Citation: 2015 TCC 192
Date: 20150729
Docket: 2015-1189(IT)APP
BETWEEN:
PATRICK
APIC,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
Woods J.
[1]
The applicant, Patrick Apic, seeks an extension
of time to institute an appeal from assessments made under the Income Tax
Act for the 2007 and 2008 taxation years.
[2]
In order for an extension of time to be granted,
the conditions set out in subsection 167(5) of the Act must be
satisfied. This provision reads:
167(5) When order to be made – No order
shall be made under this section unless
(a) the application is made within one year after the expiration of the
time limited by section 169 for appealing; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited by section 169 for
appealing the taxpayer
(A) was unable to act or to instruct another to act in the
taxpayer’s name, or
(B) had a bona fide intention to appeal,
(ii) given the reasons set out in the application and the
circumstances of the case, it would be just and equitable to grant the
application,
(iii) the application was made as soon as circumstances permitted,
and
(iv) there are reasonable grounds for the appeal.
[3]
The respondent opposes the application on the
ground that the conditions in clauses (b)(i) and (iii), above, have not been
met. The onus is on the applicant to establish that he complied with these conditions.
[4]
I am generally loath to deny an application to
extend time on the grounds set out in clauses (b)(i) and (iii) unless
non-compliance is clear. These conditions concern appeal procedure. It is often
difficult for taxpayers to navigate appeal procedures, and the penalty for non-compliance
with any of the conditions in s. 167(5) is extremely harsh. Parliament has
enacted this legislation and it must be applied, however, it is not appropriate
to set the bar too high as it concerns clauses (b)(i) and (iii) in particular.
[5]
The only witness who testified at the hearing
was the applicant’s bookkeeper, Biserka Clark. She also represented the
applicant at the hearing. I will comment first on the reliability of Ms.
Clark’s testimony.
[6]
Ms. Clark testified that the applicant formed an
intention to appeal the reassessments shortly after they were received. She
said they did not get around to the paperwork until about six months later
because they thought there was an 18 month deadline. The deadline is actually
90 days.
[7]
Ms. Clark testified that their understanding of
the deadline came from viewing the Court’s website and from calling Court staff
on two or three occasions. It was only when the respondent’s Reply was received
in June, Ms. Clark stated, that they realized that the deadline was
missed.
[8]
Counsel for the respondent submits that Ms.
Clark’s testimony is not reliable in certain respects. I agree with this. The
testimony was very brief and at times it was not believable.
[9]
For example, Ms. Clark testified that, until the
Reply was received, they believed that the applicant had 18 months to file an
appeal. This testimony does not make sense. The applicant had earlier applied
for an extension of time, and provided a reason for requesting the extension.
It makes no sense to do this if the applicant believed that he was within the
appeal period. Overall, this testimony was simply not credible.
[10]
Although Ms. Clark’s testimony does not have a
complete ring of truth, I do find that she and the applicant likely thought
that there was no problem with their filing procedure. I would note that the excerpt
from the Court’s website that was introduced into evidence makes no mention of
the conditions in s. 167(5). Similarly, the Court’s form for the extension application
does not mention them. In these circumstances, it makes sense that Ms. Clark
and the applicant were surprised when they received the Reply and saw the
conditions that must be satisfied. The applicant likely knew that he needed an
extension of time, but before receiving the Reply he also likely thought that
this would be non‑controversial.
[11]
Turning to the first condition that is at issue,
clause (b)(i) requires that the applicant be unable to appeal within 90 days,
or that the applicant had formed an intention to appeal within 90 days.
[12]
Ms. Clark testified that she and the applicant
made a decision to appeal shortly after new reassessments were issued in
response to a notice of objection. Counsel for the respondent submits that this
testimony does not make sense because no notice of appeal was filed for another
six months.
[13]
When the evidence is viewed as a whole, I would
conclude that the applicant did form an intention to appeal when the new assessments
were received.
[14]
On cross-examination, Ms. Clark explained the lead
up to the decision to appeal which started during the objection stage when the
matter was discussed with the appeals officer. I accept that the issue of
appealing was on the applicant’s radar screen early on and that the applicant
formed an intent to appeal when he saw the large amounts owing in the notices
of reassessment issued in response to the notice of objection.
[15]
As for the applicant’s failure to file a notice
of appeal immediately, I find this to be reasonable. Preparing and filing a
notice of appeal takes some time, especially if the individual is unfamiliar
with the procedure. It is not realistic to think that a notice of appeal would necessarily
be filed immediately.
[16]
It is appropriate to give the applicant the
benefit of the doubt on this issue and conclude that the condition in clause
(b)(i) is satisfied.
[17]
As for the requirement in clause (b)(iii), this
requires that the applicant demonstrate that he filed the application to extend
time as soon as circumstances permitted.
[18]
Ms. Clark testified very briefly that the applicant
was busy during this period in travelling for work and moving his office. There
was little or no follow up to this testimony on cross-examination. In the
circumstances, I am prepared to accept this testimony as a satisfactory
response to the requirement in clause (b)(iii).
[19]
Further, I accept that the applicant was relying
on the Court’s website to understand the filing procedure. This is reasonable.
The applicant provided an excerpt from the website that was relied on. It does
not alert the reader to the specific requirements in s. 167(5), and in
particular the requirement that the application for an extension of time be
filed as soon as circumstances permit. Ignorance of the law is no excuse, but
clause (b)(iii) itself requires that the circumstances be taken into account. I
find that it was reasonable for the application to be filed about six months
after the new reassessments were issued. This is “as soon as
circumstances permitted”
as required by the legislation.
[20]
I have concluded that the application should be
granted. Although I have difficulty with some of Ms. Clark’s testimony, there
is sufficient reliable evidence to justify granting the application. I would
also note that the respondent concedes that the grounds in the notice of appeal
are not frivolous. It is just and equitable that the application be granted.
[21]
An Order granting the extension of time will be
issued. In all the circumstances of this application, I have concluded that the
parties should bear their own costs.
Signed at Ottawa, Ontario this 29th day of July 2015.
“J.M. Woods”
Email this Content