Date: 20000225
Docket: 1999-254-IT-I
BETWEEN:
STÉPHANE DESJARDINS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(Delivered orally from the bench on February 14, 2000, at Montréal, Quebec, and amended at Ottawa, Ontario, on February 25, 2000)
Lamarre Proulx, J.T.C.C.
[1] This is an appeal in which the issue is whether the reassessment in respect of the 1994 taxation year was mailed on May 14, 1998.
[2] Subsections 244(15) and 244(14) of the Income Tax Act (the “Act”) provide that an assessment is deemed to have been made on the day of mailing of the notice of the assessment. The day of mailing of the notice of assessment is presumed to be the date of that notice. The parties acknowledge that these are rebuttable presumptions. The appellant claims that, on June 8, 1998, he received four notices of assessment in separate envelopes. Three of the notices bore the date of May 14, 1998, while one was dated May 22, 1998. These notices of reassessment have been produced as Exhibit A-1. The notices bearing the May 14 date were for the 1994, 1995 and 1996 taxation years. The one dated May 22 was also for the 1996 taxation year.
[3] The normal reassessment period for the 1994 taxation year ended on June 1, 1998. The appellant knew this.
[4] The envelopes in which the various notices of assessment were received were not tendered in evidence. According to the appellant, they would have been sent to the person who handled his tax files. What was produced as Exhibit A-2 was a photocopy of a Revenue Canada envelope that was not cancelled or dated by Canada Post. The original envelopes were not produced because they were sent to the appellant’s tax specialist and could not be found subsequently. The tax specialist did not testify.
[5] I quote from the appellant’s testimony:
[TRANSLATION]
Q. Mr. Desjardins, how did you receive those four years of assessments?
A. I received the four notices of assessment in separate envelopes on the same day, on the morning of June 8, 1998.
Q. O.K. If I show you . . .
Mounes Ayadi: Do you have the original envelope?
EXHIBIT A-2: A copy of an envelope.
Virginie Falardeau: The original is not available.
Mounes Ayadi : Pardon?
Virginie Falardeau: The original, we don’t have the original.
Q. I am showing you a copy of an envelope. Could this be one of the envelopes in which these notices of assessment were received?
A. Yes, it’s the copy of the envelope that I sent to my tax specialist on the morning of June 8, 1998.
Q. Is there any particular marking on the envelope?
A. No. Since the envelope was not cancelled, there was no postmark to indicate the date it was mailed.
Q. How can you be absolutely sure that you received it on June 8, 1998?
A. There had been a tax audit in a company I was working for. As president of the company, I was very well aware of what was going on. And people from the Department had explained to me the principle of time limits in tax matters. So, I knew that by June time had expired for the '94 taxation year. When I received these four envelopes in the mail on the morning of June 8, 1998, I immediately contacted both my accountant and my tax specialist and asked them how I could be receiving the '94 notice given that the year was statute-barred. I also instructed them to put a law firm on it to see, to assert my rights.
. . .
Mounes Ayadi:
Q. Is it possible, Mr. Desjardins, that you received the notices before June 8 and, to be more specific, let us say, between May 20 and May 25?
A. It’s impossible. The day I received it, I immediately contacted my tax specialist and my accountant. If I had received it before June, I would not be here. I would have paid as I did with the others. I would have paid the notice of assessment because it would not have been statute-barred at that time.
Q. What you’re telling me is that the four notices, even the one dated a week later, on the 22nd, were all received on June 8. Is that right?
A. All at the same time, yes, on the same day.
. . .
Q. Mr. Desjardins, you have submitted a copy of the envelope. If you made a copy, why wasn’t the original submitted to the Court?
A. I think my tax specialist would have it. But they checked in the offices, even in the archives . . .
Q. It was not found?
A. . . . of the company. They did not find it.
[6] As Exhibit A-3, a letter was produced from someone in Customer Service at Canada Post, which stated that the standard for delivering a letter was three working days. During the testimony, it was agreed that, if the letter came from Ontario, another working day could perhaps be added, which would mean a maximum of four days. Counsel for the appellant thus argued that, if the notice was received on June 8, 1998, it was mailed after June 1, 1998.
[7] Ruth Briand of Revenue Canada and Michel Legault, a superintendent at Canada Post, testified at the request of counsel for the respondent.
[8] Ms. Briand is Team Leader, Problem Resolution at the Ottawa Taxation Centre. She explained that a notice of assessment can be made either manually or by computer. She said that, according to the code on the notices of assessment included in Exhibit A-1, they were made by computer, that the notices of assessment bearing the date of May 14, 1998, were put into the mailing system on May 7, 1998, and that these notices of assessment were mailed along with approximately a hundred thousand other notices. I quote:
[TRANSLATION]
A. Under the system, the demands come in. We have up to a certain date to enter them in the system. And that is done by anyone. It’s just “typed” in the system and then it goes out, like the notices of the 14th, the notices of May 14. The last day for entering those notices in the system was May 7, in cycle 23.
Q. O.K., if I understand correctly, and you will correct me if I'm wrong, that means that Revenue Canada officers enter the data in the system?
A. That’s right.
Q. The deadline for the notices that went out on the 14th was May 7, you said?
A. That’s right.
Q. And that's part of a cycle?
A. That’s right.
Q. And all the notices would go out on May 14, is that correct?
A. Yes.
Q. Right. So the notices that went out on the 14th, what cycle was that?
A. Cycle 23.
Q. Cycle 23. When you talk about a cycle, does that cycle apply to a particular taxation centre or does it cover all of Canada?
A. It covers all of Canada.
Q. It covers all of Canada?
A. Yes.
Q. That means that on May 7 at the latest the data came in from everywhere and then on May 14 the notices went out?
A. That’s right.
Q. Right. Now, can you tell us what happened on the 14th?
A. They went out . . . Well, like for Ottawa, O.K., the notices of assessment, of reassessment, it's us in Ottawa in our mailroom who mail them for our international [sic] office, for Ottawa, for Shawinigan, for Jonquière and St. John's.
Q. O.K. That means . . . I’m just trying to understand what you are saying . . . the data that come into Shawinigan, the notices as such, they are printed, they go out from the Ottawa office?
A. That’s right.
Q. O.K. So how was that operation carried out on the 14th?
A. How was it carried out?
Q. Yes.
A. Well, it’s all done by, it's generated by the computer system. It goes to our mailroom. That’s where it leaves from. It’s all done by machine.
Q. Hold on! I’m going to go by stages. That means that the notices go out automatically by computer?
A. That’s right.
Q. Then, after that, how are the notices put in envelopes?
A. It’s all done by machine.
Q. Automatically?
A. Yes.
Q. Then the envelopes are put into a mailbag at some point?
A. Yes.
Q. And what happens then?
A. It goes to the room . . . I know that it has to go out by a certain time.
Q. O.K.
A. But I have no idea what time.
Q. O.K.
A. And if the date is the 14th on the . . . It has to go out on the 14th.
Q. Therefore, since the date on the notice is the 14th, according to the way you do things, it has to be posted on the 14th?
A. Yes.
Q. Can you tell us—I think you have this information—for this cycle, for cycle 23, how many notices went out that day across Canada?
A. Across Canada?
Q. Yes.
A. If you look at sheet number 2, cycle 23, there are one million one hundred and twelve thousand eight hundred and eighty-one (1,112,881) notices of assessment and reassessment.
Q. Notices of assessment. Does that cover all of Canada?
A. That covers all of Canada.
Q. Now, can you tell us how many notices were printed and mailed from your Ottawa office which, you said earlier, covers a number of taxation centres?
A. That’s on page 1. There were three hundred and sixty-four thousand two hundred and seventy-nine (364,279).
Q. Notices?
A. Notices.
Q. Now, can you tell us how many of these three hundred and sixty-four thousand notices that were sent from Ottawa concern the Shawinigan taxation centre?
A. One hundred and twenty-three thousand two hundred and one (123,201).
Q. One hundred and twenty-three thousand two hundred and one (123,201) notices to Shawinigan clients that were mailed from Ottawa?
A. That’s right.
Q. Ms. Briand, did you take any steps to see if there was any particular problem with the mail on that day?
A. Yes. There weren't any.
Q. Everything was normal?
A. Everything was normal.
. . .
Q. O.K. Just one last, maybe one last question. Were the three notices dated May 14 part of cycle 23, that is, the notices for '94, '95 and '96?
A. Notices for '94, '95, '96, there were three that went out, and after that, there was another one that went out on . . .
Q. But the three that went out on the 14th, they were part of cycle 23?
A. That’s right.
. . .
CROSS-EXAMINATION BY VIRGINIE FALARDEAU:
Q. Can you tell us a little bit about what checks you made that allow you to say that everything went normally on the day of May 14?
A. When there are problems getting out the notices or anything, we have an internal mail system, an e-mail they call it, that tells us, O.K., the interest is going to be cancelled up to such and such a date because the mailing took place on such and such a date: so many notices from such and such a place. This did not happen. So, that means that they all went out on the 14th.
Q. Can you state that the computer system on which Revenue Canada, with which Revenue Canada works, is an absolutely infallible system?
A. Well, everything is infallible [sic], but I have data showing that everything went out that day.
Q. But as a system, you have no guarantee that the system is one hundred percent reliable?
A. Not really, no.
Q. Earlier you said that the assessments are put in envelopes by machine and end up in a mailbag. Do machines take the bags to the mailrooms, or is this done manually?
A. It’s done manually. It’s put in . . .
Q. Someone takes the bag and goes and puts it in the mail?
A. They’re Canada Post’s bags.
Q. That are taken out by someone, and are sent to a mailroom?
A. That’s right. That’s the mailroom.
Q. A manual operation, then?
A. In my opinion, yes.
[9] Michel Legault explained that, for big postal clients, the cancellation stage does not take place. However, if the original envelopes had been saved, the dates they were mailed can be checked by means of an electronic inscription placed on each envelope when it is sent. I quote:
[TRANSLATION]
Q. Mr. Legault, first, can you tell us, before I show you this envelope, in what cases Canada Post cancels a letter, that is, puts its postmark on the letter. In what cases?
A. When the letter is mailed with a stamp . . .
Q. I’m sorry. We’re talking about regular mail.
A. Regular mail. A letter mailed with a stamp will be cancelled with a postmark. And a letter stamped by a company postage meter will be cancelled with a postmark. A letter mailed by a big mail dispatcher is never cancelled.
Q. Right. So—just a minute—I'm showing you this copy of this envelope.
A. Yes.
Q. Now, this envelope is not cancelled?
A. No.
Q. Can you tell us why it’s not cancelled and if this is normal?
A. It’s completely normal that it was not cancelled because Revenue Canada is a big mail dispatcher. When its mail arrives at Canada Post it is processed separately from the normal mail, the mail that is collected from street mailboxes. Mail from big mail dispatchers is given special treatment.
Q. What is this treatment?
A. The mail that is brought in, either we go and get it from the client or the client brings it to us at the sorting facility. The mail bypasses part of the system and receives accelerated processing: it is taken directly to the machines, the so-called national machines, and it goes out the same day from the processing centre.
Q. So, it skips the cancelling stage?
A. Yes, it skips the cancelling stage. It couldn't be cancelled in any case.
Q. O.K.
A. Because when you have a permit like that, there is no way for the machines to detect . . . Normally, a stamp, if you take a normal stamp, there is a phosphorescent band all around the stamp. Or if you take the meters, small companies have meters and the ink they use is phosphorescent ink. But in the case of the permits for the big dispatchers, there is nothing phosphorescent. It’s all processed, all of Revenue Canada’s mail, let’s say, if they bring us two hundred containers of mail, the two hundred containers will all be processed at the same time on the same machine. So that's why it doesn’t get cancelled. The machine could not detect a permit that is not phosphorescent.
CROSS-EXAMINATION BY VIRGINIE FALARDEAU:
Q. O.K., you say that there is no cancellation, is there any way of knowing in that case when the mailing was . . .
A. There could have been a way, but the envelope was torn on the bottom. If the mail was processed mechanically, there's a bar code on the bottom of the envelope. Using this bar code, you can decipher the date that it was inserted in a machine.
Q. You don't . . .
A. We don’t have the bar code.
Q. That analysis procedure was not undertaken in this case?
A. That’s right, because the envelope was torn on the bottom.
Analysis
[10] Subsections 244(14) and 244(15) of the Act read as follows:
(14) Mailing date — For the purposes of this Act, the day of mailing of any notice or notification described in subsection 149.1(6.3), 152(4) or 166.1(5) or of any notice of assessment shall be presumed to be the date of that notice or notification.
(15) Date when assessment made — Where any notice of an assessment has been sent by the Minister as required by this Act, the assessment shall be deemed to have been made on the day of mailing of the notice of the assessment.
[11] According to the decision of the Federal Court of Appeal in Aztec Industries Inc. v. The Queen, No. A-405-94, dated April 6, 1995, the Minister first has to prove that the notices of assessment have been mailed on the date that appears on the notices. If that is proved, it must then be determined whether the taxpayer has rebutted the presumption of mailing. I cite some excerpts from that decision:
Where as in the present case, a taxpayer alleges not only that he has not received the notice of assessment but that no such notice was ever issued, the burden of proving the existence of the notice and the date of its mailing must necessarily fall on the Minister; the facts are peculiarly within his knowledge and he alone controls the means of adducing evidence of them. A number of statutory provisions recognize the Minister's burden in this respect and are clearly designed to alleviate it.
. . .
The Tax Court judge had two questions before him. The first was whether the Minister had proved that notices of assessment had been issued and mailed as required by law. The second, assuming such proof, was to know if the taxpayer had rebutted the presumption that such notices had been received. If the first question is not answered affirmatively the second does not arise.
[12] Counsel for the respondent referred, inter alia, to the decision of Judge Bowman in Adele Schafer v. The Queen, [1998] T.C.J. No. 459. I quote:
[21] Where, as here, a notice of assessment has not been received by the taxpayer, it is incumbent upon the Minister to establish, on a balance of probabilities, that it has at least been sent.
[22] . . . The respondent therefore accepted the burden of proving the assessment had been sent by ordinary mail.
[23] In a large organization, such as a government department, a law or accounting firm or a corporation, where many pieces of mail are sent out every day it is virtually impossible to find a witness who can swear that he or she put an envelope addressed to a particular person in the post office. The best that can be done is to set out in detail the procedures followed, such as addressing the envelopes, putting mail in them, taking them to the mail room and delivering the mail to the post office.
. . .
[29] I am satisfied, on a balance of probabilities, that the notice of assessment was probably placed in the Canada Post mail bag on September 2, 1993. I say this without any specific evidence. However, if the procedures were followed it seems more probable that it was sent than that it was not.
[13] The evidence showed that the notice of assessment for the 1994 taxation year was made by computer and was part of a batch of over 100,000 assessments made on the same day. The evidence did not show that this notice of assessment could have been mailed on a different day from the other notices that bore the same date. It is my opinion, therefore, that the Minister has discharged the burden of proof that was on him and that the notice of reassessment in respect of the 1994 taxation year was indeed mailed on the date that appears on the notice. I am also of the view that the evidence presented by the appellant is really too weak to allow me to overturn that presumption. None of the original envelopes was kept and produced. It is difficult to believe that four different notices, one dated May 22 and the other three May 14, were received by the taxpayer on the same day, that is, on June 8, 1998. I must also note that, on the one hand, the appellant knew that he was being audited and that there was a possibility that the 1994 taxation year would become statute-barred and, on the other hand, no one other than the appellant testified, not even the tax specialist to whom the original envelopes were allegedly sent.
[14] The appeal is dismissed.
Signed at Ottawa, Canada, this 25th day of February 2000.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]