Sokolowska v. Canada

Sokolowska v. Canada Court (s) Database Federal Court of Appeal Decisions Date 2005-01-24 Neutral citation 2005 FCA 29 File numbers A-496-03 Decision Content Date: 20050124 Docket: A-496-03 Citation: 2005 FCA 29 CORAM: DÉCARY J.A. NADON J.A. PELLETIER J.A. BETWEEN: MARIA SOKOLOWSKA Appellant and HER MAJESTY THE QUEEN Respondent Heard at Ottawa, Ontario, on January 19, 2005. Judgment delivered at Ottawa, Ontario, on January 24, 2005. REASONS FOR JUDGMENT BY: NADON J.A. CONCURRED IN BY: DÉCARY J.A. PELLETIER J.A. Date: 20050124 Docket: A-496-03 Citation: 2005 FCA 29 CORAM: DÉCARY J.A. NADON J.A. PELLETIER J.A. BETWEEN: MARIA SOKOLOWSKA Appellant and HER MAJESTY THE QUEEN Respondent REASONS FOR JUDGMENT NADON J.A. [1] This is an appeal from an order of Madam Justice Gauthier of the Federal Court, dated September 26, 2003, which allowed the respondent's motion to strike the appellant's statement of claim. [2] The Motions Judge concluded as she did because she was of the view that the Federal Court did not have jurisdiction to hear the appellant's claim, as it raised issues that were within the exclusive jurisdiction of the Tax Court of Canada. Further, Madam Justice Gauthier concluded that the appellant's claim was an attempt to relitigate issues which had already been decided by the Tax Court of Canada. [3] A brief review of the proceedings before the Tax Court of Canada and before the Federal Court will be useful. [4] The appellant is the mother of Elwira Sokolowska ("Elwira") and the widow of Henry Sokolowski. She holds a power of attorney from Elwira Sokolowska and is the administrator of the estate of her deceased husband. [5] At the time of his death on December 26, 1998, Henry Sokolowski had an income tax debt for the years 1988, 1990, 1991, 1992, 1993 and 1998. On December 1, 1992, while subject to tax arrears, Mr. Sokolowski transferred a property located at 2413 Walkley Road, Ottawa, to his daughter Elwira. The home, valued at $126,000, was transferred for the sum of $1. [6] On December 6, 2001, the Canadian Customs and Revenue Agency (the "CCRA") sent a pre-assessment proposal letter to Elwira, detailing the CCRA's assessment of the benefit that she had received from the property transfer. Specifically, the pre-assessment proposal letter advised Elwira that the CCRA was considering assessing her under subsection 160(2) of the Income Tax Act, R.S.C. 1985, 5th Suppl., c. 1 (the "Act"), for the sum of $98,829.06. [7] On July 12, 2002, pursuant to section 160 of the Act, Elwira was assessed the sum of $94,097.60 in respect of the transfer of the property located at 2413 Walkley Road. [8] On March 18, 2003, the CCRA sent requirements to pay to nine financial institutions, where it was believed that Elwira had funds or assets on deposit. [9] On December 13, 2001, Madam Justice Lamarre of the Tax Court of Canada heard Elwira's appeal against the Minister's assessments for taxation years 1995 to 1999: Sokolowska v. Canada, [2002] T.C.J. No. 32. Elwira had claimed a business investment loss (the "BIL") of $268,897 on her 1995 income tax return, with respect to eight mortgages held in trust for her and her father by Kimico Acceptance Co. Ltd. ("Kimico"). The BIL claimed resulted from the bankruptcy of Kimico in 1989. In her Reasons for Judgment, Madam Justice Lamarre held, at paragraph 19, that: 19. Consequently, the appeals with respect to the 1995 and 1999 taxation years are dismissed and the appeals with respect to the 1996, 1997 and 1998 taxation years are allowed and the assessments are referred back to the Minister for reconsideration and reassessment on the basis that the appellant may carry forward allowable business investment losses from previous years in the amount of $11,215, $12,701 and $24,586 for the 1996, 1997 and 1998 taxation years respectively. [10] On December 2, 2002, this Court dismissed Elwira's appeal from the decision of Madam Justice Lamarre. [11] In April 2003, Maria Sokolowska, the appellant herein, filed an action in the Federal Court against the respondent on the grounds that the CCRA had improperly assessed Elwira under section 160 of the Act and that it had subsequently issued requirements to pay to nine financial institutions. The appellant also claims that Elwira and her deceased husband, Henry Sokolowski, were improperly denied BIL as a result of Kimico's bankruptcy in 1989. In addition, the appellant makes various allegations of fraud against the respondent. [12] On July 23, 2003, the respondent brought an application before the Federal Court, seeking the dismissal of the appellant's Statement of Claim on the grounds that the Federal Court did not have jurisdiction to hear the claim and further, that the issues raised therein were res judicata. As I indicated earlier, Madam Justice Gauthier allowed the respondent's motion to strike. [13] I have carefully reviewed Madam Justice Gauthier's decision in the light of the appellant's Statement fo Claim and I cannot conclude that, in concluding as she did, Madam Justice Gauthier made any reviewable error. [14] Rule 221 of the Federal Court Rules, 1998, provides that a Statement of Claim may be struck out on the ground that it discloses no reasonable cause of action. The Supreme Court of Canada has, on a number of occasions, made it clear that the applicable test in deciding whether a pleading should be struck is whether it is plain and obvious that the claim discloses no reasonable cause of action. In Hunt v. Carey Canada Inc., [1990), 2 S.C.R. 959 at 980, Madam Justice Wilson reiterated the test in the following terms: Most recently, in Dumont v. Canada (Attorney General), [1990] 1 S.C.R. 279, I made clear at p. 280 that it was my view that the test set out in Inuit Tapirisat was the correct test. The rest remained whether the outcome of the case was "plain and obvious" or "beyond reasonable doubt". [15] There can also be no doubt that where the Court does not have jurisdiction over the subject matter of the action, the Statement of Claim can also be struck. In Hodgson v. Emineskin Indian Band, [2000] F.C.J. No. 313 (F.C.T.D.) (Q.L.) at paragraph 10, Madam Justice Reed of the Federal Court puts this proposition in the following terms: 10. [...] The "plain and obvious" test applies to the striking out of pleadings for lack of jurisdiction in the same manner as it applies to the striking out of any pleading on the ground that it evinces no reasonable cause of action. The lack of jurisdiction must be "plain and obvious" to justify a striking out of pleadings at this preliminary stage. [16] Madam Justice Gauthier concluded that the Federal Court did not have jurisdiction to adjudicate upon the appellant's Statement of Claim, the purpose of which, as Madame Justice Gauthier correctly points out in her Order, was in effect to challenge the validity of the notice of assessment issued to Elwira and of the requirements to pay addressed to nine financial institutions where Elwira had funds or assets on deposit. In concluding as she did, Madam Justice Gauthier relied, inter alia, on this Court's decision in Optical Recording Corp. v. Canada, [1991] 1 F.C. 309, where the Court made it clear that the Trial Division of the Federal Court of Canada (as it then was) had no jurisdiction in regard to proceedings arising out of an assessment issued by the Minister. At paragraph 22 of his Reasons, Urie J.A., for the Court, made the following remarks: 22. I am of the opinion that the Motions Judge erred in finding that he had jurisdiction to entertain the originating motion brought by the respondent pursuant to section 18 of the Act. The proceedings which it instituted arose out of an assessment issued by the Minister. That assessment is deemed by subsection 152(8) to be valid, subject only to a reassessment, or to it being varied or vacated by a successful objection thereto (subsections 165(1) and 165(2)) or by a successful appeal of the assessment brought to the Tax Court pursuant to section 169 of the Aqct or the Trial Division of this Court pursuant to subsection 172(2). As held in the Parsons [Minister of National Revenue v. Parsons, [1984] 2 F.C. 331 (C.A)] case, since the Act expressly provides for an appeal from assessments by the Minister, it follows that section 29 of the Federal Court Act precludes not only applications under section 28 of the Act in respect of such reassessments but also applications brought pursuant to section 18, as was done in this case, to challenge not only the assessments per se but the collection proceedings or actions taken in respect of those deemed valid assessments. [17] Madam Justice Gauthier was also of the view that it was "plain and obvious" that the Statement of Claim had no chance of success because many of the issues raised therein had already been dealt with by the Tax Court of Canada in Sokolowska, supra, and that Elwira's appeal from that decision had been dismissed by this Court.. [18] I have not been persuaded by the appellant that in dismissing her Statement of Claim, the Motions Judge either erred in law or improperly exercised her discretion. I wish to add that I have carefully examined the appellant's Statement of Claim and, in particular, her allegations of fraud against the respondent, which are totally devoid of any factual basis. I am satisfied that it is "plain and obvious" that the appellant cannot possibly succeed with her action. [19] I would, therefore, dismiss this appeal and would award the respondent costs in the sum of $500. J.A. "I agree. Robert Décary J.A." "I agree. J.D. Denis Pelletier J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-496-03 Appeal from an Order of the Federal Court dated September 26, 2003, Federal Court File No.: T-607-03 STYLE OF CAUSE: Maria Sokolowska v. Her Majesty the Queen PLACE OF HEARING: Ottawa, Ontario DATE OF HEARING: January 19, 2005 REASONS FOR JUDGMENT BY: NADON J.A. CONCURRED IN BY: DÉCARY J.A. PELLETIER J.A. DATE OF REASONS: January 24, 2005 APPEARANCES: Ms. Maria Sokolowska ON HER ON BEHALF Mr. Michael Roach FOR THE RESPONDENT SOLICITORS OF RECORD: Ms. Maria Sokolowska Ottawa, Ontario ON HER OWN BEHALF Mr. John Sims Deputy Attorney General of Canada Ottawa, Ontario FOR THE RESPONDENT