Docket UT92102
Order UT94-1IN THE MATTER of an appeal by D.F. Lunnen of a decision of the Provincial Tax Commissioner.
BEFORE THE COMMISSION
on Tuesday, the 30th day of August, 1994.
Linda Webber, Chair
John L. Blakney, Vice-Chair
Order
Contents
Reasons for Order
1. Introduction
2. Discussion & Findings
Order
Reasons for Order
1 Introduction
Sections 9 and 10 of the Revenue Administration Act, Stats. P.E.I. 1991, Cap R-13.2, read as follows:
9. (1) Where a person considers that he is not liable to taxation under a revenue Act or disputes liability for the amount assessed against him, he may, within sixty days of the date of service or mailing of the notice of assessment serve on the [Provincial Tax] Commissioner a notice of objection setting out the reasons for the objection and all relevant facts.
(2) A notice of objection is sufficiently served if delivered to the office of the Commissioner or sent by registered mail addressed to the Commissioner.
(3) The Commissioner shall, within sixty days of receipt of the notice of objection, reconsider the assessment or estimate and vacate, confirm or vary it, and he shall thereupon notify the objector of his decision by registered mail.
10. (1) If a taxpayer or collector is dissatisfied with the decision of the Commissioner under subsection (3), he may, within thirty days from the date of mailing of the decision, appeal to the Island Regulatory and Appeals Commission hereafter referred to as the Commission.
(2) Any appeal shall be commenced by serving upon the Commission a notice of appeal in writing setting out the grounds of the appeal and stating briefly the facts relative thereto.
(3) A notice of appeal is sufficiently served if delivered to the office of the Commission or sent by registered mail addressed to the Commission.
(4) On the hearing of the appeal both the appellant and the Commissioner are entitled to appear and be heard and to submit further evidence.
(5) The Commission may, in writing, designate a person to act on its behalf and hear an appeal under this section and any reference in this section or section 11 to the Commission includes a person so designated.
(6) Upon any appeal, the Commission may affirm, vary or reverse the decision of the Commissioner and shall give the appellant written notice of its decision by registered mail.
On September 22, 1992, the Commission received the following letter:
RR 1
Mt. Stewart P.O.
C0A 1T0
September 21, 1992
Chairman
The Island [Regulatory and Appeals] Commission
P.O. Box 577
Charlottetown, P.E.I.
C1A 7L1
Dear Sir:
I have a dispute with the Minister of Finance over what I perceive to be an unjust and improper revenue tax assessment. I went through the procedure of appealing the assessment to the Commissioner of Taxation and received his unfavourable decision on January 13, 1992. The commissioner failed to notify me that I had to appeal his decision to your commission and by the time I discovered this fact the 30 day appeal period under the Revenue Administration Act had expired. I hereby petition your commission to waive the 30 day appeal deadline and ask you to give me the opportunity to present my case in the interest of justice.
If you cannot waive the appeal deadline I wish to present a Charter challenge to your commission in that I am being denied the opportunity to have my appeal heard in accordance with the principles of fundamental justice as outlined in Section 2(e) of the Canadian Bill of Rights. As I understand it, The Bill of Rights is the foundation of Canadian law and overrides the Revenue Administration Act. As I understand the Island Regulatory and Appeals Commission Act, the Commission has the same juristiction (sic) as a court of law and, if you refuse my request to hear my appeal, please explain why this is so.
I enclose a chronology of my dispute for your review. If you will hear the appeal I will supply a formal presentation in the near future
Yours truly
(Sgd) D.F. Lunnen
D.F. Lunnen. C.A.
The assessment in contention relates to provincial sales tax claimed by the (then) Department of Finance ("Department") to be owing on a boat, boat trailer and a truck purchased by Mr. Lunnen in the United States in the summer of 1991. The Notice of Assessment issued by the Department on October 2, 1991 shows the assessment broken down as follows:
| Purchases | $16,090.61 |
| Tax on Purchases | 1,609.06 |
| Total Tax | 1,609.06 |
| Interest to Sep. 30/91 | 48.27 |
| Total Assessment Due | $ 1,657.33 |
On November 11, 1991, Mr. Lunnen filed the following objection with the Provincial Tax Commissioner:
November 11, 1991
Commissioner of Taxation
Revenue Division, Department of Finance
Province of P.E.I.
Canada
C1A 7N1
Dear Sir:
In accordance with Section 9 (1) of the Revenue Tax Act (sic) I hereby dispute Notice of Assessment # 0847, October 2, 1991.
It would appear that your people got carried away in their zeal to collect taxes without proper investigation of the facts. Your assessment is based on a copy of a customs document indicating that I paid customs duty and GST at the US border crossing point. The customs document copy, which was supplied to you freely by me, stated that I paid applicable assessments on a 1985 Pick-up truck and a 'cabin cruiser and miscellaneous purchases'. My PEI address was on the customs document as being my Canadian residence. Why, sir, would you assume that the goods crossing the US border were all brought to PEI?. I have a duly registered company in Newfoundland (D.F. Lunnen Limited). Why could not the 'cabin cruiser' (which was actually a 17 ft. Runabout) be destined to Newfoundland?
In fact, the 1985 pickup truck was brought to PEI. It has a legal Florida plate which is legal in PEI (as I understand your Dept. Of Transport) for 30 days. I parked the vehicle in my driveway in Millcove, and it was never moved until it was sold to the person who paid the PEI tax when he bought the unit from me. I went with the purchaser at the time of tax paying because your people were concerned that we were trying to cheat the PEI government out of taxes. I argued with your people that the tax should be paid on the $5700 sales price rather than the $5250 cost to me. NO SIR, they insisted on the tax on $5250. As I see it, the PEI Government lost $45. in taxes, but who am I to argue with bureaucrats? I've learned from many years of gray hairs and high blood pressure that it is a useless task. In any event, the tax was paid on the 1985 pickup and you know it.
Now then, you will try to force me to pay tax on a vehicle that I brought to PEI with the intention of selling same and had no intention of evading taxes. If a car dealer were to bring the same vehicle into PEI for resale, would you assess him the tax? Where does it say in the Revenue Tax Act that a vendor has to be an incorporated company? As I understand it, a person does not have to be licensed as a used car dealer unless he imports more than four vehicles in any year. Would you treat me any differently?
I contend to you that I was not the purchaser, or user, or consumer of the 1985 pickup truck, but that I was a vendor of same and that the point of sale was when the truck was registered as a licensed vehicle in PEI and that the PEI tax was properly paid on the truck at that time of transfer by the purchaser. With all due respect, I think your attempt at double taxation is unfair, immoral and unjust, to put it politely!
I expect you will want to carry the matter further and I await your reply.
Yours truly,
(Sgd) D.F. Lunnen
D.F. Lunnen, C.A.
encl.
The Provincial Tax Commissioner responded as follows:
January 13, 1992
Certified Mail
David Lunnen, C.A.
Millcove
Mt. Stewart R.R. 1
P.E.I.
C0A 1T0
Dear Mr. Lunnen,
This is in response to your Notice of Objection received on November 20, 1991 regarding your recent Sales Tax Assessment.
I have reviewed the various circumstances surrounding your grounds of objection and render my decision as follows:
(sic) - This was described as a cabin cruiser on the Casual Goods accounting document from Revenue Canada Customs and Excise. This document stated that the boat had a valuation of $10,654.76 with the destination being the Province of Prince Edward Island.Boat - 17 ft. Roundabout
You did not state that this boat was actually destined for Newfoundland, however, if that were so, and taxes were paid in that Province, please supply the proper back-up documentation and an adjustment to your assessment will be considered.
- Section 4 of the Revenue Tax Act states:1985 Pick-up Truck
'Every consumer of goods consumed in the province shall, at the time of taking delivery, pay to the Minister for the raising of revenue for provincial purposes, a tax at the rate of ten per centum of the fair value of the goods.'
By virtue of Section 4 of the Revenue Tax Act, you are considered the consumer of all goods listed in your Assessment, including the motor vehicle and are therefore liable for provincial sales tax on the fair value.
as follows:The fair value of $4,562.39 was calculated from the Casual Goods accounting document from Revenue Canada Customs and Excise
| Value for Duty | $4,007.44 |
| Duty at 6.4% | 256.48 |
| Value for Tax | $4,263.92 |
| G.S.T. at 7% | 298.47 |
| Fair Value for P.S.T. | $4,562.39 |
I, therefore, regret to advise that no adjustment is warranted, and for information regarding your account status, please contact Mr. Blair White.
Yours very truly,
(Sgd) W.R. Noonan
W.R. Noonan
Provincial Tax Commissioner
The material on file reveals that, on or about April 21, 1992, the Department notified Mr. Lunnen that the taxes in question remained outstanding. According to Mr. Lunnen, he received a letter from Gary Foley threatening to sue me for alleged outstanding taxes.1 On May 5, 1992, Mr. Lunnen wrote to Foley of the Department advising him, among other things, that he had absolutely no intention of paying the assessment. Included in Mr. Lunnen's letter were the following comments:
If you decide to proceed with your ridiculous threat of 'judgement action' I wish to present my case in person before a judge. We will let the court decide the matter. I will be returning from Ontario to PEI on June 7. Please extend me the courtesy of a proper court hearing. If you take action before I return I can only contemplate corresponding court action. This is not a matter of money. Rather it is a matter of principle where the taxing authority goes beyond the realm of reason.2
Mr. Lunnen subsequently received a letter dated May 29, 1992 from R. Blair White of the Department advising him as follows:
This will confirm that today a judgement was filed between Her Majesty the Queen in the right of the Province of Prince Edward Island and Mr. David Lunnen for $ 1,839.28 plus costs, being Revenue Tax due.3
On July 27, 1992, Lunnen wrote the then Minister of Finance, Gilbert Clements, complaining about the manner in which he had been treated by Departmental officials. He included an affidavit from his son relating to the transportation of the boat to Newfoundland and asked that the assessment on the boat be canceled. He also made the following comment:
I demand that the truck assessment be dropped or that I be given my democratic rights under the Charter to present my case to The Island Regulatory and Appeals Commission.4
The Minister responded as follows:
September 3, 1992
Mr. D.F. Lunnen, C.A.
Mt. Stewart R.R. #1
P.E.I.
C0A 1T0
Dear Mr. Lunnen
This is to acknowledge receipt of your correspondence of July 26, 1992, (sic) regarding an assessment levied against you under the Prince Edward Island Revenue Tax Act.
In reviewing the file, I note that by Notice of Objection dated November 20, 1991, you disputed the subject assessment. By letter dated January 13, 1992, the Provincial Tax Commissioner gave his decision on your objection.
The time for any appeal from the Provincial Tax Commissioner's decision expired February 12, 1992. Consequently, I am treating your letter as simply an inquiry as to whether there is anything I may do for you in respect of the assessment.
I understand the requested adjustment has been made to reflect the fact that the referenced boat and trailer were delivered by your son to Newfoundland.
I have further reviewed the decision of the Provincial Tax Commissioner and find no fault with his interpretation or decision.
Please contact the Revenue Division at your earliest convenience to settle the balance owing.
Yours truly,
(Sgd) Gilbert R. Clements
GILBERT R. CLEMENTS
Minister
Department of Finance
On September 4, 1992, Mr. Lunnen was sent a letter from F.J. Weatherby stating as follows:
September 4, 1992
CERTIFIED MAIL
David Lunnen, C.A.
Millcove
Mt. Stewart R.R. 1
P.E.I.
C0A 1T0
Dear Mr. Lunnen,
Re: Notice of Assessment
This is further to Mr. Noonan's letter of January 13, 1992 in regards to your Notice of Objection. Please be advised that based on the strength of the affidavit of Gregory Lunnen declaring that the boat and trailer were never located on P.E.I. but were taken directly to Newfoundland, and are presently located in that Province, this transaction will be reversed from your Assessment since the matter now becomes the responsibility of the Province of Newfoundland.
Your are advised that a credit adjustment of $1,273.61 is warranted, broken down as follows:
| Tax on boat and trailer | $1,065.48 |
| Interest to August 31, 1992 | 208.13 |
| Total Adjustment | $1,273.61 |
Please contact Mr. Blair White regarding payment of the remainder of your account.
Very truly yours,
(Sgd) F.J. Weatherby
F.J. WEATHERBY
Assistant Director
\jmg
cc: W.R. Noonan
Provincial Tax Commissioner
cc: R.B. White
Assistant Director
Mr. Lunnen subsequently wrote a follow-up letter to the Minister, as well as a letter on the same date to the Minister of Justice, stating similar concerns. The letter to the Minister stated:
R.R. #1
Mount Stewart P.O.
P.E.I. C0A 1T0
September 18, 1992
Hon. Gilbert R. Clements
Minister of Finance
Province of P.E.I.
P.O. Box 2000
Charlottetown P.E.I.
C1A 7N8
Dear Mr. Clements:
Thank you for your letter of September 3. I was disappointed and saddened by your interpretation of my letter of July 26 (sic), 1992. I still had some vestage (sic) of hope that a Minister of the Crown would want justice to prevail and would exercise his discetion (sic) under the Revenue Administration Act to allow a taxpayer to be heard by other than his accusers. How can you assume with certainty that Mr. Noonan's interpretation of the Revenue Tax Act (sic) is correct? Is it reasonable to assume that you are a politician rather than a tax expert? Such being the case, a letter from you is a letter from Mr. Noonan, who is my accuser.
I have a question for you. I note that The Island Regulatory and Appeals Commission Act was proclaimed on November 4, 1991. Therefore at the time of Mr. Noonan's decision (January 3, 1992) and your letter (September 3, 1992) your powers of review had been transferred to The Island Regulatory and Appeals Commission. As of November 4, 1991, your decision is not worth the paper it is written on from a legal perspective. How come you did not see fit to advise me, a taxpayer of P.E.I., of this fact?
I carefully reviewed the Island Regulatory and Appeals Commission Act. It would appear that the Commission has the same judicial powers as a court of law. If that is so, they may well have the power to allow my appeal to be heard, even though the appeal period under the Revenue Administration Act lapsed on February 2, 1992. After all, Noonan did not advise me of any changes in the appeal procedure on January 3 and how can a taxpayer be expected to know the intricacies of a tax act. It is an established principle of law that a person should be advised of his legal rights when he is charged with an offence.
Failing the above, I will ask the Commission to hear a Charter challenge in that both Noonan and you denied me my democratic rights to an independent hearing, which right is guaranteed by Section 2 of the Canadian Bill of Rights.
Hon. Gilbert Clements - Page 2
Finally, Mr. Clements, I would add that if you can condone the callousness and indifference towards the taxpayer as demonstrated by Noonan and Foley that I fear the problems of your department emminate (sic) from the top down. As I see it, the financial affairs for the Province are in dubious hands.
This matter will not end here and in spite of Noonan or you I intend to have my day in court, if only to demonstrate to others the way your department treats taxpayers.
Yours truly,
(Sgd) D.F. Lunnen
D.F. Lunnen, C.A.
Mr. Lunnen's initial submission to the Commission was dated September 21, 1992 and received on September 22, 1992.
2 Discussion & Findings
The Department's position on this appeal has been that Mr. Lunnen failed to file his appeal within the time frame allowed by the statute. A preliminary objection was raised by the Department as to our jurisdiction to proceed in these circumstances. This decision relates only to that preliminary issue.
In his initial objection to the Provincial Tax Commissioner, Mr. Lunnen argued, among other things, that he was not the consumer of the truck and was thereby not liable for tax. In his letter of January 13, 1992, the Commissioner simply referenced the relevant section of the Revenue Tax Act and responded with the statement that you are considered the consumer of all the goods listed in your assessment. The Commissioner gave no reasons for his conclusion.
When Mr. Lunnen received the letter of the Commissioner, he no doubt concluded that, since the Commissioner gave no reason for his decision, his concerns were simply not addressed. The common theme in all of Mr. Lunnen's correspondence is that he was not receiving answers and was not being given the opportunity to be heard. In future, we would expect the Provincial Tax Commissioner to give concise reasons for his decisions.
Even more significant and of concern, however, is the fact that the letter of January 13, 1992, which has been treated by the Department as "the decision" of the Provincial Tax Commissioner, was not clearly identified as "the decision" from which appeal rights would flow and was, in fact, incomplete.
If one looks at s. 9(3) of the Revenue Administration Act one sees that:
9 (3) The Commissioner shall, within sixty days of receipt of the notice of objection, reconsider the assessment or estimate and vacate, confirm or vary it, and he shall thereupon notify the objector of his decision by registered mail.
It is questionable that this section allows a "partial" decision of the type rendered by the letter of January 13, 1992. Certainly, there was nothing in the letter to indicate to Mr. Lunnen that this was a final decision of the type envisioned by s.10 of the Act, which would trigger another appeal. Our conclusion is that it would be unreasonable to expect anyone to draw such a conclusion.
This problem would be avoided if anything considered by the Department to be an appealable decision contained a clear statement to this effect and the appeal procedure was noted.
In this case, Mr. Lunnen clearly did not interpret the January 13, 1992 letter as a final decision at that time. It was followed up by phone calls from Mr. Lunnen and then a complaint from him to the Minister.
At that time, the Minister responded as though he were in a position to hear any appeal from Mr. Lunnen and as though Mr. Lunnen were filing an appeal to him. Whether or not Mr. Lunnen was filing a formal appeal with his letter of July 27, 1992 is unclear but the Minister at that point had no jurisdiction over the matter and no authority to tell Mr. Lunnen that he was too late to appeal.
After Mr. Lunnen was assessed his taxes but before any appeals were filed, the appeal procedure was changed-providing for appeals to The Island Regulatory and Appeals Commission from decisions of the Provincial Tax Commissioner.
The only notice of his right to appeal received by Mr. Lunnen was the notice affixed to the assessment of October 2, 1991. When the procedure changed he was not advised of this and the Minister's response continued to lead Mr. Lunnen to believe that he had no appeal rights outside of going to Court.
Added to this is the fact that the "completion" of the decision regarding Mr. Lunnen's original objection only occurred on September 4, 1992-by way of a letter from F.J. Weatherby, Assistant Director. Was this the decision or even a decision of the Provincial Tax Commissioner from which Mr. Lunnen had a right of appeal?
Mr. Lunnen might even view the letter from the Minister as the final decision since that was his first notice of how the outstanding issues were being dealt with. While time limits for rights of appeal are usually strictly applied by the Court-as the Department has stated-one must first be clear as to when the decision has actually been rendered and whether or not a reasonable person could be expected, in the circumstances, to know he had a right of appeal and it was time to exercise it.
The participants in this case, including Mr. Lunnen, seem to believe that Mr. Lunnen missed the appeal period by not filing an appeal within 30 days of the letter of January 13, 1992.
For reasons stated above, we cannot conclude that a final decision on the objection filed by Mr. Lunnen was reached until either September 3rd or September 4th, 1992. Therefore, Mr. Lunnen's appeal to us dated September 21, 1992 is within the 30 days allowed.
Mr. Lunnen has referred the Commission to both the Canadian Charter of Rights and Freedoms and the Canadian Bill of Rights in his quest to have the Commission hear his appeal. Specifically, Mr. Lunnen refers us to the Canadian Bill of Rights . He suggests that it guarantees, to any person who is unfairly treated by anyone, a fair hearing to determine his rights and obligations.5
The Commission notes that Section 2 (f) of the Canadian Bill of Rights provides that no law of Canada shall be applied so as to deprive a person of a fair hearing in accordance with the principles of fundamental justice. We note, as well, that the Canadian Bill of Rights applies only to acts of the Parliament of Canada or orders, rules and regulations made thereunder. In particular, the Bill states, in Section 5 (3), that the provisions of Part 1 shall be construed as extending only to matters coming within the legislative authority of the Parliament of Canada. The Bill therefore has no applicability to the case at hand, which involves provincial law.
Because of our decision, we have not found it necessary to deal with the Charter arguments put forward by Mr. Lunnen.
Accordingly,
1. The Commission has jurisdiction to hear the appeal of D.F. Lunnen on a date to be fixed.
Order
UPON the Commission having reviewed and considered the submissions of D.F. Lunnen and the Provincial Tax Commissioner on the issue of jurisdiction to hear this appeal;
NOW THEREFORE, for the reasons given in the annexed Reasons for Order;
IT IS ORDERED THAT
1. The Commission has jurisdiction to hear the appeal of D.F. Lunnen on a date to be fixed.
DATED at Charlottetown, Prince Edward Island, this 30th day of August, 1994.
BY THE COMMISSION:
Linda Webber, Chair
John L. Blakney, Vice-Chair
NOTICE
Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:
12. The Commission may, in its absolute discretion, review, rescind or vary any order or decision made by it or rehear any application before deciding it.
Parties to this proceeding seeking a review of the Commission's decision or order in this matter may do so by filing with the Commission, at the earliest date, a written Request for Review, which clearly states the reasons for the review and the nature of the relief sought.
Sections 13.(1) and 13(2) of the Act provide as follows:
13.(1) An appeal lies from a decision or order of the Commission to the Appeal Division of the Supreme Court upon a question of law or jurisdiction.
(2) The appeal shall be made by filing a notice of appeal in the Supreme Court within twenty days after the decision or order appealed from and the Civil Procedure Rules respecting appeals apply with the necessary changes.
1
Appellant's Brief, dated September 6, 1993, p.3.2
Excerpt from letter dated May 5, 1992 from D.F. Lunnen to Gary Foley.3
Excerpt from letter dated May 29, 1992 from R. Blair White to David Lunnen.4
Excerpt from letter dated July 27, 1992 from D.F. Lunnen to Gilbert Clements.5
Appellant's Brief, p.2.