Date:
20051221
Docket:
T-1737-04
Citation:
2005 FC 1720
BETWEEN:
MARIO
LATOUR
Applicant
-
and -
ATTORNEY
GENERAL OF CANADA
Respondent
REASONS
FOR ORDER
PINARD J.
[1] This is an application for judicial review of a decision by
the Canada Customs and Revenue Agency (hereinafter the respondent) under the
fairness initiative, dated August 26, 2004, denying the applicant's
application for a waiver of additional overdue interest, arising from a tax
credit received in error, for the 1997, 1998 and 1999 taxation years, in
accordance with subsection 220(3.1) of the Income Tax Act, R.S.C., 1985
(5th Supp.), c. 1 (the Act).
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[2] The relevant facts may be summarized as follows:
[3] On May 28, 1999, Mario Latour (the applicant) owed a tax
debt to the respondent amounting to $2,449.85.
[4] In July 2000, the debt amounted to $3,917.61.
[5] During the period from May 28, 1999, to July 26, 2000, the
respondent sent Requirements to Pay to the applicant as well as statements
indicating the increase in his tax debt.
[6] During the same period, the applicant made payments ranging
from $52 to $69 and one payment of $170.55.
[7] In March 2000, the respondent commenced garnishment
proceedings against the applicant.
[8] On August 16, 2000, the respondent mistakenly credited
$2,874.86 to the applicant's tax account.
[9] On September 25, 2000, the respondent sent the applicant a
statement indicating that his tax debt was now only $754.22. The same
statement, which the applicant acknowledges having received, indicated a credit
for the above-mentioned amount of $2,874.86, which the applicant had not
actually paid.
[10] On December 8, 2000, the applicant also contacted the Support
Payment Collection Program after receiving a second notice that his support
payments were being increased.
[11] Between September 25, 2000, and January 5, 2004, the applicant
made no attempt to contact the respondent to inquire about the significant and
unexpected decrease in his tax debt in September 2000.
[12] On January 5, 2004, the respondent, having realized its
mistake, sent the applicant a statement indicating that his tax debt now stood
at $3,774.76.
[13] On January 8, 2004, the applicant contacted the respondent for
an explanation, which was not provided, since the officer in question was not
apprised of his file.
[14] The applicant made further attempts to contact the respondent
about this subject on January 16 and 20 and February 2, 2004.
[15] On February 2, 2004, the applicant received a detailed
statement, dated January 29, 2004. It was at that moment that the respondent
explained to the applicant for the first time that his account had been credited
by mistake.
[16] On February 13, 2004, the applicant first applied to the
respondent for a waiver of interest under the fairness provisions set out in
subsection 220(3.1) of the Act, requesting a waiver of the interest that had
accrued between August 16, 2000, and January 5, 2004, the date he received his
first bill.
[17] In a letter dated April 22, 2004, decision maker Gilles
Laberge informed the applicant of his decision to waive the interest accrued
during the first 60 days following the issuing of the statement listing the
mistaken payment made to the applicant's account. Mr. Laberge expressed
his opinion that a 60-day period was sufficient time for the applicant to
inform them of the error. Enclosed with the letter was a copy of Circular IC‑92-2,
entitled Guidelines for the Cancellation and Waiver of Interest and
Penalties. The respondent directed the applicant's attention to
paragraph 14 of the Guidelines in particular.
[18] In a letter to the respondent dated May 6, 2004, the applicant
sought administrative review of the decision dated April 22, 2004, in which his
application for a waiver of interest had been allowed in part.
[19] A second review committee analyzed the applicant's second
application. Despite the applicant's personal difficulties, Officers Brigitte
Lamontagne and Bérangère Savard recommended that the decision of April 22,
2004, be maintained because the applicant, who had not reported the error when
it was made in 2000 but had only brought it up when the respondent readjusted
his account, did not exercise reasonable care in managing his affairs.
[20] In a letter dated August 26, 2004, decision maker Pierre
Boutin informed the applicant that his application for administrative review
had been denied, hence this application for judicial review.
*
* * * * * * *
[21] It is worth reproducing here the text of the relevant
subsection of the Act:
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220.
(3.1) The Minister may at any time waive or cancel all or any portion of any
penalty or interest otherwise payable under this Act by a taxpayer or
partnership and, notwithstanding subsections 152(4) to 152(5), such
assessment of the interest and penalties payable by the taxpayer or
partnership shall be made as is necessary to take into account the
cancellation of the penalty or interest.
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220.
(3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque
pénalité ou intérêt payable par ailleurs par un contribuable ou une société
de personnes en application de la présente loi, ou l’annuler en tout ou en
partie. Malgré les paragraphes 152(4) à (5), le ministre établit les
cotisations voulues concernant les intérêts et pénalités payables par le
contribuable ou la société de personnes pour tenir compte de pareille
annulation.
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[22] The relevant paragraph of the Guidelines for the
Cancellation and Waiver of Interest and Penalties reads as follows:
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14. If taxpayers or employers believe that
the Department has not exercised its discretion in a fair and reasonable
manner, then they may request, in writing, that the director of a district
office or taxation centre review the situation.
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14. Si un contribuable ou un employeur estime
que le Ministère n’a pas exercé son pouvoir discrétionnaire de manière
raisonnable et équitable, il peut alors demander, par écrit, au directeur
d’un bureau de district ou d’un centre fiscal d’examiner la situation.
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*
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[23] Recently, in Lanno v. Canada Customs and Revenue Agency,
2005 FCA 153, Madam Justice Sharlow of the Federal Court of Appeal set out the
applicable standard of review for decisions involving an exercise of a
discretionary power such as the one conferred by subsection 220(3.1) of
the Act:
[7] In my view, there is no relevant factor that
points to a standard of review that is more deferential than reasonableness.
Therefore, I must respectfully disagree with the decisions of the Federal Court
in Sharma and Cheng and conclude that the standard of review in
this case, as in Hillier, is reasonableness. . . .
[24] In Law Society of New Brunswick v. Ryan, [2003] 1
S.C.R. 247, the Supreme Court of Canada, citing the decision in Canada (Director
of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748,
explained the standard of reasonableness as follows on page 268:
An unreasonable decision is one that, in the main, is
not supported by any reasons that can stand up to a somewhat probing
examination. Accordingly, a court reviewing a conclusion on the reasonableness
standard must look to see whether any reasons support it.
[25] Canada's tax system is based on the principle of
self-assessment. As explained by my colleague Blais J. in Boudreault v.
Canada Customs and Revenue Agency, 2002 FCT 84, at paragraph 30, while it
is understandable that an individual might want to benefit from an error made
by the respondent, it is nevertheless unacceptable. By failing to inform the
respondent of the error, the applicant jeopardized his chances of being granted
discretionary relief under subsection 220(3.1) of the Act.
[26] It is true that in this case the respondent did not inform the
applicant of his error until January 29, 2004. If the respondent's error had
been one that the applicant was unlikely to notice, I might have accepted his
application to have the interest waived. But the sudden and significant drop in
the applicant's tax debt should have prompted him to make inquiries, especially
in light of the facts that show that when the applicant looks at his mail, he
responds quickly if he sees any error. In my opinion, it is not unreasonable to
determine that the applicant knew there had been an error in his file and tried
to take advantage of it. Like in Boudreault, mentioned above, this may be
understandable, but it is not acceptable.
[27] The Minister structured the exercise of his discretion by
adopting the Guidelines for the Cancellation and Waiver of Interest and
Penalties and the Fairness Provisions Reference Guide. In my opinion, the
respondent followed those Guidelines when it considered the applicant's
situation and decided to cancel the interest for 60 days after the date of the
statement following the mistaken payment, giving the applicant enough time to
inform the respondent of the error.
[28] It is worth noting, however, that the Guidelines cannot
confine the Minister's discretionary power, which means that a discrepancy
between the respondent's actions and the Guidelines does not automatically
warrant the intervention of this Court (see Maple Lodge Farms v. Government
of Canada, [1982] 2 S.C.R. 2, at pages 6 and 7 and Lachine General
Hospital Corp. v. Québec (Procureur général), [1996] R.J.Q. 2804, at page
2817).
[29] Moreover, the Fairness Provisions Reference Guide, which the
applicant claims should have been sent to him, is simply a working document
prepared for the respondent's employees. It was therefore not necessary that it
be sent to the applicant.
[30] Finally, it was not unreasonable for the respondent to find
that the applicant's life circumstances did not justify a cancellation of the
additional overdue interest, as the facts of the case show that his situation
was never beyond his control and do not reveal any extraordinary circumstances
not experienced by a majority of Canadians (see, for example, Babin v.
Canada Customs and Revenue Agency, 2005 FC 972).
[31] As for the second decision, Pierre Boutin examined all the
information submitted and decided that the discretionary power had been
properly exercised in the first decision. In my opinion, the decision of August
26, 2004, was based on a reasonable analysis of the applicant's file given the
documentary evidence and written observations that he provided. Therefore, the
decision itself is reasonable, and the intervention of this Court is not
warranted.
[32] Accordingly, the application for judicial review is dismissed.
In light of the particular circumstances of this case, there will be no order
as to costs.
“Yvon Pinard”
Judge
OTTAWA, ONTARIO
December 21, 2005
FEDERAL
COURT
SOLICITORS
OF RECORD
DOCKET: T-1737-04
STYLE OF CAUSE: MARIO
LATOUR v. ATTORNEY GENERAL OF CANADA
PLACE OF HEARING: Ottawa,
Ontario
DATE OF HEARING: November
30, 2005
REASONS FOR ORDER BY: The
Honourable Mr. Justice Pinard
DATED: December
21, 2005
APPEARANCES:
Mario Latour APPLICANT
André Leblanc FOR THE
RESPONDENT
SOLICITORS OF RECORD:
Mario Latour APPLICANT
ON HIS OWN BEHALF
Gatineau, Quebec
John H. Sims, Q.C. FOR THE
RESPONDENT
Deputy Attorney General of Canada
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