Date: 20050408
Docket: T-1638-03
Citation: 2005 FC 471
BETWEEN:
JACOB A. KRAHN
Applicant
and
CANADA CUSTOMS REVENUE AGENCY
Respondent
REASONS FOR ORDER
STRAYER D.J.
Introduction
[1] This is an application for judicial review. In his original Notice of Application, the Applicant requested an order:
that the respondent review the applicants [sic] calculations of GST and payroll deductions and payments, compare them with their calculations and advise the applicant how they arrived at their conclusion that monies are still owing. An order for an accounting.
[2] In his Memorandum of Fact and Law, the Applicant seeks the following orders:
1. That the Minister of National Revenue reconsider and reassess payroll and interest owing by Super Save Glass & Car Care Ltd. on the basis of Judge Beaubier's finding...
* * * * * * * * * *
3. In the alternative, an order that the Minister of National Revenue reconsider and reassess payroll owing on the basis of the submission by the applicant as enumerated on page 40 to 42 in the affidavit of Jacob A. Krahn....
[3] There is thus some uncertainty as to what decision of a federal officer or tribunal it is that I should review and what precise remedy I should give.
Facts
[4] The Applicant and his wife are directors of Westbank U-Haul and Rentals Ltd., also known as Super Save Glass & Care Ltd. (the "Company") which failed to remit to the Respondent Canada Customs and Revenue Agency (the CCRA) some of the amounts deducted from its employees' payroll for income tax during the years 1993 to 1996. Assessments were served on the Company but the CCRA was unable to collect from the Company. On February 9, 1999, the CCRA issued a Notice of Assessment on both the Applicant and his wife as directors of the Company holding them responsible for payment. The Notices of Assessment were in the amount of $9,416.41.
[5] The Applicant and his wife filed appeals in the Tax Court of Canada. By judgment of Beaubier JTCC, dated November 23, 2000, that Court found that the Applicant and his wife were liable as directors and dismissed the appeals from the assessment of February 9, 1999, in the amount of $9,416.41. The Applicant now says in argument that what he and his wife requested of the Tax Court was "a waiver of interest and penalty". In other words, in his view they did not appeal the assessment of February 1999 and it was thus not confirmed by the Court. As he had not included the notices of appeal to the Tax Court in the material before me, I asked to see them. He subsequently provided to the Court a notice of appeal and the transcript of the hearing in that Court. There is nothing in the notice of appeal to suggest that these were appeals concerning the "waiver of interest and penalty". The notice of appeal lacks clarity but appears to concern discussions and an alleged agreement with CCRA to withdraw assessments against the Applicant and his wife as directors because the Applicant had satisfied the CCRA that there were extenuating circumstances concerning his health and other problems which excused him from exercising due diligence as a company officer in seeing that tax deductions from employees were remitted to the CCRA. A perusal of the transcript confirms that Mr. Justice Beaubier understand the issue to be whether the Applicant and his wife were properly assessed as directors for the company's liability. He stated in his reasons that "the Appellants have appealed assessments for director's liability pursuant to Section 227.1 of the Income Tax Act." He goes on to identify the assessment under appeal as that issued on February 9, 1999, and he concludes his reasons by stating that "the appeals are dismissed." The Applicant and his wife did not appeal the Tax Court decision. This formulation of the issue by the Tax Court Judge is of course consistent with the jurisdiction of that Court which does not include the "waiver of interest and penalty" but is limited to appeals of assessments or the hearing of certain references.
[6] Since that time, the Applicant has made various payments towards his tax liability but interest has continued to accrue on unpaid taxes, penalties and interest. What is in dispute now is the amount of money owing by the Applicant to the Respondent. The Applicant stated in Court that he has overpaid by approximately $1000.00. Shawna Stang of the Revenue Collections Division of CCRA has stated in an affidavit filed with the Court as of February 4, 2004, that there was an outstanding amount of $6,014.08 owed by the Company or the Applicant in respect of unremitted payroll deductions.
Analysis
[7] The Applicant essentially argues that, in his experience, the CCRA is prone to accounting errors and all he wants is for me to require the CCRA to review its arithmetic in respect of his account.
[8] Counsel for the Respondent submits that this Court has no jurisdiction to hear such a judicial review. He argues that, in effect, this is an attack on the assessment of February 9, 1999, and that such assessment was the subject of an appeal to the Tax Court. That appeal being dismissed, and no appeal having been taken to the Federal Court of Appeal from that decision, this Court cannot entertain another attack on the assessment by way of judicial review. He argues, in the alternative, that if this is not an attack on the assessment and if because of that the Court does have some jurisdiction to review the collection or enforcement measures of the CCRA, then there is no reviewable error demonstrated.
[9] The jurisprudence and legislation is quite clear that an income tax assessment can only be attacked in the Tax Court, subject to appeal to the Federal Court of Appeal: see MNR v. Parsons, [1984] C.T.C. 352 (C.A.); Optical Recording Corp. v. Canada, [1991] 1 F.C. 309 (F.C.A.); and Gagné v. MNR, [2003] 2 C.T.C. 213 (T.D.). In the Optical Recording Corp. case, the Federal Court of Appeal went further to say that there could be no judicial review under section 18 of the Federal Court Act in respect of "the collection proceedings or actions taken in respect of. . . ." an assessment which must otherwise be deemed valid. More recently in the Gagné case, however, Rouleau J. did review the legality of enforcement steps taken pursuant to valid assessments and found such actions to be lawful.
[10] It is clear that by section 18.5 of the Federal Courts Act there is no jurisdiction to grant judicial review under section 18.1 of that Act, where an Act of Parliament expressly provides for an appeal of a decision or order of a federal board, commission etc. from such a decision to inter alia, the Federal Court of Appeal. By section 12 of the Tax Court of Canada Act that Court has exclusive original jurisdiction to hear appeals or references under the Income Tax Act. It is clear that an assessment under that Act can only be appealed to the Tax Court from which an appeal can only be taken to the Federal Court of Appeal.
[11] If, indeed, the Applicant here is not challenging the assessment of February 9, 1999, and is only arguing that what has happened since that assessment, and its confirmation by the Tax Court of Canada, has involved some enforcement or collection decisions involving the kind of error normally reviewable under section 18.1, it may be difficult to say that judicial review of such a decision could never be available. If it is enforcement action alone, and not the assessment, which is under attack, it is clear that the taxpayer cannot challenge that by the usual Tax Court procedure. Therefore this Court should be open to considering whether a remedy is available here in respect of official action which is not reviewable by the Tax Court. For example this Court hears applications for judicial review in respect of the exercise of ministerial discretion under subsection 223(3.1) concerning the waiver of penalties or interest, a matter not reviewable in the Tax Court: see Sharma v. Canada (2001), 206 F.T.R. 40; MacKay v. Canada, [2002] 2 C.T.C. 130; and Case v. Canada, [2004] F.C.J. No. 1026.
[12] I am inclined to think that, in this case, the Applicant is really pursuing a collateral attack on the assessment which has already been before the Tax Court. As noted above, he is asking for an order that the Minister of National Revenue "reconsider and reassess payroll interest owing" either on the basis of his interpretation of the Tax Court decision, or on the basis of his own accounting. In the latter respect, he invites me to adopt the figures developed by his accountant which he attaches to his own affidavit. It is clear in looking at this set of figures that they involve a recalculation of payroll deductions and interest owing by the Company going back as far as 1992, over six years before the assessment of February 9, 1999, an assessment which has already been confirmed by the Tax Court. That the figures proposed are quite inconsistent with the Tax Court decision is clear when one sees that, by the Applicant's accounting, he insists that as of January 31, 1999, there was owed only $4,804.32. Nine days later, the Notice of Assessment was issued stating the amount owing to be $9,416.41, the assessment which was subsequently confirmed by the Tax Court of Canada. It therefore seems apparent that the Applicant wishes to re-open that assessment which must now be treated as final.
[13] Apart from that, I have considered whether there could be any enforcement or collection decision here which could be reviewable on the grounds permitted by section 18.1 of the Federal Courts Act. No error of law or jurisdiction has been suggested. It appears to me that what the Applicant may be arguing is that calculations have been made by the CCRA of the amount of his remaining indebtedness which would come within subsection 18.1(4) as being based on "an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it." Assuming without deciding that is the issue raised, I do not find such an error to have existed. The affidavit of Shawna Stang of CCRA, filed by the Respondent on this application, details her examination of the agency records and the manner in which the outstanding balance has been calculated. The affidavit also exhibits several letters, worksheets, and statements of account which have been provided by the CCRA to the Applicant to explain how the balance they say is owing was arrived at. For his part, the Applicant has provided a short affidavit which, apart from challenging the correctness of the Tax Court judgment, merely attaches a letter from his own accountant, to which I have referred before, covering the period October 31, 1992 to January 14, 2004, which is clearly not in accord with the assessment of February 9, 1999, that has already been confirmed in the Tax Court.
[14] In these circumstances, it cannot be said that the CCRA has come to the conclusion as to the amount outstanding "in a perverse or capricious manner or without regard for the material before it". Assuming there could otherwise be a judicial review here, no grounds have been demonstrated for it.
Disposition
[15] The application for judicial review will therefore be dismissed with costs. There was an earlier motion brought by the Applicant for summary judgment in this matter for which the Respondent filed substantial materials. That motion was not proceeded with except in respect of certain procedural matters. Costs were ordered in the cause. The Respondent asked for that to be taken into account and that the Court fix costs payable to the Respondent in a lump sum of $2500.00. I believe that in the circumstances $2000.00 would be reasonable and will so order.
(s) "B.L. Strayer"
Deputy Judge
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1638-03
STYLE OF CAUSE: JACOB A. KRAHN v. CANADA CUSTOMS REVENUE AGENCY
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: February 22, 2005
REASONS FOR ORDER: Strayer D.J.
DATED: April 8, 2005
APPEARANCES:
Mr. Jacob A. Krahn ON HIS OWN BEHALF
John Gibb-Carsley FOR THE RESPONDENT
SOLICITORS OF RECORD:
Mr. Jacob A. Krahn
Vancouver, British Columbia FOR THE APPLICANT
Mr. John H. Simms, Q.C
Deputy Attorney General of Canada
Ottawa, Ontario FOR THE RESPONDENT