Date: 20010430
Docket: 2000-4624-IT-G
BETWEEN:
EDWARD LLOYD JONES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for order
Bonner, J.T.C.C.
[1] The Respondent in this appeal from an assessment of Income Tax for the 1988 taxation year has applied to quash the appeal on the ground that the Appellant failed to serve a notice of objection to the assessment under s. 165 of the Income Tax Act (the "Act") and was therefore not entitled to commence the appeal under s. 169 of the Act. The Appellant responded to the application by claiming relief in an Amended Response and Notice of Motion. He sought an order quashing the assessment on the ground that it was founded on evidence obtained in breach of his Charter rights.
[2] On February 13, 1990, the Minister of National Revenue (the "Minister") assessed tax for the Appellant's 1988 taxation year. On March 12, 1990, the Appellant met with his lawyer, Peter Alexander Hart, who assisted the Appellant in preparing a letter objecting to the assessment, requesting copies of the documents relied on and, oddly enough, requesting the names of the persons in Revenue Canada involved in preparing the assessment. This letter was attached to and formed part of a Notice of Objection in prescribed form. According to the Appellant's affidavit sworn March 22, 2001[1], the Appellant mailed the document by ordinary mail addressed to "Taxation Centre Surrey" on or about March 12, 1990.
[3] The version of s. 165 of the Act in effect at the time contained clear and specific requirements regarding service of Notices of Objection. S. 165 read in part:
"(1) A taxpayer who objects to an assessment under this Part may, within 90 days from the day of mailing of the notice of assessment, serve on the Minister a notice of objection in duplicate in prescribed form setting out the reasons for the objection and all relevant facts.
(2) A notice of objection under this section shall be served by being sent by registered mail addressed to the Deputy Minister of National Revenue for Taxation at Ottawa.
(3) Upon receipt of a notice of objection under this section, the Minister shall,
(a) with all due dispatch reconsider the assessment and vacate, confirm or vary the assessment or reassess, or
...
and he shall thereupon notify the taxpayer of his action by registered mail.
...
(6) The Minister may accept a notice of objection under this section notwithstanding that it was not served in duplicate or in the manner required by subsection (2)."
[4] The Minister did not take any of the steps described in paragraph 165(3)(a). Further, he did not "accept" the Notice of Objection under ss. 165(6). Nothing in the material suggests that he was ever asked to do so or purported to do so.
[5] The Appellant commenced his appeal to this Court by Notice of Appeal dated November 8, 2000. The Respondent's application to quash is based on ss. 169(1) of the Act which opens with the words:
"(1) Where a taxpayer has served notice of objection to an assessment under section 165, the taxpayer may appeal to the Tax Court of Canada to have the assessment vacated or varied after either ..."
[6] The Respondent's application is supported by the affidavit of Roger V. Smith, an officer of the Canada Customs and Revenue Agency, successor to Revenue Canada. The affidavit was prepared in accordance with ss. 244(10) of the Act. It states in part:
"b) after careful examination and search of those records, I have been unable to find that a Notice of Objection was received within the time allowed pursuant to subsection 165(1) of the Income Tax Act with respect to Mr. Jones' 1988 taxation year."
[7] Mr. Smith was cross-examined on his affidavit. He confirmed that at the relevant time it was the practice within Revenue Canada to record all Notices of Objection in the Revenue Canada computer upon receipt of the document. Mr. Smith testified that he personally searched and found that there was no computer record of the Notice of Objection which the Appellant said that he had sent. Mr. Smith did more than make a routine search in the proper place. The cross-examination revealed that, in addition to searching the computerized record of notices of objection received, Mr. Smith asked that a check be made in the Surrey centre and at the special investigations unit[2]. The purpose of the check was to determine whether the document mailed by the Appellant might have found its way into files containing other documents pertaining to the Appellant. Mr Smith was informed that the document could not be found.
[8] Counsel for the Appellant argued that Mr. Smith's evidence of statements made to him by the persons who searched the Surrey files and the special investigation files should be rejected as hearsay. Further, he argued that an affidavit made under ss. 244(10) is, as the subsection provides, to be received as evidence of the statements contained in it only in the absence of proof to the contrary. For such proof to the contrary counsel relied on the unchallenged evidence in the Appellant's affidavit and in particular on the statement that the Notice of Objection had been sent by ordinary mail addressed to "Taxation Centre Surrey". He relied on ss. 248(7) of the Act and argued that the Notice of Objection is deemed to have been received on the day it was mailed.
[9] Ss. 248(7) provides in part:
"(7) For the purposes of this Act,
(a) anything (other than a remittance or payment described in paragraph (b)) 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; and ..."
[10] I will deal first with the sufficiency of the Smith affidavit. It fulfils the requirements of ss. 244(10) of the Act. Mr. Smith personally examined the "appropriate records", that is to say, the computerized record of Notices of Objection received by Revenue Canada and he was unable to find that any Notice of Objection for the Appellant's 1988 taxation year had been received within the time allowed. The force of the affidavit is not diminished by Mr. Smith's request to others to search in places where a Notice of Objection might possibly have been mislaid. Even if I were to reject as hearsay the portion of Smith's testimony which relates to the results of the extra searches made by others the essential element of the affidavit remains unimpaired.
[11] Ss. 248(7) does not assist the Appellant. At best for the Appellant it operates to deem that the Notice of Objection which the Appellant had mailed was received by a person at the Taxation Centre Surrey. That deemed receipt does not constitute service of the Notice of Objection under s. 165.
[12] Counsel for the Appellant also argued that if a Notice of Objection is sent then the taxpayer has done all that is required of him. According to this argument, sending of the Notice of Objection is all that counts. Receipt of the Notice of Objection is irrelevant whether ss. 165(2) is complied with or not. Counsel relied on the decision of the Federal Court of Appeal in the Queen v. Schaffer[3]. That decision is of no assistance, at least to the Appellant. In Schaffer the Court pointed out that a statutory provision which requires that a Notice of Objection be made "within 90 days after the day the Notice of Assessment is sent" to the taxpayer does not require the receipt by the taxpayer of the Notice of Assessment to start the limitation period running.
[13] The difficulty with the arguments advanced by counsel for the Appellant is that they ignore the provisions of s. 165. Ss. 165(1) requires that the taxpayer serve the Notice of Objection on the Minister and, in language of remarkable clarity, ss. 165(2) sets out how and on whom service is to be effected. I cannot find that the Appellant "served" the Notice of Objection under s. 165 when he not only failed to send it by registered mail but also failed to direct it to the right person. The fact of the failure to serve the Notice of Objection in the manner required by ss. 165(2) is abundantly clear from the Appellant's own affidavit. The ss. 244(10) deeming provision does not operate to place the Notice of Objection which the Appellant mailed to the Taxation Centre Surrey in the hands of the Deputy Minister of National Revenue for Taxation at Ottawa. Neither the language chosen by Parliament to express its will nor the legislative intent underlying ss. 244(10) can support an argument that totally ignores ss. 165(2). Although the Courts are reluctant to quash appeals on procedural grounds this is a case in which the Appellant has failed to fulfil the s. 169 condition precedent to a valid appeal.
[14] It follows that judgment must issue quashing the appeal. Because the appeal is invalid there is no proceeding in which the Appellant's claim for an order quashing the assessment can be entertained. The Respondent shall have her costs.
Signed at Ottawa, Canada, this 30th day of April 2001.
"Michael J. Bonner"
J.T.C.C.