Date: 20071016
Docket: A-535-06
Citation: 2007 FCA 323
CORAM: NADON J.A.
SEXTON J.A.
SHARLOW J.A.
BETWEEN:
MINISTER
OF NATIONAL REVENUE
Appellant
and
AJIT S.
LIDDAR
Respondent
Heard at Toronto, Ontario, on October
4, 2007.
Judgment delivered at Ottawa,
Ontario, on October
16, 2007.
REASONS FOR JUDGMENT BY: SHARLOW
J.A.
CONCURRED
IN BY: NADON
J.A.
SEXTON
J.A.
Date: 20071016
Docket: A-535-06
Citation: 2007 FCA 323
CORAM: NADON
J.A.
SEXTON
J.A.
SHARLOW
J.A.
BETWEEN:
MINISTER OF NATIONAL REVENUE
Appellant
and
AJIT S. LIDDAR
Respondent
REASONS FOR JUDGMENT
SHARLOW J.A.
[1]
The
respondent Ajit S. Liddar has an interest in a corporation, The Travel People
Inc., carrying on business as Imagine Holidays Oakville. The Minister assessed
the corporation for goods and services tax (GST) under the Excise Tax Act,
R.S.C. 1985, c. E-15, including interest and penalties totalling approximately
$4,500. Mr. Liddar, citing a series of events that caused financial hardship
to the corporation, asked the Minister to waive the interest and penalties
under section 281.1 of the Excise Tax Act. Mr. Liddar personally paid
the corporation’s entire liability as assessed because he was told by the
Minister’s officials that the Minister would waive the interest and penalties if
he did so. Given that assurance, Mr. Liddar expected a refund of the amount of
the interest and penalties. However, the Minister refused Mr. Liddar’s request
for a waiver.
[2]
Mr. Liddar
filed an application under subsection 18.1(1) of the Federal Courts Act for
judicial review of the Minister’s decision. A judge of the Federal Court allowed
the application based on the uncontradicted evidence of Mr. Liddar that he had
been assured that the interest and penalties would be waived if he paid the
corporation’s liability. The judgment orders the Minister to repay Mr. Liddar
the amount of the interest and penalties, with interest (2006 FC 1303), and also
awards Mr. Liddar $500 representing his disbursements.
[3]
The
Minister has appealed the judgment. The only ground of appeal is that subsection
18.1(3) of the Federal Courts Act does not give the Federal Court the
authority to order the Minister to refund interest and penalties that have been
paid under the Excise Tax Act.
[4]
The
Minister does not challenge the conclusion of the judge as to Mr. Liddar’s
reason for making the payment. Nor does the Minister challenge the judge’s
factual conclusion that Mr. Liddar was given the assurance he claims to have
been given. Indeed, such a challenge would be difficult to sustain because the
record contains no evidence from the Minister denying that the assurance was
given, or asserting that such an assurance was not authorized. The only
evidence from the Minister bearing on that point is a note in the report of the
“Fairness Reviewer” speculating that this was “probably a misunderstanding
related to possible relief”.
[5]
On the
record before this Court, it is not possible to find any error in the decision
of the judge to allow Mr.Liddar’s application for judicial review. It follows
that the judge was entitled to quash the Minister’s decision to refuse to waive
the interest and penalties. The issue is whether he should have simply referred
the matter back to the Minister for reconsideration of Mr. Liddar’s request,
perhaps with directions, or whether he erred in law in going further and
ordering the refund.
[6]
The answer
depends upon the correct interpretation of subsection 18.1(3) of the Federal
Courts Act which reads as follows:
|
(3) On an application for judicial review, the Federal
Court may
( a) order a federal
board, commission or other tribunal to do any act or thing it has unlawfully
failed or refused to do or has unreasonably delayed in doing; or
( b) declare invalid
or unlawful, or quash, set aside or set aside and refer back for
determination in accordance with such directions as it considers to be
appropriate, prohibit or restrain, a decision, order, act or proceeding of a
federal board, commission or other tribunal.
|
(3) Sur présentation d'une demande de contrôle
judiciaire, la Cour fédérale peut :
a) ordonner à l’office fédéral en cause d’accomplir tout acte qu’il a
illégalement omis ou refusé d’accomplir ou dont il a retardé l’exécution de
manière déraisonnable;
b) déclarer nul ou illégal, ou annuler, ou infirmer et renvoyer pour
jugement conformément aux instructions qu’elle estime appropriées, ou
prohiber ou encore restreindre toute décision, ordonnance, procédure ou tout
autre acte de l’office fédéral.
|
[7]
Paragraph
18.1(3)(a) describes the authority of the Federal Court to make an order in the
nature of mandamus. In substance, that is the order the judge made when he
ordered the Minister to refund the interest and penalties to Mr. Liddar. The
difficulty is that the facts of this case do not warrant such an order because
it has not been established that the statutory conditions for a refund under
the Excise Tax Act are met.
[8]
The
assessment and refund provisions of the Excise Tax Act (Division V of
Part IX of the Excise Tax Act) contemplate a number of different
situations. They do not contemplate the refund of interest or penalties paid by
one person for the account of another (where the person making the payment has
not been assessed for those amounts). In the circumstances of this case, any
refund of the tax and interest that the corporation was legally obliged to pay
could be refunded only to the corporation once waived by the Minister, even if
it was Mr. Liddar who made the payment. Mr. Liddar would have to look to the
corporation for reimbursement of the amounts he paid on its behalf. For that
reason, I agree with the Minister that the portion of the judgment requiring
the refund to be paid to Mr. Liddar should be set aside.
[9]
The remedy
to which Mr. Liddar was and is entitled must be within the scope of paragraph
18.1(3)(b) of the Federal Courts Act. As indicated above, there can be
no doubt that the Minister’s decision should have been quashed and the request
for a waiver of interest and penalties referred back to the Minister for
reconsideration. A question remains as to whether a direction should have been
made as permitted by paragraph 18.1(3)(b), and if so what the direction should
have been.
[10]
In this
regard, the Minister has requested that he be permitted to determine the
question of whether an undertaking was made to Mr. Liddar to waive the
corporation’s interest and penalties. However, the Minister has already had an
opportunity to present all available evidence contradicting the evidence of Mr.
Liddar on that point, which the judge determined conclusively in Mr. Liddar’s
favour. It is now too late for the Minister to attempt to re-examine that fact.
Counsel for the Minister conceded at the hearing that, on these facts, the only
reasonable response of the Minister to Mr. Liddar’s request for a waiver of
interest and penalties is to grant the waiver.
[11]
For these
reasons, I would allow the appeal in part. I would set aside the portion of the
judgment of the Federal Court that orders the Minister to pay Mr. Liddar a
refund, and order instead that the Minister’s decision be quashed, that Mr.
Liddar’s request for a waiver be referred back to the Minister for
reconsideration on the basis that Mr. Liddar paid the liability of the
corporation for tax, interest and penalties because he was assured by tax
officials that if he did so, the interest and penalties would be waived.
[12]
I would
not disturb the $500 award made by the judge. I would award Mr. Liddar a
further $500, the amount of his estimated disbursements on appeal.
“K.
Sharlow”
“I
agree
M.
Nadon J.A.”
“I
agree
J.
Edgar Sexton J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-535-06
(APPEAL FROM A
JUDGMENT OF HUGHES J. DATED OCTOBER 27, 2006, NO.
T-264-06)
STYLE OF CAUSE: MINISTER
OF NATIONAL REVENUE v. AJIT S. LIDDAR
PLACE OF HEARING: TORONTO
DATE OF HEARING: OCTOBER 4, 2007
REASONS FOR JUDGMENT BY: SHARLOW J.A.
CONCURRED IN BY: NADON J.A.
SEXTON J.A.
DATED: OCTOBER 16, 2007
APPEARANCES:
|
ANDREA JACKETT
|
FOR THE
APPELLANT
|
|
AJIT LIDDAR
|
FOR THE RESPONDENT
|
SOLICITORS
OF RECORD:
|
JOHN H. SIMS, Q.C.
DEPUTY ATTORNEY GENERAL OF CANADA
OTTAWA, ON
|
FOR THE APPELLANT
|
|
AJIT LIDDAR
MISSISSAUGA, ON
|
FOR THE RESPONDENT
|
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