REASONS
FOR ORDER
Graham J.
[1]
A taxpayer appearing before the Tax Court of
Canada on a matter under the Informal Procedure may be represented by an agent. Such agents are not required
to possess any particular qualifications. Agents are often spouses, family
members or friends. These people appear without compensation for the simple
purpose of helping the taxpayer present his or her case. Other agents are
individuals who are paid for their services. They may have accounting
designations, may be former CRA employees or, like Chris Shannon, may simply be
people who hold themselves out as having knowledge of tax matters.
[2]
The Court has the power to control its own
process. Part of that control includes controlling those who appear before the
Court as agents. In rare circumstances, it may be appropriate for the Court to
exercise that power to prohibit an individual from acting as an agent in this
Court without permission. This is one of those rare circumstances.
[3]
Mr. Shannon has acted as an agent for taxpayers
on six different appeals. After reviewing all of the relevant factors, it is
clear that Mr. Shannon should be prohibited from acting as an agent without first
obtaining permission from the Court.
[4]
I will review the source of the Court’s power to
prohibit agents from acting, the process for doing so, the factors that should
be considered, and the terms of any prohibition. I will then apply those
factors to Mr. Shannon’s situation and determine the appropriate terms for his
prohibition.
I. Power to Prohibit Agents From Acting
[5]
Neither the Tax Court of Canada Act, the Tax
Court of Canada Rules (General Procedure), nor the Tax Court of Canada
Rules (Informal Procedure) gives the Court the power to remove an agent
from an appeal or to prohibit an agent from acting. Nonetheless, the Court has
that power.
[6]
The Tax Court of Canada is a statutory court. The
Supreme Court of Canada has held that a statutory court has the implied power
to control its own process (R. v. Cunningham). The Ontario Court of Appeal
has held that a court’s power to control its own process includes the power to
prevent agents from representing litigants if their continued representation
would harm the proper administration of justice (R. v. Romanowicz). That power exists even when
legislation contemplates agents acting on behalf of a party and there is no
express rule in that legislation for their removal (Romanowicz). That
power can extend to prohibiting agents from acting not just in a given matter
but in all matters before the relevant court (Ontario v. Deutsch).
[7]
The Tax Court has previously exercised its power
to control its own process to remove counsel or agents from acting on specific
appeals. The Court has removed counsel who had a conflict of interest (Attisano
v. The Queen; Williamson v. The Queen), an agent
who had a conflict of interest
and counsel who had been suspended by the Law Society of Upper Canada (Spillman
v. The Queen).
[8]
In the case of Davitt v. The Queen, Justice Boyle exercised this
power to prevent counsel from acting in certain types of appeals. Mr. Davitt
was a lawyer who represented himself. Justice Boyle found Mr. Davitt to be a
vexatious litigant and, at the same time, ordered that Mr. Davitt not act as
counsel without permission on any matter that raised similar issues to the ones
in respect of which Mr. Davitt had been declared a vexatious litigant.
[9]
I am only aware of one case where this Court has
prohibited an agent from representing taxpayers on all matters. In 2004, the
Federal Court of Appeal issued an order prohibiting a particularly vexatious
and abusive agent named Maurice Prefontaine from representing anyone before the
Federal Court of Appeal.
Later that same year, Justice Paris issued an almost identical order preventing
Mr. Prefontaine from representing anyone in the Tax Court.
[10]
Based on all of the foregoing, I conclude that
the Court has the power to prohibit an agent from acting on all matters pursuant
to its implied power to control its own process.
II. Process for Prohibiting an Agent From Acting on Any Matter
[11]
An application to have an agent prohibited from
acting may be brought either on the Court’s own motion or by motion by the
Crown. The motion need not be connected to a specific matter already before the
Court. The normal rules of evidence need not necessarily apply to evidence that
the Court considers on such a motion.
However, it is essential that interested parties be given an opportunity to
make representations in respect of any such motion.
On the Court’s Own Motion
[12]
There are three times at which the Court might
bring an application on its own motion to prohibit an agent from acting:
a)
Before the hearing of a particular matter: If, before the hearing of a particular matter, the Court
determines that it may be appropriate to prohibit an agent from acting in both
the particular matter and all other matters, the Court should advise all interested
parties that it is considering making such an order, advise those parties of the
concerns that are causing the Court to consider making that order and give
those parties an opportunity to make representations. The interested parties
would be the agent, the taxpayer in the particular matter, the Crown and any
other taxpayers whom the agent currently represents in any other matters before
the Court. The Court may direct that the motion be dealt with in a separate hearing,
at the commencement of the hearing of the particular matter or in writing. Any
resulting order should be in the name of the agent, not the name of the taxpayer
in the particular matter or the names of the taxpayers whom the agent currently
represents in any other matters. This will ensure that the agent can appeal the
order without the involvement of such taxpayers.
b) After the hearing of a particular matter:
If, after the hearing of a particular matter, the Court determines that it may
be appropriate to prohibit an agent from acting in all matters, the Court
should advise all interested parties that it is considering making such an
order, advise those parties of the concerns that are causing the Court to
consider making that order and give those parties an opportunity to make
representations. The interested parties would be the agent, the Crown and any
taxpayers whom the agent currently represents in any other matters before the
Court. The taxpayer in the particular matter would only be an interested party
if judgment had not already been issued in that matter. The Court may direct
that the motion be dealt with in a separate hearing or in writing. Any
resulting order should be in the name of the agent, not the names of any
taxpayers whom the agent currently represents. This will ensure that the agent
can appeal the order without the involvement of such taxpayers.
c)
During the hearing of a particular matter: If, during the hearing of a particular matter, the Court
determines that it may be appropriate to prohibit an agent from acting in both the
particular matter and in all other matters, the Court should bring a motion to
remove the agent from the particular matter and then immediately hear
representations from the agent, the taxpayer and the Crown. If the Court
decides to remove the agent from the particular matter, the Court should make an
interlocutory order in the particular matter. After reaching a decision on the agent’s
representation in the particular matter, the Court should then decide whether it
should also consider prohibiting the agent from acting in all other matters. If
so, the Court should either immediately hear representations from the agent and
the Crown or choose to receive those representations either at a separate
hearing or in writing. If the agent is currently representing other taxpayers,
the Court should avoid making any order until those taxpayers have had the
opportunity to make submissions. Any resulting order should be in the name of
the agent, not the name of the taxpayer in the particular matter or the names
of the taxpayers whom the agent currently represents in any other matters. This
will ensure that the agent can appeal the order without the involvement of such
taxpayers.
On Motion by the Crown
[13]
If an application to prohibit an agent from
acting is brought by the Crown, it should be brought in accordance with the
rules for motions under the Tax Court of Canada Rules (General Procedure).
The named parties should be the Crown as applicant and the agent as respondent.
The Crown should ask the Registry to create a new docket number for the motion
separate from any existing docket numbers of any taxpayers currently represented
by the agent. For the purposes of section 67 of the Tax Court of Canada
Rules (General Procedure), the agent and any taxpayers currently
represented by the agent in any matters before the Court should be considered
persons or parties who will be affected by the order sought. Any resulting
order should be in the style of cause of the motion.
III. Test for Prohibiting an Agent From Acting
[14]
To paraphrase the Ontario Court of Appeal in Romanowicz,
it is not enough that the Court believes that the taxpayers currently
represented by an agent would be better off with another agent or representing
themselves. It is similarly not enough that the Court believes the process
would operate more smoothly and effectively if the agent were not involved.
Prohibiting a taxpayer’s chosen agent from acting is a serious matter that is
warranted only where it is necessary to protect the proper administration of
justice.
[15]
The following is a non-exhaustive list of factors
that I believe the Court should consider when deciding whether it is necessary
to prohibit an agent from acting in order to protect the proper administration
of justice. I draw this list from the case law and from specific experiences that
the Court has had with agents:
a)
Is the agent’s involvement causing or
facilitating an abuse of the Court’s process?
b) Is the agent’s involvement causing or facilitating the making of
scandalous, frivolous or vexatious arguments?
c)
Is the agent’s involvement causing or
facilitating the bringing of appeals that disclose no reasonable grounds for
appeal?
d) Is the agent’s involvement causing or facilitating the bringing of
appeals concerning matters over which the Court has no jurisdiction?
e)
Has the agent shown contempt for the Court or
encouraged his or her clients to show contempt for the Court?
f)
Has the agent acted in a threatening or verbally
abusive manner towards Registry staff?
g)
Does the agent exhibit an unacceptable level of
ignorance of court processes and the law?
h) Can the agent be trusted to conduct the matters on which he or she
will appear ethically and honourably?
i)
Is the agent acting in circumstances where he or
she is in a conflict of interest?
j)
Does the relationship between the agent and the
client suggest that the agent is taking undue advantage of the client?
k) Would the agent’s participation otherwise bring the administration
of justice into disrepute?
l)
What are the views of the agent’s current
clients?
[16]
I will describe each of these factors in more
detail before moving on to consider their application to Mr. Shannon’s case.
Abuse of Process
[17]
This factor speaks for itself. If an agent
abuses the Court’s process or makes it easier for his or her clients to abuse
the Court’s process, that would certainly be a relevant factor to consider in
deciding whether to prohibit him or her from acting. Obviously, the more
frequent and more extreme the abuse, the more significance this factor would
have.
Scandalous, Frivolous or Vexatious Arguments
[18]
If an agent puts forward scandalous, frivolous
or vexatious arguments or makes it easier for his or her clients to put forward
such arguments, that would certainly be a relevant factor to consider in
deciding whether to prohibit him or her from acting. An agent who routinely makes
or facilitates the making of scandalous, frivolous or vexatious arguments would
be of concern. An agent who wilfully raises arguments that he or she knows have
previously been unsuccessful or who demonstrates indifference as to whether his
or her arguments are scandalous, frivolous or vexatious would be of even
greater concern.
No Reasonable Grounds for Appeal
[19]
If an agent demonstrates a pattern of filing
notices of appeal or facilitating his or her clients in filing notices of
appeal that disclose no reasonable grounds for appeal, that would certainly be
a factor to consider in deciding whether to prohibit him or her from acting. An
agent who occasionally files or facilitates the filing of notices of appeal
that disclose no reasonable grounds for appeal may not be of concern. However,
an agent who routinely files or facilitates the filing of notices of appeal
that contain arguments that are so hopeless as to be a complete waste of the
Court’s time and resources would certainly be of concern.
[20]
There may sometimes be overlap between this
factor and the one immediately above. I would suggest that pleadings that raise
no reasonable grounds for appeal should be considered under this factor while
pleadings that raise scandalous, frivolous or vexatious arguments but still
contain at least one reasonable ground for appeal should be considered under
the above factor.
No Jurisdiction
[21]
If an agent demonstrates a pattern of filing
notices of appeal or facilitating his or her clients in filing notices of appeal
concerning matters over which the Court has no jurisdiction, that would
certainly be a factor to consider in deciding whether to prohibit him or her
from acting. An agent who occasionally confuses the jurisdiction of the Court
with the jurisdiction of the Federal Court or who sometimes misunderstands the
different roles of Parliament and the Court should not be of concern. However,
an agent who routinely files or facilitates the filing of notices of appeal
that primarily seek relief that the Court does not have the jurisdiction to
grant would be of concern. An agent who wilfully seeks primary relief that he
or she knows the Court does not have jurisdiction to grant would be of even
greater concern.
Contempt of Court
[22]
This factor speaks for itself. If an agent
demonstrates contempt for the Court or encourages such contempt in his or her
clients, that would certainly be a relevant factor to consider in deciding
whether to prohibit him or her from acting. This was a significant factor in
both the Tax Court and Federal Court of Appeal decisions in Prefontaine.
Obviously, the more frequent and more extreme the contempt, the more significance
this factor will have.
Threatening or Verbally Abusive Behaviour Towards Registry
Staff
[23]
The Federal Court of Appeal’s decision to
prevent Mr. Prefontaine from acting as an agent was significantly influenced by
Mr. Prefontaine’s verbal abuse of Registry staff, the need for security to attend
at the Registry and physical damage that Mr. Prefontaine caused to Registry
property. The Court ultimately concluded that Mr. Prefontaine should be
prohibited not only from acting as an agent, but also from attending the Registry.
The Court ordered that Mr. Prefontaine’s communications with the Court be
limited to sending materials by courier or registered mail.
Unacceptable Level of
Ignorance
[24]
The majority of agents who appear before the
Court provide quality services to their clients. Unfortunately, some agents
provide their clients with poor quality services which leave the Court thinking
that the taxpayer might have been better off representing himself or herself. Those
are not the type of agents that should be of concern.
[25]
It is not the Court’s role to protect taxpayers
from choosing poor quality representatives. Agents are, by definition, not
lawyers and should not be expected to have advanced knowledge of the law or of
court processes. Hiring an agent is like purchasing any other service.
Taxpayers must beware of whom they are hiring. If they are unhappy with the
services they receive, that is a matter best resolved between the client and
the agent. There are many reasons why a taxpayer may be willing to accept lower
quality representation. A taxpayer may not have the resources to pay a
particularly knowledgeable representative. A taxpayer may be more concerned
about the quality of the work that the agent does outside of the courtroom to
assist the taxpayer in marshalling his or her case or negotiating a settlement
than the quality of the work the agent does in the courtroom. A taxpayer may be
more concerned about having an agent who speaks his or her language than the
quality of the agent’s work.
[26]
The type of agent that the Court should be
concerned with is an agent who repeatedly demonstrates an unacceptable level of
ignorance in his or her conduct. I am thinking here of someone who is so
unfamiliar with tax law or court processes that he or she does not just fail to
make the best arguments for his or her client or fail to put the client’s best
case forward, but also repeatedly harms the client’s case through his or her
ignorance. Finding that an agent falls into this category should be the
exception, not the rule. I would be reluctant to conclude that an agent fell
into this category without being aware of multiple examples of his or her incompetence.
Ethical and Honourable
Conduct of the Matter
[27]
It is rare that agents appearing before this
Court are disreputable individuals. In Romanowicz, the Ontario Court of
Appeal described the following as the types of individuals Courts should be
concerned with:
…representation by an agent facing criminal
charges involving interference with the administration of justice and
representation by an agent whose background demonstrates pervasive dishonesty
or a blatant disrespect for the law. Representation by persons who have
convictions for crimes of dishonesty or who have otherwise demonstrated a lack
of good character...
[28]
The Court emphasized that these types of people
should not automatically be disqualified from acting as agents. However, the
Court stated that it should cause concern if it appears that an agent will not
be able to conduct himself or herself ethically and honourably. This is true
even if the agent has the necessary skills to represent his or her client.
[29]
In the tax context, I would suggest that the
following individuals may be particularly unsuited to acting as agents:
a)
individuals facing criminal charges for tax
evasion;
b) individuals facing criminal charges for fraud in respect of acts
that could otherwise have been prosecuted as tax evasion;
c)
individuals facing criminal charges under
subsection 238(1) of the Income Tax Act (e.g. charges for failure to
comply with a requirement or for failure to file a return); and
d) individuals facing contempt proceedings under subsection 231.7(4) of
the Income Tax Act (i.e. proceedings for failing to comply with a
compliance order issued by the Federal Court or the superior court of a
province).
Conflict of Interest
[30]
A conflict of interest is enough by itself to
justify removing an agent. An agent who has a conflict of interest would
normally have that conflict with a particular client or group of clients rather
than with the world at large. The Court would, as it has done in the past,
simply direct that the agent step down from the particular matter or matters on
account of the conflict. The conflict would prevent the agent from acting for
the particular client or clients but would have no impact on his or her
representing other clients, so there would be no reason to go through the
process of considering whether the agent should be prohibited from acting on
all matters.
[31]
That said, the fact that the agent has
repeatedly acted for clients when he or she was in a clear conflict of interest
is a factor that the Court could consider in determining whether the agent should
be prohibited from acting on all matters.
Taking Undue Advantage
[32]
While it is not the Court’s role to protect
taxpayers from unscrupulous agents, neither should the Court turn a blind eye
to the actions of such individuals. If, in addition to other factors, an agent
appears to be duping naïve or desperate clients, this may be an aggravating
factor that argues in favour of prohibiting him or her from acting on all
matters.
Otherwise Bringing the Administration of Justice into
Disrepute
[33]
This factor is designed to catch concerns that
have not already been identified in the previous factors.
Views of the Agent’s Current Clients
[34]
The views of the agent’s clients may assist the
Court in understanding why, despite the concerns that the Court may have, taxpayers
are prepared to retain the agent. Conversely, these views may reveal
information about the agent’s fitness that was previously unknown to the Court.
[35]
In certain circumstances, the Court may choose
to take the client’s wishes into account. A client, upon being informed of all
of the Court’s concerns may, nonetheless, want to proceed with that agent. In
such circumstances, the Court may choose to prohibit the agent from acting in
other matters but allow him or her to continue representing the particular
client.
[36]
In other circumstances, the clients’ views or
wishes may not carry much weight with the Court. For example, the Court is
unlikely to allow a client who is complicit in his or her agent’s abuse of
process, contempt of court or scandalous, frivolous or vexatious arguments to use
that agent as a means of amplifying the client’s inappropriate views. The Court
is similarly unlikely to follow the wishes of a client if the Court believes the
agent is taking undue advantage of the client.
[37]
There is no need for the Court to seek the views
of the agent’s clients who are not yet before the Court. The Court has the
power to control its own process. That power does not extend to controlling the
CRA’s audit and objection processes. The Court does not have the jurisdiction
to prohibit an agent from representing taxpayers who have not yet entered the
court process. The Court will therefore generally not be concerned with
obtaining the views of those taxpayers even if those taxpayers are clients of
the agent and may ultimately appeal to the Court. That said, the fact that an
agent has a number of clients who may ultimately appeal to the Court and be
represented by the agent is something that the Court may weigh in deciding whether
to prohibit an agent from acting.
IV. Terms of the Prohibition
[38]
The following are factors which the Court should
consider in ordering a prohibition.
Less Drastic Remedy
[39]
There may be situations where an appropriate
outcome can be achieved without prohibiting an agent from acting on all
matters. For example, it may be sufficient to prohibit an agent from acting for
a particular class of people, in respect of a particular type of transaction or
in respect of a certain type of issue.
Permission to Act
[40]
Any prohibition should not be absolute. The
agent should be given the option of applying to the Court in writing for
permission to act on a specific matter or on all future matters on which he or
she is retained. That permission should be granted if the Court is satisfied
that the prohibition is not necessary to protect the proper administration of
justice. Any determination of the Court to deny permission to act should be
final and should not be subject to appeal.
[41]
Recognizing that some agents that the Court may
prohibit from acting may be vexatious, it may be appropriate for the Court to
limit the number of pages that may be submitted in support of any such
application.
Appearing on Own Behalf
[42]
Generally, the prohibition against an agent
acting should not prevent an agent from appearing on his or her own behalf in a
dispute concerning any matter over which the Court has jurisdiction. However,
there may be circumstances where such a prohibition would be appropriate. In each
of the Prefontaine orders, Mr. Prefontaine was required to be
represented by a lawyer in any future matter before the relevant court unless
he first obtained permission to represent himself.
[43]
To be clear, a prohibition against an agent
acting for others does not prevent the agent from filing appeals in respect of
his or her own tax assessments. If an agent’s actions on his or her own appeals
become concerning, the Crown can always move to have the agent declared a vexatious
litigant.
Attending Registry
[44]
As set out in both Prefontaine decisions,
there may be circumstances where it is appropriate to order that an agent be
prohibited from attending the Registry.
Right of Appeal
[45]
In my view, an agent has a right, pursuant to
paragraph 27(1.1)(c) of the Federal Courts Act, to appeal any order
prohibiting him or her from acting. If I am wrong, then an appeal to the
Federal Court of Appeal must lie as of right. If the Tax Court has implied
jurisdiction to make an order, the Federal Court of Appeal must have implied
jurisdiction to hear an appeal of that order.
Notifying Previous Clients
[46]
Sometimes it may take a number of appeals before
the Court becomes aware of the need to prohibit an agent from acting. Often it
will only be the agent’s actions on previous matters that make the need for the
prohibition apparent. In those circumstances, it may be in the interests of
justice that a copy of the Order prohibiting the agent from acting and of the
related Reasons for Order be provided to some or all of the taxpayers for whom
the agent has previously acted.
V. Application of the Factors to Mr. Shannon
[47]
I will now consider the application of each of
the foregoing factors to Mr. Shannon. In doing so, I will make reference
to six appeals in which Mr. Shannon has acted as agent: Bekkerus v. The
Queen;
Heroux v. The Queen;
Chaudhry v. The Queen;
Hernandez v. The Queen;
Mazo v. The Queen;
and Track v. The Queen.
Mr. Shannon appeared before me on only the last two appeals.
[48]
At the hearing of Ms. Mazo’s appeal, I advised
Mr. Shannon that I was considering using the Court’s power to control its own
process to prohibit him from acting as an agent. I asked Mr. Shannon if he
would like the opportunity to make written or oral representations on the
matter. He indicated that he would not. I also sought input from Crown counsel.
[49]
As Mr. Shannon is not currently acting as agent
for any taxpayer in any matter before this Court, it was unnecessary to seek
input from anyone else.
[50]
On October 19, 2016, I directed the Registry to
write to Mr. Shannon, with a copy to Crown counsel. I outlined my concerns and provided
both Mr. Shannon and Crown counsel with the opportunity to make written
representations on this matter. I did so out of an abundance of caution because
Mr. Shannon had stormed out of the courtroom before I had a chance to explain
to him the reasons why I was considering prohibiting him from acting.
[51]
The Registry received responses from both the
Crown and Mr. Shannon. The Crown agreed with my observations about Mr.
Shannon’s conduct. Mr. Shannon’s response did nothing to relieve my
concerns.
Abuse of Process
[52]
The organized pseudo-legal commercial arguments
discussed below under the heading “No Reasonable Grounds for Appeal”
have sometimes been characterized as an abuse of the Court’s process. However,
since these are the only arguments that Mr. Shannon ever makes, I think it is
better to consider them under that factor rather than this one.
Scandalous, Frivolous or Vexatious Arguments
[53]
The organized pseudo-legal commercial arguments discussed
below under the heading “No
Reasonable Grounds for Appeal” could certainly
be characterized as being scandalous, frivolous or vexatious. However, since
these are the only arguments that Mr. Shannon ever makes, I think it is better
to consider them under that factor rather than this one.
No Reasonable Grounds for Appeal
[54]
In each of the appeals in which he has appeared
as agent, Mr. Shannon has relied exclusively on what have been described as “organized pseudo-legal commercial
arguments”. That term comes from the Alberta Court
of Queen’s Bench decision in Meads v. Meads. That case
thoroughly analyzed and discredited the wide range of such arguments.
[55]
Mr. Shannon’s organized pseudo-legal commercial
arguments were rejected in Bekkerus, Heroux, Chaudhry and Hernandez.
Although Ms. Track’s and Ms. Mazo’s notices of appeal relied exclusively on
such arguments, they abandoned these arguments after dismissing Mr. Shannon.
[56]
In brief, Mr. Shannon has argued that:
a) the Income Tax Act fails to describe a taxpayer as a person
who gains his or her livelihood in the private sector and thus people who do
are not subject to tax (Bekkerus; Chaudhry; Heroux; Hernandez);
b) residents of Manitoba or Ontario are not residents of Canada and are
thus not subject to tax (Heroux; Track; Hernandez);
c) the taxpayer is not the same person as the “legal name” and
thus the taxpayer is not subject to tax (Track);
d) the Tax Court does not have jurisdiction to hear appeals of income
tax assessments from anyone who does not reside on federal Crown lands (Mazo;
Track; Hernandez);
e) the Minister of National Revenue has not produced a certified copy
of the Income Tax Act nor has the Respondent’s counsel made a request of
the Clerk of the Senate for a copy (Chaudhry; Mazo);
f) the tax collection agreements that the Minister has with the
provinces do not apply to the taxpayer and thus the taxpayer does not have to
pay tax (Mazo);
g) the government cannot, without enacting the War Measures Act,
compel members of the private sector to be subject to the Income Tax Act
(Bekkerus; Chaudhry; Heroux);
h) the preamble to the Canadian Charter of Rights and Freedoms
recognizes the supremacy of God and the tenth commandment in the Bible
prohibits taxation thus the Charter prohibits taxation; and
i) the Income Tax Act only applies to people who fall into the
following categories:
i.
civil servants (Bekkerus;Track;
Mazo; Hernandez);
ii.
people who hold federal, provincial or municipal
employment (Bekkerus; Chaudhry; Heroux; Hernandez);
iii.
people who “hold an internal affairs office” (Heroux);
iv.
people who “hold an internal office” (Bekkerus;
Chaudhry);
v.
people who hold “employment for profit” (Bekkerus;
Chaudhry; Heroux);
vi.
people who “perform a function of government” (Bekkerus;
Chaudhry; Heroux; Hernandez);
vii.
people who hold federal offices (Bekkerus;
Track; Mazo; Hernandez);
viii.
people who reside on federal Crown lands (Bekkerus;
Chaudhry; Heroux; Track; Mazo; Hernandez);
ix.
people who contract with the federal government
(Track; Hernandez); and
x.
people whose employment falls under the
Canada Labour Code or who are employed in federal works, undertakings or
businesses (Mazo; Hernandez).
[57]
None of Mr. Shannon’s clients appear to have adopted
these arguments when they filed their tax returns. These arguments appear to
have been something that was introduced to them after their troubles with the
CRA began. Ms. Track and Ms. Mazo both explained that these arguments were
introduced to them by Mr. Shannon.
[58]
Mr. Shannon continued to raise these arguments
in notices of appeal even after his clients had lost in court using the same arguments.
The notices of appeal in Bekkerus, Heroux and Chaudhry are
virtually identical yet the decision in Bekkerus was issued before the notice
of appeal was filed in Heroux and the decision in Heroux was
issued before the notice of appeal was filed in Chaudhry. Mr. Shannon
does not appear to be dissuaded by losing.
[59]
Mr. Shannon’s belief in organized pseudo-legal
commercial arguments and the fact that, in each case, those arguments have been
the sole arguments he raised or proposed to raise at trial are very troubling
to me. The fact that these arguments are coming from him rather than his clients
is also troubling.
[60]
As set out in more detail below, two of Mr.
Shannon’s clients have demonstrated that they were able to have their
reassessments reduced when they abandoned those arguments. A third client would
likely have been able to have her reassessments reduced had she abandoned those
arguments. I find it very concerning that Mr. Shannon’s organized pseudo-legal
commercial arguments are preventing his clients from litigating the actual
merits of their appeals.
[61]
I place significant weight on this factor.
No Jurisdiction
[62]
I am not aware of Mr. Shannon acting as agent in
any appeals where the Court did not have jurisdiction to hear the appeal. On
the contrary, Mr. Shannon frequently argues (with no hint of irony) that this
Court lacks jurisdiction to hear whatever appeal he has brought before it.
Contempt of Court
[63]
In his appearance before me, Mr. Shannon showed
little but contempt for the Court. He refused to listen when I spoke,
preferring instead to shout over me. He stormed out of the courtroom twice in
the middle of the proceedings. He refused to acknowledge that the Court had any
jurisdiction over appeals of tax assessments against anyone who did not reside
on federal Crown lands. Both leaving in the middle of proceedings and refusing
to acknowledge the jurisdiction of the court are common strategies employed by organized
pseudo-legal commercial argument litigants.
[64]
This Court is not so thin-skinned as to prohibit
an agent from acting where the Court’s sole concern is that the agent has, on
occasion, acted with contempt. I place little weight on this factor.
Threatening or Verbally Abusive Behaviour Towards Registry
Staff
[65]
Mr. Shannon has not, to my knowledge, been
threatening or verbally abusive towards Registry staff.
Unacceptable Level of Ignorance
[66]
Mr. Shannon’s apparent belief that it is a good
decision for his clients to not attend their own trials, to not give evidence on their
own behalf,
or to not call other evidence
is very troubling. This approach has the potential to do incredible damage to his
clients’ chances of success. The fact that the approach is consistent with Mr.
Shannon’s strategy not to raise any issues other than organized pseudo-legal
commercial arguments does not make it any less concerning.
[67]
I acknowledge that there are times where a
taxpayer might, for strategic reasons, choose not to testify or call evidence.
However, those instances are unusual. While such an approach may be common in
criminal trials, it would certainly not be the default position in the Tax
Court where the Minister has the benefit of assuming the facts that she needs
to win.
[68]
When Ms. Track dismissed Mr. Shannon and focused
on the true issues underlying her reassessments, she was able to negotiate a
settlement that provided her with significant savings. Her income was reduced
by $35,000 and her gross negligence penalties were dropped. When Ms. Mazo
dismissed Mr. Shannon and ultimately placed her evidence before the Court, she
too was able to achieve significant savings. Her income was reduced by $33,000.
[69]
It is unlikely that these savings would have
been achieved in either case had Mr. Shannon continued to represent Ms. Track
and Ms. Mazo, continued to pursue his organized pseudo-legal commercial
arguments, and continued to follow his strategy of not introducing any
evidence. The fact that Mr. Shannon had not told Ms. Mazo and Ms. Track to
bring their supporting documents to court may have reduced the amount of
savings that they were able to achieve.
[70]
My understanding is that Ms. Hernandez was
reassessed in respect of the same pyramid scheme as Ms. Track and Ms. Mazo.
Given that they both fared better than Ms. Hernandez did after they dismissed
Mr. Shannon, it seems likely that she would have fared better too had she
represented herself.
[71]
An agent may only represent a taxpayer in the
Informal Procedure. A taxpayer may elect to have the Informal Procedure apply
to his or her appeal if the federal taxes and penalties in dispute for each
year are less than $25,000 or the taxpayer is prepared to cap his or her
potential savings at $25,000 per year. I am concerned that Mr. Shannon may
be causing his clients to elect to use the Informal Procedure in order to
ensure that he is allowed to represent them despite the fact that, in making
the election, his clients have accepted a cap on their potential savings.
[72]
In Bekkerus, one of the two taxpayers was
disputing a section 160 assessment of approximately $51,500. Roseann Bekkerus
elected to have the Informal Procedure apply to her appeal. This assured that Mr.
Shannon could act, but also meant that Ms. Bekkerus was giving up more than half
of the amount in dispute. This seems an odd strategy given that Mr. Shannon was
convinced that the entire amount was not owing. I acknowledge that there are
strategic or financial reasons why a taxpayer may sometimes choose to have the
Informal Procedure apply to an appeal where more than $25,000 is at stake, but
I am not convinced that such reasons were present in Bekkerus.
[73]
I place significant weight on this factor.
Ethical and Honourable Conduct
of the Matter
[74]
Mr. Shannon grossly misrepresented Justice
Ouimet’s decision in Hernandez when describing it to me. I have no doubt that he did
so knowingly. This is not conduct that the Court should expect from agents.
That said, I am not aware of Mr. Shannon attempting to mislead other judges.
[75]
I am not aware of any charges, convictions or
similar issues involving Mr. Shannon.
[76]
While this factor adds to my concerns, I place
little weight on it.
Conflict of Interest
[77]
I am not aware of any matters in which Mr.
Shannon has acted despite being in a conflict of interest.
Taking Undue Advantage
[78]
It is clear to me that Mr. Shannon took undue
advantage of at least Ms. Track and Ms. Mazo.
[79]
Ms. Track and Ms. Mazo both stated that they hired
Mr. Shannon on the recommendation of a friend. They explained that they had
been reassessed significant amounts of money and that they were desperate. They
said he sounded knowledgeable, they believed he could help them, and they trusted
him to do so. Ms. Track stated that she believed Mr. Shannon was an expert in
the field and that he had always appeared rational and professional.
[80]
These illusions came crashing down when Ms. Mazo
and Ms. Track appeared in court. Both matters were called on the same day. Ms.
Mazo’s appeal was called first. Mr. Shannon advised me that the Court did not
have any jurisdiction to hear either appeal. I explained that the Court did
have jurisdiction and that the cases would be proceeding. I then spoke directly
to Ms. Mazo. I explained to her that Mr. Shannon’s organized pseudo-legal
commercial arguments were nonsense, that he had used them in four previous
appeals and had lost each time, that in each of those appeals the taxpayer
either had not been present or had not testified, that in each of those appeals
the taxpayer might have had an arguable case on the underlying issue but that I
could not determine that because they never told their stories, that she did
not need an agent, that she could proceed without Mr. Shannon, and that I would
be pleased to guide her through the trial process as I would any self-represented
taxpayer. At that point Mr. Shannon, his entourage of at least ten supporters,
Ms. Mazo and Ms. Track all left the courtroom. The trial continued in Ms.
Mazo’s absence as it had already commenced and the Crown had the onus of proof
in respect of a statute barred year and in respect of gross negligence
penalties assessed against Ms. Mazo.
[81]
Ms. Track’s appeal was eventually called and,
because she was no longer present, was dismissed for failure to appear.
[82]
Sometime later that afternoon, after Ms. Mazo’s
trial had finished, Ms. Mazo and Ms. Track both returned to the Registry.
Mr. Shannon was not with them. Their matters were both recalled. Ms. Mazo and
Ms. Track both explained variously that they had been surprised, stunned,
appalled, embarrassed and mortified by Mr. Shannon’s conduct and that, on
reflection, they had come to realize that they had made a huge mistake in
hiring him.
[83]
Ms. Track explained that she was unsure what to
do and had felt coerced and bullied into leaving the courtroom. This matches
the observations of the CRA auditor who was in the courtroom at the time and
was watching Ms. Track and the observations of the Registrar who, although she
did not know Ms. Track, observed that the last woman to leave the room had
appeared to hesitate before leaving.
[84]
Ms. Mazo explained that she felt bullied by Mr.
Shannon. This matches both the Registrar’s and my own observations. Ms. Mazo
looked scared: not of me, not of being in court, but rather of Mr. Shannon. I
watched as Mr. Shannon repeatedly pressed his fingertips on her shoulder,
directed her not to speak to me and then ushered her out of the courtroom.
[85]
Ms. Track and Ms. Mazo both stated that Mr.
Shannon charged them a percentage of the amount that they had been reassessed.
Ms. Mazo believed that Mr. Shannon was entitled to that fee regardless of the
success he achieved on her behalf. In other words, he was paid for the problem,
not the solution. She had regrettably already paid him in full before she came
to court. Ms. Track said that the fee arrangement was vague and she was unsure
whether Mr. Shannon was entitled to the full fee if he did not save her any
money. She had already paid Mr. Shannon approximately $8,000 of the $19,000 he
wanted. In the end, it appears that all that Mr. Shannon did for the money he
received from these clients was to show up in court, announce that he and his
clients had no need to be there, throw up his hands and leave. He did not even
wait around for Ms. Track’s appeal to be called.
[86]
Both Ms. Track and Ms. Mazo asked to have new
trials. The Crown had flown a witness in from Ontario for the trials (for the
second time in Ms. Track’s case) and I was not prepared to put the Crown to the
expense of having to do so again. I agreed to set aside Ms. Track’s dismissal
on the condition that her trial go ahead the next day. Ms. Track settled her
appeal before that trial. I agreed to re-open Ms. Mazo’s appeal immediately,
summarize the evidence that had been introduced and then give her a chance to
testify. The re-opening of Ms. Mazo’s appeal unnecessarily required some registry
staff and Crown counsel to have to continue working until 7:00 p.m. An appeal
that should have taken half a day turned into a full-day appeal.
[87]
I note again that Mr. Shannon’s choice to have
Ms. Track and Ms. Mazo use the Informal Procedure ensured that he could be
retained but also capped the amount of savings that he could achieve for them.
[88]
Should Ms. Track and Ms. Mazo have realized that
Mr. Shannon’s promises of never having to pay tax were simply too good to be
true and his arguments too nonsensical to believe? Yes. Should Ms. Mazo, who
sat through Ms. Hernandez’s trial and saw Mr. Shannon in action, have realized
that something was wrong? Probably. Should Ms. Track, who, following an earlier
adjournment of her trial, received an Order from me that made it abundantly
clear that Mr. Shannon’s arguments had no merit, have realized that something
was wrong? Yes. Should they have questioned his unconventional billing
arrangement? Yes. All that said, Ms. Track’s and Ms. Mazo’s foolish actions do
not justify Mr. Shannon’s behaviour. What he did to them was wrong no matter
how easy they made it for him to do.
[89]
I find Mr. Shannon’s taking undue advantage of
his clients to be a significant aggravating factor. I have serious concerns
that, if the Court does not prohibit Mr. Shannon from acting as an agent, he
will use his organized pseudo-legal commercial arguments to take advantage of
other desperate and naïve taxpayers.
[90]
I think that it is important to highlight that my
decision to consider whether to prohibit Mr. Shannon from acting was based on
my own observations of Mr. Shannon and on his history. Ms. Track and Ms.
Mazo neither asked nor encouraged me to consider a prohibition. If Mr. Shannon
wishes to blame anyone for the resulting prohibition, he should blame me, not
them.
Otherwise Bringing the Administration of Justice into
Disrepute
[91]
There is nothing to consider that has not
already been set out in the above factors.
Views of Current Clients
[92]
As set out above, Mr. Shannon does not currently
act as agent for any other taxpayers in this Court.
VI. Decision to Prohibit
[93]
Based on all of the foregoing, I conclude that
Mr. Shannon should be prohibited from acting as an agent before this Court
without first obtaining written permission from the Court. I believe that if
Mr. Shannon is not prohibited from acting as an agent he will continue to waste
the Court’s time by making organized pseudo-legal commercial arguments, will continue
to harm his clients by making those arguments, will continue to fail to call
evidence or raise legitimate issues thus harming his clients’ chances of
success, will continue to have clients elect to use the Informal Procedure when
it may not be in their interest to do so and will continue to take advantage of
his clients’ naïveté or desperation for his own financial gain. All of these
things will harm the proper administration of justice.
[94]
I do not think that any remedy short of
prohibition will address the foregoing concerns. I acknowledge that, in Davitt,
Justice Boyle only prohibited Mr. Davitt from acting as counsel in matters that
raised issues which were substantially similar to those raised by Mr. Davitt in
his own appeal. The concerns that I have regarding Mr. Shannon taking undue
advantage of his clients do not appear to have been present in Davitt.
Mr. Davitt also appears to have been focused on a very specific issue, albeit
one that he litigated over and over again. By contrast, Mr. Shannon has
constantly invented new arguments.
[95]
In the circumstances, it seems more appropriate
to err on the side of the proper administration of justice than to risk drawing
too narrow a prohibition and having Mr. Shannon peddle new nonsense to naïve
and desperate taxpayers.
[96]
Although I do not believe that Mr. Shannon is
currently acting as agent for any taxpayer in this Court, I will nonetheless
order that Mr. Shannon be removed as the agent of any taxpayer for whom he is
currently listed as agent. The address for service in any such matter shall be
changed to the taxpayer’s address. A copy of the Order and these Reasons shall
be provided to each such taxpayer.
Obtaining Permission
[97]
If Mr. Shannon wishes to obtain permission to act
as an agent on a specific matter or on all future matters on which he is
retained, he shall apply in writing to the Registry setting out the reasons why
permission should be granted. Any such application shall not be longer than 10
pages. The Court will not consider any application that is longer than 10
pages. The Court will grant permission if it is satisfied that Mr. Shannon’s
involvement in the matter or matters will not harm the proper administration of
justice. A decision of the Court to deny permission shall be final and shall
not be subject to appeal.
No Restriction on Representing Self
[98]
If Mr. Shannon practises what he preaches, he is
very likely to end up defending himself in this Court one day. The prohibition
against Mr. Shannon acting as agent does not prevent him from appearing on his
own behalf in a dispute concerning any matter over which this Court has
jurisdiction.
Notifying Previous Clients
and the Crown
[99]
I believe that all of Mr. Shannon’s former
clients should receive copies of these Reasons and the Order. If Mr. Shannon
has pulled the wool over their eyes, they should be made aware of what has
happened. A copy of these Reasons and the Order should also be given to the
Crown.
Signed at Ottawa, Canada, this 8th day of November 2016.
“David E. Graham”
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