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Citation: 2005TCC316
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Date: 20050505
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Docket: 2003-1315(IT)G
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BETWEEN:
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NIGEL CHARLES BOAST,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER
Bowman, C.J.
[1] This motion is brought by the
appellant under section 17.3 of the Tax Court of Canada
Act, which reads:
17.3
(1) Where the aggregate of all amounts in issue in an
appeal under the Income Tax Act is $25,000 or less, or
where the amount of the loss that is determined under subsection
152(1.1) of that Act and that is in issue is $50,000 or less, an
oral examination for discovery shall not be held unless the
parties consent thereto or unless one of the parties applies
therefor and the Court is of the opinion that the case could not
properly be conducted without that examination for discovery.
(2) In
considering an application under subsection (1), the Court
may consider the extent to which the appeal is likely to affect
any other appeal of the party who instituted the appeal or
relates to an issue that is common to a group or class of
persons.
(3) The Court shall order an oral
examination for discovery in an appeal referred to in subsection
(1), on the request of one of the parties, where the party making
the request agrees to submit to an oral examination for discovery
by the other party and to pay the costs in respect of that
examination for discovery of that other party in accordance with
the tariff of costs set out in the rules of Court.
R.S. 1985, c. 51 (4th Supp.), s. 5;
1993, c. 27, s. 216.
[2] I asked the parties for written
submissions. The appellant seeks an oral discovery of an officer
of the Crown. The respondent is opposed.
[3] Counsel for the respondent states
in her written submissions that the amount in issue is
$24,697.94. This, strictly speaking, is not quite accurate. The
definition of "the aggregate of all amounts" in section 2 of
the Tax Court of Canada Act excludes interest. According
to the Reply to the Notice of Appeal the amount of $24,697.94
includes interest of $3,816.82 so that the amount in issue is
$20,881.12. This detail is not germane to the point involved
here.
[4] Whether the Court grants the
appellant's request for an oral discovery is of course a matter
of discretion, but the discretion must be exercised on proper
principles.
[5] Under paragraph (2) of
Rule 17.3, "... the Court may consider the extent to which
the appeal ... relates to an issue that is common to a group or
class of persons". This appeal involves an assessment of
director's liability and the same issue arises in an appeal by
Mr. Vanderkam who was also a director of Growth Stage
Cosmetics Ltd. These appeals are to be heard consecutively. I
believe that Mr. Vanderkam and Mr. Boast are a "group"
within the meaning of the Rule.
[6] The meaning of the word "group"
was discussed by Jackett, P. (as he then was) in
Buckerfield's Ltd. et al. v. M.N.R., 64 DTC 5301 at
5303.
The applicable
sense of the word "group" as defined by the Shorter Oxford
English Dictionary (1959) is
2. gen. An assemblage of objects
standing near together, and forming a collective unity; a knot
(of people), a cluster (of things). In early use there is often a
notion of confused aggregation.
The only other sense that might be applicable is
3. A number of persons or things in
a certain relation, or having a certain degree of similarity.
Counsel for the
appellants referred to other dictionary definitions but I do not
find any conflict among them. Apart from the argument on these
appeals, the phrase "group of persons" is apt to encompass the
companies holding the shares of Buckerfield's and Green Valley or
the companies holding the shares of Burrard and Westland, within
my understanding of the meaning of that phrase whether or not I
seek the aid of dictionaries.
[Submissions for appellant]
Counsel for the
appellants, however, put forward two submissions. These two
submissions, as I understand them, are
(a) that the word "group" in its ordinary
sense does not include any number of persons less than four;
and
(b) in section 39(4), the word
"group" means a group of persons who come together to take
advantage of the low rate of tax under section 39 and not a
group of persons who come together for any other particular
common purpose.
In support of the
first of these two submissions, as I understand him, counsel
submitted that, if Parliament had intended to include two,
reference would have been made to a couple or a pair and, if it
had intended to include three, reference would have been made to
a trio. I cannot accept this submission. The word "group" in its
ordinary meaning, as I understand it, can refer to any number of
persons from two to infinity. There is nothing in section 39(4)
to suggest that there is any intention to omit any of them. Any
omission of particular numbers would be, moreover, an obvious gap
in the legislative scheme.
[7] The fact that a group of persons
may have the same issue before the Court is not determinative but
it is a factor that the Court should take into account in
exercising its discretion under section 17.3.
[8] There are of course other
considerations. The appellant wants an oral discovery so that he
can question the Crown on a large number of notes and memoranda
that were produced. He alleges that these notes and memoranda are
based on false information. He wants to determine just what
information the assessment is based on and to ensure that
information is "false and misleading" is not used against him at
trial. While I have in the past been somewhat critical of an
undue concern about what thoughts went through an assessor's mind
at the time the assessment was made, it is still permitted and
legitimate to determine what facts were assumed in making the
assessment. This can best be done at an oral examination for
discovery.
[9] Written interrogatories simply are
not an acceptable substitute.
[10] The respondent argues that the two main
issues are due diligence and when the appellant was a director
and that these are peculiarly within the appellant's knowledge
and require no evidence that is the Minister's knowledge. I agree
to a point. As I said in The Cadillac Fairview Corporation
Limited v. The Queen, 97 DTC 405 at 407:
The appellant pleaded that the
payments were made pursuant to the guarantees and this allegation
was denied. Counsel for the appellant argued that since the
Minister had not pleaded that he "assumed" that the payments were
not made pursuant to the guarantees the Minister had the onus of
establishing that the payments were not made pursuant to the
guarantees. The question is, if not a pure question of law, at
least a mixed one of law and fact. In any event the basic
assumption made on assessing was that the appellant was not
entitled to the capital loss claimed and it was for the appellant
to establish the several legal components entitling it to the
deduction claimed. An inordinate amount of time is wasted in
income tax appeals on questions of onus of proof and on chasing
the will-o'-the-wisp of what the Minister may or may not have
"assumed". I do not believe that M.N.R. v. Pillsbury Holdings
Ltd. [1964] DTC 5184 has completely turned the ordinary rules
of practice and pleading on their head. The usual rule - and I
see no reason why it should not apply in income tax appeals - is
set out in Odgers' Principles of Pleading and Practice, 22nd
edition at p. 532:
The "burden of proof" is the duty which lies on a party to
establish his case. It will lie on A, whenever A must either call
some evidence or have judgment given against him. As a rule (but
not invariably) it lies upon the party who has in his pleading
maintained the affirmative of the issue; for a
negative is in general incapable of proof. Ei
incumbit probatio qui dicit, non qui negat. The
affirmative is generally but not necessarily, maintained by the
party who first raises the issue. Thus, the onus lies, as a rule,
on the plaintiff to establish every fact which he has asserted in
the statement of claim, and on the defendant to prove all facts
which he has pleaded by way of confession and avoidance, such as
fraud, performance, release, rescission, etc.
[11] Nonetheless, I think the facts and
issues are of sufficient complexity that the appellant is
entitled to examine an officer of the Crown in order to properly
conduct his case. I am not unappreciative of the force of the
arguments advanced by counsel for the respondent. I tend to share
counsel's reservations about the utility or relevance of
questioning an officer of the Crown about conversations that an
assessor may have had with the appellant. Tax appeals are won or
lost on the basis of objective facts not on the basis of what an
assessor may have said or thought. It is however important that a
taxpayer, particularly an unrepresented one, not be confronted
with procedural hurdles to the manner in which he or she wishes
to present the case.
[12] For the appellant to be denied what he
conceives to be an important right to examine for discovery the
person who alleges that he was remiss in performing his duties as
a director is, I think, contrary to principles of ordinary
fairness and, moreover, does nothing to enhance the appearance of
justice and fairness to appellants who appear without counsel. It
is not up to the Court or the Department of Justice to tell an
appellant that a course of action that he wishes to follow is
useless or inappropriate.
[13] The respondent refers to the expense of
having counsel and a witness attend in Kelowna. I do not think
this factor should weigh very heavily in the determination that
has to be made here.
[14] Counsel for the respondent states that
the notes referred to by the appellant and appended to his
written argument were not included in the respondent's list of
documents and are not documents that the respondent intends to
rely on at trial. This is not a reason to deny the appellant's
right to examine on them. In the partial disclosure rule under
Rule 81 only the documents a party intends to rely need be
referred to in a list of documents. Nonetheless, there may be
other documents that the party does not wish to disclose because
they do not support that party's case or are harmful to it but
which the opposing party may wish to examine on. The fact that a
party does not put a document in the list of documents is
scarcely a reason for preventing the other party's examining on
it.
[15] Paragraph 3 of section 17.3
provides that the Court shall order an oral examination
for discovery where the party requesting the order agrees to
submit to an oral examination for discovery and pay the costs.
This paragraph has no application. Mr. Boast has not agreed
to be examined or to pay costs. However, counsel for the Crown
has asked that I order that the respondent be entitled to examine
the appellant for discovery and I so order.
[16] I have not consulted with the parties
about time limits for completion of the examinations. I am
setting June 17, 2005 for completion of all
examinations for discovery in Kelowna and the fulfilment of
undertakings. If this timetable is inconvenient for either party
they may communicate with the Court and ask for an extension.
[17] The costs of this motion shall be in
the discretion of the trial judge.
Signed at Ottawa, Canada, this 5th day of May
2005.
Bowman, C.J.
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