1068754 Alberta Ltd. v. Québec (Agence du revenu), 2019 SCC 37
Financial institutions — Banks — Request for information and documents
On appeal from a judgment of the Quebec Court of Appeal (Vézina, Marcotte and Hogue JJ.A.), 2018 QCCA 8, affirming a decision of Davis J., 2015 QCCS 1135.
As part of the enforcement of fiscal laws, the Agence du revenu du Québec (“ARQ”) may require the provision of certain information and documents. The ARQ sent a formal demand for information and documents pursuant to s. 39 of the Quebec Tax Administration Act (“Demand”) to a branch of the National Bank of Canada in Calgary as part of an audit of DGGMC Bitton Trust (“Trust”), which maintains a bank account at the Calgary branch. The ARQ was seeking to ascertain the residence of the Trust and determine if the Trust owed taxes in Quebec. It sent the Demand to the Calgary branch rather than to National Bank in Quebec in order to conform to the requirements of s. 462(2) of the Bank Act, which directs that certain documents pertaining to bank customers be sent to the branch of account. The sole trustee of the Trust, 1068754 Alberta Ltd. (“Alberta Ltd.”), objected to the Demand as beyond the ARQ’s authority. In Alberta Ltd.’s submission, ss. 462(1) and 462(2) of the Bank Actrequire treating the branch as distinct from the bank as a whole. Thus, it argues that in sending the Demand out of province, the ARQ acted outside its jurisdiction. The Superior Court dismissed the trustee’s motion to quash the Demand. It found that the Demand falls under s. 462(2) of the Bank Act and that any extraterritorial effect that the Demand may have had was merely incidental to Quebec’s power to tax within the province. The Court of Appeal dismissed the trustee’s appeal.
Held (9:0): The appeal should be dismissed.
The Demand was validly issued to the National Bank. The ARQ was required by s. 462(2) of the Bank Actto send the Demand to the Calgary branch. Complying with this requirement of the Bank Act did not render the ARQ’s actions extraterritorial and, accordingly, they were not ultra vires.
Section 462(2) of the Bank Act applies to the Demand. It provides requirements by which documents that pertain to a particular customer — other than those enumerated in s. 462(1) and (3) — are to be communicated to a bank, in order for the bank to be considered to have notice of the documents sent. It is a residual provision. The use of the word “notification” in s. 462(2) contemplates not only documents that serve a notification function, but also documents that impose positive obligations on a bank. The proposal to add the predecessor to s. 462(2) was based on a practical concern that the affected bank branch actually receive notice of the bank’s obligations before the obligations are considered binding. From its inception, s. 462(2) was concerned with documents that could impose obligations on recipient banks. Thus, the Demand, which compels the production of documents and information, comes within the scope of s. 462(2). It is consistent with s. 462(2)’s concern with practical convenience for the ARQ to send the Demand to the Calgary branch where some of the requested documents are located.
However, s. 462(1) of the Bank Act has no application to the Demand. The purpose of s. 462(1) is to set out the preconditions for binding customer property held by the bank, either in the form of valuable assets or bank account debt. This provides certainty and thereby protection to banks from the risk of double liability in dealing with claims to customer property. The Demand is neither among the enumerated documents in s. 462(1) (a) to (d) nor does it seek to “bin[d] . . . property belonging to a person and in the possession of a bank”, or “money owing to a person by reason of a deposit account in a bank”, as stipulated in s. 462(1). Thus, s. 462(1) does not apply to the Demand, and so it follows that the application of s. 462(1) could not have rendered the Demand extraterritorial.
The bank, as a corporation, is a single entity; its branches are treated as distinct only for limited and specific purposes. Branches of a bank are only regarded as distinct where practical exigencies require it. There is no basis in the text of s. 462(2), in the underlying policy, or in the practicality of bank operations, to regard a branch as distinct in order to make a formal demand on the bank. The purpose of s. 462(2) is to provide a practical means by which the bank as a whole is fixed with notice. It is to the bank that the Demand is made. One is not required to conceptualize the bank and its branches as separate entities to achieve this purpose. Instead, s. 462(2) is premised on the idea that a branch is part of the bank. This is exemplified by the fact that nothing further is required from a branch upon receiving a document under s. 462(2) for the bank to be fixed with notice; the entities are one and the same.
In sending the Demand to the Calgary branch as required by s. 462(2), the ARQ did not act extraterritorially. The fact that the exercise of the ARQ’s power has some impact outside Quebec does not ipso facto render such action impermissible or extraterritorial. In this case, the determinative point in characterizing the exercise of the coercive power is the place where enforcement of the Demand may be sought. There is no dispute that National Bank operates in Quebec. It would be absurd if the procedural requirements imposed by s. 462(2) of the Bank Actwere understood to affect the ARQ’s authority to issue a formal demand to a bank that operates within its territorial jurisdiction. There is no interference with Alberta’s territorial sovereignty in communicating a formal demand to National Bank through one of the bank’s branches in Alberta. Nor is there any unfairness in subjecting a corporation that operates in multiple jurisdictions in Canada to a formal demand from a jurisdiction in which it operates. If the ARQ, in the absence of s. 462(2), would have authority to issue the Demand, the application of s. 462(2) does not detract from this.
Citation: 1068754 Alberta Ltd. v. Québec (Agence du revenu), 2019 SCC 37
SCC File No. : 37999
Reasons for Judgment: Rowe J. (Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown and Martin JJ. concurring)
APPLICATIONS FOR LEAVE TO APPEAL GRANTED
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Civil procedure — Class action — Authorization criteria — Common questions
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Law of Professions — Veterinarians — Discipline
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Criminal law — Sentencing — Making child pornography — Long‑term offender designation
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