Citation: 2014 FCA
CORAM: BLAIS C.J.
9100-7146 QUÉBEC INC.
HER MAJESTY THE QUEEN
REASONS FOR JUDGMENT
This is an appeal against two decisions of
Justice Angers of the Tax Court of Canada dismissing the appeal of Rita Congiu
from an assessment made on February 1, 2006, under subsections 270(3) and
270(4) of the Excise Tax Act (ETA), and the appeal of 9100-7146 Québec
Inc. from an assessment made on the same date, but under section 325 of the
In this case, the appellants have filed a single
appeal against two separate decisions of Justice Angers. This procedure is not
usually allowed by the Federal Courts Act. However, as the matter has
already been heard, this Court will make an exception and render two separate
judgments in the same appeal docket.
Essentially, Justice Angers cited an earlier
decision of the Court of Quebec regarding the appellants. In that decision, the
Court of Quebec had disposed of similar issues to the issues at bar, under
Quebec tax legislation.
After clarifying that he was not bound by the
decision of the Court of Quebec, the judge held that, since no additional
evidence had been filed in support of the appellants’ arguments, it was
preferable to avoid a relitigation of the claims; he further held that the
principle of judicial comity had to be applied to the decision of the Court of
Quebec and that the appeals had to be dismissed.
Justice Angers thoroughly examined the facts of
record and concluded that there was no identity of cause since the amounts of
the assessments and the legal basis of the assessments were different and,
moreover, that there was no identity of parties [translation] “because the federal and Quebec governments are
not the same person” (paragraph 8 of the decision).
However, he carefully reviewed the state of the
law on abuse of process and judicial comity. He also noted that the appellants
did not submit any different evidence from that submitted in the Court of Quebec.
He added that the agreed statement of facts filed in the Tax Court of Canada
was based on the findings of fact of the judge of the Court of Quebec
(paragraph 12 of the decision).
In my opinion, Justice Anger’s decision to apply
the principles of judicial comity was entirely warranted in the particular
circumstances of this case.
Moreover, on February 7, the Quebec Court
of Appeal rendered a decision in which it unanimously dismissed the appeal from
the decision of the Court of Quebec. This recent decision of the Quebec Court
of Appeal, which deserves examination, makes it considerably difficult for the
appellants’ chances to argue that the decision of Justice Lareau of the Court
of Quebec was not correct in law. This decision is cited as 2014 QCCA 242.
At paragraphs 14, 15 and 23 of its
decision, the Quebec Court of Appeal responds to the arguments that the
appellants have now raised before this Court. I agree with the Quebec Court of
Appeal’s statement of the law:
14 The appellant’s main ground of appeal, which reiterates the
argument made before the trial judge, is the following: section 14 of the Act
respecting the ministère du Revenu does not apply when the tax debtor
invokes the Bankruptcy and Insolvency Act, in this case, by making a
proposal in bankruptcy. In keeping with the doctrine of the Supreme Court of
Canada in Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny,
 3 S.C.R. 286, and Century Services Inc. v. Canada (Attorney General),
 3 S.C.R. 379, all recovery measures benefitting tax authorities are in
fact stayed in the event of bankruptcy or a proposal in bankruptcy. For either
event, the Bankruptcy and Insolvency Act has established a
self-contained legal regime that applies to claims of the Crown (including for
taxes and income tax) and takes precedence over the regular system for
recovering such debts. According to the appellant, this means that section 14
of the Act respecting the ministère du Revenu does not apply.
15 The trial judge rejected this submission.
Specifically, he wrote as follows:
One of the purposes of section 14 of the TAA [Tax Administration Act]
is to sanction the conduct of a director who transfers the property of a
corporation under his or her control even though the corporation owes taxes. The
director’s liability arises from the director’s conduct and failure to respect the
duties imposed on him or her by this provision. It is hard to see a link
between the penalty provided for under section 14 and the bankruptcy of [Canada
inc.]. The parties are distinct, the patrimonies are distinct, and the matter
is of no concern to the trustee in bankruptcy. Its collocation order is not
affected, and it has no legal interest in intervening in this dispute. Is it
any surprise that it made no attempt to intervene in this dispute?
The proposal in bankruptcy of [Canada inc.] may have had the effect of deferring
the date on which the [Canada inc.’s] debt became due, but it has not
eliminated the debt. Moreover, the failure to make the payments under the
proposal has led to its cancellation and to the bankruptcy of [Canada inc.].
[Canada inc.’s] tax debt remained outstanding and, before liquidating all
assets, [Ms. Congiu] should have given the [Agence du Revenu du Québec] notice
and obtained a certificate. She did not respect this obligation and therefore
breached section 14 of the TAA, which makes both her and QUÉBEC INC liable.
16 The Court shares this point of view.
One could perhaps consider what would have happened
if Canada inc. had, from the sale of its immovables, made the last payment
provided for under the proposal in a timely manner. The corporation would have
been released from its debt to the respondent. Would the respondent still have been
able to rely on section 14 to engage the appellant’s personal liability?
There is no need to answer this question since the proposal was not respected
in the matter at bar and the debtor was therefore not released from its tax
For these reasons, I would dismiss the appeal
with costs on appeal only.
Johanne Gauthier, J.A.”
Robert M. Mainville, J.A.”
Certified true translation
François Brunet, Revisor