City Centre Properties Inc. v. Canada
T-250-86
MacKay J.
25/11/93
29 pp.
Action for declaratory relief to declare plaintiff not liable for payment of income taxes and interest arising from reassessments made by MNR in 1983 in relation to Royalty Mall Ltd. for 1978 and 1979 taxation years -- Outstanding shares in Royalty purchased by plaintiff's successor from Dale Corporation by agreement dated January 31, 1979 -- Under agreement with plaintiff, Dale responsible for payment of all income taxes outstanding in name of Royalty up to December 31, 1978 -- Revenue Canada officer writing to Royalty to demand payment of taxes outstanding -- Action commenced by Royalty in December 1983 against Dale claiming damages for taxes and interest assessed, not pursued -- Revenue Canada accepting in lieu of immediate payment of taxes and interest claimed, bank guarantees arranged by banker for Dale, including one related to tax liability of Royalty -- Bank guarantee originally provided in March 1984 extended in June 1984, again renewed for a term from September 13, 1984 to March 12, 1985 -- Revenue Canada officer demanding payment of taxes and interest outstanding after expiry date of bank guarantee -- Plaintiff disputing liability of Royalty for payment of outstanding tax claim -- Action instituted to contest defendant's claim to recover outstanding taxes and interest assessed in name of Royalty -- Statement of claim amended to incorporate claim for damages, variety of declaratory orders -- Dale acknowledging status and responsibility for payment of tax claim against Royalty -- Delivery of letter of guarantee to Revenue Canada not payment of taxes claimed against Royalty-Letter of guarantee no more than assurance if taxes not paid, amount of taxes to be demanded from and paid by bank -- Revenue Canada not formally releasing or waiving claim against Royalty -- Plaintiff not relying after December 1983 upon release or waiver by Revenue Canada of right to claim against Royalty -- No basis for plaintiff's claim to estoppel against claim by Revenue Canada to recover taxes unpaid from Royalty -- No indication by Revenue Canada officer Royalty released from obligation to pay, Dale accepted as new debtor in place of Royalty -- Discretionary authority of Minister or representatives to accept security for payment of taxes under Income Tax Act, s. 220(4) -- Principle of novation having no application herein -- No evidence Revenue Canada formally released Royalty or waived possible claim against it -- Plaintiff not privy to letter of guarantee, not aware of terms, extension on two occasions -- Plaintiff's action and discontinuance matters of interrelations between plaintiff and Dale under agreement for purchase and sale of Royalty's shares -- Evidence not supporting allegation Revenue Canada knew plaintiff would rely upon defendant's agents and acted to its detriment because of that reliance -- No express trust herein -- No evidence of constructive trust or resulting trust relationship deemed to exist in equity -- Relationship between Revenue Canada and Royalty simply that of creditor and debtor under Income Tax Act, s. 222 -- Guerin v. The Queen, [1984] 2 S.C.R. 355, merely establishing possibility of fiduciary duties owed by Crown to aboriginal peoples -- Arrangements by Dale and bank guarantor to provide security for payment by taxpayer Royalty creating no fiduciary duty owed by Revenue Canada to Royalty or to plaintiff -- Error by Revenue Canada officer leading to expiry of guarantee without action taken upon it before expiry date, March 12, 1985 -- Whether error amounting to negligence -- Creditor-debtor relationship between parties should not be modified by principles of law of negligence in tort -- Carelessness in performance of officer's duty in ensuring protection of Crown's interest not negligence at commom law as no duty owed to Royalty to call for payment under bank guarantee -- No basis for finding negligence at common law in support of award of damages to plaintiff -- Officer's "fault" not negligence in relation to plaintiff -- Action dismissed -- Income Tax Act, S.C. 1970-71-72, c. 63, ss. 220(4), 222.