Federal Appeal


Tax

Income tax

Administration and enforcement

Taxpayer’s motion to have settlement agreement declared invalid was dismissed

Settlement. Taxpayer appealed from Minister’s reassessments under Income Tax Act. Settlement negotiations occurred between Minister and taxpayer’s counsel. Counsel sent email to taxpayer setting out Minister’s latest counter-offer, to which taxpayer responded “accepted ok”. Taxpayer’s counsel signed out-of-court settlement document and Notice of Discontinuance on his behalf. Notice of Discontinuance was to be held in trust until Minister issued reassessments reflecting settlement. Reassessments were issued in line with settlement. Taxpayer took position that Notice of Discontinuance could not be filed since he had never given his counsel mandate to settle and that he still wanted his day in court. Counsel withdrew from acting for taxpayer. Taxpayer’s motion to have settlement agreement set aside and declared invalid was dismissed, Minister’s motion to enforce settlement was granted, and appeals were quashed. Taxpayer appealed. Appeal dismissed. Tax Court Judge did not commit any legal error or any palpable and overriding error in her analysis of governing legal principles and appreciation of evidence given terms of agreement and counsel’s authority to sign settlement documents. Email sent by counsel outlined settlement reached and all modifications which she was able to negotiate on his behalf. Modifications so described were accepted without any form of ambiguity by taxpayer’s responding email. By sending this email, taxpayer conferred express mandate on counsel to execute agreement on his behalf. Counsel, as counsel of record, was entitled to provide “consent in writing” referred to in s. 169(3) of Act for purposes of executing settlement agreement. No fault could be found with Tax Court judge’s conclusions as to agreement’s validity and enforceability of Minister’s reassessments.

Granofsky v. Canada (2017), 2017 CarswellNat 2562, 2017 FCA 119, Noël C.J., A.F. Scott J.A., and Boivin J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 3783, 2016 CarswellNat 5269, 2016 TCC 181, 2016 CCI 181, Johanne D’Auray J. (T.C.C. [General Procedure]).

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