http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/169519/index.do
Granofsky v. The Queen (August 17, 2016 – 2016 TCC 181, D’Auray J.).
Précis: Mr. Granofsky, through his former counsel, reached a settlement of his tax appeal. He hired a new counsel who moved to set aside the settlement and the reassessments made in accordance with it. The Crown moved to enforce the minutes of settlement. The Court rejected Mr. Granosky’s arguments that the settlement was made without his authority and quashed the appeal with costs to the Crown.
Decision: The Court rejected the arguments of Mr. Granofsky’s counsel that the former counsel on the file lacked authority and that Mr. Granofsky’s health precluded him from conferring that authority upon his former counsel:
[42] As outlined above, Ms. Tremblay was mandated to sign the out-of-court settlement on behalf of her client. Ms. Tremblay, as the mandatary of the Applicant and pursuant to his authorization to settle, was entitled to sign the settlement document. Lawyers are expected to act on behalf of their client within the mandate given by the client. Ms. Tremblay, as mandatary of the Applicant, acted within her mandate when she signed the out-of-court settlement. In my view, when a party is represented by counsel, such counsel, for the purpose of settling an appeal, may consent in writing on behalf of the taxpayer in order for the Minister to issue a reassessment.
[43] Although clause 3 of the settlement agreement says that “[u]pon signing this agreement Michael J. Granofsky shall provide to the Minister of National Revenue’s counsel a duly signed Notice of Discontinuance”, that does not prevent the mandatary from binding her mandator. As I stated earlier in my reasons with respect to subsection 169(3) of the Act, as mandatary and counsel of record for the Applicant, Ms. Tremblay acted within her mandate when she signed the settlement document on his behalf. The argument that the terms of the contract either clearly favour the Applicant’s position or raise a doubt as to the interpretation of the contract could only succeed if the law surrounding mandates in Quebec civil law were ignored. In my view, there is no doubt that the terms of the contract do not raise a doubt as to whether the Applicant’s mandatary was entitled to sign the out-of-court settlement on his behalf so long as she did so in fulfilment of her mandate. Therefore, the out-of-court settlement was validly entered into by the Applicant.
[44] In any event, it could be said that the Applicant’s consent to settle was given by him in writing when he reply to Ms. Tremblay by e-mail dated September 3, 2015, at 11:26 a.m. by telling her that he accepted to settle. Subsection 169(3) of the Act does not require an out-of-court settlement signed by both parties. Subsection 169(3) of the Act states: “The Minister may at any time reassess, with the consent in writing of the taxpayer.” The procedure under 169(3) is different from a Consent to Judgment pursuant to section 170 of the Tax Court of Canada Rules (General Procedure) where both parties have to consent in writing.
[45] Furthermore, I note that it was not alleged at any time during the hearing that the Applicant did not have the mental capacity to give the mandate to settle. Although the Granofsky Affidavit raises allegations of the Applicant’s poor health in the autumn of 2015, those allegations taken at face value are still insufficient to show that the Applicant lacked mental capacity as of September 3, 2015.
[46] In light of the above, I will dismiss the Applicant’s motion and allow the Respondent’s motion, thereby enforcing the settlement reached in this matter. Given the evidence and the arguments before me, the reassessments seem to have been validly issued pursuant to subsection 169(3) of the Act.
[Footnote deleted]
Accordingly the appeal was quashed with costs to the Crown.