Morley v. Canada, 2006 FCA 171

Date: 20060509

Docket: A-511-04

Citation: 2006 FCA 171

CORAM:        LINDENJ.A.

                        NOËL J.A.

                        SHARLOW J.A.

BETWEEN:

DAVID MORLEY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

Heard at Toronto, Ontario, on May 9, 2006.

Judgment delivered from the Bench at Toronto, Ontario, on May 9, 2006.

REASONS FOR JUDGMENT OF THE COURT BY:                                                     NOËL J.A.

Date: 20060509

Docket: A-511-04

Citation: 2006 FCA 171

CORAM:        LINDENJ.A.

                        NOËL J.A.

                        SHARLOW J.A.

BETWEEN:

DAVID MORLEY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the Bench at Toronto, Ontario, on May 9, 2006)

NOËL J.A.

[1]                This is an appeal from a decision of Archambault J. of the Tax Court of Canada rendered April 13, 2004 (2004 TCC 280), denying the Appellant's share of a partnership loss for the 1993 taxation year and the carry over of this loss to the 1990 taxation year. The loss in question was mostly attributable to capital cost allowance claimed in respect of software acquired by the partnership.

[2]                By that decision the Tax Court Judge accepted that the software was acquired by the partnership for the purpose of earning income from its business but held that it was not "available for use" during the 1993 taxation year within the meaning of subsection 13(27) of the Income Tax Act. In particular, he found that the software had not been fully tested so that it could be used to produce a commercially saleable product and that there were no applications developed in 1993 using the software.

[3]                The Appellant raises what boils down to two grounds of appeal which we understand to be as follows. First the extraordinary number and character of the interventions made by the Tax Court Judges in the course of the trial were such that his impartiality was destroyed (Majcenic v. Natale, [1968] O.R. 189, at 205; Ross v. Hern, [2004] O.J. No 1186 (Ont. C.A.); J.M.W. Recycling Inc. v. Attorney General of Canada, (1982), 35 O.R. (2d) 355 (Ont. C.A.); Shoppers Mortgage and Loan Corp. v. Health First Wellington Square Limited (1998) 230.R (3d) 362 (Ont. C.A.)). These interventions would also have "materially infected" other adverse findings made by the Tax Court Judge in the course of his reasons. The alleged misconduct on the part of the Tax Court Judge is said to warrant a new trial.

[4]                The Appellant further argues that in any event, the Tax Court Judge's conclusion that the Software was not available for use in 1993 is contrary to the evidence and amounts to a palpable and overriding error.

[5]                With respect to the primary ground of appeal, the transcript does show that the Tax Court Judge pursued lines of questions at great length with four of the witnesses. This occurred after counsel for the parties had completed their own examinations. It appears as though these examinations became a regular feature of the trial which took place over some fourteen days.

[6]                At the conclusion of these examinations, counsel for the parties had the opportunity to correct any error or misunderstanding through re-examination. Only two objections were raised by counsel for the appellant in the course of the Tax Court Judge's examination and both were sustained. We are satisfied that no prejudice arose from the Tax Court Judge's questioning.

[7]                Although some of the questions were direct and to the point, the tone was polite and respectful. The questions were intended to clarify precise points and did elucidate a number of issues. A judge is entitled to inquire into matters which are unclear in order to better understand the case which he has to decide.

[8]                In our view, an objective onlooker reasonably informed about the process and the issues which had to be decided could not conclude from the nature and character of the Tax Court Judge's interventions that he had lost his impartiality. This disposes of the first ground of appeal.

[9]                With respect to the second ground, there was evidence to support the Tax Court Judge's conclusion that the software was not available for use during the 1993 taxation year.

[10]            We note amongst numerous other elements, the business plan of September 1995 to which the Tax Court Judge refers at paragraphs 192 of his reasons. The report was produced on consent without any reservation, and the fact that neither counsel pointed to it during argument did not prevent the Tax Court Judge from relying on it.

[11]            The appeal will be dismissed with costs.

                                                                                                                         "Marc Noël"

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                               A-511-04

STYLE OF CAUSE:                                                               DAVID MORLEY v. HER MAJESTY THE QUEEN

PLACE OF HEARING:                                                         TORONTO, ONTARIO

DATE OF HEARING:                                                           MAY 9, 2006

REASONS FOR ORDER

OF THE COURT BY:                                                            (LINDEN, NOËL, SHARLOW JJ.A.)

DELIVERED FROM THE BENCH BY:                             NOËL J.A.

DATED:                                                                                  MAY 9, 2006

APPEARANCES:

SOLICITORS OF RECORD: