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Citation: 2009 TCC 345
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Date: 20090625
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Dockets: 2004-3776(IT)G
2004-3778(IT)G
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BETWEEN:
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JOHN FLUEVOG BOOTS & SHOES LTD.,
JOHN FLUEVOG,
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Appellants,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER
Campbell J.
[1] The
Appellant is seeking an Order compelling the Respondent to provide written
responses to a number of questions in a written examination for discovery which
the Respondent has refused to answer. In addition, the Appellants’ Motion
requests that the Respondent produce documents which the Respondent had refused
to produce on the written examination.
[2] By
way of background, the Appellant, John Fluevog, is the shareholder and
directing mind of the Appellant Corporation, John Fluevog Boots & Shoes
Ltd. His children are competitive swimmers and belong to a B.C. swim club. The
Appellant Corporation donated money to Swim Canada, a Registered Canadian
Amateur Athletic Association (“RCAAA”), for which Swim Canada issued a
charitable donation receipt. Swim Canada forwarded this
donation to Swim B.C., which retained 5% and then sent the balance of the money
to the local Swim Vancouver club where the Appellant’s children participated in
swim training. That club used the money to administer its competitive swimming
programs. The Appellant Corporation’s donation, as in all other donations, was
then credited against the swimming costs associated with the children related
to the shareholder. These two appeals are the test case in respect to a number
of other similar contributions.
[3] The
Appellant Corporation reported the amounts paid to Swim Canada as being a
charitable gift pursuant to section 110.1 of the Income Tax Act (the “Act”)
and claimed a deduction (which would now be referred to as a tax credit
pursuant to changes in the Act). The Minister of National Revenue (the
“Minister”) denied a deduction for the payments to Swim Canada and added the
amounts to John Fluevog’s income on the basis that the Appellant Corporation
did not make gifts of payments to Swim Canada but instead had been directed by
John Fluevog to make these payments for the benefit of paying swimming expenses
for his children.
[4] The
key issue in these appeals revolves around the meaning of “gift” for the
purposes of section 110.1 of the Act. This issue by its very nature will
involve an analysis of what may constitute consideration for the purposes of a
gift. This is apparent from the framing of the relevant issues in both the
Amended Notices of Appeal and the Amended Replies to the Notices of Appeal. The
Amended Notice of Appeal for John Fluevog Boots & Shoes Ltd. states the
issue as follows:
5. The issues are whether:
(a) all
or a portion of the payments made by the Appellant to Swim Canada were
gifts within the meaning of section 110.1 of the Act,
[5] The
Amended Notice of Appeal for John Fluevog states that the issues are:
7. The issues are
whether:
(a) all
or a portion of the payments made by the Appellant and the Company to Swim
Canada were gifts within the meaning of sections 110.1 and 118.1 of the Act,
(b) the
Company made a payment or transferred property for the benefit of the Appellant
to any person pursuant to the direction of, or with the concurrence of the
Appellant or as a benefit that the Appellant desired to have conferred on that
other person within the meaning of subsection 56(2) of the Act,
(c) whether
the payments made by the Company would have been included in the Appellant’s
income pursuant to subsection 15(1) had they been made directly to the
Appellant …
[6] The
Reply to Amended Notice of Appeal for John Fluevog Boots & Shoes Ltd. states
that the issue is:
9. The issues are:
a) whether
the payments made by the Appellant to Swim Canada and deducted as a donation in
its 1994 and 1995 taxation years were gifts within the meaning of the Act, and
consequently, whether the Appellant was entitled to the eligible donation
carry-forward claimed in its 1996 and 1997 taxation years; …
[7] The
Reply to Amended Notice of Appeal for John Fluevog states the issues as
follows:
10. The issues are:
a) Whether
the amounts the Appellant paid to Swim Canada were gifts within the meaning of
sections 118.1 and 110.1, respectively of the Act;
b) Whether
the Appellant directed the Company to make the payments to Swim Canada for his
benefit;
[8] The
Respondent objected generally to the questions asked on the basis that none
were relevant. I believe therefore that it is important to be clear on what the
issues are in these appeals because one of the well established principles that
must guide my conclusions is that relevancy will be established by the pleadings.
The words of Bowman, A.C.J. in Baxter v. The Queen,
2004 DTC 3497, come to mind in this context where he states at
paragraph 14:
… I asked counsel for the appellant why,
if the questions are as irrelevant as he contends, he does not simply let his witness
answer. The objection gives to the question the appearance of importance that
it might not otherwise have.
[9] The
series of questions relates to Information Circular (“IC”) 75-23.
3. Paragraphs 3 and 4 of IC
75-23 provide as follows:
Religious Schools
3. If such a school teaches
exclusively religion and thereby operates solely for the advancement of
religion, payments for students attending that school are not considered to be
tuition fees but will be considered as valid donations and, providing the
school is a registered Canadian charitable organization, official receipts for
charitable donations may be issued for such payments.
Secular Schools
4. The provisions of the Income Tax Act
do not permit a deduction, as a charitable donation, of an amount paid to a
school for academic tuition, whether the amount was paid for set fees or was a
voluntary contribution. A gift, to be allowable within the concept of paragraph
110(1)(a) of the Act, must be a voluntary transference of property
without consideration. The consideration here is the academic training received
by the children attending the school. On the other hand religious training is
not viewed as consideration for purposes of the definition of a gift.
According to the Notice
of Motion, the Respondent had objected to or refused to answer the following
questions:
(a) It is the appellants’ contentions in
these appeals that the Payments constitute gifts therefore they were transfers
of money to Swim Canada without consideration (and in the amended notice of
appeal, at least without full consideration). In the above excerpts from IC
75-23 it is apparent that the respondent does not view religious training as
consideration (or views it as “nominal” consideration) for the purposes of the
definition of gift. Does the respondent agree that the swim training does not
constitute “consideration” (or at least represents “nominal” consideration) to
the Company or Mr. Fluevog for the purposes of the definition of a gift?
(b) If not, what is the difference (in
terms of consideration) between the religious training referred to in IC 75-23
and the swimming training that is the subject matter of the present case?
(c) What is the difference, in terms of
“consideration”, between the (secular) academic training (referred to in
paragraph 4 of IC 75-23) and the religious training?
(d) Does the respondent consider secular
academic training to have value in the marketplace whereas religious training
does not (or at least has only “nominal” consideration)?
(e) [there is no question 3(e)]
(f) If so, why or why not?
(g) Paragraph 10 of IT-110R3 describes the
policy on religious training set out in IC 75-23 as an “exception to the
general rule” regarding the meaning of “gift” as described in paragraph 3 of
IT-110R3. Why does the respondent consider the policy on religious training to
be an exception to the general rule?
(h) If the policy (that is, where the donor
receives no consideration or less than fair market value consideration for the
donation) is not an exception to the general rule, does the respondent apply
that policy only to religious private schools or to all taxpayers?
(i) Please produce any notes, memoranda or
other documents of any kind whatsoever relating to the policies regarding
consideration, benefits or expectations of return set out in IC 75-23 or
IT-110R3.
[10] Paragraphs 3 and 10 of IT-110R3 which are the provisions that are
relevant to this Motion state:
3. A gift, for purposes of sections
110.1 and 118.1, is a voluntary transfer of property without valuable
consideration. Generally a gift is made if all three of the conditions listed
below are satisfied:
(a) some property – usually cash –
is transferred by a donor to a registered charity;
(b) the transfer is voluntary; and
(c) the transfer is made without
expectation of return. No benefit of any kind may be provided to the donor or
to anyone designated by the donor, except where the benefit is of nominal value
…
[…]
10. Other exceptions to the general
rule in 3 above are discussed in separate publications. For example, see the
current versions of IT-111, Annuities Purchased from Charitable
Organizations, IT-244, Gifts by Individuals of Life Insurance Policies
as Charitable Donations and Information Circular 75-23, Tuition Fees and
Charitable Donations Paid to Privately Supported Secular and Religious Schools.
[11] The Respondent’s response to questions 3(a) to (i) was the following:
Q: 3.(a) to (i)
R. We object to and
refuse to answer these questions on the basis that these matters are not pled
in the pleadings, thus they do not lead to a line of inquiry and are therefore
irrelevant to the appeals of both the Company and Mr. Fluevog. Secondly, IC 75-23
deals specifically with the Agency’s policy with respect to religious and
secular schools and does not relate to the Minister’s policy with respect to
donations to a Registered Canadian Amateur Athletic Association. There was no
factual basis established by the Appellants on discovery to lead to questions
about this policy. Finally, how the Minister of National Revenue assesses other
taxpayers is not a relevant issue in a tax appeal, and therefore has no
relevance in a discovery on a tax appeal.
(Motion Record, Tab B, page 3)
[12] At the commencement of the hearing the Respondent provided a written
response to question 3(a) which was summarized by Appellant counsel as follows:
"First, the respondent says that IT-110R3
is the relevant document, not IC 75-23. Second, the answer to the question
posed is no."
which means that they do consider the swim
training to be consideration for the purposes of "gift".
"And further, the benefit received from the
payment made to SwimCanada exceeded nominal consideration with reference to IT‑110R3."
(Transcript page 23)
So I am now left with questions 3(b) to (i) which are in issue.
Appellant’s Position:
[13] The Notice of Motion contained the following:
2. The Respondent’s theory of
the case is that John Fluevog Boots & Shoes Ltd.’s payments to Swim Canada
were not gifts because it received consideration for those payments, namely,
swim training for the children of John Fluevog. It will be the Appellant’s
contention that the donor received no or nominal consideration when it made
those payments to Swim Canada therefore the payments were gifts and because
Swim Canada was an RCAAA (which entitled it to issue charitable tax receipts)
the company was entitled to claim the charitable tax credits in question.
3. The Minister of National Revenue’s published
policies on the meaning of gift are set out in IT 110R3 (in particular
paragraphs 3 through 15) and IC 75-23 (in particular paragraphs 3 and
4). The policies set out in IT 110R3 apply to taxpayers claiming charitable tax
credits for gifts made to RCAAA’s or other registered charities such as private
schools under ITA sections 110.1 and 118.1. Of interest to these appeals is
when the CRA considers whether consideration flowing back to the donor
constitutes “nominal consideration”. The policies set out in IC 75-23 deal with
whether tuition payments made to private schools (which may be registered
charities) constitute charitable gifts but those policies do not purport to
apply outside the legislative framework set out in ITA sections 110.1 and
118.1. As such the interpretations regarding the meaning of gift and
consideration (and in particular whether consideration is “nominal”) set out in
IC 75-23 are relevant to this case.
Respondent’s Position:
[14] In the submissions, the Respondent argued that these questions were
not given responses because they were not relevant to the issue which will be
before the Court. Since the information circulars and bulletins in issue deal
with policy concerning religious and secular schools and not donations to
RCAAA’s in the context of swimming, it is the equivalent of comparing apples
and oranges. (Transcript pages 80 and 81). The Respondent submits that it is
also an attempt to examine taxpayers other than the Appellants. In addition,
there is nothing to be gained in providing those responses or producing the
documents because they would not be relevant and therefore will neither assist
the Appellants’ appeals nor disadvantage the Respondent’s case. At pages 90 and
91 of the Transcript the Respondent stated:
…The appellants are seeking to use information
bulletins and circulars to characterize the legislation and they're attempting
to take these two separate policies and fuse them together to create some type
of administrative ambiguity when itself, the law which we're dealing with, is
clear. This is contrary to the purpose of the court giving consideration to
interpretation of bulletins or circulars, and in considering that, if we're
looking at the actual bulletins and circulars not being of assistance to the
court, because there is no ambiguity with the Section, what would flow from
that, in my submission, would be that the notes, memorandum or other documents
again would not be of assistance to the court in here, because where there is
no ambiguity, we shouldn't create one to try to undo it.
[15] Finally the
Respondent contends that the pleadings in these appeals contain no facts
referencing religious training or secular training and therefore seeking the
Minister’s opinion concerning “consideration” and “gift” in respect to these
types of training is irrelevant to pleadings that involve swim training and
donations to RCAAA’s.
[16] The Tax Court of Canada Rules (General Procedure) that governs
the scope of examinations for discovery states:
95.(1) A person examined for discovery shall answer, to the best of that
person’s knowledge, information and belief, any proper question relevant to any
matter in issue in the proceeding or to any matter made discoverable by
subsection (3) and no question may be objected to on the ground that
(a) the information
sought is evidence or hearsay,
(b) the question
constitutes cross-examination, unless the question is directed solely to the
credibility of the witness, or
(c) the question constitutes cross-examination
on the affidavit of documents of the party being examined.
[17] The Rule that governs pre-hearing document disclosure states:
List of Documents (Full
Disclosure)
82.(1) The parties may agree or, in the absence of
agreement, either party may apply to the Court for an order directing that each
party shall file and serve on each other party a list of all the documents that
are or have been in that party’s possession, control or power relevant to any
matter in question between or among them in the appeal.
General Principles of Discovery:
[18] Generally on a motion such as this, I would
intervene to prevent counsel from pursuing questions only if they were: (1)
clearly abusive; (2) clearly a delaying tactic; or (3) clearly irrelevant.
There is no contention in this Motion that these questions are abusive or delay
tactics. Although relevancy is established by the pleadings, there is the
widest possible latitude given counsel in conducting an examination for
discovery since one of the purposes of discovery is inquire of all matters that
may have some bearing on the issues at trial. In Kossow v. The Queen,
2008 DTC 4408 (at paragraph 50), V.A. Miller J. summed it up nicely stating
that: “Relevancy on discovery must
be broadly and liberally construed and wide latitude should be given”. As I
stated in General Motors of Canada Ltd. v. The Queen, 2006 TCC 184:
The scope of these objectives has
resulted in the tendency by Courts "not to circumscribe the avenues of
discovery but to widen them" (Henderson v. Mercantile Trust Co.
(1922), 52 O.L.R. 198. in Violette v. Wandlyn Inns Ltd.). However it is
also clear that discoveries should never become general fishing expeditions.
In Harris v. The Queen, 2001 DTC 5322, the Court stated that:
The term “fishing expedition” has been generally
used to describe an indiscriminate request for production, in the hope of
uncovering helpful information.
(Paragraph 45)
This will not be permitted where counsel is simply pursuing a question
in the hope of it leading to a train of inquiry.
[19] It must be remembered that in deciding the issue of relevancy of these
questions I am doing so without the benefit of all of the evidence which the
trial Judge will have before him/her. As the motions judge, I have heard only
several hours of submissions from counsel for each party relating to the
questions in issue. Consequently, I believe that questions will be relevant if
they are reasonable and can be said to relate to the issues. In Baxter, Bowman,
A.C.J. stated at paragraph 13(b):
A motions judge should not second guess
the discretion of counsel by examining minutely each question or asking counsel
for the party being examined to justify each question or explain its relevancy.
Nor should a motions judge:
…seek to impose his or her views of
relevancy on the judge who hears the case by excluding questions that he or she
may consider irrelevant but which, in the context of the evidence as a whole,
the trial judge may consider relevant; (paragraph 13(c) of Baxter).
[20] The comments of Hugesson, J. in Montana Band v. Canada
(T.D.), [2000] 1 F.C. 267, at paragraph 5, are appropriate and should
be kept in mind on a Motion such as this:
… It is sound policy for the Court to adopt a liberal approach
to the scope of questioning on discovery since any error on the side of
allowing questions may always be corrected by the trial judge who retains the
ultimate mastery over all matters relating to admissibility of evidence; on the
other hand any error which unduly restricts the scope of discovery may lead to
serious problems or even injustice at trial.
(emphasis added)
Therefore counsel should not be prevented from asking questions that “… may, standing alone, seem irrelevant” (paragraph
12 of Baxter). Questions,
however, would not be proper if they are inquiring into the “mental process of
the Minister or his officials in raising the assessments” (paragraph 60(10) of Kossow).
[21] In summary, Christie, A.C.J. (as he was then) in Shell Canada
Limited v. The Queen, 97 DTC 247, at page 249, had this to say:
In 569437 Ontario Inc. v. The
Queen, 94 DTC 1922 (T.C.C.) this is said at page 1923:
Subsection 95(1) of the Tax Court of
Canada Rule (General Procedure) (“the General Rules”) requires that a
person examined for discovery shall answer, to the best of that person's
knowledge, information and belief, any proper question relating to any matter
in issue in the proceedings. Reference is also made to Sydney Steel Corp. v.
Ship Omisalj et al., [1992] 52 F.T.R. 144, wherein Mr. Justice MacKay of
the Federal Court-Trial Division said at page 147:
Counsel for the parties are essentially
agreed that the standard for propriety of a question asked in discovery is less
strict than the test for admissibility of evidence at trial and the appropriate
standard is whether the information solicited by a question may be relevant to
the matters which at the discovery stage are in issue on the basis of pleadings
filed by the parties. As noted by the defendants the test is as set out by
Norris, D.J.A., in McKeen & Wilson Ltd. v. Gulf of Georgia Towing Co.
Ltd. et al., [1965] 2 Ex. C.R. 480, at p. 482:
... the questions objected to
may raise matters which are relevant to issues raised on the pleadings. This is
all that the defendants are required to show. …
[…]
… First, there is a broader
standard of relevance regarding questions asked at the discovery stage of
proceedings than at trial. Second, questions asked on examination for discovery
may be proper bearing in mind that issues of admissibility and weight to be
assigned to evidence at trial are for the trial judge to determine.
See also Holmested
& Watson, Ontario Civil Procedure, under the heading "SCOPE OF
EXAMINATION: GENERAL, Rule 31.06(1)" at 31‑48:
What is relevant to the
matters in issue, as defined by the pleadings, is extremely broad. The
examining party is entitled to discover for the purpose of supporting her own
case and to put that case to the opponent to obtain admissions and to limit the
issues. She is entitled to interrogate to destroy the adversary's case or to
find out the case she has to meet and the facts (and now the evidence) that are
relied upon by the adversary in support of his case.
[22] I will now deal with questions 3(b) to (h).
[23] 3(b) If not, what is the difference (in
terms of consideration) between the religious training referred to in IC 75-23
and the swimming training that is the subject matter of the present case?
This question is clearly relevant and must be answered
in light of the response provided to 3(a). This question follows as a corollary
to 3(a). I do not agree with the Respondent that it is comparing apples and
oranges. If religious training is not “consideration” for the purpose of a gift
then the Appellant is entitled to ask how this differs from swim training for
the purposes of the meaning of consideration pursuant to the definition of gift.
[24] 3(c) What is the difference, in terms of
“consideration”, between the (secular) academic training (referred to in
paragraph 4 of IC 75-23) and the religious training?
Same response as I gave in 3(b). Consideration as it
relates to and determines “gift” as it is used in this provision is central to
the issues in these appeals. Both 3(b) and 3(c) meet the general principles of
relevancy which I have previously outlined.
[25] 3(d) Does the Respondent consider secular
academic training to have value in the marketplace whereas religious training
does not (or at least has only “nominal” consideration)?
This is not an appropriate question because I do not
see the relevancy of establishing whether the value is in the marketplace or with
the taxpayer. More importantly this question has at least the appearance of
delving into the mental processes of the Minister in raising the assessment.
[26] 3(e) No question.
[27] 3(f) If so, why or why not?
Because this question is tied to 3(d) the Appellant
will not be permitted to ask 3(f).
[28] 3(g) Paragraph 10 of IT-110R3 describes the
policy on religious training set out in IC 75-23 as an “exception to the
general rule” regarding the meaning of “gift” as described in paragraph 3 of
IT-110R3. Why does the Respondent consider the policy on religious training to
be an exception to the general rule?
This question is not clear cut and I considered
rejecting it on the basis that it was bordering on a fishing expedition.
However, I am going to permit this question to be asked of the Respondent
because it falls within the wide latitude afforded to questions that may
touch on the issues.
[29] 3(h) If the policy (that is, where the
donor receives no consideration or less than fair market value consideration
for the donation) is not an exception to the general rule, does the Respondent
apply that policy only to religious private schools or to all taxpayers?
This question cannot be asked because underlying the
question is an attempt to get at the assessing position of other taxpayers,
which is clearly not permitted in discoveries.
Discovery Principles Applicable to CRA Materials:
[30] Similar to the principles governing the relevancy of questions asked,
the relevancy respecting a request for documents is likewise governed by the
pleadings. Rip J. (as he was then) in Owen Holdings Limited, [1997] 3
C.T.C. 2286, at paragraph 29, relied on Compagnie Financière du Pacifique v. Peruvian Guano Co., (1882), 11 Q.B.D. 55 (C.A.), to
state the test for documentary relevance as follows:
… The party demanding a document must
demonstrate that the information in the document may advance his own
case or damage his or her adversary's case. (emphasis added)
[31] The Federal Court of
Appeal in Owen Holdings Limited v. The Queen, 97 DTC 5401, upheld J.
Rip’s decision in part but concluded that certain documents, such as advance
rulings, are not required to be produced because they are too remote to be
relevant to the appeals of other taxpayers. The majority of the Court drew a
distinction between documents,
such as advance rulings or notes and memoranda pertaining to the enactment of
the legislation, which would not be relevant and other documents, such as
technical interpretations, which would be relevant because they focus on
specific problems of interpretation respecting a provision of the Act.
At page 5404 of that decision, the Federal Court states:
… It is certainly
not as binding precedents that the appellant may use any of these documents. It
is well established that they have no binding legal effect, as this Court had
occasion to repeat recently in Minister of National Revenue v. Ford Motor
Company of Canada, Limited. What the appellant may do with these documents
is establish a certain inconsistency in the Minister's interpretation and
application of the provision. Perhaps this can be accomplished using the
technical interpretations which are relatively simple and to the point; by
comparison, however, it appears to me that this could be almost impossible to
do using advance rulings, given the difficulties in establishing similarities
between different and complex factual situations.
This clearly indicates the purpose for which discovery
of the Minister’s published technical interpretations will be permitted and
that is to establish inconsistencies in the Minister’s interpretation as set
out in those published policies and how they may have been applied to the
provision as it relates to the facts of a particular appeal. I believe that
information circulars and interpretation bulletins which are published and held
out to the general public as representative of the Minister’s general policy
respecting a provision of the Act, would similarly fall under this
category and therefore be discoverable by counsel to establish inconsistencies
as referred to by the Federal Court of Appeal in Owen Holdings.
[32] Similarly, Christie J. in Shell Canada states
that a question is proper if it asks about administrative or ministerial
practice, policy or interpretation because employees of the Minister are
expected to adhere to those without specific direction. Further, technical
interpretations and other similar documents are published by the Minister with
the intention of assisting taxpayers generally and thus would be relevant in an
inquiry as they represent a broad statement of policy. At page 257 of this
decision, it states:
To my mind the phrase
"administrative practice", in the context referred to and in relation
to the proceedings at hand, must be taken to mean a practice promulgated by
someone at National Revenue authorized to do so and which employees thereof are
generally expected to follow and apply in the administration and enforcement of
that portion or portions of the Act with which the practice is concerned. It
does not include ad hoc decisions pertaining to particular cases. …
[33] The Supreme Court of Canada in Harel v.
Deputy Minister of Revenue of the Province of Quebec, [1978] 1 S.C.R.
851, at page 859, which was quoted at length in Shell Canada, stated the
following:
Once again, I am not saying
that the administrative interpretation could contradict a clear legislative
text; but in a situation such as I have just outlined, this interpretation has
real weight and, in case of doubt about the meaning of the legislation, becomes
an important factor. In order not to unduly lengthen these reasons, I will
refer only to the following authorities: The Commissioners for special
purposes of the Income Tax v. Pemsel, [1891] A.C. 531, in particular at p. 591;
Protestant Old Ladies' Home v. Provincial Treasurer of Prince Edward Island,
[1941] 2 D.L.R. 534, in particular at p. 540; Kernochan - Statutory
Interpretation: An Outline of Method (1976), 3 Dal. L.J. 333, in particular
at p. 359.
[34] I will now address
question 3(i).
[35] 3(i) Please produce any notes, memoranda or
other documents of any kind whatsoever relating to the policies regarding
consideration, benefits or expectations of return set out in IC 75-23 or
IT-110R3.
The manner in which the Appellant stated this question
is entirely too broad. The phrase, “documents of any kind whatsoever” contained
in the question, has far reaching implications if I were to simply permit the
question. I believe the caselaw is clear that:
1.
relevancy in production
of documents is established by the pleadings;
2.
a party seeking
production of a document must demonstrate that the document may advance its own
appeal or damage its opponents case;
3.
documents too remotely
connected, such as advance rulings and notes, memoranda or other inter-office
communication pertaining to the enactment of the legislation, will not be
relevant;
4.
technical
interpretations focusing on specific problems of interpretation respecting a
provision in the Act will be relevant;
5.
in addition to
technical interpretations I believe information circulars and interpretation
bulletins fall within the classification of documents that may be relevant
because they could assist the Court in dealing with problems of interpretation
respecting a provision; and
6.
the purpose of
discovery of such documents is to establish inconsistencies in respect to how
the Minister may have applied the provision in the past contrary to the Minister’s
present application.
There is a great deal of caselaw concerning the
meaning of “gift”. If information circulars or interpretation bulletins can
assist with resolving any ambiguity in the provision, they may be given weight.
They may well be relevant because they are interpreting the same provision
which is applicable to RCAAA’s. Therefore, in response to this question, the
Respondent shall produce all relevant technical interpretations, information
circulars and interpretation bulletins but will be exempt from producing notes,
memoranda or inter-office communications leading to the publication of these
policies. The Appellant will also be permitted to ask further questions in
respect to such documents in attempting to establish inconsistencies in
application.
[36] Finally, in his Reply submissions Appellant
counsel voiced the following concern:
… We don't want to be confronted with the
situation where the officer of the Crown simply says, "Well, here's what I
think." We want that officer to consult, because this particular officer
may not have any idea how those policies arose and what the particulars of
those policies are, before answering those questions. If, in the course of
answering these questions, they have occasion to review notes, memoranda, that
sort of thing, we want to have a look at those to ensure that what they are
saying is accurate.
(Transcript, pages 126-127)
[37] Rule 95(2) states:
Prior to the examination for
discovery, the person to be examined shall make all reasonable inquiries
regarding the matters in issue from all of the party's officers, servants,
agents and employees, past or present, either within or outside Canada and, if
necessary, the person being examined for discovery may be required to become
better informed and for that purpose the examination may be adjourned.
[38] In discussing Rule 95(2), Rip
J. in Owen Holdings, at paragraphs 7 and 8, made the
following comment:
[7] Under Rule 95(2) every person
to be examined for discovery has a duty to inform himself or herself of the
matters in issue in the litigation. In so informing oneself, the person is
obliged to make all reasonable inquiries of the officers, employees and agents
of the party on behalf of whom that person is being discovered as to the
personal knowledge acquired by them in their capacities as officers, employees
or agents: see, for example, Indalex Limited v. The Queen, 84 DTC
6018 (F.C.T.D.).
[8] If, during the examination for discovery, the opposing
party believes the person being examined is not well informed, Rule 95(2)
permits the examination to be adjourned so that the person may become better
informed. If there is a dispute between the parties as to whether the person
being examined is or is not well informed, the examining party may apply to the
Court for an order compelling the person being examined to become better
informed. The Rules do not contemplate the Court entertaining such an
application before the discovery has even started. One must assume the parties
are acting in good faith and that the person to be examined will make the
reasonable inquiries required by Rule 95(2) before he or she attends at
the examination. In Weight Watchers International Inc. v. Weight Watchers of
Ontario Ltd. (1973), 14 C.P.R. (2d) 264, Heald J., at page 266, stated
that:
It seems to me that in the
circumstances of these cases, Joyce Reid is clearly a proper person.
The plaintiffs will not be
prejudiced in the event it transpires on the resumption of the examination,
that she does not have full knowledge of the relevant facts. She is being
examined, not as an individual, but as an officer of these corporations and has
a duty to inform herself. If she does not do so, the practice is clear that the
examination should be further adjourned so that she may ascertain the necessary
facts and give the answers of the resumption of the examination.
It is clear from this quote and from my
reading of this Rule that the Appellants’ concerns are without merit and that,
if the Minister’s officer cannot competently respond to the questions, the
remedy of adjournment is available to the Appellants to provide time to the
officer to gain the proper knowledge and background in order to provide
responsive answers.
[39] In conclusion, I remind both counsel that
these appeals have been on the back burner for a very long time and as V.A. Miller
J. stated in Kossow at paragraph 66: “At
some point in time, discoveries must end so that the parties can get ready for
the trial in this matter. That time has arrived.”
[40] Since success is divided, I am making no
order as to costs.
Signed at Ottawa, Canada, this 25th
day of June 2009.
Campbell J.
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