Stemijon Investments Ltd. v. Canada (Attorney General), 2011 FCA 299

• Judge: Noël, Trudel and Stratas, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: October 11, 2011
• Jurisdiction: Canada (Federal)
• Citations: 2011 FCA 299;(2011), 425 N.R. 341 (FCA)

Stemijon Inv. Ltd. v. Can. (A.G.) (2011), 425 N.R. 341 (FCA)

MLB headnote and full text

Temp. Cite: [2011] N.R. TBEd. NO.040

Stemijon Investments Ltd. (appellant) v. The Attorney General of Canada (respondent)

(A-376-10)

Canwest Communications Corporation (appellant) v. The Attorney General of Canada (respondent)

(A-374-10)

Canwest Direction Ltd. (appellant) v. The Attorney General of Canada (respondent)

(A-375-10)

Leonard Asper Holdings Inc. (appellant) v. The Attorney General of Canada (respondent)

(A-377-10)

Lenvest Enterprises Inc. (appellant) v. The Attorney General of Canada (respondent)

(A-378-10)

Sensible Shoes Ltd. (appellant) v. The Attorney General of Canada (respondent)

(A-382-10; 2011 FCA 299)

Indexed As: Stemijon Investments Ltd. v. Canada (Attorney General)

Federal Court of Appeal

Noël, Trudel and Stratas, JJ.A.

October 26, 2011.

Summary:

Six corporate taxpayers applied under s. 220(3.1) of the Income Tax Act for relief from penalties and arrears interest reassessed because of late filing of T1135 forms concerning foreign investment property. Relief was denied. The taxpayers applied for judicial review, arguing that the Minister fettered his discretion and the decision was unreasonable.

The Federal Court, in decisions reported 382 F.T.R. 17 and [2010] F.T.R. Uned. 904; [2010] F.T.R. Uned. 905; [2010] F.T.R. 906; [2010] F.T.R. Uned. 908; and [2010] F.T.R. Uned. 909, dismissed the applications for judicial review. The taxpayers appealed. The appeals were consolidated.

The Federal Court of Appeal dismissed the appeals. Although the Minister's decisions were unreasonable because of a fettering of discretion, the court exercised its discretion to deny relief.

Administrative Law - Topic 8264

Administrative powers - Discretionary powers - Fettering of discretion - The Federal Court of Appeal noted that in the past fettering of discretion had been an automatic or nominate ground for setting aside administrative decision making because it was not open to decision makers to cut down the scope of their discretion given by law - The court noted that the past practice sat uncomfortably with Dunsmuir (SCC 2008), which encouraged courts to conduct reviews on the basis of either the correctness or reasonableness methodology - The court noted, however, that Dunsmuir, did not deal with the fettering of discretion situation - The court held that, in this case, where there was a fettering of discretion in the decision making, the methodology issue did not have to be settled, because the result was the same (i.e., a decision that was a product of a fettered discretion had to per se be unreasonable) - See paragraphs 20 to 25.

Administrative Law - Topic 8264

Administrative powers - Discretionary powers - Fettering of discretion - The Federal Court of Appeal stated that "... decision-makers who have a broad discretion under a law cannot fetter the exercise of their discretion by relying exclusively on an administrative policy ... An administrative policy is not law. It cannot cut down the discretion that the law gives to a decision-maker. It cannot amend the legislator's law. A policy can aid or guide the exercise of discretion under a law, but it cannot dictate in a binding way how that discretion is to be exercised" - See paragraph 60.

Administrative Law - Topic 8268

Administrative powers - Discretionary powers - Judicial review - [See first Administrative Law - Topic 8264 ].

Income Tax - Topic 7803

Returns, assessments, payment and appeals - Interest - Waiver - [See Income Tax - Topic 7824 ].

Income Tax - Topic 7824

Returns, assessments, payment and appeals - Penalties - Waiver - Corporate taxpayers applied for relief from penalties and arrears interest reassessed because of late filing of T1135 forms concerning foreign investment property (Income Tax Act, s. 220(3.1)) - The forms were not filed because the taxpayers' financial representative mistakenly believed that where an investment portfolio was managed by a Canadian investment manager subject to Canadian tax reporting requirements, T1135 forms were not required to be filed - Relief was denied in a letter from the Minister of National Revenue - The taxpayers applied for judicial review, arguing that the Minister fettered his discretion - The Federal Court dismissed the application - The taxpayers appealed - The Federal Court of Appeal held that the Minister fettered his discretion by failing to draw upon the law that was the source of his authority (i.e., s. 220(3.1)), and instead drawing solely on an Information Circular - His decisions therefore became unreasonable - They fell outside the range of defensibility and acceptability - However, the court exercised its discretion to deny relief where no practical end would be accomplished by setting aside the Minister's decision and returning the matter for redetermination - The Minister could not reasonably grant relief on these facts - Therefore, the appeals were dismissed.

Cases Noticed:

Telfer v. Canada Revenue Agency (2009), 386 N.R. 212; 2009 FCA 23, refd to. [para. 20].

Slau Ltd. v. Canada Revenue Agency (2009), 394 N.R. 106; 2009 FCA 270, refd to. [para. 20].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 20].

Maple Lodge Farms Ltd. v. Canada and Canada (Minister of Economic Development), [1982] 2 S.C.R. 2; 44 N.R. 354, refd to. [para. 22].

Kane v. Canada (Attorney General) et al. (2011), 413 N.R. 351; 2011 FCA 19, refd to. [para. 23].

Vancouver International Airport Authority et al. v. Public Service Alliance of Canada (2010), 403 N.R. 363; 320 D.L.R.(4th) 733; 2010 FCA 158, refd to. [para. 37].

Keeprite Workers' Independent Union v. Keeprite Products Ltd. (1980), 29 O.R.(2d) 513; 114 D.L.R.(3d) 162 (C.A.), refd to. [para. 41].

Chandler v. Alberta Association of Architects, [1989] 2 S.C.R. 848; 99 N.R. 277; 101 A.R. 321, refd to. [para. 41].

United Brotherhood of Carpenters and Joiners of America, Local 1386 v. Bransen Construction Ltd. et al. (2002), 249 N.B.R.(2d) 93; 648 A.P.R. 93; 2002 NBCA 27, refd to. [para. 41].

R. v. Teskey (L.M.), [2007] 2 S.C.R. 267; 364 N.R. 164; 412 A.R. 361; 404 W.A.C. 361; 2007 SCC 25, refd to. [para. 41].

MiningWatch Canada v. Canada (Minister of Fisheries and Oceans) et al., [2010] 1 S.C.R. 6; 397 N.R. 232; 2010 SCC 2, refd to. [para. 45].

Dennis v. Adams Lake Indian Band (2011), 419 N.R. 385; 2011 FCA 37, refd to. [para. 45].

Community Panel of the Adams Lake Indian Band v. Adams Lake Band - see Dennis v. Adams Lake Indian Band.

Spence v. Canada Revenue Agency (2010), 382 F.T.R. 1; 2010 FC 52, refd to. [para. 55].

Thamotharem v. Canada (Minister of Citizenship and Immigration) (2007), 366 N.R. 301; 2007 FCA 198, refd to. [para. 59].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 220(3.1) [para. 26].

Counsel:

Ian S. MacGregor and Peter Macdonald, for the appellants;

Josée Tremblay and Julian Malone, for the respondent.

Solicitors of Record:

Osler, Hoskin & Harcourt LLP, Ottawa, Ontario, for the appellants;

Myles J. Kirvan, Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

These appeals were heard in Ottawa, Ontario, on October 11, 2011, before Noël, Trudel and Stratas, JJ.A., of the Federal Court of Appeal. The following decision was delivered for the court by Stratas, J.A., on October 26, 2011.