Bruno v. R., [1999] 3 CTC 529, 99 DTC 5417

Prothonotary Hargrave*.

The Plaintiffs bring this motion requesting an order to certify the Plaintiffs’ action as a class action with the Plaintiffs representing all persons whose monies and documents have been improperly seized by the Requirements to Pay (a form of statutory garnishment) and Requirements to Provide Information and Documents (together the “Requirements”). The Plaintiffs allege the Requirements were improperly issued on behalf of the Minister of National Revenue (the “Minister”) under the Income Tax Act.

At the hearing of the motion, I denied the motion for the action does not meet the requirements of a representative action. These are promised reasons. However, before considering this in more detail some relevant facts are in order.

Facts

The Plaintiffs, Mr. Frank Bruno and his wife, Mrs. Holly Lynn Bruno, are tax debtors with a liability under the Income Tax Act. Between 1995 and 1998, the Minister issued a number of Requirements to Pay to various banks and other institutions demanding payment of money held to the credit of Mr. Bruno directly to the Minister. The Defendant, Waterfront Employers of B.C. (“Waterfront”), in response to the Requirement to Pay, sent notice to Mr. Bruno indicating its intention to comply with the Minister’s Requirement to Pay and began garnishing Mr. Bruno’s long term disability benefits. Mr. and Mrs. Bruno initiated this action against Her Majesty the Queen and Waterfront for unlawful seizure of monies. They specifically claim that the Crown failed to follow correct procedures in issuing Requirements to Pay.

The Plaintiffs, Mr. Robert Ernest Hanover and his wife, Mrs. Catherine Hanover, are also tax debtors. The Minister issued a Requirement to Pay and a Requirement to Provide Information and Documents to various banks and the institutions including to the Defendant, Surrey Metro Savings Credit Union (“Surrey Metro”). Surrey Metro, in compliance with the Minister’s Requirements, put Mr. Hanover’s bank account in abeyance for a year and made payment directly to the Minister from the funds in Mr. Hanover’s account. Surrey Metro also produced a number of documents to the Minister including detailed financial statements relating to Mr. Hanover. Thus the Hanovers’ suit against Her Majesty the Queen and Surrey Metro for unlawful seizure of documents.

The thrust of the Plaintiffs’ claim is that the action of the Revenue Canada officials who issued the Requirements was without statutory authority and hence wrongful. They now come to this Court to request an order certifying their action as a representative proceeding with the Plaintiffs to represent all persons whose monies have been improperly seized by the Minister by means of faulty Requirements to Pay and whose personal information, in the hands of third parties, has been improperly accessed through the use of faulty Requirements to Provide Information and Documents.

Analysis

A Preliminary Aspect

As a preliminary matter, there is an issue as to whether the Plaintiffs, as representatives of the proposed class, might fairly, properly and diligently represent all or substantially all of the members of the class.

The Plaintiffs must show that they speak for persons other than themselves who share same interests as the Plaintiffs. The test is not a rigid formula, but “a flexible tool of convenience in the administration of justice.”: John v. Rees (1969), [1970] Ch. 345 (Eng. Ch. Div.) at 370. In Pawar v. R. (1996), [1997] 2 F.C. 154 (Fed. T.D.) at 169, this Court applied the decision in “Irish Rowan” The, [1989] 2 Lloyd’s Rep. 144 (Eng. C.A.) to the effect that the class involved in the action may not necessarily cover the whole of the class of persons having the same interest as that of the possible class. The Pawar decision also applied a principle from Twinn v. R. (1986), [1987] 2 F.C. 450 (Fed. T.D.) at 464; affirmed Twinn v. Canada (Minister of Indian Affairs & Northern Development) (1987), 80 N.R. 263 (Fed. C.A.), that it is unnecessary, in a representative action, for the plaintiffs to obtain the consent of the other members of the class, even when those members do not wish to be a part of the suit the plaintiffs are bringing. Having said that, however, the Plaintiffs’ representation in a large, complex litigation may be short of the fair and adequate representation of the class that is required: see for example Native Transfer Committee at Mountain Institution v, Canada (Solicitor General) (1997), 125 F.T.R. 10 (Fed. T.D.) at 17. Failure to satisfy this condition would result in a class action being inappropriate from the outset.

It is my view that the Plaintiffs have failed to meet this condition. They have not sought to identify and recruit the members of the class, nor have they demonstrated that they speak for persons other than themselves. The Plaintiffs represent far too many views and interests to be able to properly provide legal representation for a large number of individuals. Nor have they convinced me that they have sufficient resources, or a means of raising resources, to properly conduct this litigation on behalf of a large class of people. Having said this, I will, however, consider the merits of the action as a representative action in the context of the Federal Court Rules and the case law.

Principles Applicable to a Representative Action

The provisions governing representative proceedings are codified in Federal Court Rule 114(1):

Where two or more persons have the same interest in a proceeding, the proceeding may be brought by or against any one or more of them as representing some or all of them.

The question of whether a representative action is appropriate is not a rigid formula, but rather a question of convenience. The Court must weigh detriments to the administration of justice, such as undue consumption of the time and difficulty of management, against the benefit to the Plaintiffs and other members of the class who share the common interest and grievance.

The validity of class action depends on the three basic elements enunciated in Duke of Bedford v. Ellis, [1901] A.C. 1 (U.K. H.L.) at 8. First, there must be the same interest for all parties involved; second, there must be common grievances; and third, the relief must be beneficial to all.

The B.C. Rules of Court provisions for representative actions are analogous to the Rules in this Court. The B.C. Supreme Court in Kripps v. Touche, Ross & Co. (1986), 7 B.C.L.R. (2d) 105 (B.C. S.C.), formulated the basic elements from the Duke of Bedford case into three unambiguous questions at pages 108-109. They are cited by the B.C. Court of Appeal in Pasco v. Canadian National Railway (1989), 56 D.L.R. (4th) 404 (B.C. C.A.) at page 413:

I. Is the purported class capable of clear and definite definition?

2. Are the principal issues of fact and law essentially the same as regard all members of the class?

3. Assuming liability, is there a single measure of damages applicable to all members?

I referred to this formulation in Pawar, supra, at page 164.

Clear Identification of Class

In the case at bar, the Plaintiffs assert that they speak for a clearly identifiable group of persons who are grieved by the improper exercise of the authority delegated to the Revenue Canada officials. In particular, they purport to represent all persons whose monies and property are seized by Revenue Canada without authorized delegation of statutory authority.

The class must be easily and unambiguously defined as stated by Estey J. in Naken v. General Motors of Canada Ltd., [1983] 1 S.C.R. 72 (S.C.C.). The size of the class does not bar the identification of a class, nor does the fact that much of the information needed to identify the claim is clearly in the hands of the Crown: Pawar (supra). It is not to say, however, that the representative, be it plaintiff or defendant, simply having knowledge of the members of such class will suffice. In Mayrhofer v. Canada (1993), 61 F.T.R. 81 (Fed. T.D.), Teitelbaum J. emphasized the importance of a tighter definition with respect to the identity of the class. In the present case, the Plaintiffs purport to represent any or all persons who are grieved by the measures of the Revenue Canada officials arising out of allegedly improper exercise of their authority. The perimeter of the class based on that definition alone is too ambiguous and unwieldy especially when the Plaintiffs have not shown that they speak for any other members of that class.

The Plaintiffs in our case claim that they are faced with certain obstacles in identifying the members of the class. They point to section 241 of the Income Tax Act which specifically bars any Revenue Canada officials from disclosing information about any taxpayer regardless of whether a legal proceeding is anticipated. Moreover, the provision takes priority over “any other Act of Parliament or other law.” The Plaintiffs submit that it effectively prevents them from obtaining information about other possible members of the class. The Plaintiffs’ contention is not strongly justified.

lam not convinced that the Plaintiffs had no other avenues by which to establish a following for their cause. In Pawar, supra, the sole representative plaintiff put together a group of people from various sources, including local community centres, agencies, societies, and organizations in other cities. He even went further in his endeavour to recruit members to the extent of advertising his case. As applied here, the Plaintiffs might have shown that they had at least tried a number of other methods to identify the members of the class. Dealing with Revenue Canada was not the only option available to the Plaintiffs.

Common Grievances and Interest

The second element of the class or representative action is that there must be common grievance and interest that are equally shared by all or substantially all of the members of the class. The ambit of the notion “common interest and grievance” is relatively broad and permissive. However, there can not be too many variables among the individual claims. I decided in Native Transfers, supra, that where the claims of the members of the class depend too much on the circumstances of the individual claimants, the class action would not be appropriate since the claims would be subject to too many variables. See also Kiist v. Canadian Pacific Railway (1981), [1982] I F.C. 361, 37 N.R. 91 (Fed. C.A.). In the present case, there is no indication, other than by way of submissions during argument, that there are people other than the Plaintiffs who share the same grievances and the same interests as the Plaintiffs. Nor is there any indication that the members of the proposed class will have the same common interests and grievances as do the Plaintiffs.

The interests of the individual Plaintiffs vary even among themselves to an extent that would confuse the class. For example, the Plaintiff Mr. Bruno seeks the return of the monies seized, whereas the interest of another Plaintiff, Mrs. Bruno, is to nullify the registered tax certificate on her property in New Westminster. Mrs. Hanover is concerned with money she is said to owe on Child Tax Benefits and on B.C. Family Bonus payments. Such a degree of difference, albeit against a common Defendant, would preclude a notion of common interest. Now some of these shortcomings might be addressed by Mrs. Bruno and Mrs. Hanover discontinuing their actions, but other problems remain. For example there is also the fact that, in the case of the impugned Requirements to Pay, the underlying tax liabilities remain until settled. Many taxpayers may already have settled tax liabilities involving Requirements to Pay. They may be getting on with life and may not wish to participate in having these settlements set aside: here, for example, see Cairns v. Farm Credit Corp. (1991), 49 F.T.R. 308 (Fed. T.D.) at 311.

As Mr. Justice Estey emphasized in Naken, supra, at 98, it is not enough to “string together a series of similar claims against a common defendant”

A Common Benefit to All Members

The last element required for the class action is that the benefit arising from the action, whether in damages or in the form of declaratory or injunctive relief, should be beneficial to all members of the class. The Supreme Court of Canada, in the Naken decision, defined the common benefit as all members of the class having the same interest in the outcome of the judgment. This Court in Cairns, supra, at page 311, further elaborated on this concept, stating that the outcome of the class action should, at a minimum, have the practical impact on each member of the class. See also Native Transfers, supra at page 18. In the present case, however, no single measure of damages will be adequate since the remedies sought by each of the Plaintiffs vary substantially. All the more so, one might expect, the remedies of the represented class would need to be tailored to fit each individual situation. Furthermore, the Plaintiffs have not provided materials to show that the remedy that they seek will be adequate for all members of the proposed class, or in the alternative, will have pragmatic impact on all members of the class.

Conclusion

I must deny the Plaintiffs’ motion to appoint the Plaintiffs as the representatives of the members of the proposed class for the Plaintiffs have not brought their proposed class action within the framework set out in the Duke of Bedford case as defined and refined by the modern cases. This decision will have no bearing on the ability of the Plaintiffs to continue a challenge of the particular Requirements on their own behalf. However, I neither make any finding, nor was I asked to do so, as to either the propriety of some of the peripheral causes of action or the place of Mrs. Bruno and Mrs. Hanover in challenging the Requirements.

Motion dismissed.