A-208-78
Popovich Equipment Company (Applicant)
v.
The Queen (Respondent)
Court of Appeal, Jackett C.J., Heald J. and Man
ning D.J.—Calgary, January 17; Ottawa, January
22, 1979.
Income tax — Practice — Motion to quash review of
application to set aside stay of proceedings pending prosecu
tion — Prosecution of person not appellant — Provisions
regarding stay applicable only where appellant is being prose
cuted — Motion to quash is granted — Income Tax Act, S.C.
1970-71-72, c. 63, s. 239(4).
This is a motion to quash a section 28 application to set aside
a stay filed in the Tax Review Board under section 239(4) of
the Income Tax Act, in April 1978. The stay was based on a
prosecution of some person other than the appellant in the
appeal that was stayed. The individual who is the subject upon
which the stay is based is outside the jurisdiction with no
indication as to when, if ever, the prosecution will be proceeded
with and finally determined.
Held, (Heald J. dissenting) the section 28 application is
quashed.
Per Jackett C.J.: While it is not expressly so limited, by
enacting the provision, Parliament intended only to authorize
the Minister to require that an appeal be stayed pending
disposition of a prosecution in a case where it is the appellant
who is being prosecuted. It is a purely administrative authority
to determine the order in which legal proceedings are to be
carried on and the exercise thereof does not call for implication
of procedural protection for the appellant.
Per Heald J. dissenting: When the words "...ina prosecu
tion under this section ." are given their plain ordinary
meaning in the context of the other subsections of section 239,
those words clearly empower the Minister to stay an appeal of
the taxpayer in the case at bar, even though the stay was based
on the prosecution under section 239 of someone other than the
taxpayer. If the Crown maintains the stay of proceedings
"pending final determination of the outcome of the prosecu
tion" as it is entitled to do under section 239(4), then it has
effectively deprived the appellant of its right to appeal the
income tax assessment in question. Because of the severe
consequences, the section should be interpreted as implying a
procedural duty to act fairly.
MOTION to quash.
COUNSEL:
B. A. Felesky and J. D. A. Struck for
applicant.
Deen Olsen and D. Akman for respondent.
SOLICITORS:
Bell, Felesky & Iverach, Calgary, for
applicant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is a motion to quash a
section 28 application to set aside a stay filed in
the Tax Review Board under section 239(4) of the
Income Tax Act, in April, 1978. That provision
read as follows:
239... .
(4) Where, in any appeal under this Act, substantially the
same facts are at issue as those that are at issue in a prosecu
tion under this section, the Minister may file a stay of proceed
ings with the Tax Review Board or the Federal Court, as the
case may be, and thereupon the proceedings before that Board
or Court are stayed pending final determination of the outcome
of the prosecution.
It appeared from argument of counsel that the
stay was based on a prosecution of some person
other than the appellant in the appeal that was
stayed.
If section 239(4) authorized a stay of an appeal
based on prosecution of a person other than the
appellant, the appellant, in a case where the au
thority was so exercised, would be in no position to
ensure disposition of the prosecution, which might,
if, for example, the accused were a refugee from
justice, never be disposed of. So interpreted, a stay
of an appeal as contemplated by the provision
could operate, in effect, to deprive the appellant of
his right of appeal. If that were the ambit of the
authority granted by section 239(4), I am inclined
to the view that there is no public policy involved
that would warrant interpreting the provision as
authorizing exercise of the authority to stay with
out affording procedural protection for an appel
lant adversely affected thereby.
I am, however, of the view that, while it is not
expressly so limited, by enacting the provision,
Parliament intended only to authorize the Minister
to require that an appeal be stayed pending dispo
sition of a prosecution in a case where it is the
appellant who is being prosecuted. On that view of
the provision, I am of opinion that it is a purely
administrative authority to determine the order in
which the legal proceedings are to be carried on
and the exercise thereof does not call for implica
tion of procedural protection for the appellant.
I am, therefore, of the view that the section 28
application should be quashed and that the appli
cant should be left to whatever action is necessary
to have the unauthorized "stay" struck out by the
Tax Review Board or, otherwise, declared to be of
no effect as, for example, by taking mandamus
proceedings to have his appeal heard or by bring
ing an action for a declaration.
While this application to quash raised a difficult
question the answer to which did not. become clear
without considerable argument, the matter was
nevertheless dealt with on the motion to quash
with the concurrence of counsel.
* * *
MANNING D.J. concurred.
* * *
The following are the reasons for judgment
rendered in English by
HEALD J. (dissenting): With deference to those
who hold a contrary view, I am of the opinion that
section 239(4) of the Income Tax Act does author
ize a stay of an appeal based on prosecution of a
person other than the appellant. The words used in
section 239(4) are: "... in a prosecution under this
section, ..." [emphasis added]. Accordingly, in
my view, it is necessary to read subsection (4) of
section 239 in the context of the other subsections
of section 239. A perusal of subsection (1) of
section 239' reveals that said subsection estab
lishes a number of offences capable of commission
by innumerable persons other than the appellant
(for example, false or deceptive statements made
by the taxpayer's accountants, solicitors, custom
ers, suppliers, employees, etc.; destruction, altera
tion, mutilation or secretion of the taxpayer's
records by an employee; the making of false or
deceptive entries by an employee bookkeeper in
the taxpayer's records). Accordingly, when the
words "... in a prosecution under this section, ..."
are given their plain ordinary meaning in the
context of the other subsections of section 239,
those words clearly, in my view, empower the
Minister to stay an appeal of the taxpayer in the
case at bar, even though that stay was based on
the prosecution under section 239 of someone
other than the taxpayer. Counsel for both parties
adopted this view of section 239(4) at the hearing
before us and, in my view, their interpretation is a
proper one.
Such being my view of the proper interpretation
of section 239(4), I would agree with the views of
the Chief Justice that: "... the appellant, in a case
' Section 239(1) reads as follows:
239. (1) Every person who has
(a) made, or participated in, assented to or acquiesced in
the making of, false or deceptive statements in a return,
certificate, statement or answer filed or made as required
by or under this Act or a regulation,
(b) to evade payment of a tax imposed by this Act,
destroyed, altered, mutilated, secreted or otherwise dis
posed of the records or books of account of a taxpayer,
(c) made, or assented to or acquiesced in the making of,
false or deceptive entries, or omitted, or assented to or
acquiesced in the omission, to enter a material particular,
in records or books of account of a taxpayer,
(d) wilfully, in any manner, evaded or attempted to evade,
compliance with this Act or payment of taxes imposed by
this Act, or
(e) conspired with any person to commit an offence
described by paragraphs (a) to (d),
is guilty of an offence and, in addition to any penalty
otherwise provided, is liable on summary conviction to
(f) a fine of not less than 25% and not more than double
the amount of the tax that was sought to be evaded, or
(g) both the fine described in paragraph (f) and imprison
ment for a term not exceeding 2 years.
where the authority was so exercised, would be in
no position to ensure disposition of the prosecution,
which might, if, for example, the accused were a
refugee from justice, never be disposed of. So
interpreted, a stay of an appeal as contemplated by
the provision could operate, in effect, to deprive
the appellant of his right of appeal." In the case at
bar, we have a situation similar to the example
given by the Chief Justice and quoted supra. The
individual who is the subject of the prosecution
upon which the stay is based is outside the juris
diction with absolutely no indication as to when, if
ever, the prosecution will be proceeded with and
finally determined. On this basis, if the Crown
maintains the stay of proceedings "pending final
determination of the outcome of the prosecution"
as it is entitled to do under section 239(4), then it
has effectively deprived the appellant of its right to
appeal the income tax assessment in question. On
this view of section 239(4), I consider that,
because of the severe consequences referred to
above, said section might well be interpreted as
implying a procedural duty to act fairly 2 . Accord
ingly, in my view, this applicant has an arguable
position on the section 28 application to set aside
the stay. I would therefore dismiss the motion to
quash.
2 See: Nicholson v. Haldimand-Norfolk Regional Board of
Commissioners of Police [1979] 1 S.C.R. 311.
See also: Inuit Tapirisat of Canada v. Governor in Council
[1979] 1 F.C. 710.
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