Date: 20030204
Docket: T-172-01
Neutral citation: 2003 FCT 111
BETWEEN:
NAUTICA MOTORS INC.
506913 N.B. LTD.
Applicants
- and -
MINISTER OF NATIONAL REVENUE
Respondent
[1] By application dated March 13, 2002 the applicants seek an injunction to restrain the respondent Minister from taking action against the applicants pursuant to Notices of Reassessment issued on November 15, 2001 to 506913 N.B. Ltd. and November 22, 2001 to Nautica Motors in relation to harmonized goods and services tax claimed to be payable to Revenue Canada.
[2] The matter was heard at the same time as motions in Court file T-1514-01, Cambridge Leasing Ltd. v. Minister of National Revenue, in Fredericton, New Brunswick on May 21, 2002. An order now issues dismissing the application for an injunction for the reasons that follow.
[3] A summary of the background is this. Nautica Motors Inc. is a corporation incorporated under the laws of Nova Scotia and 506913 N.B. Ltd. is incorporated in New Brunswick where it carried on business under the name of Nautica Motors N.B. Both applicants carry on business as dealers for the purchase, sale and export of automobiles. In the course of that business they pay harmonized sales tax (HST) to any vendor from whom a purchase is made, and when they sell vehicles they collect HST and remit it on a monthly basis to Revenue Canada. They do not collect HST on export sales or sales to native persons living on reserves. A substantial portion of their business was comprised of export sales and each company claims to be entitled to substantial credit returns, ITC's for monies paid as tax on such vehicles for which no tax is payable upon sales for export. Ordinarily, such credits played an important role in financing their businesses.
[4] In 1998 HST returns filed by Nautica Motors Inc. for May 1998 and by 506913 N.B. Ltd. for August, September and October 1998 were not finally processed by the Minister, and ultimately in January 2001 the applicants sought an order of mandamus to require that they be processed. The Minister declined to do so pending completion of a major audit of the applicants' operations. In November 2001 Notices of Reassessment were issued on behalf of the Minister claiming substantial taxes and penalties.
[5] The application for mandamus was heard by Mr. Justice O'Keefe in December 2001 and on April 12, 2002 he allowed the application in part by an order directing the Minister to process the outstanding returns of the applicants. Before that order was issued this application was filed for an order to enjoin the Minister from proceeding with collection steps in relation to the reassessments of November 2001. This application, said to be for an injunction, really seeks interim or ancillary relief pending determination of the parties' rights. Before the matter was heard that determination was made in part by the order of Mr. Justice O'Keefe, based on the applicants' rights to have their returns processed. Proceedings for that determination were settled by his order.
[6] This application was then heard by this Court. The respondent raises several grounds upon which it is urged the application should be dismissed. I am persuaded that result should now follow, for the application seeks interim or interlocutory relief, at a time when the primary relief sought by the applicants, i.e., determination of their rights to processing of their HST returns, has been settled. If the application were for a permanent injunction, it would in effect be for relief directly related to an assessment by the Minister, a matter that is beyond the authority of this Court in view of s. 18.5 of the Federal Court Act, R.S.C. 1998, c.F-7, as amended and provisions of the Excise Tax Act which provides a process for objections and appeals in relation to assessments.
[7] At the hearing of this application it was acknowledged that there had been no steps taken to implement the order of O'Keefe J. but that, it seems to me, is another matter.
[8] In the circumstances, an order issues dismissing this application for injunctive relief. That order, of course, is without prejudice to any other initiative of the applicants. The order is made without costs to either party.
"W. Andrew MacKay"
JUDGE
Ottawa, Ontario
February 4, 2003
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-172-01
STYLE OF CAUSE: NAUTICA MOTORS INC.
506913 N.B. LTD.
v. MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: FREDERICTON, N.B.
DATE OF HEARING: MAY 21, 2002
REASONS FOR ORDER : The Honourable Mr. Justice MacKay
APPEARANCES:
EUGENE J. MOCKER FOR THE APPLICANTS
JOHN J. ASHLEY FOR THE RESPONDENT
SOLICITORS OF RECORD:
MOCKLER, PETERS, OLEY, ROUSE & WILLIAMS FOR THE APPLICANTS
FREDERICTON
MORRIS ROSENBERG FOR THE RESPONDENT
DEPUTY ATTORNEY GENERAL OF CANADA