[1] The Appellants are husband and wife and are in the same position for tax purposes in connection with their respective appeals. These reasons will apply to both appeals namely A-51-01 and A-52-01.

[2] The Appellants jointly owned the shares of Brentwood Manor Nursing Home Ltd ("Brentwood").

[3] The Appellants bought the shares of Brentwood in 1966. They sold their shares in 1988 for the total sum of $2,417,753.00. The Appellants declared an adjusted cost base of $1,250,000 for their shares. The Respondent assessed the Appellants on the basis that the adjusted cost base of their shares was a total of $500,000. The relevant evaluation date was December 31, 1971.

[4] The Appellants, in an attempt to persuade the Respondent of their position obtained an evaluation report from Campbell Evaluation Partners Ltd. ("Campbell") signed by Ms. Nora Murrant (the "Murrant Report"). The Murrant Report set forth an evaluation of the shares as of the relevant date at $1,775,000. This report included another report as an attachment; (the "Chambers Report") prepared in 1973 which, among other things, contained some factual information relied upon by the experts for both sides.

[5] When the matter was not settled, an appeal was launched, and a trial was scheduled in which the sole issue was the value of the Brentwood shares on the evaluation date. The trial was scheduled for March 23^rd, 2000. On May 10^th, 1999, counsel for the Hallatts filed the Murrant Report with the Court. At the same time, he filed a certificate of counsel stating that he was satisfied that the Murrant Report represented the evidence of what one Howard Johnson was prepared to give.

[6] As it turns out, the solicitor had been informed that Ms. Murrant had taken new employment and was not allowed by her new employer to appear as an expert witness. Counsel was not inclined to subpoena Ms. Murrant because he felt that she would be a hostile witness in the circumstances. Instead, it was agreed by the Appellants and their lawyer that Mr. Johnson from the Campbell firm would appear as an expert witness.

[7] On objection from the Respondent, the Tax Court Judge held that the Murrant Report could not be filed as evidence because Ms. Murrant was unavailable for a cross-examination. Rule 145(2) of the Tax Court Rules provides as follows:

a) Compliance

Rule 145(2) requires that:

Unless otherwise directed by the Court, no evidence in chief of an expert witness shall be received at the hearing in respect of an issue unless,

(a) the issue has been defined by the pleadings or by written agreement of the parties stating the issues,

(b) a full statement of the proposed evidence in chief of the witness has been set out in an affidavit, the original of which has been filed and a copy of which has been served on all other parties, not less than thirty days before the commencement of the hearing; and

(Emphasis added)

[8] An alternative procedure was adopted by the Tax Court Judge by which he permitted Mr. Johnson to give evidence on behalf of the Appellants, even though no report of Mr. Johnson had been filed. The Tax Court Judge ruled that, after Mr. Johnson testified, the hearing would be adjourned so the transcript of his testimony could be prepared and used by the Crown for purposes of cross-examination.

[9] Counsel for the Appellants proceeded to examine Mr. Johnson, who made no reference in the testimony to the Murrant Report. The transcript indicates that all parties agreed that the Murrant Report would not be tendered into evidence.

[10] The trial continued on at a later date, Mr. Johnson was cross-examined and the Respondent led expert evidence relating to evaluation. While the Tax Court Judge appeared to favour the Respondent's expert evidence he nevertheless declined to accept in its entirety the evidence of either expert and instead concluded that the value for the shares of Brentwood on evaluation day was $650,000.

[11] The points and issue on appeal are:

a) Whether the Tax Court Judge erred in the exercise of his discretion in not allowing the Murrant Report to be entered in evidence.

b) Whether the Tax Court Judge made a palpable and overriding error in accepting one expert's approach over another and coming to his own factual conclusion as to the value of the Brentwood shares.

c) Whether the Appellants' representation by trial counsel was so incompetent that a miscarriage of justice resulted entitling the Appellants to a new trial.

[12] On the first issue, it is clear that the filing of the expert report did not comply with Rule 145(2). The report was signed by Ms. Murrant. Another person, Mr. Johnson, was the witness produced to give evidence at the trial. There was no statement of the proposed evidence of Mr. Johnson provided in advance.

[13] The Murrant Report could not have been entered for the truth of its contents on its own without Ms. Murrant being present for cross-examination. Expert evidence is by its very nature open to challenge. The Murrant Report was unsworn and the only way to challenge the opinion of Ms. Murrant would have been to cross-examine her. The Tax Court Judge was correct in recognizing this problem.

[14] The Tax Court Judge did, however, exercise the discretion available to him under the Rules in favour of the Appellants and allowed Mr. Johnson to testify despite the objection of the Respondent. Obviously, the Tax Court Judge did this because he realized that without the evidence of Mr. Johnson the Appellants simply had no case to put forward.

[15] As to the fact that the Murrant Report and the attached Chambers Report was not filed as an exhibit during the examination of Mr. Johnson, it appears that there was an agreement by all concerned, that it should not be tendered into evidence because Mr. Johnson had not referred to it. It cannot be said therefore, that there was any error on the part of the Tax Court Judge relating to the non-filing of the Murrant Report.

[16] With respect to the second issue, the Tax Court Judge made a thorough analysis of the evidence of the respective experts including Mr. Johnson. It cannot be said that he failed to give weight to Mr. Johnson's report.

[17] The Tax Court Judge heard the conflicting evidence as to the value of the Brentwood shares and carefully considered it. He was entitled to accept one expert's testimony over another or to accept neither and draw his own conclusions. It is the role of the trier of fact to assess and weigh the evidence, including expert evidence, and decide whether to accept it. It is not the role of the Appellate Court to reassess the weight to be given to conflicting evidence including the evidence of experts.

[18] It was argued, in particular, that the Tax Court Judge erred in saying that there was no explanation given for discounting the capitalization rate for inflation. As we construe the reasons for judgment, the Tax Court Judge must be taken to have taken note of the explanation offered but felt it was insufficient.

[19] We are unable to conclude that the Tax Court Judge made a palpable and overwriting error in his assessment of the expert evidence.

[20] As to the third issue, it must be said that the imperfections of counsel who has been chosen freely by the client cannot, in any but, the most extraordinary circumstances, result in the overturning of the decision on appeal. The appropriate test has been outlined by the Supreme Court of Canada G.D.B. v. The Queen (2000), 143 C.C.C. (3d) 289 (S.C.C.) at p. 298, Major J. for the Court said as follows:

[26] The approach to an ineffectiveness claim is explained in Strickland v. Washington, 466 U.S. 668 (1984), per O'Connor J. The reasons contain a performance component and a prejudice component . For an appeal to succeed, it must be established, first, that counsel's acts or omissions constituted incompetence and second, that a miscarriage of justice resulted.

[27] Incompetence is determined by a reasonableness standard. The analysis proceeds upon a strong presumption that counsel's conduct fell within the wide range of reasonable professional assistance. The onus is on the appellant to establish the acts or omissions of counsel that are alleged not to have been the result of reasonable professional judgment.

[21] The G.D.B. was a criminal case and this must be taken into account. In civil cases, where Charter rights are not at stake, such as the present, the concept of miscarriage of justice as a result of incompetent counsel has rarely received acceptance. In civil disputes, where an individual's constitutionally protected rights are not at stake, concerns about the propriety of counsel's trial strategy and conduct and their competence to make tactical decisions can usually be adequately addressed through a claim for damages and negligence against the solicitor, or a complaint to the governing law society, see Mallet v. Alberta, [2002] A.J. No. 1551 (Alberta Court of Appeal) at paragraphs 60-61 and 74.

[22] In any event, there are three components required in order to succeed in obtaining a new trial based on incompetence of trial counsel.

a) The Appellant must establish the facts upon which the claim of incompetence is based.

b) The Appellant must establish that their counsel was incompetent.

c) The Appellant must establish that the incompetence resulted in a miscarriage of justice.

[23] In the present case, the evidence is far from showing that the filing of the Murrant Report or indeed the calling of Ms. Murrant could have changed the result in the case. The Appellants had been advised in advance that Ms. Murrant would not be giving evidence and that Mr. Johnson would be giving evidence on their behalf. The Appellants were present when counsel at the trial made decisions as of the tendering of evidence. Counsel must be taken to have the consent of his clients, unless it is very clearly demonstrated that consent did not exist. This is not the present case.

[24] As to the competency of the Appellants' counsel the onus is on the Appellants to rebut the strong presumption of competency and to establish that his acts or omissions were not the result of reasonable professional judgment. In analysing this problem, hindsight has no place in the assessment and the standard is one of reasonableness. We are not satisfied that the onus has been met in this case.

[25] At trial, counsel is required to make tactical decisions with respect to the introduction of evidence. It is easy to second guess counsel after the event and Courts have long recognized that trial lawyers in the midst of a trial must make decisions quickly and judgment on those decisions cannot be based solely on the result of the strategy. It is not the function of Appeal Courts to second guess this strategy.

[26] Lastly, we were unable to conclude that upon the balance of probabilities, the result would have been any different if the Appellants' counsel had conducted the trial in the manner now suggested by the Appellants. We are unable to say, in the present case, that, if the Murrant Report had been filed, the result would have been any different. Accordingly, looking at the evidence as a whole, we are not persuaded that a miscarriage of justice has occurred.

[27] Despite the able submissions of counsel for the Appellants, the appeals will be dismissed with costs.

"J. E. Sexton"

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKETS: A-51-01 & A-52-01

STYLE OF CAUSE: HERBERT E. HALLATT

Appellant

and

HER MAJESTY THE QUEEN

Respondent

AND BETWEEN:

MARION E. HALLATT

Appellant

and

HER MAJESTY THE QUEEN

Respondent

PLACE OF HEARING: TORONTO, ONTARIO

DATE OF HEARING: MARCH 11, 2004

REASONS FOR JUDGMENT

OF THE COURT BY: (SEXTON, EVANS & SHARLOW JJ A.)

DELIVERED FROM THE

BENCH: SEXTON J.A.

APPEARANCES:

Russell D. Laishley

FOR THE APPELLANTS

Livia Singer

Sointula Kirkpatrick

FOR THE RESPONDENT

SOLICITORS OF RECORD:

LeDREW LAISHLEY REED LLP

Barristers & Solicitors

Toronto, Ontario

FOR THE APPELLANTS

Morris Rosenberg

Deputy Attorney General of Canada

Toronto, Ontario

FOR THE RESPONDENT

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Hallatt v. Canada, 2004 FCA 104

Citations2004 FCA 104

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2004 FCA 104