In Waycobah First Nation v. Canada (Attorney General), the Federal Court of Appeal (Halifax) recently dismissed an appeal concerning the non-payment of taxes by Waycobah First Nation, a small community in Cape Breton Island, Nova Scotia. Relying on an 18th century treaty, Waycobah didn’t collect HST taxes from non-aboriginals when they purchased gas and cigarettes from the reserve-owned gas station. By the time the tax man did cometh, Canada claimed that Waycobah owed $1.3 million, and after an agreed upon repayment schedule was not adhered to, it eventually rose to $3.4 million.
HELD: Appeal dismissed. The Assistant Commissioner’s refusal to recommend remission was not unreasonable. There was nothing in the guidelines or the language of s. 23(2) of the Financial Administration Act that indicated that Parliament intended that a debt should be remitted if payment could cause extreme hardship. Further, the Assistant Commissioner considered the other factors on which the First Nation based its request and did not treat non-compliance as an automatic bar to a recommendation of remission. Finally, there was no breach of procedural fairness as the First Nation was afforded a reasonable opportunity to be heard by the decision-maker, who was able to make an independent decision that was informed by its representations.
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7 While recognizing Waycobah’s extreme financial difficulties, the Assistant Commissioner also noted the First Nation’s history of non-compliance with its tax obligations, despite repeated warnings from CRA officials. He concluded:
- As a result of the foregoing, the facts of this case do not conform to the CRA’s remission guidelines to warrant granting relief.
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8 Waycobah challenged the Assistant Commissioner’s decision in the Federal Court on essentially two grounds.
9 First, the decision letter indicates that he unlawfully constrained the exercise of his discretion under subsection 23(2) of the Act by basing the decision solely on the criteria contained in the CRA Remission Guide (guidelines), without reference to the broader statutory criteria of whether collection of the tax or enforcement of the penalties would be “unreasonable or unjust”, or if it would otherwise be in the “public interest” to remit the tax or penalty. In particular, counsel argued, the Assistant Commissioner did not consider the request for remission in light of the government policy of encouraging First Nations’ self-governance.
10 Second, by failing to read Waycobah’s representations in support of its request and relying, instead, on officials’ summaries of them, the Assistant Commissioner breached a principle of the duty fairness: those who decide must also hear.
11 In careful and comprehensive reasons, the Judge upheld the Assistant Commissioner’s decision and concluded that Waycobah had not demonstrated that the decision was erroneous on either of the grounds on which it relied.
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30 The Act prescribes no procedures for dealing with requests for tax debt remission. This is left to the discretion of the Minister. Nonetheless, counsel for Waycobah argued that the duty of fairness applies, and that it requires the Minister, or his or her delegate, to personally examine the representations made by applicants before deciding whether to recommend remission. He based this proposition on the principle of the duty of fairness that those who decide must also hear.
31 However, to my knowledge, and counsel could point to no authority to the contrary, the duty of fairness has never required a Minister, or a senior departmental official, personally to do all the preparatory work before making an administrative decision, including summarizing any representations made by those liable to be affected by the decision.
32 The content of the duty of fairness is flexible and takes into account the nature of the decision in question, and the administrative and institutional contexts in which it is made. On the present facts, the duty will have been discharged if the Assistant Commissioner had available to him a summary of Waycobah’s representations that was sufficiently accurate and complete to enable him to make an independent decision. From Waycobah’s perspective this may not be as satisfactory as an opportunity to “speak” directly to the decision-maker, albeit in writing. However, the duty of fairness affords individuals an adequate, not the optimum, opportunity to inform the decision-maker of their case.
33 I agree that the summaries of the file prepared for the Assistant Commissioner were not perfect. For example, they did not mention the threat to health posed by the overloaded sewerage system that had been identified in a consultant’s report that Waycobah had sent to the CRA in support of its request. Nonetheless, despite some shortcomings, I am satisfied that the summaries provided a substantially accurate and complete account of the principal bases of Waycobah’s request for remission. The First Nation was thus afforded a reasonable opportunity to be heard by the decision-maker, who was able to make an independent decision that was informed by Waycobah’s representations. There was, in my opinion, no breach of the duty of fairness.
Turtle Talk 