Louis Schwartz v. Minister of National Revenue, [1984] CTC 2129, 84 DTC 1120

Taylor, TCJ:—The following motion was heard in Toronto, Ontario, on December 6, 1983 and reads as follows:

TAKE NOTICE that an application will be made by the Respondent to the Honourable Court at such time and place as appointed by the Court for an Order pursuant to Rule 7 of the Tax Review Board Rules which continue pursuant to Section 29 of the Tax Court of Canada Act granting leave to the Respondent to file his Reply to the Notice of Appeal of the Appellant herein.

AND TAKE NOTICE that in support of this Application will be read the Affidavit of Susan L Van Der Hout, filed and such further and other material as counsel may advise and this Honourable Court may permit.

There were certain similarities to the basis for a motion in Vincent J Cotroneo v MNR, [1983] CTC 2689; 83 DTC 617, which motion was denied by the Court. Counsel for the Minister took charge of the conduct of this motion, and noted in particular for the Court that several distinctions of merit could be seen between Cotroneo, (supra), and the instant situation. First, a complete explanation of the reason for additional tax assessed was provided in the T7W-C form attached to the contested notice of reassessment, which was dated September 23, 1982; second, after receipt and examination of the proper notice of objection filed by the taxpayer on October 20, 1982, the Minister had confirmed the assessment on April 20, 1983. I will note at this point that the notice of objection consisted of six typewritten pages which recounted in great detail the contentions and assertions of the taxpayer. I can only conclude that not only was the taxpayer, at that point, fully cognizant of the basis of the assessment, but that the assessment itself and his proposed defence were complex and involved in his own mind. The third point raised by counsel for the Minister, was that the notice of appeal had been filed by the taxpayer on June 7, 1983, and was copied to Revenue Canada on June 9, 1983. The Court notes at this point that the notice of appeal was in large measure a reiteration or a rephrasing of the notice of objection. The affidavit filed by counsel for the Minister, with this application, notes that the documentation considered by the Minister to be necessary for the proper preparation of a reply to notice of appeal, was not all available to counsel until August 12, 1983. A reply to notice of appeal was prepared and dated August 25, 1983. A later amended reply to notice of appeal was prepared and dated November 8, 1983. Both parties agreed that in the final analysis the Court should look to the amended reply to notice of appeal, but counsel for the appellant stressed that it was the time frame June 7, 1983 (notice of appeal) to November 8, 1983 (amended reply to notice of appeal) that the Court should consider.

Dealing first with the question of the original reply to notice of appeal, as opposed to the amended one, I do not find merit in the contention of counsel for the appellant, that the facts of filing, surrounding the original one, should be ignored. In my view, it could be completely possible for the Court to accept the filing of the original reply, and reject (on whatever grounds it considered sufficient) the filing of the amended reply. However, I have examined the amended reply and I can find therein no objectionable material which would warrant it being excluded from the Court proceedings. This decision, therefore, will deal with the merits of the Minister’s motion to file the original reply based on the facts as made known, but the end effect will be to determine whether the Minister’s amended reply should be accepted.

In reaching a decision on this matter before the Court, there are two quotations to be found in Cotroneo, (supra), which appear to have particular significance. These two quotations read as follows:

At 618 and 2690, respectively:

I would add, however, that the overriding purpose of the “Rules and Practice and Procedure in Appeals to the Tax Review Board” would appear to me to be their utility to the Board in expediting appeals, not necessarily in their utility to the parties involved.

At 620 and 2692-2693, respectively:

The position taken by this Court with regard to appellants is usually charitable in the extreme when there is any possibility of a taxpayer becoming entrapped in technical or administrative delays or difficulties. One might easily argue that a similar posture should be adopted in this matter since the contrast is so striking between the minor demands placed on a taxpayer under the Act in filing an appeal, with the rigid requirements on the Minister under the Rules (supra). However, one must not forget that it is the taxpayer in an appeal who must demonstrate and prove to the satisfaction of the Court that the contested assessment is wrong — not an easy task when confronted by vague or imprecise supportive information. In my view, once an assessment has reached the stage of an appeal to the Court, it should have been thoroughly ventilated by the parties and there should be little, if any, doubt about the nature of the matter in dispute. Therefore, this motion, as I see it, raises not just a technical point but a point of principle.

I would further add a comment to be found in a recent decision of the Court in Carson R Thistle v MNR, [1983] CTC 2656; 83 DTC 585, at 2660 and 589, respectively, which reads as follows:

I am struck by the argument of Mr Bradbury on that point. He forcibly brought to the Board’s attention the demands and parameters outlined for filing a Notice of Objection and, in particular, quoted section 165(1) of the Act:

‘‘A taxpayer who objects to an assessment under this Part may, within 90 days from the day of mailing of this notice of objection in duplicate in prescribed form setting out the reasons for the objection and all relevant facts.” (Italics mine.)

The prescribed form is of course that entitled ““T400A — Notice of Objection”, so, as I read it, no other format is acceptable. Further, Form T400A reinforces section 165(1) above in a section on it specifically entitled “Statement of Facts and Reasons” in the following way:

“Provide a complete statement of the Facts upon which the objection is based and set out the Reasons for the Objection: (if space insufficient, attach a separate sheet”.

I would assume that in practice, something less than a “complete statement of the Facts” if it is filed, may be accepted by Revenue Canada. But I am not aware of any statutory requirement which would ensure a taxpayer that such would be the case. In a situation such as that before the Board in this matter, when the primary ninety-day period has already elapsed, I can understand an agent for the taxpayer taking extra precautions to ensure that ‘‘all relevant facts” (section 165(1)) are known to him and explained to Revenue Canada. I am satisfied that in acting for the taxpayer, Mr Bradbury wasted no substantial amount of time in getting together that which he believed would be not only useful, but vital, to him in contesting the assessments. In the circumstances of this application, the argument of the agent for the taxpayer must be accepted. If Revenue Canada will settle for some “pro-forma” type of Notice of Objection, or less than the detail called for in the Act, or on Form 400A, then that climate of receptivity should be made more clear to taxpayers than it now seems to be.

In the instant matter, it cannot be said as in Cotroneo, (supra), that the taxpayer on appeal would be faced with an almost total lack of information upon which to base his defence. In addition, if a taxpayer is entitled to a certain flexibility in accumulating and organizing his defence (Thistle, (supra)), some modest accommodation is warranted where it is the Minister who is at fault. The time frame between June 9, 1983 and August 25, 1983, is neither unrealistic nor unreasonable under the circumstances of this case, and the Minister should not be put at risk of additional difficulty as a result of it.

The motion is granted, and the amended reply to the notice of appeal dated November 8, 1983 will form part of the documentation available to the Court for the hearing of the appeal which will be set down at the earliest convenience of this Court.