Date: 20020221
Docket: ITA-7985-01
Neutral citation: 2002 FCT 175
IN THE MATTER OF the Income Tax Act
- and -
IN THE MATTER OF an assessment or assessments determined
by the Minister of National Revenue
pursuant to one or more of the following Acts:
the Canada Pension Plan and the Employment Insurance Act
BETWEEN:
THE MINISTER OF NATIONAL REVENUE
Judgment creditor
AGAINST
MICHEL BLAIS
Judgment debtor
and
DENISE FILTEAU
Adverse claimant
and
ROBERT ROSS
Adverse claimant
and
MICHEL BLAIS
Adverse claimant
REASONS FOR ORDER AND ORDER
BLAIS J.
[1] On August 28, 2001, the judgment creditor filed a certificate under section 223 of the Income Tax Act certifying that the judgment debtor was indebted to the Minister of Revenue (the "Minister") in the amount of $45,002.33.
[2] Also on August 28, 2001, a writ of seizure and sale was issued ordering that the movable or personal property belonging to the judgment debtor be seized.
[3] On September 5, 2001, the judgment creditor proceeded with the seizure of the judgment debtor's property at his home.
[4] On October 5, 2001, the judgment debtor himself, Mr. Michel Blais, and Mr. Robert Ross and Ms. Denise Filteau filed a motion in objection to vacate the seizure and sale of movable property carried out in this case.
[5] On November 2, 2001, Messrs. Blais and Ross and Ms. Filteau filed an amended motion in objection.
[6] Parallel to the seizure conducted in this case, the Minister issued a letter dated September 4, 2001 pursuant to subsections 224(1) and 224(1.1) of the Income Tax Act requiring that the employers of the judgment debtor pay the Receiver General 50 percent of any sums owing to the judgment debtor and 100 percent of any sums loaned or advanced to the judgment debtor.
[7] The judgment debtor also seeks in his submissions the vacating of this letter of requirement.
[8] I informed the parties earlier, at the hearing, that this Court does not have the power, in a motion objecting to a seizure of movables, to vacate the letter of requirement that was issued by the Minister and referred to in the preceding paragraph.
[9] This letter of requirement was issued pursuant to a decision by the Minister, and if the judgment debtor wishes to challenge it, he must do so through an application for judicial review in the Federal Court and he cannot use this proceeding in objection to the seizure as an appropriate vehicle.
[10] This application is therefore dismissed since the Court does not have jurisdiction to hear it.
[11] The judgment debtor is also demanding the removal of the legal hypothec registered on his property situated at 418 de l'Escale Street, in Saint-Nicolas, Quebec.
[12] This legal hypothec was registered by the Minister pursuant to the issuance by the Minister of a certificate under subsection 223(2) of the Income Tax Act, as referred to in paragraph 1 of these reasons.
[13] The Federal Court does not have the authority, on a motion in objection to a seizure of movables, to cancel a legal hypothec registered on an immovable property under subsection 223(5) of the Income Tax Act.
[14] As counsel for the Minister pointed out, the Court has jurisdiction only to rule on the validity of the said seizure, and since the certificate and the legal hypothec were registered in accordance with the law, there is no reason that was presented to the Court that would justify the cancellation of the legal hypothec as registered.
[15] Consequently, as I stated at the hearing, the judgment debtor's application to cancel the legal hypothec is dismissed.
[16] I will now examine the objection by Mr. Robert Ross, a bailiff and friend of the judgment debtor, concerning the ownership of a golf bag and its accessories.
[17] It appears from the evidence presented in Court that this golf bag was purchased by Mr. Ross eighteen years ago, in 1984, and that it is of negligeable value in the opinion of its alleged owner.
[18] Mr. Ross has told the Court, however, that he wished as a matter of principle to submit to the Court that he had sworn under oath that he was the owner thereof, but that he was unable to provide any documentary evidence after eighteen years.
[19] In my opinion, Mr. Ross has successfully rebutted the presumption of ownership as to this golf bag; indeed, article 928 of the Civil Code of Québec states:
| 928. A possessor is presumed to hold the real right he is exercising. A person contesting that presumption has the burden of proving his own right and, as the case may be, that the possessor has no title, a defective title, or defective possession. |
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928. Le possesseur est présumé titulaire du droit réel qu'il exerce. C'est à celui qui conteste cette qualité à prouver son droit et, le cas échéant, l'absence de titre, ou encore les vices de la possession ou du titre du possesseur. |
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[20] In short, the golf bag is presumed to be the property of Mr. Michel Blais and it is Mr. Robert Ross who has the burden of rebutting this presumption and justifying his right to claim the seized property.
[21] It is true that the authorities are clear that an adverse claimant must produce the contract of purchase of the property in order to discharge its burden. However, under the maxim "nobody can be expected to do the impossible", it appears to be impossible, to say the least, for Mr. Ross to produce documentary evidence and both his testimony and his affidavit are completely credible and, in this particular case, it seems quite reasonable to depart from the usual precedents.
[22] I conclude, therefore, that Mr. Ross has provided sufficient proof that he was indeed the owner of the golf bag, and his objection is therefore allowed and the seizure carried out on the said golf bag is consequently vacated.
[23] The judgment debtor, for his part, likewise objected to the seizure of his 1997 Subaru Outback automobile.
[24] The judgment debtor told the Court that he needed the vehicle for the performance of his work as a bailiff and that if he was deprived of his vehicle he could no longer continue to perform his duties as he has done to this point.
[25] It seems fairly obvious that the judgment debtor needs an automobile for the performance of his work. He must serve process pretty well everywhere in the Quebec City area and could probably not manage to perform his work effectively if he had to use public transportation services such as buses or taxis.
[26] Counsel for the judgment creditor noted that it was not necessary to have a vehicle with an original value of $40,000 to do this work, which is correct. It is even possible for the judgment debtor to use a rental car to get around.
[27] Counsel for the Minister also tabled some judgments in support of her submissions, including a fairly recent one from the Court of Québec, dated January 25, 2001, in the case Sous-Ministre du Revenu du Québec v. B.G. Électrique S.N.C., No. 410-02-001256-988, in which Barbe J.C.Q. held that the applicant's trucks in that case did not constitute instruments of work within the meaning of article 552(3) of the Quebec Code of Civil Procedure, but were means of generating income from the business and that consequently the said vehicles were liable to seizure (page 112 of the judgment).
[28] Article 552(3) of the Quebec Code of Civil Procedure reads as follows:
| (3) The instruments of work needed for the personal exercise of his professional activity.
Nevertheless, with the exception of the property mentioned in subparagraph 2 of the first paragraph, the properly referred to in the first paragraph may be seized and sold for the amounts owed on the price of the property or by a creditor holding a hypothec thereon, as the case may be. However, if the debtor is a fisherman, his fishing boats and equipment cannot be seized or sold between 1 May and 1 November.
The valuation of the seizing officer may be revised by the court; if the court is of the opinion that the value of the property left to the debtor is below the value permitted, it may allo the debtor to choose and take from among the seized property that which is required to make up the difference.
Any renunciation of the exemptions from seizure resulting from this article is null. |
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3. Les instruments de travail nécessaires à l'exercice personnel de son activité professionnelle.
Néanmoins à l'exception des biens mentionnés au paragraphe 2, ces biens peuvent, selon le cas applicable, être saisis et vendus pour les sommes dues sur le prix de ces biens ou par un créancier détenant une hypothèque sur ceux-ci. Toutefois, dans le cas d'un pêcheur, les bateaux et leurs agrès ne peuvent être saisis ni vendus entre le premier mai et le premier novembre.
L'évaluation de l'officie saisissant peut être révisée par le tribunal; si ce dernier estime que la valeur des biens laissés au débiteur n'atteint pas la valeur permise, il peut permettre au débiteur, au choix de celui-ci, de reprendre parmi les biens saisis ceux qui sont nécessaires pour combler la différence.
Toute renonciation à l'insaisissabilité résultant des dispositions du présent article est nulle. |
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[29] Article 2648 of the Civil Code of Québec also states:
| 2648. The movable property of the debtor which furnishes his main residence, used by and necessary for the life of the household, may be exempted from seizure to the extent fixed by the Code of Civil Procedure, except where such movables are seized for sums owed on the price. The same rule applies to instruments of work needed for the personal exercise of a professional activity, except where such movable are seized by a creditor holding a hypothec thereon. |
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2648. Peuvent être soustraits à la saisie, dans les limites fixées par le code de procédure civile, les meubles du débiteur qui garnissent sa résidence principale, servent à l'usage du ménage et sont nécessaires à la vie de celui-ci, sauf si ces meubles sont saisis pour les sommes dues sur le prix. Peuvent l'être aussi, dans les limites ainsi fixées, les instruments de travail nécessaires à l'exercice personnel d'une activité professionnelle, sauf si ces meubles sont saisis par un créancier détenant une hypothèque sur ceux-ci. |
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[30] In Louis Belliard v. Deputy Minister of Revenue of Quebec (A-504-94, December 23, 1997), Létourneau J.A., writing on behalf of the Federal Court of Appeal, canvassed the circumstances involving the seizure of an automobile and the possibility of exempting an automobile from seizure and sale by invoking article 552(3) of the Quebec Code of Civil Procedure.
[31] He states, at paragraph 49:
I do not believe that the test of necessity adopted by the legislature in article 552(3) implies that a debtor may and is entitled to travel in his own motor vehicle, to the detriment of his creditors, where there are other methods, such as renting and using public transit and taxis, of reaching the same result without prejudicing creditors.
[32] However, I do not believe the test of whether the debtor can rent a car instead of purchasing it is a reason that may be taken into consideration in this particular case. Should that be the case, the same argument could be cited in regard to a computer or other pieces of equipment that businesses use in the course of their operations, which could just as easily be leased instead of purchased. And that in fact is what often happens in the case of certain office equipment such as computers, printers, photocopiers, etc.
[33] The legislature did not anticipate this subtlety in the provisions of article 552(3) of the Quebec Code of Civil Procedure.
[34] The true test is the interest of the creditors. And in this regard, it would be unacceptable for a debtor to use a $40,000 car to do his work, and thus deprive his creditors of an appreciable amount of equity, when he could do the same thing with a $15,000 or $20,000 vehicle.
[35] In the case at hand, the debtor paid $40,000 for his automobile five years ago and the vehicle now has more than 200,000 kilometres on the odometer. According to his testimony, there is still about $9,000 to be paid on this vehicle, and he is not managing to make his payments since 50 percent of his salary has already been seized by the judgment creditor.
[36] In my opinion, if the vehicle were to be sold tomorrow morning, once the hypothecary debt was paid the remaining amount for the benefit of his creditors would be minimal, and the judgment debtor would be deprived of his means of transportation and consequently his income.
[37] Since the judgment creditor is already collecting at source 50 percent of the judgment debtor's salary, I think that depriving him of his means of transportation means the judgment creditor is sawing off the branch of the tree on which he is seated.
[38] It is also foreseeable that if the judgment debtor were to lose the use of his vehicle tomorrow morning, it would be hard for him to obtain financing to purchase another vehicle or to lease one.
[39] Incidentally, it should be noted that the travel costs of a bailiff in the performance of his duties are provided in the legal tariff, which is further evidence of the importance of travel to a bailiff and the virtual impossibility of being able to adequately perform his duties without the use of an automobile.
[40] I conclude that the bailiff's work is more comparable with that of a taxi driver or a contractor who owns a delivery vehicle for his sole use and who would be deprived of his livelihood if he were to lose the use of his vehicle.
[41] In view of the evidence presented at the hearing, I find that the judgment debtor has satisfactorily demonstrated that he fulfills the requirements of article 552(3) of the Quebec Code of Civil Procedure and that the very sound decision by Mr. Justice Létourneau in Belliard, supra, must be distinguished from this case for the reasons explained previously, and particularly because the individual contemplated in the Federal Court of Appeal decision was a lawyer and was unable to demonstrate to the satisfaction of either the Trial Division or the Court of Appeal that he needed his vehicle for the performance of his work.
[42] The final item to analyze, but not the least, is that of Ms. Denise Filteau's objection, which alleges that she is the owner of all the property seized at the judgment debtor's home with the exception of the golf bag and the Subaru car we have already discussed.
[43] It is worth mentioning that this adverse claimant is the former spouse of the judgment debtor and that she has not been living at the judgment debtor's home since December 1998.
[44] I must note that the presumption in article 928, which I referred to earlier, still applies, and that it is the judgment debtor Michel Blais who is presumed to be the owner of the seized property. The conditions for rebutting this presumption have been clearly outlined by the statutes and authorities.
[45] Professor Charles Belleau, in Précis de procédure civile du Québec, volume 2 (3rd ed.), 1997 (Éditions Yvon Blais, pages 178 to 180), argues that to discharge her onus and rebut this presumption the adverse claimant should produce the contract of purchase of the property. Of course, it was only by way of exception that I agreed that in the case of the golf bag, which was the property of a third party, it was not possible to file the contract of purchase since eighteen years had gone by in the meantime.
[46] In the instant case, on the contrary, there are a number of contracts of purchase of the seized properties and these are indeed in the judgment debtor's name, and no evidence was presented to contradict this important documentary evidence other than evidence that the property had been purchased by the judgment debtor but subsequently sold by him to Ms. Filteau who is said to have repaid him by instalments, in cash of course. Moreover, as the Minister's representative reported in her affidavit, only a few days after their separation the judgment debtor purchased another stereo sound system for a large sum that he had delivered to Ms. Filteau's home although she had just left him.
[47] Ms. Filteau did try to cite the names of various people who might corroborate her testimony, but no affidavit was submitted from any such people. She even said that one of the painters who had made one of the seized paintings had refused to cooperate.
[48] Ms. Filteau was at some pains to say that she had remained a very good friend of her ex-husband, although they were separated, which in this particular case does more to raise questions than to support her overall credibility. I have carefully read Ms. Filteau's submissions in her affidavit and at the time of the presentation of her submissions to the Court, and I have noted orally her additional explanations designed to enlighten the Court.
[49] I must say that while I was initially skeptical when she began her presentation to the Court, by the end of her presentation and after hearing the precise and justified comments of the Minister's counsel, my initial skepticism had become a certainty: the certainty that Ms. Filteau had not succeeded in rebutting the presumption that all the property seized at the judgment debtor's home belonged to him. Rather, she had persuaded me to the contrary.
[50] The oral and written explanations of Ms. Filteau are completely improbable: she left the judgment debtor in 1998 and all the seized property, including the ladder, the BBQ, the frames, the paintings, the VCR, the stereo system, the vacuum, the library, the pirate's chest, the wheelbarrow, the tool chests, the freezer are all her property -- even the money in a bowl located on the judgment debtor's desk. She comes close to claiming ownership of the refrigerator contents. As to her ownership of the money located on the judgment debtor's desk, she replies candidly that she prefers to leave her cash in the house and in the custody of the judgment debtor whom she left four years ago because she is such a spendthrift and this is a way for her to save.
[51] The judgment debtor has already manifested his deliberate and firm intention not to pay any tax and on numerous occasions has made completely baseless charges against the Minister's officials.
[52] Ms. Filteau, who says she is still the judgment debtor's great friend, agreed wholeheartedly with this approach, likewise reeling off charges against the Minister's officials that were completely unfounded and devoid of any credibility in this case.
[53] Rather than believe that she was trying to mislead the Court, I prefer to blame the improbability of her affidavit on the great affection that binds Ms. Filteau to the judgment debtor.
[54] The judgment debtor still owes more than $45,000 to the Minister and it seems clear that he is prepared to use every means, including the subterfuge of this objection by Ms. Filteau, to avoid paying. However, the Court has not been fooled.
[55] For all these reasons, the objection of Ms. Denise Filteau is dismissed.
O R D E R
THE COURT ORDERS THAT:
- the objection to the seizure by Ms. Denise Filteau be dismissed because it is unfounded;
- the objection filed by Mr. Robert Ross in regard to the golf bag is allowed, and the seizure of the golf bag is therefore vacated;
- the objection of the judgment debtor Michel Blais in regard to the seizure of his salary is dismissed;
- the objection of the judgment debtor Michel Blais in regard to the legal hypothec is dismissed;
- the objection of the judgment debtor Michel Blais in regard to his Subaru Outback vehicle is allowed and the seizure of the said vehicle is vacated;
- the whole with costs in favour of the judgment creditor in the case of the adverse claimant Denise Filteau and without costs in regard to the other two adverse claimants.
Pierre Blais
Judge
OTTAWA, ONTARIO
February 21, 2002
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET NO: ITA-7985-01
STYLE: Minister of National Revenue v. Michel Blais
PLACE OF HEARING: Québec, Quebec
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE BLAIS
DATED: February 14, 2002
APPEARANCES:
Marie-Josée Bertrand for the judgment creditor (613) 946-2775
Michel Blais representing himself alone for judgment debtor (514) 831-1286
Robert Ross representing himself alone for adverse claimant (514) 667-2918
Denise Filteau representing herself alone for adverse claimant (514) 692-9883
SOLICITORS OF RECORD:
Department of Justice Canada
Marie-Josée Bertrand