Date: 20000530
Docket: 97-3445-IT-I
BETWEEN:
NELIA ARAGON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Order
Mogan J.T.C.C.
[1] The Appellant filed a Notice of Appeal with the Court on November 21, 1997 for the taxation years 1992, 1993 and 1994. The Appellant elected the informal procedure pursuant to section 18 of the Tax Court of Canada Act (the "TCC Act"). The Respondent filed a Reply to the Notice of Appeal on December 19, 1997. This appeal is connected with two other appeals (Oscar Aragon v. The Queen, No. 97-3446 and Roderic Aragon v. The Queen, No. 97-3448) which were commenced at the same time. The two other appeals will be affected by the Order I issue in this appeal by Nelia Aragon but I will proceed with these reasons as if I were concerned only with the appeal of Nelia Aragon.
[2] On April 16, 1999, the Court sent to the parties a Notice of Hearing stating that this appeal (No. 97-3445) would be heard at Regina, Saskatchewan on Friday, June 18, 1999. On April 20, 1999, counsel for the Appellant wrote a letter to the Registrar of the Court challenging the jurisdiction of the Court to fix a hearing date. The letter is short and so I shall set it out in full:
We recently received Notices of Hearing in respect of the above noted individuals. It is our position that the Court has no jurisdiction to fix a date for a hearing unless "exceptional circumstances" are found pursuant to section 18.17(1.1) as more than 365 days have elapsed since the last day the Minister could have filed a Reply even excluding periods between December 21 and January 7 of each year.
In our opinion, the result is that the Minister's re-assessment is vacated.
We look forward to your response.
[3] Because the Appellant's position amounted to a preliminary motion for judgment, it was agreed that the motion would be heard at Regina on Monday, June 14, 1999, and the parties attended on that date. The relevant parts of section 18.17 of the TCC Act are as follows:
18.17(1) Subject to subsection (1.1), the Court shall fix a date for the hearing of an appeal referred to in section 18 that is not later than one hundred and eighty days or, where the Court is of the opinion that it would be impracticable in the circumstances to fix a date for the hearing of the appeal within that period, three hundred and sixty-five days after the last day on which the Minister of National Revenue must file a reply to the notice of appeal pursuant to subsection 18.16(1) or (3).
18.17(1.1) The Court may, in exceptional circumstances, fix a date for the hearing of an appeal referred to in section 18 at any time after the periods referred to in subsection (1).
[4] The Appellant's preliminary motion was heard by Deputy Judge D.W. Rowe at Regina on June 14, 1999. After hearing submissions by counsel for both parties, Judge Rowe decided to quash the Notice of Hearing, and he delivered brief reasons from the bench for his decision. On June 25, 1999, Judge Rowe issued the following order:
Upon motion by counsel for the Appellant that the assessments issued by the Minister of National Revenue be vacated on the basis the Court had no jurisdiction to fix a date for hearing of the within appeal pursuant to subsection 18.17(1.1) of the Tax Court of Canada Act, as more than 365 days had elapsed since the last day on which the Minister had to file a Reply to the Notice of Appeal.
It is hereby ordered that the Notice of Hearing, dated April 16, 1999, purporting to fix a date for the hearing of the appeal on the 18th day of June 1999 at 9:30 a.m. at Regina, Saskatchewan, be quashed on the basis it was not issued within the period required by subsection 18.17(1.1) of the Tax Court of Canada Act and therefore has no force and effect.
The Appellant is not entitled to any further relief.
[5] Neither of the parties made any attempt to appeal from the above Order dated June 25, 1999. On March 31, 2000, Chief Judge Garon of this Court issued the following order with respect to this appeal No. 97-3445:
IT IS ORDERED that the hearing of this appeal be scheduled before this Court at the Tax Court of Canada at Provincial Court, 1815 Smith Street, Regina, Saskatchewan, commencing at 9:30 a.m. on Monday May 15, 2000.
On April 28, 2000, counsel for the Appellant wrote a letter to the Registrar of the Court (copy to the Department of Justice) again challenging the jurisdiction of the Court. The letter in full states:
We recently received Notices of Hearing in respect of the above noted individuals which are scheduled for Monday May 15, 2000. It remains our position that the Court has no jurisdiction to fix a date for a hearing unless "exceptional circumstances" are found pursuant to section 18.17(1.1) as more than 365 days have elapsed since the last day the Minister could have filed a Reply. Further, in light of the June 14, 1999 Order of Justice Rowe, we take the position that the matter of whether a hearing can be scheduled is res judicata and can only be properly questioned upon judicial review.
We trust the above clarifies our clients' positions.
[6] On May 4, 2000, counsel for the Respondent wrote a letter to the Court (copy to Appellant's counsel) opposing the position taken by the Appellant and arguing that the Court had jurisdiction to fix a hearing date. After consultation with counsel for both Appellant and Respondent, it was agreed (i) that only the question of the Court's jurisdiction to fix a hearing date would be argued at Regina on Tuesday, May 16, 2000; and (ii) that any hearing of the appeal on its merits, if permitted or required, would occur at a later date. Having regard to subsection 18.17(1) of the TCC Act, the last day on which the Minister of National Revenue was required to file a reply to the notice of appeal herein was a day in the first week of March 1999. In any event, that day was approximately six weeks before April 16, 1999 when the first Notice of Hearing was sent to the parties.
[7] At the hearing on May 16, 2000 pursuant to the Order of the Chief Judge set out in paragraph 5 above, each counsel filed a brief or argument. The Appellant's brief commenced with the following two paragraphs:
As the court will be aware, the issue of whether the Court properly has jurisdiction to set the above matters down for a hearing is scheduled to be heard on Tuesday May 16, 2000 at 10:00 a.m. in Regina. Below, please find our further submissions to the court on behalf of the Appellants.
It is our client's position that the failure to comply with section 18.17 of the Tax Court of Canada Act had led to a denial of their right to a timely appeal, and that this has resulted in a denial of natural justice. We also take issue with the most recent Order of the Court setting the matter down for hearing as we were not given any Notice of any application for an Order or that an Order was even being contemplated. We would submit that this oversight is a further violation of the rules of natural justice.
[8] I do not see how this Court's failure to comply with subsection 18.17(1) of the TCC Act has resulted in a denial of natural justice. The Appellant has not offered any evidence, by affidavit or otherwise, that the delay in the hearing of her appeal has reduced her chances of success. There are no documents in the Court file which indicate that the Appellant or her counsel attempted at any time to obtain an early hearing of her appeal. Indeed, during the period from December 19, 1997 (the filing of the Respondent's Reply) to April 16, 1999 (the sending of the first Notice of Hearing), the Court file shows a tomb-like silence from both Appellant and Respondent. Neither party was asking for an early hearing. Also, there was no application for the Order issued by the Chief Judge on March 31, 2000 (see paragraph 5 above). That Order was issued by the Court's own volition.
[9] This Court is concerned only with civil litigation. It has no criminal jurisdiction. A person who comes to this Court seeking a remedy is usually appealing from a ruling made by some official acting or purporting to act under the authority of one of the statutes named in section 12 of the TCC Act. The person who appeals to this Court from such a ruling is referred to as an "appellant" but that person is analogous to a "plaintiff" in civil litigation. In ordinary circumstances, every plaintiff wants an early hearing in order to obtain the specified remedy as soon as possible. For whatever reason, the Appellant in this case did not request an early hearing and, when a hearing was set for June 1999, her counsel successfully argued before Judge Rowe that her appeal should not be heard on its merits because the Notice of Hearing was defective. On the evidence or lack thereof, I cannot find that the Appellant has been denied natural justice in any way.
[10] The decision of the Supreme Court of Canada in Regina v. Askov, [1990] 2 S.C.R. 1199 has no application to the circumstances of this appeal because Askov was a criminal proceeding in which the Supreme Court applied the Charter of Rights and Freedoms and had to be concerned as to whether a possibly innocent person was languishing in jail.
[11] The Appellant's counsel argued that I could not hear the question as to the Court's jurisdiction to fix a hearing date because I was barred by the doctrines of res judicata and issue estoppel. The Appellant's position is summarized as follows in her counsel's brief:
We respectfully submit that the matter to be heard is barred by the doctrines of res judicata and issue estoppel, and thus cannot be litigated again. The doctrine of res judicata was described in Bashnick v. Mitchell and Crown Mart Ltd., (1981), 8 Sask. R., 338 (Sask. Q.B.) at 345, as follows:
There is no doubt as to the law in this respect: where a final judicial decision has been pronounced by a court of competent jurisdiction over the parties to and the subject matter of the litigation is the same, the parties are estopped in any subsequent litigation from trying the same issue twice afresh. A estoppel per res judicata is created.
The principle of issue estoppel was stated by Holland J. in Rasanen v. Rosemount Instruments, (1990) 28 C.C.E.L. 152 (Ont H.C.), at p. 156 in this way:
For this to be issue estoppel, three conditions must be fulilled:
(1) The same matter was decided in both proceedings.
(2) The judicial decision was final.
(3) The parties were the same.
It is our respectful submission that the facts of the present situation clearly meet these three requirements for the application of issue estoppel. The first decision of the Tax Court of Canada was based on the same question that is presently before the court. The parties are the same. We respectfully submit that the decision of Rowe J. was final, because section 18.24 of the Tax Court of Canada Act provides that a ruling of the Tax Court of Canada is final subject to judicial review by the Federal Court of Appeal. ...
[12] In the passage from Bashnick v. Mitchell and Crown Mart quoted above, when the Court speaks of "a final decision ... pronounced by a court ... over the parties" the Court is referring to a decision which affects the rights and obligations of the parties vis-à-vis each other. This meaning is clear from the subsequent words "the parties are estopped in any subsequent litigation from trying the same issue twice". Similarly, in the above passage from Rasanen v. Rosemount Instruments the third condition for issue estoppel is said to be "the parties were the same". This Court is not a "party" in the litigation which comes before it.
[13] In my opinion, the doctrines of res judicata and issue estoppel are not relevant to the questions (i) whether this Court may issue a fresh Order in March 2000 fixing a new hearing date; and (ii) whether I may hear fresh arguments with respect to the validity of such Order. The Court has exclusive original jurisdiction to hear appeals under the statutes named in section 12 of the TCC Act. There is no dispute between the Court and any party to a particular appeal. The Court is not a party to any of the appeals which are commenced within its jurisdiction. The Order issued by Judge Rowe on June 25, 1999 did not affect the rights or obligations of the parties (Appellant and Respondent) vis-à-vis each other. In fact, Judge Rowe carefully avoided vacating any of the assessments under appeal notwithstanding the submission in the letter of April 20, 1999 from the Appellant's counsel to the Registrar of this Court (see paragraph 2 above). The operative part of Judge Rowe's Order was concerned only with the validity of the Notice of Hearing sent by the Court to the parties on April 16, 1999 although the preamble to his Order refers to a motion "that the assessments ... be vacated". He quashed that Notice of Hearing.
[14] This Court (like other courts) has an obligation to provide in a timely manner a hearing for the determination of disputes. For informal appeals, the TCC Act is specific in section 18.17 (see paragraph 3 above) with respect to the time within which "the Court shall fix a date for the hearing of an appeal". Both counsel argued the question whether the word "shall" in subsection 18.17(1.1) was mandatory or directory. This question was recently reviewed by the Supreme Court of Canada in B.C. (A.G.) v. Canada (A.G.); an Act Respecting the Vancouver Island Railway [1994] 2 S.C.R. 41. In that case, Iacobucci J. (writing for the majority) stated at pages 123-124:
In other words, courts tend to ask, simply: would it be seriously inconvenient to regard the performance of some statutory direction as an imperative?
There can be no doubt about the character of the present inquiry. The "mandatory" and "directory" labels themselves offer no magical assistance as one defines the nature of a statutory direction. Rather, the inquiry itself is blatantly result-oriented. In Reference re Manitoba Language Rights, supra, this Court cited R. ex rel. Anderson v. Buchanan (1909), 44 N.S.R. 112 (C.A.), per Russell J., at p. 130, to make the point. It is useful to make it again. Russell J. stated:
I do not profess to be able to draw the distinction between what is directory and what is imperative, and I find that I am not alone in suspecting that, under the authorities, a provision may become directory if it is very desirable that compliance with it should not have been omitted, when that same provision would have been held to be imperative if the necessity had not arisen for the opposite ruling.
The temptation is very great, where the consequences of holding a statute to be imperative are seriously inconvenient, to strain a point in favor of the contention that it is mere directory. ...
Thus, the manipulation of mandate and direction is, for the most part, the manipulation of an end and not a means. In this sense, to quote again from Reference re Manitoba Language Rights, supra, the principle is "vague and expedient" (p. 742). This means that the court which decides what is mandatory, and what is directory, brings no special tools to bear upon the decision. The decision is informed by the usual process of statutory interpretation. But the process perhaps evokes a special concern for "inconvenient" effects, both public and private, which will emanate from the interpretive result.
[15] As I understand the law, when the consequences of interpreting a statutory direction to be "mandatory" are seriously inconvenient (in a public or private sense), a court will strain to hold that the meaning is directory and not mandatory. If the word "shall" in subsection 18.17(1) is mandatory as the Appellant's counsel argued, and if as a result the Court cannot fix a hearing date after 365 days without proving exceptional circumstances, the consequences are seriously inconvenient because the parties (both the appellant and the respondent in any case) would be denied a hearing through no fault of their own. That result would be not merely inconvenient but would prevent the Court from fulfilling its purpose. This Court was created to provide an independent tribunal where persons (individuals, corporations, etc.) could appeal from rulings made under the federal revenue statutes named in section 12 of the TCC Act. If those persons were to be denied a hearing because the Court failed to satisfy a statutory direction, the whole purpose of the Court would be thwarted.
[16] If I am required to decide, I would conclude that the word "shall" in subsection 18.17(1) is directory and not mandatory. I may not be required to decide that question, however, because in my opinion the Appellant has sought the wrong remedy. As stated in paragraph 9 above, a plaintiff ordinarily wants an early hearing. If the Appellant or her counsel thought that any delay in the hearing of her appeal would reduce her chances of success, she could have asked the Registrar of this Court for an early hearing anytime after December 19, 1997 when the Reply to the Notice of Appeal was filed. She did not ask for an early hearing. After the 365-day period described in subsection 18.17(1), she could have asked the Registrar to comply with that subsection. She did not ask for such compliance. If the Appellant thought that the hearing of her appeal was unduly delayed, she could have filed a Notice of Motion for an order like the Order which chief Judge Garon in fact signed on March 31, 2000 (see paragraph 5 above). She did not file such Notice of Motion. I question the sincerity and good faith of the Appellant's claim that the Court's failure to comply with subsection 18.17(1) has resulted in a denial of natural justice or a loss of jurisdiction.
[17] The Appellant must have thought in April 1999 that she could gain some advantage over the Respondent as a result of the Court's failure to fix a hearing date in accordance with subsection 18.17(1) because she asked that the Minister's reassessment be vacated. See paragraph 2 above. That is in effect a motion for judgment. Why should either party gain an advantage against the other party because of the Court's failure? Judge Rowe did not vacate any assessment in his Order of June 25, 1999 but he must have thought that he was granting some relief to the Appellant because his order ends with the words: "The Appellant is not entitled to any further relief" (emphasis added). See paragraph 4 above.
[18] If the remedy obtained by the Appellant before Judge Rowe is the correct remedy when the Court has failed to fix a hearing date as required by section 18.17, the Minister of National Revenue could be the principal beneficiary of such remedy. The limitation period in subsection 18.17(1) applies only to informal appeals with relatively small amounts in dispute. Under the informal procedure, many taxpayers come to Court without legal counsel or other professional assistance. The Minister could move to quash every Notice of Hearing issued after the 365-day period and, unless "exceptional circumstances" were established, the Notice would be quashed and the taxpayer would be denied a hearing and any opportunity to obtain relief. The drafting person or Parliament cannot have intended that this be the result of using the word "shall" in subsection 18.17(1)
[19] In my opinion, the remedy which the Appellant sought before Judge Rowe in June 1999 and sought to uphold before me on May 16, 2000 is not reasonable. That remedy is so unreasonable that it is absurd and, therefore, to be avoided.
[20] If it is necessary to demonstrate exceptional circumstances under subsection 18.17(1.1), I would take judicial notice of the following facts. First, Judge Sobier of this Court died suddenly in the first week of March 1998 (around the date when the 365-day period began) and he was not replaced until after June 1999. Second, Judge Sarchuk elected supernumerary status in July 1998 (accepting a reduced case list) and he was not replaced until after June 1999. Third, Chief Judge Couture retired on December 31, 1998 and, although another judge on the Court was promoted to Chief Judge, the vacancy created by the Couture retirement has not yet been filled. And fourth, this Court has a heavy case load in Montreal, Toronto, Calgary and Vancouver requiring frequent Court sittings in those cities to hold down the backlog. Smaller cities like Regina, Halifax, St. John's, Saskatoon and Sudbury have Court sittings less frequently. Sometimes, it is "impracticable" to hear all informal appeals within the 180-day period or even the 365-day period described in subsection 18.17(1). Having regard to the above facts, it may not be a coincidence that the Appellant's first motion was heard at Regina before a deputy judge in June 1999. Section 9 of the TCC Act permits the appointment of deputy judges.
[21] I assume that there is a continuing good faith effort on the part of the Chief Judge and the Registrar of this Court to have all informal appeals heard within the time limits described in subsection 18.17(1). Acting on that assumption, I would accept a failure to hear a particular informal appeal within those time limits as prima facie evidence of exceptional circumstances. In my opinion, this Court has jurisdiction to fix a hearing date for any appeal at any time.
[22] In Paynter et al v. The Queen, 96 DTC 6578, the Federal Court of Appeal reviewed the discretion of the Chief Judge of this Court when refusing to adjourn an informal appeal. After reviewing those parts of the TCC Act which provide for informal appeals, Strayer J.A. stated at page 6580:
... These provisions make it clear that such appeals are not intended to move along at any leisurely pace chosen by the parties but are normally to be heard and disposed of in a quick and orderly fashion. This in our view not only colours the meaning to be given to the word "impractical" in subsection 18.2(1) but indicate also the scope of the discretion given to the Court under subsection 18.2(2) to refuse adjournments even where counsel all consent.
For me, this is a good description of what Parliament and the drafting person intended for the informal procedure. If informal appeals are to be "heard and disposed of in a quick and orderly fashion", how is that objective helped by a party who moves to quash a Notice of Hearing because, on its face, if does not satisfy the time limits in subsection 18.17(1)?
[23] In Anthony M. Hayes v. The Queen, 98 DTC 3462, Christie A.C.J. was concerned with a Notice of Hearing for an informal appeal issued by the Court after the 180-day period described in subsection 18.17(1). He referred to the Court's failure to comply with subsection 18.17(1) as an "administrative oversight". That may have been the actual situation in Hayes. In this appeal by Nelia Aragon, the Court's failure to comply with subsection 18.17(1) may not have been an oversight but may have been a conscious inability to send a judge to Regina for a hearing within the prescribed time. Such inability does not detract from the Court's jurisdiction to convene a hearing at the first opportunity.
[24] In a special reference to the Federal Court of Appeal, In Re Anti-dumping Act and Other Matters, [1980] 1 F.C.R. 233, a question was put to the Court as to whether the Anti-dumping Tribunal retained jurisdiction to proceed with a re-hearing and make a finding even though a 90-day time limit in subsection 16(3) of the Anti-dumping Act had expired. Pratte J.A., speaking for the Court, stated at page 238:
Under subsection 16(3), the Board is clearly under a duty to render a decision within "a period of 90 days from the date of receipt of a notice of a preliminary determination of dumping." It does not follow, however, that at the expiry of the 90-day period, the Tribunal is relieved of its duty to make an inquiry on the question that has been referred to it and is deprived of the power to make any order or finding in the matter. In order to reach such a conclusion, which certainly would not help to achieve the purposes of the Anti-dumping Act, R.S.C. 1970, c. A-15, clear language to that effect would, in my view, be necessary. I do not find any such clear language in the statute. Once the 90-day time limit is expired, the interested parties may take the necessary steps to protect their rights and force the Tribunal to proceed, but, in my opinion, the jurisdiction of the Board to continue its inquiry remains unimpaired.
Any tribunal in its decision-making process may act beyond its jurisdiction but a failure to act at all within a prescribed time limit will rarely rob a tribunal of its jurisdiction to decide the very cases it was created to decide.
[25] The Order which was issued by Chief Judge Garon on March 31, 2000 (set out in paragraph 5 above) is a valid order. Similar orders issued in the appeals of Oscar Aragon v. The Queen (Court File No. 97-3446) and Roderic Aragon v. The Queen (Court File No. 97-3448) are valid orders. Because the parties agreed that any hearing of these three appeals on their merits (if permitted or required) would occur after May 16, 2000, I will direct the Registrar of the Court to communicate with the parties with a view to fixing a new hearing date.
Signed at Ottawa, Canada, this 30th day of May, 2000.
"M.A. Mogan"
J.T.C.C.