Date: 20010214
Docket: A-320-98
2001 FCA 19
CORAM: DESJARDINS J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
BETWEEN:
E.F. ANTHONY MERCHANT
Appellant
AND:
HER MAJESTY THE QUEEN
Respondent
Heard at Saskatoon, Saskatchewan, Wednesday, February 14, 2001
Judgment delivered from the Bench at Saskatoon, Saskatchewan,
Wednesday, February 14, 2001
REASONS FOR JUDGMENT OF THE COURT BY: LÉTOURNEAU J.A.
Date: 20010214
Docket: A-320-98
2001 FCA 19
CORAM: DESJARDINS J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
BETWEEN: E.F. ANTHONY MERCHANT
Appellant
AND:
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Saskatoon, Saskatchewan
on Wednesday, February 14, 2001)
LÉTOURNEAU J.A.
This appeal is without merit and will be dismissed with costs.
The appellant in this appeal is shooting in all directions and there is no need to review his 19 grounds of appeal contained in his memorandum of fact and law. Having said that, however, a few remarks are in order.
The appeal is against a decision of Bowman J.T.C.C. (as he then was) which allowed, in a large part, the appellant's appeal against the Minister of National Revenue's (Minister) reassessment of the appellant's taxable income by allowing some of the deductions claimed. Although the appellant was partly successful before the Tax Court, the learned judge awarded costs against him on a solicitor-client basis.
We agree with this award of costs on a solicitor-client basis. 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.
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. At the hearing, his new counsel acknowledged that there was a duty, which he said was a limited one, to cooperate at the audit stage pursuant to section 231.1 of the Income Tax Act. He also contended that the Tax Court judge created a legal requirement of cooperation for the taxpayer which resulted in the taxpayer being imposed a heavier onus on evidentiary matters. Such contention is without merit and the appellant has not been able to point out to any such instance where this would have happened, assuming of course that the judge created such a requirement as he claims.
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. As this Court said in Yacyshin v. Canada, 99 DTC 5133, at paragraph 13:
...the days of trial by ambush or surprise are fortunately gone and a party to proceedings is subject to disclosure of its case and, in return, entitled to discovery of the other party's case. This sound rule of practice and procedure aims at ensuring both the fairness and the expeditiousness of the proceedings. No court can condone the unjustified failure of a party to submit to discovery which may either prejudice a party or unduly delay the proceedings and the ensuing justice. Justice delayed is justice denied, especially where it is unjustifiably delayed.
Indeed, it is all the more so when the guilty party is the party imploring the Court for relief.
In the present instance, there is overwhelming evidence that the appellant literally obstructed Revenue Canada in the exercise of its functions and rendered impossible the orderly and effective conduct of discovery. As a result, Revenue Canada was prejudiced to the point where it was incapable of properly and effectively verifying the merit of the claims made by the appellant. 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. The learned judge referred to the state of affairs before him as chaotic. This meant that much of the Court's valuable time was wasted on discussing and proving small expenditures, a matter that should and could have been resolved at an earlier stage in the process. In the end, the hearing was unduly and unnecessarily prolonged by the appellant. His conduct was outrageous and properly justified an award of costs on a solicitor-client basis.
The appellant attacks a number of factual determinations, including credibility findings, made by the judge with respect to the expenses claimed. He would have this Court review the adverse factual determinations made in the Tax Court. This is not this Court's function unless, of course, a contested finding of fact was unreasonable or made in an arbitrary and capricious manner. We see no finding of fact which warrants our intervention. The learned judge navigated safely through a most unsatisfactory and treacherous process created by the appellant himself and we do not intend to second-guess him.
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.
On November 3, 1998, the appellant was denied leave to file a memorandum of fact and law in excess of the 30 pages allowed by the Rules. He then attempted to file a memorandum which exceeded 30 pages. By order of this Court rendered on December 21, 1998 pursuant to a motion by the respondent, the memorandum was removed from the Court file. Costs in the amount of $300 were imposed upon the appellant and made payable forthwith to the respondent.
Eventually, the appellant filed a 30 page memorandum. However, although the memorandum has 30 pages in length, in fact the size of the font is so small and the pages so full in violation of Rule 65 that the memorandum would have probably been at least 45 pages long if the Rules had been complied with. Systematically, the memorandum contains more than the 30 lines per page authorized by the Rules.
Moreover, the appellant filed his book of authorities at the beginning of the hearing. To our dismay, in the course of the hearing, the appellant tried to file with us, under the guise of what he called a roadmap for the Court, what was in reality the very memorandum of fact and law that had been previously and unequivocally rejected by this Court on December 21, 1998. This is unacceptable behaviour from an officer of the Court.
The appeal will be dismissed with costs which, in these circumstances, should be taxed in accordance with column V of the table to Tariff B.
"Gilles Létourneau"
J.A.
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