Citation: 2010 TCC 448
Date: 20100827
Dockets: 2008-2468(IT)G
2008-2590(IT)G
BETWEEN:
ROBERT ALAN KOPSTEIN,
WILLIAM SIRETT,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Jorré J.
Introduction
The motions
[1]
The parties are in
agreement that the issues in the motion in the Sirett appeal are in
substance the same as in the Kopstein case and that the only difference
relates to paragraph numbering. Accordingly these reasons will simply deal with
the Kopstein appeal. I will make brief reference at the end of these
reasons to the Sirett appeal.
[2]
The appellant has
brought a motion seeking the following:
(a) that certain portions
of the amended reply to the notice of appeal be struck;
(b) that the time to file
an answer to the amended reply be extended;
(c) that:
(i) the respondent be
ordered to produce the assessor for examination with respect to the assumptions
of fact set out in the amended reply and
(ii) that the respondent
be ordered to produce the documents relating to the assumptions of fact made
prior to the filing of the answer; and
(d) that the respondent
produce a full list of documents pursuant to section 82 of the Rules.
Nature of the appeal
[3]
It will be useful to
very briefly and generally set out the nature of the dispute as alleged in the
pleadings.
[4]
The appellant acquired certain
non-exclusive limited use licenses relating to software for trading in
securities and entered into other agreements with companies in the Trafalgar Group
of Companies. The companies in the Trafalgar Group are incorporated in various
countries; it is alleged that they do not deal with each other at arm’s length.
[5]
In computing his
income the appellant claimed capital cost allowance in respect of the licenses
acquired as well as certain amounts in respect of fees paid pursuant to the
agreements for maintenance, modifications and enhancements of the software.
[6]
In reassessing the appellant,
the Minister of National Revenue (Minister) disallowed these deductions.
[7]
The appellant and the respondent
respectively set out the issues as follows:
Appellant
(a) whether the Appellant’s investment in the
Licenses was a “tax shelter” as defined in subsection 237.1(1) of the Act;
(b) whether the Appellant’s investment in the
Licenses was a “tax shelter investment” as defined in subsection 1100(20.2) of
the Regulations;
(c) whether the Appellant acquired the Licenses for
the purpose of gaining or producing income from a business or property;
(d) whether the 1999 Note and the 2000 Note are a
“limited recourse amount” as defined in subsection 143.2(1);
(e) whether section 67 applies;
(f) whether the Appellant’s obligation under the 1999
Note and the 2000 Note was a “contingent liability”;
(g) whether the Appellant’s income tax returns for
the 2000 and 2001 taxation years were filed in a timely manner in accordance
with subparagraph 150(1)(d)(ii) of the Act; and
(h) whether the Appellant acted with due diligence in
respect of the filing of his returns for the 2000 and 2001 taxation years.
Respondent
i)
Whether the Minister has correctly assessed the
Appellant’s liability for penalties and interest;
ii)
Whether the Appellant’s investments in the Trafalgar
computer software program was an investment in an unregistered tax shelter;
iii)
Whether the 1999 Promissory Note or the 2000
Promissory Note are contingent liabilities, limited recourse amounts, or cause
at risk adjustments;
iv)
Whether the Trafalgar I/T Program was a “computer
software tax shelter property” as defined in the Income Tax Regulations;
v)
Whether the Appellant acquired his interests in
the Trafalgar computer software programs for the purpose of gaining or producing
income from a business; and
vi) Whether the amounts claimed as Appellant’s
investment in the Trafalgar computer software programs were unreasonable in the
circumstances.
Applicable Rules
[8]
Rule 49(1) requires
that every reply state, among other things:
49(1) . . .
(d) the
findings or assumptions of fact made by the Minister when making the
assessment,
(e) any
other material fact,
. . .
[9]
Rule 51(1) states:
51(1) The effect of a document or the purport
of a conversation, if material, shall be pleaded as briefly as possible, but
the precise words of the document or conversation need not be pleaded unless
those words are themselves material.
[10]
Rule 53 states:
53 The
Court may strike out or expunge all or part of a pleading or other document,
with or without leave to amend, on the ground that the pleading or other
document,
(a) may
prejudice or delay the fair hearing of the action,
(b) is
scandalous, frivolous or vexatious, or
(c) is an
abuse of the process of the Court.
General nature of the appellant’s challenge
to certain paragraphs of the amended reply
[11]
The appellant seeks to
strike certain portions of the amended reply to the notice of appeal on the
grounds that:
(a) they allege evidence
rather than material facts;
(b) they are conclusions
of law;
(c) they are mixed conclusions
of fact and law;
(d) they are allegations
of fact about third parties solely within the Minister's knowledge; or
(e) in the case of subparagraphs
19(b) and (c) of the amended reply, they are inconsistent with certain of the
assumptions in paragraph 18.
[12]
The appellant referred
me to Zelinski v. The Queen, 2002 DTC 1204 (TCC). Two passages are of
interest:
4 The purpose of pleadings is to
define the issues in dispute between the parties for the purposes of
production, discovery and trial. What is required of a party pleading is to set
forth a concise statement of the material facts upon which she relies. Material
facts are those facts which, if established at the trial, will tend to show
that the party pleading is entitled to the relief sought. Amendments to
pleadings should generally be permitted . . . as the purpose of
the Rules is to ensure, so far as possible, a fair trial of the real issues in
dispute between the parties.
5 The applicable principle is
stated in Holmsted and Watson:
This is the rule of pleading: all
of the other pleading rules are essentially corollaries or qualifications to
this basic rule that the pleader must state the material facts relied upon for
his or her claim or defence. The rule involves four separate elements: (1)
every pleading must state facts, not mere conclusions of law; (2) it must state
material facts and not include facts which are immaterial; (3) it must state
facts and not the evidence by which they are to be proved; (4) it must state
facts concisely in a summary form.
[Footnotes omitted.]
[13]
The appellant also put
great weight on Foss v. The Queen, 2007 TCC 201, a case
where the respondent pleaded a great many detailed assumptions. The appellant
particularly stressed paragraphs 9, 10 and 11:
9 The only obvious
rationale for this approach to the drawing of pleadings is that the Minister
(or more correctly her counsel) then takes the position at trial that every
fact that is pleaded to have been assumed when assessing, whether material or
simply evidentiary, and every conclusion of mixed fact and law included in the
pleading as an assumption, becomes a fact established for purposes of the
trial, unless the taxpayer is able to disprove it. This, in my view, is a gross
distortion of what was decided by the Supreme Court in Anderson Logging
and Johnston. The taxpayer is the party who has initiated the challenge
to the status quo, which is the validity of the assessment, and so it is for
him to “… demolish the basic fact on which the taxation rested.” To do this the
taxpayer needs, and so is entitled to have pleaded, “… full [disclosure] of the
precise findings of fact and conclusions of law which have given rise to the
controversy [assessment].” When Rand J. used the expression “precise findings
of fact” he surely did not mean the whole gamut of evidence that led the
assessor to his factual conclusions, but simply the material facts of the case,
which is to say those facts that, if true, justify the Minister in making the
assessment on her understanding of the law. The rationale for this is often
said to be that it is the taxpayer who best knows his own affairs. This derives
from the following passage from the judgment of Duff J., as he then was, in Anderson
Logging at page 50:
First, as to the contention
on the point of onus. If, on an appeal to the judge of the Court of Revision,
it appears that, on the true facts, the application of the pertinent enactment
is doubtful, it would, on principle, seem that the Crown must fail. That seems
to be necessarily involved in the principle according to which statutes
imposing a burden upon the subject have, by inveterate practice, been
interpreted and administered. But, as concerns the inquiry into the facts, the
appellant is in the same position as any other appellant. He must shew that the
impeached assessment is an assessment which ought not to have been made; that
is to say, he must establish facts upon which it can be affirmatively asserted
that the assessment was not authorized by the taxing statute, or which bring
the matter into such a state of doubt that, on the principles alluded to, the
liability of the appellant must be negatived. The true facts may be
established, of course, by direct evidence or by probable inference. The
appellant may adduce facts constituting a prima facie case which remains
unanswered; but in considering whether this has been done it is important
not to forget, if it be so, that the facts are, in a special degree if not
exclusively, within the appellant's cognizance; although this last is a
consideration which, for obvious reasons, must not be pressed too far.
(Emphasis
added)
The concluding words that I
have italicized are often overlooked. There are cases, of course, where all the
facts are (or should be) within the taxpayer’s particular knowledge. An example
is the case where it is simply the revenues and the expenses of a business that
are in dispute. Anderson Logging itself was such a case — the issue
being whether a sale of timber limits was effected by the taxpayer in the
course of its business, or was the realization of an investment. So too was Johnston, where the only factual issue between the parties
was whether the taxpayer supported his wife in the taxation year. It was simply
as to those material facts that the judgments in those two cases placed the
onus of proof on the taxpayers.
10 The iniquity
inherent in the practice of pleading vast swaths of evidence as assumptions of
fact that underlie the assessment under appeal is that it purports to establish
as true all the evidence pleaded that the taxpayer cannot disprove. It is this
that Duff J. cautioned against in the concluding part of the passage from his
judgment in Anderson Logging that I have quoted above. The present case
is an outstanding example of one where the assumptions pleaded relate, to a
very large extent, to matters which may very well be quite outside the
appellant’s knowledge. . . .
11 The purpose of
pleadings is to define the issues between the parties for the purposes of
discovery, both documentary and testamentary, and trial. That requires no more
than a statement of the “precise findings of fact” that underpin the
assessment. It is potentially prejudicial to the appellant to plead more —
certainly to plead more by way of assumptions of fact. The appellant is, of
course, entitled to particulars of the evidence that the Crown intends to lead
at trial, but these are properly obtained on discovery, not disguised as material
facts as to which the Crown at trial may claim a presumption of truth. . . .
[Footnotes omitted.]
I will discuss the rules for pleadings below including
those with respect to material facts.
Pleadings
General considerations
[14]
It will be useful to
consider further some of the rules that apply to pleadings.
[15]
The following are some
of the rules:
(a) A party should not
plead evidence as opposed to facts.
(b) A party should not
plead irrelevant facts.
(c) In a tax case the
respondent should plead “the precise findings of fact and rulings of law which
have given rise to the controversy” (often referred to as the Minister’s
assumptions or as the basis of the assessment).
(d) A party cannot simply
plead a mixed conclusion of fact and law but must also plead the underlying
facts.
Material facts and facts particularly within the Minister's
knowledge will be discussed further below.
[16]
It is worth remembering
that there are invariably exceptions to most of these rules and it is very
important to keep in mind the specific circumstances of each case in applying
these rules.
[17]
I would also note that I
do not understand Foss as suggesting that one should not examine each
part of the pleading that a party seeks to have struck in terms of the specific
rules of pleading.
[18]
Some cases may by their
nature involve many and complicated facts and issues; in such cases, it is not
surprising if the pleadings are longer.
Not always easy to categorize statements in pleadings
[19]
It is useful to first
consider some of the different kinds of allegations or statements that may be
contained in a pleading:
(a) evidence of facts,
(b) irrelevant facts,
(c) relevant but immaterial
facts or, stated differently, relevant facts which are not material facts (facts
which may lead to an inference of a material fact),
(d) material facts,
(e) mixed conclusions of
fact and law,
(f)
conclusions of law and,
(g)
in tax cases, there will
usually be the Minister’s “assumptions” or, stated differently, basis of the
assessment.
While an irrelevant fact would certainly not be a
material fact, for clarity in the discussion below, I wish to emphasize that
when I am referring to immaterial facts I am only referring to relevant facts
that are not material facts.
[20]
In some circumstances,
the distinction between categories may be relatively straightforward; often, it
will be quite difficult. This is well recognized:
Algoma
Central Corporation v. The Queen, 2009 TCC 314:
23 . . .
In many instances it may be a very fine line that separates that which is fact
from that which is evidence. . . .
Niagara Helicopters
Limited v. The Queen, 2003 TCC 4:
8 Whether an allegation is
irrelevant is something that the trial judge is in a position to determine in
the context of all of the evidence at trial. It is inappropriate on a
preliminary motion for a motions judge, who has heard no evidence, to decide
that an allegation is irrelevant thereby depriving a party of the opportunity
of putting the matter before the judge who presides the trial and letting him
or her put such weight on it as may be appropriate.
Odgers on Civil Court Actions, 24th edition by Simon Goulding (London,
Sweet and Maxwell, 1996), pages 155 and 156:
7.12 It is obvious, then, that the question whether a particular
fact is or is not material depends mainly on the special circumstances of the
particular case. It is a question which it is not always easy to answer, and
yet it is a very important one: the result of the case often depends on the
ruling of the judge at the trial that it is or is not necessary that a
particular fact should be proved. Sometimes it is material to allege and prove
that the defendant was aware of certain facts; at other times it is sufficient
to aver that he did some act, without inquiring into the state of his mind. In some
cases the defendant’s intention is material, in a few cases his motives. . . .
No general rule can be laid down.
The following quotation relates to Rule 25.06(1) of the
Rules of Civil Procedure of Ontario:
25.06(1) Every pleading shall contain a concise statement of the
material facts on which the party relies for the claim or defence, but not the
evidence by which those facts are to be proved.
In Jourdain v. Ontario, 2008 CanLII 35684 (ON
S.C.), Shaw J. says:
37 As noted by Master
McLeod in City of Toronto v. MFP Financial Services Ltd. (2005), 17
C.P.C. (6th) 338 (Ont. S.C.J.) at para. 15, the distinction between material
facts, particulars, and evidence is not a “bright line”. He points out
that there will be situations where the minimum level of fact disclosure may
require a pleading of material facts that might also be regarded as evidence.
In this regard, Rule 25.06(8) requires that where intent is alleged, the
pleading must contain full particulars of the allegations. The full
particulars must set out precisely what the wrongful act is and the when, what,
by whom and to whom of the relevant circumstances. See Balanyk v.
University of Toronto, [1999] O.J. No. 2162 (S.C.J.) at para. 28.
[Emphasis added.]
[21]
The appellant argued
that the determination of whether a fact was a material fact should be
distinguished from the situation where a motions judge must determine whether a
particular fact is a relevant fact and that the case law in respect of a
motions judge determining relevance should not be applied to a determination of
materiality. However, in practice, I do not see that it is any easier to
determine whether or not a relevant fact is a material fact than to determine
whether or not a particular fact is a relevant fact.
[22]
In general, the trial judge
will be better placed than the motions judge to determine the category of an
allegation, whether it is fact or evidence, whether it is relevant or
irrelevant or whether it is material or immaterial.
[23]
Accordingly, a motions
judge should be very cautious about categorizing an allegation and deciding to
strike part of a pleading as a result. Unless it is clear-cut, it is generally
appropriate to leave questions as to the category of an allegation and, as
discussed below, the consequences that may arise to the trial judge.
Material facts
[24]
A material fact may be
established:
(a) by evidence directly
or
(b) by inferences made
from other facts (sometimes referred to as secondary facts), relevant but
immaterial facts, which are in turn established by evidence.
[25]
Depending on the
circumstances of a particular case, it may be that a given material fact could
be established by evidence directly or by evidence of the other relevant but
immaterial facts. For example, supposing in a tort action relating to a hunting
accident a material fact alleged is that A shot B in circumstances where A and
B did not see each other. It may be that the fact will be established by
evidence; this would be the case if, for example, Y will testify that he (i) was
standing where he could see both A and B, (ii) saw A aim his rifle, (iii) heard
a gunshot and (iv) saw B fall.
[26]
On the other hand, it
may be that no one saw the accident directly and that the plaintiff will
establish, among others facts, the fact that (i) A and B were in the same
general area at the same time and that (ii) the bullet removed from B’s
shoulder was fired by A’s rifle. In this case, the plaintiff will be asking the
trier of fact to infer that A shot B not directly from the evidence of a
witness, but from other relevant immaterial facts; these other immaterial facts
might be established by various means including witnesses as to the location of
A and B and evidence such as, for example, in the case of the origin of the
bullet, an expert ballistics report.
[27]
Odgers discusses the question: what is a material
fact? Some of the historical context of the development of the rules regarding
the pleading of material facts is also explained:
What facts are material?
7.10 “The word ‘material’ means necessary for the purpose of
formulating a complete cause of action, and if any one ‘material’ fact is
omitted, the statement of claim is bad” (per Scott L.J. in Bruce v.
Odhams Press Ltd). The same principle applies to defences.
7.11 Facts which are not necessary to establish either a cause of
action or the defence to it are not, speaking generally, “material” within the
meaning of Order 18, r. 7, and should, therefore, be omitted from the pleading
unless it is clear that evidence will have to be given of them at the trial. All
statements which need not be proved should be omitted.
7.12 It is obvious, then, that the question whether a particular
fact is or is not material depends mainly on the special circumstances of the
particular case. It is a question which it is not always easy to answer, and
yet it is a very important one: the result of the case often depends on the
ruling of the judge at the trial that it is or is not necessary that a
particular fact should be proved. Sometimes it is material to allege and prove
that the defendant was aware of a certain fact; at other times it is sufficient
to aver that he did some act, without inquiring into the state of his mind. In some
cases the defendant’s intention is material: in a few cases his motives. The
pleader must apply his knowledge of the law, and his common sense, to the facts
stated in his instructions, and decide for himself which he must plead and
which he may safely omit. Precedents may afford him some assistance; but in the
end he must rely on his own judgment. No general rule can be laid down.
7.13 In early days, when the courts were very strict, they punished
either party who pleaded immaterial facts: for if his opponent pleaded to immaterial
facts, and issue was joined thereon, they compelled the party who had alleged
such facts to prove them literally, although they were immaterial; otherwise he
failed in his action. He had himself raised the issue, so he must prove it or
take the consequences.
7.14 Subsequently, however, the courts adopted a far better method
of preventing the parties from raising immaterial issues. They declared that “immaterial
allegations were not traversable,” e.g. neither party was allowed to
plead to any immaterial matter in his opponent’s pleading, but must treat it as
surplusage and leave it alone. Thus no issue could be raised on it; and the
party pleading it was no longer bound to prove it at the trial.
7.15 And now the courts never compel either party to prove at the
trial more than the substance of his pleading, even though his opponent may have
expressly traversed some immaterial averment contained in it lest by the
operation of Order 18, r. 13(1), it should be taken to be admitted.
7.16 If there is doubt whether a particular fact is or is not
material, the safer course is for it to be pleaded. If you think you can prove
it. For if it is omitted, and it is held to be material, no evidence can be
given of that fact at the trial, unless the judge will give leave to amend, and
such leave may be upon terms as to payment of costs.
. . .
7.44 The fact in issue between the parties is the factum
probandum, the fact to be proved, and therefore the fact to be alleged. It
is unnecessary to tell the other side how it is proposed to prove that fact;
such matters are merely evidence, facta probantia, facts by means of
which one proves the fact in issue. Such facts will be relevant at the
trial, but they are not material facts for pleading purposes.
7.45 This was always a clear rule of the common law. “Evidence shall
never be pleaded, because it tends to prove matter in fact, and therefore the matter
in fact shall be pleaded.”
7.46 In the Court of Chancery, however, this rule was never
observed: the pleadings there were lengthy narratives which sometimes became
intolerably prolix. They stated the evidence on which the party proposed to
rely in full detail, with copious extracts from the material documents. They
were more like lengthy affidavits than modern pleadings.
7.47 This was partly due to the nature of the matters with which
equity courts had to deal; for even now an equitable defence or reply is
pleaded in the Queen’s Bench Division somewhat more in detail than is usual in
the case of ordinary legal defences or replies. Moreover, it is not always easy
to decide what are the facts to be proved, and what is only evidence of those
facts. The question is often one of degree. “There are many cases in which
facts and evidence are so mixed up as to be almost indistinguishable.” Usually
though the line is reasonably clear between the fact in issue and the evidence
by which that fact would be proved, and the courts have been content to affirm
the principle without trying to elaborate the distinction further.
[Footnotes omitted.]
[28]
It is clear from the
historical context set out in paragraph 7.47 of Odgers that the rule as
applied in England was not an absolute one.
[29]
It is also clear from
the historical context set out in paragraphs 7.13 to 7.15 of Odgers that
pleading immaterial facts once had significant effects that are no longer applicable.
Consequently, although unduly and unnecessarily long pleadings should not be
encouraged, there is less reason than was once the case to be concerned with a
party pleading relevant facts that are not material facts.
[30]
Indeed, Rule 47(2), which
applies to all pleadings, says:
47 . . .
(2) Where it is convenient to do
so, particulars may be set out in a separate document attached as a schedule to
the pleading.
Given that it is clear that particulars go beyond the
material facts,
this means that the Rules contemplate parties pleading facts other than
material facts.
Is it improper to include relevant facts that are not material
facts in the assumptions?
[31]
There remains the
question: is it improper to plead relevant but immaterial facts as assumptions?
With respect to this there are a number of matters to consider.
[32]
First, there is the
well-established duty on the Minister to fully disclose to the taxpayer the
precise findings of fact which have given rise to the controversy and as Bowman
A.C.J. (as he then was) said in Mungovan v. The Queen, 2001 DTC 691
(TCC), at paragraph 10:
10 Assumptions are not quite like pleadings in an ordinary
lawsuit. They are more in the nature of particulars of the facts on which the
Minister acted in assessing. It is essential that they be complete and
truthful. . . .
Although it was dealing with a different point,
whether the onus should be shifted, in that context the Federal Court of Appeal
in Kossow v. Canada, 2009 FCA 83, appears to approve this quotation.
[33]
The “assumptions” or basis
of the assessment play a special role in tax appeals. The ultimate issue in a
tax appeal is whether the Minister has correctly assessed the amount of tax,
interest and penalties, if any. One of the functions of pleading the basis of
the assessment is to inform the taxpayer of the case he has to meet. One of the
effects of pleading assumptions is to narrow what is at issue and what the
taxpayer has to prove.
[34]
Thus, for example, if
an individual runs a business as a proprietorship and the basis of the assessment
relates solely to a claimed deduction for medical expenses, it will be
unnecessary for the appellant taxpayer to make any proof regarding all the
other elements which went into the ultimate calculation of his liability for
tax. The appellant will not have to deal with his business revenues or expenses
or with any other matter that entered into the computation of his tax.
[35]
Second, although Rule
49(1)(d), unlike Rule 49(1)(e), does not contain the word “material”,
in Globtek Inc. v. The Queen,
Bowie J., who was quite conscious of the absence of the word “material”, stated
that:
4 . . . [i]t is material facts, and only material
facts, that sub-rules 49(d) and (e) mandate.
[36]
I note, however, that,
as mentioned above, Rule 47(2) envisages parties pleading particulars that may
well include relevant but not material facts. I also note that the French text
of Rule 49(1)(e) refers to “fait pertinent”
which is closer in meaning to “relevant fact” than to “material fact”.
[37]
Third, as previously
discussed there are circumstances where it is very difficult to determine what
the material facts are as opposed to the relevant but immaterial facts.
[38]
Let us take as an
example a case where one of the issues is whether someone was a resident of Canada. Although this is primarily a question of fact, it is
accepted that it is a mixed question of fact and law. Accordingly, one cannot
simply assume that X is a resident of Canada. The Minister
may have concluded and assumed that X was a resident because he owned a house in
Canada, his spouse and children remained in Canada and lived in the house owned
by X, he was employed by a company headquartered in Canada who had employed him
in Canada for 10 years prior to his being asked to take the overseas
position, he returned to Canada every summer for his vacation and every
Christmas as well as maintaining his golf club membership and two bank accounts
in Canada, etc.
[39]
All the Minister’s
reasons in the preceding example are facts that potentially lead to the
conclusion of fact and law. None of these individual facts look like material
facts by themselves. For example, the fact that X was a member of a golf club
is clearly not by itself a material fact.
[40]
There is no fixed set
of the above facts that are the essential elements, the material facts,
relevant to the issue and yet, presumably, some subset of these facts is
essential.
[41]
In this example, are
some of the alleged facts not essential to the legal conclusion, and therefore
relevant, but not material? Perhaps, but there is no way of determining in
advance which are or are not material. In such a case, if any of the alleged
facts enumerated happen to be relevant but immaterial, I cannot see how such a
determination, assuming it is possible to make such a determination, could be
made by anyone other than the trial judge.
[42]
Fourth, as previously
noted in a case where there is a mixed conclusion of fact and law, such as in
the residence example above, the underlying facts, some of which may be relevant
but not material facts, must be pleaded.
[43]
Perhaps the discussion
above is the wrong way of analyzing the example regarding residence; it may be
that the better way of looking at the example is the following: all possible
indicia that might lead to the conclusion that a person was a resident of
Canada are material facts; the immaterial facts are only those other relevant
facts that are not in themselves indicia of residence but which could lead to
an inference of one or more of the indicia of residence. If this is the right
way of looking at the situation then the material facts as to residence remain,
potentially, quite extensive and, again, the borderline between a material and a
relevant but immaterial fact may remain a grey one indeed.
[44]
Fifth, it is not
apparent to me that it is necessarily in the taxpayer’s interest that the Minister
be precluded from including in the section outlining the basis of the
assessment assumptions regarding relevant but immaterial facts. On the
contrary, in many circumstances it will be to the appellant’s advantage.
[45]
There may be more than
one possible set of secondary facts which can lead to the same inference of a material
fact. In such a case, if the Minister includes in the assumptions the secondary
facts assumed, the practical effect will be to limit the case the taxpayer has
to make and to simplify the litigation process.
[46]
For example, suppose the
Minister has made an assessment using an alternative estimation technique such
as the net worth method. When using this technique, the Minister will determine
a person’s assets and liabilities at year end and then compare the resulting
net worth with the person’s net worth the following year. To estimate income
the Minister will then make a number of adjustments including taking account of
income reported, gifts, capital gains and many other matters.
[47]
In such an assessment there
could be quite an extensive debate as to exactly which facts are material facts
and which facts are secondary facts. However, it is clear that each asset or
each liability as determined at year end is a secondary fact since they are
added or subtracted to come up with an inference of fact, the individual’s net
worth at year end. For the sake of discussion, I will assume that an individual’s
net worth at year end is material fact.
[48]
It is well accepted in
this Court that when the net worth method is used, the Minister’s reply should
include the full net worth statements including the assets and liabilities at
year end and all the adjustments made in estimating an individual’s income.
This necessarily includes immaterial facts.
[49]
To do otherwise would
complicate enormously the task of an appellant since he would have to build up
from the beginning any challenge to the Minister’s calculation of his net worth
at the end of every year. Under the existing practice, the requirement of
including all the assets and all the liabilities (secondary, relevant but immaterial,
facts) simplifies enormously the appellant’s task as well as the entire
proceeding since the appellant can focus his case simply on correcting errors
in the assets and liabilities rather than having to establish each and every
asset and liability.
[50]
Given these
considerations, particularly the duty to disclose assumptions, the comments of
Bowman A.C.J. (as he then was) in Mungovan and the fact that there are clearly
cases where parties are expected to plead relevant but immaterial facts, while
pleadings should not be unduly and unnecessarily long, in my view there is no
general prohibition against pleading assumptions consisting of relevant facts
that are not material facts.
[51]
Although it is not
always explicitly expressed in argument, the question of onus probably lies at
the heart of most debates regarding the pleading of the Minister’s assumptions
or basis for the assessment. There may be cases where it is unfair to place on
an appellant the onus of disputing certain assumptions. The key question in
such circumstances is not whether such facts can be pleaded as assumptions based
or whether they are material facts or relevant facts that are not material
facts. The key question is whether the circumstances are such that the onus
should not be on a taxpayer.
[52]
That question will
arise in the following section.
Allegations of fact solely within the Minister’s
knowledge
[53]
The appellant argues
that certain paragraphs or subparagraphs should be struck because they are
allegations of fact about third parties solely within the Minister’s knowledge.
[54]
I would first observe
that, generally speaking, the Minister does not have direct knowledge of the
actions of an appellant or of other parties. What information he has is usually
gathered during an audit by speaking to various persons and obtaining and
examining various documents. Only occasionally does the Minister have direct
knowledge of his own of a relevant fact; for example, he would have knowledge
of his officers filing a certificate pursuant to the provisions of paragraph
227.1(2)(a) of the Income Tax Act (ITA) for the purposes
of a director’s liability assessment.
[55]
Normally in a situation
involving third party dealings all the circumstances will have to be considered
before any decision is made regarding shifting the onus of proof.
[56]
In Kossow v. The
Queen, 2008 TCC 422, V.A. Miller J. faced a very similar question. Among
the motions before V.A. Miller J. was a motion for an order directing that the respondent
bear the burden of proof with respect to certain paragraphs or subparagraphs of
the reply. In that case the reply was 37 pages in length and there were some
138 pleaded assumptions,
many of which related to third parties. The appellant sought an order to shift
the burden of proof with respect to allegations relating to third parties and
their dealings with each other. V.A. Miller J. stated:
45 The decision of whether the onus of
proof should be shifted to the Minister for certain of the assumptions of fact
is a decision that should be made by the trial judge. The following portions
from Mungovan v. The Queen [2001 DTC 691] are relevant to this motion:
10 Assumptions are not quite like pleadings in an ordinary
lawsuit. They are more in the nature of particulars of the facts on which the
Minister acted in assessing. It is essential that they be complete and
truthful. The conventional wisdom is they cast an onus upon an appellant and as
Mr. Mungovan observes with some considerable justification they may force him
to endeavour to disprove facts that are not within his knowledge. Superficially
this may be true, but this is a matter that can be explored on discovery. The
trial judge is in a far better position than a judge hearing a preliminary
motion to consider what effect should be given to these assumptions. The trial
judge may consider them irrelevant. He or she might also decide to cast upon
the respondent the onus of proving them. The rule in M.N.R. v. Pillsbury
Holdings Ltd., 64 DTC 5184, is a rule of general application but it is not
engraved in stone.
12 It is entirely possible, as Mr. Mungovan points out, that
some of the impugned assumptions are irrelevant. This is a matter for the trial
judge to determine after the evidence has been presented. It is not a matter
that can or should be determined on a preliminary motion to strike. It may well
be that the paragraphs contain allegations that lie exclusively within the respondent's
knowledge. It is a matter for the trial judge to determine whether the onus
should be cast upon the respondent to establish them.
14 The trial judge may well decide that the Crown has some
onus that goes beyond the mere recitation of a bald assumption. The weight to
be put on these paragraphs is a matter for the trial judge, as is the onus of
proof. This is not, however, a reason for striking the paragraphs before trial.
For these reasons, the motion to shift the onus of proof to the
Minister is dismissed.
[57]
The Federal Court of Appeal, in dismissing
the appeal, stated:
23 Having the benefit of all the
evidence, the trial judge will be able to appreciate the fairness of the
assumptions and provide the necessary relief should it turn out that they work
unfairly to the detriment of the appellant: see Canada v. Anchor Pointe
Energy Ltd., 2007 FCA 188, at paragraph 36; Transocean Offshore Ltd. v.
Canada, 2005 FCA 104, at paragraph 35. I agree with the judge that it is
premature to shift the onus of proof.
[58]
Accordingly, generally
speaking it is premature for a motions judge to determine whether the onus
should be shifted with respect to the assumptions relating to the actions of,
or dealings between, third parties. The trial judge will usually be best placed
to decide whether there should be any shift in onus.
[59]
Furthermore, it follows
that the question is not whether to strike assumptions regarding third parties;
it is whether the onus should shift with regard to those assumptions.
[60]
This is an opportune
place to mention a different point raised by the appellant with respect to
assumptions related to third parties. Where there are assumptions related to
the actions of third parties, the reply must show how those assumptions relate
to the assessment in issue.
This is a question of relevance. In determining whether the reply complies with
this, one must look at the reply as a whole.
Conclusions of law or mixed conclusions of fact and
law
[61]
It is clear that the
factual underpinnings to conclusions of law or mixed conclusions of fact and
law should normally be pleaded.
Rule 53 — striking pleadings or any portion
thereof
[62]
It is quite clear on
its face that section 53 sets a fairly high threshold before all or part of a
pleading will be struck. A pleading or portion thereof may be struck where it:
53 . . .
(a) may
prejudice or delay the fair hearing of the action,
(b) is
scandalous, frivolous or vexatious, or
(c) is an
abuse of the process of the Court.
This high threshold is well recognized in the following
statement by Bowman C.J. in Gould v. The Queen, 2005 TCC 556:
23 Generally speaking, the striking out of portions of a
pleading under section 53 of the Rules should be reserved for only the most
plain and obvious cases. Matters of weight and relevancy are best determined by
the trial judge who will have heard all of the evidence. Frequently the
significance of a piece of evidence will not become clear until the end of a
case. I repeat what was said in Niagara Helicopters Limited v. The Queen,
2003 DTC 513 at 514-515:
6 It is in my view premature at this stage of the
proceedings to determine that facts which counsel for the appellant considers
to be a relevant and necessary part of the appellant's case are irrelevant. The
authorities are undisputed that it is only where it is clear and obvious that a
pleading is scandalous, frivolous or vexatious or an abuse of the process of
the court that it may be struck out. (Hunt v. Carey Canada Inc., [1990]
2 S.C.R. 959 at 980; Erasmus et al. v. The Queen, 91 DTC 5415 at 5416).
This is recognized in other decisions of this Court.,
Striking pleadings for failure to include information
[63]
In contrast to
circumstances where, it is argued, something should not be in the pleading, an
additional consideration arises in the application of Rule 53 where it is
alleged that a party has failed to include something in a pleading, as is the
case here, where it is argued that certain parts of the reply should be struck
because of a failure to plead the factual underpinnings of mixed conclusions of
fact and law.
[64]
In such a case where the
complaint is a failure to include something in the pleading, it is also
necessary in applying Rule 53 to consider whether the trial process is better
served:
(a) by a motion to strike
and, if it is successful, in all likelihood, a motion to amend the reply which
may well be successful
or
(b) by a demand for
particulars followed by a motion for particulars, if necessary.
[65]
Depending on the
circumstances, sometimes the more appropriate course of action may be to demand
particulars in which case a motion to strike may be dismissed.
Summary
[66]
To summarize, in
general:
(a) evidence should not be
pleaded;
(b) irrelevant facts
should not be pleaded;
(c) with respect to
pleadings generally, Rule 49(1)(e) and Form 21(1)(a) (notice of
appeal) of the Rules mandate the pleading of material facts;
(d) the rule against
pleading relevant facts that are not material facts no longer has the force, or
the consequences, that it had historically and, as demonstrated by Rule 47(2),
it is permissible to plead relevant facts that are not material facts;
(e) with respect to
assumptions,
(i) the rules mandate
that the material facts should be pleaded,
(ii) there is no
general rule against pleading relevant facts assumed that are not material
facts,
(iii) there are some
circumstances where the inclusion of relevant but immaterial facts is required,
(iv) factual allegations
underpinning conclusions of law or mixed conclusions of fact and law should be
pleaded,
(v) assumptions relating
to the actions of, or dealings between, third parties may be pleaded, and
(vi) it must be clear
from the reply that the actions of third parties relate to the assessment in
issue;
(f) generally the trial
judge will be better placed than the motions judge to determine what category
an allegation falls into and, unless the matter is clear-cut, such a
determination should normally be left to the trial judge;
(g) generally the trial
judge will be better placed than the motions judge to determine whether it is
appropriate to shift the onus with respect to any assumptions relating to actions
of, or dealings between, third parties and, unless the matter is clear-cut,
such a determination should normally be left to the trial judge; and
(h) the threshold for
striking all or part of a pleading under Rule 53 is a high one.
Of course, there will always be exceptions where the
particular circumstances of a case and the principles and objectives underlying
the litigation process in a tax context require a different solution.
[67]
In assessing whether it
is appropriate to strike a paragraph of a pleading one must bear in mind the
practical effect of the paragraph.
[68]
In this context one
must bear in mind that an invalid or irrelevant assumption does not cast an
onus upon an appellant just because it was pleaded. For example, if on
discovery it turns out that an assumption was never made then there is no onus
on the appellant to disprove it; if the respondent wishes to rely on that
particular fact, the respondent will have to prove it. Similarly, if what is
pleaded as an assumption of fact is simply a conclusion of law and no
underlying facts for that conclusion of law have been assumed elsewhere then
there is no obligation on an appellant to disprove that.
[69]
Similarly, if it turns
out that an alleged assumption is irrelevant, an appellant’s failure to
disprove it is of no consequence and it may safely be ignored.
Specific subparagraphs the appellant seeks
to have struck
[70]
With the above
considerations in mind, I turn to the specific portions of the amended reply in
issue. The Court wishes to thank both parties for their written submissions.
The appellant consolidated his original submission with his reply submission and,
accordingly, I have simply worked from the appellant’s reply submission.
[71]
In a number of cases
the appellant seeks to have portions of the amended reply struck on the grounds
that they are allegations of fact other than material facts. With respect to
the portions that the appellant seeks to have struck for that reason, I will
simply say that in the absence of a general prohibition against pleading
relevant facts that are not material facts, in the absence of a general
prohibition against including such facts in the assumptions and given that I do
not see any unusual circumstances which would make it appropriate for me to
strike any relevant but immaterial allegation that is in issue, nothing shall
be struck for those reasons.
(In addition, I would note that in many cases it is not clear-cut whether or
not the particular fact alleged is or is not a material fact.)
[72]
I do not intend to deal
with this argument again in dealing with the specific paragraph or subparagraphs
in issue.
Subparagraphs 18(a) to (n) plus part of (o)
[73]
With respect to the
above-noted subparagraphs, the appellant’s arguments for striking may be
summarized as follows:
(a) the facts alleged
relate to activities of third parties outside the appellant’s knowledge;
(b) the facts alleged have
not been related to the appellant as required by Canada v. Status-One
Investments Inc., 2005 FCA 119; and
(c) they are not material
facts.
[74]
With respect to the
first of these grounds, the real question is whether the onus should be
shifted, not whether subparagraphs should be struck. Considering the pleadings,
I see nothing here that would justify diverging from the general rule that this
question is best left to the trial judge.
[75]
With respect to the
second ground, later in the amended reply it is alleged that the appellant had
dealings with companies referred to as TCL, TSA and TTL and that the appellant
entered into transactions with these companies in relation to computer
software. In the challenged subparagraphs it is alleged that these companies
are related and marketed investment vehicles relating to computer software. It
is further alleged that the companies did not deal at arm’s length and that
there were certain terms to these transactions, terms which applied to the
transaction which the appellant entered into.
[76]
As a general proposition,
I cannot accept the appellant’s argument; the allegations in question deal with
the parties with whom the appellant was investing and with the type of
investment made. For example, I entirely fail to see how it can be said that
the terms of the transactions described in subparagraphs (l), (m) and (n),
terms which are alleged to apply to the appellant, could be said
to be irrelevant to the appellant.
[77]
However, with respect
to subparagraph (g), I fail to see how the fact that an investment made in the
software in a particular manner was registered as a “tax shelter” and was acknowledged
to be a “tax shelter” is related to the issues in the appellant’s appeal where
the investment was allegedly made by the appellant in a different manner.
[78]
With respect to
subparagraph (c), I fail to see how the name of the chairman and CEO of the
Trafalgar Group has any relevance to the issues under appeal.
[79]
Subparagraphs (c) and
(g) will be struck.
Subparagraphs
18(u)(xii), (aa), (bb), (dd)
and (vv)
[80]
The essence of the appellant’s
position with respect to these subparagraphs is that they plead conclusions of
law. The respondent says that these subparagraphs are properly pleaded and fall
within Rule 51(1).
[81]
While some of the
wording looks like it could be a conclusion of law, most of the subparagraphs
could well be a summary of the terms of the contract or “the effect of a
document”. Without the documents, which are not before the Court at this stage,
it is impossible to tell with certainty whether the subparagraphs go beyond Rule
51(1) and contain conclusions of law.
[82]
I am not prepared to
strike these subparagraphs for two further reasons. First, the trial judge will
see the documents and be better placed to decide whether any of these
subparagraphs are conclusions of law rather than a summary of the terms of the
agreement; if the trial judge concludes that any are conclusions of law, then
the statement will not, of course, result in any onus on the appellant.
Secondly, and more importantly, as a practical matter, once in evidence the
agreements will speak for themselves and it will not matter what any party
alleged they say; the trier of fact will be able to read them and decide what
they say as well as decide what their legal effects are.
Subparagraph 18(y)
[83]
First, the appellant
asserts that this subparagraph is not a material fact. Secondly the appellant
asserts that it is a conclusion of law.
[84]
As to the second
ground, I disagree. On its face, this subparagraph does not appear to be a
conclusion of law or a summary of the terms of the contract. What it appears to
be is an allegation of an intention, a fact. There is no reason to strike this
subparagraph.
Subparagraph 18(z)
[85]
The appellant argues
that the 1999 promissory note contains no such term and that therefore this is a
conclusion of law. It may be; however, without seeing the note and the other
agreements one simply cannot tell.
[86]
If at trial it turns
out to be the case that there is no such term and this turns out to be a
conclusion of law, then the subparagraph will not cast any onus on the respondent.
Again, as I said earlier, in practice once the agreements are in evidence they
will speak for themselves and what was pleaded about them will no longer
matter. There is no reason to strike this subparagraph.
Part of subparagraph 18(rr)
[87]
The appellant’s
objection is that the subparagraph concludes that the arrangement described did
not constitute the payment of interest, a conclusion of law. The appellant
would not object if subparagraph (rr) said “TTL used the Service Provider
Monthly Fee payable to the Appellant to offset the interest payable by the
Appellant”.
[88]
While the opening words
of the subparagraph could conceivably be read in the way that the appellant
suggests, I am satisfied that the more natural reading is simply as a factual
allegation regarding the mode of payment, given the portion of the text not
disputed by the appellant. There is no reason to strike this subparagraph. The
trial judge will be perfectly capable of dealing with this.
Part of subparagraph 18(tt)
[89]
The appellant does not
object to “[t]he Appellant did not participate in any trading” but takes the
position that the remainder of (tt) is a mixed conclusion of fact and law based
on the respondent’s interpretation of the legal effects of the documents. The respondent
argues that the remainder is not based on any legal analysis.
[90]
If this statement about
liability or risk was a conclusion drawn from a legal analysis of the
agreements, it would be problematic.
[91]
However, read by itself
and in the context of the whole pleading, I do not see how it can be a
conclusion of law regarding the agreements in issue. It appears to be no more
than a statement that the appellant did not trade in securities and
(accordingly) has no liabilities or risk in respect to trading in securities.
[92]
There is no basis to
strike this subparagraph.
Subparagraph 18(ww)
[93]
The appellant argues
that this is a conclusion of law based on the respondent’s interpretation of
documents. I cannot agree; this is clearly an allegation of the parties’
intention, a fact.
Subparagraphs 18(xx), (yy) and (zz)
[94]
The appellant argues
that these are conclusions of law rather than a concise summary of the terms of
an agreement. Again, either could be true and the Court does not have the documents
before it.
[95]
What I said in
paragraph 82 above is equally applicable here.
[96]
The appellant also
argues with respect to subparagraph (yy) that it is a paraphrase of subsection
143.2(2) of the ITA and should be struck out as a conclusion of law.
Subparagraph (yy) is more a combination of an allegation of fact and a mixed conclusion
of fact and law. To the extent that it is, the key question is whether or not
the underlying facts assumed have been set out; if they have not, no onus is
cast on the appellant. However, reading the amended reply as a whole, I am not
convinced that the respondent has failed to set out the underlying facts.
[97]
There is no reason to
strike these subparagraphs.
Subparagraph 18(hhh)
[98]
The appellant argues
that this is an impermissible conclusion of law.
[99]
The appellant also
argues “. . . that the Respondent’s assertion that the intention of
the parties is not consistent with the documents is based upon a conclusion of
law . . .” as to the legal effects of the documents or a
conclusion of law that the documents do not create valid and binding
obligations.
[100]
I do not agree. This is
an allegation of intention or objective, a fact. There is no reason to strike
the subparagraph.
Subparagraphs 18(kkk) and (lll)
[101] With respect to subparagraph (kkk), the appellant
asks that it, or in the alternative, that the word “fictitious”, be struck on
the basis that it presupposes that the agreements did not create valid and
binding legal obligations.
[102]
With respect to
subparagraph (lll), the appellant asks that it, or in the alternative, the word
“excessive”, be struck on the grounds that it is for this Court to determine
whether the amounts are excessive.
[103]
While I agree that an
assumption cannot be determinative of something to be decided by the Court, I
cannot agree with the appellant. Both subparagraphs allege an objective or
intention. The assumed fact that there was an objective of creating losses is
not determinative of whether there are binding legal obligations. Similarly the
assumed objective in (lll)
does not determine whether or not the CCA claims were reasonable. There is no
reason to strike these subparagraphs.
Subparagraph 18(nnn) and part of subparagraph 18(ppp)
[104]
The appellant
challenges the words “it was simply window dressing to provide him with
immediate, significant tax savings” in subparagraph (ppp) on the basis
that they suggest that as a matter of law the agreements with respect to the
licenses in question did not create valid and binding legal obligations which
would be a conclusion of law. It is clear, particularly when one reads
subparagraphs (nnn) and (ooo), that (ppp) is a statement of the appellant’s
purpose or objective; the validity of the agreements will no doubt turn on the
interpretation of those agreements once produced at trial.
[105]
Having said that, I am
not convinced that the words “window dressing” add anything useful; however, I
do not think they meet the threshold of Rule 53 and the two words may safely be
ignored.
[106]
The appellant also asserts
that subparagraphs (nnn) and (ppp) are improper because they allege an
intention inconsistent with the wording of the agreements and under the parol
evidence rule the respondent will have to adduce evidence at trial in support
of her contention. I am unaware of any rule that results in assumptions being
limited by the parol evidence rule.
[107]
There is no reason to
strike any part of either of these subparagraphs.
Subparagraphs 18(sss) and (ttt)
[108] The appellant says that subparagraph (sss)
should be struck for three reasons.
[109]
First, it is argued
that whether there was a “representation or statement” is a question of law or a
mixed question of fact and law and that not all communication constitutes a
representation or statement for the purposes of section 237.1 of the ITA.
The appellant did not cite any authority for this and, in examining section
237.1, I am unable to see why whether there was a statement or a representation
is a question of law or a mixed question of fact and law rather than a question
of fact.
[110]
There are other
elements required in the definition of the tax shelter but they do not affect
what is a representation or a statement.
[111]
Second, the appellant
argues that subparagraph (sss) should be struck because it involves allegations
about third parties particularly within the knowledge of the respondent. In
essence, the appellant makes the same argument with respect to subparagraph (ttt).
For the reasons set out above, the issue that arises as a result of this is
whether the onus should shift, a question for the trial judge.
[112]
Third, the appellant
submits that subparagraph (sss) has not been shown to be relevant in so far as
this allegation has not been connected to the appellant. However, the issues in
this case make it relevant whether or not certain kinds of representations have
been made to others and not just the appellant and, accordingly, this is a
relevant allegation.
[113]
There is no reason to
strike any of these subparagraphs.
Paragraph 19
[114]
The appellant raises a
variety of arguments against this paragraph. Some of them may be rapidly
disposed of on the basis that paragraph 19 does not state the basis of the
assessment or the assumptions of the Minister. Accordingly, there is no
presumption of validity of paragraph 19. This paragraph consists of allegations
that the Minister must prove.
[115] The appellant also argues that these are
inconsistent allegations contrary to Rule 51(2). It is not at all evident how subparagraphs
19(b) and (c) are inconsistent with the rest of the pleading. Subparagraph 18(aaa)
assumes that the fair market value of the 1999 license and the 2000 license was
no more than $1,000 per $50,000 purchase price. An alleged fair market value
of 2% of the purchase price is not inconsistent with the description “nominal
value”.
[116]
With respect to subparagraph
19(a), Rule 51(2) states:
51 . . .
(2) A party may make inconsistent allegations in a pleading
where the pleading makes it clear that they are being pleaded in the
alternative.
[117]
Subparagraph 19(a) is
inconsistent with subparagraph 18(sss) in so far as it begins with “[r]epresentations
or statements were proposed to be made” instead of “[r]epresentations or
statements were made . . .". However, while the words “in the
alternative” could have been added, it is clear that if representations were
made they were not proposed to be made and that they are in the alternative.
This does not constitute a basis for striking under Rule 53.
[118]
Finally, with respect
to subparagraph 19(a), the appellant makes the same argument as his first
argument with respect to subparagraph 18(sss). For the same reasons as I
explained above, I do not accept that argument.
Examination of the auditor prior to answer and production
of documents relating to the assumptions prior to the answer
[119]
The appellant has
withdrawn this part of the motion.
Extension of time to file an answer
[120]
The respondent does not
contest this request and I see no reason not to extend the time for the appellant.
The appellant shall have 45 days from the order to file an answer if he desires
to do so.
Full list pursuant to Rule 82
[121] The respondent opposes the production of a
full list and submits that the appellant only seeks to put the respondent to
greater cost and trouble. The respondent also argues that if a full list were
ordered, she should also receive a full list. The appellant argues that he
needs full disclosure given the issues and the nature of the case in order to
assist him in advancing his case.
[122]
Granting a full list is
not automatic; there must be a basis for it. It must be borne in mind as well
that in practice one party can and often does obtain documents from the other
party that were not on the other party’s Rule 81 list at the oral examination
for discovery. In this case no lists of documents have been exchanged yet.
[123]
However, in the
circumstances including the nature of the issues, and the fact that the
Minister may have third party information that the appellant does not possess, it
is appropriate to order that the respondent produce a full list of documents
pursuant to Rule 82.
[124]
It is also appropriate
to order that the production by the respondent be made conditional on the
appellant producing a list to the respondent pursuant to Rule 82.
[125]
Although not in the
motion, the appellant also sought in his original written submissions an order
that the respondent provide copies. I do not see any reason to do so here.
Normally parties are able to make arrangements among themselves with respect to
copies and I trust that will be the case here. Failing agreement between the
parties, Rule 85 sets out the parties’ obligation.
Conclusion
[126]
Accordingly, the Court
will order that:
(a) subparagraphs 18(c)
and 18(g) of the amended reply be struck;
(b) the time to file an
answer will be extended to 45 days after this order;
(c) the respondent shall
file and serve on the appellant a list of documents pursuant to Rule 82 on
condition that the appellant also file and serve a list of documents on the
respondent pursuant to Rule 82. The lists are to be filed and served on the
opposing party no later than 75 days after the last day on which the appellant
may file an answer.
[127]
Both parties sought
costs. In the circumstances costs will be in the cause.
Sirett appeal
[128]
A similar order will be
issued in the Sirett appeal.
Signed at Ottawa, Ontario, this 27th day of August 2010.
“Gaston Jorré”
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