Olympia Interiors Ltd. v. R, [1998] 3 CTC 83, 98 DTC 6306

MacKay J.:

In the course of a pre-trial conference on October 29, 1997, and again at a pre-trial conference on December 2, 1997, there was discussion of a motion on behalf of the plaintiffs for joinder of issues raised in the plaintiffs’ action (Court file T-1436-92) and in two Court files, GST-41-92 and ITA-8447-92, each of which relates to a certificate filed pursuant to statute on behalf of the Minister of National Revenue, for the defendant, Her Majesty the Queen.

At the conclusion of the discussion on December 2, 1997, the Court indicated that after review of the record in the Court’s files it would issue an order disposing of the matter.

On December 5, 1997 written Directions issued by the Court summed up matters agreed to be dealt with, as therein outlined, at the conference on December 2, 1997. Those Directions included the following:

2. Joinder of Issues

MacKay J. will issue an Order, after review of the record in the file as referred to by Mrs. David and by Mr. McPhadden. (At this stage, subject to review of the record, it seems that applications by the plaintiffs to strike out the certificates of the Minister, which form the basis of proceedings in Court files GST-41-92 and ITA-8447-92, have been dismissed by the Court. No persuasive reason, and no ground of jurisdiction for this Court (MacKay J.) to reconsider the matter has been presented and it is expected the Order, when issued, will dismiss the application for joinder of issues.

An order is now issued dismissing the plaintiffs’ motion for the reasons that follow.

The background

In the action in Court file T-1436-92 the plaintiffs, now represented by Mary David, who is not a lawyer but who is acting both for herself and on behalf of the corporate plaintiff, seek damages and other relief arising from alleged malicious prosecution by Her Majesty’s officers who had earlier initiated criminal prosecution for alleged evasion of taxes said to be owed under the Excise Tax Act and payments said to be owing under the Income Tax Act. Criminal proceedings initiated in August 1987 were ultimately stayed by the Crown. The plaintiffs’ action (T-1436-92) was commenced in 1992 before the certificates were filed in that same year in relation to assessments made in September 1987 by the Minister of National Revenue for excise taxes and payments under the Income Tax Act said to be owed to Her Majesty.

For the plaintiffs, Mrs. David submits that the claims of the Crown as set out in the two files initiated by filing of certificates of amounts due (files GST-41-92 and ITA-8447-92) are in essence the same claims as were the bases of the criminal proceedings in which the plaintiffs in Court file T- 1436-92 did not have opportunity to fully present their defence, that the amounts claimed by the Crown in the certificate files are in error in any event. Moreover, it is the claims of the Crown, as well as the aborted criminal proceedings, that are said to have led to the plaintiffs’ action in T-1436- 92.

Those submissions on behalf of the plaintiffs fail to take into account that assessments of tax under the Excise Tax Act, or of payments due on behalf of employees under the Income Tax Act, if not questioned by the party assessed and thereafter revised by the Minister, and here those steps did not occur, are ultimately recoverable by the Crown by filing of a certificate in this Court which certificate is then enforceable as a judgment of the Court. Here the assessments were not contested within the 90 day limitation periods applicable under the respective statutes, a period that terminated long before the certificates were filed. Moreover, the validity of those certificates does not appear to have been contested for more than two years after the certificates were filed. In the case of the certificate in Court file GST-41-92 filed in November 1992 and amended in December 1992, the first steps by Mrs. David to contest the certificates appears from the file to have been initiated in August 1995. In the case of the certificate in Court file ITA-8447-92 filed in November 1992, the first step initiated by the plaintiffs, an application for an order for particulars, was made in August 1995. As I have noted, long before those first steps were initiated, indeed before the certificates were filed, the 90-day limitation period, fixed by statute, for questioning the assessments underlying the certificates, had expired.

On October 23, 1995 two motions were filed on behalf of the corporate plaintiff Olympia Interiors Ltd. with respect to each of the certificates filed in Court files GST-41-92 and ITA-8447-92, each seeking an order that the certificate be set aside. Those motions were ordered to be heard at a later date by orders dated November 16, 1995. Subsequently, they were heard by Associate Chief Justice Jerome, together with a motion by the plaintiffs in Court file T-1436-92 for an order striking out paragraph 56 of the Amended Statement of Defence. That paragraph refers to a possible set-off, if the plaintiffs succeed in their action, of amounts owing with respect to the cor- porate plaintiff’s non-payment of taxes and failure to remit payroll deductions, plus interest and penalty. His Lordship found then, as his Reasons dated March 21, 1996 point out, that the plaintiffs’ claim was not established, and that the Crown’s paragraph 56 defence to a possible set-off was not res judicata because of the criminal proceedings, as the plaintiffs contended. Rather, as documents then filed by Mrs. David made clear, the criminal proceedings were stayed at the direction of counsel for the Attorney General of Canada and the “matter”, 1.e., criminal liability of the plaintiffs, was not disposed of by the Court which had heard evidence in the prosecution before the stay was ordered.

While those Reasons of the Associate Chief Justice make no specific reference to the plaintiffs’ motions to set aside the certificates in files GST- 41-92 and ITA-8447-92, implicitly, dismissal of the plaintiff corporation’s motion to strike paragraph 56 of the Amended Statement of Defence accepts the continuing validity of the Crown’s claims under the certificates in question.

Subsequently, the status of the certificates was implicitly supported by Orders issued on July 5, 1996 by the Associate Chief Justice, in response to motions filed October 25, 1995 on behalf of the Minister of National Revenue, one in each of files GST-41-92 and ITA-8447-92, directing Mary David, as an officer of Olympia Interiors Ltd. to attend a debtor’s examination concerning the property of Olympia Interiors Ltd. and debts owed to it.

Further, in Court files T-723-96 and T-724-96 the plaintiffs in Court file T-1436-92 brought separate applications for judicial review, seeking certiorari, mandamus, quo warranto and declaratory relief in relation to the certificate filed in Court file ITA-8447-92 and that filed in Court file GST-41- 92, respectively. Those two applications were heard together by Mr. Justice Rothstein who denied them by Orders rendered on May 30, 1996. The plaintiffs initiated appeals in relation to those two Orders of Rothstein J. but the appeals were not pursued and, upon motions of the Crown, the appeals were dismissed on July 28, 1997 (Court files A-458-96 and A-459-96).

Determination

The purpose of the plaintiffs’ application for joinder, in the application now before the Court, is essentially to raise again the question of the validity of the assessments, and of the certificates based upon them. I agree with counsel for the defendant that is not an appropriate purpose in light of the plaintiff corporation’s failure to contest the underlying assessments within the times limited by statute. Further, in view of the previous decisions of this Court by the Associate Chief Justice and by Mr. Justice Rothstein, the validity of the certificates is not a matter that is open for further review in the trial of issues arising in the action in T-1436-92. Thus, there are no issues in Court files GST-41-92 and ITA-8447-92, relating to the validity of the certificate filed in each of those files, and thus no issues to be joined with those arising in the action by the plaintiffs in Court file T-1436-92.

In conclusion, an order goes, confirming the indication given at and following the pre-trial conferences when the plaintiffs’ motion for joinder was discussed, that is that the plaintiffs’ motion is dismissed.

I direct that the original of the Order now issued and of these Reasons be filed on Court file T-1436-92, and that a copy of each of the Order and these Reasons be filed on Court files GST-41-92 and ITA-8447-92.

Motion dismissed.