9027-4218 Québec Inc. v. Canada (National Revenue)

9027-4218 Québec Inc. v. Canada (National Revenue)
Court (s) Database
Federal Court Decisions
Date
2019-06-06
Neutral citation
2019 FC 785
File numbers
T-219-18
Decision Content
Date: 20190606
Docket: T-219-18
Citation: 2019 FC 785
[UNREVISED CERTIFIED ENGLISH TRANSLATION]
Ottawa, Ontario, June 6, 2019
PRESENT: The Honourable Madam Justice Walker
BETWEEN:
9027-4218 QUÉBEC INC.
and
3087-1883 QUÉBEC INC.
Applicants
and
MINISTER OF NATIONAL REVENUE
Respondent
JUDGMENT AND REASONS
[1] The applicants, 9027-4218 Québec Inc. (9027) and 3087-1883 Québec Inc. (3087), are seeking judicial review of a decision issued by the respondent, the Minister of National Revenue. On behalf of the Minister, Mr. Ahmed El Haial, auditor at the Canada Revenue Agency (the CRA), refused to reassess, and thus to issue notices of reassessment to the applicants, for the taxation year ending September 30, 2012. The applicants are asking the Court to set aside the Minister’s decisions and to order her to issue the reassessments in question.
[2] The application for judicial review is dismissed for the reasons that follow.
[3] As a preliminary matter, the Court accedes to the initial respondents’ request, the CRA and the Minister, that only the Minister of National Revenue should be the respondent and that the style of cause be amended so as to remove the reference to the CRA. The style of cause has been amended accordingly.
I. The Facts
[4] This application involves three interrelated companies: the applicants and Constant d’Amérique Inc. (CAI). The companies are administered primarily by Mr. Jim Constantacos. The applicants were owners of lands on rue Chabot in Montréal. On April 26, 2011, the Ministère des Transports du Québec (the MTQ) served the applicants with a notice of expropriation in order for it to be able to perform work on a section of the Turcot interchange. The lands subject to the notice of expropriation had previously been leased by the applicants to CAI, which is in the business of producing cleaning products. The two commercial leases, having been signed in January 2007, provided that each of the applicants was to pay CAI a penalty of $3 million, in addition to relocation expenses, in the event that the leased premises were repossessed by the applicants before the end of the lease (such as in the case of an expropriation).
[5] On June 10, 2011, the MTQ offered the applicants the sum of $8.7 million as payment for the expropriation. The compensation for the expropriation included the sum of $870,000 (10% of the compensation), retained by the MTQ until the premises were vacated by the applicants. In October 2011, the applicants accepted the MTQ’s offer. Cheques were distributed to 9027, in the amount of $3,189,942, and to 3087, in the amount of $4,640,058, by Maître Roger Gosselin, notary. On August 29, 2014, the MTQ paid the remaining $870,000 to 9027 following the vacation of the premises by the applicants. Later, in December 2011, the MTQ and the applicants agreed on a declaration of out-of-court settlement that broke down the elements of the expropriation compensation as follows:
Principal compensation:
land
$930,838
Ancillary hardship compensation:
Land outside the right-of-way
$507,841
Building(s) outside the right-of-way
$1,811,221
Commercial damages
$796,220
Relocation expenses
$4,407,990
Hardship
$245,790
[6] The applicants paid CAI a total amount of approximately $5.45 million for the latter three compensation expenses (commercial damages, relocation expenses, and hardship).
[7] The applicants purchased new lands from the City of LaSalle as co-owners. On December 13, 2012, the applicants signed a new lease with CAI under which the latter was to make leasehold improvements and purchase new rental properties.
[8] On March 14, 2013, the applicants and CAI filed their income tax returns for the 2012 taxation year with the following breakdown of compensation for expropriation:
9027 (proceeds of disposition)
$930,838
3087 (proceeds of disposition)
$2,319,162
CAI (inducement)
$5,450,000
Total
$8,700,000
[9] On February 6, 2014, CAI filed an amended income tax return for the 2012 taxation year and filed a first adjustment request with the Minister. That request is provided for under subsection 13 (7.4) of the Income Tax Act, RSC 1985, c 1 (5th Sup.) (the Act) in order to reduce the capital costs of certain replacement properties acquired by CAI during the fiscal period ending September 30, 2013. CAI submitted that it had used $1,109,400 of the relocation expenses to make improvements, as provided for in the new lease. Accordingly, it contended that its net income for the 2012 taxation year should be reduced by that amount by operation of subsection 13(7.4) of the Act.
[10] In May 2014, the CRA designated an auditor, Mr. Siradiou Barry, to review CAI’s tax returns. On August 11, 2014, he asked CAI to provide him with the contract entered into with the MTQ and supporting documentation showing the acquisitions and disposals that CAI included in its amended tax return, a request with which CAI complied a few days later.
[11] In a letter dated December 8, 2014, Mr. Barry, on behalf of the Minister, denied the adjustment request, adopting the conclusions of an internal memorandum. According to the letter of refusal, the portion of the compensation for expropriation paid to CAI by the applicants was not eligible for the choices provided for in subsection 13(7.4) of the Act because it constituted business income pursuant to section 9 of the Act, and not an inducement payment pursuant to paragraph 12 (1)(x) of the Act.
[12] On December 9, 2014, the applicants’ accountant contacted Mr. Barry in order to notify him that he wished to make submissions in that regard. Mr. Barry granted him until January 8, 2015 to make submissions. That date was subsequently extended until January 23, 2015.
[13] It was from that moment that the versions of the two parties began to diverge.
[14] According to the applicants, on January 9, 2015, the applicants and CAI agreed not to challenge the Minister’s refusal to accept adjustments to CAI’s income. They believed that they would have an opportunity to file amended tax returns, that the Minister would issue reassessments to the applicants for the 2012 taxation year, and that the amounts received by the applicants from the MTQ would be considered to be a capital gain in their hands.
[15] A letter dated March 23, 2017 by one of the applicants’ accountants, Mr. Alain Roy from the BCGO S.E.N.C.R.L. firm, addressed to their counsel, presented their version of the story. Mr. Roy declared that, during a meeting with Mr. Barry that took place between mid-October 2014 and mid-January 2015, Mr. Barry had verbally confirmed that the compensation from the MTQ would be considered to be a capital gain in the hands of the applicants. The letter declares that prior to the filing of their adjustment request on February 4, 2015, another accountant from the same firm, Mr. Benoît Vincent, telephoned Mr. Barry. He did so in order for Mr. Barry to [translation] “reconfirm that the treatment of the capital gain is adequate” and Mr. Barry did indeed confirm the treatment. Mr. Barry asked that the letter that was to be sent with the amended tax returns be addressed to him so that the applicants’ and CAI’s files be transferred to him.
[16] However, at paragraphs 26 and 27 of his affidavit, Mr. Barry stated that on January 20, 2015, Mr. Vincent contacted him in order to discuss the CRA’s position declining the choice presented by CAI, according to subsection 13 (7.4) of the Act, in its amended 2012 income tax return. Mr. Vincent inquired as to whether he should amend the applicants’ income tax returns to include compensation for expropriation as a capital gain and exclude from CAI’s income the amount of $5.2 million declared as other income. Mr. Barry replied that the decision was for Mr. Vincent to make. Mr. Barry also mentioned that any adjustment request would be examined as long as it was submitted within the normal reassessment period set out at subsection 152 (3.1) of the Act. To that effect, Mr. Barry stated:
[TRANSLATION]
27. During the telephone conversation on January 20, 2015, I never told Mr. Vincent that the amended income tax returns of the [applicants], and CAI would be accepted by [the CRA].
[17] That excerpt is essentially reproduced in Mr. Barry’s contemporaneous “Memo to file” dated January 20, 2015.
[18] In his affidavit, Mr. Barry stated that he had never met with Mr. Roy during the period between mid-October 2014 and mid-January 2015. During the cross-examination on his affidavit, he stated that he had only had one discussion over the telephone with Mr. Roy on September 29, 2014, and one conversation on January 20, 2015 with Mr. Vincent.
[19] Mr. Barry further stated that on January 23, 2015, Mr. Vincent had contacted him requesting that he close CAI’s file. On cross-examination, Mr. Barry acknowledged that he understood that Mr. Vincent was to carry out an adjustment request for the applicants.
[20] On February 4, 2015, Mr. Vincent sent a letter to the CRA to formally request that the applicants’ reassessments for the 2012 taxation year and CAI’s reassessments for the 2012 and 2013 taxation years be issued. The applicants’ and CAI’s amended tax returns were attached to the letter. In effect, the applicants were asking that the CRA review the amended income tax returns and that the Minister issue reassessments for the 2012 taxation year, dividing up the $8.7 million in compensation as follows:
1. 9027: Consider the sum of $4,064,197 to represent a portion of the total compensation for expropriation and include it in the income of 9027 as proceeds of disposition for the land disposition du terrain (capital gains);
2. 3087: Consider the sum $4,635,803 to represent a portion of the total compensation for expropriation and include in the income of 3087 as proceeds of disposition for the land (capital gains).
[21] In the letter, the accountant requested that the applicants’ and CAI’s amended tax returns be handled by Mr. Barry. A copy of the letter was also addressed to Mr. Barry. On cross-examination, Mr. Barry stated that he had received this letter. However, he indicated that he “had not done anything with” the letter because the file had to be assigned to him according to administrative procedures.
[22] The applicants forwarded the adjustment request on June 22, 2016, to the new auditor on the file, Ms. Sirivanh Vannareth. Shortly thereafter, their accountants, Mr. Roy and Mr. Joël Dubé, attempted to contact Ms. Vannareth by leaving weekly messages on her voicemail between August and October 2016 but failed to receive a response. Ultimately, Mr. Dubé contacted the CRA’s Ombudsman about the matter seeking his intervention.
[23] In November 2016, Mr. El Haial, the CRA’s auditor, intervened in the matter to process the adjustment requests dated February 4, 2015. The Minister acknowledged that the CRA agreed to consider the adjustment requests and that Mr. El Haial would carry out an audit to consider those requests.
[24] On March 16, 2017, Mr. El Haial sent three letters with the results of his audit of the applicants’ and CAI’s adjustment requests. The Minister upheld the applicants’ initial assessments for the 2012 taxation year. He explained that the adjustments sought by the applicants had been denied because the sum of $5,450,000 remained included in CAI’s income for the 2012 taxation year.
[25] In his affidavit, Mr. El Haial affirmed that the Minister had not made the reassessments with respect to the applicants for the 2012 taxation year. As for CAI, the Minister made a reassessment for the taxation year 2013, in order to grant it a capital cost allowance deduction of $116,509 and to overturn the $870,000 in compensation set aside, which had been added to the income of 9027 in 2014.
[26] On December 8, 2017, the applicants’ counsel, Maître Richard Généreux, sent a legal notice to Maître Nathalie Labbé, counsel for the Department of Justice of Canada, asking that notices of reassessment be sent to the applicants for the 2012 taxation year.
[27] On January 9, 2018, counsel for the Minister sent the following reply:
[TRANSLATION]
“The Canada Revenue Agency (Agency) confirms receipt of the notice that you sent to the Department of Justice on or about December 8, 2017.
The Agency will not be taking a position with regard to the said legal notice.
Please consider this letter as a courtesy response.”
II. Avis de application for judicial review
[28] The applicants filed the present notice of application for judicial review on February 6, 2018. The applicants are seeking judicial review of the Minister’s refusal to issue the notices of reassessment for the 2012 taxation year, communicated by letter from its counsel on January 9, 2018. In their notice of application they argued that the refusal is contrary to the Minister’s duty to act fairly and, furthermore, that the Minister failed to uphold a principle procedural fairness. The applicants are asking the Court to set aside the decision.
[29] The applicants are also asking the Court to order the Minister [translation] “to provide notices of reassessment to the applicants for the 2012 taxation year so as to allow them to challenge the said assessments pursuant to the [Act]”.
III. Issues
[30] Having reviewed the parties’ written and oral arguments, I will address the following issues:
1. What is the decision that is the subject of the application for judicial review?
2. Was the application for judicial review filed after the 30-day period provided for at subsection 18.1(2) of the Federal Courts Act, RSC 1985, c F-7 (FCA)?
3. Did the Minister have a legal duty to issue the notices of reassessment to the applicants – following the adjustment request dated February 4, 2015 – opening the door to the issuance of a mandamus order?
Were the Minister’s decisions dated March 16, 2017, unreasonable or did they otherwise breach the applicants’ right to procedural fairness
IV. Analysis
[31] In order to properly understand the position of the applicants, it should first be noted that their arguments are based on the Minister’s refusal to issue notices of reassessment. They do not focus on the substantive decision to uphold the initial assessments for the 2012 taxation year; they maintain that this decision must be certified by notices of reassessment and not by means of letters from the Minister. In the applicants’ view, since they failed to receive the reassessments, they had no other means to challenge the Minister’s substantive decision or appeal to the Tax Court of Canada (TCC). Accordingly, they found themselves in a legal vacuum that was attributable to the Minister’s breach of their right to procedural fairness.
(1) The decision that is the subject of the application for judicial review
Parties’ Arguments
[32] The parties disagree as to the date of the Minister’s decision refusing to carry out the reassessments and issue notices of reassessment to the applicants for the 2012 taxation year.
[33] In their notice of application for judicial review, the applicants base their arguments on the letter dated January 9, 2018. The first purpose of their application to the Court is the following:
[TRANSLATION]
DECLARE that the Respondents’ refusal to provide notices of reassessments to applicants for the 2012 taxation year, communicated by letter of their counsel dated January 9, 2018, is contrary to their duty to act fairly.
[34] In addition, in their Memorandum of fact and law, the applicants declare:
[TRANSLATION]
43. By means of a letter dated January 9, 2018, counsel for the Respondents communicated the decision of the Respondents to the effect that no position would be taken with respect to the legal notice. In the circumstances, the Respondents formally refused on January 9, 2018 to provide the notices of reassessment to the applicants for the 2012 taxation year…;
[Emphasis added.]
[35] It is clear from the applicants’ written submissions, and the date on which they filed their notice of application, that their application for judicial review is based on the letter of January 9, 2018, drafted by the Minister’s counsel. At the hearing before the Court, the applicants presented a two-pronged, nuanced argument. First, they claimed that the letters of March 16, 2017, were not administrative decisions subject to the Federal Court’s jurisdiction, while the letter of January 9, 2018, was a reviewable decision. According to the applicants, if they filed a notice of application for judicial review with the Court in March or April 2017, the Minister would have filed a motion to strike which the Court would have allowed pursuant to section 18.5 of the FCA.
[36] As a subsidiary matter, the applicants submitted at the hearing that the Minister never issued an administrative decision subject to the Federal Court’s jurisdiction. Nevertheless, they argue that the Minister has a legal obligation to issue notices of reassessment for the 2012 taxation year in order for the applicants to have an opportunity to challenge the decision under section 165 of the Act and, ultimately, to appeal it to the TCC. Even if the letter of January 9, 2018, is not a decision, the Court should order the Minister to issue the notices.
[37] In contrast, the Minister submits that the decisions in issue were made on March 16, 2017, when the Minister exercised her discretion under subsection 152(4) of the Act, refusing the adjustment requests filed by the applicants on February 4, 2015, and upholding the initial assessments for the 2012 taxation year. In her view, the letter of January 9, 2018, constitutes a mere courtesy response. The letter was not a re-evaluation of the decisions made on March 16, 2017, and cannot otherwise constitute an administrative decision. The application for judicial review was therefore filed outside of the 30-day period provided for at subsection 18.1(2) of the FCA. According to the Minister, the applicants had until April 15, 2017 at the latest to file the notice of application for judicial review, which they only filed on February 6, 2018. Furthermore, the applicants did not file an application for an extension of time or submit evidence or arguments justifying their delay.
Analysis of the letter dated January 9, 2018, and of the letters dated March 16, 2017
[38] After having considered the applicants’ arguments regarding the decision in issue, I find that the letter dated January 9, 2018, is not an administrative decision reviewable by the Federal Court. In my view, the Minister’s decision refusing to carry out reassessments was taken on March 16, 2017. That is the date on which the applicants received the Minister’s decision. Their argument according to which the letter of January 9, 2018, from the Minister’s counsel amounted to an initial communication of the refusal is unconvincing.
[39] In the context of a letter or document that confirms or makes reference to an earlier decision, the new letter or new document must have the attributes of a decision that affects the rights of a citizen in order for it to be considered a decision. In other words, there must be a new exercise of discretion by the federal board, commission or other tribunal. If it does not make reference to new facts or arguments, or does not re-examine the original decision, it is not a reviewable decision (Brar v Canada (Minister of Citizenship and Immigration), 1997 CanLII 5685 (FC), 140 FTR 163 at paras. 7-9). Such a letter or document does not represent a decision, order, act or proceeding of a federal board, commission or other tribunal within the meaning of paragraph 18.1(3)(b) of the FCA.
[40] The Court has previously addressed issues of letters of courtesy. In Philipps v Librarian and Archivist of Canada, 2006 FC 1378 at paragraph 32, Justice Noël stated as follows:
[32] … this Court has clearly held that a courtesy letter written in reply to an application for review or reconsideration is not a decision or an order within the meaning of the Federal Courts Act, R.S.C. 1985, c F-7, and thus cannot be challenged by way of a judicial review application (Dhaliwal v. Canada (M.C.I.), [1995] F.C.J. No. 982; Moresby Explorers v. Gwaii Haanas National Park Reserve, [2000] A.C.F. no. 1944; Hughes v. Canada, 2004 FC 1055 (CanLII, para. 6). In fact, in Moresby Mr. Justice Pelletier (as he then was) made the following comment (Moresby Explorers, supra, at paragraph 12):
In Dumbrava v. Canada (Minister of Citizenship and Immigration), (1995), 101 F.T.R. 230, [1995] F.C.J. No. 1238, Noel J. (as he then was) reviewed a series of cases dealing with the effect of correspondence with a decision maker after a decision has been made. In those cases, the Court held that a “courtesy response” does not create a new decision from which judicial review may be taken. As it was put by McKeown J. in Dhaliwal v. Canada (Minister of Citizenship and Immigration), [1995] F.C.J. No. 982 “. . . counsel cannot extend the date of decision by writing a letter with the intention of provoking a reply.” Before there is a new decision, subject to judicial review, there must be a fresh exercise of discretion such as a reconsideration of a prior decision on the basis of new facts.
[Emphasis added.]
[41] The letter of January 9, 2018, reads as follows: “[The CRA] will not be taking a position with regard to the said legal notice” (see: paragraph 30 of this judgment for the complete letter). In my view, this does not constitute a decision within the meaning of the FCA. It does not reflect a fresh exercise of discretion or a re-examination of the refusal of March 16, 2017. Rather, the letter represents a correspondence with the Minister following a decision having been made. I also note that the letter was written by the Minister’s two counsel, and not by an auditor authorized to make a decision for the Minister (Toronto Coalition to Stop the War v Canada (Public Safety and Emergency Preparedness), 2010 FC 957 at para. 137). I this regard, I agree with the argument of the Minister; such a “courtesy response” is not a new decision opening the door to judicial review.
[42] However, the letters dated March 16, 2017, addressed to the applicants, do possess the attributes of a decision. The two letters are identical. They state that the CRA has reviewed the adjustment request dated February 4, 2015, and decided to uphold the applicants’ initial assessments for the 2012 taxation year. In the letters, Mr. El Haial explains that the amount of $5,450,000 should be included in CAI’s income pursuant to subsection 9(1) of the Act.
[43] The letters dated March 16, 2017, constitute decisions by the Minister under subsection 152(4) of the Act. On that date, she refused to carry out the reassessments with regard to the applicants for the 2012 taxation year. The wording in the letters indicates that the Minister decided in a definitive manner to uphold the applicants’ initial assessments and therefore not to issue notices of reassessment.
Federal Court’s Jurisdiction
[44] The applicants argue that the decisions dated March 16, 2017, are not subject to the Federal Court’s jurisdiction because they raise no questions of administrative law and that the essential nature of those decisions should fall under the TCC’s jurisdiction under section 18.5 of the FCA.
[45] When I examine an application for judicial review of issues in relation to the Act, I must be satisfied that judicial review is possible under sections 18 and 18.1 of the FCA and that the jurisdiction of this Court is not excluded under section 18.5. Furthermore, the application must state “a ground of review that is known to administrative law or that could be recognized in administrative law.” (Canada (National Revenue) v JP Morgan Asset Management (Canada) Inc., 2013 FCA 250 at paras. 66, 70 (JP Morgan)).
[46] Section 18.5 of the FCA provides that a decision cannot be subject to judicial review if it can be appealed before, inter alia, the TCC:
Exception to sections 18 and 18.1
Dérogation aux art. 18 et 18.1
18.5 Despite sections 18 and 18.1, if an Act of Parliament expressly provides for an appeal to the Federal Court, the Federal Court of Appeal, the Supreme Court of Canada, the Court Martial Appeal Court, the Tax Court of Canada, the Governor in Council or the Treasury Board from a decision or an order of a federal board, commission or other tribunal made by or in the course of proceedings before that board, commission or tribunal, that decision or order is not, to the extent that it may be so appealed, subject to review or to be restrained, prohibited, removed, set aside or otherwise dealt with, except in accordance with that Act.
18.5 Par dérogation aux articles 18 et 18.1, lorsqu’une loi fédérale prévoit expressément qu’il peut être interjeté appel, devant la Cour fédérale, la Cour d’appel fédérale, la Cour suprême du Canada, la Cour d’appel de la cour martiale, la Cour canadienne de l’impôt, le gouverneur en conseil ou le Conseil du Trésor, d’une décision ou d’une ordonnance d’un office fédéral, rendue à tout stade des procédures, cette décision ou cette ordonnance ne peut, dans la mesure où elle est susceptible d’un tel appel, faire l’objet de contrôle, de restriction, de prohibition, d’évocation, d’annulation ni d’aucune autre intervention, sauf en conformité avec cette loi.
[47] Appeals relating to assessments of income tax and the accuracy of such assessments are reserved exclusively to the TCC under the Tax Court of Canada Act, RSC 1985, c T-2 (specifically section 12), and under the Act. The Federal Court does not have the jurisdiction to hear and decide such matters (JP Morgan at para. 27). In Canada v Addison & Leyen Ltd., 2007 SCC 33, the Supreme Court of Canada noted that a reviewing court must be prudent when undertaking a judicial review in circumstances that relate to the system of tax appeals established by Parliament (at para. 11).
[48] However, both this Court and the Federal Court of Appeal have recognized that the exercise of discretion by the Minister may give rise to an application for judicial review (JP Morgan at paras. 90, 96-98; Revera Long Term Care Inc. v Canada (National Revenue), 2019 FC 239). In this regard, Justice Stratas wrote (JP Morgan at para. 96):
[96] There are areas, well-recognized in the case law, where judicial review may potentially be had in tax matters. Examples include discretionary decisions under the fairness provisions, assessments that are purely discretionary (such as the assessment under subsection 152(4.2) at issue in Abraham v. Canada (Attorney General), 2012 FCA 266, 440 N.R. 201, revg 2011 FC 638, 391 F.T.R. 1), and conduct during collection matters that is not acceptable or defensible on the facts and the law (Walker, supra; Pintendre Autos Inc. v. The Queen, 2003 TCC 818).
[49] In addition, in Abakhan & Associates Inc. v Canada (Attorney General), 2007 FC 1327 (Abakhan), the taxpayer’s bankruptcy trustee filed an application for judicial review of the Minister’s decision refusing to carry out a reassessment after the normal reassessment period under subparagraph 152(4)(a)(i) of the Act (misrepresentation of facts). The Minister maintained that judicial review amounted to a parallel challenge to the TCC’s jurisdiction, and was therefore prohibited under section 18.5 of the FCA. The Court dismissed that argument. Justice O’Reilly made a distinction between a reassessment and a refusal to carry out a reassessment. A taxpayer cannot appeal a refusal to carry out a reassessment to the TCC, therefore judicial review remains the only adequate alternative means of challenging the decision (Abakhan at para. 8):
[8] However, the decision under review here is neither an assessment nor a reassessment; it is a refusal to carry out a reassessment. From this decision, I see no appeal under the Income Tax Act. Had the Minister agreed to perform a reassessment, Abakhan could have appealed the reassessment if it was dissatisfied with the result. But there is no appeal from a decision not to conduct a reassessment. Accordingly, s. 18.5 of the Federal Courts Act does not prevent an application for judicial review of a decision under s. 152(4)(a)(i) of the Income Tax Act nor, obviously, does the Income Tax Act provide any adequate alternative remedy to Abakhan. Therefore, Abakhan’s application for judicial review cannot be dismissed on this basis.
[50] In AFD Petroleum Ltd. v Canada (Attorney General), 2016 FC 547 (AFD Petroleum), the applicant challenged a decision by the Minister refusing an adjustment request filed in order to claim a tax credit for Scientific Research and Experimental Development expenditures. The Minister refused to carry out a reassessment because the applicant failed to complete most of the pages of the applicable form. The Court declared (AFD Petroleum at para. 11):
[11] To properly be in Federal Court an applicant must: (1) show that judicial review is available under sections 18 and 18.1 of the FCA; and (2) “state a ground of review that is known to administrative law or that could be recognized in administrative law” (JP Morgan at paras 68-70). In JP Morgan, the Federal Court of Appeal identified (at para 70) three grounds of judicial review known to administrative law, namely: (a) lack of vires; (b) procedural unacceptability; and (c) substantive unacceptability (i.e., a decision that is not reasonable).
[51] The Court found that the applicant had raised claims that were cognizable in administrative law: it had raised issues of procedural and substantive unacceptability. Furthermore, the Court noted that there was no appeal to the TCC available to the applicant (AFD Petroleum at para. 17).
[52] I find that the Court has jurisdiction to hear and decide the applicants’ application for judicial review. The Minister’s refusal to carry out a reassessment for a taxation year in application of subsection 152(4) of the Act is a discretionary decision. The discretionary character of such a decision is no different from that of a decision issued by the Minister under section 152(4.2) of the Act (JP Morgan at para. 96). Without making any determinations as to the correct or validity of the assessment, the Court could find the refusal to be either procedurally (in breach of procedural fairness rights) or substantively (unreasonable) unacceptable.
[53] The Minister recognizes the jurisdiction of this Court in his Memorandum:
[TRANSLATION]
29. The applicants correctly treat as a decision within the meaning of subsection 18.1(2) of the Federal Courts Act the Minister’s refusal to grant the adjustments requested and to carry out the reassessments accordingly. This, in effect, is a decision given that it affects the rights of the applicants, which renders the certiorari available in principle and allows for the breach of principles of natural justice to be invoked.
[54] I further note that the applicants point out that the letter dated January 9, 2018, is subject to judicial review by the Court because it represents the first communication of the Minister’s refusal, but they provide no explanation as to the distinction between this letter and the letters dated March 16, 2017, vis-à-vis the Court’s jurisdiction. The letter dated January 9, 2018, and the letters dated March 16, 2017, relate to the Minister’s refusal to carry out the reassessments under subsection 152(4) of the Act. If the letter of January 9 constituted a re-examination of the refusal, and not a courtesy letter, and if the applicants claim that this letter is properly before the Court for judicial review, their argument that the letters dated March 16, 2017, were not subject to judicial review makes no sense.
[55] The letters dated March 16, 2017, are decisions issued by the Minister in the exercise of her discretion pursuant to subsection 152(4) of the Act. The applicants’ application raises issues of procedural fairness and unreasonableness of the Minister’s refusal. Accordingly, they are subject to judicial review by this Court and the Court may grant the certiorari and mandamus measures sought by the applicants (JP Morgan at para. 66). Otherwise, taxpayers faced with such a refusal would find themselves without a remedy: the legal vacuum invoked by the applicants.
(2) Was the application for judicial review filed after the 30-day period provided for at subsection 18.1(2) of the FCA?
Letters dated March 16, 2017
[56] The applicants filed their application under section 18.1 of the FCA. Subsection 18.1(2) of the FCA provides that an application for judicial review must be filed within 30 days after the decision or order was first communicated to the party:
18.1(2) An application for judicial review in respect of a decision or an order of a federal board, commission or other tribunal shall be made within 30 days after the time the decision or order was first communicated by the federal board, commission or other tribunal to the office of the Deputy Attorney General of Canada or to the party directly affected by it, or within any further time that a judge of the Federal Court may fix or allow before or after the end of those 30 days.
18.1(2) Les demandes de contrôle judiciaire sont à présenter dans les trente jours qui suivent la première communication, par l'office fédéral, de sa décision ou de son ordonnance au bureau du sous-procureur général du Canada ou à la partie concernée, ou dans le délai supplémentaire qu'un juge de la Cour fédérale peut, avant ou après l'expiration de ces trente jours, fixer ou accorder.
[57] In light of my finding that the only decisions that are subject to judicial review are the Minister’s two refusals dated March 16, 2017, it is clear that the applicants filed their application for judicial review outside the period provided for at subsection 18.1(2) of the FCA. The decisions in issue were communicated to the applicants on March 16, 2017. The notice of application for judicial review was filed on February 6, 2018, more than 10 months after the decisions had been communicated to the applicants.
[58] The applicants did not request an extension of time and the Minister contends that their application for judicial review must therefore be dismissed. Despite the lack of arguments to this effect, I reviewed the issue of an extension with respect to the criteria set out by the Federal Court of Appeal in Canada (Attorney General) v Hennelly, [1999] FCJ No 846 (QL),1999 CanLII 8190 at para. 3 (Hennelly) (see also: Sauvé v Canada, 2018 FCA 98 at para. 8). A person who requires an extension of time must demonstrate (i) that there is a continuing intention to pursue the underlying proceeding; (ii) that the proceeding has some merit; (iii) that no prejudice to the respondent arises from the delay in carrying out the proceeding; and (iv) that a reasonable explanation for the delay exists. These criteria, which are neither cumulative nor exhaustive, in sum help determine whether the granting of an extension of time is in the interests of justice (Canada (Attorney General) v Larkman, 2012 FCA 204 at paras. 61-62; Grewal v Canada (Minister of Employment and Immigration), [1985] 2 F.C. 263 (C.A.) (Grewal)).
[59] The applicants have not demonstrated that their request meets the criteria established in Hennelly. Their actions since the receipt of the decisions do not show a continuing intention to pursue the application for judicial review of the decisions dated March 16, 2017. At the hearing, the applicants’ counsel pointed out the importance of Quebec’s new Code of Civil Procedure, CQLR c C-25.01, which requires parties to consider private modes of prevention and settling their dispute before turning to the courts. In my view, an obligation to attempt to resolve disputes without the intervention of the courts – which falls under Quebec’s civil law – did not prevent the applicants from protecting their right to seek judicial review of the Minister’s refusal in March or April 2017, while at the same time pursuing theirs efforts to seek a settlement.
[60] The applicants argue that, following the decisions of March 2017, they had hoped that the Minister would amend her refusal. However, the letters dated March 16, 2017 are not ambiguous. It is up to the applicants to protect theirs rights formally; this is notwithstanding their informal intervention on 13 October 2017, and their letter of legal notice in December 2017.
[61] As for the fourth criterion, although the applicants could argue that their mistaken belief that the Minister’s decisions in March 2017 were not subject to judicial review explains their delay, this argument is unconvincing, given their contradictory arguments regarding the nature of the letters dated January 9, 2018, and March 16, 2017.
[62] In conclusion, the applicants’ application for judicial review, filed on February 6, 2018, must be dismissed. The applicants filed it well after the 30-day limit set out in subsection 18.1(2) of the FCA. In light of the lengthy delay on the part of the applicants, the absence of a persuasive explanation for the delay, and the principle of finality of administrative decisions that underlies the time limit imposed to challenge such decisions, I am not convinced that the interests of justice require that an extension of time be granted (Grewal, above).
[63] That said, I will address the merits of the applicants’ arguments (the second criterion) in the sections to follow. However, in short, I find that the Minister was not obliged to carry out the reassessments or issue notices of reassessment to the applicants for the 2012 taxation year. Moreover, the Minister’s refusal to carry out the reassessments was reasonable. The applicants have not demonstrated that their application for judicial review is well founded.
5. (3) Did the Minister have a legal duty to issue the notices of reassessment to the applicants – following the adjustment request dated February 4, 2015 – opening the door to the issuance of a mandamus order?
[64] The applicants submit that, notwithstanding the late filing of their notice of application for judicial review, the Court should issue a mandamus order. They claim that the Minister had a legal duty to issue the notices of reassessment even if, after Mr. El Haial’s audit, the Minister had determined that no amendments should be made to the initial assessments for the 2012 taxation year. According to the applicants, if the Court found that the letter dated January 9, 2018 was not a decision, the Court should nonetheless order the Minister to comply and issue the notices in order for the applicants to mount a challenge under section 165 of the Act. They argue that the existence of a reviewable administrative decision is not necessary to issue a mandamus order in cases in which there is a failure to comply with a public legal duty to act.
[65] A mandamus order is a fairness relief remedy that compels the performance of a public legal duty by a public authority who refuses or neglects to carry out the duty when called upon to do so. The parties agree that the criteria for the issuance of a mandamus order were set out in Apotex Inc. c Canada (Attorney General), [1994] 1 FC 742, 1993 CanLII 3004 (FCA) (Apotex):
1. there must be a public legal duty to act;
2. the duty must be owed to the applicant;
3. there must be a clear right to performance of that duty, in particular:
(a) the applicant has satisfied all conditions precedent giving rise to the duty,
b) there was: (i) a prior demand for performance of the duty; (ii) a reasonable time to comply with the demand unless refused outright; and (iii) a subsequent refusal which can be either expressed or implied, e.g. unreasonable delay;
4. where the duty sought to be enforced is discretionary, … [some of the] following rules apply;
5. no other adequate remedy is available to the applica