Date: 20040930
Docket: T-1858-02
Citation: 2004 FC 1346
Ottawa, Ontario, September 30, 2004
Present: The Honourable Madam Justice Danièle Tremblay-Lamer
BETWEEN:
JOHN CHRISTOPHER COOPER
Applicant
and
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an application for judicial review of a decision of the Minister of National Revenue (the "Minister") denying the applicant's request under the Fairness Provision, subsection 220(3.1) of the Income Tax Act, R.S.C. 1985, c.1 (5th supp.) ( « the ITA » ), for the cancellation or waiver of interest accrued.
[2] On July 31, 1989, the applicant was reassessed for the 1984, 1985, 1986 and 1987 taxation years and it was determined that he owed the Crown $39,238. On August 23, 1989, the applicant was reassessed for the 1988 taxation year and was granted a credit of $14,427.06 which was applied to his debt.
[3] The applicant filed notices of objections to the assessments relating to the 1984, 1985, 1986 and 1987 taxation years. The respondent admits that these notices were not treated in a timely manner. Thus, on October 12, 2000, the respondent informed the applicant that it wished to settle the notices of objection. On November 10, 2000, the parties agreed to a settlement, thereby reducing the amount owed by the applicant to approximately $28,000; the respondent issued a reassessment for the 1988 taxation year in that amount.
[4] On March 29, 2001, the applicant requested that the interests on his 1988 taxation year be cancelled as per the Fairness Provision. On May 2, 2001, the respondent issued a first-level decision refusing the request on the basis that the applicant had renounced his right to ask for a waiver of interests in the November 10, 2000 settlement.
[5] On May 17, 2001, the applicant asked that the respondent review this decision.
[6] On May 31, 2002, Ms. Diane Pouliot of the Collection Division, issued a report in which she analyses the arguments of the applicant and in which she recommends that the request for a cancellation of the applicant's interests be denied.
[7] On October 1, 2002, Ms. Diane Bertrand of the Appeals Division upon receipt of Ms. Pouliot's report issued another report in which she analyses the applicant's economic situation; she also recommended that the request for cancellation be denied.
[8] On October 4, 2002, Patrick Allard, Chief of Appeals for the Canada Customs and Revenue Agency ("CCRA"), sent the applicant a letter indicating that his Fairness request had been refused. This decision is the object of the present application.
[9] The applicant submits that the report issued by Ms. Pouliot of the Collections Division in which she recommended that his Fairness request be denied included a number of errors and unfounded allegations that he never had the opportunity to address. He submits that these errors and allegations were founded on a gross misreading of legal documentation and/or untruths, partial truths and significant omissions of actual facts.
[10] Thus, since Mr. Allard based his decision on Ms. Pouliot's report, the decision cannot stand.
[11] This case raises one issue: Did the Minister err in refusing the applicant's request under the Fairness Provision of the ITA?
[12] Subsection 220(3.1) of the ITA reads as follows:
| 220(3.1) The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to 152(5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest. |
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(3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable ou une société de personnes en application de la présente loi, ou l'annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation. |
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[13] Section 7 of the Guidelines reads:
| 7. It may be appropriate, in circumstances where there is an inability to pay amounts owing, to consider waiving or cancelling interest in all or in part to facilitate collection: For example, a)When collection has been suspended due to an inability to pay. b)When a taxpayer is unable to conclude a reasonable payment arrangement because the interest charges absorb a significant portion of the payments. In such a case, consideration may be given to waiving interest in all or in part for the period from when payments commence until the amounts owing are paid provided the agreed payments are made on time. |
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7. Il peut être convenable dans des situations où il y a incapacité de verser le montant exigible d'examiner la possibilité de renoncer ou d'annuler la totalité ou une partie des intérêts afin d'en faciliter le recouvrement, par exemple dans les suivants: (a)lorsque les mesures de recouvrement ont été suspendues à cause de l'incapacité de payer; (b)lorsqu'un contribuable ne peut conclure une entente de paiement qui serait raisonnable parce que les frais intérêts comptent pour une partie considérable des versements; dans un tel cas, il faudrait penser à renoncer à la totalité ou à une partie des intérêts pour la période où les versements débutent jusqu'à ce que le montant exigible soit payé pourvu que les versements convenues soient effectués à temps. |
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[14] As I stated in Salomon v. Canada (Deputy Attorney General), [2002] F.C.J. No. 1531 (F.C.T.D.), when reviewing the discretionary decision of the Minister made pursuant to subsection 220(3.1) of the ITA, a considerable degree of deference is required, and the standard of review is that of patent unreasonableness. The reviewing Court may only intervene and set aside the Minister's discretionary decision if it was made in bad faith, if the decision-maker clearly ignored some relevant facts or considered irrelevant ones, or if the decision is contrary to law.
[15] In my opinion, the applicant has not been able to demonstrate that the Minister's decision was patently unreasonable.
[16] The applicant's main argument is that the decision rendered by the respondent is tainted by the report prepared by Ms. Pouliot because this report contains errors. Firstly, while Ms. Bertrand may have asked for a report from Ms. Pouliot, and may have even included a summary of said report in her own, Ms. Bertrand's report is comprehensive and there is no indication that Ms. Pouliot's report had any impact on the respondent's decision. In fact, the alleged errors and unfounded allegations mentioned by the applicant do not appear in Ms. Bertrand's report. Thus, the applicant's submissions relating to Ms. Pouliot's report are of no consequence to the present application.
[17] Secondly, I find that the applicant did have the opportunity to address any issue he had with Ms. Pouliot's report at his meeting with Ms. Bertrand on August 16, 2002. Hence, his submission that he was not able to correct the alleged factual errors is unfounded.
[18] Thirdly, the burden rested on the applicant to convince the Minister that his request under subsection 220(3.1) of the ITA should be granted (Young v. Canada, [1997] F.C.J. No. 1680 (F.C.T.D)). In the case at bar there were many circumstances indicating the contrary, that is, that the applicant was capable of paying his debt to the Crown. Among others, Ms. Bertrand noted the following in her report:
- though the applicant claims that he did not have any income in the first eight months and that his wife made merely $16,500, their expenses for that period included $2,500 in rent, $881 per month for life insurance, trips to England and the United States and legal fees of $3,000 per month;
- the applicant chose to pay other creditors rather than the respondent, including his lawyers at a cost of $3,000 per month;
- on October 17, 2002, five days after Ms. Josée Rodrigue from the CCRA contacted him to remind him of his outstanding tax debt, the applicant sold his property in Brome for $316,000 to a company of which he is the sole shareholder, claiming it was to repay a debt he owed the company. He was also named guarantor for the company's hypothec on the property. Moreover, the year before, he had agreed to sell his shares in that company to his wife's daughter.
[19] The applicant knew about his tax debt before these transactions took place and could have made arrangements to repay his tax debt. Thus, he was unable to meet the burden of proving his inability to reimburse his debt. Moreover, there is no evidence of bad faith on the part of the respondent and there has been no breach of natural justice. In light of these findings, it is my opinion that the respondent's decision was not patently unreasonable.
[20] For these reasons, the application for judicial review is dismissed. No costs will be awarded.
ORDER
THIS COURT ORDERS that the application for judicial review is dismissed. No costs will be awarded.
"Danièle Tremblay-Lamer"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1858-02
STYLE OF CAUSE: John Christopher Cooper
and
The Minister of National Revenue
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: September 21, 2004
REASONS FOR ORDER
AND ORDER OF The Honourable Madam Justice Danièle Tremblay-Lamer
APPEARANCES:
Mr. Daniel Ovadia FOR PLAINTIFF
Mr. Louis Sébastin FOR DEFENDANT
SOLICITORS OF RECORD:
Ovidia, Sauvageau
770 Sherbrooke Street West
Suite 1700
Montreal, Quebec
H3A 1G1 FOR PLAINTIFF
Mr. Morris Rosenberg
Deputy Attorney General of Canada
Department of Justice
Montreal, Quebec
H2Z 1X4 FOR DEFENDANT