INCOME TAX |
Practice |
Canada (Attorney General) v. National Bank of Canada
T-1006-01
2002 FCT 1068, Martineau J.
11/10/02
30 pp.
By simplified action plaintiff claiming from defendant $9,249.31 on account of source deductions withheld but not paid to MNR by numbered company--Amount in question represented $7,783.79 withheld in accordance with Income Tax Act and $1,465.52 withheld for employee premiums in accordance with Employment Insurance Act--Burden of proving claim against defendant valid rests with plaintiff-- Plaintiff based claim on Income Tax Act (ITA), s. 227(4) and (4.1) and Employment Insurance Act (EIA), s. 86(2) and (2.1)--These provisions create legal presumptions: tax debtor deemed to hold any amount deducted or withheld under ITA or EIA in trust for MNR, and MNR has beneficial ownership of any property covered by deemed trust--Presumptions apply once tax debtor fails to remit to MNR amounts set out in ITA, s. 227(4) and EIA, s. 86(2) within deadlines specified in ITA--Presumptions apply here--No right to personal remedy against defendant, and hence against bona fide purchaser of property subject to deemed trust, whether latter is creditor of tax debtor or not--Plaintiff's interpretation of ITA, s. 227(4.1) and EIA, s. 86(2.1), amounts to holding creditors and bona fide third party purchasers jointly and severally and personally liable for non-payment of source deductions which must be made exclusively by tax debtor under ITA, s. 153--Court must interpret federal provisions consistent with, first, achieving predictable results in commercial transactions, and second, distribution of exclusive powers assigned to Parliament and provincial legislatures by Constitution of Canada--Plaintiff's interpretation rejected as likely to create legal uncertainty that would be harmful to security of commercial transactions-- MNR has no right of action against third party unless latter in position in which could have been held jointly and severally liable in personal action brought by MNR against tax debtor--No evidence on which Court could conclude defendant could at any point be debtor's legal representative--Accordingly defendant clearly cannot be held personally and jointly and severally liable with debtor under ITA, s. 159 to repay source deductions to MNR --Sum of $9,249.31 not tax payable by defendant under ITA, s. 222--Plaintiff had no cause of action under federal provisions and claim without basis--Application dismissed--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 153 (as am. by S.C. 1994, c. 21, ss. 40, 77; 1996, c. 21, s. 40; c. 23, s. 175; 2001, c. 17, s. 151), 159 (as am. by S.C. 2001, c. 17, s. 154), 222, 227(4), (4.1)--Employment Insurance Act, S.C. 1996, c. 23, s. 86(2) (as am. by S.C. 1998, c. 19, s. 266), (2.1).