G.R. Block Research & Development (1981) Corp. v. MNR, 87 DTC 5137, [1987] 1 CTC 253 (FCTD)

Dubé, J.:—Section 223 of the Income Tax Act provides that the Minister may file a certificate in the Federal Court with respect to an amount payable under the Act which has not been paid, and the certificate has the same force and effect as a judgment and all proceedings may be taken thereon to secure the payment of the unpaid amount.

Such steps were taken by the Minister in the instant case. The applicant claims it was assessed in respect of Part VIII of the Act by a notice of assessment prior to the end of its fiscal year and, therefore, that the assessment, the certificate and the writ of fieri facias ought to be quashed following certain decisions of this Court. It is, therefore, necessary to review briefly the recent jurisprudence in the matter.

In H. J. Flemming Sr. Estate v. M.N.R., [1983] C.T.C. 321; 83 D.T.C. 5329, Cattanach, J. allowed the taxpayer's application and concluded that this Court had jurisdiction to entertain it. He quashed the assessments and issued an injunction against the Minister.

The Federal Court of Appeal [in Parsons v. The Queen], [1984] C.T.C. 352; 84 D.T.C. 6345 (F.C.A.), reversed that decision holding that the only way in which the taxpayer could challenge the assessment was pursuant to the appeal provisions found in the Income Tax Act. It rejected the distinction made by the learned trial judge between questions of “quantum and liability" and questions of "legal authority". Pratte, J. said as follows:

In our view, the Income Tax Act expressly provides for an appeal as such to the Federal Court from assessments made by the Minister; it follows, according to section 29 of the Federal Court Act, that those assessments may not be reviewed, restrained or set aside by the Court in the exercise of its jurisdiction under sections 18 and 28 of the Federal Court Act.

The Court of Appeal decision was followed by Rouleau, J. in Reginald J. Gibbs v. M.N.R., [1984] C.T.C. 433; D.T.C. 6418. He found that "their finding in that case is on all fours with this particular application".

However in W.T.C. Western Technologies Corporation v. M.N.R., [1986] 1 C.T.C. 110; 86 D.T.C. 6027, Collier, J. allowed the taxpayer’s application and found that the Minister had no jurisdiction to assess prior to the time that the taxpayer was required to file a return.

In Bechthold Resources Limited v. M.N.R., [1986] 1 C.T.C. 195; 86 D.T.C. 6065 (F.C.T.D.), Addy, J. followed the Court of Appeal decision and disagreed with Collier, J. Not only did he find that the Court had no jurisdiction, but moreover that on the merits the Minister was entitled to make an assessment at any time under the Act.

Later on in 1986, both Walsh, J. in Robert Hart et al. v. M.N.R., [1986] 2 C.T.C. 63; 86 D.T.C. 6335 and McNair, J. in Bonnie Ellen Danielson v. M.N.R., [1986] 2 C.T.C. 341; 86 D.T.C. 6495 followed the Court of Appeal decision in Parsons (supra).

On the other hand, Muldoon, J. in Optical Recording Corporation v. The Queen, [1986] 2 C.T.C. 325; 86 D.T.C. 6465 (F.C.T.D.), allowed the taxpayer's application and found that the Court had jurisdiction, notwithstanding the Parsons (supra) decision. On the merits, he found that the actions of the Minister and his officials were so infected with error of law, illegal conduct, excess of jurisdiction and unfair pouncing without reasonable or any notice, that all those impugned decisions and acts which affected the taxpayer adversely ought, in justice, to be quashed.

With due respect, in my view, the Court cannot entertain the instant application. Firstly, the liability to pay tax under the Income Tax Act arises before any assessment has been made (see Oneil Lambert v. The Queen, [1976] C.T.C. 611; 76 D.T.C. 6373). Secondly, under the Act, the Minister is entitled to assess at any time and is not bound to wait for the end of a fiscal year. Thirdly, it is well established that when a statute provides for an appeal procedure, that procedure must be followed before other remedies are sought. Fourthly, section 29 of the Federal Court Act expressly stipulates that, where provision is made by an act for an appeal from a decision or order, that decision or order may not be reviewed by the Court under sections 18 or 28 of the Act.

Moreover, the Minister has just issued, or is about to issue, fresh notices of assessment. The obvious remedy, of course, is for the applicant to appeal those assessments under the provisions of the Income Tax Act.

The motion is denied, with costs.

Motion denied.