Citation: 2011 TCC 569
Date: 20111221
Docket: 2011-2377(IT)APP
BETWEEN:
SONJA MELANSON,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR SUSPENDING JUDGMENT
Hershfield J.
[1] The Applicant seeks an extension of time to file a
Notice of Objection to two assessments: one for the 2005 taxation year and the
other for the 2006 taxation year. The subject assessments were both dated March
17, 2009.
[2] The Respondent asserts by affidavit signed by an
appeals officer of the Revenue Canada Agency (the “CRA”) in September, 2011 (the
“CRA’s First Affidavit”), that a
Notice of Objection in respect of both assessments was not served on the
Minister of National Revenue (the “Minister”) until January 7, 2011. The
Notice of Objection was not on a T400A form but was a letter (the Applicant’s “2011
Objection Letter”) addressed to the Chief of Appeals at the appropriate CRA
office as required under subsection 165(2) of the Income Tax Act (the
“Act”).
[3] The Applicant was advised by letter dated January 27,
2011 that her 2011 Objection Letter could not be accepted as it was not filed
within the time required by the Act and that a time extension was not
possible as the time to request an extension had expired as well.
[4] Notwithstanding being advised of the expiry of
limitation periods, on April 14, 2011 the Applicant served the Minister with applications
for extensions of time within which to file Notices of Objection for the
subject years. By letter dated May 18, 2011 the Minister informed the Applicant
that the time extensions could not be granted as the applications were not
filed within the statutory time limits.
[5] An application for an extension of time was filed with
the Court on June 30, 2011.
[6] The Respondent submits that the application to the
Court is beyond the year and 90 day limitation period imposed by paragraph
166.2(5)(a) of the Act and an extension cannot be granted. The 90 day portion
of this time limit to file an objection is set out in subsection 165(1) of the Act
and the additional one year time allowance to apply to the Court for a time
extension is covered under paragraph 166.2(5)(a) of the Act.
[7] The authorities supporting the Respondent’s submission
are numerous. Regardless, the Reply to the application asserts that the other
requirements that need to be met pursuant to paragraph 166.2(5)(b) of the Act
have not been met. The hearing of the application did not address this issue.
[8] The one year and 90 day limitation period for the
subject applications ends on June 15, 2010. On the face of it then, it should
be clear that the applications made in June, 2011 were well beyond the
limitation periods set out in both subsections 166.1(7) (applicable to the
Minister) and 166.2(5) of the Act (applicable to this Court).
[9] On the other hand, the uncontradicted and credible
evidence of the Applicant was that the Notice of Objection in respect of
both assessments said to have been served on the Minister on January 7, 2011
had been previously sent to the CRA. Indeed, she submitted a copy of the
earlier correspondence (the Applicant’s “First Letter”) which was almost
identical to the Applicant’s 2011 Objection Letter. The relevant difference
between this, the Applicant’s First Letter, and the Applicant’s 2011 Objection
Letter (that the CRA’s First Affidavit acknowledged was accepted as a Notice of
Objection albeit late filed) was that unlike the Applicant’s 2011 Objection
Letter, her First Letter was not addressed to the Chief of Appeals at the
appropriate CRA office as required under subsection 165(2) of the Act.
[10] At this point, I note that the affiant of the CRA’s
First Affidavit swore a second affidavit which was filed with the Court after
the hearing at my request (the “CRA’s Second Affidavit”). I will discuss that
affidavit again shortly but for now it is important to note that it
acknowledges the receipt of prior correspondence from the Applicant. Two such
letters are referred to but none are appended to this affidavit. Two
replies are appended to it and both give instructions as to how to file an
objection in accordance with subsection 165(2) of the Act. The latest of
those two letters served on the CRA was received by it on June 17, 2009. The Applicant
could not remember when the subject First Letter was sent and would therefore
be unable to say with certainty that the letter received by the CRA on June 17,
2009 was the letter she tendered at the hearing as her First Letter. Still, the
question arises as to the likelihood that this letter received on June 17, 2009
was the letter tendered at the hearing by the Applicant and identified in these
Reasons as her First Letter. I find that on a balance of probability it was.
The Respondent’s failure to produce the June 17, 2009 letter, after being given
the opportunity to do so, does little to dissuade me of this finding.
[11] Before moving on to yet another question raised by the
CRA’s Second Affidavit, I note here that there was yet another letter from the
Applicant received by the CRA and referred to in the CRA’s Second Affidavit
that supports my finding that the Applicant’s First Letter was sent in June,
2009. It is a March, 2011 letter and a copy of it is appended to that
affidavit. It is a third letter but again it is almost identical to the Applicant’s
two other letters. Scrutiny of the Applicant’s correspondence supports my accepting the likelihood that her
letter of June 17, 2009 was the letter she tendered as her First Letter or if
not, it would not have been dissimilar from any of her other letters before the
Court. That is to say,
I have come to the conclusion that there were three essentially identical
objection letters written by the Applicant. The March 7, 2011 letter is
distinct in that the
indentation of the addressing directive to the Chief of Appeals is different
than that of the Applicant’s 2011 Objection Letter which in turn is distinct
from her First Letter which was not addressed to an appeals officer. This
suggests to me that the Applicant has been sending essentially the same letter
to the CRA over and over with barely detectable changes.
That, in all likelihood, includes the letter of June 17, 2009.
[12] Yet another question raised by the CRA’s Second
Affidavit is why the reply to the Applicant’s letter received on June 17, 2009
did not advise the Applicant that any objection would be past the 90 day time
limit. It was already two days past the 90 day limit when that letter was
received. That is, it might have been appropriate to advise the Applicant, at
that time, that an application for an extension of time had to be made as soon
as circumstances permitted but no later than June 15, 2010. A further caution
that reasons for delays should be given and that further delays could result in
an application being denied, might have been appropriate as well. Had such
assistance been offered and a resulting application been made, I have little
doubt that the Minister would have granted an extension. Ironically, the
Respondent, in a written submission to the Court, argued that even if the letter
received by the CRA on June 17, 2009 was the letter the Applicant tendered at
the hearing as her First Letter, it was late filed and having failed to give
reasons for being late (two days), it could not have been accepted, pursuant to
the requirements of subsection 166.1(2) of the Act as an application for
an extension. That subsection requires that reasons for late filing be given in
an application.
[13] This submission was made in response to my request that
the Respondent assist the Court in identifying the date of the Applicant’s
First Letter. The reasoning was that if a letter that was later accepted as a
Notice of Objection could be confirmed to have been received earlier, then the
earlier receipt date might be accepted as the date the objection was received and
the date of an application for an extension for the purposes of sections 166.1
and 166.2 of the Act. My experience has demonstrated that the CRA has,
in appropriate circumstances, acceded to such reasoning in the past. However, no
such concession was made in this case ostensibly because of the two day issue
and the asserted need for strict compliance with subsection 166.1(2).
[14] The Respondent’s argument that the Minister in this
case would not accept the Applicant’s June 17, 2009 letter as an application
for an extension, has two components. First, as noted, it did not meet the
requirement of subsection 166.1(2) that the application provide reasons for
being late and second, because it did not meet the addressing requirements of
subsection 166.1(3). As to the latter requirement, I note the Minister has
discretion to overlook it pursuant to subsection 166.1(4). As noted earlier, it
strikes me as unlikely that the Minister would have refused to grant an
extension in this case. The Applicant’s June 17, 2009 letter can implicitly be
taken as an application for a two day extension of time to file an objection
and calling on the Minister to exercise the discretion granted in subsection
166.1(4). The subject letter expresses sufficient personal hardships as to
explain the delay in this case. The words “I am late because” do not have to
appear in an application to satisfy the requirements of subsection 166.1(2). The
Minister is certainly entitled if not required to read-in probable reasons for
such a delay as might be gleaned from the correspondence.
[15] The second component of the Respondent’s argument deals
with the addressing requirement in subsection 166.1(3). Respondent’s counsel
relied on the Federal Court of Appeal decision in Pereira v. R., 2008
FCA 264. The background to
that case was that Justice Bell of this Court in an earlier case, Haight v.
R., [2000] 4 C.T.C. 2546, held that the addressing requirement in
subsection 166.1(3) was directory not mandatory. Justice Bowie in Pereira disagreed and held it to be mandatory. The Federal
Court of Appeal favored Justice Bowie’s finding and went so far as to say that Haight
was wrongly decided. With respect, I do not see that decision as necessarily
preventing an officer of the CRA referring a document to the appropriate
section of the CRA where it is abundantly clear that the document should be
read as one requiring such referral in order for it to have any effect. With
respect, I do not see the subject legislative provisions or the decision in Pereira as going so far as to say to a CRA
officer: you must return an application to an applicant with an instruction to
send it to the officer upstairs because the statute says you cannot walk it up
the stairs yourself.
[16] Justice Bowie in Pereira reasoned that it would be difficult or impossible for the
agency to keep proper records and to ensure dealing with objections with due
dispatch as required by subsection 166.1(5) if the addressing requirement was
not mandatory. While, as confirmed by the decision of the Federal Court of
Appeal, no fault can be found with that reasoning, there may be cases where CRA
personnel can reasonably be expected to assist an applicant comply with the
mandate in subsection 166.1(3). I do not mean to ignore the administrative
expediency requirement to send certain documents to the right sections of the
CRA. Time sensitive documents cannot just be turned over to any CRA officer
where there is a requirement to see that they are sent to the officer charged
with the responsibility to monitor them. However, that is no reason for a CRA
officer not to re-direct a document to assist taxpayers where the circumstances
clearly warrant it.
[17] Returning to the CRA affidavits, I take exception to
the affiant in the CRA’s First Affidavit stating that “after careful
examination and search of the records” there was no record of a Notice of
Objection being filed before January 7, 2011. While that may have been a true
statement in the mind of the affiant, and while no bad faith is being
suggested, it is my view that a careful review of the record should have
included fuller and better disclosure of the type contained in the CRA’s Second
Affidavit. One might hope that Respondent’s counsel might have had a less
defensive view of this matter had she been aware at the outset that the CRA
correspondence failed to advise the Applicant that she needed to apply for an
extension as opposed to telling her how to address her objections in its
response to the Applicant’s letter received on June 17, 2009.
[18] Considering that the Minister’s reply to the June 17,
2009 correspondence misdirected the Applicant, I am of the view that it would
be in the interests of justice for the Minister to apply those provisions of
the Act that would allow an extension of time to file the subject
objections. I refer to the Minister as there are numerous authorities that
underline that the forgiveness type provisions that extend to the Minister in
provisions such as subsections 165(6), 166.1(4) and 220(2.1) of the Act,
do not extend to this Court.
[19] Two approaches are open for the Minister to take. First,
I am of the view that it is open for the Minister to accept the letter received
on June 17, 2009 as a late filed application for an extension and accept that
the reason for being two days late was self-evident, and waive the requirements
of section 166.1(3) pursuant to subsection 166.1(4). As stated the Minister has
more authority in respect of this approach than does this Court.
[20] The second approach is to look to subsection 220(2.1)
of the Act.
220(2.1)
Waiver of filing of documents -- Where any provision of this Act or a
regulation requires a person to file a prescribed form, receipt or other
document, or to provide prescribed information, the Minister may waive the
requirement, but the person shall provide the document or information at the
Minister’s request.
[21] A plain reading
of this provision suggests that the Minister has the power to accept the June
17, 2009 letter – the one sent just two days after the expiration of the 90 day
period to file an objection – as constituting a valid notice of objection in
more than one way. First, it suggests that the Minister could waive the
requirements of section 166.1 to file an application for an extension as a
prerequisite to granting the extension. Second it can be, and has been,
interpreted as allowing the Minister the power to extend the deadline for
filing a document, as the Minister can waive the requirement for a document but
subsequently request it.
Under either of these approaches, the June 17, 2009 letter could be accepted by
the Minister as an objection.
[22] In Guest v. R.,
[2010] D.T.C. 1225 (Eng.) (Tax
Court of Canada [Informal Procedure]) a prescribed form was not filed as
required to claim child tax benefits. Justice Woods allowed the appeal on the
basis that the Minster had not considered the discretionary provisions in
subsections 122.62(2) and 220(2.1) of the Act. She held as follows:
[18] Given
the clear intent of Parliament that the Minister may waive or extend the notification
requirement, the Minister should have given consideration to this before making
the determination to disallow the benefits in their entirety.
[23] That case, like the one at bar, had an element of
misdirection. The relevant guide did not
describe that benefits could be denied by being late in filing the prescribed
form. Arguably, allowing
an appeal on this basis might well be to
extend this Court’s jurisdiction. I am not suggesting, at this point at least, that
I would follow that lead.
[24] On the other hand, I am reluctant to dismiss this
application with a simple criticism of the rigidity of the Act or of the
hard line approach taken by Respondent’s counsel in respect of the subject
addressing requirements. Criticism together with some agile reasoning led to Justice
C. Miller of this Court in Hoffman v. R., 2010 TCC 267, [2010] 5 C.T.C. 2151,
a General Procedure case, to find in favour of an applicant who had not
properly addressed a notice of objection. In that case he remarked:
[24] … In this
case, the Notice of Objection, which Dr. Hoffman made very clear
was a Notice of Objection, was delivered to the Halifax District Taxation
Office, though not to the Chief of Appeals. Is it too much to expect of a
District Taxation Office, that receives a notice of objection, to direct it to
Appeals? This harkens back to my view of exercising some cooperation in
ensuring the taxpayer can wind his way through the intricate web of tax
processes. Putting the question another way: does the taxpayer lose his right
to object by sending a document noted as a notice of objection to the address
of the Chief of Appeals at a District Taxation Office though without stating
"Chief of Appeals"? Section
165(6) of the Act urges upon the Minister some flexibility in accepting
a valid notice of objection. It must be so disheartening to Dr. Hoffman that
the Government of Canada, in the circumstances of this case, rely on this minor
labelling issue to put an end to Dr. Hoffman's relentless, yet cooperative,
pursuit of his claim. If the Minister refuses to exercise its discretion to
accept this Notice of Objection, then I must look elsewhere. I am reluctant to
disagree with Justice Miller's comments. Yet, her case dealt with a notice of
objection to an assessment. Here I am dealing with an objection to a
determination. It is interesting to note the difference in wording between
subsection 165(1) of the Act which deals with an objection to assessment
and states the taxpayer “may serve on a Minister a Notice of Objection in
writing”, and subsection 165(1.1) of the Act which simply says the
taxpayer may object to a determination. So, does subsection 165(2) of the Act
even apply to objections to determinations or is it limited to Notices of
Objection in writing as required by subsection 165(1) of the Act? I do
not intend to reach any hard conclusion on that issue but simply add this
observation to my earlier comments about the significance of leaving off “Chief
of Appeals” in this particular case, and conclude that Dr. Hoffman is not to be
derailed by this omission: he has made a valid objection.
[25] The reference in
this quoted paragraph to “Justice Miller” is a reference to Justice V. Miller
and her decision in Fidelity Global Opportunities Fund v. R., [2010]
T.C.C. 108 (General Procedure). In that case Justice V. Miller followed the
strict approach taken in Pereira. In Hoffman, Justice C. Miller avoided
disagreeing with the strict approach taken in Fidelity Global Opportunities by
distinguishing it. One might suggest that the distinction referred to above by
Justice C. Miller in Hoffman as a reason not to apply Fidelity Global
Opportunities, is not supported by the Act but such
suggestion would, in my view, lose sight of what Justice C. Miller was really
saying in his decision: derailing objections in some circumstances should not
be tolerated.
[26] Hoffman is this Court’s most recent General
Procedure case relating to this issue. It suggests that there is going to be a
reluctance to see a taxpayer’s entitlements derailed on the basis of some
formality. Guest suggests even more strongly the same reluctance where
the Minister has not at least undertaken, in cases such as these, to review the
matter and determine the merits of exercising a discretion vested in that
office by Parliament.
[27] I am sending this back to the Minister to consider the appropriateness
of exercising the discretion afforded him by the various provisions of the Act
that help ensure reasonable access to a just and fair consideration of a
taxpayer’s objections. This is a case that warrants such consideration and as
underlined in Guest, the Minister has a responsibility, not an option, to do so.
The Applicant took reasonable steps to
comply with the law and acted on incorrect written information given by the Agency
when she was told how to file an objection without being warned that she was already
past the 90 day limitation period. Aside from the independent merits of the
subject application which call for the exercise of the Minister’s discretion, these
are criterion that the Minister has used in exercising the discretion afforded
by section 220(2.1).
[28] This approach requires that I do not render a final decision
at this time. I will render my decision as necessary upon being advised of the
Minister’s decision. The Minister is reminded that a decision may be required
to be made before March 17, 2012.
[29] In closing, I make one brief comment on the approach I
have taken in sending this matter back to the Minister. One variation of such
an approach might be to issue an order that the Minister perform the task
suggested here as being his responsibility to perform. That is not my intention
as it raises jurisdictional questions. Another variation might be to refer to
these Reasons as reasons for an interim, or the first of a two part, judgment acknowledging
the need for an addendum to address an issue raised in the first part. I do not
profess to be embracing any recognized approach. Simply put, I am not satisfied
that rendering a judgment in this matter, at this time, is in the best
interests of justice.
[30] Accordingly, judgment in this matter is suspended until
the Minister has advised the Court further.
Signed at Ottawa,
Canada this 21st day of December 2011.
"J.E. Hershfield"
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