T-4829-79
John Christopher Doyle (Plaintiff)
v.
The Queen and Minister of National Revenue
(Defendants)
Trial Division, Mahoney J.—Ottawa, June 10 and
12, 1980.
Practice — Motion to strike pleadings — Defendant applies
to strike out statement of claim on the ground that it is an
abuse of process — Plaintiff appeals a reassessment made in
accordance with judgment rendered in appeal — Whether
plaintiff has a right to ask Court to re-try identical issues
between identical parties because of an occurrence after origi
nal judgment — Motion allowed — Federal Court Rules
419(1)(a),(c),(f), 1733 — Income Tax Act, S.C. 1970-71-72, c.
63, s. 175(3).
MOTION.
COUNSEL:
Michael Phelan and Penny Bonner for
plaintiff.
W. Lefebvre and J. Coté for defendants.
SOLICITORS:
Herridge, Tolmie, Ottawa, for plaintiff.
Deputy Attorney General of Canada for
defendants.
The following are the reasons for order ren
dered in English by
MAHONEY J.: The defendants apply to strike
out the statement of claim herein pursuant to
Rules 419(1)(a), (c) and (f). The argument was
directed to the allegation that it is an abuse of the
process of the Court and I shall deal with the
motion on that basis.
In 1959, the Minister of National Revenue reas
sessed the plaintiff's 1954 income tax return and,
inter alia, added $2,080,000 to his income. The
reassessment was duly appealed.' The inclusion of
the $2,080,000 in income was sustained and the
plaintiff's alternate plea, to deduct as an expense
1 70 DTC 6262.
the value of 522,000 shares in Canadian Javelin
Limited transferred by the plaintiff to one Robert
Sherwood, was rejected. An appeal against that
judgment of the Exchequer Court of Canada was
dismissed by the Supreme Court of Canada. 2
Subsequent to the Supreme Court's judgment
but prior to the Minister reassessing the plaintiff
pursuant thereto, Sherwood was unsuccessful in
this Court in maintaining a decision of the Tax
Review Board rendered in June, 1972, which had
found him not to be a Canadian resident in 1954.
Sherwood had been assessed in 1962 and the value
of the said shares, $1,040,000, had been included
in his 1954 income. The status of any further
appeal which Sherwood may have taken is not in
evidence.
The plaintiff was reassessed in accordance with
the judgment rendered in his appeal. The plaintiff
filed a notice of objection; the Minister confirmed
the reassessment and the plaintiff, in this action,
appeals. He says that the assessment to tax of both
Sherwood and himself for the identical receipt in
the same taxation year cannot, in law, be sus
tained. I say nothing of the merit of that proposi
tion and, for this purpose, accept it as fairly
arguable. It is clear that, when the Exchequer
Court heard and disposed of the plaintiff's appeal,
Sherwood had been assessed to tax for the value of
the shares. What had not happened, and did not
happen until after the Supreme Court disposed of
his appeal, was the final determination of the
validity of Sherwood's assessment.
The plaintiff applied, under Rule 1733, to vary
the original judgment by reducing the $2,080,000
assessed to him by $1,040,000. 3 That application
was dismissed and an appeal from that decision
2 [1978] 1 S.C.R. 547.
'Rule 1733. A party entitled to maintain an action for the
reversal or variation of a judgment or order upon the ground of
matter arising subsequent to the making thereof or subsequent
ly discovered, or to impeach a judgment or order on the ground
of fraud, may make an application in the action or other
proceeding in which such judgment or order was delivered or
made for the relief claimed.
was dismissed by the Federal Court of Appeal on
January 17,1980.^
The plaintiff contends that a reassessment, not
withstanding that it ensues upon an appeal and
judgment in respect of a prior assessment, is itself
subject to objection and appeal by the taxpayer.
That is unexceptionable; otherwise, the taxpayer
would be denied access to the Courts to ensure
that the reassessment, in fact, accorded with the
judgment.
The plaintiff contends further that the Minister
is bound to take account of the facts as they
actually are at the time he reconsiders the reas
sessment on receipt of a notice of objection, includ
ing facts not considered by the Court because they
did not exist when it rendered judgment and that,
if the Minister fails to apply the law to those facts,
the taxpayer is entitled to ask the Court to require
him to do so.
The substance of the plaintiff's further conten
tion is that he has a right to ask the Court to re-try
identical issues between identical parties because
of an occurrence after the original judgment. The
Court has already decided (a) that the entire
$2,080,000 was the plaintiff's income in 1954 and
(b) that no part of the $1,040,000 was deductible
by him as an expense in 1954.
An appeal to the Court in respect of an assess
ment under the Income Tax Act, S.C. 1970-71-72,
c. 63, is, by subsection 175(3) of the Act, deemed
to be an action in the Court. Lord Halsbury L.C.,
in Reichel v. Magrath, stated: 5
... it surely must be in the jurisdiction of the Court of Justice
to prevent the defeated litigant raising the very same question
which the Court has decided in a separate action.
I believe there must be an inherent jurisdiction in every
Court of Justice to prevent such an abuse of its procedure ....
The right to appeal a reassessment ensuing upon
a judgment is not a right to have the issues,
decided by that judgment, re-tried. It is not an
4 Court Files T-2646-77 and A-51-79. [No written reasons
for judgment distributed—Ed.]
5 (1889) 14 App. Cas. 665 at 668.
alternative procedure by which the taxpayer, if
entitled to do so, may seek to vary or vacate the
original judgment. An action such as this, seeking
that result, is an abuse of the process of the Court.
ORDER
The statement of claim is struck out and the
action is dismissed with 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.