The Queen v. Gary Bowl Ltd., 74 DTC 6401, [1974] C.T.C 457 (FCA)

Thurlow, J (all concur):—This is an appeal from an order of the Trial Division refusing an application for judgment on the basis of admissions contained in the pleadings. The proceeding in the Trial Division is an appeal by the Crown from a judgment of the Tax Review Board which allowed an appeal from what are commonly referred to as “nil assessments” for the years 1967, 1968 and 1969 and referred them back to the Minister for reconsideration and reassessment.

The rule invoked in support of the Crown’s application was Rule 341 which reads as follows:

RULE 341. A party may, at any stage of a proceeding, appiy for judgment in respect of any matter

(a) upon any admission in the pleadings or other documents filed in the court, or in the examination of another party, or

(b) in respect of which the only evidence consists of documents and such affidavits as are necessary to prove the execution or identity of such documents,

without waiting for the determination of any other question between the parties.

The learned trial judge after citing a passage from the judgment of Jackett, P (as he then was) in Libby-Owens-Ford Glass Company v Ford Motor Company of Canada et al, [1969] 1 Ex CR 440 at 444, refused the application on the grounds that the issue involved a question or questions of law and the application was for a judgment disposing of the whole matter and in his view Rule 341 was not intended or appropriate for such a motion.

The wording of Rule 341 is somewhat different from that of the earlier Exchequer Court Rule 256B(2) and similar rules which have been in effect in England and other common law jurisdictions for many years but the object of the rule does not appear to me to differ in any essential respect from that of the other similar rules. In my opinion the application of Rule 341 is not confined to situations in which several causes of action are involved in a proceeding and the admissions warrant judgment on some of them but not on others and I do not think the observations of Jackett, P in the Libby-Owens-Ford Glass case should be read as limiting the rule to such situations.

The English counterpart of Rule 341 was commented on by Jessel, MR in Thorp v Holdsworth (1876), 3 Ch D 637, in the following terms at page 640:

The 11th rule of Order XL enables the Plaintiff or Defendant to get rid of so much of the action as to which there is no controversy. That is the meaning of it. It may be that the whole issue may not be in controversy, and thereupon either party may be entitled to move on admissions of fact in the pleadings.

in Gilbert v Smith (1876), 2 Ch D 686, Mellish, LJ discussed the same rule as follows at page 688:

I think that rule 11 of Order XL was framed for the express purpose, that if there was no dispute between the parties, and if there was on the pleadings such an admission as to make it plain that the Plaintiff was entitled to a particular order, he should be able to obtain that order at once upon motion. It must, however, be such an admission of facts as would shew that the Plaintiff is clearly entitled to the order asked for, whether it be in the nature of a decree, or a judgment, or anything else. The rule was not meant to apply when there is any serious question of law to be argued. But if there is an admission on the pleadings which clearly entitled the Plaintiff to an order, then the intention was that he should not have to wait, but might at once obtain any order which could have been made on an original hearing of the action.

In that case the only cause of action was for partition of lands and the claim was for partition and an order for necessary inquiries. The plaintiff’s title having been admitted the order for the inquiries was made under the rule.

The rule is, however, limited, as the passages I have quoted appear to me to indicate, io situations where as a result of admissions, etc there is nothing in controversy either in the action as a whole or in a particular part or parts of it. Even when all the necessary facts have been admitted but the legal result of them is still in controversy the rule is not appropriate if the legal question is a serious or fairly arguable one. The rule as I understand it cannot properly be invoked as an alternative to setting down for determination before trial under Rule 474 a point of law that arises on the pleadings. Under that rule it is for the Court to determine whether a point of law which is in controversy should be dealt with before trial or not and a party is not entitled to circumvent the exercise of that discretion by bringing a motion for judgment on admissions and seeking to have the point argued and determined on the hearing of that motion. On the other hand when the material facts are clearly admitted and the result of the application of the law to them is not in doubt so that it is apparent that a plaintiff is entitled ex debito justicia to the relief which he claims in the action or that a defendant is entitled to judgment dismissing the action against him, as the case may be, a motion under Rule 341 is an appropriate procedure to obtain such relief immediately in lieu of allowing the action to proceed to a trial which in the end can have no other result.

in the present case as it was admitted that the respondent’s appeal to the Tax Review Board was from nil assessments for the years 1967, 1968 and 1969 the question arises whether in view of the decision of the Supreme Court of Canada in Okalta Oils Ltd v MNR, [1955] SCR 824; [1955] CTC 271; 55 DTC 1176, there is any serious or fairly arguable question of law remaining to be argued as to the respondent’s right to appeal therefrom. In my opinion there is not.

The respondent’s position on the question was founded largely on the judgment of Cameron, J in Anjulin Farms Ltd v MNR, [1961] Ex CR 381; [1961] CTC 250; 61 DTC 1182, where it was held that the word “assessment” in subsection 46(4) was broad enough to refer to an assessment at nil dollars. That was not, however, a decision on the extent of the right of appeal from assessments conferred by section 59 and in view of the distinctions between assessing tax, interest or penalties and notifying a person that no tax is payable and between a notice of original assessment and a notification that no tax is payable, made by the repeal and substitution of subsection 46(4) by Statutes of Canada 1960, c 43, and the enactment of subsection 58(4) by the same amending statute, it is at least doubtful whether the word “assessment” in the amended subsection 48(4) can bear the interpretation given it by the Anjulin Farms case as it appeared in its context in the earlier subsection.

In my opinion the facts having being admitted and the legal result thereof being clear that the respondent had nothing to complain of in his appeal to the Tax Review Board the right of the Crown to have the judgment of the Tax Review Board set aside and the appeal from the nil assessments dismissed was made out.

The only other point in the case is whether the judgment of the Board must be treated as a nullity from which no appeal to the Trial Division would lie under section 60 of the Income Tax Act with the result that the Crown’s remedy would be limited to certiorari to quash or an application under section 28 of the Federal Court Act.

On this point I think the Tax Review Board, which is constituted as a court of record to hear appeals in taxation matters, had jurisdiction to entertain the appeal for the purpose of ascertaining whether the appellant had a right to relief from an assessment of tax. While it ought to have been apparent immediately that there was no relief to which the appellant was entitled or which the Board could properly grant and that the appeal should be dismissed on the principle of the Okalta judgment, I do not think this by itself went to the jurisidiction of the Board to deal in that way with what purported to be an appeal to it under section 59 of the Act. This appears to me to be established by the Okalta judgment where Fauteux, J (as he then was) said at page 825 [273, 1177]:

Upon the consideration of this case or any other question related to the merit of this case, we are precluded to enter, for there was no right of appeal from the decision of the Minister to the Board nor, therefore, to the Exchequer Court: the objection taken in this respect, by the respondent, before the Board and again in the Exchequer Court, should Have been decided and maintained.

(Italics mine.)

The Board having decided the objection in the present case and rejected it and having allowed the appeal and referred the matter back for reconsideration and reassessment it seems to me that its judgment must be regarded as a decision on an appeal under section 59 within the meaning of section 60. The Trial Division in my opinion accordingly had jurisdiction to entertain the Minister’s appeal to it from the decision of the Tax Review Board and to hear and maintain the objection that the respondent had no right of appeal from the “nil assessments”.

I would allow this appeal and direct the entry of judgment allowing the Minister’s appeal from the decision of the Tax Review Board and restoring the “nil assessments” in question. The respondent is, however, entitled to costs of the appeal and in the Trial Division as provided by subsection 178(2) of the Income Tax Act, Statutes of Canada 1970-71-72, c 63.