Bourque v. The Queen, docket 2000-5090-IT-G

Date: 20021206

Docket: 2000-5090-IT-G

BETWEEN:

PIERRE H. BOURQUE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Lamarre, J.T.C.C.

[1]            The respondent filed an application before this Court on November 18, 2002, for:

(a)            dismissal of the appeals for delay as a result of the appellant's failure to prosecute his appeals with due dispatch in accordance with section 64 of the Tax Court of Canada Rules (General Procedure) ("Rules");

(b)            in the alternative, dismissal of the appeals as a result of the appellant's failure to produce a list of documents in accordance with paragraph 91(c) of the Rules; and

(c)            in the alternative, an order (1) peremptorily setting the date for the filing of the appellant's list of documents and providing that failure to do so will automatically result in dismissal of the appeal; (2) extending the time for examination for discovery, which is currently to be held before November 1, 2002, in accordance with an order of this Court dated July 18, 2002, to 60 days after the time limit for filing the appellant's list of documents; and (3) postponing the pre-hearing conference currently scheduled for January 8, 2003, in accordance with the order of July 18, 2002, to 90 days after the date on which examination for discovery is held.

[2]            The facts prior to the filing of this application are important, and I will state them below. They are taken from the Court record, from the documents filed in support of and in reply to this application, and from the testimony of the appellant and his accountant, Paul W. LeBel.

[3]            On December 12, 2000, the appellant, duly represented by counsel, filed a Notice of Appeal with this Court, contesting the assessments made by the Minister of National Revenue ("Minister") under the Income Tax Act ("Act") dated December 15, 1994, for the 1990 and 1992 taxation years and dated March 15, 1996, for the 1991 taxation year, which assessments were confirmed by Notices of Confirmation dated September 13, 2000. By those assessments, the Minister added to the appellant's income for those three years amounts totalling approximately $6 million, which resulted from appropriations of funds and dividends received by him from corporations controlled by him.

[4]            On March 2, 2001, counsel for the respondent assigned to the appellant's case sent a written request to counsel for the appellant to consent to an extension of time to serve the Reply to the Notice of Appeal in accordance with section 44 of the Rules. An additional period of three weeks was thus needed, and counsel for the appellant assented to that request on the same day.

[5]            On April 6, 2001, the respondent filed a Reply to the Notice of Appeal with this Court.

[6]            On July 18, 2001, the appellant's counsel of record filed with the Court a written notice of intention to cease to represent the appellant under section 33 of the Rules, which notice had previously been served on the appellant and counsel for the respondent.

[7]            On September 17, 2001, the respondent informed the Court of a change of counsel of record. Counsel who filed the instant application is the one who has acted for the respondent since that time.

[8]            On November 8, 2001, the Court served on the parties a notice of status hearing, which was to be held on December 19, 2001.

[9]            On December 18, 2001, the appellant informed the Court in writing that his brother-in-law, a lawyer practising with a large law firm in Montréal, had agreed to represent him before this Court and asked that the status hearing be postponed until January 2002, to which counsel for the respondent did not object.

[10]          On December 20, 2001, the Chief Judge of this Court signed an order that counsel for both parties be present at the status hearing scheduled for February 6, 2002. That order was sent to counsel designated by the appellant to represent him.

[11]          On February 5, 2002, counsel designated by the appellant informed the Court in writing that, although the appellant had asked him to represent him, he had never actually accepted the mandate. He therefore asked the Court to withdraw his name as the appellant's agent in the case before the Court. In fact, the lawyer in question had never legally appeared in the appellant's case.

[12]          On February 6, 2002, the status hearing was to be held by conference call in the presence of the appellant himself and counsel for the respondent before Judge Bowie of this Court. An order was signed by Judge Bowie on February 7, 2002, directing the parties to produce a list of documents (partial list) in accordance with section 81 of the Rules before June 28, 2002. By that same order, he set August 30, 2002, as the time limit for proceeding with the examination for discovery, and the undertakings resulting therefrom had to be completed before October 31, 2002. As well, Judge Bowie ordered that a pre-hearing conference be held on January 8, 2003.

[13]          On June 28, 2002, the respondent filed her list of documents.

[14]          On July 11, 2002, the appellant made a written request to the Court for an extension of time to file his list of documents. In his request, he asked that the date for filing his list of documents be set forward to September 15, 2002, the date for examination for discovery to November 1, 2002, and the date for completing the undertakings to December 2, 2002.

[15]          On July 12, 2002, counsel for the respondent informed the Court in writing that he did not object to the appellant's request.

[16]          On July 18, 2002, the Chief Judge of this Court signed an order changing Judge Bowie's order of February 7, 2002, and in which he postponed the deadline for filing and serving the list of documents by the appellant to September 15, 2002, the deadline for examination for discovery to November 1, 2002, and the deadline for completing the undertakings to December 2, 2002.

[17]          On September 13, 2002, the appellant wrote to counsel for the respondent asking to meet with him at the respondent's offices on September 16. On September 16, the appellant cancelled the meeting scheduled for that day and postponed it to September 17.

[18]          On September 17, 2002, the appellant again cancelled the meeting scheduled with counsel for the respondent, adding that he would contact him again during the week, but he did not do so.

[19]          On October 2, 2002, counsel for the respondent informed the appellant in writing that he was in default of this Court's order dated July 18, 2002, since he had not yet filed and served his list of documents, whereas the deadline for doing so had now expired. Counsel for the respondent added in his letter that, if the appellant failed to produce his list of documents before October 5, 2002, he intended to file an application to dismiss the appeals.

[20]          On October 3, 2002, the appellant telephoned counsel for the respondent to ask to meet with him on October 4.

[21]          On October 4, 2002, the appellant cancelled that meeting and postponed it to October 7.

[22]          On October 7, 2002, the appellant informed counsel for the respondent by telephone that he would be represented by his brother-in-law, the same Montréal lawyer whose name he had given to the Court in December 2001 before the status hearing was to be held.

[23]          On October 9, 2002, the appellant informed counsel for the respondent by telephone that he was to meet the lawyer in question on October 11 and that he would get in touch with counsel for the respondent again on October 14 to inform him of the outcome of events.

[24]          On October 15, 2002, the appellant informed counsel for the respondent by telephone that he was going to Montréal that day to meet his brother-in-law who would be giving him a letter stating that he would appear in this case.

[25]          On October 17, 2002, the appellant confirmed with counsel for the respondent's assistant that his brother-in-law had agreed to represent him before this Court.

[26]          On October 18, 2002, counsel for the respondent called the appellant's brother-in-law directly, who said in clear terms that he had not met with the appellant and that he was not representing him at all.

[27]          On October 21, 2002, the appellant contacted counsel for the respondent and asked to meet with him that day. The appellant never acted on this call.

[28]          On October 30, 2002, counsel for the respondent filed the instant application with this Court together with the affidavit of Paule Chamberland, a paralegal with the Department of Tax Litigation at the Department of Justice in Ottawa, stating, in large part, the facts mentioned above. The application was returnable before this Court on November 18, 2002.

[29]          On November 12, 2002, the appellant made a written request to the Court for a postponement of the proceedings, pending the outcome of a case before the Québec Superior Court, involving the sale of the Louis St. Laurent Building (occupied by National Defence) in Hull, owned by a business controlled by the appellant, which business was purportedly also the reason behind the appropriations of funds that are the subject of the case before this Court.

[30]          On November 14, 2002, counsel for the respondent objected to that postponement on the ground that the appellant was once again attempting to delay the judicial process. He claimed, inter alia, that the appellant had pleaded guilty in 2000 to a criminal charge of tax evasion with respect to certain questions pending before this Court, having regard to unreported income from a corporation in which the appellant purportedly had an interest. Counsel for the respondent took the opportunity to inform the Court of the many delays caused by the appellant (six years) in the criminal prosecution. At the civil level, the audit commenced in 1993, and nearly 10 years had since elapsed. It is not normal, counsel for the respondent concluded, to still be at the stage where the appellant's list of documents has not yet been produced, particularly since it was the appellant himself who had proposed the dates accepted by the Chief Judge in his order of July 18, 2002.

[31]          On November 18, 2002, the application was brought before me. After hearing the allegations of the two parties, I made an order that same day adjourning the application until Friday, November 22, at 10:30 a.m., in order to give the appellant a final chance to produce his list of documents before 10:00 a.m. that specific date.

[32]          On November 22, 2002, the appellant filed a written application for a three-month extension of time to produce his list of documents on the ground that this was the time required by his accountant, Paul W. LeBel, to assemble all the required documents. Attached to his request was a letter, also dated November 22, 2002, from Paul W. LeBel addressed to the appellant, which stated the following:

Dear Mr. Bourque:

Re: Representation for Tax Court of Canada

This letter will serve to confirm our earlier discussions regarding the civil income tax matter for the years 1990, 1991 and 1992.

Canada Customs and Revenue Agency is imposing a taxable benefit related to the "Due from Shareholder" account in Pierre Bourque & Fils Ltée for the above years. Based on our preliminary review conducted in/or about 1996, it was possible that certain amounts were erroneously charged to your shareholder account while at the same time credits against the account were omitted.

In order for us to address these significant issues, you would need to provide us will [sic] all of the corporate and personal documents related to those years for our examination. We would also need to speak with your former controller, Mr. Dunn among other potential individuals.

Based on my recollection, there is a great deal of information and documents that must be examined and a number of individuals to speak to. I would also need to speak with Mr. Don Banks, my associate, as to his availability in the coming months. We estimate that the completion time for this mandate would be toward the end of February given that the Christmas season will be upon us and other prior commitments we have during the months of January and February.

Should you have any questions or concerns with respect to the above, please contact me at your earliest convenience.

Yours very truly,

Paul W. LeBel, CA, CFB

[33]          Having received this request just before the hearing of the application resumed, I asked the appellant, through the Registry, to appear at the hearing with Mr. LeBel, the accountant who had signed the letter.

[34]          At the hearing on November 22, 2002, Mr. LeBel told the Court that the appellant had only recently contacted him, that is, during the week of November 18, 2002. He had written in his letter that he would be able to examine all the documents relevant to the case before this Court by the end of February 2003. He acknowledged, however, that he had failed to indicate therein that this was conditional on payment by the appellant of his retainer's fee. In response to my questions, he said the end of February 2003 would be a reasonable time limit provided he received payment of his fees within a week or two.

[35]          Mr. LeBel said that he was expecting the appellant to draw the money needed to pay his fees from the sale of the aforementioned Louis St. Laurent Building, which sale has been the subject of a case before the Superior Court of Québec for some years now.

[36]          Since the case regarding the sale of the said building is far from settled (the parties are still conducting the examination for discovery according to the appellant's letter of November 12, 2002), the appellant testified that he thought he would borrow the money from his sister or from his son or from some acquaintance. Needless to say that none of those persons was present to confirm this, and that no affidavit was signed by any of them on the subject either.

[37]          Moreover, I note from Mr. LeBel's letter that he was expecting the appellant himself to provide him with the personal and corporate documents required for him to carry out his mandate. In addition, Mr. LeBel said in his testimony that those documents were in the appellant's garage.

[38]          Upon reflection, I find that the appellant's attitude from the start of this case has shown that his intention was to unduly delay the proceedings before this Court in order to gain time. He did not show that he had any real intention of prosecuting his appeals at the appropriate time. This is clear from the facts stated above. His failure to comply with the three orders of this Court is one example. The misrepresentations made to this Court and to counsel for the respondent with respect to the fact that he was to be represented by his brother-in-law, a lawyer, is a second example. The way he constantly cancelled his meetings with counsel for the respondent at the last minute also comes to mind. I also refer to the last letter sent to this Court, again at the last minute, and again requesting an extension of time to produce his list of documents, knowing perfectly well that he could not meet the new time limit requested. For one thing, it was up to him to assemble the documents, which he did not do despite being required to do so for nearly one year. He had only recently consulted with his accountant on that point. For another, he did not show that he actually intended to come up with the necessary funds to officially give his accountant a mandate. In my view, this type of conduct amounts to an abuse of process and seriously prejudices the due administration of justice, and this cannot be tolerated.

[39]          The comments of Lord Diplock of the House of Lords in Birkett v. James, [1978] A.C. 297 (H.L.), quoted by the Federal Court of Appeal in The Queen v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (Q.L.), paragraph 82, are appropriate in the circumstances. Paragraph 82 in Aqua-Gem reads as follows:

                In Birkett v. James, [1978] A.C. 297 (H.L.), the House of Lords affirmed the principles set out in Allen and expounded upon the grounds for dismissal for want of prosecution. Lord Diplock (who, as I have noted, delivered one of the judgments in Allen) said that Allen had set out the following principles. The power to strike out a claim for want of prosecution, he said (at page 318),

. . . should be exercised only where the Court is satisfied either (1) that the default had been intentional and contumelious, e.g., disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; . . . .

[40]          In O'Neil v. The Queen, [2000] F.C.J. No. 599 (Q.L.), the Federal Court of Canada wrote as follows in paragraphs 13, 14 and 15:

[13]                Relevant here is Grovit v. Doctor (supra) in which the House of Lords questioned the idea that a court might be powerless to give relief to a defendant, long neglected by a plaintiff, unless the defendant might show prejudice. In Grovit v. Doctor the trial judge, who initially heard the motion to dismiss the proceeding, held that there had been inordinate and inexcusable delay and that the plaintiff, having no interest in pursuing the litigation in any active way, ought to have his action dismissed for want of prosecution. Subsequently the Court of Appeal upheld that decision, pointing out that it was wrong for a plaintiff to commence and to continue litigation, which the plaintiff had no intention of bringing to a conclusion in a timely manner and that such was an abuse of process.

[14]                Notwithstanding that the appellant in Grovit v. Doctor was pursuing the appeal of the dismissal order with vigour, the House of Lords was satisfied that both the trial judge and the Court of Appeal had come to a proper conclusion. Lord Woolf, in writing for the House of Lords, pointed out that there was an abuse of process by reason of the delay and an absence of any real intention to carry the case to trial. Thus the trial judge and the Court of Appeal were entitled to dismiss the proceedings.

[15]                The approach of the three levels of the Court, in Grovit v. Doctor, is parallel to the concept that where a litigant engages in a wholesale disregard of time limits in the rules, such a breach ought to be considered not only from the point of view of prejudice, but also in the light of prejudice to the due administration of justice. . . .

[41]          For a year, the appellant displayed a flagrant breach of his obligations before this Court. Continued tolerance of such actions could cause prejudice to the due administration of justice. It is trite law that an abuse of process can, in appropriate circumstances, lead to the dismissal or the stay of proceedings (see Yacyshyn v. Canada, [1999] F.C.J. No. 196 (Q.L.), paragraph 18).

[42]          This is a case in which it is appropriate in my view to grant the first remedy sought by counsel for the respondent in his application, that is, the dismissal of the appeals.

[43]          The appeals are therefore dismissed for failure to prosecute in accordance with section 64 and paragraph 91(c) of the Rules.

[44]          As for costs, I find that the respondent is entitled to her costs in accordance with the appropriate tariff prescribed in the Rules. I consider that in dismissing the appeals for failure to prosecute, the appellant has already been sufficiently

penalized, and I do not think it appropriate to order the taxation of costs on a solicitor and client basis.

Signed at Ottawa, Canada, this 6th day of December 2002.

"Lucie Lamarre"

J.T.C.C.

Translation certified true on this 4^th day of December 2002.

Sophie Debbané, Revisor

COURT FILE NO.:                                                 2000-5090(IT)G

STYLE OF CAUSE:                                               Pierre H. Bourque v. The Queen

PLACE OF HEARING:                                         Ottawa, Ontario

DATE OF HEARING:                                           November 22, 2002

REASONS FOR JUDGMENT BY:      The Honourable Judge Lucie Lamarre

DATE OF JUDGMENT:                                       December 6, 2002

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Gatien Fournier

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2000-5090(IT)G

BETWEEN:

PIERRE H. BOURQUE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Application heard on November 22, 2002, at Ottawa, Ontario, by

the Honourable Judge Lucie Lamarre

Appearances

For the Appellant:                                                                 The Appellant himself

Counsel for the Respondent:                              Gatien Fournier

JUDGMENT

                Upon application by counsel for the respondent under section 64 and paragraph 91(c) of the Tax Court of Canada Rules (General Procedure) (the "Rules") to dismiss the appeals for delay as a result of the appellant's failure to prosecute his appeals with due dispatch and as a result of the appellant's failure to produce a list of documents in accordance with two orders of this Court;

                And upon hearing what was alleged by the parties;

                The application is allowed.

                The appeals from the assessments made under the Income Tax Act for the 1990, 1991 and 1992 taxation years are dismissed with costs.

Signed at Ottawa, Canada, this 6th day of December 2002.

"Lucie Lamarre"

J.T.C.C.

Translation certified true on this 4^th day of December 2002.

Sophie Debbané, Revisor