Docket: 2006-3036(GST)G
BETWEEN:
ROCKPORT DEVELOPMENTS INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the motions
of
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
ASA Construction Company Ltd.
(2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable
Justice François Angers
Appearances:
|
Counsel for the Appellants:
|
Edward
J. McGrath
|
|
Counsel for the Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada,
this 14th day of November 2008.
“François Angers”
Docket: 2006-3037(GST)G
BETWEEN:
PINE GLEN SUPPLY LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
ASA Construction Company Ltd.
(2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3038(GST)G
BETWEEN:
GOLDSBORO CONTRACTING LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
ASA Construction Company Ltd.
(2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3039(GST)G
BETWEEN:
C M J STORAGE LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
ASA Construction Company Ltd.
(2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3040(GST)G
BETWEEN:
ASA CONSTRUCTION COMPANY LTD. ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
M R Martin Construction
Inc.(2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3041(GST)G
BETWEEN:
M R MARTIN CONSTRUCTION INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
ASA Construction Company Ltd.
(2006-3040(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3042(GST)G
BETWEEN:
THE BEND ELECTRIC LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
Asa Construction Company Ltd.
(2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3043(GST)G
BETWEEN:
CODIAC DRILLING & BORING LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
ASA Construction Company Ltd. (2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G),
and
Robinson Construction Company Ltd. (2006‑3044(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Docket: 2006-3044(GST)G
BETWEEN:
ROBINSON CONSTRUCTION COMPANY LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motions of
Rockport Developments Inc. (2006-3036(GST)G),
Pine Glen Supply Ltd. (2006-3037(GST)G),
Goldsboro Contracting Ltd. (2006-3038(GST)G),
C M J Storage Ltd. (2006-3039(GST)G),
Asa Construction Company Ltd.
(2006-3040(GST)G),
M R Martin Construction Inc. (2006-3041(GST)G),
The Bend Electric Ltd. (2006‑3042(GST)G)
and
Codiac Drilling & Boring Ltd. (2006‑3043(GST)G)
on September 26, 2008, at Fredericton, New Brunswick.
Before: The Honourable Justice François
Angers
Appearances:
|
Counsel for the
Appellants:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
____________________________________________________________________
ORDER
UPON
motion by the appellant for an order to reopen the hearing pursuant to section
138 of the Tax Court of
Canada Rules (General Procedure),
AND UPON reading the affidavit of David
Ross;
AND UPON hearing the parties;
The motion is dismissed without cost in accordance with the attached Reasons for
Order.
The appellant will have until December 19,
2008 to submit an additional post-trial brief if necessary, the respondent will
have until January 23, 2009, and the appellant must submit a reply by February
6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
Citation: 2008 TCC 619
Date: 20081114
Dockets: 2006-3036(GST)G,
2006-3037(GST)G, 2006-3038(GST)G,
2006-3039(GST)G, 2006-3040(GST)G,
2006-3041(GST)G, 2006-3042(GST)G,
2006-3043(GST)G, 2006-3044(GST)G
BETWEEN:
ROCKPORT DEVELOPMENTS INC.,
PINE GLEN SUPPLY LTD.,
GOLDSBORO CONTRACTING LTD.,
C M J STORAGE LTD.,
ASA CONSTRUCTION COMPANY LTD.,
M R MARTIN CONSTRUCTION INC.,
THE BEND ELECTRIC LTD.,
CODIAC DRILLING & BORING LTD.,
ROBINSON CONSTRUCTION COMPANY LTD.,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Angers J.
[1]
This is a motion by the
appellants for an order to reopen the hearing before judgment has been
pronounced for such purposes and upon such terms as are just, pursuant to
section 138 of the Tax Court of Canada Rules (General Procedure). The
appeals in the above matters were heard in Moncton,
New Brunswick on May 12 and 13, 2008. The Court reserved judgment pending
the submission of written briefs, the last of which was to be submitted on
September 12, 2008.
[2]
The motion and the affidavit
in support thereof were filed with the Court on June 25, 2008. The appellants
now have further evidence that they wish to introduce with respect to the above
matters. That evidence consists of a series of transactions regarding the ownership
of shares in the appellant corporations that occurred on June 25, 2008, and of the
fact that some of the appellant corporations adopted corporate resolutions on
June 18, 2008 to permit them to make an election pursuant to the provisions of
paragraphs 156(2) and (4) of the Excise Tax Act (the Act), which
they in fact made on June 25, 2008, approximately a month after the trial had
terminated.
[3]
The above appeals
concern the assessment of tax by the Minister of National Revenue for the periods
from January 1, 2001 to December 2003 or March 31, 2004, as the case may
be. The appellants are appealing the Minister’s decision to assess by making
adjustments to the amounts reported as goods and services tax (GST) and harmonized
sales tax (HST) for the aforementioned periods. Amongst the issues is whether
the appellants Goldsboro Contracting Ltd., M R Martin Construction Inc., Pine
Glen Supply Ltd., Rockport Developments Inc., The Bend Electric Ltd., C M J
Storage Ltd. and Codiac Drilling & Boring Ltd. can rely on section 156 of
the Act since, according to the Minister, those appellants cannot be
regarded as “specified members” of a “qualifying group” because they cannot be considered
“closely related” corporations pursuant to section 128 of the Act.
[4]
The facts may be
briefly summarized by simply stating that Robinson Construction Company Ltd. (Robinson)
entered into a contract with the MRM Technical Group (MRM), an American firm
which had contracts with Enbridge Gas New Brunswick Inc. (Enbridge) for the
development of a natural gas distribution system in New Brunswick. Robinson subcontracted the performance of some of
the work and services to its affiliated companies. There were delays of four
months beyond the required start date due to the inability of Enbridge to
obtain the necessary permits and there were also late changes in design, all of
which resulted in extra costs. Robinson submitted these extra costs to MRM, which
in turn submitted them to Enbridge, but for many of these costs, there was no
payment authorization. The end result was that Robinson brought an action against
MRM and Enbridge, claiming $3.5 million for unpaid extra costs. The action was
settled in 2005 for $545,000.
[5]
As a result of the
settlement, the affiliated appellants were unable to receive payment for their
services and claimed input tax credits (ITCs) on what had become bad debts. Goldsboro
Contracting Ltd., Robinson, Rockport Developments Inc., ASA Construction
Company Ltd. and The Bend Electric Ltd.’s claims for a deduction for these bad
debts pursuant to section 231 of the Act were refused by the
Minister as they were related persons within the meaning of subparagraph 251(2)(c)(ii)
of the Income Tax Act and as such were not dealing at arm’s length as
required by section 231 of the Act. In addition and as already alluded
to, the Minister argues that the appellants Goldsboro, Martin, Pine Glen,
Rockport, Bend, C M J and Codiac cannot rely on section 156 of the Act
since none of those corporations can be regarded as “specified members” of a
“qualifying group” because they cannot be considered “closely related” corporations
pursuant to section 128 of the Act.
[6]
It is this last
argument that prompted the appellants, after the trial was over, to change their
corporate ownership and to have some of them make an election pursuant to subsections
156(2) and (4) of the Act. That is the further evidence that they wish
to introduce, as it is their position that this new evidence is relevant to
determining whether taxes were owed by the appellants during the relevant
periods. It is also their position that the Act contains no provision that
prevents making a retroactive election with an effective date which the
appellants have stipulated to be December 15, 2000. The appellants finally
argue that they are merely exercising their right to make their tax treatment
consistent with the intent of the Act.
[7]
The respondent’s
position is that there is no mention in any of the notices of appeal of the
fact that the appellants had reached an agreement with each other or had made
an election covering the periods under appeal. This therefore raises a new
issue of whether the elections are valid for the periods under appeal, and that
issue may in itself require additional evidence and arguments with respect to
the change in ownership of the shares. The respondent also submits that the
appellants’ new evidence was non-existent at the time of the trial and is not
simply new evidence that existed prior to the trial and that for some reason
was not available. The respondent submits that the creation of new evidence pertaining
to a new issue is an abuse of the process of this Court.
[8]
Subsection 138(1) of
the Tax Court of Canada Rules (General Procedure) reads as follows :
The judge may reopen a hearing before judgment has been
pronounced for such purposes and upon such terms as are just.
[9]
In 671122 Ontario
Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, the
Supreme Court of Canada endorsed the two-part test from Scott v. Cook,
[1970] 2 O.R. 769 (Ont. H.C.), that a trial judge must apply in considering a
motion to reopen a trial before judgment. The two questions that must be
answered are whether the new evidence changes the outcome of the hearing and whether
this evidence could have been obtained prior to the trial through the exercise
of reasonable diligence.
[10]
It is clear that the
evidence the appellants now seek to introduce was non-existent at the time of
the trial. The acquisition of shares, the resolutions and the elections to
treat certain taxable supplies as having been made for nil consideration all
occurred after the trial was completed. The possibility of doing all this may
have been available to the appellants well before the trial was held, but they
did not act; this is, therefore, not a case in which the evidence could have
been obtained or produced through the exercise of reasonable diligence.
[11]
The evidence the
appellants now seek to introduce is of events that occurred after the fact. The
admission of that evidence raises new issues that concern not only the matter
of the election and whether it is retroactive and how far back it must go if it
is to cover the years in issue, but also the questions of whether the share
transactions and resolutions are valid and whether the appellants satisfy the
requirements of the definitions found in the Act. All of the above would
need to be addressed. In addition, had these share transactions, resolutions
and elections been existent at the time of the audit, the outcome may possibly
have been different, the basis of the assessment may have been different, as
may also have been the pleadings and the issues before this Court. Since the
evidence was non-existent at the time of the audit and the trial, I conclude
that it cannot change the outcome of the trial.
[12]
To allow the motion
would, in my opinion, constitute an abuse of process and would be procedurally
unfair to the respondent. The appellants will have until December 19, 2008 to
submit an additional post-trial brief if necessary, the respondent will have until
January 23, 2009, and the appellants must submit a reply by February 6, 2009.
Signed at Ottawa, Canada, this 14th day of November 2008.
“François Angers”
CITATION: 2008 TCC 619
COURT FILE NOS.: 2006-3036(GST)G, 2006-3037(GST)G,
2006-3038(GST)G, 2006-3039(GST)G,
2006-3040(GST)G, 2006-3041(GST)G,
2006-3042(GST)G, 2006-3043(GST)G,
2006-3044(GST)G
STYLES OF CAUSE: Rockport
Developments Inc. v. HMQ
Pine Glen Supply Ltd. v. HMQ
Goldsboro Contracting Ltd. v. HMQ
C M J Storage Ltd. v. HMQ
ASA Construction Company Ltd. v. HMQ
M R Martin Construction Inc. v. HMQ
The Bend Electric Ltd. v. HMQ
Codiac Drilling & Boring Ltd. v. HMQ
Robinson Construction Company Ltd. v. HMQ
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: September 26, 2008
REASONS FOR ORDER: The Honourable Justice François Angers
DATE OF ORDER: November 14, 2008
APPEARANCES:
|
Counsel for the
Appellant:
|
Edward J. McGrath
|
|
Counsel for the
Respondent:
|
John Bodurtha
|
COUNSEL OF RECORD:
For the Appellant:
Name: Edward J. McGrath
Firm: Anderson Sinclair
Moncton, New Brunswick
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Canada
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