Date: 20030104
Docket: T-1514-01
Neutral citation: 2003 FCT 112
BETWEEN:
CAMBRIDGE LEASING LTD.
Applicant
- and -
MINISTER OF NATIONAL REVENUE
Respondent
[1] The applicant seeks an order in the nature of mandamus to compel the respondent Minister to process harmonized sales tax ("HST") returns which it had filed for November and December 2000, and for January and February, 2001, and to order the issue of credit returns claimed by the applicants. The matter was heard in Fredericton, on May 21, 2002 at the same time as an application by the respondent to strike the applicant's motion for relief on grounds inter alia that the matter is moot, and that relief is barred by s. 18.5 of the Federal Court Act, R.S.C. 1985, c. F-7 as amended. Thus, the respondent urges there is no possibility of success on the applicant's motion. These reasons deal with both of the motions heard by the Court. At the same hearing, the Court considered an application for an injunction against the respondent Minister, brought by inter-related corporations engaged in activities similar, and with claims similar, to those of the applicant. See: Nautica Motors Inc. and 506913 N.B. Ltd. v. Minister of National Revenue (Court file no. T-172-01).
[2] The returns in question with records of the applicant were subjected to audit by the Canadian Customs and Revenue Agency ("CCRA"), and the records of the applicant were subsequently referred to a criminal investigation undertaken by the CCRA. While those audit and investigation processes were underway, the applicant filed its application for mandamus in August of 2001. On November 22, 2001 a Notice of Assessment was sent to the applicant, relating to the months of November and December, 2000. The credits claimed by the applicant for those months and for January and February 2001 and credits claimed for subsequent months were all allocated to the amount assessed and as of May 2002 there was still a debt claimed to be owing to the Minister.
[3] A similar claim for relief was made by interrelated corporations engaged in the same activities as Cambridge Leasing. The claim of those companies was related to returns filed for the reporting period of May 1998, and for August, September and October 1998. These returns were delayed in processing because of audit and investigation processes of CCRA. In November 2001, assessments, called interim assessments were issued to those interrelated companies. Their application for an order for mandamus was considered by Mr. Justice O'Keefe in December 2001 and in April 2002 he issued an order in the nature of mandamus directing the Minister to process HST returns filed by those interrelated companies for the months in question. He declined to order that the Minister issue Input Tax Credits said to be owing to the applicant.
[4] When the application of Cambridge Leasing seeking similar relief came on for hearing, counsel for the applicant urged that the matter was essentially res judicata since the same issues and arguments had been raised before Mr. Justice O'Keefe and had been dealt with by him. For the respondent it is urged that there are some differences, in particular that, unlike the circumstances before Mr. Justice O'Keefe, in this case, the application had filed in January 2002, a Notice of Objection to the November 2001 assessment. No such Notice of Objection had been filed before argument in the Nautica case was heard by Mr. Justice O'Keefe. Moreover, the respondent urges that in that case His Lordship was not invited to consider the implications of the decisions in Western Minerals Ltd. v. Minister of National Revenue, [1962] S.C.R. 592, 62 D.T.C. 1163, 34 D.L.R. (2d) 163 (S.C.C.) and Optical Recording Co. v. Minister of National Revenue (1990), 116 N.R. 200 (F.C.A.) in relation to the applicant's claims for relief in this case.
[5] In Western Minerals Ltd., the Supreme Court of Canada dismissed the taxpayer's appeal under the Income Tax Act as it then applied, and held that an initial tax assessment by the Minister on the basis of the taxpayer's submissions was the "original assessment for the taxation year" within the statutory provision for commencement of interest payable on the amount of tax ultimately claimed by reassessments by the Minister. In my view, Western Minerals Ltd. deals with interpretation of the Income Tax Act and is not helpful in considering the public duty, if any, of the Minister to process expeditiously the taxpayer's returns under the Excise Tax Act, the primary issue before Mr. Justice O'Keefe in Nautica and before the Court in this case.
[6] In Optical Recording Co., supra, the Federal Court of Appeal allowed an appeal by the Minister from a decision of a motions judge which had quashed garnishee orders issued by the Minister to collect tax claimed to be due under the Income Tax Act, after the Minister had failed to collect an amount due as tax and had issued a notice of assessment with advice the tax would not be collected on certain understandings. The motions judge had found the Minister's conduct unlawful, and that the assessment and the garnishee orders were without foundation. That decision was overturned by the Court of Appeal, which relied upon the provision in the Income Tax Act, that an assessment is deemed to be valid, subject only to reassessment, or being varied or vacated by a successful objection. The proceedings in Optical Recording Co. arose from an assessment by the Minister. Under the Federal Court Act, as it then applied, the Court lacked jurisdiction to grant the relief sought since the Income Tax Act provided the procedure for appealing or dealing with all issues relating to the assessment.
[7] Neither of these authorities persuades me that had it been brought to the attention of Mr. Justice O'Keefe, he would have reached a different decision. I so conclude because it seems to me his decision is based on the duty of the Minister to assess tax returns expeditiously, or at least in a reasonable time, pursuant to s.-s. 229(1) of the Excise Tax Act. Moreover, he found that the interim assessments issued in Nautica were clearly not final assessments on behalf of the Minister. In those circumstances and in view of the refusal to process the applicants' returns, interim assessments only having been issued some days before the hearing, his Order directed that the assessment be completed. He did not order that tax credits be issued to the applicant and thus did not, by his Order, purport to direct or question the result of any assessment.
[8] The applicant here argues that the issue is res judicata, but strictly speaking Mr. Justice O'Keefe's decision in the Nautica case is not determinative of the issues here since the applicant parties, though interrelated, are different in the two cases, the facts are somewhat different at least in the response by objection to the November assessment before the matter was heard in this case. It is urged that the filing of the Notice of Objection in January 2002, was done as no more than a precautionary measure and did not oust the jurisdiction of this Court to consider whether the Minister met his obligations under s. 229 of the Excise Tax Act.
[9] I agree that the filing of a Notice of Objection in January 2002 does not "oust the jurisdiction" of the Court, if that jurisdiction lies under the Federal Court Act, R.S.C. 1985,
c.F.-7 as amended. The jurisdiction to order mandamus generally, is vested in this Court by ss. 18 and 18.1 of that Act and it is not precluded by s. 18.5. The latter section limits the jurisdiction of this Court under ss. 18 and 18.1, "where provision is expressly made by an Act of Parliament for an appeal as such as such" to, inter alia, the Tax Court of Canada, at least to the extent that a decision may be appealed. In such a case the decision is subject to appeal, or to review or be restrained, prohibited, removed, set aside, or otherwise dealt with only in accord with the Act expressly providing an appeal process.
It is true that a particular process to question an assessment by the Minister is provided by the Excise Tax Act. Subsections 299(3) and 299(4) provide that an assessment, subject to being vacated on objection or an appeal under the Act, is valid and binding. Subsection 301(1.4) provides for filing a Notice of Objection to an assessment and s. 306 provides for one who has so objected to appeal to the Tax Court. The Tax Court of Canada Act, R.S.C., 1985, c. T-2, s-s. 12(1) vests exclusive original jurisdiction in that Court to hear and determine references and appeals, under inter alia, the Excise Tax Act (Part IX, which is here relevant).
My reading of those various statutory provisions leads me to conclude that they do not expressly provide, as required by s. 18.5 of the Federal Court Act, that an application for mandamus is removed from this Court's jurisdiction, which would otherwise be heard in appropriate circumstances to require the Minister to perform a public duty under the Excise Tax Act. Whether that jurisdiction should be exercised in this case is a question I now turn to.
It is urged in support of the respondent's motion to strike the application, that the issue is now moot. In so far as it seeks an Order to process the applicant's HST returns, it is said that objective of the application has already been met by the assessment of which notice was given in November 2001, at least with respect to the returns filed for November and December 2000 and effectively in so far as January and February 2001 returns are concerned by inclusion of any claim of the applicant to credit within the amount claimed as taxes in the November 2001 assessment.
I note that in his decision in the Nautica case, Mr. Justice O'Keefe refers, at paragraph 47, to the applicants' claim for an Order in the nature of mandamus having been filed on March 28th and the respondent's issuance of an "interim assessment of HST" in November 2001. He then comments:
I am of an opinion that the respondent by only giving an "interim assessment" which is not a final amount, has effectively refused to process the applicants' application for a refund.
It is to be remembered that in that case the assessment notices were issued, after long delay, only days before the hearing and no Notice of Objection to the Minister's assessment was filed before the application was heard. In this case, the Notice of Objection was filed in January 2002, following the Notice of Assessment issued in November. The latter may have been described in a covering letter as an "interim assessment" but it did include a claim by the Minister to taxes in an amount greater that the applicant's claims for refundable tax credits for the returns filed monthly from November 2000 to February 2001. Whether that claim by the Minister would ultimately stand up or not, the filing of the Notice of Objection, whatever the taxpayer's intent may have been at the time, perfected the process provided by the Excise Tax Act for contesting the assessment, including the amount of a tax due under the Act and the amount of any claim by the applicant to credit and repayment. In effect, the Notice of Objection acknowledges the statutory process for contesting all issues arising in relation to the assessment.
In my opinion, the filing of a Notice of Objection ensured a process where the concerns of the applicant could effectively be dealt with, including any claim the applicant may have about delay on the part of the Minister. The normal process provided under the Excise Tax Act for assessment, and settlement of any differences about the assessment, was in place by January 2002.
In these circumstances, with the process provided under the Excise Tax Act, in place for obtaining the objectives which the applicant here seeks, there is no reason for this Court to exercise its jurisdiction to issue an order of mandamus, an extraordinary remedy within the jurisdiction of the Court. By the time this matter was heard, it could not longer be said that the respondent Minister was refusing to meet his statutory obligations, a stage acknowledged by the filing of the Notice of Objection to the Minister's assessment.
For these reasons an order goes dismissing the application formandamus by the applicant.
Having disposed of the application for mandamus on its merits by dismissing it, there is no need to deal in any detail with the cross motion of the respondent, heard at the same time, that the application for mandamus be struck out. The motion to strike, made by the respondent Minister, is dismissed by a separate order.
The orders now issued provide that no costs be awarded.
"W. Andrew MacKay"
JUDGE
Ottawa, Ontario
February 4, 2003
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1514-01
STYLE OF CAUSE: CAMBRIDGE LEASING LTD. v.
MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: FREDERICTON, N.B.
DATE OF HEARING: MAY 21, 2002
REASONS FOR ORDER : The Honourable Mr. Justice MacKay
APPEARANCES:
EUGENE J. MOCKER FOR THE APPLICANT
JOHN J. ASHLEY FOR THE RESPONDENT
SOLICITORS OF RECORD:
MOCKLER, PETERS, OLEY, FOR THE APPLICANT
ROUSE WILLIAMS
FREDERICTON
MORRIS ROSENBERG FOR THE RESPONDENT
DEPUTY ATTORNEY GENERAL
OF CANADA