Rosenberg v. Canada Revenue Agency, (2015) 479 F.T.R. 240 (FC)

• Judge: Bédard, J.
• Court: Federal Court (Canada)
• Case Date: March 30, 2015
• Jurisdiction: Canada (Federal)
• Citations: (2015), 479 F.T.R. 240 (FC);2015 FC 549

Rosenberg v. CRA (2015), 479 F.T.R. 240 (FC)

MLB headnote and full text

Temp. Cite: [2015] F.T.R. TBEd. MY.045

Michael Rosenberg (plaintiff) v. Canada Revenue Agency (defendant)

(T-1958-14; 2015 FC 549)

Indexed As: Rosenberg v. Canada Revenue Agency

Federal Court

Bédard, J.

April 28, 2015.

Summary:

Between 2008 and 2010, Rosenberg and other related legal entities were subject to an audit by the Canada Revenue Agency (the CRA) for the 2006 and 2007 taxation years. The audit was primarily related to straddling transactions in connection with the Mazel partnership. Following the audit, the CRA and Rosenberg reached an agreement (the Agreement). In January 2013, as part of another audit, the CRA sent Rosenberg a request for information under s. 231.1 of the Income Tax Act. The documents and information sought concerned the straddling transactions that Rosenberg participated in for the 2006 and 2007 taxation years. Rosenberg asserted that the Agreement put an end to any dispute regarding the tax that he had to pay for 2006 and 2007, and it prevented the Minister from availing herself of her powers under s. 231.1 for the purpose of conducting a new audit of the transactions governed by the Agreement, and which could result in a reassessment for those taxation years. Rosenberg sued the CRA seeking declaratory and injunctive relief. The CRA moved to strike the action.

The Federal Court dismissed the CRA's motion to strike, converted the action into an application for judicial review and ordered that the proceeding be continued as a specially managed proceeding, and referred the matter to the Chief Justice for the appointment of a case management judge.

Editor's note: For related proceedings involving the same parties see 2014 QCCS 685 and 2014 QCCA 1651.

Administrative Law - Topic 3342

Judicial review - General - Practice - Limitation period - Between 2008 and 2010, Rosenberg was subject to an audit by the Canada Revenue Agency (the CRA) for the 2006 and 2007 taxation years - The audit was primarily related to straddling transactions - Following the audit, the CRA and Rosenberg reached an agreement (the Agreement) - In January 2013, as part of another audit, the CRA sent Rosenberg a request for information under s. 231.1 of the Income Tax Act (ITA) - The documents and information sought concerned the 2006 and 2007 straddling transactions - Rosenberg asserted that the Agreement put an end to any dispute regarding the tax that he had to pay for 2006 and 2007, and that it prevented the Minister from availing herself of her s. 231.1 powers for the purpose of conducting a new audit of the transactions governed by the Agreement, and which could result in a reassessment for those taxation years - Rosenberg sued the CRA seeking declaratory and injunctive relief - The CRA moved to strike the action asserting that the action should have been an application for judicial review and that it was inappropriate to convert the action into an application because the application would have been filed outside the 30 day limitation period provided for by s. 18.1(2) of the Federal Courts Act (FCA) - The Federal Court rejected the CRA's limitation period argument - On a strictly technical level, the s. 231.1 request dated January 7, 2013, in and of itself, did not constitute a "decision" within the meaning of the FCA, given that it required judicial authorization under s. 231.7 of the ITA to become binding on Rosenberg or to give rise to legal consequences in the case of a failure to comply - Rather, Rosenberg was challenging broader conduct: the decision to undertake an audit and request documents and information in the context of that audit - That conduct constituted a "matter" within the meaning of s. 18.1(1) of the FCA, in respect of which a judicial review application could be made - Given that the application did not strictly concern a "decision", the 30 day limitation period did not apply and it was appropriate to convert the action into a judicial review application - Alternatively, an extension of time should be granted to Rosenberg, without having to proceed by way of a motion - Rosenberg had a continuing intention to contest the s. 231.1 request - He had a reasonable explanation for the delay (he initially made an "error of forum") - There was a live issue and Rosenberg's application was not entirely without merit - Neither the CRA nor the Minister would be prejudiced - The granting of an extension served the interests of justice - See paragraphs 53 to 63.

Administrative Law - Topic 3342.1

Judicial review - General - Practice - Limitation period - Extension of - [See Administrative Law - Topic 3342 ].

Courts - Topic 4021.1

Federal Court of Canada - Jurisdiction - Federal Court - Decisions of federal boards, commissions or tribunals (incl. ministers) - Between 2008 and 2010, Rosenberg was subject to an audit by the Canada Revenue Agency (the CRA) for the 2006 and 2007 taxation years - The audit was primarily related to straddling transactions - Following the audit, the CRA and Rosenberg reached an agreement (the Agreement) - In January 2013, as part of another audit, the CRA sent Rosenberg a request for information under s. 231.1 of the Income Tax Act - The documents and information sought concerned the 2006 and 2007 straddling transactions - Rosenberg asserted that the Agreement put an end to any dispute regarding the tax that he had to pay for 2006 and 2007, and that it prevented the Minister from availing herself of her s. 231.1 powers for the purpose of conducting a new audit of the transactions governed by the Agreement, and which could result in a reassessment for those taxation years - Rosenberg sued the CRA seeking declaratory and injunctive relief - The CRA moved to strike the action - The Federal Court dismissed the CRA's motion - There was a live issue (the Agreement's binding nature and its impact on the Minister's audit powers) and it was not plain and obvious that Rosenberg's position could not succeed - However, the action for declaratory relief was not the appropriate proceeding - Rosenberg's proceeding was in the nature of an application for judicial review against a federal board - The CRA asserted that it was pointless to consider converting the action into an application for judicial review as Rosenberg would be able to submit all of his arguments within the proceeding commenced by the Minister under s. 231.7 of the Act for an order directing Rosenberg to provide documents and information that were the subject of the s. 231.1 request - However, the s. 231.7 application was not an appropriate forum to determine all facets of the dispute - The court ordered that the action be converted into a judicial review application - See paragraphs 35 to 52 and 65.

Courts - Topic 4043

Federal Court of Canada - Jurisdiction - Federal Court - Declaratory relief - [See Courts - Topic 4021.1 ].

Courts - Topic 4071.3

Federal Court of Canada - Jurisdiction - Trial Division - Practice - Judicial review applications - Time for - [See Administrative Law - Topic 3342 ].

Courts - Topic 4072

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Limitation periods (incl. extension of) - [See Administrative Law - Topic 3342 ].

Courts - Topic 4073

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Striking out pleadings - [See Courts - Topic 4021.1 ].

Income Tax - Topic 9259.2

Enforcement - Production of information - Demand of information - Judicial review - [See Courts - Topic 4021.1 ].

Income Tax - Topic 9257

Enforcement - Production of information - Demand of information - Subsequent demands - [See Courts - Topic 4021.1 ].

Limitation of Actions - Topic 7601

Actions against the Crown - In the Federal Court of Canada - General - [See Administrative Law - Topic 3342 ].

Practice - Topic 73

Actions - Commencement of - Choice of method of commencement of proceedings - Action v. application - [See Courts - Topic 4021.1 ].

Practice - Topic 2215

Pleadings - Striking out pleadings - Declaratory actions - [See Courts - Topic 4021.1 ].

Practice - Topic 2249

Pleadings - Striking out pleadings - Bars - Issues to be tried - [See Courts - Topic 4021.1 ].

Practice - Topic 2493

Writ of summons, endorsements, originating summons and originating notices - Originating notices (incl. judicial review) - Conversion to or from formal action - [See Administrative Law - Topic 3342 and Courts - Topic 4021.1 ].

Practice - Topic 2496

Writ of summons, endorsements, originating summons and originating notices - Originating notices (incl. judicial review) - Extension of time for filing - [See Administrative Law - Topic 3342 ].

Cases Noticed:

JP Morgan Asset Management (Canada) Inc. v. Minister of National Revenue et al., [2014] 2 F.C.R. 257; 450 N.R. 91; 2013 FCA 250, refd to. [para. 8].

Ward et al. v. Samson Cree Nation No. 444 et al. (1999), 247 N.R. 254 (F.C.A.), consd. [para. 31].

Kourtessis et al. v. Minister of National Revenue et al., [1993] 2 S.C.R. 53; 153 N.R. 1; 27 B.C.A.C. 81; 45 W.A.C. 81, refd to. [para. 31].

Mohawks of the Bay of Quinte v. Canada (Minister of Indian Affairs and Northern Development) (2013), 434 F.T.R. 241; 2013 FC 669, refd to. [para. 31].

Sweet et al. v. Canada (1999), 249 N.R. 17 (F.C.A.), refd to. [para. 32].

Maroney v. Canada, [2002] F.T.R. Uned. 845; 2002 FCT 801, refd to. [para. 33].

Apotex Inc. v. Canada (Minister of Health) et al., [2010] F.T.R. Uned. 845; 2010 FC 1310, refd to. [para. 33].

Airth v. Minister of National Revenue, [2006] F.T.R. Uned. 809; 2006 FC 1442, refd to. [para. 33].

CIBC World Markets Inc. v. Minister of National Revenue (2012), 426 N.R. 182; 2012 FCA 3, refd to. [para. 39].

Association des crabiers Acadiens Inc. et al. v. Canada (Attorney General) (2009), 402 N.R. 123; 2009 FCA 357, refd to. [para. 48].

Canada v. Mid-Atlantic Minerals Inc. (2002), 223 F.T.R. 252; 2002 FCT 569, refd to. [para. 48].

Huzar et al. v. Canada et al. (2000), 258 N.R. 246 (F.C.A.), refd to. [para. 48].

Lake Babine Indian Band et al. v. Williams et al. (1996), 194 N.R. 44 (F.C.A.), refd to. [para. 48].

Krause et al. v. Canada et al., [1999] 2 F.C.R. 476; 236 N.R. 317 (F.C.A.), refd to. [para. 56].

Mikail v. Canada (Attorney General), [2011] F.T.R. Uned. 529; 2011 FC 674, refd to. [para. 56].

Larkman v. Canada (Attorney General), [2012] 4 C.N.L.R. 87; 433 N.R. 184; 2012 FCA 204, refd to. [para. 61].

Counsel:

Guy Du Pont and Michael H. Lubetsky, for the plaintiff;

Andrew Miller, for the defendant.

Solicitors of Record:

Davies Ward Phillips & Vineberg LLP, Montreal, Quebec, for the plaintiff;

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

This motion was heard at Montreal, Quebec, on March 30, 2015, by Bédard, J., of the Federal Court, who delivered the following order and reasons on April 28, 2015.