Rip T.C.J.:
1 Alexander Stahl has applied for an order extending the time within which he may file with the Tax Court of Canada a Notice of Appeal in respect of a reassessment dated April 15, 1996 for the 1992 taxation year under subsection 227(10) of the Income Tax Act (“Act”).
2 Mr. Stahl was assessed for 1992 by the Minister of National Revenue (“Minister”) by Notice of Assessment dated July 6, 1994. He objected to the assessment on or about September 1, 1994 and the Minister issued a reassessment by notification dated April 15, 1996 pursuant to the Notice of Objection. Mr. Stahl did not file a Notice of Appeal with this Court but instead objected to the reassessment by a further Notice of Objection dated April 22, 1996. The Minister confirmed the reassessment by notification dated and mailed to Mr. Stahl on August 14, 1996 pursuant to the second Notice of Objection. Mr. Stahl did not file a Notice of Appeal with the Tax Court of Canada within 90 days following the date of mailing of the Notice of Confirmation of his reassessment. The ninetieh day was November 12, 1996.
3 Following receipt of the Notice of Confirmation dated August 14, 1996 Mr. Stahl met with his lawyer and accountant to discuss the matter, but because of the cost involved in hiring a lawyer he decided to handle his own appeal. However he wanted to be guided by his accountant. Unfortunately, he said, his accountant was overseas on business for a two-week period and when he was able to contact the accountant on November 13, he was already one day late. He said that he immediately completed a Notice of Appeal and mailed it on November 13 to the Court. He said he fully intended to comply with the deadline.
4 According to the Notice of Appeal attached to the application for extension of time within which to file a Notice of Appeal, Mr. Stahl managed real property for a non-resident of Canada and apparently paid an amount to the non-resident on account of rent. Rather than withholding tax from payments made to the non-resident in 1992, Mr. Stahl wished to take advantage of subsection 216(1) of the Act. But he was three days late in filing the undertakings described in subsection 216(4) of the Act in respect of the year. He filed the undertakings on July 3, 1993. Mr. Stahl stated he had medical problem throughout 1993 which prevented him from handling his business matters on a timely basis. Under the circumstances, he pleaded, the returns were filed within a reasonable time. In the alternative, he requested the Minister to extend the time for making a return in accordance with subsection 220(3) of the Act. Mr. Stahl also asked that he be allowed “to file as an active business for 1992 in spite of the previous request for the 216 election”.
5 The Respondent opposed the granting of the extension of time within which to file a Notice of Appeal for the following reasons:a. Mr. Stahl did not demonstrate that he was unable to act or to instruct another to act in his name within the time limit by the Act for appealing, as required by clause 167(5)(b)(i)(A) of the Act;
b. Mr. Stahl did not demonstrate that he had a bone fide intention to appeal within the time otherwise limited by the Act for so doing, as required by clause 167(5)(b)(i)(b) of the Act;
c. Mr. Stahl did not demonstrate on the basis of the reasons set out in his application and the circumstances of the case, it would be just and equitable to make an order extending the time, within the meaning of subparagraph 167(5)(b)(ii) of the Act; and
d. Mr. Stahl did not demonstrate that the application was made as soon as circumstances permitted, as required by subparagraph 167(5)(b)(ii) of the Act.
6 Mr. Stahl testified that when he first received a Notice of Confirmation he contacted his accountant to make sure he knew the Notice had been received. Mr. Stahl stated he made plans to “conduct research and formulate a response to the Notice”. In the meantime his accountant, Mr. Morgan, went abroad on business trip. There was a “mix up” in communication between the applicant and Mr. Morgan, the applicant suggested, as to who should call whom on Mr. Morgan's return to Canada. The witness said he eventually phoned Mr. Morgan's office and made an appointment to see him on November 13, 1996, which he believed was within the deadline required by the Act. He thought the period was three months, not 90 days. According to Mr. Stahl it had been difficult to get in touch with Mr. Morgan.
7 In cross-examination, Mr. Stahl acknowledged that he met Morgan together with his mother and a financial advisor in August 1996. In mid-September he discussed going to the library of the Canadian Tax Foundation to research the matters raised in the assessment. Mr. Morgan was away the last two weeks of October and when he returned to Canada he was involved with other matters. Mr. Stahl felt he required Morgan's assistance to pursue the matter.
8 Mr. Morgan testified as well. Mr. Morgan is a chartered accountant. Mr. Stahl became his client in about 1992 or 1993. According to Mr. Morgan, Mr. Stahl was a management consultant for various foreign investors and he asked Mr. Morgan to prepare statements and returns for two of his clients.
9 In April 1996 Mr. Stahl informed Mr. Morgan of his personal problems with Revenue Canada and Mr. Morgan invited himself to attend with Mr. Stahl at Revenue Canada to discuss the situation. Mr. Morgan was of the view that he “didn't feel Mr. Stahl gave [me] responsibility to do certain things”. Upon receiving the Notice of Confirmation he discussed various options with Mr. Stahl.
10 Mr. Morgan testified that apparently Mr. Stahl “late filed a non-resident tax return for 1992”. After discussions with Mr. Stahl, Mr. Morgan left matters with the applicant. Research was conducted at the Canadian Tax Foundation library in mid-September.
11 Mr. Morgan concluded it was not clear to him “if there was” an intention to appeal. He described Mr. Stahl as “fatalistic”. Mr. Morgan thought there were good grounds to appeal. Mr. Morgan, himself, did not count the number of days in the appeal period; he considered the applicant had three months to file a Notice of Appeal. Mr. Morgan acknowledged he met with Mr. Stahl on November 13, 1996 and prepared the Notice of Appeal.
12 In cross-examination Mr. Morgan acknowledged that Mr. Stahl was aware that it would be preferable to engage a lawyer but it would be costly and he has no money to do so. Mr. Morgan's research on the matter assessed revealed that there was no precedent that would be either of assistance or hindrance to Mr. Stahl. He appears to have relied on Revenue Canada's administrative policy to solve the applicant's problem.
13 Respondent's counsel argued that Mr. Stahl did not demonstrate within the time required to file a Notice of Appeal that he had formulated an intent to appeal and indeed, according to Mr. Morgan, the applicant had not formulated any intent to appeal. He was simply weighing his potential costs and risks. Mr. Stahl said he did have an intent to file within the 90 days and, in fact, was only one day late.
14 There have been other applications in which a taxpayer sought an extension of time within which to file Notices of Appeal and Objection when the taxpayer was one day late: see, for example, Paletta v. Minister of National Revenue (1977), 77 D.T.C. 203 (T.R.B.); Gault Estate v. Minister of National Revenue (1977), 78 D.T.C. 1057 (T.R.B.)and Caouette v. Minister of National Revenue (1984), 84 D.T.C. 1413 (T.C.C.). In Paletta Mr. Taylor, as he then was, dismissed an appeal that was filed on the ninety first day; the appellant believed he had three months in which to file. In Gault, Chairman Cardin, as he was then, allowed an application for extension of time within which to file a Notice of Objection when the applicant was a day late, although he had “heard better reasons why there have been delays in filing Notices of Objection than the one [he had] heard [that] morning”. Executors for the deceased stated that there had been human frailties which could be considered as unusual circumstances. Chairman Cardin stated that it would not be equitable to deprive the taxpayer of his right to have the Tax Review Board deal with the important issue before it only because the Notice of Objection had been filed one day late.
15 The applicants in Caouette, applied for an extension of time within which to appeal. The applicants stated that the 90 day period was a very busy time for them and they had delivered their Notices of Appeal on the 11th day of February 1983, the ninety first day following the Notice of Reassessment Despite the late filing, Judge Brulé allowed the application since the applicants applied immediately to rectify any deficiency in the timing of their Notices.
16 In Pennington v. Minister of National Revenue (1987), 87 D.T.C. 5107 (Fed. C.A.)the Federal Court of Appeal stated that the Act required a taxpayer to make an application as early as, under particular circumstances, one could reasonably be expected to get an application ready and present it and overruled this Court's decision to allow the taxpayer to file a Notice of Objection more than 90 days after the Notice of Assessment was mailed to him. In that case the applicant made his application to the Tax Court approximately nine months after he was advised to make his application “as soon as possible and not later than one year from the 90 day time limit” set out in the Act.
17 On first blush, it appears the applications should be refused. Mr. Stahl has an unfortunate habit of filing documents late. It was due to his lateness in filing the undertaking that precipitated the reassemment, and then he was late in filing the Notice of Appeal. During much of the 90 day period following the second Notice of Confirmation Mr. Stahl could not make up his mind whether to file an appeal or not. Eventually he purported to do so. There are, however, special circumstances in this application which permit me to allow the applicant's application for an extension of time within which to file his Notice of Appeal to this Court. He made his appointment with Mr. Morgan to prepare the Notice of Appeal within the 90 day period, with the intention, finally, of appealing. Consequently the applicant had the intention to file a Notice of Appeal within the 90 day period. Secondly, it is my understanding that when a taxpayer files a Notice of Appeal late, it is practice of this Court's administration to inform the taxpayer of the lateness and advise him or her of rights under the Act to file an application for an extension of time. In ordinary circumstances a taxpayer would probably receive such an advice from the Court about a week after the Notice of Appeal had been filed late. In the applicant's case this would be in late November 1996. The applicant filed his application for extension of time on January 17, 1997, not inordinately late, bearing in mind the time of the year, and in my view it is reasonable to conclude the applicant filed his application to Court as soon as circumstances permitted.
18 I will order that the time within which the applicant may file a Notice of Appeal from an assessment for the 1992 taxation year be extended to a period of 30 days from this date of the order.
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