Date: 20041231
Docket: GST-1343-03
Citation: 2004 FC 1783
BETWEEN:
In the matter of the Excise Tax Act,
R.S.C. 1985, c. E-15,
- and -
In the matter of an assessment or
Assessments by the Minister of National
Revenue under the Excise Tax Act,
Against:
KIM OANH VU (sometime known as
OANH KIM VU, sometime carrying on
business as 129 SMOKE AND VARIETY)
77 Beckenridge Drive,
Markham Ontario
L3S 3B1
REASONS FOR ORDER AND ORDER
LAFRENIÈRE, P.
[1] Kim Oanh Vu ("Vu") and Tsui Wai Keung ("Tsui") have brought three motions in writing seeking various relief, and more particularly, an order quashing a Certificate obtained by the Minister of National Revenue (the "Minister") for unremitted GST and lifting a lien registered against their property at 77 Beckenridge Drive in Markham, Ontario, on the grounds that Vu did not receive a proposal letter sent by the Minister or a Notice of Reassessment relating to the unremitted GST, and was therefore unable to appeal the Notice of Reassessment.
[2] The Minister submits that there is no basis to quash the Minister's Certificate or set aside the lien since the proposal letter and the Notice of Reassessment were validly sent to Vu. The Minister claims that, upon mailing the Notice of Reassessment to Vu's correct address, he was authorized by statute to collect the GST debt by registering a lien against Vu's half interest in 77 Beckenridge Drive, whether or not Vu appealed the reassessment.
[3] Tsui initially sought relief from the Court in order that he could sell his property and be paid his half share of the net proceeds. Since the property has since been sold by the CIBC under power of sale, and the lien was discharged as a result, the only issue that remains to be determined is whether there is any basis to quash the Minister's Notice of Reassessment. If the Notice of Reassessment is quashed because the Minister failed to properly complete the assessing action, then the Certificate and Lien would no longer be valid, and the Crown would have no claim to Vu's share of the net proceeds of sale. Otherwise, as long as the reassessment remains valid, the Minister can take collection action on the GST debt immediately, whether or not Vu appealed the reassessment, since there is no stay for the collection of GST debts: Excise Tax Act, R.S.C. 1985, c. E-15, sections 313, 315.
Facts
[4] The pertinent facts, gleaned from the affidavit evidence filed by the parties and the transcript of the cross-examination of Vu, may be briefly stated as follows.
[5] In 1998, Vu operated a variety store known as "129 Smoke and Variety". Vu is alleged to have participated in a scheme involving the sale of cigarettes to a third party located on a native reserve that could make GST-exempt sales of the cigarettes. The actual sales of the cigarettes are alleged to have been made to Vu, who in turn sold them off-reserve without collecting and remitting any GST. After Vu was criminally charged, the Minister conducted a civil GST audit of Vu for the 1998 calendar year. A Notice of Reassessment in amount of $257,386.84 was issued to Vu on July 23, 2002.
[6] Tsui and Vu were common law spouses who separated in April 2000. In August 2001, Tsui purchased a new home at 77 Beckenridge Drive, reflecting Vu as joint tenant on the title. During all material times, Tsui and the couple's five children resided at this address.
[7] On April 26, 2002, the Minister sent Vu a letter which set out the proposed reassessment for unremitted GST. This letter was sent to 7 Glenelia Avenue, the last address recorded on the Minister's system. When this letter was returned as undeliverable, the Minister sent Vu another proposal, this time to 77 Beckenridge Drive, where Vu had apparently been receiving her mail since August 2001. Vu had been living at this address part-time when the proposal letter was sent, and had begun living there full-time at the time the Minister sent the Notice of Reassessment. In her affidavit sworn September 1, 2004, Vu states that "(t)he address on my year 2002 income tax return was 77 Beckenridge Drive, Markham."
[8] Vu claims that she did not receive either the proposal letter or the Notice of Reassessment in 2002. She did, however, admit to receiving a letter from the Minister in November 2003 which indicated that the Minister had registered the GST debt on the property register system.
Analysis
[9] Vu asserts that the amount of GST that is claimed against her is in fact owed by a wholesaler, Massey Wholesale Limited ("Massey"). On this basis, it is submitted that the Minister's reassessment is not valid. Vu also claims that she never received either the proposal letter or the notice of reassessment, and therefore had no way of opposing or even responding to the Minister's letters.
[10] There is conflicting evidence adduced by the parties whether the Minister fulfilled his legal duty with respect to the delivery of the Notice of Reassessment, pursuant to section 300 of the Excise Tax Act. Assessing whether or not Vu received proper notice is a two-step process involving the testing of Vu's evidence of lack of receipt, and the testing of the Minister's evidence on proof of mailing.
[11] Vu claims that she only became aware of the Minister's proposal letter in April 2004, when her lawyer handed a faxed copy of it to her. According to Vu, neither she nor Tsui received the letter when the Minister purportedly sent it. Vu claims that, pursuant to Rules 127(1), 131.1 and 148 of the Federal Courts Rules, this Court may set aside the consequences of default because she was not personally served with the Notice of Reassessment.
[12] There is no need, however, for the Minister to show actual receipt. The Tax Court of Canada concluded in Schafer v. Canada, [1998] T.C.J. No. 459 (QL) that the best that can be done in a large governmental organization to prove mailing is to set out the detailed procedures followed in mailing the notice in question.
[13] In the present case, such a procedure has clearly been demonstrated. Uncontradicted affidavit evidence adduced by the Minister indicates that at all material times, officers in the Canada Customs and Revenue Agency's Special Investigations Unit ("SIU") routinely left mail in an outbox, where it was reliably picked up on a daily basis by a robot called the "mailmobile". It is clear from the affidavit evidence that the Notice of Reassessment was sent to Vu's proper address. An SIU officer has provided sworn evidence that he personally sent the Notice of Reassessment to Vu on July 23, 2002, having left the notice in the office's mail outbox, where it would have been sent to 77 Beckenridge Drive. This notice was sent only after the proposal letter had been sent to that same
address and had not been returned to the office as undelivered mail. As such, pursuant to section 334 of the Excise Tax Act, Vu is deemed to have received the Notice of Reassessment in mid-2002.
[14] I conclude that the SIU officer followed standard procedure in sending the Notice of Reassessment to Vu's correct address notwithstanding Vu's protestations. In any event, there are some serious credibility issues regarding Vu's assertions that neither she nor Tsui became aware of the Notice of Reassessment until 2004.
[15] Vu claims that she was not aware of either the proposal letter or the Notice of Reassessment having been sent to her. Tsui also claims that he did not receive the proposal letter. However, for the reasons that follow, I have difficulty accepting that Vu had no knowledge of either of the two documents that informed her of her liability arising from her alleged criminal activity, but was aware of a letter that informed her that her property was to be encumbered. As the Minister has noted, all three letters were sent to the same address.
[16] Vu has acknowledged that Tsui and her five children all lived at 77 Breckenridge Drive since August 2001. She admitted in cross-examination that when she identified a letter as being from the government, she would give it to Tsui, apparently because of her difficulties in reading English. Her five children would also open the mail. It is therefore more likely than not that Vu did receive the Notice of Assessment, but never read it herself. Based on her lack of English comprehension, there is no reason why she would. However, this does not mean that the letter was not received by someone in the household. Moreover, Tsui does not claim that he did not see the Notice of Reassessment. He only stated in his affidavit that he did not receive the proposal letter.
Conclusion
[17] Vu has failed to establish, on a balance of probabilities, that the Notice of Reassessment was not received by either Vu or her family at 77 Breckenridge Drive in July 2002. In fact, the evidence establishes that the Notice of Reassessment, upon which the Certificate and Lien are based, was not only properly sent by the Minister, but was also received by Vu or her family, or both.
[18] In the circumstances, I conclude that Vu did in fact have an opportunity to appeal the Notice of Reassessment, but failed to do so in a timely fashion - namely, within the 90-day appeal period. The Minister cannot be held responsible for the fact that she did not do so.
[19] There is therefore no basis to set aside the Notice of Reassessment for lack of service. The motions are accordingly dismissed.
Costs
[20] Vu and Tsui request in their written representations that costs of the motions be fixed in the amount of $1,000, payable to each of Vu and Tsui. They assert that the Minister made demands
which violate the Excise Tax Act. They also argue that the Minister caused unreasonable delays in resolving the issue of which party owes the unremitted GST. Finally, they assert that they have become scapegoats in being forced to pay Massey's unremitted GST.
[21] I see no reason to deviate from the general rule that costs are usually awarded to the successful party. The Minister has had to respond to numerous motions seeking duplicate relief, including one motion served upon the Minister that was not accepted for filing. Neither Vu nor Tsui notified the Minister that their motion had been rejected for filing. The Minister was also required to conduct a cross-examination of Vu in order to test her credibility and obtain admissions. Moreover, counsel for the Minister made bona fide attempts to resolve two of the motions by proposing to have Vu's share of the net proceeds paid into Court pending resolution of her motion challenging service of the Notice of Reassessment.
[22] In the circumstances, I consider it just and appropriate to award costs of the three motions to the Minister against Vu and Tsui. I would fix the costs in the amount of $2,000.00, plus any taxable disbursements.
ORDER
THIS COURT ORDERS that
[23] Vu and Tsui's motions dated June 3, July 12 and July 19, 2004 are dismissed.
[24] Costs fixed in the amount of $2,000, plus disbursements, are awarded against Vu and Tsui, payable forthwith to the Minister.
"Roger R. Lafrenière"
Prothonotary
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: GST-1343-03
STYLE OF CAUSE: In the matter of the Excise Tax Act, R.S.C. 1985 c. E-15,
- and -
In the matter of an assessment or assessments by the
Minister of National Revenue under the Excise Tax Act,
against:
KIM OAHN VU (sometimes known as OAHN KIM VU,
sometimes carrying on business as 129 SMOKE AND VARIETY)
77 Beckenridge Drive, Markham, Ontario L3S 3B1
CONSIDERED AT TORONTO, ONTARIO PURSUANT TO RULE 369
REASONS FOR ORDER
AND ORDER BY: LAFRENIÈRE P.
DATED: DECEMBER 31, 2004
WRITTEN REPRESENTATIONS BY:
|
Ms. P. Tamara Sugunasiri
|
FOR THE MINISTER OF NATIONAL REVENUE
|
|
Ms. Kim Oahn Vu
|
FOR THE JUDGMENT/DEBTOR, ON HER OWN BEHALF
|
|
|
|
SOLICITORS OF RECORD:
|
Morris Rosenberg
Deputy Attorney General of Canada
|
FOR THE MINISTER OF NATIONAL REVENUE
|
|
Kim Oahn Vu
Richmond Hill, Ontario
|
FOR THE JUDGMENT/DEBTOR, ON HER OWN BEHALF
|
FEDERAL COURT
Date: 20041231
Docket: GST-1343-03
BETWEEN:
In the matter of the Excise Tax Act,
R.S.C. 1985, c. E-15,
- and -
In the matter of an assessment or
Assessments by the Minister of National
Revenue under the Excise Tax Act,
Against:
KIM OANH VU (sometime known as
OANH KIM VU, sometime carrying on
business as 129 SMOKE AND VARIETY)
77 Beckenridge Drive,
Markham Ontario
L3S 3B1
REASONS FOR ORDER
AND ORDER
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