Date: 20000330
Docket: 98-148-IT-G
BETWEEN:
JOANNE M. GAUCHER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons For Order
McArthur J.T.C.C.
[1] The Appellant brings a motion for a determination of law raised by the pleadings. The Appellant is assessed under section 160 of the Income Tax Act. Subsections 58(1) and (2) of the Tax Court of Canada Rules (General Procedure) read as follows:
58(1) A party may apply to the Court,
(a) for the determination, before hearing, of a question of law raised by a pleading in a proceeding where the determination of the question may dispose of all or part of the proceeding, substantially shorten the hearing or result in a substantial saving of costs, or
(b) to strike out a pleading because it discloses no reasonable grounds for appeal or for opposing the appeal,
and the Court may grant judgment accordingly.
58(2) No evidence is admissible on an application,
(a) under paragraph (1)(a), except with leave of the Court or on consent of the parties, or
(b) under paragraph (1)(b).
[2] Upon hearing the motion, I informed the parties that while I lean towards dismissing the motion, I wished to review the substantial material filed. Despite a novel and ably presented argument by the Appellant's counsel, I have not changed that position. The Appellant wishes to dispose of the appeal by establishing that the reassessment of Charles Haynes, the Appellant's former spouse, was statute-barred and invalid, ab initio, and she asserts that the reassessment was not validated by the decision of Judge Margeson of this Court.
[3] The Appellant requests the determination of three questions of law. First, whether the reassessment is statute-barred; second, whether the Appellant is precluded from raising the defence of the reassessment being statute-barred because the Tax Court of Canada rendered a decision in her husband's appeal. If the Appellant is not precluded from raising such a defence, there would arguably be no underlying tax liability on the part of her former husband in respect of his 1985 and 1986 taxation years and, therefore, no joint and several liability on the part of the Appellant pursuant to subsection 160(1); and third, if the Appellant is not precluded from raising such a defence, should the Appellant's appeal be allowed and the notice of reassessment vacated.
[4] The Minister of National Revenue assessed the Appellant approximately $350,000 under subsection 160(1) of the Act on April 17, 1997. At a time when the Appellant's former spouse was indebted under the Act in the amount of $350,000, he transferred a residence at 1125 Groveland Court, West Vancouver to the Appellant. Mr. Haynes declared bankruptcy a few months later.
[5] The Respondent pleads that the difference between the fair market value of the property and the consideration paid by the Appellant was $491,000. The question in the appeal is whether the Appellant is liable to pay Revenue Canada $350,000. The parties agree that, prima facie, the reassessments of Haynes were statute-barred. He was reassessed beyond the three-year limitation period provided for in the Act. The reassessment in respect of his 1985 and 1986 taxation years was made on January 4, 1991. Mr. Haynes appealed the assessment and his appeal was dismissed by Margeson J. See Haynes v. Her Majesty the Queen, dated June 3, 1994. In the 12-page judgment, there is no mention of the reassessments being statute-barred or that conditions set out in subsection 152(4) were applied.[1]
[6] Bowman J. in Ramey v. The Queen,[2] and other judges of this Court, have stated that a transferee (and in the present instance the Appellant is a transferee) should be allowed to challenge an assessment for its correctness. In the present Appellant's case, the assessment was challenged for correctness by the appropriate taxpayer, Charles Haynes, and was found by the Tax Court to be correct. The Appellant takes the position, that (a) the reassessment was statute-barred; (b) there was accordingly no underlying tax liability on the part of Haynes and, therefore, no tax liability on the part of the Appellant; and (c) that the Appellant's assessment should be vacated.
[7] I find that the issue of whether an assessment was issued out of time is not a pure question of law but one of mixed law and fact. There was no agreement between the parties on the facts. It is the position of the trial judge to determine the validity of the reassessment of Haynes on the basis of the facts. Implied in his Judgment, this was done by Judge Margeson. It was not necessary for the trial judge to specifically refer to the issue of the limitation period. I can presume that this question was resolved upon consent. Counsel for the Appellant in this motion was not prepared to permit the Respondent to introduce background evidence with respect to the limitation period which would probably have resolved the question.
[8] Given the appeal by Mr. Haynes, who was represented by counsel, who in turn called several witnesses, I find the Minister must be taken to have successfully alleged misrepresentation by assessing after the statutory period. There was no need for the trial judge to refer to the proving of the misrepresentation. I am not about to retry the appeal of Charles Haynes. Because the reassessment of Haynes was appealed by him to the Tax Court of Canada, it is not open to the Appellant to challenge the correctness of the reassessment again. Mr. Haynes challenged his
reassessment, had a full hearing before the Tax Court, and the Appellant cannot now again challenge the correctness of that decision before the Tax Court of Canada. The reassessment of Haynes is deemed to be valid. While the judgment in Haynes does not specifically deal with misrepresentation, to permit the assessment beyond the three-year limit, it is implied that Judge Margeson was satisfied that the assessment was valid. This position is supported in the following statement of the Supreme Court of Canada in The Queen v. Burns:[3]
Failure to indicate expressly that all relevant considerations have been taken into account in arriving at a verdict is not a basis for allowing an appeal under s. 686(1)(a). This accords with the general rule that a trial judge does not err merely because he or she does not give reasons for deciding one way or the other on problematic points: see R. v. Smith, [1990] 1 S.C.R. 991, affirming (1989), 95 A.R. 304, and Macdonald v. The Queen, [1977] 2 S.C.R. 665. The judge is not required to demonstrate that he or she knows the law and has considered all aspects of the evidence. Nor is the judge required to explain why he or she does not entertain a reasonable doubt as to the accused's guilt. Failure to do any of these things does not, in itself, permit a court of appeal to set aside the verdict.
This rule makes good sense. To require trial judges charged with heavy caseloads of criminal cases to deal in their reasons with every aspect of every case would slow the system of justice immeasurably. Trial judges are presumed to know the law with which they work day in and day out. If they state their conclusions in brief compass, and these conclusions are supported by the evidence, the verdict should not be overturned merely because they fail to discuss
collateral aspects of the case.
[10]In the end, I conclude that the Appellant is precluded from claiming the defense that the reassessment of her former husband was statute-barred on the basis that the Tax Court of Canada confirmed the Minister's reassessment and it is not open to the Appellant to interfere with that decision. Given the facts of the case, Margeson J. confirmed the Minister's assessment, not to mention that Haynes conceded at the beginning of trial that part of the amounts in dispute were properly assessed.
[11] The hearing of this appeal will be set down at the next available sitting of this Court three months from the date of this Order. Costs of this motion shall be costs in the cause.
Signed at Ottawa, Canada, this 30th day of March, 2000
"C.H. McArthur"
J.T.C.C.