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Citation: 2003TCC459
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Date: 20030708
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Docket: 2002-4120(IT)APP
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BETWEEN:
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DR. ROBERT J. WILSON,
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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
Little, J.
A. FACTS
[1] The
Applicant is a licensed medical doctor carrying on the practice of medicine in
the City of Windsor with a speciality in internal medicine.
[2] In
December 1989, on the advice of a friend and financial advisor, the Applicant
invested the sum of $36,900.00 in a partnership known as Mainstream Productions
89-25 (hereinafter referred to as the "Partnership").
[3] The
Partnership was engaged in the business of marketing and producing popular music.
Units in the Partnership were sold and marketed by an entity known as Advanced
Business Opportunities (hereinafter referred to as "Advanced").
[4] In
determining his income tax liability for the 1989, 1990 and 1991 taxation
years the Applicant claimed deductions related to the purchase of units in the
Partnership.
[5] On
July 14, 1993 the Minister of National Revenue (the "Minister")
issued Notices of Reassessment for the Applicant's 1989, 1990 and 1991 taxation
years. In the said Reassessments the Minister disallowed the amounts claimed by
the Applicant in connection with his investment in the Partnership.
[6] The
Applicant filed Notices of Objection to the Reassessments. The Notices of
Objection were held in abeyance pending the outcome of a test case William
King v. Canada, [1995] T.C.J. No. 92 (the "William King
case") before the Tax Court of Canada.
[7] On
July 25, 1995 the Tax Court of Canada dismissed the William King
appeal.
[8] The
decision of the Tax Court was appealed to the Federal Court of Appeal. By
Judgment dated January 17, 2001, the Federal Court of Appeal dismissed the William King
appeal.
[9] By
letter dated August 22, 2001 the Minister advised the Applicant that because of
the decision of the Federal Court of Appeal in William King his
Notices of Reassessment would be confirmed.
[10] On October 3, 2001 the Minister issued a Notification of Confirmation
for the Applicant's 1989, 1990 and 1991 taxation years.
[11] Following receipt of the Notification of Confirmation the Applicant retained
the services of David McNevin, Barrister and Solicitor. The Applicant asked Mr.
McNevin to advise him with respect to his tax position for the 1989, 1990 and
1991 taxation years in light of the decision of the Federal Court of Appeal in William
King.
[12] In an Affidavit dated October 28, 2002 Mr. McNevin stated that in
early November 2001, he advised the Applicant that an appeal to the Tax Court
was not likely to be successful because of the Court decision in the William
King case.
[13] The Applicant accepted the advice that he received from Mr. McNevin
and did not file a Notice of Appeal to the Tax Court within the time limits
specified in the Income Tax Act (the "Act").
[14] Mr. McNevin advised the Applicant that since a positive result was unlikely
if an appeal were filed with the Tax Court the Applicant might achieve a
reduction of his tax liability if he filed an application under the Fairness
Legislation in the Act.
[15] The Applicant accepted the advice of Mr. McNevin and on or about March 15,
2002, Mr. McNevin delivered an application under the Fairness Legislation
to officials of the Canada Customs and Revenue Agency (the "CCRA") in
Windsor.
[16] Sometime in June 2002, Mr. McNevin became aware of the decision of the
Supreme Court of Canada in Brian J. Stewart v. The Queen, 2002 DTC 6969.
[17] Mr. McNevin sought a legal opinion from a tax lawyer on the tax
position of the Applicant as a result of the conclusions contained in Stewart.
In September 2002, Mr. McNevin was advised by a tax lawyer that by virtue
of the Supreme Court's decision in Stewart the likelihood of success by
the Applicant in connection with his tax liability had greatly improved.
[18] Mr. McNevin represented the Applicant before the Tax Court in Windsor,
Ontario on May 1, 2003. Mr. McNevin maintained that under the circumstances as
outlined above the Applicant should be entitled to an extension of time within
which to file Notices of Appeal to the Tax Court.
B. ISSUE
[19] Should the Court grant the Applicant an extension of time pursuant to
subsection 167(1) of the Act?
C. ANALYSIS
[20] Subsection 167(1) of the Act reads as follow:
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.
[21] Subsection 167(5) of the Act reads as follow:
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.
[22] It will be noted that subsection 167(5) provides that no extension
order shall be made under paragraph 167(5)(b) unless the taxpayer
demonstrates that within the time limited by section 169 he had a bona fide
intention to appeal.
[23] In this situation the time within which the Applicant should have
filed a Notice of Appeal to the Tax Court was 90 days from October 3, 2001,
i.e. sometime prior to January 2, 2002.
[24] During the period from October 3, 2001 to January 2, 2002 the
Applicant obtained advice from Mr. McNevin that a positive result on an appeal
to the Tax Court was unlikely and that his best course of action to reduce his
tax liability was to apply under the Fairness Legislation Provisions
of the Act. The Applicant accepted this advice and instructed his
lawyer, Mr. McNevin, to file an application under the Fairness Legislation
Provisions of the Act. The application was made by Mr. McNevin for
the Applicant on March 15, 2002.
[25] Based on the evidence that was presented in the Affidavit of Mr.
McNevin and filed with the Court, I have concluded that the Applicant had
abandoned his right to file an appeal to the Tax Court. In other words, the
Applicant did not have a bona fide intention to appeal within the time
limit specified in the Act (October 3, 2001 to January 2, 2002).
[26] Since the Applicant had abandoned his intention to file an appeal to
the Tax Court he does not qualify for an extension of time to file an appeal
under subsection 167(5) of the Act.
[27] During the hearing before me it was noted that officials of the CCRA
"lost" the Applicant's file or related files for approximately two
years. Under these circumstances it would appear that the interest that has
been imposed against the Applicant on his tax liability should be waived by the
Minister for the two years when the file was lost pursuant to the Fairness
Legislation Provisions contained in the Act.
[28] The application is dismissed.
Signed at Vancouver, British Columbia, this
8th day of July 2003.
J.T.C.C.
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