2016 QCCA 1077, 2016 QCCA 1077

Rice c. Agence du revenu du Québec 2016 QCCA 1077 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-024124-133 (500-05-006143-943) (500-17-058614-101) (500-17-066353-114) DATE: JUNE 20, 2016 PRESIDING: THE HONOURABLE NICHOLAS KASIRER, J.A. No: 500-05-006143-943 JOHN LOUIS STEVEN RICE WALLACE STACEY PETITIONERS – plaintiffs v.

AGENCE DU REVENU DU QUÉBEC PROCUREURE GÉNÉRALE DU QUÉBEC PROCUREURE GÉNÉRALE DU CANADA RESPONDANTS – defendants and SYLVIA GRÉGOIRE THOMAS DONNA DE LARONDE LEAH DIOME BOBBIJO DELORMIER DEBRA GOODLEAF JOHN McCOMBER LEE JACOBS DEREK WHITE PETITIONERS – interveners No: 500-17-058614-101 SYLVIA GRÉGOIRE THOMAS DONNA DE LARONDE LEAH DIOME PETITIONERS – plaintiffs v. SOUS-MINISTRE DU REVENU DU QUÉBEC PROCUREURE GÉNÉRALE DU QUÉBEC PROCUREURE GÉNÉRALE DU CANADA RESPONDENTS – defendants

No: 500-17-066353-114 BOBBIJO DELORMIER DEBRA GOODLEAF LEE JACOBS JOHN McCOMBER DEREK WHITE PETITIONERS – plaintiffs v. SOUS-MINISTRE DU REVENU DU QUÉBEC AGENCE DU REVENU DU QUÉBEC PROCUREURE GÉNÉRALE DU QUÉBEC PROCUREURE GÉNÉRALE DU CANADA RESPONDENTS – defendants JUDGMENT [ 1 ] The petitioners seek an order pursuant to

article 390, para. 2 C.C.P. to stay execution of a judgment of this Court, rendered on April 21, 2016, until such time as the Supreme Court of Canada has rendered final judgment in the matter. At the hearing, they announced their intention to seek leave to appeal to the Supreme Court. The next day, the petitioners forwarded to my attention a draft of their application for leave that sets out the questions they intend to raise on appeal. *** [ 2 ] The petitioners are Mohawks and status Indians for the purposes of the Indian Act . They reside and carry on business within the Kahnawake Indian Reserve.

They each operate one or more retail outlets of gasoline and petroleum products and hold the requisite certificates pursuant to the Quebec Fuel Tax Act , Sales Tax Act and the federal Excise Tax Act . The petitioners state that they do not charge consumer taxes to their customers, Natives and non-Natives alike.

This practice has given rise, in particular, to their assessment for amounts due as Goods and Services Tax and the Quebec Sales Tax by the respondent Deputy Minister of Revenue of Quebec. [ 3 ] In 1994, the petitioners filed a first motion for declaratory judgment in the Superior Court seeking a declaration that the GST, the QST are inapplicable to them as a matter of constitutional and Aboriginal law and seeking to suspend the administrative and collection measures undertaken in their regard by the Deputy Minister of Revenue. [ 4 ] On June 17, 1994, Grenier J. of the Superior Court ordered a stay of certain administrative and collection measures applicable to the petitioners until judgment on the merits of the motion for declaratory judgment.

Grenier J.’s order was conditional upon the petitioners collecting taxes from non-Native consumers and remitting those amounts to the Deputy Minister. [ 5 ] On December 5, 2013, Crête J. of the Superior Court dismissed the petitioners’ amended motion for declaratory judgment on the merits.

He also dismissed a motion made before him at the hearing to maintain and extend the stay ordered by Grenier J. notwithstanding appeal. [ 6 ] In a unanimous judgment rendered on April 21, 2016, this Court, sitting as a bench of five judges, dismissed the petitioners’ appeal from the judgment of Crête J. *** [ 7 ] The criteria that must be established by the petitioners in order to obtain an order suspending execution of the judgment of this Court pending appeal are well known: (1) the existence of a serious question to be decided on appeal; (2) that the petitioners will suffer serious prejudice, sometimes characterized as irreparable, if their application for suspension is not granted; and (3) that the balance of inconvenience between the parties favours the granting of suspension .

These requirements, developed in the cases decided under

article 522.1 of the former C.C.P. and

section 65.1 of the Supreme Court Act , remain relevant under

article 390 of the new C.C.P., as my colleague Mainville J.A. noted in Pereira v. Commission des transports du Québec , 2016 QCCA 765 . [ 8 ] Each of these requirements will be considered in turn. *** [ 9 ] Is there a serious question to be decided on appeal to the Supreme Court?

[10] My reading of the petitioners’ draft motion for leave, as well as submissions made on their behalf at the hearing, suggest someshift in emphasis in respect of the questions in dispute before the Supreme Court. The proposed appeal would bear more emphatically onwhether the Royal Proclamation of 1763 grounds an autonomous source of Aboriginal rights, and whether it grants the petitioners aright, as Natives, to free and open trade with all Canadians.

The petitioners shall argue that tax compliance and administrative obligationsapplicable to them as status-Indian merchants carrying on business with Natives and non-Natives constitute an infringement of theirconstitutional rights, and argue further that the otherwise applicable taxation laws are inoperative insofar as they infringe on those rights.The draft motion for leave also raises the question as to whether liabilities resulting from their omission to collect and remit the relevanttaxes are contrary to sections 87 and 89 of the Indian Act.

In addition, they propose to ask the Supreme Court whether status-Indianscarrying on a like business on a reserve are meant to have an economic advantage from protections afforded them by the same sections ofthe Indian Act, which advantage justifies their exoneration from the aforementioned tax collection and administrative obligations. [11] Notwithstanding this change in emphasis, these arguments were, among others, rejected as presented before the Superior Courtin a particularly exhaustive judgment and by unanimous judgment in the Court of Appeal.

That said, I find that they are nonethelessserious questions within the meaning of that expression in the decided cases.

As the Supreme Court noted in RJR – Macdonald Inc. v.Canada (Attorney General), (SCC), [1994] 1 SCR 311 at 337, “[t]he threshold is a low one” and that the judge calledupon to decide upon the motion must be satisfied, based on a preliminary assessment, that “the application is neither vexatious norfrivolous”. [12] I hasten to add that I say nothing further on the possible success of these arguments, nor do I comment on whether or not thesequestions meet the standard for leave applied by the Supreme Court: see, e.g., Auberge des Glycines inc. v.

Montreal (Ville de), 2012QCCA 884, para. [13] (per St-Pierre, J.A., in chambers). *** [13] Would the petitioners suffer serious or irreparable harm if execution of the judgment of this Court were not stayed? [14] In paragraphs 18 to 22 of their motion for the stay, the petitioners state the harm they anticipate if execution of the judgment inappeal is not suspended. They assert that irreparable harm will result by reason of the resumption of the administrative and collectionmeasures by the Deputy Minister of Justice. They will be unable to operate their gas retail outlets as a result of these constraints.

Withouta stay, the gas stations would be forced to close because of the excessive costs associated with meeting obligations under the impugnedlegislation and this would cause “considerable hardship within the entire community of Kahnawake”. [15] While monetary losses alone are generally not viewed as the source of serious or irreparable harm for the purposes of this leg ofthe test in

article 390 C.C.P., the petitioners are right to say that there is authority that where the refusal to grant a stay would drive aparty out of business, this should be considered: Immobilière (L’), société d’évaluation inc. v. Évaluations, 2009 QCCA 2523, para. [17](per Rochette J.A., in chambers). [16] In RPR – Macdonald, supra, p. 341, the Supreme Court wrote the following: “‘Irreparable’ harm refers to the nature of the harmsuffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usuallybecause one party cannot collect damages from another.

Examples of the former include instances where one party will be put out ofbusiness by the court’s decision […]”. [17] In essence, the petitioners allege that they will suffer harm of this nature if the stay is not granted. [18] But what proof do they have to offer in this regard? [19] The motion for a stay is only accompanied by a short affidavit, signed by the advocate ad litem in which he asserts the truth ofthe facts alleged.

There is no detailed affidavit explaining the anticipated consequences to their businesses from the petitionersthemselves.[1] This Court has held in the past that some evidentiary basis, beyond mere allegations in the motion, is necessary toestablish harm in respect of the second criteria relevant for a stay: Autorité des marchés financiers v. Groupe SNC-Lavalin inc., 2013QCCA 884, paras [17] to [20].

While affidavit evidence might not be necessary in all circumstances, I sense it was called for here giventhe doubt raised on the factual matter of the impact of the various constraints by Grenier J., by Crête J. and in this Court. [20] When she granted what might fairly be described as the safeguard order in 1994, Grenier J. observed that the petitioners did notthemselves have to pay the taxes, but merely collect them, which they could do without suffering harm: “D’un côté”, she wrote, “rienn’indique que les requérants subiront un préjudice matériel quelconque s’ils se plient aux exigences de la loi en attendant l’issue dulitige”: Leclaire v.

Quebec (Attorney-General), 17 June AZ-94021495 (Sup. Ct.) p. 5. Crête J., in 2013 when deciding the case on themerits, was of the same view: see 2013 QCCS 6083, paras [416] to [422]. Importantly, this Court wrote that there was no evidence thatthe constraints, be they administrative or relating to the collection and remittance of the taxes from non-Native consumers to the DeputyMinister, would cause harm to the petitioners: 2016 QCCA 666, para. [107], [108] and [109].

The Court noted that the Deputy Ministerhad offered to take steps to facilitate the collection and remittance of taxes from non-Native consumers according to the law (para.[110]). The Court concluded on this point in strong terms as follows: [112] À la lumière de cette preuve, il est difficile d’écarter la conclusion de fait du juge de première instance selon laquelle lesappelants peuvent s’accommoder du système qui leur est offert sans contrainte excessive. Le refus de leur part de se prévaloir desolutions pratiques mises à leur disposition ne saurait rendre inconstitutionnelles les mesures budgétaires.

Il donne plutôt à penser que lesappelants sont davantage motivés par le désir de conserver un avantage compétitif que par l’incapacité de gérer un système administratifque l’on ne saurait qualifier d’excessif. Malheureusement pour eux, le rôle des tribunaux n’est pas d’intervenir en semblable matière. [21] The findings, by courts on three levels, would have to be set aside, in the absence of meaningful and up-to-date evidence of theexistence of serious or irreparable harm suffered by the petitioners beyond the assertions in the motion.

In my view, the petitioners havefailed to establish that the second criterion of serious or irreparable harm under

article 390 C.C.P. has been met. ***

[22] What about the balance of inconvenience? [23] Strictly speaking, this leg of the analysis is unnecessary. The petitioners’ failure to show serious or irreparable harm means themotion must be dismissed. [24] I feel bound, however, to note that the petitioners have asserted, mistakenly in my view, that suspending execution of thejudgment of this Court would cause no harm to the respondents.

They write at paragraph 23 of the motion: “There is no prejudice ingranting the stay of execution as it will only preserve the status quo as it has been maintained since 1994” (referring to the date of theGrenier J. stay or safeguard order). [25] This strikes me as wrong in two important respects.

Both would be relevant if the petitioners had established serious harm, andboth weigh against granting the stay. [26] First, it is mistaken to say that a stay ordered by a judge of this Court that would have the effect of suspending application of taxlaws causes no harm to the public interest. [27] In Manitoba (A.-G.) v.

Metropolitan Stores Ltd., (SCC), [1987] 1 SCR 110, Beetz J. wrote: [57] While respect for the Constitution must remain paramount, the question then arises whether it is equitable and just to deprive thepublic, or important sectors thereof, from the protection and advantages of impugned legislation, the invalidity of which is merelyuncertain, unless the public interest is taken into consideration in the balance of convenience and is given the weight it deserves. Ascould be expected, the courts have generally answered this question in the negative.

In looking at the balance of convenience, they havefound it necessary to rise above the interests of private litigants up to the level of the public interest, and, in cases involving interlocutoryinjunctions directed at statutory authorities, they have correctly held it is erroneous to deal with these authorities as if they have anyinterest distinct from that of the public to which they owe the duties imposed upon them by statute. [28] This harm to the public interest is a proper consideration at this stage of the analysis: RJR – Macdonald, supra, p. 341.

In myview, the petitioners have failed to consider the public interest in the application of fiscal laws in asking for the stay. [29] Second, in alluding to the “status quo” since 1994, the petitioners have not taken proper measure of an important finding of factmade by Crête J. that they failed, since that date, to respect the safeguard order in important respects. [30] It may be recalled that Grenier J. ordered the suspension of measures that might lead to the revocation of the petitioners’permits, but she did so conditionally: the petitioners had to “se plient aux exigences de la loi en ce qui a trait à la perception et à la remiseau ministre du revenue des taxes imposes aux consommateurs non-indiens qui leur achètent du carburant”: supra, p. 5. [31] In his judgment on the merits rendered 19 years thereafter, Crête held that the petitioners had, except for some modestremittances, failed to meet this condition of collecting and remitting the amount of taxes payable by non-Natives.

Crête J. wrote on thispoint, supra, at para. [422]: […] la preuve a nettement démontré que les requérants visés par l’ordonnance de la juge Grenier ont négligé, voire refusé, malgré cetteordonnance, de percevoir les taxes de vente et de les remettre au ministère, et ce, depuis des années. Le fait de verser de temps àautre « a bit of taxes », sans pièces justificatives particulières à l’appui, n’était clairement pas conforme à leurs obligations pourtant bienexplicites découlant de l’ordonnance de juin 1994.

« Frustra legis auxilium quaerit qui in legem committit. » [32] This Court took note of this finding of fact: supra, para. [8]. [33] When I asked petitioners’ counsel about the finding that her clients had failed to respect the very order that they wished to havereinstated as part of the stay, she simply declared that Crête J. was wrong, with no support for that statement, and added that her clientshad not been prosecuted for contempt.

Needless to say, the authorities’ decision not to undertake contempt proceedings, with all theconsequences that one imagines that this prosecution would entail, offers no proof whatsoever that the petitioners respected thesafeguard order.

At the least, the petitioners should have brought some evidence or meaningful argument that this finding by Crête J.constituted a palpable error. [34] To my mind, the failure to respect a court order observed by Crête J. – an order designed to preserve the equilibrium betweenthe parties – constitutes an instance of serious harm on the respondents’ side in the measure of the balance of inconvenience.

I would addthat the petitioners' position might be likened to coming to this Court asking for the assistance of a stay without clean hands, as Crête J.sensibly suggested, in the Latin maxim quoted in para. [422] of his reasons, cited above. [35] Even if I had the power to extend Grenier J.’s safeguard order as part of the stay requested by the petitioners, I would not do so.In any event, I need not decide this point because, as noted, the petitioners have failed to satisfy the requirements for a stay pursuant toarticle 390 C.C.P. [36] Considering the nature of the rights being litigated on both sides, I exercise my discretion not to grant costs on this motion. [37] FOR THE FOREGOING REASONS, the undersigned: [38] DISMISSES the motion, without costs.

NICHOLAS KASIRER, J.A.

Mtre Patrice Peltier-Rivest Directeur des poursuites criminelles et pénales For the Procureure générale du Québec Mtre Nicolas Ammerlaan Larivière Meunier (Revenu Québec) For the Agence du revenu du Québec and the Procureure générale du Québec Mtre Angela Markakis Mtre Timothé R. Huot Spiegel Sohmer, inc. For the petitioners Mtre Nancy Bonsaint Ministère de la Justice Canada For the Procureure générale du Canada Date of hearing: June 14, 2016