http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/110970/index.do
Mason v. Canada (Attorney General) (July 28, 2015 – 2015 FC 926, Strickland J.).
Précis: Mr. Mason was an accountant. He had been assessed for arrears in GST. He appealed to the Tax Court but was only partially successful. He appealed that decision to the Federal Court of Appeal. While the Tax Court appeal was underway CRA launched collection proceedings against him, sending third party demands to his clients. The Minister denied his request for a stay of the collection proceedings. He applied to the Federal Court for an interim injunction to restrain the collection proceedings. He was unsuccessful in his application for interim relief but the Federal Court permitted the application to proceed. This decision dealt with his claim for relief pending completion of his ongoing appeal of the Tax Court decision.
The Court denied the application. There were no collection restrictions in the Excise Tax Act while matters were before the Tax Court or the Federal Court of Appeal. Nothing had changed since the application for interim relief other than that the Minister had denied his request for a stay of collection proceedings. In substance Mr. Mason was challenging the underlying GST assessment, which was a matter exclusively within the competence of the Tax Court. There was no basis to quash the requirements to pay served by the Minister. There was also no basis to suggest that the Minister’s decision to refuse to start the collection proceedings or her subsequent decision to refuse to stay collections was unreasonable. The application was dismissed with costs fixed at $1,000.
Decision: Mr. Mason was an accountant. He was assessed with unpaid GST and he appealed to the Tax Court and, subsequently, to the Federal Court of appeal. While the appeals were underway the CRA served third party demands on his clients. Mr. Mason requested CRA to stop the collection proceedings pending his appeal but it refused. He applied for interim relief in the Federal Court but was unsuccessful:
[11] On October 28, 2014, having not received a response from the Minister, the Applicant brought this application for judicial review and, as noted above, on the same day he filed an appeal of the Tax Court of Canada’s decision with the Federal Court of Appeal. In his application for judicial review, the Applicant sought an injunction requiring the Minister to cease collection activity until the matters before the Federal Court of Appeal are finalized, as well as an injunction requiring the Minister to withdraw all third party demands and to notify all parties that had received the demands of the withdrawal. On that date, the Applicant also brought a motion in this Court for the same injunctions that he seeks in this application. The Minister then brought a cross-motion for an order to strike the Applicant’s application for judicial review. The Minister argued that the Applicant’s application for judicial review was premature, because the Minister had not yet issued a decision with respect to the Applicant’s request for a stay and, therefore, there was no decision to review.
[12] As will be discussed in greater detail below, Justice Gleason dismissed both the motion and the cross-motion by Order dated November 12, 2014. Regarding the Minister’s cross-motion, Justice Gleason explained that it was not plain and obvious that an application for judicial review may not be brought in respect of decisions to issue Requirements to Pay, as there may well have been reviewable decisions made by the Minister in this matter. As to the Applicant’s motion, Justice Gleason found that the Applicant had not established any of the three pre-requisites of the test for injunctive relief outlined in RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311. The application did not raise a serious issue as it was clear that under the Excise Tax Act the Minister was entitled to enforce GST assessments while appeals were pending. The Applicant had also not established that he would suffer irreparable harm through clear non-speculative evidence and, finally, the balance of convenience favoured the Minister, given that the Tax Court of Canada had found that the Applicant owed GST and failed to remit it.
The issues before the Court in this decision were:
[15] The Applicant presents the issues as follows:
1. Whether or not the CRA reasonably and properly issued third party demands to his clients;
2. Whether or not an injunction should be allowed requiring the CRA to remove the third party demands; and,
3. An injunction requiring the Minister to cease collection activity against the Applicant until the matter before the Federal Court of Appeal is finalized.
[16] In my view, these can be restated as:
1. Should this Court grant an injunction staying the Minister’s collection actions in relation to the GST amounts assessed against the Applicant until such time as his appeal of the Tax Court of Canada’s decision to the Federal Court of Appeal has been disposed of?
2. Should this Court quash the Requirements to Pay issued to third parties in respect of the GST amounts assessed against the Applicant?
The Court found against Mr. Mason on the first point:
[21] Significantly, the Applicant filed one affidavit, dated October 21, 2014, in support of the motion which is also relied upon in support of this application for judicial review. A second affidavit, dated March 3, 2014 provides a copy of the Minister’s decision of January 12, 2015 denying the Applicant’s request for a stay of collection actions, but does not speak to the grounds supporting the application. This is significant because Justice Gleason refused the interim injunction request contained in the motion by her Order of November 12, 2014 and the Applicant has subsequently put forward no new evidence in this application, other than the letter from the Minister.
[22] In fact, the only thing that has changed is that on January 12, 2015, the Minister advised the Applicant that his request for a discretionary stay of collection actions pending the outcome of his appeal would not be granted. However, the Applicant has not challenged that decision.
…
[24] As no new relevant evidence has been filed in support of the requested injunction, there is no basis on which to depart from this prior finding, with which I agree and adopt.
On the second point the Court also found against Mr. Mason:
[40] In my view, the essential nature of the Applicant’s claim is that the Minister incorrectly assessed his GST liability. As a result, the Requirements to Pay should not have been issued and, more importantly, collection should not have been pursued while this matter remains in dispute before the Federal Court of Appeal. Because the issues that the Applicant identifies are all matters that concern the correctness of the Minister’s GST assessment, which will be dealt with by the Federal Court of Appeal, this Court has no jurisdiction, pursuant to s 18.5 of the Federal Courts Rules, to address them.
[41] As acknowledged by the Minister, this Court does have jurisdiction to consider whether the Minister’s decision to issue the Requirements to Pay was reasonable. However, the Assessments are deemed to be valid and binding until varied or vacated on objection or appeal and, unlike the Income Tax Act (ss 225.1(2) and (3)), there is no statutory stay on collection activity under the Excise Tax Act while an objection or appeal is outstanding (Excise Tax Act, s 315(2); Hoffman v Canada (Attorney General), 2009 FC 832 at para 28, affirmed in 2010 FCA 310 (“Hoffman”); Canada (Minister of National Revenue) v Vu, 2004 FC 1783 at para 3 (“Vu”); Leroux v Canada Revenue Agency, 2014 BCSC 720 at para 376 (“Leroux”)).
[42] Therefore, in my view, the Minister is entitled to pursue collection activities, even while an appeal is pending at the Federal Court of Appeal, as was noted by Justice Gleason when hearing the motion for interlocutory injunction. Thus, the decision to issue the Requirements to Pay was reasonable as collection actions taken in respect of a valid assessment are lawful (Coombs at paras 15 and 19) and as there was no evidence to suggest that the decision had otherwise been unreasonably made. Nor is there any legal basis to find that this Court can grant a stay of the collection actions (Hoffman at para 28; Vu at para 3; Leroux at para 376). Injunctions cannot be issued where the Minister is acting within the powers granted by law (North of Smokey Fishermen’s Assn v Canada (Attorney General), 2003 FCT 33 at paras 10-11; Pacific Salmon Industries Inc v the Queen, [1985] 1 FC 504 (FCTD) at para 10).
[43] Finally, while the Minister may postpone collection actions in respect of all or any part of an amount assessed that is the subject of a dispute (Excise Tax Act, s 315(3)), the use of the word “may” in the provision indicates that this is a discretionary decision. Here, there is insufficient evidence to support an argument that the refusal was unreasonable, nor has the Applicant challenged that decision.
As a result the application was dismissed with costs fixed at $1,000.