Gertrude D. Smith, James $. Smith and Bernard E. Smith, Jr. (Executors of the Estate O Bernard E. Smith) v. Minister of National Revenue, [1965] CTC 257, 65 DTC 5149

HALL, J. (in Chambers) :—The application for leave to appeal to this Court from the judgment of the learned President of the Exchequer Court dismissing an application by the applicants for an order quashing the respondent’s appeal from the judgment of the Tax Appeal Board dated August 20, 1964 with respect to an income tax assessment for the 1953 taxation year and which also dismissed a motion by the applicants for an order striking out from the respondent’s Notice of Appeal in respect of the assessment for the 1953 taxation year all those parts thereof alleging misrepresentation or fraud should be refused. The substantial question, namely, whether an appeal from the Tax Appeal Board to the Exchequer Court of Canada is or is not in the nature of a trial de novo which the applicants contend should be dealt with by the Supreme Court of Canada has already been decided by the Court in Campbell v. M.N.R., [1953] 1 S.C.R. 3; [1952] C.T.C. 334. In that case, Locke, J., speaking for the Court, said:

“The proceedings on an appeal in such matters to the Exchequer Court are in the nature of a trial de novo and the appellant again gave evidence in that Court ([1951] Ex. C.R. 290; [1951] C.T.C. 258) and was cross-examined at length, and further evidence was given by his wife as to the reasons which had led her husband to sell certain of the properties.”

and at pp. 6, 337:

“While the proceedings before the Income Tax Appeal Board under the provisions of the Income Tax Act are by way of appeal from decisions of the Minister, the proceedings in the present matter are indistinguishable from those upon the trial of issues in other courts of record. By subsection (2) of Section 91 of the Act, upon completion of the steps required by the statute on an appeal to the Exchequer Court, the matter is to be deemed as an action in that Court and the proceedings are conducted in the same manner as in other actions.”

Mr. Johnston argued that these extracts from Campbell v. M.N.R. (supra) were obiter dicta. I am unable to agree with that submission. Locke, J. cites [1951] Ex. C.R. 290 which is the case of Goldman v. M.N.R., [1951] C.T.C. 241. In that judgment Thorson, J., then President of the Court, went very fully into the point in issue here and concluded with this statement with which I agree:

“There are, I think, several reasons for accepting the submission of counsel for the appellant that the appeal to this Court from a decision of the Income Tax Appeal Board, whether by the taxpayer or the Minister, is a trial de novo of the issues involved therein. While there are several descrip- tions of the proceedings as an appeal and while it is true that on the appeal the Registrar of the Income Tax Appeal Board is required by Section 91(1) of the Income Tax Act to transmit to the Registrar of this Court ‘all papers filed with the Board on the appeal thereto together with a transcript of the record of the proceedings before the Board’ there is no provision that the appeal must be based on such record. On the contrary, Section 89(3) requires the appellant to set out in the notice of appeal a statement of the allegations of fact, the statutory provisions and reasons which he intends to submit in support of his appeal and Section 90(1) calls upon the respondent to serve and file a reply to the notice of appeal admitting or denying the facts alleged and containing a statement of such further allegations of fact and of such statutory provisions and reasons as he intends to rely on. There is nothing in these provisions to restrict the parties to the allegations of fact made before the Board. Additional facts or even different facts may be alleged. Then Section 91(2) provides that upon the filing of the material referred to in Section 91(1) or 91A and of the reply required by Section 90, ‘the matter shall be deemed to be an action in the court and, unless the Court otherwise orders, ready for hearing’. This section is almost identical with Section 63(2) of the Income War Tax Act. Its purpose is to give the parties the benefits of the proceedings in an action to establish their respective allegations which would not be available in an ordinary appeal. There would be no purpose in these provisions if Parliament intended that the appeal should be heard on the basis of the record before the Income Tax Appeal Board. They contemplate that the issues as defined by the statement of facts and the reply should be tried by this Court according to the processes of an action in this Court. This necessitates a trial de novo. While this view lends itself to the possibility that the taxpayer or the Minister may make a different case or defence in this Court from that made before the Board and it may seem anomalous that Parliament should permit this there is nothing in the Act to bar it. The freedom of the Court to deal with the issues raised before it, without regard to the proceedings before the Board, is further indicated by the provision in Section 91(3) that any fact or statutory provision not set out in the notice of appeal or reply may be pleaded or referred to in such manner and upon such terms as the court may direct and by the power given to the court by Section 91(4) of disposing of the appeal by dismissing it, vacating or varying the assessment or referring it back to the Minister.

All these considerations lead to the conclusion that the appeal to this Court from a decision of the Income Tax Appeal Board, whether by the taxpayer or by the Minister, is a trial de novo of the issues involved, that the parties are not restricted to the issues either of fact or of law that were before the Board but are free to raise whatever issues they wish even if different from those raised before the Board and that it is the duty of the Court to hear and determine such issues without regard to the proceedings before the Board and without being affected by any findings made by it.”

The second branch of the application, namely, to strike out certain parts of the Notice of Appeal with respect to the 1955 taxation year clearly deals with a procedural matter. Section 99(2) of the Income Tax Act gives the Court or a judge the discretionary power to strike out a Notice of Appeal or any part thereof. The learned President, Jackett, J., in exercising his discretion, refused to strike out the parts of the Notice of Appeal objected to.

‘¢ . . it was never intended that decisions in the Exchequer Court on ordinary questions of practice or procedure should be subject to revision by this Court.’’

Kerwin, C.J. in Coast Construction Company v. The King, [1951] S.C.R. 759 at 762.

The application for leave to appeal will therefore be dismissed with costs.