Date: 20000823
Dockets: 1999-4995-GST-I; 1999-5000-GST-I; 1999-5086-GST-I
BETWEEN:
JAMES DOBIE, DEBORAH SETTON, DOREEN M. MELTON,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent,
Reasons for Judgment
Rip, J.T.C.C.
[1]James Dobie, Deborah Setton and Doreen Melton have appealed assessments issued under Part IX of the Excise Tax Act (“Act”) on the basis that they paid an amount of tax when the amount of tax was not payable or remittable by any of them and therefore the Minister of National Revenue (“Minister”) ought to pay the appropriate rebates to them in accordance with subsection 261(1) of the Act as it read at the relevant time. The appellants say that the two-year period required within which a person is to apply for a rebate pursuant to subsection 261(3) should commence when the person acquires the knowledge that he or she had paid or remitted the amount of tax by mistake or otherwise. The three appellants acknowledged that they made their application for rebates after the decision of this Court in Taylor (J.) v. Canada[1] was released on July 27, 1998 and this was more than two years after an amount of tax was paid or remitted by them on the purchase of condominium units in the same project, but not the same property, as Ms. Taylor and Mr. and Mrs. Redmond, the appellants in Taylor.
[2]These appeals were not heard on common evidence. They were heard one after the other since the parties were of the view that the facts in all three cases may not be similar. The appellants were not represented by counsel. Mr. Dobie’s appeal proceeded first. Mrs. Setton’s agent, her husband Mr. David Porte, and Mrs. Melton were present during Mr. Dobie’s trial and when their appeals were called each agreed that the facts led by Mr. Dobie applied to their appeals as well; in addition, they adduced evidence particular to each of them.[2]
[3] The appellants purchased their units in the condominium project in Vancouver, British Columbia as follows:
Appellant Date of Purchase Unit
James Dobie 19 June 1993 #404-5880 Hampton Place
Deborah Setton 26 April 1995 #404-5775 Hampton Place
Doreen Melton 12 July 1995 #303-5775 Hampton Place
[4] The appellants paid GST which was collected by the vendor of the units on or about the time they purchased their respective unit. They now claim the amounts of GST were paid in error.
[5] The appellants Dobie, Setton and Melton applied for the rebate in issue on the following dates:
Dobie March 25, 1999
Setton January 22, 1999
Melton December 21, 1998
[6]Subsections 261(1) and (3) of the Act reads as follows:
(1) Where a person has paid an amount
as or on account of, or
that was taken into account as,
tax, net tax, penalty, interest or other obligation under this Part in circumstances where the amount was not payable or remittable by the person, whether the amount was paid by mistake or otherwise, the Minister shall, subject to subsections (2) and (3), pay a rebate of that amount to the person.
. . .
(3) A rebate in respect of an amount shall not be paid under subsection (1) to a person unless the person files an application for the rebate within two years after the day the amount was paid or remitted by the person.
[7] Before the amendment to subsection 261(3) in 1997,[3] an application for rebate of tax paid by mistake was required to be made within four years from the date of the tax was paid or remitted. The amendment reducing to two years the time within which to make the application applied:
to amounts that, after June 1996, are paid as or on account of, or are taken into account as, tax or other amount payable or remittable under Part IX of the Act;
and
(b) to amounts that, on or before the last day of that month, were paid as or on account of, or were taken into account as, tax or other amount payable or remittable under that Part, other than amounts that are claimed in an application under section 261 of the Act filed on or before June 30, 1998.[4]
[8] In the appeals at bar the amounts of tax were paid or remitted before June 30, 1996 and the applications for rebate were filed after June 30, 1998.
[9] When the appellants paid or remitted the GST they had four years from the date of their respective payments to apply for the rebate of the GST. This right, as Ms. Melton complained, was taken from them when subsection 261(3) was amended in 1997.
[10] Subsection 43(c) of the Interpretation Act provides that:
Where an enactment is repealed in whole or in part, the repeal does not
. . .
(c) affect any right, privilege, obligation or liability acquired, accrued, accruing or incurred under the enactment so repealed
[11] The question, therefore, is whether the amendment of subsection 261(3) in 1997 was a repeal in whole or in part, of the Act. If the amendment repealed the Act, then any right enjoyed by the appellants at the time they purchased their condominium units should survive the amendment; the four-year period should continue.[5]
[12] The Ontario Court of Appeal considered paragraph 14(1)(c) of the Interpretation Act of Ontario (“Ontario Act”),[6] a provision analogous to subsection 43(c) of the Interpretation Act in the appeal of Re Falconbridge Nickel Mines Ltd. v. Minister of Revenue for Ontario.[7]
[13] In Re Falconbridge Nickel the appellant claimed a tax refund under subsection 2(8) of the Ontario Retail Sales Tax Act. At the time of its over-payment of tax in 1983, the appellant had a right to the refund, subject to a very minimal or negligible ministerial discretion. In April 1985, before the application for the refund was made, the province amended subsection 2(8) to interpose a limitation period. After the limitation period had expired, the appellant applied for its refund. The Minister refused to review the application on the basis that it fell outside the limitation period. Before the Ontario Court of Appeal, the appellant submitted that the new enactment deprived it of an accrued right or an accruing right under the former subsection. The Court accepted this argument and applied paragraph 14(1)(c) of the Ontario Act to the amended subsection in question.
[14] The Ontario Court of Appeal appears to have assumed that the Ontario Retail Sales Tax Act was repealed since “a major change was made in s. 2(8) affecting its substance”, the “major change” being the alteration in the time a taxpayer may apply for a tax refund. The word “repeal” is defined in the Interpretation Act to include “revise or cancel”. This is precisely what is present in the appeals at bar. A change in the period in which to apply for a tax refund from four to two years was a major change that affected the substance of the Act. The previous version of subsection 261(3) was, in effect, cancelled and ceased to have effect.[8]
[15] Thorson J.A. considered whether a “right” existed and in Re Falconbridge Nickel and stated at page 411:
. . . On April 8, 1975, when the 1975 amendment to s. 2(8) of the Retail Sales Tax Act was stated to have become effective, did the appellant have a “right” which the law will recognize as such? If so, is it a right which is protected by s. 14(1)(c) of the Interpretation Act as being one which, at that time, either had “accrued” or was “accruing” in the appellant’s favour?
In my opinion the appellant did have such a right. It arose by virtue of the pre-1975 legislation, which in my opinion clearly contemplated that a claim for a refund of tax could be asserted by a taxpayer in the situation of the appellant, and that such a claim would, when it was received by the Minister, be considered by the Minister even if, as previously noted, the end result of such consideration might be that the claim was rejected.
There is no dispute that the appellant paid the tax here in question. Having paid an amount as tax in excess of what it could then or subsequently establish by satisfactory evidence to be the amount which in law it was required to pay, it had a right, which was not limited in time by the then applicable law governing refunds, to advance a claim to the Minister to have the amount of the overpayment refunded to it, and to have its claim considered and either accepted or rejected by the Minister, applying the principles and taking into account the considerations properly applied and taken into account by her in the exercise of the discretion which she had to make or refuse to make such a refund.
And at page 413:
Nor can I agree that because no claim for a refund was outstanding at the time of the 1975 amendment, whatever right the appellant had at that time was merely “theoretical”. A right is no less a right recognized by the law solely because all of the steps necessary to be taken before it can be acted upon may not yet have been taken. In this case the right to claim a refund came into being once the overpayment of tax had been made.
[16] Reed J. in Esso Resources Canada Ltd. reiterated the above when she stated:
. . . at the date of the repeal of the statutory provisions in issue, there was an element of obligation existing on the defendant [the Minister], to repay the monies held by it. The plaintiffs “right” to the refund was not created by and did not originate with the filing of the application. The plaintiffs “right” had pre-existing content in much the same way as an individual has a right (to whatever claim is in issue) before a court declares such to be the case. What will be a right, how to define its scope, the time at which it can be said to have arisen will always be a bit of a metaphysical enquiry. But, where there is an element of obligation on one party, in my view, subsection 43(c) of the Interpretation Act applies. That subsection expressly includes within its scope more than “rights” interpreted in a narrow sense. It refers to “any right, privilege, obligation or liability”.[9]
[17] In the appeals at bar the appellants remitted the GST for the purchase of their condominiums. On July 27, 1998, it was established in Taylor (J.), supra, that the Minister collected GST in error. The Minister was in possession of monies to which he clearly had no right. The mere fact that the appellants had purchased their condominium units during the time former subsection 261(3) of the Act was in force and had erroneously overpaid GST, entitled them to a right to claim refunds within the four-year period. The Minister had a duty to refund those amounts even if the application was considered late pursuant to the amended subsection 261(3). The appellants had an accrued right or an accruing right to the monies held by the Minister until the four-year period expired.
[18] Parliament has not specifically eliminated the accrued right of taxpayers who fell within the four-year limitation period of the former subsection 261(3) of the Act. Immediately after the amendment came into force each of the appellants still possessed an accrued right to file the application for the GST rebate and to receive the refund. Their right to a refund would have expired at the end of the four-year period.
[19] As far as appellants Setton and Melton are concerned they filed their application for the GST refund within the four-year period originally required by subsection 261(3) of the Act. Their appeals will therefore be allowed with costs, if any.
[20] Unfortunately, Mr. Dobie applied for his GST refund on March 25, 1999, more than four years after he purchased the condominium unit and paid the tax on June 19, 1993.
[21] During his appeal Mr. Dobie appeared to be under the impression that the decision in Taylor (J.), supra, changed the law and if he had applied for the refund on time Revenue Canada would have rejected his application. This is probably so. Revenue Canada also rejected the application of Ms. Taylor and Mr. & Mrs. Redmond but they did not take “no” for an answer and exercised their rights under the Act to appeal Revenue Canada’s decisions to this Court and they were successful. That is the course Mr. Dobie ought to have taken as well. The Court did not change the law when it decided Taylor (J.) and Redmond; it simply told Revenue Canada that the taxing authority misapplied the law.
[22] I cannot compel the taxing authority to hand over to Mr. Dobie what is his, that is, the tax he ought not to have paid. I sympathize with Mr. Dobie when he says this is not fair. However, as the late Chief Judge Christie explained in Impact Shipping Inc. v. Canada,[10] the Tax Court is not vested with some kind of general equitable jurisdiction to remedy what it might consider to be an inequitable result. No matter how strong the appeal may be to compassion, a court cannot change the legislation. Compassion is not structured within the law.[11]
[23] In the appeals of Braxton M. Alfred & Diane L. Alfred v. The Queen; Heather L. Earnshaw and Linda M. Throness v.The Queen and Vivian M. May v. The Queen, recent decisions of my colleague Sarchuk J.[12] the facts were similar to those in these appeals. The appellants applied for the GST rebate after the two-year period had expired and their appeals were dismissed. The appellants were represented by counsel. Sarchuk J. found, among other things, that this Court does not have jurisdiction to issue an order that the appellants are entitled to the GST tax refund by extending the time, or otherwise. Subsection 309(1) of the Act provides that this Court may dispose of an appeal from an assessment by dismissing the appeal, or by allowing the appeal and either vacate the assessment or refer the assessment to the Minister for reconsideration and reassessment. The Court cannot remedy a problem that may deserve remedy except in the manner described in subsection 309(1).
[24] Therefore the appeal of Mr. Dobie is dismissed.
Signed at Ottawa, Canada, this 23rd day of August 2000.
"Gerald J. Rip"
J.T.C.C.
[1] [1998] G.S.T.C. 80.
[2] In fact, each of the appellants was present at the appeals of the other two appellants.
[3] S.C. 1997, c. 10, s. 71(1), assented to 20th March 1997.
[4] S.C. 1997, c. 10, s. 71(2).
[5] This provision of the Interpretation Act was not argued by the parties. The issue of the four year period being reduced to two years, however, was raised by Ms. Melton at trial. I did not request additional submissions from the parties, in great part because the appellants Setton and Melton were not represented by counsel. In the circumstances, they ought not be put in the position of having to incur legal expenses.
[6] Paragraph 14(1)(c) of the Ontario Act (R.S.O. 1990 Chap. I.11, s. 14) provides that:
(1) Where an Act is repealed or where a regulation is revoked, the repeal or revocation does not, except as in this Act otherwise provided,
. . .
(c) affect any right, privilege, obligation or liability acquired, accrued, accruing or incurred under the Act, regulation or thing so repealed or revoked;
[7] (1981), 121 D.L.R. (3d) 403 (C.A.) at page 412. See also Esso Resources Canada Ltd. v. The Queen, 88 DTC 6469 (F.C.T.D.) at page 6475 and In Re Kleifges and In Re Citizenship Act, [1978] 1 F.C. 734 (F.C.T.D.). In C.I. Mutual Funds Inc. v. Canada, [1999] 2 F.C. 613, the Court of Appeal appears to have distinguished between retroactive legislation and an appeal of an enactment and held that section 43 of the Interpretation Act does not apply to retroactive legislation.
[8] See subsection 2(2) of the Interpretation Act.
[9] Supra, at 6475.
[10] [1995] G.S.T.C. 28, at page 28-5.
[11] See Domjacic v. Canada, [1996] No. 879 (T.C.C.) (Q.L.) and [1997] F.C.J. No. 448 (Q.L.) and Kliman (H.M. Interpretor of Taxes) v. Winckworth, 17 T.C. 569 (K.B.).
[12] Decisions dated August 22, 2000 (Court file #2000-604(GST)I); (#2000-356(GST)I) and (#2000-645(GST)I).