Lanno v. Canada (Customs and Revenue Agency)

Lanno v. Canada (Customs and Revenue Agency) Court (s) Database Federal Court of Appeal Decisions Date 2006-06-14 Neutral citation 2006 FCA 220 File numbers A-478-04 Decision Content Date: 20060614 Docket: A-478-04 Citation: 2006 FCA 220 Present: SHARLOW J.A. BETWEEN: DENIS LANNO Appellant and CANADACUSTOMS AND REVENUE AGENCY Respondent Dealt with in writing without appearance of parties. Order delivered at Ottawa, Ontario, on June 14, 2006. REASONS FOR ORDER BY: SHARLOW J.A. Date: 20060614 Docket: A-478-04 Citation: 2006 FCA 220 Present: SHARLOW J.A. BETWEEN: DENIS LANNO Appellant and CANADACUSTOMS AND REVENUE AGENCY Respondent REASONS FOR ORDER SHARLOW J.A. [1] On May 2, 2005, in the decision of Lanno v. Canada (Customs and Revnue Agency), 2005 FCA 153, this Court allowed Mr. Lanno's appeal from a decision of the Federal Court (2004 FC 932) which denied relief from a negative decision of the Minister of National Revenue under subsection 152(4.2) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), in relation to interest. [2] This Court found that the denial of Mr. Lanno's application for relief was not reasonable in light of the various reasons given by the Minister in letters dated May 29, 2003, July 30, 2003 and November 4, 2003. This Court found three reasons why Mr. Lanno's appeal should be allowed. [3] First, contrary to the Minister's assertion, the fairness provisions can be used to extend the time limits for the filing of an objection. Information Circular 75-7R3, "Reassessment of a Return of Income" states that a reassessment "ordinarily" will be made at a taxpayer's request, even if the taxpayer has not filed a notice of objection within the prescribed time. Paragraph 4 of Information Circular 75-7R3 provides (my emphasis): A reassessment to create a refund ordinarily will be made upon receipt of a written request by the taxpayer, even if a notice of objection has not been filed within the prescribed time, provided that (a) the taxpayer has, within the four-year filling period required by subsection 164(1), filed the return of income; (b) the department is satisfied that the previous assessment or reassessment was wrong; (c) the reassessment can be made within the four-year period or the seven year-year period, as the case may be, referred to in paragraph 1 above or, if that is not possible, the taxpayer has filed a waiver in prescribed form; (d) the requested decrease in taxable income assessed is ot based solely on an increased claim for capital cost allowances or other permissive deductions, where the taxpayer originally claimed less than the maximum allowable; and (e) the application for a refund is not based solely upon a successful appeal to the Courts by a taxpayer. Sur réception d'une demande écrite du contribuable, le Ministère établit ordinairement une nouvelle cotisation pour donner un remboursement, même si un avis d'opposition n'a pas été produit dans le délai prescrit, pourvu: a) que le contribuable ait produit la déclaration de revenu dans le délai de quatre ans mentionné au paragraph 164(1) b) que le Ministère soit convaincu que la cotisation ou nouvelle cotisation précédente était inexacte; c) qu'il soit possible d'établir une nouvelle cotisation dans le délai de quatre ans ou de sept ans, selon le cas, dont il est fait mention au numéro 1 précédent ou, s'il n'est pas possible de remplir cette condition, que le contribuable ait produit une renonciation en la forme prescrite; d) que la réduction du revenu imposable établi ne résulte pas uniquement d'une majoration des déduction pour amortissement ou d'autre déductions laissant une marge de manoeuvre au contribuable, lorsque ce dernier a demandé au départ une déduction inférieure au maximum déductible; et e) que la demande de remboursement ne se fonde pas uniquement sur un appel devant les tribunaux d'un autre contribuable ayant eu gain de cause. [4] Second, Mr. Lanno's application under the fairness package was based on the fact that a number of misunderstandings had resulted in a failure to file timely notices of objection. Contrary to the Minister's assertion, his application was not based solely upon the successful appeal of another taxpayer in the decision of Stewart v. Canada [2002] 2 S.C.R. 645. [5] Finally, the Minister failed to consider the question as to whether or not there was any reason to treat Mr. Lanno differently from the three other individuals who had obtained relief. [6] This Court set aside the Federal Court's decision and allowed Mr. Lanno's application for judicial review. The matter was referred back to the Minister for reconsideration by a different decision maker. [7] The Minister, by a different decision maker, reconsidered the application for relief under the fairness provisions. In a letter dated March 24, 2006, the Minister again denied relief under subsection 152(4.2) for these reasons: In arriving at our decision, we considered each of the three areas, which posed a concern for the Court. [1] "It is manifestly incorrect to say that the fairness provisions cannot be used to extend the time limits for the filing of a notice of objection." In making this comment, the Court looked at the preamble in paragraph 4 of IC75-7R3 and notes that "if the exception in paragraph 4(e) of Information Circular 75-7R3 was not applicable, he should have been entitled to the benefit of the opening words of paragraph 4." While this is true, the fact is that paragraph 4(e) exists and the preamble in paragraph 4 cannot be read in isolation. Clearly, the insertion of the word "and" after paragraph 4(d) means that the condition in paragraph 4(e) must be met. It is not discretionary. [...] [2] "Second, the reference to the July 20, 2003 decision letter, and the statement that the decision in the letter remains unchanged, suggests that Mr. Scarcello may have concluded, as Mr. Coelho had done, that this was a case where relief should be precluded by the fact that Mr. Lanno's application for a refund was "based solely upon a successful appeal to the Courts by a taxpayer" (Stewart)." [...] while a strong argument can be made that there was intent to file Notices of Objection, the fact remains that none were filed and that the request under [sic] for reassessment under subsection 152(4.2) was not made until after the favourable decision in Stewart. It is our view that there were no extraordinary circumstances that prevented the client and/or representative from complying. [3] "Third, Mr. Scarcello failed to address the question as to whether or not there was any reason to treat Mr. Lanno differently from the three other individuals who had obtained relief. It is not possible to determine whether he ignored that submission, whether he thought that there was some relevant distinction, or whether he thought it acceptable to afford different treatment to similarly situated individuals. I must conclude that Mr. Scarcello failed to take into account a relevant consideration." Due to confidentiality it is not possible to go into detail when discussing the three other individuals referred to by the Court. Suffice to say that every case is decided on the basis of the facts of the case and the applicable laws. We, with respect, believe Mr. Lanno's case was decided corrected [sic] and without any inconsistency in the application of our policies. [8] Mr. Lanno commenced an application for judicial review in the Federal Court. He also applied to this Court for an Order pursuant to Rule 431(a) of the Federal Courts Rules (SOR/98-106) to enforce this Court's May 2, 2005 judgment. [9] The Minister submits that the process for enforcing an order is provided in Rule 423: 423. All matters relating to the enforcement of orders shall be brought before the Federal Court. 423. Toute question concernant l'exécution forcée d'une ordonnance relPve de la Cour fédérale. [10] Mr. Lanno submits that this Court should dispense with compliance with that Rule and permit Mr. Lanno to seek relief based on Rule 55 which provides: 55. In special circumstances, in a proceeding, the Court may vary a rule or dispense with compliance with a rule. 55. Dans des circonstances spéciales, la Cour peut, dans une instance, modifier une règle ou exempter une partie ou une personne de son application. [11] I am not convinced that there are any special circumstances which would justify an order pursuant to Rule 55. If Mr. Lanno is of the view that the Minister has not complied with this Court's May 2, 2005 decision, his remedy should be pursued in the Federal Court. [12] I would dismiss this motion with costs. "K. Sharlow" J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-478-04 STYLE OF CAUSE: DENIS LANNO v. CANADA CUSTOMS AND REVENUE AGENCY MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES REASONS FOR ORDER BY: SHARLOW J.A. DATED: JUNE 14, 2006 WRITTEN REPRESENTATIONS BY: Clifford L. Rand Susan J. Thomson FOR THE APPELLANT Andrea Jackett Franco Calabrese FOR THE RESPONDENT SOLICITORS OF RECORD: Stikeman Elliott Toronto, Ontario FOR THE APPELLANT John H. Sims, Q.C. Deputy Attorney General of Canada FOR THE RESPONDENT