106850 Canada Inc. v. The Queen

Date: 20011205

Docket: 2001-1784-GST-APP

BETWEEN:

106850 CANADA INC.,

Applicant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Order

Lamarre, J.T.C.C.

[1] This is an application to this Court pursuant to section 305 of the Excise Tax Act ("Act") for an order extending the time within which an appeal may be instituted with a view to having assessment number PL-99184 dated June 23, 1999, made under the Act vacated.

[2] The respondent opposes the granting of such an order on the following grounds (which are reproduced verbatim from the Response to the Respondent to the Application):

1. On June 15^th, 1999, the Respondent sent the Petitioner a letter of intent stating that an Assessment was going to be issued following a transaction between the Petitioner and 130231 Canada inc, a linked company, said letter was sent at the address of the Petitioner at 7965 boul. Décary, in Montreal.

2. On June 23^rd, 1999, a Notice of New Assessment was issued, this at the same address as the letter of intent, in the name of the Petitioner under section 325(2) of the Excice Tax Act [L.R.C. (1985), c. E-15], as amended (here after ETA), number PL-99184, this following a transfer and/or transaction on an immovable set at 1595 boul. Des Laurentides, in the city of Laval, between the Petitioner and 130231 Canada inc., a linked company.

3. That the Petitioner did not present an opposition to the said Assessment within the prescribed 90 day delay of subsection 301(1.1) ETA, rather the Petitioner made an application to the Minister under subsection 303(1) ETA asking for extension of time to file an objection, this 155 days after said Assessment was mailed, namely by letter signed on November 24^th, 1999, and December 3^rd, 1999, said Notice of objection and letter indicating that the address of the Petitioner was the same that was used to send the letter of intent and the Notice of Assessment.

4. That the reasons given by the Petitioner to ask an extension of time to file an opposition was that the sole administrator and owner of the Petitioner was out of the Country and was therefor unable to give a mandate to his lawyer.

5. On or about March 17^th, 2000, the minister granted the extension of time to present an objection, the Notice of objection being considered file at said date under subsection 303(6) ETA.

6. On November 9^th, 2000, a decision on opposition was handed down maintaining the Notice of Assessment of June 23^rd, 1999, said decision being sent to the address of the Petitioner, namely 7965 boul. Décary, in Montreal.

7. Copy of said decision on opposition was also sent on November 9^th, 2000, to the lawyers of the Petitioner Gross Pinsky (Me Roger Vokey), said lawyer representing the Petitioner at the opposition level and now in the present application.

8. Nonetheless, the Petitioner did not file an appeal within the 90 days of said decision and it is only on May 16^th, 2001, this filing date being 188 days after said decision on objection, that the lawyers for the Petitioner filed the present application.

9. At no time since 1999 did the Petitioner indicate having an other address then that used by the Respondent, nor did the Petitioner indicate any other address of business in Canada.

10. The Respondent submits that the application for an order to extend time to file an appeal should be rejected for the following reasons:

a) For the principal reason that the Petitioner does not show in what manner it is within the breath of subsection 305(5)(b) ETA, to which;

b) That following it's late filing of the opposition, no simple, normal and reasonable measures where taken by the Petitioner to make sure that important letters where looked at within a reasonable time, thus again giving rise to the same reasons for the present application, namely that the Petitioner was late because the sole administrator and owner was in China was supposedly made aware of the decision on opposition in February 2001;

c) that the lawyers for the Petitioner had the decision on opposition since November 9^th, 1999, but did not act or present any demand to this Court;

d) that the Petitioner cannot avail itself of it's own negligence and plead it's lack of order in it's commercial affair and then use this state of affairs to be excused for having not filed an appeal before the expiration of the 90 days;

e) that following it's late filing of the opposition, no simple, normal and reasonable measures were taken by the Petitioner to make sure that it had mandated a person that would see to important and preventive measures concerning the business affairs of the Petitioner;

f) that by said negligence of it's affairs, the Petitioner does not show that it was in fact unable to act within the 90 days, nor that it was completely unable give a mandate to act in it's name;

g) that as of February 5^th, 2001, following paragraph 4 of the present application, the Petitioner did not even have an opinion if it was or not going to appeal the Assessment: "...the principle... did not receive a copy... until February 5^th, 2001... a representative of the Petitioner wished to understand the options...";

h) that given the way the Petitioner conducted it's business affairs before and since the issuance of the Notice of Assessment, it would not be just and equitable to grant the application because it would indicate that the Court does not consider that the Petitioner had the obligation to act like a reasonable person would act;

i) that the Petitioner did not present the present application as soon as the circumstances permitted because the Petitioner took 69 days after it would of taken notice of the decision on opposition, thus invoking no valid reason such as delays linked to telephone and mail services although the application could be presented, and was presented, by the lawyers for the Petitioner, and no affidavit was needed.

11. The Respondent also contest any and all factual statements made by the Petitioner in the present application and will question the representative of the Petitioner on all these event's.

[3] Mr. Shu Qin Gu, who apparently acts as the representative of the applicant, resides in China and did not travel to Canada to testify. His counsel, who was present at the hearing, filed an affidavit ostensibly signed in China by Mr. Shu Qin Gu before a commissioner of oaths. In paragraph 20 of that affidavit, Mr. Shu Qin Gu states the following:

THAT the I did not receive a copy of said Decision on Opposition until the beginning of February and this being approximately February 5, 2001 and this due to the fact that I, the representative of 106850 Canada Inc. reside at an address being building 35, suite 1104, zone 3, Majapu, Jiayauan Fengtai District, Beijing, China, and that frequently correspondence between China and the outside world is interrupted by a various assortment of reasons being amongst others a complete closedown of China for two (2) weeks during New Years which took place in the month of January 2001 as well as the normal congestion of communications during the Christmas period with the consequence that I was not aware of the Decision on Opposition until said date of approximately February 5, 2001.

[4] The affidavit was not part of the Court's file, and counsel for the respondent indicated to the Court that it was never served on the respondent. Nevertheless, counsel for the applicant said that he himself filed with this Court the affidavit and the Application for an Extension of Time to File a Notice of Appeal, together with the Notice of Appeal.

[5] Counsel for the respondent objects to the filing of that affidavit on the basis that it was not validly served and on the basis that it does not meet the requirements of the Tax Court of Canada Rules (General Procedure) ("Rules"), for it is signed in the Chinese language, it is undated, and there is no evidence that it was signed before a commissioner of oaths or a judicial officer in China.

[6] At first sight, I was tempted to accept the affidavit as constituting evidence as to the reasons why the applicant's representative was unable to instruct counsel for the applicant to file an appeal before the month of February 2001 (which is the date he apparently was made aware of the decision of the Minister dated November 9, 2000). Indeed, the fact that Mr. Shu Qin Gu resides in China and the fact that he is the only representative of the applicant are certainly exceptional circumstances in which an affidavit could be authorized by this Court (under section 71 of the Rules), especially in the case of an application for an extension of time.

[7] However, there is no evidence that the affidavit in question was sworn before a judicial officer in China or someone belonging to any of the other categories of persons enumerated in section 52 of the Canada Evidence Act. Furthermore, the affidavit is not dated and therefore does not meet the requirements of section 19 of the Rules. Nor does it meet the requirements of article 91 of the Quebec Code of Civil Procedure, which reads as follows:

91. Every affidavit must be divided into paragraphs numbered consecutively, and be in the first person.

The names, occupation and exact address of the deponent must be inserted therein.

The date when and the place where it was sworn must be inserted in the jurat.

L.R.Q., 1977, c.C-25

Failure to meet those requirements constitutes sufficient grounds for not accepting an affidavit (see for example Caron c. Tribunal du travail, [1976] C.S. 864, a case in which an affidavit was not accepted because the "commission du commissaire à l'assermentation" was not mentioned, and Syndicat des travailleurs de Commonwealth Plywood (C.S.N.) c. Commonwealth Plywood Compagnie Limitée, [1979] C.S. 905, a case in which an undated affidavit was not accepted). It is therefore difficult for me in the circumstances to give much weight to the affidavit concerned in the present case.

[8] Furthermore, even if I were to accept this affidavit as is, I do not find that it is sufficient to justify an extension of time under subsection 305(5) of the Act, which reads as follows:

(5) When order to be made - No order shall be made under this section unless

(a) the application is made within one year after the expiration of the time otherwise limited by this Part for appealing; and

(b) the person demonstrates that

(i) within the time otherwise limited by this Part for appealing,

(A) the person was unable to act or to give a mandate to act in the person's name, or

(B) the person 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 it to be made, and

(iv) there are reasonable grounds for appealing from the assessment.

[9] Although paragraph 305(5)(a) is not at issue, the respondent is of the view that the applicant did not show that all the conditions required by paragraph 305(5)(b) in order for the application to be granted were met.

[10] After reviewing the documents before me, I agree with counsel for the respondent.

[11] I find that the applicant's representative did not demonstrate, by his affidavit or otherwise, that he was unable to act or to give a mandate to act in the applicant's name, or that the applicant had a bona fide intention to appeal within the time otherwise limited by the Act for appealing. Indeed, the applicant had been confronted with the same problems at the objection stage. Mr. Shu Qin Gu knew that there was an assessment against the applicant, and he experienced problems with delays when it came to objecting to that assessment. The Minister was not opposed to an extension of the time for filing a notice of objection and so advised the applicant on March 17, 2000, thereby agreeing to deal with that objection. From that point on, the applicant was aware that a decision on its objection was to be made by the Minister. That decision came on November 9, 2000 and was sent to the applicant's address in Montreal, with a copy going to the applicant's counsel.

[12] Counsel for the applicant said that Mr. Shu Qin Gu contacted him at the end of February 2001 after having learned of that decision. In my view, knowing that a decision from the Minister was forthcoming and being aware of delays caused by the fact that its representative lived in China, the applicant should have instructed its counsel to call Mr. Shu Qin Gu as soon as the decision was issued in order to receive instructions with respect thereto. Obviously this was not done. There is no evidence that there was anyone taking care of the applicant's tax problem in Canada. The evidence shows rather that the applicant was heedless of the requirements of the Act, most particularly with respect to delays. I do not think, therefore, that the applicant can say that it was unable to give a mandate to its counsel to act in its name after the decision was issued on November 9, 2000, or that it had a bona fide intention to appeal within the time otherwise limited by the Act for appealing.

[13] Furthermore, even if I were to accept the fact that the applicant could not act, or give a mandate to act in its name, before the month of February 2001, I am not convinced that the application was made as soon as circumstances permitted it to be made. Indeed, the application was only made on May 16, 2001, that is, six months after the Notice of Decision and three months after the applicant became aware of that decision. Counsel for the applicant explained that delay by the fact that he had been instructed by the applicant to draft a document and send it to Mr. Shu Qin Gu in China, which document was received by Mr. Shu Quin Gu only at the beginning of April 2001 and sent back to Canada at the beginning of May 2001. None of this information is evidenced by any document or any other reliable evidence. It is not even alluded to in Mr. Shu Qin Gu's affidavit. It is difficult in the circumstances to rely on such an explanation.

[14] I therefore conclude that the applicant has not demonstrated on a balance of probabilities that it took all the necessary and appropriate steps required by the Act in order for it to be granted an extension of time for filing its notice of appeal pursuant to section 305 of the Act.

[15] The application for an order extending the time for filing a notice of appeal is dismissed.

Signed at Ottawa, Canada, this 5th day of December 2001.

"Lucie Lamarre"

J.T.C.C.

COURT FILE NO.: 2001-1784(GST)APP

STYLE OF CAUSE: 106850 Canada Inc. v. The Queen

PLACE OF HEARING: Montreal, Quebec

DATE OF HEARING: November 27, 2001

REASONS FOR JUDGMENT BY: The Honourable Judge Lucie Lamarre

DATE OF JUDGMENT: December 5, 2001

APPEARANCES:

Counsel for the Appellant: Roger Vokey

Counsel for the Respondent: Gérald Danis

COUNSEL OF RECORD:

For the Appellant:

Name: Roger Vokey

Firm: Gross, Pinsky

For the Respondent: Morris Rosenberg

Deputy Attorney General of Canada

Ottawa, Canada

APPLICATION UNDER SECTION 305 OF THE

EXCISE TAX ACT(APPEAL)

2001-1784(GST)APP

BETWEEN:

106850 CANADA INC.,

Applicant,

and

HER MAJESTY THE QUEEN,

Respondent.

Application heard on November 27, 2001, at Montreal, Quebec, by

the Honourable Judge Lucie Lamarre

Appearances

Counsel for the Applicant: Roger Vokey

Counsel for the Respondent: Gérald Danis

ORDER

Upon reading the application for an order extending the time within which an appeal may be instituted from assessment number PL-99184 dated June 23, 1999, made under the Excise Tax Act;

And upon hearing what was alleged by the parties;

The application is dismissed.

Signed at Ottawa, Canada, this 5th day of December 2001.

"Lucie Lamarre"

J.T.C.C.