Docket: 2004-3778(IT)G
BETWEEN:
JOHN FLUEVOG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motions heard on October 12, 2010, at Vancouver, British Columbia
Before: The Honourable
Justice T.E. Margeson
Appearances:
|
Counsel for the Appellant:
|
Timothy
W. Clarke and Ryan Dalziel
|
|
Counsel for the Respondent:
|
Lynn Burch and Lisa McDonald
|
____________________________________________________________________
ORDER
UPON motion by the Appellant
for:
1.
an order for leave to amend
the Appellant’s amended notice of appeal; and
2.
if and when the Respondent
files a reply to the second amended notice of appeal an order that the
Appellant be at liberty to conduct further examinations for discovery in
relation to the administrative discrimination issue pursuant to a schedule to
be ordered by the court.
AND UPON motion by the Respondent for an order:
1.
fixing the time and place
for the hearing of this appeal;
2.
providing such further and other relief as this Court deems just;
and
3. costs
in a fixed amount of $2,000.00 be awarded to the respondent.
AND
UPON reading the materials filed, and hearing from counsel for the Appellant
and counsel for the Respondent,
With respect to the Appellant’s
motion, THIS COURT ORDERS that:
1. The Appellant’s motion to
amend the Amended Notice of Appeal as proposed is granted.
2. The Respondent will be
entitled to file an Amended Reply to the Second Amended Notice of Appeal. The
deadline for the Respondent to file an Amended Reply to the Second Amended
Notice of Appeal and for further discoveries will be set upon consultation
between the parties and the Court.
3. There
is no order as to costs in regards to the Appellant’s motion.
With respect to the
Respondent’s motion, THIS COURT ORDERS that:
1. The
Respondent’s motion is denied.
2. The Respondent shall have its costs of the day, which
will be costs in the cause, but payable in any event to the Respondent,
irrespective of the result in the cause.
Signed at New Glasgow, Nova Scotia, this 1st
day of December 2010.
“T.E. Margeson”
Citation: 2010 TCC 617
Date: 20101201
Docket: 2004-3778(IT)G
BETWEEN:
JOHN FLUEVOG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Margeson, J.
[1]
The Appellant, John
Fluevog, makes a motion before the Court under section 54 of the Tax
Court of Canada Rules (General Procedure) for an Order to amend the Amended
Notice of Appeal, and if the Respondent files a Reply to the Second
Amended Notice of Appeal, an Order that the Appellant be at liberty to conduct
further examinations for discovery in relation to the administrative
discrimination issue pursuant to a schedule to be ordered by the Court.
[2]
The Respondent makes a
motion for an Order fixing the time and place for the hearing of this appeal,
providing for such further relief as this Court thinks just, and costs in a
fixed amount of $2,000.00 to be awarded to the Respondent.
[3]
The Appellant’s
position is that he should be allowed to amend the Appellant’s Amended Notice
of Appeal so as to plead that by refusing to extend the policy published in Canada
Customs and Revenue Agency Information Circular No. 75-23 (“IC 75-23”), paragraphs
3 and 4 to the Appellant, the Minister of National Revenue (the “Minister”)
thereby discriminated against him on religious grounds under section 15 of the Canadian
Charter of Rights and Freedoms (the “Charter”).
[4]
The Respondent objects
to the amendment that is sought and argues that the Appellant is in effect
using the Court to consider the treatment of other taxpayers in situations that
have nothing in common with the swim lessons engaged in by the Appellant’s
children and nothing to do with the Appellant’s own tax assessment. This
trivializes the Court’s important role in determining whether rights guaranteed
under the Charter have been breached. Both common sense and the proposed
further Amended Notice of Appeal reveal that there are no Charter rights in
play. In a nutshell, counsel for the Respondent argues that the motion to amend
is nothing more than an attempt by the Appellant to “obfuscate” the real issue between the
parties and to delay the hearing of the appeal.
[5]
The factual situation
here presents that the Appellant’s children over 17 years ago took swimming
lessons at the Vancouver Pacific Swim Club (the “Swim Club”). The
Appellant claimed and was denied a charitable deduction for amounts paid to
Swim Canada, 95% of which flowed from Swim Canada through Swim B.C. and were
credited to his children’s swim club account there. The issue is whether the
payments made to Swim Canada were good gifts at common law or whether the
consideration received in the form of swim lessons for his children from the
Swim Club vitiated the purported gift.
[6]
At the heart of the
Appellant’s case is his position that without the so-called “administrative
exception” set out in IC 75-23 pertaining to religious tuition payments, “[there]
would be consideration and therefore, no gift”.
The effect of the administrative policy, as set out in IC 75-23, is to permit
private schools to issue official tax receipts for tuition payments for
religious training even though such payments are not gifts within the meaning
of the Income Tax Act (the “Act”). The Minister has in
effect admitted that this was the result of the administrative policy.
[7]
Further, the Minister
admitted in writing that since the Canada Revenue Agency (CRA) formalized this
policy in 1975 through the publication of IC 75-23:
·
… “it has been the Agency’s practice not to view
religious instruction provided at parochial schools as consideration” and,
·
that “the exception was contemplated only with
respect to religious instruction and is, therefore, applicable only to
religious instruction or training”.
[8]
The Appellant argues
that this clear written admission draws a distinction between “religious
consideration” and other non-religious forms of consideration and, that since
the elimination or revision of the “human dignity” test set out in R. v.
Kapp, 2008 SCC 41, [2008] 2 S.C.R. 483, it is non arguable that the
CRA’s reassessment discriminates against the Appellant on grounds
enumerated under section 15 of the Charter. Accordingly, the Appellant now
wishes to amend the Amended Notice of Appeal based on the Charter issue.
[9]
In addressing the
Respondent’s Notice of Motion regarding the matter of unjustified delays, the
Appellant submits that there were no such “numerous, inordinate, delays in the
progression of this appeal for which the Respondent is not responsible”. Counsel
for the Appellant took the position that the schedules had been agreed upon by
the Appellant’s counsel and the predecessor to the Respondent’s counsel which
schedules have been approved by the various presiding judges in case management
conferences held in relation to these test cases.
[10]
Crown counsel did not
consent to an earlier filing of this amendment and the case law at the time was
not favourable to such an argument but that has now changed and it is much more
likely that the Appellant can make out a case for section 15 discrimination.
[11]
The “four-year delay”
alleged by the Respondent in paragraph 7 of his notice of motion as
“unjustified” was necessary and agreed upon by both counsel and approved by
Justice Campbell as case management judge in these appeals.
[12]
The Respondent twice
refused to answer questions relating to the law of gift and did not answer them
until September 18, 2009, and it then became obvious that the real issue was
whether the Minister violated section 15 of the Charter.
[13]
The Respondent has not
cited any prejudice whatsoever, let alone any prejudice that cannot be
compensated by way of costs. There is no such prejudice.
[14]
On the issue of whether
the amendment discloses a cause of action, counsel opines that it is not
obvious that the claim in the amendment will fail. In the first case, the more
favourable treatment by the Minister of religious training than of
non-religious training is discriminatory. This Court has jurisdiction under
subsection 24(1) of the Charter to decide the discrimination issue and grant
the remedy sought. Namely, vacating the assessment. Vacating the Minister’s
assessment is the “appropriate and just” remedy for the Minister’s breach of
the Charter.
[15]
Counsel for the
Respondent argues that there is a real doubt as to whether there is a triable
issue disclosed by the amendments. Her position is that the proposed further
amendments disclose no issues of merit or reasonable grounds of appeal.
[16]
Further, there is no
cogent explanation why the Charter challenge could not have been raised at the
time of the first amendment in March of 2007.
[17]
The Appellant should
not be entitled to argue that he is entitled to amend the Notice of Appeal
based upon more favourable jurisprudence. Whether or not to advance certain
arguments in the course of litigation is a strategic decision based upon the
parties’ understanding of the facts and the law. A party should not be able to
advance arguments based upon their shifting assessment of the strength of the
facts which have not changed or based upon legal arguments that are not new.
[18]
There was no genuine
intention to pursue a constitutional challenge to the policy.
[19]
The Respondent’s answer
about IC 75-23 did not suddenly illuminate that the Appellant’s right to
freedom of religion had been violated. The Appellant’s ability to claim the
deduction had nothing to do with his religion (the underlining is by the
Court).
[20]
The proposed amendments
fail to advance a reasonable cause of action because section 15 of the Charter
is not engaged. The failure by CRA to apply policy IC 75-23 to the Appellant
has nothing to do with the Appellant’s religion.
[21]
The proposed further
amendments have nothing to do with the personal characteristics of the
Appellant and there can therefore be no Charter violation. The fact that
CRA did not apply IC 75-23 to the Appellant had nothing to do with his religion
or any other personal characteristics. His claim was denied because it related
to swim lessons and not for tuition or a private religious school. There is no
factual foundation that the Appellant’s freedom of religion has been violated.
[22]
The Appellant has not
met the first part of the two-step process as established in Andrews v. Law
Society of British Columbia, [1989] 1 S.C.R. 143, that there has been a
distinction based upon an enumerated ground.
[23]
Neither Law nor Kapp,
supra, impose a new and distinctive test for discrimination, but rather
affirm the approach to substantive equality under section 15 as set out in Andrews
and developed in numerous subsequent decisions where the claimants’ own
religion is not implicated in any way in the impugned decisions. There is no
reasonable basis for a claim of discrimination based on the personal
characteristic of religion.
[24]
Subsection 2(9) of the Charter
has not been violated because the amendments do not contain any facts to
establish that the Minister’s denial of a charitable donation for swim lessons
interfered with the Appellant’s freedom of religion.
[25]
It is not plain and
obvious that the case would fail and on the question of jurisdiction of the Tax
Court of Canada to grant the relief sought but there is no reason for this
Court to become involved in determining whether it has jurisdiction to grant
the relief sought under subsection 24(1) of the Charter where there is a
factual and legal vacuum underlying the Appellant’s assertion that sections 2
and 15 rights are at issue.
[26]
There is prejudice to
the Respondent, prima facie, based upon delay, which cannot be
compensated for in costs such as the risk of failing memories and the longer
the case takes to come to trial the more difficult it will be to find witnesses
and to secure their attendance.
[27]
This case is a test
case for 77 appeals currently in the Court’s inventory and for 350 taxpayers
who were similarly assessed and await the decision of the Court. Further delay
merely perpetuates delay and uncertainty.
[28]
There was no argument
between the parties that all pre-trial matters should be suspended until the
Supreme Court of Canada had rendered a decision in Redeemer Foundation v.
Canada (National Revenue), 2008 SCC 46, [2008] 2 S.C.R. 643.
[29]
There is no valid
reason for the Appellant to have waited so long to move to amend his pleadings.
[30]
In making its decisions
on these motions, there are two groups of considerations to be dealt with. The
first group for consideration are the non‑Charter issues and the
consideration of Rule 54 of the Tax Court of Canada Rules (General
Procedure). Here the Court must decide whether or not it should exercise
its discretion and allow the second Amended Notice of Appeal or whether the
appeal should be set down for hearing as the Respondent submits.
[31]
In Continental Bank
Leasing Corp. v. Canada, [1993] 1 C.T.C. 2306, Bowman J. took the broader
approach in deciding whether an amendment should be permitted and concluded that
the Court should decide:
… whether it is more consonant with the interests of justice that
the withdrawal or amendment be permitted or that it be denied. The tests mentioned
in cases in other courts are of course helpful but other factors should also be
emphasized, including the timeliness of the motion to amend or withdraw, the
extent to which the proposed amendments would delay the expeditious trial of the
matter, the extent to which a position taken originally by one party has led another
party to follow a course of action in the litigation which it would be
difficult or impossible to alter and whether the amendments sought will
facilitate the Court’s consideration of the true substance of the dispute on
its merits. No single factor predominates nor is its presence or absence
necessarily determinative. All must be assigned their proper weight in the context
of the particular case. …
[32]
The Court asks, is
there prejudice to the Respondent? Has there been delay by the Appellant? Will
the amendment lead to further unnecessary delay? Is there a reasonable
explanation for the delay in bringing the motion?
[33]
The Court is satisfied
that there will be no undue prejudice to the Respondent if the amendment sought
by the Appellant is permitted that cannot be compensated by costs. On the
question of delay, the Court is satisfied that there is enough blame to go
around although is satisfied that there were no inordinate delays by either
party.
[34]
This is a case where
there are many taxpayers that will be affected by the decision and there will
be many Appellants.
[35]
The parties attempted
to agree upon a test case and that consideration took a considerable period of
time. Further, the case was managed by a Judge of the Tax Court since 2006
and the Court is unaware of any instances of significant non‑compliance
with the Case Management Judge’s directions. The Court was impressed by
the many instances where the parties were able to reach agreement with respect
to the various steps to be taken to make the case ready for trial. There were
several instances where the parties could not reach agreement on a number of
pre-trial matters but the Court is satisfied that they both put forward a
reasonable effort to reach an agreement.
[36]
The Court is satisfied
that there will be no undue or unnecessary delays in the event that the motion
to amend is granted. The Court is satisfied that the Appellant’s counsel has
offered a reasonable explanation of the delay in bringing the motion.
[37]
Therefore, the Court is
satisfied that the Appellant has met the burden upon him with respect to the
non-Charter matters and the motion to amend should not be dismissed on those
grounds.
[38]
The Charter issues pose
a more significant hurdle for the Appellant here. The main issue under this
heading is whether the proposed amendments disclose a reasonable cause of
action? The thrust of the argument for the Respondent is that they do not.
Counsel argues that the failure to extend the “administrative exception” as
found in IC 75-23 to the Appellant has nothing to do with his religion or
any of his other personal characteristics.
[39]
The Appellant argues
that the Minister’s policy distinguishes between those who purchase religious
instructions or training from those who purchase secular instruction or
training. Therefore the benefit and burden of the Minister’s policy tend to
fall based upon whether the person is religious or not. Thus, the policy
draws a distinction that is based upon the enumerated ground of “religion”.
[40]
The Appellant has not
put his own religion into play. He need not to do so. The policy at large, as a
whole, is discriminatory and everything done under it is invalid and illegal.
The Appellant has suffered a disadvantage as a result of the under exclusions
of the policy. The policy is systemically operating illegally. The policy
is benefiting religious persons over those who are not religious.
[41]
This is adverse effect
discrimination as referred to in Ontario Human Rights Commission v. Simpsons
Sears Ltd., [1985] 2 S.C.R. 536 at page 551 and referred to in Andrews
at page 173.
[42]
The result is the same
as that described in Andrews at page 174 where the Court said:
… I would say then that discrimination may be described as a
distinction, whether intentional or not but based on grounds relating to
personal characteristics of the individual or group, which has the effect of
imposing burdens, obligations, or disadvantages on such individual or group not
imposed upon others, or which withholds or limits access to opportunities,
benefits, and advantages available to other members of society. …
[43]
As in Little Sisters
Book and Art Emporium v. Canada (Minister of Justice), 2000 SCC 69, [2000] 2 S.C.R. 1120 at pages
9 and 10:
… The legislation has been administered in an unconstitutional
manner, but it is the legislation itself, and not only its application, that is
responsible for the constitutional violations. …
[44]
There is an arguable
case according to the Appellant.
[45]
Counsel for the
Respondent relies upon the argument that there is no factual assertion in the
proposed amended pleading that the Appellant was denied the benefit of IC 75-23
because of his religion. However, the Appellant’s argument as based upon
section 15 of the Charter does not refer to the religion of the individual but
merely discrimination based upon “religion”. He is not arguing that the
discrimination was based upon his religion.
[46]
On the main point, the
Court is satisfied that the amendment will at least present an arguable case.
The Court need not be satisfied that the Appellant will be successful on this
point at trial.
[47]
On the ancillary points
of “jurisdiction” of the Tax Court and the question of “appropriate and just”
remedy, the Court is satisfied that it has the jurisdiction under subsection
24(1) of the Charter to decide the discrimination issue and grant the remedy
sought – namely – vacating the Appellant’s assessment and vacating the
Appellant’s assessment is the “appropriate and just” remedy for the Minister’s
breach of the Charter.
[48]
The Court will allow
the Appellant’s motion to amend the Amended Notice of Appeal as proposed. The
Respondent will be entitled to file an Amended Reply. The deadline for the
Respondent to file an Amended Reply to the Second Amended Notice of Appeal and
for further discoveries will be set upon consultation between the parties on
the Court.
[49]
With respect to the
matter of costs, the Appellant does not seek costs and none will be granted to
him.
[50]
With respect to costs
to the Respondent, the Court does not accept Counsel’s submissions for $2,000
costs payable forthwith by the Appellant.
[51]
The Respondent shall have
its costs of the day, which will be costs in the cause, but payable in any
event to the Respondent, irrespective of the result in the cause.
Signed at
New Glasgow, Nova Scotia, this 1st day of December 2010.
“T.E. Margeson”
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