Citation: 2007TCC372
Date: 20070809
Docket: 2005-4026(GST)APP
BETWEEN:
3362981 CANADA INC. (LOTBEST),
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR ORDER
Bédard J.
[1] This is an
application for extension of time to file a notice of objection to an
assessment under subsection 304(1) of the Excise Tax Act (the
Act).
[2] The issue is
whether the accountant’s negligence can make it just and equitable to accept
the application under subparagraph 304(5)(b)(ii) of the Act.
[3] The following facts
are admitted:
·
the
assessment is dated November 12, 2004;
·
the
time prescribed by subsection 301(1.1) of the Act ended on February 10, 2005;
·
on
or about April 19, 2005, the Applicant sent a notice of objection to the Quebec
Minister of Revenue (the Minister);
·
on
May 6, 2005, the Minister informed the Applicant that the notice of objection
was inadmissible as it had been filed after the prescribed time;
·
on
June 3, 2005, 213 days after the notice of assessment was sent, the
Applicant sent the Minister an application to extend the time for giving notice
of its objection;
·
on
October 14, 2005, the Minister notified the Applicant of his refusal to grant
an extension of time on the ground that the Applicant had not demonstrated its
inability to act before expiry of the prescribed 90-day period for objecting,
as set out in paragraph 304(5)(b) of the Act;
·
on
November 7, 2005, the Applicant filed with this Court, within the prescribed
time, an application to extend the time for serving notice of its objection
under subsection 304(2) of the Act.
[4] Only the
Applicant’s president, Serge Cadorette, and Ehab Rafla testified in
this matter.
[5] The application for
extension of time filed with the Court by the Applicant contains the following
allegations:
[TRANSLATION]
19. Following this
audit, on or about November 12, 2004, the Applicant received a notice of
assessment bearing the number GG201068 pertaining to the GST (hereinafter the
“GST Assessment”).
20. The Applicant
never received a notice of assessment pertaining to the TVQ. (It should be
noted that the undersigned attorneys first received copy of said Notice of TAQ
assessment on May 31, 2005.)
21. During the month
of November 2004, Mr. Cadorette delivered the GST Assessment to
Mr. Rafla, asking him to do whatever was necessary to contest it.
22. Each time he
went to the offices of Loon & Partners after that to hand over
correspondence received from the tax authorities, Mr. Cadorette asked Mr. Rafla
if everything was under control, which was confirmed by Mr. Rafla.
23. On
or about February 22, 2005, while he was preparing for a one-month trip to the
Congo, Mr. Cadorette received, at his residence, a letter from the MRQ’s Centre
de perception fiscale asking for payment of a debt owed by the Applicant.
24. As usual, Mr.
Cadorette gave this letter to Mr. Rafla, asking him what it was about. Mr.
Rafla told him he would take care of it.
25. It
was explained to Mr. Cadorette that such a letter was not abnormal, even in the
case of a Notice of Objection being filed given that the Notices of Assessment
pertaining to the GST and the TVQ are payable even when there is an objection.
26. Mr. Cadorette
therefore focussed on preparing his trip (obtaining visas, vaccination,
preparing documentation to bring for the contract, etc.).
27. Prior to his
departure at the end of March, Mr. Cadorette again checked with Mr. Rafla that
everything was in order with the tax authorities, to which Mr. Rafla answered
in the affirmative, as usual.
28. While Mr.
Cadorette was in the Congo, the office of Mr. Rafla filed a Notice of Objection
against the GST assessment, on or about April 19, 2005, in which a TVQ debt was
also mentioned (referring to the SAA), although no notice of assessment had
been received with regard to this.
29. Mr. Cadorette
came back from the Congo in the second week of May 2005.
30. He was
indisposed with a virus or a bug that he had caught there and was accompanied
by the Vice Minister of Congo who came to pursue negotiations with him.
31. On top of
everything, when he collected the Applicant’s mail on or about May 20, 2005, he
noticed that the MRQ, via letter dated May 6, 2005, had refused the letter of
objection filed by his accountants in April 2005, under pretext that it had
been filed late.
32. Mr. Cadorette
then contacted Mr. Rafla, who referred him to the undersigned attorneys on or
about May 20, 2005.
33. Between
medical visits to treat the illness that he had contracted in the Congo and his
obligations to the Vice‑Minister of Congo (who left Canada on May 22,
2005), Mr. Cadorette met with the undersigned attorneys.
34. The undersigned
attorneys advised Mr. Cadorette that it was necessary for the Applicant to
apply for an extension of time to object to the GST assessment, obtain the
relevant information pertaining to the issuance of a notice of TVQ assessment
and apply for an extension of time to object to this assessment if the time to
file an objection had also expired, which was very likely the case.
35. The Applicant,
through Mr. Cadorette, immediately instructed the undersigned attorneys to
obtain the necessary information and file said Applications for extension of
time pertaining to the GST assessment as well as the Notice of Assessment that
had probably already been issued in respect of the TVQ.
36. The undersigned
attorneys therefore contacted the representatives of the MRQ and learned that
the Notice of TVQ Assessment number 9900061 had been issued on November 24,
2004 (hereinafter the “TVQ Assessment”), after receiving a copy by fax on May
31, 2005 (copy attached).
37. Once they had
obtained all of the information from the MRQ and Mr. Cadorette, the
undersigned attorneys prepared this Application for Extension of Time.
[6] Mr. Ehab Rafla,
whose name is mentioned at least seven times in the allegations of the
application for extension of time filed with the Court and whose credibility
need not be put in doubt in this matter, testified that he had no knowledge of
the above-mentioned facts alleged in the application for extension of time,
since he had not worked for the Applicant’s accountants since the end of June
2004. Thus, contrary to what is alleged in the application, Mr. Rafla is not the
person to whom Mr. Cadorette delivered the assessment of November 12, 2004. Nor
was Mr. Rafla the person with whom Mr. Cadorette had followed up on this
assessment. I will point out immediately that Mr. Rafla’s testimony, which
contradicts the essential of the allegations in the application for extension
of time, left me with serious doubts as to the credibility of Mr. Cadorette.
[7] The testimony of
Mr. Cadorette, which I would qualify as no less than evasive, ambiguous,
elusive, equivocal and often unintelligible, revealed little, except that he
allegedly delivered the notice of assessment, within the time prescribed by the
Act to make an objection, not to Mr. Rafla, as alleged in the application for
extension of time, but rather to an employee or a partner of the firm Loon
& Partners whom he did not identify. In addition, he testified that he had
not instructed Mr. Rafla as alleged in his application for extension of time,
but rather Mr. Lotfi, a partner of the firm Loon & Partners, to
object to the assessment on behalf of the Applicant, and did so within the time
prescribed by the Act. It should be pointed out that Mr. Cadorette’s testimony
was silent as to the circumstances surrounding the forwarding of the Notice of
Assessment and concerning the circumstances that allegedly resulted in the
Applicant’s accountants not objecting to the assessment within the time
prescribed by the Act. I will point out that no employee or associate of the
firm Loon & Partners came to testify and explain their conduct or
the events of this matter, with the exception of one ex-employee,
Mr. Rafla, who, I repeat, simply denied the allegations from the
application for extension of time filed by the Applicant with the Court. The
circumstances of the alleged error of the firm Loon & Partners
will forever remain a mystery.
Position of the Applicant
[8] Counsel for the
Applicant argued that the Applicant had acted diligently and that it should not
be punished for the deficiencies of its accountants, whom it had instructed to
object to the assessment, doing so within the time prescribed by the Act.
Counsel for the Applicant argued that the accountants’ deficiencies made it
impossible for them to act for their client and that their error therefore
makes it just and equitable to allow the application for extension of time.
Analysis and conclusion
[9] In order for the
application to be granted, the Applicant had to convince me of the following:
(i) It
acted diligently, in that it had at least forwarded the notice of assessment to
its accountants within the time prescribed by the Act to object to this
assessment. It also had to convince me that it had indeed instructed its
accountants to object to the assessment.
(ii) The
error of its accountants, who did not object to the assessment within the
prescribed time, was not caused by their negligence or laxity. In other words,
the Appellant had to convince me that its accountants committed an error while
at the same time having exercised the normal diligence of an accountant.
[10] In this case, the
Applicant did not convince me that Mr. Cadorette had indeed forwarded the
notice of assessment to its accountants and that it had instructed them to
object to the assessment on behalf of the Applicant within the time prescribed
by the Act. In addition, the Applicant did not provide any evidence with regard
to the circumstances surrounding the alleged error of the firm
Loon & Partners. I note that the Applicant had to prove that the
error of its accountants was not caused by their laxity or negligence.
[11] For these reasons,
the application is dismissed.
Signed at Ottawa, Canada, this 9th day of August,
2007.
“Paul Bédard”
Translation
certified true
on this 28th day
of October, 2007.
Gibson Boyd,
Translator
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