Another taxpayer ("AFT") made a payment to the appellant ("ACI") of $1.95 million, which it characterized as a deductible management fee and ACI characterized as a capital receipt. A reassessment of ACI treated the fee as income to it. Following ACI's appeal of the reassessment, the Minister brought an application under s. 174 to determine the characterization of the $1.95 million payment.
ACI was concerned that distinct s. 174 proceedings would cause it to lose a tactical advantage relating to the particular assumptions previously made (and pleaded) by the Minister. After noting (at para. 25) that "the fact that steps taken by the Minister…deprive the appellant of a tactical advantage is not, in and of itself, an abuse of process," Pelletier JA indicated that while s. 174(3)(a) appeared to contemplate such a distinct proceeding, this case instead fell under s. 174(3)(b), where such advantage would not be lost.