Ross v. Canada, 2003 FC 902

Date: 20030721

Docket: T-994-03

Citation: 2003 FC 902

BETWEEN:

GLENN ALEXANDER ROSS

                                                                                                                                                     Applicant

                                                                                 and

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

                                                                                                                                               Respondent

                                                            REASONS FOR ORDER

HARGRAVE P.

[1]                  The Crown, by a motion and on the ground of re judicata, is successful in striking out this judicial review application by which the Applicant, Glenn Ross sought to prohibit the Minister of National Revenue from enforcing collection proceedings arising out of the Applicant's 1989 and 1999 taxation years. The Applicant hoped to achieve this result by not only obtaining declarations that the Minister had no right to certify the tax debt and that the tax certificate of 30 September 1999 is invalid, but also a declaration that the registration in the Federal Court of the certificate is a nullity.

[2]                  The Crown is also successful as to submissions that Mr Ross be barred from commencing further proceedings in this Court until he has paid various outstanding awards of costs. This, of course, is neither a bar to any appeal of this decision, nor a complete ban on the use of Federal Court as might flow from a proceeding under section 40 of the Federal Court Act, the vexatious litigation provision.

[3]                  In addition, the Crown may have taxed solicitor and client costs of this motion, in the sense of an indemnity.

CONSIDERATION

[4]                  The Crown submits that the present judicial review application ought to be struck out both because the relief sought is not available and because a re-visiting of the 1989 and 1990 taxation years and the certification of the tax debt is clearly res judicata.

Some Tax Collection Procedure

[5]                  This judicial review proceeding, shorn of irrelevancies, has been brought to prevent the Minister of National Revenue from collecting a substantial tax debt arising out of the Applicant's 1989 and 1990 taxation years and set out in re-assessment of those taxation years of 25 May 1993. Following that re-assessment Mr Ross filed a notice of objection. On 3 January 1995 the assessments were confirmed, but were not appealed by Mr Ross: see the facts as set out by Madam Justice Dawson, in earlier litigation between the same parties, to a similar end, Ross v. R., 2002 DTC 6884 at 6885 and following.

[6]                  An initial result of this realization process was that the Minister could not begin to collect, pursuant to the re-assessment, until the Minster confirmed the objection to the re-assessment. After the Minister's confirmation there is a further statutory grace period of 90 days. In this instance, when that time had run, 3 April 1995, the Minister was able to take various steps, including a certification under section 223 of the Income Tax Act, which allowed the Minister to register the certificate in this Court where it would become effective as if the judgement of the Court: see sections 225.1(1) and 223(3) of the Income Tax Act. As Madam Justice Dawson points out in Ross (supra) the Minister had six years after 1995 within which to register the certificate and that the Minister, in fact, registered the certificate within that time span on 30 September 1999.

[7]                  Here I would note an inconsistency in the notice of application for judicial review which Mr Ross filed 13 June 2003. The application refers to a notice of assessment of 2 June 2003, but then shifts into relief entirely related to the 1989 and 1990 taxation years, the certification of the debt as invalid and the registration of the certificate as a nullity.

[8]                  One must also keep in mind that an assessment must be appealed, in accordance with the provisions of the Income Tax Act and, in due course, if desired, to the Tax Court of Canada: see sections 165 and 169 of the Income Tax Act and Canada v. Optical Recording Laboratories Inc. (1990) 90 DTC 6647 at 6652 and following (F.C.A.). On this analysis the judicial review should be struck out for want of jurisdiction and also as an abuse, in that it is an attempt to attack tax debt assessments for 1989 and 1990 and the certificate, by bringing judicial review proceedings over three years after the registration of the certificate with the Federal Court in 1999: by section 18.1(2) of the Federal Court Act there is a 30-day limitation period.

Application of the Doctrine of Res Judicata

[9]                  There is an additional and more persuasive reason for striking out the application which has its basis in the doctrine of res judicata and which also clearly satisfies the test set out in the David Bull Laboratories (Canada) Inc. v. Pharmacia inc., [1995] 1 F.C. 588 (F.C.A.), that the application be so "... clearly improper as to be bereft of any possibility of success.", indeed, that it must be the exceptional case.

[10]            In Ross (supra), which was decided after the Federal Court of Appeal decision in Markevich v. Canada, [2001] 3 F.C. 449, Crown counsel did not succeed in having the hearing adjourned until the Supreme Court of Canada heard the Markevich appeal. The outcome of Markevich, on appeal to the Supreme Court of Canada, agreed with the end result arrived at by the Federal Court of Appeal. However, a court has an obligation to apply the law as it is, not as it might be and moreover to hear cases when they are set down: see for example Huseyinov v. Canada (Minister of Employment and Immigration) (1994), 174 N.R. 233 at 234 (F.C.A.). This duty to apply the law as it stands when a case is decided is something that I will return to in considering the concept of res judicata and the present action. In any event Madam Justice Dawson, in Ross (supra) held that the debt of Mr Ross, which had been certified, had not expired or been extinguished, and moreover, that a 16 May 2001 requirement to pay, directed to Mr Ross' wife, had been properly issued. Madam Justice Dawson ordered costs to the Crown to be assessed in accordance with Column III of the Federal Court Rules. In due course the taxing officer arrived at the figure of $1, 112.93, which was approved and consented to by Mr Ross.

[11]            On appeal of Ross to the Federal Court of Appeal, Madam Justice Dawson was upheld. In the Court of Appeal costs, awarded to the Crown, amounted to $1,056.40, again approved and consented to by Mr Ross.

[12]            Leave to appeal Madam Justice Dawson's decision to the Supreme Court of Canada, was denied, with costs to the Crown, 15 May 2003. I have not been referred to any taxation of or agreement as to the amount of costs.

[13]            The next aspect of the saga of Mr Ross, to which I will refer, is a judicial review application, Ross v. Canada, court file no. ITA-8972-99 which I will call "Ross 1999". In that application Mr Ross did not directly attack the validity of the assessments or the 1989 and 1990 taxation years, but rather took the point that a portion of his tax debt which would have gone to the province of British Columbia, had he paid it, had in fact been paid by the Federal Crown as a volunteer. The Crown moved to strike out that proceeding on various grounds, including that it was res judicata. In Reasons of 29 April 2003 I struck out the Ross 1999 proceeding through, among other means, the application of the doctrine of res judicata. I noted that while the proceeding involved clear abuse, I did not award solicitor and client costs, for, giving the benefit of the doubt to Mr Ross, I felt that he had misunderstood the doctrine of res judicata. However I did go on to censure Mr Ross in the light of the result reached by Madam Justice Dawson in Ross (supra) and awarded lump sum costs, being guided by Tariff B, Column V, in the sum of $1,200.00 payable forthwith. This brings us to the present 2003 judicial review application of Mr Ross and the issue of res judicata.

[14]            The purpose of res judicata, or issue estoppel as it is also called, is to prevent interminable litigation of a finally decided question by the same parties, for allow such would bring both the law and justice into disrepute. The requirements of issue estoppel in its most basic form are fairly narrow, being set out in [1975] 2 S.C.R. 248">Angle v. Canada (Minister of National Revenue), [1975] 2 S.C.R. 248, at 254, the Court there adopting a passage from Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 835 (H.L.) at page 935:

It is impossible to see how Mr Ross' litigation does not clearly fit within these requirements. Mr Ross does refer to the fact that in June 2003 the balance owing to him was reduced by $1,577.41, being a set-off against the tax debt of some $1,620.00, through the set-off of a credit for his 2002 taxation year. The Minister has every right to deploy a set-off that certainly does not affect the collection process, other than to reduce the amount which the Minister may collect. The effect of all this is de minimis.

[15]            Estoppel may also be somewhat broader than set out in [1975] 2 S.C.R. 248">Angle (supra) in the sense that it extends to matters which ought to have been dealt with in earlier litigation between the parties so that a plaintiff may not subject a defendant to different aspects of the same issue by bringing one action after another. The law in this area is thoroughly canvassed in Martelli v. Martelli, (1983) 148 D.L.R. (3d) 746, a decision of the BC Court of Appeal, in which Mr Justice Hinkson set out what he believed to be a correct summary of the law of estoppel by record or res judicata:

Here Mr Justice Hinkson has set out a portion of a litigant's factum based on Henderson v. Henderson (1843), 3 Hare 100, 67 E.R. 313, which was specifically referred to by Mr Justice Ritchie in [1976] 2 S.C.R. 621">Grandview (Town of) v. Doering, [1976] 2 S.C.R. 621 at 634:

Key is that the doctrine of res judicata, except in special circumstances, applies not only to what a court, in the initial proceedings, is required to decide, but to all points and issues which properly belong to or should have been a part of that litigation and which a reasonable diligent party might have brought forward in the earlier proceeding.

[16]            Here Crown counsel, quite properly, refers to Yat Tung Co. v. Dao Heng Bank, [1975] A.C. 581, a decision in which the Privy Council made two points. First, before shutting out the subject of litigation pursuant to the doctrine of res judicata the court must scrupulously examine the circumstances for while negligence, inadvertence or accident are not excuses by which to void the application of res judicata, there may be special circumstances whereby, in order to do justice, the rule ought not be applied: see Dao Heng Bank at page 590. Second, the Privy Council, elaborating upon the Henderson (supra), which it approved, pointed out that every point belonging to the litigation ought to be brought forward in the initial litigation, if with reasonable diligence, that could have been done, putting this idea into the concept of abuse of process, by referring to Greehalgh v. Mallard [1947] 2 All E.R. 255, at 257, a decision of the Court of Appeal:

The Court of Appeal makes the point in Mallard, a point adopted by the Privy Counsel in Dao Heng Bank, that the doctrine extends to matters which so clearly could have been raised in the earlier litigation that it would be an abuse of process to canvass those issues in a new proceeding. However, I should refer back to the special circumstances reservation suggested by the Privy council in Dao Heng Bank: " 'special circumstances' are reserved in case justice should be found to require the non-application of the rule." (page 590). In the present instance I do not see a special circumstance by which to avoid the rule of res judicata. At best the Applicant, Mr Ross, refers to the fact that the Supreme Court of Canada decided Markevich (supra) after Madam Justice Dawson decided Ross (supra) and while the Supreme Court of Canada reached the same result as in the Federal Court of Appeal, the reasoning by which it reached that result may have been slightly different. Here there are two answers. First, I do not see how the reasoning employed by the Supreme Court of Canada in Markevich (supra) helps Mr Ross; and second, as I have already pointed out, a court, here the Federal Court and Madam Justice Dawson, had the obligation to apply the law as it was.

[17]            Mr Ross also takes the position that the Federal Court of Appeal decision in MacKinnon v. Canada, 2003 FCA 158, an unreported 25 March 2003 decision, in which the Federal Court of Appeal looked to the Supreme Court of Canada's decision in Markevich (supra), ought to be applied to change the result reached by Madam Justice Dawson in Ross (supra). In MacKinnon the Court of Appeal noted that time did not begin to run against the Minister until the various delays set out in the Income Tax Act have run and that registration of a certificate with Federal Court is a means of reviewing the limitation.

[18]            The decision in MacKinnon hinged on the fact that when a certificate had been issued, two initial taxation years were statute-barred. This is not new law, given the Federal Court of Appeal and Supreme Court of Canada decision in Markevich (supra) and the law applied by Madam Justice Dawson in Ross (supra). At issue in the present proceeding by Mr Ross is not a new certificate, but the certificate issued in 1995 and found valid by Madam Justice Dawson in Ross, and which is still valid in this instance. Moreover it is clear from the present judicial review application that the attack by Mr Ross is still as to the 1989 and 1990 taxation years and their certification which, as I say, Madam Justice Dawson found to be a continuing and valid certification upon which to base collection proceedings.

[19]            I do not see any special circumstance which would allow Mr Ross to re-litigate what was in fact litigated or which might, with reasonable diligence, have been brought up and dealt with in the earlier litigation.

[20]            As I have already pointed out the relief sought by Mr Ross, before Madam Justice Dawson, resulted in a very thorough canvassing of the whole matter, including whether the Minister's certificate was a judgment of the Federal Court, the absence of any order supporting a writ of execution based on the certificate, the effect of the certificate, the absence of any appeal to the Tax Court from the assessment, whether the Applicant was indebted to the Crown for taxes for 1990 and earlier, whether the Minister's actions might be prevented by prohibition, whether there ought to be a redetermination, the validity of the certificate, the validity of the writ of seizure and sale and the validity of the requirement to pay. She concluded that the tax debt had not been extinguished and that the requirement to pay had been properly issued and that by filing the certificate the Minister was protected and had a continuing right to collect the tax debt. Mr Ross has referred me to little relevant material and certainly no evidence or facts which could not, through the exercise of reasonable diligence, have been brought up in his proceeding before Madam Justice Dawson. Thus the doctrine of res judicata is a sound reason by which to dismiss present action as one which, in the words of Mr Justice of Appeal Strayer, in David Bull (supra), "... is so clearly improper as to be bereft of any possibility of success.". Mr Ross does not have a scintilla of a cause of action which might give rise to any helpful amendment. Thus the application is struck out without leave to amend.

Costs

[21]            Having found the matters raised by Mr Ross in the present judicial review application to be res judicata, the matter must, as I have indicated, be dismissed. However, counsel for the Crown raises the issue of costs which Crown seeks on a solicitor-client basis by reason of abuse of process and a vexatious proceeding. Here the Crown refers not only to the Ross proceeding before Madam Justice Dawson and Ross on its appeals, but also to a more recent proceeding by Mr Ross, ITA-8972-99, being Ross 1999, which was dismissed, principally, by reason of the application of res judicata.

[22]            In dismissing the Ross 1999 judicial review application I pointed out that while the conduct of Mr Ross was an abuse deserving of some censure, I gave him the benefit of the doubt for I felt that he might have misunderstood the doctrine of res judicata. In those Reason I referred to the doctrine of res judicata at length. I also considered solicitor-client costs in detail. In the result, while I felt, as I say, that there was clear abuse, I was reluctant to award solicitor-client costs, referring to Schmidt v. Canada, an unreported 17 December 2002 BC Supreme Court action, 2002 BCSC 1738, as an alternate example, where solicitor-client costs might be appropriate, there being layers of litigation in Schmidt. We are now into the situation in which there had been several layers of litigation with the same defendant being dragged through various unsuccessful proceedings and appeals. Certainly, beyond the initial Ross case in the Trial Division, these proceedings have been clear abuse without the possibility of any misunderstanding as to outcome on the part of Mr Ross. Here I shall refer to a portion of the decision in Schmidt in order to set out some applicable principles:

[23]            In Schmidt Mr Justice Kirkpatrick awarded special costs because Mr Schmidt's actions were deliberate and made with an understanding of his valid legal options and of outcomes. As such his actions were found to be both an abuse of the process of the Court and reprehensible conduct, deserving of reproach or rebuke and as such attracted solicitor-client costs. Such is the present situation in the case of Mr Ross. The Crown may therefore have solicitor-client costs of the present motion in order to provide an indemnity. Rather than set a lump sum at this point, the matter should go to a taxation officer.

Bar to Further Proceedings Until Costs Paid

[24]            Finally, the Crown seeks, as alternatives, either security for costs or an order barring Mr Ross from commencing further proceedings until he has paid all of the outstanding awards of costs which he currently owes to the Crown. The latter is a more appropriate remedy for the present judicial review application had been dismissed, but the matter of outstanding costs is ongoing. Here I note that Mr Ross has obligations for the following costs:

Also owing are unspecified costs both in the Supreme Court of Canada, Ross v. Her Majesty the Queen, proceeding number 29500, which was dismissed with costs 15 May 2003 and costs to be taxed in this present proceeding. The Crown should have received payment for costs within a reasonable time of each award. I also note the overall inclination of Mr Ross to file proceedings, indeed redundant proceedings, at substantial cost to the Canadian taxpayers. Thus it is appropriate, as in Ceminchuk v. IBM Canada Ltd. (1995), 62 C.P.R. (3d) 546 (F.C.T.D.) that Mr Ross be barred from further use of the Court until he has paid outstanding costs. This Order is not a blanket barrier preventing Mr Ross from using the Federal Court as would be the case were this a proceeding under section 40 of the Federal Court Act, involving Mr Ross as a vexatious litigator. Rather, it is based upon the implied jurisdiction of the Federal Court to invoke a sanction which is necessary in order to shield its process from abuse and make its jurisdiction work: here I would refer to NB (Electric Power Commission) v. Maritime Electric Co., [1985] 2 F.C. 13 at 26 and following (F.C.A.), Canada (Canadian Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626 at 639 through 644 and Nu-Pharm Inc. v. Canada (AG), [2000] 1 F.C. 463 at 468 and 469 (F.C.A.).

[25]            In the Nu-Pharm case Mr Justice of Appeal Décary writing for the Court, dealt with procedural matters and the right to make any necessary and appropriate procedural order. In that case he referred to what he called a " 'jurisdiction by implication' test" (page 472) which provided the necessary procedural jurisdiction so that the Court might fully exercise its given jurisdiction (pages 472 - 473). In the present case it is appropriate that Mr Ross not have the use of the Court until he has paid outstanding costs awarded against him. Of course, this does not prevent Mr Ross from filing an appeal in the present instance.

[26]            I thank both Mr Ross and Crown counsel for a thorough presentation.

(Sgd.) "John A. Hargrave"

                                                                                              Prothonotary

Vancouver, British Columbia

21 July 2003

                                                                 FEDERAL COURT

                             NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                            T-994-03

STYLE OF CAUSE:                        Glenn Alexander Ross v. Her Majesty the Queen in Right of Canada

DATE OF HEARING:                      7 July 2003

REASONS FOR ORDER:            Hargrave P.

DATED:                                              21 July 2003

APPEARANCES:                          

SOLICITORS OF RECORD: