Section 265

Subsection 265(1) - Bankruptcies

Paragraph 265(1)(f)

See Also

Richter & Associates Inc v. The Queen, 2005 TCC 92

trustee's own suit and litigation support activity were related

The trustee in bankruptcy for a company ("Castor") which had essentially only engaged in investing in high-yield loans brought an action in its capacity of trustee for the Castor estate against the former auditors ("C&L") for $40 million in damages for breach of contract, and also began a "litigation support business" of providing assistance to most of the creditors (the "Participating Creditors"), including hiring professionals and experts, in connection with their action sounding in negligence against C&L for $800 million in damages. To the extent that, on settlement of the litigation, Richter was not able to recover its costs out of the proceeds of an award made to it on its own claim, Richter at such time would invoice the creditors for its remaining unrecovered costs, to be paid by set-off against loans they had made to it in the interim.

In rejecting a Crown argument that the litigation support business was deemed to be an activity of a separate person by s. 265(1)(f), Archambault J stated (at para. 32):

I do not know how it can be said here that the Litigation Support Business constitutes an activity to which the bankruptcy does not relate. It is clear that the services and properties related to litigation support services and properties acquired by the Estate in order to carry on the Litigation Support Business are also benefiting the Estate in the pursuit of its own legal action against C&L. … In any event…[r]egardless of whether the Estate should have filed its GST return as the Estate or as a separate person, the respondent's liability to pay the ITCs to the Estate would not change.

See summary under s. 141.01(2).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Business litigation support services provided by trustee for bankrupt financial institution were an "undertaking" 269
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(2) allocation between costs incurred by trustee in bankruptcy for bankrupt financial institution to provide litigation services to creditors, and costs incurred in connection with its action qua trustee 375
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(5) allocation between own suit and litigation support 68
Tax Topics - Excise Tax Act - Section 141.1 - Subsection 141.1(3) - Paragraph 141.1(3)(b) action brought by trustee for bankrupt financial institution deemed to be not in course of commercial activity 184
Tax Topics - General Concepts - Illegality Act applied to what has occurred irrespective of legality 134
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business litigation support services provided by trustee for bankrupt financial institution were an "undertaking" 270