Guindon v. Minister of National Revenue, (2015) 473 N.R. 120 (SCC)

• Judge: Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 05, 2014
• Jurisdiction: Canada (Federal)
• Citations: (2015), 473 N.R. 120 (SCC);2015 SCC 41;[2015] SCJ No 41 (QL);387 DLR (4th) 228;[2015] ACS no 41;[2015] 3 SCR 3

Guindon v. MNR (2015), 473 N.R. 120 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2015] N.R. TBEd. JL.016

Julie Guindon (appellant) v. Her Majesty the Queen (respondent) and Attorney General of Ontario, Attorney General of Quebec, Chartered Professional Accountants Canada and Canadian Constitution Foundation (interveners)

(35519; 2015 SCC 41; 2015 CSC 41)

Indexed As: Guindon v. Minister of National Revenue

Supreme Court of Canada

Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon, JJ.

July 31, 2015.

Summary:

A penalty was assessed against Guindon under s. 163.2(4) of the Income Tax Act. She appealed.

The Tax Court of Canada (TCC), in a decision with neutral citation 2012 TCC 287, allowed the appeal, setting aside the assessment. The Minister of National Revenue appealed.

The Federal Court of Appeal, in a decision reported at (2013), 446 N.R. 154, allowed the appeal. The judgment of the TCC was set aside and Guindon's appeal from the assessment was dismissed. Guindon obtained leave to appeal (see (2014), 473 N.R. 388).

The Supreme Court of Canada dismissed the appeal.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - Guindon issued 134 tax receipts to participants in a charitable donation scheme - Finding that the scheme was a "sham", the Minister of National Revenue assessed penalties totalling $564,747 against Guindon under s. 163.2(4) of the Income Tax Act - Guindon asserted that the penalty imposed under s. 163.2(4) was criminal and that she was, therefore, entitled to the procedural safeguards in s. 11 of the Charter - The Supreme Court of Canada set out the test for determining whether s. 11 was engaged - A person was entitled to the procedural protections of s. 11 where the proceeding was, by its very nature, criminal or where a "true penal consequence" flowed from the sanction - A criminal proceeding was aimed at promoting public order and welfare within a public sphere of activity - Conversely, administrative proceedings were primarily intended to maintain compliance or regulate conduct within a limited sphere of activity - The focus of the inquiry was on the nature of the proceedings rather than on the act that was the subject of the proceedings - A true penal consequence was imprisonment or a fine that was imposed for the purpose of redressing the wrong done to society at large rather than to the maintenance of internal discipline within a limited sphere of activity - The court also discussed criticisms of this test - See paragraphs 41 to 50.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - Guindon issued 134 tax receipts to participants in a charitable donation scheme - Finding that the scheme was a "sham", the Minister of National Revenue assessed penalties totalling $564,747 against Guindon under s. 163.2(4) of the Income Tax Act (ITA) - Guindon asserted that the penalty imposed under s. 163.2(4) was criminal and that she was, therefore, entitled to the procedural safeguards in s. 11 of the Charter - The Supreme Court of Canada disagreed - Section 11 did not apply here - The s. 163.2 process was not "criminal in nature" - The purpose of the s. 163.2 proceeding was to promote honesty and deter gross negligence or worse on the part of third party tax preparers - These were qualities that were essential to the self-reporting system of income taxation assessment - The process leading to imposition of a penalty involved a penalty audit and a review by the Third Party Penalty Review Committee - Where an assessment was upheld and payment was not made, the Minister could only invoke civil collection procedures - While the individuals targeted by s. 163.2 were not the taxpayers, themselves, this did not detract from the provision's administrative nature - Provisions that encouraged compliance by non-taxpayers were integral to the ITA's regulatory regime - Nor did the use of the term "culpable conduct" in s. 163.2(4) indicate a mens rea requirement - The requirement of a mental element did not render the provision criminal - See paragraphs 51 to 73.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - Guindon issued 134 tax receipts to participants in a charitable donation scheme - Finding that the scheme was a "sham", the Minister of National Revenue assessed penalties totalling $564,747 against Guindon under s. 163.2(4) of the Income Tax Act - Guindon asserted that the penalty imposed under s. 163.2(4) was criminal and that she was, therefore, entitled to the procedural safeguards in s. 11 of the Charter - The Supreme Court of Canada, in determining that s. 11 did not apply here, discussed the principles relevant to the determination of whether the penalty imposed was a "true penal consequence" - A monetary penalty could be a true penal consequence when it was, either in purpose or effect, punitive - Considerations included the magnitude of the fine, to whom it was paid, whether its magnitude was determined by regulatory considerations rather than principles of criminal sentencing and whether stigma was associated with the penalty - High administrative monetary penalties had been required to encourage compliance with administrative regimes - The question was not the penalty's amount, but rather whether it served regulatory or penal purposes - See paragraphs 74 to 81.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - Guindon issued 134 tax receipts to participants in a charitable donation scheme - Finding that the scheme was a "sham", the Minister of National Revenue assessed penalties totalling $564,747 against Guindon under s. 163.2(4) of the Income Tax Act - Guindon asserted that the penalty imposed under s. 163.2(4) was criminal and that she was, therefore, entitled to the procedural safeguards in s. 11 of the Charter - The Supreme Court of Canada disagreed - Section 11 did not apply here - The penalty's purpose was to discourage individuals from making false statements on behalf of others or from counselling others to make false statements, i.e., to promote compliance - That the penalty was intended to have a deterrent effect did not take it out of the realm of administrative penalties - The amount assessed here was very high for an individual - However, it did not constitute a "true penal consequence" - The magnitude reflected the objective of deterring the type of conduct in which Guindon had engaged - See paragraphs 82 to 88.

Civil Rights - Topic 8585

Canadian Charter of Rights and Freedoms - Practice - Time for deciding Charter issues - [See both Civil Rights - Topic 8588 ].

Civil Rights - Topic 8588

Canadian Charter of Rights and Freedoms - Practice - Notice to Attorney General - Guindon issued 134 tax receipts to participants in a charitable donation scheme - Finding that the scheme was a "sham", the Minister of National Revenue assessed penalties totalling $564,747 against Guindon under s. 163.2(4) of the Income Tax Act (ITA) - Guindon's argument that the penalty imposed under s. 163.2(4) was criminal and that she was, therefore, entitled to the procedural safeguards in s. 11 of the Charter was rejected - On appeal, a question was whether s. 163.2 of the ITA infringed s. 11 of the Charter - At issue was the effect of Guindon's failure to provide the required notice of a constitutional question in the courts below - The Supreme Court of Canada discussed the approach to determining whether to hear a constitutional issue that had not been properly raised in the courts below - This was a matter for the court's discretion, taking into account all of the circumstances, including the state of the record, fairness to all parties, the importance of having the issue resolved, the issue's suitability for decision and the broader interests of the administration of justice - The test for whether new issues should be considered was a stringent one - The discretion to hear new issues was exercised only exceptionally and never unless the challenger had shown that doing so caused no prejudice to the parties - See paragraphs 15 to 33 - Abella and Wagner, JJ., dissenting on this issue, indicated that the failure to provide the required notice in the courts below was fatal to the appeal - In the absence of exceptional circumstances, the court should not entertain the issue - See paragraphs 92 to 142.

Civil Rights - Topic 8588

Canadian Charter of Rights and Freedoms - Practice - Notice to Attorney General - Guindon issued 134 tax receipts to participants in a charitable donation scheme - Finding that the scheme was a "sham", the Minister of National Revenue assessed penalties totalling $564,747 against Guindon under s. 163.2(4) of the Income Tax Act (ITA) - Guindon's argument that the penalty imposed under s. 163.2(4) was criminal and that she was, therefore, entitled to the procedural safeguards in s. 11 of the Charter was rejected - On appeal, a question was whether s. 163.2 of the ITA infringed s. 11 of the Charter - At issue was the effect of Guindon's failure to provide the required notice of a constitutional question in the courts below - The Supreme Court of Canada, Abella and Wagner, JJ., dissenting on this issue, held that this was "a case in which our discretion to hear and decide a constitutional issue ought to be exercised in light of an analysis and weighing of a number of considerations" - The issue was important to the administration of the ITA - Deciding the issue was in the public's interest - Nothing indicated that any attorney general had suffered any prejudice by having the issue decided - Declining to hear the issue would result in an "enormous waste of judicial resources" - See paragraphs 34 to 40.

Constitutional Law - Topic 9954

Practice - Notice to Crown and interested parties of constitutional question (incl. attack on validity or applicability of statute) - [See both Civil Rights - Topic 8588 ].

Courts - Topic 2103

Jurisdiction - Appellate jurisdiction - Issues - [See both Civil Rights - Topic 8588 ].

Courts - Topic 3038

Supreme Court of Canada - Jurisdiction - Constitutional issues - [See both Civil Rights - Topic 8588 ].

Income Tax - Topic 7826

Returns, assessments, payment and appeals - Penalties - False statements or omissions - [See all Civil Rights - Topic 8305.1 ].

Cases Noticed:

Eaton v. Board of Education of Brant County, [1997] 1 S.C.R. 241; 207 N.R. 171; 97 O.A.C. 161, consd. [para. 16]; appld. [para. 93].

Morine v. Parker (L & J) Equipment Inc. (2001), 193 N.S.R.(2d) 51; 602 A.P.R. 51; 2001 NSCA 53, refd to. [paras. 19, 131].

Mohr v. North American Life, [1941] 1 D.L.R. 427 (Sask. C.A.), refd to. [para. 19].

Citation Industries Ltd. v. United Brotherhood of Carpenters and Joiners of America, Local 1928 et al. (1988), 53 D.L.R.(4th) 360 (B.C.C.A.), refd to. [para. 19].

R. v. Brown (A.R.R.), [1993] 2 S.C.R. 918; 155 N.R. 225; 141 A.R. 163; 46 W.A.C. 163, refd to. [para. 21].

Corporation professionnelle des médecins du Québec v. Thibault, [1988] 1 S.C.R. 1033; 84 N.R. 247; 14 Q.A.C. 173, refd to. [para. 21].

Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. and O'Connor (No. 2), [2002] 1 S.C.R. 678; 283 N.R. 233; 299 A.R. 201; 266 W.A.C. 201; 2002 SCC 19, refd to. [para. 21].

Bank of Montreal v. Hall (1986), 46 Sask.R. 182 (Q.B.), refd to. [para. 25].

Horvat et al. v. Artell Developments Ltd. (1992), 57 O.A.C. 189; 93 D.L.R.(4th) 334 (C.A.), affd. [1993] 2 S.C.R. 443; 153 N.R. 238; 64 O.A.C. 161, refd to. [para. 26].

Artell Developments Ltd. v. 677950 Ontario Ltd. - see Horvat et al. v. Artell Developments Ltd.

Penetanguishene Mental Health Centre et al. v. Ontario (Attorney General) et al., [2004] 1 S.C.R. 498; 318 N.R. 73; 185 O.A.C. 201; 2004 SCC 20, refd to. [paras. 28, 132].

Pinet v. St. Thomas Psychiatric Hospital et al., [2002] O.A.C. Uned. 44; 158 C.C.C.(3d) 325; 2002 CanLII 16257 (C.A.), revd. [2004] 1 S.C.R. 528; 317 N.R. 365; 185 O.A.C. 8; 2004 SCC 21, refd to. [paras. 28, 132].

Kirkbi AG et al. v. Ritvik Holdings Inc. et al., [2005] 3 S.C.R. 302; 341 N.R. 234; 2005 SCC 65, refd to. [paras. 29, 132].

Ryan Estate et al. v. Universal Marine Ltd. et al., [2013] 3 S.C.R. 53; 447 N.R. 1; 339 Nfld. & P.E.I.R. 312; 1054 A.P.R. 312; 2013 SCC 44, refd to. [paras. 30, 132].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1, refd to. [para. 32].

R. v. Kapp (J.M.) et al., [2008] 2 S.C.R. 483; 376 N.R. 1; 256 B.C.A.C. 75; 431 W.A.C. 75; 2008 SCC 41, refd to. [para. 33].

Hryniak v. Mauldin, [2014] 1 S.C.R. 87; 453 N.R. 51; 314 O.A.C. 1; 2014 SCC 7, refd to. [para. 36].

R. v. Wigglesworth, [1987] 2 S.C.R. 541; 81 N.R. 161; 61 Sask.R. 105; 24 O.A.C. 321, appld. [para. 44]; refd to. [para. 104].

Martineau v. Ministre du Revenu national, [2004] 3 S.C.R. 737; 328 N.R. 48; 2004 SCC 81, appld. [para. 44].

R. v. Shubley, [1990] 1 S.C.R. 3; 104 N.R. 81; 37 O.A.C. 63, refd to. [para. 45].

R. v. McKinlay Transport Ltd. and C.T. Transport Inc., [1990] 1 S.C.R. 627; 106 N.R. 385; 39 O.A.C. 385, refd to. [para. 54].

Venne v. Minister of National Revenue, [1984] C.T.C. 223 (F.C.T.D.), refd to. [para. 60].

Sirois (L.C.) v. Canada, 1995 CarswellNat 555 (T.C.C.), refd to. [para. 60].

Keller v. Canada, 1995 CarswellNat 569 (T.C.C.), refd to. [para. 60].

Sidhu v. Minister of National Revenue, [2004] 2 C.T.C. 3167; 2004 TCC 174, refd to. [para. 60].

Canada (Attorney General) v. United States Steel Corp. et al. (2011), 419 N.R. 203; 333 D.L.R.(4th) 1; 2011 FCA 176, refd to. [para. 76].

Rowan et al. v. Ontario Securities Commission (2012), 290 O.A.C. 159; 110 O.R.(3d) 492; 2012 ONCA 208, refd to. [para. 77].

Lavallee v. Alberta Securities Commission (2010), 474 A.R. 295; 479 W.A.C. 295; 2010 ABCA 48, refd to. [para. 80].

Commissioner of Competition v. Chatr Wireless Inc. et al., [2013] O.T.C. Uned. 5315; 288 C.R.R.(2d) 297; 2013 ONSC 5315, refd to. [para. 80].

Corbière et al. v. Canada (Minister of Indian and Northern Affairs) et al., [1999] 2 S.C.R. 203; 239 N.R. 1, refd to. [para. 114].

Bedford et al. v. Canada (Attorney General), [2013] 3 S.C.R. 1101; 452 N.R. 1; 312 O.A.C. 53; 2013 SCC 72, refd to. [para. 115].

MacKay et al. v. Manitoba, [1989] 2 S.C.R. 357; 99 N.R. 116; 61 Man.R.(2d) 270, refd to. [para. 116].

Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; 28 N.R. 107, refd to. [para. 116].

Bekker v. Minister of National Revenue (2004), 323 N.R. 195 (F.C.A.), refd to. [para. 118].

British Columbia Teachers' Federation et al. v. British Columbia (Attorney General) et al., [2009] B.C.T.C. Uned. 436; 94 B.C.L.R.(4th) 267 (S.C.), refd to. [para. 118].

Paluska v. Cava et al. (2002), 158 O.A.C. 319; 59 O.R.(3d) 469 (C.A.), refd to. [para. 118].

Maurice v. Crédit Trans Canada Ltée, [1996] R.J.Q. 894 (C.A.), refd to. [para. 118].

R. v. Nome (T.M.) (2010), 362 Sask.R. 241; 500 W.A.C. 241 (C.A.), refd to. [para. 118].

D.N. v. New Brunswick (Minister of Health and Community Services) (1992), 127 N.B.R.(2d) 383; 319 A.P.R. 383 (C.A.), refd to. [para. 118].

Gitxsan Treaty Society v. Hospital Employees' Union et al., [2000] 1 F.C. 135; 249 N.R. 37 (F.C.A.), refd to. [para. 121].

Mercier v. Correctional Service of Canada, [2012] 1 F.C.R. 72; 404 N.R. 275 (F.C.A.), refd to. [para. 121].

R. v. Lord (D.W.) (2011), 307 B.C.A.C. 285; 519 W.A.C. 285 (C.A.), refd to. [para. 121].

Ardoch Algonquin First Nation et al. v. Canada (Attorney General), [2004] 2 F.C.R. 108; 315 N.R. 76 (F.C.A.), refd to. [para. 121].

Cusson v. Quan et al., [2009] 3 S.C.R. 712; 397 N.R. 94; 258 O.A.C. 378; 2009 SCC 62, refd to. [para. 122].

Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; 26 N.R. 341; 25 N.B.R.(2d) 237; 51 A.P.R. 237, refd to. [para. 126].

Reference Re Remuneration of Judges of the Provincial Court (P.E.I.), [1997] 3 S.C.R. 3; 217 N.R. 1; 206 A.R. 1; 156 W.A.C. 1; 121 Man.R.(2d) 1; 158 W.A.C. 1; 156 Nfld. & P.E.I.R. 1; 483 A.P.R. 1; 150 D.L.R.(4th) 577, refd to. [para. 129].

Statutes Noticed:

Canadian Charter of Rights and Freedoms, 1982, sect. 11 [para. 43].

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 163.2(4) [para. 55].

Authors and Works Noticed:

Aylward, S. and Ritacca, L., In Defence of Administrative Law: Procedural Fairness for Monetary Penalties (2015), 28 C.J.A.L.P. 35, generally [para. 48].

Brown, H.S., Supreme Court of Canada Practice 2015 (15th Ed. 2014), pp. 374, 375 [para. 33].

McLeod, D., Facing the Consequences: Should the Charter Apply to Administrative Proceedings Involving Monetary Penalties (2012), 30 N.J.C.L. 59, generally [para. 48].

Osborne, P.H., The Law of Torts (4th Ed. 2011), p. 251 [para. 71].

Roach, K., Criminal Law (5th Ed. 2012), pp. 180 to 184, 191, 192 [para. 58].

Counsel:

Adam Aptowitzer, Alexandra Tzannidakis, Arthur B. C. Drache, Q.C., and Kenneth Jull, for the appellant;

Gordon Bourgard and Eric Noble, for the respondent;

S. Zachary Green, for the intervener, the Attorney General of Ontario;

Written submissions only by Abdou Thiaw, for the intervener, the Attorney General of Quebec;

Dominic C. Belley and Vincent Dionne, for the intervener, Chartered Professional Accountants Canada;

Written submissions only by Darryl Cruz, Brandon Kain and Kate Findlay, for the intervener, the Canadian Constitution Foundation.

Solicitors of Record:

Drache Aptowitzer, Ottawa, Ontario; Baker & McKenzie, Toronto, Ontario, for the appellant;

Attorney General of Canada, Ottawa, Ontario, for the respondent;

Attorney General of Ontario, Toronto, Ontario, for the intervener, the Attorney General of Ontario;

Attorney General of Quebec, Quebec, Quebec, for the intervener, the Attorney General of Quebec;

Norton Rose Fulbright Canada, Montreal, Quebec, for the intervener, Chartered Professional Accountants Canada;

McCarthy Tétrault, Toronto, Ontario, for the intervener, the Canadian Constitution Foundation.

This appeal was heard on December 5, 2014, by Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon, JJ., of the Supreme Court of Canada. On July 31, 2015, the court's judgment was delivered in both official languages, including the following opinions:

Rothstein and Cromwell, JJ. (Moldaver and Gascon, JJ., concurring) - see paragraphs 1 to 91;

Abella and Wagner, JJ. (Karakatsanis, J., concurring) - see paragraphs 92 to 142.