Docket: A-370-13
Citation:
2015 FCA 51
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CORAM:
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NADON J.A.
WEBB J.A.
BOIVIN J.A.
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BETWEEN:
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PAUL MATTHEW JOHNSON
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Appellant
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and
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HER MAJESTY THE QUEEN
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(MINISTER OF NATIONAL REVENUE)
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Respondent
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REASONS
FOR JUDGMENT
WEBB J.A.
[1]
This appeal raises issues related to the
conduct of the Minister of National Revenue (Minister) in assessing and
collecting net tax under Part IX of the Excise Tax Act, R.S.C. 1985, c. E-15 (the Act), and the jurisdiction of
the Federal Court and the Tax Court of Canada in relation to these matters.
[2]
Paul Johnson has appealed the decision of
the Federal Court (2013 FC 1032) dismissing his application for judicial review
of the decisions of the Minister related to the
assessment and collection taken actions against him. He has also appealed the
order of the Tax Court of Canada striking the paragraphs of his notice of
appeal to that court related to the alleged purpose
of the Minister in issuing the assessment, the conduct of the Minister in
relation to the assessment and the collection of amounts under that assessment,
and the delay in addressing Mr. Johnson’s notice of
objection (Tax Court of Canada Docket: 2012-4902(GST)G). The citation for the
Judgment and reasons in relation to the appeal from the decision of the Tax
Court Judge is 2015 FCA 52.
Background
[3]
In August 2011, the RCMP began an investigation
into whether Mr. Johnson and others were involved in the trafficking of cocaine
and other substances. The investigation ultimately led to a search of Mr.
Johnson’s vehicle and house on April 9, 2012. Approximately $13,000 in cash was
seized from the residence of Mr. Johnson. He was not charged with any offence
at that time.
[4]
On the same day, the police arrested Danny Le
and conducted searches of his vehicle and the residence occupied by Mr. Le and
his spouse, Rachel Laing. Approximately $71,000 in cash was seized from the
residence and 5 kilograms of cocaine was seized from Mr. Le’s vehicle.
[5]
On April 17, 2012, the RCMP provided to the
Minister a summary of their investigation and items seized. The summary
identified nine individuals, including Mr. Johnson, and included details of
observed transactions during the period from January 2012 to April 2012.
[6]
Following the receipt of this information from
the RCMP, on April 18, 2012 an auditor with the Canada Revenue Agency (CRA) opened
a GST/HST account for a partnership. The auditor identified Mr. Johnson, Mr. Le
and Ms. Laing as the three partners of this partnership. The effective date of
registration was January 1, 2011. The estimated annual revenue was stated to be
$3 million from a business activity described as “cocaine
distribution”. The address for the partnership was stated to be the
address for the CRA.
[7]
On April 19, 2012, the auditor referred the
matter to a Collections/Enforcement Liaison Officer with the CRA who, on the
same day, “took steps to initiate the creation of the
Partnership Assessment by entering the necessary data into the CRA’s computer
system to generate the Partnership Assessment” (Affidavit of Mandeep
Gill, paragraph 14, page 468 of the Appeal Book). The following day, the
liability for the GST/HST was posted on the CRA’s computer system.
[8]
On April 20, 2012, a Requirement to Pay Restorable
Money (RTP) was issued under subsection 320(1) of the Act against Mr. Le, Ms.
Laing and Mr. Johnson on the basis that they were each jointly and severally
liable for the GST/HST liability of the partnership under subsection 272.1(5)
of the Act. The maximum amount payable under this RTP was $292,700. The RTP was
sent by fax to the RCMP together with a covering letter also dated April 20,
2012.
[9]
On April 24, 2012, the Minister issued a notice
of assessment for the net tax, interest and penalty of the partnership of Mr.
Le, Ms. Laing and Mr. Johnson for the following amounts:
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Reporting Period
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Net Tax
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Interest and Penalty
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Total Amount
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July 1, 2011 to
September 30, 2011
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$141,120
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$6,690
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$147,810
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October 1, 2011 to
December 31, 2011
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$141,120
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$3,770
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$144,890
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[10]
This notice of assessment was addressed to Mr.
Le, Ms. Laing and Mr. Johnson, c/o the CRA auditor at the address for the CRA
in Surrey, BC. Also on April 24, 2012, a notice of assessment was issued under
subsection 272.1(5) of the Act in respect of the joint and several liability of
each of the three identified partners for the unremitted net tax, interest and
penalties of the partnership. This notice of assessment was sent to Mr. Johnson
at his last known address on the same day. These assessments were referred to
in the reasons of the Federal Court Judge as the First Assessments.
[11]
On April 26, 2012, the notice of assessment that
had been issued in relation to the joint and several liability of Mr. Johnson “was registered in Federal Court and a Writ of Seizure and Sale was obtained by the Minister” (paragraph 10 of the reasons of the Federal
Court Judge).
[12]
On May 3, 2012, the Minister hand delivered the
RTP to the RCMP and received the cash that the police had seized from the
residence of Mr. Johnson.
[13]
On May 15, 2012, personal property and vehicles
of Mr. Johnson were seized. On May 24, 2012, a certificate of title was
registered against Mr. Johnson’s property. Mandeep Gill, in his affidavit,
stated that he had issued a Requirement to Pay, pursuant to subsection 317(3)
of the Act, to Mr. Johnson’s bank on May 28, 2012. However, the Requirement to
Pay that is included in the Appeal Book is not dated.
[14]
On January 23, 2013, the CRA auditor received
additional information from the RCMP related to alleged drug trafficking
activities of the partnership. Upon reviewing this information, the CRA auditor
concluded that only Mr. Le and Mr. Johnson were members of the partnership.
[15]
On April 19, 2013, the assessment that had been
issued for the net tax, interest and penalties of the partnership for the
period ending September 30, 2011 was vacated.
[16]
On April 24, 2013, notices of (re)assessment
were issued for the net tax, interest and penalties of the partnership
consisting of Mr. Le and Mr. Johnson (under the same Business Number as the
partnership that was registered on April 18, 2012) for the following amounts:
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Reporting Period
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Net Tax
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Interest and Penalty
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Total Amount
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October 1, 2011 to
December 31, 2011
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$215,460
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$22,803
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$238,263
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January 1, 2012 to
March 31, 2012
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$96,390
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$8,646
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$105,036
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[17]
On May 3, 2013, a notice of (re)assessment was
issued under subsection 272.1(5) of the Act in respect of the joint and several
liability of Mr. Johnson for the unremitted net tax, interest and penalties of
the partnership. The amount owing as stated in this Notice of Assessment was
$253,178. The (re)assessments issued on April 24, 2013 and May 3, 2013 were
referred to as Second Assessments in the reasons of the Federal Court Judge.
Decision
of the Federal Court
[18]
The Federal Court Judge concluded that Mr.
Johnson’s application for judicial review, in relation to the assessments that
were issued, was a collateral attack on the validity of the assessments and
therefore was a matter that was not within the jurisdiction of the Federal
Court (paragraph 31 of the reasons). The Federal Court Judge also concluded
that the Tax Court of Canada had exclusive jurisdiction to address the issue of
whether the RTP was properly issued. Notwithstanding this finding in relation
to the RTP, he noted that even if the Federal Court did have jurisdiction, he
would have found that the RTP was properly issued under the Act.
[19]
In addition, the Federal Court Judge rejected Mr.
Johnson’s arguments that:
•
the First Assessments and the Second Assessments
were not made for a proper purpose;
- the Second
Assessments gave rise to a reasonable apprehension of bias;
- the Minister was
functus officio when he issued the Second Assessments; and
- a stay should be
granted in respect of the CRA’s collection action pending the outcome of
the appeal of the assessments to the Tax Court of Canada.
Issues
[20]
In this appeal, Mr. Johnson raises the following
issues:
a)
Does the Federal Court have jurisdiction to
review the actions of the Minister in relation to the First Assessments and the
Second Assessments?
i. If the Federal Court has such jurisdiction, does the conduct or
motive of the Minister, in this case, warrant a declaration that the
assessments should not have been issued?
b)
Does the Federal Court have the jurisdiction to
review the collection actions of the Minister?
ii. If the Federal Court has such jurisdiction, was the Minister’s
action in issuing the RTP in this case unlawful?
Jurisdiction
of the Federal Court Jurisdiction of the Federal Court in Relation to the
Assessments
[21]
In Canada (Minister of National
Revenue) v. JP Morgan Asset Management (Canada) Inc. 2013 FCA 250; [2013]
F.C.J. No. 1155, (JP Morgan) Stratas J.A. provided a detailed analysis
of the law with respect to judicial review applications related to questions
arising under the Income Tax Act, R.S.C. 1985,
c. 1 (5th Supp.). The analysis is equally applicable to the GST provisions of
the Act since subsection 12(1) of the Tax Court of Canada Act, R.S.C.
1985, c. T-2, provides that the Tax Court of Canada “has
exclusive original jurisdiction to hear and determine references and appeals to
the [Tax Court of Canada] on matters arising under […] Part IX of” the
Act.
[22]
In paragraph 82 of JP Morgan, Stratas
J.A. noted that:
82 In each of
the following situations, an appeal to the Tax Court is available, adequate and
effective in giving the taxpayer the relief sought, and so judicial review to
the Federal Court is not available:
Validity of assessments. The Tax Court has exclusive jurisdiction to review the correctness
of assessments by way of appeal to that Court. Sections 165 and 169 of the Income
Tax Act constitute a complete appeal procedure that allows taxpayers to
raise in the Tax Court all issues relating to the correctness of the
assessments, i.e., whether the assessment is supported by the facts of
the case and the applicable law […] Therefore, it is not possible to bring a
judicial review in the Federal Court raising the substantive acceptability of
an assessment.
[23]
The applicable objection and appeal provisions are
contained in sections 301, 302 and 306 of the Act, and these sections also “constitute a complete appeal procedure that allows taxpayers
to raise in the Tax Court all issues relating to the correctness of the
assessments”. Therefore, judicial review in the Federal Court is not
available if Mr. Johnson, under the guise of seeking judicial review of the
decision of the Minister to assess him, is in reality challenging the correctness
of the assessments.
[24]
Mr. Johnson submits that the Minister did not
have sufficient information to support the First Assessments. In particular,
Mr. Johnson noted that first the CRA concluded that there was a partnership
with three partners and then later determined that there were only two
partners. He also argued that there was very little, if any, information to
support any assessment for the period from July 1, 2011 to September 30, 2011,
which was confirmed when the assessment for this reporting period was
subsequently vacated by the Minister. He also submitted that the assessments
issued for the other reporting periods were not supported by the facts provided
by the RCMP.
[25]
However, all of these submissions are matters
that could be addressed before the Tax Court of Canada. These arguments relate
to the correctness of the assessments. Do the facts support the amounts
assessed? This is a matter for the Tax Court of Canada – not the Federal Court.
[26]
The Second Assessments relate to the change in
the composition of the partnership, a change in the amount assessed for the
reporting period ending December 31, 2011, and an additional assessment for the
reporting period ending March 31, 2012. Whether the assessments could have been
issued as they were (first with Ms. Laing as a member of the partnership and
then without her as a member), is also a matter for the Tax Court of Canada, as
it relates to the validity or correctness of the assessments that were issued.
[27]
Mr. Johnson also argues that the Minister had an
improper motive in assessing him. He states that the Federal Court has the
jurisdiction to review the Minister’s purpose for assessing him and determine
if such purpose was improper. If such purpose was improper, Mr. Johnson submits
that the Federal Court would have the jurisdiction to issue a declaration that
the assessment should not have been issued.
[28]
In this case, Mr. Johnson alleges that the
Minister issued the First Assessments for the sole purpose of seizing the funds
that the RCMP had found in Mr. Johnson’s residence before the RCMP released the
money to someone else.
[29]
Assuming without deciding that the Federal Court
would have the jurisdiction to review the Minister’s motivation or purpose for
issuing an assessment and, if appropriate, issue a declaration that such
assessment should not have been issued, this is not a case where I would find
that such a declaration should have been issued. The Minister is responsible
for enforcing the provisions of the Act, which include the collection of net
taxes owing under the Act. The fulfillment of the Minister’s statutory
responsibilities under the Act cannot be an improper motive for the Minister to
issue an assessment.
[30]
The CRA auditor received information from the
RCMP that indicated that Mr. Johnson may have been involved in making taxable
supplies. Mr. Johnson, as acknowledged by his counsel, did not file GST returns
or remit any net tax for the reporting periods in question. Whether Ms. Laing
was involved would only appear to affect the amount for which Mr. Johnson would
be liable under the Act, not whether he would be liable to remit amounts under
the Act. Presumably if particular supplies are made by a partnership of two persons
instead of three, the amount allocated to each of the two partners would be
greater. As noted, whether there was a partnership, who were the members of
that partnership (if there was a partnership), and the amount of any taxable
supplies made in any particular reporting period are all issues that relate to
the validity or correctness of the assessments and, therefore, are issues that
are within the exclusive jurisdiction of the Tax Court of Canada.
[31]
Mr. Johnson also argues that the Federal Court
should have jurisdiction to address his application for judicial review because
of the delays that he has experienced in being able to commence his appeal to
the Tax Court of Canada. Mr. Johnson filed a notice of objection on June 19,
2012. In order to commence an appeal to the Tax Court of Canada, a person must
either have a decision of the Minister (reflected in a reassessment or notice
of confirmation) or wait 180 days after filing the notice of objection (sections
302 and 306 of the Act). As Mr. Johnson did not want to wait to commence his
appeal, his counsel, in the covering letter that accompanied his notice of
objection, submitted a request that the Minister confirm the assessment without
reconsideration as provided for in subsection 301(4) of the Act.
[32]
When the requested confirmation was not
forthcoming, Mr. Johnson brought an application in the Federal Court for an
order to compel the Minister to deal with his notice of objection. On November
30, 2012, the Minister issued a notice of confirmation and Mr. Johnson then
discontinued that application in Federal Court. With the notice of
confirmation, he was then able to commence his appeal to the Tax Court of
Canada, which gave rise to the motion of the Crown to strike certain parts of
the notice of appeal referred to above.
[33]
The time limits in relation to the appeal
process are set out in the Act. The Federal Court cannot acquire jurisdiction
to judicially review the decision to assess Mr. Johnson under the Act simply
because he was not able to commence his appeal to the Tax Court of Canada as
quickly as he would have liked. He was able to commence his appeal as provided
in the Act, and therefore the Tax Court of Canada retains the exclusive
original jurisdiction to deal with the validity and correctness of the assessments.
[34]
It should also be noted that there is another
impediment to Mr. Johnson’s application for judicial review in relation to the
assessments. In JP Morgan, Stratas J.A. stated that:
66 Administrative
law authorities from this Court and the Supreme Court of Canada - including the
Supreme Court's decision in Addison & Leyen, [2007 SCC 33] - show
that any of the following qualifies as an obvious, fatal flaw warranting the
striking out of a notice of application:
(a) the notice of application fails
to state a cognizable administrative law claim which can be brought in the
Federal Court;
(b) the Federal Court is not able to
deal with the administrative law claim by virtue of section 18.5 of the Federal
Courts Act or some other legal principle; or
(c) the Federal Court cannot grant
the relief sought.
[35]
If any of these flaws would warrant “the striking out of a notice of application”, then
they would also warrant the dismissal of an application for judicial review.
[36]
In the Consolidated Amended Notice of Application,
Mr. Johnson indicated that he was seeking, in relation to the assessments, a
declaration that the Minister’s act of issuing such assessments was “an invalid and unlawful exercise of a statutory power under
section 296 and contrary to law, or alternatively, an abuse of power or an
abuse of process” (page 4, paragraph (a)(iii), page 5 paragraphs (b)(i)
and (iii)). Mr. Johnson also sought an order “quashing
or setting aside” the assessments (page 4, paragraph (iv), page 5
paragraphs (ii) and (iv)). These requests were repeated in the notice of appeal
to this court (paragraphs (a)(viii) and (ix)).
[37]
Subsections 299(3) and (4) of the Act provide
that an assessment is valid subject to it being vacated as a result of an
objection or appeal under the Act or another reassessment being issued, either
as a result of an objection or appeal under the Act or otherwise under the Act.
Since the appeal rights under the Act lead to the Tax Court of Canada and not
the Federal Court, the Tax Court of Canada has the exclusive jurisdiction to vacate
an assessment (Obonsawin v. The Queen, 2004 TCC 3, [2004] T.C.J. No. 68,
at paragraph 8). Therefore, the remedy that Mr. Johnson was seeking in relation
to quashing or setting aside the assessments is not a remedy that could have
been granted by the Federal Court. Although counsel for Mr. Johnson in their
memorandum of fact and law stated that he was only seeking a declaration from
the Federal Court, the determination of whether the Federal Court Judge should
have dismissed his application for judicial review should be based on his
application to that Court, not on his application as only modified in his
memorandum of fact and law submitted on appeal to this Court.
[38]
Although Mr. Johnson also asked for a
declaration of invalidity, it would not be possible to separate this
declaration from the question of the correctness of the assessments since the
basis for this request for declaratory relief is essentially that the Minister
did not have sufficient information to warrant the assessments that were
issued. This is effectively arguing that the assessments are not correct. In The
Queen v. Roitman, 2006 FCA 266, [2006] F.C.J. No. 1177, Décary J.A. stated
that:
25 Counsel
for Mr. Roitman alleges abuse of process on the part of the Minister in issuing
the notice of assessment. The alleged abuse is that of a deliberate incorrect
interpretation of the law. The allegation assumes that the law has been
incorrectly interpreted, which in turn assumes that the reassessment is
invalid, a determination that can only be made by the Tax Court of Canada. To
paraphrase the words of Hugessen J. in Walsh (supra, at paragraph 5),
the relief based on the alleged deliberate actions of the Minister or of the
Agency "would be a meaningless exercise when divorced, as is [sic] must
be, from the substantial question as to the validity of the assessment
itself". It is remarkable that the very question the Judge ordered to be
decided prior to trial by the Federal Court is precisely the type of legal
question that would normally fall within the very expertise and domain of the
Tax Court of Canada. It is clear in the end that the claim for damages can only
succeed if the reassessment is first found to be invalid. The Statement of
Claim is, at best, premature.
[39]
In Roitman, the alleged abuse related to
a question of law. In the present appeal, the alleged abuse relates to
questions of fact and whether there was a factual basis for the assessments as
issued. Just as in Roitman, the declaration sought by Mr. Johnson would
be a meaningless declaration separated from the real question of whether the
assessments that were issued were valid assessments under the Act.
[40]
As noted by the Supreme Court of Canada in Terrasses
Zarolega Inc. v. Québec (Régie des installations olympiques), [1981] 1
S.C.R. 94, 124 D.L.R. (3d) 204:
Finally, a declaratory judgment will not be
rendered when it will serve little or no purpose.
[41]
Issuing a declaratory judgment that could not
quash or vacate the assessments would serve little or no purpose. As noted, the
Federal Court does not have the jurisdiction to quash or vacate the assessments
that were issued under the Act. Mr. Johnson would still have to pursue his
appeal to the Tax Court of Canada even if such declaratory judgment would have
been rendered. As noted by C. Miller J. in Obonsawin, at paragraphs 15
and 16, it does not necessarily follow that the Tax Court of Canada would
automatically vacate the assessments if such a declaration is issued.
[42]
As a result, I would dismiss the appeal in
relation to the judicial review of the Minister’s actions in issuing the
assessments.
Jurisdiction
of the Federal Court in Relation to the Collection Action
[43]
In Mr. Johnson’s memorandum of fact and law and
in the oral submissions in this appeal, his counsel focused on the issue of
whether the RTP was validly issued. Since no arguments were submitted in
relation to any of the other collection actions, only the validity of the RTP
will be addressed.
[44]
Mr. Johnson’s argument in relation to the RTP is
that it was issued before he was assessed and, therefore, it was not validly
issued under the Act. The Federal Court Judge, as noted above, first concluded
that the Tax Court of Canada (and not the Federal Court) had the jurisdiction
to deal with this issue. I am unable to agree with this conclusion.
[45]
To address this issue, it is not necessary to
determine if the First Assessments were validly issued. The issue is whether
the RTP was validly issued, based on the timing of the First Assessments and
the issuance of the RTP. Rather than a collateral attack on the First
Assessments, this question assumes that the First Assessments were validly
issued.
[46]
As noted by this Court in Walker v.
The Queen, 2005 FCA 393, [2005] F.C.J. No. 1952:
15 An application for judicial review
may be made to the Federal Court to challenge the legality of collection
measures taken by the Minister to collect taxes allegedly due.
[47]
This was reaffirmed by this Court in JP
Morgan at paragraph 96.
[48]
As a result, the Federal Court does have the
jurisdiction to judicially review the collection action of the Minister in
issuing the RTP in this case.
Validity
of the RTP
[49]
The collection actions that the Minister may
pursue under the Act are set out in sections 316 to 321 of the Act. However,
section 315 of the Act provides a limitation on such collection actions:
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315.(1) The
Minister may not take any collection action under sections 316 to 321 in
respect of any amount payable or remittable by a person that may be assessed
under this Part, other than interest, unless the amount has been assessed.
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315.(1) Le
ministre ne peut, outre exiger des intérêts, prendre des mesures de
recouvrement aux termes des articles 316 à 321 relativement à un montant
susceptible de cotisation selon la présente partie que si le montant a fait
l’objet d’une cotisation.
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[50]
Before the Minister can take any collection
action (which would include the RTP that was issued under section 320 of the
Act) against any person for any amount payable or remittable under the Act, that
person must first be assessed for such amount. The Federal Court Judge
concluded that there were two separate processes under the Act – the assessment
of Mr. Johnson and the sending of the notice of assessment to him. The Federal
Court Judge determined that the assessment of Mr. Johnson had been completed
before the RTP was issued. As a result, he determined that the RTP had been
validly issued under the Act. However, I am unable to agree that the RTP had
been validly issued under the Act.
[51]
The Supreme Court of Canada addressed the issue
of statutory interpretation in The Queen v. Canada Trustco Mortgage Company,
2005 SCC 54, [2005] 2 S.C.R. 601:
10 It has been long established as a
matter of statutory interpretation that “the words of an Act are to be read in
their entire context and in their grammatical and ordinary sense harmoniously
with the scheme of the Act, the object of the Act, and the intention of
Parliament”: see 65302 British Columbia Ltd. v. R., [1999] 3 S.C.R. 804
(S.C.C.), at para. 50. The interpretation of a statutory provision must be made
according to a textual, contextual and purposive analysis to find a meaning
that is harmonious with the Act as a whole. When the words of a provision are
precise and unequivocal, the ordinary meaning of the words play a dominant role
in the interpretive process. On the other hand, where the words can support
more than one reasonable meaning, the ordinary meaning of the words plays a
lesser role. The relative effects of ordinary meaning, context and purpose on
the interpretive process may vary, but in all cases the court must seek to read
the provisions of an Act as a harmonious whole.
[52]
In deciding how to interpret subsection 315(1)
of the Act, it is necessary to examine the context of the Act and to find a
meaning that is harmonious with the Act as a whole.
[53]
Subsection 300(1) of the Act provides that:
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300.(1) After
making an assessment, the Minister shall send to the person assessed a notice
of the assessment.
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300.(1) Une fois
une cotisation établie à l’égard d’une personne, le ministre lui envoie un
avis de cotisation.
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[54]
This confirms that there are two separate
processes – the assessment of a person and the sending of notice of the
assessment to that person.
[55]
However, in this case there is no indication
that the Federal Court Judge considered subsection 335(11) of the Act in
reaching his decision on the interpretation of the Act. This subsection
provides that:
|
335 (11) If a
notice of assessment has been sent by the Minister as required under this
Part, the assessment is deemed to have been made on the day of sending of the
notice of assessment.
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335 (11)
Lorsqu’un avis de cotisation a été envoyé par le ministre de la manière
prévue à la présente partie, la cotisation est réputée établie à la date
d’envoi de l’avis.
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[56]
Since subsection 315(1) of the Act provides that
an amount must be assessed before collection action can be taken, the date that
such assessment is deemed to have been made is critical. By deeming the
assessment to have been made on the date that it is sent, the date that the
information is entered into the CRA’s computer system and the assessment is processed
by that system is not relevant. Sending the notice of assessment to the person
assessed is the relevant act that determines the date of the assessment.
[57]
The Crown argued that subsection 335(11) of the
Act only provides the date of assessment for the purposes of determining the
time within which an appeal may be commenced. I am unable to agree with this
interpretation. There are no limiting words in subsection 335(11) of the Act.
Therefore, the deemed date of the assessment, as determined pursuant to
subsection 335(11) of the Act, will be the date of the assessment for any
provision of the Act which requires the determination of such date. Subsection
315(1) of the Act is such a provision. It is necessary to determine when a
person has been assessed so that the collection action could then commence. Parliament
would not have intended that collection action under the Act could commence
before the notice of assessment is sent to the person.
[58]
Using the address of the CRA to send a notice of
assessment to a person does not satisfy the requirements of subsection 300(1)
of the Act. This subsection provides that the Minister is obligated to send the
notice of assessment to the person assessed. Using the address of the CRA as
the mailing address of the person assessed is inappropriate and does not
satisfy the requirement that the notice of assessment be sent to the person
assessed.
[59]
As a result, the First Assessment of the
partnership, which was “sent” to the CRA at its
address in Surrey, BC, was not sent to the partnership as required by
subsection 300(1) of the Act. Although subsection 335(11) of the Act only
applies “if a notice of assessment has been sent by the
Minister as required under this Part”, the failure of the Minister to
satisfy the statutory obligation to send the notice of assessment to the
partnership should not give the Minister the right to commence collection
action against the partnership. My interpretation of subsections 300(1), 315(1)
and 335(11) of the Act is that the right to commence collection action only
commences once the Minister has fulfilled the statutory obligation to send the
notice of assessment to the person assessed. Otherwise, the Minister could
assess a person and then commence collection action without ever sending the
notice of assessment to the person assessed. This could not have been the
intention of Parliament.
[60]
In this case, the collection action was taken
against Mr. Johnson as a member of the partnership and not against the
partnership. The notice of assessment (assessing him as a partner of the
partnership) was sent to him at his last known address on April 24, 2012 and,
therefore, this assessment, as a result of the provisions of subsection 335(11)
of the Act, is deemed to have been made on that day. Subsection 272.1(5) of the
Act provides that partners of a partnership are jointly and severally liable to
pay all amounts that the partnership is required to pay or remit, and
subsection 299(2) of the Act provides that liability under the Act “is not affected by an incorrect or incomplete assessment or
by the fact that no assessment has been made”. Therefore, Mr. Johnson’s
liability as a partner is not affected by the incomplete First Assessment of
the partnership.
[61]
As noted above, the assessment of Mr. Johnson
was deemed to have been made on April 24, 2012 but the RTP was issued four days
earlier on April 20, 2012. Since the RTP was issued before Mr. Johnson was
assessed for the purposes of the Act, it was not validly issued under the Act. The
Crown argued that, since the RTP was not personally served on the RCMP until
after the notice of assessment was sent to Mr. Johnson, it should be considered
to be valid. However, this simply means that an invalid RTP was served on the
RCMP. This delivery of the RTP after the First Assessment was sent to Mr.
Johnson does not change the fact that the RTP was issued before he was assessed
and does not cure the defect.
[62]
Mr. Johnson asked for a number of remedies in
his notice of appeal. However, this is an application for judicial review. The
remedies that may be awarded on a successful application for judicial review
are restricted by subsection 18.1(3) of the Federal Courts Act, R.S.C.
1985, c. F-7:
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(3) On an
application for judicial review, the Federal Court may
(a) order a federal board, commission or other tribunal to do any
act or thing it has unlawfully failed or refused to do or has unreasonably
delayed in doing; or
(b) declare invalid or unlawful, or quash, set aside or set aside
and refer back for determination in accordance with such directions as it
considers to be appropriate, prohibit or restrain, a decision, order, act or
proceeding of a federal board, commission or other tribunal.
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(3) Sur
présentation d’une demande de contrôle judiciaire, la Cour fédérale peut :
a) ordonner à l’office fédéral en cause d’accomplir tout acte
qu’il a illégalement omis ou refusé d’accomplir ou dont il a retardé
l’exécution de manière déraisonnable;
b) déclarer nul ou illégal, ou annuler, ou infirmer et renvoyer
pour jugement conformément aux instructions qu’elle estime appropriées, ou
prohiber ou encore restreindre toute décision, ordonnance, procédure ou tout
autre acte de l’office fédéral.
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[63]
Therefore the remedies that may be granted in
relation to the issuance of the RTP are limited to a declaration of invalidity
or quashing the RTP.
[64]
As a result, I would allow the appeal of Mr.
Johnson in relation to the issuance of the RTP, issue a declaration that the
RTP was not validly issued under the Act and quash the RTP. Since, as noted
above, I would dismiss the appeal in relation to the decisions of the Minister
to issue the assessments, I would not award any costs.
"Wyman W. Webb"
“I agree
M.
Nadon J.A.”
“I agree
Richard
Boivin J.A.”
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