BETWEEN:
and
REASONS FOR ORDER
(Delivered orally from the bench on October 31, 2005, in Toronto, Ontario.)
[1] I do not need to hear from you, Ms. Sloan. This application is without any merit whatsoever. The application is pursuant to section 167 of the Income Tax Act for an Order extending the time within which an appeal may be brought to this Court from assessments of income tax for the taxation years 2001 and 2002.
[2] The application to extend the time was initially filed in the form of a letter on May 6, 2005, written by the Applicant's representative, Stanley Kwan, a chartered accountant. Attached to that letter is a copy of the proposed notice of appeal, which makes it clear that the matters in issue, if any appeal were to proceed, would be the deductibility of various expenditures said to be for advertising and promotion, travel, meals and entertainment, and automobile expenses. It is not, in other words, a matter that involves issues of law, but simply issues of fact, which is to say whether or not the amounts were expended, and if so, whether the expenditure of them was for the purpose of gaining or producing income for the corporation. The time limited for appealing to this Court under section 169 of the Act was December 7, 2004in the case of the 2001 taxation year, and February 16, 2005 in the case of the 2002 taxation year.
[3] In his initial application for leave to appeal, Mr. Kwan candidly stated the following:
Initially, when the taxpayer was being audited, they were given the impression that only these two taxation years of this particular corporation were being selected for review. Because the amount involved do not seem to be very significant, they have decided not to appeal the decision by the Appeal Division. Recently, they realize that other related entities in the same corporate group are being treated in the same manner and the amount involved would significantly affect the entire group's ability to carry on its business. Therefore, we would like to seek the permission to appeal the decision and have the courts make a fair judgment.
[4] A date was fixed for the hearing of the application, and at the request of the Applicant that hearing was postponed so that the president of the Applicant corporation would be able to attend the hearing. He was apparently unable to attend the original hearing date because of a prior commitment overseas. On that basis, the hearing date was adjourned to today, and today, instead of the president of the Applicant corporation appearing, counsel on his behalf filed an affidavit sworn by him seven days ago, and advised that he was not here, and so not available to be cross-examined on that affidavit. The affidavit purports to say in paragraph 23 that the application should be granted for various reasons. And I single out the following:
(c) The application was made as soon as circumstances permitted. The special circumstance and consideration involves the nature of the business and being part of an international company, my frequent travels on business trips, therefore, justifies delay in making this application. The Applicant was unable to act during my absence, and causing the delay in submitting the subject Application.
If Mr. Wat were here to be cross-examined on the statement, I find it highly improbable that he would be able to justify it, particularly considering that Mr. Stanley Kwan, a chartered accountant who was authorized by the company to file notices of objection on its behalf and to file a notice of an application for an extension of time in this matter on its behalf, could certainly have filed a notice of appeal. Indeed, he prepared a notice of appeal to accompany his application for an extension of time. Not only could Mr. Kwan have done it, but Ms. Chang, who appeared before me as counsel, and who is styled on the affidavit as counsel for Tai Pan Group International Inc., which I understand to be the parent corporation of the applicant, could have done it. A myriad of people could have done it, had they been instructed to do so, before the time for doing so had elapsed. To file a notice of appeal in a case involving the disallowance of business expenses is not a difficult task.
[5] Returning to paragraph 23 of Mr. Wat's affidavit:
(d) The Applicant and Mr. Kwan exercised diligence and responsibility throughout to coordinate and process the subject application and notice of appeal in their best efforts.
I have no doubt that had Mr. Kwan been instructed to file a notice of appeal within the time limited for doing so, his diligence and responsibility would have been such that no application to extend the time would have been necessary, because he would have carried out that task.
(e) the Applicant had a bona fide intention to appeal, and would like the opportunity to present its case to the court, and the issues be heard by the Court.
That statement simply cannot stand in the face of what I consider to be a more candid expression of the true facts of this case, found in Mr. Kwan's letter of May 6, 2005, where he says, and I paraphrase, that the Applicant had decided not to appeal, following its receipt of the notice of confirmation and the notice of reassessment for these two years, because the amounts involved were not particularly significant. Only after the Minister gave some indication of auditing other corporations within the corporate family of Tai Pan Group International Inc. did it seem like a good idea to appeal. That, unfortunately, does not meet the test that Parliament has established in subsection 167(5) of the Income Tax Act. Tai Pan Group International Inc. will no doubt have its opportunity to pursue appeals through other subsidiary or affiliate corporations if they are reassessed at a later date. However, the fact that one or more related corporations may be reassessed at some time in the future is not a consideration that brings this case within subsection 167(5) of the Act.
[6] Before dismissing the application, I would simply note that if Mr. Wat were seriously disposed to pursue these appeals, he would have been here today, to be subjected to cross-examination on his affidavit, or his counsel would have contacted counsel for the Respondent at some earlier stage and arranged for cross-examination to take place before the hearing, if for some reason he could not be here. I consider it, at the very least, impertinent that Mr. Wat would instruct counsel to obtain an adjournment of the original hearing date on the basis of his unavailability to attend the hearing, and, having obtained a new hearing date on that basis, then not attend, instructing his counsel to indicate that he was too busy to do so. That circumstance alone causes me to have considerable doubt as to the veracity of the bald statements found at paragraph 23 of his affidavit, couched, I may say, in remarkably legal language, for somebody not engaged in the practice of law.
[7] I have no doubt that the true facts are those found in Mr. Kwan's letter of May 25.
[8] The application is dismissed.
Signed at Ottawa, Canada, this 15th day of November 2005.
"E.A. Bowie"
COURT FILE NO.: 2005-1579(IT)APP
STYLE OF CAUSE: 1196289 Ontario Limited and The Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: October 31, 2005
REASONS FOR ORDER BY: The Honourable Justice E.A. Bowie
DATE OF ORDER: October 31, 2005
APPEARANCES:
COUNSEL OF RECORD:
Firm: Tai Pan Group International Inc.
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario