Date:
20080625
Docket: A-469-06
Citation:
2008 FCA 228
CORAM: NOËL
J.A.
BLAIS J.A.
EVANS
J.A.
BETWEEN:
334156
ALBERTA LTD.
Appellant
and
MINISTER OF
NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered
from the Bench at Calgary, Alberta, on June 25, 2008)
EVANS J.A.
[1]
This
is an appeal by 334156 Alberta Ltd. from a decision of the Federal Court (2006
FC 1133), in which Justice Dawson dismissed the appellant’s application for
judicial review of a decision by the Chief of Appeals at the Calgary Tax
Services denying the appellant’s application to be relieved of penalties payable
for the late filing of its tax returns for the taxation years 1998-2002.
[2]
Upholding
a decision made at the first level review, the Chief of Appeals concluded that
the appellant was not eligible for relief from penalties under the Voluntary
Disclosure Program (“VDP”). The appellant’s disclosure was not voluntary for
the purpose of the VDP because it had “been made with the knowledge of an
audit, investigation, or other enforcement action” initiated by the Canada
Revenue Agency (“CFRA”). The Chief of Appeals reached this conclusion by
relying on a contemporaneous computer diary system entry by a CRA official of telephone
conversations. The first was on February 11, 2003, with Mr Arthur Wenngatz, a 50%
shareholder in the appellant. The second was on April 14, 2003, with Diane
Olsen, the appellant’s accountant. The Non-Filer Unit of the CRA used the
computer diary system, “SUDS”, in which these entries were made
[3]
The
entry of the first call stated that the officer spoke to “director Arthur
Wenngatz … regarding o/s T2s for yrs. 98-2001”, who referred him, “re o/s returns”,
to “his accountant, Diane Olsen”. The entry of the call to Ms Olsen stated that
she had told him that she had “most of the information for the 98 to 2001
years” and expected to file the returns at the end of April.
[4]
The
appellant challenged the Chief of Appeals’ decision on the basis of statements
by Mr Wenngatz and Ms Olsen which were before the Chief of Appeals when he made
his decision. Mr Wenngatz denied speaking to a CRA officer about the late filed
returns, while Ms Olsen stated that her records only indicated enforcement
activity with respect to the years 1998 and 1999. Accordingly, the appellant
argued, there was no evidence on which the Chief of Appeals could have based
his negative decision. It was conceded that there was knowledge of enforcement
activity respecting the years 1998 and 1999; only 2000 and 2001 were in
dispute.
[5]
After
conducting a pragmatic and functional analysis, Justice Dawson held that
unreasonableness simpliciter was the standard of review applicable to
the Chief of Appeals’ discretionary decision to deny the appellant “fairness
relief” under the VDP, promulgated pursuant to subsection 220(3.1) of the Income
Tax Act. Applying this standard, she concluded that the Chief of Appeals had
drawn a reasonable inference from the computer entries about ongoing
enforcement for the years 2000 and 2001 prior to the disclosure in February
2004, when the appellant filed the late returns.
[6]
The
appellant also argued that, even if the conversations with Mr Wenngatz and Ms
Olsen occurred as the Chief Officer found, their knowledge of enforcement
activity could not be attributed to the appellant because only Irene Wenngatz,
a 50% shareholder and sole director and officer of the appellant, was
authorized to speak to the CRA about its tax affairs. Justice Dawson refused to
consider this argument because it was being advanced by the appellant for the first
time on judicial review, and had not been put to the Chief of Appeals.
[7]
Substantially
for the reasons given by Justice Dawson, we see no reviewable error in the Chief
of Appeals’ decision. In view of the considerable deference given to
administrative fact-finding, it cannot be said to have been unreasonable for
the Chief of Appeals to have preferred the evidence provided by the computer
entries to the subsequent statements of Mr Wenngatz and Ms Olsen.
[8]
It
was not necessary on the simple facts of this informal proceeding for the Chief
of Appeals to have stated expressly that he had considered the statements of Mr
Wenngatz and Ms Olsen and to have explained why he preferred the evidence
provided by the SUDS’ entries.
[9] We would only add this. It is
now no longer appropriate for a court to review an administrative decision on a
standard of unreasonableness simpliciter. However, to the extent that
there is a difference between unreasonableness simpliciter and the
standard of reasonableness articulated in Dunsmuir v, New Brunswick,
2008 SCC 9, it is not material on the facts of this case.
[10] For these reasons, the appeal
will be dismissed with costs.
“John M. Evans”
FEDERAL COURT
OF APPEAL
NAMES OF COUNSEL
AND SOLICITORS OF RECORD
DOCKET: A-469-06
(AN
APPEAL FROM THE JUDGMENT OF THE HONOURABLE MADAM JUSTICE DAWSON DATED SEPTEMBER
26, 2006)
STYLE
OF CAUSE: 334156 ALBERTA
LTD. v.
MINISTER
OF
NATIONAL
REVENUE
PLACE
OF HEARING: CALGARY, ALBERTA
DATE
OF HEARING: June 25,
2008
REASONS
FOR JUDGMENT
OF
THE COURT BY: (NOËL,
BLAIS & EVANS JJ.A.)
DELIVERED
FROM THE
BENCH
BY: EVANS
J.A.
DATED: June
25, 2008
APPEARANCES:
ARTHUR
H. WENNGATZ FOR THE APPELLANT
CARRIE
MYMKO FOR THE
RESPONDENT
SOLICITORS
OF RECORD:
CARON
& PARTNERS LLP FOR THE
APPELLANT
CALGARY, ALBERTA
JOHN
H. SIMS, Q.C. FOR THE
RESPONDENT
DEPUTY
ATTORNEY GENERAL OF CANADA
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