Date: 20120528
Dockets: A-87-11
A-88-11
A-89-11
Citation: 2012 FCA
154
CORAM: NOËL J.A.
DAWSON
J.A.
BLANCHARD J.A. (ex officio)
A-87-11
BETWEEN:
MYRNA
JOYCE ELLIOTT
Appellant
and
HER
MAJESTY THE QUEEN
Respondent
A-88-11
BETWEEN:
L. PAUL ELLIOTT
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
A-89-11
BETWEEN:
LAWRENCE RALPH ELLIOTT
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Heard at Fredericton,
New Brunswick, on May 24,
2012.
Judgment
delivered at Ottawa, Ontario, on May 28, 2012.
REASONS FOR JUDGMENT BY: NOËL
J.A.
CONCURRED
IN BY: DAWSON J.A.
BLANCHARD J.A. (ex officio)
Date:
20120528
Dockets: A-87-11
A-88-11
A-89-11
Citation: 2012 FCA 154
CORAM: NOËL
J.A.
DAWSON J.A.
BLANCHARD J.A. (ex officio)
A-87-11
BETWEEN:
MYRNA JOYCE ELLIOTT
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
A-88-11
BETWEEN:
L. PAUL ELLIOTT
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
A-89-11
BETWEEN:
LAWRENCE RALPH ELLIOTT
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR
JUDGMENT
NOËL J.A.
[1]
These
are appeals from judgments rendered by D’Arcy J. of the Tax Court of Canada
(the Tax Court judge) pursuant to the informal procedure upholding assessments
issued against the appellants in their capacity as director of Top Ventures
Ltd. (the Company) under section 323 of the Excise Tax Act, R.S.C. 1985,
c. E-15 (the Act). The Tax Court judge held that the appellants did not exhibit
the required degree of care diligence and skill to prevent the Company from
failing to remit taxes properly owning under the Act.
[2]
The
Tax Court judge also dismissed the appellants’ further submission that the
assessments were invalid because the respondent failed to produce in evidence the
registered certificate and writ contemplated by paragraph 323(2)(a) of
the Act which provides:
323. …
Limitations
(2) A director of a corporation is not liable under
subsection (1) unless
(a) a certificate for the amount of the
corporation’s liability referred to in that subsection has been registered in
the Federal Court under section 316 and execution for that amount has been
returned unsatisfied in whole or in part;
…
|
323. […]
Restrictions
(2) L’administrateur n’encourt de responsabilité selon le
paragraphe (1) que si :
a) un certificat
précisant la somme pour laquelle la personne morale est responsable a été
enregistré à la Cour fédérale en application de l’article 316 et il y a eu
défaut d’exécution totale ou partielle à l’égard de cette somme;
[…]
|
[3]
The
three appeals were consolidated by order of this Court dated May 17, 2011, the
appeal in file A-87-11 being designated as the lead appeal. In conformity with
this order, these reasons will be filed in the lead file and a copy thereof
will be filed as reasons for judgment in files A-88-11 and A-89-11.
[4]
On
appeal, the appellants no longer contend that they acted with due diligence to
prevent the failure to remit. Rather, they rest their case entirely on the
respondent’s alleged failure to comply with paragraph 323(2)(a). They
add – for the first time on appeal – that maintaining their liability to pay
the Company’s outstanding tax debt in circumstances where compliance with
paragraph 323(2)(a) has not been demonstrated would affect their “economic
liberty” and infringe their rights pursuant to sections 7 and 11(d) of
the Canadian Charter of Rights and Freedom.
[5]
The
Tax Court judge decided to address the appellants’ argument that paragraph
323(2)(a) was not complied with despite the fact that this contention
was not advanced in their respective Notices of Appeal and indeed was not
raised until closing argument. He noted that in the Replies to the Notices of
Appeal, the respondent indicated that the Minister of National Revenue (the
Minister) relied on a variety of assumptions of fact, including the following
two:
19. m) A Certificate
in the amount of $34,791.02, representing the Company's GST/HST debt at the
time, was registered in the Federal Court on November 1, 2007. It was also
registered in the Provincial Property Registry System on April 4, 2008; and
n) On or around November 1,
2007, a Writ of Seizure was sent to the Sheriff and served on the Company. It
was returned on May 9, 2008 as Nulla Bona on the grounds that no goods,
chattels or real property under the Company name could be found.
[6]
After
noting that the appellants did not challenge these assumptions until after the
evidence was closed, he held that the Minister did not have the duty to present
evidence in support of these assumptions.
[7]
The
appellants take issue with this conclusion. They point out that the liability
of a director pursuant to section 323 cannot be established unless it is shown
that the certificate and the unsatisfied writ of seizure contemplated by
paragraph 323(2)(a) have been issued. According to the appellants the
respondent was not entitled to rely on assumptions in order to demonstrate
compliance with paragraph 323(2)(a). They rest this contention on the
decision of the Tax Court in Walsh v. Canada, 2009 TCC 557 at paragraphs
23 to 29 [Walsh].
[8]
Walsh is of no assistance to
the appellants. The issue in that case was whether a letter from the Sherriff’s
Office advising that the writ had been returned unsatisfied could be produced
in evidence despite the fact that it was not listed in the list of documents
produced by the Attorney General on behalf of the Minister. Sheridan J. held
that it could not. No such issue arises here as the informal procedure does not
contemplate the production of a list of documents with the result that there
was no omission to list either of the documents with which we are concerned.
[9]
The
appellants nevertheless maintain that it was not open to the Tax Court judge to
hold that the respondent had demonstrated compliance with paragraph 323(2)(a)
on the sole basis that the assumptions made by the Minister in this regard had
gone unchallenged in the appellants’ pleadings. They highlight in particular
the fact that the onus of proving compliance with paragraph 323(2)(a)
rested on the respondent, and that the underlying documents are peculiarly if
not exclusively within the Minister’s knowledge. I note that the Tax Court in Soper
v. Canada, [1995] T.C.J. No. 257, came to the same conclusion as did the
Tax Court judge. This last decision was confirmed by this Court on appeal,
[1997] F.C.J. No. 881, without however any opinion being expressed on the
narrow point with which we are concerned.
[10]
In
my respectful view, the Tax Court judge should not have addressed the novel
argument raised by the appellants without first giving the respondent the
opportunity to produce evidence in its possession that is relevant to this
issue.
[11]
In
agreeing to dispose of the appellants’ contention that paragraph 323(2)(a)
had not been complied with by the Minister, the Tax Court judge entertained an
issue that was not raised by the appellants in their respective Notices of
Appeal. It is always open to a trial judge to authorize a novel issue to be
pled even after the close of the evidence subject however to insuring that no prejudice
is thereby caused to other side (see for example the decision of this Court in Canderel
Ltd. v. Canada, [1994] 1 F.C. 3 at para. 9 and the cases referred therein).
[12]
In
the present case, the decision of the Tax Court judge to allow the new issue to
be pled without first giving the respondent an opportunity to tender evidence
relevant to this issue was prejudicial to the respondent inasmuch as the
registered certificate and the unsatisfied writ – if available for production –
would have foreclosed the argument raised by the appellants altogether.
[13]
I
would have been inclined to allow the appeals on this basis and return the
matter to the Tax Court judge with instructions that the respondent be granted
leave to file evidence relevant to the novel issue raised by the appellants.
However, as appellants’ counsel recognized during the hearing of the appeal
that the respondent is in a position to introduce the documents which
demonstrate compliance with paragraph 323(2)(a), there would be no point
in doing so.
[14]
I
would therefore dismiss the appeals but given the reasons advanced for reaching
this conclusion, I would do so without costs.
“Marc
Noël”
“I
agree
Eleanor R. Dawson J.A.”
“I
agree
Edmond P. Blanchard J.A. (ex
officio)”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-87-11
APPEAL FROM A JUDGMENT OF THE HONOURABLE
JUSTICE D’ARCY OF THE TAX COURT OF CANADA DATED JANUARY 28, 2011, DOCKET NUMBER
2009-1282(GST)I.
STYLE OF CAUSE: MYRNA
JOYCE ELLIOTT and HER MAJESTY OF QUEEN
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: May 24, 2012
REASONS FOR JUDGMENT BY: Noël J.A.
CONCURRED IN BY: Dawson J.A.
Blanchard J.A. (ex officio)
DATED: May
28, 2012
APPEARANCES:
William
Stephenson
|
FOR
THE APPELLANT
|
Dominique
Gallant
Gregory
King
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
WILLIAM
G. STEPHENSON
Fredericton, New Brunswick
|
FOR
THE APPELLANT
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-88-11
APPEAL FROM A JUDGMENT OF THE HONOURABLE
JUSTICE D’ARCY OF THE TAX COURT OF CANADA DATED JANUARY 28, 2011, DOCKET NUMBER
2009-1284(GST)I.
STYLE OF CAUSE: L.
PAUL ELLIOTT and HER MAJESTY OF QUEEN
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: May
24, 2012
REASONS FOR JUDGMENT BY: Noël
J.A.
CONCURRED IN BY: Dawson J.A.
Blanchard J.A. (ex officio)
DATED: May
28, 2012
APPEARANCES:
William
Stephenson
|
FOR
THE APPELLANT
|
Dominique
Gallant
Gregory
King
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
WILLIAM
G. STEPHENSON
Fredericton, New Brunswick
|
FOR
THE APPELLANT
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-89-11
APPEAL FROM A JUDGMENT OF THE HONOURABLE
JUSTICE D’ARCY OF THE TAX COURT OF CANADA DATED JANUARY 28, 2011, DOCKET NUMBER
2009-1285(GST)I.
STYLE OF CAUSE: LAWRENCE RALPH ELLIOTT and HER MAJESTY
OF QUEEN
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: May
24, 2012
REASONS FOR JUDGMENT BY: Noël
J.A.
CONCURRED IN BY: Dawson J.A.
Blanchard J.A. (ex officio)
DATED: May
28, 2012
APPEARANCES:
William
Stephenson
|
FOR
THE APPELLANT
|
Dominique
Gallant
Gregory
King
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
WILLIAM
G. STEPHENSON
Fredericton,
New Brunswick
|
FOR
THE APPELLANT
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|