Docket: 2009-167(GST)I
BETWEEN:
CARIBBEAN QUEEN RESTAURANTS INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motions
heard on August 19, 2009 at Toronto, Ontario.
By: The Honourable
Justice C.H. McArthur
Appearances:
|
Counsel for the Appellant:
|
Leigh
Somerville Taylor
|
|
Counsel for the Respondent:
|
Hong Ky (Eric) Luu
|
____________________________________________________________________
ORDER
UPON motion by the Appellant for an Order vacating
an assessment made on or about July 31, 2009, and for other relief, if
necessary;
AND UPON motion made by the Respondent seeking
directions from the Court regarding the next steps in these proceedings, and
for other relief, if necessary;
AND UPON reading materials filed;
AND UPON hearing counsel for the parties;
IT IS ORDERED THAT:
1, The Appellant’s
motion is denied, with costs in the amount of $3,000, payable forthwith by the
Respondent;
2. The Respondent’s
motion is granted and:
(a)
the Appellant shall
file an Amended Notice of Appeal by December 31, 2009;
(b)
the Respondent shall
file a Reply to the Amended Notice of Appeal by February 1, 2010
Signed at Ottawa, Canada,
this 4th day of November, 2009.
“C.H. McArthur”
Citation: 2009 TCC 566
Date: 20091104
Docket: 2009-167(GST)I
BETWEEN:
CARIBBEAN QUEEN RESTAURANTS INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
McArthur J.
[1]
There were two motions
before me, one on behalf of each party. The Appellant sought an Order vacating
an assessment made on or about July 31, 2009, and the Respondent sought
directions regarding the next steps to be taken in these proceedings.
[2]
I had previously
granted an adjournment, sine die, of the hearing scheduled for September
8, 2009 and an abridgment of time for the filing and serving of the
Respondent’s motion and affidavits.
[3]
The appeal deals with
an assessment dated February 5, 2008. All procedural steps appeared to have
been taken for the hearing scheduled September 8, 2009. The disruption
commenced with the Respondent’s reassessment of July 31, 2009. Unless it is
vacated, fresh procedural steps will have to be taken. The current appeal
cannot proceed in its present form.
[4]
In a nutshell, the
Appellant submits that it would be prejudiced if the assessment was allowed, and
that it is an abuse of process. Expanding on this the Appellant stated:
1. After a pre-hearing conference, this
appeal was set down for hearing on a date selected by the respondent.
2. After the appeal was set down for hearing,
the respondent attempted to raise new issues and new facts and sought to
adjourn the hearing of the appeal. The appellant opposed the adjournment
request.
3. After the Tax Court of Canada (“Tax
Court”) denied the respondent’s request to adjourn the hearing, the respondent
purported to reassess the appellant to nullify the appellant’s appeal and do
indirectly that which the Tax Court refused to order directly.
4. The respondent’s purported reassessment is
an attempt by the Minister to appeal from the Minister’s own assessment. The
appellant submits the purported reassessment is an abuse of process and a
nullity which ought to be vacated by this Honourable Court and that this Court
has jurisdiction over its own process.
[5]
The Respondent requested
the following:
1. Directions from the Court regarding the
next steps to be taken in these proceedings.
2. If necessary and further to the latest
reassessment from the Minister of National Revenue, an adjournment of the hearing
scheduled for September 8, 2009.
3. If necessary, an Order for an abridgment
of the time for filing and serving the Notice of Motion and supporting
affidavits herein.
[6]
The Respondent submitted
that the assessment is proper, legal and the Minister of National Revenue has a
right and duty to assess taxpayers accurately and this Court does not have
jurisdiction to vacate the assessment. Counsel
added that the facts do not warrant a finding of abuse of process and the
present facts are distinguishable from those in Bassermann v. Canada where the
Appellant had breached one or more Court Orders.
[7]
The Appellant argued
that the July 31, 2009 assessment was a deliberate action by the Minister to
obtain an adjournment which had been refused by the Court and that the
Minister’s action is tantamount to the Minister breaching an Order of the Court,
referring to Bassermann. In Bassermann, an assessment was vacated
because the Minister breached an Order of the Court to divulge documents. In
the present case, I accept the argument of counsel for the Respondent that the
assessment was decided prior to this Court’s “no adjournment” decision,
although the Appellant’s suspicions are understandable.
[8]
An abuse of process
argument was made in Obonsawin v. The Queen,
where the Appellant unsuccessfully argued that the Tax Court should vacate an
assessment because the Minister’s actions would shock the conscience of the
community. In denying the motion, Miller J. turned to the Supreme Court of
Canada’s comments in Blencoe v. British Columbia (Human Rights Commission) and R. v.
Power
to the effect that in order to find abuse of process, there must be … overwhelming
evidence that the proceedings are unfair to the point that they are contrary to
the interest of justice.
[9]
For the reasons that
follow, I find that the Minister had the right to reassess the Appellant. The
Appellant submitted that the Minister cannot appeal from its own assessment and
cited several cases set out in the Appellant’s Points of Arguments and Authorities
which support that position. Bastarache J. of the Supreme Court of Canada,
agreed with this principle in Continental Bank Leasing Corp. v. Canada.
In that case, the Minister was attempting to change the basis for assessment
after the expiration of the limitation period. Presently, the Minister is
within the four-year statutory limitation period.
[10]
Subsequent to the Continental
Bank decision, Parliament enacted subsection 152(9) of the Income
Tax Act and subsection 298(6.1) of the Excise Tax Act. They are
almost identical and permit the Minister to make alternative arguments at any
time after the normal reassessment period. These subsections do not affect the
present situation.
[11]
The stumbling block
with the Respondent’s paragraph 302(b) argument is that it only applies to
the taxpayer who is entitled to amend an appeal “on such terms as the Tax Court
directs.” Paragraph 302(b) reads in part as follows:
302. Appeal to Tax Court
Where a person files a notice of objection to an assessment and the
Minister sends … an additional assessment, … the person may, …
(a) appeal therefrom to the Tax Court; or
(b) … amend the appeal by joining
thereto an appeal in respect of the reassessment …in such manner and on such
terms as the Tax Court directs.
[12]
Counsel
for the Appellant submitted that section 54 of the Tax Court of Canada Rules
(General Procedure) must be considered. It states:
54. A pleading may be amended by the party
filing it, at any time before the close of pleadings, and thereafter either on
filing the consent of all other parties, or with the leave of the Court, and
the Court in granting leave may impose such terms as are just.
[13]
The general rule is
that: “…an amendment should be allowed at any stage of an action for the
purpose of determining the real questions in controversy, provided that such
allowance would not result in an injustice to the other party not capable of
being compensated by an award of costs.”
The comments of Bowman J. in Continental Bank
are of assistance:
It would do no credit to our system of justice in Canada if the courts were restricted in
their consideration of the merits of a case by an ill-considered admission that
is inconsistent with another position that is being advanced, particularly
where it is sought to withdraw such an admission at an early stage in the
proceeding. This is equally true whether the party seeking to change its
position is the taxpayer or the Crown.
[14]
This rule and the
comments of Bowman J. apply equally to the present situation. So long as the taxpayer
is fully and timely informed of the new basis of argument with ample time to
prepare, then the assessments should be allowed.
[15]
The trial has yet to
begin. Although the parties may disagree as to whether the Appellant had notice
of the facts and reasons behind the July 31, 2009 assessment, I believe the
Respondent should be permitted to amend the pleadings and an award of costs may
help ensure that the taxpayer is not prejudiced. Therefore, costs in the amount
of $3,000 are payable forthwith by the Respondent to the Appellant.
Conclusion
[16]
This award of costs
does not come under the scrutiny of section 18.3009 which is applicable to a
judgment after the hearing of an appeal. The present is an interlocutory Order.
Subparagraphs 18.3009(c)(i) and (ii) refer to an “award of costs to
the person who brought the appeal if the judgment reduces the amount by more
than one half and in the case of an appeal under Part IX of the Excise Tax
Act, the amount in dispute does not exceed $7,000, and (ii) the aggregate
of supplies for the prior fiscal year of the person did not exceed $1,000,000. The
legislation states this Court may award costs if certain conditions are met but
does not prohibit the awarding of costs if the conditions are not satisfied. The Tax Court
being a Superior Court has inherent jurisdiction to award costs.
[17]
The Appellant shall
have until December 31, 2009 to file an Amended Notice of Appeal and the
Respondent shall file a Reply to the Amended Appeal on or before February 1,
2010. Should further directions or clarification be required, a teleconference can
be arranged by the Court on the request of either party.
Signed at Ottawa, Canada, this 4th day of November,
2009.
“C.H. McArthur”
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