Citation:
2017 TCC 222
Date: 20171110
Docket: 2016-5034(IT)I
BETWEEN:
SALWA
ABDALLA,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
Rossiter C.J.
I. Executive
Summary
[1]
This matter came before the Tax Court of Canada
by way of Notice of Motion by the Respondent wherein the Respondent sought to
quash the appeal presented to the Tax Court of Canada by the Appellant, Salwa
Abdalla, for the 2007 and 2009 taxation years, pursuant to section 12 of the Tax
Court of Canada Act and subsection 169(2.2) of the Income Tax Act (the
“Act”). The Respondent sought to quash
the appeal on the basis that the Appellant was bound by a lead appeal known as Mariano
v The Queen, 2015 TCC 244, pursuant to an Agreement to be Bound and Waiver
of Objection and Appeal Rights. The Appellant took a position to the contrary
indicating that there were three reasons why the Motion should not be granted.
The three reasons were in relation to the Agreement to be Bound and Waiver of
Objection and Appeal Rights. The three reasons are:
a) no valid consideration exchanged for the Appellant’s promise;
b) Canada Revenue Agency (“CRA”) created conditions whereby the
Appellant’s consent was not fully informed; and
c) the Waiver was obtained by way of undue pressure.
[2]
The Motion is granted and the appeal is quashed.
[3]
It should be noted that 26 other Appellants with
appeals were part of this motion as list in Schedule A annexed hereto appeared.
All of these other 26 Appellants appeared by way of an agent, namely one of the
Appellants, Brian Gunning. At the hearing, Mr. Gunning advised that he would
rely on the Appellant’s legal submissions. The Appellant in this particular
matter was represented by legal counsel.
II. Facts
[4]
The facts are briefly summarized in the
Respondent’s written submissions as follows:
a)
The Minister of National Revenue (the “Minister”) reassessed
the Appellants, which was the Appellant and the 26 other Global Learning
Gifting Initiative (“GLGI”) participants, in denying donation tax credits
claimed in respect of GLGI’s donation program.
b)
Each of the
Appellants had signed an Agreement to be Bound and Waiver of Objection and
Appeal Rights (the “Waivers”) agreeing to be bound by the final decision in the
appeals among others of Juanita Mariano (Court
File No.: 2009-3506(IT)G) and waiving any right of
objection and appeal in respect of the issue of their entitlement to donation
tax credits in respect of the GLGI donation program if the Minister reassesses
or confirms the reassessments consistent with the outcome of those appeals.
c)
The Tax Court of
Canada decision in Mariano was rendered on October 19, 2015 denying the
claimed donation tax credits in their entirety in respect of the GLGI donation program
and the decision of Mariano was not appealed.
d)
The Minister
confirmed the reassessments of the Appellants consistent with the decision in Mariano.
Despite the signed waivers the Appellants filed Notices of Appeal appealing the
Minister’s reassessments denying donation tax credits in respect of the GLGI
donation program. The Appellants’ Notices of Appeal all contain the same
language and request a Waiver of interest and penalties, yet the Appellants
were not assessed any penalties. The Notices of Appeal claimed that the CRA
failed to adequately warn the taxpayers that the donation tax credit claims in
respect to the GLGI donation program would be disallowed.
[5]
The Appellant had for her 2007 taxation year
claimed donation tax credits based upon total charitable donations of $6,218.00
with respect to the GLGI donation program and $5,065.00 with respect to the
same donation program for 2009. The Appellant did not make a cash contribution
to participate in the donation program for either of the taxation years in
question.
[6]
After the reassessments had been issued, the
Appellant objected to the reassessments. In response to the Notice of
Objections the CRA, by letter dated December 16, 2014, wrote the Appellant to
outline four options available to the Appellant:
a) to accept an offer by the CRA to waive the interest on the
disallowance of the donation tax credits if the Appellant was willing to waive
her rights to pursue a further objection and appeal; or
b) to reject the offer and appeal directly to the Tax Court of Canada
as more than 90 days had passed since the Appellant’s filing of the Notice of
Objection; or
c) to reject the offer and agree to be bound by the final judgment in
similar GLGI donation program appeals and waive any future objection and appeal
rights in respect of the donation of tax credits; or
d) to reject the offer and not agree to be bound by the final judgment
in similar GLGI donation program appeals and wait for the CRA to take further
action.
See Agreement to be
Bound and Waiver of Objection and Appeal Rights attached hereto as Schedule
“A”. See CRA Notice of Objection Letter attached hereto as Schedule “D”.
[7]
In the letter of December 16, 2014 from the CRA,
there were three documents enclosed: a) a Waiver of Right of Objection and Appeal
for the 2007 taxation year (Schedule “A”); b) a Waiver of Right of Objection
and Appeal for the 2009 taxation year (Schedule “B”); c) an Agreement to be
Bound and Waiver of Objection and Appeal Rights for 2007 and 2009 taxation
years (Schedule “C”).
[8]
Subsequent to this correspondence to the
Appellant, dated December 16, 2014, the Appellant forwarded correspondence to
CRA wherein she stated that she agreed to be bound by the outcome of the cases
at the Tax Court of Canada, but did not want to abandon her right of appeal to
the Federal Court of Appeal. The CRA responded to the Appellant on January 21,
2015 indicating that it would not agree to the Appellant’s terms outlined in
her letter and telling her that she had to submit the form presented to her
within five business days or CRA would take further action on her objection without
advanced notice. The Appellant then submitted the Agreement to be Bound and
Waiver of Objection and Appeal Rights duly signed on January 28, 2015.
[9]
It should be noted that during this period of
time, the Appellant was given three references to contact. It should also be
noted that the Affidavit of Ramona Rudeanu, in support of the Respondent’s
motion, was the only evidence presented to the Court by either the Respondent
or the Appellant on this particular Motion.
III. Position
of the Respondent
[10]
The Respondent takes the position that the
Appellant has waived her rights, pursuant to subsection 169(2.2) of the Act
and thereby is precluded from objecting to the assessment in question. The
Respondent further takes the position that its Waiver is a properly enforceable
and valid Waiver in all aspects of both statutory and common law.
IV. Position
of the Appellant
[11]
The Appellant takes the position that the Waiver
in question is not enforceable because a) there was no valid consideration
exchanged for the Appellant’s promise; b) the CRA created conditions whereby
the Appellant’s consent was not fully informed; and c) the Waiver was obtained
by way of undue pressure brought to bear on the Appellant by the CRA.
V. Legislation
[12]
Subsection 169(2.2) reads:
Notwithstanding subsections 169(1) and
169(2), for greater certainty a taxpayer may not appeal to the Tax Court of
Canada to have an assessment under this Part vacated or varied in respect of an
issue for which the right of objection or appeal has been waived in writing by
the taxpayer.
The only
requirement imposed by subsection 169(2.2) of the Act is that the
taxpayer’s right of objection or appeal be waived in writing. In the present
case, there is no dispute that the Agreement to be Bound and Waiver of
Objection and Appeal Rights was in writing.
[13]
The leading case on waiver is the Supreme Court
of Canada decision in Saskatchewan River Bungalows Ltd. v Maritime Life
Assurance Co, [1994] 2 S.C.R. 490 (“Saskatchewan
River Bungalows”). At paragraphs 19 and 20, the
Supreme Court of Canada held that there are basically two fundamental
requirements for a waiver:
…The essentials of waiver are thus full
knowledge of the deficiency which might be relied upon and the unequivocal
intention to relinquish the right to rely on it. That intention may be
expressed in a formal legal document, it may be expressed in some informal
fashion or it may be inferred from conduct. In whatever fashion the intention
to relinquish the right is communicated, however, the conscious intention to do
so is what must be ascertained.
Waiver will be found only where the evidence
demonstrates that the party waiving had (1) a full knowledge of rights; and (2)
an unequivocal and conscious intention to abandon them. The creation of such a
stringent test is justified since no consideration moves from the party in
whose favour a waiver operates. An overly broad interpretation of waiver would
undermine the requirement of contractual consideration.
[14]
Also, the case noted that the waiver does not
require consideration and further that the “…[w]aiver
can be retracted if reasonable notice is given to the party in whose favour it
operates” (Saskatchewan River Bungalows, paragraph 27). However a
waiver cannot be withdrawn if it is too late or if the withdrawal would result
in an injustice to the promisee.
[15]
The first issue to be considered is whether or
not a Waiver requires consideration. I accept the submissions of the Respondent
on this point referring to W.J. Alan & Company Limited v El Nasr
Export & Import Company, [1972] 2 QB 189, [1972] 2 All ER 127, which
basically held that no consideration needed to be moving from the party which benefits
from the waiver. This case was decided by Lord Denning, Master of the Rolls, at
that time. The Supreme Court of Canada is noted by the Respondent to have
adopted similar principles in Saskatchewan River Bungalows where the
Court stated, at paragraph 20, in part, as follows:
... The creation of such a stringent test is
justified since no consideration moves from the party in whose favour a waiver
operates….
[16]
The Supreme Court of Canada has spoken on the
issue and as far as I can determine, this is still the law no consideration is
required. If I am in error on this particular point that consideration is
required, I am of the view that there is good and valid consideration flowing
to the Appellant. The Appellant received the benefit of not having to spend any
time or effort or cost because her appeal did not proceed to the Tax Court of
Canada. In addition, the Respondent held the Appellant’s objections in
abeyance, and ensured the Appellant’s assessments would be confirmed in accordance
with the lead case. Each of those in and of themselves is sufficient and
adequate consideration in my mind for such a waiver.
[17]
Turning to the criteria, as enunciated for a
waiver in the Saskatchewan River Bungalows case, the Appellant must have
full knowledge of her rights. One of the main arguments presented by the
Appellant is that the Appellant did not fully know her rights and therefore her
consent was not fully informed.
[18]
The Agreement to be Bound and Waiver of
Objection and Appeal Rights, the document signed by the Appellant, contains the
following statements, which if read should give the Appellant sufficient pause
if she was concerned that she was not aware of her rights:
1.
The document is titled Agreement to be Bound and
Waiver of Objection and Appeal Rights;
2.
The document states the following in part “…I waive any right of objection and appeal in respect of the
issue of my entitlement to donation tax credits…”;
3.
The document further states “I understand that I will be precluded from filing an
objection or an appeal with respect to these issues pursuant to subsections
165(1.2) and 169(2.2) of the Income Tax Act”;
4.
The document then
continues and quotes the limitation of objections in subsection 165(1.2) and
waived issues in subsection 169(2.2). The document in and of itself repeats the word waiver on at least three specific occasions including part of
the heading. This document was accompanied by the letter from CRA to the
Appellant of December 16, 2014.
[19]
Before dealing
with this letter, it should be noted that the Waiver specifically deals with
the right being waived and gives up the right to file an appeal and the
entitlement to the GLGI tax credits. Referring to the CRA letter (see Schedule
“D”) to the Appellant which was no less than four pages in length, there is no
doubt that a) the letter was poorly drafted; b) the letter was poorly worded; and
c) the letter was erroneous to some extent in that it referred to two options
for the Appellant, but actually contained four. Nonetheless, it is evident from
reviewing the letter, if read in its entirety, that there is a sufficient and
adequate explanation in the letter that a person would have full knowledge of
the rights being waived. In the letter there is background information
provided, identifying the issue with respect to the tax shelter number being
used for identification purposes only. There is reference to similar donation
cases and decisions of the Federal Court of Appeal. There is specificity to the
effect that the CRA has audited and disallowed all claims in relation to the
GLGI donation program of which the Appellant was a participant.
[20]
The CRA letter
further goes on to talk specifically about the Appellant’s donation tax credit
claims and refers specifically to her 2007 and 2009 charitable donations and
how the donations were made. The letter errs by referring to only two options
available to the Appellant, when in fact the letter contains four options.
However, those options repeatedly, as presented, refer to Waiver of appeal
rights. Option #1 is entitled “Notice of Confirmation with a Waiver of Appeal
Rights” and that paragraph refers to the Waiver of Right of Objection and Appeal
which was due within 30 days of the letter. It refers throughout to the words “reference”
and “waive” and it gives a detailed explanation of option #1. What really was
option #2, but was not described as option #2, refers to the fact that the
Appellant could appeal directly to the Tax Court of Canada if they did not
agree with option #1. What really was option #3, but listed as option #2, was rejecting
option #1 and instead signing and returning the Agreement to be Bound and
Objection and Appeal Rights. What really was option #4 was rejecting options #1
and #3, with the consequence that the CRA would proceed on their objection
without advance notice.
[21]
In the summary of
actions to be taken, the CRA letter again refers that the Appellant could
either accept the offer with interest relief by signing and returning the
enclosed Waiver of Right of Objection and Appeal or the Appellant could be
bound by the final judgment in the lead case by signing and returning the
Agreement to be Bound and Waiver of Objection and Appeal Rights. In either
case, the letter gave the Appellant 30 days to sign and return the required
document. The letter further goes on in the final paragraph to state as
follows: “You may choose to sign and return either the attached Waivers
of Objection and Appeal Rights or the Agreement to be Bound to the
address below; however, please do not sign and send both the Waivers and the
Agreement to be Bound. Also, please note, there is one Waiver per year to be
returned or one Agreement to be Bound which covers all of your outstanding GLGI
objections and years.” As noted, the letter could have been drafted somewhat
better. There are a few mistakes in the letter, but if the letter is read as a
whole, in conjunction with the forms attached, I find it difficult to say that
the Appellant would not fully understand her rights have been waived because
they are specifically laid out in the letter with great specificity.
[22]
In this
particular case, the CRA did give quite a bit of information that the rights
have been waived and the information was given in the Waiver and in the letter
and I would consider 30 days to be ample time. While the CRA could have given more
time, 30 days certainly was ample time to get advice. There were three specific
references to various contact particulars if the Appellant had any questions
about the Waiver. It should be noted that the only evidence before the Court on
this particular matter is the evidence of the Affidavit of Ramona Rudeanu referred
to aforesaid. There is no evidence of impropriety at any time about the conduct
of CRA, nor is there any evidence of any enquiries that have been made by the
Appellant for further particulars, or any indication of any nature whatsoever
if there was a lack of understanding with respect to the rights being waived.
The Appellant did not introduce an affidavit in support of any such argument, nor
did the Appellant take the witness stand to rebut such suggestion.
[23]
Basically, the
Respondent suggested that the Appellant knew or ought to have known what she
was signing. I agree with this argument given the documentation which was
presented to her had a length and breadth of the explanation.
[24]
The second
criterion is that there was an unequivocal and conscious intention to abandon
these rights. This criterion is satisfied by signing and returning the
Agreement to be Bound and Waiver of Objection and Appeal. As the Appellant knew
the rights she was waiving, this conduct unequivocally indicates it was her
intention to waive her rights. Furthermore, the waiver itself specifically
states “I waive any right of objection and appeal…[and] understand that I will
be precluded from filing an objection or an appeal with respect to these issues….”
In addition, subsections 165(1.2) and 169(2.2) were reprinted in the waiver.
There is some suggestion that the CRA failed to adequately warn the Appellant
that her claim for GLGI would be disallowed, but there is no duty of care
arising from issuing the tax shelter identification number and no duty to warn
the Appellant of the issues of the GLGI tax shelter (The Queen v Scheuer,
2016 FCA 7).
[25]
The Appellant
went on at length that there was undue influence and coercion thereby making
the waiver unenforceable. The law is clear that the onus was on the Appellant
to show she was unduly influenced for the waiver to be unenforceable: Nguyen
c R, 2005 TCC 697, 2008 DTC 2880 at para 33; Radelet v the Queen, 2017
TCC 159, 282 ACWS (3d) 443 at para 14.
[26]
I simply do not
find such undue influence based upon the evidence before the Court. As I noted,
there was no evidence presented by the Appellant on this particular point, it
was simply an argument. The case law submitted by the Respondent appears to
point quite strongly that where CRA says to the Appellant either sign the waiver
or we will close the file that is not undue pressure (McGonagle v The
Queen, 2009 TCC 168, 2009 DTC 1120). Also in Hill v The Queen, 2012
TCC 202, 2012 DTC 1168, the waiver was not invalid simply because the CRA has
said it would close the taxpayer’s file. At paragraph 29 and 30, the Court
stated in part as follows:
29
According to the evidence, Mr. Hill was told about the settlement offer in an
email from Mr. De Micco on Wednesday, March 4, 2009. In that email, Mr. De
Micco wrote that the CRA appeals officer "asked that [the settlement
offer] be signed by Friday of this week for this new offer to be
accepted." Mr. Hill said that he was told that if he didn't accept
the offer, the file would be closed with no adjustment and that he would owe
tax on $1 million of income that had been reassessed.
30 In my
view, the actions of the CRA appeals officer as described by Mr. Hill do
not amount to improper or illegitimate pressure. It appears to me that the
terms of the settlement offer would not have been a complete surprise to Mr.
Hill….
[27]
I see no evidence whatsoever which would
indicate that there was any undue pressure brought upon the Appellant to sign
the form in question. It appears to me that the Appellant had opportunities to
sign the waiver over a period of time and did so. Then when the decision on the
test case came in and she was not satisfied with the reassessment based upon
the Agreement to be Bound and Waiver of Objection and Appeal Rights she decided
to proceed with an appeal. Quite simply, I think that the Appellant is bound by
the Agreement to be Bound and Waiver of Objection and Appeal Rights and the
Motion of the Respondent is granted.
[28]
Given that this Motion is granted to quash the
Appellant’s appeal, the Motion is also granted with respect to the other 26
Appellants’ appeals which were heard concurrently, as listed in Schedule “A”
annexed hereto.
Signed
at Ottawa, Canada, this 10th day of November, 2017.
“E.P. Rossiter”
SCHEDULE “A”
File Number: 2017-1764(IT)I, Fraser, Donald v. HMQ
File Number: 2017-1541(IT)I, Loubier,
Normand v. HMQ
File Number: 2017-1489(IT)I, Flegg,
Murray v. HMQ
File Number: 2016-5364(IT)I, Allen,
Marie v. HMQ,
File Number: 2016-5361(IT)I, George, Chris v. HMQ
File Number: 2016-5244(IT)I, Thalen,
Harvey v. HMQ
File Number: 2016-5243(IT)I, Wiens,
John v. HMQ
File Number: 2016-5242(IT)I, Samadian,
Anita v. HMQ
File Number: 2016-5194(IT)I, Fast,
Gary v. HMQ
File Number: 2016-5193(IT)I, Prinzen,
Bert v. HMQ
File Number: 2016-5192(IT)I, George,
Lisa v. HMQ
File Number: 2016-5187(IT)I, Thompson,
Donna v. HMQ
File Number: 2016-5184(IT)I, Carpenter,
David v. HMQ
File Number: 2016-5181(IT)I, Martens,
Edwin v. HMQ
File Number: 2016-5169(IT)I,
Martens, Allen v. HMQ
File Number: 2016-5035(IT)I, Pauco,
Steve v. HMQ
File Number: 2016-5033(IT)I, Pike,
Tracy v. HMQ
File Number: 2016-5032(IT)I, Koshe,
Carl v. HMQ
File Number: 2016-5031(IT)I, Gunning,
Brian v. HMQ
File Number: 2016-5030(IT)I, Pauco,
Terri v. HMQ
File Number: 2016-5029(IT)I, Sonik,
Mark v. HMQ
File Number: 2016-5028(IT)I, Cushnie,
Ed v. HMQ
File Number: 2016-5027(IT)I, Cairns,
Samuel v. HMQ
File Number: 2016-5026(IT)I, Hayhoe,
Tim v. HMQ
File Number: 2016-5025(IT)I, Wiens,
Patricia v. HMQ
File Number: 2016-5024(IT)I, Armstrong,
Roger v. HMQ,
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