The case arose out of a "withholding tax" assessment
by the Minister of National Revenue of JP Morgan (Canada) Inc.
("JP Morgan") for fees paid by JP Morgan to a private
Hong Kong corporation, its client. JP Morgan challenged the
assessment by applying to the Federal Court for judicial
review. The Crown moved to strike JP Morgan's
application. It was unsuccessful before the Prothonotary and
the Federal Court. The Crown appealed to the Federal Court of
The Federal Court of Appeal observed that the Minister is a
"federal board, commission or other tribunal" within the
meaning of the Federal Courts Rules, and in appropriate
circumstances, her decisions can be judicially reviewed.
Nevertheless, the Court bemoaned the "flow of unmeritorious
applications for judicial review in the area of tax" which are
struck out "time and time again."
Indeed, the Federal Court is precluded from dealing with matters
that can be appealed to the Tax Court by virtue of Rule 18.5 of the
Federal Courts Rules. Further, the application for judicial
review, to be valid, must state a ground of review cognizable at
law, such as jurisdiction, procedural unacceptability, substantive
unacceptability or abuse of discretion.
The Court noted that all claims of abuse of ministerial
discretion in the tax context to date have been struck, because in
this context the Minister has no discretion to exercise, and thus
to abuse. Where the facts indicate a tax liability, the
Minister must issue an assessment.
A further principle that restricts the availability of judicial
review of Ministerial decisions is that a judicial review brought
in the face of adequate, effective recourse elsewhere cannot be
entertained. This principle is justified by the perception of
judicial review remedies as remedies of last resort, as well as the
unwillingness of the Courts to upset specialized schemes set up by
Parliament for the appellate review of administrative
Finally, the Federal Court will strike out a notice of
application for judicial review if it cannot grant the relief
sought. For example, in the tax context, the Court cannot
vary, set aside or vacate tax assessment.
Conversely, there are areas where judicial review may
potentially be available in tax matters. These include
discretionary Ministerial decisions under the fairness provisions,
assessments that are purely discretionary and conduct during
collection matters that is not acceptable o defensible. For
instance, aggressive methods of investigation against the members
of a particular political party would be judicially
reviewable. The list is not exhaustive, and may be expanded
on a case-by-case basis, with the above principles in mind.
In the case at hand, the Federal Court of Appeal found three
reasons to strike out JP Morgan's notice of application.
Firstly, the Court was unaware of any authority that the
Minister's alleged failure to follow her own policies could
constitute an abuse of discretion. Secondly, because the Tax
Court could consider the same question on appeal, the application
for judicial review was barred by Rule 18.5 of the Federal Courts
Rules. Finally, the Federal Court cannot set aside tax
assessments – only the Tax Court has the power to grant this
The appeal was therefore allowed, and JP Morgan's
application for judicial review was dismissed.
Significance of the Decision
The decision clarifies the principles of judicial review of
administrative action. It restates the principles of the
availability of judicial review, the nature of decisions that can
be reviewed and the remedies available. Its primary
significance will be for tax practitioners, who have obtained
further guidance as to the (very narrow) grounds upon which a
Ministerial decision in the tax context can be judicially
reviewed. The broader impact of this decision is in its
restatement of general principles concerning judicial review of
Ministerial action, which will be of interest to the practitioners
of administrative law.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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