T-618-74
The Queen (Plaintiff)
v.
Oneil Lambert (Defendant)
Trial Division, Walsh J.—Montreal, May 27;
Ottawa, June 4, 1974.
Income tax—Claim following reassessment—Certificate
and orders imposing charge on assets of taxpayer—Order for
examination of taxpayer—Further assessment—Validity of
proceedings challenged in three motions—Motions dis-
missed—Income Tax Act, ss. 152, 158, 163, 165, 223, 224,
239—Canada Evidence Act, R.S.C. 1970, c. E-10, ss. 2, 5—
Federal Court Act, s. 50, Rules 1909, 2100, 2200, 2400,
2401.
By notice of reassessment in 1973, the defendant was
reassessed for the taxation years 1968-71, for additional
taxes amounting with interest to $211,000. The Crown
obtained a certificate under section 223 of the Income Tax
Act for the amount claimed, in the sum of $209,000, of
which $205,000 remained unpaid. Pursuant to the certifi
cate, orders were obtained by the Crown charging securities
(Rule 2401) and land (Rule 2400), and directing the defend
ant to attend for examination as to assets (Rule 2200). In
1974, further "reassessments" for the same taxation years
added a claim for a further $296,000, including a penalty of
25 per cent under section 163(2X3). The validity of these
proceedings was challenged by the defendant in three
motions.
Held, dismissing all three motions:
Motion No. 1 to suspend proceedings in execution and for
examination: There was no defect in the procedural steps
taken by the Minister under section 223(2) (registration of
certificate) and section 224 (notices of garnishment). The
defendant's contention, that the seizures already made were
sufficient guarantee to cover the amount due, was irrelevant
at this stage as the value was to be determined when the
properties under seizure were sold.
Motion No. 2 to evoke the defendant's examination to the
Court, for review of questions to which the defendant
objected: The provisions of the Canada Evidence Act, sec
tion 5, protected the defendant against self-incrimination by
the use of his answers in the interrogation as to his assets in
criminal proceedings against him. There could be no objec
tion to a simple interrogation of defendant as to his assets,
merely because the answers might be used against him in
justifying the penalty of 25 per cent sought by the Minister
under section 163(2X3) of the Income Tax Act. The defend
ant should appear again for examination, in the course of
which he could testify with the protection of the Court, by
virtue of the Canada Evidence Act.
Motion No. 3 seeking a declaration that the certificate
obtained on reassessments in 1973 was rendered null and
void by the «reassessments» in 1974: Although the form
used on the second occasion was somewhat misleading, it
could be discerned that there was no "reassessment" so as
to annul the reassessments of 1973. In 1974 there were
"additional assessments" to those on which the defendant
remained liable. Such additional assessments were made
within the authority of section 152(4X8) of the Act. Under
section 165(7) the defendant could appeal to the Tax
Review Board or the Federal Court from both the 1973
reassessments and the 1974 additional assessments.
Abrahams (No. 2) v. M.N.R. [1967] 1 Ex.C.R. 333;
Walkem v. M.N.R. 71 DTC 5288; Morch v. M.N.R. 49
DTC 649, followed. Batary v. The Attorney General for
Saskatchewan [1965] S.C.R. 465, considered.
MOTIONS.
COUNSEL:
Jean Potvin and Jacques Ouellet for
plaintiff.
Claude Desaulniers for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Stikeman, Elliott & Co., Montreal, for
defendant.
The following are the reasons for judgment
delivered in English by
WALSH J.: Three motions came before the
Court in this matter as follows:
1. A motion by defendant by virtue of section
50 of the Federal Court Act' and Rule 1909
to suspend execution proceedings on a certifi
cate obtained by plaintiff on February 13,
1974 for income tax in the amount of $209,-
020.36 of which $205,981.51 remained
unpaid, and to quash an order issued by the
Court on March 14, 1974 requiring defendant
to appear in the Registry of the Court on
April 1, 1974 for interrogation as to his assets
by L. Joseph Daoust, an officer of the Court,
or, alternatively, to suspend this order, on
conditions to be fixed by the Court;
1 R.S.C. 1970, c. 10 (2nd Supp.).
2. A motion by defendant by virtue of Rule
2200(3) to evoke to the Court the examina
tion of defendant who had refused to reply to
questions put to him before the Registrar, L.
Joseph Daoust, who had then dismissed his
objections to these questions and refused to
refer the examination to the Court;
3. A motion by defendant seeking a declara
tion that the certificate obtained against
defendant by virtue of reassessments dated
October 30, 1973 is null and void as a result
of new reassessments dated May 7, 1974, and
that as a consequence the order for examina
tion as to assets issued under the authority of
this certificate is now inoperative and that all
the seizures, formal notices to third parties,
and registrations of privilege made or done by
virtue of this certificate are also null, and
seeking the release of them.
Since the motions are connected and arise out
of the same facts, all three were argued simul
taneously. It is necessary to review briefly the
background of the matter.
By notices of reassessment dated October 30,
1973 defendant was reassessed for his 1968,
1969, 1970 and 1971 taxation years additional
taxes amounting, with interest, to $211,979.85 2 .
Notices of objection to these assessments were
duly made by defendant on November 22, 1973.
The Minister did not reply to these and provi
sional orders based on the certificate were
issued by the Court on March 14, 1974 impos
ing a charge on securities and to show cause
2 The figures in these assessments do not correspond with
those on which the certificate was based which indicated
total tax arrears for these years of $141,653.21, penalty in
the amount of $32,761.80 and interest in the amount of
$34,605.35, making a total of $209,020.36, of which $205,-
981.51 was outstanding, but the arithmetic involved is not
an issue at this stage of the proceedings.
pursuant to Rule 2401, an order imposing a
charge on various parcels of land and to show
cause pursuant to Rule 2400, and an order to
attend for examination as to assets pursuant to
Rule 2200, all returnable on April 1, 1974. The
orders to show cause were made definitive by
judgments dated April 1, 1974.
Defendant appeared for examination as to his
assets before Mr. Daoust pursuant to the order
issued by the Court, at which stage defendant
refused to answer any questions, demanding
that the matter be referred to the Court to
decide on the validity of his refusal to answer.
Mr. Daoust, faced with an order of the Court
that the examination be held before him, dis
missed this objection, refusing to refer the
entire examination to the Court. He allegedly
did so on the basis of Rule 2200(3) which reads
as follows:
Rule 2200. (3) Any difficulty arising in the course of an
examination under this Rule before the prothonotary or
other officer, including any dispute with respect to the
obligation of the person being examined to answer any
question put to him, may be referred to the Court, and the
Court may determine it or give such directions for determin
ing it as it thinks fit.
taking the position that this Rule merely permits
the referring of "any question" to the Court, but
that to refer the entire examination to the Court
would be contrary to the order requiring that it
take place before him. It is this decision which
is the subject of the motion referred to as No. 2
above. Defendant's counsel takes the position,
although it is common ground that this argument
was not raised before Mr. Daoust, that defend
ant's refusal to answer any questions as to his
assets was based on the fear of incriminating
himself as he anticipated that criminal proceed
ings might be brought against him, although they
had not been at that time. I will deal with this
objection later after completing my review of
the facts. In due course, it is common ground
between the parties, although the complaint
itself is not in the file, a complaint was laid
against defendant under section 239 of the
Income Tax Act. Subsequently, on May 7, 1974
further "reassessments" were made of defend
ant's income tax for the said years 1968 to 1971
inclusive whereby a further claim for $296,-
172.36 was added which includes a 25% penal
ty under section 163(2) of the present Income
Tax Act (section 56(2) of the former Act, R.S.C.
1952, c. 148 with amendments). Defendant's
principal contention is that these "reassess-
ments" had the effect of replacing the previous
reassessments with the result that all proceed
ings taken by virtue of the latter became null
and void, and that he has 30 days from the date
of mailing of the notices of reassessment in
order to pay the amounts claimed, by virtue of
section 158(1) of the Act, as the Minister has
not made a direction under section 158(2) of the
Act that the tax penalties and interest be paid
forthwith following the said reassessments of
May 7, 1974 so that the amounts due cannot be
certified by the Minister until 30 days after
default by virtue of section 223 of the Act.
These sections read as follows:
158. (1) The taxpayer shall, within 30 days from the day
of mailing of the notice of assessment, pay to the Receiver
General of Canada any part of the assessed tax, interest and
penalties then remaining unpaid, whether or not an objection
to or appeal from the assessment is outstanding.
(2) Where, in the opinion of the Minister, a taxpayer is
attempting to avoid payment of taxes, the Minister may
direct that all taxes, penalties and interest be paid forthwith
upon assessment.
223. (1) An amount payable under this Act that has not
been paid or such part of an amount payable under this Act
as has not been paid may be certified by the Minister
(a) where there has been a direction by the Minister
under subsection 158(2), forthwith after such direction,
and
(b) otherwise, upon the expiration of 30 days after the
default.
In support of this argument defendant's counsel
referred to the cases of Abrahams (No. 2) v.
M.N.R. 3 and Walkem v. M.N.R. 4 . Both of these
cases decided that an appeal against an initial
reassessment could not be proceeded with when
it was replaced by a valid second reassessment
since the first reassessment has thereby become
a nullity. In rendering judgment in the
Abrahams case, Jackett P., as he then was,
stated at page 335:
The difference between the first re-assessment and the
second re-assessment is that, by the second re-assessment,
the appellant is assessed on the basis that his income is the
amount on which the first re-assessment was based plus an
additional amount.
and again at page 336:
Assuming that the second re-assessment is valid, it fol
lows, in my view, that the first re-assessment is displaced
and becomes a nullity. The taxpayer cannot be liable on an
original assessment as well as on a re-assessment. It would
be different if one assessment for a year were followed by an
"additional" assessment for that year. Where, however, the
"re-assessment" purports to fix the taxpayer's total tax for
the year, and not merely an amount of tax in addition to that
which has already been assessed, the previous assessment
must automatically become null. [Italics mine.]
The Walkem case followed this and also dis
cussed several other judgments dealing with the
same problem. After quoting the paragraph
from page 336 of the Abrahams case referred to
above, the Walkem judgment stated at page
5291:
In the present case, I do not consider that the final
re-assessment number 242468 constitutes an additional
assessment over and above the two re-assessments numbers
168531 and 168538 which were first appealed from merely
because it adds $117.44 interest to the assessment for
$33,108.89 tax which, as already pointed out, represents the
total of the two earlier re-assessments. On the contrary, it
seems to purport to fix the taxpayer's total tax for the year
and not merely an amount of tax in addition to that which
had already been assessed and, therefore, nullifies the previ
ous re-assessments in accordance with the Abrahams
judgment.
3 [1967] 1 Ex.C.R. 333.
71 DTC 5288.
Again, at page 5292, the Walkem judgment
states:
On the contrary, I find that the real distinction lies, as
implied in the Abrahams case (supra), in deciding whether
or not the new re-assessment completely replaces all previ
ous assessments or re-assessments so that there is no longer
any issue before the Board or Court on those previous
assessments or re-assessments, in which case the Board or
Court no longer has any jurisdiction to hear the original
appeal, or whether, on the other hand, it is merely an
additional assessment for an additional amount, which may
perhaps even be based on a different issue, in which case
the original assessment or re-assessment has not been
replaced and the issue arising out of it can still be litigated
leaving to a later date the hearing of an appeal against the
second re-assessment unless by agreement they are joined
for hearing.
In the light of these comments it is necessary
to examine the "reassessments" of May 7, 1974
closely. These were all made on forms known as
T7WC which are headed "Notice of Re-assess
ment" and annexed to each is a form entitled
"Adjustments to Declared Income" which pur
ports to explain the changes made and it is this
latter form which refers to the penalties under
section 56(2) of the former Act (section 163(2)
of the present Income Tax Act). It is not neces
sary to go into the figures on all of these forms
and it will be more convenient to look at the last
one, for the year 1971. This starts with a
column showing previous net balance of $157,-
383.94 which represents the cumulative balance
from the reassessments of May 7, 1974 for the
three preceding years 1968, 1969 and 1970. In
an inner column there appears an assessment
entitled "This Year" $169,423.01 from which is
deducted "Previous Assessment" of $46,750.95
leaving the figure designated as "Increase This
Year" of $122,672.06 which is carried to the
outside column and added to the figure of
$157,383.94 brought forward from the previous
year. Interest charged on the increase is shown
as $16,116.36 and the addition of these figures
makes a total of $296,172.36 indicated as being
"Balance Owing for Years Reassessed". It is
evident that this balance was obtained after
giving credit for the sum of $46,750.95 indicat
ed as being the previous assessment, which was
the assessment for the year 1971 shown in the
October 30, 1973 assessment. Similarly, in the
May 7, 1974 reassessment credit is given in the
year 1968 for a previous assessment in the
amount of $22,223.24, for 1969 in the amount
of $52,924.07 and in 1970 in the amount of
$91,668.38, these being the amounts shown in
the reassessments of October 30, 1973 for each
of the years in question. It is evident therefore
that the figure of $296,172.36 representing the
cumulative total resulting from the May 7, 1974
assessments does not represent the total amount
allegedly owing by defendant who also owes the
amounts shown in the reassessments of October
30, 1973 which resulted in a cumulative total of
$211,979.85. At the bottom of the May 7, 1974
reassessment for the year 1971 showing the
cumulative total of $296,172.36 there is a foot
note which reads (translated): "This notice
reflects the unpaid balance resulting from
assessments established to this date. If amounts
already assessed are due a consolidated state
ment of account will be established by the Taxa
tion Data Centre in Ottawa". It is interesting to
note, although not directly in issue, that the
October 30, 1973 reassessments were made in
exactly the same way, indicating an assessment
for each of the years 1968 to 1971 inclusive in
question and in each case giving a credit for the
amount of a previous assessment and then
carrying forward the balances which, with inter
est added, makes the final figure of $211,-
979.85, the notice of reassessment for 1971
bearing the identical footnote I have already
referred to which appeared on the May 7, 1974
assessment. In effect, therefore, the October 30,
1973 reassessments were also not complete in
themselves so that in addition to the cumulative
total shown in them, the taxpayer also owed the
amounts for which he had been given credit for
each of the years in question which were re
flected by previous assessments.
Plaintiff relies on section 152(4) of the
Income Tax Act which reads as follows:
152. (4) The Minister may at any time assess tax, interest
or penalties under this Part or notify in writing any person
by whom a return of income for a taxation year has been
filed that no tax is payable for the taxation year, and may
(a) at any time, if the taxpayer or person filing the return
(i) has made any misrepresentation that is attributable
to neglect, carelessness or wilful default or has commit
ted any fraud in filing the return or in supplying any
information under this Act, or
(ii) has filed with the Minister a waiver in prescribed
form within 4 years from the day of mailing of a notice
of an original assessment or of a notification that no tax
is payable for a taxation year, and
(b) within 4 years from the day referred to in subpara-
graph (aXii), in any other case,
reassess or make additional assessments, or assess tax,
interest or penalties under this Part, as the circumstances
require.
and calls attention to the fact that this entitles
the Minister to "reassess or make additional
assessments". Plaintiff's counsel contended that
the "reassessments" of May 7, 1974 although
on a form entitled "Notice of Re-assessment"
were really notices of additional assessments,
the same form being used for both cases. (The
same applies, of course, to the notices of reas
sessment of October 30, 1973.) On the basis of
this interpretation, which I accept, as an anal
ysis of the forms makes it clear that this was the
case, these "reassessments" were not really
reassessments so as to annul and replace the
earlier reassessments of October 30, 1973 in
accordance with the Abrahams and Walkem
cases (supra) but rather fall within the distinc
tions made by those cases and being "additional
assessments", it is possible for the taxpayer to
remain liable on the original assessments to
which the notices of objection were made as
well as on these additional reassessments.
Counsel for plaintiff also referred to section
152(8) of the Income Tax Act which reads as
follows:
152. (8) An assessment shall, subject to being varied or
vacated on an objection or appeal under this Part and
subject to a reassessment, be deemed to be valid and
binding notwithstanding any error, defect or omission there
in or in any proceeding under this Act relating thereto.
contending that the "reassessments" of May 7,
1974 being merely additional assessments did
not invalidate or relieve defendant of the liabili
ty arising out of the reassessments of October
30, 1973.
The fact that the same forms are used for
"Additional Assessments" as for `Reassess-
ments" is, to say the least, misleading as is the
fact that the final cumulative figure showing the
"Balance Owing for Years Reassessed" only
refers to the additional balance owing resulting
from the particular "reassessment" resulting in
this balance. It is even more misleading when
the first sentence of the footnote indicates that
this reflects the unpaid balance from the assess
ments established "up to this day". The second
sentence indicating that if sums already
assessed are due, a consolidated account will be
established by the Taxation Data Centre in
Ottawa, seems hardly sufficient to warn an
unwary taxpayer that actually he may owe con
siderably more than the balance owing shown
on the reassessment which he has just received
and that he must bear in mind that it is crediting
him with the amounts shown as due as a result
of previous assessments or reassessments.
However, as Thorson P. stated in Morch v.
M.N.R. 5 at page 653:
It is well to keep in mind that the notice of assessment is not
the same thing as the assessment. The former is merely a
piece of paper whereas the latter is an important administra
tive Act within the exclusive function of the Minister, ...
It would appear in the present case that, despite
the somewhat misleading form, there is no
doubt that the May 7, 1974 "reassessments"
5 49 DTC 649.
resulted in an additional amount due of $296,-
172.36 over and above the amount of $211,-
979.85 due as a result of the October 30, 1973
reassessments.
The "reassessments" of May 7, 1974 are now
covered by defendant's objection to the reas
sessments of October 30, 1973 as a result of the
provisions of section 165(7) of the Act, which is
new law and which reads as follows:
165. (7) Where a taxpayer has served a notice of objec
tion to an assessment in accordance with this section and
thereafter the Minister reassesses the taxpayer's tax for the
taxation year in respect of which the notice of objection was
served or makes an additional assessment in respect thereof,
and sends to the taxpayer a notice of the reassessment or of
the additional assessment, as the case may be, the taxpayer
may, without serving a notice of objection to the reassess
ment or additional assessment,
(a) appeal therefrom to the Tax Review Board or the
Federal Court in accordance with section 169 or subsec
tion 172(2); or
(b) if an appeal to the Tax Review Board or the Federal
Court has been instituted with respect to the assessment,
amend such appeal by joining thereto an appeal in respect
of the reassessment or the additional assessment in such
manner and on such terms, if any, as the Board or the
Court directs.
Defendant may therefore now appeal directly to
the Tax Review Board or the Federal Court
from both reassessments. It is of interest to note
that no similar section was in effect when the
Abrahams and Walkem (supra) judgments were
rendered and this now indicates that whether
the further "reassessment" is a reassessment
properly speaking or an "additional assess
ment", the two can be dealt with simultaneous
ly. This result is sensible and logical. It would
be incongruous to find that because a taxpayer
allegedly owes a much greater sum than that for
which he was originally reassessed, all seizures
and execution proceedings made by virtue of
the original reassessment must be annulled and
replaced by new proceedings taken by virtue of
the further reassessment or additional assess
ment after a resulting delay of thirty days
(unless the Minister avails himself of section
158(2)) during which delay the taxpayer is free
to deal with and dispose of assets seized by
virtue of the first reassessments.
This disposes of the most serious argument
raised by defendant, but there were other argu
ments raised in connection with the various
motions which can be dealt with briefly.
Defendant contended that section 223(2) of
the Income Tax Act had not been fully complied
with. This subsection reads as follows:
223. (2) On production to the Federal Court of Canada, a
certificate made under this section shall be registered in the
Court and when registered has the same force and effect,
and all proceedings may be taken thereon, as if the certifi
cate were a judgment obtained in the said Court for a debt
of the amount specified in the certificate plus interest to the
day of payment as provided for in this Act.
The contention was to the effect that this
requires the keeping of a special register by the
Court in which the certificates can be entered,
which is not done. Actually, the procedure fol
lowed was that set out in Rules 2400 and 2401
for imposing charges on land and on securities
respectively, the applications for these orders
being made by an affidavit to which was exhib
ited the certificate to be enforced and provision
al orders were issued in due course which were
made definitive on April 1, 1974 the date fixed
to show cause in connection with these orders
when no opposition was made. The certificate
produced in connection with the applications for
these orders bears the stamp of the Court and,
in the absence of some special rule as to how
they should be registered, I consider this to be
sufficient evidence of their registration in Court.
In practice they are only so registered when
some use is to be made of them in connection
with execution proceedings or for an order for
examination of a judgment debtor, as in the
present case. The procedure adopted in the
present case was that always followed and I
find no irregularity in connection with the sei
zures made or the order for examination.
Defendant also objected to the use by plain
tiff of section 224 of the Act by sending notices
of garnishment to a number of persons who
allegedly were or were about to become liable to
defendant, said notices being dated January 10,
1974, January 15, 1974, January 21, 1974,
January 28, 1974, January 30, 1974, February
6, 1974 and February 27, 1974, all prior to any
"registration" of the certificate against defend
ant. Section 224(1) reads as follows:
224. (1) When the Minister has knowledge or suspects
that a person is or is about to become indebted or liable to
make any payment to a person liable to make a payment
under this Act, he may, by registered letter or by a letter
served personally, require him to pay the moneys otherwise
payable to that person in whole or in part to the Receiver
General of Canada on account of the liability under this Act.
This was the procedure adopted and there is
nothing whatsoever in the Act which makes use
of the procedure under section 224 dependent
on the production or registration of a certificate
having the same force and effect as a judgment
by virtue of section 223. This argument must
therefore also be rejected.
Defendant also contended, as set out in the
motion as No. 1 above, that the seizures already
made are sufficient guarantee to cover the
amount allegedly due and to establish this he
had engaged the services of an independent
evaluator whose report was not ready at the
time his interrogation was commenced. The
value of the assets seized is, in my view, irrele
vant and not a proper subject for consideration
at this stage of the proceedings. The certificate,
when registered, has the same force and effect
as if it were a judgment and unless and until the
amount claimed is reduced or wiped out
altogether by decision of the Minister following
the taxpayer's objection or by appeal to the Tax
Review Board or the Federal Court, there is a
presumption that it is due and the Minister is
entitled to avail himself of Rules 2400 and 2401
to impose charging orders on land or securities,
Rule 2300 by way of garnishment proceedings,
Rules 2000 and following dealing with execu
tion proceedings as well as the procedure set up
for garnishments in section 224 of the Income
Tax Act, and the procedure for seizure of chat
tels set out in section 225 of the Act, and these
remedies are cumulative and not in the alterna-
tive, and can be used without limitation until the
full amount due has been paid. Hypothetical
questions of the value of the property seized
have no bearing on the matter; it is the amount
realized when the property seized is sold that is
applied against the indebtedness. This argument
must therefore also be rejected.
I turn now to the objections made by defend
ant to the interrogation before Mr. Daoust under
Rule 2200. It should be pointed out that Rule
2200(3) (supra) refers to "any difficulty arising
in the course of an examination" and goes on to
say that this includes "any dispute with respect
to the obligation of the person being examined
to answer any question put to him" and then
states they "may" be referred to the Court. I am
of the view that the wording of the Rule taken
as a whole has in mind that, while the Court
"may" be called upon to decide when an objec
tion is taken to any specific question, or when
some other difficulty arises in the course of the
examination, it is not intended that the person
being interrogated can refuse any interrogation
whatsoever before the Court officer before
whom he has been directed to appear and, in
any event, the Rule does not say that any such
difficulty or refusal to answer any question
must be referred to the Court but merely that it
may be so referred. I believe that Mr. Daoust's
decision at the time, therefore, was quite proper
especially since it is common ground that
defendant did not raise before him his real
objections to answering any and all questions,
namely his fear of self-incrimination. This
would be a serious objection and I believe such
an objection should be referred to the Court for
consideration. The answer, however, is to be
found in section 5 of the Canada Evidence Act 6 .
This Act is clearly applicable to the present
proceedings since section 2 reads as follows:
2. This Part applies to all criminal proceedings, and to all
civil proceedings and other matters whatever respecting
which the Parliament of Canada has jurisdiction in this
behalf.
Section 5 of the said Act reads:
6 R.S.C. 1970, c. E-10.
5. (1) No witness shall be excused from answering any
question upon the ground that the answer to such question
may tend to criminate him, or may tend to establish his
liability to a civil proceeding at the instance of the Crown or
of any person.
(2) Where with respect to any question a witness objects
to answer upon the ground that his answer may tend to
criminate him, or may tend to establish his liability to a civil
proceeding at the instance of the Crown or of any person,
and if but for this Act, or the Act of any provincial legisla
ture, the witness would therefore have been excused from
answering such question, then although the witness is by
reason of this Act, or by reason of such provincial Act,
compelled to answer, the answer so given shall not be used
or receivable in evidence against him in any criminal trial, or
other criminal proceeding against him thereafter taking
place, other than a prosecution for perjury in the giving of
such evidence.
This protects defendant against the use of his
answers in the interrogation as to his assets in
criminal proceedings against him, and he can
ask the Court for the protection of this Act.
Defendant states, however, that, because of the
imposition of the 25% penalty against him by
virtue of section 163(2) of the Act, his answers
might provide information assisting plaintiff in
justifying the imposition of this penalty, and
that by virtue of section 163(3) the burden of
proof lies on the Minister who cannot obtain
this proof by forcing defendant to incriminate
himself. These subsections read as follows:
163. (2) Every person who, knowingly, or under circum
stances amounting to gross negligence in the carrying out of
any duty or obligation imposed by or under this Act, has
made, or has participated in, assented to or acquiesced in
the making of, a statement or omission in a return, certifi
cate, statement or answer filed or made as required by or
under this Act or a regulation, as a result of which the tax
that would have been payable by him for a taxation year if
the tax had been assessed on the basis of the information
provided in the return, certificate, statement or answer is
less than the tax payable by him for the year, is liable to a
penalty of 25% of the amount by which the tax that would
so have been payable is less than the tax payable by him for
the year.
(3) Where, in any appeal under this Act, any penalty
assessed by the Minister under this section is in issue, the
burden of establishing the facts justifying the assessment of
the penalty is on the Minister.
Plaintiff's counsel points out that it is only on
appeal that the burden of proof is on the Minis
ter. It does not appear to me that a simple
interrogation of defendant as to his assets
should be prevented merely because the
answers might be used against him in justifying
the imposition of the penalty. Defendant's coun
sel referred to the Supreme Court case of
Batary v. The Attorney General for
Saskatchewan" but this case dealt with a differ
ent matter. That case conceded that the accused
cannot be compelled to testify in the course of
criminal proceedings brought against him, and
held that he was therefore not a compellable
witness at a coroner's inquest, the result of
which might lead to charges eventually being
laid against him. The facts are, to my mind,
clearly distinguishable from the situation in the
present case. A penalty imposed in a civil pro
ceeding to collect income tax cannot be
assimilated to a charge for a criminal offence
and the fact that such a penalty is claimed
cannot justify the defendant in putting obstacles
in the way of the Minister obtaining information
as to his assets to assist in the collection of the
taxation allegedly due. I therefore find that
defendant should appear again before Mr.
Daoust on June 10, 1974 for examination as to
his assets. During the course of such examina
tion he may testify with the protection of the
Court by virtue of the Canada Evidence Act in
connection with the use of any of his answers in
criminal proceedings against him other than a
prosecution for perjury in connection with the
evidence he gives. Objections to any specific
question can be referred to the Court.
JUDGMENT
1. Defendant's motion to suspend execution
proceedings already instituted herein and to
quash or suspend the order requiring defend
ant to appear for interrogation as to his assets
before L. Joseph Daoust, an officer of the
Court, is dismissed with costs.
2. Defendant's motion to evoke to the Court
his examination before the said Registrar is
dismissed with costs, and he is ordered to
reappear before Mr. Daoust in the office of
the Court in Montreal on June 10, 1974 at 2
p.m. or such other time as may be arranged,
for such examination on the understanding
7 [1965] S.C.R. 465.
that to the extent that his answers might tend
to incriminate him in criminal proceedings
brought against him he will be testifying
under the protection of the Court and that
such answers cannot be used against him in
criminal proceedings save for any charges of
perjury which might be laid as a result of such
answers.
3. Defendant's motion seeking a declaration
that the certificate obtained against him by
virtue of reassessments dated October 30,
1973 is null and void as well as all subsequent
proceedings brought as a result thereof
including the order for examination as to his
assets, all seizures, formal notices to third
parties, and registrations of privilege made or
done by virtue of this certificate arising from
these reassessments, is dismissed, with costs.
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.