The B.C. Court of Appeal’s decision in Myers v. Canada (Attorney General) 2022 BCCA 160 stems from an action brought by Darell Myers and Leah Murchie-Myers against the tax agency, claiming misfeasance in public office, negligence, abuse of public office and violation of their Charter rights in relation to certain tax reassessments and other conduct. The Myeres’ concerns were driven in part by the CRA’s use of the “net-worth” assessment method which is used when other methods of determining income are impossible.
The B.C. Supreme Court stayed the action and struck part of their claim, characterizing it as a collateral attack on the exclusive jurisdiction of the Tax Court of Canada because, in the judge’s opinion, the Myerses were trying to avoid the effect of the assessments and recover repayment of taxes and penalties paid (Myers v. Canada (Attorney General) 2021 BCSC 432).
But Justice Lauri Ann Fenlon, who authored the decision for a unanimous Court of Appeal, overturned that finding. She ruled the Myerses were relying on the unlawfulness of the assessments as a material fact supporting their civil tort claims rather than trying to get around the assessments, and that the B.C. Supreme Court had jurisdiction to hear their claim.
“There is an understandable pull to deferring to the expertise of the Tax Court and Federal Court — the correctness of tax assessments and CRA decisions is not the daily fare of the provincial superior courts,” she wrote in her decision, which was released May 5. “But there can be no such deferral. The provincial superior courts are courts of inherent jurisdiction.”
Justice Fenlon drew on the Supreme Court’s decision in Canada (Attorney General) v. TeleZone Inc. 2010 SCC 62 to find that “any derogation from the jurisdiction of the provincial superior courts in favour of other adjudicative bodies, such as the Federal Court or Tax Court, requires clear and explicit statutory wording to that effect.”
“There is no such language in the Federal Courts Act. It is only jurisdiction over prerogative writs, declarations, and injunctions against federal boards, commissions and other tribunals that has been removed from the jurisdiction of provincial superior courts,” she wrote. “[The Act] does not say that a provincial superior court cannot, in the course of a civil trial, assess the lawfulness of the exercise of a statutory authority by a federal decision maker.”
Ryan Androsoff, Hunter Litigation Chambers
“The TeleZone principle is that a party who is negatively affected by an administrative decision is entitled to accept the validity of that decision, but sue for damages without having to first take a detour to an administrative forum to try and invalidate that decision,” he said. “And for many litigants having to detour to take that first initial step won’t be useful to them, either because of the passage of time or because it won’t give the remedy they seek. And it is an added expense and an added delay, so this is a recognition that a litigant ought to be able to choose their forum and pursue a claim that is designed to achieve the outcome that they actually seek.”
Geoffrey Loomer, an associate professor at the University of Victoria who teaches tax law and policy, said he agreed in principle the decision seems to increase access to justice but in practice it just creates more confusion for taxpayers.
“You are now saying not only do we have these two systems [Federal Court and Tax Court], but there are also the provincial superior courts to complain about the negligence of the CRA. But someone who is in the Myers’ position just wants a remedy, and they likely don’t care about these niceties on overlapping jurisdictions of the courts,” he said. “And specifically in the Myerses’ case, I’m virtually 100 per cent certain they are going to lose on the negligence and misfeasance claims, because the CRA has the authority to do net worth assessments. So, it will give these taxpayers some comfort with an appearance of access to justice, and I expect no result that helps them in the end.”
CRA spokesperson Hannah Wardell said in an e-mail that confidentiality provisions prevent the agency from commenting on specific details of court cases.
“The courts provide Canadians with a further independent review of disputed issues, and court decisions serve to clarify the law or resolve disputes between the CRA and taxpayers,” she said.
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