Citation: 2012TCC62
Date: 20120305
Docket: 2006-1685(IT)I
BETWEEN:
CARL CURRIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Webb, J.
[1]
The Appellant brought a
motion under subsection 22(2) of the Tax Court of Canada Rules (Informal Procedure) (the “Rules”) for an order requiring the
Minister of National Revenue or the Canada Revenue Agency to appear before a
judge of this Court to respond to an allegation by the Appellant that such
person was in contempt of court in relation to a judgment that had been
rendered by Justice Rossiter (as he then was) of this Court on June 13,
2008 (the “Judgment”). The Appellants had previously brought a motion for
contempt but since the Appellant had not first obtained the required order for
someone to appear, the matter was adjourned and this motion was heard by
conference call with both parties filing affidavit evidence.
[2]
In Bhatnager v. Canada,
[1990] 2 S.C.R. 217, Justice
Sopinka (who was writing on behalf of the Supreme Court of Canada), made the
following general comments in relation to an allegation of contempt:
14 It
is well to remember at the outset that an allegation of contempt of court is a
matter of criminal (or at least quasi-criminal) dimension …
[3]
Subsections 22(1) (in
part), (2) and (4) of the Rules provide as follows:
22. (1) A person is guilty of contempt of
court who
…
(b) wilfully disobeys a process or order
of the Court;
…
(2) Subject
to subsection (6), before a person may be found in contempt of court, the
person alleged to be in contempt shall be served with an order, made on the
motion of a person who has an interest in the proceeding or at the Court’s own
initiative, requiring the person alleged to be in contempt
(a) to
appear before a judge at a time and place stipulated in the order;
(b) to
be prepared to hear proof of the act with which the person is charged, which
shall be described in the order with sufficient particularity to enable the
person to know the nature of the case against the person; and
(c) to
be prepared to present any defence that the person may have.
…
(4) An order may be made
under subsection (2) if the Court is satisfied that there is a prima facie
case that contempt has been committed.
[4]
Therefore there is a two
step process in relation to an allegation of contempt of court. The first step
(which is the subject of this Motion) is the issuance of an order requiring a
particular person to appear before a judge in relation to the allegation of
contempt. In order for such an order to be issued in this case I must be
satisfied that there is a prima facie case that contempt has been
committed. If this order is issued, the Appellant would then be required, at
the hearing for contempt, to prove beyond a reasonable doubt that the person who was required to appear
committed the alleged contempt of court.
[5]
The Judgment (which the
Appellant alleges has not been given effect) provided as follows:
The appeal from the assessment made under subsection 160(1)
of the Income Tax Act, notice of which is dated
February 3, 2004 and bears number 30527 is allowed and the matter is referred
back to the Minister of National Revenue for reconsideration and reassessment
on the basis that the Appellant is not liable for interest on the Estate debt
from December 31st of the year of the transfer, for and in accordance with the
reasons set out in the attached Reasons for Judgment.
[6]
The Appellant’s father
(Delmar Currie) died in 1996 and the Appellant was one of the two executors of
the Estate. A tax return was prepared for the year of death in which, inter
alia, the capital gain arising on the deemed disposition of the shares that
Delmar Currie held in a golf course company was reported. In 2000 the Estate of
Delmar Currie was reassessed to increase the tax liability arising as a result
of the deemed disposition of these shares and following the filing of a notice
of objection, the Estate was again reassessed to reduce the tax liability of
the Estate. It appears that the amount reassessed on April 26, 2002 (following
the notice of objection) was $705,388.
[7]
Prior to the first
reassessment of the Estate the Appellant (and his siblings) received certain
assets from the Estate of Delmar Currie. Section 160 of the Income Tax Act
(the “Act”) provides, in part, that:
160. (1) Where a person has … transferred property, either directly
or indirectly, by means of a trust or by any other means whatever, to
…
(c) a person with whom the person was not
dealing at arm's length,
the following rules apply:
…
(e) the transferee and transferor are
jointly and severally liable to pay under this Act an amount equal to the
lesser of
(i) the amount, if any, by which the fair market
value of the property at the time it was transferred exceeds the fair market
value at that time of the consideration given for the property, and
(ii) the total of all amounts each of which is
an amount that the transferor is liable to pay under this Act in or in respect
of the taxation year in which the property was transferred or any preceding
taxation year,
but nothing in this subsection shall be deemed to limit the
liability of the transferor under any other provision of this Act.
[8]
On February 3, 2004 the
Appellant was assessed under section 160 of the Act in the amount of
$544,147 (the “section 160 Assessment”) which reflected certain payments that
had been made on the tax debt of the Estate prior to that date. Although the
fair market value of the assets that the Appellant received from the Estate is
not clear, the Appellant did not object to the section 160 Assessment on the
basis that the fair market value of the assets that he received was less than
the amount for which he was assessed. The basis for his objection and appeal
was that the Appellant should not be liable for interest on the amount assessed
under section 160 of the Act for any period after the date of the
section 160 Assessment.
[9]
The Judgment provided
that the section 160 Assessment should not have included any interest for any
period following the year in which property was transferred to the Appellant.
Therefore as a result of the Judgment the amount for which the Appellant should
have been assessed under section 160 of the Act should have been less
than $544,147. It is the position of the Appellant that he should have received
a refund and since he has not, that the Minister of National Revenue or the
Canada Revenue Agency is in contempt of the Judgment.
[10]
There are two general
issues that will be addressed:
(a)
Has the Appellant
established a prima facie case that there has been a failure to
comply with the Judgment; and
(b)
If so, can the Minister
of National Revenue or the Canada Revenue Agency be cited for contempt?
[11]
In Canadian Broadcasting Corp. (CBC) v. CKPG Television Ltd., [1992] 3 W.W.R. 279, 64 B.C.L.R.
(2d) 96, Justice Lambert, writing on behalf of the British Columbia Court of
Appeal, stated that:
… In the
context of an application where both parties have filed affidavit evidence, I
presume that "a prima facie case" must mean a case where, if a
decision were to be made as if the evidence on the application were all the
evidence there was ever going to be, that decision would be in favour of the
applicant….
[12]
In this case both parties
have filed affidavit evidence in relation to the previous motion that had been
made with respect to the allegation of contempt and in relation to this motion.
Therefore the issue for this Motion is whether I am satisfied that, based only
on the affidavit evidence that was filed either in relation to the previous
motion for contempt or the current motion, there is a prima facie case
that contempt has been committed in relation to the Judgment.
[13]
In this case the
question is: how do we know if there has been a failure to comply with the
Judgment? If the tax debt of the Estate would not have been paid and the amount
of the adjustment was certain, it would be obvious whether there has been a
failure to comply with the Judgment as the amount that the Canada Revenue
Agency should be seeking to recover from the Appellant pursuant to section 160
of the Act should be less than $544,147 after giving effect to the
Judgment. However, in this case the tax debt of the Estate has been paid in
full and was paid in full before the Judgment was rendered and therefore it is
more difficult to determine if there has been a failure to comply with the
Judgment.
[14]
Counsel for the
Respondent had argued that since a second assessment (for $0) had been issued under
section 160 of the Act prior to the hearing of the appeal in 2008 (as a
result of the tax debt of the Estate having been paid in full) that this second
assessment nullified the section 160 Assessment and therefore there was no
amount to adjust. The affect of the second assessment under section 160 of the Act
was the subject of a motion that was heard by Justice Bowie on November 22,
2006. That motion was for an order to quash the appeal on the basis that, as a
result of the second assessment for $0 under section 160 of the Act,
there was no assessment under section 160 of the Act from which the
Appellant could appeal. That motion was dismissed.
[15]
The issue of the affect
of the second assessment for $0 under section 160 of the Act appears to
have again been raised in the hearing before Justice Rossiter (as he then was).
In his Reasons provided with the Judgment, Justice Rossiter (as he then was)
referred to the section 160 Assessment as Assessment #1 and the second
assessment dated May 11, 2006 in the amount of $0 as Assessment #2. It is clear
in paragraph 26 of the Reasons provided with the Judgment that Justice Rossiter
(as he then was) was ordering a variation to Assessment #1 (the section
160 Assessment).
[16]
Since the tax debt of
the Estate of Delmar Currie was paid in full sometime before May 11, 2006 (and
therefore before the Judgment), the Appellant could not have been assessed
under section 160 of the Act after the date of the Judgment (June 13,
2008) for any amount in relation to the liability of the Estate of Delmar Currie
under the Act. One of the limiting amounts in section 160 of the Act
is the liability of the transferor under the Act (subparagraph 160(1)(e)(ii)
of the Act) and since there was no liability of the Estate of Delmar
Currie in 2008, no assessment could have been issued in 2008 under section 160
of the Act in relation to any debt of the Estate of Delmar Currie. It
seems to me that the affect of the Judgment is that the assessment that had
been issued under section 160 of the Act on February 3, 2004 (at a time
when there was a liability of the Estate of Delmar Currie under the Act)
should be varied. This assessment should have been varied by not including “interest on the Estate debt from December
31st of the year of the transfer”.
[17]
The year of transfer
was not specified in the Judgment. It appears that there is some uncertainty
with respect to the determination of the year of the transfer of property to
the Appellant. It is the position of the Appellant that the last year in which
property was transferred to him was 1997. However, in his Notice of Appeal to
this Court (which was signed by the Appellant) the Appellant stated that:
4) Between 1996 and 1999, various properties were
transferred from the Estate of Delmar Currie to the Appellant as a result of
the Appellant being a beneficiary under the late Delmar Currie’s will.
[18]
In her affidavit sworn
January 30, 2012, Hélène Dahl, the litigation officer with the Canada Revenue
Agency, stated that:
23. In July 2008, after reviewing the records,
I was of the understanding that the Appellant received properties from the
Estate up to and including the year 2000 as was indicated in the Reply.
[19]
As a result it appears
that there are three possible dates that should be used to determine the amount
of the adjustment that is to be made to the section 160 Assessment – December
31, 1997, December 31, 1999 and December 31, 2000. Hélène Dahl had sworn an
affidavit on November 2, 2011 in relation to the previous motion that the
Appellant had made for a contempt order. In that affidavit, Hélène Dahl had
included a table that indicated the amounts of the Estate debt and the amount
that should have been included in the section 160 Assessment (which was dated
February 3, 2004), “without taking into account the fact that the underlying
Estate debt has been paid in full” based on the three possible years for the final
transfer of property. This table included the following:
|
|
Dec. 31, 2000
|
Dec. 31, 1999
|
Dec. 31, 1997
|
|
Total Estate
Debt
|
$627,830
|
$569,506
|
$476,876
|
|
Less: Payments
on Estate debt in 2002
|
$230,000
|
$230,000
|
$230,000
|
|
Total Section
160 debt
|
$397,830
|
$339,506
|
$246,876
|
[20]
Obviously the
determination of the year in which the property was transferred is necessary to
determine the amount for which the Appellant should have been assessed under
section 160 of the Act on February 3, 2004. As noted above, there is a
disagreement between the Appellant and the Respondent with respect to the
correct year for the transfer of property and therefore the correct adjustment
that should have been made to the section 160 Assessment.
[21]
Subsection 22(1) of the
Rules provides that:
22. (1) A person is guilty of contempt of court who
…
(b) wilfully disobeys a
process or order of the Court;
(emphasis added)
[22]
This would require mens
rea of wilfulness. Since an element of contempt of court as
provided in the Rules is that the person who is alleged to have
committed the contempt of court must have wilfully disobeyed a process
or order of the Court, any uncertainties related to the application of the Judgment
should have been resolved prior to and not as part of a contempt proceeding.
How could a person have wilfully disobeyed the Judgment if the amount of the
adjustment to be made to the section 160 Assessment is not clear? The correct
year for the transfer and therefore the appropriate adjustment that should have
been made to the section 160 assessment should have been resolved either by
agreement between the parties or by a court of competent jurisdiction before
the Appellant brought the motion for a contempt hearing.
[23]
Once the year of
transfer is determined and therefore the amount of the adjustment to the section
160 Assessment is determined, it will then be necessary to determine if the
Appellant is entitled to a refund that is not being paid to him. Assuming that
the year of the transfer of the property is 1997 (which would be the most
beneficial for the Appellant), the amount for which the Appellant should have
been assessed pursuant to section 160 of the Act is $246,876 (based
on the table prepared by Hélène Dahl). The question would then be whether the
Appellant paid more than this amount pursuant to the section 160 Assessment.
[24]
In the decision of
Justice Rossiter (as he then was), he noted that:
9 The Appellant made payments on the
Estate assessment:
|
July 21, 2004
|
$50,000.00
|
|
December 23,
2005
|
$173,000.00
|
|
February 6,
2006
|
$150,000.00
|
|
March 23, 2006
|
$247,289.64
|
|
Total
|
$620,289.64
|
[25]
Counsel for the
Appellant submitted that during the hearing before Justice Rossiter (as he
then was) the Appellant was examined and cross-examined on whether he was
making payments under the section 160 Assessment. However, the issue before
Justice Rossiter (as he then was) was the validity of the section 160 Assessment,
not whether the Appellant would be entitled to a refund. As noted above, in the
Reasons for the Judgment the section 160 Assessment was referred to as
“Assessment #1”. While Justice Rossiter (as he then was) did note that “the
Appellant made payments on the Estate assessment”, he did not state that these
payments of $620,290 were made pursuant to Assessment #1 (the section 160
Assessment). Therefore there was no clear finding that the Appellant made
$620,290 in payments under the section 160 Assessment nor would that finding
have been necessary to determine whether the Appellant should have been
assessed under section 160 of the Act in the amount of $544,147 on
February 3, 2004 (which was the issue that was determined).
[26]
The uncertainty in this
case in relation to the payments made by the Appellant arises as a result of a
decision of the Supreme Court – Trial Division of the Province of Prince Edward
Island dated December 12, 2005 (2005 PESCTD 64). The issue in that
case was which assets of the Estate of Delmar Currie should be used to pay the
debts of the Estate arising as a result of the reassessment of the Estate for
income tax (which is the same reassessment under the Act which gave rise
to the section 160 Assessment of the Appellant). Justice Taylor, in that case,
held that:
39 The
executors have transferred all the residuary assets to Carl Currie. I order him
to immediately return these assets to the Estate, and failing compliance, I
direct the executors to take action forthwith to recover the residuary assets
or their value from Carl Currie. As to the land which he received, pursuant to
s. 113(2) of the Probate Act, I direct the executors to sell forthwith
at fair market value such lands as may be necessary to pay the Estate debts and
expenses in full.
40 Certain of
the assets in the residue will have deteriorated and lost their value or will
have been consumed, specifically the household goods, machinery, tools,
livestock, farm produce and vehicles. I can think of no way now to determine if
the values placed on the assets in 1996 were fair. I presume Carl Currie
took these assets and used them. I direct he return to the Estate the value
which he and his brother assigned to these goods, namely $166,366.67, and these
monies be used to pay debts.
…
Conclusion
52 I declare as follows:
a) the $64,000 investment
is part of the residue;
b) the money
in the two bank accounts designated as being part of the residue is an estate
asset;
c) the debts and expenses
are payable first from the residue;
d) Carl
Currie holds the assets he received in trust and the executors must recover the
residuary assets from him.
53 I order Carl Currie to immediately
return the land he received from the residue and immediately repay to the
Estate the value of the other residuary assets as declared in the inventory;
failing compliance, I order the executors to forthwith take action to recover
from Carl Currie the residuary assets or their value.
54 I further order the executors to
forthwith sell such residuary lands as may be necessary to pay all the estate
debts and expenses in full.
[27]
Since the Appellant was
ordered to return to the Estate the assets that he had received as part of the
residue of the Estate and further that such assets were being held in trust by
him (to pay the tax liability of the Estate), it seems to me that there is an issue
with respect to whether any payments that were made by the Appellant after
December 12, 2005 were, to the extent that such payments were less than
the amount he was holding in trust and required to repay to the Estate, paid
from the assets he was holding in trust and not from his personal assets or
were paid from his personal assets. It seems to me that the Appellant, to
establish that he was making payments pursuant to the section 160 Assessment,
would need to establish that he was using his own assets to make such payments
and not assets that he was holding in trust for the Estate. Since the Appellant
is seeking a refund that would be paid to him personally, it seems to me that
the Appellant would need to establish that he personally paid the debt using
his assets, not assets that he was holding in trust for the Estate.
[28]
The fair market value
of the assets that the Appellant received as part of the residue of the Estate
(and which he was holding in trust) is not known. The shares that the Appellant
had received in the golf course company were not part of the residue of the Estate.
However, Justice Taylor, did note, in relation to the value of the assets that
were part of the residue, that:
30 According to the inventory, the
residue consisted of the following specified property under the following
headings:
Clothing, jewellery, household goods and furniture $
2,300.00
Farm machinery and snow blower 39,000.00
One-third interest in farm machinery, other
machinery
and tools, livestock, and farm produce 87,066.67
Vehicles 40,000.00
Real Estate 187,750.00
Two bank accounts 284,750.00
[29]
The total value of the
assets that were included as part of the residue of the Estate (using the
amounts identified above) was $640,867. As well since Justice Taylor held
that the $64,000 investment was part of the residue, it would appear that this
investment should be added to the above. As a result, the total value of the
assets that formed part of the residue of the Estate was $704,867. The total
amount of the payments made by the Appellant after December 12, 2005 (the date
of the Order of Justice Taylor) were:
|
Date of Payment
|
Amount
|
|
December 23, 2005
|
$173,000
|
|
February 6, 2006
|
$150,000
|
|
March 23, 2006
|
$247,290
|
|
Total:
|
$570,290
|
[30]
The total amount of the
payments was less than the value of the assets (based on the values as stated
in the inventory of the Estate) that the Appellant was holding in trust and
which he was ordered to return to the Estate. Counsel for the Appellant indicated
during the hearing of this Motion that an appeal from the decision of Justice
Taylor had been filed and a settlement had been reached but there was no
indication of when the matter was settled or how it was settled.
[31]
To further cloud the
issue, when the Appellant made the three payments referred to above he included
with the payment the remittance form for the Estate of the late Delmar Currie.
The remittance form that the Appellant would have received with the section 160
Assessment differed from the remittance forms for the Estate. In the remittance
form that accompanied the section 160 Assessment, the following appears on the
left hand side:
Remitted by:
…
CARL CURRIE
…
[32]
It is clear in the remittance form
that accompanied the section 160 Assessment that the payment was being remitted
by someone other than the tax debtor as the following appears on the right hand
side of this form:
|
Assessment in respect of:
…
|
|
Name
…
ESTATE
OF THE LATE DELMAR CURRIE
|
|
Account
number…
108393661
RI
|
When
you make inquiries, please quote this number.
…
|
[33]
In contrast, the
remittance form for the tax debt of the Estate only identifies the Estate of
the late Delmar Currie. As noted above, the Appellant only used the remittance
forms for the Estate of the Late Delmar Currie when he made the three payments
that were made after December 12, 2005.
[34]
If the three payments
made by the Appellant after December 12, 2005 were not made by the Appellant
pursuant to the section 160 Assessment, then it would appear that the Appellant
would not be entitled to a refund even if the year of the transfer was 1997
(which would result in the least amount for which the Appellant should have
been assessed based on the three possible years of 1997, 1999 and 2000). As
noted above, if the year of the transfer of property was 1997, the amount of
the assessment that should have been issued under section 160 of the Act
was $246,876 but the only payment made by the Appellant after the date that he
was assessed under section 160 of the Act (February 3, 2004) and before
December 12, 2005 was $50,000. Any payments that the Appellant may have made
prior to February 3, 2004 would not be payments that the Appellant was making
pursuant to the section 160 Assessment.
[35]
It seems to me that
whether the Appellant can establish that the payments that he was making after
December 12, 2005 were being made by him pursuant to the section 160 Assessment
is an important element that the Appellant would have to establish prior to
commencing any action for contempt of court. It does not seem to me that this
issue should be resolved in the context of a contempt of court proceeding. This
issue would have to be resolved either by agreement of the parties or by a
court of competent jurisdiction before the Appellant can bring a motion for
contempt.
[36]
Given the very
significant uncertainties related to the year in which the property was
transferred to the Appellant (and hence the amount of the adjustment that would
have to be made to the assessment issued under section 160 of the Act to
give effect to the Judgment) and the amount that the Appellant paid pursuant to
the assessment issued under section 160 of the Act, in my opinion the
Appellant has not established that there is a prima facie case for
contempt in relation to whether there has been a failure to comply with the
Judgment.
[37]
It seems to me that it
is also important to review the jurisdiction of this Court. The jurisdiction of
the Court is set out in section 12 of the Tax Court of Canada Act which
provides as follows:
12. (1) The
Court has exclusive original jurisdiction to hear and determine references and
appeals to the Court on matters arising under the Air Travellers Security
Charge Act, the Canada Pension Plan, the Cultural Property Export
and Import Act, Part V.1 of the Customs Act, the Employment
Insurance Act, the Excise Act, 2001, Part IX of the Excise Tax
Act, the Income Tax Act, the Old Age Security Act, the Petroleum
and Gas Revenue Tax Act and the Softwood Lumber Products Export Charge
Act, 2006 when references or appeals to the Court are provided for in those
Acts.
[38]
On an appeal to this
Court in relation to an assessment issued under the Act, what the Court
may do in relation to the disposition of the appeal is set out in section 171
of the Act which provides that:
171. (1) The
Tax Court of Canada may dispose of an appeal by
(a)
dismissing it; or
(b)
allowing it and
(i)
vacating the assessment,
(ii)
varying the assessment, or
(iii)
referring the assessment back to the Minister for reconsideration and
reassessment.
[39]
In the decision
of the Federal Court of Appeal in the case of Main Rehabilitation Co. v.
R., (2004 FCA 403) (leave to appeal to the Supreme Court of Canada was
dismissed (343 N.R. 196 (note))), the Federal Court of Appeal made the
following comments:
8 This
is because what is in issue in an appeal pursuant to section 169 is the
validity of the assessment and not the process by which it is established (see
for instance the Consumers’ Gas Co. v. R. (1986), 87 D.T.C. 5008
(Fed. C.A.) at p. 5012). Put another way, the question is not whether the CCRA
officials exercised their powers properly, but whether the amounts assessed can
be shown to be properly owing under the Act (Ludco Enterprises
Ltd./Entreprises Ludco Ltée v. R. (1994), [1996] 3 C.T.C. 74 (Fed. C.A.)
at p. 84).
[40]
Therefore the only
issue in an appeal to this Court is the validity of an assessment and the only
remedies that this Court can grant if an appeal is allowed are to vacate the
assessment, vary the assessment or refer the matter back to the Minister of
National Revenue for reconsideration and reassessment. There is no power or
authority to order a refund. Counsel for the Appellant stated that in his
opinion Justice Rossiter (as he then was) was clearly contemplating a refund
when he issued the Judgment. In particular he referred to the comments of
Justice Rossiter (as he then was) in relation to the interest that was
paid for the period after February 3, 2004. In paragraphs 21 and 22 of his
decision, Justice Rossiter (as he then was) stated that:
21 The Appellant’s objection is to the
paying of approximately $75,000 interest accrued against him on the Estate debt
after Assessment #1. The Appellant’s appeal is from Assessment #1 which does
not include that $75,000….
22 ….Also, the Appellant specifically wanted to be repaid the
$75,000, paid by him as interest, post the Assessment #1. This amount will be
deleted from the assessment, per my previous comment and most certainly should
be deleted to be consistent with Algoa Trust, supra, …
[41]
Although the Appellant
had requested that he be repaid the $75,000 amount, in paragraph 22 (above) it
is indicated that this amount was to be deleted from the assessment. The
interest of approximately $75,000 was interest on the amount of $544,147 for
the period after the date on which the Appellant was assessed for this amount
(February 3, 2004) and therefore it was not included in the assessment issued
on February 3, 2004. As a result it was not necessary to delete this interest
from the section 160 Assessment as it was not included in this assessment. In
any event, the only power or authority that this Court has when an appeal is
allowed, is the power or authority to vacate the assessment or change the
assessment – either directly (by varying the assessment) or indirectly (by
referring the matter back to the Minister of National Revenue for
reconsideration and reassessment). Therefore the only power or authority of
this Court in this case would have been to vacate or change the assessment that
was under appeal which was the assessment under section 160 of the Act in
the amount of $544,147 that had been issued on February 3, 2004. It seems to me
that this Court does not have the jurisdiction to resolve any dispute arising
as a result of how the Canada Revenue Agency has allocated or treated any
payments made to it and in particular this Court does not have the jurisdiction
to order any refund, including any refund of interest. It should also be noted
that the Judgment itself only addresses the amount that should have been
assessed and in effect, varies the amount of the section 160 Assessment.
[42]
It also seems to me
that the limited jurisdiction of this Court is relevant in this matter in
relation to the two disputes referred to above – the year in which the transfer
of the property occurred and the amount that the Appellant paid pursuant to the
section 160 Assessment.
[43]
Since the first dispute
relates to the amount that the Appellant should have been assessed under
section 160 of the Act, it seems to me that this Court would have
jurisdiction to resolve this matter if the parties are unable to reach an
agreement on the year in which the property was transferred to the Appellant.
[44]
However, since the
second issue does not relate to the amount of the assessment but rather to the amount
that the Appellant has paid pursuant to such assessment, it seems to me that
this Court would not have the jurisdiction to resolve this dispute, if the
parties are unable to agree upon the amount that the Appellant paid pursuant to
the section 160 Assessment. This is not a dispute related to the amount of the
assessment but is a dispute related to the amount of the payments made under
the assessment. This is not a matter over which jurisdiction has been granted
to this Court under the Tax Court of Canada Act.
[45]
Since the Appellant has
not established a prima facie case of contempt of court, the question of
whether the Minister of National Revenue or the Canada Revenue Agency is the
person who should be ordered to appear in relation to the allegation of
contempt is a moot question. However, since Counsel for the Respondent had
raised the argument that the Minister of National Revenue could never be found
to be in contempt, I would like to make a few comments on this argument. This
argument is based on the comments of Justice Bowie in Kumar v. The
Queen, 2004 TCC 521,
[2004] 4 C.T.C. 2477, 2004 DTC 3048. In
paragraph 5 of Kumar, Justice Bowie stated that:
5 I should
make it clear at the outset that this motion cannot succeed in respect of “the
Minister of National Revenue”. It is well settled that a Minister of the Crown
cannot be committed for contempt because of acts or omissions of the officers
of her department: see Bhatnager v. Canada, [1990] 2 S.C.R. 217.
[46]
In Bhatnager, above,
the principal issue, as described by Justice Sopinka (who was writing on behalf
of the Supreme Court of Canada), was as follows:
1 …
The principal issue is whether acceptance of service of the order by the
solicitor for the Ministers is sufficient knowledge of the order on their part
to found liability in contempt.
[47]
Justice Sopinka made
the following comments in relation to the requirement of knowledge of the order
before a person can be found to be in contempt of that order:
16 On the
cases, there can be no doubt that the common law has always required personal
service or actual personal knowledge of a court order as a precondition to
liability in contempt….
…
17 This
lengthy history of a strict requirement at common law that the party alleging
contempt must prove actual knowledge on the part of the alleged contemnor is
inconsistent with the submission that a rebuttable presumption arises in every
case upon service of the order on the solicitor. In my opinion, a finding of
knowledge on the part of the client may in some circumstances be inferred from
the fact that the solicitor was informed. Indeed, in the ordinary case in which
a party is involved in isolated pieces of litigation, the inference may readily
be drawn. In the case of Ministers of the Crown who administer large
departments and are involved in a multiplicity of proceedings, it would be
extraordinary if orders were brought, routinely, to their attention. In order
to infer knowledge in such a case, there must be circumstances which reveal a
special reason for bringing the order to the attention of the Minister.
Knowledge is in most cases (including criminal cases) proved circumstantially,
and in contempt cases the inference of knowledge will always be available where
facts capable of supporting the inference are proved: see Avery v. Andrews
(1882), 51 L.J. Ch. 414.
18 This
does not mean that Ministers will be able to hide behind their lawyers so as to
flout orders of the court. Any instructions to the effect that the Minister is
to be kept ignorant may attract liability on the basis of the doctrine of
wilful blindness. Furthermore, the fact that a Minister cannot be confident in
any given case that the inference will not be drawn will serve as a sufficient
incentive to see to it that officials are impressed with the importance of
complying with court orders.
[48]
It therefore seems to
me that it is not an absolute rule that the Minister of National Revenue could
never be found to be in contempt but the requirement that the Minister of
National Revenue must have knowledge of the judgment would mean that only in
very exceptional circumstances could the Minister of National Revenue be found
to be in contempt of a judgment of this Court following a tax appeal. There was
no evidence that the Minister of National Revenue had any knowledge of the
Judgment and since this was an informal procedure case, it is very unlikely
that the Minister of National Revenue had any knowledge of the Judgment or that
the doctrine of wilful blindness would apply in this case.
[49]
Also, as noted above,
contempt of court as provided in section 22 of the Rules provides that
the person must have wilfully disobeyed a process or order of the court.
Therefore, not only does the Appellant have to prove that the person who is
alleged to be in contempt of court had knowledge of the order or judgment but
the Appellant must also prove that such person wilfully disobeyed such
process or order. As a result, in any event, it seems to me that the Minister
of National Revenue would not be the appropriate person to respond to an
allegation of contempt of the Judgment in this case.
[50]
Justice Sopinka also
dealt with the other argument related to vicarious liability:
Vicarious
Liability
24 Counsel
for the respondent presented this Court with elaborate arguments in support of
the proposition that the appellants ought to be held liable in contempt in the
absence of knowledge of the breached order, on the basis of some form of
vicarious liability, variously referred to as the principle of delegation and
the theory of identification. Counsel sought to analogize the appellants to
licensees and corporations in relation to which these principles have been
applied in the past: see, e.g. Allen v. Whitehead, [1930] 1 K.B.
211; and Canadian Dredge & Dock Co. v. The Queen, [1985] 1
S.C.R. 662.
25 Given
the premise that liability in contempt is essentially criminal liability, the
respondent's main hurdle on this issue is that, in general, vicarious liability
is unknown to the criminal law. As Estey J. stated in Canadian Dredge &
Dock Co., at p. 692:
In the criminal law, a natural person is
responsible only for those crimes in which he is the primary actor either
actually or by express or implied authorization. There is no vicarious
liability in the pure sense in the case of the natural person.
However, the
respondent, while conceding that the doctrine of respondeat superior does not
apply, urges that either or both of the sub-doctrines of delegation and
identification ought to ground the appellants' liability in contempt. There
are, to my mind, at least two fatal objections to the respondent's position on
this issue.
26 First,
the principle of delegation, according to which an individual may be held
criminally liable for the acts of his or her delegate, has long been understood
to apply, if at all, to cases in which the delegator is under a specific
statutory duty that has been contravened by the delegate: see A.W. Mewett
and M. Manning, Criminal Law (2nd ed. 1985), at p. 64; Allen, supra,
per Lord Hewart C.J. at p. 220; and R. v. Stevanovich
(1983), 7 C.C.C. (3d) 307 (Ont. C.A.), per Dubin J.A. (as he then was), at
p. 315. It is not necessary to express a view on the correctness of this
apparent departure from the general rule against vicarious liability in the criminal
law, since it is sufficient to observe that in the circumstances of the present
case the appellants are under no analogous duty.
27 Second,
the theory of identification, according to which a corporation may be held
criminally liable for the acts of the directing mind of the corporation, is
uniquely inapplicable to natural persons. As Estey J. explained in Canadian
Dredge & Dock Co., at p. 693, the theory of identification "is a
court-adopted principle put in place for the purpose of including the
corporation in the pattern of criminal law in a rational relationship to that
of the natural person." Since a corporate entity cannot have a mind of its
own, it was necessary to select some responsible official (the directing mind)
whose mind was identified as that of the corporation. To now apply the theory
of identification to natural persons would be to turn the principle on its
head. It would be, in my view, a manifestly unjust application to an individual
of simple vicarious liability under another name.
28 In
light of these conclusions, it is unnecessary to consider whether a contrary
interpretation of the Federal Court Rules or a finding of vicarious criminal
liability would constitute a violation of ss. 7 and 11(d) of the Canadian
Charter of Rights and Freedoms; though it seems clear that any argument in
favour of such liability would have [page231] grave difficulty overcoming the
decision of this Court in Re B.C. Motor Vehicle Act, [1985] 2
S.C.R. 486. (See also R. v. Burt, [1988] 1 W.W.R. 385 (Sask.
C.A.), per Bayda C.J.S.)
[51]
While the Supreme Court
of Canada held that, in general, vicarious liability would not apply to
criminal law (including contempt), the Supreme Court of Canada noted that it
was not necessary in that case to express a view in relation to the correctness
of the principle of delegation.
[52]
The other person
identified by the Appellant was the Canada Revenue Agency. In Ayangma v.
The Queen, [2002] F.C.J. No. 108, 2002 FCT 79 (affirmed on appeal to the
Federal Court of Appeal, 2003 FCA 46), Justice MacKay noted that a federal
government department was not a proper respondent to an allegation of contempt
because the department is not a person. However, the Canada Revenue Agency is a
body corporate (subsection 4(1) of the Canada Revenue Agency Act) and
therefore is a person. As a result the comments of Justice MacKay related
to federal government departments would not apply to the Canada Revenue Agency
and the Canada Revenue Agency is a person who could be a respondent to an
allegation of contempt of court.
[53]
Since, as noted above,
the Appellant has not established a prima facie case for contempt in
relation to the Judgment, the Appellant’s motion for an order pursuant to
subsection 22(2) of the Rules requiring the Minister of National Revenue
or the Canada Revenue Agency to appear before a judge of this court in relation
to an allegation that such person is in contempt of court is dismissed with
costs.
Signed at Ottawa, Canada, this 5th day of March 2012.
“Wyman W. Webb”
Email this Content