Estoppel to Bind Crown
Vallelunga v Canada, 2016 FC 1329
At issue was whether estoppel applied to the circumstances to prevent the Crown from recovering the tax debt owed pursuant to an assessment under Income Tax Act section 160, where there was a memorial issued and registered against the title of real property pursuant to section 223 but where the CRA’s database erroneously showed no tax debt owing by the taxpayer.
ANALYSIS
The factors giving rise to estoppel were set out by the Supreme Court of Canada in Canadian Superior Oil Ltd v Paddon-Hughes Development Co, [1970] SCR 932 at para 19:
(1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made.
(2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made.
(3) Detriment to such person as a consequence of the act or omission.
The representation must be unambiguous and unequivocal (Canada (Attorney General) v Jencan Ltd, [1997] FCJ No 876 at para 49), and the truth must not be known to the party purportedly relying on the representation (Livingstone v Jannetta, [1932] SCR 175). Estoppel will not bind the Crown it if would “work a contrary result to that set out in a statute; nor should it tie the hands of the legislature in the future” (para 11). In the tax context, the Crown is not bound by representations of its officials where those representations are about the law (interpretation of statute as opposed to statement of fact), but does apply where the statute allows the official some discretion (para 11).
Estoppel cannot be used to avoid a tax debt outstanding under the ITA, to remove an obligation to obey a statute, or to pay a valid and binding tax assessment (para 12) – Kenora (Town) Hydro Electric Commission v Vacationland Dairy Co-operative Ltd, [1994] 1 SCR 80 at para 52. The Crown cannot be estopped from applying the law.
However, estoppel may lie with regard to a memorial registered against property where the crown makes representations that it will not enforce it against the property or the taxpayer (para 14). This is an exercise of discretion.
Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3
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