Vineland Quarries & Crushed Stone Limited v. Minister of National Revenue, [1971] CTC 501, 71 DTC 5269

Noël, A.C.J.:—By notice of motion, the Minister of National Revenue applies for an order quashing the appeal of the appellant herein, Vineland Quarries & Crushed Stone Limited (hereinafter sometimes called ‘‘Vineland’’) from an income tax assessment dated September 15, 1967, wherein tax in the sum of $2,268.43 was levied in respect of income for the taxation year 1965, on the basis that:

(a) Since Vineland Quarries & Crushed Stone Limited has not served a notice of objection to the assessment, the latter is by virtue of Section 46(7) of the Income Tax Act valid and binding and no appeal lies therefrom;

(b) the purported appeal herein was instituted or attempted to be instituted without the authority of Vineland Quarries & Crushed Stone Limited and is not the appeal of Vineland Quarries & Crushed Stone Limited, the purported appellant herein.

With this application was filed an affidavit of Norris Walker who has been, since January 24, 1967, the president and director of Vineland Quarries Stone Limited, and who states therein that the notice of objection of Vineland, signed by one Ben Sauder, to the re-assessment of September 15, 1967 was never authorized as Vineland did not object to the said re-assessment nor did it authorize any person to do so on its behalf, nor did, according to Walker, Vineland authorize the appeal to this Court, nor did it authorize any person to do so on its behalf or to sign the notice of appeal, dated July 23, 1968, which is signed ‘‘ Vineland Quarries & Crushed Stone Limited’’ by its solicitors, Goodman & Carr. Walker indeed states in his affidavit that, in particular, Vineland did not authorize Messrs. Goodman & Carr, counsel of record in these proceedings, to institute the purported appeal herein.

From Walker’s affidavit it appears that St. Catharines Crushed Stone Limited purchased all of the shares of the capital stock of Vineland pursuant to an agreement in writing dated January 5, 1967, and on January 24, 1967 the agreement of purchase and sale was closed. The four persons who had previously been directors and officers of Vineland resigned, Norris Walker, the affiant, was elected president of Vineland, a number of shares were transferred to the new directors and the remainder of these shares were lodged with Canada Trust in escrow pending payment of the purchase price under the agreement. In January 1970 the shares were released from escrow and St. Catharines Crushed Stone Limited was registered in the books of Vineland as owners thereof. The names of four persons who, on January 24, 1967, resigned as officers and directors of Vineland and the positions which they held with Vineland at the time of their resignations were as follows:

From January 24, 1967 to December 31, 1967 there were four directors of Vineland, namely, Norris Walker, John G. Walker, John G. Walker II and Mamie Z. Klein. Norris Walker, the affiant, states that he has shown Exhibit C (the notice of objection signed by Ben Sauder) to each of the above persons who all say that the signature thereon is not theirs.

The Court sat in Welland, Ontario, where both counsel for the Minister, Mr. J. Bonner, and counsel for Vineland, Mr. J. D. Cromarty, Q.C., attended but where no one appeared for or on behalf of counsel of record for the appellant, Messrs. Goodman & Carr. Mr. Franklyn E. Cappell of this firm had, however, written to Mr. M. J. Bonner, counsel for the Minister, on June 22, 1971, as follows:

Re: Vineland Quarries & Crushed Stone Limited v. M.N.R.

I have now received copies of the Notice of Motion and supporting Affidavit returnable on Friday, June 25, 1971 before the presiding Judge at Welland. We do not propose to appear for the Motion.

I must say that having regard to the very serious and extraordinary situation and averments mentioned in Walker’s affidavit, and the fact that Messrs. Goodman & Carr are the solicitors of record in this appeal, their absence from the hearing on June 25, 1971 is hard to explain particularly if one considers that under the Federal Court Act (Section 11(3)) they are officers of this Court. Representations were made at this hearing on behalf of the Minister by Mr. Bonner and they were endorsed entirely by the alleged appellant, Vineland, through its counsel, Mr. Cromarty. There was, however, in view of the absence of anyone representing Messrs. Goodman & Carr, no explanation given the Court as to how this appeal could have been taken and pursued without the authorization of the appellant. The sale document of January 5, 1967 contains a clause (U), at page 6, where it is stated that the vendors shall have the responsibility of pursuing an appeal, in the Supreme Court, whereby the appellant was held to be a company related to another company in which the vendors had an interest which, of course, is not the appeal dealt with in the present proceedings. In the light of the allegations recited in Mr. Walker’s affidavit, which were fully supported by counsel for Vineland, and on the basis of the representations made before me at Welland on June 25, 1971 by both counsel for the Minister and counsel for Vineland, this application to quash should be granted and in view of the unexplained unauthorized proceedings launched by Messrs. Goodman & Carr, the costs of the respondent as well as the costs of the counsel for Vineland on the present motion, should be charged to Messrs. Goodman & Carr.

I intend to grant the present application and to hold Messrs. Goodman & Carr liable for costs. I will, however, refrain from doing so until July 8, 1971 in order to give Messrs. Goodman & Carr the possibility of objecting to the present application in writing, with copies to be sent to counsel for the Minister and of Vineland and of showing cause why they should not, in the circumstances, be condemned to pay the costs occasioned by these unauthorized proceedings.