Lambert, J. (Carrothers, J. concurring):—There are two principal issues in this appeal: the first relates to the validity and priority of a seizure and sale of property by a deputy sheriff acting on a writ of fieri facias issued from the Federal Court of Canada to enforce an income tax debt; the second relates to the constitutionality of an enforcement section of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") in relation to section 8 of the Charter where the seizure and sale rests on a certificate having the effect of a judgment, rather than on a true judgment, and no notice of the making of the certificate, or the issuance of the writ of fieri facias, or the instruction to the sheriff to make a seizure of chattels, is required by the enforcement section to be given to the taxpayer.
The Facts
There was an agreement between the parties about the facts.
In late 1984 and early 1985 International Electronics Corporation became liable for tax under Part VIII of the Income Tax Act after it designated four separate amounts, between July and December 1984, in respect of shares, debt obligations or rights under a scientific research financing contract. Between September 1984 and March 1985 four separate assessments were issued under the Income Tax Act with respect to the four separate designated amounts. The assessments were sent to the taxpayer. The total of the designated amounts was $65,000,000. The total of the assessments was half that, or $32,500,000.
On June 21, 1985 two certificates headed “In the Federal Court of Canada" were prepared by an officer of the Accounting and Collections Division of Revenue Canada and were stamped by him with a facsimile of the signature of "W. J. Massel”, the Director of Accounting and Collections. The certificate said that the amounts shown on them were payable by International Electronics Corporation and had not been paid. The amount on one certificate was $26,142.17. It related to withholding tax under Part I of the Income Tax Act. The amount on the other certificate was $32,500,000. It related to tax under Part VIII of the Income Tax Act arising from a scientific research financing contract.
On June 24, 1985 the two certificates, each accompanied by a writ of fieri facias headed "The Federal Court of Canada" and bearing the seal of the Federal Court and the signature of a Registry officer, respectively for the two face amounts shown on the two certificates, plus penalty and interest, were delivered to the office of the sheriff at Victoria.
There is nothing in the agreed facts to indicate that International Electronics Corporation was ever informed by notice of any kind that the two certificates had been prepared and signed, that the two writs of fieri facias had been issued, or that the certificates and writs of fieri facias had been placed in the hands of the sheriff. This appeal was argued on the basis that no such notice was given.
Between June 24, 1985 and June 28, 1985, deputy sheriff Peter Holmes seized the goods and chattels of International Electronics Corporation. Between July 26, 1985 and August 20, 1985 deputy sheriff Peter Holmes sold the goods and chattels which he had seized. He realized $196,259.15 as gross proceeds of sale.
Meanwhile, on July 8, 1985, the Royal Bank started proceedings in the Supreme Court of British Columbia claiming that International Electronics Corporation was indebted to it in the amount of $553,287.61 in principal and interest, plus further interest after July 6, 1985. On August 9,1985 the Bank obtained judgment by default in the amount of $556,456.51, including interest and costs. On August 20, 1985 the bank's judgment, together with a writ of seizure and sale from the Supreme Court of British Columbia, were placed in the hands of the sheriff of Victoria for execution against the property of International Electronics Corporation. By that time all the goods and chattels of International Electronics Corporation had been seized and sold by deputy sheriff Peter Holmes under the writ of fieri facias issued from the Federal Court at the instance of Revenue Canada. All that remained in his hands were the proceeds of sale.
The proceedings
Deputy sheriff Peter Holmes brought a petition in the Supreme Court of British Columbia, in the nature of interpleader proceedings, against Her Majesty the Queen in Right of Canada, the Royal Bank of Canada, and the Director of Employment Standards, a Provincial Crown officer. On December 16,1985 a Supreme Court Justice ordered that the net proceeds of the seizure and sale under the two writs of fieri facias issued from the Federal Court at the instance of Revenue Canada be held in an interest bearing trust account pending a determination of which of the respondents to the petition was entitled to those proceeds. The order also provided that the entitlement to the proceeds of realization should be determined on a special case under Rule 33 of the Supreme Court Rules.
The special case came on for hearing before a Supreme Court Justice in June, 1989. He decided that, for the purpose of enforcing the Federal Crown's rights under a certificate, the effect of subsection 223(2) of the Income Tax Act was to make the Federal Crown a creditor of equal status to a judgment holder, and that on that basis the Crown prerogative gave the Crown a better claim to the proceeds of realization than the claim of the Royal Bank. He also decided that the bank's claims that subsection 223(2) of the Income Tax Act was contrary to section 8 of the Canadian Charter of Rights and Freedoms and that section 223 was contrary to the Bill of Rights should be dismissed.
This appeal has been brought by the Royal Bank from those decisions. The Director of Employment Standards is not a party to the appeal, and apparently an agreement has been made which will permit the Director's entitlement, if any, to be determined under the agreement once the respective entitlements, if any, of the Federal Crown and the Royal Bank have been decided.
The first issue: the effect of the writs of fieri facias
Section 223: The Governing Section of the Income Tax Act
Section 223 of the Income Tax Act deals with the certification of amounts payable under the Act, and with the effect of such a certification and certificate. At the relevant time, section 223 read:
223. (1) An amount payable under this Act that has not been paid or such part of an amount payable under this Act as has not been paid may be certified by the Minister
(a) where there has been a direction by the Minister under subsection 158(2), forthwith after such direction, and
(b) otherwise, upon the expiration of 30 days after the default.
(2) On production to the Federal Court of Canada, a certificate made under this section shall be registered in the Court and when registered has the same force and effect, and all proceedings may be taken thereon, as if the certificate were a judgment obtained in the said Court for a debt of the amount specified in the certificate plus interest to the day of payment as provided for in this Act.
(3) All reasonable costs and charges attendant upon the registration of the certificate are recoverable in like manner as if they had been certified and the certificate had been registered under this section.
[Emphasis added.]
The section does not make a certificate into a judgment. Nor does it provide that a certificate is to be deemed to be a judgment. What it does is say that a certificate has the same force and effect as if it were a judgment and that all proceedings may be taken under the certificate as if it were a judgment. See Hongkong Bank of Canada v. The Queen (1989), 58 D.L.R. (4th) 385 at 390, 36 B.C.L.R. (2d) 373 at 378. In my opinion that means that the certificate may be enforced in all respects as if it were a judgment of the Federal Court.
The Authority for the Writ of fieri facias
Rule 1900(1) of the Federal Court Rules deals with the enforcement of judgments of the Court. It reads:
1900 (1): Subject to the provisions of the Rules, a judgment or order for the payment of money, not being a judgment or order for the payment of money into court, may be enforced by one or more of the following means, that is to say,
(a) writ of fieri facias;
(b) garnishee proceedings;
(c) a charging order;
(d) the appointment of a receiver;
(e) in a case in which Rule 1903 applies, an order of committal;
(f) in such a case, a writ of sequestration.
In my opinion the registration of the two certificates in the Federal Court authorized the issuance of the two writs of fieri facias.
The Federal Court Statutory Law of Execution
The effect of the two writs of fieri facias in the hands of the sheriff of Victoria must be determined under subsection 56(3) of the Federal Court Act, which reads:
56. (3) All writs of execution or other process against property, as well those prescribed by the Rules as those hereinbefore authorized, shall, unless otherwise provided by the Rules, be executed, as regards the property liable to execution and the mode of seizure and sale, as nearly as possible in the same manner as the manner in which similar writs or process, issued out of the superior courts of the province in which the property to be seized is situated, are, by the law of that province, required to be executed; and such writs or process shall bind property in the same manner as such similar writs or process, and the rights of purchasers thereunder are the same as those of purchasers under such similar writs or process.
[Emphasis added.]
Subsection 56(3) is a provision in a federal statute. It provides for execution on a judgment of the Federal Court, itself established under a federal statute pursuant to the power conferred by section 101 of the Constitution Act, 1867, which reads:
The Parliament of Canada may, notwithstanding anything in this Act, from time to time provide for the constitution, maintenance, and organization of a General Court of Appeal for Canada, and for the establishment of any additional Courts for the better administration of the laws of Canada.
Subsection 56(3) does not purport, on its face, to integrate the federal system of writs of execution with the provincial systems. There may well be constitutional impediments to doing so. Instead, it provides for a federal system which is parallel with and similar to the various provincial systems in four respects, namely, the property liable to execution, the mode of seizure and sale, the way property is bound by a writ, and the rights of purchasers.
Subsection 56(3) is not couched in language which would be appropriate if the provincial systems of execution were to be adopted as the federal system, by reference. In that respect it is helpful to compare subsection 56(3) with subsection 38(1) of the Federal Court Act which deals with limitation of actions. Subsection 38(1) reads:
Except as expressly provided by any other Act, the laws relating to prescription and the limitation of actions in force in any province between subject and subject apply to any proceedings in the Court in respect of any cause of action arising in such province, and a proceeding in the Court in respect of a cause of action arising otherwise than in a province shall be taken within and not after six years after the cause of action arose.
[Emphasis added.]
Subsection 38(1) makes provincial limitation laws apply in actions in the Federal Court. But that is not what is done by subsection 56(3). Instead of incorporating provincial execution laws as federal laws, by reference, a task which might well be constitutionally daunting because of questions of priorities, subsection 56(3) establishes a federal execution law for Federal Court executions. That federal execution law is like provincial laws in the four stated respects, but it is not provincial law incorporated as federal law, but rather a separate federal system of execution law.
The two writs of fieri facias in this case were therefore issued under the federal system and came into the hands of the sheriff for execution under the federal system. He seized the property under the federal system and he sold it under the federal system. That process was entirely completed before any writ of seizure and sale issued by the Royal Bank came into the sheriff's hands under the provincial system.
The Existence of a Federal Common Law of Execution
In my opinion there must be a federal common law which governs federal executions in the gaps that are not covered by the statutory provisions set out in subsection 56(3) of the Federal Court Act. As authority for the propositions that there can be a federal common law, and that such a federal common law is part of "the laws of Canada" for the purposes of the jurisdiction of the Federal Court, I rely on Roberts v. Canada, [1989] 1 S.C.R. 322, 57 D.L.R. (4th) 197, particularly at pages 339-40,where, in a unanimous judgment for a five-judge division of the Supreme Court of Canada, Madam Justice Wilson decided that the Federal Court had jurisdiction in a dispute between two Indian bands because both the Indian Act and the common law of aboriginal title which underlies the fiduciary obligations of the Crown to Indian bands are "laws of Canada" and that they are federal laws for the purposes of the jurisdiction of the Federal Court as established under section 101 of the Constitution Act, 1867. If the law in relation to aboriginal title when dealt with in a federal context is federal common law then I think that the law of execution of a Federal Court judgment is also federal common law.
In my opinion the decisions of the Supreme Court of Canada in Quebec North Shore Paper Co. v. Canadian Pacific Ltd., [1977] 2 S.C.R. 1054, [1978] C.T.C. 628, 78 D.T.C. 6426, McNamara Construction v. The Queen, [1977] 2 S.C.R. 654, 75 D.L.R. (3d) 273, The Queen v. Thomas Fuller Construction, [1980] 1S.C.R. 695, 106 D.L.R. (3d) 193 and R. W.D.S.U. v. Dolphin Delivery Ltd., [1986] 2 S.C.R. 573,33 D.L.R. (4th) 174, to the extent that they might be thought to deny the existence of federal common law, must be regarded as explained and, if it were thought necessary, overruled by the Roberts case.
The Substance of the Relevant Federal Common Law of Execution
Under the common law of England, the goods seized under a writ of fieri facias or an equivalent writ remained the property of the person from whom they were seized, after the seizure, until they were sold. But once they were sold they became the property of the purchaser and the proceeds of sale became impressed with the proprietary interest of the judgment creditor at whose instance the goods had been sold. The proceeds of sale never became the property of the judgment debtor from whom the goods had been seized. In this connection see Giles v. Grover, [1824-34] All E.R. 547, particularly Alderson, J. at page 557 and Lord Tenterden, C.J. at pages 568-9. This is what Alderson, J. had to say at page 557:
From these premises, two propositions seem to me to follow—first, that at no period of time at all does the execution creditor obtain any property whatsoever in the goods themselves, and, secondly, that the general property in the goods seized remains, until the sale, in the debtor, and is not changed by the seizure: Milton v. Eldrington. After the sale the case is very different, for, by the sale, the property is wholly changed from the debtor to the vendee of the sheriff, and the money, the produce of the goods, then becomes the property of the creditor, for which he may maintain an action for money had and received and for which the sheriff is responsible to him, the original debtor being then wholly and finally discharged: Perkinson v. Gilford. The rule is thus expressly laid down by Garrow, B., in delivering the opinion of the court after full consideration in Higgins v. M'Adam (3 Y. & J. at page 13):
The rule is, that when execution is executed, the property is changed; and execution is said to be executed when a sale has taken place.
[Emphasis added.]
I have been unable to find any suggestion in the decided cases, in the commentaries, or in the Law Reform reports to suggest that Giles v. Grover is no longer a sound expression of the common law, as opposed to the statute law, of execution against chattels. Indeed it was followed and applied by Mr. Justice Spencer in the Supreme Court of British Columbia in A.G. Canada v. Skeena (1984), 52 B.C.L.R. 142.
Application of the Federal Law of Execution to this Case
In this case the deputy sheriff had seized the goods and chattels of International Electronics Corporation under the two writs of fieri facias issued from the Federal Court at the instance of Revenue Canada. He had entirely sold those goods and chattels before the writ of execution issued from the Supreme Court of British Columbia at the instance of the Royal Bank came into his hands. It is my opinion that when the sheriff received the Royal Bank writ there were no longer any goods or chattels or funds which belonged to International Electronics Corporation against which the sheriff could levy under the Royal Bank's writ.
For those reasons it is my opinion that, subject to the arguments under the Charter and the Bill of Rights to which I am about to turn, the entire proceeds of the execution by the sheriff which are now held in the interest bearing trust account are or would be funds on which the Royal Bank has or would have no claim.
Two Further Observations
I wish to add two observations.
My first observation is that it follows from the ground on which my decision on this issue rests that it is not necessary to explore the difficult questions, which were fully argued before us, relating to the Crown prerogative to be paid in priority to the subject if the claim of the Crown and the claim of the subject are of equal degree. I do not propose to do so.
My second observation is that I feel sure that the conclusion I have reached reveals a whole new range of difficulty and complexity about the priorities between the rights of the federal Crown on the one hand and the rights of the provincial Crown and the subjects of the Crown on the other hand. I suppose that some of the direct conflicts between rights arising under federal legislation and rights arising under provincial legislation may be resolved by Multiple Access v. McCutcheon, [1982] 2 S.C.R. 161, 138 D.L.R. (3d) 1. But I see no opening for the federal Crown to accommodate itself to the Creditor Assistance Act of British Columbia and to obtain the benefits of the Creditor Assistance Act's proportional recovery system, or to allow other creditors to do so, (even if the federal Crown were to prefer that system for settling priorities), except by the federal Crown starting its proceedings from the beginning in the provincial system. There is no need to say any more on this point and I will not do so.
The second issue: unreasonable seizure
Section 8 of the Charter
Section 8 of the Charter reads:
Everyone has the right to be secure against unreasonable search or seizure.
Counsel for the Royal Bank argued that the statutory scheme for enforcing the Income Tax Act based on a certificate made by a tax official, of which the taxpayer may have been given no notice, and enforcement proceedings on the certificate, of which again the taxpayer may have been given no notice, is a scheme which authorizes unreasonable seizures, contrary to section 8 of the Charter. For that reason, counsel for the Royal Bank argued that subsection 223(2) of the Income Tax Act, which provided for the certificates on which the scheme rests, and for their enforcement as judgments, should be declared to be unconstitutional.
The Statutory Enforcement Scheme
Part XV of the Income Tax Act deals with administration and enforcement. I will mention the provisions which were in effect at the relevant time.
Section 222 makes income tax a debt to the Crown, recoverable in the Federal Court or in any other court of competent jurisdiction.
Section 223 provides that the Minister may certify an amount that is payable under the Act and has not been paid, and that the certificate may be registered in the Federal Court and enforced as a judgment of that Court. For convenience of reference I will set out subsection 223(2) again:
On production to the Federal Court of Canada, a certificate made under this section shall be registered in the Court and when registered has the same force and effect, and all proceedings may be taken thereon, as if the certificate were a judgment obtained in the said Court for a debt of the amount specified in the certificate plus interest to the day of payment as provided for in this Act.
[Emphasis added.]
Section 224 provides for garnishment; section 224.1 for recovery by deduction. Neither of those sections provides for notice to the taxpayer of the proposed enforcement action. They do not depend on a judgment or even on a certificate that has the effect of a judgment.
Section 225 provides for seizure of chattels. By contrast to section 224 and section 224.1, it requires that 30 days' notice must be given to the taxpayer by registered mail of the Minister's intention to make the seizure.
Sections 225.1 and 225.2 stipulate that the Minister cannot invoke the enforcement provisions I have summarized until 90 days have elapsed after the day of mailing to the taxpayer of the notice of assessment unless the Minister considers that the enforcement could be jeopardized by the delay. Ninety days is, of course, also the period within which the taxpayer may object to the assessment.
The first significant point to note about the scheme is that notice is given to the taxpayer by registered mail of the assessment, but that thereafter no notice is required to be given to the taxpayer of any enforcement action that is contemplated unless the contemplated action is a seizure of chattels under section 225, in which case 30 days' notice must be given.
The second significant point is that the requirement of notice before seizure of chattels can be avoided by making a certificate and then causing a writ of fieri facias to be issued and delivered to the sheriff for execution. So the Act itself sets out the path whereby its very own notice provision in relation to seizure of chattels may be defeated.
Was This a "Seizure" for the Purposes of Section 8 of the Charter?
Counsel for the Crown argued that a seizure from International Electronics Limited to enforce an income tax obligation was not a seizure to which section 8 of the Charter would apply, because section 8 was limited to seizures to obtain evidence which might be used to incriminate a person in proceedings where liberty or security of the person was at risk. Counsel relied on The Queen v. Werhun, [1991] 2 W.W.R. 344, 62 C.C.C. (3d) 440, a decision of the Manitoba Court of Appeal. I regard that aspect of the decision in Werhun, and perhaps other points made in the same segment of the reasons, as being obiter dicta; but whether that is so or not I would not make a similar limitation on the rights protected by section 8 of the Charter.
Thomson Newspapers Limited v. Director, Combines Investigation, [1990] 1 S.C.R. 425, 67 D.L.R. (4th) 161 establishes that the concept of seizure in section 8 consists of taking hold by a public official of a thing belonging to a person against the person's will. See particularly at pages 494-95, 505, 596, and 610 (S.C.R.).
In my opinion, the taking of the goods of International Electronics Corporation by the sheriff was a seizure within the meaning of" seizure” in section 8 of the Charter.
Was it a Seizure that Might be "Unreasonable"?
In my opinion the seizure of chattels under the Income Tax Act without any notice to the taxpayer of an intention to seize the chattels and without giving the taxpayer reasonable time, following the notice, to discharge the tax debt, in circumstances where there is no reasonable ground for a belief that the taxpayer intends to avoid the payment of the tax debt, may constitute an unreasonable course of conduct and an unreasonable seizure. The same is true of garnishment of wages and recovery by deduction under the enforcement scheme of the Act since they are equally within the definition of "seizure" on which I I rely.
I think that the principle in Lister v. Dunlop, [1982] 1 S.C.R. 726, 135 D.L.R. (3d) 1, that a person from whom a seizure is being made under a security instrument is entitled to receive such notice of the proposed seizure as is reasonable in the circumstances, is a principle that is not confined to security instruments but applies to all seizures under contract and to all seizures under a statutory scheme that does not specifically provide otherwise, unless the person on whose behalf the seizure is made has first obtained a trial judgment under court processes that contemplate the giving of notice of the proceedings to the person from whom the goods are to be seized. That principle was applied to a security instrument in Waldron v. Royal Bank (1991), 53 B.C.L.R.
(2d) 294, 78 D.L.R. (4th) 1 and the extent of the applicability of the principle was discussed in that case at pages 299-300 (B.C.L.R.). In Salituro v. The Queen, [1991] 3 S.C.R. 654, 68 C.C.C. (3d) 289 the Supreme Court of Canada emphasized that the Charter must stimulate and guide incremental developments in the common law, and that concept is reflected in the passage in Waldron which I have mentioned.
A person who is subject to a seizure may well suffer losses far in excess of the amount of the debt that is discharged through the seizure. Those losses may extend beyond the direct value of the goods seized and may extend to injury to reputation and credit. The process of seizure is therefore likely to involve a serious invasion of a reasonable expectation of privacy. See Hunter v. Southam, [1984] 2 S.C.R. 145, 11 D.L.R. (4th) 641 per Dickson, C.J. at page 159 (S.C.R.). It is for that reason that the Canadian Charter of Rights and Freedoms guarantees the right to be secure against unreasonable seizures.
So I do not believe that the state should seize the goods of a subject in circumstances where the subject might well be expected to discharge his debt to the state voluntarily if he knew that if he did not do so within a short period he might be subject to such a seizure. A seizure in those circumstances, is likely, in my opinion, to be unreasonable.
The 30-day notice provision in section 225 reflects the adoption by Parlia- ment of the concept that there should be adequate notice to the taxpayer before a seizure of goods. And, of course, there should be a method of dispensing with notice when an impartial process leads to a conclusion that the giving of notice would be likely to thwart the collection of the tax debt.
I do not consider that section 225.1, which was enacted in 1985, and which provides for a postponement of collection action while an assessment is being disputed, meets the same purpose as would be met by a provision for notice before seizure.
So I consider that because of the absence of any notice to International Electronics Corporation of the intention to make and register a certificate, or of the intention to issue a writ of fieri facias and to deliver it to the sheriff with instructions to make a seizure, there is a genuine question raised by this appeal about whether the statutory scheme which permits such a seizure is unconstitutional under section 8 of the Charter.
In this case we are not being asked whether the specific seizure is unreasonable and, as such, results in an unconstitutional application of a constitutional provision. Rather, we are being asked to declare that subsection 223(2) of the Income Tax Act itself is unconstitutional as being contrary to section 8 of the Charter. The fact that the seizure in this case is of the type that might be unreasonable and that it occurred in the ordinary administration of the Act is the only determination which need be made at this point.
The Standing of the Royal Bank and the Remedies the Bank May Seek
The bank is a person directly affected by the seizure in this case. If the seizure took place under an unconstitutional enactment then in my opinion, under the normal rules, the bank, as a person directly affected by an application of the enactment, has standing to challenge its constitutionality. In reaching that conclusion I rely on Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138, 43 D.L.R. (3d) 1; The Nova Scotia Board of Censors v. McNeil, [1976] 2 S.C.R. 265, 55 D.L.R. (3d) 632; The Minister of Justice of Canada v. Borowski, [1981] 2 S.C.R. 575, 57 D.L.R. (4th) 231; and Canadian Council of Churches v. The Queen (1992), 132 N.R. 241 (all decisions of the Supreme Court of Canada).
The recent decision of the Supreme Court of Canada in The Wholesale Travel Group Inc. v. The Queen, [1991] 3 S.C.R. 154, 67 C.C.C. (3d) 193, which deals with the standing of a corporation to challenge the constitutionality under the Charter of a statutory provision which, in its terms, applies to both individuals and corporations, confirms that the bank has standing in this case even though the challenge to the constitutionality of subsection 223(2) is a Charter challenge and even though the bank is a corporation. The decision of the Supreme Court of Canada in The Queen v. Goltz (1991), 67 C.C.C. (3d) 481 raises some new issues with respect to standing but I would not apply that decision to refuse standing to the Royal Bank in this case, where the issue of standing was substantively conceded before the decision in the Goltz case became available.
The bank does not seek any remedy based on the manner in which the seizure was Carried out, including the fact that no notice was given to International Electronics Corporation before the certificate having the effect of a judgment was registered in the Federal Court, and including the fact that no notice was given to International Electronics Corporation before the writs of fieri facias were issued and the seizure took place. If the bank were seeking such a remedy it would face difficult problems in showing it had an expectation of privacy in relation to the chattels of its customer and in asserting that a claim could be made by a corporation with respect to a violation of a section 8 right. But it is not necessary to consider those questions in this case.
So the bank's claim is confined to a request for a declaration that subsection 223(2) of the Income Tax Act is unconstitutional because it authorizes both reasonable seizures and unreasonable seizures, without distinction.
“Reading Down" the Legislative Scheme to Retain Constitutionality
Clearly it would be possible to devise a scheme for enforcement of income tax obligations by seizure of chattels similar to the certificate provisions in subsection 223(2), but which would limit the scheme to circumstances where the registration of the certificate, and the issuance of the writ of fieri facias, and the seizure, would all be reasonable. For example, such a limit might confine the scheme to cases where notice had been given to the taxpayer of the imminence of the seizure if payment of the tax obligation was not made promptly, and to cases where it was established by a process involving a proper measure of impartiality that such a notice could not be given without jeopardizing the prospects of enforcing the obligation.
In my opinion it is not the proper course to read down a legislative enactment, which is in some applications contrary to the Charter, by devising a legislative policy which would, if it were incorporated in the scheme, place limits on the scheme such that the scheme would become constitutional, and then to treat the legislative scheme as if it contained those limits and to apply it only within those limits. In this connection I refer to the decisions of the Supreme Court of Canada in Hunter, supra, at pages 168-69, and The Queen v. Seaboyer, [1991] 2 S.C.R. 577, 66 C.C.C. (3d) 321, per McLachlin, J. at pages 403-05 (C.C.C.).
But that is not to say that the determination of constitutionality must be made in relation to the scheme as a whole. I come now to the decision of the Supreme Court of Canada in Goltz, supra.
A Legislative Scheme Which Authorizes both Constitutional Applications and Unconstitutional Applications
Because judgment was handed down by the Supreme Court of Canada in Goltz after this appeal was argued, we asked for responsive written submissions on the application of the Goltz case to this appeal. We have received and considered those submissions.
In the Goltz case the majority judgment was given by Mr. Justice Gonthier for himself and for La Forest, L'Heureux-Dubé, Sopinka, Cory and lacobucci, JJ. Madam Justice McLachlin gave dissenting reasons. Chief Justice Lamer and Mr. Justice Stevenson agreed with her.
The Goltz case related to the constitutionality of paragraph 88(1)(c) of the Motor Vehicle Act of British Columbia which makes it an offence to drive while the driver is prohibited from driving under any one of four sections of the Act, or while the driver's licence is suspended under any one of six sections of the Act, and imposes a mandatory minimum sentence of seven days' imprisonment. The argument on behalf of Willy Goltz was that paragraph 88(1)(c) was contrary to section 12 of the Charter because in some fairly common situations its application would constitute cruel and unusual punishment by imposing a punishment which was grossly disproportionate to the offence. That argument was successful at trial, and on a Crown appeal in this Court. However, it was rejected by the majority in the Supreme Court of Canada.
The majority reasons of Mr. Justice Gonthier confine the issue of constitutionality to the precise subparagraph, namely subparagraph 86(1)(a)(ii), which authorized the driving prohibition which was applied to Willy Goltz and which made his driving an infringement of subsection 88(1). That precise subparagraph was the one which allowed the superintendent to prohibit a person from driving if the Superintendent thought that the person's driving record was unsatisfactory. All the other provisions which could lead to prohibitions or to licence suspensions were said not to be in issue in the appeal (page 490). Consequently, Mr. Justice Gonthier's consideration of the constitutionality of paragraph 88(1)(c) under section 12 of the Charter was specifically limited to prohibitions under only one subparagraph out of the ten sections which could lead to driving prohibitions or to driver's licence suspensions. Mr. Justice Gonthier than said that paragraph 88(1)(c) could only be unconstitutional in relation to an application to a person prohibited from driving under paragraph 86(1)(a)(ii) if its application to Willy Goltz himself would amount to cruel and unusual punishment, or if its application to some other person who had been prohibited from driving under the exact same provision as Willy Goltz in "reasonable hypothetical circumstances" would amount in those reasonable hypothetical circumstances" to cruel and unusual punishment (pages 496-97). Mr. Justice Gonthier considered that the application to Willy Goltz himself did not amount to cruel and unusual punishment because in his particular case there was no gross disproportionality between the punishment and the offence (page 497-503). Willy Goltz had a thoroughly bad record for speeding, had been prohibited from driving by the Superintendent, and was caught speeding once again. Mr. Justice Gonthier considered that Willy Goltz's case was an illustration of the fact that, in its usual applications, the imposition of punishment under paragraph 88(1)(c) to a person prohibited from driving under paragraph 86(1)(a)(ii) because of a bad driving record would not result in grossly disproportionate punishment (page 504). He concluded that there was no" reasonable hypothetical circumstance” in which seven days' imprisonment would be a grossly disproportionate punishment for a person who had been prohibited from driving because of a poor driving record (page 504-507). Once again, Mr. Justice Gonthier said that those “reasonable hypothetical” cases where seven days imprisonment would be imposed for driving while a licence had been suspended for a failure to pay for a licensing examination or a failure to pay an insurance claim were of no relevance to the constitutional issue to which the Goltz case was limited, namely the disproportionality of the punishment for Willy Goltz himself or for a person who had been prohibited from driving for the very same reason as Willy Goltz.
The dissenting reasons of Madam Justice McLachlin indicate that in her opinion Mr. Justice Gonthier’s approach severs the unconstitutional applications from the constitutional applications before even starting on a consideration of whether the section is constitutional; that it fails to answer the precise constitutional question that was stated by the Chief Justice as being the constitutional question for decision in the Goltz case; that it reads down the section by confining it to constitutional applications by imposing limits that were not enacted by Parliament; that it is contrary to the decision of the Supreme Court of Canada in Seaboyer, supra; and that it leaves the section in the statute books as a valid section when it is valid only in some applications and not in others, with the distinction between the two categories being impossible to recognize by an examination of the section itself, resulting in a checkerboard applicability with the checkerboard only mistily perceived. And, of course, it follows that the decisions of the Supreme Court on standing, particularly Thorson and McNeil, supra, may not be applicable in cases where the standing is asserted to challenge the constitutionality of a provision on the ground that the provision is contrary to the Charter, if the challenge is made by a person who relies on applications of an enactment in reasonable hypothetical circumstances which are not closely similar to that person's own circumstances. But see The Queen v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295, 18 C.C.C.(3d) 385.
The ratio decidendi of the reasons of Mr. Justice Gonthier is binding on this Court.
The Goltz case should not be distinguished in this Court on grounds which do not establish a true distinction, as, for example, that it only applies where the counsel defending the constitutionality of the provision has confined his case to the precise application arising from the facts of his own case.
A stronger argument could be made for distinguishing the Goltz case on the ground that its scope was intended to be limited to cases arising under section 12 of the Charter. It is difficult to conceive that cruel or unusual punishment could ever be justified in a free and democratic society. So the fact that section 1 is most unlikely to have any applicability to a case under section 12 may arguably be a reason for giving a narrower constitutional focus to cases under section 12 than is given to cases under section 8. However, I would be reluctant to apply such a distinction to the Goltz case until the Supreme Court of Canada itself has had an opportunity to discuss the relationship of the decision in Goltz to its decisions in other cases.
In my opinion the ratio of Mr. Justice Gonthier's decision is applicable to this case and must be applied to this case.
Application of the Goltz Decision to this Case
In this case subsection 223(2) was invoked by the Accounting & Collections Division of Revenue Canada as a method of enforcing, by seizure, the debt owed by International Electronics Corporation to the Crown for tax assessed under Part VIII of the Income Tax Act. Part VIII imposes a tax equal to 50 per cent of the total amounts designated by a corporation in respect of a share or debt obligation issued by it in a year. All or some of the tax may become refundable. The tax under Part VIII is only imposed on corporations and it is only imposed after a corporation invites its imposition by making a designation under Part VIII. At that stage the corporation knows, from the amount it has designated, how much the tax is going to be, and that the corporation is required, under subsection 195(2), to pay the tax by the last day of the month after it makes its designation.
In this case the total of the amounts designated by International Electronics Corporation between July and December, 1984 was $65,000,000. The total tax payable on those designated amounts was 50 per cent of $65,000,000, or $32,500,000.
The majority reasons for judgment in the Goltz case require that we confine our consideration of the constitutionality of subsection 223(2) to the precise circumstances of International Electronics Corporation or to a case that could be said to arise through a similar application of subsection 223(2) in ''reasonable hypothetical circumstances" to a corporation which had made a designation in respect of a share or debt obligation of the corporation and so had invoked the necessity to pay Part VIII tax.
In my opinion, on that narrow application of subsection 223(2), that provision is not unconstitutional as being contrary to section 8 of the Charter, which provides protection against unreasonable seizures. Where the corporation acts to make the designation which results in the assessment, and where the payment must be made in the month after the month in which the designation is made, a seizure for persistent or continuing non-payment must be regarded as being the probable consequence of invoking the Act and then flouting it. Such a seizure cannot be regarded as unreasonable.
The situation might well be otherwise where the seizure is founded on a certificate issued under subsection 223(2) in circumstances where the taxpayer is an individual who has had no actual notice of the specific possibility of seizure, other than the bare assessment of tax.
The Canadian Bill of Rights
An alternative argument was made on behalf of the Royal Bank to the effect that subsection 223(2) of the Income Tax Act, that is, the same certificate provision which I have been discussing with respect to constitutionality under the Charter, must be applied under section 2 of the Canadian Bill of Rights in such a way as to invalidate the seizure by the sheriff under Revenue Canada writs of fieri facias, in accordance with the right embodied in these words in subsection 1(a) of the Canadian Bill of Rights:
1. It is hereby recognized and declared that in Canada there have existed and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely,
(a) the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law;
[Emphasis added.]
The right to the enjoyment of property recognized and confirmed by subsection 1(a) of the Canadian Bill of Rights is not a right of corporations but a right of individuals. Having regard to the reasons for judgment of the majority of the Supreme Court of Canada in Goltz and notwithstanding the reasons of the Supreme Court of Canada in The Wholesale Travel Group Inc. case, supra, I would not apply the Bill of Rights to protect the right of a corporation to the enjoyment of property just because an individual might well be able to invoke that section of the Bill of Rights in order to obtain protection from an unreasonable seizure under a certificate made under subsection 223(2) of the Income Tax Act.
Under the decision of the Supreme Court of Canada in The Queen v. Drybones, [1970] S.C.R. 282, [1970] 3 C.C.C. 355, the effect of the infringement of a provision in an Act of the Parliament of Canada that is contrary to section 1 of the Canadian Bill of Rights is that the infringing section is inoperative. The offending section does not become, by the infringement, or by the possibility of other infringements, unconstitutional. In those circumstances, it seems to me that there would be no authority for applying the protection and recognition given to the right of individuals to the enjoyment of property by subsection 1(a) of the Canadian Bill of Rights to the protection of any equivalent right of a corporation.
Disposition
I have concluded that the seizure under the writs of fieri facias issued on behalf of Revenue Canada was entirely completed, by the sale of the goods seized, by the time the Royal Bank's writ came into the hands of the sheriff, and that there was therefore nothing in the sheriff's hands to which the Royal Bank's writ could attach. The proceeds of sale were already the property of the Crown, though they remained in the hands of the sheriff.
I have also concluded that the seizure based on a certificate made under subsection 223(2) of the Income Tax Act is not unconstitutional as being contrary to section 8 of the Charter in circumstances where the tax assessed was tax assessed on a corporation under Part VIII of the Income Tax Act. Had the seizure been made against an individual for tax under Part I of the Income Tax Act without specific actual notice to the individual of the imminent possibility of such a seizure, my conclusion might well have been different. Such a seizure might well be unreasonable and contrary to section 8 of the Charter.
One of the Crown's writs of fieri facias was issued under the certificate relating to the assessment of $32,500,000 for tax under Part VIII of the Income Tax Act. The other writ of fieri facias was based on a certificate for $26,142.17 for withholding tax under Part I of the Income Tax Act. Having regard to the legal consequence of a decision that the seizure under the writ of fieri facias resting on the certificate for $32,500,000 was constitutional, effective, and complete, there is no purpose to be served in undertaking an analysis of whether the certificate, writ, and seizure with respect to the tax debt of $26,142.17 under Part I of the Income Tax Act were contrary to section 8 of the Charter.
Finally, I have concluded that the seizure against International Electronics Corporation with respect to its liability for Part VIII tax and flowing from the certificate issued under subsection 223(2) of the Income Tax Act was not contrary to subsection 1(a) of the Canadian Bill of Rights.
Accordingly, I would dismiss the appeal.
Taylor, J:—I am in complete agreement with the conclusions of Mr. Justice Lambert on the issues raised in this case, and with his reasons for reaching them.
I am, however, reluctant to express any opinion with respect to the status under the Charter of the procedure adopted here, or any other tax recovery procedure, institutions other than those of the type with which we are directly concerned—that is to say the case of a corporation liable for unpaid taxes due under Part VIII of the Income Tax Act.
I express that reservation because it seems to me that in a free and democratic society it may be reasonable that the state have recourse to tax collecting procedures which require payment of taxes without judicial adjudication, and on the basis of assumptions which may prove unfounded, with an accounting to be made and refund paid if necessary at the end of the taxation year, and that under such a system it may possibly be appropriate for the taxing authority to attach debts, including wages, order deductions, or place a writ of seizure in the hands of the sheriff, without notice to the taxpayer other than notice of the taxes due, and of the consequences of nonpayment, with a reasonable period within which to pay them.
Since these matters were not dealt with fully before us, I am reluctant to express any opinion beyond that necessitated by the facts of the present case.
I am also reluctant to endorse even a tentative expression of opinion with respect to the question whether at common law a sheriff acting under a writ of fieri facias acts in a purely administrative capacity, at the instance of the judgment creditor, so as to be entitled in law to remove the property seized without considering any request which the judgment debtor may make for time to pay. I say that because it seems to me possible that the sheriff may act in this regard in an independent capacity, as an officer of the court. It is well known that sheriffs in this province—prior, at least, to the time when seizure of chattels under the judgments of provincially—established courts seems to have been largely transferred to commercial bailiffs—customarily exercised some discretion with respect to the manner in which executions were carried out.
Where a judgment debtor has sought time to pay, sheriffs have sometimes made formal seizure by notice to the debtor but thereafter have left the chattels in place and put an officer in possession or, with the debtor's consent, created the debtor, a representative of the debtor or some other person, a sheriff's bailiff. In this way it has been possible for debtors to be given the opportunity to raise the funds needed to pay a judgment, or to seek an order of the court, under its jurisdiction over its officers or under provincial legislation, allowing further time to pay without removal of chattels.
It is quite unclear to me whether, in deciding to delay removal of chattels, a sheriff could be said to act in an independent, or even quasi-judicial, capacity associated with that office, or whether, absent consent of the judgment creditor, the sheriff acts without any specific legal authority, and has simply done what everyone regarded as the fair and practical thing to do, and to which no one objected.
But if, in fact, the strict legal duty of the sheriff has in the past required him to remove goods seized under a writ of execution immediately—without considering any request by the debtor for time to raise the money to pay the judgment debt, and if this is a reflection of what has been the common law governing that historic public office—that is to say, if the law has been that the sheriff has no independent discretion to give time to pay after formally effecting seizure and before removing the goods—then it may be that section 8 of the Charter has the effect of changing the state of the law, and that the relevant jurisprudence may one day have to be reconsidered in that light.
If, moreover, the requirements of section 8 go further than that, and require that the formal seizure itself not take place without prior notice to the debtor in cases where there has been no trial, or any other cases, then it may be in this regard, too, that the common law governing issuance of writs of seizure by the courts, or in the manner of their execution, may have to be reconsidered in order to ensure that proper effect is given to requirements of the Charter. In the case of Federal Court seizures, these matters will, perhaps, be dealt with in that Court.
If change in the common law would suffice to accommodate any requirements created by section 8 in the case of judicial seizures, it seems to me that a court might be reluctant to strike down as unconstitutional a statutory provision which authorized judicial seizure and was silent as to the procedure to be followed before, or in the course of, its execution.
It is because of the complexity of these questions, and because they were not the subject of argument, that I would prefer not to make any observation on the possible outcome of cases other than that with which we are directly concerned.
Appeal dismissed.