Joyal,
J.:—This
is
an
application
to
vacate
a
direction
by
the
Minister
of
National
Revenue
made
pursuant
to
subsection
225.2(1)
of
the
Income
Tax
Act,
S.C.
1970-71-72,
c.
63.
It
arises
from
the
enactment
by
Parliament
in
1985
of
certain
amendments
to
the
Income
Tax
Act
limiting
the
authority
of
the
Minister
of
National
Revenue
to
enforce
payment
of
taxes
owing
on
an
assessment
until
there
has
been
a
final
determination
of
the
tax
payable.
These
amendments
are
found
in
section
225
[sic]
of
the
Income
Tax
Act
and
were
enacted
in
S.C.
1985,
c.
45,
section
116.
Subsection
225.1(1)
contains
detailed
rules
restricting
the
right
of
the
Minister
to
collect
taxes
owing.
These
rules
represent
a
considerable
departure
from
a
long-standing
provision
in
the
Income
Tax
Act
and
are
meant
to
dampen
considerably
the
right
of
the
Minister
to
collect
a
tax
until
various
avenues
of
appeal
have
been
exhausted.
The
full
text
of
the
subsection
is
as
follows:
225.1
(1)
Collection
restrictions.—Where
a
taxpayer
is
liable
for
the
payment
of
an
amount
assessed
under
this
Act
(in
this
subsection
referred
to
as
the
“unpaid
amount"),
other
than
an
amount
payable
under
subsection
227(9),
the
Minister
shall
not,
for
the
purpose
of
collecting
the
unpaid
amount,
(a)
commence
legal
proceedings
in
a
court,
(b)
certify
the
unpaid
amount
under
subsection
223(1),
(c)
require
a
person
to
make
a
payment
under
subsection
224(1),
(d)
require
an
institution
or
person
to
make
a
payment
under
subsection
224(1.1),
(e)
require
the
retention
of
the
unpaid
amount
by
way
of
deduction
or
set-off
under
section
224.1,
(f)
require
a
person
to
turn
over
moneys
under
subsection
224.3(1),
or
(g)
give
a
notice,
issue
a
certificate
or
make
a
direction
under
subsection
225(1)
before
the
day
that
is
90
days
after
the
day
of
mailing
of
the
notice
of
assessment.
Notwithstanding
these
limitations,
however,
the
new
amendments
provide
an
exception.
This
exception
is
found
in
subsection
225.2(1)
and
authorizes
the
Minister
to
take
immediate
action
to
collect
when
it
may
reasonably
be
considered
that
the
collection
of
an
amount
assessed
might
be
jeopardized
by
delay.
The
full
text
of
subsection
225.2(1)
reads
as
follows:
225.2
(1)
Collection
in
jeopardy.—Notwithstanding
section
225.1,
where
it
may
reasonably
be
considered
that
collection
of
an
amount
assessed
in
respect
of
a
taxpayer
would
be
jeopardized
by
a
delay
in
the
collection
thereof,
and
the
Minister
has,
by
notice
served
personally
or
by
registered
letter
addressed
to
the
taxpayer
at
his
latest
known
address,
so
advised
the
taxpayer
and
directed
the
taxpayer
to
pay
forthwith
the
amount
assessed
or
any
part
thereof,
the
Minister
may
forthwith
take
any
of
the
actions
described
in
paragraphs
225.1(1)(a)
to
(g)
with
respect
to
that
amount
or
that
part
thereof.
By
direction,
therefore,
the
Minister
in
such
circumstances
may
demand
immediate
payment
of
the
amount
assessed
and
take
such
procedures
to
enforce
payment
as
would
otherwise
be
denied
him.
The
taxpayer,
however,
is
not
without
recourse.
Pursuant
to
subsection
225.2(3),
he
may
file
an
application
to
a
Superior
Court
or
Federal
Court
judge
to
have
the
direction
varied
or
vacated.
It
is
a
kind
of
show
cause
hearing
where
the
Minister
has
the
burden
of
justifying
his
direction.
The
judge
may
then
dispose
of
the
application
by
confirming
the
direction,
by
vacating
it
or
varying
it
and
may
make
such
other
order
as
he
considers
appropriate.
In
effect,
a
judge
may
look
at
the
grounds
on
which
the
Minister
has
made
his
direction
and
decide
whether
or
not
they
are
of
a
nature
to
justify
the
exceptional
measure
the
Minister
has
taken.
In
effect,
the
procedure
is
a
check
on
the
Minister’s
authority
which
would
otherwise
be
substantially
unfettered.
The
applicant
before
me
is
a
taxpayer
who
was
assessed
on
February
18,
1985.
He
was
assessed
in
the
amount
of
$85,129.06
on
an
income
calculated
on
a
net
worth
basis
of
$184,929.
This
assessment
was
the
result
of
an
investigation
by
the
Special
Investigations
Division
of
the
Windsor
District
Taxation
Office
of
Revenue
Canada.
The
investigation
disclosed
that
although
the
taxpayer
appeared
unemployed,
there
was
evidence
of
some
affluent
pursuits
in
which
the
taxpayer
had
been
engaged,
namely
the
purchase
of
a
car
for
$13,700,
the
purchase
of
a
pleasure
boat
for
$15,500,
the
transfer
of
$65,000
to
a
friend
or
associate
and
the
transportation
to
the
United
States
of
some
$14,000
concealed
underneath
his
automobile.
The
taxpayer
also
held
some
$13,000
in
a
bank
account.
Law
enforcement
agencies
as
well
had
reasons
to
be
concerned
with
the
taxpayer.
Drug
section
officers
of
the
Royal
Canadian
Mounted
Police
became
interested
in
the
taxpayer's
activities
and
suspected
that
the
taxpayer's
source
of
income
was
from
trafficking
in
drugs.
This
interest
was
in
tandem
with
Revenue
Canada
which
always
takes
the
position
that
notwithstanding
the
source
of
any
income,
a
taxpayer
should
pay
his
fair
share
of
taxes
on
it.
The
result
of
the
investigations
by
law
enforcement
agencies
was
to
arrest
the
taxpayer
on
January
28,
1986
on
charges
of
conspiracy
to
traffic
in
narcotics.
He
was
released
on
bail.
The
result
of
the
investigation
by
Revenue
Canada
was
to
submit
to
the
Minister
a
lengthy
telex
message
dated
February
14,
1984
outlining
the
following:
1.
the
proposed
assessment
in
the
amount
I
have
stated;
2.
the
grounds
for
assessment;
3.
the
fact
of
the
criminal
charges
laid
against
him;
4.
the
grounds
for
the
application
of
the
jeopardy
provisions
I
have
previously
explained;
5.
a
statement
of
the
assets
to
be
seized
or
proposed
collection
action
to
be
taken.
The
grounds
for
the
application
of
the
jeopardy
provisions
are
summarized
in
four
affidavits
filed
on
behalf
of
the
Minister.
The
first
affidavit
is
by
Mr.
H.
A.
Diguer,
an
Assistant
Deputy
Minister
of
Revenue
Canada
who
states
that
his
decision
to
make
a
direction
was
based
on
information
in
the
statement
contained
in
the
telex
of
February
14,
1986.
The
direction
he
did
make
was
communicated
to
the
taxpayer
by
registered
mail
on
February
18,
1986
and
copy
of
that
letter
together
with
copy
of
the
notice
of
assessment
and
of
the
telex
are
attached
as
exhibits
to
the
affidavit.
The
next
affidavit
is
from
Constable
R.
Reynolds
of
the
Royal
Canadian
Mounted
Police
who
states
that
on
January
10,
1986,
he
had
proceeded
to
the
international
border
at
the
Ambassador
Bridge
linking
Windsor,
Ontario
to
Detroit,
Michigan,
where
he
observed
that
the
U.S.
Customs
Service
had
taken
the
taxpayer
into
custody
and
had
seized
the
equivalent
of
some
$14,000
in
Canadian
funds
which
the
U.S.
authorities
had
discovered
concealed
underneath
the
taxpayer's
car.
The
third
affidavit
is
from
another
R.C.M.P.
constable,
N.
Wentoniuk,
who
stated
he
had
obtained
a
copy
of
a
withdrawal
receipt
from
the
Toronto-Dominion
Bank
dated
February
10,
1986
in
the
amount
of
$11,000
and
signed
by
the
taxpayer.
He
also
stated
that
on
or
about
February
10,
1986,
he
had
questioned
the
taxpayer
about
the
withdrawal
and
he
had
replied
as
follows:
“I
have
it,
I
stashed
it
and
you
will
never
find
it.”
The
last
affidavit
on
behalf
of
the
Minister
is
from
G.
Hooft
of
the
Special
Investigations
Division
of
Revenue
Canada.
It
is
in
this
affidavit
that
the
various
assets
of
the
taxpayer
are
disclosed
with
copies
of
documents
witnessing
the
various
transactions
attached
as
exhibits.
Included
in
these
documents
is
a
deed
of
sale
from
the
taxpayer
to
his
parents
of
property
at
1419
Prince
Road
in
Windsor
for
nominal
consideration
and
the
assumption
of
a
$21,000
mortgage
as
well
as
copies
of
I.O.U.'s
in
the
total
amount
of
$65,000
paid
to
an
associate
of
the
taxpayer
for
investment
purposes.
The
case
for
the
taxpayer
against
what
appears,
prima
facie,
to
be
reasonable
grounds
for
the
direction
is
set
out
in
the
taxpayer’s
affidavit
dated
May
16,
1986.
The
material
elements
in
the
affidavit
are
that:
1.
the
taxpayer
has
strong
roots
in
the
community
of
Windsor;
2.
he
owns
a
house,
his
wife
is
gainfully
employed,
his
parents
live
in
Windsor
and
since
an
industrial
accident
on
June
30,
1984,
has
been
in
receipt
of
Workmen's
Compensation
benefits
of
$412
per
week;
3.
on
or
about
May
6,
1986,
he
filed
a
notice
of
objection
to
the
assessment;
4.
upon
his
release
pending
trial
on
the
criminal
charges,
bail
was
set
at
$10,000
cash
and
$60,000
securities
together
with
the
condition
that
he
remain
in
the
County
of
Essex
as
well
as
sign
in
at
the
local
police
station
every
Sunday.
The
taxpayer
further
states
that
the
bail
conditions
imposed
on
him
have
not
been
breached
to
date
and
that
he
has
no
intention
of
breaching
them
prior
to
his
criminal
trial.
The
taxpayer's
notice
of
objection
is
attached
to
his
affidavit.
The
grounds
stated
are
that
no
reason
was
advanced
to
him
to
explain
or
justify
the
amount
of
tax
assessed
nor
to
justify
jeopardy
procedures
against
him.
On
the
basis
of
the
evidence
before
me,
I
have
no
hesitation
in
concluding
that
the
Minister,
on
February
18,
1986,
had
sufficient
grounds
to
make
his
direction.
I
find
that
the
nature
of
the
assessment
itself
raises
reasonable
apprehensions
that
the
taxpayer
had
not
been
conducting
his
affairs
in
what
might
be
called
orthodox
fashion.
There
is
reasonable
apprehension
that
in
placing
surplus
funds
for
investment
purposes
through
the
hands
of
a
third
party
instead
of
directly,
there
would
be
difficulty
in
retracing
these
funds
or
in
recovering
them.
Discounting
for
the
moment
the
real
apprehension
that
the
taxpayer's
income
might
have
come
from
criminal
pursuits,
the
incident
at
the
Ambassador
Bridge,
the
withdrawal
of
cash
from
the
Toronto-Dominion
Bank,
the
taxpayer’s
statement
to
a
police
constable,
the
exchange
of
cash
for
tangible
assets,
all
of
these
factors
taken
together
provide,
in
my
opinion,
sufficient
grounds
for
the
Minister
to
have
exercised
his
power
at
that
particular
time.
Counsel
for
the
taxpayer
urged
the
Court
to
find
that
there
were
serious
deficiencies
in
the
affidavit
evidence
submitted
on
behalf
of
the
Minister.
Relying
on
Erie
Manufacturing
Company
(Canada)
Ltd.
v.
Rogers
(1981),
24
C.P.C.
132
(H.C.O.)
and
Chitel
et
al.
v.
Rothbart
et
al.
(1982),
39
OR.
(2d)
513;
141
D.L.R.
(3d)
268,
and
other
cases
dealing
with
the
well-known
Mar-
eva
injunction
procedures,
counsel
for
the
taxpayer
ably
and
articulately
pleaded
that
the
burden
on
the
Minister
to
justify
his
actions
is
a
very
heavy
one
and
that
such
action
should
not
be
endorsed
by
this
Court
except
on
unassailable
grounds.
The
rules
of
evidence
when
submitted
in
affidavit
form
must
be
strictly
construed,
he
said,
and
particularly
in
the
case
of
H.
A.
Diguer's
evidence,
did
the
affidavit
fail
to
state
that
he
“‘believed”
in
the
information
communicated
to
him
in
telex
form
by
the
district
investigator,
G.
Hooft.
The
taxpayer’s
counsel
might
have
an
arguable
point
were
the
evidence
before
me
limited
exclusively
to
that
particular
affidavit.
As
counsel
for
the
Crown
reminded
me,
however,
I
am
entitled
to
look
at
all
the
evidence
contained
in
the
other
affidavits.
These
affidavits
might
also
be
submitted
to
theological
dissection
by
anyone
who
is
dialectically
inclined
but
I
find
on
the
whole
that
those
essential
elements
in
these
affidavits
and
in
the
evidence
which
they
contain
pass
the
well-known
tests
and
are
sufficiently
demonstrated
to
justify
the
Minister's
actions.
I
would
further
observe
that
the
Minister's
authority
under
subsection
225.2(1)
is
exercisable
when
"..
.
it
may
reasonably
be
considered
that
collection
of
an
amount
assessed
.
..
would
be
jeopardized
by
a
delay
.
.
.”
The
expression
has
sufficiently
liberal
qualifications
to
it
that
its
ambit
appears
to
me
of
far
greater
scope
than
that
found
in
Mareva
injunctions.
The
word
"may"
and
the
expression
"reasonably
considered",
when
read
together,
provide
considerable
latitude
to
the
Minister,
a
latitude
which
I
believe
is
not
found
whenever
one
deals
with
a
seizure
before
judgment.
Logic
and
good
sense
tell
me
that
it
should
be
so.
The
institution
of
an
action
by
a
private
litigant
against
another
private
litigant
cannot
be
equated
with
a
notice
of
assessment
under
the
Income
Tax
Act.
The
balances
which
a
court
must
maintain
are
not
the
same.
Between
private
parties,
it
is
necessary
for
a
plaintiff
to
establish
a
strong
prima
facie
case.
By
a
notice
of
assessment,
however,
the
case
is
made
as
far
as
the
Minister
is
concerned
and
the
burden
rests
on
the
taxpayer
to
disprove
or
vary
it
through
appeal
procedures.
It
is
the
kind
of
presumption
which
is
not
found
when
dealing
with
actions
on
contract
or
in
tort.
The
uncertainties
when
dealing
with
the
latter
cases
are
ever
present
and
the
consequential
damages
when
a
Mareva
order
is
granted
too
generously
may
be
incalculable
or
at
least
be
extremely
vexatious.
I
should
also
observe
that
the
subsection
225.2(1)
refers
to
the
“collection
of
an
amount
assessed
[which]
would
be
jeopardized
by
a
delay
in
the
collection
thereof
.
.(my
emphasis),
a
wording
which
establishes
the
presumption
that
the
amount
is
a
"collectible”
amount,
collectible
forthwith,
were
it
not
for
the
delays
which
section
225.1
contemplates.
I
conclude
that,
although
indicative
of
the
tests
which
might
be
applied
by
a
court
in
dealing
with
a
Minister’s
direction,
the
tests
found
in
Mareva
proceedings
are
far
from
being
determinative
or
conclusive.
A
further
argument
advanced
by
counsel
for
the
taxpayer
is
with
respect
to
another
notice
sent
by
Revenue
Canada
dated
February
18,
1986,
where
a
demand
is
made
for
immediate
payment
of
the
tax
assessed.
This
notice
is
pursuant
to
section
226.1
and
authorizes
the
Minister
to
demand
payment
when
he
suspects
that
a
taxpayer
is
about
to
leave
Canada.
I
was
urged
to
find
that
there
were
no
grounds
for
this
suspicion.
The
evidence
in
the
taxpayer's
affidavit
as
to
his
family
roots
in
Windsor,
his
wife's
employment,
a
home
which
he
owns,
all
of
this
quells
any
reasonable
suspicion
the
Minister
might
have
had.
Furthermore,
counsel
argued,
the
conditions
of
the
taxpayer's
bail
requiring
him
to
stay
in
Essex
County
and
to
report
regularly
to
the
local
authorities
had
not
been
breached
and
the
taxpayer
had
no
intention
of
breaking
them.
Perhaps
a
case
could
be
made
on
this
were
it
not
for
a
fact
that
I
should
doubt
that
a
Minister's
decision
under
section
226
is
reviewable
by
a
Court.
It
appears
to
be
independent
of
the
powers
conferred
under
subsection
225.2(1)
and
as
such
is
not
reviewable
under
subsection
225.2(2).
Whether
this
is
by
reason
of
legislative
policy
or
legislative
oversight
is
not
for
me
to
decide.
I
can
only
declare
that
the
leaving
Canada
issue
is
not
before
me
nor
do
I
have
the
necessary
jurisdiction
to
determine
whether
or
not
the
Minister
had
reasonable
grounds
to
suspect
that
the
taxpayer
would
depart
our
shores.
The
statute
provides
that
on
an
application
of
this
nature,
a
judge
may
confirm,
vacate
or
vary
the
direction
of
the
Minister.
According
to
the
taxpayer's
affidavit,
the
Minister’s
direction
has
to
date
caused
the
seizure
of
an
amount
of
$1,700
in
the
Toronto-Dominion
Bank,
the
seizure
of
a
1975
Mustang
automobile,
the
filing
of
a
lien
on
the
taxpayer's
house
which
has
a
net
value
of
some
$35,000
and
a
lien
on
the
property
transferred
by
the
taxpayer
to
his
parents
allegedly
for
a
nominal
consideration.
The
affidavit
of
the
taxpayer,
although
traversing
at
length
the
issue
of
his
leaving
Canada
and
denying
that
the
transfer
of
real
estate
to
his
parents
was
otherwise
than
at
arm's
length,
provides
the
Court
with
little
guidance
as
to
the
degree
of
impediment
to
his
current
financial
needs
which
the
exercise
of
some
of
the
executory
processes
under
paragraphs
225.1
(1)(a)
to
(g)
might
have
caused.
Similarly,
the
record
is
silent
as
to
any
garnishment
proceedings
having
been
taken
with
respect
to
the
large
amount
of
funds
entrusted
by
the
taxpayer
to
a
third
person.
I
would
think
that
it
is
incumbent
on
the
Minister
in
exercising
his
executory
powers
under
subsection
225.1(1)
to
limit
the
freeze
to
those
assets
which
roughly
equal
the
amount
at
risk.
Again,
the
record
is
silent
on
this
point.
In
such
circumstances,
I
should
very
much
hesitate
at
this
stage
to
vary
the
Minister's
direction,
leaving
it
to
the
parties
to
make
such
adjustments
as
may
be
necessary
so
that
the
essential
purposes
of
the
jeopardy
provisions
are
maintained
and
that
the
taxpayer,
qua
taxpayer,
be
otherwise
capable
of
managing
his
affairs,
whatever
those
affairs
may
be.
I
am
informed
by
counsel
that
to
their
knowledge,
the
new
jeopardy
provisions
under
the
Income
Tax
Act
have
not
previously
been
subjected
to
a
judicial
test.
In
such
circumstances,
a
court
is
often
tempted
to
stray
further
afield
than
the
strict
requirements
of
the
case
and
end
up
with
musings
of
doubtful
value.
Perhaps,
I
have
not
sufficiently
resisted
that
temptation.
I
will
only
concede
that
as
a
response
to
the
wide-ranging
and
interesting
debate
provided
to
me
by
counsel
on
both
sides,
the
temptation
was
strong.
The
Minister’s
direction
is
confirmed.
Pursuant
to
the
provisions
of
subsection
225.2(8),
there
are
no
costs.
Application
denied.
Email this Content