Date:
20061130
Docket: A-289-05
A-290-05
Citation: 2006 FCA 389
CORAM: DESJARDINS
J.A.
NOËL
J.A.
NADON
J.A.
A-289-05
BETWEEN:
JACQUELIN
SIMARD
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
A-290-05
BETWEEN:
PIERRE-YVES
SIMARD
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1]
These
are two appeals, consolidated and pleaded simultaneously, against an order by
Mr. Justice Angers of the Tax Court of Canada (2005 TCC 256), dated
May 17, 2005, dismissing the motions for an extension of time to serve
a notice of objection to the notices of assessment issued by the respondent for
the period from January 1, 1992, to September 30, 2000.
[2]
The
appellants are asking this Court to allow the appeal and to extend the time for
filing the notice of objection to the assessment issued by the respondent on
August 10, 2001, pursuant to subsection 323(1) of the Excise Tax Act,
R.S.C. 1985, c. E-15 (ETA).
[3]
The
appellants filed a memorandum in support of their appeal but were not present
or represented at the hearing. We therefore disposed of the appeals in
accordance with the arguments as presented in the memoranda.
RELEVANT FACTS
[4]
From
1986 to 2001, the appellants were administrators of Construction Emma Inc.
[5]
On
February 2, 2001, the corporation made a proposal within under the Bankruptcy
Act, R.S.C. 1985, c. B-3, to the creditors of that corporation, including
the respondent.
[6]
On
May 5, 2001, following the corporation’s default in respecting its proposal,
the corporation had been put into bankruptcy.
[7]
The
bankruptcy trustee Raymond Chabot Inc. ensured the administration and the full
and exclusive governance of the appellants’ corporation from the date of the
initial bankruptcy until the discharge of the trustee on February 20, 2003.
[8]
On
August 10, 2001, the respondent issued a notice of assessment against the
appellants pursuant to subsection 323(1) of the ETA in the amount of $72,102.35
for the period from 1992 to 2000 for taxes assessed but not paid.
[9]
On
May 17, 2004, the respondent made a final demand for payment for the notices of
assessment issued in August 2001. Following that demand, the appellants served
a notice of objection on the objections directorate of Revenu Québec, dated May
26, 2004. Revenu Québec refused to address those objections on the grounds that
they had been served outside the time limit prescribed under section 81.15 of
the ETA.
[10]
On
June 4, 2004, the appellants applied to the objections directorate of Revenu
Québec for an extension of time to file their notices of objection. The
application was dismissed on the grounds that it was filed outside the time
period provided under paragraph 303(7)(a) of the ETA.
STATUTORY PROVISIONS
[11]
These
are the relevant provisions of the ITA:
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81.15 (1) Any person who has been assessed,
otherwise than pursuant to subsection (4) or 81.38(1), and who objects to the
assessment may, within ninety days after the day on which the notice of
assessment is sent to him, serve on the Minister a notice of objection in the
prescribed form setting out the reasons for the objection and all relevant
facts on which that person relies.
|
81.15 (1) Toute personne qui a fait l’objet
d’une cotisation, sauf en application des paragraphes (4) ou 81.38(1), et qui
s’oppose à la cotisation peut, dans un délai de quatre-vingt-dix jours suivant
la date d’envoi de l’avis de cotisation, signifier au ministre un avis
d’opposition en la forme prescrite énonçant les raisons de son opposition et
tous les faits pertinents sur lesquels elle se fonde.
|
|
81.32 (1) Subject to subsection (6), any person
entitled to serve a notice of objection under section 81.15 or 81.17, other
than a notice in respect of Part I, or to appeal to the Tribunal under
section 81.19 may, at any time before or after the expiration of the time
limited by that section for so objecting or appealing, apply to the Tribunal
for an order extending that time.
…
(6) No application may be made pursuant
to subsection (1) or (3) more than one year after the expiration of the time
limited.
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81.32 (1) Sous réserve du paragraphe (6),
toute personne ayant droit de signifier un avis d’opposition en vertu de
l’article 81.15 ou 81.17, autre qu’un avis à l’égard de la partie I, ou
d’interjeter appel au Tribunal en vertu de l’article 81.19, peut, avant ou
après la fin du délai prévu par cet article pour ainsi s’opposer ou
interjeter appel, demander au Tribunal une ordonnance prolongeant ce délai.
…
(6) Les demandes prévues aux paragraphes
(1) ou (3) ne peuvent être présentées plus d’un an après la fin du délai.
|
|
304 (4) The Tax Court may dispose of an application
made under subsection (1) by
(a)
dismissing it, or
(b)
granting it,
and
in granting an application, it may impose such terms as it deems just or
order that the notice of objection or the request be deemed to be a valid
objection or request as of the date of the order.
(5) No application shall be granted under
this section unless
(a)
the application was made under subsection 303(1) within one year after the
expiration of the time otherwise limited by this Part for objecting or making
a request under subsection 274(6), as the case may be; and
(b)
the person demonstrates that
(i)
within the time otherwise limited by this Act for objecting,
(A) the
person was unable to act or to give a mandate to act in the person’s name, or
(B) the
person had a bona fide intention to object to the assessment or make the
request,
(ii)
given the reasons set out in the application and the circumstances of the
case, it would be just and equitable to grant the application, and
(iii)
the application was made under subsection 303(1) as soon as circumstances
permitted it to be made.
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304 (4) La Cour canadienne de l’impôt peut rejeter la
demande ou y faire droit. Dans ce dernier cas, elle peut imposer les
conditions qu’elle estime justes ou ordonner que l’avis d’opposition soit
réputé valide à compter de la date de l’ordonnance.
(5) Il n’est fait droit à la demande que
si les conditions suivantes sont réunies:
a) la demande a été présentée en
application du paragraphe 303(1) dans l’année suivant l’expiration du délai
par ailleurs imparti pour faire opposition ou présenter la requête en
application du paragraphe 274(6);
b) la personne démontre ce qui suit:
(i) dans
le délai d’opposition par ailleurs imparti, elle n’a pu ni agir ni mandater
quelqu’un pour agir en son nom, ou avait véritablement l’intention de faire
opposition à la cotisation ou de présenter la requête,
(ii)
compte tenu des raisons indiquées dans la demande et des circonstances de
l’espèce, il est juste et équitable de faire droit à la demande,
(iii) la
demande a été présentée dès que les circonstances le permettaient,
(iv)
l’opposition est raisonnablement fondée.
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323. (1) If a corporation fails to remit an
amount of net tax as required under subsection 228(2) or (2.3) or to pay an
amount as required under section 230.1 that was paid to, or was applied to
the liability of, the corporation as a net tax refund, the directors of the
corporation at the time the corporation was required to remit or pay, as the
case may be, the amount are jointly and severally, or solidarily, liable,
together with the corporation, to pay the amount and any interest on, or
penalties relating to, the amount.
(2) A director of a corporation is not
liable under subsection (1) unless
(a)
a certificate for the amount of the corporation’s liability referred to in
that subsection has been registered in the Federal Court under section 316
and execution for that amount has been returned unsatisfied in whole or in
part;
(b)
the corporation has commenced liquidation or dissolution proceedings or has
been dissolved and a claim for the amount of the corporation’s liability
referred to in subsection (1) has been proved within six months after the
earlier of the date of commencement of the proceedings and the date of
dissolution; or
(c) the
corporation has made an assignment or a bankruptcy order has been made
against it under the Bankruptcy and Insolvency Act and a claim for the
amount of the corporation’s liability referred to in subsection (1) has been
proved within six months after the date of the assignment or bankruptcy
order.
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323. (1) Les administrateurs d’une personne
morale au moment où elle était tenue de verser, comme l’exigent les
paragraphes 228(2) ou (2.3), un montant de taxe nette ou, comme l’exige
l’article 230.1, un montant au titre d’un remboursement de taxe nette qui lui
a été payé ou qui a été déduit d’une somme dont elle est redevable, sont, en
cas de défaut par la personne morale, solidairement tenus, avec cette
dernière, de payer le montant ainsi que les intérêts et pénalités afférents.
(2) L’administrateur n’encourt de
responsabilité selon le paragraphe (1) que si:
a) un certificat précisant la somme pour
laquelle la personne morale est responsable a été enregistré à la Cour
fédérale en application de l’article 316 et il y a eu défaut d’exécution
totale ou partielle à l’égard de cette somme;
b) la personne morale a entrepris des
procédures de liquidation ou de dissolution, ou elle a fait l’objet d’une
dissolution, et une réclamation de la somme pour laquelle elle est
responsable a été établie dans les six mois suivant le premier en date du
début des procédures et de la dissolution;
c) la personne morale a fait une cession,
ou une ordonnance de faillite a été rendue contre elle en application de la Loi
sur la faillite et l'insolvabilité, et une réclamation de la somme pour
laquelle elle est responsable a été établie dans les six mois suivant la
cession ou l’ordonnance.
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TCC DECISION
[12]
The
appellants challenged this decision before the Tax Court of Canada (TCC).
Angers J. dismissed the appellants’ applications because they had been
filed outside the time limit provided under paragraph 304(5)(a) of the
ETA.
[13]
That
decision is now under appeal.
APPELLANTS’ POSITION
[14]
The
appellants raised multiple grounds to deny their liability as administrators,
which have evolved in the course of the proceedings. After the hearing before
the TCC, the appellants’ counsel argued for the first time in written pleadings
that the appellants had never seen or received the notices of assessment issued
against them. Angers J. dismissed this argument and that aspect of his
decision was not appealed.
[15]
Before
us, the appellants argued for the first time that the notices of assessment are
void ab initio since they were issued after the six-month time period
prescribed under paragraph 323(2)(c), and that in those
circumstances, the Court must grant the motion for an extension of time since
it is the only procedure available to them to assert their right.
[16]
The
appellants also allege that Angers J. did not accept their defence that they
were unable to act after February 2001, following the appointment of the
trustee. On that point, the appellants refer to the decision by the Court of
Québec in Léon Paquin v. Sous-ministre du Revenu du Québec, October 16,
2003, Québec, No.: 200-02-029678-028, (C.Q.):
[translation]
[38] Decisions
indicate that when the administrator no longer has the liberty to dispose of
the company’s assets because the bank decides which cheques will be paid, as in
this case, the administrators are not liable under 24.01.
[39] In
this case, the applicant is not liable for the tax debts incurred and due when
the bank was administering all of the company’s assets and inventories pursuant
to 24.02 of the Act respecting the Ministère du Revenu. According to the
evidence, these debts amounted to $3,615.55, namely $1,757.33 for QST and
$1,858.22 for DAS.
DECISION
[17]
With
respect to this last argument, there is no doubt that an administrator cannot
be liable for defaults occurring after control has been assumed by the trustee
or the bank on its behalf. The issue is not whether the appellants are liable
for their omissions after the trustee had taken control. The assessments issued
against the appellants are for an earlier period, during which they were
administrators.
[18]
The
appellants also argue that the assessments issued against them were void ab
initio since Construction Emma Inc. was deemed to have made an assignment
within the meaning of the BA on February 2, 2001, i.e. more than six
months before the assessment at issue was made. In saying this, the appellants
are relying on paragraph 323(2)(c), which provides that the claims for
which they are liable must be proved within six months of the assignment.
[19]
This
issue was not debated before Angers J., and it is not clear that the evidence
relevant to its disposal was in the record (see Athey v. Leonati, [1996]
3 S.C.R. 458 at paragraph 51). In any event, the appellants’ argument based on
paragraph 323(2)(c) would not result in the assessment being void ab
initio. Rather, this provision provides a defence that the appellants can
argue on the merits. Yet, in order to argue this defence, the appellants had to
file a notice of objection in the prescribed time period, which they did not
do.
[20]
Ultimately,
Angers J. could not overlook the requirement under paragraph 304(5)(a)
making his power to grant an extension of time conditional on the application
for extension being made within one year of the time otherwise prescribed. In
this case, that condition was not met.
[21]
I
would dismiss the two appeals with a single set of costs.
“Marc
Noël”
“I
concur”
Desjardins
J.A.
“I
concur”
Nadon
J.A.
Certified
true translation
Kelley
A. Harvey, BCL, LLB
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