As the tax deadline of April 30th for most corporations has passed, some corporations have paid their taxes, others have claimed a refund and others like United Parcel Services (UPS) have paid their taxes and claimed it back as an error. The journey of United Parcel Services v. Canada, 2009 SCC 20, through the hierarchy of courts up to the SCC clearly indicates the importance of due diligence to ensure an error-free tax return. Instead of paying taxes, UPS asserted their claim over more than $2 million in taxes that was already paid to the government in the form of GST payments. UPS made an error in filing their taxes that led to an overpayment of $2,937,123 in GST.

Background
The GST, or the Goods and Services Tax, is a 5% tax that applies to most goods and services in Canada. Although the consumer ultimately pays the GST, generally businesses are responsible for collecting and remitting the GST to the government. Businesses register with the government stating their intent to collect and remit GST. The GST paid on purchases to operate the business is negated by the GST collected from sales. The difference is claimed as a refund or payment to the government.

In this case, other than acting as a courier, UPS took on the role of a licenced customs broker for goods entering into Canada from a foreign country. As a broker, UPS had the authority to take all steps to clear Canadian customs and pay or remit duties and taxes on behalf of its customers. Over a period of 23 months, a number of errors resulted in overpayment of GST including wrong value for duty, returned shipments, Canadian goods returning to Canada, GST free goods and others. The various reasons for the overpayment could be attributable to either UPS or its customers.

Issue
The error in GST payment amounted to $2,937,123 from February 1, 1996 to December 31, 1997. UPS claimed a rebate for the overpayment. However, the respondent put forward three main arguments that Justice Rothstein dealt with in detail in his judgment:
1. Should UPS be entitled to the rebate under s.261(1) of the Excise Tax Act?
2. Does the amount paid by UPS constitute an amount that was “not payable” as per s.261(1)?
3. Did UPS follow the required procedure to obtain a rebate under s.261(1)?

Analysis
Although both parties agreed to the definition of overpayment as being “an amount of GST that would not have been payable had the errors…not been made” (para 12), the parties disagree on whether the meaning of overpayment implies a right of repayment.

1. Should UPS be entitled to the rebate under s.261(1) of the Excise Tax Act?
Under s.261(1) of the Excise Tax Act:

261.(1) Where a person has paid an amount
(a) as or on account of, or
(b) that was taken into account as tax, net tax, penalty, interest or other obligation under this part in circumstances where the amount was not payable or remittable by the person, whether the amount was paid by mistake or otherwise, the Minister shall, subject to subsections (2) and (3), pay a rebate of that amount to the person. [Emphases added]

The Minister claimed that UPS should not be entitled to the rebate because UPS was the broker and as such UPS customers were liable to pay GST, not UPS itself. He claimed that the person who “paid an amount” is the person with legal liability (customers) and not the person who simply remitted the money to the government (UPS), and that s.261(1) should not be interpreted in a contextual vacuum.

Justice Rothstein disagreed with the Minister’s interpretation. He stated that “[i]f the Minister’s argument were correct, a stranger who mistakenly paid GST on goods imported by someone else (perhaps because the names of two importers were similar) could not obtain a rebate. It cannot have been the intention of Parliament that persons who were not liable for GST but paid GST in error could not obtain a rebate.” He took a broad, purposive approach and interpreted the words of the statute in context of the provision as a whole, while trying to determine the intention of the drafters.

2. The amount of $2.9 million was “not payable” as per the statute
Justice Rothstein disagreed with the Minister. He decided that the fact that the $2.9 million is considered as overpayment and the amount would “not be payable” had the errors not been made guarantees its authority under s.261(1) of the Excise Tax Act.

3. UPS followed the required procedures
Justice Rothstein, again, interpreted the statute broadly and determined that the definition of “allowable rebate” is a rebate that would have been allowed had the applicable procedure been followed. Yet, he concluded that, this does imply that not following the procedure is fatal to the rebate claim. Since the Minister agreed that the $2.9 million is overpayment and not payable, “[b]y necessary implication, these concessions must mean that had the appropriate procedures been followed, the rebate would have been allowable.” (para 33)

Conclusion
Justice Rothstein decided in favor of the appellants and granted them the rebate. He utilized the various tools of statutory interpretation available to him including plain meaning of the words, and intention of the drafters.

This case further establishes the role of statutory interpretation for judges when making a decision relating to tax law. This implies that the final interpretation of tax law belongs to the judiciary. Unlike a civil law court, Canada’s common law court tends to consider the context of the case including the facts of the case when interpreting the statute, exercising more freedom in their legal reasoning. On the other hand, civil law courts tend to follow the exact wording of the statute and are more strict in their legal reasoning.

It is unclear whether one approach is better than the other, especially with regard to tax law. On the one hand, the importance of certainty for taxpayers is essential as provided by civil courts. However, the intention of the Parliament and other interpretive tools must be considered in context of the facts of the case to determine a fair judgment.

As seen in this case, Canadian courts have taken a more balanced approach, taking a broad, purposive approach to the interpretation of the statute, along with the facts and circumstances of the case to reach a fair judgment. This approach may incur the wrath of critics against judicial activism, for judicial restraint.

On April 23, Justice O’Reilly of the Federal Court in Vancouver ordered the federal government to request the repatriation of Omar Khadr in Khadr v. Prime Minister of Canada 2009 FC 405. Following an earlier decision from the Supreme Court in Canada v. Khadr 2008 SCC 28 O’Reilly found that Canadian officials had been complicit in the detention, interrogation and mistreatment of Mr. Khadr, and thus, violated his rights under s.7 of the Charter. Presently, the federal government is still pondering and appeal of the decision, and in this post I look at some of the areas of O’Reilly’s judgment that government officials might think to ground an appeal. While the decision appears weak in the way it addresses the principles of fundamental justice under s.7, with the mounting political pressure to close Guantanamo and the top court’s increasingly interventionist approach to foreign affairs matters, the federal government faces an uphill battle.

History

Omar Khadr’s saga should be familiar to just about any reasonably attentive Canadian. The very mention of the name is likely to stir controversy and incite often-problematic comments on news websites and blogs nationwide. In short, though, Mr. Khadr was apprehended by American forces in Afghanistan and charged with murder in 2002 following a firefight that resulted in the death of an American solider. He was held in Bagram Air Base in Afghanistan before being transferred to the American military base in Guantanamo Bay, Cuba. He has been held there now for over 6 years without a trial. He was 15 years old at the time of his capture.

Mr. Khadr alleges that during his detention, he was subject to a variety of forms of mistreatment including the use of stress positions, sleep deprivation, solitary confinement, the denial of medical treatment and physical violence. His allegations are consistent with what has generally been observed at Guantanamo Bay. In 2006 a UN report found that the conditions at Guantanamo Bay represented violations of a host of international legal instruments including the Convention Against Torture. Importantly, Justice O’Reilly found that Mr. Khadr was placed on the “frequent flier program” – a process in which he was denied uninterrupted sleep for 3 weeks – before being interrogated by Canadian officials in order to make him “more amenable and willing to talk.” The Canadian officials were aware of this procedure, and thus became complicit in Mr. Khadr’s mistreatment.

S.7 of the Charter and the Principles of Fundamental Justice

Following directly from the 2008 Supreme Court Khadr decision, Justice O’Reilly found that the Canadian government was implicated in the violation of Mr. Khadr’s s. 7 liberty interests by virtue of “Canada’s participation in a foreign process that is contrary to Canada’s international human rights obligations.” The central issue, then, was whether the refusal to demand Mr. Khadr’s repatriation had been done in a manner consistent with the principles of fundamental justice.
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Associate Justice David Souter of the United States Supreme Court announced his retirement from that country’s highest judicial office last week. Souter retires after a 18-year term on the top bench, and at times like these it seems appropriate to consider the impact of a career in one of the most important judiciaries in the world by examining some of his major decisions.

One of his earliest major decisions was Planned Parenthood v. Casey, 505 U.S. 833 (1992), wherein Souter (along with Sandra Day O’Connor and Anthony Kennedy in a plurality opinion) declined to overturn Roe v. Wade, 410 U.S. 113 (1973), but in doing so allowed several conditional access rules for obtaining an abortion to stand - including a 24 hour waiting period, parental consent requirements for minors, and required disclosure about the potential health risks of obtaining an abortion. However, a spousal notification requirement was overruled on the basis that it could potentially enable abusive husbands. (How spousal notification differs from parental consent where an abusive figure is in the household was never adequately explained in the decision.) The plurality also found that the state had an interest in the life of the fetus once the fetus reached viability, which was a major blow to abortion rights activists in the United States.

Over time, though, Justice Souter began demonstrating a distinct civil libertarian streak in his decisions. Justice Souter dissented in Zelman v. Simmons-Harris, 536 U.S. 639 (2002), wherein the Supreme Court found that government-funded school voucher programs did not violate the Establishment Clause requiring the separation of church and state. Souter argued that the majority decision was incorrect because it misapplied the concept of “choice” and considered public funding for public schools to be equivalent to public funding for religious schools.
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(Part 3 of 3)

Introduction

This is the third and final installment of an article on the Supreme Court’s current review of qualified privilege in the common law of defamation.

The first installment considered various formulations of qualified privilege in the common law of defamation, and why the formulation applied by the Ontario Court of Appeal in the Cusson and Grant cases fails to provide adequate protection of reputation in our free and democratic society.

The second installment concluded that none of those various formulations really meets the requirements of minimal impairment under section 1 of the Canadian Charter of Rights and Freedoms.

In this installment, we will confirm that conclusion and then posit an entirely new approach to media privilege which does achieve balance between freedom of the press and reputation in a Charter-complaint manner.

Ultimate proportionality

After considering the question of minimal impairment, analysis under section 1 of the Charter then tests what might be termed ‘ultimate proportionality’.

Under Oakes, the court weighs the importance of the law’s objective (here, protecting both expression and reputation) against the potential deleterious effect of infringing the right or interest involved (here, reputation and freedom of the press, respectively) in the facts and circumstances of the particular case. Under Dagenais, the court also weighs the deleterious and salutary effects of (each of) the infringement(s).

Weighing the objectives of qualified privilege against the effect of infringing expression and/or reputation would seem to be an exercise in abstraction. One wonders whether such a process would really produce any insights or difference – unless the harm to the public of not knowing about a matter or, conversely, to the plaintiff’s reputation and participation in public life, were so extreme and obvious on the facts as to outweigh constitutional protection of the competing interest. That may have been the case in Hill v. Scientology, for example. Vogel (discussed in Part 2) would have been a closer call. Cusson or Grant – probably not.

Weighing the deleterious against salutary effects of the two infringements (i.e. one against the other) may be a more practicable way to assess whether any of the existing common law approaches would meet the requirement of ultimate proportionality in the circumstances of any particular case. However, it seems unduly cumbersome to go through a full-blown Charter analysis in order to reach what amounts to a simple weighing of the pros and cons of publication. Why not go straight to the point? Read the rest of this entry »

(Part 2 of 3)

Introduction

This is the second installment of a three-part article on the Supreme Court’s current bout of spring cleaning in the law of defamation.

The first installment considered the various formulations of qualified privilege in the common law of defamation, and showed an important reason why the Hoffman/Hale formulation in the English case of Jameel, as applied by the Ontario Court of Appeal in the Cusson and Grant cases, fail to provide adequate protection of reputation in modern Canadian society.

This installment will consider whether any of those various formulations could withstand scrutiny under the Canadian Charter of Rights and Freedoms.

A constitutional question

In the Cusson and Grant cases, the Chief Justice took the unusual step of stating constitutional questions – even though no legislation or State action was involved. On that invitation, it is therefore appropriate to consider the balance between freedom of the press and reputation through the lens of constitutionality.

Charter-protected rights and interests

Freedom of expression

The importance of freedom of expression, particularly on matters of public interest, is sufficiently well-known not to need repeating here, (see for example Harper v. Canada – except for this.

While freedom of expression enjoyed by the media has traditionally been considered no greater than that of other members of Canadian society, (WIC Radio Ltd. v. Simpson), specific Charter protection of freedom of the press must surely contemplate a separate and different standard based on media-specific considerations.

For example, if freedom of the press appropriately includes a privilege to publish to the world, it should at the same time include a higher standard of responsibility as to what is being published. The reason for both the increased latitude and the higher standard is that freedom of the press, responsibly exercised, is a wellspring for the freedom of expression exercised by everyone else.

The Reputation Interest

The Supreme Court of Canada has recognized that reputation has implicit protection under the Charter. In Hill v. Scientology, the court expounded upon its importance, concluding as follows, (see also Reynolds v. Times Newspapers Limited and Others):

Although it is not specifically mentioned in the Charter, the good reputation of the individual represents and reflects the innate dignity of the individual, a concept which underlies all the Charter rights. It follows that the protection of the good reputation of an individual is of fundamental importance to our democratic society.

Further, reputation is intimately related to the right to privacy which has been accorded constitutional protection. …. The publication of defamatory comments constitutes an invasion of the individual’s personal privacy and is an affront to the person’s dignity. The protection of a person’s reputation is indeed worthy of protection in our democratic society and must be carefully balanced against the equally important right of freedom of expression.

In addition, Canadian courts have long recognized the importance of enabling individuals to take part in public life free of the risk of defamatory attacks on their personal reputations. (Snyder v Montreal Gazette (1978), 87 D.L.R. (3d) 5, rev’d. 5 D.L.R. (4th) 206, rev’d. [1988] 1 S.C.R. 494).

That includes not only running for political office, or serving as a government official, but also many other ways of taking part in the public life of our communities.
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(Part 1 of 3)

Introduction
The Supreme Court of Canada is in the midst of a little spring cleaning in the law of defamation.

Cusson v Quan was a case concerning an Ontario provincial police officer who on his own initiative travelled to New York City following the events of September 11, 2001, to assist in rescue efforts. He was interviewed in the media and cast as a hero. The OPP was criticized for its reaction to Mr. Cusson’s absence without leave.

The Ottawa Citizen then published articles critical of Mr. Cusson, suggesting that his conduct was less than heroic. For one thing, he had reportedly worn an R.C.M.P. uniform at “ground zero” and misled New York State police into thinking that his pet dog, Ranger, had formal training in civilian search and rescue operations. For another, the newspaper averred (but failed to prove) that Mr. Cusson had deliberately misled the New York police by representing himself as a trained R.C.M.P. canine officer, and had compromised the rescue effort.

Mr. Cusson sued and the newspaper relied on the defence of qualified privilege – that it had a duty to publish the story and the general public had a corresponding interest in reading it. The trial court rejected that defence because a “compelling” public interest had not been demonstrated. The newspaper’s appeal was denied, but on the ground that the defence of qualified privilege had now been superseded by the “different jurisprudential creature” recognized by Lord Hoffman and Baroness Hale in the recent English case of Jameel.

Grant v Torstar Corp. involved a newspaper article headlined “Long-time Harris backer awaits Tory nod on plan”. Mr. Grant was seeking to expand his personal golf course, in Ontario’s cottage-country, by purchasing Crown land. The article included the statement that everyone thought the purchase was a “done deal” due to Mr. Grant’s influence and ties with the then-Premier.

Mr. Grant sued and the newspaper relied on both the traditional defence of qualified privilege and the new Jameel defence. The trial judge conflated the two defences and found in the plaintiff’s favour, because the subject-matter of the article was not of general public interest. The Ontario Court of Appeal found the judge had erred in that regard, and that the Jameel defence would apply – but before applying that defence, the jury first had to decide what was the precise meaning of the defamatory imputation.

The Cusson appeal was heard by the Supreme Court on February 17, 2009. The Grant appeal is set to be heard on April 23, 2009.

It was clear from questions from the bench in Cusson that a number of justices of the Supreme Court were uneasy with the Ontario Court of Appeal’s interpretation and/or application of the Jameel defence as it impacts reputation.

Having heard the court’s concerns, it is now possible to anticipate a made-in-Canada solution to the problems which have vexed past attempts to apply the venerable concept of qualified privilege in modern circumstances and with broader interests in mind.

This is the first of three postings whose unabashed purpose is to offer assistance to the court as it decides these two cases. Read the rest of this entry »

We are coming up on one full year since the Supreme Court heard the appeals for R. v. Grant and R. v. Shepherd, which — along with R. v. Harrison (also awaiting judgment) — represent a holy triptych dealing with the admissibility of unconstitutionally obtained evidence under section 24(2) of the Charter. Grant and Shepherd were before the Court on April 24, 2008 while Harrison was heard last December. How the three cases are decided could cause a seismic shift with regard to how courts approach the section 24(2) analysis.

We at TheCourt.ca have written extensively on all three cases, which perhaps says something about our enthusiasm for section 24(2) jurisprudence as well as about the degree to which we anticipate the Court’s pronouncements. In light of the one-year “anniversary” for Grant and Shepherd and the fact that we have still not heard back from the Court, I’d just like to make a few remarks on what’s at stake.

Twenty-seven years after the enactment of the Charter and twenty-two years after the Supreme Court’s decision in R. v. Collins, in which Lamer J. (as he was then) provided a framework for analyzing section 24(2), Canadian courts are still grappling with how to admit or exclude unconstitutionally obtained evidence in a consistent and principled manner. It is not surprising that courts remain uncertain about how the administration of justice would be best be served when confronted with improperly obtained evidence, given that section 24(2) pits two of the justice system’s primary functions against each other: its role as truth-seeker versus its role as guardian of Charter rights.

In Collins, Lamer J. grouped the various considerations impacting a section 24(2) analysis into three broad categories: (1) factors that affect trial fairness, (2) factors that point to the seriousness of the Charter breach, and (3) factors that relate to the effect of excluding evidence on the reputation of the administration of justice. Although Lamer J. used this structure only “as a matter of personal preference,” subsequent Supreme Court decisions have since adopted his framework as a three-branch test.

Much of the jurisprudence surrounding the Collins test has focused on the trial fairness branch, and the Supreme Court has typically regarded it as the most important consideration in the section 24(2) analysis. However, the jurisprudential fixation on trial fairness has shifted the Court’s attention away from what I believe is the more interesting and pressing debate: at what point is a Charter breach so repugnant that a court should acquit a factually guilty criminal rather than allow the Charter to be so compromised? Or, in the alternative, in what circumstances is uncovering the truth behind a crime so important to the administration of justice that the court should allow a Charter infringement to go unremedied? Finally, in situations where a serious Charter infringement uncovers evidence of a serious offence, would it be the admission or the exclusion of the evidence that would bring the administration of justice into further disrepute? These questions inform the analysis undertaken in the second and third branches of the Collins test, which have in my opinion been given only a cursory analysis in relation to the attention lavished on the trial fairness branch.
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Just a quick note about the Ellard hearing at the SCC yesterday.

Almost 12 years after the drowning death of Reena Virk, accused Kelly Ellard’s fate for her alleged role in the death is still uncertain. 3 trials, 2 appeals, and 1 hung jury later, this sordid saga could be sent back for yet another trial.

The Vancouver Sun provides a good summary here.

The BC Court of Appeal decision which forms the basis of this appeal is found here.

The SCC’s case summary is found here: 32835.

On March 17, 2009, the Supreme Court of Argentina ruled that the “Partido Nuevo Triunfo” cannot be recognized as a political party. The issue had been heard in the lower court, the “Cámara Nacional Electoral” - which rules on issues regarding political parties and elections – that “Partido Nuevo Triunfo” had tried to get recognition with the name “Partido Nacionalista de los Trabajadores” – a name that resembled the “National Sozialistiche Deutschen Arbeiterpartei” – and that its political program included the idea that the “homosexual, junky, and corrupted net currently present in Argentina” shall be dismantled (art. 29 of its Political Program) and that laziness should be prosecuted, and that respect for that last rule would be twice as important with regards to foreigners (art. 29 of its Program). Articles 16 and 38 of the Organic Law of Political Parties 23.298 state that the name of a party shall not include racist or discriminatory references and that the same rule applies to the use of symbols that represent the party.

In order to decide the case, the Court analyzed whether banning the “Partido Nuevo Triunfo” would amount to using a “suspicious classification.” The issue at stake was whether banning this party from participating in elections would amount to a violation of equality before the law, which is a constitutional guarantee – as stated in Section 16 of the Argentine Constitution and also in international human rights treaties ratified by Argentina. When the State provides a differential treatment to a certain group, it has the burden of showing that there are “compelling state interests” that justify the distinction. The use of the suspicious classifications standard by Argentine Supreme Court was inspired by its use in American jurisprudence. According to this idea, it is insufficient for the State to show merely that a legal classification is “reasonable,” “convenient,” or “timely.” Rather, the government must demonstrate the existence of a justifying “compelling state interest.”

The Court held that the State had an interest in promoting policies favouring racial equality – this justifies banning parties who are openly disrespectful of that fundamental aim. Furthermore, the Court quotes International Treaties: Article 2 of the International Covenant on Civil and Political Rights ratified by Argentina, which states that “1. Any propaganda for war shall be prohibited by law; and that 2. Any advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited by law.” Article 13.5, American Convention on Human Rights: “Any propaganda for war and any advocacy of national, racial, or religious hatred that constitute incitements to lawless violence or to any other similar action against any person or group of persons on any grounds including those of race, color, religion, language, or national origin shall be considered as offenses punishable by law.”

The Court held that Articles 16 and 38 of the Organic Law of Political Parties 23.298 shall be understood on the basis of the aforementioned clauses.

This Friday, the Supreme Court of Canada will be delivering its judgment in Robin Chatterjee v. Attorney General of Ontario, a case that contemplates a division of powers issue. Specifically, the SCC was asked to consider whether sections 1-6, 16 and 17 of the Remedies for Organized Crime and Other Unlawful Activities Act (the “Civil Remedies Act,” or “the CRA”) are ultra vires the province of Ontario on the ground that they relate to criminal law, a subject matter that is exclusively within federal jurisdiction. A finding that the CRA does relate to criminal matters would render it in violation of section 91(27) of the Constitution Act, 1867.

The matter arose in March 2003, after the appellant’s vehicle was stopped by police for a missing license plate. Following this investigation, the appellant was arrested for a minor offence, which was ultimately not prosecuted. However, the search of the vehicle incident to the arrest yielded nearly $30,000 in cash and various items that are often associated with indoor marijuana grow ops. Though the cash and equipment smelled strongly of marijuana, none of the actual drug was found; as such, the police did not have sufficient evidence to charge the appellant with any drug-related offence. Instead, the Attorney General of Ontario brought an application in rem (a claim for property) for the forfeiture of the cash and chattels as proceeds and instruments of unlawful activity pursuant to the CRA. In response, the appellant brought a motion challenging the constitutionality of that legislation as ultra vires the province and for its violation of sections 7, 8, 9, and 11(d) of the Charter. Read the rest of this entry »