Thurlow, J (concurred in by Ryan and Le Dain, JJ):
1 This appeal is from a judgment in favour of the respondent pronounced by the Trial Division on a motion under Rule 341. By the judgment it was ordered that the respondent recover the full amount claimed in the action and costs.
2 Rule 341 reads as follows:
Rule 341. A party may, at any stage of a proceeding, apply 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,
3 The scope and purpose of this rule were recently discussed in the reasons of this Court in The Queen v Garry Bowl Limited, [1974] 2 F.C. 146, [1974] C.T.C. 457, 74 D.T.C. 6401. In general, procedure under it may properly be invoked only where on the admitted facts one party or the other is entitled to judgment and no fairly arguable question of law as to the right of that party to judgment remains to be decided or where the right of a party to judgment flows as a matter of law from the effect of documents. I should add that the rules do not provide a procedure for obtaining summary judgment on a motion supported by affidavits verifying the plaintiff's claim and negativing the existence of any defence, such as is provided for in many courts under rules corresponding in general to those of English Order 14.
4 The respondent's claim in the action was founded on a notice alleged to have been given on January 15,1973 under subsection 224(1) of the Income Tax Act requiring the appellant to pay to the Receiver General for Canada any moneys payable by the appellant to one Saverio Micucci operating as Bytown Masonry Construction up to an amount of $7,324.54, and an allegation that between January 15, 1973 and May 4, 1973 the defendant paid to Micucci amounts the aggregate of which exceeded $7,324.54. After referring to sections 222 and 224 of the Act the statement went on to submit that the appellant was liable to the Crown in the amount of $7,324.54 and to claim that amount.
5 Sections 222 and the relevant parts of section 224 read as follows:
222. All taxes, interest, penalties, costs and other amounts payable under this Act are debts due to Her Majesty and recoverable as such in the Federal Court of Canada or any other court of competent jurisdiction or in any other manner provided by this Act.
224. (1) When the Minister has knowledge or suspects that a person is or is about to become indebted or liable to make any payment to a person liable to make a payment under this Act, he may, by registered letter or by a letter served personally, require him to pay the moneys otherwise payable to that person in whole or in part to the Receiver General of Canada on account of the liability under this Act.
(2) The receipt of the Minister for moneys paid as required under this section is a good and sufficient discharge of the original liability to the extent of the payment.
(4) Every person who has discharged any liability to a person liable to make a payment under this Act without complying with a requirement under this section is liable to pay to Her Majesty an amount equal to the liability discharged or the amount which he was required under this section to pay to the Receiver General of Canada, whichever is the lesser.
6 As I read it the statement of claim, if it states a cause of action under these provisions at all, does so only by implication since it does not allege expressly that Micucci was indebted to the Crown, or in what amount, on the date of the giving of the notice, nor does it allege expressly a failure by the appellant to pay $7,324.54 to the Receiver General.
7 By its amended defence the appellant, in paragraph 1 admitted that it is a company incorporated under the laws of the Province of Ontario, but denied all the other allegations of the statement of claim. It went on to allege as follows:
2. The Defendant entered into a contract with one Saverio Micucci, operating a business known as Bytown Masonry Construction, on or about March 16, 1973, for the performance of masonry work on premises located at the Almonte Arena in Almonte, in the Province of Ontario.
3. The said contract terminated on or about May 4, 1973, and all payments made under the said contract were made by the Defendant, payable to Bytown Masonry Construction, Saverio Micucci, for the work provided by him and his workmen. The Defendant states and the fact is, that by virtue of work and services performed by Bytown Masonry Construction and its workmen, for the said Defendant, that Bytown Masonry Construction and its workmen acquired a lien on the above property for the price of the work pursuant to Section 5 of the Mechanics' Lien Act, RSO 1970, Chapter 267.
4. The Defendant states and the fact is that pursuant to Section 2 of the Mechanics' Lien Act, RSO 1970, Chapter 267, all monies received by the Defendant on account of this project to a trust in favour of all workmen on the project and accordingly monies paid to Saverio Micucci herein referred to were made conditionally upon Saveria Micucci paying his workmen their proper wages. At no time was Saverio Micucci, beneficially entitled to all the monies claimed in the proceedings herein, but rather received the largest portion of the monies as a further trustee for his workmen as their interests might be determined.
5. The Defendant therefore submits that it was not indebted to Saverio Micucci personally in the amount outlined in the Plaintiff's Statement of Claim.
8 These pleas are confusing and their form and content leave much to be desired but it seems to me that they do raise an issue as to whether amounts paid by the appellant to Micucci under the alleged contract were paid, in whole or in part, to Micucci upon a trust for Micucci's workmen and whether a payment to Micucci upon such trust is, to the extent that the workmen are the beneficiaries of the trust, a payment to which section 224 of the Income Tax Act applies.
9 To my mind this was a serious issue requiring the ascertainment of the facts as to the extent of the rights of the workmen in the amounts paid to Micucci and the determination of the question of law as to the applicability of section 224 of the Income Tax Act in respect of amounts payable to them. With such an issue raised and unresolved, in my opinion, procedure to obtain judgment under Rule 341 could not properly be invoked.
10 The learned trial judge, in his reasons, after citing paragraphs 3, 4 and 5 of the defence, stated the issue accurately when he said:
Basically the substance of these allegations is that the monies paid by the defendant to Micucci were impressed with a trust by virtue of section 2 of the Mechanics' Lien Act, RSO 1970, chapter 267, ...
but he went on to consider—possibly because of the form of the plea and the nature of the arguments advanced—whether the monies paid by the appellant had been received by the appellant in trust and after finding, from certain particulars of the defence delivered by the defendant, that such monies had not been received by the appellant in trust he proceeded to determine the question of law and concluded that there was no defence.11 With respect, I do not think the issue or the defence depended on the money having been received by the appellant upon a trust or upon money in the appellant's hands being impressed with a trust prior to the making of a payment to Micucci. The critical questions raised by the plea, as I see them were whether money was paid to Micucci upon a trust and, if so, the extent to which Micucci was not the beneficiary of that trust, and whether, to the extent Micucci was not the beneficiary, the payment was one to which section 224 of the Income Tax Act applied.
12 The foregoing is in my view sufficient to indicate that the order under appeal should not be sustained. But there are two further matters to which reference should be made.
13 The first of these is that in concluding that the material facts had all been admitted the learned trial judge held that the appellant was not entitled to dispute that Micucci was indebted to the Minister in the amount of $7,324.54 since that is a subject matter of dispute only between Micucci and the Minister to which the appellant is not a party. With respect, the de facto existence of the indebtedness of Micucci to the Crown for monies payable under the statute at the time of the giving of a notice under subsection 224(2) appears to me to be, on the wording of the section, a fundamental fact upon which any liability of the appellant under section 224 depends and I know of no reason or authority for the proposition that the defendant is not entitled to put the existence of such a fact in issue.
14 The other matter arises on the following passage from the reasons of the learned trial judge.
The position taken by counsel for the defendant was that resort to Rule 341 by Her Majesty was inappropriate because of the denial in the statement of defence of all allegations in the statement of claim and the specific admonition therein that the plaintiff was “put to the strict proof thereof”. By this he meant, and so stated, that her Majesty must proceed to trial and prove each and every allegation of fact by calling competent witnesses.
This contention is unwarranted in the view I hold that the facts are clearly admitted and no disputed issue of fact remains to be tried.
In support of the notice of motion there was an affidavit as required by the rules. In that affidavit the affiant swears that the demand under subsection 224(1) of the Income Tax Act was served on the defendant on January 15, 1973, and service thereof was admitted by B Kent, an officer of the defendant. Admission of the service on that date is endorsed on the demand which is annexed to the affidavit as an exhibit.
Furthermore counsel for the defendant cross-examined the affiant on his affidavit as was his right to do but he did not introduce as evidence the transcript of the cross-examination to indicate any dispute of facts.
If there was any bona fide dispute as to the facts the defendant was at liberty to submit affidavits contradictory of the affidavit in support of the motion in accordance with the right to do so under Rule 319(2). This was not done. It is for these reasons that I have reached the view that there are no disputed facts which remain to be tried.
The object of Rule 341 is to enable a party to obtain a speedy judgment, without the necessity of a prolonged trial, where admissions in the pleadings or other documents filed in the Court have been made.
For the reasons I have expressed all essential facts have been admitted. The defendant cannot dispute that Micucci is indebted to the Minister of National Revenue in the amount of $7,324.54. That is the subject matter of dispute only between Micucci and the Minister to which the defendant is not a party. Service of the third party demand on the defendant is admitted and an admission of service is endorsed on that document. The reply for the demand for particulars, which is part and parcel of the pleadings, constitutes an admission by the defendant of the times and amounts of the payments which were made by it to Micucci all of which were made after service of the demand on it, and the dates upon which payments were made by the owners to the defendant to Micucci. It is implicitly admitted in the statement of defence that the defendant made no payments to the Minister pursuant to the demand therefor.
I simply cannot conceive of what other facts need to be proven, but to be certain I put the question to counsel for the defendant to which I received no satisfactory reply other than the assertion that the defendant was entitled to “its day in Court”. That subverts the objective sought to be achieved by Rule 341.
15 It is first necessary to say that on the appeal the case presented differed somewhat from that before the learned trial judge by reason of an admission contained in the memorandum of argument of the respondent that the failure of the appellant's counsel to introduce the transcript of the cross-examination of the affiant referred to by the learned trial judge, was due to inadvertence. Accordingly, while it may have been reasonable for the learned trial judge to draw, from the failure to produce the cross-examination, an inference that it was unfavourable to the appellant it would not be appropriate for this Court on its rehearing of the matter to draw such an inference.
16 But apart from this, I am of the opinion that proof of the facts by affidavit is not what is contemplated by Rule 341 and that the appellant was under no obligation because of the bringing of a motion under that Rule to submit to what appears to have been a summary trial of the action on affidavits filed by the respondent. In my view it is apparent that the appellant had never admitted the fundamental fact of indebtedness on January 15, 1973, of Micucci for sums payable under the statute in the amount set out in the notice of that date, and, in my opinion, nothing in Rule 341 permitted the proof of that fact by affidavit or transformed such proof as was tendered by affidavit and the appellant's reaction thereto into an admission by the defendant upon which judgment might be pronounced against it under Rule 341.
17 Similar considerations appear to me to apply as well to the proof by affidavit of the service of the notice under subsection 224(1) and of failure of the appellant to pay the amount claimed to the Receiver General for Canada. The latter fact was not expressly alleged by the plaintiff and if alleged at all is put in issue by the general denial. The former though alleged was also denied by the plea which, however general, and even if open to attack on that ground, could not be ignored so long as it remained in the defence.
18 I would allow the appeal and dismiss the Crown's motion with costs in the Trial Division and on the appeal.
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