A precedent-setting decision rendered by the Supreme Court of Canada on July 12, 2007 (Canada v. Addison & Leyen Ltd., 2007 SCC 33) held that there is an ability to seek relief for unfair treatment by the Canada Customs and Revenue Agency (CRA), including for abusive delay. In appropriate cases, judicial review under section 18.5 of the Federal Courts Act, R.S.C. 1985, c. F-7 is available to challenge the exercise of the Minister's discretion to assess a taxpayer under section 160 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (ITA).
Section 160 of the ITA has been widely criticized as a “draconian” provision to collect tax from often unwitting, innocent third parties. It imposes a kind of vicarious liability. The potential for abuse as a result of unfair utilization of section 160 has been much commented upon. The Supreme Court's ruling that section 160 is subject to judicial safeguards is a welcome clarification to the tax bar and taxpayers across the country.
Bennett Jones LLP, acting on behalf of the respondents, had a team comprised H. Martin Kay, Q.C. (litigation), Curtis Stewart (tax), and Laurie Goldbach (litigation). Roderick McLennan, Q.C., of McLennan Ross LLP in Edmonton acted for the respondent.
Graham Garton, Q.C. and Wendy Burnham acted on behalf of the appellant HMQ and CCRA.