Date: 20000630
Docket: 98-1962-IT-G
BETWEEN:
NICOLE WELLS,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor order
Tardif, J.T.C.C.
[1] This is a motion for leave to amend the Notice of Appeal.
[2] The applicant-appellant, Nicole Wells, filed a Notice of Appeal on June 22, 1998, after a notice of reassessment was issued for the 1994 and 1995 taxation years claiming from her a total of $8,625.73, that is, $5,884.47 for the 1994 taxation year and $2,741.26 for the 1995 taxation year.
[3] The appeal arises from a dispute over the value of a work of art, namely a painting by the artist Suzor-Côté.
[4] The painting in question, the property of the appellant Nicole Wells and her brother Guy Wells, also an appellant in a related case, was donated to the Musée du Saguenay.
[5] The applicant's Notice of Appeal explains and enumerates all the facts giving rise to the case and states the basis of her claims. In this regard, I think it useful to reproduce the Notice of Appeal.
[TRANSLATION]
. . .
1. On July 28, 1997, the respondent issued a notice of reassessment for 1995 claiming additional tax of $8,625.73 from the appellant, the whole as appears from the said notice of reassessment filed in support hereof as Exhibit A-1 to have effect as if herein set out at length;
2. As appears from the notice of reassessment (Exhibit A-1), the respondent claims from the appellant an additional amount as a result of the respondent's decision of May 13, 1997 to reduce from $37,500 to $10,000 the value of the gift made by the appellant in 1994 of a painting by Marc-Aurèle De Foy Suzor-Côté depicting a monk, which the appellant had owned jointly with her brother Guy Wells and which they had given to the Musée du Saguenay, the whole as appears from the original of the respondent's letter of May 13, 1997, to which was appended a copy of the appraisal of the said painting made at the respondent's request by Allan Klinkhoff, both of which were filed together in support hereof as Exhibit A-2 to have effect as if herein set out at length;
3. On June 10, 1997, the appellant, through her counsel, rejected the respondent's proposal contained in the letter of May 13, 1997 (A-2) to reduce the amount of the appellant's 1994 gift from $37,500 to $10,000, the whole as appears from the letter to that effect addressed to the respondent, a copy of which is filed in support hereof as Exhibit A-3 to have effect as if herein set out at length;
4. By notice of objection served on the respondent on October 21, 1997, the appellant contested the notice of reassessment issued by the respondent, the whole as appears from a copy of the said notice of objection filed in support hereof as Exhibit A-4 to have effect as if herein set out at length;
5. On March 31, 1998, the respondent sent the appellant a notice of confirmation by the Minister of the notice of assessment (Exhibit A-1), the whole as appears from a copy of the said notice of confirmation by the Minister filed in support hereof as Exhibit A-5 to have effect as if herein set out at length;
6. The notice of assessment issued by the respondent on July 28, 1997 for the 1995 taxation year is incorrect and ill-founded in fact and in law for the reasons set out below;
7. The respondent's decision to reduce the value of the painting from $75,000 to $20,000 is based on an appraisal produced by Allan Klinkhoff, which appraisal is part of Exhibit A-2;
8. When the appellant and Guy Wells gave the painting to the Musée du Saguenay, Paquerette Hudon, owner of La Corniche de Chicoutimi art gallery had appraised the painting at $75,000, and she confirmed this appraisal in writing on January 30, 1995; a copy of this appraisal is filed as Exhibit A-6 to have effect as if herein set out at length;
9. In 1996, the respondent informed the appellant and Guy Wells that she disputed the appraisal and the two donors asked two experts, Annie Cantin of Boischâtel, Quebec, and Pierre Bevilacqua of Sherbrooke, to appraise the painting;
10. Annie Cantin produced an appraisal of $62,500, a copy of which is filed in support hereof as Exhibit A-7 to have effect as if herein set out at length, and Pierre Bevilacqua filed an appraisal of $58,119.67, a copy of which is filed in support hereof as Exhibit A-8 to have effect as if herein set out at length;
11. Paquerette Hudon, Annie Cantin and Pierre Bevilacqua are appraisers recognized by the Department of the Secretary of State of Canada;
12. The painting was given by Suzor-Côté's brother to the donors' grandmother, Adèle Têtu-Wells, a few years prior to her death in 1902 as an expression of thanks to the donors' grandparents for taking in and caring for his wife;
13. The painting had always remained in the donors' family until they decided to give it to the Musée du Saguenay;
14. Contrary to what Mr. Klinkhoff claims in his appraisal, Suzor-Côté was not considered an inexperienced artist in 1890 since the Hôtel-Dieu de Montréal commissioned him at that time to paint a fresco, and he received other commissions; the Musée du Québec has in its collection a painting done in 1890, Portrait de femme, la logeuse de l'artiste à St-Cézaire, and the Musée des Beaux Arts de Montréal has a very beautiful still life from 1892; in July 1891, Suzor-Côté finished eighth out of 236 entrants in a painting competition in Paris;
15. Contrary to what Mr. Klinkhoff appears to claim in his appraisal, Suzor-Côté was never known for painting primitive or naïve pictures;
16. It is surprising to say the least that someone such as Mr. Klinkhoff, who appears to lay claim to a knowledge of Quebec culture, should say in his appraisal: "The description of the monk and his wine is rooted more in the artistic traditions of 19th Century European Painting than those of Quebec";
17. Mr. Klinkhoff's appraisal contains no factual or market comparison information and is based solely on suppositions;
18. Suzor-Côté is considered one of the greatest Quebec and Canadian painters and the Musée du Québec has at least four paintings dating back before 1900, including one from 1890 and another from 1892; the Musée des Beaux Arts de Montréal has five paintings from before 1900, including one from 1892, and the National Gallery of Canada has three from before 1900;
19. The painting in question, although a work from the beginning of the painter's career, has obvious heritage value and is definitely of interest to any collector; as early as the mid-1950s, one collector offered $12,000 for the painting;
20. The respondent is therefore wrong to rely on Mr. Klinkhoff's appraisal and to assign a value of only $20,000 to this painting;
21. Accordingly, the notice of reassessment (Exhibit A-1) issued by the respondent is ill-founded in fact and in law and must be vacated;
22. The instant appeal is well-founded in fact and in law . . . .
[6] The applicant-appellant contends that the amendment sought is essentially of a clerical nature and is intended solely to clarify what is obvious from the content of the Notice of Appeal as a whole; the whole being moreover logical and consistent with the content of the earlier stages following the initial assessment.
[7] The respondent, for her part, takes a strict and rigorous approach; she contends that the absence of any specific and express indication respecting the 1994 taxation year must be fatal in that the purpose of the motion for amendment is to do by indirect means what the Income Tax Act (the "Act") does not allow to be done directly.
[8] Is the purpose of the motion to amend the Notice of Appeal to add a taxation year to the notice of appeal after the time period prescribed by the Act has expired?
[9] If so, the Tax Court of Canada clearly has no jurisdiction to permit such an addition, which would have the effect of reviving a right extinguished by the expiry of the strict deadline.
[10] This moreover is very clear from both the Act and the case law. On this point, the Court appreciated the relevance of the case law to which the respondent referred. I refer in particular to the following judgments:
1. Gill v. Canada, [1998] T.C.J. No. 195, nos. 96-359(IT)I and 96-513(IT)I, March 16, 1998;
2. Liette Tremblay Côté v. Her Majesty The Queen, Federal Court of Canada, Trial Division, April 22, 1999;
3. McGowan v. Minister of National Revenue, 62 DTC 492 (Tax Court of Canada);
4. John Taubler v. The Minister of National Revenue, no. 82-2241, Tax Court of Canada, June 2, 1987;
5. Robert Talbot v. M.N.R., May 21, 1992, no. 90-1672(IT), Tax Court of Canada;
6. Peter Howard Clifford Mitchell v. The Minister of National Revenue, no. 84-637(IT), Tax Court of Canada, November 5, 1985;
7. Horowitz v. Minister of National Revenue, 62 DTC 1038.
I refer also to the following Interpretation Bulletin:
Income Tax Act, Separate Businesses, no. IT-206R, October 29, 1979.
[11] Upon expiry of the legal deadlines for filing a notice of appeal, the Tax Court of Canada has no jurisdiction to permit or authorize an appeal. On this question, I think it relevant to reproduce an excerpt from the judgment by the Honourable Judge Pierre Dussault in Consoltext v. The Queen, 92 DTC 1567, in which he stated the following:
. . . This Court derives its jurisdiction from Parliament and more particularly from section 12 of the Tax Court of Canada Act. With respect to appeals under the Income Tax Act (the "Act"), this section now gives the Court exclusive original jurisdiction to hear and determine appeals which are provided for in the Income Tax Act. The right to appeal from an assessment under that Act is provided for in section 169 and the manner in which the Court can dispose of it is set forth in section 171. The relief sought by the Appellant falls outside the requirements of those provisions as they have been interpreted by our Courts. As stated by the Supreme Court of Canada in the Okalta case (supra) at 1177, the "right of appeal is a right of exception which exists only when given by statute". I am of the opinion that this proposition still holds true today. The Tax Court of Canada cannot expand that right and is bound by its own decisions and decisions of higher Courts that have restricted its application. . . .
[12] The question of the time period prescribed by section 169 of the Act was also considered by the Honourable Judge Christie in MacDonell v. The Queen, 84 DTC 1258, where he wrote as follows:
Regardless of the propinquity of the steps taken to appeal to the expiration of the 90 day period, this Court is without jurisdiction to hear an appeal which is not instituted before that period has elapsed. The right of appeal granted by paragraph 169(a) is purely statutory and, if it is to be invoked, the conditions pertaining thereto must be strictly complied with. If that is not done, then this Court is without jurisdiction. For this Court to add even 1 day to the 90 day period would be tantamount to rewriting paragraph 169(a) which, of course, it cannot do. There is ample authority for my conclusion: Horowitz v. Minister of National Revenue, 62 DTC 1038, Minister of National Revenue v. Simard, 62 DTC 1192 and MacIsaac v. The Queen, 83 DTC 5259.
The respondents might have made application after April 30, 1982, for an Order extending the time within which to institute the appeals as provided by section 167 of the Act, but the time for pursuing that course of action has long since passed.
[13] The Notice of Appeal dated June 22, 1998, arises from a single transaction, that is, a gift made by the co-owners, one of whom was the applicant-appellant, to the Musée du Saguenay. The disputed value of the gift constitutes the sole basis for the appeal which has consequences for two taxation years.
[14] This fact is moreover abundantly described and set out in extensive detail in the Notice of Appeal. It would of course have been preferable that the notice refer to the 1994 taxation year. But does this omission of any such reference exclude everything pertaining to the 1994 taxation year?
[15] I do not believe so since all the relevant and material facts are present and—a point which seems to me to be highly relevant—the amount of the assessment is expressly stated therein and includes the two taxation years.
[16] I am therefore of the view that the purpose of the motion is in effect not to introduce a new taxation year but essentially to complete and clarify that which is implicit from the whole of the facts described in the Notice of Appeal. In other words, the purpose of the motion is not to gain the right to add a fundamental element since the whole of the facts alleged implies the reality that was not expressly stated, that is, the reference to 1994.
[17] This interpretation is moreover in keeping and consistent with the progress of the case since the filing of the notice of objection dated July 28, 1997.
[18] Consequently, the motion should be disposed of on the basis of the principles applicable to amendments.
[19] On this point, Chairman Cardin of the Tax Review Board wrote as follows in Boivin v. M.R.N., 79 DTC 50, at page 56:
[TRANSLATION]
At the hearing, the appellant's representative raised the point that the Minister unilaterally assumed that the taxpayer had accepted a reserve under paragraph 20(1)(n) of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended, when in fact the taxpayer had not elected to deduct a reserve for the balance of the selling price of the land to be carried over to subsequent years. Counsel for the respondent objected to this issue being raised, contending that the Board did not have jurisdiction to decide it because it had not been raised in the notice of objection or notice of appeal. The Board took the objection under advisement, preferring to hear the main points of the case and then determine the validity of the objection if the outcome of the appeal might be affected.
Having concluded that the gain realized by the appellant in 1969 is taxable and that the Minister was justified in reassessing the taxpayer in respect of the 1969 and 1970 taxation years, it seems to me that the Minister's assumption of a reserve in respect of the selling price for the subsequent years did not cause the appellant any prejudice and is not really relevant to the point at issue. However, the respondent's objection and the questioning of the Board's jurisdiction on the basis that the appellant wished to raise a point that had not been included in the notice of objection or notice of appeal appear to me to be important enough to warrant a comment in obiter dictum. Having considered the question, I have come to the conclusion that, in tax matters where the accuracy of assessments is at issue, the procedure, at least at the Tax Review Board, should not be so strict as to prevent any of the parties from raising at the hearing of the appeal new points of law or fact which are directly related to the final determination with respect to the assessment in dispute.
It seems to me that the basic rule that must be scrupulously adhered to in such circumstances is to ensure that the parties are not taken by surprise and that they have the necessary time to consider the newly raised point and to present a defence. This is clearly one possible and serious exception to the general rule that the issue should be completely joined prior to the hearing. Having said that, I am of the view that the Board, in principle, has jurisdiction to hear and decide points raised at the hearing of an appeal, in reasonable circumstances and on fair conditions, at the Board's discretion.
[20] It is also interesting to note Pigeon J.'s comments in Bowen v. City of Montreal, [1979] 1 S.C.R. 519:
. . . On the other hand, this Court cannot endorse the formalistic attitude of the Court of Appeal. This would be contrary to a fundamental principle that is at the root of s. 50 of the Supreme Court Act and of the reform of civil procedure effected by the 1965 Code, and which has been sanctioned in numerous decisions, the most recent being Cité de Pont Viau v. Gauthier Mfg. Ltd. This principle is that a party must 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. . . .
[21] Lastly, I find it helpful and pertinent to reproduce a passage from the judgment in Québec (Sous-Ministre du Revenu) c. De Stefano, [1993] R.D.F.Q. 41 (C.A.), in which Chouinard J.A. wrote at pages 43 and 44:
[TRANSLATION]
. . . Thus, the Deputy Minister's assessment and the contesting of the capital gain by the respondent constituted the subject matter of the entire debate, which incidentally included the matter of the taxation of the alleged gift, in the event that the transaction turned out not to have been made for fair consideration. All the parties knew from the outset the substance of the entire issue, without regard to the modalities thereof. The amendment sought is related to the main issue arising from the same source. A broad and liberal interpretation is what is appropriate in matters of amendment, particularly with respect to sections 202 and 203.
. . .
And at page 45, he wrote:
[TRANSLATION]
. . .
The only conclusion is that the assessment is the determination, by the Minister of Revenue or the collector of revenue or his officers, of the tax payable by the taxpayer. This determination is entirely separate from the notice which sets it out and which communicates it. Furthermore, this single decision includes all taxes owed by the taxpayer under Parts I to VIII of the Taxation Act (applicable in the instant case), regardless of whether the determination is reflected by one or a number of notices depending on the particular characteristics of the case, in accordance with a single or varied mode of application of the Act. The main operation must be distinguished from the ancillary operations.
. . .
[22] For these reasons, I believe the motion should be granted and the applicant-appellant permitted to amend her Notice of Appeal in accordance with the content of the Amended Notice of Appeal.
Signed at Ottawa, Canada, this 30th day of June 2000.
"Alain Tardif"
J.T.C.C.
Translation certified true on this 28th day of September 2001.
[OFFICIAL ENGLISH TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
98-1962(IT)G
BETWEEN:
NICOLE WELLS,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion heard on May 9, 2000, at Chicoutimi, Quebec, by
the Honourable Judge Alain Tardif
Appearances
Counsel for the Applicant: Jean Dauphinais
Counsel for the Respondent: Michel Lamarre
ORDER
Counsel for the applicant's motion, notice of which is dated June 22, 1998, to amend the Notice of Appeal filed under the Income Tax Act by adding the year 1994 to paragraphs 1 and 6 and to the conclusion of the original Notice of Appeal, is allowed in accordance with the attached Reasons for Order.
Signed at Ottawa, Canada, this 30th day of June 2000.
|
"Alain Tardif " |
J.T.C.C.
Translation certified true
on this 28th day of September 2001.
Erich Klein, Revisor