John Shairp v. Her Majesty the Queen, [1988] 2 CTC 344, 88 DTC 6484

Marceau, J.:—This appeal is from a preliminary determination on a question of law, made by a judge of the Trial Division pursuant to rule 474 of the Rules of the Court. To understand the question as it was put to the trial judge, the very special factual context in which it arose has to be known. I will therefore set out the facts first.

The appellant, a building contractor, had appealed to the Tax Court of Canada a reassessment made against him by the Minister of National Revenue with respect to a particular taxation year. The dispute concerned the qualification for tax purposes (income from an adventure in the nature of trade or capital gain on the disposition of a principal residence) of the profit he had realized on the sale of a house in which he had lived for a few months. The case came on for hearing on the morning of May 3, 1984, and at the end of the argument, just before the noon recess, the presiding judge made known his reaction to the evidence heard and explained his views as to law concluding the whole by stating: ”. . . I feel that I should find in his (the appellant's) favour and allow the appeal". During the recess, however, the judge had second thoughts. He recalled the parties and, on resuming the hearing in the afternoon, he informed them that a more thorough analysis of some cases he had been referred to had led him to change his mind; thereupon, giving reasons for his newly acquired views, he announced that he was dismissing the appeal. The situation was no doubt unusual enough but it was unfortunately to be even further complicated. On June 11, 1984, through an unexplained cause, a formal judgment of the Tax Court, signed inexplicably by the judge, was issued purporting to allow the appeal. This judgment was however replaced on July 17, 1984 by an amended judgment, again signed by the judge, dismissing the appeal.

The question of law submitted for determination will now be easily appreciated:

Did the Tax Court err in law or act without jurisdiction in rendering the amended judgment dated July 17, 1984?

The learned trial judge came to a negative answer on the basis of the following reasoning. He first noted that the only statutory provisions having relevance to the issue were section 17 of the Tax Court of Canada Act and subsections 171(1) and 171(4) of the Income Tax Act, which read:

17. The Court shall give reasons for its decisions but, except where the Court deems it advisable in any particular case to give reasons in writing, the reasons given by it need not be in writing.

171.(1) Disposal of appeal. — The Tax Court of Canada may dispose of an appeal by

(a) dismissing it; or

(b) allowing it and

(i) vacating the assessment,

(ii) varying the assessment, or

(iii) referring the assessment back to the Minister for reconsideration and reassessment.

171.(4) Copy of decision to Minister and appellant. — Upon the disposition of an appeal, the Tax Court of Canada shall forthwith forward, by registered mail, a copy of the decision and any written reasons given therefor to the Minister and the appellant.

Drawing from the wording of subsection 171(4) a requirement that a decision of the Tax Court be in writing, the learned judge considered that therein lay the answer to the first question to be settled, namely whether the Tax Court judge, having allowed the appeal in the morning, could dismiss it in the afternoon. “Until such time as the formal decision, judgment or order is made pursuant to subsection 171(4) of the Income Tax Act," he wrote, "the court has power to reconsider and vary it (Fruehauf Trailer Co. v. McCrea, [1955] 3 D.L.R. 543 at 547-8.” Coming then to the second question, whether the formal judgment of June 11, 1984 could be replaced by an amended one, he simply pointed out that, bearing in mind the reasons given on the afternoon of May 3, 1984, it was clear that this judgment had not expressed the manifest intention of the Court. He held this to be, as stated by Mr. Justice Jackett in M.N.R. v. Gunnar Mining Limited, [1970] C.T.C. 152; 70 D.T.C. 6135, one of the two instances where a court remains empowered to amend a judgment already drawn up and entered.

In my view, the trial judge was correct in his determination, but I have some difficulty with his reasoning. Not that I would dispute the validity of what he wrote when dealing with the second question. Indeed, if the Tax Court judge could withdraw the conclusion he had reached in the morning of May 3 and come back with a new one in the afternoon, I do not see how it could be doubted that the formal judgment of June 11 had been issued in error and could therefore be replaced by an amended one. [1] But I have difficulty in relying only on section 174 of the Income Tax Act to find the answer to the first question. I think counsel for the appellant is right in taking exception to a position which would rely solely on the wording adopted in that section in order to introduce a distinction between a "disposition" and a "decision", and deduce that an oral disposition has no effect as long as it has not become a decision by being put in writing. It seems to me that the first subsection of section 171 is merely concerned with the content of a decision, that is to say with what the Court is entitled to do in disposing of an appeal, while the fourth paragraph only requires, at least on its face, that some writing be made of the decision.

I would prefer to approach this question of whether the judge could reverse in the afternoon the conclusion he had announced in the morning on the basis of the following propositions. Firstly, we are concerned exclusively with a matter of jurisdiction. Secondly, the only possible reason why the judge could have been without jurisdiction to change his conclusion is that his morning pronouncement had rendered him functus officio, his connection with the case from then on being limited to correcting incidental errors. Thirdly, the morning pronouncement could only have rendered the judge functus officio if, as such, it had had the effect of finally disposing of the appeal.

If I think that the Tax Court judge could do what he did, it is because I do not see how his morning pronouncement could be seen as having disposed of the appeal before him. In my view, in the absence of any specific provision empowering him to deliver judgment orally in open court, such as rule 337(1) of the general rules of this Court, [2] a judge of a court of record can only dispose finally, on behalf of the court, of a matter he has been seized of by filing and entering a written decision. There is no such provision to that effect in the rules of practice of the Tax Court of Canada and I even doubt such a provision could accord with the above cited section 17 of its enabling statute, which, by contemplating only the possibility of oral reasons, seems to exclude in any event oral decrees. It follows, in my view, that until judgment is filed the pronouncement of a judge, even made in open court and in the presence of a registrar, is merely an expression of opinion and a declaration of intention, which in law have no decisive effect and therefore remain subject to reconsideration. One would certainly assume that only in extraordinary circumstances would a judge, who sees fit, at the end of a hearing, to publicly pronounce his reasoned opinion and express his intention as to how he will dispose of the case, would later present differing reasons and a completely different judgment. But his jurisdiction to do so would seem to me to be unfettered if he continues to be seized of the matter as obviously he does.

While the case law on the point is not as clear and consistent as one would have hoped, I consider this view I have just expressed amply supported by authority. It is true that I cannot refer to any judgment where the presence or absence of a provision, such as Federal Court Rule 337(1), empowering the court to dispose of a matter by delivering judgment from the bench, has been presented as a relevant factor, as I suggested it would be. It is true also that there are judgments which urge that only in exceptional circumstances could a judge consider altering a decree after verbal utterance (without however — it ought to be noted — giving any indication as to what could qualify as exceptional circumstances and whether the limitation would be based on a legal principle or on a moral or practical requirement). [3] But I know of no case where the jurisdiction of a judge to vary a verbal pronouncement made in open court prior to the entering of a formal judgment has been denied. Reference to a few recent decisions will suffice. In England, the issue was explored at some length in In re. Harrison's Share Under A Settlement. In re. Williams' Will Trust. In re. Ropner's Settlement Trusts, [1955] 1 Ch. 260. The headnote to the unanimous decision of the Court of Appeal reads, in part, thus:

Held, that an order pronounced by a judge, whether in open court or in chambers, can always be withdrawn, altered or modified by him, either on his own initiative or on the application of a party, until such time as the order has been drawn up, passed and entered. The oral order is meanwhile provisionally effective, and can be treated as a subsisting order where the justice of the case requires it and the right of withdrawal would not thereby be prevented or prejudiced.

When a judge has pronounced judgment, he retains control over the case until the order giving effect to his judgment is formally completed; such control, however, must be used in accordance with his discretion, exercised judicially and not capriciously.

The Court of Appeal reaffirmed the principle in Pittalis v. Sherefettin, [1986] 2 All E.R. 227:

A judge, including a county court judge, could always recall and reconsider his decision up until the time his order was drawn up or perfected. The county court judge had therefore been entitled to recall his judgment and allow the application after previously announcing that he intended to dismiss it, and in any event, even if there was no general principle permitting him to do so, the circumstances were sufficiently exceptional to permit him to do so.

In Canada, in the case of Municipality of the District of Lunenburg v. Public Service Commission of Bridgewater et al. (1983), 34 C.P.C. 235, the Nova Scotia Supreme Court, Appeal Division faced a situation remarkably similar to the one before us, and its decision is properly summarized by the headnote in the following way:

The oral decision of the County Court Judge did not dispose of the proceeding; the proceeding was not disposed of until there was an order duly entered, and as a result the Judge was not functus officio at the time he issued the written addendum to his decision. There was no question of a clerical error or omission here, so that Nova Scotia Civil Procedure R. 15.07 did not apply.

It is my opinion therefore that the trial judge's determination was correct and the appeal should be dismissed with costs.

Appeal dismissed.