Citation: 2005TCC788
Date:20051209
Docket: 2004-3293(IT)APP
BETWEEN:
HERMAN GEBELE,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Sheridan, J.
[1] The hearing of this motion commenced on August 30, 2005 in Hamilton and was adjourned to November 4, 2005 in St. Catharines to permit the Applicant, Herman Gebele, to call an additional witness, Mr. Timothy Wright. In the materials as originally filed, the Applicant applied under paragraph 166.2(1)(a) of the Income Tax Act for an order to extend the time for serving on the Minister of National Revenue notices of objection to the assessments and reassessments of his 1988-1994 taxation years (referred to collectively as "the Notices" and each bearing a "date of mailing"[1] between March 19, 1996 and May 15, 1996). When the hearing resumed in November, the Applicant sought and was granted an order to amend the Notice of Motion to include the following alternative relief:
In the alternative, an Order that the 1996 Notices of Reassessment and Notices of Assessment referred to in Schedule "A" attached hereto [the Notices] be vacated as they were not mailed or sent to the Applicant as required by Sections 152(2) & (4) and 165(1) of the Act and same are statute-barred under Sections 152(3.1)(b) and 152(4) of the Act.
[2] The first question before the Court is whether and if so, when the Notices were sent to the Applicant. According to the Applicant, the Notices were not sent within the meaning of subsection 152(2) until March 2004 when he first became aware of their existence. Subsection 152(2) reads:
(2) Notice of assessment. After examination of a return, the Minister shall send a notice of assessment to the person by whom the return was filed.
[3] The Applicant argued further that upon learning of the Notices, he promptly filed notices of objection in April 2004, well within the time permitted by subsection 165(1):
Section 165: Objections to Assessment.
(1) A taxpayer who objects to an assessment under this Part may serve on the Minister a notice of objection, in writing, setting out the reasons for the objections and all relevant facts,
(a) where the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a testamentary trust, on or before the later of
(i) the day that is one year after the taxpayer's filing date for the year, and
(ii) the day that is 90 days after the day of mailing of the notice of assessment; and
(b) in any other case on or before the day that is 90 days after the day of mailing of the notice of assessment.
[4] The Minister acknowledged that the Notices were never mailed to the Applicant but submitted that his statutory obligations were met when on May 16, 1996, CCRA officials gave the Notices to Mr. Wright, the Applicant's (then) agent of record. Calculated from that time in accordance with sections 165 and 166.1, the deadline for serving notices of objection was August 14, 1997, some seven years prior to the date upon which the Applicant ultimately filed his objections. Accordingly, under paragraph 166.2(5)(a) of the Act, this Court is without jurisdiction to grant an extension of time to file notices of objection.
Facts
[5] The Applicant testified that in 1994, he left Canada to seek cancer treatment in the United States. Prior to his departure, he sold to his former spouse Helga the house they had lived in at 37 Concerto Courtin Ancaster, Ontario. Soon after his arrival in the United States, the Applicant was charged with illegally entering that country and incarcerated for five years. After serving his sentence, he was escorted to the Canadian border in March 2004 whereupon he was somehow made aware of the existence of the Notices. On April 6, 2004, he served notices of objection in respect of them on the Minister.
[6] On cross-examination, the Applicant admitted that at no time before leaving Canada or during his stay in the United States did he provide a new or forwarding address to the CCRA. When asked how he expected his tax matters to be handled during his absence from Canada he replied that he "really wasn't thinking about that at all". He also admitted that although he had instructed Mr. Wright to prepare and file his 1988 income tax return, he had not authorized him to handle his tax affairs after that time. Notwithstanding this denial of authorization, when presented departmental form T1013[2] dated January 30, 1996 and authorizing Revenue Canada (as it then was) to release to Mr. Wright his confidential taxpayer information, the Applicant admitted it bore his signature. He had no memory of signing the document or how it came to be in Mr. Wright's possession but said he was aware that Mr. Wright would provide the T1013 to Revenue Canada. He offered no explanation for these contradictions in his evidence.
[7] Mr. Wright was called by the Applicant. He is a chartered accountant of some 30 years experience. Although he had nothing more than a nodding acquaintance with the Applicant, as a favour to another of his clients, Mr. Wright undertook to write to Revenue Canada on the Applicant's behalf. The letter[3] is dated April 16, 1996 and reads as follows:
TIMOTHY WRIGHT
Chartered Accountant
April 16, 1996
Revenue Canada
Hamilton, Ont.
RE: Herman Gebele
Dear Reader:
Helga has provided me with the attached consent and the following information.
Investment income earned 1989/90/91/92/93
$24,000 Interest on a Mortgage
T4 amended for 1993 should be 11,575, UI 347.26, Tax deducted 2232.95, UI INS 11,575.
Please forward copies of the 1990 and 1994 return referred to in Sudbury's letter of March 21, 1996.
Would you please advise me of any outstanding information requests and address all future mail to:
Herman Gebele
Box 81027 PO
Ancaster L9G 4X1
Yours truly,
Timothy Wright
Chartered Accountant
[8] He enclosed with the letter the signed form T1013 although he could not remember the circumstances in which he obtained it. Since he had never met with the Applicant, however, he assumed that it had come through Helga. Shortly after sending the letter, Mr. Wright was asked to meet with CCRA officials. Of his meeting with them on May 16, 1996 he had a "vivid" memory since it was at that time he was advised "his client" owed some two million dollars in taxes. He was flabbergasted[4] at this news but soldiered on. At the end of the meeting, Mr. McFarlane and his colleague[5] gave him the Notices for the receipt of which he signed a departmental "Receipt for Borrowed Books, Records and Documents".[6] Mr. Wright could not remember what he did with the Notices but he later met with the Applicant's lawyer to report on the meeting. He received no further instructions and was paid for his efforts in repairs for his car. He testified that he now feels he was taken advantage of by the officials in that he did not realize, at the time, the consequences his actions might have for the Applicant. He admitted, however, that in the circumstances, he gave Revenue Canada officials no reason to doubt that the purpose of the T1013 was to inform Revenue Canada that he was the Applicant's designated representative.
[9] The Respondent called Mr. McFarlane, Team Leader with CRA Investigations. Although his primary involvement was with tax evasion issues, he was present with Mr. Crawford at the May 16, 1996 meeting with Mr. Wright. He explained that the department knew the Applicant had left the country and had no address on record other than that of his former residence at 37 Concerto Court. They also knew that his former spouse continued to reside there and that they had nothing on file authorizing her to act on the Applicant's behalf. Their concerns about violating the Act's confidentiality provisions[7] led to a decision not to mail the Notices to that address. Thus no steps were taken until, unsolicited, Mr. Wright's letter together with the T1013 signed by the Applicant arrived at their office. They immediately arranged a meeting with Mr. Wright. Satisfied that the signature on T1013 was the Applicant's and believing Mr. Wright to be his duly authorized representative, they gave the Notices to him on May 16, 1996.
Analysis
[10] The Applicant contended that the Minister's actions fell short of his statutory obligations under subsection 152(2). On the evidence presented, however, I am satisfied that the Minister met his evidentiary burden[8] of proving that a Notice of Assessment was "sent" within the meaning of the Act. It is up to the taxpayer to keep the Minister informed of his mailing address[9]. While it is understandable that when he left Canada, the Applicant may have been preoccupied with health worries, neither they nor his subsequent imprisonment exempted him from his obligation to provide the department with current contact information.
[11] Conversely, nothing in the Act requires the Minister to verify the accuracy of the mailing address provided by the taxpayer or to seek out the taxpayer at some other location. In this case, where the Applicant failed to update the information filed in his last return, the Minister might well have met his legislative obligations by simply mailing the Notices to his last reported address, 37 Concerto Court. Knowing however, that the Applicant had moved from this address and that his former spouse (an unauthorized person) continued to reside there, the Minister took the extra precaution of withholding the Notices. Only upon receiving Mr. Wright's letter with enclosed T1013 and after being satisfied that the signature on it was the Applicant's did officials act: they gave the Notices to Mr. Wright, a person they had good reason to believe had been designated by the Applicant to receive them on his behalf. In addition to having initiated contact with Revenue Canada and having provided officials with the necessary documentation, Mr. Wright willingly signed a departmental receipt for the Notices and took them away with him.
[12] In these circumstances, it is difficult to imagine what more the Minister could reasonably have been expected to do, especially given the Applicant's complete failure to fulfill his own obligations. I am satisfied that the Notices were sent and the limitation period for the filing of a notice of objection began to run on May 16, 1996 when the Notices were given to Mr. Wright. Accordingly, the deadline for making an application to the Minister for an extension of time within which to file a notice of objection expired on August 14, 1997; pursuant to paragraph 166.2(5)(a) of the Act, this Court is without jurisdiction to grant the Applicant's application. The application is dismissed, with costs to the Respondent. In view of this decision, it is not necessary for the Court to consider the Applicant's alternative grounds for relief.
Signed at Ottawa, Canada, this 9th day of December, 2005.
"G. Sheridan"
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