Citation: 2016 TCC 215
Date: 20161020
Docket: 2015-3908(IT)G
BETWEEN:
LAWRENCE
MPAMUGO,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
AMENDED
REASONS FOR ORDER
Graham J.
[1]
The Crown has brought a motion to quash an
appeal filed by Lawrence Mpamugo in respect of his 1998 to 2002 tax years on
the grounds that the preconditions for filing the appeal are not met. A
taxpayer cannot appeal from a reassessment to the Tax Court of Canada unless
the taxpayer has first filed a timely Notice of Objection with the Minister of
National Revenue and the Minister has neither confirmed the reassessment,
issued a new reassessment or failed to resolve the objection within 90 days. The
Crown takes the position that Mr. Mpamugo has not filed timely Notices of
Objection to any of the reassessments of the years in question.
[2]
Mr. Mpamugo agrees that the Appeal should be
quashed, but for a different reason. He takes the position that the Notices of
Reassessment were never sent to him. Thus, he says that there was nothing to
which he could object in the first place. He argues that, since he could not
object, he cannot have met the precondition for filing a Notice of Appeal and
thus the Appeal should be quashed.
I. Issues
[3]
This Motion raises two key issues:
a)
What test must be applied when a taxpayer alleges
that a Notice of Assessment was never mailed to him or her? In particular, at
what step in the test should the taxpayer’s credibility be considered?
b) Applying that test to the evidence, should Mr. Mpamugo’s appeal
be quashed?
II.
Background
[4]
In 1998 and 1999, Mr. Mpamugo ran a college in
Ontario through a company known as Marygold Technologies Incorporated. The
college recruited a large number of “students” and assisted those individuals
in falsely applying for student loans through the Ontario Student Assistance
Program (“OSAP”). In 2004, Mr. Mpamugo was convicted of fraud in respect of those
student loans.
In simple terms, the Court found that Mr. Mpamugo fraudulently obtained OSAP
funding for students who did not actually attend the college. Mr. Mpamugo was also
convicted of obstruction of justice for creating false documents after the
fraud investigation had begun. Mr. Mpamugo was ultimately sentenced to six and
a half years in jail and ordered to pay $5,700,000 in restitution payments.
[5]
The Minister claims to have reassessed Mr.
Mpamugo’s 1998 to 2002 tax years. The alleged 1998 and 1999 reassessments together
assess approximately $6.8M in additional income. The reassessments mostly appear
to relate to income that the Minister alleges Mr. Mpamugo received from the
fraud or from Marygold. The alleged 2000 to 2002 reassessments appear to have
been for relatively small amounts. I say “appear” in the previous sentences because
the Minister has not yet filed a Reply so I do not know the assumptions of fact
on which the alleged reassessments were based. Related assessments were issued
to Mr. Mpamugo’s wife, son and daughter under subsection 160(1).
III.
Test to be used when a taxpayer alleges that a
notice of assessment was never mailed
[6]
The Tax Court of Canada and Federal Court of
Appeal have had many opportunities to consider what happens when a taxpayer
alleges that the Minister did not mail a Notice of Assessment. Those cases have
arisen in the context of determining whether a taxpayer filed a Notice of
Objection on time or determining whether a tax year is beyond the normal
reassessment period. The following is a summary of the steps that have emerged
from those cases:
a)
Step 1: The taxpayer
must assert that the Notice of Assessment was not mailed. A taxpayer normally does so in
one of two ways. The taxpayer may assert that he or she did not receive the Notice
of Assessment and thus believes that it was not mailed. Alternatively, the taxpayer
may assert that the Notice was mailed to the wrong address through no fault of the
taxpayer and was thus, in effect, not mailed.
b) Step 2: If the taxpayer asserts that the
Notice of Assessment was not mailed, the Minister must introduce sufficient
evidence to prove, on a balance of probabilities, that the Notice of Assessment
was indeed mailed or, if the taxpayer has asserted that it was mailed to the
wrong address, that it was mailed to the address that the CRA properly had on file.
c)
Step 3: If the
Minister is able to prove that the Notice of Assessment was indeed mailed, then
the mailing is presumed to have occurred on the date set out on the Notice
(subsection 244(14)). This is a rebuttable presumption. The taxpayer may introduce
evidence to prove that it was actually mailed on a different date. The deadline
for filing a Notice of Objection is calculated from the mailing date
established by this step (subsection 165(1)). The “normal reassessment period” for a tax year also commences from the mailing date established by
this step (subsection 152(3.1)).
d) Step 4: Once the mailing date is established
(either through the presumption or through proof of a different date), the
assessment is deemed to have been made on that date (subsection 244(15))
and the Notice of Assessment is deemed to have been received on that
date (subsection 248(7)). These deeming provisions are not rebuttable. The date on which an
assessment is made is used to determine whether a reassessment was made outside
of the “normal reassessment
period” of a tax year (subsection 152(4)). Step
4 is not strictly relevant for the purposes of determining the deadline for
filing a Notice of Objection. That determination is made in Step 3. Step 4
simply makes it clear that the fact that a taxpayer did not actually receive
the Notice of Assessment is irrelevant.
[7]
The main dispute between the parties regarding these
steps is whether the taxpayer’s credibility is to be considered at Step 1 or
Step 2. While this may, at first, appear to be a minor issue, one can see its
importance if one considers a situation where the Minister has no evidence of
mailing whatsoever but the Court does not believe the taxpayer’s assertion that
the Notice was not mailed. If credibility is determined at Step 1, the taxpayer
will lose as the test will never proceed to the point where the Minister has to
prove mailing. If credibility is determined at Step 2, the Crown will lose as it
will be unable to discharge its onus.
[8]
The Crown takes the position that the taxpayer’s
credibility is to be determined at Step 1. The Crown argues that, if the
taxpayer’s assertion is not credible, Step 1 is not satisfied and thus the
analysis never proceeds to Step 2 and the Crown never has to prove the date of
mailing.
[9]
Mr. Mpamugo takes the position that the
taxpayer’s credibility is not determined until Step 2. He argues that Step 1 is
satisfied if a taxpayer simply makes an assertion regardless of whether the
Court finds that assertion to be credible. He submits that it is only at Step 2,
when the Court has to decide whether the Crown has proven mailing on a balance
of probabilities, that the credibility of the taxpayer’s assertion becomes
relevant.
[10]
I prefer Mr. Mpamugo’s view. The taxpayer’s
credibility should be determined at Step 2.
[11]
The Crown relies heavily on a decision of this
Court in Nicholls v. The Queen which stated that the Crown “only has the onus to prove that the
assessments were sent if the [taxpayer] alleges that he has not received the
assessments and that allegation is credible”.
Nicholls was followed in Oddi v. The Queen and Menzies v. The Queen. With respect, I am not
convinced by those cases. To me, the logical place to consider credibility is
where Courts normally consider it: in the weighing of the evidence on a balance
of probabilities.
[12]
I do not see any need to further protect the
Minister from unscrupulous taxpayers who might raise false assertions. The
existing system already provides sufficient protection to the Minister. Subsection
244(10) makes it easy for the Crown to prove mailing. Under that subsection, if
a CRA officer provides an affidavit stating that the officer has charge of the
appropriate records and has knowledge of the practices of the CRA, that he or
she has examined those records, and that those records show that a Notice of
Assessment was mailed, those statements shall be evidence, absent proof to the
contrary, that the Notice was mailed. In a situation where the Court finds that
a taxpayer is not credible, there will be no proof to the contrary so the Crown
should be able to easily succeed based solely on such an affidavit.
[13]
Even if the Crown cannot rely on a subsection
244(10) affidavit, it should still not be too difficult for the Crown to
succeed if the Court finds that the taxpayer’s assertion is not credible. The
Crown merely needs to show that it is more likely than not that the Notice was
mailed. So long as the Crown can introduce some evidence that the mailing
occurred, with no credible evidence to counter the Crown’s evidence, the
conclusion should be that the Crown has proven mailing.
[14]
Furthermore, I do not think that it is necessary
to complicate an already complicated area by adding a requirement that the
assertion raised by the taxpayer be judged to be credible before the Crown is
called upon to prove mailing. Unless the hearing of the motion were divided and
the Court issued a ruling on the credibility of the taxpayer’s assertion before
moving to Step 2, I have difficulty picturing how anything would change on a
practical level. The Crown would have to be certain that the Court would find
the taxpayer lacking in credibility before the Crown would choose not to introduce
any evidence of mailing. Even if the hearing were divided into two parts, the
Crown would frequently choose to lead evidence at Step 1 to challenge the
taxpayer’s credibility. Often that evidence would be the same or closely
connected to the evidence that the Crown would want to rely on at Step 2 to
prove mailing.
[15]
The Crown suggests that the Minister should not
be put to the expense of having to prove mailing if the Court finds the
taxpayer’s assertion to lack credibility and that that expense can be avoided
if credibility is determined at Step 1. If, in a given case, the Crown thinks
that a taxpayer’s unbelievable assertion has wasted the Crown’s and the Court’s
time and was simply based on the hope that the Crown might no longer have the
records needed to prove mailing, the Crown may seek a higher award of costs.
[16]
Based on all of the foregoing, I conclude that
the credibility of the taxpayer’s assertion is to be considered as part of the
analysis at Step 2 rather than at Step 1.
IV.
Application of the Mailing Test to the Facts
[17]
I will now apply the test set out above to the
facts of Mr. Mpamugo’s case.
Step 1: Assertion that notices were not
mailed
[18]
Mr. Mpamugo’s position is that he told the CRA
to change his mailing address and they did not do so. As a result, he asserts
that the Notices of Reassessment for his 1998 to 2002 tax years were never
mailed to him.
[19]
Mr. Mpamugo’s position is complicated by the
fact that the address that CRA had on file for him was his home address. Both
he and his wife resided at that address on the dates that the Notices of Reassessment
were purportedly mailed. It is therefore implicit in his assertion that he did
not receive the Notices of Reassessment at his home. Thus, while Mr. Mpamugo’s
position on this point was not entirely clear, I think that I must assume that
he is arguing in the alternative that the Notices were not mailed in the first
place as he did not receive them despite residing at the address to which they
would have been mailed.
[20]
Both Mr. Mpamugo’s primary position and what I
assume to be his alternative position satisfy Step 1 of the test.
Step 2: Proof of
Mailing
[21]
Since Mr. Mpamugo has raised an assertion that
the Notices of Reassessment were not mailed, the Crown must prove on a balance
of probabilities that they were.
Crown’s
evidence:
[22]
The Crown relies on an affidavit of Bruce
Costigan to prove that the Notices of Reassessment were mailed. Mr. Costigan is
a litigation officer with the CRA. The relevant portions of Mr. Costigan’s
affidavit do not meet the requirements of subsection 244(10). Subsection 244(10)
requires that the affiant have charge of the records in question. Mr. Costigan
did not have charge of those records. The key portions of Mr. Costigan’s
affidavit relating to the mailing of the Notices of Reassessment were based on
information that he had obtained from two individuals at CRA (Gwen Dugal and
Dave Sheridan) that he believed to be true. Ms. Dugal and Mr. Sheridan had
charge of the relevant records. Mr. Costigan did not have the ability to view
the records in question himself.
[23]
The fact that the portions of Mr. Costigan’s
affidavits dealing with mailing do not comply with subsection 244(10) does not
mean that I must disregard them. If the Minister is unable to provide an affidavit
that complies with subsection 244(10), the Court must weigh the evidence
provided by the Minister against the evidence provided by the taxpayer in order
to determine whether it is more likely than not that the Notice was mailed.
[24]
Given the size of CRA’s operations and the sheer
number of Notices of Assessment that are mailed each year, the Minister will
generally adduce evidence indicating the normal procedure that is followed by
the CRA in mailing Notices of Assessment and a reason why the Court should
accept that that procedure was followed in the taxpayer’s case.
[25]
Mr. Costigan stated that Ms. Dugal is a Senior
Programs Officer with the Individual Returns Processing Section within the
Assessing, Benefit and Service Branch of the CRA. Mr. Costigan described what
he had learned from Ms. Dugal about how Notices of Assessment are printed.
This description was set out in Mr. Costigan’s affidavit and fleshed out on his
cross-examination. He stated that Ms. Dugal had told him that Notices of Assessment
are grouped and sent electronically to be printed, that each group is assigned
a cycle number, that the date printed on the Notices of Assessment is the date
on which the Assessments will be mailed and that the Notices of Assessment are
actually printed a number of days earlier than that. Mr. Costigan testified on
cross-examination that he had been informed by Ms. Dugal and others in similar
positions that there were checks and balances in place to ensure that a Notice
of Assessment that was sent for printing was ultimately printed. He explained
that the number of Notices of Assessment that were supposed to be in a cycle
was compared to the number of envelopes containing Notices of Assessment that
were ultimately produced at the end of the cycle and that, if there was a
discrepancy in the count, the envelopes were thrown out and the entire cycle
was re-run. Mr. Costigan provided the cycle numbers (known as DAS Cycle
numbers) for the reassessments in issue. He also provided the dates on which
those cycles numbers were to be printed along with the dates that would have
been printed on the notices of reassessment (i.e. the dates that the Notices of
Reassessment were to be mailed).
[26]
Mr. Costigan stated that Mr. Sheridan is a
Manager Print to Mail at CRA. Mr. Costigan stated that Mr. Sheridan had
informed him that, due to the significant amount of time that has passed since
the Notices of Reassessment in question were printed, the CRA no longer has the
records that would provide any further information on the mailing of the
notices.
[27]
Mr. Costigan provided the foregoing information
not just for the Notices of Reassessment in question, but also for three
additional Notices of Reassessment purportedly mailed to Mr. Mpamugo in respect
of his 1999 tax year. These three notices preceded the 1999 Notice of
Reassessment in question and were purportedly mailed between the mailing date
of the 1998 Notice of Reassessment and the ultimate 1999 Notice of Reassessment.
Mr. Mpamugo claims not to have received these three notices either.
[28]
All of the foregoing evidence is based on
information and belief. Rule 72 of the Tax Court of Canada Rules (General
Procedure) permits affidavit evidence based on information and belief to be
admitted if the source of the information and the fact of the belief are stated.
Any concerns about the necessity of the resulting hearsay evidence or its
reliability go to the weight the Court should give to the evidence. Mr. Costigan’s affidavit
complies with Rule 72. Mr. Costigan identifies which statements are made on
information and belief and states the sources of that information and his
belief in them. Accordingly, I find Mr. Costigan’s evidence to be
admissible. The question remains, however, how much weight I should give to the
evidence.
[29]
I agree with Mr. Mpamugo’s counsel that it would
have been preferable to have an affidavit from Ms. Dugal. The Crown did not
provide a compelling reason why it was necessary for Mr. Costigan to provide
the affidavit instead of Ms. Dugal. I do, however, find Mr. Costigan’s evidence
to be relatively reliable. It was clear from his cross-examination on his
affidavit that he had, in the course of similar cases in the past, spoken to
other individuals with similar knowledge as Ms. Dugal and that the
understanding of the printing system that he had gained from those
conversations was in accordance with the information that he obtained from Ms.
Dugal and, in fact, went beyond it.
[30]
Based on all of the foregoing, while I am not
prepared to give the portions of Mr. Costigan’s affidavits dealing with mailing
a lot of weight, I am similarly not prepared to give them no weight at all. I
am not prepared to conclude, on the basis of Mr. Costigan’s affidavits, that
the Notices of Reassessment were actually printed or mailed. I do, however,
find them to be weak evidence that the CRA anticipated printing the following Notices
of Reassessment and anticipated mailing those Notices of Reassessment to Mr.
Mpamugo on the following dates as part of larger batches of notices:
|
Year
|
Anticipated Print Dates
|
Anticipated Mailing Dates
|
|
1998
|
March 16, 2000
|
March 23, 2000
|
|
1999
|
October 2, 2000
|
October 10, 2000
|
|
1999
|
December 4, 2000
|
December 11, 2000
|
|
1999
|
January 19, 2001
|
January 26, 2001
|
|
1999
|
March 1, 2001
|
March 8, 2001
|
|
2000
|
February 25, 2002
|
March 4, 2002
|
|
2001
|
June 23, 2008
|
July 2, 2008
|
|
2002
|
December 1, 2003
|
December 8, 2003
|
[31]
Mr. Costigan stated that he had reviewed the
CRA’s mailing address history report and had determined that Mr. Mpamugo’s
mailing address from 1993 to 2013 had been his home address in Mississauga,
Ontario. He also stated that he was unable to find any indication that mail had
been returned from that address during that time period. This evidence was not
provided based on information and belief. It was provided based on Mr.
Costigan’s own review of the records in question. It was not shaken on
cross-examination. Based on the foregoing, I find that the address that would
have appeared on the foregoing Notices of Reassessment was Mr. Mpamugo’s home
address.
Mr. Mpamugo’s evidence
[32]
I did not find Mr. Mpamugo credible. His
testimony (both oral and in affidavits) was full of inconsistencies,
exaggerations and omissions. Much of it was implausible. He was evasive on
cross-examination. He frequently paused for long periods of time in his
testimony in what appeared to me to be an effort to fabricate an explanation
for an inconsistency that he suspected he was about to be caught in. His memory
was inexplicably vague on certain facts that I would have expected him to
recall given his detailed recollection of other matters.
[33]
Mr. Mpamugo’s testimony regarding changing his
address was totally lacking in credibility. He asserted that he had not
received the Notices of Reassessment because the CRA had failed to follow his
oral instructions to change his mailing address when he was being held pending
bail at the Maplehurst Detention Centre and to automatically change his mailing
address following his sentencing to the Beaver Creek Correctional Institution.
[34]
Mr. Mpamugo gave evidence both in his affidavit
and on cross-examination setting out in detail how he had seen a woman taking
notes at his first bail hearing, how he had been introduced to this woman at
his second bail hearing where he had learned that she was a CRA Collections
officer named Jodi Roul, how he had then spoken to Ms. Roul and told her
that he wanted his mailing address changed to the Maplehurst Detention Centre
where he was then being held and how she had noted his new address.
[35]
I find that this conversation never took place.
Mr. Mpamugo’s first bail hearing was held on November 5, 1999. His second bail
hearing was held on November 17, 1999. Ms. Roul was not assigned to Mr.
Mpamugo’s file until 2003.
[36]
More importantly, the whole idea that Mr.
Mpamugo changed his address to the Maplehurst Detention Centre is completely
implausible. Mr. Mpamugo describes spending “a very long time” in Maplehurst
Detention Centre between his first and second bail hearings. He spent 13 days there. He
was denied bail at his appearance on November 5, 1999 and was ultimately
released on November 17, 1999.
Mr. Mpamugo would have me believe that he changed his address from his home,
where his wife continued to reside throughout the entire period in question, to
a detention centre where he had just spent 13 days despite the fact that, when
he purports to have had the conversation changing his address, he was about to
be released from that detention centre. That is equivalent to a taxpayer
returning from two weeks of holidays in Whistler and deciding to send a change
of address form to CRA switching her address to the hotel she had just stayed
at in Whistler in case she ended up returning there next year. Between his
arrest on August 4, 1999 and his sentencing over five years later, Mr. Mpamugo
was imprisoned for a total of only 67 days. The first 13 days were while
Mr. Mpamugo was awaiting bail in 1999. The next 54 days were in 2001 as a
result of Mr. Mpamugo breaching the conditions of his bail. Those 54 days were not days
that, at the time that he purportedly changed his address, he would have
anticipated spending incarcerated as they arose from a breach of his bail
conditions. In summary, the notion that Mr. Mpamugo would have changed his
address to Maplehurst Detention Centre in these circumstances is simply absurd
and the fact that he was willing to spin this tale significantly undermines his
credibility.
[37]
Mr. Mpamugo’s counsel asked me to draw an
adverse inference from the fact that the Crown did not introduce into evidence
the notes of the Collections Officer assigned to Mr. Mpamugo’s file on the dates
that he says he spoke to Ms. Roul. I am unwilling to do so. I find it more
likely that the Crown’s failure to introduce the notes in question arose not
from a desire to hide their contents but rather from a belief that it was unnecessary
to pile on even more evidence that Mr. Mpamugo lacked credibility. Had Mr.
Mpamugo’s counsel felt that those notes were important evidence, he could have
sought their production.
[38]
The idea that CRA knew that they should change
Mr. Mpamugo’s address to the Beaver Creek Correctional Institution when he was
sentenced is flawed for two reasons. First, it is not up to the Minister to
change a taxpayer’s address without instructions from the taxpayer. Second, the
Minister had no way of knowing where Mr. Mpamugo was going when he was
sentenced. Mr. Mpamugo did not even know where he was going. He was not sent to
Beaver Creek at first. He was held in a series of four different institutions
for at least two months before he finally ended up being transferred to Beaver
Creek. Even then, he spent years of his sentence on day parole living at a
halfway house or on full parole living at home. During his entire
incarceration, his wife continued to reside at their home and bring him his
mail.
[39]
Mr. Mpamugo states in his affidavit that he
received mail from and sent mail to various other parties with whom he was
dealing in the years in question using his jail addresses. Documents showing
this statement to be false were entered into evidence on cross-examination. Mr.
Mpamugo used his home address when communicating with the Ontario Superior
Court of Justice,
when filing an appeal from his criminal conviction to the Ontario Court of
Appeal
and when communicating with the Ontario Court of Appeal. The legal aid lawyers
initially retained to conduct that appeal
and the Ministry of the Attorney General for Ontario both communicated with Mr.
Mpamugo at his home address. Mr. Mpamugo even used his home address when
sending correspondence to CRA.
[40]
Mr. Mpamugo did not even raise the assertion
that he had not received the Notices of Reassessment until after the Crown sought
to quash his appeal. Mr. Mpamugo’s Notice of Objection does not contain
any reference to his not having received the Notices of Reassessment or to
their not having been mailed. The closest that it comes is to state that he
does not know how the amount of tax that he owes was calculated. This same
pattern continues in Mr. Mpamugo’s Notice of Appeal. The Notice of Appeal does
not contain any reference to his not having received the Notices of
Reassessment or to their not having been mailed. The closest that it comes is
to state that Mr. Mpamugo has no idea why the amount of tax, penalties and
interest that he allegedly owes is so high. Indeed, he even makes a statement
which contradicts his position. He states “This appeal did not meet the 90 days requirement because I was
confided [sic] in prison”. This statement
suggests that he had received the Notices of Reassessment but was unable to
object on time because he was in jail. It is not until after the Crown filed
its motion to quash the appeal that Mr. Mpamugo first asserted that he did not
receive the Notices of Reassessment and introduced his story about changing
mailing addresses.
[41]
I note in passing that Mr. Mpamugo’s
unbelievable claim that he changed his address was not even a good explanation
of why he would not have received the Notices of Reassessment. As it turns out,
Mr. Mpamugo was not actually in jail on any of the dates that the Minister
asserts the Notices of Reassessment were mailed. On each of the dates that
the Minister asserts that she issued the Notices of Reassessment, Mr. Mpamugo
was either out on bail or out on parole. In either case, he was living at home.
[42]
In summary, based on Mr. Mpamugo’s lack of
credibility, I find that he did not change his address with the CRA in the
years in question.
[43]
Given my overall findings on Mr. Mpamugo’s
credibility, I do not believe his alternative assertion that he did not receive
the Notices of Reassessment at his home address. It is important to clarify
that my lack of belief in Mr. Mpamugo’s assertion that he did not receive the Notices
does not mean that I find he did receive them. It simply means there is no
evidence that they were not received and thus no evidence from which I could
infer that they were not mailed.
Evidence Which Is Not Evidence of Mailing
[44]
There are two key pieces of evidence that the
Crown introduced that are not evidence that the Notices of Reassessment were
mailed but that do hurt Mr. Mpamugo’s credibility. The first is evidence
concerning Mr. Mpamugo’s discussions with CRA Collections. The second is
evidence concerning work done by Mr. Mpamugo’s accountants.
[45]
Turning first to the discussions with
Collections. The Crown introduced evidence which showed that Mr. Mpamugo had
meetings, phone calls and correspondence with Collections Officers relating to
the collection of the amounts allegedly assessed in the Notices of Reassessment
and that he paid certain amounts on account of those amounts. In Aztec
Industries v. The Queen
the Federal Court of Appeal made it clear that a taxpayer’s knowledge that the
Minister believed she had assessed the taxpayer, the taxpayer’s knowledge of
actions taken by Collections to collect the amount purportedly assessed and any
payments made by the taxpayer on account of the amount purportedly assessed are
not evidence that a Notice of Assessment was mailed. Accordingly, I have not
considered these discussions to be evidence that the reassessments were mailed.
[46]
However, I do find that Mr. Mpamugo’s testimony
regarding these discussions with Collections seriously undermined his
credibility. Mr. Mpamugo testified that he was unaware that he had any tax
problems until he tried to sell his house in 2014 and discovered that CRA had a
lien over it. Mr. Mpamugo acknowledged having had discussions with CRA
Collections about requirements to pay that were issued against him, his wife
and his children. He explained that those conversations were limited to
discussing whether the requirements to pay could supercede existing Ontario
Superior Court orders freezing his assets and explaining the difficult
financial position that the requirements put his family in. Mr. Mpamugo stated
that he did not discuss his underlying tax debt or those of his wife and
children with Collections as he was unaware of those debts. I find the idea
that Mr. Mpamugo would have had conversations with CRA Collections officers who
were seeking to collect in excess of $5,000,000 from him and his family and
would not have asked any questions at all about the underlying tax liability to
be preposterous. This is not a case where a taxpayer has an outstanding
$100,000 liability and the CRA assesses an additional $3,000. In a situation
like that I could believe that the taxpayer might not question where the
additional amount came from. In Mr. Mpamugo’s case, the amount that CRA was
seeking to collect was so overwhelmingly large that it is impossible to believe
that he would not have asked where it came from. Mr. Mpamugo would have me
believe that, faced with requirements to pay for such a large sum and being
totally unaware of his actually owing anything to the CRA, he attended a
meeting with Collections where he discussed only the mechanics of the
requirements to pay and his financial circumstances and never once asked about
the underlying debts. He would have me believe that CRA was pursuing his
children for what the Reasons for Judgment in the criminal trial would lead me
to believe was $500,000 each and yet he never asked why his children, who were
university students at the time, could possibly owe CRA that much money. The
fact that Mr. Mpamugo put forward such a ridiculous story seriously undermines
his credibility. It is simply unfathomable that Mr. Mpamugo would have had the
conversation with Collections that he claims to have had. If TD Bank arrived at
my door one day and told me that they were garnishing my pay because I was
behind on my mortgage, the first thing out of my mouth would be “What mortgage? I have never borrowed money
from TD in my life!” not “The amount you are garnishing is a little
steep in my current financial situation. Do you think we could discuss a
reduction.”
[47]
Turning then to the work done by Mr. Mpamugo’s
accountants. The Crown also introduced documentary evidence from Mr. Mpamugo’s
accountants indicating that they were aware that Mr. Mpamugo had been
reassessed and were working to object to those reassessments. The documents do
not specifically mention reviewing the Notices of Reassessment. It appears to
me that a summary sheet prepared by the accountants confuses Notices of
Reassessment with statements of account on more than one occasion. There are a
number of documents described as Notices of Reassessment that bear dates other
than the dates in question. Had I seen evidence that the accountants had
actually reviewed the Notices of Reassessment, I would have concluded from that
fact that the Notices were mailed. Absent that evidence, while I have no doubt
that the accountants believed that the Minister had reassessed Mr. Mpamugo, I
am only able to conclude from that Mr. Mpamugo was aware that the Minister
believed she had reassessed him. I cannot conclude that the Notices were
mailed.
[48]
However, I do find that Mr. Mpamugo’s testimony
regarding the work done by his accountants undermined his credibility. The
documents from Mr. Mpamugo’s accountants indicated that the accountants
were working to “counteract the
existing tax assessments” on Mr. Mpamugo, his
wife and Marygold and were planning on appealing. The documents indicate that
Mr. Mpamugo, whose assets had been frozen and who was facing difficult
financial choices, paid the accountants tens of thousands of dollars for their
work over two years. Mr. Mpamugo testified that he had no discussions with his
accountants about what they believed to be outstanding reassessments, that he
was unaware of the work they were doing, that he was unaware of the fact that
the accountants believed there had been reassessments and that those
reassessments were not mentioned at a meeting that he and one of those
accountants attended with Collections. These assertions are not believable and further
undermine Mr. Mpamugo’s credibility.
Summary
[49]
In summary, since I find that Mr. Mpamugo’s
assertion that he changed his mailing address is not credible, there is no
evidence on which I could conclude that any Notices mailed by the Minister were
mailed to the wrong address. Similarly, there is no evidence on which I could
conclude that the Notices of Reassessment were not received by Mr. Mpamugo at
his home address. Thus, there is no basis upon which I could infer, from a lack
of receipt, that the Notices were never mailed.
[50]
By contrast, there is evidence that the Minister
sent Notices of Reassessment for processing along with batches of Notices of
Assessment and Reassessment of other unrelated taxpayers on eight separate
occasions in five different years, evidence that the Minister anticipated that
all those Notices would be printed and mailed in the ordinary course, evidence that
the Minister had checks and balances in place to ensure that Notices sent for
printing would, in fact, be printed and mailed, evidence that the address on
the eight Notices of Reassessment intended for Mr. Mpamugo would have been Mr.
Mpamugo’s home address and evidence that no mail was returned undelivered from
Mr. Mpamugo’s home address in the years in question.
[51]
I find it extremely improbable that eight
different times in five different years the Minister would have sent Notices of
Reassessment for Mr. Mpamugo to be printed along with the Notices of unrelated
taxpayers and that none of Mr. Mpamugo’s Notices would actually have been printed
and mailed.
[52]
In previous cases where the Court has concluded
that the Minister has failed to prove mailing, the Minister either had no
evidence of mailing or the Minister’s weak evidence was outweighed by the
taxpayer’s credible testimony that he or she did not receive the Notice in
question. That is not the case here. The evidence before me is neither fulsome
nor ideal but it is the evidence that I am left with and the evidence upon
which I must decide whether the Notices of Reassessment were mailed. As set out
above, the Crown need only prove that that it is more likely than not that the
Notices were mailed. Faced with weak evidence that the Notices were mailed, no credible
evidence that they were not received and an extremely low probability that none
of them was mailed, I find that it is more likely than not that they were indeed
mailed.
Step 3: Date of
Mailing
[53]
Mr. Mpamugo concedes that if I find that the Notices
of Reassessment were mailed, then they were mailed on the dates identified by
the Minister. Accordingly, I find that the Notices of Reassessment in question
were sent to Mr. Mpamugo on the dates asserted by the Crown.
[54]
Pursuant to subsection 165(1), a taxpayer may
object to a Reassessment on or before the day that is 90 days after the mailing
of the Notice of Reassessment. Mr. Mpamugo filed a Notice of Objection on July
3, 2014. This was well after the respective 90 day deadlines for objecting to
the Reassessments, the latest of which expired in 2008. Mr. Mpamugo has not
obtained an extension of time to file Notices of Objection from either the
Minister or this Court and is well out of time to do so now. Thus, he does not
have valid Notices of Objection. Without valid Notices of Objection, Mr.
Mpamugo is unable to meet a key precondition for appealing to this Court.
[55]
Based on all of the foregoing, the Motion is allowed.
The Appeal is quashed.
V.
Costs
[56]
Costs are awarded to the Respondent. It is my
hope that the parties will reach an agreement on costs. If they do not, they
shall have 30 days from the date of this Judgment to make submissions on costs to
me. In attempting to reach an agreement, I suggest that Mr. Mpamugo keep in
mind my comments in paragraph 15 above.
[57]
The Amended Reasons for Order is issued in
substitution of the Reasons for Order dated September 28, 2016.
Signed at Ottawa, Canada, this 20th day
of October 2016.
“David E. Graham”
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