Date: 20051219
Docket: T-833-05
Citation: 2005 FC 1713
Ottawa, Ontario, December 19, 2005
PRESENT:
THE HONOURABLE MADAM JUSTICE TREMBLAY-LAMER
BETWEEN:
GAÉTAN
GROLEAU
Applicant
and
CANADA CUSTOMS AND REVENUE
AGENCY
and
LOUIS TURCOTTE, in his capacity as Acting
Chief of Appeals,
Québec Tax Services Office
Respondents
REASONS FOR ORDER AND ORDER
[1]
This is an
application for judicial review of a decision by the Canada Customs and Revenue
Agency (the respondent) under the fairness initiative, dated April 5, 2005, to
deny an application for a waiver of additional overdue interest for the 1999
and 2000 taxation years, in accordance with subsection 220(3.1) of the Income
Tax Act, R.S.C., 1985 (5th Supp.), c. 1 (ITA).
[2]
On April
15, 2002, the Canada Customs and Revenue Agency issued a reassessment listing
penalties and interest owed by Gaétan Groleau (the applicant) following an
audit for the 1999 and 2000 taxation years.
[3]
On July 5,
2002, the applicant filed notices of objection for both of the assessments issued
on April 25, 2002, for the 1999 and 2000 taxation years.
[4]
On July
24, 2003, the Appeals Division of the Québec Tax Services Office decided to
disallow the notices and uphold the assessments.
[5]
On June 4,
2003, the applicant first applied to the Agency to have the interest waived for
the 1999 and 2000 taxation years under subsection 220(3.1) of the
ITA, alleging undue delay by the Agency in processing his request. The Agency
was unable to process the request at that time because it had to wait for a valid
and binding decision regarding the years at issue.
[6]
On July
21, 2004, Archambault J. of the Tax Court of Canada allowed the appeals from
assessments for the 1999 and 2000 taxation years and referred the matter to the
Minister of National Revenue for reconsideration and reassessment, in
accordance with the consent to judgment.
[7]
On July
21, 2004, the applicant and Her Majesty the Queen signed a consent to judgment
by which the applicant was allowed to deduct certain amounts as business
losses.
[8]
In a
letter dated November 3, 2004, Réjean Michaud, a manager for the Agency,
informed the applicant that his application had been allowed in part and that
the interest owing for the period from September 18, 2002, to December 1, 2002,
would be waived.
[9]
In a
letter dated December 17, 2004, the applicant applied to the Agency for a
second-level administrative review of the decision dated November 3, 2004.
[10]
After
reviewing the file, Robert Lévesque recommended that the decision of
November 3, 2004, be upheld, since the interest for the 1999 and 2000
taxation years could not be attributed to the actions of the Agency, and there
had been no undue delay caused by the Agency other than the two-and-a-half
month period for which the interest owing had already been waived pursuant to
the first fairness application; moreover, it was the applicant who had decided
not to pay off his tax account at the time of filing his objection and appeal
with the Tax Court of Canada, which resulted in his having to pay unnecessary
additional interest.
[11]
In a
letter dated April 5, 2005, Louis Turcotte, Acting Chief of Revenue
Canada’s Appeals Division, informed the applicant that his application had been
denied because the review of his file had not revealed any undue delay caused
by the Agency in processing his file.
[12]
It is
worth reproducing here the relevant subsection of the ITA:
|
220 (3.1) The Minister
may at any time waive or cancel all or any portion of any penalty or interest
otherwise payable under this Act by a taxpayer or partnership and, notwithstanding
subsections 152(4) to 152(5), such assessment of the interest and penalties
payable by the taxpayer or partnership shall be made as is necessary to take
into account the cancellation of the penalty or interest.
|
220 (3.1) Le ministre
peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt
payable par ailleurs par un contribuable ou une société de personnes en
application de la présente loi, ou l'annuler en tout ou en partie. Malgré les
paragraphes 152(4) à (5), le ministre établit les cotisations voulues
concernant les intérêts et pénalités payables par le contribuable ou la
société de personnes pour tenir compte de pareille annulation.
|
[13]
Should the
Court intervene and review the Minister’s exercise of discretion in his decision
dated April 5, 2005, denying the applicant’s application for waiver of
interest because of undue delay caused by the Agency?
[14]
The
appropriate standard of review for discretionary decisions made by the Minister
of National Revenue in accordance with the so-called “fairness” provisions of
the ITA is the standard of reasonableness simpliciter: Lanno v.
Canada (Customs and Revenue Agency), 2005 FCA 153. The reviewing Court
must therefore look to the reasons given by the tribunal. “A decision will be
unreasonable only if there is no line of analysis within the given reasons that
could reasonably lead the tribunal from the evidence before it to the
conclusion at which it arrived. If any of the reasons that are sufficient to
support the conclusion are tenable in the sense that they can stand up to a
somewhat probing examination, then the decision will not be unreasonable and a
reviewing court must not interfere. . . . This means that a decision may
satisfy the reasonableness standard if it is supported by a tenable explanation
even if this explanation is not one that the reviewing court finds compelling”
(Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 274 at para. 55).
[15]
Subsection
220(3.1) of the ITA confers on the Minister of National Revenue a discretionary
power to waive, upon application, penalties or interest owed by a taxpayer or
partnership. To facilitate the exercise of this discretionary power, on
March 18, 1992, the Minister of National Revenue issued Information
Circular IC-92-2, entitled “Guidelines for the Cancellation and Waiver of
Interest and Penalties”, and in March 1996 adopted improved guidelines in a
document called the “Fairness Provisions Reference Guide”.
[16]
In Kaiser
v. Canada (Minister of National Revenue – MNR), [1995] F.C.J. No. 349
(F.C.T.D.), Rouleau J. noted that the purpose of the fairness provisions is to
give the Minister of National Revenue a discretionary power to waive or cancel
all or any portion of any penalty or interest when exceptional circumstances or
circumstances beyond the taxpayer’s control prevent him or her from meeting
deadlines or complying with the rules under the tax system.
[17]
In this
case the applicant did not raise any exceptional circumstances or
circumstances beyond his control that would have prevented him from paying his
tax debt. Based on the reasons and the evidence before me, it was not
unreasonable for the Agency to find that there was no undue delay caused by the
Agency other than the two-and-a-half month period for which the interest owing
had already been waived pursuant to the first fairness application.
[18]
A review
of the record shows that there were various periods during which the applicant
waited for responses from the Agency. On July 5, 2002, the applicant filed
notices of objection to the 1999 and 2000 reassessments, which were disallowed
13 months later, on July 24, 2003. Ms. Gariépy, Appeals Officer,
cited a shortage of human resources and a new Commissioner to justify that
delay. In light of the circumstances, the Agency informed the applicant that
the interest would be waived for the period from September 18, 2002, to
December 1, 2002. The applicant was therefore successful in his claim for that
period.
[19]
On June 4,
2003, the applicant first applied to the Agency to have the interest waived for
the 1999 and 2000 taxation years. As mentioned above, that application
could not be processed immediately because the Agency had to wait for a valid
and binding decision regarding the years at issue. Therefore, that delay was
not caused by the Agency. On July 21, 2004, the Tax Court of Canada made its
decision. Pursuant to the decision, in a letter dated November 3, 2004, the
Agency informed the applicant that the interest had been waived for the
above-mentioned two-and-a-half month period, the only delay that was caused by
the Agency.
[20]
On
December 17, 2004, the applicant applied to the Agency for a review of the
decision dated November 3, 2004. On April 5, 2005, Louis Turcotte informed the
applicant that there had been no undue delay caused by the Agency, which
is clearly borne out by the facts. Unfortunately for the applicant, as
Mr. Turcotte pointed out, it was the applicant himself who opted not to
pay the taxes owing under the reassessments and to wait for the outcome of his
objection, which resulted in the accrual of interest.
[21]
Moreover,
there is no evidence that his right to a fair, objective and unbiased decision
was violated. The fact that the file was processed in Québec cannot in itself
amount to a breach of procedural fairness. I note that both applications were
processed independently and that the person involved in the first application
for a waiver was not involved in the second.
[22]
Based on
the evidence before me, there is no reason to determine that the Minister’s
decision of April 5, 2005, denying the applicant’s application to have the
interest waived was unreasonable; therefore the application for judicial review
is dismissed, without costs.
ORDER
[1]
THE
COURT ORDERS that
the application for judicial review be dismissed, without costs.
“Danièle
Tremblay-Lamer”
Certified
true translation
Francie
Gow
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