Minister of National Revenue (Plaintiff)
v.
Bobbie Brooks (Canada) Limited (Defendant)
Trial Division, Walsh J.—Montreal, P.Q., Sep-
tember 25; Ottawa, September 28, 1972.
Income tax—Parties—Practice—Income tax appeal
brought by M.N.R.-Application to substitute the Queen—
Federal Court Rules 424, 425—Amendment allowed.
The Minister of National Revenue appealed from a deci
sion of the Tax Appeal Board on an income tax appeal.
After the appeal was launched it was held by this Court in
two other cases that on the proper interpretation of section
48(1) of the Federal Court Act and section 175(1) of the
Income Tax Act income tax appeals should be brought by or
against the Queen rather than the Minister of National
Revenue. The plaintiff then moved to substitute the Queen
as plaintiff in this action in place of the Minister of National
Revenue.
Held, having regard to Federal Court Rules 424 and 425
the amendment should be allowed.
Mastino Developments Ltd. v. The Queen [1972] F.C.
532; The Queen v. Weintraub [1972] F.C. 619, referred
to.
INCOME tax appeals.
Jean Potvin for plaintiff.
M. Shacter for defendant.
WALSH J.—Plaintiff's motion to substitute
Her Majesty the Queen as plaintiff in place of
the Minister of National Revenue in this case
was contested by defendant. In making this
motion plaintiff relies on the judgments in the
cases of MastinoDevelopments Ltd. v. The Queen
[1972] F.C. 532 and The Queen v. Weintraub
[1972] F.C. 619, which latter judgment affirmed
the judgment of Noël A.C.J. in the same case
reported at [1972] F.C. 611. These judgments
definitively settled that income tax appeals
should be brought by or against Her Majesty
the Queen rather than the Minister of National
Revenue. There had been some uncertainty
prior to this time due to the wording of section
48(1) of the Federal Court Act when read in
conjunction with section 175(1) of the Income
Tax Act, and this was clarified by these judg
ments. It should be noted that the first of these
judgments was that of Noël A.C.J. in the Mas-
tino case rendered on May 12, 1972 which was
subsequent to the production of the statement
of claim in the present proceedings which took
place on April 18, 1972. Moreover, the present
proceedings are an appeal by the Minister from
a judgment of the Tax Appeal Board in which
the parties were designated in the same manner.
Defendant's counsel argued that by substitut
ing Her Majesty the Queen for the Minister of
National Revenue as plaintiff a new party was
being introduced into the proceedings to replace
the party in whose name they were brought and
that this would require new proceedings and not
merely an amendment, and since the delays to
appeal would have expired these new proceed
ings could not now be brought. The defendant
would therefore suffer prejudice if the present
proceedings were allowed to continue against it
by an amendment substituting another party as
plaintiff. In support of his argument he relied on
the comment by the Associate Chief Justice in
the Mastino case (which was an application for
directions rather than an issue between parties)
in which he said at page 539:
Should the present motion be one to strike, or should I be
faced with such a submission on appeal, I would have to
come to a conclusion on the matter. The problem here is not
only a question of procedure but one of interpretation of a
number of sections of a statute dealing with the manner in
which appeals should be taken before this Court and which,
if improperly taken, may possibly result in the dismissal of
the proceedings.
He also argued that Rule 425 cannot be invoked
to rectify a mistake in law. Rule 425 reads as
follows:
Rule 425. An amendment to correct the name of a party
may be allowed under Rule 424, notwithstanding that it is
alleged that the effect of the amendment will be to substi
tute a new party, if the Court is satisfied that the mistake
sought to be corrected was a genuine mistake and was not
misleading or such as to cause any reasonable doubt as to
the identity of the party intending to sue, or, as the case
may be, intended to be sued.
In support of this contention he referred to the
case of Bruno v. International Coal and Coke
Co. (1913) 12 D.L.R. 745. That case held that
an employee's ignorance of the fact that he was
entitled to compensation for injuries is not a
mistake that will excuse his failure to give
notice thereof in the manner required by the
Alberta Workmen's Compensation Act, but it
also held that the failure to give notice within
the time prescribed was not fatal unless the
omission was prejudicial to the employer, so I
cannot find that it supports his argument.
If plaintiff did, in fact, make a mistake in law
in initiating the proceedings as he did this was
because the law was so unsettled at the time
that an application for directions was made
soon thereafter to the Federal Court in another
case in order to determine what was the correct
manner in which the parties should be designat
ed in income tax appeals. In any event, section
62 of the Income Tax application rules, 1971,
referred to in the Mastino case provides for
proceedings to be instituted in accordance with
the old Act for a period of two years after the
coming into force of the 1971 Income Tax Act.
This section reads as follows:
62. (6) An appeal to the Federal Court instituted within 2
years after the coming into force of this Act, that is institut
ed in accordance with Division J of Part I of the former Act
and any rules made thereunder as those rules read immedi
ately before the coming into force of this Act, shall be
deemed to have been instituted in the manner provided by
the amended Act; and any document that is served on the
Minister or a taxpayer in connection with an appeal so
instituted in the manner provided in that Division and those
rules shall be deemed to have been served in the manner
provided by the amended Act.
Moreover, Rule 424 reads as follows:
Rule 424. Where an application to the Court for leave to
make an amendment mentioned in Rules 425, 426 or 427 is
made after any relevant period of limitation current at the
date of commencement of the action has expired, the Court
may, nevertheless, grant such leave in the circumstances
mentioned in that rule if it seems just to do so.
and this leaves discretion to the Court. Rule 425
permits the substitution of a new party:
. . . if the Court is satisfied that the mistake sought to be
corrected was a genuine mistake and was not misleading or
such as to cause any reasonable doubt as to the identity of
the party intending to sue, or, as the case may be, intended
to be sued.
and it is abundantly clear that there has never
been any mistake as to the identity of the plain
tiff, nor has defendant in any way been prejud-
iced whether the proceedings are brought in the
name of the Minister of National Revenue or in
the name of Her Majesty the Queen, as plain
tiff. The present amendment is sought merely to
bring the proceedings into line with what is now
considered to be the proper procedure.
I therefore permit the amendment. Had the
motion not been contested no costs would have
been allowed on it, but in view of the unsuc
cessful contestation, costs of the motion will be
in favour of plaintiff.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.