It has been just over a month since the Federal Court of Appeal rendered its decision in JP Morgan Canada Asset Management v. AG Canada. In the wake of that decision, I thought there would never be another judicial review application in the tax context.
By way of background, decisions of federal employees (such as those within the Canada Revenue Agency) can be subject to judicial review under administrative law principles as a remedy of last resort. In the tax context, judicial review applications are common in decisions on interest and penalty waivers, and can encompass other types of decisions as well. The JP Morgan case resulted from a challenge to the CRA’s decision to not follow its own policies.
It turns out that those predicting the demise of the judicial review remedy were premature. This week, the Federal Court released its decision inConocophillips Canada Resources Corp. v. Minister of National RevenueResult: taxpayer was successful on a judicial review application.
The facts are simple. The CRA alleged that it sent a Notice of Reassessment to the taxpayer. The taxpayer denied having received it. When the taxpayer filed its Notice of Objection, the CRA said, sorry, you’re out of time, we can’t consider your Notice of Objection. The taxpayer sought judicial review of the CRA’s decision to not consider the Notice of Objection, saying that the Federal Court had jurisdiction to consider the decision, and the decision was unreasonable in light of the fact that CRA could not prove when the Notice of Reassessment was in fact mailed. Essentially, the taxpayer was trying to force the CRA into considering the objection on its merits, even if it resulted in the CRA confirming its audit position. Then, at least, the taxpayer would have recourse to the Tax Court of Canada by way of appeal.
The Crown’s counter-argument was that the taxpayer was already free to appeal to the Tax Court. The Tax Court then had jurisdiction to decide whether the Notice of Reassessment was properly sent, in time, to the taxpayer.
The Federal Court agreed with the taxpayer and found, firstly, that it had jurisdiction to undertake a judicial review because the taxpayer had no other adequate legal remedy (by way of Tax Court appeal), and secondly, that the CRA’s decision was unreasonable. The judge expressly considered but distinguished the JP Morgan decision. In my view, the Crown will almost certainly appeal this decision to the Federal Court of Appeal on the jurisdictional issue.