Citation: 2011 FC 371
Ottawa, Ontario, March 28, 2011
PRESENT: The Honourable Mr. Justice Zinn
MAJESTY THE QUEEN
IN RIGHT OF CANADA
REASONS FOR JUDGMENT AND
tax debt at issue in this application arose more than 25 years ago. While death
and taxes may be certain, the collection of the latter is not.
Doig seeks a declaration from this Court that he has no debt for taxes for the
1971 to 1984 taxation years. He says that he paid that debt but that Canada
Revenue Agency or its predecessor agency (collectively referred to throughout
as “CRA”) failed to properly give him credit for payments he made.
the reasons that follow, I am unable to issue the declaration that is sought. Mr.
Doig has waited too long to bring this application, and he has failed to prove
on the balance of probabilities that he paid his tax debt.
says that as of June 16, 2009 Mr. Doig was indebted to the Crown in the amount
of $323,738.31, comprised of unpaid taxes, interest and penalties “from
taxation years prior to and including 1982, 1983, 1984, 1985, 1986, 1987, 1988,
1989, 1991, 1992, and 1993.”
Doig does not dispute the amounts claimed by CRA to be owed with respect to
taxation year 1985 and following; he disputes the claim of CRA that there is
any debt owed for 1984 and prior taxation years (collectively the “prior
period”). He says that he paid the tax debt of the prior period.
litigation has taken a circuitous route. The applicant initially took the
position that the Notices of Assessment for the taxation years 1984 and prior
had not been sent to or received by him. However, when the application came on
for hearing, the position advanced by the applicant was that the debt from the
prior period had been paid by him but that his payments had not been credited
to his account by CRA. On consent, the hearing was adjourned and fresh records
and memoranda were filed.
will follow the applicant’s division of the prior period into three separate
time periods: 1971-1973, 1974-1979, and 1980-1984.
January 21, 1975, a Certificate filed by the respondent issued from the Federal
Court of Canada – Trial Division in favour of the Crown stating that Mr. Doig
had an unpaid tax debt, plus interest for the taxation years 1971 to 1973, in
the amount of $14,277.19. A writ of fieri facias was issued and the record
indicates that it was paid on or about February 3, 1975. The applicant submits
that he was not properly credited with the payment and that the 1971 to 1973
tax liability is included in the amount CRA claims is owed for the prior period.
respondent agrees that the debt for this period was paid but asserts that no
part of the tax debt claimed for the prior period includes or relates to this
period of time.
Doig swears that he made two payments to CRA in the period from 1974 to 1979 in
satisfaction of the tax debt that arose within this period.
attests that: “On March 17, 1978, my wife, Helen Doig (nee Helen Teahen) placed
a mortgage on her cottage property for $5,000.00.” He says that despite the
high interest rate of 13%, “the mortgage was placed on the cottage so that
funds could be raised to pay my income tax arrears.” He asserts that “my wife
gave me the funds and I paid the proceeds to the CRA as partial payment of my outstanding
taxes and interests [sic].”
Doig then attests that in the fall of 1979, CRA in Ottawa contacted him and told him
that he had outstanding tax arrears of approximately $17,000.00. Again, his
wife placed a mortgage on her cottage property from which she received $16,000.00.
Mr. Doig says that he contributed $1,000.00 of his own money and swears that he
paid $17,000 to CRA “as payment against my outstanding taxes and interest.” He
From 1979 to January 1984, no collections
[sic] actions were taken by the CRA’s Ottawa
or Sudbury collections offices against me and I was
not advised of any outstanding tax debt. As such, I conducted my affairs on
the basis that I had no tax debt outstanding.
It is my belief that when the Sudbury collections office became aware of the 1975 Certificate that
it mistakenly concluded that I had never paid the tax debt.
submits that its records do not show that either payment was made, that the
applicant has failed to prove on the balance of probabilities that these
payments were made, and that the applicant’s behaviour contradicts his claim
that he made these payments.
applicant states that there were no collection steps taken by CRA and that he
regularly paid his taxes in this period. He says that he only became aware of
the alleged debt in 2005 when CRA withheld a small refund due to him. Following
an inquiry to determine why it was withheld, he learned that CRA’s records
showed a balance forward from January 19, 1986, of $57,575.06.
respondent states that as a consequence of a change in its computer systems in
1986 a new statement of account was created. The system took the balance owed
by the applicant on January 20, 1986 (relating to the 1984 and prior taxation
years) and merged it with the tax debt owed on account of the 1985 taxation
year and recorded the sum as one amount in July 1986. It states that from that
date onward, the computer system labelled the merged debt as the “1985 debt”;
however, it was a debt that related to the 1985 and prior taxation
years. The respondent submits that its records filed in this proceeding show
that it is comprised of debt from the 1985, 1984, 1983, 1982, and prior
says that it has filed the best evidence available to prove the debt. It says
that because the applicant waited more than 30 years to raise the allegation
that he made payments that were not credited to his account, CRA is unable to
provide statements of account from the 1970s showing the payments made and
credited because all documents from that period have been destroyed.
respondent also submits that this application is time-barred under the Crown
Liability and Proceedings Act, RSC 1985, c C-50, s. 32 of which establishes
a 6-year limitation period for launching proceedings against the Crown. CRA
submits that the applicant knew or ought to have known of the debt he now
disputes since at least 1986.
applicant says that the limitation period for his application is 10 years as
provided for in s. 222(4) of the Income Tax Act, RSC 1985, c 1 (5th
Supp). He says that he was unaware of the debt at issue until, in response to
his inquiry, he received correspondence from CRA dated January 5, 2006, enclosing
a Statement of Account that showed a balance forward as at January 19, 1986 of
addition to the limitation period, CRA further submits that this application is
time-barred based on the doctrines of undue delay, laches and acquiescence.
parties addressed three questions:
is the applicable limitation period prescribed for the applicant’s application,
and when did the limitation period commence?
the application is not proscribed by a limitation period, is the applicant
barred from obtaining the relief requested on the basis of the doctrines of
undue delay, laches, and acquiescence?
there a debt owed by the applicant to the respondent for any of the following
taxation years: (i) 1971 to 1973; (ii) 1974 to 1979; or (iii) 1980 to 1984?
1. The Limitation
Supreme Court of Canada in Markevich v Canada, 2003 SCC 9, disagreed
with the view of CRA that no limitation period applied with respect to its
collection of tax debts as none was provided in the Income Tax Act. The
Supreme Court held that s. 32 of the Crown Liability and Proceedings Act
applied to impose a six-year limitation period on the Crown’s right to collect
federal tax debts of a taxpayer.
32 of the Crown Liability and Proceedings Act provides as follows:
32. Except as
otherwise provided in this Act or in any other Act of Parliament, the laws
relating to prescription and the limitation of actions in force in a province
between subject and subject apply to any proceedings by or against the Crown
in respect of any cause of action arising in that province, and proceedings
by or against the Crown in respect of a cause of action arising otherwise
than in a province shall be taken within six years after the cause of action
Sauf disposition contraire de la présente loi ou de toute autre loi fédérale,
les règles de droit en matière de prescription qui, dans une province,
régissent les rapports entre particuliers s’appliquent lors des poursuites
auxquelles l’État est partie pour tout fait générateur survenu dans la
province. Lorsque ce dernier survient ailleurs que dans une province, la procédure
se prescrit par six ans.
response to the decision in Markevich the government amended the Income
Tax Act: SC 2004, c 22, s 50. Section 222 of the Act was amended to read,
in relevant part, as follows:
222. (1) The
following definitions apply in this section.
« action »
an action to collect a tax debt of a taxpayer and includes a proceeding in a
court and anything done by the Minister under subsection 129(2), 131(3),
132(2) or 164(2), section 203 or any provision of this Part.
means any amount payable by a taxpayer under this Act.
(2) A tax debt
is a debt due to Her Majesty and is recoverable as such in the Federal Court
or any other court of competent jurisdiction or in any other manner provided
by this Act.
Minister may not commence an action to collect a tax debt after the end of
the limitation period for the collection of the tax debt.
limitation period for the collection of a tax debt of a taxpayer
(i) if a
notice of assessment, or a notice referred to in subsection 226(1), in
respect of the tax debt is sent to or served on the taxpayer, after March 3,
2004, on the day that is 90 days after the day on which the last one of those
notices is sent or served, and
subparagraph (i) does not apply and the tax debt was payable on March 4,
2004, or would have been payable on that date but for a limitation period
that otherwise applied to the collection of the tax debt, on March 4, 2004;
subject to subsection (8), on the day that is 10 years after the day on which
limitation period described in subsection (4) for the collection of a tax
debt of a taxpayer restarts (and ends, subject to subsection (8), on the day
that is 10 years after the day on which it restarts) on any day, before it
would otherwise end, on which
taxpayer acknowledges the tax debt in accordance with subsection (6);
Minister commences an action to collect the tax debt; or
Minister, under subsection 159(3) or 160(2) or paragraph 227(10)(a), assesses
any person in respect of the tax debt.
(1) Les définitions qui suivent s’appliquent au présent article.
action » Toute action en recouvrement d’une dette fiscale d’un contribuable,
y compris les procédures judiciaires et toute mesure prise par le ministre en
vertu des paragraphes 129(2), 131(3), 132(2) ou 164(2), de l’article 203 ou
d’une disposition de la présente partie.
dette fiscale »
dette fiscale » Toute somme payable par un contribuable sous le régime de la
La dette fiscale est une créance de Sa Majesté et est recouvrable à ce titre
devant la Cour fédérale ou devant tout autre tribunal compétent ou de toute
autre manière prévue par la présente loi.
Une action en recouvrement d’une dette fiscale ne peut être entreprise par le
ministre après l’expiration du délai de prescription pour le recouvrement de
Le délai de prescription pour le recouvrement d’une dette fiscale d’un
commence à courir :
si un avis de cotisation, ou un avis visé au paragraphe 226(1), concernant la
dette est envoyé ou signifié au contribuable après le 3 mars 2004, le
quatre-vingt-dixième jour suivant le jour où le dernier de ces avis est
envoyé ou signifié,
si le sous-alinéa (i) ne s’applique pas et que la dette était exigible le 4
mars 2004, ou l’aurait été en l’absence de tout délai de prescription qui
s’est appliqué par ailleurs au recouvrement de la dette, le 4 mars 2004;
prend fin, sous réserve du paragraphe (8), dix ans après le jour de son
Le délai de prescription pour le recouvrement d’une dette fiscale d’un
contribuable recommence à courir — et prend fin, sous réserve du paragraphe
(8), dix ans plus tard — le jour, antérieur à celui où il prendrait fin par
ailleurs, où, selon le cas :
le contribuable reconnaît la dette conformément au paragraphe (6);
le ministre entreprend une action en recouvrement de la dette;
le ministre établit, en vertu des paragraphes 159(3) ou 160(2) ou de l’alinéa
227(10)a), une cotisation à l’égard d’une personne concernant la dette.
respondent submits that there is no provision in the Income Tax Act
setting out a limitation period for taxpayers who claim that they made payments
that were not credited to their account. Therefore, it says, s. 32 of the Crown
Liability and Proceedings Act applies and the applicant had six years from
the date on which he became aware, or ought to have become aware, that the
payments he now claims were made were not credited to his tax account to
commence this application.
applicant submits that s. 222 of the Income Tax Act applies. He says
that the respondent’s submission that s. 222 permits the Minister to wait ten
years to collect taxes but does not permit the taxpayer to defend the
Minister’s actions is “innovative” but “not tenable.” He relies, in part, on the
following statement made by the Minister at the time s. 222 was amended:
The Government agrees that a limitation
period for the collection of taxes is needed. We believe a 10-year limitation
period is appropriate and recognizes the special reporting and assessment
system in federal tax acts. It provides a reasonable amount of time for the
Canada Revenue Agency and taxpayers to deal with tax debts.
added] (Minister of Finance Ralph Goodale, Media Release, “March 4, 2004 Press
Release: Minister of Finance Proposes Amendments to Change the Limitation
Period for the Collection of Federal Tax Debts” (4 March 2004).)
The approach to the correct interpretation of s. 222 of the
Income Tax Act is set out by the Supreme Court in Trustco Mortgage v
Canada,  2 S.C.R. 601, at para. 10:
been long established as a matter of statutory interpretation that “the words
of an Act are to be read in their entire context and in their grammatical and
ordinary sense harmoniously with the scheme of the Act, the object of the Act,
and the intention of Parliament”: see 65302 British Columbia Ltd. v. Canada,
 3 S.C.R. 804, at para. 50. The interpretation of a statutory provision
must be made according to a textual, contextual and purposive analysis to find
a meaning that is harmonious with the Act as a whole. When the words of a
provision are precise and unequivocal, the ordinary meaning of the words play a
dominant role in the interpretive process. On the other hand, where the
words can support more than one reasonable meaning, the ordinary meaning of the
words plays a lesser role. The relative effects of ordinary meaning, context
and purpose on the interpretive process may vary, but in all cases the court
must seek to read the provisions of an Act as a harmonious whole. [emphasis
my view, the words of s. 222 of the Income Tax Act are precise and
unequivocal – the section applies to the “collection” by the Minister of a tax
debt and only to that type of action. Subsection 222(3) provides: “The
Minister may not commence an action to collect a tax debt after the end of the
limitation period.” It is beyond question that the section is directed to
actions commenced by the Minister, and, in my view, it is equally beyond
question that it applies only to such actions for there is no reference to any
others. Had Parliament intended the limitation period to apply equally to an application
by a taxpayer claiming that the debt was paid, it could have easily said so – but
it did not. The matter before this Court is an application commenced by the
taxpayer, not a proceeding by the Minister to collect a tax debt, and I find
that s. 222 of the Income Tax Act has no bearing on this application.
applicant submits that it is contrary to justice that the Minister may sue to
recover a tax debt at any time within the 10 year limitation period but the
taxpayer cannot raise a defence that he or she has paid the debt if that
payment was made more than six years prior to the Minister’s action being
commenced. There is nothing in either the Income Tax Act or the Crown
Liability and Proceedings Act which prevents a taxpayer from asserting as a
defence to a claim that a debt is owed that the debt was paid, even in
circumstances where the taxpayer is otherwise prevented by a limitation period
from commencing an application seeking a declaration to that effect in
anticipation of collection litigation. It is always a defence to debt
collection to assert that there is no debt owed; the burden is on the debt
collector to establish on the balance of probabilities that there is an unpaid
found that s. 222 of the Income Tax Act does not apply to this
application, it follows that the limitation period set out in s. 32 of the Crown
Liability and Proceedings Act may apply. The question to be answered is
thus when, on the facts before us, this limitation period began running.
A cause of action is “[a] group of
operative facts giving rise to one or more bases for suing; a factual situation
that entitles one person to obtain a remedy in court from another person,” or,
more simply, “a set of facts that provides the basis for an action in court” (Black’s
Law Dictionary, 9th ed.; Markevich, above, at para. 27).
I agree with the respondent that the facts giving rise to the applicant’s cause
of action consist of the assertion by the respondent of a tax debt owed by the
applicant for the years 1985 and prior and the respondent’s collection actions
against the applicant to recover the tax debt.
The limitation period provided in the Crown Liability
and Proceedings Act begins to run
when an applicant knew or ought to have known that a cause of action existed: Central
Trust v Rafuse,  2 S.C.R. 147, at para. 77; Canada
(Attorney General) v Lameman, 2008
SCC 14, at para. 16. This principle, discoverability, applies to statutory
limitation periods unless it is displaced by clear legislative language: Ermineskin
Indian Band and Nation v Canada, 2006 FCA 415, at para. 333, aff’d 2009 SCC 9. Mr.
Doig says that he only realized that he had an alleged tax debt when CRA
retained a refund in 2005 and he investigated and was then informed by letter
5, 2006, that there was a balance forward, as at January 19, 1986, of
$57,575.06. He further asserts in his
affidavit of January 15, 2009: “From on or about 1992 until on or about 2004, I
do not recall receiving any statements relating to this alleged debt.”
The applicant’s credibility is
brought into question when one contrasts his statement with the following:
in July 1986 the applicant was
sent a Notice of Assessment that showed taxes owed for the 1985 taxation year
of $1,717.13 and a total outstanding balance of $58,798.87;
in each year from 1985 through
1996, the applicant received a Notice of Assessment that reflected a balance
forward that far exceeded the tax incurred in the taxation year under
the applicant was quoted his
outstanding balance forward in an amount that included the balance for the
prior period 23 times from September 17, 1987 to November 17, 1988;
the applicant was sent 13
statements from February 23, 1989 to September 8, 1992, showing the balance
owing for the prior period;
the applicant received 21 “legal
warnings” from CRA from June 22, 1989 to November 26, 1993 about the
outstanding balance owed; and
in the period between June 22,
1989 and January 29, 1997, the applicant made 10 promises to pay the balance
owing or to make arrangements to pay it.
The applicant no longer disputes
that he received annual notices of assessment from CRA. The evidence in the
record establishes that the applicant was aware of the claim that there was a
tax debt related to the prior period at least as early as July 1986 when his 1985
Notice of Assessment reflected that debt. Accordingly, the six-year limitation
period expired in July 1992, at the latest. Throughout that entire period of
time notices were sent to the applicant and conversations were had with him
concerning his outstanding tax debt. Indeed, the record shows that on January
29, 1997, after the expiration of the limitation period, the applicant met with
a collection officer and stated that he thought he would be able to obtain
approximately $68,000 from various sources to settle his account with CRA.
The evidence before the Court simply
does not support the applicant’s assertion that he was unaware of this tax debt
during the relevant period of time. Each notice of assessment sent to him reflected
the tax debt he now challenges. The first, the 1985 taxation year assessment
notice, showed that there was a tax debt due with respect to the applicant’s
income for that taxation year of $1,717.13 and a total balance outstanding of
$58,798.87. Each of the following assessment notices through to 1996 showed
the outstanding debt, albeit increased due to interest charges. Further, the
respondent has filed evidence of repeated attempts by CRA to recover the tax
debt: see Affidavit of Brian Just, paras. 23, 27, 28, and 31 and related
Exhibits at Tab 1 of Respondent’s Record. Therefore, I find that throughout
the 1990s the applicant had knowledge of the facts that form the basis of his
Accordingly, the application falls
under the limitation period prescribed by s. 32 of the Crown Liability and
Proceedings Act and it is statute-barred.
2. Undue Delay, Laches and Acquiescence
The same facts supporting the
operation of the statutory limitation period underlie the respondent’s argument
that the applicant is precluded from proceeding with this application on the
basis of the equitable doctrines of laches and acquiescence. In light of my
holding above, it is not necessary to deal with this defence to the
application, however, in the event that a higher court should disagree with my
finding regarding the limitation period, the submissions made by the parties
shall be briefly addressed.
The respondent relies on the
equitable defence of laches, as adopted by the Supreme Court of Canada in M.
(K.) v M. (H.),  3 S.C.R. 6. At para. 98, quoting R.P. Meagher et al,
Equity Doctrines and Remedies, 2d ed (Sydney: Butterworths, 1984), the
Supreme Court explained the conditions for the application of this defence:
has either] (a) acquiesced in the defendant's conduct or (b) caused the
defendant to alter his position in reasonable reliance on the plaintiff's
acceptance of the status quo, or otherwise permitted a situation to arise which
it would be unjust to disturb …
CRA relies on the applicant’s
knowledge of the tax debt, its attempts to collect the debt, and the prejudice
caused to it by the delay in bringing this application – namely the destruction
of records. For the same reasons the application is statute-barred, had the
statutory limitation period not applied, I would find that the doctrine of
laches would prevent the application from succeeding. Particularly important
is the fact that the applicant has delayed for so long in bringing this
application, knowing full well of the tax debt claimed by CRA. It is as a
direct consequence of that delay that documents were destroyed and the
respondent’s ability to prove its position has been compromised. It would be
unjust and unfair to permit this application to proceed in such circumstances even
if it were not statute-barred.
would add that although the applicant
suggested during an earlier pre-hearing motion that
destruction policies of CRA might provide evidence proving his position that
the past debts were paid, no submissions were made in this regard at the
there a debt owed by the applicant to the respondent for any of the following
taxation years: (i) 1971 to 1973; (ii) 1974 to 1979; or (iii) 1980 to 1984?
must first be noted that the Federal
Court does not have jurisdiction to entertain an application questioning the
validity of tax assessments; that is a matter within the exclusive jurisdiction
of the Tax Court: Optical Recording v Canada (1990), 116 NR 200 (FCA); Roitman
v Canada, 2006 FCA 266; Walker v Canada,
2005 FCA 393.
Mr. Doig states that he is not
questioning the validity of the assessments made nor is he suggesting that he
never received those notices of assessment. Rather, he says that he paid the
debts owing but was not credited with payment. The burden of proof falls
squarely on him to satisfy the Court on the balance of probabilities that he paid
1971 to 1973
parties agree that the debt owed with respect to these three taxation years was
paid by Mr. Doig, as evidenced by the Certificate filed in the Federal Court –
Trial Division on May 21, 1976.
Doig asserts that this past debt was improperly carried forward and that he was
not credited with having paid it. However, there is no evidence at all to
support this assertion. There is no evidence that the 1971 to 1973 debt was
carried forward and now forms part of the debt that CRA claims is owed, nor is
there any evidence that CRA failed to credit Mr. Doig’s account with his payment.
Mr. Doig has failed to meet his burden of proof and the Court finds that no
part of the debt now claimed arises from the tax once owed for the period 1971
agree with the submission of the respondent that “a payment made in 1975, in
relation to a 1971 [to] 1973 tax debt is not sufficient evidence to contradict
a statement of account which shows in January 1984, taxes were owed for years
prior to 1982.” The applicant’s assertion that part of the debt now claimed
relates to this period in the early 1970s amounts to no more than supposition
and speculation. His own evidence is to that effect: “It is my belief
that when the Sudbury collections office
became aware of the 1975 Certificate that it mistakenly concluded that I had
never paid the tax debt” [emphasis added]. The applicant fails to provide any
grounds for that belief and, given that there are eight taxation years after
1973 and prior to 1982 to which the debt recorded at January 1984 could
relate, much more than the applicant’s belief would be required to find that
the payment he made had not been credited to his tax account.
1974 to 1979
applicant attests that he made two payments to CRA in this period from funds his
wife raised by placing mortgages on her cottage property. He has filed as
exhibits copies of these two mortgages. He says that there were no collection
efforts taken by CRA from 1979 to January 1984 and he was not advised of any
outstanding tax debt. He states that he believed that he had no outstanding
debt. As noted previously, the respondent has no record of the applicant
having made either payment.
is no objective evidence filed by the applicant to support his assertion that
the money from these mortgages was paid over to him by his wife and that he
then paid the money to CRA. The applicant did not file, as one would have
expected, an affidavit from his now former wife supporting his statement that
she borrowed this money in order that he could satisfy the tax debt nor were any
cancelled cheques provided from either the applicant or his former wife showing
a payment to CRA. There was no explanation offered for why such evidence was
applicant’s evidence is not consistent with the documentary record and brings into
question his credibility concerning these alleged payments. In his affidavit
sworn September 1, 2010, he attests: “The 1975 Certificate was lifted to allow
me to make the payments from the mortgage proceeds.” The 1975 Certificate related
to the arrears for taxation years 1971 to 1973. A copy of the 1975 Certificate
filed with the Court on May 21, 1976, shows that it was paid, and paid almost two
years before the payments the applicant alleges he made from the mortgage
record reveals that this cottage property had been owned by Mr. Doig until
March 13, 1978, when he transferred title to it to Helen Teahen for $2.00 and
other consideration. She took out the first mortgage on the property only five
days later. The transfer of the property could not have occurred if the writ
of fieri facias filed with the local Sherriff’s office had been active.
accept that the property was mortgaged twice and for the amounts that the
applicant states. However, in light of questions relating to the applicant’s
credibility, his assertion that he made the payments to CRA requires some
objective evidence to support it. There is none. The applicant has failed to
establish, on the balance of probabilities, that he made payments of some
$22,000.00 in the period 1974 to 1979 that CRA failed to credit to his tax
1980 to 1984
Doig says that he heard nothing from CRA from 1979 to 1984 and therefore he was
unaware that CRA was of the view that he owed any tax arrears. At the hearing,
his counsel confirmed his position that he had paid all amounts owing as of
January 1, 1984.
the record before the Court relating to the tax situation in the early 1980s
brings into serious question the applicant’s statement that he was of the view
that his account with CRA was current.
January 1, 1984 and July 5, 1984, the applicant made payments to the CRA
totalling $3,527.00 and the CRA seized a total of $25.88 from him. This was
despite allegedly knowing that his account with the CRA was clear as of January
July 1984, the applicant was assessed taxes for the 1983 taxation year of
$5,677.76. Thereafter he made payments of $11,066.45 and had $1,430.41 seized
from him. Accordingly, in 1984 he paid to the CRA and had seized a total amount
($12,496.86) greater than the amount he owed specifically in relation to the
1983 taxation year ($5,677.76). If Mr. Doig had not had a debt relating to
years earlier than 1983, CRA would have been indebted to him for an overpayment
of $6,819.10, in addition to the $3,552.88 the CRA would have owed him for the
earlier excess payments and seizure. Despite having allegedly paid off all
amounts owing to the CRA as of January 1, 1984, the applicant continued to make
regular payments to the CRA without ever demanding a refund of the $10,371.98
that would have been owed to him by the CRA.
one accepts the applicant’s claim that he did not know that there was a debt
claimed for the prior period, then one must find it reasonable that the
applicant, without objection, made tax payments and permitted CRA to garnish
sums from him when CRA was indebted to him and not vice versa. One would also have
to find it reasonable that the applicant did not question why he did not
receive a refund from CRA. I find neither to be a reasonable or expected
response, particularly the latter given that in 2005 he questioned why CRA
retained what he described as a “small refund” owed to him.
the respondent submits, not only did the applicant not dispute the debt from
the prior period, he made promises to pay the debt on a number of occasions.
find that the conduct of the applicant, as described above, coupled with the
evidence of the respondent that the notices of assessment sent to him reflected
the tax owed from the prior period, puts into serious question the applicant’s
statement that he was led to believe that there was no tax debt from the prior
find that a taxpayer, in light of these facts, would have to be wilfully blind
not to be aware that CRA was claiming that a debt was owed from the prior
applicant’s application is statute-barred. If it were not statute-barred, then
it would have been dismissed due to the applicant’s undue delay and the
application of the doctrine of laches. In any event, the applicant has failed
to establish on the balance of probabilities that he made the necessary
payments on account of tax arrears for the period prior to the 1985 taxation
year. His application is dismissed.
parties are agreed that an appropriate award of costs to the successful party
in this matter is $15,000.00, inclusive of fees, disbursements and taxes.
THIS COURT’S JUDGMENT is
that this application is dismissed and the respondent is
awarded costs fixed at $15,000.00, inclusive of fees, disbursements and taxes.
“Russel W. Zinn”