Citation: 2009 TCC 298
Date: 20090602
Docket: 2006-1524(CPP)
BETWEEN:
4528957 MANITOBA LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS OF JUDGMENT
McArthur J.
[1]
This unfortunate situation
has gone on for far too long.
[2]
The following facts are
some of the most fundamental factors. Mr. Guevara is the owner and director of
the company 4528957 Manitoba Ltd. (the Appellant). The latter received a
Notice of Reassessment in the amount of $6,131.72. Despite several attempts to
find out what the assessment was for, the Appellant still does not know why it
received said assessment. The Appellant believes it is an employment insurance
issue, that the amount has already been paid, and that the reassessment would
be a double payment.
[3]
The Minister of National
Revenue (the Minister) brought a motion to strike out the appeal, as the appeal
is under the wrong procedure. The assessment was made under the Income Tax
Act (the Act), whereas the Appellant filed its appeal under the Canada Pension Plan (the Plan).
[4]
In my order issued on
July 24, 2007, I dismissed the motion. Subsequently, the Minister repeated his
procedural position, while continuing to ignore requests for an explanation as
to what the amount of the assessment was for.
[5]
The Appellant made an
effort to comply with the Minister’s position and to proceed under tax procedures,
but its three attempts were thwarted by the administration of the Tax Court of
Canada (the Court). The
Appellant is rightly perplexed and is seeking not only an explanation, but also
to be heard by an office of the Court other than the Winnipeg office.
[6]
The Appellant’s efforts
to comply with the Minister’s request to file its appeal under the Act instead
of the Plan were denied. It is not surprising that the Appellant is completely confused.
[7]
I consider that the Appellant
is fully entitled to an explanation from the Minister, which seems unlikely any
time soon. Requests for the reasons for the assessment and the Appellant’s
conviction that the amount in question has already been paid demonstrate a prima
facie case and puts the burden of proof back on the Minister. The Minister
did not meet his burden of proof and did not take it into account either. The appeal
is allowed. More specific facts and the reasoning process follow.
Facts
[8]
On February 11, 2005,
the Minister mailed out a Notice of Assessment to be paid by the Appellant under
subsection 153(1) of the Act for the taxation period beginning December 31,
2003, and ending September 30, 2004. The notice indicated that the balance
owing was $6,131.72. Most of the amount owing was under line item “Total
deductions and client’s obligation.”
[9]
On March 22, 2005, the Appellant
filed a Notice of Objection to the assessment, indicating that it had already
made payments that were not taken into account.
[10]
On January 16, 2006, the
Minister issued a Notice of Confirmation indicating that the Appellant did not
make the deductions required by subsection 153(1) of the Act.
[11]
On April 30, 2006, the
Appellant filed a Notice of Appeal pursuant to the informal procedure and also
paid the $100 filing fee. The Appellant elected
“Canada Pension Plan” on the electronic appeal form.
[12]
The Registry officer accepted the
Notice of Appeal filed on April 30, 2006, because it was received in due form. Nevertheless,
the appeal was classified as appeal under the Plan and the $100 filing fee was
reimbursed to the Appellant.
[13]
On July 27, 2006, the Respondent
wrote to the Court to indicate that the Appellant had chosen the informal procedure
for questions concerning the Plan, but that there was no issue pertaining to
that statute. No reason was given
to support that statement. Furthermore, the
Respondent indicated that the Appellant did not file its appeal within the
prescribed time limits and that it should therefore apply for an extension of
time to ensure compliance with the Court’s procedures. Therefore, with the
Appellant’s consent, the Respondent applied for an order to extend the time
limit for replying to the Notice of Appeal to allow the Appellant to take the
necessary steps to ensure its appeal would be heard under the appropriate
procedure, that is, the informal procedure, for tax matters.
[14]
On August 4, 2006, the Court informed
the Appellant of the available choices to obtain an order to extend the time
limit for filing the Notice of Appeal, as the Appellant appealed its assessment
more than 90 days after the mailing date of the Notice of Confirmation. In
addition, the Court asked the Appellant to repay the $100 filing fee to allow
the appeal to proceed.
[15]
On August 8, 2006, the
Appellant wrote to the Court and indicated that it did not agree with counsel
for the Respondent and that the dispute involved rather a decision rendered
under the Plan. The Appellant indicated that the nature of the amount appealed was
unknown and that the documents of the Canada Revenue Agency (CRA) were too
vague and general to allow it to determine under which specific procedure to
file the appeal.
[16]
On August 9, 2006, the Court indicated
to the parties that no changes would be made to the Appellant’s appeal.
[17]
On October 19, 2006, the
Respondent sent a letter to the Appellant repeating that the appeal filed by
the Appellant had deficiencies and that it had to correct them, failing which,
the Respondent would ask the Court to dismiss these appeals.
[18]
On October 27, 2006, the
Respondent filed a notice of motion to strike the appeal, stating that the Court
did not have the jurisdiction to hear the appeal as the assessment did not involve
sections 27.1 and 27.2 of the Plan and that no decision was rendered under the
provisions of the Plan. According to the Respondent, the 2005 assessment
involved subsection 153(1) of the Act only.
[19]
In a letter received by the Registry
of the Court on November 13, 2006, in reference to the Court’s letter of August
4, 2006, the Appellant asked the Court for an extension of time pursuant to
subsection 18.1(1) of the Tax Court of Canada Rules (Informal Procedure) (the
Rules). Schedule 18.1. was attached to the letter, pursuant to the Rules. The
Appellant indicated that it had always intended to appeal the Minister's
decision. The $100 filing fee was received on November 20, 2006.
[20]
The motion was heard on January 30,
2007, and on July 24, 2007, I dismissed the motion and requested that a
Reply to the Notice of Appeal be filed, as the Appellant satisfied the conditions
for an extension of time to appeal.
[21]
On September 21, 2007, the
Respondent filed his Reply to the Notice of Appeal.
[22]
On August 21, 2008, the Court reimbursed
the $100 filing fee that the Appellant had submitted with its application for
an extension of time, indicating that the appeal remained subject to the Plan.
Analysis
[23]
At issue is whether the
Appellant, who is not represented by counsel and who has had to face a series
of deplorable procedural circumstances over the course of this case, discharged
its duty to disprove, on a balance of
probabilities, the basis for the
Minister’s decision.
[24]
At first blush, there seems to be
no issue with respect to the Plan. However, in the auditor’s account statement
of November 1, 2004, the auditor recorded the amount of $6,131.72 in line
item “Total deductions and
client’s obligation.” There is no way of
knowing what that amount related to.
[25]
In his confirmation, the Minister
cited section 153 of the Act to explain the nature of the amount and did not
provide any other detail regarding the amount of the assessment.
[26]
In its letter of August 8, 2006,
the Appellant itself said that the nature of the amount in question is unknown and
that the documents of the CRA are vague and general.
[27]
The Respondent attempted to assist
the Appellant in choosing another procedure for the appeal, but despite this act
of good faith, the Respondent failed to provide even the smallest amount of
additional information on the merits of the case. Such information would have
helped the Appellant to understand why the Respondent wanted a change in procedure.
[28]
For the purposes of this dispute,
the procedure chosen to appeal is of little relevance. An appeal may be instituted
under subsection 28(1) of the Plan despite the fact that the Minister did not
render a decision under section 27.1 of the Plan.
[29]
As Bowman J. states in Holmes
v. The Queen, [2000] 3 C.T.C. 2235, it would be
unconscionable if the taxpayer could not likewise notify the Minister of his
objection to the assessments and of his appeal by sending a single notice of
objection or appeal:
6 No form is prescribed for an appeal to the
Minister for reconsideration of an assessment under subsection 61(2) of the UI
Act and I should think that a notice of objection to an assessment that
purports in one document to assess tax under three federal statutes would be
sufficient compliance with the three statutes particularly where, as here, the
notice of objection refers to the assessment by date and number. The same is
true of a notice of appeal to this court. I note that Joyal J. in a trial de
novo from a judgment of Rip J. held that a piece of paper emanating from
the Department of National Revenue listing four statutes and one global amount
was a valid notice of assessment (The Queen v. Leung, 93 DTC 5467).
7 If the Minister can fulfil his statutory
obligation under four statutes to notify a taxpayer of his assessments with one
piece of paper it would be unconscionable if the taxpayer could not likewise
notify the Minister of his objection to the assessments and of his appeal by
sending a single notice of objection or appeal. Although under the rules of
this court there are prescribed forms for appealing from an EI
assessment or CPP assessment, under section 32 of the Interpretation
Act substantial compliance is sufficient. Otherwise the objection and
appeal process under these omnibus assessments could become a minefield for the
unwary.
[30]
Even though the Rules prescribe
a form for an appeal of a decision under the Plan, under section 32 of the Interpretation Act
substantial compliance is sufficient. In other words, the Appellant
has the right to appeal from the Minister’s decision under the procedure it
chose.
[31]
In the case at bar, the
Appellant represents itself and, for more than three years, it had to answer questions
of procedure of this Court without, however, having the chance to examine the substance
of the Minister’s decision.
[32]
Notwithstanding the
procedural issues that continue to be raised by the Respondent, I have already concluded
that the Appellant met the requirements of the Rules to file its Notice of Appeal
when the previous motion was brought. For all practical purposes, the time
limits were complied with and the merits of the appeal must be weighed.
[33]
Unfortunately, it is difficult
to weigh the merits of the appeal when the Respondent does not put forth any
assumptions of fact that the Minister relies on to assess the Appellant. The
Respondent’s Reply to the Notice of Appeal does not in any way clarify the nature
of the total amount indicated in the assessment.
[34]
The Respondent did not provide
any findings and assumptions of fact on which the Minister relied in assessing the Appellant as required by subsection 6(1)(d) of the Rules.
[35]
Alternatively, the Respondent’s
reply did not contain
a statement of any further allegations of fact on which the Minister intended
to rely as required by subsection 12(3)(b) of the Tax Court of Canada Rules of
Procedure respecting the Canada Pension Plan.
[36]
Nevertheless, the Respondent was
aware that the merits of this case had to be examined. It appears to me that
the Respondent could have compiled a list of the facts on which the Minister
relied in making the assessment, regardless of the procedure chosen, to support
his assumption that the Appellant was liable to pay the amount of $6,131.72 in
accordance with subsection 153(1) of the Act.
[37]
In Spensieri v. The Queen,
2001 D.T.C. 787,
Bowman J. indicates that the Rules must not be used as a trap to keep
the appellant from having her day in
court:
10 I do not mean to be either dismissive or disrespectful of
the Crown's submission, but I cannot help thinking that the respondent is being
rather technical in mounting a major campaign to keep the appellant from having
her day in court because of a rather minor slip-up. It is not surprising, if a
person has to manoeuvre through two acts (the Income Tax Act and the Tax
Court of Canada Act) and two sets of rules, informal and general, that he
or she might make a mistake. The rules are not intended to be a trap for the
unwary or to create a minefield of obstacles for litigants. Rather they are
supposed to facilitate the resolution of substantive disputes.
[38]
In The
Queen v. Anchor Pointe Energy Ltd., 2007 FCA 188, Létourneau J.
stated as follows:
27 In our self-reporting system of taxation, the Minister
makes assumptions of fact in determining the tax liability of a taxpayer. As
Rothstein J.A., as he then was, said in Canada v. Anchor Pointe Energy Ltd.,
supra, “the practice is for the Crown to disclose in its pleadings
assumptions of fact made by the Minister upon which his determination of the
tax owing is based”; see paragraph 2. In the words of Bowman A.C.J.T.C., as he
then was, these assumptions “are supposed to be a full and honest disclosure of
the facts upon which the Minister of National Revenue relied in making the
assessment”: Holm et al. v. The Queen 2003 DTC 755, at paragraph 9.
28 When pleaded, assumptions of fact place on the taxpayers
the initial onus of disproving, on a balance of probabilities, the facts that
the Minister assumed: see Canada v. Anchor Pointe Energy Ltd., supra,
at paragraph 2, Hickman Motors Ltd. v. Canada [1997] 2 S.C.R. 336, at
paragraph 92. Unpleaded assumptions have no effect on the burden of proof one
way or the other: see The Queen v. Bowens 96 DTC 6128, at page 6129, Pollock
v. The Queen 94 DTC 6050, at page 6053.
29 Fairness requires that the facts pleaded as assumptions be
complete, precise, accurate and honestly and truthfully stated so that the
taxpayer knows exactly the case and the burden that he or she has to meet: Canada
v. Anchor Pointe Energy Ltd., supra, at paragraph 23, Holm et al. v. The
Queen, supra, Canada v. Lowen [2004] 4
F.C.R. 3, at paragraph 9. (F.C.A), Grant v. The Queen et al. 2003 DTC
5160, at page 5163, First Fund Genesis Corporation v. Her Majesty the Queen
90 DTC 6337, at page 6340, Shaughnessy v. Her Majesty the Queen 2002 DTC
1272, at paragraph 13, Stephen v. Canada [2001] T.C.J. No. 250, at paragraph 6.
[39]
In the case
at bar, the unpleaded assumption is simply that the Appellant has to pay an
amount pursuant to subsection 153(1) of the Act. No explanation was given as to the facts on which the
Minister relied in assessing the Appellant, either in the reply or during the
hearing.
[40]
Taxpayers who appear in
person play a key role in the Court. Mr. Guevara has the right to appear
in person or represent a company, as is the case here, before the Court under
the informal procedure. The Appellant must be treated with courtesy and respect,
and the issues must be presented clearly and with enough detail so that the
Appellant can understand them.
[41]
In our case, the Appellant was
treated with insolence and disrespect. For more than three years, the Appellant
patiently met all the requirements of this Court. It paid the $100 filing fee
when it filed its Notice of Appeal in April 2006, had the $100 fee reimbursed
with confirmation that the procedure it chose did not require a filing fee, repaid
the filing fee in August 2006 and the fee was reimbursed again in August 2008 for the same reason. On numerous
occasions, the Appellant had to explain that the Minister’s documents were too
vague for it to be able to choose a procedure other than the one it had already
chosen. The Respondent’s reply did not help clarify the reasons for which the Appellant
was being assessed. In short, even to this day, neither the Appellant nor this Court
can even begin to understand the assumptions of fact on which the Minister
relied in this case. To this day, the reasons supporting the assessment remain
a secret that is being kept from the Appellant and this Court.
[42]
As
indicated above, the Crown has a
duty to disclose in its pleadings assumptions of fact
made by the Minister upon which his determination of the tax owing is based.
When assumptions are pleaded, the burden of proof is reversed and the onus is
then cast on the taxpayer to disprove the assumptions. Considering that the Respondent did not plead any other assumptions of fact, the
Appellant was unable to reverse the burden of proof. The Appellant had no
information on what basis it was being assessed and, therefore, had nothing to disprove.
[43]
The appeal from the
assessment of February 11, 2005, is allowed, with costs, and the assessment is
vacated.
Signed at Ottawa, Canada, this
2nd day of June 2009.
“C.H. McArthur”
Translation
certified true
on this 15th day
of June 2009.
Daniela Possamai,
Translator
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