Date: 20070214
Docket: T-1317-05
Citation: 2007 FC 166
Ottawa, Ontario, the 14th day of February 2007
Present:
The Honourable Mr. Justice Blais
BETWEEN:
TRANSPORT
RONADO INC.
Plaintiff
and
HER
MAJESTY THE QUEEN
Defendant
REASONS FOR JUDGMENT AND
JUDGMENT
NATURE OF THE
PROCEEDINGS
[1]
The
plaintiff filed an action under section 81.2 of the Excise Tax Act,
R.S.C. 1985, c. E-15, challenging a decision of the Minister dated May 2,
2005 and bearing reference number RT 777 363 120 CA.
[2]
Pursuant
to this decision, the Minister of National Revenue (the Minister) ruled that
determination 20031204QUE210, dated December 4, 2003, was well founded.
This decision essentially concerned the fact that the plaintiff’s application
for a refund of excise tax had been received by the Minister on March 11,
2003, that is, after the statutory time limit specified in the Budget
Implementation Act, 2003, S.C., c. 15, which set February 17, 2003, as the
deadline for submitting such an application.
RELEVANT FACTS
[3]
In
November 2002, in Penner International Inc. v. Her Majesty the Queen,
[2003] F.C. 581, 2002 FCA 453 (Penner), the Federal Court of Appeal
ruled that diesel fuel used to transport goods outside the country constituted
exported goods within the meaning of the Excise Tax Act and,
consequently, that the excise tax paid on the purchase of the fuel was eligible
for the tax rebate provided for in section 68.1 of that Act.
[4]
Following
the decision of the Federal Court of Appeal, an application for leave to appeal
against this judgment was filed by the defendant in the Supreme Court of
Canada, which dismissed the leave application on May 15, 2003.
[5]
Without
waiting for the final decision of the Supreme Court, but aware of the tax
consequences of the Penner judgment if it were to be upheld by the
Supreme Court, Parliament decided to enact a legislative amendment to counter
the effects of the Federal Court of Appeal judgment.
[6]
This
legislative amendment was tabled at the same time as the budget on February 18,
2003, through the Budget Implementation Act 2003. This Act, assented to
on June 19, 2003, with a retroactive effect, expressly confirmed Parliament’s
intent to make February 17, 2003, the deadline for taxpayers to apply for a
refund of the excise tax on diesel fuel.
[7]
In
subsection 63(2) of this Act, Parliament created an exception to the refund
program for tax paid on exported goods, to the effect that no amount is payable
to a person in respect of tax paid on diesel fuel transported out of
Canada in the fuel tank of the vehicle that is used for that transportation.
[8]
In
the following subsection of the Act, namely, subsection 63(3), Parliament
specified a date for the application of this exception. This subsection states
that the exception applies to any application for a payment “received by the
Minister of National Revenue after February 17, 2003”.
PLAINTIFF’S EVIDENCE
[9]
The
plaintiff had two witnesses testify in support of its submissions.
Testimony of Ronny
Nadeau
[10]
The
first witness for the plaintiff was Ronny Nadeau, president of Transport Ronado
Inc., a trucking company he has been managing for 20 years. Mr. Nadeau
testified to the fact that nearly 100% of the fuel used by his trucks is bought
in Canada. He added that deliveries to the United States represent
approximately 50% of his sales.
[11]
He
also mentioned that the quantities of fuel used in each American state and in
each Canadian province are tallied by each driver and also archived by a
company called “compac”, which keeps an accounting of all this data.
Mr. Nadeau stated that his spouse, Madonne Caron, is the accountant for
his company and is also in charge of tax claims.
[12]
Mr.
Nadeau also testified that, while dining at a restaurant called “Estaminet” in
downtown Rivière-du-Loup, he overheard a conversation at a neighbouring table
where persons were discussing the possibility of applying for a refund of the
excise tax paid on fuel used in the United States. To the best of his
recollection, this conversation was overheard on February 7 or 8, 2003,
that is, approximately one week before his spouse submitted the application.
Mr. Nadeau also stated that, before that time, he did not know it was
possible to claim amounts paid as excise tax on fuel used outside of the
country, and that he did not speak with the people at the neighbouring table
because he did not know them.
Testimony of Madonne
Caron
[13]
Madonne
Caron was then heard as a witness for the plaintiff. She confirmed that she
took care of accounting, general administration and records management for the
plaintiff company, which has belonged to her husband for approximately 20
years. She confirmed the conversation overheard at the restaurant on or about
February 7 or 8, 2003, and mentioned that, at the first opportunity, she
conducted an Internet search and found a form on the Web site of the Canada
Customs and Revenue Agency (the Agency) allowing her to claim the excise tax
collected on fuel used outside of Canada.
[14]
In
order to prepare the application, she asked her secretary to retrieve the
documents stored in another room, particularly the “compac” reports, which
contained information about the fuel used by their trucks during the period
subject to the claim. Because she had the monthly fuel reports on hand, she was
able to rapidly collect the data, and within about half an hour she was able to
fill out the form, the original of which was filed in the Court record as D-1.
[15]
Ms.
Caron stated that first she filled out a rough draft of the form, then
transcribed it on a blank photocopy of the form supplied by the Canada Customs
and Revenue Agency, which she signed on February 13, 2003. On that same
day, around 11:00 a.m., she allegedly gave the form to Ms. Malenfant,
the letter carrier who takes mail back and forth between the post office and
their company. Ms. Malenfant allegedly took the envelope to send it on to
the address appearing on the form: Summerside Tax Centre, 275 Pope Road,
Suite 101, Summerside, Prince Edward Island.
[16]
She
also confirmed having filed a refund application covering two consecutive
periods, namely, from January 1 to December 31, 2001, and from
January 1 to December 31, 2002, as it appears on the form. Still
according to her testimony, after having admitted that she knew she could make
a claim for a previous two-year period, she did not know why she had not made a
claim for the most recent period, namely, from January 1 to
February 13, 2003.
[17]
Ms.
Caron did not give any answer as to why she did not use safer mail such as
registered mail or another type of mail service which could have proved the
exact date on which the document was sent and could have given her confirmation
that the document had in fact been received at the Summerside Tax Centre.
[18]
Finally,
Ms. Caron alleged that on that date she did not have any reason to think that a
few days later Parliament would impose a time limit for filing such a claim.
DEFENDANT’S EVIDENCE
[19]
The
defendant also had two witnesses testify.
Testimony of Gilles
Séguin
[20]
The
first witness, Gilles Séguin, is a senior employee at Canada Post Corporation
(Canada Post) in Ottawa, in charge of service quality at Canada Post. He
testified in detail about the management of mail traffic at Canada Post in
general, and in particular for deliveries from Rivière-du-Loup to Summerside,
Prince Edward Island.
[21]
Mr.
Séguin testified that the time required for the delivery of a regular letter,
for example, from Québec to Québec, that is, within the same city, is two
business days. From one destination to another within the province of Quebec,
three business days are required, while from any place in the province of
Quebec to any other place within Canada but outside Quebec, four business days
are required. If a weekend falls inside the count, another two days must be
added. Mr. Séguin referred to Exhibit 8 of the defendant’s record, a
document concerning Canada Post’s service standards, which confirms the traffic
data mentioned in his testimony.
[22]
However,
Mr. Séguin also confirmed that Canada Post entrusted an independent company
with the measurement of service quality and, in particular, service reliability
in terms of delivery times. This independent company, which sends 100,000
pieces of mail throughout Canada to test the reliability of the system,
concluded that for delivery from one province to another, the four business day
standard is met 96% of the time. If a one-day grace period is allowed, the
reliability rate goes up to 99%, and if two days are allowed, the reliability
rate rises to 99.7%.
[23]
Because
the plaintiff claimed to have mailed the letter on a Thursday, two extra days
for the weekend must be added to the usual four days, giving a delivery time of
six days. If the letter was mailed on February 13, 2003, Mr. Séguin is of the
opinion that it should have been delivered on February 19, 2003, at the
latest. If a two-day grace period is added to attain a higher percentage of
reliability, there is 99.7% chance that the letter would have been delivered
eight days later, that is, on Friday, February 21, 2003.
[24]
Mr.
Séguin then gave an even more specific explanation of the routing of a letter
mailed from Rivière-du-Loup. Assuming the letter was given to the letter
carrier around 11:00 a.m. on February 13, 2003, she should have taken
this letter to the main post office at Rivière-du-Loup, where outgoing mail is
processed between 6:00 p.m. and 8:00 p.m. At the end of the day,
around 8:00 p.m., the envelope would have been placed in the bag to be
sent to the main post office in Québec, on St-Paul Street, which was
operational at that time, and would have been processed during the night of February 13
to 14, 2003. The envelope would then have been placed back in a bag at the
beginning of the day of February 14, 2003, at the Québec post office,
where a truck from Montréal would stop around 3:00 p.m. to pick up the
bags bound for Halifax, taking away the mail bound for Nova Scotia and Prince
Edward Island. This was route L.-112.
[25]
This
envelope, which was carried by truck, would have arrived in Halifax during the
night of Saturday, February 15, 2003. Because of the weekend break, the
mail would have been removed from the truck and processed beginning Sunday,
February 16, 2003, at 4:00 pm. This was the time at which the Canada Post
employees at the Halifax main post office returned to work after their weekend
off. Any mail for Prince Edward Island in the bags carried to Halifax would
have been sorted on Monday, February 17, 2003, and the envelope would have
been left by truck at the end of the day, arriving in Moncton, New Brunswick,
in the evening of February 17, 2003. The truck would have left for Prince
Edward Island that same evening, arriving at the Summerside post office around
2:00 a.m. on February 18, 2003. Once in Summerside, the mail would
have been sorted until approximately 7:00 a.m. on February 18, 2003.
Later that day, the mail would have been sent by truck to the Canada Customs
and Revenue Agency at 275 Pope Road.
[26]
Following
this analysis and the usual Canada Post procedure, Mr. Séguin therefore
concluded that, according to the statistics established by an independent
company monitoring the reliability of the Canada Post system, the chances that
a letter sent on February 13, 2003, from Rivière-du-Loup was received in
Summerside on February 18, 2003, at the latest were 96%, and if a two-day grace
period is added, the chances that the letter sent on February 13, 2002,
arrived no later than February 21, 2003, were 99.7%.
[27]
Using
the same parameters, Mr. Séguin concluded that the letter stamped at the Canada
Customs and Revenue Agency on March 11, 2003, that is, the original
Exhibit D-1, the refund application sent by Ms. Caron, would most
probably have been mailed on March 3, 2003, and not on February 13,
2003.
[28]
However,
Mr. Séguin added that certain circumstances may delay mail delivery, such as
snow storms, truck breakdowns, closure of the bridge to Prince Edward Island,
or a strike. However, he added that there had been no strike during the period
in question and that the traffic on the Confederation Bridge between New
Brunswick and Prince Edward Island had only been interrupted twice, on February 27,
2003, and on March 3, 2003. Moreover, from February 12, 2003, to
March 20, 2003, there had been 52 accidents on the roads travelled by
Canada Post, but only the two one-day closures of the Confederation Bridge
could have had a real impact on mail delivery.
[29]
Mr.
Séguin also mentioned that if mail is damaged during transportation, it is
taken to a special place in one of the offices along the mail route. The
envelope is then repaired, inserted in a plastic bag and re-sent with an
explanatory letter. This may add a delay of one to two days.
[30]
Mr.
Séguin also added that when items are sent by express or registered mail, a bar
code is applied to the envelope, making it easier to trace the mailing date.
[31]
Mr.
Séguin finally noted that a Canada Post seal is placed on a letter when it is
received at Rivière-du-Loup on the day it is mailed, and it is possible that
another sticker containing the postal code, date and time is placed on the
envelope when it is processed at the Québec sorting centre.
Testimony of David Kelly
[32]
The
second witness for the defendant, David Kelly, is an employee of the Canada
Customs and Revenue Agency at Summerside, Prince Edward Island, who has been a
mail management team leader since 2005. He therefore did not hold this position
at the time when the letter in question was sent from Rivière-du-Loup to
Summerside, either in February or March 2003.
[33]
However,
he mentioned having had numerous conversations with the employees working at
that time and referred several times during his testimony to information
received from these employees. According to his testimony, mail processing has
not changed significantly since 2003.
[34]
Essentially,
Mr. Kelly explained how mail is managed from the time it is received in
Summerside. For example, he mentioned that the truck or trucks which deliver
the mail arrive at approximately 4:00 a.m. at the shipping and receiving
section of the building. Two employees of the Canada Customs and Revenue Agency
take care of receiving the mail and taking the bags out of the truck and into
the Agency building. Agency employees immediately sign receipts for letters
sent by express mail, which must have proof of delivery.
[35]
The
other employees report for work between 5:00 a.m. and 5:30 a.m. and
systematically open the envelopes sent to the Summerside Tax Centre. They must
do an initial sorting which is completed around 7:00 a.m. The employees
count each piece of mail received and open every envelope. A certain number of
envelopes, that is, those containing T-1 and T-2 returns, are kept with the
returns as evidence of the exact date of receipt for tax purposes and possible
penalties. In the case of mail regarding excise tax, the envelopes are
destroyed after they are opened.
[36]
Mr.
Kelly explained that sorting is facilitated in part by the fact that the
envelopes will have different postal codes on them, depending on the recipient.
For example, envelopes for GST returns have a different postal code from those
concerning income tax returns or applications for excise tax refunds. The
postal code C1N 6E7 appears on the envelopes of excise tax refund applications.
Mr. Kelly also stated that all letters concerning GST and excise tax are
stamped with their entry date on the morning of their receipt. Around
7:00 a.m., all the mail is sent to the various departments for analysis.
[37]
Finally,
in answer to the written questions filed by the plaintiff, the defendant also
submitted answers in writing, which were shown to the witness, who managed to
conduct a certain analysis of this information. More specifically, on the day
on which the letter sent by Ms. Caron was received, namely, March 11,
2003, Summerside received 32,006 pieces of mail. Of that number, a total of 314
were sent to the excise tax department.
[38]
The
parties submitted several documents in support of their submissions and closed
their cases after the four witnesses had been heard.
ISSUE
[39]
The
issue to be decided is the following: Did the Minister of National Revenue
receive the plaintiff’s N-15 application for refund within the meaning of
subsection 63(2) of the Budget Implementation Act, 2003 before or
after February 17, 2003?
ANALYSIS
[40]
As
stated by the defendant, there is no doubt in my mind that the plaintiff’s N-15
application for refund was physically received by the Summerside Tax Centre in
Prince Edward Island on March 11, 2003.
[41]
The
defendant submits that, no matter on what date the application for refund was
mailed, the decisive date was the day on which the envelope was received by the
Canada Customs and Revenue Agency in Summerside, because under the Budget
Implementation Act, 2003, in order to be accepted, the application for
refund must be “received by the Minister of National Revenue before February
17, 2003”.
[42]
The
plaintiff, however, submits that the date of mailing is decisive, because under
paragraph 2(2)(c) of the Canada Post Corporation Act, R.S.C.
1985, c. C-10, leaving mail with the addressee or his servant or agent is
deemed to be delivery to the addressee. Furthermore, the plaintiff submits that
under section 23 of the Canada Post Corporation Act, the
corporation is an agent of Her Majesty in Right of Canada.
[43]
The
defendant submits that the plaintiff’s arguments are flawed, because the
provisions of the Canada Post Corporation Act concerning the receipt of
documents on behalf of Her Majesty in Right of Canada do not apply in this
case. The defendant submits that for this presumption to operate to the
advantage of the plaintiff in this case, Canada Post would have to be
characterized as a person apparently authorized by the Minister to receive
delivery of mail addressed to the Minister. According to the defendant, the
role of Canada Post is restricted to the transmission and delivery of messages
to their addressees in accordance with subsection 5(1) of its
incorporating act.
[44]
It
should be noted that for certain documents sent to the Minister, particularly
income tax returns on April 30 of each year, the moment of mailing is the
decisive factor. For example, section 102 of the Budget Implementation
Act, 2003 specifies that a return “is deemed to have been filed with the
Minister on the day on which the return was mailed”.
[45]
I
agree with the defendant’s position, because in my opinion Canada Post can be
considered to be an agent of the Minister of National Revenue only where it is
expressly mentioned in the Act or regulations in force, as for example in the
case of the mailing of income tax returns during the month of April of every
year. Although Parliament was not overly zealous in clarifying Canada Post’s occasional
role as agent, it does not seem reasonable to me to draw a general conclusion
to the effect that Canada Post is at all times an agent of the Minister of
National Revenue. It would not be reasonable to conclude that every time a
document is sent to one of the Minister’s offices throughout Canada, the
mailing date is determinative. I cannot agree with this interpretation. I
conclude, rather, that where Her Majesty the Queen intends that Canada Post act
as an agent of any of her ministers or agencies, she will specifically provide
for it in the Act or regulations.
[46]
Moreover,
the Canadian International Trade Tribunal also rendered a decision on this
point in Holste Transport Limited v. Minister of National Revenue,
AP-2004-001, concluding at paragraph 33 that the expression “received by
the Minister” is “unambiguous and means the date of actual receipt by the
Minister or his agent (i.e. the CRA), not the date of mailing”.
[47]
In
any event, I am not convinced that this conclusion is determinative in the present
case, for reasons I will explain further on in my decision.
[48]
The
plaintiff also submits that it had acquired rights when it mailed the
application for refund on February 13, 2003.
[49]
It
argues that before the bill was tabled on February 18, 2003, there was no
time limit for filing its application for refund. It suggests that it had
acquired rights under section 43 of the Interpretation Act, R.S.C.
1985, c. I-21, which provides that the repeal in whole or in part of an
enactment does not affect any right, privilege, obligation or liability
acquired, accrued, accruing or incurred under the enactment so repealed. The
plaintiff thus argues that acquired rights to refunds crystallize as soon as an
application for refund is mailed. Therefore, it submits that the subsequent
amendment to the Excise Tax Act would be of no effect with respect to
the existence of its acquired rights to a refund which were crystallized by
simply mailing its application for refund.
[50]
Although
it may seem arbitrary that Parliament may from time to time enact legislation
that restricts rights which up to then had favoured the taxpayer, our courts
have always acknowledged Parliament’s inalienable right to enact legislation to
modify certain advantages available to taxpayers. Case law has very clearly
established that the presumption of non-retrospectivity of legislation may be
rebutted when Parliament clearly mentions it. The general rule to this effect
was established by the Supreme Court of Canada in Gustavson Drilling (1964)
Ltd. v. Canada (Minister of National Revenue), [1977] 1 S.C.R. 271, at
paragraph 11:
First, retrospectivity. The general rule
is that statutes are not to be construed as having retrospective operation
unless such a construction is expressly or by necessary implication required by
the language of the Act. An amending enactment may provide that it shall be
deemed to have come into force on a date prior to its enactment or it may
provide that it is to be operative with respect to transactions occurring prior
to its enactment. In those instances the statute operates retrospectively.
[51]
Moreover,
in Transport Gilles Perreault Inc. v. Minister of National Revenue,
AP-2004-051, the Canadian International Trade Tribunal dealt with the
plaintiff’s argument in a decision rendered on a similar issue for the
following reasons, at paragraph 18:
The Budget Implementation Act, 2003,
which became effective on June 19, 2003, expressly amended
section 68.1 of the Excise Tax Act and expressly stated that the
amendment applied “. . . in respect of any application
for a payment under section 68.1 of the Act received by the Minister of
National Revenue after February 17, 2003.” (Emphasis added). The
legislation is not ambiguous. The legislation was intended to be retroactive to
the date of the budget announcement and it was intended to affect expectations
(or rights) to receive a refund if the application was received by the
Minister after February 17, 2003. The Tribunal notes that retroactive
application of taxing legislation to the date of its announcement is not
unusual.
[52]
I
would now like to briefly deal with the plaintiff’s factual submissions to the
effect that the application for refund had been mailed on February 13,
2003, that is, before the February 17, 2003 deadline, and that the delays which
led to the Minister’s physically receiving said document on March 11,
2003, were not attributable to the plaintiff, but rather to delays in mail
delivery and processing by the Summerside Tax Centre.
[53]
I
must acknowledge that the witnesses heard by the plaintiff, namely,
Mr. Nadeau and Ms. Caron, did not convince me that the application
for refund was in fact placed in the hands of a Canada Post agent on the
morning of February 13, 2003. The two testimonies to the effect that the
information about the excise tax refund had been obtained through a
conversation overheard at a restaurant in Rivière-du-Loup one week before
February 13, 2003, which led Ms. Caron to search the Internet for a
claim form and then send it by regular mail on the morning of February 13,
2003, are not convincing.
[54]
These
testimonies are in stunning contrast to the very precise and convincing
testimony of Mr. Séguin about the transportation of that mail. Although I may
admit that this is not a precise science, that delivery times are not
guaranteed, and that a few days of delay may be attributed to Canada Post in
spite of the very precise description of the usual routing of a letter sent
from Rivière‑du-Loup to Summerside, in this case, there is a discrepancy
of more than two weeks, even if several days of delay are attributed to Canada
Post. In addition, it must be acknowledged that the plaintiff’s representatives
were especially ill advised in not taking special measures to obtain physical
evidence of the mailing of such an important document as the claim for $123,000
sent by regular mail.
[55]
The
exceptionally precise testimony of Mr. Kelly, an employee in the Summerside Tax
Centre, was also very convincing, and I have no difficulty in taking for
granted that all the envelopes received at the Tax Centre were opened that
morning and accounted for. Therefore, I have no doubt that the letter in
question, which was stamped March 11, 2003, actually was received on
March 11, 2003, at the Summerside Tax Centre.
[56]
It
is rather surprising that a company in the transportation industry, for which
this excise tax represents a considerable amount of money, could have been
completely unaware of the possibility of claiming a refund, and that it was
simply a conversation overheard by chance in a restaurant that prompted the
company to submit a claim just a few days before the deadline.
[57]
On
a balance of probabilities, I am satisfied that it is not possible that the
application for refund sent by Ms. Caron was physically mailed before
February 17, 2003. The application was probably mailed in the days
following the budget statement tabled on February 18, 2003.
[58]
This
finding of fact in itself renders any application for refund inadmissible and
is sufficient reason for this action to fail.
[59]
There
is no doubt that the plaintiff’s claim may inspire sympathy for reasons of
fairness, but a State has the inalienable power to legislate from time to time
to modify the rights of taxpayers, and taxpayers who have or believe that they
have legitimate rights also have a responsibility to make their intentions
known as soon as possible.
[60]
Finally,
the Canadian International Trade Tribunal has already heard, on many occasions,
claims that are somewhat similar to those in the case at bar and has rejected
them for the reasons I discussed in the preceding. Although the Federal Court
is not bound by decisions of the Canadian International Trade Tribunal, it is
obvious that the Court nevertheless has a duty to study these decisions and to
take into consideration the thoroughness with which the statutory amendments in
the Budget Implementation Act, 2003 were studied by the Tribunal.
In the present case, I do not see any reasons why the conclusions reached by
the Canadian International Trade Tribunal should be disregarded.
[61]
I
am of the opinion that determination 20031204QUE210, dated December 4,
2003, to the effect that the plaintiff’s application for refund had been
received by the Minister on March 11, 2003, that is, after the statutory
time limit specified in the Budget Implementation Act, 2003, which set
February 17, 2003, as the final date for submitting such an application,
was well founded.
[62]
Accordingly,
the plaintiff’s appeal must be dismissed.
JUDGMENT
- The Court dismisses
the plaintiff’s appeal;
- With costs.
“Pierre Blais”
Certified
true translation
Michael
Palles
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