Taxpayer was non-profit organization established for purpose of operating golf course for its members. In 2006, it disposed of parcel of land and realized gain on that disposition. Taxpayer reported disposition on its non-profit organization information return, which it filed for 2006. Taxpayer did not report gain in its T3 trust income tax and information return filed for taxation year ending December 31, 2006 on basis that gain was exempt under s. 149(5)(e)(ii) of Income Tax Act. MNR reassessed taxpayer to include gain on disposition of parcel on basis that it was not used exclusively for and directly in course of providing dining, recreational or sporting facilities provided by it for its members. Reassessment was made after normal reassessment period. Taxpayer applied for order to strike out or expunge certain paragraphs of amended reply to notice of appeal. Application granted in part. Amended reply struck in its entirety as it did not disclose reasonable cause of action. Key assumption in paragraph 12(h) of reply was conclusion of mixed fact and law which did nothing more than paraphrase test found in s. 149(5)(e)(ii) of Act. Factual components of paragraph 12(h) could not be presumed true for purposes of application and second sentence of paragraph 13(b) should be struck. It was clear that remainder of amended reply did not set out sufficient facts to support conclusion that taxpayer made misrepresentation due to carelessness, negligence or wilful default in its T3 return. Amended reply was to be struck as disclosing no reasonable cause of action. Paragraph 12(h) was struck as well. Amended reply could be revised without difficulty to extricate factual elements relating to taxpayer’s use of parcel and to state them as factual assumptions made by Minister. To extent that there were facts otherwise relied on by MNR concerning taxpayer’s use of property, those should be pleaded elsewhere in reply. MNR had 60 days from date of order to file further amended reply to notice of appeal. Taxpayer had not shown that it would be impossible for MNR to amend to support reassessment.
Mont-Bruno C.C. Inc. v. Her Majesty The Queen (2017), 2017 CarswellNat 3165, B. Paris J. (T.C.C. [General Procedure]).