Date: 20070619
Docket: T-385-06
Citation: 2007
FC 654
Ottawa, Ontario, June 19, 2007
PRESENT: The Honourable Mr. Justice Harrington
BETWEEN:
DAVID
ASHER GROSH
Applicant
and
REVENUE CANADA TAXATION
FAIRNESS REVIEW BOARD
Respondent
REASONS FOR ORDER AND ORDER
[1]
For a
number of years Mr. Grosh was either late in filing his income tax returns or
had not fully paid his assessments. As a result, he ran up interest and penalty
charges. In accordance with section 220 and following of the Income Tax Act
the Minister may waive or cancel, in whole or in part, any penalty or interest
otherwise payable. Guidelines, often called the Fairness Package, were made
known to the public in 1992. They are not intended to be exhaustive, but set
out the circumstances normally taken into account. In 2002, Mr. Grosh requested
the Minister to waive interest and penalties owed on the 1993 through 1996
taxation years on the grounds of financial hardship. The Canada Revenue Agency
declined to do so, except that it cancelled in full all arrears interest
charges for a five-month period, as it had been slow in processing his request.
[2]
The
Guidelines go on to provide that if the taxpayer believes that discretion has
not been exercised in a fair and reasonable manner, he may request that the
director of a district office or taxation centre review the situation. That is
what happened in this case.
[3]
By the
time the matter came before Carl Balestreri, Assistant Director, Revenue
Collections, of the Toronto North Tax Services Office, of the Canada Revenue
Agency, who was authorized to carry out the review, Mr. Grosh’s situation had
deteriorated. He had suffered a devastating accident in 2003 as a result of
which his yearly income was severely reduced. By letter dated 1 February 2006,
Mr. Balestreri informed Mr. Grosh that he would cancel all interest charges
stemming from the date of his accident, but would not otherwise waive the interest
and penalties owing on the 1993 through 1996 taxation years. This is a judicial
review of that decision.
THE LEGAL FRAMEWORK
[4]
As Mr.
Grosh represented himself at the hearing, I will try to explain the procedure
without resorting to the legalise lawyers and judges are so fond of using.
[5]
Mr. Balestreri’s
review of the earlier decision was not really a review. He was entitled to take
a fresh look at the matter and to use his own discretion. He was also entitled
to take into account new circumstances.
[6]
On the
other hand, my assessment of Mr. Balestreri’s decision is a review, a judicial
review. This means the law does not permit me to substitute my own opinion, or
my own discretion for his. I can only interfere with his decision if it is
unreasonable. That point was decided by the Federal Court of Appeal in Lanno
v. Canada (Custom and Revenue Agency) which is reported and
available on the Federal Court of Appeal’s website under official citation
number 2005 FCA 153, and which was filed as part of the Minister’s
material.
[7]
If I
conclude that the decision was unreasonable, I still cannot waive any of the
remaining interest or penalties. All I can do is refer the matter back to a new
officer for a fresh look.
[8]
There are
two other points which must shape my reasoning. It is not enough for a taxpayer
to think that the result is unfair. The meaning of fairness has been discussed in
various court decisions. The other point is that there is an objective meaning
to “reasonableness”. In determining if a decision is reasonable, the Court must
ask itself “after a somewhat probing explanation, can the reasons given, when
taken as a whole, support the decision?” The Court looks at the reasoning of the
decision maker. It does not engage in its own fresh reasoning. This was
explained by the Supreme Court of Canada in Law Society of New Brusnwick v.
Ryan, [2003] 1 S.C.R. 247 at paragraph 43 and following.
THE FACTS
[9]
Mr. Grosh
thinks it unfair that he be penalized and charged high interest from 1993
through 1996. It was always his intention to pay what was owed, so much so that
he hired professionals to help him. He believes they let him down.
[10]
He
declared bankruptcy in 1991, and was only discharged in 1996. He does not know
why there was such a delay. He thought that the trustee in bankruptcy would be
filing his ongoing tax returns, but that was not the case. He then filed his
returns and upon being assessed, filed certain objections. One of his
accountants was his own father who, it seems, filed incomplete returns because
he was verging on senility. He then had difficulty with another chartered
accountant. He took an action in the Tax Court, and received some redress, but
not in full.
[11]
If Mr.
Grosh’s returns were late, or incomplete, because of bad advice, or a
misunderstanding with his advisors, that is something between them. Those are
not matters Mr. Balestreri took into account. His decision not to do so was not
unreasonable. The Ryan case, mentioned above, is a perfect example. Mr.
Ryan was a lawyer who had been hired by his clients to institute legal
proceedings. He did not do so within the time allowed. As a result they lost
their claim. In one sense, that might be unfair, but the clients’ recourse was
against Mr. Ryan, not against the party they intended to sue.
[12]
Furthermore,
Mr. Grosh was able, prior to his accident, and is still able, to pay the
remaining debt. He received sizable tax refunds which could have been used to
retire the debt. He also topped up his registered retirement savings plan. He
says he used the refunds to move from Vancouver
back to the Toronto area, and topped up his RRSP
on the advice of his accountant. Even so, Mr. Balestreri’s decision not to take
those factors into account was not unreasonable.
[13]
Furthermore,
the Minister has been willing to make a reasonable repayment arrangement.
[14]
For these
reasons, I must dismiss this application for judicial review. However I will
not award costs.
ORDER
THIS COURT ORDERS that the application for judicial
review of the decision of Carl Balestreri, dated 1 February 2006, is
dismissed without costs.
“Sean Harrington”
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