Citation: 2007TCC62
Date: 20070126
Docket: 2005-1163(GST)G
BETWEEN:
COMMISSION SCOLAIRE DES PATRIOTES,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR ORDER
Archambault J.
[1] On October 2, 2006,
the Commission scolaire des patriotes (the "School Board")
filed a Notice of Application for leave to file an amended Notice of Appeal,
and attached that amended Notice of Appeal to its application. In a letter dated
September 27, 2006, the Respondent objected to the filing of this
amended Notice of Appeal. However, at the hearing, the Respondent stated that
she was not really objecting to the filing of such a notice, but was challenging
the addition of paragraphs 25, 26, 27 and 29, and the inclusion of the alternative
plea set out in paragraph 28. The paragraphs of the Amended Notice of Appeal
state as follows:
[TRANSLATION]
25. Should this Honourable Court
decide that the Minister did not exhaust his discretion by issuing the
assessment of May 10, 2004, the Appellant respectfully submits that
the exercise of its discretion on May 11, 2004, was patently
unreasonable under the circumstances.
26. Since subsection 64(3) of the Budget
Implementation Act, 2003 does not require the Minister to assess the
Appellant according to the new retroactive rules, but confers a discretion on
the Minister to do so, it was patently unreasonable for the Minister to ignore
its consent to judgment, the judgment of this Honourable Court and the
assessment that he issued on May 10, 2004, to give effect to it, by
issuing a reassessment on May 11, 2004, aimed at cancelling what he
had previously decided to allow.
27. Moreover, if the Minister never
intended to honour his consent to this Honourable Court's judgment, the conduct
of the Minister was patently unreasonable.
28. Should this Honourable Court
decide that subsection 64(3) of the Budget Implementation Act,
2003, clearly authorizes the Minister to act as he did or that it shields
the exercise of his discretion in the instant matter from judicial review, the
Appellant respectfully submits that subsection 64(3) of the Budget
Implementation Act, 2003 is unconstitutional.
29. The Appellant submits that
subsection 64(3) of the Budget Implementation Act, 2003 did
not authorize the Minister to undermine the credibility of the courts by asking
them to render judgments that he had no intention of complying with, or by
shielding the Minister from judicial review in the exercise of his discretion.
[2] To sum up, the real
issue to be decided is whether it is appropriate to strike out those
paragraphs. The parties made their submissions as though the Respondent had
filed a motion to strike out a pleading.
[3] It is helpful to
place this dispute in its factual context. The School Board claimed input tax
credits (ITCs) under Part IX of the Excise Tax Act (ETA) for the
period of April 1 to April 30, 1999, and the Minister granted only a part of those ITCs.
The School Board appealed from the assessment, notice of which is dated
September 2, 1999. It is of the view that it is entitled to a full
refund. The same issue was dealt with in several court decisions,
including Commission scolaire Des Chênes v. Canada, 2001 FCA
264, [2001] G.S.T.C. 120, a decision rendered by the Federal Court of Appeal on
October 17, 2001, where it was held that school boards are entitled
to a full refund of ITCs.
On February 18, 2003, the Minister of Finance tabled a budget
that included a measure amending section 5 of Part III of
Schedule V of the ETA, justifying, retroactively to
December 17, 1990, the Respondent's interpretation that the Federal
Court of Appeal had rejected in Commission scolaire Des Chênes.
[4] On March 7, 2003,
the Minister and the School Board signed a consent to judgment in favour of the
School Board. On April 14,
2003, I signed a judgment giving effect to this consent. On
May 10, 2004, the Minister of National Revenue made an assessment
giving effect to that judgment. On the following day, May 11, 2004,
the Minister made a new assessment based on subsection 64(3) of the Budget
Implementation Act, 2003 (which enacted the aforementioned budget measure
of February 18, 2003) extinguishing, by way of set-off, the School
Board's entitlement to the refund granted on May 10, 2004. The School
Board submits that the Minister did not have the power to make the assessment
of May 11, 2004, because he had exhausted his discretion to do so on
May 10, 2004, and that, if he had not exhausted that discretion, the
latter assessment was an unreasonable exercise of discretion.
[5] On October 31,
2006, following a hearing that lasted more than four and a half hours and
during which a dialogue was established between the Court and each of the attorneys,
I rendered orally the following oral decision on the motions:
[TRANSLATION]
It is not this Court's responsibility to
dispose of the merits of the argument made by counsel for the Commission
scolaire des patriotes in paragraphs 25 to 29 of his Amended Notice of Appeal.
Rather, this Court must merely decide whether the argument is patently
erroneous beyond a reasonable doubt. While I am far from certain that the
School Board's argument is well founded, I am not convinced of this beyond
a reasonable doubt. In addition, I find that it would be appropriate, and
in the best interests of justice, that this issue be decided by the judge who
will hear the merits of the appeal. Therefore, the Court allows the School
Board's application to amend its Notice of Appeal and dismisses the
Respondent's application to strike out paragraphs 25 to 29 of the Amended
Notice of Appeal. At the request of counsel for the Respondent, the Court
grants 40 days in which to file the Reply to the Amended Notice of Appeal.
Signed at Ottawa, Canada, this
26th day of January 2007.
"Pierre Archambault"
Archambault J.
Translation
certified true
on this 25th day
of January 2008
François Brunet, Revisor
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