Howard J. Hughes v. Minister of National Revenue, [1987] 2 CTC 2360, 87 DTC 635

Brulé, T.C.J.:—The present motion heard in Toronto on September 15, 1987, is for an order quashing the appellant's purported appeal for the 1982 taxation year on the grounds that the notice of objection to the Minister’s notice of assessment was not served within the time period prescribed by section 165 of the Income Tax Act.

Facts

The facts giving rise to the present motion may be summarized as follows. A notice of assessment dated September 15, 1983, was mailed to the appellant. A notice of objection to the assessment was received from the appellant postmarked December 15, 1983. On January 23, 1984, the parties to the present appeal executed an agreement whereby the appellant gave security for the payment of the assessed tax. A clause of the agreement stated:

WHEREAS Howard Hughes has by Notice of Objection dated December 14, 1983 objected in a timely manner to the said assessment;

In September 1984 the appellant filed a notice of appeal with this Court, to which the respondent replied approximately one month later.

On August 18, 1987, the respondent gave notice that the present motion to quash the purported appeal would be made to the Court on the basis that the appellant had not complied with the provisions of subsection 165(1) of the Income Tax Act.

Analysis

Counsel for the appellant first argued that because of the Minister's actions and particularly because of the admission that the notice of objection was filed “in a timely manner," contained in the Agreement of January 23, 1984, the respondent is estopped from raising this issue.

The appellant’s counsel submitted that subsection 165(4) gives the Minister the power to file the appellant’s notice of objection with the Court, thereupon instituting an appeal, whether or not the notice of objection was filed in a timely manner. That paragraph, counsel argued, should be construed as evidence of the legislator's intention of giving the Minister the power to validate, through consent or estoppel, a notice of objection filed outside the prescibed time. In any event, cases dealing with late filing of notices of appeal should not be applied to the present facts since the notice of appeal is a prerequisite to the Court's jurisdiction while in counsel's view the filing of a notice of objection is merely a procedural step.

The Court cannot accept the appellant's arguments on this point. Subsection 165(4) can in no way be construed as expressing the legislator’s intention of giving the Minister the power to validate a notice of objection filed outside the prescribed period. The legislator in section 167 deals with the extension of time for the filing of both notices of appeal and notices of objection. This must be taken to mean that the same reasoning must be applied to both late-filed notices of appeal and notices of objection; except for cases where an order extending the time for the filing of the notice of objection has been granted pursuant to section 167 of the Act, the non- observance of the conditions set out in section 165 deprives the Court of jurisdiction.

Also subsection 165(4) is predicated upon paragraph (3)(b) of section 165 and that paragraph only allows the Minister a certain course of action when a notice of objection is received under the section and the section requires a filing within 90 days.

The respondent cannot, through consent or the application of the doctrine of estoppel, invest the Court with a jurisdiction it does not possess. Case law on this point in regard to notices of appeal is unambiguous and may be properly applied to late-filed notices of objection. See among others, Anderson v. M.N.R., [1980] C.T.C. 2290; 80 D.T.C. 1269, MacDonell v. M.N.R., [1984] C.T.C. 2279; 84 D.T.C. 1258, Wollenberg v. M.N.R., [1984] C.T.C. 2043; 84 D.T.C. 1055 and Taubler v. M.N.R., [1987] 2 C.T.C. 2058; 87 D.T.C. 393.

I would cite the words of Bonner, T.C.J. in the case of Lapointe-Fisher Nursing Home, Limited v. M.N.R., [1986] 1 C.T.C. 2462 at 2464-65; 86 D.T.C. 1357 at 1360:

A right of appeal to this Court is conferred by section 169 of the Income Tax Act only "where a taxpayer has served notice of objection to an assessment under section 165 . . .". Thus, if the appellant's premise is right, its appeal must be dismissed by reason of its failure to satisfy the condition precedent contained in section 169.

Bonner, T.C.J. adds at the same page:

I cannot construe that letter either as any sort of waiver or as a consent to jurisdiction. Even if I could, the position is aptly described by the words of Moss, C.J.O. in Re Port Arthur Election. (1906), 13 O.L.R. 17 at 20:

The Court must be careful to see that it does not usurp a jurisdiction it does not possess. The jurisdiction it has is wholly statutory, and only such as is conferred by the statute can be exercised.

Counsel for the appellant argued in the alternative that the notice of assessment was perhaps not mailed on September 15, 1983, but rather on September 16, 1983. Both parties having agreed that the notice of objection was mailed on December 15, 1983, the filing would therefore have occurred within the 90-day period set out in section 165.

In determining this issue, the Court must bear in mind the presumption created by subsection 244(14) of the Act. Controversy has arisen as to what version of that subsection should apply to the present case. Subsection 244(14), as it read at the time the notice of assessment was mailed, stated:

244(14) For the purposes of this Act, the day of mailing of any notice of assessment or notification described in subsection 152(4) shall, in the absence of any evidence to the contrary, be deemed to be the day appearing from such notice or notifica- tion to be the date thereof unless called in question by the Minister or by some person acting for him or Her Majesty.

The subsection was subsequently modified as follows:

244(14) For the purposes of this Act, the day of mailing of any notice or notification described in subsection 110(8.1) or (8.2), 152(4), 164(1.2), 192(8), 194(7) or 225.2(1) or of any notice of assessment shall be presumed to be the date of such notice or notification.

The appellant argued that the former version of subsection 244(14) should apply and that to rebut the presumption it was sufficient to adduce evidence to the contrary.

Counsel for the respondent stated that since the subsection in question dealt with procedural matters the current version of subsection 244(14) should be applied and the appellant therefore had to rebut the presumption on a balance of probabilities.

Subsection 244(14) clearly deals with a procedural matter and the present version of the enactment must be applied. The removal of the words “in the absence of evidence to the contrary" in the present version of the subsection does not, however, change the degree of proof the appellant must adduce to rebut the presumption. The matter falls squarely within the scope of subsection 24(1) of the Interpretation Act, R.S.C. 1970, c. 1-23, which states :

24(1) Where an enactment provides that a document is evidence of a fact without anything in the context to indicate that the document is conclusive evidence, then, in any judicial proceedings, the document is admissible in evidence and the fact shall be deemed to be established in the absence of any evidence to the contrary.

Is there evidence in the present matter to indicate the notice of assessment was mailed on a later day than that appearing on the notice? Cross- examination of Mr. Barnard, an officer of the Department of National Revenue, has revealed that frequently due to the delays involved between the typing of the notice of assessment and the verification of the form it is possible the notice of assessment was not delivered to the Mail Room before 3:30 p.m. If such was the case the notice would not have been mailed on the 15th, but rather on the 16th of September, 1983.

Mr. Barnard testified that it was standard practice, when a notice of objection was received, to compute the number of days since the mailing of the notice of assessment and to advise the taxpayer if the notice of objection was filed outside the 90-day period. The Department's admission in the agreement that the notice of objection was filed in a timely manner may be explained by the fact that the notice of assessment had indeed been mailed only on the 16th of September, 1983.

Counsel suggested that the mailing of the notice of assessment was on the 16th of September and this is further supported by the Department's acquiescence in the Agreement filed as Exhibit “A” in support of the appellant's counsel's affidavit, that the appellant had objected "in a timely manner". Such a statement, made a few months from the date of filing by a representative of the respondent knowledgeable of the facts in question, is perhaps consistent with a mailing of the notice of assessment on September 16, 1983.

The Court is satisfied that there is sufficient evidence to rebut the presumption created by subsection 244(14) concerning the mailing date of the notice of assessment.

In support of the motion the respondent filed Mr. Barnard's affidavit stating he has charge of the appropriate records and has knowledge of the practice of the Department. The affidavit further states that the records of the Department of National Revenue show that the notice of assessment was mailed on September 15, 1983, and that he has been unable to find a notice of objection filed within the time allowed. Such an affidavit is pursuant to subsection 244(10), received as prima facie evidence of the statements it contains.

Cross-examination of Mr. Barnard revealed the Department's records were not conclusive as to the notice of assessment's mailing date. Mr. Barnard, who was working in the Toronto Office, had received the file only the day previous to his deposition and said that he could not delineate the exact procedure in the Kitchener Office from where the notice of assessment was mailed and where Mr. Barnard had never been. In view of the evidence adduced and the doubt as to the exact date of mailing, incapable of being verified on being challenged, the Court finds the notice of assessment was mailed on or after September 16, 1983, and that the notice of objection was therefore filed in accordance with the provisions of the statute. The motion is denied.

Motion denied.