In its notices of
application, the Applicant alleges the Canada Revenue Agency (CRA), committed
the following reviewable errors in its decisions:
The Appeals Division
never sent the Applicant a proper confirmation of a tax reassessment, as
Division refused to lift a judgment placed by the CRA on two of the three
properties owned by the Applicant despite the fact that the equity in the
remaining property would have been sufficient to cover the amount owing to the
Division refused to apply existing credits to a 2008 debt as requested by the Applicant,
and instead applied the credits to the oldest existing debt;
Division refused to address the liens on three properties owned by the Applicant
for disputed debts for the 2000, 2002 and 2003 taxation years until debts for
the 2008 taxation year had been settled.
In its notices of
application, the Applicant seeks the following relief:
of Application T-1360-10
(a) Declaratory relief that the
Decision was against the CRA’s policy that their general rule of applying
credits to the oldest existing debt can be circumvented at the specific request
of a taxpayer (such as the request at issue in this application).
(b) Mandamus relief
ordering the CRA to apply the credit in the manner specified by the Applicant’s
(c) Such other relief as this
Honourable Court deems just; and
Notice of Application T-1362-10
(a) An order for mandamus
relief that the CRA issue the amended notices of confirmation for the
Reassessments as promised in their letter of March 13, 2009.
(b) In the alternative, a
declaration finding that the CRA failed to resolve the objection filed on
December 14, 2006, in that it has not yet addressed the penalty issue and, as
such, that the notices of confirmation issued on February 11, 2009, are
inadequate and incomplete and quashed.
(c) A declaration that any delay
that has transpired between February 11, 2010 and the issuance of amended
notices of confirmation or quashing of the original notices of
confirmation is attributable to the actions of the CRA for purposes of
potential interest relief if the Applicant’s ultimate appeal of this matter to
the Tax Court of Canada is unsuccessful.
(d) Such other relief as this
Honourable Court deems just; and
Notice Application T-1363-10
(a) Declaratory relief that the
Decision was unreasonable. The CRA should look to protect its position as a
creditor but should not seek to use powers provided to it under the Income
Tax Act to achieve a result better than provided by law. For example, the
CRA should not seek to over-encumber property owned by a taxpayer to informally
coerce a taxpayer into paying off a disputed debt that is already fully
(b) Declaratory relief that Leslie
Green unduly fettered her discretion in rendering the Decision in that she
failed to consider the ongoing harm to the Applicant from the excessive liens.
(c) Declaratory relief that the
Decision was incorrect in law because the underlying debt was not actionable
because the notices of confirmation issued by the CRA on February 11, 2009,
were incomplete as admitted by the Chief of Appeal in his letter dated March
(d) An order quashing the
Decision and ordering that the liens on the other two properties be lifted
(e) Such other relief as this
Honourable Court deems just; and
Notice of Application T-1364-10
(a) Declaratory relief that the
Decision was incorrect in law.
(b) Declaratory relief that the
Decision failed to follow CRA policy or, in the alternative, that CRA policy is
incorrect in law and unduly fetters the discretion of collections officers.
(c) Such other relief as this
Honourable Court deems just; and
Since the filing of
the notices of application, the Applicant states that “[f]acts alleged in the
notices of application have been confirmed or refuted through the litigation
process and new facts have come to light.” Consequently, the Applicant states
in its written submissions that it now seeks the following “core relief”:
relief for the production of a promised amended notice of confirmation and now
declaratory relief to confirm that the Canada Revenue Agency (CRA) cannot
that the CRA should acknowledge and follow its policy for the application of
that the alleged 2008 debt of $436,446.80 was paid by June, 2009 (as now
reflected on the CRA statements) and that the liens and other collections
actions taken in 2010 on the basis that the 2008 debt was unpaid were in error;
that it is not a transparent or intelligible exercise of discretionary power
when officials of the collections division of the CRA make a decision (in this
case concerning multiple liens related to the 2003 Reassessment) without
reviewing their file and subsequently revise their position as to who made that
decision and on what basis.”
The Applicant raises the
following issues to be decided by the Court:
“(i) Can the CRA
Should the CRA be
forced to issue the promised amended notice of confirmation (one that is not
Should the CRA know who
makes a decision and communicate that decision consistently in Court documents?
Should the CRA review
their file before exercising discretionary decisions affecting millions of
dollars of property?
Should a collections
official of the CRA make a decision (in this case concerning multiple liens
related to the 2003 Reassessment) without reviewing their file?
Should the CRA know
and follow its policies on the application of credits?
Should the CRA place
liens on debts that have already been paid subject only to the CRA correcting
their errors of misapplying earlier payments and not following their policy?”
This consolidated application
concerns a number of different decisions and raises issues that rest on different
facts. The respondent contends that certain issues raised are moot and need not
be decided. In the circumstances, it is useful to restate the issues as
the Minister breach procedural fairness in issuing the Notice of Confirmation
and if not, is the legal efficacy of the Notice of Confirmation a proper matter
for judicial review?
the full repayment of the Applicant’s debt and the lifting of the judgments on
the Applicant’s property render the other issues raised in relation to the
Collections Division’s decisions moot?
so, should the Court, in the exercise of its discretion, decide the moot
so, are the Collections Division’s decisions reviewable decisions under subsection
18.1 of the Federal Courts Act?
a. Did the Collections Division err in
registering a judgment on the Applicant’s properties based on the 2008
b. Did the Collections Division err in
refusing to lift judgments from two properties belonging to the Applicant?
c. Did the Collections Division err in
failing to acknowledge and follow its policy for the application of credits?
I propose to deal with
each of these issues and their underlying facts in turn.
of Appeals Division – Notice of Confirmation
The Minister issued
notices of reassessment of the Applicant’s 2000, 2002 and 2003 taxation years
on October 23, 2006 (the Reassessments). The Reassessments included gross
negligence penalties under paragraph 163(2) of the Income Tax Act, RSC
1985, c 1 (5th Supp) (ITA). The Applicant filed an objection to the
Reassessments on December 14, 2006.
On February 11, 2009,
the CRA issued a Notice of Confirmation of the Reassessments and informed the Applicant
of the procedure to undertake should it wish to appeal the Reassessments to the
Tax Court of Canada.
In response to the
Notice of Confirmation, Mr. Davis, the Applicant’s representative and
accountant, sent a letter to the CRA Appeals Division on February 17, 2009,
acknowledging the confirmation of the Reassessments and inquiring as to why the
Appeals Division had not considered the discussions the Applicant had had with
the audit division, which the Applicant contends resulted in an agreement that
there were certain errors in the assessment. Mr. Davis also noted that the
Notice of Confirmation was silent on the penalties.
In a letter dated
March 13, 2009, the Appeals Division responded to the Applicant’s inquiry explaining
its reasons for confirming the Reassessments and stating “[w]ith respect to the
issue of penalties, we neglected to inform you that the penalties assessed
under subsection 163(2) of the Income Tax Act were also confirmed. We will
provide you with amended copies of the confirmation documents to reflect this
fact.” On or about March 13, 2009, the CRA sent the Applicant a revised version
of the Notice of Confirmation (Revised Version) which now included the phrase
“the penalties assessed under subsection 163(2) of the Income Tax Act.” The
revised document reads as follows:
Your Notices of Objection to
the income tax assessment for the 2000, 2002 and 2003 tax years have been carefully
reviewed under subsection 165(3) of the Income Tax Act. The Minister of
National Revenue has considered the reasons set out in your objection and all
the relevant facts. It is hereby confirmed that the assessment has been made in
accordance with the provisions of the Income Tax Act on the basis that: The
taxable capital gains assessed under S 69(1)(b) of the Income Tax Act, the
capital losses disallowed under S 38 of the Income Tax Act, the penalties
assessed under S 163(2) of the Income Tax Act, and the capital losses
carried back to 2000 and 2002 disallowed under S 111(1)(b) has been determined
to have been correctly assessed. [My emphasis]
The CRA dated the Revised Version the
same date the original Notice of Confirmation was signed, namely February 11,
2009. The Revised Version was sent via regular mail.
ISSUE I: Did the Minister breach
procedural fairness in issuing the Notice of Confirmation and if not, is the
legal efficacy of the Notice of Confirmation a proper matter for judicial
OF THE APPLICANT
contends that the Appeals Division never sent the Applicant a proper
confirmation of a tax reassessment, as promised. It argues that the amended
Notice of Confirmation, dated February 11, 2009, but signed on or around March
13, 2009, is a backdated document and as such is a nullity. The Applicant
contends that backdating the revised Notice of Confirmation to February 11,
2009, effectively “truncates” the “important 90 day timeline” provided for
under law to appeal the notice, as the appeal period starts to run from the
time the notice is issued. The Applicant argues that this backdating amounts to
an abuse of procedural fairness reviewable on a standard of correctness. The Applicant
seeks a declaration that the revised Notice of Confirmation is a nullity and void
ab initio, and a writ of mandamus directing the respondent to
issue a new notice of confirmation.
OF THE RESPONDENT
The respondent contends
that by issuing the Notice of Confirmation on February 11, 2009, the Minister
complied with subsection 165(3) of the ITA, and notified the Applicant
of the Minister’s action of confirming the Reassessments. Having done so, the
Minister became functus officio in regard to his determination. The
Applicant was advised that he could appeal the Minister’s confirmation of the
Reassessments to the Tax Court of Canada, pursuant to subsection 169(1) of the ITA.
The respondent contends that the revised Notice of Confirmation did not replace
the original version. Rather, it was provided to the Applicant out of courtesy
and to clarify that the penalties had also been confirmed. The respondent argues
that despite having received the Notice of Confirmation, the Applicant
continued to “raise the issue of the correctness of the Reassessments with
CRA’s Appeals division” rather than appeal the decision to the Tax Court of
Canada within the prescribed time frame.
further contends that the Applicant cannot seek declaratory relief relating to
the “backdating of documents”. It is argued that the relief was not pled in the
Applicant’s notice of application and the evidence establishes the revised
document was known to it at the time of drafting the notice of application.
The respondent also
argues that the Applicant should not be permitted to use judicial review as a
means to avoid the comprehensive statutory scheme established by the ITA
and the Tax Court of Canada Act, RSC 1985, c T-2, for the appeal of
reassessments. The respondent argues that the Tax Court of Canada has exclusive
original jurisdiction to hear and determine appeals on matters arising under
the ITA pursuant to section 12 of the Tax Court of Canada Act.
The respondent submits that the Supreme Court has also stated in Canada v
Addison & Leyen Ltd., 2007 SCC 33 at paragraph 11 [Addison
& Leyen], that taxpayers should not be permitted to use judicial review
application processes at the Federal Court to open up an incidental form of
litigation when a right of appeal exists at the Tax Court of Canada.
Whether the Court is
reviewing a decision on procedural fairness grounds or determining whether the
issues raised are properly within the Court’s jurisdiction on judicial review,
the matters are reviewable on the correctness standard (Walker v Canada,
2005 FCA 393 at para 10 [Walker]; Ellis-Don Ltd. v Ontario (Labour
Relations Board), 2001 SCC 4 at para 65; Dunsmuir v. New Brunswick, 2008 SCC 9 at paras 59, 129).
I will turn first to
the Applicant’s procedural fairness argument. This argument is considered
because the issue potentially engages the Applicant’s right to launch its
appeal to the Tax Court of Canada.
Following the filing
of the Applicant’s objection to the Reassessments pursuant to section 165 of
the ITA, the Minister confirmed the Reassessments and communicated his
action to the Applicant by Notice of Confirmation issued on February 11, 2009.
By doing so, the Minister confirmed that his decision on the Reassessments
remained unchanged. This included his decision to levy gross negligence penalties
even though this was not expressly mentioned in the Notice of Confirmation. As
noted above, this was confirmed by the CRA in a letter sent to the Applicant on
March 13, 2009, as well as in the revised document sent on or around the same
date. The record establishes that the Applicant received this letter and this
In my view, once the
Minister decides to confirm an assessment or reassessment and notifies the
taxpayer in writing of his decision pursuant to subsection 165(3) of the ITA,
his duties under the ITA in relation to reconsideration of assessments
are completed. In the circumstances, I find that the Minister did confirm the
Reassessments on February 11, 2009, and did notify the Applicant in writing of
his action. The Applicant had the option to appeal the decision to the Tax
Court of Canada, which it did not do. The ITA does not provide for a
further reconsideration of the Minister’s action. The February 11, 2009 Notice
of Confirmation is the only effective notice of the Minister’s action in the
circumstances. Any revised or amended notice that does not change the
Minister’s decision cannot be considered a substitute for the Notice of
Further, contrary to
the Applicant’s contention, I find no evidence of a promise made on behalf of
the Minister that a new Notice of Confirmation was to be issued. The March 13,
2009 letter from the CRA informed the Applicant that the penalties were also
confirmed and that “amended copies” of the confirmation documents would be sent
to reflect this fact. In my view, the undertaking to issue “amended copies”
that confirm the Reassessments does not amount to a promise that a new Notice
of Confirmation is to be issued. Further, the record of the transcripts of
cross-examinations of CRA officials supports the Minister’s contention that the
revised notice was sent to clarify that the gross negligent penalties continued
to apply as levied in the Reassessments and as confirmed in the Notice of
Q: Now, if you
thought that the initial notice of confirmation was sufficiently clear, was [the
revised version] provided merely as a courtesy?
A: That’s correct.
Cross-Examination on Affidavit of Ron
Brass, Applicant’s Record, p. 260.
I am satisfied that
the revised version of the Notice of Confirmation was sent to clarify the
Minister’s action and was not intended to replace the Notice of Confirmation. I
accept the Minister’s contention that the revised document was dated the same
date as the Notice of Confirmation so as not to mislead the Applicant about the
date of the Notice of Confirmation or the possibility that the Revised Version
was a new document that replaced the original Notice of Confirmation. Consequently,
I find that the Revised Version did not serve to backdate the Notice of
The Minister could
not revisit his decision once his action on the objection was taken and
communicated to the Applicant. The revised document did not change the
Minister’s decision on the Applicant’s objection to the Reassessments. That
decision was communicated to the Applicant by the Notice of Confirmation dated
February 11, 2009, as required by subsection 165(3) of the ITA.
Here, the Applicant
received the Notice of Confirmation as well as its Revised Version. The
Applicant was aware of the Minister’s decision and of his right of appeal. The
cover letter to the Notice of Confirmation states that should the Applicant
“disagree with this decision, [it] may file an appeal with the courts.
Information on how to proceed is attached.” The attached information clearly
sets out the necessary steps to be taken for an appeal of the decision to be
launched before the Tax Court of Canada, including that the “appeal has to be
received by the Court no later than 90 days from the mailing date of our Notice
of Confirmation or notice of (re)assessment.” Notwithstanding this notice,
the Applicant did not move to protect its rights by appealing to the Tax Court
of Canada. Rather, it persisted in pursuing its dispute with CRA officials. In
the circumstances, I find that the Minister’s actions do not amount to a breach
of procedural fairness.
I find no breach of procedural fairness in the circumstances, it would have
been preferable had the Minister articulated his clarification on the gross
negligent penalties differently. A simple letter advising the Applicant that
the penalties were confirmed in the February 11, 2009 Notice of Confirmation
would have been sufficient and may have prevented the need for this
determined that no breach of procedural fairness resulted from the issuance of
the Notice of Confirmation, I turn to consider whether the legal efficacy of
the Notice of Confirmation is a matter that is properly before this Court on
In Walker, above, when the CRA contacted the taxpayer regarding an
amount due, the taxpayer claimed that he had never received a notice of
reassessment. Over a year later, he commenced an application for judicial
review in the Federal Court seeking an order declaring that no amount was owing
because no notice had been sent. The Federal Court of Appeal affirmed the
Federal Court’s decision not to hear the application for judicial review. The Federal
Court of Appeal held that the legal efficacy of the notice of reassessment was
a matter to be determined by the Tax Court of Canada in an income tax appeal.
At paragraph 13 of its decision, the Federal Court of Appeal wrote that “[i]n this case, section
18.5 [of the Federal Courts Act] should preclude the Federal Court from
entertaining an application for judicial review in which the critical issue is
the legal efficacy of that key document.” Similar reasoning was adopted by the
Supreme Court in Addison & Leyen.
Here, the Applicant
claims that the Revised Version of the Notice of Confirmation which purports to
amend the Notice of Confirmation has no legal effect. The Applicant challenges
the “legal efficacy” of a “key document”. Guided by the above discussed
jurisprudence of the Federal Court of Appeal and the Supreme Court of Canada, I
am satisfied that such a question is a matter to be determined by the Tax Court
of Canada in an income tax appeal.
It was open to the
Applicant to appeal the Notice of Confirmation to the Tax Court of Canada. In
the result, pursuant to section 18.5 of the Federal Courts Act and
section 12 of the Tax Court of Canada Act, the application for judicial
review on this question will not be entertained. Consequently, the Applicant’s
claim for mandamus relief and ancillary declaratory relief related to
the question will be dismissed.
of the Collections Division
The remaining issues
concern the decisions of the Collections Division. Therefore, I will next set
out the underlying facts relating to each of those decisions.
(i) Registering a judgment on
the Applicant’s properties based on the 2008 Assessment
On April 15, 2009,
the CRA issued an assessment against the Applicant in the amount of $436,446.80
for its taxation year ending October 31, 2008 (the 2008 Assessment).
On June 19, 2009, the
Applicant paid $387,031 into its account against the 2008 Assessment. The
amount was inadvertently posted by the CRA to a different account also
belonging to the Applicant.
Sometime in 2009, Mr.
Davis requested that the Applicant’s credits from the 2005 and 2006 taxation
years amounting to $24,076 be applied against the 2008 Assessment.
The Applicant’s 2008
corporate return indicates tax withheld at the source in the amount of $17,996.
On April 1, 2010, the
Collections Division sent a warning letter advising the Applicant that it had
21 days to pay the outstanding amounts owing on the Reassessments and the 2008
Assessment before legal action would be taken.
Sometime in April
2010, the Collections Division was notified that the June 19, 2009 payment was
inadvertently applied by the CRA to the wrong account and that the payment had
been intended by the Applicant to be applied against its 2008 Assessment.
The CRA obtained a
certificate from the Federal Court for the 2008 Assessment for $442,412.96 which
it registered in the Land Title Office against three properties belonging to
the Applicant on or around June 4, 2010. At that time, the CRA also registered
a judgment against the Applicant’s properties for $500,488.88, which had been
obtained on January 19, 2007 for half of the amount owing under the 2000, 2002
and 2003 Reassessments.
(ii) Refusal to apply tax
credits to the 2008 debt
Mr. Davis had requested
at some point in 2009 that the Applicant’s tax credits for the 2005 and 2006
taxation years be applied to the 2008 Assessment debt. The request had not been
processed at that time and was resubmitted by the Collections Division to the
corporate accounting division in April 2010.
At the end of July
2010, counsel for the Applicant contacted Brian McGrath at the Collections
Division to request that the 2005 and 2006 taxation year credits be applied
against the 2008 Assessment. Mr. McGrath was informed by his team leader,
Leslie Green, that credits needed to be applied to the oldest debt. Mr. McGrath
admitted he knew there was a CRA policy that the taxpayer could apply credits
as requested, but told counsel for the Applicant that the credits needed to be
applied to the oldest debt, as instructed by Ms. Green.
On the same day, Ms.
Green realized her mistake and told Mr. McGrath that the credits could be
applied where the taxpayer desired. The Applicant was not made aware of this
reversal of position until the credits were eventually posted on the CRA’s
system in December 2010. At that time, Mr. McGrath advised Mr. Davis that the
credits had been applied to the 2008 Assessment and provided Mr. Davis with a
release of the 2008 judgment for use in the Land Title Registry. The CRA
alleges the delay in the posting of the credits is attributable to the fact
that the CRA needed to reassess the Applicant’s returns for 2005 and 2006 in
order to determine if the Applicant was entitled to the credits.
The judgment on the Applicant’s
property for the 2008 tax debt was released on December 15, 2010.
(iii) Refusal to lift the
judgment from two of the three properties
At the end of July
2010, counsel for the Applicant contacted Mr. McGrath to request that the CRA
remove the Reassessments judgment from two of the Applicant’s properties on the
basis that the third property had sufficient equity to cover the debt. The Applicant
provided the CRA with a December 2009 mortgage statement to substantiate its
Mr. McGrath discussed
the request with his team leader, Leslie Green, and a Resource officer, Kelly
Ward. Ms. Green denied the request on the basis that it was an old debt, the
debt was collectible and that the CRA would not gain any benefit from doing so.
Ms. Green did not review any documents in the file in coming to her
response. The decision was relayed to counsel for the Applicant by Mr. McGrath.
On April 29, 2011,
CRA received payment of $1,180,384.22, representing full payment of the
Reassessments. All judgments against the Applicant’s properties have been
lifted as of this date.
ISSUE II: Does the full
repayment of the Applicant’s debt and the lifting of the judgments on the Applicant’s
properties render the other issues raised in relation to the Collections
Division’s decisions moot?
OF THE RESPONDENT
The respondent argues
that the test to determine “mootness” established by the Supreme Court in Borowski
v Canada (Attorney General),  1 S.C.R. 342 at 353 [Borowski],
has been met.
contends that since the credits at issue were applied to the 2008 debt and that
all debts have been paid in full, the required tangible and concrete dispute
between the parties has disappeared and the issues have become academic.
further argues that the Court should not exercise its discretion to hear the
applications because there is no longer an adversarial relationship between the
parties since all debts have been paid in full, and because “issues in these
applications are not of public importance, are likely to come before the Court
in other applications, and have no practical effect on the parties.”
The respondent also
contends that the “core relief” now sought by the Applicant was not pled in the
notice of application. It is argued that such a request is inappropriate
without an amendment to the notice of application and should not be entertained
by the Court.
OF THE APPLICANT
The Applicant argues that
the record does not establish that the tangible and concrete dispute has
disappeared between the parties. It contends that the record is unclear in
regard to a second judgment registered against its properties between April 11
and 29, 2011. It questions why these liens were imposed and what impact they
may have had on forcing payment.
Further, the Applicant
contends that it is seeking relief beyond the lifting of the judgments, namely
declaratory relief and an order quashing the impugned decision. The Applicant
distinguishes between the lifting of the liens and an order quashing the
decision to register the liens. It argues that a quashed decision may have
retroactive effect. The Applicant also contends that there is “no saving in
judicial economy raising issues of mootness at the hearing itself.”
The Applicant contends
that the public interest prong of the mootness test applies in the
circumstances because the “Crown’s identification of the decision maker has
changed several times” and “back-dating has been admitted by a Crown witness in
cross-examination.” Also within the public interest prong, the Applicant states
a creditor can excert [sic] pressure upon an applicant, for example by more
than doubling the liens in place on three different properties, and then claim
mootness when the application of pressure results in the desired payment, there
is a risk of misconduct being rewarded rather than scrutinized.
The Applicant submits
that given the changes in some of the facts since the initial application, the
“core relief” it sets out in its memorandum of fact and law should be
considered in determining whether the issues are moot.
The preliminary question
is to determine whether the relief sought by the Applicant is restricted to
what is claimed in the original notices of application filed on August 24,
2011, or whether it also includes the “core relief” raised by the Applicant in
its written submissions.
In addition to the
specific relief requested in the Applicant’s notices of application, there is
the “basket clause” stating: “Such other relief as this Honourable Court deems
just.” Declaratory relief raised in a memorandum of fact and law that is
necessarily incidental to the requested relief may be granted under a basket
clause in circumstances where the opposite party is not taken by surprise or in
any way prejudiced (Native Women’s Assn. of Can. v Canada,  3 S.C.R. 627 at para 31 and SC Prodal
94 SRL v Spirits International B.V., 2009 FCA 88).
Item (i) of
the core relief articulated in the Applicant’s memorandum of fact and law now
seeks declaratory relief relating to the backdating of documents. Here, the
notice of application makes no reference to declaratory relief sought relating
to the backdating of documents. The relief sought in the Notice of Application
includes a request for an order requiring the issuance of an amended Notice of
Confirmation, a declaration that the February 11, 2009 Notice of Confirmation
was inadequate and incomplete, and a declaration that any delay in the issuance
of the amended Notice of Confirmation is attributable to the actions of the
CRA. The “backdating of documents” is a different issue and was not raised in
the Notice of Application. I am of the view that the specific relief relating
to backdating is not necessarily incidental to the relief raised in the Notice
of Application. Consequently, the respondent did not have notice that such
relief was requested. Failure to provide proper notice results in a process
that is procedurally unfair. Therefore, the request for declaratory relief
relating to backdating of documents listed in the “core relief” will not be
entertained on this application. In any event, I have already determined in
the context of the procedural fairness issue that there was no backdating of
the Notice of Confirmation.
to the three other heads of declaratory relief sought in the Applicant’s
memorandum of fact and law, I am satisfied that the relief sought is incidental
or ancillary to the relief sought in the notices of application and is relief
that may be granted under the “basket clauses.” I am further satisfied, in the
circumstances, that the respondent is not taken by surprise or in any way
prejudiced by allowing the request for this relief to be considered by the
Court. Consequently, the three additional heads of relief articulated as part
of the “core relief” sought by the Applicant are properly before the Court.
determined which heads of relief sought by the Applicant are properly before
the Court, I now turn to consider whether the issues raised are moot.
The Supreme Court, in
Borowski at 353, sets out the following two-step approach in applying
the doctrine of mootness: … “[f]irst, it is necessary to determine whether the
required tangible and concrete dispute has disappeared and the issues have
become academic. Second, if the response to the first question is affirmative,
it is necessary to decide if the court should exercise its discretion to hear
the Supreme Court discusses the circumstances where the doctrine of mootness is
The doctrine of mootness is an aspect of a general policy or
practice that a court may decline to decide a case which raises merely a
hypothetical or abstract question. The general principle applies when the
decision of the court will not have the effect of resolving some controversy
which affects or may affect the rights of the parties. If the decision of the
court will have no practical effect on such rights, the court will decline to
decide the case. This essential ingredient must be present not only when the
action or proceeding is commenced but at the time when the court is called upon
to reach a decision. (at 353)
makes clear that the analysis to determine whether a question is moot “requires a consideration of whether there
remains a live controversy.” A case that fails to meet the “live controversy
test” is moot (Borowski at 353-354).
also teaches that declaratory relief, in itself, does not provide a basis to
establish a live controversy (Fogal
v Canada, 167
FTR 266,  FCJ No 788 (QL)).
Here, all of
the debts owing to the CRA have been paid and all of the judgments registered
against the Applicant’s properties have been discharged. Consequently, the
primary elements of relief raised in the Applicant’s notices of application are
no longer live. What remains, in terms of potential relief available to the
Applicant, is the declaratory relief claimed in relation to past enforcement
actions of the CRA. When declaratory relief does not flow from a live
controversy, as is the case here, it is to be considered in the second step of
the Borowski analysis. In the result, I am satisfied that there remain
no live controversies and that the issues raised in relation to the Collections
Division decisions are moot.
ISSUE III: Should the Court, in the exercise of its
discretion, decide the moot issues?
In exercising its
discretion to hear a matter that is moot, the Court should consider the extent
to which the following three rationales for enforcing the mootness doctrine are
present (Borowski at 358-363):
the lack of an
the concern for scarce
judicial resources (whether the decision will have a practical effect on the
parties, is a case of a recurring nature but brief duration or an independent
question that may independently evade review by the court, or is an issue of
public importance of which a resolution is in the public interest);
the need for the
Court to demonstrate a measure of awareness of its proper law-making function
and not overstepping its role as the adjudicative branch in our political
i) Adversarial relationship
still considers certain elements of its relationship with the CRA to be
adversarial. It claims that certain actions of the CRA were inappropriate, in
particular the filing of certain liens against its properties, the timely
lifting of certain liens against is properties, and the timely application of
tax credits against the Applicant’s debts. The respondent contends that all
issues have been resolved and all liens against the Applicant’s properties have
been lifted. The respondent also contends that the CRA has always acted
at issue relate essentially to actions taken by the Minister in carrying out
his obligation to collect outstanding tax debts pursuant to the provisions of
the ITA. These actions flow from discretionary administrative decisions.
the necessary adversarial context in the circumstances, there should be
evidence of the collateral consequences of the outcome. These are not evident
here. In its written submissions, the Applicant states that “the record is
unclear” as to the impact of the impugned liens on forcing payments. It further
submits that it is “far from clear” that lifting the liens removes any tangible
dispute between the parties. At best, the Applicant relies on speculative inferences
to base any collateral consequences to deciding the issues.
In my view,
the first rationale of the Borowski test, the adversarial context,
mitigates against the exercise of my discretion to entertain the moot issues in
ii) Concern for judicial economy
considering the second rationale, the Court must evaluate whether there are
special circumstances that warrant the use of limited judicial resources on
issues that are moot (Borowski at 360). The concern for judicial economy
is answered if the Court decision will have some practical effect on the rights
of the parties. This approach is also adopted when the Court considers a
request for declaratory relief. To grant declaratory relief, “the case before
the Court must be genuine, not moot or hypothetical; and the declaration must
be capable of having some practical effect in resolving the issues the case
raises” (Solosky v The Queen,  1 S.C.R. 821 at 832-833; Monachino
v Liberty Mutual (2000), 47 OR (3d) 481 (CA) at para 20).
Further, “[i]n order to ensure that an important
question which might independently evade review be heard by the court, the
mootness doctrine is not applied strictly” (Borowksi at 360). The Supreme Court has stated
that “[i]t is preferable to wait and determine that point in a genuine
adversarial context unless the circumstances suggest the disputes will have
always disappeared before it is ultimately resolved” (Borowski at 361).
Court is justified in using scarce judicial resources to hear moot cases that
raise questions of public importance of which a resolution is in the public
discussed above, the Applicant was unable to clearly articulate any collateral
consequence that would flow from deciding the issues. The Applicant has not
demonstrated any prejudice it suffered from the alleged unreasonable actions by
the CRA. Further, the declaratory relief sought is in relation to past
enforcement actions of the CRA. These actions have been taken and are not
recurring or ongoing in a continuing relationship. In my view, there will be no
practical effect on the rights of the parties in determining the issues raised
by the Applicant.
did not raise any issue that is unlikely to come before the Court in other
circumstances. I am satisfied that there are no important questions which
although moot might independently evade the review of the Court.
contends that the following questions raised in the applications justify the
exercise of the Court’s discretion in hearing the moot issues, namely the
backdating of the Notice of Confirmation, the allegation that the CRA’s
identification of the decision-maker has changed, and the fact that new liens
were placed on its properties between April 11, 2011, and April 29, 2011, for
an amount that more than doubled the existing liens. In my view, these
questions do not raise issues that involve social costs of continued
uncertainty in the law. Rather, they relate to facts specific to the
Applicant’s circumstances that do not amount to questions of public importance.
Consequently, I am satisfied that there are no issues of public importance in
play in the applications.
In the result, the
second rationale of the Borowski test does not support the exercise of
the Court’s discretion to hear the moot issues.
The Court’s law-making function
“In considering the exercise of its discretion to
hear a moot case, the Court should be sensitive to the extent that it may be
departing from its tradition
role” (Borowski at 363). The issues in play here essentially concern the
reasonableness of past enforcement actions of the CRA, and its implementation
of administrative policies relating to the collection of outstanding tax debt
pursuant to the enforcement provisions of the ITA. In adjudicating such issues,
the Court would not be departing from its traditional role. However, in the
specific circumstances of this case, it would be preferable to decide such
questions on the basis of live issues. Consequently, I consider the third
rationale of the Borowski test to be a neutral factor in the exercise of
conclusion, in the circumstances, having considered the three basic rationales
for enforcement of the mootness doctrine, in the exercise of my discretion, I
decline to hear and decide the moot issues raised in the applications at issue.
Had I proceeded to
consider the moot issues raised in each of the Collections Division’s decisions
under review, the evidence adduced by the Applicant would have failed to
establish an evidentiary foundation for the declaratory relief sought in any
application relating to the Collections Division refusal to apply tax credits
from the 2005 and 2006 tax years to the 2008 tax debt, the evidence shows those
credits were eventually applied as requested by the Applicant in accordance
with the CRA’s policy. The mistaken belief that the 2005 and 2006 taxation year
credits needed to be applied to the oldest debt and not as directed by the
taxpayer was corrected by officials on the same day the mistake was made. The
credits were eventually applied when the CRA determined the Applicant was
entitled to the credits following a reassessment of the 2005 and 2006 taxation
The Applicant alleges
that the CRA acted unreasonably in refusing to lift liens from two of the
Applicant’s properties on the basis the Minister had sufficient equity to cover
the debt. The Applicant adduced only a mortgage statement to substantiate its
claim. This is clearly insufficient to establish the value of the equity in the
impugned properties. Further, the Applicant failed to provide any authority
indicating that the Collections Division had the obligation to lift any liens
in such circumstances or conduct an independent evaluation of the Applicant’s properties
to determine its equity.
The relief sought by
the Applicant relating to the
liens based on the 2008 Assessment is also unsupported on the record. The record establishes that all of the
liens were properly registered pursuant to legally obtained judgments on
outstanding debt. Even
if I were to accept the Applicant’s arguments that the CRA erred in obtaining a
judgment based on the 2008 Assessment and registering it against its
properties, the Applicant’s properties would still have been the subject of the
liens based on the Reassessments. In the circumstances, the Applicant has
failed to demonstrate any practical effect that would warrant declaratory
relief on this issue.
above findings, in the result, it is unnecessary to consider the two remaining
issues identified at paragraph 6 above.
For the above
reasons, the applications for judicial review consolidated pursuant to the
December 20, 2010 Order of Prothonotary Lafrenière will be dismissed with
JUDGMENT is that the applications
for judicial review consolidated pursuant to the December 20, 2010 Order of
Prothonotary Lafrenière are dismissed with costs.
“Edmond P. Blanchard”