Hacikyaner v. Canada (Customs and Revenue Agency), 2002 FCT 1066

                                                                                                                                            Date: 20021015

                                                                                                                                       Docket: T-1382-00

Ottawa, Ontario, the 15th day of October, 2002

Present: The Honourable Mr. Justice Pinard

Between:

HILDA HACIKYANER,

546 Inverness, Town of Mount Royal, Quebec H3R 1C3

Applicant

- and -

CANADA CUSTOMS AND REVENUE AGENCY,

305 René-Lévesque Blvd. W., Montréal, Quebec H2Z 1A6

Respondent

ORDER

The application for judicial review and reversal of the decision of the Canada Customs and Revenue Agency delivered June 19, 2000, by the Acting Chief of Appeals, Mr. Jean Laporte, rejecting the request for cancellation of interest and penalties made by the applicant in accordance with subsection 220(3.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), is dismissed with costs.

                                  Judge

Certified true translation

Suzanne M. Gauthier, C. Tr., LL.L

Date: 20021015

                                            Docket: T-1382-00

Neutral citation: 2002 FCT 1066

Between:

HILDA HACIKYANER,

546 Inverness, Town of Mount Royal, Quebec H3R 1C3

Applicant

- and -

CANADA CUSTOMS AND REVENUE AGENCY,

305 René-Lévesque Blvd. W., Montréal, Quebec H2Z 1A6

Respondent

REASONS FOR ORDER

PINARD J.:

[1]                 This is an application for judicial review seeking the reversal of the decision of the Canada Customs and Revenue Agency (hereinafter the CCRA) delivered June 19, 2000, by the Acting Chief of Appeals, Mr. Jean Laporte, rejecting the request for cancellation of interest and penalties made by the applicant in accordance with subsection 220(3.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (hereinafter the Act).

[2]                 On December 15, 1995, the CCRA issued an assessment against the applicant pursuant to section 160 of the Act.

[3]                 The CCRA assessment was based on the fact that, while the applicant's husband was liable for taxes owing to the Minister of National Revenue for the years 1987 to 1990, the applicant had profited from a transfer of real estate with a value in excess of her husband's debt, a transfer for which no consideration was paid to her husband.

[4]                 This transfer was made by notarial act dated January 31, 1991, changing the matrimonial regime of the spouses from a partnership of acquests to a separation as to property.

[5]                 Through this change in matrimonial regime, the applicant received the family residence, with a market value of more than $300,000, this property being then encumbered with a hypothec of $100,000. No valuable consideration was given to the husband as payment for this transfer at the time when he had an unpaid tax liability to the Minister of National Revenue.

[6]                 The applicant, through a notice of objection and later a notice of appeal to the Tax Court of Canada, disputed the assessment issued to her because of this transfer. The assessment was upheld by a judgment of the Tax Court of Canada dated October 16, 1997.

[7]                 The amount of the applicant's assessment is composed of her husband's tax liability of $21,067.49 for the years 1987 to 1990, plus the interest that had accumulated on this debt to the

time of the assessment issued to the wife, the beneficiary of the transfer under section 160 of the

Act.

[8]                 Toward the end of 1998, the applicant applied to the Montréal tax services office of the CCRA to ask that the amount of the tax liability imposed on her be reduced in interest pursuant to the Minister's discretionary authority under subsection 220(3.1) of the Act.

[9]                 On January 5, 1999, an officer of the CCRA rejected this request to cancel the interest and the applicant asked the management of the tax services office in Montréal to review the decision.

[10]            In its examination of the request for review, the fairness committee of the debt collection division reviewed the facts of the case and then reported to the Acting Chief of Appeals, Mr. Jean Laporte, who made the decision at issue of June 19, 2000.

[11]            Mr. Jean Laporte refused the request to cancel the interest and penalties in the assessment in the following words:

. . .

In your representation, you have exposed the burden of this liability on your financial situation and the impact of the accumulation of interest on the unpaid debt. While I sympathize with your difficulties, you have not demonstrated the willingness to seek all avenues for an early resolution of the tax liability. Our information indicates that you have sufficient equity in your residence which would enable you to acquire sufficient funds to pay the arrears.

The fairness provisions are designated to permit the Agency to assist clients in resolving problems through no fault of their own.

I have considered the Agency's position with respect to the fairness provision and made a thorough and impartial review of the facts and representations that you have submitted to support your request. While I understand your concerns, I must deny your request to cancel the penalties and interest.

. . .

[12]            The relevant provision of the Income Tax Act, subsection 220(3.1), reads as follows:

[13]            In Boudreault v. Canada (C.C.R.A.), 2002 FCT 84, [2002] F.C.J. No 126 (T.D.) (QL), Mr. Justice Blais upheld the standard of review pronounced by Mr. Justice Rouleau in Kaiser v. Canada (Minister of National Revenue - M.N.R.), [1995] F.C.J. No. 349 (T.D.) (QL), 93 F.T.R. 66, where the Court was asked to review a decision made pursuant to a discretionary authority, as in this case:

[8]            The purpose of this legislative provision is to allow Revenue Canada, Taxation, to administer the tax system more fairly, by allowing for the application of common sense in dealing with taxpayers who, because of personal misfortune or circumstances beyond their control, are unable to meet deadlines or comply with rules under the tax system. The language used in the section bestows a wide discretion on the Minister to waive or cancel interest at any time. To assist in the exercise of that discretion, policy guidelines have been formulated and are set out in Information Circular 92-2.

[9]           The jurisprudence has established the standard to be employed by the Courts when called upon to review the exercise of a discretionary power such as the one in question here. In Re Maple Lodge Farms Ltd. and Government of Canada et al. (1982), 137 D.L.R. (3d) 558 (S.C.C.), McIntyre, J. stated at p. 562:

In construing statutes such as those under consideration in this appeal, which provide for far-reaching and frequently complicated administrative schemes, the judicial approach should be to endeavour within the scope of the legislation to give effect to its provisions so that the administrative agencies created may function effectively, as the legislation intended. In my view, in dealing with legislation of this nature, the courts should, wherever possible, avoid a narrow, technical construction, and endeavour to make effective the legislative intent as applied to the administrative scheme involved. It is, as well, a clearly-established rule that courts should not interfere with the exercise of a discretion by a statutory authority merely because the court might have exercised the discretion in a different manner had it been charged with that responsibility. Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere.

[14]            In Braceland v. Canada (Minister of National Revenue - M.N.R.), [1999] F.C.J. No. 434 (F.C.T.D.) (QL), Mr. Justice Teitelbaum applied the standard of review set down in Kaiser, supra:

[14]          It is clearly established that the Minister's decision under subsection 220(3.1) of the Income Tax Act is discretionary and as such gives rise to a narrow scope of review. The standard of review for the Minister's decision pursuant to subsection 220(3.1) of the Act is discussed in Kaiser v. Canada (Minister of National Revenue - M.N.R.) (F.C.T.D.) (1995), 93 F.T.R. 66....

[15]            For my part, I, too, recently applied the same standard of review in Grace Edwards et al. v. Canada Customs and Revenue Agency (May 31, 2002), T-1030-01, 2002 FCT 618:

[13]          Subsection 220(3.1) of the Act vests a discretionary power to the Minister. The courts have the responsibility to ensure that the taxpayer is heard, and that he is entitled to a decision that is the outcome of a fair process in the course of which the submissions he is raising were indeed considered (see Courchesne v. Canada (Revenue), [1996] F.C.J. No. 1469 (T.D.) (QL)).

[14]          Based on the evidence here, I am satisfied that there has been a proper exercise of the statutory discretion bestowed on the Minister by subsection 220(3.1) of the Act. A discretionary power of this nature must be exercised in good faith, in accordance with the principles of natural justice, taking into account all relevant considerations and without regard to irrelevant or extraneous ones. As stated in Kaiser, supra, at page 69:

. . . Every case is required to be decided on its own merit in order that circumstances unique to that individual taxpayer are properly taken into account. . . . [W]hen the Minister exercises his discretion under subsection 220(3.1), he is required to take into account considerations relevant and unique to that taxpayer alone. . . .

[16]            In this case it appears that all of the facts on file were properly considered. The report prepared by the fairness committee, subsequently given to Mr. Jean Laporte, relates in detail the facts and circumstances giving rise to the review of the request. The evidence on file essentially shows that at all relevant times (1) the applicant was the owner of a property assessed at $300,000 and mortgaged in the amount of $100,000; (2) the applicant had an annual income above $45,000; and (3) the applicant had contributed a total of $9,700 to her RRSP since 1992.

[17]            In the circumstances, considering the applicable standard of review defined in the aforementioned cases, the intervention of this Court is not warranted. On the contrary, I am satisfied not only that the decision is consistent with the law, but that it is also reasonable.

[18]            For these reasons, the application for judicial review is dismissed, with costs.

                     Judge

OTTAWA, ONTARIO

October 15, 2002

Certified true translation

Suzanne M. Gauthier, C. Tr., LL.L

FEDERAL COURT OF CANADA

TRIAL DIVISION

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET NO:                         T-1382-00

STYLE:                                      HILDA HACIKYANER v. CANADA CUSTOMS AND REVENUE AGENCY

PLACE OF HEARING:         Montréal, Quebec

DATE OF HEARING:           September 17, 2002

REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE PINARD

DATED:                                   October 15, 2002

APPEARANCES:

HILDA HACIKYANER           THE APPLICANT, ACTING ON HER OWN BEHALF

PIERRE LAMOTHE    FOR THE RESPONDENT

SOLICITORS OF RECORD:

HILDA HACIKYANER

Mount Royal, Quebec

THE APPLICANT, ACTING ON HER OWN BEHALF

MORRIS ROSENBERG

Deputy Attorney General of Canada

Ottawa, Ontario

FOR THE RESPONDENT