CITATION: Sequeira v. Minister of Revenue, 2012 ONSC 3575
DIVISIONAL COURT FILE NO.: 209/11
DATE: 20120618
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
ASTON, HERMAN AND POMERANCE JJ.
BETWEEN:
VICTOR SEQUEIRA AND JOE GARCIA
Applicants
– and –
THE MINISTER OF REVENUE
Respondent
Jeffrey Radnoff and Kris Gurprasad, for the Applicants
Lori E. J. Patyk and Jessica Fiore, for the Respondent
HEARD at Toronto: June 18, 2012
HERMAN J. (orally)
[1] This is an application for judicial review of a decision of the Minister of Revenue to deny the applicants’ request for an extension of time to file Retail Sales Tax returns for the period of September 1, 2000 to January 2003, and to accept the returns for filing pursuant to s.33 of the Retail Sales Tax Act, R.S.O. 1990, c. R.31 (the “Act”).
[2] The applicants seek an order sending back the initial decision denying the request for an extension of time to the Minister for a redetermination and an order restraining the Minister from collecting the Retail Sales Tax until the determination is made.
[3] The applicants were partners who operated a business called All Systems Corporate Environment. By letter dated October 10, 2003, the Ministry of Revenue advised the applicants that an audit of their business was being conducted under the Act for the period in question. By further letter dated March 16, 2004, the Ministry requested the co-operation of the applicants in conducting the audit, as the company had failed to produce all the required records and the documents requested. An audit was performed and the company was assessed as owing $177,702.24 which included tax, interest and the penalty. The applicants were advised of this assessment by letter dated August 23, 2004.
[4] The applicants claim that the assessment was significantly flawed and could result in a substantial overpayment.
[5] Objections to tax assessments may be made within 180 days of the mailing of the Notice of Assessment by serving the Minister with a Notice of Objection. The 180-day limitation period expired on February 19, 2005. There is a right of appeal from the Minister’s decision to the Superior Court of Justice.
[6] There is no record of the applicants having served a Notice of Objection or seeking an extension of time within which to file a Notice of Objection. According to the applicants they had instructed their accountant to file a Notice of Objection and they only learned that it had not been done some time after the expiration of the limitation period.
[7] By notice dated February 2, 2011, the Ministry of Revenue advised the applicants that it would be taking legal action against them to collect the amount owing, that is $111,318.02. On February 10, 2011, counsel for the applicants sent in a submission to the Ministry requesting the late filing of returns under s. 33 of the Act.
[8] Section 33 of the Act provides:
The Minister may enlarge the time for making any return before or after the time for making it.
[9] The Minister of Revenue declined the applicants’ request to extend the time within which to file returns.
[10] The applicants now seek judicial review of the Minister’s decision. They submit that the Minister erred in his interpretation and application of s.33 of the Act. In particular, they submit that the Minister failed to consider all the relevant factors in arriving at that decision, including the fact that they had intended to file a Notice of Objection and they had made a significant overpayment. Furthermore, they submit that there was a denial of procedural fairness as the result of the Minister’s failure to provide written reasons for the decision, the failure to consider the application in full including the alleged overpayment, the fettering of the Minister’s discretion through the application of an inflexible policy, the failure to consider whether an injustice would result from overpayment and the failure to consider the reasons for the delay and whether the taxpayers had done everything within their power or control to object or appeal.
[11] Judicial review is a discretionary remedy. In the circumstances of this case, we decline to exercise that discretion for two reasons.
[12] One of the grounds on which a court may decline an application for judicial review is mootness (see Coté v. Ontario (Human Rights Commission), [2009] O.J. No. 1833 (Div. Ct.) at para. 11). The principle of mootness applies where the decision of the court will not have the practical effect of resolving the parties’ dispute (see Borowski v. Canada (Attorney General), [1989] I S.C.R. 342 at para. 15). Even if the applicants in this case were permitted to file their returns late, it would have no practical effect on the assessment of the taxes. That is because s.18(3) of the Act provides that the Minister may reassess any tax payable within four years from the day the tax becomes payable. The Minister has no authority to reassess beyond that four- year period (see Bell Canada v. Ontario (Minister of Finance), [2005] O.J. No. 4111 (Ont. S.C.J.)).
[13] The applicants argue that the limitation period in s.18(3) does not apply to vendors because it only refers to tax payable by a purchaser or registrant, but does not refer to tax payable by the vendor. We do not agree.
[14] The statutory scheme of the Act is that it is the purchaser who is required to pay the tax while it is the vendor’s obligation to collect and remit the tax. In our opinion, the limitation period would apply because the taxes in question were payable by purchasers.
[15] As a result, if the applicants were permitted to file late tax returns, it would have no practical effect because the Minister has no authority to conduct a reassessment.
[16] For this reason, the procedural fairness grounds, even if made out, could not affect the outcome.
[17] The second reason for our decision to decline to exercise our discretion is based on the circumstances of this case. The applicants had a statutory remedy available to them, that is, the right to file a Notice of Objection to the assessment with the Minister and the right to appeal from the Minister’s decision. They did not exercise that right. In fact, they did not attempt to seek an extension of time to file the tax returns until almost seven years later and only after receiving notice that the Minister would be taking action to collect against them personally.
[18] To grant the applicants the relief they are seeking would be to permit them to bypass the statutory framework and circumvent the limitation periods provided in the Act for the filing of returns, audits, assessments, objections to assessments and appeals. Even if it would be possible for the court to grant such an order, it is our opinion that the circumstances in this case do not warrant it.
[19] Given these two overriding factors, it is unnecessary to address either the standard of review or the other grounds raised by the applicants.
[20] The application for judicial review is therefore dismissed.
ASTON J.
COSTS
[21] I endorse the Application Record on behalf of the panel, “For oral reasons delivered by Herman J., the application is dismissed. The applicants are jointly and severally responsible for payment of costs of this application fixed at $5,000 all inclusive.”
HERMAN J.
ASTON J.
POMERANCE J.
Date of Reasons for Judgment: June 18, 2012
Date of Release: June 29, 2012
CITATION: Sequeira v. Minister of Revenue, 2012 ONSC 3575
DIVISIONAL COURT FILE NO.: 209/11
DATE: 20120618
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
ASTON, HERMAN AND POMERANCE JJ.
BETWEEN:
VICTOR SEQUEIRA AND JOE GARCIA
Applicants
– and –
THE MINISTER OF REVENUE
Respondent
ORAL REASONS FOR JUDGMENT
HERMAN J.
Date of Reasons for Judgment: June 18, 2012
Date of Release: June 29, 2012