Citation: 2006TCC524
Date: 20060926
Docket: 2006-375(IT)APP
2005-395(IT)APP
BETWEEN:
CENTRAL SPRINGS LIMITED and
A & E PRECISION FABRICATING AND MACHINE SHOP INC.,
Applicants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
BowieJ.
[1] Eli Humby operates a logging business in Newfoundland and Labrador through three corporate entities, two of which are the applicants before me. They are applying for extensions of the time within which they may deliver notices of objection to certain notices of assessment under the Income Tax Act (the Act). The notices of assessment in question relate to withholdings from wages that were paid to the people working for Mr. Humby's companies, and they are for the taxation years 2001, 2002 and 2003. The amount of tax and penalty involved for Central Springs Limited (Central) is approximately $43,000.00, and for A & E Precision Fabricating and Machine Shop Inc. (A & E) it is approximately $29,000.00. The A & E assessments are dated July 14, 2003; the Central assessments are dated July 22, 2003.
[2] The position of the respondent with respect to these applications is set out in two affidavits made by Claudia Spence, who is a litigation officer in the Tax Litigation Office of the Halifaxoffice of the Canada Revenue Agency. As to the source of her knowledge, she says this in paragraphs two and three of each affidavit:[1]
2. I have charge of the CRA file and records relating to this Application with respect to the Applicant's 2001, 2002 and 2003 taxation years and the appropriate records in the CRA relating to the Applicant and the application.
3. I have knowledge of the practice of the CRA.
With respect to the issuing and mailing of the notices of assessment she says this:
6. Assessment information stored in the CRA computer system is available in paper form by printing a copy of the electronic journal or by the reprinting the Notice of Assessment or Reassessment by an officer of the Minister of National Revenue (the "Minister").
7. The reprinting of a Notice of Assessment or Reassessment is done only by an officer of the Minister authorized to do so and only upon request of another officer of the Minister.
8. The officer of the Minister authorized to issue a reprinted Notice of Assessment extracts the information of the original Notice of Assessment from the computer system and generates a reprinted copy.
9. The reprinted Notice of Assessment contains the exact assessment information and date as contained in the original Notice of Assessment that was issued to the taxpayer. However, reprinted Notices of Assessment will show the current address that is contained in the CRA system on the date it was reprinted.
10. On or about February 28, 2006, I requested a reprinted copy of the Notice of Assessment for the Applicant's 2001 and 2002 taxation years and for the period from January 1 to May 31, 2003.
11. By Notice of Assessment dated July 22, 2003, the Minister assessed the Applicant for failure to remit payroll deductions, penalty and interest totaling $19,656.35 relating to the 2001 taxation year. A copy of the reprinted Notice of Assessment is attached to this affidavit and marked as Exhibit "A".
12. By Notice of Assessment dated July 22, 2003, the Minister assessed the Applicant for failure to remit payroll deductions, penalty and interest totaling $15,234.47 relating to the 2002 taxation year. A copy of the reprinted Notice of Assessment is attached to this affidavit and marked as Exhibit "B".
13. By Notice of Assessment dated July 22, 2003, the Minister assessed the Applicant for failure to remit payroll deductions, penalty and interest totaling $7,204.27 relating to the period January 1, 2003 to May 31, 2003. A copy of the reprinted Notice of Assessment is attached to this affidavit and marked as Exhibit "C".
14. It is the practice of the CRA to send the Notice of Assessment by regular mail to the taxpayer on the date that appears on the Notice of Assessment and to the address reported by the taxpayer to the CRA.
15. I have carefully reviewed the appropriate CRA records and the record shows that the Applicant changed his address with the CRA on November 30, 2005, to a "General Delivery" address in Benton, Newfoundland. This is the same address that appears on the reprinted Notices of Assessment attached hereto as Exhibits "A", "B" and "C" since I requested copies of the reprinted Notices of Assessment on or around February 28, 2006, after the Applicant changed his address with the CRA in November 2005.
16. I have carefully reviewed the appropriate CRA records and the address of the Applicant on July 22, 2003, was 325 Garret Drive, P.O. Box 342, Gander, Newfoundland, A1V 1W7. This is the address that would have appeared on the original Notices of Assessment and the address to which the Notices of Assessment were mailed to the Applicant.
17. The Applicant filed a Notice of Objection dated July 24, 2005, which was received by the Minister on July 28, 2005. A copy of the Notice of Objection is attached to this affidavit and marked as Exhibit "D". The Applicant clarified with the CRA in September 2005 that the assessments to which the Applicant was objecting related to the 2001, 2002 and 2003 taxation years.
18. The address given by the Applicant in the Notice of Objection is the same address the CRA had in its system on July 22, 2003 when the original Notices of Assessment were issued and mailed to the taxpayer.
[3] Ms. Spence's affidavit says nothing about the mailing process in the office of CRA from which the assessments were mailed. In fact, she does not even reveal from what office the assessments were issued. The respondent relies on the provisions of subsection 244(10) of the Act:
244(10) An affidavit of an officer of the Canada Customs and Revenue Agency, sworn before a commissioner or other person authorized to take affidavits, setting out that the officer has charge of the appropriate records and has knowledge of the practice of the Agency and that an examination of those records shows that a notice of assessment for a particular taxation year or a notice of determination was mailed or otherwise communicated to a taxpayer on a particular day under this Act and that, after careful examination and search of those records, the officer has been unable to find that a notice of objection or of appeal from the assessment or determination or a request under subsection 245(6), as the case may be, was received within the time allowed, shall, in the absence of proof to the contrary, be received as evidence of the statements contained in it.
Also pertinent are subsections 244(14) and (15):
244(14) For the purposes of this Act, where any notice or notification described in subsection 149.1(6.3), 152(3.1), 165(3) or 166.1(5) or any notice of assessment or determination is mailed, it shall be presumed to be mailed on the date of that notice or notification.
244(15) Where any notice of assessment or determination has been sent by the Minister as required by this Act, the assessment or determination is deemed to have been made on the day of mailing of the notice of the assessment or determination.
Section 244 of the Act, and in particular subsection (10), confers on the CRA a significant evidentiary advantage in proceedings before the Court. No doubt Parliament views this as a necessary abridgment of the normal rules by which facts and documents are proven. Given this advantage, it is, for reasons that are obvious, fundamental that officers of the Agency must not abuse it.
[4] The applicants' accountant is Donald J. Farrell, C.A., of Walters Hoffe, Chartered Accountants, in Gander. Both Mr. Farrell and Mr. Humby gave evidence that they did not receive the notices of assessment in the names of the two applicants for 2001, 2002 and 2003 before the sheriff took steps to seize assets at the instance of the CRA in 2005. The exact date on which they, or either of them, first saw the notices of assessment is not clearly established by the evidence, although I infer that it was about the beginning of June, 2005. On June 14, 2005 Mr. Humby's lawyer, Mr. Anstey, sent a notice of appeal by fax to "Hon. Minister John McCullum"[sic]. It is signed by Mr. Humby for Central and A & E and is dated June 6, 2005. In it he says:
I am appealing the "apparent" assessment levied on Humby Enterprises Limited, Central Springs Limited and A & E Precision Fabricating and Machine Shop Inc. made by Revenue Canada. I never received a copy of the Notice of Assessment for the above companies except for one recently received by me in the last month for A & E Precision Fabricating and Machine Shop Inc. and Central Springs Limited.
[5] Mr. Humby's evidence was that he sent this notice as soon as he became aware of the notices of assessment. He sent copies of this notice to Mr. Peddle and Mr. Taylor in the St. John's office of CRA, as well as sending the original to the Minister's office in Ottawa. His reason for doing so, I assume, was because he and Mr. Farrell had been engaged in discussions with Mr. Peddle and Mr. Taylor about the prospect of such assessments, or other action on the part of the Agency in the latter part of 2002. At that time, Mr. Humby was about to embark on a lengthy trial of an action he had brought in the Supreme Court against the government of Newfoundland and Labrador. He left those meetings with an understanding that the CRA would take no steps against his companies while he was engaged in that trial. I have no doubt that when he found out about the assessments that had been issued, he felt that Mr. Peddle and Mr. Taylor had broken their agreement with him.
[6] Mr. Farrell, for his part, forwarded notices of objection to the Chief of Appeals at the CRA office in St. John's on July 24, 2005 on the Agency's printed form. Although these documents did not specify the taxation years to which they pertained, there is no suggestion that the Agency was in any way misled by that omission, and by some unspecified date in September, according to Ms. Spence's affidavit, Mr. Farrell had clarified the taxation years to which the objections pertained, if it was in fact ever in doubt.
[7] What, then, is the factual conclusion that I should draw from the affidavit of Ms. Spence, her testimony at the hearing, and the evidence of Mr. Humby and Mr. Farrell? I am not much impressed by Ms. Spence's affidavit. Her statement that she has charge of the appropriate records and that she has knowledge of the practice of the Agency, which subsection 244(10) requires, is at best suspect. She has charge, as she says, of the records that relate to this application. It is clear from the affidavit itself as well as from her evidence under cross-examination that she does not have charge of the computer where the only record of the notices of assessment was maintained between the time the assessments were raised and the time that she obtained printouts of them from the "officer of the Minister authorized to issue a reprinted Notice of Assessment". Clearly, she herself was not authorized to reprint the notices, and that alone causes me to conclude that her affidavit overreaches. Furthermore, her only statements that the notices of assessment were mailed are the oblique references in paragraphs 16 and 18. It was clear from her evidence on cross-examination that she had no actual knowledge of the fact of mailing, nor any knowledge of the process for doing so in the office from which they were mailed.
[8] Mr. Humby was clear in his evidence that he did not receive the notices of assessment by mail. His is a small company, and if the notices had arrived at its post office box I am quite sure that they would have come to his attention. I am also quite sure that if they had come to his attention in that way, then he would have taken the steps to object to them immediately, just as he did in June 2005. If the two notices bore the same date then one might infer that they were mailed together and were lost or delayed in the course of the mail. That is not the case, however. They bear dates that are eight days apart. I consider it unlikely that two notices mailed eight days apart to a post office box in Gander would both go astray. It seems to me to be far more likely that Mr. Peddle and Mr. Taylor were living up to their agreement not to take steps against Mr. Humby's companies during the pendency of the trial. It may be that because of that agreement, assessments were prepared but then held in abeyance. I do not know, and I am quite sure that Ms. Spence does not know either. What I do know is that the unchallenged evidence of Mr. Humby and of Mr. Farrell outweighs her flimsy affidavit. I am satisfied on a balance of probabilities that the notices of assessment were never mailed.
[9] The law is settled that when notices of assessment are not mailed but come to the attention of the taxpayer by personal delivery then the time within which they may be objected to starts to run with that personal delivery.[2] I conclude, therefore, that the time limited for filing notices of objection in these cases did not expire until the beginning of September 2005, and that valid notices of objection were filed by Mr. Farrell in July of that year. The applicants, therefore, are in the position that they may either wait for the Minister to respond to those notices of objection, which of course he has not yet done, or they may avail themselves of the right to appeal to the Court now, as provided for in paragraph 169(1)(b) of the Act.
[10] As in Aztec Industries Inc. v. The Queen,[3] the applications will be dismissed, not because the applicants are undeserving of relief, but because they do not require it.
Signed at Ottawa, Canada, this 26th day of September 2006.
"E.A. Bowie"
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