Date: 20020716
Docket:
2002-309-IT-APP
BETWEEN:
JOHN
GORENKO,
Applicant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasonsfor Order
Lamarre Proulx,
J.T.C.C.
[1]
This is an application, made pursuant to section 167 of the
Income Tax Act (the "Act"), for an
order extending the time within which the Applicant may file a
Notice of Appeal in respect of assessments dated October 5,
1999, for the years 1989 to 1995, assessments that were ratified
on September 17, 2001.
[2]
It is admitted that the time limit prescribed by
subsection 169(1) of the Act to file a Notice of
Appeal with this Court expired on December 17, 2001. The
application for an extension of time was filed on
January 23, 2002.
[3]
The question at issue is whether within the time specified by
section 169 of the Act for appealing, the taxpayer
had a bona fide intention to appeal and, whether
given the circumstances of the case, it would be just and
equitable to grant the application.
[4]
The Applicant testified. He explained that during the years under
appeal, the corporate group he headed, Gor-Can
Canada Ltd. ("Gor-Can") and
Alpha-Leather Canada Ltd. ("Alpha-Leather")
was buying and selling materials from several countries. From
1970, the business evolved from the footwear industry, to
garments, leather goods and the automotive and industrial
products. According to the Applicant, the corporate group had
large warehouses of over $5 million dollars worth of
inventory at all time, and on a weekly basis, he received customs
officers who came to verify the inventory. In 1993, the companies
were reassessed. Mr. Gorenko stated that when he believed
that he had reached an agreement with the auditors, the special
investigation agents came and seized all the documents. He was
prosecuted before the criminal court. He was advised by his tax
lawyer to see a criminal law lawyer and about 30 boxes of
documents, were transferred to Mr. Vincent Rose.
[5]
About April or May 2001, he received confirmation of the
reassessments concerning the companies. These documents were
brought to Mr. Rose. In September 2001, Mr. Gorenko
received confirmation of reassessments against him personally. He
also brought these documents to Mr. Rose. These are the
reassessments that are at issue here.
[6]
Mr. Gorenko stated that Mr. Rose told him that he would ask
someone in his office who was more knowledgeable in income tax to
look into the matter. It was the same lawyer who handled the
filing of the appeals for the companies. Mr. Gorenko met
monthly with his lawyer over tax matters and was assured that the
office was handling everything. However, he was informed in
January 2002 by his lawyer that there might have been an
oversight.
[7]
Mr. Gorenko stated that he trusted his lawyers. He stressed
the fact that this was a matter very critical for him where all
his personal fortune and the fortune of his wife was
involved.
[8]
Mr. Vincent Rose testified. Mr. Rose is a member
in good standing of the Quebec Bar, since 1984. His area of
specialization is criminal defence work. Mr. Gorenko was
referred to him by a colleague, a tax lawyer. This was in
May 2001. His mandate was specifically with respect to the
case in the Court of Quebec Criminal Division. He has a specific
mandate to that effect in writing with Mr. Gorenko. Shortly
thereafter, Mr. Gorenko came to see him with Notices of
Confirmation with respect to his companies Alpha-Leather
and Gore-Can. In those cases, he delegated the task to one
of the lawyers in their office, Mr. Barbacki, and the
Notices of Appeal were filed in due course. Mr. Gorenko came
with other Notices of Confirmation, this time being for him
personally. This would have been near the end of September 2001.
Mr. Rose stated that he did exactly what he had done in the
matter of the two companies's cases. He met with
Mr. Barbacki and he delegated the task to him at the end of
September, to file the Notices of Appeal. Mr. Barbacki is an
ex-Crown attorney who is now in private practice. He joined
their office approximately three years ago as a nominal
associate.
[9]
Mr. Barbacki got back to him in the middle of October and
suggested that they meet with the client as he needed more
information in order to proceed with the Notice of Appeal in
Mr. Gorenko's personal file.
[10]
Mr. Rose explained that in these months, he met with
Mr. Gorenko but the issue was principally the criminal
prosecution, which involved 30 boxes of evidence and was
rather demanding in terms of a lawyer's time. There were
meetings that were cancelled because he was caught up in court.
One thing led to the next and unfortunately, the matter somehow
fell through the cracks.
[11]
In January, his assistant who was working with him in the
principal case and who is a tax expert, informed him that
Mr. Gorenko's Notice of Appeal had not been filed on
time. Mr. Rose stated that he was stunned. Two days after the
problem was discovered, a Notice of Appeal and a request for an
extension of time were filed.
[12]
Mr. Barbacki testified. He is a member of the Quebec Bar
since 1976. He is a tenant at Elfassy, Rose. In early June of
2001, Mr. Rose asked him to deal with two Notices of
Confirmation of assessments relating to appeals in two corporate
files, Alpha-Leather and Gor-Can Canada. The deadline
for filing these appeals was July 2 or 3. He is not a tax
lawyer but a criminal lawyer. A day before the last day, he made
what he called a pro forma appeal without adding substance
arguments. So, they were filed, he believed, on the last day.
Towards the end of September, Mr. Rose gave him a third
appeal, which was for the individual, Mr. Gorenko. He looked
at the Notices of Confirmation, and he came to the conclusion
that they did not contain enough information for him to file an
appeal. So he advised Mr. Rose, some time in October, that
he was not able to do the same kind of work that he had done for
the two initial appeals because he just did not have any
information as to what was the appeal for. So the understanding
was that the client would be contacted and information would be
obtained from the client and an appeal would be filed before the
deadline which, he believed, fell towards the end of December
2001. He never met Mr. Gorenko.
[13]
Counsel for the Applicant argued that the Applicant had acted
with due diligence as well as Mr. Rose and Mr. Barbacki
and that as soon as it was discovered by Mr. Rose's
assistant that the Notice of Appeal had not been filed on time,
it was acted upon. He stated that the evidence showed that the
Applicant brought the Minister's confirmation as soon as he
received it to his lawyer, Mr. Rose. The latter was much
taken by his criminal law work particularly, by a substantial
file concerning Mr. Gorenko with the Quebec Court Criminal
Division, so he entrusted the matter to a lawyer acting within
their premises. There may have been a misunderstanding between
the lawyers that resulted in the exceeding of the time limit but
that was not due to negligence on either part.
[14]
Counsel for the Respondent base her case on
Mr. Barbacki's behaviour. There was carelessness in
Mr. Barbacki's behaviour in his handling of the case
that had been confided to him. She referred to my decision in
Di Modica v. Canada, [2001] T.C.J. No. 620
(Q.L.) at paragraph 16 :
[16]
It is my view that an error by counsel can be a just and
equitable reason for granting an extension of time if counsel
otherwise exercised the reasonable diligence required of a
lawyer. I do not think that the state of the law is such that
counsel's negligence or carelessness can constitute a just
and equitable reason for granting the requested extension within
the meaning of subparagraph 166.2(5)(b)(ii) of the
Act.
[15]
Counsel for the Applicant replied that Mr. Rose was
Mr. Gorenko's lawyer and not Mr. Barbacki.
Mr. Rose was Mr. Barbacki's client.
Conclusion
[16]
The evidence has shown that the Applicant instructed his lawyer
on time to file a Notice of Appeal and that Mr. Rose acted
with a reasonable degree of diligence. He did not have time to
file the Notices of Appeal himself so he retained a colleague to
act on his behalf.
[17]
That lawyer was entrusted with the filing of the appeal on time.
He knew of the deadline. He filed the appeals for the companies
on time, albeit on the last day or so according to his testimony.
I accept that, as the lawyers suggested, there may have been a
misunderstanding between them and that may have been the cause of
the delay.
[18]
I consider to be an important element in the present matter the
fact that the Applicant's lawyer confirmed that the Applicant
acted on time and that the lawyers testified to explain their
omission. I consider also to be an important element the fact
that as soon as the omission was found by Mr. Rose and his
assistant, the application for extension of time was filed
accompanied by a proposed Notice of Appeal.
[19]
Although this case is not as straightforward as it should be,
these cases seldom are, and in view of the fact that
Mr. Gorenko and Mr. Rose showed a reasonable degree of
diligence in the exercise of their rights and duties, the
extension of time to file an appeal is granted.
Signed at Ottawa, Canada, this 16th day of
July, 2002.
"Louise Lamarre
Proulx"
J.T.C.C.
COURT FILE
NO.:
2002-309(IT)APP
STYLE OF
CAUSE:
John Gorenko and Her Majesty the Queen
PLACE OF
HEARING:
Montreal, Québec
DATE OF
HEARING:
May 27, 2002
REASONS FOR ORDER
BY:
The Hon. Judge Louise Lamarre Proulx
DATE OF
ORDER:
July 16, 2002
APPEARANCES:
Counsel for the Appellant: Consolato
Gattuso
Counsel for the
Respondent:
Marie-Claude Landry
COUNSEL OF RECORD:
For the
Appellant:
Name:
Consolato Gattuso
Firm:
Mitchell Gattuso
Montreal, Québec
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-309(IT)APP
BETWEEN:
JOHN GORENKO,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Application heard on May 27, 2002 at
Montreal, Québec, by
the Honourable Judge Louise Lamarre
Proulx
Appearances
Counsel for the
Applicant:
Consolato Gattuso
Counsel for the
Respondent:
Marie-Claude Landry
ORDER
Upon reading the application for an Order
extending the time within which appeals from the assessments made
under the Income Tax Act for the 1989, 1990, 1991, 1992,
1993, 1994 and 1995 taxation years may be instituted;
And upon hearing what was alleged by the parties;
The time within which appeals may be
instituted is extended to the date of this Order and the Notice
of Appeal, received with the application, is deemed to be a valid
Notice of Appeal as of the same date if the appropriate filing
fee is paid to the Registry not later than August 15, 2002,
all in accordance with the attached Reasons for Order.
Signed at Ottawa, Canada,
this 16th day of July, 2002.
J.T.C.C.
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