On February 17, 2016, CRA assessed the applicants for their derivative liability under ETA s. 323(l) for arrears of GST owing by the corporation (“Artisan”) of which they were directors. On April 20, 2016, the applicants (then, self-represented) filed Notices of Objection to such assessments – except that they used the incorrect forms (so that CRA recorded them as payroll rather than GST objections), as well as using an incorrect assessment number.
On March 12, 2018, the Minister certified the amounts owing by the applicants and Artisan under ETA s. 316(1). In April 2018, (recently retained) counsel for the applicants informed CRA of the objections, which CRA promptly located, and in September 2018, CRA informed counsel that the objections had been “backdated” (i.e., accepted as having been validly and timely filed in April 2016) and that CRA would be withdrawing the certificate and writ for both applicants “as the debt is now considered to be certified in error.” This was done.
Counsel took the position that the National Collections Manual (2015-01) instead required that the certificate be renounced (i.e., permanently canceled), rather than merely temporarily withdrawn. In a January 29, 2019 letter (the “Decision”), CRA indicated that, in this regard, the Manual had been amended in November 2016 by an InfoZone communication from the Director of CRA’s Collections Enforcement Division (“the 2016 Directive”), which indicated that, in these circumstances, it was appropriate for the certificate to be merely withdrawn and that, in any event, the 2015 Manual was internal policy, not law. The applicants then brought this application for judicial review, primarily on the basis that the Decision was unreasonable because it contravened the 2015 Manual.
Before turning to the Decision, Elliott J noted (at para. 63) that, in light of s. 315 and the jurisprudence thereunder, “there was no legal impediment to the actions of the collections officer in pursuing collection by filing certificates and registering writs” – and similarly stated (at para. 66) after summarizing the effect of ss. 315 and 316:
Together these provisions … legally justify and support the collection activities that were undertaken and the withdrawal of the certificates. …
Turning to the reasonableness of the Decision departing from the Manual, Elliott J indicated (at para. 102) that what was relevant was that the 2016 Directive was "in effect on April 24, 2018 when the Objections were accepted by CRA Appeals and backdated,” in contrast to its not being in effect when the objections were originally filed, and further noted (at paras. 106 and 113):
Policy guidelines and manuals are what is referred to as "“soft law”". As such, a policy that is relied on by decision-makers in the day-to-day administration of their governing legislation, cannot supersede the authority provided under the legislation … .
In the end, whether or not withdrawal of the documents was based on the 2016 Directive is immaterial since neither the 2015 Manual nor the 2016 Directive were binding.
In rejecting a further argument of the applicants (at para. 118) that “there was a legitimate expectation that CRA would follow their own policies and procedures as set out in the 2015 Manual,” Elliott J first stated (at para. 120):
A legitimate expectation arises when a government official makes “clear, unambiguous and unqualified” representations within the scope of their authority to an individual about an administrative process that the government will follow: … Mavi, 2011 SCC 30 … .
She then stated (at paras. 122-123):
I agree with CRA that an internal policy that was rescinded at the time that the certificates were filed is not a representation that is sufficiently precise to constitute a binding contractual obligation. As such, a legitimate expectation did not arise.
Even if a legitimate expectation did exist, an important limit on the doctrine is that it cannot give rise to substantive rights. The Court may only grant appropriate procedural remedies to respond to a legitimate expectation … .
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|Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc.||suggestion that a clear representation made by CRA officials within the scope of their authority as to an administrative process they will follow is binding||277|