October 07, 2011

Deanne Ho-A-Shoo (Plaintiff) v. The Attorney General of Canada and the Minister of National Revenue (Defendants)

Superior Court of Justice of Ontario
2001 DTC 5589
June 13, 2001

(Court File No. 99-CV-172125.)

Transferor-transferee joint liability for tax – Minister reassessing plaintiffs and several others in respect of certain gifts received from a transferor – Minister also requiring plaintiffs and the others to pay unassessed interest above the ¡°liability limit¡± under subparagraph 160(1)(e)(i) of the Act – Plaintiff instituting class proceedings on behalf of herself and the others similarly assessed, and later entering into a consent judgment ? Whether entitled to an order dismissing the class action, and approving the proposed settlement – Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, as amended, s. 160(1)(e).

The plaintiff was reassessed under subsection 160(1) of the Act in respect of gifts received from a transferor. She was later required to pay amounts for unassessed interest above the ¡°liability limit¡± under subparagraph 160(1)(e)(i) of the Act, which was the amount by which the fair market value of the property transferred exceeded the fair market value of any consideration given. The plaintiff entered into a consent judgment, as did the other putative class members of a class action which had been commenced in the Ontario Superior Court of Justice by the plaintiff and certain other persons who had been similarly reassessed. The plaintiff subsequently moved, on consent, for an Order to dismiss the class action, and for an order to approve the proposed settlement. Such settlement would provide the 20 members of the class (including the representative plaintiff) with 100 per cent recovery of the monies paid to the Minister in respect of the allegedly unauthorized interest, plus interest at the prejudgment interest rate under the Ontario Courts of Justice Act. Under the terms of the settlement, moreover, the Minister retained the right to seek to recoup from the transferor in respect of each of the class members any amounts that had been repaid to them pursuant to the settlement, and to investigate whether there were any other transfers in respect of which section 160 assessments could be issued.

Held: The plaintiff’s motion was granted. An extensive examination to determine possible claims had been undertaken and completed by the Minister for the period from April 1, 1996 to March 31, 1999. Given all the circumstances, therefore, the settlement was fair and reasonable, and had, accordingly, to be approved. In addition, the plaintiff’s action was dismissed without prejudice to the rights of any other person, and his counsel fees and disbursements in the amount of $129,320.21 were ordered to be paid.