Bruno v. R., [1999] 4 CTC 37, 99 DTC 5421

Prothonotary Hargrave:

These reasons arise out the Crown’s motion to strike out the whole of this action as being without a reasonable cause of action. The motion goes on to seek alternatives, including the removal of Holly Lynn Bruno and Catherine Hanover as Plaintiffs. In the further alternative, the Crown seeks particulars. The alternatives were not argued at the hearing of the motion to strike out the whole of the Statement of Claim, but that primary relief having been denied, the alternatives now become relevant and may be argued at a future date.

Background

The main thrust of the action, commenced 14 December 1998, is a challenge of the vires of Requirements to Pay, a form of statutory garnishments, and of Requirements to Provide Information and Documents (referred to collectively as the “Requirements”), issued to third parties under the Income Tax Act.

In the case of Frank Bruno, the Requirements to Pay were based on an assessment of tax against Mr. Bruno. These Requirements to Pay were directed to the Defendants, Surrey Metro Savings Credit Union (“Surrey Metro”) and to Waterfront Employers of B.C. (“Waterfront”) and also to the Plaintiff, Holly Bruno. Mr. Bruno’s claim against Surrey Metro and Waterfront seems to be that they ought to have disregarded the Requirements to Pay, however the propriety of the action against Surrey Metro and against Waterfront are for some other time.

Mr. Robert Hanover challenges a number of Requirements to Pay directed to various banks, to Investor’s Group and to Surrey Metro. Mr. Hanover also challenges a Requirement to Provide Information and Documents which was delivered to Surrey Metro.

Mrs. Holly Bruno’s interest in the proceeding seems to be the removal of a tax certificate, issued in October of 1997 and registered against property which she owns. Mrs. Catherine Hanover’s complaint is first that she has been assessed $1,069.29 as owing to the Minister of National Revenue pursuant to Canada Child Tax Benefits and B.C. Family Bonus, 1995 through 1997. Mrs. Hanover also challenges a tax liability of $2,167.22, for 1995 and 1996. While one might wonder at Mrs. Bruno’s and Mrs. Hanover’s choice of remedy, an action as opposed to the remedy contained in the Income Tax Act, I am to deal with the portion of the motion seeking removal of those two individuals, as Plaintiffs, at some later date.

The ground for the challenge to the Requirements is an interesting one. It is similar in both instances, being an alleged failure of the Minister of National Revenue to follow correct procedure, namely causing, permitting or allowing the Requirements to be signed by a Ministry of National Revenue official who is not specifically authorized by legislation, but who presumably signed as a delegate of the Minister or of the Deputy Minister of National Revenue.

The relief the Plaintiffs claim includes a return of funds said to be improperly seized, damages, a declaration that Requirements are invalid if not issued by the Minister of National Revenue or by the Deputy Minister of National Revenue and injunctive relief restraining the Crown from issuing Requirements which do not comply with the Income Tax Act. Other relief is claimed: the Crown has reserved the right to challenge specific portions of that relief, specific paragraphs of the Statement of Claim and the propriety of Mrs. Bruno and Mrs. Hanover as Plaintiffs.

Analysis

The striking out of a pleading, particularly of a statement of claim, thereby denying a plaintiff a day in Court, must not be done lightly. For that reason the established case law requires that it be plain, obvious and beyond doubt that an action cannot succeed by reason of want of jurisdiction. I must, in testing for a reasonable cause of action, neither examine the merits of case nor approve the cause of action, but merely, without extrinsic evidence, examine the statement of claim as it stands by itself, assume the facts are true, so long as not absurd and then determine if the plaintiff has an arguable case. Only if “it be obvious that the plaintiffs’ action is so clearly futile that it has not the slightest chance of succeeding, whoever the judge may be before whom the case could be tried...” should I deprive a plaintiff of a day in Court: Creaghan v. R., [1972] F.C. 732 (Fed. T.D.) at 736, a decision of Mr. Justice Pratte, as he then was. In short, it is for the party moving to strike out to show that the proceeding is futile.

Here I have also kept in mind that part of the remedy sought is declaratory. Declarations should be made with caution. They are clearly a matter of discretion. Generally, a pleading ought not to be struck out where it is at the Trial Judge’s discretion whether to allow a remedy: see for example Lower Similkameen Indian Band v. Allison (1996), 115 F.T.R. 247 (Fed. T.D.) at 250.

The motion, as ably argued on behalf of the Crown, deals with the substance of this action, a challenge of the way in which the Requirements were issued.

The Crown’s argument going to an absence of a reasonable cause of action is that this action ought to have been brought as an application for judicial review, for it is a challenge of Requirements issued by the Minister of National Revenue, by way of delegation of authority under sections 224 and 231.2 of the Income Tax Act. The Crown’s submission is then to the effect that a challenge of the authority to delegate statutory powers is properly brought by way of judicial review and here refers to Jones and deVillars on Administrative Law, Second Edition, 1994, Carswell, at page 370, under the heading of “Granting Delegated Powers in Broad or Subjective Terms”, the passage being:

The doctrine of ultra vires means that a statutory delegate can only act within the ambit specifically granted by legislation, and judicial review is generally available to determine the legality of a delegate’s action.

The Crown goes on to submit that the Minister of National Revenue, when exercising jurisdiction or powers under the Income Tax Act, acts as a federal board, commission or other tribunal as defined in section 2(1) of the Federal Court Act and here the Crown cites a passage from James Richardson & Sons Ltd. v. Minister of National Revenue (1980), [1981] 2 W.W.R. 357 (Man. Q.B.) at 361-362, setting out that the respondent, the Minister of National Revenue, “...who purported to exercise powers conferred on him by the Income Tax Act, an Act of the Parliament of Canada, was undoubtedly a ‘federal board, commission or other tribunal’ within the meaning of s. 2 of the Federal Court Act”.

The Crown goes on to refer to ICN Pharmaceuticals Inc. v. Canada (Patented Medicine Prices Review Board) (1996), [1997] 1 F.C. 32 (Fed. C.A.) at 71, for the proposition that declaratory relief against a federal board is available only on judicial review. There the Federal Court of Appeal obviously had in mind section 18(3) of the Federal Court Act which makes it clear that various extraordinary remedies, including injunctions and declaratory relief, may only be obtained on an application for judicial review commenced under section 18.1 of the Federal Court Act. Of course, in ICN Pharmaceuticals Inc. there was also the problem that there was no decision to review, rather merely an opinion of counsel acting for the Patent Medicine Prices Review Board.

Next the Crown cites Joli-Coeur c. R., [1998] 4 C.T.C. 7 (Fed. T.D.), a decision of Mr. Justice Pinard, involving a challenge of the Minister of National Revenue’s retention of a monthly spouse’s allowance, by way of set off, of a tax liability of Mr. Joli-Coeur, the plaintiff. This set off was under section 224.1 of the Income Tax Act: the Crown says that the facts in Joli- Coeur are analogous to those in the present instance and points to the determination by the Judge that the relief sought by Mr. Joli-Coeur, as plaintiff, ought to have been sought by way of judicial review.

The Crown concludes with the point that merely by claiming damages, as part of a remedy, the Plaintiff has not saved the present action, there referring to Johnson-Paquette v. R., an unreported 26 November 1998 decision of Madame Justice Tremblay-Larner in action T-165-98 [reported (1998), 159 F.T.R. 42 (Fed T.D.)]. From that case the proposition is that the plaintiff, having failed to exhaust a grievance procedure and the possible resulting judicial review might not, in substitution, seek a review by way of an action for damages in tort, relying upon Lameman v. Gladue (1995), 95 F.T.R. 220 (Fed. T.D.).

All of this and other case law does establish that if the Minister is a “federal board, commission or other tribunal”, the Federal Court has jurisdiction to grant injunctive and declaratory relief only in the context of judicial review under section 18 of the Federal Court Act: see for example Williams v. Lake Babine Band (1996), 194 N.R. 44 (Fed. C.A.) at 46. Yet the Plaintiffs mount substantial argument that the Minister is not such a federal board, commission or tribunal and that an action is the proper vehicle for their claim. I now turn specifically to points raised by the Plaintiffs in opposition to this motion.

The Plaintiffs’ response to all of this is first, that Richardson was concerned with the jurisdiction of the Federal Court, that the point of the passage deeming the Minister a federal board was somewhat in passant and that, as a decision of the Manitoba Court of Queen’s Bench, it is not binding.

The points made about the Richardson case, by the Plaintiffs, are certainly arguable. Yet it is the Plaintiffs’ second submission that is the more telling comment on the Richardson case and it is that Richardson predates the Supreme Court of Canada decision in Fee v. Bradshaw (1982), 137 D.L.R. (3d) 695 (S.C.C.). There, at page 701, Mr. Justice Chouinard, who delivered the judgment of the Court said, in determining the nature of the Minister of National Revenue, whether or not a board, that:

Is the decision before the court an administrative decision or the exercise of a discretionary power, to use the expressions employed by appellants and by the writers cited -- for that is what s. 18 is applicable to. The jurisdiction of the Trial Division of the Federal Court under that section extends to “any federal board, commission or other tribunal’, that is, to “any body or any person or persons having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of the Parliament of Canada”.

Only to the extent that he makes an administrative decision or exercises a discretionary power could it be argued that the Minister of National Revenue is included in the definition of the words “board, commission or other tribunal” as a person having jurisdiction or powers conferred by or under an Act of the Parliament of Canada, and consequently, that may be subject to the superintending and reforming power of the Trial Division.

In effect, only where the Minister makes an administrative decision, or a discretionary decision, “could it be argued” that the Minister of National Revenue is a board, commission or other tribunal as defined in the Federal Court Act.

Building upon Fee v. Bradshaw counsel for the Plaintiffs makes the argument that what occurred in the present instance was not an administrative error on the part of the Minister, for it is not a challenge of an alleged improper delegation, but rather the Plaintiffs say that no such delegation ever took place. This, as characterized by the Plaintiffs, amounts to neither an administrative decision, nor an improper exercise of power by the Minister, nor a review of a decision by the Minister. On this characterization it might well be that the Minister is not a “federal board, commission or other tribunal” subject to judicial review. All of this is certainly arguable and, by itself, grounds for allowing the Plaintiffs to continue with the action generally, but perhaps not as to specific aspects which, as I have pointed out, were reserved for later argument. Yet this argument can be bolstered further and I have in mind here an unreported 30 December 1998 decision of Mr. Justice Muldoon in Harris v. R., action T-2407-96 [reported (1998), [1999] 2 F.C. 392 (Fed. T.D.)]. Harris does not make new law, but rather considers and applies existing law.

In the Harris case the plaintiff, as a taxpayer, challenged the consistency of the Minister who made a tax ruling and then did not follow it, resulting in substantial tax going uncollected. Mr. Harris, in a representative capacity, sought a declaration to bind the defendants, the Queen and the Minister of National Revenue, to compel them to conduct their duties properly.

The argument mounted by the defendants in Harris, to strike out the statement of claim, was similar to that in the present instance. There the defendants said that the proceeding ought to have been brought as a judicial review application. Mr. Justice Muldoon dealt with that argument, in part, as follows:

[11] The defendants challenge this Court’s jurisdiction to adjudicate such a claim, which, they say ought to have been brought under Federal Court Act subsection 18(1) and (3). Of course, the extraordinary remedies available through judicial review pursuant to subsection 18(3) and 18.1(1) and (3) cannot be invoked against the Crown, because it is no “federal board, commission or other tribunal” as defined in section 2 of the Act. Can it be, then, that the Crown is immune from an action for a declaration, in one proceeding along with a Crown Minister? That will be so if the Federal Court Act and other federal statutes make no other provision.

[12] Section 17 of the Court’s statute provides for “relief against the Crown”, and the plaintiff invokes subsections 17(1) and (5)(b), which are adequate to support the prosecution of the plaintiff’s claims against the Crown and its minis- ters and servants, if there be a cause of cognizable by this Court. Those provisions are:

17.(1) Expert as otherwise provided in this Act or any other Act of Parliament, the Trial Division has concurrent original jurisdiction in all cases where relief is claimed against the Crown.

(5) The Trial Division has concurrent original jurisdiction

(a) ...

Mr. Justice Muldoon, in Harris, went on to refer to Pica v. /?., [1985] 1 C.T.C. 160 (Fed. T.D.), for the proposition that the Federal Court has, in similar circumstances, found jurisdiction on which to found an action in section 17(1) of the Federal Court Act, a jurisdiction allowing it to give declaratory relief. Granted, Pica predates section 18(3) of the Federal Court Act, which limits extraordinary remedies, such as declarations and injunctions, to judicial review proceedings. Yet some meaning must be given to section 17 of the Federal Court Act. Indeed, as Associate Chief Justice Jerome pointed out in Pica: “There have also been a number of cases in which the jurisdiction of this Court to issue declaratory relief under section 18 of the Federal Court Act has been questioned, but these plaintiffs do not seek relief under section 18. They have commenced an action authorized by section 17.” (page 162). In coming to this conclusion Associate Chief Justice Jerome referred to Fee v. Bradshaw (supra) in which the application for an injunction was dismissed, there being no judicial review remedy under section 18, because the Minister was not acting as a federal board, commission or other tribunal.

Conclusion

In conclusion, the Crown’s motion to strike out the whole of the Statement of Claim is denied. This is not to say that the Plaintiffs will be successful, but merely to say that their cause of action, framed as an action, is not plainly and obviously one that will not succeed.

In reaching this conclusion I make no finding as to some of the specific portions of the Statement of Claim which are challenged in the motion, but not yet argued, or as to whether either Mrs. Bruno or Mrs. Hanover have a reasonable cause of action. These are points which were reserved by counsel for the Crown, counsel for the Plaintiffs not being in a position to make argument.

The costs of this motion may be spoken to at the conclusion of argument of the balance of the Crown’s motion.

Motion dismissed.