Docket: T-3-17
Citation:
2017 FC 1022
[ENGLISH
TRANSLATION]
Ottawa,
Ontario, November 8, 2017
PRESENT: The Honourable Mr.
Justice Roy
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BETWEEN:
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BOREL CHRISTEN,
CLAIRE
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Applicant
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and
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CANADA REVENUE
AGENCY
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Respondent
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JUDGMENT AND REASONS
[1]
The Attorney General of Canada, acting on behalf
of the Canada Revenue Agency [CRA], is appealing the order by Prothonotary
Morneau from April 27, 2017. Such an appeal is provided for by rule 51
of the Federal Courts Rules, SOR/98-106 [Rules].
I.
Background
[2]
The hearing on October 31, 2017, allowed
for a better understanding of the imbroglio that this case is in. With the hope
of sorting everything out, this case must be placed in its context.
[3]
It appears that over the course of 2015, Ms. Borel
Christen allegedly decided to make a voluntary disclosure to Revenue Canada.
She then allegedly began discussions with her current counsel, but
unfortunately, the disclosure plan took some time to gather all the necessary
information. This means that the applicant did not make her disclosure before
the CRA reported its intention to proceed with an audit. Thus, a Revenue Canada
auditor reportedly contacted Ms. Borel Christen in late September or very
early October 2015 to notify her that an audit had been undertaken. The
applicant/motion’s respondent then contacted her counsel and she submitted a
voluntary disclosure application on October 20, 2015. This application was
dismissed, and the applicant filed a second one.
[4]
This second application for “administrative review”, which was filed on August 18,
2016, was dismissed on December 2, 2016. The decision specified that the
appropriate information circular set forth that a [TRANSLATION] “must meet four conditions to be valid. Unfortunately, your
disclosure is not valid because it is not considered to be voluntary.”
It appears that the Revenue Agency found that it [TRANSLATION] “received your disclosure on October 20, 2015, and that
we raised an audit before the disclosure date.” The decision letter
concluded by notifying the taxpayer that she can always file an application for
judicial review, which is what she did.
II.
The confusion arises
[5]
It may be that the confusion began to set in starting
with this application for judicial review. In that application for judicial
review, the taxpayer researched two conclusions. I am repeating them here:
[TRANSLATION]
a) Set aside the decision by Mr. Daniel Martineau in his letter dated
December 2, 2016;
b) Send the case back to the Assistant
Director of the CRA’s Voluntary Disclosures Program by giving him instructions
to re-open file GB162351547375 and process the applicant’s disclosure as if it
were valid, since it meets the four conditions of validity set forth in the CRA’s
applicable internal policies.
[6]
Thus, in that second conclusion, the applicant would
like the Federal Court to rule on the validity of her voluntary disclosure
application. In other words, that conclusion seeks to short-circuit the typical
process, in which a legislator chose an administrative tribunal to deal with
these issues, and replace it with a decision by the Federal Court. The
application for judicial review is not limited to sending the case back to
another administrative decision-maker. The applicant instead wants the Court to
deal with the validity of her voluntary disclosure application. The respondent
described this conclusion as a [TRANSLATION] “mandamus
conclusion”. The applicant instead described it as a “directed verdict”.
[7]
It appears that the respondent was prepared to
concede that the decision from December 2, 2016, may have been tarnished
by a procedural fairness defect. It may be alleged that this decision may be
seen by an informed person, who is examining the situation in a reasonable
manner, as being tarnished by an appearance of bias (Committee for Justice
and Liberty v National Energy Board, [1978] 1 S.C.R. 369). Thus, it agreed not
to oppose that conclusion. But things became more complicated, largely because
things were not said clearly.
[8]
In fact, the respondent chose to file an unnamed
motion on March 20, 2017. This motion, presented in writing under rule 369,
sought [TRANSLATION] “an order granting the judicial review
filed on January 3, 2017, in accordance with subsection 18(1) of the Federal
Courts Act and rules 3 and 392 of the Federal Courts Rules.”
It is not very clear what rules 3 and 392 provide. What we do know is that
the respondent’s “motion” only aimed to state
that it was prepared [TRANSLATION] “to
perform a new review of the application made by the applicant.” In other
words, we had to infer that the respondent agreed to the first conclusion in
the application for judicial review dated January 3, 2017. The conclusion
to send the case back with the instruction to accept the validity of the
voluntary disclosure application was ignored and was not part of the motion
filed on March 20, 2017. The respondent therefore dissented, arguing that such
a condition could not be imposed on it because the application for judicial
review had two components: set aside the decision dated December 2, 2016, which
the respondent seemed ready to do in its “motion”
dated March 20, 2017, but would not agree to the second conclusion sought
by the applicant, in which it would be given the possibility of filing its
voluntary disclosure.
[9]
To complicate matters, appended to that application
dated March 20, 2017, was a skirmish regarding the filing of affidavits by
two of the lawyers involved in this case. In my view, this was a useless
skirmish about which there is no need to say much.
III.
Appeal
[10]
I could not clearly understand what comprised the
motion from March 20, 2017, because the desired conclusion seemed to be
far from explicit. It appeared to aimed at forcing the applicant to consent and
thus abandon the second conclusion in its application for judicial review. In
any case, it produced Prothonotary Morneau’s order from April 27, 2017, which
sought to respond to the motion from March 20, 2017, as worded. He
declared himself competent to deal with the motion without a hearing.
[11]
Prothonotary Morneau summarily dealt with the
issue of filing affidavits. The affidavit from the taxpayer’s counsel was
admissible thanks to rule 82. The affidavit from the respondent’s counsel
in reply was denied by applying rule 369(3). He found that the CRA, even
on the face of its motion, did not acquiesce to the two conclusions sought in
the application for judicial review. The prothonotary said that he agreed with
the claims by counsel for the applicant, whereby she could not be forced to
abandon one of the conclusions in her judicial review, which would have been
the result of allowing the motion from March 20, 2017. That naturally
resulted in dismissing the motion from March 20, 2017, with costs of $300.00
in favour of the applicant/motion’s respondent (I note that as of now, the
application for costs before Prothonotary Morneau was for the amount of
$3,000.00.) It is this decision that is being appealed by the CRA.
[12]
Motions that are accessory to judicial reviews can
be heard by a prothonotary. In my view, what fed the confusion seems to be the
non-explicit nature of the unnamed motion from March 20, 2017. This was
later filed as being a motion for consent to judgment. But whose consent? It
appears that it was the respondent who wanted to consent, but did not
articulate why a motion like the one from March 20 was necessary. In fact,
we end up seeing that the respondent only wanted to consent to half of the
application for judicial review. But if such was the case, it would have had to
apply for, with arguments in support, the rejection of the second conclusion
that it claimed to be a mandamus in nature (whereas the applicant spoke
of a “directed verdict”). However, for that to
be clear, it would have to be said, and if that had been said, we could then
conclude that this was an application (a disguised one) to reject one of the
conclusions of the application for judicial review. Such an application is not
within the jurisdiction of a prothonotary of the Federal Court. Only a judge
can handle an application for judicial review on the merits. But it was not in
this clear manner that things were presented, even though the prothonotary
ultimately found that the unnamed motion for consent did not deal with the two
factors of the initial remedy, leading to this motion being dismissed.
IV.
Analysis
[13]
The incident regarding the affidavits was
useless. Counsel for the taxpayer wanted to submit evidence that he attempted
to settle this matter in response to the motion from March 20. We can see
that the CRA spoke of a planned assessment with penalties while preventing it
from abandoning the second conclusion, which the CRA sought to have set aside.
In reply, a CRA lawyer tried to submit its own affidavit.
[14]
Prothonotary Morneau simply accepted the
affidavit from counsel for the taxpayer by applying the discretion granted to
him by rule 82. He concluded that the affidavit on behalf of the moving
party in response to that of the motion’s respondent was not permitted under rule 369(3).
While it may be possible, as an exception, to file an affidavit in reply, it
was not shown where there would have been an error.
[15]
Given what was at issue, both affidavits were
irrelevant. They had no bearing on the only issue for the prothonotary to
handle: can a party that refuses to withdraw one of its arguments be forced to
consent to a judgment that drastically reduces its application? The skirmish of
affidavits, which the prothonotary quickly handled, did not change the result
in any way.
[16]
This imbroglio thus resulted in an application
that would have had to be clearer, thus favouring more expeditious handling.
Prothonotary Morneau must have been clairvoyant to refuse to allow that motion,
stating that [TRANSLATION] “it is clear that the respondent is not
seeking to acquiesce or consent to judgment following the two (2) main
conclusions of the Application”. He was right. The confusion centres on
two topics: an unnamed motion and the premature denial of conclusions sought by
an application for judicial review. Thus, the CRA was prepared to consent to
judgment, but only to admit that the certiorari part of the remedy was
well founded due to the appearance of partiality. However, over time, we
learned that it wanted the taxpayer to consent to the certiorari part,
which should not have been difficult to accomplish, but also implicitly for her
to consent to the second component, described by the parties as a mandamus
or a directed verdict, being thus withdrawn. The taxpayer flat out refused.
[17]
It was only in the respondent’s reply that that
we can see the claim emerging that [TRANSLATION] “directed conclusions” are only possible under
exceptional circumstances. However, we do not find a conclusion whereby the
second conclusion should be dismissed, without a hearing, and without providing
arguments. In its initial motion, which does not clearly indicate the desired
conclusions, aside from the application for judicial review from January 3,
2017, being granted, a cross-check of the paragraphs is needed to understand
the limited scope of consent given by the respondent. In a motion written under
rule 369, we can only expect that the desired conclusions be clearly
stated and that the arguments are articulated. Here, nothing of that sort is
apparent. The reply barely alluded to directed conclusions and referred to two
decisions at the bottom of the page.
[18]
The Attorney General’s written submissions on
appeal are such that the prothonotary had erred when concluding, citing the
applicant’s factum, which stated that we [TRANSLATION] “cannot acquiesce to the conclusion of setting aside the
impugned decision without acquiescing to other conditions desired by the
applicant and that stand out from the wording of the application”
(Memorandum of facts and law, para 33).
[19]
Even on the face of it, there is no error on
Prothonotary Morneau’s part. In fact, the Attorney General later tried to claim
that the second conclusion of the application for judicial review could only be
dismissed. It would have had to say it and present its arguments. On the one
hand, after a review of jurisprudence, I am not so certain that it would be
inevitable that the case could only be sent back for a third review; it is not
clear that it must be so. On the other hand, no such claim is found in the
motion from March 20, 2017, which is also only one page long. The claims
written in support of the motion in writing are also limited in their content,
not exceeding a single page either. It was only in the CRA’s reply on April 11,
2017, that we see that the motion from March 20 is for matters on consent.
The articulation of a position was lacking, from start to finish.
[20]
To appeal a prothonotary’s decision and to
submit that the desired conclusion in an application for judicial review cannot
be granted greatly exceeds what was claimed before the prothonotary and what
may have been decided by him. To put things directly, the prothonotary did not
have jurisdiction to reject that conclusion, whether because it was a mandamus
in nature or because it was a “directed verdict”
in nature, since that is only possible under particularly exceptional
circumstances (D’Errico v Canada (Attorney General), 2014 FCA 95 [D’Errico]
and Canada (Public Safety and Emergency Preparedness) v LeBon, 2013 FCA
55). In fact, that would be a rejection of a part of a judicial review on the
merits.
[21]
I cannot see how Prothonotary Morneau’s handling
of the motion from March 20, 2017, would constitute a reviewable decision
on appeal. The pleadings were deficient due to their vagueness. He only
responded to a motion that applied for consent to judgment from the applicant
that did not exist. The prothonotary could not find a consent that did not
exist and was unable to reject a desired conclusion in the application for
judicial review even if he were able to decipher that a similar application had
been made. What was before him was an unnamed motion that he accepted as being
for a consent to judgment so that a new review of the voluntary disclosure
application can be conducted. That was not a consent to anything that was
requested by the taxpayer. A part of the application for judicial review was
purged without really reading it, as if by implication. The prothonotary found
that this was inappropriate. If the respondent wanted to bring an end to the
application for judicial review, it would have had to consent to all the
conclusions. Not only did the respondent not show that there was a palpable and
overriding error, but in my view, the prothonotary’s decision was correct (Hospira
Healthcare Corporation v. Kennedy Institute of Rheumatology, 2016 FCA 215).
In my view, the parties must be heard on this second conclusion sought by the
taxpayer. Therefore, that means that the appeal of Prothonotary Morneau’s
decision on April 27, 2017, must be dismissed.
[22]
The Federal Court of Appeal acknowledged 22
years ago that “the direct and proper way to contest an
originating notice of motion which the respondent thinks to be without merit is
to appear and argue at the hearing of the motion itself” (Laboratories
(Canada) Inc. v Pharmacia Inc., [1995] 1 FCR 588 [David Bull] at p. 197).
The Court said that as an exception, a motion may be useful in order “to dismiss in a summary manner a notice of motion which is
so clearly improper as to be bereft of any possibility of success” (David
Bull, at p. 600). Yet it is far from being clear that an unnamed
motion, for which the conclusions were at the very least ambiguous, was useful
as part of that judicial review. And that was not helped in any way by the fact
that there was a skirmish regarding the filing of affidavits as part of a
futile remedy, such as the motion from March 20, 2017. Several months were
lost.
[23]
As I highlighted, the pleadings were deficient
and that caused some confusion, which even persisted during the appeal of the
prothonotary’s decision. In the wake of David Bull, I must add that this
confusion could have been completely avoided by contesting the second
conclusion of the application for judicial review from January 3, 2017,
during the hearing on merits. Section 18.4 of the Federal Courts Act expressly
set forth that an application for judicial review shall be heard and determined
without delay and in a summary way. If the respondent wanted to argue that rule 302
applied in this case, which may not have been clear (Habitations Îlot
St-Jacques Inc. v Canada (Attorney General), 2017 FC 535), it should have
done so in contesting the judicial review, instead of carrying on in an unnamed
motion that it said was a motion for consent to judgment. It would also be
possible at the hearing on the merits of the application for judicial review to
deal with the possibility of a “directed verdict”
that the applicant appeared to seek or the impossibility of obtaining a
conclusion that the respondent claimed was by nature a mandamus, because
the conditions were not fulfilled (D’Errico, at paras 14 et seq). The
very specific conditions under which jurisprudence would allow that type of
conclusions may be the topic of a full debate before a judge of the Federal
Court.
[24]
The appeal of Prothonotary Morneau’s order from
April 27, 2017, is therefore dismissed. The respondent, which had applied
for costs of $3,000.00 before Prothonotary Morneau, is now applying for
$5,000.00. The Court is not inclined to accept such a proposal. However, the
appeal filed by the respondent as part of this judicial review remedy was
certainly reckless. Under the circumstance, costs of $1,000.00 are awarded in
favour of the applicant, Ms. Borel Christen.
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