Guindon v. Minister of National Revenue

• Jurisdiction: Federal Jurisdiction (Canada)
• Judge: Noël, Gauthier and Stratas, JJ.A.
• Citation: (2013), 446 N.R. 154 (FCA),2013 FCA 153
• Court: Court of Appeal (Canada)
• Date: 05 June 2013

Guindon v. MNR (2013), 446 N.R. 154 (FCA)

MLB headnote and full text

[French language version follows English language version]

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

Temp. Cite: [2013] N.R. TBEd. JN.011

Her Majesty the Queen (appellant) v. Julie Guindon (respondent)

(A-459-12; 2013 FCA 153; 2013 CAF 153)

Indexed As: Guindon v. Minister of National Revenue

Federal Court of Appeal

Noël, Gauthier and Stratas, JJ.A.

June 12, 2013.

Summary:

A penalty was assessed against Guindon under s. 163.2 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 allowed the appeal. The judgment of the TCC was set aside and Guindon's appeal from the assessment was dismissed.

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 of the Income Tax Act - On Guindon's appeal, the Tax Court of Canada (TCC) found that s. 163.2 created an offence within the meaning of s. 11 of the Charter, entitling Guindon to the rights guaranteed by s. 11 - As Guindon was not given those rights, the TCC set aside the assessment - The Federal Court of Appeal allowed the Minister's appeal on the basis that Guindon's failure to serve notice of a constitutional question took away the TCC's jurisdiction to consider whether s. 163.2 created a criminal offence - The court rejected Guindon's argument that, even if her failure to serve a notice of constitutional question prevented the TCC from finding that all of the s. 11 rights applied, some s. 11 rights that did not conflict with the wording of s. 163.2 could still apply - Either a person was "charged with an offence" and all of the s. 11 rights applied, or a person was not charged with an offence and none applied - Section 11 was "not a buffet table where one can pick and choose the rights on offer" - See paragraphs 33 to 35.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - At issue was whether s. 163.2 of the Income Tax Act, which imposed penalties regarding misrepresentation of tax matters by a third party, created an "offence" within the meaning of s. 11 of the Charter, entitling persons to the rights guaranteed by s. 11 - The Federal Court of Appeal found that the assessment of a penalty under s. 163.2 was not the equivalent of being charged with a criminal offence - The court stated that "section 163.2 is mainly directed to ensuring the accuracy of information, honesty and integrity within the administrative system of self-assessment and reporting under the Act. The imposition of a section 163.2 penalty by way of assessment and the subsequent procedures for challenging the assessment are proceedings of an administrative nature aimed at redressing conduct antithetical to the proper functioning of the administrative system of self-assessment and reporting under the Act. Put another way, proceedings under section 163.2 aim at maintaining discipline, compliance or order within a discrete regulatory and administrative field of endeavour. They do not aim at redressing a public wrong done to society at large." - See paragraphs 36 to 42.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - At issue was whether s. 163.2 of the Income Tax Act, which imposed penalties regarding misrepresentation of tax matters by a third party, created an "offence" within the meaning of s. 11 of the Charter, entitling persons to the rights guaranteed by s. 11 - The Federal Court of Appeal found that the assessment of a penalty under s. 163.2 was not the equivalent of being charged with a criminal offence - The court noted that the Act contained approximately 60 penalty provisions, including s. 163.2, in contrast to other provisions in the Act that created "offences" - The penalty provisions prescribed a non-discretionary fixed amount or formula for the penalty's calculation - Each of the offence provisions was punishable by a fine, imprisonment or both, none of which was fixed or calculated by a rigid formula - The judge's task was not mechanical, but discretionary - The offence provisions did more than merely maintaining discipline or compliance - The fact that some penalties under s. 163.2 could be quite large did not change their administrative nature - See paragraphs 43 to 47.

Civil Rights - Topic 8305.1

Canadian Charter of Rights and Freedoms - Application - Section 11 - At issue was whether s. 163.2 of the Income Tax Act, which imposed penalties regarding misrepresentation of tax matters by a third party, created an "offence" within the meaning of s. 11 of the Charter, entitling persons to the rights guaranteed by s. 11 - The Federal Court of Appeal found that the assessment of a penalty under s. 163.2 was not the equivalent of being charged with a criminal offence - The inclusion of a reference to "culpable conduct" in s. 163.2 did not import a notion of criminality - In the Act, "culpable conduct" had a defined meaning that set out the elements that had to be present before a penalty could be assessed - This definition did not bring within it the notion of "guilt" or conduct violating some criminal standard - See paragraphs 48 and 49.

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 of the Income Tax Act - On Guindon's appeal, the Tax Court of Canada (TCC) found that s. 163.2 created an offence within the meaning of s. 11 of the Charter, entitling Guindon to the rights guaranteed by s. 11 - As Guindon was not given those rights, the TCC set aside the assessment - The Federal Court of Appeal allowed the Minister's appeal - Guindon was seeking the invalidity, inoperability or inapplicability of sections of the Act - A notice of constitutional question had to be served - Guindon's failure to do so took away the TCC's jurisdiction to consider whether s. 163.2 created a criminal offence - It was not open to the TCC to find that s. 163.2 prescribed a criminal offence such that s. 11 of the Charter applied - See paragraphs 22 to 32.

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 of the Income Tax Act - On Guindon's appeal, the Tax Court of Canada (TCC) found that s. 163.2 created an offence within the meaning of s. 11 of the Charter, entitling Guindon to the rights guaranteed by s. 11 - As Guindon was not given those rights, the TCC set aside the assessment - The Federal Court of Appeal allowed the Minister's appeal on the basis that Guindon's failure to serve notice of a constitutional question took away the TCC's jurisdiction to consider whether s. 163.2 created a criminal offence - The court rejected Guindon's argument that, once s. 163.2 was regarded as an offence provision, s. 34(2) of the Interpretation Act required that Criminal Code procedures be followed rather than Income Tax Act procedures such that no procedures under the Income Tax Act would be found to be invalid, inoperative or inapplicable - Guindon's argument overlooked the language of s. 34(2) which imposed the Criminal Code procedures to any offence "except to the extent that [another] enactment otherwise provides" - The Income Tax Act otherwise provided - Therefore, Guindon was seeking the invalidity, inoperability or inapplicability of sections of the Income Tax Act - A notice of constitutional question had to be served - See paragraph 25 to 27.

Constitutional Law - Topic 9954

Practice - Notice to Crown and interested parties of attack on validity of statute - [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 ].

Income Tax - Topic 7826

Returns, assessments, payment and appeals - Penalties - False statements or omissions - At issue was whether s. 163.2 of the Income Tax Act, which imposed penalties regarding misrepresentation of tax matters by a third party, created an "offence" within the meaning of s. 11 of the Charter, entitling persons to the rights guaranteed by s. 11 - The Federal Court of Appeal found that the assessment of a penalty under s. 163.2 was not the equivalent of being charged with a criminal offence - The court noted that some commentators had expressed concerns about the unfairness of s. 163.2 and the potential for misuse of the section - While many of the concerns expressed were "overstated", there were also many tools available to address procedural or substantive unfairness and any misuse of the section, including an application for relief under s. 220(3.1) of the Act and s. 12 of the Charter - See paragraphs 50 to 61.

Cases Noticed:

R. v. Wigglesworth, [1987] 2 S.C.R. 541; 81 N.R. 161; 61 Sask.R. 105; 24 O.A.C. 321, refd to. [para. 17].

Martineau v. Ministre du Revenu national, [2004] 3 S.C.R. 737; 328 N.R. 48; 2004 SCC 81, refd to. [para. 17].

Paluska v. Cava et al. (2002), 158 O.A.C. 319; 59 O.R.(3d) 469 (C.A.), refd to. [para. 29].

Bekker v. Minister of National Revenue (2004), 323 N.R. 195; 2004 FCA 186, refd to. [para. 29].

Schmidt v. Canada et al., [1987] 1 S.C.R. 500; 76 N.R. 12; 20 O.A.C. 161, refd to. [para. 35].

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. 38].

Cartaway Resources Corp. et al., Re, [2004] 1 S.C.R. 672; 319 N.R. 1; 195 B.C.A.C. 161; 319 W.A.C. 161; 2004 SCC 26, refd to. [para. 46].

Canada (Attorney General) v. United States Steel Corp. et al. (2011), 419 N.R. 203; 2011 FCA 176, refd to. [para. 46].

Rowan et al. v. Ontario Securities Commission (2012), 290 O.A.C. 159; 2012 ONCA 208, refd to. [para. 46].

Lavallee v. Alberta Securities Commission (2010), 474 A.R. 295; 479 W.A.C. 295; 2010 ABCA 48, refd to. [para. 46].

Minister of National Revenue v. RBC Life Insurance Co. (2013), 443 N.R. 378; 2013 FCA 50, refd to. [para. 55].

Stemijon Investments Ltd. v. Canada (Attorney General) (2011), 425 N.R. 341; 2011 FCA 299, refd to. [para. 58].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 59].

Abraham et al. v. Canada (Attorney General) (2012), 440 N.R. 201; 2012 FCA 266, refd to. [para. 59].

Canadian Human Rights Commission v. Canada (Attorney General) et al. (2013), 444 N.R. 120; 2013 FCA 75, refd to. [para. 59].

Chiarelli v. Minister of Employment and Immigration, [1992] 1 S.C.R. 711; 135 N.R. 161, refd to. [para. 60].

Statutes Noticed:

Canadian Charter of Rights and Freedoms, 1982, sect. 11 [para. 15].

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 163.2 [para. 16]; sect. 163.2(4) [para. 12]; sect. 220(3.1) [para. 56].

Interpretation Act, R.S.C. 1985, c. I-21, sect. 34(2) [para. 25].

Authors and Works Noticed:

Innes, William I. and Burke, Brian J., Adviser Penalties: How Will the Courts Construe Section 163.2?, 2001 Conference Report, Report of Proceedings of the Fifty-Third Tax Conference (2002), generally [para. 51].

Mitchell, Warren J.A., Civil Penalties: A Wold in Sheep's Clothing?, 2000 Conference Report, Report of Proceedings of the Fifty-Second Tax Conference (2001), generally [para. 51].

Nichols, Brian, Civil Penalties for Third Parties, 1999 Ontario Tax Conference (2000), generally [para. 51].

Counsel:

André LeBlanc and Paul Klippenstein, for the appellant;

Adam Aptowitzer and Joel Secter, for the respondent.

Solicitors of Record:

William F. Pentney, Deputy Attorney General of Canada, Ottawa, Ontario, for the appellant;

Drache Aptowitzer, Ottawa, Ontario, for the respondent.

This appeal was heard at Ottawa, Ontario, on June 5, 2013, by Noël, Gauthier and Stratas, JJ.A., of the Federal Court of Appeal. On June 12, 2013, Stratas, J.A., delivered the following reasons for judgment for the court.