Date: 20010912
Docket: 2000-5112-IT-APP
BETWEEN:
MARIA DI MODICA,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Order
Lamarre Proulx, J.T.C.C.
[1]
This is an application to extend the time for serving a notice of
objection to an assessment under section 166.2 of the Income
Tax Act ("the Act").
[2]
The issue is whether counsel's negligence can be a just and
equitable reason for granting an application under paragraph
166.2(5)(b) of the Act.
[3]
The following facts are admitted: the assessment is dated March
16, 2000; the time allowed by subsection 165(1) of the Act
expired on June 14, 2000; on July 5, 2000, the
applicant sent the Minister of National Revenue ("the
Minister") a notice of objection; on July 17, 2000, the
Minister notified the applicant that the notice of objection was
inadmissible because it had been filed after the prescribed time;
on November 27, 2000, the applicant sent the Minister an
application to extend the time for serving her objection; on
November 28, 2000, the Minister notified the applicant that he
was refusing to grant an extension of time pursuant to subsection
166.1(7) of the Act; on December 20, 2000, the applicant
applied to this Court for an extension of the time for serving
her objection.
[4]
The application for an extension refers to documents attached
thereto, including the application for an extension of time made
to the Minister. The latter application, which is dated November
23, 2000, and which was received on November 27, reads as
follows:
[TRANSLATION]
. . .
As regards the above-mentioned file, and further to your
letter of July 17, 2000, which was found in our files on
November 21, 2000, this is to inform you of the
following.
We are writing to ask you to extend the time for filing a
notice of objection for the following reasons.
When the person looking after the file, Carmelo Nicolo,
received your letter of July 17, 2000, he simply put it in the
file without asking for instructions from the lawyer responsible
for the file, Vincent Chiara.
A bring forward to November 20, 2000 was put on the file, and
it was on that date that the said letter of July 17, 2000, was
found. Unfortunately, the deadline of August 4, 2000, had
passed.
An application to extend the time for filing a notice of
objection in the above-mentioned file was therefore not made
because of an error by Ms. Di Modica's solicitors.
Our client should not suffer prejudice because of her
solicitors' error and she should be heard with respect to her
notice of objection.
. . .
[5]
The applicant testified. She stated that, as soon as she received
her assessment, she called Vincent Chiara, went to his office to
take the documents to him and asked him to challenge the
assessment. He allegedly told her that he would take care of it.
She maintained that she called her lawyer several times. She
subsequently received other letters from the government, one of
which was filed as Exhibit I-1. It is dated June 15,
2000, and concerns arrears on an assessment made under subsection
160(1) of the Act. The letter starts by stating that it is
the final notice.
[6]
Counsel for the applicant argued that the applicant acted
diligently and should not be punished for the omissions of the
law firm she had retained. In his written representations, he
argued that an error by counsel can have the effect of making it
impossible to act. He referred in this regard to the authorities
under articles 481.11 and 482 of the Quebec Code of Civil
Procedure found in Hubert Reid and Julien Reid,
Alter Ego, Code de procédure civile du Québec,
Complément jurisprudence et doctrine,
15th edition (Wilson & Lafleur, 1999).
[7]
The above-mentioned articles of the Quebec Code of Civil
Procedure read as follows:
481.11 Inscription for proof and hearing
must be effected not later than 180 days after service of the
declaration and notice. Failing inscription within that time, the
plaintiff is deemed to have discontinued his suit. Such time
limit is imperative; it can be extended only if the party shows
that it was impossible for him to act.
The clerk must refuse to receive or file in the record any
inscription after expiry of such time limit.
482 A
party condemned by default to appear or to plead may, if he was
prevented from filing his defence by surprise, by fraud or by any
other reason considered sufficient, request that the judgment be
revoked and that the action be dismissed.
[8]
Counsel for the applicant finished his written representations as
follows:
[TRANSLATION]
In conclusion, we stress that Ms. Di Modica acted diligently
and that she cannot lose her rights because of her counsel's
error and/or negligence.
[9]
Counsel for the respondent referred in his written
representations to this Court's decision in Garry R.
Harris v. M.N.R., 85 DTC 302, and to the decision of the
Tax Review Board in Antonio Arnone v. M.N.R., [1979]
C.T.C. 2006, in which chairman Cardin stated the following:
However, the chartered accountants in the firm are
professional people. They are responsible people and they charge
for their services and they should also carry out whatever duties
are conferred upon them. I don't believe that the reasons
given in the letter supporting the application are valid and I
shall, for the record, read them:
I enclose notices of objection for the above taxpayer for the
years 1975 and 1976. I would ask for an extension of time to file
these notices on the following basis:
1. The taxpayer contacted me within the required time
period.
2. I contacted the responsible assessor but we were unable to
arrange a meeting.
I am going to stop here and say that that is not sufficient.
The filing of a Notice of Objection is a formal legal procedure
and it cannot be replaced by a telephone call or a meeting.
3. The file in my office got misplaced and in the rush of the
Christmas season and subsequent busy period the matter slipped my
mind.
4. The taxpayer was under the impression the matter was being
handled by me and until collections recently started applying
pressure, he then contacted me.
There is no justification for granting the application in Mr.
Sproule's letter. There is nothing in what he said this
morning, including his recent marriage, which can be considered
as having any bearing or any import on the filing of the
application and I believe that it would be doing a wrong service
to professionals to give them the idea that so long as they
advise the Board that there was some mistake in their operation
that the application would automatically be granted. I think that
that would be a wrong policy to follow. It is certainly not the
one which has been followed by my colleagues on this Board nor in
the Federal Court.
Conclusion
[10]
Subsection 166.2(5) of the Act reads as follows:
No application shall be granted under this section unless
(a)
the application was made under subsection 166.1(1) within one
year after the expiration of the time otherwise limited by this
Act for serving a notice of objection or making a request, as the
case may be; and
(b)
the taxpayer demonstrates that
(i)
within the time otherwise limited by this Act for serving such a
notice or making such a request, as the case may be, 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 object to the assessment or
make the request,
(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, and
(iii)
the application was made under subsection 166.1(1) as soon as
circumstances permitted.
[11] Counsel
for the applicant referred to the authorities under article
481.11 of the Code of Civil Procedure. I cite the first
comment at page 536 of Alter Ego, supra:
[TRANSLATION]
481.11/1 The time limit in article 481.11 C.C.P. can be
extended if the party shows that it was impossible for him or her
to act. In some cases, the error or negligence of counsel for the
applicant may be equated with such impossibility, since,
according to the principles laid down by the Supreme Court of
Canada, a party must not be deprived of his or her rights on
account of an error of that party's counsel where it is
possible to rectify the consequences of such error without
injustice to the opposing party. In assessing whether it was
impossible to act, account must certainly be taken of the harm
caused to the party alleging that impossibility, but
consideration must also be given to the harm imposed on the
opposing party, the apparent value of the action brought and the
distinction between an error by counsel and that counsel's
negligence or inexcusable error.
[12] The
principles laid down by the Supreme Court of Canada referred to
in the above passage are to be found in Cité de
Pont-Viau v. Gauthier Manufacturing Ltd., [1978]
2 S.C.R. 516, and Bowen v. City of Montreal, [1979]
1 S.C.R. 511. It is clear from the facts of those cases that
the circumstances in which counsel made an error were in no way
related to negligence or carelessness by counsel.
[13] In the
first case, the inscription in appeal had been filed within the
time limit but had been served on counsel who were not counsel
for the respondent. That error occurred because the prothonotary
had entered incorrect information. The facts giving rise to the
case were set out as follows by Pratte J. at
pages 518-19:
Within thirty days from the judgment of the Superior Court,
specifically on March 9, 1976, appellant filed at the office of
the Superior Court an inscription in appeal against each one of
the two judgments delivered against it on February 12. Both these
inscriptions had previously (March 4) been served upon Messrs.
O'Brien, Home, Hall, Nolan, Saunders and Associates, who
represented Union Canadienne Compagnie d'Assurance but did
not represent respondent. The inscription in appeal was therefore
not served upon either respondent or its counsel as required by
art. 495 C.C.P.
This omission was due to the fact that the prothonotary, in
giving the notice prescribed by the second paragraph of art. 473
C.C.P., repeated the error appearing on the last page of
the Superior Court judgment and erroneously designated Messrs.
O'Brien, Home, Hall, Nolan, Saunders and Associates as
counsel for the respondent.
After the time limit for filing the appeal had expired, namely
on March 26, 1976, respondent [page 519] caused to be served upon
appellant a motion for the dismissal of the appeal which was
returnable before the Court of Appeal on April 20, 1976. In this
motion respondent alleged that appellant's appeal was
irregular and void because the inscription has not been served
upon either respondent itself or its counsel.
[14] In the
second case, the error involved was an error of law arising out
of the complexity of the issues to be dealt with. Again, it was
an error that had nothing to do with carelessness or negligence
by counsel. I cite the headnote at page 512:
Appellant cannot succeed on his argument that the claim is
based on unjust enrichment and such a claim was not subject to
the short prescription. If there was any enrichment of respondent
municipality, it was not unjust enrichment but the result of the
expropriation and resale. If the expropriation was tainted with
illegality appellant might perhaps, had it not been for the
prescription, have obtained damages instead of the annulment of
the expropriation, but the prescription is an insurmountable
obstacle to any claim of this nature. The only conclusions on
which appellant could hope to succeed were therefore those he had
added by amendment, but which he did not mention in his brief,
namely the prayer to have the expropriation annulled, to which
only the thirty-year prescription applies. However, even if a
direct action in nullity was admissible, the Court cannot rule on
these conclusions with the record in its present state. The
rights of the purchaser cannot be prejudiced without impleading
it, and this seems to have been forgotten. On the other hand, in
accordance with the principle that a party may not be deprived of
his rights on account of an error of counsel where it is possible
to rectify the consequences of such error without injustice to
the opposing party, appellant should be allowed to take the
necessary steps to obtain a decision on his conclusions for the
annulment of the expropriation, on which the courts below did not
rule.
[15] First of
all, it must be noted that the letter of November 23, 2000,
reproduced in paragraph [4] of these Reasons, which should state
the reasons for which the person was unable to act within the
time limited by subsection 165(1) of the Act, is
silent on this point. This is contrary to what is required by
subparagraph 166.2(5)(b)(i) of the Act. Second,
there is an admission in counsel's submissions that the
lawyers were negligent, and none of the lawyers involved came to
testify and explain his conduct and the chain of events in this
case. As well, the result of that failure to testify is that
there is no confirmation of the applicant's assertion that
she had wanted to appeal the assessment within 90 days following
that assessment.
[16] It is my
view that an error by counsel can be a just and equitable reason
for granting an extension of time if counsel otherwise exercised
the reasonable diligence required of a lawyer. I do not think
that the state of the law is such that counsel's negligence
or carelessness can constitute a just and equitable reason for
granting the requested extension within the meaning of
subparagraph 166.2(5)(b)(ii) of the Act.
[17] The
application is dismissed.
Signed at Ottawa, Canada, this 12th day of September 2001.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
[OFFICIAL ENGLISH TRANSLATION]
2000-5112(IT)APP
BETWEEN:
MARIA DI MODICA,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Application heard on May 2, 2001, at
Montréal, Quebec, and
last written argument filed at Ottawa, Ontario,
on June 8, 2000, before
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the
Applicant:
Michel Décoste
Counsel for the
Respondent:
Claude Lamoureux
ORDER
Upon application for an order
extending the time for serving a notice of objection to the
assessment numbered 24413 and dated March 15, 2000, which was
made under the Income Tax Act;
The application is dismissed in
accordance with the attached Reasons for Order.
Signed at Ottawa, Canada, this 12th day of September 2001.
J.T.C.C.
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