The Minister of National Revenue v. William Durocher, [1951] CTC 176, [1951] DTC 497

THORSON, P.:—On July 27, 1950, a certificate made under section 108 of The Income Tax Act, Statutes of Canada, 1948, chapter 52, was registered in this Court showing that certain amounts payable under the Act by the defendant had not been paid and that more than 30 days had expired after his default. These amounts were $154.66 by way of penalty and $158.76 as interest on taxes deducted at the source by the defendant from his employees and not remitted by him for 1948 and for 1949 up to September 28. On the registration of this certificate it had the same force and effect as if it were a judgment obtained in the Court for a debt of the amount specified therein plus interest to the day of payment. Thereupon, on September 26, 1950, a writ of fieri facias issued out of this Court to the Sheriff of the Judicial District of Montreal, in which the defendant resides, and a seizure of certain goods and chattels of the defendant was made thereunder. On November 29, 1950, the defendant signed an objection to the writ which was filed in this Court on December 16, 1950, claiming that he was not indebted and that the writ was null and void.

It is questionable whether the defendant has adopted the proper procedure in bringing his objection before the Court, but I am of the opinion that it is sufficiently before the Court to permit a disposition of it on the merits.

The facts are not in dispute. The defendant was subject to the requirements of section 44(1) of the Act for the year 1949 and the corresponding section 92(2) of the Income War Tax Act, R.S.C. 1927, chapter 98, for the year 1948. The former provides as follows:

11 44.(1) Every person paying salary or wages or other remuneration

to an officer or employee, a superannuation or pension benefit, a retiring allowance, an annuity payment, director’s fees or fees, commissions or other amounts for services, at any time in a taxation year shall deduct or withhold therefrom such amount as may be prescribed and shall, within one week of the day when he became liable to make the payment or at such other time as may be prescribed, remit that amount to the Receiver General of Canada on account of the payee’s tax for the year under this Part’’.

Section 92(2) of the Income War Tax Act imposed a similar requirement. The defendant failed to meet these requirements. The amounts of tax at the source deducted from his employees but not remitted came to $1,203.05 for 1948 and $384.20 for the period of 1949 up to September 28, making a total of $1,587.25. The defendant’s failure to remit the deducted amounts subjected him to penalties and interest in addition to the above amounts.

Section 112(9) of the Act provides:

"112.(9) Every person who has failed to remit an amount

deducted or withheld as required by this Act or a regulation is liable to a penalty of 10% of that amount or $10, whichever is the greater, in addition to the amount itself, together with interest on the amount at the rate of 10% per annum.”

There are analogous provisions in section 84(2) and 92(16) of the Income War Tax Act.

The penalties came to $120.30 for 1948 and $34.36 for 1949 making a total of $154.66 and the interest to $135.90 for 1948 and $11.12 for 1949, making a total of $147.02, which had grown to $158.76 at the date of the certificate. On December 19, 1949, the defendant paid $250.00 on account of his indebtedness. On March 18, 1950, a complaint and charge was laid against him before a judge of the Sessions of the Peace at Montreal that he had failed to comply with the requirements of section 92(2) of the Income War Tax Act and that the sum of $953.03 for the period from January 8, 1940, to December 29, 1948, remained unpaid. On April 18, 1950, a similar complaint and charge was laid of failure to comply with the requirements of section 44(1) of the Income Tax Act and that the sum of $384.20 for the period from January 5, 1949, to September 28, 1949, remained unpaid. On June 21, 1950, the defendant pleaded guilty to the charges laid and was fined $35.00 and costs on the first charge and $200.00 and costs on the second one, making a total of $246.00 which fines were paid. By this date he had paid the balance of the amount of tax deductions which he had failed to remit, but denied his liability to pay any penalty or interest. This led to the registration of the certificate, the issue of the writ. the seizure thereunder and the present proceedings of contestation of the validity of the writ.

The defendant became liable to pay the fines under sections 119(2) of the Income Tax Act and section 92(9) of the Income War Tax Act. The former provides as follows:

"119.(2) Every person who has failed to comply with or contravened

subsection (1) of section 44, subsection (5) of section 112, section 114 or section 115 is guilty of an offence and, in addition to any penalty otherwise provided is liable on summary conviction to (a) a fine of not less than $200 and not exceeding $10,000, or (b) both the fine described in paragraph

(a) and imprisonment for a term not exceeding 6 months. ‘ ‘

Section 92(9) of the Income War Tax Act contains analogous provisions except that there is no provision for a minimum fine.

The defendant bases his objection to the writ on the saving clause in section 119(3) of The Income Tax Act for which I find no counterpart in the Income War Tax Act. This reads as follows:

‘119.(3) Where a person has been convicted under this section

of failing to comply with a provision of this Act or a regulation, he is not liable to pay a penalty imposed under section 51, section 112, or section 117 for the same failure unless he was assessed for that penalty or that penalty was demanded from him before the information or complaint giving rise to the conviction was laid or made.’’

It was submitted for the defendant that since he had been convicted for failing to comply with section 44(1) of the Act and had paid his fine he was not liable to pay the penalty or interest imposed under section 112.(9). When the case first came before me on April 16, 1951, I held that the saving clause made no reference to the subject of interest and that the objection to the writ so far as the interest was concerned could not be sustained. But there was no evidence whether the defendant had been assessed for the penalty or whether it had been demanded from him before the information or complaint giving rise to the conviction was laid or made except certain statements contained in the certificate and I adjourned the hearing so that evidence on this point might be adduced.

Counsel for the defendant urged that he ought not to be subjected to two penalties for the same fault. The answer to this submission is in the Act itself. Under section 112.(9) the defendant became liable to a penalty for his failure to remit the amounts of tax which he had deducted but not remitted and section 119(2) made him guilty of an offence and liable to punishment by fine or fine and imprisonment in addition to any penalty otherwise provided. There is no possible escape for the defendant from this double liability except through the door of the saving clause of section 119(3), provided that it is open to him. But it is not open unless all the conditions of the saving clause are shown to be present. If the defendant had not been assessed for the penalty or it had not been demanded from him before the complaints were made on March 18, 1950, and April 18, 1950, his objection to the penalty would have been well founded. But the evidence now before me is that the defendant was assessed for the penalty and also that it was demanded from him before the dates mentioned. The statement of Raymond Cadieux, an officer of the Department of National Revenue in its Montreal division, charged with the collection of tax deductions at the source is, I think conclusive. It shows that on October 14, 1949, the defendant was assessed for $1,587.25 for tax deductions, $154.66 for penalty and $147.02 for interest. This is sufficient, without anything more, to take the defendant out of the benefit of the exemption conferred by section 119(3). I am also satisfied that the penalty was demanded from him not only by the notice of assessment, dated October 14, 1949, but also by a demand made on November 8, 1949. That being so, the defendant is not entitled to the benefit of the exemption conferred by section 119(3).

It follows that there is no foundation for his objection to the validity of the writ and the seizure made thereunder. There will, therefore, be judgment dismissing the objection with costs.

Judgment accordingly.