Christos Antoniou v. Minister of National Revenue, [1988] 2 CTC 2055, 88 DTC 1415

Brulé, T.C.J.: —By application made in Toronto, Ontario, on March 7, 1988, the applicant requested an order granting an extension of time within which notices of objection could be served regarding his 1982 and 1983 taxation years.

Counsel for the Minister of National Revenue opposed the application on the grounds that the application was filed outside the time limit set by the Income Tax Act (the Act). In support of his position, counsel for the Minister filed an affidavit sworn by an officer of the Department of National Revenue

stating notices of reassessment for the taxation years 1982 and 1983 had been mailed to the appellant on November 4, 1985 and that no notices of objection had been received.

The applicant did not challenge the statements contained in the affidavit but stated that he had never received the notices of reassessment. The applicant testified he remained unaware that he had been reassessed until he received a letter dated March 18, 1987 from a Revenue Canada officer stating his 1982 and 1983 taxation years were no longer being reviewed. The applicant stated that his mail is received in a locked mail box at a postal station for which only he has the key. Throughout the period in question, the appellant’s address remained unchanged. He explained that he had received notices of assessment for subsequent taxation years and discussions were held between himself and the Revenue department concerning these subsequent taxation years, but the 1982 and 1983 taxation years were never discussed. When reassessed for a subsequent year the applicant went immediately to Revenue Canada seeking information. The reassessment, he claimed, was not done for the years in question yet the facts were similar. On one occasion he asked a Mrs. Yee of Revenue Canada about 1982 and 1983 wondering why they were accepted but not 1984 and 1985 when the problem was similar. Mrs. Yee refused to discuss the years in question as she stated that she did not have authority to do so. If she had made the applicant aware that there was a problem for 1982 and 1983 he had plenty of time to file a proper application and he said that this would have been done.

The appellant further stated that until he received the letter from Revenue Canada of March 18, 1987 he remained under the impression that his 1982 and 1983 taxation years as filed were accepted.

Analysis

The pertinent provisions of the Income Tax Act for the purposes of this application read in part as follows:

Sec. 152(2). After examination of a return, the Minister shall send a notice of assessment to the person by whom the return was filed.

Sec. 165(1). A taxpayer who objects to an assessment under this Part may, within 90 days from the day of mailing of the notice of assessment, serve on the Minister a notice of objection in duplicate in prescribed form setting out the reasons for the objection and all relevant facts.

Sec. 167(1). Where no objection to an assessment under section 165 or appeal to the Tax Review Board under section 169 has been made or instituted within the time limited by section 165 or 169, as the case may be, for doing so, an application may be made to the Tax Review Board for an order extending the time within which a notice of objection may be served or an appeal instituted and the Board may, if in its opinion the circumstances of the case are such that it would be just and equitable to do so, make an order extending the time for objecting or appealing and may impose such terms as it deems just.

Sec. 167(5). No order shall be made under subsection (1)

(a) unless the application to extend the time for objecting or appealing is made within one year after the expiration of the time otherwise limited by this Act for objecting to or appealing from the assessment in respect of which the application is made;

The present case must, at the outset, be distinguished from the line of cases where the notice of assessment was sent addressed to the taxpayer / elsewhere than at his actual mailing address. In one of those cases, Lawrence

B. Scott v. M.N.R., [1960] C.T.C. 402; 60 D.T.C. 1273, the Exchequer Court of Canada, determined that a notice of assessment sent in that way was insufficient to complete the assessment or reasssessment process and did not bind the taxpayer.

The present case is more akin to that of the recent decision of the Federal Court of Appeal, Herbert Flanagan v. The Queen, [1987] 2 C.T.C. 167; 87 D.T.C. 5390, in which Hugessen, J. commented on the necessity of receipt, by the taxpayer of the notice of assessment sent to the taxpayer's proper address, pursuant to subsection 152(2), for the purposes of computing the limitation period prescribed by subsection 152(4) of the Act. Speaking for the Court, Mr. Justice Hugessen stated at page 168 (D.T.C. 5391) of the report:

It is common ground that subsection 152(2) required the Minister to "send" the notice of reassessment to the appellant within the prescribed period. The only question on the present appeal is whether, as the learned trial judge found, the Minister’s attempts of service on July 14 met that requirement.

We are all in agreement with the trial judge's view that the sending contemplated by subsection 152(2) is to be understood as a dispatching which does not necessarily include receipt; it is certainly not obligatory that the sending be by mail, as is made quite clear by subsection 244(10).

[Emphasis added.]

It is not disputed that in the present case the mailing of the notice of assessment to the proper address satisfied the requirement of subsection 152(2) of the Act and that the reassessment was made within the time prescribed by subsection 152(4).

The time limited for making the present application runs, pursuant to paragraph 167(5)(a) of the Act, from the day of mailing. The Court finds that, in order for the day of mailing to validly mark the start of the limitation period set out in paragraph 167(5)(a), the notice must have been received by the taxpayer within the period. Although an affidavit as to mailing was filed with the Court this does not absolutely presume [sic] that the notice was received. Perhaps the notice was not mailed even though so indicated.

Section 167 must be construed in such a way as to recognize that the legislator did not intend to deprive a taxpayer who has not received a notice of an assessment of the right to object. An indication of the legislator's intention may be gathered from the wording of subsection 244(10) of the Act, providing for proof of mailing of the notice which reads as follows:

An affidavit of an officer of the Department of National Revenue, sworn before a commissioner or other person authorized to take affidavits, setting out that he has charged of the appropriate records and has knowledge of the practice of the Department and that an examination of the records shows that a notice of assessment for a particular taxation year was mailed or otherwise communicated to a taxpayer on a particular day pursuant to this Act and that, after careful examination and search of the records, he has been unable to find that a notice of objection or of appeal from the assessment was received within the time allowed therefor, shall be received as prima facie evidence of the statements contained therein.

The wording of the provision indicates that the mailing of the notice serves as prima facie evidence that the notice has been received. If receipt by the taxpayer of the notice sent by mail had not been deemed a necessary condition for the limiting of the right to appeal, the legislator would not have found it necessary to provide a means of proving such a receipt.

Mr. Justice Wooton of the Supreme Court of British Columbia explains the effect of subsection 244(5)* [1] as follows in the case of Regina v. James Stewart Tyhurst, [1962] C.T.C. 119 at 121-2; 62 D.T.C. 1042 at 1043:

This brings me to the merits of the stated case. The relative section involved here is subsection (5) of Section 136 of the Income Tax Act which reads as follows:

“Proof of Service by Mail.

136.(5) Where, by this Act or a regulation, provision is made for sending by mail a request for information, notice or demand, an affidavit of an officer of the Department of National Revenue sworn before a commissioner or other person authorized to take affidavits setting out that he has charge of the appropriate records, that he has knowledge of the facts in the particular case, that such a request, notice or demand was sent by registered letter on a named day to the person to whom it was addressed (indicating such address) and that he identifies as exhibits attached to the affidavit the post office certificate of registration of the letter or a true copy of the relevant portion thereof and a true copy of the request, notice or demand, shall be received as prima facie evidence of the sending and of the request, notice or demand."

Mr. Skatfeld argued on behalf of the appellant that if the subsection is to have the force suggested for it by the Crown the following words should be added thereto, namely, “and the receipt of the request, notice or demand by the accused" or some words to like effect. And of course these additional words are not there.

In my opinion, however, such words are unnecessary if the comprehensive meaning is given to the following words “and of the request, notice or demand" that includes the meaning of the effect and fact of receipt by the individual to whom such request, notice or demand was addressed. If such comprehensive meaning is not given then the said words "and of the request, notice or demand" in the context of the subsection appear to have no meaning or purpose whatever.

Reference to recognized dictionaries indicates quite clearly that in the comprehensive interpretation of the words "request", “notice” and "demand", there is a meaning which includes the fact of the receipt by the individual addressed of the request, notice or demand. Particularly on this subject of the interpretation I refer to the Oxford University Dictionary 1955 at page 477 when dealing with the word "demand" we have the following among other interpretations: "the action or fact of demanding in legal form”. The extent of this meaning here is made more conclusive by the marginal note of the subsection viz., "Proof of Service by Mail”.

[Emphasis added.]

Although the Tyhurst case, supra, dealt with a penalty for not responding to a demand for information, the construction of subsection 244(5) made therein holds true in the present case.

Other cases also dealing with penalties show how the presumption of receipt of mailed documents may be defeated. In The Queen v. Fedoruk, [1965] C.T.C. 566; 65 D.T.C. 5280, the Saskatchewan Court of Appeal stated at page 569 (D.T.C. 5281) of the report:

As to the first ground, I have no hesitation in holding, with all respect, that the learned District Court Judge was in error. In my view, proof of the mailing of the Demand to the person named in the Information is prima facie evidence that such person received the Demand. To defeat this presumption there must be some evidence that the person so named has not received the letter. This was the view expressed by Stewart, J., in Attorney General of Canada v. Storey, 127 C.C.C. 36, and by Wooton, J., in Regina v. Tyhurst, 131 C.C.C. 89 [1962] C.T.C. 119, with which I am in complete agreement.,

Referring to the section of the Income War Tax Act that proceeded subsection 244(5), which involves registered mail whereas subsection 244(10) does not, McKay, J. stated in the case of Robins v. Forbes, [1917-27] C.T.C. 100 at 102; 1 D.T.C. 8 at 9:

Under this section, in my opinion, the mailing of the registered letter is not the demand until it is received by the person to whom it is addressed, or there is presumptive evidence that he received it, and this presumption arises when the letter is mailed to the address of the person, and there is no evidence that it has not been received by the addressee. Consequently, even after it is proved that the letter of demand has been duly registered addressed to the person from whom the information is required, and that such person has not delivered to the Minister such information within the 30 days, it is still open to such person to shew that he did not receive the said letter. In other words, proof of mailing of the registered letter to such person is only prima facie evidence that he received such letter.

This section of the Act, makes the presumption that when an assessment is mailed it is received by the taxpayer. In Sopinka and Lederman on The Law of Evidence in Civil Cases it is said at page 376:

Conclusive presumptions of law are rare and those that exist are statutory . . .

A true rebuttable presumption of law shifts the burden of proof and requires the party against whom it operates to disprove the presumed fact.

and at page 377:

If, therefore, there is good reason for presuming a fact to exist, the presumption should continue unless rebutted by a preponderance of evidence and, in some cases, by evidence excluding reasonable doubt.

It would seem difficult to have a statutory period commence without rights being given to a taxpayer. When given a right he must be in a position to act. By being unaware of any problem the applicant could not commence any remedial action.

In light of the evidence adduced, the Court is satisfied that the notice of reassessment was sent by mail addressed to the appellant at his proper address on November 4, 1985. The Court also finds the appellant has established on a balance of probabilities he never received the notice of reassessment that had been mailed to him.

The date of mailing of a notice of assessment is presumed to be the date indicated in the notice [subsection 244(14)]. This of course is in the absence of evidence to the contrary. No evidence was introduced as to the mailing except by a Revenue Canada record officer’s affidavit. After receipt of the reassessment was denied by the applicant herein and his testimony not disturbed under cross-examination and no rebuttal evidence offered, the Court concludes that there was no receipt of the notice.

he conclusions of Vice-Chairman Dubrulé of the Tax Review Board in the case of Paul S. Bhatti v. M.N.R., [1981] C.T.C. 2555 at 2557; 81 D.T.C. 506 at 508, could to some degree be applied to the present one:

The result is, the motion is dismissed as there was no need for the application to extend the time to object as there was no assessment or reassessment to which objection could be taken.

In the present case, although there probably were valid reassessments, no valid receipt of the mailing of the notice having been established, after evidence indicated it had not been received, the time limited by subsections 165(1) and 167(1) of the Act for objecting to the reassessment has not expired. There is no basis to apply for an extension of time to file a notice of objection as the manner in which the purported reassessments for 1982 and 1983 was carried out was insufficient to complete the reassessment process. The present application is therefore a nullity.

Order accordingly.