T-1134-90
Albion Transportation Research Corporation, 285614 Alberta Ltd. and Henry John Alberta Maplesden also known as John Henry Albert Maplesden and Kathleen Sylvia Maplesden (Plaintiffs)
v.
Her Majesty the Queen (Defendant)
Indexed as: Albion Transportation Research Corp.v. Canada (T.D.)
Trial Division, Gibson J."Calgary, April 21; Ottawa, June 20, 1997.
Practice — Limitation of actions — Crown Liability and Proceedings Act, s. 3(1)(a) — Action for conversion of chattels (funds and assets), for wrongful filing of writ of fieri facias, and for damages — Action statute barred pursuant to Alberta Limitation of Actions Act, s. 51(g) — Cause of action arising on date of allegedly wrongful seizure.
Administrative law — Statutory appeals — Pursuant to Federal Court Act, s. 18.5, plaintiffs' right of appeal to T.C.C. barring Court from adjudicating claims of plaintiffs — Act, s. 18.5 applying to actions as well as judicial review — Act, s. 18.5 barring Court from adjudicating claim entailing challenge to validity of tax assessment or of collection proceedings taken in respect thereof as alternative right of appeal to T.C.C. — Not precluding Court from adjudicating merits of claim for wrongful filing of writ of fieri facias as original amount subsequently varied and assessment not challenged .
Estoppel — Practice — Res judicata — Issue estoppel — Claim for wrongful filing of writ of fieri facias with respect to certificate registered under Income Tax Act, s. 223 — Not case of issue estoppel as plaintiff not seeking to relitigate validity of tax assessed against her, but rather arguing writ flowing from assessment wrongfully filed.
Income tax — Practice — Action for conversion of chattels (funds and assets), for wrongful filing of writ of fieri facias, and for damages — Action statute barred pursuant to Alberta Limitation of Actions Act, s. 51(g) — Also, Federal Court Act, s. 18.5 barring Court from adjudicating claim entailing challenge to validity of tax assessment or of collection proceedings taken in respect thereof as alternative right of appeal to T.C.C.
In November 1984, Revenue Canada issued a notice of assessment to Albion respecting payments on account due under the Income Tax Act. 285614 Alberta Ltd. was the sole shareholder of Albion and the shares of 285614 were owned by John (51%) and Kathleen (49%) Maplesden. In July and September 1985, the defendant seized and removed from an escrow account held by Canada Trust on behalf of Albion the amount of $ 3,017,992. In August 1985, a certificate was registered in the Federal Court pursuant to the Income Tax Act with respect to the assessment in the amount of $15,000,000, and a writ of fieri facias was issued with respect to this certificate. In October 1985, the defendant used these to seize all computers, hardware, furniture and other assets of Albion and obtained $373,666 from the sale. As a result, Albion ceased business in September 1985.
In September 1985, an assessment for the 1984 taxation year was issued against plaintiff Kathleen Maplesden in the amount of $750,000. At the same time, a certificate was registered against her property in the Federal Court for that tax debt, and a writ of fieri facias was issued pursuant to the certificate. The certificate remained on title for 3 years until it was lifted and replaced by one for the reduced amount of the second reassessment. Her appeal to the Tax Court was dismissed, and the dismissal was appealed to the Federal Court. The disputed portion of this assessment was based upon a transfer of funds from Albion to her in November 1984, which funds were used to purchase property. Meanwhile, in June 1986, she was assessed for the 1985 taxation year in the amount of $ 45,944. In January 1988, a certificate was registered in the Federal Court for that debt, and in March, a writ of fieri facias was issued with respect thereto.
The plaintiffs initiated an action for the return of Albion's wrongfully seized and removed funds and assets, and for damages. Kathleen Maplesden's claim was for the wrongful filing of a writ of fieri facias against the lands she bought with the money she got from Albion. This resulted in the following question of law being set down for determination on the basis of an agreed statement of facts: are claims set out in the statement of claim barred by statutory or common law limitation, the provisions of the Income Tax Act or do they fail by virtue of binding judicial precedent or res judicata.
The claims of Albion and 285614 were statue barred.
This was an action in tort for wrongful seizure of funds in an escrow account, computers, hardware, furniture and other chattels. The Crown Liability and Proceedings Act provides for the application of provincial statutory limitations in respect of any causes of action arising in that province, in this case, Alberta. The two-year limitation period provided for in section 51 of the Alberta Limitation of Actions Act for actions for conversion of chattels was applicable (actions for "wrongful seizures" being actions in the nature of conversion). In modern usage, the term "chattels" encompassed not only computers, hardware and furniture, but also choses in action such as bank accounts. In this case, the limitation began to run from the date on which the cause of action arose " the date when the alleged wrongful seizure took place, with the knowledge of the allegedly wronged party. There was no dispute that the date of seizure and of knowledge was outside of the two-year limitation period in respect of actions for conversion in the nature of trespass (this was not a case of wrongful detention of property or detinue). Therefore, the cause of action pleaded by the plaintiffs in paragraphs 5 and 6 of the statement of claim arose more than two years prior to the commencement of the action by the plaintiffs and as such, the claims of Albion and 285614 are statute barred by paragraph 51(g) of the Alberta Limitation of Actions Act . And since the claim for pure economic loss under paragraph 7 is entirely dependent on the claims under paragraphs 5 and 6, if the plaintiffs cannot succeed on these claims, because they are statute barred, they cannot succeed under paragraph 7 whatever might be the appropriate limitation period in respect of that claim.
The claims of Albion and 285614 also fail as a result of Albion not utilizing available procedures to challenge its income tax assessment or the defendant's collection actions under the Income Tax Act and by virtue of binding judicial precedent. Section 18.5 of the Federal Court Act bars the Federal Court from adjudicating the claims of Albion and 285614 because the plaintiffs have a right of appeal to the Tax Court, expressly provided by another Act of Parliament. It has been established that section 18.5 applies not only to judicial reviews and applications for prerogative writs, but also to actions. To argue that there was no legal justification for the seizure would entail an attack on the validity of the tax assessment which is already provided for by a right of appeal to the Tax Court pursuant to section 171 of the Income Tax Act. Section 18.5 bars this Court from adjudicating a claim that would entail a challenge to the validity of the tax assessment because an alternative appeal right exists to the Tax Court. The attempt by plaintiffs to recharacterize their claim for wrongful seizure not as a claim for conversion but rather as a claim based on misrepresentation or abuse of discretion is not supported by their statement of claim. In any event, the Court is bound by the Court of Appeal decision in Optical Recording Corp. v. Canada, [1991] 1 F.C. 309 (C.A.) in which it was held that where an appeal right exists to the Tax Court, a party can challenge neither the validity of the tax assessment nor the collection proceedings taken in respect of that assessment. Paragraph 7 must also fall with the claims under paragraphs 5 and 6, when they fall on the basis of section 18.5 of the Federal Court Act.
The final question is whether the claims of Kathleen Maplesden are res judicata and in any event, whether they fail by virtue of her failure to challenge the defendant's collection actions under the Income Tax Act and by virtue of binding judicial precedent. The plaintiff's allegations in the statement of claim with respect to damages do not flow from an argument that registration of the original certificate was wrongful but rather that maintenance of registration of the original certificate, in the original amount and for a substantial period of time after the Minister conceded that her tax liability was substantially lower than that indicated on the face of the certificate, resulted in damage. It remained to determine whether this taxpayer's claim for wrongful filing of the writ was either res judicata or barred by the operation of section 18.5 of the Federal Court Act.
The defendant relied on the doctrine of issue estoppel and argued that the claim of Ms. Maplesden was res judicata. The defendant argued that the issue of the validity of the tax assessment against the taxpayer has already been determined by the Tax Court and as such, could not be relitigated in the Federal Court. That argument was flawed as the taxpayer was not seeking to relitigate the validity of the tax assessed against her for 1984. Rather, she was arguing that the writ which flowed from that assessment was wrongfully filed. Res judicata did not apply. Nor did section 18.5 preclude the Court from adjudicating the merits of Ms. Maplesden's claim. In this case, the assessment underlying the writ of fieri facias was varied by the defendant before any appeal was commenced. As such, the writ for the original amount of $750,000, being the alleged collection procedure, no longer corresponded to any assessment which could be appealed.
statutes and regulations judicially considered
Crown Liability and Proceedings Act, R.S.C., 1985, c. C-50 (as am. by S.C. 1990, c. 8, s. 21), ss. 3(1)(a), 32 (as am. idem, s. 31).
Federal Court Act, R.S.C., 1985, c. F-7, s. 18.5 (as enacted by S.C. 1990, c. 8, s. 5).
Federal Court Rules, C.R.C., c. 663, R. 474(1)(a),(b).
Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 171 (as am. by S.C. 1994, c. 7, Sch. IX, s. 215).
Limitation of Actions Act, R.S.A., 1980, c. L-15, ss. 4, 51.
cases judicially considered
applied:
Jamieson v. Carota, [1977] 2 F.C. 239; (1977), 13 N.R. 390 (C.A.); confg [1977] 1 F.C. 504 (T.D.); Re Attorney-General for Ontario and Royal Bank of Canada, [1970] 2 O.R. 467; (1970), 11 D.L.R. (3d) 257 (C.A.); City Centre Properties Inc. v. Canada, [1991] 1 C.T.C. 143; (1990), 91 DTC 5083; 120 N.R. 397 (F.C.A.); revg [1990] 1 C.T.C. 71; (1980), 90 DTC 6080; 29 F.T.R. 212 (F.C.T.D.); Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3; (1995), 122 D.L.R. (4th) 129; 26 Admin. L.R. (2d) 1; [1995] 2 C.N.L.R. 92; 177 N.R. 325; Minister of National Revenue v. Parsons, [1984] 2 F.C. 331; [1984] CTC 352; (1984), 84 DTC 6345 (C.A.); Optical Recording Corp. v. Canada, [1991] 1 F.C. 309; [1990] 2 C.T.C. 524; (1990), 90 DTC 6647; 116 N.R. 200 (C.A.); Angle v. M.N.R., [1975] 2 S.C.R. 248; (1974), 47 D.L.R. (3d) 544; 74 DTC 6278; 2 N.R. 397.
distinguished:
Barberree v. Bilo et al. (1991), 126 A.R. 121; 84 Alta. L.R. (2d) 216; 3 C.P.C. (3d) 96 (Q.B.); Davis v. Henry Birks & Sons Ltd., [1981] 5 W.W.R. 559 (B.C.S.C.); Guest v. Bonderove & Co. et al. (1988), 88 A.R. 277; 59 Alta. L.R. (2d) 86; 28 C.P.C. (2d) 202 (C.A.).
authors cited
Fleming, John G. The Law of Torts, 7th ed. Sydney: Law Book Company, 1987.
Halsbury's Laws of England, Vol. 6, 4th ed. London: Butterworths, 1973, para. 8.
PRELIMINARY determination of questions of law.
counsel:
Mark W. Gruman for plaintiffs.
Thomas P. O'Leary for defendant.
solicitors:
Professional Corporation, Calgary, for plaintiffs.
Milner Fenerty, Calgary, for defendant.
The following are the reasons for order rendered in English by
Gibson J.: By order dated March 17, 1997, the Associate Chief Justice set down the following question of law for determination on the basis of an agreed statement of facts that was before him:
The claims set out in paragraphs 5 through 8, and in paragraphs 11 and 12 of the Statement of Claim are barred by statutory or common law limitation, the provisions of the Income Tax Act1 or fail by virtue of binding judicial precedent or res judicata, and the determination of this application shall be final and conclusive for the purposes of this action, subject to being varied upon appeal.
The order of the Associate Chief Justice was made pursuant to Rule 474 of the Federal Court Rules.2 Subsection 474(1) reads as follows:
Rule 474. (1)The Court may, upon application, if it deems it expedient so to do,
(a) determine any question of law that may be relevant to the decision of a matter, or
(b) determine any question as to the admissibility of any evidence (including any document or other exhibit),
and any such determination shall be final and conclusive for the purposes of the action subject to being varied upon appeal.
These reasons arise out of the hearing of the question of law held at Calgary, Alberta on April 21, 1997.
The agreed statement of facts, as modified in technical respects at the opening of the hearing, reads as follows:
I. ALBION TRANSPORTATION RESEARCH CORPORATION AND 285614 ALBERTA LTD.
1. 285614 Alberta Ltd. ("285614") was at all material times the sole shareholder of Albion Transportation Research Corporation ("Albion"), and both were at all material times corporations pursuant to the laws of Alberta. At all material times, Henry John Albert Maplesden ("John Maplesden") owned 51% of the shares in 285614 and Kathleen Sylvia Maplesden ("Kathleen Maplesden") owned 49% of the shares in 285614. John Maplesden was at all material times the president of Albion.
2. Albion was incorporated on July 17, 1984 under the Canada Business Corporations Act and on August 29, 1984, was registered as an extra-provincial corporation under the Alberta Business Corporations Act.
3. On September 21, 1984, Albion issued a $30,000,000.00 SRTC designation under part VIII of the Income Tax Act, to John Rennie, acting as a trustee for Goodyear Canada Inc., and filed a Form T2113 with Revenue Canada with respect to this transaction.
4. On November 16, 1984, Revenue Canada issued a Notice of Assessment respecting the payments on account of tax due under Section 195(2) of the Income Tax Act, which was received by Albion sometime in November, 1984. It was accompanied by a notice and a press release from Revenue Canada. The Notice of Assessment, notice and press release are located at Tab "A" hereto.
5. No Notice of Objection to this Assessment was submitted by Albion.
6. Albion's fiscal year-end for income tax purposes was September 20. Pursuant to s. 150(1) of the Income Tax Act, Albion was not required to file any income tax return until March 20, 1986. Albion never filed an income tax return for the fiscal year ending September 20, 1985 nor for any subsequent year.
7. Until July 15, 1995, Albion had never been advised of any breach of Revenue Canada policies or requirements as they relate to the SRTC program.
8. On or about July 15, 1985, the Defendant issued a requirement to pay to the Canada Trust Company in respect of approximately $3,450,893.00 held by Canada Trust in an escrow account on behalf of Albion for taxes alleged to have been then owing from Albion to the Defendant. Albion was aware that this had taken place on or about July 15, 1985.
9. On August 27, 1985, a Certificate was registered in the Federal Court of Canada pursuant to s. 223 of the Income Tax Act in the matter of an assessment against Albion, assessing and certifying taxes due from Albion in the principal amount of $15,000,000.00 with interest of $1,368,835.62 to August 27, 1985. Also on August 27, 1985, a writ of fieri facias was issued by the Federal Court of Canada with respect to this Certificate. It is disputed whether or not Albion received notice of this Certificate or the writ of fieri facias. No steps were taken by Albion to appeal or otherwise dispute this Certificate or the writ of fieri facias until this action was commenced.
10. From time to time between July 15, 1985 and September 13, 1985, the Defendant authorized various releases of monies from the escrow account to pay Albion operating expenses. The Defendant did not authorize any payments to John Maplesden.
11. On or about September 13, 1985, the Defendant demanded that Canada Trust deliver all remaining funds held in the escrow account to the Defendant. The funds were received by the Defendant on or about September 17, 1985, the amount being $3,017,992.45. These funds were thereafter applied by the Defendant against taxes allegedly owing by Albion. Albion was aware that this had taken place on or about September 13, 1985.
12. On or about October 8, 1985 the Defendant, pursuant to the Certificate and writ of fieri facias, seized all computers, hardware, furniture another assets of Albion. Albion was aware that this seizure had taken place on or about October 8, 1985. These assets were subsequently sold or otherwise realized, such being completed on or about June 20, 1987, with net proceeds to the Defendant being $373,666,56. These proceeds were applied against taxes allegedly owing by Albion.
13. The Defendant was aware that the removal of funds from Albion's account with Canada Trust and the seizure of assets had the probable result of ending any ongoing business of Albion. Albion ceased any ongoing business on approximately September 17, 1985.
14. On or about March 25, 1988, John Maplesden was charged with various offences under the Income Tax Act. A six week trial was held in the Alberta Court of Queen's Bench, and on February 1, 1990, John Maplesden was acquitted of all charges.
15. This action was commenced on April 26, 1990.
II. KATHLEEN MAPLESDEN
16. On or about September 30, 1985, an assessment for the 1984 taxation year was issued against Kathleen Maplesden in the amount of $750,000.00. On the same date, the defendant directed Kathleen Maplesden to pay that amount forthwith under authority of Section 158 of the Income Tax Act of Canada.
17. This disputed portion of this assessment was based upon a transfer of funds from Albion to Kathleen Maplesden in November, 1984, which funds were used to purchase property in Priddis, Alberta.
18. Also on September 30, 1985, a Certificate was registered in the Federal Court of Canada pursuant to Section 223 of the Income Tax Act for the assessed 1984 tax debt of Kathleen Maplesden and a writ of fieri facias issued by the Federal Court of Canada pursuant to that Certificate.
19. On or about October 16, 1985, Kathleen Maplesden filed a notice of objection with respect to the assessment.
20. On or about October 18, 1985, the Defendant issued a reassessment against Kathleen Maplesden for the 1984 taxation year, resulting in taxes owing of $371,954.18.
21. On or about November 14, 1985, Kathleen Maplesden filed a notice of objection to this reassessment.
22. On or about June 11, 1986, the Defendant issued an assessment against Kathleen Maplesden for the 1985 taxation year, assessing taxes owing of $45,944.68. No steps were taken by Kathleen Maplesden to dispute these taxes pursuant to the provisions of the Income Tax Act.
23. On or about January 26, 1988, a Certificate pursuant to section 223 of the Income Tax Act was registered in the Federal Court of Canada for the assessed 1985 tax debt of Kathleen Maplesden and on March 25, 1988, a writ of fieri facias was issued out of the Federal Court of Canada with respect to that Certificate.
24. On or about June 9, 1988, the Defendant issued a further reassessment against Kathleen Maplesden for the 1984 taxation year, resulting in an assessed tax liability of Kathleen Maplesden in the amount of $342,101.53 for the 1984 taxation year.
25. Kathleen Maplesden appealed the June 9, 1988 reassessment to the Tax Court of Canada and the appeal was dismissed by order dated December 17, 1990. This dismissal was further appealed, which action continues before the Federal Court of Canada.
26. Pursuant to a judgment of the Albert Court of Queen's Bench on February 26, 1993, Kathleen Maplesden recovered damages in negligence from the law firm of Burnet Duckworth & Palmer in the amount of $356,156.20 which was that court's assessment of the damages sustained by Kathleen Maplesden as a result of solicitor's negligence as it relates to a loan from Albion used to purchase the Priddis property, which loan gave rise to Kathleen's Maplesden's 1984 income tax liability. No steps were taken by Kathleen Maplesden to appeal this assessment of damages.
27. This action was commenced on April 26, 1990.
The notice of assessment, notice and press release referred to in paragraph 4 of the statement of agreed facts are not in any way central to these reasons.
The paragraphs from the statement of claim that are referred to in the question of law reads as follow:
5. The Plaintiffs Albion and 285614 claim against the Defendant Revenue Canada is for the return of funds wrongfully seized and removed from the accounts of Albion on or about the 12th day of July, 1985, in the amount of $3,450,893.00 together with interest on the said sum at twelve (12%) percent per annum from the date of the seizure and removal to the date funds are paid to the Plaintiffs.
6. The Plaintiffs Albion and 285614 further claim against the Defendant Revenue Canada is for the return of assets of Albion wrongfully seized and removed on or about the 12th day of July, 1985, and thereafter, or in the alternative an accounting and return of funds received by Revenue Canada from the wrongful sale of assets wrongfully seized and removed in the amount of $1,576,371.00, further particulars of which include:
FURNITURE AND FITTINGS $ 200,370.00
MECHANICAL AND EQUIPMENT 1,355,856.00
SOFTWARE 20,145.00
$ 1,576,371.00
7. As a result of the wrongful seizure and removal of the Plaintiff Albion and 285614's funds and assets by the Defendant Revenue Canada, Albion and 285614 were unable to continue in business, which result was well known to the Defendant at the time of the wrongful seizure. Accordingly, the Plaintiff Albion and 285614 further claim against the Defendant Revenue Canada is in the sum of $10,000,000.00 or such other amount as may be proven at trial, representing the loss of business opportunity and future profits of the business.
8. The Plaintiffs Albion and 285614 have demanded a return of the funds and assets wrongfully seized but the Defendant Revenue Canada has refused to do so.
. . .
11. The Plaintiff Kathleen Maplesden's claim against the Defendant is for the wrongfully [sic] filing of a Writ of Fieri Facias against the lands on October 2, 1985, Instrument No. 851165367 in the amount of $750,000.00 plus costs.
12. As a result of the said wrongful filing, the Plaintiff Kathleen Maplesden has been damaged in the sum of $750,000.00, some particulars of which include:
(a) Slander of Title;
(b) Damage to Credit;
(c) Inability to dispose of the property by Mortgage or otherwise;
(d) Mental Distress;
The objective of a preliminary determination of a question or questions of law was implicitly adopted by the Federal Court of Appeal in Jamieson v. Carota3 when it quoted the following statement by Mr. Justice Dubé of the Trial Division [[1977] 1 F.C. 504, at page 507] in his reasons on the order appealed from:
The general purpose of the Rule is to afford an avenue for solving matters in dispute and thus shorten, and possibly eliminate, trials. The Rule works when there is no dispute of fact, or an agreement to the facts, and the determination sought deals with pure law.
On the material and argument before me, there was essentially no dispute on the facts. The determination sought dealt with "pure law".
The first issue argued and reflected in the question set down was whether or not the claims of Albion and 285614 are statute-barred.
[A.]Le premier point débattu et tel qu'il se dégage de la question à trancher est de savoir si les prétentions d'Albion et de 285614 étaient éteintes par prescription légale.
Paragraph 3(1)(a) of the Crown Liability and Proceedings Act4 provides that the federal Crown is liable for torts committed by servants of the Crown. That Act does not specifically set out any limitation period for bringing tort actions. However, section 32 [as am. by S.C. 1990, c. 8, s. 31] of that Act provides for the application of provincial statutory limitations in respect of any causes of action arising in that province, in this case, Alberta. The parties agreed that the applicable statutory limitation period is to be found in the Alberta Limitation of Actions Act.5 The dispute revolved around the applicable provision of that Act.
The defendant argued that the appropriate limitation period is that provided for in section 51 of the Limitation of Actions Act, the relevant part of which reads as follows:
51 Except as otherwise provided in this Part, an action for
. . .
(g) the taking away, conversion or detention of chattels,
may be commenced within 2 years after the cause of action arose, and not afterwards.
The plaintiffs argued that the appropriate limitation period is that set out in section 4 of the Limitation of Actions Act. The relevant portions of that section read as follows:
4(1) The following actions shall be commenced within and not after the time respectively hereinafter mentioned:
. . .
(c) actions
(i) for the recovery of money, other than a debt charged on land, whether recoverable as a debt or damages or otherwise, and whether on a recognizance, bond, covenant or other specialty or on a simple contract, expressed or implied, or
(ii) for an account or for not accounting,
within six years after the cause of actions arose;
. . .
(2) Nothing in this section extends to an action when the time for bringing the action is by statute specially limited.
I am satisfied that the claims of Albion and 285614 under paragraphs 5 and 6 of the statement of claim are for conversion of chattels and as such fall squarely within the ambit of paragraph 51(g) of the Limitation of Actions Act. Their claims are claims in tort for "wrongful seizure" of funds in an escrow account, computers, hardware, furniture and other chattels. In The Law of Torts , the learned author writes:
Anyone who, without lawful justification, takes a chattel out of another's possession with intent to exercise dominion over it, commits conversion no less than trespass.6
The plaintiffs' claims for wrongful seizure, as set out in their statement of claim, are claims to the effect that the defendant, without lawful justification, took the plaintiffs' property with the intent to exercise dominion over it. Thus, the defendant was correct in asserting that actions for "wrongful seizures" are actions in the nature of conversion.
With respect to whether the seizures were seizures of "chattels", there was no dispute that computers, hardware and furniture, all of which were seized, were chattels. The plaintiffs, however, disputed that the funds in an escrow account were "chattels".
According to Halsbury's Laws of England, the modern usage of the term "chattels" encompasses choses in action such as bank accounts.7
In Re Attorney-General for Ontario and Royal Bank of Canada,8 Brooke J.A., wrote at page 472:
In other days, the term "chattel" or "chattels personal" often referred only to movables. Today it may, however, be given the broader meaning so as to include all personal property. In Robinson v. Jenkins et al. (1890), 6 T.L.R. 158 at p. 159, Fry, L.J., said:
Order LVII. allowed an interpleader to take place in respect of "chattels," which was one of the largest words known to the law, and certainly included choses in action.
He went to interpret the term "chattel" in a writ of fieri facias to include choses in action and specifically, money standing to credit in a bank account seized pursuant to that writ.
Thus, I am satisfied that the funds seized from the escrow account were "chattels" within the meaning of section 51 of the Alberta Limitation of Actions Act and that the limitation period of two years provided by that section applies to the claim for conversion asserted by the plaintiff in this matter.
I am satisfied that section 4 of the Limitation of Actions Act cannot apply. To accept the plaintiffs' assertion that subparagraph 4(1)(c)(i) applies would, I conclude, be contrary to a proper interpretation of that provision and run against the scheme of the Limitation of Actions Act. Subparagraph 4(1)(c)(i) refers to actions concerning recovery of money, whether recoverable as a debt or damages or otherwise, and whether on a recognizance, bond, covenant, other specialty or on a simple contract. The use of the conjunctive "and" makes it clear that the action must be for the recovery of money and on a recognizance, bond, covenant other specialty or on a simple contract. This is clearly not the case here where the plaintiffs are claiming damages for wrongful seizure. In addition, subsection 4(2) provides that nothing in section 4 extends to an action when the time for bringing the action is by statute specially limited. It appears that the cause of action in conversion here is specially limited by paragraph 51(g) and as such, section 4 has no application. Finally, to accept that section 4 applies merely because of its reference to the recovery of money recoverable by way of debt or damages would run counter to what I interpret to be the scheme of the Limitation of Actions Act. It would make all of section 51 redundant because all actions in tort would be for damages, which according to the plaintiffs' argument would be within the ambit of subparagraph 4(1)(c)(i). Subparagraph 4(1)(c)(ii) does not apply because the statement of claim herein makes no claim for accounting.
The plaintiffs argued in the alternative that, even if the two-year limitation period prescribed by section 51 were applicable, their claims were nonetheless not outside of the two-year limitation period. Counsel argued that the limitation period began to run from the date of demand by the plaintiffs for the return of the seized property and the refusal by defendant to return that property. It was argued that the demand by the plaintiffs for the return of the seized property, and the refusal by the defendant to do so, occurred within the two years preceding the commencement of this action.
In support of this argument, the plaintiffs cited Barberree v. Bilo et al.,9 where Feehan J. of the Alberta Court of Queen's Bench wrote at page 123:
Counsel for Bilo also posits that Barberree's right of action against Aslin has expired under s. 51(g) of the Limitation of Actions Act, R.S.A. 1980, c. L-15. The limitation period for commencing an action in conversion begins to run from the time a demand to turn over the chattel is made and refused. (See Davis v. Henry Birk and Sons Limited, [1981] 5 W.W.R. 559, affirmed [1983] 1 W.W.R. 754 (B.C.C.A.)).
I am satisfied that Barberree and the case cited therein are distinguishable from the case at bar.
In Barberree, Ms. Barberree's husband, Mr. Aslin, had removed a motorcycle registered to Ms. Barberree upon their separation. Mr. Aslin subsequently sold the motorcycle to the defendant. The defendant, prior to taking possession of the motorcycle, discovered that Ms. Barberree was the registered owner and undertook to stop payment on his cheque to Mr. Aslin. The defendant was unable to stop payment and subsequently took the position that title and possession resided with him. The Alberta Court of Queen's Bench found that the defendant's rights were possessory only and subject to the rights of the rightful owner, Ms. Barberree. In the result, the action of the defendant in taking possession of the motorcycle was not inherently wrongful. What was wrongful was the retention of the motorcycle despite the demand for its return by the rightful owner. Thus, it becomes clear that the conversion in Barberree related to "detinue" or wrongful detention. The same is true in Davis [Davis v. Henry Birks & Sons Ltd., [1981] 5 W.W.R. 559 (B.C.S.C.)].
In the case at bar, the plaintiffs' claim of "wrongful seizure" of their property is known in traditional tort law as trespass, and not wrongful detention of property or detinue. The principle expounded in Barberree and Davis, thus, simply does not apply.
I am satisfied that the limitation period began to run from the date on which the cause of action arose. In this case, the allegation is wrongful seizure or trespass to property. The cause of action arose on the date when the alleged wrongful seizure took place if such seizure was done with the knowledge of the party who is allegedly wronged by the seizure. There was no dispute that the date of seizure and of knowledge was outside of the two-year limitation period in respect of actions for conversion in the nature of trespass. Fleming in The Law of Torts writes:
Anyone who, without lawful justification, takes a chattel out of another's possession with intent to exercise dominion over it, commits conversion no less than trespass. The tort is complete without prior demand for the return of the goods.10 [Underlining added by me for emphasis.]
He continues in respect of detinue:
The reason for insisting on a prior demand is to ensure that one who came into possession innocently be first informed of the defect in his title and have the opportunity to deliver the property to the true owner . . . .
No demand is necessary if conversion can be established in some other way, for example where possession was unlawfully acquired. [Underlining added by me for emphasis.]
In this case, the plaintiffs' allegation is that the seizure was wrongful or, to put it in another way, the defendant's possession was unlawfully acquired.
To apply the principle from Barberree and Davis to the case at bar would, I conclude, lead to an absurd result which would undermine the very rational for having a statutory limitation period. What is the point of having a limitation period for conversion, which includes wrongful seizure, when the aggrieved party alleging wrongful seizure, knowing full well of the seizure, can manipulate the operation of the statutory limitation period by delaying the demand for the return of the wrongfully seized property?
For the foregoing reasons, I conclude that the cause of action pleaded by the plaintiffs in paragraphs 5 and 6 of the statement of claim arose more than two years prior to the commencement of the action by the plaintiffs and as such, the claims of Albion and 285614 are statute-barred by paragraph 51(g) of the Alberta Limitation of Actions Act.
Counsel for the plaintiffs argued that, whatever the result in respect of the claims of Albion and 285614 under paragraphs 5 and 6 of the statement of claim quoted earlier in these reasons, the claim under paragraph 7, also quoted, is of an entirely different character which he described as "pure economic loss" and is not affected by the limitation period provided in section 51 of the Limitation of Actions Act . For this proposition he cites Guest v. Bonderove & Co. et al.11 where Mr. Justice Kerans wrote [at page 278]:
In our view, the words "trespass or injury to real property or chattels whether direct or indirect" do not encompass an action alleging pure economic loss. The broadest acceptable sense of the word "injury" is "interference with a right". We cannot put that interpretation on "injury" in s. 51(f) because it would make no sense. Section 51(f) is referring to things that happen to property, not things that happen to the owners of the property. We therefore agree with Esson, J., in Alberni District Credit Union and ADCU Development Ltd. v. Cambridge Properties Ltd. et al. (1985), 65 B.C.L.R. 297 (B.C.C.A.), when he says that, in this context, "injury":
" . . . imports something in the nature of physical injury or damage."
We agree. Pure economic loss is not covered by that word in this context.
Unfortunately, the facts underlying Guest are unclear on the material that was before me. In any event, I propose to distinguish it. Here, the claim under paragraph 7 is, I conclude, entirely dependent on the claims under paragraphs 5 and 6. If the plaintiffs cannot succeed on their claims under paragraphs 5 and 6 because they are statute-barred, and that is my conclusion, they cannot succeed under paragraph 7 whatever might be the appropriate limitation period in respect of that claim.
The second issue presented before me was stated on behalf of the defendant in the following terms: Do the claims of Albion and 285614 fail as a result of Albion not utilizing available procedures to challenge its income tax assessment or the defendant's collection actions under the Income Tax Act and by virtue of binding judicial precedent?
Section 18.5 of the Federal Court Act reads as follows:
18.5 Notwithstanding sections 18 and 18.1, where provision is expressly made by an Act of Parliament for an appeal as such to the Court, to the Supreme Court of Canada, to the Court Martial Appeal Court, to the Tax Court of Canada, to the Governor in Council or to the Treasury Board from a decision or order of a federal board, commission or other tribunal made by or in the course of proceedings before that board, commission or tribunal, that decision or order is not, to the extent that it may be so appealed, subject to review or to be restrained, prohibited, removed, set aside or otherwise dealt with, except in accordance with that Act.12
The issue before me is whether section 18.5 bars this Court from adjudicating the claims of Albion and 285614 because the plaintiffs have a right of appeal to the Tax Court of Canada, expressly provided by another Act of Parliament.
The plaintiffs argued that section 18.5 is confined in its application to judicial reviews and has no application to actions such as this. The case law is clear. Section 18.5 precludes judicial reviews and applications for prerogative writs where there exists a statutory right of appeal.13 Section 18.5 provides that decisions or orders, against which there lies a statutory right of appeal, are "not . . . to be . . . otherwise dealt with" [underlining added] except in accordance with the statute conferring the right of appeal. The words "or otherwise dealt with" broaden the scope of that section and support the proposition that section 18.5 also applies to actions. This appears to be the approach adopted by the Federal Court of Appeal. In City Centre Properties Inc. v. Canada ,14 an action brought by City Centre Properties for, inter alia, a declaration that its tax liability had been extinguished, the Trial Judge [[1990] 1 C.T.C. 71] characterized the action as being tantamount to an appeal against its tax assessment and as such it was barred by the operation of section 18.5. The Court of Appeal allowed the appeal, not on the basis that section 18.5 had no application to actions, but rather on the basis that the Trial Judge had mischaracterized the action as being equivalent to an appeal of the tax assessment.
It is clear that the claim for wrongful seizure, in the sense that the seizure was without legal justification, cannot be adjudicated by this Court by operation of section 18.5. To argue that there was not legal justification for the seizure would entail an attack on the validity of the tax assessment which is already provided for by a right of appeal to the Tax Court of Canada pursuant to section 171 [as am. by S.C. 1994, c. 7, Sch. IX, s. 215] of the Income Tax Act. Section 18.5 bars this Court from adjudicating a claim that would entail a challenge to the validity of the tax assessment because an alternative appeal right exists to the Tax Court of Canada.
Before me, counsel for the plaintiffs sought to characterize the claim for wrongful seizure, not as a claim for conversion, but rather as a claim based on misrepresentation and/or abuse of discretion. It was argued that the seizures were wrongful in that they were contrary to a representation by the defendant that collection procedures would be modified to allow for payment at a date later than that authorized by law. Above, I concluded that the claims of the plaintiffs as pleaded in paragraphs 5 and 6 of its statement of claim are in the nature of conversion. The attempt by the plaintiffs to re-characterize their claims as relating to wrongful seizure arising from a misrepresentation or abuse of discretion is not supported by their statement of claim.
Even if I were to accept the alternative characterization put forth by the plaintiffs, I would nonetheless be bound by the Court of Appeal's decision in Optical Recording,15 involving very similar facts to those before me. That case also involved a tax assessment under the Income Tax Act by the Minister of National Revenue. Revenue Canada issued a notice of assessment in respect of Part VIII tax payable as a result of filing of an SRTC (Scientific Research Tax Credit) designation. Optical Recording was advised by Revenue Canada that although corporations are technically liable to pay the tax by the end of the month following the transaction, since the taxes could be reduced under the credit program, Revenue Canada was prepared to modify its usual collection action where it was satisfied that the corporation would eliminate its tax liability by the end of the year or provide security. Subsequently the Minister issued "requirements to pay" to two financial institutions and registered a certificate in this Court. Optical Recording brought an application for certiorari and prohibition.
In the Trial Division, Muldoon J. granted the orders of certiorari and prohibition, holding that he had jurisdiction to entertain the application on the basis that the remedies sought could not be obtained on an appeal of the tax assessment.
The Court of Appeal allowed an appeal. Urie J.A., writing for himself, Décary and Stone JJ.A., held that where an appeal right exists to the Tax Court of Canada, a party cannot challenge the validity of the tax assessment, nor can a party challenge the collection proceedings taken in respect of that assessment. He wrote: [at pages 320-321]:
I am of the opinion that the Motions Judge erred in finding that he had jurisdiction to entertain the originating motion brought by the respondent pursuant to section 18 of the Act. The proceedings which it instituted arose out of an assessment issued by the Minister. That assessment is deemed by subsection 152(8) to be valid, subject only to a reassessment, or to it being varied or vacated by a successful objection thereto (subsections 165(1) and 165(2)) or by a successful appeal of the assessment brought to the Tax Court pursuant to section 169 (as am. by S.C. 1980-81-82-83, c. 158, s. 58; 1984, c. 45, s. 70) of the Act or to the Trial Division of this Court pursuant to subsection 172(2) (as am. by S.C. 1980-81-82-83, c. 158, s. 58). As held in the Parsons [Minister of National Revenue v. Parsons, [1984] 2 F.C. 331 (C.A.)] case, since the Act expressly provides for an appeal from assessments made by the Minister, it follows that section 29 of the Federal Court Act [a predecessor section to section 18.5] precludes not only applications under section 28 of the Act in respect of such assessments but also applications brought pursuant to section 18, as was done in the case, to challenge not only the assessments per se but the collection proceedings or actions taken in respect of those deemed valid assessments. [Underlining added by me for emphasis.]
Counsel for the plaintiffs argued that Optical Recording is distinguishable from the case at bar in that it dealt with a judicial review whereas this is an action. Having concluded above that section 18.5 also applies to actions, I cannot accept that Optical Recording can be distinguished on the basis urged by counsel for the plaintiffs.
That said, it could very well be argued that the Court of Appeal has taken a step back from its position in Optical Recording in City Centre Properties.16 In City Centre Properties, Mahoney J.A., for the Court, distinguished both Parsons and Optical Recording in the following terms:
This case is to be distinguished from this Court's decisions in M.N.R. v. Parsons . . . and Optical Recording Laboratories v. Canada . . . because the validity of the assessment is not challenged here. In each of those cases, the issue as to liability for income tax depended on the alleged invalidity of the assessment. In such a case, we have no doubt, the denial of liability can only be litigated by an appeal against the assessment as provided by the Income Tax Act . . . .17
Based on the above passage, it is arguable that the Court of Appeal is restricting Optical Recording to situations where the validity of the tax assessment is directly under attack. The passage makes no mention of collection proceedings. That being said, the Court of Appeal clearly did not regard its decision as inconsistent with its decision in Optical Recording. Rather, it regarded Optical Recording as distinguishable. On facts very similar to those in Optical Recording, even if I were to accept the plaintiffs' re-characterization of their claims to be claims in the nature of misrepresentation and/or abuse of discretion, I am nonetheless bound by Optical Recording, and must conclude that section 18.5 of the Federal Court Act precludes this Court from adjudicating the claims under paragraphs 5 and 6 of the statement of claim of Albion and 285614.
By analogy to my reasoning earlier in these reasons regarding the claim of Albion and 285614 under paragraph 7 of the statement of claim, I conclude that that claim must also fall with the claims under paragraphs 5 and 6, when they fall on the basis of section 18.5 of the Federal Court Act.
The final question argued before me is similar in terms to the second question just dealt with. It is in the following terms:
Are the claims of Kathleen Maplesden res judicata and in any event, do they fail by virtue of her failure to challenge the defendant's collection actions under the Income Tax Act and by virtue of binding judicial precedent?
As is evident from the statement of agreed facts, Kathleen Maplesden was assessed on or about September 30, 1985, for her 1984 taxation year, in the amount of $750,000. On or about the same day, a certificate was registered in this Court for Ms. Maplesden's 1984 tax debt and a writ of fieri facias was issued by the Court pursuant to that certificate. A notice of objection was filed with respect to the assessment. In mid-October, 1985, a reassessment was issued resulting in taxes owing of $371,954.18. Once again, a notice of objection was filed to this reassessment. In mid-1988, a further reassessment was made against Ms. Maplesden for her 1984 taxation year, once again reducing her assessed tax liability, this time to an amount of $342,101.53 for that taxation year. This second reassessment was appealed to the Tax Court of Canada and the appeal was dismissed. The dismissal was further appealed and the further appeal is ongoing.
Despite the foregoing series of events, the certificate registered against Ms. Maplesden's property, in the amount of the original assessment against her for 1984, remained registered against that property for some three years when it was lifted and replaced by a certificate in the reduced amount of the second reassessment.
On the argument before me, it was clear, that the allegations in the plaintiff's statement of claim with respect to damages suffered by Ms. Maplesden do not flow from an argument that registration of the original certificate was wrongful but rather that maintenance of registration of the original certificate, in the original amount and for a substantial period of time after the Minister conceded that Ms. Maplesden's tax liability was substantially lower than that indicated on the face of the certificate, resulted in damage. If I am correct in this, the real complaint on behalf of Ms. Maplesden is not reflected on the face of the statement of claim.
I must deal with the claim as it is presented in the statement of claim. Thus, it is incumbent upon me to determine whether Ms. Maplesden's claim for wrongful filing of the writ is either res judicata or barred by the operation of section 18.5 of the Federal Court Act.
Before me, counsel for the defendant submitted that if the plaintiff's recharacterization of Ms. Maplesden's claim was accepted, then he would, for the purposes of this proceeding, abandon his argument concerning res judicata. As I have not accepted the re-characterization of the Ms. Maplesden's claim, I must deal with the question of res judicata.
As Dickson J. (as he then was) stated in Angle v. M.N.R.,18 there are two species of res judicata. The first is cause of action estoppel, which precludes a person from bringing an action against another when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction. The second is issue estoppel which precludes a party from raising an issue which has previously been decided as between the same parties. The defendant relied on the doctrine of issue estoppel and argued that the claim of Ms. Maplesden is res judicata. It was argued that the issue of the validity of the tax assessment against Ms. Maplesden has already been determined by the Tax Court and as such, cannot be relitigated in this Court. I conclude this argument is flawed. Ms. Maplesden is not seeking here to relitigate the validity of the tax assessed against her for the 1984 taxation year. Rather, she is arguing that the writ which flowed from that assessment was wrongfully filed. The issue before the Court in this respect is not res judicata.
The defendant also asserted that Ms. Maplesden's claim for wrongful filing of the writ of fieri facias is barred by section 18.5 of the Federal Court Act. The defendant argued that the filing of the writ of fieri facias constituted a collection procedure which flowed from Ms. Maplesden's tax assessment. Relying once again on Optical Recording, the defendant submitted that subsection 18.5 precludes this Court from examining the collection procedures adopted in respect of a tax assessment because there exists a right of appeal to the Tax Court of Canada. With respect to Ms. Maplesden's claim, I am satisfied that the principle in Optical Recording does not apply. In Optical Recording, the collection procedure was based on the amount of tax liability assessed against the appellant in that case. That amount as reflected in the tax assessment could have been appealed to the Tax Court of Canada. In this case, the assessment underlying the writ of fieri facias was varied by the defendant before any appeal was commenced. As such, the writ of fieri facias for the original amount of $750,000, being the alleged collection procedure, no longer corresponded to any assessment which could be appealed. Thus, I conclude that section 18.5 does not preclude this Court from adjudicating the merits of Ms. Maplesden's claim.
In the result then, an order will go determining that:
(1) the claims of Albion and 285614 under paragraphs 5 and 6 of the statement of claim are barred by the statutory limitation contained in paragraph 51(g) of the Alberta Limitation of Actions Act and their claim under paragraph 7 of the statement of claim fails by reason of its dependence on the claims under paragraphs 5 and 6;
(2) the claims of Albion and 285614 under paragraphs 5 and 6 of the statement of claim fail as a result of Albion not utilizing available procedures to challenge its income tax assessment and thus the defendant's collection actions under the Income Tax Act and by virtue of binding judicial precedent and their claim under paragraph 7 of the statement of claim fails by reason of its dependence on the claims under paragraphs 5 and 6; and
(3) the claim of Kathleen Maplesden is not res judicata and does not fail by virtue of her failure to challenge the defendant's income tax assessment and thus the defendant's collection actions under the Income Tax Act and by virtue of binding judicial precedent.
Costs to be determined at a later date.
1 R.S.C., 1985 (5th Supp.), c. 1, as amended
2 C.R.C., c. 663, as amended.
3 [1977] 2 F.C. 239 (C.A.), at p. 242.
4 R.S.C., 1985, c. C-50, as am. by S.C. 1990, c. 8, s. 21.
5 R.S.A. 1980, c. L-15.
6 John G. Fleming, the Law of Torts, 7th ed. (Sydney: Law Book Company, 1987), at p. 52.
7 Halsbury's Laws of England, 4th ed. (London: Butterworths, 1973), Vol. 6, at para. 8.
8 [1970] 2 O.R. 467 (C.A.).
9 (1991), 126 A.R. 121 (Q.B.).
10 Supra, note 6, at pp. 52-53.
11 (1988), 88 A.R. 277 (C.A.).
12 R.S.C., 1985, c. F-7, as am. by S.C. 1990, c. 8, s. 5.
13 See Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3; Minister of National Revenue v. Parsons, [1984] 2 F.C. 331 (C.A.); and Optical Recording Corp. v. Canada, [1991] 1 F.C. 309 (C.A.).
14 [1991] 1 C.T.C. 143 (F.C.A.).
15 Supra, note 13.
16 Supra, note 14.
17 City Centre Properties, supra, note 13, at p. 144.
18 [1975] 2 S.C.R. 248, at p. 254.