Charbonneau v. Minister of National Revenue

Published in: (1995), 96 Dominion Tax Cases 6024

IN THE MATTER OF the Income Tax Act, and
IN THE MATTER OF certain assessments made by the Minister of National Revenue
under certain statutes against Jean-Maurice Charbonneau

Federal Court-Trial Division

October 6, 1995

(Court File Nos. ITA-2743-93, ITA-1035-94 and T-2502-79.)


Acting under the provisions of section 223(3) of the Act, the Crown registered a certificate in the Federal Court having the same effect as a judgment. Following the seizure by the sheriff of an immovable property belonging to them, the taxpayers opposed the seizure in an application made to the Federal Court- Trial Division.

Held: The taxpayers' application was dismissed. The taxpayers' allegation that the Income Tax Act is unconstitutional was simply untenable in light of the decisions of the Privy Council in Caron v. The King [1924] A.C. 999, and the Federal Court of Appeal in Kasvand v. The Queen. Nor could the taxpayers be heard to argue that a process server ('huissier') was not competent to act for the sheriff in the execution of the writ issued in this case. That argument was also untenable in light of the provisions of sections 55 and 56 of the Federal Court Act. Thirdly, the taxpayer had alleged that the ex parte procedure under which the Crown registers a certificate and obtains judgment under subsections 223(2), and (3) of the Act violates the audi alteram partem rule. That argument, however, found no favour with Addy, J. of the Federal Court-Trial Division in Lambert v. The Queen (75 DTC 5065). The reasoning was that the taxpayer has a full right to be heard on the merits if an objection to the underlying assessment is made within the statutory time frames provided in the Act. Section 223 of the Act, merely ensures the speedy and effective collection of the tax that has already been assessed. Finally, despite the taxpayers' allegations to the contrary, the Crown's seizure of the taxpayers' property was not invalidated by the provisions of article 572 of the Quebec Code of Civil Procedure. Under that article a creditor's obligation to sell a debtor's movable property first, exists only when the creditor has seized both movable and immovable property, which was not the situation with the taxpayers. For all of these reasons the taxpayers' opposition to the Crown's seizure was rejected.


M. Jutras for the Crown;
J. Charbonneau, the taxpayer in person.

Before: Pinard, J.


(Official English Translation)

Pinard, J.: It was agreed by the parties that the similar motions in files ITA-1035-94 and T-2502-79 before this Court would be heard at the same time as the instant motion and decided in accordance therewith.

At the hearing, the judgment debtor Jean-Maurice Charbonneau eloquently made two arguments. First, he argued that the Income Tax Act is unconstitutional because, contrary to section 92 of the British North America Act, 1867, it gives the federal government a direct taxation power that is reserved exclusively to the provinces by section 91. However, it was established long ago by the Privy Council in Caron v. The King, [1924] A.C. 999, that the federal government has a direct taxation power. The following comments on this point by Professor Frank R. Scott in an article entitled 'La taxation directe et l'A.A.N.B.' [ FOOTNOTE 1 : (1954-55), 5 La revue juridique Thémis (Montréal: Éditions Thémis Inc.), at 94 and 95.] should be noted:

"... In Canada, this power was allotted to the federal government under the 1867 Constitution.

It is not difficult to understand the basis for the federal government's right to impose income tax and other direct taxes as the provinces do when it is recalled that the provinces can impose their direct taxes only for provincial purposes. Once a direct tax is imposed for federal purposes, it falls exclusively under federal jurisdiction. In taxation matters, Ottawa has all the powers that are not exclusively reserved to the provinces, and only direct taxes for provincial purposes are so reserved. Therefore, Ottawa's direct taxes are valid so long as they relate to national purposes. In fact, the first federal income tax was imposed to meet the needs of the First World War, which is clearly a field outside provincial power. Not only does legal logic lead us to this conclusion, but there are very weighty legal and other authorities to the same effect. In 'Legislative Power in Canada' [1896 edition, at 361], Lefroy notes:

Thus there would appear to be concurrent power of legislation in respect to the imposition of direct taxation in this sense, and in this sense only, that power to legislate in this way is in part invested in one and in part in the other. As stated by the Privy Council in Bank of Toronto vs. Lamb: 'As regards direct taxation within the province to raise revenue for provincial purposes that subject falls wholly within the jurisdiction of the provincial legislature'; while all other power to impose direct taxation is exclusively in the Dominion parliament under No. 3 of 91 ...

He cites numerous authorities in support of this theory. Later, the Privy Council stated the following in Caron v. The King [Caron v. the King, supra]:

"Upon any view there is nothing in s. 92 to take away the power to impose any taxation for Dominion purposes which is prima facie given by head 3 of s. 91. It is not therefore ultra vires on the part of the Parliament of Canada to impose a Dominion tax for Dominion purposes ..."

In Forbes [Forbes v. A.G. of Manitoba, supra], Lord Macmillan continued as follows:

"Both income taxes (federal and provincial) may co-exist and be enforced without clashing. The Dominion reaps part of the field of the Manitoba citizen's income. The Province reaps another part of it."

This situation is precisely what was created by provincial income tax. This tax is valid, but the federal tax is no less valid..."

Very recently, the Federal Court of Appeal [ FOOTNOTE 2 : Donna E. Kasvand v. Her Majesty the Queen (September 28, 1995), No. A-176-95. ] disposed of the argument as follows:

"The only point taken by the applicant which was not taken in her previous unsuccessful tax litigation [See Kasvand v. The Queen, 94 DTC 6271. Leave to appeal to the Supreme Court of Canada refused.] is that the Income Tax Act is ultra vires the Parliament of Canada as being direct taxation. It suffices to read paragraph 91(3) of the Constitution Act [1867 (U.K.), 30 & 31 Victoria, c. 3] to see that the point is wholly without substance.

91. It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this Section, it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say,


3. The raising of Money by any Mode or System of Taxation."

Second, the judgment debtor argued that the bailiff was not authorized to act for the sheriff in enforcing the writ of execution against immovable property issued in the case at bar, since the sheriff's power cannot be delegated. This argument must also be rejected because of the provisions of sections 55 and 56 of the Federal Court Act.

In his motion the judgment debtor relied on two other grounds to which he did not refer at the hearing, but of which the Court intends to dispose. First, he alleged that there was a breach of the audi alteram partem rule and that the certificate issued in the case at bar was therefore invalid. The Court rejects this argument and adopts the following comments by Addy, J. with respect to such a certificate in Oneil Lambert v. Her Majesty the Queen et al., 75 DTC 5065, at 5068:

"... In the case of a certificate issued under section 223, however, there is a full right to be heard on the merits if an objection to the assessment is made within the time limited for making such an objection, and section 165 provides for the method of objecting, imposes an obligation on the Minister to reconsider the assessment and also confers the right on a taxpayer to appeal directly to the Tax Review Board or to the Federal Court."


It has been held that there is nothing unreasonable, oppressive, unusual or extraordinary in the summary procedure where Parliament has provided enacting legislation providing for the registration of a certificate or in the effects which flow therefrom, where an execution has issued, notwithstanding an appeal against the assessment. See John Jacob Morch v. Minister of National Revenue,"

And at 5069:

"... Where the fundamental right of the taxpayer to have his liability for taxes ultimately determined on the merits is preserved, such as in the Income Tax Act, the powers given the Minister of National Revenue by section 223 to ensure speedy and effective tax collection do not infringe the principle of audi alteram partem or the Canadian Bill of Rights. The section must, of course, be read with the other provisions of the Act to which I have referred."

In addition, the judgment debtor alleged that the seizure of immovable property carried out in the case at bar was invalid because the officiating officer cannot sell the seized immovable until after the movable property has been discussed. However, it appears from the record that apart from the immovable concerned no movable property was seized. Since, under article 572 of the Code of Civil Procedure, the obligation to sell movable property first exists only where the creditor carries out a seizure of both movable and immovable property, the immovable in the case at bar can be sold without any prior discussion of movable property that was not seized and the existence of which is not in evidence. In my opinion, this is consistent with the views expressed by Denis Ferland and Benoît Emery in Précis de procédure civile du Québec (volume 2), at 137:

"Creditors may exercise at the same time the different means of execution allowed them by law. If they have caused the movable and immovable property of the debtor to be seized under the same writ, they cannot proceed to the sale of the immovables until after the movable property has been discussed (art. 572).

Thus, the judicial sale of an immovable belonging to the debtor, which is seized under the same writ as the debtor's movable property, will be annulled if the immovable was sold without the movables being sold [Commissaires d'école pour la municipalité scolaire des Laurentides v. Heurtey, J.E. 86-913 (Sup. Ct.)].

A writ of seizure of immovable property may, however, be issued and executed without the judgment creditor first seizing and selling the debtor's movable property, since the obligation to sell the latter first exists only where the creditor has seized both movable and immovable property under the same writ [Fort Garry Trust Co. v. Roberts Sprinkler Ltd., C.S. 905; Imperial Oil Limited v. Bernier ,R.P. 345 (Sup. Ct.); Hydro-Québec v. Mackay , R.P. 303 (Prov. Ct.)]."

For these reasons, the motion must be dismissed with costs.