This case deals with whether a disposition of a distressed debt gave rise to a non-capital loss. In his customarily meticulous analysis, Justice Sommerfeldt examines whether the disposition of the debt arose from an adventure in the nature of trade (a business), the amount of the loss, if there was one, and whether there was, in fact, a disposition of the debt that allowed realization of a loss for tax purposes.
In the course of these long reasons (53 pages), Justice Sommerfeldt reviews the law on admissions, and the Court’s freedom to disregard them if the evidence is contrary.
“[80] Given that this Court has a statutory mandate to confirm or vary an assessment, based on the facts, whether proven or admitted, this Court is not required to follow the principle applied in civil proceedings to the effect that an admission is binding on the party which gave it. Thus, while this Court will not generally look behind a formal admission by a party, this Court is not bound by an admission that is shown, through properly tendered evidence, to be contrary to the facts.121 In other words, a judge of this Court should not turn a blind eye on evidence placed before him or her.122 Accordingly, where an admission is contradicted by the evidence, the admission should be regarded as having been made in error.123”
The footnotes, 121 through 123, read:
“121 Paletta, supra note 63, ¶102 & 105-106.
122 Hammill v. The Queen, 2005 FCA 252, ¶29-32; and Fiducie Alex Trust v. The Queen, 2014 FCA 123, ¶9.
123 Wardean Drilling Company Limited v. MNR, [1978] CTC 270, 78 DTC 6202 (FCA), ¶11 & footnote 1. See also McKervey v. MNR, [1992] 2 CTC 2015, 92 DTC 1570 (TCC), ¶21.”