Roseland Farms Ltd. v. Her Majesty the Queen, [1992] 2 CTC 398, 93 DTC 5008

McGillis, J. (orally):—These are my reasons for judgment in the matter of Roseland Farms Ltd. and Her Majesty the Queen.

Reasons for order

The plaintiff, Roseland Farms Ltd. (Roseland Farms), applies for an order under section 179 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") that a portion of the proceedings be held in camera.

Background

On June 30, 1992, Mr. Justice Muldoon dismissed an application by Roseland Farms to invoke section 179 of the Income Tax Act, as it existed prior to amendment in 1985. He adjourned until today the further application by Roseland Farms to invoke the existing section 179 of the Income Tax Act to have the proceedings held in camera. In particular, Roseland Farms wishes to keep the identity of two unnamed investors secret. In support of the application under section 179 of the Income Tax Act, an affidavit was filed by Murdoch MacKay, solicitor, who is president of Roseland Farms. This affidavit indicates, among other things, that Roseland Farms was set up in 1976, for the two unnamed persons, by virtue of instructions received from a company called Consultants for Canadian Investments Ltd., of Lugano, Switzerland. The reasons these unnamed persons made the investments were that a communist takeover of the Italian government was expected, and the kidnapping of wealthy investors' children was a frequent occurrence. In 1976, Italy had restrictions on the export of capital from that country, and for that reason, the investors also wish to keep their names secret. As a result, the law firm of Mr. MacKay held the shares in trust. He was instructed not to divulge the names publically, as these unnamed persons might face prosecution.

Issue

Whether the proceedings in this matter should be held in camera.

Analysis

Section 179 of the Income Tax Act provides as follows:

Proceedings in the Federal Court under this division may, on the application of the taxpayer, be held in camera if the taxpayer establishes to the satisfaction of the Court, that the circumstances of the case justify in camera proceedings.

This section places an onus on the taxpayer to establish to the satisfaction of the Court that the circumstances of the case justify in camera proceedings. In considering whether the circumstances of the case are such as to justify the holding of an in camera proceeding, it must be borne in mind that public policy favours strongly the concept that judicial proceedings be conducted openly (see Attorney General of Nova Scotia v. MacIntyre, [1982] 1 S.C.R. 175, recognized as the owner of one-half of those assets but alleged that 98 per cent belonged to her, without presenting evidence. In April 1992, the plaintiff's husband finally paid the balance of tax he owed. The plaintiff, acting throughout on her own behalf, persistently instituted and conducted vexatious and frivolous proceedings. She failed to attend in Court on four occasions and left the courtroom at the outset of the hearing on the present application.

HELD:

The applications to dismiss were granted and an order under section 40 of the Federal Court Act was made barring the plaintiff from instituting any further proceedings in this Court save by leave of the Court. Application granted.

The plaintiff appeared on her own behalf.

Douglas R. Neville for the defendant.

Cases referred to:

Foy v. Foy (1979), 26 O.R. (2d) 220, 102 D.L.R. (3d) 342;

Re Mascan Corp. v. French (1988), 64 O.R. (2d) 1, 49 D.L.R. (4th) 434;

Lang Michener v. Fabian (1987), 59 O.R. (2d) 353, 37 D.L.R. (4th) 685.

McGillis, J.:—Counsel for the Attorney General of Canada seeks an order dismissing the applications brought by the plaintiff Aurelia Vojic in files T-663-92 and T-1300-92. He also requests that an order be issued under section 40 of the Federal Court Act, R.S.C. 1985, c. F-7, as amended by S.C. 1990, c. 8, barring Mrs. Vojic from instituting any further proceedings in the Federal Court of Canada, except by leave of the Court. On August 20, 1992, I dismissed the applications of Mrs. Vojic and made the requested order under section 40 of the Federal Court Act. These are my reasons for doing so.

Background

In 1982, the Department of National Revenue assessed Lucijan Vojic, the husband of Mrs. Vojic, for the 1978 through 1980 taxation years and issued him with a notice of assessment in the amount of $20,997.94. Mr. Vojic did not file a notice of objection to the assessment and he did not pay the moneys owed. Given his failure to pay the moneys, the Department of National Revenue seized funds from a bank account held jointly by Mr. and Mrs. Vojic and issued third party demands to tenants in an apartment building in Waterloo which, according to the registered deed, was owned by Mr. and Mrs. Vojic as joint tenants. The Department of National Revenue subsequently paid back to Mrs. Vojic 50 per cent of the moneys seized from the bank account and the tenants. The remainder of the moneys seized was retained by the Department of National Revenue.

In 1984, Mrs. Vojic brought an application in court file T- 460-84 seeking an injunction against Her Majesty The Queen to prevent the Department of National Revenue from garnishing bank accounts jointly owned by Mrs. Vojic and her husband and seeking the return of moneys garnished from their joint and any other accounts.

An interlocutory injunction was granted to Mrs. Vojic on the condition that an action be instituted. She then instituted an action for a declaration that she owned a 98 per cent interest in the apartment building and the bank account, as well as an order requesting the return of moneys seized illegally and damages. The interlocutory injunction was continued by two other orders.

On November 6, 1987, the respondent brought a motion to dismiss Mrs. Vojic’s action on the basis of her failure to produce a document to establish her alleged 98 per cent ownership of the apartment building and bank accounts. Mrs. Vojic filed a cross-motion requesting, among other things, the return of the remaining moneys retained by the Department of National Revenue and the dismissal of the motion brought by the respondent. When the motion to dismiss was brought on by the respondent, Mrs. Vojic failed to appear in Court on two occasions in response to the motion.

On January 26, 1988, Madame Justice Reed ordered that Mrs. Vojic would be given 30 days within which to produce the alleged document. This order was appealed by Mrs. Vojic. The respondent then brought a motion to quash the appeal. Although it was established that the registered mail informing Mrs. Vojic of the return date of the respondent's motion had been collected, she did not appear in Court. The motion was adjourned and Mrs. Vojic was seen outside the courtroom where she was served with documentation.

The appeal brought by Mrs. Vojic from the order of Madame Justice Reed was dismissed on April 10, 1989. Mrs. Vojic then brought an application for leave to appeal to the Supreme Court of Canada which was dismissed on February 8, 1990.

On June 26, 1989, Mr. Justice McKay ordered that the action instituted by Mrs. Vojic in T-460-84 be dismissed because of failure to produce the document. This order was appealed. No steps have been taken by Mrs. Vojic in over three years to perfect this appeal.

Following the dismissal of the action, efforts were made, to no avail, to collect the moneys owing to the Department of National Revenue.

In August, 1991, the Department of National Revenue instructed the local sheriff to sell the interest of Mr. Vojic in the apartment building. Mr. Vojic was advised by letter that the building was to be sold by public auction on April 10, 1992.

Mrs. Vojic then instituted action T-663-92 requesting an order of mandamus and an injunction to prevent the apartment building from being sold. On April 6,1992, Mr. Justice Rouleau declined to order the injunction and stated that the Crown was at liberty to take whatever steps it wished in the meantime. He adjourned the matter to June 8, 1992.

At the end of April, 1992, the taxes in question including interest were paid by Mr. Vojic in the amount of $35,918.

On May 20, 1992, counsel for the respondent wrote and requested Mrs. Vojic to abandon the outstanding application for injunction and the appeal that had not been perfected during the last three years. In response to this, Mrs. Vojic filed a new notice of motion in court file T-1300-92 in which, among other things, she claimed the return of the moneys seized in 1984.

When the T-1300 notice of motion was initially returnable in Court, it was scheduled to be heard before the associate senior prothonotary. When Mrs. Vojic learned that the associate senior prothonotary would be dealing with the matter, she left the courtroom and complained that a judge should hear the application. Mr. Justice Rouleau entertained submissions from Mrs. Vojic and ordered the motion in file T-1300 to be adjourned until June 15, 1992.

On that date, Mrs. Vojic failed to attend in Court. On July 6, 1992, the motion was adjourned because of the length of the court list until August 20, 1992. It should be noted that, in addition to walking out before the associate senior prothonotary, Mrs. Vojic and her husband walked out of Court on August 20, 1992 prior to the argument on the section 40 of the Federal Court Act application, despite my attempts to explain to her the nature of the proceedings being conducted and despite my attempts to assist her, as she was unrepresented by counsel. There is also an indication that, on at least one occasion, a process server has been abused.

Issues

1. Whether the applications of Mrs. Vojic in files T-663-92 and T-1300-92 should be dismissed; and,

2. Whether an order should be made under section 40 of the Federal Court Act barring Mrs. Vojic from instituting any further proceedings in the Federal Court of Canada, except by leave of the Court.

Position of Her Majesty The Queen

Counsel for the Attorney General of Canada submits that the application in file T-663-92 in which Mrs. Vojic seeks an injunction preventing the sale of the apartment building is moot because Mr. Vojic has paid the taxes owing and the writ of execution against the property has been withdrawn. As such, there is no longer any basis for the application and it should be dismissed.

With respect to the application in file T-1300-92 in which Mrs. Vojic seeks relief pertaining to the moneys seized in 1984, these matters were essentially disposed of in action T-460-84 which was dismissed by Mr. Justice McKay for failure to produce a document. Accordingly, there is no reasonable cause of action disclosed and the application should be dismissed.

A review of the history of this matter supports the argument that an order should be made under section 40 of the Federal Court Act that Mrs. Vojic can institute no further proceedings in the Court, except by leave of the Court. Mrs. Vojic has persistently instituted vexatious proceedings or has conducted proceedings in a vexatious manner. For example, there has been relitigation of the alleged 98 per cent ownership by Mrs. Vojic of the apartment building. Although this was a material issue in action T-460-84, it was the focus of T-1300 and it also formed a part of T-663-92. There has been a multiplicity of actions. Furthermore, the appeal filed in relation to the dismissal of action T-460-84 appears to be frivolous and has not been diligently pursued. Service has been resisted on approximately two instances and there has been discourteous conduct to the Crown. Mrs. Vojic has failed to attend in Court on four occasions.

Position of Mrs. Vojic

With respect to application T-663-92, Mrs. Vojic agreed that the taxes were paid and the writ of execution against the property was withdrawn. She submits that her application in T-1300-92 ought not to be dismissed as it discloses a reasonable cause of action.

Mrs. Vojic did not make any submissions on the application brought by the respondent under section 40 of the Federal Court Act. She refused to participate in the proceedings and voluntarily left the courtroom at the outset of the application.

Analysis

Dismissal of the applications

The application instituted by Mrs. Vojic in file T-663-92 is clearly moot and, as such, discloses no reasonable cause of action. The application is therefore dismissed. With respect to file T-1300-92, a careful review of the history of all of the proceedings instituted by Mrs. Vojic reveals that this application raises essentially the same subject matter as T-460-84 which was dismissed by Mr. Justice McKay due to the failure of Mrs. Vojic to produce an alleged document. The application therefore discloses no reasonable cause of action and is dismissed.

Section 40 Federal Court Act application

Section 40 of the Federal Court Act, which came into force in February 1992, provides as follows:

Where the Court is satisfied, on application, that a person has persistently instituted vexatious proceedings or has conducted a proceeding in a vexatious manner, the Court may order that no further proceedings be instituted by the person in the Court or that a proceeding previously instituted by the person in the Court not be continued, except by leave of the Court.

Since this section is similar in wording to subsection 150(1) of the Courts of Justice Act, 1984, S.O. 1984, c.11, guidance may be obtained in determining the law applicable to vexatious proceedings by referring to judgments rendered in Ontario.

A review of the Ontario authorities reveals that the categories for vexation are never closed and the history of the proceedings must be examined carefully to determine if the conduct of the litigant is vexatious in nature. Proceedings have been held to be vexatious in circumstances where there were no reasonable grounds to institute the action, the issue had already been determined by the Court and unsuccessful appeals were pursued. (See Foy v. Foy (1979), 26 O.R. (2d) 220, 102 D.L.R. (3d) 342 (C.A.); Re Mascan Corp. v. French (1988), 64 O.R. (2d) 1, 49 D.L.R. (4th) 434 (Ont. C.A.); Lang Michener v. Fabian (1987), 59 O.R. (2d) 353, 37 D.L.R. (4th) 685 (Ont. H.C.J.)). In Lang Michener et al. and Fabian et al., supra, the Court observed that it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented

I have concluded, following a careful review of the history of the proceedings, that an order under section 40 of the Federal Court Act should be made against Mrs. Vojic.

In making this order, I have carefully considered the conduct of Mrs. Vojic in relation to the various actions which she has brought in this Court since 1984. In the various actions, there has been an attempt by Mrs. Vojic to relitigate issues, grounds and issues have been repeated and supplemented, frivolous appeals have been instituted and matters pertaining to motions or appeals have not always been diligently pursued by her. Furthermore, she has failed to appear in Court on several occasions and has shown disrespect to the Court by walking out of proceedings and by refusing to have a matter heard by the Associate Senior Prothonotary. Accordingly, the conduct of Mrs. Vojic, when viewed in its totality, demonstrates unequivocally that she has persistently instituted vexatious proceedings or has conducted a proceeding in a vexatious manner. She may not, therefore, institute any further proceedings in the Court, except by leave of the Court. Before closing, I wish to add that I have considered the matter carefully from the perspective of Mrs. Vojic, since she was unrepresented by counsel and chose not to remain in the courtroom for the proceedings on the section 40 of the Federal Court Act application.

Application granted.