Executive Summary: Key Legal and Evidentiary Issues

• Brass Collar Capital Corp. pursued a moot appeal after the CRA allowed its objection in full, leaving no live controversy to litigate regarding its universal life insurance policy's exempt status.

• The Respondent (the Crown) moved to strike portions of the amended notice of appeal under Rule 53(1), arguing the insurance policy issue was moot and no exceptional remedy applied.

• Linked entities — Mosten, Ituna, and Atwater Investment LPs — held related appeals disputing the exempt status of their own policies, but the Court refused to let Brass's appeal serve as a vehicle for those separate disputes.

• Application of the Borowski mootness framework revealed no sufficient adversarial context, no basis to consume judicial resources, and no overriding public interest to justify continuing the Brass appeal.

• The Tax Court confirmed it lacks jurisdiction to grant declaratory relief, which was in substance what Brass sought regarding the policy's non-exempt classification.

• Numerous paragraphs of the Selke Affidavit were struck for containing opinions, arguments, legal conclusions, mischaracterizations, and impermissible transcript excerpts.

The parties and their connections

This decision, cited as 2026 TCC 62 and dated April 9, 2026, combines the judgments and reasons for four related tax appeals before the Tax Court of Canada in a single document for ease of reference and convenience. The primary appellant, Brass Collar Capital Corp. ("Brass"), appealed the assessment of its 2023 taxation year, which ended September 30, 2023. Brass's amended notice of appeal raised two matters: the exempt versus non-exempt status of a universal life insurance policy issued by Industrial Alliance Insurance and Financial Services Ltd. ("IA"), and whether legal fees incurred in 2023 should be included in Class 14.1 for capital cost allowance ("CCA") purposes. Three limited partnerships — Mosten Investment LP, Ituna Investment LP, and Atwater Investment LP (collectively, the "LPs") — had their own pending appeals involving life insurance policies. All entities were linked through an upper-tier partnership, Station Master Investments LP, and shared a common director, Mr. Gary Selke, who also served as the director of 101132817 Saskatchewan Ltd., the general partner of each LP.

Brass's assessment history and the mootness problem

Brass was initially assessed on December 21, 2023, with $488.52 payable. It filed a notice of objection on February 3, 2024, challenging the assessment on the basis that its IA policy was not an exempt policy, contending its net income should be reduced by $917 and partially offset by $97 in taxable interest income. Brass appealed to the Tax Court on June 17, 2024, before the objection was resolved. However, the CRA subsequently allowed the objection in full by letter dated August 13, 2024, and reassessed Brass on September 3, 2024, reducing the previous balance from $521.32 to $76.40. Despite receiving the relief it originally requested, Brass did not discontinue the appeal. Instead, it filed an amended notice of appeal on consent on March 7, 2025, adding a new CCA issue concerning a $1,776 expense included on Schedule 1 to Brass's 2023 T2 return of income and categorized as non-deductible. Brass argued the expense should be reclassified under Class 14.1, permitting a $105 CCA deduction. At the motion hearing, the Respondent agreed to allow the CCA deduction, leaving the insurance policy status as the sole remaining matter — a matter on which the CRA had already agreed with Brass's filing position.

The unusual litigation strategy

The Court noted an unusual dynamic at the heart of these appeals. Brass continued to argue that its IA policy was not exempt, a position the CRA had already accepted. Meanwhile, the LPs took the opposite stance — they disputed the Minister's conclusion that their IA policies were exempt, even though exempt status represented a favourable tax outcome. Justice Sorensen inquired why the LPs would appeal against a beneficial determination. Counsel explained that the appellants wanted the Court to consider particular facts relating to each insurance policy and provide an interpretation of Regulation 306. Counsel advised that regulators would then have the option to adopt or enforce that interpretation as they see fit, and the insurers would be obligated to invest the money they are supposed to invest, in compliance with the law. The Court observed that this overtly spoke to the real underlying issue animating Brass and the LPs: the operational parameters of the investment accounts under each of the LPs' policies, a business issue which was said to be contingent on exempt versus non-exempt status.

The Respondent's motion to strike Brass's amended notice of appeal

The Crown brought a motion under Rule 53(1) of the Tax Court Rules (General Procedure) to strike paragraphs 10 to 27 of Brass's amended notice of appeal. The legal threshold for striking pleadings is high: relief will only be granted if it is "plain and obvious" that the pleading discloses no reasonable cause of action or prospect or possibility of success. The Respondent relied on section 12 of the Tax Court of Canada Act, sections 169(1) and 171(1) of the Income Tax Act, and case law including Bruner and Interior Savings Credit Union, which establish that a taxpayer is not entitled to challenge an assessment where the success of the appeal would make no difference to the taxpayer's liability for tax or would increase it.

The Court's finding of mootness

Justice Sorensen determined there was never any live controversy regarding any policy issue as between the Minister and Brass. The only dispute involving the policy was Brass challenging its own filing position. The Court rejected Brass's argument that linkage between the entities and similarity in subject matter justified keeping the appeal alive, stating that Parliament established an appeals scheme that operates at the taxpayer level, and nothing in the legislative scheme "allows for a zombie appeal to lurch to the aid of another, whether or not there is some linkage between them." The Court further noted that the Brass appeal does not provide any shortcuts to assist in determining another assessment dispute on the merits, and that a generalized blanket argument that the Minister reached inconsistent results does not broaden the scope of "live controversy" for tax appeal purposes.

Application of the Borowski mootness framework

The Court applied the three-factor Borowski test. On the first factor — adversarial context — the Court found none existed for Brass concerning the 2023 taxation year as it related to the policy. There was no other pending administrative dispute or litigation for Brass that depended on a conclusion in this Tax Court appeal, and the entities' shared director, Mr. Selke, did not cause their distinct appeals to coalesce into anything approximating a single dispute. Brass's claimed confusion about how to file returns was dismissed, with the Court noting that in Canada's self-assessment tax system, a taxpayer who needs guidance can seek professional advice, do their own research, and/or seek from the CRA some comfort by way of a ruling or technical interpretation. On the second factor — judicial economy — the Court found no basis to devote limited resources to the appeal, noting that assessment disputes are not "brief candles" and that as and when a viable Regulation 306 case comes along, the Court would no doubt have sufficient time to hear it. On the third factor — the role of the courts — the Court considered it a neutral factor. Overall, the Borowski factors did not support an exercise of discretion to grant the extraordinary remedy of allowing a moot appeal to proceed.

Rejection of the public interest and "heads I win" arguments

The Court dismissed Brass's public interest argument, holding that whether income earned in an investment component of a policy is exempt or not is not a matter of public importance analogous to reproductive rights, as in Tremblay v Daigle. The Court also rejected an inventive "heads I win, tails you lose" submission by Brass's counsel: if the Court found the policy was not exempt, Brass would "win" but the appeal would be devoid of any practical effect since there was no assessment relevant to the policy to appeal; however, a "loss" in this Court would mean the policy was exempt (contrary to Brass's position throughout), which would reduce the assessed tax to the extent of the $97 inclusion, thus paradoxically resurrecting the appeal. Justice Sorensen found that allowing the appeal to continue on that basis would require "an unacceptable level of logical contortion" and was inconsistent with the Rules and the prescribed form of pleadings. The Court further noted that the relief Brass sought — the Court's confirmation that the policy is not an exempt policy pursuant to the relevant regulations — appeared in substance to be declaratory relief, which the Supreme Court of Canada has affirmed the Tax Court does not have jurisdiction to grant.

The motion to strike portions of the Selke Affidavit

The Respondent also moved to strike specified paragraphs of the August 5, 2025 affidavit of Gary Selke, which had been filed in support of the further motions for consolidation and non-party discovery. Under Rule 19(2), an affidavit shall be confined to a statement of facts within the personal knowledge of the deponent or to other evidence that the deponent could give if testifying as a witness in Court. Relying on 506913 NB Ltd., Quadrini, and Gold Line, the Court evaluated each impugned paragraph individually. Paragraphs were struck for variously containing argument, opinion, legal conclusions, mischaracterizations, prejudicial characterizations of the opposing party's position, tendentious definitions, and impermissible transcript excerpts. The Court also addressed the inclusion of discovery transcript excerpts, directing the parties to follow the guidance of Practice Note 8 and file transcript copies with the Court at the hearing of the consolidation and non-party discovery motions. One limited exception was preserved: the first sentence of paragraph 31 — Mr. Selke's assertion that he still did not know how to accurately file Ituna's and Brass Collar's tax returns — was permitted to remain as an assertion that could be a belief of the affiant. The motion was granted with leave to amend, to ensure that the next motions proceed with a proper record.

The ruling and outcome

The Respondent (His Majesty the King) prevailed on both motions. Paragraphs 10 to 27 of Brass's amended notice of appeal were struck without leave to amend, and for greater certainty, paragraphs 34(a) and 37 through 73, inclusive, were also struck — all without leave to amend, as the Court concluded no amendments could save the Brass appeal. The impugned paragraphs of the Selke Affidavit were struck with costs, with leave to amend. Costs on both motions were awarded to the Respondent in accordance with the Tariff. No specific monetary amount was ordered or awarded beyond costs, as the underlying motions were procedural in nature and the dispute involved modest sums — Brass's initial assessment was $488.52, and the CCA deduction at issue was $105.