Dubé v. R., [1999] 3 CTC 159, [1999] DTC 5218

Pinard J.:

This concerns two applications for judicial review which were heard together with the consent of the parties. The first, in docket T-1703-07, concerns the decision made on July 10, 1997 by the director of the Jonquière, Quebec, Tax Services Office (TSO), confirming the denial, recommended by a fairness committee, of the applicant’s request, made on or about June 25, 1997, to waive the penalties and interest assessed on him due to the late filing of his income tax returns for the 1990 to 1995 taxation years. The second, on docket T-668-98, concerns a similar decision made on July 30, 1997 by the director of the Sherbrooke, Quebec, TSO, confirming the denial, recommended by a fairness committee, of the applicant’s request, made on or about October 3, 1996, to waive the penalties and interest assessed on him due to the late filing of his personal income tax return for the 1989 taxation year.

Before me, counsel for the applicant stated that in both cases, the fundamental issue was whether the applicant had received the benefit of all of the procedural fairness required.

It is subsection 220(3.1) of the Income Tax Act (the Act) which gives the Minister of National Revenue the discretion to waive or cancel all or any portion of any penalty or interest payable by a taxpayer. This provision reads as follows:

220(3.1) The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to (5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest.

220(3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable ou une société de personnes en application de la présente loi, ou l’annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation.

To facilitate the exercise of this discretion, the Minister has established guidelines which are set out in Information Circular 93-2. Paragraph 10 of this Circular is particularly relevant:

10. The following factors will be considered when determining whether or not the Department will cancel or waive interest or penalties:

(a) whether or not the taxpayer or employer has history of compliance with tax obligations;

(b) whether or not the taxpayer or employer has knowingly allowed a balance to exist upon which arrears interest has accrued;

(c) whether or not the taxpayer or employer has exercised a reasonable amount of care and has not been negligent or careless in conducting their affairs under the self-assessment system;

(d) whether or not the taxpayer or employer has acted quickly to remedy any delay or omission.

10. Le Ministère tiendra compte des points suivants dans l’étude des demandes d’annulation des intérêts ou des pénalités ou de renonciation à ceux-ci:

a) si le contribuable ou l’employeur a respecté, par le passé, ses obligations fiscales:

b) si le contribuable ou l’employeur a, en connaissance de cause, laissé subsister un solde en souffrance qui a engendré des intéré sur arriérés;

c) si le contribuable ou l’employeur a fait des efforts raisonnables et s’il n’a pas fait preuve de négligence ni d’imprudence dans la conduite de ses affaires en vertu du régime d’autocotisation;

d) si le contribuable ou l’employeur a agi avec diligence pour remédier à tout r etard ou à toute omission.

On the subject of the exercise of a similar discretion, the Supreme Court of Canada stated the following in Maple Lodge Farms Limited v. Canada, [1982] 2 S.C.R. 2 (S.C.C.), at pages 7 and 8:

...It is, as well, a clearly-established rule that the courts should not interfere with the exercise of a discretion by a statutory authority merely because the court might have exercised the discretion in a different manner had it been charged with that responsibility. Where the statutory discretion has been exercised in good faith, and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere....

In my view, in the context of a request to cancel penalties and interest based on subsection 220(3.1) of the Act, nothing in either the Act or Information Circular 92-2 indicates that the Minister must allow the applicant to respond to his or her objections, that the Minister is required to make a decision or to form an opinion on the facts set out in the applicant’s request, that the Minister must provide the applicant with the opportunity to make oral representations, or that the Minister must give reasons for his or her decision. In my view, it is sufficient, save in exceptional cases, to simply allow the applicant to make written representations (see Barron v. Minister of National Revenue, 97 D.T.C. 5121 (Fed. C.A.), an unreported decision of the Federal Court of Appeal concerning the exercise of a similar discretion under subsection 152(4.2) of the Act).

In the instant case, the evidence on the record indicates that the applicant was given a full opportunity to make representations to each of the committee responsible for examining his requests addressed to the Jon- quière and Sherbrooke TSOs respectively. Moreover, the applicant’s first counsel was even given the opportunity, in both cases, to make additional representations. The applicant’s new counsel argued, however, that the applicant’s claims were not properly evaluated. In this regard, she has not convinced me either that the statutory discretion was not exercised in good faith or that reliance was placed on considerations irrelevant or extraneous to the statutory purpose. It is clear from the evidence on the record that in additional to the applicant’s written representations, each of the TSO directors considered the detailed recommendations of a fairness committee which in both cases had particular regard to the elements set out in paragraph 10 of Information Circular 92-2. It was perfectly appropriate for the fairness committees to consult as they did the information available in the applicant’s taxation file, in order to determine how he conducted himself with regard to his tax liabilities under the self-assessment system. This knowledge of the applicant’s taxation file did not in the least create the [TRANSLATION] “appearance of bias which tarnishes his fairness package” as alleged. In my view, an informed person, viewing the matter realistically and practically — and having thought the matter through — would not think that the decision-making bodies at issue were likely, whether consciously or unconsciously, to decide unfairly (see Committee for Justice & Liberty v. Canada (National Energy Board), [1978] 1 S.C.R. 369 (S.C.C.), at page 394).

As in my view the available evidence could reasonably allow the directors of the Jonquière and Sherbrooke TSOs to determine as they did, the intervention of this Court is not warranted. The two applications for judicial review are accordingly dismissed.

Application dismissed.