Date: 19980519
Docket: T-673-98
BETWEEN:
DRAGISA GAJIC,
Plaintiff,
- and -
HER MAJESTY THE QUEEN
IN THE NAME OF REVENUE CANADA
AND
HER MAJESTY THE QUEEN
IN THE RIGHT
MINISTER OF FINANCE AND CORPORATE RELATIONS
FOR THE PROVINCE OF BRITISH COLUMBIA,
| Defendant. |
REASONS FOR ORDER
MR. JOHN HARGRAVE,
PROTHONOTARY
[1] This action involves a claim for tax, penalties and interest assessed on an improper basis and paid in error. The Federal Crown, at an early stage, did the correct and proper thing through a refund authorised by Order in Council and therefore, either in its own right, or as an agent collecting and remitting taxes on behalf of the Provincial Government, ought not to be a party to these proceedings. The Provincial Crown, to all appearances unjustly enriched by reason of the Plaintiff's payments, has refused to make any refund.
[2] In a triumph of law over justice the Plaintiff has no claim at law and no remedy against the Provincial Crown, either in the courts of British Columbia or in the Federal Court: this action must be struck out.
[3] Mr. Gajic, who acts for himself and who made a reasonable presentation, deserves reasons, which follow.
SOME PERTINENT FACTS
[4] This matter, as far as the Provincial Crown is concerned, was thoroughly canvassed in Gajic v. British Columbia (1996) 19 B.C.L.R. (3d) 169 (called "Gajic 1996"), a decision of Mr. Justice Wood of the B.C. Court of Appeal, whose findings of fact I paraphrase.
[5] Mr. Gajic, a Yugoslavian immigrant, failed to file tax returns for at least the years 1977 through to 1979. The reason for this, subsequently accepted by the Federal Crown, was that he was being pressured by a European terrorist faction and thought it best to lie low. But in the result, in 1981, the Minister of National Revenue assessed tax, penalties and interest, which Mr. Gajic paid.
[6] In 1986, at the request of Revenue Canada, Mr. Gajic filed returns for the years 1977 through 1985: it turned out that the government assessment of 1981 was a gross overstatement of his actual income for the taxation years of 1977, 1978 and 1979. However, by 1986, it was too late to apply for a reassessment. In due course the Governor General in Council, by way of an Order in Council, remitted the tax, penalties and interest collected on behalf of the Government of Canada. It returned to Mr. Gajic $6,887.96. The Minister of National Revenue wrote to the British Columbia Ministry of Revenue to provide the information necessary in order to obtain a remission of Provincial income tax.
[7] The then Provincial Minister of Finance, Mr. Clark, wrote a lengthy letter explaining why it was fair for the Provincial Government to retain its portion of the tax. Mr. Clark refused to recommend to Cabinet that there be a Provincial remission of the tax collected, $3,123.63, together with interest.
[8] Mr. Justice Low, of the B.C. Supreme Court, heard the matter in June of 1993 and, in reasons sympathetic to Mr. Gajic, dismissed the claim.
[9] Coincidentally, the same day that the B.C. Supreme Court dismissed Mr. Gajic's application for remission, the Provincial Cabinet was to have considered the request for a remission. Here there is interesting dichotomy between what Mr. Gajic was told in writing and what is set out in the Cabinet minutes. The Minster of Finance wrote to Mr. Gajic to say that the Cabinet had decided not to grant a remission, however the minutes state:
| "Cabinet approved list of Orders recommended by CCLRO with the exception of OIC proposing a remission of provincial income tax to Mr. Dragisa Gajic, which was withdrawn." (emphasis added by Court of Appeal). |
[10] Mr. Gajic, on the basis that the Provincial Government was considering his claim, let the time for appeal of Mr. Justice Low's decision slip by. However, the B.C. Court of Appeal, in Gajic v. British Columbia (1994) 2 B.C.L.R. (2d) 115 (called "Gajic 1994"), felt both that the delay had been explained and that there was merit in Mr. Gajic's case. Thus, in Gajic 1994, the B.C. Court of Appeal extended the time within which to appeal.
[11] The Court of Appeal, when it subsequently dealt with the merits in Gajic 1996, gave Mr. Gajic's claim a very thorough consideration. It assumed, contrary to the minutes of the Cabinet meeting, that the Lieutenant Governor in Council had denied a remission, but since denial was purely a legislative decision-making function it was not subject to any rules of procedural fairness. The Court compared the Federal and Provincial outcomes of Mr. Gajic's claims. In dismissing Mr. Gajic's claim it concluded that the only reason for the difference in the Federal and Provincial decisions was that Mr. Gajic did not receive a sympathetic hearing from the Province of British Columbia.
[12] Mr. Gajic considers he has been poorly dealt with by the Provincial Crown and perhaps the average person on the street, if he or she had overpaid tax, would feel much the same way. It is here that Mr. Gajic refers to the Declaration of Taxpayer Rights, which appears, for example, on the cover page of the 1997 General Income Tax Guide. That declaration includes the undertakings that Revenue Canada will apply "... the tax laws in a consistent and fair manner." and that is a job of Revenue Canada "... to collect only the correct amount of tax, no more and no less.". I now turn to Mr. Gajic's Statement of Claim.
STATEMENT OF CLAIM
[13] The Provincial Crown submits the Statement of Claim does not disclose any reasonable cause of action, or alternatively, that it is scandalous, frivolous or vexatious. The Crown's motion, filed and heard on short leave, to which Mr. Gajic did not object, makes no mention of the obvious, that the Federal Court has in fact no jurisdiction over the Provincial Crown. Thus, although the written argument touches on the jurisdiction point, I limit my consideration to a want of a reasonable cause of action argument which, in effect, is a res judicata submission by reason of the very full treatment of the Provincial Crown's position by the B.C. Court of Appeal.
[14] On the basis of a want of a reasonable cause of action argument I must consider the facts set out in the Statement of Claim, unless patently unreasonable, as proven. Here I note that Mr. Gajic has incorporated into and attached to his Statement of Claim various documents including the decision in Gajic 1996.
[15] As I read the Statement of Claim it is in part a cry for some sort of justice from the Provincial Crown, but giving it a broad and generous reading it is also a submission that the Federal Crown, as a tax-collecting agent for the Provincial Crown, has a duty not to err and that there being an error the Federal Crown ought to reimburse the Plaintiff for the taxes it collected on behalf of British Columbia.
[16] The Statement of Claim goes on to set out that Mr. Gajic felt the whole exercise, culminating in the hearing of his case by the B.C. Court of Appeal in October, 1995, in Gajic 1996, was at least a moral victory. Mr. Gajic sets out and this is uncontradicted by any affidavit evidence, that the Provincial Crown attorney was asked, by Mr. Justice Wood, whether he saw any fairness and justice on the part of the Government of British Columbia toward Mr. Gajic and the response was "Who is talking about fairness and justice, the Government does not want you to review this case, and that is all.".
CONSIDERATION
[17] There are two motions to consider, first that of the Federal Crown, to the effect that there is no reasonable cause of action, or alternatively that the Queen in Right of Canada ought not to be a party to the proceedings as the Queen in Right of Canada is in no way related to the relief sought. Second, there is a motion of the Provincial Crown, upon which I have already touched.
The Federal Crown's Motion
[18] Turning first to the motion of the Queen in Right of Canada, there are two reasons why the claim, as against the Federal Crown, ought to be struck out.
[19] First, the Federal Crown has made appropriate restitution so far as Federal tax collected is concerned, and this is not denied by the Plaintiff. Second, and I will elaborate on this, Revenue Canada, as a tax-collecting agent for the Province of British Columbia has, on the pleadings as they stand and, in any event, no liability to the Plaintiff.
[20] That the Federal Government, through what is now referred to as Revenue Canada, acted as an agent for the Provincial Government in collecting taxes is clear from Section 54 of the Income Tax Act, R.S.B.C. 1979, ch. 190. Indeed, this is a point made by Mr. Justice of Appeal Wood in Gajic 1996 (supra) at page 171.
[21] The Statement of Claim does not allege that the Minster of National Revenue acted beyond the scope of his authority, or acted fraudulently, or acted otherwise than a normal agent, or still has money which ought to be returned to the Plaintiff, but merely that there was an error on the part of the assessor who determined and made the assessment against the Plaintiff. In this instance, because Mr. Gajic is a lay litigant and here has a little difficulty with the English language, I will take it that the allegation is one of negligence.
[22] The difficulty with a plea of negligence, in the present instance and leaving aside the likelihood of a time bar, is that Mr. Gajic himself failed to file tax returns over a number of years. By every appearance Revenue Canada made what it thought might be a reasonable assessment: there is no allegation in the Statement of Claim to the contrary. In hindsight the assessment was high. However there is no indication or clear allegation whatsoever of negligence on the part of Revenue Canada. Rather, at the very most, Revenue Canada erred because Mr. Gajic did not hold up his part of the bargain between taxpayer and Government, to make full disclosure by means of an income tax return each year.
[23] On this basis it is clear and beyond doubt that Mr. Gajic cannot succeed against the Federal Crown, for there is no reasonable cause of action. To proceed would be futile. The Statement of Claim is struck out as against her Majesty the Queen in the name of Revenue Canada.
Claim Against the Provincial Crown
[24] As a preliminary matter counsel for Her Majesty the Queen in Right of the Province of British Columbia moved that he be allowed to speak to his own affidavit. This is a practice which should at least be discouraged and perhaps, except in some special circumstance, be barred as totally improper. Indeed, as Mr. Justice Cattanach observed, in College Marketing and Research Canada Corporation v. Volkswagenwerk Aktiengesellschaft (1981) 53 C.P.R. (2d) 37 at 40, "A solicitor is not competent to conduct litigation in which he is a witness".
[25] Counsel for the British Columbia Crown submitted that his affidavit was in fact a chronology of events and ought not to be contentious. Mr. Gajic felt that it was contentious by reason of what the affidavit omitted and this leads to a basic reason, the embarrassment of cross-examination, by which speaking to one's own affidavit ought to be barred. In Lex Tex Canada Ltd. v. Duratex Inc. (1979) 42 C.P.R. (2d) 185, Mr. Justice Addy dealt with a situation in which a party's counsel had been cross-examined on an affidavit:
| "The present case illustrates clearly and dramatically the impropriety of having the solicitor of any party to a legal proceeding take an affidavit or testify orally on behalf of his client regarding any cause or issue as to which he has been consulted. The Rule has long been recognized by common law Courts but of late, seems to have fallen into disuse to some extent, in interlocutory matters in any event, largely because it is so much more convenient for the solicitor to take such affidavits. |
| Whatever might be the motive for doing so, it is completely improper and unacceptable for a solicitor to take an affidavit even in an interlocutory matter where he attests to matters of substance and might therefore expose himself to being cross-examined on matters covered by solicitor-and-client privilege." (p. 186). |
While it is not applicable in the present instance, Mr. Gajic acting for himself, it is never in the interests of the legal profession to require counsel to comment upon evidence given by another counsel engaged as such in the same action. That situation would lead to the Bench being called upon to discuss with counsel the weight to be attached to his or her evidence, a complete impropriety: see for example Bell Engine Co. Ltd. v. Gagné (1914) 7 W.W.R. 62 at 62 (Sask. S.C. En Banc).
[26] As I say, counsel, in good faith, felt his affidavit was not contentious. Mr. Gajic, perhaps quite properly, took exception to some of the material which, in other instances or circumstances, could well have resulted in cross-examination. This is a reason why a lawyer should not be both counsel and witness. All the more so in that the material in the affidavit was such that others could have sworn to it.
[27] In the present situation there is another important reason why counsel should not have become involved as a deponent of an affidavit. It is one thing for counsel to represent a client with no sense of justice or honour, for all parties to litigation should receive the benefit of proper representation. However counsel, in swearing an affidavit on behalf of a client, should be very circumspect about needlessly lending his or her good name and reputation to someone who has no sense of justice or honour, for it reflects not only on counsel but, in the eyes of an honest lay litigant and perhaps to the public generally, it also lowers the esteem in which they hold the legal profession. In any event I denied counsel the ability to refer to his own affidavit.
[28] Turning now to the merits of the motion by the Provincial Crown to have the Statement of Claim struck out, certainly the matter was canvassed very thoroughly by the B.C. Court of Appeal in Gajic 1996. The issues in this present action appear to have been decided in a final manner between the same parties in Gajic 1996: see for example Canada v. Chung [1993] 2 F.C. 42 at 57, in which the court considered the requirements for issue estoppel and adopted those set out by the House of Lords in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) [1967] 1 A.C. 853.
[29] The reason I hesitate slightly by saying that the issues before the B.C. Court of Appeal in Gajic 1996 and in the present action appear common is that Mr. Gajic seems now to be saying that he is entitled to the rights set out in the Declaration of Taxpayer Rights published by Revenue Canada, in effect that he has a legitimate expectation of the proper amount of tax being collected and an impartial review. In effect there is in Mr. Gajic's view, a promise that the Provincial Government, by way of its policies and through its officials, will provide a fair procedure. However, leaving aside whether the Declaration of Taxpayer Rights applies to and binds the Provincial Crown, the Court of Appeal in Gajic 1996 (supra) has closed off any idea that the British Columbia Lieutenant Governor in Council made a decision that was subject to any rules of procedural fairness: rather the Lieutenant Governor in Council's decision was "... a purely legislative decision-making function which was not subject to any rules of procedural fairness." (p. 185).
[30] It is clear and beyond doubt that the Plaintiff is estopped from making any further claim against the Provincial Crown. Given the thorough canvassing of all of the issues by the Court of Appeal in Gajic 1996 it would be futile for the Plaintiff to proceed.
CONCLUSION
[31] The Federal Crown, having done the correct and honourable thing in refunding money to Mr. Gajic by way of an Order in Council and having acted merely as an agent ought not to be a part of this action. It would be clearly futile to proceed against the Federal Crown.
[32] Were the Provincial Crown to have clearly set out in the motion that the Federal Court has no jurisdiction over the Provincial Crown, by reason of the definition of Crown in Section 2 of the Federal Court Act, which limits jurisdiction to the Federal Crown, I would certainly have struck out the action on that basis and would not have needed to test the Statement of Claim for a reasonable cause of action. But the Provincial Crown, having overlooked the jurisdiction point in the motion, I considered whether, on the facts set out in Mr. Gajic's Statement of Claim, which included complete incorporation of various documents including the Judgment of the Court of Appeal in Gajic 1996, there was any reasonable cause of action. It is clear, at law, that there is not a reasonable cause of action against the British Columbia Crown. No amendment to the Statement of Claim would assist as against either Defendant, for there is not a scintilla of a cause of action. With regret I must point out, as did Mr. Justice Low of the B.C. Supreme Court and Mr. Justice of Appeal Wood, of the B.C. Court of Appeal, that there is no remedy for Mr. Gajic. This is so even though the Provincial Crown has been unjustly enriched. The parties shall bear their own costs.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
19 May 1998
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATE: June 8, 1998
COURT NO.: T-673-98
STYLE OF CAUSE: DRAGISA GAJIC,
Plaintiff,
- and -
HER MAJESTY THE QUEEN IN THE
NAME OF REVENUE CANADA AND
HER MAJESTY THE QUEEN IN THE RIGHT
OF THE MINISTER OF FINANCE AND CORPORATE
RELATIONS FOR THE PROVINCE OF BRITISH COLUMBIA,
Defendants.
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER OF
ROTHSTEIN, J.
dated June 08, 1998
APPEARANCES:
| Mr. Dragisa Gajic on his own behalf |
| Mr. Wayne Garnons-Williams for Her Majesty the Queen |
| in the name of Revenue Canada |
| Mr. Hunter Gordon for Her Majesty the Queen |
| for the Province of British Columbia |
SOLICITORS OF RECORD:
| Mr. Dragisa Gajic on his own behalf |
| Lay litigant |
| George Thomson for Her Majesty the Queen |
| Deputy Attorney General in the name of Revenue Canada |
of Canada
| Mr. Hunter Gordon for Her Majesty the Queen |
| Legal Services for the Province of British Columbia |