Holmes v. Minister of National Revenue et al., (1992) 12 B.C.A.C. 191 (CA)

• Judge: Carrothers, Lambert and Taylor, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: April 10, 1992
• Jurisdiction: British Columbia
• Citations: (1992), 12 B.C.A.C. 191 (CA)

Holmes v. MNR (1992), 12 B.C.A.C. 191 (CA);

    23 W.A.C. 191

MLB headnote and full text

Deputy Sheriff Peter Holmes (petitioner) v. Her Majesty the Queen in Right of Canada (respondent/respondent), The Royal Bank of Canada (respondent/appellant) and Director of Employment Standards (respondent)

(V01053)

Indexed As: Holmes v. Minister of National Revenue et al.

British Columbia Court of Appeal

Carrothers, Lambert and Taylor, JJ.A.

April 10, 1992.

Summary:

Revenue Canada issued certificates through the Federal Court of Canada against a taxpayer for unpaid taxes. (Income Tax Act, s. 223(2)). On June 24, 1985, the certificates and writs of fieri facias were delivered to the sheriff in Victoria, B.C. The taxpayer had no notice of the proceedings. On June 24 and 28 the sheriff seized the taxpayer's goods which were sold between July 26 and August 30. Meanwhile on July 8 the Royal Bank started proceedings against the taxpayer. On August 9, the bank obtained default judgment. On August 20 the bank served the judgment and a writ of seizure and sale on the sheriff. By this time the taxpayer's goods were sold and the sheriff was left with the proceeds. The sheriff commenced interpleader proceedings.

The British Columbia Supreme Court held that the Crown had priority. The bank appealed.

The British Columbia Court of Appeal dismissed the appeal.

Civil Rights - Topic 1644

Property - Search and seizure - Seizure defined - Section 223 of the Income Tax Act provided for certification of amounts payable under the Act - Section 223(2) provided that a certification could be enforced as if it were a judgment of the Federal Court - There were no notice provisions - The British Columbia Court of Appeal held that a "seizure" of taxpayer's property under s. 223(2) was a "seizure" under s. 8 of the Charter - However, a seizure under s. 223(2) is not unreasonable or contrary to s. 8 in circumstances where the tax assessed was respecting a corporation under Part VIII of the Income Tax Act - The court cautioned that its conclusion might well have been different if the seizure was against an individual under Part I of the Act - See paragraphs 30 to 79.

Civil Rights - Topic 1646

Property - Search and seizure - Unreasonable search and seizure defined - [See Civil Rights - Topic 1644 ].

Civil Rights - Topic 1656

Property - Search and seizure - Execution of judgment - [See Civil Rights - Topic 1644 ].

Civil Rights - Topic 8005

Canadian Bill of Rights - Principles of operation and interpretation - Right to enjoyment of property - Revenue Canada registered two certificates in Federal Court against a taxpayer pursuant to s. 223(2) of the Income Tax Act - The certificates and writs of fieri facias were delivered to a sheriff in British Columbia - The sheriff seized and sold the taxpayer's property and retained the proceeds - There were no notice provisions in s. 223(2) - A bank affected by the seizure and sale argued that s. 223(2) was contrary to s. 1(a) of the Canadian Bill of Rights (i.e., the right of an individual to the enjoyment of property) - The British Columbia Court of Appeal rejected the bank's argument, holding that s. 1(a) did not apply to corporations - See paragraphs 72 to 74.

Civil Rights - Topic 8305

Canadian Charter of Rights and Freedoms - Application of - Persons protected - Corporations - The British Columbia Court of Appeal held that a bank affected by a seizure of taxpayer's property under s. 223(2) of the Income Tax Act had status to challenge the constitutionality of s. 223(2), notwithstanding that the bank was a corporation - See paragraphs 51 to 54.

Civil Rights - Topic 8380.18

Canadian Charter of Rights and Freedoms - Denial of rights - Remedies - Reading down - The British Columbia Court of Appeal stated that "it is not the proper course to read down a legislative enactment, which is in some applications contrary to the Charter, by devising a legislative policy which would, if it were incorporated in the scheme, place limits on the scheme such that the scheme would become constitutional, and then to treat the legislative scheme as if it contained those limits and to apply it only within those limits" - See paragraph 56.

Civil Rights - Topic 8583

Canadian Charter of Rights and Freedoms - Practice - Who may raise Charter issues - [See Civil Rights - Topic 8305 ].

Constitutional Law - Topic 2501

Determination of validity of statutes - General - The British Columbia Court of Appeal discussed the approach to be taken in Charter analysis where a legislative scheme authorizes both constitutional applications and unconstitutional applications - See paragraphs 55 to 71.

Constitutional Law - Topic 2507

Determination of validity of statutes - Reading down - [See Civil Rights - Topic 8380.18 ].

Execution - Topic 431

General rules - Priorities - Sale of property - The British Columbia Court of Appeal held that the law of execution of a Federal Court judgment was a federal common law - The court held that under the common law goods seized under a writ of fieri facias remained the property of the person from whom they were seized, after the seizure, until they were sold - But once the goods were sold they became the purchaser's property and the sale proceeds became impressed with the proprietary interest of the judgment creditor who caused the seizure and sale - The proceeds of sale never became the property of the judgment debtor from whom the goods had been seized - See paragraphs 23, 24.

Execution - Topic 431

General rules - Priorities - Sale of property - Revenue Canada registered two certificates in Federal Court against a taxpayer - The certificates and writs of fieri facias were delivered to a sheriff in British Columbia - The sheriff seized and sold the taxpayer's property and retained the proceeds - In the meantime a bank obtained judgment against the taxpayer - The bank's judgment and a writ of seizure and sale were delivered to the sheriff after the taxpayer's goods were sold - The British Columbia Court of Appeal held that when the sheriff received the bank's writ there were no longer any goods or funds belonging to the taxpayer against which the sheriff could levy under the bank's writ - Therefore the bank had no claim to the sale proceeds - See paragraphs 1 to 26.

Execution - Topic 432

General rules - Priorities - Sale of property - Priority of Crown judgments - [See second Execution - Topic 431 ].

Execution - Topic 1004

Writ of execution - Federal Court writs - Revenue Canada issued two certificates against a taxpayer for back taxes through the Federal Court - The certificates and two writs of fieri facias were delivered to the sheriff in Victoria - The sheriff seized the taxpayer's goods under the writ - The British Columbia Court of Appeal held that s. 223(2) of the Income Tax Act provided that the certificates could be enforced in all respects as if they were a judgment of the Federal Court - Under Federal Court Rule 1900(1) a Federal Court judgment could be enforced by, inter alia, a writ of fieri facias - The court concluded therefore, that the registration of the two certificates in the Federal Court authorized the issuance of the two writs of fieri facias - See paragraphs 12 to 14.

Execution - Topic 1004

Writ of execution - Federal Court writs - Section 56(3) of the Federal Court Act set out how writs of execution issued by the Federal Court were to be executed - The British Columbia Court of Appeal held that s. 56(3) established a federal execution law for Federal Court executions - "That federal execution law is like provincial laws in ... four ... respects, but it is not provincial law incorporated as federal law, but rather a separate federal system of execution law." - Further, the law of execution of a Federal Court judgment is a federal common law - See paragraphs 15 to 19.

Execution - Topic 1004

Writ of execution - Federal Court writs - Revenue Canada registered two certificates in Federal Court against a taxpayer pursuant to s. 223(2) of the Income Tax Act - The certificates and writs of fieri facias were delivered to a sheriff in British Columbia - The sheriff seized and sold the taxpayer's property and retained the proceeds - There were no notice provisions in s. 223(2) - A bank affected by the seizure and sale argued that s. 223(2) was contrary to s. 8 of the Charter - The British Columbia Court of Appeal rejected the bank's argument where the case involved tax assessed on a corporation under Part VIII of the Income Tax Act - See paragraphs 30 to 79.

Execution - Topic 1004

Writ of execution - Federal Court writs - [See Civil Rights - Topic 8005 and both Execution - Topic 431 ].

Execution - Topic 1081

Writ of execution - Priorities and property affected - General - [See both Execution - Topic 431 ].

Execution - Topic 1088

Writ of execution - Priorities and property affected - Crown - [See second Execution - Topic 431 ].

Execution - Topic 1131

Writ of execution - Seizure - General - [See both Execution - Topic 431 and third Execution - Topic 1004 ].

Execution - Topic 1276

Writ of execution - Sale by sheriff - General - [See both Execution - Topic 431 ].

Execution - Topic 1321

Writ of execution - Distribution to judgment creditors - General - [See both Execution - Topic 431 ].

Income Tax - Topic 9301

Enforcement - Search and seizure - General - [See Civil Rights - Topic 8005 and third Execution - Topic 1004 ].

Income Tax - Topic 9326

Enforcement - Judgments - Certificate of minister - General - [See Civil Rights - Topic 8005 , second Execution 431 and first and third Execution - Topic 1004 ].

Income Tax - Topic 9327

Enforcement - Judgments - Certificate of minister - Nature of - The Income Tax Act, s. 223(2) provided that a certificate registered in Federal Court "has the same force and effect, and all proceedings may be taken thereon, as if the certificate were a judgment ..." - The British Columbia Court of Appeal stated that s. 223(2) did not make a certificate into a judgment, nor does it deem a certificate to be a judgment - Rather, a certificate has the same force and effect as if it were a judgment and all proceedings (including enforcement proceedings) may be taken under the certificate as if it were a judgment of the Federal Court - See paragraphs 12, 13.

Practice - Topic 219

Persons who can sue and be sued - Individuals and corporations - Status or standing - Validity of legislation - [See Civil Rights - Topic 8305 ].

Cases Noticed:

Hongkong Bank of Canada v. The Queen (1989), 36 B.C.L.R.(2d) 373; 58 D.L.R.(4th) 385, refd to. [para. 13].

Wewayakum Indian Band v. Canada and Wewayakai Indian Band, [1989] 1 S.C.R. 322; 92 N.R. 241; 25 F.T.R. 161, folld. [paras. 21, 22].

Roberts v. Canada - see Wewayakum Indian Band v. Canada and Wewayakai Indian Band.

Canadian Pacific Ltd. and Incan Ships Ltd. v. Quebec North Shore Paper Co. and Quebec and Ontario Transportation Co., [1977] 2 S.C.R. 1054; 9 N.R. 471, consd. [para. 22].

Government of Canada v. McNamara Construction (Western) Ltd. et al., [1977] 2 S.C.R. 654; 13 N.R. 181; consd. [para. 22].

McNamara Construction (Western) Ltd. v. The Queen - see Government of Canada v. McNamara Construction (Western) Ltd. et al.

Foundation Co. of Canada Ltd. v. Canada and Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695; 30 N.R. 239, consd. [para. 22].

Dolphin Delivery Ltd. v. Retail, Wholesale and Department Store Union, Local 580, Peterson and Alexander, [1986] 2 S.C.R. 573; 71 N.R. 83; 33 D.L.R.(4th) 174; [1987] 1 W.W.R. 577, consd. [para. 22].

Giles v. Grover, [1824-34] All E.R. Rep. 547, refd to. [para. 23].

Attorney General of Canada v. Skeena (1984), 52 B.C.L.R. 142 (S.C.), refd to. [para. 24].

Multiple Access Ltd. v. McCutcheon et al., [1982] 2 S.C.R. 161; 44 N.R. 181; 138 D.L.R.(3d) 1; 18 B.L.R. 138, refd to. [para. 29].

R. v. Werhun, [1991] 2 W.W.R. 344 (Man. C.A.), not folld. [para. 40].

Thomson Newspapers Ltd. v. Director of Investigation and Research, Combines Investigation Act et al., [1990] 1 S.C.R. 425; 106 N.R. 161; 39 O.A.C. 161; 54 C.C.C.(3d) 417, refd to. [para. 41].

Ronald Elwyn Lister Ltd. et al. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726; 42 N.R. 181, refd to. [para. 44].

Waldron v. Royal Bank (1991), 53 B.C.L.R.(2d) 294, refd to. [para. 44].

R. v. Salituro (1991), 131 N.R. 161; 50 O.A.C. 125; 68 C.C.C.(3d) 289 (S.C.C.), refd to. [para. 44].

Southam Inc. v. Hunter, [1984] 2 S.C.R. 145; 55 N.R. 241; 55 A.R. 291; 9 C.R.R. 355; 14 C.C.C.(3d) 97; 41 C.R.(3d) 97; [1984] 6 W.W.R. 577; 33 Alta. L.R.(2d) 193; 27 B.L.R. 297; 84 D.T.C. 6467; 2 C.P.R.(3d) 1; 11 D.L.R.(4th) 641, refd to. [paras. 45, 56].

Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138; 1 N.R. 225; 43 D.L.R.(3d) 1, refd to. [paras. 51, 62].

McNeil v. Nova Scotia Board of Censors, [1976] 2 S.C.R. 265; 5 N.R. 43; 12 N.S.R.(2d) 85; 6 A.P.R. 85; 55 D.L.R.(3d) 632; 32 C.R.N.S. 376, refd to. [paras. 51, 62].

Borowski v. Minister of Justice and Minister of Finance of Canada, [1981] 2 S.C.R. 575; 39 N.R. 331; 12 Sask.R. 420; [1982] 1 W.W.R. 97; 24 C.R.(3d) 352; 24 C.P.C. 62; 64 C.C.C.(2d) 97; 130 D.L.R.(3d) 588, refd to. [para. 51].

Canadian Council of Churches v. Canada et al. (1992), 132 N.R. 241 (S.C.C.), refd to. [para. 51].

R. v. Wholesale Travel Group Inc. and Chedore, [1991] 3 S.C.R. 154; 130 N.R. 1; 49 O.A.C. 161; 67 C.C.C.(3d) 193, refd to. [paras. 52, 73].

R. v. Goltz (1991), 131 N.R. 1; 5 B.C.A.C. 161; 11 W.A.C. 161; 67 C.C.C.(3d) 481 (S.C.C.), appld. [paras. 52, 57-71, 73].

R. v. Seaboyer and Gayme, [1991] 2 S.C.R. 577; 128 N.R. 81; 48 O.A.C. 81; 66 C.C.C.(3d) 321, refd to. [paras. 56, 62].

R. v. Big M Drug Mart, [1985] 1 S.C.R. 295; [1985] 3 W.W.R. 481; 58 N.R. 81; 60 A.R. 161; 18 C.C.C.(3d) 385; 18 D.L.R.(4th) 321; 37 Alta. L.R.(2d) 97; 85 C.L.L.C. 14,203; 13 C.R.R. 64, refd to. [para. 62].

R. v. Drybones, [1970] 3 C.C.C. 355 (S.C.C.), refd to. [para. 74].

Statutes Noticed:

Canadian Bill of Rights, R.S.C. 1985, Appendix III, sect. 1(a) [para. 72].

Canadian Charter of Rights and Freedoms, 1982, sect. 1 [para. 65]; sect. 8 [paras. 1, 30 et seq.]; sect. 12 [paras. 60, 65].

Constitution Act, 1867, sect. 101 [paras. 16, 21].

Federal Court Act, R.S.C. 1985, c. F-7, sect. 38(1) [para. 18]; sect. 56(3) [para. 15 et seq.].

Federal Court Rules, rule 1900(1) [para. 14].

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 195(2) [para. 67]; sect. 222 [para. 33]; sect. 223 [para. 12 et seq.]; sect. 223(2) [para. 10 et seq.]; sect. 224, sect. 224.1 [paras. 35, 36]; sect. 225 [paras. 36, 38, 47]; sect. 225.1 [paras. 37, 48]; sect. 225.2 [para. 37].

Counsel:

S.M Johnson, for the Royal Bank of Canada;

P.F. Partridge, for Her Majesty the Queen in Right of Canada.

This appeal was heard in Victoria, B.C., on October 30 and 31, 1991, before Carrothers, Lambert and Taylor, JJ.A., of the British Columbia Court of Appeal. The decision of the court was delivered on April 10, 1992, including the following opinions:

Lambert, J.A. (Carrothers, J.A., concurring) - see paragraphs 1 to 79;

Taylor, J.A. - see paragraphs 80 to 90.