Date: 20000113
Docket: T-2090-98
BETWEEN:
ELI REVIVO
Applicant
- and -
REVENUE CANADA - TAXATION
Respondent
REASONS FOR ORDER
REED, J.:
[1] This is an application for judicial review of decisions rendered by the Fairness Committee of Revenue Canada ("Fairness Committee") denying the applicant further relief from penalty and interest pursuant to subsection 281.1 of the Excise Tax Act, R.S.C. 1985, c. E-15.
[2] The applicant seeks a redetermination of the decision under review, partly on the basis of new evidence that was not presented to the original decision-maker (the Fairness Committee). Unfortunately, the relief sought is not a type that a judge can give on a judicial review application.
[3] I have reviewed the material on this file again, carefully, as I indicated at the hearing I would do. The applicant has pursued this application on his own behalf, without the benefit of assistance by counsel.
[4] The scope of a judge's authority on a judicial review is often not well understood. The procedure that Parliament allows is not a full appeal of the decision. The Court can only quash the type of discretionary, administrative decision under review, if it finds that the decision-maker based its decision on what I described to the applicant, at the hearing, as a significant error. For example, if the decision-maker applied the wrong law (an error of law), or made a decision on the facts that was perverse or capricious or without regard to the material that had been placed before him.
[5] A description of the Court's jurisdiction is found in section 18.1(4) of the Federal Court Act, R.S.C., 1985, c. F-7. The relevant part reads:
| (4) The Trial Division may grant relief under subsection (3) if it is satisfied that the federal board, commission or other tribunal |
| ... |
| (c) erred in law in making a decision or an order, whether or not the error appears on the face of the record; |
| (d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it; |
| (e) acted, or failed to act, by reason of fraud or perjured evidence; or |
| (f) acted in any other way that was contrary to law. |
[6] The nature of the Court's jurisdiction when reviewing decisions of the Fairness Committee was described by Mr. Justice Rouleau in Kaiser v. Minister of National Revenue (1995), 93 F.T.R. 66 at 68, quoting McIntyre J. in Re Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2 at 7:
| ... It is, as well, a clearly-established rule that courts should not interfere with the exercise of a discretion by a statutory authority merely because the court might have exercised the discretion in a different manner had it been charged with that responsibility. Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere. ... |
[7] In reviewing the decision(s) of the Fairness Committee, I am restricted to inquiring whether an error of the type identified-above exists. Also, if I find an error of the type described, I must return the applicant's request for a waiver of the penalty and interest, which he has been charged, to the Committee for its reconsideration.
[8] The applicant made errors in calculating the GST he owed for the years 1992 - 1994. The respondent does not contend that the errors were anything other than honest mistakes. The applicant's returns for the years in question were audited, starting July 1995, and he was reassessed on March 27, 1996. It was determined that he owed $19,624.05 in unremitted GST, to which was added $3,591.31 as penalty, and $3,620.48 interest.
[9] Section 280(1) of the Excise Tax Act requires the addition of the penalty and interest:
| 280.(1) Subject to this section and section 281, where a person fails to remit or pay an amount to the Receiver General when required under this Part, the person shall pay on the amount not remitted or paid |
| (a) a penalty of 6% per year, and |
| (b) interest at the prescribed rate, |
| computed for the period beginning on the first day following the day on or before which the amount was required to be remitted or paid and ending on the day the amount is remitted or paid. |
[10] However, section 281.1 of the Excise Tax Act provides for the possibility that part of all of the penalty and interest may be waived:
| 281.1 (1) the Minister may waive or cancel interest payable by a person under section 280. |
| (2) The Minister may waive or cancel penalties payable by a person under section 280. |
[11] GST Memorandum 5000-3-2-1 sets out the policy guidelines that have been formulated to assist the Fairness Committee in the exercise of the Minister's discretion under section 281.1. The Memorandum states that interest and penalties may be waived where there is an inability on the part of the tax debtor to pay the amounts owing, where the interest and penalty were incurred as a result of delays by the Department in processing, or where they resulted from an extraordinary circumstance that was beyond the person's control, including natural or man-made disaster, such as flood or fire. The Memorandum identifies factors that should be considered in determining whether to exercise the Minister's discretion: whether the person has a satisfactory history of voluntary compliance and whether there is evidence that the person exercised reasonable care and diligence and was not careless or negligent in the conduct of his affairs.
[12] On July 8, 1996, the applicant applied to the Fairness Committee asking that the $7,211.79 in penalty and interest be waived because he could not afford to pay and because he had made honest mistakes. He also sought a reduction in the amount of the principal tax owed. He stated that the amount he had been assessed as owing was not correct, but he could not afford the huge amount of time it would take to redo the relevant bookkeeping, to demonstrate the auditor's errors - he had his business to run. A reduction in the amount of the principal tax owed was not a remedy the Fairness Committee could grant.
[13] On January 29, 1997, the Committee decided that the errors had not occurred as a result of matters beyond the applicant's control, that he had not shown that financial hardship existed to excuse the payment of the penalty and interest. However, it decided that the department had taken rather too long in conducting the audit, and waived the penalty and interest attributable to the December 21, 1995 - March 20, 1996 period.
[14] On October 9, 1997, the applicant resubmitted an application for relief because his business had suffered a fire in March of 1997. The Committee responded to this request on June 25, 1998, and granted a waiver of the penalty and interest from March 15, 1997, to June 25, 1998, because of the fire and its affect on the applicant's business. Relief on the basis of hardship was not granted because the net worth statement the applicant provided showed that he had equity of $249,000 in a family home. His total net worth, after his liabilities were subtracted from the equity held in the house, was $213,176. Thus, the Committee concluded it was possible for the applicant to borrow against the equity in the family home to repay the penalty and interest that was owed.
[15] The applicant did not have the help of an accountant or lawyer in filling out the net worth statement, and thus did not disclose to the Committee that the family home was in his wife's name. He had transferred it to her in 1993, although he continued to treat the taxes on the home, and the mortgage payments, as liabilities for which he was responsible. After this information was disclosed, there was apparently a third review of the applicant's situation by the Fairness Committee. That decision is not part of the present review.
[16] It will appear from what has been said above that I cannot find the Fairness Committee made the kind of error that would justify me in setting aside either of the decisions under review. The Committee exercised its discretion on the basis of the material presented to it. At the same time, I have been referred to no provision that would prevent the Fairness Committee from reviewing its earlier decision on the basis of new evidence presented to it, to demonstrate that the applicant was unable to borrow against the family home, contrary to what was assumed in the June 25, 1998, decision. But this is not a matter within the scope of the present application, and may already have been done.
Judge
OTTAWA, ONTARIO
January 13, 2000