Walsh, J:—Three petitions were presented by petitioner in this matter and argued at the same time, the first seeking the cancellation and suspension of an order rendered ex parte invoking rules 330 and 1909 of the Federal Court and sections 8 and 12 of the Constitution Act, 1982, the second being a petition opposing and seeking the cancellation of the garnishment of moveable property, invoking section 627 of the Quebec Code of Civil Procedure, sections 8 and 12 of the Constitution Act, 1982 and article 56 of the Federal Court Act, the third being a petition to cancel or suspend the execution of the judgment rendered ex parte invoking rules 330 and 1909 of the Federal Court and articles 11, 12, 24 and 52 of the Constitution Act, 1982. In argument it was conceded that there 1s considerable duplication in these petitions.
The facts giving rise to this litigation may be outlined as follows. On January 13, 1984 a provisional garnishment order was rendered by Justice Dubé ordering the garnishee to appear on February 24, 1984, to declare all amounts due by it to the debtor and retain same until the Court decided how they should be dealt with. This was based on a certificate registered in the Court on December 7, 1983 pursuant to subsection 223(1) of the Income Tax Act claiming indebtedness of Charron for 1981 and 1982 income tax, penalty and interest amounting to $19,631.54 with interest on the amount of $13,852.71 from November 10, 1983 to the date of payment pursuant to subsection 161(1) of the Act.
Subsection 223(1) of the Act reads as follows:
223. (1) An amount payable under this Act that has not been paid or such part of an amount payable under this Act as has not been paid may be certified by the Minister
(a) where there has been a direction by the Minister under subsection 158(2), forthwith after such direction, and
(b) otherwise, upon the expiration of 30 days after the default.
Subsection (2) reads:
(2) On production to the Federal Court of Canada, a certificate made under this section shall be registered in the Court and when registered has the same force and effect, and all proceedings may be taken thereon, as if the certificate were a judgment obtained in the said Court for a debt of the amount specified in the certificate plus interest to the day of payment as provided for in this act.
An affidavit by Robert Lefrançois dated December 15, 1983, supporting a petition dated January 5, 1984 for the provisional garnishment contains a paragraph stating that the Minister demanded payment immediately after the assessment pursuant to subsection 158(2) of the Income Tax Act, being of the opinion that the taxpayer was attempting to avoid payment. This paragraph was necessary to bring the filing of the certificate within the provisions of paragraph 223(l)(a) since the assessment was only made on November 9, 1983 and hence only 28 days before registration of the certificate. The said section 158 reads as follows:
158. (1) The taxpayer shall, within 30 days from the day of mailing of the notice of assessment, pay to the Receiver General any part of the assessed tax, interest and penalties then remaining unpaid, whether or not an objection to or appeal from the assessment is outstanding.
(2) Where, in the opinion of the Minister, a taxpayer is attempting to avoid payment of taxes, the Minister may direct that all taxes, penalties and interest be paid forthwith upon assessment.
The notice of assessment was allegedly sent to the debtor at his address the same day it was made, that is to say, November 9, 1983. Petitioner contends that as of December 7, 1983 he had never received notice of this assessment, which was in effect a reassessment, since he had already been assessed for the 1981 and 1982 taxation years on the basis of the returns he had made without any additional amounts being claimed.
Petitioner alleges that it was only about January 30, 1984 after having learned of the procedures taken to execute the judgment that he made formal notices of opposition to these reassessments. Respondent does not deny that these were made in time and will be dealt with in due course.
Petitioner raises a variety of arguments in contesting the provisional garnishment order of January 13, 1984. He states that the affidavit by virtue of which it was obtained was defective as it did not say that the certificate of December 7, 1983, having the effect of a judgment has not been satisfied. This contention is wrong since paragraph 1 of the affidavit states that the amount remains unpaid. He states that the affidavit does not state the amounts of the debt owing to him by the garnishee. The affidavit of necessity contained certain information necessary to indicate why an order should be issued against the garnishee calling upon him to declare. It is conceded that he was arrested on October 19, 1983 on a charge under the Narcotics Act, that on his arrest the following sums were found, $800 on his person, $4,670 with his effects in a bag, and $14,000 at 2 Place Dupuis L’Esterel, and that they are in the possession of the Clerk of the Court of the Sessions of the Peace, the garnishee. Supporting documents were annexed to the affidavit. On November 17, 1983 an order to produce the sums seized was served on the police of the Montreal Urban Community pursuant to subsection 224(3) of the Income Tax Act, and on December 1, 1983 a peremptory demand for payment was made on the Clerk of the Court of the Sessions of the Peace, Montreal.
While it seems doubtful whether the sums held by the police come within the provisions of subsection 224(3) of the Act which only refers to amounts payable to the tax debtor as “interest, rent, remuneration, a dividend, an annuity or other periodic payment’’, the issue of whether these sums can be properly garnisheed should await a decision when the garnishee has made his declaration, at which time oppositions to seizure whether by the debtor or the garnishee or by a third party having an interest in the said sums can be dealt with.
While certainly the guilt or innocence of the debtor is not an issue before this Court, and he must in any event be presumed to be innocent until proven guilty, this information to which his counsel strongly objected, was necessary to indicate the nature of the funds held by the garnishee. Petitioner’s counsel pointed out however that he was charged together with others, so that it has not been established that the money seized by the police was his. In particular there is nothing to show that the $14,000 seized at the address 2 Place Dupuis L’Esterel was at an address belonging to him although documents produced indicate that this was done by virtue of a search warrant. Here again if the money seized or part of it does not belong to the debtor the owners can make an opposition to seizure in due course.
The fact that the debtor is in prison does not deprive him of any civil rights other than those necessarily resulting from his incarceration nor can it taint his right to appeal the assessment. It appears from a further affidavit of Robert Lefrançois produced at the hearing that Charron had filed no tax returns for 1978 or 1979, had only declared income of $1,084.05 for 1980, $2,332 for 1981 and $1,719 for 1982 so that representatives of the Minister on learning of the substantial sums seized made a further investigation of his bank deposits in 1982 and 1983 and his living expenses adding, as a result, $38,532 as business income to his 1981 return and $42,826 as business income to his 1982 return in new tax assessments dated November 9, 1983. Whether these new assessments were justified or not is a matter which will only be determined following the decision on his notices of objection and whatever appeals he may bring. Meanwhile, whether the assessments are right or wrong, the certificates resulting from them were registered on December 7, 1983.
Petitioner contends however that there is no justification for saying that he is avoiding payment of tax. Certainly the mere fact of non-payment is not equivalent to avoidance, nor is the fact of making erroneous declarations (and this has not yet been proved in view of the notice of objection). This is clearly not the intention of subsection 158(2) of the Act. The Minister may have had good reason for using this section for registering the certificate only 28 days after the assessments instead of waiting for the normal delay of 30 days which would not require an allegation of avoidance of payment. Petitioner contends however that Robert Lefrançois who made the affidavit could not make this statement as it was only the Minister who could make this finding. All the affidavit states though is that the Minister was of this opinion, not that it is Lefrançois’ opinion. While petitioner states that this is hearsay it is supported by an exhibit annexed to the affidavit and a copy of the letter by the Deputy Minister dated November 9, 1983 advising the debtor of the reassessments and demanding immediate payment which states (translated)
This directive is addressed to you by virtue of Paragraph 2 of Article 158 of the Income Tax Act.
The Deputy Minister can exercise the powers of the Minister.
While petitioner invokes section 8 of the Charter of Rights in the Canadian Constitution of 1982 which provides that everyone has the right to be secure against unreasonable search or seizure and article 12 providing that “Everyone has the right not to be subject to any cruel and unusual treatment or punishment’’ I do not believe that article 8 can have any application since it remains to be seen whether the seizure was valid or not. There is undoubtedly a difference between an irregular seizure and an “unreasonable’’ seizure. It is not unreasonable to garnishee assets as a result of the filing of a certificate under section 231 [sic] of the Act for income tax assessments. With respect to article 12 there is certainly no question of any unusual treatment or punishment. What has been done is a very common procedure and although petitioner alleges that as a result of the seizure he is now deprived of any source of income and that he suffers a grave prejudice this is no more than the prejudice suffered by any debtor whose assets are seized by a creditor, nor is there anything cruel or unusual in applying the provisions of the Income Tax Act in an attempt to collect taxes believed to be due. As already stated the petitioner has every right to oppose the seizure before it is made definitive, and also to contest his liability for taxes which led to the seizure.
A number of arguments were submitted on behalf of petitioner most of which cannot be sustained with the exception of one serious argument which I will deal with at the end of these reasons.
Petitioner contends, as previously indicated, that he did not receive the notice of reassessment and that for this reason the registration certificate was invalid. All that subsection 152(2) of the Income Tax Act requires is that the Minister “shall send a Notice of Assessment’’. It is possibly quite true that Charron did not receive it. There is no obligation to serve it or even to send it by registered mail. It was quite properly sent to the address of the taxpayer as shown in his return and if he happened to be in jail at the time and it was not forwarded to him this is not the responsibility of the Minister. Even if the representatives of the Minister were aware that he was in jail there would be no obligation to send the notice to him there, since if this policy were adopted it would make the Minister responsible for attempting to trace the address of a taxpayer who has moved since filing his return in order to send the notice to him. The obligation imposed by the Act is to send the notice not to make sure that it is received. Moreover in this case, no doubt as a matter of excessive caution as a result of the petitions brought, a further affidavit of Robert Lefrançois was filed at the opening of the hearing which gives the names of the persons who posted the notices to Charron and annexes affidavits from them to this effect indicating the mailing on November 9, 1983. While petitioner points out that these affidavits do not strictly comply with the rules of this Court with respect to affidavits in that the address and occupation of the deponent are not given nor does it state that the persons making them are employees of the Department of National Revenue this makes little difference because in the first place, as respondent points out these letters could have been posted by anyone, not necessarily an employee of the Ministry, and moreover as I have stated such rigorous proof of the mailing of a letter is certainly not necessary or feasible in connection with the thousands of notices of assessment or reassessment sent regularly as a matter of course. It is sufficient for the affidavit to state as it did that the notices were sent.
On the same date, November 9, 1983, formal demands for payment were also sent. The standard form states that “A certificate has been registered in the Federal Court of Canada in respect of the federal arrears indicated”. This is obviously incorrect since the certificate was only registered on December 7, so the standard form was obviously not applicable in the circumstances of this case. In any event the letters advising of the reassessments sent on November 9, 1983 demanded immediate payment and refer to subsection 158(2) of the Income Tax Act and moreover in any event the taxpayer admits becoming aware in due course, although after registration of the certificate on December 7, of the notices of reassessment and, as already indicated, filed a notice of opposition within the proper legal delays. Moreover a considerable time elapsed between the registration of the certificate on December 7, 1983 and the provisional order of January 13, 1984. Furthermore the affidavit of Mr Lefrançois produced at the hearing states that on November 25, 1983 he sent to Charron at his residential address a copy of a peremptory demand for payment, copy of which is annexed to the affidavit. This makes no reference to the date of registration of the certificate.
A further affidavit of André Héroux, an employee of the Department states that on November 17, 1983, he had had a telephone call from Charron inquiring as to the reasons why Revenue Canada were demanding the payment of about $19,000 from him. Héroux advised him that an assessor would call to see him. Another affidavit of Jean-Pierre Paquette an employee of the Department states that on December 6 he had a call from an officer of the Detention Centre, Parthenais Street, indicating that Charron had received different papers from Revenue Canada and wished to meet him. This is of course hearsay. As a result on December 13 he went there with Gaétan Côté at which time Charron stated the documents which he had received from Revenue Canada had been sent to his lawyer in Quebec. He further states that he had received no collaboration from him with respect to establishing the sources of his income. An affidavit from Côté corroborates this.
Petitioner contends that subsection 158(2), (supra), is contrary to the Canadian Charter of Rights and more specifically paragraph 11(d) thereof providing that any person charged with an offence has the right to be presumed innocent until proven guilty according to the law in a fair and public hearing by an independent and impartial tribunal. All that subsection 158(2) does is permit the Minister (or Deputy Minister who can exercise his powers pursuant to Income Tax Regulation 900(1)) to form an opinion that the taxpayer is attempting to avoid payment of taxes and thereby not required to wait 30 days from the mailing of the notice of assessment to demand payment of them. Petitioner correlates this with subsection 239(1) of the Act which creates an offence for evading payment of tax. Certainly anyone charged with an offence under section 239 would have to be given a fair trial. Charron has not been charged with any income tax offence even though the reassessment may have resulted from the fact that in the opinion of the Minister the returns he made omitted to include a substantial part of his income. Subsection 158(2) by virtue of which the certificate was registered depends, on itself and does not create a criminal offence but is merely a civil matter permitting a demand for payment to be made without waiting 30 days from the mailing of the notice of assessment. It is also of interest to note that it uses the word “avoid” payment of the taxes rather than the word “evade” which is the essence of the criminal offence.
Neither do I find subsection 158(2) of the Income Tax Act is in any way contrary to subsection 24(1) of the Canadian Charter of Rights, nor that the taxpayer’s rights are infringed as a result of it. Subsection 24(1) reads as follows:
24.(1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.
While it is true that the Minister’s opinion in relation to the fact that the taxpayer is avoiding payment of taxes was made without first hearing the taxpayer he is not deprived of his remedy to oppose this by establishing by an opposition to seizure that he is not avoiding payment of taxes. In fact in the present case as the affidavits of Côté and Paquette which have been referred to above establish they even went to the prison to interview Charron (although admittedly after the registration of the certificate) respecting his complaints against the assessment but were merely informed that he had sent the documents to his lawyer in Quebec, and received no collaboration from him. While the term collaboration is somewhat vague he certainly had the opportunity at that time to at least claim that none of the sums which have been seized belonged to him, or that he had received them in some manner which would not require them to be included in taxable income so that they could investigate his allegations. Instead he chose to remain silent, although he will still have an opportunity to make such proof if it is possible in an opposition to seizure.
This brings us to what I consider to be a serious argument however on the basis of which I believe that petitioner must partially succeed in his petitions. The standard procedure for registration of a certificate as set out in paragraph 223(l)(b), (supra), is to wait 30 days after the notice of assessment has been sent before registering the certificate which then becomes equivalent to a judgment of the Court. This is admittedly a severe section and the Court has no discretion with respect to the registration of such certificate when produced for this purpose signed by a properly authorized officer of the Department of National Revenue. The certificate itself gives no reference to the date of sending the notice of assessment or reassessment but merely refers to the taxation year for which the assessment is made. This can be immediately followed by a petition for a provisional seizure, although in the present case the Minister waited nearly a month before producing the petition. For obvious reasons this is done ex parte. The judgment on this petition fixes a date on which the debtor, and if it is a garnishment the garnishee, shall appear to declare and this is duly served on them and they can make an opposition to the seizure at that time. In the interval the garnishee is ordered not to dispose of the object seized.
Invoking subsection 158(2) as was done in the present case is an exception to the general rule requiring the 30-day delay from the mailing of the assessment to the registration of the certificate. For reasons best known to him the Minister only waited 28 days, therefore the certificate could not be validly registered except by invoking subsection 158(2).
The debtor Charron cannot contend that he had no knowledge that this was intended since reference to this section was made in the letters advising him of the notices of assessment. While I do not find that this article itself 1s contrary to the Canadian Charter of Rights I do conclude that as a matter of natural justice and the well established duty to act fairly it should only be used exceptionally and when there is clear evidence in the possession of the Minister that the taxpayer is “attempting to avoid payment of taxes”. If this were not so then the Minister could use this article in all cases thereby avoiding compliance with paragraph 223(1 )(b) requiring the 30-day delay. In a sense it can be said that any taxpayer who files an incomplete or false return is attempting to avoid payment of taxes. In a general way it is also perhaps arguable that any taxpayer who has substantial sums of money in his possession but has not paid his taxes 1s avoiding payment of them. I do not find that either such circumstance however is what subsection 158(2) is intended to cover. It would appear to be directed more to a situation where a taxpayer is found to be making away with his assets, transferring them to others for insufficient consideration, is about to leave the country, or some such circumstance as would justify a seizure before judgment under provincial law. In the present case the taxpayer disputes that the assets are his, or that they resulted from undeclared income, and in fact has filed a notice of objection to the assessments. While it is true that at the time the affidavit was made none of this was before the Minister, the affidavit read in conjunction with the facts which are now before the Court gives no indication of the Minister’s justification for reaching the opinion that the debtor is attempting to avoid payment of taxes. The fact that he is in prison awaiting trial certainly adds nothing to this.
In conclusion therefore I find that subsection 158(2) should not have been used so as to register the certificate prematurely and that this registration is therefore invalid. It follows that the provisional garnishment judgment issued by Justice Dubé on February 13, 1984 must be set aside. These issues were not raised before him and the judgment was properly rendered on the basis of the affidavits supporting the petition for provisional judgment which invoked subsection 158(2).
Accordingly I grant petitioner’s petition but only so far as to set aside the provisional seizure by garnishment made by virtue of the judgment of January 15, 1984 and suspending the execution of a judgment resulting from it. I do not however grant the third conclusion sought in the petitions that the money seized should be paid to the petitioner. The period of 30 days now having lapsed since the sending of the notice of reassessment respondent can register a new certificate pursuant to paragraph 223(1 )(b) without invoking the provisions of subsection 158(2) and if it so chooses forthwith apply for a new provisional garnishment order based on this new certificate and need not await the date normally set aside by the rules of this Court for presentation of motions by virtue of the Income Tax Act but may present same forthwith. In due course, as already stated, if this is done the debtor Charron or anyone claiming ownership of the sums seized can present an opposition to seizure at the date fixed for making the provisional judgment definitive. There will be one set of costs in favour of petitioner on the three motions.
ORDER
This order is applicable to the three motions presented herein.
1. Neither subsection 158(2) nor section 223 of the Income Tax Act are unconstitutional.
2. The certificate for taxes registered on December 7, 1983 is annulled without prejudice to the right to re-register same.
3. Consequently the provisional garnishment judgment rendered on January 13, 1984 is annulled as well as the seizure resulting from it, main-levee being granted to the garnishee.
One set of costs on the three motions, in favour of petitioner.
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