http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/70991/index.do 
Frank Arthur Investments Inc. v. Canada (National Revenue) (April 7, 2014 – 2014 FC 336) was an application for judicial review of the Minister’s decision not to support a remission order. The case arose out of disputed federal sales tax going back to a period from 1987 to 1990. The first stage of the proceedings dragged on for more than a decade from 1991 to 2003 and is quite convoluted:
[4] All issues raised before the Court relate to the long period of time that elapsed between the assessment of the Federal Sales Tax on January 25, 1991 and April 2004, when the applicant elected to pay nearly all of the amount claimed. Accordingly, a chronology of the main events is necessary.
[5] On January 25, 1991, Frank Arthur, then known as Cornelius Industries Inc, was assessed pursuant to the ETA for an amount of $115,972.50, comprising $96,749.90 in Federal Sales Tax, $12,986.47 in interest and $6,236.13 in penalties for the period covering April 1, 1987 to October 31, 1990. The Notice of assessment stated that all amounts owing were subject to interest and penalties at the rate of 1.5% per month or part thereof.
[6] On April 5, 1991, Frank Arthur filed an opposition with the CRA, on the basis that certain goods sold should have been taxed at the reduced rate of 9% pursuant to section 31 of Part I of Schedule IV to the ETA, instead of the general rate of 13.5%. Frank Arthur did so despite a 1985 CRA ruling advancing the contrary position.
[7] On February 7, 1992, the Canadian International Trade Tribunal [CITT] rendered a decision in favour of Les Industries Vogue Ltée [Vogue], one of Frank Arthur’s competitors in the business of manufacturing components for above- and in-ground swimming pools. This decision was favourable to Frank Arthur’s opposition. As a result, the CRA put the applicant’s opposition file in abeyance, and eventually even allegedly lost it for a time. In fact, the file was being stored in the CRA’s archives.
[8] The CRA appealed the CITT decision in the Vogue file but did not exert much effort in seeking to expedite the appeal process.
[9] On March 17, 1998, after almost seven years, the applicant’s opposition was finally dismissed by the CRA’s opposition division.
[10] On June 17, 1998, the applicant filed an appeal of the CRA’s negative decision before the CITT, but it requested that the latter put the file in abeyance, pending a final decision in the Vogue file.
[11] On May 29, 2000, this Court granted the CRA’s appeal in the Vogue file. As such, this was unfavourable for the applicant’s opposition.
[12] On April 15, 2002, the Federal Court of Appeal confirmed the judgment of this Court and, in June 2003, the Supreme Court of Canada dismissed Vogue’s leave to appeal, rendering the Federal Court of Appeal decision final.
After the conclusion of the foregoing proceedings, in December of 2004 the applicant sought fairness relief under the provisions of the
Excise Tax Act. That application was denied and the applicant did not seek to review it. The applicant next sought a remission order under the provisions of the
Financial Administration Act. That was also denied and the applicant then commenced this proceeding to seek judicial review of the Minister’s refusal to recommend a remission order:
[19] Rather, it filed the Remission request which lead to the decision under review. The applicant basically raised the same arguments in its Remission request as it did in its Fairness relief request, adding, however, that it was patently unfair that a fairness relief remedy existed since 1990 under the ETA for Goods and Services Tax, but that no such remedy existed prior to June 14, 2001 for Federal Sales Tax.
The chronology of the fairness application and the remission application are not set out in the reasons for judgment although the court file number (T-548-13) suggests that this application was commenced in 2013.
The grounds for the application are summarized by the court as follows:
[1] The applicant Frank Arthur Investment Inc. [Frank Arthur] seeks judicial review of a decision rendered on March 4, 2013, by an Assistant Commissioner of the Canada Revenue Agency [CRA], acting as delegate for the Minister of National Revenue. In its decision, the CRA refused to exercise the discretionary power granted to federal Ministers by subsection 23(2) of the Financial Administration Act, RSC (1985) c F-11 [the FAA], and so did not elect to recommend the remission of penalties and interests that accrued from October 1990 to April 2004 on a Federal Sales Tax assessment issued on January 25, 1991.
[2] In its written submissions, the applicant argues that the decision not to grant its Remission request is unreasonable. Alternatively, it argues that the CRA fettered its discretion by relying on the conclusions of the Fairness Committee, which had been asked to assess the applicant’s Fairness relief request pursuant to section 88 of the Excise Tax Act [ETA] and, in any event, it did not reasonably apply the Fairness relief criteria and guidelines. In its pleadings before the Court, the applicant mainly argued that the decision was unreasonable, as the Assistant Commissioner did not have all of the relevant information on hand when he rendered his decision.
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[23] The issues raised by this Application for Judicial Review are as follows:
a. Whether the decision is unreasonable because the Assistant Commissioner misunderstood, misinterpreted, or failed to consider certain relevant facts?
b. Whether the Assistant Commissioner fettered his discretion by relying on the conclusions of the Fairness Committee (second-level) in determining whether the applicant was eligible or not for a remission order based on the criteria of the Fairness relief provisions?
c. Whether the Assistant Commissioner’s decision is unreasonable in respect of the criteria and guidelines of the Fairness relief provisions?
The court rejected the argument that the Assistant Commissioner failed to understand or consider relevant facts:
[37] The Assistant Commissioner properly considered all of the relevant evidence of the file. He was tasked to decide whether to make a recommendation or not for remission based on a review of whether there had been any incorrect action or advice on the part of CRA officials or unintended results of the legislation. In doing so, he was to follow the remission guidelines, as long as he did not treat them as if “they were law and exhaustive of the factors that may be considered in the exercise of a broader statutory discretion” (Waycobah First Nation (FCA) at para 28).
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[41] Secondly, the Assistant Commissioner had been fully aware of the seven year delay for the processing of the applicant’s objection file when rendering his decision. Nonetheless, he determined that different avenues were available to the applicant during that time period, which could have stayed the accrual of interest, or otherwise expedited the CRA’s determination with regard to the applicant’s objection.
[42] The applicant made a business decision at the time of its Notice of assessment not to pay the balance owing in full or under a payment arrangement, and to recover the money with interest accrued should it win its objection, despite being told on at least three occasions of the potential financial consequences in not doing so. A tax assessment is presumed to be valid and binding immediately. A Notice of objection does not change that fact. It simply allows the objector to postpone payment of his debt, if he so chooses, until his case is resolved, all the while maintaining responsibility for the accrued interest should he not succeed with his objection (subsections 88.12(2) and 315(3) of the ETA).
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[46] The same reasoning extends to whether a Collections Agent had told the applicant that, considering the CITT Vogue decision, there was no reason for it to spend more money in pursuing a matter which was settled in its favour. I note in this respect that in the applicant’s own Collection Diary Display, it is clear that it was the applicant who considered the cases “associated,” despite the CRA informing it that nothing was preventing Frank Arthur from “filing to the [CITT] directly to get this resolved on 3-4 mths.” Considering that the applicant later readily argued that the facts in its situation were different than those of Vogue, there was no reason for it not to proceed accordingly.
[47] Lastly, the fact that in August 1997, internal CRA documents reveal that an Appeals Officer had drafted a confidential decision favourable to the applicant, based on the CITT Vogue decision, changes nothing with respect to the outcome of this case. As things stood then for the applicant, its Notice of objection was held in abeyance, and this, officially, until the Vogue case was settled in Court. Frank Arthur would not have even been aware of such a confidential draft, and so accordingly, it could not have been relied upon by the company.
Similarly the court rejected the argument that the Assistant Commissioner fettered his discretion:
[50] Moreover, the Assistant Commissioner, in his decision-making capacity, had no obligation to personally review and analyze the facts and circumstances of the applicant in light of the criteria and guidelines pursuant to the Fairness relief legislation. His obligations only extend to the criteria he was meant to examine pursuant to section 23(2) of the FAA. Nor as a general rule is he required to do more than an analysis of the summaries provided to him by other CRA officials, as long as the record the summaries are based on contain the relevant information.
Finally the court concluded that the Assistant Commissioner’s decision was not unreasonable:
[51] As the applicant suggests, the Assistant Commissioner was called on to render his decision based on the powers conferred by the FAA, the remission guidelines and all of the relevant facts, and this, with regard to the issues brought before him by the applicant. He had no duty to do so in light of the Fairness relief guidelines. He need not then consider the fact that the applicant had a clear history of meeting and respecting its fiscal and tax obligations. He only had to consider the seven year delay for the processing of its objection file and the fairness of the negative decision rendered by the Minister pursuant to the ETA. The Assistant Commissioner considered both of these factors in making his decision.
In the result the application was dismissed with costs.
Comment: This case is difficult to evaluate in the absence of some understanding of the chronology between the submission of the fairness application in December of 2004 and the commencement of this application sometime in 2013.