Date: 20041130
Docket: A-602-03
Citation: 2004 FCA 403
NOËL J.A.
MALONE J.A.
BETWEEN:
MAIN REHABILITATION CO. LTD.
Appellant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Toronto, Ontario, on November 29th, 2004.
Judgment delivered at Toronto, Ontario, on November 30th, 2004.
REASONS FOR JUDGMENT OF THE COURT BY: ROTHSTEIN J.A.
NOËL J.A.
MALONE J.A.
Date: 20041130
Docket: A-602-03
Citation: 2004 FCA 403
CORAM: ROTHSTEIN J.A.
NOËL J.A.
MALONE J.A.
BETWEEN:
MAIN REHABILITATION CO. LTD.
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
INTRODUCTION
[1] This is an appeal from a decision of Woods J. in which she struck out portions of the Notice of Appeal to the Tax Court of the appellant Main Rehabilitation Co. Ltd. ("Main"). The portions she ordered struck pertained to allegations of abuse of process at common law and under section 7 of the Charter of Rights and Freedoms in the conduct of an audit of Main by the Canada Customs and Revenue Agency ("CCRA").
FACTS
[2] For the purposes of the motion before Woods J. and on this appeal, the allegations in the Notice of Appeal to the Tax Court are assumed to be true. The CCRA reassessed Main by disallowing certain expenses for its 1996, 1997 and 1998 taxation years. The Notice of Appeal alleges that the disallowance of the expenses followed an audit which Main says was based on mala fides and an abuse of authority. It is said that a protracted and abusive audit was triggered by an anonymous false tip by a disgruntled shareholder. It was conducted by an "auditor" who had not yet passed her exams. And it was managed by the supervisor who was related to a municipal inspector who had dealings with directors, officers and employees, as well as being a friend of the disgruntled shareholder. The relief Main seeks in respect of these allegations is that the assessment be stayed.
THE TEST FOR STRIKING OUT PLEADINGS
[3] The test to be applied for striking out pleadings is whether it is plain and obvious that Main's Notice of Appeal to the Tax Court discloses no reasonable claim. Only if its appeal is certain to fail should the relevant portions of the Notice of Appeal be struck out. As stated, the facts alleged in the Notice of Appeal are assumed to be true. See Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959.
CHARTER SECTION 7
[4] In our respectful opinion, seminal Supreme Court jurisprudence makes it plain and obvious that Main cannot rely on section 7 of the Charter. The general principle is that only human beings can enjoy the right to life, liberty and security of the person (See Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927 at 1004). An exception is the ability of a corporation charged with an offence to challenge the constitutionality of the offence (as it applies to human beings) as part of its own defence. A corporation may defend a criminal charge by arguing that a law under which the charge is brought is constitutionally invalid (See The Queen v. Big M. Drug Mart Ltd. et al., [1985] 1 S.C.R. 295 at 313-4; see also Dwidag Systems International, Canada Ltd. Zutphen Brothers Construction Ltd. [1990] 1 S.C.R. 705 at 709 and The Wholesale Travel Group Inc. v. Her Majesty the Queen, [1991] 3 S.C.R. 154 at 179).
[5] Main is a corporation. It is not being charged with an offence and in its Notice of Appeal it is not challenging the constitutional validity of any section of the Income Tax Act. It is only arguing that the audit that was conducted constituted an abuse of process contrary to section 7 of the Charter. It is plain and obvious that it cannot invoke section 7 of the Charter or avail itself of Charter remedies in these circumstances.
ABUSE OF PROCESS
[6] In any event, it is also plain and obvious that the Tax Court does not have the jurisdiction to set aside an assessment on the basis of an abuse of process at common law or in breach of section 7 of the Charter.
[7] As the Tax Court Judge properly notes in her reasons, although the Tax Court has authority to stay proceedings that are an abuse of its own process (see for instance Yacyshyn v. Canada, 1999 D.T.C. 5133 (F.C.A.)), Courts have consistently held that the actions of the CCRA cannot be taken into account in an appeal against assessments.
[8] This is because what is in issue in an appeal pursuant to section 169 is the validity of the assessment and not the process by which it is established (see for instance the Queen v. the Consumers' Gas Company Ltd. 87 D.T.C. 5008 (F.C.A.) at p. 5012). Put another way, the question is not whether the CCRA officials exercised their powers properly, but whether the amounts assessed can be shown to be properly owing under the Act (Ludco Enterprises Ltd. v. R. [1996] 3 C.T.C. 74 (F.C.A.) at p. 84).
[9] This point was recently reiterated in the context of an attack against an assessment based on a breach of subsection 15(1) of the Charter. In Sinclair v. The Queen 2003 DTC 5625, Evans J.A. speaking for the Court said (para. 7):
[7] In our view, it is not open to the Tax Court to set aside a tax reassessment on the ground that the taxpayer ought to have been given the same favourable treatment as others who are similarly situated. The issue before the Tax Court in this case is whether Ms. Sinclair is entitled to an exemption under section 87. This must be decided on the basis of the interpretation of the section and its application to her situation: that others are given the benefit of the exemption is simply not relevant to Ms. Sinclair's appeal. See Hokhold v. Canada [93 DTC 5339], [1993] 2 C.T.C. 99 (F.C.T.D.); Ludmer v. Canada [95 DTC 5311, [1995] 2 F.C. 3 (C.A.); Hawkes v. The Queen [97 DTC 5060], [1997] 2 C.T.C. 5060 (F.C.A.). Apart from the allegation that some similarly situated taxpayers receive more favourable treatment, Ms. Sinclair does not suggest that section 87 is unconstitutional, either as interpreted or as applied to her case.
[10] Evans J.A. went on to explain that Ms. Sinclair had recourse to other Courts in the pursuit of her Charter rights (para. 8) just as the appellant in the present case can seek vindication for the alleged abuse of his rights before the appropriate forum
[11] The appellant argues that the decision of this Court in the Queen v. O'Neil Motors Ltd., 98 D.T.C. 6424 supports the proposition that an assessment can be vacated by the Tax Court in an appeal pursuant to section 169 where it can be shown that the process leading to the issuance of the assessment is tainted by the breach of a Charter right. That is not the effect of that decision.
[12] The issue in O'Neil was whether the Tax Court Judge after having excluded evidence on the basis that it had been obtained in breach of section 8 of the Charter could go on to vacate the reassessments. Bowman J.T.C.C. ( as he then was) proceeded to vacate the reassessments after having noted that the Minister bore the burden of establishing the validity of the reassessments (because they had been issued beyond the limitation period) and that they could not be supported without the impeached evidence.
[13] On appeal, this Court confirmed that it was open to the Tax Court Judge to vacate the reassessments in these circumstances. Contrary to what the appellant asserts, O'Neil merely stands for the proposition that an assessment may be vacated in an appeal pursuant to section 169 if it is not supported by reason of the exclusion of the evidence which led to its issuance.
[14] Finally, we do not believe that the decision of our Court in Arthur C. Dwyer v. The Queen 2003 FCA 322 creates a departure from the existing state of the law. In that case, the Court disposed of an attack based on abuse of process by going to the merits of this objection. This was one of many issues raised against multiple reassessments, and the Court held that there was no substance to the objection.
[15] There is no suggestion that the jurisdictional question was raised and indeed no discussion of the statutory limitations which apply to an appeal pursuant to section 169. It is plain and obvious that Dwyer was not intended to operate as a departure from the well established line of cases confirming the limited Jurisdiction of the Tax Court.
[16] The appeal will be dismissed with costs.
"Marc Noël"
J.A.
"Marshall Rothstein"
J.A.
"B. Malone"
J.A.
FEDERAL COURT OF APPEAL
Names of Counsel and Solicitors of Record
DOCKET: A-602-03
STYLE OF CAUSE: MAIN REHABILITATION CO. LTD.
Appellant
and
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: NOVEMBER 29, 2004
REASONS FOR JUDGMENT
OF THE COURT BY: (ROTHSTEIN J.A., NOËL J.A., MALONE J.A.)
APPEARANCES BY:
Mr. Rocco Galati
FOR THE APPELLANT
Ms. Catherine Letellier de St. Just
Ms. Lorraine Edinboro FOR THE RESPONDENT
SOLICITORS OF RECORD:
Galati, Rodrigues, and Associates
Toronto, Ontario FOR THE APPELLANT
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Ontario FOR THE RESPONDENT