Date: 20011120
Docket: 1999-1746-IT-G
BETWEEN:
HELGA ZELINSKI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Order
Bowie J.
[1]
There are two motions before me. One is brought by the Respondent
for an Order striking out numerous paragraphs of the Amended
Notice of Appeal. The other is brought by the Appellant for an
Order permitting her to further amend the Notice of Appeal to add
several more paragraphs.
[2]
The Appellant was assessed under section 160 of the Income Tax
Act (the Act). The Minister of National Revenue (the
Minister) takes the position that one Herman Gebele (Herman), to
whom the Appellant was married at one time, transferred real
property to her for no, or inadequate, consideration, at a time
when he was indebted to the Crown for unpaid income tax, and that
Herman and the Appellant were not acting at arm's length at
the time. The amount assessed is $306,636.38. This appeal is from
that assessment. A number of objections to the assessment were
raised initially. With the consent of the Respondent an amended
Notice of Appeal was filed. The Respondent's consent, it
appears, was not to a specific proposed amended pleading.
Confronted with the Amended Notice of Appeal, the Respondent now
moves to strike out paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 20, 21, 24, 25, 27, 28 and 34, on the basis that they are
frivolous, vexatious, and an abuse, and are likely to prejudice
or delay the fair hearing of the appeal. Although the motion is
framed in the language of Rule 58 of the Tax Court of
Canada Rules (General Procedure) (the Rules), the real
objection to these paragraphs is that they do not plead material
facts.
[3]
The Respondent having moved against the Amended Notice of Appeal,
the Appellant now moves to add some 10 additional paragraphs or
subparagraphs, falling into two categories. One group is intended
to raise for the first time objections to the assessment based on
sections 7 and 8 of the Canadian Charter of Rights and
Freedoms (the Charter). The second seeks to invoke the
Principles of the Nuremberg Tribunal, 1950 (the
Nuremberg Principles) and the Charter of the United
Nations (the U.N. Charter). These further amendments
are opposed by the Respondent, with the exception of a minor
amendment to the prayer for relief.
[4]
The purpose of pleadings is to define the issues in dispute
between the parties for the purposes of production, discovery and
trial. What is required of a party pleading is to set forth a
concise statement of the material facts upon which she relies.
Material facts are those facts which, if established at the
trial, will tend to show that the party pleading is entitled to
the relief sought. Amendments to pleadings should generally be
permitted, so long as that can be done without causing prejudice
to the opposing party that cannot be compensated by an award of
costs or other terms, as the purpose of the Rules is to
ensure, so far as possible, a fair trial of the real issues in
dispute between the parties.
[5]
The applicable principle is stated in Holmsted and
Watson:[1]
This is the rule of pleading: all of the other pleading
rules are essentially corollaries or qualifications to this basic
rule that the pleader must state the material facts relied upon
for his or her claim or defence. The rule involves four separate
elements: (1) every pleading must state facts, not mere
conclusions of law; (2) it must state material facts and not
include facts which are immaterial; (3) it must state facts and
not the evidence by which they are to be proved; (4) it must
state facts concisely in a summary form.
Applying these principles, I approach both motions on the
basis that the test to be applied is whether the paragraphs in
dispute, and those that the Appellant proposes to add, are proper
pleadings of material facts. The Appellant's motion seeks
to add two issues to those now pleaded. She should be permitted
to do so, unless it is plain and obvious that they are so
ill-founded in law that they could not succeed at trial, even if
the facts upon which they depend were established to be true.
[6]
The following facts are material to an appeal from an assessment
under section 160:
i)
whether there was a transfer of property to the Appellant;
ii)
whether the Appellant gave consideration for the transfer, and if
so the value of that consideration;
iii)
the fair market value of the property at the time of the
transfer;
iv)
whether the transferor and the Appellant were acting at
arms' length at the time of the transfer;
v)
whether the transferor was indebted to the Crown for unpaid tax
at the time of that transfer, and if so, the amount of that
indebtedness at the time of the transfer; and;
vi)
whether the assessment or assessments giving rise to that
indebtedness are well founded in fact and law.
[7] I
shall not reproduce in full the paragraphs that the Respondent
attacks. They may be conveniently dealt with in two groups.
First, however, I note that counsel for the Appellant conceded
during the hearing of the motion that paragraphs 18, 21, 24, 25,
27, 28 and 34 cannot be sustained. They will be struck out.
Paragraphs 9, 10, 11, 12, and 13.
[8]
These contain allegations that Herman and a corporation called
Herman's Auto Repair Service Centre Limited (Herman's
Auto) filed certain income tax returns, that the Appellant
believes them to have filed certain other income tax returns, and
that certain assets of Herman's Auto were transferred to a
bank in Bermuda. If these facts were established at trial, they
could have no bearing on the validity of the assessment under
appeal. Counsel for the Appellant suggested that paragraphs 12
and 13 would be relevant to whether certain assessments against
Herman had been made after the time limited by the Act.
This submission was based upon an improper understanding of the
provisions of the Act dealing with the Minister's
obligation to assess. All the contents of these paragraphs are
immaterial to the issues. They will be struck out.
Paragraphs 15, 16, 17, 19 and 20
[9]
These paragraphs allege certain conduct on the part of officers
of the Respondent in connection with the investigation that gave
rise to the assessment under appeal. Paragraph 19 also makes
reference to an operations manual, which, it is alleged, these
officers failed to comply with in their investigation. Paragraph
20 alleges that certain parts of that manual "¼ are
particularly relevant herein". The position advanced by
counsel for the Appellant in argument is that the
Appellant's right under section 8 of the Charter to
be secure against unreasonable search and seizure was violated by
the conduct of these officers. He relies on R. v. Dial Drug
Stores Ltd.,[2]
a decision dealing with evidence in the context of a criminal
proceeding, for the proposition that the Appellant is entitled to
have the assessment vacated by reason of the conduct of the
officers.
[10] It is
clear from such decisions as The Queen v. O'Neill
Motors,[3]
The Queen v. Norman Jurchison and Norway Insulation Inc.[4] and The
Queen v. Norwood[5] that even if the Appellant were to establish a breach
of section 8 of the Charter by the investigators, she
would not be entitled to judgment vacating the assessment unless
it were established that the Crown had no evidence other than
that gathered in contravention of the Charter by which it
could seek to uphold the assessment. The Amended Notice of Appeal
contains no such plea; indeed, it does not even plead reliance on
section 8 at all, a failing which counsel for the Appellant seeks
to remedy by his motion to further amend the pleading.
[11]
Nevertheless, the allegations pleaded in paragraphs 15, 16, 17
and 19 will be relevant to an objection to the admissibility of
evidence which the Appellant intends to make at the trial. The
merit of that objection will be a matter for the trial judge to
deal with, if and when the evidence is tendered. In the meantime,
however, I can see no reason why the Appellant should not be
entitled to raise in her pleading the factual issue as to the
manner in which evidence has been gathered by the officers of the
Respondent, even though as presently pleaded it is material only
to the issue of admissibility, and not to the substantive relief
sought in the appeal. The issue will likely be a live one at the
trial. Paragraphs 15, 16, 17 and 19 will therefore not be struck
out. Paragraph 20, however, is immaterial, and will be struck
out.
The Appellant's motion
[12] The
paragraphs that the Appellant moves to add to the Amended Notice
of Appeal fall into two categories. Proposed paragraphs 17A,
35(l) and 36A would invoke sections 1, 7, 8 and 24 of the
Charter. Paragraphs 34A, 34B, 34C, 34D, 36B and 36C seek
to rely on the Nuremberg Principles and the U.N.
Charter. A further minor amendment to the relief sought is
consented to by counsel for the Respondent.
The Charter of Rights and Freedoms
[13] I have
already concluded above that the Appellant may plead allegations
that her rights under the Charter were infringed in the
course of the investigation, which gave rise to the assessment
against her. It follows that she may specifically plead reliance
on section 8 of the Charter. Reliance upon section 7 is,
however, foreclosed by the decision of the Federal Court of
Appeal in A. Tyler v. M.N.R.[6] The Court there made a distinction
between the use of information in a tax audit and in a criminal
investigation, for the purposes of section 7 of the
Charter. At page 20, Stone J.A. said:
¼ in the context of the tax audit the deprivation [of
rights] does not amount to a breach of the principles of
fundamental justice. In the tax audit per se there is no
suspect and no accused. The procedure is entirely administrative
in nature.
[14] The
Appellant may amend her Notice of Appeal to rely upon sections 8
and 24 of the Charter, on the basis of the facts already
pleaded. This Court has no jurisdiction to grant the declaratory
relief the Appellant proposes to seek, however.
The Nuremberg Principles and the U.N. Charter
[15] Proposed
paragraphs 34A, 34B, 34C and 34D may be summarized as a plea that
the Appellant is not bound to pay taxes (presumably including a
derivative assessment under section 160 of the Act)
because the Government of Canada will spend some of the money
that it raises through taxation on weapons of mass destruction,
contrary to the Nuremberg Principles and the U.N.
Charter. The affidavit of the Appellant filed in support of
her motion does not address any questions of conscience in this
connection. Paragraphs 34A and 34B simply would plead that she
does not choose to support the Government of Canada because it is
"¼ involved in an agreement with other nations that
involve the will and the capacity to murder hundreds of millions
of defenceless human beings".
[16] These are
essentially the same arguments that were before the Federal Court
in Prior v. The Queen.[7] The Notice of Appeal was struck out in that
case, on the basis that the Appellant could not possibly succeed
at trial in an appeal which was based solely on the proposition
that the Appellant was not obliged to pay taxes to the government
that would be used for the purpose of acquiring weapons of war.
Counsel for the Appellant sought to distinguish this case on the
basis that the argument there was based on sections 2(a)
and 15 of the Charter, and did not, as here, rely on the
Nuremberg Principles and the U.N. Charter. Those
two documents, however worthy, cannot weigh more heavily in the
judicial scales than the Charter of Rights and Freedoms,
which is, of course, an integral part of Canada's
constitution. The essence of the decision in Prior was to
the effect that section 2(a) of the Charter could
not displace the taxing power in section 91(3) of the
Constitution Act, 1867. It follows that the
Appellant's argument based upon the Nuremberg
Principles and the U.N. Charter could not possibly
succeed. If these paragraphs had been pleaded in the original
Notice of Appeal they would have been susceptible of being struck
out. The Appellant is therefore not entitled to the proposed
amendment.
[17] The
Respondent has been substantially successful on both motions.
Costs will be to the Respondent, in the cause.
Signed at Ottawa, Canada, this 20th day of November, 2001.
J.T.C.C.
E.A.Bowie
COURT FILE
NO.:
1999-1746(IT)G
STYLE OF
CAUSE:
Helga Zelinski and Her Majesty the Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
November 7, 2001
REASONS FOR JUDGMENT
BY:
The Honourable Judge E.A. Bowie
DATE OF
JUDGMENT:
November 20, 2001
APPEARANCES:
Counsel for the
Appellant:
George Gligoric
Counsel for the
Respondent:
David E. Spiro and Brianna Caryll
COUNSEL OF RECORD:
For the
Appellant:
Name:
George Gligoric
Firm:
George Gligoric
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-1746(IT)G
BETWEEN:
HELGA ZELINSKI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion heard on November 7, 2001, at Toronto,
Ontario, by
the Honourable Judge E.A. Bowie
Appearances
Counsel for the
Appellant: George
Gligoric
Counsel for the Respondent: David E.
Spiro and Brianna Caryll
ORDER
UPON motion brought by counsel for the Respondent for an Order
striking out paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 17, 18,
19, 20, 21, 24, 25, 27, 28 and 34 of the Amended Notice of Appeal
on the grounds that they are frivolous, vexatious, and an abuse,
and are likely to prejudice or delay the fair hearing of the
appeal; and
UPON motion brought by counsel for the Appellant for an Order
permitting a further amendment of the Notice of Appeal; and
UPON reading the Amended Notice of Appeal and the Affidavit of
Helga Zelinski, filed; and
UPON hearing counsel for the parties;
IT IS HEREBY ORDERED THAT:
1. Paragraphs 9, 10, 11, 12, 13, 14, 18, 20, 21, 24, 25,
27, 28 and 34 of the Amended Notice of Appeal are hereby struck
out;
2. The Appellant shall have leave to further amend the
Amended Notice of Appeal to plead and rely on section 8 of the
Canadian Charter of Rights and Freedoms, and to add the
words "or vacated" to subparagraph 38(a), such
further amended Notice of Appeal to be filed and served by
December 15, 2001;
3. The Respondent shall have 45 days following service
of the Further Amended Notice of Appeal within which to deliver a
Reply;
4. The Order of the Chief Judge dated July 6, 2001 is
amended to provide that the parties shall file and serve lists of
documents pursuant to Rule 82 (full disclosure) by
February 28, 2002, examinations for discovery shall be completed
by March 29, 2002, and undertakings shall be fulfilled by
April 30, 2002. The final paragraph of that Order remains in
force.
5. The Respondent is entitled to the costs of both
motions, in the cause.
Signed at Ottawa, Ontario, on the 20th day of November,
2001.
J.T.C.C.
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