Bell
J.T.C.C.:
—
Upon
motion
by
the
Appellant,
Harvey
S.
Dorsey,
for
an
Order
pursuant
to
Rule
88
to
require
the
Minister
of
National
Revenue
to
produce
for
inspection
by
the
Appellant,
pursuant
to
subsection
241(4)
of
the
Income
Tax
Act,
certain
documentation
and
information
concerning
certain
taxpayers,
namely,
Bernard
J.
Karnin
and
Alan
Sugarman.
AND
UPON
hearing
counsel,
AND
this
Court,
by
Order
of
even
date,
having
ordered
the
appeals
of
Messrs.
Dorsey,
Skryzlo
and
Page
to
be
heard
at
the
same
time,
AND
it
appearing
that
the
motion
by
the
Appellant,
Harvey
S.
Dorsey
was,
in
fact,
a
motion
affecting
all
three
Appellants,
IT
IS
HEREBY
ORDERED
under
section
13
of
the
Tax
Court
of
Canada
Act,
that
the
Minister
of
National
Revenue
produce
to
counsel
for
each
of
the
Appellants
copies
of
(a)
all
written
communications
between
the
Department
of
National
Revenue
and
each
of
Bernard
J.
Karnin
and
Alan
Sugarman,
(b)
all
written
records
of
other
communications
between
any
officer
of
the
Department
of
National
Revenue
and
each
of
Bernard
J.
Karnin
and
Alan
Sugarman,
(c)
transcripts
of
all
computer
stored
information
arising
out
of
communications
between
any
officer
of
the
Department
of
National
Revenue
and
each
of
Bernard
J.
Karnin
and
Alan
Sugarman,
and
(d)
all
memoranda
and
notes
in
the
possession
of
the
Department
of
National
Revenue
in
connection
with
or
arising
out
of
the
foregoing,
relating
to
the
potential
liability
of
the
directors
or
purported
directors
of
Déjà
Vu
Management
Inc.
under
section
227.1
of
the
Income
Tax
Act.
IT
IS
FURTHER
ORDERED
that
the
costs
of
the
motion
shall
be
costs
in
the
cause.
Bell
J.T.C.C.:
—
The
Respondent
made
a
motion,
to
be
heard
by
telephone
conference
call
on
November
3,
1995,
for
an
Order
pursuant
to
Rule
26
of
the
Tax
Court
of
Canada
Rules
(General
Procedure)
to
consolidate
the
three
appeals.
The
Appellants
were
three
of
five
directors
of
a
law
firm
management
company,
Déjà
Vu
Management
Inc.,
which
failed
to
deduct
or
withhold
and
remit
certain
amounts
to
the
Receiver
General
for
Canada.
The
other
two
directors,
who
were
not
so
assessed,
are
Bernard
J.
Karnin
and
Alan
Sugarman.
During
the
telephone
conference,
the
Court
was
advised
that
a
Department
of
National
Revenue
(“Revenue”)
official,
during
an
examination
for
discovery,
refused
to
produce
any
information
respecting
its
decision
not
to
assess
Messrs.
Karnin
and
Sugarman
for
directors’
liability.
The
telephone
conference
concluded
with
an
adjournment
of
Respondent’s
motion
to
November
17,
1995
in
Toronto.
Counsel
for
the
Appellants
indicated
that
a
motion
would
be
brought
compelling
Revenue
to
produce
documentation
relating
to
communications
between
it
and
each
of
Messrs.
Karnin
and
Sugarman
respecting
the
liability
of
directors
of
Déjà
Vu
Management
Inc.
On
November
15,
1995
Appellant’s
counsel
caused
a
Notice
of
Motion
to
be
delivered
to
the
Court.
The
motion
was
expressed
to
be
for
an
Order
pursuant
to
Rule
88
to
require
the
Minister
of
National
Revenue
to
produce
for
inspection
by
the
Appellant,
pursuant
to
subsection
241(4)
of
the
Income
Tax
Act
(Canada)...certain
documentation
and
information
concerning
certain
taxpayers,
namely,
Bernard
J.
Karnin...and
Alan
Sugarman....
Having
regard
to
the
fact
that
Appellant’s
counsel
had
indicated
during
the
telephone
conference
that
such
motion
would
be
brought,
I
abridged
the
time
for
filing
and
serving
same
under
Rule
12
of
the
Tax
Court
of
Canada
Rules
(General
Procedure).
Both
motions
proceeded
in
Toronto
on
November
17,
1995.
With
respect
to
the
Respondent’s
motion,
I
find
it
appropriate
to
have
the
cases
of
the
three
Appellants
heard
at
the
same
time.
An
Order
will
be
made
dealing
solely
with
this
matter.
Although
the
motion
for
an
Order
producing
documents
was
made
in
the
name
of
Harvey
S.
Dorsey
only
it
became
apparent
during
the
hearing
that
all
Appellants
sought
such
Order.
Because
I
have
concluded
that
the
cases
of
the
three
Appellants
should
be
heard
at
the
same
time,
a
separate
Order
will
be
made
on
that
motion
affecting
those
Appellants.
I
have
decided
that
the
Respondent
should
produce
to
counsel
for
each
Appellant
copies
of
(a)
all
written
communications
between
Revenue
and
each
of
Bernard
J.
Karnin
and
Alan
Sugarman,
(b)
all
written
records
of
other
communications
between
any
officer
of
Revenue
and
each
of
Bernard
J.
Karnin
and
Alan
Sugarman,
(c)
transcripts
of
all
computer
stored
information
arising
out
of
communications
between
any
officer
of
Revenue
and
each
of
Bernard
J.
Karnin
and
Alan
Sugarman,
and
(d)
all
memoranda
and
notes
in
Revenue’s
possession
in
connection
with
or
arising
out
of
the
foregoing,
relating
to
the
potential
liability
of
the
directors
or
purported
directors
of
Déjà
Vu
Management
Inc.
under
section
227.1
of
the
Income
Tax
Act.
Although
subsection
241(1)
of
the
Act
contains
a
general
prohibition
against
disclosure
of
taxpayer
information
by
an
official,
paragraph
241(4)(b)
states
that
an
official
may
provide
to
any
person
taxpayer
information
that
can
reasonably
be
regarded
as
necessary
for
the
purposes
of
determining
any
tax,
interest,
penalty
or
other
amount
that
is
or
may
become
payable
by
that
person.
In
the
case
of
Fratschko
v.
Minister
of
National
Revenue
(sub
nom.
Minister
of
National
Revenue
v.
Huron
Steel
Fabricators
(London)
Ltd.
),
[1973]
C.T.C.
422,
73
D.T.C.
5347,
the
Federal
Court
of
Appeal
dismissed
the
Minister’s
appeal
from
a
decision
of
the
Trial
Division
of
the
Federal
Court
of
Canada
ordering
the
Minister
to
produce
relevant
income
tax
returns
of
another
company
and
to
show
them
to
counsel
for
the
Plaintiffs.
Although
the
Minister’s
argument
for
refusing
to
do
same
was
on
the
ground
of
public
interest,
which
ground
was
not
argued
in
this
case,
I
am
instructed
by
the
reasoning
of
Thurlow
J.
who
said,
at
page
423
(D.T.C.
5349),
It
will
be
observed
that
the
only
public
interest
specified
in
the
affidavit
as
likely
to
be
prejudiced
by
production
of
returns
of
persons
who
are
not
parties
to
the
litigation
is
...
the
public
interest
in
the
completeness
and
accuracy
of
the
information
which
a
taxpayer
is
required
by
law
to
disclose
in
his
return.
This,
to
my
mind,
amounts
to
nothing
more
than
the
putting
forward
by
a
somewhat
different
wording
of
an
alleged
public
interest
in
keeping
a
whole
class
of
documents
from
disclosure
on
grounds
of
the
necessity
to
ensure
candour
and
truthfulness
by
persons
who
file
income
tax
returns.
Such
a
reason
at
best
has,
in
my
opinion,
very
little
weight
or
validity
by
itself
and
I
think
has
even
less
when
considered
in
the
light
of
the
legal
obligation
upon
the
person
making
the
return
to
be
accurate
and
truthful
on
pain
of
severe
penalties
both
for
untruthfulness
and
for
omissions.
In
each
of
the
Appellants’
cases,
the
documents
sought
are
not
the
income
tax
returns
of
any
other
person.
They,
to
the
extent
that
any
such
documents
exist,
may
contain
inaccurate
information.
In
addition,
such
documents
may
have
influenced
the
decision
or
decisions
of
officers
of
Revenue
respecting
the
liability
of
directors
of
Déjà
Vu
Management
Inc.
It
is
my
conclusion
that
the
Appellants
are
entitled
to
same.
Accordingly,
the
motion
is
granted
and
an
Order
will
be
made
dealing
with
this
matter.
Motion
granted.
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