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Docket: 2003-1899(IT)G
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BETWEEN:
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NEVIO CIMOLAI,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Motions heard on January 25, 2005 at Vancouver, British Columbia
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Before: The
Honourable Justice J.E. Hershfield
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Appearances:
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For the
Appellant:
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The Appellant
himself
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Counsel for the
Respondent:
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Susan Wong
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____________________________________________________________________
ORDER
Upon motion made
by the Appellant for an Order:
(a) allowing the appeal in the absence of the
Respondent's fulfilment of the written discovery process; or
(b) in the alternative, for an Order compelling the
Respondent to answer questions on written discovery; or
. . . 2
(c) in the alternative for an Order compelling the
Respondent to attend oral discovery; and
(d) to pay the Appellant's costs for this motion and
lost wages.
And upon
motion made by the Respondent for an Order:
(a) terminating the Appellant's written examination
for discovery of the Respondent pursuant to section 117 of the Tax Court of
Canada Rules (General Procedure);
(b) directing the Appellant to provide the Respondent
with copies of the complete legal invoices, including the particulars of each
invoice, to support a disallowed deduction;
(c) setting the appeal down for hearing; and
(d) awarding costs to the Respondent pursuant to
section 70 of the Tax Court of Canada Rules (General Procedure).
And upon
reading the Affidavits and submissions filed and hearing the parties it is
ordered, for and in accordance with the reasons set out in the attached Reasons
for Order, that:
(1) The Appellant's motions are denied;
(2) The Respondent's motion to terminate the
Appellant's examinations for discovery pursuant to section 117 of the Rules
is granted in accordance with and on the terms set out in paragraphs [13] and [14]
of the attached Reasons for Order;
(3) The Respondent's motion directing the Appellant to
provide legal invoices to support the disallowed deduction that is the
subject-matter of the appeal is denied;
(4) A status hearing be arranged if and as required in
or about 30 days from the date of this Order for the purpose of setting the
appeal down for hearing; and
(5) Each party shall bear their own costs in respect of
these motions.
Signed at Ottawa, Canada, this 3rd day of February 2005.
Hershfield
J.
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Citation: 2005TCC93
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20050203
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Docket: 2003-1899(IT)G
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BETWEEN:
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NEVIO CIMOLAI,
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Appellant,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER
Hershfield J.
[1] Each of the parties has brought motions under
section 65 of the Tax Court of Canada Rules (General Procedure). Each
motion relates to the discovery process which is currently at a standstill.
Before setting out the motions a brief background would be helpful.
[2] The Appellant appeals an income tax assessment
of his 2001 taxation year which denied the deduction of certain legal fees. The
legal expenses pertain to two proceedings allegedly arising out of the
Appellant's termination from employment as a medical microbiologist. The first
proceeding is a juridical review of a suspension made by a hospital board which
action is still pending before the Court of Appeal of British Columbia. The second proceeding seeks damages in tort for
acts relating to and arising from wrongful dismissal.
[3] By Order of this Court dated February 25, 2004
the parties were ordered to conduct examinations for discovery by way of
written questions in accordance with sections 113 to 118 of the Rules.
[4] The Appellant submitted the first set of
questions, 43 in total, on April 14, 2004. On May 28, 2004 a designated
officer of the CRA served an affidavit of answers to the written questions
following which the Appellant submitted on June 14, 2004 a further set of
written questions containing 396 questions. The second set of questions is
based on the Appellant's dissatisfaction with the answers to the first set of
questions and in this regard he presumably relies on subsection 116(1) of the
Rules.
[5] The Respondent has refused to answer the second
set of questions and the Appellant has brought a motion for an Order:
(a) allowing the appeal in the absence of the Respondent's fulfilment
of the discovery process; or
(b) alternatively, compelling the Respondent to answer the second set
of questions submitted on written discovery; or
(c) alternatively, compelling the Respondent to attend oral discovery.
[6] The Respondent has moved for an Order:
(a) terminating the Appellant's examinations for discovery pursuant
to section 117 of the Rules;
(b) directing the Appellant to provide legal invoices to support the
disallowed deduction that is the subject-matter of the appeal; and
(c) setting
down the appeal for hearing.
[7] In order to put the nature of the second set of
questions in context it is necessary to set out, summarily at least, the
factual background that has led up to the current situation which is that the
Respondent is frustrated by the Appellant's unwillingness to provide particulars
of his legal fees and the Appellant is of the belief that the CRA and its
lawyer from the Department of Justice have acted inappropriately.
[8] The Appellant has come armed with voluminous
materials illustrative of what he asserts to be misconduct on the part of the
Respondent's agents. He has accused the CRA of non-disclosure of documents before
and during discovery, editing documents disclosed, taking contradictory
positions and not being honest and forthright in their dealings with him.
Further, he has accused the Justice lawyer of conflict of interest and
misrepresenting settlement communications. I will refer to these areas of
concern as the procedural issues.
[9] In a nutshell what seems to have happened is
that the assessment denies all legal expenses claimed by the Appellant in
respect of his 2001 taxation year. The CRA based such denial on its then
assessing practice relating to paragraph 8(1)(b) of the Income Tax
Act. The CRA later took the position that it would allow deductions under
that paragraph for the portion of his legal expenses that related to his first
action. This position required that the Respondent be satisfied as to the quantum
of legal expenses related to each of the two actions.
[10] The Appellant insists he has provided the
necessary invoices and somehow believes that the CRA and its legal counsel are
falsely denying that he has complied with their request. Based on the exhibits
submitted by the Appellant himself, it is clear that the Appellant has not
provided the particulars requested.
Indeed, the Appellant acknowledged that the reason he would not provide
particulars is because they are solicitor-client privileged. Respondent's
counsel acknowledged that she could not then, or would not, pursue her motion
to compel the Appellant to provide particulars. Clearly the Appellant may
withhold such particulars at his peril.
[11] I turn now to the issue of terminating the
discoveries versus requiring the Respondent to answer the second set of
questions. I note that the Respondent relies solely on section 117 of the Rules,
paragraph (a) of which allows termination of or limiting the scope of
the written examination where the right to examine is being abused by an excess
of improper questions.
[12] I have reviewed the 396 questions in the second
set of questions and found virtually none of them relevant to the issue under
appeal. They relate to or would have relevance to the procedural issues raised
by the Appellant. As I will comment on momentarily, these are improper
questions, which is to say that there is clearly an overwhelming excess of
improper questions. Accordingly the Respondent properly invokes and relies on
section 117 of the Rules. As well, I note that the second set of
questions include a series of 21 questions asked of 13 different federal
government employees. This alone is not allowed under the Rules. Subsection
93(3) of the Rules allows for the examination of only one officer of the
Crown subject to the naming of a different officer on application being made to
the Court. Subsection 93(3), which would apply to discoveries by written
questions, requires the Crown, when it is the party to be examined, to select a
knowledgeable officer to be examined on behalf of that party. However, under
subsection 95(2) of the Rules the person to be examined is required,
prior to the examination, to make all reasonable inquiries regarding the
matters in issue. Such inquiries are to be made of all of the CRA's officers,
servants, agents and employees, past or present, and if necessary the person
being examined for discovery may be required to become better informed and for
that purpose the examination may be adjourned. Failure to meet the requirements
of this Rule would invoke subsection 116(1) of the Rules
permitting further written questions or subsection 93(1) of the Rules
permitting a further examination of the party.
[13] On listening to the Appellant's concerns, one
concern appears to have some validity. That concern is that the CRA officer
responding to the first set of written questions submitted by the Appellant did
not, on the face of certain answers, evidence that she had made any inquiries
of other officers of the CRA in relation to questions the answers to which were
or could be material to the issues under appeal. I have identified three such questions
in the first set of questions and the Appellant is entitled to be satisfied
that the answers to such relevant questions comply with subsection 95(2) of the
Rules. Accordingly, I will grant the motion of the Respondent to close
discoveries subject to the Respondent causing the officer of the CRA, the
affiant who answered the first set of questions, to respond again to questions
5, 6 and 9 of the first set of questions in a manner more clearly consistent
with her obligation set out in subsection 95(2) of the Rules. This
is to limit the scope of written examinations as contemplated in
section 117 of the Rules. As well I note that the answer to
question 31 of the first set of questions has an undertaking which as at
the date at the hearing had not been satisfied. Accordingly my Order will include
by reference the stipulation that the answers to the redirected questions (5, 6
and 9 of the first set of questions) and the undertaking made in answer to
question 31 of the first set of questions shall be completed within 30
days of the date of this Order.
[14] I note here that the Appellant has asked whether
on receiving the answers to the redirected questions he may then serve a
further list of written questions pursuant to subsection 116(1) of the Rules.
That section of the Rules is clearly not intended to allow a further
list of written questions ad infinitum. It would be an abuse of the Rule
in situations like this to suggest that the Appellant continue with his
present course of action. Under the Rules a party gets to examine an
adverse party only once. Subsection
116(1) must be applied so as not to abuse this governing principle. I can
envision no circumstances under which a further list of written questions would
be allowed. Accordingly, subject to subsection 93(1) of the Rules,
examinations for discovery are to be closed upon the Respondent complying with
its obligations as set out in paragraph 13 above.
[15] Needless to say, the Appellant's motion for an
Order allowing the appeal in the absence of the Respondent's fulfilling of the
discovery process is denied as is his request to compel the Respondent to
attend oral discoveries.
[16] As to the Respondent's motion to set this matter
down for hearing of the appeal, I repeat some general observations I made at
the end of the hearing of the motions. The purpose of discoveries is to gather
information related in a relevant way to the issues under appeal. While it
appears that the Appellant has a claim to solicitor-client privilege in relation
to the particulars sought by the Respondent, and while I have denied the
Respondent's motion for an Order directing the Appellant to provide complete
legal invoices to support the disallowed deduction, I note that the information
requested by the Respondent is relevant to the issues. While this may put the
Appellant in a difficult position vis‑à‑vis his claim of privilege,
it does not justify his current disputes over the conduct of the officers of
the CRA or the Justice lawyer involved. The Appellant is on a bit of a witch
hunt and believes he has caught these parties in practices that abuse the
process of his appeal. For example, he has, through access to information,
discovered more documents than were listed under section 82 of the Rules
or provided to him in response to his written questions. He also notes that
some documents have been edited by the deletion of handwritten observations
evident on the copies received from access to information and not evident on
copies received in respect of answers to his written questions. However, as
pointed out to the Appellant at the hearing, nothing in these so‑called
discrepancies were material to issues in this appeal. If the CRA determines
that a document is not relevant to an issue under appeal it need not be
embarrassed about its non-disclosure. Further, to clean up copies is not
necessarily offensive if what is being cleansed is of no relevance to the
issues under appeal or are solicitor-client notations (even if privilege claims
are subsequently waived through access to information). The Appellant has
convinced himself that there is a conspiracy of sorts here to cover up facts
that would disclose that the CRA had taken inconsistent and inappropriate
positions. He has a number of complaints about the entire process and he is on
a fishing trip for full disclosure of that process in order to establish the
veracity of his beliefs and convictions. His pursuits along this path are not
relevant to the issue under appeal and are beyond the jurisdiction of this Court.
Although it is open for the Appellant to seek legal advice on the merits of
considering other forums to pursue, this Court's jurisdiction in these
circumstances is simply and only to determine the correctness of the assessment
on the facts that bear directly to the legal issues in question. The issues
here appear to be straightforward. There is clearly no need to extend pre-trial
procedures further other than as directed above. Accordingly, the parties
should expect that a status hearing will be arranged by the Court in or about
30 days from the date of this Order to set a trial date subject to the parties'
joint request that the matter not be set down for hearing until mutually
satisfactory arrangements have been made to accommodate both the Respondent's
request for particulars respecting the legal invoices in question in this
appeal and the Appellant's concerns respecting the privileged nature of such
evidence.
Signed at Ottawa,
Canada, this 3rd day of February 2005.
Hershfield
J.
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