Date: 19990625
Docket: T-185-94
BETWEEN:
FEDERATED CO-OPERATIVES LIMITED
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER
DUBÉ J:
[1] This application by the defendant ("the Crown") is for summary judgment dismissing the plaintiff's action for a refund of payments made to the defendant under the Excise Tax Act1, ("the Act") between June 1, 1985, and June 11, 1986, including pre and post judgment interest, as well as punitive damages.
1. The Facts
[2] The plaintiff carries on the business of refining, marketing and selling gasoline and diesel products, primarily in Western Canada. During the relevant period, paragraph 27(1.1)(c) of the Act imposed a federal sales tax on the sale price of these products. Payments were made by the plaintiff on the last day of the month following the sales.
[3] The preamble of that paragraph as it read on June 1, 1985, provided that the tax be imposed "on the sale price" of goods. However, the rate set out in Schedule II.1 was on a "per volume basis". The preamble was amended on December 1986 to impose tax "on the sale price or on the volume".
[4] On October 19, 1990, MacNair J., then of this Court, held in MacMillan Bloedel Limited v. The Queen2 that the Minister"s assessment was erroneously based on the earlier wording of paragraph 27(1.1)(c) of the Act, that the Minister was only entitled to impose the rate prescribed in paragraph 27(1.1)(d), and that MacMillan Bloedel therefore had a right under section 68 to a refund of the payments made before the retroactive date of the corrective legislation.
[5] More than two years after that decision (and some six years after the payments in issue), or on December 30, 1992, the plaintiff in this case filed an Application for Refund. The original claim at that time was for $30,000,000. The application was denied on March 30, 1993, by way of a Notice of Determination on the basis that the application under section 68 of the Act was made beyond the two-year limitation period specified in that section. The plaintiff filed a Notice of Objection on June 24, 1993, which was also disallowed on November 5, 1993 on that same ground.
[6] In 1987 and 1988 the plaintiff was assessed three times relating to patronage dividends for the years 1981 to 1984. None of these three assessments was appealed by way of Notice of Objection by the plaintiff pursuant to the relevant sections of the Act.
2. The Test For Summary Judgment
[7] The general principles governing summary judgment have been summarized by Madame Justice Tremblay-Lamer of this Court in Granville Shipping Co. v. Pegasus Lines Ltd.3 as follows, at pages 859-860:
| 1. the purpose of the provisions is to allow the Court to summarily dispense with cases which ought not proceed to trial because there is no genuine issue to be tried (Old Fish Market Restaurants Ltd. v. 1000357 Ontario Inc. et al); |
| 2. there is no determinative test (Feoso Oil Ltd. v. Sarla (The) but Stone J.A. seems to have adopted the reasons of Henry J. in Pizza Pizza Ltd. v. Gillespie. It is not whether a party cannot possibly succeed at trial, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial; |
| 3. each case should be interpreted in reference to its own contextual framework (Blyth) and (Feoso); |
| 4. provincial practice rules (especially Rule 20 of the Ontario Rules of Civil Procedure, [R.R.O. 1990, Reg. 194] can aid in interpretation (Feoso and Collie); |
| 5. this Court may determine questions of fact and law on the motion for summary judgment if this can be done on the material before the Court (this is broader than Rule 20 of the Ontario Rules of Civil Procedure) (Patrick); |
| 6. on the whole of the evidence, summary judgment cannot be granted if the necessary facts cannot be found or if it would be unjust to do so (Pallman and Sears); |
| 7. in the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge (Forde and Sears). The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a "hard look" at the merits and decide if there are issues of credibility to be resolved (Stokes). |
[8] It should be added that in the case of Pizza Pizza v. Gillespie4, Henry J. set out the now well known "best foot forward" principle, which requires the party against which a summary judgment motion has been launched to produce sufficient evidence to show that there is a genuine issue for trial. In other words, it is not sufficient for the respondent party to merely state that more and better evidence will be available at trial: "the occasion is now".
3. The Time Limitation Issue
[9] The Crown argues that there is no genuine issue for trial. The Act is a complete piece of legislation which expressly provides for a limitation period. It is common ground that such a statutory limitation period cannot be extended by the Court. The two relevant provisions of the Act for the purposes of this motion are sections 68 and 81.1(6) of the Act:
| 68. Where a person, otherwise than pursuant to an assessment, has aid any moneys in error, whether by reason of mistake of fact or law or otherwise, and the moneys have been taken into account as taxes,penalties, interest or other sums under this Act, an amount equal to the amount of those moneys shall, subject to this Part, be paid to that person if he applies therefor within two years after the payment of the moneys. |
| 81.1(6) For the purposes of determining, in making an assessment, whether an amount if payable to the person being assessed pursuant to any of sections 68 to 68.29, the person is deemed to have duly made an application under the section on the day on which the notice of assessment is sent to him. |
| (my emphasis) |
[10] The Federal Court of Appeal held in Dawe v. Minister of National Revenue (Customs and Excise)5 that limitation periods enacted by Parliament must be strictly enforced. The foundation for the plaintiff's claim is its Application for Refund made on December 30, 1992, pursuant to section 68 of the Act. It subsequently filed the instant action pursuant to subsection 81.2(1) and section 81.28 of the Act which deal with assessments and rights of appeal. Section 68 relates to moneys paid in error "otherwise than pursuant to an assessment" and prescribes a two year limitation "after the payment of the moneys".
[11] Consequently, the plaintiff's claim would be without basis and would call for summary judgment of the plaintiff's action, without the benefit of a trial.
[12] The Crown alleges, in the alternative, that if the governing legislation is the 1970 Act, the relevant provision would be section 44 and by virtue of subsection 44(7.1) a refund application in writing must be made to the Minster within four years after the monies were paid. Thus, the plaintiff's application would still be well outside the four year limitation period under the Act.
[13] As to the 1987/88 assessments, they are not related to the sums to be refunded. And the plaintiff did not object to these assessments by way of timely Notices of Objection as required by section 81.15 of the 1985 Act which sets out a period of 90 days in which a notice of objection may be filed with the Minister. Section 81.15 reads as follows:
| 81.15 (1) Any person who has been assessed, otherwise than pursuant to subsection (4) or 81.38(1), and who objects to the assessment may, within ninety days after the day on which the notice of assessment is sent to him, serve on the Minister a notice of objection in the prescribed form setting out the reasons for the objection and all relevant facts on which that person relies. |
| (my emphasis) |
[14] It follows that if the plaintiff was of the view that the 1987/88 assessments should have included the issue of the overpayments of taxes made in 1985/86, the basis of this claim, then the plaintiff should have challenged the assessments pursuant to section 81.15 of the 1985 Act. It did not do so.
[15] I must conclude that since the 1985/86 payments in issue were not made pursuant to an assessment of the defendant, but paid in error by the plaintiff, the proper statutory provision in seeking redress was obviously section 68 of the 1985 Act. In contrast, section 85.15 of the 1985 Act deals specifically with objections to assessments. Section 68 specifically excludes payments made "pursuant to an assessment".
4. Deemed Application Under Subsection 81.1(6)
[16] In its amended statement of claim, the plaintiff relies on subsection 81.1(6) for the proposition that the plaintiff "is deemed" to have made an Application for Refund for the purposes of section 68. However, the clear and unambiguous wording of subsection 81.1(6) is to the effect that the deeming provision is with respect to the assessment process. It has no relevance to an Application for Refund made pursuant to section 68. A claim for refund pursuant to section 68 of monies paid in error is a separate and distinct procedure from an assessment made pursuant to section 81.15. And the plaintiff is outside the statutory time limit under both sections.
[17] In Riverside Concrete Limited v. Canada6, Rothstein J. of this Court, said that the limitation period in section 68 was imperative, although it "may appear harsh". As to the decision of this Court in MacMillan Bloedel, supra, the Crown did assess the taxpayer with additional tax in accordance with the pre amendment to the 1970 Act. However, unlike the case at bar, the taxpayer objected to that assessment within the mandated period.
5. Unjust Enrichment
[18] It is common ground and trite law that a claim of unjust enrichment must meet three essential tests. First, an enrichment; second, a corresponding deprivation; and, third, no juristic reason for the enrichment.
[19] Both parties agree that the first element is present. As to deprivation, the Crown raised an argument to the effect that such costs could have been passed on to consumers. However, they disagree mostly on whether there is a juristic reason for the enrichment. Both parties also agree that unless the relevant provisions of the Act constitute a "complete code", unjust enrichment may be invoked by the plaintiff. Parliament has included in the 1985 Act section 71 which provides as follows:
| 71. Except as provided in this Act or any other Act of Parliament, no person has a right of action against Her Majesty for the recovery of any monies paid to Her Majesty that are taken into account by Her Majesty as taxes, penalties, interest or sums under this Act. |
| (my emphasis) |
[20] In Michelin Tire (Canada) Ltd. and Her Majesty the Queen7, Madame Justice Reed of this Court, was dealing with federal sales tax overpaid by Michelin Tire under the Act because of errors due to incorrect calculations on the part of Michelin. The Minister of National Revenue did not qualify these amounts as repayable because they had been made four years prior to the date of the application. The learned judge canvassed the law and the jurisprudence in the matter under "the unjust enrichment argument". She concluded as follows:
| [7] In my view, both the Excise Tax Act, R.S.C. 1985 c. E-15, as amended, together with the Excise Tax Act, R.S.C. 1970, c. E-13, as amended, to the extent that the latter is relevant, contain a complete code applicable to the repayment of amounts paid in error in the circumstances of this case. |
| (my emphasis) |
[21] Although the Michelin decision is under appeal, I share the views of my colleague in this matter.
[22] I do not accept the proposition of the plaintiff to the effect that the right to obtain equitable relief by virtue of section 3 of the Federal Court Act would render section 71 of the 1985 Act ineffective. True, the Federal Court is a statutory Court and must find its powers in a federal statute. Section 3 of the Federal Court Act is the statutory grant and it provides that "the court of law, equity and admiralty in and for Canada now existing under the name of the Federal Court of Canada is hereby continued ..." Thus, the Federal Court does have an equitable jurisdiction in the sense that it refers to those principles of law that were administered before 1873 by the Courts of Equity, mainly the Court of Chancery. However, tax laws were within the jurisdiction of the Courts of Exchequer8. In other words, this Court cannot use its equitable jurisdiction to grant restitution to taxpayers in violation of prescriptions and limitations imposed by an act of Parliament.
[23] Furthermore, when the statute itself provides for relief, on the same grounds that the common law or equitable remedy would have provided relief, there is a presumption that the statutory code does not exclude the common law right of action, but rather codifies it and structures it within a specific context as willed by Parliament.
[24] The plaintiff points out that eleven of the thirteen overpayments made under the erroneous legislation were made prior to the coming into force of section 71 on May 1, 1996. It submits, therefore, that section 71 does not constitute a juristic reason to prevent the plaintiff's recovery of the first eleven overpayments.
[25] However, the May 1, 1986, amendment did not materially change the right of the taxpayer to recover monies paid in error but reduced the limitation period under which a taxpayer could seek this recovery from four years after the payment to two. When the plaintiff filed its application on December 30, 1992, the amendment had been in force for more than six years.
7. Insufficient Evidence
[26] The plaintiff contends that it would be unfair to grant summary judgment to the Crown in the face of its refusal to produce more witnesses. The plaintiff claims that the only evidence put forward by the moving party with respect to its conduct is the affidavit of Appeals Officer Ted Glas which is made entirely on information and belief. In the cross-examination of Mr. Glas, the moving party's counsel identified a number of individuals who provided the information to Mr. Glas, who was not occupying the position of Appeals Officer during the relevant period. Since the plaintiff, as a responding party, was unable under the Federal Court Rules to obtain evidence in the possession of other Crown Officers, the plaintiff argues that the motion judge under the Rules ought not to assume that the record on the motion contains all the evidence which the party will present at trial.
[27] However, Rule 216(3) provides that the Court may grant summary judgment in favour of any party if it is able on the whole of the evidence before it to find the facts necessary to decide the questions of fact and law. The Crown produced the evidence which it felt was sufficient to establish its case. Again, as mentioned earlier, it is for the plaintiff to put its best foot forward. Apparently, the plaintiff was interested in delving deeper into the conduct of Crown Officers in the expectation that some type of misconduct would be brought to the surface. There is no indication that the Crown would have conducted itself in such a fashion as to enable the plaintiff to bypass the limitation periods imposed by the Act.
8. Disposition
[28] Consequently, there is sufficient evidence before the Court to conclude that the Application for Refund of the plaintiff was made beyond the two year limitation period as set out in section 68 of the 1985 Act. The Court may not extend or abridge that limitation period. The Act provides a complete code for all rights or recovery of monies paid in error to the Crown. Therefore, there is no genuine issue for trial. Summary judgment will issue dismissing the plaintiff's statement of claim with costs.
OTTAWA, ONTARIO
June 25, 1999
Judge
__________________2 (1991), 38 F.T.R. 58 (F.C.T.D.).
3 [1996] 2 F.C. 853 (T.D.), references omitted.
4 (1990), 75 O.R. (2d) 225 (Ont. Ct. (Gen. Div.)).
7 (26 November 1998), T-871-93, (F.C.T.D.) per Reed J. (unreported).
8 Maplesden v. Minister of National Revenue (1997), 139 F.T.R. 300 (T.D.).