This
case
is
to
be
distinguished
from
this
Court's
decisions
in
M.N.R.
v.
Parsons,
[1984]
C.T.C.
352;
84
D.T.C.
6345
and
Optical
Recording
Laboratories
v.
Canada,
[1990]
2
C.T.C.
524;
90
D.T.C.
6647
because
the
validity
of
the
assessment
is
not
challenged
here.
In
each
of
those
cases,
the
issue
as
to
liability
for
income
tax
depended
on
the
alleged
invalidity
of
the
assessment.
In
such
a
case,
we
have
no
doubt,
the
denial
of
liability
can
only
be
litigated
by
an
appeal
against
the
assessment
as
provided
by
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the"Act").
We
are
all
of
the
view
that
the
learned
trial
judge
erred
in
characterizing
this
action
for
declaratory
relief
as
an
appeal
against
the
assessment
in
issue.
Rather,
many
of
the
declarations
sought
are
to
the
effect
that,
in
law,
the
debt
confirmed
by
the
assessment
has
been
extinguished.
An
action
for
declaratory
relief
does
not
entirely
fail
simply
because
some
of
the
declarations
sought
may
not
be
available.
It
follows
that,
whatever
he
might
properly
have
done
as
to
specific
declarations
claimed
had
it
been
sought
to
strike
them,
the
trial
judge
erred
by
entirely
dismissing
the
action
on
the
basis
that
the
issues
could
have
been
dealt
with
by
way
of
an
appeal
against
the
assessment
and
that
the
Trial
Division
was,
therefore,
without
jurisdiction
to
entertain
it.
The
appeal
will
be
allowed
with
costs.
Pursuant
to
subparagraph
52(b)(ii)
of
the
Federal
Court
Act,
R.S.C.
1985,
c.
F-7,
the
matter
will
be
referred
back
to
the
Trial
Division
for
a
new
trial.
Appendix
98.
Therefor
the
Plaintiff
seeks
from
this
Honourable
Court
one
or
more
of
the
following
declarations,
that
is
to
say,
a
declaration
that:
(1)
The
receipt
by
the
Defendant's
agents,
servants,
employees
or
officials
of
the
bank
guarantee
payable
on
demand
was
tantamount
to
payment
of
the
income
tax
balances
reflected
in
the
Notice
of
Reassessment
dated
November
10,
1983
and
in
the
Notice
of
Reassessment
dated
January
29,
1985;
(2)
The
making
of
the
demand
for
payment
upon
the
Bank
of
Montreal
on
September
13,
1984
pursuant
to
the
bank
guarantee
and
Revenue
Canada's
decision
not
to
accept
payment,
as
between
the
Plaintiff
and
Defendant,
constituted
payment
of
the
Reassessment
amount
or
the
amount
claimed;
(3)
By
making
a
demand
for
payment
pursuant
to
the
bank
guarantee
on
September
13,
1984
and
choosing
not
to
accept
payment
or
cash
but
rather
a
renewal
of
the
guarantee,
the
Defendant
by
Her
agents
etc.
accepted
all
risks
for
so
doing
and
effectively
waived
any
recourse
it
might
have
against
the
Plaintiff
and/or
released
or
discharged
the
Plaintiff
from
any
liability
for
or
the
payment
of
the
Reassessment
amount
or
the
amount
claimed;
(4)
The
receipt
by
the
Defendant's
agents
etc.
of
the
bank
guarantee
was
tantamount
to
the
payment
of
the
income
tax
balances
reflected
in
[the
said
Notices
of
Reassessment]
subject
to
a
condition,
namely
demand,
over
which
the
Defendant,
Her
agents
etc.
had
the
entire
control,which
demand
the
Defendant
through
the
default
of
Her
agents
etc.
failed
to
make
prior
to
the
expiry
of
the
bank
guarantee
as
a
result
of
which
the
Plaintiff
is
relieved
from
paying
the
[said]
income
tax
balances;
(5)
The
Defendant
by
Her
agents
etc.
recognized
The
Dale
Corporation
as
the
person
responsible
for
the
payment
of
the
[said]
income
tax
balances
and
did
thereby
waive
any
recourse
it
may
have
had
against
the
Plaintiff
for
the
payment
of
the
[said]
income
tax
balances;
(6)
The
Defendant
by
Her
agents
etc.
recognized
[Dale]
as
the
person
responsible
for
the
payment
of
the
[said]
income
tax
balances
and
did
thereby
release
the
Plaintiff
from
any
liability
for
the
payment
of
the
[said]
income
tax
balances;
(7)
The
Defendant,
by
Her
agents
etc.
recognized
[Dale]
as
the
person
responsible
for
the
payment
of
the
[said]
income
tax
balances
and
entered
negotiations
and
arrangements
with
[Dale]
to
the
exclusion
of
the
Plaintiff
and
did
thereby
waive
any
recourse
it
may
have
had
against
the
Plaintiff
for
the
payment
of
the
[said]
income
tax
balances;
(8)
The
Defendant,
by
Her
agents
etc.
recognized
[Dale]
as
the
person
responsible
for
the
payment
of
the
[said]
income
tax
balances
and
entered
negotiations
and
arrangements
with
[Dale]
to
the
exclusion
of
the
Plaintiff
and
did
thereby
release
the
Plaintiff
from
any
liability
for
the
payment
of
the
[said]
income
tax
balances;
(9)
The
Defendant,
by
Her
agents
etc.
knew
or
ought
to
have
known
that
the
Plaintiff
would
rely
on
the
conduct
of
the
Defendant's
agents
etc.
and
based
thereon
would
not
pursue
the
court
action
which
it
had
commenced
against
[Dale]
to
the
Plaintiff's
detriment
and
accordingly,
the
Defendant,
Her
agents
etc.
are
estopped
from
acting
upon
[the
said
Notices
of
Reassessment];
(10)
The
Defendant,
by
Her
agents
etc.
knew
or
ought
to
have
known
that
the
Plaintiff
would
rely
on
[their]
conduct
and
based
thereon
would
not
pursue
the
court
action
which
it
had
commenced
against
[Dale]
to
the
Plaintiff's
detriment
and
accordingly,
the
Plaintiff
is
relieved
from
paying
the
[said]
income
tax
balances;
(11)
The
Defendant
by
Her
agents
etc.
was
trustee
of
the
bank
guarantee
for
the
Plaintiffs
benefit
and
failed
to
exercise
that
trusteeship
in
the
manner
of
a
reasonable
and
prudent
trustee,
and
accordingly,
the
Defendant,
Her
agents
etc.
are
estopped
from
acting
upon
[the
said
Notices
of
Reassessment];
(12)
The
Defendant
by
Her
Agents
etc.
was
trustee
of
the
bank
guarantee
for
the
Plaintiff’s
benefit
and
failed
to
exercise
that
trusteeship
in
the
manner
of
a
reasonable
and
prudent
trustee,
and
accordingly,
the
Plaintiff
is
relieved
from
paying
the
[said]
income
tax
balances;
(13)
Revenue
Canada
had
an
equitable
obligation
as
a
fiduciary
to
handle
the
bank
guarantee
in
a
manner
beneficial
to
the
Plaintiff
which
obligation
it
breached,
and
accordingly,
the
Plaintiff
is
relieved
from
paying
the
[said]
income
tax
balances;
(14)
The
Defendant
by
Her
agents
etc.
owed
a
duty
to
the
Plaintiff
to
carefully
handle
the
bank
guarantee,
which
duty,
to
the
Plaintiff's
detriment,
they
failed
to
perform,
and
accordingly,
the
Plaintiff
is
relieved
from
paying
the
[said]
income
tax
balances;
(15)
For
the
reasons
stated
in
paragraphs
(1)
to
(8)
and
paragraphs
(13)
and
(14)
above,
the
Defendant,
Her
agents
etc.
are
estopped
from
acting
on
[the
said
Notices
of
Reassessment]
to
the
Plaintiff's
prejudice.
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