Citation:
2015 TCC 290
Date: 20151120
Docket: 2013-188(IT)G
BETWEEN:
DAVID
TUCCARO,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
Hershfield J.
I. The
Motions
[1]
The Respondent (the “Crown”) has
brought a motion seeking an Order pursuant to section 58 of the Tax Court of Canada
Rules (General Procedure)
(the “Rules”) to determine the following question:
Is the Appellant
[Mr. Tuccaro] precluded from re-litigating the issue of whether his income is
exempt from income taxation pursuant to Treaty 8, on the basis of issue
estoppel?
[2]
The Appellant has brought a motion seeking an
Order pursuant to sections 48 and 53 of the Rules to strike certain portions of
the Crown’s Reply to the Amended Notice of Appeal.
II.
Background
[3]
The Appellant is an Indian within the meaning of
section 2 of the Indian Act
and is a member of the Mikisew Cree First Nation. It is admitted that the
Appellant, at all relevant times, was resident on a reserve as defined in the
Indian Act, had reported certain income in the subject years (2002 – 2006
inclusive) as exempt, and was assessed on the basis that such income was not
exempt.
[4]
The subject of both motions is the exemption
sought pursuant to Treaty 8, a treaty within the meaning of the Constitution
Act, 1982,
entered into in 1899 between the Crown and certain First Nations. The Amended
Notice of Appeal also claims a tax exemption pursuant to section 87 of the Indian
Act. While the motions before me do not deal with that exempting provision per
se, I will make reference to this exempting provision later in these
Reasons.
[5]
In short, the motions before me derive from a
prior series of interlocutory proceedings. These proceedings began when the
Respondent filed a motion on June 5, 2013 to strike portions of the Appellant’s
Amended Notice of Appeal including, in particular, portions relating to the
application of Treaty 8, which I will refer to as the “2013
Treaty 8 motion”. The Respondent based the relief sought on the ground
that pleading Treaty 8 would be an abuse of process given the earlier Federal Court of Appeal (the “FCA”) decision in Benoit v Canada.
[6]
In Benoit, the plaintiffs sought a
declaration that the Crown had agreed, pursuant to Treaty 8, not to impose any
tax on them at any time. The judge hearing the 2013 Treaty 8 motion, in
granting the motion to strike the Appellant’s plea for protection from taxation,
effectively maintained the result in Benoit which was that the treaty
did not afford such broad relief from taxation.
[7]
In granting the 2013 Treaty 8 motion, the
motions judge identified res judicata as the ground for the motion to
strike but went on to apply, in effect, the principles of the doctrine of stare
decisis. The parties appealed to the FCA (the “Tuccaro FCA Appeal”).
[8]
Before continuing, it is necessary to emphasize
that the Appellant and the Mikisew Cree First Nation were not parties to Benoit. The Mikisew Cree First Nation, however, was a member of the Athabasca
Tribal Corporation (“ATC”), which was such a party.
The Tuccaro FCA Appeal
[9]
At the Tuccaro FCA Appeal, the
FCA unanimously allowed the Appellant’s appeal and dismissed the 2013 Treaty 8 motion.
[10]
Webb J.A., for the FCA, held that the motions judge erred in law in applying stare decisis with Benoit
serving as precedent, as the FCA in Benoit
had only reversed the trial judge on a factual finding, not a point of law.
Specifically, the FCA in Benoit found that the Trial Division had lacked
sufficient evidence before it to reach the conclusion that it did on the
understanding of the Aboriginal signatories of Treaty 8. At paragraph 21, Webb J.A.
states as follows:
21 In
allowing the appeal, this Court focused on the factual finding of whether
"the Aboriginal signatories understood that they would be exempted from
taxation at any time for any reason" and, after a detailed review of the
record, concluded that there was "insufficient evidence to support"
this view (paragraph 116). This was a factual finding following a review of the
evidence and reversed the finding of fact that had been made by the Federal
Court Judge. Having made this finding of fact, there was no need to address any
question of law related to Treaty 8. The only finding made by this Court in Benoit
was a finding of fact. Therefore, the principles of stare decisis would
not apply. The question is not whether the Tax Court of Canada is "bound
by [the] established law regarding the lack of legal effect of Treaty 8 in
granting tax exempt status to its signatories" (as stated by the Tax Court
Judge), but whether Mr. Tuccaro is bound by the finding of fact in Benoit.
The applicable principles are those related to issue estoppel (which is a
specie of res judicata), not stare decisis.
[11]
According to Webb J.A., the most relevant
doctrine for a motion to strike references to Treaty 8 in the Amended Notice of
Appeal was not stare decisis; rather, it would have been issue estoppel.
The failure to consider issue estoppel also meant that there was a failure to
consider the required elements of issue estoppel.
[12]
Webb J.A. had earlier outlined the elements of
issue estoppel:
14 The requirements for issue
estoppel to apply are set out in Angle by Dickson J. (who was quoting
from the decision of Lord Guest in Carl Zeiss Stiftung v. Rayner &
Keeler Ltd. (No. 2), [1967] 1 A.C. 853 at p. 935):
(1) ...the same question has been decided;
(2) ...the judicial decision which is said to create the estoppel
was final; and,
(3) ...the parties to the judicial decision or their privies were
the same persons as the parties to the proceedings in which the estoppel is
raised or their privies.
[13]
Counsel for the Appellant in the Tuccaro FCA Appeal conceded that the
first two requirements would be met.
The third requirement would be satisfied only if the Appellant was a privy to
ATC, but neither the motions judge nor the FCA had evidence before them on this
point.
III. Rule 58 Issues and
Arguments
[14]
Subsection 58(2) of the Rules reads as follows:
58. […]
(2) On the application, the Court
may grant an order if it appears that the determination of the question before
the hearing may dispose of all or part of the proceeding or result in a
substantially shorter hearing or a substantial saving of costs.
[15]
The Respondent submits that a direction under
this Rule will dispose of a ground for the appeal and result in a substantial
saving of costs. If the discrete question of whether ATC was a privy of the Appellant
is answered in the affirmative and exercising discretion to allow the case to
proceed regardless of the applicability of issue estoppel is ruled
inappropriate, then the issue at trial will be narrowed to the application of
section 87 of the Indian Act. Needless to say, the Respondent referred
to a number of cases that allowed such bifurcation of an appeal, arguing the
same reasoning would support my allowing the Rule 58 motion in the case at bar. The Appellant cites
jurisprudence to the opposite effect.
[16]
The Appellant maintains, and the Respondent
refutes, that when the FCA reversed the 2013 motions judge’s Order striking
references to Treaty 8 in the Amended Notice of Appeal, it necessarily held that
such references can be included in such pleading. Accordingly, the Appellant
submits that it would be an abuse of process to allow the Respondent to
re-litigate that issue under Rule 58.
[17]
Each party is asserting that the other is re-litigating
an issue that has been finally decided.
[18]
The Appellant also argues that the Respondent
had the onus on the 2013 Treaty 8 motion to adduce evidence sufficient to
permit a finding as to whether the third condition for the application of issue
estoppel had been met. The Respondent cannot now be allowed to seek a second
chance to adduce such evidence.
[19]
The Appellant also argued that the record of the
Benoit proceedings establishes that ATC, a party to those proceedings,
was not a privy of the Mikisew Cree First Nation. Reference was made to the
Appellant’s Motion Record
wherein an Order of the trial judge in Benoit was reproduced. That Order
denied a Crown motion to appoint ATC as the representative of its member bands
for the purposes of Benoit. The trial judge denied the motion as it was
not made on consent (the “Benoit FCTD Representative
Order”). The impact of this Order and the Order allowing ATC to be a
party to the litigation
(the “Benoit FCTD ATC Order”) was debated
before me.
[20]
The Respondent relied on the Benoit FCTD
ATC Order, which allowed ATC to be added as a party to the Benoit
litigation because its members could be affected by the outcome of the action.
The Appellant argued that being “affected” by
the outcome of the litigation does not mean bound by it. Similarly, the
Appellant pointed out that the Benoit FCTD Representative Order was in
response to a Crown motion seeking an order on the express basis that the
outcome of the litigation would directly affect the Indian people that belonged
to the First Nations that were members of ATC, and who would be able to
re-litigate the identical issue if they were not bound by the litigation’s
outcome. The Appellant argued that the denial of the motion demonstrates that
the Benoit trial judge meant to afford the Crown no relief from this
result.
[21]
The Respondent submitted that the motion
leading to the Benoit FCTD Representative Order was an unnecessary
precaution as ATC would be a privy to the Appellant regardless and that in any
event it was of no consequence since it was denied on the basis of a lack of
consent of the parties.
IV.
Analysis of the Rule 58 Motion
[22]
I agree with the Appellant that the decision in the
Tuccaro FCA Appeal, together with other factors, should preclude the Respondent
from succeeding on the Rule 58 motion.
[23]
To allow a determination under Rule 58 that
could effectively result in the striking of paragraphs of the Amended Notice of
Appeal would be to allow me to give another motions judge the power to
effectively eviscerate the Order in the Tuccaro FCA Appeal. While one might
argue that dismissing the motion to strike references to Treaty 8 does not
necessarily mean the FCA was saying that it was properly pleaded, I cannot find
that any other result follows from its Order. The Order of the FCA was to leave
in the impugned portions of the Appellant’s pleadings to be considered by the
trial judge. That decision is, in my view, not to be undercut by another
pre-trial interlocutory proceeding.
[24]
At paragraph 29 of the FCA Tuccaro Appeal, Webb
J.A. states:
As a result I
would allow Mr. Tuccaro’s appeal in relation to the Order to strike those
paragraphs of his Notice of Appeal that relate to Treaty 8.
[25]
To allow a determination under Rule 58 would be
to effectively permit the striking of paragraphs of the Amended Notice of
Appeal that the FCA said were to be left in.
[26]
Webb J.A. did not direct the issue back to the
motions judge to re-consider the motion on the correct grounds. This is a
course of action occasionally employed if the lower court judge failed to
consider a relevant argument or issue put forward by a party.
[27]
In not sending this matter back to the motions
judge, I can only conclude that the FCA found fault with the Crown’s
presentation of its motion, insofar as it did not present the motions judge
with all relevant doctrines and facts that pertain to a branch of the fundamental
basis for the relief sought, namely, that pleading Treaty 8 was an abuse of
process.
[28]
I do not see any invitation in Webb J.A.’s
reasons for judgment that invite the Crown to try for a second chance and an
opportunity to start over. Such a result is contrary to a considerable amount
of jurisprudence to the effect that parties to litigation are required to bring
forward their whole case and courts should not permit the same parties to reopen
the same subject of litigation in respect of a matter which ought to have been
brought forward at the outset.
[29]
As well, I agree with the Appellant’s submission
that the Crown’s seeking the representation order in the Benoit proceedings,
and failing in that effort, lends considerable weight to an argument that the
question sought to be answered in the Respondent’s motion for a Rule 58
determination was already answered in those prior proceedings. That is, I see
merit in the Appellant’s argument as to the effect of the Benoit FCTD
Representative Order, namely, that it made the determination that the Benoit
decision would not bind ATC members. At the very least, it raises considerable
doubt as to the likelihood of the Crown being successful on a Rule 58
determination if this motion were to succeed.
[30]
That is, the Benoit FCTD Representative
Order is yet another obstacle to finding that the Rule 58 motion should be
granted. It is certainly relevant to answering the question the Crown sought to
have answered under Rule 58. While its relevance might be examined in light of
principles of abuse of process, at this point I am unable to conclude that this
Order would be determinative or conclusive of that question. The approach I am
drawn to is that the Benoit FCTD Representative Order speaks to the
probability of the Rule 58 motion being successful. In discussing principles
relating to applications similar to Rule 58, Létourneau J.A., at paragraph 14
of Perera v Canada, agreed with prior jurisprudence to the effect that in exercising
discretion to allow a question to be determined, the judge hearing the
application must only be satisfied that the proposed question will probably
be decided in such a way as may dispose of the action or some substantial part
of it. While that leaves room to say that a minimal prospect of success is
sufficient, as suggested in the case before Justice Woods in Sentinel Hill
Productions IV Corporation v The Queen, I am
inclined to believe that the probability here is a factor favouring my
exercising my discretion not to allow the forum sought by the Respondent.
[31]
Further still, there is the question of whether
the resolution of the estoppel issue would necessarily have to be dealt with at
trial. If, at the discretion of the trial judge, the trial was limited in the
first instance to the application of section 87, the need to consider evidence
and argument in respect of Treaty 8 would be obviated if there was a finding
that favoured the Appellant. As this way of managing the appeal would mean that
a determination of this question before trial might, in the end, save neither
time nor expense,
I am further disinclined to grant the Rule 58 motion.
[32]
The trial judge should and will have such
discretion to manage this appeal, bifurcating it as deemed necessary for its
expedient resolution. That discretion could include, in addition to trying the
section 87 issue first, dealing with the question of issue estoppel before considering Treaty 8. A decision
now not to grant the motion for a Rule 58 determination will not prevent the
trial judge from dealing with that question at any point if the pleadings of the Respondent raise the issue (as
they will for the reasons addressed under the next heading).
[33]
Further and lastly, aside from the possibility
of saving considerable resources depending on how a trial is managed, I am not
convinced that the question posed in the motion would save time and costs if I
allowed the Respondent’s motion. Determining whether ATC was the privy of the
Appellant would potentially require new evidence regarding the intentions of
the members of ATC. This could be a very contentious and difficult issue if the
Benoit FCTD Representative Order does not make short shrift of that
question. As noted by the FCA in Jurchison v The Queen, Rule 58 “is not intended as an easily accessible alternative to a
trial for the disposition of complex and contentious disputes about the rights
and liabilities of litigants”.
Chief Justice Rossiter of this Court most recently made the same point that “a Rule 58 determination should not be an easily accessible
alternative to a hearing for contentious disputes”. I foresee a potentially
contentious issue here. This possibility is yet another factor that has encouraged
me not to exercise my discretion to allow such a question to be addressed in an
interlocutory proceeding.
[34]
These considerations, taken as a whole, have
made me conclude that the answer to the question raised by the Respondent is
not one that should be determined under Rule 58.
V. Analysis of the Motion
to Strike
[35]
It was expected by the parties that the same
arguments that would persuade me to deny the Rule 58 motion would persuade me
to allow the Appellant’s motion to strike all references in the Respondent’s
Reply challenging the Appellant’s reliance on Treaty 8.
[36]
I have not come to that conclusion.
[37]
Going back to the 2013 Treaty 8 motion, it
sought the striking of certain portions of the Amended Notice of Appeal, on the
basis that the Appellant’s raising Treaty 8 as a ground for appeal was an abuse
of process.
[38]
The motions judge, in finding the Appellant’s
reliance on Treaty 8 to be barred, ordered that all paragraphs relating to
Treaty 8 be struck.
[39]
The FCA allowed the Appellant’s appeal in
respect of this motion.
[40]
I have already referred to the part of the FCA decision
where Webb J.A. stated:
As a result I would allow Mr. Tuccaro’s
appeal in relation to the Order to strike those paragraphs of his Notice of
Appeal that relate to Treaty 8.
[41]
I do not believe that Order presents the same
problem in respect of denying the Appellant’s motion to strike as I found it would
have were I to allow the Respondent’s Rule 58 motion.
[42]
There is no suggestion in Webb J.A.’s decision
that the Respondent ought to be denied the opportunity to respond to that which
the FCA allowed to be raised as an issue. In allowing the Appellant to raise
the Treaty 8 issue, the FCA held that stare decisis did not prevent his
reliance on that treaty. To extend this holding to preclude the Respondent from
disputing this issue properly before the trial judge on grounds other than stare
decisis, including the ground of issue estoppel, strikes me as an
unwarranted extension of the FCA’s decision.
[43]
Put another way, while I see the Tuccaro FCA decision
as barring the Respondent from initiating the issue of issue estoppel in a
subsequent proceeding, I see no corollary that she must be denied raising it in
response to an issue the FCA allowed the Appellant to plead.
[44]
As noted, it is still open for the trial judge
to consider issue estoppel since the basis for my denying the Respondent’s Rule
58 motion was not that the Crown was estopped from doing so. The issue is alive
as issue estoppel was not squarely before the FCA as one that could be dealt
with. There is nothing in the ratio of Webb J.A.’s decision that necessarily
precludes the Respondent from raising it before the trial judge as an answer to
the Appellant’s appeal. It is a question of the proper forum. The “if and how” of dealing with this issue is part of
managing the conduct of a trial.
[45]
Further, the test to be applied in respect of a
motion to strike cannot allow the striking of an issue unless the action is
certain to fail.
This is a more permissive test for leaving the pleadings as is than applicable for
allowing a motion for a determination under Rule 58. It underlines the role of
the trial judge to assess the merits of a case as opposed to it being prejudged
on the basis of a perceived frailty or weakness.
[46]
Further, I am at ease with the results of these
considerations that would deny the Appellant’s motion to strike even though it
would seemingly permit the retrying of an issue that I find cannot be retried pursuant
to Rule 58. That the Respondent cannot seek a second chance on its own
initiative to attack the Appellant’s pleadings in an interlocutory proceeding does
not mean that the Respondent is precluded in a Reply to the Appellant’s
pleadings from attacking the grounds for the appeal and making this case at
trial.
[47]
Accordingly, I would deny the Appellant’s motion
to strike those paragraphs of the Reply or portions thereof that relate to
Treaty 8.
[48]
While I have said that I am at ease with this
view, and I am as a matter of law, I must confess that the result of this Order,
viewed as a whole, does have a troubling aspect.
[49]
I have potentially afforded the Appellant an
opportunity to bring evidence of the intent of parties to a treaty entered into
over a hundred years ago. As this evidence was presumably available and of more
recent provenance at the time of the Benoit litigation, one wonders, as
a practical matter, as more time passes, how many individual attempts at
invoking Treaty 8, as providing an all-encompassing exemption from taxation,
can be tried.
[50]
In any event, the trial judge will inevitably
have ultimate authority over how to deal with the Treaty 8 issue.
VI.
Other Parts of the Motion to Strike
[51]
There were additional parts of the Reply that
the Appellant sought to strike. Based on the observations that I made to
Appellant’s counsel at the hearing, he withdrew such parts of his motion.
[52]
The other parts of the Reply sought to be struck
(but which were withdrawn) dealt with Canada Revenue Agency guidelines and practises
in other cases that were relied on by the Appellant (as pleaded in the Amended
Notice of Appeal) and that the Reply challenged as irrelevant.
[53]
The withdrawal of such motions to strike pay
heed to guidance from the Supreme Court in relation to pre-trial procedures:
32[…] While summary judgment motions
can save time and resources, like most pre-trial procedures, they can also slow
down the proceedings if used inappropriately. While judges can and should play
a role in controlling such risks, counsel must, in accordance with the
traditions of their profession, act in a way that facilitates rather than
frustrates access to justice. Lawyers should consider their client's limited
means and the nature of their case and fashion proportionate means to achieve a
fair and just result.
[54]
Sometimes I am encouraged to say that in many
cases the honour of the bar demands that interlocutory motions on the propriety
of pleadings be avoided. This is one of those cases. While it does not address
a party’s means, it is one of those cases given that the public purse in this
case is attacked on three fronts when such challenges are repeatedly made. There is a similar waste of
scarce judicial resources when successive actions, using motions or otherwise,
are made at different times.
VII. Conclusions
[55]
For the Reasons stated above, the motion of the
Crown and the motion of the Appellant are dismissed. Each party shall bear
their own costs
Signed at Ottawa, Canada, this 20th
day of November 2015.
“J.E. Hershfield”
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