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Citation: 2003TCC841
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Date: 20040112
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Docket: 2003-2579(IT)APP
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BETWEEN:
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NORMAND PAQUET,
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER
Bédard, J.
[1] This
is an application made under subsection 167(5) of the Income Tax Act (the
"Act") for an order to extend the time in which the Applicant can
appeal the decision by the Minister of National Revenue (the
"Minister"). The Court must determine whether there are grounds for
the Applicant's application for extension of the time to bring an appeal for
the 1998, 1999 and 2000 taxation years.
[2] The
facts in evidence are:
- On October 9, 2001, the Minister sent the Applicant
Notices of Reassessment for the 1998, 1999 and 2000 taxation
years. On approximately December 12, 2001, the Applicant served on
the Minister through Annie Poulin, an accounting technician, his objection to the Notices of Reassessment. In reply to these notices
of objection, the Minister forwarded Notices of Reassessment dated April 25, 2002.
- Annie Poulin, the Applicant's agent at the time, undertook
negotiations with the Minister, which led to an agreement signed by the
Applicant and the Minister in June 2002. Nicole Turcotte, auditor for
the Canada Customs and Revenue Agency, testified to the effect that she had
negotiated with Ms. Poulin. Ms. Turcotte stated that she spoke with
the Applicant during a telephone conversation but that she always negotiated
with Ms. Poulin.
- It is important to specify that the Applicant considers himself
illiterate and having little education. That is why he retained
Ms. Poulin's services to look after his file. The Applicant had blind
faith in Ms. Poulin. The latter allegedly informed the Applicant that
after signing the June 2002 agreement, he had to pay $300 per month
for six months and then the file would be closed.
- In November 2002, the Applicant received a statement of
account from the Minister indicating that the Applicant owed a balance
of $12,000. He questioned Ms. Poulin about this statement of account
and a disagreement allegedly occurred between the Applicant and
Ms. Poulin. As a result, Ms. Poulin withdrew from the file in
November 2002.
- Consequently, the Applicant took numerous steps to find a new
accountant to handle his file. The same month, November 2002, the
Applicant went to an accounting office where he met an accounting technician.
He was not able to meet with a certified accountant until a week later. The
accountant made an appointment with him for 15 days later. During this
appointment, the accountant told the Applicant that he could not look after his
file. The Applicant was accordingly sent to another accountant. Waiting until
after the holidays, he met this accountant in January 2003. The Applicant
asked at that time if he could appeal the assessments. He was told he could.
His file was given to another accountant in the same office. It was not until
two weeks later that he met with this accountant. The accountant told the
Applicant that he needed copies of certain contracts for the sale of some
horses. As these horses had been sold to the United States, a two-month period
passed before the Applicant was able to gather all the necessary copies. He
still did not have the name of the American buyer. The accountant recommended
that the Applicant make up a name, which he refused to do. It was important to
the Applicant to have truthful records to be able to present them to the Court.
In May 2003, the accountant told the Applicant that he could longer do
anything for him. Finally, the Applicant retained the services of Christian
Boivin, a tax expert, in July 2003. This same Mr. Boivin acted as the
Applicant's agent during the hearing of this application. Mr. Boivin observed
that the time for an appeal from the assessments by the Minister had run out
and that it was necessary to immediately submit an application for an
extension. The application was submitted on July 9, 2003,
350 days after the deadline for bringing an appeal, which was
July 24, 2002.
[3] Is the Applicant in compliance with subsection
167(5) of the Act and is he entitled to an extension of the time for
lodging his Notice of Appeal? Subsection 167(5) of the Act reads:
When
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 limited by section 169 for appealing; and
(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.
[4] The
time for bringing an appeal under section 169 of the Act expired on
July 24, 2002. The Applicant submitted an application for an
extension on July 9, 2003. The application was thus submitted in the
year following the expiration of the period mentioned under section 169 of
the Act for bringing an appeal. As a result, the Applicant complied with
paragraph 167(5)(a) of the Act.
[5] Before
allowing the application for an extension of the time to appeal, the Court must
be satisfied that, in the time limit for bringing an appeal (in the present
case, the period expired on July 24, 2002), the Applicant had been
unable to act or to instruct someone else to act on his behalf, or he truly
intended to bring an appeal. These two conditions appearing in
subparagraph 167(5)(b) of the Act are disjunctive.
[6] In
the case at bar, the Court cannot conclude that the Applicant truly intended to
lodge an appeal between April 25, 2002 and July 24, 2002.
The Applicant signed an agreement with the Minister in June 2002 and it
was not until November of the same year that he received a statement of account
from the Minister indicating that he owed a balance of $12,000. It is upon
receipt of the statement of account that the Applicant really intended to
appeal. Before that time, the Applicant believed that the dispute had been
settled.
[7] As
for the period from April 25, 2002 to June 2002, that is, before
the signing of the agreement, the Applicant had no real intention of appealing
the Minister's decision as he attempted, to settle the dispute through
Ms. Poulin. Beaubier J. of this Court, in Steve Bata v. Canada, [1998] T.C.J. No. 803
found that the desire to reach an out-of-court settlement cannot be interpreted
as a true intention to lodge an appeal. Here are the comments of
Beaubier J. at subsections 7 and 8:
The appellant testified that he
thought that he could get Mr. Berta to sign the acknowledgments so that the
cost of a lawyer in an appeal wouldn't be necessary. On the evidence, the
appellant has not convinced the Court that the appellant always had a bona fide
intention to appeal pursuant to (5)(b)(i)(B). Rather, he had an
intention to settle the matter so as to avoid the cost of an appeal.
The appellant testified that he
always wanted to appeal, but his actions did not confirm his testimony. The
appellant did not suffer from any circumstances which prevented him from making
this application at any time before he did. He was not away from Canada or
Regina. He did not suffer from a major illness or disability. His job at the
Hungarian Club was for 365 days per year but, even so, he operated a building
cleaning business on the side. On the evidence, he tried to get Mr. Berta to
sign exhibits A-1 and A-2, so that he could make a deal with Revenue Canada.
[8] Despite
the absence of intention to appeal prior to November 2002, the Court is of
the opinion that the Applicant was unable to act or to instruct someone to act
on his behalf during the time granted for lodging an appeal. As mentioned
above, the Applicant did not really intend to lodge an appeal between
April 25, 2002 and June 2002, as he attempted to make some sort
of settlement. The Applicant did not obtain the results that had been set out
for him before he signed the agreement. The Court believes the Applicant when
he says he agreed to sign the agreement on the basis of only having to
pay $300 per month for six months, and no more. Let us remember that the
Applicant is a person with little education and who is, consequently, at the
mercy of the people around him. If the Applicant had understood that the
agreement did not give the expected results, the Court believes that he would
not have entered into this agreement. There was thus error regarding the
benefit on the Applicant’s part, which vitiates his consent to the agreement.
If he had not signed the agreement in June 2002, the Applicant would have
had more than a month to lodge an appeal. It was impossible for the Applicant
to act or instruct another to act on his behalf by virtue of the agreement
entered into in June 2002. It was not until November 2002, when he
received the statement of account, that this impossibility ceased.
[9] The
Applicant's situation is similar to the situation in Abboud v. Canada, [1996] T.C.J. No. 956.
In Abboud, the Applicant found it difficult to express himself in either
French or English. Mr. Abboud did business with an accountant. Due to his
communication problems, Mr. Abboud had to blindly put himself in the hands of
his accountant. In his judgment, Tremblay, J. states:
[translation]
Despite the Applicant's difficulty
in expressing himself in either of the country's two official languages, his
testimony confirmed the facts described in the application for an extension of
the October 6, 1995, deadline…
The corporation "Les
Investissements Papillon" was incorporated in 1985. The Applicant
possessed 50% of the shares. This company's activity consisted in
operating a convenience store.
For six years, the applicant had an
accountant who in all likelihood had served him well. He trusted him.
Therefore, following the issue of notices of assessments and multiple requests
for information by Revenue Canada by telephone and letter alike, the Applicant
transferred his records to him. The accountant told him: "Don’t worry, I’m
taking care of it."
The Respondent's letters dated
May 25, 1994; July 13, 1994; December 12, 1994;
May 16, 1995, and June 12, 1995, have all been filed as
exhibits I-1, I-2, I-3 and I-4.
The receipt of a letter dated
April 26, 1995, from Revenue Canada made the applicant decide to seek
the services of a law firm, Carrière, Dame, Paquet, Pinard. This firm sent a
cease and desist letter to the applicant's accountant. He was never able to be
reached and thus, none of the applicant's records in the accountant's
possession could be obtained.
. . .
The Court is satisfied
with the evidence presented, namely that the applicant, in all of the
circumstances, was unable to act or instruct someone to act on his behalf. Moreover, he truly
intended to object to the assessment. He made every sacrifice to pay all his
debts. [Emphasis added]
[10] For these reasons, the Court finds that the Applicant meets the
criteria under paragraph 167(5)(b)(i) of the Act in that he
could not act or instruct someone to act on his behalf during the period
granted for lodging an appeal.
[11] In the circumstances it is fair and just to
allow the Application. The Applicant, knowing his limitations due to his lack
of education, did everything he could to obtain the necessary help when he
became aware of the situation. He knocked on a number of doors unsuccessfully.
The Applicant's delay is not attributable to his negligence. To the contrary,
the Applicant has demonstrated perseverance. It is therefore fair and just to
allow his application. The condition in subparagraph 167(5)(b)(ii)
of the Act is thus met.
[12] Was the application submitted as soon as circumstances permitted as
required in subparagraph 167(5)(b)(iii)? As soon as Mr. Boivin
was instructed to take care of the Applicant in early July 2003, he
advised him to submit an application for an extension of the deadline. The
application was submitted on July 9, 2003. As it was impossible for
the Applicant to act or instruct someone to act on his behalf before
November 2002 and because he had not been able to find a competent agent
before July 2003, it is reasonable to think that the application was
submitted as soon as circumstances permitted. The complexity of the matter and
the Applicant's lack of education are such that the Applicant could not have
acted alone.
[13] Finally, are there reasonable grounds for the appeal? It is not up to
this Court to determine the appeal's chances for success. It is enough that the
Applicant has reasonable grounds for an appeal for the appeal to be justified
under subparagraph 167(5)(b)(iv) of the Act. Although the
Applicant elaborated little on the reason for his appeal, the Court agrees that
there are reasonable grounds for the appeal.
[14] The Applicant therefore meets the conditions set
forth in subsection 167(5) of the Act. For these reasons, he is entitled
to apply for an extension of the time for an appeal for the
years 1998, 1999 and 2000.
Signed at
Ottawa, this 12th day of January 2004.
Bédard, J.
Translation certified true
on this 26th day of April 2004.
Sharon Moren, Translator
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