Citation: 2012 TCC 236
Date: 20120705
Docket: 2008-3719(GST)G
BETWEEN:
Anthony M. Speciale,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Lamarre J.
[1]
The appellant’s motion is
for an order setting aside my judgment dated January 31, 2012, dismissing for
delay and want of prosecution, with costs of $2,534.57, the appeal from the
assessment for an amount of $68,900 or thereabouts made under the Excise Tax
Act (ETA) for the period from January 1, 2004 to
April 30, 2006, the notice of which was dated March 15, 2007.
[2]
That judgment was
rendered following a motion to dismiss the appeal brought by the respondent at
the show cause hearing held before me in Toronto on January 25, 2012, at which
the appellant, although duly notified of the time and place of the hearing, was
not present and no one appeared on his behalf.
[3]
The grounds for the
appellant’s motion are set out in his notice of motion filed with this Court on
March 19, 2012.
[4]
Those grounds are mainly
that his appeal has merit, that he has always shown his intention to pursue his
appeal, that, historically (but for January 25, 2012), he has always
appeared before this Court when requested, that the notice from this Court regarding
a show cause hearing to be held on January 25, 2012 did not come to his attention
because of an honest mistake and/or inadvertence, that he expressed his
intention to seek to have the judgment set aside on the same date he first
became aware of that judgment, that is, February 1, 2012, by calling a registry officer of this
Court, that he immediately sought in writing, unsuccessfully, the respondent’s
consent to have the judgment set aside, that he brought this motion immediately
upon being advised that the respondent was not prepared to consent to an order
to set aside the judgment, that there is no prejudice to the respondent in the
judgment being set aside which an order on costs could not compensate, that the
respondent has taken against the appellant enforcement measures securing more
than four times the monetary amount involved in the appeal, that the outcome of
the appeal will affect how other amounts in dispute between the appellant and
the Canada Revenue Agency (CRA) will be dealt with, that the appellant’s
failure to attend on January 25, 2012 is an irregularity, and that not
setting aside the judgment would result in a manifest injustice to the
appellant. The appellant also states that this Court has the inherent
jurisdiction to set aside the judgment.
[5]
In support of his
motion the appellant filed an affidavit sworn by him in which he sought leave
of this Court to rely upon his own affidavit, which I granted pursuant to rule
4.02 of the Rules of Professional Conduct of the Law Society of Upper
Canada in order to expedite the matter.
[6]
In essence, the appeal arises
from the disallowance by the CRA of input tax credits (ITC) in respect
of goods and services received during a specific period. The CRA has taken the
position that all the ITCs in question must be disallowed on the basis that
insufficient documentary evidence was provided to substantiate the credits
claimed. It is the appellant’s position that the CRA misconstrued the facts and
was wrong in law in arriving at its decision. The appellant is of the view that
there is a reasonable probability of this Court’s making a finding in the
appeal that the information provided by him is sufficient to support his claim
for ITCs.
[7]
Further, the appellant
states in his affidavit that there was a misfiling of, and failure to diarize,
the notice for a show cause hearing to be held on January 25, 2012
and that these errors were caused by a clerk in his office. Apparently, the
notice from the Court had been misfiled as part of seven “banker boxes” of
documents relating to a long‑outstanding appeal matter going back to the
1989 taxation year.
[8]
The respondent opposes
the appellant’s motion. She states that the appellant has been less than
forthright with this Court and the respondent throughout the appeal process and
that he has a manifest history of disregarding court orders.
[9]
First of all, the
appellant failed to comply with an order issued by Hogan J. of this Court
on July 14, 2009 requiring the parties to deliver their lists of
documents by September 30, 2009.
[10]
Second, the appellant
did not fulfil his undertakings by August 30, 2010, the date that had been
set for doing so in a second order of this Court dated May 13, 2010.
[11]
Third, the appellant
again failed to fulfil his undertakings, this time not meeting the
February 25, 2011 deadline specified in a third order of this Court,
dated February 3, 2011, issued following a show cause hearing held
before V. Miller J. of this Court on January 25, 2011.
[12]
The appellant finally
fulfilled his undertakings on April 6, 2011. However, the Court
advised the appellant on April 13, 2011 that he needed to bring a motion
for an extension of time to satisfy his undertakings. Although duly advised by
the Court, the appellant did not bring such a motion as required by Practice
Note No.14 of this Court.
[13]
Fourth, on November 18,
2011, the Court ordered the appellant to appear at a show cause hearing on
January 25, 2012. Although duly notified by the Court and by the
respondent, who had sent him a copy of a letter written to the Court asking for
dates for the hearing of a motion to dismiss for delay, the appellant did not
answer the respondent’s letter and failed to attend the show cause hearing on
January 25,
2012. That failure resulted in the judgment dismissing his appeal for delay and
want of prosecution, with costs of $2,534.57, that was issued on January 31,
2012 and is now the subject of the present motion to set aside.
[14]
Subsection 140(2) of
the Tax Court of Canada (General Procedure) Rules (TCC Rules)
provides that this Court may set aside a judgment dismissing an appeal for
failure to appear if the moving party applies for such relief within 30 days of
the pronouncement of the judgment. Subsection 140(2) reads as follows:
Failure
to Appear
140
(2) The Court may set aside or vary, on such terms as are just, a judgment or
order obtained against a party who failed to attend a hearing, a status hearing
or a pre-hearing conference on the application of the party if the application
is made within thirty days after the pronouncement of the judgment or order.
[15]
The case law has established
that the application should be made as soon as possible after the judgment
comes to the knowledge of the appellant, but mere delay is not a bar unless it
prejudices the other party or is wilful.
[16]
The respondent is of
the view that the appellant did not present his motion in a timely way.
Although the judgment was pronounced on January 31, 2012, the appellant
did not file his affidavit until March 19, 2012. He did not write to the
Court until February 28, 2012, for which he gave a host of excuses,
including medical reasons, pressing client matters and deadlines in other
matters. The respondent argues that the appellant’s delay in bringing this
application was, in fact, wilful.
[17]
The respondent also
submits that the reasons given by the appellant for the failure to attend the
show cause hearing on January 25, 2012 (i.e., the misfiling by the clerk and
her failure to diarize the date of the hearing) could not be verified, and are
not believable. Indeed, the respondent mentioned that the appellant’s diary
entries did not show the show cause hearing held a year ago, on January 25, 2011,
and did not record the appellant’s attendance at that time. The respondent infers
that the existence or non-existence of a diary entry is therefore irrelevant.
[18]
Further, although the
clerk’s performance apparently declined in the fall of 2011, the appellant did
not feel it necessary to check his personal tax files to determine if deadlines
had been missed. Had he done so after the clerk’s departure on December 12,
2011, he would have found the allegedly misfiled notice of hearing long before
the actual hearing date of January 25, 2012, since he subsequently
found it mixed in with other tax files. The respondent concludes that the
appellant did not attend on January 25, 2012 because he had lacked
diligence in the prosecution of his appeal.
[19]
Finally, the respondent
suggests that the appellant has no case on the merits. Indeed, the appellant
was denied ITCs for the period at issue and he does not have documents substantiating
his ITC claim. In his list of documents, he only included documents for a
period prior to the period under appeal. Further, the appellant never provided the
required documentation, and so, even if that documentation exists, he will be barred
from introducing it as evidence by section 89 of TCC Rules. Therefore, he has
no reasonable prospect of success in his appeal.
[20]
The respondent
concludes by saying that the appellant did not have the intention to bring a
motion for an extension of time to satisfy his undertakings as requested by the
Court (cross-examination of the appellant on his affidavit, at pages 107-109).
The appellant’s conduct leads to the conclusion that there was a deliberate violation
of the TCC Rules, a repetitive and intentional violation, and that this
justifies the dismissal of his motion (MacIver v. Canada, 2009 FCA 89).
My decision
[21]
Although I recognize
that the appellant has been negligent and disorganized, overwhelmed by his
personal tax matters, I do not find that this is a situation comparable to the
ones that prevailed in MacIver, supra, Fafard v. Canada,
[1999] F.C.J. No. 1856 (QL), or Amethyst Greenhouses Ltd. v.
Canada, 2006 TCC 575, referred to by the respondent.
[22]
In MacIver, the
taxpayer’s behaviour was deliberately obstructive; his answers at discovery
were abusive and scandalous; he engaged in defiant misconduct; and he had been
convicted in the past for perjury and obstruction of justice. In Fafard,
the taxpayer’s misconduct included abuse, insults, intimidation, obscenities, and
verbal and physical aggression. In Amethyst Greenhouses Ltd., the
taxpayer did not have the benefit of legal representation; his notice of appeal
was incoherent, making it difficult, if not impossible, to discern on what
basis he was challenging the minister’s assessments. All this, combined with
the fact that the taxpayer simply forgot — no other explanation was provided —
to attend the hearing, was considered by Sheridan J. in dismissing the motion
to set aside the default judgment.
[23]
In Jamieson v. the
Queen, 2012 TCC 144, a decision signed on May 2, 2012, and
referred to by the respondent, Campbell J. of this Court dismissed the motion
to set aside the default judgment mainly because she came to the conclusion
that the taxpayer’s inaction in his appeals and his approach of delaying the
matter to infinity tended to show that he had no desire ultimately to have his
appeals adjudicated by this Court.
[24]
In the present case, I
am prepared to give the appellant a last chance to get organized and to go
ahead with the necessary steps to have this case scheduled for hearing. My
reasons are set out hereunder.
[25]
Although subsection
140(2) of the TCC Rules provides that there is a 30-day time limit for making
an application to set aside a default judgment, it is clear that the time limit
may be extended (see Tomas v. The Queen, 2007 FCA 86).
[26]
The Court has inherent
jurisdiction to set aside a default judgment. The principles which should be
taken into account in considering whether a judgment should be set aside were
considered by Bowman A.C.J. in Farrow v. Canada, 2003 TCC 885.
[27]
Thus, the application has
to be made as soon as possible after the judgment comes to the knowledge of the
party against whom it was rendered, but mere delay will not be a bar to the
application unless an irreparable injury will be done to the other party or the
delay has been wilful. The affidavit supporting the application should explain
the delay in making the application. Finally, the application must disclose
that the applicant has a case on the merits.
[28]
It is also worth noting
that the Court should not apply a set of factors in a rigid manner (see GMC
Distribution Ltd. v. The Queen, 2009 TCC 287).
[29]
In the present case, I
am fully aware that the appellant, being a barrister and solicitor, should be
more careful with regard to procedural matters.
[30]
It is somewhat
difficult to understand the appellant’s not filing his motion as soon as he
learnt about the default judgment, on the basis that he was awaiting counsel
for the respondent’s consent to having the judgment set aside. The appellant
should have known that, whatever the position of the respondent might be, he
had to present a motion before this Court in order to obtain an order setting
aside the default judgment.
[31]
Nonetheless, although
the appellant must bear responsibility for the situation that has arisen, I
find that he gave a sufficient explanation for not attending the show cause
hearing on January 25, 2012 and that, even though he only filed his
motion with the Court on March 19, 2012, he advised the Court of his
intent right after receiving the default judgment.
[32]
Further, the delay in
bringing the motion, while unfortunate, has not occasioned prejudice to the respondent.
[33]
Counsel for the respondent
argued that the appellant has not demonstrated that he has an arguable appeal.
As Bowman A.C.J. stated in Farrow, the threshold in that regard is a
relatively low one.
[34]
The issue, according to
the respondent, concerns the right to input tax credits in circumstances where
the documentation requirements of the ETA have not been satisfied, and, the
respondent argues under section 89 of the TCC Rules, it is now too late to
provide other documentation, if any exists.
[35]
I do not agree that the
appellant is precluded from doing so. There is still the possibility of
amending his list of documents. In any event, I am reluctant to deprive the
appellant of his rights, especially taking into account that the amount of money
involved, $68,900, is not insignificant. It is my view that there is a
justiciable issue here that should be decided on the merits.
Conclusion
[36]
I have concluded that
it is appropriate to set aside the judgment dated January 31, 2012,
dismissing the appeal.
[37]
The application is
allowed. The appellant will be exempted from filing a motion for an extension
of time to fulfil the undertakings that were fulfilled on April 6, 2011. The
appeal shall be scheduled for hearing for a duration of two days, in Toronto, on December 5 and 6, 2012.
[38]
As for costs, relying
on Farrow, and in light of the fact that the problem was caused by the
appellant, I am awarding the respondent costs of this motion and the motion to
dismiss in any event of the cause, the said costs being fixed at $1,000 and
payable within 60 days from the date of this order.
Signed at Montreal, Quebec, this 5th day of July 2012.
“Lucie Lamarre”
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