DATE: 20040211

DOCKET: C39640

COURT OF APPEAL FOR ONTARIO

McMURTRY C.J.O., GOUDGE and GILLESE JJ.A.

B E T W E E N:

PETER CHEONG

Osborne G. Barnwell

for the appellant

Appellant

Lynn K. Tosolini

• and -

for the respondent

THE MINISTER OF FINANCE

Roger Taylor

for the Intervener

Respondent

Heard: October 8 and 9, 2003

On appeal from the judgment of Justice Norman D. Dyson of the Superior Court of Justice dated January 30, 2003.

GOUDGE J.A.:

[1] Pursuant to the right given to him by s. 25 of the Retail Sales Tax Act, R.S.O. 1990, c. R.31 (the "RSTA"), the appellant Peter Cheong sought to appeal to the Superior Court of Justice from the assessment made against him for retail sales tax. Section 25(2) of the RSTA provides that the appeal is instituted by filing a notice of appeal with the court, paying the court fee, and serving a copy of the notice of appeal on the provincial Minister of Finance, who is responsible for administering the RSTA.

[2] Section 25(1) provides inter alia that no appeal shall be instituted after the expiration of ninety days from the day the Minister mailed the notice confirming the assessment to the person objecting to it. In this case, the appellant served the Minister with a copy of the notice of appeal on the ninety-first day. He then sought an order extending the time for service. For his part, the Minister brought a cross-motion to strike the appeal as being out of time. The motions judge dismissed the appellant's motion and allowed that of the Minister.

[3] This is the appeal from that order. The central issue is whether the court has jurisdiction to extend time in these circumstances. For the reasons that follow, I conclude that it does not. I would therefore dismiss the appeal.

BACKGROUND

[4] The relevant facts are not in dispute. The appellant was the president and a director and shareholder of a corporation which carried on business as Scarborough Town Hyundai from September 1, 1992 until July 7, 1995, when it filed for bankruptcy.

[5] In February 1995, the corporation received a notice of assessment for retail sales tax that it had collected but not remitted. It filed no notice of objection to this assessment but, because of its subsequent bankruptcy, the Minister recovered nothing from the corporation.

[6] As a result, by notice of assessment dated April 15, 1997, the appellant was assessed as director of the corporation for the retail sales tax collected by the corporation but not remitted during the period from September 1, 1992 to July 7, 1995. Including penalty and interest, the assessment totalled $138,234.45.

[7] The appellant's counsel filed a notice of objection to this assessment dated October 2, 1997 in which he raised the due diligence defence available to him under the RSTA.

[8] In a separate proceeding in the Ontario Court of Justice in August 1998, the appellant was found guilty under s. 42 of the RSTA of having "directed, authorized, assented to, acquiesced in or participated in" the corporation's failure to remit retail sales tax.

[9] Four years after he had filed his objection, and after his counsel had repeatedly sought to have the objection dealt with, the appellant received a letter from the Minister dated on October 17, 2001 confirming that no change would be made in his assessment. The letter, which was copied to counsel, advised the appellant that he had ninety days to appeal to the Superior Court of Justice and set out the steps required to institute that appeal.

[10] The appellant sought to exercise his right to appeal. He filed a notice of appeal with the Superior Court and paid the required fee on January 15, 2002. He served the copy of the notice of appeal by registered mail on the Minister on January 16, 2002, the ninety-first day after October 17, 2001.

[11] When the Minister refused to consent to an extension of time for service, the appellant brought his motion. The Minister then brought his cross-motion.

[12] The motions judge issued his reasons for dismissing the appeal on January 30, 2003. He found that the time for service should not be extended because the appellant had no reasonable chance of success on the appeal and, secondly, in any event, under the RSTA the court had no jurisdiction to extend time for service.

ANALYSIS

[13] The appellant contests both findings. He argues that, assuming the court can do so, this is a proper case to extend the time for service. The more important issue is whether the court has jurisdiction to extend the time for service and, on that score, the appellant says that the motions judge was wrong in his interpretation of the RSTA, most particularly in his failure to advert to s. 29. On this issue, the appellant was supported by the intervener, McKerlie-Millen Inc., whose submissions were helpful in addressing the legislative history of the relevant sections of the RSTA.

[14] Given my conclusion on jurisdiction, it is unnecessary to finally decide whether the motions judge should have extended the time for service of the notice of appeal if the court had the power to do so. Suffice it to say that the appellant has a sympathetic case. He has raised a detailed due diligence defence to the assessment. It is unclear whether that defence was adjudicated upon in the provincial court proceedings. Nothing suggests that the Minister would suffer any prejudice by extending the time for service by one day. The fact that the Minister took some four years to respond to the appellant's original objection, despite the prodding of counsel, takes the edge off any assertion that strict timeliness is an essential component of the process for contesting assessments.

[15] However, the primary issue in this appeal is not whether the court should extend the time for service of the notice of appeal, but whether it has the jurisdiction to do so.

[16] The relevant sections of the RSTA are central to the determination of this issue.

[17] The first of these are ss. 24(1) and (4), which provide for the initial objection to an assessment for retail sales tax and the Minister's obligation to respond. They read as follows:

24. (1) A person who objects to an assessment made against the person under section 18, subsection 19(1) of section 20 or to a statement under section 20 that is served on the person may, within 180 days from the day of mailing of the statement or notice of assessment, serve on the Minister a notice of objection in the form approved by the Minister.

(4) Upon receipt of the notice of objection, the Minister shall with all due dispatch reconsider the assessment or statement objected to and vacate, confirm or vary the assessment or statement, or reassess or serve a fresh statement, and the Minister shall thereupon notify the person making the objection of his or her action in writing.

[18] The provisions governing an appeal from the Minister's notification under s. 24(4) are ss. 25, 26 and 27. For the purposes of this case, the critical subsections, beginning with the cornerstone provided by s. 25(1), are the following:

25. (1) When the Minister has given the notification required by subsection 24(4), the person who has served a notice of objection under that section may appeal to the Superior Court of Justice to have the assessment or statement so objected to vacated or varied, but no appeal under this section shall be instituted after the expiration of ninety days from the day notice has been mailed to such person under subsection 24 (4).

(2) An appeal to the Superior Court of Justice shall be instituted by,

(a) filing a notice of appeal with the court in the form approved by the Minister;

(b) paying a fee to the court in the same amount and manner as the fee payable under regulations made under the Administration of Justice Act on the issue of a statement of claim; and

(c) serving on the Minister a copy of the notice of appeal as filed.

(3) A notice of appeal shall be served on the Minister by being sent by registered mail addressed to the Minister.

(5) The time within which a notice of objection or a notice of appeal is to be served may be extended by the Minister if application for extension is made,

(b) in respect of a notice of appeal, before the expiration of the time allowed under subsection (1) of this section for the service of the notice of appeal.

26. The Minister shall with all due dispatch serve on the person appealing and file in the court a reply to the notice of appeal admitting or denying the facts alleged and containing a statement of such further allegations of fact and all statutory provisions and reasons as he or she intends to rely on, and where the Minister has failed to serve the reply within 180 days from the date of service upon him or her of the notice of appeal, the appellant may, upon twenty-one days notice to the Minister, bring a motion before a judge of the Superior Court of Justice for an order requiring the reply to be served within such time as the judge shall order, and the judge may, if he or she considers it proper in the circumstances, also order that, upon failure by the Minister to serve the reply in the time specified in the order, the assessment or statement with respect to which the appeal is taken shall be vacated and any tax paid pursuant to such assessment, or any refund disallowed pursuant to such statement, shall be repaid or refunded to the appellant, but nothing in this section revives an appeal that is void or affects a statement or assessment that has become valid and binding under subsection 18 (8), subsection 19(3) or subsection 20(9).

27. (1) Upon the filing of the material referred to in section 26 with the Superior Court of Justice, the matter shall be deemed to be an action in the court.

[19] Finally, the section relied on most heavily by the appellant is s. 29:

29. The practice and procedure of the Superior Court of Justice, including the right of appeal and the practice and procedure relating to appeals, apply to every matter deemed to be an action under section 25, and every judgment and order given or made in every such action may be enforced in the same manner and by the like process as a judgment or order given or made in an action commenced in the court.

[20] These various sections of the RSTA put a number of points beyond argument.

[21] First, s. 25(1) gives a right of appeal only if the appeal is instituted within ninety days of the mailing of the Minister's response under s. 24(4). Meeting this limitation period is a condition of the right of appeal. By seeking an extension of time, the appellant acknowledges as much.

[22] Second, s. 25(2) makes clear that serving a copy of the notice of appeal on the Minister is a part of instituting the appeal. The appeal cannot be instituted without that service. Section 25(3) provides that service is by registered mail. Hence, unless proper service is effected within ninety days, the appeal is not instituted within the ninety day limitation period and is barred.

[23] Third, the legislature has explicitly addressed the issue of extending time to serve a notice of appeal. Section 25(5)(b) gives the Minister the power to extend that time provided the extension is sought within the ninety days.

[24] There is no provision in the RSTA which expressly gives the court jurisdiction to extend the time for service after the ninety days have run. However, the appellant, supported by the intervener, argues that s. 29 does so implicitly. The argument has two steps. The appellant says that s. 29 engages the practice and procedure of the court as found in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and the Courts of Justice Act, R.S.O. 1990, c.C.43 once the appellant has taken the steps required by s. 25(2) to institute an appeal, even if those steps are taken after the ninety day limitation period has expired. The appellant then argues that the Rules and the Courts of Justice Act give the court the power to relieve against the statutory limitation period by extending the time for serving a notice of appeal.

[25] In my view, both steps in this argument are flawed.

[26] First, I think that when s. 29 is read in the context of ss. 25, 26 and 27 of the RSTA, it is clear that the practice and procedure of the Superior Court apply only upon completion of the steps called for by both ss. 25 and 26. That is, the appellant must file the notice of appeal, pay the necessary fee and serve the notice of appeal as required by s. 25. And the Minister must then serve and file his reply as required by s. 26. Short of this, the practice and procedure of the Superior Court can offer no help to the appellant.

[27] The logic of the statutory language mandates this result. Section 29 requires that a matter be deemed to be an action before the practice and procedure of the Superior Court can apply to it. Section 27 is the only provision under which a matter can be deemed an action. Section 27 states that this deeming can occur only on the filing of the Minister's reply. Indeed, the legislature amended this section of the RSTA in 1975 to delay the point at which a matter is deemed an action until the Minister has filed his reply under s. 26. Before this amendment, a matter was deemed an action upon the completion of the steps required of the appellant under s. 25.

[28] However, the appellant argues that because s. 29 makes the practice and procedure of the Superior Court applicable to every matter deemed to be an action under s. 25, only the steps to be taken by the appellant must occur before the remedial power in the Rules and the Courts of Justice Act can be resorted to. The difficulty with this proposition is that s. 25 does not deem a matter to be an action. The legislature cannot therefore have intended that the phrase "under s. 25" in s. 29 be coupled with the deeming phrase that immediately precedes it. Rather"under s. 25" must only identify the matter to which the practice and procedure of the Superior Court will apply once the matter is deemed to be an action. In other words, the court's practice and procedure applies to every matter under s. 25 once it is deemed to be an action. Because of s. 27, this necessitates that the steps required by both ss. 25 and 26 be completed before resort can be had to the court's practice and procedure.

[29] The appellant also argues that the explicit inclusion of "the right of appeal" in "the practice and procedure" made applicable by s. 29 must mean that the practice and procedure applies to the right of appeal itself, including its limitation period. However, the flaw in this proposition is that "the right of appeal" in s. 29 cannot refer to the right of appeal from an RSTA assessment. There is nothing in the practice and procedure of the Superior Court that provides for the right of appeal from an assessment. Rather, that right of appeal is accorded by s. 25(1) of the RSTA if the ninety day limitation period is complied with. Therefore, the right of appeal referred to in s. 29 must refer to the right of appeal from the Superior Court. Section 29's reference to "the right of appeal" thus has no bearing on the appellant's argument.

[30] The cases cited by the appellant do not support a conclusion that s. 29 of the RSTA allows the appellant access to the court's practices and procedure to extend the time to serve the notice of appeal after the statutory limitation period has expired. Unlike Molson Ontario Breweries v. Ontario (Minister of Finance), [1985] O.J. No. 295 (S.C.O.) and Helou (c.o.b Your Choice Pizza & Wings) v. Ontario (Minister of Finance), [2002] O.J. No. 3973 (S.C.), (leave to appeal to the Divisional Court granted [2002] O.J. No. 4556), this is not a case where estoppel can be raised against the Minister. And, unlike K.C. v. College of Physical Therapists of Alberta, 1998 ABCA 213, [1998] A.J. No. 99 (C.A) at para. 12 in this case, the statutory right of appeal in s. 25(1) of the RSTA is clearly conditional on the appeal being instituted within the ninety day limitation period.

[31] The inability of the court to relieve against the ninety day limitation period that results from this statutory interpretation may seem to carry draconian results. Indeed, as Iacobucci and Major JJ. wrote in their dissenting opinion in Novak v. Bond, 1999 685 (SCC), [1999] 1 S.C.R. 808 at para. 8: "Almost all applications of limitations statutes will seem harsh. But their finality should not obscure their value."

[32] However, the circumstances of this particular limitation period may at least soften that sense of harshness. The ninety days provided by s. 25(1) of the RSTA are triggered by a clear event, namely the Minister's response under s. 24(4) to the objection to the assessment. The person required to comply with the limitation period will already have set out his or her concerns with the assessment in the objection previously filed pursuant to s. 24(1). And, as in this case, the person may well have legal assistance by the time the limitation period starts to run.

[33] Thus, I think that, taken in context, the meaning of s. 29 of the RSTA is clear. The practice and procedure of the Superior Court is available to an appellant only once the steps required by both ss. 25 and 26 are properly completed and the matter is therefore deemed an action. That practice and procedure is not available at the s. 25 stage to assist an appellant to extend the time for service of the notice of appeal after the ninety day limitation period in s. 25(1) has expired. At that point, the right to appeal is gone. Thus, the appellant in this case cannot look to the practice and procedure of the Superior Court for relief from the statutory limitation period set out in s. 25(1) of the RSTA.

[34] The second step in the appellant's argument is also flawed. Even if the practice and procedure of the Superior Court could be engaged prior to the filing of the Minister's reply under s. 26 of the RSTA, nothing in the Rules of Civil Procedure or the Courts of Justice Act empowers the court to extend the statutory limitation period clearly set out in s. 25(1).

[35] The rule dealing with extension of time is rule 3.02. It gives the court discretion to extend time, but only time prescribed by the Rules. This rule does not permit the court to extend a limitation period prescribed by statute. See Murphy v. Welch; Stoddart v. Watson, 1993 59 (SCC), [1993] 2 S.C.R. 1069 at para. 15.

[36] Nor do ss. 11 or 146 of the Courts of Justice Act do so. Section 11 gives the Superior Court of Justice all the jurisdiction historically exercised by courts of common law and equity. Section 146 provides that any jurisdiction which the court has shall be exercised consistent with the due administration of justice in the absence of any express provision for its exercise. Neither section confers jurisdiction on the court to override a clearly expressed statutory limitation period such as that found in s. 25(1) of the RSTA. See Dickson J. in College Housing Co-operative Ltd. v. Baxter Student Housing Ltd., 1975 164 (SCC), [1976] 2 S.C.R. 475 at p. 480.

[37] Thus, I conclude that both steps in the appellant's argument are misconceived. Section 29 of the RSTA simply does not give the court jurisdiction to extend the time for service of the notice of appeal in the circumstances of this case. The court does not have the power to relieve against the limitation period in s. 25(1) of the RSTA.

[38] The motions judge was correct to find that he had no jurisdiction. The appeal is dismissed. However, we are unsympathetic to the Minister's request for costs given that his successful complaint about the appellant being one day late comes in a case where he took some four years to discharge his duty to respond "with all due dispatch" to the appellant's original objection. There will be no order as to costs.

Released: February 11, 2004 "RRM"

"S.T. Goudge J.A."

"I agree R.R. McMurtry C.J.O."

"I agree E.E. Gillese J.A."