REASONS
FOR JUDGMENT
Favreau J.
[1]
Mr. Shabitai seeks an extension of time to
institute an appeal from reassessments made for the 2000 to 2007 taxation years
inclusively.
[2]
In order for an extension of time to be granted,
the applicant must satisfy the conditions set out in subsection 167(5) of
the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) in its
applicable version (the “Act”). This provision reads:
When order to be made
(5) 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.
[3]
Farah De Vito, an objections officer
at the Canada Revenue Agency (the “CRA”), testified at
the hearing and summarized the applicant’s case history as follows:
-
On
August 3, 2012, the applicant was issued notices of reassessment for
the 2000 to 2007 taxation years inclusively;
-
The applicant did
not dispute the notices of reassessment on time. On or around
May 15, 2013, he asked the Minister of National Revenue (the
“Minister”) for a time extension to file an objection;
-
On
May 30, 2013, the Minister accepted the application for an extension
to file an objection;
-
On
March 7, 2014, the Minister resolved the objection by issuing notices
of reassessment for the 2000 to 2007 taxation years inclusively (hereinafter
“new notices of reassessment”);
-
The applicant did
not file notices of objection to dispute these new notices of reassessment
within the required time limit;
-
On
July 17, 2014, the applicant applied for another time extension to
file an objection;
-
The Minister
accepted the application for extension on August 20, 2014
(hereinafter “2nd objection process”);
-
For the 2nd
objection process, the applicant cited no grounds to support his objections and
provided no documentation despite the time he had had to do so;
-
On December 17, 2014, the Minister
confirmed all the new notices of reassessment;
-
On
December 18, 2014, the respondent gave the agent for the applicant a
copy of the December 17, 2014 notice of confirmation at a hearing in
the Superior Court, District of Montréal, in connection with case 500‑17‑076180-135,
entitled Procureur général du Canada v. Shabitai;
-
On
December 19, 2014, a copy of the December 17, 2014 notice of
confirmation was also sent by registered mail to the applicant’s personal
address at 6-2605 Ekers Street in Montréal;
-
The applicant had
until March 17, 2015 to institute an appeal from the new notices of
reassessment. He failed to do so within the required time limit;
-
On
May 21, 2015, the applicant filed an application for an extension of
time to institute an appeal from the new notices of reassessment with the Tax
Court of Canada, arguing that he had not received the
December 17, 2014 notice of confirmation until
April 8, 2015;
-
What the
applicant received on April 8, 2015 is a copy of the
December 17, 2014 notice of confirmation, which he had requested the
day before during a telephone conversation with the objections officer.
[4]
Patrick Dragan, collections officer at the CRA,
also testified at the hearing and said that he personally knew that Stéphanie
Côté had given counsel for the applicant a copy of the
December 17, 2014 notice of confirmation at the hearing for Procureur général du Canada v. Shabitai, to have a property owned by the applicant sold in a
judicial sale because of delinquent taxes. The case was heard by the Superior
Court of Québec on December 18, 2014 at the Montréal courthouse. A
copy of the judgment in that case, rendered on January 30, 2015, was
admitted as evidence. According to the witness, counsel in the case referred to
the December 17, 2014 notice of confirmation in argument. Lastly, the
witness confirmed that the applicant had not attended the hearing on December 18, 2014.
[5]
Mr. Shabitai testified at the hearing as
well. He said that he had never received the December 17, 2014 notice
of confirmation and that his counsel had not given him a copy. According to
him, as soon as he learned of the notice’s existence, he called
Ms. De Vito to ask for a copy. He indeed received a copy of said
notice of confirmation on April 8, 2015, the day after his
conversation with Ms. De Vito. During said telephone conversation, he
had told her that the notice of confirmation had been lost by Canada Post.
[6]
Mr. Shabitai included with his application
for an extension of time the letter from Canada Post, dated
May 15, 2015, confirming that the mail he had picked up and signed
for on December 23, 2014 had not been intended for him. The following
excerpt from the letter from Canada Post explains the situation well:
[translation]
After looking
into this incident, and based on the statement obtained from the clerk on duty
that day, we can confirm that registered mail item no. RW967424111CA
addressed to you was not delivered to you, despite the information displayed,
which can be checked with Canada Post.
Our investigation
confirmed what you said, that is, that at 10:59 a.m. on
December 23, 2014, you picked up mail by presenting the delivery
notice at the Wilderton postal outlet, located at 2535 Van Horne, that you
showed photo identification, and that you signed for the mail before looking at
it; you left the postal outlet without immediately realizing what had happened
and returned a few moments later to tell the clerk that the mail did not belong
to you, since the name on it was not yours. The clerk on duty confirmed this,
took the mail back, and tried to find yours in order to give it to you. Despite
her efforts, she could not locate the item you had come to pick up. We must
assume that it was mistakenly given to the wrong person.
[7]
The content of the letter from Canada Post was
the subject of an admission by the respondent at the opening of the hearing.
The applicant cited no other facts to support his application for an extension
of time.
[8]
In the notice of appeal included with his
application, the applicant cited as grounds for the appeal only the fact that
his tax documents had been lost in a fire.
Analysis and conclusion
[9]
The condition set out in paragraph 167(5)(a)
of the Act is satisfied because the application was made within one year after
the expiration of the time limited by section 169 for appealing. The
applicant made his application on May 21, 2015, that is, within one
year after the expiration of the time limit for appealing.
[10]
The conditions set out in subparagraph 167(5)(b)(i)
of the Act are not satisfied, because the applicant failed to demonstrate that,
within the time limit for appealing, he was unable to act or to instruct
another to act in his name, or that he had a bona fide intention to
appeal.
[11]
In Canada v. Schafer, [2000] F.C.J.
No. 1480, the Federal Court of Appeal clearly pointed out that there is no
requirement that the notice of confirmation be received in order to start the
limitation period specified in subsection 169(1) of the Act running. The
Minister need only demonstrate that the notice of confirmation was mailed to
the applicant. Justice Little from our Court quoted heavily from the decision
rendered in Schafer in Haggart v. The Queen, 2003 TCC 925.
[12]
In this case, a copy of the notice of
confirmation was hand-delivered to counsel for the applicant at the hearing of
a case involving the applicant before the Superior Court of Québec, held on
December 18, 2014. The applicant did not attend the hearing and it
cannot be assumed that counsel for the applicant personally gave him a copy of
the notice of confirmation. However, it is more than likely that his counsel at
least informed him of the existence of said notice of confirmation. In any case,
the applicant failed to provide the Court with the exact date on which he
learned that the notice of confirmation had been mailed by the CRA.
[13]
During the hearing, the applicant provided no
credible explanations as to the reasons for which or the circumstances under
which he was unable to act or to have someone else act in his name within the
time limit for appealing. He cited the fact that he was sick, without
specifying the illness, and that he was unable to take care of his tax files.
According to him, he was living with his father and travelled to Cuba every
month. All his bank accounts had been seized by the CRA. The applicant was
represented by counsel in the judicial sale of real property and by an
accountant during the 2nd objection process, during which the applicant had
ample time to submit his documents and representations. Specifically, the CRA
notified the applicant in a letter dated October 27, 2014 that he had
until November 27, 2014 to submit his representations. After a call
from an agent for the applicant, the period was extended to
December 16, 2014. Since the CRA subsequently received nothing, the
applicant’s file was closed, and the notice of confirmation was sent by
registered mail. The applicant did not dispute the fact that the notice of
confirmation had been sent to his personal address by registered mail. His
argument was that he had not received it because of an error by Canada Post.
[14]
There is nothing in the record to indicate that
the applicant had an intention to appeal the reassessments. At first glance,
one could conclude that the applicant surely had an intention to appeal, given
that he had objected to the reassessments twice. However, in the absence of any
evidence of the steps he took or attempted to take to institute an appeal, he
has not fulfilled this requirement. His failure to submit representations for
the 2nd objection process raises serious doubt as to his intention to appeal.
[15]
Therefore, the conditions set out in
subparagraph 167(5)(b)(ii) are not satisfied. Given the reasons set
out in the application and the circumstances of the case, I do not believe that
it would be just and equitable to grant the application. The applicant had
several opportunities to exercise his rights and did nothing, at least with
regard to the 2nd objection process. The reassessments issued on
March 7, 2014 were established based solely on estimates of expenses,
such as mortgage interest expenses, expenses incurred for the purpose of
earning rental income, and commissions paid during the sale of property. On the
whole, the applicant seems to have been treated fairly with regard to the
disputed assessments.
[16]
The condition set out in
subparagraph 167(5)(b)(iii) is not satisfied, since the application
was not made as soon as circumstances permitted. Between
December 16, 2014, the date of the latest extension granted to the
applicant to submit representations, and April 7, 2015, the date on
which the applicant called Ms. De Vito, a period of approximately
105 days elapsed. The applicant knew or ought to have known that, after
expiration of the latest extension granted, the CRA would act quickly in his
case if he did not submit his representations. He was very slow to call
Ms. De Vito to ask about the status of his case. Even after calling
Ms. De Vito on April 7, 2015, he did not apply for an
extension of time until May 21, 2015, that is, more than 30 days
later.
[17]
The condition set out in
subparagraph 167(5)(b)(iv) is not satisfied, since there are no
reasonable grounds for the appeal. The only grounds cited are the fact that the
documents pertaining to the dispute were lost in a fire. In such circumstances,
the applicant seems unable to meet his burden of proof to attack the validity
of the reassessments. He had many opportunities to do so, and did not.
[18]
For all these reasons, the application for an
extension of time to institute an appeal is dismissed.
Signed at
Montréal, Canada, this 29th day of January 2016.
“Réal Favreau”
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