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Citation: 2003TCC829
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Date: 20031107
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Docket: 2003-886(IT)APP
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BETWEEN:
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LOUISE KOLMAR,
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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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Docket: 2003-885(IT)APP
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AND BETWEEN:
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1120733 ONTARIO LIMITED,
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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
Rip. J.
[1] These are applications by Mrs. Louise
Kolmar and 1120733 Ontario Limited pursuant to section 167 of the Income Tax
Act ("Act") to extend the time to file Notices of Appeal.
Mrs. Kolmar's application is with respect to 1997 and 1998 and the
corporation's application concerns its 1996, 1997 and 1998 taxation years.
[2] The Minister of National Revenue reassessed
Mrs. Kolmar's taxation years for 1997 and 1998 by Notices of Reassessment dated
November 6, 2000. A Notice of Objection was duly filed and the Minister
confirmed the reassessments and mailed the Notice of Confirmation to Mrs.
Kolmar on November 30, 2001.
[3] 1120733 Ontario Limited was reassessed by
the Minister for its 1996, 1997 and 1998 taxation years by Notices dated
November 8, 2000. A Notice of Objection to the reassessments was served on the
Minister on December 4, 2000 and on November 30, 2001 the Minister confirmed
the reassessments and mailed a Notice to the corporation.
[4] No appeal from the assessments against the
corporation and Mrs. Kolmar was filed within the 90 days from the date the
Notices of Confirmation were mailed to each of the applicants.
[5] The applications by
the corporation and Mrs. Kolmar to file the appeals late are dated February 28,
2003, the last day an application was permitted to be filed in accordance with
paragraph 167(5)(a) of the Act.
[6] The Minister
objects to granting the applications on the basis that neither of the
applicants demonstrated that its application was made as soon as circumstances
permitted, as required by subparagraph 167(5)(b)(iii).
[7] The Minister does
not deny that the applicants were unable to act or instruct in order to act in
their respective names within the 90 days from the mailings of the Notices of
Confirmation pursuant to subsection 169(1) or that the applicants had a bona
fide intention to appeal the relevant assessments within the said period of
90 days.
[8] The issue between
the applicants and the Minister is whether certain motor vehicle expenses were
incurred by the corporation in its 1996 to 1998 taxation years for the purpose
of producing income from a business and, if not, whether the corporation
conferred a benefit on Mrs. Kolmar, a shareholder of the corporation:
subsection 15(1).
[9] In her affidavit
Mrs. Kolmar described the facts leading to the application:
3. In
the early part of December, 2001, my late husband, Walter Kolmar, contacted our
solicitor, Mr. Harold Feder, to advise that the Company and I were in
a dispute with the Canada Customs and Revenue Agency ("CCRA")
regarding disallowed car expenditures and that we wished to appeal.
4. My
husband then began to put together the relevant tax documents for the Appeals.
From the end of September to mid February is the busiest time for the business
so he was unable to do much in that regard until the end of February.
5. On
March 7, 2002, I requested and received from CCRA a copy of the Notice of
Confirmation dated November 30, 2001 relating to my assessment.
6. Until
the time of the receipt of the copy of the Notice on March 7, 2002, I did not
realize that the Objection relating to my tax matter had been denied. Further,
I had incorrectly understood the date of the Confirmation relating to the Company
to be December 9, 2001.
7. I
am advised by Mr. Feder and do verily believe that on that date, March 7, 2002,
he advised my husband that the time for filing the Appeals had expired and that
accordingly, we would require an extension. My husband confirmed that we were
still interested in pursuing the Appeals.
8. Throughout
2002 my husband and Mr. Feder were working on gathering the necessary
documentation with which to properly assess the Appeals and prepare the Appeal
documents.
9. The
process was difficult and time consuming due to a number of factors. The
Appeals dealt with three taxation years, the earliest being over six years
earlier. We did not have the documentation required by Mr. Feder. We had dealt
with three different accountants over the period in question. The most involved
accountant had suffered a heart attack and a stroke in the fall of 2001 and was
unable to provide any assistance.
10. Throughout
2002, we were contacted periodically by CCRA and the Ontario Minister of
Finance relating to the status of our tax accounts. We informed them that these
matters were under appeal and directed them to Mr. Feder for further
information.
11. On
December 4, 2002, my husband died suddenly of a heart attack.
12. Shortly
thereafter, I contacted Mr. Feder to inform him of the news and seek his
advice. After some discussion, I confirmed that I wanted to proceed with the
Appeals.
13. The
Appeals were filed February 28, 2003 together with a Request for an Extension
of Time to File the Appeals.
[10] In cross‑examination
on her affidavit, Mrs. Kolmar stated she misunderstood the time issue. She said
she believed information in addition to that provided to the Minister during
the audit and objection stages was necessary to file an appeal and her husband
was "searching" for this information prior to his death.
[11] Mrs. Kolmar said she
advised Mr. Feder, her counsel, to file an application for extension of time in
March, 2002. She was in touch with the accountant who suffered a heart attack
and stroke. This accountant was ill before the Notices of Confirmation were
sent to Mrs. Kolmar. "Everything happened at the same time,"
Mrs. Kolmar recalled, and this was during the busiest time of year for the
business. She said there was "not time to put [things] together".
[12] Mrs. Kolmar stated
she does not know what happened to the original Notices of Confirmation mailed
to her and the corporation on November 30, 2001.
[13] The relevant
provisions of subsection 167(5) provide that:
(5) 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 ...
(iii) the
application was made as soon as circumstances permitted, ...
[14] Applicant's counsel
argued that one must interpret the words "application is [to be] made
within one year ..." in subsection 167(5)(b)(iii) to mean that the
application is to be made "as soon as circumstances permit". Time
must be accorded to taxpayers, he said, to permit them to make an application
not merely to stop the clock but to properly assess the taxpayer's rights. A
taxpayer is given one year to file a "proper" appeal; the taxpayer
need not "dump" the application.
[15] I do not agree with the applicant's counsel. Once the Minister sends a
notice to the taxpayer that the assessment has been confirmed or the Minister
has reassessed as a result of an objection, the taxpayer has 90 days from the
mailing of the notice to appeal to the Court: subsection 169(1). [The
taxpayer may also appeal an assessment if 90 days have elapsed after filing a
notice of objection and the Minister has not notified the taxpayer that the
Minister has vacated or confirmed the assessment or reassessment.] Within this
90 day period the taxpayer is to gather all his or her forces, assemble
documentation, obtain legal advice, etc. to prepare a notice of appeal and
actually file a notice of appeal. Section 167 is an exception to section 169.
All conditions in subsection 167(5) must be fulfilled before an order can be
made extending the time to appeal. The taxpayer must demonstrate, among other
things, that he or she was unable to act or instruct another to act in the
taxpayer's name or had a bona fide intention to appeal within the 90 day
period but because of serious illness, accident or misfortune or due to one of
those inevitable mishaps that occur in life, he or she could not act or
instruct another or exercise his or her intention to file an appeal on time. If
a taxpayer is late in filing a notice of appeal, the taxpayer must act with
diligence to apply for an extension of time to appeal and file a notice of
appeal. There is no comfort of one year to get ready to make an application. In
enacting section 167, Parliament did not intend to extend by a year a
taxpayer's right to appeal an assessment. Such an interpretation would render
the delays in section 169 absolutely meaningless.
[16] There is no doubt that because of the illness of one accountant and
having to deal with two other accountants, Mr. and Mrs. Kolmar's task in
retrieving documents was difficult. However, I cannot satisfy myself that Mrs.
Kolmar and the corporation made their applications as soon as circumstances
permitted. First of all, Mrs. Kolmar cannot recall when she or the corporation
received the original notices of confirmation mailed to them on November 30,
2001. In early December, 2001 the late Mr. Kolmar had contacted their solicitor
advising they had a dispute with Canada Customs and Revenue Agency ("CCRA").
It is not unreasonable to assume that his contact with the solicitor was the
result of the receipts of the notices of confirmation. It was only on
March 7, 2002, after the 90 days to file an appeal had expired, that
Mrs. Kolmar obtained a copy of her notice of confirmation. She had
understood that the corporation's notice of confirmation was dated December 9,
2001.
[17] Secondly, the function of pleadings is to ascertain with precision the
matters on which the parties in dispute differ and the points on which they
agree. It is not necessary to disclose in a pleading any evidence by which a
party proposes to establish his or her case at the trial. What is required is a
sufficient outline of the case.
The applicants were scurrying around after March, 2002, it appears, not
necessarily to prepare notices of appeal but looking for evidence. I infer that
in the circumstances of these cases the information required to prepare a good
notice of appeal was available at the time the notice of objection was filed.
[18] Thirdly, I am unaware of any material fact described in the notices of
appeal filed with the applications that was unknown to Mrs. Kolmar and the
corporation when Mr. Kolmar first contacted their solicitor in December, 2001.
[19] Fourthly, there appears to have been no effort to determine from CCRA
what documents it had in its possession and which could be reviewed by the
applicants to prepare their applications and notices of appeal on a more timely
basis.
[20] In Her Majesty the Queen v. Arthur C. Pennington, Thurlow, C.J. stated that it appeared
to him that what the statute requires "is that the taxpayer make his
application as early as, under the particular circumstances, he could
reasonably be expected to get an application ready and present it". The
Court of Appeal allowed the Crown's review application to set aside a decision
of this Court.
[21] While, in cases of doubt, it is preferable to have a dispute between a
taxpayer and the Crown decided on its merits, rather than the Crown succeeding
due to a taxpayer missing a time limit, one cannot ignore the clear words of
the statute. I am not convinced that circumstances were not present until early
in 2003 to permit the applicants to make their applications. The applications
could have been made much earlier.
[22] The applications are dismissed.
Signed at Ottawa,
Canada, this 7th day of November, 2003.
Rip,
J.
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