Section 88.1

The appellant Trust was a subsidiary of an income fund. As part of a plan of arrangement to in effect replace the income fund by a public corporation ("Seafoods Inc."), the Trust was wound-up into the income fund, and the income fund was wound up into Seafoods Inc., in each case, in reliance on the rollover provisions of s. 88(1), as modified by s. 88.1(2).

The Trust had commenced a tax appeal four months prior to the plan of arrangement. Because the Trust no longer existed, its counsel applied under Rule 29 for an order that Seafoods Inc. be substituted as the new appellant. Rule 29(1) can apply "where at any stage of a proceeding the interest or liability of a person... is transferred or transmitted to another person by assignment, bankruptcy, death, or other means." The trial judge agreed with the Minister that the motion should be dismissed - the appeal could not be continued because the appellant had ceased to exist.

Sharlow JA stated (at para. 13):

In my view, there has been in this case a transmission of the liability of the Taxpayer Trust to another person by "other means" – which I take to include the termination of the existence of the taxpayer. The disposition of property of the Taxpayer Trust resulted automatically in the termination of the Taxpayer Trust and the transmission of its federal income tax liability to one or more other persons. That is a sufficient basis for concluding that the circumstances are within the language and intended purpose Rule 29(1).

The matter was referred back to the Tax Court for confirmation of (likely routine) factual matters respecting the appropriateness of applying Rule 29.