861808 Ontario Inc. v. R. – OCA: Ontario courts have no jurisdiction to enjoin CRA from collecting income tax

Bill Innes on Current Tax Cases

861808 Ontario Inc. v. Canada (Revenue Agency) (October 3, 2013 – 2013 ONCA 604) was an appeal from an order striking the appellant’s claim to an injunction against CRA preventing it from collecting unpaid taxes, interest and penalties:

[1] The appellant 861808 Ontario Inc. appeals from the order of Goldstein J. of the Superior Court of Justice dated January 7, 2013, striking paragraph 2 of the appellant’s statement of claim that sought an injunction against the respondent Canada Revenue Agency (“CRA”) preventing it from collecting the appellant’s unpaid taxes, interest and penalties. The appellant’s primary claim in the action is that an agent of the CRA made an agreement with the appellant to accept $79,000 in full satisfaction of its tax debt, and that the CRA is in breach of that agreement.

The appellant had two main arguments:

1. That s. 18(1) of the Federal Courts Act, R.S.C. 1985, c. F-7 (“FCA”) did not apply to interim injunctions.

2. That CRA was not a federal board, commission or other tribunal within the meaning of s. 18(1)(a) of the FCA.

Neither argument fared well before the Ontario Court of Appeal:

[7] We do not accept this submission. Section 18(1) of the FCA explicitly grants the Federal Court “exclusive original jurisdiction to issue an injunction”. There is nothing ambiguous in this language; it applies to all injunctions, including interim, interlocutory and permanent. Moreover, all of the relevant case authorities support the motion judge’s analysis and conclusion: see Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62, at para. 52; Puttkemery v. Air Canada, [2003] O.J, No. 2686 (Div. Ct.), at paras. 5-6; and Burkes v. Canada (Revenue Agency), 2010 ONSC 3485, at paras. 9-15.

[8] In TeleZone, Binnie J. dealt with this issue explicitly, at para. 52:

All of the remedies listed in s. 18(1)(a) are traditional administrative law remedies, including the four prerogative writs – certiorari, prohibition, mandamus and quo warranto – and declaratory and injunctive relief in the administrative law context. Section 18 does not include an award of damages. If a claimant seeks compensation, he or she cannot get it on judicial review. By the same token, the plaintiff in a damages action is not entitled to add a supplementary claim for a declaration or injunction to prevent the government from acting on a decision said to be tainted by illegality. That is the domain of the Federal Court. [Emphasis added.]

[9] This passage is conclusive against the appellant’s argument.

[10] Second, the appellant submits that the motion judge erred by concluding that the CRA is a federal board, commission or other tribunal within the meaning of s. 18(1)(a) of the FCA. The appellant’s action against the CRA is framed in contract and tort law, not administrative law and judicial review.

[11] We disagree. As Belobaba J. stated in Burkes, at para. 11:

The respondent Canada Revenue Agency clearly exercises powers of tax collection as conferred by an Act of Parliament and is therefore a federal board, commission or tribunal for the purposes of s. 18.

The appeal was dismissed with costs fixed at $24,000, inclusive of disbursements and HST. Leave to appeal to the Supreme Court of Canada was denied on March 13, 2014.