Docket: 91-509(IT)G,
91-1816(IT)G
91-1946(IT)G, 2004-2787(IT)G
BETWEEN:
LINDA LECKIE MOREL,
GEOFFREY D. BELCHETZ,
ALLAN GARBER,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motions
heard on July 8, 2008, and decision rendered orally
on July 23, 2008, at Toronto, Ontario
By: The Honourable
Justice E.A. Bowie
Appearances:
|
Counsel for the Appellants:
|
Howard
W. Winkler (July 8 and 22)
|
|
Counsel for the Respondent:
|
Gordon Bourgard (July 8)
Alexandra Humphrey (July 22)
|
____________________________________________________________________
ORDER
UPON motion by the
Appellants for an Order granting leave to amend the Notices of Appeal as
follows:
(a) for
the Appellant Allan Garber, in the form attached as Schedule “A” to the
Notice of Motion;
(b) for
the Appellant Geoffrey Belchetz, in the form attached as Schedule “B” to the
Notice of Motion;
(c) for
the appellant Linda Leckie Morel in File No. 91-509(IT)G, in the form attached as
Schedule “C” to the Notice of Motion;
(d) for
the appellant Linda Leckie Morel in File No. 91-1816(IT)G, in the form attached
as Schedule “D” to the Notice of Motion;
AND UPON FURTHER motion
by the Appellants for an Order striking out the following paragraphs in the
Amended Replies and Fresh as Amended Replies:
(a) paragraphs
16, 17, 18, 19, 22 (the reference to reasonable expectation of profit) and 30
of he Amended Reply to the Notice of Appeal of the Appellant Alan Garber;
(b) paragraphs
13, 14, 15, 16, 19 (the reference to reasonable expectation of profit) and 29
of the Amended Reply to the Notice of Appeal of the Appellant Geoffrey
Belchetz;
(c) paragraphs
12, 13, 14, 15, 18 (the reference to reasonable expectation of profit) and 27
of the Fresh as Amended Reply to the Notice of Appeal of the Appellant Linda
Leckie Morel in File No. 91-509(IT)G; and
(d)
paragraphs
13, 14, 15, 16, 19 (the reference to reasonable expectation of profit) and 27
of the Amended Reply to the Notice of Appeal of the Appellant Linda Leckie
Morel in File No. 91‑1816(IT)G;
AND UPON reading the
materials filed, and hearing counsel for the parties;
AND UPON the Respondent
consenting to the following paragraphs being struck from the Amended Replies and
Fresh as Amended Reply in:
(i) the appeal of
Allan Garber, paragraphs 19 and 30,
(ii) the appeal of
Geoffrey Belchetz, paragraphs 16 and 29,
(iii) the
appeal of Linda Leckie Morel, File 91-509(IT)G, paragraphs 15 and 26; and
(iv) the
appeal of Linda Leckie Morel, File No. 91‑1816(IT)G, paragraphs 16
and 27;
IT IS ORDERED THAT:
1. The
Appellants’ motion to amend the Notices of Appeal is allowed in accordance with
the Amended Notices of Appeal attached to the Notice of Motion as Schedules
“A”, “B”, “C” and “D”;
2. Paragraphs
19 and 30 shall be struck from the Amended Reply to the Notice of Appeal of
Allan Garber;
3. Paragraphs
16 and 29 shall be struck from the Amended Reply to the Notice of Appeal of
Geoffrey Belchetz;
4. Paragraphs
15, and 26 shall be struck from the Fresh as Amended Reply to the Notice of
Appeal of Linda Leckie Morel, File No. 91‑501(IT)G;
5. Paragraphs
16 and 27 shall be struck from the Amended Reply to the Notice of Appeal of
Linda Leckie Morel, File No. 91‑1816(IT)G;
6. The
parties will forthwith file Fresh as Amended pleadings to reflect the result of
these motions; and
7. Costs
of these motions are reserved, to be dealt with at the hearing of the
Respondent’s motions on August 18, 2008.
Signed at Ottawa, Canada,
this 28th day of July, 2008.
“E.A. Bowie”
Citation: 2008 TCC 433
Date: 20080728
Docket: 91-509(IT)G, 91-1816(IT)G
91-1946(IT)G, 2004-2787(IT)G
BETWEEN:
LINDA LECKIE MOREL,
GEOFFREY D. BELCHETZ,
ALLAN GARBER,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Bowie
[1] The two motions
before me are brought by the appellants. One is to amend their Notices of
Appeal. The other is for an Order striking out certain paragraphs of the
Amended Replies.
[2] The Respondent
opposes the two substantial proposed amendments to the Notices of Appeal, but
does not oppose other minor amendments.
[3] The appeals are
concerned with the appellants’ claims that they are entitled to deductions in
computing their income for losses sustained by certain limited partnerships during
the years under appeal, and for interest paid in connection with their
acquisition of their partnership interests.
[4] The appellants have
been examined for discovery. They now wish to amend the language used in the
Notices of Appeal to describe the interest payments, originally said to have
been interest on loans entered into to acquire their partnership interests, as
interest on promissory notes given to acquire their partnership interests. They
wish also to delete references to a reasonable expectation of profit, and
replace those with the allegation that they specifically contemplated that in
the course of the limited partnership business substantial start-up costs would
be incurred.
[5] The Respondent
opposes the amendments, both upon the ground that the appellants have delivered
no affidavit evidence to support their motions to amend their pleadings, and on
the basis that what they seek to do amounts to withdrawing judicial admissions,
and that they should therefore be required to show by evidence that the
statements they wish to withdraw are not true, and how they came to be made.
[6] The appellants’
position is that the proposed amendments as to interest are simply to make the
Notices of Appeal conform to the facts as they appear from the examinations for
discovery. The amendment to delete the reference to no reasonable expectation
of profit, it is said, is simply to recognize and accord with the Supreme Court
of Canada judgments in Stewart v. Canada and Walls v. Canada.
[7] In my opinion, the
interests of justice will be best served by permitting the appellants to make
the amendments that they seek.
[8] The overarching
principle that should be applied in considering applications to amend pleadings
was expressed this way by Décary J.A. in Canderel Ltd. v. Canada:
… while it is impossible to enumerate all
the facts that a judge must take into consideration in determining whether it
is just, in a given case, to authorize an amendment, the general rule is that
an amendment should be allowed at any stage of an action for the purpose of
determining the real questions in controversy between the parties, provided,
notably, that the allowance would not result in an injustice to the other party
not capable of being compensated by an award of costs and that it would serve
the interests of justice.
[9] It is difficult to
see how the respondent in these cases could be prejudiced by the amendment
concerning interest paid relevant to the acquisition of the appellants’ limited
partnership interests, as the respondent in her Amended Replies has pleaded
that one of the assumptions on which the Minister relied in assessing the
appellants is that:
[The General Partner] committed to
provide financing to the individual investors … in exchange for non-assignable
promissory notes from each investor …
Amended
Reply in Belchetz v. The Queen, p. 9(o)
[10] Nor has the
respondent shown that she would suffer any prejudice from the removal of the
reference to reasonable expectation of profit from the Notice of Appeal. The
Amended Replies in part D - GROUNDS RELIED ON AND RELIEF SOUGHT –
make reference to the absence of a reasonable expectation of profit, and that
is one of the parts of the Replies that the appellants move to strike out.
Perhaps they consider that they need to withdraw the allegation from their own
pleadings to argue credibly to strike it from the Replies. In any event, I see
no possibility of prejudice if those words are deleted from the Notices of
Appeal.
[11] I am not persuaded
by the respondent’s argument that the proposed amendments would have the effect
of withdrawing judicial admissions. Neither averment meets the modern test for
a judicial admission that was accepted by Braidwood J. in British Columbia
Ferry Corp v. T & N plc,
that it must be a deliberate concession made by one party for the benefit of
the other. This test has been adopted in Ontario by Master MacLeod in Hughes v.
Toronto-Dominion Bank.
[12] The respondent
relies on the decision of Tardif, J. in Le 11675 Société Commandite c. La
Reine,
in support of the submission that the allegations the appellants seek to remove
from their Notices of Appeal are judicial admissions, and that they should
therefore be put to proving them to be untrue and explaining the reason for the
withdrawal. In that case Tardif, J. applied, by analogy, the provisions of the Civil
Code of Québec. That, of course, was appropriate as the case involved a
hearing in Québec of the appeal of a Québec corporation. The present cases
arise in Ontario, where all the appellants reside, and in my view it is
appropriate to adopt the practice that is now accepted in Ontario.
[13] Nor am I troubled
by the absence of affidavit evidence in support of the motions. Rule 71
provides that evidence in a motion may be given by affidavit, but it does not
require it. If the motion does not require the proof of any facts then no
affidavit is needed. Both counsel referred in argument to certain questions and
answers from the transcripts of the examinations for discovery. It appears that
the appellants may have been somewhat equivocal in their answers with respect
to the interest issue, but, as I have said, the effect of the proposed
amendments is to make the appellants’ pleadings accord with the Minister’s
stated position on assessing.
[14] If anything, the
amendments that the appellants propose will tend to narrow the issues for trial
somewhat. There is no discernible prejudice to the respondent that would result
from the amendments. The appellants will therefore have leave to amend the
Notices of Appeal in accordance with Schedules A, B, C and D to the Notice of
Motion.
[15] I turn now to the
motion to strike certain paragraphs from the Amended Replies. These paragraphs
were added to the Replies by leave of the Court, and formed the basis for seven
questions that were the subject of a pre-trial determination under Rule 58. The
paragraphs are identical in the four Amended Replies, although their numbering
varies. In the appeal of Allan Garber, they are numbers 16, 17, 18, 19 and 30.
Paragraphs 16, 17 and 18 contain particulars of the charges laid against the
promoters of the limited partnerships and the disposition of those charges.
Paragraph 19 purports to provide a summary of the findings of the Ontario
Superior Court of Justice that form the basis of that Court’s disposition of
the charges. Paragraph 30 found in Part D – GROUNDS RELIED ON AND RELIEF SOUGHT
– argues that the appellants are precluded by the doctrine of abuse of process
from litigating the findings set out in paragraph 19.
[16] By way of pre-trial
determination under Rule 58, it has now been established by this Court, and
affirmed on appeal, that the appellants are not precluded from litigating the
issues that were central to the convictions of the promoters. In view of that
decision, Mr. Shipley has agreed that paragraphs 19 and 30 of the Reply in the
Garber appeal and the corresponding paragraphs in the other Replies should be
removed. I was advised at the hearing of the motion that he had so indicated to
counsel for the appellants.
[17] Mr. Winkler submits
that paragraphs 16, 17 and 18 must also be struck from the pleading because
they are simply an attempt by the respondent to associate the appellants with
the criminal conduct of the promoters, and thereby prejudice them in these
proceeding.
[18] I do not agree. In
paragraph 13 it is alleged that the promoters perpetrated a fraud on the
individual investors and on the Crown by creating and uttering false financial
statements, invoices and other documents. Paragraphs 16, 17 and 18 give further
particulars of these allegations. There is no doubt that the issue of fraud by
the promoters on the investors will be before the Court at the trials, and that
the allegations in the impugned paragraphs will be relevant to that issue.
[19] The appellants’ only
objection to the respondent’s motion two years ago to add paragraphs 16, 17,
18, 19 and 30 to the Replies was directed to paragraph 30. Had they argued
then that paragraphs 16, 17 and 18 were pleas of evidence rather than of
material facts, they might well have been excluded on that basis. Not having
taken the point then, however, it is too late to do so now.
[20] The other attack on
the Amended Replies is to have struck out of paragraph 22 the last eight words,
where it is said that the partnerships “never had a reasonable expectation of
profit”. The basis for this attack on the pleading is the decisions of the
Supreme Court of Canada in Stewart and Walls. Those decisions
rejected the doctrine that there could not be a source of income where there is
no reasonable expectation of profit. It is not correct, however, to say that
the Supreme Court has rendered expectation of profit totally irrelevant, and it
is conceivable that such a submission might be appropriately made in argument
at the trial. Since the words appear in Part D of the pleading, they do not
have the character of allegations of fact, but are simply notice of an argument
to be made at trial. To strike out the words would have no effect on either the
length or the complexity of the trial, and I am not prepared to say that no
submission as to expectation of profit could properly be made at the end of the
trial. For that reason, I am not inclined to strike the words from the
pleading.
[21] In the result then,
paragraphs 19 and 30 will be struck from the Amended Reply in the Allan Garber
appeal, and the corresponding paragraphs will be struck from the Amended
Replies in the other three appeals, to reflect the result of the pre-trial
determination in respect of the abuse of process issue made under Rule 58, and
the motion is otherwise dismissed.
[22] Costs of the motions
are reserved to be dealt with after hearing argument on the Respondent’s
motions on August 18, 2008.
Signed at Ottawa, Canada, this 28th day of July, 2008.
“E.A. Bowie “
CITATION: 2008 TCC 433
COURT FILE NO.: 91-509(IT)G, 91-1816(IT)G, 91-1946(IT)G, and 2004-2787(IT)G
STYLE OF CAUSE: LINDA LECKIE MOREL, GEOFFREY D. BELCHETZ, ALLAN GARBER and
HER
MAJESTY THE QUEEN
PLACE OF HEARING: Toronto,
Ontario
DATE OF HEARING: July 8, 2008
REASONS FOR ORDER BY: The Honourable Justice E.A. Bowie
DATE OF ORDER: July 28, 2008
APPEARANCES:
|
Counsel for the
Appellants:
|
Howard W. Winkler
|
|
Counsel for the
Respondent:
|
John Shipley
|
COUNSEL OF RECORD:
For the Appellants:
Name: Howard W. Winkler
Firm: Aird
& Berlis
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa, Canada
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