Horsnall v. Canada, 2006 FCA 381

Date: 20061120

Docket: A-474-05

Citation: 2006 FCA 381

CORAM:       LÉTOURNEAU J.A.

                        PELLETIER J.A.

                        MALONE J.A.

BETWEEN:

ROD HORSNALL

Appellant

and

HER MAJESTY THE QUEEN

Respondent

Heard at Regina, Saskatchewan, on November 20, 2006.

Judgment delivered from the Bench at Regina, Saskatchewan, on November 20, 2006.

REASONS FOR JUDGMENT OF THE COURT BY:                                      LÉTOURNEAU J.A.

Date: 20061120

Docket: A-474-05

Citation: 2006 FCA 381

CORAM:       LÉTOURNEAU J.A.

                        PELLETIER J.A.

                        MALONE J.A.

BETWEEN:

ROD HORSNALL

Appellant

and

HER MAJESTY THE QUEEN

Respondent

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the Bench at Regina, Saskatchewan, on November 20, 2006)

LÉTOURNEAU J.A.

[1]               We are of the view that this appeal should be allowed in part. There was sufficient evidence for the Tax Court judge (judge) to conclude that the appellant acted as an agent for the seller of used cars within the meaning of paragraph 177(1) of the Excise Tax Act.

[2]               As a matter of fact, the evidence establishes that there was an exchange of consent between the appellant and the seller that made the appellant act in an agency relationship. The appellant had the authority to affect the principal’s legal position. He was under the principal’s control with respect to the contemplated action. Finally, he made the supply of goods on behalf of the principal.

[3]               In relation to the penalties, the appellant submits that he acted with due diligence by contacting the authorities on the issue of collecting and paying the G.S.T. There is some evidence on the record that he was told that his liability for the G.S.T. extended only to the commission that he received for each sale.

[4]               Unfortunately, the judge did not address the due diligence defence in determining liability for the penalties. We are not in a position to decide such issue as it implies findings of fact and credibility. We believe the fair and practical solution is to remit the matter back to the judge to determine whether the penalties and the interests resulting therefrom ought to be maintained in view of the dire diligence defence.

[5]               The appeal will be allowed in part, the part of the decision of the Tax Court judge relating to penalties will be set aside and the matter will be remitted back to the judge for a determination of the appellant’s liability for the penalties in view of the due diligence defence. Insofar as the issue of agency is concerned, the appeal will be dismissed.

[6]               The determination shall be made on the basis of the existing record.

[7]               The appellant shall be entitled to the costs of the appeal.

“Gilles Létourneau”

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                               A-474-05

(APPEAL FROM A JUDGMENT OF THE TAX COURT OF CANADA DATED SEPTEMBER 6, 2005, DOCKET NO. 2004-4263 (GST) I)

STYLE OF CAUSE:                                               ROD HORSNALL v. HER MAJESTY THE

                                                                                 QUEEN

PLACE OF HEARING:                                         Regina, Saskatchewan

DATE OF HEARING:                                           November 20, 2006

REASONS FOR JUDGMENT                             LÉTOURNEAU J.A.

OF THE COURT BY:                                            PELLETIER J.A.

                                                                                 MALONE J.A.

DELIVERED FROM THE BENCH BY:             LÉTOURNEAU J.A.

APPEARANCES:

SOLICITORS OF RECORD: