Popovich Equipment Co. v. The Queen, 79 DTC 5079, [1979] CTC 65 (FCA)

The Chief Justice:—This is a motion to quash a section 28 application to set aside a stay filed in the Tax Review Board under subsection 239(4) of the Income Tax Act, in April, 1978. That provision read as follows:

(4) Where, in any appeal under this Act, substantially the same facts are at issue as those that are at issue in a prosecution under this section, the Minister may file a stay of proceedings with the Tax Review Board or the Federal Court, as the case may be, and thereupon the proceedings before that Board or Court are stayed pending final determination of the outcome of the prosecution.

It appeared from argument of counsel that the stay was based on a prosecution of some person other than the appellant in the appeal that was stayed.

If subsection 239(4) authorized a stay of an appeal based on prosecution of a person other than the appellant, the appellant, in a case where the authority was so exercised, would be in no position to ensure disposition of the prosecution, which might, if, for example, the accused were a refugee from justice, never be disposed of. So interpretted, a stay of an appeal as contemplated by the provision could operate, in effect, to deprive the appellant of his right of appeal. If that were the ambit of the authority granted by subsection 239(4), I am inclined to the view that there is no public policy involved that would warrant interpretting the provision as authorizing exercise of the authority to stay without affording procedural protection for an appellant adversely affected thereby.

I am, however, of the view that, while it is not expressly so limited, by enacting the provision, Parliament intended only to authorize the Minister to require that an appeal be stayed pending disposition of a prosecution in a case where it is the appellant who is being prosecuted. On that view of the provision, I am of opinion that it is a purely administrative authority to determine the order in which the legal proceedings are to be carried on and the exercise thereof does not call for implication of procedural protection for the appellant.

I am, therefore, of the view that the section 28 application should be quashed and that the applicant should be left to whatever action is necessary to have the unauthorized “stay” struck out by the Tax Review Board or, otherwise, declared to be of no effect as, for example, by taking mandamus proceedings to have his appeal heard or by bringing an action for a declaration.

While this application to quash raised a difficult question the answer to which did not become clear without considerable argument, the matter was nevertheless dealt with on the motion to quash with the concurrence of counsel.

Heald, J (dissenting):—With deference to those who hold a contrary view, I am of the opinion that subsection 239(4) of the Income Tax Act does authorize a stay of an appeal based on prosecution of a person other than the appellant. The words used in subsection 239(4) are: . . in a prosecution under this section ...” (emphasis added). Accordingly, in my view, it is necessary to read subsection (4) of section 239 in the context of the other subsections of section 239. A perusal of subsection (1) of section 239* [1] reveals that said subsection establishes a number of offences capable of commission by innumerable persons other than the appellant (for example, false or deceptive statements made by the taxpayer’s accountants, solicitors, customers, suppliers, employees, etc; destruction, alteration, mutilation or secretion of the taxpayer’s records by an employee; the making of false or deceptive entries by an employee bookkeeper in the taxpayer’s records). Accordingly, when the words .. in a prosecution under this section . . .” are given their plain ordinary meaning in the context of the other subsections of section 239, those words clearly, in my view, empower the Minister to stay an appeal of the taxpayer in the case at bar, even though that stay was based on the prosecution under section 239 of someone other than the taxpayer. Counsel for both parties adopted this view of subsection 239(4) at the hearing before us and, in my view, their interpretation is a proper one.

Such being my view of the proper interpretation of subsection 239(4), I would agree with the views of the Chief Justice that: . . the appellant, in a case where the authority was so exercised, would be in no position to ensure disposition of the prosecution, which might, if, for example, the accused were a refugee from justice, never be disposed of. So interpreted, a Stay of an appeal as contemplated by the provision could operate, in effect, to deprive the appellant of his right of appeal.” In the case at bar, we have a Situation similar to the example given by the Chief Justice and quoted supra. The individual who is the subject of the prosecution upon which the stay is based is outside the jurisdiction with absolutely no indication as to when, if ever, the prosecution will be proceeded with and finally determined. On this basis, if the Crown maintains the stay of proceedings “pending final determination of the outcome of the prosecution” as it is entitled to do under subsection 239(4), then it has effectively deprived the appellant of its right to appeal the income tax assessment in question. On this view of subsection 239(4), I consider that, because of the severe consequences referred to above, said section might well be interpreted as implying a procedural duty to act fairly*. [2] Accordingly, in my view, this applicant has an arguable position on the section 28 application to set aside the stay. I would therefore dismiss the motion to quash.