COURT OF APPEAL FOR ONTARIO
RE:
IBL TRANSPORT CO. LTD. (Appellant (Respondent in appeal)) – and – THE MINISTER OF FINANCE (Respondent (Appellant in appeal))
BEFORE:
ROSENBERG, MOLDAVER and SIMMONS JJ.A.
COUNSEL:
Lynn Tosolini
for the appellant
Marco Drudi and Christos Papadopoulos
for the respondent
HEARD & RELEASED ORALLY:
November 29, 2004
On appeal from the judgment of Justice Alexandra Hoy of the Superior Court of Justice dated June 26, 2003.
E N D O R S E M E N T
1This is an appeal from an order fixing the interest rate payable on an overpayment under the Fuel Tax Act, R.S.O. 1990, c. F. 35, that resulted from an assessment by the Minister.
2The trial judge set the interest rate in accordance with a letter from counsel for the respondent to the appellant stating that the interest rate should be the same as that charged by the Minister on an underpayment. However, on the date the overpayment was made, s. 8(1.1)4 of the Regulations provided that interest to be paid by the Minister was two per cent lower than the base rate, which was lower than the rate the taxpayer must pay to the Minister for an underpayment. Subsequently, on January 1, 1999 a new section was added to the Regulations providing for interest on an overpayment resulting from an assessment by the Minister to be the base rate. In the face of these specific provisions, the trial judge had no jurisdiction to impose a different rate under the general provision in s. 14(12) of the Fuel Tax Act which permits the court to make an order that it considers just.
3In our view, the words of s. 8(1.1)4 are broad enough to cover the case of interest on an overpayment that results from an assessment by the Minister and a decision by the court on an appeal, and not merely overpayments resulting from an error by the taxpayer. The words “the rate of interest to be paid or allowed by the Minister” are very broad and cover both situations. When the more specific provision of s. 8(1.1)5 came into force, the interest rate to be paid by the Minister in circumstances covered by that provision applied in accordance with the rule of interpretation that the specific overrides the general.
4In fairness to the trial judge, it does not appear that these arguments (that the interest rates were governed by the Regulations) were made to her at the trial. The issue may have been raised later when the parties sought clarification of the reasons but by that time the case was under appeal. The Minister did not move before the trial judge under Rule 59.06.
5Accordingly the appeal is allowed and the interest rate shall be calculated in accordance with s. 8(1.1)4 and 5 of the Regulations.
6Costs of the trial shall be in accordance with para. 27 of the trial judge’s costs endorsement subject to the respondent having the opportunity to verify the Minister’s calculation. If the parties cannot agree on whether or not the ultimate judgment is not as favourable to the respondent as the Offer to Settle, the parties may attend before the trial judge to resolve the issue.
7There will be no costs of the appeal. This appeal arose because the Minister never replied to respondent’s counsel’s letter and did not challenge the statements in the letter during the trial proper.
Signed: “Marc Rosenberg J.A.”
“M.J. Moldaver J.A.”
“Janet Simmons J.A.”