JP Morgan Asset Management (Canada) Inc. v. Minister of National Revenue et al., (2013) 450 N.R. 91 (FCA)

• Judge: Sharlow, Stratas and Near, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: October 24, 2013
• Jurisdiction: Canada (Federal)
• Citations: (2013), 450 N.R. 91 (FCA);2013 FCA 250

JP Morgan Asset Mgt. Inc. v. MNR (2013), 450 N.R. 91 (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. OC.024

The Minister of National Revenue and Canada Revenue Agency (appellants) v. JP Morgan Asset Management (Canada) Inc. (respondent)

(A-532-12; 2013 FCA 250; 2013 CAF 250)

Indexed As: JP Morgan Asset Management (Canada) Inc. v. Minister of National Revenue et al.

Federal Court of Appeal

Sharlow, Stratas and Near, JJ.A.

October 24, 2013.

Summary:

The Minister exercised his discretion to reassess the corporate taxpayer for noncompliance with its obligation under the Income Tax Act to withhold tax on payments made to non-residents (Act, Part XIII). The taxpayer sought judicial review. The Minister moved to strike the judicial review application on the ground that the matter dealt with tax assessments, which fell under the exclusive jurisdiction of the Tax Court of Canada.

A Prothonotary of the Federal Court, in a judgment reported (2012), 410 F.T.R. 231, dismissed the motion. The Prothonotary held that the application raised an independent administrative law ground of review and was properly before the Federal Court. The Minister appealed.

The Federal Court, in a judgment reported 2012 FC 1366, dismissed the appeal, finding no clear error by the Prothonotary. The Minister appealed.

The Federal Court of Appeal allowed the appeal and struck JP Morgan's judicial review application. JP Morgan was, in reality, challenging the assessments, a matter that fell within the exclusive jurisdiction of the Tax Court of Canada under s. 12(1) of the Tax Court of Canada Act. There was no cognizable administrative law claim.

Administrative Law - Topic 3303

Judicial review - General - Bars - Appeal or review available - [See Courts - Topic 4049 ].

Courts - Topic 4049

Federal Court of Canada - Jurisdiction - Federal Court - Income tax matters - The Minister exercised his discretion to reassess the corporate taxpayer for noncompliance with its obligation under the Income Tax Act to withhold tax on payments made to non-residents (Act, Part XIII) - The taxpayer applied for judicial review - The Minister moved to strike the judicial review application on the ground that the matter dealt with tax assessments, which fell under the exclusive jurisdiction of the Tax Court of Canada - A Prothonotary of the Federal Court dismissed the motion - The statutory system of tax assessments and appeals could not be circumvented or undermined by collateral attacks on assessments by way of judicial review - However, the taxpayer "only seeks judicial review of the decision to reassess which is alleged to be contrary to policies of CRA [Canada Revenue Agency] which were in place. No attack on the reassessments is in play. ... The issue in this application is only to review the exercise of a discretion exercised by the Minister which is alleged to have been exercised arbitrarily, unfairly and contrary to the rules of natural justice in a context in which it is alleged to be inconsistent with CRA's own policies" - The Prothonotary stated that "the decision of the Minister to apparently depart from policies is not otherwise reviewable and therefore is subject to judicial review" - The Federal Court of Appeal struck JP Morgan's judicial review application - JP Morgan was, in reality, challenging the assessments, a matter that fell within the exclusive jurisdiction of the Tax Court of Canada under s. 12(1) of the Tax Court of Canada Act - There was no cognizable administrative law claim and the Federal Court could not grant the relief sought (setting aside the assessments).

Courts - Topic 4071.1

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Judicial review applications - General - The Federal Court of Appeal discussed what constituted a cognizable administrative law claim which could be brought in the Federal Court: "first, the judicial review must be available under the Federal Courts Act. There are certain basic prerequisites imposed by sections 18 and 18.1 of the Federal Courts Act ... Second, the application must state a ground of review that is known to administrative law or that could be recognized in administrative law." - Grounds known to administrative law include "lack of vires", "procedural unacceptability" and "substantive unacceptability" - The court cited examples of each category - See paragraphs 68 to 73.

Courts - Topic 4073

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Striking out pleadings - Motion to strike application for judicial review - The Federal Court of Appeal stated that "as a general rule, affidavits are not admissible in support of motions to strike applications for judicial review" - The court explained the rationale for the general rule and stated that "exceptions to the rule against admitting affidavits on motions to strike should be permitted only where the justifications for the general rule of inadmissibility are not undercut, and the exception is in the interests of justice" - See paragraphs 51 to 53.

Income Tax - Topic 8004

Returns, assessments, payment and appeals - Appeals to courts - General - Federal court - Jurisdiction - [See Courts - Topic 4049 ].

Practice - Topic 2242

Pleadings - Striking out pleadings - Appeals, applications or originating motions - The Federal Court of Appeal stated that "the court will strike a notice of application for judicial review only where it is 'so clearly improper as to be bereft of any possibility of success' ... There must be a 'show stopper' or a 'knockout punch' - an obvious, fatal flaw striking at the root of this court's power to entertain the application ... There are two justifications for a such a high threshold. First, the Federal Court's jurisdiction to strike a notice of application is founded not in the Rules but in the court's plenary jurisdiction to restrain the misuse or abuse of courts' processes ... Second, applications for judicial review must be brought quickly and must proceed 'without delay' and 'in a summary way'" - See paragraphs 47 to 48.

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Bull (David) Laboratories (Canada) Inc. v. Pharmacia Inc. et al., [1995] 1 F.C. 588; 176 N.R. 48 (F.C.A.), refd to. [para. 47].

Rahman v. Public Service Labour Relations Board et al., [2013] N.R. Uned. 107; 2013 FCA 117, refd to. [para. 47].

Western Grain By-Products Storage Ltd. v. Donaldson, [2012] N.R. Uned. 195; 2012 FCA 286, refd to. [para. 47].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 47].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc. et al.

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Multi-Malls Inc. et al. v. Minister of Transportation and Communications et al. (1977), 14 O.R.(2d) 49 (C.A.), refd to. [para. 72].

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Ludmer v. Canada - see Ludco Enterprises Ltd. et al. v. Ministre du Revenu national.

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Bajwa et al. v. Canada (Minister of Citizenship and Immigration) (2012), 415 F.T.R. 107; 2012 FC 864, refd to. [para. 108].

Authors and Works Noticed:

Du Pont, Guy, and Lubetsky, Michael H., The Power to Audit is the Power to Destroy: Judicial Supervision of the Exercise of Audit Powers (2013), 61 Can. Tax. J. 103, p. 120 [para. 32].

Jacyk, David, The Dividing Line Between the Jurisdictions of the Tax Court of Canada and Other Superior Courts (2008), 56 Can. Tax J. 661, p. 707 [para. 33].

Mullan, David J., Administrative Law (2001), pp. 100 to 113 [para. 72].

Sherman, David, Annotation to Pine Valley Enterprises Inc. R., 2010 TCC 324 (Taxnet Pro online), generally [para. 33].

Woolf, Lord, Judicial Review: A Possible Programme for Reform, [1992] P.L. 221, p. 235 [para. 85].

Counsel:

Naomi Goldstein and Laurent Bartleman, for the appellants;

Gerald L.R. Ranking, for the respondent.

Solicitors of Record:

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

Fasken Martineau DuMoulin, Toronto, Ontario, for the respondent.

This appeal was heard on September 18, 2013, at Toronto, Ontario, before Sharlow, Stratas and Near, JJ.A., of the Federal Court of Appeal.

On October 24, 2013, Stratas, J.A., delivered the following judgment for the Court of Appeal.