Lornex Mining Corp. Ltd. v. MNR, 88 DTC 6399, [1988] 2 CTC 195 (FCTD)

Reed, J.:—The defendant brings a motion in writing pursuant to Rule 324 of the Federal Court Rules for an order pursuant to Rule 341 dismissing the plaintiff's action herein. Rule 341 provides:

A party may, at any stage of a proceeding, apply for judgment in respect of any matter

(a) upon any admission in the pleadings or other documents filed in the Court, or in the examination of another party, or

(b) in respect of which the only evidence consists of documents and such affidavits as are necessary to prove the execution or identify of [sic] such documents,

without waiting for the determination of any other question between the parties.

The defendant reassessed the amount of income tax payable by the plaintiff with respect to its 1976 taxation year. This was done by notice of reassessment dated September 14, 1981. It indicated that the taxes owed by the plaintiff were “nil” in so far as federal tax was concerned and $172,668 as far as British Columbia tax was concerned. The plaintiffs statement of claim contests that reassessment. A similar claim is made with respect to the 1977 taxation year in the companion file T-1331-84.

The defendant's motion for judgment before trial, in the summary fashion contemplated by Rule 341, is based on the argument that there is no right of appeal from a “nil” assessment. While provincial income tax was assessed, the defendant argues that the validity of that assessment is not within the jurisdiction of this Court. The defendant cites, as authority for these propositions, the Federal Court of Appeal decision in The Queen v. Bowater Mersey Paper Company Limited, [1987] 2 C.T.C. 159; 87 D.T.C. 5382. That case is also cited as authority for the proposition that it is appropriate to proceed by way of Rule 341 in the present case. Another decision cited in support of that position is The Queen v. Garry Bowl Ltd., [1974] C.T.C. 457; 74 D.T.C. 6401 (F.C.A.).

The plaintiff argues that in reassessing the provincial tax payable, the defendant was acting as agent for the province of British Columbia. The plaintiff argues that the defendant was acting pursuant to a Memorandum of Agreement between the Government of the Province of British Columbia and the Government of Canada, dated January 26, 1962 as amended by agreements dated: October 26, 1964; March 3, 1967; December 19, 1968; November 30, 1970; April 30, 1972; December 11, 1978; and October 9, 1979. In addition, the calculation of the tax assessed was linked to the federal tax assessment. The plaintiff argues that this Court, therefore, has jurisdiction over its claim.

In the Bowater Mersey case, supra, the Federal Court of Appeal dealt with the identical issue, albeit in relation to taxes owing to the province of Nova Scotia. The Court of Appeal, at page 162 (D.T.C. 5384) of its decision, said:

Counsel for the respondent also argued in support of the judgment that the notices of reassessment of January 4, 1984, were not superseded by those of March 6 because the latter left intact the assessment of provincial tax contained in the earlier ones. This argument has no merit since this Court has no jurisdiction to entertain an appeal from an assessment of provincial income tax.

A fuller description of the facts pertaining in that case can be found in the trial judge's reasons, [1986] 1 C.T.C. 535; 86 D.T.C. 6293. The defendant argues that the Federal Court of Appeal decision in Bowater Mersey was rendered per in curiam. If that is the case it is a matter for the Court of Appeal to address, not for the Trial Division. I have been referred to no factor which distinguishes this case from that dealt with by the Federal Court of Appeal in Bowater Mersey. Accordingly the defendant's motion for judgment will be granted.

One procedural issue must be referred to. The defendant, on January 22, 1988, filed its request for a determination of this motion pursuant to Rule 324. In a letter accompanying that motion counsel for the defendant requested that it be dealt with on the basis of the written submissions filed and without oral hearing. The plaintiff filed, on March 23, 1988, its written submissions in response to the defendant's motion. No request for an oral hearing was made. The Federal Court Registry, on June 6, 1988, initiated a telephone call to counsel for the defendant and she responded thereto with the following:

. . . we do not intend to file written submissions in response to the plaintiff unless the Court does not order an oral hearing. Should the Court be willing to proceed on the basis of Rule 324, we will be filing a Reply with the Court.

I do not read Rule 324 as requiring that the applicant file a reply to the respondent's submissions with respect to the motion. Subsection 324(4) requires merely that the Court be satisfied that all interested parties have had an opportunity to make representations. I am satisfied that such has occurred in this case. Nor do I find it necessary to hold an oral hearing. Neither party has requested it.

For the reasons given, the defendant's application will be granted.

Application granted.