Date: 20030702
Docket: A-553-02
Citation: 2003 FCA 293
CORAM: ROTHSTEIN J.A.
NOËL J.A.
BETWEEN:
JOZO (JOE) KOVACEVIC
Appellant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Toronto, Ontario, on June 17, 2003.
Judgment delivered at Ottawa, Ontario, on July 2, 2003.
REASONS FOR JUDGMENT BY: ROTHSTEIN J.A.
CONCURRED IN BY: NOËL J.A.
SEXTON J.A.
Date: 20030702
Docket: A-553-02
Citation: 2003 FCA 293
CORAM: ROTHSTEIN J.A.
NOËL J.A.
BETWEEN:
JOZO (JOE) KOVACEVIC
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
ROTHSTEIN J.A.
[1] The issue in this appeal from the Tax Court is this: where, under the Excise Tax Act, R.S.C. 1985, C. E-15 (the Act), a notice is required to be sent by the Minister of National Revenue (Minister) by registered mail, what evidence of mailing is required for compliance with the Act?
Facts and Evidence
[2] On October 31, 1996, the appellant, in his capacity as a director of a company, was sent a Notice of Assessment imposing on him personal liability for certain GST obligations of the company under the Act. On or about December 15, 1996, the appellant filed a Notice of Objection. On May 8, 1998, the Minister says a Notice of Decision was mailed to the appellant by registered mail disallowing the objection and confirming the assessment.
[3] The appellant says he did not receive the Notice of Decision. He says that it was on or about May 4, 2001, that he was informed by a collections officer of the Minister that he was personally liable as a director for the GST obligations of the company.
[4] By Notice of Decision dated November 22, 2001, the Minister dismissed the appellant's appeal for an extension of time to challenge the assessment.
[5] By Notice of Appeal dated December 21, 2001, the appellant appealed to the Tax Court.
[6] On or about May 22, 2002, the Minister filed a Notice of Motion to dismiss the appellant's appeal on the grounds that it was filed out of time.
[7] By decision dated July 25, 2002, the Tax Court Judge granted the Minister's motion and dismissed the appellant's appeal.
[8] The appellant now appeals that decision to this Court.
Decision of the Tax Court
[9] The Tax Court Judge found that the appellant's evidence that he did not receive the Notice of Decision "was not shaken on cross-examination". He also accepted that the onus of proving the mailing was on the Minister. The Tax Court Judge then recited some paragraphs in an affidavit of an official of the Minister attesting to the fact that he prepared the Notice of Decision. The official's affidavit stated that the Notice of Decision was dropped in his Team Leader's in-basket, was approved by his Team Leader and then submitted to the Assistant Director of Appeals who appears to have signed the Notice of Decision on May 15, 1998. The affidavit then attests to the policy and practice of the Canada Customs and Revenue Agency (Agency) in respect of mailing the Notice of Decision:
10. It is the policy and practice of the Agency to then forward the Notice of Decision to a clerk who arranges for the Notice of Decision to be sent my (sic) registered mail. The method of delivery is indicated on the Notice of Decision by the typed word "registered" on the face of the Notice of Decision. Attached and marked as Exhibit "C" to this my affidavit is a true copy of the Notice of Decision dated May 15, 1998. The word "registered" is recorded in the top left corner.
11. It is the policy and practice of the Agency to indicate the date of mailing by registered mail by date stamping the Notice of Decision with the mailing date. The date stamp of this Notice of Decision indicates the date of mailing as May 15, 1998. Attached and marked as Exhibit "C" to this my affidavit is a true copy of the Notice of Decision dated May 15, 1998, showing the date stamp in the top, left corner.
[10] In respect of the policy and practice of the Agency, the Tax Court Judge relied on the obiter statement of Bowman J. (as he then was) in Schafer v. The Queen, [1998] G.S.T.C. 60 (reversed [2000] G.S.T.C. 82 (F.C.A.)), that when documents are to be sent by ordinary mail that:
In a large organization, such as a government department, a law or accounting firm or a corporation, where many pieces of mail are sent out every day it is virtually impossible to find a witness who can swear that he or she put an envelope addressed to a particular person in the post office. The best that can be done is to set out in detail the procedures followed, such as addressing the envelopes, putting mail in them, taking them to the mail room and delivering the mail to the post office.
[11] Although the Tax Court Judge acknowledged that the official did not have personal knowledge of the events that transpired after he placed the Notice of Decision in his Team Leader's in-basket, he was satisfied on a balance of probabilities that the Notice of Decision was sent as required by the Act on May 15, 1998.
[12] As a result, the Tax Court Judge dismissed the appeal.
Analysis
[13] The provisions dealing with the proof of mailing a Notice of Decision confirming an assessment are subsections 301(5) and 335(1) of the Act. The Notice must be sent by registered or certified mail. Evidence of the sending of the Notice is by affidavit to which is attached as an exhibit, the post office certificate of registration or a true copy of the relevant portion thereof:
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301(5). After reconsidering an assessment under subsection (3) or confirming an assessment under subsection (4), the Minister shall send to the person objecting notice of the Minister's decision by registered or certified mail. ... 335(1). Where, under this Part or a regulation made under this Part, provision is made for sending by mail a request for information, a notice or a demand, 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 request, notice or demand 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.
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301(5). Après avoir examiné de nouveau ou confirmé une cotisation, le ministre fait part de sa décision par avis envoyé par courrier recommandé ou certifié à la personne qui a fait opposition à la cotisation. ... 335(1). Lorsque la présente partie ou un règlement d'application prévoit l'envoi par la poste d'une demande de renseignements, d'un avis ou d'une mise en demeure, l'affidavit d'un fonctionnaire de l'Agence, souscrit en présence d'un commissaire ou autre personne autorisée à le recevoir, constitue la preuve de l'envoi ainsi que de la demande, de l'avis ou de la mise en demeure, 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 et 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. |
[14] The affidavit of the Minister's official in this case does not attach a post office certificate of registration or a true copy of the relevant portion thereof.
[15] The Minister's official was cross-examined on this point. The official testified that according to information he received from the "mail-room", the mail-room only keeps these records for "a year or two years and then they discard it". In this case, about three years had passed and the official said the mail-room advised they have no record of the certificate of registration.
[16] I accept that when legislation requires that documents be sent by a large organization such as a government department by ordinary mail, but does not require registered or certified mail or evidence of a more formal means of sending, the observation of Bowman J. in Schafer is reasonable. Generally, it would be sufficient to set out in an affidavit, from the last individual in authority who dealt with the document before it entered the normal mailing procedures of the office, what those procedures were. However, that will not be the case when documents are required by the legislation to be sent by registered or certified mail and where the legislation prescribes the required proof of the mailing. In this case, subsection 335(1) provides that a post office certificate of registration is to be attached to an affidavit of the person swearing it.
[17] I do not say that subsection 335(1) is mandatory in its specific requirements. I think equivalent reliable evidence would also be sufficient. For example, if the person who took the document to the post office swore that he or she mailed it by registered mail on a specific date, obtained a post office certificate of registration but lost it, and that evidence remained intact after cross-examination, that might be sufficient.
[18] Subsection 335(1) establishes a higher standard of proof of mailing than in a case where no formal requirements for mailing are provided in legislation. In this case that standard was not met.
[19] It is inexplicable that the Agency would discard certificates of registration after "a year or two". Counsel was unable to provide any reasonable explanation for the practice. It seems to me that cases such as this one are precisely the reason the records are required for a period longer than one to two years. By not retaining these records, the Minister precludes himself from providing the evidence for proving registered mailing when the legislation provides that such records are required.
[20] Here the evidence is that the appellant first became aware of the decision dealing with his Notice of Objection some three years after the Minister says the Notice of Decision was mailed. Counsel for the Minister suggested that there was some obligation on the appellant to check with the Minister as to the status of his Notice of Objection if he did not receive word as to its disposition. I do not accept this argument. Even though interest is accruing, taxpayers have no obligation to prompt the Minister to deal with their Notices of Objection. In any event, I see no reason why records of registered mailing should not retained for longer than "a year or two".
[21] The unavailability of the post office certificate of registration and the absence of any equivalent evidence of registered mailing taking place is fatal to the Minister's motion.
[22] I would make two other observations in relation to the specific facts of this case. The first is that the copy of the Notice of Decision in the record before this Court shows the Assistant Director of Appeals' signature on it. I assume that normal business practice is to sign the document that is being sent but not the file copy. Counsel for the Minister did not say the practice at the Agency was to sign file copies. While my decision is based on the Minister not meeting the legal test for proof of registered mailing, the existence in the file of a signed copy of the Notice of Decision without any explanation may be an indication that the document was in fact not sent.
[23] Second, the affidavit filed on behalf of the Minister was not from the Assistant Director of Appeals who last dealt with the Notice of Decision before it entered the Agency's normal mailing procedure. The official's affidavit in this case is hearsay as to what happened after he last saw the document when he put it in his Team Leader's in-basket. Hearsay is acceptable when the tests of reliability and necessity are met. Here there is no indication that the Assistant Director of Appeals, who was the last official to have dealt with the Notice of Decision before it allegedly entered the mailing procedure, was unavailable and that hearsay was necessary.
[24] The result is that the Minister has failed to prove the mailing of the Notice of Decision confirming the appellant's assessment in accordance with the requirements of the Act.
[25] The appellant asks that this appeal be allowed and that his appeal in the Tax Court be dismissed so that the matter may be remitted to the Minister to take whatever steps he deems appropriate in respect of the appellant's Notice of Objection. I think this is the appropriate disposition of this case. In an abundance of caution, however, I would make it clear that the dismissal of the appellant's appeal in the Tax Court will not render any future appeal res judicata.
[26] This appeal should be allowed, the decision of the Tax Court should be quashed and the matter should be remitted to the Tax Court to dismiss the appellant's appeal in that Court on the grounds that the Minister has failed to prove the mailing of the Notice of Decision confirming the appellant's assessment in accordance with the requirements of the Act and to remit the matter to the Minister to take steps he considers appropriate in respect of the appellant's Notice of Objection.
[27] The appellant should be entitled to costs of $7,500, inclusive of disbursements and GST.
"Marshall Rothstein"
J.A.
"I agree
Marc Noël J.A."
"I agree
J. Edgar Sexton J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-553-02
STYLE OF CAUSE: JOZO (JOE) KOVACEVIC v. HER MAJESTY THE
QUEEN
PLACE OF HEARING: Toronto
DATE OF HEARING: June 17, 2003
REASONS FOR JUDGMENT
BY: ROTHSTEIN J.A.
CONCURRED IN BY: NOËL J.A.
SEXTON J.A.
DATED: July 2, 2003
APPEARANCES:
Howard W. Winkler For the Appellant
Eleanor H. Thorn
Brent E. Cuddy For the Respondent
SOLICITORS OF RECORD:
GOWLING, LAFLEUR HENDERSON LLP
Toronto, Ontario For the Appellant
Morris Rosenberg
Deputy Attorney General of Canada For the Respondent