Date: 20041027
Docket: T-1507-03
Citation: 2004 FC 1516
Toronto, Ontario, October 27th, 2004
Present: The Honourable Madam Justice Layden-Stevenson
BETWEEN:
JANDA PRODUCTS CANADA LIMITED
Applicant
and
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR ORDER AND ORDER
[1] Janda Products Canada Limited (Janda), by notice of motion dated September 17, 2004 and returnable October 25, 2004, seeks to address the issues of interest and costs arising from an application for judicial review on July 6, 2004.
[2] The order of Mr. Justice Gibson, dated July 6, 2004, provides as follows:
THIS COURT ORDERSthat
1. On consent, this Judicial Review Application is allowed in part. The matter under review is referred back for determination by the Canada Customs and Revenue Agency on the basis that:
(i) The Coin Operated Devices Remission Order Regulation s. 1/91-21 ("Remission Order") issued on March 4, 1999 under the Financial Administration Act, R.S.C. 1985. c. F-11 applies to supplies made by coin-operated amusement devices that are equipped with a continuous play feature, as defined in the Partial Agreed Statement of Facts herein; and
(ii) The "Centipede" and "Road Riot" games, referred to in paragraph 5 of the Affidavit of Rajwinder Sanhu, sworn November 17, 2003, can be and were set to accept only one quarter as the consideration.
2. The issue of adjourning the balance of the hearing at present fixed for the 16th of August, 2004, to address the issues of interest and costs, is referred to the judge scheduled to preside on that date.
BACKGROUND
[3] Janda carries on business in Ontario and other provinces as an operator and supplier of amusement games. It applied for judicial review of the ministerial delegate's decision denying, in part, its request for a rebate of goods and services tax (GST) paid by it under the Excise Tax Act, R.S.C. 1985, c. E-15 (the ETA) between January 1, 1991 and April 23, 1996. Janda's request to the Minister was made under theCoin-Operated Devices Remission Order, Regulation SI/91-21 (the remission order) enacted pursuant to subsection 23(2) of the Financial Administration Act, R.S.C. 1985, c. F-11 (the FAA). Janda is a GST registrant.
[4] Effective April 24, 1996, the ETA was amended to exempt certain coin-operated devices from payment of GST. The relevant provision, subsection 165.1(2), states:
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165.1(2)
Where the consideration for a supply of tangible personal property or a service is paid by depositing a single coin in a mechanical coin-operated device that is designed to accept only a single coin of twenty-five cents or less as the total consideration for the supply and the tangible personal property is dispensed from the device or the service is rendered through the operation of the device, the tax payable in respect of the supply is equal to zero.
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165.1(2)
La taxe payable relativement à la fourniture d'un bien meuble corporel distribué, ou d'un service rendu, au moyen d'un appareil automatique à fonctionnement mécanique qui est conçu pour n'accepter, comme contrepartie totale de la fourniture, qu'une seule pièce de monnaie de 0,25 $ ou moins est nulle.
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[5] The remission order was enacted on March 29, 1999, apparently in response to Distribution Lévesque Vending (1986) Ltée. v. Canada, [1997] G.S.T.C. 38 (T.C.C.). It provides that a registrant who paid GST between January 1, 1991 and April 23, 1996, in relation to coin-operated devices described in subsection 165.1(2), on application, is entitled to remission of the tax paid. Its stated purpose is that it is in the public interest.
[6] Janda applied for remission and was refused. It sought judicial review of the refusal. The Minister consented. By order dated December 3, 2002, Mr. Justice MacKay set aside the Minister's determination and remitted the matter for reconsideration on specific terms.
[7] The decision in Amusements Jolin Inc. v. Canada, [2002] G.S.T.C. 111 (T.C.C.) was rendered after Janda's first application for judicial review. On the reconsideration, the Minister allowed Janda's request, in part, but denied its request on all devices that were equipped with a continuous play feature and for the games "Centipede" and "Road Riot" on the basis that those games could be set to accept more than one quarter.
[8] In a partial agreed statement of facts dated December 17, 2003, the parties agreed on a definition of the continuous play feature and agreed that the games "Centipede" and "Road Riot" were set to accept only one quarter. On May 21, 2004, Mr. Justice Lemieux, in 97113476 Ontario Inc. v. Canada (Attorney General) (2004), G.T.C. 1120 (F.C.), determined that amusement devices possessing a continuous play feature qualified as an eligible supply under the remission order.
[9] This brings me back to the order of Mr. Justice Gibson dated July 6, 2004 wherein, on consent, Janda's (second) application for judicial review was allowed in part. The issues of interest and costs, initially adjourned to August 16, 2004, were further adjourned to October 25, 2004. At the hearing on October 25th, counsel indicated that they would, in all likelihood, be able to agree on the issue of costs.
ISSUE
[10] Whether Janda is entitled to interest on the monies returned to it as a consequence of the remission order.
ANALYSIS
[11] Janda argues, first, that interest is payable to it under the provisions of the ETA. The argument is premised on the basis that the purpose of subsection 165.1(2) of the ETA and the remission order is to relieve collectors of GST from the obligation to remit a tax that could not be collected from the consumer. GST remitted to the Minister that met the criteria of the exemption in subsection 165.1(2), according to Janda, was paid by "mistake or otherwise" within the meaning of subsection 261(1) of the ETA.
[12] It submits that the remission order reopened the limitation period for the recovery of the GST that was paid during the remission period and enabled Janda to make its application for a rebate of the GST paid by mistake or otherwise. For purposes of the determination of interest payable under the ETA, Janda argues that the remission order was a retroactive enactment that relates to Part IX of the ETA within the meaning of subsection 124(3) and, consequently, interest is to be computed from the date that Janda remitted the GST to the Minister up to the date that the GST was refunded by the Minister to Janda.
[13] In short, Janda's argument is that the payment of interest is consistent with the general scheme of the ETA, and the general purpose of subsection 165.1(2) and the remission order. The Minister's denial that interest is payable is not only inconsistent with subsections 261(1) and 124(3), it perpetuates the hardship and inequity that subsection 165.1(2) and the remission order sought to address. It was unnecessary for the remission order to expressly deal with the payment of refund interest because the provisions of the ETA address the payment of interest. To accept the Minister's position yields a result where a registrant that paid GST during a remission period is treated less favourably than the registrant who failed to pay.
[14] The hurdle that Janda has to overcome is subsection 261(1) of the ETA. That provision reads as follows:
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261 (1) Where a person has paid an amount
(a) as or on account of, or
(b) that was taken into account as,
tax, net tax, penalty, interest or other obligation under this Part in circumstances where the amount was not payable or remittable by the person, whether the amount was paid by mistake or otherwise, the Minister shall, subject to subsections (2) and (3), pay a rebate of that amount to the person.
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261 (1) Dans le cas où une personne paie un montant au titre de la taxe, de la taxe nette, des pénalités, des intérêts ou d'une autre obligation selon la présente partie alors qu'elle n'avait pas à le payer ou à le verser, ou paie un tel montant qui est pris en compte à ce titre, le ministre lui rembourse le montant, indépendamment du fait qu'il ait été payé par erreur ou autrement.
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[15] If Janda comes within subsection 261(1), it has, in my view, a compelling argument for payment of interest under section 124. The respondent, at the hearing, agreed with my observation that if subsection 261(1) applies, so too does section 124.
[16] While I am sympathetic to Janda's position, I am unable to conclude that it comes within subsection 261(1) of the ETA. The remission order was enacted "on the recommendation of the Minister of National Revenue, pursuant to subsection 23(2)" of the FAA. Thus, the FAA is the governing legislation. Subsection 23(2) provides:
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23(2)
The Governor in Council may, on the recommendation of the appropriate Minister, remit any tax or penalty, including any interest paid or payable thereon, where the Governor in Council considers that the collection of the tax or the enforcement of the penalty is unreasonable or unjust or that it is otherwise in the public interest to remit the tax or penalty.
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23(2)
Sur recommandation du ministre compétent, le gouverneur en conseil peut faire remise de toutes taxes ou pénalités, ainsi que des intérêts afférents, s'il estime que leur perception ou leur exécution forcée est déraisonnable ou injuste ou que, d'une façon générale, l'intérêt public justifie la remise.
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[17] Paragraph 23(4)(e) of the FAA states:
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(e) by repaying any sum of money paid to or recovered by the Receiver General for the tax, penalty or other debt.
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e) remboursement de sommes payées au receveur général ou recouvrées par lui au titre des taxes, pénalités ou autres dettes.
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[18] Neither the FAA nor the remission order provides for the payment of interest. Subsection 165.1(2) of the ETA operates to eliminate the GST otherwise payable by reducing it from seven percent to zero percent. Technically, the tax is still applied albeit at a zero percent rate. The remission order and the pertinent provisions of the FAA deal with a remission rather than a rebate.
[19] The remission order does not purport to amend the ETA in any way. Subsection 165.1(2), effective April 24, 1996, applies to GST paid by Janda on or subsequent to April 24, 1996. Any such payments - expressly reduced by virtue of an ETA provision - will qualify for a rebate under subsection 261(1). The words "or otherwise" in section 261 do not incorporate remission payments pursuant to the FAA into the ETA. A provision that is to have extra-legislative application must say so. Similarly, because Janda completed a form requesting a rebate under section 261 of the ETA does not establish entitlement pursuant to that provision.
[20] Parliament could have provided for the payment of interest on the monies remitted for the period between January 1, 1991 and April 23, 1996. It did not. Rather, Parliament specifically chose to limit its obligation, to pay interest, to those monies rebated subsequent to April 23, 1996. In the absence of a statutory provision imposing an obligation to pay interest, no such obligation exists.
[21] I appreciate Janda's submissions that the result is unfair. However, legislative decision making is not subject to any known duty of fairness: Wells v. Newfoundland, [1999] 3 S.C.R. 199. It is not open to the court to interfere. The comment that "[t]he prohibition 'Thou shalt not steal' has no legal force upon the sovereign body" found in Florence Mining Co. v. Cobalt Lake Mining Co. (1909), 18 O.L.R. 275 at 279 is still the law: Wells, supra.
[22] In the alternative, Janda requests prejudgment interest pursuant to section 31 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50. That section states:
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31. (1) Except as otherwise provided in any other Act of Parliament and subject to subsection (2), the laws relating to prejudgment interest in proceedings between subject and subject that are in force in a province apply to any proceedings against the Crown in any court in respect of any cause of action arising in that province.
(2) A person who is entitled to an order for the payment of money in respect of a cause of action against the Crown arising outside any province or in respect of causes of action against the Crown arising in more than one province is entitled to claim and have included in the order an award of interest thereon at such rate as the court considers reasonable in the circumstances, calculated
(a) where the order is made on a liquidated claim, from the date or dates the cause of action or causes of action arose to the date of the order; or
(b) where the order is made on an unliquidated claim, from the date the person entitled gave notice in writing of the claim to the Crown to the date of the order.
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31. (1) Sauf disposition contraire de toute autre loi fédérale, et sous réserve du paragraphe (2), les règles de droit en matière d'intérêt avant jugement qui, dans une province, régissent les rapports entre particuliers s'appliquent à toute instance visant l'État devant le tribunal et dont le fait générateur est survenu dans cette province.
(2) Dans une instance visant l'État devant le tribunal et dont le fait générateur n'est pas survenu dans une province ou dont les faits générateurs sont survenus dans plusieurs provinces, les intérêts avant jugement sont calculés au taux que le tribunal estime raisonnable dans les circonstances et :
a) s'il s'agit d'une créance liquide, depuis la ou les dates du ou des faits générateurs jusqu'à la date de l'ordonnance de paiement;
b) si la créance n'est pas liquide, depuis la date à laquelle le créancier a avisé par écrit l'État de sa demande jusqu'à la date de l'ordonnance de paiement.
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(3) When an order referred to in subsection (2) includes an amount for, in the Province of Quebec, pre-trial pecuniary loss or, in any other province, special damages, the interest shall be calculated under that subsection on the balance of the amount as totalled at the end of each six month period following the notice in writing referred to in paragraph (2)(b) and at the date of the order.
(4) Interest shall not be awarded under subsection (2)
(a) on exemplary or punitive damages;
(b) on interest accruing under this section;
(c) on an award of costs in the proceeding;
(d) on that part of the order that represents pecuniary loss arising after the date of the order and that is identified by a finding of the court;
(e) where the order is made on consent, except by consent of the Crown; or
(f) where interest is payable by a right other than under this section.
(5) A court may, where it considers it just to do so, having regard to changes in market interest rates, the conduct of the proceedings or any other relevant consideration, disallow interest or allow interest for a period other than that provided for in subsection (2) in respect of the whole or any part of the amount on which interest is payable under this section.
(6) This section applies in respect of the payment of money under judgment delivered on or after the day on which this section comes into force, but no interest shall be awarded for a period before that day.
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(3) Si l'ordonnance de paiement accorde une somme, dans la province de Québec, à titre de perte pécuniaire antérieure au procès ou, dans les autres provinces, à titre de dommages-intérêts spéciaux, les intérêts prévus au paragraphe (2) sont calculés sur le solde du montant de la perte pécuniaire antérieure au procès ou des dommages-intérêts spéciaux accumulés à la fin de chaque période de six mois postérieure à l'avis écrit mentionné à l'alinéa (2)b) ainsi qu'à la date de cette ordonnance.
(4) Il n'est pas accordé d'intérêts aux termes du paragraphe (2) :
a) sur les dommages-intérêts exemplaires ou punitifs;
b) sur les intérêts accumulés aux termes du présent article;
c) sur les dépens de l'instance;
d) sur la partie du montant de l'ordonnance de paiement que le tribunal précise comme représentant une perte pécuniaire postérieure à la date de cette ordonnance;
e) si l'ordonnance de paiement est rendue de consentement, sauf si l'État accepte de les payer;
f) si le droit aux intérêts a sa source ailleurs que dans le présent article.
(5) Le tribunal peut, s'il l'estime juste, compte tenu de la fluctuation des taux d'intérêt commerciaux, du déroulement des procédures et de tout autre motif valable, refuser l'intérêt ou l'accorder pour une période autre que celle prévue à l'égard du montant total ou partiel sur lequel l'intérêt est calculé en vertu du présent article.
(6) Le présent article s'applique aux sommes accordées par jugement rendu à compter de la date de son entrée en vigueur. Aucun intérêt ne peut être accordé à l'égard d'une période antérieure à cette date.
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(7) This section does not apply in respect of any case in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law within the meaning of the Federal Courts Act.
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(7) Le présent article ne s'applique pas aux procédures en matière de droit maritime canadien, au sens de la Loi sur les Cours fédérales.
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[23] Janda recognizes that its hurdle in relation to this argument lies with the words "an order for the payment of money". It relies on subsection 23(6) of the FAA and claims that it provides that the remission granted to Janda has effect as if the tax paid by it had been "sued for and recovered". Even if this is not so, it contends that Mr. Justice Gibson's order of July 6, 2004 is an order for the payment of money. Janda submits that, in the circumstances that existed when the order was made, all factual and legal issues had been resolved. The Minister's determination required only the issuance of a payment to Janda in the amount agreed to by the parties. On July 29, 2004, the Minister "issued a refund to Janda in accordance with the order".
[24] The crux of the argument is that Mr. Justice Gibson's order "effectively required the issuance of a cheque to Janda by the Minister and was an order for the payment of money". It is said that this is so because the Minister did not have to conduct any further audit activity, reconsider any facts or issues, or issue any reassessment. The Minister merely had to process a cheque in full and final payment of Janda's claim for a refund.
[25] With all due respect, I disagree. Janda's argument with respect to subsection 23(6) is misconceived. That provision reads:
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23(6)
(6) A conditional remission, on fulfilment of the condition, and an unconditional remission have effect as if the remission were made after the tax, penalty or other debt in respect of which it was granted had been sued for and recovered.
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23(6)
(6) Une remise conditionnelle, une fois la condition remplie, et une remise absolue ont le même effet que s'il y avait eu remise après recouvrement, sur action en justice des sommes en cause.
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Its intent is to ensure that the Crown cannot attempt to recover the debt after remission is granted. It is necessary because, without it, the GST liability remains in existence and collectable under the ETA.
[26] Regarding Justice Gibson's order, to interpret it as an "order for the payment of money" is, in my view, to stretch elasticity to the breaking point. None of the authorities provided by the parties are directly on point but they provide insight. It is readily apparent that to come within the meaning of the noted phrase, the order must give monetary relief to one party from another party. It is equally apparent that a declaration of entitlement to money falls short of having the same effect: Crown Zellerbach Canada Ltd. et al. v. The Queen in Right of British Columbia (1979), 101 D.L.R. (3d) 240 (B.C.C.A.); Charterways Transportation Ltd. v. 1022804 Ontario Inc., [1996] O.J. No. 1126 (Ont. Ct. Jus. Gen. Div.); Ocean Construction Supplies Limited v. Minister of Finance, [1980] 6 W.W.R. 497 (B.C.S.C.); Musqueam Indian Band et al. v. Glass et al. (1997), 144 F.T.R. 67 (T.D.) aff'd. (1999), 250 N.R. 95 (F.C.A.). Whether the phrase is "order for the payment of money", or "money judgment", or "pecuniary judgment" does not affect the basic principle, as is evident in the noted authorities.
[27] Mr. Justice Gibson's order is not an order that provides monetary relief to one party from the other party. More importantly, the order could not have so provided. Paragraph 18.1(3)(b) of the Federal Courts Act, R.S.C. 1985, c. F-7, as am., delineates the relief that may be granted by the court on an application for judicial review. The court is limited to declaring invalid or unlawful, quashing or setting aside and referring back for determination in accordance with such directions as it considers to be appropriate, the decision of a federal board, commission or other tribunal. Section 36 of the Federal Courts Act deals with prejudgment interest in respect of claims other than those against the Crown. The only "order for the payment of money" available on judicial review is one that addresses the issue of costs.
[28] The order dated July 6, 2004 refers the matter back for determination and sets the parameters regarding the devices that are eligible for remissions. It specifies the test for determining the eligibility of specific devices. It does not purport to determine which devices are eligible and it does not order the Minister to pay a monetary amount to Janda.
[29] This disposes of the motion. If the parties are unable to agree on costs, either may seek further directions in that regard. I retain jurisdiction only with respect to the issue of costs of the motion and only if necessary.
ORDER
THIS COURT DETERMINES that the applicant is not entitled to interest on the monies returned to it as a consequence of the remission order. The Court retains jurisdiction with respect to the issue of costs of this motion. "Carolyn Layden-Stevenson"
J.F.C.
FEDERAL COURT
Names of Counsel and Solicitors of Record
DOCKET: T-1507-03
STYLE OF CAUSE: JANDA PRODUCTS CANADA LIMITED
Applicant
and
MINISTER OF NATIONAL REVENUE
Respondent
DATE OF HEARING: OCTOBER 25, 2004
PLACE OF HEARING: TORONTO, ONTARIO.
REASONS FOR ORDER
AND ORDER BY: LAYDEN STEVENSON, J.
APPEARANCES BY:
Irving Marks
Michael Gasch For the Applicant
Nancy Arnold
Elizabeth Chasson For the Respondent
SOLICITORS OF RECORD:
Irving Marks Robins, Appleby and Taub LLP Toronto, Ontario For the Applicant
Morris Rosenberg
Deputy Attorney General of Canada
Toronto, Ontario For the Respondent
FEDERAL COURT
Date: 20041027
Docket: T-1507-03
BETWEEN:
JANDA PRODUCTS CANADA LIMITED
Applicant
and
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR ORDER
AND ORDER
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