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An attempt to circumvent the Tax Court’s exclusive jurisdiction | Sara Blake

Tuesday, March 21, 2023 @ 10:59 AM | By Sara Blake


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Sara Blake
The Supreme Court of Canada has granted leave to appeal in a second case this month concerning the right to apply for judicial review when the statute grants a right of appeal.

In Canada (Attorney General) v. Iris Technologies Inc. 2022 FCA 101, the company chose to seek judicial review in the Federal Court rather than exercise its right of appeal to the Tax Court of Canada.

My last blog is about the other case — Yatar v. TD Insurance Meloche Monnex 2022 ONCA 446.

In this latest case, Iris Technologies sought judicial review of a tax audit that resulted in a tax assessment of GST owing. The company alleged administrative law grounds against the minister of national revenue, specifically, procedural unfairness, lack of an evidentiary basis for the assessment, failure to apply policy and improper motives (bias).

The Federal Court of Appeal struck the application for judicial review. It was dismissive of the company’s attempt to circumvent the statutory regime for appeal by “cloaking grievances in administrative law language.” Essentially, the judicial review is a challenge to the validity of the tax assessment, over which the Tax Court has exclusive original jurisdiction by way of a statutory right of appeal.

The court noted that the validity of a tax assessment is a question of law that turns on findings of fact and the interpretation of statute. In a Tax Court proceeding, there are rights to discovery, to present evidence and to make submissions on all questions of fact and law. The Tax Court is not bound by the minister’s findings of fact, policy or interpretation of statute. The Federal Court of Appeal ruled that the declarations sought by the company on administrative law grounds would have no practical effect on the validity of the assessment. The assessment remains valid and binding until vacated by the Tax Court. It would serve little or no purpose for the court to issue a declaration that does not quash or vacate the assessment. Given that an appeal to the Tax Court can cure any defect in the minister’s process, it provides an adequate alternative remedy. The Federal Court of Appeal dismissed the application for judicial review as a collateral attack on the validity of the assessment and “bereft of any possibility of success.”

Over the past decade Federal Courts have allowed an expanding variety of issues to be raised on judicial review of the minister, possibly circumventing the statutory process to challenge tax assessments. It will be interesting to see whether the Supreme Court restricts its focus to the circumstances of this case or uses this case to review more broadly the Federal Court jurisprudence on the resort to judicial review in tax cases. I expect the company’s lawyers will cite all the federal jurisprudence; some of the precedents are cited by the Federal Court of Appeal.

Sara Blake is the author of Administrative Law in Canada, 7th edition, LexisNexis Canada. Her practice is restricted to clients who exercise statutory and regulatory powers.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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