The Tax Court ordered that “assumptions of fact” pleaded by the Crown in its Reply should be struck out and moved to the reasons part of the Reply on the sole ground that they were in fact conclusions of mixed fact and law. The sole such assumptions that were at issue on this appeal were that the fair market value of the shares and partnership interest received by two beneficiaries of the appellant trust were specified dollar amounts, that the only beneficiaries of the trust were the two other appellants and their issue and that a ULC was not a beneficiary, and assumptions using the phrase “received…for the benefit of”
Monaghan JA stated (at paras. 18-20):
There is no principle of law that a statement of mixed fact and law cannot stand as an assumption. …
[T]he Tax Court concluded that leaving them as assumptions placed an onus on the respondents that they would not otherwise bear. But, that is not so.
An assumption that is a statement of mixed fact and law does not put any additional onus on the taxpayer … [since]
“when the validity of the assessment is attacked in point of law…there is really no onus on either party… .”
After referring to the Anchor Pointe and CIBC (2013 FCA 122) decisions on which the respondents relied, Monaghan JA stated (at paras. 36, 40):
As expressly recognized in CIBC, a statement of mixed fact and law may stand as an assumption if there is no prejudice, no debate about the legal principles, or the facts are simple … .
[R]ather than ask itself whether the particular assumption as written was prejudicial or would delay the fair hearing of the appeal as required by Rule 53(1)(a), the Tax Court only explained why it was a statement of mixed fact and law. Further, the Tax Court did not consider whether leaving the assumptions as is would better serve the trial process. … [T]he Tax Court therefore erred in law … .
Regarding the particular assumptions at issue, Monaghan JA indicated that:
- “A statement that an identified property has a particular fair market value at a particular point in time is an assumption (or finding) of fact, notwithstanding that fair market value has a legal definition.” (para. 47)
- The respondents had not shown any prejudice or merit to their complaint about the assumptions as to the beneficiaries and amounts received for their benefit,
Thus, the appellant was allowed to retain the pleadings in issue as assumptions.