Henco Industries Ltd. v. R. |
2014 CarswellNat 2012 |
Tax Court of Canada
Tax | Income tax | Administration and enforcement | Practice and procedure on appeals | Evidence
Taxpayer was developer who owned three properties — Unrest occurred in area due to protests by aboriginal persons who set up barricades Government rezoned DCE property so that development could not continue — Taxpayer obtained injunction to remove native persons from properties — Properties were eventually purchased by provincial government, with removal of injunction being condition — Government made payment of $650,000 to taxpayer to mitigate impact of protests and barricades — Taxpayer sold nearby golf course property and M property to related company — On 2007 tax returns, taxpayer treated disposition of DCE property as proceeds of disposition of eligible capital property, proceeds from disposition of property M as inventory, and proceeds from sale of golf course as capital, and mitigation payment of $650,000 as non--taxable receipt Minister of National Revenue reassessed taxpayer for 2007 taxation year under Income Tax Act, treating money from disposition of DCE property as net profit, sale of M property as having value of $1,400,000 not $1,000,000, treating value of golf property as $850,000 instead of $800,000 and treated as income, and treating mitigation payment as income — Taxpayer appealed — Appeal allowed in part — Nature of contract for sale of DCE was ambiguous regarding allocation of property, goodwill and other assets, and so extrinsic evidence was necessary to determine nature of agreement — Factual matrix essential where issue is characterization of nature of payment by third party — Information regarding driving factors of deal was necessary to determine tax consequences Extrinsic evidence was admissible, and critical to proper characterization of the $15,800,000 payment — Even if parol evidence rule came into play, exception to address ambiguity in agreement also came into play, as agreement needed to be interpreted to determine nature of payment — Agreement was not sufficiently clear, opening door to admitting extrinsic evidence — Language of preamble in agreement allowed for consideration of extrinsic evidence — Agreement was not clear and included provisions that invited further scrutiny — Press issues issued by government were admissible evidence but affidavits of government officials were not — Affidavits of public officers made for use in court matter proceedings were not admissible — Being affidavit of public officer did not mean documents were subject to public documents' exception to hearsay rule — Contents of the affidavits were not contents of which affiants would otherwise have no recollection, and affiants could have appeared — Affiants could have appeared in current proceedings — Documents not admissible on principle exception to hearsay rule.