Order UT96-04 - UT95104 - Sales Tax Appeal - Reasons - Omni-Plus Incorporated v. Provincial Tax Commissioner (Jul 19, 1996)

Docket UT95104
Order UT96-4

IN THE MATTER of an appeal by Omni-Plus Incorporated against a decision of the Provincial Tax Commissioner, dated July 14, 1995.

BEFORE THE COMMISSION

on Friday, the 19th day of July, 1996.

Linda Webber, Chair
Anne McPhee, Commissioner
Deborah MacLellan, Commissioner

Order

Contents

Appearances & Witnesses

Reasons for Order

Introduction

Discussion and Findings

Disposition

Order

Appearances & Witnesses

1. For Omni-Plus Incorporated

Counsel:
Peter Allison

Witnesses:
Catherine M. Parkman

Wendy Plets

Kent Cox

2. For the Provincial Tax Commissioner

Counsel:
Ruth DeMone

3. For the Island Regulatory and Appeals Commission

Counsel:
Thomas A. Matheson

Staff:
Donald G. Sutherland
Director, Technical Services Division

Heather Walker
Recording Secretary

Reasons for Order

1. Introduction

These Reasons address an appeal of a decision of the Provincial Tax Commissioner rendered on July 14, 1995. The July 14, 1995 decision dismisses an objection filed by the Appellant herein on the grounds that a proper Notice of Objection was not served within the time allowed by s.9(1) of the Revenue Administration Act, R.S.P.E.I. 1988, R-13-2.

A Notice of Assessment, No. 1019, dated March 8, 1995 was served on Omni-Plus Incorporated (the "Appellant") by hand delivering the notice to Wendell Cox, president of the Appellant, on March 21, 1995. The assessment was for tax on general sales in the amount of $41,279.86, interest to February 28, 1995 in the amount of $20,602.49, and a penalty in the amount of $2,064.01, for a total assessment in the amount of $63,946.36. The Provincial Tax Commissioner (the "Respondent") states that the assessment was in respect of taxes collected but not remitted to the Commissioner in connection with the company K.J.G.W. Holdings Inc., which operated the Charlottetown Playhouse. Wendell Cox was also president of K.J.G.W. Holdings Inc.

A letter dated May 23, 1995 was filed with the Provincial Tax Commissioner by the Appellant. The date of its receipt is in issue. The letter stated, among other things, that "we are appealing this transfer of Assessment on behalf of Omni-Plus Incorporated and K.J.G.W. Holdings Inc." The Respondent's decision that a proper Notice of Objection was not served within the allowed time was appealed to the Commission by filings made on August 10, 1995. The appeal also raises issues relating to the merits of the original objection.

The Commission heard argument on the issue of the validity of the Notice of Assessment on February 7 and 8, 1996, and in connection therewith issued Order UT96-1 dated February 22,1996.

The Commission heard argument on May 30, 1996 on the issue of whether or not the Notice of Objection to the Provincial Tax Commissioner had been filed within the time period required by the Act.

During the course of the hearing, Catherine Parkman testified on behalf of the Appellant. When she attempted to continue to act as counsel for the Appellant, counsel for the Respondent objected, citing the rules of conduct for lawyers. While Ms. Parkman opposed the objection, the Commission ruled that the Code of Conduct adopted by the Law Society of Prince Edward Island was clear and it appeared to the Commission to be in the best interests of the Appellant to have another counsel continue with the case. Peter Allison, who was present with Ms. Parkman at the start of the day's proceedings, then stepped in to act on behalf of the Appellant.

2. Discussion and Findings

The Respondent relies upon section 9 of the Act:

OBJECTION AND APPEAL

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 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.

The Respondent's position is that the Appellant failed in two respects to meet the requirements of that section:

(1) The Notice of Objection was not served on the Respondent within 60 days of the service of the Notice of Assessment upon the Appellant; and

(2) The Notice of Objection was, in fact, not a Notice of Objection within the meaning of the Act because it failed to set out any reasons for the objection and any relevant facts, as is required by subsection (1) of section 9.

On the first argument, the Respondent produced as evidence a copy of the letter dated May 23, 1995 with a date stamp indicating "May 26, 1995." No one was produced as a witness to explain departmental procedure as to date-stamping or the handling of this particular document.

On this same issue, the Appellant produced witness Wendy Plets, a receptionist/secretary in the MacLeod, MacDougall law office, who testified that she personally took the letter to the Provincial Treasury Office in the Shaw Building, asked for Garey Foley and was told he wasn't there, and so gave the letter to someone named "Chris" who promised to put it on Mr. Foley's desk. While Ms. Plets did not remember the exact "date" of this delivery, she did remember that it was the day after the long weekend in May. She remembered being very busy because it was after the long weekend and that Ms. Parkman had mentioned a number of times during that day that it was important to have the letter delivered that day.

The Commission accepts the evidence of Ms. Plets. She was very specific in her testimony and a credible witness. No effort was made in any way to impeach her testimony. Also, there was no disagreement that the day after the long holiday weekend in May of 1995 was, in fact, May 23, 1995.

On the second element of the Respondent's argument-that the contents of the letter of May 23, 1995 were insufficient to meet the requirements of section 9 of the Act-the details of the letter are important. The contents of the letter are therefore set out herein:

May 23, 1995

Mr. Garey Foley
Tax Administration Supervisor
Prince Edward Island Department of
Provincial Treasury
P.O. Box 1330
Charlottetown, PE
C1A 7N1

Dear Mr. Foley:

RE: TRANSFER OF $41,279.86 - Sales Tax from Playhouse Account to Omni-Plus Incorporated Account - April 20, 1995

With respect to the above noted, please be advised that we are appealing this transfer of Assessment on behalf of Omni Plus Incorporated and KJGW Holdings Inc.

Further correspondence setting our grounds for appeal of assessment will follow shortly.

Yours very truly,

MacLEOD, MacDOUGALL, CRANE & PARKMAN

CATHERINE M. PARKMAN

CMP/bb

The Respondent's position is that the lack of any indication of grounds or facts renders the notice invalid insofar as the requirements of the Act are concerned.

The Appellant responded to this position with a variety of arguments:

1. The actual notice of the assessment was only given to Wendell Cox. The implication left by the Appellant was an argument that, as a result of Mr. Cox's death, the Respondent should have notified someone else in the company.

The Commission notes that no authority was provided in support of this argument. Since this was a corporate-not a personal-matter, the Commission does not accept the argument.

2. The Executrix of the estate had to wait 30 days to probate the estate; her authority did not begin to run until she obtained probate; and the Executrix knew nothing of the Respondent's requirements.

In support of this argument, the Appellant cited case law indicating that time will not run against an administrator until the grant of letters of administration. However, we were told that Mr. Cox had a will under which he appointed an Executrix. So no administrator was required. The case law cited by the Respondent supports the proposition that the will speaks from the date of death and an executor/executrix is the legal representative of the deceased taxpayer from the date of death. (May, Executor of Koziej Estate v. M.N.R. (1985), D.T.C. 690.)

The Respondent also argued that the tax assessment in issue, not being personal to Mr. Cox, was in no way affected by the death of Mr. Cox. There were other corporate directors and officers who had an obligation to carry on with the affairs of the company.

On behalf of the Appellant, Kent Cox, son of Wendell Cox and manager of the Charlottetown Playhouse, testified that the other shareholders had no active part in the company. This would not seem to assist the legal position of the officers and directors.

The Commission accepts the Respondent's position with respect to these arguments.

3. The Appellant argues that Ms. Parkman was told by Garey Foley, in a telephone conversation, that, if she was going to argue the validity of the assessment, "the time must be nearly up on that, you better get something down here right away"-this was on May 19, 1995.

The Commission does not find any additional obligation on the Provincial Tax Commissioner to have been created by this conversation nor do we see how the facts support the Appellant's position. They show that, before the 23^rd of May, the Appellant had the intention of appealing but had done nothing up to May 19^th. On that date, the Appellant was merely reminded by the Department's representative that the filing deadline was close, if not passed.

4. The letter of May 29, 1995 which contained the reasons for the Notice of Objection was, along with the letter of May 23, 1995, sufficient to meet the requirements of section 9.

The question of the sufficiency of a notice for the purposes of section 9 of the Act is one that has arisen on several prior occasions. The usual question is whether or not a notice can later be amended to elaborate upon or add new grounds of appeal, especially at the time an appeal is taken to the Commission.

The Commission has not, however, previously been asked to rule upon the sufficiency of the original notice to the Provincial Tax Commissioner. In this case, there is an admission that no grounds of appeal have been cited in the Notice of Objection. Even the matter being appealed (or objected to) is somewhat unclear because an objection is made to "this transfer of assessment", not to the assessment itself.

While the Commission has always taken the position that it is not reasonable to place a heavy onus upon an Appellant to use proper legal terminology-to dot every "i" or cross every "t"-or even to identify every possible reason for objecting to an assessment, we must give some reasonable meaning to the words of the statute. Those words clearly require that, within the time frame allotted, a taxpayer must give indication to the Provincial Tax Commissioner that an objection is being made to the assessment and at least some indication of the reasons or grounds for the objection. For the Commission to assume it has jurisdiction to hear an argument on the merits of the case when, on its face, the notice admits that no effort has been made to include the grounds required ("Further correspondence setting out our grounds for appeal of assessment will follow shortly."), would appear to us to be an attempt to either rewrite the statute or read into the notice far more than is reasonable. While the Commission is loath to see anyone deprived of an appeal, the Commission must respect the law's basic requirements.

The Appellant may well have a good reason to object to the assessment, but the Commission can't ignore the insufficiency of the notice when that notice is the basis for the Respondent's decision. The question is: Was the Respondent within his rights to find that the Appellant had failed to file the required notice within the required time period? We find the notice so defective in its contents that we must support the position of the Provincial Tax Commissioner.

The Commission has great sympathy for the position Mr. Cox's family found itself in after April 1, 1995. No doubt there was considerable confusion and much to do. However, corporate officers and directors have responsibilities that outlive any one of them. The corporation is itself a person in law. The telephone conversation between Ms. Parkman and Mr. Foley on May 19, 1995 indicates that certainly by that date, and apparently well before, the existence of this Notice of Assessment had been brought to the attention of other family/corporate members. Unfortunately, the actions taken by the letter of May 23, 1995 do not meet the basic requirements of the law if an objection was going to be made.

While the Courts may have powers in equity to provide a remedy in such a circumstance, the Commission is a creature of statute and endowed only with the powers given to it directly by the statute. We find here we have no jurisdiction to proceed. In our view, the findings of the Provincial Tax Commissioner are within the law.

For the above reasons, the appeal is dismissed.

3. Disposition

An Order dismissing the appeal will therefore issue.

Order

UPON the appeal by Omni-Plus Incorporated against a decision of the Provincial Tax Commissioner, dated July 14, 1995;

AND UPON hearing the evidence adduced as well as what was alleged by Counsel at hearings conducted in Charlottetown on May 30, 1996;

NOW THEREFORE, for the reasons given in the annexed Reasons for Order;

IT IS ORDERED THAT

1. The appeal is hereby dismissed.

DATED at Charlottetown, Prince Edward Island, this 19th day of July, 1996.

BY THE COMMISSION:

Linda Webber, Chair

Anne McPhee, Commissioner

Deborah MacLellan, Commissioner

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.

Subsections 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.