Friday, 12 October 2012

Tax decisions by Canada's newest SC Justice

Richard Wagner, a Montreal native and a graduate of uOttawa Law, was sworn in today as Canada's newest Supreme Court Justice,* and I asked one of my student to find me his tax decisions.  It's a very short list, of just eight cases (out of a total of 508 decisions (150 rendered at the Superior Court of Quebec and 508 at the Court of Appeal, though the latter were signed, not always authored, by the Justice):
Productions Merveilles inc c Montréal (Ville), 2006 QCCS 213
Municipal Taxation; Real estate transfer tax
 A common-law couple (Productions Merveilles), both lawyers, tried to avoid a transfer tax that is usually incurred when selling immovable property (i.e., real estate). Each party owned a company with an independent active business. Property was transferred between the two companies. The couple argued that due to their personal relationship, identical corporate infrastructure (e.g., same business address), and shared benefit, they share the same patrimony and therefore these transactions should meet the standard of “closely linked entities” (defined as having control of at least 90% of shares) and be exempt from the transfer tax.  Judge Wagner rejected the shared patrimony argument and found they had a joint venture, decision in favor of the City of Montreal. 
Peintres Filmar inc c Lapointe, 2007 QCCS 1491
CRA search and seizure
Filmar claimed false business expenses to evade taxes. The CRA proposed amnesty if the fraudulent invoices were surrendered. Filamr complied, but only partially. After realizing that disclosure was only partial, the CRA further extended its amnesty in an effort to gain Flimar’s full cooperation. When Filmar refused to comply, the CRA obtained a search warrant and seized documents.  Filmar claimed his Charter rights were abused (section 7: “right to life, liberty and security”; section 8: “unreasonable search and seizure”; and, section 24(2): “exclusion of evidence that would bring the administration of justice into disrepute”).  Justice Wagner disagreed: the seizure was valid, the CRA’s actions were in compliance of the applicable laws, Filmar’s non-compliance invalidated any limitations on seizures, and furthermore the CRA was reasonable, and even generous, in its dealings with Filmar. 
Bromont (Ville) c Québec (Cour du Québec), 2011 QCCA 482
Rejection for leave to appeal
IBM sought to exclude certain assets from its municipal base (tax expenditures for industrial use of a facility). The city of Bromont disputed IBM’s assessment. The Quebec Administrative Tribunal ruled in Bromont’s favour. The Court of Quebec reversed. The Superior Court found that part, but not all of IBM’s exclusions should be allowed.  Appeal denied: the Superior court’s decision was reasonable; there is neither an issue of interest, nor one that creates controversy. 
Re Garippo, 2011 QCCA 1143 (with Justices Hilton and Morissette)
Rejection, without reasons, for leave to appeal 
Construction Louisbourg ltée c Québec (Juge de la Cour du Québec), 2011 QCCA 1636 (with Justices Doyon and Dufresne)
Affirmation of Superior Court’s decision to allow the search and seizure of commercial documents in a criminal tax investigation, citing public interest as the reason for upholding the lower court’s judgement.
Banque Nationale du Canada c Agence du revenu du Québec, 2011 QCCA 1943 (reasons by Justice Dalphond; signed by Justices Wagner and Bouchard)
Banque Nationale managed a bankrupt company’s assets, during which money allocated for taxes was not paid.  Held: Banque has a fiduciary relationship, through a constructive trust, with Revenue Quebec and must pay part of the unpaid amount. 
Cantley (Municipalité) c Jinlili International Trading Ltd, 2012 QCCA 1151 (with Justices Hilton and Kasirer)
Short joint decision concerning how fees wrongly incurred by the municipality should be refunded. 
Pellan c Québec (Sous-ministre du Revenu), 2012 QCCA 1632 (reasons by Justice Biche; signed by Justices Wagner and Bouchard)
Jurisdictional matters
A group of soldiers filed a class action, claiming that they were wrongly assessed by Revenue Quebec for income earned while serving overseas.  The Superior Court declined jurisdiction and said the action should have gone through the Court of Quebec (provincial court).  Appeal Allowed: the Superior Court was a valid vehicle for the claim.
Nothing too earth-shattering here, though the government or agency prevailed in most cases.  It's a very small sampling size, so I am not sure we can read too much into that.  Interestingly enough, among his many accomplishments, Justice Wagner was President of the Quebec Bar's Construction Law Section.  We've got lots of problems with the construction industry here in Quebec.  Too bad we haven't had an Al Capone moment.  Maybe we still will.

* I note a bit of an oddity here with respect to the swearing in.  I've got a SCC press release in my inbox that says the following:  "OTTAWA, October 12, 2012 – The Honourable Mr. Justice Richard Wagner was sworn-in as a judge of the Supreme Court of Canada before The Right Honourable Beverley McLachlin, Chief Justice of Canada, and the judges of the Court in a private ceremony on October 11, 2012. A formal welcome ceremony will take place on a date to be announced."  Nowhere on the web can I find any information at all about this swearing in ceremony or the formal ceremony to come, indeed I cannot even find the press release itself on the SCC website or on the Canada News Centre press release site, where they ostensibly post all government press releases as they emerge.  So now I am curious, why is there a private swearing in, and a "formal welcome ceremony"?  And is it really not news that a new SCC Justice has just been sworn in?  Canadian court & media watchers, please advise of this custom.

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