Date: 20010802
Docket: 2001-1954-GST-I
BETWEEN:
ROBERT ALAN MORIYAMA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Order
Bowman, A.C.J.
[1]
This is a motion by the respondent for an order that
sections 17.1, 17.2 and 17.4 to 17.8 of the Tax Court of
Canada Act apply to the appeal herein.
[2]
The Minister of National Revenue assessed the appellant for
$276,277.94 under subsection 323(1) of the Excise Tax
Act as a director of Jetcom Communications Inc. The
appellant, in appealing, elected the Informal Procedure.
[3]
The Crown asks that the case be moved to the General Procedure.
The court has no discretion to refuse such a request where the
request was made within 60 days after the Registry of the
court transmits the notice of appeal to the Minister of National
Revenue. That condition is met.
[4]
Section 18.3002 of the Tax Court of Canada Act reads
as follows.
18.3002(1)
Where the Attorney General of Canada so requests, the Court shall
order that sections 17.1, 17.2 and 17.4 to 17.8 apply in respect
of an appeal in respect of which sections 18.3003 and 18.3007 to
18.302 would otherwise apply.
(2) A
request under subsection (1) shall not be made after sixty days
after the day the Registry of the Court transmits to the Minister
of National Revenue the notice of appeal unless
(a)
the Court is satisfied that the Attorney General of Canada became
aware of information that justifies the making of the request
after the sixty days had elapsed or that the request is otherwise
reasonable in the circumstances; or
(b)
the person who has brought the appeal consents to the making of
the request after the sixty days have elapsed.
(3)
The Court shall, on making an order under subsection (1), order
that all reasonable and proper costs of the person who has
brought the appeal be borne by Her Majesty in right of Canada
where
(a)
the amount in dispute is equal to or less than $7,000; and
(b)
the aggregate of supplies for the prior fiscal year of that
person is equal to or less than $1,000,000.
[5]
The Crown also submits that subsection (3) does not apply
and that I should not order the Crown to pay the appellant's
costs because the amount in dispute is not equal to or less than
$7,000.
[6]
Before dealing with the question whether
paragraphs (a) and (b) of subsection (3)
are met I should briefly mention section 18.3007 of the
Act. It gives the court a certain discretion to award
costs where the amounts involved are larger than those referred
to in subsection 18.3002(3). This section need not be
considered here because the award of costs under that provision,
if it applies, can only be made when the appeal is disposed
of.
[7]
Similarly, whatever broad discretionary powers this court may
have to award costs under section 147 of the Tax Court of
Canada Rules (General Procedure), they need not be considered
at this point (see the order of Bowie J. in Wood v. The
Queen, 96-2445(GST)I). The sole question I have to answer is
whether subsection 18.3002(3) applies to require me to order
the Crown to pay the appellant's reasonable and proper
costs.
[8]
Paragraphs (a) and (b) of subsection 18.3002(3)
are conjunctive and so both paragraphs must be satisfied. It is
clear that paragraph (b) is met. The aggregate of
supplies for the prior fiscal period of Mr. Moriyama is less
than $1,000,000.
[9]
The sole remaining question is whether paragraph (a)
is met. Counsel for the respondent contends that the amount in
dispute is not "equal to or less than $7,000" and that
it is in fact $276,277.94.
[10] Counsel
for the appellant contends that since this is an appeal under
subsection 323(1) of the Excise Tax Act there is no
amount in dispute. Rather, he says, what is in dispute is
not "an amount" — the amount is fixed against the
company — but rather the principle of the liability of
Mr. Moriyama and that depends on a number of considerations
that have nothing to do with the determination of an amount.
These include whether the conditions in subsection 323(2)
have been met, including the time limitation, and whether the
appellant has exercised the degree of care, diligence and skill
required by subsection 323(3).
[11]
Notwithstanding the skill with which Mr. Robertson advanced
the argument, I find it a little too subtle. It is true there are
legal or factual questions to be determined that do not depend on
the monetary amount of the assessment, such as whether the
conditions in subsection 323(2) have been met or whether the
director has exercised due diligence. These are questions that
have to be determined irrespective of whether the assessment is
for $1,000,000 or $1,000. Nonetheless, any tax dispute —
whether it is under the Excise Tax Act or the Income
Tax Act and whether it involves an assessment against the
principal taxpayer or is a derivative assessment against a
director under section 323 of the Excise Tax Act or
section 227.1 of the Income Tax Act — is about
an amount even though there are legal or factual questions
relating to the liability to pay that amount or any part of it.
Essentially the question "What is the amount in
dispute?" in a case could be expressed colloquially as
"How much money are we talking about in this case?"
This is a question that would invariably elicit a dollars and
cents answer in any tax dispute.
[12]
Mr. Robertson contended that subsection 18.3002(3)
appears to have been drafted with an ordinary appeal by the
taxpayer who was primarily liable for the Goods and Services Tax
in mind and not someone such as a director whose assessment was
derivative under section 323. I tend to agree that the
wording of paragraph 3(b) of section 18.3002
lends some support to that argument in that in most cases it can
have little or no application to a corporate director. However I
must take the words of the statute as I find them and the
inappropriateness of one part of the statute to a particular kind
of taxpayer should not deprive the plain meaning of the words of
another part of any effect.
[13] Even if I
accepted the appellant's contention that where a pure
question of principle or of law is involved there is no
"amount in dispute", I do not think such a conclusion
helps the appellant here. He is disputing the whole assessment
and parts of it and he is entitled to attack the correctness, in
whole or in part, of the underlying assessment against the
company. This is certainly one of his grounds of appeal in
paragraph 16 of the notice of appeal and it is something
that he is entitled to do.
[14] In
Gaucher v. The Queen, 2000 DTC 6678, the Federal
Court of Appeal upheld the judgments of this court such as
Acton v. The Queen, 95 DTC 107, and Ramey v.
The Queen, 93 DTC 791, which held that a
derivatively liable person could attack the assessment against a
primarily liable taxpayer even though the latter had not done so.
In so doing the Federal Court of Appeal held that such cases as
Schafer (A.) v. Canada, [1998] G.S.T.C. 7, (and
inferentially Papa v. R., [2000] G.S.T.C. 74) which
had refused to follow Acton and Ramey were wrongly
decided.
[15] Therefore
I do not think that subsection 18.3002(3) applies. The
amount in dispute is not equal to or less than $7,000. I do not
propose to make any order as to costs under
subsection 18.3002(3). The respondent asked for a further
order as follows:
2.
an Order for the following directions for the subsequent conduct
of the appeal: that the normal General Procedure Rules concerning
costs apply to the appeal herein, and that the Respondent shall
not be responsible for bearing the Appellant's reasonable and
proper costs of the appeal herein in any event of the cause.
[16] I think
it is preferable that I make no order for costs that might appear
to bind the discretionary powers of the trial judge under
section 147 of the Rules. He or she may decide that
the rather broad powers under section 147 are in some way
circumscribed by sections 18.3002 or 18.3007. That is a
question for the trial judge.
[17] The order
will go as follows.
[18] It is
ordered that sections 17.1, 17.2 and 17.4 to 17.8 of the
Tax Court of Canada Act apply in respect of this
appeal.
[19] It is
further ordered that the matter of costs be left to the trial
judge.
Signed at Ottawa, Canada, this 2nd day of August 2001.
"D.G.H. Bowman"
A.C.J.
COURT FILE
NO.:
2001-1954(GST)I
STYLE OF
CAUSE:
Between Robert Alan Moriyama and
Her Majesty The Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
July 18, 2001
REASONS FOR ORDER
BY:
The Honourable D.G.H. Bowman
Associate Chief Judge
DATE OF
ORDER:
August 2, 2001
APPEARANCES:
Counsel for the Appellant: David D. Robertson, Esq.
Counsel for the
Respondent:
Sherry Darvish
COUNSEL OF RECORD:
For the
Appellant:
Name:
David D. Robertson, Esq.
Firm:
Baker & McKenzie
Toronto, Ontario
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-1954(GST)I
BETWEEN:
ROBERT ALAN MORIYAMA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion heard on July 18, 2001, at Toronto,
Ontario, by
The Honourable D.G.H. Bowman
Associate Chief Judge
Appearances
Counsel for the
Appellant: David
D. Robertson, Esq.
Counsel for the Respondent: Sherry
Darvish
ORDER
Upon the motion by the respondent for:
1. an Order
that sections 17.1, 17.2 and 17.4 to 17.8 of the Tax
Court of Canada Act (the "General Procedure Rules")
apply the appeal herein; and
2. an Order
for the following directions for the subsequent conduct of the
appeal: that the normal General Procedure Rules concerning costs
apply to the appeal herein, and that the Respondent shall not be
responsible for bearing the Appellant's reasonable and proper
costs of the appeal herein in any event of the cause.
.../2
And
upon hearing what was alleged by the parties
It is
ordered that sections 17.1, 17.2 and 17.4 to 17.8 of the
Tax Court of Canada Act apply in respect of this
appeal
It is
further ordered that the matter of costs be left to the trial
judge.
Signed at Ottawa, Canada, this 2nd day of August 2001.
A.C.J.
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