Date: 20081021
Docket: 08-A-62
Citation: 2008 FCA 314
Present: SHARLOW
J.A.
BETWEEN:
1344746 ONTARIO INC.
and JAMES VIDAL
Applicants
and
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR ORDER
SHARLOW J.A.
[1]
The
applicants ask for reconsideration of my order of September 19, 2008. In that
order I dismissed the applicants’ motion for an extension of time to commence
an appeal under subsection 172(3) of the Income Tax Act, R.S.C. 1985, c.
1 (5th Supp.). They seek to challenge the notice given by the
Minister of National Revenue of his intention to revoke the registration of the
Pension Plan for Presidents of 1344746 Ontario Inc. (the Plan).
First motion
[2]
To
understand my disposition of the applicants’ motion for reconsideration, it is
necessary to understand why the applicants’ first motion was dismissed.
[3]
From
material filed by the applicants, it appears that the Minister’s decision
was based on certain factual conclusions he had reached, as set out in this
letter dated December 19, 2006 (exhibit C to the affidavit of Brigitte
Dioguardi sworn August 20, 2008).
[4]
I
summarize the Minister’s factual conclusions as follows. The Plan was
registered on March 10, 1999. The Minister initially was informed that the only
member of the Plan was the applicant James Vidal, an employee of 1344746
Ontario Inc. On September 10, 1999, a sum of money was transferred to the Plan
on Mr. Vidal’s account from another registered pension plan, apparently
representing pension credits accumulated over approximately 30 years with
another employer. Over the next three years, approximately 20% of that amount
was paid to Mr. Vidal. The Minister’s audit was commenced at a time when the
Minister’s records showed no employment earnings for Mr. Vidal from 1344746
Ontario Inc. for the years 1999, 2000, 2001, 2002 or 2003. The Minister was
informed by the applicants that Mr. Vidal was an employee of 1344746 Ontario
Inc. in April, May and June of 1999. However, the only documentary evidence
sent to the Minister in support of that information had apparently been
prepared after the commencement of the audit. The Minister says he received no
pay stubs, pay cheques or T4 slips issued to Mr. Vidal in relation to his
purported employment with 1344746 Ontario Inc.
[5]
It appears
that the Minister concluded, on the basis of these facts, that the Plan did not
meet the purpose test in paragraph 8502(a) of the Income Tax
Regulations, C.R.C. 1978, c. 945. That provision states that a pension plan
does not meet the conditions for registration under the Income Tax Act unless
its purpose is to provide lifetime retirement benefits to members in respect of
their service as employees with the employer. Whether that purpose exists in a
particular case is a question of fact to be determined by the Minister. This
Court will not intervene in that determination if it is reasonable based on the
evidence available to the Minister when the determination is made (see Loba
Limited v. M.N.R., 2004 FCA 342).
[6]
The basis
of the applicants’ first motion for an extension of time was that counsel for
the applicants was retained only on August 3, 2008 and did not have enough time
to meet the filing deadline of August 17, 2008. That motion was dismissed
because the motion record disclosed no arguable case on appeal (see Pharmascience
Inc. v. Canada (Minister of Health) (F.C.A.), [2004] 2 F.C.R. 349, at
paragraph 6).
Reconsideration motion
[7]
The applicants
now ask for reconsideration of my order pursuant to Rule 397(1)(b), Federal
Courts Rules, SOR/98-106. That provision reads as follows:
|
397. (1)
Within 10 days after the making of an order, or within such other time as the
Court may allow, a party may serve and file a notice of motion to request
that the Court, as constituted at the time the order was made, reconsider its
terms on the ground that
(a) […]
(b) a matter that
should have been dealt with has been overlooked or accidentally omitted.
|
397. (1) Dans les 10 jours après qu’une ordonnance a été rendue ou dans tout
autre délai accordé par la Cour, une partie peut signifier et déposer un avis
de requête demandant à la Cour qui a rendu l’ordonnance, telle qu’elle était
constituée à ce moment, d’en examiner de nouveau les termes, mais seulement
pour l’une ou l’autre des raisons suivantes :
a) […]
b) une question qui aurait dû être traitée a été oubliée ou omise
involontairement.
|
[8]
In the
material filed in support of the applicants’ motion for reconsideration,
counsel for the applicants argues that he had “overlooked the appropriate
procedure by which to challenge” the Minister’s decision. It appears that
counsel for the applicants initially believed that a statutory appeal from a
decision of the Minister should be commenced by a notice of application for
judicial review, and now understands that it should be commenced by a notice of
appeal.
[9]
If the
argument for the applicants is that this mistake by counsel can be the basis
for reconsidering an order, it is ill founded. Rule 397(1)(b) permits a
judge to reconsider an order to be reconsidered if the judge overlooked
or accidentally omitted a matter that should have been considered. A mistake by
counsel in framing a motion cannot justify reconsideration of the order
disposing of the motion. In any case, the misunderstanding of counsel on the
proper form was not relevant to the dismissal of the initial motion for an
extension of time.
[10]
Counsel
for the applicants also submits that there is an arguable case on appeal. This
argument was not made in the first motion. As I understand the argument, it is
based on evidence that counsel for the applicants proposes to submit on the
appeal to prove the following facts: (1) Mr. Vidal was employed by
1344746 Ontario Inc. for three months in 1999 but could not continue his
employment due to a severe illness; and (2) later financial difficulties
required the Plan to be wound up in early 2006. Counsel for the applicants
submits that these facts will “disprove” the Minister’s conclusion that the
Plan did not meet the purpose test when it was registered in March of 1999. I
cannot give effect to this submission as a basis for reconsidering my previous
order. It was not an argument that was made in support of the first motion and
therefore it does not speak to any matter that I overlooked or accidentally
omitted.
[11]
I would
add that, even if I were to reconsider my previous order, I would reach the
same conclusion and dismiss the motion for an extension of time. In my view,
even if the facts as stated by counsel are true, they would not make the
Minister’s decision unreasonable unless evidence of those facts had been given
to the Minister before he rendered his decision. I see nothing in the material
submitted by the applicants to establish that the Minister was informed of
these facts or that the Minister unfairly denied the applicants an opportunity
to inform him of these facts.
[12]
Finally, I
note that counsel for the applicants appears to have assumed that an appeal
under subsection 172(3) of the Income Tax Act is the same as an appeal
from an income tax assessment. That is not a correct assumption. An income tax
appeal is commenced in the Tax Court of Canada and is determined on the basis
of a trial at which the appellant and the Minister may present evidence that
may not have been before the Minister when issuing the assessment under appeal.
In contrast, an appeal of the Minister’s notice of intention to revoke the
registration of a pension plan must be commenced in this Court, and is
determined using a procedure that is more like a judicial review of the
Minister’s decision. As mentioned above, this Court has held that it will not
intervene in the Minister’s determination of the purpose of a pension plan if the
determination is reasonable, based on the evidence available to the Minister
when the determination is made.
Conclusion
[13]
The motion
for reconsideration will be dismissed with costs.
“K.
Sharlow”
Email this Content