Docket: T-2220-01
Neutral citation:
2002 FCT 824
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BETWEEN:
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NORMAN JOHN RAYMOND MACKINNON
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Applicant
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and
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HER MAJESTY THE QUEEN
IN RIGHT OF CANADA
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Respondent
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REASONS FOR ORDER
ROTHSTEIN J.A. (ex officio)
[1]
This is a judicial review of a decision of the
Minister of National Revenue, apparently by way of Statement of Account
provided by the Minister to the Applicant on November 22, 2001, showing a
balance owing by the Applicant of $164,454.48 as of that date for taxes, Canada
Pension Plan, interest and penalties. The Applicant says that the vast bulk of
the indebtedness in the Statement of Account is statute barred, that the
statute barred indebtedness is extinguished and that the Minister is precluded
from collection action for that part of the indebtedness which is statute
barred.
[2]
The indebtedness arises from assessments and
reassessments as follows:
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Taxation year
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Assessment/reassessment
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Date
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1979
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Assessment
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July 14, 1980
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Reassessment
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April 16, 1984
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1980
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Assessment
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August 4, 1981
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Reassessment
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April 16, 1984
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1981
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Assessment
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August 10, 1982
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Reassessment
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April 16, 1984
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1982
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Assessment
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September 16, 1983
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1983
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Assessment
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June 25, 1984
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1984
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Assessment
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July 22, 1985
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Reassessment
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January 15, 1988
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1997
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Assessment
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June 4, 1998
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[3]
On January 20, 1988, the Minister filed a
certificate in the Federal Court of Canada certifying the applicant’s
indebtedness under the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.), and Canada Pension Plan, R.S.C. 1985, c. C-8, covering the
applicant’s 1979 to 1984 taxation years inclusive. On December 15, 1989, the
applicant signed a hypothecation agreement with the Minister acknowledging his
indebtedness for the years 1979 to 1984 inclusive. Commencing on September 1,
1989, and continuing to August 16, 1999, the applicant made over 50 payments to
the Minister ranging from $250.00 to $2,500.00 each.
[4]
This is a case in which section 32 of the Crown
Liability and Proceedings Act, R.S.C. 1985, c. C-50, and the British Columbia Limitation Act, R.S.B.C. 1996, c. 266, apply. Section 32 provides:
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32. Except as otherwise provided in this Act
or in any other Act of Parliament, the laws relating to prescription and the
limitation of actions in force in a province between subject and subject
apply to any proceedings by or against the Crown in respect of any cause of
action arising in that province, and proceedings by or against the Crown in
respect of a cause of action arising otherwise than in a province shall be
taken within six years after the cause of action arose.
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32.
Sauf disposition contraire de la présente loi ou de toute autre loi fédérale,
les règles de droit en matière de prescription qui, dans une province,
régissent les rapports entre particuliers s'appliquent lors des poursuites auxquelles
l'État est partie pour tout fait générateur survenu dans la province. Lorsque
ce dernier survient ailleurs que dans une province, la procédure se prescrit par
six ans.
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The relevant provisions of the
Limitation Act are as follows:
3. (5) Any other action not specifically provided
for in this Act or any other Act may not be brought after the expiration of 6
years after the date on which the right to do so arose.
5. (1) If, after time has begun to run with
respect to a limitation period set by this Act, but before the expiration of
the limitation period, a person against whom an action lies confirms the cause
of action, the time during which the limitation period runs before the date of
the confirmation does not count in the reckoning of the limitation period for
the action by a person having the benefit of the confirmation against a person
bound by the confirmation.
5. (2) For the purposes of this section,
(a)
a person confirms a cause of action
only if the person
(i)
acknowledges a cause of action,
right or tile of another, or
(ii)
makes a payment in respect of a
cause of action, right or title of another,
5. (5) For the purposes of this section, an
acknowledgment must be in writing and signed by the maker.
[Emphasis added]
[5]
In addition, subsection 225.1(1) of the Income Tax
Act provides:
225.1. (1) Where a taxpayer is liable for the payment
of an amount assessed under this Act, other than [...], the Minister shall not,
for the purpose of collecting the amount [take collection action],
[...]
until after the day that is 90 days after the day of
the mailing of the notice of assessment.
[6]
The Minister’s cause of action arises upon an
assessment or reassessment issuing and the elapsing of the relevant delay
period under subsection 225.1(1) of the Income Tax Act. See Markevich
v. The Queen, [2001] 3 F.C. 449 at paragraph 60 (C.A.). The applicant says
the cause of action could arise earlier because of the provisions respecting
jeopardy orders under section 225.2 of the Income Tax Act. However,
even a jeopardy order requires an assessment by the Minister. In any event,
there was no jeopardy order sought or granted in this case.
[7]
The relevant limitation period under subsection 3(5) of
the Limitation Act is 6 years. The Minister concedes that his causes of
action, in respect of the assessments for the applicant’s 1979 and 1980
taxation years, are statute barred. However, he says that the certificate
filed in the Federal Court on January 20, 1988, was less than 6 years after the
other assessments and all reassessments were issued and would permit an action
to be brought on the certificate within 6 years thereafter.
[8]
In Ross v. Canada 2002 D.T.C. 6884
(F.C.T.D.), Dawson J. stated at paragraphs 33 and 34:
[33] Where, however, the Minister has preserved the
debt by filing a certificate, which has the same effect as a judgment, the debt
is not extinguished, the debtor remains liable to pay moneys owing under the
Act (tax, penalties, interest and the like) and the requirement to pay may be
issued.
[34] Moreover, section 3 of the Limitation Act
would permit an action to be brought on a certificate, which would be deemed to
be a judgment of this Court, within 6 years.
[9]
I agree with Dawson J. The certificate in this
case would permit the Minister to bring an action or to take statutory
collection proceedings until January 20, 1994.
[10]
However, the hypothecation agreement of December
15, 1989, which acknowledged the Minister’s cause of action and, therefore,
constituted a confirmation of it under subparagraph 5(2)(a)(i) of the
Limitation Act, further extended the limitation period for 6 years after
that date. Thereafter, each payment made by the applicant constituted
confirmation under subparagraph 5(2)(a)(ii) of the Limitation Act and extended
the limitation period after each such payment a further 6 years. As the last
of such payments occurred on August 16, 1999, the limitation period has not yet
expired, the applicant’s indebtedness is not extinguished and the Minister may
take steps either by action or statutory collection procedures to enforce
collection.
[11]
The applicant says that the January 20, 1988,
certificate contains calculation errors. Even if it does, that does not
invalidate the certificate. Where a certificate contains calculation errors
the remedy is to correct them.
[12]
The applicant does not argue that the Minister
is required to allocate his payments to any specific indebtedness or to any
specific year. Indeed, he made no request for any particular allocation of his
payments. It was, therefore, open to the Minister to allocate payments to the
oldest indebtedness first (see Clayton’s Case (1816), 35 E.R. 781 at 793
and Agricultural Insurance Co. v. Sargeant (1896), 26 S.C.R. 29 at 36).
[13]
By reason of the Minister’s concession and
because they are statute barred, the Minister shall not enforce collection of
any amounts for taxes, Canada Pension Plan, interest or penalties pertaining
solely to the Minister’s July 14, 1980, and August 4, 1981, assessments of the
applicant’s 1979 and 1980 taxation years. In all other respects, the
application for judicial review should be dismissed. The Minister should be
entitled to his costs.
[14]
The parties made written supplementary
submissions relative to the fact that Markevich, supra, and Ross,
supra, are under appeal and that there should be some sort of recognition
of these circumstances in the order made in respect of this judicial review.
The Minister takes the position that if he is successful on the appeal of Markevich,
there would be no applicable limitation period and any amounts due as a result
of the July 14, 1980, and August 4, 1981, assessments would not be statute
barred and collection of such amounts could be enforced. The applicant says
that if the Ross appeal is successful, the Minister’s January 20, 1988,
certificate would not have the effect of extending the limitation period.
[15]
I have carefully considered the parties’
supplementary written submissions on this point. If the Markevich, supra,
and Ross, supra, appeals were imminent, it might be appropriate to hold
the decision in this judicial review in abeyance pending those appeals.
However, it will be many months before those appeals are heard, let alone
decided. The judgment that issues on a judicial review is final and the
parties have not satisfied me that there is any appropriate way in which, in
effect, to keep the matter open for subsequent redetermination pending the
outcome of the appeals in Markevich, supra, and Ross, supra. The
judgment in this judicial review will issue on the basis that the Markevich,
supra, and Ross, supra, decisions have been correctly decided and it
will be up to the parties to appeal if they wish to preserve their rights
should the appeals in Markevich, supra, or Ross, supra, be
successful.
“Marshall Rothstein”
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