disposition

Following the amalgamation of the taxpayer's employer with other Canadian subsidiaries of the U.S. parent, the taxpayer executed a settlement agreement with the Canadian employer in which he acknowledged that a payment of $83,900 was in full settlement of all claims arising from his employer's unilateral termination of the employee stock option agreement between the taxpayer and the employer. In finding that this sum was a tax-free receipt, and in reversing a finding of the Tax Court Judge that it represented the value of consideration from a disposition pursuant to s. 7(1)(b), Malone J.A.

The phrase "the disposition of any property" means the sale of a particular item or items of property and "the expression 'something else' must be given the widest meaning reasonably assignable, which would include different items and classes of property as well as the rarer class of non-property." The court accordingly rejected the taxpayers' argument that s. 68 could not apply to re-allocate an aggregate consideration of $5,850,000 among various classes of property including land, building and equipment which the taxpayers sold.

A payment of $575,000 to the taxpayer by a debtor in default in consideration for an extension of the due date of the loan and the taxpayer's agreement to waive its current rights to take action on the loan, did not represent proceeds of disposition of property. Under the Quebec Civil Code, the obligation was not extinguished, but rather amended as to its term. Garon TCJ. noted (at p. 162) that the definition of "disposition" in what now is s.

The taxpayer made a series of demands for parties to a non-compete agreement (that it had received in connection with its acquisition of a business) to comply with the agreement and, following negotiations and before the commencement by it of an action, it was agreed that it would be paid a lump sum in consideration for the cancellation of the non-compete agreement.

Noël JA noted (at para. 26) that the Tax Court had:

The Court found that in collecting payment upon a cheque from a third party, no disposition of the property of the customer takes place in favour of the bank if the account is already in credit. Accordingly, when the bank credits the customer's account with the amount of the cheque, there is no disposition of the customer's property for purposes of s. 127 of the Insolvency Act (U.K.) which provides):

"In winding-up by the court, any disposition of the company's property ... made after the commencement of the winding-up is, unless the court otherwise orders, void."

The taxpayer was found to have disposed of his stock option rights to a corporation for purposes of s. 7(1)(b) when he agreed to surrender them for a stipulated sum, notwithstanding that the stock option right did not survive such surrender by him.

In connection with the sale of the taxpayer's business to an arm's length corporation, it was agreed that refillable cylinders would be rented by the taxpayer to the purchaser at, what was found on the evidence to be, a market rate of rent, and that over the subsequent five years, 1/5 of the cylinders would be purchased each year by the purchaser for a stipulated amount.

It was held that since the taxpayer, by executing an agreement respecting the ultimate sale by it of apartment buildings, had "completely divested itself of all of the duties, responsibilities and charges of ownership and also all of the profits, benefits and incidents of ownership, except the legal title," the taxpayer had thereby disposed of the buildings.

The taxpayer (who had an October 31 fiscal year end) followed a practice of purchasing a new fleet of cars from Ford to replace the fleet which it had acquired the previous year. The process of exchanging the cars was initiated and completed within the month of October but the intent of the parties was that title to the old fleet would remain with the taxpayer until November 15, at which point payment by Ford for the old fleet would be effected by way of set-off against the amount payable by the taxpayer for the new fleet.