Docket: 2009-3311(IT)G
BETWEEN:
BRIGITTE GRATL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion
heard on July 16, 2010 at Toronto,
Ontario
By: The Honourable
Justice E.A. Bowie
Appearances:
|
For the Appellant:
|
The
Appellant herself
|
|
Counsel for the Respondent:
|
Toks C. Omisade
|
___________________________________________________________________
ORDER
UPON motion by the Respondent for an Order pursuant to
sections 53 and 58 of the Tax Court of Canada Rules (General Procedure) to
strike out the following portions of the Amended Amended Amended Notice of
Appeal:
a. subparagraphs 4(d)
and 4(j), paragraph 5, subparagraphs 6(g) and 6(h), subparagraphs 7(d) and
7(e)
b. reference to the
Canadian Charter of Rights and Freedoms (the “Charter”) under the
heading “The Statutory Provisions Relied on are as follows”; and
c. reference to
sections 7, 12 and subsection 15(1) of the Charter under the heading
“The Statutory Provisions Relied on are as follows:
or, in the alternative, an Order granting
the Respondent 60 days to file and serve the Reply to the Amended Amended
Amended Notice of Appeal, pursuant to section 12 of the Rules, and for
costs of this motion;
AND UPON reading the material filed herein;
AND UPON hearing the Appellant and counsel for the
Respondent;
IT IS ORDERED THAT
1. Paragraph 5 of the
Amended Amended Amended Notice of Appeal is struck out, with leave to the
Appellant to amend that paragraph to contest the disallowance of the home
office expense, and other expenses that the appellant seeks to deduct, the
imposition of penalties and the computation of assessed interest, but without
reference to the Canadian Charter Rights and Freedoms;
2. Subparagraphs 7(d)
and (e) and the references in paragraph 8 to the Canadian Charter of Rights
and Freedoms and to sections 7, 12 and 15 thereof, are struck out.
3. The Appellant shall
file and serve a Fresh as Amended Notice of Appeal in conformity with this
Order and the Reasons for Order by November 8, 2010.
4. The respondent is
entitled to costs of this motion which are fixed at $750 inclusive of
disbursements and H.S.T., payable forthwith in any event of the cause.
Signed at Ottawa, Canada,
this 6th day of October, 2010.
“E.A. Bowie”
Citation: 2010 TCC 491
Date: 20101006
Docket: 2009-3311(IT)G
BETWEEN:
BRIGITTE GRATL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Bowie
J.
[1] The appellant’s Notice of Appeal was filed on October
16, 2010. Since then it has been attacked in at least two motions brought by
the respondent, and it has been amended three times in vain attempts to remedy
its obvious deficiencies. The appellant is a lawyer who apparently does not
appreciate the wisdom of Clarence Darrow’s well known aphorism. By the
present motion I am asked to strike out numerous subparagraphs of the Amended
Amended Amended Notice of Appeal. The portions of the pleading that are
attacked now are the following:
4(d) In their second assessment, the auditors proceeded to
disallow expenditures that had been previously allowed, i.e. a vehicle, the
satellite home office, expenses associated with the home office, general
expenses for office materials, computer expenses, in addition to those that had
been previously disallowed in 2003. The appellant respectfully submits that this
amounts to arbitrary treatment of the taxpayer.
4(j) Furthermore, the Appellant submits that she is entitled to
know the interest rate which is being charged, and no such disclosure has been
made.
5
The Appellant contends that her constitutional rights have been infringed
on the following basis:
a.
The Appellant contends that she is being discriminated against by
the department’s insistence that she receive clients at her satellite office in
the middle of the night contrary to the provisions of s. 7 and s. 15 of the
Charter. The taxpayer has offered her daily dockets and given sufficient
explanations to demonstrate that nightly work at the home office is a necessary
part of the law practice. The taxpayer spends her daytime hours at court, and
her evening hours seeing clients at the regular office, so that the only time
during which necessary Notices of Application, Notices of Appeal, Notices of
Motion to vary final Orders, Affidavits, Case Conference Briefs and many other
documents which require a quiet environment can be prepared is available after
the taxpayer returns home and uses the midnight and early morning hours for
such preparations.
b.
the imposition of penalties is unjustified given the taxpayer’s
inexperience as a lawyer, and as such amounts to cruel and unusual punishment
contrary to s. 12 of the Canadian Charter of Rights and Freedoms, should some
of the expenses charged against income be adjudged as inappropriate.
c.
The taxpayer further respectfully submits that the failure of the
tax department to disclose the interest charged violates her entitlement to
full disclosure contrary to s. 7 of the Charter. Without such disclosure, the
taxpayer is in no position to ascertain whether the interest charged has been
properly calculated.
d.
Interest accrual on a daily basis amounts to cruel and unusual
punishment contrary to s. 12 of the Charter, specifically in the light of the
fact that the tax department benefits from the delay for which it alone is
responsible in reviewing the taxpayer’s tax returns.
e.
Insofar as the delay represents unfair treatment of the taxpayer,
the provisions of s. 7 of the Charter are also engaged.
6 The following questions of mixed law and fact should be determined
by this Honourable Court:
:
g. Is there a legal entitlement for the tax department to
charge excessive amounts of interest beyond the federal rate and commercial
rates?
h.
Is the tax department entitled to conceal the interest rate which is
being charged?
7 d. That
the interest is valid.
e. That the Appellant be given reasonable time to pay the
amount owing, after which time interest at a disclosed rate, calculated
semi-annually and not in advance, be applied.
8. Statutory
Provisions Relied on are as follows:
…
Canadian
Charter of Rights and Freedoms:
s.
7
s.
12
s.
15(1)
I shall
deal with each in turn.
paragraph
4, subparagraphs (d) and (j)
[2] The respondent’s
position appears to be that these subparagraphs allege misconduct by the Canada
Revenue Agency’s assessors, and so run afoul of the decision of the Federal
Court of Appeal in Main Rehabilitation Co v. The Queen. This is a misapplication of
that judgment. While it may be inelegantly expressed, it is clearly the
intention of the appellant by these subparagraphs to dispute the disallowance
of certain expenses, and to dispute the computation of the interest assessed.
She is entitled to do this. These subparagraphs are perhaps not a clear and
concise statement of the facts that she relies on, but it seems unlikely that
to require her to redraft them would result in significant improvement. The
respondent will not be prejudiced if she has to wait until discovery for
particulars to emerge. These subparagraphs may stand.
paragraph
5
[3] The appellant is
entitled to advance a claim for a deduction from income in respect of a home
office, and in respect of the other items referred to in subparagraph 5 a. She
also may contest the applicability of the penalty provisions of the Income
Tax Act (the “Act”),
and challenge the computation of assessed interest within the context of her
appeal to this Court. It is, however, plain and obvious that her reliance on
sections 7, 12 and 15 of the Charter is foreclosed by authority. In Tyler
v. M.N.R.
the Federal Court of Appeal noted the distinction between criminal proceedings
and a tax audit, and held that in the case of a tax audit, which is a purely an
administrative proceeding, there is no suspect and no accused; see also Kaulius
v. The Queen.
Section 7 simply does not apply to the tax audit process.
[4] It is also plain
and obvious that neither the denial of an income tax deduction nor the imposition of an
administrative penalty under a self-reporting scheme of taxation amounts to cruel and unusual
treatment or punishment. The same is true of the imposition of interest, which
is simply compensation to the fisc for the late payment of taxes.
[5] In her reliance
on section 15 of the Charter the appellant has failed to specify a
provision of the legislation that she says is discriminatory, she has failed to
identify a ground falling within section 15 upon which she says she is
discriminated against, and she has failed to identify any comparator group. She
simply advances vague claims of discrimination in the air. It is plain and
obvious that such claims cannot succeed. All of paragraph 5 therefore will be
struck out as it raises no arguable ground upon which the Court could grant
relief.
subparagraphs
6 (g) and (h)
[6] Paragraph 6 is
the appellant’s attempt to define the issues for trial. These two subparagraphs
raise these questions:
6 (g) Is there a legal entitlement for the tax department to
charge excessive amounts of interest beyond the federal rate and commercial
rates?
(h) Is the tax department entitled to conceal the interest rate
which is being charged?
While
the answers to these questions might seem obvious to many, I see no harm in
letting the appellant put them into issue. The computation of interest is only
one of the many things that the parties should be able to agree on before
trial. Failing agreement, the Appellant can obtain particulars of the
computation through the discovery process.
subparagraphs
7 (d) and (e)
[7] These read as
follows:
7 d. That
the interest be voided.
e. That the Appellant be given reasonable time to pay the
amount owing, after which time interest at a disclosed rate, calculated
semi-annually and not in advance, be applied.
This
Court’s jurisdiction in disposing of an appeal from an assessment for income
tax is found in subsection 171(1) of the Act. In allowing an appeal it
may vacate the assessment, it may vary the assessment, or it may refer the
assessment back to the
Minister
for reconsideration and reassessment, but in doing so it is limited by the
provisions of the Act. It is trite that the Court has no power to waive
interest payable under the Act, or to fix terms for the payment of tax
due under the Act. The interest rates payable on outstanding tax is fixed
by the Act and the Regulations. The Court has no jurisdiction to
fix interest rates, although it may review the correctness of the computation.
[8] In the result,
then, paragraph 5 of the Amended Amended Amended Notice of Appeal will be
struck out, with leave to the appellant to amend that paragraph to contest the
disallowance of the home office expense and other expenses, the imposition of
penalties, and the computation of assessed interest, without reference to the Canadian
Charter of Rights and Freedoms. Subparagraphs 7 (d) and (e), and the
references in paragraph 8 to the Canadian Charter of Rights and Freedoms, and
to sections 7, 12 and 15 thereof, will be struck out.
[9] The appellant is
to serve and file a Fresh as Amended Notice of Appeal in conformity with these
Reasons for Judgment within 30 days from the date of this Order. The respondent
is entitled to the costs of this motion, which are hereby fixed at $750.00,
inclusive of disbursements and H.S.T., payable forthwith in any event of the
cause.
Signed at Ottawa, Canada, this 6th
day of October, 2010.
“E.A. Bowie”
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