OTTAWA, ONTARIO, October 27, 2006
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
and
REASONS FOR JUDGMENT AND JUDGMENT
[1] This is an application for judicial review of a decision of the Minister of National Revenue, Canada Customs and Revenue Agency, as set out in a letter dated February 1, 2006, wherein the Applicant’s request for cancellation of penalties and interest under the Fairness provisions of the Excise Tax Act, R.S.C. 1985, c. E-15 and recovery thereof, were denied.
[2] The facts of this case are unusual. The Applicant started a travel agency business in 1982 and incorporated a company for that purpose, The Travel People Inc. That company operated a business in Mississauga, Ontario. Early in 1999, a second travel agency location was opened in Oakville, Ontario. This agency was a branch of the first, but operated under the name Imagine, and was run by the Applicant’s son.
[3] The Imagine travel agency business was initially only modestly successful. It did report GST but, in accordance with an audit conducted several years later, it became clear that it seriously underreported what was truly owing. In 2001, the Imagine business took a loss, the Applicant attributes this to the decline in the travel business due to the tragic events of 9/11. By late 2002, it became evident that the son was seriously ill, so ill that in October 2003, he was hospitalized for two months and a long recuperation followed.
[4] The Applicant, the father, realized that the Imagine business was in trouble and late in 2002, stepped in to do what he could to clear up the mounting debts and put the business in order. At that time, an audit revealed an underpayment of GST and the business, Imagine, made two partial payments of $500.00 each in order to partly offset this debt.
[5] The uncontradicted evidence by way of the Applicant’s affidavit is that by the year 2004, he was in communication with the collection staff responsible for GST and was given a clear understanding that if he paid off the debt owing, together with penalty and interest accruing, that the interest and penalty would be waived. That is what the Applicant did, he personally, not the son, not Imagine, not the Travel People, paid off the debt of $8,627.53, together with interest and penalties of $4,485.89. To quote the uncontradicted evidence as set out in paragraph 11 of his Affidavit:
“I was given the clear understanding by the collection staff that if I manage to pay the basic GST amount owing, the interest and penalty will be waived.”
[6] That did not happen. The record filed by the Minister contains a handwritten memorandum reviewed August 10, 2005. It notes that the Applicant had spoken to an Ed Devisser and confirms that such an undertaking was made. The note calls this a “misunderstanding”. It if was, the Agency did nothing to clear it up. Nothing in the two affidavits filed by staff members of the Canada Revenue Agency shows that any recognition of this undertaking was given by the Agency in coming to its decision that a third party, the Applicant, and not the taxpayer, Imagine, had paid the debt including interest and penalties.
[7] The record shows that all that the Agency did with the Applicant’s request for waiver was follow the Fairness Guidelines, without regard to the unusual circumstances of this case, where a third party had paid the debt and an undertaking as to waiver had been given by the Agency to that third party. This constitutes a serious error and breach of fundamental fairness. The amount paid for interest and penalties of $4,485.89 together with interest as provided for in the Fairness Guidelines, paragraph 1, at the rate of six percent (6%) per annum, not compounded, from the date of payment, which on the basis of the evidence is May 11, 2005, shall be paid forthwith by the Agency to the Applicant.
[8] The Applicant is self-represented and not a lawyer, thus cannot recover costs. However, he can recover his disbursements, which have been approximated as $500.00.
JUDGMENT
FOR THE REASONS ABOVE:
THIS COURT ORDERS THAT:
1. The application is allowed;
2. The Applicant shall recover from the Respondent forthwith, the sum of $4,485.89, together with interest payable at the rate of six percent (6%) per annum, not compounded, to run from May 11, 2005, until payment in full is made; and
3. The Applicant is awarded payment of his disbursements fixed at $500.00.
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-264-06
STYLE OF CAUSE: Ajit S. Liddar
v. Minister of National Revenue
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: October 25, 2006
REASONS FOR JUDGMENT
AND JUDGMENT: HUGHES, J.
DATED: October 27, 2006
APPEARANCES:
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Mr. Ajit S. Liddar |
REPRESENTING HIMSELF |
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Ms. Andrea Jackett |
FOR THE RESPONDENT |
SOLICITORS OF RECORD:
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Ajit S. Liddar Mississauga, Ontario |
REPRESENTING HIMSELF |
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John H. Sims, Q.C. Deputy Attorney General of Canada |
FOR THE RESPONDENT |