Date: 20020423
Docket: A-646-00
Neutral citation: 2002 FCA 145
CORAM: STRAYER J.A.
ROTHSTEIN J.A.
NADON J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
and
DENNIS CARLSON
Respondent
Heard at Edmonton, Alberta, on April 18, 2002.
Judgment delivered from the Bench at Edmonton, Alberta, on April 18, 2002.
REASONS FOR JUDGMENT OF THE COURT BY: NADON J.A.
Date: 20020423
Docket: A-646-00
Neutral citation: 2002 FCA 145
CORAM: STRAYER J.A.
ROTHSTEIN J.A.
NADON J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
and
DENNIS CARLSON
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Edmonton, Alberta, on April 18, 2002)
NADON J.A.
[1] This is an application for judicial review of an Order, dated September 5, 2000, made by Deputy Judge Porter of the Tax Court of Canada (the "TCC") who, on an application to extend the time for filing a notice of objection to a notice of assessment, concluded that as the objection had been filed within the prescribed time, there was no necessity of disposing of the application.
[2] The facts relevant to the determination of this judicial review are straightforward and can be summarized as follows.
[3] On August 17, 1993, under subsection 160(2) of the Income Tax Act (the "Act"), Revenue Canada, by way of registered mail, sent notice of assessment no. 7272 to the respondent, which he received two days later.
[4] In paragraphs 1 to 4 of his Reasons for Order, the Deputy Judge sets out the facts which led to the assessment being made against the respondent:
[1] This is an application to the Court to extend the time in which an objection to an assessment might be made to the Minister of National Revenue (the "Minister") under subsections 166.1(1) and (7) of the Income Tax Act (the "Act"). The application arises out of a rather unfortunate set of circumstances. The Applicant has become embroiled in a situation, which was not of his own making, save that he attempted to help out the primary tax payer, one Avery Broadbent ("Avery"), without any thought of reward or compensation for himself.
[2] The evidence revealed that in 1992, the Applicant was asked and he agreed to help Avery, who was having difficulty with the City of Edmonton, in obtaining the necessary permits to do renovations to a rental property, in which the girlfriend of the Applicant rented a suite. The Applicant agreed in October 1992 to the property being transferred into his own name so that he could make the necessary applications to the City for the permits, leaving out the name of Avery. No money changed hands and there was no consideration for the transfer. He was simply a bare trustee. Although lawyers were involved in the transfer, no trust document was drawn up. The transfer showed a value of $76,000.00, but the property was subject to a mortgage and thus there was little or not equity in it at the time of the transfer. Avery continued to collect all rents for his own account and the Applicant had nothing to do with the administration o the properties, except to make application for the permits to the City of Edmonton.
[3] Avery ran into further difficulties over the next year or so, at one time ending up in jail for unknown activities. His behaviour became of such concern to the Applicant that in the summer of 1994, he insisted upon returning the title to him. In July 1994, a lawyer engaged by Avery prepared a transfer of the title to the son of Avery, one Robert Broadbent. The Applicant signed the transfer, had no lawyer acting for him and received no consideration or money.
[4] Unfortunately for the Applicant, on August 17, 1993, Revenue Canada had served upon him a Notice of Assessment in the amount of $43,000.00 in the following terms.
"This assessment is issued pursuant to the provisions of subsection 160(2) of the Income Tact Act in respect of transfers from Sunwapta Construction Ltd. on or about September 1, 1992 of real estate located at 9543 and 9547 - 103 Avenue, Edmonton, Alberta, legally described as Lots 18 and 19, Block 8, Plan D R.L. 12 and 14."
[5] Pursuant to subsection 165(1) of the Act, the respondent had until November 15, 1993 to serve on the Minister of National Revenue ("the Minister") his notice of objection to the notice of assessment. However, the respondent did not serve on the Minister his notice of objection within the prescribed delay.
[6] After collection proceedings were commenced against him, the respondent, in February, 1999, served on the Minister a notice of objection with an application to extend the time in which to serve his notice of objection. The Minister, after due consideration, rejected the respondent's request for an extension.
[7] As a result, on April 23, 1999, the respondent applied to the TCC for an Order extending the time in which to make his objection.
[8] On September 5, 2000, Deputy Judge Porter held that, as the respondent had, in his view, served his objection "within 90 days of his being properly informed by Revenue Canada that he had a liability to pay and that they were looking to him for payment", there was no need to grant the respondent's application to extend time.
[9] In our view, the Deputy Judge erred for the following reasons. Under subparagraph 165(1)(a)(ii) of the Act, a taxpayer who objects to an assessment must do so by serving on the Minister a notice of objection within ninety days after the day the notice of assessment was mailed to him. If the taxpayer fails to meet this delay, he may apply to the Minister and to the TCC for an extension of time.
[10] However, both the Minister and the TCC are precluded under paragraphs 166.1(7)(a) and 166.2(5)(a) of the Act from extending the time in which to file a notice of objection unless the application is made within one year after the expiry of the time in which a notice of objection could have been made.
[11] In the present case, one year after the expiry of the ninety days in which the respondent could have served his notice of objection is November 15, 1994. Thus, when the respondent served his notice of objection in February 1999, he was clearly out of time.
[12] In concluding that the respondent had served his objection within the prescribed ninety days, the Deputy Judge took the position that since the respondent had only understood the meaning and significance of notice of assessment no. 7272 in late 1998 or early 1999, when he had discussions with Revenue Canada, time only started to run from that point in time. Consequently, in the Judge's view, the notice of objection served on February 16, 1999, was timely.
[13] That view, with respect, is clearly wrong. As this Court has held on numerous occasions, when a taxpayer is unable to meet the deadline prescribed by the Act, even by reason of a failure of the postal system, neither the Minister nor the TCC can come to his help. (See Schafer v. Her Majesty the Queen [2000] F.C.J. 1480 (FCA); The Attorney General of Canada v. John F. Bowen [1992] 1 F.C. 311 (FCA)). Hence, if a postal failure cannot save a taxpayer, he will not be saved by his failure to grasp the significance of a notice of assessment served on him.
[14] As there is no dispute that notice of assessment no. 7272 was sent by registered mail to the respondent on August 17, 1993, and that the respondent received it within a few days, his notice of objection was clearly served out of time. Since the respondent did not apply for an extension of time before the end of November 1994, neither the Minister nor the TCC Judge could grant him the extension he was seeking.
[15] In support of his view that the respondent's notice of objection had been filed within the prescribed time, the Deputy Judge also relied on the common law discoverability rule. Under that rule, which was developed entirely in the field of torts, time will not start to run until a person has fully and clearly appreciated his or her legal rights. The rule seeks to remedy situations of perceived injustice where potential claimants, through no fault of their own, are unaware of a wrong committed against them, and the resulting harm, until after the expiry of the limitation period in which to commence their legal proceedings.
[16] Since it is clear, on the facts of this case, that the respondent was neither diligent nor reasonable in the way he conducted himself following service of the notice of assessment, the rule, in any event, is inapplicable (See K.M. v. H.M., [1992] 3 S.C.R. 6).
[17] We are therefore of the view that the Deputy Judge erred, in the circumstances of this case, in relying on the discoverability rule. As to whether the rule can find application in cases arising under the Act, in regard to which question we have serious doubts, we need not answer today.
[18] Counsel for the respondent argued that we should decide or direct the TCC to decide that the respondent can only be assessed in his capacity of trustee for Avery Broadbent, and that only trust assets are exigible. We are of the view that we have no jurisdiction to make such an order.
[19] For these reasons, the applicant's judicial review application will be allowed. The decision of Deputy Judge Porter dated September 5, 2000, will be set aside and the matter will be referred back to the TCC for redetermination on the basis that the respondent's application for an extension of time to serve his notice of objection to notice of assessment no. 7272 dated August 17, 1993 shall be dismissed for lack of jurisdiction to grant the relief sought.
Marc Nadon
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-646-00
STYLE OF CAUSE: Her Majesty The Queen v. Dennis Carlson
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: April 18, 2002
REASONS FOR JUDGMENT: Nadon J.A.
DATED: April 23, 2002
APPEARANCES:
Ms. Kathleen Lyons
FOR THE APPELLANT
Ms. Belinda Schmid
Mr. Robert Gillespie
FOR THE RESPONDENT
SOLICITORS OF RECORD:
Mr. Morris Roesenberg
Deputy Attorney General
of Canada
FOR THE APPELLANT
Mr. Robert Gillespie
FOR THE RESPONDENT
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