Date: 20010430
Docket: 2000-4624-IT-G
BETWEEN:
EDWARD LLOYD JONES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for order
Bonner, J.T.C.C.
[1]
The Respondent in this appeal from an assessment of Income Tax
for the 1988 taxation year has applied to quash the appeal on the
ground that the Appellant failed to serve a notice of objection
to the assessment under s. 165 of the Income Tax Act (the
"Act") and was therefore not
entitled to commence the appeal under s. 169 of the Act.
The Appellant responded to the application by claiming relief in
an Amended Response and Notice of Motion. He sought an order
quashing the assessment on the ground that it was founded on
evidence obtained in breach of his Charter rights.
[2]
On February 13, 1990, the Minister of National Revenue (the
"Minister") assessed tax for the Appellant's 1988
taxation year. On March 12, 1990, the Appellant met with his
lawyer, Peter Alexander Hart, who assisted the Appellant in
preparing a letter objecting to the assessment, requesting copies
of the documents relied on and, oddly enough, requesting the
names of the persons in Revenue Canada involved in preparing the
assessment. This letter was attached to and formed part of a
Notice of Objection in prescribed form. According to the
Appellant's affidavit sworn March 22, 2001[1], the Appellant mailed the
document by ordinary mail addressed to "Taxation Centre
Surrey" on or about March 12, 1990.
[3]
The version of s. 165 of the Act in effect at the time
contained clear and specific requirements regarding service of
Notices of Objection. S. 165 read in part:
"(1) A taxpayer who objects to an assessment under this Part
may, within 90 days from the day of mailing of the notice of
assessment, serve on the Minister a notice of objection in
duplicate in prescribed form setting out the reasons for the
objection and all relevant facts.
(2) A notice of objection under this section shall be served by
being sent by registered mail addressed to the Deputy Minister of
National Revenue for Taxation at Ottawa.
(3) Upon receipt of a notice of objection under this section, the
Minister shall,
(a) with all due dispatch reconsider the assessment and vacate,
confirm or vary the assessment or reassess, or
...
and he shall thereupon notify the taxpayer of his action by
registered mail.
...
(6) The Minister may accept a notice of objection under
this section notwithstanding that it was not served in duplicate
or in the manner required by subsection (2)."
[4]
The Minister did not take any of the steps described in
paragraph 165(3)(a). Further, he did not
"accept" the Notice of Objection under ss. 165(6).
Nothing in the material suggests that he was ever asked to do so
or purported to do so.
[5]
The Appellant commenced his appeal to this Court by Notice of
Appeal dated November 8, 2000. The Respondent's application
to quash is based on ss. 169(1) of the Act which
opens with the words:
"(1) Where a taxpayer has served notice of objection to
an assessment under section 165, the taxpayer may appeal to the
Tax Court of Canada to have the assessment vacated or varied
after either ..."
[6]
The Respondent's application is supported by the affidavit of
Roger V. Smith, an officer of the Canada Customs and
Revenue Agency, successor to Revenue Canada. The affidavit was
prepared in accordance with ss. 244(10) of the Act.
It states in part:
"b)
after careful examination and search of those records, I have
been unable to find that a Notice of Objection was received
within the time allowed pursuant to subsection 165(1) of the
Income Tax Act with respect to Mr. Jones' 1988
taxation year."
[7]
Mr. Smith was cross-examined on his affidavit. He confirmed that
at the relevant time it was the practice within Revenue Canada to
record all Notices of Objection in the Revenue Canada computer
upon receipt of the document. Mr. Smith testified that he
personally searched and found that there was no computer record
of the Notice of Objection which the Appellant said that he had
sent. Mr. Smith did more than make a routine search in the proper
place. The cross-examination revealed that, in addition to
searching the computerized record of notices of objection
received, Mr. Smith asked that a check be made in the Surrey
centre and at the special investigations unit[2]. The purpose of the check was to
determine whether the document mailed by the Appellant might have
found its way into files containing other documents pertaining to
the Appellant. Mr Smith was informed that the document could not
be found.
[8]
Counsel for the Appellant argued that Mr. Smith's evidence of
statements made to him by the persons who searched the Surrey
files and the special investigation files should be rejected as
hearsay. Further, he argued that an affidavit made under ss.
244(10) is, as the subsection provides, to be received as
evidence of the statements contained in it only in the absence of
proof to the contrary. For such proof to the contrary counsel
relied on the unchallenged evidence in the Appellant's
affidavit and in particular on the statement that the Notice of
Objection had been sent by ordinary mail addressed to
"Taxation Centre Surrey". He relied on ss. 248(7) of
the Act and argued that the Notice of Objection is deemed
to have been received on the day it was mailed.
[9]
Ss. 248(7) provides in part:
"(7) For the purposes of this Act,
(a)
anything (other than a remittance or payment described in
paragraph (b)) 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; and ..."
[10] I will
deal first with the sufficiency of the Smith affidavit. It
fulfils the requirements of ss. 244(10) of the Act. Mr.
Smith personally examined the "appropriate records",
that is to say, the computerized record of Notices of Objection
received by Revenue Canada and he was unable to find that any
Notice of Objection for the Appellant's 1988 taxation year
had been received within the time allowed. The force of the
affidavit is not diminished by Mr. Smith's request to others
to search in places where a Notice of Objection might possibly
have been mislaid. Even if I were to reject as hearsay the
portion of Smith's testimony which relates to the results of
the extra searches made by others the essential element of the
affidavit remains unimpaired.
[11] Ss.
248(7) does not assist the Appellant. At best for the Appellant
it operates to deem that the Notice of Objection which the
Appellant had mailed was received by a person at the Taxation
Centre Surrey. That deemed receipt does not constitute service of
the Notice of Objection under s. 165.
[12] Counsel
for the Appellant also argued that if a Notice of Objection is
sent then the taxpayer has done all that is required of him.
According to this argument, sending of the Notice of Objection is
all that counts. Receipt of the Notice of Objection is irrelevant
whether ss. 165(2) is complied with or not. Counsel relied on the
decision of the Federal Court of Appeal in the Queen v.
Schaffer[3].
That decision is of no assistance, at least to the Appellant. In
Schaffer the Court pointed out that a statutory provision
which requires that a Notice of Objection be made "within 90
days after the day the Notice of Assessment is sent" to the
taxpayer does not require the receipt by the taxpayer of the
Notice of Assessment to start the limitation period running.
[13] The
difficulty with the arguments advanced by counsel for the
Appellant is that they ignore the provisions of s. 165. Ss.
165(1) requires that the taxpayer serve the Notice of Objection
on the Minister and, in language of remarkable clarity, ss.
165(2) sets out how and on whom service is to be effected. I
cannot find that the Appellant "served" the Notice of
Objection under s. 165 when he not only failed to send it by
registered mail but also failed to direct it to the right person.
The fact of the failure to serve the Notice of Objection in the
manner required by ss. 165(2) is abundantly clear from the
Appellant's own affidavit. The ss. 244(10) deeming provision
does not operate to place the Notice of Objection which the
Appellant mailed to the Taxation Centre Surrey in the hands of
the Deputy Minister of National Revenue for Taxation at Ottawa.
Neither the language chosen by Parliament to express its will nor
the legislative intent underlying ss. 244(10) can support an
argument that totally ignores ss. 165(2). Although the Courts are
reluctant to quash appeals on procedural grounds this is a case
in which the Appellant has failed to fulfil the s. 169
condition precedent to a valid appeal.
[14] It
follows that judgment must issue quashing the appeal. Because the
appeal is invalid there is no proceeding in which the
Appellant's claim for an order quashing the assessment can be
entertained. The Respondent shall have her costs.
Signed at Ottawa, Canada, this 30th day of April 2001.
"Michael J. Bonner"
J.T.C.C.
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