Date: 20060926
Docket: T-1556-06
Citation: 2006
FC 1137
Montreal, Quebec, September
26, 2006
PRESENT: The Honourable Mr. Justice Harrington
BETWEEN:
742190 ONTARIO INC. COB
VAN DEL MANOR NURSING HOME
Applicant
and
CANADA CUSTOMS AND
REVENUE AGENCY
Respondent
REASONS FOR ORDER AND ORDER
[1]
Van Del
Manor Nursing Home has been in trouble with the tax authorities for several
years. Its situation has now been straightened out, except with respect to employee
deductions at source which it failed to remit many years ago. This led to
interest and penalty charges.
[2]
The
nursing home, which has not carried out business as such for many years, has asked
the respondent, sometimes referred to as Canada Customs, and sometimes as the
Agency, six times to exercise its discretion under those portions of the Income
Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (ITA) popularly coined the Fairness
Package, and waive penalties and accumulated interest. It was successful on one
occasion in the early 1990s.
[3]
Currently,
the nursing home owes more than $300,000 in interest and penalties. Canada
Customs was asked to grant interest and penalty relief. Its last negative
decision was 22 August 2006, and this was followed up by a garnishment order
served on the City of Toronto, which rents the former
nursing home and uses it as a shelter for homeless men.
[4]
The
nursing home has filed an application for judicial review of that decision, or
those two decisions, and in the meantime seeks an interlocutory injunction, or
a stay of the direction to pay. That is the issue to be decided in this motion.
[5]
Although
the nursing home suggests that it is not indebted in the amount alleged, that
issue is beyond this Court’s jurisdiction. Section 152(8) of the ITA provides
that an assessment is deemed to be valid and binding notwithstanding any error,
defect or omission until it is varied or vacated on objection or appeal
therefrom to the Tax Court (The Minister of National Revenue v. MacIver (1999),
99 D.T.C. 5524, Canada(Minister
of National Revenue – M.N.R.) v. Services M.L. Marengère Inc. (1999), 176 F.T.R. 1, 2000 D.T.C.
6032).
[6]
An
interlocutory injunction, or a stay, pending the outcome of an underlying court
proceeding, is an equitable remedy. In order to succeed, the petitioner must
establish a serious issue, irreparable harm, and a favourable balance of
convenience (RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1
S.C.R. 311).
[7]
In RJR-MacDonald,
above, a serious issue was held to be an issue which was neither frivolous nor
vexatious. However, if the effect of the stay would be to grant the very remedy
sought in the underlying application, the merits of that application should be
more closely examined (Wang v. Canada (Minister of Citizenship and
Immigration),
2001 FCT 148, [2001] 3 F.C. 682).
[8]
The Agency’s
decision not to exercise its discretion should not be disturbed unless
considered to be unreasonable (Lanno v. Canada (Customs and Revenue Agency), 2005 FCA 153, [2005] F.C.J.
No. 714 (F.C.) (QL)).
[9]
In this
particular case, the Agency has requested corporate returns time and time
again, year after year. No returns have been filed since 1997. The onus is on
the applicant to provide full and complete disclosure of relevant information.
It was not unreasonable for the Agency to refuse to exercise its discretion in
the corporation’s favour.
[10]
Furthermore,
last year in Court Docket No. T-862-05, the respondent withdrew a requirement
to pay which had been served on the City of Toronto on the basis that the nursing home was
to promptly file a request for administrative review of its negative fairness
decision. It was informed, as turned out to be the case, that it would likely
be required to file all outstanding returns. It did not.
[11]
This is
the first reason why the present motion should be dismissed. I should add,
however, that if, as and when the nursing home ever gets this information to
the respondent, it is entitled to demand a seventh waiver of interest and
penalties in virtue of the Fairness Package.
[12]
There is a
second reason why the application should not be granted. As a court of equity,
we should keep in mind the twelve maxims thereof. There are three that are
relevant which lead to the conclusion that this motion should be dismissed with
costs. They tie in with the balance of convenience:
A.
He who
comes into equity must come with clean hands.
B.
Delay
defeats equities.
C.
Equity
looks on that as done which ought to be done.
[13]
The nursing
home, as a corporation, is normally required to be represented by counsel.
However, it obtained a special order allowing its director, Mrs. Pinnock, to
represent it at this hearing. Nevertheless, it was represented by counsel who
was of considerable assistance in deconstructing the application which Mrs.
Pinnock had put together. As counsel was authorized to appear on the one motion
and so is not solicitor of record, if the corporation wishes to be represented
by Mrs. Pinnock at the application for judicial review, as mentioned at the
hearing of this motion, it should move the Court prior thereto.
ORDER
THIS COURT ORDERS that this application is dismissed
with costs.
“Sean Harrington”
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