Citation: 2011 TCC 405
Date: 20110826
Docket: 2006-2031(GST)G
BETWEEN:
WILLIAM JAMES LOUGHEED,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Woods J.
[1]
This is a motion brought by
William James Lougheed in relation to an alleged breach by the respondent of an
Order of this Court dated May 5, 2010 (the “2010 Order”). The main allegation
is that the respondent is willfully withholding documents contrary to the Order.
The respondent vehemently denies this. Mr. Lougheed further alleges that the
respondent is attempting to run up costs and cause delays in order to exhaust
his resources.
Background
[2]
In 2006, Mr. Lougheed instituted
an appeal in respect of a director's liability assessment issued to him under
the Excise Tax Act. The amount payable under the assessment is
$248,222.59.
[3]
In connection with the appeal, Mr.
Lougheed brought a motion to, among other things, compel delivery of documents that
were being withheld by the respondent. The motion was granted by order of Justice
Favreau dated May 5, 2010, and the respondent was given 30 days to comply. The 2010
Order does not specify the documents to be delivered except that they are
“currently being withheld.”
[4]
At a show cause hearing held
before me last June, Mr. Lougheed stated that he was not ready for trial
because the respondent had documents that he needed. This motion was therefore
scheduled, and by happenstance, it also has come before me.
[5]
The relief that
Mr. Lougheed seeks is reproduced in part below.
THIS MOTION IS FOR:
1.
An ORDER declaring the Respondent is in Contempt
of the Order of Favreau J., dated May 5, 2010 and a further ORDER allowing the
Appellants’ Appeal for reasons of the Respondents’ failure to comply with the
Order of Favreau J., dated May 5, 2010.
IN THE
ALTERNATIVE,
An ORDER
allowing the Appellants’ Appeal for reasons that the Appellant has been found
to have acted with reasonable care, skill and due diligence in this matter.
IN THE ALTERNATIVE,
An ORDER
declaring the Respondent is in Contempt of the Order of Favreau J., dated May
5, 2010, and a FINAL Order to the Respondents (and also to the Trustee in the
bankruptcy of EEC) to comply with the Order of Favreau J., dated May 5, 2010.
[…]
Discussion
(a) Should appeal
be allowed?
[6]
The first alternative relief
can be readily disposed of. Mr. Lougheed seeks:
An ORDER
allowing the Appellants’ Appeal for reasons that the Appellant has been found
to have acted with reasonable care, skill and due diligence in this matter.
[7]
An order allowing the
appeal based on a finding of due diligence is not appropriate in this
preliminary motion. A due diligence finding can only be made after a full
trial.
(b) Applications
for contempt
[8]
The remaining heads of
relief requested each involve a declaration that the respondent is in contempt of
the 2010 Order. The first head of relief requests that the declaration be
accompanied by an order allowing the appeal. The third head requests that the
declaration be coupled with an order for the respondent to comply with the 2010
Order.
[9]
I would first comment
concerning procedure in contempt applications. Section 172.4 of the applicable
Rules sets out the procedure. The applicant must first apply for a show cause
order and make a prima facie case. If granted, the show cause order will
then require the person alleged to be in contempt to appear before a judge.
[10]
The appellant did not
follow this procedure. However, I will not pursue the matter because there was
no objection to the procedure and it would not affect the outcome of the
motion.
(c) Has contempt
been established?
[11]
Turning to the merits
of the contempt allegation, Mr. Lougheed alleges that the respondent, Her
Majesty the Queen, is in willful breach of the 2010 Order by deliberately
withholding documents that were the subject of the Order.
[12]
The evidence in support
of the allegation consists of an affidavit sworn by Mr. Lougheed, with
enclosures.
[13]
The respondent responds
to the allegation with two arguments, first that the affidavit should be struck,
and second that the 2010 Order has been fully complied with.
[14]
As for striking the
affidavit, the respondent suggests that a substantial portion of the affidavit
is improper. Counsel seems to acknowledge that if the affidavit is struck out,
the appellant should be given an opportunity to file a new one. This would
delay the litigation. It is not necessary to strike the whole affidavit and it
is more efficient to deal with the allegation based on the relevant parts of
the affidavit. I would prefer to do that.
[15]
As for whether there
was a willful breach of the 2010 Order, Mr. Lougheed attempts to prove this by
the following sworn statements:
7.
The Respondent has NOT complied with the Order
and has failed to deliver the documents so Ordered; the details of the non
compliance are attached, referred to herein and follow in this Affidavit.
[…]
12. In the Alternative, I am respectfully
asking for an Order enforcing compliance with Justice Favreaus’ [sic] Order
and, in that alternative, I am asking for:
Any and ALL EEC and GAMI Source documents
(Contracts, Bank Statements, Cancelled Cheques, Shipping Manifests,
Receiving Manifests, Cash Receipts, Debit or Credit Card Receipts. ALL
Communications, inclusive of letters of Demand, Proof of Claims, communications
to and from the Trustee in bankruptcy that a reasonable man might use to
prove or disprove a financial position or a reasonable “audit”, complete with a
statement of Cash Collected and Disbursements from the Trustee showing how much
money is in EEC’s trust account as at today’s date.
[16]
Counsel for the
respondent vehemently denies these allegations. In support, Mr. Lougheed was
examined on his affidavit and the transcript was introduced into evidence. In
addition, counsel introduced oral evidence at the hearing from Sandra McIntyre,
a Canada Revenue Agency official who was the team leader on the relevant audit.
[17]
The transcript of Mr.
Lougheed’s examination establishes that when the audit was completed, Mr.
Lougheed received back 24 boxes of documents that had originally been provided
to the CRA. He also acknowledged signing a receipt for this. Further, he
admitted that in response to the 2010 Order, he received two large binders of
documents from the respondent.
[18]
Ms. McIntyre testified
that subsequent to the 2010 Order she was asked by her counsel to provide everything
that the CRA had. She also testified that she followed up with CRA staff in
order to diligently comply with this request. There is no reason for me to
doubt this testimony and I accept it.
[19]
In my view, Mr.
Lougheed has not made even a prima facie case that the respondent is
willfully withholding documents. The two paragraphs from his affidavit that are
reproduced above are not sufficient proof, and neither is any of the material
included in the motion record.
[20]
Based on transcripts of
case management hearings held before the earlier motion, it appears that the
respondent had a bona fide objection to the production of certain
documents. In granting the 2010 Order, Favreau J. apparently disagreed with these
objections. However, there is no reliable evidence before me that documents
were being withheld without a bona fide reason.
[21]
In paragraph 12 of his
affidavit, Mr. Lougheed states that he is seeking a wide range of documents.
The implication seems to be that these documents were provided to the CRA and
have wrongfully been kept. I am not prepared to conclude based on the vague
statement of facts in the affidavit and the attached material that this is the
case. At my request, Mr. Lougheed provided at the hearing a more detailed list
of documents that he are allegedly being withheld; however, this list also
suffers from vagueness.
[22]
In some of the material
before me, Mr. Lougheed alleges that one or two CRA auditors pilfered the 24
boxes that were delivered at the commencement of an audit. The allegation seems
to be that the auditors continued with this wrongful conduct, and chose to defy
the 2010 Order.
[23]
Even if the auditors
acted in such a deceitful manner, it would not be sufficient to succeed in a
contempt proceeding against the respondent because the Crown cannot be committed
for contempt based on the actions of specific officers: Kumar v The Queen,
2004 TCC 521, 2004 DTC 3048, para 5.
[24]
In any event, I am not
satisfied that Mr. Lougheed has made a prima facie case that either of
the CRA auditors wrongfully withheld documents that were contained in the
boxes. It seems unlikely that CRA officers would engage in this type of
deliberate conduct, and in this case greater evidence of the breach is
required. There is simply not a sufficient evidentiary basis to establish even
a prima facie case and take the contempt proceeding to the next stage
contemplated by section 172.4 of the Rules.
[25]
In addition to the
allegation regarding withholding documents, Mr. Lougheed also states at para 8
of his affidavit that the 2010 Order was breached for failure to pay costs in a
timely manner. Mr. Lougheed has not established a deliberate breach of the 2010
Order with respect to costs. It appears that there was a dispute about the
amount of costs, which took many months to resolve in accordance with the
Rules. There is no basis for thinking that the respondent did not have bona
fide reasons for challenging the amount of costs requested by Mr. Lougheed.
[26]
I would also comment
concerning the statement at paragraph 9 of the affidavit. It reads:
9. Justice Favreaus’ [sic] Order also “[placed] the
burden of producing EEC documents in support of this appeal on the
respondent”.
[27]
I mention this
paragraph partly because the parties are not in agreement that the judge
intended this to be part of the 2010 Order, and if so what the judge meant by
the term “burden.” In light of this dispute, I suggested to the parties that
this be clarified before the hearing of the appeal. In any event, I am unable
to discern any allegations that such an order has been breached.
[28]
Finally, during oral
submissions Mr. Lougheed placed much emphasis on a decision of the Ontario
Court of Justice which dismissed a criminal charge that Mr. Lougheed had
deliberately failed to file an income tax return on time.
[29]
I do not agree with Mr.
Lougheed that the decision in the criminal matter provides support for this
motion. In particular, although the judge questions the wisdom of the Crown’s
decision to bring the criminal charge, she does not find that the decision was taken
for an improper purpose.
[30]
In conclusion, the
motion brought by Mr. Lougheed will be dismissed in its entirety, with costs to
the respondent.
[31]
As for the amount of costs, the
respondent provided me with a draft bill of costs in respect of the motion in
the amount of $4,550. These costs are quite high, but I am satisfied that are
appropriate in light of the short timeframe that the respondent had to respond
to allegations that were very serious. In particular, I find that it was
appropriate to add a second counsel to the file, to arrange for an examination
of Mr. Lougheed on his affidavit, and to arrange for a transcript of that
examination. This was all done within about 10 days.
[32]
The respondent will be awarded
costs in respect of the motion in an amount fixed at $4,550. This amount shall
be paid by Mr. Lougheed to the respondent on or before September 30, 2011.
[33]
I also canvassed the parties
concerning their availability for trial. They indicated that they would be
available during the week of March 5, 2012. I would direct that the Registry
follow up with the case management judge concerning the scheduling of the
appeal.
Signed at Ottawa, Ontario this 26th day of August 2011.
“J. M. Woods”
Email this Content