Date: 20010912
Docket: 2000-5112-IT-APP
BETWEEN:
MARIA DI MODICA,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Order
Lamarre Proulx, J.T.C.C.
[1] This is an application to extend the time for serving a notice of objection to an assessment under section 166.2 of the Income Tax Act ("the Act").
[2] The issue is whether counsel's negligence can be a just and equitable reason for granting an application under paragraph 166.2(5)(b) of the Act.
[3] The following facts are admitted: the assessment is dated March 16, 2000; the time allowed by subsection 165(1) of the Act expired on June 14, 2000; on July 5, 2000, the applicant sent the Minister of National Revenue ("the Minister") a notice of objection; on July 17, 2000, the Minister notified the applicant that the notice of objection was inadmissible because it had been filed after the prescribed time; on November 27, 2000, the applicant sent the Minister an application to extend the time for serving her objection; on November 28, 2000, the Minister notified the applicant that he was refusing to grant an extension of time pursuant to subsection 166.1(7) of the Act; on December 20, 2000, the applicant applied to this Court for an extension of the time for serving her objection.
[4] The application for an extension refers to documents attached thereto, including the application for an extension of time made to the Minister. The latter application, which is dated November 23, 2000, and which was received on November 27, reads as follows:
[TRANSLATION]
. . .
As regards the above-mentioned file, and further to your letter of July 17, 2000, which was found in our files on November 21, 2000, this is to inform you of the following.
We are writing to ask you to extend the time for filing a notice of objection for the following reasons.
When the person looking after the file, Carmelo Nicolo, received your letter of July 17, 2000, he simply put it in the file without asking for instructions from the lawyer responsible for the file, Vincent Chiara.
A bring forward to November 20, 2000 was put on the file, and it was on that date that the said letter of July 17, 2000, was found. Unfortunately, the deadline of August 4, 2000, had passed.
An application to extend the time for filing a notice of objection in the above-mentioned file was therefore not made because of an error by Ms. Di Modica's solicitors.
Our client should not suffer prejudice because of her solicitors' error and she should be heard with respect to her notice of objection.
. . .
[5] The applicant testified. She stated that, as soon as she received her assessment, she called Vincent Chiara, went to his office to take the documents to him and asked him to challenge the assessment. He allegedly told her that he would take care of it. She maintained that she called her lawyer several times. She subsequently received other letters from the government, one of which was filed as Exhibit I-1. It is dated June 15, 2000, and concerns arrears on an assessment made under subsection 160(1) of the Act. The letter starts by stating that it is the final notice.
[6] Counsel for the applicant argued that the applicant acted diligently and should not be punished for the omissions of the law firm she had retained. In his written representations, he argued that an error by counsel can have the effect of making it impossible to act. He referred in this regard to the authorities under articles 481.11 and 482 of the Quebec Code of Civil Procedure found in Hubert Reid and Julien Reid, Alter Ego, Code de procédure civile du Québec, Complément jurisprudence et doctrine, 15th edition (Wilson & Lafleur, 1999).
[7] The above-mentioned articles of the Quebec Code of Civil Procedure read as follows:
481.11 Inscription for proof and hearing must be effected not later than 180 days after service of the declaration and notice. Failing inscription within that time, the plaintiff is deemed to have discontinued his suit. Such time limit is imperative; it can be extended only if the party shows that it was impossible for him to act.
The clerk must refuse to receive or file in the record any inscription after expiry of such time limit.
482 A party condemned by default to appear or to plead may, if he was prevented from filing his defence by surprise, by fraud or by any other reason considered sufficient, request that the judgment be revoked and that the action be dismissed.
[8] Counsel for the applicant finished his written representations as follows:
[TRANSLATION]
In conclusion, we stress that Ms. Di Modica acted diligently and that she cannot lose her rights because of her counsel's error and/or negligence.
[9] Counsel for the respondent referred in his written representations to this Court's decision in Garry R. Harris v. M.N.R., 85 DTC 302, and to the decision of the Tax Review Board in Antonio Arnone v. M.N.R., [1979] C.T.C. 2006, in which chairman Cardin stated the following:
However, the chartered accountants in the firm are professional people. They are responsible people and they charge for their services and they should also carry out whatever duties are conferred upon them. I don't believe that the reasons given in the letter supporting the application are valid and I shall, for the record, read them:
I enclose notices of objection for the above taxpayer for the years 1975 and 1976. I would ask for an extension of time to file these notices on the following basis:
1. The taxpayer contacted me within the required time period.
2. I contacted the responsible assessor but we were unable to arrange a meeting.
I am going to stop here and say that that is not sufficient. The filing of a Notice of Objection is a formal legal procedure and it cannot be replaced by a telephone call or a meeting.
3. The file in my office got misplaced and in the rush of the Christmas season and subsequent busy period the matter slipped my mind.
4. The taxpayer was under the impression the matter was being handled by me and until collections recently started applying pressure, he then contacted me.
There is no justification for granting the application in Mr. Sproule's letter. There is nothing in what he said this morning, including his recent marriage, which can be considered as having any bearing or any import on the filing of the application and I believe that it would be doing a wrong service to professionals to give them the idea that so long as they advise the Board that there was some mistake in their operation that the application would automatically be granted. I think that that would be a wrong policy to follow. It is certainly not the one which has been followed by my colleagues on this Board nor in the Federal Court.
Conclusion
[10] Subsection 166.2(5) of the Act reads as follows:
No application shall be granted under this section unless
(a) the application was made under subsection 166.1(1) within one year after the expiration of the time otherwise limited by this Act for serving a notice of objection or making a request, as the case may be; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited by this Act for serving such a notice or making such a request, as the case may be, the taxpayer
(A) was unable to act or to instruct another to act in the taxpayer's name, or
(B) had a bona fide intention to object to the assessment or make the request,
(ii) given the reasons set out in the application and the circumstances of the case, it would be just and equitable to grant the application, and
(iii) the application was made under subsection 166.1(1) as soon as circumstances permitted.
[11] Counsel for the applicant referred to the authorities under article 481.11 of the Code of Civil Procedure. I cite the first comment at page 536 of Alter Ego, supra:
[TRANSLATION]
481.11/1 The time limit in article 481.11 C.C.P. can be extended if the party shows that it was impossible for him or her to act. In some cases, the error or negligence of counsel for the applicant may be equated with such impossibility, since, according to the principles laid down by the Supreme Court of Canada, a party must not be deprived of his or her rights on account of an error of that party's counsel where it is possible to rectify the consequences of such error without injustice to the opposing party. In assessing whether it was impossible to act, account must certainly be taken of the harm caused to the party alleging that impossibility, but consideration must also be given to the harm imposed on the opposing party, the apparent value of the action brought and the distinction between an error by counsel and that counsel's negligence or inexcusable error.
[12] The principles laid down by the Supreme Court of Canada referred to in the above passage are to be found in Cité de Pont-Viau v. Gauthier Manufacturing Ltd., [1978] 2 S.C.R. 516, and Bowen v. City of Montreal, [1979] 1 S.C.R. 511. It is clear from the facts of those cases that the circumstances in which counsel made an error were in no way related to negligence or carelessness by counsel.
[13] In the first case, the inscription in appeal had been filed within the time limit but had been served on counsel who were not counsel for the respondent. That error occurred because the prothonotary had entered incorrect information. The facts giving rise to the case were set out as follows by Pratte J. at pages 518-19:
Within thirty days from the judgment of the Superior Court, specifically on March 9, 1976, appellant filed at the office of the Superior Court an inscription in appeal against each one of the two judgments delivered against it on February 12. Both these inscriptions had previously (March 4) been served upon Messrs. O'Brien, Home, Hall, Nolan, Saunders and Associates, who represented Union Canadienne Compagnie d'Assurance but did not represent respondent. The inscription in appeal was therefore not served upon either respondent or its counsel as required by art. 495 C.C.P.
This omission was due to the fact that the prothonotary, in giving the notice prescribed by the second paragraph of art. 473 C.C.P., repeated the error appearing on the last page of the Superior Court judgment and erroneously designated Messrs. O'Brien, Home, Hall, Nolan, Saunders and Associates as counsel for the respondent.
After the time limit for filing the appeal had expired, namely on March 26, 1976, respondent [page 519] caused to be served upon appellant a motion for the dismissal of the appeal which was returnable before the Court of Appeal on April 20, 1976. In this motion respondent alleged that appellant's appeal was irregular and void because the inscription has not been served upon either respondent itself or its counsel.
[14] In the second case, the error involved was an error of law arising out of the complexity of the issues to be dealt with. Again, it was an error that had nothing to do with carelessness or negligence by counsel. I cite the headnote at page 512:
Appellant cannot succeed on his argument that the claim is based on unjust enrichment and such a claim was not subject to the short prescription. If there was any enrichment of respondent municipality, it was not unjust enrichment but the result of the expropriation and resale. If the expropriation was tainted with illegality appellant might perhaps, had it not been for the prescription, have obtained damages instead of the annulment of the expropriation, but the prescription is an insurmountable obstacle to any claim of this nature. The only conclusions on which appellant could hope to succeed were therefore those he had added by amendment, but which he did not mention in his brief, namely the prayer to have the expropriation annulled, to which only the thirty-year prescription applies. However, even if a direct action in nullity was admissible, the Court cannot rule on these conclusions with the record in its present state. The rights of the purchaser cannot be prejudiced without impleading it, and this seems to have been forgotten. On the other hand, in accordance with the principle that a party may not be deprived of his rights on account of an error of counsel where it is possible to rectify the consequences of such error without injustice to the opposing party, appellant should be allowed to take the necessary steps to obtain a decision on his conclusions for the annulment of the expropriation, on which the courts below did not rule.
[15] First of all, it must be noted that the letter of November 23, 2000, reproduced in paragraph [4] of these Reasons, which should state the reasons for which the person was unable to act within the time limited by subsection 165(1) of the Act, is silent on this point. This is contrary to what is required by subparagraph 166.2(5)(b)(i) of the Act. Second, there is an admission in counsel's submissions that the lawyers were negligent, and none of the lawyers involved came to testify and explain his conduct and the chain of events in this case. As well, the result of that failure to testify is that there is no confirmation of the applicant's assertion that she had wanted to appeal the assessment within 90 days following that assessment.
[16] It is my view that an error by counsel can be a just and equitable reason for granting an extension of time if counsel otherwise exercised the reasonable diligence required of a lawyer. I do not think that the state of the law is such that counsel's negligence or carelessness can constitute a just and equitable reason for granting the requested extension within the meaning of subparagraph 166.2(5)(b)(ii) of the Act.
[17] The application is dismissed.
Signed at Ottawa, Canada, this 12th day of September 2001.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
[OFFICIAL ENGLISH TRANSLATION]
2000-5112(IT)APP
BETWEEN:
MARIA DI MODICA,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Application heard on May 2, 2001, at Montréal, Quebec, and
last written argument filed at Ottawa, Ontario, on June 8, 2000, before
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Applicant: Michel Décoste
Counsel for the Respondent: Claude Lamoureux
ORDER
Upon application for an order extending the time for serving a notice of objection to the assessment numbered 24413 and dated March 15, 2000, which was made under the Income Tax Act;
The application is dismissed in accordance with the attached Reasons for Order.
Signed at Ottawa, Canada, this 12th day of September 2001.
|
"Louise Lamarre Proulx" |
J.T.C.C.