Imperial General Properties Limited (Formerly Speedway Realty Corporation Limited) v. Her Majesty the Queen, [1981] CTC 331, 81 DTC 5191

Gibson, J:—The evidence in this appeal consisted of an Agreed Statement of Facts, Exhibit 29, and documentary evidence, Exhibits 1-28 and 30- 34, and the oral evidence of Mr Morry Wingold, which evidence was substantially different than the evidence adduced before the Tax Review Board.

The sole issue is whether or not Valider Limited was associated with Speedway Realty Corporation Limited within the meaning of paragraph 39(4)(a) or (b) of the Income Tax Act in force in the relevant taxation years of Speedway, namely 1962-3-6-7. Said paragraphs 39(4)(a) and (b) read:

(4) For the purpose of this section, one corporation is associated with another in a taxation year if, at any time in the year,

(a) one of the corporations controlled the other,

(b) both of the corporations were controlled by the same person or group of persons,

All the common shares of Validor were owned by the Wingolds; and Validor owned 50% of the common shares of Speedway.

The Gasners owned 40% of the common shares of Speedway plus voting preference shares, which gave the Gasners 50% voting rights of Speedway.

The submission of the defendant is that even though 50% voting control or votes which can be cast at a meeting of shareholders were held equally by Validor and the Gasners, nevertheless Validor held control of Speedway within the meaning of subsection 39(4) of the Act because the preferred shares held by the Gasners did not have the same de jure rights as the common shares; and for this proposition the defendant relied on Oakfield Developments (Toronto) Limited v MNR (SCC) [1971] SCR 1032; [1971] CTC 283; 71 DTC 5175.

In my view the principle in the Oakfield case is not applicable to the facts of this case. Instead the principle that should be applied is exemplified in Buckerfield’s Limited et al v MNR, [1965] 1 Ex CR 299; [1964] CTC 504; 64 DTC 5301; MNR v Dworkin Furs (Pembroke) Limited et al [1966] Ex CR 228; [1965] CTC 465; 65 DTC 5277; (SCC) [1967] SCR 223, [1967] CTC 50; 67 DTC 5035; and Him ley Estates Ltd and Humble Investments, Ltd v The Commissioners of Inland Revenue (1932), 17 TC 367 at 379.

Accordingly, the appeal is allowed with costs, and the matter referred back for further reassessment not inconsistent with these reasons.