Date: 20140918
Docket:
ITA-9052-11
Citation: 2014
FC 904
Calgary, Alberta, September 18, 2014
PRESENT: The Honourable Mr. Justice Locke
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IN THE
MATTER OF the Income Tax Act
and
IN THE MATTER OF an assessment or
assessments by
the Minister of National Revenue under
one or more of the
Income
Tax Act, Canada Pension Plan,
Employment Insurance Act and Alberta Income Tax Act
against:
GREENSLADES NORTHERN WELDING LTD.
405-3RD AVENUE EAST, BOX 640
HANNA, ALBERTA
T0J 1P0
and
IN THE
MATTER OF the Civil Enforcement Act, R.S.A. 2000, C. C-15;
and
IN THE
MATTER OF seizures made on February 21, 2013;
AND IN THE
MATTER OF an Order of this Court granted by Madam Justice Gagné on June 2,
2014 and entered on June 3, 2014;
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA AS REPRESENTED BY
THE MINISTER OF NATIONAL REVENUE
Applicant
and
GREENSLADES NORTHERN WELDING LTD.
Respondent
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REASONS FOR ORDER AND ORDER
[1]
This decision concerns a hearing, following a
show cause Order by Prothonotary Lafrenière dated August 15, 2014, to consider
an accusation that the Respondent, Greenslades Northern Welding Ltd., acted in
contempt of an earlier Order of Justice Gagné dated June 3, 2014. Justice
Gagné’s June 3 Order concerned certain seized assets held by the Respondent
under a bailee’s undertaking and identified in a demand notice dated January 2,
2014.
[2]
The demanded assets are:
(i)2005 Dodge Ram truck with deck and
welding equipment (S/N 3D7MS48CX5G772936);
(ii)1997 GMC Sierra truck with deck and
welding equipment (S/N 1GDJK34R5VF015389);
(iii)1999 Chevrolet GMT-400 truck trailer
(S/N 1GCGK29R6XF022775);
(iv)2005 Dodge Ram truck trailer with deck and
welding equipment (S/N (v)3D7MS48C75G773025);
(vi)2006 Case
430 (S/N JAF416808).
[3]
Curiously, the Respondent’s principal, William Steven
Greenslade, stated at the hearing, apparently for the first time, that he has
no knowledge of the 1999 Chevrolet GMT-400 truck trailer (point (iii)) and that
he is aware of only one 2005 Dodge Ram truck, not two per points (i) and (iv).
It is surprising that these assertions should come to light at this late date,
and then only in response to a question from the Court. However, for the
purposes of this decision, it is not necessary to address these assertions.
[4]
The June 3 Order required that the Respondent
deliver up the demanded assets to Graham Auctions by June 30, 2014.
[5]
There is no dispute that none of the demanded
assets was delivered up as ordered, either by June 30, 2014 or subsequently.
There is also no dispute that the Respondent and Mr. Greenslade were aware of
the June 3 Order.
[6]
Rule 466(b) of the Federal Courts Rules (SOR/98-106)
provides that, subject to the issuance of a show cause order (which was issued
by Prothonotary Lafrenière on August 15, 2014), a person who disobeys an order
of the Court is guilty of contempt of Court. Pursuant to Rule 469, a finding of
contempt must be based on proof beyond a reasonable doubt. Contempt of Court
requires a finding that the failure to comply with the Order in question was
deliberate or with serious indifference.
[7]
The Applicant presented evidence from two
witnesses: (i) Robert Morris, who is a collections officer with the Canadian
Revenue Agency (CRA) and is working on an outstanding tax debt owed by the
Respondent; and (ii) Michael Orechow, who works at Graham Auctions. Mr.
Greenslade was the only witness on behalf of the Respondent.
[8]
Having heard the evidence, there is no doubt
that the Respondent knew of the June 3 Order and took no steps to comply with
it. In fact, rather than deliver up the demanded assets, Mr. Greenslade, on
behalf of the Respondent, acted in contravention of the Order by arranging the
sale of at least one of the demanded assets, the 2006 Case 430 (point (v) above),
to a third party. In my opinion, the Respondent’s failure to comply with the
June 3 Order was either deliberate or with serious indifference.
[9]
The Respondent asserts a number of excuses for
failing to comply with the June 3 Order. None of them is satisfactory.
[10]
The Respondent argues that it acted reasonably
in selling certain assets itself and giving the proceeds to the CRA, rather
than delivering them up as ordered for sale at auction, because other assets
that had previously been seized and sold at auction on behalf of the CRA had
realized only a fraction of their true market value. It should be noted that
the evidence on true market value comes entirely from the mouth of Mr.
Greenslade.
[11]
Even if I were satisfied that the Respondent’s
action in this regard was reasonable to maintain the value of the demanded
assets, it concerns only one of the demanded assets and could not excuse the
failure to deliver up the other demanded assets. Moreover, it is not a defence
to take a reasonable alternative to an order from the Court: Stone v. Stone
[1989] NBJ No. 820 at paragraphs 5 to 7.
[12]
I note also that the Respondent acted
unilaterally in this regard and in clear contravention of the June 3 Order.
Further, the Respondent has failed to give details of the sale (including bill of
sale and identification of the assets sold) despite being requested to do so by
the Applicant.
[13]
The Respondent also argues that it was, and
remains, unable to comply with the June 3 Order because the equipment it could
use to deliver up the demanded assets was previously seized from the Respondent
and sold. The Respondent further submits that, customarily, creditors are
responsible for picking up seized assets themselves.
[14]
As I understand it, this excuse of difficulty in
delivering the assets was raised only on August 28, 2014 in a letter to the
Court. No attempt was made prior to that date to advise the Applicant of any
difficulty in delivering the assets, or to make alternate arrangements for
delivery. It should be noted that, with the exception of the 2006 Case 430
(point (v)), all of the demanded assets are automotive vehicles and thus easily
movable even without special equipment. Even if the Respondent and/or Mr.
Greenslade were unable to deliver the demanded assets themselves, I heard no
evidence or argument that the Respondent could not have arranged for another party
to do so. The Respondent was obliged to take steps to comply with the June 3
Order, and engaging a third party would have been a reasonable step.
[15]
As regards what is customary, the wording of the
June 3 Order clearly overrode any custom that may exist.
[16]
The Respondent also points to a separate
proceeding by the Royal Bank of Canada before the Alberta Court of Queen’s
Bench to foreclose on a property the Respondent owns. The Respondent argues
that the CRA’s concern that it must seize the demanded assets in order to
secure the tax debt owed by the Respondent is misplaced because the CRA will
realize more than enough money to pay off the debt in just a few months as the
second secured creditor on the property. But as the Applicant correctly points
out, this is beside the point. Firstly, the anticipated realization through the
foreclosure sale is not without doubt. It might not happen. Secondly, and more
importantly, this issue is unrelated to the real issue of whether the
Respondent knowingly breached the June 3 Order.
[17]
For the foregoing reasons, I find the Respondent
guilty of contempt of Court.
[18]
Though I heard some submissions on penalty at
the hearing, I will defer ruling on the penalty for now. At the hearing the
parties appeared to be in agreement that the appropriate penalty would depend
on future events, such as whether the Respondent commences promptly making
efforts to comply with the June 3 Order and whether the CRA obtains proceeds
from the foreclosure sale discussed during the hearing.
[19]
I will likewise defer ruling on costs associated
with the hearing and with the motion for the show cause order.
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