A-177-73
The Queen (Appellant)
v.
Gary Bowl Limited (Respondent)
Court of Appeal, Thurlow and Ryan JJ.,
Mackay D.J.—Ottawa, June 13 and 21, 1974.
Income tax—"Nil" assessments—No right of appeal—
Income Tax Act, s. 46(4) and s. 58(4), en. S.C. 1960, c. 43,
ss. 15(2), 17(2); ss. 59, 60; S.C. 1970-71-72, c. 63, s.
178(2).—Federal Court Act, s. 28; Rules 341, 474.
The taxpayer appealed to the Tax Appeal Board (now the
Tax Review Board) from "nil" assessments for the taxation
years 1967, 1968, 1969. The Minister's application to quash
the appeal was dismissed by the Board, which allowed it on
the merits. The Crown, as appellant in an appeal action
before the Trial Division asked that the decision of the
Board be quashed and, on the admissions in the pleadings,
moved for judgment under Rule 341. The motion wàs dis
missed ([1973] F.C. 1052). The Crown appealed.
Held, the respondent taxpayer's appeal to the Tax Review
Board was admittedly from "nil" assessments. In view of
the decision in Okalta Oils Ltd. v. M.N.R. [1955] S.C.R.
824, there was no fairly arguable question of law remaining
to be argued in favour of the taxpayer's right to such an
appeal. The Crown's right to have the judgment of the
Board set aside and the taxpayer's appeal dismissed, was
made out. The Crown could assert this right by way of an
action in appeal from the Board's decision, as a "decision"
within sections 59, 60. The Crown's appeal should be
allowed and judgment entered allowing the appeal from the
Board and restoring the "nil" assessments.
Libby-Owens-Ford Glass Company v. Ford Motor Com
pany of Canada (No. 1) [1969] 1 Ex.C.R. 440; Thorp v.
Holdsworth [1876] 3 Ch. D. 637; Gilbert v. Smith
[1876] 2 Ch. D. 686, considered. Anjulin Farms Ltd. v.
M.N.R. [1961] Ex.C.R. 381, distinguished.
INCOME tax appeal.
COUNSEL:
N. A. Chalmers, Q.C., for appellant.
Morley Greene for respondent.
SOLICITORS:
Deputy Attorney General of Canada for
appellant.
Buchwald, Asper, Henteleff & Associates,
Winnipeg, for respondent.
The following are the reasons for judgment
delivered in English by
THURLOW J.: This is an appeal from an order
of the Trial Division refusing an application for
judgment on the basis of admissions contained
in the pleadings. The proceeding in the Trial
Division is an appeal by the Crown from a
judgment of the Tax Review Board which
allowed an appeal from what are commonly
referred to as "Nil assessments" for the years
1967, 196'8 and 1969 and referred them back to
the Minister for reconsideration and re-assess
ment.
The Rule invoked in support of the Crown's
application was Rule 341 which reads as
follows:
Rule 341. A party may, at any stage of a proceeding, apply
for judgment in respect of any matter
(a) upon any admission in the pleadings or other docu
ments filed in the court, or in the examination of another
party, or
(b) in respect of which the only evidence consists of
documents and such affidavits as are necessary to prove
the execution or identity of such documents,
without waiting for the determination of any other question
between the parties.
The learned Trial Judge after citing a passage
from the judgment of Jackett P. (as he then was)
in Libby-Owens-Ford Glass Company v. Ford
Motor Company of Canada (No. 1) 1 refused the
application on the grounds that the issue
involved a question or questions of law and the
application was for a judgment disposing of the
whole matter and in his view Rule 341 was not
intended or appropriate for such a motion.
The wording of Rule 341 is somewhat differ
ent from that of the earlier Exchequer Court
Rule 256B(2) and similar Rules which have
been in effect in England and other common
law jurisdictions for many years but the object
of the Rule does not appear to me to differ in
' [19691 1 Ex.C.R. 440 at page 444.
any essential respect from that of the other
similar Rules. In my opinion the application of
Rule 341 is not confined to situations in which
several causes of action are involved in a pro
ceeding and the admissions warrant judgment
on some of them but not on others and I do not
think the observations of Jackett P., in the Lib-
by-Owens-Ford Glass case should be read as
limiting the Rule to such situations.
The English counterpart of Rule 341 was
commented on by Jessel M. R. in Thorp v.
Holdsworth 2 in the following terms at page 640:
The 11th rule of Order XL. enables the Plaintiff or
Defendant to get rid of so much of the action as to which
there is no controversy. That is the meaning of it. It may be
that the whole issue may not be in controversy, and there
upon either party may be entitled to move on admissions of
fact in the pleadings.
In Gilbert v. Smith 3 Mellish L. J. discussed
the same Rule as follows at page 688:
I think that rule 11 of Order XL. was framed for the express
purpose, that if there was no dispute between the parties,
and if there was on the pleadings such an admission as to
make it plain that the Plaintiff was entitled to a particular
order, he should be able to obtain that order at once upon
motion. It must, however, be such an admission of facts as
would shew that the Plaintiff is clearly entitled to the order
asked for, whether it be in the nature of a decree, or a
judgment, or anything else. The rule was not meant to apply
when there is any serious question of law to be argued. But
if there is an admission on the pleadings which clearly
entitles the Plaintiff to an order, then the intention was that
he should not have to wait, but might at once obtain any
order which could have been made on an original hearing of
the action.
In that case the only cause of action was for
partition of lands and the claim was for partition
and an order for necessary inquiries. The plain
tiff's title having been admitted the order for the
inquiries was made under the Rule.
The Rule is, however, limited, as the passages
I have quoted appear to me to indicate, to
2 [1876] 3 Ch. D. 637.
3 [1876] 2 Ch. D. 686.
situations where as a result of admissions etc.,
there is nothing in controversy either in the
action as a whole or in a particular part or parts
of it. Even when all the necessary facts have
been admitted but the legal result of them is still
in controversy the Rule is not appropriate if the
legal question is a serious or fairly arguable one.
The Rule as I understand it cannot properly be
invoked as an alternative to setting down for
determination before trial under Rule 474 a
point of law that arises on the pleadings. Under
that Rule it is for the Court to determine wheth
er a point of law which is in controversy should
be dealt with before trial or not and a party is
not entitled to circumvent the exercise of that
discretion by bringing a motion for judgment on
admissions and seeking to have the point argued
and determined on the hearing of that motion.
On the other hand when the material facts are
clearly admitted and the result of the application
of the law to them is not in doubt so that it is
apparent that a plaintiff is entitled ex debito
justitiae to the relief which he claims in the
action or that a defendant is entitled to judg
ment dismissing the action against him, as the
case may be, a motion under Rule 341 is an
appropriate procedure to obtain such relief
immediately in lieu of allowing the action to
proceed to a trial which in the end can have no
other result.
In the present case as it was admitted that the
respondent's appeal to the Tax Review Board
was from nil assessments for the years 1967,
1968 and 1969 the question arises whether in
view of the decision of the Supreme Court of
Canada in Okalta Oils Ltd. v. M.N.R. 4 there is
any serious or fairly arguable question of law
remaining to be argued as to the respondent's
right to appeal therefrom. In my opinion there is
not.
The respondent's position on the question
was founded largely on the judgment of Camer-
on J. in Anjulin Farms Ltd. v. M.N.R. 5 where it
was held that the word "assessment" in subsec-
4 [1955] S.C.R. 824.
5 [1961] Ex.C.R. 381.
tion 46(4) was broad enough to refer to an
assessment at nil dollars. That was not, how
ever, a decision on the extent of the right of
appeal from assessments conferred by section
59 and in view of the distinctions between
assessing tax, interest or penalties and notifying
a person that no tax is payable and between a
notice of original assessment and a notification
that no tax is payable made by the repeal and
substitution of subsection 46(4) by Statutes of
Canada 1960, c. 43, and the enactment of sub
section 58(4) by the same amending statute it is
at least doubtful whether the word "assess-
ment" in the amended subsection 48(4) can bear
the interpretation given it by the Anjulin Farms
case as it appeared in its context in the earlier
subsection.
In my opinion the facts having being admitted
and the legal result thereof being clear that the
respondent had nothing to complain of in his
appeal to the Tax Review Board the right of the
Crown to have the judgment of the Tax Review
Board set aside and the appeal from the nil
assessments dismissed was made out.
The only other point in the case is whether
the judgment of the Board must be treated as a
nullity from which no appeal to the Trial Divi
sion would lie under section 60 of the Income
Tax Act with the result that the Crown's remedy
would be limited to certiorari to quash or an
application under section 28 of the Federal
Court Act.
On this point I think the Tax Review Board,
which is constituted as a court of record to hear
appeals in taxation matters had jurisdiction to
entertain the appeal for the purpose of ascer
taining whether the appellant had a right to
relief from an assessment of tax. While it ought
to have been apparent immediately that there
was no relief to which the appellant was entitled
or which the Board could properly grant and
that the appeal should be dismissed on the prin
ciple of the Okalta judgment I do not think this
by itself went to the jurisdiction of the Board to
deal in that way with what purported to be an
appeal to it under section 59 of the Act. This
appears to me to be established by the Okalta
judgment where Fauteux J. (as he then was)
said at page 825:
Upon the consideration of this or any other question related
to the merit of this case, we are precluded to enter, for there
was no right of appeal from the decision of the Minister to
the Board nor, therefore, to the Exchequer Court; the
objection taken in this respect, by the respondent, before
the Board and again in the Exchequer Court, should have
been decided and maintained. [Underlining added.]
The Board having decided the objection in the
present case and rejected it and having allowed
the appeal and referred the matter back for
reconsideration and re-assessment it seems to
me that its judgment must be regarded as a
decision on an appeal under section 59 within
the meaning of section 60. The Trial Division in
my opinion accordingly had jurisdiction to
entertain the Minister's appeal to it from the
decision of the Tax Review Board and to hear
and maintain the objection that the respondent
had no right of appeal from the "nil
assessments".
I would allow this appeal and direct the entry
of judgment allowing the Minister's appeal from
the decision of the Tax Review Board and res
toring the "nil assessments" 6 in question. The
respondent is, however, entitled to costs of the
appeal and in the Trial Division as provided by
subsection 178(2) of the Income Tax Act, Stat
utes of Canada 1970-71-72, c. 11.
* * *
RYAN J.—I concur.
* * *
MACKAY D.J.—I concur.
6 See Provincial Secretary of Prince Edward Island v.
Egan [1941] S.C.R. 396.
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.