Date: 20121116
Docket: A-432-11
Citation: 2012 FCA 294
CORAM: NOËL
J.A.
PELLETIER
J.A.
MAINVILLE
J.A.
BETWEEN:
PIERRE GOUGEON
Appellant
and
Her Majesty The Queen
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1]
This
is an appeal from a decision of Justice Angers of the Tax Court of Canada
(the Tax Court judge), under the informal procedure, confirming an assessment
made with regard to Pierre Gougeon (the appellant) pursuant to section 323
of the Excise Tax Act, R.S.C. 1985, c. E-15 (the Act). According to
the assessment in question, Quadrisart Canada Ltd., a company of which the
appellant was the sole shareholder, owed a total of $10,015.92 in unpaid goods
and services tax (GST), plus interest and penalties.
[2]
In
support of his appeal to the Tax Court judge, the appellant, who represented
himself, made two submissions. First, he attempted to show that he had acted
with due diligence, and hence that he was not liable under
subsection 323(1) of the Act. Second, he submitted that the amounts
claimed from him as director had been paid but had not been applied against
Quadrisart’s debt as they should have been.
[3]
The
appellant relied on this second argument at the hearing before this Court. He
argued that, in dismissing his appeal, the Tax Court judge did not take into
account the fact that the payments had been made, and that the onus was on the
respondent to prove that Quadrisart’s debt was still outstanding.
[4]
The
GST claimed covers the period from February 28, 2006, to February 29,
2008. The amount assessed is based on the returns filed by Quadrisart for these
periods and is therefore not in dispute. The notice of appeal filed by the
appellant alleges that the amounts in question were indeed remitted to the
Ministère du revenu du Québec (the MRQ), as agent of the Department of National
Revenue, but for some unexplained reason, they were not applied against the
unpaid GST, as they were supposed to have been (Notice of Appeal, paras. 6
(a), (d) and (e)).
[5]
This
allegation was denied in the reply to the notice of appeal signed by a lawyer
from the MRQ’s litigation service on behalf of the respondent. However, the
reply was not filed within the prescribed time (i.e., within 60 days after the
date the notice of appeal was served), and the motion to be relieved from this
requirement was denied because the required affidavits were not annexed to that
motion. Instead of filing a new motion, as the presiding judge invited him to
do, the lawyer elected to proceed to trial without having been relieved from
his default.
[6]
The
consequences of this choice are significant. According to section 18.3003 of
the Tax Court of Canada Act (R.S.C. 1985, c. T-2), not only the
respondent may no longer benefit from the presumption that her assessment is
valid, but the allegations of fact contained in the appellant’s notice of
appeal are “presumed to be true”.
[7]
In
his reasons, the Tax Court judge only addressed the issue of whether the
appellant had acted diligently. No mention was made of the submission that the
amounts claimed had been duly paid and misapplied. The notice of appeal, the
reply and the hearing transcript (Hearing Transcript of August 31, 2011,
Appeal Record, Tab 21, pp. 80 to 83) all show that this argument was
most clearly and unmistakably set out before the Tax Court judge.
[8]
The
matter could be referred back to him for reconsideration. However, we have
before us all the evidence needed to dispose of this issue, and judicial
economy will be better served if we address the issue ourselves.
[9]
The
evidence shows that, at the trial, to substantiate his argument that the GST payable
had been paid, the appellant filed a table, with supporting documents, setting
out the payments made on behalf of the MRQ during the period before the
assessment was made (Exhibit A-10, Appeal Record, Tab 15). The amounts in
question greatly exceed Quadrisart’s debt which, according to the respondent’s
arguments, remains unpaid. The appellant was not cross-examined regarding the
payments made according to the table, except to have him state that he had
prepared the table himself using his account ledgers (Hearing Transcript of
August 31, 2011, Appeal Record, Tab 21, p. 80, lines 24 and
25; p. 81, line 1).
[10]
The
only evidence offered by the respondent to counter the appellant’s argument is
the testimony of the MRQ officer who was asked to make the assessment regarding
the appellant. According to her testimony, her work had been limited to noting
that a notice of bankruptcy had been issued with regard to Quadrisart and that
the appellant was registered as the company’s sole director. She also confirmed
that the amount of the assessment had been established on the basis of returns
that the appellant himself had completed on Quadrisart’s behalf (Transcript of
June 28, 2011, Appeal Record, Tab 23, pp. 20 to 26).
[11]
This
evidence is clearly insufficient to counter the appellant’s statement in his
notice of appeal to the effect that the amounts on which the assessment is
based were paid but misapplied, a statement which, I would point out, must be
presumed to be true.
[12]
Given
a shift of the burden of proof, and given the additional evidence that was
filed by the appellant and regarding which he was not cross-examined, the onus
was on the respondent to show either that the amounts in question were not
remitted to the MRQ or that, if they were remitted, that these amounts did not
have to be applied against Quadrisart’s debt, as the appellant argues.
[13]
No
evidence regarding the first element was filed. Regarding the second element,
the appellant cross-examined the MRQ officer at length regarding how the
amounts paid to the MRQ were supposed to be applied. This series of questions
gave rise to a general discussion to which the Tax Court judge eventually put
an end by the following comment (Transcript of August 31, 2011, p. 16,
lines 11 to 14):
[translation]
. . . I cannot start changing the payments
that should have been made, be they to the federal government or to the
provincial government; that is not within this Court’s province.
[14]
With
respect, that was not the issue at hand. The only issue that the Tax Court
judge had to dispose of was whether the respondent had met her burden of
proving that the amounts paid to the MRQ had been applied as they were supposed
to have been and that the debt of Quadrisart for which the appellant was liable
as director was still unpaid at the time the assessment was made. If he had
considered that issue, he would have had no alternative but to find in favour
of the appellant because the respondent had not completed a reconciliation of
the amounts paid or even tried to do so.
[15]
I
would therefore allow the appeal, and rendering the judgment that the Tax Court
judge should have rendered, I would allow the appeal and vacate the assessment
dated January 6, 2009,
for the period from February 28, 2006, to
February 29, 2008. The appellant is entitled to the disbursements he
incurred to perfect his appeal.
“Marc Noël”
“I agree.
J.D.
Denis Pelletier J.A.”
“I agree.
Robert M. Mainville J.A.”
Certified true translation
François Brunet
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