Citation: 2013 TCC 171
Date: 20130529
Docket: 2012-1911(IT)APP
BETWEEN:
LAURIE TURCOTTE,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Bocock J.
I.
Issue
[1]
Taxpayers have an “as
of right” prescribed ability to appeal any reassessment to the Tax Court of
Canada provided a Notice of Appeal has been filed within 90 days of receipt of a
Notice of Confirmation.
[2]
In this case, the
Notice of Confirmation was issued on January 26, 2012.
[3]
No Notice of Appeal was
received until May 15, 2012. The “as of right” deadline expired on April 28,
2012. Under subsection 167(5) of the Income Tax Act (“Act”), a
taxpayer may bring an Application to extend the time to file a Notice of Appeal
within one year after the expiration of the 90 day “as of right” Appeal period.
The Applicant’s Application for an extension was received on May 15, 2012. In
respect of such an Application, this Court may grant such an extension provided
certain conditions are met.
[4]
In this Application, the
sole objection submitted by the Respondent and also the sole outstanding issue before
this Court is whether the final condition in subparagraph 167(5)(b)(iv)
of the Act has been satisfied. An excerpt of the condition follows [underscoring
added]:
167(5)
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 […]
[…]
(iv) there are reasonable grounds for the appeal.
II. Proceedings To Date
[5]
The Notice of
Application per se is largely absent precise factual particulars specifically
relevant to the Application and related Appeal possibly to be heard before the
Court. The facts were supplemented at the Application hearing through vive
voce testimony and cross-examination of the Applicant, Ms. Turcotte.
[6]
This Application is broadly
associated with many appeals brought before the Court by Native Leasing
Services (“NLS”), as agent, on behalf of certain status Indians. Each claims
exemption from tax assessed on personal property, in the form of employment
income, of an Indian pursuant to section 87 of the Indian Act. The
Applicant, Ms. Turcotte, has been before the Court before with respect to such
an appeal on her employment income, albeit in respect of previous assessment
years. The Applicant’s file has now been assumed by legal counsel who has avidly
taken up the file and requests a full hearing on the merits of the claim for exemption
from tax. Although not determinative, the Application to extend was filed a
mere 20 days after the “as of right” appeal period expired.
III. Facts
[7]
Notwithstanding the
non-descript Application and Notice of Appeal, Ms. Turcotte gave viva voce
evidence at the Application Hearing. She suitably demonstrated her intention to
appeal which caused the Respondent to resile from a previous secondary
challenge to the Application for a failure to disclose a bona fide
intention to appeal under clause 167(5)(b)(i)(B).
[8]
Ms. Turcotte is a
status Indian and member of the Six Nations Band of the Grand River. She
resides in Ayr, Ontario, a small town on the banks of the Grand River located between
Kitchener and Brantford. She works in Kitchener, Ontario, a major Ontario city which also straddles the banks of the Grand River. Her employment in Kitchener
is as an employee of the K-W Urban Native Wigwam Project, a “geared to income”
support organization for native families. The organization’s general offices
are located on the Six Nations’ Reserve, but its operational offices are
located of the Reserve. It is asserted that the personal property of Ms.
Turcotte is created on the Reserve for native purposes and for the benefit of natives
and their community. If that were the totality of the argument, this Application
would likely lack the requisite “reasonable grounds” for granting the Application
since those precise legal arguments based upon those precise facts have been
heard previously by this Court. Almost factually identical appeals, including
the Applicant’s own previous appeal, have been dismissed on such a basis. Aside
from the Applicant’s previous case, both counsel referred to many cases before
this Court, the Federal Court of Appeal and the Supreme Court of Canada.
a) Argument Regarding “Disputed
Reserve Lands”
[9]
In the present case and
in respect of subsequent assessment years, counsel for the Applicant has ably
pressed the argument that the location of the Applicant’s residence and
workplace are situated within the well publicized pending disputed land claim
of the Six Nations known by many names, the most common of which may be the
Haldimand Tract land claim. It is well known and observed that the imperial Crown
granted title to these lands through a grant of land measuring six miles on
either side of the banks of the Grand River from its mouth to its source. Much
has been written, alleged and debated, without resolution, about that grant and
its related challenged subsequent surrenders. That longstanding confusion aside,
what remains clear to this day is that the land claim, its extent and the
method of any resolution remain active issues politically, socially and legally
both within and beyond the Grand River Valley and various Courts.
b) Submissions
[10]
Counsel for the
Respondent submitted that in the Applicant’s previous appeal the Disputed
Reserve Lands argument could easily have been made by the Applicant or her
agent. It was an issue at the time, but was neither pleaded nor submitted.
Aside from this supposedly now novel argument, the Respondent argues that the
Applicant has failed to submit a sufficiently particular Application or Appeal,
has not factually (based upon decided authority) advanced reasonable grounds
for an Appeal and, lastly, has not demonstrated that the law has sufficiently
evolved in regard to the connecting factors test laid down by the Supreme Court
of Canada in Williams v. Canada, [1992] 1 S.C.R. 877.
[11]
In the absence of
having established any one of the foregoing factors, the statutory
pre-condition of presenting “reasonable grounds” for an Appeal has not been met.
[12]
Counsel for the Applicant
has stated that recent cases have re-set the framework for the “connecting
factors” test. Further, location of property is a legal conclusion to be
addressed through the facts properly to be heard and determined by a trial
judge. At the very least, these issues are matters presently evolving before
the Courts and require and warrant an appeal because the “shifting” nature of
the case law expands legal grounds not previously available.
IV. Analysis
[13]
The matter before this
Court is a quasi interlocutory proceeding, but nonetheless has a dispositive
effect should the Court not grant the Application and thereby deny that the Appeal
be heard. The determination to allow the extension and the Appeal to proceed
requires the finding of reasonable grounds. Such a finding is not assisted in
this case by the Notice of Application and a Notice of Appeal which have been drafted
in a generic, non-descript and formulaic fashion. The Respondent is correct
that both issues; namely, the presence of reasonable grounds and sufficiency of
pleadings must be satisfied before an Appeal may be heard. The first goes to the
jurisdiction of the Court to grant the Application and the second relates to
procedural compliance and fairness to the responding party.
a) Reasonable Grounds
[14]
To proceed with any
meaningful analysis of whether reasonable grounds for an Appeal exist, the
Court must assume for the moment that the Applicant’s Notice of Appeal would
otherwise contain the factual and legal assertions given through vive voce
evidence at the hearing of the Application, both in terms of the facts and
issues. If such were the case, the issue of the Disputed Reserve Lands would have
been present in the Application much in the same clear way that the factual and
legal foundations of such an assertion were present in the mind and expressed
by plainly spoken words from the mouth of the Applicant.
[15]
A question for the
Court is whether the Disputed Reserve Lands issue constitutes reasonable
grounds and meets the hurdle of subparagraph 167(5)(b)(iv). To do so, one
must ask, what is the meaning in that subparagraph of the phrase “reasonable
grounds”?
[16]
In Johnston v. Canada,
2009 TCC 327, 2009 DTC 1198, Justice Webb stated at paragraph 26 as follows:
26 In
my opinion, the statutory requirement that an applicant demonstrate that there
are reasonable grounds for the appeal is a condition that must be satisfied in
order for this Court to have the jurisdiction to issue the order extending the
time within which an appeal may be instituted and it is not a requirement that
can be waived by the Respondent. It is not a requirement that is imposed solely
for the benefit of the Respondent. The requirement that an applicant
demonstrate that there are reasonable grounds for the appeal is a condition
precedent to this Court issuing the requested order.
[17]
Although not referenced
above, critical to the determination of the absence of reasonable grounds was
the decision of the Court that the findings of fact forming the basis of the
appeal in Johnston were almost identical when compared to appeals
already heard and dismissed by the Court. Moreover, where such facts were
different to those in Johnston, they were less compelling than in the
matters previously dismissed.
[18]
Not dissimilar to this
line of reasoning is that of Justice Woods in Keshane v. Canada, 2010
TCC 651, 2011 DTC 1040, where she states the following at paragraphs 16 and 21:
16 In
light of this background, I would agree with counsel for the respondent that in
order to satisfy the Court that there are reasonable grounds for an appeal in
these applications, the applicant must present a reasonable argument that the
conclusions in Shilling and Horn decisions are not applicable based
on their particular facts. None of the applicants have attempted to do
this.
[…]
21 Although
the requirement in s. 167(5)(b)(iv) should be interpreted broadly so as
not to foreclose reasonable arguments, none of the applicants have demonstrated
that their appeals have any reasonable prospects of success.
[19]
Justice Woods appears
to have further raised the bar by implying a prospective analysis of whether
the arguments might reasonably prevail. Quite apart from this possibly
heightened threshold, it was clear on the facts in both of Johnston and Keshane
that the appeals were factually and textually identical, and were presented and
argued identically, to appeals previously heard, decided and dismissed by the
Court.
[20]
An example of slightly
different or novel facts and/or submissions brought before the Court and expressed
through otherwise poor pleadings is the case of Rock v. Canada, 2010 TCC
607, 2011 DTC 1006. Specifically paragraphs 35, 36, 38 and 39 enunciate the
logical sequence and staging of the “reasonable grounds” threshold where
Justice Hershfield states:
35 I
have not requested any submissions on that nor have I ventured off on my own to
research this issue. My conclusions are simple and straightforward. They are
pragmatic and to my mind, as a matter of common sense, they rely principally on
the Applicants’ right to be heard. Simply put, the test in subparagraph 167(5)(b)(iv)
is not about the relative chances of success but about having a ground to
appeal.
36 The
Applicants have capable counsel, who represent earnest persons seeking to
either fit into a box that has excluded them and others, or to have that box
expanded by persistently seeking to apply those legal principles and arguments
that they hope might yet prove capable of succeeding, in some cases at least.
The law is not static, after all, and some circumstances may warrant applying
the connecting factors test as urged by counsel in respect of these Applications.
However, I specifically note that any pursuit of the application of the section
87 exemption based on anything other than the connecting factors test might be
so futile as to warrant a finding that there is no reasonable ground for the
appeal. The Federal Court of Appeal has made that much clear. Justice Evans did
so at paragraph 5 in Horn and Williams where, as noted above, he
concludes that the connecting factors test is the only applicable test. He also
concludes that the protection afforded Indians in the Supreme Court case of McDiarmid
Lumber Co. v. God’s Lake First Nation of property situated on reserve
determined by where the debtor resides, applies only to protection from seizure
not protection from taxation.
38 On
balance then, as likely as it is that these cases will fail on appeal, I am
going to grant the Applications. […] I have heard six NLS cases this week and
there is no hint that adding another year to any of the appeals would have
added one extra minute to the proceedings.
39 Secondly,
having heard those six appeals this week, I remain undecided as to their
outcome. That is to say, there may well be limited circumstances where the
particular facts and surrounding circumstances of an NLS appeal might invoke
the section 87 exemption. As noted by Justice Evans in Horn and Williams
at paragraph 8, it is the function of the trial judge to assess the relative
weight to be given to the constituent elements of a multi-factored test in the
particular circumstances of a particular case. Caution must therefore be
exercised that an application’s judge not pre-maturely perform that function by
categorizing all NLS cases, even those with apparent similar facts with those
that have failed, as following into a non-exempt category. Some cases with very
similar facts can be presented in a very different light, evidence Robertson
et al. v. Her Majesty the Queen versus Ballantyne v. Canada. In those cases, each judge was influenced by different factors based on the evidence
presented. And here, I note that in Shilling at paragraphs 40 and 41,
absences of evidence were noted. Fuller evidence might have resulted in a
different outcome. Hence, the caution not to pre-judge.
[21]
This case relies on the
direction of the Federal Court of Appeal, in Horn et al. v. MNR, 2008
FCA 352, 2008 DTC 6743 and Williams, to the trial judge to assess
the consistent elements of the test on a case by case basis. The application judge,
according to the Federal Court of Appeal, would prevent this critical
assessment by prematurely performing that function even where there are almost
identical facts.
(b) Novel Particular Facts to be heard?
[22]
The case before me has
a better footing than that of Rock since fuller facts are embedded in
the Disputed Reserve Lands issue. There is reason to be applied by the Court to
these facts and related arguments. Moreover, some of these facts, although likely
existing at the time of the Applicant’s previous appeals, were not marshalled
to present the Disputed Reserve Lands issue.
[23]
In light of these
additionally adduced facts and potential submitted arguments and the absence of
any Court having recently, previously and precisely heard and decided same, the
success or failure of the Appeal will not be determined presently by virtue of
a dispositive order in a mere Application for extension to file the Notice of Appeal.
Instead, they shall see the light of day before a hearing judge of this Court. The
granting of this Application is consistent with the preceding cases since the
particular facts of this Application, given their highest and best weight at
this Application stage, not only afford, but require the mind or “reason” of
this Court to be brought to bear upon these facts and related arguments since
this has not yet occurred, based upon the authorities submitted, in respect of
the Disputed Land Issue.
[24]
The potential existence
of such “untried” facts and related argument, once revealed before the
application judge gives the Court jurisdiction as mandated by Johnston, and
renders the Appeal dissimilar to those previously decided as required by Keshane.
Perhaps as importantly, the facts as alleged call for a consideration of
the submitted ground of appeal where similar, but not identical facts of this
taxpayer require a trial judge to assess and weigh this Applicant’s/Appellant’s
particular facts when applying same to “the constituent elements of a
multi-factored test in the particular circumstances of a particular case” as
described in Rock, which, as noted, references the Federal Court of
Appeal in Horn and Williams.
[25]
In short, these alleged
facts and submissions of this Applicant warrant a hearing of this case before a
trial judge because a ground of appeal susceptible to, and inviting of, reason
has been connected to alleged facts and related argument not applicably and
previously decided by this Court.
[26]
In order to address the
deficiency of the pleadings and to assist the Court and the parties at the hearing,
the Applicant, now Appellant, shall be required to file a fresh Notice of
Appeal within 30 days in pursuance of the rules by specifically pleading the
facts to be brought before the Court and by including the relevant statutory
provisions relied upon. The Respondent shall have 30 days after that to file a
fresh Reply, should this be desired.
Signed at Toronto, Ontario, this 29th day of May 2013.
“R.S. Bocock”
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