Docket: A-430-13
Citation:
2014 FCA 297
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CORAM:
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DAWSON J.A.
STRATAS J.A.
NEAR J.A.
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BETWEEN:
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MINISTER OF NATIONAL REVENUE
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Appellant
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and
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CONOCOPHILLIPS CANADA
RESOURCES CORP.
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Respondent
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REASONS
FOR JUDGMENT
DAWSON J.A.
[1]
The genesis of this appeal is a dispute between the
Minister of National Revenue and the respondent taxpayer ConocoPhillips Canada
Resources Corp. about whether a notice of reassessment in respect of
ConocoPhillips’ tax year ending November 30, 2000 was mailed to ConocoPhillips
on November 7, 2008. The Minister takes the position that the notice of
reassessment was so mailed. ConocoPhillips takes the position it was not.
[2]
The dispute is of signal importance to
ConocoPhillips. Under the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.) (Act), income tax assessments are deemed to be valid and binding unless
varied or vacated on an objection or appeal (subsection 152(8)). In order to
object to an assessment, a taxpayer must serve a notice of objection on the
Minister within a specified timeframe; in the present case the notice of
objection was required to be served within 90 days of the date on which the
notice of reassessment was mailed (subsection 165(1)). On receipt of a notice
of objection, the Minister is obliged, with all due dispatch, to “reconsider the assessment and vacate, confirm or vary the
assessment or reassess,” and to notify the taxpayer in writing of the
Minister’s action (subsection 165(3)). If the Minister has not confirmed,
vacated or varied the assessment within 90 days of receiving the notice of
objection, the taxpayer may appeal the assessment to the Tax Court of Canada
(subsection 169(1)).
[3]
In the present case, ConocoPhillips states that
it first learned of the reassessment on April 14, 2010. On June 7, 2010,
it filed a notice of objection. In response, the Minister’s delegate advised
that he would not consider the objection on the ground that it was untimely.
[4]
On October 15, 2010, ConocoPhillips filed a
notice of application in the Federal Court seeking judicial review of the
Minister’s delegate’s decision not to consider the notice of objection. For
reasons cited as 2013 FC 1192, a judge of the Federal Court allowed the
application for judicial review and set aside the decision not to consider the
objection. In the Judge’s view, the Federal Court had jurisdiction to entertain
the application and the decision of the Minister’s delegate was unreasonable.
[5]
This is an appeal from that decision.
[6]
For the reasons that follow, I have concluded
that the Federal Court lacked jurisdiction to entertain the application for
judicial review. It follows that I would allow the appeal on the basis set out
below.
[7]
Section 18.5 of the Federal Courts Act,
R.S.C. 1985, c. F-7 insulates from judicial review a decision of a federal
board, commission or other tribunal if an Act of Parliament expressly provides
for an appeal to, among other courts, the Tax Court.
[8]
In the present case, ConocoPhillips’ proper
recourse was to commence an appeal to the Tax Court under paragraph 169(1)(b)
of the Act and to demonstrate in that appeal that its notice of objection was
filed on a timely basis. It is within the jurisdiction of the Tax Court to
determine whether the notice of reassessment was in fact mailed as the Minister
alleges. This it will do on a full evidentiary record with regard to the
statutory presumption found in subsection 244(14) of the Act (which presumes a
notice of reassessment to have been mailed on its date). See: Walker
v. Canada, 2005 FCA 393, 344 N.R. 169, at paragraphs 11 to 13. It is open
to ConocoPhillips to request that the question of the timeliness of its notice
of objection be determined before the trial pursuant to Rule 58(1) of the Tax
Court of Canada Rules (General Procedure), SOR/90-688a.
[9]
At paragraph 8 of his reasons, the Federal Court
Judge expressed the view that paragraph 169(1)(b) of the Act did
not apply because “the conditions precedents [sic]
do not exist”. To similar effect, in this Court ConocoPhillips argues
that it is entitled to have the Minister reconsider the notice of reassessment
on the ground that subsection 165(3) obliges the Minister to reconsider an
assessment “with all due dispatch” when served
with a notice of objection. ConocoPhillips argues that the only way that it can
have its right to reconsideration respected is by having the Federal Court
resolve the timeliness issue and, if resolved in ConocoPhillips’ favour,
ordering the Minister to reconsider under subsection 165(3) of the Act.
[10]
It is uncontroversial that subsection 165(3)
obliges the Minister to reconsider an assessment when served with a notice of
objection. The flaw in ConocoPhillips’ position is that the ministerial
obligation is triggered only when a notice of objection is served within the
time frame mandated by the Act. ConocoPhillips cannot argue that the Minister’s
failure to consider a notice of objection that may or may not have been filed
on a timely basis takes ConocoPhillips out of the statutory scheme contained in
the Act and out of the specialized expertise of the Tax Court. This argument
begs the question as to the proper forum to determine if, or when, the notice
of reassessment was mailed, and when the time for filing a notice of objection
expired.
[11]
Without expressing any opinion on the timeliness
issue, should the Tax Court find the notice of objection was in fact filed on a
timely basis the Minister will be under a legally enforceable duty to
reconsider the notice of reassessment. The Tax Court may facilitate this by
adjourning or staying the appeal.
[12]
For these reasons, the Federal Court erred by
finding that a condition precedent to the operation of paragraph 169(1)(b)
was not met.
[13]
It follows that I would allow the appeal with
costs. Pronouncing the judgment the Federal Court ought to have pronounced, I
would dismiss the application for judicial review with costs in the Federal
Court.
“Eleanor R. Dawson”
“I agree.
David
Stratas J.A.”
“I agree.
D.
G. Near J.A.”
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