Jones v. Canada (Minister of National Revenue), 2004 DTC 6185, 2004 FC 382

                                                                                                                               Date: 20040315

                                                                                                                            Docket: T-556-02

                                                                                                                    Citation: 2004 FC 382

Ottawa, Ontario, this 15^th day of March, 2004

PRESENT: THE HONOURABLE MADAM JUSTICE SNIDER

BETWEEN:

                                                          EDWARD L. JONES

                                                                                                                                          Applicant

                                                                        - and -

                                       MINISTER OF NATIONAL REVENUE

                                                                                                                                      Respondent

                                       REASONS FOR ORDER AND ORDER

SNIDER J.

[1]                 Edward L. Jones, the Applicant, disagrees with his income tax assessment for the year 1988. The dispute that is the subject of this judicial review began with a Notice of Assessment dated February 13, 1990. By letter dated April 2, 2002, Mr. Jones wrote to the Chief of Appeals of Canada Customs and Revenue Agency ("CCRA") requesting that the Minister of National Revenue (the "Minister") exercise his discretion under subsection 165(6) of the Income Tax Act, R.S., 1952, c. 148, s. 1. (the "Act") to accept Mr. Jones' notice of objection, that he claims was mailed on March 12 or 13, 1990 to the Department of National Revenue. By letter dated May 1, 2003, Ms. Janice Dulk, a CCRA officer, advised Mr. Jones that the Minister could not exercise her discretion because "she did not receive a Notice of Objection for [Mr. Jones'] 1988 taxation year until 2001". Mr. Jones seeks judicial review of that decision.

Issues

[2]        The Applicant raises the following issues:

1.          Did the Minister err by refusing to exercise her discretion under subsection 165(6) of the Act in favour of the Applicant?

2.          Can the Minister exercise her discretion under subsection 165(6) where the Notice of Objection was mailed prior to the expiry of the statutory time limit but was not received until after the expiry of this limit?

[3]         This is really one issue, which can be stated as follows:

1.          Did the Minister err in law by concluding that she was unable to consider exercising her discretion under subsection 165(6) of the Act with respect to the Applicant's Notice of Objection?

Background

[4]         By letter dated April 2, 2002, the Applicant's solicitor wrote to the Chief of Appeals, C.C.R.A. Vancouver, and requested that the Minister exercise her discretion under subsection 165(6) of the Act and accept the Applicant's Notice of Objection even though it had not been served in the manner required by subsection 165(2) of the Act.

[5]         The Applicant's request was assigned to Janice Dulk for her review and recommendation. Ms. Dulk summarized the following facts in her affidavit:

a)          the Applicant was assessed in respect of his 1988 taxation year on February 13, 1990;

b)          the Applicant claims that a Notice of Objection was prepared and dated March 12, 1990;

c)          the Minister does not accept that a Notice of Objection was mailed as claimed by the Applicant;

d)          the Minister has no record of receiving a Notice of Objection from the Applicant in respect of his 1988 taxation year;

e)          the first time the Minister received a copy of a Notice of Objection in respect of the Applicant's 1988 taxation year was in 2001;

f)           at some time after May 14, 1990, the Applicant filed a Notice of Appeal to the Tax Court of Canada in respect of the assessment of his 1988 taxation year; and

g)          the Tax Court of Canada, in its decision dated April 30, 2001, determined that the Applicant had not served a Notice of Objection in the manner required by s. 165 of the Act.

[6]         Ms. Dulk, upon reviewing the Applicant's file, learned that Roger Smith, Manager C.C.R.A. Litigation Section, informed the Tax Court of Canada that, to the best of his knowledge, no Notice of Objection in respect of the Applicant's 1988 taxation year was received by the Minister prior to March 28, 2001. Ms. Dulk considered this to be evidence that no Notice of Objection was received by the Minister within the time limit stipulated in subsection 165(1) of the Act. She concluded that the Minister did not have the jurisdiction to consider accepting the Applicant's Notice of Objection under subsection 165(6) of the Act. In her report, Ms. Dulk further concluded that, even if the Notice of Objection was mailed by the Applicant, the deemed receipt provision under subsection 248(7)(a) of the Act is rebutted by the Minister's evidence that no Notice of Objection was received within the time limit provided by subsection 165(1) of the Act.

Analysis

What are the applicable statutory provisions and the nature of the issues?

[7]         At the relevant time, when Mr. Jones alleges that his Notice of Objection was mailed, subsection 165(1) of the Act stated:

[8]         This provision requires that if a taxpayer wishes to object to an assessment, the objection must be served on the Minister within 90 days from the day that the notice of assessment was mailed.

[9]         Subsection 165(2) of the Act, as it then was, required that the notice of objection was to be served "by being sent by registered mail".

[10]      In his affidavit, Mr. Jones deposes that, on March 12, 1990, he sent a Notice of Objection to "Taxation Office Surrey" in respect of the 1988 taxation year through ordinary mail. In his letter to the Minister on April 2, 2002, he requested that the Minister exercise his discretion under subsection 165(6) of the Act, and accept this Notice of Objection, notwithstanding that he failed to comply with the requirements in subsection 165(2).

[11]      Subsection 165(6) of the Act, applicable at the time of this application, reads:

[12]       Thus, while the Minister may accept a notice of objection that does not comply with the requirements set out in subsection 165(2) of the Act, namely, service by registered mail to the Deputy Minister, subsection 165(6) is silent with respect to subsection 165(1). It can be assumed, therefore, that the condition contained in subsection 165(1) is mandatory and the Minister has no discretion under subsection 165(6) to waive it. Put another way, service within 90 days must occur before the Minister can consider accepting the Applicant's Notice of Objection under subsection 165(6) of the Act. Therefore, the issue in this proceeding is whether the Minister erred in law in her determination that she did not have the jurisdiction to consider exercising her discretion under subsection 165(6).

[13]       To answer this question, this Court must determine whether the Applicant satisfied the requirement set out in subsection 165(1) of the Act. If the requirement in this provision was met, then the Minister erred in her determination that the discretion granted to her under subsection 165(6) was not applicable in this case. If not, then the Minister correctly refused to consider accepting the Applicant's Notice of Objection. This is a question of law and I agree with the Respondent that the standard of review is correctness.

Does the deeming provision in subsection 248(7)(a) of the Act assist Mr. Jones?

[14]      The Applicant submits that the requirement of service within 90 days under subsection 165(1) of the Act was met for the following reasons:

·           subsection 248(7)(a) of the Act creates a non-rebuttable presumption that anything sent by mail shall be deemed to have been received by the person to whom it was sent on the day it was mailed (Schafer v. R., 2000 DTC 6542 (F.C.A.));

·           since the Applicant mailed his Notice of Objection to the Minister on March 12, 1990, less than a month after receiving a notice of assessment, the 90 day service requirement in subsection 165(1) of the Act was satisfied.

[15]       I disagree. Subsection 248(7)(a) of the Act states:

[16]      In my view, the deeming provision has no applicability to this case. The statutory provision in issue specifically uses the word "serve" which must be intended to have a different meaning than "sent", as discussed below. While subsection 248(7)(a) would have applicability in instances where no reference is made to the receipt, it cannot override a specific provision that a notice must be served by registered mail. Further, there is a significant difference between ordinary mail and registered mail, in that registered mail allows the sender to confirm receipt of his or her correspondence. In this case, had Mr. Jones sent the alleged letter as set out in the Act, this motion would be unnecessary.

[17]      Mr. Jones points to David M. Sherman, "Income Tax Act: Department of Finance, Technical Notes", 12^th ed. (Carswell: Toronto, October 30, 2000) as evidence that the deeming provision applies in respect of correspondence sent by ordinary mail and not just first class mail or its equivalent. Upon reading the technical notes relied upon by Mr. Jones, I do not think that they support his assertion. Even if they do, they do not have the force of law.

What does the word "serve" mean and who has the burden or proving service or lack thereof?

[18]      Having determined that the deeming provision does not assist Mr. Jones, the question becomes whether Mr. Jones nevertheless satisfied the requirement in subsection 165(1) of the Act. That is, what does the word "serve" mean and who has the burden of proving service or lack thereof?

[19]      The Respondent, in her submissions, canvassed the legal meanings given to the word "service". In her view, "service" means more than merely receiving something. This higher standard can be described as delivery with or plus official notice of some kind

(Federal Court Rules, 1998, Rule 147; Vaters (Next friend of) v. Calgary Cab Co., [2001] A.J. No. 810 at para. 3 (A.C.A.) (QL), aff'g [2000] A.J. No. 426 (Alta. Q.B.) (QL); Canada Trust Co. v. Kakar Properties Ltd. (1983), 32 C.P.C. 280 at 289-290 (Ont. S.C.); Bradbrooke v. Ross (1989), 35 C.P.C. (2d) 231 at 233 (Sask. Q.B.)). I accept that the word "serve" includes the receipt of a document, or at the very least, awareness of the existence of a document. In the present case, it is the Minister who had to receive or be aware of the Notice of Objection. Who bears the burden of proving or disproving service?

[20]      In Aztec Industries Inc. v. R., 1995 DTC 5235 (F.C.A.), the Federal Court of Appeal determined that the presumption of deemed receipt in subsection 248(7) of the Act was rebutted by the Minister's failure to prove that he sent a notice of assessment to a taxpayer. The taxpayer applied for an extension of time to file a notice of objection in respect of a particular taxation year and argued that, not only had she not received a notice of assessment, but further, that the Minister had never issued the notice. The Court held that, where a taxpayer alleges this, the burden of proving the existence of the notice and the date of its mailing falls on the Minister. Since the facts are peculiarly within his knowledge and he controls the means of adducing them, he had the burden of proving that he mailed the notice. In my view, the party who seeks to rely on a provision and who is in a position to adduce facts in support of such reliance, ought to bear the burden of proving that such reliance is warranted. The Minister does not believe that Mr. Jones mailed his Notice of Objection in 1990 or that she was served with it. Can Mr. Jones prove that he did mail it and the Minister was served? I do not think so. All that Mr. Jones presents to this Court is his Notice of Objection to his 1988 assessment, which is addressed to "Taxation Centre Surrey". This letter is dated March 12, 1990, which is within the 90 day limitation period. However, the Applicant has provided no proof that the Notice of Allegation was ever mailed or that the Minister was served with it.

[21]      If I am wrong and, in fact, the Minister bears the burden of proving that she did not receive the Notice of Objection, then I believe that the burden has been discharged. In this proceeding, Ms. Dulk relies in her affidavit on the search of the Applicant's file that was conducted by Roger Smith, also an employee of C.C.R.A. Mr. Smith, in relation to another proceeding concerning the same parties and the same Notice of Objection (Jones v. Canada, [2001] 3 C.T.C. 2090, aff'd [2002] F.C.J. No. 345 (F.C.A.) (QL)), leave to the Supreme Court of Canada denied, January 9, 2003), swore an affidavit upon which he was cross-examined. In it, he stated that, after a careful examination of the Minister's records, he was unable to find that the Applicant's Notice of Objection was received by CCRA. In Jones,supra, Mr. Smith's affidavit was held to fulfil the evidence requirements in subsection 244(10) of the Act. In my view, the Minister has satisfied this Court that she was not served with Mr. Jones' Notice of Objection in respect of the 1988 taxation year.

[22]      For these reasons, I think that the Minister correctly decided that she did not have the jurisdiction to consider accepting Mr. Jones' Notice of Objection under subsection 165(6) of the Act.

Do the other arguments of Mr. Jones have merit?

[23]      I will now briefly address the remaining arguments of the Applicant. They can be summarized as follows:

1.         The Minister's decision breaches subsection 1(a) and subsection 2(e) of the Canadian Bill of Rights, 1960, c. 44 (the "Bill of Rights"), as it amounts to a denial of due process (Authorson v. Canada (Attorney General) (2003), 227 D.L.R. (4^th) 385 (S.C.C.)).

2.         Since the 1988 assessment is based on information that was held in a criminal proceeding to have been obtained in breach of s. 7 and s. 11(d) of the Charter of Rights and Freedoms (the "Charter"), the Minister's reliance on this information is evidence of a reasonable apprehension of bias ([1991] S.C.R. 869">Pearlman v. Manitoba Law Society Judicial Committee, [1991] S.C.R. 869). This Charter breach warrants quashing the assessment (R. v. O'Neill Motors Limited,1998 DTC 6424 (F.C.A.)).

3.         Mr. Jones was entitled to know the case against him and did not (Singh v. Canada (Minister of Employment and Immigration), [1985] 1 S.C.R. 177). In the absence of reasons, it can be assumed that the Minister acted upon illegally obtained evidence.

4.         The Minister has exercised its discretion in similar cases and, therefore, its failure to do so in this case is evidence of the arbitrary exercise of discretion (Blankson v. R., [2001] 2 C.T.C. 2253).

[24]      I find none of these arguments convincing.

[25]      Subsection 1(a) of the Bill of Rights recognizes that individuals have a right not to be deprived of property except by due process of law. Subsection 2(e) of the Bill of Rights states that no law of Canada will be interpreted as depriving a person of a right to a fair hearing in accordance with the principles of fundamental justice. In Authorson, supra the Supreme Court of Canada held that the Bill of Rights does not protect against Parliament's right to expropriate property by passing legislation that uses clear and unambiguous language.

[26]      There is no need to consider whether such language exists in the Act because Mr. Jones has failed to provide any evidence that the Minister expropriated property that belonged to him. Without a richer factual context, a discussion of appropriation in accordance with due process is academic. All that is known is that Mr. Jones objects to the Minister's 1988 assessment. The validity of this objection is not an issue that is before this Court. Further, s. 165 of the Act does provide Mr. Jones with a process whereby he can object to an allegedly unfair assessment. He simply did not satisfy the requirements in this provision. This failure on his part does not mean that no process was in place. For this reason, I conclude that the Minister's decision does not offend subsection 1(a) or subsection 2(e) of the Bill of Rights.

[27]      Unlike in Singh, supra, Mr. Jones did know the case against him. The Minister informed Mr. Jones of her legal opinion, in a letter dated May 1, 2003: "It is our position that subsection 165(6) does not permit the Minister to exercise her discretion to accept a Notice of Objection that is received beyond the statutory time limits". Further, Ms. Dulk's affidavit provides Mr. Jones with ample information that the Minister relies upon in support of its legal position.

[28]      With respect to impartiality, the test for determining whether a reasonable apprehension of bias exists is the following:

Would a reasonably well-informed person consider that the interest might have an influence on the exercise of the official's public duty? ([1991] S.C.R. 869">Pearlman, supra at para. 34, citing Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170 at 1198).

[29]      As evidenced by this test, Mr. Jones is required to point to a specific official and a specific interest. This was not done. In the absence of such evidence, it must be presumed that a decision-maker acted impartially (Zundel v. Citron (2000), 189 D.L.R. (4^th) 131 at 242 and 245 (F.C.A.), leave to appeal to the Supreme Court of Canada refused, December 14, 2000).

[30]      The present case can also be distinguished from O'Neill Motors Limited, supra. In that case, which was an appeal of a Tax Court decision, the Federal Court of Appeal held that no reversible error had been made by the trial judge's decision to vacate certain reassessments of the applicant in certain years where the information upon which the reassessments were based were obtained in violation of s. 8 of the Charter. This Court is not reviewing Mr. Jones' assessment for the 1988 taxation year. This is a judicial review of the Minister's decision that a procedural bar prevented her from exercising her discretion.

[31]      Finally, Mr. Jones has not pointed to one case where the Minister, in spite of a taxpayer's failure to comply with the requirements in subsection 165(1) of the Act, accepted a notice of objection under subsection 165(6) of the Act. In Blankson, supra, the Tax Court of Canada held that the Applicant had complied with the requirements in s. 165 of the Act. In the absence of any evidence, Mr. Jones' argument that the Minister arbitrarily invokes its discretion under subsection 165(6) of the Act is nothing more than a bald assertion.

Conclusion

[32]      For these reasons, I would dismiss the application, with costs.

                                                                      ORDER

1)         This Court orders that the application is dismissed with costs.

"Judith A. Snider"

Judge

                                                           FEDERAL COURT

                       NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                              T-556-02

STYLE OF CAUSE:                           EDWARD L. JONES v.

MINISTER OF NATIONAL REVENUE

PLACE OF HEARING:                     Vancouver, British Columbia.

DATE OF HEARING:                       March 3, 2004

REASONS FOR ORDER

AND ORDER BY:                              The Honourable Madam Justice Snider

DATED:                                                March 15, 2004

APPEARANCES:

Mr. Michael McMahon                                                    FOR THE APPLICANT

Mr. Eric Douglas                                                               FOR THE RESPONDENT

SOLICITORS OF RECORD:

Michael McMahon Law Corp.                           FOR THE APPLICANT

Vancouver, British Columbia

MORRIS ROSENBERG                                                 FOR THE RESPONDENT

Deputy Attorney General of Canada