Kung v. The Queen, docket 1999-3520-IT-G

Date: 20011101

Docket: 1999-3520-IT-G

BETWEEN:

HING LEUNG KUNG,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Order

McArthur J.

[1]            The Appellant seeks the following relief:

1.              an order to change the examination for discovery of the Appellant from an oral examination to an examination by written questions and answers;

2.              in the alternative, an order that the oral examination for discovery of the Appellant take place in Hong Kong and an order providing for the issuing of a commission authorizing the taking of evidence before a named commissioner;

3.              in the further alternative, for an order that the Respondent pay a reasonable amount of witness fees and expenses (collectively called "conduct money") to come to Vancouver from Hong Kong to attend an oral examination for discovery; and

4.              an order extending the time set by order dated April 17, 2001 to complete examinations for discovery to December 15, 2001 and to satisfy any undertakings resulting from such examinations to January 15, 2002 and by rescheduling the pre-hearing conference to a date in February 2002 or to such other dates as this court may direct.

[2]            The Appellant appeals from five assessments of tax with respect to 1991, 1992, 1993, 1994 and 1995 taxation years. The amount of tax involved is almost $1 million. The issue boils down to whether the Appellant was a resident of Canada during the relevant taxation years within the meaning of the Income Tax Act.

[3]            The position of the Appellant is set out in the Notice of Motion and in the affidavit of Amy Chan, filed in support of the motion. The problem arises from the following facts. The Respondent requested oral examinations for discovery of the Appellant. The Appellant is presently residing in Hong Kong. He informed the declarant, Amy Chan, during a telephone conversation on October 11, 2001 that:

a.              he does not want to board a commercial aircraft to fly from Hong Kong to Vancouver to attend the examination for discovery at the present time because of the September 11, 2001 acts of terrorism on the World Trade Centre, the threat of anthrax and the current war on terrorism; and

b.              he preferred to have a written examination for discovery.

He does not want to fly to Vancouver for oral examination for discovery and if he must attend in Vancouver, he wants to be paid $3,000 in conduct money. His counsel submits that the Tax Court of Canada has jurisdiction to order written discovery or issue a commission to obtain discovery evidence in Hong Kong.

[4]            The Respondent concludes that an oral examination is necessary to properly prepare for the hearing of the appeals. Counsel included the following statement from paragraph 7 of the affidavit of Eric Douglas filed October 19, 2001:

7.              Upon reviewing the Respondent's file I determined that I would have numerous and very detailed questions to ask the Appellant on discovery. I also determined that I would be requesting numerous documents from the Appellant, the nature of which I would only be able to specifically determine through questioning the Appellant. I further determined that a majority of the questions I am likely to ask on discovery will depend on the Appellant's answers to other questions. I further determined that certain actions and statements of the Appellant are inconsistent with each other and will require clarification through detailed questioning by the Respondent.

[5]            The Appellant relies on Rules 94(1) and (2), and 112(1) and (2) of the Tax Court of Canada Rules (General Procedure).

Analysis

Paragraph 1 of the Notice of Motion

[6]            Section 92 of the General Procedure Rules reads as follows:

92.            An examination for discovery may take the form of an oral examination or, at the option of the examining party, an examination by written questions and answers, but the examining party is not entitled to subject a person to both forms of examination except with leave of the Court.

The examining party, the Respondent in this instance, has the option between oral examination or examination by written questions and answers.

[7]            Subsection 94(2) gives the Court discretion to allow a party to examine an Appellant for discovery other than in circumstances set out in subsection 94(1), which does not include a discretion to order a written examination over an oral one. This remains the discretion of the Respondent as set out in Rule 92 which states "at the option of the examining party".

[8]            Even if I had discretion, I would order an oral examination. Apparently, the Appellant has listed 125 documents and the Respondent's counsel referred to inconsistencies between some documents and other material in the Respondent's possession (see paragraph 14(p) of the Reply to the Notice of Appeal). I agree with the Respondent that written questions and answers would be inadequate in the present circumstances.

Paragraph 2 of the Notice of Motion

[9]            The Appellant provided no authority to support his request for issuing a commission authorizing the taking of oral evidence before a commissioner in Hong Kong.

[10]          Counsel for the Respondent referred to Crestbrook Forest Industries Ltd. v. R., [1993] 2 C.T.C. 9, where at page 21, Isaac J. wrote:

... it is only in exceptional circumstances that the Court will issue a commission to obtain evidence that would normally be obtained during examinations for discovery. ...

In the present case, we have no evidence that the Appellant is unable to fly to Vancouver. The only evidence presented is contained in paragraph 23 of the affidavit of Amy Chan wherein she states that, during a telephone conversation with the Appellant, he told her "he does not want to board a commercial aircraft to fly from Hong Kong to Vancouver to attend the examination for discovery because of the acts on September 11, 2001, the threat of anthrax and the current war on terrorism. Alternatively, he appears to say that he will attend in Vancouver if paid conduct money of $3,000". I do not find "exceptional circumstances" to permit commission evidence.

Paragraph 3 of the Notice of Motion

[11]          It would appear that the centre of the Appellant's concern is conduct money. I find no support for the Appellant's request for payment by the Respondent of his travel costs. Neither party could find precedent for the payment of conduct money to the Appellant to attend the examination for discovery. At the end of the day, if the Appellant is successful, he is entitled to costs. It is his appeal and the Respondent is entitled to examine him for discovery. He will have the obligation to attend trial if he wishes to proceed. He cannot sit back and have the Respondent come to him unless he establishes exceptional circumstances. He must be proactive with respect to the conduct of his appeals.

[12]          For the above reasons, the motion for an order as set out in paragraphs 1, 2 and 3 of the Appellant's Notice of Motion, is denied.

Paragraph 4 of the Notice of Motion

[13]          Upon consent of the parties, the date for completion of examinations for discovery is extended to January 10, 2002 and any undertakings arising therefrom shall be completed by February 15, 2002.

[14]          It is also ordered that the pre-hearing conference scheduled for January 16, 2002 is adjourned and set down on a peremptory basis for hearing commencing at 9:30 a.m. on February 22, 2002, at Vancouver, British Columbia.

Signed at Ottawa, Canada, this 1st day of November, 2001.

"C.H. McArthur"

J.T.C.C.

COURT FILE NO.:                                                 1999-3520(IT)G

STYLE OF CAUSE:                                               Hing Leung Kung and

                                                                                Her Majesty the Queen

PLACE OF HEARING:                                         Vancouver, British Columbia

DATE OF HEARING:                                           October 24, 2001

REASONS FOR JUDGMENT BY:                      The Honourable Judge C.H. McArthur

DATE OF JUDGMENT:                                       November 1, 2001

APPEARANCES:

Counsel for the Appellant:                  Ralph H. Long

Counsel for the Respondent:              Ron Wilhelm

COUNSEL OF RECORD:

For the Appellant:                

Name:                Ralph H. Long

Firm:                  Ralph H. Long & Co.

For the Respondent:                             Morris Rosenberg

                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

1999-3520(IT)G

BETWEEN:

HING LEUNG KUNG,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Motion heard on October 24, 2001, at Vancouver, British Columbia, by

the Honourable Judge C.H. McArthur

Appearances

Counsel for the Appellant:                    Ralph H. Long

Counsel for the Respondent:                Ron Wilhelm

ORDER

          Upon motion by counsel for the Appellant for an Order:

1.        to change the examination for discovery of the Appellant from an oral examination to an examination by written questions and answers;

2.        in the alternative, an order that the oral examination for discovery of the Appellant take place in Hong Kong and an order providing for the issuing of a commission authorizing the taking of evidence before a named commissioner;

3.        in the further alternative, for an order that the Respondent pay a reasonable amount of witness fees and expenses (collectively called "conduct money") to come to Vancouver from Hong Kong to attend an oral examination for discovery; and

4.        an order extending the time set by order dated April 17, 2001 to complete examinations for discovery to December 15, 2001 and to satisfy any undertakings resulting from such examinations to January 15, 2002 and by rescheduling the pre-hearing conference to a date in February 2002 or to such other dates as this court may direct.

          And upon reading the affidavits of Amy Chan and Eric Douglas, filed;

          And upon hearing counsel for the parties;

          Upon consent of the parties, it is ordered that the Appellant's motion is granted on the basis that the date for completion of examinations for discovery is extended to January 10, 2002 and the date to satisfy any undertakings resulting from such examinations is extended to February 15, 2002.

          It is further ordered that the pre-hearing conference scheduled for January 16, 2002 is adjourned and set down on a peremptory basis for hearing commencing at 9:30 a.m. on Friday, February 22, 2002 at the Tax Court of Canada, 701 West Georgia Street, 6th floor, Vancouver, British Columbia.

          In all other respects, the Appellant's motion is denied.

Signed at Ottawa, Canada, this 1st day of November, 2001.

"C.H. McArthur"

J.T.C.C.