Tax Court of Canada Judgments

Date: 19970120

Docket: 97-131-GST-I

BETWEEN:

JULIA M. KURJEWICZ,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

McArthur, J.T.C.C.

[1] The Minister of National Revenue (the "Minister") disallowed the Appellant's application for Good and Services Tax (GST) New Housing Rebate in the amount of $8,750 in that she did not submit her application within the two year time limit set out in subsection 256(3) of the Excise Tax Act (the "Act").

[2] Throughout the period of 1993-1994, Ms Kurjewicz sought advice from Revenue Canada on several occasions. The department employees with whom she spoke advised her that she would only be permitted to make one application, and therefore, she should wait until the construction was completed before applying for the GST New Housing Rebate. She was also told, by an employee of this department, that she would have up to four years to file for this rebate.

[3] The issue is whether the Crown is bound by the representations made to the Appellant. The parties agreed to the facts set out in paragraph 16 of the Reply to the Notice of Appeal that read as follows:

(b) the Appellant bought land located at 125 Amber Trail, Winnipeg Manitoba and legally described as Lot 17, Block 6, Plan 25476WLTO in the Parish of Kildonan (the "Land") on February 25, 1992;

(c) the Appellant subsequently carried on, and engaged other persons to carry on for her, the construction of a single unit residential complex (the "House") on the Land;

(d) the construction of the House began in May 1992;

(e) the Appellant first occupied the House on September 25, 1992;

(f) the Appellant occupied the House throughout the remainder of the construction;

(g) the Appellant was the first individual to occupy the House after the construction began; and

(h) the application for a "GST New Housing" rebate was received by the Department on January 18, 1995.

[4] The parties also agreed that the Appellant was advised by an employee of Revenue Canada that, given these facts, she had up to four years to apply for a GST rebate. The representation made was incorrect. The Appellant had a two year period from September 25, 1992 to apply for a rebate pursuant to section 256 of the Act and applied on January 18, 1995. No evidence was presented argument was made upon these agreed facts.

Position of the Appellant

[5] Given the representation made by employees of Revenue Canada, and that the Appellant acted on it to her detriment, the Respondent is estopped from now changing its position.

[6] The Appellant's counsel added that the Crown would be unjustly enriched. The Appellant was aware that she was entitled to a rebate she relied on the incorrect representation made to her.

Position of the Respondent

[7] No decision involving an interpretation of law by a servant or officer of the Crown can bind it. Accordingly, if the Appellant is alleging that the appeal should be allowed based on erroneous information provided by Revenue Canada officials, it is respectfully submitted that estoppel does not lie against the Crown. She occupied the house on September 25, 1992, the house was first occupied by the Appellant for the purposes of paragraph 256(3)(a) of the Act from that date. It is therefore submitted that the two year period within which the Appellant was eligible to file her application for a rebate is determined by subparagraph 256(2)(d)(i) of the Act and commenced September 25, 1992. The Appellant is not entitled to the rebate as she failed to submit her application within two years from the day that she first occupied the house after the construction commenced as described in subparagraph 256(2)(d)(ii) of the Act.

[8] The Respondent referred the Court to several cases[1] [2] [3] [4] [5] for the principle that the Crown is not bound by erroneous advice given by its officials. Counsel added that this Court simply lacks the jurisdiction to vacate an assessment otherwise valid in all its legal aspects on the grounds of equitable principles, or through set-off principles derived from ostensible actionable conduct premised on administrative accountability.

[9] Both counsel referred the Court to Goldstein (supra) wherein Bowman J. of this Court dealt with the question of estoppel and stated the following:

23. It is sometimes said that estoppel does not lie against the Crown. The statement is not accurate and seems to stem from a misapplication of the term estoppel. The principle of estoppel binds the Crown, as do other principles of law. Estoppel in pais, as it applies to the Crown, involves representations of fact made by officials of the Crown and relied and acted on by the subject to his or her detriment.*(4) The doctrine has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved, because estoppels cannot override the law. *(5)

24. The question of the interpretation of paragraph 146(1)(c) is a matter of law and I must decide it in accordance with the law as I understand it. I cannot avoid that obligation because the Department of National Revenue may previously have adopted an interpretation different from that which it now propounds. The question is not whether the Crown is bound by an earlier interpretation upon which a taxpayer has relied. It is more to the point to say that the courts, who have an obligation to decide cases in accordance with the law, are not bound by representations, opinions or admissions on the law expressed or made by the parties. *(6)

25. The result of the application of the rule in Maritime Electric and the many other cases to the same effect can have, in particular cases, unfortunate consequences for a taxpayer who, in good faith, relies upon a departmental interpretation that is subsequently changed. Nonetheless it is not in the interests of justice that the courts should be fettered by erroneous interpretations of the law by departmental officials. *(7)

[10] I agree with and accept this resumé of the law of estoppel and I adopt it as my own. Obviously, I have attempted to find in favour of the Appellant but I cannot. I cannot avoid my obligation to interpret subsection 256(1) in accordance with the law.

[11] Beaubier J. of this Court dealt with an almost identical fact situation in Kielau (supra). I agree with his reasoning and conclusion in the final paragraph which reads:

4 Shirley Kielau testified that on two occasions she telephoned Revenue Canada officials responsible for the GST and was assured that she had four years after occupancy in which to apply for the rebate. The first telephone call was made well within the two year period. when she received the documentation for the application after the second telephone call she realized that the two year period, not the four year period, applied in their circumstances. She quite understandably feels that an estoppel provision should apply in the circumstances. Unfortunately the settled law in the matter is that the statute, rather than the statements of Revenue Canada, officials, governs. For this reason the appeal is dismissed.

[12] As a matter of fairness, justice and common sense I make these comments. The GST legislation is new and too complex for most taxpayers to comprehend without informed assistance. There is no question that the Appellant was entitled to a rebate. Section 256 is designed to provide a taxpayer with a rebate for owner-built homes if applied for within two years after the complex is first occupied and substantial completion. The Appellant took reasonable precautions to insure that she would receive a rebate. Unfortunately, neither I nor the Revenue Canada employees can change the law which clearly states that, given the present facts, an application must be submitted within two years.

[13] The appeal is dismissed.

Signed at Ottawa, Canada, this 20th day of January 1998.

"C.H. McArthur"

J.T.C.C.

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