Citation: 2007TCC482
Date: 20070905
Docket: 2005-1588(IT)APP
BETWEEN:
BETTY HICKERTY,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
AMENDED REASONS FOR ORDER
Boyle J.
[1] The taxpayer has made an application to
late file a notice of appeal in an informal appeal of her income tax reassessments
for 1998 and 1999. The application arises because Mrs. Hickerty mailed her
appeal addressed to the Tax Court and to the Canada Revenue Agency in a
timely fashion but used a street address in Ottawa that was not the Court
Registry’s address. It was in fact an address for the CRA that she was given by
a CRA information officer on its telephone helpline as the address for filing
her Tax Court appeal. Her appeal was prepared and mailed by her after hearing
her objection was not going to be successful but before receiving the
information package from CRA Appeals on appealing its decision on the
objections to the Tax Court. This was her uncontradicted testimony and is
corroborated by the dates of the relevant written correspondence. I accept her
version of the events entirely as the Crown neither put forward any alternative
version nor questioned the correctness of her testimony.
[2] The Crown has objected to this application primarily
on the basis that it was brought more than one year and 90 days after the
date of the reassessments. Neither the Crown nor the Applicant put in evidence
copies of the reassessments. The only evidence is that on July 8, 2003,
CRA Appeals wrote a letter explaining the objection would be only partly allowed,
together with a schedule T7WC setting out the numbers and indicating that the
reassessments would be issued separately. The Applicant confirmed that she did
receive reassessments separately. The Applicant’s wrongly addressed appeal to
the Court was dated four days later – July 12, 2003.
[3] The appeal Mrs. Hickerty mailed was never
received by the Registry of the Tax Court. The Court received a copy of it from
Mrs. Hickerty in December 2004 after she became aware of the problem.
This copy accompanied her late filing application.
[4] It is the Crown’s position that the Applicant’s
initial appeal cannot constitute appealing for purposes of section 169 of the Income
Tax Act within 90 days of the date of the reassessments. It
appears that subsection 18.15(3.2) of the Tax Court of Canada Act
precludes a notice of appeal that is never received by the Registry from being
a properly instituted appeal under section 175 for purposes of section 169.
[5] It is the Crown’s further position that when a copy of
that initial appeal was received by the Court in December 2004, it was
received more than 90 days after the reassessments and could not be
considered to validate the institution of the appeal. CRA’s letter advising
that reassessments would issue was dated July 8, 2003. Unless CRA
took more than a year to issue the reassessments, December 2004 was not
within the 90 day period. I, like other tax professionals, know that the
reassessments would be issued by a separate group within CRA than the Appeals
group that authored the July 8, 2003 letter and the attached T7WC and
that such reassessments are often dated and received sometime later than the
letter and T7WC from CRA Appeals. However, Mrs. Hickerty’s testimony was
consistent with the reassessments having been received in the ordinary course,
not more than one year later.
[6] Since I have concluded Mrs. Hickerty has not
properly instituted an appeal, I turn to her application to file an appeal
outside the ordinary timeframe of 90 days. In order for this application
under subsection 167(5) to be granted, I must be satisfied of five things.
[7] Firstly, the Applicant must have had a bone fide
intention to appeal within the normal 90 day period. In this case, I am
entirely satisfied she did. Indeed, her resolve to appeal the decision of her
objections to the Tax Court had her filing her initial ill-addressed appeal
within days of being aware of the outcome of her objections, and before receiving
Appeals’ letter of July 8, 2003. This diligence, resolve and haste are
why she needs to bring this application. This is very different than the many
applications that result from delay.
[8] Secondly, the application to late file must be brought
as soon as circumstances permit. I am again satisfied on the facts before me
that this requirement is met. The Applicant became aware of the fact her
initial appeal was wrongly addressed sometime in October 2004. This was
relayed to her in a telephone conversation with CRA and CRA’s letter to her confirming
this was dated November 16, 2004. Her application to the Court (which
is what CRA suggested in its November letter that she do) was made on
December 10, 2004.
[9] Thirdly, I must conclude that there are reasonable
grounds for the appeal. The Crown did not contest that there were reasonable
grounds for the appeal. The notice of appeal goes through the issues of
business use and business expenses in some detail. I am satisfied on this
point.
[10] Fourthly, I must conclude that granting the order
would be just and equitable in the circumstances. In this case, I am satisfied
that it is just and equitable for the Order to be granted and I am prepared to
grant the application provided the fifth requirement is met. To my mind, the
facts of this case speak for themselves:
1)
The taxpayer sought to
appeal to this Court virtually immediately upon hearing of CRA Appeals’
decision on her objections;
2)
She prepared and mailed
her notice of appeal to the Court;
3)
Her mistake was to
wrongly address it. She called CRA’s information line for the Court’s address
and mailed it to the address she was given. Unfortunately, that was an
incorrect address. But for that, this application would not be necessary and
this Court would be proceeding to hear the merits of her appeal;
4)
After mailing her initial
appeal document in July 2003, the first reference in her written and oral
evidence to her being contacted by CRA Collections was in October and
November 2004. Not hearing from Collections following the filing of a
notice of appeal is consistent with having instituted a valid appeal and the collection
restrictions in section 225.1 applying as a result;
5)
After filing her
initial July 12, 2003 appeal, the Applicant heard a Canadian radio
program on income tax disputes from which she understood that the hearing of an
appeal with the Canadian Tax Court could be a slow and lengthy process; and
6)
The Applicant is far
from the only taxpayer to not fully understand the Tax Court’s separate
existence from CRA generally or from CRA’s Appeals Directorate specifically.
Indeed, during the week this application was heard, I heard four other appeals
and one intervention addressed to the Tax Court at a CRA address. The
difference seems to be that in those cases CRA did forward the appeals to the
Registry of the Court. Each of those parties had also been provided with the
CRA information sheet on how to appeal to the Tax Court.
[11] This leaves only the fifth requirement to be
satisfied. That requires that this application have been brought within one year
of the normal 90 day period for filing the appeal following receipt of the
reassessments. If the reassessments were dated July 8, 2003, this
application would have to have been brought within one year of
October 6, 2003. Since the application was dated December 10, 2004
this condition could not be met unless the period during which the Applicant
was under the reasonable but mistaken misapprehension that she had validly
instituted her appeal does not count in the calculation of the further one year
period. If not, this application could not succeed unless the reassessments
were not issued by CRA until early September 2003, some two months after
its July 8, 2003 letter. Unfortunately, that evidence is not before
the Court and, while that period may be within the bounds of CRA’s ordinary
course, the Applicant has not met her onus to show that that was the case.
[12] Thus I return to the question whether the time the Applicant
was under the mistaken misapprehension that she had validly instituted her
appeal is included in the one year grace period. In the circumstances, I am of
the view that the period during which the taxpayer is under a reasonable but
mistaken belief that she has validly instituted an appeal is not included in
the further one year grace period provided for in paragraph 167(5)(a).
This issue does not appear to have been previously considered by the Court with
respect to either late filed objections or appeals. An interpretation
favourable to the taxpayer is consistent with this Court’s expressed preference
to have taxpayers’ tax disputes heard and resolved on their merits, especially
in the absence of any prejudice to the Crown. To interpret and apply this differently
would deprive a taxpayer of the right to have an appeal that she reasonably believed
for a period of just less than five months to have properly instituted, heard
on its merits, where there was nothing else she could reasonably have been expected
to do during that period. In most cases, the one year period will be a calendar
year plain and simple. However, if a taxpayer mistakenly but reasonably
believes that she has validly instituted an appeal and the other requirements
of subsection 167(5) are met, the one year grace period stops running until the
taxpayer becomes aware, or should have become aware if she is acting and
thinking reasonably, that the intended appeal was invalid. That is, there will
come a point when a taxpayer’s mistaken belief may cease to be reasonable but,
on the facts of this case, it was reasonable for her to continue to so believe
until at least December 10, 2003, even if it may have ceased to be reasonable
by December 10, 2004.
[13] This case and this last issue are significantly
different than the issues of awareness and understanding of an assessment, and of
discoverability, considered by the Federal Court of Appeal in the case of H.
M.Q. v. Carlson, 2002 DTC 6893. In that case, the taxpayer
had not even objected to his tax assessments issued in 1993 until he
sought to late file his objection in 1999, some five years later. The
Court of Appeal concluded he could not be helped because he was “neither
diligent nor reasonable in the way he conducted himself following service of
the Notice of Assessment.”
[14] Another case referred to by the Crown, Schiavone v. H.M.Q., 2002 DTC 2023
(TCC), also involved a delay of some five years in seeking to late file
an appeal to the Court which delay was not explained in the Reasons.
[15] I note that in the third case referred to by the
Crown, Meer v. H.M.Q., 2001 DTC 648, this Court
concluded in paragraph 16 that it was reasonable for a taxpayer to be under a
continuing mistaken belief that his appeal had been instituted for a period of
five months.
[16] For these reasons I am granting Mrs. Hickerty’s
application. For the same reasons, I will also be granting Mr. Hickerty’s
identical application made on identical facts and heard on common evidence.
These Amended Reasons for Order are
issued in substitution for the Reasons for Order dated
August 22, 2007.
Signed at Ottawa, Canada, this 5th day of September 2007.
"Patrick Boyle"
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