T-2123-87
Louis J. Devor (Plaintiff)
v.
Minister of National Revenue (Defendant)
INDEXED AS: DEVOR v. M.N.R.
Trial Division, Giles A.S.P.—Toronto, February
29 and April 11, 1988.
Federal Court jurisdiction — Trial Division — Motion to
strike statement of claim under Federal Court Act s. 29: Court
without jurisdiction to grant s. 18 relief against income tax
reassessments as appeal therefrom provided for by statute —
Reassessment issued after waiver obtained from plaintiff —
Main action seeking, under s. 18, to have waiver and any
subsequent reassessment declared null — Action initiated
before reassessment issued, when no appeal available — Con
flicting case law in Federal Court Trial Division on availabili
ty of s. 18 relief against reassessments — At time statement of
claim issued, s. 29 not relevant — Fact reassessment and
notices of objection filed subsequently irrelevant — Motion
dismissed.
Income tax — Reassessment — Motion to strike statement
of claim — Plaintiff seeking, under Federal Court Act s. 18, to
have waiver and any subsequent reassessment declared null
Plaintiff pleads non est factum based on allegation depart
mental official improperly obtained waivers, enabling Depart
ment to reassess after limitation period expired — Motion to
strike statement of claim pursuant to Federal Court Act s. 29
(Court without jurisdiction to grant s. 18 relief where statutory
appeal provision) — Action initiated before reassessment
issued, when no appeal available — At time statement of
claim issued, s. 29 not relevant and facts reassessment and
notices of objection filed subsequently irrelevant — Motion
dismissed.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 29.
Income Tax Act, S.C. 1970-71-72, c. 63.
CASES JUDICIALLY CONSIDERED
APPLIED:
Optical Recording Corp. v. Canada, [1987] 1 F.C. 339;
(1986), 86 DTC 6465 (T.D.).
DISTINGUISHED:
Minister of National Revenue v. Parsons, [1984] 2 F.C.
331; 84 DTC 6345 (C.A.); Hart v. Canada (M.N.R.),
[1986] 3 F.C. 178; 86 DTC 6335 (T.D.); Bechthold
Resources Ltd. v. Canada (M.N.R.), [1986] 3 F.C. 116
(T.D.) (Bechthold #1); Danielson, B. E. v. M.N.R.
(1986), 86 DTC 6495 (F.C.T.D.); G. R. Block Research
& Development (1981) Corporation et al. v. M.N.R.
(1987), 87 DTC 5137 (F.C.T.D); Gibbs, R. J. v. M.N.R.
(1984), 84 DTC 6418 (F.C.T.D.); WTC Western Tech
nologies Corporation v. M.N.R. (1986), 86 DTC 6027
(F.C.T.D.).
REFERRED TO:
Webster Industries Limited v. The Queen, [1983] 1 F.C.
393 (T.D.).
COUNSEL:
Thomas A. Kelly for plaintiff.
M. T. Boris for defendant.
SOLICITORS:
Kelly & Lebow, North York, Ontario, for
plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for order ren
dered in English by
GILES, A.S.P.: When this motion was set down
for hearing, it was to strike the statement of claim.
At the hearing the plaintiff sought to file an
amended statement of claim. Counsel for the
Crown indicated she was prepared to consent to
the filing of the amended statement of claim if the
motion could be considered as one applicable to
the amended statement of claim. Counsel for the
plaintiff indicated his consent and I therefore
ordered the amended statement of claim filed and
proceeded to hear the motion as one to strike the
statement of claim as amended.
In this action the plaintiff invokes the aid of the
Federal Court to remedy the alleged improper
actions of officials of the Department of National
Revenue in obtaining waivers from him which
enabled the Department to reassess the plaintiffs
income for taxation purposes at a time when, but
for the waivers, the Department would have had
no right to reassess. The actions of the Depart-
ment, it is alleged, were such that the plaintiff can
plead non est factum with respect to the waivers
and any subsequent reassessment is therefore a
nullity.
The defendant relies on section 29 of the Feder
al Court Act [R.S.C. 1970 (2nd Supp.), c.10]
which indicates that this Court does not have
jurisdiction where provision is expressly made by
an Act of the Parliament of Canada for an appeal,
as such, to the Court. The cases indicate that the
appeal may be an indirect one as is the case here.
When the statement of claim was issued, no reas
sessment had been made and there would appear
to have been no statutory provision for an appeal
at that stage. The plaintiff may have been justified
in resorting to this Court at that time to prevent
the use of the waivers. However, as is apparent
from the affidavit of Aziz Fazal, sworn March 1,
1988, what purport to be notices of reassessment
have been issued and served and notices of objec
tion have been filed with respect to them.
The plaintiff's argument is that the waivers
being a nullity, the reassessments are out of time
and therefore a nullity and that this Court should
so declare and provide consequential relief. It is
quite apparent that the plaintiff can make his
objection now that the purported assessments have
been issued through the usual channels. Counsel
referred me to the cases which have been decided
since Minister of National Revenue v. Parsons
[1984] 2 F.C. 331; 84 DTC 6345 (C.A.)
There have been no further decisions of the
Federal Court of Appeal and there have been
apparently conflicting decisions of the Trial Divi
sion of the Court. The most recent decision is that
of Walsh J. in Hart v. Canada (M.N.R.), [1986] 3
F.C. 178; 86 DTC 6335 (T.D.). As the most recent
decision it is the one which would be binding upon
me if the ratio for that decision is indistinguishable
from that in one of the other cases and from the
situation in this case.
I note that in Optical Recording Corp. v.
Canada, [1987] 1 F.C. 339, at page 351; (1986)
86 DTC 6465 (T.D.), at page 6471, it is noted that
the issues raised "questions of fundamental
administrative illegality, unfair treatment and
estoppel". There do not appear to have been any
such issues in Hart. In the present case, what can
be categorized as "unfair treatment" is alleged.
Estoppel is not an issue in this case. The funda
mental illegality in the Optical Recording case
consisted of the Department's policy being one
which was not authorized by any statute.
In this case, the complaint arises from the
alleged unfair conduct of a single officer of the
Department. Parsons involved a lack of legal au
thority in the Minister. Bechthold Resources Ltd.
v. Canada (M.N.R.), [1986] 3 F.C. 116 (T.D.)
("Bechthold #1") involved the Minister's jurisdic
tion to assess. Hart involved the Minister's juris
diction. Danielson, B. E. v. M.N.R., (1986), 86
DTC 6495 (F.C.T.D.) involved an attack on an
assessment. G. R. Block Research & Development
(1981) Corporation et al. v. M.N.R., (1987), 87
DTC 5137 (F.C.T.D.) involved the Minister's
jurisdiction to assess at the time when he did.
Gibbs, R. T. v. M.N.R. (1984), 84 DTC 6418
(F.C.T.D.), was also an attempt to quash an
assessment. WTC Western Technologies Corpora
tion v. M.N.R. (1986), 86 DTC 6027 (F.C.T.D.)
while having a different result also involved attack
on the Minister's right to assess when he did. All
the foregoing cases except Optical Recording, it
will be observed, turned on the appropriateness of
departmental action in the light of the provisions
of the Income Tax Act [R.S.C. 1952, c. 148 (as
am. by S.C. 1970-71-72, c. 63, s.l)]. Optical
Recording, however, involved more than the provi
sions of the Act. There were actions of officials of
the Department involved "so infected with error of
law, illegal conduct, excess of jurisdiction, as to
engage the superintending jurisdiction of Superior
Court". In this case, there are allegations of con
duct which, if proved, might be found sufficiently
venal to require the intervention of this Court. As
indicated previously, it is my view that at the time
the statement of claim was issued, section 29 was
not relevant. If, as I find, there might be official
conduct such as to require the intervention of the
Court, does the fact that there has been reassess
ment and notices of objection have been filed, have
any effect? It appears from Optical Recording,
that it does not. Counsel for the Crown pointed out
that there were, in effect, two actions now in
progress in which the effectiveness of the waivers
could be considered. This is of course the case, but
as pointed out by counsel for the plaintiff, while a
motion to stay one of them might be successful,
there was no such motion before the Court. In my
view there being no motion to stay before the
Court, the element of duplicity cannot be taken
into account. However, if I am wrong, and it is
necessary to take the matter into account. I note
that in this action the only facts to be considered
are those relating to what amounts to a plea of non
est factum. If the plaintiff were successful with
such a plea, it appears the entire dispute would be
resolved. The litigation set in motion by the reas
sessments and notices of objection would involve
both the same non est factum plea and tax matters
requiring more evidence and argument and can be
considerably more time consuming. It is therefore
unlikely that this action would be one that was
stayed.
Counsel for the Crown pointed out that the
relief sought included injunctive relief and submit
ted that such relief was not available against the
Minister. For the reasons set forth in Webster
Industries Limited v. The Queen, [1983] 1 F.C.
393 (T.D.) and the cases cited therein it would
appear that counsel is correct. However, there is
no motion seeking to strike only those portions of
the claim relevant to injunctive relief. While they
might be struck if the Court were so moved, it is
not open to me to strike a portion only of the claim
on the motion before me. The motion to strike the
statement of claim will therefore be dismissed.
ORDER
The motion is dismissed.
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