Pomeroy – Federal Court of Appeal allows the Crown to adduce fresh evidence after a TCC motion even with something of a failure to have introduced this before the TCC
The Tax Court dismissed the Crown’s motion to amend its reply to the taxpayer’s notice of appeal to add an allegation that a loan in issue was a sham, on the grounds that such addition would be unfair as the taxpayer’s principal (Mr Pomeroy) had now died. The Crown now moved under Rule 351 for leave to present fresh evidence, namely, the entirety of the transcript of Mr. Pomeroy’s 2018 discovery, on the basis that it would demonstrate that Mr. Pomeroy had little knowledge of the transactions in question, and therefore he could not have given evidence of importance.
The principal sticking point to allowing this new evidence was the first of the four tests enunciated in Coady (2019 FCA 102), namely, that “the party seeking to adduce fresh evidence [must] establish that the evidence: (1) could not have been adduced at trial with the exercise of due diligence.”
Regarding the failure to satisfy this test, Locke JA noted that the Crown did not become aware of the relevance of the additional evidence until six days before the hearing of the Tax Court motion, at which point there was no established procedure for introducing such evidence – but nonetheless found that he was “not convinced that the appellant could not have sought, and possibly obtained, leave to put the evidence before the Tax Court.”
In nonetheless allowing the new evidence, he stated:
… I am conscious that the motion before the Tax Court was an interlocutory matter, and the respondent’s opportunity to adduce this evidence was limited because of the absence of a clear procedural mechanism for doing so. Leave might have been sought at, or shortly before, the hearing before the Tax Court to adduce the New Evidence, but such a request would have been irregular and might well have been unsuccessful.
On balance, and having regard for the limited opportunity the respondent had for putting forward the New Evidence before the Tax Court, I find that the interests of justice require that the Court exercise its discretion to admit the New Evidence.
Neal Armstrong. Summary of Canada v. Pomeroy Acquireco Ltd., 2020 FCA 221 under Rule 351.