Huber (J.M.) Corp. v. Alberta (Provincial Treasurer) et al., (1995) 175 A.R. 61 (QB)

• Judge: Forsyth, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 12, 1995
• Citations: (1995), 175 A.R. 61 (QB)

Huber Corp. v. Alta. (1995), 175 A.R. 61 (QB)

MLB headnote and full text

J.M. Huber Corporation (applicant) v. The Provincial Treasurer of Her Majesty The Queen in Right of Alberta and Her Majesty The Queen in Right of Alberta (respondents)

(Action Nos. 9201-01656, 9201-01657, 9201-03318 and 9201-03319)

Indexed As: Huber (J.M.) Corp. v. Alberta (Provincial Treasurer) et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Forsyth, J.

September 12, 1995.

Summary:

The Director of Audit for the Alberta Treasury Department directed that a corpo­rate taxpayer be deemed to be associated with another corporation for the 1985 and 1986 years resulting in a redetermination of the taxpayer's Alberta royalty tax credit under the Province's Corporate Income Tax Act. The taxpayer commenced statutory appeals and applications for judicial review to quash the direction. The actions were consolidated.

The Alberta Court of Queen's Bench quashed the notice of reassessment and held that the taxpayer was entitled to recover the monies paid as a result of the improper reassessment.

Administrative Law - Topic 262

The hearing and decision - Right to a hearing - When right exists - [See fifth Income Tax - Topic 6860 ].

Administrative Law - Topic 1262

Classification of power or function - Powers or functions classified as legisla­tive - What constitutes - [See fourth Income Tax - Topic 6860 ].

Administrative Law - Topic 2085

Natural justice - Constitution of board or tribunal - Bias - Acting in multiple roles or capacities - [See fourth Income Tax - Topic 6860 ].

Administrative Law - Topic 2088

Natural justice - Constitution of board or tribunal - Bias - Apprehension of - [See fourth Income Tax - Topic 6860 ].

Administrative Law - Topic 2095

Natural justice - Constitution of board or tribunal - Attitudinal bias - [See fourth Income Tax - Topic 6860 ].

Administrative Law - Topic 2266

Natural justice - The duty of fairness - What constitutes procedural fairness - [See fifth Income Tax - Topic 6860 ].

Administrative Law - Topic 3202

Judicial review - General - Scope of review - [See first Income Tax - Topic 6860 ].

Administrative Law - Topic 6201

Judicial review - Statutory appeal - Scope of review - General - [See first Income Tax - Topic 6860 ].

Income Tax - Topic 3901

Interpretation - General - The Alberta Court of Queen's Bench stated that "[w]hen faced with a taxing statute, the task of the court is, as with any other statute, to ascertain the purpose of the legislation and to give effect to that pur­pose. In modern times, this purpose can go beyond mere raising of revenue and can encompass significant social and economic goals. ... Where the purpose of the legisla­tion is not clear or does not resolve ambi­guities in wording, the rule of strict con­struction is to apply." - See paragraphs 45, 46.

Income Tax - Topic 3907

Interpretation - General - Desired objec­tive of statute - [See Income Tax - Topic 3901 ].

Income Tax - Topic 6860

Computation of tax - Rules for corpo­rations - Tax credits - Royalty tax credit - The Director of Audit for the Alberta Treasury Department directed that a cor­porate taxpayer be deemed to be associated with another corporation for the 1985 and 1986 years resulting in a redetermination of the taxpayer's royalty tax credit under the Alberta Corporate Income Tax Act - The taxpayer commenced statutory appeals and applications for judicial review to quash the direction - The Alberta Court of Queen's Bench concluded that the appro­priate standard of review to apply for both the statutory appeal and the review of the direc­tion was reasonableness - See para­graphs 6 to 11.

Income Tax - Topic 6860

Computation of tax - Rules for corpo­rations - Tax credits - Royalty tax credit - A corporate taxpayer, which was at his maximum Alberta royalty tax credit (ARTC), entered into a "carve-out" agree­ment which temporarily conveyed an interest in oil producing assets to a com­pany which was below the maximum ARTC - The Provincial Treasurer con­cluded that the transaction was artificial and directed that the taxpayer be deemed to be associated with the other corporation for ARTC purposes resulting in a redetermination of the taxpayer's ARTC under the Alberta Corporate Income Tax Act - The taxpayer challenged the deci­sion - The Alberta Court of Queen's Bench ref­used to interfere with the Treasurer's direction where it was reason­able - See para­graphs 12 to 24.

Income Tax - Topic 6860

Computation of tax - Rules for corpo­rations - Tax credits - Royalty tax credit - The Director of Audit for the Alberta Treasury Department (the Director) directed that a corporate taxpayer be deemed to be associated with another corporation for the 1985 and 1986 years resulting in a redetermination of the tax­payer's Alberta royalty tax credit (ARTC) under the Province's Corporate Income Tax Act - The taxpayer challenged the deci­sion, alleging that the s. 26.1(10) of the Act gave the Provincial Treasurer the discretionary power to direct that two corporations be deemed associated and the Treasurer was not entitled to delegate to the Director until the Treasurer first per­sonally decided that the ARTC had been artificially increased - The Alberta Court of Queen's Bench rejected the assertion - See paragraphs 25 to 27.

Income Tax - Topic 6860

Computation of tax - Rules for corpo­rations - Tax credits - Royalty tax credit - The Director of Audit for the Alberta Treasury Department (the Director) directed that a corporate taxpayer be deemed to be associated with another corporation resulting in a redetermination of the taxpayer's royalty tax credit under the Alberta Corporate Income Tax Act - The taxpayer challenged the decision, alleging that there was a reasonable appre­hension of bias because of the Director's institutional role as a government auditor and because of his dual role as investigator and adjudicator - The taxpayer also alleged predisposition bias - The Alberta Court of Queen's Bench concluded that the Direc­tor was exercising delegated legisla­tive discretion and, accordingly, the test was that of "prejudgment" bias or the "closed-mind" test and rejected the allega­tions - See paragraphs 29 to 39.

Income Tax - Topic 6860

Computation of tax - Rules for corpo­rations - Tax credits - Royalty tax credit - The Director of Audit for the Alberta Treasury Department (the Director) directed that a corporate taxpayer be deemed to be associated with another corporation resulting in a redetermination of the taxpayer's royalty tax credit under the Alberta Corporate Income Tax Act - The taxpayer challenged the decision, alleging that he was denied a fair hearing - The Alberta Court of Queen's Bench concluded that a formal hearing was not required by statute and that the duty to be fair required some element of the right to have notice and to be heard which was done throughout the investigation process and was well beyond the norm for minis­terial decision making - See paragraphs 40 to 42.

Income Tax - Topic 6860

Computation of tax - Rules for corpo­rations - Tax credits - Royalty tax credit - The Provincial Treasurer concluded that a transaction entered into by two corpo­rations, Huber and Strathfield, artificially increased the Alberta royalty tax credit (ARTC) claimable - Pursuant to the Alberta Corporate Income Tax Act, s. 26.1(10)(b), the Treasurer directed that Huber be deemed to be associated with Strathfield for ARTC purposes and reassessed Huber's ARTC - In computing a corporation's ARTC, s. 26.1(8) prohibited the inclusion of an amount that would artificially increase it - On hearing Huber's challenges, the Alberta Court of Queen's Bench concluded that the Treasurer erred in law by not considering s. 26.1(8) which would have had the effect of disallowing Strathfield's additional claim to ARTC - Accordingly, Huber was entitled to the monies paid as a result of the improper reassessment - See paragraphs 50 to 56.

Statutes - Topic 522

Interpretation - General principles - Tax legislation - [See Income Tax - Topic 3901 ].

Statutes - Topic 2265

Interpretation - Presumptions and rules in aid - Against change in terminological usage (consistent expression) - [See Stat­utes - Topic 2271 ].

Statutes - Topic 2271

Interpretation - Presumptions and rules in aid - Against tautology (every word must have a meaning) - The Alberta Court of Queen's Bench reviewed the presumption against tautology and the presumption of consist­ent expression - See paragraphs 48 to 50.

Statutes - Topic 5310

Operation and effect - Delegated legisla­tion - General and definitions - Power of subdelegation - When conferred - [See third Income Tax - Topic 6860 ].

Cases Noticed:

Precambrian Shield Resources Ltd. v. Alberta (Provincial Treasurer) (1989), 99 A.R. 204; 69 Alta. L.R.(2d) 344 (Q.B.), affd. (1991), 116 A.R. 76; 81 Alta. L.R.(2d) 152 (C.A.), consd. [para. 4].

Pezim v. British Columbia Securities Commission et al., [1994] 2 S.C.R. 557; 168 N.R. 321; 46 B.C.A.C. 1; 75 W.A.C. 1; [1994] 7 W.W.R. 1; 92 B.C.L.R.(2d) 145, consd. [para. 6].

Superintendent of Brokers v. Pezim - see Pezim v. British Columbia Securities Commission et al.

Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ), [1988] 2 S.C.R. 1048; 95 N.R. 161; 24 Q.A.C. 244, consd. [para. 8].

Union des employés de service, local 298 v. Bibeault - see Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ).

Bibeault - see Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ).

U.E.S., Local 298 v. Bibeault - see Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ).

Penny v. Workers' Compensation Board (Alta.) (1993), 145 A.R. 20; 55 W.A.C. 20; 12 Alta. L.R.(3d) 238 (C.A.), consd. [para. 8].

Secretary of State for Education and Science v. Thameside Metropolitan Bor­ough Council, [1977] A.C. 1014 (H.L.), consd. [para. 10].

R. v. Alberta and Southern Gas Co., [1979] 1 S.C.R. 36; 23 N.R. 622; 78 D.T.C. 6566, refd to. [para. 19].

TransAlta Utilities Corp. v. Public Utilities Board (Alta.) (1986), 68 A.R. 171; 21 Admin. L.R. 1 (C.A.), refd to. [para. 19].

Dallinga v. Calgary (City) (1975), 62 D.L.R.(3d) 433 (Alta. C.A.), not appld. [para. 22].

R. v. Harrison, [1977] 1 S.C.R. 238; 8 N.R. 47; 66 D.L.R.(3d) 660, not appld. [para. 26].

Mungoni v. Northern Rhodesia (Attorney General), [1960] A.C. 336 (P.C.), consd. [para. 26].

Ahmad v. Public Service Commission Appeal Board (Can.), [1974] 2 F.C. 644; 6 N.R. 287; 51 D.L.R.(3d) 470 (F.C.A.), consd. [para. 26].

Granby Construction & Equipment Ltd. v. Milley, [1974] 5 W.W.R. 292 (B.C.S.C.), revd. [1975] 1 W.W.R. 730 (B.C.C.A.), consd. [para. 27].

Newfoundland Telephone Co. v. Board of Commissioners of Public Utilities (Nfld.), [1992] 1 S.C.R. 623; 134 N.R. 241; 95 Nfld. & P.E.I.R. 271; 301 A.P.R. 271, consd. [para. 30].

Tottrup v. Alberta (1977), 9 A.R. 483; 79 D.L.R.(3d) 533 (T.D.), consd. [para. 32].

Barry and Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301; 93 N.R. 1; 96 A.R. 241, consd. [para. 34].

Golden et al. v. Minister of National Rev­enue, [1986] 1 S.C.R. 209; 65 N.R. 135; [1986] 3 W.W.R. 1; [1986] 1 C.T.C. 274; 25 D.L.R.(4th) 490; 86 D.T.C. 6138; 39 R.P.R. 297, consd. [para. 45].

Nicholls v. Cumming (1877), 1 S.C.R. 395, consd. [para. 46].

Winnipeg (City) v. Morguard Properties Ltd. et al., [1983] 2 S.C.R. 493; 50 N.R. 264; 25 Man.R.(2d) 302; [1984] 2 W.W.R. 97; 24 M.P.L.R. 219; 3 D.L.R.(4th) 1; 6 Admin. L.R. 206, refd to. [para. 46].

Canadian Marconi Co. v. Minister of National Revenue, [1986] 2 S.C.R. 522; 70 N.R. 174; 33 D.L.R.(4th) 481, refd to. [para. 46].

Johns-Manville Canada Inc. v. Minister of National Revenue, [1985] 2 S.C.R. 46; 60 N.R. 244; 21 D.L.R.(4th) 210, consd. [para. 47].

Hill v. Hill (William)(Park Lane) Ltd., [1949] A.C. 530 (H.L.), consd. [para. 49].

R. v. Zeolkowski, [1989] 1 S.C.R. 1378; 95 N.R. 149; 58 Man.R.(2d) 63; 61 D.L.R.(4th) 725, consd. [para. 50].

Thomson v. Canada (Minister of Agricul­ture), [1992] 1 S.C.R. 385; 133 N.R. 345; 89 D.L.R.(4th) 218, refd to. [para. 50].

Statutes Noticed:

Alberta Corporate Income Tax Act, R.S.A. 1980, c. A-17, sect. 26.1(1) [para. 5]; sect. 26.1(8), sect. 26.1(10) [para. 5 et seq.]; sect. 26.1(10)(b) [para. 7 et seq.]; sect. 55(1) [para. 35]; sect. 63 [paras. 36, 37].

Financial Administration Act, R.S.A. 1980, c. F-9, sect. 13(1) [para. 27].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Stat­utes, generally [para. 48].

Counsel:

J.B. Ballem, Q.C., and P.D. Edwards, for the plaintiff;

R. Couzin and G.A. Meikle, for the respondents.

This matter was heard before Forsyth, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment on September 12, 1995.