Le Dain, J:—This is an appeal and a cross-appeal from an order of the Trial Division striking out the statement of claim and dismissing the action as against certain of the defendants other than the Crown on the ground that the Court lacks jurisdiction to entertain the action as against them. It is convenient in these reasons to deal at the same time with the closely related issues in appeal A-652-79, which is from an order of the Trial Division granting leave to amend the statement of claim and to add a defendant, and in appeal A-622-81, which is from an order of the Trial Division striking out certain paragraphs of the statement of claim on the motion of the Crown.
The action is for declarations that certain income tax assessments are invalid and the procedures taken to recover the arrears are null and void, and for damages. The action has been continued since the appeals by the administratrix of the estate of the late William R Stephens (hereinafter referred to as ‘the plaintiff”).
The facts which must be taken as established for purposes of the appeals and the cross-appeal are those set out in the statement of claim, as amended, and in an agreed statement of facts submitted by the parties pursuant to a direction of the Trial Division. By notices of assessment and reassessment delivered March 16, 1979 the plaintiff was assessed for income tax in various amounts, as well as penalty and interest, for the taxation years 1973, 1974, 1975, 1976 and 1977. The notices bore in the upper left-hand corner the inscription “Revenue Canada Taxation”. By letter dated April 17, 1979 the defendant R Smith, writing on behalf of the Chief of Collections, Department of National Revenue, Taxation, made a demand for payment within five days of the total arrears in the amount of $220,760.57. On April 23, 1979 the defendant J H Morrison, Director—Taxation in the London, Ontario district office of the Department of National Revenue, Taxation, made a “Demand on Third Parties”, a form of garnishment pursuant to section 224 of the Income Tax Act, by which the sum of $167.89 in the plaintiff’s bank account in the Bank of Nova Scotia, Woodstock, Ontario, was “seized”, or, as the section provides, paid over by the bank, to the Receiver General. By letter dated April 24, 1979 to the defendant Smith, the plaintiff’s solicitors informed him that the plaintiff's position was that the liability to pay within thirty days from the mailing of the notices of assessment, as provided by subsection 158(1) of the Income Tax Act, had not arisen because the notices of assessment delivered to the plaintiff appeared “to be on behalf of Revenue Canada, Taxation, an entity which does not exist in law.” The plaintiff took the position that he had not yet received a notice of assessment within the meaning of section 158(1). It is alleged that the plaintiff’s solicitors had also informed the defendant J M Wilkie by letter dated April 20, 1979, that this was the plaintiff's position. By letter dated April 25, 1979 the defendant D L H Davidson, Assistant Deputy Minister of National Revenue for Taxation, directed, pursuant to subsection 158(2) of the Act, that the arrears of tax, penalty and interest be paid forthwith. On the same day the amounts unpaid were certified, pursuant to section 223 of the Act, by the Director, Accounting and Collections Division, Department of National Revenue, Taxation, and the certificate was filed in the Federal Court to have the effect of a judgment of the Court. Again, on the same day, at the request of a solicitor of the Crown, a writ of fieri facias issued out of the Federal Court directed to the Sheriff of the County of Oxford, Ontario, to be executed against the plaintiff’s property in satisfaction of the amounts certified as unpaid. The writ was executed by the defendant L Statham, Deputy Sheriff of the County of Oxford, on the following day. The defendants Wilkie and Smith, both purporting to act on behalf of the Director, Accounting and Collections Division, Department of National Revenue, Taxation, accompanied the defendant Statham and instructed him to seize and remove all chattels from the plaintiff’s premises. The defendant Statham seized the plaintiff's chattels and prohibited their removal by “Sheriff’s Notice of Seizure” dated April 26, 1979. The defendant Statham was also accompanied by the defendant Constable J Ross.
The statement of claim concludes for declarations that the assessments of tax, penalty and interest for the taxation years 1973 to 1977 inclusive are invalid and that the Notices of Assessment or Reassessment for those years, the certificate of unpaid arrears filed in the Federal Court, the writ of fieri facias, and the demand on third parties are null and void; for an order enjoining the defendant Statham from taking further proceedings pursuant to the writ of fieri facias; for damages for wrongful seizure and trespass from all the defendants except Morrison; and for exemplary damages from all the defendants.
Applications were originally brought on behalf of the defendants Wilkie, Morrison and Smith and on behalf of the defendants Statham and Ross for orders under Rule 419 striking out the statement of claim and dismissing the action as against them, and in the alternative for leave to file conditional appearances and for orders directing the determination of a question of law under Rule 474. By orders of the Trial Division on June 25, 1979 leave was granted to these defendants to file conditional appearances for the purpose of objecting to the jurisdiction of the Court, with the direction that an application be brought under Rule 474 and the parties file an agreed statement of facts and memoranda. Conditional appearances were filed and a single application was made on behalf of these defendants for an order under Rule 419 striking out the statement of claim and dismissing the action as against them, apparently on the ground that it does not disclose a reasonable cause of action against them, and in the alternative, on the ground that the Court lacks jurisdiction to entertain the action as against them. The Crown filed a statement of defence but also brought an application for an order under Rule 419 striking out subparagraphs (g), (h) and (i) of paragraph 2 of the statement of claim, which contains the claims for damages. The plaintiff applied for leave to add D L H Davidson as a defendant and to amend the statement of claim by the addition of certain paragraphs containing allegations with respect to him and the capacity in which the defendants Morrison, Smith, Wilkie, Statham and Ross had purported to act.
The'three applications were heard together, and the Trial Division made the following orders on October 29, 1979:
1. An order granting leave to add D L H Davidson as a defendant and to amend the statement of claim as sought;
2. An order striking out the statement of claim and dismissing the action as against the defendants Wilkie, Smith, Statham and Ross on the ground that the Court lacks jurisdiction to entertain the action as against them, but dismissing the application with respect to the defendant Morrison; and
3. An order striking out subparagraphs (g), (h) and (i) of paragraph 2 of the statement of claim on the ground that the Court lacks jurisdiction to entertain these claims for damages against the Crown.
In his reasons the learned trial judge dealt first with the application to add Davidson as a defendant and to amend the statement of claim. After allowing the amendments and the addition of Davidson, he gave Davidson leave to file a conditional appearance immediately and to be represented on the application to strike out the statement of claim and dismiss the action as against the defendants other than the Crown. The defendant Davidson appeals in A-652-79 from the order adding him as a defendant, but his contentions are the same as if he were appealing from the order on the application of the defendants Wilkie, Morrison, Smith, Statham and Ross, in so far as it failed to strike out the statement of claim and dismiss the action as against him. The defendant Morrison appeals in A-653-79 from this second order in so far as it dismissed the application to strike out the statement of claim and dismiss the action as against him, and the plaintiff cross-appeals from the same order in so far as it struck out the statement of claim and dismissed the action as against the defendants Wilkie, Smith and Statham. There is no appeal or cross-appeal in so far as the order struck out the statement of claim and dismissed the action as against the defendant Ross. The plaintiff appeals in A-622-81 from the order striking out subparagraphs (g), (h) and
(i) of paragraph 2 of the statement of claim as against the Crown.
It is convenient to deal first with the claims against the defendants other than the Crown — that is, the issues raised by the appeals of the defendants Davidson and Morrison and by the plaintiff’s cross-appeal against the order Striking out the statement of claim and dismissing the action as against the defendants Wilkie, Smith and Statham. The principal contention here, and the basis on which the matter was disposed of in the Trial Division, is that the Court lacks jurisdiction to entertain the action as against these defendants. The other question raised by the appeals and the cross-appeal — whether, apart from the question of jurisdiction, the statement of claim discloses a reasonable cause of action against these defendants — may be treated as alternative to the question of jurisdiction.
The cause of action against the defendants other than the Crown, to the extent that there is one, is in tort. They would not appear to be parties to the action for purposes of the declaratory relief sought, viewed as a separate and distinct form of relief. Subparagraphs (g) and (h) of paragraph (2) of the statement of claim conclude for damages for “wrongful seizure” and “trespass” against all the defendants except Morrison. Subparagraph (i) concludes for “exemplary demands”, which presumably means exemplary damages, against all the defendants.
The only head of Federal Court jurisdiction on which the claims against the defendants other than the Crown can conceivably rest is paragraph 17(4)(b) of the Federal Court Act, which provides:
(4) The Trial Division has concurrent original jurisdiction
(b) in proceedings in which relief is sought against any person for anything done or omitted to be done in the performance of his duties as an officer or servant of the Crown.
With one exception, it was not contended in argument that the claims against the defendants other than the Crown did not fall within the description in paragraph 17(4)(b). The exception is the defendant Statham. It was contended that he was not a servant of the Crown in right of Canada. I agree with that contention. As a deputy sheriff of the County of Norfolk he was acting, in the execution of the writ of fieri facias, as an ex officio deputy sheriff of the Federal Court by virtue of subsection 13(2) of the Federal Court Act, which provides: “Where no sheriff is appointed under subsection
(1) for a geographical area, the sheriff and deputy sheriffs of the county or other judicial division or part thereof within that geographical area who are appointed under provincial law are ex officio sheriff and deputy sheriffs, respectively of the Court.” That provision had the effect of making Statham an officer of the Federal Court, but it did not make him a servant of the Crown in right of Canada. As deputy sheriff of the Federal Court, by virtue of this statutory provision, he was not appointed by the Crown in right of Canada, nor employed by it, nor subject to its ministerial control. It is clear from the statement of claim, as amended, that the defendants Davidson, Morrison, Wilkie and Smith were servants of the Crown in right of Canada. It further appears from the statement of claim, as amended, that while the acts of these defendants are said to be null and void or without legal justification they were purporting to act in the performance of their duties as servants of the Crown. I am, therefore, of the opinion that the claims against them fall within the terms of paragraph 17(4)(b).
The issue of jurisdiction is whether the claims against the defendants other than the Crown are sufficiently supported by federal law to satisfy the requirement of Federal Court jurisdiction laid down and applied by the Supreme Court of Canada in Quebec North Shore Paper Company v Canadian Pacific Limited, [1977] 2 S.C.R. 1054; McNamara Construction (Western) Ltd v The Queen, [1977] 2 S.C.R. 654; The Queen v Thomas Fuller Construction Co (1958) Limited, [1980] 1 S.C.R. 695; and Rhine and Prytula v The Queen, [1980] 2 S.C.R. 442. The issue is the relationship that must exist between the cause of action and the existing and applicable federal law to give the Court jurisdiction. The most recent view of the Supreme Court of Canada on this question is reflected in the Rhine and Prytula case. Laskin, CJ, delivering the judgment of the Court, said at 445: “The effect of the McNamara case, shortly put, is that there must be existing and applicable federal law to support the claims made in these cases by the Crown ...”, and on the same page he said, “The question in these two cases is, therefore, whether it can be said that the source of the claims by the Crown is in existing federal law ...”. With reference to the case of Rhine, the Court held that while the undertaking in question was of a contractual nature it was one that was governed by the provisions of the Prairie Grain Advance Payments Act, which provided for it. Laskin, CJ said at 447:
True, there is an undertaking or a contractual consequence of the application of the Act but that does not mean that the Act is left behind once the undertaking or contract is made. At every turn, the Act has its impact on the undertaking so as to make it proper to say that there is here existing and valid federal law to govern the transaction which became the subject of litigation in the Federal Court. It should hardly be necessary to add that “contract” or other legal institutions, such as “tort” cannot be invariably attributed to sole provincial legislative regulation or be deemed to be, as common law, solely matters of provincial law.
With reference to the case of Prytula, he said at 449:
As is correctly pointed out by the respondent in its factum, the Canada Student Loans Act and the regulations thereunder govern every aspect of the relationship between the borrowing student, the lending bank and the guaranteeing government. Resort must necessarily be had to the statute and regulations to support any legal claims, whether by the bank or by the government, or to determine the liability of the borrowing student. Moreover, subrogation of the Crown to the claim of the bank is expressly dealt with. The prescribed form of agreement between the student and the bank emphasizes this by the student’s signed assertion that ‘I understand my obligations under this Act and the Regulations and . . . I shall repay my total indebtedness as required by the Act and Regulations”. Once it is accepted, as it is here, that the Act and regulations are valid, I do not see how it can be doubted that there is here existing and applicable federal law to underpin the jurisdiction of the Federal Court.
He concluded, at 449, with respect to the two cases as follows:
The short answer to the issues raised by the appellants in the two cases is that each of the statutes with which they are respectively concerned provides for the advancing of federal funds or federally guaranteed funds to eligible individuals, as defined in the respective statutes and regulations, and also for repayment and the means for enforcing repayment. This is all a matter of the administration of a federal statute and is, therefore, within s 101 of the British North America Act. Consequently, it supports jurisdiction in the Federal Court under s 17(4)(a) of the Federal Court Act.
In the present case it is contended that the income tax assessments were invalid and the defendants other than the Crown acted without legal authority in seeking to recover the unpaid arrears. The contention that they acted without legal justification would appear to be a necessary basis of their liability in tort, if any. Thus the claims against the defendants other than the Crown would necessarily involve the construction and application of provisions of the Income Tax Act. Is this sufficient to give the Court jurisdiction to entertain the claims against them, having regard to the implications of the Supreme Court’s decision in Rhine and Prytula? Having given these implications the best consideration I can, I have come to the conclusion that it is not sufficient for jurisdiction. What I infer from Rhine and Prytula is that a cause of action in contract (or tort) may be held to be one sufficiently supported by federal law to give the Federal Court jurisdiction if the contractual or tortious liability can be said to be one that is provided for by federal law. The Supreme Court appears to have concluded in Rhine and Prytula that the rights asserted there found their source essentially or substantially in federal law because of the extent to which they were provided for and governed by the applicable federal statutes. In the present case, despite the necessary application of the provisions of the Income Tax Act to the question of validity or legal justification, the right to damages cannot be said to be provided for by federal law. If it exists at all, it is created by provincial law. The applicable federal law does not purport to create or provide for this right. This is not a case, for example, of an action for breach of statutory duty for which a right of action can be said to be created by federal statute. The requirement of existing and applicable federal law cannot, as a practical matter, exclude the necessary application of provincial law in the determination of certain issues or incidents affecting the full extent of the right being asserted, but the right must be one which is provided for by federal law. For these reasons I agree with the conclusion of the Trial Division that the Court lacks jurisdiction to entertain the claim against Wilkie and Smith. The same would be true of the claim against the defendant Statham if he were considered to be a servant of the Crown in right of Canada. It is equally true, however, of the claim against the defendant Morrison, who, for reasons that are not clear, was not included in the order striking out the statement of claim and dismissing the action as against the defendants other than the Crown. I would accordingly allow his appeal and strike out the statement of claim and dismiss the action as against him, with costs in this Court and in the Trial Division. The cross-appeal should be dismissed with costs.
For the same reasons the appeal of the defendant Davidson in A-652-79 should be allowed and the order giving leave to add him as a defendant and to amend the statement of claim should be set aside.
I turn now to the plaintiff’s appeal against the order of the Trial Division striking out subparagraphs (g), (h) and (i) of paragraph 2 of the statement of claim on the motion of the Crown. As against the Crown, those claims for damage would be for the vicarious liability of the Crown based on paragraph 3(1 )(a) of the Crown Liability Act, RSC 1970, c C-38, which provides:
3. (1) The Crown is liable in tort for the damages for which, if it were a private person of full age and capacity, it would be liable
(a) in respect of a tort committed by a servant of the Crown,
Subsection 4(2) of the Act lays down a condition of this liability in the following terms:
(2) No proceedings lie against the Crown by virtue of paragraph 3(1 )(a) in respect of any act or omission of a servant of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or his personal representative.
The Trial Division allowed the Crown’s application on the ground that the Court lacked jurisdiction to entertain the claims for damages against it. This conclusion appeared to be treated as following necessarily from the decision that the Court lacked jurisdiction to entertain the action as against the defendants other than the Crown. I cannot agree with this conclusion. Anomalous as it may seem that the Court should have jurisdiction to enter- tain an action for the vicarious liability of the Crown when it would not have jurisdiction to entertain an action against the Crown servants for whose acts the Crown is to be held liable, I cannot see how that anomaly is to be avoided. The vicarious liability of the Crown and the right of action against it are created by paragraph 3(1 )(a) of the Crown Liability Act and would not exist apart from it. Thus it appears to be undeniable that the claim is founded on federal law. Whether the acts of the defendants other than the Crown would give rise to a cause of action in tort, for purposes of subsection 4(2) of the Act, must be determined by what, in an action against them, would have to be considered provincial law, but that cannot, in my respectful opinion, make the vicarious liability of the Crown for those acts any less a cause of action founded on federal law when it is so clearly provided for by the Crown Liability Act.
The issue, then, with respect to the claim for damages against the Crown is whether the statement of claim discloses a reasonable cause of action for vicarious liability in tort for the acts of the defendants Davidson, Morrison, Wilkie and Smith. (Since the defendant Statham was not acting as a servant of the Crown in right of Canada there can be no vicarious liability for his acts.) That is to be determined, in my view, by considering whether the acts alleged to have been committed by these defendants give rise to a reasonable cause of action in tort against any of them. It is sufficient for the vicarious liability of the Crown that there be a reasonable cause of action in tort against one of them.
The act on which the claim against Davidson is based is his direction to pay forthwith made in the exercise of the ministerial discretion conferred by subsection 158(2) of the Income Tax Act and delegated to him by section 900 of the Income Tax Regulations. There is some question as to the precise nature of the tortious liability that is invoked against him. Presumably it is for trespass since, having been added as a defendant, he would be covered by the claims in subparagraphs (g) and (h) of paragraph 2 of the statement of claim for damages for wrongful seizure and trespass, as well as the claim in subparagraph (i) for exemplary damages. There would, however, appear to be an absence of causal connection between his act and the seizure of the plaintiff’s chattels. It may be assumed that his act had the effect of abridging the time for payment (although in fact it appears to have been made more than 30 days after the mailing of the notices of assessment), but I cannot see how that can be said to be a cause of the seizure. If there is not a cause of action against him in trespass, then the only category of tort that might conceivably be invoked in his case is the misfeasance in public office that nas been recognized on occasion as consisting of the malicious or deliberate abuse of power. See MacBride, Damages as a Remedy for Unlawful Administrative Action (1979), 38 Camb LJ 323. Apart from the question of remoteness of the damage, I do not think that the allegations of the statement of claim, as amended, support such a cause of action. There is no allegation with respect to Davidson of malice, intent to injure, or knowledge that he was clearly acting without authority. For these reasons I am of the opinion that the act of Davidson did not give rise to a reasonable cause of action in tort.
There is also in my opinion considerable doubt about the cause of action against Morrison based on the exercise of the Minister’s power to make a demand on third parties that is conferred by section 224 of the Act and delegated by section 900 of the Regulations. He is expressly excepted from the claims for wrongful seizure and trespass. A demand on third parties pursuant to section 224 is a direction to a debtor of the taxpayer to pay what he owes, up to the amount of the sum owing by the taxpayer to the Crown, to the Receiver General. Since that act does not involve an interference with the possession of corporeal property I do not see how it could be considered to be either trespass or conversion. There would appear to be no basis for treating it in the same way as the conversion of a cheque, in which the face value of the cheque is taken to be the value of the chattel that is converted. See Lloyd's Bank v Chartered Bank, [1929] 1 KB 40 at 55-6. In so far as the tort of misfeasance in public office is concerned, the same observations apply to Morrison as to Davidson. For these reasons I am of the opinion that the act of Morrison does not give rise to a reasonable cause of action in tort.
I think it may be taken that the cause of action asserted against Wilkie and Smith is in trespass. They are alleged, in effect, to have participated in a wrongful interference with the plaintiff’s goods. The role which they played and its actual effect in the seizure are questions of fact which would only be made clear by the evidence. Although it was the duty of the defendant Statham to conform to the direction of the Court contained in the writ of fieri facias, and not to their alleged instructions, what actually took place, particularly with reference to the extent of the seizure practised, would only be established at trial. I am not prepared at this stage to hold that the acts of the defendants Wilkie and Smith could not conceivably give rise to a cause of action in tort.
For these reasons, I am of the opinion that the plaintiff should succeed in his appeal from the order striking out subparagraphs (g), (h) and (i) of paragraph 2 of the statement of claim.