Southin, J.: —On December 17, 1986, several deputy sheriffs of British Columbia attended at 7914 184th Street in Surrey, the home of the petitioners, and seized pursuant to writs of Fi. Fa. issued out of the Federal Court on December 16, all the petitioners’ personal property within the house and a 1979 Cadillac, 1981 Mercedes and a motor home.
The underlying issue before me on this petition was whether the seizure was lawfully made pursuant to subsection 225.2(1) of the Income Tax Act, S.C. 1970-71-72 c. 63 as amended:
(1) Notwithstanding section 225.1, where it may reasonably be considered that collection of an amount assessed in respect of a taxpayer would be jeopardized by a delay in the collection thereof, and the Minister has, by notice served personally or by registered letter addressed to the taxpayer at his latest known address, so advised the taxpayer and directed the taxpayer to pay forthwith the amount assessed or any part thereof, the Minister may forthwith take any of the actions described in paragraphs 225.1(1)(a) to (g) with respect to that amount or that part thereof.
Having heard what the Minister did, I was of the opinion that the act of seizure was not authorized by the section. I so informed counsel, saying I would deliver written reasons. These are my reasons.
When in these reasons I refer to "the Minister" I am referring to officers of the Department of National Revenue who were acting on his behalf.
No objection was taken by counsel for the respondents to the jurisdiction of this Court to determine whether an act purportedly done under the Income Tax Act is authorized by it.
What happened as disclosed in the petition and affidavits was this:
1. On December 13, 1986, the petitioners went on holiday to Mexico. The Minister did not know this. — See the affidavit of Richard Leigh at paragraph 12.
2. On December 16, the Minister sent by registered post to each petitioner notices of assessment for certain earlier taxation years and a letter dated "Dec 161986". The letter to Mrs. Chudina said this:
In this document "the amount assessed" means "the Aggregate Amount of Assessment" shown below:
Date Amount of of of Assessment Taxation Year Assessment December 16, 1986 1983 $73,000.00 December 16, 1986 1984 77,889.00 December 16, 1986 1984 46,116.00 Aggregate Amount of Assessment = $197,005.00 You are hereby advised that it may reasonably be considered that collection of the amount assessed in respect of you would be jeopardized by a delay in the collection thereof, and you are hereby directed to pay forthwith the amount assessed.
This document has been executed under one or more of the following Acts: .. . . The Income Tax Act of Canada; . . ..
You may be entitled, under Section 225.2 of the Income Tax Act of Canada, to apply for a judicial determination of the question whether the direction contained herein was justified in the circumstances. You must first, upon 3 days notice to the Deputy Attorney General of Canada, apply to a judge of a superior court having jurisdiction in the province in which you reside or to a judge of the Federal Court of Canada for an order fixing a time and place for the determination. Such application must be made within (30) days after the date of this document, or within such further time as the judge, upon being satisfied that the application was made as soon as circumstances permitted, may allow.
The assessment was posted at 8:25 a.m. and the letter at 8:35 a.m. The evidence of the Minister does not disclose where the documents were posted nor is there any evidence that the Minister expected that they or either of them would be delivered the following day.
3. On the same day, the Minister issued certificates against the petitioners pursuant to subsection 223(1) of the Income Tax Act:
(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.
Also on that day, the certificates were registered in the Federal Court pursuant to subsection 223(2):
(2) Judgments. 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.
4. Thereafter, but also on that day, the Minister obtained from the Federal Court, as part of its process of execution on its judgment, writs of Fi. Fa. to which I have referred.
5. On December 17, the sheriff executed the writs.
6. The reason the Minister sent letters instead of serving the petitioners personally was to ensure surprise. As Mr. Casey, the solicitor for the petitioners, put it in his affidavit:
5. When I asked those officials why they did not give actual notice to my clients of the assessments and reassessments and of the Minister's direction under Section 225.2 of the Income Tax Act prior to taking execution proceedings, I was advised in words to the effect that Revenue Canada purposely refrained from giving the Petitioners actual notice because Revenue Canada feared that such notice defeats the purpose of section 225.2 of the Income Tax Act by removing the element of surprise.
The reference to "officials" is to those officers of the Department of National Revenue with whom Mr. Casey met on December 30, 1986. The substance of paragraph 5 is not controverted in the evidence adduced by the respondents.
I conclude that the officials of the Department knew full well when the process was invoked that the taxpayer would have no opportunity whatever to pay up the assessment.
I hold:
1. That the Minister could not have had any rational belief that either or both of the documents could come into the hands of the petitioners before execution proceedings began on December 17.
2. That when the Minister began on the 17th to take actions described in paragraphs 225.1(a) to (g) he had no belief that the petitioners could not conveniently be found. He believed that the petitioners were at home.
So what it comes to is that all in one day, the Minister assessed for tax asserted due, sent a letter of assessment with a demand for payment, obtained a judgment, and obtained process of execution, and the next day executed that process. Of all this, the petitioners had no knowledge until they returned home from their holiday.
The question is whether the section authorizes this course of conduct.
Section 225.2 is part of the enforcement provisions of the Act and can only be properly understood within the scheme:
(1) Notwithstanding section 225.1, where it may reasonably be considered that collection of an amount assessed in respect of a taxpayer would be jeopardized by a delay in the collection thereof, and the Minister has, by notice served personally or by registered letter addressed to the taxpayer at his latest known address, so advised the taxpayer and directed the taxpayer to pay forthwith the amount assessed or any part thereof, the Minister may forthwith take any of the actions described in paragraphs 225.1(1)(a) to (g) with respect to that amount or that part thereof.
1. By Part XV, all tax, interest and penalties payable under the Act are debts due to Her Majesty and recoverable in the Federal Court or any other Court of competent jurisdiction.
2. An amount assessed under the assessment provisions is an amount payable.
3. The Minister may certify the amount, obtain a judgment on a certificate and obtain execution thereon (section 223).
4. Before 1985, the Minister could collect the amount assessed even though the taxpayer disputed the assessment. Of course, if the taxpayer ultimately succeeded, the Minister gave him back his money.
5. By the 1985 amendments (S.C. 1985, c. 45) execution is postponed until the appeal process if invoked by the taxpayer is exhausted to the level of trial e.g. as to the appeal to the Minister, see subsection 225.1(2):
(2) Idem. Where a taxpayer has served a notice of objection under this Act to an assessment of an amount payable under this Act, other than an amount payable under Part VIII or subsection 227(9), the Minister shall not, for the purpose of collecting the amount in controversy, take any of the actions described in paragraphs (1)(a) to (g) before the day that is 90 days after the day on which notice is mailed to the taxpayer that the Minister has confirmed or varied the assessment.
This was a significant change in the legal rights of the “creditor” against the alleged "debtor".
6. But by section 225.2 which I have quoted earlier, the Minister retained the power "where it may reasonably be considered, collection would be jeopardized" to invoke the process of certification, registration and collection.
It is not, I think fanciful to say that this is a kind of statutory Mareva injunction, albeit one with even more potentially devastating effects than such an injunction has.
In my opinion, the concept underlying section 225.2 is simple. The taxpayer must pay up right away or the Minister will use the full panoply of his powers. The amount assessed is effectively treated as a demand debt upon the non-payment of which then and there the taxpayer is in the position he was before the 1985 amendments.
But how can the taxpayer avoid the seizure of his property by paying up unless he knows that he owes the money (i.e. has been assessed) and that the Minister insists on having it?
In the case before me, the assessment and the demand for payment were both posted on December 16, and the seizure took place the next day. This course of action was deliberately adopted so that the taxpayer would not have a chance to pay up.
To adopt a course of action deliberately intended as this was to deprive the taxpayer of the opportunity however brief of paying up before the seizure of all his property is, in my opinion, to misuse the power conferred. It is a subversion of Parliamentary intention. The thrust of these sections is that the taxpayer is to be given the opportunity to appeal and the opportunity to pay. Section 225.2 is a special power for a limited purpose.
The concept that a power must be exercised to carry out the purpose of the donor and not to subvert that purpose applies not only in public law but also in private law. The remarks of Lord Westbury, L.C. in Portland v. Topham (1864), 11 H.L. Cas. 32 at 54 are apposite:
Without farther dwelling on the matter, inasmuch as your Lordships concur in opinion, I think we must all feel that the settled principles of the law upon this subject must be upheld, namely, that the donee, the appointor under the power, shall, at the time of the exercise of that power, and not for any purpose for which it is used, act with good faith and sincerity, and with an entire and single view to the real purpose and object of the power, and not for the purpose of accomplishing or carrying into effect any bye or sinister object (I mean sinister in the sense of its being beyond the purpose and intent of the power) which he may desire to effect in the exercise of the power.
The application of this principle when the power is one conferred by Parliament for a public purpose is adverted to in Padfield v. Minister of Agriculture, [1968] 1 All E.R. 694 at 701 by Lord Reid:
If it is the Minister’s duty not to act so as to frustrate the policy and objects of the Act of 1958, and if it were to appear from all the circumstances of the case that that has been the effect of the Minister’s refusal, then it appears to me that the court must be entitled to act.
Now of course the facts in the authorities to which I have referred are very different indeed from the facts before me, but they are statements of a principle just as applicable throughout the whole of the law as is the maxim delegatus non potest delegare. Here the plain purpose of the section is to give the erring taxpayer an opportunity no matter how brief to pay. To choose a method of notification deliberately intended to deprive him of that opportunity is to frustrate the object of section 225.2 of the Income Tax Act and the related sections.
As I understood him, counsel for the Minister argued that literal compliance is all that is necessary.
If literal compliance is all that is required, then the Minister could put a registered letter in the post at 8:00 a.m. in Cape Dorset addressed to a taxpayer whose “last known address" was Sandspit, B.C. and have a sheriff's officer in the taxpayer's home in the Queen Charlotte Islands at 5:00 a.m. Pacific Time. I have purposely given an exaggerated example.
But I see no difference in principle between that example and what happened here. Each is an example of the taxpayer being deliberately deprived of the chance to pay.
In other words, the condition precedent cannot be held to have been performed when the Minister knew that because of the course of post the taxpayer cannot have received the direction to pay. If Parliament had intended the Minister to have the right to take the actions described in section 225.1 without notice or a genuine attempt at notice to the taxpayer, it could easily have said "The Minister may if he deems it advisable without notice to the taxpayer, forthwith take any of the actions described, etc."
What is at stake here is the validity of the act of the Minister, not the behaviour of the petitioners. This judgment is not in any way a determination of what the position would be in law had the Minister known before the events in question that the petitioners were in Mexico, a fact which was known to the Royal Canadian Mounted Police by virtue of a letter which had been left with the Royal Canadian Mounted Police detachment in, I believe, Vancouver before the petitioners departed. Nor is it in any way a determination of the position where to the knowledge of the Minister the taxpayer cannot be found.
I wish to make it clear that I am not in this judgment making any finding on whether “it may reasonably be considered that collection of an amount assessed . . . would be jeopardized by a delay.. . .”
Nor am I making any finding as to whether the direction to pay by the Minister was justified in the circumstances.
The petitioner in the petition asks for "such further and other relief as to this Court seems just".
My view is that the relief which is just is a declaration that as of December 17, 1986 the Minister had no lawful right to take any of the actions so described.
I am willing to hear counsel further on the appropriate remedy. For that purpose they may if they so desire make arrangements through the Registry.
Declaration accordingly.