Date: 200000920
Docket: A-414-98
CORAM: STRAYER J.A.
ISAAC J.A.
SHARLOW J.A.
B E T W E E N:
HER MAJESTY THE QUEEN
Applicant
-- and --
ADELE SCHAFER
Respondent
Heard at Saskatoon, Saskatchewan on Thursday, May 25, 2000
JUDGMENT delivered at Ottawa, Ontario on Wednesday, September 20, 2000
REASONS FOR JUDGMENT BY: ISAAC J.A.
CONCURRED IN BY: STRAYER J.A.
CONCURRING REASONS FOR JUDGMENT BY: SHARLOW J.A.
Date: 20000920
Docket: A-414-98
CORAM: STRAYER J.A.
ISAAC J.A.
SHARLOW J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
- and -
ADELE SCHAFER
Respondent
REASONS FOR JUDGMENT
ISAAC J.A.
[1] This is an application for judicial review of a decision of the Tax Court of Canada dismissing the respondent's appeal from a decision of the Minister of National Revenue ("the Minister") which dismissed her application for an extension of time in which to file a notice of objection. The Tax Court dismissed the taxpayer's appeal and granted the Minister's motion to quash on the ground that it was unnecessary to grant the respondent's application for an extension of time because the application was made within the 90 day limitation period prescribed by statute.
[2] The relevant facts are straightforward. In 1993, Willows Golf Corporation was indebted to the Crown in right of Canada for federal goods and services tax (GST) payable under the Excise Tax
Act1 in the amount of $116,033.30 and was unable to pay. The Crown believed that Willows Golf Corporation had transferred at least the same amount of cash or property to its principal shareholder, Reginald Shafer, for less than fair market value consideration, and that as a result he was vicariously liable, pursuant to section 325 of the ETA , for the GST liability of Willos Golf Corporation. He was assessed on that basis.
[3] The Crown also believed that Mr. Schafer had transferred the same amounts to his wife, Adele Schafer, in order to make mortgage payments on their home, and, because of that transfer, she also was vicariously liable, pursuant to section 325 of the ETA, for the GST liability of Mr. Schafer, that was actually the GST liability of Willows Golf Corporation. The Minister of National Revenue ("the Minister") mailed two notices of assessment to Mrs. Schafer on August 24, 1993 totalling $83,001.78. Mrs. Schafer received those notices, consulted a lawyer, and then filed notices of objection.
[4] The Minister placed a third notice of assessment addressed to Mrs. Schafer in the mail on 2 September, 1993 for the remaining $33,031.62 of GST. She was required to file a notice of objection within 90 days of that date. Mrs. Schafer testified, and the Tax Court Judge accepted her evidence, that she never received the notice. She testified further that she first heard about the notice in an examination for discovery on 20 July, 1996. On 18 September, 1996 her solicitors wrote to the Minister requesting an extension of time under section 303 of the ETA within which to file a notice of objection to that assessment. The Minister received the application on 23 September, 1996. He refused it on 23 October, 1996. On 18 November 1996, the respondent then renewed the request for an extension in the Tax Court. On 20 March 1998, the applicant moved before the Tax Court for an order quashing the respondent's application for extension because, by virtue of paragraph 304(5)(a) of the ETA, the Tax Court was without jurisdiction to deal with it. This was so, the Minister argued, because the application for extension made under subsection 303(1) of the ETA was not made within one year of the expiration of the time otherwise prescribed by Part IX of the ETA for objecting. The Tax Court Judge dismissed the application and granted the motion to quash on the ground that it was unnecessary because the time limitations for objecting did not start to run until 20 July, 1996, or the first day on which the respondent received the notice of assessment. The Minister brings this application for judicial review from that decision, contending that the Tax Court lacks jurisdiction to deal with the matter.
[5] In the Tax Court, the Minister questioned the credibility of Ms. Schafer's allegation that she never received the notice of assessment. The Tax Court Judge found her a credible witness, despite several false statements that she made concerning her husband's previous convictions for fraud. Before us, the Minister has again contended that Ms. Schafer actually received the notice of assessment before 20 July, 1996.
[6] The Minister also contended that the Tax Court Judge should not have believed Ms. Schafer. In my respectful view, this application for judicial review cannot succeed on this basis because there is no palpable or overriding error that would justify interference with the decision of the Tax Court Judge on this finding of credibility. It is not for this Court to interfere with a finding of credibility made by a Judge at first instance unless there are compelling reasons to do so. The Tax Court Judge believed Ms. Schafer, and so we must accept his finding.
[7] In my respectful view, however, the relevant sections of the ETA clearly state that the time period for filing a notice of objection begins to run on the date that the Minister sends the notice of assessment, and that receipt of that notice is not required. Those sections read:
| 300. (1) After making an assessment, the Minister shall send to the person assessed a notice of the assessment. 301(1.1) Any person who has been assessed and who objects to the assessment may, within ninety days after the day notice of the assessment is sent to the person, file with the Minister a notice of objection in the prescribed form and manner setting out the reasons for the objection and all relevant facts. 303.(1) Where no objection to an assessment is filed under section 301 . . . within the time limit otherwise provided, a person may make an application to the Minister to extend the time for filing a notice of objection . . . and the Minister may grant the application. 304.(1) A person who has made an application under section 303 may apply to the Tax Court to have the application granted after either
but no application under this section may be made after the expiration of thirty days after the day the decision has been mailed to the person under subsection 303(5). 304(5) No application shall be granted under this section unless
(b) the person demonstrates that
[Emphasis added.] 334. (1) For the purposes of this Part and subject to subsection (2), anything sent by first class mail or its equivalent shall be deemed to have been received by the person to whom it was sent on the day it was mailed. 335. (1) Where, under this Part or a regulation made under this Part, provision is made for sending by mail a . . . notice . . . an affidavit of an officer of the Agency, sworn before a commissioner or other person authorized to take affidavits, setting out that the officer has knowledge of the facts in the particular case, that such a . . . notice . . . was sent by registered or certified mail on a named day to the person to whom it was addressed (indicating the address), and that the officer identifies as exhibits attached to the affidavit the post office certificate of registration of the letter or a true copy of the relevant portion thereof and a true copy of the request, notice or demand, is evidence of the sending and of the request, notice or demand. |
| 300.(1) Une fois une cotisation établie à l'égard d'une personne, le ministre lui envoie un avis de cotisation. 301(1.1) La personne qui fait opposition à la cotisation établie à son égard peut, dans les 90 jours suivant le jour où l'avis de cotisation lui est envoyé, présenter au ministre un avis d'opposition, en la forme et selon les modalités déterminées par celui-ci, exposant les motifs de son opposition et tous les faits pertinents. 303.(1) Le ministre peut proroger le délai pour produire un avis d'opposition dans le cas où la personne qui n'a pas fait opposition à une cotisation en application de l'article 301 . . . dans le délai par ailleurs imparti lui présente une demande à cet effet. 304.(1) La personne qui a présenté une demande en application de l'article 303 peut demander à la Cour canadienne de l'impôt d'y faire droit après:
Toutefois, une telle demande ne peut être présentée après l'expiration d'un délai de 30 jours suivant l'envoi de la décision à la personne selon le paragraphe 303(5). 304.(5) Il n'est fait droit à la demande que si les conditions suivantes sont réunies:
b) la personne démontre ce qui suit:
[L'emphase est ajoutée] 334.(1) Pour l'application de la présente partie, tout envoi en première classe ou l'équivalent est réputé reçu par le destinataire à la date de sa mise à la poste. 335.(1) Lorsque la présente partie ou un règlement d'application prévoit l'envoi par la poste . . . d'un avis . . . l'affidavit d'un fonctionnaire du ministère, souscrit en présence d'un commissaire ou autre personne autorisée à le recevoir, constitue la preuve de l'envoi . . . de l'avis, s'il indique que le fonctionnaire est au courant des faits de l'espèce, que la demande, l'avis ou la mise en demeure a été envoyé par courrier recommandé ou certifié à une date indiquée à l'intéressé dont l'adresse est précisée er que le fonctionnaire identifie comme pièces jointes à l'affidavit, le certificat de recommandation remis par le bureau de poste ou une copie conforme de la partie pertinente du certificat et une copie conforme de la demande, de l'avis ou de la mise en demeure. |
[8] The requirement in subsection 301(1.1) of the ETA is that the objection to the Minister's assessment be made within ninety days after it has been "sent." The Tax Court found, and the respondent does not dispute, that the Minister placed the notice of assessment in the Canada Post mail bag on 2 September, 1993. The implication of the interpretation placed on subsection 301(1.1) by the Tax Court is that the word "sent" means "received" by the taxpayer.
[9] I am aware that the Tax Court has interpreted almost identical sections of the Income Tax Act1 to mean that the limitation period does not start to run unless the taxpayer receives the notice of assessment within the statutory time limit.2 However, this Court has criticized that approach in the past. In Canada v. Bowen, Stone J.A. cited a passage from the Tax Court's decision in Antoniou requiring receipt to start the limitation period, and then stated:
| With respect, we are unable to agree with that conclusion. In our view, it disregards the plain meaning of subsection 165(3) and section 169 of the [Income Tax] Act. . . |
| In our opinion, the duty resting upon the Minister under subsection 165(3) was to do precisely what he did, viz., notify the respondent of the confirmation by registered mail. Nothing in that subsection or in section 169 required the notification to be "served" personally or to be received by the taxpayer.3 |
[10] The Supreme Court in Alberta (Treasury Branches) v. M.N.R. held that, in the absence of ambiguity in the statutory language, the ETA must be applied strictly and without regard to its object or purpose. Cory J., writing for the majority, stated that:
| . . . when there is neither any doubt as to the meaning of the legislation nor any ambiguity in its application to the facts then the statutory provision must be applied regardless of its object or purpose.4 |
[11] In a number of cases decided under the Income Tax Act, the Supreme Court of Canada has taken a similar approach. For example, in Shell Canada Ltd. v. Canada, McLachlin J., as she then was, expressed her views of the matter at paragraphs 40-41:
| Second, it is well established in this Court's tax jurisprudence that a searching inquiry for either the "economic realities" of a particular transaction or the general object and spirit of the provision at issue can never supplant a court's duty to apply an unambiguous provision of the Act to a taxpayer's transaction. Where the provision at issue is clear and unambiguous, its terms must simply be applied: Continental Bank, supra at para. 51, per Bastarache J.; Tennant, supra, at para. 16, per Iacobucci J.; Canada v. Antosko, [1994] 2 S.C.R. 312, at pp. 326-27 and 330, per Iacobucci J.; Friesen v. Canada, [1995] 3 S.C.R. 103, at para. 11, per Major J.; Alberta (Treasury Branches) v. M.N.R., [1996] 1 S.C.R. 963, at para. 15, per Cory J. |
| It is my respectful view that by paying insufficient attention to these very important principles, the Minister and the Federal Court of Appeal fell into error.5 |
[12] It is my respectful view that the principles laid down in those passages apply with equal force in this case and that we should avoid inviting further censure from on high by adopting the approach of the Tax Court. Paragraph 304(5)(a) does not require the Minister to serve the notice of assessment on the taxpayer, personally, or even that the notice be received by the taxpayer. The paragraph merely states that the Tax Court shall not hear an application for an extension of time if it is brought more than one year beyond the expiration of time limited by subsection 301(1.1). Subsection 301(1.1) states that the limitation period begins to run ninety days after the notice is "sent." Therefore, the only requirement is that the Minister demonstrate that the notice was sent. There is no requirement that the notice be received in order to start the limitation period running. The language of subsection 301(1.1) is clear and unambiguous and must be applied regardless of its object and purpose.
[13] But even if, contrary to what I have concluded to be the correct interpretation of "sent" in subsection 301(1.1), and the word "sent" means that the taxpayer must have received the notice of assessment, then, in any event, subsection 334(1) of the ETA applies in this case and the respondent is deemed to have received the notice of assessment on 2 September, 1993.
[14] The Tax Court considers this subsection to create a rebuttable presumption as to the date that the notice was received. With respect, I do not agree.
[15] In St. Peter's Evangelical Lutheran Church (Ottawa) v. Ottawa (City), McIntyre J. stated as follows:
| It is true, of course, that the words "deemed" or "deeming" do not always import a conclusive deeming into a statutory scheme. The word must be construed in the entire context of the statute concerned. . . . Any other conclusion [than a conclusive deeming provision] would frustrate and break down the whole scheme of the Act designed specifically to accomplish both the preservation of the heritage of Ontario and the protection of landowners.6 |
The question therefore becomes whether the conclusion that subsection 334(1) contains a rebuttable deeming provision that would frustrate the scheme of the ETA.
[16] In my respectful view, subsection 334(1) does not create a rebuttable presumption. I have come to this conclusion for two reasons. The first is the conclusion of Stone J.A. in Bowen that:
| a requirement for the receipt of the notification would be difficult, if not totally unworkable, from an administrative standpoint.7 |
I agree that it would be extremely difficult to administer a scheme in which a notice is sent by ordinary first class mail that would require the Minister to contact every person who has been sent a notice of assessment to ensure that they have, in fact, received it.
[17] The second is subsection 335(1) of the ETA. That subsection sets out the manner of proof for the Minister to demonstrate that he has indeed sent the notice of assessment to the taxpayer. It clearly establishes that the onus is on the Minister to establish that he sent the notice to the respondent. There is no corresponding subsection detailing how the Minister or the taxpayer is to establish that the taxpayer received the notice of assessment. The absence of a provision in the ETA detailing the method of proof of receipt or non-receipt of a notice of assessment is, in my respectful view, cogent evidence that the deeming provision is conclusive.
[18] For all these reasons, then, I would allow the application for judicial review with costs, set aside the order of the Tax Court, dated 3 June, 1998, and remit the matter to the Tax Court for reconsideration on the basis that the motion to quash should have been granted with costs for the reasons that, by virtue of paragraph 304(5)(a) of the ETA, the Tax Court lacked jurisdiction to extend the time for filing the notice of objection.
(s) "Julius A. Isaac"
J.A.
I concur
B.L. Strayer J.A.
Date: 20000912
Docket: A-414-98
CORAM: STRAYER J.A.
ISAAC J.A.
SHARLOW J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
- and
ADELE SCHAFER
Respondent
REASONS FOR JUDGMENT
SHARLOW J.A.
[19] I have read in draft the reasons of Mr. Justice Isaac. I agree with his reasoning and conclusion. I wish only to add one comment. Ms. Schafer, representing herself in this matter, stated her argument on the main issue with admirable clarity:
| ... it is only fair and just to interpret the Excise Tax Act in a manner that allows a citizen of Canada an opportunity to appeal an arbitrary third party assessment when she learns of it and not allow Revenue Canada to hide behind a technical interpretation of laws, that would permit Revenue Canada not to be subjected to an independent review of its assessments by the Tax Court. |
[20] The Tax Court Judge obviously agreed with the principle underlying Ms. Schafer's argument, as do I, although I am unable to conclude that the provisions of Excise Tax Act governing applications for an extension of time can reasonably bear an interpretation that achieves the result Ms. Schafer seeks.
[21] The reasoning adopted by the Tax Court Judge in this case was first expressed in Antoniou v. M.N.R., 88 D.T.C. 1415 (T.C.C.). Judge Brulé said (at page 1416) that paragraph 167(5)(a) of the Income Tax Act (analogous to paragraph 303(5)(a) of the Excise Tax Act): Income Tax Act (analogous to paragraph 303(5)(a) of the Excise Tax Act):
| ... must be construed in such a way as to recognize that the legislator did not intend to deprive a taxpayer who has not received a Notice of an assessment of the right to object. |
[22] The same approach has been taken in other cases, for example, Rideau Arcades Ltd. v. M.N.R., 92 D.T.C. 1671 (T.C.C.), per Garon T.C.J., as he then was, and Adler v. The Queen, 98 D.T.C. 1414 (T.C.C.), per Hamlyn T.C.J.
[23] This result has much to commend it. While doing no substantial violence to the scheme of the Excise Tax Act relating to assessments and collection, it ensures that a taxpayer has a chance to challenge an assessment that, through no fault of her own, is not brought to her notice in time to permit the statutory deadline to be met.
[24] The statutory provisions for assessments, objections and appeals are intended to provide clear rules for determining when the Minister's obligation to make an assessment is fulfilled, and to provide procedures by which taxpayers may challenge assessments that may be mistaken. Parliament has chosen to adopt a rule that makes no allowance for the possibility, however remote, that the taxpayer may miss the deadline for objecting or appealing because of a failure of the postal system. I do not understand why Parliament has chosen to deprive taxpayers of the chance to challenge an assessment of which they are unaware, but that is a choice that Parliament is entitled to make.
Karen R. Sharlow
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-414-98
STYLE OF CAUSE: The Queen v. Adele Schafer
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: May 25, 2000
| REASONS FOR JUDGMENT BY: Isaac J.A. |
CONCURRED IN BY: Strayer J.A.
CONCURRING REASONS FOR JUDGMENT BY: Sharlow J.A.
DATED: September 21, 2000
APPEARANCES:
Mr. Gordon Berscheid FOR THE APPELLANT
Ms. Adele Schafer ON HER OWN BEHALF
SOLICITORS OF RECORD:
Mr. Morris Rosenberg
Deputy Attorney General of Canada FOR THE APPELLANT
Ottawa, Ontario
Ms Adele Schafer ON HER OWN BEHALF
Saskatoon, Saskatchewan
__________________
1. R.S.C. 1985, c. 1 (5th Supp). The provisions of that statute have been amended too many times in the recent past to make reproducing them here of any use in this case.
2. See, for example, Antoniou v. MNR, 88 DTC 1415 [hereinafter Antoniou] and Adler v. MNR, 98 DTC 1414.
3. 91 DTC 5594 (Fed. C.A.) at 5595-5596.
4. [1996] 1 S.C.R. 963 at para. 15.
5. [1999] 3 S.C.R. 616 at 641-642.
6. [1982] 2 S.C.R. 616 at 629.
7. Supra note 4 at 5995.