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Citation: 2004TCC652
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Date: 20041029
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Docket: 2004-1681(IT)APP
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BETWEEN:
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ROBERT HOULE,
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR ORDER
Bédard J.
[1] This involves an application made
under section 166.2 of the Income Tax Act (the "Act") to
obtain an order for an extension of the time in which the
Applicant can serve a notice of objection to the assessments of
March 27, 2003, for the 1999 and 2000 taxation years.
The Court must determine whether the Applicant's request for an
extension of the time to object to the assessments is well
founded.
Facts
[2] On October 16, 2002, the Applicant
received a letter from Lucie Gervais (Exhibit I-1) from the
Canada Customs and Revenue Agency ("the Agency") indicating that
the Applicant would be subject to a more comprehensive audit of
his tax returns for the 1999 and 2000 taxation years.
[3] After verifying the documentary
evidence submitted by the Applicant, Ms. Gervais sent an
assessment proposal dated January 7, 2003, (Exhibit I-1) to
him. This assessment proposal gave the Applicant until February
7, 2003, to respond.
[4] On February 12, 2003, Ms. Gervais
sent the Applicant a letter (Exhibit I-1) which set
out the changes that the Agency made to the Applicant's tax
returns for the taxation years in question. This letter also
indicated that the Applicant would soon receive notices of
reassessment reflecting these changes.
[5] On March 27, 2003, the Minister of
National Revenue (the "Minister") issued the notices of
reassessment for the taxation years in question.
[6] The Applicant did not object to
the assessments of March 27, 2003, in the time limit prescribed
in subsection 165(1) of the Act and which expired on
June 25, 2003.
[7] On November 11, 2003, Chantal
Amiot, a tax expert and Agent for the Applicant, sent the
Minister an application for an extension of the time to object to
the assessments of March 27, 2003, (Exhibit R-2)
attached to the notices of objection. Ms. Amiot stated the
following facts and reasons in her request:
· Mr. Houle
has been our client since 2002;
· He received
a letter from CCRA in January 2003 regarding his 1999 and 2000
returns;
· Disagreeing
with CCRA's corrections, he discussed this with his financial
advisor at the time and his advisor suggested that he object to
this decision;
· He believes
he submitted his assessment notices to the advisor or to one of
his representatives with the mandate to prepare an objection;
· When filing
his 2002 taxes, he realized that the Department asked him to pay
his taxes for 1999 and 2000;
· On several
occasions, Mr. Houle asked his advisor at the time what was going
on. The advisor explained to Mr. Houle that Collections and
Appeals were distinct departments and that this type of situation
was normal;
· In October
2003, the client received the formal request for payment
addressed to his employer and understood that someone had not
done their job;
· I discussed
this with Mr. Houle and contacted the Department and realized
that the objection had never been filed;
· The client
did not have the notices of reassessment on hand because he
believed he had given them to his financial advisor;
· We asked
for these notices;
· [We] ask
you not to harm the taxpayer and to allow him to defend his tax
case properly;
· We are
aware that the taxpayer should know the law, but the major error
that he committed was to go to an investment advisor rather than
a tax professional.
[8] In a letter dated January 19,
2004, (Exhibit R-4), the Minister notified the Applicant about
his refusal to grant him an extension of the time in which to
serve his objection to the assessments of March 27, 2003.
[9] On April 16, 2004, the Applicant's
counsel filed with the Court an application for an extension of
the time in which to serve an objection to the assessments of
March 27, 2003.
[10] In her application for an extension of
time of April 16, 2004, the Applicant's counsel mainly
alleged:
(i) that the Applicant had
entrusted to his financial advisor the mandate of objecting to
the assessments;
(ii) that the Applicant did not
notice his financial advisor's failure to do so until October 28,
2003;
(iii) that it was impossible for the
Applicant to personally act in this matter because he believed
that his agent had carried out his mandate, and that the
Applicant should not suffer harm because of this.
Preliminary remarks
[11] It is noteworthy that at the opening of
the hearing, the Applicant's counsel amended her application for
an extension of time to now allege that that the envelope in
which the notices of assessment of March 27, 2003, were sent were
postmarked by Canada Post on September 29, 2003. The Applicant
therefore received these notices toward the end of September
2003, and Rock Robert Bilodeau, the Applicant's financial
advisor, knew about these notices at the beginning of October
2003, and, consequently, the Applicant was unable to act or have
someone else act on his behalf before the end of
September 2003. The Applicant's counsel explained to the
Court that Mr. Bilodeau had just given her the envelope
(Exhibit R-1) in which the notices of assessment were sent, and
pointed out to her the postmark on this envelope, which,
according to the counsel, showed that the envelope was mailed on
September 29, 2003.
Analysis
[12] In his testimony, Mr. Bilodeau
explained:
[Translation]
(i) that in December 2002, the
Applicant retained his services as financial advisor;
(ii) that in January 2003, the
Applicant consulted with him regarding the assessment proposals
of January 7, 2003, (Exhibit I-1), and that he thus advised him
to object to the assessments when they were completed. He also
explained to the Applicant that a taxpayer cannot object to an
assessment proposal and that the Applicant therefore could not do
anything if the assessments had not been issued;
(iii)
that the Applicant thereafter regularly called him to discuss
this problem and that his response was always the same-he had to
wait for the assessment notices;
(iv) that toward the end of September
or beginning of October 2003, the Applicant called him to say
that he had received a letter from the Agency;
(v) that one of his employees went to
the Applicant's home to get the envelope and assessment notices
dated March 27, 2003;
(vi) that between October 8 and 15,
2003, he noted that the envelope contained the assessment notices
dated March 27, 2003;
(vii) that he entrusted an employee of
Gaétan Fradette, an accountant with whom he worked
closely, with preparing the notices of objection on the
Applicant's behalf;
(viii) that the Applicant's salary was seized by the
Agency toward the end of October or beginning of
November 2003, and that Mr. Bilodeau entrusted Chantal
Amiot, a tax expert employed by Mr. Fradette, with dealing with
the problem of the Applicant's salary being seized;
(ix) that while he was in Europe, Ms.
Amiot met with the Applicant and contacted the Agency to find out
why the Applicant's salary had been seized. According to
Mr. Bilodeau, Ms. Amiot allegedly found out from the Agency
that the notices of objection to the assessments of March 27,
2003, had not been served;
(x)
that he was in Europe and that Ms. Amiot did not have the
envelope in which the assessment notices of
March 27, 2003, had been sent when she prepared
and sent the Minister the application for extension of time and
that he was thus unable to rectify the facts alleged by Ms. Amiot
in the application;
(xi) that in December 2003, he had a
copy of the famous envelope (Exhibit R-5) faxed to Diane Charette
at the Agency to try to show that it had been mailed on September
29, 2003, that the Applicant had the time to object and that the
seizure of the Applicant's salary therefore had to be stopped. He
testified that his efforts to convince Ms. Charette were
unsuccessful.
[13] Essentially, the Applicant testified
that he received the assessment notices at the end of September
2003, that he did not understand what the documents were about
and that he had them sent to Mr. Bilodeau for him to do whatever
was necessary.
[14] In her submission, the Applicant's
counsel argued:
(i) that the envelope in which
the assessment notices of March 27, 2003, were sent was
postmarked September 29, 2003;
(ii) that I should retain the
Applicant's and Mr. Bilodeau's uncontradicted testimonies
according to which they did not become aware of these assessment
notices before the end of September 2003, and that the Applicant
was thus unable to act before the end of September 2003;
(iii) that given the circumstances of
the case, it would be fair and equitable to grant the
request.
[15] First, after a meticulous review of
Exhibit R-1, I find that the envelope that contained the
assessment notice of March 27, 2003, was postmarked
April 29, 2003, the same date that the Agency had stamped
(in red) on this envelope. In fact, the Roman numeral that
appears on the Canada Post postmark (in black) and which
indicates the month that the Agency had mailed the envelope is,
in my opinion, a IV and not a IX as the Applicant's counsel
claimed.
[16] Given that the Applicant testified that
he received the assessment notices toward the end of September
2003 and that he gave them to Mr. Bilodeau in October 2003, and
given that Mr. Bilodeau testified that he saw these documents in
October 2003 and that he entrusted Ms. Amiot with producing the
notices of objection to these assessments and to deal with the
problem of the salary being seized, how is it that Ms. Amiot did
not allege these facts, which are crucial to the case, in her
application for extension of time (Exhibit R-2) dated
November 11, 2003. And how is it that the Applicant's
counsel did not allege these same facts in her application for
extension of time dated April 16, 2004? It must be pointed out
that Ms. Amiot and the Applicant's counsel instead simply alleged
Mr. Bilodeau's error in their respective applications for an
extension of time. How is it that the Applicant's counsel was not
informed of the above-mentioned facts until the very
morning of the hearing?
[17] Why did the Applicant fail to inform
Ms. Amiot that he had received the assessment notices at the end
of September 2003? It should be pointed out that Mr. Bilodeau
testified that Ms. Amiot had prepared the application for
extension of time based on the information sent by the Applicant.
The Applicant testified that he had not understood anything in
the documents that he received at the end of September 2003 and
that he sent them to Mr. Bilodeau for him to do whatever was
necessary. However, I strongly doubt that when the Applicant met
with Ms. Amiot or talked to her, that at that point he still
did not know the nature of these documents that he received at
the end of September 2003. That would imply that he did not ask
Mr. Bilodeau what the nature of the documents was and what the
consequences were. That appears unbelievable and improbable. The
fact that he did not inform his counsel that he had not received
the assessment notices until the end of September 2003 remains
unexplained and unexplainable.
[18] How is it that Mr. Bilodeau, who was
the Applicant's primary agent and who himself chose the
professionals in the Applicant's tax case, did not inform Ms.
Amiot and the Applicant's counsel about the fact that the
assessment notices had been received at the end of September
2003? How is it that he did not inform the Applicant's counsel
until the very morning of the hearing? His testimony in this
regard appears decisive and should be cited:
[Translation]
R. As I said,
I received the assessment notice between the 8th and 15th of
October, sometime toward the end of October, beginning of
November. Mr. Houle's salary was seized, then the taxes from 2003
were also retained as payment on account. But as we could not
object, we did not have the assessment on hand, on what basis
could I object? Except that the assessment was in transit. Ms.
Amyot [sic], she, she says that someone did not do their
job, but Ms. Amyot [sic], even with her work at Mr.
Fradette's office, she, she is a tax expert, she acted on what
Mr. Houle told her, but she did not have the physical file that I
have here in my hands because once Mr. Fradette finishes my
files, he brings them to me. So, the famous copy of the envelope,
she did not see it. She, she wrote a note based on what Mr., when
I told Robert, I said, so, you have a notice of seizure. I said
I'm going to send you to see Chantal. I said, so I said, with a
seizure occurring and no opposition made, something has to be
done. So she wrote a letter. I left for Europe, I came back, I
saw the letter. It had already been sent so I couldn't say, so
listen, that's not what happened, here are the facts. I even sent
a copy of the envelopes that were sent to you to a lady at the
Department named Diane Charette in December.
Q. So show me what
you sent, Mr. Bilodeau.
R. I have the
acknowledgement of receipt of the fax, what is not underneath
that is the copy, the photocopy.
Q. That is the
photocopy. I do not have any copies, that is directly from the
file, but...
R. The
acknowledgement of receipt of the fax with the date, attached to
the famous envelope that you have there.
Q. Fine, if you will
allow me, Your Honour, evidence of transmission by fax on
December 18, 2003, Exhibit R-5. And then, you send Ms. Charette a
copy of the envelope with the postmark?
R. The
envelope, yes, with the two seals to show, look, why are we
wasting our time arguing? Stop seizing my client's salary. We
objected and then got the envelope with that date, so it was
still within the time limit. But nothing could be done.
[19] According to Mr. Bilodeau's testimony,
he knew at the time that the assessment notices had been
postmarked September 29, 2003. His contacting Ms. Charette
at the Agency on December 18, 2003, undeniably proves that. He
testified that he had not brought Ms. Amiot up to date before she
sent out the application for extension of time dated November 11,
2003, because at that time he was in Europe and he did not send
her the famous envelope. In this regard, I have to point out that
it would have been very interesting to hear Ms. Amiot give her
own version of the facts. Assuming that what Mr. Bilodeau said to
explain the fact that he did not inform Ms. Amiot is true, which
I doubt, the fact remains that Mr. Bilodeau did not inform the
Applicant's counsel until the very morning of the hearing still
remains unexplained and unexplainable. Was he still in Europe?
Who, then, met with the Applicant's counsel when she prepared the
application for extension of time?
[20] Given the evidence submitted, I find
that the assessment notices of March 27, 2003, were mailed
on April 29, 2003, that the testimony of the Applicant and of Mr.
Bilodeau who tried to show that the assessment notices had been
mailed on September 29, 2003, and received by the Applicant
toward the end of that month, is simply unlikely and unbelievable
and that the Applicant therefore did not show that within the
time limit specified to serve the Minister his objection to the
assessments, he was unable to act or have someone act on his
behalf, in accordance with the requirements of sub-paragraph
166.2(5)(b)(i) of the Act.
[21] The application for the 1999 and 2000
taxation years is therefore dismissed.
Signed at Ottawa, Canada, this 29th day of October 2004.
Bédard J.
Translation certified true
on this 19th day of January 2005.
Julie Oliveira, Translator
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