The Minister disallowed the deduction by the taxpayer of guarantee fees paid by it to its US parent. The taxpayer appealed, and moved to have parts of the Minister's response struck on the basis that the Court of Appeal had already decided that the same guarantee fees were deductible when paid by one of the taxpayer's three predecessors before amalgamation (see General Electric Canada Company Inc.).
Campbell J. dismissed the motion. The res judicata doctrine did not apply. This was clearly not a case of action estoppel, as the appeal concerned different taxation years than the prior decision. The taxpayer did not discharge its burden to make out issue estoppel either. Issue estoppel requires either that the parties in the present matter be the same parties, or privies of the same parties, in the prior decision. There was insufficient evidence to conclude that the three predecessors were "alter-egos" of one-another (para. 27). Moreover, there was insufficient evidence that the guarantee agreement in the present case was similar enough to the prior guarantee agreement to establish that the same question was being tried.