Date: 20050704
Docket: T-959-05
Citation: 2005 FC 935
Montréal, Quebec, July 4, 2005
Present: The Honourable Johanne Gauthier
BETWEEN:
ESTATE OF THE LATE DAVID NADLER
Applicant
and
ATTORNEY GENERAL OF CANADA
and
CANADA-ISRAEL SECURITIES LTD.
Respondents
REASONS FOR ORDER AND ORDER
[1] The applicant, the Estate of the Late David Louis Nadler, seeks a stay of the execution of the Requirement for the production of information and documents dated May 12, 2005 requesting Canada-Israel Securities Ltd. to deliver to Canada Revenue Agency:
(a) copy of all correspondence between David Louis Nadler and Canada-Israel Securities Ltd. from 1999 to 2005; and
(b) copy of all correspondence between Dow Dot Corporation Ltd. and the Canada-Israel Securities Ltd. from 1999 to 2005;
until the merits of its application for judicial review concerning the said Requirement is decided.
[2] The parties agree that in order to succeed the applicant had to meet the tripartite test set out in RJR-Macdonald Inc. v. Canada (AG), [1994] 1 S.C.R. 311.
[3] In its motion record and at the hearing, the applicant simply referred the Court to its notice of application which, in its view, sets out the serious issues it raises. The relevant paragraphs of the said notice of application read as follows:
8. The Applicant hereby seeks an order to quash the Requirement namely for the following reasons:
(i) The CRA did not follow the procedure set out in the Income Tax Act in issuing the Requirement;
(ii) The Requirement is vague, unclear and deficient namely in that it does not specify what exact information is sought by the CRA nor what purpose if any the said information may serve with respect to the administration of the Income Tax Act;
9. The Requirement consists of nothing more than a fishing expedition by the CRA and an attempt to obtain any information regarding the financial situation of the Late David Nadler whether or not the said information is relevant to the administration and enforcement of the Income Tax Act;
10. In fact, the Late David Nadler was not a resident of Canada since November 3, 1999.
[4] The applicant states that in view of the low threshold applicable at this stage, the Court must conclude on the face of these allegations that it has met its onus of establishing that there is a serious issue to be tried.
[5] In the affidavit submitted in support of its motion, the applicant also simply states that it will suffer irreparable harm if Canada-Israel Securities Ltd. provides the documents and information requested before a decision is rendered on its application for judicial review because it would render this remedy moot and futile, thereby depriving it of its right to be protected from abusive search and seizure and to the respect of its private life. It relies on the decision in Capital Vision Inc. v. Minister of National Revenue, [2000] F.C.J. No. 954 (T.D.)(QL) to support its argument that it needs to produce no further evidence or argument to support its position.
[6] The respondent argues that the applicant does not raise a serious issue because its argument with respect to the vagueness of the Requirement and the fact that it is a fishing expedition is frivolous as was found by the Federal Court of Appeal in Bisaillon v. Canada, [1999] F.C.J. No. 1477 (F.C.A.)(QL) and by Lemieux J. in Lapointe v. Canada, [2003] A.C.F. 176 (T.D.)(QL).
[7] As in Bisaillon, supra, the person from whom the information is sought does not raise any objection that it cannot fulfil its obligation because the Requirement is too vague or imprecise. On the contrary, it appears from the applicant's motion record that indeed the applicant was advised that Canada-Israel Securities Ltd. is now ready to forward the requested documentation and information to the respondent.
[8] I am satisfied by the evidence provided by the respondent (affidavit of John Drozd ) that his request was made in respect of a named person and that insofar as the first set of correspondence is concerned, it is made "squarely and ostensibly as part of a proceeding to recover the tax debt which the department had against" the late David Nadler (Bisaillon, supra, at paragraph 6).
[9] Subsection 231.2(1) of the Income Tax Act, R.S.C. 1985 c.1, (5th supplement) (the Act) expressly refers to the collection of any amount payable under the Act. The Act does not require that the third party from whom the information is sought be given any details as to the purpose of the Requirement. The Requirement properly indicates the name of the taxpayer concerned, refers to the appropriate enabling provision and gives a description of the information required which is sufficient to enable Canada-Israel Securities Ltd. to prepare its response.
[10] Therefore , I see no reason why I should not adopt the reasoning and conclusion of the Federal Court of Appeal in Bisaillon at least in so far as it pertains to the request to provide the correspondence between the late David Nadler and Canada-Israel Securities Ltd.
[11] The applicant could not give the Court any reason or basis on which it should find that there is a serious issue with respect to the fact that the Requirement was issued with respect to a non-resident.
[12] As I have already indicated it in my order relating to other Requirements issued to collect this tax debt (T-993-05 and T-992-05), I have considered the statutory provisions and the scheme of the Act and can think of no reason why a taxpayer could avoid the application of section 231.2 simply by leaving Canada after incurring the tax debt. As I said, the applicant offered no help in that respect even after the Court specifically asked it to further develop its argument.
[13] This is clearly not the first time this type of requirement is issued (see for example Tower v. Canada (Minister of National Revenue-MNR), [2004] 1 F.C.R. 183, [2003] F.C.J. No. 1153 (F.C.A.)(QL)).
[14] I conclude that the applicant raises no serious issue with respect to the request to provide correspondence between the late David Nadler and Canada-Israel Securities Ltd.
[15] During the hearing and further to a question raised by the Court, the applicant argued that the purpose of the Requirement with respect to Dow Dot Corporation Limited was not as clear. I agree. I am not convinced that I have sufficient evidence before me to conclude that this information or documentation may be relevant to the collection of the tax debt owed by the late David Nadler.
[16] In its memorandum, the respondent argues that Dow Dot Corporation is being investigated as a prête nom of the taxpayer. This is a plausible and logical argument but there is no such mention in Mr. Drozd's affidavit. Mr. Drozd simply states that a transaction between the taxpayer and that company took place before he left Canada and that the agency does not have a list of the directors and shareholders of that company. It may well be that implicitly this means that Dow Dot Corporation is investigated as a prête nom but, in that respect, I am not prepared to say that the applicant's argument is frivolous.
[17] That is not to say however that the applicant is entitled to a stay on that basis because I am not satisfied that there is sufficient evidence before me to establish that in respect of this particular documentation, it would likely suffer an irreparable harm if a stay is not granted.
[18] In effect, the applicant filed no evidence to establish how it is related or associated with Dow Dot Corporation, if at all. It does not say why or how its own right to privacy for example would be infringed by this request.
[19] In Capital Vision Inc., supra, Dawson J. relied on the decision of Létourneau J. to grant an interim stay while the appeal in Bisaillon, supra, was pending (Bisaillon v. Canada, [1999] F.C.J. No. 898)(F.C.A.)(QL). In that case, he found that there would be irreparable harm because the taxpayer who had moved to obtain the stay and had filed the appeal could well see his privacy infringed if the information was provided before the appeal was decided. Noël J.A. followed this reasoning in Bining v. Canada, [2003] F.C.J. No. 1013 (F.C.A.)(QL).
[20] As explained by Sharlow J. in Apotex Inc. v. Welcome Foundation Limited, [2004] F.C.J. No. 713 (F.C.A.)(QL), these stays were not granted simply to protect a right of appeal and those two decisions should not be construed as establishing such a principle.
[21] In fact, there are numerous decisions where stays have been denied in a different context pending the determination of a judicial application or an appeal.
[22] I am satisfied that the applicant has failed to establish that it would suffer irreparable harm if the requirement to provide correspondence between Dow Dot Corporation and Canada-Israel Securities Ltd. is not stayed.
[23] I must also add that even if I considered that the applicant's alleged irreparable harm with respect to the first request ( correspondence with the late David Nadler) is sufficient to satisfy the second criteria of the tripartite test, I would nevertheless deny the stay because I am not satisfied that considering all the circumstances including the fact that the applicant's application for judicial review in respect of that request is in my view frivolous, that the balance of convenience favours the applicant.
[24] I must therefore dismiss the motion with costs.
ORDER
THIS COURT ORDERS that
The motion is dismissed with costs.
"Johanne Gauthier"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-959-05
STYLE OF CAUSE: ESTATE OF THE LATE DAVID NADLER
Applicant
and
ATTORNEY GENERAL OF CANADA
and
CANADA-ISRAEL SECURITIES LTD.
Respondents
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING:
REASONS FOR ORDER AND ORDER : GAUTHIER J.
DATED: July 4, 2005
APPEARANCES:
Konstantinos Voggas FOR APPLICANT
Louis Sébastien FOR RESPONDENT
ATTORNEY GENERAL OF CANADA
Stéphane Eljarrat FOR RESPONDENT
CANADA-ISRAEL SECURITIES LTD.
SOLICITORS OF RECORD:
Sweibel Novek FOR APPLICANT
Montréal, Quebec
John H. Sims, Q.C. FOR RESPONDENT
Deputy Attorney General of Canada ATTORNEY GENERAL OF CANADA
Montréal, Quebec
Davies Ward Phillips & Vineberg FOR RESPONDENT
Montréal, Quebec CANADA-ISRAEL SECURITIES LTD.