Classic Transfer Pricing Case: HSBC Bank Canada v. The Queen 2007By Robert Robillard - 10 June 2014
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In HSBC Bank Canada v. The Queen, 2007 TCC 307 (CanLII), “the Crown requested an order striking out some facts from the notice of appeal of the taxpayer since they “refer to the fact that in years prior to the years under appeal the Minister of National Revenue did not adjust the amount paid by the appellant to its parent Hongkong and Shanghai Banking Corporation Limited (“HBAP”) to guarantee deposits of the appellant.” The request was denied.
“It is trite law that the Minister is neither bound nor estopped by what may or may not have been done in other years. This principle was recognized recently in Ludco Enterprises Ltd. v. The Queen, reflex,  3 C.T.C. 74, but it is a principle of long standing.”[…]
“ A motion to strike out a pleading should be granted only where it is clear and obvious that pleading is scandalous, vexatious or frivolous or an abuse of the Court’s process. (Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC),  2 S.C.R. 959 at 980; Erasmus v. The Queen, 91 DTC 5415 at 5416; Gould v. The Queen,  DTC 1311; Niagara Helicopters Limited v. The Queen,  DTC 513 at 514‑515.) An example of the type of frivolous and vexatious pleading that section 8 of the Rules is aimed at is Davitt v. The Queen,  DTC 702. It is by no means plain and obvious to me that the assertion of an unchallenged practice in previous years is so irrelevant to the question of reasonableness in subsection 247(3) that it should be struck out as frivolous or vexatious. Nor do I see that the allegation prejudices the respondent or that it would unduly lengthen the trial.  The motion to strike paragraph 19 is dismissed. The matter of the costs of this motion should be left to the trial judge. The Crown is entitled to a further 30 days after the date of this order to file a reply to the notice of appeal.”
Robert Robillard, CPA, CGA, MBA, M.Sc. Econ.
Transfer Pricing Chief Economist, RBRT Inc.
514-742-8086; robert.robillard “at” rbrt.ca
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