Docket: A-127-15
Citation:
2016 FCA 21
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CORAM:
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TRUDEL J.A.
STRATAS J.A.
RYER J.A.
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BETWEEN:
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BEMCO
CONFECTIONERY AND SALES LTD.
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Appellant
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and
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HER MAJESTY THE
QUEEN
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Respondent
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench
at Toronto, Ontario, on January 25, 2016).
STRATAS J.A.
[1]
Bemco Confectionary and Sales Ltd. appeals from
the order dated June 20, 2014 of the Tax Court of Canada (per Paris J.):
2015 TCC 48. The Tax Court dismissed Bemco’s motion for an order under section
53 of the Tax Court of Canada Rules (General Procedure), SOR/90-688a striking out certain paragraphs of the respondent’s Reply without leave
to amend.
[2]
The order under appeal is a discretionary one,
namely an order reached by applying legal standards to the particular facts of
the case in circumstances where the court could reach different outcomes. Absent
legal error or an error in legal principle, the standard of review to be
applied is an onerous one for the appellant to meet.
[3]
Recently, in Turmel v. Canada, 2016 FCA 9
this Court noted that over the years many turns of phrase have been used to
describe this onerous standard—such the standard of “palpable
and overriding error” discussed in Imperial Manufacturing Group Inc.
v. Decor Grates Incorporated, 2015 FCA 100 and applied by this Court a
number of times since. What is common to each of these turns of phrase is that:
…in the absence of an error of law or legal
principle an appellate court cannot interfere with a discretionary order unless
there is an obvious, serious error that undercuts its integrity and viability.
This is a high test, one that the case law shows is rarely met.
(Turmel at paragraph 12). It follows
that in substance we agree with the respondent’s submission that absent legal
error or an error in legal principle, Bemco must show a readily apparent error
that could change the result of the case.
[4]
In our view, this Bemco has not done. We see no
legal error or an error in legal principle on the part of the Tax Court and no
other readily apparent error that could change the result of the case.
[5]
Bemco submits that a number of facts alleged in
the Reply are inadmissible evidence of prior discreditable conduct, improperly suggesting
that Bemco has a propensity to breach the Tobacco Tax Act, R.S.O. 1990,
c. T.10. The Tax Court characterized the impugned portions of the Reply
differently (at paragraphs 25-27). It found that the impugned portions of the Reply
merely describe times, places and circumstances concerning the transactions in
issue and do not suggest that Bemco engaged in discreditable conduct unrelated
to its obligations under the Excise Tax Act, R.S.C.,
1985, c. E-15. In the words of the Tax Court (at
paragraphs 26-27), the Reply “sets out the position of
the Respondent that the commercial structures in place between [Bemco] and the
Indian purchasers were a sham,” a position that “precludes
any suggestion of propensity-based reasoning” contrary to R. v. Handy,
2002 SCC 56, [2002] 2 S.C.R. 980.
[6]
Given the standard of review, we see no grounds
to interfere with this finding. There was no error of law or legal principles
and the Tax Court’s characterization of the impugned portions of the Reply is
supportable given the standard of review we must apply. If the respondent later
uses these portions of the Reply as part of an improper propensity argument,
the Tax Court can intervene and prevent any prejudice or reject the argument outright.
[7]
In the Tax Court, as part of its motion to
strike, Bemco also complained that there was insufficient particularity
concerning the names and locations of the alleged true purchasers of the
products in question. The Tax Court, with the correct legal test in mind,
concluded (at paragraphs 47-49) that particulars were unnecessary because the
pleadings gave Bemco enough information to know the case it has to meet, the
Minister might bear the burden of proof and, if necessary, particulars could be
sought through a demand for particulars. Here again, we see no error of law or
error in legal principle and we are not persuaded that there are any other grounds
to interfere with this finding given the standard of review we must apply.
[8]
Consistent with the fact that the Tax Court did
not grant costs below, in this Court the Crown does not ask for its costs.
Accordingly, none shall be granted. We shall dismiss the appeal.
"David Stratas"
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