Citation: 2008TCC422
Date: July 18, 2008
Docket: 2005-1974(IT)G
BETWEEN:
KATHRYN KOSSOW,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
V.A. Miller, J.
[1] The Appellant has brought this motion for an
Order as follows:
1. directing that the paragraphs and
subparagraphs described in Schedule “A” be struck from the Reply;
2. alternatively, directing that the
Respondent bear the burden of proof with respect to the allegations of fact
pleaded as ministerial assumptions of fact in the paragraphs and subparagraphs
described in Schedule “A”;
3. directing the Respondent to satisfy
certain undertakings given at the examination for discovery of the Respondent’s
nominee where the answers given were incomplete, non-responsive or otherwise
ambiguous and to answer certain questions that the Respondent refused or failed
to answer at this examination;
4. directing the Respondent to file a
further affidavit of documents pursuant to Rule 82 containing all the
documents in the Respondent’s possession that relate to the matters in issue,
not only those documents which the Respondent considers “relevant” to the
matters in issue;
5. directing the Respondent’s nominee
to reattend at the Respondent’s own expense at a continuation of the
examination for discovery to answer all proper questions that the Respondent
previously refused or failed to answer, and to also answer any proper questions
arising from those answers;
6. directing the Respondent to pay
forthwith the costs of this motion, costs thrown away and the costs of the
continuation of the examination for discovery.
[2] Schedule “A” referred to in the Appellant’s
motion is attached to these Reasons. At the hearing of this motion the
Appellant did not refer to Schedule “B” that was attached to her motion.
Instead she provided a chart of the questions asked and refused in respect of
which she wanted an Order compelling answers. That chart is attached to these
Reasons.
[3] The appeal is for the Appellant’s 2000, 2001 and
2002 taxation years. By notices dated September 2, 2004 the Minister of
National Revenue (“the Minister”) reassessed the Appellant for those years and
disallowed 80% of the charitable tax credits she had claimed. The basis of the
Minister’s reassessment was that there was no gift.
[4] On September 9, 2005 the Minister reassessed the
Appellant for only the 2002 taxation year to disallow 100% of the claimed
charitable tax credit. The 2000 and 2001 taxation years were statute barred.
[5] In reassessing the Appellant for the 2002
taxation year the Minister assumed that there was not a valid gift under
section 118.1 of the Income Tax Act; that the loan the Appellant
received was a sham; and that the general anti-avoidance rule (GAAR) applied.
The Respondent pleaded sham and GAAR as alternative grounds for the 2000 and
2001 taxation years.
[6] For ease of reference I have divided these
reasons into sections according to the relief sought in the Appellant’s motion.
Motion to Strike
[7] It is the Appellant’s position that the
Ministerial assumptions in Schedule “A” are improper pleadings and should be
struck as assumptions of fact. The Appellant has categorized the improper
pleadings as those the Respondent has admitted are incorrect; evidence pleaded
as assumptions of fact; allegations of fact about third parties which are
solely within the Minister’s knowledge; allegations of fact about third parties
and facts within the Minister’s knowledge which the Minister alleges the
Appellant knew; and, conclusions of law.
[8] The grounds for this portion of the motion are:
1. The Reply contains 103 ministerial
assumptions of fact, most of which relate to parties other than the Appellant,
and most of which and whom the Appellant did not know.
2. Throughout the examination of the
Respondent’s nominee, Salvatore Tringali, he stated that these assumptions were
based not on any particular document that would evidence the alleged fact, but
on his interpretation of “all the documents”.
3. This response appears in
the examination for discovery 238 times.
4. The pleadings listed in Schedule
“A” contain evidence, conclusions of law and facts about which the Appellant
had no knowledge and which do not benefit from the presumption of validity.
5. The Reply contains improper
pleadings that may prejudice or delay the fair hearing of the appeal and are an
abuse of process.
6. Sections 4, 49, 53, 70 and 126(b)
and (e) of the Tax Court of Canada Rules (General Procedure) (the Rules).
[9] Section 53 of the Rules reads:
Striking out a Pleading or
other Document
53. The
Court may strike out or expunge all or part of a pleading or other document,
with or without leave to amend, on the ground that the pleading or other
document,
(a) may
prejudice or delay the fair hearing of the action,
(b) is
scandalous, frivolous or vexatious, or
(c)
is an abuse of the process of the Court.
(a)
Incorrect Pleadings
[10] At the hearing of the
motion counsel for the Appellant sought to have paragraph 39(e) and the word
“provincial” in paragraph 39 (yyyy) struck from the Reply. She stated that
during the discovery of the Respondent’s nominee in April, 2008, she learned
that the facts assumed in paragraph 39(e) of the Reply are incorrect. The error
is that Penturn and Glatt were not equal shareholders of BFIL. Counsel’s
argument with respect to paragraph 39(yyyy) is that provincial charitable tax
credits are not at issue in this appeal and the word “provincial” should be
struck.
[11] The Respondent’s counsel
admitted that there was an error in paragraph 39(e). It was his position that
the pleadings could be amended with leave from the Court. Alternatively, the
paragraph could remain as it is. The Appellant has the admission that the
paragraph is incorrect and it cannot be used at trial against the Appellant.
[12] With respect to the
motion to strike paragraph 39(e), it is my opinion that the Appellant has made
this motion within a reasonable time after she knew there was an error in that
paragraph. However, I do agree with counsel for the Respondent that the
Appellant has the admission of the inaccuracy in paragraph 39(e). The pleading
cannot be used against the Appellant at the hearing of this appeal. I do not
see the need at this point in time to grant further relief.
[13] I
will address the Motion to Strike paragraph 39(yyyy) in my reasons below.
(b) Evidence, Conclusions of Law, Paragraph
39(yyyy) and Allegations about Third Parties
[14] The Appellant has asked that the paragraphs which
contain evidence (paragraphs 34, 35, 39(y), 39(aaa) and 39(eee)) and
conclusions of law (paragraphs 40, 41(a), 41(b), 41(c), 41(d), 41(e) and 41(f))
be struck from the Reply as they are improper pleadings.
[15] The Appellant has also moved to have the
paragraphs which contain allegations of fact about third parties struck from
the Reply or alternatively, she asked that they remain in the Reply as
allegations that the Respondent must prove. In other words she has asked that
the onus of proof for these allegations be shifted to the Respondent. The
paragraphs in issue are: 10, 31, 33, 39(b), 39(c),39(d), 39(g), 39(h), 39(i),
39(j), 39(k), 39(l), 39(m), 39(n), 39(o), 39(p), 39(q), 39(r), 39(s), 39(t), 39(u),
39(v), 39(w), 39(x), 39(y), 39(z), 39(aa), 39(bb), 39(cc), 39(dd), 39(ee),
39(ff), 39(gg), 39(hh), 39(ii), 39(jj), 39(kk), 39(ll), 39(mm,) 39(nn), 39(oo),
39(pp), 39(qq), 39(rr), 39(ss), 39(tt), 39(uu), 39(vv), 39(ww), 39(xx), 39(yy),
39(fff), 39(ggg), 39(hhh), 39(jjj), 39(kkk), 39(lll), 39(mmm), 39(nnn),
39(ooo), 39(ppp), 39(qqq), 39(rrr), 39(sss), 39(ttt), 39(uuu), 39(vvv),
39(www), 39(xxx), 39(yyy), 39(zzz), 39(aaaa), 39(bbbb), 39(cccc), 39(dddd),
39(eeee), 39(ffff), 39(gggg), 39(hhhh), 39(iiii), 39(jjjj), 39(kkkk), 39(mmmm),
39(oooo), 39(pppp), 39(qqqq), 39(rrrr), 39(ssss),
39(tttt), 39(uuuu), 39(vvvv), 9, 39(f), 39(k), 39(jj), 39(zz), 39(jj), 39(zz),
39(aaa), 39(bbb), 39(eee), 39(ggg), 39(hhh), 39(nnnn), 39(yyyy), 40, 41(a),
41(a), 41(b), 41(c), 41(d), 41(e), 41(f).
[16] The Appellant relied on the decision of Justice
Bowie in Zelinski v. The Queen1 where he explained the
purpose of pleadings:
[4] The
purpose of pleadings is to define the issues in dispute between the parties for
the purposes of production, discovery and trial. What is required of a party
pleading is to set forth a concise statement of the material facts upon which
she relies. Material facts are those facts which, if established at the trial,
will tend to show that the party pleading is entitled to the relief sought. Amendments
to pleadings should generally be permitted, so long as that can be done without
causing prejudice to the opposing party that cannot be compensated by an award
of costs or other terms, as the purpose of the Rules is to ensure, so
far as possible, a fair trial of the real issues in dispute between the
parties.
[5]
The applicable principle is
stated in Holmsted and Watson:
This is the
rule of pleading: all of the other pleading rules are essentially corollaries
or qualifications to this basic rule that the pleader must state the material
facts relied upon for his or her claim or defence. The rule involves four
separate elements: (1) every pleading must state facts, not mere conclusions of
law; (2) it must state material facts and not include facts which are
immaterial; (3) it must state facts and not the evidence by which they are to
be proved; (4) it must state facts concisely in a summary form.
[17] Counsel for the Appellant stated that pleading
evidence masqueraded as a fact and pleading conclusions of law or mixed fact
and law without first pleading the facts to support the conclusions are
improper pleadings and they should be struck from the Reply.
[18] It was the Respondent’s position that Rules 7
and 8 applied to the paragraphs that the Appellant sought to have
struck. Counsel for the Respondent stated that if these paragraphs contained
improper pleadings, then that was an irregularity as it is defined in Rule
7. He further argued that the present motion was not brought within a reasonable
time after the Appellant ought to have known of the irregularity and that the
Appellant has taken several other steps in the proceeding.
[19] Rules 7 and 8 read:
7 A failure to
comply with these rules is an irregularity and does not render a proceeding or
a step, document or direction in a proceeding a nullity, and the Court,
(a) may
grant all necessary amendments or other relief, on such terms as are just, to
secure the just determination of the real matters in dispute, or
(b) only
where and as necessary in the interests of justice, may set aside the
proceeding or a step, document or direction in the proceeding in whole or in
part.
8 A motion to
attack a proceeding or a step, document or direction in a proceeding for
irregularity shall not be made,
(a)
after the expiry of a reasonable time after the moving party knows or ought
reasonably to have known of the irregularity, or
(b) if
the moving party has taken any further step in the proceeding after obtaining
knowledge of the irregularity,
except with leave of the Court.
[20] It is my opinion that
pleading evidence and conclusions of law are irregularities within Rules
7 and 8 and that Rule 8 does apply to a motion brought pursuant to Rule
53. 2
[21] Rule 8(b) is known
as the “fresh step” rule. The purpose of this rule was stated by Justice
O’Keefe of the Federal Court in Vogo Inc. v. Acme Window Hardware
Ltd.3 in these words:
The purpose of the "fresh step" rule is to prevent a party from acting
inconsistently with its prior conduct in the proceeding. By pleading in
response to a statement of claim, for instance, a defendant may extinguish
their right to complain of fatal deficiencies in the allegations made against
them. The fresh step rule
aims to prevent prejudice to a party who has governed themselves according to
the procedural steps taken by the opposing side,
where it would be unfair to permit a reversal in approach.
[22] Associate Chief
Justice Bowman, as he then was, explained the fresh step rule as follows:
The "fresh step" rule is one that has
been part of the rules of practice and procedure in Canada
and the United Kingdom for many years. There is a great deal of
jurisprudence on what constitutes a fresh step but the rule is based on the
view that if a party pleads over to a pleading this implies a waiver of an
irregularity that might otherwise have been attacked.4
[23] The chronology of events
with respect to the pleadings in this appeal is:
a) The Notice of
Appeal was filed on June 14, 2005;
b) The Reply was
filed on August 19, 2005.
c) An Amended Notice
of Appeal was filed on December 8, 2005;
d) A Reply to the
Amended Notice of Appeal was filed on January 16, 2006;
e) An Amended Reply to the
Amended Notice of Appeal was filed on August 18, 2006. The Appellant consented
to it being filed and served.
f) A Further Amended Reply to
the Amended Notice of Appeal was filed on February 16, 2007 and the Appellant
consented to its filing and serving.
[24] Paragraph 39(yyyy), the
paragraphs that contain allegations about third parties and the paragraphs that
the Appellant has asked to be struck because they contain evidence, have been
in the Respondent’s pleadings since August 19, 2005 and those that contain
conclusions of law have been in the Respondent’s pleadings since January 16, 2006.
The Appellant did not make this motion to strike the pleadings until June 6,
2008.
[25] Counsel for the Appellant
stated that the Appellant objected to the Respondent’s pleadings as early as
2006. She referred to the decision of Chief Justice Bowman in Kossow v. The
Queen5.
[26] The Appellant did file a Notice
of Motion dated February 17, 2006. I have reviewed the Motion and Chief Justice
Bowman’s Order and Reasons for the Order. None of these documents support
counsel’s assertion that the Appellant objected to the Respondent’s pleadings
at an earlier date. The Motion on February 17, 2006 was for a “determination,
before hearing, of a question of law, or a question of mixed law and fact
raised by a pleading”. The question as stated by Chief Justice Bowman and his
reasons for dismissing the Motion were as follows:
[12] The only
thing I have to decide is whether the first ground of assessing (no
gift/material benefit) constitutes a separate and discrete question that can be
answered ahead of the trial.
[13]
I do not think the first basis of assessment should be severed from the rest of
the case and dealt with separately. I say this for several reasons.
(a) Whether the making of the donation
entailed a corresponding benefit to the appellant involves a substantial
factual issue that can best be dealt with by the trial judge in the context of
the overall hearing.
(b) It is inappropriate for me, as a
motions judge, to set the matter down for determination before one judge and
have that judge's determination tie the hands of the judge who hears the other
issues (sham and GAAR). The factual and legal issues in the first question are
inextricably bound up with those in the second and third bases. One judge
should be free to deal with all issues at one sitting.
(c) A decision on the question that the
appellant wants to have heard as a preliminary matter under Rule 58 will not be
determinative of the entire case. The other two grounds will require
adjudication. Therefore, there will be no appreciable shortening of the trial.
(d) The first ground (no gift/material
benefit) is something up on which both parties should hold discoveries. To try
to determine the question in the abstract without a factual underpinning is in
my view premature.
[14]
A number of authorities were cited by both counsel. Some preceded the amendment
to Rule 58. To some extent the court's discretion must in part be based on
convenience, efficiency and fairness. The court has as much of an interest as
the parties in having cases dealt with expeditiously. I do not, however, think
that splitting the case into separate adjudications achieves that result.
[27] The Appellant filed an
Amended Notice of Appeal after she was made aware of the pleadings in
paragraphs 34, 35, and the subparagraphs of 39 that she now wishes to strike.
She did not complain of the pleadings at that time or at anytime until the
present motion. The Appellant pleaded over the Reply and in my opinion this
implied that she accepted the irregularities and the pleadings in these
paragraphs.6
[28] The conclusions of law that
the Appellant seeks to strike from the Respondent’s pleadings speak to the
reassessment of the 2002 taxation year made on September 9, 2005.
[29] The Appellant has taken
several fresh steps since she knew or ought to have known of the irregularities
and the pleadings that she now seeks to strike. The Appellant’s counsel
conducted the examination for discovery of the Respondent’s nominee, Salvatore
Tringali, on January 17, 18, 19, 22 and 23, 2007. Subsequent to this, on
February 13, 2007, Appellant’s counsel sent a list of 10 questions to the
Respondent. These questions related to all the assumptions in the
Respondent’s pleadings including those that the Appellant now seeks to strike
out. The Respondent answered these questions by letters dated April 20, April
30, May 1, and June 8, 2007. The Appellant was not satisfied with the responses
to questions 3, 4, 5, 6 and 10 and she filed a Notice of Motion dated October
11, 2007 pursuant to section 4 of the Rules to compel the Respondent to
provide detailed, complete and responsive answers, in writing, to these
questions. Justice Campbell Miller heard the motion on November 20, 2007. His
Order was as follows:
1. The Appellant’s motion with respect
to compelling the Respondent to provide detailed, complete and responsible
answers is dismissed;
2. The Appellant’s motion with respect
to full disclosure is allowed, and the Respondent is to make full disclosure
pursuant to Rule 82 by January 31, 2008, but such disclosure does not apply to
documents relating specifically to donor taxpayers other than the Appellant,
nor to Canada Revenue Agency generated documents other than already disclosed
pursuant to Rule 81;
3. The Appellant is to make full
disclosure pursuant to Rule 82 by December 14, 2007;
4. Further examinations
for discovery, if required as a result of full disclosure, are to be completed
within six weeks of receipt by the Appellant of the Respondent’s full
production, on the understanding that the Appellant will require no more than
five further days of discovery; if the Appellant requires more than five days,
she is required to obtain a Court Order to that effect;
5.
The Respondent’s motion is allowed and the Appellant will attend
on examination for discovery on November 28, 2007; if a second day is
necessary, the Appellant will attend on a day prior to December 31, 2007 and to
be determined by the parties;
6.
The hearing of this appeal is scheduled
to commence on Monday, June 16, 2008, at 9:30 a.m., for two (2) consecutive
weeks, at the Tax Court of Canada, Federal Judicial Centre, 180 Queen Street
West, 6th floor, Toronto, Ontario.
7.
A case management teleconference will be held on
Wednesday, January 16, 2008, at 1:00 p.m.
8.
Costs of these motions will be in the cause.
[30] The Appellant did have five
additional days in April, 2008 to discover the Respondent’s nominee.
[31] The Appellant has not met
either provision in Rule 8.7 The motion to strike was
not brought within a reasonable time after she knew or ought to have known of
the irregularities and the pleadings as a whole and she has taken several fresh
steps after obtaining knowledge of the irregularities and the pleadings as a
whole.
[32] The Appellant’s motion to
strike is
dismissed.
(c)
Onus of Proof
[33] The Reply is 37
pages in length plus a schedule titled Ideas Leveraged Donation Scheme. There
are 138 pleaded assumptions and many of these assumptions refer to the Scheme,
the parties involved in the Scheme and their dealings with each other.
[34] The Appellant
acknowledged that it is trite law that in tax litigation matters the onus is on
the taxpayer to demolish the assumptions of fact made by the Minister.8
In her memorandum she stated that the rule respecting ministerial assumptions
is “a matter of policy in light of the common-sense proposition that the
material facts underlying an assessment are peculiarly within the knowledge of
the taxpayer and not the Minister”. She argued that the rule ought not and does
not extend to facts assumed by the Minister that an Appellant could not
reasonably or practically be expected to either prove or disprove.9
[35] It is the
Appellant’s position that the decision in Johnson10 was
not intended to cover the present situation where the majority of the
assumptions relate to third parties, their dealings with each other and a
Scheme.
[36] The Appellant
relied on this court’s decision in Redash Trading Inc. v. Canada11
to assert that facts which are peculiarly within the knowledge of the
Minister do not carry a presumption of correctness that the taxpayer has to
disprove. Further, she argued, the Federal Court of Appeal’s decision in Transocean
Offshore Ltd. v. Canada12 has recognized that fairness requires
that no onus be cast on a taxpayer respecting facts solely within the
Minister’s knowledge.
[37] In conclusion
the Appellant relied on Chief Justice Bowman’s decision in Gould v. Canada13
where he stated that the Minister likely bears the onus of proof regarding
these allegations about third parties and their dealings.
[38] The appeal in Gould
is similar to the present appeal and the Minister’s pleadings are almost
identical to his pleadings in the present appeal. In that appeal, Chief Justice
Bowman refused to strike portions of the Reply including those paragraphs that
dealt with third parties. His reasoning was as follows:
21 With
respect, I am unable to ascribe to either the Status-One decision or the
case which it followed, The Queen v. Global Communications Limited,
97 DTC 5194, the effect contended for by counsel for the appellant. A
central component in the assessment which disallowed the charitable donations
is the existence of a “scheme” in which it is alleged that the appellant
participated and which enabled the participants to obtain what the Crown sees
as artificial or inflated charitable tax credits. It of necessity involved
third parties and if the existence of a scheme is essential to the Crown’s case
it should be able to plead and prove all of the components of the scheme. To
say, as the appellant does, that Global and Status-One preclude
any reference to third party transactions unless the appellant knows of or is
privy to those transactions goes too far. If the existence of a scheme is
germane to the disallowance it cannot be ignored whether or not the Minister
assumed that the appellant knew about or was a party to the third party
transactions that, according to the Reply, were an integral part of the scheme.
If any of the facts assumed are truly within only the Crown’s knowledge the
Crown probably has the onus of proving them although this is ultimately for the
trial judge to decide.
Analysis
[39] The initial onus of disproving the Minister’s
assumptions is on the Appellant.14 As stated by Justice L'Heureux-Dubé:
92 It
is trite law that in taxation the standard of proof is the civil balance of
probabilities: Dobieco Ltd. v. Minister of National Revenue, [1966]
S.C.R. 95 (S.C.C.), and that within balance of probabilities, there can be
varying degrees of proof required in order to discharge the onus, depending on
the subject matter: Continental Insurance Co. v. Dalton Cartage Ltd.,
[1982] 1 S.C.R. 164 (S.C.C.); Pallan v. Minister of National Revenue
(1989), 90 D.T.C. 1102 (T.C.C.) at p. 1106. The Minister, in making
assessments, proceeds on assumptions (Bayridge Estates Ltd. v. Minister of
National Revenue (1959), 59 D.T.C. 1098 (Can. Ex. Ct.), at p. 1101) and the
initial onus is on the taxpayer to "demolish" the Minister's
assumptions in the assessment (Johnston v. Minister of National Revenue,
[1948] S.C.R. 486 (S.C.C.); Kennedy v. Minister of National Revenue
(1973), 73 D.T.C. 5359 (Fed. C.A.), at p. 5361). The initial burden is only to
"demolish" the exact assumptions made by the Minister but no
more:First Fund Genesis Corp. v. R. (1990), 90 D.T.C. 6337 (Fed. T.D.),
at p. 6340.
[40] It is premature for the
Appellant to ask that the onus of proof for the allegations of fact with
respect to third parties be shifted to the Respondent. This is a decision that
should ultimately be made at the hearing by the trial judge.15
[41] In Tolley v. The Queen16,Justice
Bell, as he then was, succinctly explained his decision in Redash, to
the effect that the onus of proof will be addressed at trial once the Appellant
has initially demolished the assumptions of the Respondent:
86. In Redash
Trading Incorporated (supra) I discussed at length the effect of
no evidence being adduced by the Respondent in a situation where the onus had
clearly shifted to the Respondent. I refer to that entire discussion and
conclusion on this matter. Specifically, I set out here statements from Hickman
Motors Ltd. v. Canada, [1997] 2 S.C.R. 336 where the Supreme Court of
Canada stated:
As I have noted,
the appellant adduced clear, uncontradicted evidence, while the respondent did
not adduce any evidence whatsoever. In my view, the law on that point is well
settled, and the respondent failed to discharge the burden of proof ...
The law is
settled that unchallenged and uncontradicted evidence "demolishes" the
Minister's assumptions: ... As stated above, all of the Appellant's evidence in
the case at bar remained unchallenged and uncontradicted ...
Where the
Minister's assumptions have been "demolished" by the appellant, the
onus ... shifts to the Minister to rebut the prima facie case
made out by the appellant and to prove the assumptions.
and
Where the burden
has shifted to the Minister, and the Minister adduces no evidence whatsoever,
the taxpayer is entitled to succeed.
The
Respondent has simply not responded to the shifted onus in this case.
[42] Counsel for the
Appellant stated that the Appellant testified at the examination for discovery
that she did not know the third parties referred to in the Minister’s
pleadings. Counsel specifically referred to excerpts of the discovery examination
of Kathryn Kossow which were contained in the affidavit of Michelle Julfs, an
employee of Richler & Tari. The Respondent objected to this use of the
discovery transcript.
[43] The use of
discovery evidence at the hearing of a motion is contained in Rule 75:
75. On
the hearing of a motion an examination for discovery in the proceeding may be
used in evidence and section 100 applies with necessary modifications.
100(1). At the hearing, a party may read into
evidence as part of that party’s own case, after that party has adduced all of
that party’s other evidence in chief, any part of the evidence given on the
examination for discovery of
(a) the adverse
party, or
(b) a
person examined for discovery on behalf of or in place of, or in addition to
the adverse party, unless the judge directs otherwise,
if
the evidence is otherwise admissible, whether the party or person has already
given evidence or not.
(1.1) The judge may, on request, allow the part of
evidence referred to in subsection (1) to be read into evidence at a time other
than that specified in that subsection.
(2) Subject to the provisions of the Canada Evidence
Act, the evidence given on an examination for discovery may be used for the
purpose of impeaching the testimony of the deponent as a witness in the same
manner as any previous inconsistent statement by that witness.
(3) Where only part of the evidence given on an
examination for discovery is read into or used in evidence, at the request of
an adverse party the judge may direct the introduction of any other part of the
evidence that qualifies or explains the part first introduced.
(3.1) A party who seeks to read into evidence under
subsection (1) or who requests the judge to direct the introduction of evidence
under subsection (3) may, with leave of the judge, instead of reading into
evidence, file with the Court a photocopy or other copy of the relevant
extracts from the transcripts of the examination for discovery, and when the
copy is filed such extracts shall form part of the record.
(4) A party who reads into evidence as part of that
party’s own case evidence given on an examination for discovery of an adverse
party, or a person examined for discovery on behalf of or in place of or in
addition to an adverse party, may rebut that evidence by introducing any other
admissible evidence.
(5) The evidence given on the examination for discovery
of a party under disability may be read into or used in evidence at the hearing
only with leave of the judge.
(6) Where a person examined for discovery,
(a) has died,
(b) is unable
to testify because of infirmity or illness,
(c) for
any other sufficient reason cannot be compelled to attend at the hearing, or
(d)
refuses to take an oath or make an affirmation or to answer any proper
question,
any
party may, with leave of the judge, read into evidence all or part of the
evidence given on the examination for discovery as the evidence of the person
examined, to the extent that it would be admissible if the person were testifying
in Court.
(7) In deciding whether to grant leave under subsection
(6), the judge shall consider,
(a) the extent
to which the person was cross-examined on the examination for discovery,
(b) the
importance of the evidence in the proceeding,
(c) the general
principle that evidence should be presented orally in Court, and
(d) any other
relevant factor.
(8) Where an appeal has been
discontinued or dismissed and another appeal involving the same subject matter
is subsequently brought between the same parties or their representatives or
successors in interest, the evidence given on an examination for discovery
taken in the former appeal may be read into or used in evidence at the hearing
of the subsequent appeal as if it had been taken in the subsequent appeal.
[44] Neither Rule 75 nor Rule
100 allows a party to read its discovery examination into evidence at the
hearing of a motion and have that testimony accepted. The Appellant was not
cross-examined for credibility at the examination for discovery17.
The Appellant could not be cross-examined on the affidavit filed with this
motion as it was not her affidavit18. The discovery transcript
cannot be used at this motion by the Appellant to establish that she had no
knowledge of the third parties referred to in the Minister’s pleadings.
[45] The decision of whether the
onus of proof should be shifted to the Minister for certain of the assumptions
of fact is a decision that should be made by the trial judge. The following
portions from Mungovan v. The Queen19 are relevant to
this motion:
[10] Assumptions
are not quite like pleadings in an ordinary lawsuit. They are more in the
nature of particulars of the facts on which the Minister acted in assessing. It
is essential that they be complete and truthful. The conventional wisdom is
they cast an onus upon an appellant and as Mr. Mungovan observes with some
considerable justification they may force him to endeavour to disprove facts
that are not within his knowledge. Superficially this may be true, but this is
a matter that can be explored on discovery. The trial judge is in a far better
position than a judge hearing a preliminary motion to consider what effect
should be given to these assumptions. The trial judge may consider them
irrelevant. He or she might also decide to cast upon the respondent the onus of
proving them. The rule in M.N.R. v. Pillsbury Holdings Ltd., 64 DTC
5184, is a rule of general application but it is not engraved in stone.
[12]
It is entirely possible, as Mr. Mungovan
points out, that some of the impugned assumptions are irrelevant. This is a
matter for the trial judge to determine after the evidence has been presented.
It is not a matter that can or should be determined on a preliminary motion to
strike. It may well be that the paragraphs contain allegations that lie
exclusively within the respondent's knowledge. It is a matter for the trial
judge to determine whether the onus should be cast upon the respondent to
establish them.
[14]
The trial judge may well decide that the
Crown has some onus that goes beyond the mere recitation of a bald assumption.
The weight to be put on these paragraphs is a matter for the trial judge, as is
the onus of proof. This is not, however, a reason for striking the paragraphs
before trial.
For these reasons, the motion
to shift the onus of proof to the Minister is dismissed.
2.
Refusal
Motion
[46] This portion of the
Appellant’s motion is for an order that the Respondent provide answers to
certain undertakings and questions refused to be answered at the examination
for discovery of the Respondent’s nominee. The grounds relied on by the
Appellant are as follows:
1. An examination for discovery is
intended to render the trial process more fair and efficient by allowing each
party to fully inform itself of the precise nature of the opposing party’s
position and evidence.
2. The scope of questioning on discovery
ought to be liberal; any error which unduly restricts the scope of discovery
may lead to serious prejudice to the examining party.
3. The Respondent’s answers to
undertakings include failures to answer, incomplete, non-responsive and
otherwise ambiguous answers and improper refusals.
4. The Appellant was denied a full and
fair examination for discovery of the Respondent.
5. Rules 93, 95, 107, 108, and
110 of the General Procedure Rules.
Appellant’s
Position
[47] The Appellant provided
written points of argument in support of her motion. The salient points are:
1. The Federal Court of Appeal in Basserman
v. Canada (1994), 114 D.L.R. (4th) 104 (FCA) has recognized the
distinction between documents which are relevant to matters in issue and
documents which relate to any matter in question. The latter entails the widest
possible scope:
It is not necessary that they be relevant to any
issue to be resolved in the litigation, only that they relate to a matter in
question. The appellant's submissions to us as to their potential relevance are
simply not to the point at this stage.
2. While the words “relating to”
necessarily impart an element of relevance, relevance in discovery is a low
threshold, unlike relevance at trial.
Owen
Holdings Ltd. v. Canada, 97 D.T.C. 5401 (FCA)
3. Relevance on discovery is to be
liberally construed and a motions judge ought not to second guess the
discretion of counsel by minutely examining each question or requiring a party
to explain the relevance, unless the question is patently irrelevant or
abusive.
Baxter v.
Canada, 2004 D.T.C. 3497 (TCC)
4. Questions clarifying the party’s
legal position are proper as are questions about the facts which underlie a
particular allegation in a pleading.
Sandia
Mountain Holdings Inc. v. Canada, 2005 D.T.C. 206 (TCC)
Respondent’s
Position
[48] In the Appellant’s motion under Schedule “B” (which is attached
to these reasons) the refusals are listed in two categories: “non-responsive,
incomplete, vague and ambiguous answers” and “improper refusals”. In his
opening statement counsel for the Respondent stated that it was not until the
hearing of this motion that he knew the exact grounds for the Appellant’s
motion with respect to the improper refusals. He was not aware that the
Appellant was challenging his claim to litigation privilege, solicitor client
privilege, taxpayer confidentiality and informant privilege. He stated that if
he had known of this particular complaint, he would have submitted sealed
evidence for my review.
[49] The Respondent categorized
the questions that are in issue as:
(a)
questions the Respondent has already answered;
(b)
questions concerning litigation privilege;
(i)
questions on how the Respondent’s list of documents was prepared;
(ii) questions on whether the
Respondent should be obliged to allocate documents to a particular assumption;
(iii) questions concerning the
facts that the Respondent relies on in support of a particular assumption;
(iv) questions on the source or
author of documents that were acquired after litigation began;
(c)
questions of law;
(d)
questions concerning the Canada Revenue Agency.
[50] He relied on the decision
in Baxter v. Canada20 where Chief Justice Bowman
summarized the principles concerning relevancy of questions in an examination
for discovery as:
(a)
Relevancy on discovery must be broadly and
liberally construed and wide latitude should be given;
(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;
(c)
The motions judge should not 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;
(d)
Patently irrelevant or abusive questions or
questions designed to embarrass or harass the witness or delay the case should
not be permitted.
[51] Respondent’s counsel cited the decision in Blank v. Canada (Minister of Justice)21 for the definition of
litigation privilege. The relevant passages are below.
27 Litigation privilege, on the other hand, is not
directed at, still less, restricted to, communications between solicitor and
client. It contemplates, as well, communications between a solicitor and
third parties or, in the case of an unrepresented litigant, between the
litigant and third parties. Its object is to ensure the efficacy of the
adversarial process and not to promote the solicitor-client relationship.
And to achieve this purpose, parties to litigation, represented or not, must be
left to prepare their contending positions in private, without adversarial
interference and without fear of premature disclosure.
32 Unlike
the solicitor-client privilege, the litigation privilege arises and operates even
in the absence of a solicitor-client relationship, and it applies
indiscriminately to all litigants, whether or not they are represented by
counsel: see Alberta (Treasury Branches) v. Ghermezian (1999), 242 A.R. 326,
1999 ABQB 407. A self-represented litigant is no less in need of, and
therefore entitled to, a “zone” or “chamber” of privacy. Another
important distinction leads to the same conclusion. Confidentiality, the sine
qua non of the solicitor-client privilege, is not an essential component of the
litigation privilege. In preparing for trial, lawyers as a matter of
course obtain information from third parties who have no need nor any
expectation of confidentiality; yet the litigation privilege attaches
nonetheless.
34
The purpose of the litigation privilege, I repeat, is to create a “zone of
privacy” in relation to pending or apprehended litigation. (Emphasis added.)
[52] With respect to whether it
was appropriate for the Appellant to ask what facts the Respondent relied on to
prove the allegations in the pleadings, the Respondent relied on Justice
Campbell Miller’s decision in Sandia Mountain Holdings Inc. v. The Queen22
where he stated:
19(iii)
Facts relied on to prove or disprove allegations:
Justice Campbell in Six Nations confirms that these types of questions are
common place in Ontario, notwithstanding the views of
the Alberta Court of Appeal in Can-Air. Different rules. Justice Hugessen made
a distinction in Montana between improperly asking what
evidence a witness has to support an allegation, and properly asking what facts
were within the witness's knowledge to underlie a particular allegation. This
is a fine distinction. One approach goes to getting the witness to determine
what proof is required, which would not be proper. The other approach of asking
for facts underlying an allegation is limited solely to fact-gathering and is
proper. Semantics may play too significant a role in making this distinction,
yet the distinction is real: questions aimed at getting a witness to confirm
that certain facts are proof of certain allegations are out; questions arrived
at getting the witness to divulge relevant facts in connection with an
allegation are in.
[53] With
respect to questions of law, the Respondent stated that it is proper to ask
what the Respondent’s legal position is23 but it is not proper to
ask a question that seeks an opinion on what the law is24.
[54] Respondent’s
counsel stated that the Minister’s mental process25 in raising a
reassessment is not an issue in an appeal nor are the actions of the CRA
officers26 relevant in an appeal.
Analysis
[55] The
main provisions of the Rules which relate to pre-trial document
disclosure and examination for discovery read as follows:
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
a judgment directing that each party shall file and serve on each other party a
list of all the documents which are or have been in that party’s possession,
control or power relating to any matter in question between or among them in
the appeal.
Examination for Discovery
92. An
examination for discovery may take the form of an oral examination or, at the
option of the examining party, an examination by written questions and answers,
but the examining party is not entitled to subject a person to both forms of
examination except with leave of the Court.
Scope of Examination
95. (1) 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 proceeding
[56] The
application of the Rules to the motion depends on the meaning of the
phrases “relating to any matter in question…in the appeal” and “relating to any
matter in issue in the proceeding”.
[57] The
test for documentary discovery was stated by Justice Rip, as he then was, in Owen
Holdings Ltd. v. The Queen27 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.
[58] According
to Rule 95(1) a question is proper if it relates to any matter in issue.
This has been interpreted as meaning that the question must be relevant to the
issues in the action as defined by the pleadings.28 Likewise,
whether a document is relevant to any matter in question in the appeal also
depends upon the pleadings.29
[59] The issues raised by the Reply in this appeal are:
a)
whether the Minister correctly reassessed the Appellant’s tax liability for her
2000, 2001 and 2002 taxation years on the basis that alleged donation amounts
of $50,000, $60,000 and $50,000, respectively were not gifts within the meaning
of subsection 118.1(1);
b) whether the alleged loans to the
Appellant by Talisker were shams; and
c) whether the general
anti-avoidance rule is applicable in the circumstances.
[60] A summary of the general principles from the
caselaw is as follows:
1. The
principles for relevancy were stated by Chief Justice Bowman and are reproduced
at paragraph 50.
2. The
threshold test for relevancy on discovery is very low but it does not allow for
a “fishing expedition”: Lubrizol Corp. v. Imperial Oil Ltd.30
3. It
is proper to ask for the facts underlying an allegation as that is limited to
fact-gathering. However, it is not proper to ask a witness the evidence that he
has to support an allegation: Sandia Mountain Holdings Inc. v. The Queen. 31
4. It
is not proper to ask a question which would require counsel to segregate
documents and then identify those documents which relate to a particular issue.
Such a question seeks the work product of counsel: SmithKline Beecham Animal
Health Inc. v. The Queen. 32
5. A
party is not entitled to an expression of the opinion of counsel for the
opposing party regarding the use to be made of documents: SmithKline Beecham
Animal Health Inc. v. The Queen. 33
6. A
party is entitled to have full disclosure of all documents relied on by the
Minister in making his assessment: Amp of Canada v. Canada. 34
7. Informant
privilege prevents the disclosure of information which might identify an
informer who has assisted in the enforcement of the law by furnishing assessing
information on a confidential basis. The rule applies to civil proceedings as
well as criminal proceedings: Webster v. The Queen. 35
8. Under
the Rules a party is not required to provide to the opposing party a
list of witnesses36. As a result a party is not required to provide
a summary of the evidence of its witnesses or possible witnesses: Loewen v.
the Queen.37
9. It
is proper to ask questions to ascertain the opposing party’s legal position: Six
Nations of the Grand
River Band
v. Canada.38
10. It
is not proper to ask questions that go to the mental process of the Minister or
his officials in raising the assessments: Webster v. The Queen.39
[61] Prior
to making my decision on the propriety of the questions, I wish to address
counsel for the Respondent’s concern regarding those instances where he has
objected to a question on the basis of litigation privilege, solicitor client
privilege, informant privilege and taxpayer confidentiality.
[62] The Notice of Motion
and the Motion Record were not specific regarding the Appellant’s complaint
with respect to the instances she stated were “failures to answer, incomplete,
non-responsive and otherwise ambiguous answers and improper refusals”. The
Appellant did not rely on Rule 88 as a ground for this portion of the
motion nor has she brought any evidence to show that the claim of privilege was
improperly made. Unless there is some basis on the face of the material before
me to suggest that the Respondent’s objections are improper, I will allow his
objections to stand.40
[63] The questions that
are in issue are attached hereto as Schedule “B”. However, in my decision that
follows I will refer to the questions as they were listed in the chart provided
by Appellant’s counsel at the hearing of this motion. I have referred to the
question by its number in the discovery transcript and page in the motion
record.
A. Question about the CRA’s
treatment, taxation and review of other parties in the alleged scheme
|
|
Motion Page
|
Question Number
|
Decision
|
|
1.
|
244-247
|
3647-3652
|
The question is proper and it must be answered
|
|
2.
|
308-310
|
4646-4648
|
The question is proper and it must be answered
|
|
3.
|
252-253
|
3845
|
The Respondent has claimed litigation privilege for all
documents listed in Schedule “B” to the affidavit of documents. Based on my
prior statements, the Respondent’s claim of litigation privilege stands.
|
|
4.
|
254-256
|
3873
|
Same as 3.
|
|
5.
|
|
3874
|
Same as 3.
|
B. Questions about the
Productions
|
|
Motion Page
|
Question Number
|
Decision
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|
6.
|
194-195
|
2696
|
The Respondent has answered this question. See motion
record at page 562.
|
|
7.
|
370-371
|
6551
|
The Respondent has claimed privilege to a portion of the
covering letter that was with the documents at tab 6551. The Respondent is to
state the type of privilege claimed.
|
|
8.
|
425-426
|
8819
|
The question has been answered.
|
|
9.
|
148-150
|
1479-1483
|
The Respondent has stated that the media articles are
located at tabs 1479 – 1483. The question has been answered. The Respondent
does not have to allocate the documents to the specific assumptions.
|
|
10.
|
154-156
|
1568
|
This question consisted of 21 parts.
- Question was answered. See page 536 of the motion
record.
- Question was answered. See page 537 of the motion
record.
- Question was answered. See page 538 of the motion
record.
- Question was answered. See page 538 of the motion
record.
- Question was answered. See page 539 of the motion
record.
- Question was answered. See page 539 of the motion
record.
- Question was answered. See page 539 of the motion
record.
- Question was answered. See page 540 of the motion
record.
9. to 21. The only material
placed before me with respect to these questions was a table of the exhibits
that Mr. Tringali had at his examination for discovery. From my review of
this material, the refusal to answer was proper. All documents in exhibit 5
were documents contained in the Appellant’s List. It is not apparent from
this table or the exchange between counsel at pages 154-156 that Mr. Tringali
and his team ever received the documents at exhibit 5 or that the documents
were in the Respondent’s List of Documents.
|
|
11.
|
227-228
|
3324
|
The question was answered at page 558-559 of the motion
record. The undertaking was given on January 23 and the answer given
satisfied that undertaking.
|
|
12.
|
154-156
|
1568
|
These are the same questions that appeared at line10.
|
|
13.
|
175-178
|
1992-1995
|
The request as stated by the Appellant in her chart is not
the exact request that appears at line 1992. The request made by Mr. Yoker
was “if there is any document we are going to refer to, we are
asking for a best efforts undertaking to identify the exact date the document
was received by the CRA.” It is a very important difference.
Prior to the request Mr. Tringali was asked if he knew
when a particular document was received by his team. He answered that he did
not know the specific date but that he knew it was prior to the proposal
letter being issued.
The question was answered.
It is sufficient that the Respondent disclose if a
document was received prior to the reassessment or after the reassessment.
See page 558 of the motion record where at question 3324 the Respondent
listed the documents not obtained by the audit team prior to the proposal
letter or prior to reassessment.
The request as framed in the Appellant’s chart and as it
appeared at page 545 of the motion record is overbroad.
|
|
14.
|
364-366
|
6521-6523
|
The request was to produce all the exhibits listed in
exhibit 9, tab 419. The Respondent stated that the exhibits are found at tabs
6522-23. See page 604-605 of the motion record. In its response the
Respondent stated that exhibits 10 and 11 will not be produced. He based his
objection on relevance and taxpayer confidentiality. There was no material
before me to show what documents were in exhibits 10 and 11. The respondent’s
objection stands.
|
|
15.
|
252-253
|
3845
|
Same as question 3.
|
|
16.
|
253
|
3873
|
Same as question 3.
|
|
17.
|
|
3874
|
Same as question 3.
|
|
18.
|
|
4601
|
The Respondent is not required to answer this question. It
involves the work product of counsel.
|
|
19.
|
375
|
6614
|
The question is not relevant.
|
C. Questions
about the Rule 82 affidavit.
|
|
Motion Page
|
Question Number
|
Decision
|
|
20.
|
427
|
8824
|
The question has been answered.
|
|
21.
|
427
|
8825
|
The Respondent stated at the hearing of the motion that
they have discovered additional documents that were not disclosed in
preparing the Rule 82 affidavit. It was not a deliberate attempt to not
disclose. Different counsel has worked on this file. The documents will be
provided.
|
D. Questions
about alleged informant privilege
|
|
Motion Page
|
Question Number
|
Decision
|
|
22.
|
258
|
3891
|
The questions to which the Respondent has objected on the
basis of informant privilege need not be answered.
|
|
23.
|
261-263
|
3906-3913
|
Same decision as in line 22.
|
|
24.
|
263
|
3914
|
Same decision as in line 22.
|
E. Questions
tending to shorten litigation.
|
|
Motion Page
|
Question Number
|
Decision
|
|
25.
|
264
|
3945
|
The Respondent does not have to give the Appellant a list
of the witnesses she intends to call at the trial. See Rule 95(4). The party
is only entitled to obtain disclosure of the names of persons who might
reasonably be expected to have knowledge of the transactions in issue.
|
|
26.
|
264
|
3948
|
This question is improper and need not be answered.
|
|
27.
|
416
|
8433
|
The question was answered at page 415 of the motion
record, line 8430.
|
|
28.
|
382-386
|
6724 to 6730
|
The question was answered. See page 606 of the motion
record.
|
|
29.
|
236-237
|
3557
|
The question does not have to be answered. Appellant’s
counsel stated that the document was a written proposal. It appears that the
document speaks for itself.
|
|
30.
|
250-251
|
3837-3840
|
The refusal to answer this question was based on
solicitor-client privilege. The refusal was proper.
|
|
31.
|
268
|
4368
|
The question was answered at page 269 of the motion
record, line 4372.
|
|
32.
|
366-369
|
6527
|
This is a proper question and if the Respondent has the
answer it is to provide it.
|
F. Questions
about the audit and audit process
|
|
Motion Page
|
Question Number
|
Decision
|
|
33.
|
433-434
|
9037
|
The question is not relevant and does not have to be
answered. At the hearing Appellant’s counsel stated that this question was an
attempt to find out if CRA had a protocol as to how these types of files were
handled. That may have been the intent but the question does not address her
intent.
|
|
34.
|
434
|
9040
|
The question is neither proper nor relevant and does not
have to be answered.
|
|
35.
|
193
|
2680-2682
|
The interview notes were produced. See page 580 of the
motion record.
|
|
36.
|
109-110
|
580-584
|
The answer to this undertaking appears at pages 583- 584
of the motion record. Any redactions based on relevance are to be disclosed.
The redactions and exclusions based on solicitor-client privilege and
taxpayer confidentiality do not have to be disclosed.
|
|
37.
|
111-112
|
600
|
The answer to this undertaking appears at pages 585-590 of
the motion record. Redactions based on relevance are to be disclosed.
Redactions and exclusions based on solicitor-client privilege, taxpayer
confidentiality and informant privilege do not have to be disclosed.
|
|
38.
|
113
|
603-605
|
The question is too broad and as worded it represents a
“fishing expedition”.
|
|
39.
|
166-167
|
1801, 1803
|
This question does not have to be answered. Any complaints
that were made are not relevant. This is not an issue that is raised in the
pleadings.
|
|
40.
|
167
|
1804-1814
|
This question is overly broad and represents a “fishing
expedition”.
|
|
41.
|
|
1831-1833
|
This question does not have to be answered. Any complaints
that were made are not relevant. This is not an issue that is raised in the
pleadings.
|
|
42.
|
170-171
|
1849-1850
|
The question has been answered.
|
|
43.
|
175-176
|
1992-1995
|
This question was answered at number 13 above. This
question was asked on January 19, 2007 and the undertaking was satisfied on
April 17, 2007.
|
|
44.
|
162-164
|
1795
|
This question does not have to be answered. Any complaints
that were made are not relevant. This is not an issue that is raised in the
pleadings.
|
|
45.
|
173
|
1861
|
This question is not relevant and does not have be
answered.
|
|
46.
|
225-226
|
3212
|
The question was answered at page 225 line 3208 of the
motion record. To ask the Respondent’s nominee to go to his notes to see
where else the assumption is recorded is a fishing expedition.
|
|
47.
|
238-239
|
3571
|
The question was answered. See the motion record page 591
and the answer for question 3567.
|
|
48.
|
238-239
|
3579
|
If this document has not already been produced, it must be
produced subject to taxpayer confidentiality.
|
|
49.
|
242-243
|
3586
|
If there is a document, it must be produced. If there is
no document then the Respondent is to answer how the CRA became aware that
the Appellant was a donor to Ideas Canada. Exact dates need only be given if
they are readily available.
|
|
50.
|
368-369
|
6538
|
Mr. Tringali said that he is almost certain he did not
make notes. The question has been answered.
|
|
51.
|
224
|
3158
|
The answer given was that the assumption was made in the
course of reassessing. In my opinion the answer is sufficient.
|
|
52.
|
219
|
3052-3054
|
Same as number 51.
|
|
53.
|
188
|
2189
|
This question does not have to be answered. To ask the
Respondent’s nominee to go through his notes to point out each time there is
a reference to a particular assumption is onerous and constitutes a fishing
expedition. There is nothing to be learned from this exercise.
|
G. Questions
about the Minister’s assertion that the appellant “knew” or was deemed to know
through a power of attorney and agency given to deliver a cheque and deal with
collateral security on a loan that was not part of the amounts disallowed by
the minister.
|
|
Motion Page
|
Question Number
|
Decision
|
|
54.
|
100-101
|
133-134
|
The Appellant is entitled to ask the Respondent’s nominee
what CRA’s legal position is with respect to the pledges. It is improper for
the Appellant to ask what CRA’s opinion is of the law as it relates to the
pledges in issue in this appeal. The question as framed is seeking CRA’s
opinion of the law. I find that the question is improper and it does not have
to be answered.
|
|
55.
|
106-107
|
350-351
|
The question has been answered. See page 533 of the motion
record.
|
|
56.
|
136-138
|
1207-1223
|
The question has been answered. See page 535 of the motion
record.
|
|
57.
|
139-144
|
1242-1247
|
The question has been answered. See page 535 of the motion
record.
|
|
58.
|
145-146
|
1358-1361
|
The question was answered at page 146 of the motion
record.
|
|
59.
|
153
|
1514-1516
|
The question was answered at page 536 of the motion
record. The Appellant is seeking to ask a follow up question to the answer
she received. The Appellant is not permitted to ask a follow up question. At
some point in time there must be an end of the discovery process to allow the
parties to prepare for the hearing of the appeal.
|
|
60.
|
208
|
3016
|
The question was answered in the chart provided by the
Respondent at page 498 of the motion record.
|
|
61.
|
208-212
|
3017
|
The question has been answered. See pages 498-505 of the
motion record.
|
H. Questions about the
Respondent’s position about matters other than the Appellant’s alleged knowledge
|
|
Motion Page
|
Question Number
|
Decision
|
|
62.
|
117-118
|
917
|
The question requires a legal opinion from the nominee and
as such it is improper.
|
|
63.
|
229
|
3360
|
This question does not arise from the pleadings and as
such it is improper.
|
|
64.
|
231-232
|
3389
|
The Appellant is seeking a legal opinion and not a
conclusion of law. The question is improper.
|
|
65.
|
359-360
|
5961
|
This question seeks a legal analysis from the Respondent
and is improper.
|
|
66.
|
376
|
6649
|
Same decision as was made at number 65.
|
|
67.
|
393-394
|
6996
|
The question as framed on page 393 of the motion record
asks for the relevancy of the assumption. My decision is the same as was made
at number 65.
|
|
68.
|
401
|
7334
|
Same decision as was made at number 65.
|
|
69.
|
402-403
|
7450
|
The question as framed requires a legal analysis and is
improper.
|
|
70.
|
404
|
7613
|
At the hearing Respondent’s counsel stated that this
question was answered at question 7471 of the transcript. I cannot make a
decision on this question as the material was not before me.
|
|
71.
|
411
|
8242
|
At page 411 and 412 of the motion record the Respondent’s
counsel stated that this question as it applied to the assumptions of fact in
paragraphs 41 and 43 were already answered. I accept that. The question at
8242 relates only to paragraph 58 in the “Grounds Relied on and Relief
Sought”. This question calls for a legal analysis and is improper.
|
|
72.
|
416-417
|
8433
|
The question was answered at page 415 question 8430 of the
motion record.
|
|
73.
|
415-417
|
8481
|
The question was answered at page 610 of the motion record.
|
|
74.
|
420
|
8552
|
This question requires legal argument from the Respondent
and is improper.
|
|
75.
|
|
8569
|
The question has been answered according to the answer
supplied in the Appellant’s chart.
|
I. Questions about the basis
of the assessment
|
|
Motion Page
|
Question Number
|
Decision
|
|
76.
|
123
|
1093-1095
|
The question has been answered.
|
|
77.
|
225
|
1133
|
The question has been answered.
|
|
78.
|
129
|
1134
|
The question has been answered.
|
|
79.
|
129-130
|
1135-1138,1140-1144
|
The questions have been answered.
|
|
80.
|
134-135
|
1200
|
The answer to this question requires the work product of
counsel and as such the question is improper.
|
|
81.
|
148-150
|
1479,1483
|
Same decision as number 9 herein.
|
|
82.
|
178-179
|
1996-2005
|
Same decision as number 51 herein.
|
|
83.
|
180-181
|
2035-2036
|
The Appellant admitted that the answer given was
satisfactory.
|
|
84.
|
184-185
|
2156-2157
|
Same as number 83 herein.
|
|
85.
|
187
|
2172
|
Same as number 83 herein.
|
|
86.
|
189-190
|
2645
|
The answer to this question requires the work product of
counsel and as such the question is improper.
|
|
87.
|
191-192
|
2675
|
The answer to this question requires the work product of
counsel and as such the question is improper.
|
|
88.
|
196
|
2705
|
My decision is the same as that at number 87 herein.
|
|
89.
|
197-199
|
2885
|
The question has been answered.
|
|
90.
|
203-204
|
2948
|
The answer to this question requires the work product of
counsel and as such the question is improper.
|
|
91.
|
199-202
|
2888-2992
|
The answer to this question requires the work product of
counsel and as such the question is improper.
|
|
92.
|
220
|
3089
|
The Appellant is seeking proof of a legal position and as
such the question is improper.
|
|
93.
|
220-221
|
3099
|
The question has been answered.
|
|
94.
|
|
3125-3137
|
The answer to this question requires the work product of
counsel.
|
|
95.
|
231-232
|
3391-3395
|
The question has been answered.
|
|
96.
|
265
|
4222
|
The Appellant is seeking proof of the Respondent’s legal
position. The question is improper. It was noted at the hearing that counsel
for the Appellant rephrased this question (See the question at 4223) and this
new question was answered. See Tab F of Sabrina Esty’s affidavit.
|
|
97.
|
268
|
4368
|
See line 31 herein.
|
|
98.
|
301-303
|
4539-4546
|
The document speaks for itself. There is no need for the
Respondent’s nominee to answer this question.
|
|
99.
|
305-306
|
4582
|
Same decision as line 98.
|
|
100.
|
244-247
|
4646-4648
|
I have dealt with this question at line 1 herein.
|
|
101.
|
311-312
|
4777
|
The question has been answered. See page 312, question
4779 in the motion record.
|
|
102.
|
322-323
|
5216
|
The Respondent has stated that it will answer this
question as it is phrased at question 5214.
|
|
103.
|
347-348
|
5827
|
The Respondent has stated that it will answer this
question.
|
|
104.
|
362-363
|
6244
|
The question has been answered. To require Mr. Tringali to
have to do a further review of his review is onerous and not necessary. He
answered counsel’s question.
|
|
105.
|
367-369
|
6527
|
See my decision at number 32 herein.
|
|
106.
|
406-408
|
7686
|
M. Tringali was prepared to answer this question at the
discovery. Appellant’s counsel wanted an undertaking. Respondent’s counsel
refused to give an undertaking on the basis that the answer could be given at
that time. It is my opinion that Appellant’s counsel has missed the
opportunity to have the question answered.
|
|
107.
|
422-424
|
8589
|
This question relates to paragraph 58 which is in the
section of the Reply titled “Grounds Relied on Relief Sought”. As such the
question seeks a legal analysis and is improper.
|
J. Takes
the position that the minister can raise alternate allegations to those on
which the minister based the assessment and not disclose the basis on which the
respondent makes those allegations.
|
|
Motion Page
|
Question Number
|
Decision
|
|
108.
|
215-217
|
3037
|
The answer to this question would require the work product
of counsel. The question is improper.
|
|
109.
|
220-221
|
3089
|
The Appellant has withdrawn its request to have this
question answered.
|
|
110.
|
313-314
|
4957
|
My decision is the same as that in number 108.
|
|
111.
|
316-317
|
5169
|
My decision is the same as that in number 108.
|
|
112.
|
318-319
|
5177
|
Mr. Tringali answered the questions with respect to this
allegation and the documents relied on at the time of the audit. Question
5177 as framed requires the work product of the Respondent and litigation
privilege was properly claimed.
|
|
113.
|
324
|
5224
|
The question as framed requires the work product of
counsel. It is an improper question.
|
|
114.
|
325
|
5255
|
Same decision as 113.
|
|
115.
|
326-327
|
5281
|
Same decision as 113.
|
|
116.
|
328-329
|
5329
|
Same decision as 113.
|
|
117.
|
333
|
5487
|
Same decision as 113.
|
|
118.
|
334
|
5500
|
Same as decision 113.
|
|
119.
|
335
|
5525
|
Same as decision 113.
|
|
120.
|
336
|
5575
|
Same as decision 113.
|
|
121.
|
337
|
5582
|
Same as decision 113.
|
|
122.
|
338
|
5622
|
Same as decision 113.
|
|
123.
|
339
|
5624
|
Same as decision 113.
|
|
124.
|
344-345
|
5800
|
Same as decision 113.
|
|
125.
|
346
|
5808
|
Same as decision 113.
|
|
126.
|
349-350
|
5836
|
Same as decision 113.
|
|
127.
|
351-352
|
5856
|
Same as decision 113.
|
|
128.
|
353
|
5874
|
The question that appears at 5874 is not the same question
which the Appellant has listed in her chart. The question at 5874 on page 353
of the motion record would require the work product of counsel for the
Respondent. It is an improper question,
|
|
129.
|
354
|
5882
|
Same as decision 113.
|
|
130.
|
355
|
5884
|
Same as decision113.
|
|
131.
|
357
|
5926
|
Same as decision 113.
|
|
132.
|
373
|
6563
|
The question at 6563 in the motion record is not the same
question as appears on the Appellant’s chart. The Respondent refused to
allocate documents to the assumption at 39(kk). It is a proper refusal. The
Respondent stated that Mr. Tringali could answer the question as to the
facts, information and belief that relates to this assumption.
|
|
133.
|
376
|
6647
|
The Respondent refused to allocate documents to the
assumption at 39(ll). It is a proper refusal. Mr. Tringali did answer the
question with respect to the facts, information and belief.
|
|
134.
|
379
|
6679
|
The question as it appears at 6679 of the motion record
was answered at page 606 of the motion record.
|
|
135.
|
381
|
6713
|
Same as decision 113.
|
|
136.
|
387
|
6746
|
The situation and decision is the same as that at 133
except that it is with respect to assumption 39(oo).
|
|
137.
|
389
|
6755
|
Same as decision 113.
|
|
138.
|
390
|
6846
|
Same as decision 113.
|
|
139.
|
391
|
6909
|
Same as decision 113.
|
|
140.
|
392
|
6960
|
Same as decision 113.
|
|
141.
|
395
|
7049
|
Same as decision 113.
|
|
142.
|
397
|
7094
|
Same as decision 113.
|
|
143.
|
400
|
7192
|
Same as decision 113.
|
|
144.
|
409
|
7802
|
Same as decision 113.
|
|
145.
|
410
|
8129
|
The question as framed requires a legal analysis and thus
the work product of counsel. It is an improper question.
|
[64] The Appellant has also requested that the Respondent
be directed to file a further affidavit of documents pursuant to Rule 82
and that the Respondent’s nominee reattend for a continuation of the discovery.
[65] Both of these requests are refused. There has been
extensive discovery in this appeal. The Respondent’s nominee has been examined
for ten days. As well the Respondent has answered interrogatories in an attempt
to expedite matters. I note that there was never a court order pursuant to Rule
92 that entitled the Appellant to both oral and written discovery.
[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.
[67] At the hearing of this motion counsel for the
Respondent stated that there were documents that through inadvertence had not
been given to the Appellant. He stated that these documents will be given to
the Appellant. If the documents have not already been provided then I order
that they be provided by August 1, 2008.
[68] The Respondent is to provide written answers to
the refusals as indicated in these reasons. The answers are to be provided by
August 8, 2008. Any questions arising from the additional documents are to be
sent to the Respondent by August 15, 2008. They are to be answered by August 29,
2008.
[69] While the Appellant has achieved some
success in this motion, it was very minor. The Respondent is to have its costs
payable forthwith.
Signed at Ottawa, Canada, this 18th day of July 2008.
“V. A. Miller”
Endnotes
1.
[2001] T.C.J. No. 774, 2002 D.T.C.
1204.
2.
See Kulla v. The Queen, 2005
TCC 136; Foss v. The Queen, [2007] 4 CTC 2024.
3.
2004 FC 851, at para. 60 [Vogo].
4.
Imperial Oil Ltd. v. The Queen,
2003 TCC 46.
5.
2006 TCC 151.
6.
Vogo, supra note 3.
7.
Supra note 2.
8.
Johnston v. Canada
(Minister of National Revenue),
[1948] S.C.R. 486.
9.
William Innes and Hemamalini
Moorthy, "Onus of Proof and Ministerial Assumptions: The Role and
Evolution of Burden of Proof in Income Tax Appeals" (1998) 46 Can. Tax J.
1187 at 1209.
10.
Ibid.
11.
[2004] TCJ No. 317 [Redash].
12.
2002 DTC 5201 (FCA).
13.
[2005] TCJ No. 403 [Gould].
14.
Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336 at para. 92.
15.
Stanfield v. Canada, [2007] TCJ No. 160 paras. 42-45.
16.
2004 TCC 650 [Tolley].
17.
See Rule 95(1)(b).
18.
See Lana International Ltd. v.
Menasco Aerospace Ltd. (2000), 50 OR (3d) 97 (C.A.) at para.
36: “… Parties to a motion who wish to use their own
evidence must provide an affidavit and be subject to a full cross-examination.”
19.
2001 TCC 568, 2001 DTC 691 [Mungovan].
20.
[2005] 1 CTC 2001 (TCC) at para.
13 [Baxter].
21.
2006 SCC 39 [Bank].
22.
[2005] 2 CTC 2297 [Sandia Mountain Holdings].
23.
Six Nations of the Grand River
Band v. Canada (Attorney General), [2000] OJ No. 1431 at para. 14 [Six Nations].
24.
Sandia Mountain Holdings, supra
note 22, at para. 19.
25.
The Queen v. Riendeau, [1991] 2 CTC 64 (FCA) at para. 4 [Riendeau].
26.
Main Rehabilitation Co. v. The
Queen, 2004 FCA 40, at para. 8.
27.
[1997] 3 CTC 2286 [Owen
Holdings].
28.
Andersen v. St. Jude Medical
Inc., [2006] OJ No. 3659, 33 CPC (6th)
159 (Ont. Sup. Ct. Just.).
29.
Baxter, supra note 20 at para. 10; SmithKline Beecham Animal Health
Inc. v. the Queen, [2002] 4 CTC 93 (FCA) at para. 29.
30.
Lubrizol Corp. v. Imperial Oil
Ltd., [1997] 2 FC 3, at para. 19.
31.
Sandia Mountain Holdings, supra
note 22 at para. 19(iii).
32.
SmithKline Beecham Animal
Health Inc. v. The Queen, [2001] 2
CTC 2086 at para. 11.
33.
Ibid.
34.
Amp of Canada, Ltd. v. Canada, [1987] F.C.J. No. 149
35.
Webster v. The Queen, 2003 DTC 211, at para. 14.
36.
Singh v. The Queen, [2005] 4 CTC 2484 at para. 28.
37.
Loewen v. The Queen, [2007] 1 CTC 2151 at para. 14.
38.
Six Nations, supra note 23 and Sandia Mountain Holdings, supra note
22.
39.
Riendeau, supra note 25.
40. Privacy Commissioner
of Canada v. Attorney General of Canada, 2008 SCC 44 at para.17
CITATION: 2008TCC422
COURT FILE NO.: 2005-1974(IT)G
STYLE OF CAUSE: KATHRYN KOSSOW AND
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 16-17, 2008
REASONS FOR ORDER
BY: The Honourable Justice Valerie Miller
DATE OF ORDER: July 18, 2008
APPEARANCES:
|
Counsel for the
Appellant:
|
A. Christina Tari
|
|
Counsel for the
Respondent:
|
Arnold H. Bornstein
|
COUNSEL OF RECORD:
For the Appellant:
Name: A. Christina Rari
Firm: Richler
and Tari
Toronto, Ontario
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa, Canada
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