Date: 20000823
Dockets: 1999-4995-GST-I; 1999-5000-GST-I; 1999-5086-GST-I
BETWEEN:
JAMES DOBIE, DEBORAH SETTON, DOREEN M. MELTON,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent,
Reasons for Judgment
Rip, J.T.C.C.
[1]James Dobie, Deborah Setton and Doreen Melton have
appealed assessments issued under Part IX of the Excise Tax
Act (“Act”) on the basis that they paid an
amount of tax when the amount of tax was not payable or
remittable by any of them and therefore the Minister of National
Revenue (“Minister”) ought to pay the appropriate
rebates to them in accordance with subsection 261(1) of the
Act as it read at the relevant time. The appellants say
that the two-year period required within which a person is to
apply for a rebate pursuant to subsection 261(3) should commence
when the person acquires the knowledge that he or she had paid or
remitted the amount of tax by mistake or otherwise. The three
appellants acknowledged that they made their application for
rebates after the decision of this Court in Taylor (J.) v.
Canada[1] was
released on July 27, 1998 and this was more than two years
after an amount of tax was paid or remitted by them on the
purchase of condominium units in the same project, but not the
same property, as Ms. Taylor and Mr. and Mrs. Redmond, the
appellants in Taylor.
[2]These appeals were not heard on common evidence. They were
heard one after the other since the parties were of the view that
the facts in all three cases may not be similar. The appellants
were not represented by counsel. Mr. Dobie’s appeal
proceeded first. Mrs. Setton’s agent, her husband Mr. David
Porte, and Mrs. Melton were present during Mr. Dobie’s
trial and when their appeals were called each agreed that the
facts led by Mr. Dobie applied to their appeals as well; in
addition, they adduced evidence particular to each of them.[2]
[3] The appellants purchased their units in the condominium
project in Vancouver, British Columbia as follows:
Appellant Date of Purchase Unit
James Dobie 19 June 1993 #404-5880 Hampton Place
Deborah Setton 26 April 1995 #404-5775 Hampton Place
Doreen Melton 12 July 1995 #303-5775 Hampton Place
[4] The appellants paid GST which was collected by the vendor
of the units on or about the time they purchased their respective
unit. They now claim the amounts of GST were paid in error.
[5] The appellants Dobie, Setton and Melton applied for the
rebate in issue on the following dates:
Dobie March 25, 1999
Setton January 22, 1999
Melton December 21, 1998
[6]Subsections 261(1) and (3) of the Act reads as
follows:
(1) Where a person has paid an amount
as or on account of, or
that was taken into account as,
tax, net tax, penalty, interest or other obligation under this
Part in circumstances where the amount was not payable or
remittable by the person, whether the amount was paid by mistake
or otherwise, the Minister shall, subject to subsections (2) and
(3), pay a rebate of that amount to the person.
. . .
(3) A rebate in respect of an amount shall not be paid under
subsection (1) to a person unless the person files an application
for the rebate within two years after the day the amount was paid
or remitted by the person.
[7] Before the amendment to subsection 261(3) in 1997,[3] an application for
rebate of tax paid by mistake was required to be made within four
years from the date of the tax was paid or remitted. The
amendment reducing to two years the time within which to make the
application applied:
to amounts that, after June 1996, are paid as or on account
of, or are taken into account as, tax or other amount payable or
remittable under Part IX of the Act;
and
(b) to amounts that, on or before the last day of that
month, were paid as or on account of, or were taken into account
as, tax or other amount payable or remittable under that Part,
other than amounts that are claimed in an application under
section 261 of the Act filed on or before June 30, 1998.[4]
[8] In the appeals at bar the amounts of tax were paid or
remitted before June 30, 1996 and the applications for
rebate were filed after June 30, 1998.
[9] When the appellants paid or remitted the GST they had four
years from the date of their respective payments to apply for the
rebate of the GST. This right, as Ms. Melton complained, was
taken from them when subsection 261(3) was amended in 1997.
[10] Subsection 43(c) of the Interpretation Act
provides that:
Where an enactment is repealed in whole or in part, the repeal
does not
. . .
(c) affect any right, privilege, obligation or
liability acquired, accrued, accruing or incurred under the
enactment so repealed
[11] The question, therefore, is whether the amendment of
subsection 261(3) in 1997 was a repeal in whole or in part, of
the Act. If the amendment repealed the Act, then
any right enjoyed by the appellants at the time they purchased
their condominium units should survive the amendment; the
four-year period should continue.[5]
[12] The Ontario Court of Appeal considered paragraph
14(1)(c) of the Interpretation Act of Ontario
(“Ontario Act”),[6] a provision analogous to subsection 43(c)
of the Interpretation Act in the appeal of Re
Falconbridge Nickel Mines Ltd. v. Minister of Revenue for
Ontario.[7]
[13] In Re Falconbridge Nickel the appellant claimed a
tax refund under subsection 2(8) of the Ontario Retail Sales
Tax Act. At the time of its over-payment of tax in
1983, the appellant had a right to the refund, subject to a very
minimal or negligible ministerial discretion. In April 1985,
before the application for the refund was made, the province
amended subsection 2(8) to interpose a limitation period. After
the limitation period had expired, the appellant applied for its
refund. The Minister refused to review the application on the
basis that it fell outside the limitation period. Before the
Ontario Court of Appeal, the appellant submitted that the new
enactment deprived it of an accrued right or an accruing right
under the former subsection. The Court accepted this argument and
applied paragraph 14(1)(c) of the Ontario Act to the
amended subsection in question.
[14] The Ontario Court of Appeal appears to have assumed that
the Ontario Retail Sales Tax Act was repealed since
“a major change was made in s. 2(8) affecting its
substance”, the “major change” being the
alteration in the time a taxpayer may apply for a tax refund. The
word “repeal” is defined in the Interpretation
Act to include “revise or cancel”. This is
precisely what is present in the appeals at bar. A change in the
period in which to apply for a tax refund from four to two years
was a major change that affected the substance of the Act.
The previous version of subsection 261(3) was, in effect,
cancelled and ceased to have effect.[8]
[15] Thorson J.A. considered whether a “right”
existed and in Re Falconbridge Nickel and stated at
page 411:
. . . On April 8, 1975, when the 1975 amendment to s. 2(8) of
the Retail Sales Tax Act was stated to have become
effective, did the appellant have a “right” which the
law will recognize as such? If so, is it a right which is
protected by s. 14(1)(c) of the Interpretation Act
as being one which, at that time, either had
“accrued” or was “accruing” in the
appellant’s favour?
In my opinion the appellant did have such a right. It arose by
virtue of the pre-1975 legislation, which in my opinion clearly
contemplated that a claim for a refund of tax could be asserted
by a taxpayer in the situation of the appellant, and that such a
claim would, when it was received by the Minister, be considered
by the Minister even if, as previously noted, the end result of
such consideration might be that the claim was rejected.
There is no dispute that the appellant paid the tax here in
question. Having paid an amount as tax in excess of what it could
then or subsequently establish by satisfactory evidence to be the
amount which in law it was required to pay, it had a right, which
was not limited in time by the then applicable law governing
refunds, to advance a claim to the Minister to have the amount of
the overpayment refunded to it, and to have its claim considered
and either accepted or rejected by the Minister, applying the
principles and taking into account the considerations properly
applied and taken into account by her in the exercise of the
discretion which she had to make or refuse to make such a
refund.
And at page 413:
Nor can I agree that because no claim for a refund was
outstanding at the time of the 1975 amendment, whatever right the
appellant had at that time was merely “theoretical”.
A right is no less a right recognized by the law solely because
all of the steps necessary to be taken before it can be acted
upon may not yet have been taken. In this case the right to claim
a refund came into being once the overpayment of tax had been
made.
[16] Reed J. in Esso Resources Canada Ltd. reiterated
the above when she stated:
. . . at the date of the repeal of the statutory provisions in
issue, there was an element of obligation existing on the
defendant [the Minister], to repay the monies held by it. The
plaintiffs “right” to the refund was not created by
and did not originate with the filing of the application. The
plaintiffs “right” had pre-existing content in much
the same way as an individual has a right (to whatever claim is
in issue) before a court declares such to be the case. What will
be a right, how to define its scope, the time at which it can be
said to have arisen will always be a bit of a metaphysical
enquiry. But, where there is an element of obligation on one
party, in my view, subsection 43(c) of the
Interpretation Act applies. That subsection expressly
includes within its scope more than “rights”
interpreted in a narrow sense. It refers to “any right,
privilege, obligation or liability”.[9]
[17] In the appeals at bar the appellants remitted the GST for
the purchase of their condominiums. On July 27, 1998, it was
established in Taylor (J.), supra, that the Minister
collected GST in error. The Minister was in possession of monies
to which he clearly had no right. The mere fact that the
appellants had purchased their condominium units during the time
former subsection 261(3) of the Act was in force and had
erroneously overpaid GST, entitled them to a right to claim
refunds within the four-year period. The Minister had a duty to
refund those amounts even if the application was considered late
pursuant to the amended subsection 261(3). The appellants had an
accrued right or an accruing right to the monies held by the
Minister until the four-year period expired.
[18] Parliament has not specifically eliminated the accrued
right of taxpayers who fell within the four-year limitation
period of the former subsection 261(3) of the Act.
Immediately after the amendment came into force each of the
appellants still possessed an accrued right to file the
application for the GST rebate and to receive the refund. Their
right to a refund would have expired at the end of the
four-year period.
[19] As far as appellants Setton and Melton are concerned they
filed their application for the GST refund within the four-year
period originally required by subsection 261(3) of the
Act. Their appeals will therefore be allowed with costs,
if any.
[20] Unfortunately, Mr. Dobie applied for his GST refund on
March 25, 1999, more than four years after he purchased the
condominium unit and paid the tax on June 19, 1993.
[21] During his appeal Mr. Dobie appeared to be under the
impression that the decision in Taylor (J.), supra,
changed the law and if he had applied for the refund on time
Revenue Canada would have rejected his application. This is
probably so. Revenue Canada also rejected the application of Ms.
Taylor and Mr. & Mrs. Redmond but they did not take
“no” for an answer and exercised their rights under
the Act to appeal Revenue Canada’s decisions to this
Court and they were successful. That is the course Mr. Dobie
ought to have taken as well. The Court did not change the law
when it decided Taylor (J.) and Redmond; it
simply told Revenue Canada that the taxing authority misapplied
the law.
[22] I cannot compel the taxing authority to hand over to Mr.
Dobie what is his, that is, the tax he ought not to have paid. I
sympathize with Mr. Dobie when he says this is not fair. However,
as the late Chief Judge Christie explained in Impact Shipping
Inc. v. Canada,[10] the Tax Court is not vested with some kind of general
equitable jurisdiction to remedy what it might consider to be an
inequitable result. No matter how strong the appeal may be to
compassion, a court cannot change the legislation. Compassion is
not structured within the law.[11]
[23] In the appeals of Braxton M. Alfred & Diane L.
Alfred v. The Queen; Heather L. Earnshaw and
Linda M. Throness v.The Queen and Vivian M. May v. The
Queen, recent decisions of my colleague Sarchuk J.[12] the facts were
similar to those in these appeals. The appellants applied for the
GST rebate after the two-year period had expired and their
appeals were dismissed. The appellants were represented by
counsel. Sarchuk J. found, among other things, that this Court
does not have jurisdiction to issue an order that the appellants
are entitled to the GST tax refund by extending the time, or
otherwise. Subsection 309(1) of the Act provides that
this Court may dispose of an appeal from an assessment by
dismissing the appeal, or by allowing the appeal and either
vacate the assessment or refer the assessment to the Minister for
reconsideration and reassessment. The Court cannot remedy a
problem that may deserve remedy except in the manner described in
subsection 309(1).
[24] Therefore the appeal of Mr. Dobie is dismissed.
Signed at Ottawa, Canada, this 23rd day of August 2000.
"Gerald J. Rip"
J.T.C.C.
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