Appeal Court Orders Retrial On Heron Bay

In a judgment in Heron Bay Investments Ltd. v. The Queen (2010 FCA 203), delivered on July 26, 2010, the Canadian Federal Court of Appeal found that there was a "want of procedural fairness" in the proceedings of the Tax Court which resulted in its decision of September 8, 2009 (2009 TCC 337) and, as requested by the appellant, Heron Bay, in its pleadings, returned the matter to the Tax Court "for retrial by a different judge".

The case concerned a deduction for doubtful/bad debts claimed for tax purposes by Heron Bay in the amount of $3,770 million in its return for its taxation year ended August 31, 1995. Heron Bay was a member of the Conservancy Group of related companies controlled by four brothers. In November of 1994, it made a loan in the amount of the claim to Viewmark Homes Ltd., another member of the Conservancy Group, to assist it in financing the acquisition of a significant interest (95%) in real property acquired for $24.5 million in a series of