Richard S Walker v. Minister of National Revenue, [1984] CTC 2177

Taylor, TCJ:—This is an application heard in Toronto, Ontario, on December 5, 1983, for an extension of time within which to file a notice of objection for the years 1978, 1979 and 1980. The application which was dated April 6, 1983 was beyond the time limit set out in paragraph 167(5)(a) of the Income Tax Act, SC 1970-71-72, c 63, as amended, for the years 1978 and 1979, and the application for those years is therefore denied because this Court is without jurisdiction. With regard to the year 1980, the Minister opposed the Court granting the application, and relied upon subparagraphs 167(5)(c)(i) and (ii) of the Act. For that year, the assessment notice was dated July 26, 1982, and had been mailed to the applicant’s business address.

I am satisfied that within reasonable limits, the applicant did file the application at issue “as soon as circumstances permitted” (subparagraph 167(5)(c)(ii)), and accordingly the applicant need orly overturn the Minister’s reliance on subparagraph 167(5)(c)(i) of the Act.

(i) but for the circumstances mentioned in subsection (1) or (4), as the case may be, an objection or appeal would have been made or taken within the time otherwise limited by this Act for so doing.

It was the contention of the applicant that during the 90-day period to which subparagraph 167(5)(c)(i) makes reference, he was not aware that the assessment notice had been received — all such fiscal matters were handled by his wife, whom he employed as his bookkeeper (she is now his ex-wife), and in turn, if necessary, they were turned over to his accountant. It was his contention that the matters were not brought to his attention at all, and for some reason they were not properly dealt with either by his bookkeeper or his accountant. He asserted that this may have been because of particular difficult personal problems he was encountering at the time with his wife (bookkeeper) — but he did not know the exact reasons that resulted in the matter being neglected.

The fact that there were outstanding taxes only came to his attention when he attempted to sell his business, and his solicitor found an income tax lien had been registered against certain of his property. During the year in question, the applicant’s main business was that of a private professional engineer, but his objection to this tax assessment was based on his view that the Minister was incorrect in disallowing certain alleged farming losses which he deducted from his other income. The applicant noted for the Court, that in filing his 1981 income tax return, he had continued to deduct the alleged farming losses relative to that year. His reason for raising this point was that he wished to know if this hearing could also take into account his similar disagreement with the 1981 assessment and disallowance by the Minister. It was brought up by the Minister’s counsel that there was no record of a notice of objection of any kind having been filed for 1981, and in the course of these comments it became clear that the applicant was beyond the time limit for making an application for extension of time for 1981. That matter (1981), of course, is not before the Court, but it is referenced for reasons which will become apparent later in this order.

In my view, little need be said about the apparent lack of attention to the details of his income tax matters which were admitted and described by the applicant. I find it difficult to accept that he was so unaware of the assessments for 1978, 1979, 1980 and indeed 1981, and that the lien on his property could come as such a shock to him. He is not professing “ignorance of the law’’, an excuse rejected generally by the Courts, nor is he contending that either his bookkeeper or his accountant filled a role as “agent” in a manner consistent with that role in Milan Hrovat and M & H Doors Ltd v MNR, [1983] CTC 2662; 83 DTC 590. This applicant’s sole reason for contending that his request should be granted, is that he was completely unaware of the amounts, certainly the one at issue, 1980. As noted above, I would normally have great difficulty accepting as sufficient such a reason, but there is one set of circumstances which forces me to give this applicant the benefit of the doubt. The assessments for the years 1978 and 1979 were issued by the Minister on November 23, 1981 — and although those do not form part of the matter before the Court, they are signifi cant because in all relevant material aspects they were identical to the much later assessments for the years 1980 and 1981 — the farm losses claimed were disallowed. I am prepared to presume if this applicant had been aware of the contents of the 1978 and 1979 assessment notices (the disallowance of the farm losses) he would have been reluctant to file for 1980 and 1981 in exactly the same form without at least some proper explanations from his accountant. The 1980 income tax return would have been due before April 30, 1981, and that for 1981, before April 30, 1982. The notice of reassessment for 1980 was dated July 26, 1982, and it was in the spring of 1983 that his lawyer allegedly brought to his attention the problem of the lien. It is my view that the applicant should be given the benefit of the doubt and allowed to file the notice of objection for the year 1980

The application is denied for the years 1978 and 1979 and granted for the year 1980.

Application allowed in part.