Res Judicata In relation to Right to Object to a Reassessment

Lytle v The Queen, 2012 TCC 368

The taxpayer brought a motion to extend the time to file a Notice of Appeal.  The Crown argued that the issues were res judicata due to a previous appeal of that tax year.

The Court held that in this case it was satisfied that the issues being raise related to matters before the Court previously, and there was no evidence or special circumstances to warrant overriding the principle of res judicata.

FACTS

The tax years (2001 and 2002) to which the motion related were previously successfully appealed, and the taxpayer wanted to extend the time to file Notices of Appeal against the reassessments issues in 2010.  The MNR reassessed to include unreported income and gross negligence penalties on the basis of a net worth assessment, and the previous appeal resulted in the removal of a large poriton but not all of the amounts under consideration.

The MNR claims to have reassessed on the basis of the judgment and sent manual notices of reassessment, which the taxpayer claims to have never received.  The taxpayer filed many letter communications with CRA attempting to obtain the notices of reassessment.

ANALYSIS

The Crown relied on res judicata, subsection 165(1.1) and subsection 169(2).

The Court stated that subsection 165(1.1) is meant to prevent taxpayers from using certain assessments or determinations issues for special purposes to object to unrelated matters not previously objected to.  The FCA in Chevron Canada Resources Ltd v The Queen, [1999] 3 CTC 140 (FCA), where the limitation in subsection 165(1.1) were determined to include issues that were reasonably related to the matter related to the reassessment and conclusively determined by a court – “by virtue of the principle of res judicata, a judgment of a court conclusively determined all undecided and related issues subject to litigation, including those that could have been raised at the time”.

The Court here held that the issues being raised by the applicant were related to the matters previously before the court, and thus all matters including undecided and related matters, have been conclusively determined.  There was nothing before the Court to indicate that it wasn’t possible for the applicant to raise these issues in the previous appeal, and no evidence of special circumstances that would warrant overruling the principle of res judicata. 

The Court said that even if the taxpayer were not barred from filing notices, she did so out of time.

– Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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