Minuteman Press of Canada Company Limited v. Minister of National Revenue, [1987] 2 CTC 2231, 87 DTC 458

Sarchuk, T.C.J.:—This is an application by Minuteman Press of Canada Company Limited (Minuteman) for an order extending the time within which appeals may be instituted with respect to its taxation years ending February 28, 1979, June 30, 1979, June 30, 1980 and June 30, 1981. The Minister of National Revenue opposes the application on the basis that the provisions of subsection 165 (a) [sic] of the Income Tax Act have not been complied with and that as a result this Court has no jurisdiction to grant the order sought.

The Minister of National Revenue (the Minister) concurrently applies for an order quashing purported appeals for the taxation years ending February 28, 1979, June 30, 1979, June 30, 1980 and June 30, 1981 on the grounds that this Court has no jurisdiction to hear these appeals as the notices of appeal were filed after the expiration of 90 days from the date that notification of confirmation by the Minister of National Revenue was mailed to Minuteman for the 1979 and 1980 taxation years and on the grounds that no notice of objection was filed by Minuteman for the 1981 taxation year, with the result that no appeal may be instituted under section 169 of the Income Tax Act.

Counsel for Minuteman conceded that no notice of objection was filed by it for the 1981 taxation year and that it had not been Minuteman's intention to either object or to appeal from that assessment. The inclusion of that year in the material filed was inadvertent and in error. The Court therefore orders that the purported appeal for the 1981 taxation year be quashed.

The salient facts upon which Minuteman relies are contained in the affidavit of Stanley M. Katz (Katz) filed with the Court. Counsel for the Minister, taking the position that the Court did not have the jurisdiction to grant the relief sought chose not to cross-examine on the affidavit. The result is that the facts contained therein stand unchallenged.

A short summary of the circumstances is warranted. Katz is a citizen of the United States of America and resides in Williston Park in the State of New York. He is presently a vice-president of Minuteman having been appointed to that position in November 1984. Prior to this appointment he practised as an accountant and from approximately 1972 acted for and on behalf of Minuteman, its parent company Minuteman Press International Inc. and related companies on various accounting and tax matters. He continues to be responsible for the accounts and tax affairs of Minuteman to this day.

To assist him in the accounting and tax affairs of Minuteman, Katz consulted and worked with the firm of Resnick, Wintraub & Co. in Toronto, Ontario a firm of chartered accountants. In particular he relied upon Mr. Marvin Otto, (Otto) an accountant and manager of that firm who was to act on behalf of Minuteman to object to notices of reassessment dated October 5, 1983 with respect to the taxation years in issue. In due course Otto prepared notices of objection with respect to each of the notices of reassessment and served them on the Minister. On August 16, 1984 Katz received a letter from the Minister requesting further information which had not been provided to them by Otto. Katz contacted Otto and instructed him to be certain that the necessary information was supplied. On February 21, 1985 Katz, Mr. Ed Ryder, New York counsel to Minuteman and Mr. Jeffrey Haber a representative of Minuteman and its parent company, met in Toronto with Otto and Mr. Steve Landau another manager with Resnick, Wintraub. Mr. Otto advised all present that he was following up with the Minister on behalf of Minuteman.

On February 26,1985 the Minister confirmed the assessments in question. Although Katz could not be precise he was satisfied that these notices were received by him late in March 1985. Upon receipt of the notices of confirmation Katz instructed Otto to prepare an appeal therefrom pursuant to the Income Tax Act. In late April 1985, Katz discovered that Otto was leaving Resnick, Wintraub effective April 30, 1985 and as a result he instructed him to ensure that some other person at Resnick, Wintraub attend to this matter. Otto assured Katz that it would be taken care of.

Mr. Otto eventually prepared a letter directed to the Registrar of the Tax Court of Canada. This letter is dated July 2, 1985. At some point of time in late June or early July 1985 Otto phoned Katz at his office in New York, advised him that the document required for the appeal had been prepared and sought Katz' permission to have someone sign the document on Katz' behalf. Katz was advised by Otto that this document would initiate an appeal on behalf of Minuteman “with respect to the Notices of Confirmation”. Otto was given permission to have the document signed on Katz’ behalf. Katz did not receive a copy of this document and in fact did not see it until July 1986.

In October 1985 Katz received a letter from the Department of National Revenue, Appeals Division, advising him that documents revelant to Minuteman's appeal had been filed with the Registrar of the Tax Court of Canada. On October 4, 1985 Katz received a letter from the Minister's solicitor advising him that the notice of appeal had been received and that the Minister would be serving a formal reply as soon as possible. On January 6, 1986 Katz received a letter from the Minister's solicitor dated November 27, 1985 enclosing a notice of motion for an order quashing Minuteman's appeal on the grounds that notices of appeal were not filed within the required 90-day period permitted by the Act.

According to Katz this was the first material received by him which gave any indication that there was a problem with the appeals. Prior to receipt of these notices of motion Katz had assumed that the matter was properly before the Tax Court of Canada and he was awaiting notice of a hearing date.

On January 6, 1986 Katz spoke to counsel for the Minister and obtained further information from him. Counsel suggested that an application to the Tax Court of Canada for an order extending the 90-day time period might be a possible approach or solution. Katz concedes that concurrently he was advised that there was a one-year limitation period within which such an application had to be brought and that the last day of this period was May 27, 1986.

At approximately the same time Katz contacted Otto and asked him who at Resnick, Wintraub was now handling Minuteman's appeal. Otto advised Katz that Resnick, Wintraub had merged with Touche Ross & Co. effective December 1985 and undertook to provide Katz with the name of the individual to be contacted. Mr. Katz never heard further from Otto. As a result he contacted Landau, a former manager with Resnick, Wintraub who was now a manager with Touche Ross. Upon being advised of the respondent's motion Landau stated that he would review the file. Katz requested a meeting with Landau but was advised that Landau was very busy at that time of the year and could not see Katz until March or early April.

On April 16, Katz and Mr. Ryder met with Landau in the latter's office in Willowdale, Ontario. The merits of Minuteman's appeal were discussed at length. Landau accepted the responsibility of doing everything necessary to "reactivate this case with Revenue Canada and the Department of Justice and . . . to try to contact Revenue Canada to see if it was possible to get some sort of settlement". Shortly after that meeting Katz, by way of a letter dated April 18, 1986, delivered to Landau copies of all relevant material. On April 21, 1986 Landau confirmed Touche Ross' retainer to act on behalf of Minuteman with respect to these matters.

I note at this point that approximately one month remained of the time Within which an application for an extension could be made. As to the events which followed Landau's letter of April 21, 1986 I specifically quote a portion of Katz' affidavit:

29. In early July, 1986, I phoned Steve Landau with respect to this matter. Mr. Landau then advised me that it was really a case for a tax attorney, and recommended an attorney by the name of Jay Sheppard to me. I phoned Mr. Sheppard and gave him a history of the case as I understood it. He advised me he would get photostats of the relevant material from Mr. Landau. I subsequently phoned Mr. Sheppard, after he had had an opportunity to review the material from Mr. Landau, at which time he advised me it might be too late for anything to be done on behalf of Minuteman. This was the first indication I had that Touche Ross & Company had not responded properly to Mr. Teichman’s letter and motion material as discussed above.

30. I then phoned Mr. Teichman's office, and on July 8, spoke to Mr. Teichman himself. He confirmed to me that the one year period to apply to the Tax Court of Canada with respect to the appeal had expired in the last week of May, 1986. I immediately phoned Mr. Sheppard back and asked him what we were to do now. It was arranged that there would be a meeting on July 17, 1986, at the offices of Touche Ross, which was the earliest Mr. Landau and Mr. Sheppard could make it.

31. On July 17, 1986, myself and Mr. Ryder came from New York to attend this meeting and to find out why nothing had been done, and find out what could be done. The meeting was held at the offices of Touche Ross & Company in Willowdale, though neither Mr. Landau nor anyone else from Touche Ross attended the meeting. Mr. Sheppard and a junior from his law firm were there, and the matter was discussed at some length. No explanation was given for the failure of Touche Ross to have the matter properly put before the Tax Court of Canada, nor its failure to act within the one year period.

32. I am advised by Mr. Ed Ryder, and verily believe, that although Mr. Landau did not attend the meeting, he spoke to Mr. Landau immediately prior to the meeting, at a time when I was not present. Mr. Ryder advises me and I verily believe that Mr. Landau told Mr. Ryder Mr. Landau had another meeting that day and could not attend, and although Mr. Ryder asked that he be there because of the importance of the matter to Minuteman, Mr. Landau refused to attend the meeting.

33. Immediately following that meeting Mr. Ryder and I decided to retain independant (sic) counsel on behalf of Minuteman with respect to this matter, as Mr. Sheppard advised he could not represent Minuteman if Minuteman brought any proceedings against Touche Ross or Steve Landau with respect to their failure to act within the one year period. Mr. Ryder and myself attended at the offices of Strathy, Archibald & Seagram, in Toronto, on the afternoon of July 17, 1986, and retained Mr. Philip W. Thompson, a solicitor in that firm, on behalf of Minuteman with respect to this matter.

It is common ground that no formal application for an order extending time was ever prepared or filed with the Court. To overcome this problem counsel for the applicant submitted that the letter of July 2,1985 prepared by Otto and signed on behalf of Minuteman by some person in Otto's office can be taken to be an application for an order extending time. Only the first two sentences of this letter are of relevance in the context of counsel's submissions. They read:

It is our understanding that the Notices of Objections which this Corporation filed relating to the tax years 1979, 1980 and 1981 have been disallowed. We wish to appeal this decision at this time. [Emphasis added.]

The letter then sets out the grounds upon which Minuteman took exception to the Minister’s assessments and concludes with the following words:

As such we formally wish to appeal the disallowance of the Notices of Objection previously filed.

Should you have any further questions please contact the writer.

[Emphasis added.]

This letter is dated approximately five weeks after the expiry of the 90-day period within which an appeal may be instituted but is well within the one- year period within which an application for an order extending the time for appealing may be made.

It is Minuteman's position that this document is essentially ambiguous. Counsel argued that it cannot clearly be said to be a notice of appeal nor can it clearly be said that it is an application for an order extending time. Minuteman contends that, and I quote its counsel:

It appears to have elements of both. Minuteman acknowledges that it refers to the objections which makes it look like a Notice of Appeal. Clearly the document sets out the factual background and the grounds for appeal, much like a Notice of Appeal does. But, there are elements of it which are not really a Notice of Appeal, starting with the first two sentences. The second sentence says: "We wish to appeal this decision at this time.” The same language is set out in the last sentence of the second to last paragraph: "As such we formally wish to appeal the disallowance of the Notices of Objection previously filed.”

Normally when one does a Notice of Appeal one says "we are appealing”. The use of the word “wish” is ambiguous and it is unclear as to whether or not this was meant to be an application or meant to be an appeal. It is Minuteman’s position and submission that when the document is ambiguous, Minuteman is asserting it is an application, that the ambiguity should be interpreted in favour of Minuteman.

Mr. Thompson submitted that the language of the July 2, 1985 letter was very much like the language of a letter which was held to be an application made pursuant to section 167 of the Act in the case of Robert Douglas Batey v. M.N.R., [1986] 1 C.T.C. 2439; 86 D.T.C. 1294. In that case a taxpayer failed to file notices of objection within the 90 days. Just before the expiry of the one- year period the taxpayer sent a letter to the "Tax Review Court" [sic], which read as follows:

I am submitting copies of Amended Notice of Objections covering above years and we are appealing that you will review said documents and allow the file of objections to be opened and discussed further.

Judge Taylor, in commenting on that letter said:

It should first be noted that there is no such clearly identifiable “application”, but a letter dated June 11, 1985 was regarded by the appellant as filling that role.

Judge Taylor decided that the letter could constitute an application for an order extending time, stating:

This is one set of circumstances in which the Court finds it would be "just and equitable" (subsection 167(1)) to grant the Order extending the time required.

Counsel submits that there is great similarity between the letter in Batey and the letter in the case at bar. He contends that the only matter which was clearly stated by the taxpayer in both cases was that they wished to appeal. In each case the words chosen to express the taxpayer's intentions were, according to Mr. Thompson, ambiguous and no more than "a statement of intention without getting involved as to the technical and procedural language and requirements of the Act".

Relying upon Kramer et al. v. M.N.R., [1984] C.T.C. 2784; 84 D.T.C. 1709 and Robert Bourdon v. M.N.R., [1984] C.T.C. 2654; 84 D.T.C. 1411, Mr. Thompson submitted that section 167 of the Act gives this Court wide discretion to be exercised as it sees fit where the circumstances are "just and equitable". Although the exercise of such discretion is normally predicated on an application being properly brought before the Court counsel argued that the section brings the concept of "just and equitable” into play in analyzing whether there is an application before the Court at all.

Taking his argument one step further counsel submitted that there are a number of "just and equitable grounds" upon which this Court was entitled to treat the July 2, 1985 letter as an application for an order extending time inter alia: the respective prejudice to the parties and in particular the fact that there would be no prejudice whatsoever to the Minister; the fact that this taxpayer always had the intention to appeal from the reassessments; the fact that the taxpayer itself did everything it could in the circumstances to properly launch the appeals; the fact that there was evidence supporting Minuteman’s tax position which had not been seen by officials of the Department of National Revenue; and the fact that a denial would in effect penalize Minuteman for the patent and obvious negligence of his advisers.

With respect to the last ground counsel for Minuteman contended that on a number of occasions the courts have stated that where a time limit is missed solely due to the negligence of a taxpayer's professional adviser it is "just and equitable” to extend the time limit; Wayne Thody v. M.N.R., [1983] C.T.C. 2741; 83 D.T.C. 641; Robert Bourdon (supra); Milan Hrovat and M & H Doors Ltd. v. M.N.R., [1983] C.T.C. 2662; 83 D.T.C. 590.

Counsel concluded his submission by arguing that as a matter of public policy, tax matters ought to be, wherever possible, dealt with in the Tax Court of Canada rather than being a collateral issue in a negligence suit in another Court. Furthermore, he submitted that granting the application is less likely to impeach the integrity of the Canadian tax system than would strict adherence to limitation periods.

Notwithstanding counsel's very persuasive arguments I have concluded that the order sought by Minuteman cannot be granted. Before setting out my reasons I should make two comments. The material before me, and I repeat that it consists solely of the Katz affidavit untested by cross-examination, offers, at the very least, prima facie evidence of incompetence on the part of Minuteman's professional advisers. Although incompetence and negligence are factors which I can consider in determining whether the order sought by Minuteman ought to be granted, they remain matters which must perforce be determined at a different time in a different forum. Secondly, the cases cited on behalf of Minuteman are examples of the "just and equitable” rule being applied in cases where the applications were made within the time prescribed by statute, and while useful, they are factually distinguishable and must be considered with care.

The question in this case turns upon the meaning to be given to the letter of July 2, 1985. Mr. Thompson argued: “It (the letter) is close enough. It is ambiguous, so let us resolve the ambiguity in favour of the taxpayer and call it an application and get on with dealing with the tax merits of this matter in the right forum, being the Tax Court of Canada". To accept this submission would be to give the language used in the letter an unnatural construction. It would also require the Court to completely ignore the fact that the discussions which preceded the writing of the letter were specifically directed to the launching of an appeal. Although counsel argued that there was no real evidence before the Court as to what the intention of Minuteman or of Katz was at the time the July 2nd letter was prepared and that Katz really did not know or care what was going on, that argument does not accord with Katz' evidence, in particular paragraphs 14 and 15 of his affidavit.

The author, E. A. Driedger, in his text Construction of Statutes 2nd Ed. (1983) stated at page 87:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

Although directing his observations to statutes the comments are equally applicable to the case at bar. Whether the Court is interpreting a contract or deed or other instrument the cardinal principle is that each word must have assigned to it its plain ordinary meaning: Beard v. Moira Colliery Co., [1915] 1 Ch. 257; 84 LJ.Ch. 155. Therefore when parties chose certain words to express their meaning and to define their relationships, there is no excuse for distorting those words out of their ordinary plain meaning. Merrill Petroleums Limited and Cancoll Oil & Gas Company Limited v. Seaboard Oil Company et al. (1957), 22 W.W.R. 529.

As has often been stated no principle has ever been more universally or rigorously insisted upon than written instruments, if they are plain and unambiguous, must be construed according to the plain and unambiguous language of the instrument itself. I see no reason to depart from these principles in the present case. It would be most improper for me, in the circumstances of this case, to find an ambiguity where none exists. Since the letter is not, in my view, ambiguous it follows that no "circumstance" has been established such that it would be just and equitable to “call it an application” for the purposes of section 167 of the Act

The application of Minuteman is dismissed and the application by the Minister for an order quashing the purported appeals for taxation years ending February 28, 1979, June 30, 1979, June 30, 1980 is allowed.

Application dismissed.