Fuchs v. R., [1997] 2 CTC 246, 98 DTC 6560

Teitelbaum J.:

The Applicant, Gerald Fuchs, filed an application for judicial review and an affidavit in support of his application on July 16, 1996. As stated in the Applicant’s Originating Notice of Motion, the purpose of the present proceeding is to obtain “judicial review of the decision of the Minister of National Revenue (the “Minister”) communicated to the Applicant on June 26, 1996 wherein the Applicant’s request dated June 25, 1996 that the Minister cease all proceedings to collect debts previously owing to the Minister by the Applicant for his 1974 through 1978 taxation years was denied”.

With the Court’s permission during the oral hearing on February 18, 1997, the Applicant filed a second affidavit sworn on February 13, 1997. The Respondent, Her Majesty the Queen, filed the affidavit, sworn of August 14, 1996 of Peter Irving, a Collection Officer for the Minister.

Facts

To better understand why the June 26, 1996 telephone conversation is the subject of the current application, it is necessary to review the Applicant’s rather tangled history with the Canadian tax authorities. In 1981, the Applicant was assessed for his 1974 through 1978 taxation years. On March 25, 1982, the Minister filed a certificate with the Federal Court, certifying a tax debt due by the Applicant in the amount of $61,370.91 (see Exhibit “B” to the Irving affidavit). The Applicant appealed this assessment to the Tax Court of Canada. On February 17, 1984, the Applicant reached a settlement with the Minister. On August 7, 1985, new notices of assessment, in the amount of $15,082.31 reflecting the settlement amount and interest, were issued to the Applicant for his 1974 through 1978 taxation years. According to the Applicant, he never made any payments under this settlement for the taxation years 1974 through 1978 (paragraphs 4 and 6, Mr. Fuch’s first affidavit).

Beginning on August 12, 1991, the Minister retained the Applicant’s goods and services tax credits (hereinafter GST) to set off the Applicant’s outstanding settlement debt. As well, in October 1994 and March 1996, the Minister sent a Requirement to Pay Notice under Section 224 of the Income Tax Act, R.S.C. 1985, (5th Supp.) c.1, (hereinafter Income Tax Act) to Ager Holdings Ltd., a residential construction company of which the Applicant is the sole shareholder. In October 1994, and January 1995, a Requirement to Pay notice was also sent to the Hongkong Bank of Canada to claim a portion of the Applicant’s registered retirement savings plan account (hereinafter RRSP). Both Ager Holdings Ltd. and the Hongkong Bank of Canada complied with the notices and remitted funds to the Minister.

Events appeared to come to a head in the summer of 1996. In prior numerous telephone conversations between the Applicant and the employees of the Minister, the Applicant voiced his outrage at the sums taken in repayment of the debt. He claimed that the deductions left him strapped for funds. However, in paragraphs 17 and 18 of Mr. Irving’s affidavit, certain facts about Ager Holdings Ltd. appear to undermine the Applicant’s invocations of poverty. Paragraphs 17 and 18 state:

17. To the best of my knowledge and belief, the Applicant is a 100% shareholder of Ager Holdings Ltd. The Corporate Financial Records of Ager Holdings Ltd. show a Shareholder loan of $158,000 due by the corporation to its shareholder. This Shareholder loan has no repayment terms.

18. To the best of my knowledge and belief, Ager Holdings Ltd. owned a house located at 2171 Deep Cove Road. This property was listed for sale on or around February 1995 for $429,000.00. The mortgage on this property was approximately $273,000.00 in 1995.

Finally, on June 26, 1996, Applicant’s counsel communicated with Mr. Irving of the Minister’s Collection Department, his belief that the Applicant’s tax debt in fact had been extinguished under British Columbia’s Limitation Act, R.S.B.C. 1979 c. 236 (hereinafter the Limitation Act).

In reference to the June 26, 1996 telephone conversation with the Applicant’s counsel, Mr. Irving states in paragraph 25 of his affidavit:

25. The Applicant indicates in his originating Notice of Motion that he is asking for judicial review of my decision on June 26, 1996. The only communication I had regarding the Applicant’s tax account on June 26 , was with Mr. Craig Sturrock, the Applicant’s lawyer. Mr. Sturrock and I discussed the statute barred issue, and the Montgomery [Montgomery v. Minister of National Revenue (1995), 95 D.T.C. 5032 (Fed. C.A.) (F.C.A.)] decision referred to above that the Minister has no discretion over pre-1985 taxation year interest. The information communicated to Mr. Sturrock during this conversation was consistent with all my previous conversations with the Applicant and with his representatives to the effect that we had no legal discretion to do what they wanted us to do with the Applicant’s tax account.

Issue(s)

In his Application Record, filed with the Court on September 12, 1996, the Applicant states the issue to be decided as:

The sole issue in this application for judicial review is whether Her Majesty the Queen (the “Crown”) is bound by the limitation period prescribed by the British Columbia Limitation Act in respect of debts due to the Crown under the Income Tax Act (the “Act”).

However, I subscribe to the more comprehensive list of issues provided in the Respondent’s Amended Application Record dated November 22, 1996. They are:

a) whether the Applicant has instituted a valid application for judicial review;

b) whether a claim for an amount owing under the Income Tax Act (the “Act”) is a cause of action arising in a province in the context of section 32 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50;

C) whether the provisions of the Act “otherwise provide” so that section 32 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50 is inapplicable.

The other issues flow from the first question of the validity of the application for judicial review. Is a statement made during a telephone conversation by a Collection Officer of the Minister to the Applicant’s counsel, the topic of this conversation being the applicability of the Limitation Act, a decision or order of a federal board, commission or other tribunal for the purposes of judicial review? In paragraph 25 of his affidavit quoted above, Mr. Irving admits to discussing the “statute barred issue”.

Section 2 of the Federal Court Act, R.S.C. 1985, c.F-7 defines “federal board, commission or other tribunal” as:

any body or any person or persons having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament or by or under an order made pursuant to a prerogative of the Crown, other than any such body constituted or established by or under a law of a province or any such person or persons appointed under or in accordance with a law of a province or under section 96 of the Constitution Act, 1867;

I am satisfied that Mr. Irving, a Collection Officer for the Minister, can be considered a “federal board, commission or other tribunal”. As the representative of the Minister, Mr. Irving can make decisions that may be binding on the Minister. However, the mere fact that Mr. Irving fits into the definition under Section 2 does not mean that all of his statements can be considered as decisions subject to judicial review.

On the issue of the formal requirements for judicial review, Section 18.1 of the Federal Court Act states:

18.1 (1) An application for judicial review may be made by the Attorney General of Canada or by anyone directly affected by the matter in respect of which relief is sought.

(2) An application for judicial review in respect of a decision or order of a federal board, commission or other tribunal shall be made within thirty days after the time the decision or order was first communicated by the federal board, commission or other tribunal to the office of the Deputy Attorney General of Canada or to the party directly affected thereby, or within such further time as a judge of the Trial Division may, either before or after the expiration of those thirty days, fix or allow.

(3) On an application for judicial review, the Trial Division may

(a) order a federal board, commission or other tribunal to do any act or thing it has unlawfully failed or refused to do or has unreasonably delayed in doing; or

(b) declare invalid or unlawful, or quash, set aside or set aside and refer back for determination in accordance with such directions as it considers to be appropriate, prohibit or restrain, a decision, order, act or proceeding of a federal board, commission or other tribunal.

(4) The Trial Division may grant relief under subsection (3) if it is satisfied that the federal board, commission or other tribunal

(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;

(b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;

(c) erred in law in making a decision or an order, whether or not the error appears on the face of the record;

(d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it;

(e) acted, or failed to act, by reason of fraud or perjured evidence; or

(f) acted in any other way that was contrary to law.

(5) Where the sole ground for relief established on an application for judicial review is a defect in form or a technical irregularity, the Trial Division may

(a) refuse the relief if it finds that no substantial wrong or miscarriage of justice has occurred; and

(b) in the case of a defect in form or a technical irregularity in a decision or order, make an order validating the decision or order, to have effect from such time and on such terms as it considers appropriate.

More specifically, under Subsection 18.1(2) of the Federal Court Act, an application for judicial review must be made within thirty days of the decision or order of the federal board, commission or other tribunal. The Respondent argues that the current application for judicial review must fail because it is out of time. The Respondent, if I understood the submission, also submits that a mere telephone conversation cannot form the basis of a decision for the purposes of a judicial review. This minor issue of how a decision is to be communicated can be easily resolved. I am satisfied because a “decision” is communicated to a party in a telephone conversation, the nature of the decision is not altered. If a decision of a Minister (or his or her representative) is communicated to a party by any means, such a decision can be the subject of judicial review providing that the decision disposes of a substantial question before the federal board, commission or

other tribunal: Mahabir v. Canada (Minister of Employment & Immigration). (1991), [1992] 1 F.C. 133 (Fed. C.A.) (F.C.A.).

However, I do not conclude that what was communicated to the Applicant’s Counsel on June 26, 1996 actually constitutes a “decision”. What is claimed to be a decision in this application for judicial review is merely the expression of a Collection Officer’s opinion in the course of an apparently wide-ranging telephone conversation discussing the collection of funds owed for income taxes. The actual decision setting events in motion, the collection of the Applicant’s GST credits beginning in 1991, and the issuance of the Requirements to Pay in 1994, took place more than thirty days before the current application for judicial review. In fact, in his Originating Notice of Motion, the Applicant sought orders to quash these Requirements to Pay and declare invalid the Minister’s retention of the GST credits.

The Applicant offered a novel but ultimately groundless submission on the issue of the validity of the application for judicial review. If I found, as I have done above, that the June 26, 1996 conversation was not a “decision”, the Applicant still argued that the application for judicial review could proceed. According to the Applicant, for the purposes of judicial review, the June 26, 1996 conversation between Mr. Irving and the Applicant’s Counsel does not even have to constitute a “decision or order”. The Applicant argued that there is no need for a thirty day limitation period when the federal board, commission or tribunal has not made a decision but merely initiated an “act or proceeding”. The Applicant submitted that the Court is entitled to issue a writ of Prohibition against the acts or proceedings of the Minister in the case at bar, namely, the issuance of Requirements to Pay and the retention of GST credits, no matter when they occurred. To substantiate its unorthodox claim, the Applicant cited tantalizing bits of phrases and allusions from the Federal Court Act which appear to go beyond the strict confines of “decision or order” and refer to an “act or proceeding”: (Section 18.1(3)(b)) and “or other matter” (Rule 1602(2)(f)). With respect, I cannot accept the Applicant’s strained reading of the statute. In his efforts to highlight how there is ostensibly a separate category of matters subject to judicial review besides “decisions or orders”, the Applicant did not provide the Court with even the wisp of a judicial precedent or comment from the doctrinal writers. Another grave difficulty is that even by the Applicant’s own account, judicial review of an “act or proceeding” under paragraph 18.1(3)(b) is restricted to prohibiting an act or proceeding of the federal board, commission or tribunal in a prospective manner. In the case at bar, the Minister began to “act” in 1991 and 1994 by withholding the Applicant’s GST credits and issuing Requirements to Pay.

It was for the Applicant to have commenced the necessary legal proceedings within the thirty day delay when the Respondent retained the Applicant’s GST credits or issued Requirements to Pay. At that time, he might have alleged that no monies were owing because of the statutory prescription. In the case of Canada (Anti-Dumping Tribunal), Re, [1976] 2 S.C.R. 739 (S.C.C.), the Court exercised its discretion to refuse judicial review where the applicant, without explanation, delayed two years in moving against a tribunal’s decision. In the case at bar, the Minister has been deducting funds in payment of the tax debt since 1991 from the Applicant’s other sources of income.

During the course of oral submissions, the Applicant also suggested that if I found the Applicant to be out of time, he requested, pursuant to subsection 18.1(2) of the Federal Court Act, an extension of time for the judicial review. I refused to consider such an option. The Applicant could not offer a valid explanation for why he had failed to file his application for judicial review within the legal delays. As I informed counsel for the Applicant, the Applicant’s purported ignorance of the law, lack of sophistication or scarcity of funds are not valid reasons for granting an extension of time. Indeed, this extension would be for a substantial period of time. It would be for at least two to two and one-half years if we consider October 26, 1994 as the latest date (the date the Minister began to issue Requirements to Pay) or five and one-half years if we consider the date of August 12, 1991 (the date the Minister began to withhold the GST credits). In addition, I have no evidence to indicate that the Applicant had any intention to contest the legality of the Minister’s decision by way of a judicial review application.

I am therefore satisfied that the Applicant is out of time to bring an application for judicial review of the Minister’s decision to set off the GST payments or the Minister’s decision to issue Requirements to Pay. The application for judicial review is therefore invalid. In view of my decision on this preliminary issue, the subsequent questions concerning whether collection on a tax debt is a cause of action arising in a province or whether the Income Tax Act otherwise provides a limitation period do not arise.

Application dismissed.