Docket: 14-T-27
Citation:
2014 FC 553
Ottawa, Ontario, June 10, 2014
PRESENT: The Honourable Madam Justice Gleason
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BETWEEN:
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ARTHUR MATSUI
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Applicant
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and
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HER MAJESTY THE QUEEN IN RIGHT OF CANADA AS REPRESENTED BY THE
MINISTER OF NATIONAL REVENUE
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Respondent
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ORDER AND REASONS
[1]
The applicant, Arthur Matsui, has made a motion
in writing under Rule 369 of the Federal Courts Rules, SOR/98-106 [the
Rules] seeking two orders. He first requests an extension of time to file an
application for judicial review of the January 24, 2014 decision of the
Minister of National Revenue [the Minister], disallowing business expenses he
claimed for the 2001 taxation year. Mr. Matsui secondly seeks relief in the
nature of an injunction, suspending until final disposition of his judicial
review application the operation of a Requirement to Pay that the Canada
Revenue Agency [CRA] served on ARC Metallurgical Inc. [ARC] on March 24, 2014.
[2]
For the reasons set out below, both requests are
denied and this motion is dismissed.
[3]
The factual background to this motion is convoluted
and summarized in the materials filed. It is not necessary to review much of
this background for purposes of this motion. Rather, I set out below only those
facts that are pertinent to the motion.
[4]
In this regard, Mr. Matsui has an outstanding
debt for unpaid taxes in the approximate amount of $28,000.00. In April 2009,
Mr. Matsui claimed business losses for the 2005 taxation year. CRA requested
documents to substantiate this claim, but Mr. Matsui did not provide them. In
2007 and 2008 he sent CRA documents that he claims unilaterally extinguished
his tax debt, which, of course, they did not. In 2009, he retained Demara
Consulting Inc. [Demara] as his representative to the CRA; Demara’s principals
were subsequently charged with tax fraud associated with claiming fraudulent
expenses.
[5]
In May 2012, Demara filed amended tax returns on
Mr. Matsui’s behalf for the 2001 and 2005 taxation years. In them, Demara
claimed additional business losses. Once again CRA wrote to Mr. Matsui and his
representatives, requesting documentation to support the claimed expenses. Once
again, Mr. Matsui provided nothing in reply.
[6]
On January 14, 2014, the CRA wrote to Mr. Matsui
and told him that as he had not produced the requested information it had
assessed his claims based on the information available to it, and in light of
this information, had disallowed the losses claimed. On March 20, 2014, CRA
issued the Requirement to Pay to ARC, a company Mr. Matsui indicates he works
for as a contractor.
[7]
Mr. Matsui did not file this motion until April
8, 2014, and the evidence before me indicates that he took no steps to seek to
review the CRA’s January 24, 2014 decision until after the Requirement to Pay
was served on ARC.
I.
No Grounds to Extend the Time Limit for Judicially
Reviewing CRA’s January 24, 2014 Decision
[8]
I turn first to the request to extend the time
limit for filing the instant application for judicial review. Under subsection
18.1(2) of the Federal Courts Act, RSC 1985, c F-7 [the FCA], the time
limit for filing a judicial review application is thirty (30) days from the
date the decision was first communicated to the applicant. The case law
recognizes that this Court should exercise its discretion to extend this time
limit only where an applicant is able to establish the following four things:
first, that he or she had an ongoing intent to challenge the decision that was
first developed within the thirty (30) day period and continued until the date
the motion for an extension was made; second, that the applicant has a
reasonable explanation for missing the deadline; third, that the applicant’s
proposed judicial review application has some merit; and finally, that the
respondent is not prejudiced by the delay (see e.g. Canada (Attorney
General) v Hennelly (1999), 167 FTR 158; Grewal v Canada
(Minister of Employment and Immigration), [1985] 2 FC 263).
[9]
Here, none of the foregoing criteria, with the
exception of the lack of prejudice to the respondent (which is admitted), is
present.
[10]
There is no evidence of continuing intent on Mr.
Matsui’s part to review the January 24, 2014 decision; rather, his intention
seems to have been prompted by the service of the Requirement to Pay on ARC.
[11]
Secondly, his application is not meritorious. As
the respondent notes, the Income Tax Act, RSC 1985, c 1 (5th Supp) [the
ITA] limits the types of expenses that may be deducted to those related to a
business or property of the taxpayer that produces income. Although the ITA does
not require that a taxpayer produce receipts or other documents to justify
business expenses in all cases, the case law recognizes that failure to provide
such documentation when it is reasonably required will give rise to a refusal
of the claimed expense (see e.g. Gagné v Attorney General of Canada), 2006
FC 1523 at paras 23-24, aff’d 2007 FCA 399, leave to appeal to SCC refused, [2008]
SCCA No 66; House v Canada, 2011 FCA 234 at para 80, Morrissette v
Canada, 2005 TCC 187 at para 47).
[12]
Here, it was reasonable for the Minister to
request supporting documentation from Mr. Matsui given the amounts claimed and
the passage of time. The Minister’s decision to disallow Mr. Matsui’s request
for reassessment when he failed to produce the supporting documentation is
therefore entirely reasonable. Mr. Matsui has accordingly failed to establish there
is any merit in his proposed application for judicial review. Moreover, his
argument regarding the impact of the documents he sent CRA in 2007 and 2008 is clearly
without merit and, indeed, the fact he made such arguments makes the Minister’s
request for substantiation all the more reasonable.
[13]
Thirdly, Mr. Matsui has not provided any
reasonable explanation for his delay in pursuing this matter. While Demara’s
principals may well have been enjoined from dealing with Mr. Matsui in light of
the criminal charges pending against them, there was nothing to prevent Mr.
Matsui from pursuing the issue on his own behalf, as he has now done, or from
retaining someone else in a timely fashion to assist him.
[14]
Thus, Mr. Matsui has failed to establish the
points necessary for an extension of time. His request to extend the thirty
(30) day time limit to file his application for judicial review in respect of
the Minister’s January 24, 2014 decision is therefore dismissed.
II.
No Basis for Injunctive Relief
[15]
This determination must necessarily result in
the dismissal of Mr. Matsui’s request for relief in the nature of an
injunction, suspending the effect of the Requirement to Pay served on ARC. This
Court possesses jurisdiction to issue such relief under s. 50 of the FCA only
ancillary to proceedings that are pending before the Court. As I have denied
Mr. Matsui permission to commence such a proceeding, there is no basis for the
award of the injunctive-type relief he seeks.
[16]
Moreover, he has in any event failed to meet one
of the necessary prerequisites for such relief, namely, that his application
raise a serious issue. For the reasons set out above, Mr. Matsui’s judicial
review application fails to raise any such issue.
[17]
This second request must therefore also be
denied.
[18]
As the respondent has not sought costs, I make
no award in its favour in respect of them.
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