Danso-Coffey v. Ontario, (2010) 265 O.A.C. 345 (CA)

• Judge: Weiler, Juriansz and Epstein, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 13, 2009
• Jurisdiction: Ontario
• Citations: (2010), 265 O.A.C. 345 (CA);2010 ONCA 171

Danso-Coffey v. Ont. (2010), 265 O.A.C. 345 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. AU.073

Lisa Danso-Coffey (applicant/respondent) v. Her Majesty the Queen in Right of Ontario (respondent/appellant)

(C50199; 2010 ONCA 171)

Indexed As: Danso-Coffey v. Ontario

Ontario Court of Appeal

Weiler, Juriansz and Epstein, JJ.A.

March 9, 2010.

Summary:

The appellant assessed the respondent $64,020 for unremitted retail sales tax on the basis that she was a director of Danso Enterprises Ltd. Danso Enterprises was a company owned and incorporated by the respondent's brother that had failed to remit the tax and which had made an assignment in bankruptcy. The assessment was made pursuant to s. 43 of the Retail Sales Tax Act (RSTA). The respondent was never a director of the corporation and had no involvement with the company. She did not contest liability within the framework of the RSTA. She sought a declaration under s. 97 of the Courts of Justice Act and rule 14.05(3) of the Rules of Civil Procedure that she was never a director of Danso Enterprises Ltd. and that she was not liable for the s. 43 director's liability assessment.

The Ontario Superior Court, in a decision reported at [2009] O.T.C. Uned. 306, allowed the application. The appellant appealed.

The Ontario Court of Appeal allowed the appeal.

Courts - Topic 202

Judges - General - Role of judge - The appellant assessed the respondent $64,020 for unremitted retail sales tax on the basis that she was a director of Danso Enterprises Ltd. - Danso Enterprises was a company owned and incorporated by the respondent's brother that had failed to remit the tax and which had made an assignment in bankruptcy - The assessment was made pursuant to s. 43 of the Retail Sales Tax Act (RSTA) - The respondent was never a director of the corporation and had no involvement with the company - She did not contest liability within the framework of the RSTA - She obtained a declaration under s. 97 of the Courts of Justice Act and rule 14.05(3) of the Rules of Civil Procedure that she was never a director of Danso Enterprises Ltd. and that she was not liable for the s. 43 director's liability assessment - The appellant appealed - The Ontario Court of Appeal allowed the appeal - Weiler, J.A., commented on the effect of the declaration that the respondent was not a director of the company and the recourse available to her - See paragraphs 40 to 52 - Juriansz, J.A. (Epstein, J.A., concurring), agreed that the appeal should be dismissed - However, Juriansz, J.A., stated that "I do not acquiesce in the discussion Weiler, J.A., undertakes after concluding the appeal must be allowed. I do not see it as my role to seek to assist one of the parties before it by, in effect, offering legal advice. The recourse that [the respondent] may yet have and the statutory provisions upon which she might apply are not issues pertinent to this appeal. I would also refrain from commenting on the equities of the case." - See paragraphs 55 to 61.

Sales and Service Taxes - Topic 157

Sales tax - Liability of persons and property - Particular persons - Directors - The appellant assessed the respondent $64,020 for unremitted retail sales tax on the basis that she was a director of Danso Enterprises Ltd. - Danso Enterprises was a company owned and incorporated by the respondent's brother that had failed to remit the tax and which had made an assignment in bankruptcy - The assessment was made pursuant to s. 43 of the Retail Sales Tax Act (RSTA) - The respondent did not contest liability within the framework of the RSTA - She obtained a declaration under s. 97 of the Courts of Justice Act and rule 14.05(3) of the Rules of Civil Procedure that she was never a director of Danso Enterprises Ltd. and that she was not liable for the s. 43 director's liability assessment - The appellant appealed - The Ontario Court of Appeal held that the application judge erred in holding that the assessment was unlawful - In making its assessment, the appellant said it was entitled to rely, and did rely, on the returns filed under the Corporations Information Act (CIA) and the presumption of accuracy it contained - The appellant knew that the CIA certificate was only based on the unconfirmed information in a CIA return, and had reliable information from the respondent's lawyer that a basic precondition to the imposition of liability under s. 43 had not been fulfilled at the time it chose to issue the Notice of Assessment - However, despite the information rebutting the presumption of accuracy, the appellant issued a Notice of Assessment - Although the appellant was not bound by the information provided by the respondent, the appellant's discretion to issue an assessment, like all administrative discretion, had to be exercised reasonably, not arbitrarily or capriciously - In this appeal, the respondent did not allege that the Minister abused its power or that her objection was not taken into account - Rather, it appeared that the appellant was under the impression that in law the respondent could not raise the defence that she had never been a director - Accordingly, it issued a Notice of Assessment - See paragraphs 16 to 18.

Sales and Service Taxes - Topic 157

Sales tax - Liability of persons and property - Particular persons - Directors - The appellant assessed the respondent $64,020 for unremitted retail sales tax on the basis that she was a director of Danso Enterprises Ltd. - Danso Enterprises was a company owned and incorporated by the respondent's brother that had failed to remit the tax and which had made an assignment in bankruptcy - The assessment was made pursuant to s. 43 of the Retail Sales Tax Act (RSTA) - The respondent did not contest liability within the framework of the RSTA - She obtained a declaration under s. 97 of the Courts of Justice Act and rule 14.05(3) of the Rules of Civil Procedure that she was never a director of Danso Enterprises Ltd. and that she was not liable for the s. 43 director's liability assessment - The application judge found that the statutory scheme in the RSTA did not contemplate the defence that the respondent did not have the status of director and she had no defences other than the due diligence defence in s. 43(3) - There was, in effect, a "functional gap" in the RSTA - The appellant appealed - The Ontario Court of Appeal allowed the appeal - The application judge erred in concluding that there was a "functional gap" in the RSTA - The respondent had a due diligence defence in the sense that she had a reasonable belief in a mistaken set of facts - She could have raised the defence that she was never a director under s. 43(3) as a defence to an assessment under the RSTA - See paragraphs 19 to 24.

Sales and Service Taxes - Topic 157

Sales tax - Liability of persons and property - Particular persons - Directors - The appellant assessed the respondent $64,020 for unremitted retail sales tax on the basis that she was a director of Danso Enterprises Ltd. - Danso Enterprises was a company owned and incorporated by the respondent's brother that had failed to remit the tax and which had made an assignment in bankruptcy - The assessment was made pursuant to s. 43 of the Retail Sales Tax Act (RSTA) - The respondent did not contest liability within the framework of the RSTA - She obtained a declaration under s. 97 of the Courts of Justice Act and rule 14.05(3) of the Rules of Civil Procedure that she was never a director of Danso Enterprises Ltd. and that she was not liable for the s. 43 director's liability assessment - The appellant appealed, asserting that the application judge erred in exercising his jurisdiction to hear the matter - The Ontario Court of Appeal dismissed the appeal - There was no jurisprudential reason for the court to exercise its inherent jurisdiction to grant a declaration - Simply because the respondent's lawyer missed the time limits within which to object to the appellant's assessment or to request a review of its decision, did not mean that the application judge should have exercised his inherent jurisdiction - Even absent words clear enough to oust the court's jurisdiction, the court inferred that the legislature intended disputes concerning the validity of an assessment of tax to be resolved within the RSTA - The application judge erred in declaring that the respondent was not liable for retail sales tax - See paragraphs 25 to 35.

Sales and Service Taxes - Topic 157

Sales tax - Liability of persons and property - Particular persons - Directors - The appellant assessed the respondent $64,020 for unremitted retail sales tax on the basis that she was a director of Danso Enterprises Ltd. - Danso Enterprises was a company owned and incorporated by the respondent's brother that had failed to remit the tax and which had made an assignment in bankruptcy - The assessment was made pursuant to s. 43 of the Retail Sales Tax Act (RSTA) - The respondent was never a director of the corporation and had no involvement with the company - She did not contest liability within the framework of the RSTA - She obtained a declaration under s. 97 of the Courts of Justice Act and rule 14.05(3) of the Rules of Civil Procedure that she was never a director of Danso Enterprises Ltd. and that she was not liable for the s. 43 director's liability assessment - The appellant appealed - The Ontario Court of Appeal upheld the application judge's declaration that the respondent was never a director of the company - On the basis of the unchallenged evidence concerning the respondent's lack of involvement with the corporation and in the light of the position taken by the appellant, the court saw no reason to interfere with the application judge's declaration that the respondent was never a director of the company - Because the respondent was never a director of the company, a precondition for the imposition of liability under s. 43(3) was not met - Nonetheless the original assessment remained valid because of s. 18(8) of the RSTA - As the original assessment under the RSTA was valid and could not be set aside, the court allowed the appellant's appeal - See paragraphs 36 to 39.

Sales and Service Taxes - Topic 208

Sales tax - Assessments - General - Validity of - [See first and fourth Sales and Service Taxes - Topic 157 ].

Sales and Service Taxes - Topic 312

Sales tax - Review of assessments - Statutory appeal or review - Jurisdiction - [See third Sales and Service Taxes - Topic 157 ].

Cases Noticed:

Hay v. Canada, 2004 TCC 51, refd to. [para. 22].

Ontario v. London Excavators & Trucking Ltd. (1998), 110 O.A.C. 94; 125 C.C.C.(3d) 83 (C.A.), refd to. [para. 23].

Stubart Investments Ltd. v. Minister of National Revenue (1984), 53 N.R. 241; 84 D.T.C. 6305 (S.C.C.), refd to. [para. 28].

Minister of National Revenue v. Canada Trustco Mortgage Co., [2005] 2 S.C.R. 601; 340 N.R. 1, refd to. [para. 28].

Toronto (City) v. Olympia Edward Recreation Club Ltd., [1954] O.R. 14 (C.A.), refd to. [para. 30].

Addison & Leyen Ltd. et al. v. Canada Customs and Revenue Agency, [2006] 4 F.C.R. 532; 346 N.R. 238 (F.C.A.), revd. [2007] 2 S.C.R. 793; 365 N.R. 62; 284 D.L.R.(4th) 385; 2007 SCC 33, refd to. [para. 30].

Scion Capital LLC et al. v. Gold Fields Ltd. et al., [2006] O.T.C. 114; 15 B.L.R.(4th) 331 (Sup. Ct.), refd to. [para. 31].

Di Battista et al. v. 874687 Ontario Inc., [2005] O.T.C. 1159; 80 O.R.(3d) 136 (S.C.), refd to. [para. 46].

Flatley v. Algy Corp. et al., [2000] O.T.C. Uned. A25; 100 A.C.W.S.(3d) 411 (Sup. Ct.), refd to. [para. 46].

Aim Funds Management Inc. v. Aim Trimark Corporate Class Inc. et al., [2009] O.T.C. Uned. Q72 (Sup. Ct.), refd to. [para. 47].

Statutes Noticed:

Retail Sales Tax Act, R.S.O. 1990, c. R-31, sect. 18(8) [para. 38]; sect. 43 [para. 2, footnote 1].

Counsel:

Anita Veiga, for the appellant;

Heather Williams, for the respondent.

This appeal was heard on July 13, 2009, by Weiler, Juriansz and Epstein, JJ.A., of the Ontario Court of Appeal. The judgment of the Court of Appeal was delivered on March 9, 2010, and included the following opinions:

Weiler, J.A. - see paragraphs 1 to 54;

Juriansz and Epstein, JJ.A., concurring in part - see paragraphs 55 to 61.