Docket: A-254-15
Citation:
2016 FCA 17
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CORAM:
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TRUDEL J.A.
DE MONTIGNY J.A.
GLEASON J.A.
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BETWEEN:
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LBL HOLDINGS
LIMITED
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Appellant
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and
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HER MAJESTY THE
QUEEN
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Respondent
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Ottawa, Ontario, on
January 20, 2016).
TRUDEL J.A.
[1]
In reasons cited as 2015 TCC 115, Graham J. for
the Tax Court of Canada granted in part LBL Holdings Limited (LBL)’s motion to
strike portions of the Crown’s Fresh Reply to LBL’s Amended Notice of Appeal of
assessments for the 1999 and 2000 tax years. This arose subsequent to the Tax
Court’s decision in September, 2014, to strike the Crown’s Reply in its
entirety because the Crown improperly relied exclusively on assumptions of fact
without pleading any facts in support for reassessing statute-barred years.
[2]
LBL would have this Court overturn the Tax Court
judge’s discretionary decision not to strike these portions of the Fresh Reply,
arguing that he erred by failing to consider affidavit evidence LBL sought to
present in support of its motion, and that regardless, each challenged portion
of the Fresh Reply ought to have been struck.
[3]
The test for striking pleadings under Rule 53 of
the Tax Court of Canada Rules (General Procedure) SOR/90-688a
(Rules) is whether the claim has “no reasonable
prospect of success” (R. v. Imperial Tobacco Canada Ltd., 2011
SCC 42, [2011] 3 S.C.R. 45) at paragraph 17. One of the purposes of rules
allowing hopeless pleadings to be struck is the promotion of efficiency in the
judicial system (ibidem at paragraph 20).
[4]
Although LBL is correct to note that submission
of evidence by affidavit is not prohibited in motions pursuant to paragraphs
(1)(a), (b), and (c) of Rule 53, we have reviewed the
affidavits in question and find that they do not assist in determining whether
the impugned portions of the Fresh Reply should be struck in accordance with
this test.
[5]
It appears that LBL seeks to essentially argue
its case on the merits, and in particular to challenge the Minister’s asserted
facts by introducing contrary evidence, at this interlocutory stage. We agree
with the respondent that a motion to strike is not the appropriate forum. Indeed,
to delay a trial with repeated challenges to pleadings would seem to frustrate
the purpose of promoting judicial efficiency. As Bowman, C.J. wrote for the Tax
Court:
If the respondent wishes to challenge the
facts alleged, a section 53 motion is not the place in which to do so. It is at
trial where a judge hearing the evidence can determine the correctness,
relevancy and weight to be assigned to the evidence adduced in support of the
allegations. (Sentinel Hill Productions (1999) Corporation v. The Queen,
2007 TCC 742, [2008] 5 C.T.C. 2690) at paragraph 6.
[6]
The Tax Court judge conducted a careful
examination of the portions of the Fresh Reply challenged by LBL. He found that
paragraphs 12(d), 12(j), and 12(y) constituted assertions of fact and not, as
LBL argued, conclusions of mixed fact and law that would be impermissible in
pleadings as material facts.
[7]
He found, further, that paragraphs 18, 19, 23,
and 24, all under the heading of “Statutory Provisions,
Grounds Relied on, and Relief Sought”, were sufficiently supported by
the facts the Crown pleads that a judge may reach the conclusions set out in
those paragraphs. In other words, none of the portions of the Fresh Reply that
were not struck manifest the kind of radical deficiency that would justify striking
pleadings at this early stage.
[8]
We have not been persuaded that this Court
should interfere with any of these conclusions or that the Tax Court judge made
any error in his analysis. As a result, the appeal will be dismissed with
costs.
"Johanne Trudel"
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