Joseph M. Weintraub (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Noël A.C.J.—Ottawa, May 31
and June 13, 1972.
Income tax—Appeal from assessment—Defendant should
be the Queen—Income Tax Act, R.S.C. 1952, c. 148, s. 175
(am. 1970-71, c. 63)—Federal Court Act, s. 48.
Having regard to the provisions of the Department of
National Revenue Act, R.S.C. 1970, c. N-15, section 4, the
Minister in exercising his functions under the Income Tax
Act does so as an officer of the Crown and not as persona
designata. Accordingly an appeal against an income tax
assessment must under section 175 of the Income Tax Act,
R.S.C. 1952, c. 148, as amended by 1970-71, c. 63, be
instituted in the manner set forth in section 48 of the
Federal Court Act, i.e. against Her Majesty the Queen and
not the Minister of National Revenue.
Mastino Developments Ltd. v. The Queen [1972] F.C.
532, referred to.
MOTION to quash appeal.
Bruce Verchere for plaintiff.
A. P. Gauthier for defendant.
NOEL A.C.J.—The Attorney General of
Canada moves for an order dismissing the
appeal herein on the ground that no relief can
be sought or obtained from Her Majesty the
Queen in respect of the exercise by the Minister
of National Revenue of the administrative duty
conferred on him as a persona designata under
the provisions of the Income Tax Act to assess
the tax payable by the plaintiff. The Attorney
General submits that the Minister of National
Revenue is the proper person to be made a
party in proceedings where the relief sought is a
review, by way of a trial of the assessment of
tax, interest and penalties, if any, under the
provisions of the Income Tax Act, R.S.C. 1952,
c. 148, or from decisions rendered by the Tax
Review Board which have reviewed, by way of
a trial, the assessment made by the Minister.
Since the amendment to the Income Tax Act,
R.S.C. 1952, c. 148 by S.C. 1970-71, c. 63,
section 175(1) of the Income Tax Act provides
as follows:
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 of the Federal Court Act, S.C.
1970, c. 1, a section applicable to appeals
instituted by taxpayers, provides that the pro
ceedings are to be instituted by filing in the
Registry of the Court a document in the form
set forth in schedule "A" to the Act. This
schedule contains a skeleton statement of claim
wherein the defendant is shown as Her Majesty
the Queen and counsel for the Attorney General
says that Rule 400 and not Rule 600 of the
Rules of this Court is the rule which applies to
appeals instituted by the Minister of National
Revenue.
The Attorney General submits that the proper
party to the proceedings in respect of appeals
from assessments must be the Minister of
National Revenue. The appeal provided for
under the Income Tax Act is, he says, an appeal
from the exercise by the Minister of a statutory
duty conferred on him under section 152 of the
Income Tax Act, R.S.C. 1952, c. 148, as amend
ed by S.C. 1970-71, c. 63, which provides that
the Minister of National Revenue is required to
examine returns of income filed under the Act,
and assess tax, interest and penalties, if any.
The appeal is, he adds, from the exercise by the
Minister of the statutory duty which duty the
Minister exercises, performs, not as an agent or
servant of Her Majesty, but rather by virtue of
the powers given to him by the statute. In order
that justice may not only be done, but seem to
be done, it is essential, he says, that the person
who exercised the statutory duty, which is
being reviewed on the trial, should in fact be
before the Court.
The provisions of the Income Tax Act,
according to the Attorney General, draw a dis-
tinction between the duty to assess, which is
imposed upon the Minister of National Reve
nue, and the taxes payable which by section
222 of the Act, are payable to Her Majesty the
Queen with the consequence that Her Majesty
is not an interested party when the Court is
exercising its jurisdiction to review by way of a
trial assessments made by the Minister.
The Attorney General also submits that Par
liament, in providing by subsection (3) of sec
tion 175 of the Act, that an appeal under the
Act was to be treated as an ordinary action to
which the Rules of the Court would apply,
clearly had in mind, he says, the provisions of
Rule 800(1)(a) of the Rules of this Court which
provides:
Rule 800. (1) Subject to the provisions of the statutes
specially made in relation to an income tax or estate tax
appeal, and regulations made pursuant thereto, the provi
sions of these Rules, with necessary modifications and in so
far as they are reasonably appropriate, are applicable to any
such appeal to the Trial Division as if
(a) the appeal were an action and the taxpayer and the
Minister of National Revenue were the parties thereto;
The defendant also says that the clear-cut
intention of Parliament, as evidenced by para
graph (b) of subsection (1) of section 175 and
subsection (1) of section 172 of the Act is that
in those cases where the Minister is dissatisfied
with a decision of the Board, he is entitled to
appeal that decision. There is, according to the
defendant, nothing in the statutory scheme of
the Income Tax Act from which it can be
inferred that, in those cases where the appeal is
by the taxpayer, the defendant must, should,
could or ought to be Her Majesty the Queen.
The Attorney General says that paragraph (b) of
subsection (1) of section 175 of the Act con
templates and provides for an appeal by the
Minister in certain specified circumstances with
the consequence that (1) the appeal by the
Minister is to be brought in his name and not in
the name of the Attorney General of Canada;
(2) the provisions of Rule 600 of the Rules of
this Court are inapplicable; (3) Form 31 of the
Rules is inapplicable, and (4) Rule 400 and
Form 11 are applicable in those cases where an
appeal is instituted by the Minister.
The Attorney General also submits that
unless the Minister of National Revenue is in
fact made a party to the proceedings, the Court
would be powerless to exercise the jurisdiction
conferred on it by sections 177, 246(5)(c) and
247(3) of the Income Tax Act, R.S.C. 1952, c.
148 as amended by S.C. 1970-71, c. 63, to refer
an assessment back to the Minister for recon
sideration and assessment. He also submits that
in those cases where Her Majesty is the unsuc
cessful party in the litigation, the Court would
not have any jurisdiction under section 178 of
the Income Tax Act, R.S.C. 1952, c. 148 as
amended by S.C. 1970-71, c. 63, to order Her
Majesty to pay the costs or repay the tax since
the Court's jurisdiction is limited to making
orders against the Minister and if he was not a
party to the proceedings, such an order could
not, he says, be made against him.
I should first deal with the submission that
the Minister of National Revenue is acting as a
persona designata when assessing the tax pay
able by the plaintiff or when acting under the
provisions of the Income Tax Act. A reference
to chapter N-15, R.S.C. 1970, the Department
of National Revenue Act, section 4, and the
schedule, indicates clearly, in my view, that
when the Minister of National Revenue exer
cises the duties described in the Income Tax
Act he is merely exercising the functions that
he must exercise under the statute as every
other Minister of Her Majesty and it follows
that he cannot, therefore, be acting as a persona
designata in so doing.
Section 4(1) and (2) of the above statute
indeed reads as follows:
4. (1) The duties, powers and functions of the Minister
extend and apply to the subjects and services enumerated in
the schedule, over which the Minister has the control,
regulation, management and supervision, subject always to
the •provisions oÏ the Acts relating to the said subjects and
matters connected therewith.
(2) The Governor in Council may at any time assign any
of the duties and powers hereby vested in the Minister to
the head of any other department, and from the time
appointed for that purpose by order in council such duties
and powers shall be vested in the head of such other
department.
The schedule at the bottom of page 2 of
chapter N-15 describes the subjects and serv
ices to which such duties, powers and functions
refer and comprises inter alia
4. Internal taxes, unless otherwise provided, including
income taxes.
Section 48 of the Federal Court Act with
section 175(1) of the Income Tax Act, R.S.C.
1952, c. 148 as amended by S.C. 1970-71, c.
63, refer to the manner in which a taxpayer
must appeal from an assessment by the Minister
or from a decision of the Tax Review Board
and section 48 refers in turn to schedule A
which is described as a statement of claim or
declaration, where the parties are described as
plaintiff and defendant and where Her Majesty
the Queen is shown as the defendant. Section
48, as I had occasion to say in the matter of the
appeal in Mastino Developments Limited v. Her
Majesty the Queen and others [1972] F.C. 532
at p. 536, is clearly "... an indication of a trend
in Canada towards eliminating nominated par
ties and towards leaving Her Majesty as the
party where she is the person whose legal rights
or obligations are involved. This is preferable as
a person litigating against the Crown does not
have to decide which department or depart
ments is responsible for the situation of which
he complains".
The Department of National Revenue is
created by statute and placed under the man
agement and control of a particular minister
and, as already mentioned above, he, as such,
exercises the duties, powers and functions set
out in the statute in the same manner as the
other ministers of the various government
departments fulfil their duties under the statute
which constitutes their respective departments.
I should reiterate here what was stated in the
Mastino Developments appeal (supra), at p. 536,
as it does explain the manner in which the
exercise of duties, functions and powers of the
Minister of National Revenue fit in to the over
all scheme of government administration:
Each of the Government departments is constituted by
statute and placed under the management and control of its
particular Minister (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 direction of the Minister of
Justice who is ex officio Attorney General of Canada and as
Attorney General of Canada, has the regulation and conduct
"of all litigation for or against the Crown or any public
department" (s. 5(d)). The Deputy Attorney General has, by
virtue of the Interpretation 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 "assess" 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.
May I inject here that the matter of the style
of an appeal is not too important if we consider
that under the Income War Tax Act, where the
Minister of Revenue performed the same func
tions, duties or powers as under the Income Tax
Act, a notice of appeal was a very simplified
document as it had no style and no title. Section
58(3) of the Income War Tax Act, which deals
with the form of a notice of appeal says that
"such notice shall, as closely as may be, follow
the form contained in the second schedule of
this Act and shall set out clearly the reasons for
appeal and all facts relative thereto". The
second schedule referred to above merely pro
vides for the setting down of the name of the
taxpayer and the Minister is not even men
tioned nor is his name mentioned when refer
ring to the assessment appealed from.
There is no question that generally speaking,
when there is an "appeal" of a judicial charac
ter, the tribunal or authority appealed from is
not a party except where it has an administra
tive role in connection with the matter in addi
tion to its statutory power to make decisions.
Courts are not ordinarily parties to appeals
against their decisions. Nevertheless, the Court
of Appeal may return matters to them in appro
priate cases for rehearing, etc. It appears to me
that the Minister, when assessing or performing
his functions is acting as a decision-rendering
authority (somewhat like a Court) although he is
still merely performing the functions given him
by the statute and, as such an authority should
not be party to an appeal from his decision.
When a minister of any other department
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. Here the statute says that
an appeal to this Court (section 175(1) of the
Income Tax Act) shall be instituted in the case
of an appeal by a taxpayer in the manner set
forth in section 48 of the Federal Court Act and
this, as we have seen, means that the appeal
shall be launched against Her Majesty the
Queen. It is, as I pointed out in the Mastino
appeal, at page 538:
... 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 payment 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 statutes are merely using a device to impose duties or
confer rights on Her Majesty in what is regarded as a more
dignified way. The obligation 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 authoriz
ing 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 am therefore of the view that litigants must
comply with the directions set down in section
48 of the Federal Court Act and its schedule A,
that the form so indicated shall be used, that the
documents shall be called statement of claim or
declaration, that the parties shall be described
as plaintiffs and defendants and that the party
should be Her Majesty herself as she is men
tioned in schedule A. This is a literal compli
ance with the Act and it appears to me that, as
the powers given the Minister under the statute
are not conferred on him in his private capacity
or even as a persona designata but merely as an
officer of the Crown acting on behalf of Her
Majesty, the reference to the Minister in sec
tions 175 et seq. of the Income Tax Act should
not be an obstacle to proceeding in the above
manner, and if this is done, the Court will still
have the power to refer an assessment back for
reconsideration and assessment or to order the
payment of costs or the repayment of the tax.
The Attorney General's motion is dismissed
with costs to the plaintiff in any event of the
cause.
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.