Brill v. Canada
T-3252-90
Pinard J.
26/1/95
14 pp.
Appeal from reassessments for 1986, 1987 -- Plaintiff purchasing 1.769% and 1.613% interest respectively in two condominium properties, chattel pertaining thereto for purpose of gaining rental income -- Financed acquisition costs through mortgages -- Default, foreclosure, Court ordered sale, deficiency judgment -- Plaintiff's share of sale price of properties $31,824 and $33,564 respectively -- Plaintiff's share of amounts adjudged owing $76,965 and $40,117.02 respectively -- Reassessment applying Income Tax Act, s. 79(c) providing where mortgagee acquiring beneficial ownership in consequence of failure to pay amount owing, proceeds of disposition including principal amount of taxpayers's claim plus all amounts each of which is principal amount of any debt owing, to extent extinguished by virtue of acquisition -- Whether proceeds of disposition $31,824 and $33,564 respectively or $76,965 and $40,117.02 respectively -- Ss. 13(21)(d), 54(h) defining proceeds of disposition of depreciable property, capital property respectively -- Plaintiff relying on provision (i): proceeds of disposition including sale price of property sold, or (vii): proceeds of disposition including amount by which taxpayer's liability to mortgagee reduced as result of sale of mortgaged property under mortgage, plus any amount received by taxpayer out of proceeds of sale -- Defendant submitting proceeds of disposition properly calculated pursuant to s. 79(c) as directed by provision (viii): proceeds of disposition including amount included in computing taxpayer's proceeds of disposition under s. 79(c) -- Plaintiff submitting under s. 79(c) proceeds of disposition would be equal to amount by which liability of plaintiff reduced or extinguished by virtue of acquisition of mortgage -- Appeal allowed in part -- S. 79(c) not requiring "principal amount of taxpayer's claim" be "extinguished by virtue of the acquisition [of mortgaged property by taxpayer]" -- Requirement of extinguishment applies to principal amounts referred to in line of s. 79(c) following word "plus" -- "It" in phrase "to the extent that it has been extinguished by virtue of the acquisition" referring only to "principal amount" in immediately preceding clause in third line of paragraph commencing with word "plus" -- Otherwise legislator would have used "they" -- As no apparent contradiction between English, French versions of s. 79(c), and given clarity of French version, Parliament clearly expressed intention in words used in statute and therefore no need for further construction -- S. 79(c) contemplating situation herein where, in both cases, beneficial ownership of plaintiff's property acquired by mortgagee in consequence of plaintiff's failure to pay amount owing by him to mortgagee -- Plaintiff's proceeds of disposition of property including principal amount of mortgagee's claim i.e. $76,965, $40,117.02 -- MNR justified in reassessment for 1987 on basis plaintiff's proceeds of disposition of property included full amount of plaintiff's principal indebtedness to mortgagees when acquired properties pursuant to Court orders -- Situation herein involving "sale price of property that has been sold" (provision (i)), and even possibly "amount by which the liability of a taxpayer to a mortgagee is reduced as a result of the sale of mortgaged property under a provision of the mortgage", (provision (i)) also involving "sale price of property that has been sold" (provision (i)) -- But nothing in s. 13(21)(d) or 54(h) expressly giving precedence to any of the subparagraphs or paragraphs over others -- Under such circumstances specific must prevail over general -- Provision (viii) more specific than (i) or (vii) -- Plaintiff's proceeds of disposition $76,965 and $40,117.02 respectively -- Income Tax Act, S.C. 1970-71-72, c. 63, ss. 13(21)(d) (as am. by S.C. 1977-78, c. 1, s. 6), 54(h) (as am. by s. S.C. 1977-78, c. 1, s. 22; 1980-81-82-83, c. 48, s. 23; c. 140, s. 23; 1986, c. 6, s. 27), 79(c) (as am. by S.C. 1980-81-82-83, c. 140, s. 42).