Citation: 2009TCC485
Date: 20090929
Docket: 2000-4164(GST)G
BETWEEN:
ROGER OBONSAWIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Webb, J.
[1]
The Appellant served
subpoenas on four senior officials with the Canada Revenue Agency (“CRA”) on
Friday September 25, 2009 in relation to the hearing that was scheduled to
commence Monday September 28, 2009. The individuals are:
a.
William Baker –
Commissioner, CRA
b.
Lyse Ricard - Assistant
Commissioner, CRA
c.
Paul Lynch - Director
General, Tax and Charities Appeals Directorate, Appeals Branch, CRA
d.
Pierre Bertrand -
Director General, Excise and GST/HST Rulings Directorate, Legislative Policy
and Regulatory Affairs Branch, CRA
[2]
This appeal was
commenced in 2000 and, by Order of Justice Bowie
of this Court dated January 27, 2009, was set down for hearing for two weeks
commencing September 28, 2009. There were several case management conferences
that were held in relation to this Appeal. At no time prior to September 22,
2009, (which is six days before the date scheduled for the commencement of the
hearing) did counsel for the Appellant indicate that he would be serving
subpoenas on these four individuals.
[3]
On September 22, 2009
counsel for the Appellant wrote to counsel for the Respondent to indicate that
he would be requiring the attendance of these four individuals at the hearing.
The subpoenas were not, however, served until September 25. The subpoenas were
not served at least five days prior to the date that the individuals were
required to appear (as required by subsection 141(1.1) of the General Procedure
Rules, unless otherwise directed by the Court) as the date set out in the
subpoenas for the appearance of the witnesses was September 28, 2009. Therefore
the subpoenas could be quashed for that reason; however, I propose to deal with
the merits of the subpoenas themselves.
[4]
In Re Zündel 2004
FC 798, 259 F.T.R. 249, Justice Blais of the Federal Court (as he then was)
stated as follows:
Grounds for quashing a subpoena
5 The case law
on subpoenas shows that there are two main considerations which apply to a motion
to quash a subpoena: 1) Is there a privilege or other legal rule which
applies such that the witness should not be compelled to testify?; (e.g. Samson
Indian Nation and Band v. Canada (Minister of Indian Affairs and
Northern Development), [2003] F.C.J. No. 1238); 2) Is the evidence
from the witnesses subpoenaed relevant and significant in regard to the issues
the Court must decide? (e.g. Jaballah (Re), [2001] F.C.J. No.
1748; Merck & Co. v. Apotex Inc., [1998] F.C.J. No. 294)
…
7 As to determining
whether the evidence to be presented will be useful to the trial judge, courts
will be reluctant to prevent parties from calling the evidence the parties feel
they need, but courts generally will not allow fishing expeditions.
Thus, if one party moves to quash the subpoena, it must show the lack of
relevance or significance of the evidence the party that has issued the subpoena
intends to produce. Obviously, the judge who decides whether or not to quash
the subpoena is not deciding on the weight to be given to such evidence, which
is to be determined by the trier of fact (Stevens v. Canada
(Attorney General), [2004] F.C.J. No. 98).
8 In R. v. Harris,
[1994] O.J. No. 1875 (Ont. C.A.), the Ontario Court of Appeal ruled that it
was not sufficient for the party calling the witness to simply state that the
witness might have material evidence; rather, the party had to establish that
it was likely that the witness would give material evidence. In that
case, the Court weighed the respective affidavits of the parties: on the one
hand, the affidavit was that of the secretary of the legal firm that was
representing the accused who had subpoenaed Crown counsel, who stated that she
had been told that the evidence would be relevant to the alleged good faith of
the police officers; on the other, the affidavit of the witness subpoenaed was
that he had no material evidence to give. The first affidavit was pure hearsay
and highly speculative, and thus the subpoena was quashed.
9 In Nelson v. Canada
(Minister of Customs and Revenue Agency), [2001] F.C.J. No. 1220, Mr.
Nelson sought to subpoena a number of ministers, including the Prime Minister,
in his action against the Minister of the Customs and Revenue Agency. The
motion was dismissed because there was no evidence from the supporting material
that any of these persons had been in any way involved in the events giving
rise to the action.
10 Thus
the criterion is one of relevance and materiality of the evidence to be
provided by the prospective witness.
(emphasis added)
[5]
In Laboratoires Servier v.
Apotex Inc. 2008 FC 321, 66 C.P.R. (4th) 406, Justice Snider of the Federal
Court stated that:
20. Other jurisprudence reinforces the notion that a subpoena must
not be a fishing expedition.
[6]
Following the serving
of the subpoenas, the Respondent conducted a search of all documents related to
these individuals, this Appeal and other litigation relating to the Appellant.
For three of the individuals (Lyse Ricard, Paul Lynch and Pierre Bertrand)
their involvement was minimal, if any, and Lyse Ricard did not join the CRA
until May 22, 2007. Counsel for the Appellant acknowledged that the subpoenas
for these three individuals should not have been served. This seems to me to
clearly suggest that this was a fishing expedition. These subpoenas are
quashed.
[7]
With respect to the
subpoena for William Baker, the position of the Appellant is that his testimony
would be relevant in relation to two issues. The first issue is the argument
that is raised in the Amended Amended Notice of Appeal that the Respondent owes
fiduciary duties to aboriginal peoples, and that this duty should influence the
interpretation or application of the relevant statutes. Counsel for the Appellant
argued that the duty should be viewed as an interpretive tool in applying
statutes. It seems to me that if such a duty does exist in this case, since the
argument is that it should be used to interpret the relevant statutes, then it
is a question of law and not a question of fact. It seems to me that there are
two legal questions raised by this issue – does the duty exist in this case and
how should it influence the interpretation or application of the Excise Tax
Act and the Indian Act?
[8]
Witnesses are called to
testimony with respect to facts. There do not appear to be any facts to which
William Baker could testify that would be relevant in relation to the legal
questions of whether a fiduciary duty exists in this situation and, if so, how
that duty should influence the interpretation or application of the relevant statutes.
[9]
The other argument
raised by counsel for the Appellant was that William Baker’s testimony would be
relevant to the background related to the reassessment of the Appellant and the
argument of the Appellant that is made in paragraph 29 of the Amended Amended
Notice of Appeal. This paragraph provides as follows:
29. The Appellant maintains that the Respondent was provided
access to all documents and information necessary to perform an accurate audit
of his business activities to determine the amount of his alleged liability for
the remittance of GST. Instead, the Respondent made a notional assessment of
the GST payable based upon assumptions and projections concerning the
Appellant’s business activities. The Respondent had no authority under the Excise
Tax Act to perform a notional assessment based upon assumptions concerning
the Appellant’s business activities. It failed to meet even a minimum standard
of reliability and the assessment out [sic] to be set aside.
[10]
The first sentence
describes the Appellant’s position that “the Respondent was provided access to
all documents and information necessary to perform an accurate audit of his
business activities to determine the amount of his alleged liability for the
remittance of GST”. The facts related to this statement relate to the access
that was provided to the Respondent. The Respondent, in Exhibit 7 attached to the
affidavit filed in support of the motion to quash the subpoenas, provides a
detailed history of the discussions and correspondence between the Appellant
and representatives of the CRA. Counsel for the Appellant did not question or
challenge the accuracy of that history. There is no reference in this Exhibit to
any discussions that took place directly between the Appellant and William
Baker nor is there any reference to any correspondence between the Appellant
and William Baker. There does not appear to be any basis to suggest that William
Baker would be able to provide any testimony on the access to documents and
information that was provided to the Respondent other than any information that
William Baker may have acquired as a result of hearsay.
[11]
The next sentence
relates the fact that the Respondent made a notional assessment of GST payable
based on assumptions and projections concerning the Appellant’s business
activities. The reference to the notional assessment is in paragraph 20 of the
Amended Amended Notice of Appeal which states that:
The Respondent issued a notional assessment against the Appellant’s
business on June 30, 1998 in the amount of $4,553,076.56 for the period
February 1, 1993 to December 31, 1996, followed by a further GST assessment t [sic]
the Appellant in the amount of $7,252,840.65 [collectively the “GST
Assessment”].
[12]
In paragraph 14 of the
Reply to the Twice Amended Notice of Appeal it is stated that:
He admits the Respondent issued notional assessments to the
Appellant but otherwise denies paragraph 20 of the Amended Amended Notice of
Appeal. Because the Appellant had not filed GST returns and had not provided
access to his books and records for GST audit purposes the Minister issued two
notional assessments. The Minister issued a first notional assessment on May
12, 1995 in the amount of $1,079,379.26 for the period February 1, 1991 to
January 31, 1993. The Minister issued an additional notional assessment on
August 20, 1998 in amount of $4,622,042.43 for the period February 1, 1993 to
December 31, 1996.
[13]
In paragraphs 16, 17
and 20 of this Reply the Respondent sets out the basis for the calculation of
the GST amount and states that the first notional assessment was based on the
Appellant’s gross business income reported by the Appellant in his 1992 and
1993 personal tax returns. The GST amount was determined by multiplying the
estimate of quarterly fees (gross business income divided by four) by 7%.
[14]
The second notional
assessment was determined based on the T4 summaries filed by the Appellant as
an employer for 1993 – 1996. The T4 summary amounts were grossed up by a profit
margin of 5% and then the GST amount was calculated as 7% of this grossed-up
amount.
[15]
There was no indication
that William Baker was involved in any of these calculations and therefore there
does not appear to be any factual evidence that he would have that would relate
to the determination of the notional assessments.
[16]
The next sentence in
paragraph 29 of the Amended Amended Notice of Appeal relates to the Appellant’s
legal argument that the Respondent did not have the authority under the Excise
Tax Act to perform a notional assessment based on the assumptions that were
made. This is a legal argument and the testimony of William Baker would not be
relevant in relation to the legal argument.
[17]
The final sentence in
this paragraph relates to the minimum standard of reliability and counsel for
the Appellant acknowledged that, taken in isolation, William Baker would not
have any relevant testimony in relation to this issue.
[18]
Counsel for the
Appellant argued that the paragraph should be read as a whole and not sentence
by sentence. However it does not seem to me that reading the paragraph as a
whole I am able to reach any different conclusion with respect to the relevance
of William Baker’s testimony. William Baker was briefed on various issues and
in turn he briefed others. There is nothing to suggest that he would have any
relevant testimony with respect to the calculation of the GST liability or the
basis for the calculation.
[19]
The Federal Court of Appeal in Main Rehabilitation Co.
v. R. (2004 FCA 403) (leave to appeal to the Supreme Court of Canada was
dismissed (343 N.R. 196 (note))), made the following comments:
6 In
any event, it is also plain and obvious that the Tax Court does not have the
jurisdiction to set aside an assessment on the basis of an abuse of process at
common law or in breach of section 7 of the Charter.
7 As
the Tax Court Judge properly notes in her reasons, although the Tax Court has
authority to stay proceedings that are an abuse of its own process (see for
instance Yacyshyn v. R. (1999), 99 D.T.C. 5133 (Fed. C.A.) ),
Courts have consistently held that the actions of the CCRA cannot be taken into
account in an appeal against assessments.
8 This
is because what is in issue in an appeal pursuant to section 169 is the
validity of the assessment and not the process by which it is established
(see for instance the Consumers' Gas Co. v. R. (1986), 87 D.T.C.
5008 (Fed. C.A.) at p. 5012). Put another way, the question is not
whether the CCRA officials exercised their powers properly, but whether the
amounts assessed can be shown to be properly owing under the Act (Ludco
Enterprises Ltd./Entreprises Ludco Ltée v. R. (1994), [1996] 3
C.T.C. 74 (Fed. C.A.) at p. 84).
(emphasis added)
[20]
It seems to me that these
comments are equally applicable to an assessment issued under the Excise Tax
Act. Under the Excise Tax Act a person appeals to this Court under
either section 302 or 306 of the Excise Tax Act in relation to an
assessment and, as provided in section 309 of the Excise Tax Act, this
Court is limited to dismissing the appeal from the assessment or allowing such
appeal and vacating the assessment or referring the assessment back to the
Minister for reconsideration and reassessment.
[21]
The issue before me in
an appeal is whether the amounts that were assessed under the Excise Tax Act
are the amounts that are properly owing under that statute. It appears that William
Baker’s role was simply to pass on information to senior government officials. He
was not directly involved in determining the amount of GST that was assessed.
[22]
In R. v. Harris (1994),
74 O.A.C. 398, 93 C.C.C. (3d) 478 the Ontario Court of
Appeal stated that
5. In our view it is not sufficient to sustain the subpoena that the
witness “may have” evidence material to the case. The burden was on the
respondent to establish that Murphy was likely, or to it put another way, would
probably have evidence material to the issues raised.
[23]
In this particular case
there is nothing to indicate that William Baker would have any evidence that
would be directly relevant to the issues that have been raised. The first
issue, as noted above, relates to the legal questions of whether the Respondent
owed a fiduciary duty to aboriginal peoples that would be applicable in this
case and, if so, how that fiduciary duty should have influenced the
interpretation or application of the Indian Act and the Excise Tax
Act. These are questions of law not fact.
[24]
The second issue raised
by counsel for the Appellant related to the notional assessments. There is no
indication that William Baker ever met or corresponded directly with the
Appellant or that he was involved in determining the amount of GST that was
assessed. The issue in the GST appeal is the validity of the assessment, not
the process by which the assessment was issued. The relevance of the process
could relate to the accuracy of the amount assessed but there is nothing to
indicate that William Baker would or could provide any assistance in relation
to the accuracy of the amount assessed. There does not appear to be any factual
evidence that William Baker is likely or would probably have in relation to
this issue.
[25]
There is also an
additional issue in relation to this subpoena. All of the subpoenas require the
individual to bring documents with them. The description of the documents in
the subpoena for William Baker is “Documents relating to Roger Obonsawin C.O.B.
Native Leasing Services, dated 1991 – 2000”. The description in the other
subpoenas of the documents that the other individuals were to bring is
similarly very general and covers the same 10 year period. As noted above, the
subpoenas served on the other three individuals were part of a fishing
expedition. The same general description of documents for a 10 year period in
the subpoena for William Baker suggests that the subpoena issued to William
Baker was also part of a fishing expedition.
[26]
The Respondent’s motion
is granted and the subpoenas served on William Baker, Lyse Ricard, Paul Lynch
and Pierre Bertrand on September 25, 2009 are quashed.
[27]
I will reserve my
decision on costs until I have submissions from counsel for the Respondent and
counsel for the Appellant on costs.
Signed at Toronto, Ontario, this 29th day
of September 2009.
“Wyman W. Webb”
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