Date: 20000912
Docket: 2000-601-GST-I
BETWEEN:
MATT PANAR
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Sarchuk J.T.C.C.
[1] This is an appeal by Matt Panar from an assessment dated
April 26, 1999 by virtue of which the Minister of National
Revenue (Minister) denied the Appellant's application for a
rebate of GST on the basis that the application was not filed
within four years after the amount of tax was paid or remitted as
required by subsection 261(3) of the Excise Tax Act (the
Act).
[2] The following facts are not in dispute. A developer leased
a large area of undeveloped property from the University of
British Columbia and improved the property with residential
strata units. Prior to the construction thereof, the developer
converted the leased area into smaller individual stratified
leases. In 1992, the Appellant purchased residential strata unit
106 in the Thames Court condominium complex at 5880 Hampton Place
and in so doing acquired a lease interest by way of an assignment
of one of the stratified leases converted from the
developer's lease with the University. The transaction was
completed by the Appellant on August 21, 1992. The price paid by
the Appellant was $279,000. In addition to the foregoing amount,
the Appellant paid GST to the developer in the amount of
$18,252.34.
[3] The Appellant applied for a rebate by submitting the
requisite form to Revenue Canada on November 27, 1998. The
application was denied on the basis that it was not filed within
the time prescribed by the Act. The Appellant however, did
receive a GST New Housing Rebate in the amount of $6,729.33
leaving the balance of $11,523.01 which remains in issue.
[4] The Appellant was represented at the hearing by Barry
Brovender who advised the Court that he did not intend to call
any witnesses and proposed to submit a statement of facts in lieu
thereof. Counsel for the Respondent accepted the facts set out in
the following two paragraphs:
1. Dr. Matt (sic) purchased his leasehold condominium,
unit #106 in The Thames Court condominium complex at 5880 Hampton
Place in Vancouver, on August 21, 1992. Dr. Panar paid $18,252.34
GST on the purchase of his leasehold condominium. The amount of
money in dispute in this appeal is the balance of $18,252.34.
2. In 1998 Dr. Panar, aware of the efforts of the Hampton
Place GST Committee, applied for a full GST rebate on the balance
owing of $18,252.34. He received the April 26, 1999 letter
denying his claim and advising him of subsection 261(3) of the
Excise Tax Act. Under the time limits set by section
261(3) of the Act, Dr. Panar had 4 years from the time he
purchased his leasehold condominium to apply for a rebate
(Section 261 has since been amended). During this time Dr. Panar
was discouraged to learn that other leasehold condominium owners
at Hampton Place, who had successfully completed and filed forms
for full GST rebates, were denied full rebates by Revenue
Canada.
Legislative Scheme
[5] The relevant provisions of the Act in effect on
November 27, 1998 when the Appellant filed his General
Application for Rebate read as follows:
261(1) Where a person has paid an amount
(a) as or on account of, or
(b) that was taken into account as,
tax, net tax, penalty, interest or other obligation under this
Part in circumstances where the amount was not payable or
remittable by the person, whether the amount was paid by mistake
or otherwise, the Minister shall, subject to subsections (2) and
(3), pay a rebate of that amount to the person.
...
261(3) A rebate in respect of an amount shall not be paid
under subsection (1) to a person unless the person files an
application for the rebate within two years after the day the
amount was paid or remitted by the person.
Subsection 261(3) as it read at that time reflected an
amendment made in 1997 reducing the prior limitation period from
four years to two years. The amendment further provided that:
71(2) Subsection (1) applies:
(a) to amounts that, after June 1996 are paid as or on
account of, or are taken into account as tax or other amount
payable or remittable under Part IX of the Act; and
(b) to amounts that, on or before the last day of that
month, were paid as or on account of, or were taken into account
as tax or other amount payable or remittable under that part,
other than amounts that are claimed in an application under
section 261 of the Act filed on or before June 30, 1998.[1]
Appellant's position
[6] The primary submission advanced by Brovender in the
material he submitted was that Revenue Canada was unjustly
enriched by the amount of GST collected in error on the exempt
supply of the Appellant's leasehold condominium because:
(a) Revenue Canada does not have authority under the Excise
Tax Act to collect GST on an exempt supply;
(b) from January of 1995, Revenue Canada had continual notice
of the disputed GST payments on the exempt supply of leasehold
condominiums from the Hampton Place residence;
(c) Revenue Canada litigated the matter beyond the time period
allowed for this Appellant to claim a rebate for the GST
collected in error; and
(d) Revenue Canada erred in interpreting section 261 of the
Act to apply to an exempt supply collected in error.
As well, Brovender, who had been present throughout the
hearing of the appeals in Earnshaw and Throness v. The Queen,
Alfred v. The Queen and May v. The Queen[2] asked the Court to
consider the following arguments advanced in those cases and
apply them to this appeal. There was no objection from counsel
for the Respondent.
[7] The Appellant relies on the decision in Taylor and
Redmond v. The Queen[3] in which Garon C.J.T.C.C., in identical
circumstances, held that the Appellants' acquisition of their
respective residential units was exempt from tax under
Part IX of the Act and that accordingly, the
Minister's assessment to deny them a rebate of taxes paid in
error was vacated. Since this decision was handed down on July
27, 1998 the Appellant contends that his right to file a General
Application for Rebate was postponed effective as of that date.
In support of this position, it was submitted that the
appropriate interpretation of subsection 261(1) can be
ascertained by reading subsections (1) and (3) together and
utilizing subsection (1) in determining what was meant by the
phrase "within two years after the day the amount was paid
or remitted by the person". It was further submitted that it
is necessary to import into the meaning of subsection (3) the
concept of "was not payable or remittable by the
person" from subsection (1). When read in this fashion and
accepting the fact that the Appellant did not learn that the
amount in issue "was not payable" by him until such
time as the Taylor and Redmond decision was handed down,
at that point i.e. July 27, 1998, if the statutory
limitation did in fact apply, he had two years within which to
make his application. The Appellant contends that interpreting
the words referred to in this fashion does not violate the plain
meaning and intent of the statute but interprets the law in a
creative fashion in order to enable the Court to interpret the
relevant sections in a manner which provides relief for the
Appellant.
[8] In support of this approach to the interpretation of
taxing statutes, reference was made to the decision in Smith
Drugs Ltd. v. M.N.R.[4] wherein Reed J. stated:
With respect to the statements in Fries v. M.N.R.,
(1990) 114 N.R. 150; 90 DTC 6662 (S.C.C.) and Johns-Manville
Canada Inc. v. M.N.R., (1985) 60 N.R. 244; 85 DTC 5373
(S.C.C.) which indicate that in cases of uncertainty the taxpayer
must be given the benefit of the doubt, I do not interpret those
comments as in any way resiling from the principle set out in
Stubart. In my view, those cases merely indicate that if
after one has read the relevant statutory provisions of an
Act and read them in light of the purpose and object of
the statute, there is still doubt as to which alternative
interpretation was intended, then, that doubt should be resolved
in favour of the taxpayer, regardless of whether the provision in
question is a charging section or an exemption or deduction
provision.
[9] This Appellant also adopts the supplementary submissions
filed in May v. The Queen, supra. In that appeal, it was
argued that a reasonable interpretation of subsection 261(3)
of the Act suggests that a person subject to the
provisions of the Act is, in the usual case, aware of a
sale of a taxable supply that did not go through, remained unpaid
or was consumed outside of Canada. In such circumstances, GST
would not be payable and the person would apply for a rebate of
GST remitted on the sale within the limitation period. On the
other hand, a person would not normally know that a rebate of an
exempt supply collected in error by Revenue Canada is possible
until a Court determines that the supply is exempt. In the case
of this Appellant, the determination that the supply of his
leasehold interest was an exempt supply was not made until the
Taylor and Redmond decision which was handed down after
the limitation period had expired. Relying on a recent decision
of the British Columbia Court of Appeal (BCCA), Hansen v. The
Queen,[5] it
was argued that subsection 261(3) may be interpreted as a
limitation that is procedural in nature because it determines
that a person make the application for a rebate when the person
becomes aware of circumstances in which the GST would not be
payable. In Hansen, the BCCA held that a limitation that
is procedural in nature can be extended by agreement or estoppel.
Thus, the Appellant says, Revenue Canada by accepting that
purchasers were entitled to rebates but only after the
Taylor decision was handed down, effectively agreed to
extend the commencement of the limitation period to the date of
the decision i.e. July 27, 1998.
[10] The Appellant also contends that the Minister is estopped
from denying his claim for a rebate by asserting that his
application is statute-barred by reason of being out of
time. He says that if his application is in fact statute-barred,
his failure to file within the requisite time was the result of
representations made by the Minister's servants and agents
prior to the expiration of the limitation period with respect to
his right to a general rebate.
Conclusion
The Limitation Period Argument
[11] I have concluded that the "creative approach"
to the interpretation of subsections 261(1) and (3) of the
Act as proposed must be rejected. The intention of
Parliament to limit the time period for the filing of a rebate
application has been set out in clear and unambiguous language.
What is being sought by the Appellant is to have the Court
interpret this particular provision to make it say what he
believed would have been said by the legislators if this
particular situation had been before them. When the meaning is
clear, this Court has no jurisdiction to mitigate a harsh
consequence. While this Court may be entitled to construe the
language of an Act of Parliament, it may not distort it to
make it accord with what the Court may think to be reasonable.[6]
[12] I am also of the view that the decision in Hansen
is distinguishable both in fact and in law. The issue in that
case was whether she was barred from pursuing a claim for
compensation for land taken for highway purposes by reason of a
one-year limitation in section 25 of the Expropriation
Act.[7] The
Expropriation Compensation Board (the Board) held that the
Ministry was estopped from relying on the limitation period. The
appeal was from that determination. The facts in Hansen
are that at a meeting between solicitors in June 1995 the
Ministry's negotiator led Hansen's solicitor to believe
that the one-year limitation period would run from August 8, the
possession date, rather than from July 21, being one year from
the date of payment as stipulated in the relevant provision.
MacKenzie J.A. found that "the representation was
unambiguous. It was a representation of fact. It was intended to
be relied upon, and was relied upon" and held that the Board
was correct in its conclusion that the elements of promissory
estoppel were made out. This decision is of little assistance to
the Appellant since the estoppel as found involved a
representation of fact which was acted on by Hansen to her
detriment. That is not the case in the present appeal where the
representations by Gravelle (and other Revenue Canada officials)
were reflective of the Department's interpretation of the
relevant statutory provisions of the Act.
[13] Relying specifically on the following comment of
MacKenzie J.A. in Hansen:
Section 25, as well as barring proceedings after the
expiration of one year, deems the owner to have accepted advanced
payment in full settlement, in the absence of a further claim
within time. In my view, that does not extinguish the claim but
simply deems the claim paid. The distinction may be a subtle one,
but I think that the wording of section 25 lays down a limitation
that is procedural in nature which can be extended by agreement
or estoppel.
it was also argued that the limitation in subsection 261(3) of
the Act is procedural in nature and can be extended by
agreement or estoppel. I am unable to agree. First the Appellant
has not made out a case for estoppel. Second, the limitation
period set out in subsection 261(3) of the Act is
substantive in nature and not merely procedural and cannot be
extended. It provides that "a rebate ... shall not be
paid ... unless the person files an application for the
rebate within two years ... ". As counsel for the
Respondent observed, this provision clearly extinguishes all
rights to the rebate. Furthermore, there is no suggestion the
Appellant was incorrectly informed by any Revenue Canada official
of the limitation period for filing a rebate application. Thus it
is difficult to find any basis for the submission made that
Revenue Canada "effectively agreed to extend the limitation
until after the Court decision" in Taylor and
Redmond. Furthermore, even if the Appellant had been able to
establish that Revenue Canada entered into some form of agreement
with him, it would in effect be an agreement to assess tax
otherwise than in accordance with the law and would be an illegal
agreement.[8]
[14] To the foregoing, I must add that there is no provision
in the Act granting authority to the Minister or providing
the Federal Court or this Court with jurisdiction to waive,
extend or alter the statutory time periods specified in a
subsection such as 261(3).[9]
Estoppel argument
[15] There is no evidence that any officer or agent of Revenue
Canada provided the Appellant with erroneous information with
respect to his right to a General Rebate. However, by the latter
part of 1995, it was common knowledge amongst all of the people
who had purchased the strata units in issue that Revenue
Canada's position was that they were not entitled to the
rebate. Furthermore, although there is no direct evidence on
point, it is reasonable to infer that the Appellant was aware of
this position and believed that implicit in Revenue Canada's
position was that he should not make an application because it
would not be successful. It is also a fair inference that, like
many others, he acted on it and concluded that making an
application would be a waste of time. Thus, relying on the
correctness of the expressed Revenue Canada position, he failed
to submit his application within the time period prescribed.
[16] Although it is clear that the Appellant acted to his
detriment as a result of the representations made by Revenue
Canada employees as to the relevant provisions of the Act,
he cannot succeed. Issue estoppel has been considered in a number
of cases and the principle which can be taken therefrom is that
no representation involving an interpretation of law by a servant
or officer of the Crown can bind it. In The Minister of
National Revenue v. Inland Industries Limited,[10] the Supreme
Court of Canada considered certain sections of the Income Tax
Act respecting the deductibility of past service
contributions to a pension plan initially accepted by the
Department of National Revenue for registration but with respect
of which deductions were later refused. Pigeon J. speaking for
the Court effectively disposed of any question of an estoppel by
stating:
... However, it seems clear to me that the Minister
cannot be bound by an approval given when the conditions
prescribed by the law were not met.
This principle was applied in Stickel v. M.N.R.[11] by Cattanach J.
who stated:
In short, estoppel is subject to the one general rule that it
cannot override the law of the land.
[17] The rationale for the principle expressed in these cases
was succinctly summarized by Bowman J. in Goldstein v. The
Queen:[12]
It is sometimes said that estoppel does not lie against the
Crown. The statement is not accurate and seems to stem from a
misapplication of the term estoppel. The principle of estoppel
binds the Crown, as do other principles of law. Estoppel in
pais, as it applies to the Crown, involves representations of
fact made by officials of the Crown and relied and acted on by
the subject to his or her detriment. The doctrine has no
application where a particular interpretation of a statute has
been communicated to a subject by an official of the government,
relied upon by that subject to his or her detriment and then
withdrawn or changed by the government. In such a case a taxpayer
sometimes seeks to invoke the doctrine of estoppel. It is
inappropriate to do so not because such representations give rise
to an estoppel that does not bind the Crown, but rather, because
no estoppel can arise where such representations are not in
accordance with the law. Although estoppel is now a principle of
substantive law it had its origins in the law of evidence and as
such relates to representations of fact. It has no role to play
where questions of interpretation of the law are involved,
because estoppels cannot override the law.
[18] The question before me is whether the representations
made by officials of Revenue Canada to various strata unit owners
with respect to the taxability of the supply of their units were
representations of fact or law. These representations were in
essence that the acquisition of the strata units was considered
to be a sale and purchase and did not constitute an exempt supply
and as such was properly subject to the 7% GST. In my view, these
representations were not statements of fact but rather were an
opinion as to the appropriate interpretation of the relevant
statutory provisions of the Act. In such circumstances, it
is not open to the Appellant to set up estoppel to preclude the
Minister from relying on the provisions of subsection 261(3) of
the Act to deny his claim for a rebate.
[19] The Appellant has also asked this Court to vary the
assessment to return the balance of $18,252.34 plus interest to
him on the basis that the Minister was unjustly enriched or in
the alternative, seeks an Order that a remission of tax pursuant
to section 23 of the Financial Administration Act is
justified in the circumstances. This request is beyond
the jurisdiction of this Court. In Lamache Estate v.
Canada,[13]
counsel for that Appellant sought a "direction
with respect to an accounting" for the amount of $3,733.11
in tax paid which had not been credited or refunded to him.
Christie A.C.J.T.C. stated:
... Even assuming that an action for an accounting could
be brought in respect of the money I questioned whether this
court has that jurisdiction and referred to its authority in
disposing of an appeal. Section 171 of the Act
provides:
171(1) The Tax Court of Canada may dispose of an appeal by
(a) dismissing it, or
(b) allowing it and
(i) vacating the assessment,
(ii) varying the assessment, or
(iii) referring the assessment back to the Minister for
reconsideration and reassessment.
On further reflection I am reinforced in my view that the
court does not have the jurisdiction referred to. The Tax Court
of Canada is a purely statutory creation and its jurisdiction is
confined to what is expressly conferred on it by Parliament and
what is necessarily implied from what is expressly conferred.
...
In McMillen Holdings Limited v. M.N.R., 87 DTC 585 at
591-592 (T.C.C.), the Appellant relying on sections 12 and 13 of
the Tax Court of Canada Act asked the court for a
direction to the respondent to pay interest on a dividend refund
made under subsection 129(1) of the Act. ...
In concluding that the court did not have jurisdiction, Rip J.
said:
Section 12 of the Tax Court of Canada Act grants this
Court original jurisdiction to hear and determine appeals on
matters arising under the Act and other statutes.
Subsection 171(1) of the Act regulates how the Court may
exercise its original jurisdiction to hear and determine an
appeal under the Act. Section 13 of the Tax Court of
Canada Act simply grants the Court all powers, rights and
privileges as are vested in a superior court of record in respect
of witnesses, documents and other matters necessary or proper for
the due exercise of its jurisdiction, that is, to hear and
determine appeals, but section 13 does not increase the
Court's jurisdiction to that of a superior court of record.
The due exercise of this Court's jurisdiction on matters
arising under the Act is to hear and determine an appeal
from a tax assessment. I cannot overemphasize that the
Court's original jurisdiction is to hear and determine
appeals in matters arising under the Act; an action
against the Crown based on the Act, but which is not an
appeal from an assessment, is not an appeal arising under the
Act, which is within the jurisdiction of this Court.
[20] Accordingly, for the above reasons, the appeal is
dismissed.
Signed at Ottawa, Canada, this 12th day of September,
2000.
"A.A. Sarchuk"
J.T.C.C.
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