Corporation de l'École Polytechnique v. Canada

Corporation de l'École Polytechnique v. Canada Court (s) Database Federal Court of Appeal Decisions Date 2004-03-26 Neutral citation 2004 FCA 127 File numbers A-452-03 Notes Digest Decision Content Date: 20040326 Docket: A-452-03 Citation: 2004 FCA 127 CORAM: DÉCARY J.A. LÉTOURNEAU J.A. NADON J.A. BETWEEN: CORPORATION DE L'ÉCOLE POLYTECHNIQUE Appellant and HER MAJESTY THE QUEEN Respondent Hearing held at Montréal, Quebec, on March 10, 2004. Judgment rendered at Ottawa, Ontario, on March 26, 2004. REASONS FOR JUDGMENT: DÉCARY AND LÉTOURNEAU JJ.A. CONCURRED IN BY: NADON J.A. Date: 20040326 Docket: A-452-03 Citation: 2004 FCA 127 CORAM: DÉCARY J.A. LÉTOURNEAU J.A. NADON J.A. BETWEEN: CORPORATION DE L'ÉCOLE POLYTECHNIQUE Appellant and HER MAJESTY THE QUEEN Respondent REASONS FOR JUDGMENT DÉCARY AND LÉTOURNEAU JJ.A. [1] In a decision reported at [2003] G.S.T.C. 138, Judge Lamarre Proulx of the Tax Court of Canada stated that in her opinion the supply by the appellant of a licence to exploit intellectual property was not an exempt supply within the meaning of paragraph 2(c) of Part VI of Schedule V of the Excise Tax Act, R.S.C. 1985, c. E-15 (the Act). The judge accordingly dismissed the appeal by the appellant from an assessment made on October 27, 1998. That assessment included a penalty imposed pursuant to section 280 of the Act: in dismissing the appeal, the judge by implication affirmed the imposition of penalty, but made no reference to it in her reasons. Facts [2] The appellant is a university level public education institution affiliated with the University of Montréal. At the time in question it qualified as a "charity" within the meaning of section 123 of the Act as it then stood. [3] In fall 1991, the appellant signed research agreements with four Quebec business investment companies (SPEQs, or investment companies). In them it undertook to carry out research projects for the said companies. The standard research agreement provided in clause 8.2 (a.c., vol. 1, p. 123) that the rights of intellectual property associated with the result of the research were [TRANSLATION] "entirely the property" of the investment company, and in clause 8.3 that: [TRANSLATION] With the prior written approval of [the investment company], the [appellant] may use the intellectual property for research and education. [4] In a parallel agreement, a [TRANSLATION] "purchase and licensing contract" concluded on the same day, the appellant undertook in clause 2.1 (a.c., vol. 1, p. 145) to purchase the intellectual property from the investment company on a specified date, and in clause 3.1 (a.c., vol. 1, p. 146), it granted the investment company, at the said date, [TRANSLATION] namely pursuant to acquisition of the intellectual property, an exclusive and irrevocable licence . . . to the rights of exploiting and marketing the intellectual property, subject to the payment for a minimum of ten years and a maximum of twenty years of the amounts . . . [5] The phrase [TRANSLATION] "intellectual property" is defined as follows in clause 1.2.8 (ibid., p. 144): [TRANSLATION] . . . includes only technical information, know-how, documents, copyrights, data banks, software, data, models, patterns, prototypes, equipment and results and knowledge produced directly by the completion of the research project . . . including any improvements or modifications and the rights to exploit and market intellectual property conferred . . . hereunder. [Emphasis added.] [6] Clause 4.1 (ibid., p. 147) further provides that the appellant [TRANSLATION] undertakes and agrees that it will not exploit or market the intellectual property itself and will not grant any other party whatsoever the right to exploit and market the intellectual property in any manner whatsoever. [7] The evidence further disclosed that no royalties were received by the appellant and that it will not receive any, as the investment companies have wound up their activities. [8] The appellant paid the goods and services tax (GST) when the intellectual property was purchased. On account of its status as a "public sector body", the appellant subsequently obtained only partial reimbursement, representing 67% of the GST it had paid: that reimbursement and percentage were set out in section 259 of the Act and section 5 of the Public Service Body Rebate Regulations, SOR/91-37, December 18, 1990. [9] It will be worth recalling here the general rule that the GST owed on an exempt supply is payable at the penultimate stage of the production chain, the purpose of this being to encourage certain acts of the final consumer _ going to university, for example _ or assist the final consumer _ supplies by charities, legal aid and health organizations and so on (see Schedule V of the Act). As the GST is not transferred to the final consumer, the penultimate consumer _ the appellant in the case at bar _ cannot claim the input tax credit (ITC) and is reimbursed only in part in the form of a rebate of a certain percentage of the amount of GST paid (here 67%). It follows that an organization like the appellant can only claim the ITC, which would give it a 100% rebate, when it is possible to anticipate that another consumer will eventually be responsible for the GST further along the chain of consumption. Ordinarily, this is only possible in connection with commercial activities in which the organization might engage, since the consumers with whom it deals in connection with its educational activities are not subject to the payment of GST (see Centre Provincial de Ressources Pédagogiques v. The Queen, [1999] G.S.T.C. 62 (T.C.C.)). However, through procedures described in the Act, Parliament has provided for the possibility of a full rebate in certain circumstances as well. It is that kind of procedure which the appellant is seeking to take advantage of in the case at bar, and which is to be found in Part VI of Schedule V of the Act. [10] Accordingly the appellant, which was dissatisfied with the 67% rebate to which it was entitled, maintained that supply of the licence was a "taxable supply" within the meaning of Part VI of Schedule V, and in that case it was entitled to an ITC-type rebate representing 100% of the GST paid. In the appellant's submission, the supply of a licence for rights of exploitation and marketing in return for royalties was not part of the usual activities of a charity and was actually a commercial activity covered by paragraph 2(c) of Part VI of Schedule V. [11] The Quebec Ministère du Revenu did not accept the appellant's arguments and the latter was unable to recover the full amount of the GST it had paid: hence the present dispute. Legislation [12] The relevant provisions of the Income Tax Act and the Excise Tax Act are the following: Income Tax Act 248. (1) In this Act, ... "business" includes a profession, calling, trade, manufacture or undertaking of any kind whatever and, except for the purposes of paragraph 18(2)(c), section 54.2, subsection 95(1) and paragraph 110.6(14)(f), an adventure or concern in the nature of trade but does not include an office or employment. Loi de l'impôt sur le revenu 248. (1) Les définitions qui suivent s'appliquent à la présente loi. [...] « entreprise » Sont compris parmi les entreprises les professions, métiers, commerces, industries ou activités de quelque genre que ce soit et, sauf pour l'application de l'alinéa 18(2)c), de l'article 54.2, du paragraphe 95(1) et de l'alinéa 110.6(14)f), les projets comportant un risque ou les affaires de caractère commercial, à l'exclusion toutefois d'une charge ou d'un emploi. Excise Tax Act 123. (1) In section 121, this Part and Schedules V to X, Loi sur la taxe d'accise 123. (1) Les définitions qui suivent s'appliquent à l'article 121, à la présente partie et aux annexes V à X. "business" includes a profession, calling, trade, manufacture or undertaking of any kind whatever, whether the activity or undertaking is engaged in for profit, and any activity engaged in on a regular or continuous basis that involves the supply of property by way of lease, licence or similar arrangement, but does not include an office or employment; « entreprise » Sont compris parmi les entreprises les commerces, les industries, les professions et toutes affaires quelconques avec ou sans but lucratif, ainsi que les activités exercées de façon régulière ou continue qui comportent la fourniture de biens par bail, licence ou accord semblable. En sont exclus les charges et les emplois. "commercial activity" of a person means (a) a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person, (b) an adventure or concern of the person in the nature of trade (other than an adventure or concern engaged in without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the adventure or concern involves the making of exempt supplies by the person, and (c) the making of a supply (other than an exempt supply) by the person of real property of the person, including anything done by the person in the course of or in connection with the making of the supply; « activité commerciale » Constituent des activités commerciales exercées par une personne : a) l'exploitation d'une entreprise (à l'exception d'une entreprise exploitée sans attente raisonnable de profit par un particulier, une fiducie personnelle ou une société de personnes dont l'ensemble des associés sont des particuliers), sauf dans la mesure où l'entreprise comporte la réalisation par la personne de fournitures exonérées; b) les projets à risque et les affaires de caractère commercial (à l'exception de quelque projet ou affaire qu'entreprend, sans attente raisonnable de profit, un particulier, une fiducie personnelle ou une société de personnes dont l'ensemble des associés sont des particuliers), sauf dans la mesure où le projet ou l'affaire comporte la réalisation par la personne de fournitures exonérées; c) la réalisation de fournitures, sauf des fournitures exonérées, d'immeubles appartenant à la personne, y compris les actes qu'elle accomplit dans le cadre ou à l'occasion des fournitures. "exempt supply" means a supply included in Schedule V; « fourniture exonérée » Fourniture figurant à l'annexe V. "property" means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money; « bien » À l'exclusion d'argent, tous biens - meubles et immeubles - tant corporels qu'incorporels, y compris un droit quelconque, une action ou une part. "supply" means, subject to sections 133 and 134, the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition; « fourniture » Sous réserve des articles 133 et 134, livraison de biens ou prestation de services, notamment par vente, transfert, troc, échange, louage, licence, donation ou aliénation. "taxable supply" means a supply that is made in the course of a commercial activity . . . « fourniture taxable » Fourniture effectuée dans le cadre d'une activité commerciale. 136. (1) For the purposes of this Part, a supply, by way of lease, licence or similar arrangement, of the use or right to use real property or tangible personal property shall be deemed to be a supply of real property or tangible personal property, as the case may be. 136. (1) Pour l'application de la présente partie, la fourniture, par bail, licence ou accord semblable, de l'utilisation ou du droit d'utilisation d'un immeuble ou d'un bien meuble corporel est réputée être une fourniture d'un tel bien. 280. (1) Subject to this section and section 281, where a person fails to remit or pay an amount to the Receiver General when required under this Part, the person shall pay on the amount not remitted or paid (a) a penalty of 6% per year, and (b) interest at the prescribed rate, computed for the period beginning on the first day following the day on or before which the amount was required to be remitted or paid and ending on the day the amount is remitted or paid. 280. (1) Sous réserve du présent article et de l'article 281, la personne qui ne verse pas ou ne paie pas un montant au receveur général dans le délai prévu par la présente partie est tenue de payer la pénalité et les intérêts suivants, calculés sur ce montant pour la période commençant le lendemain de l'expiration du délai et se terminant le jour du versement ou du paiement : a) une pénalité de 6 % par année; b) des intérêts au taux réglementaire. Schedule V Part VI - Public Sector Bodies 2. A supply made by a public institution of any personal property or a service, but not including a supply of . . . . . (c) property (other than capital property of the institution or property that was acquired, manufactured or produced by the institution for the purpose of making a supply of the property) where, immediately, before the time tax would be payable in respect of the supply if it were a taxable supply, the property was used (otherwise than in making the supply) in commercial activities of the institution . . . Annexe V Partie VI - Organismes du secteur public 2. La fourniture de biens meubles ou de services par une institution publique, sauf la fourniture :. . . . . c) du bien, sauf une immobilisation de l'institution ou un bien qu'elle a acquis, fabriqué ou produit en vue de le fournir, qui immédiatement avant le moment où la taxe serait payable relativement à la fourniture s'il s'agissait d'une fourniture taxable, était utilisé (autrement que pour effectuer la fourniture) dans le cadre des activités commerciales de l'institution . . . (We have set out the provisions to which we were referred by counsel and which were in effect at the time Judge Lamarre Proulx wrote her reasons. These provisions are for all practical purposes the same as those that were in effect at the relevant time, except that after January 1, 1997, the reference in section 2 of Part VI of Schedule V was to "public institution" rather than "charity" (S.C. 1997, c. 10).) Assessment [13] The parties agreed that the only provision of the Act on which the appellant could hope to rely is paragraph 2(c) of Part VI of Schedule V. [14] That paragraph assumes at the outset that a charity may engage in a commercial activity and allows such a body to recover the full amount of the GST it has paid if it meets the conditions for application of the paragraph. For the limited purposes of this case, those conditions of application are the following: (1) supply of property, (2) which was not acquired for the purpose of making a supply, (3) and which was used otherwise than in making the supply, (4) in the appellant's commercial activities. - Supply of property [15] On the first point, counsel for the appellant maintained that the property which was acquired was intellectual property and that the property supplied was the licence of rights to exploit and market that intellectual property, but in reality it was the same property since one is an aspect of the other. [16] We do not share this view. The property acquired by the appellant was the [TRANSLATION] "intellectual property" in the general sense it is given in clause 1.2.8 of the contract of purchase and licence. The property which was supplied was not intellectual property in the general sense, but that part of the intellectual property represented by the licence of rights of exploitation and marketing. It follows that the property acquired _ the intellectual property, including the rights of exploitation and marketing _ is distinct from the property supplied _ the licence of rights to exploit and market. However, for the purposes of application of paragraph 2(c), the only property which can be relevant is the property supplied, and when that paragraph refers to the property acquired, it necessarily refers to property acquired which was supplied. In the case at bar, therefore, the property acquired and supplied which is at issue is the licence of rights to exploit and market. - "Acquired . . . for the purpose of making a supply" [17] On the second point, counsel for the appellant, though indicating that in her view also the property acquired was the property which was supplied, maintained that in the case at bar the property was not "acquired . . . for the purpose of making a supply", since it was used by the appellant before supplying it. That argument does not stand up to analysis. The rights of exploitation and marketing were never used by the appellant between the time they were acquired and the time they were assigned: they belonged to the investment company until they were acquired by the appellant on December 13, 1993, and they were immediately assigned to the investment company. These rights were clearly acquired for the purpose of being supplied, without any form of use whatever by the appellant intervening between the time of acquisition and the time of supply. In this connection we note that in its memorandum the appellant itself described the operation carried out as [TRANSLATION] "the acquisition of intellectual property rights for the purpose of making a supply by licences to exploit and market". - "Used . . . otherwise than in making the supply" [18] For the very reasons which we have given in the preceding paragraph, it is not possible to say here that the property (the licence) was used by the appellant in any way or at any time whatsoever otherwise than in making the supply. [19] Accordingly, it is not necessary to consider what is referred to by the words "immediately before the time tax would be payable in respect of the supply if it were a taxable supply", since there was never any use by the appellant otherwise than in making the supply. [20] The appellant therefore clearly cannot succeed, since it does not meet the second and third requirements of paragraph 2(c). [21] Consequently, we do not have to rule on the question of whether the fourth requirement _ in commercial activities _ was met. However, we will say a few words to clarify the interpretation that counsel made of certain of Judge Lamarre Proulx's conclusions. Counsel were agreed that she had erred in requiring [TRANSLATION] "commercial activities for profit" at paragraph 39 of her reasons. In our view, certain clarifications are necessary. [22] The phrase "commercial activities" is defined in subsection 123(1) of the Act. The appellant said it came within category (b), namely "an adventure or concern . . . in the nature of trade". The respondent argued that if it could be said the appellant was engaged in commercial activities, it was actually within category (a), namely "a business carried on". [23] The appellant is trying to get the best of both worlds. It says it is a "business", and so qualifies under (a), to support the argument that the definition of a "business" eliminates the requirement of making a profit, but it says it is "an adventure or concern . . . in the nature of trade", and so qualifies under (b), and maintains that both under (a) and under (b) the requirement of making a profit was excluded. [24] There is an error of interpretation here. It is only a "business" (and hence (a)) which, by the definition it is given, covers both profit-making and non-profit-making undertakings. The "adventure or concern . . . in the nature of trade" ((b)), relied on by the appellant, is not a "business", the definition of a "business" is not applicable to it and it does not include non-profit ventures or concerns. In the Court's view, the phrase "adventure or concern . . . in the nature of the trade" should be given the meaning it has in the definition of a "business" in subsection 248(1) of the Income Tax Act. According to the case law, "the first requirement for an adventure in the nature of trade is that it involves a 'scheme for profit-making'"(Friesen v. Canada, [1995] 3 S.C.R. 103, para. 16, per Major J.). [25] Accordingly, to the extent that the appellant was seeking to qualify under (b) rather than under (a), Judge Lamarre Proulx was right to conclude that a profit-making purpose was necessary. [26] We have thus come to the conclusion that the conditions for paragraph 2(c) to apply were not all met and that accordingly the Minister's assessment in this regard was correct. Penalty [27] This Court has held that there is no bar to the defence argument of due diligence, which a person may rely on against charges involving strict liability, being put forward in opposition to administrative penalties. In particular, it has held that section 280 of the Excise Tax Act, by its wording and content, gives rise to that defence: Canada (A.G.) v. Consolidated Canadian Contractors Inc., [1999] 1 F.C. 209 (F.C.A.). It may be worth reviewing the principles governing the defence of due diligence before applying them to the facts of the case at bar. [28] The due diligence defence allows a person to avoid the imposition of a penalty if he or she presents evidence that he or she was not negligent. It involves considering whether the person believed on reasonable grounds in a non-existent state of facts which, if it had existed, would have made his or her act or omission innocent, or whether he or she took all reasonable precautions to avoid the event leading to imposition of the penalty. See The Queen v. Sault Ste-Marie, [1978] 2 S.C.R. 1299; The Queen v. Chapin, [1979] 2 S.C.R. 121. In other words, due diligence excuses either a reasonable error of fact, or the taking of reasonable precautions to comply with the Act. [29] The defence of due diligence should not be confused with the defence of good faith, which applies in the area of criminal liability, requiring proof of intent or guilty knowledge. The good faith defence enables a person to be exonerated if he or she has made an error of fact in good faith, even if the latter was unreasonable, whereas the due diligence defence requires that the error be reasonable, namely, an error which a reasonable person would have made in the same circumstances. The due diligence defence, which requires a reasonable but erroneous belief in a situation of fact, is thus a higher standard than that of good faith, which only requires an honest, but equally erroneous, belief. [30] A person relying on a reasonable mistake of fact must meet a twofold test: subjective and objective. It will not be sufficient to say that a reasonable person would have made the same mistake in the circumstances. The person must first establish that he or she was mistaken as to the factual situation: that is the subjective test. Clearly, the defence fails if there is no evidence that the person relying on it was in fact misled and that this mistake led to the act committed. He or she must then establish that the mistake was reasonable in the circumstances: that is the objective test. [31] As soon as the defence of due diligence accepted for strict liability offences is raised, the question arises of whether the defence of error of law could also be relied on to avoid imposition of a penalty. That question does not arise only in connection with strict liability offences, although with the growth in regulations and the multiplication of statutory offences the field of strict liability has proven to be the most fertile for the emergence of this defence. [32] The question first arose in criminal law because of section 19 of the Criminal Code, which lays down the rule that "ignorance of the law . . . is not an excuse". That rule has been imported into and applied in statutory and regulatory law: see R. v. MacDougall, [1982] 2 S.C.R. 605, at 612. There is no distinction between mistake of law and ignorance of the law as such: Molis v. The Queen, [1980] 2 S.C.R. 356. Both in criminal law and in statutory and regulatory law, its justification can be found in the following factors set out by Prof. Don Stuart, Canadian Criminal Law, A Treatise, 3d ed., 1995, at pp. 295 to 298: 1. Allowing a defence of ignorance of the law would involve the courts in insuperable evidential problems. 2. It would encourage ignorance where knowledge is socially desirable. 3. Otherwise every person would be a law unto himself, infringing the principle of legality and contradicting the moral principles underlying the law. 4. Ignorance of the law is blameworthy in itself. [33] For the purposes of this short review of the principles applicable to mistakes of law, and without seeking to be exhaustive, we may distinguish four types of mistake of law: the mistake of law made in good faith and the reasonable mistake of law, which we discuss together and which are not allowed as defences, the officially induced mistake of law and the invincible mistake of law. - Mistake of law made in good faith and reasonable mistake of law [34] A mistake of law made in good faith refers to an honest and sincere, but mistaken, belief as to the existence of legislation prohibiting the activity engaged in, the interpretation that should be given to that legislation or the interpretation it has received from the courts. It is to some extent the complement of mistake of fact made in good faith, which also requires an honest and sincere, but mistaken, belief as to the existence of actual facts and circumstances. Reasonable mistake of law, for its part, involves a reasonable but mistaken belief as to the aforesaid legal matters. The reasonableness of the mistake requires an analysis of the reasonable steps taken by the person so misled to avoid committing the mistake and a comparison of his or her conduct with what a reasonable person would have done in the circumstances. [35] In Molis v. The Queen, supra, at 364, the Court concluded that due diligence was an available defence in relation to "the fulfilment of a duty imposed by law and not in relation to the ascertainment of the existence of a prohibition or its interpretation". [36] This conclusion was reiterated 15 years later in R. v. Pontes, [1995] 3 S.C.R. 44. Both the judges in the majority and the minority reaffirmed the rule that a mistake of law, that is, a mistake as to what the law is, cannot serve as a defence. At paragraphs 34 and 79 Cory J., for the majority, and Gonthier J. for the dissenting judges, wrote respectively: The application of this principle leads to the conclusion that an accused cannot put forward as a defence that he made diligent inquiries as to the legality of his actions or status. The submission of such a defence was specifically rejected in Molis v. The Queen . . . . . . . . The above discussion can be summarized as follows. An offence of strict liability requires the minimal mental element of negligence in order to ground a conviction. Negligence consists in an unreasonable failure to know the facts which constitute the offence, or the failure to be duly diligent to take steps which a reasonable person would take. Since ignorance of the law is not an excuse for breaking the law, due diligence consists in taking steps to fulfil a duty imposed by law and not in the ascertainment of the existence of a statutory prohibition or its interpretation. [Emphasis added.] As Prof. Anne-Marie Boivert says in "Innocence morale, diligence raisonnable et erreur de droit", 41 C.R. (4th ed.) 243, [TRANSLATION] "the decision in Pontes does not in fact formally challenge the decision in Molis. The diligence used to inquire about the existence or application of the law is still not a defence"; see also Jill R. Presser, "Absolute Liability and Mistakes of Law in the Regulatory Context: Pontes Disappoints and Confuses", 41 C.R. (4th ed.) 249, at 252-253, 255 and 258-259. [37] Academic analysis has frequently criticized in vain the strictness of the rule of law applicable to mistake of law. In his Treatise, supra, Prof. Stuart wrote in this regard at page 324: The proposition that ignorance of the law is no excuse is based on the conclusive presumption that everybody knows the law. This implies that the law exists in a body of discernable rules which the ordinary person remembers or is capable of discovering. If this proposition was ever valid, it is certainly laughable in our present complex society in which there is a vast proliferation of laws of every description, including statutory provisions, obscure regulatory ones and intricate judge-made law. Taxation statutes are certainly excellent representatives of this description given by Prof. Stuart of the existing legislative situation. [38] This brief review of the legislation and case law leads to the following conclusion. Apart from exceptions, mistakes in good faith and reasonable mistakes of law as to the existence and interpretation of legislation are not recognized as defences to criminal offences, nor to strict liability offences or prosecutions governed by the rules applicable in strict liability. However, two exceptions to the principle should be noted: officially induced mistake of law and invincible mistake of law. - Invincible mistake of law [39] Invincible mistake of law, accepted by the courts and Parliament, refers to mistakes which it is impossible to avoid because it is impossible for the person charged to know the law, either because it has not been promulgated or because it was not published in a satisfactory way so that its existence and contents could be known: see R. v. Ross (1944), 84 C.C.C. 107 (B.C.C.C.); Re Michelin Tires Manufacturing (Canada) Ltd. (1975), 15 N.S.R. (2d) 150 (N.S.C.A.); R. v. Catholique (1980), 49 C.C.C. (2d) 65 (N.W.T.S.C.). [40] The Statutory Instruments Act, R.S.C. 1985, c. S-22, subsection 11(2), enacted by the federal Parliament, expressly provides that a person cannot be convicted for failing to observe a regulation that has not been published in the Canada Gazette at the time the offence is alleged to have been committed. The Ontario and Quebec statutes on regulations also contain similar exonerations: Regulations Act, R.S.O. 1990, c. R-21, ss. 5(3) and (b); Regulations Act, R.S.Q., c. R-18.1, s. 15. - Officially induced mistake [41] The defence of officially induced mistake, alluded to earlier in other decisions, was officially recognized by the Ontario Court of Appeal in R. v. Cancoil Thermal Corp. (1986), 52 C.R. (3d) 188. The case concerned a prosecution for an infringement of a provincial statute following an industrial accident. At 199 Lacourcière J.A. wrote for the Court: The defence of "officially induced mistake" is available as a defence to an alleged violation of a regulatory statute where an accused has reasonably relied upon the mistaken legal opinion or advice of an official who is responsible for the administration or enforcement of the particular law. In order for the accused to successfully raise this defence, he must show that he relied on the mistaken legal opinion of the official and that his reliance was reasonable. The reasonableness will depend upon several factors, including the efforts he made to ascertain the proper law, the complexity or obscurity of the law, the position of the official who gave the advice, and the clarity, definitiveness and reasonableness of the advice given. I agree with the following statement made by Professor Barton in the article referred to earlier, at p. 331: Where the advice is given by an official who has the job of administering the particular statute, and where the actor relies on this advice and commits what is in fact an offence, even if the agency cannot be estopped does it follow that the actor should not be excused? To do so is not to condone an illegality or say that the agency is estopped into a position of illegality, but to recognize that the advice was illegal but excuse the actor because he acted reasonably and does not deserve punishment. [42] The Court said that in its opinion this defence was separate and apart from the defence of due diligence and could be relied on after due diligence had failed: ibid. The validity of the defence of officially induced mistake depends on the reasonableness of the opinion given by the official authority in the circumstances, and the question of whether it was reasonable for the accused to follow it: ibid., at 200. [43] In R. v. Jorgensen, [1995] 4 S.C.R. 55, the Supreme Court of Canada refused to rule on the point since the defence was not pleaded as such. However, Lamer C.J. undertook a useful review of developments in the law and proposals for its reform by the Canada Law Reform Commission. Like the Ontario Court of Appeal, he concluded that the defence is separate from that of due diligence in that due diligence is a complete defence, while the defence of officially induced mistake acts as an excuse for an accused whose guilt has been established by the prosecution: see paragraph 22 of his reasons. In this he agreed with and approved the position of the four dissenting judges in Pontes, where Gonthier J. described this mistake of law as "an additional defence thereto, operating as an exception to the rule that ignorance of the law does not excuse": ibid., para. 23. [44] Finally, the Chief Justice concluded that in order to benefit from the defence of officially induced mistake of law, an accused must show that "she made a mistake of law, that she considered her legal position, consulted an appropriate official, obtained reasonable advice and relied on that advice in her actions": ibid., at para. 36. [45] The definition of what constitutes an official is still evolving. However, according to writers who are somewhat critical of this position, both the U.S. courts and the Canadian courts do not accept a defence of mistake of law even when reasonable, based on a lawyer's legal opinion: see Stuart, supra, page 350; Harper, Rainville and Turgeon, Traité de droit pénal canadien, 4th ed., Les Éditions Yvon Blais Inc., Cowansville, 1998, page 1095; see also R. v. Pitchford (1982), 7 W.C.B. 242 (Ont. C.A.): similarly, reasonable mistake of law based on or occasioned by judicial precedent is not an excuse or admissible defence: Harper, Rainville and Turgeon, supra, at 1095 and 1096; see also Corp. des Maîtres mécaniciens en tuyauterie du Québec v. Boutique Relaxe Flamme Inc., [2002] J.Q. No. 3565 (Que. S.C.); Dunn v. R. (1977), 21 N.S.R. (2d) 334 (N.S.C.A.). * * * [46] In the case at bar, the only proof of due diligence offered by the appellant at the trial hearing amounted to this reply by the witness Blais: [TRANSLATION] [128] Q. O.K. Why did you decide to request all the credits when the school is a public institution, a charity? A. Because we always argued that these arrangements in particular were commercial operations, and additionally we asked our tax experts for opinions on the matter and they told us, "yes, that's right, that makes sense". I think we did our duty in this regard. Of course, opinions are opinions. [a.c. vol. 2, p. 725] Clearly this evidence does not meet the requirements laid down by precedent. [47] At the hearing of this appeal counsel for the appellant drew the Court's attention to a passage from a report by the Auditor General mentioning discussions on draft assessments at issue between the Department and counsel for the appellant in respect of the point at issue (a.c., vol. 2, pp. 644, 645). This evidence of events subsequent to preparation of a draft assessment clearly cannot be relevant in establishing due diligence, which must be determined at the time the property was supplied. [48] A review of the contracts further indicates that at the time they were concluded the appellant was aware of the fact that it probably would not be entitled to a 100% rebate. Accordingly, clause 2.3 of the contract of purchase and licence provides that the appellant will be able to deduct from the purchase price of the intellectual property [TRANSLATION] "amounts which it cannot claim as rebates of any federal or provincial goods and services tax". (a.c., vol. 1, p. 146). The appellant's representative, Mr. Blais, was cross-examined on this. His explanation was as follows: [TRANSLATION] [183] . . . A. As I told you, the École Polytechnique had good reason for believing that _ for maintaining that these were commercial assemblies. I will not go over that: I believe it to be the case. We had _ we requested expert opinions from our tax experts, but they are not lawyers, they give opinions. Then, we said to ourselves "we will wear the belt, the velcro and the straps" and the part kept from the École Polytechnique, as you know, the École Polytechnique received a partial tax rebate, GST, QST, we said to ourselves "we will keep it until we are sure, absolutely sure, that the government agrees with our positions on the commercial aspect of this". That is why on the invoice that is here, we refused to pay, how should I say, the purchase price . . . [184] Q. The difference between the 67% rebate provided for public institutions . . . A. That's right. [185] Q. . . . and the 100% you were asking for? A. That's right. If I remember correctly, that is it. We intended to refuse to pay for the part for which we would not be reimbursed _ for which we thought we might not be reimbursed. [a.c., vol. 2, pp. 745, 746] It follows that it was not the appellant that suffered a loss of earnings as a result of the position taken by the Department. Rather, it was the investment companies which suffered it, since it was indicated in the invoices that the appellant would only have to pay those companies the amount it received in GST rebate (a.c., vol. 2, pp. 624 et seq.). [49] A taxpayer who knows that his or her position is vulnerable, who does not seek to confirm it from the proper authorities when the time comes, and who inserts in contracts clauses seeking to have others bear the responsibility accruing to it for paying GST, is not acting with due diligence. [50] We would dismiss the appeal with costs. "Robert Décary" J.A. "Gilles Létourneau" J.A. "I concur M. Nadon J.A." Certified true translation Suzanne M. Gauthier, C Tr, LLL FEDERAL COURT OF APPEAL SOLICITORS OF RECORD DOCKET: A-452-03 STYLE OF CAUSE: CORPORATION DE L'ÉCOLE POLYTECHNIQUE v. HER MAJESTY THE QUEEN PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: March 10, 2004 REASONS FOR JUDGMENT BY: Décary and Létourneau JJ.A. CONCURRED IN BY: Nadon J.A. DATED: March 26, 2004 APPEARANCES: Diane Bouchard FOR THE APPELLANT Benoît Denis FOR THE RESPONDENT SOLICITORS OF RECORD: Desjardins, Ducharme, Stein, Monast Montréal, Quebec FOR THE APPELLANT Veillette & Associés Montréal, Quebec FOR THE RESPONDENT