Daniel R. Porodo v. Minister of National Revenue, [1990] 2 CTC 2282

Mogan, T.C.J.:—This application is for an order extending the time to file notices of objection. On January 20, 1988, notices of reassessment were mailed to the applicant for his 1983 and 1984 taxation years. He received those notices. On April 19, 1988, the 90-day period to object expired. On February 15, 1989, an agent for the applicant sent to Revenue Canada, Taxation a notice of objection for the applicant's 1983 taxation year. On April 26, 1989, the Edmonton district office of Revenue Canada, Taxation sent to the applicant a standard letter (form TLA-4) stating that his notice of objection for 1983 was outside the 90-day limit and therefore late. On November 22, 1989, the applicant made the application herein.

If I were to decide this matter on the above undisputed facts, the application would be dismissed because it was not made within the period of one year plus 90 days as required by paragraph 167(5)(a) of the Income Tax Act:

67.(5) No order shall be made under subsection (1) . . .

(a) unless the application to extend the time for objecting . . . is made within one year after the expiration of the time otherwise limited . . . for objecting to . . . the assessment. . .

There are certain additional facts which make this matter more difficult to resolve. The applicant stated under oath that, in February 1988, one month after receiving the notices of reassessment, he mailed his notices of objection for 1983 and 1984 in the small blue envelope which he received with his reassessment documents. That blue envelope was intended for tax remittances and, on its face, there was printed the address of the taxation centre at Winnipeg, Manitoba. Sheila Hanson from the Appeals Branch of the Revenue Canada Office at Edmonton stated under oath that her Appeals Branch could find no record of the notices of objection which the applicant claims to have mailed in February 1988.

The dispute concerning the February objections is narrow. The respondent does not deny that the applicant mailed the notices of objection in the blue envelope in February 1988. The respondent simply states that he has no record of receiving those objections.

In the summer of 1988, the Collections Branch of Revenue Canada, Taxation contacted the applicant. He spoke with Mr. Rostotski and with Ms. Karen Sundquist on several occasions. He also spoke with a Mr. Leske of the Special Investigations Branch in Vancouver who was reviewing a gold mine joint venture in which the applicant claimed to be an investor. He told all of these people of the notices of objection which he mailed in February 1988 and, in his own words: “Everybody down there said that they had no record of my objections.” Mr. Rostotski testified at the hearing and described telephone discussions with the applicant on September 15 and October 12, 1988 in which the applicant referred to the February objections and Mr. Rostotski confirmed that he could find no record of them.

According to the applicant, Ms. Sundquist told him in December 1988 that he could have a further 30 days to file his objections but there is some confusion and dispute as to whether she was offering to withhold collection action for 30 days. In any event, it was this discussion which caused the applicant to contact Mr. Hazlewood who had put him into the gold mine joint venture and who filed the 1983 objection on February 15, 1989. The covering letter from Mr. Hazlewood refers to the applicant as not having received the reassessments of January 1988 when he did in fact receive them. It was Revenue Canada, Taxation which did not receive the objections of February 1988. There was an obvious misunderstanding between the applicant and his agent Hazlewood.

Counsel for the applicant put forward three arguments: (i) the applicant is required to prove only that he sent his notices of objection in February—he is not required to prove that they were received; (ii) employees of Revenue Canada, Taxation waived the procedural requirements concerning duplicate copies, registered mail and the specific address at Ottawa; and (iii) the 1983 notice of objection sent on February 15, 1989 should be regarded as an application to extend time. If either of the first two arguments were to be accepted by the Court, this application could be dismissed because the applicant would have proved that he served notices of objection within the 90-day period. I shall consider all three arguments in order.

The applicant relies on the decision of this Court in Kramer et al. v. M.N.R., [1984] C.T.C. 2784; 84 D.T.C. 1709. In that case, notices of objection were not served within the 90-day period which ended on September 22, 1982. The taxpayers' accountant stated that he had sent to the Tax Review Board by registered mail on October 8, 1982 an application to extend time. The application was never received by the Board and the accountant had lost his registered mail receipt. Nothing further was done until the accountant sent an affidavit to the Board on November 3, 1983. The period cf one year plus 90 days had expired on September 22, 1983. The issue in Kramer was whether the application to extend time had been made within the period of one year plus 90 days. Cardin, J. stated at page 2787 (D.T.C. 1711):

. . . he has met all the conditions of subsection 167(5), save paragraph (a), which the applicants must prove by establishing that the applications were made on October 7, 1982. It is not incumbent on the applicants to prove that the applications were received by the Tax Review Board or the Department of Justice, but they must establish that they were, in fact, sent.

In Kramer, the Court accepted the sworn testimony of the accountant plus certain corroborating documents to prove that the taxpayers had complied with subsection 167(3) on October 8, 1982. In this application, Mr. Porodo testified that he did not comply with section 165 but sent his objections to Winnipeg by ordinary mail. In these circumstances, I find that the Kramer case is not helpful.

The applicant also relies on the recent decision of this Court in Bowen v. M.N.R., [1990] 2 C.T.C. 2080; 90 D.T.C. 1625. The issue in Bowen was whether the taxpayer could defer the commencement of the 90-day appeal period by proving to the satisfaction of this Court that he had not received the Minister's confirmation issued under subsection 165(3) of the Act. The Minister admitted that his confirmation had not been received by Mr. Bowen. In this application, there is no doubt that the applicant received the reassessments of January 20, 1988. It is the Minister who did not receive the objections sent by the applicant in February 1988.

This Court held in Bowen that the taxpayer's failure to receive the Minister's confirmation issued under subsection 165(3) deferred the 90-day appeal period which otherwise would have commenced on the day the confirmation was mailed. Assuming that the Minister sent his confirmation to Mr. Bowen's last known address, one must ask how the Minister could otherwise comply with subsection 165(3). In this application, the 90-day objection period had already commenced on January 20, 1988. It is the applicant who was required to respond within those 90 days by serving his notices of objection. Parliament prescribed in subsection 165(2) how a notice of objection shall be served. The applicant ignored the statutory requirements and sent his notices of objection by ordinary mail, not to Ottawa but to a wrong address in Winnipeg. In my view, the decision in Bowen does not assist the applicant.

If I accept the applicant's sworn testimony that he mailed his notices of objection to Winnipeg in the small blue envelope in February 1988, can I find that he has complied with section 165 of the Income Tax Act when the respondent denies receiving those objections? In section 165, Parliament has prescribed that a notice of objection be served in duplicate by registered mail to the Deputy Minister at Ottawa. If the Winnipeg Taxation Centre had received the notices of objection and forwarded them to the appropriate Deputy Minister's office at Ottawa, it was open to the respondent to acknowledge the objections and thereby waive the procedural requirements of duplicate copies and registered mail to Ottawa. But the respondent denies receiving the objections and waiving any procedural requirements. In these circumstances, I cannot hold that the applicant has complied with section 165.

Counsel for the applicant referred me to subsection 248(7):

248(7) For the purposes of this Act, any thing sent by first class mail or its equivalent shall be deemed to have been received by the person to whom it was sent on the day it was mailed except that the remittance of an amount deducted or withheld as required by this Act or a regulation made under this Act, shall be deemed to have been remitted on the day it was received by the Receiver General.

Even if I were to accept the applicant's uncorroborated testimony and apply subsection 248(7), the notices of objection would be deemed to have been received by the Taxation Centre at Winnipeg on the day that they were mailed in February 1988. The requirements of section 165 would not be met.

I would like to give the applicant the benefit of his uncorroborated sworn testimony but, when the respondent denies receiving the documents and calls evidence to prove that he has no record of receiving them, the failure to use registered mail and the correct address is fatal to the applicant's position on this first argument.

Considering the applicant's second argument, there is no evidence that employees of the respondent waived the statutory provisions requiring that notices of objection be sent in duplicate by registered mail to the prescribed address at Ottawa. Concerning the applicant's third argument, I cannot regard the 1983 notice of objection mailed on February 15, 1989 as an application to extend time because it does not come even close to satisfying the provisions of subsection 167(3).

When this application was heard in July 1990, the applicant was 27 years old and employed as a driver/warehouseman for Amoco in Alberta. In 1983, the applicant had purchased certain stock through a man named Thiesen. When the applicant was about to file his 1984 income tax return, Thiesen told him that he could get a refund of $5,000 if Thiesen prepared and filed the return. The applicant therefore authorized Thiesen to file his 1984 return. Thiesen introduced the applicant to a man named Hazlewood. In a complicated arrangement which was not adequately described, the applicant assigned 70 per cent of his prospective tax refund to Thiesen and/or Hazlewood in exchange for /2 of 1 per cent of a gold mine joint venture. It sounded as if the applicant had been sold part of the Brooklyn Bridge!

It is easy to experience sympathy for the applicant because he appears to have entered into financial transactions beyond his comprehension and to have received income tax advice from persons who were incompetent or negligent. On the other hand, when mailing the objection forms in the small blue envelope, the applicant ignored the instructions printed plainly on those forms stating that duplicate copies were to be sent by registered mail to a specific address in Ottawa. Also, the applicant described his discussions with employees of the respondent and stated: "Everybody down there said that they had no record of my objections.” As that message became clear, he should have obtained competent income tax advice before it was too late. The reference to "just and equitable” in subsection 167(1) is not an invitation to the Court to ignore statutory requirements for the service of documents (apart from time limits) when the respondent denies receiving documents which were not served in a manner prescribed by the statute. The application is dismissed. Both counsel are to be commended for their presentations.

Application dismissed.