[1] The issue in this appeal from Heneghan J. of the Trial Division (as it then was) is the interpretation of subsection 225.1(5) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 as amended. The appeal involves when the Minister of National Revenue may take collection action after a decision is issued in another action, pending which the taxpayer and the Minister had agreed to hold a Notice of Objection in abeyance pursuant to subsection 225.1(5).

FACTS

[2] The appellant, Charles Webster, was reassessed in respect of his 1991, 1992 and 1993 taxation years. He filed a Notice of Objection with the Minister. While the Notice of Objection was pending before the Minister, the appellant and the Minister, as contemplated by subsection 225.1(5), entered into an agreement to delay proceedings on the objection until judgment was given in another case - Global Communications v. The Queen. Global's appeal was allowed in part in the Tax Court, 97 D.T.C. 1293, but on appeal to this Court, [1999] F.C.J. No. 966, its appeal was dismissed and the Minister's cross-appeal allowed. The judgment of this Court was issued on June 18, 1999. On October 27, 2000, the Minister issued a notice to the appellant confirming the reassessments against him. By letter dated November 7, 2000, the Minister indicated his intention to proceed with collection action in respect of the amounts at issue in the reassessments. On December 7, 2000, the appellant filed a Notice of Appeal in the Tax Court of Canada in respect of the reassessments.

[3] The appellant, relying on subsection 225.1(3), says the Minister is precluded from taking collection action against him until his appeal in the Tax Court is determined and a copy of the Tax Court decision is mailed to him. The Minister says that the appellant, by agreeing to delay proceedings on his Notice of Objection by an agreement in writing of the kind referred to in subsection 225.1(5), waived any protection against collection provided by subsection 225.1(3). The Minister could therefore commence collection action at any time after notifying the appellant of the decision of the Tax Court in Global.

[4] The appellant brought an application for judicial review in the Trial Division seeking a declaration, injunction, and writ of prohibition enjoining the Minister from taking any collection action. Heneghan J. dismissed the appellant's judicial review. I agree that the judicial review was properly dismissed.

RELEVANT STATUTORY PROVISIONS

[5] The relevant provisions of the Act are subsections 225.1(1), (2), (3) and (5). Subsections 225.1(1), (2) and (3) provide a continuum of protection precluding the Minister from taking collection action against the taxpayer:

1. first, until after the day that is 90 days after the day of mailing of a Notice of Assessment;

2. second, if the taxpayer serves a Notice of Objection, until after the day that is 90 days after the day the Minister has mailed to the taxpayer a Notice of Confirmation or Variation of the assessment;

3. third, if the taxpayer appeals from the Confirmation or Variation to the Tax Court, until the day of mailing of a copy of the decision of the Tax Court to the taxpayer.

[6] Subsections 225.1(1), (2) and (3) provide:

225.1. (1) Where a taxpayer is liable for the payment of an amount assessed under this Act, other than an amount assessed under subsection 152(4.2), 169(3) or 220(3.1), the Minister shall not, for the purpose of collecting the amount,

(a) commence legal proceedings in a court,

(b) certify the amount under section 223,

(d) require an institution or a person to make a payment under subsection 224(1.1),

(e) require the retention of the amount by way of deduction or set-off under section 224.1,

(f) require a person to turn over moneys under subsection 224.3(1), or

(g) give a notice, issue a certificate or make a direction under subsection 225(1)

until after the day that is 90 days after the day of the mailing of the notice of assessment.

(2) Where a taxpayer has served a notice of objection under this Act to an assessment of an amount payable under this Act, the Minister shall not, for the purpose of collecting the amount in controversy, take any of the actions described in paragraphs 225.1(1)(a) to 225.1(1)(g) until after the day that is 90 days after the day on which notice is mailed to the taxpayer that the Minister has confirmed or varied the assessment.

(3) Where a taxpayer has appealed from an assessment of an amount payable under this Act to the Tax Court of Canada, the Minister shall not, for the purpose of collecting the amount in controversy, take any of the actions described in paragraphs 225.1(1)(a) to 225.1(1)(g) before the day of mailing of a copy of the decision of the Court to the taxpayer or the day on which the taxpayer discontinues the appeal, whichever is the earlier.

225.1. (1) Dans le cas où un contribuable est redevable du montant d'une cotisation établie en vertu de la présente loi, exception faite des paragraphes 152(4.2), 169(3) et 220(3.1), le ministre, pour recouvrer le montant impayé, ne peut, avant le lendemain du 90e jour suivant la date de mise à la poste de l'avis de cotisation:

a) entamer une poursuite devant un tribunal;

b) attester le montant, conformément à l'article 223;

c) obliger une personne à faire un paiement, conformément au paragraphe 224(1);

d) obliger une institution ou une personne visée au paragraphe 224(1.1) à faire un paiement, conformément à ce paragraphe;

e) exiger la retenue du montant par déduction ou compensation, conformément à l'article 224.1;

f) obliger une personne à remettre des fonds, conformément au paragraphe 224.3(1);

g) donner un avis, délivrer un certificat ou donner un ordre, conformément au paragraphe 225(1).

(2) Dans le cas où un contribuable signifie en vertu de la présente loi un avis d'opposition à une cotisation pour un montant payable en vertu de cette loi, le ministre, pour recouvrer la somme en litige, ne peut prendre aucune des mesures visées aux alinéas (1)a) à g) avant le lendemain du 90e jour suivant la date de mise à la poste d'un avis au contribuable où il confirme ou modifie la cotisation.

(3) Dans le cas où un contribuable en appelle d'une cotisation pour un montant payable en vertu de la présente loi, auprès de la Cour canadienne de l'impôt, le ministre, pour recouvrer la somme en litige, ne peut prendre aucune des mesures visées aux alinéas (1)a) à g) avant la date de mise à la poste au contribuable d'une copie de la décision de la cour ou la date où le contribuable se désiste de l'appel si celle-ci est antérieure.

[7] Subsection 225.1(5) provides that where the Minister and a taxpayer enter into a written agreement to delay proceedings on an objection or appeal until a decision is given in another action, the Minister may take collection action in a manner consistent with the judgment of the Court in the other action at any time after the Minister notifies the taxpayer in writing of the decision in the other action. Subsection 225.1(5) provides:

(5) Notwithstanding any other provision in this section, where a taxpayer has served a notice of objection under this Act to an assessment or has appealed to the Tax Court of Canada from an assessment and agrees in writing with the Minister to delay proceedings on the objection or appeal, as the case may be, until judgment has been given in another action before the Tax Court of Canada, the Federal Court of Appeal or the Supreme Court of Canada in which the issue is the same or substantially the same as that raised in the objection or appeal of the taxpayer, the Minister may take any of the actions described in paragraphs 225.1(1)(a) to 225.1(1)(g) for the purpose of collecting the amount assessed, or a part thereof, determined in a manner consistent with the decision or judgment of the Court in the other action at any time after the Minister notifies the taxpayer in writing that

(a) the decision of the Tax Court of Canada in that action has been mailed to the Minister,

(b) judgment has been pronounced by the Federal Court of Appeal in that action, or

(5) Malgré les autres dispositions du présent article, lorsqu'un contribuable signifie, conformément à la présente loi, un avis d'opposition à une cotisation ou en appelle d'une cotisation devant la Cour canadienne de l'impôt et qu'il convient par écrit avec le ministre de retarder la procédure d'opposition ou la procédure d'appel jusqu'à ce que la Cour canadienne de l'impôt, la Cour d'appel fédérale ou la Cour suprême du Canada rende jugement dans une autre action qui soulève la même question, ou essentiellement la même, que celle soulevée dans l'opposition ou l'appel par le contribuable, le ministre peut prendre les mesures visées aux alinéas (1)a) à g) pour recouvrer tout ou partie du montant de la cotisation établi de la façon envisagée par le jugement rendu dans cette autre action, à tout moment après que le ministre a avisé le contribuable par écrit que, selon le cas:

a) le jugement de la Cour canadienne de l'impôt dans l'action a été posté au ministre;

b) la Cour d'appel fédérale a rendu jugement dans l'action;

c) la Cour suprême du Canada a rendu jugement dans l'action.

ANALYSIS

[8] It appears that subsection 225.1(5) is intended to save the taxpayer and the Minister the administrative and litigation costs of pursuing an objection or appeal if it is thought that the decision in a case in which the issue is the same, or substantially the same, may be dispositive of the taxpayer's objection or appeal.

[9] An agreement under subsection (5), however, only deals with collection. It is not an agreement whereby the Minister and the taxpayer are necessarily bound by the decision in the other action. The taxpayer is not precluded from filing an appeal or continuing with an appeal irrespective of the decision in the other action.

[10] However, once the Minister notifies the taxpayer of the decision in the other action, the Minister is free to take collection action against the taxpayer. The plain meaning of subsection (5) supports this view. The combination of the opening words of the subsection "Notwithstanding any other provision in this section" ... and the empowering words which come later " the Minister may take any of the actions described ... at any time after the Minister notifies the taxpayer..." leave little doubt as to the legislator's intention. The immunity from collection action found in subsections (2) and (3) is subordinated to the Minister's right to proceed under subsection (5).

[11] The appellant argues that the words "as the case may be" in subsection (5) should be interpreted to mean that an agreement to delay proceedings on an objection does not constitute an agreement to delay an appeal to the Tax Court. As a result, an agreement to delay an objection will not prevent subsection (3) from protecting the taxpayer against collection action if a notice of appeal is filed in the Tax Court after notification of the decision in the other action.

[12] I am of the opinion that the words "as the case may be" are intended to ensure that an agreement to delay proceedings is specific to the stage of the taxpayer's proceedings with the Minister. That is, if the agreement is made at the objection stage, it delays the objection; if it is made at the appeal stage, it delays the appeal. But once the delay is ended by notification of the decision in the other action, the Minister is free to take collection action at any time.

[13] I think the appellant's interpretation of subsection (5) would lead to two unexplained anomalies. First, if the appellant's interpretation is correct, a taxpayer who agreed to a delay at the objection stage would be in a better position than a taxpayer who agreed to a delay at the appeal stage. If an agreement is made at the objection stage and the taxpayer files a Notice of Appeal after being notified of the decision in the other action, protection against collection under subsection (3) would apply. However, in the case of a taxpayer who had already filed a Notice of Appeal in the Tax Court before making the agreement, that protection would be lost by reason of subsection (5). There is no logical reason to support such a difference in treatment. The right of the Minister to take collection action arises when the taxpayer is notified of the decision in the other action irrespective of whether the taxpayer's case is at the objection or appeal stage.

[14] Second, the appellant concedes that the words "at any time" in subsection (5) mean that the Minister may take collection action at any time after notification of the decision in the other action. Yet he says that as soon as the taxpayer files a Notice of Appeal in the Tax Court, the Minister would have to stop that collection action. However, it seems to me that, if the intent of subsection (5) was to give collection protection to a taxpayer once a Notice of Appeal was filed in the Tax Court, the wording of subsection (5) would parallel the wording in subsection (2). That is, the taxpayer would be given 90 days to file a Notice of Appeal in the Tax Court before collection action could be taken. On the contrary, the words "at any time" are used, which are the antithesis of the continuum of protection against collection provided by subsections (1)-(3).

[15] In the alternative, the appellant says that the judgment in the Global case is not the same or substantially the same as the issues in his case and cites a number of differences. He says that on judicial review, the Court must determine if the issues in his Notice of Objection and in the Global decision are or are not the same or substantially the same, and, if they are not, the Minister may not invoke subsection (5) to take collection action. Rather, he says, once an appeal is filed in the Tax Court, he should be entitled to protection from collection action under subsection (3).

[16] I cannot agree. For the purposes of subsection (5), the issue is whether an agreement in writing to delay proceedings pending the outcome in the other action has been entered into. Where the parties agree in writing that the issues in the other case are the same or substantially the same, a Court on judicial review will not go behind that agreement.

[17] The actual decision in the other action only becomes relevant when determining how much of the amount assessed may be collected. I do not preclude the possibility of a dispute over the amount assessed against the taxpayer "determined in a manner consistent with the decision or judgment of the court in the other action." However, that is a dispute as to what amount the Minister may collect, not whether he is free to take collection action at all.

CONCLUSION

[18] I conclude that once an agreement is entered into under subsection (5), the taxpayer is bound by the subsection (5) procedure and collection action may be taken at any time after notification of the decision in the other action, notwithstanding subsections (2) and (3). The taxpayer is not required to enter into such an agreement but if he elects to do so, he is bound by the agreement and the right of the Minister to take collection action at any time after notification of the decision in the other action.

[19] For these reasons, I would dismiss the appeal.

[20] The Court was requested to permit written submissions on the matter of costs. Within 7 days of the date of these reasons, the Minister shall serve and file written submissions of not more than 2 pages. The Court will entertain a request for a lump sum of costs inclusive of fees and disbursements. Within 7 days of receipt of the Minister's submissions as to costs, the appellant shall serve and file written submissions of not more than 2 pages in respect of costs. Of course, it is open to the parties to agree to costs if they are able to do so and to so advise the Court.

"Marshall Rothstein"

J.A.

"I agree

John M. Evans J.A."

"I agree

J.D. Denis Pelletier J.A."

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-18-03

STYLE OF CAUSE: CHARLES WEBSTER

and

THE MINISTER OF NATIONAL

REVENUE ET AL.

PLACE OF HEARING: TORONTO, ONTARIO

DATE OF HEARING: NOVEMBER 6, 2003

REASONS FOR JUDGMENT

BY: ROTHSTEIN J.A.

CONCURRED IN BY: EVANS J.A.

PELLETIER J.A.

DATED: NOVEMBER 21, 2003

APPEARANCES:

Mr. Al Meghji FOR THE APPLICANT

Mr. Kevin Dias FOR THE RESPONDENTS

SOLICITORS OF RECORD:

Osler, Hoskin, Harcourt LLP

Toronto, Ontario FOR THE APPLICANT

Morris Rosenberg

Deputy Attorney General of Canada

Toronto, Ontario FOR THE RESPONDENTS

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Webster v. Canada (Minister of National Revenue), 2003 FCA 442

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2003 FCA 442