Hinz v. M.N.R., 2003 TCC 727

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Motions heard on August 8, 2003, at Hamilton, Ontario

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ORDER

          Upon motions by the Respondent for Orders setting aside the Judgments against the Respondent, whose counsel failed to attend the hearing of the appeals due to illness; and rescheduling the matters for hearing before the Court;

          And upon reading the affidavits of Eric Sherbert and Holly Tang;

          And upon hearing the parties;

          It is ordered that the Respondent's motions are granted and the Judgments of the Honourable Judge T.E. Margeson dated May 6, 2003, are set aside and a new hearing date shall be set.

Signed at Ottawa, Canada, this 15th day of October, 2003.

Bowie J.

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Motion heard on August 8, 2003, at Hamilton, Ontario

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ORDER

Upon motion by the Respondent for an Order setting aside the Judgment against the Respondent, whose counsel failed to attend the hearing of the appeal due to illness; and rescheduling the matter for hearing before the Court;

          And upon reading the affidavits of Eric Sherbert and Holly Tang;

          And upon hearing the parties;

          It is ordered that the Respondent's motion is granted and the Judgment of the Honourable Judge T.E. Margeson dated May 6, 2003, is set aside and a new hearing date shall be set.

Signed at Ottawa, Canada, this 15th day of October, 2003.

Bowie J.

REASONS FOR ORDER

Bowie J.

[1]      Mr. Hinz appealed to this Court from decisions of the Minister of National Revenue (the Minister) under both the Employment Insurance Act[1] (EIA) and the Canada Pension Plan[2] (CPP). Mr. Togeretz appealed to the Court, under its informal procedure from an assessment under the Income Tax Act[3] (ITA). The one thing that they have in common is that their appeals were scheduled to be heard by the Court in Hamilton, Ontario on May 1, 2003. On that morning counsel for the Crown (who was not the counsel who appeared before me on these motions) did not appear in Court, and judgment was given in favour of the Appellants. The Crown now brings motions in each of these proceedings for Judgment setting aside the Judgments of May 1, 2003, and ordering that new hearings be held. All parties agreed that the motions should be heard together as the one issue is common to all.

[2]      The facts surrounding the non-appearance of Crown counsel on May 1, 2003, are set out in two affidavits filed in support of the motions. One is made by counsel, and the other by a legal assistant in the Toronto office of the Department of Justice. The Respondents elected not to cross-examine on these affidavits because to do so would cause further lost time at work for them, and would also delay the final resolution of their appeals. They preferred to accept the affidavit evidence unchallenged. It may be summarized this way. Counsel, who lives in Toronto, set out on the morning of May 1, 2003, to drive to Hamilton, where he had been assigned to appear for the Crown in the appeals with which these motions are concerned. He became ill - so ill that he could not continue to drive. He telephoned a legal assistant in his office, who in turn telephoned the Court House at Hamilton and left a message for the Court Registrar. The message reached the Registrar, but only in part, and when the cases were called the presiding Judge did not know that the absence of counsel for the Crown was attributable to sudden illness. He knew only that counsel had sent the message that he was unable to attend Court that day. The judge proceeded to hear the cases in the absence of counsel for the Deputy Attorney General of Canada, and he allowed the appeals. No doubt he was relying by analogy on General Procedure Rule 140. It appears from the Court's record that no witnesses were sworn, and no exhibits were entered during the hearings, so there was no evidence at all to discharge the burden of proof on the Appellants. The Judgments were, on their face, given on the basis of non-appearance by the Crown.

[3]      Counsel for the Attorney General appearing on these motions relied on section 140 of the Tax Court of Canada Rules (General Procedure), which reads:

140(1) If at a hearing, either party fails to appear, the Court may allow the appeal, dismiss the appeal or give such other direction as is just.

     (2)    The Court may set aside or vary, on such terms as are just, a judgment or order obtained against a party who failed to attend a hearing, a status hearing or a pre-hearing conference on the application of the party if the application is made within thirty days after the pronouncement of the judgment or order.

While the Rule is enacted with application only to appeals conducted under the Court's general procedure, counsel argues that it should be applied, by analogy, to cases conducted under the informal procedure, and to cases arising under the EIA and the CPP as well.

[4]      I cannot see any reason to apply Rule 140 of the General Procedure Rules by analogy, in the case of either an income tax appeal conducted under the informal procedure, or an appeal under either the EIA or the CPP. There is a specific provision in the Tax Court of Canada Act, similar in terms to Rule 140, which makes provision for giving default judgment if an Appellant fails to appear for the hearing of an informal procedure appeal, and for setting that judgment aside on a subsequent motion of the Appellant. No such provision is made in that Act to deal with failure of the Crown's representative to appear. There is no statutory provision or rule making any similar provision applicable to appeals arising under the EIA or the CPP. If either Parliament or the Rules Committee had wished to enact a provision similar to Rule 140 to apply in a case of failure of the Crown to appear, it would have been very simple to do so. Resort to the General Rules of Procedure in informal appeals, and in EIA and CPP appeals, should be limited to those occasions when a procedure is required; there is no mandate to apply the General Rules of Procedure to every situation in which the Rules Committee has not seen fit to make provision in the Informal Procedure Rules or the EI and CPP Rules. That is especially so where the matter at hand affects established rights and not simply the procedure to be followed.

[5]      That does not mean, however, that this Court is powerless to deal with the matter. The Federal Court of Appeal had occasion to consider an application similar in principle to those before me, although arising in different circumstances, in May & Baker (Canada) Ltd. v. The "Oak".[4] There an action arising out of damage to cargo was begun in the Federal Court Trial Division on October 24, 1972. The Rules[5] provided that the Statement of Claim could be served within a year from the day it was filed, and gave the Court power to extend the time for service. Two days before the time for service expired the Plaintiff obtained an ex parte order extending the time for service, and a second extension of time was later granted by a further order of the Federal Court Trial Division. A motion to set aside the service on the basis that the orders extending the time for service ought not to have been made was heard and dismissed by the Trial Division. On appeal, the Federal Court of Appeal held that the Trial Division orders ought not to have been made because the material put before the Court on those occasions was not sufficient to show entitlement to the orders. As no appeal had been taken from the orders extending time, the Court had to consider whether the Trial Division could have set aside its own earlier orders on the motion attacking service of the Statement of Claim. It held that it could, and should, have done so, the orders having been made ex parte, and on insufficient evidence. Jackett C.J. wrote the unanimous reasons of the Court, in which he said at pages 404-405:

Generally speaking, when a court makes an order or delivers a judgment, in the absence of special provision, it is without authority to review such order or judgment. Its correctness can only be dealt with on appeal. When, however, an order is made ex parte, in my view, in the absence of something to the contrary, there is an inherent jurisdiction in the Court, after the party adversely affected has been given an opportunity to be heard, if it then appears that the ex parte order or judgment should not have been made,

(a)        to set aside the ex parte order or judgment as of the time when the order setting aside is made, and                                                                                                                                      

(b)        to make such ancillary order as may be necessary to restore the party adversely affected to the position he would have been in if the ex parte order or judgment had not been made      

It follows, in my view, that, in such a case, the party aggrieved is entitled, upon an application to set aside an ex parte order, to obtain such relief, and that the appellant, as such an aggrieved party, should have been granted such relief by the judgment that is the subject matter of this appeal.

[7]      I have no doubt that the principle applied by the Court of Appeal in The "Oak" applies here as well. Taking the affidavits at face value, as I must, the non-appearance of the Crown was unavoidable in the circumstances. The Judgments must therefore be considered to have been made ex parte. The judgment in The "Oak" was followed in this Court by Christie A.C.J. (as he then was) in Curoe v. M.N.R.[6] He described the power to rescind an ex parte judgment given in error to be one "... which all the common law courts have long held to be inherent in their jurisdiction".[7] No doubt appeals from the ex parte Judgments of May 1, 2003 would have been successful, had they been taken, and so this Court has the authority, and the duty, to set them aside on the application of the party aggrieved.

[8]      I regret that I do not have the power to make any order as to costs on these motions. If I were satisfied that the Crown's right to Orders setting aside the Judgments were discretionary, then I would make the orders conditional upon the Deputy Attorney General undertaking to compensate the Respondents for their loss of income resulting from the need to attend three hearings instead of only one. However, a careful reading of the authorities satisfies me that the Crown is entitled to have the Judgments set aside as of right. The Attorney General could of course, compensate the Appellants for their time lost on an ex gratia basis.

[9]      Orders will go setting aside the judgments and directing that new trial dates shall be set.

Signed at Ottawa, Canada, this 15th day of October, 2003.

Bowie J.