Citation: 2005 FCA 180
CORAM: DÉCARY J.A.
HER MAJESTY THE QUEEN
D. KENNETH GIBSON
THE ATTORNEY GENERAL FOR ONTARIO
Heard at Ottawa, Ontario, on May 10,2005.
Judgment delivered at Ottawa, Ontario, on May 13, 2005.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRED IN BY: LÉTOURNEAU J.A.
Citation: 2005 FCA 180
CORAM: DÉCARY J.A.
HER MAJESTY THE QUEEN
D. KENNETH GIBSON
THE ATTORNEY GENERAL FOR ONTARIO
REASONS FOR JUDGMENT
 The respondent is seeking a declaration that, due to the expiry of certain limitation periods, the Canada Customs and Revenue Agency (the Agency) is prohibited from taking collection action against him for tax debts allegedly owing for the 1990 and 1991 taxation years.
 In Markevich v. Canada,  1 S.C.R. 94, the Supreme Court of Canada held that a six-year limitation period applied to collection proceedings under the Income Tax Act. The six-year limitation periods at issue in this appeal were to expire on March 18 and 29, 1999, for the 1990 and 1991 tax debts.
 On March 2, 1999, i.e. a few weeks before the expiry of the limitation periods, the respondent requested that his losses from subsequent tax years be carried back and applied to the 1990 and 1991 taxation years. The request was granted by the Agency on September 28, 2000. Eventually, notices of reassessment were issued to the respondent for the 1990 and 1991 taxation years in September 2000 and August 2002 respectively.
 The Agency having taken no action to collect the tax debts before the expiry of the limitation periods, the respondent filed his application for judicial review on June 11, 2003 to prevent the Agency from taking any further action.
 On June 4, 2004, Mosley J. granted the application. With respect to the federal portion of the tax debt, he found that the carry back request did not amount to an acknowledgment by the respondent of his tax debt such as contemplated in Markevich and could not have the effect of extending the six-year limitation period provided in section 32 of the Crown Liability Proceedings Act (R.S.C. 1985, c. C-50). With respect to the collection by the Agency of that part of the tax debt which was owed to the Government of Ontario, he found that such collection would be beyond the two-year limitation period set out in subsection 45(1)(h) of the former Limitations Act (Ontario).
 The Crown appealed to this Court. In addition to the ground it had raised below (i.e. acknowledgment of tax debt resulting from the carry back request), it argued that reassessments made in September 2000 and August 2002 were events that renewed the federal and provincial limitation periods, that the ten-year limitation period recently set out in section 222 of the Income Tax Act, as amended by S.C. 2004, c. 22, section 50, applied with respect to the federal tax and that the twenty-year limitation period set out for "specialty" in paragraph 45(1)(b) of the Limitations Act (Ontario) applied with respect to the provincial tax.
 The Attorney General for Ontario was granted leave to intervene in the appeal. He argued that under Ontario legislation, the Crown is not bound by a statute unless it is stated therein that the Crown is bound thereby (s. 11 of the Interpretation Act (Ontario)); that the former Limitations Act (Ontario) contains no provision stating that the Act is binding on the Crown; that paragraph 45(1)(h), upon which Mosley J. relied, does bind the Crown but applies only to actions that are penal in nature; and, should the Court find that the Act is binding on the Crown, that the relevant provision would be paragraph 45(1)(b), which sets out a twenty-year limitation period.
 The relevant statutory provisions are the following:
Income Tax Act
(as amended by the
Budget Implementation Act, 2004,
S.C. 2004, c. 22, s. 50)
(2) A tax debt is a debt due to Her Majesty and is recoverable as such in the Federal Court or any other court of competent jurisdiction or in any other manner provided by this Act.
(3) The Minister may not commence an action to collect a tax debt after the end of the limitation period for the collection of the tax debt.
(4) The limitation period for the collection of a tax debt of a taxpayer
(i) if a notice of assessment, or a notice referred to in subsection 226(1), in respect of the tax debt is mailed to or served on the taxpayer, after March 3, 2004, on the day that is 90 days after the day on which the last one of those notices is mailed or served, and
(ii) if subparagraph (i) does not apply and the tax debt was payable on March 4, 2004, or would have been payable on that date but for a limitation period that otherwise applied to the collection of the tax debt, on March 4, 2004; and
(b) ends, subject to subsection (8), on the day that is 10 years after the day on which it begins.
(5) The limitation period described in subsection (4) for the collection of a tax debt of a taxpayer restarts (and ends, subject to subsection (8), on the day that is 10 years after the day on which it restarts) on any day, before it would otherwise end, on which
(a) the taxpayer acknowledges the tax debt in accordance with subsection (6);
(b) the Minister commences an action to collect the tax debt; or
(c) the Minister, under subsection 159(3) or 160(2) or paragraph 227(10)(a), assesses any person in respect of the tax debt.
(10) Notwithstanding any order or judgment made after March 3, 2004 that declares a tax debt not to be payable by a taxpayer, or that orders the Minister to reimburse to a taxpayer a tax debt collected by the Minister, because a limitation period that applied to the collection of the tax debt ended before royal assent to any measure giving effect to this section, the tax debt is deemed to have become payable on March 4, 2004.
Loi de l'impôt sur le revenu
(telle que modifiée par la
Loi d'exécution du budget de 2004,
L.C. 2004, ch. 22, art. 50)
(2) La dette fiscale est une créance de Sa Majesté et est recouvrable à ce titre devant la Cour fédérale ou devant tout autre tribunal compétent ou de toute autre manière prévue par la présente loi.
(3) Une action en recouvrement d'une dette fiscale ne peut être entreprise par le ministre après l'expiration du délai de prescription pour le recouvrement de la dette.
(4) Le délai de prescription pour le recouvrement d'une dette fiscale d'un contribuable :
a) commence à courir :
(i) si un avis de cotisation, ou un avis visé au paragraphe 226(1), concernant la dette est posté ou signifié au contribuable après le 3 mars 2004, le quatre-vingt-dixième jour suivant le jour où le dernier de ces avis est posté ou signifié,
(ii) si le sous-alinéa (i) ne s'applique pas et que la dette était exigible le 4 mars 2004, ou l'aurait été en l'absence de tout délai de prescription qui s'est appliqué par ailleurs au recouvrement de la dette, le 4 mars 2004;
b) prend fin, sous réserve du paragraphe (8), dix ans après le jour de son début.
(5) Le délai de prescription pour le recouvrement d'une dette fiscale d'un contribuable recommence à courir - et prend fin, sous réserve du paragraphe (8), dix ans plus tard - le jour, antérieur à celui où il prendrait fin par ailleurs, où, selon le cas :
a) le contribuable reconnaît la dette conformément au paragraphe (6);
b) le ministre entreprend une action en recouvrement de la dette;
c) le ministre établit, en vertu des paragraphes 159(3) ou 160(2) ou de l'alinéa 227(10)a), une cotisation à l'égard d'une personne concernant la dette.
(10) Malgré toute ordonnance ou tout jugement rendu après le 3 mars 2004 dans lequel une dette fiscale est déclarée ne pas être exigible, ou selon lequel le ministre est tenu de rembourser à un contribuable le montant d'une dette fiscale recouvrée, du fait qu'un délai de prescription qui s'appliquait au recouvrement de la dette a pris fin avant la sanction de toute mesure donnant effet au présent article, la dette est réputée être devenue exigible le 4 mars 2004.
(R.S.O. 1990, c. I.11)
11. No Act affects the right of Her Majesty, Her heirs or successors, unless it is expressly stated therein that Her Majesty is bound thereby.
(L.R.O. 1990, ch. I.11)
11. Aucune loi ne porte atteinte aux droits de Sa Majesté, de ses héritiers ou de ses successeurs, sauf indication explicite que Sa Majesté est liée par la loi.
(R.S.O. 1990, c. L.15)
45. (1) The following actions shall be commenced within and not after the times respectively hereinafter mentioned,
(b) an action upon a bond, or other specialty, except upon a covenant contained in an indenture of mortgage made on or after the lst day of July, 1894;
within twenty years after the cause of action arose,
(h) an action for a penalty, damages, or a sum of money given by any statute to the Crown or the party aggrieved, within two years after the cause of action arose; ...
Loi sur la prescription des actions
(L.R.O. 1990, ch. L.15)
45. (1) Les actions suivantes se prescrivent par les délais respectifs indiqués ci-dessous : [...]
b) l'action faisant suite à un contrat par acte scellé, notamment un cautionnement, à l'exception d'un engagement contenu dans un acte d'hypothèque conclu le ler juillet 1894 ou après cette date;
se prescrit par vingt ans à compter de la naissance de la cause d'action,
h) l'action en recouvrement d'une pénalité, de dommages-intérêts ou d'une somme d'argent accordée par une loi à la Couronne ou à la partie lésée se prescrit par deux ans, à compter de la naissance de la cause d'action; [...]
Limitations Act, 2002
(as amended by the Justice Statute Law Amendment Act, 2002,
S.O. 2002, chapter 24, Schedule B)
3. This Act binds the Crown.
16. (1) There is no limitation period in respect of,
(i) a proceeding to recover money owing to the Crown in respect of,
(i) fines, taxes and penalties, or
(ii) interest that may be added to a tax or penalty under an Act; ...
Loi de 2002 sur la prescription des actions (telle que modifiée par la Loi de 2002 modifiant des lois dans le domaine de la justice, L.O. 2002, chapitre 24, Annexe B)
3. La présente loi lie la Couronne.
16. (1) Aucun délai de prescription n'est prévu dans les cas suivants :
i) les instances en recouvrement des créances de la Couronne à l'égard :
(i) soit d'amendes, d'impôts et de pénalités,
(ii) soit d'intérêts qui peuvent s'ajouter à un impôt ou à une pénalité en vertu d'une loi; [...]
 I wish to point out at the outset that the appeal before us was essentially argued on grounds that had not been argued or well articulated in the Federal Court. With respect to the federal tax, the Crown had not raised the argument (which, as we shall see, ends up being a decisive one) based on the 2004 amendment to section 222 of the Income Tax Act. With respect to the provincial tax, it appears that none of the case law which was cited to us by the intervener had been brought to the attention of the Federal Court judge.
The federal limitation period
 The hearing before Mosley J. proceeded on April 28, 2004. Bill C-30, which introduced the amendment noted above, received Royal Assent on May 14, 2004. The impugned decision was rendered on June 4, 2004. One is at a loss to understand why the matter was not brought to the attention of the Federal Court judge by counsel for the Crown.
 The amended section 222 of the Income Tax Act is, to use the words of Linden J.A. in C.I. Mutual Funds Inc. et al v. The Queen (1999), 99 G.T.C. 7075 (F.C.A.) at 7076, "amply clear so as to rebut any presumption against retroactive application." The amendment was introduced as a Parliamentary response to the Supreme Court of Canada decision in Markevich. It sets up, at subsection (4), a ten-year limitation period in income tax matters that replaces the six-year general limitation period set out in subsection 32(1) of the Crown Liability and Proceedings Act. It goes on in subsection (10) to ensure that the amendment applies to any judgment made after March 3, 2004 that declares a tax debt not to be payable by a taxpayer because a limitation period ended before Royal Assent was given. Subsection (10) goes even further in deeming such tax debt to have become payable on March 4, 2004. The impugned judgment having been made on June 4, 2004, there is no doubt that the tax debt here at issue is deemed to have become payable on March 4, 2004 and that the limitation period expires on March 3, 2014.
 Counsel for the respondent was gracious enough to recognize that the amendment suffered from no ambiguity. He timidly suggested that the amendment was inoperative by virtue of section 1(a) of the Canadian Bill of Rights. Such an argument cannot, of course, be entertained by this Court absent service of a constitutional question to all Attorneys General (see s. 57 of the Federal Courts Act). In any event, the argument would have no chance of success in view, notably, of the decision of the Supreme Court of Canada in Authorson v. Canada (Attorney General),  2 S.C.R. 40, at 60. The amendment, here, is "clear and unambiguous" and satisfies the "due process of law" required by section 1(a). There being no conflict with the protections afforded by the Canadian Bill of Rights, there is no need for an express declaration that the provision operates notwithstanding the Canadian Bill of Rights.
 In view of the conclusion I have reached with respect to the retroactivity of the 2004 amendment to section 222 of the Income Tax Act, I need not examine the other grounds argued by the appellant with respect to the federal tax.
The provincial limitation period
 Section 11 of the Interpretation Act (Ontario) provides that no Act affects the right of Her Majesty, unless it is expressly stated therein that Her Majesty is bound thereby.
 The former Limitations Act (Ontario) does not expressly state that it binds the Crown. The Ontario Court of Appeal has held that section 11 of the Interpretation Act "reinforces the ancient maxim nullum tempus occurrit regi" and that the Crown is only bound by those provisions of the former Limitations Act in which it is expressly mentioned (Ontario (Attorney General) v. Watkins (1975), 8 O.R. (2d) 513, at 514-515 (C.A.).
 Counsel for the intervener concedes that paragraph 45(1)(h) upon which Mosley J. relied does, by its very words, bind the Crown. He points out, however, and correctly in my view, that the jurisprudence interpreting that paragraph and its predecessors establishes that it only applies to actions that are penal in nature (see Thomson v. Lord Clanmorris,  1 Ch. 718 (C.A.), per Lindley M.R. at 725; Johnson Controls Inc. v. Varta Batteries Ltd. (1984), 80 C.P.R. (2d) 1 (F.C.A.), per Urie J.A. at 18; West End Construction Ltd. v. Ontario (Ministry of Labour) (1989), 62 D.L.R. (4th) 329 (Ont. C.A.), per Finlayson J. at 340; Abraham v. Canadian Admiral Corp. (Receiver of) (1998), 39 O.R. (3d) 176 (Ont. C.A.), per McKinlay J.A. at 181-182).
 An action taken to collect Ontario income taxes, which, by virtue of section 30 of the Income Tax Act (Ontario), "are debts due to Her Majesty in right of Ontario," is not a penal action. The two-year limitation period set out in paragraph 45(1)(h) did not apply.
 Counsel for the intervener also submits that paragraph 45(1)(b) is not applicable as it does not bind the Crown. I agree. In any event, that paragraph would have been of no use to the respondent as it sets out a twenty-year limitation period.
 It is worth noting, before closing, that in the new Limitations Act, 2002 (Ontario), section 3 states that "[t]his Act binds the Crown" and paragraph 16(1)(i) provides that "[t]here is no limitation period in respect of ... a proceeding to recover money owing to the Crown in respect of (i) fines, taxes and penalties, or (ii) interest that may be added to a tax or penalty under an Act." If there was uncertainty before - and I have found none - with respect to the imprescriptibility of tax collection proceedings in Ontario, there can be none now.
 With respect to the intervention, the Attorney General for Ontario was granted leave on the express condition that he "pay to the respondent on a party-to-party basis all extra fees and disbursements incurred by the respondent as a result of his intervention, including costs of the intervention." I would assess the whole of these fees and disbursements at $1,000.00.
 With respect to the appeal, had the amendment to section 222 been brought to the attention of the Federal Court judge, this appeal might have been unnecessary. In all likelihood, the judge would have dismissed the application insofar as the federal tax was involved and, in all likelihood, the respondent would not have appealed. On the other hand, the amendment to the federal legislation was of no consequence with regard to the provincial tax and the respondent would have seen that segment of his application dismissed by our Court in any event. At the end of the day, in fairness to the respondent, there should be no costs in the Federal Court and the respondent should be entitled to his costs against the appellant in the appeal, these costs to be assessed, as per rule 407, in accordance with column III of the table to Tariff B.
 I would allow the appeal, set aside the decision of the Federal Court and dismiss the application for judicial review. There should be no order as to costs in the Federal Court. The respondent should have his costs on the appeal as against the appellant, these costs to be assessed in accordance with column III of the table to Tariff B. The intervener should pay costs, assessed at $1,000.00, to the respondent.
Gilles Létourneau, J.A."
J.D. Denis Pelletier, J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
Appeal from an Order of the Federal Court dated June 4, 2004, Court File No. T-958-03
STYLE OF CAUSE: The Queen v. D. Kenneth Gibson and the Attorney General for Ontario
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: May 10, 2005
REASONS FOR JUDGMENT BY: Décary J.A.
CONCURRED IN BY: Létourneau J.A.
DATED: May 13, 2005
April Tate FOR THE APPELLANT
William G. D. McCarthy FOR THE RESPONDENT
Josh Hunter FOR THE INTERVENER
SOLICITORS OF RECORD:
John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario FOR THE APPELLANT
William G. D. McCarthy
Ottawa, Ontario FOR THE RESPONDENT
Michael J. Bryant
Attorney General for Ontario
Toronto, Ontario FOR THE INTERVENER