Citation: 2010 TCC 621
Date: 20101203
Docket: 2010-77(IT)APP
BETWEEN:
ANTHONY GYIMAH,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Hershfield J.
[1] An Application
to the Court to extend time to serve Notices of Objection for the Applicant’s 1997,
1998 and 1999 taxation years was filed on January 7, 2010.
[2] At an initial hearing before this Court, the Application
was adjourned sine die as it had not gone first to the Minister of
National Revenue (the “Minister”) as required by subsection 166.2(1) of the Income
Tax Act (the “Act”).
[3] An application was then filed with the
Minister on March 8, 2010 (Exhibit R-1) and the Minister refused it on May 27,
2010 (Exhibit R-2) because it did not satisfy the time limit requirement under paragraph
166.1(7)(a) of the Act. No assertion was made by the Minister
that the other requirements of that subsection had not been met and
Respondent’s counsel acknowledged at the hearing that no reliance was being
placed on any arguments concerning any such other requirements. Regardless, I
note that I am satisfied, based on the evidence presented at the hearing, that
all such other requirements have been met.
[4] The Application is
now properly before the Court pursuant to subsection 166.2(1) of the Act and the issue is whether the
Application was made within the required time.
[5] Paragraph 166.2(5)(a) of the Act
provides as follows:
166.2(5) When application to be granted -- No application shall be granted under this
section unless
(a) the
application was made under subsection 166.1(1)
within one year after the expiration of the time otherwise limited by this Act
for serving a notice of objection or making a request, as the case may
be; and
…
[6] The time otherwise limited
by the Act for serving a Notice of Objection is set out in subsection
165(1) of the Act which reads as follows:
165.(1) Objections to assessment -- A taxpayer who objects to an assessment under this Part
may serve on the Minister a notice of
objection, in writing, setting out the
reasons for the objection and all relevant facts,
(a) where the assessment is in respect of
the taxpayer for a taxation year and the taxpayer is an individual (other than a
trust) or a testamentary trust, on or
before the later of
(i) the day that is one year
after the taxpayer's filing-due date for the year,
and
(ii) the day that is 90 days
after the day of mailing of the notice of assessment; and
(b) ….
[7] The later date referred
to in paragraph 165(1)(a) is, in this case, 90 days after the mailing of the
Notices of Assessment as determined under subparagraph (a)(ii).
[8] The date by which an application for an
extension of time must be made to the Court pursuant to paragraph 166.2(5)(a)
has been determined accordingly on the following basis:
1997: Assessment date: October 31,
2005
Date by which the Applicant was required to
file an objection:
January 30, 2006
Date by which an application for an extension of time must
be made: January 30, 2007
1998:
Assessment date: December 19, 2005
Date by which the Applicant was required to file an objection:
March 20, 2006
Date by which an application for an extension of time must
be made: March 20, 2007
1999:
Assessment date: November 18, 2003
Date by which the Applicant was required to file an objection:
February 16, 2004
Date by which an application for an extension of time must
be made: February 16, 2005
[9] The Canada Revenue
Agency (the “CRA”) alleges that the Notices of Assessment bearing the date
October 31, 2005 in respect of the 1997 taxation year, December 19, 2005 in
respect of the 1998 taxation year, and November 18, 2003 in respect of the 1999
taxation year were all mailed to the Applicant.
[10] Mr. Gyimah
alleges that he did not receive the Notices of Assessment. He testified that he
did not learn of the existence of the Notices of Assessment until after the
time for filing an objection and applying for an extension of time to file one had
expired.
[11] Respondent’s
counsel called on a litigation officer of the CRA to testify to the fact that
the assessments were mailed as required to give effect to the deadlines noted
above. However, under cross-examination such evidence was anything but certain.
Before elaborating on the reasons why such uncertainties have resulted in my
granting the Applications, I will review the factual background as to the
Applicant’s circumstances during the relevant period.
[12] In 1997, 1998 and
1999, Mr. Gyimah worked as an air conditioner mechanic fixing air conditioners.
In June of 2000, he was involved in a car accident. The Applicant testified
that he sustained a brain injury and suffered from memory loss and behavioral
and comprehension problems as a result of the accident. He testified that he
worked on average three months per year after the accident and stopped working
in 2004 altogether. Medical evidence was produced at the hearing to support that
the injury sustained was genuinely debilitating in a material way regarding the
Applicant’s ability to comprehend and respond to an assessment.
[13] Still, the Applicant retained a lawyer in April 2002,
to seek damages that arose from the accident. The lawyer wanted him to see an
accountant to prepare tax returns that were presumably necessary for the computation
of damages. The Applicant said he met an accountant to assist in a filing. It
makes sense that a return for 1999, the last year prior to the accident, would
have been filed at some point after the retention of the lawyer. In fact, a
return was filed in 2003 for 1999. However, there is no evidence that returns were
filed, at that time, for 1997 or 1998.
[14] Before getting into the evidence regarding filing returns
for these years, I will review Mr. Gyimah’s
testimony regarding the behavioral problems he suffered after the accident.
[15] He testified that as
a result of the accident he often reacted violently to various stimuli and had
been incarcerated several times for up to two or three months at a time. He was
never convicted of any charges. The time spent in jail was awaiting bail or a trial.
My impression was that, in all cases, charges were eventually dropped due to his
condition or he was found not guilty due to it. He offered his incarceration as
a possible explanation as to why he did not receive the assessments although
there seemed to be some doubt in his mind as to this as his son, who he said took
care of his affairs, did not receive anything to the Applicant’s knowledge.
[16] Another explanation as
to why he did not receive the assessments was that the assessments were mailed, if mailed at all, to
the wrong address. In the years 2003 and
2005, Mr. Gyimah owned two residential properties, one at 1 Victoria Avenue West and the other at 7 Victoria
Avenue West. The Applicant resided at 7 Victoria Avenue West at those times. The other residence was rented. Mr. Gyimah believed that
the assessments, if sent, may have been sent to the wrong address.
[17] It was not until June
of 2005 that one of his tenants, residing at the rented premises, presented him
with a Requirement to Pay (referred to at the hearing as a garnishment) from the
CRA. The garnishment stipulated that
the tenant should pay the rent to the CRA rather than to Mr. Gyimah. Knowing
nothing of the reason for the garnishment, the Applicant attended at the
offices of the CRA. A CRA officer at the North Toronto tax office informed Mr.
Gyimah that he owed CRA monies and advised him to retain an accountant to update
his returns as they would not address the matter until he did. Mr. Gyimah alleges that the
CRA officer did not inform him of any Notices of Assessment.
[18] Such information, at that time, might have helped clear
things up because the Applicant did see someone to assist him in filing at
least one pre-2000 return. However, whether things might have been cleared up, assumes
that the Applicant was competent to comprehend and respond to any information concerning
a prior assessment had it been provided. Indeed, it might well have been. And
then, of course, there is the question of the ability of the Applicant, at that
time, to properly inform and instruct the person who filed his returns. As
well, the reliability of the testimony of the Applicant on any of this, given
his mental condition and memory problems between the time of the accident in
2000 and his stabilization by 2008, is questionable.
[19] Still, the status regarding past returns can, to some
extent, be found in the record presented by the Respondent’s witness.
[20] As I said, the Respondent
called a litigation officer of the CRA who referred me to two sets of CRA
printouts called an Option C and Option E. These printouts reflect standard entries
documenting return filing dates as well as when and where the subject
assessments were sent.
[21] The Option C printout for 1997 consists of a single page. It shows an assessment
date of November 21, 2005. No filing date is shown. As stated, the Applicant asserts he never received
the assessment. The assessed income for 1997 is identified on the printout but
in a rather unusual manner. It states, in what I would refer to as a
highlighted line, “A MULTI-YEAR
REASSESSMENT HAS MODIFIED THIS ASSESSMENT”. It shows income of some $70,000.
The Court has no information regarding a modifying assessment. Contrary to the
clear statement on the Option C printout, the Respondent’s witness testified
that there were no other assessments. This strikes me as too irregular to
ignore. Indeed, it seems to give some credibility to the Applicant’s
speculation that changes in 2005 respecting these 3 years did not properly
adjust his income for 1999.
In any event, my confidence in gleaning reliable information from these printouts,
in this case, is somewhat less than normal.
[22] The Option C printout for 1998 consists of two pages. It shows a filing date of
August 4, 2005 on page 2 and an assessment date of December 19, 2005 on page 1. The Applicant, as stated, asserts he
never received it. However, it appears that in response to the CRA’s request
for updated returns after the June, 2005 garnishment, the Applicant received
help filing at least a return for 1998. The income for 1998 is said to be in
the order of $153,000. The Applicant testified that he could not possibly have
earned that amount.
[24] Returning now to the events following the garnishment which
would have arisen from the 2003 assessment of the 1999 year, Mr. Gyimah testified
that after his initial contact with the CRA, he made persistent attempts over
the next two years to meet with CRA personnel to learn not only the source of
the garnishment referred to above but the source of another garnishment issued
in November 2006 to the tenant at 1 Victoria Avenue West. The maximum
garnishment amount had increased from some $64,000 to over $229,000. The
increase would presumably have resulted primarily from the additional
assessment in 2005 of the Applicant’s 1997 and 1998 taxation years.
His attempts to meet with CRA personnel resulted in his being shuffled from
person to person over that period. He insisted that he was always being put off
and that he was never told about the outstanding assessments.
[25] As well, he was unable to contact the persons who
assisted him file his previous returns. Finally, he retained an accountant, Mr. Gustavo Beher, in July of 2008 to
prepare tax returns for the years 2000 on and to resolve matters related to the
monies owed to the CRA which Mr. Beher learned arose from assessments of the
Applicant’s 1997, 1998, and 1999 taxation years.
[26] Mr. Beher testified
at the hearing. He acknowledged he did not know when returns for 1997, 1998 and
1999 were filed. He testified that had he been able to file amended returns for
those years, the adjusted gross income would have been $20,500, $19, 900
and $3, 000 respectively.
[27] At this point, there appears to be little or nothing in
this recital of events that assists the Applicant to deal with the statutory
limitation period for granting the Application sought. I say “appears” because
Applicant’s counsel argued the Applicant’s mental condition must be considered
in determining when the limitation clock can start running. However, while I
have included the evidence that relates to that argument thus far, there is
more that relates to the argument concerning the mailing of the assessments.
[28] The one page Option C printout for 1997 is dated August 19, 2010 and shows the mailing
address at that time as “1 Victoria
Avenue West ”. The mailing address shown
on the Option E printout at the time of the 2005 assessment was “7 Victoria Avenue West ”.
[29] The two page Option C printout for 1998 is dated August 19, 2010 and shows the mailing
address at that time as “1 Victoria
Avenue West”. The mailing address shown
on the Option E printout at the time of the 2005 assessment was “7 Victoria Avenue West”.
[30] The three page Option C printout for 1999 is dated August 19, 2010 and shows the mailing
address at that time as “1 Victoria
Avenue West”. The mailing address shown
on the Option E printout at the time of the 2003 assessment is shown on two
entries, first as “7 Victoria Avenue West” and next as “391
Keele St.”. They are recorded in that
sequence as being effective on the same day; namely, October 23, 2003. They are
entered in a manner that indicates that they would have been entered based on information provided by the
taxpayer or his authorized agent. The CRA
litigation officer could not explain how such conflicting entries, both
effective on the same day, both entered by the same CRA officer, could come
about. That being the case, the unexplained irreconcilable double entries made on October 23, 2003 cannot be taken as evidencing a change of address that the
Respondent can rely on. The reliability
of the sequence of the entries and their source is dubious at best. Indeed, I
believe it is fair to say that the Respondent’s witness’s confidence in the reliability of the evidence he was
called to address, was shaken at least in respect of the 1999 year. More importantly, he admitted that he could not say
with certainty where the Notice of Assessment would have been mailed.
[31] When I say the Respondent’s witness’s confidence was shaken
at least in respect of 1999, I note that there was further confusion regarding the mailing address for the
1997 and 1998 assessments which were mailed on November 21, 2005 and December
19, 2005, respectively. The source of the address recorded on the Option E
printout was stated on the printout to have been taken from a tax return. The
Respondent’s witness testified it could have come from any return; he
could not tell from the printout which one. Given the absence of any
other returns filed near that time, he suggested it must have been taken from
the 1998 return. However, as I indicated above, I am not satisfied that the
records show all the returns which puts in doubt the source and reliability of
the change in address relied on by the CRA in mailing the 1997 and 1998
assessments. That does not necessarily mean that they were sent to the wrong
address. Indeed it appears, unlike the case in respect of the 1999 assessments that
they were, in fact, sent to the right address. Still, the interrelationship of
all three assessments arising from a “MULTI-YEAR REASSESSMENT” persuades me to
find that the failure in this case to send one assessment, the first and
arguably the most critical in the chain of assessments, to the right address,
in practical terms, taints the delivery process of the entire multi-year
assessment. Indeed, in
practical terms, the 1999 year cannot be effectively dealt with separately if, in
fact, it has lumped together income from the three years in question.
[32] This
finding, that the delivery of the subject assessments was tainted, leads me to
conclude that the Application for an extension of time to file objections to them
must be granted. Applicant’s counsel cites 236130 British Columbia Ltd. v.
R.
in support of this finding. This case dealt with the issue of a notice of
assessment mailed to the wrong address. In that case, the Court stressed that
“the fact that the assessment was sent to the wrong address leads to the
conclusion that they were not issued at all.”
Counsel for the Applicant submits that this conclusion supports the Applicant’s
position that the limitation period clock cannot be regarded as having started.
[33] I agree. The evidence that the Respondent can normally rely on that
the assessments were sent to the right address is not sufficient in this case. The
Option C and Option E printouts have raised so many questions that an
additional onus of proof has arisen on the Respondent and the burden in respect
of that onus has not been met. Further, the confusion and circumstances of this
case encourage me to give the Applicant the benefit of the doubt. Accordingly, notices of objection
shall be treated as having been timely filed in respect of the three years in
question and the Minister shall respond in due course as required under the Act.
[34] Were it not for that finding, it would be necessary to
consider the Applicant’s argument relating to his inability to receive and
respond to a notice of assessment due to his mental incapacity.
[35] The Applicant’s counsel took
the position that as long as the taxpayer is mentally incapacitated, and there
is no guardian or legal representative, time
cannot run against them so as to deny them a right to object to an assessment.
He cited Meunier v. M.N.R.,
Lesage v. Minister of National
Revenue and R.
v. Tohms.
Each of these cases allowed extensions based on an incapacity to act.
[36] However, none of those cases appear to have dealt with the
provision under which there was a statutory prohibition for applications for
extensions to be granted beyond the year and 90 days. They all appear to be
applications beyond the 90 day limitation period but within the additional one
year allowable extension period.
[37] Further, the Respondent answers the capacity argument by
reliance on the well established law that time runs from the date of mailing.
If receipt is irrelevant then capacity to act is irrelevant. The Act
sets a rule that prevents objections and appeals to clog up the system forever
regardless of the equities. If I cannot act because the post office fails to
deliver an assessment, then my inability to act is no less excusable if I am
unable to act because I am mentally unable to respond, even if I had received
it.
[38] Considering the
authorities she cites, it is difficult for me to take issue with her. She cites
Chu v. Canada
for example. In that case I wrote:
18 However,
with respect, the language of the subject provisions is absolutely,
unambiguously clear. It does not suggest that receipt of the notice of
assessment is relevant. Accordingly, the authorities have found, for
example, that proof of failure of the postal service resulting in a non-receipt
does not change the start date of the prescribed limitation period. This was
confirmed by the Federal Court of Appeal in 2000, in Schafer v. Canada.
Essentially, such decisions frustrate the application of the doctrine of
discoverability. I believe my hands are tied.
[39] Respondent’s counsel
seems to be on pretty safe ground then when the essence of her argument is that
if receipt is irrelevant, what difference does the state of mind of the
intended recipient make? If the receipt is rendered irrelevant by the statute,
then understanding its content or being able to respond are equally irrelevant
and this Court has no jurisdiction to re-write the legislation.
[40] While I agree that both
the legislation and the authorities favour the view that the 90 days plus one
year provision is an absolute limitation period, there is one aspect of this
case that does present a new question. Namely, there is a question here as to the reliability of
any information contained in a return filed by or on behalf of an adult person
with a mental illness who has no guardian or legal representative. There is a
statutory obligation in paragraph 150(1)(d) of the Act for a legal
representative or guardian to file returns for a person unable to do so. If a
person is mentally incapacitated but has no guardian or legal representative,
but a return is filed on behalf of such person, it is arguable that no return
has been filed and no assessment in respect of it can be said to have been
issued. How can an incapacitated person effectively authorize someone to file a
return, provide income information and a mailing address? Arguably, that can
only be done effectively through a legal representative or guardian. None
exists in this case.
[41] I
note here, as well, that there is no statutory guardian or legal representative provision with
respect to notifying the Minister of a change of address, filing objections or
appeals or making applications by prescribed dates. It seems unlikely that such
omission to provide for such a representative in situations other than in
respect of filing returns would suggest that a mentally disabled person should
thereby be viewed as having effective legal capacity for the purposes of the Act
in such other situations. The medical evidence I referred to above indicated
that the Applicant could not understand
the filing requirements relating to income tax. If that was the case, if he was
incompetent to file income tax returns during the period in question, he was
not competent to provide the necessary information or requisite authorizations
without a legal representative or guardian.
[42] On the other hand, that argument could well confront a
contrary view if the limitation period is read as an absolute or ultimate one. This
leads to a whole other area of law about which much can be said in respect of
the impact of statutes of limitation on mentally disabled persons.
Arguably, the 90 days and one year rule in the Act must be seen and
applied as an absolute and ultimate limitation period. Nothing in the existing
authorities that have been brought to my attention suggests otherwise.
[43] The question remains open. However, I note here that were
it necessary to decide the Application on the basis of capacity, the sufficiency of the doctor’s letter might well be
questioned in this case. Further, the absence of action by the family and various professionals
that dealt with the Applicant, including the doctor, might suggest that a
guardian was not necessary. In any event,
as I said the question remains open as the Application is allowed for other reasons. Based on
my concerns respecting the mailing issues and applying 236130 British Columbia Ltd. as good law, I find that the Application
should be granted. As the matter proceeds, consideration should be given to
proceeding under the General Procedure, in which case costs in the respect of
this Application might be awarded in the cause or as otherwise determined by
the Court.
Signed at Ottawa, Canada this 3rd day of December 2010.
"J.E. Hershfield"
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