Docket: 2013-188(IT)G
BETWEEN:
DAVID TUCCARO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on September 9, 2013 at Ottawa, Canada
Before: The Honourable
Mr. Justice Randall S. Bocock
Appearances:
|
Counsel for the Appellant:
|
Maxime
Faille
|
|
Counsel for the Respondent:
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Darcie Charlton
Ashleigh Akalehiywot
|
____________________________________________________________________
ORDER
UPON MOTION brought by the Respondent for
an Order striking certain paragraphs from the Appellant’s Notice of Appeal;
AND UPON reading the materials filed,
hearing submissions and argument from respective counsel for the Appellant and
Respondent including the draft Amended Notice of Appeal submitted at the
hearing of the Motion, but not filed with the Court;
THIS COURT ORDERS THAT:
1.
all pleadings
referencing Treaty 8 exemption rights are to be struck throughout the draft
Amended Notice of Appeal;
2.
paragraphs 14 through
32 inclusive are to be struck in the draft Amended Notice of Appeal;
3.
paragraph 43 shall be
redrafted to better describe the foundational facts which are applicable,
relevant and supportive to this appeal and which facts, to the Appellant’s
information, are causal to the present statement of fact in that paragraph;
4.
a final Amended Notice
of Appeal shall be filed otherwise reflecting the changes provided for in this
Order within 45 days of the date of this Order;
5.
the Respondent shall
have 60 days after the final Amended Notice of Appeal is filed and served to
file a Reply; and
6.
there shall be no Order
as to costs and no submissions on costs are required by the Court.
Signed at Ottawa, Canada, this 23rd day of September 2013.
“R.S. Bocock”
Citation: 2013 TCC 300
Date: 20130923
Docket: 2013-188(IT)G
BETWEEN:
DAVID TUCCARO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Bocock J.
I.
Motion to Strike
Pleadings and General Legal Test
[1]
This is a motion by the
Respondent under Rule 53(a) and (c) of the Tax Court of Canada
Rules (General Procedure) to strike certain provisions of the Appellant’s
Notice of Appeal on the basis that they constitute an abuse of process and/or
will delay a fair hearing of the matter.
a)
Grounds for
Striking
[2]
Generally, the impugned
sections within the draft Amended Notice of Appeal and the Respondent’s
(Applicant in the Motion) related grounds for challenge may be described as
follows:
1.
a claimed exemption
from taxation by the Appellant by virtue of Treaty 8 of 1899 and the
conjunctive operation of section 35 of the Constitution Act ought to be
struck on the basis of res judicata;
2.
the description of
various historical facts and events in paragraphs 10 through 34 is challenged on
the basis that same either advance the alleged Treaty 8 exemption and/or are irrelevant
to the validly pleaded claimed exemption under section 87 of the Indian Act,
RSC 1985, c. I-5;
3.
the inclusion of paragraph
43 which provides “The status Indian employees of Neegan were treated as tax-exempt.”
is challenged on the basis that such fact relates to the treatment of another
taxpayer by the Minister and is therefore irrelevant to this appeal; and
4.
paragraphs 84 to 94 and
paragraph 111 should be struck on the basis these paragraphs allege that CRA
Form TD1-IN(06) “Determination of Exemption of a Status Indian’s Employment
Income” and included guidelines represent, through an Honour of the Crown
collateral argument, a pleading of a pre-determination of liability for tax,
which, in turn, usurps the jurisdiction of this Court (the “Guidelines Argument”).
[3]
The Appellant (Respondent
in the Motion) filed a draft Amended Notice of Appeal prior to the hearing of
this motion. This document is the version of the Notice of Appeal referred to
herein.
b)
Legal Test to
Strike Pleadings
[4]
The parties generally
agreed on the applicable test for striking any pleading irrespective of whether
such pleadings are grounds for appeal, fact, relief or statutory provision.
Generally, there is a high threshold for striking pleadings (Sentinel Hill 1999
Master Limited Partnership v Canada, 2007 TCC 742, 2008 DTC 2544, at
paragraph 4). It must be plain and obvious, after giving the party pleading the
highest and best assumption of factual accuracy, that a pleading is rendered to
a state of having ‘no chance of success.’ Simply put, if an argument for
striking goes to weight and/or relevance, then the pleading should be sent to
the trial judge unless there is no chance of its success. There must be a
“radical defect” in the pleading for it to be struck (Hardtke v Canada, 2005 TCC 263, 2005 DTC 676, at paragraphs 10 and 16).
[5]
Furthermore, and specifically
relevant to the matter before the Court, a factual inquiry by the Tax Court
under section 87 of the Indian Act is a challenging one and
requires a careful, nuanced, fact-based inquiry (Kelly v Canada, 2013
FCA 171, [2013] 5 CTC 194 (FCA), at paragraph 71).
II. Issue by Issue Arguments and Decisions
a)
Treaty 8
Exemption
[6]
The Appellant states that
the Federal Court of Appeal decisions in Benoit v Canada, 2003 FCA 236,
2003 DTC 5366 (FCA), and Dumont v Canada, 2008 FCA 32, 2008 DTC 6091
(FCA), were wrongly decided and included the following legal errors:
1)
The reasons of the
Federal Court of Appeal failed to include the fact that additional documents
were adduced at trial identifying the intention of Treaty 8 to create an
exemption from tax;
2)
The Federal Court of
Appeal wrongfully determined that agents of the Crown could not legally bind
the Crown to a financial undertaking not to tax; and
3)
Lastly, the failure of
the decision to acknowledge that the ongoing acquiescence on the part of the
federal Crown by not disavowing Treaty 8’s plain wording is legally
determinative of a continuing agreement not to tax under the Income Tax Act.
[7]
Furthermore, the
Appellant argues that any willingness by this Court to be bound by the
precedential weight of Benoit and Dumont by striking the
pleadings is unfair and stymies the law from evolving in respect of the alleged
Treaty 8 Exemption.
[8]
For the reasons stated
below these submissions of the Appellant against striking the Treaty 8 exemption
pleadings must fail.
[9]
Benoit and Dumont are definitive findings of
the Federal Court of Appeal. The Tax Court of Canada is bound by such
established law regarding the lack of legal effect of Treaty 8 in granting tax
exempt status to its signatories. In the words of Justice Sheridan at paragraph
4 in the trial decision of Dumont (2005 TCC 790 at paragraph 4)
for these very reasons the “argument that Treaty 8 shelters … income from
taxation is without merit.”
[10]
If the Federal Court of
Appeal is wrong, as submitted by the Appellant, it is not for the Tax Court of
Canada to determine. Given the unambiguous finding of the Federal Court of
Appeal regarding Treaty 8, it is plain and obvious there is presently no chance
of success on that basis for a legal claim of exemption from tax. Therefore,
paragraphs or portions thereof referencing Treaty 8 exemption rights or facts
supporting same are struck from the draft Amended Notice of Appeal.
b)
Paragraph 43 –
Treatment of Another Taxpayer
[11]
The Appellant’s
argument for retaining paragraph 43 relates to its relevance to circumstances
surrounding the “connecting factors test” provided for in Williams v Canada
[1992] 1 S.C.R. 877. This is notwithstanding that the fact pleaded relates to the treatment
of other taxpayers. The Court agrees with the Appellant that it is premature to
strike this provision, but only if the preceding factual foundation is pleaded
whereby the pleaded factual allegation becomes relevant to the connecting
factors test. This proximate circumstances argument goes to the weight of
relevancy to be assigned by a trial judge. For example, a foundational
preceding fact such as “all employees resided and the local offices of Neegan
were situate on the reserve” is possibly relevant to the facts supporting the
Appellant’s section 87 exemption claim. Possibly, there may be other foundational
facts related to the Minister’s determination of tax exemption for these
employees. Such foundational facts are possibly relevant to the connecting
factors test to be applied in this instance, but the pleadings should contain them
in order that a trial judge sees them. This paragraph may stay, but must be amended
to include the prior foundational facts likely relevant to such an inquiry.
c)
Guidelines and
Honour of the Crown
[12]
In reply to the motion
to strike these provisions, the Appellant stated this matter is not a standard
case. The Appellant stated that while the Guidelines do not legally bind the
Minister to the assessment, they are nonetheless a relevant consideration buttressed
by the Honour of the Crown arguments because factually the Crown publishes these
Guidelines and related forms exclusively for use by native taxpayers applying
for exemption. It was argued by the Appellant that recent case law suggests
that the Honour of the Crown argument has a higher and possibly more notable
meaning by virtue of the historical trust role played by the federal Crown in
native matters (Manitoba Métis Federation Inc. v Canada, 2013 SCC 14,
[2013] SCJ No. 14 (QL), at paragraph 90 and Mohawks of the Bay of Quinte v
Canada, 2013 FC 669, [2013] FCJ No. 741 (QL), at paragraph 48).
[13]
The Respondent
acknowledged, in reply to the argument to retain these sections, that the
Guidelines are merely a concise statement of the Minister’s view of the law and
may be used in Court solely for that purpose and strictly to that extent.
However, in this case, Respondent’s counsel maintains that the inclusion of the
Guidelines is intended to be a form of legal estoppel from taxation and
therefore eviscerates the Court’s exclusive jurisdiction to determine tax
liability and therefore should be struck from the pleadings (Hawkes v Canada,
97 DTC 5060 (FCA), [1996], FCJ No. 1694 (QL)).
[14]
As properly referenced
in Hawkes, actions, pronouncements or rulings of the Minister or her
agents on matters of law cannot legally usurp of the Court’s ultimate role.
However, there is no direct pronouncement by the Supreme Court of Canada or the
Federal Court of Appeal on the application of the Guidelines, as a fact, to the
analysis of a section 87 exemption. That issue therefore differs from the
claimed, now struck, Treaty 8 exemption. The Guidelines, as pleaded, are
something that should be before the watchful eye of the trial judge in the factual
context of a section 87 exemption claim. Such Guidelines in the context of section
87 represent new facts which invite the consideration of the Court. Their
inclusion as a fact to be considered will not bind a trial judge of this Court.
Their inclusion as part of the factual analysis undertaken by the Court is not
beyond “any chance of success”, where it may be reasonably concluded that, even
to the smallest extent, an argument may be marshalled that the Guidelines
comprise a component of the factual circumstances to be reviewed.
[15]
This motions Court is
not suggesting that paragraphs 84 to 94 and paragraph 111 will contribute to a
successful finding by a trial judge that a section 87 exemption exists. However,
the Guidelines Argument, even in the context of the Honour of the Crown
argument, cannot be said to have “no chance of success” when considered in the
context of the Appellant’s factual history, the sequence of events in his claim
for a section 87 exemption and the fact that a trial judge has not previously weighed
the probative value and weight of the Guidelines Argument in such a factual context.
That opportunity shall now be afforded.
d)
Specific
Paragraphs to be Struck or Retained
[16]
Consistent with the
above determinations regarding the Treaty 8 exemption and the Guidelines
Argument, I now turn to specific paragraphs in the draft Amended Notice of
Appeal to be struck or retained in order to provide clarity to the parties.
[17]
I am mindful in my determination
of two overriding issues. Firstly, the determination of a section 87 exemption
claim must be, on the basis of commentary by the Supreme Court of Canada (Dubé v Canada, 2011 SCC 39, [2011] 2 S.C.R. 764), a broadly based factual inquiry of
the trial judge with an eye and ear to the context of any historical activity in
applying the connecting factors test. Secondly, to the extent any statement of
fact in the impugned paragraphs relates exclusively to the Treaty 8 exemption
and does not relate to a section 87 exemption claim, such factual allegations
must be struck. The Court should err on the side of the slightest shade of relevance
to the section 87 factual inquiry. Therefore, the following chart summaries each
contested paragraph and the Court’s finding of relevance to any remaining issues
to be presented to a trial judge.
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Paragraphs
in Draft Amended Notice of Appeal
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Nature
of Facts Asserted
|
Conclusion
of Relevance
|
Decision
|
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11, 12 and 13
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These paragraphs describe the customary “on
reserve” activities and how same have changed over the years.
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These facts are possibly relevant to
customary native activities and dealings on the reserve.
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Retained
|
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14, 15, 16, 17, 18, 19, 20, 21, 22, 23,
24, 25, 26, 27, 28, 29, 30, 31 and 32
|
These paragraphs exclusively describe the
background, negotiations, history, conclusion and effect of Treaty 8 and
subsequent interpretation and actions regarding same.
|
These facts are not relevant to a section
87 exemption claim, but are offered to support a Treaty 8 claim, which has
been struck because it confers no legal basis for exemption from tax.
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Struck
|
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33, 34, 35 and 36
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These paragraphs describe the present and
evolving life and activity within the region in which the reserve is situate.
|
While these statements are not necessarily
succinct, they do describe the impact of the modern oil sands industry on the
region and the reserves within it. Arguably, these facts are relevant as to
the activity, undertaking and income generated from such activities of
natives.
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Retained
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[18]
To reiterate,
references anywhere in the draft Amended Notice of Appeal relating to Treaty 8
exemption rights are to be deleted as are paragraphs 14 through 32 inclusive in
the draft Amended Notice of Appeal.
[19]
Paragraph 43 shall be
redrafted in order to enumerate the succinct foundational facts known to the
Appellant which relate to the legal exemption afforded to the employees of
Neegan Development Corporation Ltd, but only to the extent such facts are applicable
and relevant in the present appeal.
[20]
Subject to such foregoing
paragraphs being struck and/or amended, the final Amended Notice of Appeal shall
be served and filed within 45 days. The Respondent shall have 60 days from that
date of service to file an Amended Reply, if any.
III. Costs
[21]
At the conclusion of hearing
the motion, I reserved on the issue of whether to hear submissions from the
parties on the issue of costs in order that they might know the outcome prior
to making such representations. Given the mixed results, there shall be no order
as to costs and therefore no submissions on costs are now necessary.
Signed at Ottawa, Canada, this 23rd day
of September 2013.
“R.S. Bocock”
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