The taxation year of a corporation ("York") owned principally by one of the applicants ("Addison") ended on September 28, 1989 by virtue of a sale of York to a third party ("Senergy"). During its September 28, 1989 taxation year, York incurred a tax liability as a result of an asset sale, retained cash sufficient to pay the estimated amount of that tax liability, and made various payments in the year including directors fees, retiring allowances, management fees, loans and dividends. Although at the time of the sale of York to Senergy, York's net asset value was approximately nil, Senergy paid over $1 million for the York shares because Senergy had arranged for York to purchase seismic data immediately before the closing of the sale with a view to a resulting deduction eliminating tax liabilities of York.
In rejecting the taxpayer's submission that the long delay of the Minister in assessing the applicants under s. 160 was abusive and should be subject to judicial review under s. 18.5 of the Federal Courts Act, McLachlin C.J. noted that the Minister had the discretion under s. 160 to reassess a taxpayer at any time, so that "the length of the delay before a decision on assessing a taxpayer does not suffice as a ground for judicial review, except, perhaps, in as much as it allows her a remedy like mandamus to prod the Minister to act with due diligence once a notice of objection has been filed" (para. 10) and stated (at para. 11) that "judicial reviews should not be used to develop a new form of incidental litigation designed to circumvent the system of tax appeals established by Parliament and the jurisdiction of the Tax Court."