Date:
20100601
Docket:
T-369-10
Citation:
2010 FC 594
[UNREVISED
ENGLISH CERTIFIED TRANSLATION]
Ottawa, Ontario, June 1, 2010
PRESENT:
The Honourable Mr. Justice Beaudry
IN
THE MATTER OF
the Income Tax Act,
-
and -
IN
THE MATTER OF
assessments by the Minister of National Revenue under the Income Tax Act;
AGAINST:
GÉRARD
ROSS
47,
rue de la Réserve
Les
Escoumins, Quebec G0T 1K0
AND
CLAIRE ROSS
47, rue de la Réserve
Les
Escoumins, Quebec G0T 1K0
Debtors-Respondents
REASONS FOR ORDER AND ORDER
[1]
This
is an application by Gérard Ross (male applicant) and Claire Ross (female
applicant) under subsection 225(8) of the Income Tax Act, R.S.C. 1985 (5th
Supp.), c.1 (Act), to have the amended order made by Justice Mactavish on March
15, 2010, reviewed. The relevant provisions of the Act are in included in the appendix
to this order.
[2]
Gérard
Ross is a crab fisherman in Les Escoumins and is married to Claire Ross. They
are Indians under the Indian Act and live on the Issipit Reserve.
[3]
Since
2005, the Canada Revenue Agency (Agency) has issued eight notices of
reassessment to the male applicant:
a. on April 18, 2005, for
the 2000 to 2003 taxation years;
b. on September 1, 2005,
for the 2004 taxation year;
c. on September 25, 2006,
for the 2005 taxation year;
d. on November 13, 2007, for
the 2006 taxation year;
e. on February 26, 2010, for
the 2007 and 2008 taxation years.
f. on March 10, 2010, the
amount owing was $724,568.17. The notices of reassessment are the subject of a
notice of objection.
[4]
On
March 11, 2010, the Agency issued a notice of assessment in the amount of $581,181.32
to the female applicant in accordance with her liability under subsection
160(1) of the Act.
[5]
Furthermore,
it appears that the male applicant also owes a tax debt to the Minister of
Revenue of Quebec. It is currently being disputed in the Court of Québec.
[6]
On
March 15, 2010, Justice Mactavish issued the order under review, authorizing
the Agency to take forthwith all of the actions provided under paragraphs
225.1(1)(a) to (g) of the Act in order to collect or secure
payment of the amounts owed by Gérard Ross further to the notices of reassessment.
The order also authorized the Agency to take forthwith all of the actions
provided under paragraphs 225.1(1)(a) to (g) of the Act in order
to collect or secure payment of the amounts owed by Claire Ross further to the
notice of assessment dated March 11, 2010, despite the fact that the notice of
assessment had not yet been sent to her. The Court found, on the basis of the
affidavit of Thérèse Gauthier (the Agency officer responsible for Gérard
and Claire Ross’ file), that there are reasonable grounds to believe that the
collection of all or any part of the amount would be jeopardized by a delay in
the collection of that amount. The order was issued ex parte in
accordance with subsection 225.2(2) of the Act.
[7]
In
their written submissions, the applicants maintain that the grounds on which
the order of March 15, 2010, was issued are erroneous and that there was no
serious investigation by the Agency. The applicants provide their own analysis
of the grounds raised in the ex parte order and argue that the
statements in Thérèse Gauthier’s affidavit are inaccurate or untrue. They rely
on the statutory declarations of Gérard Ross, Claire Ross and Dave Ross as well
as the allegations of the erroneous interpretations in Ms. Gauthier’s affidavit.
[8]
According
to the case law of this Court, an application under subsection 225.2(8) is an
extraordinary remedy and must be granted only if there are reasonable grounds
to believe that the collection of all or any part of the amount would be
jeopardized by a delay in the collection of that amount. Thus, “the issue is
not whether the collection per se is in jeopardy but rather whether the
actual jeopardy arises from the likely delay in the collection” (Canada (Minister
of National Revenue - MNR) v Services ML Marengère inc (1999), 176 FTR 1,
[1999] FCJ No 1840 at paragraph 63). The case law sets out that the Agency may
act as such in cases of fraud or similar situations and in cases where the
taxpayer may waste, liquidate or otherwise transfer his or her property to
escape the authorities (Services ML Marengère inc at paragraph 63). However,
intent to deceive is not part of the legal test. Fraud, deceit or a bad motive need
not be proven; it is the result or effect of the handling of the taxpayer’s
assets that is important (Services ML Marengère inc at paragraph 72(4).
[9]
After
analyzing the documents submitted in this case, the Court is of the view that
there are reasonable grounds to believe that the collection of all or any part
of the amount would be jeopardized by a delay in the collection of that tax
debt. The evidence submitted by the applicants does not raise any doubt that
the criterion set out in subsection 225.2(2) of the Act was not met and the
additional evidence submitted by the Agency reinforces the reasonable grounds
to believe that the delay arising from the opposition process would jeopardize
the collection.
[10]
Thérèse
Gauthier’s affidavit dated May 6, 2010, shows that the taxpayers converted substantial
assets that were otherwise seizable into assets that they consider exempt from
seizure (Ms. Gauthier’s affidavit, May 6, 2010, paragraphs 12 to 46).
[11]
This
evidence is in addition to the evidence in her affidavit dated March 12, 2010,
which states that the applicants, along with their counsel and tax advisors, looked
at how to transfer the fishing company (which contains most of their assets) to
their son while protecting them from the tax authorities or a possible
bankruptcy (pages 77 to 87, ex parte motion record).
[12]
In
his affidavit, the male applicant states that he has no intention of selling
his company to his son before the Court of Québec makes its decision and that,
if the Agency had taken the time to check, it would have found that the fishing
licence linked to the company was never the subject of a transfer request. That
statement is contradicted by the evidence submitted by the Agency. The male applicant
verbally requested that his fishing licence be transferred to his son around
mid‑February 2010 (Exhibit 14, page 141, record in reply to the application
for review appended to Thérèse Gauthier’s affidavit dated May 6, 2010).
[13]
In
light of the circumstances, the applicants’ tax debts, the action plan created
and the steps undertaken by the male applicant to transfer his company to his
son, the Court cannot but conclude that the Agency demonstrated that it had reasonable
grounds to believe that the collection of the amounts owing would be
jeopardized by a delay in the collection of that tax debt.
[14]
Finally,
the evidence submitted does not enable the Court to state, as the applicants suggest,
that the Agency acted in bad faith or intended to mislead the judge who issued
the amended order on March 15, 2010.
[15]
With
respect to costs, at the suggestion of the Court, the parties had the
opportunity to provide input on the award of an amount as a lump sum.
ORDER
THE COURT ORDERS that the application be
dismissed. The jeopardy collection order dated March 15, 2010, is upheld. The
applicants shall pay costs to the Agency in a lump sum in the amount of $5,000 including
the disbursements.
“Michel Beaudry”
Certified
true translation
Janine
Anderson, Translator
APPENDIX
Income
Tax Act,
R.C.S. 1985 (5th Supp.), c. 1.
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225.1
(1) If a taxpayer is liable for the payment of an amount assessed under this
Act, other than an amount assessed under subsection 152(4.2), 169(3) or
220(3.1), the Minister shall not, until after the collection-commencement day
in respect of the amount, do any of the following for the purpose of
collecting the amount:
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225.1
(1) Si un contribuable est redevable du montant d’une cotisation établie en
vertu des dispositions de la présente loi, exception faite des paragraphes
152(4.2), 169(3) et 220(3.1), le ministre, pour recouvrer le montant impayé,
ne peut, avant le lendemain du jour du début du recouvrement du montant,
prendre les mesures suivantes :
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(a)
commence legal proceedings in a court,
(b)
certify the amount under section 223,
(c)
require a person to make a payment under subsection 224(1),
(d)
require an institution or a person to make a payment under subsection
224(1.1),
(e)
[Repealed, 2006, c. 4, s. 166]
(f)
require a person to turn over moneys under subsection 224.3(1), or
(g)
give a notice, issue a certificate or make a direction under subsection
225(1).
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a)
entamer une poursuite devant un tribunal;
b)
attester le montant, conformément à l’article 223;
c)
obliger une personne à faire un paiement, conformément au paragraphe 224(1);
d)
obliger une institution ou une personne visée au paragraphe 224(1.1) à faire
un paiement, conformément à ce paragraphe;
e)
[Abrogé, 2006, ch. 4, art. 166]
f)
obliger une personne à remettre des fonds, conformément au paragraphe
224.3(1);
g)
donner un avis, délivrer un certificat ou donner un ordre, conformément au
paragraphe 225(1).
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225.2
(1) In this section, “judge” means a judge or a local judge of a superior
court of a province or a judge of the Federal Court.
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225.2
(1) Au présent article, « juge » s’entend d’un juge ou d’un juge local d’une
cour supérieure d’une province ou d’un juge de la Cour fédérale.
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(2)
Notwithstanding section 225.1, where, on ex parte application by the
Minister, a judge is satisfied that there are reasonable grounds to believe
that the collection of all or any part of an amount assessed in respect of a
taxpayer would be jeopardized by a delay in the collection of that amount,
the judge shall, on such terms as the judge considers reasonable in the
circumstances, authorize the Minister to take forthwith any of the actions
described in paragraphs 225.1(1)(a) to 225.1(1)(g) with respect to the
amount.
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(2)
Malgré l’article 225.1, sur requête ex parte du ministre, le juge saisi autorise
le ministre à prendre immédiatement des mesures visées aux alinéas 225.1(1)a)
à g) à l’égard du montant d’une cotisation établie relativement à un
contribuable, aux conditions qu’il estime raisonnables dans les
circonstances, s’il est convaincu qu’il existe des motifs raisonnables de
croire que l’octroi à ce contribuable d’un délai pour payer le montant
compromettrait le recouvrement de tout ou partie de ce montant.
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(3)
An authorization under subsection 225.2(2) in respect of an amount assessed in
respect of a taxpayer may be granted by a judge notwithstanding that a notice
of assessment in respect of that amount has not been sent to the taxpayer at
or before the time the application is made where the judge is satisfied that
the receipt of the notice of assessment by the taxpayer would likely further
jeopardize the collection of the amount, and for the purposes of sections
222, 223, 224, 224.1, 224.3 and 225, the amount in respect of which an
authorization is so granted shall be deemed to be an amount payable under
this Act.
.
. .
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(3)
Le juge saisi peut accorder l’autorisation visée au paragraphe (2), même si
un avis de cotisation pour le montant de la cotisation établie à l’égard du
contribuable n’a pas été envoyé à ce dernier au plus tard à la date de la
présentation de la requête, s’il est convaincu que la réception de cet avis
par ce dernier compromettrait davantage, selon toute vraisemblance, le
recouvrement du montant. Pour l’application des articles 222, 223, 224,
224.1, 224.3 et 225, le montant visé par l’autorisation est réputé être un
montant payable en vertu de la présente loi.
(…)
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(8)
Where a judge of a court has granted an authorization under this section in
respect of a taxpayer, the taxpayer may, on 6 clear days notice to the Deputy
Attorney General of Canada, apply to a judge of the court to review the
authorization.
.
. .
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(8)
Dans le cas où le juge saisi accorde l’autorisation visée au présent article
à l’égard d’un contribuable, celui-ci peut, après avis de six jours francs au
sous-procureur général du Canada, demander à un juge de la cour de réviser
l’autorisation.
(…)
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(11)
On an application under subsection 225.2(8), the judge shall determine the
question summarily and may confirm, set aside or vary the authorization and
make such other order as the judge considers appropriate.
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(11)
Dans le cas d’une requête visée au paragraphe (8), le juge statue sur la
question de façon sommaire et peut confirmer, annuler ou modifier
l’autorisation et rendre toute autre ordonnance qu’il juge indiquée.
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