Doyle v. The Queen, 80 DTC 6260, [1980] CTC 330 (FCTD)

Mahoney, J:—The defendants apply to strike out the Statement of Claim herein pursuant to Rules 419(1 )(a), (c) and (f). The argument was directed to the allegation that it is an abuse of the process of the Court and I shall deal with the motion on that basis.

In 1959, the Minister of National Revenue reassessed the plaintiff’s 1954 income tax return and, inter alia, added $2,080,000 to his income. The reassessment was duly appealed, [1970] CTC 356; 70 DTC 6262. The inclusion of the $2,080,000 in income was sustained and the plaintiff’s alternate plea, to deduct as an expense the value of 522,000 shares in Canadian Javelin Limited transferred by the plaintiff to one Robert Sherwood, was rejected. An appeal against that judgment of the Exchequer Court of Canada was dismissed by the Supreme Court of Canada, [1977] CTC 530; 78 DTC 6027.

Subsequent to the Supreme Court’s judgment but prior to the Minister reassessing the plaintiff pursuant thereto, Sherwood was unsuccessful in this Court in maintaining a decision of the Tax Review Board rendered in June 1972, which had found him to be a Canadian resident in 1954. Sherwood had been assessed in 1962 and the value of the said shares, $1,040,000, had been included in his 1954 income. The status of any further appeal which Sherwood may have taken is not in evidence.

The plaintiff was reassessed in accordance with the judgment rendered in his appeal. The plaintiff filed a notice of objection; the Minister confirmed the reassessment and the plaintiff, in this action, appeals. He says that the assessment to tax of both Sherwood and himself for the identical receipt in the same taxation year cannot, in law, be sustained. I say nothing of the merit of that proposition and, for this purpose, accept it as fairly arguable. It is clear that, when the Exchequer Court heard and disposed of the plaintiff’s appeal, Sherwood had been assessed to tax for the value of the shares. What had not happened, and did not happen until after the Supreme Court disposed of his appeal, was the final determination of the validity of Sherwood’s assessment.

The plaintiff applied, under Rule 1733, to vary the original judgment by reducing the $2,080,000 assessed to him by $1,040,000.* [1] That application was dismissed and an appeal from that decision was dismissed by the Federal Court of Appeal on January 17, 1980 (unreported).

The plaintiff contends that a reassessment, notwithstanding that it ensues upon an appeal and judgment in respect of a prior assessment, is itself subject to objection and appeal by the taxpayer. That is unexceptionable; otherwise, the taxpayer would be denied access to the courts to ensure that the reassessment, in fact, accorded with the judgment.

The plaintiff contends further that the Minister is bound to take account of the facts as they actually are at the time he reconsiders the reassessment on receipt of a notice of objection, including facts not considered by the Court because they did not exist when it rendered judgment and that, if the Minister fails to apply the law to those facts, the taxpayer is entitled to ask the Court to require him to do so.

The substance of the plaintiff’s further contention is that he has a right to ask the Court to retry identical issues between identical parties because of an occurrence after the original judgment. The Court has already decided (a) that the entire $2,080,000 was the plaintiff’s income in 1954 and (b) that no part of the $1,040,000 was deductible by him as an expense in 1954.

An appeal to the Court in respect of an assessment under the Income Tax Act is, by subsection 175(3) of the Act, deemed to be an action in the Court. Lord Halsbury, LC, in Reichel v Magrath (1889), 14 App Cas 655 at 668 Stated:

. it surely must be in the jurisdiction of the Court of Justice to prevent the defeated litigant raising the very same question which the Court has decided ina separate action.

I believe there must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of itS procedure .. .

The right to appeal a reassessment ensuing upon a judgment is not a right to have the issues, decided by that judgment, retired. It is not an alternative procedure by which the taxpayer, if entitled to do so, may seek to vary or vacate the original judgment. An action such as this, seeking that result, is an abuse of the process of the Court.

ORDER

The Statement of Claim is struck out and the action is dismissed with costs.