Date: 19980603
Docket: APP-478-96-GST
BETWEEN:
ADELE SCHAFER,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Order
Bowman, J.T.C.C.
[1] This application by Adele Schafer is for an order extending the time within which a notice of objection may be filed to an assessment made under the Excise Tax Act. The notice of assessment bears the date September 2, 1993, and is numbered 15938.
[2] By letter dated September 18, 1996 the applicant’s solicitors wrote to the Minister of National Revenue requesting under section 303 of the Excise Tax Act an extension of time within which to file a notice of objection to that assessment. They enclosed in duplicate a notice of objection. The application was denied and this motion ensued.
[3] The letter is stamped by the Department of National Revenue as having been received on September 23, 1996. Obviously September 23, 1996 is more than one year and 90 days beyond September 2, 1993 and so the application would be out of time if in fact time started to run on September 2, 1993. As a result this court would not be empowered to grant the extension of time requested.
[4] The Minister of National Revenue alleges that the notice of assessment was sent to the applicant by ordinary mail on September 2, 1993. The applicant alleges that she did not receive it and that she first received it and became aware of it on July 30, 1996, in the course of an examination for discovery relating to appeals brought by the applicant from other assessments.
[5] If the notice of assessment although dated September 2, 1993 was first “sent” when counsel for the respondent first communicated it to the applicant on July 30, 1996, the notice of objection was filed in a timely basis when it was sent with the solicitors’ letter of September 18, 1996 and there is no need for an order extending the time.
[6] The respondent has also brought a motion to quash the applicant’s motion. Everything put forward in support of the respondent’s motion to quash could be put forward in response to the applicant’s motion. I see no necessity to clutter up this record with a proliferation of proceedings.
[7] The issues are these:
1) Was the assessment sent to the applicant on September 2, 1993, or at any other time? If the respondent has not established this, the principles in Aztec Industries Inc. v. The Queen, 95 DTC 5235 and Rick Pearson Auto Transport Inc. v. The Queen, 4 GTC 3146 apply.
2) If it was sent, was it received by the applicant?
3) If I find as a fact that the notice of assessment was sent but that the applicant, through no fault of her own (such, for example, as not informing the Minister of National Revenue of a change of address) did not receive it at the address to which it was sent, what is the legal effect on her rights of objection and appeal?
[8] Mrs. Schafer was assessed by two notices of assessment dated August 24, 1993 and bearing the numbers 15936 and 15937. Her solicitor, on her instructions, prepared notices of objection dated November 16, 1993. She requested under subsection 301(4) of the Excise Tax Act that the Minister not consider the assessments but confirm them immediately, so that she could take the matter to the Tax Court of Canada.
[9] She received two further assessments, dated June 21, 1994 bearing number 16406 and August 22, 1994, bearing number 15993 and filed notices of objection to them. In these objections she also requested that the assessments be immediately confirmed. Following a letter from Mrs. Schafer’s solicitors she received three notices of decision of the Minister of National Revenue and a notice of assessment, and as a result filed an appeal to this court. At the examination for discovery on July 30, 1996 she was shown by counsel for the respondent the notice of assessment that is in issue on this motion. It is dated September 2, 1993 and bears the number 15938. It is addressed to her at 118 Lakeshore Terrace, Saskatoon, Saskatchewan, S7J 3X6. It assessed Adele Schafer for $33,031.62 in respect of cash transfers from Reginald Schafer to her during the period January 1, 1991 to May 6, 1993 under subsection 325(1) of the Excise Tax Act.
[10] Mrs. Schafer denies having received the notice of assessment. At that time Mr. and Mrs. Schafer lived at 118 Lakeshore Terrace with their son, who was about 26 years old in 1993. There were no children under 18 living at that address. She testified that the mail always came in at the front door and would be put on a table from which each person would take his or her own mail.
[11] A portion of the postal guide for Saskatoon was put in evidence. It contains the postal code for 102 to 114 Lakeshore Terrace S7J 3X6, but nothing for 118 Lakeshore Terrace. There are also listed Lakeshore Bay, Lakeshore Crescent, Lakeshore Court and Lakeshore Place. The applicant testified that she had problems with mail not arriving “lots of times” and sometimes she would receive mail for 118 Lakeshore Crescent.
[12] Mrs. Schafer was subjected to a very thorough, vigorous and skilful cross-examination by counsel for the respondent and she was unshaken in her assertion that she did not receive the notice of assessment.
[13] Mrs. Schafer’s credibility was unquestionably put in issue, both in connection with a fax that she received in June of 1996 which listed, in the Crown’s documents the notice of assessment, and her knowledge of her husband’s having been imprisoned for mail fraud.
[14] I am satisfied, on a balance of probabilities, that Mrs. Schafer did not receive the notice of assessment number 15938 dated September 2, 1993. I am aware of some inconsistencies in her testimony. I am also not unmindful of the fact that Mogan J. in another proceeding made an adverse finding of credibility against her. That cannot however be imported into the findings I am making here. Findings of credibility are based upon a number of factors, one of the most significant being the judge’s observation of the witness’ demeanour in the witness stand. Other factors also must be taken into account, such as surrounding circumstances. Where an adverse finding of credibility involves a conclusion that a witness is deliberately lying it requires cogent evidence.
[15] Here Mrs. Schafer’s testimony is buttressed by the fact that neither she nor her husband would have had any motive to ignore a notice of assessment if she had received it. Moreover, she was at the time when the notice of assessment was allegedly sent vigorously contesting all of the other assessments, to the extent even of waiving reconsideration of them so the matter could proceed to court.
[16] I find therefore, as a matter of fact, that Mrs. Schafer did not receive the notice of assessment number 15938.
[17] This finding does not however conclude the matter. Three questions remain:
(a) Do the provisions of subdivision (g) of Division VIII of Part IX of the Excise Tax Act have the effect of conclusively deeming the Minister to have sent the assessment and the applicant to have received the assessment on September 2, 1993?
(b) If not, has the Minister established that in fact the assessment was sent on September 2, 1993?
(c) If it is found as a fact that the assessment was sent on September 2, 1993 does the applicant’s time for objecting or for obtaining an extension of time under subdivision (d) run from that date, notwithstanding that she did not in fact receive the assessment?
[18] Subsections 335(10) and (11) provide:
(10) — Where any notice or demand that the Minister is required or authorized under this Part to send or mail to a person is mailed to the person, the day of mailing shall be presumed to be the date of the notice or demand.
(11) — Where a notice of assessment has been sent by the Minister as required under this Part, the assessment shall be deemed to have been made on the day of mailing of the notice of assessment.
[19] Subsection 334(1) reads:
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.
[20] These provisions create rebuttable presumptions. Neither the word “deemed” nor the word “presumed” indicate an intention by Parliament that the mere production of a notice of assessment with a date on it would constitute conclusive proof that an assessment had been made, sent and received by the taxpayer.
[21] Where, as here, a notice of assessment has not been received by the taxpayer, it is incumbent upon the Minister to establish, on a balance of probabilities, that it has at least been sent.
[22] Subsection 335(1) provides for proof of service by registered or certified mail, but it is silent with respect to a notice or other document being sent by ordinary mail. The respondent therefore accepted the burden of proving the assessment had been sent by ordinary mail.
[23] 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.
[24] The respondent called four witnesses. Mr. Ronald Gilewicz of the Department of National Revenue described the procedures whereby third party notices under section 325 of the Excise Tax Act are prepared and issued. Blank forms of third party notices of assessment were kept under lock and key. A blank form would be filled out by hand by the collections officer, who would give it to a collections clerk who would type it and give it back to the collections officer for review. He or she would give it to Mr. Gilewicz, who was then District Collections Manager, for approval. When he approved it he would give it to the collections clerk who would make two copies. One copy would be retained in the collections file and the other would be put in the third party collection file. The collections clerk would put it in a windowed envelope together with a covering letter and it would be taken to the mail room, which was on the same floor. It would be placed in a mail bag which would be picked up by Canada Post every day.
[25] The assessment would also be entered on a control sheet which was initialed by Mr. Gilewicz (Exhibit R-2). This sheet set out the name of the taxpayer, the collections clerk, (Stacey Glauser), and the collections officer, (Dennis Sarvajc).
[26] Stacey Glauser and Dennis Sarvajc testified and confirmed the procedures described by Mr. Gilewicz.
[27] Also Mrs. Rachael Fang testified. She worked in the mail room. The procedure was that mail from the various sections of the Department would be put on a table in the mail room in a box with dividers. It would be sorted, weighed and put through a postage machine and then put in the Canada Post bag.
[28] No one was able to testify that a specific envelope addressed to Mrs. Schafer was in fact sent on September 2, 1993.
[29] I am satisfied, on a balance of probabilities, that the notice of assessment was probably placed in the Canada Post mail bag on September 2, 1993. I say this without any specific evidence. However, if the procedures were followed it seems more probable that it was sent than that it was not.
[30] The evidence for Mrs. Schafer not having received the assessment is somewhat stronger.
[31] Of the various hypotheses that suggest themselves therefore the one that on the evidence that is most probable is that the notice of assessment was sent on September 2, 1993, and that it was not received by Mrs. Schafer.
[32] This leaves the question of law.
[33] The Minister sent the notice to the correct address, but it did not arrive. The case is very different from A-G Can. v. Bowen, 91 DTC 5594, where the Minister sent a notification of confirmation by registered mail but the taxpayer did not receive it because he had failed to provide the Minister with his new address. At p. 5596 the Federal Court of Appeal stated:
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. In dispatching the notification by registered mail the Minister was entitled to avail himself of the address or addresses which the respondent himself had already furnished. There was no obligation on him to look beyond that information. Moreover, a requirement for the receipt of the notification would be difficult if not totally unworkable from an administrative standpoint. Parliament has not required it; it has required merely that the notification be dispatched by registered mail.
It is apparent that the reason why the respondent did not receive the notification was not because the Minister failed to do all that was required of him but because the respondent did not keep his mailing address current. Such arrangements as he did make for the receipt of mail during his absence from Canada between March 1988 and December 1989 broke down — but that, surely, cannot be laid at the feet of the Minister who acted throughout in the manner required by the Act.
[34] There can be no fault attributed to Mrs. Schafer. She did not move, unlike Mr. Bowen. The notice was sent to her address, and through no fault of hers, she did not receive it. I do not believe that the Bowen case can be extended to cover such a situation, or that the Federal Court of Appeal intended its decision to mean that where a taxpayer establishes through credible evidence that a notice was not received her rights of objection simply disappear if she does not know of the assessment until after the time for objecting has expired.
[35] Indeed, the very fact that subsection 335(1) deems the notice to have been received on the day it was sent (a wholly unrealistic presumption) indicates that receipt is in the normal cause regarded as an essential part of the giving of notice. The deeming of receipt in subsection 335(1) is not conclusive and the presumption created by that subsection has been rebutted.
[36] Counsel referred to Aztec and Rick Pearson (supra). Those cases turned on the failure of the Minister to establish that the notices had been sent.
[37] Cases that in my view are of greater relevance to the issue here are Adler v. The Queen, 98 DTC 1414 and Antoniou v. M.N.R., 88 DTC 1415. In both of those cases it was held that the failure of the taxpayer to receive the notice of assessment resulted in the time limitations for objecting not starting to run. Therefore the court in both cases dismissed the application as being unnecessary.
[38] The same disposition is appropriate here. The taxpayer received the notice of assessment in July 1996 during an examination for discovery. She has filed a valid objection to the assessment within the time limits prescribed by the Act. Therefore the application for an extension is unnecessary. For that reason the application will be dismissed and the motion to quash is granted, but not for the reasons advanced by counsel for the Crown.
[39] I make no order for costs.
Signed at Ottawa, Canada, this 3rd day of June 1998.
"D.G.H. Bowman"
J.T.C.C.