Rowe T.C.J. (Orally) .
THE REGISTRAR: The court is resumed. The Honourable Judge Rowe is presiding.
First case before the court, 96-1765(IT)I, between Mr. Russell Sykes and Her Majesty the Queen. Appearing for the Appellant, there is no one here at this time; appearing for the Respondent is Ms. Patricia Babcock.
HIS HONOUR: Is there service of your motion for today?
MS. BABCOCK: It was --1 have a letter from him, where he indicated that he got the envelope from us at 1830 on March 9th, 1998. So it’s not within the set -- the set time. It should have been served to him sooner. I don’t think he’s planning to come today.
HIS HONOUR: No, okay.
MS. BABCOCK: As I said, he did send me a letter, and perhaps a copy could be made for the Court.
HIS HONOUR: Right. I think I saw that.
MS. BABCOCK: Excuse me, Your -- or maybe he did send -- did he send a copy of a March 11th letter to the Court today? It does say at the bottom, it says copy to Tax Court of Canada for the Presiding Judge, March 11th.
HIS HONOUR: Is that the one we got today?
MS. BABCOCK: That’s right.
THE REGISTRAR: Yes.
HIS HONOUR: Okay.
MS. BABCOCK: He says that he was unable to -- on page 2 of that letter under your facsimile transmission to J. Bissonnette --
HIS HONOUR: Right.
MS. BABCOCK: -- he indicates in the second paragraph, “Mr. Bissonnette spoke to my wife on March 6th, ’98. My wife told me I was to call him as soon as possible.” And then he indicates he never managed to get in touch with Jean Bissonnette.
So I don’t know if he’s even planning to come today, or --
HIS HONOUR: But the actual -- the notice of hearing --
MS. BABCOCK: Is for tomorrow.
HIS HONOUR: Is for tomorrow at 9:30, right?
MS. BABCOCK: Yes.
HIS HONOUR: Okay. And so as far as the appeal goes, you better leave it there.
MS. BABCOCK: Yes.
HIS HONOUR: Now, with respect to your motion, are you aware of a decision?
MS. BABCOCK: There is only one decision and it’s against us.
HIS HONOUR: Right. And that is the one that Leith. It’s the Leith decision, Tax Appeal Board?
MS. BABCOCK: Yes.
HIS HONOUR: Okay. Because what I see 128(2) doing, for example, those returns were filed by the Trustee.
MS. BABCOCK: The Trustee.
HIS HONOUR: He can’t say that they weren’t his agent for the purpose of the filing of those returns, and that is the purpose of the Trustee in Bankruptcy who shall be deemed to be the agent of the bankrupt for all purposes of this Act. If Smythe McMahon came in here and, as his deemed agent, withdrew that notice of appeal, notwithstanding the fact that they didn’t file it, at that point in time, having been deemed as the agent, I think there wouldn’t be any choice but to acknowledge that. But as I see it, the mere fact that you deem somebody an agent doesn’t take away the right of the individual to still continue to perform certain acts as principal.
MS. BABCOCK: Well, it’s hard to say. The property — the Insolvency Act, I have a copy for the Court here. The definition of property in section 2 indicates that property includes things and actions, which you could argue that a lawsuit is a thing and action. And then if you turn over to 71(2), the vesting of property in the Trustee.
HIS HONOUR: Right.
MS. BABCOCK: So if you combine the definition of property, the fact that the property is vested in the Trustee in 128(2)(a) of the Income Tax Act, there is an argument to be made notwithstanding Leith.
HIS HONOUR: But, you see, that is if the assessment can be raised, which it can’t. I mean, you can’t come out of here owing any more tax. The only thing that might give you some ammunition here is the request, in effect, in the pleadings that because this appeal is, in the view of the Minister, frivolous, that there be an application for the order under 179(1) of the Act to pay an amount not exceeding 10 per cent of the taxes, which, if that were successful, would have the effect of reducing the amount of money that is available, assuming there ever was any, to be distributed to the other creditors. In that particular instance then, if that were the case --
but the thing is, you see, I can’t exercise any jurisdiction under the Bankruptcy Act.
MS. BABCOCK: No, I know.
HIS HONOUR: The Trustee would have to make application to a judge having power in bankruptcy to get an injunction to restrain him from proceeding with the appeal because the potential for a 10 per cent order against him might diminish the pool of money that remains left for the creditors.
MS. BABCOCK: Yes.
HIS HONOUR: But I don’t, at all, see 128(2) as doing anything other than making sure that the undischarged bankrupt can’t say, “I didn’t file that return. I didn’t prepare that financial statement.” But it doesn’t eliminate the right of that individual to prosecute his own case. Right?
MS. BABCOCK: Well, you know, it was --
HIS HONOUR: And the only case you found was —
MS. BABCOCK: Against me.
HIS HONOUR: Was exactly dead against you. Well, you know, you can’t win all the shoot-outs; sometimes they bounce off the posts.
MS. BABCOCK: That’s right.
HIS HONOUR: All right. The application, the motion that’s before me, which was to dismiss the appeal on the basis that the appeal was instituted by Russell Sykes personally and not by his Trustee in Bankruptcy, Ronald McMahon, as required, in the view of counsel, by section 128(2)(a) of the Income Tax Act, is hereby dismissed. The jurisprudence on the issue is the case of Leith v. Minister of National Revenue (1970), 70 D.T.C. 1144 (Can. Tax App. Bd.), and in that particular decision, Mr. Fordham, Q.C. stated at 1145 (after referring to the section, as it then was, of the Income Tax Act, 65[A](2)(a)), which is in exactly the same form as the appropriate section now, as follows:
I discern nothing in this wording that impedes the appellant in a proceeding of the present kind or takes away his right to appeal. I do not think that deeming the trustee to be the agent of the bankrupt precludes the latter from acting on his own behalf when the trustee prefers to remain aloof. In prosecuting this appeal, the appellant has only spent the negligible sum of $15 and will incur no further costs before the Board. What he is doing may prove of benefit to the estate. It certainly can do no harm, in that if he succeeds, the estate will be considerably better off than if the reassessment involved were to be disregarded and the Minister thereby enabled to obtain judgment by default for the large amount claimed by him.
So then I think what we had best do is --
MS. BABCOCK: Adjourn it till tomorrow?
HIS HONOUR: — call the matter tomorrow, because that’s when the hearing --
MS. BABCOCK: Is that going to be for hearing tomorrow, or --
HIS HONOUR: Pardon?
MS. BABCOCK: Is that for hearing tomorrow it’s being called, or —
HIS HONOUR: That’s what the notice of hearing says, doesn’t it? And as far as I am concerned, unless there are compelling reasons to the contrary, he has filed an appeal, a notice of hearing went out. I presume it’s for tomorrow, isn’t it?
MS. BABCOCK: Yes, it is, for two days.
HIS HONOUR: Yes. I can assure you it isn’t going to be two days.
Motion dismissed.
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