Abraham - Federal Court of Appeal finds that a decision of CRA that it knows to be legally incorrect is reasonable

A group of status Indian taxpayers applied to have their out-of-limitations-period income tax reassessed in order to conform to a Tax Court ruling (Boubard) that their income was exempt under s. 87 of the Indian Act.  The Minister denied the application, reasoning that Boubard did not represent the "state of the law" at the time on s. 87.  The Court of Appeal approved the Minister's "state of the law" methodology and found that the Minister's decision to deny relief was consistent with such methodology.

With respect, I think the Court of Appeal's conclusions are logically inconsistent. Justice Campell articulated the problem with the Minister's reasoning succinctly (at paras. 13 and 15 of the trial decision, 2011 FC 638):

Even though the decision under review was rendered pursuant to a discretionary power, it is important to note that the decision is based on findings of law, and, therefore, for the decision to be supported on judicial review, I find that the findings must be correct in law. ...

...Boubard is the law, and it is the law that applies to income received by Sagkeeng Band members who worked at the mill back to 1926 which is the date of the sale of the land upon which the mill was built.

The second paragraph is clearly correct - statutory interpretation is retrospective.  The Minister's belief that court decisions affect "the state of the law" in a statutory context ignores the principle that statutory law is set down by Parliament and then discovered through interpretation rather than altered by judicial fiat.

Scott Armstrong.  Summary of The Queen v. Abraham, 2012 FCA 266 under s. 152(4.2) and Indian Act - s. 87.