[1] This is an appeal by the Crown of an order of the Federal Court pursuant to subsection 18.1(2) of the Federal Court Act, R.S.C. 1985, c. F-7, granting the motion of the Respondent Arthur Webster for an extension of time for filing an application for judicial review. According to the draft notice of application for judicial review, Mr. Webster seeks to have the Federal Court quash the decision of the Minister of National Revenue dated March 8, 2001 to confirm certain assessments under the Income Tax Act, R.S.C. 1985 (5^th supp.), c. 1.

[2] A decision to extend the time for commencing a proceeding is a discretionary one. Such decisions generally cannot be reversed on appeal except on the basis of an error of law: Canderel Ltd. v. Canada (C.A.), [1994] 1 F.C. 3. The Crown argues that the Motions Judge erred in law in granting the motion in this case because the Federal Court has no jurisdiction to review the Minister's decision to confirm an income tax assessment. It is argued for Mr. Webster that this appeal should be dismissed so that the merits of the judicial review application, including the question of jurisdiction, can be considered by the Federal Court: David Bull Laboratories (Canada) Inc. v. Pharmacia Inc. (C.A.), [1995] 1 F.C. 588.

[3] I summarize the relevant facts as follows. On October 12, 1999, after an income tax audit, Mr. Webster was reassessed in respect of his 1995, 1996 and 1997 taxation years. Mr. Webster filed a notice of objection, as was his right pursuant to subsection 165(1) of the Income Tax Act, which reads as follows:

165. (1) A taxpayer who objects to an assessment under this Part may serve on the Minister a notice of objection, in writing, setting out the reasons for the objection and all relevant facts,

165. (1) Le contribuable qui s'oppose à une cotisation prévue par la présente partie peut signifier au ministre, par écrit, un avis d'opposition exposant les motifs de son opposition et tous les faits pertinents, dans les délais suivants:

(a) where the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a testamentary trust, on or before the later of

a) lorsqu'il s'agit d'une cotisation relative à un contribuable qui est un particulier (sauf une fiducie) ou une fiducie testamentaire, pour une année d'imposition, au plus tard le dernier en date des jours suivants:

(i) the day that is one year after the taxpayer's filing-due date for the year, and

(i) le jour qui tombe un an après la date d'échéance de production qui est applicable au contribuable pour l'année,

(ii) the day that is 90 days after the day of mailing of the notice of assessment; and

(ii) le 90e jour suivant la date de mise à la poste de l'avis de cotisation;

(b) in any other case, on or before the day that is 90 days after the day of mailing of the notice of assessment.

b) dans les autres cas, au plus tard le 90e jour suivant la date de mise à la poste de l'avis de cotisation.

[4] The obligation of the Minister upon receiving a notice of objection is set out in subsection 165(3) of the Income Tax Act, which reads as follows:

165 (3) On receipt of a notice of objection under this section, the Minister shall, with all due dispatch, reconsider the assessment and vacate, confirm or vary the assessment or reassess, and shall thereupon notify the taxpayer in writing of the Minister's action.

165 (3) Sur réception de l'avis d'opposition, le ministre, avec diligence, examine de nouveau la cotisation et l'annule, la ratifie ou la modifie ou établit une nouvelle cotisation. Dès lors, il avise le contribuable de sa décision par écrit.

[5] The Minister's obligation to consider objections is delegated to tax officials of Canada Customs and Revenue Agency who are assigned to the "appeals division" and bear the title "appeals officer". From the record it appears that the appeals officer in this case was Ms.

Maggie Martel, who was supervised by her team leader, Ms. Brenda O'Regan.

[6] A number of communications passed between the appeals officer and Mr. Webster, through his counsel, while Mr. Webster's objection was under consideration. Among the documents that the appeals officer provided to Mr. Webster were copies of an audit report and some working papers. Parts of those documents were blacked out. An explanation was requested. The explanation was that the blacked out portions contained information obtained from a third party on the expectation that the information would remain confidential.

[7] By letter dated March 8, 2001, Mr. Webster was notified that the assessments were confirmed. On June 5, 2001, Mr. Webster filed a notice of appeal in the Tax Court. That was

his right pursuant to subsection 169(1) of the Income Tax Act, which reads as follows:

169. (1) Where a taxpayer has served notice of objection to an assessment under section 165, the taxpayer may appeal to the Tax Court of Canada to have the assessment vacated or varied after either

169. (1) Lorsqu'un contribuable a signifié un avis d'opposition à une cotisation, prévu à l'article 165, il peut interjeter appel auprès de la Cour canadienne de l'impôt pour faire annuler ou modifier la cotisation:

(a) the Minister has confirmed the assessment or reassessed, or

a) après que le ministre a ratifié la cotisation ou procédé à une nouvelle cotisation;

(b) 90 days have elapsed after service of the notice of objection and the Minister has not notified the taxpayer that the Minister has vacated or confirmed the assessment or reassessed,

b) après l'expiration des 90 jours qui suivent la signification de l'avis d'opposition sans que le ministre ait notifié au contribuable le fait qu'il a annulé ou ratifié la cotisation ou procédé à une nouvelle cotisation;

but no appeal under this section may be instituted after the expiration of 90 days from the day notice has been mailed to the taxpayer under section 165 that the Minister has confirmed the assessment or reassessed.

toutefois, nul appel prévu au présent article ne peut être interjeté après l'expiration des 90 jours qui suivent la date où avis a été expédié par la poste au contribuable, en vertu de l'article 165, portant que le ministre a ratifié la cotisation ou procédé à une nouvelle cotisation.

[8] The authority of the Tax Court in income tax appeals is set out in subsection 171(1) of the Income Tax Act, which reads as follows:

171. (1) The Tax Court of Canada may dispose of an appeal by

(a) dismissing it; or

(b) allowing it and

(i) vacating the assessment,

(ii) varying the assessment, or

(iii) referring the assessment back to the Minister for reconsideration and reassessment.

171. (1) La Cour canadienne de l'impôt peut statuer sur un appel:

a) en le rejetant;

b) en l'admettant et en:

(i) annulant la cotisation,

(ii) modifiant la cotisation,

(iii) déférant la cotisation au ministre pour nouvel examen et nouvelle cotisation.

[9] Mr. Webster's appeal was filed under the "General Procedure Rules" (Tax Court of Canada Rules (General Procedure) SOR/90-688). Under those rules, both the taxpayer and the Crown are obliged, before trial, to disclose relevant documents and submit to examinations for discovery. Mr. Webster alleges that in the course of the discovery process, he learned for the first time that the appeals officer who considered his objection had been provided with copies of the audit report and other documents that were not blacked out, as his copies were. As Mr. Webster sees the matter, the appeals officer who was charged with considering his objection had access to factual information that was denied to him.

[10] It is argued for Mr. Webster that this was a breach of natural justice for which he is entitled to a remedy, and that the only Court with the authority to give him a remedy for that breach is the Federal Court. The remedy he seeks is an order quashing the confirmation of his assessments, and requiring his objection to be reconsidered. It is common ground that the Tax Court cannot give him that remedy, because its jurisdiction is limited to determining whether the assessments are correct in law.

[11] The jurisdiction of the Tax Court includes the authority to deal with disputes relating to pre-trial discoveries. Mr. Webster invoked that jurisdiction by making a motion in relation to his tax appeal to compel disclosure of a complete copy of the audit report. That motion was heard by Judge Bonner on November 7, 2002, and dismissed on December 27, 2002: Webster v. Canada, 2003 D.T.C. 211, [2003] 2 C.T.C. 2315 (T.C.C.). Judge Bonner determined that the blacked out portions of the audit report did in fact relate to information provided by an informant who had been promised confidentiality. He held that the blacked out information was not relevant to the issues raised on appeal, and that the information was protected by informer privilege. Mr. Webster did not appeal that decision.

[12] After the hearing of his motion in the Tax Court, but before Judge Bonner had ruled on it, Mr. Webster filed the motion for an extension of time that has now given rise to this appeal. The Motions Judge granted the motion on January 10, 2003 on the basis of written submissions pursuant to Rule 369 of the Federal Court Rules, 1998, SOR/98-106. That is the order that is the subject of this appeal. The Motions Judge gave no written reasons.

[13] The Crown subsequently filed a motion in the Federal Court to strike out the application for judicial review for lack of jurisdiction. That motion was denied by Prothonotary Hargrave on March 11, 2003 on the basis that it was an abuse of process, because the debate as to the jurisdiction of the Federal Court had been argued before the Motions Judge when he granted Mr. Webster's motion for an extension of time to commence the application for judicial review: Webster v. Canada (Attorney General), 2003 FCT 296, 2003 D.T.C. 5241, [2003] 3 C.T.C. 110 (F.C.T.D.).

[14] At the hearing of this appeal, counsel indicated that the Tax Court appeal is being held in abeyance pending the outcome of the judicial review. The Federal Court is in the process of dealing with a dispute under Rule 318 as to the documents the Crown is required to disclosure in the judicial review proceeding.

[15] Against that factual background, I will consider the principal question raised in this appeal, which is whether the Federal Court has the jurisdiction to quash a decision to confirm a notice of objection under the Income Tax Act.

[16] The Federal Court's judicial review jurisdiction is defined by section 18(1) of the Federal Court Act, the relevant parts of which read as follows:

18. (1) Subject to section 28, the Trial Division has exclusive original jurisdiction

18. (1) Sous réserve de l'article 28, la Section de première instance a compétence exclusive, en première instance, pour_:

(a) to issue an injunction, writ of certiorari, writ of prohibition, writ of mandamus or writ of quo warranto, or grant declaratory relief, against any federal board, commission or other tribunal; and

a) décerner une injonction, un bref de certiorari, de mandamus, de prohibition ou de quo warranto, ou pour rendre un jugement déclaratoire contre tout office fédéral;

(b) to hear and determine any application or other proceeding for relief in the nature of relief contemplated by paragraph (a), including any proceeding brought against the Attorney General of Canada, to obtain relief against a federal board, commission or other tribunal.

b) connaître de toute demande de réparation de la nature visée par l'alinéa a), et notamment de toute procédure engagée contre le procureur général du Canada afin d'obtenir réparation de la part d'un office fédéral.

. . .

(3) The remedies provided for in subsections (1) and (2) may be obtained only on an application for judicial review made under section 18.1.

(3) Les recours prévus aux paragraphes (1) ou (2) sont exercés par présentation d'une demande de contrôle judiciaire.

[17] An appeals officer exercising the authority of the Minister to consider an income tax objection is a "federal board, commission or other tribunal" as that phrase is defined in the Federal Court Act, which on the face of it would suggest that decisions made by appeals officers may be subject to judicial review in the Federal Court.

[18] However, the judicial review jurisdiction of the Federal Court is limited by subsection 18.5 of the Federal Court Act, which reads as follows (my emphasis):

18.5 Notwithstanding sections 18 and 18.1, where provision is expressly made by an Act of Parliament for an appeal as such to the Court, to the Supreme Court of Canada, to the Court Martial Appeal Court, to the Tax Court of Canada, to the Governor in Council or to the Treasury Board from a decision or order of a federal board, commission or other tribunal made by or in the course of proceedings before that board, commission or tribunal, that decision or order is not, to the extent that it may be so appealed, subject to review or to be restrained, prohibited, removed, set aside or otherwise dealt with, except in accordance with that Act.

18.5 Par dérogation aux articles 18 et 18.1, lorsqu'une loi fédérale prévoit expressément qu'il peut être interjeté appel, devant la Cour fédérale, la Cour suprême du Canada, la Cour d'appel de la cour martiale, la Cour canadienne de l'impôt, le gouverneur en conseil ou le Conseil du Trésor, d'une décision ou d'une ordonnance d'un office fédéral, rendue à tout stade des procédures, cette décision ou cette ordonnance ne peut, dans la mesure où elle est susceptible d'un tel appel, faire l'objet de contrôle, de restriction, de prohibition, d'évocation, d'annulation ni d'aucune autre intervention, sauf en conformité avec cette loi.

[19] Pursuant to subsection 169(1) of the Income Tax Act, the decision of an appeals officer under subsection 165(3) of the Income Tax Act to confirm an assessment may be appealed to the Tax Court of Canada. It follows, according to subsection 18.5 of the Federal Court Act, that

the decision to confirm cannot be the subject of an application for judicial review in the Federal Court. The only possible conclusion is that the Motions Judge erred in law in granting Mr. Webster's motion for an extension of time to commence his application for judicial review.

[20] Counsel for Mr. Webster argued that if the Federal Court is not permitted to consider Mr. Webster's application for judicial review, he will have been deprived of a fair hearing of his objection. It is perhaps more accurate to say that once the objection process was complete, Mr. Webster was deprived of an opportunity to argue in the Federal Court, through a judicial review application, that the Minister has an obligation to conduct the objection process fairly, and that the process followed in his particular case was unfair. However, Parliament has spoken on this matter. Whatever flaws there may have been in the objection process in Mr. Webster's case, it resulted in a decision that can be challenged in only one way, and that is by an appeal to the Tax Court.

[21] I would add that the right to appeal an income tax assessment to the Tax Court is a substantial one. The mandate of the Tax Court is to decide, on the basis of a trial at which both parties will have the opportunity to present documentary and oral evidence, whether the assessments under appeal are correct in law, or not. If the assessments are incorrect as a matter of law, it will not matter whether the objection process was flawed. If they are correct, they must stand even if the objection process was flawed.

[22] For these reasons, this appeal should be allowed with costs in this Court and in the Court below, the motion for an extension of time should be dismissed for lack of jurisdiction, and the application for judicial review should be quashed.

(Sgd.) "Karen R. Sharlow"

J.A.

"I agree" (Sgd.) "Alice Desjardins"

J.A.

"I agree" (Sgd.) "Robert Décary"

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-50-03

APPEAL FROM AN ORDER OF THE COURT (TRIAL DIVISION) DATED January 10, 2003, (Rouleau, J.) (02-T-77)

STYLE OF CAUSE: AGC v. Arthur Webster

PLACE OF HEARING: Vancouver, BC

DATE OF HEARING: October 20, 2003

REASONS FOR JUDGMENT: Sharlow, J.A.

CONCURRED IN BY: Desjardins, Décary J.J.A.

DATED: October 21, 2003

APPEARANCES:

Ms. Lisa Macdonell

FOR THE APPELLANT

Mr. Laurence Armstrong

FOR THE RESPONDENT

SOLICITORS OF RECORD:

Mr. Morris Rosenberg

Deputy Attorney General of Canada

FOR THE APPLICANT

Armstrong Nikolich.

Vancouver, BC

FOR THE RESPONDENT

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Canada (Attorney General) v. Webster, 2003 FCA 388

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2003 FCA 388