Dym v. The Queen, 79 DTC 5362, [1979] CTC 442 (FCTD)

Cattanach, J:—This is an application to change the terms of a judgment granted by myself on May 18, 1979 following upon a motion under Rule 324 for judgment on consent dated May 7, 1979 signed by counsel for both parties. The motion recites that the parties agreed that appeals from assessments of the plaintiff to income tax for various years should be resolved as set forth in minutes of settlement also dated May 7, 1979.

I declined to grant a draft of the judgment sought in that it embodied the terms of the minutes of settlement.

I directed the Registry to advise the applicants that the draft of the consent judgment was not acceptable for implementation in the form it was drafted and that consideration would be given to a revised draft of the consent judgment which contained within its four corners the terms of the judgment sought without resort to extrinsic material.

This was done to ensure a twofold purpose:

(1) to conform to the accepted practice that the formal pronouncement of a judgment shall be on a separate document (Rule 337(2)(b)), and

(2) that the appropriate judgment implementing the agreed settlement should be drafted and agreed upon by the solicitors for the parties so as to accurately reflect the settlement agreed upon between them.

This was done.

However I did make certain amendments to that draft to achieve the resultant form of judgment I signed on May 18, 1979.

I deleted the opening words:

The parties having signed minutes of settlement

as superfluous and detracting from the principle that the judgment should be completely self-contained.

I amended paragraph 1 of the draft which read:

The appeal for each of the 1969 and 1973 taxation years is dismissed.

to read:

The appeals from the plaintiff’s assessment to income tax are dismissed.

I amended paragraph 2 of the submitted draft reading:

The appeal for the 1974 taxation year is allowed in part and the notice of reassessment is referred back to the Minister of National Revenue for reassessment on the basis that the Plaintiff received additional income in the amount of $222,731.99 and was conferred benefits in the amount of $5,378.88.

to read:

The appeal from the plaintiff’s assessment to income tax for his 1974 taxation year is allowed and the assessment is referred back to the Minister of National Revenue for reassessment on the basis that the Plaintiff received additional income in the amount of $222,731.99 and was conferred benefits in the amount of $5,378.88 in that taxation year.

The only amendment made of any significance was that the words “in part’’ contained in the draft of paragraph 2 were deleted.

section 177 of the Income Tax Act prescribes how the Federal Court may dispose of an appeal. It reads:

The Federal Court may dispose of an appeal, other than an appeal to which section 180 applies, by

(a) dismissing it; or

(b) allowing it and

(i) vacating the assessment,

(ii) varying the assessment,

(iii) restoring the assessment, or

( iv) referring the assessment back to the Minister for reconsideration and reassessment.

The section does not permit of an appeal being allowed “in part”. If an appeal is successful in any respect then the appeal is to be allowed and the assessment (which is what is appealed) is to be vacated, varied, restored or referred back to the Minister for reassessment as the circumstances dictate.

If perchance paragraph 2 of the submitted draft which states that the appeal for the 1974 taxation year is allowed in part” had gone on to state as I consider to be obligatory “that in all other respects the appeal is dismissed” I may have given consideration to granting a judgment so worded but the draft judgment was not so worded.

Paragraph 2 of the judgment granted conforms exactly to what subparagraph 177(b)(iv) comtemplates and as was sought in paragraph (2) of the draft except for the deletion of the words “in part’’ which was done to conform to section 177 of the Act.

Paragraph 5 of the minutes of settlement reads:

5. The assessment for the 1974 taxation year is to be varied by reducing the additional income to $222,731.99 and by confirming the taxable benefit in the amount of $5,378.88.

In my view paragraph 2 of the draft judgment and that paragraph contained in the judgment granted with the words “in part’’ deleted conforms to the agreement between the parties as outlined in paragraph 5.

It is the assessment that is appealed and the only possible way the assessment can be “varied” (which is the word used in the agreement) is by allowing the appeal and referring back to the Minister and that is what was done in paragraph (2) of both the draft judgment and the judgment.

What has happened is that a dispute has arisen between the parties as to whether the agreement between them precluded the assessment of penalties in their entirety or permitted either an increase or reduction thereof consistent with the change in the assessment of income. The latter is the position of the defendant and the former may be in the position of the plaintiff.

I fail to follow how the language (which is that of the parties) in paragraph 2 of the judgment does not conform with paragraph 5 of the minutes of settlement.

I do not accept the conclusion of Pierre Loiselle in paragraph 11 of his supporting affidavit sworn on September 12, 1979 where he states that the judgment rendered by myself does not conform with the judgment prepared by the parties in that the minutes of settlement contemplated that the assessment for the 1974 taxation year was to be “varied” and that the appeal for that year was to be allowed “in part”.

As indicated before an appeal should not be allowed “‘in part”. It is allowed with the qualifications in paragraph 177(b) of the Act or it is dismissed.

“Vary” as applied to things means to change or alter. When an assessment is referred back to the Minister for reassessment on the basis that additional income or lesser additional income has been received that contemplates an increase or decrease in the tax payable which is a change or alteration of the assessment and hence a variation thereof.

It is not my purpose to interpret the meaning of the settlement between the parties for them with its consequent results. That is not an issue before me.

The question before me is whether the judgment granted contains a mistake or error which should be corrected.

It was made abundantly clear to the solicitors for the parties that it was their responsibility to submit a self-contained draft judgment which would implement the agreement between them.

The language that the appeal be allowed and referred back for reassessment on a specified basis (which basis conformed to that in the settlement) was the language chosen by the draftsmen.

In my view the judgment contains no mistake which is subject to correction under either Rule 337(6) or 1733 and the judgment granted was the judgment that was asked for and to which the parties consented. The dispute between the parties is a dispute between the parties as to the meaning of the agreement of settlement, which was implemented in the consent judgment and not as to the judgment granted.

For the foregoing reasons the motion is dismissed. Neither party demanded costs so each party will bear its own costs.