Date: 20061027
Docket: T-264-06
Citation: 2006 FC 1303
OTTAWA, ONTARIO, October 27,
2006
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
AJIT
S. LIDDAR
Applicant
and
MINISTER
OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This
is an application for judicial review of a decision of the Minister of National
Revenue, Canada Customs and Revenue Agency, as set out in a letter dated
February 1, 2006, wherein the Applicant’s request for cancellation of penalties
and interest under the Fairness provisions of the Excise Tax Act, R.S.C.
1985, c. E-15 and recovery thereof, were denied.
[2]
The
facts of this case are unusual. The Applicant started a travel agency business
in 1982 and incorporated a company for that purpose, The Travel People Inc.
That company operated a business in Mississauga, Ontario. Early in
1999, a second travel agency location was opened in Oakville, Ontario.
This agency was a branch of the first, but operated under the name Imagine, and
was run by the Applicant’s son.
[3]
The
Imagine travel agency business was initially only modestly successful. It did
report GST but, in accordance with an audit conducted several years later, it
became clear that it seriously underreported what was truly owing. In 2001,
the Imagine business took a loss, the Applicant attributes this to the decline
in the travel business due to the tragic events of 9/11. By late 2002, it
became evident that the son was seriously ill, so ill that in October 2003, he
was hospitalized for two months and a long recuperation followed.
[4]
The
Applicant, the father, realized that the Imagine business was in trouble and
late in 2002, stepped in to do what he could to clear up the mounting debts and
put the business in order. At that time, an audit revealed an underpayment of
GST and the business, Imagine, made two partial payments of $500.00 each in
order to partly offset this debt.
[5]
The
uncontradicted evidence by way of the Applicant’s affidavit is that by the year
2004, he was in communication with the collection staff responsible for GST and
was given a clear understanding that if he paid off the debt owing, together
with penalty and interest accruing, that the interest and penalty would be
waived. That is what the Applicant did, he personally, not the son, not
Imagine, not the Travel People, paid off the debt of $8,627.53, together with
interest and penalties of $4,485.89. To quote the uncontradicted evidence as
set out in paragraph 11 of his Affidavit:
“I was given the clear understanding by
the collection staff that if I manage to pay the basic GST amount owing, the
interest and penalty will be waived.”
[6]
That
did not happen. The record filed by the Minister contains a handwritten
memorandum reviewed August 10, 2005. It notes that the Applicant had spoken to
an Ed Devisser and confirms that such an undertaking was made. The note calls
this a “misunderstanding”. It if was, the Agency did nothing to clear it up. Nothing
in the two affidavits filed by staff members of the Canada Revenue Agency shows
that any recognition of this undertaking was given by the Agency in coming to
its decision that a third party, the Applicant, and not the taxpayer, Imagine,
had paid the debt including interest and penalties.
[7]
The
record shows that all that the Agency did with the Applicant’s request for
waiver was follow the Fairness Guidelines, without regard to the unusual
circumstances of this case, where a third party had paid the debt and an
undertaking as to waiver had been given by the Agency to that third party.
This constitutes a serious error and breach of fundamental fairness. The
amount paid for interest and penalties of $4,485.89 together with interest as
provided for in the Fairness Guidelines, paragraph 1, at the rate of six
percent (6%) per annum, not compounded, from the date of payment, which on the
basis of the evidence is May 11, 2005, shall be paid forthwith by the Agency to
the Applicant.
[8]
The
Applicant is self-represented and not a lawyer, thus cannot recover costs.
However, he can recover his disbursements, which have been approximated as
$500.00.
JUDGMENT
FOR THE REASONS ABOVE:
THIS COURT ORDERS THAT:
1.
The
application is allowed;
2.
The
Applicant shall recover from the Respondent forthwith, the sum of $4,485.89,
together with interest payable at the rate of six percent (6%) per annum, not
compounded, to run from May 11, 2005, until payment in full is made; and
3.
The
Applicant is awarded payment of his disbursements fixed at $500.00.
"Roger
T. Hughes"
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