[1] This is an appeal by the appellant from a judgment by Mr. Justice Archambault of the Tax Court of Canada (judge) that is favourable to the appellant and, in my view, quite generous under the circumstances. Archambault J. gave the appellant the benefit of the doubt concerning certain input tax credits (ITCs) on a pick-up truck and an all-terrain vehicle that the appellant claimed to use almost exclusively for carrying on his business and set aside a penalty imposed on the appellant under section 285 of the Excise Tax Act, R.S.C. 1985, c. E-15, (the Act).

[2] What, then, is the appellant's complaint?

Issues

[3] The appellant complained that the judge had dismissed both the appellant's motion for dismissal filed at his hearing in the Tax Court of Canada and the appellant's counterclaim, had changed his mind concerning the prescription of part of the respondent's claim and, finally, had upheld a penalty imposed pursuant to section 280 of the Act, for the appellant's delay in remitting or failure to remit an amount owing. Section 280 reads as follows:

Penalty and interest

280. (1) Subject to this section and section 281, where a person fails to remit or pay an amount to the Receiver General when required under this Part, the person shall pay on the amount not remitted or paid

(a) a penalty of 6% per year, and

(b) interest at the prescribed rate,

computed for the period beginning on the first day following the day on or before which the amount was required to be remitted or paid and ending on the day the amount is remitted or paid.

Pénalité et intérêts

280. (1) Sous réserve du présent article et de l'article 281, la personne qui ne verse pas ou ne paie pas un montant au receveur général dans le délai prévu par la présente partie est tenue de payer la pénalité et les intérêts suivants, calculés sur ce montant pour la période commençant le lendemain de l'expiration du délai et se terminant le jour du versement ou du paiement_:

a) une pénalité de 6_% par année;

b) des intérêts au taux réglementaire.

For strictly utilitarian purposes, the use of the words "assessment" or "notice of assessment" in these reasons refers to the principal, interest and penalties. Let us examine each of the appellant's complaints.

Background to the Tax Court of Canada Arguments

[4] The appellant represented himself in the Tax Court of Canada and before this Court. As the judge whose decision is the subject of this appeal correctly pointed out, the appellant initially refused to cooperate with auditors from the Department of National Revenue, thereby impeding their legitimate audit work and unduly extending and unnecessarily complicating the appeal in the Tax Court of Canada.

[5] In the absence of a preliminary audit of the 4,950 invoices that the appellant wanted to discuss in the hearing before the Tax Court of Canada, the judge attempted to organize a preliminary meeting between the parties, if only to classify and organize the invoices in a meaningful way according to the problems that they could raise. Again, the appellant refused to cooperate, even at this critical stage, so that, to use the judge's own words, "nothing or virtually nothing had been accomplished prior to the hearing of Mr. Fournier's appeal". After this period of non-cooperation on his part, the appellant brought his motion for dismissal at the outset of the hearing.

Motion for Dismissal

[6] The motion for dismissal sought to dismiss the Minister's notices of assessment on the ground that they were unfounded in fact and in law. The motion was brought as part of the appeal proceedings against those very assessments, when the purpose of the proceedings was precisely to determine whether the assessments were well founded in fact and in law. Thus, the judge did not err in dismissing the motion as being premature since, in order to determine its merits, he had to hear and analyse the evidence concerning the notices of assessment, which was the very purpose of the appeal from the assessments. The motion was not only premature, as the judge ruled, but also, under the circumstances, frivolous, unnecessary and expensive in terms of time and resources.

Counterclaim

[7] The appellant's appeal from the assessment notices was accompanied by a counterclaim for damages of $32,624,276.62 and exemplary damages of $100,000. There is no point in detailing or breaking down these amounts. Suffice it to say that they represent amounts claimed in various proceedings initiated in Quebec Superior Court, a number of which were dismissed: see paragraphs 2 and 3 of the judge's decision. In addition, some of the claims were against the Attorney General of Quebec and agencies under provincial jurisdiction (e.g., Centre Jeunesse de l'Estrie, Centre Notre-Dame de l'Enfant Sherbrooke Inc.).

[8] The judge showed great patience, explaining to the appellant in great detail and for over two hours, why the Tax Court of Canada did not have jurisdiction to hear and dispose of his counterclaim. I should note in passing that we were no more successful in our attempt to explain the jurisdictional boundaries of the Tax Court of Canada than the judge had been.

[9] Even before he brought his claim for damages in the Tax Court of Canada, the appellant had previously been informed by the appeal officer that an application of this type could not be made in the context of an appeal from an assessment. Nevertheless, knowing that his application was barred, the appellant insisted on reasserting his claim for damages during his pleadings in the Tax Court of Canada.

[10] The judge described the appellant's behaviour as "extreme and abusive stubborness" and "vexatious conduct . . . [that] caused the Court to waste a great deal of time". The anticipated one-day hearing of the appeal in the Tax Court of Canada ended up taking two full 11-hour days to complete.

[11] The judge stated that he had no jurisdiction to impose costs on an appellant who unnecessarily delayed an appeal process initiated within an informal proceeding. I should point out that the Tax Court of Canada has the inherent jurisdiction to prevent and control an abuse of its process: see Yacyshyn v. Canada, [1999] F.C.A. No. 196 (F.C.A.).

[12] The awarding of costs is one mechanism for preventing or remedying abusive delays or procedures: see Blencoe v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307, at paragraphs 179 and 183. In Sherman v. Canada (Minister of National Revenue - M.N.R.), [2003] 4 F.C. 865, at paragraph 46, this Court addressed the issue in the following terms:

It is now generally accepted that an award of costs may perform more than one function. Costs under modern rules may serve to regulate, indemnify and deter. They regulate by promoting early settlements and restraint. They deter impetuous, frivolous and abusive behaviour and litigation. They seek to compensate, at least in part, the successful party who has incurred, sometimes, large expenses to vindicate its rights.

[Emphasis added.]

[13] The judge did not err in dismissing the appellant's counterclaim on the ground of lack of jurisdiction.

Prescription

[14] In the oral arguments, the judge suggested that, in his view, part of the assessment, i.e., that portion covering the period between April 1996 and June 30, 1997, was prescribed, given the four-year limitation period applicable to assessments under section 298 of the Act. The issue of prescription had not been raised by the parties to the dispute. The judge later reconsidered when he realized that he could not determine the starting point for the limitation period, because there was no evidence in the record as to when the appellant had filed his GST returns for the periods in question: see paragraph 38 of his decision. Under the circumstances, since the issue was not raised by the appellant and since the respondent had not introduced evidence concerning the issue, or even had an opportunity to do so, the judge expressed the opinion that, at this late stage in the proceedings, a breach of procedural fairness would result if he were to set aside part of the assessments on the ground of prescription.

[15] The judge was right to abstain from adjudicating this question, which was not at issue, and from finding against the respondent in breach of procedural fairness, particularly in the total absence of evidence concerning the starting point of the prescription. He was required to judge on the basis of law and evidence, not on the strength of a first impression.

Upholding of Penalty under Section 280 of the Act

[16] The judge upheld the penalty imposed under section 280 for failure to remit or delay in remitting an amount owing. I see no error in this finding by the judge. The appellant wrongly believes that setting aside the penalty imposed under section 285 (with respect to false statements or omissions in a return) produces a domino effect and leads to the setting aside of the penalty under section 280. Quite obviously, the two sections at issue relate to two different actions.

Costs

[17] Section 400 of the Federal Court Rules gives the Court power to award costs to the successful party when an appeal is dismissed. Furthermore, under paragraphs (a), (c), (i), (j) and (k), the Court may in determining the amount of costs consider as factors the result of the proceeding, the importance or non-importance of the issues, the conduct of the appellant, the failure by the appellant to admit anything that should have been admitted and whether the issues raised were improper, vexatious or unnecessary.

[18] Quite simply, the appeal before us was entirely without merit. While it is true that the appellant represented himself, his problem, as the judge noted, was one of attitude and stubbornness.

[19] We could see this when we explained to him that neither the Tax Court of Canada nor our Court had jurisdiction to adjudicate his counterclaim. He immediately inquired about the possibility of appealing our decision. I was tempted, under the circumstances, to impose deterrent costs but will not do so in the hope that two things will happen: first, that the appellant will see reason and, second, that he will realize that this Court will not always show the leniency that it has shown today.

[20] However, in order to avoid another debate of the determination and assessment of costs, I would set the amount of costs at $1,000.

[21] For these reasons, I would dismiss the appeal with costs set at $1,000.

"Gilles Létourneau"

J.A.

"I concur

Marc Noël J.A."

"I concur

M. Nadon J.A."

Certified true translation

Michael Palles

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET: A-677-04

STYLE OF CAUSE: DOMINIQUE FOURNIER v. HER MAJESTY THE QUEEN

PLACE OF HEARING: Montréal, Quebec

DATE OF HEARING: April 7, 2005

REASONS FOR JUDGMENT BY: LÉTOURNEAU J.A.

CONCURRED IN BY: NOËL J.A.

NADON J.A.

DATED: April 13, 2005

APPEARANCES:

Dominique Fournier

FOR HIMSELF

Michel Morel

FOR THE RESPONDENT

SOLICITORS OF RECORD:

VEILLETTE, LARIVIÈRE

Sainte-Foy, Quebec

FOR THE RESPONDENT

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Fournier v. Canada, 2005 FCA 131

Citations2005 FCA 131

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2005 FCA 131