Citation:
2016 TCC 256
Date: 20161108
Docket: 2016-1032(IT)G
BETWEEN:
MANSOUR
BOROUMEND,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
Graham J.
[1]
The Crown has brought a motion to quash an
appeal filed by Mansour Boroumend in respect of his 2003 and 2004 tax
years on the grounds that a precondition to filing the appeal has not been met.
When a taxpayer objects to a reassessment and the Minister of National Revenue
confirms the reassessment, the taxpayer has 90 days to appeal to the Tax Court
of Canada.
The Crown takes the position that Mr. Boroumend did not initiate his appeal
within 90 days, did not obtain an extension of time to appeal and is now out of
time to obtain an extension of time. Thus, the Crown submits that Mr. Boroumend’s
appeal should be quashed.
[2]
Mr. Boroumend takes the position that the
Minister never mailed a Notice of Confirmation to him. Thus, he says that his
objection is still outstanding. Paragraph 169(1)(b) of the Income Tax
Act states that a taxpayer may appeal to the Court if 90 days have elapsed
since he or she filed his or her objection and the Minister has not vacated the
reassessment, confirmed the reassessment or issued a new reassessment. Mr.
Boroumend asserts that his appeal was properly made pursuant to that provision
and thus should not be quashed.
Test to Be Used
When a Taxpayer Alleges That a Notice of Confirmation Was Never Mailed
[3]
The Tax Court of Canada and Federal Court of
Appeal have had many opportunities to consider what happens when a taxpayer
alleges that the Minister did not mail a Notice of Assessment or a Notice of
Confirmation. I recently set out a summary of the steps that have emerged from
those cases in respect of Notices of Assessment (see Mpamugo v. The Queen). The law is substantially the
same for Notices of Confirmation. I have reproduced those steps below, with the
modifications necessary to cover Notices of Confirmation:
a) Step 1: The taxpayer must assert that
the Notice of Confirmation was not mailed.
A taxpayer normally does so in one of two ways. The taxpayer may assert that he
or she did not receive the Notice of Confirmation and thus believes that it was
not mailed. Alternatively, the taxpayer may assert that the notice was mailed
to the wrong address through no fault of the taxpayer and was thus, in effect,
not mailed.
b) Step 2: If the taxpayer asserts that the
Notice of Confirmation was not mailed, the Minister must introduce sufficient
evidence to prove, on a balance of probabilities, that the Notice of Confirmation
was indeed mailed or, if the taxpayer has asserted that it was mailed to the
wrong address, that it was mailed to the address that the CRA properly had on
file.
As Notices of Confirmation are usually sent by registered mail, the Minister
may choose to meet this burden by relying on an affidavit that complies with
the requirements of subsection 244(5) to create a rebuttable presumption that
the notice was mailed. Alternatively, the Minister may simply introduce the
required evidence through other means.
c) Step 3: If the Minister is able to prove
that the Notice of Confirmation was indeed mailed, then the mailing is presumed
to have occurred on the date set out on the notice (subsection 244(14)). This
is a rebuttable presumption.
The taxpayer may introduce evidence to prove that it was actually mailed on a
different date. The deadline for filing a Notice of Appeal is calculated from
the mailing date established by this step (subsection 169(1)).
d) Step 4: Once the mailing date is
established (either through the presumption or through proof of a different
date), the Notice of Confirmation is deemed to have been received on
that date (subsection 248(7)). This deeming provision is not rebuttable. Step 4 is not strictly
relevant for the purposes of determining the deadline for filing a Notice of Appeal.
That determination is made at Step 3. Step 4 simply makes it clear that the
fact that a taxpayer did not actually receive the Notice of Assessment is
irrelevant.
[4]
In Mpamugo, I concluded that the
taxpayer’s credibility is to be considered in Step 2 rather than in Step 1.
Application of the Mailing Test to the Facts
[5]
I will now apply the test set out above to the
facts in Mr. Boroumend’s case.
Step 1: Assertion That the Notice Was Not Mailed
[6]
Mr. Boroumend asserts that the Minister never
mailed a Notice of Confirmation to him. He acknowledges that a notice was
prepared but asserts that it was never mailed. This assertion satisfies Step 1
of the test.
Step 2: Proof of Mailing
[7]
Since Mr. Boroumend has asserted that no Notice
of Confirmation was ever mailed, the Crown must prove on a balance of
probabilities that one was mailed.
[8]
The Crown would normally rely on subsection
244(5) to prove mailing. That subsection provides a simple mechanism by which
the Minister can prove mailing if the Notice of Confirmation was sent by
registered mail. Unfortunately for the Minister in the present case, she does
not have the evidence that she would normally rely upon to produce the affidavit
referred to in subsection 244(5).
[9]
The Minister tracks documents relating to an
objection in what is referred to as an “orange appeals folder”. In the
normal course, a dated copy of the Notice of Confirmation and the proof of
mailing would both be kept in a taxpayer’s orange appeals folder. The Minister
has lost Mr. Boroumend’s orange appeals folder. The Minister knows that the orange
appeals folder existed up until at least the Spring of 2012 but is unsure what
happened to it after that.
[10]
The fact that the Minister cannot rely upon
subsection 244(5) to prove mailing does not mean that the Crown loses. It
simply means that the Minister must use other means to try to prove, on a
balance of probabilities, that the Notice of Confirmation was mailed.
[11]
The Minister relies upon an affidavit of a CRA
litigation officer named Thivya Logananthan. Ms. Logananthan also testified and
was cross-examined on both her affidavit and her testimony.
[12]
Ms. Logananthan explained that CRA Appeals’
normal practice would be to send a Notice of Confirmation to a taxpayer by Canada
Post Xpresspost and to keep proof of that mailing in the orange appeals folder.
She also explained that the normal practice would be for the Notice of
Confirmation to be sent with a cover letter and to be accompanied by
instructions on how to appeal to the Tax Court. I do not think that any of this
evidence is controversial. I accept it.
[13]
Ms. Logananthan went on to describe what she
says is the usual process by which Notices of Confirmation are sent out:
a)
The Appeals Officer prints out a Notice of
Confirmation and an accompanying cover letter.
b) The Appeals Officer then signs the cover letter.
c)
The Appeals Officer then gives the cover letter,
the Notice of Confirmation and instructions on how to appeal to the Tax Court
to his or her team leader for approval.
d) If they are approved, the team leader then signs the Notice of
Confirmation and gives the three documents to an Appeals clerk.
e)
The Appeals clerk then dates the Notice of
Confirmation and the cover letter and sends them to the taxpayer by Xpresspost.
f)
Someone then enters that date into the CRA’s
case management system.
[14]
The Crown admits that the foregoing testimony is
hearsay. Ms. Logananthan does not personally have experience with the
process that she described.
[15]
Section 72 of the Tax Court of Canada Rules
(General Procedure) permits affidavit evidence based on information and
belief to be admitted on a motion if the source of the information and the fact
of the belief are stated. Any concerns about the necessity of the resulting
hearsay evidence or its reliability go to the weight the Court should give to
the evidence.
However, Ms. Logananthan’s evidence regarding the process was not introduced by
affidavit. It was introduced orally pursuant to section 76 of the Rules.
Section 76 does not say anything about hearsay. Thus, the normal rules
regarding hearsay evidence apply. The evidence can only be admitted if it meets
the tests of necessity and reliability.
[16]
I do not see the necessity of relying on Ms.
Logananthan’s evidence rather than the evidence of an Appeals Officer or a team
leader who has actual experience with the process. I did not need to receive
evidence from the particular Appeals Officer or team leader who dealt with Mr.
Boroumend’s objection. Given the size of the CRA’s operations and the sheer
number of Notices of Confirmation that are mailed each year, it would have been
acceptable to me if the Crown had simply adduced evidence from someone with
personal knowledge indicating the normal procedure that is followed by CRA
Appeals in issuing Notices of Confirmation and providing a reason why I should
accept that that procedure was followed in Mr. Boroumend’s case.
[17]
I also have some concerns about the reliability
of Ms. Logananthan’s evidence. She seemed unsure of the exact mechanics of some
of the key steps in the process and gave seemingly contradictory explanations as
to who dated the Notice of Confirmation and when.
[18]
Based on the foregoing, I find that Ms.
Logananthan’s evidence on the process of issuing a Notice of Confirmation is
not admissible. I note that, even if I had accepted that Ms. Logananthan had
accurately described the process, there are clear indications that the process
was not followed in Mr. Boroumend’s case. A quality assurance audit performed
on the file sometime after the objection process was completed revealed that
there was no copy of the cover letter and no copy of the instructions on how to
appeal to the Tax Court in Mr. Boroumend’s orange appeals folder. The absence
of these documents indicates that the process described by Ms. Logananthan was
not followed.
[19]
At some point, Mr. Boroumend made a request for
documents under the Privacy Act.
The documents that were provided to him included some documents from his orange
appeals folder. The Minister kept a copy of the documents given to Mr.
Boroumend and has not lost those documents. Thus, the Minister indirectly has
copies of some of the documents from the orange appeals folder. Ms. Logananthan
attached the relevant documents to her affidavit. Those documents show that:
a)
on October 22, 2009, the Appeals Officer sent
Mr. Boroumend a letter advising him that the Appeals Officer was going to
confirm the reassessments;
b) the Appeals Officer prepared a Notice of Confirmation;
c)
the Notice of Confirmation was signed by the
Appeals Officer’s team leader;
d) an undated copy of that signed Notice of Confirmation was placed in
the orange appeals folder;
e)
the Appeals Officer prepared a cover letter to
go with the Notice of Confirmation;
f)
the reproduced cover letter indicates that the
Appeals Officer’s intention was to send the Notice of Confirmation and the
cover letter by Xpresspost;
g)
in April 2010, a CRA Quality Assurance Officer
reviewed the contents of the orange appeals folder and found that:
i.
the cover letter had not been placed in the
file; and
ii.
the instructions on how to appeal to the Tax
Court had not been placed in the file;
h) the Appeals Officer reproduced the cover letter that he had prepared
and gave a copy of it to the Quality Assurance Officer who put it in the orange
appeals folder;
and
i)
the reproduced cover letter was undated.
[20]
Ms. Logananthan reviewed the electronic records
in the CRA’s case management system. Those records indicate that the “decision date” for Mr. Boroumend’s objection was October 29, 2009. Ms.
Logananthan explained that the decision date is generally the date of the
Notice of Confirmation. The fact that Mr. Boroumend’s decision date is October
29, 2009 is not proof that a Notice of Confirmation was sent to him. It is,
however, proof that someone at the CRA believed the Notice of Confirmation had
been sent on that date.
[21]
If the above documents and electronic records were
all the evidence before me, I would have found that the Minister had failed to
prove, on a balance of probabilities, that the Notice of Confirmation was
mailed. The above documents and records are evidence that the Appeals Officer prepared
the Notice of Confirmation, that he took steps towards mailing it and that the
computer system was updated to reflect that intention, but are not proof that
the notice was actually mailed.
[22]
However, the above documents and records are not
the only evidence before me. There are several pieces of evidence that suggest
that Mr. Boroumend received a Notice of Confirmation. If Mr. Boroumend received
a Notice of Confirmation then it must have been mailed. The following evidence
suggests that Mr. Boroumend received a Notice of Confirmation:
a)
In October 2011, Mr. Boroumend filed
applications for extension of time to appeal his 2003 and 2004 tax years. Both of those applications
state that he was seeking an extension of time to appeal a “Notice of Reassessment” dated October 29, 2009. The applications state that his accountant
kept telling him that he was going to file a Notice of Appeal but never did. The
Notices of Appeal attached to those applications state that “on October 29, 2009 [the Appeals Officer]
dismissed the Notices of objection and confirmed the reassessment.”
b) Mr. Boroumend ultimately withdrew his applications for extension. He was represented by counsel
at the time.
Assuming that October 29, 2009 was, in fact, the date that the
Notices of Confirmation were mailed, Mr. Boroumend would have been out of time
to apply for an extension of time to appeal. Mr. Boroumend later described
counsel as not being able to help him “as time was not on his side”. This description suggests
that the reason for withdrawing the applications for extension was that they
had been made too late.
c)
In October 2014, Mr. Boroumend applied to the
Minister under the taxpayer relief provisions for relief in respect of his 2003
and 2004 tax years. He referred to those years as being “reassessed by the CRA on October 29, 2009.”
d) In November 2014, Mr. Boroumend again applied to the Minister under
the taxpayer relief provisions for relief in respect of his 2003 and 2004 tax
years. He again referred to those years as being “reassessed by the CRA on October 29, 2009.”
[23]
A number of the above documents refer to Notices
of Reassessment being issued on October 29, 2009 as opposed to a Notice of
Confirmation. By contrast, the Notices of Appeal refer to a Notice of
Confirmation dated October 29, 2009. There is no evidence to indicate that Mr.
Boroumend’s 2003 and 2004 tax years were reassessed on October 29, 2009. I find
that the references to reassessments were made in error and were intended to be
references to confirmations.
[24]
I do not have any evidence from Mr. Boroumend to
explain the above statements. Faced with the knowledge that the Crown was going
to rely on those statements, Mr. Boroumend chose not to file an affidavit in
response to the Crown’s motion. He chose not to state in such an affidavit that
he did not receive the Notice of Confirmation. He chose not to explain why it
was that he used the October 29, 2009 date in his applications for extension,
his Notices of Appeal and his applications for taxpayer relief if not that he
had received a Notice of Confirmation bearing that date. He chose not to
explain why he withdrew his applications for extension if not because he had
realized that he was out of time to make them. In the circumstances, I draw an
adverse inference from his failure to introduce this evidence.
[25]
Mr. Boroumend submits that because the Crown has
not yet filed a Reply and I have not yet granted an extension of time for the
Crown to do so, pursuant to subsection 44(2) of the Rules, the facts pled in
the Notice of Appeal are presumed to be true. As a result, Mr. Boroumend says
that I must presume that his assertion in his Notice of Appeal that he did not
receive the Notice of Confirmation is true. I disagree with that interpretation
of subsection 44(2). Subsection 44(2) only applies when a Reply has not been
filed within the time limits set out in subsection 44(1). Subsection 44(1)
contemplates the normal 60 day time limit being extended either by consent
or by Court order. In my view, subsection 44(2) only has the potential to apply
when:
a)
a Reply has not been filed within the 60 day
period and no extension has been granted;
b) a Reply has not been filed within the 60 day period and an extension
has been granted but the Reply has still not been filed within the extended
period for filing; or
c)
a Reply has not been filed with the 60 day
period and the Crown has not applied for an extension of time to file a Reply
within that 60 day period.
[26]
The Crown is not in any of those situations. The
Crown has, as alternative relief to quashing Mr. Boroumend’s appeal, asked
for an extension of time to file a Reply and has done so within the 60 day
period. Since I have not yet ruled on that application, the Crown is not yet
unable to file a timely Reply and thus subsection 44(2) does not yet have the
potential to apply.
[27]
The evidence of Mr. Boroumend’s actions after
October 2009, coupled with the adverse inference that I have drawn, suggest
that Mr. Boroumend received a Notice of Confirmation and that it was dated
October 29, 2009. That suggestion is reinforced by the fact that the October
22, 2009 letter shows that the Minister planned to issue the Notice of
Confirmation shortly thereafter and the fact that the case management system
recorded October 29, 2009 as the date that a decision was made on the
objections.
[28]
Based on all of the foregoing, I find that it is
more likely than not that the Notice of Confirmation was mailed to Mr.
Boroumend.
Step 3: Date of Mailing
[29]
Normally, once the Respondent has proven that
the Notice of Confirmation was mailed, the mailing would be presumed to
have occurred on the date set out on the notice (subsection 244(14)). In this
case, due to the loss of the orange appeals folder, I do not know what date was
set out on the notice. However, based on all of the evidence before me, I find
that the notice was mailed on October 29, 2009.
[30]
Pursuant to subsection 169(1), a taxpayer may appeal
a confirmation on or before the day that is 90 days after the mailing of the Notice
of Confirmation. The 90 day deadline for Mr. Boroumend to appeal the
confirmation expired on January 27, 2010. Mr. Boroumend filed a Notice of
Appeal on March 14, 2016. Mr. Boroumend did not obtain an extension of time to
file a Notice of Appeal and is well out of time to do so now. Thus, he is not
able to appeal to this Court.
[31]
Based on all of the foregoing, the Motion is
allowed. The Appeal is quashed.
Costs
[32]
Costs are awarded to the Crown.
Signed at Ottawa,
Canada, this 8th day of November 2016.
“David E.Graham”
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