Date: 19990927
Docket: GST-2815-99
Winnipeg, Manitoba, this 27th day of September 1999
PRESENT: THE HONOURABLE MADAME JUSTICE SHARLOW
In the matter of the Excise Tax Act,
R.S.C., 1985, c. E-15,
- and -
In the matter of an assessment or
assessments by the Minister of National
Revenue under the Excise Tax Act,
Against:
NIBRON RESTAURANTS LTD.
(sometime carrying on business as
NIBBLER'S NOSH RESTAURANT)
973 Corydon Avenue
Winnipeg, Manitoba
R3M 0X1
ORDER
Upon an application on behalf of Yaron Walter for:
| 1. An Order declaring the Writ of Seizure and Sale issued by this Honourable Court on July 29, 1999, as unlawful and invalid; |
| 2. An Order setting aside the Writ of Seizure and Sale issued by this Honourable Court on July 29, 1999; |
| 3. An Order restraining and enjoining Revenue Canada and/or its agents from taking any further action pursuant to the Writ of Seizure and Sale issued by this Honourable Court on July 29, 1999; |
| 4. Costs; and |
| 5. Such further and other relief as counsel may advise and this Honourable Court may deem just. |
THIS COURT ORDERS
The motion is dismissed with costs fixed at $750, inclusive of disbursements.
"Karen R. Sharlow"
Judge
Date: 19990928
Docket: GST-2815-99
In the matter of the Excise Tax Act,
R.S.C., 1985, c. E-15,
- and -
In the matter of an assessment or
assessments by the Minister of National
Revenue under the Excise Tax Act,
Against:
NIBRON RESTAURANTS LTD.
(sometime carrying on business as
NIBBLER'S NOSH RESTAURANT)
973 Corydon Avenue
Winnipeg, Manitoba
R3M 0X1
Docket: ITA-7012-99
In the matter of the Income Tax Act,
- and -
In the matter of an assessment or
assessments by the Minister of National
Revenue under one or more of the Income Tax
Act, Canada Pension Plan, Employment
Insurance Act, The Income Tax Act
(Manitoba)
Against:
NIBRON RESTAURANTS LTD.
(sometime carrying on business as
NIBBLER'S NOSH RESTAURANT)
973 Corydon Avenue
Winnipeg, Manitoba
R3M 0X1
REASONS FOR ORDER
SHARLOW J.
[1] Mr. Yaron Walter seeks an order invalidating the seizure of certain assets of Nibron Restaurants Ltd. (Nibron) to satisfy its obligation for unremitted source deductions (ITA-7012-99), and a similar order relating to the seizure of assets to satisfy Nibron's obligations for unremitted GST (GST-2815-99). Nibron is not a party to the motions.
[2] Mr. Walter says that he has entered into an agreement to acquire all the shares of Nibron Restaurants Ltd. He says that agreement gives him a sufficient interest in Nibron's assets to entitle him to challenge Revenue Canada's collection action.
[3] The notices of motion indicate that Mr. Walter initially relied on the Constitution Act, 1982. The constitutional challenge was abandoned at the hearing as no notice had been given pursuant to section 57 of the Federal Court Act.
[4] Mr. Walter now relies solely on section 1(a) of the Canadian Bill of Rights. It reads in part as follows:
| It is hereby recognized and declared that in Canada there shall have existed and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely, |
| (a) the right of the individual to ... enjoyment of property, and the right not to be deprived thereof except by due process of law. |
This provision does not advance Mr. Walter's claim.
[5] Generally, the shareholder of a corporation has no proprietary interest in the corporation's assets: Salomon v. Salomon, [1897] A.C. 22 (H.L.), Macaura v. Northern Assurance Company, Limited, [1925] A.C. 619 (H.L.). I was referred to no corporate law or other statute applicable to Nibron that compels a different conclusion in this case.
[6] It follows that no seizure of Nibron's assets can be a breach of a property right of a shareholder of Nibron. A fortiori, there is no basis in law for concluding that a seizure of Nibron's assets is a breach of a property right of Mr. Walter, who has at most only a right to become a shareholder of Nibron.
[7] Nothing that has been done or that may be done by Revenue Canada to Nibron's assets derogate from Mr. Walter's right to purchase the shares of Nibron. The value of those shares may be diminished if Nibron is compelled to meet its statutory obligations before Mr. Walter would like, but that does not deprive Mr. Walter of any proprietary right.
[8] For these reasons, the motions of Mr. Walker are denied.
[9] There are additional points that should be made relating to the merits of Mr. Walter's motions, and his motives.
[10] First, with respect to the merits. Even if I had concluded that Mr. Walter had standing to challenge Revenue Canada's action to collect Nibron's tax debts, I would not have granted the relief sought.
[11] Mr. Walter alleges that the responsible officials of Revenue Canada had knowledge at all material times of his interest in Nibron, and of his attempts to negotiate a payment schedule. He says that a Revenue Canada official gave him reason to believe that collection action would be stopped while a payment schedule was negotiated, but steps were taken to realize on Nibron's assets in violation of that understanding.
[12] There may be situations where the continuation of collection action by Revenue Canada in the face of an agreement to delay would be an abuse of a statutory power. However, the evidence of an abuse of a statutory power must be clear.
[13] Here, the only evidence in support of Mr. Walter's allegation is an affidavit indicating that on the day or two before the seizure, his lawyer Mr. Gray attempted to reach Ms. Klim, the collections officer responsible for the Nibron file, only to find that she was absent due to illness. He spoke instead to Mr. Urso, another collections officer. There is no suggestion that Mr. Urso had any knowledge of the Nibron file. Mr. Walter's affidavit states:
| I am also advised by Randall M. Gray and do verily believe that he advised Mr. Urso that he represented me, that he was calling with respect to the indebtedness and that, given Ms. Klim's absence due to illness as well as the fact that he himself was going to be away for three business days, he wished to confirm that the matter would be left in abeyance until he and Ms. Klim could speak the following week. Based on this, it was understood by Mr. Gray and myself that no further steps would be taken by Revenue Canada with respect to the indebtedness pending Mr. Gray's discussion with Ms. Klim. |
[14] For reasons that are no fault of the Crown, there was no cross-examination on this affidavit, and so for present purposes I take it at face value. I agree with counsel for the Crown, who says that this statement contains no allegation that Mr. Urso or Ms. Klim agreed to Mr. Gray's alleged suggestion that collection be held in abeyance.
[15] Second, as to motive. It was argued by counsel for the Crown that Mr. Walker's motions are merely a tactic to attempt to delay collection of the tax debt and are an abuse of process. There is no doubt that Mr. Walker wished to delay the collection and that he hoped to achieve that by filing these motions. It is also true that the grounds for his motion are weak. However, I am not satisfied that Mr. Walker's motions were improperly motivated or an abuse or process.
[16] I indicated at the closing of the hearing that the motions would be dismissed and that written reasons would follow. Counsel for the Crown sought an order for costs on a lump sum basis. After hearing submissions by both parties, I awarded the Crown lump sum costs totalling $1,500 ($750 for each motion, inclusive of disbursements).
"Karen R. Sharlow"
Winnipeg, Manitoba Judge
September 28, 1999
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.: ITA-7012-99, GST-2815-99
STYLE OF CAUSE:
GST-2815-99
In the matter of the Excise Tax Act, R.S.C., 1985, c. E-15,
- and -
In the matter of an assessment or assessments by the Minister of National Revenue under the Excise Tax Act,
Against:
NIBRON RESTAURANTS LTD. (sometime carrying on business as NIBBLER'S NOSH RESTAURANT) 973 Corydon Avenue, Winnipeg, Manitoba, R3M 0X1
ITA-7012-99:
In the matter of the Income Tax Act,
- and -
In the matter of an assessment or assessments by the Minister of National Revenue under one or more of the Income Tax Act, Canada Pension Plan, Employment Insurance Act, The Income Tax Act (Manitoba)
Against:
NIBRON RESTAURANTS LTD. (sometime carrying on business as NIBBLER'S NOSH RESTAURANT) 973 Corydon Avenue, Winnipeg, Manitoba, R3M 0X1
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: September 27, 1999
DELIVERED BY: The Honourable Madame Justice Sharlow
DATED: September 28, 1999
APPEARANCES
Perry Derksen for the Applicant
Department of Justice
301 - 310 Broadway
Winnipeg, Manitoba
R3C 0C6
Richard Buchwald for the Respondent
SOLICITORS OF RECORD
Pitblado Buchwald Asper
2500 - 360 Main Street
Winnipeg, Manitoba
R3C 4H6 for the Respondent
Morris Rosenberg
Deputy Attorney General of Canada for the Applicant