Date: 20050426
Docket: T-2262-03
Citation: 2005 FC 567
Ottawa, Ontario, Tuesday, the 26th day of April 2005
Present: THE HONOURABLE MADAM JUSTICE DAWSON
BRENDA BEACOCK
Applicant
- and -
ATTORNEY GENERAL OF CANADA
Respondent
DAWSON J.
[1] Subsection 220(3.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ("Act")1 confers a discretion upon the Minister of National Revenue ("Minister") to waive or cancel all, or any portion, of any penalty or interest otherwise payable under that Act by a taxpayer. Mrs. Beacock brings this application for judicial review of the Minister's decision refusing her application for a waiver of the interest which Mrs. Beacock owes under the Act. Her responsibility to pay such interest arose after an income tax audit for the 1998 and 1999 taxation years found errors in Mrs. Beacock's accounting records.
[2] The letter which advised Mrs. Beacock of the negative decision explained the reasons for that decision in the following terms:
A review of the facts of this case has failed to show that payment of the liability in its entirety would cause financial hardship. You have a significant amount in mutual funds as well as equity in property. Family members have purchased approximately $32,000 worth of RRSP's over the last two years. Financial hardship for an individual refers to the lack of what is needed for basic living requirements such as food, clothing and shelter.
Furthermore, on your claim of bookkeeping error, the fairness provisions expect the taxpayer to be responsible of the actions of third parties such as accountants.
[3] The Minister's exercise of discretion is entitled to significant deference by this Court. In Sharma v. M.N.R., 2001 DTC 5360, Mr. Justice Pelletier, then of this Court, after reviewing the factors relevant to the pragmatic and functional analysis, concluded that the Minister's discretion under subsection 220(3.2) of the Act was patent unreasonableness. In Cheng v. Canada (2001), 213 F.T.R. 85, this analysis was adopted by my colleague Mr. Justice Gibson with respect to the Minister's discretion under subsection 220(3.1) of the Act. On the basis of these authorities, I agree that the applicable standard of review to be applied to this decision is the most deferential standard of patent unreasonableness. As such, the Court can only intervene if satisfied that the decision-maker acted in bad faith, ignored relevant facts, took irrelevant facts into account, or otherwise acted contrary to law. The Court is not entitled to simply substitute its decision for that of the Minister.
[4] Notwithstanding the considerable deference owed to decisions of this nature, I have concluded that in the present case, the decision-maker did ignore relevant evidence and did consider irrelevant factors with the result that the decision is patently unreasonable and should be set aside.
[5] Specifically, in concluding that payment of the interest debt would not cause financial hardship, the decision-maker relied upon the facts that Mrs. Beacock "[has] a significant amount in mutual funds as well as equity in property". While it is correct that Mrs. Beacock owned mutual funds and had equity in property, the financial information provided by Mrs. Beacock showed significant debt liabilities and that Mrs. Beacock's total liabilities were in excess of her total assets. This fact was not addressed in the decision, or in the "account summary", or the "memoranda of decision" that led to the decision. By apparently failing to consider the taxpayer's liabilities, and only looking to her assets, the decision-maker ignored facts relevant to the issue of hardship.
[6] As well, counsel for the Minister was, in oral argument, unable to explain how it was relevant to this taxpayer's situation that, in the two-year period preceding the decision, "family members" had purchased RRSP's. (In fairness to counsel, his task was not made easier by the failure of the Minister to have filed a tribunal record). In the absence of some explanation, which was not provided, I conclude that by considering the financial situation of unspecified "family members", the decision-maker considered irrelevant facts.
[7] In the result, the application for judicial review will be allowed.
[8] Costs normally follows the event. As Mrs. Beacock is self-represented she is not entitled to an award of any counsel fee. She is entitled to an award of costs in respect of her out of pocket expenses, which I fix in the amount of $100.00 in respect of monies paid for the filing fee and photocopy expenses.
ORDER
[9] THEREFORE, THIS COURT ORDERS THAT:
1. The application for judicial review is allowed and the Minister's decision communicated by letter dated October 31, 2003 is set aside. Mrs. Beacock's request for interest relief is to be remitted for redetermination by a different representative of the Minister.
2. The respondent shall pay to the applicant costs, fixed in the amount of $100.00 on account of disbursements.
"Eleanor R. Dawson"
______________________________
Judge
1 Subsection 220(3.1):
| 220(3.1) The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to 152(5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest.
|
|
220(3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable ou une société de personnes en application de la présente loi, ou l'annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation. |
|
|
|
|
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2262-03
STYLE OF CAUSE: Brenda Beacock v. Attorney General of Canada
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: April 12, 2005
APPEARANCES:
Mrs. Brenda Beacock FOR THE APPLICANT
Self-represented
Mr. Victor Caux FOR THE RESPONDENT
SOLICITORS OF RECORD:
Self-represented FOR THE APPLICANT
Vancouver, British Columbia
Mr. John H. Sims, Q.C. FOR THE RESPONDENT
Deputy Attorney General of Canada