REASONS
FOR JUDGMENT
Masse D.J.
[1]
These five applications
were heard on common evidence.
[2]
Each of the five Applicants participated in a
donation programme in the 2002 or 2003 taxation year and claimed corresponding
donation tax credits for those years. The donation programme was promoted by
Initiatives Canada Corporation (“ICC”). The Applicants’ agent in all of these applications,
Robert Mattacchione, was the Chief Executive Officer of ICC. Mr.
Mattacchione is also affiliated with another company called PAC Protection
Corporation (“PAC”) which was involved in assisting the Applicants to appeal their
reassessments.
[3]
Each of these Applicants
was reassessed by the Minister of National Revenue (the “Minister”) in respect
of the donation arrangement, and each Applicant objected to the reassessment.
After some considerable delay, each Applicant’s reassessment was confirmed by
the Minister in July and August of 2014. Each Applicant had 90 days from the
date of the mailing of the Notice of Confirmation within which to file a Notice
of Appeal with this Court. Each Applicant failed to do so. It is their position
that a lawyer, Mr. Tony DeBartolo, retained by ICC through Mr Mattachione, failed
to file the Notices of Appeal in a timely fashion. Hence, each Applicant has
filed an application for an order extending the time to file a Notice of Appeal
with this Court pursuant to s. 167 of the Income Tax Act, R.S.C., 1985,
c. 1 (5th Supp.) (the “Act”).
Issue
[4]
The sole issue in all of
these applications is whether each of the five Applicants should be granted an
order extending the time to file a Notice of Appeal with this Court pursuant to
s. 167 of the Act in respect of the taxation years here under
consideration regarding their participation in the donation programme.
Legislative Provisions
[5]
Section 167 of the Act
provides in part:
167 (1) Extension of
time to appeal -- Where an appeal to the Tax Court of Canada has not been
instituted by a taxpayer under section 169 within the time limited by that
section for doing so, the taxpayer may make an application to the Court for an
order extending the time within which the appeal may be instituted and the
Court may make an order extending the time for appealing and may impose such
terms as it deems just.
(2) Contents of Application
-- An application made under subsection 167(1) shall set out the reasons
why the appeal was not instituted within the time limited by section 169 for
doing so.
(3) . . .
(4) . . .
(5) When order to be made -- No order shall be made under
this section unless
(a) the application
is made within one year after the expiration of the time limited by section 169
for appealing; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited
by section 169 for appealing the taxpayer
(A) was unable to act or to instruct
another to act in the taxpayer’s name, or
(B) had a bona fide intention to appeal,
(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,
(iii) the application was made as soon
as circumstances permitted, and
(iv) there are reasonable grounds for the appeal.
[6]
Section 169(1) of the Act
provides:
169(1) Appeal – 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
(a) the Minister
has confirmed the assessment or reassessment, or
(b)
.
. .
but no appeal under this section may be
instituted after the expiration of 90 days from the day notice has been sent to
the taxpayer under section 165 that the Minister has confirmed the assessment
or reassessment.
Analysis
[7]
Pursuant to subsection 169(1) of the Act,
each of the Applicants had 90 days following the sending of a Notice of
Confirmation by the Minister within which to file a Notice of Appeal with this
Court. None of the Applicants did so. The only recourse left to the Applicants
to have these matters determined by the Court on their merits is to bring an application
to this Court, pursuant to section 167 of the Act, for an order
extending the time within which to file a Notice of Appeal.
[8]
In all
of the instant cases, the parties have agreed that paragraph 167(5)(a) is not
in issue as each of the five applications was filed within the one year
extended time limit. The parties have also agreed that subparagraph 167(5)(b)(iv)
is not in issue on the basis that there are reasonable grounds for the
underlying appeal of the donation arrangement. Thus, the only issues relate to
the application of subparagraphs 167(5)(b)(i), (ii) and (iii) to these
five applications. The Applicants must show that:
(a)
they were
unable to act or to instruct another to act in their name OR they
had a bona fide intention to appeal within the 90-day period allowed by
subsection 169(1) to appeal;
(b)
it would
be just and equitable to allow the application given the reasons set out in the
application and the circumstances of the case; and
(c)
the applications
were made as soon as circumstances permitted.
[9]
Subsection 167(2) of the Act provides that the applications must set out
the reasons why the appeal was not instituted within the time limit (90 days)
set out in section 169. Each Applicant sets out exactly the same reason for
their application:
Agent had
believed that the legal representative had filed an appeal for the appellant.
However, the legal representative had not filed within the 90 days requirement,
therefore the need to request to submit at this time.
[10]
Each application had attached to it, a Notice of Appeal that was identically
worded to all the others except for the Applicant’s name and address, the
applicable taxation year and the date of confirmation of the reassessment. The pertinent taxation year was 2002 for each Applicant except for
Roger Léger and Jean-Paul J. Léger where the taxation year was 2003. The statement of facts and grounds for appeal
consist of just one page and are also identical one to the others.
[11]
The Minister
did not call any witnesses at the hearing of these matters but did file
affidavits sworn by Michael Hwang, an Officer in the Toronto Litigation Office
of the Canada Revenue Agency (the “CRA”) for each of the five applications.
These affidavits set out the timelines for each Applicant as follows:
|
Mark Amrite – 2002 Taxation Year
Date of last Notice of
Reassessment:
Confirmation date:
90-day deadline:
Application filing date:
# of days late:
|
January 2, 2014
July 17, 2014
October 15, 2014
November 19, 2014
35
|
|
|
|
|
|
Jean-Paul J. Léger – 2003 Taxation Year
Date of last Notice of
Reassessment:
Confirmation date:
90-day deadline:
Application filing date:
# of days late:
|
April 17, 2014
July 21, 2014
October 20, 2014
November 19, 2014
30
|
|
|
|
|
Roger Léger – 2003 Taxation Year
Date of last Notice of
Reassessment:
Confirmation date:
90-day deadline:
Application filing date:
# of days late:
|
March 27, 2014
July 21, 2014
October 20, 2014
November 19, 2014
30
|
|
|
|
|
|
Tony D’Souza – 2002 Taxation Year
Date of last Notice of
Reassessment:
Confirmation date:
90-day deadline:
Application filing date:
# of days late:
|
November 15, 2014
August 8, 2014
November 6, 2014
November 19, 2014
13
|
|
|
|
|
|
Elizabeth D’Souza – 2002 Taxation Year
Date of last Notice of
Reassessment:
Confirmation date:
90-day deadline:
Application filing date:
# of days late:
|
November 15, 2014
August 8, 2014
November 6, 2014
November 19, 2014
13
|
[12]
The Applicant Mark
Amrite, was not present at the hearing and did not testify. However, an
affidavit sworn by him on November 13, 2017 was filed with the Court as Exhibit
A-4. In his affidavit, he affirms that he participated in the Initiatives
Canada Corporation/Canadian Literacy Initiatives Donation Programme in 2002. He
was reassessed by the CRA in 2006 and was denied the tax credits related to
this donation programme. Upon receipt of his reassessment, he contacted PAC and
was provided with details on how to file an objection. He filed a Notice of
Objection which was subsequently disallowed by the CRA by way of a Notice of
Confirmation dated July 17, 2014. He forwarded his Notice of Confirmation and
other documents received from the CRA to PAC. He was informed by PAC that they
would deal with filing an appeal to the Tax Court of Canada. According to PAC,
a lawyer had been retained to act on behalf of many other participants in the
donation programme to deal with all of the appeals. Mr. Amrite was informed
that his file would be forwarded to the lawyer. He later became aware of problems
surrounding the lawyer and his failure to file a Notice of Appeal in a timely fashion
and that a request for extension of time would be pursued by PAC. Mr. Amrite
affirms that he never had reason to believe that there would be any problems or
concerns surrounding his appeal.
[13]
Mr. Amrite dealt primarily with a person named
Donna DuSomme from PAC who holds the position of Reassessment Manager. On May
22, 2014, Mr. Amrite emailed Donna DuSomme advising that the CRA had sent
him a letter of settlement. The next day Donna DuSomme replied that the
applicant would soon be getting a Notice of Confirmation and at that time, PAC
would prepare and file an appeal on his behalf. On March 4, 2015, Mr. Amrite’s
father emailed Donna DuSomme inquiring about his own appeal and that of his
wife. He also indicated that he had visited the Tax Court of Canada website and
he did not see any reference to his son’s appeal. The next day Donna DuSomme
wrote back indicating that an appeal had indeed been filed for Mark, his son,
the Applicant in this matter. In fact, this was simply not so. It was not an
appeal that had been filed but rather an application to extend time to file an appeal.
These emails are included as part of Exhibit A-1.
[14]
The Applicant Jean-Paul J. Léger, also was not
present and did not testify. However, his affidavit is before the Court as
Exhibit A-5. He also participated in the donation programme in the 2003
taxation year and his tax credits related thereto were also refused by the CRA.
He contacted PAC and was provided with details on how to file an objection. He
filed a Notice of Objection which was subsequently disallowed by the CRA by way
of Notice of Confirmation dated July 21, 2014. He forwarded his Notice of
Confirmation and other documents received from the CRA to PAC. He was informed
by PAC that they would file an appeal with the Tax Court of Canada. According
to PAC, a lawyer had been retained on behalf of all the participants in the
donation programme to deal with all of the appeals. From April to July 2014, he
faxed and emailed documentation regarding his Notice of Objection and Notice of
Confirmation and he was informed that his file would be forwarded to the
lawyer. He became aware of problems with his appeal when he received
correspondence from the CRA that the amount in dispute was owed and
collectable. He contacted PAC and was told that there were problems regarding
the lawyer filing a Notice of Appeal on time. He was told that a request for extension
of time had been filed by PAC with the Court. He affirms that since being
reassessed, he has corresponded with PAC without issue and he never had reason
to believe that there would be any problems or concerns surrounding his appeal.
[15]
Exhibit A-1 contains emails exchanged between
Donna DuSomme and Jean-Paul J. Léger and his wife in early May 2014 providing
the Applicant with instructions on how to complete a Notice of Objection. It
does not make any reference at all to filing an appeal to the Tax Court of
Canada or to making an application for an extension of time.
[16]
The Applicant Roger Léger, also was not present
and did not testify at the hearing. His affidavit was filed with the Court as Exhibit
A-3. He indicates that he also participated in the donation programme. He also
was reassessed by the CRA and denied tax credits related to the donation programme
for his 2003 taxation year. He also filed a Notice of Objection with the help
of PAC which was subsequently denied. He received a Notice of Confirmation
dated July 21, 2014 and forwarded all documents to PAC. He was informed that a
lawyer had been retained to handle the appeals on behalf of all participants in
the programme. From April to July 2014, he faxed and emailed PAC, documentation
regarding his Notice of Objection and Notice of Confirmation and he was
informed that his file would be forwarded to the lawyer. He became aware of
problems with his appeal when he received correspondence from the CRA that the
amount of tax in dispute was owed and collectable. He contacted PAC and was
told of the problems surrounding the lawyer and his lack of timely filing. He
was told that a request for extension of time had been filed by PAC. He affirms
that since being reassessed, he has corresponded with PAC without issue and he
never had reason to believe that there would be any problems or concerns
surrounding his appeal.
[17]
Exhibit A-1 contains emails exchanged between
Donna DuSomme and Rosella Léger, Roger’s wife, in late May 2014 in relation to
her 2003 Notice of Objection and the extent of her insurance coverage. There
are also emails between Roger Léger and Donna DuSomme at the end of July 2014, regarding
the 2003 Notice of Objection of Roger Léger. This email refers to a total of
seven documents that are attached. Although none of these emails make reference
to a Notice of Confirmation or filing an appeal to the Tax Court of Canada or
making an application for an extension of time, given the date, it is likely
that one of those documents was his Notice of Confirmation since that was dated
July 21, 2014.
[18]
The Applicant Tony D’Souza, was present and did
testify on behalf of himself and his spouse, the Applicant Elizabeth D’Souza.
They also were donors to the donation programme for the 2002 taxation year. He
testified that when they were reassessed for that year, he and his wife
prepared and filed Notices of Objection with the assistance of Donna DuSomme
from PAC. In due course, they received Notices of Confirmation dated August 8,
2014 which he forwarded on to PAC. It was his expectation that PAC would file Notices
of Appeal with the Tax Court. He did not follow up with PAC on the progress of
these matters since he had confidence that PAC was taking care of everything
and that things were being done on time. He believed that he was covered by a
warranty programme and that PAC would take the necessary steps to retain legal
counsel and file an appeal. He was made aware of the problem regarding an
extension of time to file an appeal but he left it up to the professionals to
take care of the problem. He states that he received offers of settlement from
the CRA but he refused such offers and sent them on to PAC to take care of
them. He was quite comfortable dealing with his tax problem in the context of a
group of appellants. He identified two strings of emails that are contained in
Exhibit A-1. One string of emails dates from the end of January 2014 and the
other string dates from the middle of May 2014. Both of these relate to the
preparation and filing of Notices of Objection, not appeals, since they predate
the Notices of Confirmation.
[19]
In cross-examination, he confirmed that he
received a Notice of Confirmation on August 8, 2014. He also confirmed that he
was aware that he had 90 days from that day to file a Notice of Appeal.
However, he did not keep track of the date by which he had to file. He simply
left it to PAC to look after. He does not recall doing any follow-up with Donna
DuSomme and he did not follow up with the CRA or with the Court. He himself
took no action between the limitation date for filing an appeal and the date that
the application for extension of time was filed. He did not contact a lawyer nor
did he contact Mr. DeBartolo, the lawyer hired by PAC to file the appeals.
In fact, he has never met Mr. DeBartolo.
[20]
Donna DuSomme testified. She first started
working for PAC in 2013. She was the contact person for PAC whenever their
clients got reassessed by the CRA. She would direct the clients on how to
prepare and file Notices of Objection. There were many clients and thus there
was a large volume of Notices of Objection to be filed. It was around March and
April 2014 that she received an influx of calls from clients wondering why they
were being contacted by CRA demanding payment. Clients began to receive Notices
of Confirmation and they were sending the notices to her on practically a daily
basis. At first, she did not even know what these Notices of Confirmation were
and neither did some of the clients. She did not know what steps had to be
followed to challenge these notices. She and a co-worker, Cheri Durst, went to Mr.
Mattachione, their superior, for guidance and instruction. She was told that a
lawyer, who we now know was Tony DeBartolo, was being hired to file appeals of
the reassessments with this Court on behalf of their clients. She scanned the
documents provided to her by the clients and either emailed or faxed them to
Mr. DeBartolo. She knew that these appeals were time-sensitive. She would
request that Mr. DeBartolo confirm receipt of these documents. There was some communication
with his office but then this stopped. She later found out that some of the
files had gone beyond the time prescribed for filing an appeal because Mr.
DeBartolo had not filed the appeals in a timely manner. She then learned how to
draft and file applications for an extension of time to appeal and did so for
these clients. She kept track of the appeals and applications by the use of
spreadsheets but this was a confusing and unreliable process since she did not
have complete information from all of the clients. She did not know which files
were being appealed by DeBartolo and which files were not. She had to
communicate with the Court in order to find out.
[21]
She testified that she did not really remember
some of the Applicants in the matters before this Court. That only stands to
reason since there were many Applicants and it was a long time ago. She
testified that the primary means of communication with the PAC clients was by
way of email; yet, there are very few emails that have been filed with the court
describing the steps taken other than the few emails that have been produced as
Exhibit A-1. She acknowledges that a lot of clients did not follow up on their
appeals. She supposes that they all presumed that PAC would take care of things.
[22]
Ms. DuSomme testified that on March 27, 2014, she
received communication from Mr. DeBartolo’s office that she was not to send him
any more files or faxes until he had heard from Mr. Mattacchione. She advised
Mr. Mattacchione of this, that same date. This is a clear indication to me
that there was a problem with the solicitor-client relationship. She never did
receive any communication from Mr. DeBartolo to resume sending files to him.
However, even though Mr. DeBartolo did not want to receive any more faxes, she
kept on sending them to him on instruction from Mr. Mattachione. It is her
evidence that all PAC did, was forward Notices of Confirmation to Mr. DeBartolo
and not really anything else. Mr. DeBartolo was the only lawyer hired to handle
the appeals – no other counsel or legal representative was hired.
[23]
Tony DeBartolo is a tax lawyer practicing in
Mississauga, Ontario. He was called to the bar in 2006. He is familiar with the
donation programme that was the subject of reassessment in the present cases.
He testified that on November 8, 2013, he was retained by Robert Mattacchione,
on behalf of and as Chief Executive Officer for ICC. This retainer agreement
can be found in Exhibit A-2 at Tab 1. Currently, there is a civil
litigation between Mr. DeBartolo as plaintiff (defendant by counterclaim)
against ICC, PAC and Roberto Mattachione as defendants (plaintiffs by
counterclaim). Exhibit A-2 is Mr. DeBartolo’s affidavit of production of documents
in relation to this litigation.
[24]
The retainer agreement is in anticipation of
litigation before the Tax Court of Canada between the CRA and all the donors
who participated in the donation programme for the 2002, 2003 and 2004 taxation
years. It is to be noted that, according to this agreement, Mr. DeBartolo’s
client is ICC and not the individual taxpayers who participated in the donation
programme. The agreement sets out a non-exhaustive menu of services to be
provided to ICC in relation to this anticipated litigation. Mr. DeBartolo’s
hourly rate was $300 for his services and $100 for his legal assistants.
Disbursements and harmonized sales tax are extra. Paragraph 5 of the agreement provides
that accounts are to be paid in full no later than 30 days from the date of
invoice. Paragraph 9 provides for an initial retainer deposit of $10,000.
Interim billings will be drawn on the initial retainer. According to paragraph
11, should the balance of the retainer funds fall below $5,000, then upon request
by Mr. DeBartolo, the retainer is to be replenished in the amount of $10,000.
Work on any file will be stopped until the amount requested has been paid.
According to paragraph 12, if the retainer is not replenished, then Mr.
DeBartolo may take action to have himself removed as solicitor of record in any
court action. Mr. DeBartolo made it clear that he was unwilling to do any work
without being properly retained and paid. On November 11, 2013, PAC provided
Mr. DeBartolo with an initial cheque in the amount of $10,000. That is all that
was ever paid.
[25]
Initial discussions between Mr. Mattachione and
Mr. DeBartolo were to the effect that there were tax appeals that had to be
filed and they had to be filed quickly. Mr. DeBartolo told Mr. Mattacchione to
send the files to his office and the appeals would be filed quickly. Mr.
DeBartolo testified that he would receive faxes from Donna DuSomme and he
coordinated matters with her. Every time she received a Notice of Confirmation
from a donor, he would ask her to provide him with the complete file to permit
him to draft a Notice of Appeal. The flow of paperwork commenced immediately
after being engaged. Donna DuSomme would send him everything and if he was
missing something, he would apprise her of such and he would confirm when he
was in receipt of it.
[26]
Mr. DeBartolo did file Notices of Appeal on
behalf of about 25 donors as well as applications for extension of time to
appeal with the Tax Court of Canada. There were no problems in filing these appeals
and applications. In reporting to Mr. Mattachione by email, Mr. De Bartolo made
it clear that in the future, it was very important that any appeals be filed
within 90 days of the date of a Notice of Confirmation. He requested that any
material be forwarded to him within that 90-day period.
[27]
It did not take long for the solicitor-client
relationship to break down. On Nov. 25, 2013, Mr. DeBartolo rendered an interim
account in the amount of $7,932.60 for work done to date and requested a
further amount of $10,000 (see Exhibit A-2, Tab 3 and 4). The requested amount
was not paid. On January 9, 2014, Mr. DeBartolo emailed Mr. Mattacchione
requesting further retainer monies in order to continue working. Mr. DeBartolo
warned that more appeals needed to be filed with the Tax Court of Canada and
that the deadline for filing was fast approaching – these appeals were very time-sensitive.
Mr. DeBartolo confirmed that he stopped working on the appeals until he
receives more retainer funds (see Exhibit A-2, Tab 5). Mr. Mattacchione responded
by email dated Thursday January 9, 2014, that funds would be provided the
following Monday (Exhibit A−2, Tab 6). No funds were forthcoming. On
January 20, 2014, Mr. DeBartolo provided another interim account in the
amount of $56,879.60 for filing applications for extension of time and Notices
of Appeal with the Tax Court of Canada on behalf of 24 taxpayers who had
participated in the donation programme. Although Mr. Mattacchione acknowledged
receipt of the invoice, no funds were forthcoming. On January 27, 2014, Mr. DeBartolo
again exchanged emails with Mr. Mattacchione reiterating that he had stopped
working on donors’ files and would not be doing any further work until he
received payment and that the deadlines for filing were fast approaching. Mr.
Mattacchione indicated that he was working to obtain payment. It should be
noted that another lawyer, one Mr. Robert Kepes, was holding substantial
funds as a defence fund on behalf of the donors and therefore funds could have
been easily transferred from Mr. Kepes to Mr. DeBartolo. However, no funds
were in fact transferred to Mr. De Bartolo in spite of Mr. Mattacchione’s
undertaking to do so. From then on, there followed much correspondence from Mr.
DeBartolo to Mr. Mattacchione regarding requested payment of invoices and
replenishment of his retainer. Mr. DeBartolo consistently reminded Mr.
Mattacchione that the appeals were time-sensitive and failure to act could
adversely affect the interests of the taxpayers. Mr. DeBartolo’s emails were
ignored and no funds were paid. Mr. De Bartolo has not done any more work on
any new files since February 2014, just as he stated in his correspondence.
However, he was counsel of record on some appeals that had already been filed
with the Court and he continued to do some work on those files but not any new
ones. Finally, after a telephone conversation of January 27, 2015, more than a
year after the initial retainer was exhausted, Mr. DeBartolo sent an email
dated February 2, 2015, indicating that if he did not receive payment in full
by the following Friday, he would bring an application to be removed as counsel
of record on those files for which he was indicated as counsel of record before
the Tax Court of Canada and he would not go back on the record. All of this
correspondence is contained in Exhibit A-2. As of August 14, 2015, the
outstanding balance on account of services rendered by Mr. DeBartolo to ICC was
$80,938.80. None of this has been paid to date. The dispute over amounts owing
for services rendered gave rise to the litigation between Mr. DeBartolo and Mr.
Mattachione and related companies.
[28]
Mr. DeBartolo did, in fact, apply to remove
himself from the record on all of those files for which he was indicated as
counsel of record and he so indicated to the individual donors in
correspondence to them, that they should seek other representation. Mr.
DeBartolo has never met any of the donors and he is categorical in his
assertion that he was not retained by any of the donors. He was only retained
by ICC.
[29]
As I have previously indicated, the parties are
in agreement that paragraph 167(5)(a) is not
in issue, as each of the five applications was filed within the one-year
extended time limit. The parties have also agreed that subparagraph 167(5)(b)(iv)
is not in issue on the basis that there are reasonable grounds for the
underlying appeal of the donation arrangement. Thus, the only issues relate to
the application of subparagraphs 167(5)(b)(i), (ii) and (iii) for these
five applications. In order to succeed, the Applicants must satisfy each and
every one of the following criteria:
(a)
they were
unable to act or to instruct another to act in their name OR they
had a bona fide intention to appeal within the 90-day period allowed by
subsection 169(1) to appeal;
(b)
it would be just and
equitable to grant the application given the reasons set out in the application
and the circumstances of the case; and
(c)
the applications were made
as soon as circumstances permitted.
[30]
On the entirety of the evidence, I am satisfied
that the Applicants had a bona fide intention to appeal within the 90-day
period limited by subsection 169(1) of the Act. The Respondent is
not contesting this branch of the criteria.
[31]
The Respondent does contest that the Applicants
filed their applications as soon as circumstances permitted as required by
subparagraph 167(5)(b)(iv) of the Act. In Pennington v. M.N.R.,
87 DTC 5107, the Federal Court of Appeal held that the requirements in the Act
to file the application as soon as circumstances permitted meant that the
taxpayer has to make his application as early as under the particular circumstances,
he could reasonably be expected to get an application ready and file it.
[32]
In Kolmar v. R., 2003 TCC 829, Justice
Rip of this Court observed at paragraph 15 that if a taxpayer is late in filing
a notice of appeal, the taxpayer must act with diligence to apply for an
extension of time to appeal and file a Notice of Appeal. In Carrier c. R.,
2005 TCC 182, at paragraphs. 21 and 24, Justice Tardif of this Court held that,
even if an Applicant’s representative admits that an oversight which resulted
in missing a filing date, was his, the Applicant must bear responsibility for
the representative’s oversight because it was his duty to ensure that his representative
would be able to act within the prescribed time limit.
[33]
In the case of Mr. Amrite, he overshot the 90-day
period limited by subsection 169(1) of the Act by 35 days. J.P. Léger
and Roger Léger were 30 days late. Mr. and Mrs. D’Souza were 13 days late.
There is scant evidence that the Applicants themselves took any steps to file
their appeals on time other than entrusting PAC to do so. PAC did not do so. I
conclude that the Applicants were not diligent in following up on the efforts
of PAC to file their appeals. PAC seeks to place the blame for the late filing
on Mr. DeBartolo. However, it is clear on the entirety of the evidence that the
solicitor-client relationship had broken down as early as January 9, 2014, when
Mr. DeBartolo confirmed that he would do no more work until his retainer was
replenished and put in good standing. This is well before the dates of the
Notices of Confirmation and very much before the 90-day deadline. PAC knew
these matters were time-sensitive and that it was having problems with its
legal representative long before the Applicants received their Notice of
Confirmation. Yet, little or no effort was made by ICC, PAC or Mr. Mattacchione
to mend the solicitor-client relationship or to retain other counsel or to
otherwise take steps to file the appeals on time even though there was more
than sufficient time to do so. PAC was negligent in discharging its duties to
its clients. The Applicants must bear responsibility for PAC’s negligence since
it was their duty to ensure that PAC would act within the prescribed time
limit.
[34]
I am satisfied that the Applicants and PAC have
not adequately demonstrated that they were diligent in filing their appeals. In
my view, each of the five Applicants and PAC had ample time to file the Notices
of Appeal with this Court within the 90-day time limit for doing so, pursuant
to section 169 of the Act. They have not adequately explained why their appeals
were filed beyond the 90-day time limit and why they were delayed beyond that
time limit. Had the Applicants and PAC exercised even a modicum of diligence,
these applications for extension of time would not have been necessary in the
circumstances of each of these cases. These applications were therefore not filed
as soon as circumstances permitted. To file an application under section 167 of
the Act, an Applicant has the onus of establishing that each of the
criteria set out in subsection 167(5) of the Act has been met. A failure
to meet any one of the criteria is fatal to the application (see Dewey v.
Canada, 2004 FCA 82 at paragraph 3). Therefore, these applications should
be dismissed on a consideration of this branch of the criteria alone.
[35]
Alternatively, I am also not satisfied that it would be just and equitable to allow the extensions of time, given
the reasons set out in the applications and the circumstances of these cases. I
come to this conclusion for the following reasons:
It has been held
that the negligence or carelessness of a taxpayer’s lawyer does not amount to
just and equitable grounds for granting an extension of time to file a Notice
of Appeal under the Excise Tax Act (see Bouganim v. Canada,
[2010] T.C.J. No. 449). It is clear that a simple mistake made by a
representative or lawyer acting on behalf of an Applicant will not disentitle the
Applicant to relief. However, negligence or carelessness of the taxpayer’s
representative or lawyer, certainly may. In Di Modica v. Canada, [2001]
T.C.J. No. 620 (Q.L.), the issue was whether the lawyer’s negligence could be a
just and equitable reason for granting an application for an extension of time for
serving a Notice of Objection. The provisions contained in subsection 166.2(5)
of the Act for granting an extension of time to file a Notice of
Objection are similar to the provisions contained in section 167(5) of the Act
for granting an extension of time to file a Notice of Appeal. It was argued
that the Applicant acted diligently and should not be punished for the
omissions of the law firm she had retained. In dismissing the application,
Justice Lamarre Proulx of this Court observed at paragraph 16:
[16] It is in my view that an error by counsel can be a just and
equitable reason for granting an extension of time if counsel otherwise
exercised reasonable diligence required of a lawyer. I do not think that the
state of the law is such that counsel’s negligence or carelessness can
constitute a just and equitable reason for granting the requested extension
within the meaning of subparagraph 162.2(5)(b)(ii) of the Act.
[Emphasis
added].
[36]
Therefore, although a mistake made by an agent
or counsel acting on behalf of an Applicant is not fatal to an application for
an extension of time, an agent or counsel acting on behalf of an Applicant must
otherwise demonstrate reasonable diligence. Negligence or carelessness of an
agent or counsel does not constitute a just and equitable reason for granting
an extension of time to appeal.
[37]
The cases at bar are practically identical to
the situation in Sapi et al. v. Canada, 2016 TCC 239, a decision of
Justice Visser of this Court. The only difference is that in Sapi, Mr.
DeBartolo did not testify whereas he did before this Court in the five
applications at bar. Given the testimony that I heard from Mr. DeBartolo, the
result must be the same as in Sapi. Justice Visser of this Court
observed as follows at paragraph 37 of Sapi:
. . . It is my view that the Applicants have not
established that it would be just and equitable to grant their Applications
given the reasons set out in their Applications and the circumstances of their
cases. It is my view that the alleged failure of PAC and Mr. De Bartolo to file
the Applicants’ appeals on a timely basis within the appeal period is not a
just and equitable reason to grant the Applications in the circumstances of
this case. While there is insufficient evidence in this case to establish that
Mr. De Bartolo was negligent or careless, or that he even had been engaged to
act on behalf of the Applicants, it is my view that the Applicants have not
established that PAC or Mr. De Bartolo acted with reasonable diligence as
required in the De Modica case. PAC was purportedly engaged to assist
the Applicants in filing their appeals. It failed to do so, and failed to
properly engage counsel to assist it in doing so. There is no evidence that it
actively monitored the status of the appeal filings on a case-by-case basis, or
that it set in place procedures for doing so. There is also no evidence that it
was properly staffed to handle the volume of appeals it took on or that it
engaged a sufficient number of counsel, of which there are no shortage in
Ontario or Canada, to assist it in filing and handling the appeals it had taken
on.
[38]
I agree with Justice
Visser and I arrive at the same conclusion based on all the evidence that I
have heard. In the cases before me, I do not find that Mr. DeBartolo was
in fact negligent; he was simply standing firm that he would do no work on new
files unless he was paid – not an unreasonable position to take. Even if it can
be found that Mr. DeBartolo was negligent, I am driven to the conclusion that
ICC, PAC and/or Mr. Mattacchione demonstrated great negligence in failing to file
the applications for extension of time. PAC dithered and delayed, providing Mr.
DeBartolo with no additional retainer funds and did nothing to honour the terms
of the retainer agreement even though it knew that time was of the essence and
even though it knew that Mr. DeBartolo would do no further work without being
paid. No efforts were made to retain alternate counsel or legal representation
once the relationship with Mr. DeBartolo broke down even though other counsel,
such as Robert Kepes, was undoubtedly available. I am of the view, as was Justice
Visser in Sapi, that each of the five Applicants also failed to take
adequate steps to follow up with PAC to ensure that their respective Notices of
Appeal were filed on a timely basis. Any neglect or carelessness by ICC, PAC,
Mr. Mattacchione or any counsel engaged to file the appeals in question, is not
a just and equitable reason to grant these five applications.
[39]
Justice Visser, in Sapi,
went on to observe at paragraphs 44 of his reasons for judgment:
[44] Overall, it is my view that each of the
Applicants provided their respective Notice of Confirmation to PAC on a timely
basis, and then simply trusted PAC to attend to their appeals without
adequately following up with PAC to ensure their appeal was so filed.
Unfortunately, their trust in PAC was misplaced, as PAC did not insure their
appeals were filed on a timely basis or take adequate steps in doing so. While
PAC has attempted to deflect blame to Mr. DeBartolo, who did not testify, it is
my view that any neglect or carelessness by either PAC or any counsel it
engaged to file the appeals in question is not a just and equitable reason to
grant these four Applications.
[40]
I agree with Justice Visser. In the
circumstances of these cases, the neglect or carelessness of the Applicants,
ICC, PAC, Mr. Mattacchione or Mr. DeBartolo in failing to file the appeals
in question, is not a just and equitable reason to grant these applications for
an extension of time to file an appeal.
Conclusion
[41]
For all of the above noted reasons, each of
these five applications for an order extending the time within which an appeal
may be instituted is dismissed, without costs.
Signed at Kingston, Canada, this 22nd day of January 2018.
“Rommel G. Masse”
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