Date: 20100520
Docket: T-1533-09
Citation: 2010 FC 554
Ottawa, Ontario, May 20, 2010
PRESENT: The Honourable Mr. Justice Boivin
BETWEEN:
LISE
A. LEGAL
Applicant
and
CANADA REVENUE AGENCY
(acting in behalf of THE ATTORNEY GENERAL
OF CANADA)
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This
is an application for judicial review by Lise A. Legal (the applicant) of a
decision by the Minister of National Revenue (the Minister) dated August 5,
2009, denying the applicant a renewal for a licence to manufacture tobacco
products or to dispose of, sell, offer for sale, purchase or possess unpackaged
and unstamped raw leaf tobacco or tobacco products, including partially
manufactured tobacco under the Excise Act, 2001, S.C. 2002 c. 22 (the Excise
Act).
Factual Background
[2]
In
2005, the applicant and her business partner, Tannis Bullard, created Mother
Earth Tobacco, a business located on or near the Long Plain First Nation
Reservation in Manitoba.
[3]
Mother
Earth’s business is to manufacture and sale Certified Organic tobacco used in
cultural and religious ceremonies by Aboriginal People.
[4]
On
July
20, 2005,
the applicant applied for and was granted a federal licence to manufacture tobacco
products under the provisions of the Excise Act.
[5]
On
October 14, 2005, the applicant acquired provincial licensing pursuant to
Manitoba’s Tobacco Tax Act, C.C.S.M. c. T80 and became a tax collector
in the Province
of Manitoba. A
registration number was also assigned in accordance with the Retail Sales
Tax Act, C.C.S.M. c. R130.
[6]
The
applicant failed to file tax returns and failed to remit tax collected for the
months of October 2005 through May 2007, thus resulting in the termination of
the provincial licence on June 12, 2007.
[7]
On
June 26, 2007, the applicant was charged under section 11 of the Tobacco Tax
Act and sections 75(1)(c), 75(2)(c) and 75(3)(c) of
the Tax Administration and Miscellaneous Taxes Act, C.C.S.M. c. T2.
[8]
The
applicant’s licence issued under the Excise Act was to expire on July 19, 2009. The applicant
applied for a renewal of her licence on July 16,
2009.
[9]
A
review of the application was conducted by Scott Hendrick, Acting Technical
Advisor in the Excise Duty, Legislative Policy and Regulatory Affairs Division
in the Prairie Region of the Canada Revenue Agency (CRA). Mr. Hendrick
recommended that the applicant’s licence renewal application be denied for failing
to comply with provincial and federal tobacco legislation.
[10]
By
letter dated August 5, 2009, signed by Doug Arnot, Acting Manager, Excise Duty
in the Prairie Region of the CRA who has been delegated by the Minister of
National Revenue to make decisions (ss. 9(2), 14 and 23(2) of the Excise Act),
the applicant was informed that her renewal application was denied on the grounds
that (i) the application was not submitted less than 30 days before the day on
which it expired and (ii) she had failed to comply with provincial legislation
concerning the taxation or control of tobacco products in regards to sections 2
and 9 of the Regulations Respecting Excise Licences and Registrations, SOR/2003-115 (the Regulations).
[11]
The
applicant filed this application for judicial review on September 11, 2009.
Impugned Decision
[12]
The impugned decision is the decision made on August 5,
2009 (the Minister’s decision) denying the renewal
of the applicant's tobacco licence.
Issue
[13]
A
number of issues were submitted by the applicant in her memorandum of facts and
law as well as in oral submission. As per the hearing, the issues can be
summarized as follows:
(1)
Was
the Minister’s decision reasonable?
(2)
Did the Minister
fail to observe any of the principles of procedural fairness or natural
justice?
(3)
Should any
of the constitutional issues raised by the applicant be considered by this Court?
Legislative Framework
[14]
The
Excise Act governs the taxation and regulation of activities involving the
manufacture, possession and sale of tobacco at the federal level.
[15]
The
Regulations Respecting Excise Licences and Registrations, SOR/2003-115, s. 2, s. 9 provide as follows:
|
Issuance of
licence
2. (1) In order to be issued a licence, a person must submit
to the Minister a completed application, in the form authorized by the
Minister, accompanied by a list of the premises in respect of which the
application is being made.
(2)
Subject to subsections (3) and (4), an applicant is eligible for a licence,
other than a licence issued under section 22 of the Act, if
(a)
they are not the subject of a receivership in respect of their debts;
(b)
they have not, in the five years immediately before the date of the
application,
(i) failed to comply with any Act of Parliament, other
than the Act, or of the legislature of a province respecting the taxation of
or controls on alcohol or tobacco products or any regulations made under it,
or
(ii) acted to defraud Her Majesty;
(c)
in the case of an applicant who is an individual, they
(i) are at least eighteen years of age, and
(ii) have sufficient financial resources to conduct their
business in a responsible manner;
…
|
Délivrance de licences ou d’agréments
2.
(1)
Quiconque souhaite obtenir une licence ou un agrément présente une demande au
ministre sur le formulaire approuvé par lui, accompagné d’une liste des
locaux visés par la demande.
(2)
Sous réserve des paragraphes (3) et (4), est admissible à une licence ou un
agrément, autre que l’agrément délivré en vertu de l’article 22 de la Loi, le
demandeur qui remplit les conditions suivantes :
a) il ne fait pas l’objet d’une
mise sous séquestre à l’égard de ses dettes;
b) dans les cinq ans précédant
la date de la demande :
(i) il n’a pas omis de se conformer à toute loi fédérale,
autre que la Loi, ou provinciale — ou à leurs règlements — portant sur la
taxation ou la réglementation de l’alcool ou des produits du tabac,
(ii) il n’a pas agi dans le but de frauder Sa Majesté;
c) dans le cas où il est un
particulier, il est :
(i) âgé d’au moins dix-huit ans,
(ii) dispose des ressources financières suffisantes pour
gérer son entreprise d’une manière responsable;
(…)
|
|
Renewal of
licence
9. (1) In order to have a licence
renewed, a licensee must submit to the Minister a completed renewal
application, in the form authorized by the Minister, not less than thirty
days before the day on which the licence expires.
(2) A
licensee is eligible to have a licence renewed if they have not ceased to
meet the applicable requirements of section 2.
|
Renouvellement
des licences et agréments
9. (1) Le titulaire qui souhaite faire
renouveler sa licence ou son agrément présente une demande de renouvellement
au ministre sur le formulaire approuvé par lui, au moins trente jours avant
la date d’expiration de la licence ou de l’agrément.
(2)
Est admissible au renouvellement de sa licence ou de son agrément le
titulaire qui remplit toujours les exigences applicables énoncées à l’article
2.
|
[16]
In
accordance with subsection 9(2) of the Excise Act, these powers are delegated
to CRA officers who apply the requirements of the Act and the
Regulations in determining whether to issue or renew a licence.
Standard of Review
[17]
The
respondent submits that the standard of review that ought to be applied to
judicial review of a decision to refuse to renew a licence to manufacture
tobacco products is the standard of reasonableness based on the principles
articulated in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008]
1 S.C.R. 190; Canada v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339.
[18]
It
is worthy of note that, in accordance with sections 8, 14 (1) (d) and 23
of the Excise Act, the Minister of National Revenue is entitled to a
degree of deference from the Court in view of the fact that he has full and
exclusive jurisdiction to determine all matters relating to the decision to amend,
suspend, renew, cancel or reinstate a licence under the Excise Act, and its Regulations.
[19]
In
addition, the respondent submits that there are different levels of deference
and in circumstances where ministerial discretion is being exercised based on
finding of fact, a very high degree of deference should be accorded.
[20]
The
Court therefore agrees that the applicable standard of review to the
discretionary decisions of the Minister of National Revenue is reasonableness
and that a very high degree of deference should be accorded. Indeed, the
standard of reasonableness has been held to apply generally to questions of
facts, discretion and policy as well as to questions of mixed facts and law
where the legal issues cannot easily be separated from the factual issues (Dunsmuir
at para. 51). In judicial review, reasonableness is concerned mostly with
the existence of justification, transparency and intelligibility within the
decision-making process (Dunsmuir at para. 47).
[21]
However,
it is well settled that the standard of review pertaining to procedural
fairness and natural justice must be determined against the standard of
correctness (Waterman v. Canada (Attorney General), 2009
FC 844; [2009] F.C.J. no. 991; Worthington v. Canada,
2004 FC 1546, [2004] F.C.J. No. 1879; Sketchley v. Canada (Attorney General), 2005 FCA 404, [2006] 3 F.C.R. 392).
Was the Minister’s
decision reasonable?
[22]
In
following the legislative framework, the Minister refused the renewal of the applicant’s
licence to manufacture tobacco products for two reasons: the applicant did not
file her application for renewal within the thirty days prescribed by section 9
of the Regulations and the applicant failed to comply with provincial
legislation concerning the taxation of tobacco products as required by
paragraph (2)(b)(i) of the Regulations.
[23]
The
obtaining of a licence is generally considered as a privilege and is accompanied
by conditions. In obtaining a licence, a licensee undertakes to comply with
those conditions. Under subsection 23(2) of the Excise Act, the Minister is
authorized to issue, refuse to issue, amend, suspend, renew, cancel or
reinstate any tobacco licence.
[24]
Subsection
9 of the Regulations identifies two conditions that must be met before a licence
is renewed:
(1) In order to have a
licence renewed, a licensee must submit to the Minister a completed renewal
application in the form authorized by the Minister, not less than thirty days
before the day on which the licence expires.
(2)
A licensee
is eligible to have a licence renewed if they have not ceased to meet the
applicable requirements of section 2.
[25]
In
failing to comply with conditions set forth in section 9 of the Regulations,
the licensee is subject to a non-renewal of the licence (see Genex
Communications v. Canada (Attorney General) (F.C.A.), 2005 FCA 283,
[2005] F.C.J. No. 1440).
[26]
In
the case at bar, the applicant does not dispute the fact that the application
for renewal was made on July 16, 2009 and that the licence to manufacture
tobacco products was set to expire on July 19, 2009. The application was thus not
made more than 30 days before the day on which the licence expires contrary to
section 9 of the Regulations.
[27]
Secondly,
Mr. Hendrick of the CRA contacted a counterpart in Manitoba in order to
determine whether the applicant was in compliance with provincial legislation
concerning the taxation or control of tobacco products. An email dated May 26,
2009 was sent by Carl Capner, Special Investigator (Manitoba Finance) to Mr.
Hendrick informing him that the applicant’s dealer licence, granted pursuant to
the Tobacco Tax Act was suspended two years earlier. A further email
dated July 20, 2009 provided the following information:
-
The Applicant
applied for a Dealer’s Licence under the Tobacco Tax Act and her licence
was processed on October
14, 2005. She
was assigned Licence no. 12490. On the same day, the Applicant applied for
registration pursuant to the Retail Sales Tax Act and was given
registration number 835886474. Also on October 14, 2005 Manitoba Finance sent a
letter to the Applicant, advising her that her application to be a tax
collector was granted and describing her responsibilities.
-
On May 24,
2007, the Assistant Deputy Minister of Finance sent a letter to the Applicant
advising her that her Tobacco Licence was being cancelled effective June 12,
2007 and providing her with 14 days to send a submission showing why the
licence should not be cancelled.
-
Subsequent
to the Deputy Minister’s letter having been sent, the Applicant met with
officials from Manitoba Finance. Details of that meeting were not provided to
Mr. Hendrick.
-
On June
14, 2007, by letter, the Assistant Deputy Minister of Finance advised the Applicant
that her Tobacco Licence had been cancelled and that her appointment as a
Collector under the Tobacco Tax Act was likewise terminated.
(Respondent’s Record, p. 98) [Emphasis
added.]
[28]
At
the hearing before this Court, the applicant did not dispute these facts but argued
that some of the evidence on record was not consistent or accurate with her
experience. For instance, the applicant alleged that in a similar situation in
2007 a different decision was rendered by the Minister. However, the Court
cannot find in the tribunal’s record any document or evidence to support the
applicant’s arguments.
[29]
In
these circumstances, the Court finds that the legal requirements for licence
renewal were not met by the applicant and also finds that the Minister’s
decision based on an application of the Excise Act and the Regulations is
reasonable. The Court cannot read any particular exemption or ambiguity in the
Act or the Regulations which could apply to the applicant in the case at bar.
[30]
As
for the requirements to observe procedural fairness and natural justice, the
Court is of the view that they have not been violated. In Motta v. Canada (Attorney
General),
[2000] F.C.J. No. 27, at para. 12-13, this Court observed that in some cases
involving licences, the duty of procedural fairness is fulfilled if an
application is evaluated and a decision is made in a manner that is not
capricious and that is not influenced by an erroneous finding of fact. In this
case, the decision is transparent and provides reasons for the non-renewal of
the licence. As mentioned above, the Minister followed the framework prescribed
by the Act and the Regulations in making his decision.
[31]
Accordingly,
the Court believes that sufficient grounds were stated for the decision to
refuse the renewal of the manufacturing tobacco licence so that the applicant
was in a position to know and understand the reasons why it was refused and to
make an application for judicial review.
[32]
Lastly,
the constitutional issues raised by the applicant lack proper factual
foundation and will therefore not be addressed or considered by this Court (Worthington).
[33]
For
all of the reasons above, the decision of the Minister was not unreasonable and
it was made in accordance with the rules of procedural fairness. The applicant
did not meet her burden of demonstrating that a reviewable error had been made.
The Court finds that the decision is reasonable. The outcome falls within a
range of possible, acceptable outcomes which are defensible in respect of the
facts and in law (Dunsmuir). The application for judicial review is
therefore dismissed.
[34]
I
will exercise my discretion in this matter and not award any costs.
JUDGMENT
THIS COURT
ORDERS AND ADJUDGES that this
application for judicial review is dismissed without costs.
“Richard
Boivin”
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