Trang v. Nguyen et al., (2012) 300 O.A.C. 94 (CA)

• Judge: Simmons, Juriansz and Epstein, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 20, 2012
• Jurisdiction: Ontario
• Citations: (2012), 300 O.A.C. 94 (CA);2012 ONCA 885

Trang v. Nguyen (2012), 300 O.A.C. 94 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. DE.042

Rosaline Trang (plaintiff/respondent) v. Ha T. Nguyen (also known as Carolyn Nguyen), and Quoc Dung Tran (also known as Alexander Tran) and Her Majesty the Queen in Right of Canada (Canada Revenue Agency) (defendants/appellant/respondents)

Carolyn Nguyen (applicant/respondent) v. Alexander Tran and Her Majesty the Queen in Right of Canada (Canada Revenue Agency) (respondents/appellant/respondent)

(C55014; 2012 ONCA 885)

Indexed As: Trang v. Nguyen et al.

Ontario Court of Appeal

Simmons, Juriansz and Epstein, JJ.A.

December 17, 2012.

Summary:

Alexander Tran owed the Canada Revenue Agency (CRA) $1.6 million in unpaid income taxes and GST. The CRA registered liens for the amounts owing against the title to three Ontario properties which Tran owned, or co-owned, with his wife. Tran was convicted of income tax evasion in 2009. Following his conviction, his sister, Rosaline Trang, commenced a civil action and his wife, Nguyen, commenced family law proceedings each seeking a declaration that they held an unregistered equitable interest in one or more of Tran's properties. The sister claimed she had equitable mortgages over all her brother's lands. The wife claimed that she was entitled to a 50% share of a business property registered in Tran's name alone based on work she did in the business. The CRA was added as a party to each proceeding. The proceedings were to be heard together. The CRA brought a motion under rule 21.01(1)(a) of the Rules of Civil Procedure to determine whether the equitable interests could, if proven, entitle them to payment in priority to the CRA's registered liens.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 7076, held that the unregistered equitable interests of Tran's wife and sister could be payable in priority to the CRA's subsequent liens. The CRA appealed.

The Ontario Court of Appeal dismissed the appeal.

Income Tax - Topic 9238

Enforcement - Collection - Lien or levy - Priorities - Alexander Tran owed the Canada Revenue Agency (CRA) $1.6 million in unpaid income taxes and GST - The CRA registered liens for the amounts owing against the title to three Ontario properties which Tran owned, or co-owned, with his wife - Tran was convicted of income tax evasion - Following his conviction, his sister and his wife each commenced proceedings seeking a declaration that they held an unregistered equitable interest in one or more of Tran's properties - A motions judge held that the unregistered equitable interests could, if proven, be payable in priority to the CRA's subsequent liens - The CRA appealed - Section 223(5)(b) of the Income Tax Act (ITA) adopted the scheme of priority created for collection of amounts owing to the provincial Crown - The CRA argued that the combined effect of ss. 223(5)(b) and 223(6) of the ITA, s. 93(3) of the Land Titles Act, s. 2 of the Land Registration Reform Act and the provisions of the various debt enforcement provisions of Ontario taxing statutes was that registration of a memorial evidencing an income tax debt in a Land Titles Office gave the memorial priority over prior unregistered equitable interests - The Ontario Court of Appeal rejected the argument - A voluntary act by the land owner was necessary to create a charge under s. 93 of the Land Titles Act - The CRA's liens were created by statute rather than by a land owner's voluntary act - Also, the court was not persuaded that the Ontario Legislature intended to create "a charge" within the meaning of the Land Titles Act when it enacted the various tax collection provisions on which the CRA relied - See paragraphs 54 to 73.

Practice - Topic 8327.2

Costs - Appeals - Costs of appeal - Solicitor and client costs - Before a motion judge, the Canada Revenue Agency (CRA) relied on s. 223(5)(a) of the Income Tax Act (ITA) to argue that, once registered against the title to land under the Land Titles Act, a memorial created a "charge" on land within the meaning of s. 93(3) of the Land Titles Act, such that the memorial had priority over unregistered equitable interests - On appeal, the CRA relied on ss. 223(5)(b) of the ITA to make the same argument - It offered no explanation for why it did not raise its s. 223(5)(b) argument before the motion judge - The Ontario Court of Appeal held that, although the CRA should have raised its s. 223(5)(b) argument below, it would still consider the argument on the merits - Section 223(5)(b) was closely linked to s. 223(5)(a), which was the main provision at issue in the court below - The argument the CRA now made was strictly a legal one, putting the court in as good a position as the motion judge to decide it - The court dismissed the CRA's appeal - Given that there were arguments raised for the first time on appeal which should have been raised and dealt with in the court below, the court awarded the respondents their costs of the appeal on a substantial indemnity basis - See paragraphs 51 and 53 and 81.

Practice - Topic 9012

Appeals - Restrictions on argument on appeal - Issues or points not previously raised - [See Practice - Topic 8327.2 ].

Real Property - Topic 1741

Equitable estates and interests - Equitable interests - General - [See Income Tax - Topic 9238 ].

Real Property - Topic 7968

Title - Registration of instruments, etc. - Priorities - Equitable interests - [See Income Tax - Topic 9238 ].

Sales and Service Taxes - Topic 5207

Goods and services tax (incl. harmonized sales tax) - Administration, collection and enforcement - General - Liens - [See Income Tax - Topic 9238 ].

Cases Noticed:

Mutual Trust Co. v. Creditview Estate Homes Ltd. (1997), 102 O.A.C. 246; 34 O.R.(3d) 583 (C.A.), refd to. [para. 32].

Canada (Attorney General) v. Collins (Keith G.) Ltd. (2008), 226 Man.R.(2d) 290; 2008 MBQB 64, affd. (2008), 228 Man.R.(2d) 266; 427 W.A.C. 266; 2008 MBCA 92, dist. [para. 47].

Investors Group Trust Co. v. Eckhoff et al. (2008), 307 Sask.R. 164; 417 W.A.C. 164; 2008 SKCA 18, refd to. [para. 49].

Statutes Noticed:

Excise Tax Act, R.S.C., 1985, c. E-15, sect. 315 [para. 8, footnote 2].

Income Tax Act, R.S.C. 1985, c. 1 (5th. Supp.), sect. 223(5), sect. 223(6) [para. 34]; sect. 223(11.1) [para. 35].

Land Titles Act, R.S.O. 1990, c. L-5, sect. 93 [para. 36].

Counsel:

Andrew Gibbs, for the appellant;

Michael S. Hebert, for Rosaline Trang;

Gregory A. Ste. Marie, for Carolyn Nguyen.

This appeal was heard on July 20, 2012, before Simmons, Juriansz and Epstein, JJ.A., of the Ontario Court of Appeal. Simmons, J.A., released the following decision for the court on December 17, 2012.