David Creaghan, Executor of the Estate of
Thomas Cyril Creaghan (Suppliant)
v.
The Queen (Respondent)
Trial Division, Pratte J.—Montreal, April 17;
Ottawa, April 28, 1972.
Practice and procedure—Motion to strike out petition of
right—Whether reasonable cause of action disclosed—
Whether abuse of process of Court—Federal Court Rule
419.
The executor of C's estate by petition of right prayed that
a sum obtained by the Department of National Revenue
from an insurance company as a result of an estate tax
assessment against the estate be returned to the estate. The
petition alleged that a notice of assessment was sent to the
estate's notary instead of to the executor as required by
section 12 of the Estate Tax Act. Suppliant had requested
that "communications" be sent to the notary.
Held, a motion to strike out the petition of right must be
dismissed. It should not be struck out as disclosing no
reasonable cause of action since it was arguable that the
notice of assessment was not sent as required by the Act.
Nor should it be struck out as being vexatious and an abuse
of the process of the Court because of suppliant's request
that "communications" be sent to the notary, since it was
arguable that the word "communications" could not apply
to a notice of assessment in view of the provisions of the
Act.
MOTION by respondent.
Peter O'Brien for suppliant.
A. Garon and G. J. Rip for respondent.
PRATTE J.—The respondent applies for an
order that the suppliant's petition of right be
struck out on the following grounds:
(a) that it discloses no reasonable cause of
action against Her Majesty;
(b) that it is vexatious and an abuse of the
process of the Court.
The petition of right could certainly have
been drafted in a more articulate manner; it
reads as follows:
... The humble petition of DAVID CREAGHAN, Execu
tor of the Estate of Thomas Cyril Creaghan, showeth that:
1. That by assessment dated November 14, 1968, the
Department of National Revenue did assess the Estate of
Thomas Cyril Creaghan in the amount of $14,096.60.
2. That this assessment was forwarded to the Notary of
the estate who in turn on December 3, 1968, wrote a letter
forwarding the assessment to the company, which Mr.
Creaghan had previously been associated with.
3. This assessment did not reach Mr. Creaghan until
delays for objection had expired. Mr. Creaghan verbally
pointed this out to the Department and further pointed out
that he had a valid objection. The Department agreed to
examine the objection and with Mr. Creaghan's accountants
did so examine the objection during the Summer of 1969.
The Department subsequently stated that they did not feel
the objection was valid and advised Mr. Creaghan that they
would proceed with the assessment.
4. That by third party notice purporting to be under the
terms of one or more acts, not including the Estate Tax Act,
the said sum of $14,663.23 was claimed from the Prudential
Assurance Co. Limited and the sum of $3,777.00 has been
paid to the Department of National Revenue as a result of
the said claim.
5. That Defendant had good and valid objection to the
purported assessment in that the amount assessed had no
real value and was simply a technical waiver of claim for an
amount which never could be paid.
6. That subsequent events have shown that this is in fact
the case.
Your suppliant therefore humbly prays "that the amount
obtained by the Department of National Revenue from The
Prudential Assurance Company Limited under its demand
on third parties as a result of the alleged assessment be
returned to claimant" and that the notice of assessment
issued November 14, 1968, be declared invalid insofar as
Petitioner is concerned for all purposes, the whole with
costs.
In support of her motion, the respondent filed
affidavits establishing the following facts:
1. On June 23, 1967, the suppliant, acting
as the executor of the estate of the late
Thomas Cyril Creaghan, filed an estate tax
return pursuant to the provisions of the
Estate Tax Act;
2. There was, on the form of return thus
completed and filed by the suppliant, a space
in the upper part of which the following
words were printed: "Name and address of
person to whom communications should be
sent". In this space, the suppliant had written
the name and address of the notary of the
estate, "Harvey A. Corn, Notary, 620 Dor-
chester Blvd. West, Montreal 2, Que.";
3. On November 14, 1968, a notice of
assessment relating to the estate of Thomas
Cyril Creaghan was mailed to Mr. Corn at the
above-mentioned address;
4. No notice of objection or of appeal from
the said assessment was ever received by the
Department of National Revenue.
At the hearing, counsel for the respondent
argued that the motion should be allowed for
the following reasons:
(a) There is nothing in the petition of right
which could warrant suppliant's claim that he
be paid the sum that the Crown allegedly
received from The Prudential Assurance
Company Ltd. In the event of the Crown
having received this payment without being
entitled to it, then, counsel argued, it should
reimburse it to the Prudential Assurance
Company, not to the suppliant;
(b) With respect to the suppliant's prayer that
the notice of assessment issued November
14, 1968, be declared invalid, counsel con
tended that the petition of right was nothing
but an attempt by the suppliant to contest the
validity of the assessment otherwise than in
the way and within the time limit specified in
the Estate Tax Act; counsel referred me to
the decision of the Exchequer Court in Sub
sidiaries Holding Co. v. The Queen [1956]
C.T.C. 240, at pp. 248 and 252 in order to
show that such an attempt was bound to
failure.
Counsel for the suppliant did not answer the
first branch of the argument put forward by
counsel for the Crown in connection with the
sum paid by The Prudential Assurance Compa
ny Limited. He, however, objected strenuously
to the second branch of that argumentation. He
denied that the suppliant, by his petition, was
seeking to obtain the annulment or modification
of the assessment made by the Minister of
National Revenue. Referring to the concluding
sentence of the petition, he pointed out that the
suppliant merely prayed that the notice of
assessment dated November 14, 1968, not the
assessment itself, be declared invalid. Counsel
further argued that from the facts alleged in the
petition as well as from those adduced in evi
dence, one could reasonably infer that no notice
of assessment had ever been sent to the suppli
ant as required by the Estate Tax Act. Indeed,
section 12(2) of the Estate Tax Act, S.C. 1958,
c. 29 (now R.S.C. 1970, c. E-9, s. 12(2)), pro
vides that
12. (2) After examination of a return and after making the
assessment required by subsection (1), the Minister shall
send a notice of assessment to each of the executors of the
estate of the deceased ... .
On the other hand, it is common ground here,
that the notice of assessment issued on Novem-
ber 14, 1968, was not sent to the executor of
the estate of the late Thomas Cyril Creaghan, as
required by the above-quoted subsection of sec
tion 12, but to the notary of the estate. Counsel
concluded that it can reasonably be argued that,
in these circumstances, the suppliant is entitled
to a judgment declaring that the notice of
assessment was not sent as required by section
12 of the Estate Tax Act. It may be noted here
that the suppliant's interest in getting such a
declaration would arise from another section of
the same Act S.C. 1958, c. 29, s. 22 (now
R.S.C. 1970, c. E-9, s. 24) which provides that
the time limit within which an objection may be
made to an assessment starts to run from the
date of the mailing of the notice of assessment
"sent by the Minister pursuant to section 12".
Before saying how I propose to dispose of
this application, a few preliminary remarks are
perhaps in order:
(1) On a motion to strike out a statement
of claim made under Rule 419, the Court may
not, in order to determine whether or not the
statement discloses a reasonable cause of
action, take into consideration the evidence
adduced in support of the motion. The Court,
however, must take this evidence into consid
eration in deciding whether the statement of
claim is frivolous, vexatious or otherwise an
abuse of the process of the Court (Rule
419(2)).
(2) Inasmuch as a motion to strike out a
statement of claim is made under Rule
419(1)(a), the Court is not called upon to
decide whether the allegations of the state
ment of claim, assuming them to be true,
disclose a cause of action, but whether they
disclose a reasonable cause of action. In this
respect a motion made under Rule 419(1)(a)
differs from a motion made under article
165(4) of the Code of Civil Procedure of the
Province of Quebec, which reads as follows:
165. The defendant may ask for the dismissal of the
action if:
4. The suit is unfounded in law, even if the facts alleged
are true.
When a motion is made under this section of
the Code of Civil Procedure, the Court must
decide whether or not the suit is founded in
law, assuming all the allegations of the decla
ration to be proved. But when a motion is
made before this Court under Rule 419(1)(a),
the Court merely has to decide whether the
plaintiff, assuming all the facts alleged in the
statement of claim to be true, has an arguable
case.
(3) Finally, in my view, a statement of
claim should not be ordered to be struck out
on the ground that it is vexatious, frivolous or
an abuse of the process of the Court, for the
sole reason that in the opinion of the presid
ing judge, plaintiff's action should be dis
missed. In my opinion, a presiding judge
should not make such an order unless it be
obvious that the plaintiff's action is so clearly
futile that it has not the slightest chance of
succeeding, whoever the judge may be before
whom the case could be tried. It is only in
such a situation that the plaintiff should be
deprived of the opportunity of having "his
day in Court".
In the light of these remarks, I shall now say
how respondent's application will be disposed
of.
Inasmuch as the suppliant prays "that the
amount obtained by the Department of National
Revenue from The Prudential Assurance Com
pany Limited ... be returned to claimant", I
think, for the reasons put forward by counsel
for the respondent, that the petition of right
does not disclose any reasonable cause of
action. I will therefore order that the above-
quoted part of the prayer for relief as well as
paragraph 4 of the petition of right be struck
out.
However, as to the rest of the petition of
right, I am of the opinion that it discloses a
reasonable cause of action. Suppliant alleges in
his petition, that the notice of assessment,
instead of having been sent to him, as required
by section 12 of the Estate Tax Act, was sent to
the notary of the estate. Assuming this fact to
be true, it is certainly arguable that the suppli
ant has the right to obtain a judgment declaring
that the notice of assessment issued on Novem-
ber 14, 1968, was not sent or mailed pursuant
to the provisions of the Estate Tax Act. For this
reason the suppliant's petition of right may not
be struck out in its entirety on the ground that it
does not disclose a reasonable cause of action.
However, should not the petition be struck
out on the ground that it is vexatious and an
abuse of the process of the Court, if one takes
into consideration the evidence adduced by the
respondent in support of her motion? Indeed,
the affidavits filed show that the notice of
assessment was sent to the notary of the estate
for the reason that the suppliant himself, in the
estate tax return that he had filed with the
Department, had directed that all further "com-
munications" be sent to his notary. Relying on
that undisputed fact, counsel for the respondent
argued that the notice of assessment had been
sent to the suppliant's agent and that it should
be considered as having been sent to the suppli
ant himself. On the other hand, counsel for the
suppliant contended that the direction, con
tained in the estate tax return, to the effect-that
"communications" should be sent to the notary
of the estate, could not apply to the notice of
assessment which, according to the very words
of the statute, was to be sent to the suppliant
himself. On this issue, I will only say that the
contention put forward on behalf of the suppli
ant does not appear to be devoid of merit as to
warrant my striking out his petition of right on
the ground that it is vexatious and an abuse of
the process of the Court.
For these reasons, respondent's motion will
be allowed only in part. However, the respond
ent will be entitled to her costs of this motion
whatever be the event of the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.