RICHARD C. THOM, Appellant, v. HER MAJESTY THE QUEEN,, 2012 TCC 428

Docket: 2011-4043(IT)G BETWEEN: RICHARD C. THOM, Appellant, and HER MAJESTY THE QUEEN, Respondent . ____________________________________________________________________ Motion presented on written submissions By: The Honourable Justice Campbell J. Miller Signatories : Counsel for the Appellant: James W. Dunphy Counsel for the Respondent: Cecil S.

Woon ORDER WHEREAS the Respondent brings a motion for an Order granting leave to file an Amended Reply; AND WHEREAS the Court has reviewed the written submissions by counsel for the Respondent and counsel for the Appellant; IT IS HEREBY ORDERED that: 1. the motion is granted and the Respondent shall file an Amended Reply on or before the 14 th day of December, 2012; 2. if the Appellant intends to file an Amended Answer he shall do so on or before the 15 th day of January, 2013; and 3. costs shall be in the cause. Signed at Ottawa, Canada, this 4th day of December 2012. “Campbell J. Miller” C. Miller J.

Citation: 2012 TCC 428 Date: 20121204 Docket: 2011-4043(IT)G BETWEEN: RICHARD C. THOM, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR ORDER C. Miller J. [ 1 ] This case is about shareholder benefits. The Respondent claims that the Appellant, as a shareholder of Disney Brook Ranch Ltd. (the "Company") benefited from improvements made by the Company on property owned by the Appellant.

The Company filed a mortgage against the property in an amount equivalent to the costs of the improvements. [ 2 ] The Respondent brings a Motion to amend its Reply by adding under the heading "OTHER MATERIAL FACTS", the following: 18A. The Company intended to confer a benefit on the Appellant with respect to the Improvements to the Property. The Respondent then adds a subsection 15(2) of the Income Tax Act (the " Act ") argument by adding reference to subsection 15(2) of the Act as well as the following: 23A.

He further submits that, in the alternative, if the Court finds that the Appellant received a loan from or has become indebted to the Company with respect to the Improvements to the Property, the amount of the loan or indebtedness must be included in the Appellant’s income pursuant to subsection 15(2) of the Act. [ 3 ] The Appellant’s primary opposition to this amendment is that it is the result of information disclosed to the Respondent through settlement discussions, and it would not be consonant with the interests of justice to allow an amendment in such circumstances.

Had the amendments sought by the Crown raised matters not touched on in the Notice of Appeal, I might agree with the Appellant. However, the Notice of Appeal clearly raises the matter of the mortgage filed by the Company. The Respondent relies on subsection 152(9) of the Act to advance an alternative argument; in effect, if the Court views the mortgage as a loan, subsection 15(2) of the Act would apply. I do not see how this causes any injustice or inconvenience to the Appellant. It simply puts all the arguments on the table. Examinations for discovery have not yet taken place.

It is preferable that this matter be clarified at this early stage rather than at trial.

[ 4 ] The motion is granted with costs in the cause. Signed at Ottawa, Canada, this 4th day of December 2012. "Campbell J. Miller" C. Miller J. CITATION: 2012 TCC 428 COURT FILE NO.: 2011-4043(IT)G STYLE OF CAUSE: RICHARD C. THOM AND HER MAJESTY THE QUEEN PLACE OF HEARING: n/a DATE OF HEARING: n/a REASONS FOR ORDER BY: The Honourable Justice Campbell J. Miller DATE OF ORDER: December 4, 2012 SIGNATORIES: Counsel for the Appellant: James W. Dunphy Counsel for the Respondent: Cecil S. Woon COUNSEL OF RECORD: For the Appellant:

Name: William F. Pentney Firm: Dunphy & Bokenfohr Law Partnership For the Respondent: Myles J. Kirvan Deputy Attorney General of Canada Ottawa, Canada