Stare Decisis

Table of Contents


Canada v. 984274 Alberta Inc., 2020 FCA 125

prior decision of the FCA that “manifestly overlooked [the] established line of cases” was not to be followed

After noting the Crown’s reliance on the FCA’s finding in Freitas that a statute-barred reassessment was voidable rather than void, Noël CJ stated (at para. 55):

I agree with the respondent that Freitas is not authoritative on this point as the Court manifestly overlooked this established line of cases and did not address the reasoning behind it … .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160.1 - Subsection 160.1(1) ss. 160.1(1) and (3)’s application not subject to the issuance of a prior time-constrained reassessment 489
Tax Topics - Income Tax Act - Section 164 - Subsection 164(1) nil assessment was an “assessment” giving rise to an s. 164(3.1) overpayment 445
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) nil assessment not subject to 3-year limitation in s. 152(4) 190

Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65

prior decisions can be departed from where this will reduce uncertainty

Before going on to revise the standards to be applied in determining whether an administrative decision should be altered through judicial review, the Court stated (at para. 20):

[T]his Court has in the past revisited precedents that were determined to be unsound in principle, that had proven to be unworkable and unnecessarily complex to apply, or that had attracted significant and valid judicial, academic and other criticism: Craig, at paras. 28-30; Henry, at paras. 45-47; Fraser, at para. 135 (per Rothstein J., concurring in the result); Bernard, at pp. 858-59. Although adhering to the established jurisprudence will generally promote certainty and predictability, in some instances doing so will create or perpetuate uncertainty in the law: Minister of Indian Affairs and Northern Development v. Ranville, [1982] 2 S.C.R. 518, at p. 528; Bernard, at p. 858; R. v. B. (K.G.), [1993] 1 S.C.R. 740, at p. 778. In such circumstances, “following the prior decision because of stare decisis would be contrary to the underlying value behind that doctrine, namely, clarity and certainty in the law”: Bernard, at p. 858. These considerations apply here.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Act - Section 18.1 - Subsection 18.1(2) correctness appellate standard for questions of law not generally applicable to s. 18.1 reviews 984
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) correctness standard applied to questions of law of central importance, reasonableness standard applicable to most reviews 542
Tax Topics - Statutory Interpretation - Consistency presumption of consistent expression 138
Tax Topics - Statutory Interpretation - Ordinary Meaning administrative decisions must have regard to the provision’s text, context and purpose 222

Markou v. Canada, 2019 FCA 299

consent judgments had no precedential value

In rejecting arguments that the Federal Court of Appeal should not follow its earlier decision in Maréchaux, Noël CJ stated (at para 52):

… [T]his Court will not overrule a prior decision unless it can be shown that in rendering it, the Court overlooked binding precedents or ignored relevant statutory authority… . No such demonstration has been made.

Noël CJ also stated (at para 61):

… [T]he four Consent Judgments signed by the Minister involving other participants in the [subject leveraged donation] Program for taxation years subsequent to the enactment of subsections 248(30)-(32)… are of no assistance to the appellants. Consent Judgments have no precedential value… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts Quebec and ROC donations have similar requirements for a donative (impoverishing) intent 422

1455257 Ontario Inc. v. Canada, 2016 FCA 100

prior decisons overruled only if manifestly wrong

The Court overruled its earlier decision in Sarraf and found that an Ontario corporation which has been dissolved cannot file a Notice of Appeal. Before so concluding, Dawson JA stated (at para. 21):

[I]n Miller v. Canada (Attorney General), 2002 FCA 370, 220 D.L.R. (4th) 149, this Court held that to protect the values of certainty and consistency, it will only depart from one of its prior decisions if satisfied that the previous decision is manifestly wrong.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Ontario - Business Corporations Act - Section 242 dissolved corporation cannot launch appeal/voluntarily dissolved corp cannot be revived by Companie Branch 264
Tax Topics - Income Tax Act - Section 169 - Subsection 169(1) dissolved corporation cannot appeal to Tax Court 116

Tuccaro v. Canada, 2014 DTC 5103 [at 7210], 2014 FCA 184

prior finding about the meaning of an aboriginal treaty was a finding of fact, not of law

The taxpayer's tax appeal was based on an alleged exemption, in an aboriginal treaty ("Treaty 8"), from all taxation. The motions judge found that he was bound by the legal finding in Benoit that there was no such exemption in Treaty 8, and granted the Minister's motion to strike references to Treaty 8 from the taxpayer's pleadings.

Webb JA reversed the motion judge's decision. Benoit made a factual conclusion, on whether "the Aboriginal signatories understood that they would be exempted from taxation for any reason," finding that there was "insufficient evidence" to support this view - therefore, the question was not whether stare decisis applied on the findings of law in Benoit, but rather whether issue estoppel applied on the findings of fact (para. 21).

Issue estoppel did not apply. Although the issue was the same, there was no evidence that any litigant in Benoit was the present taxpayer or his privy.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel prior finding about meaning of aboriginal treaty did not estop new litigant 164
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 prior decision on treaty was finding of fact, not law 164

Canada v. Craig, 2012 SCC 43, [2012] 2 S.C.R. 489

previous SCC decision overruled - but FCA should have followed

After noting (at para. 25) that, before overruling a previous decision of the Court, "the Court must be satisfied based on compelling reasons that the precedent was wrongly decided," Rothstein J went on to find that this test was satisfied in the case of the previous decision of the Supreme Court in Moldowan, so that such decision should not be followed. He had previously noted that the Federal Court of Appeal in Gunn had also not followed Moldowan notwithstanding that Moldowan was "a precedent binding on the Federal Court of Appeal" (para. 18), and in this case what the Federal Court of Appeal ought to have done, rather than following its own decision in Gunn and not following Moldowan, was to merely state written reasons as to why Moldowan was problematic (para. 21).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 31 - Subsection 31(1) law practice and farm were a "combination" source 301

Copthorne Holdings Ltd. v. Canada, 2012 DTC 5006 [at 6536], 2011 SCC 63, [2011] 3 S.C.R. 721

high threshold for reversing not met

The Canada Trustco decision, 2005 SCC 54, established that under the definition of "series of transactions" in s. 248(10), a transaction can be effected "in contemplation of" a series of transactions even if it occurs after that series of transactions. The taxpayer argued that this finding in Canada Trustco should be overturned because it ran contrary to the plain meaning of "in contemplation of," which the taxpayer alleged is forwards-looking only. Rothstein J. stated (at para. 57):

Trustco is a recent decision of this Court. Reversing a recent decision "is not a step to be lightly undertaken" (Ontario (Attorney General) v. Fraser, 2011 SCC 20, [2011] 2 S.C.R. 3, at paras. 56-57, per McLachlin C.J. and LeBel J.). Before a Court will entertain reversing a recently decided decision, there must be substantial reasons to believe the precedent was wrongly decided. In this case, Copthorne has not met the "high threshold for reversing a precedent" (Fraser, at para. 60) and it is appropriate to reaffirm the Trustco interpretation of s. 248(10).

The taxpayer's reassessment under s. 245 was upheld.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit illuminated by comparison to reasoanble alternative 315
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) policy of s. 87(3) is to avoid preservation of PUC on parent and sub amalgamation 372
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) "in contemplation" could be retrospective 342
Tax Topics - Statutory Interpretation - Expressio Unius est Exclusio Alterius 109

Bozzer v. Canada, 2010 DTC 5025 [at 6612], 2010 FC 139, rev'd 2011 DTC 5106 [at 5922], 2011 FCA 186

rev'd on other grounds 2011 DTC 5106 [at 5922], 2011 FCA 186

Shore J. found that he should apply a decision of the Federal Court of Appeal on the meaning of "taxation year" in s. 127(5) even though that section had since been repealed.

Kaulius v. Canada, 2003 FCA 371, 2003 DTC 5644 (FCA), aff'd 2005 DTC 5538, 2005 SCC 55

aff'd on other grounds 2005 DTC 5538, 2005 SCC 55

Before finding that the Court should not depart from its approach in OSFC Holdings Ltd. v. The Queen, 2001 FCA 260 (FCA), Rothstein J.A. noted that "the basic test for overruling a decision of another panel of the Court is that the prior decision is manifestly wrong in that the Court overlooked a relevant statutory provision or a case that ought to have been followed", and noted that before him the appellants were only raising some additional statutory provisions in support of an argument that was previously made, and that this was insufficient to cause the Court to consider overruling its prior decision.

Itt Industries of Canada Ltd. v. Canada, 2000 DTC 6445 (FCA)

Before going on to decline to follow an obiter dictum in a previous case, Sharlow J.A. stated (at p. 6449):

"In my view, the obligation of the Court in this case is to consider whether or not the interpretation suggested by the obiter in Kettle River is correct, and to confirm it only if it is correct. Neither the passage of time since Kettle River was decided, nor the inaction of Parliament in the interim, relieves the Court of that obligation or requires the adoption of obiter that is found not to be correct."

Attorney General of Canada v. Mastri, 97 DTC 5420 (FCA)

With respect to a submission by the Crown that the earlier decision of the Court of Appeal in the Tonn case should be "overruled", Robertson J.A. stated (at p. 5422):

"It is important to recognize that although a decision of one panel of this court is not binding on another, it is incorrect to speak of a recent decision overruling an earlier one. The accepted rules of stare decisis dictate that both decisions are of equal weight."

The Queen v. Armstrong, 96 D.T.C 6315 (FCA)

After noting that the decision in The Queen v. Bryce, [1982] 2 F.C. 581 (C.A.) was reversed under a consent judgment made in the Supreme Court of Canada that allowed an appeal from the Court of Appeal decision and restored the judgment in the Trial Division (at 80 DTC 6304), Stone J.A. stated (at p. 6320):

"True, the Supreme Court of Canada upon a motion in chambers in turn reversed this Court's judgment but as its judgment was given on consent it has no precedential value. A consent judgment represents an agreement of the parties and although it is entered upon the record with the approval of a court and is therefore binding as between the parties it does not create a precedent by which an inferior court is bound."

Symes v. Canada, 94 DTC 6001, [1993] 4 S.C.R. 695

Before stating (p. 6012) that he did not feel that he had to "slavishly follow those cases which have characterized child care expenses as personal in nature", Iacobucci J. referred to R. v. Salituro, [1991] 3 S.C.R. 654 where the Court stated (p. 670) that:

"Judges can and should adapt the common law to reflect the change in social, moral and economic fabric of the country".

Carlini Bros. Body Shop Ltd. v. The Queen, 92 DTC 6543 (Ont. Ct. J. - G.D.)

"My understanding of the law of stare decisis is that I am only bound by decisions of a court to which a decision of mine could be appealed. Federal Court of Appeal decisions, even in relation to the Income Tax Act, are not binding on me, but are entitled to the same consideration and persuasive weight as would be given by this court to the decisions of the highest appellate courts of the other provinces ...".

Royal Bank of Canada v. Saskatchewan Power Corp., 90 DTC 6330 (Sask QB)

The Saskatchewn Court of Queen's Bench was not bound by a decision of the Alberta Court of Appeal in respect of which the Supreme Court of Canada had refused to give leave to appeal, in light of the principle that a refusal to grant leave is not a disposal of the case on its merit.

Pilfold v. Skog Estate (1989), 64 DLR (4th) 186 (BCCA)

Even where remarks of the Supreme Court of Canada are obiter, those remarks should be followed if they were given after full argument on the point.

Re Cox, 88 DTC 6494, [1988] 2 CTC 365 (BCSC)

An opinion of Collier, J. was a bald statement which apparently was made without the benefit of argument on the relevant authorities. His opinion was not followed.

Irving Oil Ltd. v. The Queen, 88 DTC 6138, [1988] 1 CTC 263 (FCTD), aff'd 91 DTC 5106 (FCA)

"[W]here a Court gives two or more reasons for allowing an appeal, each reason is binding and forms part of the ratio of the decision."

The Queen v. Pollock, 84 DTC 6370, [1984] CTC 353 (FCA)

Pratte J.A. stated (p. 6371), in refusing to depart from the earlier decision of the Court in The Queen v. Atkins, 76 DTC 6258 that while the:

"... Court has the power to reconsider and refuse to follow one of its previous decisions, we are of opinion that we should do so only when we are convinced that our previous decision was wrong ..."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 7
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base cost incurred to acquire right to receive damages 58

See Also

Canada (National Revenue) v. Stankovic, 2018 FC 462

Quebec CA decision relied upon

In briefly disposing of the taxpayer's Charter arguments, Russell J stated (at para. 64):

The issues raised by the Applicant on this point were addressed … by the Quebec Court of Appeal [Berger, 2016 QCCA 226].

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) a taxpayer with an unreported Swiss bank account was not yet under criminal investigation 436
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 7 use of stolen data provided by French tax authorities did not violate taxpayer's Charter rights 202
Tax Topics - Income Tax Act - Section 231.7 - Subsection 231.7(1) mere suspicion of criminal activity did not oust s. 231.1 215

Construction S.Y.L. Tremblay Inc. v. Agence du revenu du Québec, 2018 QCCA 552

Court of Quebec not bound by Tax Court decisions/stare decisis does not preclude relitigation where unfairness would otherwise result

In the federal Construction S.Y.L. Tremblay case, Bédard J found that house-repair invoices, that did not give the house address or describe the precise nature of the work performed (and that were rendered in the name of entities that did not remit the GST), failed to satisfy the requirements of s. 3 of the Input Tax Credit Information (GST/HST) Regulations, so that the appellant’s related input tax credit claims were properly denied.

Before going on to confirm the finding below that it represented an abuse of process for essentially the same issue to be relitigated in the Court of Quebec respecting the availability of input tax refunds under the parallel provisions under the Quebec Sales Tax Act and Regulations, Thibault JCA stated (at para. 32, TaxInterpretations translation) that “the Court of Quebec is not bound under the …stare decisis rule by a judgment rendered by the Tax Court of Canada.” Thibault JCA also quoted (at para. 29) with approval statements in Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77, 2003 SCC 63, paras. 52-53 (extract from para. 53 quoted below):

… There are many circumstances in which the bar against relitigation, either through the doctrine of res judicata or that of abuse of process, would create unfairness.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Regulations - Input Tax Credit Information (GST/HST) Regulations - Section 3 - Paragraph 3(c) - Subparagraph 3(c)(iv) failure of invoices to describe the supplies could not be remedied by testimony 397
Tax Topics - General Concepts - Abuse of Process taxpayer’s attempt to relitigate an adverse TCC decision in the Court of Quebec was an abuse of process given that the new evidence to be tendered did not address its defective invoices 386
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) failure of invoices to describe supply was in itself sufficient to deny credit 168

BCS Group Business Services Inc. v. The Queen, 2018 TCC 120

prior decision not followed

The Court disagreeing with the Court's prior finding in Masa Sushi and subsequent cases that Tax Court Rule 30(2) conflicted with section 17.1 of the Tax Court of Canada Act, and the latter section did not allow a corporation to be represented other than by counsel.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 30 - Subsection 30(2) corporation can appear “in person” without counsel 329

Resource Capital Fund IV LP v Commissioner of Taxation, [2018] FCA 41 (Federal Court of Australia), rev'd on various grounds [2019] FCAFC 51

lower court not bound by a point of law that was assumed rather than examined by a higher court

Two Caymans investment LPs (“RCF IV” and RCF V”) whose limited partners were mostly U.S. residents, realized gains from the disposal of significant shareholdings in a TSX-listed Australian corporation. An earlier decision of the Full Federal Court had proceeded on the basis that a similar partnership (“RCF III”) was a corporation for Australian income tax purposes. In finding that this did not preclude him from considering (and then concluding) that RCF IV and RCF V were to be treated as partnerships for such purposes (so that its partners were the relevant taxpayers), Pagone J first noted (at para. 6) that

It is important to the issues in this proceeding that at no stage had it been contended by either party in the RCF III proceedings that Division 5A did not constitute or contemplate RCF III to be a limited partnership able to be taxed as a taxable entity separately from the partners.

He then quoted the statement in Re Hetherington (deceased) [1990] Ch 1 that “even where a decision of a point of law in a particular sense was essential to an earlier decision of a superior court, but that superior court merely assumed the correctness of the law on a particular issue, a judge in a later case is not bound to hold that the law is decided in that sense,” and then concluded (at para. 8):

It follows from those observations, and from the way in which the issue of RCF III as a taxable entity was considered in RCF III, that the view in RCF III that the partnership in that case was a taxable entity is not binding in these proceedings.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares private equity fund LP with 5-year holding objective realized share gain on income account 167
Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(ii) gains of a NR PE fund from disposals of Australian share investments that were managed in part in Australia were derived from Australia 411
Tax Topics - Treaties - Income Tax Conventions - Article 3 each U.S.-resident partner of a Caymans PE LP carried on a U.S. “enterprise” 222
Tax Topics 386
Tax Topics - Treaties - Income Tax Conventions - Article 13 exclusion in Art. 13 of Aust.-U.S. Treaty for real property dispositions extended to shares of Australian holding company holding mining leases through grandchild
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) assessment of partnership was assessment of partners 83
Tax Topics - Treaties - Income Tax Conventions - Article 6 Art. 6 extends common law meaning of real property 180
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxable Canadian Property - Paragraph (d) shares of lithium mining and processing company were derived principally from the processing rather than mining operation and, thus, were not taxable Australian real property 500
Tax Topics - Income Tax Act - Section 218.3 - Subsection 218.3(1) - Canadian Property Mutual Fund Investment shares of Australian mining company were primarily attributable to the processing rather than mining operations 140
Tax Topics - General Concepts - Fair Market Value - Other processing assets of mining company were more valuable than its mining assets 234

Scott v. The Queen, 2017 TCC 224, 2017 TCC 224

Supreme Court obiter accorded deference

After quoting with approval the statement in R. v Prokofiew, 2010 ONCA 423, ¶21 that:

The orderly and rational development of the jurisprudence is not served if lower courts are too quick to strike out in legal directions different than those signalled in obiter from the Supreme Court of Canada.

Sommerfeldt J stated (at para. 95):

The comments made by Charron J in Tsiaprailis about the non-taxability of the future component of Ms. Tsiaprailis’ settlement payment were not integral to the result or the analysis that underlay the determination of the matter before the Supreme Court of Canada in that case, given that the appeal dealt only with the taxability of the arrears component of the settlement payment. … Thus, even if the obiter dicta is binding, it is not determinative of these Appeals.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 89 - Subsection 89(1) - Paragraph 89(1)(a) trust return not admitted at trial opening where no previous notice and not relied upon by CRA 229
Tax Topics - Income Tax Act - 101-110 - Section 107.1 - Paragraph 107.1(a) s. 107.1(a) in effect produced a rollover on cash distribution of mooted benefits 181
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) a distribution from a health and welfare trust to compensate for lost insurance coverage was not a taxable benefit as it did not come within s. 6(4) 316
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(iii) payment made as compensation for termination of monthly death benefits was paid, at the least, in lieu of a death benefit 235
Tax Topics - Income Tax Act - Section 9 - Compensation Payments surrogatum principle references "why the compensatory amount was paid," and not confined to business receipts 205
Tax Topics - Statutory Interpretation - Specific v. General Provisions termination payment that did not come within s. 6(4) should be treated as excluded from s. 6(1)(a) 153

Revenue and Customs Commissioners v. Findmypast Ltd., [2017] CSIH 59

prior cases reviewed for principles rather than similar facts

After discussion the leading cases on point, Lord Drummond Young noted (at para. 20) that additional cases raised by counsel for HMRC “were relied on in large measure because they appeared to provide analogies to the factual situation found in the present case,” and stated (also at para. 20):

It seems to us that the application of tax law is through principle rather than analogy; in every case the underlying basis of the court’s reasoning must be discovered, and it is the principles contained in that reasoning that govern future cases.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Service supply of genealogical records by website in satisfaction of previously purchased credits was a service 406
Tax Topics - Excise Tax Act - Section 152 - Subsection 152(1) the time of a supply of services was accelerated by prepayment only where the services were precisely identifiable 805
Tax Topics - Excise Tax Act - Section 168 - Subsection 168(6) precise services to be purchased with credits were not yet identified 152

Tallon v. The Queen, 2014 DTC 1148 [at 3478], 2014 TCC 193 (Informal Procedure)

taxpayer presumptively entitled to rely on former decision involving the taxpayer and substantially the same facts

The taxpayer suffered from severe chronic pain. On the advice of her doctor, she helped alleviate the pain by wintering with her husband in warm climates. She claimed medical expense tax credits in respect of her travel and meal expenses.

Woods J found that the facts were materially identical to a 2008 case, decided by Lemarre J, involving the same taxpayer, medical condition and treatment. Therefore, although the Minister identified a 2001 decision that would potentially undermine the taxpayer's METC claim, Woods J stated (at para. 15):

There would be nothing wrong with this if the reasons of Justice Lemarre were provided to me so that I could consider them. But they were not, and no explanation was provided for failing to provide a transcript of these reasons. I find this situation to be very unfair to the taxpayer. If Ms. Tallon is to be deprived of the benefit of the prior decision for a subsequent year, it is only fair to her that the Court give careful consideration to the reasons in the prior case. I was not able to do this.

It was inappropriate, especially in an informal procedure case, to order a subsequent hearing to review the prior decision. Therefore, the taxpayer's METC claims were allowed.

J.K. Read Engineering Ltd. v. The Queen, 2014 DTC 1216 [at 3872], 2014 TCC 309

weight of obiter depends on fullness of argument

Before finding that the taxpayers' argument was contradicted by the "authoritative obiter" in S.T.B. that s. 245(7) applied to third parties only, Hogan J paraphrased (at para. 28) R. v. Henry, [2005] 3 S.C.R. 609 for the proposition "that obiter dicta move along a continuum and diminish in weight the further they stray from the dispositive point of judicial opinion," and noted (at para. 29) that in S.T.B. "the third party application of subsection 245(7)…was fully argued."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis weight of obiter depends on fulness of argument 93
Tax Topics - Income Tax Act - Section 161 - Subsection 161(1) interest under GAAR assessments accrued from balance due dates 54
Tax Topics - Income Tax Act - Section 245 - Subsection 245(7) GAAR applies to impose liability for abusive transactions from inception 254

J.K. Read Engineering Ltd. v. The Queen, 2014 DTC 1216 [at 3872], 2014 TCC 309

weight of obiter depends on fulness of argument

Before finding that the taxpayers' argument was contradicted by the "authoritative obiter" in S.T.B. that s. 245(7) applied to third parties only, Hogan J paraphrased (at para. 28) R. v. Henry, [2005] 3 S.C.R. 609 for the proposition "that obiter dicta move along a continuum and diminish in weight the further they stray from the dispositive point of judicial opinion," and noted (at para. 29) that in S.T.B. "the third party application of subsection 245(7)…was fully argued."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis weight of obiter depends on fullness of argument 93
Tax Topics - Income Tax Act - Section 161 - Subsection 161(1) interest under GAAR assessments accrued from balance due dates 54
Tax Topics - Income Tax Act - Section 245 - Subsection 245(7) GAAR applies to impose liability for abusive transactions from inception 254

Congiu v. The Queen, 2013 TCC 271, aff'd 2014 FCA 73

The appellant was appealing an assessment made by Revenue Quebec on behalf of the (federal) Minister under s. 270(4) of the Excise Tax Act in respect of a debt of a corporation of which she had been a receiver. Angers J noted (at para. 4) that (TaxInterpretations translation):

The issues before me are essentially the same as those put before Justice Lareau of the Court of Quebec and on which he has already pronounced. Only the legislative provisions on which the assessments rest are different….[T]he decision…which dismissed the appeals, is under appeal before the Quebec Court of Appeal….

There was an agreed statement of facts based on the findings of Lareau J.

In finding that the issues before him were not res judicata, and after noting that both cases dealt with a sale of assets without a clearance certificate, Angers J stated (at para. 8):

It is more difficult for me to conclude that the provincial and federal assessments have the same subject. Their amounts and legal basis are different. Finally…there is not an identity of the parties, as the federal and Quebec governments are not the same person.

However, it would constitute an abuse of process to consider the issues in the present appeal given their similarity to those disposed of by Lareau J. A different outcome in this appeal would be viewed as contradictory to the earlier decision (para. 13), whereas the objective instead was that "judgments on the same question be coherent" (para. 16).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Abuse of Process judicial comity re Quebec decision 299
Tax Topics - General Concepts - Res Judicata not res judicata where two different government litigants 266
Tax Topics - General Concepts - Judicial Comity judicial comity re Quebec decision 221

CAE Inc. v. The Queen, 2011 DTC 1362 [at 2031], 2011 TCC 354, aff'd 2013 DTC 5084 [at 5944], 2013 FCA 92

aff'd on other grounds 2013 DTC 5084 [at 5944], 2013 FCA 92

Jorré found that the taxpayers' flight simulators could be depreciable property in a taxation year where the taxpayer rented the simulator out (thereby allowing the taxpayer to deduct capital cost allowance), but also be inventory in the year the simulator is sold (thus forcing the taxpayer to treat the resulting gain as business income rather than a capital gain). In reaching this conclusion, Jorré J. noted that the Court in Friesen ([1995] 3 S.C.R. 103) made a comment indicating that his approach might be "inconsistent with the basic division in the Income Tax Act between business income and capital gain." Although he ultimately concluded that his findings did not contradict Friesen, he stated (at para. 139):

Does the excerpt from Friesen that I just quoted [regarding the income/capital gain division] apply? We are no longer in the era where Lord Halsbury stated that a judgment is authoritative solely for the issue it decides and nothing more. Ever since the Supreme Court's decision in Sellars v. The Queen [[1980] 1 S.C.R. 527], it has been clear that the Supreme Court's decisions have broader scope than they would under Lord Halsbury's classic approach.

Crown Forest Industries Ltd. v. The Queen, 2006 DTC 2321, 2006 TCC 47

In refusing to follow the decision in the Terra Mining Exploration case (84 DTC 6185) Hershfield J. stated (at p. 2326):

"While I am loathe to cast aside a precedent as long-standing as the Federal Court, Trial Division's decision in Terra, it is necessary to consider the issue at hand now, some 20 years later, in the light of more recent jurisprudence. While I would not advocate reconstructing the meaning of a statutory provision as and when the judicial thinking of the day changes, in this case, the express language of the Act was not, in my view, given effect in Terra."

Sussex Square Apartments Ltd. v. The Queen, [1999] 2 CTC 2143 (TTC), aff'd [2000] 4 CTC 203 (FCA)

Bowman TCJ. adopted the "illuminating discussion of the principle of stare decisis [in] the judgment of Master Funduk in Southside Woodwork v. R.C. Contracting et al. (1989) 95 A.R. 161 at pp. 166-167, paragraphs 51 and 53".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date Dale principle did not apply to "contractually agreed ... revisionism" 198

La Compagnie Price Limitée v. The Queen, 95 DTC 428 (TCC)

The Minister reassessed the taxpayer in accordance with a Federal Court judgment issued pursuant to a consent to judgment (as subsequently varied). The taxpayer objected to the reassessment on the basis that it did not properly compute its logging tax credit. In dismissing the taxpayer's appeal, Garon TCJ. noted that the reassessment accorded in every respect with the consent judgment and (at p. 433):

"If this Court were permitted to consider and decide a question that has not been examined and the decision rendered following a consent to judgment by the parties, it would follow that this Court would have the power vary its own judgment. We know that it is clearly recognized that a court of justice may vary one of its judgments only in certain quite specific circumstances that are described in ... Gunnar Mining ..."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) 135

Mourtzis v. The Queen, 94 DTC 1362 (TCC)

stare decisis inapplicable to Informal Procedure precedents

S.18.28 of the Tax Court of Canada Act merely indicates that the rules of stare decisis do not apply to the informal procedure decisions of the Tax Court and does not preclude the Tax Court from citing, analysing or following such decisions if it is disposed to do so.

Dundas v. MNR, 90 DTC 1529 (TCC)

In applying obiter dicta of Pigeon J. in the Cewe case, Rip J. applied the following statement in Ottawa v. Nepean, [1943] O.W.N. 352:

"What was said there may be obiter, but it was the considered opinion of the Supreme Court of Canada, and we should respect it and follow it, even if we are not strictly bound by it."

Bernier Estate v. MNR, 90 DTC 1220 (TCC)

Although Lamarre Proulx J. was inclined to interpret s. 62(1) differently than in the Haines and Bracken decisions, and although under the rule of stare decisis she was not bound by those decisions if they were not decisions of a higher court, nonetheless because "stability and consistency in the decisions of a Court are important" (p.1223), those decisions were followed by her. She also quoted the following passage from Stewart v. Bank of Montreal (1909), 41 SCR 516 at 534:

"'It is', said Lord Macnaghten, in New South Wales Taxation Commissioners v. Palmer, [1907] A.C. 179 at p. 184, 'impossible to treat a proposition which the court declares to be a distinct and sufficient ground for its decision as a mere dictum because there is another ground upon which, standing alone, the case might have been determined.'"


Justice Marshall Rothstein, "An Overview of the Supreme Court of Canada", Bulletin for International Taxation (IBFD), January/February 2016, p. 20.

Stare decisis usually applies (p. 20)

As the Court recently noted: "stare decisis is not a straitjacket that condemns the law to stasis". [f.n. 10 [Carter v. Canada (AG), 2015 SCC]] The Supreme Court has indicated a willingness to depart from its own precedent where a new legal issue has been raised or where there has been a change in the facts that "fundamentally shifts the parameters of the debate."[f.n.11: [Canada (AG) v Bedford, 2013 SCC 72] at para 42] But this will be rare; the principle of stare decisis, or following precedents, is the norm.

Extraneous communication (p. 21)

The judges...refrain from speaking on radio or television or commenting on social media and will not engage in blogging.

Signing of judgments (p. 22)

There is no rule governing when a judgment will be signed by "The Court", but as a rule of thumb it is reserved for controversial cases of significant public importance. They are cases that likely involve highly visible and/or devisive issues that attract much attention from the public and commentators. Signing "The Court" depersonalizes the judgment and is intended to signal that the Court is strong and united on the legal issues in the cases [F.n. 24: For example, two of the cases that were heard between October 2014 and May 2015 were written by "The Court": Carter, [2015 SCC 5], in which the Court found unconstitutional the prohibition against physician-assisted death for competent adults in certain limited circumstances, and R v. Smith, 2015 SCC 34, in which the Court found unconstitutional the prohibition against the possession of non-dried forms of medical marihuana.]

Resort to foreign Treaty interpretation decisions (p. 25)

In interpreting treaties to which Canada is a party, the Supreme Court of Canada and Canadian courts are not averse to seeking guidance from the decisions of foreign courts. An openness to considering foreign judgments is beneficial for a number of reasons: a well-reasoned foreign decision that has considered similar issues may provide analytical guidance. We may also look to the effects of a particular rule in action in considering the merit of arguments about likely consequences. It also leads to greater harmonization of law in terms of interpretation and implementation of treaties. [F.n.73: See generally van Ert [Using International Law in Canadian Courts, 2d ed (Irwin Law 2008)] pp. 280-284]

Resort to foreign judgments (p. 25)

An example concerns the interpretation of a "series of transactions" under a general anti-avoidance rule (GAAR) that is found to be abusive of the Income Tax Act. English jurisprudence had a direct influence in Canada on the way in which this concept was understood. In the 2005 case Canada Trustco Mortgage Co v. Canada, the Supreme Court agreed with the Federal Court of Appeal which, in a prior unrelated case, had adopted the interpretation of the UK House of Lords' decisions in Furniss v . Dawson and Craven v. White... . Another example is Canada's approach to defining residency of a corporation and a trust, which is informed by British jursiprudence... .

Characterization of foreign entities (p. 25)

This endorsement of a foreign court's definition of a taxation law concept contrasts with Canadian courts' use of domestic law to characterize certain foreign arrangements and relationships, which can lead to significant tax consequences. In 2001, in Backman v. Canada, a Canadian taxpayer was seeking to deduct certain losses of a partnership recognized under the law of the state of Texas, in the United States. While the Federal Court of Appeal looked at whether the taxpayer satisfied the definition of a partnership under Canadian law after having determined that Texas law was insufficiently proven, the Supreme Court did not look at whether foreign law had been sufficiently proven under Texas law. Instead, the Court wrote that if a partnership wants to deduct losses under Canadian law, it must satisfy the elements of a partnership under Canadian law. This precedent limits to a certain extent the use of foreign law in Canadian tax cases.