Date: 20000630
Docket: 98-1962-IT-G
BETWEEN:
NICOLE WELLS,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
order
Tardif, J.T.C.C.
[1]
This is a motion for leave to amend the Notice of Appeal.
[2]
The applicant-appellant, Nicole Wells, filed a Notice of
Appeal on June 22, 1998, after a notice of reassessment was
issued for the 1994 and 1995 taxation years claiming from her a
total of $8,625.73, that is, $5,884.47 for the 1994 taxation year
and $2,741.26 for the 1995 taxation year.
[3]
The appeal arises from a dispute over the value of a work of art,
namely a painting by the artist
Suzor-Côté.
[4]
The painting in question, the property of the appellant
Nicole Wells and her brother Guy Wells, also an
appellant in a related case, was donated to the Musée du
Saguenay.
[5]
The applicant's Notice of Appeal explains and enumerates all
the facts giving rise to the case and states the basis of her
claims. In this regard, I think it useful to reproduce the Notice
of Appeal.
[TRANSLATION]
. . .
1.
On July 28, 1997, the respondent issued a notice of
reassessment for 1995 claiming additional tax of $8,625.73 from
the appellant, the whole as appears from the said notice of
reassessment filed in support hereof as
Exhibit A-1 to have effect as if herein set out
at length;
2.
As appears from the notice of reassessment
(Exhibit A-1), the respondent claims from the
appellant an additional amount as a result of the
respondent's decision of May 13, 1997 to reduce
from $37,500 to $10,000 the value of the gift made by the
appellant in 1994 of a painting by Marc-Aurèle De Foy
Suzor-Côté depicting a monk, which the appellant had
owned jointly with her brother Guy Wells and which they had
given to the Musée du Saguenay, the whole as appears
from the original of the respondent's letter of May 13,
1997, to which was appended a copy of the appraisal of the said
painting made at the respondent's request by
Allan Klinkhoff, both of which were filed together in
support hereof as Exhibit A-2 to have effect as
if herein set out at length;
3.
On June 10, 1997, the appellant, through her counsel,
rejected the respondent's proposal contained in the letter of
May 13, 1997 (A-2) to reduce the amount of the
appellant's 1994 gift from $37,500 to $10,000, the whole as
appears from the letter to that effect addressed to the
respondent, a copy of which is filed in support hereof as
Exhibit A-3 to have effect as if herein set out
at length;
4.
By notice of objection served on the respondent on
October 21, 1997, the appellant contested the notice of
reassessment issued by the respondent, the whole as appears from
a copy of the said notice of objection filed in support hereof as
Exhibit A-4 to have effect as if herein set out
at length;
5.
On March 31, 1998, the respondent sent the appellant a
notice of confirmation by the Minister of the notice of
assessment (Exhibit A-1), the whole as appears from a copy
of the said notice of confirmation by the Minister filed in
support hereof as Exhibit A-5 to have effect as
if herein set out at length;
6.
The notice of assessment issued by the respondent on
July 28, 1997 for the 1995 taxation year is incorrect and
ill-founded in fact and in law for the reasons set out below;
7.
The respondent's decision to reduce the value of the painting
from $75,000 to $20,000 is based on an appraisal produced by
Allan Klinkhoff, which appraisal is part of
Exhibit A-2;
8.
When the appellant and Guy Wells gave the painting to the
Musée du Saguenay, Paquerette Hudon, owner of La
Corniche de Chicoutimi art gallery had appraised the painting at
$75,000, and she confirmed this appraisal in writing on
January 30, 1995; a copy of this appraisal is filed as
Exhibit A-6 to have effect as if herein set out
at length;
9.
In 1996, the respondent informed the appellant and Guy Wells
that she disputed the appraisal and the two donors asked two
experts, Annie Cantin of Boischâtel, Quebec, and
Pierre Bevilacqua of Sherbrooke, to appraise the
painting;
10.
Annie Cantin produced an appraisal of $62,500, a copy of
which is filed in support hereof as Exhibit A-7
to have effect as if herein set out at length, and
Pierre Bevilacqua filed an appraisal of $58,119.67, a copy
of which is filed in support hereof as
Exhibit A-8 to have effect as if herein set out
at length;
11.
Paquerette Hudon, Annie Cantin and
Pierre Bevilacqua are appraisers recognized by the
Department of the Secretary of State of Canada;
12.
The painting was given by Suzor-Côté's brother
to the donors' grandmother,
Adèle Têtu-Wells, a few years prior to
her death in 1902 as an expression of thanks to the donors'
grandparents for taking in and caring for his wife;
13.
The painting had always remained in the donors' family until
they decided to give it to the Musée du Saguenay;
14.
Contrary to what Mr. Klinkhoff claims in his appraisal,
Suzor-Côté was not considered an inexperienced
artist in 1890 since the Hôtel-Dieu de
Montréal commissioned him at that time to paint a fresco,
and he received other commissions; the Musée du
Québec has in its collection a painting done in 1890,
Portrait de femme, la logeuse de l'artiste à
St-Cézaire, and the Musée des Beaux Arts de
Montréal has a very beautiful still life from 1892; in
July 1891, Suzor-Côté finished eighth out of
236 entrants in a painting competition in Paris;
15.
Contrary to what Mr. Klinkhoff appears to claim in his
appraisal, Suzor-Côté was never known for
painting primitive or naïve pictures;
16.
It is surprising to say the least that someone such as
Mr. Klinkhoff, who appears to lay claim to a knowledge of
Quebec culture, should say in his appraisal: "The
description of the monk and his wine is rooted more in the
artistic traditions of 19th Century European Painting than those
of Quebec";
17.
Mr. Klinkhoff's appraisal contains no factual or market
comparison information and is based solely on suppositions;
18.
Suzor-Côté is considered one of the greatest
Quebec and Canadian painters and the Musée du
Québec has at least four paintings dating back before
1900, including one from 1890 and another from 1892; the
Musée des Beaux Arts de Montréal has five paintings
from before 1900, including one from 1892, and the National
Gallery of Canada has three from before 1900;
19.
The painting in question, although a work from the beginning of
the painter's career, has obvious heritage value and is
definitely of interest to any collector; as early as the
mid-1950s, one collector offered $12,000 for the painting;
20.
The respondent is therefore wrong to rely on
Mr. Klinkhoff's appraisal and to assign a value of only
$20,000 to this painting;
21.
Accordingly, the notice of reassessment (Exhibit A-1)
issued by the respondent is ill-founded in fact and in law and
must be vacated;
22.
The instant appeal is well-founded in fact and in law . . . .
[6]
The applicant-appellant contends that the amendment sought is
essentially of a clerical nature and is intended solely to
clarify what is obvious from the content of the Notice of Appeal
as a whole; the whole being moreover logical and consistent with
the content of the earlier stages following the initial
assessment.
[7]
The respondent, for her part, takes a strict and rigorous
approach; she contends that the absence of any specific and
express indication respecting the 1994 taxation year must be
fatal in that the purpose of the motion for amendment is to do by
indirect means what the Income Tax Act (the
"Act") does not allow to be done directly.
[8]
Is the purpose of the motion to amend the Notice of Appeal to add
a taxation year to the notice of appeal after the time period
prescribed by the Act has expired?
[9]
If so, the Tax Court of Canada clearly has no jurisdiction to
permit such an addition, which would have the effect of reviving
a right extinguished by the expiry of the strict deadline.
[10] This
moreover is very clear from both the Act and the case law.
On this point, the Court appreciated the relevance of the case
law to which the respondent referred. I refer in particular to
the following judgments:
1.
Gill v. Canada, [1998] T.C.J. No. 195,
nos. 96-359(IT)I and 96-513(IT)I, March 16,
1998;
2.
Liette Tremblay Côté v. Her Majesty The
Queen, Federal Court of Canada, Trial Division,
April 22, 1999;
3.
McGowan v. Minister of National Revenue,
62 DTC 492 (Tax Court of Canada);
4.
John Taubler v. The Minister of National
Revenue, no. 82-2241, Tax Court of Canada,
June 2, 1987;
5.
Robert Talbot v. M.N.R., May 21, 1992,
no. 90-1672(IT), Tax Court of Canada;
6.
Peter Howard Clifford Mitchell v. The Minister of
National Revenue, no. 84-637(IT), Tax Court of
Canada, November 5, 1985;
7.
Horowitz v. Minister of National Revenue,
62 DTC 1038.
I refer also to the following Interpretation Bulletin:
Income Tax Act, Separate Businesses,
no. IT-206R, October 29, 1979.
[11] Upon
expiry of the legal deadlines for filing a notice of appeal, the
Tax Court of Canada has no jurisdiction to permit or authorize an
appeal. On this question, I think it relevant to reproduce an
excerpt from the judgment by the Honourable Judge
Pierre Dussault in Consoltext v. The Queen,
92 DTC 1567, in which he stated the following:
. . . This Court derives its jurisdiction from Parliament and
more particularly from section 12 of the Tax Court of Canada
Act. With respect to appeals under the Income Tax Act
(the "Act"), this section now gives the Court exclusive
original jurisdiction to hear and determine appeals which are
provided for in the Income Tax Act. The right to appeal
from an assessment under that Act is provided for in section 169
and the manner in which the Court can dispose of it is set forth
in section 171. The relief sought by the Appellant falls outside
the requirements of those provisions as they have been
interpreted by our Courts. As stated by the Supreme Court of
Canada in the Okalta case (supra) at 1177, the
"right of appeal is a right of exception which exists only
when given by statute". I am of the opinion that this
proposition still holds true today. The Tax Court of Canada
cannot expand that right and is bound by its own decisions and
decisions of higher Courts that have restricted its application.
. . .
[12] The
question of the time period prescribed by section 169 of the
Act was also considered by the Honourable
Judge Christie in MacDonell v. The Queen,
84 DTC 1258, where he wrote as follows:
Regardless of the propinquity of the steps taken to appeal to
the expiration of the 90 day period, this Court is without
jurisdiction to hear an appeal which is not instituted before
that period has elapsed. The right of appeal granted by paragraph
169(a) is purely statutory and, if it is to be invoked,
the conditions pertaining thereto must be strictly complied with.
If that is not done, then this Court is without jurisdiction. For
this Court to add even 1 day to the 90 day period would be
tantamount to rewriting paragraph 169(a) which, of course,
it cannot do. There is ample authority for my conclusion:
Horowitz v. Minister of National Revenue, 62 DTC 1038,
Minister of National Revenue v. Simard, 62 DTC 1192 and
MacIsaac v. The Queen, 83 DTC 5259.
The respondents might have made application after
April 30, 1982, for an Order extending the time within
which to institute the appeals as provided by section 167 of the
Act, but the time for pursuing that course of action has long
since passed.
[13] The
Notice of Appeal dated June 22, 1998, arises from a single
transaction, that is, a gift made by the co-owners, one of
whom was the applicant-appellant, to the Musée du
Saguenay. The disputed value of the gift constitutes the sole
basis for the appeal which has consequences for two taxation
years.
[14] This fact
is moreover abundantly described and set out in extensive detail
in the Notice of Appeal. It would of course have been preferable
that the notice refer to the 1994 taxation year. But does this
omission of any such reference exclude everything pertaining to
the 1994 taxation year?
[15] I do not
believe so since all the relevant and material facts are present
and—a point which seems to me to be highly
relevant—the amount of the assessment is expressly stated
therein and includes the two taxation years.
[16] I am
therefore of the view that the purpose of the motion is in effect
not to introduce a new taxation year but essentially to complete
and clarify that which is implicit from the whole of the facts
described in the Notice of Appeal. In other words, the purpose of
the motion is not to gain the right to add a fundamental element
since the whole of the facts alleged implies the reality that was
not expressly stated, that is, the reference to 1994.
[17] This
interpretation is moreover in keeping and consistent with the
progress of the case since the filing of the notice of objection
dated July 28, 1997.
[18]
Consequently, the motion should be disposed of on the basis of
the principles applicable to amendments.
[19] On this
point, Chairman Cardin of the Tax Review Board wrote as
follows in Boivin v. M.R.N., 79 DTC 50, at
page 56:
[TRANSLATION]
At the hearing, the appellant's representative raised the
point that the Minister unilaterally assumed that the taxpayer
had accepted a reserve under paragraph 20(1)(n) of
the Income Tax Act, S.C. 1970-71-72,
c. 63, as amended, when in fact the taxpayer had not elected
to deduct a reserve for the balance of the selling price of the
land to be carried over to subsequent years. Counsel for the
respondent objected to this issue being raised, contending that
the Board did not have jurisdiction to decide it because it had
not been raised in the notice of objection or notice of appeal.
The Board took the objection under advisement, preferring to hear
the main points of the case and then determine the validity of
the objection if the outcome of the appeal might be affected.
Having concluded that the gain realized by the appellant in
1969 is taxable and that the Minister was justified in
reassessing the taxpayer in respect of the 1969 and 1970 taxation
years, it seems to me that the Minister's assumption of a
reserve in respect of the selling price for the subsequent years
did not cause the appellant any prejudice and is not really
relevant to the point at issue. However, the respondent's
objection and the questioning of the Board's jurisdiction on
the basis that the appellant wished to raise a point that had not
been included in the notice of objection or notice of appeal
appear to me to be important enough to warrant a comment in
obiter dictum. Having considered the question, I
have come to the conclusion that, in tax matters where the
accuracy of assessments is at issue, the procedure, at least at
the Tax Review Board, should not be so strict as to prevent any
of the parties from raising at the hearing of the appeal new
points of law or fact which are directly related to the final
determination with respect to the assessment in dispute.
It seems to me that the basic rule that must be scrupulously
adhered to in such circumstances is to ensure that the parties
are not taken by surprise and that they have the necessary time
to consider the newly raised point and to present a defence. This
is clearly one possible and serious exception to the general rule
that the issue should be completely joined prior to the hearing.
Having said that, I am of the view that the Board, in principle,
has jurisdiction to hear and decide points raised at the hearing
of an appeal, in reasonable circumstances and on fair conditions,
at the Board's discretion.
[20] It is
also interesting to note Pigeon J.'s comments in
Bowen v. City of Montreal, [1979]
1 S.C.R. 519:
. . . On the other hand, this Court cannot endorse the
formalistic attitude of the Court of Appeal. This would be
contrary to a fundamental principle that is at the root of s. 50
of the Supreme Court Act and of the reform of civil
procedure effected by the 1965 Code, and which has been
sanctioned in numerous decisions, the most recent being
Cité de Pont Viau v. Gauthier Mfg. Ltd. This
principle is that a party must 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. . . .
[21] Lastly, I
find it helpful and pertinent to reproduce a passage from the
judgment in Québec (Sous-Ministre du Revenu)
c. De Stefano, [1993] R.D.F.Q. 41 (C.A.), in
which Chouinard J.A. wrote at pages 43 and 44:
[TRANSLATION]
. . . Thus, the Deputy Minister's assessment and the
contesting of the capital gain by the respondent constituted the
subject matter of the entire debate, which incidentally included
the matter of the taxation of the alleged gift, in the event that
the transaction turned out not to have been made for fair
consideration. All the parties knew from the outset the substance
of the entire issue, without regard to the modalities thereof.
The amendment sought is related to the main issue arising from
the same source. A broad and liberal interpretation is what is
appropriate in matters of amendment, particularly with respect to
sections 202 and 203.
. . .
And at page 45, he wrote:
[TRANSLATION]
. . .
The only conclusion is that the assessment is the
determination, by the Minister of Revenue or the collector of
revenue or his officers, of the tax payable by the taxpayer. This
determination is entirely separate from the notice which sets it
out and which communicates it. Furthermore, this single decision
includes all taxes owed by the taxpayer under Parts I to
VIII of the Taxation Act (applicable in the instant case),
regardless of whether the determination is reflected by one or a
number of notices depending on the particular characteristics of
the case, in accordance with a single or varied mode of
application of the Act. The main operation must be
distinguished from the ancillary operations.
. . .
[22] For these
reasons, I believe the motion should be granted and the
applicant-appellant permitted to amend her Notice of Appeal in
accordance with the content of the Amended Notice of Appeal.
Signed at Ottawa, Canada, this 30th day of June 2000.
"Alain Tardif"
J.T.C.C.
Translation certified true on this 28th day of September
2001.
[OFFICIAL ENGLISH TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
98-1962(IT)G
BETWEEN:
NICOLE WELLS,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion heard on May 9, 2000, at Chicoutimi,
Quebec, by
the Honourable Judge Alain Tardif
Appearances
Counsel for the
Applicant:
Jean Dauphinais
Counsel for the
Respondent:
Michel Lamarre
ORDER
Counsel
for the applicant's motion, notice of which is dated
June 22, 1998, to amend the Notice of Appeal filed under the
Income Tax Act by adding the year 1994 to
paragraphs 1 and 6 and to the conclusion of the original
Notice of Appeal, is allowed in accordance with the attached
Reasons for Order.
Signed at Ottawa, Canada, this 30th day of June 2000.
J.T.C.C.
Translation certified true
on this 28th day of September 2001.
Erich Klein, Revisor
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