IAN E. BROWN Appellant v. HER MAJESTY THE QUEEN, 2014 FCA 301

Date: 20141217 Dockets: A-340-13 A-120-14 Citation: 2014 FCA 301 CORAM: PELLETIER J.A. STRATAS J.A. WEBB J.A. BETWEEN: IAN E. BROWN Appellant and HER MAJESTY THE QUEEN Respondent Heard at Toronto, Ontario, on September 10, 2014. Judgment delivered at Ottawa, Ontario, on December 17, 2014. REASONS FOR JUDGMENT BY: WEBB J.A. CONCURRED IN BY: PELLETIER J.A. STRATAS J.A. Date: 20141217 Dockets: A-340-13 A-120-14 Citation: 2014 FCA 301 CORAM: PELLETIER J.A. STRATAS J.A. WEBB J.A. BETWEEN: IAN E.

BROWN Appellant and HER MAJESTY THE QUEEN Respondent REASONS FOR JUDGMENT WEBB J.A. [ 1 ] Ian Brown filed a notice of appeal (A-120-14) in relation to the order of Campbell J. dated January 27, 2014 (Docket: 2013- 3386 (IT)

I) striking Mr. Brown’s Notice of Appeal dated September 10, 2013, Amended Notice of Appeal dated January 15, 2014 and Fresh Notice of Appeal dated January 20, 2014, which he had filed under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the Act). Mr. Brown was attempting to appeal a reassessment of his 2010 taxation year. Mr. Brown also filed a notice of appeal (A-340-13) from the order of Boyle J. dated September 25, 2013 (Docket: 2012-3456 (IT)

G) striking his amended notice of appeal and dismissing his appeal in relation to the assessments for the 2006, 2007, 2008 and 2009 taxation years. [ 2 ] Although these appeals were not consolidated, Mr. Brown raised the same issue in both appeals in relation to the assessment

of penalties under subsection 163(2) of the Act (gross negligence penalties). In the appeal filed as A-340-13, Mr. Brown also raised an argument related to the constitutional validity of the Act. At the hearing Mr. Brown addressed the arguments for both appeals at the same time. As a result, these reasons will apply to both appeals and a copy of these reasons will be placed in each file. Background [ 3 ] In filing his income tax return for 2009, Mr. Brown claimed a loss from a business of $181,167.

He also submitted the form to request that $140,939 of this loss from a business from 2009 be carried back to previous taxation years as a non-capital loss as follows: $41,985 to 2008, $64,666 to 2007 and $34,288 to 2006. In filing his income tax return for 2010, he claimed a loss from a business of $63,554. [ 4 ] The Minister of National Revenue denied the losses from a business that he claimed in 2009 and 2010. Since the loss from a business for 2009 was denied, he was also denied the non-capital loss that he was attempting to carry back from 2009 to 2008, 2007 and 2006.

Gross negligence penalties were also assessed in relation to the losses from a business that he had claimed in each of 2009 and 2010. [ 5 ] Mr. Brown filed a notice of appeal under the General Procedure with the Tax Court of Canada in relation to his 2006, 2007, 2008 and 2009 taxation years, and a notice of appeal under the Informal Procedure with that Court in relation to his 2010 taxation year. In his notices of appeal he included statements indicating that he was appealing the assessment of the gross negligence penalties. The Crown brought motions to strike each notice of appeal on the basis that Mr.

Brown did not disclose any material facts. Both notices of appeal were struck by the Tax Court. Issues [ 6 ] In the appeal to this Court Mr. Brown raises two issues: (

a) Whether, as a constitutional matter, the Act is null and void “due to vague and convoluted

interpretations in the [Act]” ; and, (

b) Whether his appeal to the Tax Court of Canada should be allowed to continue only in relation to the assessment of gross negligence penalties in 2009 and 2010. Vagueness [ 7 ] Mr. Brown’s argument that the Act is void is based mainly on the

definitions of “business” , “employee” , “employment” , “person” and “taxpayer” in subsection 248(1) of the Act. These terms are defined in subsection 248(1) of the Act as follows: “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; “employee” includes officer; “employment” means the position of an individual in the service of some other person (including Her Majesty or a foreign state or sovereign) and “servant” or “employee” means a person holding such a position; “person”, or any word or expression descriptive of a person, includes any corporation, and any entity exempt, because of subsection 149(1), from tax under

Part I on all or part of the entity's taxable income and the heirs, executors, liquidators of a succession, administrators or other legal representatives of such a person, according to the law of that part of Canada to which the context extends; “taxpayer” includes any person whether or not liable to pay tax; « 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. « employé » Sont compris parmi les employés les cadres ou fonctionnaires. « emploi »

Poste qu’occupe un particulier, au service d’une autre personne (y compris Sa Majesté ou un État ou souverain étrangers); « préposé » ou « employé » s’entend de la personne occupant un tel poste. « personne » Sont comprises parmi les personnes tant les sociétés que les entités exonérées de l’impôt prévu à la

partie I sur tout ou

partie de leur revenu imposable par l’effet du paragraphe 149(1), ainsi que les héritiers, liquidateurs de succession, exécuteurs testamentaires, administrateurs ou autres représentants légaux d’une personne, selon la loi de la

partie du Canada visée par le contexte. La notion est visée dans des formulations générales, impersonnelles ou comportant des pronoms ou adjectifs indéfinis. « contribuables » Sont comprises parmi les contribuables toutes les personnes, même si elles ne sont pas tenues de payer l’impôt. [ 8 ] His argument is that the

definitions provided for “business” , “employee” , “person” and “taxpayer” are not complete

definitions because the Act only provides specific references to what is included in these terms. As a result, he submits that these

expressions are vague. [9] However, this is simply the choice of Parliament in determining what guidance will be provided in the

interpretation of theseterms by ensuring that these terms will include what is specifically referenced. Even if no guidance would have been provided byParliament, each of these terms would have a meaning that could be determined by a court for the purposes of the Act. By providing thatthese terms “include” what is specifically identified in these

definitions, it does not make these provisions void, nor does it make theentire Act void. [10] Lord Denning in Fawcett Properties Ltd. v. Buckingham County Council, [1961] A.C. 636 at 676 stated that: My Lords, it is a bold suggestion to make that these words, taken as they are from a statute, are void for uncertainty. Mr. Megarry wasunable to point to any case where a statute has ever been held void for uncertainty. There are a few cases where a statute has been heldvoid because it is meaningless but none because it is uncertain ...

But when a statute has some meaning, even though it is obscure, orseveral meanings, even though there is little to choose between them, the courts have to say what meaning the statute is to bear, ratherthan reject it as a nullity. As Farwell J. put it when speaking of a statute: 'Unless the words were so absolutely senseless that I could donothing at all with them, I should be bound to find some meaning, and not declare them void for uncertainty.' [11] In R. v. Nova Scotia Pharmaceutical Society, (SCC), [1992] 2 S.C.R. 606, [1992] S.C.J.

No. 67, Gonthier J.set out the following proposition: 71 The doctrine of vagueness can therefore be summed up in this proposition: a law will be found unconstitutionally vague if it solacks in precision as not to give sufficient guidance for legal debate. This statement of the doctrine best conforms to the dictates of therule of law in the modern State, and it reflects the prevailing argumentative, adversarial framework for the administration of justice. [12] The provisions of the Act to which Mr. Brown refers do not satisfy this proposition.

Whether the defined terms will include,in addition to what is specifically identified, something or someone else is a matter that can be resolved by a Court based on the ordinarymeaning of these terms. [13] For example, in this case, Mr. Brown raised the question of whether he was a person for the purposes of the Act since thedefinition of person only provides that it includes corporations, certain entities “and the heirs, executors, liquidators of a succession,administrators or other legal representatives of such a person”.

Human beings or individuals are not specifically included in the list. [14] However, in Canada (Minister of National Revenue) v. Stanchfield, [2009] F.C.J. No. 133, 2009 FC 99, Gauthier J. (as shethen was) stated: 23 When one uses simply the term "person", one necessarily includes the notion of the human being, as it is the very essence of thereality represented by this term. This explains why, in the Act, subsection 248(1) does not specifically mention the term "human being"in its definition of the term "person".

This is not necessary given that, as explained by professors Duff, Alarie, Brooks and Philipps in Canadian Income Tax Law4, "this definition merely expands on the ordinary meaning of the word "person"" (emphasis added). This isentirely consistent with the approach of the British Columbia Court of Appeal in Lindsay (see above at para. 10). There is thus absolutelyno doubt that a natural person is directly included within the definition of the word "person" at subsection 248(1) of the Act. [15] Mr. Brown is a person and a taxpayer for the purposes of the Act.

Standard of Review – Motion to Strike Pleadings [16] The second issue raised by Mr. Brown is whether the provisions of his notices of appeal related to the assessment of grossnegligence penalties should have been struck. In Canadian Imperial Bank of Commerce v. The Queen, 2013 FCA 122, [2013] 4 C.T.C.218, this Court noted that: 5 The decision of a judge to grant or refuse a motion to strike is discretionary.

This Court will defer to such a decision on appeal inthe absence of an error of law, a misapprehension of the facts, a failure to give appropriate weight to all relevant factors, or an obviousinjustice: Apotex Inc. v. Canada (Governor in Council), 2007 FCA 374, Collins v. Canada, 2011 FCA 140. Test For Striking Pleadings [17] Iacobucci, J., writing on behalf of the Supreme Court of Canada in Odhavji v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263,set out the test for striking pleadings: 15 An excellent statement of the test for striking out a claim under such provisions is that set out by Wilson J. in Hunt v.

CareyCanada Inc., (SCC), [1990] 2 S.C.R. 959, at p. 980: ... assuming that the facts as stated in the statement of claim can be proved, is it "plain and obvious" that the plaintiff's statement of claimdiscloses no reasonable cause of action? As in England, if there is a chance that the plaintiff might succeed, then the plaintiff should notbe "driven from the judgment seat". Neither the length and complexity of the issues, the novelty of the cause of action, nor the potentialfor the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case.

Only if the action iscertain to fail because it contains a radical defect ... should the relevant portions of a plaintiff's statement of claim be struck out ... The test is a stringent one. The facts are to be taken as pleaded. When so taken, the question that must then be determined is whetherthere it is "plain and obvious" that the action must fail. It is only if the statement of claim is certain to fail because it contains a "radicaldefect" that the plaintiff should be driven from the judgment. See also Attorney General of Canada v. Inuit Tapirisat of Canada, 1980

21 (SCC), [1980] 2 S.C.R. 735. Pleadings in Relation to Gross Negligence Penalties [18] Mr. Brown confirmed during the hearing of his appeal before this Court that the only matter that he wants to pursue beforethe Tax Court of Canada is the assessment of the gross negligence penalties for 2009 and 2010. He is not pursuing his appeal in relationto the denial of the losses from a business in 2009 or 2010 or the denial of the carry back of a non-capital loss to 2008, 2007 or 2006. [19] Subsection 163(3) of the Act provides that:

(3) Where, in an appeal under this Act, a penaltyassessed by the Minister under this

section or section163.2 is in issue, the burden of establishing the factsjustifying the assessment of the penalty is on theMinister.

(3) Dans tout appel interjeté, en vertu de la présente loi,au sujet d’une pénalité imposée par le ministre en vertudu présent

article ou de l’article 163.2, le ministre a lacharge d’établir les faits qui justifient l’imposition de lapénalité. [20] Therefore the Minister, and not Mr. Brown, would have the burden of establishing the facts justifying the assessment of thegross negligence penalties imposed for 2009 and 2010. Since the only documents filed in these matters at the Tax Court of Canada werethe notices of appeal (and amended notices of appeal) filed by Mr. Brown, it is not plain and obvious that the Minister will be successfulin establishing the facts justifying the assessment of the gross negligence penalties.

Since this is the Minister’s burden, there are nomaterial facts that Mr. Brown would need to allege (and then have the onus to prove) in his notices of appeal. [21] The Tax Court erred in law in striking those parts of Mr. Brown’s notices of appeal that address the issue of whether grossnegligence penalties should have been assessed. Striking these parts of the notices of appeal means that he is denied a hearing in the TaxCourt of Canada on a matter for which the onus of proof rests with the Minister. Conclusion [22] As a result, I would allow Mr.

Brown’s appeal in relation to striking the parts of his notices of appeal that address theassessment of gross negligence penalties for 2009 and 2010. The parts of his notices of appeal for 2009 and 2010 that relate to the lossfrom a business that he had claimed in these years would be struck and the parts of his notices of appeal for 2009 and 2010 that relate tothe assessment of these penalties would not be struck. The provisions of his notice of appeal that relates to his appeal of the assessmentof his 2006, 2007 and 2008 taxation years would be struck, as no penalties were assessed in relation to those years.

Therefore, makingthe order that the Tax Court should have made, I would revise Mr. Brown’s notices of appeal as follows: Tax Court File Number 2012-3456(IT)G (Appeal A-340-13) - Mr. Brown’s Amended Notice of Appeal dated November 26, 2012 (AppealBook pages 35 to 38): Paragraphs (

a) and (

b) contain personal information. These paragraphs, as written by Mr. Brown, would not be struck from this notice ofappeal except that the reference to taxation years 2006, 2007, 2008 and 2009 would be changed to a reference to only the taxation year2009. Paragraphs 1) to 4) (inclusive) and paragraph 9) relate to either Mr. Brown’s right to appeal to the Tax Court of Canada or the assessmentof the gross negligence penalty and would not be struck from this notice of appeal.

Paragraphs 30) and 31) indicate that the issue is “[w]hat constitutes a false statement” and “[w]hether the penalty imposed by theminister is supported by any facts” and would not be struck from this notice of appeal. Paragraphs 33, 34, 35, 37 and 39 relate to either Mr. Brown’s right to appeal to the Tax Court of Canada or the assessment of the grossnegligence penalty and would not be struck from this notice of appeal.

The parts of the paragraph outlining the relief sought (identified as (g)) related to vacating the assessment, “vary[ing] the account toreflect the return which was originally filed” and granting other relief would be struck. As a result this paragraph would be as follows: The appellant is requesting that the court remove all penalties imposed on this account and all accrued interest on those penalties. All of the other paragraphs of this notice of appeal would be struck. Tax Court File Number 2013-3386(IT)I (Appeal A-120-14) - Mr.

Brown’s Fresh Notice of Appeal dated January 20, 2012 (Appeal Bookpages 82 and 83): This notice of appeal, in relation to his 2010 taxation year, would be as submitted by Mr. Brown except that the reference in paragraph 4to his request that the court vacate the assessment would be struck and therefore this paragraph would be as follows: 4. The Appellant is requesting that the court remove all penalties imposed on this account and all accrued interest on those penalties andthe costs of this appeal. [23] I would set aside the awards of costs that were made by each Tax Court Judge and I would award Mr.

Brown costs here andbelow. "Wyman W. Webb"

J.A. “I agree J.D. Denis Pelletier J.A.” “I agree David Stratas J.A.” FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DocketS: A-340-13 and A-120-14 STYLE OF CAUSE: BROWN v HMQ PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: September 10, 2014 REASONS FOR JUDGMENT BY: WEBB J.A. CONCURRED IN BY: PELLETIER J.A. STRATAS J.A. DATED: December 17, 2014 APPEARANCES : Self-represented For The Appellant H. Annette Evans Kathleen Beahen For The Respondent SOLICITORS OF RECORD : William F. Pentney Deputy Attorney General of Canada Ottawa, Ontario For The Respondent