Judicial review application sought declarations that are 'of no practical effect,' court says
The Federal Court of Appeal (FCA) has dismissed a judicial review application challenging the validity of tax assessments issued by the tax minister against a telecommunications company.
In Canada (Attorney General) v. Iris Technologies Inc., 2022 FCA 101, the respondent, Iris Technologies Inc., was audited and assessed by the Minister of National Revenue under the Excise Tax Act. The respondent then filed a notice of application with the Federal Court, seeking three specific declarations. First, the respondent was denied procedural fairness in the audit and assessment. Second, there was no evidentiary foundation upon which an assessment could be issued. Third, the assessments were issued to deprive the Federal Court of jurisdiction to hear administrative law grievances raised by the respondent in a related application.
In response, the appellant, the Attorney General of Canada, moved to strike out the application. The prothonotary dismissed the motion – an order sustained on appeal by the Federal Court.
The appellant filed an appeal with the FCA, arguing that the Federal Court failed to recognize that the true essence of the respondent’s application was an attack on the validity of the assessments – a matter within the Tax Court of Canada’s exclusive jurisdiction. It also argued that the declarations sought in the application were not cognizable administrative law remedies.
The FCA granted the appeal and struck out the application in its decision.
The court found that the grounds of review cited in the application were situated in the context of the legislative mandate of the minister under the Excise Tax Act and the respective jurisdictions of the Tax Court and the Federal Court. Therefore, the application was, “in essence, a collateral challenge to the validity of the assessments,” a matter within the exclusive jurisdiction of the Tax Court.
“The application also seeks declarations that are of no practical effect,” Justice Donald Rennie wrote. “As such, the application is bereft of any possibility of success.”
As to the first declaration sought by the respondent, the court ruled that the procedural defects committed by the minister in making the assessments were not grounds for setting aside an assessment.
“To the extent the minister ignored, disregarded, suppressed or misapprehended evidence, an appeal under the general procedure in the Tax Court is an adequate, curative remedy,” Justice Rennie wrote. “In the Tax Court appeal, the parties will have the opportunity to discover and present documentary and oral evidence and make submissions.”
The court added that this reasoning is equally dispositive of the second declaration requested – that the assessments were made without an evidentiary foundation.
“Whether the assessment made by the minister is sustained by the evidence is a question precisely within the legislative mandate of the Tax Court,” Justice Rennie wrote.
Regarding the third declaration, the court held that the mere fact that the minister issued an assessment did not oust the jurisdiction of the Federal Court. Where the Tax Court does not have jurisdiction to deal with the minister’s conduct or where the true purpose of the application is to seek practical relief against the exercise of discretion, the court determined that the bar in s. 18.5 of the Federal Courts Act does not apply.
Section 18.5 provides that if an act of Parliament expressly provides for an appeal to courts from a decision of a federal board, commission, or tribunal, that decision is not subject to review or to be removed or set aside.
Moreover, the court found that the appellant had not pointed to any particular motive or conduct of the minister “other than to say that the minister issued the assessments to deprive the Federal Court of jurisdiction in the related Federal Court proceeding.”
“The respondent’s complaint appears to be directed to section 18.5 of the Federal Courts Act and the statutory scheme itself, and not with any particular conduct on the part of the minister,” Justice Rennie wrote.