http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/143161/index.do
1455257 Ontario Inc. v. Canada (March 30, 2016 – 2016 FCA 100, Dawson (author), Near, Boivin JJ. A.).
Précis: The appellant corporation had been dissolved under the provisions of the Ontario Business Corporations Act (“OBCA”). It filed an appeal in the Tax Court which concluded that it could not pursue the appeal until its articles had been revived:
[1] A single issue is raised on this appeal: did the Tax Court of Canada err by concluding that the appellant, as a dissolved corporation, lacked the capacity to initiate an appeal to the Tax Court from an assessment issued against it under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (Act)? Flowing from this conclusion, the Tax Court adjourned the appellant’s pending appeal for 60 days in order to allow the appellant the opportunity to take steps to revive its corporate status. The appellant did not avail itself of this opportunity. Instead, it appealed the order of the Tax Court to this Court. This is that appeal.
The taxpayer appealed the Tax Court decision to the Federal Court of Appeal. The Court of Appeal reached the same decision as the Tax Court, although in a somewhat different manner. Thus the appeal was dismissed with costs although the taxpayer was given another 60 days to seek a revival of its corporate status.
Decision: The Court of Appeal dismissed the appeal (although following a somewhat different reasoning than that of the Tax Court):
[32] Subsection 242(1) of the Ontario BCA does not authorize a dissolved corporation to initiate a civil proceeding. It follows that the Tax Court did not err by adjourning the appeal and requiring the appellant to revive its corporate status so that it could continue the appeal.
[33] As explained above, I have reached this conclusion on the basis of what was in issue in Johnson and the significant change in procedure subsequent to the decision of the Supreme Court. This said, this interpretation avoids the mischief that concerned the Tax Court. Of concern to the Tax Court was who is entitled to instruct counsel for the dissolved corporation and who is responsible for paying counsel and using the assets of the corporation, before forfeiture, to pay the legal costs and other required expenditures.
[34] Finally, during oral argument counsel for the appellant submitted that not all dissolved Ontario corporations can be revived. Thus, the appellant argued that unless dissolved corporations are permitted to commence and prosecute appeals in the Tax Court, some dissolved corporations will be unable to appeal against assessments and reassessments issued against them under the Act.
[35] As this was a novel and important argument, the Court sought and received supplemental submissions on this point.
[36] On the basis of those submissions, I accept that the revival provision found in subsection 241(5) of the Ontario BCA applies only to corporations which have been dissolved by the Director appointed under that Act after being noted in default of certain specified obligations. Therefore, corporations that are voluntarily dissolved, corporations that are dissolved for cause or corporations dissolved more than 20 years prior to the intended revival cannot be revived pursuant to the administrative provision found in the Ontario BCA.
[37] However, I am satisfied that in the perhaps unlikely event that a party wishes to take proceedings against such a dissolved corporation, a mechanism exists to effect revival. When articles of revival cannot be filed under subsection 241(5) of the Ontario BCA, the dissolved corporation may be revived by a Private Act of the Ontario Legislature. This right is real and not illusory because the Ontario Legislative hears Private Acts to revive corporations on a regular basis.
[38] Thus, I reject the submission that corporations that cannot be revived administratively cannot be revived.
In the result the appeal was dismissed with costs but the adjournment ordered by the Tax Court was extended by another 60 days in order to allow the appellant to revive its corporate status.