Date:
20120110
Docket:
A-140-11
Citation: 2012 FCA 7
CORAM: LÉTOURNEAU
J.A.
NOËL
J.A.
GAUTHIER
J.A.
BETWEEN:
PUBLIC SERVICE ALLIANCE OF CANADA
and
CATHY MURPHY
Appellants
and
CANADA
REVENUE AGENCY
Respondent
and
CANADIAN
HUMAN RIGHTS COMMISSION
Respondent
REASONS FOR JUDGMENT
OF THE COURT
(Delivered
from the Bench at Ottawa, Ontario, on January 10, 2012.)
NOËL
J.A.
[1]
In
support of their appeal the appellants essentially reiterate the arguments
which were successively addressed by the Canadian Human Rights Tribunal (the
Tribunal) at first instance and by the Federal Court on judicial review. The
Canadian Human Rights Commission (the Commission) for its part argues again
that assessing actions by the Canada Revenue Agency (CRA), more precisely the
Minister of National Revenue (the Minister) pursuant to the Income Tax Act,
R.S.C. 1985, c.1 (5th Supp.) (the ITA) are “services” within the
meaning of the Canadian Human Rights Act, R.S.C. 1985, c. H-6 (the
CHRA).
[2]
In
a very thorough analysis which should be commended for its clarity, the
Tribunal addressed each of these arguments, and applying a standard of
reasonableness, the Federal Court judge was unable to identify any
justification for his intervention. We can detect no error as to the standard
of review that was applied by the Federal Court judge (see Canada (Canadian Human
Rights Commission) v. Canada (Attorney General), 2011 SCC 53, para. 24 and Alberta
(Information and Privacy Commissioner) v. Alberta Teachers’ Association,
2011 SCC 61, para. 30), or his conclusion that there was no reviewable error,
although we want to make it clear that we would have reached the same
conclusion applying a standard of correctness.
[3]
The
only issue with respect to which we can usefully comment is the Tribunal’s
conclusion that the alleged discrimination in this case does not result from
any ministerial action that might be viewed as a service, but rather from the
application of the ITA based on undisputed facts (reasons of the Tribunal,
para. 50). As was held by the Tribunal (para. 54):
… Even if the
tasks undertaken by the CRA […] constitute a service, they are not the basis
for the adverse differentiation alleged in the complaint. The source of the
alleged discriminatory practice is found solely within the legislative language
of ss. 110.2 and 120.31 of the ITA. None of the evidence before me establishes
that the alleged discrimination arises from the conduct of CRA officials or the
discretionary implementation of policies or practices by the CRA. …
[4]
Indeed,
pursuant to section 152 of the ITA the Minister has the mandatory duty to
assess taxes in conformity with the law. It follows that even if the Minister’s
assessing actions could be viewed as services, the Minister had no choice but
to assess all those in receipt of Qualifying Retroactive Lump-Sum Payments
(QRLSP’s) in the same manner, regardless of their personal characteristics.
[5]
Rather,
the complaint is directed at the provisions of the ITA which provide for the
taxation of QRLSP’s, or more precisely at “the manner in which these payments
are taxed” as the appellants put it at paragraph 73 of their memorandum.
According to the appellants, this manner of taxing QRLSP’s should not be
applied to the payments in issue, not because they fail to qualify under the
relevant provisions of the ITA, but because giving effect to these provisions
would compound the discrimination to which the complainants were subjected to
by their employer.
[6]
This
is a direct attack on sections 110.2 and 120.31 of the ITA, based on
considerations that are wholly extrinsic to the ITA. As was held in Forward
v. Canada (Citizenship and Immigration), 2008 CHRT 5 at paragraphs 37 and
38 with respect to an identical challenge directed at specified provisions of
the Citizenship Act, R.S.C. 1985, c. C-29, this type of attack falls
outside the scope of the CHRA since it is aimed at the legislation per se,
and nothing else. Along the same lines, the Federal Court in Wignall v.
Canada (Department of National Revenue (Taxation)), 2003 FC 1280, observed
in obiter that an attempt pursuant to the CHRA to counter the
application of paragraph 56(1)(n) of the ITA based solely on its alleged
discriminatory impact on the complainant, could not succeed; only a
constitutional challenge could yield this result. In our view, the opinion
expressed in these cases is the correct one since the CHRA does not provide for
the filing of a complaint directed against an act of Parliament (see subsection
40(1) which authorizes the filing of complaints and sections 5 to 14.1 which
sets out the “discriminatory practices” against which complaints may be
directed).
[7]
The
decision of this Court in Canada (Attorney General) v. Druken, [1989] 2
F.C. 24 (F.C.A.) [Druken] was decided on the basis that the complaint in
that case was directed at a discriminatory practice in the provision of a
service within the meaning of section 5, a matter that was conceded by the
Attorney General and therefore not argued (see the caveat expressed by
Robertson J.A. in Canada (Attorney General) v. McKenna, [1999] 1 F.C.
401 (C.A.), paras. 78 to 80). Despite this concession, a reading of the
decision and the remedy granted (Druken, p. 29, letter a) make it clear
that the complaint was directed solely at the operability of paragraphs 3(2)(c)
and 4(3)(d) of the Unemployment Insurance Act, S.C. 1974-75-76,
c. 80 and 4(3)(d) of the Unemployment Insurance Regulations,
C.R.C., c. 1576), and, to that extent, for the reasons already given, such a
complaint does not come within any of the practices that may form the object of
a complaint under the CHRA.
[8]
There
is no merit to the appellants’ alternative contention that parts of the amounts
assessed under to the QRLSP mechanism could be waived through the exercise of
ministerial discretion pursuant to subsection 220(3.1) of the ITA and that the
Minister engaged in a discriminatory practice in failing to exercise this
discretion in favour of the complainants (memorandum of the appellants, paras.
58 and 59). First, it is worth noting that no relief was sought pursuant to
subsection 220(3.1). More importantly however, a reading of section 120.31
makes it clear that the amounts assessed pursuant to that provision are taxes
and therefore could not be waived by the Minister.
[9]
We
need only note in this respect that the amount computed under that provision is
the “tax payable” (subsection 120.31(2)), which includes an “amount that would
be calculated as interest” at the prescribed rate applicable to refunds
(subparagraph 120.31(3)(b)(ii)), on the assumption that the specified
portion of the lump-sum payment being reallocated and the tax thereon had been
paid in the year to which it relates (paragraph 120.31(3)(b)). That the
tax includes an amount intended to reflect the interest shortfall resulting
from the fact that the tax was not paid in the years in which it ought to have
been paid according to the assumption underlying the QRLSP mechanism does not
alter its nature.
[10]
The
decision of the Tax Court in Fetterly v. The Queen, 2006 TCC 94, is of
no assistance to the appellants. In that case, McArthur J. said in obiter
(para. 13):
While it is not open to me to
decide for the Committee, the $15,475.72 amount that the Appellant wishes to
have the Committee consider, has all the indicia of interest. As Mogan J. in Sanford v. The Queen, [2000] T.C.J. No.
801
stated "If a two-legged creature with feathers waddles like a duck, quacks
like a duck, and looks like a duck, it must be a duck". In as much as I am
empowered to do so, I suggest that the amount is in fact interest and recommend
that the Appellant's application under the fairness package be given careful
consideration.
[11]
In
so suggesting, McArthur J. did not purport to decide the issue and the
appellants were unable to identify any instance since this decision was
rendered in 2006 where part of the taxes assessed pursuant to the QRLSP
mechanism were waived pursuant to this logic. Again, that the computation of
the tax comprises amounts intended to reflect the notional interest shortfall
from the government’s perspective does not alter the fact that it is a tax, and
subsection 220(3.1) does not empower the Minister to waive the payment of
taxes.
[12]
The
decision of the Tax Court in Milliken v. Canada, [2002] T.C.J. No. 151 [Milliken]
on which the appellants also rely is no more helpful to their case. The
language of subparagraph 120.31(3)(b)(ii) is clear. The Minister has no
choice but to apply the prescribed rate pursuant to subsection 164(3) in
computing the notional interest shortfall, and we do not read Milliken
as saying otherwise (see Milliken, paras. 19 and 20). As to the manner
in which the interest was to be computed, subsection 248(11) provides that this
rate “shall be compounded daily” with the result that, again, the Minister has
no discretion in this regard.
[13]
Finally,
it is not surprising that the QRLSP mechanism only favored a small fraction of
the complainants in this case given that the payments which they received
relate to years dating as far back as 1985 (reasons of the Tribunal, para. 73).
As the evidence makes clear, there was no guarantee that this measure would
yield a more favorable result than having the lump-sum payment taxed in whole
in the year of receipt under the usual rule (subsection 5(1) of the ITA).
Indeed, the only guarantee was that the method most beneficial to the taxpayer
would be applied. This is what occurred in this instance, as would be the case
for any other person in receipt of a similar payment.
[14]
The
above should not be read as detracting from any of the other self-standing
grounds on which the complaint was dismissed by the Tribunal.
[15]
We
would dismiss the appeal with costs to the respondent Canada Revenue Agency. We
would award no costs for or against the Commission.
“Marc
Noël”
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