Prince Rupert Hotel ( 1957 ) Ltd. v. Canada
A-350-93
Strayer, Desjardins, JJ.A. and Hugessen J.A., dissenting
31/3/95
23 pp.
Appeal from Trial Division decision dismissing appellant's appeal of Minister's reassessment -- Appellant general partner in limited partnerships formed for purpose of developing and exploiting hotel -- Hotel financing carried out by sale of rooms to limited partners who then made rooms available to hotel -- Drafting error in agreement with respect to management fee calculation resulting in appellant receiving lower share of revenues than intended -- Appellant receiving sums of money in settlement of action against solicitors -- Issue whether sums of money constituting capital receipt or compensation for loss of revenue -- Appellant contending sums representing capital receipt as paid as compensation for permanent impairment or non-receipt of capital property -- Minister's argument, accepted by Trial Judge, settlement moneys representing compensation for loss of revenue i.e. difference between management fee as received by appellant under improperly drawn agreement and that which it should have received under deal as originally conceived -- At trial Crown admitting general partnership interest owned by appellant constituting capital property -- Strayer J.A., for majority, holding duty of Trial Judge to determine what compensation effectively replacing -- Strayer J.A. concluding ample evidence supporting Trial Judge's view compensation paid in respect of lost management fees and thus constituting revenue -- In concurring with majority finding, Desjardins J.A. of opinion Crown's admission of no relevance -- Hugessen J.A. (dissenting) holding admission determinative: loss or destruction of capital property constituting capital loss and amount paid in compensation therefor accordingly constituting capital receipt -- Hugessen J.A. further noting that as no part of income from hotel operation lost as a result of improperly drawn agreement, sum compensation for loss or non-receipt of appellant's share which was itself capital property -- Appeal dismissed.