Federal Court Decisions

Date: 19971126

Docket: T-658-97

BETWEEN:

     356575 ONTARIO LIMITED

                                             Applicant

     - and -

     REVENUE CANADA and

     THE ATTORNEY GENERAL OF CANADA

                                             Respondents.

     REASONS FOR ORDER

     (Delivered orally from the Bench on

     November 3, 1997, as edited)

GIBSON J.:

[1]      These reasons arise out of an application for judicial review of a decision on behalf of the Minister of National Revenue rejecting a request for review of a decision of the "Fairness Committee" in Revenue Canada which in turn rejected an application of the applicant for rescission of arrears of interest and penalty in respect of the 1986 taxation year of the applicant, pursuant to "Fairness Legislation". The decision under review is dated the 5th of March, 1997.

[2]      As counsel for the applicant submitted in argument before me, our income tax system is a self-assessing system that places the initial onus for estimation of tax payable on the taxpayer.

[3]      The applicant, through its accountant, engaged in that process, but on the face of the affidavit filed on behalf of the applicant, the principal of the applicant chose to rely fully on his accountant and simply signed what was put in front of him.

[4]      When, some years later, the accountant for the applicant provided it with the notice of reassessment, it reflected exactly the amended return that the applicant had submitted, signed by the principal of the applicant. The applicant, through its principal, chose not to know or to understand the basis for the reassessment. There is no evidence whatsoever before me that the applicant's principal, or anyone else for that matter, checked the applicant's records or called the applicant's accountant and asked, where did this reassessment come from and how did Revenue Canada get this number?

[5]      Counsel for the applicant spoke of a balancing of interests and of responsibilities. The initial responsibility lies with the taxpayer. This taxpayer chose not to assume that responsibility. It attempted to shift the burden onto the Minister of National Revenue without fulfilling its own responsibility. Having attempted to do so, it is unfortunate that the applicant did not receive a prompt reply to its inquiry. On the other hand, in all of the circumstances, I cannot conclude that Revenue Canada's failure to respond promptly to the applicant's inquiry invokes the fairness doctrine in favour of the applicant where the answer to the inquiry appeared on the face of documents signed on behalf of the applicant by its principal. The reply was in the applicant's own hands. The kind of information that it was requesting does not fall within paragraph 6 of the "Fairness" guidelines. It is not information, the lack of which precluded the applicant from paying the assessment and at the same time asking why, or asking its accountant why. That option was open to the applicant. It chose not to exercise the option and the Minister of National Revenue cannot be held responsible for that choice by the applicant under any interpretation of the "Fairness" guidelines.

[6]      I agree with counsel for the applicant that the letters of explanation eventually provided in response to the applicant's request for a fairness review could have been more fulsome and could have provided the kind of explanation that counsel for the respondents provided on the hearing of this matter. If counsel for respondents, on sober second thought, had the opportunity to write the decision letters that are often the subject of judicial review, each of them would be, I suppose, as perfect as it would be possible to make them. But I can find no grounds on the basis of the letters provided on behalf of the Minister of National Revenue to conclude that there was a fettering of discretion.

[7]      In the circumstances, this application for judicial review will be dismissed. There will be no order as to costs.

                         ___________________________

                             Judge

Ottawa, Ontario

November 26, 1997