Sheppard,
J.:
The
respondents
apply
by
way
of
notice
of
motion
to
set
aside
the
ex
parte
orders
of
the
Honourable
Judge
van
der
Hoop
dated
October
12,
1988.
The
orders
sought
to
be
set
aside
emanate
from
two
separate
proceedings
numbered
A882918
and
A882919,
Vancouver
Registry.
The
parties
agreed
that
both
motions
be
heard
together.
On
October
12,
1988,
in
both
proceedings,
van
der
Hoop
L.J.S.C.
authorized
the
Deputy
Minister
of
National
Revenue,
Taxation
to
take
forthwith
and
from
time
to
time
any
or
all
of
the
actions
described
in
paragraphs
225.1
(1)(a)
to
(g)
inclusive
of
the
Income
Tax
Act
as
provided
by
subsection
225.2(2)
of
the
same
Act,
as
amended
by
Bill
C-139
and
enacted
September
13,
1988.
At
the
conclusion
of
the
submissions
of
counsel
I
set
aside
both
those
orders,
reserved
on
the
question
of
costs
and,
as
there
does
not
seem
to
be
much
judicial
authority
on
these
sections,
promised
some
written
reasons.
These
are
those
reasons.
Paragraphs
225.1(1)(a)
to
(g)
and
subsection
225.2(2)
are
set
out
below:
225.1
(1)
Collection
restrictions.
—Where
a
taxpayer
is
liable
for
the
payment
of
an
amount
assessed
under
this
Act
(in
this
subsection
referred
to
as
the
'unpaid
amount’),
other
than
an
amount
payable
under
Part
VIII
or
subsection
227(9),
the
Minister
shall
not,
for
the
purpose
of
collecting
the
unpaid
amount,
(a)
commence
legal
proceedings
in
a
court,
(b)
certify
the
unpaid
amount
under
section
223,
(c)
require
a
person
to
make
a
payment
under
subsection
224(1),
(d)
require
an
institution
or
person
to
make
a
payment
under
subsection
224(1.1),
(e)
require
the
retention
of
the
unpaid
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)
before
the
day
that
is
90
days
after
the
day
of
mailing
of
the
notice
of
assessment
225.2
(2)
Authorization
to
proceed
forthwith.
—Notwithstanding
section
225.1,
where,
on
ex
parte
application
by
the
Minister,
a
judge
is
satisfied
that
there
are
reasonable
grounds
to
believe
that
the
collection
of
all
or
any
part
of
an
amount
assessed
in
respect
of
a
taxpayer
would
be
jeopardized
by
a
delay
in
the
collection
thereof,
he
shall,
on
such
terms
as
he
considers
reasonable
in
the
circumstances,
authorize
the
Minister
to
take
forthwith
any
of
the
actions
described
in
paragraphs
225.1(1)(a)
to
(g)
with
respect
to
the
amount.
Counsel
for
the
petitioner
proffered
the
affidavit
of
Daryl
Blaine
Byblow
as
support
for
the
order
he
sought
before
van
der
Hoop
L.J.S.C.
Mr.
Byblow,
a
Collections
Investigation
Officer
employed
at
the
Vancouver
District
Taxation
office,
deposed
that
the
respondent
Dick
Atchison
had
concealed
income
and
assets
with
an
intent
to
evade
payment
of
income
tax.
The
grounds
for
his
belief
had
their
source,
inter
alia,
in
two
affidavits
filed
by
Dick
Atchison's
estranged
wife,
Wilma
Atchison,
sworn
November
20,
1987
and
December
9,
1987,
and
filed
in
the
matter
of
her
divorce
from
Dick
Atchison.
I
quote
from
these
affidavits:
From
page
6
of
the
November
20,
1987
affidavit:
Throughout
our
marriage,
the
Petitioner
frequently
gave
me
large
sums
of
cash
for
various
purposes
.
.
.
and
that
the
Petitoner
did
not
account
to
the
Ministry
of
National
Revenue
for
that
cash
.
.
.
From
page
11
of
the
December
9,
1987
affidavit:
.
.
.
there
was
at
one
time
registered
in
my
maiden
name
a
property
on
which
there
sat
a
house,
situate
at
Gambier
Island.
The
house
construction
was
financed
by
monies
given
to
me
by
the
Petitioner.
The
Petitioner
specifically
asked
me
to
acquire
the
property
in
my
maiden
name
and
specifically
asked
me
to
invest
the
cash
he
gave
me
in
the
construction
of
the
house
thereon
in
order
that
he
might
hide
the
monies
which
were
expended
on
the
property
from
the
Income
Tax
Department.
Mr.
Byblow
was
also
informed
by
Special
Investigations
Officer
Dell
Spencer
that
the
source
of
income
which
Dick
Atchison
disclosed
fell
far
short
of
accounting
for
his
cash
expenditures.
Mr.
Byblow
further
deposed
that
Dick
Atchison
had
knowledge
of
the
trade
of
trafficking
in
marijuana.
His
grounds
for
that
belief
derived
from
the
reasons
for
judgment
of
McMorran
C.C.J.
in
action
X78-240,
New
Westminster
Registry,
wherein
Dick
Atchison
was
charged
with
possession
of
marijuana
for
the
purpose
of
trafficking.
A
further
ground
for
that
belief
was
based
on
information
received
from
Dell
Spencer
that
Dick
Atchison
kept
large
sums
in
cash,
almost
always
paid
cash
for
purchases,
and
could
not
credibly
explain
the
source
of
the
cash.
Mr.
Byblow
further
deposed
that
he
was
informed
by
Dell
Spencer
that
she
had
obtained
information
from
Wilma
Atchison's
divorce
lawyer,
John
C.
Fiddes,
that
Dick
Atchison
might
be
considering
a
move
out
of
the
country.
Mr.
Byblow
attempted
to
buttress
this
information
with
a
list
of
Dick
Atchison's
travel
destinations
in
the
years
1981
to
1987,
some
39
trips
in
total.
Mr.
Byblow
also
deposed
that
Dick
Atchison
was
in
the
process
of
divesting
himself
of
assets
and
converting
them
into
cash.
He
referred
specifically
to
the
court
ordered
sale
of
his
personal
residence
on
Gambier
Island
and
a
proposed
sale
of
a
parcel
of
land
adjoining
that
residence.
In
short,
Mr.
Byblow
deposed
that
collection
of
income
tax
from
Dick
and
Wilma
At-
chison
was
in
“jeopardy”
for
the
purpose
of
subsection
225.2(2)
of
the
Income
Tax
Act
as
it
was
his
belief
that
Dick
Atchison
appeared
very
likely
to
flee
the
country
or
conceal,
divest,
or
dissipate
assets,
rather
than
pay
income
tax.
On
the
basis
of
the
foregoing
information
van
der
Hoop
L.J.S.C.
granted
ex
parte
orders
with
respect
to
both
Wilma
and
Dick
Atchison,
with
the
provision
that
Wilma
Atchison
was
at
liberty
to
apply
to
vary
the
order
on
one
day's
notice
and
Dick
Atchison
was
to
be
given
appropriate
notice
as
to
his
statutory
right
pursuant
to
subsection
225.2(8)
to
apply
to
set
aside
the
order.
Counsel
for
Wilma
Atchison
submits
that
Wilma
does
not
owe
any
income
tax,
but
has
been
assessed
on
what
the
Department
of
National
Revenue
characterizes
as
a
"non-arm's
length"
transfer
from
her
husband
Dick,
in
the
form
of
the
transfer
of
the
matrimonial
home
in
the
context
of
their
divorce
proceedings.
More
importantly,
Wilma’s
solicitor
makes
the
point
that
the
affidavit
evidence
presented
to
van
der
Hoop
L.J.S.C.
does
not
set
out
the
grounds
with
respect
to
the
Department
of
National
Revenue's
concerns
in
relation
to
the
collection
of
tax
from
Wilma.
The
Byblow
affidavit
is
concerned
solely
with
allegations
in
respect
of
Dick
Atchison.
Counsel
for
the
Department
of
National
Revenue
submits
that
Wilma
was
an
active
participant
in
concealing
assets
which
belonged
to
her
husband.
In
my
view,
this
allegation
has
no
bearing
on
the
test
that
must
be
met
pursuant
to
subsection
225.2(2).
That
test
is
set
out
in
Danielson
v.
M.N.R.,
[1986]
2
C.T.C.
380;
86
D.T.C.
6518,
wherein
the
court
considered
the
predecessor
section
of
subsection
225.2(2):
.
.
.
the
issue
is
not
whether
the
collection
per
se
is
in
jeopardy,
but
rather
whether
the
actual
jeopardy
arises
from
the
likely
delay
in
the
collection
thereof.
[Emphasis
added.]
I
note
that
although
subsection
225.2(2)
has
been
recently
amended,
it
remains
the
same
as
its
predecessor
except
with
respect
to
the
provision
that
the
Minister
of
National
Revenue
must
now
obtain
judicial
approval
before
he
may
proceed
with
a
collection
pursuant
to
subsection
225.2(2).
The
Department
of
National
Revenue
have
clearly
not
addressed
the
issue
of
delay
with
respect
to
Wilma
Atchison
and
on
that
ground
alone
the
order
of
van
der
Hoop
L.J.S.C.
dated
October
12,
1988
must
be
set
aside.
Counsel
for
Dick
Atchison
makes
the
following
submissions
with
respect
to
the
contents
of
the
Byblow
affidavit
vis-a-vis
his
client.
Mr.
Atchison
has
been
involved
in
continuous
negotiations
with
Revenue
Canada
since
December
of
1987
to
resolve
his
alleged
liability
for
taxes.
He
has
received
notices
of
assessment
for
the
years
1981
to
1986
totalling
approximately
$400,000.
With
respect
to
the
alleged
concealment
of
income
and
the
grounds
deposed
by
Daryl
Byblow,
Mr.
Atchison
submits
that
he
has
not
concealed
income
or
assets
for
any
purpose.
Specifically,
he
denies
financing
any
house
construction
on
the
Gambier
property
and
instructing
his
wife
Wilma
to
acquire
the
property
in
her
maiden
name.
With
respect
to
the
allegation
that
Mr.
Atchison
has
derived
income
from
the
drug
trade,
the
taxpayer
admits
he
has
convictions
for
drug
possession,
but
he
submits
that
they
are
over
ten
years
old
and
have
no
bearing
on
this
application
pursuant
to
the
Income
Tax
Act.
Mr.
Atchison
further
submits
that
he
has
no
intention
of
moving
out
of
the
country
and
cannot
explain
why
his
wife's
divorce
lawyer
would
offer
that
information.
In
that
regard,
Wilma
Atchison's
divorce
lawyer,
John
C.
Fiddes,
responded
to
this
particular
allegation
in
his
affidavit
dated
November
3,
1988
wherein
he
states:
That
I
have
read
the
said
affidavit
of
the
said
Daryl
Byblow
who
states
in
paragraph
8
thereof
that
he
was
advised
by
the
said
Dell
Spencer
and
believes
that
on
August
4,
1988
the
said
Dell
Spencer
spoke
to
me
and
I
advised
that
'Dick's
recent
travels
had
given
rise
to
concern
that
Dick
might
be
considering
a
move
out
of
the
country.'
I
deny
this
and
say
that
I
did
not
have
any
such
discussion
with
the
said
Dell
Spencer
on
that
day,
in
fact,
I
was
on
vacation
at
that
time.
[Emphasis
added.]
With
respect
to
the
allegation
of
excessive
travel,
the
taxpayer
submits
that
this
has
no
relevance
on
his
ability
or
willingness
to
pay
taxes
to
Revenue
Canada.
Further,
he
denies
making
a
number
of
the
trips
alleged
and
offers
a
reasonable
explanation
for
his
frequent
visits
to
certain
other
locales.
None
of
the
foregoing
constitutes
evidence
of
an
intention
to
flee
the
country.
Moreover,
counsel
for
Dick
Atchison
submits
that
the
divestiture
of
certain
assets
was
a
result
of
court
orders
obtained
in
the
context
of
a
matrimonial
action
between
the
respondents.
The
respondent's
final
submission
centres
on
the
test
which
Revenue
Canada
must
meet
in
subsection
225.2(2).
The
key
portion
is
as
follows:
where
.
.
.
a
judge
is
satisfied
that
there
are
reasonable
grounds
to
believe
that
the
collection
of
all
or
any
part
of
an
amount
assessed
in
respect
of
a
taxpayer
would
be
jeopardized
by
a
delay
in
the
collection
thereof,
The
repealed
section
of
the
Income
Tax
Act
respecting
jeopardy
collection
reads:
225.2(1)
.
.
.
where
it
may
reasonably
be
considered
that
collection
of
an
amount
assessed
in
respect
of
a
taxpayer
would
be
jeopardized
by
a
delay
in
the
collection
thereof.
.
.
The
respondent
cites
Danielson
v.
M.N.R.,
supra,
for
the
proposition
that
the
crux
of
subsection
225.2(1)
is
the
matter
of
collection
jeopardy
by
reason
of
a
delay
in
collection
normally
attributable
to
the
appeal
process:
The
wording
of
subsection
225.2(1)
would
seem
to
indicate
that
it
is
necessary
to
show
that
because
of
the
passage
of
time
involved
in
an
appeal
the
taxpayer
would
become
less
able
to
pay
the
amount
assessed
.
.
.
the
mere
suspicion
or
concern
that
delay
may
jeopardize
collection
would
not
be
sufficient
per
se.
The
onus
lies
with
Revenue
Canada
to
show
that
a
delay
in
collection
will
jeopardize
the
collection
process.
The
following
passage
from
1853-9049
Quebec
Inc.
v.
The
Queen,
[1987]
1
C.T.C.
137;
87
D.T.C.
5093
is
also
instructive:
The
Minister
may
certainly
act
not
only
in
cases
of
fraud
or
situations
amounting
to
fraud,
but
also
in
cases
where
the
taxpayer
may
waste,
liquidate,
or
otherwise
transfer
his
property
to
escape
the
tax
authorities:
in
short,
to
meet
any
situation
in
which
a
taxpayer's
assets
may
vanish
into
thin
air
because
of
passage
of
time.
[Emphasis
added.]
After
considering
all
the
submissions
and
affidavit
evidence
my
conclusion
is
that
the
Department
of
National
Revenue
was
not
justified
in
seeking
a
jeopardy
collection
order
against
the
respondent
Dick
Atchison.
In
coming
to
this
conclusion
I
make
the
following
observations.
While
delay
is
at
the
crux
of
this
legislation,
Revenue
Canada
has
not
proffered
sufficient
evidence
with
respect
to
delay
caused
by
the
respondent.
The
evidence
before
me
indicates
that
any
delay
in
this
matter
is
delay
attributable
to
employees
of
Revenue
Canada.
The
affidavit
of
the
respondent's
tax
lawyer,
E.G.
Kroft,
deposes
to
a
continuing
series
of
meetings
with
Revenue
Canada
on
Dick
Atchison’s
behalf.
Throughout
these
discussions
Dell
Spencer
reiterated
the
“interim”
nature
of
assessments
which
had
been
served
on
the
respondent
and
that
further
assessments
would
follow
as
their
sources
were
investigated.
In
September
of
1988
an
employee
of
the
Appeals
Division
of
Revenue
Canada
requested
that
Mr.
Kroft
postpone
further
discussion
concerning
Dick
Atchison's
assessments
until
January
of
1989,
pending
investigation
by
the
Department
of
Justice.
With
respect
to
evidence
of
delay
originating
with
the
respondent,
I
reject
the
petitioner's
allegations
that
the
respondent
was
planning
on
leaving
the
country
or
dissipating
his
assets.
There
is
no
evidence
of
either
before
me.
The
law
is
clear
that
persons
applying
ex
parte
to
the
court
must
use
the
utmost
good
faith,
and
if
they
do
not,
they
cannot
keep
the
results
of
their
application:
Lazard
Bros.
&
Co.
v.
Banque
Industrielle
de
Moscou,
[1933]
A.C.
289
(H.L.);
Kraupner
v.
Ruby
(1957),
21
W.W.R.
145
(B.C.C.A.).
In
my
view,
the
ex
parte
applications
were
not
justified,
as
the
Crown
did
not
make
full
disclosure
with
respect
to
the
allegations.
Accordingly,
I
confirm
that
the
ex
parte
orders
of
van
der
Hoop
L.J.S.C.
dated
October
12,
1988
with
respect
to
both
Dick
and
Wilma
Atchison
are
set
aside
and
order
that
the
respondents
shall
have
their
costs
against
the
petitioner.
Motion
granted.
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