Date: 20010308
Docket: 1999-4349-IT-I
BETWEEN:
PHILIPPE HOUDE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Tardif, J.T.C.C.
[1] This is an appeal concerning the 1995 taxation year.
[2] The appellant provided a good summary of the facts in his Notice of Appeal, which reads as follows:
[TRANSLATION]
1. On or about March 22, 1999, the respondent sent the appellant a notice of reassessment for the 1995 taxation year in which she taxed him on an amount of $70,751.22 that he had received from Public Works and Government Services Canada, Superannuation Directorate, under the Public Service Superannuation Plan of his sister, the late Madeleine Houde, who had died on January 12, 1995, the whole as can be seen from Exhibit R-1;
2. Within the time required by the Act, the appellant filed a notice of objection to the assessment made by the respondent, who is called upon to produce the original of that notice of objection, failing which secondary evidence thereof will be adduced at the hearing;
3. On or about July 23, 1999, the respondent confirmed the reassessment that had been made against the appellant on or about March 22, 1999, as can be seen from the decision made by Anne Maziade, Chief of Appeals, Jonquière Taxation Centre, filed in support hereof as Exhibit R-2;
4. The appellant objects to the respondent's assessment for the following reasons, inter alia:
(a) On or about May 26, 1995, Pauline Boudreault-Leblanc from the Client Operational Services Division at Public Works and Government Services Canada, Superannuation Directorate, informed the appellant that he was to receive a benefit under the Canadian Public Service Superannuation Plan of his sister, the late Madeleine Houde, as can be seen from the letter filed as Exhibit R-3;
(b) Shortly before the time his tax returns were prepared, the appellant received a T4A form and a Relevé 2 form from Public Works and Government Services Canada showing that $70,751.22 had been sent, the said forms being in the name of the Estate of the late Madeleine Houde, as can be seen from the said forms filed as Exhibit R-4;
(c) On or about September 30, 1997, the appellant received a facsimile from Sylvia Stack of Public Works and Government Services Canada stating that the T4 issued in the name of the Estate of the late Madeleine Houde would be cancelled and replaced with a T4 in the name of Philippe Houde, as can be seen from the said facsimile filed in support hereof as Exhibit R-5;
(d) In the meantime, the appellant had given the forms he had received from Public Works and Government Services Canada to his accountant, who had reported the Canadian Public Service Superannuation Plan benefit in the tax return of the Estate of the late Madeleine Houde, as can be seen from the said return filed in support hereof as Exhibit R-6;
(e) More than $4,000 in interest was charged by both Revenue Canada and the Quebec Department of Revenue because of the mistake made by Public Works and Government Services Canada in issuing the T4A and Relevé 2 after the death of the late Madeleine Houde;
(f) The appellant filed the late Madeleine Houde's tax returns with the tax authorities within the required time and in accordance with the T4A and Relevé 2 forms received from the federal government;
(g) If the federal government had not made a mistake in issuing its forms, the appellant would not have been required to pay the more than $4,000 in interest assessed against him by Revenue Canada and the Quebec Department of Revenue.
[3] In reply, the respondent mainly alleged the following:
[TRANSLATION]
(a) for the taxation year at issue, a T4A form showing an amount of $70,751 was issued by Public Works and Government Services Canada in the name of the M. Houde Estate;
(b) when the late Madeleine Houde's tax return for the 1995 taxation year was filed, the $70,751 was reported as other income;
(c) as a result, the appellant filed his tax return for the taxation year at issue without including the $70,751 referred to in subparagraph (a) above;
(d) for the taxation year at issue, an amended T4A form was issued in the appellant's name by Public Works and Government Services Canada for the $70,751 that he had received as a lump-sum benefit based on the annuity that the late Madeleine Houde would have received over a five-year period, in respect of which the appellant was the beneficiary;
(e) on March 8, 1997, the Minister made an amendment with respect to the late Madeleine Houde's 1995 taxation year, reducing to nil the $70,751 reported as other income and transferring to the appellant the $10,612.68 in tax withheld at source;
(f) by reason of the balance due to the M. Houde Estate, the Minister paid it arrears interest for the 1995 taxation year;
(g) for the taxation year at issue, the Minister also added to the appellant's income an amount of $70,751 as other income and took into account an additional $10,612.68 in tax withheld at source in computing his tax balance payable;
(h) the Minister therefore established the balance due from the appellant as follows:
Federal tax $18,659.87
Social benefits repayment $4,690.00
Quebec abatement ($2,939.24)
Income tax deducted ($10,612.68)
(i) because of the balance due, the Minister assessed arrears interest against the appellant for the taxation year at issue.
[4] The issue is whether the arrears interest was correctly computed and lawfully claimed.
[5] The appellant began by admitting the accuracy of all the facts assumed in making the reassessments, which facts are more specifically set out in subparagraphs 13(a) to (i) inclusive.
[6] The appellant basically argued that the assessment was unfounded because Public Works and Government Services Canada ("PWGSC") had made a mistake and that mistake was the reason interest was assessed and claimed.
[7] The appellant submitted that he is not required to pay the interest because he made no mistakes and, on the contrary, displayed a great deal of vigilance by initiating several actions.
[8] Since the mistake that gave rise to the interest could in no way be attributed to him, he relied on the doctrine of estoppel to argue that incorrect information and error are the direct and only cause of the interest and that the interest claim is therefore void against him.
[9] Estoppel by representation is a common law doctrine; it applies only where very specific conditions are met. Those conditions were stated by the Honourable Judge Bowman of this Court in Goldstein v. Canada, 96 DTC 1029.
[10] Before assessing whether there is any basis for applying the doctrine of estoppel by representation, it must be asked whether that doctrine can be applied in Quebec. This question has been addressed by the Honourable Judge Pierre Dussault of this Court in Alameda Holdings Inc. v. Canada, 2000 DTC 1544.
[11] Relying on the administrative law principle laid down in Laurentide Motels v. Beauport (City), [1989] 1 S.C.R.. 705, and now codified in article 300 of the Civil Code of Québec ("C.C.Q."), that legal persons established in the public interest are governed by the C.C.Q. particularly "with regard to their status as legal persons, their property or their relations with other persons", Judge Dussault decided the question as follows:
. . . I believe that the doctrine of estoppel cannot be pleaded in the instant case and that it is the Civil Code of Quebec that applies. In Soucisse, supra, Beetz J. of the Supreme Court of Canada distinguishes between the two concepts, while recognizing that there has often been confusion between the two and that both terms are used. He refers in particular to Mignault J.'s opinion in Grace and Company, supra, that the concept of estoppel, as applied in the English system, is unknown to the civil law. However, he expressly acknowledges the existence of fins de non-recevoir in civil law and recognizes that one possible legal basis for a fin de non-recevoir might be the wrongful conduct of a party under articles 1053 et seq. of the Civil Code of Lower Canada (articles 1457 et seq. of the Civil Code of Quebec).
[12] The main basis for Judge Dussault's reasons can be found in the Supreme Court of Canada's decision in National Bank of Canada v. Soucisse et al., [1981] 2 S.C.R. 339. In that case, Beetz J., writing for the Supreme Court, ruled out the applicability of the doctrine of estoppel in Quebec civil law in the following terms:
. . . there does not seem to exist any coherent theory of fins de non-recevoir as there is, for example, for unjust enrichment in civil law, or the theory of estoppel in English law.
There is nonetheless no question that fins de non-recevoir do exist in Quebec civil law and are sometimes confused with estoppel, despite the warning of Mignault J. in Grace and Company v. Perras [(1921), 62 S.C.R. 166], at p. 172:
. . . I venture to observe that the doctrine of estoppel as it exists in England and the common law provinces of the Dominion is no part of the law of the Province of Quebec. This, however, does not mean that in many cases where a person is held to be estopped in England, he would not be held liable in the Province of Quebec. Article 1730 of the civil code is an example of what, in England, is referable to the principle of estoppel, and where a person has by his representation induced another to alter his position to his prejudice, liability in Quebec, could be predicated under articles 1053 and following of the civil code. Whether such liability could be relied on as a defence to an action, in order to avoid what has been called a "circuit d'actions," is a proposition which, were it necessary to discuss it here, could no doubt be supported on the authority of Pothier. May I merely add, with all due deference, that the use of such a word as "estoppel," coming as it does from another system of law, should be avoided in Quebec cases as possibly involving the recognition of a doctrine which, as it exists today, is not a part of the law administered in the Province of Quebec.
. . .
One possible legal basis for a fin de non-recevoir is the wrongful conduct of the party against whom the fin de non-recevoir is pleaded.
[13] In short, it is now clearly established that the doctrine of estoppel by representation as developed in the common law is not applicable in Quebec law in so far as a civil law question is involved. As a result, the authorities submitted by the appellant are not applicable in this appeal.
[14] The evidence shows that PWGSC made a mistake as a consequence of which the respondent issued, in accordance with the Act, an assessment the basis for which was essentially interest owed.
[15] Did the respondent behave wrongfully, negligently or improperly in computing the interest? I do not think so. Rather, the respondent acted normally, correctly and in accordance with the Act.
[16] The appellant is absolutely blameless, since the mistake made by PWGSC is the reason for the delay that gave rise to the interest. The appellant would like to use the mistake against the respondent and have the interest cancelled.
[17] The respondent could no doubt, on the basis of fairness, have accepted the appellant's arguments. However, in strictly legal terms, the respondent had the power to assess such interest. She acted lawfully in this regard, and the assessment is the result of an unimpeachable exercise. I do not think that PWGSC's mistake can be used against the respondent, especially since the appellant has or had an excellent remedy by way of an action in liability against those who made the mistake.
[18] Under subsection 161(1) of the Act, interest at the prescribed rate is computed automatically on overdue taxes. The Minister of National Revenue ("the Minister") has the power to waive such interest in accordance with the conditions set out in subsection 220(3.1) of the Act and Information Circular 92-2. Under subsection 165(1.2) of the Act, assessments made under subsection 220(3.1) are not subject to the appeal process in this Court.
[19] However, the Minister's exercise of that power may be reviewed by the Federal Court through the judicial review power conferred on it by sections 18 and 18.1 of the Federal Court Act, R.S.C. 1985, c. F-7, as amended.
[20] The interplay of these various provisions was clearly set out by Judge Lamarre Proulx of this Court in Gretillat v. The Queen, 98 DTC 1483, at page 1486 (English translation: [1998] T.C.J. No. 143).
[21] It appears to be on the basis of these rules that the courts have stated many times that the Tax Court of Canada has no jurisdiction to rule on the question of interest when it has been correctly assessed. Where a taxpayer has an outstanding tax liability and interest is computed under subsection 161(1) of the Act, this Court may not interfere on the basis of fairness to cancel or reduce the interest payable under the Act. Only the Minister has the power to do so under subsection 220(3.1), and the exercise of that power may be reviewed by the Federal Court only if it did not take place in accordance with the principles of natural justice.
[22] This Court therefore has no power to review the question of the interest covered by the assessment in the instant case.
[23] Accordingly, the appeal must be dismissed.
Signed at Ottawa, Canada this 8th day of March 2001.
"Alain Tardif"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 23rd day of April 2001.
Erich Klein, Revisor