Docket: 2003-351(IT)G

BETWEEN:

BRENT GLYNN McCLELLAND,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Motion heard on June 19, 2003, at Calgary, Alberta,

by the Honourable Justice A.A. Sarchuk
Appearances:
Counsel for the Appellant:	Kerry W. McClelland
Counsel for the Respondent:	Margaret McCabe

____________________________________________________________________

JUDGMENT

          Upon motion by the Respondent for an Order dismissing appeal number 2003-351(IT)G, with costs to the Respondent;

          And upon reading the affidavits of Cheryl Ritchie and the Appellant, filed;

          And upon hearing counsel for the parties;

          It is ordered that the Respondent's motion is granted and the purported appeals from assessments of tax made under the Income Tax Act for the 1998, 1999, 2000 and 2001 taxation years are quashed, with costs to the Respondent.

Signed at Ottawa, Canada, this 14th day of October, 2003.

Citation: 2003TCC736

Date: 20031014

Docket: 2003-351(IT)G

BETWEEN:

BRENT GLYNN McCLELLAND,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Sarchuk J.

[1]      This is a motion by the Respondent for an Order quashing the appeals of Brent Glynn McClelland[1] or, in the alternative, for an Order granting the Respondent 90 days from the receipt of the Order to file its Reply to the Notice of Appeal. The grounds for the foregoing motion are that two required condition precedents have not been met, more specifically:

a)          The Appellant failed to serve Notices of Objection on the Minister within the time limit prescribed by subsection 165(1) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c.1 (the "Act") and thereby failed to fulfill a required condition precedent to institute a valid appeal as set out in section 58(3)(b) of the Tax Court of Canada Rules (General Procedure). SOR/90-688 (General Procedure Rules).

b)          In addition, or in it alternative, the appellant instituted the appeal outside the time requirements prescribed by subsection 169(1) of the Act and thereby failed to fulfill a required condition precedent to institute a valid appeal as set out in section 58(3)(b) of the General Procedure Rules.

[2]      In support of its motion, the Respondent filed the affidavit of Cheryl Ritchie which states:

1.      I am employed as an Officer of the Canada Customs and Revenue Agency (the "CCRA") in the Tax Litigation Office, Appeals Division, in Edmonton, Alberta, and as such have personal knowledge of the matters hereinafter deposed to, save and except what is stated to be based on information and belief and, where so stated, I believe it to be true.

2.      I have charge of the CCRA file relating to the Appellant's appeal with respect to the 1998, 1999, 2000 and 2001 taxation years and the appropriate records in the CCRA relating to the Appellant and the appeal (the "Records").

3.      I have knowledge of the practice of the CCRA.

4.      It is the practice of the CCRA that officers of the CCRA exercising the powers of the Minister in the Winnipeg Taxation Centre enter information into the computer system of the CCRA from the return of income of a taxpayer and the information entered results in an assessment being electronically generated by the CCRA.

5.      It is the practice of the CCRA that assessments electronically generated by the CCRA computer system in the Winnipeg Taxation Centre, where a refund is owed to the taxpayer, are directed to the Public Works Canada Centre in Winnipeg in order that refund cheques can be prepared. It is then the practice that both assessment and refund are printed and placed into envelopes which are then mailed to the taxpayer from the Public Works Canada Centre in Winnipeg to the address located on the return of income.

6.      It is the practice of the CCRA that assessments electronically generated by the CCRA computer system in the Winnipeg Taxation Centre, in all other cases, including direct deposit of a refund, than as stated in paragraph 5 of this my Affidavit, are printed and placed into envelopes which are then mailed to the taxpayer from the Winnipeg Taxation Centre to the address located on the return of income.

7.      It is the practice of the CCRA that, in assessing a taxpayer by use of the CCRA computer system, the Winnipeg Taxation Centre does not create a paper copy of the assessment issued for the CCRA records.

8.      It is the practice of the CCRA that the vast majority of assessments of returns of income are electronically generated in the above-noted manner and only a very small number of assessments are generated otherwise. The assessments at issue in the within application were generated in accordance with the above-noted manner.

9.      It is the practice of the CCRA that assessments are stored in the CCRA computer system and are inaccessible to tampering or altering by any person once the assessments are issued.

10.    It is the practice of the CCRA that assessment information stored in the CCRA computer system is available in printed format by computer printout of the electronic journal, or by reconstruction of the assessment by an officer of the Minister.

11.    It is the practice of the CCRA that the reconstruction of an assessment is done only by an officer of the Minister designated to do so and only upon request from another officer of the Minister.

12.    It is the practice of the CCRA that the officer of the Minister designated to issue a reconstructed assessment extracts the information of the original assessment from the computer system and generates the reconstructed assessment.

13.    It is the practice of the CCRA, that the reconstructed assessment is issued only by the Ottawa Tax Services Office.

14.    I have carefully examined and searched the CCRA records, and they show that a Notice of Assessment for the 1998 year of the Appellant was mailed on June 20, 2002; that a Notice of Assessment for the 1999 year of the Appellant was mailed on June 20, 2002 and that a Notice of Assessment for the 2000 year of the Appellant was mailed on July 25, 2002, to the Appellant at 10300 Tuscany Hills Way N.W., Calgary, Alberta, T3L 2G5.

15.    I have carefully examined and searched the CCRA records, and have been unable to find that the Minister has assessed the 2001 year of the Appellant, or that the Appellant has filed a return of income for the 2001 taxation year.

16.    I requested reconstructed Notices of Assessment of the 1998, 1999 and 2000 years of the Appellant from Sylvain Allaire, Appeals Division, Ottawa Taxation Office, and I was provided with the documents attached to this my Affidavit as Exhibits "A", "B" and "C", respectively. Based on my request, I am informed and believe that Exhibits "A", "B" and "C" are printouts of electronic documents which are reproduced from the electronic entry in the CCRA's computer system of the assessments referred to in paragraph 14 of this my Affidavit.

17.    A Notice of Objection in respect of the 1998, 1999, 2000 and 2001 years for the Appellant was received by the CCRA on November 5, 2002.

18.    A Notice of Appeal in respect of the 1998, 1999, 2000 and 2001 years for the Appellant was transmitted to the CCRA on February 3, 2003.

19.    I have made a careful examination and search of the records, and have found no indication that the Notices of Assessment for the 1998, 1999 and 2000 years for the Appellant were returned to the Minister by the post office.

20.    I have compared the reconstructed Notices of Assessment attached to this my Affidavit as Exhibits "A", "B" and "C" with the information available to me in the CCRA computer system and I attest that the contents of the reconstructed Notices of Assessment so attached are identical to the information in the CCRA computer system and are evidence of the nature and contents of the original Notice of Assessments.

21.    I make this Affidavit in support of the Respondent's application for an Order dismissing the Appellant's appeal number 2003-351(IT)G with respect to the 1998, 1999, 2000 and 2001 taxation years and for no other, or improper, purpose.

It is appropriate at this point to observe that the Appellant did not cross-examine the deponent, Cheryl Ritchie, nor did he lead any evidence to contradict or refute her affidavit.

[3]      The Appellant, McClelland, also filed an affidavit which reads as follows:

1.      On September 16, 2002, I mailed a Notice of Objection dated September 16, 2002 (attached to this Affidavit as Exhibit A), objecting to Canada Customs and Revenue Agency ("CCRA") assessments. This Notice of Objection was mailed to M. Janikowski, Calgary Taxation Centre, CCRA, at 330 - 220 4^th Ave. S.E., Calgary, Alberta, T2G 0L1.

2.      On January 8, 2003, I mailed a letter dated January 7, 2003 (attached to this Affidavit as Exhibit B) to M. Janikowski, Calgary Taxation Centre, CCRA, at 330 - 220 4^th Ave. S.E., Calgary, Alberta, T2G 0L1, stating that I had sent a Notice of Objection to the same M. Janikowski on September 16, 2002, and enclosed a copy of said Notice of Objection with that letter.

3.      On January 8, 2003, I mailed a letter dated January 7, 2003 (attached to this Affidavit as Exhibit C) to Chief of Appeals, CCRA, Winnipeg Taxation Centre, 66 Stapon Road, Winnipeg, Manitoba, stating that I had sent a Notice of Objection to M. Janikowski on September 16, 2002, and enclosed a copy of said Notice of Objection with that letter.

[4]      The parties agree that the Appellant did not file returns of income for the three years 1998, 1999 and 2000 and that as a result the Minister made arbitrary assessments pursuant to subsection 152(7).[2] Furthermore, although the Appellant made reference to the 2001 taxation year in his letters, he does not dispute that no return was filed for that taxation year nor has there been any assessment by the Minister of that year.

Has the Minister met the burden of proving the existence of the Notices of Assessment and the date of their mailing?

[5]      The Respondent's position is premised on the admissibility and acceptability of the reconstructed Notices of Assessment as proof of their date of mailing. Section 244(9) provides:

244(9) An affidavit of an officer of the Canada Customs and Revenue Agency, sworn before a commissioner or other person authorized to take affidavits, setting out that the officer has charge of the appropriate records and that a document annexed to the affidavit is a document or true copy of a document, or a print-out of an electronic document, made by or on behalf of the Minister or a person exercising a power of the Minister or by or on behalf of a taxpayer, is evidence of the nature and contents of the document.

Ms. Ritchie in her affidavit described the manner in which assessments are recorded in the computer system, made invulnerable in the system and then only taken out of the system in the form of a reconstructed notice by one of two persons who are entitled to do so in the Minister's office. Her detailed testimony convinces me that the contents of the reconstructed assessments before the Court as exhibits contain all the information that was contained in the original Notices of Assessment sent to the taxpayer and that includes the date of mailing because, as indicated by the affidavit, the date of mailing as it is recorded on those reconstructed Notices of Assessment are the dates of mailing of the original assessments.[3] There is no basis upon which it would be appropriate to reject the reconstructed Notices of Assessment. The provisions of subsection 244(9) may be relied upon by the Respondent and accordingly, I accept that the affidavit of Cheryl Ritchie is evidence of the nature and contents of the documents.

Did the Appellant serve a Notice of Objection on the Minister within the time limit prescribed by subsection 165(1) of the Act?

[6]      Notices of Assessment for the 1998 and 1999 taxation years of the Appellant were mailed on June 20, 2002 and a Notice of Assessment for the 2000 taxation year was mailed on July 25, 2002. The Appellant's position is that he mailed a notice of objection with respect to the three assessments in issue on September 16, 2002. His counsel contends that the Appellant's letter of this date constitutes an appropriate Notice of Objection and that accordingly, the Respondent's motion for an order quashing the appeals should be dismissed.

[7]      Subsection 165(2) of the Act provides:

165(2) A notice of objection under this section shall be served by being addressed to the Chief of Appeals in a District Office or a Taxation Centre of the Canada Customs and Revenue Agency and delivered or mailed to that Office or Centre.

It is not disputed that the Appellant sent the September 16, 2002 letter to one M. Janikowski, a Collection Enforcement Officer, Tax Services, 330-220 4th Ave. S.E., Calgary, AB, T2G 0L1. The letter is headed:

Re:      Letter dated September 9, 2002 from Rev. Can. concerning tax arrears

(my emphasis)

In his letter the Appellant refers to the fact that a number of his appeals with respect to certain taxation years commencing in 1988 were "currently before the Federal Court of Appeal" and that in his view, the issues before that Court would impact on tax owing for those and subsequent years. There is no reference in this letter, either direct or oblique, to the assessments of his 1998, 1999 and 2000 taxation years.

[8]      There is no merit in the Appellant's submission that the letter of September 16, 2002 is a valid objection to the assessments in issue. To accept this argument, it would be necessary to completely ignore the language of the relevant provision, being subsection 165(2)[4] which, as has been observed by this Court on previous occasions, sets out in clear and unambiguous language how service of an objection is to be effected. Counsel for the Appellant contends that subsection 165(2) must be read that the Notice of Objection can be sent to the Chief of Appeals in a District Office or to a Taxation Centre of the Canada Customs and Revenue Agency. He argues that the language is disjunctive and that accordingly, the Appellant's letter of September 16, 2002 to M. Janikowski is sufficient. I do not agree. The clear requirement set out in subsection 165(2) is that a Notice of Objection, regardless of form, must be sent to the Chief of Appeals in a District Office or in a Taxation Centre of Canada Customs and Revenue Agency. There is substantial logic in that requirement since the Appeals Division is the body legislatively authorized to review the facts and make the recommendation upon which the Minister may carry out his duties pursuant to the provisions of subsection 165(3) of the Act.

[9]      As the Appellant stated in his affidavit, it was not until January 8, 2003 that the Appellant mailed a letter dated January 7, 2003 to the Chief of Appeals as required by the provisions of the Act. In this letter he stated that "I had sent a Notice of Objection to M. Janikowski on September 16, 2002" and enclose a copy thereof. I have already concluded that the letter of September 16, 2002 was not a Notice of Objection. Furthermore, even accepting that his letter of January 7, 2003 was intended to be a Notice of Objection, the Appellant has not established that he served it in accordance with the Act. More specifically, September 17, 2002 is 90 days after the mailing of the 1998 and 1999 Notices of Assessment and October 22, 2002 is 90 days after the mailing of the 2000 notice of assessment and thus, he has not complied with the provisions of subsection 165(1) of the Act.

Did the Appellant receive the assessments in issue?

[10]     The Appellant takes the position that he never received the documents in issue. I must note that there is no clear and unequivocal denial in the Respondent's affidavit that he received the Notices of Assessment, nor was any oral evidence adduced to that effect. Subsection 152(2) reads:

152(2) After examination of a return, the Minister shall send a notice of assessment to the person by whom the return was filed.

Section 165 provides in part:

165(1) A taxpayer who objects to an assessment under this Part may serve on the Minister a notice of objection, in writing, setting out the reasons for the objection and all relevant facts,

(a)         where the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a testamentary trust, on or before the later of

(i)          the day that is one year after the taxpayer's filing-due date for the year, and

(ii)         the day that is 90 days after the day of mailing of the notice of assessment; and

(b)         in any other case, on or before the day that is 90 days after the day of mailing of the notice of assessment.

                                                                             (my emphasis)

In The Queen v. Adele Schafer,[5] the Federal Court of Appeal considered the provisions of subsections 300 and 301 of the Excise Tax Act. These two subsections read:

300(1) After making an assessment, the Minister shall send to the person assessed a notice of the assessment.

301(1.1) Any person who has been assessed and who objects to the assessment may, within ninety days after the day notice of the assessment is sent to the person, file with the Minister a notice of objection in the prescribed form and manner setting out the reasons for the objection and all relevant facts.

With respect to these sections, Isaac J.A. made the following comments:

[8]         The requirement in subsection 301(1.1) of the ETA is that the objection to the Minister's assessment be made within ninety days after it has been "sent." The Tax Court found, and the respondent does not dispute, that the Minister placed the notice of assessment in the Canada Post mail bag on 2 September, 1993. The implication of the interpretation placed on subsection 301(1.1) by the Tax Court is that the word "sent" means "received" by the taxpayer.

[9]         I am aware that the Tax Court has interpreted almost identical sections of the Income Tax Act to mean that the limitation period does not start to run unless the taxpayer receives the notice of assessment within the statutory time limit. However, this Court has criticized that approach in the past. In Canada v. Bowen, Stone, J.A. cited a passage from the Tax Court's decision in Antoniou requiring receipt to start the limitation period, and then stated:

With respect, we are unable to agree with that conclusion. In our view, it disregards the plain meaning of subsection 165(3) and section 169 of the [Income Tax] Act ...

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.

[10]       The Supreme Court in Alberta (Treasury Branches) v. M.N.R. held that, in the absence of ambiguity in the statutory language, the ETA must be applied strictly and without regard to its object or purpose. Cory J., writing for the majority, stated that:

... when there is neither any doubt as to the meaning of the legislation nor any ambiguity in its application to the facts then the statutory provision must be applied regardless of its object or purpose.

[11]       In a number of cases decided under the Income Tax Act, the Supreme Court of Canada has taken a similar approach. For example, in Shell Canada Ltd. v. Canada, McLachlin, J., as she then was, expressed her views of the matter at paragraphs 40-41:

Second, it is well established in this Court's tax jurisprudence that a searching inquiry for either the "economic realities" of a particular transaction or the general object and spirit of the provision at issue can never supplant a court's duty to apply an unambiguous provision of the Act to a taxpayer's transaction. Where the provision at issue is clear and unambiguous, its terms must simply be applied: Continental Bank, supra at para. 51, per Bastarache, J.; Tennant, supra, at para. 16, per Iacobucci, J.; Canada v. Antosko, [1994] 2 S.C.R. 312, at pp. 326-27 and 330, per Iacobucci, J.; Friesen v. Canada, [1995] 3 S.C.R. 103, at para. 11, per Major, J.; Alberta (Treasury Branches) v. M.N.R., [1996] 1 S.C.R. 963, at para. 15, per Cory, J.

It is my respectful view that by paying insufficient attention to these very important principles, the Minister and the Federal Court of Appeal fell into error.

[12]       It is my respectful view that the principles laid down in those passages apply with equal force in this case and that we should avoid inviting further censure from on high by adopting the approach of the Tax Court. Paragraph 304(5)(a) does not require the Minister to serve the notice of assessment on the taxpayer, personally, or even that the notice be received by the taxpayer. The paragraph merely states that the Tax Court shall not hear an application for an extension of time if it is brought more than one year beyond the expiration of time limited by subsection 301(1.1). Subsection 301(1.1) states that the limitation period begins to run ninety days after the notice is "sent." Therefore, the only requirement is that the Minister demonstrate that the notice was sent. There is no requirement that the notice be received in order to start the limitation period running. The language of subsection 301(1.1) is clear and unambiguous and must be applied regardless of its object and purpose.

[11]     It is clear from the foregoing that the position advanced by the Appellant cannot be sustained.

[12]     For the foregoing reasons, the Respondent's motion is granted and the Appellant's purported appeals from assessments made for the taxation years 1998, 1999, 2000 and 2001 are quashed, with costs to the Respondent.

Signed at Ottawa, Canada, this 14th day of October, 2003.

"A.A. Sarchuk"

CITATION:

2003TCC726

COURT FILE NO.:

2003-351(IT)G

STYLE OF CAUSE:

Brent Glynn McClelland and Her Majesty the Queen

PLACE OF HEARING:

Calgary, Alberta

DATE OF HEARING:

June 19, 2003

REASONS FOR JUDGMENT BY:

The Honourable Justice A.A. Sarchuk

DATE OF JUDGMENT:

October 14, 2003

APPEARANCES:

Counsel for the Appellant:

Kerry W. McClelland

Counsel for the Respondent:

Margaret McCabe

COUNSEL OF RECORD:

For the Appellant:

Name:

Kerry W. McClelland

Firm:

N/A

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada

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