Citation: 2012 TCC 264
Date: 20120723
Docket: 2007-3474(IT)G
BETWEEN:
MICHAEL EDWARDS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Woods J.
[1]
The appellant, Michael Edwards,
seeks an adjournment of the appeal in order to take advantage of proposed retroactive
legislation affecting charitable donations. A one year adjournment is
requested. The application is opposed by the respondent, who submits that the
application continues a pattern of delay.
Background
a)
The dispute
[2]
The appellant was assessed under
the Income Tax Act for the 2003 taxation year to disallow a charitable
donation in the amount of $10,000. The donation was made pursuant to leveraged
donation program marketed as the “ParkLane Charitable Donation Program.”
[3]
According to information provided
by the respondent, approximately 18,000 taxpayers participated in this or
similar programs and 8,000 have been reassessed to date. It is estimated that the
total donations are approximately $500,000,000.
[4]
This is a lead case for nine
appeals which have been filed to date, which are under case management by the
Chief Justice. Although the outcome in this appeal is not binding on others,
the other appeals have been held in abeyance pending this case. It would appear
that thousands of other taxpayers are waiting in the wings.
b)
Setting trial
dates
[5]
The trial was initially scheduled
for seven days commencing February 8, 2010.
[6]
A few weeks prior to
the scheduled hearing, the appellant
requested that the appeal be held in abeyance pending the outcome of an appeal
to the Federal Court of Appeal relating to another leveraged donation program: Maréchaux
v The Queen, 2010 FCA 287, 2010 DTC 5174, aff’g 2009 TCC 587, 2009 DTC 1379.
The respondent objected to the request, but the adjournment was granted by Chief
Justice Rip. The appeal was further held in abeyance until Maréchaux was
finally disposed of by the Supreme Court of Canada when the taxpayer’s
application for leave to appeal was dismissed on June 9, 2011.
[7]
The outcome in Maréchaux was
to disallow the charitable donation in its entirety. Following the conclusion
of the case, the parties to this appeal entertained settlement discussions but
these were not successful.
[8]
At a teleconference in February
2012, Chief Justice Rip pressed the appellant to set the matter down for trial
and a hearing was scheduled for five days commencing November 26, 2012. Also at
the teleconference, the appellant advised of his intention to bring this motion
and it was scheduled for July, well in advance of the trial date.
c) The proposed legislation
[9]
On December 20, 2002,
the Government of Canada announced proposed amendments to the Act which
are commonly referred to as “split receipting rules.” The legislation is to be
retroactive to the announcement date and the Canada Revenue Agency have since
been administering the provisions as if they were enacted.
[10]
In the most the recent
federal budget, the government announced its intention to proceed with several
pieces of outstanding legislation, which includes these proposals. This type of
statement has typically been made in recent federal budgets.
[11]
The appellant submits
that the proposed legislation would provide partial relief for approximately 30
percent of the donation in the event that it is found that the donation does
not qualify in total.
[12]
The respondent takes
the position that the proposed legislation would not provide relief because the
appellant lacked the requisite donative intent.
Discussion
[13]
A wide range of factors have been
recognized as being relevant in considering adjournment requests. In Ariston
Realty Corp. v Elcarim Inc. (2007), 51 CPC (6th) 326 (Ont. S.C.), several of these were referred to:
[34] Depending
on the circumstances of each case, to judicially exercise the discretion to
grant or refuse an adjournment, a judge or master may need to weigh many
relevant factors including:
▪ the overall objective of a
determination of the matter on its substantive merits;
▪ the principles of natural
justice;
▪ that justice not only be done
but appear to be done;
▪ the particular circumstances
of the request for an adjournment and the reasons and justification for the
request;
▪ the practical effect or
consequences of an adjournment on both substantive and procedural justice;
▪ the competing interests of the
parties in advancing or delaying the progress of the litigation;
▪ the prejudice not compensable
in costs, if any, suffered by a party by the granting or the refusing of the
adjournment;
▪ whether the ability of the
party requesting the adjournment to fully and adequately prosecute or defend
the proceeding would be significantly compromised if the adjournment were
refused;
▪ the need of the administration
of justice to orderly process civil proceedings; and
▪ the need of the administration
of justice to effectively enforce court orders.
[14]
As for adjournments in
the context of legislative proposals, counsel for the appellant referred me to an oral decision of the
Federal Court of Appeal in which adjournments of this nature were generally
frowned upon. In Johnson & Johnson Inc. v Boston Scientific Ltd.,
2004 FCA 354, it was stated at para. 3:
[…] it
is a rare circumstance where the Court will decline to proceed because of
anticipated legislative changes.
[15]
The appellant submits that
this is the rare case where an adjournment should be granted. He requests an
adjournment of 12 months from November 26, 2012, or less if the legislative
proposals are enacted sooner. He also undertakes not to seek a further
adjournment provided that circumstances do not change.
[16]
The appellant submits that
he is seriously prejudiced by not having the benefit of the enactment of the
legislation. He notes that the CRA has been administering the Act as if
the proposals were law, but he is not able to challenge their interpretation of
the provisions. He also submits that the respondent would more likely be
receptive to settlement if the proposals were in force.
[17]
I acknowledge prejudice to
the appellant in the event that the adjournment request is denied. It is possible
that an adjournment may enable the appellant to benefit from the proposed
legislation, either by way of settlement or otherwise. It is also possible that
a denial of an adjournment would necessitate further litigation for other
taxpayers, which may be avoided if the adjournment is granted.
[18]
In my view, there are
compelling reasons why this appeal should not be further delayed which outweigh
the competing interests of the appellant and other participants in the program
and who may also benefit from an adjournment.
[19]
Generally speaking, it is
important for the administration of justice that tax litigation proceed in a
timely manner. This is a particularly pressing consideration here where tax
deductions relating to donations in the range of $500,000,000 are potentially
affected. Delay is not a trifling matter.
[20]
I would also note that
this appeal relates to transactions that were undertaken almost nine years ago
and this appeal was first set down for hearing over two years ago.
[21]
The respondent submits
that there has been a pattern of delay. This may well be the case, but I do not
have the background on this matter to make this determination. I am troubled,
however, by a statement made by the appellant to Chief Justice Rip in support
of the prior adjournment request that the appellant would proceed expeditiously
after Maréchaux was decided.
[22]
I would also comment that this
motion is not necessarily the end of the road for the appellant because the
trial judge has discretion to provide some delay if the circumstances warrant
it. At the present time, for example, there is very little indication that the
legislation will be enacted soon.
[23]
The interest that the
appellant has in an adjournment is greatly outweighed by the public interest in
having a resolution of this matter as soon as practicable. The adjournment
request will be denied. Each
party shall bear their own costs of this motion.
Signed at Toronto, Ontario this 23rd day of July
2012.
“J. M. Woods”
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