Sunbeam Corp. ( Canada ) Ltd. v. Canada
T-1010-89
MacKay J.
2/12/93
23 pp.
Action to recover overpayment of federal sales taxes -- Plaintiff manufacturer of small household appliances -- From September 1982 to March 1986 paying federal sales tax in relation to sale prices of products manufactured as set out by Excise Tax Act, s. 27 (now s. 50) -- Annual letters from Excise indicating sales tax to be computed in relation to sales prices of goods manufactured by plaintiff -- Excise auditors never mentioning any other method for calculating tax -- From 1965 to 1985 Excise allowing certain manufacturers to account for federal sales tax using "determined value method" i.e. based on determined values -- Individual company's specific determined value based on administrative policy, discretion -- Nothing in departmental communications concerning determined value method of valuation -- Plaintiff learning some competitors paying federal sales tax on different basis from tax consultant -- Estimating overpayments equalling 1% to 1.5% of after-tax profits -- In 1987 plaintiff claiming refund of taxes allegedly overpaid -- Excise cancelling claim on ground determined value could not be applied retroactively to adjust amounts of tax computed on basis of sales prices -- When plaintiff objected to decision, Excise denying objection, stating since tax paid on sale price, as set out in Act, no overpayment -- Action dismissed -- (1) Plaintiff claiming entitled to reduce tax liability with reference to tax treatment afforded to others -- Treatment afforded to other taxpayers in authorizing some to apply determined value method in calculating tax not relevant to question of whether plaintiff entitled to refund just as not relevant some taxpayers paid on same basis as plaintiff -- (2) Plaintiff claiming restitution on ground of unjust enrichment -- To support claim based on unjust enrichment, must prove defendant enriched by receipt of benefit at expense or deprivation of plaintiff in absence of any juristic reason for enrichment, and in circumstances where would be unjust that benefit be retained -- Plaintiff alleging relied on Excise representations (letters) required to pay tax based on selling price of products, and never informed of determined values for products or of opportunity to use company specific determined values, even though policy of Excise to provide full information to taxpayers, through auditors and publications about methods of calculating tax -- Overpaid taxes by mistake, under practical compulsion -- Requirements to found claim on unjust enrichment not established -- Neither establishing Crown receiving any benefit, other than tax paid in accord with statute, nor establishing sale prices not as provided in Act -- Treatment accorded to certain other taxpayers, in authorizing tax to be calculated according to determined value method, not displacing statutory provision for tax to be paid in relation to sales prices -- Statutory provision applied, without determined values, in cases of other taxpayers -- Even if Crown received benefit, not at expense or deprivation of plaintiff -- Where economic burden of tax shifted to others, i.e. where passed on to customers through sales prices, plaintiff not establishing any gain to Crown at its expense -- (3) Plaintiff claiming legitimate expectation would be treated fairly or equitably with respect to other taxpayers in similar position, and would not be misled by information published by defendant through Excise -- Facts not supporting application of doctrine of legitimate expectations -- Doctrine creating neither substantive right to claim recovery of tax allegedly overpaid nor right to have determined value method apply retroactively to calculations of plaintiff's federal sales tax so as to create overpayment in regard to tax paid -- Doctrine generally requiring express representation by public official upon which judicial review claimant can establish it relied to its detriment -- No representation herein about determined value method of calculating tax -- Representations tax to be calculated on sales price of products consistent with Act -- Exceptional treatment of another party not estopping defendant from denying retroactive application of determined values for calculation of tax -- (4) Plaintiff claiming refund of overpayments under s. 44 -- Claiming taxes paid in error because unaware of ability to calculate tax by determined value method, and unaware of financial implication of that method -- In absence of industry-wide determined values or general policy for application of determined value method of calculating tax, assumption entitled to use determined value method for calculating tax invalid -- Payment of taxes in accord with statute neither error nor overpayment -- Excise Tax Act, R.S.C. 1970, c. E-13, ss. 27 (as am. by S.C. 1976-77, c. 6, s. 3; 1980-81-82-83, c. 68, s. 10; 1985, c. 3, s. 16; 1986, c. 1, s. 186; c. 9, s. 16), 44 (as am. by S.C. 1986, c. 9, s. 23(3),(5)).