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Citation:2003TCC703
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Date: 20031010
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Docket: 2000-4697(IT)G
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BETWEEN:
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ANDRE TREMBLAY,
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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 JUDGMENT
Bell, J.
[1] The Respondent filed a Notice of
Motion with the Court on September 23, 2003 returnable
on September 25, 2003 and served the Appellant by leaving a copy
thereof and attached documents, in a sealed envelope, in his
mailbox at 3:05 p.m. at 3807-5th Avenue, Port Alberni, British
Columbia.
[2] When the Court advised the
Respondent's counsel that she had had ample time to file a
motion with the appropriate notice she responded that the
Appellant was not prejudiced by this motion. The Appellant
stated, before he was sworn, that he had not received the served
copy of the Notice of Motion.
[3] The motion was for an Order that
the appeals be dismissed pursuant to the provisions of Rule
116(4) of the Tax Court of Canada Rules (General
Procedure). The ground for the motion was that the Appellant
failed to respond to questions on written examination for
discovery by affidavit in Form 114 either within 30 days as
provided in the said Tax Court Rules, or at any time.
[4] A copy of the affidavit of Karen
A. Truscott, counsel in the Tax Law Services Section of the
Department of Justice in Vancouver, British Columbia reads as
follows:
I, Karen A. Truscott, of the City of Vancouver, in the
Province of British Columbia, MAKE OATH AND SAY AS FOLLOWS:
1. I am
employed as counsel, in the Tax Law Services Section of the
Department of Justice (the "Department") in Vancouver,
British Columbia and as such have personal knowledge of the
matters hereinafter deposed to, save and except what is stated to
be on information and belief, and where so stated, I verily
believe them to be true.
2. Attached as
Exhibits A and B respectively are copies of the Notice of Appeal
and Reply to the Notice of Appeal filed in these proceedings.
3. Attached as
Exhibits C and D are copies of the Appellant's List of
Documents and the Respondent's List of Documents.
4. I have
reviewed the Department's files and am also informed by Ms.
Lynn Burch, counsel in the Tax Law Services Section of the
Department of Justice, Vancouver, British Columbia, having
conduct of this appeal, and do verily believe that on February 6,
2003 Ms. Burch served on the Appellant's then counsel, Mr.
George Jones, questions on written examination for discovery
together with copies of the documents comprising the
Respondent's List of Documents. A copy of Ms. Burch's
letter and the questions on written examination for discovery are
attached as Exhibit E.
5. I am
informed by Ms. Burch and do verily believe that the Appellant
did not answer the questions on written examination for discovery
in Form 114 as prescribed by the Tax Court of Canada Rules
(General Procedure) either within the thirty days of the
questions being served on his counsel or at any other time.
Counsel for the Appellant did provide a letter dated March 6,
2003 on a "without prejudice" basis. A copy of that
letter is attached as Exhibit F.
6. I am
informed by Ms Burch and do verily believe that the Appellant,
his counsel and Ms. Burch attended a pre-trial conference before
Mr. Justice Beaubier, in Victoria, British Columbia on April 3,
2003. A copy of the pre-trial brief is attached as Exhibit G.
7. I am
informed by Ms. Burch and do verily believe that the pre-trial
conference was unsuccessful in defining or resolving any of the
matters at issue in this appeal.
8. On June 4,
2003 Mr. Jones made a motion to be removed as solicitor of record
which motion attached a letter of that same date addressed to Mr.
Justice Beaubier. A copy of the Notice of Motion and letter are
attached as Exhibit H.
9. I am
informed by Ms. Burch and do verily believe that Mr. Jones'
motion to be relieved as solicitor of record was heard by
teleconference call on June 27, 2003 which motion was unopposed
by the Respondent and granted by Mr. Justice Beaubier. A copy of
the Reasons for Order and Order are attached as Exhibit I.
10. I make this Affidavit
in support of the Respondent's motion that the appeal be
dismissed pursuant to Rule 116(4) of the Tax Court of Canada
Rules (General Procedure).
[5] Exhibit E to Karen Truscott's
affidavit is reproduced, in pertinent part, as follows:
QUESTIONS ON WRITTEN EXAMINATION
FOR DISCOVERY
The Respondent has chosen and the Appellant has consented that
the Appellant shall be examined for discovery by written
questions. The Respondent requires that the following questions b
answered by affidavit in Form 114 prescribed the Tax Court of
Canada Rules (General Procedure), and served within thirty
days after service of these questions.
1. Do you
agree that the assessment for your 1998 taxation year, dated
September 14, 2000 (see item 42, Respondent's List of
Documents) is a nil assessment (ie. it is not an assessment of
tax but is a notification that no tax was payable).
2. If you
don't agree, why not?
3. You agree
with the facts set out at paragraphs 8(b), (c) and (d) of the
Reply?
4. If not,
state fully the facts which contradict those pleaded facts.
5. Do you
agree that the Minister of National Revenue properly included the
amounts set out at paragraphs 8(e) of the Reply in your income
for the years stated there?
6. If not, why
not?
7. Did you
claim certain pension and investment income that was properly
yours as income of your brother Marquis Tremblay as set out at
paragraph 8(e)(i) and (ii)?
8. The
documents at Tabs 60, 61, 4, 7, 9 and 62 are tax returns for
1991, 1992, 1993, 1994, 1995 and 1996 that you filed under your
brother's name?
9. You signed
Marquis Tremblay's name to each of those returns,
correct?
10. Has Marquis Tremblay
has been deceased since 1935?
11. You agree with the
facts stated at paragraphs 8(f), (g), (h), (i), (j), (k), (m),
(n), (o) and (p) of the Reply to Notice of Appeal?
12. If not, state fully
the facts which contradict those pleaded facts.
13. You did not appeal the
decision of the Supreme Court of British Columbia ordering
repayment to Shipp?
14. You did not appeal the
fraud conviction?
15. You did not appeal
your conviction in the 1999 tax prosecution?
16. If any of those
matters were appealed, please provide details as to their
resolution.
17. Further to an Order of
the Supreme Court of British Columbia in respect of the civil
suit brought against you by Frederick Shipp ("Shipp")
you repaid $794,899 to Shipp in your 1998 taxation year.
18. If you disagree with
this statement, fully state why.
19. You agree that the
September 14, 2000 Reassessments allowed you to carry the
non-capital loss generated by the repayment to your 1995, 1996,
1997 taxation years as set out in Schedule 1 of the Reply?
20. On what facts do you
rely in support of the position taken in the Notice of Appeal
that you should be allowed to carry back the non-capital loss
generated by the 1998 repayment to your 1994 taxation year?
21. Is it your position
that you should be allowed to carry back the non-capital loss
generated by the 1998 repayment to your 1991, 1992 or 1993
taxation years?
22. If so, what facts do
you rely on in support of that position?
23. What is the exact
amount of "large legal expenses" and "full legal
expenses" referred to at paragraphs B.1 and C.3 of the
Notice of Appeal?
24. What are the legal
expenses comprised of?
25. Do the legal expenses
cover both the civil Shipp action and the two prosecutions?
26. When were the legal
expenses incurred?
27. Who was your legal
representative in each of those matters?
28. How did your legal
representatives in those matters invoice you?
29. Please provide copies
of all documents indicating the legal expenses you incurred in
defense of the Shipp action and the two prosecutions that you
believe should be allowed to you as a deduction.
30. Did you pay legal
fees?
31. If so, what was the
manner of payment?
32. When were the payments
made? Provide copies of any and all documents showing
payment.
[6] Respondent's counsel, Lynn
Burch, informed the Court that it was impossible, without answers
to those questions, to determine the issues in this appeal. She
referred to the portion of the Notice of Appeal entitled "C.
ISSUES TO BE DECIDED" which reads as follows:
1. Whether
indeed the Appellant should have certain sums received from Fred
Shipp included in his income in 1994.
2. Whether all
monies paid to Fred Shipp's Estate in later years should be
credited to the Appellant.
3. Whether the
full legal expenses incurred by the Appellant in defending the
Shipp actions are deductible under the provisions of the
Income Tax Act.
4. Whether the
Appellant is entitled to carry back legal expenses and repayment
amounts to the 1994 taxation year.
5. Whether the
Appellant was guilty of gross negligence in order for penalties
to be levied and applied against him.
[7] Counsel also informed the Court
that the Appellant had been convicted, under the Criminal Code,
of embezzling funds from Mr. Shipp ("Shipp") and
sentenced to two years in prison. She stated further that the
Appellant had been convicted of offenses under section 239 of the
Income Tax Act ("Act") and had been
ordered by the Supreme Court of British Columbia on June 26, 1998
to repay Shipp $830,620 in respect of the aforesaid
defalcation.
[8] Counsel also described how amounts
in respect of the defalcation were paid to Shipp by the Appellant
and how such payments had been treated as deductions which were
applied against his 1998 income and the income of 1997, 1996 and
1995 with the balance being carried forward for seven years. She
also stated that one of the difficulties with the Appellant was
that the loss could not be carried back, because of statutory
limitation, to his 1994 taxation year. Respondent's counsel
also advised the Court that when the case was initially set down
for April 3, 2003 the hearing essentially became a pre-hearing
conference with an attempt to settle the matter. Counsel advised
that the Appellant would not accept a settlement satisfactory to
the Respondent and to Appellant's counsel and that the case
was adjourned to September 25, 2003.
[9] The Appellant denied ever
discussing the written questions with his lawyer and denied
having received them from such counsel on his resignation as
counsel by order of this Court on June 27, 2003. This denial was
made in spite of my assurance to him that his counsel, of
outstanding reputation and competence, would have delivered all
documents to him after his resignation.
[10] After the Court caused the Appellant to
be sworn so that his subsequent statements would all be made
under oath, in response to the Court's questions as to what
evidence he would produce if the trial proceeded, he said that he
would prove that he did not take the money from Shipp. He also
referred to untrue statements made by Respondent's
counsel.
[11] The impression made upon the Court by
the Appellant is that he was untruthful, obstructive and, having
ignored his responsibility to answer questions and define the
issues, was wholly unprepared to proceed with the hearing of his
appeal. This impression was buttressed by his extraordinary
declaration that he was not guilty as convicted, blaming his
lawyer for such result.
[12] It appears to the Court that this
Appellant had no intention of preparing for the conduct of a
reasonable hearing and because he denied the existence of proven
facts, there was no point in proceeding with that hearing or
adjourning it to another date.
[13] Rule 116(4) read as follows:
(4) Where a person
refuses or fails to answer a proper question on a written
examination or to produce a document which that person is
required to produce, the Court may, in addition to imposing the
sanctions provided in subsections (2) and (3),
(a) if the
person is a party or a person examined on behalf of or in place
of a party, dismiss the appeal or allow the appeal as the case
may be,
(b) strike out all
or part of the person's evidence, and
(c) give such
other direction as is just.
[14] In light of the foregoing, I determined
that the Appellant was not prejudiced by the short notice for the
hearing of the motion and I abridged the time for serving the
Notice of Motion under Rule 12 and dismissed the appeal under
rule 116(4).
Signed at Ottawa, Canada this 10th day of October, 2003.
J.T.C.C.
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