2020 FC 772, 2020 FC 772

T-868-19 2020 FC 772 Elizabeth Harrison ( Applicant ) v. The Minister of National Revenue ( Respondent ) Indexed as: Harrison v. Canada (National Revenue) Federal Court, Strickland J.—Vancouver (by videoconference), July 16 and July 21, 2020.

Income Tax — Practice — Judicial review of Canada Revenue Agency (CRA) decision refusing applicant’s request to refund amount collected from her, on December 19, 2014, in relation to 1988 taxation year — Applicant requesting refund on basis that 10-year collection limitation period (CLP) set out in Income Tax Act ( Act ), s. 222 having expired — Applicant claiming losses, other deductions in connection with her participation in Trinity Denton Partnership (Trinity Denton), Sierra Trinity Limited Partnership (Sierra Trinity) — Objecting to CRA’s disallowance of certain partnership losses — Several notices of reassessment, objection ensuing — Applicant filing notice of appeal in Tax Court of Canada (Tax Court) on January 4, 2011, with respect to 1988, 1989, 1990 taxation years — Notice of reassessment issued in December 2014 — Reassessment restoring deductions disallowed with respect to Sierra Trinity but not making any adjustments relating to Trinity Denton losses — On December 19, 2014, Minister applying credit otherwise refundable to applicant against 1988 tax debt — Applicant of view that this collection statute barred pursuant to Act , s. 222(4) — Main issue whether Minister reasonably concluding that CLP had not expired as of December 19, 2014 — Minister’s statement that filing appeal with Tax Court acknowledgement of debt, thereby restarting limitation period, not justified, intelligible or transparent, thus unreasonable — Filing of appeal with Tax Court not automatic acknowledgment of tax debt that restarts limitation period — As to whether filing of appeal extending CLP, because 1988 debt in respect of Trinity Denton losses not validly in issue in appeal, debt not “amount in controversy” — Debt’s collection therefore not barred by Act , s. 225.1(3) , limitation period for its collection not extended by s. 222(8) — Initial limitation period not restarted or extended prior to its expiry on March 4, 2014, or prior to December 2014 reassessment — Finding that December 2014 reassessment restarting limitation period thus unreasonable — Contrary to public interest for Minister to sleep on its rights in enforcing collection — CRA decision quashed — Application allowed.

This was an application for judicial review of a decision of the Canada Revenue Agency (CRA) refusing the applicant’s request to refund an amount that the CRA collected from her, on December 19, 2014, in relation to the applicant’s 1988 taxation year. The applicant requested the refund on the basis that the 10-year collection limitation period (CLP) set out in

section 222 of the Income Tax Act ( Act ) had expired on March 4, 2014. In 1988, the applicant claimed losses and other deductions in connection with her participation in the Trinity Denton Partnership (Trinity Denton) and the Sierra Trinity Limited Partnership (Sierra Trinity). The applicant was first reassessed in 1992 and 1993. She objected to certain disallowances related to the Trinity Denton and Sierra Trinity partnerships. Several notices of reassessment and objection ensued.

On January 4, 2011, the applicant filed a notice of appeal in the Tax Court of Canada (Tax Court) with respect to her 1988, 1989 and 1990 taxation years. The applicant disputed the disallowance of the listed 1988 deductions. A notice of reassessment issued in December 2014 (the third reassessment) restoring the deductions that had been disallowed with respect to Sierra Trinity in their entirety. It did not make any adjustments related to the Trinity Denton losses.

The third reassessment also mentioned that the refund owed to the applicant had been applied to reduce her previous balance outstanding (i.e. the 1988 tax debt). The applicant was of the view that the collection of this debt was statute barred pursuant to subsection 222(4) of the Act . She requested a refund of that amount plus interest. The CRA refused the applicant’s request, noting that the collections limitation period (CLP) is restarted or extended when certain events occur.

The main issue was whether the Minister reasonably concluded that the CLP, as prescribed by subsection 222(4) of the ITA , had not expired as of December 19, 2014. Held , the application should be allowed. The Minister’s statement that filing an appeal with the Tax Court is an acknowledgement of debt, thereby restarting the limitation period, was not justified, intelligible or transparent, and was unreasonable. The Act does not define “acknowledges” or “written acknowledgment” as found in paragraphs 222(5) (

a) and s 222(6)(b), respectively. When read together, subsections 222(8) and 225.1(3) explicitly contemplate that, when an appeal to the Tax Court has been filed, the Minister will not take any collection action for the amount in controversy and the limitation period will be extended to account for the period of time that the matter was under appeal. The effect of subsections 222(8) and 225.1(3) is that the filing of an appeal with the Tax Court will pause the running of the existing limitation period for the duration of the appeal.

Had it been Parliament’s intent that the filing of an appeal with the Tax Court would restart the limitation period, then it presumably would have clearly said so. It would be absurd if the limitation period could be both restarted by the filing of an appeal to the Tax Court pursuant to paragraphs 222(5)(

a) and (6)(

b) and, at the same time, also be extended pursuant to subsection 222(8). Parliament chose to limit the circumstances in which the limitation period is restarted to those set out in subsection 222(5), including where the taxpayer acknowledges the debt. The Minister unreasonably interpreted the Act in determining that the filing of an appeal with the Tax Court is an automatic acknowledgment of a tax debt that restarts the limitation period. The plain

meaning of “acknowledgment” requires an admission or confirmation by the person making the acknowledgment of the thing alleged, beit an admission of liability for damages, blame, responsibility or liability for a tax debt. Even if the filing of an appeal with the Tax Courtcan potentially trigger the restarting of a limitation period, the mere filing of the appeal will not automatically serve to act as a writtenacknowledgment of the debt. Rather, the content of the appeal itself must be scrutinized in each case.

Reading subsections 152(3) and (8)of the Act in the context of the overall purpose of the Act does not lead to the conclusion that an acknowledgement does not require anadmission of liability and serves to oust the common law requirement for such an admission. The fact that the Minister deems the debt tobe valid does not mean that the taxpayer acknowledges liability for that debt. In the absence of an acknowledgment by the taxpayer thatthe disputed portion of the assessed debt exists and is valid, the filing of the appeal is not an “acknowledgment” of the debt. This viewalso gains support from paragraphs 222(6)(

a) and 222(6)(

c) of the Act. The applicant’s notice of appeal to the Tax Court did not admit orconfirm that the 1988 debt was validly owed or “confirm[ed] and concede[d]” the amount of the tax debt. Indeed, it disputed the validityof the amounts assessed. As to whether the applicant’s filing of her appeal to the Tax Court, on January 4, 2011, extended the existing CLP, because the 1988debt in respect of the Trinity Denton losses was not validly in issue in the appeal, it was not an “amount in controversy”.

Its collectionwas therefore not barred by subsection 225.1(3) of the Act and the limitation period for its collection was not extended by subsection222(8). The initial limitation period was not restarted or extended prior to its expiry on March 4, 2014, or prior to the December 2014reassessment. That reassessment fell outside the March 4, 2014, limitation period expiry and could not extend, restart or revive theexhausted limitation period. Accordingly, the decision of the CRA unreasonably found that the December 2014 reassessment restartedthe limitation period.

It is contrary to the public interest for the Minister to sleep on its rights in enforcing collection. It is evident that therationales justifying the existence of limitation periods apply to the collection of tax debts. In conclusion, the CRA’s decision was not justified in relation to the relevant factual and legal constraints that bear on it and wastherefore unreasonable. The decision was quashed and the matter was remitted back to the Minister for redetermination. STATUTES AND REGULATIONS CITED Canada Student Loans Act, R.S.C., 1985, c. S-23. Federal Courts Act, R.S.C., 1985, c. F-7, ss. 18.1.

Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 152(3),(8), 164(2), 169(2.2),(3), 222 “action”, “tax debt”, 225.1(1),(2),(3),(4),(5), 248“assessment”. Limitation Act, R.S.B.C. 1979, c. 236. Limitations Act, R.S.O. 1990 c. L.15, ss. 45, 51(1). Securities Act, R.S.B.C. 1996, c. 418, ss. 159, 161(6)(d). CASES CITED APPLIED: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1; Markevich v. Canada, 2003 SCC 9,[2003] 1 S.C.R. 94; Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, (1998), 36 O.R. (3d) 418; WilliamsLake Indian Band v.

Canada (Aboriginal Affairs and Northern Development), 2018 SCC 4, [2018] 1 S.C.R. 83; Chieu v. Canada(Minister of Citizenship and Immigration), 2002 SCC 3, [2002] 1 S.C.R. 84. CONSIDERED: Connolly v. Canada (National Revenue), 2019 FCA 161, [2019] 4 F.C.R. 256; McLean v. British Columbia (Securities Commission),2013 SCC 67, [2013] 3 S.C.R. 895; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Buik Estate v. Canasia PowerCorp., 2014 ONSC 2959 ; Thandi (Re), 2017 BCSC 1201, 2017 D.T.C. 5090; West York International Inc. v. ImportanneMarketing Inc., 2012 ONSC 6476 ; Canada (Attorney General) v.

Simpson (1995), (ON SC), 26 O.R. (3d)317, [1995] O.J. No. 2850 (QL) (S.C.); Podovinikoff v. Montgomery (1984), (BC CA), 14 D.L.R. (4th) 716, 58 B.C.L.R.204 (B.C.C.A.). REFERRED TO: Canada (Human Rights Commission) v. Canada (Attorney General), 2018 SCC 31, [2018] 2 S.C.R. 230; Canada Trustco Mortgage Co.v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601; Doig v. Canada, 2011 FC 371, [2011] 4 C.T.C. 1; Canada v. Stasiuk, 2018 ONSC 1226; Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53; Belanger v.

Gilbert (1984), (BC SC), 8 D.L.R. (4th) 92,52 B.C.L.R. 197 (B.C.S.C.), affd (1984), (BC CA), 14 D.L.R. (4th) 428, 58 B.C.L.R. 191 (B.C.C.A.); Allen v. BapcoPaint Limited (1982), 34 B.C.L.R. 242, (B.C.S.C.); TransCanada Pipelines Ltd. v. The Queen, 2001 FCA 314, [2002]1 C.T.C. 43; Lornport Investments Ltd. v. Canada, (FCA), [1992] 2 F.C. 293, [1992] 1 C.T.C. 351 (C.A.); TheQueen v. Simard-Beaudry Inc., [1971] F.C. 396, [1971] F.C.J. No. 33 (QL) (T.D.). AUTHORS CITED Alberta. Law Reform Institute. Limitations. Report No. 55. Edmonton: The Institute, 1989. Black’s Law Dictionary, 10th ed., Thomson Reuters, 2014.

Black’s Law Dictionary online, 2nd ed., “acknowledgement”. Merriam-Webster Online Dictionary , “acknowledgement”. Oxford English Dictionary online, 3rd ed., “acknowledgement”. Sullivan, Ruth. Sullivan on the Construction of Statutes , 6th ed. Markham, Ont.: LexisNexis Canada, 2014. APPLICATION for judicial review of a decision by the Canada Revenue Agency refusing a request to refund an amount collected from the applicant in relation to her 1988 taxation year. Application allowed. APPEARANCES David R. Davies and Jennifer Flood for applicant. Jason Levine and Julio Paoletti for respondent.

SOLICITORS OF RECORD Thorsteinssons LLP , Vancouver, for applicant. Deputy Attorney General of Canada for respondent. The following are the reasons for judgment and judgment rendered in English by [ 1 ] S trickland J . : This is an application for judicial review of the decision of an Assistant Director, Revenue Collection, Canada Revenue Agency (CRA), on behalf of the Minister of National Revenue (Minister), dated April 26, 2019 (Decision), refusing the applicant’s request to refund an amount which CRA collected from her, on December 19, 2014, in relation to the applicant’s 1988 taxation year.

The applicant requested the refund on the basis that the 10-year collection limitation period (or CLP) set out in

section 222 of the Income Tax Act , R.S.C., 1985 (5th Supp.), c. 1 ( ITA ) had expired on March 4, 2014. This judicial review is brought pursuant to

section 18.1 of the Federal Courts Act , R.S.C., 1985, c. F-7 . Background [ 2 ] The factual background to this matter takes place over an extended period of time, starting in 1988. However, the underlying facts are largely not in dispute.

Those facts are set out in some detail here as this will assist and add clarity to the analysis that follows. [ 3 ] In her 1988 income tax return the applicant claimed losses and other deductions in connection with her participation in two transactions: the Trinity Denton Partnership (Trinity Denton) and the Sierra Trinity Limited Partnership (Sierra Trinity). [ 4 ] On December 29, 1992, the applicant’s 1988 taxation year was reassessed (First Reassessment). [ 5 ] On March 23, 1993, the applicant filed a notice of objection in response to the First Reassessment.

Therein she objected to CRA’s disallowance of certain Trinity Denton partnership losses allocated to her in her capacity as a general partner in that entity.

Specifically: i. $75 108 in non-capital loss (1988 Trinity Denton NCL); and ii. $25 125 capital loss (1988 Trinity Denton Capital Loss). (collectively, the Trinity Denton Partnership Losses) [ 6 ] On December 29, 1993, the Minister issued a notice of reassessment in respect of the applicant’s 1988 taxation year (Second Reassessment). [ 7 ] On March 18, 1994, the applicant filed a notice of objection to the Second Reassessment in which she disputed the: i. disallowance of $174 000 of a claimed deduction of $203 278 in Canadian exploration expenses (1988 CEE); and ii. disallowance of $12 218 of a claimed deduction of $27 743 bank interest charges (1988 Bank Interest). [ 8 ] The applicant submits that the 1988 CEE and 1988 Bank Interest charges were connected to Sierra Trinity, not Trinity Denton.

This is not disputed by the respondent. [ 9 ] On June 13, 1994, the applicant and the Minister entered into a settlement agreement with respect to the claimed Trinity Denton Partnership Losses (Settlement Agreement).

In the Settlement Agreement the Minister agreed to provide some interest relief and the applicant, amongst other things, agreed: i. to the issuance of an assessment or reassessment to disallow the claimed partnership losses; and ii. to waive any right to file a notice of objection or appeal regarding the disallowance of the losses described in the agreement; to the confirmation of such an assessment or reassessment if a notice of objection had been filed; and, that she would not take any other action to contest the validity of the Settlement Agreement. [ 10 ] On March 30, 1995, the Minister issued a letter of confirmation pertaining to notices of objections filed for the 1988 and 1989

taxation years (First Confirmation). As a result of its review, the Minister stated that: i. Losses with respect to Trinity Denton Limited Partnership which were previously disallowed were confirmed, “as per our agreement”; and ii.

Interest charges on any taxes due for 1988 and 1989 taxation years, as a result of the reassessments relating to Trinity Denton, would be cancelled for the period prior to May 1, 1991, “as per our settlement agreement”. [ 11 ] On October 7, 2010, the Minister issued a letter of confirmation pertaining to notices of objections filed for the 1988, 1989 and 1990 taxation years (Second Confirmation). With respect to the 1988 taxation year, it confirmed that: i.

The purchase of certain seismic data did not quali[f]y as 1988 CEE and the $174,000 in the 1988 taxation year (which had been disallowed by the Second Reassessment), was confirmed as disallowed; and ii. The $12,218 of the $26,496.70 1988 Bank Interest (which had been disallowed by the Second Reassessment), was confirmed as disallowed. [ 12 ] On January 4, 2011, the applicant filed a notice of appeal in the Tax Court with respect to her 1988, 1989 and 1990 taxation years. With respect the 1988 taxation year, a more detailed version of the above history of events was recited.

The notice of appeal identified as issues, as regards to the 1988 taxation year: i. Whether the listed deductions (the 1988 Trinity Denton NCL, 1988 Trinity Denton Capital Loss, 1988 Bank Interest and 1988 CEE) were deductible in computing income; ii. Whether the 1988 resource interest was deductible in computing income; and iii. Whether the disallowance of the 1988 Trinity Denton NCL, 1988 Trinity Denton Capital Loss and 1988 Bank Interest were statute barred. [ 13 ] The applicant disputed the disallowance of the listed 1988 deductions which she submitted were validly made.

She also asserted that the Second Reassessment was improper and ought to be vacated by virtue of laches of the CRA; the 1988 resource interest should be deducted and her income reduced accordingly; and, that the disallowance of the 1988 Trinity Denton NCL, 1988 Trinity Denton Capital Loss, and 1988 Bank Interest were statute barred. She requested that the Second Reassessment be vacated or, alternatively, that it be referred back to the Minister for reconsideration and reassessment. [ 14 ] In a reply to the notice of appeal, the Minister argued that paragraphs 5 and 9 (as well as paragraphs 6(b), 6(

c) and 12(c)) of the notice of appeal were improperly pleaded and should be struck out because the issue of the losses arising from the applicant’s participation in Sierra Denton Limited Partnership was not properly before the Court due to the Settlement Agreement by which the applicant agreed not to file any appeal and was, therefore, barred from appealing that issue pursuant to subsection 169(2.2) of the ITA . I note here in passing that, as acknowledged by the parties when appearing before me, the reference in the reply to Sierra Denton Limited partnership is in error.

The referenced paragraphs of the notice of appeal actually refer to the Trinity Denton partnership and the 1988 Trinity Denton NCL and 1988 Trinity Denton Capital Loss. The Settlement Agreement likewise refers to the Trinity Denton partnership. [ 15 ] On December 19, 2014, the Minister issued a notice of reassessment in respect of the applicant’s 1988 taxation year (Third Reassessment). The applicant states that Third Reassessment restored the deductions that had been disallowed in respect to Sierra Trinity in their entirety. It did not make any adjustments related to the Trinity Denton Partnership Losses.

This is not disputed by the respondent. [ 16 ] The Third Reassessment indicates that the applicant was due a refund of $929 152.13. In its explanation of changes, the reassessment states: We have made an adjustment according to the consent judgment. We reduced the instalment interest we charged you by $6,728.40. We reduced the arrears interest we charged you by $838,988.83.

We have used your refund of $929,152.13 to reduce your previous balance outstanding. [ 17 ] By letter of September 20, 2016, counsel for the applicant advised the CRA of the applicant’s view that the collection of the debt in relation to the 1988 taxation year was statute barred, pursuant to subsection 222(4) of the ITA , as the 10-year limitation period prescribed by that

section had expired. The letter noted that the applicant had been subject to two separate reassessments in respect of her 1988 taxation year. The First Reassessment (December 29, 1992) made adjustments to her participation in Trinity Denton. The Second Reassessment (December 29, 1993) made adjustments to her participation in Sierra Trinity. The applicant filed the First Notice of Objection, in respect of the First Reassessment, on March 23, 1993.

In 1994, she entered into the Settlement Agreement with respect to the First Reassessment, in which she waived her right to make any further objection or appeal in respect of the amounts contested in the First Notice of Objection. She had then filed the Second Notice of Objection, in respect of the Second Reassessment, which was ultimately confirmed by CRA.

She then filed an appeal to the Tax Court in respect of the Second Reassessment. [ 18 ] However, due to the passage of time and changes of counsel during that period, new counsel who prepared the notice of appeal was not aware of the Settlement Agreement made with respect to the First Reassessment. Because of this, new counsel included references to the First Assessment in the notice of appeal. In the Minister’s reply, the Minister asserted that these were improper pleadings as the matters relating to Trinity Denton had been finally resolved by the Settlement Agreement.

The applicant did not dispute this at the appeal.

[ 19 ] The September 20, 2016, letter goes on to state that after the effecting of the Settlement Agreement, the CRA did not contact the applicant in relation to an amount owing in respect to the First Assessment and only did so after the appeal of the Second Reassessment was resolved in December 2014.

As no collection action was taken by March 4, 2014, CRA was barred by subsection 222(4) of the ITA from now attempting to do so. [ 20 ] By letter of December 12, 2017, counsel for the applicant wrote to confirm the voicemail message of CRA that it would not be taking collection action in relation to an amount alleged to be owing with respect to the 1988 taxation year. A letter of January 25, 2018, from counsel for the applicant to the CRA attached the applicant’s Detailed Arrears/Refund Interest Calculation for 1988, which indicates a credit of $91 080.10.

The letter states that the Minister, on December 19, 2014, applied this credit against the 1988 debt and that the Minister improperly took collection action, contrary to the limitation period prescribed in subsection 222(4) of the ITA . The letter requested a refund of that amount plus interest. A similar letter was sent by counsel for the applicant on February 19, 2018. The Minister referred the matter to the Department of Justice (DOJ) for an opinion.

On April 1, 2019, counsel for the applicant wrote to DOJ outlining the lengthy history of the matter and the applicant’s position. [ 21 ] By the letter of April 26, 2019, the CRA advised the applicant that her refund request was refused. That letter comprises the Decision that is the subject of this judicial review. Decision under review [ 22 ] The April 26, 2019, letter is brief.

It acknowledges the refund request and notes that the collections limitation period, or CLP, is restarted or extended when certain events occur, referring the applicant to a link to CRA’s website for additional information. [ 23 ] The letter then states: On January 4, 2011, the taxpayer appealed to the Tax Court of Canada (TCC) in respect of its 1988 taxation year. In the “Notice of Appeal” filed, the reassessment dated December 29, 1992 (“First Reassessment”) and the reassessment dated December 29, 1993 (“Second Reassessment”) are both acknowledged.

Filing an appeal with the TCC is an acknowledgement of the debt and restarted the CLP to day one. The CLP was simultaneously extended when the appeal to TCC was filed, which means that the CLP does not run during the time an appeal is with the TCC. On December 19, 2014, the 1988 taxation year was reassessed, and the CLP restarted again 90 days after that date. The CLP started again at day one, on March 20, 2015, and the CLP would expire 10 years from this date on March 20, 2025, unless it is restarted or extended further.

The CLP for the 1988 taxation year had not expired on March 4, 2014, and the liability was not statute barred when the refund in the amount of $91,080.10 was applied to the 1998 tax liability. As a result, the requested refund will not be forthcoming.

Overview of the Applicant’s position [ 24 ] It is perhaps helpful, before proceeding further, to provide an overview of the applicant’s position as this provides context for the discussions that follow. [ 25 ] The applicant in her written submissions addresses the ITA provisions which pertain to the 10-year collection limitation period and the circumstances in which it can be extended or restarted. [ 26 ] Specifically, that pursuant to subparagraph 222(4) (a)(ii) and paragraph 222(4) (

b) of the ITA , the limitation period for the collection of a tax debt that was payable on March 4, 2004, begins on March 4, 2004, and ends on the day that is 10 years after the day on which it began. [ 27 ] Pursuant to subsection 222(8), the limitation period is extended in certain circumstances, specifically those set out in paragraphs 222(8)(

a) to (d). Relevant to this matter is paragraph 222(8)(a), which states that in computing the day on which a limitation period ends there shall be added the number of days that the Minister may not, because of subsections 225.1(2) to (5), take any of the actions described in subsection 225.1(1) in respect of the tax debt. Subsection 225.1(3) stipulates that where a taxpayer has appealed to the Tax Court from an assessment of an amount payable under the ITA , the Minister shall not, for the purpose of collecting the amount in controversy, take any of the collection actions described in paragraphs 225.1(1)(

a) to (g). Thus, the effect of filing an appeal in the Tax Court is that the Minister is precluded from collecting the tax debt while the appeal is ongoing and the limitation period is extended by that same period. [ 28 ] Pursuant to subsection 222(5), the 10-year limitation period for the collection of a tax debt can be restarted , then ending on the day 10 years after the day on which it restarted, in the three circumstances set out in paragraphs 222(5)(a), (

b) and (c): 222 (1) … Limitation period restarted (5) … (

a) the taxpayer acknowledges the tax debt in accordance with subsection (6); (

b) the Minister commences an action to collect the tax debt; or (

c) the Minister, under subsection 159(3) or 160(2) or paragraph 227(10)(a), assesses any person in respect of the tax debt. [ 29 ] With respect to an acknowledgment of a debt, subsection 222(6) states:

222 (1) … Acknowledgement of tax debts

(6) A taxpayer acknowledges a tax debt if the taxpayer (

a) promises, in writing, to pay the tax debt; (

b) makes a written acknowledgement of the tax debt, whether or not a promise to pay can be inferred from the acknowledgement and whether or not it contains a refusal to pay; or (

c) makes a payment, including a purported payment by way of a negotiable instrument that is dishonoured, on account of the tax debt. [ 30 ] The applicant’s overarching position in this case is that, pursuant to subparagraph 222(4)(a)(ii) the limitation period for debt owed by Trinity Denton for the 1988 taxation year (1988 Debt) began on March 4, 2004, and, pursuant to paragraph 222(4) (b), ended on March 4, 2014. She submits that during that timeframe that the Minister took no steps to collect the 1988 Debt. Nor do the circumstances of this case support that the limitation period was extended or was restarted.

Accordingly, pursuant to subsection 222(3), the Minister was precluded from commencing an action to collect the 1998 Debt after the end of the limitation period. An “action” is defined in subsection 222(1) and means an action to collect a debt of a taxpayer and includes anything done by the Minister under subsection 164(2) : 164 (1) … Application to other debts

(2) Instead of making a refund or repayment that might otherwise be made under this section, the Minister may, where the taxpayer is, or is about to become, liable to make any payment to Her Majesty in right of Canada or in right of a province, apply the amount of the refund or repayment to that other liability and notify the taxpayer of that action. [ 31 ] On December 19, 2014, and despite the expiry of the limitation period, the Minister took collection action by applying a credit otherwise refundable to the applicant against the 1988 Debt.

The applicant submits that the grounds relied upon by the Minister in the Decision refusing her request for a refund are incorrect in law. Relevant provisions of the ITA [ 32 ] The full text of the relevant provisions of the ITA are reproduced in Annex “A” of these reasons.

Issues [ 33 ] The applicant submits that the sole issue is whether the Minister made a substantive error of law by concluding that the limitation period under subsection 222(4) of the ITA , in respect of the 1988 Debt, had not expired prior to December 19, 2014. [ 34 ] The Minister submits that there are three issues arising and that if the answer to any one of them is affirmative, then the application for judicial review must be dismissed. Specifically: i.

Did the issuance of the Third Reassessment on December 19, 2014, operate as a wholly new reassessment with an entirely new CLP in respect to the applicant’s 1988 tax liability? ii. Did the applicant’s filing of the appeal on January 4, 2011, suspend the CLP in existence at that time for the duration of the appeal? iii.

Did the applicant “acknowledge” her 1988 tax liability by filing the appeal (to the Tax Court), thereby restarting the CLP in existence at that time? [ 35 ] In my view, and given my conclusion on the applicable standard of review as set out below, the overarching question is whether the Minister reasonably concluded that the CLP, as prescribed by subsection 222(4) of the ITA , had not expired as of December 19, 2014. This question requires the determination of three issues: Issue 1: Did the applicant “acknowledge” her 1988 tax liability by filing her appeal to the Tax Court, thereby restarting the CLP?

Issue 2: Did the applicant’s filing of her appeal to the Tax Court, on January 4, 2011, extend the existing CLP? Issue 3: Did the issuance of the Third Reassessment on December 19, 2014, operate as a new reassessment, initiating a new CLP, in respect of the applicant’s 1988 tax liability? Standard of Review Parties’ positions [ 36 ] In her written submissions the applicant asserted that correctness is the applicable standard of review, relying on Connolly v. Canada (National Revenue) , 2019 FCA 161 , [2019] 4 F.C.R. 256 ( Connolly ), [at paragraph 54]: I agree with Mr.

Connolly that the first aspect of the delegate’s consideration of the subsection 204.1(4) analysis, involving delineation of the applicable test enshrined in the subsection, raises a question of law and that, to date, this Court has reviewed legal

interpretations made by the Minister or a ministerial delegate of provisions in the ITA for correctness, even though under the Dunsmuir v. New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190, framework such questions normally subject to review on a reasonableness standard: see,

e.g., Redeemer Foundation , at paragraph 24; Bozzer , at paragraph 3; Sheldon Inwentash and Lynn Factor Charitable Foundation v. Canada , 2012 FCA 136 , 432 N.R. 338, at paragraphs 19–23 ; Prescient Foundation v. Canada (National Revenue) , 2013 FCA 120 , 358 D.L.R. (4th) 541, at paragraphs 12–13 ; Opportunities for the Disabled Foundation v. Canada (National Revenue) , 2016 FCA 94 , 482 N.R. 297, at paragraph 16 . [ 37 ] The respondent submitted in its written submissions that an administrative decision maker’s

interpretation of their home statute is subject to deference on judicial review. Here the ITA is the Minister’s home statute and the applicant is challenging the Minister’s

interpretation and application of the ITA . The respondent submitted that the reasonableness standard presumptively applies ( Canada (Human Rights Commission) v. Canada (Attorney General) , 2018 SCC 31 , [2018] 2 S.C.R. 230, at paragraphs 27 and 28 ) and that none of the exceptions to this presumption have application in this matter ( McLean v.

British Columbia (Securities Commission) , 2013 SCC 67 , [2013] 3 S.C.R. 895 ( McLean ), at paragraphs 25–33 ). [ 38 ] Subsequent to the parties filing their written submissions, the Supreme Court of Canada issued its decision in Canada (Minister of Citizenship and Immigration) v. Vavilov , 2019 SCC 65 , 441 D.L.R. (4th) 1 ( Vavilov ).

The parties were permitted to file further written submissions to address the impact of Vavilov on their positions. [ 39 ] In those further submissions, the parties agreed that post- Vavilov , the presumptive standard of review is reasonableness. [ 40 ] However, the applicant contends that this presumption is rebutted in the circumstances of this matter and, therefore, the applicable standard of review continues to be correctness. Specifically, she submits that the

interpretation of statutory limitation periods is a pure question of law and is of central importance to the functioning of the legal system in Canada ( Markevich v. Canada , 2003 SCC 9 , [2003] 1 S.C.R. 94 ( Markevich ), at paragraph 17 ; McLean , at paragraph 28 ). The applicant submits that to allow the Minister’s delegate to interpret subsection 222(4) of the ITA “under the guise of ‘reasonableness’ review would be inconsistent with the rule of law and would introduce an unacceptable degree of uncertainty into the

interpretation of the legal question”. Further, that the CRA, acting on behalf of the Minister, has no particular expertise in interpreting legal issues involving limitation periods and the ITA does not suggest that the Minister is to be afforded deference. In the alternative, if the Court determines that the reasonableness standard does apply, then when assessing the Decision the Court must apply that standard in the manner set out in Vavilov . This should include recognizing that the CRA is not an independent tribunal and has an interest in the outcome, the continued withholding of the refund. The CRA cannot be permitted to reverse engineer its statutory

interpretation to achieve its desired outcome ( Vavilov , at paragraph 121 ). [ 41 ] The respondent submits that Vavilov contemplates two situations where the presumption is rebutted: (1) where legislation speaks directly to standard or review or does so implicitly by providing for direct appeal a decision maker to a court, and (2) where required by the rule of law. However, neither of these exceptions have application in this matter.

The rule of law only requires courts to have the final word with regard to general questions of law that are of central importance to the legal system as a whole ( Vavilov , at paragraphs 58–59, 61 ). The Decision does not raise a general or abstract question relating to limitation periods generally. Rather, it raises questions of mixed fact and law that are specific to the administration of the ITA .

Analysis [ 42 ] As to the applicant’s reliance on Connolly , it is significant to note that following paragraph 54, relied upon by the applicant and quoted above, the Court went on to say: That said, given significant developments in the common law of judicial review in recent years, it may well be that this approach is no longer correct as my colleague, Woods J.A., recently noted in Bonnybrook Park Industrial Development Co. Ltd. v. Canada (National Revenue ), 2018 FCA 136 , 425 D.L.R. (4th) 746, at paragraphs 22–24 and Ark Angel Foundation v.

Canada (National Revenue), 2019 FCA 21 , [2019] 4 C.T.C. 71, at paragraphs 30–31 . However, for the reasons set out below, it is in my view unnecessary to decide this issue in the present case. [ 43 ] Subsequent to Connolly , the Supreme Court of Canada in Vavilov held that the standard of reasonableness presumptively applies whenever a court reviews an administrative decision ( Vavilov , at paragraphs 16, 23, 25 ). That presumption may be rebutted in two circumstances.

The first is where the legislature has prescribed the standard of review or has provided a statutory appeal mechanism thereby signalling the legislature’s intent that appellate standards should apply ( Vavilov , at paragraphs 17, 33 ). The second circumstance is where the rule of law requires the application of the correctness standard.

This will be the case for certain categories of questions, namely, constitutional questions, general questions of law of central importance to the legal system as a whole and questions related to the jurisdictional boundaries between two or more administrative bodies ( Vavilov , at paragraphs 17, 53 ). [ 44 ] The applicant does not suggest that the first circumstance has any application in this matter.

She takes the position that the Minister’s Decision falls into the category of a general question of law of central importance to the legal system as a whole and, as such, rebuts the presumption that the reasonableness standard applies. [ 45 ] In my view, this position is not supported by Vavilov or the factual circumstances of this matter. In Vavilov , the Supreme Court stated that the presumptive standard of reasonableness applies to the administrative decision maker’s

interpretation of its enabling statute, as well as applying more broadly to other aspects of its decision (paragraph 25). And, as to general questions of law of central importance to the legal system as a whole, the Supreme Court referenced its decision in Dunsmuir [ v. New Brunswick ], 2008 SCC 9 , [2008] 1 S.C.R. 190 [ Dunsmuir ], at paragraph 60 , which held that general questions of law which are “both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise”.

However, while the Court remained of the view that the rule of law requires courts to have the final word with regard to general questions of law that are “of central importance to the legal system as a whole”, it found that it is no longer necessary to evaluate the decision maker’s specialized expertise in order to determine whether the correctness standard must be applied in cases involving such questions ( Vavilov , at paragraph 58 ). That is, expertise is no longer relevant to the determination of the standard of review as it was in the previously required contextual analysis.

The role of expertise in decision- making is now a consideration in conducting the presumptive reasonableness review ( Vavilov , at paragraph 31 ). [ 46 ] The Supreme Court then noted that the key underlying rationale for this category of question is the reality that certain general questions of law “require uniform and consistent answers” as a result of “their impact on the administration of justice as a whole”

( Dunsmuir , paragraph 60 ). In these cases, correctness review is necessary to resolve general questions of law that are of “‘fundamental importance and broad applicability’”, with significant legal consequences for the justice system as a whole or for other institutions of government ( Vavilov , at paragraph 59 ).

The Court cited its prior decisions in this regard and then stated: .… For example, the question in University of Calgary could not be resolved by applying the reasonableness standard, because the decision would have had legal implications for a wide variety of other statutes and because the uniform protection of solicitor-client privilege — at issue in that case — is necessary for the proper functioning of the justice system: University of Calgary , at paras. 19-26.

As this shows, the resolution of general questions of law “of central importance to the legal system as a whole” has implications beyond the decision at hand, hence the need for “uniform and consistent answers”. [ 47 ] Further [at paragraphs 61–62]: We would stress that the mere fact that a dispute is “of wider public concern” is not sufficient for a question to fall into this category — nor is the fact that the question, when framed in a general or abstract sense, touches on an important issue: see, e.g., Communications, Energy and Paperworkers Union of Canada, Local 30 v.

Irving Pulp & Paper, Ltd ., 2013 SCC 34 , [2013] 2 S.C.R. 458, at para. 66 ; McLean , at para. 28 ; Barreau du Québec v. Quebec (Attorney General) , 2017 SCC 56 , [2017] 2 S.C.R. 488, at para. 18 . The case law reveals many examples of questions this Court has concluded are not general questions of law of central importance to the legal system as a whole. These include whether a certain tribunal can grant a particular type of compensation ( Mowat , at para. 25); when estoppel may be applied as an arbitral remedy ( Nor-Man Regional Health Authority Inc. v.

Manitoba Association of Health Care Professionals , 2011 SCC 59 , [2011] 3 S.C.R. 616, at paras. 37-38 ); the

interpretation of a statutory provision prescribing timelines for an investigation ( Alberta Teachers , at para. 32); the scope of a management rights clause in a collective agreement ( Irving Pulp & Paper , at paras. 7, 15- 16 and 66, per Rothstein and Moldaver JJ., dissenting but not on this point); whether a limitation period had been triggered under securities legislation ( McLean , at paras. 28-31 ); whether a party to a confidential contract could bring a complaint under a particular regulatory regime ( Canadian National Railway , at para. 60); and the scope of an exception allowing non-advocates to represent a minister in certain proceedings ( Barreau du Québec , at paras. 17-18).

As these comments and examples indicate, this does not mean that simply because expertise no longer plays a role in the selection of the standard of review, questions of central importance are now transformed into a broad catch-all category for correctness review. In short, general questions of law of central importance to the legal system as a whole require a single determinate answer.

In cases involving such questions, the rule of law requires courts to provide a greater degree of legal certainty than reasonableness review allows. [Emphasis in original.] [ 48 ] I note that in McLean , referenced above in paragraph 61 of Vavilov by the Supreme Court as an example of questions that are not general questions of law central to the importance to the legal system as a whole, the Supreme Court considered whether, for the purposes of paragraph 161(6) (

d) of the British Columbia Securities Act [R.S.B.C. 1996, c. 418 ], “the events” that triggered the six-year limitation period found in

section 159 were triggered by the underlying conduct that gave rise to a settlement agreement or by the settlement agreement itself. The majority found that although limitation periods, conceptually, are “ generally of central importance to fair administration of justice” [emphasis in original], it did not follow that the Security Commissioner’s

interpretation of the limitation period must be reviewed for its correctness. Rather, that the meaning of “the events” in

section 159 was “a nuts-and-bolts question of statutory

interpretation confined to a particular context” ( McLean , at paragraph 28 ). [ 49 ] In my view, this is a similar circumstance. The Decision in this matter does not turn purely on the Minister’s

interpretation of subsection 222(4) of the ITA , but on the Minister’s application of that, and related provisions, to the facts of the applicant’s case. That is, it is an issue of mixed fact and law. I am also not persuaded that any

interpretation of that provision by the Minister in the Decision gives rise to a general question of law central to the importance to the legal system as a whole. The Minister’s

interpretation is confined to the applicant’s particular circumstances, being whether the Settlement Agreement caused the limitation period to be extended or restarted and, if it did not, whether the limitation period had expired prior to, and could not be revived by, the Third Reassessment. It will primarily have an effect on the specific circumstances of the applicant and it does not amount to a general question of law of central importance to the legal system as a whole which requires a single determinate answer.

Accordingly, the presumption of reasonableness as the applicable standard of review of the Decision has not been rebutted. [ 50 ] Finally, I note that the Supreme Court in Vavilov also addressed how a reasonableness review is to be conducted by a reviewing court (at paragraphs 73–145). [ 51 ] Within that discussion, the Supreme Court addressed the principles of statutory

interpretation as an element of a reasonableness analysis and held that matters of statutory

interpretation are not treated uniquely and, as with other questions of law, may be evaluated on a reasonableness standard (paragraph 115). [ 52 ] More generally, it held that a reviewing court must determine whether the decision as a whole is reasonable and, to make that determination, the reviewing court “asks whether the decision bears the hallmarks of reasonableness—justification, transparency and intelligibility—and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision” ( Vavilov , at paragraphs 15, 99 ).

When a decision is based on an internally coherent and rational chain of analysis and is justified in relation to the facts and the law that constrain the decision maker it is reasonable and is to be afforded deference by a reviewing court ( Vavilov , at paragraph 85 ). Issue 1: Did the applicant “acknowledge” her 1988 tax liability by filing her appeal to the Tax Court, thereby restarting the CLP? Applicant’s position [ 53 ] This first issue concerns whether the applicant made a “written acknowledgment” of the 1988 Debt, as that term is described in paragraph 222(6) (

b) of the ITA , by filing her appeal to the Tax Court, thereby restarting the CLP pursuant to paragraph 222(5)(a). The applicant submits that the appeal did not constitute a written acknowledgment of the 1988 Debt by the applicant and therefore it did not restart the limitation period.

[54] She submits that because what constitutes a written acknowledgment is not defined in the ITA, it is therefore properly interpretedby reading the words of the statutory provision “in their entire context and in their grammatical and ordinary sense harmoniously with thescheme of the Act, the object of the Act, and the intention of Parliament” (Rizzo & Rizzo Shoes Ltd. (Re), (SCC),[1998] 1 S.C.R. 27, (1998), 36 O.R. (3d) 418 [Rizzo], at paragraph 21), including considering the ordinary meaning of those words. Suchan

interpretation does not support that the appeal is a written acknowledgment of the 1988 Debt. [55] In that regard, the applicant notes, amongst other points, that paragraph 222(8)(

a) provides that the limitation period is extendedwhile an appeal is outstanding. It would be redundant and incoherent to conclude that paragraph 222(5)(

a) is also intended tosimultaneously restart the limitation period. Had Parliament intended to restart the limitation period on the filing of any notice of appealto the Tax Court, it would have said so. The applicant submits that this

interpretation is also consistent with the legislative purpose ofsection 222 and the policy underlying limitation periods in general (Alberta Law Reform Institute, Report No. 55, Limitations(Edmonton: The Institute, 1989), at page 92). That is, where a taxpayer does not admit or verify their liability, they have not renouncedtheir need to be protected by the limitation period and there is no justification for renewing the limitation period.

Conversely, based onestoppel, if a debtor has promised to pay a debt, then the creditor should be entitled to rely on this new promise and a limitation periodshould not be renewed in view of that promise. [56] Further, by its very nature an appeal is a dispute as to the existence of a tax debt, not a confirmation of its existence. By filing theappeal the applicant merely acknowledged that the First and Second Reassessments had been issued for her 1988 taxation year. She didnot acknowledge the existence of the alleged 1988 Debt itself or her liability for that debt.

Rather, she expressly denied the existence ofany liability for the 1988 taxation year. As the appeal did not “confirm and concede” (Buik Estate v. Canasia Power Corp., 2014 ONSC2959 (Buik), at paragraph 35) the correctness of the First Reassessment or the Second Reassessment or the existence of the1988 Debt, it was not a written acknowledgment of the tax debt and did not restart the limitation period. Respondent’s position [57] The respondent submits that the Minister’s

interpretation of what constitutes a “written acknowledgment” in the context of theITA was reasonable and is to be afforded deference. While the respondent concedes that language similar to that found in subsection222(5) of the ITA appears in the Limitation Act, R.S.B.C. 1979, c. 236, it asserts that the authorities relied upon by the applicant arenevertheless distinguishable due to the statutory context and purpose of the ITA, its purpose being to raise revenues to operate the publicsector. [58] Further, subsection 152(8) of the ITA states that an assessment shall, subject to being varied or vacated on an objection or appealunder

Part I [sections 2 to 181.71] and subject to a reassessment, be deemed to be valid and binding notwithstanding any error, defect oromission in the assessment or in any proceeding under the ITA relating thereto.

Subsection 152(3) states that liability for the tax underPart I is not affected by an incorrect or incomplete assessment or by the fact that no assessment has been made. [59] Accordingly, the respondent submits that there is no need for a taxpayer to make an admission of liability because the ITAalready deems that liability to exist and ousts any common law precondition of an admission of liability in order to constitute anacknowledgment. The filing of an appeal of a valid and binding tax debt is an acknowledgment of that debt. The ordinary meaning of theword “acknowledge” can bear this

interpretation and is reasonable. Analysis [60] The Decision states that the notice of appeal acknowledged both the First Reassessment and the Second Reassessment. Further,that “Filing an appeal with the TCC is an acknowledgement of debt and restarted the CLP to day one”.

This appears to express a viewgenerally held by CRA that the filing of any appeal is an acknowledgment of the subject debt and, therefore, restarts the limitationcollection period. [61] I note in passing here that the respondent’s above reasoning referencing subsections 152(3) and (8) of the ITA is not found in theDecision refusing the requested refund. The Decision makes no explicit reference to any provisions of the ITA in support of itsconclusion. The certified tribunal record, like the Decision, does not include any notes or analysis.

It includes only excerpts from theCRA National Collections Manual and a screen print of a portion of CRA’s external website concerning limitation periods, which bothindicate, without explanation, that the filing of a notice of objection or an appeal to the Tax Court is an acknowledgment of the debt. Theexternal website extract states that these actions will restart the collections limitation period as they “are considered acknowledgments ofdebt”. The electronic link to which the applicant was referred in the Decision is, presumably, a link to the CRA website. That said, theinterpretation of paragraph 222(5)(

a) and subsection 222(6) was not directly at issue when the applicant made her submissions to theCRA seeking a refund. However, the CRA appears to rely on a stated

interpretation of the ITA in the Decision without offering anyjustification for its conclusion. [62] Accordingly, the first question to be addressed is whether CRA reasonably concluded that the act of filing an appeal is, in and ofitself, an acknowledgment which will suffice to restart a limitation period in every case. [63] The Supreme Court of Canada has held that the words of

an Act are to be read in their entire context and in their grammatical andordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament (Vavilov, at paragraph117; Rizzo, at paragraph 21; in the context of the ITA also see Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R.601, at paragraph 10). Further, that assessing the reasonableness of a statutory

interpretation requires the reviewing court to ask “whetherthe tools of statutory

interpretation – including the text, context and purpose of the provision – can reasonably support the [Minister’s]conclusion” (Williams Lake Indian Band v. Canada (Aboriginal Affairs and Northern Development), 2018 SCC 4, [2018] 1 S.C.R. 83, atparagraph 108). [64] In terms of context,

section 222 must be viewed in context of that

section as a whole, other relevant provisions and the object ofthat Act. In that regard, the ITA does not define “acknowledges” or “written acknowledgment” as found in paragraphs 222(5)(

a) and222(6)(b), respectively. Nor do those provisions state that the filing of an appeal is an acknowledgment or that the filing of an appealwill serve to restart a limitation period. Significantly, however, subsections 222(8) and 225.1(3), read together, explicitly contemplate

that, when an appeal to the Tax Court has been filed, the Minister will not take any collection action for the amount in controversy and the limitation period will be extended to account for the period of time that the matter was under appeal. The effect of subsections 222(8) and 225.1(3) is that the filing of an appeal with the Tax Court will pause the running of the existing limitation period for the duration of the appeal. When the appeal has been determined, the limitation period will resume running and will be extended by the time of the pause for the appeal.

That is, the 10-year limitation period is preserved. [ 65 ] In my view, had it been Parliament’s intent that the filing of an appeal with the Tax Court would restart the limitation period, then it presumably would have clearly said so (see, for example, Doig v. Canada , 2011 FC 371 , [2011] 4 C.T.C. 1, at paragraph 27 ). Further, the fact that subsections 222(8) and 225.1(3) explicitly contemplate the extension of a limitation period by the filing of an appeal, while paragraphs 222(5) (

a) and 222(6) (

b) which concern the restarting of limitation periods are silent as to appeals, mitigates against the

interpretation of an “acknowledgement” of the subject tax as including the filing of an appeal. [ 66 ] It would also be absurd if the limitation period could be both restarted by the filing of an appeal to the Tax Court pursuant to paragraphs 222(5) (

a) and (6) (

b) and, at the same time, also be extended pursuant to subsection 222(8). This could have the result of two different limitation periods running with respect to the same matter. To the extent that this was what CRA was suggesting in the Decision when it stated that the filing of the appeal restarted the limitation period and that the limitation period “was simultaneously extended when the appeal to the TTC was file[d]”, in my view, this is an unreasonable

interpretation. [ 67 ] Based on the foregoing considerations, it is my view that the Minister’s general conclusionary statement that filing an appeal with the Tax Court is an acknowledgement of debt, thereby restarting the limitation period, is not justified, intelligible or transparent and is unreasonable ( Vavilov , at paragraphs 14, 86, 95, 99–101, 105, 120–121 ). [ 68 ] However, I will also consider the parties’ other submissions as to the

interpretation of the word “acknowledgment” found in paragraph 222(6)(b). [ 69 ] In applying the ordinary meaning rule,

interpretation starts with ordinary meaning—reading the words in their grammatical and ordinary sense. But, “[i]nterpreters are obliged to consider the total context of the words to be interpreted in every case, no matter how plain those words seem upon initial reading” (Ruth Sullivan, Sullivan on the Construction of Statutes , 6th ed. (Markham, Ont.: LexisNexis Canada, 2014), at §3.7). The grammatical and ordinary sense of words in a statutory provision is not determinative, rather, the

section must be read in its entire context: “This inquiry involves examining the history of the provision at issue, its place in the overall scheme of the Act , the object of the Act itself, and Parliament’s intent both in enacting the Act as a whole, and in enacting the particular provision at issue” ( Chieu v.

Canada (Minister of Citizenship and Immigration) , 2002 SCC 3 , [2002] 1 S.C.R. 84, at paragraph 34 ). [ 70 ] With respect to interpreting the ITA , in Markevich the Supreme Court of Canada stated [at paragraph 14]: There is no authority to support the proposition that the ITA is a complete code that cannot be informed by laws of general application. The ITA does not operate in a legislative vacuum: see Will-Kare , supra , at para. 31. See also P. W. Hogg, J. E. Magee and T.

Cook, Principles of Canadian Income Tax Law (3rd ed. 1999), at p. 2, where the authors note that the “Income Tax Act relies implicitly on the general law”. Accordingly, whether a statute or legal principle affects the operation of the ITA must be decided by an analysis of the specific provisions involved. [ 71 ] Here, the relevant sections of the ITA are paragraph 222(5) (

a) and subsection 222(6) : 222 (1) … Limitation period restarted

(5) The limitation period described in subsection (4) for the collection of a tax debt of a taxpayer restarts (and ends, subject to subsection (8), on the day that is 10 years after the day on which it restarts) on any day, before it would otherwise end, on which (

a) the taxpayer acknowledges the tax debt in accordance with subsection (6); (

b) the Minister commences an action to collect the tax debt; or (

c) the Minister, under subsection 159(3) or 160(2) or paragraph 227(10)(a), assesses any person in respect of the tax debt. Acknowledgement of tax debts

(6) A taxpayer acknowledges a tax debt if the taxpayer (

a) promises, in writing, to pay the tax debt; (

b) makes a written acknowledgement of the tax debt, whether or not a promise to pay can be inferred from the acknowledgement and whether or not it contains a refusal to pay; or (

c) makes a payment, including a purported payment by way of a negotiable instrument that is dishonoured, on account of the tax debt. [ 72 ] As noted above, these provisions do not state that the filing of a notice of appeal with the Tax Court is a written acknowledgment of the tax debt, which would serve to restart, rather than suspend and extend the limitation period.

Instead, Parliament chose to limit the circumstances in which the limitation period is restarted to those set out in subsection 222(5) , including where the taxpayer acknowledges the debt ( paragraph 222(5) (a)). [ 73 ] The applicant submits that the plain and ordinary meaning of the term “acknowledgment” indicates that there must be some form of admission or verification of the debt owing in order to restart the limitation period under subsection 222(5) and that this

interpretation

is consistent with the case law she has referenced. She points to Black’s Law Dictionary (Black’s Law Dictionary online, 2nd ed., subverbo acknowledgement) definition as “Stating that something is true or factual … A message that confirms a communication wasreceived … aka verification”. Further, the Oxford English Dictionary (Oxford English Dictionary online, 3rd ed., sub verbo“acknowledgement”) defines the terms as “the action or

an act of acknowledging, confession, admitting, or owning something:admission, confession”. [74] The respondent refers to a similar definition from Black’s Law Dictionary being “to recognize (something) as being factual orvalid” (Black’s Law Dictionary, 10th ed., Thomson Reuters, 2014, page 27).

The respondent says that the use of the disjunctive word“or” is important because by appealing an assessed tax debt the taxpayer is acknowledging that the assessed debt is factual—it exists as aliability—even if it disputes it validity. [75] I note that the Merriam-Webster online dictionary (Merriam-Webster Online Dictionary, sub verbo “acknowledgement”) defines“acknowledgment” as including the act of acknowledging something or someone, such as the acknowledgment of a mistake; and as adeclaration or avowal of one’s act or of a fact to give it legal validity. [76] In my view, the plain meaning of “acknowledgment” requires an admission or confirmation by the person making theacknowledgment of the thing alleged, be it an admission of liability for damages, blame, responsibility or liability for a tax debt. [77] As to judicial

interpretation of the term, there would not appear to be a great deal of case law directly on point. The respondentprovided no cases and the applicant identified only one case which addresses subsections 222(5) and (6) of the ITA. That case is Thandi(Re), 2017 BCSC 1201, 2017 D.T.C. 5090 (Thandi). There, the British Columbia Supreme Court (B.C.S.C.) held that participation byCRA in foreclosure proceedings with the express purpose of attempting to collect on the outstanding debt was an “action to collect a taxdebt” under subsection 222(1).

Further, that there was sufficient evidence to support the CRA’s position that they had received a writtenacknowledgment of the debt, pursuant to subsections 222(5) and 222(6). Specifically, a notation found in a CRA collection diary statedthat counsel for Mr. Thandi had sent a letter (which was not in evidence) requesting confirmation that the CRA would release judgmentsonce any excess funds went to CRA. In the absence of any contradictory evidence submitted by Mr. Thandi, the B.C.S.C. found that byhis counsel’s letter, Mr.

Thandi had acknowledged his debt in writing such that the limitation was restarted (Thandi, at paragraphs 31–33). [78] What I take from Thandi is that when it is alleged that there has been a written acknowledgment of a tax debt, pursuant toparagraph 222(6)(

b) of the ITA, it is the content of that acknowledgment that will determine if this is the case. In the context of thismatter, this supports that even if the filing of an appeal with the Tax Court can potentially trigger the restarting of a limitation period, themere filing of the appeal will not automatically serve to act as a written acknowledgment of the debt.

Rather, the content of the appealitself must be scrutinized in each case. [79] The remaining jurisprudence provided by the applicant considers whether there was a written acknowledgment of a debtsufficient to restart a limitation period in the context of provincial limitation statutes. In Buik, the Ontario Court of Justice consideredwhether the limitation period found subsection 51(1) of the Limitations Act, R.S.O. 1990, c.

L.15, which provided that a writtenacknowledgment of a debt delivered prior to the expiration of the limitation period, from which a promise to pay could be inferred,restarted a fresh limitation period. It concluded that in the case before it the debt had been acknowledged by letters which served torestart the limitation period. The court’s survey of relevant case law included the following [at paragraph 35]: In Canada (AG) v. Simpson (1995), (ON SC), 26 O.R. (3d) 317 (Gen.

Div.), the court held that a debtor’s applicationsfor interest relief did not constitute an acknowledgment of debt within the meaning of the law. Charron J. held that there must be greatercertainty before a writing will put the parties out of the operation of the statute. In addition to being in writing, and signed by the personmaking it (or that person’s agent), the acknowledgement of the debt must “confirm and concede the amount that remains owing”: WestYork International Inc. v. Importanne Marketing Inc., 2012 ONSC 6476 , at para. 92. See also Ainsley v.

Fitzpatrick, 2013ONSC 3338 , at para. 55, aff’d 2014 ONCA 93 ; Graeme Mew, The Law of Limitations, 2d ed. (Markham, Ont.:Butterworths, 2004), at pp. 115-16. [80] I note that West York International Inc. v. Importanne Marketing Inc., 2012 ONSC 6476 , cited in Buik, stated [atparagraph 92]: It is well established law that in considering whether an acknowledgment satisfies the requirements made under s.13 of the LimitationsAct, the acknowledgement must, at a minimum, confirm and concede the amount that remains owing.

Further, the acknowledgment mustbe in writing and signed by the person making it, or the person’s agent. [Emphasis added.] [81] Canada (Attorney General) v. Simpson (1995), (ON SC), 26 O.R. (3d) 317, [1995] O.J. No. 2850 (QL) (S.C.)(Simpson), also cited in Buik, concerned an application for interest relief under Canada Student Loans Act [R.S.C., 1985, c. S-23]. TheOntario Court (General Division) held that this did not constitute an acknowledgment of debt sufficient to rescue claim from operation ofsection 45 the Limitations Act, R.S.O. 1990, c. L.15. It dismissed the plaintiff’s motion for

summary judgment. The Court held that noneof the defendant’s applications for interest relief constituted an acknowledgment of debt within the meaning of the law as the wordingwas too equivocal: In my view, none of the defendant’s applications for interest relief constitute an acknowledgment of debt within the meaning of the law.Nor would the plaintiff be in any better position had the forms been subsequently completed by the lending institutions and returned tothe defendant in accordance with the established procedure.

Indeed had the details of the loan been set out on the form before thedefendant signed it, the plaintiff’s position would have been stronger but in my view, the matter would have still been quite debatable. Ofcourse the question that immediately comes to mind is “why would the debtor be applying for interest relief on loans unless they werehis?” I would think in the usual case the applicant for interest relief would be one who acknowledges that he or she owes the money butis having difficulty discharging the debt at that time.

Nevertheless, a debtor who disputes the principal amount of “his” loans as set outby the lending institution in part or in totality could just as well apply for interest relief as one who does not dispute it. The disputingdebtor would have nothing to lose; if he or she were ultimately found liable on the debt, at least some of the interest would be forgiven.

[82] In my view, Simpson is relevant to this matter as it demonstrates that the filing of a document that may, on its face, suggest that itis an acknowledgment of a debt is not, in and of itself, sufficient to restart a debt. It is the content of the document that is determinative.In that case, owing to a lack of detail pertaining to the underlying loan, the request for interest relief was found not to be a writtenacknowledgment of the debt (also see Canada v. Stasiuk, 2018 ONSC 1226 , at paragraphs 15, 28–38). [83] In Podovinikoff v.

Montgomery (1984), (BC CA), 14 D.L.R. (4th) 716, 58 B.C.L.R. 204 (B.C.C.A.) the BritishColumbia Court of Appeal considered whether, pursuant to the British Columbia Limitation Act, the acknowledgment of a cause ofaction must amount to an admission of liability if the acknowledgment is to serve as a confirmation of the cause of action. It concluded[at page 8] that: … a person may acknowledge as a bare fact that someone has asserted (probably by making a claim) a cause of action against himwithout acknowledging any liability.

However, I am also of the view that such a bare acknowledgment of the existence of a cause ofaction is quite insufficient to meet the requirements of s.5 (2) (a) (

i) of the Act. Those provisions provide that a person confirms a causeof action only if he “... acknowledges a cause of action, right or title of another; ...”. The acknowledgment of a right or title must, in myview, involve the acknowledgment of some liability. The word “acknowledgment” must have the same meaning when used withreference to a cause of action. It follows, therefore, that what binds a defendant and activates s.5 (2) (a) (

i) is an acknowledgment inwriting of a cause of action which admits some liability thereunder. (Also see Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53, at paragraphs 43–46). [84] As indicated above, what I take from Thandi is that when it is alleged that there has been a written acknowledgment of a tax debt,pursuant to paragraph 222(6)(

b) of the ITA, it is the content of that acknowledgment that will determine if this is the case. Thisrequirement for scrutiny of the content of the document in issue is also supported by the above case law interpreting writtenacknowledgements in the context of provincial limitations legislation. [85] In my view, this jurisprudence does not support an analysis which interprets a written acknowledgment, as that term is utilized inparagraph 222(5)(

a) and subsection 222(6), such that the mere filing of an appeal in the Tax Court will automatically and in every caseserve as an acknowledgment of a disputed, in whole or in part, tax debt by the appellant, thereby restarting the 10-year limitation period.Rather, if the filing of an appeal can potentially trigger those provisions, then whether it will do so is dependent upon the content of thesubject appeal. [86] The respondent submits, however, that there is no need for a taxpayer to make an admission of liability because the ITA alreadydeems the liability to exist and, therefore, that the ITA ousts any common law precondition of an admission of liability to constitute an“acknowledgement”.

More specifically, the legislative purpose of the ITA, being to raise revenue to operate the public sector, as viewedin the context of subsections 152(8) and 152(3), serves to distinguish the Minister’s

interpretation of “acknowledgment” from thejurisprudence relied upon by the applicant and render it reasonable. [87] In my view, although the ITA is a distinct statutory scheme, it “does not operate in a legislative vacuum” (Markevich, atparagraph 14). Further, because what comprises a “written acknowledgment” is not defined by the ITA, the jurisprudence pertaining tocivil limitation periods which contains wording very similar to subsection 222(6) is a useful

interpretation tool in identifying, moregenerally, what is required for a document to be considered an acknowledgment. [88] The respondent relies on subsections 152(3) and (8) of the ITA, asserting that they serve to oust the common law requirement foran acknowledgement to contain admission of liability. However, by their terms those sections do not state that they do this. Subsection152(3) states that liability for tax is not affected by an incorrect or incomplete assessment or by the fact that no assessment has beenmade.

Subsection 152(8) states that an assessment shall, subject to being varied or vacated on an objection or appeal and subject to areassessment, be deemed to be valid and binding notwithstanding any error, defect or omission in the assessment or in any proceedingunder the ITA. [89] I agree that paragraphs 222(5)(

a) and 222(6)(

b) are to be interpreted keeping in mind the overall purpose of the ITA, which therespondent states is to raise revenue and support the public sector. However, unlike the provisions cited by the respondent,

section 222 isspecifically concerned with collections. Subsections 222(4)–(10) are concerned with limitation periods as related to collections.Subsection 222(3) states that the Minister may not commence an action to collect a tax debt after the end of the limitation period for thecollection of the tax debt. I am not persuaded that reading subsections 152(3) and (8) of the ITA in the context of the overall purpose ofthe ITA leads to the respondent’s conclusion that an acknowledgement, pursuant to paragraphs 222(5)(

a) and 222(6)(b), does not requirean admission of liability and serves to oust the common law requirement for such an admission. Nor has the respondent pointed to anyjurisprudence in support of this assertion. [90] I agree with the applicant’s submission that by filing an appeal to the Tax Court a taxpayer acknowledges only that the Ministerhas assessed a tax debt to exist, which the Minister deems to be a valid debt. In my view, the fact that the Minister deems the debt to bevalid does not mean that the taxpayer acknowledges liability for that debt.

The very purpose of filing the appeal is to challenge thevalidity of that assessment, in whole or in part. In the absence of an acknowledgment by the taxpayer that the disputed portion of theassessed debt exists and is valid, or put otherwise, when the appeal denies the validity of and therefore liability for the assessed debt, thefiling of the appeal is not an “acknowledgment” of the debt. [91] This view gains support from the two other subsections of subsection 222(6), paragraphs 222(6)(

a) and 222(6)(c). Paragraph222(6)(

a) states that a taxpayer acknowledges a debt if they promise in writing to pay the debt. In that case, by agreeing to pay the debt,the taxpayer acknowledges that the debt (liability) exists and does not challenge or deny its validity. Thus, the new promise to pay estopsthe taxpayer from asserting that the original limitation period continues to run, the promise to pay restarts the limitation period. The sameis true of paragraph 222(6)(

c) which addresses the circumstance where the taxpayer makes a payment that is dishonoured. Viewed in thiscontext, an acknowledgment pursuant to paragraph 222(6)(

b) requires something more from the taxpayer than simply filing an appealchallenging the assessed tax debt—it requires an admission or confirmation by the taxpayer that the debt liability not only exists, but thatit is validly owed. As the applicant submits, this is also in keeping with the policy underpinnings of limitation periods.

[92] Put otherwise, even if, as the respondent submits subsections 152(3) and (8) deem the tax debt to be valid and binding untilvaried or vacated, paragraphs 222(6)(

b) and 222(6)(

c) do not support the assertion that an acknowledgement under paragraph 222(6)(a)does not require and admission of liability. An acknowledgment of the debt by the taxpayer must confirm and concede the amount of thetax debt that is owing in order to restart the limitation period. The mere filing of an appeal with the Tax Court is not automatically anacknowledgement as defined by subsection 222(6).

The content of the appeal must be scrutinized. [93] Accordingly, I conclude that the Minister unreasonably interpreted the ITA in determining that the filing of an appeal with theTax Court is an automatic acknowledgment of a tax debt which restarts the limitation period. [94] This finding leads to the question of whether the content of the notice of appeal filed in this case was a written acknowledgmentof the 1988 Debt.

The Decision states that the notice of appeal acknowledged both the First Reassessment and the Second Reassessment.The applicant submits that in the appeal she did not admit any liability under either the First or the Second Reassessment. In fact, theappeal expressly denied the existence of any liability for the 1988 taxation year. She states that, unlike the defendant in Belanger v.Gilbert (1984), (BC SC), 8 D.L.R. (4th) 92, 52 B.C.L.R. 197 (B.C.S.C.), affd (1984), (BC CA), 14D.L.R. (4th) 428, 58 B.C.L.R. 191 (B.C.C.A.), she did not contemplate settlement or otherwise implicitly acknowledge any of the 1988Debt.

Rather, she specifically requested that the Second Assessment be vacated by the Tax Court in its entirety. The notice of appeal didnot expressly or impliedly acknowledge that there was a valid debt owing and expressly denied any liability for the assessed debt(referencing Allen v. Bapco Paint Limited (1982), 34 B.C.L.R. 242, (B.C.S.C.). [95] I have reviewed the notice of appeal.

It put in issue whether the identified claims, including the 1988 Deductions, weredeductible in computing income and whether the disallowances of the 1988 Trinity Denton NCL, the 1988 Trinity Denton Capitol Lossand 1988 Bank Interest were statute barred. The applicant disputed the disallowances and stated that claims for the expenses werevalidly made. Amongst other things, she stated that the Second Reassessment was improper and ought to be vacated and that the amountsin issue represent reasonable expenditures and are deductible as claimed.

The requested remedies include that the Second Reassessmentbe vacated or, alternatively, be referred back to the Minister for reconsideration. [96] In my view, the appeal does not admit or confirm that the 1988 Debt is validly owed or “confirm and concede” the amount of thetax debt. Indeed, it disputes the validity of the amounts assessed.

Accordingly, the Minister’s finding that the appeal is a writtenacknowledgement of the 1988 Debt, as defined in paragraph 222(6)(b), and that the filing of the appeal restarted the imitation periodpursuant to paragraph 222(5)(a), was made without justification and is unreasonable. [97] In conclusion, for the reasons I have set out in paragraphs 60 to 67 above, I have found that the Minister’s general conclusionarystatement, that filing an appeal with the Tax Court is an acknowledgement of debt thereby restarting the limitation period, is not justifiedand is unreasonable.

I further conclude that the Minister also unreasonably interpreted the ITA in determining that the filing of an appealwith the Tax Court is an automatic acknowledgment of a tax debt which, without regard to the content of the appeal, restarts thelimitation period. In this case, the notice of appeal did not acknowledge the applicant’s 1998 Debt. Issue 2: Did the applicant’s filing of her appeal to the Tax Court, on January 4, 2011, extend the existing CLP? [98] The relevant provisions of the ITA are paragraph 222(8)(

a) and subsections 225.1(2) and (3): 222 (1) … Extension of limitation period

(8) In computing the day on which a limitation period ends, there shall be added the number of days on which one or more of thefollowing is the case: (

a) the Minister may not, because of any of subsections 225.1(2) to (5), take any of the actions described in subsection 225.1(1) inrespect of the tax debt; … 225.1 (1) … No action by Minister

(2) If a taxpayer has served a notice of objection under this Act to an assessment of an amount payable under this Act, the Minister shallnot, for the purpose of collecting the amount in controversy, take any of the actions described in paragraphs (1)(

a) to (

g) until after theday that is 90 days after the day on which notice is sent to the taxpayer that the Minister has confirmed or varied the assessment. Idem

(3) Where a taxpayer has appealed from an assessment of an amount payable under this Act to the Tax Court of Canada, the Ministershall not, for the purpose of collecting the amount in controversy, take any of the actions described in paragraphs (1)(

a) to (

g) before theday of mailing of a copy of the decision of the Court to the taxpayer or the day on which the taxpayer discontinues the appeal, whicheveris the earlier. [99] In the Decision, the Minister stated that the CLP was restarted and simultaneously extended when the appeal, made in respect ofboth the First Reassessment and the Second Reassessment, was filed meaning that the CLP did not run during the appeal. Applicant’s position [100] The applicant submits that while subsection 225.1(3) of the ITA bars the Minister from taking collection action while an alleged

tax debt is under appeal to the Tax C

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