Akanda – Federal Court of Appeal grants an extension to seek reversal of a default judgment notwithstanding the absence of a reasonable explanation for the delay

After the taxpayer (Akanda) had missed a lot of deadlines for providing a list of documents and completing discovery examinations, and shortly after its counsel had resigned, its appeals respecting the denial of over $6M and $1.5M in SR&ED and ITC claims, respectively, were dismissed without an appearance by the taxpayer. Akanda then appointed new counsel, who was unsuccessful in a motion for extending the time limit for applying to have this default judgment set aside (the application to set aside having been brought three months’ late).

Webb JA reversed this decision. He noted that Akanda had satisfied three of the usual criteria for such an extension (having a continuing intention to pursue the application to set aside the default judgment, having some merit to its application and there being no demonstrated prejudice to the Crown in the three month delay) but not the fourth criterion (having a reasonable explanation for the delay) – but stated:

Since the findings with respect to three of the four factors favour Akanda and since the amounts involved are significant, the interests of justice support a finding that the application for an extension of time should be granted.

Neal Armstrong. Summary of Akanda Innovation Inc. v. The Queen, 2018 FCA 200 under Tax Court of Canada Rules, s. 140(2).