Federal Appeal


Income tax

Administration and enforcement

Settlement agreement binding as representative signing agreement had capacity on behalf of taxpayers

Settlements. Taxpayers were involved in film production and were part of group that included four associated master limited partnerships (MLPs) and several production services limited partnerships (PLPs). Settlement agreement was entered into between Canada Revenue Agency (CRA) and representative for MLPs and related PLPs, but focused on SH MLP. Minister of National Revenue issued reassessments and determinations to taxpayers, who were remaining MLPs and PLPs. Taxpayers appealed on basis that Minister erred in interpreting settlement agreement. Tax Court judge dismissed appeal. Judge found that there was valid binding agreement between taxpayers and Minister. Judge concluded that reassessments and determinations proceeded in accordance with settlement agreement as it applied to taxpayers. Judge concluded that phrase “on the basis consistent with” meant that same ratio of disallowed expenses that applied to SH MLP would also apply to taxpayers. Judge found that ratio to be applied for producer referral and financing fees was to be determined by dividing amount disallowed for SH MLP by total amount of incurred for those specific fees. Taxpayers appealed. Appeal dismissed. Judge did not err in finding that settlement agreement was applicable to taxpayers, as representative who signed settlement agreement had capacity to conclude agreement on behalf of taxpayers. There were no grounds warranting intervention regarding judge’s interpretation of phrase “on the basis consistent with”. Judge did not err in determining ratio or in finding there was meeting of minds. There was no reason to interfere with judge’s conclusion that terms of settlement agreement were sufficiently certain. Judge did not err in finding that agreement was enforceable because it reflected principled application of Income Tax Act to known facts.

University Hill Holdings Inc. (Formerly 589918 B.C. Ltd.) v. Canada (2017), 2017 CarswellNat 6704, 2017 FCA 232, J.D. Denis Pelletier J.A., Richard Boivin J.A., and Mary J.L. Gleason J.A. (F.C.A.).

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