Date: 20010913
Docket: ITA-3600-97
Neutral citation: 2001 FCT 1019
Ottawa, Ontario, Thursday the 13th day of September 2001
PRESENT: The Honourable Madam Justice Dawson
BETWEEN:
HER MAJESTY, REPRESENTED BY
THE MINISTER OF NATIONAL REVENUE
and by CANADA CUSTOMS AND REVENUE AGENCY
Respondents
and
RODNEY CHARLES MAXWELL STICKLE
Applicant
REASONS FOR ORDER AND ORDER
DAWSON J.
[1] These reasons are about a ditch witch, an auger (with 5 auger bits), an orange trailer, two Mastercraft tool boxes and tools, a King Cab truck, and two vintage vehicles. By order dated February 20, 2001, Campbell J. directed that a hearing be held, based on viva voce evidence and the presentation of documents, to determine the ownership of these assets, the value of the assets other than the truck and vintage vehicles, and certain issues as to costs. Justice Campbell's order arose in the following circumstances.
[2] On April 29, 1997 a certificate made under subsection 223(2) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 ("Act") was filed in this Court certifying that Mr. Stickle was indebted to Her Majesty as represented by the Minister of National Revenue and the Canada Customs and Revenue Agency ("CCRA") in the amount of $238,209.73 ("certificate"). On April 29, 1997 a writ of seizure and sale was issued in the amount of the debt, plus interest and costs. On December 6, 2000 goods were seized by a bailiff employed by Shortridge Civil Enforcement Agency on the instructions of a representative of CCRA. Mr. Stickle then moved for relief from seizure of at least some of that property, asserting that he did not own all of the property which had been seized.
[3] Subsequently, the ditch witch, auger and bits, orange trailer, Mastercraft tool boxes and tools were returned to Mr. Stickle.
[4] On February 20, 2001, Justice Campbell, after hearing submissions, ordered that a hearing be held to determine the issues set out above, including who would pay for the return of vehicles seized on December 6, 2000, but found not to be owned by Mr. Stickle. With respect to any exemptions from seizure under the governing legislation, section 88 of the Alberta Civil Enforcement Act, S.A. 1994, c. C-10.5, Justice Campbell determined that pursuant to paragraph 37(1)(d) of the Civil Enforcement Regulations, Alta. Reg. 276/95, the maximum exemption which Mr. Stickle could claim for personal property owned by him is $10,000.00.
[5] No appeal was taken from the order of Justice Campbell.
PRELIMINARY MATTERS
[6] At the hearing before me, both Mr. Stickle and the respondents sought to make additional motions. Mr. Stickle sought to file a "Motion for Production - Relief Continuance" described to be an addendum to his original motion objecting to seizure. In substance, through this motion, Mr. Stickle sought to attack the existence of the tax liability evidenced by the certificate. The respondents sought short leave for the bringing of a motion authorizing sale of the seized goods.
[7] Mr. Stickle's request was denied at the hearing and the return of his unfiled motion materials was directed on the ground that Justice Campbell's order was express that only the issues described would be heard. No appeal had been taken from that order. The respondents' request was denied on the ground that no urgency was established which would justify abridgement of the prescribed period for the service and filing of motion materials.
[8] After dealing with those preliminary matters, evidence was adduced through eight witnesses. At the conclusion of hearing the evidence adduced by the parties, an order was issued requiring the delivery of written argument, confined solely to the issues set out in the order of Justice Campbell, and confined solely to evidence adduced at the hearing. No new evidence was to be submitted.
[9] Written arguments were served and filed in accordance with the time and page limits imposed in the order. However, Mr. Stickle made extensive arguments as to the existence of the underlying debt, alleged errors by CCRA, and whether, contrary to the order of Justice Campbell, he was entitled to exemptions as a farmer. Mr. Stickle also purported to append documents not tendered at trial. I have not had regard to any of the above-noted arguments and evidence for the following reasons.
[10] First, the Act is a comprehensive code for the collection of taxes. A taxpayer who receives a notice of assessment and who disputes his or her obligation may file a notice of objection, and potentially may appeal to the Tax Court of Canada. However, when a certificate is filed in this Court pursuant to section 223 of the Act, the Court has no jurisdiction to inquire into the correctness of the assessment. See: Marcel Grand Cirque Inc. v. Canada (Minister of National Revenue) (1995) 107 F.T.R. 18, and by analogy with the Excise Tax Act, R.S., c. E-15 see Olympia Interiors Ltd. v. Canada (1998) 98 DTC 6306.
[11] Second, Justice Campbell's order specified the applicable exemption Mr. Stickle was entitled to. That order was not appealed and is determinative of that issue.
[12] Finally, not only was the order which directed written argument express that no new evidence could be submitted, but fairness precludes having regard to documentary evidence obtained after the trial which has not been subjected to cross-examination and which, in any event, would not have been admissible at hearing as a business record.
ONUS OF PROOF
[13] I think it helpful before reviewing the evidence to consider who bears the onus of establishing ownership of seized property. This Court has held that where a seizure of property is made and a third party claims ownership of some or all of the assets seized, the onus is on the third party to establish ownership of those assets: 384238 Ontario Ltd. v. The Queen, [1981] C.T.C. 295 (F.C.T.D.); aff'd (1983), 52 N.R. 206 (F.C.A.); leave to appeal refused (1984), 8 D.L.R. (4th) 676 (S.C.C.).
[14] Alberta jurisprudence, made relevant by Rule 448 of the Federal Court Rules, 1998 because the seizure occurred in Alberta, is to similar effect in circumstances as are now before the Court. In Riczu v. Indigion Holdings Ltd. (1997), 207 A.R. 318, Master Waller canvassed the law stating as follows:
_3 __In general circumstances, the onus lies with the execution creditor to prove that the goods seized are the goods of the debtor.__That onus however shifts in certain circumstances to the party claiming the goods.
_4___ __In Korpus v. W.F. Botkin Construction Ltd. [1994] S.J. No. 6 p. 1 a 1935 Pierce Arrow automobile was seized from the debtor's father.__ The father produced a bill of sale which the creditor alleged was a sham. __Halverson, J. discussed the applicable principles in this way:
[para 4] Generally, the onus is upon the execution creditor to prove a right to seize particular goods of the debtor.__ But where the goods are in the possession of the debtor, there is a presumption they are his, and the onus shifts to the claimant to establish his title thereto (see Hudson Bay Company v. Macaskill et. al. (1983), 27 Sask.R. 81 (Sask.Q.B.)).__Applying this to the instant case leads to the requirement that the plaintiff establish his ownership of the vehicle.
[para 5] There are three other useful principles arising from the authorities.__ Firstly, the claimant must show a bona fide sale accompanied by immediate delivery and a continued change of possession (see Morrow v. Western Empire Life Assurance Company, Limited, [1933] 2 W.W.R. 393 (Sask. C.A.) and Belair v. banque d'Hochelaga, [1923] 2 W.W.R. 771 (Sask. C.A.)). Secondly, where the goods belonged to the execution debtor before the seizure and were conveyed to a near relative under suspicious circumstances, the onus is again upon the claimant to prove ownership (see Massey-Harris Company, Limited et al. v. Dell, [1919] 1 W.W.R. 1032 (Sask. C.A.)).__ Thirdly, corroboration of the claimant's assertion is desirable where the disposition is to a relative (see Kushner v. Yasinka, [1927] 3 W.W.R. 328 (Sask. C.A.) and Avco Financial Services Canada Limited v. Zacharias et al. and Stevens, [1977] 3 W.W.R. 697 (Sask. D.C.))._ _As stated earlier, these principles are not binding in the present situation, but they are helpful in assessing the burden upon the plaintiff.
_5 __I am satisfied given the family relationship that exists here and the fact that the debtor tenant had possession of the goods at the time of the distraint that a strong onus lies with the applicant father to show his ownership of the goods. In the absence of any concrete documentation a sworn statement is not adequate.
_6___ __In Cisakowski v. Fikete (1984) 35 Alta L.R. (2d) 392 a tenant attempted to assert that certain distrained goods were actually the property of a corporation other distinct from the tenant. __In dismissing the claim, Miller, A.C.J.Q.B., clearly defines the degree the proof necessary using the following terms:
______In my view, there is an onus on 112600 to adduce at least some evidence beyond a bold statement in an affidavit establishing 112600's ownership of Abbotsfield Optical.__ To hold otherwise would require the landlord to prove a negative.__ Especially where there is some evidence to the contrary, I think it is crucial for a party asserting ownership of seized chattels to put forward strong evidence that should be within his knowledge, if it exists, to support his claim.
[underlining added]
[15] I now turn to the evidence adduced at the hearing.
THE EVIDENCE
The Ditch Witch
[16] Mr. Stickle testified that: the ditch witch is owned by Mr. Bushfield; it is worth about $4,000.00; Mr. Stickle rented it from Mr. Bushfield pursuant to an oral agreement; Mr. Stickle had last used the ditch witch two or three weeks prior to the seizure; and "if and when I'm renting it, if I'm using it, then I pay him accordingly". Mr. Stickle produced no documentation to establish either ownership or rental payments, although he said that he "probably would have [documentation] somewhere". Mr. Stickle said that when seized there were not too many weeds around the ditch witch.
[17] Mr. Bushfield did not testify because, according to Mr. Stickle, he was watching for rain and waiting to get his hay crops off.
[18] Mr. Stickle called a representative of the CCRA to testify as to her conversations with Mr. Bushfield. That representative said that Mr. Bushfield had told her that the ditch witch was his, but that he had no documents to prove that.
[19] With respect to the evidence of the CCRA representative, I conclude that the evidence as to Mr. Bushfield's assertion of ownership is not admissible as evidence proving the truth of that assertion. I reach that conclusion because I do not find the statement to be sufficiently reliable to fall within the hearsay exception, nor do I see any necessity for the admission of that evidence to prove the truth of the statement.
[20] On the evidence set out above, I would be prepared to find that Mr. Stickle failed to meet the onus upon him to overcome the presumption referred to in Riczu, supra, that goods in his possession are his. However, there is sufficient evidence that it is unnecessary for me to decide this issue simply on the basis of onus.
[21] The bailiff who effected the seizure testified that at the time the seizure was effected Mr. Stickle made no objection to the removal of the ditch witch. Mr. Stickle did not challenge or contradict that evidence. The bailiff also testified that the ditch witch was found with weeds growing around it, it took 30 minutes for the tow truck driver to get the ditch witch "up and running", there was no battery, and it had a flat tire. The bailiff was of the opinion that in view of its condition the equipment could not have been used in the prior few weeks.
[22] I found the bailiff to give his testimony in a forthright, clear way. He agreed with many of the suggestions put to him by Mr. Stickle in cross-examination evidencing a candour in his testimony. He had nothing directly to gain from his testimony on matters touching the ownership of assets. I accept his testimony about the ditch witch.
[23] When I consider the paucity of the evidence adduced by Mr. Stickle, the evidence of the bailiff that Mr. Stickle failed to object to the seizure of the ditch witch at the time of seizure (in circumstances where he was objecting to the removal of other items on the ground that he did not own them) and the evidence of the condition of the ditch witch which was inconsistent with Mr. Stickle's assertion that he was renting and using the equipment, I am satisfied for the purpose of this matter that the ditch witch is the property of Mr. Stickle.
[24] I have considered that Mr. Sawatzky, who was assisting Mr. Stickle at the hearing, testified that he attended at the seizure and heard Mr. Stickle tell the bailiff that the ditch witch belonged to Mr. Bushfield. In view of Mr. Stickle's failure to testify or challenge the bailiff's evidence on the point I place no weight on Mr. Sawatzky's testimony. I also note that while Mr. Stickle had excluded all of the other witnesses who he called to testify, Mr. Sawatzky was not excluded and remained in the courtroom. The fact that Mr. Sawatzky had heard prior testimony including that of the CCRA representative, and Mr. Stickle's advice that Mr. Bushfield would not be testifying, are factors which I find also go to reduce the weight to be given to Mr. Sawatzky's testimony.
[25] As to the value of the ditch witch, the respondents did not challenge Mr. Stickle's evidence on the point and so I find the present value of the ditch witch is $4,000.00.
Auger and Five Bits
[26] Mr. Stickle testified that the auger and bits were parts that belonged to a Bobcat, that they were worth between $800.00 and $1,000.00, and that he had no ownership documents because the parts did not belong to him.
[27] The bailiff testified that at the time of the seizure Mr. Stickle told him that one of the bits could possibly have been with the Bobcat, but that Mr. Stickle was not sure of this. On cross-examination, the bailiff agreed that at the time of the seizure Mr. Stickle had satisfied him that the Bobcat was not owned by Mr. Stickle by producing a purchase paper in the name of Mrs. Stickle. The bailiff would not agree with the suggestion that "auger and bits that were basically all the same colors as the Bobcat would belong to the Bobcat". The bailiff stated that he had "seized other things before that were actually bought at a later date".
[28] Mrs. Stickle testified. The relevant portion of her testimony is as follows:
17. What are you looking for mainly right now?
18. I'm looking for the return of my equipment.
17. That would be your truck and trailer?
19. Yes.
[...]
18. MR. STICKLE: Was there any other stuff that was removed that belongs to you?
20. No.
[29] In view of Mrs. Stickle's failure to testify that the auger and bits were hers, I am only able to conclude that the auger and bits do not belong to her, but belong instead to Mr. Stickle. In view of the fact that they could have been acquired after the Bobcat was purchased, any similarity in colour to the Bobcat is insufficient to establish ownership.
[30] The respondents did not challenge Mr. Stickle's testimony that the auger and bits "could run up to 800 or $1,000". I find the auger and bits to be valued at $800.00.
The Orange Trailer
[31] Mr. Stickle testified that the orange trailer belonged to Mr. Bushfield, that he had no documents with him to establish ownership, and that the trailer was worth between $800.00 and $1,000.00. The CCRA representative confirmed that Mr. Bushfield had told her that he owned the trailer, but that Mr. Bushfield had no documents to prove that. The bailiff could recall no objection to the seizure of the orange trailer at the time the trailer was seized, and was not cross-examined on that evidence. Mr. Sawatzky made no reference to the trailer.
[32] Again, for the reasons set out above with respect to the ditch witch, I conclude that the evidence of the representative of the CCRA does not establish the truth of Mr. Bushfield's assertion of ownership.
[33] On this evidence, I conclude that Mr. Stickle has not met the onus of establishing that Mr. Bushfield owned the orange trailer and find, for the purpose of this matter, that the orange trailer is the property of Mr. Stickle.
[34] Again, the respondents did not challenge Mr. Stickle's evidence as to the value of the trailer. I find it to be valued at $800.00.
The Mastercraft toolboxes and tools
[35] Mr. Stickle admitted that he owned the two Mastercraft toolboxes and that with tools they were valued at $400.00 each, although some unspecified tools of unspecified value were said to be missing when the toolboxes were returned to Mr. Stickle.
[36] On that evidence, I find that the toolboxes are the property of Mr. Stickle and are together valued at $800.00.
The King Cab truck
[37] This is better described as a 1998 Dodge truck.
[38] Mrs. Stickle swore that this vehicle is hers because she had used her own savings to have the truck redeemed and returned in circumstances where it had been seized from her husband by a bank.
[39] On cross-examination, Mrs. Stickle testified that she worked as a receptionist, and as a sales person and that she raised dogs so that in total her average net monthly income was $3,000.00. Her income "mostly" goes into her personal bank account. While the money to redeem the truck was paid out of a joint account, Mrs. Stickle stated that there was no money in the account before she made a deposit into it. No bank statements were produced to show that in fact Mrs. Stickle was the source of the funds, although in response to a question on cross-examination Mrs. Stickle advised that she did not have any bank statements with her right now, but could prove where the money came from.
[40] The vehicle was originally purchased by Mr. Stickle and it remains registered in Mr. Stickle's name.
[41] The bailiff testified that at the time the seizure was effected Mr. Stickle advised him that the truck was his. This evidence was not directly challenged on cross-examination.
[42] Both Mr. and Mrs. Stickle were cross-examined on the source of the money that went into the account used to provide funds to redeem the truck from the bank's seizure. Mrs. Stickle's answers were not easily forthcoming or very illuminating. For example:
19. You said that -- how much goes into the joint bank account then that you contribute?
21. 1,000.
18. And that's just for expenses then?
22. Yeah.
Q. And the rest goes into your personal bank account?
23. Right.
19. So on average you would probably deposit 12,000 a year into that bank account, correct?
24. I couldn't tell you. I'm not an accountant, and I just live from day to day.
Q. But if you say you contribute usually 1,000 a month, and there's 12 months in a year, then 12 times one is 12?
25. Oh, okay, good. Yeah.
20. And how much would Mr. Stickle contribute into that account?
A. I couldn't tell you. Enough to keep us going, I guess.
[43] I found that Mr. Stickle's evidence to be evasive on the point. For example, he testified that:
20. But for last year approximately what would your net income be?
26. I've got a lot of that stuff in to the accountant's now, so I can't -- Like I say, I'm just trying to get some of the stuff set in my book work for the accountant to work on.
21. So you can't even give me an approximation of what you made?
THE COURT: Ms. Tyssen, [in the gallery] at the beginning when I explained the procedure, one of the things was that the only people who participate orally are counsel and the witness so ...
27. I think I'll just do that best by I don't recall.
[...]
21. COUNSEL FOR THE RESPONDENTS: So in May of 2000, did you deposit your net income into the joint bank account, the Royal Bank in Airdrie?
28. My wife has a separate account.
22. No, but where did you deposit your money, into what account, into the joint bank account at the Royal Bank?
THE COURT: And I would ask the witnesses [in the gallery] not to be gesturing or making any suggestive comment to the witness because that won't help the weight to be given to that testimony.
COUNSEL FOR THE RESPONDENTS: Thank you.
A. Best to say that they probably go into the dual account at the bank somewhere.
As can be seen, during the course of Mr. Stickle's evidence a member of the gallery who had previously testified, Mr. Stickle's daughter, had to be cautioned twice against gesturing or commenting so as to suggest answers to Mr. Stickle.
[44] In view of the lack of candour and forthrightness which I find characterized the testimony of Mr. and Mrs. Stickle about the source of the funds used to redeem the truck from a prior unrelated seizure, the failure of Mrs. Stickle to produce documents she said were available to her to prove that she personally provided the funds, the fact that the vehicle remained registered in Mr. Stickle's name, and the testimony of the bailiff that Mr. Stickle admitted ownership of the truck to him, I conclude that for the purpose of the proceedings, the 1998 Dodge King Cab truck is the property of Mr. Stickle.
[45] I draw adverse inference from Mrs. Stickle's failure to produce bank documents supportive of her claim at the hearing.
[46] The order of Campbell J. did not direct any inquiry into the value of this truck. In the event a determination of this is nonetheless required, I accept the evidence of the auctioneer, Mr. Graham, that the vehicle is now worth between $16,000.00 to $17,000.00, and that it was worth $22,250.00 when seized. I determine the current value to be $16,000.00.
The Vintage Vehicles
[47] Cathy Tyssen, Mr. Stickle's daughter, testified that she was the owner of a 1964 Bentley Rolls Royce and a 750 c.c. Yamaha Virago motorcycle. Mr. Stickle clarified that these were the two items covered by the phrase "vintage vehicles".
[48] There was no evidence other than Ms. Tyssen's sworn testimony about the Virago motorcycle, and she was not cross-examined on her evidence. In the absence of any contradiction of her sworn assertion of ownership, I find that the 750 c.c. Yamaha Virago motorcycle is for the purpose of this matter the property of Cathy Tyssen.
[49] As for the 1964 Bentley Rolls Royce, Ms. Tyssen produced a handwritten bill of sale (not tendered in evidence), dated October 5, 1994, from her father to her in respect of the car. The bill of sale was apparently for $9,000.00. Ms. Tyssen swore that the balance of the car's value was given to her as a wedding present. Nothing was paid by Ms. Tyssen to her father on account of the $9,000.00 owing pursuant to the alleged bill of sale. Ms. Tyssen said it was a loan to her, and that "[l]oans from parents are sometimes inheritances". The vehicle was never registered in her name, was never used or removed from her parents' premises by Ms. Tyssen, and was never insured by her. Ms. Tyssen swore that she was restoring the vehicle and that she had replaced a door and done body work and buffing. No receipts were tendered by her substantiating that work, although she said documents to that effect were probably at home. Ms. Tyssen contacted the CCRA about the seizure in April of 2001, some four months after the seizure.
[50] The bailiff swore that Mr. Stickle told him that the Bentley was his at the time of seizure and that Mr. Stickle was restoring it. The bailiff was not directly challenged on the evidence.
[51] The auctioneer currently in possession of the Bentley as a result of the seizure advised that the car was worth $1,500.00 in its present state, but that amount might be generous. The Bentley is registered in Mr. Stickle's name.
[52] I find the evidence of Ms. Tyssen and the untendered bill of sale unpersuasive on the issue of ownership. Ms. Tyssen's explanation for leaving the car with her father was that she was restoring it. Yet she produced no documentary evidence to collaborate the restoration expenses, notwithstanding the fact they were said to exist. Her evidence of restoration work was contradicted by the bailiff's evidence that on the date of the seizure Mr. Stickle stated it was he who owned the vehicle and who was restoring it. The suggestion of any meaningful restoration effort is not supported by the evidence of the auctioneer as to the condition and value of the car, which was not in any way challenged and which I accept.
[53] The force of Ms. Tyssen's assertion of ownership is, I find, also undercut by her failure to advance a claim to the CCRA on a more timely basis. As well, Ms. Tyssen is Mr. Stickle's daughter and during the hearing had to be warned about appearing to help Mr. Stickle during his testimony. Ms. Tyssen is clearly sympathetic with her father's situation and so corroboration of her evidence was desirable. I found the most credible testimony to be that of the bailiff who, as noted above, had no direct financial interest in this matter and who I found testified in a forthright fashion. The bailiff was not challenged in his evidence as to Mr. Stickle's admissions on the date of seizure.
[54] For these reasons, I conclude that I have not been satisfied on the evidence that Ms. Tyssen owns the Bentley. I find for the purpose of the matter that it is the property of Mr. Stickle.
The Cost of the Return of the Virago Motorcycle
[55] The respondents acknowledged in written argument that they would pay the costs of return of seized property found to belong to a third party. Therefore the CCRA will be responsible for the costs of returning the Virago motorcycle to Ms. Tyssen. I also find that the CCRA should be responsible for any storage costs associated with that motorcycle. In my view, the storage costs naturally follow the costs of returning the property, particularly in circumstances where no evidence was adduced to contradict Ms. Tyssen's assertion that the motorcycle was hers.
Matrimonial Property Issue
[56] Mrs. Stickle in her testimony also asserted that she owned half of everything that Mr. Stickle owned by virtue of their marriage.
[57] I reject this as a proper claim impacting in any way upon the seizure at issue. A spouse does not automatically acquire an interest in their spouse's property by sole virtue of marital status. In Alberta, a distribution of matrimonial property occurs only upon the granting of a decree nisi of divorce, a declaration of nullity of marriage, a judgment for judicial separation, or in certain cases where the parties live separate and apart. See: Currie (Re) (2000), 258 A.R. 303 (Alta. Q.B.). There was no evidence of any of those circumstances or the making of a distribution of matrimonial property.
[58] For these reasons,
ORDER
[59] THIS COURT ORDERS THAT:
1. The respondents shall return to Cathy Tyssen at their expense the 750 c.c. Yamaha Virago motorcycle and pay for all storage charges associated with that vehicle.
2. The Court for the purpose of the matter declares that:
a the ditch witch is the property of Rodney Stickle and its value is $4,000.00;
b the auger and five bits are the property of Rodney Stickle and are together valued at $800.00;
c the orange trailer is the property of Rodney Stickle and its value is $800.00;
d the Mastercraft toolboxes and tools are the property of Rodney Stickle and are together valued at $800.00;
e the 1998 Dodge King Cab truck is the property of Rodney Stickle. Its value is $16,000.00, while its value at the time of seizure was $22,250.00; and
f the 1964 Bentley Rolls Royce is the property of Rodney Stickle and its value is $1,500.00.
3. The issue of the costs of this hearing are reserved to be dealt with at the time the motion for a formal order for sale is dealt with.
"Eleanor R. Dawson"
________________________________
Judge