Precision Contractors Ltd. v. Saskatchewan, (2011) 378 Sask.R. 31 (QB)

• Judge: Ball, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: October 27, 2011
• Jurisdiction: Saskatchewan
• Citations: (2011), 378 Sask.R. 31 (QB);2011 SKQB 407

Precision Contractors Ltd. v. Sask. (2011), 378 Sask.R. 31 (QB)

MLB headnote and full text

Temp. Cite: [2011] Sask.R. TBEd. NO.050

Brought under the Class Action Act

Precision Contractors Ltd. (plaintiff) v. The Government of Saskatchewan (defendant)

(2009 Q.B. No. 1579; 2011 SKQB 407)

Indexed As: Precision Contractors Ltd. v. Saskatchewan

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Ball, J.

October 27, 2011.

Summary:

The plaintiff, an Alberta corporation, owned and leased construction vehicles and equipment which it brought into Saskatchewan for temporary use in its business. The government of Saskatchewan (the defendant) assessed provincial sales tax (PST) on the property. The plaintiff sought a declaration that the PST levied by the defendant was ultra vires the direct taxation powers granted to provinces. It claimed restitution of the amount it paid in PST between October 19, 2005 and July 24, 2009 ($2,283,921.17), as well as damages. The plaintiff applied to have the action certified as a class action.

The Saskatchewan Court of Queen's Bench found that the proposed class proceeding was ill-suited for addressing the constitutionality of the impugned PST legislation. The court adjourned the application pending a determination of the constitutional challenge. For the purposes of s. 6(1)(a) of the Class Actions Act, the court found that the pleadings disclosed the following causes of action: (a) for restitution of PST paid on purchased property pursuant to ultra vires legislation; and (b) for compensatory damages as an alternative to restitution. The court addressed the requirements under ss. 6(1)(b) and (c) of the Act, and deferred any definitive ruling on the remaining questions under ss. 6(1)(d) and (e) until the return of the application.

Crown - Topic 2448

Liability of Crown arising out of the enforcement of statutes - When liable - Unconstitutional statutes - [See seventh Practice - Topic 209.3 ].

Crown - Topic 2888

Crown immunity - Exceptions - Restitution for ultra vires taxes - [See seventh Practice - Topic 209.3 ].

Limitation of Actions - Topic 6203

Restitution - General - Applicable limitation period - The plaintiff challenged the constitutional validity of legislation imposing provincial sales tax on construction vehicles and equipment brought into Saskatchewan from Alberta for temporary use in the plaintiff's business - The crux of the plaintiff's claim was for a refund of taxes paid - The defendant's position was that the claim did not disclose a cause of action sufficient for certification as a class action because, inter alia, a limitation period might apply to some portion of the claim - The plaintiff submitted that the defendant had chosen not to file a statement of defence and, consequently, it had not raised a defence based on a limitation period - The Saskatchewan Court of Queen's Bench, in deciding to adjourn the application pending determination of the constitutional challenge, considered potential limitation periods that might affect the plaintiff and class members - No limitation period would prevent the plaintiff from applying for a declaration that the impugned provisions of the PST Act and/or the PST Regulations were unconstitutional (Limitations Act, s. 15(a)) - As well, if the action was ultimately certified, s. 43 of the Class Actions Act would operate to suspend any applicable limitation period as of the commencement of the action - See paragraphs 98 to 100.

Mistake - Topic 1706

Recovery of money paid under mistake - Mistake of law - Money paid under invalid legislation - [See seventh Practice - Topic 209.3 ].

Practice - Topic 207

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Respecting validity of legislation or statutory power - [See seventh Practice - Topic 209.3 ].

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - [See fifth Practice - Topic 209.3 ].

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiff, an Alberta corporation, had paid provincial sales tax (PST) to the government of Saskatchewan (the defendant) on construction vehicles and equipment purchased in Alberta and used before being temporarily brought into Saskatchewan for use in the plaintiff's business - The "temporary use" or "1/3" formula of PST calculation was contained in s. 17.3(2)(a) of the PST Regulations - The plaintiff's claim objected to the "temporary use" or "1/3 method", quoting what was set out in an Interpretation Bulletin, and claimed restitution of the PST paid - The Saskatchewan Court of Queen's Bench found that the pleadings met the requirements of s. 6(1)(a) of the Class Actions Act - The plaintiff had advanced a genuine cause of action and a plausible basis for claiming restitution of PST paid on purchased property on the basis that s.17.3(2)(a) of the PST Regulations was ultra vires - See paragraphs 43 to 48.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiff, an Alberta corporation, leased construction vehicles and equipment which it brought into Saskatchewan for temporary use in its business - The government of Saskatchewan taxed that property under the Provincial Sales Tax (PST) Act - The plaintiff claimed for restitution of PST paid pursuant to allegedly ultra vires legislation - The Saskatchewan Court of Queen's Bench held that the requirements of s.6(1)(a) of the Class Actions Act had not been satisfied with respect to that claim - The relevant legislation appeared to be ss. 5(13), 5(14) and 5(15) of the PST Act - If the plaintiff (or any other member of the proposed class) was assessed PST pursuant to those sections, it was not disclosed by the pleadings or the affidavit evidence filed by the plaintiff - The plaintiff had not advanced a discernable claim for restitution of PST paid on leased property on the basis that ss. 5(13), (14) and (15) of the PST Act or any provisions in the PST Regulations, were ultra vires - See paragraphs 49 to 52.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiff, an Alberta corporation, claimed for restitution of provincial sales tax paid pursuant to allegedly ultra vires legislation - In its response to the defendant's reply to the certification application, the plaintiff argued that the manner in which the defendant had imposed PST on residents of Alberta violated the International Agreement on Internal Trade (AIT), recognized federally by the AIT Implementation Act - The Saskatchewan Court of Queen's Bench stated that "A cause of action based on a claim for restitution of taxes paid under ultra vires legislation is fundamentally different from a claim that the taxation infringes an inter-jurisdictional agreement on Internal Trade. If the latter is to form any part of a cause of action amenable to certification under The Class Actions Act, it must, as a first requirement, be pled. It was not and, accordingly, it does not meet the requirements for certification under s. 6(1)(a) of The Class Actions Act" - See paragraphs 53 to 56.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The pleadings advanced two basic claims: one for restitution of provincial sales tax (PST) paid pursuant to allegedly ultra vires legislation; the other for damages - The Saskatchewan Court of Queen's Bench considered whether the pleadings supported the various claims for damages - The court accepted that the claim for "compensatory damages" could be viewed as an alternative way of pleading an entitlement to restitution of taxes paid under ultra vires legislation, with its success dependent on a determination that s.17.3(2)(a) of the PST Regulations and/or the relevant provisions of the PST Act were unconstitutional - Accordingly, the court accepted that the claim for compensatory damages was based on a cause of action disclosed by the pleadings - However, the claims for "aggravated", "exemplary" and "punitive" damages did not arise from a cause of action disclosed by the pleadings and did not in themselves constitute causes of action within the meaning of s. 6(1)(a) of the Class Actions Act - See paragraphs 57 to 59.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiff, an Alberta corporation, challenged the constitutional validity of legislation imposing provincial sales tax on construction vehicles and equipment brought into Saskatchewan from Alberta for temporary use in the plaintiff's business - The plaintiff claimed a refund of taxes paid - The Saskatchewan Court of Queen's Bench found that the proposed class description was far wider than the claim advanced - The following description identified a class of persons which satisfied the requirements of s. 6(1)(b) of the Class Actions Act - "All persons residing or ordinarily resident or carrying on business in Saskatchewan who, on a temporary basis, brought into Saskatchewan or received delivery in Saskatchewan of construction equipment, vehicles or tools purchased in Alberta and intended for use or consumption in Saskatchewan and who, after October 19, 2005, paid provincial sales taxes to the Government of Saskatchewan based on invoiced purchase prices" - See paragraphs 60 to 69.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - At issue on this certification application was the constitutional validity of legislation imposing provincial sales tax on construction vehicles and equipment brought into Saskatchewan from Alberta for temporary use in the plaintiff's business - The Saskatchewan Court of Queen's Bench found that the following common issues would satisfy the requirements of s. 6(1)(c) of the Class Actions Act, i.e., their determination would eliminate duplication of fact finding and legal analysis that would be required if individual plaintiffs brought individual actions: "(1). Are ss. 5(9)-(9.2) of The Provincial Sales Tax Act and ss. 17.3-17.31 of The Provincial Sales Tax Regulations ultra vires the legislative or regulatory powers of the Province of Saskatchewan as being taxes that are not within the direct taxation powers conferred by s. 92(2) of the Constitution Act, 1982? (2). If the answer to #1 is 'yes' and the impugned provisions in whole or in part are found to be unconstitutional, are class members entitled to restitution for taxes paid under ultra vires legislation? (3). If the answer to #1 and #2 is 'yes', how should restitution be calculated and distributed to class members?" - See paragraphs 70 to 79.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiff, an Alberta corporation, owned and leased construction vehicles and equipment which it brought into Saskatchewan for temporary use in its business - The government of Saskatchewan taxed that property under the Provincial Sales Tax (PST) Act - The plaintiff challenged the constitutional validity of s.17.3(2)(a) of the PST Regulations and/or ss. 5(9) to (9.2) of the PST Act (the first of three common issues) - The crux of the claim was for a refund of taxes paid - The Saskatchewan Court of Queen's Bench held that the proposed class proceeding was ill-suited for addressing the constitutionality of the impugned PST legislation and/or regulations - The preferable procedure for addressing that issue would be an application for declaratory relief, a public law remedy available by summary application under Part 52 of the Queen's Bench Rules, s. 8 of the Constitutional Questions Act and s. 11 of The Queen's Bench Act - That approach would require significantly less time and expense - The court adjourned the application for certification until the constitutional question had been addressed, with leave to bring it back at that time to address the remaining issues - See paragraphs 80 to 101.

Restitution - Topic 69

Unjust enrichment - General - Where money paid under invalid law - [See seventh Practice - Topic 209.3 ].

Sales and Service Taxes - Topic 106

Sales tax - Liability of persons and property - Purchases outside province brought into province - [See seventh Practice - Topic 209.3 ].

Sales and Service Taxes - Topic 115

Sales tax - Liability of persons and property - General principles - Leased property - [See seventh Practice - Topic 209.3 ].

Cases Noticed:

Hoffman et al. v. Monsanto Canada Inc. et al. (2007), 293 Sask.R. 89; 397 W.A.C. 89; 2007 SKCA 47, refd to. [para. 41].

Kingstreet Investments Ltd. et al. v. New Brunswick (Minister of Finance) et al., [2007] 1 S.C.R. 3; 355 N.R. 336; 309 N.B.R.(2d) 255; 799 A.P.R. 255; 2007 SCC 1, refd to. [para. 44].

Sorotski v. CNH Global NV et al. (2007), 304 Sask.R. 83; 413 W.A.C. 83; 2007 SKCA 104, refd to. [para. 47].

Ducharme and Holben v. Davies and Rogoschewsky, [1984] 1 W.W.R. 699; 29 Sask.R. 54 (C.A.), refd to. [para. 55].

Hollick v. Metropolitan Toronto (Municipality) et al., [2001] 3 S.C.R. 158; 277 N.R. 51; 153 O.A.C. 279; 2001 SCC 68, refd to. [para. 60].

Western Canadian Shopping Centres Inc. et al. v. Dutton et al., [2001] 2 S.C.R. 534; 272 N.R. 135; 286 A.R. 201; 253 W.A.C. 201; 2001 SCC 46, refd to. [para. 61].

Wuttunee et al. v. Merck Frosst Canada Ltd. et al. (2009) 324 Sask.R. 210; 451 W.A.C. 210; 2009 SKCA 43, refd to. [para. 62].

Guimond v. Québec (Procureur général), [1996] 3 S.C.R. 347; 201 N.R. 380; 138 D.L.R.(4th) 647, refd to. [para. 88].

Buffett v. Ontario (Attorney General) (1998), 42 O.R.(3d) 53 (Gen. Div.), refd to. [para. 89].

Elder Advocates of Alberta Society et al. v. Alberta et al. (2011), 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345; 331 D.L.R.(4th) 257; 2011 SCC 24, refd to. [para. 91].

Horner et al. v. Saskatchewan et al. (2009), 336 Sask.R. 12; 2009 SKQB 270, refd to. [para. 92].

Perron v. Canada (Attorney General), [2003] 3 C.N.L.R. (Ont. Sup. Ct.), refd to. [para. 92].

Amyotrophic Lateral Sclerosis Society of Essex County et al. v. Windsor (City), [2011] O.T.C. Uned. 91; 2011 ONSC 91, refd to. [para. 93].

Antoniali v. Coquitlam (City), [2005] B.C.T.C. 1310; 2005 BCSC 1310, refd to. [para. 93].

Barbour v. University of British Columbia, [2006] B.C.T.C. Uned. C54; 2006 BCSC 1897, refd to. [para. 93].

Howard Estate et al. v. British Columbia (1999), 66 B.C.L.R.(3d) 199 (S.C.), refd to. [para. 93].

Nanaimo Immigrant Settlement Society et al. v. British Columbia (2001), 149 B.C.A.C. 26; 244 W.A.C. 26; 84 B.C.L.R.(3d) 208; 2001 BCCA 75, refd to. [para. 93].

Marcotte et al. v. Longueuil (Ville), [2009] 3 S.C.R. 65; 394 N.R. 1; 2009 SCC 43, refd to. [para. 93].

Horner et al. v. Saskatchewan et al. (2008), 318 Sask.R. 96; 2008 SKQB 273, refd to. [para. 97].

Statutes Noticed:

Class Actions Act, S.S. 2001, c. C-12.01, sect. 6(1) [para. 39]; sect. 41(2), sect. 41(3) [para. 9]; sect. 43(2), sect. 43(3) [para. 100].

Provincial Sales Tax Act, R.S.S. 1978, c. P-34.1, sect. 5(9) [para. 16]; sect. 5(9.1), sect. 5(9.2) [para. 17]; sect. 5(12) [para. 18]; sect. 5(13), sect. 5(14), sect. 5(15), sect. 5(17) [para. 32].

Provincial Sales Tax Regulations, R.R.S., c. E-3, Reg. 1, sect. 17.3(2) [para. 24]; sect. 17.3(4), sect. 17.31 [para. 25].

Counsel:

E.F.A. Merchant, Q.C., and Casey R. Churko, for the plaintiff;

Charita N. Ohashi, for the defendant.

This certification application was heard before Ball, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following judgment and reasons for judgment, dated October 27, 2011.