Waycobah First Nation v. Canada (Attorney General), 2011 FCA 191

• Judge: Nadon, Evans and Layden-Stevenson, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: May 30, 2011
• Jurisdiction: Canada (Federal)
• Citations: 2011 FCA 191;(2011), 421 N.R. 193 (FCA)

Waycobah First Nation v. Can. (A.G.) (2011), 421 N.R. 193 (FCA)

MLB headnote and full text

Temp. Cite: [2011] N.R. TBEd. JL.010

Waycobah First Nation (appellant) v. Attorney General of Canada (respondent)

(A-490-10; 2011 FCA 191)

Indexed As: Waycobah First Nation v. Canada (Attorney General)

Federal Court of Appeal

Nadon, Evans and Layden-Stevenson, JJ.A.

June 6, 2011.

Summary:

In 2000, the Waycobah First Nation (Waycobah) purchased a gas station located on its reserve in Cape Breton. The previous owner, relying on Mi'kmaq treaty rights, never collected HST on gasoline and tobacco sold to non-natives. Waycobah continued the practice. In 2003, litigation determined that Mi'kmaq retailers were required to collect HST on taxable sales to non- natives. Waycobah started collecting the HST, but was still assessed over $1,000,000 in HST that should have been collected and penalties. Waycobah and the Canada Revenue Agency (CRA) agreed to payments of $10,000 per month and the CRA forgave a portion of interest and penalties on the basis of financial hardship. Waycobah was in dire financial straits, as the reserve was running a large deficit and the debt to the CRA precluded critical infrastructure projects. Waycobah stopped the monthly payments and applied under s. 23(2) of the Financial Administration Act for remission respecting its liability for the unreported HST. A CRA official recommended to the Minister that the application be denied. Waycobah applied for judicial review of the official's decision, arguing that the official (1) applied the wrong test for remission by failing to consider relevant factors or considering irrelevant factors; (2) erred by fettering his discretion; and (3) breached the rules of natural justice by failing to consider evidence put forward by Waycobah.

The Federal Court, in a judgment reported (2010), 378 F.T.R. 262, dismissed the application. Waycobah appealed.

The Federal Court of Appeal dismissed the appeal.

Administrative Law - Topic 487

The hearing and decision - The tribunal - "He who decides must hear" - An Indian band sought judicial review of a discretionary decision by the Assistant Commissioner of the Canada Revenue Agency (CRA) dismissing an application for remission of uncollected HST and penalties - The band, relying on the principle "he who hears must decide" argued that the Assistant Commissioner breached the rules of natural justice by not reviewing the band's actual submissions in its request letter - The Federal Court dismissed the band's application - The Assistant Commissioner considered the report of the CRA official who received the submissions and accurately summarized all of the relevant information in the recommendation presented to the Assistant Commissioner - Although the actual text of the submissions were not considered by the Assistant Commissioner, the band was not prevented from raising any of the factors it deemed relevant to its remission application - In any event, the "he who decides must hear" principle applied to judicial and quasi-judicial decisions, it did not apply to discretionary administrative decisions - The Federal Court of Appeal agreed - See paragraphs 30 to 33.

Administrative Law - Topic 2201

Natural justice - Policies, rules or guidelines adopted by board or tribunal - General - The Federal Court of Appeal stated that "it is not unlawful for an administrative decision-maker to base a decision on valid, non-exhaustive guidelines, formulated as a decision-making framework to promote principled consistency in the exercise of a discretion. However, the decision-maker cannot treat guidelines as if they were law, and exhaustive of the factors that may be considered in the exercise of a broader statutory discretion." - See paragraph 28.

Administrative Law - Topic 8264

Administrative powers - Discretionary powers - Fettering of discretion - [See Administrative Law - Topic 2201 ].

Administrative Law - Topic 9102

Boards and tribunals - Judicial review - Standard of review - [See Sales and Service Taxes - Topic 5212 ].

Sales and Service Taxes - Topic 5212

Goods and Services Tax (incl. Harmonized Sales Tax) - Administration, collection and enforcement - General - Remission on basis of fairness or public interest - In 2000, an Indian band purchased a gas station located on its Cape Breton reserve - The previous owner relied on Mi'kmaq treaty rights to refuse to collect HST on gasoline and tobacco sold to non-natives - The band deliberately chose not to collect HST until 2003, when litigation found Mi'kmaq retailers liable to collect HST on taxable sales to non-natives - The band started collecting the HST and agreed to pay $10,000 per month on over $1,000,000 in HST (plus penalties) that should have been collected - The Canada Revenue Agency (CRA) forgave some interest and penalties - The band was in dire financial straits, as it was running a large deficit and the CRA debt precluded critical infrastructure projects - The band ceased the monthly payments and applied under s. 23(2) of the Financial Administration Act, arguing that remission of its liability for the unreported HST was in the "public interest" - A CRA official recommended that remission be denied - Although remission was "rarely" granted as a result of a court decision, it was only when a CRA policy was overturned - Here, the CRA always maintained that the band was obligated to collect the HST and so advised the band - Notwithstanding the band's financial hardship, the remission guidelines required consideration of the band's compliance record and the band had a history of noncompliance - The Federal Court dismissed the band's judicial review application - Applying the pragmatic and functional approach to determining the appropriate standard of review, "a review of the decision not to recommend remission called for considerable restraint" - The discretionary decision was reviewable for "reasonableness" and the court could intervene only if the official failed to consider relevant factors or considered irrelevant factors - The "public interest" was society at large, not one group of taxpayers such as the Indian band members - The official considered all of the relevant factors - He did not fetter his discretion, as he did not elevate the CRA's Remission Guide to the force of law, as argued by the band (i.e., issue not predetermined on basis of guidelines) - It was reasonable to determine that claimed mistaken noncompliance was outweighed by a consistent pattern of deliberate noncompliance - Finally, the court rejected the band's claim that it was denied natural justice - The Federal Court of Appeal affirmed the decision.

Cases Noticed:

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. 12].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 16].

Chogolzadeh v. Canada (Minister of Public Safety and Emergency Preparedness) (2008), 327 F.T.R. 39; 2008 FC 405, refd to. [para. 19].

Robertson v. Minister of National Revenue, [2002] F.T.R. Uned. 876; [2003] D.T.C. 5068; 2003 FCT 16, refd to. [para. 25].

McNaught Pontiac Buick Cadillac Ltd. v. Canada Customs and Revenue Agency (2006), 302 F.T.R. 117; 2006 FC 1296, refd to. [para. 25].

Statutes Noticed:

Financial Administration Act, R.S.C. 1985, c. F-11, sect. 23(2) [para. 6].

Counsel:

Bruce S. Russell, Q.C., and Daniel F. Wallace, for the appellant;

Caitlin Ward, for the respondent.

Solicitors of Record:

McInnes Cooper, Halifax, N.S., for the appellant;

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

This appeal was heard on May 30, 2011, at Halifax, N.S., before Nadon, Evans and Layden-Stevenson, JJ.A., of the Federal Court of Appeal.