Citation: 2010TCC633
Date: 20101209
Docket: 2008-522(IT)I
BETWEEN:
ESTATE OF THE LATE CELY LIRETTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2008-523(IT)I
BETWEEN:
LIONEL C. LIRETTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
V.A. Miller J.
[1]
The Appellants have
brought these motions for an Order that:
a) the Minister of
National Revenue (the “Minister”) be found to be in contempt of this Court;
b) the Minister be
compelled to assess Lionel Lirette and the Estate of the Late Cely Lirette in
accordance with the Judgment of Webb J. dated October 29, 2008; and,
c) Lionel Lirette be
awarded $149,905 in cash.
[2]
The grounds relied on
by the Appellants were:
a)
Section 13 of the Tax
Court of Canada Act which reads:
13.
Contempt against Court -- The Court has the power, jurisdiction and
authority to deal with and impose punishment for contempt against the Court,
whether or not committed in the face of the Court.
b)
Paragraphs 22(1)(b)
and (c) of the Tax Court of Canada Rules (Informal Procedure)
which read:
22. (1) A person is guilty of
contempt of court who
(b) wilfully disobeys a process or order of the
Court;
(c) acts in such a way as to interfere with the
orderly administration of justice or to impair the authority or dignity of the
Court;
c)
Sections 2, 167 and
paragraphs 172.4(1)(b) and (c) of the Tax Court of Canada
Rules (General Procedure) which read:
2.
Definitions -- In these rules,
"judgment"
includes an order;
167.
Pronouncing and Entering of Judgments -- (1) The Court shall dispose of an appeal
or an interlocutory or other application that determines in whole or in part
any substantive right in dispute between or among the parties by issuing a
judgment and shall dispose of any other interlocutory or other application by
issuing an order.
172.4
(1) A person
is guilty of contempt of court who
(b)
wilfully disobeys a process or order of the Court;
(c) acts
in such a way as to interfere with the orderly administration of justice or to
impair the authority or dignity of the Court;
[3]
In 2008, the Appellants filed
notices of appeal with the Court in which they elected that the Informal
Procedure would apply to their appeals. The appeals were heard and allowed, in
part, by Webb J. under the Informal Procedure.
[4]
The issues before Webb J. in the
appeal of the Estate of the Late Cely Lirette (“the Estate”) were the quantum
of the allowable business loss (“ABIL”) that the Estate could claim in 1998 and
the amount of capital loss that it could claim in 2005 with respect to the
shares of Taylor Venture Ltd. (“the shares”). The Minister had allowed an ABIL
of $117,878 in 1998 and no capital loss in 2005. The Judgment, dated October
29, 2008, (“the Judgment”) required the Minister to reassess the Estate on the
basis that the amount of the business investment loss (“BIL”) in 1998 was
$231,874 and its ABIL with respect to the shares was $173,905. The appeal with
respect to the 2005 taxation year was dismissed.
[5]
With respect to the appeal of
Lionel Lirette, the issue before Webb J. was the quantum of the BIL with
respect to the shares in 1998. The appeal was allowed, in part, and the matter
was referred back to the Minister for reassessment on the basis that Mr.
Lirette’s BIL in 1998 was $29,619. The Minister had previously allowed a BIL of
$17,120.
[6]
The Minister reassessed the
Applicants as a result of the Judgment to increase the Estate’s ABIL for the
1998 taxation year by $24,000 and to increase Lionel Lirette’s ABIL for the
1998 taxation year by $5,190. The result is that the Estate has been allowed an
ABIL of $141,878 and Lionel Lirette has been allowed an ABIL of $22,310.
[7]
It was the Appellants’ position
that although it elected to use the Informal Procedure, it never intended to
limit its appeal to a loss of $24,000 and in this regard, it did not make an
informed election. On behalf of the Appellants, Mr. Lirette argued that since
the Judgment made no mention of the $24,000 limitation, the Appellants are
entitled to the full ABIL allowed by Webb J. He also submitted that the
Minister should be found to be in contempt because he did not reassess the
Estate in accordance with this court’s Judgment. In conclusion, Mr. Lirette
argued that since Webb J. was aware of section 18.13 of the Tax Court of
Canada Act and the amounts involved in the appeals, he did not have to
formally order that the General Procedure apply. According to Mr. Lirette Section
9 of the Tax Court of Canada Rules (General Procedure) gave Webb J. the
unlimited power to dispense with the rule that he had to formally order the
General Procedure to apply.
[8]
The Appellants’ ground that the
Minister is in contempt of this court is totally without merit. As stated by
Bowie J. in Kumar v. R.[1]
at paragraph 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.
[9]
As well, the Minister’s officers
were not in contempt of the Court. They did reassess the Appellants in
accordance with the Judgment and in accordance with the Tax Court of Canada
Act (“the Act”).
[10]
Although the Judgment does not
mention the $24,000 limitation, sections 18 and 18.1 of the Act limit
the amount that is allowed in the Judgment in an Informal Appeal. The Judgment
is deemed to include the statement that “the amount of the loss in issue is not
increased by more than $24,000”. Those sections read:
18. (1) The provisions of
sections 18.1 to 18.28 apply in respect of appeals under the Income Tax Act
where a taxpayer has so elected in the taxpayer’s notice of appeal or at such
later time as may be provided in the rules of Court, and
(a) the aggregate of all amounts in issue is
equal to or less than $12,000; or
(b) the amount of the loss that is determined under
subsection 152(1.1) of that Act and that is in issue is equal to or less than
$24,000.
Other appeals — Income Tax Act
(2) The provisions of sections 18.1
to 18.28 also apply in respect of an appeal, on a taxpayer’s election in the
taxpayer’s notice of appeal or at any later time as may be provided in the
rules of the Court, if the only subject-matter of the appeal is
(a) an amount of interest assessed under the Income
Tax Act; or
(b) the validity of a suspension referred to in
subsection 188.2(2) of that Act
Limit
18.1 Every judgment that allows an appeal referred to
in subsection 18(1) shall be deemed to include a statement that the
aggregate of all amounts in issue not be reduced by more than $12,000 or that
the amount of the loss in issue not be increased by more than $24,000, as the
case may be. (emphasis added)
[11]
The General Procedure cannot
automatically apply where it is found that the amount of loss in an appeal is
in excess of $24,000. There is a vast difference between the Informal Procedure
and the General Procedure. This difference is reflected by, among other things,
the costs of filing an appeal, the ability to conduct a discovery in the
General Procedure, the applicable rules of evidence at the hearing and the
costs that can be allowed[2].
As well, section 9 of the Tax Court of Canada Rules (General Procedure)
cannot override section 18.1 of the Act. In order for the General
Procedure to apply to the Judgment issued by Webb J., he would have had to make
that order specifically.
[12]
Mr. Lirette has made the argument
that the Estate did not intend to limit the amount of loss to $24,000. However,
he did know when the Estate elected the Informal Procedure that the loss was
limited to $24,000. I have inferred this from the Notice of Motion where Mr.
Lirette has stated that he expected the Judge to change the procedure to the
General Procedure if he found that the ABIL exceeded $24,000[3].
[13]
The argument was also made that
section 18.13 of the Act required Webb J. to order that the General
Procedure apply to the appeal. Section 18.13 reads:
18.13 Order at hearing -- Where, after the hearing of an appeal
referred to in subsection 18(1) has started but before a judgment is rendered
on the appeal, it appears to the Court that
(a)
the aggregate of all amounts in issue exceeds $12,000, or
(b)
the amount of loss in issue exceeds $24,000,
as the case
may be, the Court shall, on motion of either party or of its own motion, order
that sections 17.1 to 17.8 apply with respect to the appeal unless the
appellant elects to limit the appeal to $12,000 or $24,000, as the case may be,
or unless the amount of the excess is too small to justify a rehearing in
accordance with the general procedure, taking into account the inconvenience
and expense that would result to the parties and the interests of justice and
fairness.
[14]
There is no indication in the
Reasons for Judgment as to whether or not the General Procedure was
contemplated by the parties or Webb J. However, this court does not have the
jurisdiction to grant a remedy to the Appellants based on this argument because
to do so would be to change the Judgment issued by Webb J. In accordance with
section 18.24 of the Act, any proceeding to change an order of this
court must be heard by the Federal Court of Appeal. Section 18.24 of the Act
reads:
18.24 Final
Judgment -- An appeal from a judgment of the Court in a proceeding in
respect of which this section applies lies to the Federal Court of Appeal in
accordance with section 27 of the Federal Courts Act.
This was affirmed by the Federal Court of Appeal in Breslaw
v. Canada[4]
where it stated:
30 The
general principle is that a judge may not review the merits of a decision of a
judge of coordinate jurisdiction. See Bubla v. Canada
(Solicitor General), [1995] 2 F.C. 680 (Fed. C.A.) at para. 18. As a
result, any proceeding to impeach or set aside an order of the Tax Court of
Canada must be taken in the Federal Court of Appeal.
[15]
The motions are dismissed.
Signed at Ottawa, Canada, this 9th day
of December 2010.
“V.A. Miller”
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