[2013] 2 F.C.R. 46
ITA-8283-05
2011 FC 800
IN THE MATTER OF the Income Tax Act
AND IN THE MATTER OF an assessment or assessments by the Minister of National Revenue under one or more of the Income Tax Act, Canada Pension Plan, Employment Insurance Act, the Alberta Income Tax Act, against:
ALLEN ZIEFFLE
POST OFFICE BOX 93
ALLIANCE, ALBERTA
T0B 0A0
Indexed as: Zieffle (Re)
Federal Court, Lafrenière P.—Vancouver, July 7, 2011.
Practice — Motion pursuant to Federal Courts Rules, r. 437(2) seeking to extend writ of seizure, sale — Judgment debtor incurring income tax liability — Ex parte applications renewing writs of seizure, sale under Income Tax Act routinely granted; one application declined — Whether r. 437(2) requiring that motion for extension of validity of writ be served on judgment debtor before it can be extended — Renewal of writ part of continuum of enforcement process — Compelling reasons for allowing r. 437(2) applications to be considered ex parte — Applicant having to meet low threshold to obtain relief; moving party having to act in good faith, to make full, frank disclosure; taxpayer receiving notice before execution of writs; judgment debtor having recourse under Federal Courts Rules, r. 399(1) — Crown at liberty to proceed ex parte if continuing status quo for security — Court retaining discretion to require that motions be served on affected party — Steps taken by Crown herein reasonable, necessary — Motion allowed.
Income Tax — Practice — Motion pursuant to Federal Courts Rules, r. 437(2) seeking to extend writ of seizure, sale — Judgment debtor incurring income tax liability — Crown at liberty to proceed ex parte if continuing status quo for security — Court retaining discretion to require that motions be served on affected party — Steps taken by Crown herein reasonable, necessary.
This was a motion pursuant to subsection 437(2) of the Federal Courts Rules seeking an order to extend the validity of a writ of seizure and sale issued in the current proceedings for a further period of six years against the judgment debtor for income tax liability.
Applications to renew writs of seizure and sale under the Income Tax Act on an ex parte basis have routinely been granted by the Court. However, one ex parte application for the renewal of a writ was declined on one occasion. The applicant sought directions as to whether applications for extension of the validity of a writ pursuant to subsection 437(2) may continue to be brought on an ex parte basis. The procedural issue to be determined was whether subsection 437(2) requires that a motion for extension of the validity of a writ must be served on the judgment debtor before it can be extended.
Held, the motion should be allowed.
The renewal of a writ is part of a continuum of an enforcement process which is usually engaged without notice to the judgment debtor. Rule 436 of the Federal Courts Rules provides that a motion for leave to issue a writ of execution under subsection 434(1) or rule 435 of the Federal Courts Rules may be made ex parte. It would appear incongruous that an application for leave to issue a new writ to replace an expired writ may be made ex parte, while an application to renew an unexpired writ is required to be on notice. There are compelling reasons to allow applications pursuant to subsection 437(2) to be considered on an ex parte basis: the applicant must meet a low threshold to obtain relief under subsection 437(2); the moving party must act in good faith and make full and frank disclosure to the Court; notice must be given to the taxpayer before the Crown can execute its writs; and a judgment debtor has recourse under subsection 399(1) of the Federal Courts Rules to challenge the extension of a writ. It remains that the Court cannot issue general directions dispensing with service of all motions brought pursuant to subsection 437(2). Only an amendment to the Federal Courts Rules could effect such a change. However, the Crown is at liberty to move for leave to proceed ex parte if it is simply a matter of continuing the status quo for security with respect to an unsatisfied debt. Ultimately, the Court retains the discretion to require that any motion, even those brought ex parte under the Federal Courts Rules, be served on a party potentially affected by the relief sought by a moving party. In the present case, the steps taken by the Crown to seek leave to extend the validity of the writ were reasonable and necessary to enforce a certified judgment.
STATUTES AND REGULATIONS CITED
Civil Enforcement Act, R.S.A. 2000, c. C-15, s. 9 (as am. by S.A. 2002, c. 17, s. 1).
Excise Tax Act, R.S.C., 1985, c. E-15, s. 316(8) (as enacted by S.C. 1990, c. 45, s. 12; 2000, c. 30, s. 94).
Federal Court Rules, C.R.C., c. 663, RR. 331A (as enacted by SOR/79-57, s. 6), 2006.
Federal Courts Act, R.S.C., 1985, c. F-7, s. 1 (as am. by S.C. 2002, c. 8, s. 14).
Federal Courts Rules, SOR/98-106, rr. 1 (as am. by SOR/2004-283, s. 2), 363 (as am. by SOR/2002-417, s. 21(F)), 364 (as am. by SOR/2009-331, s. 5), 367, 370, 399(1), 433(1), 434, 435, 436, 437(1),(2).
Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 223 (as am. by S.C. 1994, c. 7, Sch. VIII, s. 129; 1996, c. 23, s. 187; 1998, c. 19, s. 224; 2000, c. 30, s. 175).
CASES CITED
considered:
Machula v. Canada (May 28, 2010), ITA-8528-97 (F.C.); Lowe v. Dorling & Son, [1906] 2 K.B. 772 (C.A.); R. v. Aubé, [1981] 2 F.C. 702 (T.D.); Wolf (M.) v. Canada (No. 1), [1991] 2 C.T.C. 41 (F.C.T.D.).
referred to:
Services M.L. Marengère Inc. (Re), 1999 CanLII 9004, (2000), 54 D.T.C. 6032 (F.C.T.D.).
MOTION pursuant to subsection 437(2) of the Federal Courts Rules seeking an order to extend the validity of a writ of seizure and sale issued in the current proceedings for a further period of six years. Motion allowed.
APPEARANCES
George F. Bódy for applicant.
SOLICITORS OF RECORD
Deputy Attorney General of Canada for applicant.
The following are the reasons for order and order rendered in English by
[1] Lafrenière P.: Subsection 437(1) of the Federal Courts Rules [SOR/98-106, r. 1 (as am. by SOR/2004-283, s. 2)] (Rules) provides that a writ of execution is valid for six years after its date of issuance. By motion brought ex parte and in writing, the applicant, Her Majesty the Queen (Crown), seeks an order pursuant to subsection 437(2) extending the validity of the writ of seizure and sale issued in this proceeding for a further period of six years, with costs against the judgment debtor, Allen Zieffle.
[2] This motion involves an interpretation of subsection 437(2) which reads:
| 437. … |
|
| Extension of validity of writ |
(2) On motion, where a writ has not been wholly executed, the Court may, before the writ would otherwise expire, order that the validity of the writ, including a writ the validity of which has previously been extended, be extended for a further period of six years. |
[3] It has been the general practice of the federal Crown to bring applications to renew writs in proceedings under the Income Tax Act [R.S.C., 1985 (5th Supp.), c. 1] (ITA), the goods and services tax (GST) and the Excise Tax Act [R.S.C., 1985, c. E-15] (ETA) on an ex parte basis. Such applications have routinely been granted by this Court over the years. However, on May 28, 2010, on one occasion, the Court declined to entertain an ex parte application for the renewal of a writ in Court File No. ITA‑8528‑97. A direction was issued that the motion for extension of the writ be served on the respondent.
[4] In order to obtain judicial guidance and prevent future uncertainty, the Crown seeks directions as to whether applications for extension of the validity of a writ pursuant to subsection 437(2) may continue to be brought by the Attorney General on an ex parte basis.
Facts
[5] The relevant facts on this motion can be summarized as follows. Canada Revenue Agency (CRA) filed a certificate on July 22, 2005 under section 223 [as am. by S.C. 1994, c. 7, Sch. VIII, s. 129; 1996, c. 23, s. 187; 1998, c. 19, s. 224; 2000, c. 30, s. 175] of the ITA certifying that the judgment debtor was liable to CRA for unpaid income tax in the amount of $71 792.45, plus prescribed interest from July 6, 2005 to the date of payment. A writ of seizure and sale was issued on July 22, 2005 (writ) directing the Sheriff of the Province of Alberta or any civil enforcement agency licensed pursuant to section 9 [as am. by S.A. 2002, c. 17, s. 1] of the Alberta Civil Enforcement Act [R.S.A. 2000, c. C-15] (CEA) to seize property of the judgment debtor which is subject to levy within the Province of Alberta.
[6] CRA subsequently registered the writ at the Alberta Land Titles Office against the real property jointly owned by the judgment debtor and his spouse. The judgment debtor made an assignment in bankruptcy in December 2006; however, he remains an undischarged bankrupt.
[7] Since the issuance of the writ, other collection activity was taken by CRA, including the issuance of requirements to pay. A balance of $62 067.68 remains owing on the tax debt as of June 21, 2011 and the writ will expire on July 22, 2011. The Crown accordingly moves for an extension of the validity of the writ.
Analysis
[8] The express requirements of subsection 437(2), namely the existence of an unexpired writ, not wholly executed, are satisfied in this case. The procedural issue to be determined is whether subsection 437(2) requires that a motion for extension of the validity of a writ must be served on the judgment debtor before it can be extended.
[9] Subsection 437(2) provides that an extension of the validity of a writ may be obtained “on motion”. The Crown submits that subsection 437(2) is silent as to whether an application can be made “ex parte” and that neither the Federal Courts Act [R.S.C., 1985, c. F-7, s. 1 (as am. by S.C. 2002, c. 8, s. 14)] nor the Rules explicitly require an application to be made on notice to the judgment debtor. However, the general provisions governing motions in Part 7 of the Rules [rr. 358‑371], including the service requirements contained in rules 363 [as am. by SOR/2002-417, s. 21(F)], 364 [as am. by SOR/2009-331, s. 5], 367 and 370, impliedly stipulate that notice should be given to any person who may be affected by an interlocutory proceeding.
[10] In addition, rule 436, which immediately precedes subsection 437(2), specifically provides that a motion for leave to issue a writ of execution under subsection 434(1) or rule 435 may be made ex parte. Applying the implied exclusion rule of statutory construction (at one time expressed by the Latin maxim expressio unius est exclusio alterius), the express inclusion of wording granting leave to proceed without notice in rule 436 would exclude such dispensation for motions brought pursuant to subsection 437(2).
[11] However, as stated by Farwell L.J., Lowe v. Dorling & Son, [1906] 2 K.B. 772 (C.A.), at page 785: “the [implied exclusion rule] ought not to be applied, when its application, having regard to the subject-matter to which it is to be applied, leads to inconsistency or injustice.”
[12] Subsection 437(2) is contained in Part 12 of the Rules [rr. 423–474], which governs the enforcement of judgments and orders. The renewal of a writ is part of a continuum of an enforcement process which is usually engaged without notice to the judgment debtor. Subsection 433(1) provides that a person entitled to execution may obtain a writ of execution by filing a requisition for its issuance, subject only to rules 434 and 435 and the completion of any conditions set out in the judgment. As stated earlier, rule 436 provides that a motion for leave to issue a writ of execution under subsection 434(1) or rule 435 may be made ex parte. It appears incongruous that an application for leave to issue a new writ to replace an expired writ may be made on ex parte basis while an application to renew an unexpired writ is required to be on notice.
[13] In R. v. Aubé, [1981] 2 F.C. 702 (T.D.) (Aubé), Mr. Justice Mahoney considered an ex parte application in writing of the Crown to renew a writ of seizure pursuant to former Rule 2006 of the Federal Court Rules, C.R.C., c. 663, which provided as follows:
Rule 2006. (1) For the purpose of execution, a writ of execution is valid in the first instance for five years beginning with the date of issue.
(2) Where a writ has not been wholly executed the Court may by order extend the validity of the writ from time to time for a period of five years at any one time beginning with the day on which the order is made, if an application for extension is made to the Court before the writ would otherwise expire.
[14] Mr. Justice Mahoney held that such an application was not subject to the requirement of former Rule 331A [as enacted by SOR/79-57, s. 6], that one month’s notice be given to every other party of a party’s intention to proceed if a year or more has passed since the last proceeding in a matter. He concluded that the express provision that an application under former subsection 2006(2) could be made up to five years less a day after the issuance of the writ should be given effect over the general provision of former Rule 331A and therefore granted the application.
[15] In Wolf (M.) v. Canada (No. 1), [1991] 2 C.T.C. 41 (F.C.T.D.), Mr. Justice Teitelbaum questioned what an opposant could possibly say at a renewal hearing. Relying on the Court’s reasoning in Aubé, he concluded that the writ renewal in the particular case before him was properly done ex parte, without notice to Mrs. Wolf, a party claiming interest in goods seized under the writ. In his view, there was no prejudice to the opposant by not being given notice of the renewal.
[16] Beyond the matter of expediency and cost efficiency, there are compelling reasons to allow applications pursuant to subsection 437(2) to be considered on an ex parte basis.
[17] First, the renewal of a writ is a procedural step that maintains a judgment creditor’s interest in and priority to the tax debtor’s assets. There is a low threshold to be met by an applicant to obtain relief under subsection 437(2). In the vast majority of cases, the only evidence necessary is that a writ has not been wholly executed and has not expired.
[18] Second, in seeking relief by way of an ex parte motion, the moving party must act in the utmost good faith, and make full and frank disclosure so as not to mislead the Court: Services M.L. Marengère Inc. (Re), 1999 CanLII 9004, (2000), 54 D.T.C. 6032 (F.C.T.D.).
[19] Third, before the Crown can execute its writs, notice must be given to the taxpayer. Within Alberta, the CEA mandates that a notice of intention to sell real property be at least 180 days before the property can be listed for sale, and a notice of seizure of personal property must be served on either the taxpayer, an adult person in the taxpayer’s household, or the person in possession of the personal property. The CEA also provides a 15-day period following the seizure of personal property for the debtor to file an objection to the seizure. The seizure and sale of the personal property cannot proceed without either the voluntary withdrawal of the objection by the taxpayer or the order of this Court vacating the objection and directing the civil enforcement agency to proceed with the sale. Subsections 223(9) of the ITA and 316(8) [as enacted by S.C. 1990, c. 45, s. 12; 2000, c. 30, s. 94] of the ETA also provide additional safeguards of the taxpayer’s rights, as the Minister’s written consent is necessary before any of the taxpayer’s property is sold, disposed of, or advertised for sale.
[20] Fourth, a judgment debtor is not left without any recourse to challenge a writ extended pursuant to subsection 437(2). Subsection 399(1) permits the Court to set aside or vary an ex parte order if a party against whom the order is made discloses a prima facie case why the order should not have been made.
[21] It remains that the Court cannot issue general directions dispensing with service of all motions brought pursuant to subsection 437(2). Only an amendment to the Rules could effect such a sweeping change. However, the Crown is at liberty to move for leave to proceed ex parte if it is simply a matter of continuing the status quo for security with respect to an unsatisfied debt. Ultimately, the Court retains the discretion to require that any motion, even those specifically allowed to be brought ex parte under the Rules, be served on a party potentially affected by the relief sought by a moving party.
[22] The steps taken by the Crown to seek leave to extend the validity of the Writ were reasonable and necessary to enforce a judgment certified by this Court. In the circumstances, the Crown is entitled to costs of the motion, hereby fixed in the standard amount of $100 for such applications.
ORDER
THIS COURT ORDERS that:
1. The Crown is granted leave to bring this motion on an ex parte basis.
2. The writ of seizure and sale issued on July 22, 2005, and directed to the Sheriff of the Province of Alberta or any civil enforcement agency licensed pursuant to section 9 of the Civil Enforcement Act of the Province of Alberta, is hereby renewed for a period of six years from the date of this order.
3. Costs of this motion, hereby fixed in the amount of $100, shall be paid by the judgment debtor, Allen Zieffle.