Ottawa, Ontario, June 19, 2007
PRESENT: The Honourable Mr. Justice Harrington
BETWEEN:
and
FAIRNESS REVIEW BOARD
REASONS FOR ORDER AND ORDER
[1] For a number of years Mr. Grosh was either late in filing his income tax returns or had not fully paid his assessments. As a result, he ran up interest and penalty charges. In accordance with section 220 and following of the Income Tax Act the Minister may waive or cancel, in whole or in part, any penalty or interest otherwise payable. Guidelines, often called the Fairness Package, were made known to the public in 1992. They are not intended to be exhaustive, but set out the circumstances normally taken into account. In 2002, Mr. Grosh requested the Minister to waive interest and penalties owed on the 1993 through 1996 taxation years on the grounds of financial hardship. The Canada Revenue Agency declined to do so, except that it cancelled in full all arrears interest charges for a five-month period, as it had been slow in processing his request.
[2] The Guidelines go on to provide that if the taxpayer believes that discretion has not been exercised in a fair and reasonable manner, he may request that the director of a district office or taxation centre review the situation. That is what happened in this case.
[3] By the time the matter came before Carl Balestreri, Assistant Director, Revenue Collections, of the Toronto North Tax Services Office, of the Canada Revenue Agency, who was authorized to carry out the review, Mr. Grosh’s situation had deteriorated. He had suffered a devastating accident in 2003 as a result of which his yearly income was severely reduced. By letter dated 1 February 2006, Mr. Balestreri informed Mr. Grosh that he would cancel all interest charges stemming from the date of his accident, but would not otherwise waive the interest and penalties owing on the 1993 through 1996 taxation years. This is a judicial review of that decision.
THE LEGAL FRAMEWORK
[4] As Mr. Grosh represented himself at the hearing, I will try to explain the procedure without resorting to the legalise lawyers and judges are so fond of using.
[5] Mr. Balestreri’s review of the earlier decision was not really a review. He was entitled to take a fresh look at the matter and to use his own discretion. He was also entitled to take into account new circumstances.
[6] On the other hand, my assessment of Mr. Balestreri’s decision is a review, a judicial review. This means the law does not permit me to substitute my own opinion, or my own discretion for his. I can only interfere with his decision if it is unreasonable. That point was decided by the Federal Court of Appeal in Lanno v. Canada (Custom and Revenue Agency) which is reported and available on the Federal Court of Appeal’s website under official citation number 2005 FCA 153, and which was filed as part of the Minister’s material.
[7] If I conclude that the decision was unreasonable, I still cannot waive any of the remaining interest or penalties. All I can do is refer the matter back to a new officer for a fresh look.
[8] There are two other points which must shape my reasoning. It is not enough for a taxpayer to think that the result is unfair. The meaning of fairness has been discussed in various court decisions. The other point is that there is an objective meaning to “reasonableness”. In determining if a decision is reasonable, the Court must ask itself “after a somewhat probing explanation, can the reasons given, when taken as a whole, support the decision?” The Court looks at the reasoning of the decision maker. It does not engage in its own fresh reasoning. This was explained by the Supreme Court of Canada in Law Society of New Brusnwick v. Ryan, [2003] 1 S.C.R. 247 at paragraph 43 and following.
THE FACTS
[9] Mr. Grosh thinks it unfair that he be penalized and charged high interest from 1993 through 1996. It was always his intention to pay what was owed, so much so that he hired professionals to help him. He believes they let him down.
[10] He declared bankruptcy in 1991, and was only discharged in 1996. He does not know why there was such a delay. He thought that the trustee in bankruptcy would be filing his ongoing tax returns, but that was not the case. He then filed his returns and upon being assessed, filed certain objections. One of his accountants was his own father who, it seems, filed incomplete returns because he was verging on senility. He then had difficulty with another chartered accountant. He took an action in the Tax Court, and received some redress, but not in full.
[11] If Mr. Grosh’s returns were late, or incomplete, because of bad advice, or a misunderstanding with his advisors, that is something between them. Those are not matters Mr. Balestreri took into account. His decision not to do so was not unreasonable. The Ryan case, mentioned above, is a perfect example. Mr. Ryan was a lawyer who had been hired by his clients to institute legal proceedings. He did not do so within the time allowed. As a result they lost their claim. In one sense, that might be unfair, but the clients’ recourse was against Mr. Ryan, not against the party they intended to sue.
[12] Furthermore, Mr. Grosh was able, prior to his accident, and is still able, to pay the remaining debt. He received sizable tax refunds which could have been used to retire the debt. He also topped up his registered retirement savings plan. He says he used the refunds to move from Vancouver back to the Toronto area, and topped up his RRSP on the advice of his accountant. Even so, Mr. Balestreri’s decision not to take those factors into account was not unreasonable.
[13] Furthermore, the Minister has been willing to make a reasonable repayment arrangement.
[14] For these reasons, I must dismiss this application for judicial review. However I will not award costs.
ORDER
THIS COURT ORDERS that the application for judicial review of the decision of Carl Balestreri, dated 1 February 2006, is dismissed without costs.
“Sean Harrington”
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-385-06
STYLE OF CAUSE: DAVID ASHER GROSH v.
REVENUE CANADA TAXATION FAIRNESS REVIEW BOARD
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 14, 2007
APPEARANCES:
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Mr. David Asher Grosh
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THE APPLICANT ON HIS OWN BEHALF |
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Ms. Maria Vujnovic
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SOLICITORS OF RECORD:
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David Asher Grosh Thornhill, Ontario
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THE APPLICANT ON HIS OWN BEHALF |
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John H. Sims, Q.C. Deputy Attorney General of Canada
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