Citation: 2008TCC18
Date: 20080121
Docket: 2007-1615(EI)APP
2007-1616(CPP)APP
BETWEEN:
CHEAM TOURS LTD. OP AIRPORT LINK SHUTTLE,
Applicant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Counsel for the Applicant: Donald Smetherman &
Andrea Donohoe
Counsel for the Respondent: Selena Sit
____________________________________________________________________
AMENDED REASONS FOR ORDER
(Delivered orally from the Bench on
November 8, 2007, at Vancouver, British Columbia)
McArthur J.
[1] This motion by the Respondent is for an
Order that the Applicant’s requests to extend time to file Notices of Appeal be
dismissed on the grounds that they were not filed in time, pursuant to subsection
103(1) of the Employment Insurance Act and subsection 28(1) of the Canada
Pension Plan. This is an instance where an Applicant, acting on his own
behalf as he is entitled to do, found himself in deep procedural trouble
requiring the able assistance of counsel to guide him through a maze of rules
and regulations.
[2] Two decisions,
dated July 26, 2006 and August 7, 2006, respectively, were sent by the Minister
of National Revenue to the Applicant. The first confirmed the ruling that
Stephen Eric Freeric Simpson was engaged in pensionable and insurable
employment, and the second concerned assessments of EI and CPP contributions.
Both decisions concluded with the following paragraph:
If you disagree with this decision, you
can appeal to the Tax Court of Canada within 90 days of the date of this
letter. You can find details on how to file an appeal in the enclosed
information sheet called How to Appeal to the Tax Court of Canada. (addresses
for the Tax Court of Canada were included)
[3] On August 16, 2006,
Mr. Narinder S. Johal, the president, director and shareholder of the Applicant,
wrote asking to appeal the decisions. This “appeal” was in writing and it set
out, in general terms, the reasons for the appeal and the relevant facts.
Unfortunately it was sent to Canada Revenue Agency instead of the Tax Court of
Canada, Mr. Johal not appreciating the difference between the two. Had it been
forwarded to the Tax Court Registry, there would be no need for this motion. Subsection
5(4) of the Tax Court of Canada Rules of Procedure respecting the Employment
Insurance Act
requires that the appeal be instituted by filing the original document in the
Registry. Because this “appeal” was sent to the wrong address and not forwarded
to this Court, this was not possible.
[4] CRA records
(provided pursuant to an access to information request) indicate that a CRA
Trust Examiner received this “appeal” on August 22, 2006 and advised the Applicant’s
accountant, Zahoor Shariff, that he would hold on to it until all of the
records had been received.
[5] The Applicant was
verbally advised by a CRA official that there would be an opportunity to appeal
the decision once CRA had calculated the final amount owing. CRA records also confirm
that the Trust Examiner knew the Applicant was under the impression there would
be another appeal.
[6] After receiving the
Trust Examiner’s detailed calculations on January 24, 2007, the Applicant faxed
a letter to the Tax Court on January 31, 2007. Unfortunately, this letter
failed to set out the reason why the Applicant had not instituted an appeal within
the allotted time. Obviously, he believed, albeit mistakenly, that he had
instituted a valid appeal. The Tax Court requested further particulars in a
letter dated February 15, 2007. The Applicant provided the particulars on March
27, 2007 and the appeal was filed on April 2, 2007. Because April 2, 2007 fell
more than 180 days after August 7, 2006, the Minister filed a motion to dismiss
the Applicant’s application for an extension of time.
[7] Subsection 103(1)
of the Employment Insurance Act
(the “Act”) stipulates that an application for extension can only be
made up of 180 days (90 days + 90 days) after the decision is communicated. And
the Interpretation Act states:
Where there is a reference to a number of
days, not expressed to be clear days, between two events, in calculating that
number of days the day on which the first event happens is excluded and the day
on which the second event happens is included.
[8] The relevant dates
are:
(i)
Ninety
days after August 7, 2006 which would have been Sunday, November 5, 2007 (not
including August 7th but including November 5th). Since November 5th
fell on a weekend, however, the deadline would have fallen on Monday, November
6, 2006.
(ii) One-hundred and
eighty days after August 7, 2006 which would have been Saturday, February 3,
2007. Since this also fell on a weekend, the deadline would similarly have been
moved to Monday, February 5, 2007.
[9] The issues are
whether the fax sent by the Applicant to the Tax Court on January 31, 2007
is a valid application for extension of time and if not, was the April 2, 2007
application for extension of time filed in time?
[10] The main sections of
the legislation relied on are as follows:
Employment Insurance Act
103(1) The Commission or a person
affected by a decision on an appeal to the Minister under section 91 or 92 may
appeal from the decision to the Tax Court of Canada in accordance with the Tax
Court of Canada Act and the applicable rules of court made thereunder
within 90 days after the decision is communicated to the Commission or the
person, or within such longer time as the Court allows on application made to
it within 90 days after the expiration of those 90 days.
103(1.1) Section 167, except paragraph
167(5)(a), of the Income Tax Act applies, with such modifications
as the circumstances require, in respect of applications made under subsection
(1).
Income Tax Act
167(1) Where an appeal to the Tax Court
of Canada has not been instituted by a taxpayer under section 169 within the
time limited by that section for doing so, the taxpayer may make an application
to the Court for an order extending the time within which the appeal may be
instituted and the Court may make an order extending the time for appealing and
may impose such terms as it deems just.
167(2) An application made under subsection 167(1) shall set
out the reasons why the appeal was not instituted within the time limited by
section 169 for doing so.
167(3) An application made under subsection (1) shall be made
by filing in the Registry of the Tax Court of Canada, in accordance with the
provisions of the Tax Court of Canada Act, three copies of the
application accompanied by three copies of the notice of appeal.
167(4) The Tax Court of Canada shall send a copy of each
application made under this section to the office of the Deputy Attorney
General of Canada.
167(5) No order shall be
made under this section unless
(a) …
(b) the taxpayer demonstrates that
(i) within the time otherwise
limited by section 169 for appealing the taxpayer
(A) was
unable to act or to instruct another to act in the taxpayer’s name, or
(B) 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, and
(iv) there are reasonable grounds for the
appeal.
[11] The Tax Court of
Canada Rules of Procedure Respecting the Employment Insurance Act
provides at Rule 3 and 27(3):
3. These rules shall be liberally construed
to secure the just, least expensive and most expeditious determination of every
appeal on its merits.
27(3). The Court may,
where and as necessary in the interests of justice, dispense with compliance
with any rule at any time.
Analysis
[12] While rule 27 of the
Tax Court Rules for Unemployment Insurance appeals, made under
the authority of the Tax Court Act, permits the Court to dispense with
compliance with any rule, this clearly does not authorize the Court to alter
the statutory conditions for appeal in subsection 70(1) of the Unemployment
Insurance Act [today subsection 103(1) of the EIA]. Obviously, I am not free
to dispense with the statutory conditions in section 103 of the Employment
Insurance Act or in section 167 of Income Tax Act (except for
paragraph 167(5)(a)).
[13] Subsection 167(2) of
the Income Tax Act, however, presents a stumbling block. It stipulates
that an application for extension shall set out the reasons why the appeal was
not instituted within the time limit. I cannot overlook the fact that, since the
fax of January 31, 2007 failed to do this, it cannot constitute a valid
application to extend the time within which to institute an appeal.
[14] The final question
is whether the April 2, 2007 application for extension of time was filed in
time? On several occasions, this Court has permitted an Applicant to cure a
technical defect where due diligence was exercised in good faith. The following
comments of Chief Justice Bowman in Spensieri v. The Queen come to mind:
I do not mean to be either
dismissive or disrespectful of the Crown’s submission, but I cannot help
thinking that the respondent is being rather technical in mounting a major
campaign to keep the Applicant from having her day in court because of a rather
minor slip-up. It is not surprising, if a person has to manoeuvre through two
acts (the Income Tax Act and the Tax Court of Canada Act) and two
sets of rules, informal and general, that he or she might make a mistake. The
rules are not intended to be a trap for the unwary or to create a minefield of
obstacles for litigants. Rather they are supposed to facilitate the
resolution of substantive disputes.
(Emphasis added)
[15] In Hickerty v.
Canada,
where as in the present instance,the taxpayer had also mailed her appeal to CRA
rather than mailing it to the Tax Court. Justice Boyle held that:
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). …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 [been] 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.
[16] By analogy to Hickerty, the conditions in
subsection 167(5) of the Income Tax
Act must be met. After a review, I am satisfied that the Applicant had a good faith
intention to appeal and it would be just and equitable to grant the application
for extension in the circumstances. In addition, there are reasonable grounds
for the Applicant to appeal the decisions of the Minister and it had a mistaken
belief that the appeal had been validly instituted.
[17] Nevertheless, several hurdles must be overcome.
First, since the Tax Court requested further particulars in a letter dated
February 15, 2007, but the Applicant did not respond until March 27, 2007, it
could be argued that the application was not made as soon as circumstances
permitted. However, I am satisfied that this allegation can be overcome by
looking to the overall circumstances of the case. The Applicant sent the
initial “appeal” (albeit mistakenly) to CRA shortly after receiving the CRA
decisions. In addition, the Applicant faxed a letter to the Tax Court (albeit lacking
the necessary particulars) shortly after receiving the Trust Examiner’s
detailed calculations. This indicates a general level of diligence which I
believe inures to the benefit of the Applicant.
[18] Perhaps more serious is the question, “was there
something else the Applicant ought reasonably to have done during the period in
question?” Assuming without deciding that the Applicant ought reasonably to
have done some unspecified action during the period in question of when this
unspecified action ought to have taken place. And, since two month of
stopped-time would be enough to bring the April 2, 2007 filing within the
allotted 180-day timeframe, I am satisfied the application for extension
of time was validly instituted. The bottom line is that the Applicant was
caught in a procedural web that would be incomprehensible to most Canadians. As
Chief Justice Bowman stated in Spensieri, “it is in the interest of
justice that he be extricated from it so that he can get on with having his
case heard on its merits.”
[19] Further, the Tax Court has inherent jurisdiction
over its own process. The Applicant has acted reasonably and in good faith
throughout and I accept the alternative argument of counsel for the Applicant’s
counsel as follows:
On the basis of the Boyle J.’s decision
in Hickerty, that the date which the Minister contends as the filing
date of the Applicant’s extension application and notice of appeal in the Tax
Court of April 2, 2007 is within the 90 day time
limit set out in the CPP and EI
Act for the filing an appeal to the Minister’s August 7, 2006 Decision.
These Reasons
for Order are issued in substitution for the Reasons for Order issued January
9, 2008.
Signed
at Ottawa, Canada, this 21st
day of January, 2008.
“C.H. McArthur”
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