Harvey v. R., [1996] 1 CTC 2577, 96 DTC 3252 (Informal Procedure)

P.R. Dussault J.T.C.C.: — This is an application for an order extending time to institute an appeal from an assessment in respect of the applicant’s 1989 taxation year.

The assessment in issue was dated February 26, 1993. The applicant objected thereto on March 15, 1993 and the Minister of National Revenue (the “Minister”) sent a notice of confirmation to the applicant by registered mail on May 18, 1993. The applicant subsequently instituted an appeal from the assessment on November 8, 1993 and the respondent filed a motion to dismiss the appeal on the ground that it had not been instituted within the time limit provided for in section 169 of the Income Tax Act (the “Act”).

The hearing of that motion took place on March 28, 1994, before Judge Guy Tremblay of this Court and was adjourned in order to enable the respondent to file evidence that the notice of confirmation of May 18, 1993 was sent to the applicant by registered mail. That evidence was filed on April 7, 1994 and Judge Tremblay rendered judgment dismissing the appeal on April 8, 1994. On April 13, 1994, the applicant filed this application for an order extending time.

First let us clarify that that application was filed within the time limit provided for in paragraph 165(1 )(a) of the Act. Then let us emphasize that the applicant does not dispute the fact that the notice of confirmation was sent by registered mail. Exhibits 1-1 and A-l filed in evidence attest thereto. However, the applicant claims that he never received the document, despite the fact that the postal register (Exhibit A-l) indicates that delivery of the document was taken on May 29, 1993. The signature H. Harvey appears as that of the person who took delivery of the document. The identification mentioned in the register is as follows: 412 M 826. However, while admitting that that number corresponds to the licence number of an automobile belonging to him, the applicant denies that the signature is his or that of a person of his acquaintance, including his wife. In short, the applicant states that he has never received the document, contrary to what is indicated in the register.

On the basis of this fact, counsel for the applicant claims that receipt of the notice of confirmation by the taxpayer must be proved. On this point, he relies on an amendment made in 1993 to subsection 165(3) of the Act. Whereas that subsection had previously stated that the Minister had to notify the taxpayer of a confirmation by registered mail, it now states that, in such a case, the Minister shall notify the taxpayer of his decision in writing. According to counsel for the applicant, the amendment results in a greater requirement for the Minister, who must now ensure that the taxpayer receives the document in question. Counsel also relies on subsection 244(5) of the Act and subsection 26(3) of the Canada Evidence Act in order to contend that while those provisions state the means to establish some evidence, they nevertheless allow for the possibility of adducing evidence to the contrary. Lastly, in support of his argument based on the requirement of receipt, counsel for the appellant refers to the decisions in De Chantal v. Minister of National Revenue, [1990] 2 C.T.C. 2484, 90 D.T.C. 1936 and Antoniou v. Minister of National Revenue, [1948] 2 C.T.C. 2055, 88 D.T.C. 1415.

I must emphasize at this point that I indicated, at the end of the hearing, the Federal Court of Appeal decision in Bowen v. Minister of National Revenue, [1990] 2 C.T.C. 266, 91 D.T.C. 5594 to counsel for the parties. In that case, the Court, rejecting the interpretation given in the Antoniou case (supra) on which the Tax Court of Canada judge had relied, clearly states that the sole obligation imposed by subsection 165(3) of the Act is that the Minister send the notice of confirmation by registered mail, not that he ensure it is received by the taxpayer. In my view, the written comments I received on the same day from counsel for the appellant merely restate the gist of the argument made on this point at the hearing.

The argument of counsel for the applicant deserves a few comments, even if they do not lead me directly to the resolution of the case. I believe they are important for recalling the state of the law that applies to this case.

First, subsection 169(1) clearly provides:

... 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.

[Emphasis is mine.]

The provision could not be clearer: the time limit runs from the date of mailing, not that of receipt. As I have already indicated, subsection 165(3) stated that the Minister had to notify the taxpayer of the confirmation by registered mail. The amendment of that provision mentioned by counsel for the appellant now provides that the Minister must simply notify the taxpayer in writing. On the one hand, that amendment is effective only upon Royal Assent of what has become Chapter 24 of the Statutes of 1993, that is June 10, 1993. However, the notice of confirmation here in question was sent on May 18, 1993, that is, before the amendment came into force. On the other hand, it is quite clear, particularly in the notes accompanying the bill, that the amendment was made in order “to remove the requirement for the notice to be by registered mail”. The requirements in this respect were therefore not increased, but rather decreased starting on the effective date.

Moreover, I also wish to state that, under subsection 244(5) of the Act and subsection 26(3) of the Canada Evidence Act, prima facie evidence may be established of the existence of a request or notice, as well as the sending of such a request or notice. There is no mention of evidence of receipt of a request or notice. Since the sending of the notice of confirmation is not at all in dispute here, these provisions do not apply.

In concluding that clarification, I will simply say that the decision in Bowen (supra) expresses the state of the law applicable to the case as regards the Minister’s obligations in respect of the sending of the notice of confirmation. In conclusion, the Court, in that case, confirmed the date that must be taken into account in calculating the time limit for appeal under section 169 as well as the additional time limit within which an application for an order for extension of time may be made under section 167. It is the date of sending of the notice of confirmation, not the date of its receipt. In any case, the meaning of the argument of counsel for the applicant is all the more difficult to understand since this application was made within the time limit provided for in paragraph 167(5)(a) of the Act, that is, within “one year after the expiration of the time limited by section 169 for appealing”. That time limit is, I repeat, 90 days following the date of sending of the notice of confirmation.

In order to rule on this case, it is necessary here only to verify the existence of the conditions stated in paragraph 167(5)(b) of the Act. Moreover, the evidence and arguments should mainly have concerned the conditions stated in that provision. This was unfortunately not the case. Paragraph 167(5)(b) provides as follows:

(5) 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.

The application was made within the time limit provided for in subsection 167(5), as mentioned above. It remains to be determined whether the applicant showed, on a balance of probabilities, that the other four conditions stated in paragraph 167(5)(b) were met.

With respect to the first condition, I consider that the explanations provided do not enable me to conclude that it was met. The applicant states that he never received the notice of confirmation, contrary to what is indicated in the postal register. The explanations provided on this point seem to me implausible and far from convincing. It is not enough to state that anyone can know the licence number of an automobile to explain how that number could have been entered in the postal register as an identification of the person who took delivery of a registered letter. Before being able to take delivery of a registered letter, a person must first be informed that it was sent and is in the possession of the postal service. The letter is then normally handed over to the person who wants to take delivery of it upon an identity check. I cannot reasonably believe that one can simply request the licence number of an automobile without demanding to see the registration certificate itself, which is normally in the possession or under the control of the owner or of one of his relatives who uses the automobile. Furthermore, even supposing that the applicant’s explanations can be accepted, the evidence does not enable the Court to establish the date on which the applicant had knowledge that the assessment had been confirmed. The notice of appeal dated November 8, 1993 of course mentions that the appeal was instituted further to a telephone conversation with a certain Mr. Henri Laferriere, Chief of Appeals, on November 1, 1993. However, in the absence of more precise explanations provided at the hearing, it is difficult to conclude simply that the condition provided for in subparagraph 167(5)(b)(i) was met.

As to subparagraph 167(5)(b)(iii), it provides that the applicant must show that the application for extension of time was made as soon as circumstances permitted. In her reply to the applicant’s application, the respondent alleged that the applicant was notified on January 13, 1994 that a motion to dismiss the appeal of November 8, 1993 had been filed. A letter accompanying the notice also informed him that it was possible to make an application for an extension. The respondent alleges that the notice and letter were received by the applicant on January 17, 1994. These facts were not at all disputed. However, the applicant did not make an application either before or at the hearing of the motion on March 28, 1994. In fact, the instant application was not made until April 13, 1994 after judgment was rendered dismissing the appeal. If anyone could con- elude that there was any logic in the applicant’s approach, one can only observe that it was certainly not dictated by prudence. Here again, the evidence adduced does not allow to go further since no additional explanation was provided by the applicant.

I come to the condition stated in subparagraph 167(5)(b)(iv), according to which the applicant must show that there are reasonable grounds for the appeal. In his notice of appeal of November 8, 1993, the applicant said that he disagreed with the assessment with respect to the penalties and interest assessed. The explanation provided was as follows:

I am prepared to pay my taxes, but I refuse to pay fines and interest because, if Mr. Jacques Jean had sent me a T-4 within the time limit, I would not have been assessed this penalty and interest. I believe he should pay this amount himself.

Please note that I am prepared to pay my taxes, but not the interest and penalties.

[Translation.]

During the hearing of the application, the validity of the appeal did not form the subject of any question, comment, explanation or argument of any nature whatever. The subject was purely and simply disregarded. However, this is just as important a condition as the others.

It is not necessary to elaborate at any length on a taxpayer’s obligation to report his income, on the manner of so reporting and, lastly, on doing so within the set time limit. Failure to meet these obligations is punished by penalties. Interest is also charged on amounts a person owes under the Act in respect of both tax and penalties. A taxpayer’s tax liability is established by the Act and is not defined in relation to the behaviour of another taxpayer. Thus, the obligation for an employee to report a salary or similar income is not conditional on the issuance of a T-4 slip by the employer or payer, although the latter also has obligations in this respect which, if not met, also result in penalties. All this to say that it is not simply by alleging that a slip was not received in time from a third party that one can have penalties and interest, assessed for failure to meet one’s own obligation to report income as provided by the Act, vacated. On this point, and in the absence of any additional element adduced in evidence, I am compelled to conclude that the applicant did not show that there were reasonable grounds for the appeal.

Similarly, in light of the insufficient evidence, if not the absence of evidence of special circumstances, I cannot conclude that the condition stated in subparagraph 167(5)(b)(ii) was met.

In conclusion, I find that the applicant did not adduce sufficient evidence to enable me to find that the conditions stated in paragraph 167(5)(b) of the Act were met. That provision requires him to adduce sufficient evidence that the stated conditions were all met. I am obliged to find that the evidence adduced was not at all directed to that end.

Consequently, I find myself obliged to dismiss the application for an order extending time to institute an appeal from the assessment issued for the applicant’s 1989 taxation year.

Application dismissed.