Tax Court of Canada Judgments

Date: 19990203

Docket: 98-852-IT-I

BETWEEN:

NORMAN BAKER,

Applicant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for judgment

BOWIE J.T.C.C.

[1] These appeals from assessments for income tax for the years 1993, 1994 and 1995 were begun by a Notice of Appeal filed on March 23, 1998 by the Applicant's agent, Barry Ward, CA. The Applicant elected the informal procedure. A Reply to the Notice of Appeal was served and filed on or about May 21, 1998. Notice of Hearing was mailed to both parties on November 3, 1998.

[2] On December 8, 1998, a letter was sent on Mr. Ward's letterhead to the Registrar of the Court. It reads as follows:

This is to advise that the above taxpayer wishes to withdraw his above appeal scheduled to be heard on January 12, 1999 at the Tax Court in Vancouver, B.C.

It was signed "K. Mari per B. Ward", over the typed signature "Barry Ward, CA". A copy was sent to the Applicant.

[3] On December 21, 1998, the Registry of the Court acknowledged the receipt of this letter, advising that it was filed on December 16, 1998, and that the file was then closed.

[4] On December 22, 1998, Mr. Ward wrote to the Registrar as follows:

On December 8, 1998 I wrote to you regarding the above noted taxpayer stating he wished to withdraw his appeal. There was some confusion between the taxpayer and ourselves as he has now advised us he wishes to continue this appeal and represent himself when it's heard.

Please disregard our letter of December 8, 1998 and keep the appeal open. As I am with this letter resigning as his authorized representative, he may be contacted at 11470 Warsley Street, Maple Ridge, B.C. V2X 1T1, telephone 604-465-4438.

The letter is signed by Mr. Ward, over his typed signature. A copy was sent to the Applicant.

[5] Counsel for the Respondent, upon being made aware of this letter, wrote to the Registrar to record his opposition to the purported withdrawal of the Notice of Discontinuance. The Applicant, represented by his agent, appeared before me on January 12, 1999, seeking an Order to reinstate his appeals.

[6] The Applicant and Mrs. Ward gave evidence which established these facts. Mr. Ward was authorized to, and did, file the Notice of Appeal on the Appellant's behalf. In the latter part of 1988, a serious health problem prevented him from attending to his practice for several weeks. During this time his daughter, who works for him as a clerk and bookkeeper, and his wife, who works part-time in his office, attended to his practice. Upon receiving the Notice of Hearing in these appeals, Mrs. Ward telephoned the Applicant and arranged to meet with him. During that meeting she somehow gained the impression that the Applicant did not wish to pursue his appeals, and she therefore caused the letter of December 8 to be sent to the Court. When he received a copy of this letter, the Applicant telephoned the agent's office, demanding an explanation. I believe his testimony, which was to the effect that he did not wish to abandon his appeals, and that the letter of December 8 was sent without his instructions. I also believe the evidence of Mrs. Ward, which was that she believed, after meeting with the Applicant, that he did not wish to pursue his appeals.

[7] The agent for the Applicant takes the position that the letter of December 8 was the result of a misunderstanding between the Applicant and Mrs. Ward, that it was withdrawn as soon as the misunderstanding was discovered, and that the Applicant should not be prejudiced by this mistake.

[8] Counsel for the Respondent argued that the letter of December 8 was an effective Notice of Withdrawal, and that by the operation of section 16.2[1] of the Tax Court of Canada Act (the Act), the appeals are deemed to have been dismissed on December 16, 1998, when it was filed. He relies on two judgments of this Court: Laskaris v. M.N.R.[2] and Bogie v. Canada.[3] The Laskaris case was decided before section 16.2 was enacted. Laskaris, by his agent, filed a Notice of Appeal in the Court more than 180 days after his Notice of Objection was delivered to the Minister, but before the Minister had dealt with the objection. A representative of the Minister, mistakenly, advised the agent of the Applicant to withdraw the appeal, on the understanding that he could refile it after the objection had been dealt with. He did so, and, as was then the practice of the Court, the Notice of Discontinuance was placed before the Chief Judge, who made an Order dismissing the appeal. Sarchuk J. held that, even though the Respondent had, without malice, induced the Applicant to file the Notice of Discontinuance, the Court had no power to relieve against the dismissal, based on the withdrawal, of what had been a valid appeal. The Court's power was spent, and the Applicant had lost the right to appeal the assessment.

[9] In Bogie, the Appellant filed a Notice of Appeal from an assessment for income tax, asserting that a property sold by him had been his principal residence. He was then advised, erroneously, by his accountant that he had in the past claimed capital cost allowance on the property, and that it therefore could not be a principal residence. The Appellant discontinued his appeal, only to be advised by the accountant that his earlier advice had been a mistake. On a motion to have the Notice of Discontinuance set aside, Brulé J. concluded that he had no such jurisdiction, as section 16.2 operated to deem the appeal to be dismissed as of the day of filing the Notice of Discontinuance.

[10] In Bogie, Brulé J. referred to the Appellant's "considered decision to terminate the appeal". In the present case the Applicant made no such decision, considered or otherwise. The appeal was terminated by the action of Mrs. Ward, which she was not, as she thought, instructed to take. I have, somewhat reluctantly, concluded that this factual difference does not permit the Applicant to avoid the effect of the December 8, 1998 letter. Section 17.1 of the Tax Court of Canada Act permits an Appellant who elects the informal procedure to be represented by counsel, or by an agent.

17.1(1) A party to a proceeding in respect of which this section applies may appear in person or be represented by counsel, but where the party wished to be represented by counsel, only a person who is referred to in subsection (2) shall represent the party.

(2) Every person who may practise as a barrister, advocate, attorney or solicitor in any of the provinces may so practise in the Court and is an officer of the Court.

There is no doubt that a litigant is bound by the actions of counsel taken in the conduct of the litigation.[4] There is nothing in section 17.1, or elsewhere in the Act, to suggest that a non-legal agent has any lesser, or different, authority than a lawyer has in representing a litigant before this Court. Nor is there any principled reason why the extent of an agent's implied authority should be different, at least in the context of a professional person who acts for a fee. I was referred to no authority that would support such a distinction. Nor was it suggested by Mr. Ward that his wife lacked the authority to act for him in his absence. Indeed, it is clear that she did have his authority to act. The words of section 16.2 are clear, and I must give effect to them.[5]

[11] I should add that my conclusion is based on the words of section 16.2 of the Act, and the implied authority which a professional agent who is paid to conduct an appeal in the Court has to bind his client. The result might well be different if the agent were simply a friend, professing no particular skill, and assisting the Applicant for no consideration.

[12] I have reached my decision in this matter reluctantly, as I would relieve the Applicant from the serious consequences of his agent's mistake if it were open to me to do so. The prospect of an action for damages must be of little comfort to him, given the cost and the uncertainty of such litigation. This case should serve as a reminder to those who elect to act as professional agents before this Court that by doing so they accept the responsibility to exercise an adequate degree of care to safeguard the interests of their clients.

[13] The application to set aside the deemed dismissal and to reinstate the appeals is denied.

Signed at Ottawa, Canada, this 3rd day of February, 1999.

"E.A. Bowie"

J.T.C.C.

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