Date: 19980217
Docket: T-3041-89
BETWEEN:
Enter Style of Cause just after [Comment] code
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FOREST OIL CORPORATION
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
SUPPLEMENTARY REASONS FOR JUDGMENT - INTEREST
GIBSON J.
[1] By Statement of Claim filed the 22nd of December, 1989, the plaintiff contested the refusal by the defendant to repay to it, with interest, $360,000 in instalment payments paid in respect of the plaintiff's estimated tax liability for its 1983 taxation year under the Petroleum and Gas Revenue Tax Act,1 (the "PGRT Act") and $51,424.94 representing an overpayment by instalments of tax assessed against the plaintiff under the PGRT Act for the plaintiff's 1982 taxation year that was transferred, at the plaintiff's request, to the plaintiff's PGRT Account for its 1983 taxation year.
[2] On the 27th of November, 1996, I granted judgment to the plaintiff in the following terms:
| 1. The Defendant is a constructive trustee of the amount of $411,424.94 on behalf of the Plaintiff; |
| 2. the Defendant shall deliver up to the Plaintiff the amount of which the Defendant is such a constructive trustee; and |
| 3. The Plaintiff is entitled to costs.2 |
[3] In Reasons for Judgment issued the same day,3 I wrote:
Before me, counsel were in agreement that, if judgment were to go in favour of the Plaintiff on the main issue, as it will, then agreement between the parties could likely be reached on the question of interest. Accordingly, the issue of interest was not argued before me and will not be dealt with in my judgment. If agreement on the interest issue is not reached within a reasonable time, I retain jurisdiction and am prepared to reconvene this matter on that issue only.
[4] On the 23rd of July, 1997, counsel for the plaintiff wrote to the Court to advise that the parties had been unable to reach agreement on the question of interest and that they were prepared to have the question of interest dealt with on the basis of written submissions only. In the result, an order issued setting a schedule for written submissions. The last of these submissions were received in the Registry of the Court on the 10th of September, 1997.
[5] I have now had an opportunity to fully consider the written submissions and these reasons are in support of my supplementary judgment in this matter.
[6] The sole issue now dealt with is whether the plaintiff is entitled to interest on the amount of the judgment in this matter and, if so, what is the appropriate method for computing the amount of interest.
[7] Counsel for the plaintiff urges that the plaintiff is entitled to interest on the amount of the judgment in this matter on two alternative grounds. First, by virtue of subsection 18(3) of the PGRT Act and, second and in the alternative, under subsections 31(2) and 31.1(2) of the Crown Liability and Proceedings Act.4
[8] Subsection 18(3) of the PGRT Act provides as follows:
(3) Where an amount in respect of an overpayment is refunded to a taxpayer or applied under this section on other liability, interest at the rate per annum referred to in subsection 15(1) shall be paid or applied thereon for the period commencing with the latest of
(a) the day when the overpayment occurred,
(b) the day on or before which the return of the production revenue in respect of which the tax was paid was required to be filed, and
(c) the day when the return of the production revenue was actually filed,
and ending with the day of the refund or the application on the other liability, as the case may be, unless the amount of the interest so calculated is less than one dollar, in which event no interest shall be paid or applied under this subsection.[emphasis added]
(3) Lorsqu'une somme est remboursée à titre de paiement en trop ou qu'elle est affectée, en vertu du présent article, à l'acquittement d'une autre obligation, des intérêts au taux annuel visé au paragraphe 15(1) doivent être payés ou affectés à l'acquittement de cette autre obligation, pour la période commençant à la dernière des dates suivantes :
a) le jour où le paiement en trop a été fait;
b) au plus tard le jour où la déclaration de revenu de production, qui a fait l'objet du paiement d'impôt, devait être produite;
c) le jour de la production effective de la déclaration de revenu de production,
et se terminant le jour du remboursement ou de l'affectation en question, selon le cas, à moins que le montant des intérêts ainsi calculé ne soit inférieur à un dollar, auquel cas aucun intérêt ne doit être payé ni affecté conformément au présent paragraphe.[Je souligne]
[9] In my earlier reasons for judgment in this matter, I wrote at page 631:
Thus, the amount in dispute represented an "overpayment" made on account of the plaintiff's tax for the taxation year within the meaning of subsection 91(1) of the PGRT Act.
[10] "Overpayment" is defined in subsection 18(5) of the PGRT Act in relation to a taxation year as the aggregate of all amounts paid on account of tax for that year minus all amount payable by the taxpayer under that Act. It remains for determination whether or not the amount in dispute was ever, within the words of subsection 18(3) of the PGRT Act, "refunded" to the plaintiff. Clearly, it was not. Further, in my reasons for judgment, I determined that the amount payable to the plaintiff was not payable as a refund but rather was payable by reason of the existence of a constructive trust and the obligation to disburse the funds held in the constructive trust. Thus, I conclude, subsection 18(3) of the PGRT Act has no application.
[11] I turn then, to the alternative submission on behalf of the plaintiff.
[12] The relevant provisions of the Crown Liability and Proceedings Act read as follows:
31. (1) Except as otherwise provided in any other Act of Parliament and subject to subsection (2), the laws relating to prejudgment interest in proceedings between subject and subject that are in force in a province apply to any proceedings against the Crown in any court in respect of any cause of action arising in that province.
31. (1) Sauf disposition contraire de toute autre loi fédérale, et sous réserve du paragraphe (2), les règles de droit en matière d'intérêt avant jugement qui, dans une province, régissent les rapports entre particuliers s'appliquent à toute instance visant l'État devant le tribunal et dont le fait générateur est survenu dans cette province.
(2) A person who is entitled to an order for the payment of money in respect of a cause of action against the Crown arising outside any province or in respect of causes of action against the Crown arising in more than one province is entitled to claim and have included in the order an award of interest thereon at such rate as the court considers reasonable in the circumstances, calculated
(a) where the order is made on a liquidated claim, from
the date or dates the cause of action or causes of action arose to the date of the order; or
(b) where the order is made on an unliquidated claim, from the date the person entitled gave notice in writing of the claim to the Crown to the date of the order.
(2) Dans une instance visant l'État devant le tribunal et dont le fait générateur n'est pas survenu dans une province ou dont les faits générateurs sont survenus dans plusieurs provinces, les intérêts avant jugement sont calculés au taux que le tribunal estime raisonnable dans les circonstances et_:
a) s'il s'agit d'une créance d'une somme déterminée, depuis la ou les dates du ou des faits générateurs jusqu'à
la date de l'ordonnance de paiement;
b) si la somme n'est pas déterminée, depuis la date à laquelle le créancier a avisé par écrit l'État de sa demande jusqu'à la date de l'ordonnance de paiement.
...
(6) This section applies in respect of the payment of money under judgment delivered on or after the day on which this section comes into force, but no interest shall be awarded for a period before that day.
...
(6) Le présent article s'applique aux sommes accordées par jugement rendu à compter de la date de son entrée en vigueur. Aucun intérêt ne peut être accordé à l'égard d'une période antérieure à cette date.
...
...
31.1 (1) Except as otherwise provided in any other Act of Parliament and subject to subsection (2), the laws relating to interest on judgments in causes of action between subject and subject that are in force in a province apply to judgments against the Crown in respect of any cause of action arising in that province.
(2) A judgment against the Crown in respect of a cause of action outside any province or in respect of causes of action arising in more than one province shall bear interest at such rate as the Court considers reasonable in the circumstances, calculated from the time of the giving of the judgment.[emphasis added]
31.1 (1) Sauf disposition contraire de toute autre loi fédérale et sous réserve du paragraphe (2), les règles de droit en matière d'intérêt pour les jugements qui, dans une province, régissent les rapports entre particuliers s'appliquent aux jugements rendus contre l'État dans les cas où un fait générateur est survenu dans cette province.
(2) Un jugement rendu contre l'État, dans le cas où le fait générateur n'est pas survenu dans une province ou dans celui où les faits générateurs sont survenus dans plusieurs provinces, porte intérêt, à compter de son prononcé, au taux que la Cour estime raisonnable dans les circonstances.[Je souligne]
[13] In the absence of more specific statutory provisions, I am satisfied that subsections 31(2) and 31.1(2) of the Crown Liability and Proceedings Act apply. Subsection 31(2) is, however, limited by subsection 31(6). That subsection provides in unequivocal terms that no interest can be awarded under section 31 of the Crown Liability and Proceedings Act for a period before the day on which that section came into force. That day was the first of February, 1992.5 On the basis of the reasoning of Mr. Justice Strayer in Peel (Regional Municipality) v. Canada6 and the relevant statutory provisions, I conclude that the plaintiff is entitled to prejudgment interest only from the 1st of February, 1992.
[14] Under subsection 31(2) of the Crown Liability and Proceedings Act, the rate of interest to be applied is "...such rate as the Court considers reasonable in the circumstances...". I conclude that the relevant circumstances here are the following. Despite the fact that the plaintiff had a very significant amount of money on account with the respondent in relation to its 1983 tax, it was tardy in filing its return. By letter dated the 23rd of January, 1985, the defendant requested that the return be filed. A further written request was made on the 21st of September, 1987. The return was not filed until the 18th of July, 1988.7 The plaintiff's delay in filing its return proved to be the ultimate cause of this litigation. I conclude that the plaintiff was the author of its own misfortune. In the circumstances, I conclude that an appropriate rate of pre-judgment interest is 0%.
[15] Under subsection 31.1(2) of the Crown Liability and Proceedings Act, the appropriate rate of post-judgment interest is, once again, "...such rate as the Court considers reasonable in the circumstances...". Unlike the situation with respect to prejudgment interest, the plaintiff cannot be considered to have delayed in seeking satisfaction of judgment since the day it was delivered. I conclude that a reasonable rate for post-judgment interest would be 5% to run from the date of judgment to the date of payment.
[16] A supplementary judgment in this matter will be filed to reflect these reasons.
__________________________
Judge
Ottawa, Ontario
February 17, 1998
__________________1 S.C. 1980-81-82-83, c. 68, (since repealed) see R.S., 1985, c. 45 (2nd supp.) s. 8
2 A Notice of Appeal against this judgment was filed the 20th of December, 1996.
3 ;Forest Oil Corporation v. Her Majesty the Queen, [1997] 1 F.C. 624 (T.D.) at 638
4 R.S. 1985, c. C-50 (as amended)
5
See Canadian Statute Citator, Sept. 1997, C31-1
6 [1987] 3 F.C. 103 at 128 (T.D.)(reversed on other grounds)
7 Forest Oil, supra, note 3 at 629