T-1276-87
The Queen (Plaintiff)
v.
W.H. Violette Limited (Defendant)
INDEXED AS: W.H. VIOLETTE LTD. v. M.N.R.
Trial Division, McNair J.—Fredericton, October
27; Ottawa, November 27, 1987.
Income tax — Practice — Nothing preventing Minister, in
different proceedings, from defending contradictory assess
ments issued against same taxpayer concerning different taxa
tion years but involving same facts and amounts — Purpose to
prevent income completely avoiding taxation — Action neces
sary to preserve right to reassess 1981 amounts as becoming
statute-barred — Inconsistent stance consequence of taxpayer
refusing to reveal exact date of transaction Reassessment
for 1980, 1982 not superseding 1981 assessment.
Practice — Pleadings — Motion to strike — Pleading
regarding basis of income tax assessment for 1981 taxation
year contradicting factual basis of 1982 assessment in other
action with respect to same amounts — No abuse of process —
Rule 411 prohibition against departure in pleading applying
only to pleadings in same action — No rule preventing incon
sistency in pleading in different actions.
Constitutional law — Charter of Rights — Life, liberty and
security — Contradictory assessments in different proceedings
against same taxpayer concerning different taxation years but
involving same facts and amounts not violating principles of
fundamental justice — Main issue when proceeds received —
Taxpayer cannot complain of double jeopardy when choosing
not to reveal date of transaction and action necessary safe
guard against complete avoidance of taxation.
In settlement of an action against its supplier, Ford Motor
Co. of Canada, over pick-up and delivery charges, the defen
dant herein, a Ford automobile dealership, received, upon the
execution of a release dated only February 1982, the amounts
of $51,182.44 and $27,579.16 which the plaintiff assessed as
business income for the 1981 taxation year. After the appeal
procedure with respect to this assessment was set in motion, the
Minister of National Revenue reassessed the defendant for its
1980 and 1982 taxation years, adding to its 1982 taxation year
a further $78,761.60 which, the defendant was advised, would
be removed from the 1981 taxation year.
In an action brought before this Court to appeal the Tax
Court of Canada's decision dismissing W.H. Violette's appeal
from the 1980 and 1982 assessments, the Crown argued that
the $78,761.60 was validly included in the 1982 taxation year.
In the present action, an appeal from the Tax Court of
Canada's decision allowing W.H. Violette's appeal from the
1981 assessment, the Crown had to argue that that amount was
validly included in the 1981 taxation year.
This is a motion to strike the plaintiff's statement of claim on
the ground that it constitutes a departure from the plaintiff's
pleading in the other action and constitutes an abuse of process.
The defendant relies on Rules 419 and 411, arguing that such
contradictory pleading places it in a position of double jeop
ardy. The defendant also argues that this violates the principles
of fundamental justice, contrary to Charter section 7. Finally,
the defendant submits that the reassessments for the 1980 and
1982 taxation years had the legal effect of nullifying any
previous assessment for the 1981 taxation year.
Held, the motion should be dismissed.
It is clear from Odgers' Principles of Pleading and Practice
and from Williston and Rolls' The Law of Civil Procedure that
the rule against departure in pleading only applies to pleadings
in the same action. Rule 411 is therefore of no assistance to the
defendant. Nor is there any rule preventing the plaintiff from
pleading, in this action, allegations of fact inconsistent with
those pleaded in another action in which the plaintiff is
defendant.
This case is analogous to a situation where the Minister had
little choice in making inconsistent and seemingly contradictory
assessments in separate actions for different taxation years, but
arising out of the same transaction, in order to ensure that
there will at least be some taxation. The present action is
necessary to preserve the right to reassess amounts in the 1981
taxation year, which might otherwise become statute-barred.
The reassessment for 1980 and 1982 did not supersede or
cancel the 1981 assessment because they were not made in
respect of the same taxation year nor in respect of the same
issues.
There is no double jeopardy and therefore no violation of the
principles of fundamental justice espoused by section 7 of the
Charter. In the other action concerning the 1980 and 1982
taxation years, the taxpayer pleaded alternatively that if the
amounts in question constituted income, then they were
received or receivable in 1981. In the present action, meant
only to ensure that the amounts involved do not escape any
taxation, the plaintiff is appealing the Tax Court's decision
allowing the defendant's appeal on the basis that its other
appeal with respect to similar amounts for different years had
been dismissed.
Since the main issue is whether the amounts were received in
1981 or 1982 and since the defendant chooses not to reveal the
actual date of settlement, it cannot complain of double jeop
ardy and violation of the principles of fundamental justice. This
action is a necessary safeguard against the possibility of the
taxpayer avoiding any taxation by proving in the other action
that the amounts were actually received in 1981.
Each action has its own raison d'être and individual points of
merit requiring a full adjudication at trial.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canadian Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.), s. 7.
Federal Court Rules, C.R.C., c. 663, RR. 411, 419.
Income Tax Act, S.C. 1970-71-72, c. 63, s. 152(4).
CASES JUDICIALLY CONSIDERED
APPLIED:
In re Morgan Owen v. Morgan (1887), 35 Ch.D. 492
(C.A.); Quemet Corp. v. R., [1980] 1 F.C. 431; (1979),
79 DTC 5330 (T.D.).
DISTINGUISHED:
Walkem v. M.N.R. (1971), 71 DTC 5288 (F.C.T.D.);
Johnston v. Minister of National Revenue, [1948] S.C.R.
486; 3 DTC 1182; Crown Trust Co. v. The Queen, [1977]
2 F.C. 673; 77 DTC 5173 (T.D.).
AUTHORS CITED
Odgers' Principles of Pleading and Practice in Civil
Actions in the High Court of Justice, 22nd ed. by D. B.
Casson and I. H. Dennis, London: Stevens & Sons,
1981.
Williston, W. B. and Rolls, R. J., The Law of Civil
Procedure, Volume 2, Toronto: Butterworths, 1970.
COUNSEL:
John R. Shipley and Beverly J. Hobby for
plaintiff.
Eugene J. Mockler, Q.C. and Edward L.
Derrah for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Mockler, Allen & Dixon, Fredericton, for
defendant.
The following are the reasons for order ren
dered in English by
MCN AIR J.: This is an interlocutory application
by the defendant to strike the plaintiff's statement
of claim on the following stated grounds, viz:
I. The Plaintiff's Statement of Claim be struck out pursuant
to Rule 419 of the Federal Court Rules by reason of the fact
that the said pleading constitutes a departure from the same
party's pleading in another action before this Honourable
Court and constitutes an abuse of the process of this Honour
able Court.
The defendant carried on business as a Ford
automobile dealership in the town of Grand Falls,
New Brunswick. The defendant and the subse
quent dealership, Violette Motors Limited, had a
contractual relationship with their supplier, Ford
Motor Company of Canada Limited (hereinafter
referred to as "Ford"). By the terms of their
contractual relationship, the defendant and
Violette Motors Limited had the right to pick up
new automobiles directly from the Ford assembly
plant in Oakville, Ontario. In 1968 Ford unilater
ally purported to alter the contractual relationship
with the defendant whereby Ford began to charge
the defendant for pick-up and delivery even though
no pick-up and delivery services were ever per
formed. The defendant protested this unilateral
action by Ford but the charges were paid by Ford
Motor Credit Corporation pursuant to the whole
sale financing plan in existence at the time. These
extra costs were included in the defendant's
accounting records as operating expenses.
On March 29, 1977 the defendant commenced
legal proceedings against Ford in the Court of
Queen's Bench of New Brunswick Trial Division
[W.H. Violette Ltd. and Violette Motors Ltd. v.
Ford Motor Co. of Canada Ltd. (1980), 31
N.B.R, (2d) 394; 75 A.P.R. 394] for declaration
of the plaintiff's rights and recovery of the pick-up
and delivery charges and interest thereon. On Sep-
tember 16, 1980 the Court issued a judgment
granting the relief sought and awarding damages
to the defendant and Violette Motors Limited in
the sum of $310,442.50 for the period from Janu-
ary 1, 1972 to December 15, 1978, plus interest
thereon. The New Brunswick Court of Appeal
upheld the decision at trial in a judgment pro
nounced on April 16, 1981 [(1981), 34 N.B.R.
(2d) 238; 85 A.P.R. 238]. An application by Ford
for leave to appeal to the Supreme Court of
Canada was dismissed on October 19, 1981
[[1981] 2 S.C.R. viii; (1981), 39 N.R. 537].
On July 16, 1981, the defendant commenced a
second action against Ford for damages and inter
est arising from continuing breach of contract in
respect of pick-up and delivery charges from
December 15, 1978 to March 21, 1980. This
second action was ultimately settled by the parties
and discontinued upon the execution of a release.
The release is formally dated "this day of
February A.D. 1982". The plaintiff maintains that
the defendant received the amounts of $51,182.44
income and interest of $27,579.16 as its share of
the second action.
On September 16, 1983 the Minister of Nation
al Revenue reassessed the defendant in respect of
the 1981 taxation year and added $404,086.50 to
the active business income and $217,738.67 to the
income of the defendant for that year. By notice of
objection dated December 12, 1983 the defendant
disputed the aforementioned assessment for the
1981 taxation year. On January 8, 1985 the Minis
ter rejected the notice of objection aforesaid. The
assessment was revised, however, to add a total of
$436,759.44 to the defendant's income for the
1981 taxation year.
The defendant filed a notice of appeal for the
1981 taxation year with the Tax Court of Canada
on February 26, 1985. This appeal was identified
as Appeal Number 85-362.
By letter dated May 14, 1985 Revenue Canada
indicated that the above mentioned sum of
$436,759.44 would be removed from the 1981
taxation year and assessed in 1980 and 1982. On
June 19, 1985 the Minister of National Revenue
reassessed the defendant in respect of the 1980
taxation year by adding $357,997.84 to the tax
payer's income. The 1982 taxation year was also
reassessed on that date to add a further $78,761.60
to the taxpayer's income for that year. These
assessments were duly appealed to the Tax Court
of Canada and identified as Appeal Numbers 86-8
and 86-9.
On February 3, 1987 the Tax Court dismissed
these appeals and upheld the Minister's assessment
on the ground that the amount of $435,516.59 was
received by the taxpayer as business income and
was therefore on income account and not on capi
tal account.
The present defendant's appeal in the action
known as Appeal Number 85-362 was allowed by
the Tax Court of Canada on July 8, 1987 and the
matter was referred to the Minister for reconsider
ation and reassessment.
The plaintiff's present action (T-1276-87) is an
appeal from that decision to the Federal Court of
Canada. The plaintiff alleges in paragraphs 11(g),
11(i), 13, and 14 of its statement of claim herein
that the amounts of $51,182.44 and $27,579.16
must be included as income from business in the
defendant's 1981 taxation year.
On June 17, 1987 W.H. Violette Limited
appealed the decision of the Tax Court of Canada
rendered on February 3, 1987 with respect to the
reassessments for its 1980 and 1982 taxation years
(T-1329-87). In this other action in which Her
Majesty the Queen is defendant, the plaintiff,
W.H. Violette Limited, makes the following alter
native plea in paragraph 25 of its statement of
claim:
25. The Plaintiff says further the Minister issued an assess
ment for the said amount for the 1981 taxation year on or
about the 16th day of September, 1983, and after filing of the
Notice of Objection by the Plaintiff, the Minister re-assessed
the said amount in the years 1980 and 1982 and the Plaintiff
says the said re-assessments were contradictory and inconsis
tent and the same should be set aside as being contrary to law
and to the Charter of Rights and in particular S.l and 7
thereof.
The defendant makes the following response in
paragraph 13 of the defence:
13. With respect to paragraph 25 of the Statement of Claim,
he admits that the Minister of National Revenue issued an
assessment for the Plaintiffs 1981 taxation year on September
16, 1983, inter alia, in respect of amounts received or receiv
able from Ford Motor Company of Canada arising from the
two actions. He admits further that, after the Plaintiff had
instituted an appeal to the Tax Court of Canada in respect of
its 1981 taxation year, the Minister of National Revenue
reassessed the Plaintiff for its 1980 and 1982 taxation years so
as to include in the computation of the Plaintiff's income
amounts received or receivable from Ford Motor Company of
Canada arising from the two actions. He otherwise denies the
said paragraph and states further that the assessments were
based on information provided by the Plaintiff and the allega
tions of fact contained in the Plaintiffs Notice of Appeal to the
Tax Court of Canada in respect of its 1981 taxation year, that
Counsel for the Defendant submitted to the Tax Court of
Canada that the Plaintiffs appeal of the assessment of its 1981
taxation year ought to be allowed, and that such appeal was
allowed by the Tax Court of Canada by judgment dated
February 5, 1987.
The defendant pleads, inter alia, in the assump
tions of fact set out in paragraph 14 of the defence
that the amounts of $51,182.44 and $27,579.16
were received or receivable by the plaintiff as
income in its 1982 taxation year.
Essentially, the crux of the defendant's case on
the motion to strike is simply this: the statement of
claim in the present action constitutes an abuse of
process by reason that the pleading therein regard
ing the basis of assessment for the defendant's
1981 taxation year contradicts the factual basis of
the assessment made and defended by the Minister
in the other action with respect to the same
amounts said to be income to the plaintiff in the
1982 taxation year.
The defendant primarily relies on Rules 419 and
411 of the Federal Court Rules [C.R.C., c. 663],
which state as follows:
Rule 419. (1) The Court may at any stage of an action order
any pleading or anything in any pleading to be struck out, with
or without leave to amend, on the ground that
(a) it discloses no reasonable cause of action or defence, as
the case may be,
(b) it is immaterial or redundant,
(c) it is scandalous, frivolous or vexatious,
(d) it may prejudice, embarrass or delay the fair trial of the
action,
(e) it constitutes a departure from a previous pleading, or
(/) it is otherwise an abuse of the process of the Court,
and may order the action to be stayed or dismissed or judgment
to be entered accordingly.
(2) No evidence shall be admissible on an application under
paragraph (1)(a).
(3) In this Rule, "departure" means that which is prohibited
by Rule 411.
Rule 411. (1) A party shall not in any pleading make any
allegation of fact inconsistent with a previous pleading of his or
raise any new ground or claim as an alternative to, or a
substitute for, a ground or claim in a previous pleading.
(2) Paragraph (1) shall not be taken as prejudicing the right
of a party to amend, or apply for leave to amend, his previous
pleading so as to plead the allegations or claims in the
alternative.
Counsel for the defendant submits that a party
may plead in the alternative but not inconsistently.
It therefore follows that the Minister cannot be
permitted to plead in the one case that certain
amounts are assessable to the taxpayer's 1981
taxation year, while maintaining at the same time
in another case in which he plays the role of
defendant that the identical amounts are assess-
able to the 1982 taxation year. Counsel contends
that such contradictory pleading places the
defendant in the present action in a position of
double jeopardy, thereby making it impossible for
the defendant to demolish the findings of fact upon
which the Minister bases his assessment. Further
more, it is submitted that such double jeopardy
contradicts section 7 of the Canadian Charter of
Rights and Freedoms [being Part I of the Consti
tution Act, 1982, Schedule B, Canada Act 1982,
1982, c. 11 (U.K.)] in that it violates the principles
of fundamental justice by thrusting on the defen
dant the unfair onus of having to disprove inconsis
tent and contradictory assessments. Finally, coun
sel for the defendant submits that the
reassessments for the 1980 and 1982 taxation
years had the legal effect of nullifying any previ
ous assessment for the 1981 taxation year, and he
cites in support thereof Walkem v. M.N.R. (1971),
71 DTC 5288 (F.C.T.D.).
Counsel for the plaintiff asserts, on the other
hand, that Rule 419 does not avail to the defen
dant inasmuch that the statement of claim dis
closes a reasonable cause of action and from the
further fact that the defendant has pleaded over to
the same. As for Rule 411, the rule against depar-
ture therein enunciated only applies to pleadings in
the same action. He maintains that the statement
of claim is only pleading allegations of fact in
support of a cause of action that is separate and
distinct from those pleaded in defence to another
action. He argues that this is particularly neces
sary in a case where, as here, the facts in dispute
are within the sole knowledge of the opposite
party. While conceding that inconsistent and con
tradictory assessments are generally undesirable,
he argues that the circumstances here are such as
to leave the Minister with no other choice, relying
on Quemet Corp. v. R., [1980] 1 F.C. 431; (1979),
79 DTC 5330 (T.D.), at pages 439-441 F.C.;
5334-5335 DTC. Counsel for the plaintiff submits
that the defendant in the case has raised factual
allegations subsequent to the reassessments for
1980 and 1982 which cast much doubt on the
actual date of settlement of the second action, that
is, whether occurring in 1981 or 1982. In addition,
the defendant has declined to provide waivers to
the Minister with respect to its 1981 taxation year.
The result therefore is that in order to ensure that
the income received from the settlement of the
second action is taxed at all, it is absolutely neces
sary that the appeal involving the 1981 assessment
be maintained and permitted to proceed.
I will deal first with the procedural points.
The English rule against departure is similar in
wording to our own Rule 411. Odgers' Principles
of Pleading and Practice in Civil Actions in the
High Court of Justice, 22nd ed., gives this expla
nation of the rule at page 212:
It is at the stage of reply that the rule against what is called "a
departure in pleading" applies for the first time. "A party shall
not in any pleading make any allegation of fact, or raise any
new ground of claim, inconsistent with a previous pleading of
his." (See Ord. 18, r. 10; Herbert v. Vaughan [1972] 1 W.L.R.
1128.)
A departure takes place when in any pleading the party
deserts the ground that he took up in his preceding pleading,
and resorts to another and a different ground; or, to give Sir
Edward Coke's definition, "A departure in pleading is said to
be when the second plea containeth matter not pursuant to his
former, and which fortifieth not the same; and therefore it is
called decessus, because he departeth from his former plea"
(Co. Litt. 304a). This is clearly embarrassing; a reply is not the
proper place in which to raise new claims; to permit this would
tend to spin out the pleadings to an intolerable length. The
plaintiff must amend his statement of claim by adding the new
matter as a further or alternative allegation.
W. B. Williston and R. J. Rolls, The Law of
Civil Procedure, Volume 2, Toronto: Butterworths
(1970), has this to say about the comparable
Ontario rule, at page 666:
A departure in pleadings exists where a party quits or departs
from the case or defence which he has first made, and has
recourse to another. This rule against departure applies only to
pleadings in the same action.
Applying the foregoing principles to the case at
bar, I am bound to conclude that Rule 411 is of no
assistance to the defendant.
What of the point made regarding inconsistency
in pleading? Williston and Rolls, op. cit., says at
page 664:
Either party may include in his pleading alternative allega
tions even though they be inconsistent: a plaintiff may plead
inconsistent sets of material facts and claim relief thereunder in
the alternative, and a defendant may raise in his defence as
many inconsistent defences as he may think proper.
In re Morgan Owen v. Morgan (1887), 35 Ch.D.
492 (C.A.), Lindley L.J., said at page 499:
I think that in this case the learned Judge in the Court below
has taken too strict a view of the Order as to pleadings. He has
evidently proceeded on the principle that inconsistent defences
are embarrassing and ought not to be allowed. That view
appears to me not to be warranted by the Orders when properly
construed.
The learned Judge has relied in particular upon Order XIX.,
rule 4, the important part of which runs thus: "Every pleading
shall contain, and contain only, a statement in a summary form
of the material facts on which the party pleading relies for his
claim or defence, as the case may be, but not the evidence by
which they are to be proved."
Now I cannot myself construe that Order as prohibiting
inconsistent pleadings. One sees perfectly well what is meant by
it, viz., that each party is to state succinctly and concisely and
in a summary form the material facts on which he relies. Now
a person may rely upon one set of facts, if he can succeed in
proving them, and he may rely upon another set of facts, if he
can succeed in proving them; and it appears to me to be far too
strict a construction of this Order to say that he must make up
his mind on which particular line he will put his case, when
perhaps he is very much in the dark.
I therefore disagree with the defendant's blanket
contention that the plaintiff may not plead in this
action allegations of fact inconsistent with those
pleaded in another action in which the plaintiff is
defendant.
Nonetheless, the defendant still maintains that
the present action represents an abuse of process,
arguing that the inconsistency of pleading has the
effect of placing on the taxpayer the unfair onus of
having to reassess its own income. In support of
this contention, the defendant cites the following
statement of Mr. Justice Rand in Johnston v.
Minister of National Revenue, [1948] S.C.R. 486;
3 DTC 1182, at pages 490 S.C.R.; 1183 DTC:
... It must, of course, be assumed that the Crown, as is its
duty, has fully disclosed to the taxpayer the precise findings of
fact and rulings of law which have given rise to the controversy.
Here there are two controversies by way of
appeal in which inconsistent allegations of fact are
pleaded. I fail to see any nexus between this type
of situation where there are different issues to be
tried in separate actions and the proposition stated
by Rand J., in Johnston, supra. Moreover, it is my
view that the Crown cannot reasonably be expect
ed to disclose precise findings of fact with respect
to the actual date of settlement of the second
action when these facts are solely within the
knowledge of the defendant taxpayer.
The present case, as it seems to me is, not one
where the Minister is seeking in the same action to
have the Court confirm two contradictory assess
ments in the same taxation year, unlike Crown
Trust, infra, which held that this was "no legal bar
to the Minister assessing two different amounts for
the same asset in the same taxation year when the
value to be determined arises out of the same
transaction", despite the unfairness of such prac
tice: see Crown Trust Co. v. The Queen, [1977] 2
F.C. 673; 77 DTC 5173 (T.D.), per Addy J., at
pages 677 F.C.; 5175 DTC. Rather, it is more
analogous, in my view, to a situation where the
Minister had little choice in making inconsistent
and seemingly contradictory assessments in sepa
rate actions for different taxation years, but aris
ing out of the same transaction, in order to ensure
that there will at least be some taxation. See in
this regard Quemet Corp. v. R., supra, per
Walsh J., at pages 439-440 F.C.; 5335 DTC.
Viewed in this light, the present action seems to
me to be one that is necessary to preserve the right
to reassess amounts in the 1981 taxation year,
where such amounts might otherwise become stat-
ute-barred by virtue of subsection 152(4) of the
Income Tax Act [R.S.C. 1952, c. 148 (as am. by
S.C. 1970-71-72, c. 63, s. 1)] in the absence of any
waiver on the part of the taxpayer.
Counsel for the defendant relies on Walkem v.
M.N.R. (1971), 71 DTC 5288 (F.C.T.D.) as au
thority for the proposition that a reassessment
supersedes an assessment under appeal. In that
case, the Crown was successful on a motion to
quash the taxpayer's appeal from an original reas
sessment that had been cancelled and superseded
by a subsequent reassessment. Counsel argues that
the present appeal with respect to the 1981 taxa
tion year is invalid because the original reassess
ment has been replaced by the reassessments for
the 1980 and 1982 taxation years. Counsel for the
plaintiff distinguishes the Walkem case as being
applicable only to reassessments in a single taxa
tion year and not as between different taxation
years in respect of different issues. I agree with
this submission. Moreover, it is clear from the
statutory language of section 152 of the Act that
assessments and reassessments are made for a
particular taxation year with a view to determining
the amount of income tax payable for that particu
lar year. Each taxation year must be considered
independently. Hence, it is difficult, if not impos
sible, to conceive how a reassessment for one taxa
tion year can be taken to be superseded by a
reassessment in respect of another taxation year.
Consequently, I find that the Walken case is of no
assistance to the defendant.
I turn now to the defendant's final submission to
the effect that the continuance of the present
action places the taxpayer in a position of double
jeopardy and thus violates the principles of funda
mental justice espoused by section 7 of the
Canadian Charter of Rights and Freedoms. This
is said to arise from the fact that the defendant has
been thrust into the invidious position of having to
disprove inconsistent and contradictory reassess
ments. I disagree.
The central issue in the taxpayer's appeal in the
other action is whether the reassessments for the
taxation years 1980 and 1982 were wrong by
reason that amounts added to income for those
years were not income but rather capital. The
taxpayer pleaded alternatively in the same action
that if the said amounts were taken to constitute
income to the plaintiff then they were received or
receivable in the 1981 taxation year and were not
assessable for the 1980 or 1982 taxation years. In
the present action, the plaintiff is appealing the
Tax Court's decision allowing the defendant's
appeal on the basis that its other appeal with
respect to similar amounts for different years had
been dismissed. In my view, this is entirely con
sistent with the Minister's position that he wishes
only to ensure that the amounts involved do not
escape any taxation.
While both actions by way of appeal possess
many common features arising out of the same
general set of circumstances, they nevertheless in
fact raise the very real and substantially different
issue of whether the amounts of $51,182.44 and
$27,579.16 were taxable as business income to the
plaintiff in either of the 1981 or 1982 taxation
years. As I see it, the resolution of this issue turns
on whether the taxpayer's second action against
Ford was settled in February, 1982 or before the
end of the 1981 calendar year in terms of when the
settlement proceeds were actually received. In my
view, the answer to this is a matter within the
taxpayer's peculiar knowledge whereby he can
hardly be heard to complain of double jeopardy
and violation of the principles of fundamental
justice if he chooses not to reveal the actual date of
settlement. Rather than constituting a threat of
double jeopardy, I consider that the present action
is a necessary safeguard against the possibility of
the taxpayer avoiding any taxation by successfully
proving in the other action that the amounts were
actually received in 1981.
In my opinion, each action has its own raison
d'être and individual points of merit requiring a
full adjudication at trial. I find therefore that the
plaintiff's statement of claim discloses a reason
able cause of action in the circumstances and that
it does not constitute an abuse of the process of the
Court.
In the result, the defendant's motion is dis
missed with costs and an order will go accordingly.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.