Tax Court of Canada Judgments

Docket: 2003-4491(IT)G

BETWEEN:

NEWMONT CANADA LIMITED,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Motion heard on November 30, 2004 at Toronto, Ontario

Before: The Honourable Justice G. Sheridan
Appearances:
Counsel for the Appellant:	Robert B. Hayhoe Steven McLeod
Counsel for the Respondent:	Wendy Burnham Deborah Horowitz

AMENDED ORDER

Upon application by the Minister of National Revenue under section 53 of the Tax Court of Canada Rules (General Procedure) striking out certain paragraphs in the Notice of Appeal filed by Newmont Canada Limited for the taxation years 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995 and 1996;

          And having heard what was alleged and having read the materials filed by the parties;

          IT IS ORDERED THAT:

a)        paragraphs 40 to 52, 53(c) and 62 be struck from Newmont's Notice of Appeal; and

b)       the Crown shall have 30 days from the date of this motion Order to file its Reply to the Notice of Appeal.

The application is granted with costs for two counsel in accordance with the attached Amended Reasons for Order.

          This Amended Order is issued in substitution for the Order dated March 31, 2005.

Signed at London, Ontario this 14th day of April, 2005.

"G. Sheridan"

Sheridan, J.

Citation:2005TCC143

Date: 20050414

Docket: 2003-4491(IT)G

BETWEEN:

NEWMONT CANADA LIMITED,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

AMENDED REASONS FOR ORDER

Sheridan, J.

[1]      This is an application by the Crown for an Order striking out certain paragraphs in the Notice of Appeal filed by the Appellant, Newmont Canada Limited ("Newmont") for the taxation years 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995 and 1996. Newmont took over from its corporate predecessors in 1995. In 1996, the Minister began reassessing Newmont's 1988-96 taxation years. The parties agree that:

a)        Newmont is a "large corporation"[1] within the meaning of the Income Tax Act;

b)       the impugned paragraphs in its Notice of Appeal concern an issue (referred to, for the purposes of this application, as the "Gold Loan Issue") that was not described in any of its Notices of Objection to the Minister's reassessments;

c)        the Gold Loan Issue pertains only to the 1990, 1991 and 1992 taxation years; and

d)       although settlement discussions occurred between Newmont and Canada Revenue Agency officials, no agreement was reached nor is Newmont seeking to enforce any such agreement.

[2]      The Minister's position is that Newmont is not entitled to appeal the Gold Loan Issue because that issue was not described in its Notices of Objection as required by subsection 165(1.11) of the Act. The Crown argues that, as is the case with any taxpayer, Newmont's right of appeal originates in subsection 169(1). As a large corporation, however, its general right of appeal is qualified by subsection 169(2.1) which operates to restrict a large corporation's appeal to those issues described in its initial notice of objection pursuant to subsection 165(1.11).

[3]      Newmont challenges the Crown's position on three grounds:

a)        in respect of the 1990-92 taxation years, the Crown waived the statutory requirements in subsection 169(2.1);

b)       in respect of the 1990-92 taxation years, the Crown is estopped from relying on the statutory requirements in subsection 169(2.1); and

c)        in respect of the 1992 taxation year only, subsection 169(2.1) is not applicable because Newmont appealed directly to the Tax Court of Canada from the Minister's subsection 165(3) reassessment.

[4]      Newmont's assessment history for its 1988 to 1996 taxation years appears in chart form at paragraph 9 of its Outline of Oral Argument:

Taxation Year	Assessment Objected To	Notice of Objection	Response of CRA Appeals Division
			Confirmation	Reassessment
1988	September 27, 1996	December 19, 1996	Sep 18, 2003	-
1989	September 27, 1996	December 19, 1996	Sep 18, 2003	-
1990	September 27, 1996	December 19, 1996	Sep 18, 2003	-
1991	September 27, 1996	December 19, 1996	Sep 18, 2003	-
1992	August 6, 1997	October 29, 1997	-	Sep 18, 2003
1993	August 6, 1997	October 29, 1997	-	Sep 18, 2003
1994	October 25, 1999	December 23, 1999	-	Sep 18, 2003
1995	August 1, 2000	October 30, 2000	Sep 18, 2003	-
1996	May 4, 2001	June 30, 2001	Sep 18, 2003	-

[5]      As can be seen from the above, in response to Newmont's objections to the reassessments of the three taxation years in issue, the Minister confirmed by Notice of Confirmation the assessments objected to in respect of the 1990 and 1991 taxation years, and reassessed by Notice of Reassessment the 1992 taxation year. It is because of this difference in treatment i.e., confirmation versus reassessment, that Newmont's argument regarding subsections 165(7) and 169(2.1) pertains only to the 1992 appeal. This argument cannot be made in respect of the Minister's confirmation of his assessments of the 1990 and 1991 taxation years because subsection 165(7) applies only where the Minister "reassesses" in response to a taxpayer's objection.

[6]      With respect to Grounds (a) and (b), Newmont concedes that if the Court rejects its interpretation of the relevant legislative provisions under Ground (c), then its arguments based on waiver and estoppel must also fail. For this reason, I will begin by considering Newmont's statutory interpretation argument under Ground (c).

Ground (c):

"Subsection 169(2.1) does not apply to Newmont's appeal for 1992"

Part 1 - "Because it is brought under subsection 165(7), not subsection 169(1)"

[7]      Newmont's argument in support of a right of appeal created by paragraph 165(7)(a) appears in paragraphs 94 to 98 of its Outline of Oral Argument:

94.        Newmont's appeal in relation to 1992-1994 is an appeal under subsection 165(7) in that it is an appeal in response to a reassessment arising out of a notice of objection.

           

95.        Paragraph 165(7)(a) reads:

"Where a taxpayer has served in accordance with this section a notice of objection to an assessment and thereafter the Minister reassesses the tax, interest, penalties or other amount in respect of which the notice of objection was served or makes an additional assessment in respect thereof and sends to the taxpayer a notice of the reassessment or of the additional assessment, as the case may be, the taxpayer may, without serving a notice of objection to the reassessment or additional assessment,

(a)         appeal therefrom to the Tax Court of Canada in accordance with section 169 ..."

(TAB 17)

96.        The Federal Court of Appeal in TransCanada Pipeline describes subsection 165(7) as permitting:

"an appeal without the prior serving of a notice of objection when, after the serving of an initial notice of objection, the Minister reassesses or makes an additional assessment. In such cases, a taxpayer who is still dissatisfied may appeal without serving a further notice of objection."

TransCanadaPipeline Limited, supra at 5629 (TAB 29)

97.        Subsection 169(2.1) begins with the words "Notwithstanding subsections (1) and (2),...". Thus, while subsection 169(2.1), where it applies, can limit the issues that a large corporation may raise in an appeal under subsection 169(1) or (2), subsection 169(2.1) does not limit the issues that a large corporation may raise in an appeal under paragraph 165(7)(a). If Parliament intended that subsection 169(2.1) limit the issues a large corporation may raise in an appeal under paragraph 165(7)(a), the section would have read "Notwithstanding subsections 169(1) and (2) and subsection 165(7),...".

98.        Since Newmont's 1992 appeal is brought under subsection 165(7), the 169(2.1) large corporation appeal limitation cannot apply to Newmont's 1992 appeal.

[8]      When the Minister notified Newmont by Notice of Reassessment dated September 18, 2003 of his decision to reassess for 1992 under subsection 165(3), Newmont relied on paragraph 165(7)(a) to forego serving another notice of objection on the Minister in respect thereof and appealed directly to the Tax Court of Canada. Having filed a notice of appeal in response to the September 18, 2003 reassessment, Newmont argues that it was, in effect, "appealing" under subsection 165(7); that is to say, deriving its substantive right of appeal from that provision. There being nothing in subsection 165(7) to restrict appeals by large corporations, or to link such "appeals" to subsection 169(2.1), Newmont concludes that it is entitled to include the Gold Loan Issue in its Notice of Appeal for the 1992 taxation year.

[9]      I do not find these arguments convincing. Beginning with what Newmont calls its "appeal" under paragraph 165(7)(a), the case law is clear[2] that a taxpayer's right to appeal an assessment under the Income Tax Act is rooted in section 169. In Minister of National Revenue v. Parsons[3], the Federal Court of Appeal stated at paragraph 2:

[2]         We are all of the opinion that the appeal must succeed on the narrow ground that the only way in which the assessments made against the respondents could be challenged was that provided in sections 169 and following of the Income Tax Act.

Section 169(1) of the Act reads:

Where a taxpayer has served notice of objection to an assessment under section 165, the taxpayer may appeal to the Tax Court of Canada to have the assessment vacated or varied after either

a)          the Minister has confirmed the assessment or reassessed, or

b)          90 days have elapsed after service of the notice of objection and the Minister has not notified the taxpayer that the Minister has vacated or confirmed the assessment or reassessed,

but no appeal under this section shall be instituted after the expiration of 90 days from the day notice has been mailed to the taxpayer under section 165 that the Minister has confirmed the assessment or reassessed.

[10]     Paragraph 165(7)(a), the provision upon which Newmont relies for its right of appeal, reads:

Where a taxpayer has served in accordance with this section a notice of objection to an assessment and thereafter the Minister reassesses the tax, interest, penalties or other amount in respect of which the notice of objection was served or makes an additional assessment in respect thereof and sends to the taxpayer a notice of the reassessment or of the additional assessment, as the case may be, the taxpayer may, without serving a notice of objection to the reassessment or additional assessment,

(a)         appeal therefrom to the Tax Court of Canada in accordance with section 169; [Emphasis added.]

...

[11]     To argue that it brought its appeal under paragraph 165(7)(a) requires Newmont to turn a blind eye to the qualifying final phrase of that provision. Though paragraph 165(7)(a) permits a taxpayer to dispense with serving another notice of objection and to proceed with an appeal to the Tax Court of Canada, the clear wording of this provision directs such an appeal to be "in accordance with section 169". To avail himself of the procedural relief in subsection 165(7), a taxpayer must have served at least one notice of objection "in accordance with [section 165]" in response to which the Minister has reassessed. Similarly, to exercise his right of appeal under subsection 169(1), a taxpayer must also have first served a notice of objection to "an assessment under section 165". With the serving of that initial notice of objection, both provisions are simultaneously satisfied: it only makes sense that paragraph 165(7)(a) permits the taxpayer to forego further objection(s) at the departmental level and to seek instead, a final ruling on the issues in dispute by appealing to the Tax Court of Canada in accordance with section 169. That this is the effect of subsection 165(7) was decided by the Federal Court of Appeal in Transcanada Pipelines Limited v. The Queen[4]:

[19]       Subsection 165(7) permits an appeal without the prior serving of a notice of objection when, after the serving of an initial objection, the Minister reassesses or makes an additional assessment. In such cases, a taxpayer who is still dissatisfied may appeal without serving a further notice of objection.

[12]     For reasons not apparent to me, Newmont relied on this passage in support of its argument that paragraph 165(7)(a) creates a substantive right of appeal[5]. While I reject the conclusions drawn by Newmont, if indeed, there is any ambiguity in the passage quoted above, it is resolved in the paragraph immediately following in which the Court makes a clear distinction between the procedural relief in subsection 165(7) and the substantive appeal rights under subsection 169(1):

[20] However, subsection 165(7) does not apply to permit a subsequent appeal from a reassessment issued under subsection 169(3)[6] that disposes of a prior appeal. Paragraph 165(7)(a), in its context, is concerned with the taxpayer's receiving a second reassessment in the period prior to the taxpayer filing a notice of appeal. Paragraph 165(7)(b) is concerned with the period after the taxpayer files a notice of appeal but before the appeal is dealt with. A taxpayer who receives a notice of reassessment in this period may amend the appeal to cover matters in the reassessment. The purpose of subsection 165(7) is to save the time and expense of the filing of a further notice of objection when the Minister reassesses after an original notice of objection is served and the taxpayer is still dissatisfied, and either has not yet appealed or has appealed but the appeal has not been decided. It does not apply after appeal proceedings have been disposed of and, in particular, after they have been disposed of under subsection 169(3). In other words, subsection 165(7) only applies before or during the period when the appeals process is still in progress but is no longer available once that process is concluded. Subsection 165(7) is of no assistance to TCPL in the circumstances of this case.

And, as I read it, subsection 165(7) is of no assistance to Newmont in its attempt to avoid the application of subsection 169(2.1). The Federal Court of Appeal explains that subsection 165(7) is geared toward saving "time and expense" by providing a means to ending the cycle of objections and reassessments that would otherwise be the lot of the chronically dissatisfied taxpayer and a confirmation-averse minister. I am unable to identify in either the legislation or the case law any support for Newmont's argument that paragraph 165(7)(a) creates substantive right of appeal; it merely relieves the still-dissatisfied taxpayer of the obligation to continue to object until the Minister finally confirms his most recent reassessment.

[13]     Finally, at paragraph 97 of its Outline of Oral Argument, Newmont concludes that "[i]f Parliament intended that subsection 169(2.1) limit the issues a large corporation may raise in an appeal under paragraph 165(7)(a), the section would have read "Notwithstanding subsections 169(1) and (2) and subsection 165(7),..."." With respect, this is flawed logic. That no such qualification has been included in the preamble to subsection 169(2.1) is indicative of the absence of any parliamentary intention to create a substantive right of appeal under subsection 165(7) parallel to that in subsection 169(1).

Ground (c):

"Subsection 169(2.1) does not apply to Newmont's appeal for 1992"

Part 2 - "Subsection 169(2.1) Requires an Objection"

[14]     In the second part of its argument under Ground (c), Newmont argues that having filed an appeal rather than serving a notice of objection to the September 18, 2003 reassessment, it cannot bring its situation within subsection 169(2.1):

99.        Even if jurisdiction for Newmont's appeal in 1992 is found in subsection 169(1) rather than subsection 165(7), pursuant to its terms subsection 169(2.1) only applies where the assessment being appealed to the Tax Court has been the subject of a notice of objection.

100.      Subsection 169(2.1) reads as follows:

"Notwithstanding subsections 169(1) and 169(2), where a corporation that was a large corporation in a taxation year (within the meaning assigned by subsection 225.1(8)) served a notice of objection to an assessment under this Part for the year, the corporation may appeal to the Tax Court of Canada to have the assessment vacated or varied only with respect to

(a)         an issue in respect of which the corporation has complied with subsection 165(1.11) in the notice, or

(b)         an issue described in subsection 165(1.14) where the corporation did not, because of subsection 165(7), serve a notice of objection to the assessment that gave rise to the issue

and, in the case of an issue described in paragraph 169(2.1)(a), the corporation may so appeal only with respect to the relief sought in respect of the issue as specified by the corporation in the notice." (emphasis added)

(TAB 17)

101.      The preamble of subsection 169(2.1) states two conditions that must be satisfied before the limitations provided for by subsection 169(2.1) apply. These conditions are:

(a)         the taxpayer is a large corporation as defined in subsection 225.1(8), and

(b)         the taxpayer served a notice of objection to the assessment being appealed.

102.      Where these two conditions are satisfied, the issues that the large corporation may raise in its appeal are limited procedurally as provided in paragraphs (a) and (b) of subsection 169(2.1). Where these two conditions are not satisfied, subsection 169(2.1) does not apply.

103.      The structure of subsection 169(2.1) is one commonly used in the Income Tax Act. There is a preamble setting out conditions that must be met for various consequences or rules (which are set out following the preamble) to apply. This common grammatical structure was recognized by the Supreme Court of Canada in Antosko v. The Queen when considering subsection 20(14). The Supreme Court confirmed that:

"The grammatical structure of subsection 20(14) is similar to a number of provisions in the Act in which Parliament lists the income tax consequences that arise when certain preconditions are met. Usually, the preconditions are set out in an introductory paragraph or paragraphs and the consequences in separate subparagraphs."

Antoskov. The Queen [1994] 2 S.C.R. 312 at 332 (TAB 22)

104.      The preconditions for the application of subsection 169(2.1) are not satisfied in respect of Newmont's appeal for its 1992 taxation year. Newmont was a large corporation during 1992, but Newmont did not serve a notice of objection to the September 18, 2003 reassessment. Therefore, subsection 169(2.1) cannot apply to Newmont's appeal as it relates to 1992.

105.      Newmont served a notice of objection to the Minister's August 6, 1997 notice of reassessment for 1992. But Newmont's appeal as it relates to 1992 is not and cannot be an appeal of the August 6, 1997 reassessment because that reassessment was nullified and superseded by the September 18, 2003 reassessment.

106.      It is well established that a reassessment of a taxation year nullifies any preceding assessment of that taxation year.

"Assuming that the second reassessment is valid, it follows, in my view, that the first reassessment is displaced and becomes a nullity. The taxpayer cannot be liable on an original assessment as well as on a re-assessment. It would be different if one assessment for a year were followed by an "additional" assessment for that year. Where, however, the "reassessment" purports to fix the taxpayer's total tax for the year, and not merely an amount of tax in addition to that which has already been assessed, the previous assessment must automatically become null."

Abraham (No. 1) v. M.N.R., 66 DTC 5451 at 5452 (Ex. Ct.) (TAB 23)

107.      The Crown in its reply at paragraphs 58 through 61 cites a decision of the Tax Appeal Board, a decision of the Federal Court of Appeal and a decision of the Tax Court of Canada in support of the suggestion that an assessment which is superceded by a reassessment is not a nullity but is just changed over time. With respect, this is a misinterpretation of the applicable decision of the Tax Appeal Board and of the Federal Court of Appeal. Furthermore, the Tax Court of Canada decision cited has been superceded by a subsequent decision of the Federal Court of Appeal in any event.

108.      In the 1968 decision of the Tax Appeal Board in Andrulionis, the Board faced a situation where the Crown was attempting on a procedural ground to deny the taxpayer a right to appeal a tax assessment. The Crown had argued that the taxpayer could not appeal directly from a reassessment made after an objection because the reassessment resulted in the first assessment becoming a nullity such that there was no assessment that had been objected to. While the Board rejected the Crown's motion to quash the appeal, it did so while acknowledging that a reassessment nullifies the previous assessment.

Andrulionisv. M.N.R., 68 DTC 76 (T.A.B.) (TAB 24)

Walkemv. M.N.R., 71 DTC 5288 at 5291 (F.C.T.D.) (TAB 25)

109.      The Tax Court has confirmed that in a situation where the CRA issues a reassessment subsequent to the filing of an appeal with the Tax Court of Canada, the assessment first appealed from becomes a nullity and the appeal must either be amended or quashed.

Roland Parent v. The Queen, 2003 DTC 1002 at 1006 (T.C.C.) (TAB 26)

110.      The Crown also cites the Lambert v. The Queen decision of the Federal Court of Appeal against the well-established principle that a re-assessment nullifies a previous assessment. However, the Lambert decision dealt with the question of whether a liability to pay tax continued despite the issuance of a reassessment. The Federal Court of Appeal concluded that a liability to pay tax and an assessment are different things and that a reassessment does not nullify the liability even if it nullifies the previous assessment.

Lambert v. The Queen, 76 DTC 6373 at 6375 (FCA) (TAB 27)

111.      The 1986 decision of the Tax Court of Canada in Super Jewellers v. M.N.R. is a decision made in the context of the interplay between criminal tax evasion and civil tax law. To the extent that it suggests that a reassessment is just a variance of the previous assessment and does not nullify the previous assessment, it is not consistent with current jurisprudence.

Super Jewellers v. M.N.R., 86 DTC 1404 (TCC) (TAB 28)

112.      The Federal Court of Appeal has recently confirmed that a reassessment of a taxpayer's total tax liability does nullify a prior assessment:

The issuance of notices of reassessment on November 8, 1999 for those years displaced the July 11, 1995 notices of reassessment. The July 11, 1995 notices of reassessment became nullities and there is no relief that the Tax Court could grant on appeal from them. They ceased to exist when the November 8, 1999 reassessments were issued and there was nothing that the Tax Court could vary or refer back to the Minister with respect to them. See Abrahams (No. 1) v. Minister of National Revenue (1966), 66 DTC 5451, at 5453 (Ex. Ct.).

TransCanadaPipeline Limited v. The Queen, 2001 DTC 5625 at 5628 (F.C.A.) (TAB 29)

113.      The September 18, 2003 reassessment for Newmont's 1992 taxation year fixes Newmont's total tax liability. This is apparent from the face of this notice of reassessment and was confirmed by Mr. Fogel on cross-examination. Therefore, the September 18, 2003 reassessment of 1992 nullified and superseded the August 6, 1997 assessment of 1992 previously objected to by Newmont.

Paragraph 169(2.1)(b)

114.      Paragraph 169(2.1)(b) does not apply to Newmont's appeal of the September 18, 2003 notice of reassessment of 1992. Paragraph 169(2.1)(b) can only apply if the conditions in the preamble of subsection 169(2.1)(b) are satisfied, i.e. "where...a large corporation...served a notice of objection to an assessment". Newmont did not serve a notice of objection to the September 18, 2003 notice of reassessment of 1992.

115.      Paragraph 169(2.1)(b) limits the issues that may be raised by the large corporation to "an issue described in subsection 165(1.14)". This refers to a new issue raised by the Minister when reassessing pursuant to subsection 165(3) in response to the taxpayer's notice of objection and does not apply to Newmont.

[15]     I accept Newmont's position that the August 1997 reassessment was the "assessment" Newmont initially objected to and that that "assessment" was rendered a nullity by the Minister's September 18, 2003 reassessment. I do not accept, however, Newmont's conclusion that this nullification of the earlier quantification of its tax liability had the dual effect of nullifying Newmont's act of having filed a notice of objection to the August 1997 assessment, thus making it impossible for Newmont to appeal under subsection 169(1) and, possible to avoid the restrictions of subsection 169(2.1).

[16]     At the hearing, Newmont referred the Court to paragraph 7 of Lambert v. R.[7] in support of its position that a "reassessment" is not an "assessment". This is, in my view, a misreading of Lambert but, in any event, that case involved a taxpayer who sought to avoid paying amounts owing for unpaid tax under a section 223 certificate by arguing that the reassessments in effect when the certificate was issued had been nullified by subsequent reassessments thereby simultaneously nullifying his indebtedness under the certificate. I accept the Crown's position that a more complete explanation of Chief Justice Jackett's rejection of the argument Newmont seeks to advance appears in paragraphs 7 and 8:

[7]         On examining new assessments, we are inclined to the view that they are not further assessments but are reassessments. This question did not, however, have to be decided because, in our view, whichever they are, they do not, in themselves, affect the validity of the section 223 certificate or operate automatically to confer on the appellant a right to have the section 223 certificate nullified.

[8]         As appears from our review of the provisions of the Act, there is a difference between

(a)         a liability under the Act to pay tax, and

(b)         an "assessment" (including a reassessment or a further assessment), which is a determination or calculation of the tax liability.

It follows that a reassessment of tax does not nullify the liability to pay the tax covered by the previous [assessment] as long as that tax is included in the amount reassessed.

More recently, the Federal Court of Appeal reached the same conclusion in R. v. Loewen[8] where at paragraph 6 of the decision, Sharlow, J.A. explained:

[6] An assessment is the determination by the Minister of the amount of a person's tax liability: Pure Spring Co. v. Minister of National Revenue, [1946] Ex.C.R. 471, [1946] C.T.C. 169, (1946) 2 DTC 844. A taxpayer's initial assessment for a taxation year typically takes into account what is reported by the taxpayer in an income tax return. An initial assessment may be appealed, but most appeals are from reassessments, in which the Minister assesses additional tax to reflect specific changes to the taxpayer's taxable income. The word "assessment" is used to refer to assessments and reassessments. [Emphasis added]

[17]     Thus, where the Minister reassesses the assessment (be it an initial "assessment" or a subsequent "reassessment") and the taxpayer is still unhappy with the result, he has two choices: he may serve another notice of objection on the Minister under subsection 165(1), or he may rely on subsection 165(7) to dispense with that step and appeal directly to the Tax Court of Canada in accordance with subsection 169(1). Newmont's argument that a reassessment of the tax originally assessed renders a nullity the earlier assessment[9] is not disputed[10]. It does not follow, however, that the taxpayer is then left with no "assessment" to appeal when the Minister reassesses after his initial notice of objection. It simply means, as explained in Lambert, that the Minister's most recent calculation of the amount of tax owed by the taxpayer for that taxation year replaces the one prior to it. Thus, although the quantum of tax owing may change, the taxpayer's underlying tax liability and his right to challenge each ministerial determination of it, does not.

[18]     In paragraphs 116 to 120 of the final portion of its argument under Ground (c), Newmont refers the Court to various cases and texts to assist in the interpretation of subsection 169(1). In particular, Newmont cited the Supreme Court of Canada in Shell Canada Limited v. The Queen[11], in which the Court directed that "... where the provision at issue is clear and unambiguous, its terms must simply be applied." Though expressed in the Act's typically inelegant style, sections 165 and 169 are nonetheless clear and unambiguous in their meaning: simply applied, their terms ensure that whether at the objection or appeal stage, in challenging the Minister's assessment of its tax liability, a large corporation will be restricted to those issues described in accordance with subsection 165(1.11). The right to object to an assessment is rooted in subsection 165(1) which provides that a taxpayer "may", within the time permitted, serve on the Minister "...a notice of objection in writing, setting out the reasons for the objection and all relevant facts". Where that taxpayer is a large corporation, however, more stringent requirements apply: pursuant to subsection 165(1.11), where a large corporation objects to an assessment, it "... shall"

(a)         reasonably describe each issue to be decided;

(b)         specify in respect of each issue, the relief sought, expressed [in a certain manner]; and

(c)         provide facts and reasons relied on by the corporation in respect of each issue.

[19]     Where the large corporation fails to comply with (b) or (c), subsection 165(1.12) allows for deemed compliance where, within 60 days of receiving the Minister's written notice of such deficiencies, the large corporation submits the missing information. No such allowance, however, applies in respect of the issues themselves. Subsections 165(1.13) and (1.14) operate to limit the right of a large corporation to object to any further reassessments made in respect of the initial objection to only those issues properly described under subsection 165(1.11), except where new issues have been raised by the Minister in subsequent reassessments. Similarly, where a large corporation chooses to forego further objections under subsection 165(7) and to appeal to the Tax Court of Canada in accordance with subsection 169(1), subsection 169(2.1) operates to limit the issues which may be included in that appeal to those originally identified in compliance with subsection 165(1.11). Applied to Newmont's circumstances, the combined effect of sections 165 and 169 is to preclude the company from including the Gold Loan Issue in its Notice of Appeal.

[20]     The Federal Court of Appeal considered the effect of the large corporation rules in R. v. Potash Corporation of Saskatchewan Inc.[12]:

I recognize that this is a harsh result for PCS, and a harsh rule for large corporations. A large corporation that discovers an error in an income tax return after it has filed a notice of objection or a notice of appeal may find itself barred from taking proceedings to compel the Minister to correct the error. However, that is the result Parliament intended.

[21]     Malone, J.A. explained the purpose of the large corporation rules at paragraph 4 of that judgment:

The Large Corporation Rules were enacted in 1995 to discourage large corporations from engaging in a full reconstruction of their income tax returns for a particular year, after the objection or appeal process had started, based on developing interpretations and the outcome of court decisions in litigation involving other taxpayers. The reasons for these subsections are well-stated by R.M. Beith in his paper entitled "Draft Legislation on Income Tax Objections and Appeals" as outlined in the Report of Proceedings of the Forty-Sixth Tax Conference, 1994 Conference Report (Toronto: Canadian Tax Foundation, 1995), 34:2.

One of the reasons for the legislation is to identify disputed issues much sooner so that a taxation year's ultimate tax liability can be determined in a timely way.

Owing to the complexity of the law and the number of issues, for many years a number of large corporations have had some of their taxation years left open through outstanding notices of objection or appeals, so that they have been able to raise new issues based on emerging interpretations and the outcome of court decisions challenged by other taxpayers.

Recently, a particular problem was identified by the auditor general and the Public Accounts Committee. A case dealing with the calculation of the "resource allowance" which was decided against the department, resulted in claims not only based on the particular facts decided by the court but in respect of a new issue concerning the calculation of the "resource allowance". These claims, both directly and indirectly from the court decision, involved significant amounts of tax and interests.

In summary, it is essential that revenues be more predictable and therefore that potential liabilities be identified and resolved within a more reasonable time.

Simply put, Parliament wants the Minister of National Revenue (the Minister) to be able to assess at the earliest possible date both the nature and quantum of pending tax litigation and its potential fiscal impact.

[22]     In view of my conclusions, Newmont's arguments under Ground (a) - "Waiver" and Ground (b) - "Estoppel" must also fail. The Act having specified the prerequisites which must be satisfied before certain issues may be included in an appeal by a large corporation, the Tax Court of Canada has no jurisdiction to entertain appeals in respect of issues where those statutory conditions have not been fulfilled. The law is well settled that the Court's jurisdiction cannot be expanded by the consent or agreement of the parties[13]. Similarly, the doctrine of estoppel is of no help to Newmont; in paragraph 33 of its Written Submission, the Crown cited the following words from the Federal Court of Appeal in Hawkes v. The Queen[14]:

It is trite law to say that estoppel cannot apply so as to prevent the Minister from performing the duties imposed on him by the Income Tax Act, namely the proper assessment of returns in accordance with the law.

and at paragraph 34, the words of Bowman, A.C.J. (as he then was) in Consoltex v. The Queen[15]:

The doctrine [of estoppel] has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law, it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved, because estoppels cannot override the law.

[23]     As conceded by Newmont at the hearing, if waiver and estoppel are not available to Newmont, subsection 169(2.1) must apply to its appeals of the 1990 and 1991 taxation years.

[24]     Accordingly, the Crown's application is granted, with costs for two counsel, and it is ordered that:

a)        paragraphs 40 to 52, 53(c) and 62 be struck from Newmont's Notice of Appeal; and

b)       the Crown shall have 30 days from the date of this motion Order to file its Reply to the Notice of Appeal.

          This Amended Reasons for Order is issued in substitution for the Reasons for Order dated March 31, 2005.

Signed at London, Ontario this 14th day of April, 2005.

"G. Sheridan"

Sheridan, J.

CITATION:

2005TCC143

COURT FILE NO.:

2003-4491(IT)G

STYLE OF CAUSE:

Newmont Canada Limited v. Her Majesty the Queen

PLACE OF HEARING:

Toronto, Ontario

DATE OF HEARING:

November 30, 2004

AMENDED REASONS FOR ORDER BY:

The Honourable Justice G. Sheridan

DATE OF AMENDED ORDER:

April 14, 2005

APPEARANCES:

Counsel for the Appellant:

Robert B. Hayhoe Steven McLeod

Counsel for the Respondent:

Wendy Burnham Deborah Horowitz

COUNSEL OF RECORD:

For the Appellant:

Name:

Robert B. Hayhoe Steven McLeod

Firm:

Miller Thomson, LLP Toronto, Ontario

For the Respondent:

John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada

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