REASONS FOR ORDER
D’Auray J.
INTRODUCTION
[1]
The case of Le Sage au piano, limited
partnership (the applicant), was heard on semi-common evidence with the application
of Les Monarques complexe pour retraités Inc. (Les Monarques). Despite that
some evidence was common to both files, for example, the companies belong to
the same corporate group and the witnesses were the same, the evidence was
different given the orders made in each file.
[2]
On February 5, 2014, the applicant filed with
the Court an application under Part IX of the Excise Tax Act (the ETA)
to extend the time to file a notice of objection in respect of the assessment
dated June 3, 2013, for the period from October 1, 2009, to October 31, 2009.
[3]
The issues are as follows:
−
Does the presumption under subsection 334(1) of
the ETA apply?
−
Does the applicant meet the conditions set out
in subsection 304(5) of the ETA?
FACTS
[4]
The applicant is a company whose headquarters
are located at 465 Rue Bibeau, suite 600, Saint-Eustache, Quebec.
[5]
The applicant operates a residence for
independent seniors located at 15 Rue Lesage in Ste-Thérèse. For that
purpose, the applicant is the owner of two multiple-unit residential complexes.
The residence was constructed in two phases; the construction of the first complex
ended in phase 1 in 2007 and the construction of the second complex ended in
phase 2 in 2009.
[6]
After an audit of the phase 1 complex, the Agence
du revenu du Québec (ARQ) assessed the applicant, for and on behalf of the Minister
of National Revenue (the Minister), for the period from November 1, 2007, to
November 31, 2007, under the ETA.
[7]
This assessment followed the determination by
the ARQ of the fair market value (FMV) of the phase 1 complex and involved the
amount of net tax reported by the applicant in relation to the FMV.
[8]
The applicant objected to that assessment. An application
for settlement was filed in December 2012. The assessment was then appealed to
the Court. A Consent to Judgment was filed with the Court on October 2, 2013.
[9]
In 2013, the applicant was audited by the ARQ in
respect of the phase 2 complex.
[10]
On May 23, 2013, the ARQ sent the applicant the results
of the audit.
[11]
On June 3, 2013, the ARQ assessed the applicant
under the ETA for the period from October 1, 2009, to October 31, 2009 (the
period at issue). The assessment dealt with the FMV of the phase 2 complex.
[12]
It is worth noting that the notice of assessment
was addressed to the applicant’s headquarters, at 465 Rue Bibeau,
Saint-Eustache, Quebec, but that the suite number was not included.
[13]
The applicant did not file its notice of
objection to the notice of assessment for the period at issue within 90 days after
the day the notice of assessment was sent, as set out in subsection 301(1.1) of
the ETA.
[14]
Ms. Forget, accountant and comptroller for the
applicant, testified that the applicant never received the notice of assessment
dated June 3, 2013, made under the ETA. She stated that the applicant
learned only on September 16, 2013, that an assessment had been made on June 3,
2013. Ms. Forget learned about this from a telephone conversation with Ms.
Bouchard, the ARQ auditor on the file. Following this conversation, Ms. Bouchard
sent the notice of assessment, which the applicant received on September 23,
2013.
[15]
Ms. Forget stated in her testimony that the applicant’s
office is located in a six-storey building that has approximately 20 tenants
and that the mailbox on the main floor does not bear the applicant’s name, but
“EMD Construction”.
[16]
At the hearing, Ms. Privé, analyst at ARQ’s Division
du flottage, de l’impression, de l’expédition et l’insertion massive, explained
ARQ’s procedure for sending communications and the deposit to Canada Post of
the notice of assessment dated June 3, 2013.
[17]
Ms. Privé submitted a file containing the
details of the communication to the applicant, including the applicant’s taxation
number, the production date and the production number (31501) of the notice of
assessment, the date of the notice of assessment, the applicant’s postal code,
the physical lot number and the specific number given to the communication. Ms.
Privé also filed an excerpt of the page for physical lot number 0151, which
included the notice of assessment dated June 3, 2013, as well as the sequence
report by document number indicating that the notice of assessment was part of
a lot of 1,689 items processed that day. The witness filed the worksheet for
June 3, 2013, for a document entitled “DDE Quotidien” showing that the notice
of GST assessment bearing the production number 31501 and physical lot number 0151
was part of a lot of 1,689 communications included in the 21,947 items processed
that day. The witness filed a document from Canada Post called a deposit
summary indicating that, on June 3, 2013, the ARQ deposited 21,947 mail items,
which corresponds to the total number of items indicated on the DDE Quotidien
worksheet.
[18]
On October 8, 2013, the applicant filed with the
Minister an application to extend the time to file a notice of objection and
attached the notice of assessment.
[19]
On January 8, 2014, the Minister informed the
applicant that its application to extend the time to file a notice of objection
could not be granted because the notice of assessment had been sent to the
applicant's address and that, under subsection 334(1) of the ETA, the notice of
assessment is deemed to have been received by the applicant on the day it was
mailed. Note that the letter dated January 8, 2014, stated the applicant’s suite
number.
[20]
On February 5, 2014, the applicant filed with
the Court an application to extend the time to file a notice of objection for
the period at issue.
ANALYSIS
[21]
The applicant submits that it did not file a
notice of objection to the Minister within the time prescribed by the ETA
because it never received the notice of assessment dated June 3, 2013.
a. Presumption
of receipt of the notice – subsection 334(1) of the ETA
[22]
The applicant’s first argument is that it did
not receive the notice of assessment mailed on June 3, 2013, pursuant to the
ETA because the address used by the Minister on the notice of assessment was
incomplete as the suite number was not included. As a result, the applicant maintains
that the presumption under subsection 334(1) of the ETA cannot apply.
[23]
The respondent maintains that the notice of
assessment was sent to the correct address and that consequently the
presumption under subsection 334(1) of the ETA applies.
[24]
Subsection 334(1) of the ETA provides that
anything sent by first class mail shall be deemed to have been received on the
day it was mailed. That subsection reads as follows:
334(1) Sending by
mail -- For the purposes of this Part and subject to subsection (2), anything
sent by first class mail or its equivalent shall be deemed to have been
received by the person to whom it was sent on the day it was mailed.
[25]
When a taxpayer claims that he or she did not
receive a document and believes that the document was not sent, the appropriate
taxing authority has the burden of proving that the document was sent. This
principle was noted by the Federal Court of Appeal in Aztec Industries Inc v
Canada, [1995] FCJ No 535, 95 DTC 5235. The Federal Court of Appeal
stated the following:
Where as in the
present case, a taxpayer alleges not only that he has not received the notice
of assessment but that no such notice was ever issued, the burden of proving
the existence of the notice and the date of its mailing must necessarily fall
on the Minister; the facts are peculiarly within his knowledge and he alone
controls the means of adducing evidence of them. . . .
[26]
Subsection 334(1) of the ETA creates an
irrebuttable presumption, the Minister must prove that the notice of assessment
was sent and not that the notice was received by the taxpayer. In Schafer v
Canada, [2000] FCJ No 1480, 2000 DTC 6542, Justice Sharlow, of the
Federal Court of Appeal, wrote the following at paragraph 24 of his
reasons regarding subsection 334(1) of the ETA:
[24] The
statutory provisions for assessments, objections and appeals are intended to
provide clear rules for determining when the Minister's obligation to make an
assessment is fulfilled, and to provide procedures by which taxpayers may
challenge assessments that may be mistaken. Parliament has chosen to adopt a
rule that makes no allowance for the possibility, however remote, that the
taxpayer may miss the deadline for objecting or appealing because of a failure
of the postal system. I do not understand why Parliament has chosen to deprive
taxpayers of the chance to challenge an assessment of which they are unaware,
but that is a choice that Parliament is entitled to make.
[27]
The mailing of the notice of assessment dated
June 3, 2013, is not in doubt. That said, in order for the presumption under
subsection 334(1) of the ETA to apply, the address used by the ARQ must
be the correct one.
[28]
It is up to the Minister to establish that the
notice of assessment was mailed to the correct address. A notice of assessment
that is sent to an incorrect address is deemed to have not been received.
[29]
The respondent acknowledges that the inclusion
of the correct postal code is an essential element of a correct and complete
address, as established by the case law. For the respondent, the suite number may
not be. In this case, he argues that the absence of the suite number did not
prevent the ARQ’s other letters in the file from being received by at the applicant.
[30]
Of the five items in the file that refer to the applicant’s
address, four of the items do not mention the suite number. One of those items
came from the applicant itself; the address written on the notice of objection
does not mention suite number 600. However, the notice of objection was
prepared and signed by counsel for the applicant.
[31]
The three other items are letters sent by the ARQ
to the applicant. According to the evidence, only the notice of assessment
dated June 3, 2013, was not received by the applicant. Details on the items
that did not include the suite number are as follows:
−
On May 23, 2013, the ARQ mailed the audit results
to the applicant’s address without specifying the suite number. The letter was received at that address on May 31, 2013.
−
The notice of assessment dated June 3, 2013, was
addressed to 465 Rue Bibeau, Saint‑Eustache, Quebec, and did
not mention suite number “600”. According to the applicant, the notice of
assessment was never received.
−
On June 18, 2013, the ARQ mailed a letter to the
applicant’s address stating that the person responsible for the file had
changed, and it did not specify the suite number. The
letter was received by the applicant on June 18, 2013.
[32]
The respondent argues that all of the correspondence
from the ARQ between May 23 and June 18, 2013, was received by the applicant
even if it did not mention the suite number.
[33]
However, in the correspondence from the ARQ dated
January 8, 2014, which informed the applicant that the Minister refused to
extend the time for filing an objection, the applicant’s address included suite
600.
[34]
In addition to Scott v Minister of National
Revenue, [1960] CTC 402, 60 DTC 1273, which states that a wrong or
fictitious address cannot constitute a valid mailing, the applicant submitted
two other decisions to support its claim. It relied on 236130 British
Columbia Ltd. v Her Majesty the Queen, 2006 FCA 352, 2007 DTC 5021 and Katepwa
Park Golf Partnership v The Queen, [2000] TCJ No 246, [2000] 3 CTC 2043. In
those decisions, the addresses were inaccurate with respect to the postal codes.
[35]
The applicant argues that even though in this case
the error does not involve a postal code, there is still a strong likelihood
that the letter would not be received at its destination, namely because of the
physical layout of the premises. Ms. Forget stated in her testimony that
the applicant’s place of business is located in a complex with approximately 20
tenants. The applicant’s office is located on the 6th floor at suite 600, whereas
the mailbox is located on the main floor with many other mailboxes. Furthermore,
the mailbox does not bear the applicant’s name, but the name of the group’s
main company, “EMD Construction”. The mailbox is also used for all of the companies
in the group, which is about thirty companies.
[36]
The respondent did not submit any evidence
regarding the address that the applicant provided to the ARQ, that is, the applicant’s
address in the ARQ’s computer records or the address stated by the applicant on
its GST reports or tax returns.
[37]
Aside from Ms. Forget’s testimony, the applicant
did not submit evidence of the address that it provided to the ARQ. For
example, it did not state the address that it used in its GST reports or tax
returns. That said, it is up to the ARQ to prove that it sent the notice of assessment
to the correct address.
[38]
The concept of “address” is not defined in the
ETA or in the Income Tax Act. Furthermore, no decision dealing with
those statutes seems to provide a definition of it. Using common or legal
dictionaries to establish an address’s content was inconclusive.
[39]
In Katepwa Park Golf Partnership, supra,
the Court decided that the postal code was an essential element of an address.
In this case, the issue is whether the suite number is also an essential
element of an address.
[40]
In my opinion, in light of the facts in the file,
that is, in a complex with several storeys where the mailbox does not bear the applicant’s
name, the suite number becomes essential , a situation which could be different
for a duplex or a building with few occupants.
[41]
Even though the Minister demonstrated that most
of the mail in the file was received by the applicant despite the absence of
the suite number, that does not mean that the address was complete.
[42]
Furthermore, like the applicant noted, how is it
that the suite number was on the correspondence sent by the ARQ to the applicant
on January 8, 2014? The ARQ cannot have used the address stated on the notice
of objection produced by counsel for the applicant because that address did not
include the suite number. It is therefore likely that the address with the suite
number is from the ARQ’s computer records. Indeed, I noted that the applicant,
in the files for the phase 1 complex, included the suite number in its address.
[43]
In my view, the respondent had to prove that the
address used for mailing purposes was the correct address, which it did not do
in this case. If the respondent had proven that the address provided by the applicant
did not include the suite number, my finding would have been different. A
taxpayer cannot argue that the address used by the ARQ is not correct if the ARQ
uses the address provided by the taxpayer.
[44]
As stated by Justice Noël in Scott, supra,
a notice of assessment sent to a wrong address is equivalent to a notice of
assessment that was not sent at all.
[45]
Consequently, the application for an extension of
time for filing a notice of objection is allowed.
[46]
In any event, in this case, in light of the
facts, I am of the opinion that the applicant meets the conditions listed in
subsection 304(5) of the ETA that makes it possible for the Court to allow an
application for an extension of time for filing a notice of objection.
b. Necessary conditions for an extension of time –
subsection 304(5) of the ETA
[47]
The section lists the conditions that must be
met to allow an application for an extension of time. Those conditions are
cumulative and must all be met for the Court to grant the application.
304(5) When application to be granted. – No
application shall be granted under this section unless
(a) the application was
made under subsection 303(1) within one year after the expiration of the time
otherwise limited by this Part for objecting or making a request under
subsection 274(6), as the case may be; and
(b) the person
demonstrates that
(i) within the time otherwise
limited by this Act for objecting,
(A) the person was unable to act
or to give a mandate to act in the person’s name, or
(B) the person had a bona fide
intention to object to the assessment or make the request,
(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, and
(iii) the application was
made under subsection 303(1) as soon as circumstances permitted it to be made.
304(5)(a)
[48]
The condition listed in paragraph 304(5)(a)
of the ETA is not problematic. The fact that the one-year deadline was
respected is not in dispute.
304(5)(b)(i)
[49]
The applicant must demonstrate that within the
time otherwise limited for objecting:
−
it was unable to act or to give a mandate to act
in its name, or
−
it had a bona fide intention to object to the
assessment.
[50]
In my view, the applicant always had the bona
fide intention to object. In support of its position, it raises its past
actions, including the fact that the assessment for the period at issue followed
a prior similar assessment that it had objected to. Indeed, an appeal was made
and a Consent to Judgment was filed with the Court in Le Sage au piano, phase
1.
[51]
Contrary to the Les Monarques file, no notice of
payment followed the audit. Furthermore, there was no document from the ARQ that
referred to the assessment date of June 3, 2013.
[52]
Ms. Forget sent counsel for the applicant the audit
results once she received them. She had been told to wait for the notice of
assessment and once she received the notice of assessment, Ms. Forget sent
counsel for the applicant the notice of assessment so that an application for
an extension of time for filing a notice of objection could be filed with the
Minister.
304(5)(b)(ii)
[53]
According to subparagraph 304(5)(b)(ii) of
the ETA, an application for an extension of time can only be granted if it is
fair and equitable to do so. In this case, I believe that it is fair and
equitable to grant the application.
[54]
To examine that condition, there is first a need
to consider the risks that the parties may experience hardship. The applicant
could experience hardship if its objection could not be decided on the merits,
especially since a Consent to Judgment was filed regarding the phase 1 complex.
304(5)(b)(iii)
[55]
Pursuant to subparagraph 304(5)(b)(iii) of
the ETA, the application must be made as soon as circumstances permit it to be
made. In this case, that condition was met.
[56]
In this regard, the sequence of events is
important. That sequence is as follows:
(a)
June 3, 2013 - notice of assessment;
(b)
September 3, 2013 - time limit to file objection;
(c)
October 8, 2013 –filing of the application for
an extension of time, which the notice of objection was attached to, with the
Minister;
(d)
January 8, 2014 – Minister’s dismissal of the
application for an extension;
(e)
February 5, 2014 – filing of the application
with the Court.
[57]
The applicant filed an application with this
court within a reasonable time frame, that is, less than a month after the
Minister’s refusal.
304(5)(b)(iv)
[58]
The applicant did not demonstrate a reasonable
basis for its objection. Because of its discrepancy with the English version,
the French version of paragraph 304(5)(b) of the ETA must be interpreted
as not requiring the fourth condition set out in subparagraph 304(5)(b)(iv).
CONCLUSION
[59]
I am of the opinion that the presumption in
subsection 334(1) of the ETA does not apply in this case. Consequently, the
application for an extension of time for filing a notice of objection is granted
and the notice of objection attached to the application constitutes a valid
notice of objection.
[60]
If the presumption in subsection 334(1) of the ETA
had been applied, I would have still granted the applicant’s application
because the conditions set out in subsection 304(5) of the ETA were met.
Signed at Ottawa, Canada, this 28th day
of October 2014.
“Johanne
D’Auray”
Translation certified true
on this 11th day of December 2014
Janine Anderson, Translator
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