Date: 20020716
Docket: 2002-309-IT-APP
BETWEEN:
JOHN GORENKO,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Order
Lamarre Proulx, J.T.C.C.
[1] This is an application, made pursuant to section 167 of the Income Tax Act (the "Act"), for an order extending the time within which the Applicant may file a Notice of Appeal in respect of assessments dated October 5, 1999, for the years 1989 to 1995, assessments that were ratified on September 17, 2001.
[2] It is admitted that the time limit prescribed by subsection 169(1) of the Act to file a Notice of Appeal with this Court expired on December 17, 2001. The application for an extension of time was filed on January 23, 2002.
[3] The question at issue is whether within the time specified by section 169 of the Act for appealing, the taxpayer had a bona fide intention to appeal and, whether given the circumstances of the case, it would be just and equitable to grant the application.
[4] The Applicant testified. He explained that during the years under appeal, the corporate group he headed, Gor-Can Canada Ltd. ("Gor-Can") and Alpha-Leather Canada Ltd. ("Alpha-Leather") was buying and selling materials from several countries. From 1970, the business evolved from the footwear industry, to garments, leather goods and the automotive and industrial products. According to the Applicant, the corporate group had large warehouses of over $5 million dollars worth of inventory at all time, and on a weekly basis, he received customs officers who came to verify the inventory. In 1993, the companies were reassessed. Mr. Gorenko stated that when he believed that he had reached an agreement with the auditors, the special investigation agents came and seized all the documents. He was prosecuted before the criminal court. He was advised by his tax lawyer to see a criminal law lawyer and about 30 boxes of documents, were transferred to Mr. Vincent Rose.
[5] About April or May 2001, he received confirmation of the reassessments concerning the companies. These documents were brought to Mr. Rose. In September 2001, Mr. Gorenko received confirmation of reassessments against him personally. He also brought these documents to Mr. Rose. These are the reassessments that are at issue here.
[6] Mr. Gorenko stated that Mr. Rose told him that he would ask someone in his office who was more knowledgeable in income tax to look into the matter. It was the same lawyer who handled the filing of the appeals for the companies. Mr. Gorenko met monthly with his lawyer over tax matters and was assured that the office was handling everything. However, he was informed in January 2002 by his lawyer that there might have been an oversight.
[7] Mr. Gorenko stated that he trusted his lawyers. He stressed the fact that this was a matter very critical for him where all his personal fortune and the fortune of his wife was involved.
[8] Mr. Vincent Rose testified. Mr. Rose is a member in good standing of the Quebec Bar, since 1984. His area of specialization is criminal defence work. Mr. Gorenko was referred to him by a colleague, a tax lawyer. This was in May 2001. His mandate was specifically with respect to the case in the Court of Quebec Criminal Division. He has a specific mandate to that effect in writing with Mr. Gorenko. Shortly thereafter, Mr. Gorenko came to see him with Notices of Confirmation with respect to his companies Alpha-Leather and Gore-Can. In those cases, he delegated the task to one of the lawyers in their office, Mr. Barbacki, and the Notices of Appeal were filed in due course. Mr. Gorenko came with other Notices of Confirmation, this time being for him personally. This would have been near the end of September 2001. Mr. Rose stated that he did exactly what he had done in the matter of the two companies's cases. He met with Mr. Barbacki and he delegated the task to him at the end of September, to file the Notices of Appeal. Mr. Barbacki is an ex-Crown attorney who is now in private practice. He joined their office approximately three years ago as a nominal associate.
[9] Mr. Barbacki got back to him in the middle of October and suggested that they meet with the client as he needed more information in order to proceed with the Notice of Appeal in Mr. Gorenko's personal file.
[10] Mr. Rose explained that in these months, he met with Mr. Gorenko but the issue was principally the criminal prosecution, which involved 30 boxes of evidence and was rather demanding in terms of a lawyer's time. There were meetings that were cancelled because he was caught up in court. One thing led to the next and unfortunately, the matter somehow fell through the cracks.
[11] In January, his assistant who was working with him in the principal case and who is a tax expert, informed him that Mr. Gorenko's Notice of Appeal had not been filed on time. Mr. Rose stated that he was stunned. Two days after the problem was discovered, a Notice of Appeal and a request for an extension of time were filed.
[12] Mr. Barbacki testified. He is a member of the Quebec Bar since 1976. He is a tenant at Elfassy, Rose. In early June of 2001, Mr. Rose asked him to deal with two Notices of Confirmation of assessments relating to appeals in two corporate files, Alpha-Leather and Gor-Can Canada. The deadline for filing these appeals was July 2 or 3. He is not a tax lawyer but a criminal lawyer. A day before the last day, he made what he called a pro forma appeal without adding substance arguments. So, they were filed, he believed, on the last day. Towards the end of September, Mr. Rose gave him a third appeal, which was for the individual, Mr. Gorenko. He looked at the Notices of Confirmation, and he came to the conclusion that they did not contain enough information for him to file an appeal. So he advised Mr. Rose, some time in October, that he was not able to do the same kind of work that he had done for the two initial appeals because he just did not have any information as to what was the appeal for. So the understanding was that the client would be contacted and information would be obtained from the client and an appeal would be filed before the deadline which, he believed, fell towards the end of December 2001. He never met Mr. Gorenko.
[13] Counsel for the Applicant argued that the Applicant had acted with due diligence as well as Mr. Rose and Mr. Barbacki and that as soon as it was discovered by Mr. Rose's assistant that the Notice of Appeal had not been filed on time, it was acted upon. He stated that the evidence showed that the Applicant brought the Minister's confirmation as soon as he received it to his lawyer, Mr. Rose. The latter was much taken by his criminal law work particularly, by a substantial file concerning Mr. Gorenko with the Quebec Court Criminal Division, so he entrusted the matter to a lawyer acting within their premises. There may have been a misunderstanding between the lawyers that resulted in the exceeding of the time limit but that was not due to negligence on either part.
[14] Counsel for the Respondent base her case on Mr. Barbacki's behaviour. There was carelessness in Mr. Barbacki's behaviour in his handling of the case that had been confided to him. She referred to my decision in Di Modica v. Canada, [2001] T.C.J. No. 620 (Q.L.) at paragraph 16 :
[16] It is my view that an error by counsel can be a just and equitable reason for granting an extension of time if counsel otherwise exercised the reasonable diligence required of a lawyer. I do not think that the state of the law is such that counsel's negligence or carelessness can constitute a just and equitable reason for granting the requested extension within the meaning of subparagraph 166.2(5)(b)(ii) of the Act.
[15] Counsel for the Applicant replied that Mr. Rose was Mr. Gorenko's lawyer and not Mr. Barbacki. Mr. Rose was Mr. Barbacki's client.
Conclusion
[16] The evidence has shown that the Applicant instructed his lawyer on time to file a Notice of Appeal and that Mr. Rose acted with a reasonable degree of diligence. He did not have time to file the Notices of Appeal himself so he retained a colleague to act on his behalf.
[17] That lawyer was entrusted with the filing of the appeal on time. He knew of the deadline. He filed the appeals for the companies on time, albeit on the last day or so according to his testimony. I accept that, as the lawyers suggested, there may have been a misunderstanding between them and that may have been the cause of the delay.
[18] I consider to be an important element in the present matter the fact that the Applicant's lawyer confirmed that the Applicant acted on time and that the lawyers testified to explain their omission. I consider also to be an important element the fact that as soon as the omission was found by Mr. Rose and his assistant, the application for extension of time was filed accompanied by a proposed Notice of Appeal.
[19] Although this case is not as straightforward as it should be, these cases seldom are, and in view of the fact that Mr. Gorenko and Mr. Rose showed a reasonable degree of diligence in the exercise of their rights and duties, the extension of time to file an appeal is granted.
Signed at Ottawa, Canada, this 16th day of July, 2002.
"Louise Lamarre Proulx"
J.T.C.C.
COURT FILE NO.: 2002-309(IT)APP
STYLE OF CAUSE: John Gorenko and Her Majesty the Queen
PLACE OF HEARING: Montreal, Québec
DATE OF HEARING: May 27, 2002
REASONS FOR ORDER BY: The Hon. Judge Louise Lamarre Proulx
DATE OF ORDER: July 16, 2002
APPEARANCES:
Counsel for the Appellant: Consolato Gattuso
Counsel for the Respondent: Marie-Claude Landry
COUNSEL OF RECORD:
For the Appellant:
Name: Consolato Gattuso
Firm: Mitchell Gattuso
Montreal, Québec
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-309(IT)APP
BETWEEN:
JOHN GORENKO,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Application heard on May 27, 2002 at Montreal, Québec, by
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Applicant: Consolato Gattuso
Counsel for the Respondent: Marie-Claude Landry
ORDER
Upon reading the application for an Order extending the time within which appeals from the assessments made under the Income Tax Act for the 1989, 1990, 1991, 1992, 1993, 1994 and 1995 taxation years may be instituted;
And upon hearing what was alleged by the parties;
The time within which appeals may be instituted is extended to the date of this Order and the Notice of Appeal, received with the application, is deemed to be a valid Notice of Appeal as of the same date if the appropriate filing fee is paid to the Registry not later than August 15, 2002, all in accordance with the attached Reasons for Order.
Signed at Ottawa, Canada, this 16th day of July, 2002.
|
"Louise Lamarre Proulx" |
J.T.C.C.