Date: 20101004
Docket: A-166-10
Citation: 2010 FCA 254
Present: STRATAS
J.A.
BETWEEN:
TERRY LONG
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR ORDER
STRATAS J.A.
[1]
The
appellant, Mr. Long, has appealed to this Court from an interlocutory order of
the Tax Court of Canada (2010 TCC 197). Mr. Long has now moved in this Court
for various forms of relief. The primary relief sought is a stay or suspension
of the Tax Court’s interlocutory order until this Court decides the appeal.
[2]
To get
this relief, Mr. Long must show that his appeal is arguable, he will suffer
irreparable harm if the Tax Court’s order is not stayed, and the balance of
convenience lies in his favour: RJR-MacDonald v. Canada (Attorney General),
[1994] 1 S.C.R. 311.
[3]
This Court
will grant the stay. The respondent has conceded that there is an arguable case
on appeal, in the sense that the law does not render Mr. Long’s appeal
frivolous. Further, as will be seen below, the respondent has not made
submissions that seriously contest the remaining parts of the RJR-MacDonald
test.
A. Background
[4]
The
Minister of National Revenue believes that certain business income of Mr. Long
should have been included in his income for income tax purposes. The Minister
issued an assessment to that effect. Mr. Long challenges that assessment. He
has appealed to the Tax Court.
[5]
A dispute
has arisen in the Tax Court about disclosure of relevant documents and
information. Mr. Long is concerned that if he discloses a list of relevant
documents, the documents themselves, and other information to the respondent,
the existence of criminality may be revealed. Mr. Long says that the respondent
may pass this information along to investigators at the Canada Revenue Agency,
to prosecutors at the Department of Justice and/or to officers of the Royal
Canadian Mounted Police. Therefore, Mr. Long says that requiring him to
disclose may require him to self-incriminate, contrary to his rights under the Charter.
[6]
Mr. Long
raised this issue in the Tax Court. He sought an order that only the respondent
should make disclosure in the Tax Court appeal, and alternative relief. The Tax
Court dismissed his motion and ordered, among other things, that Mr. Long
prepare and serve a list of documents by a certain date, under section 81 of
the Tax Court of Canada Rules (General Procedure). This is the order that
Mr. Long appeals to this Court and seeks to stay in this motion.
B. Analysis
[7]
On this
motion, the respondent has conceded that the appeal raises a serious issue to
be tried. It has not argued that self-incrimination cannot arise on the law as
applied to these facts, e.g. that there is some case that conclusively
denies Charter protection to Mr. Long on these facts. Accordingly, this motion
turns on whether there is irreparable harm and whether the balance of convenience
lies in Mr. Long’s favour.
[8]
Mr. Long
has filed evidence on these issues. He alleges that disclosure would reveal
criminality, but what the criminality might be is vague. Mr. Long did not seek
to file his sensitive evidence under the protection of a confidentiality order.
This Court is left to assess this evidence, vague as it is.
[9]
The
respondent did not cross-examine Mr. Long on this evidence, nor did it file
evidence rebutting it. The respondent’s concession that there is an arguable
case that disclosure would result in self-incrimination could be taken as a
concession that there is a genuine concern about the disclosure of criminality.
The respondent’s main submission is that there is “no evidence of irreparable
harm,” a submission that is plainly wrong: Mr. Long has put forward evidence,
albeit vague evidence.
[10]
The Tax
Court was prepared to accept that Mr. Long had a genuine concern about the
disclosure of criminality. In light of the state of the evidence and the ruling
of the Tax Court, this Court is prepared to accept, for the purposes of this
motion only, that Mr. Long has a genuine concern about the disclosure of
criminality. Further, based on the evidence, albeit vague, filed by Mr. Long
and the concession by the respondent that the arguments based on
self-incrimination are not frivolous, this Court accepts that the disclosure of
criminality could work severe consequences to Mr. Long.
[11]
In its
reasons for decision, the Tax Court felt that Mr. Long’s concerns about
disclosure and distribution of his information would not arise because the
respondent would be subject to a blanket obligation to keep confidential all
material disclosed to it (at paragraph 27):
[Mr. Long] is concerned
that information he provides will be used in criminal proceedings against him.
The concept of implied undertaking confirms that documents produced during the
discovery process will not be used by the [Canada Revenue Agency] for
collateral purposes.
(On the scope of the implied undertaking, see generally Juman
v. Doucette, 2008 SCC 8, [2008] 1 S.C.R. 157.)
[12]
The Tax
Court’s finding that the respondent is subject to a blanket confidentiality obligation
normally would be a complete answer to Mr. Long’s concern that material
disclosed to the respondent might find its way elsewhere. However, during the parties’
oral submissions on the motion in this Court, it became apparent that there is great
uncertainty regarding the scope of this obligation. Despite the statement of
the Tax Court, the respondent sees some potential for it or others to use Mr.
Long’s disclosure at some time. The respondent was not prepared to restrict
this potentiality in any way.
[13]
Often when
there is uncertainty regarding the nature and extent of the confidentiality
obligation over material to be disclosed in litigation, the parties proceed to
court by way of motion in order to define the obligations with particularity.
That has not happened here.
[14]
In this
motion, it is not for this Court to pronounce on whether there is a
confidentiality obligation as broad as that suggested by the Tax Court, or
whether the respondent can use discovery information in some circumstances at
some times for some purposes. That issue may be relevant to the merits of the
appeal before this Court. Until this Court hears and determines the merits of
the appeal, we are left with the respondent’s position concerning the scope of
its confidentiality obligation. The respondent takes a narrower view of that
obligation than the Tax Court does. Accordingly, Mr. Long’s concerns would appear
to be justified: his sensitive disclosures may well be used in a manner that
will cause irreparable harm.
[15]
On the
issue of the balance of convenience, the respondent has asserted that Mr. Long
is the author of his own misfortune: he has appealed the income tax assessment
against him and this has triggered the potential of harmful disclosures. That is
true. But Mr. Long has the statutory right to challenge the assessments against
him. And, as for who has created the potential for harm, the respondent bears
some responsibility. In the face of Mr. Long’s concerns, it has not attempted
to restrict itself or define its confidentiality obligation but, instead, has
left open the possibility of collateral use of the information, contrary to the
Tax Court’s statement in paragraph 11, above. This is not meant as criticism of
the respondent; its position might end up being vindicated in this Court.
However, the respondent’s position does make it appropriate that the status
quo be maintained pending the appeal.
[16]
Also on
the issue of the balance of convenience, the respondent has not filed any
evidence or made any submissions regarding the need for the matters in the Tax
Court to proceed quickly. It did not point to evidence that there would be any specific
prejudice if the decision of the Tax Court were stayed. Indeed, it is evident
that until the appeal in this Court is heard and determined, the Tax Court
proceedings will be ensnared in these disclosure issues and may not progress
quickly or in an orderly way. Finally, if a stay is not granted, Mr. Long’s
appeal to this Court will be moot. Therefore, considering all these
discretionary factors, this Court finds that the balance of convenience is in
Mr. Long’s favour.
[17]
Finally,
the respondent submitted that a stay should be denied because of Mr. Long’s
failure to follow a scheduling order made by the Tax Court.
[18]
It is true
that from the time the scheduling order was made, Mr. Long did not follow it.
This would normally be a matter of very serious concern. Mr. Long explains the
delay by saying that he was concerned that complying with the scheduling order would
reveal his sensitive information and make his appeal moot. He acted on his
concern. Soon after the Tax Court made the scheduling order, Mr. Long brought a
motion in the Tax Court to adjust it, and he filed his notice of appeal in this
Court. At roughly the same time, Mr. Long sought out the respondent’s position
regarding a stay pending appeal to this Court. In my view, these steps show
that Mr. Long did not intend to flout the Tax Court’s scheduling order. Rather,
he only wanted to have this Court adjudicate his appeal before he suffered any
harm. In the circumstances of this case, Mr. Long’s failure to follow the
scheduling order should not deny him entitlement to a stay.
[19]
Therefore,
all three elements of the RJR-MacDonald test have been satisfied. The
decision of the Tax Court is stayed pending determination of Mr. Long’s appeal.
Mr. Long shall have his costs.
C. Scheduling issues
[20]
The
appellant also sought an order scheduling this proceeding on an expedited
basis. The respondent consents to such an order.
[21]
Mr. Long has
not progressed his appeal significantly in this Court. The discipline supplied
by a scheduling order is needed. Further, the stay that has been granted by
this Court should remain in place for the shortest time possible. Therefore,
this Court will set a schedule for the completion of the procedural steps in
this appeal.
[22]
During
oral submissions, the deadlines set out in this Court’s order were discussed
and agreed to by both parties. The schedule embodies some shortening of the
normal deadlines under the Federal Courts Rules. Mindful of Mr. Long’s
somewhat dilatory pace in this Court to date, this Court warns him, as it did
during argument on the motion, that any failure to meet the deadlines ordered
by this Court may well result in the dismissal of his appeal without further
notice to him.
"David
Stratas"
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