783783 Alberta Ltd. v. Canada (Attorney General) et al., (2010) 482 A.R. 136 (CA)

• Judge: Slatter, Rowbotham and Bielby, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: May 26, 2010
• Citations: (2010), 482 A.R. 136 (CA);2010 ABCA 226

783783 Alta. v. Can. (A.G.) (2010), 482 A.R. 136 (CA);

      490 W.A.C. 136

MLB headnote and full text

Temp. Cite: [2010] A.R. TBEd. JL.061

783783 Alberta Ltd. carrying on business as Vue Weekly (appellant/plaintiff/cross-respondent) v. The Attorney General of Canada, SEE Magazine, Great West Newspaper Group Ltd., Gazette Press Ltd., Jamison Newspapers Inc., Hollinger Canadian Publishing Holdings Co., Hollinger International Inc. also known as Sun Times Media Group, Inc. (respondents/defendants/cross-appellants) and Hollinger Inc., Conrad M. Black and the Ravelston Corporation Limited (not parties to the appeal/defendants)

(0903-0164-AC; 2010 ABCA 226)

Indexed As: 783783 Alberta Ltd. v. Canada (Attorney General) et al.

Alberta Court of Appeal

Slatter, Rowbotham and Bielby, JJ.A.

July 14, 2010.

Summary:

Vue Weekly, a free weekly news magazine, brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE Magazine, Vue's main competitor, under s. 19 of the Income Tax Act, when SEE was not a Canadian company as required by s. 19, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence. The Crown applied to strike the statement of claim as against it. The defendants other than the Crown (the SEE defendants) supported the position.

A Master of the Alberta Court of Queen's Bench, in a decision reported at (2007), 430 A.R. 361; 2007 ABQB 348, allowed the application. Vue appealed.

The Alberta Court of Queen's Bench, in a decision reported at (2009), 466 A.R. 1, allowed the appeal in part. The SEE defendants lacked standing on the appeal. The duty of care alleged by Vue was negated for policy reasons. However, Vue could seek a remedy in tort in the Court of Queen's Bench or the Federal Court if it was established that SEE was a non-Canadian newspaper and that the Canada Revenue Agency auditors had failed to correctly tax the SEE advertisers. To found a tort action, Vue had a right to seek a declaration, under s. 173(1) of the Income Tax Act, from the Tax Court of Canada (TCC) that the CRA auditors had failed to correctly tax the SEE advertisers. The Master erred when he struck the claim for failure to disclose a cause of action. The appeal was allowed to the extent that, if Vue was unable to have the TCC determine SEE's status, then Vue could amend its statement of claim to seek that remedy from the Court of Queen's Bench. It was plain and obvious that Vue had to obtain the necessary declaration before a tort action began to run. Therefore, Vue's claim as to damages arising from the past actions of the CRA auditors had to fail and those portions of the statement of claim were struck. Vue appealed. The Crown cross-appealed. The SEE defendants cross-appealed from the finding that they lacked standing.

The Alberta Court of Appeal dismissed Vue's appeal and allowed the cross-appeals. The action as against the Crown was struck for failure to disclose a cause of action.

Actions - Topic 1502

Cause of action - General principles - When cause of action arises - Tort - [See both Crown - Topic 1563 ].

Courts - Topic 4502

Tax Court of Canada - General - Jurisdiction - Vue Weekly was a free weekly news magazine - Its main competitor was SEE Magazine - Vue's and SEE's advertisers were able to deduct their advertising expenses under s. 19 of the Income Tax Act (ITA), which allowed such deductions for advertising in a Canadian newspaper - Vue brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE when it was not a Canadian company, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence - The Crown applied to strike the statement of claim as disclosing no cause of action against it - A Master allowed the application - Vue appealed - A chambers judge allowed the appeal in part, finding, on her own motion, that Vue's proper remedy was by way of judicial review in the Tax Court of Canada (TCC), beginning with a question under the reference mechanism in s. 173(1) of the ITA - On Vue's appeal, the Alberta Court of Appeal held that s. 173(1) did not apply here - Vue was not a "taxpayer" within the meaning of s. 173(1) as its tax liability was not engaged under s. 19 - Section 173(1) did not give Vue and the Minister the ability to put before the TCC the status of SEE or the tax liability of third party advertisers - Section 173(1) was not intended to extend the TCC's jurisdiction beyond its core function of determining the income tax liability of particular taxpayers - See paragraph 29.

Courts - Topic 4502

Tax Court of Canada - General - Jurisdiction - [See Courts - Topic 5695.2 ].

Courts - Topic 5695.2

Provincial courts - General - Jurisdiction or powers - Respecting income tax matters - Vue Weekly was a free weekly news magazine - Its main competitor was SEE Magazine - Vue's and SEE's advertisers were able to deduct their advertising expenses under s. 19 of the Income Tax Act (ITA), which allowed such deductions for advertising in a Canadian newspaper - Vue brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE when it was not a Canadian company, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence - The Crown applied to strike the statement of claim as disclosing no cause of action against it - A Master allowed the application - Vue appealed - A chambers judge allowed the appeal in part - At issue on Vue's appeal was whether the Court of Queen's Bench or the Tax Court of Canada (TCC) had jurisdiction over the question of the status of SEE as a Canadian newspaper - The Alberta Court of Appeal held that the Court of Queen's Bench had jurisdiction over the issues raised in the statement of claim - The Master and the chambers judge erred in concluding that the action should be dismissed or narrowed because of any jurisdictional limitations - The TCC's exclusive jurisdiction over tax liability and assessment did not mean that no other court could interpret the ITA - Provincial superior courts had general jurisdiction to interpret statutes, including federal statutes - The TCC had no jurisdiction to decide the tort liability of Canada or SEE - See paragraphs 20 to 30.

Courts - Topic 8345

Provincial courts - Alberta - Court of Queen's Bench - Jurisdiction - [See Courts - Topic 5695.2 ].

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Vue Weekly was a free weekly news magazine - Its main competitor was SEE Magazine - Vue's and SEE's advertisers were able to deduct their advertising expenses under s. 19 of the Income Tax Act (ITA), which allowed such deductions for advertising in a Canadian newspaper - Vue brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE when it was not a Canadian company, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence - The Crown applied to strike the statement of claim as disclosing no cause of action against it - A Master allowed the application - A chambers judge allowed Vue's appeal in part, reading Holland v. Saskatchewan et al. (2008 S.C.C.) as requiring a judicial decree as a condition precedent to a cause of action in tort - To found a tort action, Vue could seek a declaration, under s. 173(1) of the ITA from the Tax Court of Canada that the auditors had failed to correctly tax the SEE advertisers - Vue appealed and the Crown cross-appealed - The Alberta Court of Appeal dismissed Vue's appeal and allowed the Crown's cross-appeal - The chambers judge's analysis was an over-reading of Holland which never held that a judicial decree was a condition precedent to a tort action - This case called for the conventional application of the Cooper v. Registrar of Mortgage Brokers (B.C.) et al. (2001 S.C.C.) analysis under which it was unlikely that the necessary proximity existed here - The relationship between the tax assessors and any taxpayer was primarily to ensure that the taxpayer was fairly assessed - The tax assessors also had a general duty to the government and indirectly to the general public - But overall, the relationship was not one where the tax assessors were responsible for protecting taxpayers from losses arising from competitive disadvantages of the type pled here - The assessors' duty was directed elsewhere - The action as against the Crown was struck for failure to disclose a cause of action - See paragraphs 37 to 45.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Vue Weekly was a free weekly news magazine - Its main competitor was SEE Magazine - Vue's and SEE's advertisers were able to deduct their advertising expenses under s. 19 of the Income Tax Act (ITA), which allowed such deductions for advertising in a Canadian newspaper - Vue brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE when it was not a Canadian company, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence - The Crown applied to strike the statement of claim as disclosing no cause of action against it - A Master allowed the application - A chambers judge allowed Vue's appeal in part, reading Holland v. Saskatchewan et al. (2008 S.C.C.) as requiring a judicial decree as a condition precedent to a cause of action in tort - To found a tort action, Vue could seek a declaration, under s. 173(1) of the ITA from the Tax Court of Canada that the auditors had failed to correctly tax the SEE advertisers - Vue appealed and the Crown cross-appealed - The Alberta Court of Appeal dismissed Vue's appeal and allowed the Crown's cross-appeal - The chambers judge's analysis was an over-reading of Holland which never held that a judicial decree was a condition precedent to a tort action - This case called for the conventional application of the Cooper v. Registrar of Mortgage Brokers (B.C.) et al. (2001 S.C.C.) analysis under which it was unlikely that the necessary proximity existed here - Even if the necessary foreseeability and proximity could be established, policy considerations precluded any private law duty in tort - The Canadian income tax system was based on self-reporting by the taxpayer, followed by an assessment - The relationship between the taxpayer and the assessor was personal and private - Imposing a duty on the assessor to account to one taxpayer for the way another taxpayer was assessed unacceptably impeded on that relationship - Further, recognizing a duty of care in tort in such circumstances would expose the Crown to liability to an unidentifiable group for an indeterminate amount - The action as against the Crown was struck for failure to disclose a cause of action - See paragraphs 46 to 49.

Crown - Topic 1645

Torts by and against Crown - Actions against Crown - Defences, bars or exclusions - Policies or "policy" decisions - [See second Crown - Topic 1563 ].

Income Tax - Topic 8967

Administration - Communication of information - Prohibition - General - Vue Weekly was a free weekly news magazine - Its main competitor was SEE Magazine - Vue's and SEE's advertisers were able to deduct their advertising expenses under s. 19 of the Income Tax Act (ITA), which allowed such deductions for advertising in a Canadian newspaper - Vue brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE when it was not a Canadian company, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence - The Crown applied to strike the statement of claim as disclosing no cause of action against it - A Master allowed the application, relying in part on the privacy provisions in s. 241 of the ITA - The Master concluded that under s. 241, it would be impossible for Vue to prove its case - On Vue's appeal, the chambers judge concluded that s. 241 was not determinative - On further appeal, the Alberta Court of Appeal indicated that s. 241 only prevented the disclosure of taxpayer information that would reveal the taxpayer's identity - Here, the only evidence that Vue would need to prove its damages would be the gross total of advertising expenses relating to SEE that the Minister improperly (allegedly) allowed to be deducted - The Minister could compile that information without disclosing the identities of the individual taxpayers - Further, whether a pleading disclosed a cause of action was a distinct issue from whether the plaintiff would be successful in marshalling the evidence needed to prove that cause of action - Section 241 was not determinative - See paragraphs 31 to 36.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - [See Income Tax - Topic 8967 ].

Practice - Topic 8893

Appeals - Parties - Standing to appeal - Vue Weekly was a free weekly news magazine - Its main competitor was SEE Magazine - Vue's and SEE's advertisers were able to deduct their advertising expenses under s. 19 of the Income Tax Act (ITA), which allowed such deductions for advertising in a Canadian newspaper - Vue brought an action, alleging, inter alia, that the Minister of National Revenue had improperly allowed advertisers to deduct expenses from advertising in SEE when it was not a Canadian company, that Vue had suffered damages due to lost advertising revenue and that the Crown was liable for the Minister's negligence - A Master allowed the Crown's application to strike the statement of claim as disclosing no cause of action against it - The defendants other than the Crown (the SEE defendants) had supported the Crown's position - Vue appealed - The chambers judge denied standing on the appeal to the SEE defendants on the basis that striking out the claim against Canada would not affect them - Since they had not applied for or been granted leave to intervene, they had no standing - The chambers judge allowed the appeal in part - On Vue's appeal, the SEE defendants cross-appealed regarding standing - The Alberta Court of Appeal allowed the cross-appeal - A party to an action did not have to apply for intervenor status in order to make submissions - The SEE defendants had a right to be heard - It was an error of law to deny them standing - Even if there was a residual discretion to deny standing, it was unreasonable here to exercise that discretion - Where a party alleged that its rights would be affected by a particular motion, it was rarely open to the chambers judge to second guess the judgment of that party - See paragraphs 17 to 19.

Practice - Topic 8989

Appeals - When appeal available - Persons entitled to appeal - [See Practice - Topic 8893 ].

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - [See first Crown - Topic 1563 ].

Torts - Topic 78

Negligence - Duty of care - Effect of statutory or policy precautions or safeguards on the scope of the duty of care - [See second Crown - Topic 1563 ].

Torts - Topic 81

Negligence - Duty of care - Requirement that duty be owed to plaintiff - [See first Crown - Topic 1563 ].

Cases Noticed:

Holland v. Saskatchewan et al., [2008] 2 S.C.R. 551; 376 N.R. 316; 311 Sask.R. 197; 428 W.A.C. 197; 2008 SCC 42, consd. [para. 11].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 13].

Walton International Group Inc. v. Rocky View No. 44 (Municipal District) et al., [2007] A.R. Uned. 6; 32 M.P.L.R.(4th) 55; 2007 ABCA 21, refd to. [para. 13].

Mitten v. College of Alberta Psychologists et al. (2010), 487 A.R. 198; 2010 ABCA 159, refd to. [para. 13].

Heikkila v. Workers' Compensation Board Appeals Commission (Alta.) et al. (2007), 404 A.R. 33; 394 W.A.C. 33; 2007 ABCA 92, refd to. [para. 13].

Thomson v. Canada (Minister of Agriculture), [1992] 1 S.C.R. 385; 133 N.R. 345, refd to. [para. 14].

Votour v. Tucker et al., [2009] A.R. Uned. 884; 2009 ABQB 722, refd to. [para. 18].

Roitman v. Canada (2006), 353 N.R. 75; 2006 FCA 266, leave to appeal refused [2006] 2 S.C.R. xi; 362 N.R. 400 (S.C.C.), dist. [para. 22].

Longley v. Minister of National Revenue (1992), 14 B.C.A.C. 22; 26 W.A.C. 22; 66 B.C.L.R.(2d) 238 (C.A.), refd to. [para. 26].

Ontario (Attorney General) v. Canada (Attorney General), [1947] A.C. 127 (P.C.), refd to. [para. 26].

Foundation Co. of Canada Ltd. v. Canada and Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695; 30 N.R. 249, refd to. [para. 26].

Perehinec v. Northern Pipeline Agency, [1983] 2 S.C.R. 513; 50 N.R. 248, refd to. [para. 26].

Alberta Mortgage and Housing Corp. v. Edson Manor Properties Ltd. et al. (1992), 127 A.R. 138; 20 W.A.C. 138; 8 C.P.C.(3d) 257 (C.A.), refd to. [para. 32].

Jahnke v. Wylie (1993), 144 A.R. 188; 13 Alta. L.R.(3d) 31; 107 D.L.R.(4th) 211 (Q.B.), refd to. [para. 32].

Alberta et al. v. C.H.S. et al. (2005), 385 A.R. 119; 55 Alta. L.R.(4th) 168; 2005 ABQB 695, refd to. [para. 32].

Slattery (Bankrupt) v. Slattery, [1993] 3 S.C.R. 430; 158 N.R. 341; 139 N.B.R.(2d) 246; 357 A.P.R. 246, refd to. [para. 33].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, appld. [para. 37].

Odhavji Estate et al. v. Woodhouse et al., [2003] 3 S.C.R. 263; 312 N.R. 305; 180 O.A.C. 201; 2003 SCC 69, refd to. [para. 43].

Edwards et al. v. Law Society of Upper Canada et al., [2001] 3 S.C.R. 562; 277 N.R. 145; 153 O.A.C. 388; 2001 SCC 80, refd to. [para. 44].

B.D. et al. v. Children's Aid Society of Halton Region et al., [2007] 3 S.C.R. 83; 365 N.R. 302; 227 O.A.C. 161; 2007 SCC 38, refd to. [para. 39].

B.D. v. Syl Apps Secure Treatment Centre - see B.D. et al. v. Children's Aid Society of Halton Region et al.

Design Services Ltd. et al. v. Canada, [2008] 1 S.C.R. 737; 374 N.R. 77; 2008 SCC 22, refd to. [para. 48].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 173(1) [para. 29]; sect. 241 [para. 31].

Counsel:

J.J. Arvay, Q.C., for the appellant, Vue Weekly;

M.E. Burns, for the respondent, Attorney General of Canada;

D.T. Yoshida, for the respondents, SEE Magazine, Great West Newspaper Group Ltd., Gazette Press Ltd., and Jamison Newspapers Inc.;

No appearance for the respondents, Hollinger Canadian Publishing Holdings Co., and Hollinger International Inc. also known as Sun Times Media Group Inc.

This appeal and these cross-appeals were heard on May 26, 2010, by Slatter, Rowbotham and Bielby, JJ.A., of the Alberta Court of Appeal. On July 14, 2010, the court delivered the following memorandum of judgment.