John Christopher Doyle v. Minister of National Revenue, [1978] CTC 597, 78 DTC 6408

Addy, J:—Pursuant to Federal Court Rule 477, motions were made by counsel acting for the taxpayers in each of the above seven related appeals for an order authorizing the issue of a Commission for the examination of one John Christopher Doyle at Panama City in the Republic of Panama.

The appeals involved nearly $2,000.000 in income tax assessed against the taxpayer for the years 1953 to 1956 inclusively. With interest in [sic] penalties the amount now totals over $6,000,000.

The affidavit in support of all of the motions which were heard together was that of the aforesaid Doyle. He personally is the appellant in two of the cases and, in his affidavit. he states that, at all relevant times, he was the sole shareholder and the sole director of Javelin Foundries & Machine Works Limited (hereinafter referred to as ‘‘Javelin Foundries’’), the corporate taxpayer involved in the five other appeals. Javelin Foundries ceased to carry on business in 1956 as its undertaking had been sold in 1951 and 1952 to a newly created public company Canadian Javelin Limited, of which Doyle was a director and the controlling shareholder.

Under these circumstances, for the purpose of deciding whether a Commission should or should not issue as. requested, I intend to consider the merits of the case as if Doyle were the actual party involved in each of the appeals since he admittedly was the only person interested in Javelin Foundries.

The following facts were established by the affidavit and were not contested by counsel for the respondent Minister of National Revenue: Except for one person who is now advanced in years and a bookkeeper who was employed by Canadian Javelin Limited in 1965, Mr Doyle is now the sole person who is familiar with the affairs of the taxpayers during the years in issue. Mr Doyle has direct personal knowledge of the business of Javelin Foundries and of the transactions and share tradings between it and Canadian Javelin Limited, which had acquired its undertakings. The determination of the issues in the appeals will involve the business relationships existing at the time between Javelin Foundries and Mr Doyle and particularly evidence as to whether certain expenditures made by him were of a business nature or a personal nature and also the alleged appropriation by him of certain shares of Javelin Foundries. Mr Doyle is the only person available who is able to give evidence concerning any of these expenditures. Some of the documentary evidence pertaining to these appeals is missing and the oral evidence of Mr Doyle would be required to explain certain transactions.

I therefore find that, not only is the evidence of Mr Doyle important, but it indeed appears to be vital to the favourable determination of the appeal for the taxpayer in each case, since the appeals are trials de novo and the onus of proof rests on the taxpayer.

Mr Doyle has been considered a non-resident of Canada for taxation purposes since 1955 and he has been a permanent resident of the Republic of Panama since 1972. He is now a citizen of that country.

Should the order be granted, he has also undertaken, through his counsel, to make a cash provision in advance to cover all reasonable costs and expenditures of all persons involved in the commission including those of the commissioner and whatever officials might be required by him.

The sole reason advanced by the applicants for requesting the Commission is that Mr Doyle would face criminal prosecution and, in all probability, be arrested should he come to Canada. He would be facing four charges of fraud, two charges of breach of trust and some 406 charges of fraudulent manipulation of stock market transactions, all laid in the province of Newfoundland pursuant to various provisions of the Criminal Code. He was not in Canada when the charges were brought and has therefore never been arrested on these particular charges nor has he appeared before a court in relation to them. It is thus on the basis that he does not wish to come to Canada to expose himself to criminal prosecution on these charges that the request is made that his evidence be taken on commission.

Under the circumstances, it is abundantly clear that credibility would be a vital issue and counsel agreed that this was a case where the trial judge, who would be ultimately trying the appeals, should be appointed commissioner in order to attend in Panama, as credibility can hardly be determined from a transcript. It is precisely, in my view, the type of case contemplated by my brother Collier, J in his as yet unreported reasons dated July 25, 1977, in a similar motion before this court in the case of Marubeni Corporation v The Ship “Star Taranger” and Westfal-Larsen & Co A/S and Star Shipping Co A/S, Court No T-2991-74, where he stated at page 4:

One can possibly envisage a situation in an action of some kind where all the key witnesses are outside Canada; where there is obviously going to be major conflicts in factual or opinion testimony; where credibility (and assessment of it) would be of prime importance. It may perhaps be that the Court, in that situation, would conclude there were compelling reasons, in a practical sense and in the interest of justice, that a judge should be appointed. While a judge, in those circumstances, might technically be characterized aS a mere commissioner, one must look at the position realistically. Basically, the judge would be sitting as the court, making immediate rulings on evidence and other legal points, arriving at tentative, or perhaps final, assessments as to credibility—all this in a foreign jurisdiction.

There is good authority in this court for the appointment of the judge who would be ultimately trying the case as the commissioner to hear evidence in a foreign country, namely the order of former Associate Chief Justice Noël in the case of Rossdeutscher v The Queen (unreported). In my view such a procedure should be adopted where the ends of justice require it.

The motion was well and thoroughly argued by counsel for the applicants and an extensive review of the authorities was presented.

There is no question but that the granting of a commission is a discretionary matter which must be dealt with according to the particular circumstances of each case. As to the method of exercising that discretion, I am in general agreement with the tests enumerated by Osler, JA in the case of Ferguson v Millican (1905), 11 OR 35 at 39, which tests were approved and applied by the late Steward, J in Niewiadomski v Longdon, [1956] OWN 762. According to these authorities the court must be satisfied that:

1. the application is made bona fide;

2. the issue is one which the court ought to try;

3. the witnesses to be examined can give evidence material to the issue;

4. there is some good reason why they cannot be examined here.

On the other hand l disagree with the tests quoted by counsel for the respondent as laid down in the case of Green v Spencer et al, [1939] OWN 119 and other subsequent decisions of the Master of the Supreme Court of Ontario which followed it.

There is no doubt in my mind that the present application is made bona fide, that the issue is One which must be tried and that the witness Doyle’s evidence would be material. The sole matter remaining is whether the reason involved is a good one.

I can see no particular prejudice to the respondent as all expenses incurred would be paid by the applicants in any event of the cause. Finally, the judge who would be trying the case has indicated that he would be willing to accept the appointment if named commissioner.

In adjudicating between parties on a discretionary matter, a court must not only consider the rights of the parties but the effects which its decision might have on the administration of justice generally. There are cases where the evidence of a plaintiff as opposed to that of a mere witness had been taken on commission: Haynes v Haynes and Haynes (1962), 35 DLR (2d) 660; Hanton v Simmons et al, [1921] 1 WWR 757; Robins v The Empire Printing and Publishing Co (1892), 14 PR 488; Coch v Allcock (1888), 21 QBD 178; and Weingarden v Noss (1953), 9 WWR 335. In these cases the plaintiff was either incapable of travelling by reason of age or ill health or the amount in suit did not warrant the expense of travelling to the jurisdiction of the Trial Court.

There are also cases where the commission evidence of a witness or even of a defendant was allowed on the sole grounds that, if the person came into the jurisdiction he or she would face criminal proceedings. I know of no case, however, nor could counsel refer me to any, where a plaintiff obtained such an order on those grounds. The avoidance of criminal proceedings, although a valid ground is not a compelling one.

I am of the view that, generally speaking, it would be detrimental to the administration of justice to allow a plaintiff to claim recourse from a court and then refuse to come into its jurisdiction because he might have offended the very laws which that court is charged with enforcing.

A fortiori, in the particular circumstances of this case, where, in fact although not in law, the Court itself would be travelling to the foreign jurisdiction in order to allow an accused to avoid facing charges in its own jurisdiction, in my view, there would be a great likelihood of the administration of justice being brought in disrepute. It would be improper for this Court to risk creating the impression that it might be assisting a person accused of serious criminal offences to avoid answering to those actions especially where they must necessarily be intimately related to the subject matter in issue.

On this ground alone, I dismiss the application with costs of which there shall, of course, be but one set.