Citation: 2007TCC93
Date: 20070627
Docket: 2000-761(IT)G
BETWEEN:
RAYNALD GRENIER,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR ORDER
(Delivered orally from the bench on
December 13, 2006
at Québec, Quebec and modified for more clarity and
precision.)
Archambault J.
[1] In a motion, Raynald Grenier
is asking the Court to set aside or vary a judgment by this Court dated October
1, 2002, because of a fraud or facts that arose or were discovered after the
verdict was rendered, pursuant to paragraph 172(2)(a)
of the Tax Court of Canada Rules (General Procedure) (Rules), or
on the ground that the Court did not make a finding on an issue raised before
it, pursuant to paragraph 172(1)(b)
of the Rules.
The facts
[2] Mr. Grenier has appealed from the
assessments made by the Minister of National Revenue (minister) for the
taxation years 1993 to 1996. Following the judgment I rendered and for which
the written reasons were dated December 14, 2002, Mr. Grenier appealed before
the Federal Court of Appeal, which rendered a decision April 1, 2004,
dismissing Mr. Grenier's appeal and confirming this Court's decision.
[3] In the case before
the Federal Court of Appeal, Mr. Grenier twice asked the Court for permission
to tender new evidence. First, a motion was filed on August 18, 2003, asking
for [translation] "an authorization to tender complementary
evidence in support of testimony already heard but not accepted by the
Honourable Justice Pierre Archambault."
[4] In his reasons for denying
this motion, Létourneau J.
noted that among the documents Mr. Grenier wanted to produce, were copies of
rules and legislation that did not need to be part of the evidence because they
could have been included in the book of legislation, regulations, case law and
doctrine. As for what could be considered new factual evidence, Létourneau J. ruled
as followed:
[translation]
Given that the other items the Appellant
wants to submit in appeal refers to documents that are either already in the
appeal book, not relevant, or appeared after the hearing, or prior to the
hearing when the Appellant knew of their existence; it is therefore ordered
that: the motion by the Appellant for authorization to present new evidence is
dismissed.
[5] Following this
decision by Létourneau J., a new motion to reopen the case was presented to the Federal Court of
Appeal, which was also denied. However, I would like to point out the main ground
relied on in support of this motion was the existence of new facts to be tendered
and not fraud.
• Issues for which
the Court did not render a decision
[6] During argument in
support of his motion before the Court, Mr. Grenier specified the grounds he
felt attracted the application of section 172 of the Rules. In support of the
argument that the Court did not make a ruling on an issue before it, he invoked
subsection 31(2) of the Income
Tax Act (Act) that given the Minister the power to "...
determine that a taxpayer's chief source of income for a taxation year is neither
farming nor a combination of farming and some other source of income" and
argued that in the evidence submitted, nothing indicated whether the Minister
used this power, which Mr. Grenier qualified as discretionary. With no evidence
that the Minister used it, there could have been abuse of power, which would
have prevented Mr. Grenier from exercising his rights and freedoms set out in
the Canadian Charter of Rights and Freedoms (Charter). This is
the main ground I have been able to distill from the long motion prepared by
Mr. Grenier, which would justify the claim that the Court did not make a ruling
on an issue brought before it.
• Allegation of
fraud
[7] In support of his motion
under paragraph 172(2)(a)
of the Rules, Mr. Grenier relied on the existence of a fraud that resulted from
the conduct of counsel for the Respondent. In particular, counsel for the
Respondent tendered before the Court tables summarizing the documentary
evidence submitted to him, including a table summarizing the data for 1980 to
1992 from Exhibit I-11 and obtained from Revenue Canada's computer system.
Another table covering the period 1993 to 2000 was prepared using Mr. Grenier's
income tax reports that were produced during the hearing as Exhibit I-2 (for
the 1993 tax report) and I-4 to I-10 (for the tax reports of 1994 to 2000).
According to Mr. Grenier, important data were missing from these tables, of
note the data regarding his income sources other than the agricultural
business, his profession and his other business. He claims that he earned
rental income in 1982 of $171,286 and investment income of $15,206, and realized
a capital gain of $18,286. The income from these three sources could have been
combined with those earned from his agricultural activity, according to Mr. Grenier.
He criticized counsel for the Respondent of having [translation] "fraudulently or maliciously and
voluntarily" neglected to state these income sources in his summary
tables, while the data in question were available (Exhibits I‑4 and
I‑11).
[8] The other fact Mr.
Grenier relied on to establish the fraud by counsel for the Respondent is that
counsel did not include prior years in his tables, namely 1958 to 1980; this
data, according to Mr. Grenier, could have shown that his sylviculture activity was an important
income source that provided for his household needs.
[9] Mr. Grenier also claimed that he could not
have determined that some data was not in the summary tables due to a fault by
counsel for the Respondent or the auditor for the Respondent. My own
verifications allowed me to note that the absence of those data in the summary
tables was due to the fact that they were not tendered in evidence.
[10] In support of his
allegation of fraud, Mr. Grenier
also relied on the fact that a few weeks before the appeal hearing before the
Federal Court of Appeal, he had sent a request for certain documents that were
in the possession of either the Minister of Revenue or counsel for the
Minister, in particular, his income tax returns for prior years. However, it is
important to note that Mr. Grenier admitted receiving some of these documents
and some data regarding prior years. Moreover, in support of his claims at the
hearing for his motion, he adduced as Exhibit R-1 some tables that showed
income declared for 1967, 1972, 1974 to 1976 and 1978 to 2005. By omitting some
of this data from the summary tables, counsel for the Respondent, in Mr.
Grenier's opinion, tried to mislead the judge, thus committing a fraud. In this
omission by counsel for the Respondent, he sees another indication of a
fraudulent or malicious intent.
[11] Mr. Grenier also made reference to the
counsel for the Respondent who examined him during his testimony in 2002, in
particular regarding Exhibit A‑7, a statement from the Régie de l'assurance
maladie du Québec (Régie). This statement indicates a number of
patients, 722, for which he was allegedly compensated and, according to him,
the questions he was asked did not allow him to show that these could have been
patients he had seen during a period other than the two weeks covered by the
statement. In other words, the statement does not necessarily represent the
exact number of patients seen during the targeted period. He criticizes counsel
for having created an impression that did not correspond to reality.
[12] Without necessarily
stressing its importance—he left it to the Court's discretion to draw its own conclusions—Mr.
Grenier claimed that it had to be taken into consideration that counsel for the
Respondent was opposed to having Mr. Gingras, Mr. Grenier's forest engineer, testify as an expert in 2002 because no
expert report was adduced in accordance with the Rules. He also criticized
counsel for having questioned the engineer on issues that could have been based
on opinion.
[13] Finally, Mr. Grenier mentioned the
objection by counsel for the Respondent regarding his motion filed before the
Federal Court of Appeal on August 18, 2003, (page 64 of the statement under
oath of opposition to the motion (statement of opposition) of December 6, 2006)
to be authorized to adduce complementary evidence; he made reference to
documents designated as Q-8 and A-10 in his motion addressed to the Federal
Court of Appeal.
• New facts
[14] Regarding the
argument about new facts, Mr. Grenier tried to draw the Court's attention to
the existence of two documents from the Association des Dermatologistes du Québec having to do
with the compensation ceiling that was in force during the relevant period
targeted by the Minister's assessment. According to Mr. Grenier, these
documents could have evidenced an amount inferior to that set by the Minister
in his assessment. Indeed, the controversy in Mr. Grenier's case did not only relate
to the application of the restrictions set out in section 31 of the Act, but
also to the application of a penalty for not declaring income from a
profession.
Respondent's submissions
[15] In support of her submission
that the motion to set aside the judgment should be denied on the grounds that
the Court no longer had jurisdiction to hear Mr. Grenier's claims, and
that there is nothing more that would attract the application of section 172 of
the Rules, counsel for the Respondent cites a number of cases. The most important was a case of the
Federal Court of Appeal in Etienne v. Canada, [1993] F.C.J.
No. 1388 (QL). In this case, the appeal related to a decision rendered by
Teitelbaum J. (Etienne v. Canada, [1992] F.C.J. No. 862 (QL)), who denied
a motion to amend an order rendered under the Official Languages Act. It
must be noted that in addition to that motion, the litigant also appealed
before the Federal Court of Appeal. At paragraph 1 of his reasons, Hugessen J.
of that court held that the judge "…was correct to view it as
inappropriate for a trial judge to deal with an application under r.1733 in
respect of his own judgment at a time that an appeal from that judgment was
pending. The proper remedy in such circumstances would be an application under
r. 1102(1) to introduce the newly discovered evidence before the Court of Appeal."
[16] Thus, the Federal
Court of Appeal ruled that it was inappropriate to make such a motion before
the trial court and rather, it should be presented before the Federal Court of
Appeal. This decision was followed by two other decisions by our Court: Déziel v. Her Majesty the Queen,
2005 TCC 70, a decision by Dussault J.; and Schmidt v. Her
Majesty the Queen, 2003 TCC 352, a decision by Little J. In these
decisions, the judges ruled that it was irregular for the Court to "agree
to deal with an application to amend a judgment on the ground of facts arising
or discovered after the judgment was made if the judgment has already been
appealed."
In these two cases, the Court of Appeal decision had been rendered.
Analysis
[17] The question I must
address is the following: are
Mr. Grenier's claims sufficient to attract the application of section 172 of
the Rules?
[18] Without deciding
whether it is appropriate to find that Mr. Grenier's motion cannot be heard for
want of jurisdiction, I feel that Mr. Grenier's claims are not valid. I am not persuaded
that there was a fraudulently obtained judgment or that there were facts that
occurred or were discovered after it was rendered. Moreover, as Hugessen J.
stated, it is before the Federal Court of Appeal that he should have filed such
a motion, both in terms of the new facts and the fraud that allegedly occurred.
Mr. Grenier's motion regarding new facts was filed before the Federal Court of
Appeal. Létourneau J. reviewed it and found that it addressed [translation]
"documents that are either already in the appeal book, not relevant, or
appeared after the hearing, or prior to the hearing when the Appellant knew of
their existence" (October
29, 2003, order, Docket A‑597‑02, p. 73 of the statement
of opposition.) So, if I were to render a decision, I would have to act, to a
certain extent, as an appeal jurisdiction in regard to the decision by
Létourneau J. However, I do not have jurisdiction to overturn this decision. As
for all the documents that were subject to the motion before Létourneau J., res
judicata probably applies and I cannot see how I could arrive at a different
result than his.
[19] Insomuch as there
were documents not covered by the order of Létourneau J., and insomuch as the motion
before me raised the issue of obtaining a judgment through fraud, I accept the
argument by counsel for the Respondent that this element of fraud, to which Mr.
Grenier referred, could have been addressed in a motion directed to the Federal
Court of Appeal. The facts surrounding the fraud were known at that time. If it
had been appropriate to plead fraud, it should have been brought to the
attention of the Court of Appeal when it heard the application to reopen the
case.
[20] At any rate, even if
it were not too late to do so and even if this Court had the jurisdiction to
allow it, because of the existence of an alleged fraud, reopening the case and
the amendment of a judgment I rendered, I rule that the facts stated by Mr. Grenier do not establish the
existence of such a fraud. In regard to the new facts, the evidence does not show
that these are facts that Mr. Grenier did not have knowledge of at the
time of the hearing held in September 2002. I rule, as did Létourneau J. when
he rendered his decision on Mr. Grenier's motion to produce new documents, that
it is too late to adduce this evidence and vary the judgment.
[21] As for the
allegation of fraud, I am of the view that Mr. Grenier's submission shows a
significant lack of knowledge of the legal system and the rules that govern the
administration of justice in Canada. The system in force in Canada is adversarial.
In this system, it is up to the two parties to adduce all the evidence
necessary to establish the whole truth as to the factual elements in a case.
The Court notes that, among other things, Mr. Grenier was represented by a tax
lawyer during the hearing of his appeal in 2002; this lawyer, from what the
Court can determine, had the necessary skills to defend Mr. Grenier's case.
Each party had the duty to adduce its evidence and could propose its own
interpretation of that evidence to the judge. It is totally unwarranted for Mr.
Grenier to charge counsel for the Respondent or her auditor with fraudulent
intent, in particular that of misleading the Court by presenting certain data
regarding income as summary tables presented to the Court, and neglecting to
include others. It was open to Mr. Grenier to tender his own tables, to
interpret them differently and to show that by combining the agricultural
income with that from other sources, in particular rental income, investment
income and capital gains, he could have argued against the application of the
restriction provided for in section 31 of the Act. Each had its role to play
and the evidence adduced by Mr. Grenier does not show that counsel for the Respondent voluntarily
misled the Court by making reference to facts that were not in evidence or that
were different from what had been tendered in evidence.
[22] If Mr. Grenier
believed that it was relevant to offer his income from 1958 to 1980 in evidence
to complete the evidence the Minister had adduced, he could have done so. If he
did not do so, he must accept the consequences of incomplete evidence. It is conceivable
that this evidence might have changed the result, but it is also possible that
it would have changed nothing.
[23] Mr. Grenier often invoked the principles of
justice, particularly that it would be unjust to not allow the reopening of the
case because the judgment must be rendered based on reality and not, in his
opinion, on incomplete evidence.
[24] The Court is very
aware of these principles of justice. When I preside over a hearing, I do not
necessarily limit myself to the facts stated before me. If particulars are
required, I will ask for clarification, whether it is a witness for the
Appellant or a witness for the Respondent. I believe it is the judge's duty to
seek the truth and that a party should not win or lose because of a blunder by
a lawyer or because someone forgot to raise an argument. When I see that an
important fact has not been offered in evidence or an argument has not been raised,
I do not hesitate to ask factual questions or to raise the argument myself.
Clearly a judge cannot be blamed if the evidence adduced and the legal
arguments raised by the parties are incomplete. Each participant has a role to
play in the administration of justice.
[25] When a case is
prepared—and this is even clearer in cases where the taxpayer is represented by
counsel who is knowledgeable about the subject—and then after the fact one
notices that it would have been useful to adduce other evidence in order to succeed, one obviously would like
to have a second chance. "With hindsight, everyone has 20/20 vision",
as the expression goes. But it must also be recognized that the legal process
must end at some point and it is not in the interest of justice for legal controversies
to continue on and on. Society devotes significant resources to ensure that
disputes can be adjudicated by the courts. Moreover, I was not happy when
finding Mr. Grenier's appeal was to be dismissed on September 26, 2002.
Planting trees is a very laudable activity. I mentioned this in my reasons for
judgment. Moreover, I feel that he had the right to a deduction of costs.
However, the role of the Court is not to render judgment based on its feelings
or personal beliefs. The role of a judge is to apply the law, in this case
section 31 of the Act, which provides that if a taxpayer's income for a
taxation year does not come mainly from agriculture or a combination of
agriculture and another source, the agricultural losses must be limited to
$5,000 in a given year.
The excess is to be carried over to subsequent years and must be deducted from
the income from the agricultural business in those years.
[26] Based on the
Charter, it is possible to argue that section 31 of the Act might not apply
because it is discriminatory and violates section 15 of the Charter. However,
advance notice must be given to the Attorney General of Canada and the Attorney
General of the provinces, as required under section 19.2 of the Tax Court of
Canada Act. When Mr.
Grenier appeared before me in 2002, no such notice had been given to the
Attorney General of Canada or the Attorneys General of the provinces. His
counsel did not even invoke the Charter to ask that section 31 of the Act be
declared inapplicable and of no force or effect. The Court did not rule on this
issue, and could not have done so even if it had been raised before it.
[27] Regarding the
argument based on the fact the Court allegedly neglected to make a ruling on an
issue raised before it, in particular the one based on subsection 31(2) of the
Act, this argument also seems unfounded to me. Subsection 31(2) allows the
Minister to determine whether agriculture makes up a main source of income. The
evidence does not show whether the Minister specifically exercised this power.
The argument that he did not exercise it was not raised by Mr. Grenier's
counsel. As the issue was not raised before the Court, there was no need for it
to make a ruling on the application of subsection 31(2) of the Act. At any
rate, it can be said that the Court made an implicit ruling since, by
determining whether the assessment was valid with regard to subsection 31(1),
which implicitly presumes that in a case such as Mr. Grenier's, agriculture is
not a main source of income, the Court ruled on the issue whether it was warranted
to restrict Mr. Grenier's losses. Moreover, as the Supreme Court of Canada
recognized in Vincent v.
Minister of National Revenue,
[1966] C.T.C. 147, when it had to rule on an argument similar to the one Mr.
Grenier raised, namely that simply because the Minister made a determination
under subsection 13(2) of the Act, which is equivalent to the current 31(2),
this did not prevent the Exchequer Court from having the necessary jurisdiction
to determine whether the main source of the taxpayer Vincent was agriculture.
[28] Mr. Grenier tried to argue that this case
had been decided many years prior to the adoption of the Charter. In my
opinion, the Charter would have no effect on the Supreme Court of Canada
decision. The courts have consistently applied the standards of judicial
review. These standards include the principle of procedural fairness to apply,
and in general, the courts have recognized that, for a discretionary power to
be applied fairly by the minister, the decision must have been made according
to the rules of natural justice, in particular audi alteram partem
(according to which each party must be given the opportunity to present its
evidence). Ministers are not required to consider non-relevant facts when
exercising their discretionary power, and they must have had all the relevant
facts before them; only then is it possible for them to exercise their
discretionary power. Even without the Charter, a count can review the exercise
of a discretionary power. Even if the minister had not exercised his
discretionary power, which is generally viewed as an abuse of power, the courts
recognize that they have the right to exercise the minister's discretionary
power and make a decision on the controversy; in this case, to determine
whether Mr. Grenier's agricultural activity could be considered his main source
of income.
[29] In terms of
paragraph 172(1)(b)
of the Rules, I find that the Court ruled on all the issues that had been raised
before it, namely whether it was appropriate to apply the restriction in
section 31 of the Act and whether the imposition of a penalty for
non-declaration of incomes was warranted.
[30] For all these
reasons, the motion to vary the judgment is denied.
Signed at Stanstead, Quebec, this 27th day of June 2007.
"Pierre Archambault"
on this 20th day of February 2008
François Brunet, Revisor
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