Citation: 2014 TCC 364
Date: 20141118
Docket: 2012-4373(IT)G
BETWEEN:
BUHLER
VERSATILE INC.,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
D'Arcy J.
[1]
The Respondent has brought a motion for an
order, pursuant to sections 95 and 110 of the Tax Court of Canada Rules
(General Procedure) (the “Rules”), requiring the Appellant to
produce five binders of documents (the “Five Binders”) that the Appellant
previously provided to a Canada Revenue Agency appeals officer.
[2]
The Respondent is also asking the Court to amend
its order with respect to the completion of various litigation steps and to
award costs to the Respondent, payable forthwith.
I. Facts
[3]
The Minister assessed the Appellant on December
2, 2008, disallowing its claims for scientific research and experimental
development (“SR&ED”) expenditures and associated investment tax credits
(“ITCs). On February 26, 2009, the Minister received the Appellant’s
notice of objection to the assessment.
[4]
On October 21, 2011, the Appellant made a written
submission to the appeals officer assigned to review its notice of objection
(the “Appellant’s October 21, 2011 Submission”). The submission states, in
part, the following:
. . .
It is our intent of this letter to clarify key aspects of the
SR&ED claim and provide relevant supporting documentation. Specifically,
Buhler’s position is:
. . .
In addition, we have provided:
3) Technical Work Performed on Specific Projects in
2005
4) A Brief Overview of Buhler’s Business
5) Conclusion
6) Relief Requested
7) Supporting
Documentation (provided in a separate binder)
[5]
The Appellant provided the supporting
documentation to the CRA appeals officer in the Five Binders.
[6]
On February 27, 2012, Mr. Lorne Anderson,
Assistant Director, SR&ED at the Calgary Tax Services office, wrote to Mr.
Alnoor Kassam, Chief of Appeals at the Calgary Tax Services Office a memorandum,
in which Mr. Anderson explained why he had concluded that the Minister’s
assessment should not be changed. In the memorandum, Mr. Anderson states the
following with respect to the Appellant’s October 21, 2011 Submission:
. . .
The 2011-10-21
letter also provides a general description of work done on each project and is
accompanied by five binders of supporting documentation (approx. 2,000 pages
total).
Response
. . . The five binders of supporting information included with the
NOO [Notice of Objection] consisted primarily of emails that appear to be a
mass printing of Outlook folders. BVI has not referred to any of this
information in the 2011-10-21 letter, has not identified the relevance of any
of the information, multiple copies of many of the emails were included, and
the header on most of the emails was missing; therefore, it was not always
evident when the emails were sent or to/from whom. Regardless, the CRA has
reviewed the supporting information in detail and evaluates it in the sections
below.
[Emphasis
added]
[7]
On June 20, 2012, the CRA returned the Five
Binders to the Appellant. The CRA did not retain copies of the material
contained in the Five Binders. Along with the Five Binders the CRA sent a
letter to the Appellant advising that the completion of the CRA’s review should
not be considered as permission to destroy any books or records.
[8]
The Minister confirmed the assessment on August
3, 2012. The Appellant subsequently filed this appeal.
[9]
The Appellant filed its list of documents with
the Court on June 20, 2013. The Appellant listed the Appellant’s October 21,
2011 Submission as document number 262.
[10]
During the examination for discovery of the
Appellant’s representative, counsel for the Respondent asked the
representative, Mr. Allan Minaker, to provide copies of the Five Binders.
Counsel for the Appellant stated that the Appellant would take the request
under advisement for the following reasons:
−
He was not sure if “we can answer that right
now”.
−
He was not sure if “that encompasses litigation
privilege”.
−
“. . . As you know, this isn’t a judicial
review. For this litigation, we have included the documents we thought were
relevant that advanced our case.”
[11]
In its written answers to the undertakings
provided during the discovery of Mr. Minaker, the Appellant refused to provide
the Five Binders. It stated, “As this case is not a judicial review, all
relevant documents have been provided.”
II. Requirement
to Produce Under Subsections 85(3) and 105(1) of the Rules
[12]
In my view, subsection 85(3) and paragraph
105(1)(a) of the Rules require the Appellant to produce the Five
Binders.
[13]
These provisions read as follows:
85(3) All documents
listed in a party's list of documents under section 81 or under section 82 and
that are not privileged, and all documents previously produced for inspection
by the party shall, without notice, subpoena or direction, be taken to and
produced at,
(a)
the examination for discovery of the party or a person on behalf of, in place
of, or in addition to the party, and
(b)
the hearing of the appeal,
unless the parties
otherwise agree.
105(1) Unless the
parties otherwise agree, or the Court otherwise directs, the person to be
examined shall bring to the examination and produce for inspection,
(a)
on an examination for discovery, all documents as required by subsection 85(3)
. . .
[14]
The effect of subsection 85(3) and paragraph
105(1)(a) is that the Appellant was required to bring to the examination
for discovery and produce for examination all documents listed on its list of
documents.
[15]
The Appellant’s October 21, 2011 Submission is
listed as document number 262 on its list of documents. As a result, it was
required to produce the submission at the examination for discovery.
[16]
The Appellant’s counsel argued with respect to
the document listed as document number 262 that what is being referred to
is to the 21-page written submission portion of the Appellant’s October 21,
2011 Submission. He argued that it does not include the supporting documentation
included in the Five Binders. I do not accept that argument.
[17]
The Appellant states at page 1 of its October 21,
2011 Submission that it intends to “. . . clarify key aspects of the SR&ED
claim and provide relevant supporting documentation.” It then specifically
refers to the supporting documentation that is provided in a separate binder.
[18]
In my view, the document listed as document
number 262 on the Appellant’s list of documents comprises the 21-page written
submission and the supporting documents: i.e., the Five Binders. The written
submissions together with the supporting documents compose the document.
Subsections 85(3) and 105(1) of the Rules required the Appellant to
produce the complete document, including the Five Binders, at the examination
for discovery.
III. Requirement
to Produce Under Subsection 105(2) of the Rules
[19]
Even if the 21-page written submission and the
Five Binders were not a single document, subsection 105(2) of the Rules
required the Appellant to produce the Five Binders within 10 days of the
examination for discovery.
[20]
Subsection 105(2) reads as follows:
Where a person
admits, on an examination, that he or she has possession or control of or power
over any other document that relates to a matter in issue in the proceeding and
that is not privileged, the person shall produce it for inspection by the
examining party forthwith, if the person has the document at the examination,
and if not, within ten days thereafter, unless the Court directs otherwise.
[21]
It is not clear to me whether the Appellant’s
representative admitted that the Appellant had possession or control of the
Five Binders. However, a party does not avoid the application of subsection
105(2) by refusing to provide an answer when asked to produce the documents in
question. The Appellant has possession of the Five Binders. As a result, it was
required to produce them upon the request of the Respondent’s counsel.
IV. The
Appellant’s Arguments
[22]
I will briefly address the arguments raised by
the Appellant.
[23]
The Appellant argued that the Respondent’s
request for the Five Binders is a fishing expedition. It is not clear to me how
the Appellant can make such an argument in light of the facts. The Respondent
is merely requesting documents that the Appellant, on its own initiative,
provided to the CRA’s appeals officer in support of its appeal.
[24]
Counsel for the Appellant argued that documents
are not deemed relevant for the purposes of proceedings before this Court
merely because they were produced to a CRA appeals officer. Counsel’s argument
may be correct in certain fact situations. However, documents that the
Appellant provided to the CRA appeal’s officer to support its claim that
certain expenses constitute SR&ED expenditures are relevant, particularly
when the appeals officer reviewed such documents when making her decision, a
decision the Appellant appealed to this Court.
[25]
The Appellant argued that the Respondent has
already had disclosure and now seeks to utilize this Court as a document
retrieval assistant. The Appellant appears to be confusing the Court with the
CRA. The Appellant provided the documents in the course of the CRA appeal
process, but it has not provided the documents in the course of this appeal.
The Court will only consider documents that the parties file as evidence in
this appeal.
[26]
Finally, counsel for the Appellant argued that
this is a trial de novo, not an appeal on the record. I do not
understand the Appellant’s argument on this point. This Court is a trial court and
its decisions are based on the evidence properly before the Court and on the
law. The Court’s rules attempt to ensure that, on an efficient basis, each
party has the opportunity to review, prior to the actual hearing, any relevant
evidence that is in the possession or control of the other party.
[27]
For the foregoing reasons, the motion is granted
and the Appellant is ordered to produce the Five Binders.
[28]
In my view, the Appellant’s actions have
lengthened unnecessarily the duration of these proceedings. As a result, the
Respondent is awarded costs of $2,000, payable forthwith.
[29]
The parties shall, within 30 days of this Order,
provide the Court with dates for the completion of the litigation steps.
Signed at Ottawa, Canada, this 18th day of November 2014.
“S. D’Arcy”
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