Executive Summary: Key Legal and Evidentiary Issues

• Distinguishing material facts from evidence in pleadings was the core question on the motion.

• Whether contractual excerpts could be pled under Rule 51(1) turned on whether the precise words were themselves material.

• Materiality and relevance of facts from taxation years not under appeal (2024 and 2025) were disputed in relation to the 2023 claim.

• Application of the "plain and obvious" threshold under Rule 53(1)(a) and (d) governed whether the impugned paragraphs would be struck.

• Project history spanning multiple years raised whether later-year facts can inform SR&ED eligibility in a disputed year.

Facts of the case

ArendiBio Solutions Inc. (the Appellant) appealed a reassessment that denied its 2023 scientific research and experimental development (SR&ED) claims, by a notice of appeal dated August 19, 2025 (para 1). The Crown's reply was filed and served on January 30, 2026, and the Appellant filed and served an amended notice of appeal on February 26, 2026, before the close of pleadings (para 1). That amended pleading added new paragraphs 18.1, 24.1, and 24.2 (para 2). Subparagraph 18(f) was amended to allege that the Appellant owned all results and intellectual property produced by its Subcontractors on certain Projects pursuant to their legal agreements, and new paragraph 18.1 then set out quotations from Master Service Agreements with two Subcontractors, ITR and Cirion (paras 3-4). A core issue in the underlying appeal is whether the Subcontractors' work was performed "on behalf of" the Appellant (para 4). New paragraphs 24.1 and 24.2 referred to the Minister of National Revenue's review of the Appellant's SR&ED claims for the 2024 and 2025 taxation years - said to involve a continuation of the same Projects, drug candidates (VLTR-557 and AFM28), Subcontractors, clients, and contracts - and to favourable conclusions in a project eligibility report dated December 5, 2025 (paras 5, footnotes). The Respondent moved to strike paragraphs 18.1, 24.1, and 24.2, arguing that 18.1 (and 24.2) improperly pleaded evidence and that 24.1 and 24.2 concerned taxation years not in issue and were therefore immaterial and irrelevant; it also sought an extension to file an amended reply and costs (paras 6-7).

Contractual clauses and procedural rules at issue

The contractual material in new paragraph 18.1 consisted of excerpts from the Subcontractor agreements. Section 9 of the June 7, 2022 ITR Master Service Agreement provided that intellectual property created by ITR in performing the research would be the exclusive property of the Appellant, with full rights to use, assign, or license it without further payment (para 9, footnote). Sub-section 13.2 of the September 19, 2022 Cirion Master Services Agreement similarly provided that inventions and deliverables would be the sole and exclusive property of the Appellant, with Cirion assigning its entire interest and related rights (footnote to para 11). On the procedural side, the Respondent relied on Rule 53(1)(a) and (d) of the Tax Court of Canada Rules (General Procedure), which allow the Court to strike a pleading that may prejudice or delay a fair hearing, or that discloses no reasonable grounds for appeal or for opposing it (para 19). Rule 51(1) was also central: the effect of a document may be briefly pleaded if material, but its precise words need not be - interpreted by the Court, given the prohibition on pleading evidence, as words that "shall not" be pleaded unless themselves material (para 20, footnote 14).

The court's reasoning and analysis

Sorensen J. set out the governing principles, drawing on Hillcore for the rule that pleadings must state material facts concisely, not evidence or conclusions of law, and on CIBC for the distinction between relevance and materiality (paras 15–16). Striking is discretionary and available only where it is "plain and obvious" that the impugned pleading cannot succeed; the bar is high but not unreachable, as motions to strike are an important housekeeping tool (paras 17-18). On new paragraph 18.1, the Court found that subparagraph 18(f) was a permissible (and unchallenged) factual allegation directed at a matter in issue, and that it was clear and understandable without contractual excerpts (paras 21, 23). Reproducing the precise wording of an agreement is prima facie pleading evidence, and the Court found nothing unique about the case or the language that justified reliance on Rule 51(1); if this ordinary commercial language were material, contractual wording would be material in nearly every case (para 24). The Court therefore concluded that paragraph 18.1 improperly pleaded evidence - yet, because the motion was brought only under Rule 53(1)(a) and (d), it asked whether the snippets would prejudice or delay the hearing or disclose no reasonable grounds, and answered no on both counts, so paragraph 18.1 was not struck (paras 25–27). On new paragraphs 24.1 and 24.2, the Court agreed that each taxation year is a distinct cause of action and that the Minister's positions on 2024 and 2025 do not bind the Respondent or the Court as to 2023; because those paragraphs were concerned exclusively with the Minister's review and determinations, they had to be struck under Rule 53(1)(d) (para 29). The Court accepted, however, that information from years not under appeal could potentially bear on SR&ED eligibility in a disputed year, given the multi-year nature of such projects (citing Indusol and Les Abeilles and CRA guidance), and so granted leave to amend, provided any amendment pleads material facts about multi-year Projects rather than the Minister's opinion (paras 30–31).

Ruling and outcome

The Respondent's motion to strike was partially granted. New paragraphs 24.1 and 24.2 were struck with leave to amend, while new paragraph 18.1 - though found to be improperly pleaded evidence - was allowed to stand because it did not engage the grounds the Respondent had invoked (paras 27, 32). The Court directed that any further amended notice of appeal be filed on or before August 3, 2026, and that the Respondent's amended reply be filed on or before October 5, 2026 (para 32). Given this mixed result, in which the Respondent succeeded on the 2024–2025 paragraphs but the Appellant preserved paragraph 18.1, neither party was wholly successful, and the Court made no award of costs.