Citation: 2010 TCC 622
HOUDA INTERNATIONAL INC.,
HER MAJESTY THE QUEEN,
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR ORDER
The taxpayer has applied
to this Court for an extension of time within which to file an appeal following
confirmation by the Canada Revenue Agency (“CRA”) of objections in respect of goods
and services tax (“GST”) reassessments. The application was made within the
maximum one-year time limit set out in section 305 of the Excise Tax
Act (Canada) (the “GST legislation”). The 90‑day period within which
to file an appeal expired in January 2010; this application was filed in
March. It is the taxpayer’s position that its professional advisors were either
negligent or mistaken as it had instructed its lawyer to file an appeal within the
90‑day period; however, it was not filed in time because certain key
documents remained in the possession of its former accountants until
March 2010 even though several requests had been made.
The taxpayer was
recently successful in obtaining an extension of time from the Cour du Québec under
la Loi sur le ministère du Revenu (the “Quebec Act”) to file an appeal
in respect of the corresponding provincial sale tax assessments. That
application had been opposed by the Quebec Ministry of Revenue. The reasons of
the Cour du Québec are attached hereto. The Cour du Québec concluded that, in
the circumstances, since the taxpayer had instructed its counsel to appeal, the
fact that the latter did not do that in a timely fashion made it impossible for
the taxpayer to file an appeal in a timely fashion.
At times, this Court
has not accepted that the error or negligence of a professional advisor in itself
satisfies the requirements of subsection 167(5) of the Income Tax Act
or subsection 305(5) of the GST legislation. At times, this Court has ruled
that an extension of time in such circumstances would not be just and equitable.
See, for example, Di Modica v. The Queen, 2002 DTC 1290. At other
times, this Court has ruled that, in such circumstances, the application was
not made as soon as circumstances permitted. See, for example, Carrier v.
HMQ, 2005 TCC 182, Ham et al. v. The Queen,
2004 DTC 3022, and Lord v. The Queen, 2004 DTC 3519.
That being said, this Court often grants such applications: see, for example, 2749807
Canada Inc. v. HMQ, 2004 TCC 457.
The first, and main,
issue that the Court must decide is whether it is bound by the decision of the
Cour du Québec under the doctrines of issue estoppel or abuse of process. If the
answer is in the negative, this Court must then determine what deference should
be extended to the decision of the Cour du Québec in the interests of judicial comity.
I. The Law
of the federal GST legislation provides as follows:
order to be made — No order shall be made under
this section unless
(a) the application is made within one year after the
expiration of the time otherwise limited by this Part for appealing; and
(b) the person demonstrates that
(i) within the time otherwise limited by this Part for appealing,
(A) the person was unable to act or to give a mandate to act in
the person’s name, or
(B) the person had a bona fide intention to appeal,
(ii) given the reasons set out in the application and the
circumstances of the case, it would be just and equitable to grant the application,
(iii) the application was made as soon as circumstances permitted
it to be made, and
(iv) there are reasonable grounds for appealing from the
de la demande — Il n’est fait droit à la demande
que si les conditions suivantes sont réunies :
a) la demande a été présentée dans
l’année suivant l’expiration du délai d’appel par ailleurs imparti;
b) la personne démontre ce qui suit :
(i) dans le délai d’appel par ailleurs imparti, elle n’a pu ni
agir ni mandater quelqu’un pour agir en son nom, ou avait véritablement
l’intention d’interjeter appel,
(ii) compte tenu des raisons indiquées dans la demande et des
circonstances de l’espèce, il est juste et équitable de faire droit à la
(iii) la demande a été présentée dès que les circonstances le
(iv) l’appel est raisonnablement fondé.
These are identical to subsections 167(5) and
166.1(7) of the Income Tax Act.
The relevant paragraph
of section 93.1.13 of the Quebec Act provides:
Conditions for granting application.
The application shall be granted if the person demonstrates that
it was impossible in fact for that person to act and that the application was
filed as soon as circumstances permitted
Acceptation d’une demande.
Il est fait droit à une telle demande si la personne démontre
qu'elle était dans l'impossibilité en fait d'agir et que la demande a été
présentée dès que les circonstances le permettaient.
II. Are the Federal and Quebec
Requirements the same?
This Court must decide
whether, under the GST legislation, the Applicant was unable to act or had a bona
fide intention to appeal, whether granting the application would be just
and equitable, and whether the application was made as soon as circumstances
permitted. Correspondingly, under the Quebec Act, the Cour du Québec had to
decide whether it had been impossible in fact for the taxpayer to act and
whether the application had been made as soon as circumstances permitted.
In Cité de Pont Viau
v. Gauthier Mfg. Ltd.,  2 S.C.R. 516, Pratte J.
considered the concept of impossibility in fact and wrote, at pages 526 and
. . . By referring to impossibility "in fact",
which implies that the impossibility is relative, the legislator has chosen a
test that is certainly less demanding that [sic] the criteria of
absolute impossibility or force majeure.
. . .
It is impossible to specify in advance every situation that might
constitute a relative impossibility. Each case must be decided according to its
own particular circumstances, since the impossibility in question is really one
In the case at bar foreclosure was due solely to the error of
appellant's counsel. The party itself acted with diligence and I do not see
what more it could have done in order to "act sooner".
With respect to section 110.1
of the Code of Civil Procedure of Quebec, which similarly provides for an
impossibility in fact test as to extensions of time applications in civil
matters in the province, the Quebec Court of Appeal wrote in Québec (Sous‑ministre
du Revenu) c. Stever, 2007 QCCA 257 (CanLII), at
En ce qui concerne l'erreur de l'avocat, elle résulte ici de son
ignorance de la loi, une situation qui donne ouverture à l'usage de la discrétion
conférée dans l'article 110.1 C.p.c., à moins que cette erreur
n'ait des conséquences irréparables pour l'autre partie. À cet égard, il y a
lieu de préciser que toute erreur de l'avocat, qu'elle résulte de son ignorance
ou de sa négligence, même grossière, peut permettre à une partie d'être relevée
de son défaut.
Earlier this year, in Océanica
inc. c. Québec (Sous-ministre du Revenu), 2010 QCCQ 871 (CanLII),
the Cour du Québec described the impossible in fact test applicable to
extension applications in tax matters as follows:
34 En ce qui concerne l'impossibilité en fait d'agir, les
jugements rendus par la Cour du Québec sur ce point montrent clairement que
cette condition doit être interprétée favorablement au contribuable. L'erreur
du mandataire, comptable ou avocat, a régulièrement été considérée comme un
élément qui place le contribuable en cause dans une situation où il lui est en
fait impossible d'agir.
Similarly, the Cour du
Québec wrote earlier this year in another tax case, Simon c. Québec
(Sous-ministre du Revenu), 2010 QCCQ 2980 (CanLII):
9 Le Tribunal a une large discrétion pour analyser les
faits afin de déterminer si le contribuable se retrouve dans une situation qui
l'empêchait d'agir dans les délais légaux. Chaque cas est un cas d'espèce.
10 Lorsque l'empêchement résulte de l'erreur du mandataire du
contribuable, soit son avocat, son comptable, en l'absence de faute ou de
négligence de la part du contribuable, la demande de prorogation de délai peut être
According to these
Quebec cases, it is clear that, under the “impossible in fact” test, in a late‑filing
application involving the failure of a lawyer or accountant, the Quebec court must
be satisfied that the taxpayer has instructed his advisor to proceed and that
the default is not attributable to the taxpayer himself. I am satisfied
that that test is, in substance, identical to the test that requires the
taxpayer to show that he was unable to act or that he had a bona fide
intention to appeal.
The Cour du Québec
expressly found in granting this taxpayer’s application that, within the prescribed
time limit, it had clearly instructed its lawyer to institute an appeal.
Further, since the
Quebec legislation permits, but does not require, the Cour du Québec to grant
the application in such circumstances, I am satisfied that, when that court decides
to exercise its discretion, it thereby implicitly decides that it is just and
equitable to permit late‑filing in the particular circumstances.
Finally, in granting
this taxpayer’s application, the Cour du Québec expressly decided that the
taxpayer’s late‑filing application was filed as soon as circumstances
These are the same
issues as are before this Court. The other requirements of section 305(5)
of the GST legislation are met and were not contested.
III. Issue Estoppel and Abuse of Process
Issue estoppel and
abuse of process were considered at length in Golden et al. v. The Queen,
2008 TCC 173, 2008 DTC 3363, a decision of this Court; it was
upheld by the Federal Court of Appeal (2009 FCA 86,
2009 DTC 5079).
The doctrine of issue
estoppel and its application in a tax case was also aptly described by Lamarre
J. in Leduc v. HMQ,  2 C.T.C. 2735.
In Golden, I
described the doctrines of issue estoppel and abuse of process as follows:
A. Issue estoppel
 It is open to this Court to apply the doctrine of issue
estoppel to prevent relitigation of matters already decided in another court
proceeding. . .
. . .
 The preconditions for the application of issue estoppel
1. the earlier court decision must have decided the
same question that is before this Court, and the question was fundamental to
the earlier court’s decision;
2. the earlier court decision must be final; and
3. there must be a mutuality of parties in the
proceedings, that is, the parties to the earlier judicial decision or their
privies need be the same persons as the parties in this proceeding or their
 The doctrine of issue estoppel is not to be applied
automatically or inflexibly once the preconditions are established. It remains
for this Court to decide whether, as a matter of discretion, issue estoppel
ought to be applied or if its application would be unfair in these particular
. . .
 It is also open to this Court to apply the doctrine of
abuse of process to prevent relitigation of matters already decided in another
 The scope and application of the doctrine of abuse of
process to prevent relitigation has recently been thoroughly canvassed by the
Supreme Court of Canada in C.U.P.E.
 The principal difference between issue estoppel and abuse of
process to prevent relitigation is with respect to the question of mutuality of
parties and privity. Abuse of process does not require that the preconditions
of issue estoppel be met. Abuse of process can therefore be applied when the
parties are not the same but it would nonetheless be inappropriate to allow
litigation on the same question to proceed in order to preserve the courts’
 Abuse of process is also a doctrine that should only be
applied in the Court’s discretion and requires a judicial balancing with a view
to deciding a question of fairness. However, it differs somewhat from a
consideration of the possible application of issue estoppel in that the
consideration is focused on preserving the integrity of the adjudicative process
more so than on the status, motive or rights of the parties.
 Relitigation should be avoided unless it is in fact
necessary to enhance the credibility and effectiveness of the adjudicative
process. This could be the case where (1) the first proceeding is tainted by
fraud or dishonesty; (2) fresh new evidence, previously unavailable,
conclusively impeaches the original result; or (3) when fairness dictates that
the original result should not be binding in the new context.
. . .
In C.U.P.E. (at paragraph 15), Arbour J. identifies some
of the matters to be considered in the exercise of judicial discretion:
The body of law dealing with the relitigation of issues finally
decided in previous judicial proceedings is not only complex; it is also at the
heart of the administration of justice. Properly understood and applied, the
doctrines of res judicata and abuse of process govern the interplay
between different judicial decision makers. These rules and principles call for
a judicial balance between finality, fairness, efficiency and authority of
It is not clear that
issue estoppel applies in this case. While the issue before this Court and the
issue before the Cour du Québec are not entirely identical, they are in substance
indistinguishable. While this Court is further required by statute to determine
if the extension would be just and equitable, that additional requirement is
surely implicit in the Cour du Québec’s favourable exercise of its discretion. Whether
there is mutuality of parties is not so clear in this case. The federal
government is not the same person as a provincial government.
However, the doctrine
of abuse of process does not require mutuality of parties when applied to
prevent the relitigation of an issue. I am satisfied that the matter before
this Court has already been addressed by the Cour du Québec and should not be
relitigated before this forum as that might result in a different outcome. Clearly,
the reopening of this issue would lead to an inefficient use of public and
private resources, could lead to inconsistent decisions that could not be
reasonably explained to taxpayers in Quebec and elsewhere in Canada, and would
unnecessarily erode the principles of finality, consistency, predictability and
fairness so important to the proper administration of justice.
IV. Judicial Comity
does not apply with respect to decisions of courts of coordinate jurisdiction.
That being said, according to the doctrine of judicial comity, reasoned
judgments of such courts or judges should be deferred to in the absence of exceptional
In Re Hansard Spruce
Mills Ltd.,  4 D.L.R. 590, the Supreme Court of British
“But I have no power to overrule a brother Judge, I can only differ
from him, and the effect of my doing so is not to settle but rather to unsettle
the law, because, following such a difference of opinion, the unhappy litigant
is confronted with conflicting opinions emanating from the same Court and
therefore of the same legal weight. This is a state of affairs which cannot
develop in the Court of Appeal.
Therefore, to epitomize what I have already written in the Cairney
case, I say this: I will only go against a judgment of another Judge of this
(a) Subsequent decisions have affected the validity
of the impugned judgment;
(b) it is demonstrated that some binding authority
in case law, or some relevant statute was not considered;
(c) the judgment was unconsidered, a nisi prius
judgment given in circumstances familiar to all trial Judges, where the
exigencies of the trial require an immediate decision without opportunity to fully
If none of these situations exist I think a trial Judge should follow
the decisions of his brother Judges.”
See also Janssen v.
Apotex,  F.C.J. No. 169, 72 C.P.R. (3d) 179
(FCA) and Viel v. Canada (Employment Insurance Commission),
2001 FCA 9.
In Singh v. Canada (Minister of
Citizenship and Immigration),
 F.C.J. No. 1008 (FCTD), it is written:
“In Glaxo Group Ltd. v. Canada (Minister of National Health
and Welfare), supra, Richard J. (as he then was) considered whether he
was bound, by reasons of judicial comity, to apply a decision of Noël J. (as he
then was) on one of the identical issues raised before him. In reviewing the
principle of judicial comity and its application, Richard J. stated as follows:
The principle of judicial comity has been expressed as follows:
The generally accepted view is that this court is bound to follow a
previous decision of the court unless it can be shown that the previous
decision was manifestly wrong or should no longer be followed: for example,
(1) the decision failed to consider legislation or binding authorities
which would have produced a different result, or (2) the decision, if
followed, would result in a severe injustice. The reason generally assigned for
this approach is a judicial comity. While doubtless this is a fundamental
reason for the approach, I think that an equally fundamental, if not more
compelling, reason is the need for certainty in the law, so far as that can be
established. Lawyers would be in an intolerable position in advising clients if
a division of the court was free to decide an appeal without regard to a
previous decision or the principle involved in it.
A similar position was taken by Mr. Justice Jackett, President of
the Exchequer Court, in Canada Steamship Lines Ltd. v. M.N.R., 
Ex. C.R. 972 at p. 976,  C.T.C. 255, 66 D.T.C. 5205:
I think I am bound to approach the matter in the same way as the
similar problem was approached in each of these cases until such time, if any,
as a different course is indicated by a higher Court. When I say I am bound,
I do not mean that I am bound by any strict rule of stare decisis
but by my own view as to the desirability of having the decisions of this Court
follow a consistent course as far as possible.
In R. v. Northern Electric Co. (1955), 24 C.P.R. 1 at p. 19,
 3 D.L.R. 449,  O.R. 431 (H.C.), McRuer C.J.H.C. stated:
Having regard to all the rights of appeal that now exist in Ontario,
I think Hogg J. stated the right common law principle to be applied in his
judgment in R. ex rel. McWilliam v. Morris,  O.W.N. 447 where he
said: “The doctrine of stare decisis is one long recognized as a
principle of our law. Sir Frederick Pollock says, in his First Book of Jurisprudence,
6th ed., p. 312: ‘The decisions of an ordinary superior court are binding on all
courts of inferior rank within the same jurisdiction, and, though not
absolutely binding on courts of co-ordinate authority nor on that court itself,
will be followed in the absence of strong reason to the contrary’.”
I think that “strong reason to the contrary” does not mean a strong
argumentative reason appealing to the particular Judge, but something that may
indicate that the prior decision was given without consideration of a statute
or some authority that ought to have been followed. I do not think “strong
reason to the contrary” is to be construed according to the flexibility of the
mind of the particular Judge.
Following his review of the jurisprudence, Richard J. concluded that
counsel opposing the motion had failed to establish that Noël J. was “manifestly
wrong” in his decision. He also noted that, although counsel opposing the
motion had “argumentative reasons” in support of his position, they were not
“strong reasons” not to follow the decision of Noël J. “...who gave detailed
reasons during which he considered the authorities and relevant legislation.”
In short, Richard J. applied the decision of Noël J. At the time of his
decision, both Richard J. and Noël J. were judges of the Trial Division.”
In Almrei v. Canada (Citizenship
and Immigration), 2007 FC 1025, Lemieux J. summarized the
exceptions to the doctrine of judicial comity as follows:
 There are a number of exceptions to the principle of
judicial comity as expressed above they [sic] are:
The existence of a different factual matrix or
evidentiary basis between the two cases;
Where the issue to be decided is different;
Where the previous condition failed to consider
legislation or binding authorities that would have produced a different result,
i.e., was manifestly wrong; and
The decision it followed would create an
In this Court, Tardif
J. considered the doctrine of judicial comity as between our Court and the Cour
du Québec in considering late‑filing applications in 2749807 Canada
Inc. v. HMQ, 2004 TCC 457. Tardif J. wrote, at paragraph 19:
. . . [W]hile this court is not bound by the
decisions of the Court of Quebec, especially where the relevant legal
provisions are not the same, I believe it is important, insofar as it is
possible, to help ensure that the judgments on a single issue are consistent.
I have no doubt that allowing
the Respondent to proceed would result in an abuse of process. That being said,
in the alternative, I am satisfied that, in the circumstances, in the best interest
of justice, the application should be granted in deference to the decision of
the Cour du Québec. Otherwise, there would be unnecessary disorder in the
administration of justice with respect to tax appeals, the law would become
uncertain and the confidence of the public would be undermined. This would occur
whether or not this Court were to decide the matter on the merits in favour of
the Applicant or not.
application to late‑file its GST appeal to this Court is granted. The
Cour du Québec has already decided, in substance, the same issue for Quebec
sales tax (“QST”) purposes. In the circumstances, I am satisfied that it would
be inappropriate for me to allow the Respondent to proceed on the merits: that
would result in an abuse of process. In the alternative, I am of the view that
the application should be granted on the basis of judicial comity: the
situation calls for deference to the decision of the Cour du Québec. I see no
reason why scarce judicial resources should be wasted in an examination of such
an application on the merits since the parallel provincial application has
already been decided.
applications made within the one‑year period involving taxpayers who have
instructed their lawyer or accountant to file an objection or appeal under the Income
Tax Act or the GST legislation typically turn on whether this Court is
satisfied that the taxpayer had a bona fide intention to object or
appeal and whether granting the requested extension would be just and
equitable. My analysis and conclusions do not change that. However, where the
Cour du Québec has concluded that the particular taxpayer’s circumstances
satisfy the corresponding requirements under the Quebec Act, this Court, in its
control over its process, should generally defer to that decision; it should
not be expected to revisit the issue on the merits. This should not be taken to
be a relaxation in this Court’s approach to considering late‑filing
applications based upon a failure of a taxpayer’s lawyer or accountant where a
parallel provincial determination has not already been made.
Signed at Ottawa, Canada,
this 10th day of January 2011.
Translation certified true
On this 11th day of January 2011
François Brunet, Revisor