Citation: 2013 TCC 251
Date: 20130808
Docket: 2013-1444(GST)I
BETWEEN:
9218-4167 QUÉBEC INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
__________________________________________________________________
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Counsel for the appellant:
|
Simon St-Gelais
|
|
|
|
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Counsel for the respondent:
|
Éric
Bernatchez
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____________________________________________________________________
ORDER AND REASONS FOR ORDER
[1]
The appellant is appealing from an assessment concerning the
goods and services tax under section 325 of the Excise Tax Act.
[2]
According to the Notice
of Appeal, the issue is the fair market value of an immovable. The Notice of Appeal states that there is a discrepancy of $600,000 between
the parties’ positions.
[3]
The respondent filed a motion
to strike certain paragraphs and two titles from the Notice of Appeal on the
ground that the alleged facts are not relevant.
[4]
The respondent requests
that the motion be determined on the basis of written submissions.
[5]
The paragraphs in
question are allegations relating to the conduct of the objection stage before
the appeal was commenced before this Court. Among other things, it is alleged
that the objection file was closed only one week after the appellant sent to
the respondent a copy of an assessment report without counsel for the appellant
being able to speak with the objections officer and that, subsequently, the
respondent refused to reopen the file.
[6]
The respondent claims
that all these allegations are not relevant in determining the validity of the
assessment and the issue, the fair market value of an immovable. The respondent
cites the Federal Court of Appeal decision in Main Rehabilitation Co. v. Canada.
[7]
I agree that the conduct
of objections and the conduct alleged in the Notice of Appeal are not relevant in determining the fair market value of an immovable.
[8]
In its written
observations, the appellant does not claim that the provisions in question are
relevant to the fair market value. However, the appellant claims that these
provisions are relevant to its application for costs on a solicitor-client
basis.
[9]
In additional written
submissions, the respondent acknowledges the Court’s power to award costs, but in
citing Canada v. Landry,
the respondent submits that normally the conduct prior to the proceeding can
only be taken into account in exceptional circumstances.
[10]
I agree. Nothing in the
allegations in question suggests that there are circumstances that justify that
the conduct prior to the appeal be taken into account.
[11]
To get an idea of what
is exceptional, it is useful to examine the rather unique facts in E.F.
Anthony Merchant v. The Queen,
a case where this Court considered conduct before the Notice of Appeal. In Merchant,
“the taxpayer’s conduct frustrated the audit process, and unduly and
unnecessarily prolonged the hearing” (emphasis added).
[12]
For example, in Merchant,
the Federal Court of Appeal stated:
4 … The taxpayer's conduct was unacceptable
and frustrated a proper audit of his claims with the result that a motion for
disclosure became necessary. Moreover, the appellant refused and failed to
comply with the disclosure order either by not disclosing documents immediately
as requested or, in violation of the order which required specificity and the
giving of particulars, by disclosing a large number of documents in such a
state of disarray that it was impossible to understand them and make use of
them. For instance, the appellant produced a list containing more than 16,000
items with no description which could assist the respondent in determining
their nature and relevancy. As a result, the discovery process, like the audit
process, was frustrated.
5 The
appellant, who is a lawyer and an officer of the Court, submitted in his
memorandum of fact and law that he was under no legal duty to cooperate with
Revenue Canada during both the audit and the objection stages. …
6 Whatever
the duty of cooperation may have been at the audit stage or whether there is
one at the objection stage, the appellant, as a litigant before the Tax Court
seeking to obtain relief, had a duty to comply with the Rules and provide
meaningful disclosure. …
7 …
In turn, the appellant's failure to cooperate and obey the order of the Tax
Court placed the Tax Court judge in an invidious and unacceptable position
where he was left with virtually all factual determinations instead of having a
proper and initial determination made at the audit level as is usually the
case. …
…
9 One
last thing ought to be said. Even before this Court, the appellant showed disrespect
by circumventing an order of this Court and flouting Rules 65 and 70(4) of the Federal
Court Rules (1998) which regulate the length, size and disposition of a
memorandum of fact and law.
[Emphasis added.]
[13]
For these reasons, the
motion is granted and the Court orders that
(a) paragraphs 14,
15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 29, 31, 32, 33, 34, 35, 36 and
37 (including sub-paragraphs “a” to “h”), title [translation] “iii. The vexatious conduct of the respondent in
the processing of the appellant’s objection file” and the title [translation] “b. The vexatious nature of
the respondent’s conduct” in the Notice of Appeal should be struck;
(b) the appellant submit a
new Notice of Appeal, amended in accordance with this order and these reasons,
at the latest by September 4, 2013;
(c) the respondent submit
a reply to the Amended Notice of Appeal at the latest by October 15, 2013.
Signed at Ottawa, Ontario, this 8th day of August 2013.
“Gaston Jorré”
Translation
certified true
on this 3rd day of
October 2013
Catherine Jones, Translator
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