Date: 19981127
Docket: APP-218-98-IT
BETWEEN:
KHUSHVINDER MAAN,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Order
Bell, J.T.C.C.
ISSUE:
[1] This is an application under section 167 of the Income Tax Act ("Act") for an Order extending the time within which an appeal may be instituted.
FACTS:
[2] The Applicant, through his counsel, by letter of June 5, 1998 requested the above extension of time.
[3] The Applicant's Notices of Objection to the assessments in question were served on the Minister within the time limited by subsection 165(1) of the Act. They were mailed by the representative on March 21, 1996.
[4] The Minister of National Revenue ("Minister") under covering letter of March 12, 1997 sent a Notification of Confirmation of the reassessments to the Applicant by registered mail on that date. An exhibit to the affidavit of a Department of National Revenue official indicates that the envelope containing those documents was "unclaimed" and returned to the Department. The appropriate exhibit shows that a card was sent by the post office on March 14, 1997 to the Applicant's residence, the same address. Further, a final notice was sent on March 20, 1997 and appears to have been returned to the Minister on April 1, 1997. On April 10, 1997 an appeals officer from Revenue Canada sent a copy of the Notification of Confirmation to Mr. Peter Hammond, the Applicant's counsel at the hearing of his application, together with a letter which read as follows:
The enclosed notification was mailed by registered mail to your client but it was returned "unclaimed". Since he did not inform us of a change of address we are remailing it through you by ordinary mail.
[5] Subsection 169(1) of the Act provides that a taxpayer may appeal to the Tax Court of Canada after the Minister has confirmed the assessment but must institute such appeal within 90 days from the mailing of the Notification of Confirmation. The Applicant was, therefore, obliged to institute a Notice of Appeal on or before June 10, 1997.
[6] A series of extraordinary and tragic circumstances had occurred prior to the mailing of the Notification of Confirmation on March 12, 1997. Understandably, these events deeply affected the Applicant's mental and psychological state. In February, 1993 his mother died and his relationship with his father deteriorated to the point that, unlike the custom in Sikh families, his father moved out of the Applicant's residence. This was described as a traumatic experience for the Applicant and his whole family.
[7] In December, 1995 his brother-in-law died in a hotel fire in New Jersey. The Applicant went to New Jersey, there being no relations in that area, and spent three to four weeks taking care of funeral arrangements and attending various inquiries including a coroner's inquest concerning the nature of the death. The Applicant then made arrangements to move his sister and her three children to the Applicant's home in British Columbia in February or March, 1996.
[8] On February 28, 1996 the Applicant's son, at the age of one and one-half years, fell about 13 feet off a sun deck railing and fractured his skull. He was in intensive care in a hospital for quite some time during which he had three operations, including the placement of a plate in his head. He testified that the initial prognosis was very bad, saying that there was doubt as to whether he would survive. He also testified that this was a traumatic event for him and his state of emotions concerning his father, his deceased brother-in-law, concerns for his sister and her children combined with this event worsened matters substantially.
[9] His sister and children moved back to New Jersey because of their friends and circumstances in that location. During this period the Applicant supported his sister and family both financially and emotionally.
[10] Yet another tragedy befell the Applicant. His sister and three children died in a house fire in New Jersey on January 3, 1997. The Applicant said that he was absolutely shocked by this and that he was not in a "good condition". He went to New Jersey to attend to funeral arrangements and other matters and attended police and coroner investigations and remained there for approximately three weeks. He stated further that his father was very badly shocked and affected by these circumstances and that he, the Applicant, had to take care of his wife and four children and his job and was generally in a very bad state. He said, in response to a question from his counsel as to whether he was thinking in March, 1997 about income tax matters:
No. I don't know what I was thinking of. I didn't really care much about it because, you know, losing my sister who was really close to me, and we were only a year and a half apart so we grew together and came here into Canada together and we had taken care of each other all our lives. And this sort of thing happening was ... really affected by employment and the state of my living and my life.
He then stated that he could not recall when he had previously heard from Revenue Canada.
[11] In response to a question from his counsel as to whether he had received the March 12, 1997 letter he said:
No, we did not. To be honest with you, I have never returned any letters that came to our address and if I would have known I would have gotten it from the post office. And maybe because the time ... at that time that we ... I was just talking to my wife too on the way in and she says she doesn't recall either that the notification came to our house. See, at that time, the period of time, even afterwards, we did have a lot of family members that came and visited us. So, you know, to sort of recuperate the loss of our family and so we subsequently must have lost it or didn't really, you know ...
He said that he was not expecting correspondence from Revenue Canada and that at that time his mind was not on Revenue Canada matters but that "it was family matters".
[12] The Applicant contacted Mr. Hammond in December, 1997 about estate matters in New Jersey. He said that the trauma caused by his circumstances increased with the development of a dispute between families over the estate of his sister. He said that he was affected mentally quite a bit dealing with the loss, then dealing with the money issue and how to handle matters and telephoning back and forth in an attempt to resolve everything.
[13] The Applicant then testified that he had learned of the March 12, 1997 correspondence from his counsel when in his office. He said further that his counsel had asked him to supply material and that he did not remember what material he had supplied but the intention was to file an appeal. He also stated that he believed he had good grounds to appeal. He testified further that he was still adversely affected by these circumstances saying:
... because when I think about it, you think about the time that has passed and sort of the memory comes alive again.
He said that his manner of coping with this when it interrupts his work is to stop work and pray to God.
[14] Subsection 167(5) of the Act read as follows:
(5) No order shall be made under this section unless
(a) the application is made within one year after the expiration of the time limited by section 169 for appealing; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited by section 169 for appealing the taxpayer
(A) was unable to act or to instruct another to act in the taxpayer's name, or
(B) had a bona fide intention to appeal,
(ii) given the reasons set out in the application and the circumstances of the case, it would be just and equitable to grant the application,
(iii) the application was made as soon as circumstances permitted, and
(iv) there are reasonable grounds for the appeal.
[15] Applicant's counsel said, referring to this subsection, that the Applicant having regard to all the circumstances and not having received the Notification of Confirmation, was unable to act or to instruct another to act in his name.
[16] Respondent's counsel submitted that by virtue of subsection 248(7) the document was deemed to have been received by the Applicant. The pertinent portion of that provision reads as follows:
For the purposes of this Act
(a) 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.
[17] He then referred to the Attorney General of Canada v. John F. Bowen, 91 DTC 5594 in which the Federal Court of Appeal said at 5596:
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.
[18] In that case there were three separate and complete efforts to serve Mr. Bowen with the confirmation document. All were returned marked "refused". The first mailing had been made to the address on Mr. Bowen's income tax returns. Between the first and second mailings, a more detailed computer search had been made of the Revenue Canada records and it was determined a "change of address" letter had been received from Mr. Bowen ... and that was used for the second and third mailings. The Federal Court further said:
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.
[19] Respondent's counsel relied upon the deemed receipt of the Notification of Confirmation and the Bowen decision. He also submitted within the meaning of subsection 167(5)(b)(iii) that the application was not made as soon as circumstances permitted. In addition, he sought to persuade the Court that the receipt by his counsel of the Notification of Confirmation constituted a receipt by the Applicant. He said:
If we can't notify the representative and feel secure that the knowledge passes through to the Applicant, there's a difficulty there. The Minister has completed its duty, has done its duty. The difficulty may be elsewhere. It's not for me to try and figure out where that difficulty is.
In this regard, Applicant's counsel said:
As I had mentioned to the Court in my initial application, I had a question in my mind at the time I received the letter from Revenue Canada, whether I was still retained by Mr. Maan or not because I had not been in communication with him for months. I happened to be unpaid at the time. The indication was that he'd moved and he hadn't advised me of that. I knew that he had property in northern B.C. and my telephone calls to the only number I had for him at the time for telephone calls were unanswered with no telephone machine. So I was uncertain whether or not I was retained or whether he was or whether he was retaining other counsel. And to some extent, that was ... I was misled by the correspondence received from Revenue Canada.
His last statement had reference to the suggested change of address described in the letter enclosing the Notification from Revenue Canada to him.
[20] The Bowen decision did not discuss whether the Applicant "was unable to act or to instruct another to act in the taxpayer's name". That decision was made in the context of three mailings returned to Revenue Canada marked "refused". In the present case the letter was unclaimed and the two cards sent out following that letter drew no response.
[21] In David Rothstein v. Her Majesty the Queen, judgment dated June 9, 1998, Judge Dussault of this Court said, with respect to this provision:
The evidence presented by the applicant convinced me, in like manner, that he did not receive the said notice of assessment and therefore that he was, obviously, unable to act or to instruct another person to act in his name within the time otherwise limited by the Act for serving a notice of objection within the meaning of clause 166.2(5)(b)(i)(A) of the Act.
[22] I can find no other judicial comment on the phrase under examination. As stated above there was a suggestion in the letter to Applicant's counsel that the address had been changed. Counsel attempted unsuccessfully to contact the Applicant by telephone. He also advised that he, because of the change of address suggestion, had not mailed the document to him.
[23] The words "unable to act or to instruct another to act" appear clearly to include circumstances in which someone's mental state or physical state or both was or were such that no action could be taken. The Applicant was deemed, by the Act, to have received the Notification of Confirmation on March 12, 1997. I accept fully the Applicant's description of his own condition during the period building up to the March 12, 1997 mailing date. The final tragic event above described was the death of his sister and her three children, slightly over two months before that date. It is my conclusion that the Applicant was genuinely confused about the status of his tax affairs and even about when he was advised by counsel of the confirmation of his Notice of Objection.
[24] This is a situation in which certain facts will never be known - namely, why the envelope was not received and why the cards (one at least) were returned. It seems rather harsh not to take account of the tragic circumstances above described. Obviously, the Applicant's attention was substantially consumed by past events and by his need to cope with the responsibilities arising from them and from his family obligations and from his job. It is clear that he did not receive the Notification of Confirmation, it having been returned to Revenue Canada. It is difficult to determine how broadly the words "was unable to act" should be interpreted. However, they must have some meaning or, in the face of deemed receipt, without actual receipt, of the Notification, they would be unnecessary. I had no reason to doubt the Appellant's credibility. My observation of him, during his uncontradicted testimony left me with the impression that he was psychologically and emotionally so involved with and affected by the series of tragedies that he could readily be regarded as unable to act or to instruct another to act on his behalf. I also conclude, that, having regard to the foregoing facts, the application was made as soon as circumstances permitted. No other grounds for opposing the application were advanced by the Respondent. Respondent's counsel, in his submissions said:
I'm going to return to my submission respecting contacting the lawyer and the accountant and Revenue Canada, although I fully appreciate and understand the Court's perspective on that. In toto, to accede to the Applicant's argument in this respect, in my respectful submission, would be to allow a defence of wilful blindness.
[25] In the circumstances, I am more than surprised that the application was not granted without the need to come to this Court. Having regard to facts that would leave many persons shattered, the use of the term "wilful blindness" is inappropriate.
[26] The application for extension of time is granted and the Notice of Appeal forwarded to the Court with Mr. Hammond's letter of June 5, 1998 will be regarded as a valid Notice of Appeal.
[27] The costs of this application are awarded to the Appellant.
Signed at Ottawa, Canada this 27th day of November, 1998.
"R.D. Bell"
J.T.C.C.