Federal Court of Appeal - Granbury Developments Ltd. v. Canada

[1] The issue in this appeal from the Tax Court ([2000] T.C.J. No. 698, G.S.T.C. 92) is whether the Tax Court Judge (Beaubier J.) erred in dismissing the appellant's appeal from the denial by the Minister of National Revenue of input tax credits with respect to the Goods and Services Tax under the Excise Tax Act, R.S.C. 1985, c. E-15.

[2] By a Consent in writing dated January 26, 1999, the parties agreed to "be bound by the final decision in the aforementioned case", namely 398722 Alberta Ltd. v. The Queen, [2000] F.C.J. No. 699; (2001), 257 N.R. 71 (F.C.A.). At the time of the Consent, that case was under appeal in this Court. The Consent further provided that "... should the appeal [in 398722 Alberta Ltd.] not proceed before the Federal Court of Appeal, that they will be bound by the Tax Court of Canada judgment, which judgment was rendered by the Tax Court of Canada on October 28, 1998." Finally, the parties agreed that "This Consent does not deprive either party of any right of appeal it may have to any Judgment arising out of a decision of this Court."

[3] By consent order of January 29, 1999, Beaubier J. adjourned the appeal of this case in the Tax Court. His order reads in part:

The appeal is adjourned until the earlier of 90 days after the date of judgment in the appeal of 398722 Alberta Limited v. The Queen (97-1392 (GST) G) by the Federal Court of Appeal, or forthwith upon judgment of the Supreme Court of Canada, or the withdrawal of the said appeal.

[...]

Upon final judgment being issued by either the Federal Court of Appeal or the Supreme Court of Canada, if [sic] the appeals are withdrawn, as the case may be, this Court shall issue judgment accordingly pursuant to the consent of the parties hereto dated January 25 [sic], 1999.

[4] The decision of the Federal Court of Appeal in 398722 Alberta Ltd. was in favour of the Minister. However, following the issuance of the decision in that case, the appellant moved before Beaubier J. for an order amending his January 29, 1999 order to permit argument respecting application of section 141.01 of the Excise Tax Act on the basis that this Court did not address that section in 398722 Alberta Ltd.

[5] Beaubier J. dismissed the motion giving the following reasons:

The parties consented on January 26, 1999 to be bound by the final judgment in that case no matter which Court made the final judgment. The pleadings of both parties in this case set out matters respecting Section 141.01 and referred to that Section. Specifically, the Appellant is concerned because the final decision of the Federal Court of Appeal did not address Section 141.01. However, that possibility was one which was known to both counsel in this case when they executed the Consent in this Court.

Following dismissal of the motion, Beaubier J. also dismissed the appeal on the basis of the reasons set forth in this Court's decision in 398722 Alberta Ltd.

[6] The appellant now appeals Beaubier J.'s dismissal of its motion to amend his January 29, 1999, order and his dismissal of the appellant's appeal to the Tax Court.

[7] At the outset of the following analysis, we should point out that counsel for the appellant before this Court is not counsel who entered into the Consent on behalf of the appellant and who appeared before Beaubier J. in these proceedings in the Tax Court.

[8] The appellant rests its argument on the words of the Consent:

This Consent does not deprive either party of any right of appeal it may have to any judgment arising out of a decision of this Court.

With respect, we do not think these words assist the appellant. In the first place, Beaubier J. dismissed the appellant's motion because he interpreted the Consent to mean that as far as the Tax Court was concerned, the parties had agreed that the decision of this Court in 398722 Alberta Ltd. would determine the outcome in the appeal before him. The appellant has shown us no words in the Consent that would suggest that Beaubier J. had misinterpreted it, or that there were any grounds for him to amend his order of January 29, 1999, to allow the appellant to argue section 141.01 before him. He observed that section 141.01 was referred to in the pleadings of both parties and that the possibility that section 141.01 would not be dealt with by this Court in 398722 Alberta Ltd. was known to the parties before they executed the Consent. Indeed, the parties knew that section 141.01 was not addressed in the Tax Court decision in 398722 Alberta Ltd. when they executed the Consent. We can see no error in the reasoning of Beaubier J. when he dismissed the appellant's motion and consequently, the appellant's appeal in the Tax Court.

[9] That should dispose of this appeal. However, the appellant argues that its reservation of a right to appeal in the Consent allows it to argue section 141.01 in this Court. We are unable to agree. The transcript of proceedings before Beaubier J. makes it clear that the reservation was included in the Consent to take account of the possibility that the 398722 Alberta Ltd. appeal would not proceed in this Court. In that event, the parties wanted the Tax Court decision in 398722 Alberta Ltd. to govern the outcome of this case in the Tax Court, with the parties reserving the right to appeal the decision to this Court. Upon appeal, this Court would, in effect, rule on the correctness or otherwise of the Tax Court decision in 398722 Alberta Ltd. At page 89 of the transcript, the following exchange took place.

His Honour: So, are you saying that if the Federal Court of Appeal does not decide on Judge Teskey's case, that you would expect to argue this case, have a decision, and then appeal that and take that before the Federal Court of Appeal? Is that the gist of what you are doing here?

Mr. Leslie: Yes, yes.

His Honour: Is that right, counsel for the appellant?

Mr. O'Halloran: Yes, I think it's just simply the Alberta case will stand as a Tax Court of Canada decision in this matter and both parties - -

His Honour: Oh, I see.

Mr. O'Halloran: That's it. And both parties will have a right to appeal that decision to the Federal Court of Appeal, if need be.

[...]

And at page 97:

His Honour - Decision. [...] Pursuant to matters presented to the Court by the Counsel, in the event that that matter fails to go forward and fails to have a judgment from the Federal Court of Appeal, this Court will adopt the reasons of Judge Teskey in that case, and issue judgment. Whereupon the parties will have full rights of appeal pursuant to discussions held here this morning. In the event that the Federal Court of Appeal determines 398722 Alberta Ltd. v. The Queen, then this Court will issue a judgment in the terms and -- adopted by the Federal Court of Appeal in that decision.

[10] We think that the above transcript references make it clear that the right of appeal in the Consent was only to take account of the possibility that the 398722 Alberta Ltd. matter would not be decided by this Court. It did not leave open to the parties the right to appeal matters not dealt with by this Court in its 398722 Alberta Ltd. decision.

[11] If that were not the correct interpretation of the Consent, then it is hard to see what the parties were agreeing to when they agreed to be bound by the final decision in 398722 Alberta Ltd. If they were to be entitled to argue matters not decided by this Court in 398722 Alberta Ltd., they were not agreeing to be bound by that decision. Yet the Consent says that is exactly what they were agreeing to.

[12] Parties may agree to be bound by another decision and if they do so, that agreement is binding on them. That is what occurred here.

[13] In the circumstances, we will dismiss this appeal with costs.

"Marshall Rothstein"

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-677-00

STYLE OF CAUSE: GRANBURY DEVELOPMENTS LIMITED v.

HER MAJESTY THE QUEEN

PLACE OF HEARING: HALIFAX, NOVA SCOTIA

DATE OF HEARING: NOVEMBER 5, 2002

REASONS FOR JUDGMENT

OF THE COURT: (STONE, ROTHSTEIN, PELLETIER JJ.A.)

RENDERED FROM THE

BENCH BY: ROTHSTEIN J.A.

APPEARANCES:

BRUCE S. RUSSELL FOR THE APPELLANT

V. LYNN W. GILLIS FOR THE RESPONDENT

SOLICITORS OF RECORD:

McINNES COOPER FOR THE APPELLANT

HALIFAX, NOVA SCOTIA

MORRIS ROSENBERG, DEPUTY FOR THE RESPONDENT

ATTORNEY GENERAL OF CANADA