Date: 20030129
Docket: 2002-1595(GST)I
BETWEEN:
PARMJIT CHEEMA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bowie J.
[1] The Appellant and
his brother, Jaswant Cheema, purchased two adjacent lots in
Kamloops, British Columbia, in January 1994. Jaswant Cheema is a
builder, and he constructed two semi-detached houses on these
lots, one at 754 MacArthur Drive for the use of himself and
his family, and one at 756 MacArthur Drive for the use of
the Appellant and his family. Both properties were registered in
the name of Jaswant Cheema, but the Appellant's evidence was
that the house occupied by him and his family was beneficially
owned by him, and that there was a trust instrument executed by
Jaswant Cheema to establish that fact. This instrument was made
available to Revenue Canada's assessor, but he was unwilling
to accept that it was genuine. That Parmjit Cheema owned 756
MacArthur Drive beneficially is not now in dispute. In fact, in a
separate appeal brought before this Court by Jaswant Cheema,
the Honourable Judge McArthur so held.
[2] I do not propose
to go into all the details surrounding the building of these
residences as it is only necessary for the purposes of this
appeal to know that Parmjit Cheema was as a matter of fact and
law the owner of 756 McArthur Drive in Kamloops, B.C., and that
he was therefore entitled to apply for and to receive the new
housing rebate provided for in section 256 of the Excise Tax
Act in respect of that property. Construction of the
residence was completed and the Appellant and his family moved
into it in May 1994, at which time the two-year period during
which he was entitled to apply for the rebate began to run. He in
fact filed a claim for the rebate on July 25, 1994.
[3] The Appellant is
a member of the Royal Canadian Mounted Police, and in September
of that year the force transferred him to Surrey, B.C. At this
point the evidence becomes considerably confused. It can be said
with certainty, however, that the Appellant's application for
a new housing rebate was refused, by a Notice of Assessment
issued on December 20, 1995. The Appellant testified that he
first became aware of this Notice of Assessment in October 1996.
It is not clear to me whether the delay in him becoming aware of
it is attributable to a failure on his part to inform Revenue
Canada of his new address in Surrey, or if there was some other
reason. In any event, his inquiries elicited the information that
his application for the new housing rebate had been refused
because Revenue Canada was of the view that the house in fact was
owned by his brother Jaswant. The Appellant was advised by
Revenue Canada that, for that reason only, his brother was
entitled to apply for and receive the new housing rebate, and
that the matter could therefore be pursued only by an application
in his brother's name. This, of course, was erroneous advice,
as was eventually established by Judge McArthur's
Judgment of December 20, 2000, in the case of
Jaswant Cheema. Despite the fact that he was being advised
not only by the officials of Revenue Canada, but also by an
accountant and a lawyer, the Appellant failed to file a Notice of
Objection in response to the Notice of Assessment of December 20,
1995, within the 90-day period limited for doing so.
[4] On March 27,
2001, the Appellant filed a second application for the new
housing rebate, because he had recently become aware of Judge
McArthur's decision in his brother's case. This
application, however, was filed almost seven years after he and
his family first occupied the residence, and it is clearly out of
time.
[5] If these were all
the facts, then the inevitable result would be that the
Appellant's first application for the new housing rebate
could not succeed, as he had been erroneously assessed to deny
it, but had not filed a Notice of Objection to that assessment,
and his second application could not succeed because it was made
too late. These time limits not having been met, the Appellant
would not be in a position to receive the rebate, although it
clearly had been his entitlement. Had he been advised to file a
Notice of Objection, and later a Notice of Appeal, the
probability is that his appeal would have been heard by Judge
McArthur with his brother's appeal, and it would have
succeeded.
[6] It emerged during
the hearing before me that the Appellant made an application in
January 2002, to the Minister seeking a remission order from the
Governor in Council pursuant to section 23 of the Financial
Administration Act,[1]and that he has followed it up twice since. At the time
of the hearing before me, some nine months later, he had had no
response to that application. The Appellant followed the course
of action that he did, and failed to follow the course of action
that he should have, as a result of advice given to him by the
officers of the Canada Customs and Revenue Agency. That was his
evidence and I accept it. It is therefore understandable that he
felt that he was entitled to a remission order.
[7] But for one other
fact that emerged during the course of the hearing before me, the
saga would end at this point, with the Appellant's legal
entitlement gone and his hope of receiving the rebate to which he
was at one time unquestionably entitled depending entirely upon
the grace of Cabinet, on the recommendation of the Minister of
National Revenue. The additional fact to which I refer is that on
June 25, 1997, Revenue Canada wrote to the Appellant in the
following terms:
This notice refers to your application made
under section 303 of the Excise Tax Act, to extend the
time for filing a Notice of Objection to the Goods and Services
Tax [sic] dated June 14, 1996.
The Minister of National Revenue has
considered the information and reasons set forth in your
application and renders the following decision.
After considering the application, and being
satisfied that the conditions set out in section 303 have been
met, the extension of time for filing the objection is granted.
The Notice of Objection is considered to be filed as of the date
of this letter.
Should you wish to communicate with us
regarding the Notice of Objection number 115201758, please direct
your correspondence to the address noted below.
[8] The existence of
this letter first became known to counsel for the Respondent
during a recess in the course of the hearing before me. Having
become aware of it, she very properly brought it to my attention.
She also, quite properly, called a witness, Cosimo Stea, who is
an officer of the Agency and who had reviewed the Agency's
file in relation to the Appellant's rebate applications, and
had also taken steps to retrieve information from the
Agency's computer regarding Notice of Objection no.
115201758. The thrust of his evidence was that the Notice of
Objection referred to in the letter that is
Exhibit R-1 was in fact not that of this Appellant but
of his brother, Jaswant. That notice of objection had been
forwarded to Revenue Canada under cover of a letter signed by
both brothers; the Minister's intention had been that the
letter be addressed to Jaswant Cheema; instead it was sent to
Parmjit Cheema. He drew this inference largely from the number of
the notice of objection which is on the face of the letter, and
from the fact that the date June 14, 1996, referred to therein is
only one day distant from June 13, 1996, the date of the
assessment pertaining to Jaswant Cheema.
[9] I have no doubt
that Mr. Stea gave his evidence in good faith. However, the fact
remains that the Appellant was granted an extension of time and
was also told that the Minister considered that he had a valid
Notice of Objection filed with the Minister which would satisfy
the requirements of section 301 of the Excise Tax Act.
Although the Minister now seeks to resile from it, in my view,
there is no question that Exhibit R-1, whether it was
intended to or not, did in fact confer upon the Appellant an
extension of time to object pursuant to section 303.
[10] I said that Mr. Stea
gave his evidence in good faith, however, I do not accept that
his knowledge of the records of Revenue Canada was encyclopedic,
or that in fact his conclusions drawn from the records he
reviewed is the correct one.
[11] It is common ground
that the Minister has neither confirmed this Appellant's
assessment, nor reassessed him since June 25, 1997. He therefore
became entitled, pursuant to section 306 of the Act, to
appeal to this Court 180 days later, on December 22, 1997.
My conclusion therefore is that the Appellant has an appeal
validly before this Court from the refusal of his first
application for the GST new housing rebate.
[12] It was never disputed
in the proceeding before me that if the Appellant had an appeal
validly before the Court then he would be entitled to succeed in
that appeal. The appeal is therefore allowed and the assessment
is referred back to the Minister for reconsideration and
reassessment on the basis that the Appellant is entitled to
receive the new housing rebate under section 256 of the
Act in respect of the residence at 756 McArthur Drive,
Kamloops, B.C.
[13] I have been advised
since I drafted these reasons that the Appellant's
application for a remission order has been approved. The order
has been granted and he has received some funds as a result of
it. However, as there are some considerations of interest and of
the filing fee that the Appellant paid to bring the appeal before
this Court which are independent of the remission order, I have
pronounced the judgment that I have and the reasons for it
because the matter is not entirely moot.
Signed at Ottawa, Canada, this 29th day of
January, 2003.
J.T.C.C.
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