Date: 20051219
Ottawa, Ontario, December 19, 2005
PRESENT: THE HONOURABLE MADAM JUSTICE TREMBLAY-LAMER
BETWEEN:
Applicant
and
CANADA CUSTOMS AND REVENUE AGENCY
and
LOUIS TURCOTTE, in his capacity as Acting Chief of Appeals,
Québec Tax Services Office
REASONS FOR ORDER AND ORDER
[1] This is an application for judicial review of a decision by the Canada Customs and Revenue Agency (the respondent) under the fairness initiative, dated April 5, 2005, to deny an application for a waiver of additional overdue interest for the 1999 and 2000 taxation years, in accordance with subsection 220(3.1) of the Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1 (ITA).
[2] On April 15, 2002, the Canada Customs and Revenue Agency issued a reassessment listing penalties and interest owed by Gaétan Groleau (the applicant) following an audit for the 1999 and 2000 taxation years.
[3] On July 5, 2002, the applicant filed notices of objection for both of the assessments issued on April 25, 2002, for the 1999 and 2000 taxation years.
[4] On July 24, 2003, the Appeals Division of the Québec Tax Services Office decided to disallow the notices and uphold the assessments.
[5] On June 4, 2003, the applicant first applied to the Agency to have the interest waived for the 1999 and 2000 taxation years under subsection 220(3.1) of the ITA, alleging undue delay by the Agency in processing his request. The Agency was unable to process the request at that time because it had to wait for a valid and binding decision regarding the years at issue.
[6] On July 21, 2004, Archambault J. of the Tax Court of Canada allowed the appeals from assessments for the 1999 and 2000 taxation years and referred the matter to the Minister of National Revenue for reconsideration and reassessment, in accordance with the consent to judgment.
[7] On July 21, 2004, the applicant and Her Majesty the Queen signed a consent to judgment by which the applicant was allowed to deduct certain amounts as business losses.
[8] In a letter dated November 3, 2004, Réjean Michaud, a manager for the Agency, informed the applicant that his application had been allowed in part and that the interest owing for the period from September 18, 2002, to December 1, 2002, would be waived.
[9] In a letter dated December 17, 2004, the applicant applied to the Agency for a second-level administrative review of the decision dated November 3, 2004.
[10] After reviewing the file, Robert Lévesque recommended that the decision of November 3, 2004, be upheld, since the interest for the 1999 and 2000 taxation years could not be attributed to the actions of the Agency, and there had been no undue delay caused by the Agency other than the two-and-a-half month period for which the interest owing had already been waived pursuant to the first fairness application; moreover, it was the applicant who had decided not to pay off his tax account at the time of filing his objection and appeal with the Tax Court of Canada, which resulted in his having to pay unnecessary additional interest.
[11] In a letter dated April 5, 2005, Louis Turcotte, Acting Chief of Revenue Canada’s Appeals Division, informed the applicant that his application had been denied because the review of his file had not revealed any undue delay caused by the Agency in processing his file.
[12] It is worth reproducing here the relevant subsection of the ITA:
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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.
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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. |
[13] Should the Court intervene and review the Minister’s exercise of discretion in his decision dated April 5, 2005, denying the applicant’s application for waiver of interest because of undue delay caused by the Agency?
[14] The appropriate standard of review for discretionary decisions made by the Minister of National Revenue in accordance with the so-called “fairness” provisions of the ITA is the standard of reasonableness simpliciter: Lanno v. Canada (Customs and Revenue Agency), 2005 FCA 153. The reviewing Court must therefore look to the reasons given by the tribunal. “A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they can stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere. . . . This means that a decision may satisfy the reasonableness standard if it is supported by a tenable explanation even if this explanation is not one that the reviewing court finds compelling” (Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 274 at para. 55).
[15] Subsection 220(3.1) of the ITA confers on the Minister of National Revenue a discretionary power to waive, upon application, penalties or interest owed by a taxpayer or partnership. To facilitate the exercise of this discretionary power, on March 18, 1992, the Minister of National Revenue issued Information Circular IC-92-2, entitled “Guidelines for the Cancellation and Waiver of Interest and Penalties”, and in March 1996 adopted improved guidelines in a document called the “Fairness Provisions Reference Guide”.
[16] In Kaiser v. Canada (Minister of National Revenue – MNR), [1995] F.C.J. No. 349 (F.C.T.D.), Rouleau J. noted that the purpose of the fairness provisions is to give the Minister of National Revenue a discretionary power to waive or cancel all or any portion of any penalty or interest when exceptional circumstances or circumstances beyond the taxpayer’s control prevent him or her from meeting deadlines or complying with the rules under the tax system.
[17] In this case the applicant did not raise any exceptional circumstances or circumstances beyond his control that would have prevented him from paying his tax debt. Based on the reasons and the evidence before me, it was not unreasonable for the Agency to find that there was no undue delay caused by the Agency other than the two-and-a-half month period for which the interest owing had already been waived pursuant to the first fairness application.
[18] A review of the record shows that there were various periods during which the applicant waited for responses from the Agency. On July 5, 2002, the applicant filed notices of objection to the 1999 and 2000 reassessments, which were disallowed 13 months later, on July 24, 2003. Ms. Gariépy, Appeals Officer, cited a shortage of human resources and a new Commissioner to justify that delay. In light of the circumstances, the Agency informed the applicant that the interest would be waived for the period from September 18, 2002, to December 1, 2002. The applicant was therefore successful in his claim for that period.
[19] On June 4, 2003, the applicant first applied to the Agency to have the interest waived for the 1999 and 2000 taxation years. As mentioned above, that application could not be processed immediately because the Agency had to wait for a valid and binding decision regarding the years at issue. Therefore, that delay was not caused by the Agency. On July 21, 2004, the Tax Court of Canada made its decision. Pursuant to the decision, in a letter dated November 3, 2004, the Agency informed the applicant that the interest had been waived for the above-mentioned two-and-a-half month period, the only delay that was caused by the Agency.
[20] On December 17, 2004, the applicant applied to the Agency for a review of the decision dated November 3, 2004. On April 5, 2005, Louis Turcotte informed the applicant that there had been no undue delay caused by the Agency, which is clearly borne out by the facts. Unfortunately for the applicant, as Mr. Turcotte pointed out, it was the applicant himself who opted not to pay the taxes owing under the reassessments and to wait for the outcome of his objection, which resulted in the accrual of interest.
[21] Moreover, there is no evidence that his right to a fair, objective and unbiased decision was violated. The fact that the file was processed in Québec cannot in itself amount to a breach of procedural fairness. I note that both applications were processed independently and that the person involved in the first application for a waiver was not involved in the second.
[22] Based on the evidence before me, there is no reason to determine that the Minister’s decision of April 5, 2005, denying the applicant’s application to have the interest waived was unreasonable; therefore the application for judicial review is dismissed, without costs.
ORDER
[1] THE COURT ORDERS that the application for judicial review be dismissed, without costs.
JUDGE
Certified true translation
Francie Gow
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-833-05
STYLE OF CAUSE: GAÉTAN GROLEAU
and
CANADA CUSTOMS AND REVENUE AGENCY and LOUIS TURCOTTE, in his capacity as Acting Chief of Appeals, Québec Tax Services Office
DATE OF HEARING: December 7, 2005
REASONS FOR ORDER BY: The Honourable Madam Justice Tremblay-Lamer
APPEARANCES:
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Gaétan Groleau
|
FOR THE APPLICANT |
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Martin Lamoureux
|
FOR THE RESPONDENTS |
SOLICITORS OF RECORD:
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Gaétan Groleau 1876, rue des Épinettes Rouges Lac St-Charles, Quebec G3G 2L4
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FOR THE APPLICANT |
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John H. Sims, Q.C. Deputy Attorney General of Canada
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FOR THE RESPONDENTS |