Felesky Holdings Ltd. v. Her Majesty the Queen, [1993] 1 CTC 146, 93 DTC 5051

Reed, j.:— The defendant brings a motion for an order dismissing the plaintiff's action for want of prosecution or, alternatively, an order directing the plaintiff to file a more accurate or complete affidavit of documents within seven days, failing which this action would be dismissed.

Similar motions are brought with respect to seven other files: T- 1573-87; T-1574-87; T-1575-87; T-1576-87; T-1577-87; T-1578-87; 1-1579-87. These reasons relate to this file, T-1572-87, as well as to the other seven.

On September 1,1992 Mr. Justice Rouleau issued eight orders, in identical terms, one with respect to each file:

This Court orders that:

(a) the plaintiff take the next step in this action by filing and serving on the

defendant an affidavit of documents within 45 days from September 1,1992;

(b) the plaintiff proceed to examinations for discovery of the plaintiff within 90

days from the date the affidavit of documents is served on the defendant;

(c) if the plaintiff fails to comply with either of the directions in subparagraphs (a) and (b) of this order within the time prescribed, the plaintiff agrees the action will be dismissed; and

(d) costs of this application to the defendant.

On October 15, 1992, the last day of the time period prescribed in paragraph (a), an affidavit of documents was filed. This states that there are no documents either within or which have been within the power, possession or control of the plaintiff relevant to any matter in issue in the action. The affidavit also states that it is the affiant's belief that there were no such documents in the possession, power or control of any person who was not a party to the action.

The actions were all started in July of 1987 as appeals by way of trial de novo from a decision of the Tax Court rendered March 24, 1987. The Tax Court actions had been commenced in 1982. The appeals concern the amount of capital gain which should be attributed to the plaintiff's 1977 taxation year as a result of the disposition of certain property in that year. This, in turn, depends upon the appropriate "V-Day" value of that property in 1971. It is this valuation which is in dispute.

The main issue to be determined on this motion is whether the plaintiff's filing of affidavits of “nil” documents, on October 15,1992 effectively constitutes non-compliance with Mr. Justice Rouleau's orders or, at least, demonstrates such a dilatory attitude with respect to the prosecution of the appeals that they should be struck out for want of prosecution.

Counsel's main argument is that the affidavits were filed in good faith, thinking they complied with the rules. He argues that the rule only requires that documents be listed which relate to the issue in dispute and that the only issue in dispute is" V-Day” valuation. This he argues will be determined on the basis of opinion evidence and evidence respecting comparables which will be adduced as part of that evidence. Thus he argues that there is no documentation relevant to the action which the plaintiff should list in its affidavits.

He argues that there was no need, for example, to list in the affidavit the expert report on valuation which had been prepared for use in the Tax Court because the plaintiff does not intend to rely on that report in this action. He argues that there was no need to list documents relating to two transactions (across the road from the subject property) to which the plaintiff was party in 1971 and upon which the plaintiff based its $2,000 an acre estimate in its tax return, because such evidence will be part of the expert's opinion and would be adduced in that way. He argues that much of the factual context of the claim has been agreed to in the pleadings and thus there is no need to list, for example, the purchase and sale agreement of 1977 which generated the capital gain, or any documentation establishing the location of the property. Counsel argues that in any event, all the documents are already in the possession of the defendant and thus no prejudice arises as a result of the “nil” documents affidavit.

I do not find these arguments convincing. In the first place, I have not been persuaded that there was a genuine attempt to comply with the order of Mr. Justice Rouleau. It is clear that there are documents which under any reasonable interpretation of Rule 448 should have been listed in the affidavit. Secondly, some of the counsel's arguments are clearly not pertinent: that documents need not be listed because they are in the defendant's possession or because they are not going to be relied upon by the plaintiff in presenting its case. I note, also, with respect to his argument that all the relevant facts except valuation have been agreed upon, that in files T-1573-87, T-1574-87, T-1577-87 and T-1579-87 the location of the property is not entirely agreed upon. Lastly, if counsel for the plaintiff was genuinely concerned about the scope of Rule 448, because it had recently been amended, there was time to have tested that interpretation in Court long before the October 15 date.

In summary, I have not been persuaded that Mr. Justice Rouleau's order was complied with. I have not been persuaded that the plaintiff's actions demonstrate anything other than a dilatory attitude towards the prosecution of this case. I am not convinced that giving the plaintiff yet another seven days to file affidavits of documents would result in anything but further skirmishes de- signed to prolong the proceedings as long as possible with no real intention of prosecuting this action.

For the reasons given the plaintiff's action will be dismissed with costs to the defendant. The costs of this motion are to be assessed on a solicitor/client basis.

Motion granted.