Date:
20120216
Docket:
A-178-11
Citation:
2012 FCA 58
CORAM: SHARLOW
J.A.
DAWSON J.A.
TRUDEL
J.A.
BETWEEN:
IAN SPENCE
Appellant
and
CANADA
REVENUE AGENCY
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered
from the Bench at Calgary, Alberta, on February 16, 2012)
SHARLOW J.A.
[1]
Subsection
220(3.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.), gives the Minister the discretionary power to waive or cancel
penalties. Mr. Spence made a request under that provision for the waiver of a
penalty imposed on him under subsection 163(1) of the Income Tax Act.
The Minister refused to cancel the penalty. Mr. Spence applied to the Federal
Court for judicial review of that decision. His application was dismissed.
(2011 FC 426). Mr. Spence now appeals to this Court.
[2]
The
decision under appeal is the second Federal Court decision in this matter. When
the Minister first refused Mr. Spence’s request, Mr. Spence applied
successfully for judicial review of that decision (2010 FC 52), and the
Minister was ordered to reconsider. The Minister did so and, in a letter dated March
18, 2010, notified Mr. Spence that his request for a cancellation of the
penalty was denied.
[3]
The
decision letter also states the reasons for the decision. As we read those
reasons, the Minister was influenced primarily by the following factors. (1) It
is the responsibility of the taxpayer to ensure the correctness of his return,
even if it is prepared by someone else. (2) The available evidence indicates
that Mr. Spence signed the return in question, certifying its correctness, and
there is no evidence that he was prevented from reviewing his return before
signing it. (3) The initial assessment notice issued to Mr. Spence disclosed
that the amount of income assessed was approximately $22,000, substantially
less than his actual income for the year, which was approximately $60,000. Mr.
Spence ought to have noticed this discrepancy and taken corrective steps, but
failed to do so before the underreporting was detected by the Canada Revenue
Agency.
[4]
As
indicated above, Mr. Spence’s application for judicial review of the
reconsideration decision was dismissed, and Mr. Spence now appeals to this
Court.
[5]
In
an appeal from a decision of the Federal Court disposing of an application for
judicial review, this Court will not intervene unless the judge chose the wrong
standard of review, or chose the correct standard of review but did not apply
it correctly: Canada Revenue Agency v. Telfer, 2009 FCA 23. In this
case, the judge correctly determined that the standard of review is
reasonableness (Telfer, at paragraph 25; Lanno v. Canada (Customs and
Revenue Agency), 2005 FCA 153, at paragraph 7). Thus, the Minister’s
decision must stand unless our review of the Minister’s decision, as well any
reasons given and the record upon which the decision is based, leads us to conclude
that the
decision does not fall “within a range of possible, acceptable outcomes which
are defensible in respect of the facts and law” (Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190,
2008 SCC 9, at paragraph 47).
[6]
Counsel
for Mr. Spence argues on a number of grounds that the judge did not correctly
apply the reasonableness standard of review. Having considered his
written and oral submissions, we can detect no error on the part of the judge
that warrants the intervention of this Court. It is not necessary to recount
the judge’s entire analysis. It is enough to say that we are all of the view
that his reasons are based on a thorough review of the Minister’s decision and
the record, and a sound appreciation of the relevant facts and the scope of the
Minister’s discretion.
[7]
Counsel
for Mr. Spence placed considerable reliance on Stemijon Investments Ltd. v.
Canada, 2011 FCA 299 (sometimes referred to as “Canwest”), in which this
Court provided, at paragraph 56, some guidance on the content of letters expressing
reasons for a discretionary Ministerial decision. We do not take this paragraph
as setting out any new principles relating to the sufficiency of reasons. Nor
do we accept that the failure on the part of the Minister to follow the
suggested guidance would, in itself, be fatal to the validity of a decision or
a basis for finding it to be unreasonable.
[8]
Counsel
for Mr. Spence also strongly emphasized the harshness of the penalty in this
particular case, noting that an official involved in reviewing the request for
relief also considered it harsh. The amount of the penalty was approximately
$7,000, but the assessment that took into account the unreported income as well
as the available credits resulted in less than a $200 change to Mr. Spence’s
net tax liability. We have no doubt that the Minister was aware of these facts.
However, we are unable to say that the amount of the penalty, considered
against all the relevant circumstances, is such a compelling factor in Mr.
Spence’s favour that it renders the Minister’s decision unreasonable,
particularly in light of the amount of the unreported income compared to Mr.
Spence’s total income.
[9]
For
these reasons, the appeal will be dismissed with costs.
"K. Sharlow"
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-178-11
STYLE OF CAUSE: Ian
Spence v.
Canada Revenue Agency
PLACE OF HEARING: Calgary, Alberta
DATE OF HEARING: February 16, 2012
REASONS FOR JUDGMENT OF THE COURT BY: (SHARLOW, DAWSON, TRUDEL JJ.A.)
DELIVERED FROM THE BENCH BY: SHARLOW J.A.
APPEARANCES:
|
Kevin C. Mellor
|
FOR THE APPELLANT
|
|
Wendy
Bridges
|
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
McCrank Stewart LLP
Regina,
Saskatchewan
|
FOR THE
APPELLANT
|
|
Myles J.
Kirvan
Deputy Attorney General of Canada
|
FOR THE
RESPONDENT
|
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