Date: 20020509
Docket: A-70-01
Montréal, Quebec, May 9, 2002
LÉTOURNEAUJ.A.
PELLETIER J.A.
BETWEEN:
FORESBEC INC. AND
SOCIÉTÉ DE GESTION J.N.G. INC.
Appellants
and
HER MAJESTY THE QUEEN
Respondent
JUDGMENT
The appeal is dismissed with costs.
"Alice Desjardins"
J.A.
Certified true translation
Sophie Debbané, LLB
Date: 20020509
Docket: A-70-01
Neutral Citation: 2002 FCA 186
CORAM: DESJARDINS J.A.
LÉTOURNEAUJ.A.
PELLETIER J.A.
BETWEEN:
FORESBEC INC. AND
SOCIÉTÉ DE GESTION J.N.G. INC.
Appellants
and
HER MAJESTY THE QUEEN
Respondent
Hearings held at Montréal, Quebec, on May 7 and 9, 2002.
Judgment delivered from the bench at Montréal, Quebec, on May 9, 2002.
REASONS FOR JUDGMENT OF THE COURT: LÉTOURNEAU J.A.
Date: 20020509
Docket: A-70-01
Neutral Citation: 2002 FCA 186
CORAM: DESJARDINS J.A.
LÉTOURNEAUJ.A.
PELLETIERJ.A.
BETWEEN:
FORESBEC INC. AND
SOCIÉTÉ DE GESTION J.N.G. INC.
Appellants
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the bench at Montréal, Quebec
on May 9, 2002.)
LÉTOURNEAUJ.A.
[1] Counsel for the appellants is essentially asking the Court in this case to reassess the documentary and testimonial evidence adduced before the Tax Court of Canada.
[2] With respect to the testimonial evidence, he would like the Court to reassess the witnesses' credibility in order to overturn the findings of fact made by the Trial Judge. That is a request that the Court cannot grant having regard to the very substantial duty of deference that the Court must discharge in this case: Singh v. The Queen, 2001 DTC 5298 (F.C.A.), Schwartz v. Canada, [1996] 1 S.C.R. 254.
[3] Moreover, we agree with the Tax Court of Canada that the conflict between Mr. Boissé (president of Société de Gestion J.N.G. Inc., the appellant, which had just redeemed the shares held by Multi-Ind Inc. in Foresbec Inc.) and Mr. L'Espérance (a substantial shareholder of Multi-Ind Inc. and chairman of the board of directors of Foresbec Inc. before the share buyback) was so intense on the issue of decisions and directions taken by Mr. L'Espérance in relation to the future and development of Foresbec Inc. that it was improbable that Mr. Boissé would offer Mr. L'Espérance a two-year consulting contract for the sum of $150,000 to give him advice on managing the company. There was sufficient evidence for the judge of the Tax Court of Canada to find that the alleged consulting contract, which was incidentally not signed by the party to whom it was offered and who had never rendered any services, was a sham and that the payment of $150,000 was in fact payment for the buyback of shares.
[4] As justification for this so-called contract, the appellants submitted that it was, if not essential, at least useful, for the purposes of binding Mr. L'Espérance, the outgoing chairman, and preventing him from competing with Foresbec Inc. The trial judge acted properly in rejecting that justification since the buyback agreement itself included a non-competition clause that was binding on Mr. L'Espérance.
[5] With regard to the documentary evidence, the findings of fact that were drawn by the Trial Judge were not unreasonable and counsel for the appellants was unable to point to any error in law that would warrant this Court's intervention.
[6] Accordingly, the appeal will be dismissed with costs.
"Gilles Létourneau"
J.A.
Certified true translation
Sophie Debbané, LLB
FEDERAL COURT OF APPEAL
Date: 20020509
Docket: A-70-01
Between:
FORESBEC INC. AND
SOCIÉTÉ DE GESTION J.N.G. INC.
Appellants
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
OF THE COURT
FEDERAL COURT OF APPEAL
SOLICITORS OF RECORD
COURT FILE NO.: A-70-01
STYLE OF CAUSE: FORESBEC INC. AND
SOCIÉTÉ DE GESTION J.N.G. INC.
Appellants
and
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: May 7 and 9, 2002
REASONS FOR JUDGMENT OF THE COURT BY:
THE HONOURABLE LÉTOURNEAU J.A.
CONCURRED IN BY: THE HONOURABLE DESJARDINS J.A.
THE HONOURABLE PELLETIER J.A.
DATE OF REASONS: May 9, 2002
APPEARANCES:
Christopher R. Mostovac FOR THE APPELLANTS
Marie-Andrée Legault FOR THE RESPONDENT
SOLICITORS OF RECORD:
Ravinsky Ryan
Montréal, Quebec FOR THE APPELLANTS
Morris Rosenberg
Deputy Attorney General of Canada
Montréal, Quebec FOR THE RESPONDENT