The Minister initially reassessed the taxpayer on the assumption that it had purchased seismic data for more than its fair market value, so that a portion of the expenditure did not qualify for deduction as CEE, and confirmed this reassessment on the assumption that the expenditure had not been made for a qualifying purpose so that it did not qualify as CEE.
In finding that the taxpayer had the onus of demolishing the different assumption (added to the Minister's pleadings by amendment) made by the Minister at the confirmation stage, Létourneau J.A. noted that the taxpayer's position (that this onus only applied to assumptions made prior to the filing by the taxpayer of its notice of objection) ignored the likely meaning of "assessment" in the relevant jurisprudence as the product of the process of assessment, reassessment and confirmation.
However, several of the Minister's assumptions contained mixed statements of fact and law, and the trial judge was correct to strike these paragraphs. Létourneau J.A. stated (at para. 26):
The Minister may assume the factual components of a conclusion of mixed fact and law. However, if he wishes to do so, he should extricate the factual components that are being assumed so that the taxpayer is told exactly what factual assumptions it must demolish in order to succeed. It is unsatisfactory that the assumed facts be buried in the conclusion of mixed fact and law.