Date: 19990514
Docket: A-260-96
MONTRÉAL, QUEBEC, THE 14th DAY OF MAY 1999
CORAM: THE HONOURABLE MADAME JUSTICE DESJARDINS
THE HONOURABLE MR. JUSTICE LÉTOURNEAU
THE HONOURABLE MR. JUSTICE NOËL
BETWEEN: MARIE BERNIER
Appellant
AND
HER MAJESTY THE QUEEN
Respondent
J U D G M E N T
The appeal is dismissed with costs.
Alice Desjardins
J.A.
Certified true translation
M. Iveson
Date: 19990514
Docket: A-260-96
Coram: DESJARDINS J.A.
LÉTOURNEAU J.A.
NOËL J.A.
Between:
MARIE BERNIER
Appellant
-and-
HER MAJESTY THE QUEEN
Respondent
Hearing held at Montréal, Quebec, on Wednesday, May 12, 1999.
Judgment delivered at Montréal, Quebec, on Friday, May 14, 1999.
REASONS FOR JUDGMENT BY: NOËL J.A.
Date: 19990514
Docket: A-260-96
Coram: DESJARDINS J.A.
LÉTOURNEAU J.A.
NOËL J.A.
Between:
MARIE BERNIER
Appellant
-and-
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1] The appellant is appealing a decision of the Tax Court of Canada which dismissed her appeal against the assessment issued by the Minister of National Revenue with respect to the 1986 taxation year.1
[2] I am of the view that the appeal must be dismissed. In light of the evidence, it is clear in my opinion that the employer unilaterally terminated the stock option plan it had established for its employees, including the appellant, and that the employees were not involved in this decision.2 The evidence also indicates that a settlement with respect to financial compensation for this cancellation occurred only one year later.
[3] As was the case in Reynolds et al v. R.,3 this matter involves the unilateral cancellation of an option contract which gave rise to the financial compensation received by the appellant and not an assignment of rights set out in a contract. It follows that the source of the payment is not the contract but rather its unilateral repudiation.
[4] As Mr. Justice Stone said so eloquently in R.A. Greiner et al. v. The Queen4 in reference to Reynolds, this situation is completely different from one in which, by mutual consent, an employee transfers his or her rights under an option agreement for predetermined consideration:
| In that case it was clear that at the time the settlement was reached, the taxpayer"s stock option rights as such had already passed out of existence and, accordingly, that no rights remained to be transferred or otherwise disposed of "under" the agreement. In the present case, the rights created by the stock option agreements remained very much alive and were in fact the subject [of] each surrender agreement. |
[5] Contrary to what the appellant argued before the Court, I do not believe that the introduction of subsection 7(1.4) into the Income Tax Act5 in 1985 nuanced the case law which followed Reynolds. In fact, it is clear from a reading of this subsection that it deals with an exchange by mutual agreement as in Greiner.
[6] Accordingly, I find that the amount of $58,000.00 the appellant received does not fall under paragraph 7(1)(b). Also, as at no stage of the proceedings did the appellant challenge the merit of the assessment in the event paragraph 7(1)(b) was found inapplicable, the appeal should be dismissed with costs.
Marc Noël
J.A.
Certified true translation
M. Iveson
Federal Court of Appeal
Date: 19990514
Docket: A-260-96
Between:
MARIE BERNIER
Appellant
-and-
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
FEDERAL COURT OF CANADA
APPEAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.: A-260-96
STYLE OF CAUSE: MARIE BERNIER
Appellant
-and-
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: May 12, 1999
REASONS FOR JUDGMENT OF THE COURT (THE HONOURABLE MADAME JUSTICE DESJARDINS, THE HONOURABLE MR. JUSTICE LÉTOURNEAU AND THE HONOURABLE MR. JUSTICE NOËL)
REASONS FOR JUDGMENT DELIVERED BY: The Honourable Mr. Justice Noël
DATED May 14, 1999
APPEARANCES:
Gary Naschen
Guy Masson for the appellant
Paul Plourde for the respondent
SOLICITORS OF RECORD:
STIKEMAN ELLIOTT
Toronto, Ontario for the appellant
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Ontario for the respondent
__________________1 The decision is now reported at 97 DTC 317.
2 This is clear from the evidence in general and was unequivocally acknowledged by Mr. Bourque during his testimony. Transcript, Appeal Book Schedule I, p. 111.
3 75 DTC 5042; affirmed by the Court of Appeal, 75 DTC 5393 and by the Supreme Court, 77 DTC 5044.