861808 Ontario Inc. v. Canada (Revenue Agency)

  • Document:
  • Date: 2018

[Indexed as: 861808 Ontario Inc. v. Canada Revenue Agency]

2013 ONCA 604

Court of Appeal for Ontario, Feldman, MacPherson and Epstein JJ.A.

October 3, 2013

Courts — Jurisdiction — Provincial superior courts — Canada Revenue Agency being “federal board, commission or other tribunal” for purposes of s. 18(1) of Federal Courts Act — Superior court having no jurisdiction to issue injunction enjoining CRA from collecting taxes, interest and penalties — Section 18(1) of Act applying to interim injunctions — Federal Courts Act, R.S.C. 1985, c. F-7, s. 18(1).

In an action in the Superior Court of Justice, the appellant sought an injunction against the respondent Canada Revenue Agency preventing it from collecting the appellant’s unpaid taxes, interest and penalties. The respondent’s motion striking the claim for an injunction on the basis that the Federal Court had exclusive jurisdiction with respect to that claim was granted. The appellant appealed.

Held, the appeal should be dismissed.

The motion judge did not err in finding that the CRA is a “federal board, commission or other tribunal” for the purposes of s. 18(1) of the Federal Courts Act (“FCA”) when exercising powers of tax collection. Section 18(1) of the FCA applies to interim orders such as the interim injunction sought by the appellant. The superior court had no jurisdiction to issue an injunction enjoining the CRA from collecting taxes, interest and penalties from the appellant.

Cases referred to

861808 Ontario Inc. v. Canada (Revenue Agency), [2013] O.J. No. 2299, 2013 ONSC 3012, [2013] 5 C.T.C. 249, 228 A.C.W.S. (3d) 646 (S.C.J.); Burkes v. Canada (Revenue Agency), [2010] O.J. No. 2877, 2010 ONSC 3485, 2010 D.T.C. 5133, [2010] G.S.T.C. 104, [2010] 6 C.T.C. 295 (S.C.J.) [Leave to appeal refused [2010] O.J. No. 5019, 2010 ONSC 6059, [2011] 2 C.T.C. 40, [2010] G.S.T.C. 176 (Div. Ct.)]; Canada (Attorney General) v. TeleZone Inc., [2010] 3 S.C.R. 585, [2010] S.C.J. No. 62, 2010 SCC 62, 273 O.A.C. 1, 410 N.R. 1, 2011EXP-42, J.E. 2011-18, 56 C.E.L.R. (3d) 1, 327 D.L.R. (4th) 527, 96 C.L.R. (3d) 1; Puttkemery v. Air Canada, [2003] O.J. No. 2686 (Div. Ct.)

Statutes referred to

Federal Courts Act, R.S.C. 1985, c. F-7, s. 18 [as am.], (1) [as am.], (a)

Appeal from the order of Goldstein J., [2013] O.J. No. 80, 2013 ONSC 152 (S.C.J.) striking a claim for interim injunction.

Jeffrey Radnoff, David Fenig and Kris Gurprasad, for appellant.

Shahana Kar and Angela Shen, for respondent.

BY THE COURT: —

[1] The appellant 861808 Ontario Inc. appeals from the order of Goldstein J. of the Superior Court of Justice dated January 7, 2013, striking para. 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.

[2] CRA brought a motion seeking the striking of the relevant portion of the appellant’s statement of claim based on s. 18(1) of the Federal Courts Act, R.S.C. 1985, c. F-7 (“FCA”):

18(1) Subject to section 28, the Federal Court has exclusive original jurisdiction

(a) to issue an injunction, writ of certiorari, writ of prohibition, writ of mandamus or writ of quo warranto, or grant declaratory relief, against any federal board, commission or other tribunal; . . .

[3] The motion judge held that “when exercising powers of tax collection the CRA is indisputably a ‘federal board, commission, or other tribunal’”. He also held that both the wording of s. 18(1) of the FCA and the relevant case authorities pointed to an obvious conclusion: the superior court has no jurisdiction to issue an injunction enjoining the CRA from collecting taxes, interest and penalties from the appellant.

[4] In supplementary reasons dated May 23, 2013, the motion judge awarded CRA costs fixed at $40,150.25 [[2013] O.J. No. 2299, 2013 ONSC 3012 (S.C.J.)]. This award included substantial indemnity costs after July 21, 2010.

[5] The appellant appeals these orders on four grounds.

[6] First, and principally, the appellant contends that the motion judge erred by concluding that s. 18 of the FCA applies to interim orders, such as the interim injunction sought by the appellant. The appellant wants the superior court to enjoin the CRA, pending the determination of the appellant’s breach of contract claim against it, from continuing to garnish customer accounts of the appellant to collect taxes the CRA alleges are still owing.

[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] 3 S.C.R. 585, [2010] S.C.J. No. 62, 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] O.J. No. 2877, 2010 ONSC 3485 (S.C.J.), 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.

[12] Third, the appellant contends that the motion judge erred by permitting the return of the motion to strike in the face of Allen J.’s order that CRA could request that the motion be brought back “if circumstances warrant”.

[13] We disagree. The circumstance that warranted bringing back the motion was the Divisional Court’s refusal to grant leave to appeal in Burkes v. Canada (Revenue Agency), [2010] O.J. No. 5019, 2010 ONSC 6059 (Div. Ct.). With this decision of a higher court in play, the motion judge was justified in permitting the return of CRA’s motion in this case.

[14] Fourth, the appellant seeks leave to appeal the motion judge’s costs award. The appellant contends that the substantial indemnity component of the award was made in error.

[15] We would not grant leave to appeal. CRA sought costs of just under $60,000. After careful review of the progress of the litigation, lawyers involved for CRA, hourly rates, dockets and offers to settle, the motion judge fixed costs at just over $40,000. Accordingly, even if the appellant were successful on its legal argument, we would not interfere with the costs award he made,

[16] The appeal from the motion judge’s order dated January 7, 2013 is dismissed. Leave to appeal the motion judge’s order dated May 23, 2013 is denied.

[17] The respondent is entitled to its costs of the appeal fixed at $24,000, inclusive of disbursements and HST.

 

Appeal dismissed.