Docket: T-812-15
Citation:
2016 FC 275
Toronto, Ontario, March 2, 2016
PRESENT: The
Honourable Mr. Justice Diner
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BETWEEN:
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R & S
INDUSTRIES INC
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Applicant
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and
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MINISTER OF
NATIONAL REVENUE
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Respondent
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JUDGMENT AND REASONS
I.
Overview
[1]
This is a judicial review, pursuant to section
18.1 of the Federal Courts Act, RSC 1985, c F-7 [the FC Act], of a
decision [the Decision] by Ms. Jeannie Mah of the Audit Division of the Canada
Revenue Agency [the CRA]. In the Decision, Ms. Mah rejected an amended T2059
election pursuant to subsections 96(5.1) and 97(2) of the Income Tax Act,
RSC, 1985, c 1 (5th Supp) [the Act].
[2]
The Applicant, R&S Industries [R&S] argues
that the Decision was both procedurally unfair and unreasonable. The Respondent
rejects both arguments, further suggesting that this application should be
dismissed for late filing and for failure to meet the Court’s criteria for an
extension of time. For reasons that follow, I agree with the Respondent.
II.
Background
[3]
The Applicant is an Alberta corporation with its
principal place of business in Edmonton. It is controlled by Roger Stokowski. On
September 1, 2005, the Applicant transferred its assets, including goodwill, to
Big Eagle Limited Partnership [BELP] through an Acquisition and Investment Agreement
[the Transfer Agreement]. BELP, like R&S, was controlled by Roger Stokowski
at the time. The Applicant states that it transferred the business to a
partnership structure to grow that business and to attract new investors. Article
4.1(a) of the Transfer Agreement states that the Applicant and BELP shall:
Jointly elect and file in the prescribed
form and within the prescribed time period under subsection 97(2) of the [Act]
that the elected amounts that shall be deemed to be R&S’ proceeds of
disposition and [BELP’s] cost of each property (in respect of which such
election is made) at the minimum agreed amounts under the [Act], which shall be
the basis on which the Purchase Price is allocated to the Assets, provided
however that in respect of the Goodwill, the elected amount shall, unless
otherwise agreed, be equal to $2,502,600. (Applicant’s
Record [AR], p 42)
[4]
Subsection 97(2) of the Act permits parties to a
transfer to a partnership to rollover the tax consequences of that transfer to
a future date by jointly electing that, for income tax purposes, a transferred
asset was sold for an amount other than the actual consideration exchanged. The
amount the parties elect, which is established per asset, rather than in the
aggregate, is the “agreed amount”, and the Act
contains rules on what this amount may be. Taxpayers make this election by
filing a T2059 (Election on Disposition of Property) form with the Respondent.
[5]
As reproduced above, article 4.1(a) of the
Transfer Agreement states that the agreed amount for each asset would be the
minimum amount permitted by the Act, except for goodwill, which would be
$2,502,600, unless otherwise agreed. R&S claims that this figure was chosen
because the parties to the Transfer Agreement did not know the precise extent
of the assets and debts it was transferring to BELP. In other words, according
to R&S, the goodwill amount of $2,502,600 reflected an estimate of the
amount by which non-share consideration exceeded the costs of the assets
transferred.
[6]
R&S also asserts that the intention of the
parties was always to adjust the agreed amount for the goodwill if it had been
found to be inaccurately valued when the Transfer Agreement was signed because
full information was not available at that time.
[7]
R&S and BELP made a joint election per the
terms of the Transfer Agreement by filing a T2059 [the Original T2059]. R&S
now asserts, however, that the Original T2059 contained errors. Specifically,
the non-share consideration allocated to the assets being transferred – other
than goodwill – was in excess of the agreed amounts (i.e. the minimum amount
permitted under the Act for each asset), contrary to the intention of the
parties as expressed in article 4.1(a).
[8]
On January 19, 2010, the Respondent reassessed R&S’s
2006 taxation year, the year that transfer took place. R&S’s tax payable
was increased to $490,270 from $5,120. R&S suggests that the majority of
this increase was based on the erroneous figures in the Original T2059, though
the Respondent claims that only “$1,982,126 pertained to
correcting the tax consequences of the agreed amounts submitted with the
[Original] T2059 Election” (Respondent’s Record, [RR], p 5). A
subsequent reassessment by the Respondent dated August 17, 2010 allowed the
Applicant to carry back $2,027,605 in losses from its 2009 taxation year and
reduce its tax payable accordingly.
[9]
On November 12, 2010, R&S filed a Notice of
Objection to the Respondent’s reassessment on the basis that the amounts given
in the Original T2059 were mistakenly identified (RR, p 57).
[10]
On March 12, 2012, Lori Tymchuk, Appeals Officer
with the CRA Appeal Division, was appointed to review the Applicant’s objection
(RR, p 6).
[11]
On January 17, 2013, Ms. Tymchuk explained that
she would not have any basis to consider changing the assessment on appeal
without a properly filed subsection 97(2) amendment, namely through the filing
of an amended T2059 [the New T2059] (AR, p 87).
[12]
R&S thereafter submitted a New T2059,
pursuant to subsection 96(5.1) of the Act, which allows a subsection 97(2) rollover
election to be amended where “in the opinion of the
Minister, the circumstances of a case are such that it would be just and
equitable”. According to R&S, the New T2059 clarified that (a) the
non-share consideration for every asset being transferred (except for goodwill)
was equal to the amount stated for that asset in the Transfer Agreement and (b)
that the agreed amount for the transfer of the goodwill was equal to the
remainder of the total non-share consideration.
[13]
Ms. Tymchuk, who lacked the authority to approve
the amended rollover election, forwarded the amended election to Jeannie Mah,
Team Leader in the Audit Division at the CRA, who had the delegated authority
to make a discretionary ruling under subsection 96(5.1) of the Act pursuant to the
CRA’s “just and equitable” authority. In a June
10, 2013 letter, Ms. Mah informed R&S that “[d]ue
to the Delegation of Authority, the amended election has been forwarded to the
Audit Division for review and consideration of acceptance” (AR, p 89).
[14]
On July 18, 2013, the New T2059 submissions were
sent to Kathy Katzenback, a Senior Income Tax Auditor in CRA’s Audit Division,
for review. Ms. Katzenback subsequently requested further information from the
Applicant on a $572,146
discrepancy between the total non-share consideration she identified in the
documentation attached to the Notice of Objection ($39,931,772) and the total
non-share consideration listed on the New T2059 ($39,359,626) (RR, p 193). Ms.
Katzenback made several further requests of the Applicant to provide written
back-up for the amended election, but no information could be located or
provided: the Applicant states that it had difficulty documenting the
discrepancy because of staff turnover at BELP.
[15]
It also appears from the record that by this
time Roger Stokowski had lost any controlling interest in BELP in an
acrimonious buy-out (RR, p 334).
[16]
On October 4, 2013, R&S told the Respondent
that it would further amend the New T2059 and accept the higher goodwill figure
of $572,146 that had been identified by Ms. Katzenback, based on one possible
figure postulated by CRA staff. This new goodwill figure had the effect of
increasing the amount for the transferred goodwill to $3,054,868.
[17]
Ms. Katzenback, after her review of the New
T2059 submissions, decided to refuse the amendment. She then submitted her
analysis and her recommendations to Ms. Mah.
[18]
On January 31, 2014, Ms. Mah sent her Decision
to R&S denying the submission of the New T0259. In her Decision, which is
the subject of this judicial review, Ms. Mah found that “there does not appear to be any provision in the Agreement
[between R&S and BELP] that would require the reallocations provided”
but that instead “the reallocations result in the
agreed amount for goodwill being overstated and in contravention of the
specific terms of the Agreement”. She concluded that, “pursuant to the power delegated to me under subsection
220(2.01) of the Income Tax Act and in accordance with the facts presented,
your request to amend the original T2059 filed under subsection 97(2) has been
denied” (AR, p 14).
[19]
Ms. Mah did not instruct the Applicant anywhere
in her Decision as to how R&S might challenge it. R&S contends that it
was not aware that this was a decision pursuant to the subsection 96(5) “just and equitable” provisions of the Act, the
redress for which is a judicial review application to this Court. It further
contends that as a result CRA’s failure to make it clear that this was indeed a
final decision on the amended election, it was thus unaware that the 30 day timeline
for filing of a judicial review under subsection 18.1(2) of the FC Act had
begun to run as of its receipt date.
[20]
R&S’s counsel wrote two subsequent letters
to the Audit Division asking to discuss the rejection contained in the
Decision, stating that the Applicant believed an agreement had been reached
with Ms. Tymchuk to accept the New T2059.
[21]
In response, Ms. Tymchuk sent a May 30, 2014 letter
to R&S stating that the CRA Audit Team Leader, Ms. Mah, had denied the New
T2059 submission, and that if R&S had an issue with that decision, it could
apply for judicial review under section 18.1 of the FC Act within “30 days of the date the decision was first received”
(AR, p 246). Ms. Tymchuk further stated that she would hold the objection “in abeyance should you wish to apply for a judicial review.
However, I will require a copy of the complete Form 301, Notice of Application
before June 20, 2014 to do so” (AR, p 246). Ms. Tymchuk stated that she
would otherwise proceed in evaluating the Applicant’s objection on the basis of
the Original T2059.
[22]
On August 8, 2014, Carla Schur-Ellison, Team
Leader of the CRA Appeals Division, wrote a further letter to the Applicant,
this time under the heading “Notice of Objection: Final
Decision”. The letter states that since the amended election had been
denied by Ms. Mah, the objection had been assessed on the basis of the Original
T2059, concluding that:
As we have verified that the auditor’s
adjustments correctly reflect the tax consequences… based on the elected
amounts outlined in Schedule “A” filed with the T2059 Election and the request
to amend the election was denied, our decision is to confirm the assessment. (AR,
p 109)
[23]
Ms. Schur-Ellison also noted that if the
Applicant disagreed with the decision to confirm the reassessment, the
Applicant could appeal to the Tax Court of Canada [the TCC]. If, however, the
Applicant disagreed with the decision to deny the New T2059, the correct
recourse “was to apply for judicial review of that
decision… within 30 days of the date the decision was first received”
(AR, p 110).
[24]
On November 6, 2014, R&S sent a Notice of
Appeal to the TCC in respect of the confirmation of the 2010 assessment. In it,
R&S states that the Respondent’s representatives “were
responsible for an atmosphere of confusion” and that it was never clear,
throughout the proceedings, that an exercise of ministerial discretion had
occurred (AR, p 116).
[25]
On April 16, 2015, the Respondent filed a reply
[the Reply] in the matter of the TCC appeal brought by the Applicant. In the Reply,
the Respondent states that the “Tax Court of Canada has
no jurisdiction to judicially review the Minister’s decision in this regard”
(AR, p 125). R&S argues in this judicial review, that this Reply marked the
first time that the “nature, background and reasons for
the Decision [to reject the amended T2059] were provided in full context”
(AR, p 311).
[26]
This judicial review was filed on May 19, 2015.
III.
The Decision
[27]
Ms. Mah, in her Decision of January 31, 2014, states
that she reviewed the New T2059, which “amended [the
Original T2059] by adjusting the non-share consideration and share
consideration allocated to each of the assets that were transferred to the
partnership”. Ms. Mah notes that while the adjustments were made in
accordance with counsel’s interpretation of article 4.1(a) of the Transfer
Agreement, a “standard clause in agreements in which a
taxpayer transfers property to a corporation or a partnership”, the
adjustments resulted in an increase of goodwill from the elected amount of
$2,502,600 to $3,054,868 (AR, pp 13-14).
[28]
Beyond the higher amount for goodwill, Ms. Mah
noted a second issue, which was that the number of partnership units in BELP
issued to the Applicant in the agreement, namely 20,499,334, differed from the
20,384,909 in the New T2059. She observed that the total value of these units originally
transferred was $102,496,670, while the total value of that figure in the New
T2059 was $101,924,524 – a decrease of $572,146, which equalled the discrepancy
identified by Ms. Katzenback (the difference between the total non-share
consideration identified in the Notice of Objection and the total non-share
consideration listed on the New T2059).
[29]
Ms. Mah concluded that “[t]
here does not appear to be any provision in the Agreement that would require
the reallocations provided… In fact the reallocations result in the Agreed
Amount for Goodwill being overstated and in contravention of the specific terms
of the Agreement which specifically states that the elected amount shall be
$2,502,600”. As a result, Ms. Mah denied the request to amend the
Original T2059.
IV.
Analysis
[30]
There were three issues raised by the Applicant
in this judicial review:
A.
Is the judicial review time-barred?
B.
Did the Respondent’s delegate fail to provide
the Applicant an adequate opportunity to make submissions prior to denying the
New T2059, and thereby denying its right to procedural fairness?
C.
Is the Decision reasonable?
[31]
In reviewing the Respondent’s actions for
procedural fairness, this Court should apply a correctness standard (Williams
v Canada (National Revenue), 2011 FC 766 at para 13; Yachimec v Canada
(National Revenue), 2010 FC 1333 at para 31). In a correctness review, “a reviewing court will not show deference to the decision
maker’s reasoning process”; instead, it must conduct its own analysis of
the question (Dunsmuir v New Brunswick, 2008 SCC 9 at para 50 [Dunsmuir]).
[32]
As for the substance of the decision, discretionary decisions of the CRA attract a
reasonableness standard (Coombs v
Canada (National Revenue), 2012 FC
1499 at para 14, Canada (Attorney General) v Abraham, 2012 FCA 266 at
para 32; Dingman v Canada (National Revenue), 2009 FC 395 at para
26). In a reasonableness review, this
Court should approach with deference and intervene only if the officer’s
assessment lacks “justification, transparency and
intelligibility” and falls outside “a range of
possible, acceptable outcomes defensible in respect of the facts and law”
(Dunsmuir at para 47).
A.
Was this judicial review brought out of time?
[33]
The Respondent argued preliminarily that this
judicial review should be denied because the application was not commenced on
time, that there is no court order extending the time to commence it, and there
is no reason for this Court to exercise its discretion to let it be heard, per
subsection 18.1(2) of the FC Act, which reads:
An application for judicial review in
respect of a decision or an order of a federal board, commission or other
tribunal shall be made within 30 days after the time the decision or order was
first communicated by the federal board, commission or other tribunal to the
office of the Deputy Attorney General of Canada or to the party directly
affected by it, or within any further time that a judge of the Federal Court
may fix or allow before or after the end of those 30 days.
[34]
The Applicant insists that the Decision was
never properly “communicated” until April 16,
2015 – the date the Reply was filed in the TCC proceedings – and thus that the
May 19, 2015 filling of this judicial review was within the 30 day window.
[35]
The requirement that the decision be “communicated” has been held by the Federal Court of
Appeal to signify “some positive action… on the part of
the decision-maker in order to communicate his decisions to the parties
directly affected” (Atlantic Coast
Scallop Fishermen's Association et al v Canada (Minister of Fisheries and
Oceans), (1995), 189 NR 220 at 222
(FCA)). The Federal Court of Appeal has further held that “[w]aiting for reasons is not an acceptable excuse for
failure to file an application in time” (Canada (Attorney General) v Trust
Business Systems, 2007 FCA 89 at para 27).
[36]
I find that the
Respondent’s first letter, sent on January 31, 2014, was sufficiently
communicative of the Decision for the Applicant to comply with the filing
requirements of subsection 18.1(2) of the FC Act. Ms. Mah conveyed the decision
that had been made, provided reasons, and expressed the fact that it was
exercised pursuant to a delegation of ministerial authority under subsection
220(2.01) of the Act.
[37]
CRA was under absolutely
no obligation to set out the available recourse, i.e., to commence a judicial
review in this Court. Even if it were so required, the two subsequent CRA
communications of May 30, 2014 from Ms. Tymchuk and August 8, 2014 letter from Ms. Schur-Ellison of the CRA both made it
entirely clear that section
18.1 of the FC Act applied and therefore a judicial review application
at the Federal Court was the proper forum to contest the Decision. Still, the
Applicant filed no application for judicial review until May19, 2015 – over 15
months after the Decision was first communicated and well past the 30 day period
prescribed by subsection 18.1(2) of the FC Act.
[38]
R&S argues that the
April 16, 2015 CRA Reply “was
the first time CRA’s decision in respect of the Submission was conveyed to the
Applicant in a discernable context clearly identifiable as an exercise of
ministerial discretion to which the Applicant could make this Application in
any meaningful way”
(AR, p 9).
[39]
I cannot accept this
contention. Ms. Mah’s January 31, 2014 letter was entirely clear in its
disposition of the re-election request. It could not be plainer. I further do
not accept the proposition that the Respondent has a duty to map out the
consequences of each decision, including how it can be challenged in Court. The
Applicant could not point me to any such authority. Furthermore, R&S could
not explain how the subsequent two letters from the CRA – where the review
route was plainly mapped out – were unclear. Indeed, Ms. Tymchuk, in her May
30, 2014 letter, offered to hold the objection process in abeyance if R&S
wished to proceed with the judicial review and provided a deadline by which
time she would need proof of said filing. R&S, however, chose not to act on
that offer.
[40]
The Respondent advised R&S of its Federal Court rights,
once again, in the Schur-Ellison letter of August 8,
2014 and, once again, no application ensued. R&S had counsel throughout. Had
there been an unrepresented party in a similar situation, the delay of some 16
months may have been easier to explain, but counsel even gave testimony in
cross-examination as to his knowledge of the difference between delegated
decisions and those decisions made in the assessment and appeal process (RR, pp
331-32).
(1)
Should an extension of time be granted?
[41]
Given the lengthy delay, I must now assess
whether this Court should exercise its discretion to extend the timeline. This
discretion is guided by a series of flexible principles, most recently
reformulated as four questions in Exeter v Canada (Attorney General),
2011 FCA 253 [Exeter] at para 4:
1. Does the moving party have a continuing intention to pursue
an application for judicial review?
2. Has the responding party suffered any prejudice as a result
of the moving party’s delay?
3. Has the moving party offered a reasonable explanation for
the delay?
4. Does the intended application for judicial review have any
prospect of success?
[42]
As noted in Apotex Inc v Canada (Health),
2012 FCA 322, these questions serve to guide this exercise of discretion, rather
than to bind it in any way. The question I must ultimately answer is “whether,
in the circumstances presented, to do justice between the parties calls for the
grant of the extension” (Grewal v
Minister of Employment and Immigration, [1985] 2 FC 263 [Grewal] at
272).
[43]
After some consideration, I find that I will not
exercise this discretion. R&S does not meet the Exeter principles for
the following reasons.
(a)
Continuing Intention to Pursue
[44]
The fifteen-month delay between the Decision and
the filing of the application for judicial review was punctuated by long
periods of silence. Most significantly, within this period, the Applicant never
acted when provided with explicit details about redress. It chose not to avail
itself of CRA’s May 2014 offer to hold the objection in abeyance. While R&S
made some inquiries and remained in contact at various points during the fifteen-month
period in question, it should have filed this judicial review if not within 30
days from the January 31, 2014 letter, then at least within 30 days of Ms.
Tymchuk’s May 30, 2014 letter. Failing to file it after the August 8, 2014
letter from Ms. Schur-Ellison was the third strike, in my view. It is quite
possible, as the Respondent suggests, that this application was only filed in
May 2015 because that was when the Applicant realized that it might not get the
remedy it sought from the Tax Court.
(b)
Prejudice to the Responding Party
[45]
The Respondent has suffered prejudice on account
of the delay. CRA decisions, like many other decisions by government entities,
must retain a degree of finality and certainty (Canada (Attorney General) v
Larkman, 2012 FCA 204 at para 87). Those two principles would be undermined
were I to grant the requested extension. The Applicant has argued that, since
litigation before the Tax Court has been ongoing throughout this period, there
is no loss of certainty or finality. But that interpretation again erroneously
conflates the two separate decisions – the decision to deny the new T2059 and
the decision to deny the objection – into one continuous action.
(c)
Reasonable Explanation
[46]
I also do not find that the Applicant has met
the third criterion, namely a reasonable explanation of delay. Here, R&S has
had representation throughout the process by leading tax and legal
professionals. Mistakes were made along the way and mistakes are excusable;
indeed, the Act provides redress to amend those errors, and opportunities to
challenge any unsuccessful efforts to amend. What was not reasonable, however,
was the length of the delay. Even though heeding the CRA’s May and August, 2014
letters would have resulted in a missed deadline, there certainly would have
been a much stronger argument at that time for the Applicant to seek an
extension, particularly in light of the offer that the CRA had made to hold the
objection process in abeyance, which was slightly less than twelve months before
R&S finally filed its Application.
(d)
Merit to the Application
[47]
Finally, and most significantly from a
substantive point of view, I do not find there to be merit to the application.
The opportunities to provide information and documentation to the CRA, outlined
above, were more than sufficient to be considered fair to R&S. The CRA was
both patient with the Applicant and even went out of its way to assist R&S
when required. Ms. Tymchuk’s offer to hold the objection process in abeyance was
one such instance. Another instance was when the Applicant could not locate its
own documentation of previous filings made with the CRA after having been asked
to explain the positions it had taken in its amendment (New T2059) request. Ultimately,
CRA sent R&S its own tax documentation, which R&S had previously filed
with the CRA, to assist in this regard.
[48]
R&S argues that it should have been warned,
prior to the Decision, that the New T2059 and the Transfer Agreement were in
conflict. It also argues that it should have been given a chance to respond to
the goodwill issue. In so doing, R&S is essentially arguing for the right
to review the exercise of ministerial discretion before it occurs. I do not
agree that there was any lack of fairness, nor any insufficient notice or
communication. The Applicant had plenty of time to respond and knew that there
were issues with respect to goodwill and numbers, even after the amended
election that did not reconcile.
[49]
The case law involving analogous exercises of
ministerial discretion under the Act suggest that the Respondent must accept
submissions and remain communicative, but flatly refuses a more onerous
procedural right to comment on a decision before it is made. For example, in Sherry
v Canada (National Revenue), 2011 FC 1208 at para 18, this Court held that
the “Applicant was afforded ample opportunity to
provide all necessary information to CRA when she submitted her request for
review. The rules of procedural fairness did not entitle her to further comment
before the Decision was made”. In Costabile v CCRA, 2008 FC 943 at paras
37-38, the applicant took issue with the fact that there was no
opportunity to discuss the outcome or the reviewing of the fairness order. Justice
Russell rejected the applicant’s complaint, holding that “[t]he Applicant was given the opportunity to submit
information and documents when he submitted his fairness request. I do not find
that the Minister was required to seek further information, documents, or
submissions from the Applicant in this case”. I find that the rationale of
these decisions applies equally in the context of subsection 96(5.1) of the
Act.
[50]
The Respondent’s approach throughout was an
eminently appropriate and fair one. R&S was repeatedly afforded the
opportunity to make submissions and the Respondent was in communication
throughout the decision-making process. The evidence even reveals that Ms.
Katzenback made several attempts to contact R&S and its counsel to discuss
concerns she had, but that R&S often did not respond (RR, p 195). And when
Ms. Katzenback asked for evidence explaining the discrepancy between the
non-share consideration listed on the New T2059 and the non-share consideration
in the Notice of Objection, R&S was unable to provide any evidence
whatsoever. The Respondent was not obliged by procedural fairness requirements to
do more.
[51]
As for the Applicant’s argument on the
reasonableness of the Respondent’s Decision, I can find no reviewable error.
The Respondent took the Transfer Agreement into account, as it was the only
evidence that existed regarding goodwill, and reached a justifiable and
intelligible interpretation of its terms.
[52]
R&S argues that the Respondent made an
unreasonable error in requiring that, to accept the New T2059, there be written
evidence of an agreement to change the elected amount for goodwill from
$2,502,600, as described in the Transfer Agreement, to $3,054,868. R&S
contends that article 4.1(a) the Agreement does not impose this requirement, and
that since both BELP and R&S were under the control of Mr. Stokowski, it
would have made no sense for him to draft a contract to demonstrate that he
shared an intention with himself. In light of this, the New T2059 should have
been more than adequate evidence of Roger Stokowski’s intentions.
[53]
R&S also argues that the Respondent’s
interpretation of the contract was illogical. because it contravenes the rules
of the Transfer Agreement that the Respondent is stating is being breached, due
to the following flawed logic:
A.
The Respondent requires that the agreed amount
for goodwill must be $2,502,600, because there was no written agreement
otherwise.
B.
Therefore, the Respondent interprets the
Transfer Agreement to require any increase in aggregate non-share
consideration, which would normally be allocated to goodwill, to be allocated
to the other, non-goodwill assets.
C.
However, the Respondent’s interpretation would
also require that the non-share consideration for any asset adhere to the terms
of the Transfer Agreement – which fixed that non-share consideration to the
cost amount of each asset in question.
D.
As a result, the excess non-share consideration
would, in being assigned to the other, non-goodwill assets, breach the terms of
the Transfer Agreement and article 4.1(a) anyway.
[54]
I am unable to accept these arguments. CRA’s
interpretation of the Transfer Agreement and the underlying facts were
reasonable. Simply put, there was insufficient evidence available to
substantiate the Applicant’s claim that a new agreement had been made, and the
Respondent drew a reasonable conclusion from this absence. As for R&S’s
submissions on the logic of the decision itself, the Respondent argues that
R&S is ignoring the words “provided however”,
a critical phrase in its interpretation of article 4.1(a) of the Transfer
Agreement (reproduced above), such that it was entirely open to Ms. Katzenback to
conclude that if the goodwill was not going to remain at $2,502,600, there
needed to be agreement from the other parties. I agree that the words “provided however” in article 4(1)(a) provide a plain
and clear meaning.
[55]
Despite the arguments about an illogical
structure and outcome to the CRA Decision, there appears nothing unreasonable
in the Respondent’s conclusions, which found that (1) the Transfer Agreement
requires that goodwill be fixed at a certain amount unless the parties agree
otherwise; (2) the New T2059 does not fix the goodwill at that amount; and (3)
therefore, it is in contravention of the Transfer Agreement and should not be
accepted. The Respondent asked for evidence to show that there was an agreement
between the parties to substantiate the amended election, but none was ever
produced.
[56]
As noted by Justice Evans in Canada Revenue
Agency v Telfer, 2009 FCA 23 at para 25, another judicial review of an
exercise of ministerial discretion under the Act, “[w]hen
reviewing for unreasonableness, a court must examine the decision-making
process (including the reasons given for the decision), in order to ensure that
it contains a rational ‘justification’ for the decision, and is transparent and
intelligible.” This Court cannot engage in a search for the “correct” answer. Instead, I find that this is a
transparent, intelligible conclusion provided by a decision-maker with
expertise in the subject-matter and, from the deferential perspective of a
reasonableness review, there would be no reason to disturb it.
[57]
In summary, in considering the principles laid
out in Exeter and Grewal, I do not find that the Applicant should
be granted an extension of time.
V.
Conclusion
[58]
In light of the above, this application for
judicial review is dismissed. It was not made in a timely fashion and I see no
reason to exercise my discretion to entertain it, given that R&S has failed
to meet the criteria set out in Exeter.
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