Docket: 2014-3005(IT)APP
BETWEEN:
TERESA
SAPI,
Applicant
and
HER
MAJESTY THE QUEEN,
Respondent,
And
Docket:
2014-3034(IT)APP
BETWEEN:
ANECITO
CALADO,
Applicant,
and
HER MAJESTY
THE QUEEN,
Respondent,
And
Docket: 2014-3252(IT)APP
BETWEEN:
JOHN
HASTINGS,
Applicant
and
HER
MAJESTY THE QUEEN,
Respondent,
And
Docket: 2014-3508(IT)APP
BETWEEN:
TIMOTHY
D’SOUZA,
Applicant
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
VISSER,
J.
OVERVIEW:
[1]
Each of the four Applicants participated in a
donation arrangement in one or more of the years 2001, 2002 and 2003, and
claimed corresponding donation tax credits in those taxation years. The
donation arrangement included the purchase and donation of various products,
including comic books, pens, pencils, stationery and medical supplies, and was
promulgated by Robert Mattacchione, the Applicants’ agent in these
Applications, and one or more corporations with which he was affiliated. Each
of the Applicants was reassessed by the Minister of National Revenue (the “Minister”) in respect of the donation
arrangement, and each objected thereto. After a significant delay, each
Applicant’s objection to those reassessments was confirmed by the Minister in
2014. Due to delays in filing a Notice of Appeal with this Court which were
allegedly caused by Mr. Tony De Bartolo, a lawyer engaged by their agent,
each of the Applicants filed an Application for an order extending the time to
file a Notice of Appeal with this Court pursuant to section 167 of the Income
Tax Act (Canada).[1]
The four Applications were heard on common evidence.[2]
ISSUES:
[2]
The sole issue in these Applications is whether
each of the four Applicants should be granted an order extending the time to
file a Notice of Appeal with this Court pursuant to section 167 of the Act
in respect of the amounts in dispute pursuant to their participation in the
donation arrangement.
LAW and ANALYSIS:
[3]
Pursuant to subsection 169(1) of the Act,
following the sending of a Notice of Confirmation by the Minister, each of the
Applicants had 90 days[3]
from the day the Notice had been sent to the Applicant by the Minister to file
a Notice of Appeal with this Court. It is not disputed that each of the
Applicants did not file a Notice of Appeal with this Court within this time
limit. As such, each Applicant applied to this Court pursuant to section 167 of
the Act for an order extending the time within which to file a Notice of
Appeal. Section 167 of the Act more particularly provides as follows:
167. (1)
Extension of time to appeal — Where an appeal to
the Tax Court of Canada has not been instituted by a taxpayer under section 169
within the time limited by that section for doing so, the taxpayer may make an
application to the Court for an order extending the time within which the
appeal may be instituted and the Court may make an order extending the time for
appealing and may impose such terms as it deems just.
(2) Contents
of application — An application made under subsection (1) shall set out the
reasons why the appeal was not instituted within the time limited by section
169 for doing so.
(3) How
application made — An application made under subsection (1) shall be made by filing in
the Registry of the Tax Court of Canada, in accordance with the provisions of
the Tax Court of Canada Act, three copies of the application accompanied
by three copies of the notice of appeal.
(4) Copy to Deputy Attorney General — The Tax Court of Canada shall send a copy of each application made
under this section to the office of the Deputy Attorney General of Canada.
(5) When
order to be made — No order shall be made under this section unless
(a) the application is made within one year after the expiration of
the time limited by section 169 for appealing; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited by section 169 for appealing
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 appeal,
(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,
(iii) the application was made as soon as circumstances permitted,
and
(iv) there are reasonable grounds for the appeal.
[4]
In this case, the parties have agreed that
paragraph 167(5)(a) is not in issue as each of the four Applications was filed
within the one year extended time limit. The parties have also agreed that
subparagraph 167(5)(b)(iv) is not in issue on the basis that there are
reasonable grounds for the underlying appeal of the donation arrangement. Thus,
the only issues relate to the application of subparagraphs 167(5)(b)(i), (ii)
and (iii) to these four Applications.
[5]
Pursuant to subsection 167(2), each of the
Applications must “set
out the reasons why the appeal was not instituted within the time limited by
section 169 for doing so” In this respect, each of the four
Applications was identically worded as follows:
Agent had
believed that the legal representative had filed an appeal for the appellant.
However, the legal representative had not filed within the 90 days requirement,
therefore the need to request to submit at this time.
[6]
Attached to each Application was a Notice of
Appeal which was identical to the others except for the Appellant’s name and
Social Insurance Number and the applicable taxation year. The Statement of
Facts and Grounds for Appeal attached to each of the four Notices of Appeal was
identically worded as set out in Schedule A, attached hereto.
[7]
The Minister opposed each of the Applications
for an order extending the time to file a Notice of Appeal because each
Applicant had
“… not
demonstrated that:
a. he was
unable to act or to instruct another to act within the time otherwise limited
by the Act for so doing, as required by clause 167(5)(b)(i)(A) of the Act;
b. he had
a bona fide intention to appeal within the time otherwise limited by the
Act for so doing, as required by clause 167(5)(b)(i)(B) of the Act;
c. on the
basis of the reasons set out in the Application and the circumstances of the
case, it would be just and equitable to make an Order extending the time,
within the meaning of subparagraph 167(5)(b)(ii) of the Act;
d. the
Application was made as soon as circumstances permitted, as required by
subparagraph 167(5)(b)(iii) of the Act; and
e. there
are reasonable grounds for the appeal within the meaning of subparagraph
167(5)(b)(iv) of the Act.”[4]
[8]
The Minister did not call any witnesses at the
hearing of this matter, but did submit an Affidavit from Christine Mah, an
Officer in the Toronto Litigation Office of the Canada Revenue Agency (the “CRA”), in respect of each of the four
Applications. Based on those Affidavits, but subject to an issue with respect
to the applicable dates in Mr. Hastings’ Application as will be discussed
further below, the relevant dates for each of the Applications are as follows:
|
TAXPAYER
|
TAX YEAR(s)
|
DATE OF NOTICE OF REASSESSMENT
|
CONFIRMA-TION DATE
|
90 DAY DEADLINE
|
APPLICATION FILING DATE
|
# DAY(s) LATE
|
|
Teresa
Sapi
|
2003
|
March 8, 2007
|
January 23, 2014
|
April 23, 2014
|
August 27, 1014
|
126
|
|
Anecito
Calado
|
2002
|
April 20, 2006
|
February 25, 2014
|
May 26, 2014
|
August 28, 2014
|
94
|
|
John
Hastings
|
2001
|
July 19, 2004 & July
10, 2013
|
June 2, 2014
|
September 1, 2014
|
September 5, 2014
|
4
|
|
Timothy
D’Souza
|
2002 & 2003
|
April 7, 2006 &
March 1, 2007
|
June 16, 2014
|
September 15, 2014
|
October 1, 2014
|
16
|
[9]
Teresa Sapi testified at the hearing of these
Applications. I found her to be a credible witness. She also submitted some
documentary evidence in support of her Application, which is included in
Exhibit A-1. Ms. Sapi is an accountant who lives in Mississauga, Ontario and
participated in the donation arrangement in 2003 and claimed a corresponding
donation credit in her 2003 taxation year. Following the Minister’s
reassessment, she objected to the reassessment on a timely basis. As she works
in an accounting office, she utilized the assistance of Sonia Vaknin, a lawyer
who is one of her colleagues that handles tax disputes. Ms. Vaknin in turn
utilized the services of PAC Protection Corporation (“PAC”), a company
affiliated in some way with Mr. Mattacchione and the donation arrangement in
issue in the underlying tax appeals. Following the receipt of the Notice of
Confirmation on January 23, 2014, Ms. Sapi provided the Notice of Confirmation
to Ms. Vaknin who in turn emailed it to Donna DuSomme at PAC on the same
date and asked her to “confirm next steps for this matter.”[5] Ms. Sapi further
testified that she forwarded all mailings she received from the CRA relating to
the donation arrangement under appeal promptly to Ms. Vaknin who in turn
promptly forwarded the mail to PAC, who she understood was dealing with her
appeal.
[10]
Ms. Sapi testified that she did not have any
direct discussion with PAC and that she was not sure if PAC engaged a lawyer
(or Mr. Tony De Bartolo in particular) to assist in the appeal, and that she
became aware that her Notice of Appeal had not been filed when she received a
notice from the CRA advising that her tax dispute was no longer under objection
and that payment of the taxes under dispute was owing. She then immediately
asked Ms. Vaknin to contact the CRA and PAC to determine what had happened. She
subsequently filed this Application with the assistance of PAC. Ms. Sapi
further testified that it was always her intention to appeal her reassessment
following receipt of the Notice of Confirmation, but she is not sure why her
Notice of Appeal was not filed on time. Ms. Sapi also testified that she had
purchased a warranty from PAC in relation to the donation arrangement in 2005.
While she was not sure what the warranty covered, she believed it covered
taxes, interest and penalties if she was unsuccessful in her appeal.
[11]
Anecito Calado testified at the hearing of these
Applications. I found him to be a credible witness. Mr. Calado is an electronic
technician who lives in Mississauga, Ontario and participated in the donation
arrangement in 2002 and claimed a corresponding donation credit in his 2002
taxation year. Following the Minister’s reassessment of his 2002 taxation year,
he objected to the reassessment on a timely basis. He testified that when he
received a letter from the CRA he would forward it to PAC almost immediately
and they would handle it. He also testified that he mostly dealt with Donna
DuSomme at PAC and that he trusted PAC to handle all of the tax matters, but
that he was not aware of Mr. De Bartolo. He became aware that his Notice
of Appeal had not been filed when the CRA sent him a letter indicating that he needed
to pay the taxes owing pursuant to the reassessment under dispute, following
which he contacted Ms. DuSomme at PAC and this Application was filed with
this Court. Mr. Calado also testified that he had purchased a warranty
from PAC in relation to the donation arrangement and that he believed it
covered taxes, interest and penalties if he was unsuccessful in his appeal.
While Mr. Calado did not fully comprehend all of the various correspondence
sent to him by the CRA, based on his testimony it is my view that he had an
intention to continue appealing his reassessment and forwarded any such
correspondence promptly to PAC upon receipt as he relied on PAC to look after
his appeal.
[12]
Timothy D’Souza testified at the hearing of
these Applications. I found him to be a credible witness. Mr. D’Souza is a
litho printer who lives in Mississauga, Ontario and participated in the
donation arrangement in 2002 and 2003 and claimed a corresponding donation
credit in his 2002 and 2003 taxation years. Following the Minister’s
reassessment of his 2002 and 2003 taxation years, he objected to the
reassessments of both taxation years. He testified that he was advised by his
accountant and financial planner, Mr. Tony D’Souza, regarding his participation
in the donation arrangement. He also testified that his spouse, Vivien D’Souza,
looks after all of his financial affairs, and that she communicated with both
PAC and Mr. Tony D’Souza regarding his appeal of the Minister’s reassessments
of his 2002 and 2003 taxation years. Mr. D’Souza was not sure if he had
purchased a warranty from PAC, but thought that PAC would either reimburse him
or pay the amounts owing if he lost his appeal.
[13]
Vivien D’Souza, the spouse of Timothy D’Souza,
also testified at the hearing of these Applications. I found her to be a
credible witness. Ms. D’Souza is currently a postal worker who lives in
Mississauga, Ontario. She previously had worked as a secretary and handled most
of the paperwork for Mr. D’Souza and in particular with respect to his
involvement in the donation arrangement and his appeal of the resulting
reassessment in issue. Ms. D’Souza believes that she also participated in the
donation arrangement. With respect to Mr. D’Souza’s reassessment, Ms. D’Souza
testified that she communicated verbally and by email with Ms. DuSomme to get
her advice and she would get Ms. DuSomme to fax any documents that needed to be
signed by Mr. D’Souza. She would then tell Mr. D’Souza what Ms. DuSomme had
said and get him to promptly sign the relevant documents. When they received
Mr. D’Souza’s Notice of Confirmation from the CRA, she also forwarded it to Ms.
DuSomme and relied on her to look after the appeal. She also testified that she
did not know if a lawyer was involved in Mr. D’Souza’s appeal and that she and
Mr. D’Souza had no dealings with Mr. De Bartolo, but that she put her
trust in Ms. DuSomme as their professional adviser. Ms. D’Souza also testified
that both she and Mr. D’Souza had purchased a warranty from PAC in relation to
the donation arrangement and that it would cover expenses but that she did not
know what parts the warranty covered.
[14]
Donna DuSomme, an accounting clerk with PAC,
testified at the hearing of these Applications. I found her to be a credible
witness. She assisted the Applicants with their Notices of Objections and
appeals, and regularly dealt with them by email, facsimile and telephone. She
also dealt with the Applicants’ accountants or financial advisors. She started
working with PAC in approximately June 2013. Her position was previously occupied
by Cheri Durst, who also provided instructions to her. With respect to the
appeals of each Applicant’s Notice of Confirmation, she testified that she was
advised by Ms. Durst that Mr. Tony De Bartolo, a lawyer, had been engaged
by PAC to manage the process of filing each Notice of Appeal. She further
testified that she would fax him each donor’s file, together with the donor’s
Notice of Confirmation, and it was her understanding that he would then file
the necessary Notice of Appeal with this Court. However, he never sent any
correspondence that confirmed that he had filed any of the Notices of Appeal.
[15]
With respect to Ms. Sapi’s appeal, Ms. DuSomme
testified that she received Ms. Sapi’s Notice of Confirmation by email on
January 23, 2014,[6]
that she sent it by facsimile to Mr. De Bartolo on January 29, 2014, that the
facsimile cover sheets confirming this are set out at Tab 3 of Exhibit A-1, and
that Mr. De Bartolo confirmed receipt of Ms. Sapi’s file by email on
January 29, 2014, a copy of which is set out at Tab 4 of Exhibit A-1.
[16]
Ms. DuSomme testified that although she
understood that Mr. De Bartolo was supposed to be filing all of the appeals,
there was an influx of calls from donors wondering why they were being
contacted by the CRA stating that they had an undisputed amount of tax that had
to be paid. She testified that she believed she became aware of the failure to
file Ms. Sapi’s appeal in late March or early April, 2014. However, by this
time she was unable to reach Mr. De Bartolo by phone or email,
despite numerous attempts to do so. She testified that PAC then tried to file
the appeals on behalf of the Applicants. In this respect, she further testified
that Cheri Durst filed an Application to Extend Time in respect of Ms. Sapi’s
appeal with this Court on April 24, 2014, as evidenced by an email from the
Registry of this Court on April 24, 2014 and set out at Tab 5 of Exhibit
A-1. The reason for the Application to Extend Time as set out therein was “Confusion between the lawyer and the agent with regard
to submission of appeal.” However, as set out
at Tab 6 of Exhibit A-1, this Court advised Ms. Durst in a letter dated May 1,
2014 that additional information was required to file Ms. Sapi’s Application to
Extend Time and Notice of Appeal. Ms. DuSomme testified that she then refiled
Ms. Sapi’s Application to Extend Time and Notice of Appeal on August 27, 2014,
which was accepted by this Court, but that she was not aware of what happened
between May 1, 2014 and August 27, 2014 with respect to Ms. Sapi’s Application,
or why there was a further delay in providing the additional information
requested by this Court on May 1, 2014.[7]
However, she testified that she did try to contact Mr. De Bartolo by facsimile
on June 26, 2014[8]
with respect to Ms. Sapi’s appeal, but that she did not get a response from
him, and that she was of the view that Ms. Sapi’s Application to Extend Time
was expedited as quickly as possible in the circumstances.
[17]
Ms. DuSomme testified that the issues with Mr.
De Bartolo began in 2013 and continued into 2014, and that she became aware
that Mr. De Bartolo removed himself from representing PAC and the Applicants in
February 2015, when Mr. De Bartolo sent a letter to the Applicants advising
that he was removing himself. I note, however, that a copy of this purported
letter was not introduced into evidence by Ms. DuSomme or any of the
Applicants, and that the only evidence submitted to this Court that purports to
be from Mr. De Bartolo is an email that indicates he received two facsimiles relating
to Ms. Sapi on January 29, 2014.[9]
That email, however, does not indicate what action, if any,
Mr. De Bartolo was intending to take with respect to Ms. Sapi’s
appeal or the appeals of any of the other Applicants. I also note that Ms.
DuSomme testified that PAC intentionally did not provide Mr. De Bartolo’s name
to the Applicants because PAC was concerned about the legal costs that might
result if donors contacted Mr. De Bartolo directly. Ms. DuSomme also testified
that no other counsel was retained by PAC to assist in filing the Applicants’
appeals, even after PAC became aware of Mr. De Bartolo’s apparent failure to
file the appeals in issue.
[18]
Ms. DuSomme also testified that PAC represented
participants in the donor arrangement who purchased warranty insurance as well
as those who participated in a defence fund, although she was not sure what the
warranty covered. She testified that PAC also assisted other participants in
the donor arrangement if they asked PAC for assistance, even if they had not
purchased a warranty or were part of the defence fund.
[19]
Overall, Ms. DuSomme testified that the
Applicants were timely in forwarding CRA documentation, including the Notices
of Confirmation, to her and that she was timely in forwarding them to Mr. De
Bartolo, and that it was only when CRA began contacting the Applicants about
collection matters that the Applicants and she became aware of Mr. De Bartolo’s
apparent failure to file the Applicants’ Notices of Appeal with this Court,
after which she and PAC acted as promptly as they could considering the
significant volume of appeals they were administering.
[20]
There was conflicting evidence as to when the
Minister issued the Notice of Confirmation for John Hastings. Christine Mah’s
Affidavit, and the Minister’s Reply, indicate that it was dated and mailed on
June 2, 2014. John Hastings’ Application and his Notice of Appeal both indicate
that the Notice of Confirmation was dated June 6, 2014. At tab 26 of Exhibit
A-1, a signed copy of the Minister’s Notice of Confirmation which was sent to
John Hastings is dated June 6, 2014. However, the fax cover sheet from John
Hastings enclosing this Notice of Confirmation appears to be dated June 5,
2014. As the date on the Minister’s Notice of Confirmation which was sent to
John Hastings is clearly dated June 6, 2014, I have determined, for the
purposes of John Hastings’ Application, that it was dated and issued on that
date. In any event, I note that it is not disputed that John Hastings was late
in filing his Notice of Appeal, and it is my view that it is not material to
the outcome of his Application whether he was one day or four days late in
filing his Notice of Appeal together with his Application herein.
[21]
Based on the foregoing, Mr. Mattacchione has
argued that all four Applications should be granted as each of the Applicants
had a bona fide intention to appeal, each of the Applications were made
as soon as circumstances permitted, and given the reasons set out in each of
the Applications and the circumstances of each case, it would be just and
equitable to grant each such Application. In particular, he argued that PAC was
dealing with hundreds of individuals at the same time and CRA had an approach
of confirming objections en masse which created a back-log at PAC. He also
argued that PAC dealt with the issue created by Mr. De Bartolo’s failure to act
as expeditiously as it could in the circumstances, considering the volume of
appeals being handled by PAC. From an equitable perspective, Mr. Mattacchione
argued that it would be equitable to grant these four Applications as the
Applicants are hardworking everyday people and the consequences of the appeal
are financially cumbersome to the Applicants, who are not wealthy people, and
it would be unfortunate if the Applications and the resulting appeals were not
allowed to proceed because of an error by PAC or Mr. De Bartolo. He also argued
that the entity which sold warranty insurance to the Applicants (and many
others involved in the donor arrangement) may not be able to afford a loss resulting
from the approximately 130 individual donors who may lose their appeals based
on these four lead case Applications.
[22]
The Applicants brought a number of cases to my
attention in support of their position in this matter, including:
(a)
Mehta v. R., 2011 TCC 38;
(b)
2749807 Canada Inc.
v. R., 2004 TCC 457;
(c)
Euro Software Canada
Mondial (ESCM) Inc. v. R.,
2004 TCC 296;
(d)
Meer v. R., 2001 D.T.C. 648;
(e)
Gorenko v. R., 2002 D.T.C. 2025; and
(f)
Rock v. R., 2010 TCC 607.
[23]
Of these cases, Mr. Mattacchione referenced Mehta,
where Justice Miller of this Court determined that it would be just and
equitable to grant the requested application for an extension of time where the
harm of disallowing the Application to the Appellant was greater than the harm
to the Respondent, if the Application was allowed. With respect, however, while
this may be a relevant factor, it is my view that this should not be a
determinative factor in and of itself in each case, as the harm to an applicant
of not granting an application to extend time is almost always greater than the
harm to the Minister if an application to extend time is granted. In addition,
it is my view that it is clear that Parliament, in drafting section 167 of the Act,
did not intend that section 167 provide all appellants with an extended one
year appeal period.
[24]
Mr. Mattacchione also referenced Gorenko,
which dealt with an application for an extension of time where two lawyers, who
had been tasked with preparing and filing an appeal, failed to do so due to a
miscommunication between them. Upon discovering the problem, they remedied the
situation within two days. In that case, Justice Lamarre Proulx of this Court
noted the following at paragraphs 13 to 19:
13 Counsel for the Applicant argued
that the Applicant had acted with due diligence as well as Mr. Rose and Mr.
Barbacki and that as soon as it was discovered by Mr. Rose's assistant that the
Notice of Appeal had not been filed on time, it was acted upon. He stated that
the evidence showed that the Applicant brought the Minister's confirmation as
soon as he received it to his lawyer, Mr. Rose. The latter was much taken by
his criminal law work particularly, by a substantial file concerning Mr.
Gorenko with the Quebec Court Criminal Division,
so he entrusted the matter to a lawyer acting within their premises. There may
have been a misunderstanding between the lawyers that resulted in the exceeding
of the time limit but that was not due to negligence on either part.
14 Counsel
for the Respondent base her case on Mr. Barbacki's behaviour. There was
carelessness in Mr. Barbacki's behaviour in his handling of the case that had
been confided to him. She referred to my decision in Di Modica v. Canada,
[2001] T.C.J. No. 620 (Q.L.) at paragraph 16:
[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.
15 Counsel
for the Applicant replied that Mr. Rose was Mr. Gorenko's lawyer and not Mr.
Barbacki. Mr. Rose was Mr. Barbacki's client.
Conclusion
16 The
evidence has shown that the Applicant instructed his lawyer on time to file a
Notice of Appeal and that Mr. Rose acted with a reasonable degree of diligence.
He did not have time to file the Notices of Appeal himself so he retained a
colleague to act on his behalf.
17 That
lawyer was entrusted with the filing of the appeal on time. He knew of the
deadline. He filed the appeals for the companies on time, albeit on the last
day or so according to his testimony. I accept that, as the lawyers suggested,
there may have been a misunderstanding between them and that may have been the
cause of the delay.
18 I
consider to be an important element in the present matter the fact that the
Applicant's lawyer confirmed that the Applicant acted on time and that the
lawyers testified to explain their omission. I consider also to be an important
element the fact that as soon as the omission was found by Mr. Rose and his
assistant, the application for extension of time was filed accompanied by a
proposed Notice of Appeal.
19 Although
this case is not as straightforward as it should be, these cases seldom are,
and in view of the fact that Mr. Gorenko and Mr. Rose showed a reasonable
degree of diligence in the exercise of their rights and duties, the extension
of time to file an appeal is granted. [Emphasis added]
[25]
I note that both lawyers testified in the Gorenko
case, and Justice Lamarre Proulx determined that they both acted with
a reasonable degree of diligence in the exercise of their duties. In contrast,
it is my view that it is not clear that either PAC or Mr. De Bartolo acted with
a reasonable degree of diligence in this case. I note that Mr. De Bartolo was
not called or subpoenaed to testify as a witness, and there was no independent
evidence, such as an engagement letter, to confirm that he was in fact retained
to act on behalf of the Applicants or PAC, or any explanation as to why he did
not act on a timely basis in filing the Appeals. I have drawn an adverse
inference from his failure to testify and the Applicants’ failure to call or
subpoena him as a witness. I also note that PAC has not adequately explained
why it did not take more adequate measures to file the appeals within the
stipulated 90 day time limit, such as engaging other counsel, despite the fact
that each of the Applicants forwarded their Notice of Confirmations to PAC on a
timely basis.
[26]
The Respondent argued that each of the
Applications should be dismissed for the reasons set out in the Minister’s
Reply, as noted above, and brought a number of cases to my attention in support
of the Minister’s position in this matter, including:
(a)
Sampson v. R., 2012 TCC 156;
(b)
Hamilton v. R., 2013 TCC 192;
(c)
Bouganim v. R., 2010 TCC 560; and
(d)
Maria Di Modica v.
R., 2002 D.T.C. 1290
(Eng.).
[27]
In this case, I agree with the Respondent that
each of the Applications should be dismissed for the reasons that follow.
[28]
In making an Application under section 167 of
the Act, an Applicant has the onus of establishing that each of the
criteria set out in subsection 167(5) of the Act has been met. As noted
in paragraph 3 of Dewey v. Canada, 2004 FCA 82, “a failure to meet any one of the conditions is fatal to the
application.” In addition, as noted in paragraph 15 of Kolmar v. R., 2003
TCC 829,
… Once the Minister
sends a notice to the taxpayer that the assessment has been confirmed or the
Minister has reassessed as a result of an objection, the taxpayer has 90 days
from the mailing of the notice to appeal to the Court: subsection 169(1). [The
taxpayer may also appeal an assessment if 90 days have elapsed after filing a
notice of objection and the Minister has not notified the taxpayer that the
Minister has vacated or confirmed the assessment or reassessment.] Within this
90 day period the taxpayer is to gather all his or her forces, assemble
documentation, obtain legal advice, etc. to prepare a notice of appeal and
actually file a notice of appeal. Section 167 is an exception to section 169.
All conditions in subsection 167(5) must be fulfilled before an order can be
made extending the time to appeal. The taxpayer must demonstrate, among other
things, that he or she was unable to act or instruct another to act in the
taxpayer's name or had a bona fide intention to appeal within the 90 day period
but because of serious illness, accident or misfortune or due to one of those
inevitable mishaps that occur in life, he or she could not act or instruct
another or exercise his or her intention to file an appeal on time. If a
taxpayer is late in filing a notice of appeal, the taxpayer must act with
diligence to apply for an extension of time to appeal and file a notice of
appeal. There is no comfort of one year to get ready to make an application. In
enacting section 167, Parliament did not intend to extend by a year a taxpayer's
right to appeal an assessment. Such an interpretation would render the delays
in section 169 absolutely meaningless.
[29]
In Sampson, Justice Paris of this Court
indicated at paragraph 4 that Mr. Sampson ““…
simply said that whenever he received material from the Canada Revenue Agency,
he forwarded it to OI Employee Leasing Inc. (OI), and that it was OI’s
responsibility to take care of it.” Justice
Paris further noted the following at paragraphs 7 and 8 of that case:
7 However, I
am not satisfied that Mr. Sampson has shown that he has met either of the
conditions set out in paragraph 167(5)(b)(i), which requires that an applicant
show either that he was unable to act or instruct another to act in his name,
or that he had a bona fide intention to appeal within the time otherwise
limited for appealing the reassessment (i.e. 90 days from the date of
confirmation). There is no evidence before me to suggest that between August
14, 2008 and November 12, 2008, Mr. Sampson was unable to act or to instruct anyone
else to act for him. Furthermore, Mr. Sampson has not shown that he had the
intention to appeal within that period. There is no proof before me that he
instructed OI to file an appeal on his behalf. His statement that he forwarded
any materials he received from the CRA to OI, and expected OI to take care of
things is insufficient to demonstrate a specific “bona fide” intention to
appeal the reassessment during the relevant period. The application filed on
December 23, 2008 on behalf of Mr. Sampson by OI sets out that a notice of
appeal (presumably from the reassessments of the 2003, 2004 and 2005 taxation
years) was submitted in May 2007 but that no filing fee or request to waive the
filing fee was subsequently submitted. The application goes on to state that
“[u]pon receiving another Notice of Confirmation for the 2006 taxation year and
upon
learning that a filing fee was no longer required, a
new Notice of Appeal is being submitted”.
8 It
appears to me that Mr. Sampson chose not to appeal the reassessment before
submitting his application on December 23, 2008 because he did not wish to pay
the required filing fee or to request a waiver of the filing fee. In any
event, he has not provided any evidence regarding what, if any, follow-up was
done by him with OI after he forwarded the Notice of Confirmation for 2006 to
OI. The onus in this application is on Mr. Sampson to show that he had a bona
fide intention to appeal within 90 days of the confirmation of the
reassessment, and in the absence of evidence as to what steps he took or
attempted to take, (if any) through OI to appeal, that onus has not been met.
[Emphasis added]
[30]
In Hamilton, Justice Miller dismissed
Andrea Hamilton’s Application for an Extension of Time where Ms. Hamilton
provided an Affidavit but did not attend at the hearing of her Application to
testify. Given the conflicting reasons set out in the reasons and Ms.
Hamilton’s Affidavit, Justice Miller determined that she could give no weight
to the Affidavit. Counsel for the Respondent argues that Mr. Hastings
failure to attend and testify is similarly fatal to his Application.
[31]
In Bouganim, Justice Favreau of this
Court noted the following at paragraphs 2 and 24 through 26:
2 The
issue is whether the negligence of the lawyer, Victor A. Carbonneau, may be a
just and equitable ground for granting the applications under subsection 305(5)
of the ETA. The lawyer's mistake was admitted at the hearing.”
…
24 However,
Mr. Carbonneau made several mistakes, including not filing the notices of appeal
within the time allotted and not carrying out his mandate, not promptly
informing his clients of that failure, not swiftly remedying the failure, and
having asked Mr. Talarico to prepare the applications for an extension of time
to appeal and the notices of appeal. Mr. Talarico did nothing, and
Mr. Carbonneau was the one who prepared the first draft of the notice of
appeal. All of these mistakes clearly amounted to negligence or carelessness on
the part of Mr. Carbonneau and his associate.
25 In
Di Modica v. The Queen, 2001 CanLII 548, Justice Lamarre Proulx
dismissed an application to extend the time for serving a notice of objection
because the lawyers concerned had been negligent or careless. At paragraph 16
of her decision, she concluded as follows:
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.
26 Given
that Mr. Carbonneau was negligent or careless, the condition set out in subparagraph
305(5)(b)(ii) has not been met, as it does not seem that it would be
just and equitable to grant the applications.
[32]
In Di Modica, Justice Lamarre Proulx also
noted at paragraph 15 that
… 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.
[33]
In this case, it is my view that there was no
evidence that each of the Applicants was unable to act or instruct another to
act. To the contrary, there was evidence that each Applicant had instructed Ms.
DuSomme and PAC to act during this time period. Therefore, it is my view that
none of the Applicants has established that clause 167(5)(b)(i)(A) applies.
However, an Applicant may still succeed if the Applicant establishes that he or
she had a bona fide intention to appeal as set out in clause
167(5)(b)(i)(A) of the Act.
[34]
Based on all of the evidence, it is my view that
Ms. Sapi has demonstrated that she had a bona fide intention to appeal
within the 90 day time limit set out in section 169 of the Act. While there is
some doubt about their understanding of the nature of these proceedings and
their appeal, it is also my view that Mr. D’Souza and Mr. Calado have each
established, on a balance of probabilities, that they each had a bona fide
intention to appeal within the 90 day time limit set out in section 169 of the
Act. As such, it is my view that each of these three Applicants have
established that he or she had a bona fide intention to appeal within
the 90 day time limit set out in section 169 of the Act and have
therefore met the requirement of subparagraph 167(5)(b)(i). In this respect,
based on their testimony, there is evidence that each of the Applicants
forwarded the Notice of Confirmation to Ms. DuSomme at PAC promptly upon
receipt with the expectation that PAC would continue to dispute their tax
appeals, as it had been doing for some time. However, as in the Sampson
case, there was little or no evidence that any of these three Applicants
followed up with PAC after initially forwarding their Notice of Confirmation to
PAC. As discussed further below, it is my view that this is a relevant factor
in considering whether it is just and equitable to grant each of their
respective Applications.
[35]
While John Hastings did not attend or testify at
the hearing of these Applications, there is some evidence that he intended to
continue appealing his reassessment. In this respect, I note that he sent the
Notice of Confirmation which he received from the CRA to Ms. DuSomme by
facsimile on or about June 5, 2014. A copy of this facsimile, together with the
Notice of Confirmation, is set out at Tab 26 of Exhibit A-1. However, while the
facsimile specifies that Mr. Hastings sent the Notice of Confirmation to
Ms. DuSomme for review and comment, it is not clear if he intended to appeal or
was thereby instructing PAC to file an appeal on his behalf. Given the
probability that he had purchased warranty insurance from PAC, there is also a
possibility that he was forwarding the Notice of Confirmation to PAC in respect
of a warranty claim. He may also have simply been asking for advice for the
purpose of determining whether he should continue with his appeal. There was
also no evidence that Mr. Hasting followed up with PAC after he forwarded his
Notice of Confirmation to PAC. Overall, it is my view that Mr. Hastings has not
satisfied his onus of establishing that he had a bona fide intention to
appeal within the 90 day time limit set out in section 169 of the Act. I am
supported in my determination by the decision of Justice Paris in the Sampson
case.
[36]
With respect to subparagraph 167(5)(b)(ii), the
Respondent argues that the alleged negligence of Mr. De Bartolo, who did not
testify, is not a just and equitable reason to grant the Applications in this
case. The Respondent further argues that the Applicants did not adequately
follow up once they had provided their Notice of Confirmation to PAC, and notes
that Justice Tardif concluded in 2749807 (a case referenced by the
Applicants) that relying on an allegedly qualified and competent person is not
in itself an acceptable excuse to justify and explain a failure to act within
the prescribed time. In this case, the Respondent argues that there is no
evidence of follow-up after the Applicants forwarded their Notice of Confirmation
to PAC. The Respondent also argues that the Applicants did not know Mr. De
Bartolo, had never dealt with him directly, and in fact did not know he was
purportedly acting on their behalf.
[37]
I agree with the Respondent. It is my view that
the Applicants have not established that it would be just and equitable to
grant their Applications given the reasons set out in their Applications and
the circumstances of their cases. It is my view that the alleged failure of PAC
and Mr. De Bartolo to file the Applicants’ appeals on a timely basis within the
appeal period is not a just and equitable reason to grant the Applications in
the circumstances of this case. While there is insufficient evidence in this
case to establish that Mr. De Bartolo was negligent or careless, or that he
even had been engaged to act on behalf of the Applicants, it is my view that
the Applicants have not established that PAC or Mr. De Bartolo acted with
reasonable diligence as required in the Di Modica case. PAC was
purportedly engaged to assist the Applicants in filing their appeals. It failed
to do so, and failed to properly engage counsel to assist it in doing so. There
is no evidence that it actively monitored the status of the appeal filings on a
case by case basis, or that it set in place procedures for doing so. There is
also no evidence that it was properly staffed to handle the volume of appeals
it took on or that it engaged a sufficient number of counsel, of which there
are no shortage in Ontario or Canada, to assist it in filing and handling the
appeals it had taken on.
[38]
I also note that the reasons set out in the
Applications for Mr. Calado, Mr. Hastings and Mr. D’Souza are in my view
not entirely truthful. It is clear that PAC and Ms. DuSomme were aware that
there was a problem with the filing of donor’s appeals on or before April 24,
2014. The deadline for filing the Notice of Appeal for each of Mr. Calado, Mr.
Hastings and Mr. D’Souza was well after that date. In addition, the Notice of
Confirmation for each of Mr. Hastings and Mr. D’Souza was dated after that
date. In my view, PAC and Mr. Calado, Mr. Hastings and Mr. D’Souza had
ample time after April 24, 2014 to file their respective Notice of Appeal
within the 90 day deadline, but failed to do so. Each of the four Applicants
also failed to take adequate steps, if any, to follow-up with PAC to ensure
their respective Notice of Appeal was filed on a timely basis.
[39]
I am supported in my view by the decision of
Justice Lamarre Proulx in Di Modica, as previously noted, and by Carrier
v. Canada, 2005 TCC 182, where an error by an applicant’s accountant in
late filing a Notice of Objection was held not to meet the similar criteria set
out in section 166.2 of the Act. I am also supported in my view by this Court’s
decision in Kolmar, as previously noted.
[40]
With respect to subparagraphs 167(5)(b)(iii), it
is my view that the Applicants have not met this criteria. Ms. Sapi, Mr.
Calado, and Mr. D’Souza testified that they each forwarded their Notice of
Confirmation to PAC on a timely basis. In addition, Mr. Hastings forwarded his
Notice of Confirmation to PAC promptly upon receipt. As such, in my view each
of the four Applicants and PAC had ample time to file their respective Notice
of Appeal with this Court within the 90 day time limited for doing so pursuant
to section 169 of the Act, and therefore in my view these Applications
would not have been required in the circumstances of each of these cases had
each of the Applicants and PAC exercised the degree of diligence required of
each.
[41]
With respect to Ms. Sapi’s Application, the
Respondent argues that there was not a sufficient explanation provided by PAC
and Ms. Sapi as to why it was filed four months after the deadline. With
respect to the other three Applications, the Respondent argues that PAC was
aware of the purported issue with Mr. De Bartolo at least on April
24, 2014, which is well before the 90 day deadline arose in each of the other
three Applications, and PAC and the other Applicants have not adequately
explained the delay in filing those appeals given this awareness.
[42]
Mr. Mattacchione argued, in contrast, that PAC
was simply an administrator and that the Applicants relied on both their own
advisors and PAC over a long period of time, and that trust built up over time
was the reason the Applicants may not have followed up with PAC, as there was
no reason for them to follow-up given their past experience with the Notice of
Objection process and other issues raised by the CRA during the entire process.
He also argued that some of the Applicants admittedly had a limited
understanding of the process, so had to rely on PAC or others for advice and
assistance. He also argued that PAC had limited resources, namely Ms. DuSomme,
to handle a large volume of appeals and applications.
[43]
I agree with the Respondent. In my view, the
Applicants and PAC have not adequately established why their appeals were filed
outside the 90 day time limit and why they were delayed beyond that time limit.
[44]
Overall, it is my view that each of the
Applicants provided their respective Notice of Confirmation to PAC on a timely
basis, and then simply trusted PAC to attend to their appeals without
adequately following up with PAC to ensure their appeal was so filed.
Unfortunately, their trust in PAC was misplaced, as PAC did not ensure their
appeals were filed on a timely basis or take adequate steps in doing so. While
PAC has attempted to deflect blame to Mr. De Bartolo, who did not testify, it
is my view that any neglect or carelessness by either PAC or any counsel it
engaged to file the appeals in question is not a just and equitable reason to
grant these four Applications.
CONCLUSION:
[45]
Based on all of the foregoing, each of the four
Applications for an order extending the time within which an appeal may be
instituted is dismissed, without costs.
Signed at Vancouver, British Columbia,
this 24th day of October 2016.
“Henry A. Visser”
Schedule
A
Statement of
facts:
1.
The above-mentioned
Taxpayer acquired several goods (hereinafter referred as the “Goods”) and donated the Goods to a registered
Canadian Charity (referred as the “Charity”) qualified to
issue charitable donation receipts under the Income Tax Act (Canada)
(hereinafter referred as the “ITA”).
2.
The above-mentioned
Taxpayer donated cash to a registered Charity qualified to issue charitable
donation receipts under ITA.
3.
The Charity issued a
charitable donation tax receipt to the Taxpayer in an amount equal to the
appraised value of the Goods donated by the Taxpayer to that Charity.
4.
The Charity issued a
charitable donation tax receipt to the Taxpayer in an amount equal to the Cash
donated by the Taxpayer to that Charity.
5.
In computing the
Taxpayer’s tax payable under Part I of the ITA, the Taxpayer deducted an amount
in respect of the appraised value of the Goods and Cash donated by the Taxpayer
to the Charity in accordance with the ITA (hereinafter, “Tax Credit”).
6.
The Canada Revenue
Agency reassessed the Taxpayer to disallow the deduction of the Tax Credit (if
applicable: “and assessed penalties”).
Grounds for Appeal:
7.
The Goods were the
Taxpayer’s personal use property within the meaning of the ITA.
8.
The Taxpayer’s
donations of the Goods and Cash to Charity were gifts and were properly
included in the computation of the Taxpayer’s “total charitable gifts”.
9.
In computing the
Taxpayer’s tax payable, the taxpayer is entitled under the ITA to deduct the
Tax Credit.
10.
The Taxpayer has not
acted negligently nor committed any act which warrants the assessment of
penalties (if applicable).
11. The Taxpayer reserves its right to submit
any additional document or arguments in support of the present notice of
assessment or reassessment.
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