Muldoon,
J.:—It
will
be
noticed
by
anyone
who
sees
the
documents
on
the
Court's
file
of
these
proceedings,
that
one
of
the
references
preceding
the
title
of
action
(style
of
cause),
as
formulated
by
the
applicant’s
solicitors,
announces:
“AND
IN
THE
MATTER
OF
the
Constitution
Act,
1982,
and
sections
7,
8,
24
and
52
thereof”.
That
reference
presages
a
prayer
for,
"(6)
A
declaration
that
sections
223
and
224
of
the
Income
Tax
Act
are
of
no
force
and
effect".
At
the
beginning
of
the
hearing
of
this
litigation,
on
August
15,
1986,
the
applicant’s
counsel
informed
the
Court
that
the
applicant
abandons
herein
its
claim
for
relief
to
declare
sections
223
and
224
of
the
Income
Tax
Act
to
be
of
no
force
and
effect.
So
be
it.
(Parenthetically,
it
may
be
observed
that
the
legislators
who
enacted
Schedule
I
of
the
Federal
Court
Act,
and
the
judges
who
composed
Appendix
I
to
the
Rules,
made
no
provision
for
such
references.
Further,
if
Her
Majesty
the
Queen
be
an
appropriate
party
herein,
which
is
doubtful,
the
expression
"in
Right
of
Canada"
is
in
the
same
state
of
inutility
as
the
immediately
above-mentioned
references
and
should
share
their
fate.
They
will
be
eliminated
from
the
formal
order
which
will
dispose
of
this
motion,
and
this
may
be
taken
to
be
an
order
to
eliminate
all
of
those
extraneous
references
from
further
proceedings,
if
any,
in
these
proceedings.)
The
remaining
prayers
for
relief
expressed
by
the
applicant
are
as
follows:
(1)
A
Writ
of
certiorari
or
an
order
for
relief
in
the
nature
thereof
to
quash
the
determination
by
the
respondent,
the
Minister
of
National
Revenue,
to
assess
tax
as
owing
by
the
applicant
and
the
issue
of
a
document
headed
“Notice
of
Assessment”
dated
June
3,
1985
in
respect
of
those
taxes
allegedly
owing
by
the
applicant;
(2)
A
Writ
of
certiorari
or
an
order
for
relief
in
the
nature
thereof
to
quash
the
decision
by
the
respondent
to
issue
a
“Requirement
to
Pay”
dated
March
18,
1986
pursuant
to
section
224
of
the
Income
Tax
Act
delivered
by
hand
to
the
Royal
Bank
of
Canada,
20
King
Street
West,
Toronto,
Ontario
respecting
taxes
allegedly
owing
by
the
applicant;
(3)
A
Writ
of
certiorari
or
an
order
for
relief
in
the
nature
thereof
to
quash
the
decision
by
the
respondent
to
issue
a
“Requirement
to
Pay”
dated
March
18,
1986
pursuant
to
section
224
of
the
Income
Tax
Act
delivered
by
hand
to
the
Canada
Permanent
Trust,
66
Temperance
Street,
Toronto,
Ontario
respecting
taxes
allegedly
owing
by
the
applicant;
(4)
A
Writ
of
certiorari
or
an
order
for
relief
in
the
nature
thereof
to
quash
the
decision
by
the
respondent
to
issue
a
Certificate
pursuant
to
section
223
of
the
Income
Tax
Act
respecting
taxes
allegedly
owing
by
the
applicant;
(5)
A
writ
of
prohibition
or
relief
in
the
nature
thereof
prohibiting
or
restraining
the
respondents
and
anyone
under
their
direction
and
control
from
continuing
with
collection
proceedings
against
the
applicant
until
it
is
lawful
to
do
so;
(6)
[abandoned]
(7)
Such
other
orders
as
may
to
this
Honourable
Court
seem
just.
The
applicant
asserts
the
following
grounds
in
support
of
its
prayers
for
relief:
(a)
That
the
respondent
acted
without
or
in
excess
of
his
jurisdiction
in
issuing
a
Notice
of
Assessment;
(b)
The
document
headed
Notice
of
Assessment
issued
by
the
respondent
contains
an
error
on
its
face
in
that
the
tax
allegedly
assessed
is
shown
as
owing
pursuant
to
subsection
195(2)
of
the
Income
Tax
Act,
which
section
does
not
create
an
obligation
to
pay
tax;
(c)
The
Certificate
issued
pursuant
to
section
223
of
the
Income
Tax
Act
contains
an
error
on
its
face
as
to
the
amount
of
tax,
if
any,
that
is
owing
by
the
applicant;
(d)
That
the
collection
proceedings
taken
by
the
respondent
amount
to
unreasonable
seizure
of
the
assets
of
the
applicant
contrary
to
sections
7,
8
and
52
of
the
Charter
of
Rights
and
Freedoms;
and
(e)
[abandoned]
(f)
Sections
223
and
224
of
the
Income
Tax
Act
are
procedurally
unfair
and
infringe
on
the
applicant’s
right
to
a
fair
hearing
or
infringe
on
the
applicant’s
right
to
security
of
property
contrary
to
the
Canadian
Bill
of
Rights.
Ground
(f),
in
invoking
the
Canadian
Bill
of
Rights,
is
broader
than
the
relief
claimed
and,
in
so
far
as
it
implies
a
plea
for
a
declaration
of
invalidity
or
lack
of
force
and
effect,
it
also
is
regarded
as
having
been
abandoned.
On
behalf
of
the
applicant
there
was
filed
the
affidavit
of
John
Adamson,
its
president.
Annexed
to
his
affidavit
are
voluminous
and
numerous
exhibits
which
invite
more
detailed
examination
and
commentary
than
can
be
accorded
here
in
view
of
the
pressing
nature
of
these
proceedings
upon
which
the
parties
desire
the
Court's
pronouncement
without
delay.
Mr.
Adamson
was
cross-examined
on
his
affidavit,
of
which
paragraph
19
is
struck
out
of
it.
No
affidavit
was
tendered
on
behalf
of
the
respondent
Minister.
The
applicant
has
served
and
tendered
a
rather
succinct
statement
of
fact
and
law
included
in
the
motion
record
herein.
The
respondents
have
tendered
such
a
statement,
as
well
as
two
books
of
authorities.
For
convenience
in
the
circumstances,
those
statements
of
fact
are
now
reproduced
herein,
with
such
commentaries,
abridgements
and
findings
as
the
Court
deems
necessary
and
desirable.
Both
express
the
parties’
references
to
other
material.
The
applicant
is
frequently
called
O.R.C.
1.
The
applicant
is
a
Canadian
corporation
carrying
on
the
business
of
scientific
research
and
development
with
its
head
corporate
office
located
in
the
City
of
Toronto,
in
the
Municipality
of
Metropolitan
Toronto.
2.
The
company
was
incorporated,
as
Information
Tunnel
Research
Inc.,
on
August
17,
1984.
It
has
subsequently
changed
its
name
to
Optical
Recording
Corporation.
3.
The
fiscal
year
end
for
the
corporation
is
February
28.
(The
above
assertions
are
admitted
by
the
respondents.)
4.
In
April
of
1985,
O.R.C.
designated
amounts
totalling
$21,500,000
pursuant
to
subsection
194(4)
of
the
Income
Tax
Act,
as
the
respondents
admit.
The
applicant
says
that
those
amounts
were
the
consideration
received
by
O.R.C.
on
the
issue
of
shares,
debt
obligations
and
certain
rights
to
finance
scientific
research
and
development.
(For
purposes
of
these
proceedings,
this
can
be
taken
to
be
true,
without
prejudice
to
any
rights
of
the
respondents
in
other
proceedings.)
5.
In
June
of
1985,
the
Minister
of
National
Revenue
served
a
“Notice
of
Assessment”
dated
June
3,
1985
purporting
to
levy
an
assessment
under
Subsection
195(2)
of
the
Act
in
the
amount
of
$10,750,000.
Reference:
Affidavit
of
Gary
John
Adamson,
paragraph
8.
6.
The
Notice
of
Assessment
provided
on
its
face:
“Corporations
that
have
issued
scientific
research
or
share-purchase
tax
credit
securities
are
technically
liable
to
pay
the
related
Part
VIII
tax
by
the
end
of
the
month
following
the
transaction.
However,
under
the
terms
of
this
special
credit
program,
the
tax
liabilities
may
be
reduced
or
extinguished
through
the
use
of
qualifying
expenditures
or
tax
credits.
Since
these
Part
VIII
tax
liabilities
may
be
reduced,
Revenue
Canada,
Taxation
is
prepared
to
modify
or
withhold
its
usual
collection
action
with
respect
to
these
assessments
where
the
corporation
is
able
to
satisfy
Revenue
Canada
that
its
liability
will
be
eliminated
by
the
end
of
the
year,
or
provide
acceptable
security."
[Emphasis
added.]
Reference:
Affidavit
of
Gary
John
Adamson,
paragraph
9
and
Exhibit
“D”.
(Statements
of
fact
5
and
6,
above,
are
admitted
by
the
respondents.)
7.
In
reliance
on
this
statement,
the
corporation
did
not
file
a
Notice
of
Objection
to
the
Notice
of
Assessment,
as
it
had
already
eliminated
its
liability
regarding
this
tax.
Reference:
Affidavit
of
Gary
John
Adamson,
paragraph
9.
Cross-examination
of
Gary
John
Adamson,
pages
30,
31,
32,
questions
121
through
133
The
respondents
do
not
admit
paragraph
7
and
state
that
when
the
applicant’s
president,
Mr.
Adamson,
received
the
Notice
of
Assessment
he
did
not
at
first
immediately
read
it,
but
instead
put
it
aside.
Mr.
Adamson
did
not
understand
that
there
was
such
a
procedure
as
a
Notice
of
Objection
until
after
the
time
limit
for
objecting
had
passed.
Reference:
Cross-examination
of
John
Adamson,
pages
2-3,
questions
1-15;
and
pages
30-32,
questions
121-133.
Both
the
applicant
and
the
respondents
are
correct.
The
Court
finds
that
the
receipt
of
the
two-page
document
caused
Mr.
Adamson,
upon
reading
it,
to
review
and
to
reaffirm
his
belief
that
the
applicant,
O.R.C.,
had
already
eliminated
its
liability
for
Part
VIII
tax,
and
therefore
in
light
of
the
emphasized
passage,
that
the
respondent
Minister
and
his
officials
were
not
exacting
payment
of
the
$10,750,000
recorded
on
the
other
page.
It
is
true
that
Mr.
Adamson
did
not
immediately
read
that
document,
did
not
then
understand
that
there
was
such
a
procedure
as
a
notice
of
objection
and
was
unable
to
say
on
cross-examination
which
particular
phrases
or
linguistic
constructs
in
the
cited
paragraph
conveyed
to
him,
as
it
did,
that
its
meaning
was
to
remove
any
requirement
to
pay
the
sum
recorded
on
the
other
page.
In
the
view
which
the
Court
takes
of
the
evidence
those
truths
indicated
by
the
respondents
are
of
wan
weight
or
significance
when
compared
with
the
salient
fact
that
the
Minister’s
message
conveyed
to
Mr.
Adamson
the
eminently
reasonable
meaning
that
the
Minister
and
his
officials
were
not
requiring
the
payment
of
the
cited
sum,
but
were
in
fact
merely
acknowledging
the
applicant's
filing.
8.
In
late
1985
and
early
1986,
John
Adamson
met
with
[three
named
officials,
included
among
whom
was
one
from
Revenue
Canada
Collections],
to
discuss
the
subject
of
collateral
security
by
O.R.C.
as
against
the
potential
tax
liability.
Reference:
Affidavit
of
Gary
John
Adamson,
paragraph
10
(The
respondents
admit
the
above
assertion
of
facts.)
9.
The
scientific
equipment
purchased
and
to
be
credited
against
the
tax
liability
has
been
assessed
by
one
Professor
Chamberlain.
[Respondents
correctly
add
the
following
remarks.]
Professor
Chamberlain
was
retained
by
Revenue
Canada
for
the
purpose
only
of
ascertaining
whether
the
research
carried
out
by
the
applicant
was
scientific
in
nature.
Any
statement
made
by
Professor
Chamberlain
was
only
concerned
with
that
issue.
The
only
opinion
sought
by
the
applicant
from
Revenue
Canada
was
with
respect
to
whether
the
financing
arrangements
for
the
purchase
of
certain
equipment
satisfied
the
transitional
provisions
of
the
Income
Tax
Act.
No
other
opinion
was
sought
from
and
no
other
opinion
has
been
given
by
Revenue
Canada
with
respect
to
any
other
issue.
Paragraph
11
of
affidavit
of
John
Adamson
and
Cross-examination
of
John
Adamson,
pages
11-16,
questions
50-65;
pages
19-20,
questions
73-76;
pages
21-23,
questions
82-87;
and
pages
53-56,
questions
205-209.
10.
On
March
18,
1986,
two
of
the
creditors
of
O.R.C.
(the
Royal
Bank
of
Canada
and
Canada
Permanent
Trust)
were
served
with
requirements
to
pay
by
the
Minister
of
National
Revenue.
This
has
had
the
effect
of
freezing
the
funds
held
by
them
for
O.R.C.
Reference:
Affidavit
of
Gary
John
Adamson,
paragraphs
12
and
13.
(This
is
admitted
by
the
respondents.)
11.
Optical
Recording
has
requested
an
extension
of
time
to
file
a
Notice
of
Objection
to
the
Notice
of
Assessment
of
June
3,
1985.
The
Minister
has
refused
to
consent
to
such
an
extension
of
time.
Reference:
Affidavit
of
Gary
John
Adamson,
paragraphs
14
and
15.
The
respondents
admit
the
above
facts,
but
add
that
pursuant
to
subsection
167(5)
of
the
Income
Tax
Act
unless
the
Court
is
satisfied
that
the
requirements
of
paragraph
167(5)(c)
of
the
Income
Tax
Act
are
satisfied
no
extension
shall
be
granted,
notwithstanding
the
respondents’
position.
12.
Optical
Recording
has
filed
a
tax
return
for
its
fiscal
year
ending
February
28,
1986
which
shows
no
Part
VIII
tax
owing
as
the
Part
VIII
liability
has
been
eliminated
through
expenditures
on
research
and
development.
Reference:
Affidavit
of
Gary
John
Adamson,
Exhibit
“P”.
The
respondents
admit
that
the
applicant
has
filed
such
a
return,
but
they
deny
that
the
Part
VIII
tax
liability
has
been
eliminated
through
expenditures
on
research
and
development.
13.
The
Minister
of
National
Revenue
has
indicated
that
it
will
continue
its
collection
proceedings
in
this
matter.
14.
On
July
3,
1986,
six
days
before
a
scheduled
hearing
in
the
Supreme
Court
of
Ontario
brought
by
Canada
Trust
to
interplead
the
sum
of
$543,858.00
of
monies
due
and
owing
to
Digital
Recording
Corporation,
the
Minister
consented
to
these
funds
being
paid
to
Digital
Recording
Corporation.
(The
respondents
admit
the
facts
expressed
in
paragraphs
13
and
14
above.)
The
above-mentioned
sum
was
held
in
escrow
by
the
trust
company
for
the
purpose
of
paying
the
remaining
expenditures
for
scientific
research
equipment,
according
to
an
escrow
agreement,
by
which
total
expenditures
Mr.
Adamson
believed
the
applicant
had,
or
would
have,
eliminated
its
Part
VIII
tax
liability
before
or
by
the
dawning
of
the
day
of
reckoning.
In
addition
to
the
above
recited
facts
about
which
there
is
little
relevant
dispute
here,
the
respondents
would
add
certain
others,
thus:
A.
The
applicant
chose
to
avail
itself
of
the
scientific
research
tax
credit
provisions
of
the
Income
Tax
Act
voluntarily
and
under
no
compulsion.
Cross-examination
of
John
Adamson,
page
27,
questions
106-107.
B.
The
applicant
in
filing
designations
under
subsection
194(4)
of
the
Income
Tax
Act,
could
have
designated
any
amount
up
to
$21,500,000.00.
Cross-examination
of
John
Adamson,
page
27,
questions
108-109.
C.
The
applicant
designated
in
total
$21,500,000.00
pursuant
to
subsection
194(4)
of
the
Income
Tax
Act
and
declared
that
the
Part
VIII
tax
payable,
which
was
50%
of
the
total
amount
designated,
was
$10,750,000.00.
The
designations
filed
were
prepared
on
the
instructions
of
Mr.
Adamson
and
were
signed
by
him.
Cross-examination
of
John
Adamson,
pages
25-27,
questions
92-105.
(The
above
three
statements
of
fact
are
correct.)
D.
At
the
time
the
applicant
filed
the
designations
under
subsection
194(4)
of
the
Income
Tax
Act,
it
knew
that
its
Part
VIII
tax
payable
would
be
50%
of
the
total
amount
designated.
Cross-examination
of
John
Adamson,
page
27,
question
110.
The
above
statement
is
correctly
cited,
but
it
would
be
most
accurately
stated
..
could
be
as
much
as
50%
of
the
total
amount”.
At
the
end
of
the
tax
year
tax
might
have
been
entirely
eliminated
or
might
be
less
than
50%,
but
no
more
than
50
per
cent.
E.
The
assessment
issued
to
the
applicant,
in
respect
of
the
designations
filed,
was
in
an
amount
equal
to
50%
of
the
total
amount
of
the
designations
filed,
which
was
$10,750,000.00.
Cross-examination
of
John
Adamson,
page
28,
question
112.
The
above
statement
E
is
also
correctly
cited
but
begs
the
question
of
whether
or
not
that
which
is
called
an
assessment
is
simply
a
nullity.
F.
At
the
time
the
applicant
received
the
Notice
of
Assessment
it
had
not
and
at
no
time
since
receiving
the
Notice
of
Assessment
has
the
applicant
received
any
confirmation
from
Revenue
Canada
that
they
were
satisfied
that
the
Company’s
Part
VIII
tax
liability
would
be
satisfied.
Cross-examination
of
John
Adamson,
page
33,
question
134;
pages
11-16,
questions
50-65;
pages
19-20,
questions
73-76;
pages
21-23,
questions
82-87;
and
pages
53-56,
questions
205-209.
G.
The
assessment
issued
to
the
applicant
has
not
been
altered
by
virtue
of
any
objection
or
appeal
filed
by
the
applicant.
Cross-examination
of
John
Adamson,
page
28,
questions
113-114.
H.
The
applicant
has
at
no
time
offered
to
provide
security
to
Revenue
Canada
for
its
Part
VIII
tax
liability
and
has
refused
all
requests
for
security
made
by
Revenue
Canada.
Cross-examination
of
John
Adamson,
pages
43-44,
questions
169-171;
and
pages
50-51,
questions
187-191.
I.
The
Requirements
To
Pay
issued
in
respect
of
the
applicant’s
Part
VIII
tax
liability
do
not
refer
to
any
Notice
of
Assessment.
Cross-examination
of
John
Adamson,
pages
41-43,
questions
162-168.
J.
The
applicant’s
Part
VIII
income
tax
return
was
filed
in
early
April,
1986.
Cross-examination
of
John
Adamson,
pages
38-41,
questions
153-161.
K.
Revenue
Canada
is
currently
auditing
the
applicant’s
Part
VIII
return.
Cross-examination
of
John
Adamson,
page
53,
question
200.
L.
Paragraph
10
of
the
affidavit
of
John
Gary
Adamson,
sworn
June
18,
1986,
should
be
amended
to
read,
inter
alia:
“,..
On
both
occasions
I
advised
[the
department's
collections
official]
and
do
verily
believe
that
there
was
no
need
for
collateral
security
as
O.R.C.
had
satisfied
the
potential
tax
liability
through
its
equipment
purchase
made
with
Digital
and
that
O.R.C.
is
a
well
established
business
in
Toronto.”
Cross-examination
of
John
Adamson,
page
36,
questions
145-146.
(Statements
F
to
L
are
correct.)
The
respondents
also
allege,
as
a
fact,
that
which
is
properly
a
conclusion
of
law:
M.
At
all
material
times
the
applicant,
by
virtue
of
subsection
195(2)
of
the
Income
Tax
Act,
was
liable
to
make
a
payment
under
the
Income
Tax
Act.
In
terms
of
the
relief
sought
here,
that
statement
is
a
double-edged
sword
of
the
kind
traditionally
associated
with
the
allegorical
symbol
of
justice.
Subsection
195(2)
of
the
Act
will
be
considered,
in
conjunction
with
other
pertinent
matters,
after
consideration
of
the
question
of
this
Court's
jurisdiction
to
adjudicate
on
the
applicant’s
motion
for
relief
pursuant
to
section
18
of
the
Federal
Court
Act.
The
question
is
raised
and
discussed
by
both
sides.
At
first
blush
that
question
might
seem
to
be
already
concluded.
The
Appeal
Division
in
its
unanimous
decision
in
M.N.R.
v.
Parsons,
[1984]
2
F.C.
331;
[1984]
C.T.C.
352;
84
D.T.C.
6345,
(reversing
the
Trial
Division
judgment
[1984]
1
F.C.
804;
[1983]
C.T.C.
107;
83
D.T.C.
5329)
held:
We
are
all
of
opinion
that
the
appeal
must
succeed
on
the
narrow
ground
that
the
only
way
in
which
the
assessments
made
against
the
respondents
could
be
challenged
was
that
provided
for
in
sections
169
and
following
of
the
Income
Tax
Act.
This,
in
our
view,
clearly
results
from
section
29
of
the
Federal
Court
Act.
The
learned
judge
of
first
instance
held
that,
in
this
case,
section
29
did
not
deprive
the
Trial
Division
of
the
jurisdiction
to
grant
the
application
made
by
the
respondents
under
section
18
of
the
Federal
Court
Act
because,
in
his
view,
the
appeal
provided
for
in
the
Income
Tax
Act
was
restricted
to
questions
of
"quantum
and
liability”
while
the
respondents’
application
raised
the
more
fundamental
question
of
the
Minister’s
legal
authority
to
make
the
assessments.
We
cannot
agree
with
that
distinction.
The
right
of
appeal
given
by
the
Income
Tax
Act
is
not
subject
to
any
such
limitations.
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.
Since
the
release
of
the
Parsons
judgment,
there
have
been
apparently
conflicting
decisions
of
the
Trial
Division
in
W.T.C.
Western
Technologies
Corp.
v.
M.N.R.,
[1986]
1
C.T.C.
110;
86
D.T.C.
6027,
and
in
Bechthold
Resources
v.
M.N.R.,
[1986]
1
C.T.C.
195;
86
D.T.C.
6065.
The
case
at
bar
raises
issues
about
the
paragraph
attached
to
the
purported
notice
of
assessment
(exhibit
““D’’,
above
recited)
and
the
respondent
Minister's
policy
of
collections
(exhibit
“A”
to
Mr.
Adamson's
affidavit),
which
are
quite
beyond
the
scope
of
the
appeal
provisions
of
the
Income
Tax
Act
upon
which
the
Appeal
Division
relied
in
order
to
invoke
section
29
of
the
Federal
Court
Act
in
derogation
of
the
Trial
Division's
jurisdiction
in
the
Parsons
case.
The
issues
to
be
determined
here
are
much
broader
than,
and
different
from,
matters
of
extension
of
time
to
appeal,
the
validity
of
a
notice
of
assessment
and
appeal
therefrom.
The
issues
here
raise
questions
of
fundamental
administrative
illegality,
unfair
treatment
and
estoppel
which
engage
the
superintending
jurisdiction
of
a
superior
court,
such
that
even
if
this
Court's
disposition
of
them
be
ultimately
adjudged
to
be
wrong,
the
Court's
decision
to
entertain
them
should
be
seen
to
be
correct.
The
case
at
bar
is
therefore
quite
distinct
from
the
Parsons
case.
It
will
be
seen,
as
well,
to
be
distinguishable
from
the
W.T.C.
Western
and
Bechthold
Resources
decisions.
For
these
reasons,
which
are
more
fully
developed
hereinafter,
the
Court
accepts
and
exercises
jurisdiction
in,
upon
and
over
the
subject
of
this
motion.
A
brief
general
explanation
of
the
Scientific
Research
Tax
Credit
(SRTC)
program,
in
more
narrative
prose
than
the
Act
provides,
can
be
gleaned
from
the
first
two
pages
of
the
Department's
internal
paper
on
administrative
policy
and
procedures,
a
copy
of
which
is
annexed
as
exhibit
"A"
to
Mr.
Adamson's
affidavit,
thus:
Incentives
for
research
and
development
(R
&
D)
have
been
provided
in
the
Income
Tax
Act
since
1944.
However,
in
the
past
these
tax
incentives
were
only
of
value
to
companies
that
were
in
a
taxable
position.
The
SRTC
mechanism
was
introduced
to
allow
research
companies
to
provide
tax
incentives
to
investors
to
assist
the
research
companies
in
attracting
external
financing
for
their
R
&
D
programs.
SRTCs
may
be
issued
after
September
1983
and
in
respect
of
qualified
R
&
D
expenditures
incurred
after
April
19,
1983.
The
SRTC
provisions
enable
a
corporation
to
issue
capital
stock,
debt
obligations
or
certain
rights
(SRTC
securities)
after
September
30,
1983
to
raise
capital
to
fund
its
R
&
D
activities.
Pursuant
to
subsection
194(4)
of
the
Act,
a
company
issuing
SRTC
securities
can
designate,
by
filing
prescribed
form
T2113
no
later
than
the
end
of
the
month
following
the
month
of
issue,
any
amount
up
to
the
issue
price
of
the
SRTC
security
(net
of
any
government
assistance
received
by
the
investor
in
respect
of
the
security).
The
first
purchaser
of
the
SRTC
securities
will
thereby
become
entitled
to
deduct
a
tax
credit
equating
to
50%
of
the
amount
designated
by
the
issuer
in
respect
of
the
SRTC
securities.
(pp.
00006
and
00007
of
the
motion
record)
In
making
its
designation,
the
applicant
effected
a
timely
filing
of
the
prescribed
form
T2113,
which
is
exhibited
as
schedule
"A"
to
the
respondents'
points
of
argument.
Having
designated
$21.5
million,
the
applicant
became
liable
to
pay,
on
account
of
its
tax
payable
pursuant
to
Part
VIII
of
the
Act,
the
sum
of
$10,750,000.
Such
liability
is
provided
in
subsection
195(2)
of
the
Act.
The
eye
of
the
storm
for
the
present
litigation
resides
in
subsection
195(2)
of
the
Income
Tax
Act.
It
runs
as
follows:
195.
(2)
Where,
in
a
particular
month
in
a
taxation
year,
a
corporation
issues
a
share
or
debt
obligation,
or
grants
a
right,
in
respect
of
which
it
designates
an
amount
under
section
194,
the
corporation
shall,
on
or
before
the
last
day
of
the
month
following
the
particular
month,
pay
to
the
Receiver
General
on
account
of
its
tax
payable
under
this
Part
for
the
year
an
amount
equal
of
50%
of
the
aggregate
of
all
amounts
so
designated.
[Emphasis
added.]
This
solemn
enactment
of
Parliament
is
mandatory,
absolute
and
precise.
The
ultimate
tax,
on
account
of
which
subsection
195(2)
exacts
the
above-
mentioned
50
per
cent,
will
not
be
assessed
in
excess
of
that
amount.
"However,
to
the
extent
that
a
corporation's
Part
VIII
tax
liability
is
extinguished
by
Part
VIII
refunds
generated
before
the
end
of
the
year
in
which
[it]
issued
SRTC
securities,
no
Part
VIII
tax
or
interest
thereon
will
be
payable"
according
to
the
said
policy
paper,
exhibit
"A"
at
its
pages
2
and
3.
(pp.
00008
and
00009
of
the
motion
record)
In
oral
argument,
counsel
for
the
respondents
indicated
that
the
way
the
SRTC
system
works,
if
the
Minister
started
insisting
on
payment
pursuant
to
subsection
195(2)
the
working
of
the
scheme
would
be
affected.
He
noted
that
the
respondent
Minister
tries
to
facilitate
the
working
of
the
scheme,
but
not
to
jeopardize
the
security
of
tax
revenues;
and
he
asserted
that
if
the
Minister
is
strict,
the
legislative
provision
will
not
work.
So,
the
Minister
provides,
extra-legally,
for
voluntary
arrangements,
of
which
there
is
no
parliamentary
approval.
No
doubt
successive
ministers
can
be
credited
with
good
intentions
by
taxpaying
corporations
engaged
in
scientific
research,
which
must
appreciate
the
indulgence
of
the
“extra-legal”
voluntary
arrangements.
But,
in
law,
those
intentions
are
quite
beside
the
point.
On
page
8
of
the
respondents'
points
of
argument
there
is
this
passage:
Form
12113
[already
mentioned]
indicates
that
payment
of
Part
VIII
tax
and
penalty
is
to
accompany
the
filing.
It
does
indicate
that,
but
at
the
filing,
no
tax
is
necessarily
assessed
or
due.
Subsection
195(2)
exacts
payment
merely
“on
account
of
its
tax
payable
under
this
Part”.
The
passage
continues:
Strictly
speaking
a
form,
without
the
payment
of
Part
VIII
tax
accompanying
it,
cannot
be
said
to
be
validly
filed.
But
the
Minister
does
not
take
that
strict
an
approach,
he
accepts
such
forms
as
validly
filed.
Nor
does
he
insist
on
payments
mandated
by
subsection
195(2)
if
the
corporation
could
show
that
the
liability
for
Part
VIII
tax
would
be
satisfied.
In
terms
only
of
the
Minister's
indulgent
approach
to
the
law,
the
applicant
has
always
maintained
that
it
would
lawfully
succeed
in
eliminating
its
Part
VIII
tax
liability,
and
it
exhibits
a
copy
of
its
return
for
its
taxation
year
ending
February
28,
1986
(at
p.
00110
of
the
motion
record)
to
verify
its
contentions.
The
Minister
has
not
yet
assessed
the
Part
VIII
tax
in
this
regard.
The
respondents'
policy
is
revealed
in
exhibit
“A”
which
is
too
voluminous
to
be
recited
here.
It
is
stated
to
be
“for
departmental
use
only”
as
the
respondents'
counsel
confirmed.
Two
samples
will
suffice
to
demonstrate
how
that
policy
departs
from
the
precise
and
absolute
command
which
Parliament
enacted
in
subsection
195(2).
At
pages
5
and
6
(pp.
00011
and
00012
of
the
motion
record):
As
the
purpose
of
this
project
is
to
determine
the
corporation’s
ability
to
satisfy
its
Part
VIII
tax
obligation,
the
following
questions
should
be
answered
in
the
course
of
the
interview(s)
and
a
copy
of
the
results
placed
in
the
T2
file
with
the
permanent
correspondence:
1.
How
does
the
taxpayer
intend
to
satisfy
its
Part
VIII
tax
liability?
At
page
7
of
exhibit
“A”
(p.
00013
of
the
motion
record):
Where
it
is
evident
that
the
company
has
generated
or
will
generate
a
Part
VIII
tax
refund
sufficient
to
offset
its
Part
VIII
tax
liability,
no
further
action
is
required.
In
addition,
no
further
action
is
required
for
companies
that
appear
to
be
sound
taxpayers
based
upon
an
evaluation
of
their
corporate
history,
size,
financial
status
and
the
nature
of
their
operations
or
for
companies
that
can
establish
that
they
have
the
technological
capability
to
carry
out
a
bona
fide
research
project
(i.e.,
qualified
personnel,
proper
facilities,
etc.)
and
the
financial
capability
to
spend
sufficient
funds
on
qualified
R
&
D
to
eliminate
its
Part
VIII
tax
liability
(i.e.
the
taxpayer
has
access
to
sufficient
internal
or
external
financing
to
incur
sufficient
R
&
D
expenses).
Counsel
for
the
respondents
were
offered
a
recess
during
the
hearing,
for
the
purpose
of
consulting
among
themselves,
or
with
anyone
else,
in
order
to
reflect
upon
their
position
in
regard
to
the
Minister's
lawful
authority,
if
any,
to
effect
his
indulgent
policy
scheme
evinced
in
exhibits
“A”
and
“D".
They
declined
the
recess
but
conferred
together
at
the
counsel
table
and
then
indicated
that
they
could
cite
no
such
authority.
Since,
as
the
respondents'
counsel
conceded,
the
Minister’s
invitation
to
disregard
the
legislative
command
to
pay
50
per
cent
within
the
stated
time
is
“extra-legal",
it
is
obviously
wholly
beyond
the
contemplation
of
the
Income
Tax
Act,
and
is
obviously
not
engaged
by
the
objection
and
other
appeal
provisions
therein
enacted
by
Parliament.
As
well,
the
Minister
receives
no
lawful
or
any
authority
to
thwart
subsection
195(2)
by
means
of
the
provisions
of
subsections
153(1)
or
(1.1)
of
that
Act,
nor
yet
by
any
means
provided
in
section
17
of
the
Financial
Administration
Act,
R.S.C.
1970,
Chap.
F-10.
One
is
left
with
the
conclusion
that
the
Minister's
“extra-legal”
policy
is
quite
illegal.
It
runs
directly
against
subsection
195(2)
of
the
Income
Tax
Act.
That
Act,
moreover,
makes
no
procedural
provision
for
contesting
by
litigation
such
an
illegal
irregularity.
The
respondents'
counsel's
secondary
plea
of
necessity
rings
hollow
because
successive
Ministers
have
always
been
members
of
the
successive
governments
of
the
day,
which
always
can,
and
frequently
did
and
do
lay
before
Parliament
numerous
amendments
to
this
Act.
If
there
were
such
necessity
for
this
policy
of
counselling
and
permitting
disobedience
of
the
law,
why
not
seek
approval
and
ratification
by
Parliament?
Parliament
is
the
only
constitutional
arbiter
to
decide
whether
or
not
such
indulgence
be
necessary
and
Parliament
alone
can
and
could
enact
it
into
law
or
decline
to
do
so.
After
the
completion
of
all
oral
argument,
counsel
on
both
sides
were
invited
to
submit,
in
writing,
any
further
thoughts
on
any
of
the
issues
debated
in
the
court
room.
Under
cover
of
a
letter
dated
August
21,
1986,
the
respondents'
counsel
submitted
“Further
Submissions
by
the
Respondents",
signed
by
the
three
counsel,
with
a
copy
to
the
applicant's
counsel.
The
judgments
in
The
Queen
v.
Garry
Bowl
Ltd.,
[1974]
C.T.C.
457;
74
D.T.C.
6401,
and
in
Danielson
v.
Dep.
A-G
of
Canada
and
M.N.R.,
[1986]
2
C.T.C.
42;
86
D.T.C.
6340,
are
cited
for
the
respondents.
In
the
Garry
Bowl
decision,
it
was
contended
that
a
judgment
of
the
Tax
Review
Board
allowing
an
appeal
from
“nil
assessments"
was
a
nullity
and
that
no
appeal
could
be
taken
from
a
nullity
to
this
Court.
The
present
Chief
Justice
of
the
Federal
Court
was
then
a
member
of
the
appellate
panel
and,
for
the
Court
he
wrote
(at
460
(D.T.C.
6403))
to
the
effect
that,
whereas
the
Board
ought
to
have
realized
immediately
that
there
was
no
relief
which
it
could
properly
accord
and
that
the
appeal
ought
to
have
been
dismissed,
nevertheless
that
circumstance
did
not
deprive
the
Board
of
jurisdiction
to
deal
with
what
purported
to
be
an
appeal
pursuant
to
the
Act.
There
the
fact
of
a
properly
lawful
assessment
—
a
“nil"
assessment
to
be
sure
—
was
not
questioned
and,
of
course,
there
was
no
suggestion
that
the
Minister
had
created
any
illegal
anomaly
in
order
to
induce
breach
of
the
law,
an
anomaly
which
is
not
even
contemplated
by
procedures
provided
in
the
Income
Tax
Act.
The
Garry
Bowl
decision,
unexceptionally
correct
in
and
for
the
noted
circumstances,
does
not
engage
or
bear
upon
the
circumstances
here.
The
Danielson
case
relates
to
delay
in
collection
whereby
“an
amount
assessed
in
respect
of
a
taxpayer"
was
reasonably
considered
to
be
jeopard-
ized,
pursuant
to
section
225.2
of
the
Act.
Having
declined
to
submit
any
evidence
herein,
the
respondents
fail
to
demonstrate
that
circumstance
here.
Nor
is
there
any
evidence
here
of
the
notice
to
the
taxpayer
prescribed
by
that
section.
On
the
contrary,
the
applicant
here
complains
that,
while
it
was
still
engaged
in
attempting
to
demonstrate
to
the
respondent
Minister
its
elimination
of
Part
VIII
tax
liability,
the
Minister
effected
the
freezing
of
its
operating
accounts
without
notice
or
other
warning.
The
respondents'
counsel,
in
their
latest
submission,
return
to
the
Becht-
hold
decision
and
emphasize
subsection
152(8)
which
deems
an
assessment
to
be
valid,
subject
to
certain
conditions.
It
will
be
noted
that
in
the
latter
case
(C.T.C.
200;
D.T.C.
6070)
it
is
said
"subsections
4
and
7
of
section
152
allow
the
Minister
to
assess
at
any
time".
To
"assess"
in
terms
of
the
Act
must
mean
all
or
either
of
"to
calculate,
to
compute
and
to
fix
and
to
determine".
The
verb
"assess"
does
not
operate
at
large.
It
is
not
expressed
in
an
intransitive
usage.
It
is
transitive.
The
Minister
must
assess
something.
He
assesses
tax(es),
penalty
and
interest.
What
then
could
he
assess
pursuant
to
subsection
195(2)
?
Not
taxes,
for
they
were
not
yet
due.
What
was
due
was
a
payment
"on
account
of
.
.
.
tax".
How
could
the
Minister
calculate,
compute,
fix
or
determine
any
sum
of
tax
in
regard
to
subsection
195(2)?
All
the
calculating,
computing,
fixing
and
determining
had
already
been
done,
by
Parliament,
in
exacting
50
per
cent
of
the
amounts
designated
to
be
paid
by
the
end
of
the
following
month.
There
was
nothing
for
the
Minister
to
assess.
Parliament
performed
the
assessment
as
such
and
demanded
payment
forcefully
and
precisely.
What
Parliament
did
was
quite
adequate,
and
did
not
call
for
the
Minister's
interference.
The
respondents'
counsel
offer
the
Minister's
objective
and
intentions
as
a
basis
for
usurping
legislative
power,
and
in
so
doing
they
merely
emphasize
the
illegality
of
such
usurpation.
Here
is
part
5
of
their
further
submissions:
The
timing
for
the
collection
of
Part
VIII
tax
is
fixed
by
statute.
A
payment
on
account
of
tax
is
required
to
be
made
by
subsection
195(2)
within
2
months
(at
the
latest)
of
the
date
as
of
which
a
designation
under
s.
194
is
made.
In
practice
the
Minister
may
extend
the
time
for
the
payment.
The
extension
depends
upon
various
circumstances
but
the
underlying
objective
is
to
secure
the
taxes
due.
To
either
rigidly
adhere
to
the
mandatory
requirement
of
s.195(2)
or
to
extend
the
time
for
payment
as
a
matter
of
course
could
seriously
impair
the
working
of
the
Part
VIII
scheme.
It
is
submitted
that
in
the
circumstances
the
Minister
is
the
appropriate
person
to
decide
whether
the
circumstances
warrant
an
extension
of
time
for
collection
or
not.
The
effect
of
subsection
195(2)
is
that
the
debt
due
to
Her
Majesty
(s.
222)
is
crystallized
as
of
the
end
of
the
month
following
the
month
in
which
the
amount
was
designated.
The
Minister’s
action
in
dealing
with
the
Applicant
in
collecting
the
debt
is
analagous
to
that
of
other
creditors
in
similar
circumstances.
Any
concession
made
with
respect
to
discharging
the
debt
does
not
affect
the
validity
of
the
debt
itself.
It
would
not
be
appropriate
either
to
legislate
or
to
direct
judicially
the
process
of
such
negotiations
for
there
is
no
question
involved
of
the
relative
rights
of
the
parties.
All
concessions
made
by
the
Minister
were
for
the
benefit
of
the
Applicant.
The
concessions
were
made
gratuitously.
It
is
submitted
that
the
practice
of
the
Minister
in
collection
matters
of
taking
into
account
the
particular
circumstances
of
a
taxpayer
and
the
preservation
of
the
public
purse
is
to
be
encouraged
rather
than
inhibited
in
order
to
achieve
the
purpose
of
the
Part
VIII
scheme.
[Emphasis
added.]
As
noted
above,
Parliament
provided
adequately
and
lawfully
for
the
preservation
of
the
public
purse,
and
it
did
not
provide
for
the
Minister’s
usurpation
of
its
legislative
power.
As
the
applicant’s
counsel
argues,
this
situation
is
not,
in
the
words
of
subsection
152(8),
merely
a
matter
of
“any
error,
defect
or
omission"
in
an
assessment
"or
in
any
proceeding
under
this
Act
relating
thereto".
He
rightly
argues,
in
his
response
to
the
respondents'
further
submissions,
that
the
Minister,
in
effect,
stepped
in,
and
induced
the
applicant
to
follow
him,
outside
the
proceedings
under
the
Act.
As
such,
he
argues,
that
subsection
cannot
be
applied
to
validate
a
purported
notice
of
assessment
issued
without
jurisdiction,
as
this
is
not
contemplated
by
the
subsection.
The
applicant’s
counsel
is
willing
to
concede
that
although
the
Minister
may
indeed
exercise
some
discretion
as
to
whether
the
circumstances
of
a
particular
case
warrant
an
extension
of
time
for
collection,
(without
mentioning
the
regime
of
subsection
195(2)
specifically
in
this
regard)
he
nevertheless
asserts
that
upon
the
Minister
making
a
representation
to
a
taxpayer,
that
representation
should
be
binding.
Here,
he
asserts
again
that
the
applicant
is,
indeed,
prejudiced
for,
having
relied
on
the
Minister's
written
offer
(Exhibit
“D’’
to
Mr.
Adamson's
affidavit,
previously
recited)
in
writing,
it
did
not
file
a
notice
of
objection.
Since,
as
the
applicant
contends,
it
had
already
eliminated
its
liability
in
respect
of
the
tax
referred
to
in
the
form
of
notice
of
assessment
it
was
led
to
believe
that
there
was
no
need
for
a
notice
of
objection,
and
now
the
applicant
is
too
late
to
put
forward
its
notice
of
objection
in
the
course
of
a
regular
appeal
under
the
Income
Tax
Act.
There
is
a
strong
fibre
in
the
fabric
of
our
law
which
is
to
the
effect
that
neither
the
Sovereign,
nor
the
Sovereign's
minister
nor
yet
any
exactor
régis
is
above
the
law.
So
strong
is
that
fibre
that
our
people
have
come
rightly
to
expect
that
a
minister
of
the
Crown
will
not
counsel
them
to
break
the
law.
It
is
reasonable
to
hold
that
John
Adamson,
the
applicant’s
president,
harboured
that
same
expectation,
as
his
affidavit
and
cross-examination
demonstrate.
The
apparent
authority
of
the
Deputy
Minister
who
"signed"
the
note
attached
to
the
assessment
notice
(Exhibit
““D’’)
would
dupe
many
a
reasonable
taxpayer
into
accepting
the
legitimacy
of
the
assertions
therein,
and
the
more
so
(in
light
of
human
nature),
because
no
payment
was
demanded.
By
that
note
the
Minister
was,
in
effect,
telling
the
applicant:
"Despite
the
law
enacted
by
Parliament
in
subsection
195(2),
you
do
not
have
to
obey
Parliament’s
absolute
and
precise
command
to
pay
on
account
of
tax
until
I
or
my
officials
tell
you
to
pay.”
The
Minister
sought
to
put
himself
above
the
law
in
purporting
to
absolve
the
applicant
from
its
lawful
duty,
and
in
publishing
a
notice
to
that
illegal
effect.
So
it
was
that
after
the
time
in
April
1985,
when
the
applicant,
O.R.C.
designated
the
$21.5
million
pursuant
to
section
194,
the
Minister
and
his
officials
failed
to
take
that
strict
approach,
which
was
their
duty,
to
exact
the
50
per
cent
which
Parliament
commanded
to
be
paid.
That
was
certainly
the
time
to
do
it.
So
it
also
was
that
in
early
June
1985,
when
that
curious
"assessment"
(not
of
tax,
but
maybe
of
the
sum
already
levied
under
subsection
195(2)
of
the
Act)
was
directed
to
the
applicant,
the
respondent
counselled
the
applicant
conditionally
not
to
pay
because
the
Department
"is
prepared
to
modify
or
withhold
its
usual
collection
action
.
..
.”
Of
course,
with
such
apparently
official
encouragement
—
albeit
not
read
immediately
by
Mr.
Adamson
—
the
applicant
did
not
pay
and
the
respondent
did
not
enforce
the
law
which
commanded
payment.
The
Minister
bears
greater
responsibility
—
blame
—
for
this
flouting
of
the
law
than
does
the
applicant.
Printed
forms
are
part
of
the
essential
mystique
of
governments
in
the
twentieth
century,
but
one
must
not
be
dazzled
by
printed
forms
even
when
they
are
officially
prescribed.
The
printed
form
itself,
carries
no
legal
force.
One
wonders
why
the
Minister,
or
his
Deputy
or
their
officials,
in
conveying
whatever
message
they
intended
to
convey
on
June
3,
1985,
chose
to
make
a
notice
of
assessment
form
the
vehicle.
There
was
no
Part
VIII
tax
due
to
assess
at
that
time.
Nor
was
the
Minister
then
demanding
payment
as
his
words
and
deeds
amply
demonstrate.
Since
that
form
of
notice
of
assessment
signified
neither
demand
nor
assessment
it
amounts
to
a
double
nullity.
Indeed
it
is
not
really
clear
just
what
message
was
intended,
or
could
be
taken,
from
Exhibit
“D",
except
that
the
applicant
was
not
then
required
to
pay
any
money
until
the
Minister,
the
Deputy
or
the
officials
told
him
to
pay.
About
September
3,
1985,
the
ninety-day
period
in
which
the
applicant
could
have
lodged
a
notice
of
objection
expired.
That
is,
it
expired,
if
there
were
a
real
notice
of
assessment
calling
for
a
notice
of
objection,
and
not
just
a
double
sham.
Still
the
respondent
Minister
and
his
officials
declined
to
exact
from
the
applicant
that
payment
which
Parliament
commanded
be
made
on
account
of
tax.
They
continued
to
foster
that
clear
breach
of
the
aw.
Much
correspondence
flowed
between
the
applicant
and
the
Minister's
officials
in
late
1985
and
early
1986
as
is
demonstrated
by
Exhibits
“E"
to
“J".
By
the
end
of
December
1985,
the
Minister
had
designated
Prof.
Chamber-
lain
to
perform
an
evaluation
of
the
scientific
and
research
aspects
of
the
applicant’s
activities.
Matters
rolled
along
with
the
parties
still
wedded
in
the
Minister's
illegal
policy
scheme,
with
the
applicant
being
intent
on
showing
Prof.
Chamberlain
its
marvellous
optical
research
laboratory,
when
on
March
18,
1985,
the
Minister
struck
with
two
garnishing
instruments
(Exhibits
“K"
and
“L’’),
thereby
freezing
the
applicant’s
operating
accounts.
The
respondents'
counsel
concedes
that
there
is
nothing
before
the
Court
to
show
that
the
applicant
was
given
any
warning
or
notice
of
a
change
of
official
attitude
from
that
of
the
previous
several
months.
The
applicant
was
never
informed
that
the
Minister
had
changed
his
mind
about
not
collecting
the
money.
To
pounce
upon
the
applicant
after
first
having
induced
its
president,
by
illegal
abuse
of
ostensible
authority,
into
the
reasonable
belief
that
the
applicant
did
not
(if
not
would
not)
have
to
pay
is
quintessentially
unfair
to
the
applicant.
It
is
unfair
even
in
the
context
of
an
illegal
scheme,
which
indulgently
purported
to
absolve
the
applicant
of
obedience
to
the
law’s
absolute
and
precise
command.
One
wonders
why
the
respondent
Minister,
when
he
decided
that
he
ought
at
last
to
take
sudden
action,
did
not
register
the
certificate
of
indebtedness
in
this
Court
pursuant
to
subsection
223(2).
It
would
have
operated
as
a
judgment
of
this
Court.
From
that,
the
applicant
would
not
have
been
foreclosed
from
complaining
by
means
of
appeal,
and
could
at
least
have
sought
a
stay
of
enforcement
pending
appeal.
It
appears
that
subsection
223(2)
has
not
been
invoked
yet
by
the
Minister
in
the
matter.
The
respondents,
by
illegal
abuse
of
authority
and
false
inducements,
are
clearly
estopped
from
taking
any
benefit
from
their
sudden
garnishments
of
the
applicant’s
accounts.
They
are
justly
estopped
even
in
public
law
and
even
although
the
benefit
taken
is
not
for
personal
gain
but
for
the
public
purse.
The
principle
of
estoppel
here
is
closely
akin
to
that
other
long
and
hardy
fibre
in
the
web
of
our
law,
ex
turpi
causa
non
oritur
actio.
The
Minister
cannot
be
permitted
to
put
a
taxpayer
to
prejudicial
disadvantage
by
invocation
of
illegal
administrative
means
of
the
Minister's
own
invention,
which
unlawfully
induced
the
taxpayer
into
a
highly
vulnerable
position.
The
circumstances
here
do
not
support
the
decision
to
issue
the
garnishments
nor
the
instruments
themselves.
The
actions
of
the
Minister
and
his
officials
are
so
infected
with
error
of
law,
illegal
conduct,
excess
of
jurisdiction
and
unfair
pouncing
without
reasonable
or
any
notice,
that
those
impugned
decisions
and
acts
which
affect
the
applicant
adversely
ought
all,
in
justice,
to
be
quashed.
Included
will
be
the
purported
notice
of
assessment,
that
curious
double
nullity.
If
this
determination
by
the
Court
be
seen,
on
further
adjudication
to
run
counter
to
the
Parsons
decision,
it
will
also
be
seen
to
be
severable
and
distinct
from
the
other
dispositions
herein.
Certiorari
is
granted
to
quash,
as
well,
the
respondent
Minister's
decisions
to
issue
the
two
statutory
requirements
to
pay,
the
garnishing
orders,
and
to
quash
the
instruments
themselves,
which
are
removed
into
this
Court
for
that
purpose.
It
is
far
too
late
now
for
the
applicant
to
make
timely
compliance
with
subsection
195(2)
of
the
Income
Tax
Act
from
which
it
was
counselled
and
induced
by
the
Minister.
The
reasonable
course
now
would
be
to
perform
a
real
assessment
of
tax,
including
Part
VIII
tax,
if
any,
upon
the
applicant's
now
filed
income
tax
return,
in
order
to
determine
whether
or
not
the
applicant
actually
did
eliminate
its
liability
for
those
Part
VIII
taxes.
Accordingly,
certiorari
is
also
granted
to
quash
the
respondent's
decision
to
issue
a
certificate
pursuant
to
section
223
of
the
Act,
and
to
quash
the
certificate
itself,
which
is
now
removed
into
this
Court
for
that
purpose.
The
applicant
is
therefore
also
entitled
to
relief
in
the
nature
of
prohibition
to
prohibit
the
respondent
Minister
and
everyone
under
his
direction
and
control
from
continuing
with
collection
proceedings
until
it
is
lawful
and
fair
to
do
so.
One
criterion
of
timing
for
the
lawful
and
fair
resumption
of
collection
proceedings
is
suggested
above.
The
applicant
is
entitled
to
its
taxable
party-and-party
costs.
Application
granted.
Email this Content