Attorney General of Canada v. S.F. Enterprises Inc., 90 DTC 6195, [1990] 1 CTC 289 (FCA)

MacGuigan, J.A.:—This section 28 application is brought to review and set aside a decision of Tremblay, T.C.J. of the Tax Court of Canada of March 9, 1989. That decision dismissed a motion by the applicant that the individual respondents lacked standing to appeal a tax assessment by the Minister of National Revenue against the corporate respondent.

The Minister's assessment was for the 1985 tax year. The corporate respondent filed a notice of objection to the assessment in February, 1987, claiming a refundable dividend tax credit in the amount of approximately $400,000. The corporate respondent was then dissolved on March 7, 1987.

The individual respondents were former class A shareholders of the corporate respondent to whom all of its shares were transferred by contract in consideration of their assumption of corporate liabilities.

The preliminary question on this application is whether this Court has jurisdiction. As was recently held by this Court, no clearly interlocutory decision of a judge of the Tax Court is reviewable on a section 28 application: Wiebe v. M.N.R., [1989] 1 C.T.C. 411; 89 D.T.C. 5179.

The authorities in this Court for the principle that a “decision” reviewable under section 28 must be a “final” decision of a “federal board, commission or other tribunal” were well reviewed by Heald, J.A. in Anheuser-Busch Inc. v. Carling O'Keefe Breweries of Canada Limited, [1983] 2 F.C. 71; 142 D.L.R. (3d) 548 at 75, where he said:

In support of this submission, counsel relied on the developing jurisprudence [2] in this Courton the meaning of the word "decision" as it is used in section 28 of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10. That jurisprudence is to the effect that the Federal Court of Appeal has jurisdiction to review under section 28 only final orders or decisions—that is —final in the sense that the decision or order in issue is the one that the tribunal has been mandated to make and is a decision from which legal rights or obligations flow. This jurisprudence makes it clear that the Court will not review the myriad of decisions or orders customarily rendered on matters which normally arise in the course of a proceeding prior to that final decision.

The applicant argued that Van Rooy v. M.N.R., [1988] 2 C.T.C. 78; 88 D.T.C. 6323 (F.C.A) stands for the proposition that a Tax Court decision on a motion for dismissal of a taxpayer's appeal is a decision in the sense of section 28, since it was so treated in that case. However, in my view the Court's silence on the jurisdictional issue in that case cannot be taken as an affirmation of anything except that the issue was probably not raised.

Nevertheless, some decisions that might be called interim have been found to be reviewable in recent years, even though they have disposed of less than all the issues before the tribunal. Thus in Via Rail Canada Inc. v. Butterill, [1982] 2 F.C. 830 (F.C.A), review was allowed where the determination of the quantum of monetary compensation had not yet been made by the tribunal. Brennan v. The Queen, [1985] 2 F.C. 799; 57 N.R. 116 (F.C.A), went further, in that a tribunal decision was held to be reviewable even though the tribunal had not decided even what type of award should be made. However, the incompleteness of the tribunal decisions in these cases is only as to remedy, not as to liability, and the analogy is in my opinion too distant to assist the applicant in the case at bar.

At first blush the applicant would appear to be helped by Lutes v. Commissioner of the Royal Canadian Mounted Police, [1985] 2 F.C. 326; 61 N.R. 1, where this Court reviewed and set aside a decision by the Commissioner of the R.C.M.P. to order a new review of a recommendation for discharge. However, a close reading of the reasons for judgment of Heald, J.A. on this point makes clear that what was decisive was the fact that the Commissioner had fully exercised his lawful powers, and that what followed would be in effect a new review. Heald, J.A. wrote (at 340):

Applying the Danmor test, can it be said that the Commissioner's “decision” herein is a decision which he has been expressly mandated to make? I conclude that this question must be answered affirmatively. As noted supra, subsection 21(2) of the Royal Canadian Mounted Police Act empowered the Commissioner to promulgate Bulletin AM-53 as a standing order. The procedure followed in this case is authorized and prescribed by AM-53. Paragraph 14 thereof details the procedure to be followed where there is an appeal to the Commissioner from a decision of a Board of Review. Subparagraph k, of paragraph 14 covers the circumstances in this case. It reads:

14. . . .

k. If the appeal is made by the CO, the Commissioner shall dispose of it by: 1. dismissing the appeal and confirming the decision being appealed; or

2. allowing the appeal and:

1. ordering a new review of the case by a Discharge and Demotion Board;

2. directing that the member be discharged from the Force; or

3. if the CO is appealing a recommendation that the member be retained in the Force at his present rank or level, directing that the member be demoted.

Subparagraph m. of paragraph 14 is relevant as well. It reads:

14 . . .

m. If the Commissioner orders a new review of a case by a Discharge and Demotion Board, the applicable D/Commr. or the DOP, as the case may be, shall convene a Discharge and Demotion Board and the new review shall be conducted in accordance with these procedures as if it were the first review of the case.

In this case, the Commissioner, pursuant to the provisions of paragraph 14.k.2.1., allowed the appeal and ordered a new review of the case by a newly constituted Discharge and Demotion Board. Accordingly, I think it clear that in so deciding the Commissioner was acting in the exercise of powers conferred on him by an Act of Parliament, namely the Royal Canadian Mounted Police Act. On this basis, the Danmor test is clearly met and has jurisdiction to entertain this section 28 application.

Clearly, where legislated powers have been fully utilized, there is no further decision to be made. Of course, the matter might ultimately return to the Commissioner again as the final stage of the review he ordered, but that would be in a new proceeding. The initial proceeding was exhausted by the Commissioner's decision.

In the case at bar, the decision of the Tax Court judge that the two individual respondents have standing is merely a preliminary ruling enabling the Court to proceed to consider the substantive issue relating to the appeal against the tax assessment. The disposition of such tax appeals is provided for by subsection 171(1) of the Income Tax Act, which reads as follows:

171.(1) The Tax Court of Canada may dispose of an appeal by:

(a) dismissing it, or

(b) allowing it and

(i) vacating the assessment,

(ii) varying the assessment, or

(iii) referring the assessment back to the Minister for reconsideration and reassessment.

The Tax Court, unlike the R.C.M.P. Commissioner in Lutes, has not yet made any or any part of the dispositions it is required to make under the legislation. Its statutory mandate remains to be fulfilled. The decision under attack is therefore not final but interlocutory.

The applicant argued that any right on its part to further judicial review of this question would be obviated if the Tax Court upheld the Minister's tax assessment. In other words, it would have won the war but not the battle. However, except as provided by subsection 28(4), the review provided for by section 28 of the Federal Court Act does not exist for the purpose of determining every legal issue, but for the expeditious review of final decisions of administrative tribunals.

Had the Tax Court's decision on standing gone the other way, it would have been final, because it would have finally determined the matter in dispute between the parties, but as it is, it is preliminary and interlocutory.

Since in my opinion this Court lacks jurisdiction to entertain the section 28 application. I find it unnecessary to address the other issues raised by the parties.

The section 28 application must therefore be dismissed.

Desjardins, J.A.: —I share the view and adopt the reasons for judgment of my colleague MacGuigan, J.A. that this Court has no jurisdiction to review the decision of the Tax Court rendered on March 23, 1989.

Upon a motion for dismissal filed by the applicant, the Tax Court has decided that the two respondents Elaine Fraid Rush and Diane Fraid Lissauer have standing to appeal an assessment for the year 1985 made by the Minister on August 25, 1986 and confirmed on June 7, 1988 against S.F. Enterprises, a corporation whose dissolution was pronounced by the Inspector General of Financial Institutions of Quebec as of March 7, 1987, at which time, pursuant to section 28 of the Quebec Companies Act', [1] consideration was given to a transfer agreement dated December 31, 1985 approved respectively by the board of directors and the shareholders of the corporation, whereby Elaine Fraid Rush and Diane Fraid Lissauer became successors to the assets and liabilities of the corporation. The motion for dismissal with regard to the corporation itself was granted but no review is requested on that part of the decision.

The argument pressed upon us by the applicant with regard to the two individual respondents is that the assessment being a matter between the taxpayer and the Minister, no one but the taxpayer can appeal. The decision taken by the Tax Court is in excess of its jurisdiction under section 12 of the Tax Court of Canada Act? [2] and section 169 of the Income Tax Act [3] to hear matters as between the taxpayer and the Minister. Moreover, whatever issues may be related to enforcement come under Part XV of the Act and are not of the jurisdiction of the Tax Court. The decision on standing is “final” under the terms of section 28 of the Federal Court Act.

The decision of that Court is only one of the issues related to the matter of the assessment of the corporate taxpayer by the Minister. Those who under the transfer agreement conditional to the dissolution have assumed the liabilities of the corporation request to be heard as to whether liability exists before it is pronounced and before the enforcement process is engaged. The Tax Court, at this point, has not reached as yet the decision it has a mandate to make under subsection 171(1) of the Income Tax Act [4] and from which legal rights and obligations flow (Anheuser-Busch, Inc. v. Carling O’Keefe).° [5]

I would dismiss the section 28 application.

Le Juge Marceau: —Je crois maintenant, comme mon collègue MacGuigan, que cette Cour n'a pas juridiction pour réviser immédiatement, en vertu du pouvoir que lui attribue l'article 28 de la Loi sur la Cour fédérale, cette décision de la Cour canadienne de l'impôt relative à la recevabilité de l'appel logé devant elle. Mais je suis arrivé à cette conclusion plus difficilement que lui et par un raisonnement quelque peu différent du sien, et il convient peut-être que je m'en explique brièvement.

Il m'apparaît douteux, je le dis avec égards, que l’on puisse refuser de considérer cette demande au motif qu'elle ne se rapporterait pas à une décision sujette à révision en vertu de l'article 28 de la loi constitutive de cette Cour. Ce n'est pas, bien sûr, que je pourrais oublier l'existence de cette régie jurisprudentielle aujourd'hui définitivement acquise à l'effet que la décision dont il est question dans cette disposition doit être, non seulement source de droits et d'obligations, mais aussi finale. Mais que faut-il entendre par décision finale? Pour être finale au sens de la règle, une décision doit-elle nécessairement avoir pour effet de dessaisir complètement le tribunal des procédures intentées devant lui? Je sais qu'on retrouve incidemment l'affirmation dans les commentaires sous certaines décisions, mais j'hésite pour ma part à l'affirmer. Ni le but de la règle, ni son fondement, ne permettent de lui attribuer une telle portée. C'est pour empêcher que la procédure devant les tribunaux inférieurs ne puisse être constamment arrêtée par des demandes de révision incidentes, demandes qui, par surcroît, pourraient souvent s'avérer sans aucun intérêt pratique, que cette Cour s'est employée à restreindre le sens du mot "décision" tel qu'il se trouvait dans le texte de l'article 28 de sa loi constitutive (voir les notes du juge en chef Jackett dans Le procureur général du Canada c. Cylien, [1973] C.F. 1166; 43 D.L.R. (3d) 590). Ce but n'est-il pas atteint en limitant l'exclusion à toute décision qui ne fait que mettre une instance en état de recevoir une solution, ou dont la portée ou l'intérêt pratique peut être annulée—sinon en elle-même du moins pour celui qui pouvait d'abord s'en plaindre—par la décision à suivre. C'est d'autre part uniquement par interprétation du mot “décision” que la règle a pu être dégagée. Ne doit-elle pas alors se rapporter aux caractéristiques intrinsèques de la décision plutôt qu'à des circonstances extérieures, comme le contexte dans lequel elle intervient. Je n'oublie pas que la Cour a, à maintes reprises, refusé de vérifier immédiatement l'affirmation de juridiction qu'un tribunal avait été appelé à faire en début de litige, mais on a dit, avec raison, qu'une telle prise de position, si elle était nécessaire de la part du tribunal, ne constituait pas pour autant une décision qu'il était mandaté à prononcer (Cf. B.C. Packers Ltd. c. C.C.R.T., [1973] C.F. 1194). Il me semble que la décision ici en cause en est une que le tribunal était appelé à rendre puisqu'elle portait sur le droit des intimées d'en appeler de la cotisation, que cette décision ne pouvait être reprise ou annulée par la décision finale qui, elle, ne devait porter que sur le bien-fondé de la cotisation (article 171 de la Loi de l'impôt sur le revenu), et qu'elle semblait comporter, surtout dans l'hypothèse d'une décision finale annulant la cotisation, une sorte d'irrévocabilité pour le Ministre.

Si j'en suis venu à la conclusion que la demande n'était pas recevable, c'est par suite de l'exclusion établie par l’article 29 de la Loi sur la Cour fédérale, dont je rappelle les termes:

29. Par dérogation aux articles 18 et 28, lorsqu'une loi fédérale prévoit expressément qu'il peut être interjeté appel, devant la Cour fédérale, la Cour suprême, le gouverneur en conseil ou le Conseil du Trésor, d'une décision ou ordonnance d'un office fédéral rendue à tout stade des procédures, cette décision ou ordonnance ne peut, dans la mesure où elle est susceptible d'un tel appel, faire l'objet de révision, de restriction, de prohibition, d'évocation, d'annulation ni d'aucune autre intervention, sauf dans la mesure et de la manière prévues dans cette loi.

A mon avis, le processus d’appel que la Loi de l'impôt sur le revenu, par ses articles 169 et suivants, établit pour contrer une décision de la Cour canadienne de l'impôt relative à une cotisation du Ministre du Revenu national ne permet pas d'éviter cette exclusion formelle établie par l'article 29 de la Loi sur la Cour fédérale. On sait que ce processus consiste dans le droit pour le Ministre comme pour le contribuable de saisir la section de première instance de cette Cour du problème de la légalité de la cotisation dans le cadre d'un procès de novo, où toutes les questions impliquées seront reprises sans égard aux positions adoptées par la Cour canadienne de l'impôt. Corrigeant un commentaire obiter fait dans une cause antérieure, le Président Thorson écrivait, dans M.N.R. v. Simpson's Limited, [1953] Ex. C.R. 93; [1953] C.T.C. 203 ; 53 D.T.C. 1127 aux pages 206-7 (D.T.C. 1129):

. . .The basic error lies in failure to appreciate the effect of the fact that the hearing of an appeal from a decision of the Income Tax Appeal Board to this Court is a trial de novo of the issues of fact and law that are involved. There cannot, I think, be any doubt that this is so where the appeal is by the taxpayer. It must equally be so when the Minister is the appellant. In either event the hearing in this Court must proceed without regard to the case made before the Board or the Board's decision. Consequently, where the Minister appeals from the decision of the Board allowing an appeal from the assessment the fact that the Board found the assessment to be erroneous must be disregarded. To do otherwise would be tantamount to giving effect to the Board's decision which would be inconsistent with the view that the hearing of the appeal from it is a trial de novo.

C'est encore ainsi qu'est vu ce recours des articles 169 et suivants de la Loi de l'impôt sur le revenu (Cf. Minister of National Revenue v. Maurice Taylor, [*1961] C.T.C. 211; 61 D.T.C. 1139 (C. de I’E.); H.M. the Queen v. Eric L. Lavers, [1978] C.T.C. 341; 78 D.T.C. 6230 (C.F. 1 inst.); The Queen v. Lehndorff Realty Developments Ltd., [1987] 1 C.T.C. 42; 86 D.T.C. 6610. L'adoption d'un tel mode exceptionnel d'appel non seulement rend plus difficile d'attribuer un véritable caractère de finalité aux décisions de la Cour canadienne de l'impôt, mais force à penser que le Parlement entendait mettre sur le même pied, donner le même effet et soumettre à la même voie de recours toutes les décisions de la Cour canadienne de l'impôt rendues relativement à une cotisation d'impôt [1] .

C'est à partir de ces considérations, donc, que j'en suis venu à la même conclusion que mon collègue, soit que cette demande soumise en vertu de l'article 28 ne peut être admise à procéder.

Application dismissed.