Date: 20000912

Docket: 2000-601-GST-I

BETWEEN:

MATT PANAR

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Sarchuk J.T.C.C.

[1] This is an appeal by Matt Panar from an assessment dated April 26, 1999 by virtue of which the Minister of National Revenue (Minister) denied the Appellant's application for a rebate of GST on the basis that the application was not filed within four years after the amount of tax was paid or remitted as required by subsection 261(3) of the Excise Tax Act (the Act).

[2] The following facts are not in dispute. A developer leased a large area of undeveloped property from the University of British Columbia and improved the property with residential strata units. Prior to the construction thereof, the developer converted the leased area into smaller individual stratified leases. In 1992, the Appellant purchased residential strata unit 106 in the Thames Court condominium complex at 5880 Hampton Place and in so doing acquired a lease interest by way of an assignment of one of the stratified leases converted from the developer's lease with the University. The transaction was completed by the Appellant on August 21, 1992. The price paid by the Appellant was $279,000. In addition to the foregoing amount, the Appellant paid GST to the developer in the amount of $18,252.34.

[3] The Appellant applied for a rebate by submitting the requisite form to Revenue Canada on November 27, 1998. The application was denied on the basis that it was not filed within the time prescribed by the Act. The Appellant however, did receive a GST New Housing Rebate in the amount of $6,729.33 leaving the balance of $11,523.01 which remains in issue.

[4] The Appellant was represented at the hearing by Barry Brovender who advised the Court that he did not intend to call any witnesses and proposed to submit a statement of facts in lieu thereof. Counsel for the Respondent accepted the facts set out in the following two paragraphs:

1. Dr. Matt (sic) purchased his leasehold condominium, unit #106 in The Thames Court condominium complex at 5880 Hampton Place in Vancouver, on August 21, 1992. Dr. Panar paid $18,252.34 GST on the purchase of his leasehold condominium. The amount of money in dispute in this appeal is the balance of $18,252.34.

2. In 1998 Dr. Panar, aware of the efforts of the Hampton Place GST Committee, applied for a full GST rebate on the balance owing of $18,252.34. He received the April 26, 1999 letter denying his claim and advising him of subsection 261(3) of the Excise Tax Act. Under the time limits set by section 261(3) of the Act, Dr. Panar had 4 years from the time he purchased his leasehold condominium to apply for a rebate (Section 261 has since been amended). During this time Dr. Panar was discouraged to learn that other leasehold condominium owners at Hampton Place, who had successfully completed and filed forms for full GST rebates, were denied full rebates by Revenue Canada.

Legislative Scheme

[5] The relevant provisions of the Act in effect on November 27, 1998 when the Appellant filed his General Application for Rebate read as follows:

261(1) Where a person has paid an amount

(a) as or on account of, or

(b) that was taken into account as,

tax, net tax, penalty, interest or other obligation under this Part in circumstances where the amount was not payable or remittable by the person, whether the amount was paid by mistake or otherwise, the Minister shall, subject to subsections (2) and (3), pay a rebate of that amount to the person.

...

261(3) A rebate in respect of an amount shall not be paid under subsection (1) to a person unless the person files an application for the rebate within two years after the day the amount was paid or remitted by the person.

Subsection 261(3) as it read at that time reflected an amendment made in 1997 reducing the prior limitation period from four years to two years. The amendment further provided that:

71(2) Subsection (1) applies:

(a) to amounts that, after June 1996 are paid as or on account of, or are taken into account as tax or other amount payable or remittable under Part IX of the Act; and

(b) to amounts that, on or before the last day of that month, were paid as or on account of, or were taken into account as tax or other amount payable or remittable under that part, other than amounts that are claimed in an application under section 261 of the Act filed on or before June 30, 1998.[1]

Appellant's position

[6] The primary submission advanced by Brovender in the material he submitted was that Revenue Canada was unjustly enriched by the amount of GST collected in error on the exempt supply of the Appellant's leasehold condominium because:

(a) Revenue Canada does not have authority under the Excise Tax Act to collect GST on an exempt supply;

(b) from January of 1995, Revenue Canada had continual notice of the disputed GST payments on the exempt supply of leasehold condominiums from the Hampton Place residence;

(c) Revenue Canada litigated the matter beyond the time period allowed for this Appellant to claim a rebate for the GST collected in error; and

(d) Revenue Canada erred in interpreting section 261 of the Act to apply to an exempt supply collected in error.

As well, Brovender, who had been present throughout the hearing of the appeals in Earnshaw and Throness v. The Queen, Alfred v. The Queen and May v. The Queen[2] asked the Court to consider the following arguments advanced in those cases and apply them to this appeal. There was no objection from counsel for the Respondent.

[7] The Appellant relies on the decision in Taylor and Redmond v. The Queen[3] in which Garon C.J.T.C.C., in identical circumstances, held that the Appellants' acquisition of their respective residential units was exempt from tax under Part IX of the Act and that accordingly, the Minister's assessment to deny them a rebate of taxes paid in error was vacated. Since this decision was handed down on July 27, 1998 the Appellant contends that his right to file a General Application for Rebate was postponed effective as of that date. In support of this position, it was submitted that the appropriate interpretation of subsection 261(1) can be ascertained by reading subsections (1) and (3) together and utilizing subsection (1) in determining what was meant by the phrase "within two years after the day the amount was paid or remitted by the person". It was further submitted that it is necessary to import into the meaning of subsection (3) the concept of "was not payable or remittable by the person" from subsection (1). When read in this fashion and accepting the fact that the Appellant did not learn that the amount in issue "was not payable" by him until such time as the Taylor and Redmond decision was handed down, at that point i.e. July 27, 1998, if the statutory limitation did in fact apply, he had two years within which to make his application. The Appellant contends that interpreting the words referred to in this fashion does not violate the plain meaning and intent of the statute but interprets the law in a creative fashion in order to enable the Court to interpret the relevant sections in a manner which provides relief for the Appellant.

[8] In support of this approach to the interpretation of taxing statutes, reference was made to the decision in Smith Drugs Ltd. v. M.N.R.[4] wherein Reed J. stated:

With respect to the statements in Fries v. M.N.R., (1990) 114 N.R. 150; 90 DTC 6662 (S.C.C.) and Johns-Manville Canada Inc. v. M.N.R., (1985) 60 N.R. 244; 85 DTC 5373 (S.C.C.) which indicate that in cases of uncertainty the taxpayer must be given the benefit of the doubt, I do not interpret those comments as in any way resiling from the principle set out in Stubart. In my view, those cases merely indicate that if after one has read the relevant statutory provisions of an Act and read them in light of the purpose and object of the statute, there is still doubt as to which alternative interpretation was intended, then, that doubt should be resolved in favour of the taxpayer, regardless of whether the provision in question is a charging section or an exemption or deduction provision.

[9] This Appellant also adopts the supplementary submissions filed in May v. The Queen, supra. In that appeal, it was argued that a reasonable interpretation of subsection 261(3) of the Act suggests that a person subject to the provisions of the Act is, in the usual case, aware of a sale of a taxable supply that did not go through, remained unpaid or was consumed outside of Canada. In such circumstances, GST would not be payable and the person would apply for a rebate of GST remitted on the sale within the limitation period. On the other hand, a person would not normally know that a rebate of an exempt supply collected in error by Revenue Canada is possible until a Court determines that the supply is exempt. In the case of this Appellant, the determination that the supply of his leasehold interest was an exempt supply was not made until the Taylor and Redmond decision which was handed down after the limitation period had expired. Relying on a recent decision of the British Columbia Court of Appeal (BCCA), Hansen v. The Queen,[5] it was argued that subsection 261(3) may be interpreted as a limitation that is procedural in nature because it determines that a person make the application for a rebate when the person becomes aware of circumstances in which the GST would not be payable. In Hansen, the BCCA held that a limitation that is procedural in nature can be extended by agreement or estoppel. Thus, the Appellant says, Revenue Canada by accepting that purchasers were entitled to rebates but only after the Taylor decision was handed down, effectively agreed to extend the commencement of the limitation period to the date of the decision i.e. July 27, 1998.

[10] The Appellant also contends that the Minister is estopped from denying his claim for a rebate by asserting that his application is statute-barred by reason of being out of time. He says that if his application is in fact statute-barred, his failure to file within the requisite time was the result of representations made by the Minister's servants and agents prior to the expiration of the limitation period with respect to his right to a general rebate.

Conclusion

The Limitation Period Argument

[11] I have concluded that the "creative approach" to the interpretation of subsections 261(1) and (3) of the Act as proposed must be rejected. The intention of Parliament to limit the time period for the filing of a rebate application has been set out in clear and unambiguous language. What is being sought by the Appellant is to have the Court interpret this particular provision to make it say what he believed would have been said by the legislators if this particular situation had been before them. When the meaning is clear, this Court has no jurisdiction to mitigate a harsh consequence. While this Court may be entitled to construe the language of an Act of Parliament, it may not distort it to make it accord with what the Court may think to be reasonable.[6]

[12] I am also of the view that the decision in Hansen is distinguishable both in fact and in law. The issue in that case was whether she was barred from pursuing a claim for compensation for land taken for highway purposes by reason of a one-year limitation in section 25 of the Expropriation Act.[7] The Expropriation Compensation Board (the Board) held that the Ministry was estopped from relying on the limitation period. The appeal was from that determination. The facts in Hansen are that at a meeting between solicitors in June 1995 the Ministry's negotiator led Hansen's solicitor to believe that the one-year limitation period would run from August 8, the possession date, rather than from July 21, being one year from the date of payment as stipulated in the relevant provision. MacKenzie J.A. found that "the representation was unambiguous. It was a representation of fact. It was intended to be relied upon, and was relied upon" and held that the Board was correct in its conclusion that the elements of promissory estoppel were made out. This decision is of little assistance to the Appellant since the estoppel as found involved a representation of fact which was acted on by Hansen to her detriment. That is not the case in the present appeal where the representations by Gravelle (and other Revenue Canada officials) were reflective of the Department's interpretation of the relevant statutory provisions of the Act.

[13] Relying specifically on the following comment of MacKenzie J.A. in Hansen:

Section 25, as well as barring proceedings after the expiration of one year, deems the owner to have accepted advanced payment in full settlement, in the absence of a further claim within time. In my view, that does not extinguish the claim but simply deems the claim paid. The distinction may be a subtle one, but I think that the wording of section 25 lays down a limitation that is procedural in nature which can be extended by agreement or estoppel.

it was also argued that the limitation in subsection 261(3) of the Act is procedural in nature and can be extended by agreement or estoppel. I am unable to agree. First the Appellant has not made out a case for estoppel. Second, the limitation period set out in subsection 261(3) of the Act is substantive in nature and not merely procedural and cannot be extended. It provides that "a rebate ... shall not be paid ... unless the person files an application for the rebate within two years ... ". As counsel for the Respondent observed, this provision clearly extinguishes all rights to the rebate. Furthermore, there is no suggestion the Appellant was incorrectly informed by any Revenue Canada official of the limitation period for filing a rebate application. Thus it is difficult to find any basis for the submission made that Revenue Canada "effectively agreed to extend the limitation until after the Court decision" in Taylor and Redmond. Furthermore, even if the Appellant had been able to establish that Revenue Canada entered into some form of agreement with him, it would in effect be an agreement to assess tax otherwise than in accordance with the law and would be an illegal agreement.[8]

[14] To the foregoing, I must add that there is no provision in the Act granting authority to the Minister or providing the Federal Court or this Court with jurisdiction to waive, extend or alter the statutory time periods specified in a subsection such as 261(3).[9]

Estoppel argument

[15] There is no evidence that any officer or agent of Revenue Canada provided the Appellant with erroneous information with respect to his right to a General Rebate. However, by the latter part of 1995, it was common knowledge amongst all of the people who had purchased the strata units in issue that Revenue Canada's position was that they were not entitled to the rebate. Furthermore, although there is no direct evidence on point, it is reasonable to infer that the Appellant was aware of this position and believed that implicit in Revenue Canada's position was that he should not make an application because it would not be successful. It is also a fair inference that, like many others, he acted on it and concluded that making an application would be a waste of time. Thus, relying on the correctness of the expressed Revenue Canada position, he failed to submit his application within the time period prescribed.

[16] Although it is clear that the Appellant acted to his detriment as a result of the representations made by Revenue Canada employees as to the relevant provisions of the Act, he cannot succeed. Issue estoppel has been considered in a number of cases and the principle which can be taken therefrom is that no representation involving an interpretation of law by a servant or officer of the Crown can bind it. In The Minister of National Revenue v. Inland Industries Limited,[10] the Supreme Court of Canada considered certain sections of the Income Tax Act respecting the deductibility of past service contributions to a pension plan initially accepted by the Department of National Revenue for registration but with respect of which deductions were later refused. Pigeon J. speaking for the Court effectively disposed of any question of an estoppel by stating:

... However, it seems clear to me that the Minister cannot be bound by an approval given when the conditions prescribed by the law were not met.

This principle was applied in Stickel v. M.N.R.[11] by Cattanach J. who stated:

In short, estoppel is subject to the one general rule that it cannot override the law of the land.

[17] The rationale for the principle expressed in these cases was succinctly summarized by Bowman J. in Goldstein v. The Queen:[12]

It is sometimes said that estoppel does not lie against the Crown. The statement is not accurate and seems to stem from a misapplication of the term estoppel. The principle of estoppel binds the Crown, as do other principles of law. Estoppel in pais, as it applies to the Crown, involves representations of fact made by officials of the Crown and relied and acted on by the subject to his or her detriment. The doctrine has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved, because estoppels cannot override the law.

[18] The question before me is whether the representations made by officials of Revenue Canada to various strata unit owners with respect to the taxability of the supply of their units were representations of fact or law. These representations were in essence that the acquisition of the strata units was considered to be a sale and purchase and did not constitute an exempt supply and as such was properly subject to the 7% GST. In my view, these representations were not statements of fact but rather were an opinion as to the appropriate interpretation of the relevant statutory provisions of the Act. In such circumstances, it is not open to the Appellant to set up estoppel to preclude the Minister from relying on the provisions of subsection 261(3) of the Act to deny his claim for a rebate.

[19] The Appellant has also asked this Court to vary the assessment to return the balance of $18,252.34 plus interest to him on the basis that the Minister was unjustly enriched or in the alternative, seeks an Order that a remission of tax pursuant to section 23 of the Financial Administration Act is justified in the circumstances. This request is beyond the jurisdiction of this Court. In Lamache Estate v. Canada,[13] counsel for that Appellant sought a "direction with respect to an accounting" for the amount of $3,733.11 in tax paid which had not been credited or refunded to him. Christie A.C.J.T.C. stated:

... Even assuming that an action for an accounting could be brought in respect of the money I questioned whether this court has that jurisdiction and referred to its authority in disposing of an appeal. Section 171 of the Act provides:

171(1) The Tax Court of Canada may dispose of an appeal by

(a) dismissing it, or

(b) allowing it and

(i) vacating the assessment,

(ii) varying the assessment, or

(iii) referring the assessment back to the Minister for reconsideration and reassessment.

On further reflection I am reinforced in my view that the court does not have the jurisdiction referred to. The Tax Court of Canada is a purely statutory creation and its jurisdiction is confined to what is expressly conferred on it by Parliament and what is necessarily implied from what is expressly conferred. ...

In McMillen Holdings Limited v. M.N.R., 87 DTC 585 at 591-592 (T.C.C.), the Appellant relying on sections 12 and 13 of the Tax Court of Canada Act asked the court for a direction to the respondent to pay interest on a dividend refund made under subsection 129(1) of the Act. ...

In concluding that the court did not have jurisdiction, Rip J. said:

Section 12 of the Tax Court of Canada Act grants this Court original jurisdiction to hear and determine appeals on matters arising under the Act and other statutes. Subsection 171(1) of the Act regulates how the Court may exercise its original jurisdiction to hear and determine an appeal under the Act. Section 13 of the Tax Court of Canada Act simply grants the Court all powers, rights and privileges as are vested in a superior court of record in respect of witnesses, documents and other matters necessary or proper for the due exercise of its jurisdiction, that is, to hear and determine appeals, but section 13 does not increase the Court's jurisdiction to that of a superior court of record. The due exercise of this Court's jurisdiction on matters arising under the Act is to hear and determine an appeal from a tax assessment. I cannot overemphasize that the Court's original jurisdiction is to hear and determine appeals in matters arising under the Act; an action against the Crown based on the Act, but which is not an appeal from an assessment, is not an appeal arising under the Act, which is within the jurisdiction of this Court.

[20] Accordingly, for the above reasons, the appeal is dismissed.

Signed at Ottawa, Canada, this 12th day of September, 2000.

"A.A. Sarchuk"

J.T.C.C.

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