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Citation: 2004TCC194
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Date: 20040330
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Docket: 2003-3521(IT)APP
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BETWEEN:
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RICK GREENSTREET
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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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____________________________________________________________________
For the Applicant: The Applicant himself
Counsel for the Respondent: Marlyse Dumel
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered
orally from the Bench on
January
7, 2004, at Kingston, Ontario)
McArthur J.
[1] Mr. Greenstreet applied for an Order
extending the time within which he could file a Notice of Appeal with respect
to his 1995 taxation year. This arises from unusual, if not unique
circumstances. This is the Applicant's second appeal process for the same year.
Judge Sarchuk of this Court heard his first appeal from an assessment for the
1995 taxation year, which appeal was dismissed by a Judgment dated March 24,
1999.
[2] Subsequently, on
July 4, 1999, the Applicant submitted an amended income tax return for the same
1995 taxation year. The Minister of National Revenue reviewed this amended
return under subsection 152(4.2) of the Income Tax Act. There was
confusion in the Minister's office. Upon receipt of the amended return, the
Minister's officer, reviewing it, apparently did not realize that the
Applicant's 1995 taxation year had been appealed and ruled on by the Tax Court
(Judge Sarchuk on March 24, 1999). By letter dated March 5, 2002 the Minister advised the Applicant
that his subsequent return was correct. The Applicant states he believed there
was no need to object and awaited a refund cheque from the Minister. Yet by
letter dated March 15, 2002,
the Minister wrote the Applicant stating:
The confusion stems from our initial
dealing in this matter when we were led to believe that a request for
adjustment to your 1995 return had been requested by yourself and not dealt
with by the Agency. We were unaware at that time that the matter had actually
been dealt with, both under a Notice of Objection and subsequently adjudicated
at the Tax Court of Canada. As we now know, the Tax Court of Canada dismissed
your appeal for an allowable business investment loss and noted that the losses
claimed could not be applied against your employment income on your return,
rather could only be applied against capital gains. You have sought an
adjustment to your return eliminating the "other employment income"
in the amount of $18,000 reported in your original return.
CCRA refers to confusion and, indeed, there was a good
deal of confusion. I accept the Minister's position in the letter of May
27, 2002 (Exhibit R-4) when he states:
We will therefore close out our file
without making any changes to your 1995 T1 return.
where he was referring to the first original return
and not the amended version filed in 1999.
[3] The position of the Minister is that the
Applicant's 1995 taxation year was dealt with conclusively by Judge Sarchuk and
the July 4, 1999 issues raised by the Applicant are res judicata. Also,
the Applicant's 1995 taxation year is statute‑barred. The assessment was
dated June 20, 1996 and the three-year limitation period in the Act
ended on June 20, 1999. The Applicant's revised return was dated July 4, 1999,
14 days beyond the limitation. The Minister added that he exercised his
discretion only in reviewing the amended return pursuant to
subsection 152(4.2).
[4] I will deal with the Minister's primary
submissions: firstly, res judicata, that is, have the issues raised by
the Applicant been previously dealt with by the Court. In his second return,
the Applicant deleted an amount of $18,000 reported on his first return. The
$18,000 appears to be the Applicant's share in the distribution of assets
including the contents of a bank account upon the dissolution of a partnership.
The Applicant's proposed Notice of Appeal is of little assistance in
determining why the Applicant originally included the $18,000 in his first
return and deleted it in his second return. I believe he stated it is in
keeping with the Court Judgment in that, if the $32,000 is capital, the $18,000
is capital and should not have been included as income. This, for reasons that
will follow, is not accurate.
[5] In dismissing the Applicant's appeal, Judge
Sarchuk, at paragraphs 11 and 12 of the decision, stated the following:
11 Allowable business investment
losses are certain types of losses which are afforded preferential treatment
under the Act …
12 … The result is that the
Applicant has a net capital loss which can be used to reduce capital gains in
other years. …
[6] The Applicant did not focus on the fact
that his previous appeal for the 1995 taxation year was dismissed without
reservation. Counsel for the Minister referred to Chevron Canada Resources v
The Queen, [1997] 2 C.T.C. 2624, where Justice Noël states clearly at
paragraphs 36 and 37:
36 … the position of the Respondent
that the only issues that have been conclusively determined are those that have
been specifically decided is untenable if the doctrine of res judicata,
insofar as it bars further litigation with respect to undecided but related
matters, applies. …
37 … The rule is that a party who
under these conditions omits to raise an issue is forever barred from raising
it again. To the extent that this rule applies, the matter of the
computation of the Respondent's resource allowance must be held to have been
conclusively determined by the Consent Judgment.
He also quoted with approval the Privy Council in Thomas
v Trinidad & Tobago (Attorney General), (1990), 115 N.R. 313, as
follows:
… It is in the public interest that there
should be finality to litigation and that no person should be subjected to
action at the instance of the same individual more than once in relation to the
same issue. The principle applies not only where the remedy sought and the
grounds therefore are the same in the second action as in the first but
also where, the subject matter of the two actions being the same, it is sought
to raise in the second action matters of fact or law directly related to the
subject matter which could have been but were not raised in the first. …
… the Court requires that the parties to
that litigation bring forward their whole case, …
It is clear that the above statements apply equally to
the present situation. The Judgment dated March 24, 1999 was a final
disposition of the Applicant's 1995 taxation year unless he appealed the
decision to the Federal Court of Appeal which he did not.
[7] The Applicant is attempting, in this
instance, to raise issues that were or should have been part of the previous
litigation and should have been raised at that time and no special
circumstances exist in this case that would permit me to re-open the hearing. I
conclude that the doctrine of res judicata applies. For this reason
alone, I would deny the application.
[8] While it is not necessary to proceed
further, I believe that the Minister's second argument ably presented by
counsel is also valid. I agree that the 1995 assessment was statute-barred in
July 1999 when the Applicant filed a revised return deleting $18,000 in income
referred to in his first return. Subsection 152(4.2) provides that the
Minister may reassess beyond the normal reassessment period and this is a
discretionary power of the Minister and if he fails to exercise it to the
taxpayer's satisfaction, the taxpayer has no recourse in this Court. The
Applicant's action to the Tax Court of Canada's Judgment was to appeal to the
Federal Court of Appeal. He originally considered that approach and decided it
was not economically viable so he is attempting to have the Tax Court hear the
same year again. Further, the Applicant did not file a Notice of Objection
within the statutory time limit in section 165.
[9] The Applicant raised several issues that do
not advance his position but I will refer to them briefly. He states that CCRA
made a ruling supporting the Applicant's calculations and he waited for the
return of the money. He went on to say: CCRA commenced collection proceedings
so the Applicant filed a Notice of Objection yet CCRA garnished his wages
despite prohibition in the Act and the Minister continued to
"steal" the Applicant's wages. He also referred to other errors of
CCRA officials including, apparently, a reversal of the March 5, 2002 decision.
It is well-founded in law that estoppel cannot override the law. A mistake by
an officer of CCRA does not override the law and the law is as described
earlier in this decision.
[10] For these reasons, the application for
extension of time to file a Notice of Appeal with respect to he Applicant's 1995
taxation year is denied.
Signed at Ottawa, Canada, this 30th day of
March, 2004.
McArthur
J.
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