Hudrick v. The Queen, docket APP-308-98-IT

Date: 19990219

Docket: APP-308-98-IT; APP-309-98-IT

BETWEEN:

DIANE HUDRICK, JAMES HUDRICK,

Applicants,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for order

Sarchuk, J.T.C.C.

[1] These are applications by Diane and James Hudrick for an Order extending the time within which they may file notices of objection with respect to their 1994 and 1995 taxation years.

[2] The Applicants carry on business in Ste. Anne's, Manitoba. The Minister of National Revenue initially assessed the Applicants for the 1994 taxation year on May 1, 1995 and for the 1995 taxation year on April 4, 1996. Following an audit, the Minister, on July 31, 1997 reassessed each Applicant for those taxation years. The evidence adduced on behalf of the Minister from Alice Newman, the appeals officer who had conduct of this file for Revenue Canada, establishes that the notices of reassessment were mailed to the Applicants' address of 28 Seine Road, Ste. Anne's, MB, R5H 1A1, each in a separate envelope.

[3] The Applicants failed to file notices of objection within the time limited by section 165 of the Income Tax Act (the Act). Subsequently, their accountant, C. Les Champagne, submitted a request to the Minister for an extension of time on their behalf by way of letter dated May 7, 1998. The reason cited for failing to file within the required time limit was that each was unaware of the reassessments and that neither had received their respective notices of reassessment. The Minister denied the application and the Applicants were advised thereof by mail on June 10, 1998.

[4] On August 25, 1998, each Applicant filed an application with the Tax Court of Canada for an extension of time to file the notices of objection pursuant to section 166.2 of the Act. The grounds relied upon were that each Applicant "was not aware nor has in his/her possession a reassessment notice for the said years 1994-1995".

[5] Both Applicants testified. To put it charitably Mr. Hudrick's testimony was of absolutely no assistance to the Court. He could not recall receiving the assessments nor could he recall seeing other documents which had been sent to him by Revenue Canada including a letter dated June 19, 1997 from the auditor setting out the proposed basis for reassessment. This letter, it might be added, was included with the documents and other material subsequently turned over by the Applicants to their accountant.

[6] Diane Hudrick also asserted that she could not recall receiving the notices of reassessment. She conceded that Revenue Canada had returned by Priority Post all of the documents that the Applicants had provided to it during the audit but could not recall seeing the proposal letter which accompanied those documents. In cross-examination, she conceded that since their accountant had the proposal letter in his possession and had received it from the Applicants then she must have seen it at some point of time. Her testimony on the whole was vague and of no assistance to the Applicants or to the Court.

[7] Mr. Champagne has been the Applicants' accountant for a number of years. With respect to this particular matter, his involvement began in or about May 1998 when he applied to the Minister for an extension of time on behalf of his clients. This was precipitated by questions put to him by the Hudrick's at the time he was preparing their 1997 returns. At that time, the Applicants provided him with a copy of the proposal letter and told him that they had no recollection of receiving any notices of reassessment.

[8] Evidence was adduced on behalf of the Respondent from Lillian Fargey, a collection officer with Revenue Canada. The Hudricks' file was assigned to her on October 28, 1997. She contacted the Applicants and spoke to Mrs. Hudrick on October 30, who advised her "that she was going to be presenting more receipts to have the reassessment done again". There was, according to her diary entries, no suggestion by Mrs. Hudrick that the reassessment had not been received.

[9] The testimony adduced by the Applicants fails to establish that they did not receive their respective notices of assessment. The evidence is clear that the Minister sent the notices to each Applicants' address appearing on their file. Furthermore, the testimony of Fargey casts great doubt on the evidence given by the Applicant, Diane Hudrick. I accordingly conclude that the Applicants have not demonstrated that within the time otherwise limited by the Act for serving the notice, they were unable to act or instruct another to act as required by subparagraph 166.2(5)(b)(i). The applications are denied.

Signed at Ottawa, Canada, this 19th day of February, 1999.

"A.A. Sarchuk"

J.T.C.C.