Dick v. R., [1998] 1 CTC 3332, 98 DTC 1158

Sarchuk T.C.J.:

Motions by both the Respondent and the Appellants in respect of the appeals of Basil Dick, Kenneth R. Livermore, K. John Woodcock and Anne Goetz-Rapcewicz were argued yesterday and I indicated that I would rule on them today. The first is a motion by the Respondent for an Order abridging the time for service of the Notice of Motion, which I grant; and for an Order dismissing the appeals with costs, or, alternatively, compelling the Appellants to re-attend at their own expense to answer questions undertaken to be answered and any proper questions arising therefrom, with costs of the motion to the Respondent. The Appellants, for their part, sought an adjournment of the trial of these appeals.

The grounds advanced by the Respondent in respect of each individual motion are identical and allege that each Appellant has failed to satisfy undertakings given on oral examination contrary to the Orders of this Court dated January 22, 1997 and April 9, 1997 which undertakings were to be satisfied by July 30, 1997. More specifically, it is asserted that each Appellant failed to answer a number of proper questions undertaken to be answered on their respective examinations for discovery conducted in the case of Woodcock on July 3, 1997, and in the case of the other three Appellants on June 17, 1997. The Respondent relies on section 110 and subsection 125(7) of the Tax Court of Canada Rules (General Procedure).

A brief summary of the events giving rise to these motions is warranted. The Notices of Appeal were filed on May 23, 1995 and the Replies thereto followed on July 26, 1995. No further steps were taken by the Appellants as a result of which a status hearing was held on November 12, 1996. At that time, Counsel for the Appellants was unable to advise the Court whether he had served copies of the notices on his clients and as a result, the status hearing was adjourned to January 13, 1997. On that date, the Court ordered that the appeals be heard on common evidence on August 11, 1997. The Court further set time periods for the completion of the remaining steps, included in which was a requirement that the examinations for discovery and any undertakings arising therefrom be completed by May 30, 1997. On April 2, 1997, Counsel for the Appellants requested an amendment of the Order to permit discoveries to be completed not later than June 30, 1997 and undertakings to be completed by July 30, 1997. The Order was granted.

The Dick, Livermore and Goetz-Rapcewicz discoveries were held on June 17, 1997. A further motion was made by the Appellants to again extend the time for completion of the Woodcock examination to July 15, 1997, which was motion granted. In all instances, the Respondent chose not to object. As of July 30, 1997 (the last date for the completion of undertakings), not one of the Appellants had complied. On August 1, 1997, the Respondent filed the present motions to dismiss.

On August 6, 1997, the date set for the hearing of these motions, a series of letters, some accompanied by documents, were faxed by Appellants’ Counsel to Respondent’s Counsel. At the commencement of the hearing, none of this material had been received by the Court. At various times that day, both the Court and Counsel for the Respondent received this material and in several instances examined it for the first time in the course of the argument on the motion. [1]

The material so submitted, according to Appellants’ Counsel, constituted a complete and full answer to the 39 undertakings vis-a-vis the Appellant, Dick, eight for Woodcock and 25 for Livermore. Goetz- Rapcewicz did not respond at all, and none of the undertakings relating to her appeal have been produced. She has thus completely failed to comply with the Court order. Counsel for the Appellants advised the Court that he has not been able to speak or otherwise communicate with her and has no idea why she has failed to comply with the Order. In view of this, the Minister’s motion is granted with respect to Goetz-Rapcewicz and her appeal is dismissed.

With respect to the other three Appellants, the position advanced on behalf of the Minister (it would appear after only a cursory examination of the material submitted), was that a number of undertakings were not answered or were insufficiently or incompletely answered. With particular reference to Dick, Counsel for the Respondent submitted that some of the answers did not address the issue raised by the questions and in some instances, appeared to skirt the issue. In my view, upon examination of the material, that appeared to be the case, but whether this was done deliberately or inadvertently was difficult to tell. Counsel for the Respondent contended that the faxed documents did not constitute full and complete answers to the questions they related to as required.

Quite frankly, the explanations for the delay advanced by their Counsel, particularly with respect to Dick and Livermore, do not bear close scrutiny. Counsel for the Appellants argued that his clients had until July 30, 1997 to complete the undertakings and that the production of the undertakings on the day of this hearing was in essence only three working days late. That may be so, but the examinations for discovery of Dick and Livermore were completed on June 17, 1997 which left six weeks to comply with the Court’s directions. With respect to Woodcock, his discovery was completed on July 3, 1997, again leaving virtually a full month within which the undertakings could have been completed. The fact that within five days of the filing of the motion by the Respondent, the Appellants, Dick, Woodcock and Livermore, produced answers to undertakings (in one form or another) clearly indicates that they could readily have been provided well before the Court-mandated deadline.

The Appellants’ counsel also submitted that given the circumstances, dismissal of the appeals was too severe a sanction.

Let me say that both the Respondent and the Appellants are obliged to obey the lawful orders of this Court as long as they are outstanding. If a party disagrees with an order, it can appeal but it may not ignore the order. The conduct of the Appellants in this case clearly had the potential to prejudice the Respondent’s position, particularly given that fact that the trial was scheduled to be heard on August 11, 1997, a fact known to the Appellants for over six months. Quite simply, an Appellant has the responsibility to prosecute an appeal with due dispatch and within the prescribed rules. As was noted by Hamlyn J. in D’Abbondanza v. R., (1993), 93 D.T.C. 1042 (T.C.C.), an Appellant must be proactive not reactive.

The history of this file is that the Appellants have consistently been dilatory in their prosecution of the appeals. Their recent actions demonstrate that only too well. In this context, I note that on July 25, 1997, the Appellants sought an adjournment of the trial date set for these appeals. The grounds set out by their Counsel in his letter to the Court were in part as follows:

These appeals, while being made by only four Appellants, are actually on behalf of some 100 other taxpayers who are also involved in this business investment.

The proper presentation of these appeals will involve the use of professional accountants, lawyers etc., as witnesses aside from the parties themselves. The use of these professionals will be expensive.

I had asked my clients to organize a solicitation of funds from the other investors in order to be able to pay these professionals. They had advised me that a third party was involved in this and was soliciting these funds.

They have recently learned that this was not the case and that no other taxpayers had been, in fact, solicited.

At that time, Counsel’s submission to the Court was that “my clients have now organized themselves and a letter has been sent, to be followed up with a telephone solicitation, to seek the funds necessary for the proper presentation of theses (sic) cases before the Court. However, sufficient funds have not been received as of yet and the preparation, meeting, etc. with necessary professionals has not yet started”. This motion for an adjournment was denied by the Chief Judge of the Tax Court on July 28, 1997. It was renewed before me on August 6, 1997, at which time I indicated that an adjournment on the grounds advanced was not warranted. [2]

I have not been persuaded by the submissions of Counsel for the Appellants that there was a genuine attempt by his clients to comply with the Orders of this Court. The Respondent’s motion is granted, with costs, and the appeals are dismissed, with costs. Given my decision in respect of the Respondent’s motion, I need not address the Appellants’ request for an adjournment.

Motion granted.