Mastino Developments Limited (Plaintiff)
(Appellant)
v.
The Queen (Defendant) (Respondent);
Welland Chemical of Canada Limited (Appel-
lant)
v.
Minister of National Revenue representing the
Queen (Respondent);
Nouvelle Ile Inc. (Appellant)
v.
Minister of National Revenue (Respondent);
In the matter of a proposed appeal by the
Minister of National Revenue from the decision
of the Tax Review Board allowing the appeal of
Lewie Leon from assessments made under the
Income Tax Act for his 1965, 1966, 1967 and
1968 taxation years.
Trial Division, Noël A.C.J.—Ottawa, March
23 and May 12, 1972.
Income tax—Practice—Parties—Income tax appeal—
Whether Queen or Minister proper party—Pleadings—Desig-
nation of—Right to require pleading of statutory provi-
sions—Income Tax Act, R.S.C. 1952, c. 148, s. 175(1)—
Federal Court Rules 409, 473.
Motion was made for directions under Rule 473 as to (1)
the proper party on an appeal from an income tax assess
ment and from a decision of the Tax Review Board, (2) the
proper description of the pleadings, (3) the proper descrip
tion of the parties, and (4) the pleading of statutory provi
sions and reasons.
Held, in view of the provisions of section 175(1) of the
Income Tax Act, R.S.C. 1952, c. 148, the appeal document
should be called a statement of claim or declaration and the
parties plaintiff and defendant, but the Court should not on
this motion determine whether the Queen or the Minister of
National Revenue should be a party. The Court can give
directions only as to procedure but not as to interpretation
of a statute regarding the manner in which proceedings
should be launched. It is permissible for a party to plead
statutory provisions and reasons, although the Income Tax
Act no longer makes that obligatory, and under Rule 409
the Court may order that they be pleaded if the opponent
might otherwise be taken by surprise.
MOTION.
André Gauthier for Department of Justice.
Bruce Verchère for Nouvelle Ile Inc.
T. Kerzner for Mastino Developments.
NOËL, A.C.J.—A request is here made for
directions pursuant to Rule 473 of the Rules of
this Court as to:
(1) the proper party in proceedings instituted
from assessments by the Minister of National
Revenue and from appeals from decisions of
the Tax Review Board;
(2) the proper description of the pleadings in
any such proceedings;
(3) the proper description of the parties; and
(4) the pleading of statutory provisions and
reasons which the party pleading intends to
submit.
The request is made in four different
proceedings:
(1) Mastino Developments Ltd. and the
Queen, where the taxpayer is described as
plaintiff (appellant) and the other party as the
Queen, defendant (respondent) and where the
proceedings are described as a statement of
claim and contain a number of allegations;
(2) Welland Chemical of Canada Ltd. and
The Minister of National Revenue where the
taxpayer is described as the appellant and the
Minister of National Revenue is described as
representing Her Majesty the Queen as
respondent and where the document contains
the following words:
"Notice of appeal is hereby given from the
income tax assessments ..." and the grounds
for appeal are dealt with under the following
separate headings:
(A) Statement of facts and summary
reassessments;
(B) Statutory provisions and reasons which
the appellant intends to submit to show that
the respondent's reassessments are in
error.
A "Notice to the respondent" then follows:
"You are required to take cognizance of
the within notice of appeal and make opposi
tion thereto in accordance with its terms and
the appropriate provisions of the Rules of this
Court. If you fail to do so, you will be subject
to have such judgment given as the Court
may think just"
and then a number of allegations follow.
(3) Nouvelle Ile Inc. and The Minister of
National Revenue where the taxpayer is
described as "appellant" and the Minister of
National Revenue is described as the "re-
spondent" and the proceedings are entitled
"Notice of appeal" followed by two
headings:
(A) Statement of facts, and
(B) Statement of reasons and a number of
allegations under each heading and finally
(4) The matter of a proposed appeal by the
Minister of National Revenue from the deci
sion of the Tax Review Board allowing the
appeal of one Lewie Leon from the assess
ments made under the Income Tax Act for his
1965, 1966, 1967 and 1968 taxation years.
Because of the various designations and
forms of proceedings adopted in the above
cases, the Attorney General of Canada, on
behalf of the Minister of National Revenue,
applies for directions in order to determine:
(a) the proper party in proceedings from
assessments made under the provisions of the
Income Tax Act, R.S.C. 1952, c. 148;
(b) the appropriate name for the pleadings
and the parties thereto.
It indeed appears from the above that since
the amendment to the Income Tax Act, R.S.C.
1952, c. 148 by c. 63, S.C. 1970-71, appeals to
this Court from assessments made under the
Income Tax Act have been instituted in some
cases
(a) where Her Majesty the Queen has been
shown as a party;
(b) in other cases where the Minister of
National Revenue representing Her Majesty
the Queen is described as a party, and
(c) in other cases the Minister of National
Revenue.
It also appears that in appeals instituted
subsequent to June 1, 1971 and to the amend
ments made to the Income Tax Act the originat
ing document has been variously described as
(1) a notice of appeal, or
(2) a statement of claim.
Furthermore, the parties to the proceedings
have been variously described as either
(1) appellant and respondent, or
(2) plaintiff and defendant, or
(3) plaintiff (appellant) and defendant
(respondent).
Section 62(5) of c. 63 of S.C. 1970-71
(Income Tax application rules, 1971) provides
that the amended provisions of the Income Tax
Act in respect to the institution of appeals to
the Federal Court are:
"... applicable in respect of any appeal or
application instituted or made, as the case
may be, after the coming into force of this
Act".
Section 175(1) of the Income Tax Act, R.S.C.
1952, c. 148, as amended by c. 63, S.C. 1970-
71, provides that:
175. (1) An appeal to the Federal Court under this Act,
other than an appeal to which section 180 applies, shall be
instituted,
(a) in the case of an appeal by a taxpayer,
(i) in the manner set forth in section 48 of the Federal
Court Act, or
(ii) by the filing by the Minister in the Registry of the
Federal Court of a copy of a notice of objection pursu
ant to paragraph 165(3)(b); and
(b) in the case of an appeal by the Minister, in the manner
provided by the Federal Court Rules for the commence
ment of an action.
Section 48(1) (to which section 175(1)(a)(i)
refers) of the Federal Court Act, S.C. 1970, c.
1, provides that a proceeding against the Crown
may be instituted by the filing in the Registry of
the Court of a document in the form set out in
schedule A to the Act. Schedule A sets forth a
document described as a statement of claim or
declaration and the parties therein are described
as plaintiff and defendant and in the schedule
Her Majesty the Queen is in fact shown as the
defendant. The confusion involved in the desig
nation of the parties and in the description of
the proceedings is evidently due to the refer
ence in section 175(1)(a)(i) of the Income Tax
Act to section 48 of the Federal Court Act and
the above schedule and some clarification is
required in order to ensure uniformity in the
designation of the parties and the description of
the proceedings taken under the Income Tax
Act.
Section 48 of the Federal Court Act is an
indication of a trend in Canada towards elimi
nating nominated parties and towards having
Her Majesty as the party where she is the
person whose legal rights or obligations are
involved. This is preferable as a person litigat
ing against the Crown does not have to decide
which department or departments is responsible
for the situation of which he complains.
Each of the Government departments is con
stituted by statute and placed under the man
agement and control of its particular Minis
ter (cf. Public Works Act, R.S.C. 1970, c.
P-38). The Department of Justice (R.S.C. 1970,
c. J-2) is subject to the management and direc
tion of the Minister of Justice who is ex officio
Attorney General of Canada and as Attorney
General of Canada, has the regulation and con
duct "of all litigation for or against the Crown
or any public department" (s. 5(d)). The Deputy
Attorney General has, by virtue of the Interpre
tation Act, the powers of the Attorney General.
The Minister of National Revenue has a special
statutory function to do certain things which
have legal effects under the Income Tax Act.
He has, indeed, the duty and authority to "as-
sess" the tax payable for each taxation year of
each taxpayer (s. 152) and, when he has done
so his assessment is deemed to be "valid and
binding" subject to being varied or vacated on
an objection or appeal and subject to a re
assessment. Under the Income Tax Act, a
notice of appeal had no style and no title (see s.
58(3) and the second schedule). Generally
speaking, when there is an "appeal" of a judi
cial character, the tribunal or authority appealed
from is not a party except where it has an
administrative role in connection with the
matter in addition to its statutory power to
make decisions. Courts are not ordinarily par
ties to appeals against their decisions. Never
theless, the Appeal Court may return matters to
them inappropriate cases for re-hearing, etc.
I now turn to section 175(1) of the Income
Tax Act to see what is meant by this section. It
would seem from the language used "an appeal
by the Minister" and to an order for "payment
or repayment ... by the Minister", that it is
intended that those proceedings are to be called
appeals, that they are to be carried on in the
name of the Minister in his capacity as the
officer in charge of Revenue collection for Her
Majesty and that being appeals, the parties
should be described as appellants or respond
ents. However, if that view is adopted the result
will be that the changes in the form in Schedule
A to the Federal Court Act and to the corre
sponding form in the Rules will be so substan
tial that they will no longer be the forms pre
scribed by section 175(1) at all. We cannot
escape from the direction that the forms
indicated shall be used that the documents shall
be called statements of claim or declarations
(which is the equivalent of a statement of claim
in the Province of Quebec) and that the parties
shall be described as plaintiffs and defendants.
Anything less than that would mean that the
forms prescribed are not being used at all. I am,
however, also inclined to the view, but with less
certainty, that the party should be Her Majesty
herself, as she is in Schedule A. That would be
a literal compliance with the Act and the refer
ence to the Minister in section 175, et seq of the
Act should not be an obstacle to proceeding in
this manner. When the Minister of Public
Works decides to institute legal proceedings, he
instructs the Department of Justice and the
proceedings are instituted in the name of Her
Majesty or such substitute name as may be
required by statute. There should be no greater
difficulty in the statute contemplating that a
proceeding by the Minister of National Revenue
to attack a decision of the Appeal Board be
launched in the name of Her Majesty. A person
who is discontented with a decision of a Board
may "appeal" from it, depending on the prac
tice that is current, by an action or motion or an
appeal. It is not too great an incompatability of
words, therefore, to require an appeal to be
instituted by an originating document called a
statement of claim or declaration. Finally it is
common form for statutes to impose obligations
and confer rights on Her Majesty by requiring
the Minister who is in charge of the particular
part of Her Majesty's affairs to make a pay
ment or do something, or by authorizing such
Minister to do something. Obviously such a
statute does not impose an obligation or confer
a right on the person who happens to be a
Minister in his private capacity. All such stat
utes are merely using a device to impose duties
or confer rights on Her Majesty in what is
regarded as a more dignified way. The obliga
tion to pay is an obligation on the Minister,
whoever he may be, in the course of performing
his duties as an officer of the Crown to make a
payment out of Her Majesty's moneys. Finally,
the provisions authorizing the Court to dispose
of an appeal by referring the assessment back
to the Minister for re-assessment, appear to be
quite consistent with Her Majesty being the
party who opposes the appeal. There is, indeed,
no need for the person who exercises a power
under a statute to be a party to a proceeding
attacking his decision. He is in the position of a
tribunal or an authority whose decision is under
appeal. The person interested in maintaining his
decision in this case is Her Majesty and as long
as she or somebody acting for her is a party to
protect her interests, that is all that should be
required.
I have no hesitation in concluding that the
forms as indicated in section 175(1) should be
used, that the documents should be called state
ments of claim or declarations and that the
parties should be described as plaintiffs and
defendants. Although as mentioned above my
inclination would be to the view that the party
should be Her Majesty herself as she is in
Schedule A, I do so with some hesitation in
view of the clear language of the Income Tax
Act which refers only to the "Minister of
National Revenue" upon whom certain statuto
ry duties are imposed and the possibility of
raising the arguable submission that unless the
Minister of National Revenue is in fact made a
party to the proceedings, the Court may be
powerless to exercise the jurisdiction conferred
on it by section 177 of the Income Tax Act,
R.S.C. 1952, c. 148, as amended by c. 63, S.C.
1970-71 to refer an assessment back to the
Minister for re-consideration and re-assess
ment. There is also the possibility of an
arguable submission being made also that in
those cases, where Her Majesty is the unsuc
cessful party in the litigation, the Court would
not have jurisdiction under section 178 of the
Income Tax Act, R.S.C. 1952, c. 148, as amend
ed by c. 63, S.C. 1970-71 to order Her Majesty
to pay the costs or repay the tax on the submis
sion that the Court's jurisdiction is limited to
making orders against the Minister and that if
he is not a party to the proceedings, such an
order could not be made against him.
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. Rule 473 of the Rules of this
Court under which the present motion was pre
sented, allows the Court to give directions only
as to the procedure to govern the course of the
matter and does not permit the Court to issue
directions on the interpretation to be given to a
statute which deals with the manner in which
proceedings should be launched. Obviously, no
decision on the above matter can be given until
the matter is raised during an appeal or comes
up on a motion to strike out, and the present
motion is not such a motion.
I should point out that section 62 of the
Income Tax application rules, 1971 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.
The above must, therefore, necessarily be
more in the nature of comments than directives
but it is put forward in the hope that it will be
persuasive in indicating to the parties the most
desirable manner in which proceedings in
appeal should be dealt with before this Court.
I shall now deal with the pleading of statutory
provisions and reasons. I am of the view that
although because of the repeal of the provisions
of subsection (3) of section 98 and subsection
(1) of section 99 of the Income Tax Act R.S.C.
1952, c. 148 by section 1 of c. 63 of S.C.
1970-71, there is no longer any statutory obliga
tion for a party to plead either statutory provi
sions or reasons, I am inclined to encourage
such pleadings in view of their usefulness in
allowing the parties and particularly the taxpay
er, to be informed on precisely what basis the
proceedings are taken, having regard to the
assumptions which the Minister, in some cases,
is entitled to adopt with regard to the basis of
the assessments.
Although the provisions providing for such
pleadings have been repealed, this does not
mean that they cannot be pleaded or even
ordered for that matter, if by not pleading them
they may take the other party by surprise. Rule
409 of the General Rules of the Court indeed
provides, inter alia that
A party shall plead specifically any matter .. .
(b) that, if not specifically pleaded, might take the oppo
site party by surprise ....
and Rule 412 says "A party may by his pleading
raise any point of law".
The parties are hereby authorized to amend
their pleadings in order to conform to the pre
ferred forms of pleading as hereinabove indicat
ed. There shall be no costs.
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.