Citation: 2016 TCC 49
Date: 20160225
Docket: 2013-1383(IT)G
BETWEEN:
DOUGLAS
MCCARTHY,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
Boyle J.
[1]
Counsel for the Appellant requested a stay of
Mr. McCarthy’s appeal on the Wednesday before the Friday upon which that
appeal is set down for hearing. Mr. Sumner did so in response to communication
to the Court by the Respondent that the Appellant was again in breach of an
order of this Court to complete documentary and oral discoveries, being my
order of February 15, 2016. Counsel for the Appellant acknowledges that
they had not filed their list of documents as ordered, but maintains that this
was a mistake which has been remedied. The Respondent disagrees. Counsel for
the Appellant says the Appellant did attend the examination for discovery as
requested by the Respondent, identified himself and objected to most of the
Respondent’s questions on the grounds of torture. The Respondent adjourned the
examination and intends to bring a further motion. I will not be resolving the
parties’ concerns with discoveries at this stage, only the issue of the
Appellant’s request of yesterday for a stay of tomorrow’s hearing.
[2]
This is an appeal being case managed by me as
part of a Fiscal Arbitrators group. Up until his retirement last December,
former Chief Justice Rip had been case management judge for Fiscal Arbitrators
appeals.
[3]
The Appellant in this case has, in his further
amended notice of appeal, appealed from the penalty assessed in respect of
Fiscal Arbitrators claimed losses. The Respondent bears the burden of proof
with respect to that penalty. In addition, the Appellant is appealing the
denial of his claim for a so‑called northern residents deduction. It is
the Appellant who bears the burden of proof with respect to that claim.
[4]
The appeal is scheduled to be heard this Friday
by Justice Hershfield in Toronto. The appeal had previously been set down for
hearing on November 27, 2015. That hearing had to be adjourned at the last
minute because the Appellant had failed, without notice to the Court or the
Respondent, to attend to the pretrial discovery ordered by Justice Rip notwithstanding
the appointment taken out by the Respondent after consulting with
Mr. Sumner. The Appellant had decided not to attend because he had
appealed that interlocutory order of Justice Rip, along with another order of
Justice Rip of the same day, to the Federal Court of Appeal. Those appeals have
not yet been heard by the Federal Court of Appeal.
[5]
The Court set down this Friday’s new hearing
date last November. The prior order of Justice Rip scheduling discovery fixed
dates by reference to the trial date. Therefore, new dates for documentary and
oral discovery were automatically triggered by Justice Rip’s prior order. The
Appellant failed to meet those dates.
[6]
Counsel for the Appellant wrote a two‑sentence
letter to the Court in December 2015 requesting Mr. McCarthy’s appeal be
held in abeyance pending the appeals to the Federal Court of Appeal and
informing the Court that discussions had opened up with the Respondent to
resolve the matter. This led to a case management conference at the
Respondent’s request being heard by me by telephone on January 19, 2016. In
that case management call, the Respondent sought new dates for discovery given
the Appellant’s default. The parties were both clearly interested in having the
right to appeal any order I made on those two issues during that case
management call. I therefore sought the parties’ agreement to treat their
requests as formal motions. That was not forthcoming. Mr. Sumner was initially
unsure about making a motion about his request that the hearing be stayed
pending decisions from the Federal Court of Appeal. He expressed concern that a
formal motion gave rise to the risk of costs if unsuccessful. He asked for, and
was given, time to resume the case management conference later during the day
after he had time to consider whether he wished to make such a motion. Mr. Sumner
ultimately decided that the Appellant did not want to bring that motion, and
that he would not consent to hearing a Crown motion for new discovery dates at
that time.
[7]
We ended the January case management call
without dealing with these matters in order that each side could file whatever
motions they wished in accordance with the Tax Court of Canada Rules
(General Procedure).
[8]
The Respondent filed a motion to order
discoveries. No motion was filed by the Appellant. The Respondent’s motion was
heard by me in Toronto, and decided with oral reasons, on February 11, 2016. My
order was signed on February 15, 2016, along with a copy of my oral reasons
allowing the Respondent’s motion and rejecting Mr. Sumner’s position that this
Court’s Judicial Administrator was an extrajudicial tyrant and that Court‑ordered
discovery constituted criminal torture and coercion given the anguish it is
causing Mr. McCarthy as he is aware the Crown has the burden of proof with
respect to his Fiscal Arbitrators penalty.
[9]
Mr. Sumner was given the opportunity at the
hearing of the Respondent’s motion to bring a motion to stay or to have the
Appellant’s hearing of this Friday adjourned sine die to await decisions
from the Federal Court of Appeal on his appeals of Justice Rip’s orders. He
indicated he did not wish to do so. It was again evident that one of his
considerations was his desire to minimize the risk of a cost award against the
Appellant if his request was turned down. That was his decision to make on
behalf of the Appellant.
[10]
On February 23, 2016, three days before the
rescheduled trial date, and the last day for completion of discovery set out in
my order of February 15, 2016, the Respondent wrote to the Court informing
the Court that the Appellant was in breach of the order and requesting a
further case management call. It was not entirely clear what relief the
Respondent hoped for, however she did inform the Court that its order of
February 15, 2016 had been appealed by the Appellant to the Federal Court
of Appeal.
[11]
On February 24, 2016 the Appellant’s written
position on the Respondent’s request for a case management call was received.
Mr. Sumner confirmed that the Appellant did not complete discovery as
described above. He indicated that the Appellant appealed that order to the
Federal Court of Appeal. He indicated he had asked the Federal Court of Appeal
for a stay of my order in the interim. He also asked in his response for a stay
from this Court. In response to a request for clarification from the Court,
Mr. Sumner confirmed that he was asking the Court to have
Mr. McCarthy’s appeal stayed until the Federal Court of Appeal has decided
the appeals before it of the three orders of this Court and that he did not
think an adjournment would suffice.
[12]
In the circumstances, the stay requested by
counsel for the Appellant will not be granted. However, the Court will be
adjourning this Friday’s hearing of the appeal sine die. The Appellant
will be ordered to communicate with the Court within 60 days in respect of
the status of each of his appeals of this Court’s orders involving
Mr. McCarthy to the Federal Court of Appeal. Similar 90‑day orders
can be expected to follow.
[13]
This is no longer a case in which I believe
costs will be best left to the trial judge. The Court is particularly concerned
with the following:
1. The
Appellant has twice not complied with the Court’s orders for the completion of
discoveries without coming back to the Court until after the Respondent
returned to the Court.
2. While
the Appellant’s decision whether to, and how to, complete discoveries is his
own, Mr. Sumner is counsel of record and an officer of the Court and did
not inform the Court promptly of Mr. McCarthy’s refusal to appear at the
previously scheduled examination, either immediately following his failure,
much less when it was probably earlier clear to Mr. Sumner that his client
would not be attending.
3. The
Appellant, having decided that he would not bring a motion for a stay, instead
again asked for a stay two days before the hearing date. This need not have
been a last minute request for a stay as there were two clear opportunities to
make this request earlier, one of which would even have allowed the Court to
schedule another appeal in its place in an efficient use of public resources.
4. The
last minute further stay request tactic by the Appellant, after not bringing a
motion, has had the result of effectively forcing the Court to deal with the
request by formal order as if it was a motion in order to not deprive the Respondent
of her full right to appeal which she had made known in January would be
important.
[14]
This Court has the inherent jurisdiction to
regulate its processes from abuse and costs awards may be used to do that. See,
for example, Fournier v. Canada, 2005 FCA 131.
[15]
I am asking the parties for their written
submissions on costs within 30 days.
[16]
Further, this Court has the power to order that
costs be payable personally by counsel in appropriate circumstances under Rule
152 of the Tax Court of Canada Rules (General Procedure) “where a counsel for a party has caused costs to be incurred
improperly or without reasonable cause or to be wasted by undue delay,
misconduct or other default”. I am asking Mr. Sumner to make
written submissions within 45 days on why this Court should not consider
an order under Rule 152 in respect of some portion or all of any costs awarded
against the Appellant in favour of the Respondent.
Signed at Ottawa,
Canada, this 25th day of February 2016.
“Patrick Boyle”
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