Date: 20010711
Docket: ITA-571-01
Neutral citation: 2001 FCT 777
IN THE MATTER OF THE INCOME TAX ACT
- AND -
IN THE MATTER OF AN ASSESSMENT OR ASSESSMENTS BY THE
MINISTER OF NATIONAL REVENUE UNDER THE ONE OR MORE OF
THE INCOME TAX ACT (CANADA), CANADA PENSION PLAN,
UNEMPLOYMENT INSURANCE ACT, EMPLOYMENT INSURANCE
ACT AND ALBERTA INCOME TAX ACT, AGAINST:
PATRICIA L. WHITFIELD (sometimes known as
Patricia Lynn WHITFIELD)
INTRODUCTION
[1] These reasons arise out of three motions heard together before me at Edmonton, Alberta on the 27th of June, 2001. All related to Patricia L. Whitfield's assessment for tax under the Income Tax Act[1] for the year 1998 which, at the date of the hearing before me, remained outstanding, to negotiations between Patricia L. Whitfield (the "respondent") and Canada Customs and Revenue Agency ("CCRA") to settle the matter and, when those negotiations proved unsuccessful, to collection action taken by CRRA.
[2] In the first motion, filed the 18th of May, 2001, the respondent seeks an order to set aside a Writ of Seizure and Sale dated the 19th of January, 2001 and her costs. The grounds for the motion are the respondent's allegations that there is no tax debt owing by her in respect of her 1998 taxation year, that the seizure documents were improperly served and served on a minor, that CCRA failed to "follow" section 225 of the Income Tax Act and that CCRA failed to respect her rights, particularly her legal rights, under the Canadian Charter of Rights and Freedoms[2] (the "Charter"). Finally, the respondent alleges that the tax debt in question has been in dispute since October of 1999 and that CCRA has made no attempt to schedule an "impartial hearing as required".
[3] In the second motion, CCRA seeks, in addition to an abridgment of time for serving the motion, an order:
a) declaring that the property seized from the premises of the respondent on the 27th of January, 2001 is the personal property of the respondent;
b) declaring that Kyle William Henry Rosin, the respondent's elder son, does not have a valid security interest in the seized property;
c) declaring that the property seized is not exempt under Part 10 of the Civil Enforcement Act[3] and is the personal property of the respondent;
d) directing the sale of the property of the respondent seized on the 27th of January, 2001 as listed and described in a Notice of Seizure of Personal Property;
e) directing Consolidated Rockingham Bailiff Services Inc. to distribute the sale proceeds from the seized property according to Part 5 and Part 11 of the Civil Enforcement Act; and
f) for costs as set out in subsection 99(3) of the Civil Enforcement Act.
[4] The grounds for the second motion are stated to be that the respondent is indebted to CCRA pursuant to a Certificate filed in this Court on the 19th of January, 2001 and a Writ filed in this Court on the same day.
[5] In the third motion, filed by the respondent on the 22nd of June, 2001, the respondent seeks the same relief as she seeks in the first motion and, in addition, an order for the immediate return of the seized property, a Dodge Dakota, to her son, Kyle William Henry Rosin, who is described as a secured creditor against the vehicle. While reciting the same grounds for the motion as are cited in respect of the first motion, the respondent further cites her allegation that the Certificate registered in this Court is invalid as it does not show the appropriate delegation of authority as set out in Part IX, Regulation 900(2) to the Income Tax Act, the failure of CCRA to uphold the respondent's Charter rights including not only the legal rights as cited in respect of the first motion, but also her equality rights by reason of the alleged labelling of the respondent as a "tax protestor".
[6] Before me, the issues that were argued and the order in which they were argued were the following:
- whether or not a tax debt remains outstanding by the respondent to CCRA in respect of her 1998 income tax year;
- whether CCRA engaged in selective enforcement and harassment against the respondent, thus infringing her Charter rights;
- whether the certification process followed by CCRA was invalid; and
- finally, whether the seizure process was invalidated and whether the respondent's son Kyle has a legitimate security interest in the Dodge Dakota.
[7] I will briefly deal with each of the issues in turn. The respondent appeared before me on her own behalf. In the circumstances, a verbatim record of the proceedings was taken and a transcript was ordered by the Court. Upon receipt of the transcript, it will be available for consultation on the Court's file.
THE CONTINUED SUBSISTENCE OF A TAX DEBT OWED BY THE RESPONDENT TO THE CROWN IN RESPECT OF THE RESPONDENT'S 1998 TAXATION YEAR
[8] On the 10th of August, 1999, an assessment in the amount of $6,887.48 was made against the respondent in respect of her 1998 taxation year. No objection to that assessment was filed. On the 16th of December, 1999, the respondent attended at the offices of CCRA and gave to an official a letter, which the respondent describes as a promissory note, indicating that the tax debt represented by the assessment for 1998 would be paid in full on the 30th of December, 1999.
[9] Two representatives of CCRA attended at a place designated by the respondent, on the 30th of December, 1999, to receive payment of the tax debt. At the request of the respondent, they identified themselves although they did not produce any official identification documents. They discovered that their meeting with the respondent was being both tape recorded and videotaped. When they were asked if they would consent to the meeting being tape recorded and videotaped, they indicated they would not. They indicated that they wished to receive payment of the tax debt and would provide a receipt and that was all they were there to do.
[10] The respondent indicated, and these are my words, that the matter would not be so easily dealt with. A brief discussion ensued. The letter or promissory note was not presented. The representatives of CCRA left without receiving payment.
[11] In the circumstances of the meeting on the 30th of December, 1999, the respondent urged before that the promissory note that she had given to CCRA in settlement of the tax debt had been discharged. As authority for this proposition she referred me to sections 183 and 184 of the Bills of Exchange Act[4].
[12] Whatever the merits of the respondent's submission regarding discharge of her obligation under the promissory note, those submissions simply miss the point. There was no evidence whatever before me that the promissory note, if that is what it was, was accepted in full settlement of the tax debt for the 1998 taxation year and stood in the place of that tax debt. Even if the respondent's obligations under the alleged promissory note were in fact discharged, her obligations under the assessment made against her for the 1998 taxation year were not discharged.
SELECTIVE ENFORCEMENT/HARASSMENT
[13] The respondent urged before me that, given the relatively small size of her tax debt for the 1998 taxation year, CCRA, in choosing to enforce the tax debt through the certification and seizure provisions of section 223 of Income Tax Act chose an unduly harsh enforcement mechanism and in so doing discriminated against her, unduly harassed her, and infringed her legal rights under the Charter. Further, she urged, in identifying her as a "tax protestor"and thereafter engaging in "draconian" collection measures, CCRA infringed her equality rights under the Charter. The respondent further urged that CCRA discriminated against her and unduly harassed her in failing to cooperate with what she described as her reasonable request for information that would allow her to better understand the position that CCRA was taking.
[14] I find no merit in these arguments. There was no evidence before that would allow me to conclude that CCRA adopted more stringent enforcement measures against this particular taxpayer than it would against similarly situated taxpayers. Indeed, the evidence was to the contrary. At page 103 of the transcript of cross-examination on affidavit of a representative of CCRA in this matter, the following exchange is recorded:
Q Okay, Did CCRA decide to proceed despite the cost because PLW [the respondent] has been labeled as a tax protestor?
A No.
Q Okay. Because they wanted to make an example of this situation?
A No.
Q Okay, Does CCRA generally execute on debts less than $10,000?
A I have done hundreds of seizures and literally thousands of writs, many of them are under $10,000, many of them are under $5,000,...
I find no substance to an argument that CCRA, on the facts of this matter, somehow infringed any right of the respondent under the Charter. Further, I find no indication in the evidence before me to the effect that CCRA was less cooperative with the respondent in providing information or access to information than would be the case in respect of other similarly situated taxpayers.
THE CERTIFICATION PROCESS
[15] The respondent urged that the certification process followed against her was simply because the Certificate issued under section 223 of the Income Tax Act was improperly signed under the relevant delegation of authority from the responsible Minister. Counsel for CCRA placed before the Court the appropriate delegation document. She also referred me to R. v. Ehli[5] and The Queen v. Galbraith[6] as authority for the proposition that the delegation here was properly exercised albeit that a rubber-stamp impression of the appropriate signature was relied upon. I adopt these authorities and find no irregularity in the certification process here followed by CCRA.
THE SEIZURE PROCESS AND THE ALLEGED SECURITY INTEREST
[16] The respondent urged that the seizure of the Dodge Dakota at her residence was invalid because it was performed in her absence, the bailiff conducting the seizure bullied and took advantage of her sons, one of whom was a minor, the bailiff improperly modified the seizure documents which constituted her instructions, and service of the seizure documents was made upon a minor.
[17] Once again, I reject these arguments. While it was not disputed before me that the seizure was conducted when the respondent's two sons were apparently alone at her residence, one of those sons being 19 years of age at the time and the other a minor, I find no evidence to support the proposition that they were unduly harassed or taken advantage of. Further, it was not at all clear on the evidence before me, notwithstanding the copy of an affidavit of Darren James Rosin attached as an exhibit to the respondent's affidavit filed on the first motion, whether the seizure documents were served, or left with, the minor son or the 19 year-old son who was qualified as a person on whom service could be effected. Finally, the modification of the serial number of the vehicle on the instruction in the seizure documents, when all other elements of the description of the Dodge Dakota in the seizure documents were correct and the modification was a relatively minor one was not, I am satisfied, of itself, sufficient to invalidate the seizure.
[18] Finally, the respondent urged that her son Kyle had a security interest in the Dodge Dakota equal to its full value and that therefore the truck should, without further ado, be turned over to Kyle. The respondent based her argument in this regard on the following: first, an amount of $40,000.00 was deposited into the respondent's bank account by her mother, Kyle's grandmother. It required three signatures to withdraw the money from that account. Those signatures, one of which was that of the respondent, were obtained on a cheque written in favour of the respondent in the amount of $40,000.00. That cheque was used by the respondent to purchase three money orders, one of which was in an amount of somewhere between thirty-one and thirty-two thousand dollars, and that money order was used to purchase the Dodge Dakota.
[19] The respondent urged that, at all times, it was her intention and that of her mother that the Dodge Dakota would be Kyle's and not hers. The vehicle was, she urged, registered in her name simply because Kyle was, at the time of purchase, 17 years of age and the cost of insurance on the vehicle would have been prohibitive if it were registered in his name. As evidence of this arrangement, the respondent referred me to a "truck agreement" bearing an "effective date" of December 17, 1998 and purporting to be signed on that date by Kyle and the respondent which included the following paragraph:
Pat Whitfield agrees to purchase the above-mentioned truck on Kyle's behalf, using Kyle's money in order to accommodate the above [the insurance concerns]. Pat also agrees to register and insure the above-mentioned truck in her name until such time as Kyle reaches the age of 21 or until Kyle decides to sell the truck. Pat also agrees to have Kyle register a security interest on the above-mentioned truck after he reaches the age of 18, in order to protect his interest and his investment. In return, Kyle agrees to practice safe driving habits. Kyle also agrees that he will pay for the gas for the truck.[7]
On the 26th of November, 1999, almost a year later, and presumably after Kyle reached the age of 18, a security agreement as contemplated by the foregoing paragraph was entered into in favour of Kyle with the debtor indicated to be the respondent. The security document was registered the same day.
[20] On the basis of the foregoing, the respondent urged that, under the Personal Property Security Act of Alberta[8] and the Civil Enforcement Act of Alberta[9], Kyle's interest to the full value of the Dodge Dakota takes precedence to that of CCRA.
[21] Once again I reject these arguments. By reference to the above-quoted paragraph from the truck agreement entered into by Kyle and the respondent, there was simply no evidence before me, other than what I consider to be the self-serving evidence of the respondent to which I give no weight, that the Dodge Dakota was purchased "...using Kyle's money" and that therefore the Dodge Dakota represented "...his investment." The respondent acknowledged that the funds used to purchase the Dodge Dakota were drawn in her favour from a bank account that she described as hers, although three signatures were required to draw money out of it. Certainly none of those signatures was that of Kyle. The source of the money in the respondent's bank account was apparently her mother. There was absolutely no evidence that her mother intended the $40,000.00 that was transferred into the respondent's bank account to be in whole or in part a gift or a loan to Kyle. I am satisfied that, at least for the purposes of this matter, the Dodge Dakota is the property of the respondent with whose money it was purchased and in whose name it is registered.
CONCLUSION
[22] In the result, the two motions before me on behalf of the respondent will be dismissed. The motion before me on behalf of CCRA will be granted and an order will go granting the reliefs sought on that motion as earlier described in these reasons.
_______________________________
J. F. C.C.
Ottawa, Ontario
July 11, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD
COURT FILE NO.: ITA-571-01
STYLE OF CAUSE: ITA v. PATRICIA L. WHITFIELD
PLACE OF HEARING: EDMONTON, ALBERTA
DATE OF HEARING: JUNE 27, 2001
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE GIBSON
DATED: JULY 11, 2001
APPEARANCES:
MARGARET A. IRVINGFOR APPLICANT
PATRICIA L. WHITFIELDFOR RESPONDENT
SOLICITORS OF RECORD:
MR. MORRIS ROSENBERGFOR APPLICANT
DEPUTY ATTORNEY GENERAL OF CANADA
APPEARING ON HER OWN BEHALFFOR RESPONDENT
[1] R.S.C. 1985, c.1 (5th Supp.), as amended.
[2] Part I of the Constitutional Act,1982 (R.S.C. 1985, Appendix II, No. 44), being Schedule B to the Canada Act, CA 1982 (U.K.), 1982 c. 11.
[3] Statutes of Alberta, 1994, cC-10.5.
[4] R.S.C. 1985, c. B-5.
[5] [2000] A.J. No. 706 (Alta. C.A.).
[6] 2001 B.C.S.C. 675.
[7] Exhibit "A" to the respondent's affidavit sworn the 23rd of May, 2001 and filed the same day.
[8] Statutes of Alberta, 1988 cP- 4.05.
[9] Supra, footnote 3.