Docket: T-249-15
Citation: 2016 FC 983
Vancouver, British
Columbia, August 29, 2016
PRESENT: Case Management Judge Roger R. Lafrenière
BETWEEN:
MARCIEN PAUL EMILE BOUCHARD
DBA BOUCHARD BROS LTD AND BOUCHARD NATURAL POWER INC.
Plaintiff
and
HER MAJESTY THE QUEEN
Defendant
REASONS AND ORDER
[1]
The Defendant, Her Majesty the Queen (the
Crown), has moved in writing for an order striking the Statement of Claim in
its entirety, without leave to amend. In the alternative, the Crown seeks an
order striking all portions of the Statement of Claim that directly attack the
validity of a tax assessment and collection actions taken following the assessment,
as well as an extension of time to serve and file a statement of defence.
Identity of the
Parties
[2]
My review of the Statement of Claim and the
submissions on this motion leads to a preliminary observation regarding who is
bringing this action and the identity of tortfeasor.
[3]
The style of cause indicates that the Plaintiff
is “Marcien Paul Emile Bouchard DBA Bouchard Bros Ltd
and Bouchard Natural Power Inc.” The nomenclature is confusing as it is unclear
in what capacity Mr. Bouchard is bringing this action. Although Mr. Bouchard can
bring an action in his own name and is entitled to represent himself in this proceeding,
he cannot bring suit in the name of a corporation.
[4]
The Crown submits that the two named corporations
did not seek or obtain leave to be represented by an officer or director. Mr.
Bouchard insists, however, that there is only one plaintiff in this proceeding.
This is consistent with the fact that Mr. Bouchard signed the Statement of
Claim in his personal capacity and repeatedly refers to himself as “the applicant” in the singular throughout the
pleading. Moreover, there are no allegations made by or on behalf of the two corporations.
It is Mr. Bouchard’s choice to bring the action in his personal capacity. He will
accordingly be referred to as the Plaintiff in these reasons. I will say more,
however, later on about his standing to bring this action and obtain the relief
requested in the Statement of Claim.
[5]
Similarly, there is confusion about who and what
actions are targeted by the claim. The Statement of Claim
contains bald and conclusory assertions that “an
internal administration process” was used by “the
defendants” to levy an amount against the Plaintiff, that the process
was an “an abuse of power”, and that the administrative
actions and decisions taken by these unnamed individuals were “contrary to prescriptive law”, “a prejudice against (the Plaintiff)” and “without justifiable reasoning”.
[6]
The Plaintiff was obligated
under Rule 174 to plead material facts, including the identity of the
individuals who are alleged to have engaged in misfeasance: Merchant Law
Group v. Canada Revenue Agency, 2010 FCA 184 (CanLII), at par. 38. Although none of the “defendants” are
referred to by name, it would appear that the Plaintiff is alleging tortious conduct
on the part of Canada Revenue Agency (CRA) and/or CRA employees.
Nature of the
Proceeding
[7]
The Plaintiff commenced the underlying action in
damages against the Crown on February 20, 2015. The Statement of Claim consists
of 41 paragraphs of allegations and a prayer for relief, all set out in 5
fairly densely typed pages. The pleading also refers to various exhibits, a
newspaper article, court decisions and extracts of legislation. These documents
were ordered to be produced following a motion to compel by the Crown pursuant
to Rule 206 of the Federal Courts Rules.
[8]
The Statement of Claim is certainly not a model
of clarity and concision. It is replete with evidence, conjecture, opinion, argument
and bald conclusions. Despite these deficiencies, it is still possible to discern
the basis of the Plaintiff’s claim.
[9]
The Plaintiff’s dispute with CRA stems back to incidents
that occurred in November 2009. The Plaintiff alleges that he received a
notice from CRA requesting that he file forms 5018 for any contractors that the
Plaintiff had engaged in business within 2006 and 2007 (par. 4 of the Statement
of Claim). I pause here to mention that the notice referred to by the Plaintiff
(Exhibit 1 to the Statement of Claim) is addressed to Bouchard Bros Ltd., and
not the Plaintiff. The notice states that contract payment reporting by the
construction industry became mandatory following the February 24, 1998 Federal
Budget. Any corporation, trust, individual or partnership with construction as
their primary source of business income that makes payments to subcontractors
has to file T5018 slips, failing which a penalty of up to $2,500 may be imposed
under subsection 162(7) of the Income Tax Act [ITA].
[10]
According to the Plaintiff, he received a
similar request for T5018 slips in 2000 and complied with the request (par. 5).
The Plaintiff alleges that upon receiving the T5018 forms in 2000, the
defendants proceeded to audit and reassess every individual and corporation
that was in contract with the Plaintiff at the time (par. 6). The Plaintiff
claims that the defendants’ actions “shows a prejudice”
against him as “it was not standard procedure to audit
every 5018 slip” (par. 7). The Plaintiff claims that his reputation
was tainted due to the defendants’ actions (par. 9). According to the
Plaintiff, individuals and corporations were fearful to contract with him
because of their concern of being audited (par. 10).
[11]
At paragraph 12 to 16, the Plaintiff explains
why the individuals he contracted with were independent contractors and not
employees. He claims that the individuals he is presently involved with requested
that no personal information be shared with any government body, agent or third
party representative (par. 18). He therefore refused to provide any T5018 forms
to CRA relating to these individuals, citing “privacy
issues” and section 17.1 of The Freedom of Information and Protection
of Privacy Act, RSO 1990, c F.31 of Ontario [FIPPA (Ontario)] (par. 19).
[12]
As stated earlier in these reasons, the
Plaintiff alleges that the defendants have taken certain administrative actions
against him “contrary to prescriptive law” and
have used “an internal administration process” to
levy an amount against him. At paragraphs 22 and 23 of the Statement of Claim,
the Plaintiff claims that he received a notice of assessment from the
defendants declaring that he was the employer of employees and requesting that
he contribute $1,467,000 towards the Canada Pension Plan and unemployment
insurance benefits of the apparent employees. The Plaintiff alleges that the
defendants assessed him in this manner to penalize him for his actions and his
failure to provide the T5018 forms.
[13]
The Plaintiff alleges at paragraph 32 that the
defendants failed to follow their own guidelines concerning the determination
of workers employed or independent contractors, as set out in Exhibit 4, disregarded
information provided to them, and arbitrarily pronounced an administrative
judgment.
[14]
In the prayer for relief, the Plaintiff seeks an
order nullifying the notice of assessment in the amount of $1,467,000 and
punitive damages of $3,246,800 for damage to his reputation and the hardships
he and his family had to endure.
Principles
Applicable on a Motion to Strike
[15]
The Crown has moved to strike the Statement of
Claim under Rule 221 of the Federal Courts Rules on the grounds
that it does not disclose a reasonable cause of action (paragraph (1)(a)), is
immaterial (paragraph (1)(b)), is frivolous (paragraph (1)(c)), and is
otherwise an abuse of the process of the Court (paragraph (1)(f)). The motion
is opposed by the Plaintiff.
[16]
The fact that the claim is a novel or difficult
one is not a sufficient ground to strike the claim. The burden on the Crown
is very high and the Court should exercise its discretion to strike only in the
clearest of cases. The pleading should be read generously with allowance for
inadequacies due to drafting deficiencies.
[17]
On a motion to strike a pleading on the grounds
that it does not disclose a reasonable cause of action, those allegations that
are capable of being proved must be taken as true: Hunt v. Carey Canada Inc.,
[1990] 2 S.C.R. 959. This rule does not apply, however, to allegations based on
assumptions and speculation: Operation Dismantle Inc. v. The Queen
(1985), 18 D.L.R. (4th) 481 (S.C.C.) at 486-487 and 490-491. Moreover, the
Court need not accept at face value bare allegations, factual allegations which
may be regarded as scandalous, frivolous or vexatious, or legal submissions
dressed up as factual allegations.
[18]
Rule 221(2) provides that no evidence shall be
heard on a motion for an order under paragraph (1)(a). Consequently, the
Plaintiff’s affidavit, sworn August 5, 2016, was not considered for the purpose
of determining whether the Statement of Claim fails to disclose a reasonable
cause of action. Documents referred to in a statement of claim were admitted
and taken into account because they are incorporated by reference and are
deemed to be part of the pleadings: Cremco Supply Ltd. v. Canada Pipe
Company, 1998 CanLII 7616 (FC) at par. 22.
Analysis
[19]
The Statement of Claim purports to assert
various causes of action against the Crown. Although the language used in the
pleading is imprecise, and the pleading is replete with opinion, conclusions
and argument, the gist of the Plaintiff’s claim is that he was harmed by a
number of actions and decisions taken by CRA and its employees. However, to the
extent that the Plaintiff may be asserting any cause of action on behalf of
Bouchard Bros Ltd. (or Bouchard Natural Power Inc., which is not mentioned at
all), the pleading does not disclose a reasonable cause of action since the
Plaintiff has no standing to bring the action.
[20]
The law on the integrity of the corporate entity
is well settled. Following the seminal decision in Salomon v. Salomon &
Co. Ltd., [1897] AC 22 (HL), the courts have applied the general rule that
the corporation is a legal entity distinct from its shareholders or other
corporations, or persons, and it must be treated as such in law. This means
that in interpreting a statute, or a contract, or in applying the common law,
the corporation must be treated as a separate and distinct entity from its shareholders,
partners, or principals.
[21]
The creation of the corporate entity as a
distinct legal construct has led to advantages and disadvantages as well as
responsibilities for those who choose the corporate vehicle for business. By
choosing the benefits of a business structure, individuals must be prepared to
accept the necessary consequences. As was stated by Madam Justice
L’Heureux-Dubé in National Bank of Canada v. Houle, [1990] 3 S.C.R. 122 at
pp. 178-79:
One of these consequences is that it is the
corporation which suffers damages when there is a wrong to the corporation...
…
The consequences of any other position would
not be logical. There would be no value to the corporate structure if whoever
does business with a corporation would at the same time become liable not only
to the company but also to every shareholder for any damage that may be caused
to the company.
[22]
There are inconsistencies between the
Plaintiff’s allegations and the facts set out in the letters referred to in the
pleading (Exhibits 1 and 2, as well as a third letter contained in Exhibit 3).
The three letters are indisputably addressed to Bouchard Bros Ltd., and not to
the Plaintiff. There are no material facts suggesting that a notice of assessment
was issued in the Plaintiff’s name or that penalties were ever imposed on the
Plaintiff personally.
[23]
The Plaintiff has failed to explain on what
basis he purports to be “doing business as” in a
corporation’s name and how he suffered any personal damages. The Plaintiff was
provided an opportunity to amend the pleading to clarify the situation, but
declined to do so. The problem with the pleading overall is that the Plaintiff
is not the real party in interest to virtually all of the claims. In the
circumstances, I conclude that the Statement of Claim should be struck out for
lack of standing.
[24]
I should add the Statement of Claim does not
disclose a reasonable cause of action against the Crown, even if the Plaintiff
had standing or the proceeding was brought by Bouchard Bros Ltd.
[25]
To the extent that the Plaintiff is alleging the
tort of misfeasance of public office, the essential elements of the tort have
not been pleaded. Misfeasance in a public office is an intentional tort
distinguished by: (1) deliberate, unlawful conduct in the exercise of public functions;
and (2) awareness that the conduct is unlawful and likely to injure the
plaintiff: Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, 2003 SCC 69
(CanLII) at par. 23.
[26]
The tort involves deliberate disregard of
official duty coupled with knowledge that the misconduct is likely to injure
the plaintiff. There are no material facts to support the
conclusion that the CRA or any of its employees acted improperly, let alone unlawfully.
To the contrary, it appears that CRA was simply using responsible enforcement tools
to promote awareness of and compliance with the ITA. In addition, no
material facts are plead to support a conclusion that CRA or any of its
employees were aware that their conduct was unlawful and that it was likely to
harm the Plaintiff or Bouchard Bros Ltd.
[27]
The Plaintiff’s claim is largely premised on the
false assumption that he (or more properly Bouchard Bros Ltd) was free to
disregard the CRA’s request to provide T5018 slips on privacy grounds. The
Plaintiff relies on sections 11 and 17 of FIPPA (Ontario); however, these
provisions only apply to institutions, as defined in section 2. The disclosure
of personal information is not an unreasonable invasion of a third party's
privacy if an enactment of Canada expressly authorizes or requires the
disclosure. The Plaintiff is ultimately the author of his own misfortune.
[28]
Moreover, the claim, in pith and substance, constitutes
an improper collateral attack of a tax assessment. The damages claimed in the
prayer for relief are in reality sought on the basis of an alleged invalid
reassessment made on the basis of a wrong interpretation of the law. However,
the federal legislator has established a system of appeals specific to tax
assessment disputes. The Tax Court of Canada is granted exclusive original
jurisdiction to hear appeals of tax assessment disputes. It is the exclusive
court with specialized expertise designated to decide disputes involving the
complex statutory regime of federal tax assessments. The claim is clearly a
matter within the exclusive jurisdiction of the Tax Court of Canada. I
adopt and make mine paragraphs 27 to 33 of the Crown’s written representations.
[29]
In response to the Crown’s motion, the Plaintiff
filed rambling and incoherent submissions. He submits that the Statement of
Claim shows how the Crown has “trespassed” against
him, citing the Charter of Rights and Freedoms, the International
Covenant on Economic, Social and Cultural Rights (a multilateral treaty adopted
by the United Nations General Assembly) and some case law. The submissions
fail, however, to address the issue on this motion – whether the Statement of
Claim should be struck pursuant to Rule 221(1).
[30]
For the above reasons, the Crown’s motion will
be granted. As the Plaintiff was provided an opportunity to amend his pleading
and declined to do so, and has not proposed any amendments that would cure the
radical defects in the pleading, I conclude that the Statement of Claim should
be struck without leave to amend. As for costs of the motion, I see no reason
why they should not follow the event.
[31]
Finally, since the Plaintiff’s motion for
default judgment was dismissed by Order dated July 20, 2016, I need not deal
with paragraphs 37 to 49 of the Crown’s written representations.
THIS COURT ORDERS that:
1.
The Statement of Claim is struck out, without
leave to amend.
2.
Costs of the motion, hereby fixed in the amount
of $750.00, shall be paid by the Plaintiff, Marcien Paul Emile Bouchard.
“Roger R. Lafrenière”
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