Moss v. R., [1998] 1 CTC 2999, 97 DTC 1493

Bell T.C.J.:

Issue:

This is an application for an Order in forma pauperis sought by the Applicant on the basis that he is bankrupt and does not have the $550 filing fee required to file a Notice of Appeal.

Respondent’s counsel stated that there were two aspects to this issue, namely:

1. Whether this Court has the ability to grant such an Order; and

2. Whether the evidence supports a conclusion that the Applicant is unable to pay the filing fee.

Preliminary Matter:

The Applicant received a NOTIFICATION OF CONFIRMATION by the Minister dated December 2, 1996 confirming an assessment of tax for his 1991 taxation year. The Minister also, on that date, reassessed the Applicant for his 1992 and 1994 taxation years varying previous assessments. The Applicant prepared a Notice of Appeal, a copy of which was presented to the Court together with a letter dated February 14, 1997 reading as follows,

As I am a bankrupt, and do not have the $550.00 registration fee required at this time, please waive the fee in this circumstance.

I am also attaching a letter from my trustee permitting me to deal with this matter, on my own.

The letter from Keith G. Collins Ltd., Trustee in Bankruptcy, dated February 17, 1997 reads as follows,

This is to advise that we, as trustee for the estate of the above debtor, have no objection to Mr. Moss pursuing his appeal of income tax reassessments.

The Applicant explained that it took some time for him to persuade the Trustee to let him pursue this appeal. Because the Applicant seeks an Order waiving the filing fee, it is apparent that the Notice of Appeal was not filed on time. The Court then heard submissions as to whether an extension of time for filing a Notice of Appeal should be given. In the circumstances, it is my view that the time for filing the Notice of Appeal should be extended. Obviously, without the filing fee, it was not possible for the Applicant to file same. His ability, therefore, to file a Notice of Appeal is dependent upon the outcome of his application for the Order.

First Aspect:

Respondent’s counsel, with respect to this Court’s jurisdiction to make the Order sought, stated that substantive rights were in issue and that an Order should only be issued by virtue of legislation or rules of Court. She stated that there is a specific rule in the Supreme Court of Canada for same and that the Federal Court of Canada has no specific rule and this Court has no specific rule. She referred to Rule 6 of the Federal Court, [1] and section 12 of the Tax Court of Canada Act setting out the jurisdiction of the Court and Rule 9 of the Tax Court of Canada Rules (General Procedure) (“Rules”) which is akin to Rule 6 of the Federal Court of Canada. That Rule reads as follows,

9. The Court may, only where and as necessary in the interests of justice, dispense with compliance with any rule at any time.

Counsel then referred to Magrath v. Canada (National Parole Board), [1979] 2 F.C. 757 (Fed. T.D.). There being no rule permitting an Order in forma pauperis in the Federal Court, the alleged right to be permitted to proceed in that form was based on an English statute and British Columbia’s English Law Act. The Court found that the absence of any provision in its Rules for proceedings in forma pauperis was not the result of any oversight and was more likely to be a conclusion that after due consideration it was not considered necessary. The Court stated,

...that the right to proceed in forma pauperis is a substantive right recognized by the English statute which is still applicable in Canada.

...in view of the fact that Parliament deemed it necessary to provide for in forma pauperis appeals in the Supreme Court Act and did not provide for any such proceedings in the Federal Court Act, lead me to conclude that the English statute should not be applied in this Court to substitute for the absence of any such provision in the Court’s Rules.

Counsel then referred Satellite Earth Station Technology Inc. v. R. (1994), 94 D.T.C. 6597 (Fed. T.D.) and Vespoli v. Canada, [1988] 1 C.T.C. 25 (Fed. T.D.) as approving the Magrath decision. She also quoted from Moffat v. R. (1994), 94 D.T.C. 1408 (T.C.C.), at 1412 in which I said, after referring to Magrath, in an application for summary judgment,

This seems directly analogous to the case at bar. Both the Ontario Court Rules and the Federal Court Rules provide for summary judgment. Therefore, the omission of a similar provision from the Rules would imply that it was not intended that summary judgment be available.

These cases confirm the fact that on matters concerning major procedural questions, it is improper for the Court to assume jurisdiction for which no specific provision is made.

Counsel then referred to Reid v. R., [1995] 2 C.T.C. 2926 (T.C.C.) in which I granted an application to proceed in forma pauperis suggesting that this decision was not supportable in light of the previous authorities.

Analysis:

In short, I do not agree with Respondent’s submissions. I agree that in forma pauperis is not a procedural but is a substantive rule. The substantive test is that if the rule in question affects the individual’s rights it is substantive in nature. The Dictionary of Canadian Law, Dukelow & Nuse (Toronto: Carswell, 1991) at page 1042 states that substantive law is

the part of the law which creates and defines rights as opposed to procedural law which prescribes methods of enforcement.

Conrad, J.A., Alberta Court of Appeal in International Assn. of Science & Technology for Development v. Hamza (1995), 28 Alta. L.R. (3d) 125 (Alta. C.A.) at paragraph 8 said

...procedural matters usually pertain to the machinery for enforcing a right by action in the courts and include, among other things, the form of the action, the proper parties to the action, available remedies, admissibility of evidence and determination of the proper court. In contrast, substantive matters usually relate to the existence or nature of a legal right.

Weight is lent to the previous authorities by Tolofson v. Jensen, [1994] 3 S.C.R. 1022 (S.C.C.), at 1067 and Block Brothers Realty Ltd. v. Mollard (1981), 122 D.L.R. (3d) 323 (B.C. C.A.).

At the time the Magrath decision was made, in 1979, Federal Court Rule 6 did not exist. It was added in 1990 and reads as follows:

The Court may, in special circumstances and subject to such conditions as it considers appropriate, by order, dispense with compliance with any Rule where it is necessary in the interests of justice.

It is an open question as to whether the learned Justice in Magrath would have come to a different conclusion had this discretionary rule been available at the time. I do not, in light of the existence of Rule 9 in this Court, find that the Magrath decision should affect my determination. The critical component of Rule 9 is “in the interests of justice”. In X. Ltd. c. Morgan- Grampian (Publishers) Ltd., [1990] 2 All E.R. 1 (U.K. H.L.), the House of Lords held that

...in section 10 of the Contempt of Court Act 1981 the phrase “in the interests of justice” contemplates that persons should be enabled to exercise important legal rights and to protect themselves from serious legal wrongs whether or not resort to legal proceedings in a court of law will be necessary to attain those objectives.

In McKervey v. Minister of National Revenue, [1992] 2 C.T.C. 2015 (T.C.C.), at 2020, Bowman J. concluded that

...the interests of justice are best served if the true facts are put before the Court.

In Reid(supra), after referring to Moffatt (supra), I stated

It must be kept in mind that I was dealing with the substance of an appeal in a situation where the Minister of National Revenue would have been denied the right to present his case had I decided in favour of the Applicant.

In the present case, if the Applicant is unsuccessful, he will be denied the ability to present his case in Court. This would not serve the interests of justice.

It seems that undue significance is being appended to the term in forma pauperis. Indeed, although the Applicant seeks an Order described by such phrase, the Court, in granting his request, is simply acting within its jurisdiction to dispense with compliance with the Rule requiring the payment of a filing fee. Rule 4(1) states

These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every proceeding on its merits.

Rule 9, repeated, says

The Court may, only where and as necessary in the interests of justice, dispense with compliance with any rule at any time.

Rule 176(1) says

The Registry shall collect the fees prescribed in Schedule II, Tariff A.

In granting the Applicant’s request, I am simply exercising discretion to dispense with compliance with Rule 176(1). This, of course, is subject to the Court being satisfied that the Applicant in fact is indigent and unable to pay the filing fee. That matter is dealt with in the following paragraph.

Applicant’s Poverty:

Respondent’s second counsel cross-examined the Applicant at length. This cross-examination was based substantially on many dozens of pages of affidavits and documents prepared, it appears, in respect of “jeopardy proceedings” and the Applicant’s wife, Rochelle Moss. I am totally unpersuaded by that cross-examination and by the submissions of counsel that the Applicant’s statement that he could not pay the required filing fee was incorrect. Counsel sought to draw inferences from allegations of fact. He did not establish that the Applicant in fact had the necessary funds. Counsel referred, on several occasions, to the fact that money was available to the Applicant. It should be made clear that regardless of how much money his wife may have had under her control, if he did not have the necessary funds, the wife’s resources are immaterial. I accepted the Applicant’s evidence.

Accordingly, my previous finding applies and an Order dispensing with compliance with Rule 176(1) resulting in the Applicant’s ability to file the Notice of Appeal without fee will be made.

Application granted.