Luciano v. The Queen

Luciano v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2007-04-18 Neutral citation 2007 TCC 230 File numbers 2005-2151(IT)G Judges and Taxing Officers Wyman W. Webb Subjects Income Tax Act Decision Content Docket: 2005-2151(IT)G BETWEEN: NANCY LUCIANO, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Motion heard on April 11, 2007 at Toronto, Ontario. Before: The Honourable Justice Wyman W. Webb Appearances: For the Appellant: Peter Martin Counsel for the Respondent: Jenny P. Mboutsiadis ____________________________________________________________________ ORDER Upon Motion by the Respondent for an Order striking out certain portions of the Notice of Appeal filed on behalf of the Appellant; AND upon hearing counsel for the Respondent; AND upon hearing counsel for the Appellant; AND upon reading the material filed; The Respondent's Motion is granted, with costs, and it is ordered that the following be stricken from the Notice of Appeal: (a) All of paragraph 8; (b) All of subparagraph 12 c); (c) All of subparagraph 13 b); and (d) All of subparagraph 14 e). Signed at Ottawa, Canada, this 18th day of April 2007. "Wyman W. Webb" Webb J. Citation: 2007TCC230 Date: 20070418 Docket: 2005-2151(IT)G BETWEEN: NANCY LUCIANO, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR ORDER Webb J. [1] The Respondent has brought this Motion to strike certain parts of the Notice of Appeal. The parts that the Respondent has asked to have stricken are the following: (a) All of paragraph 8 which reads as follows: 8. Following the notice of objection, the appeals officer refused to investigate the fact that the Respondent had erred with respect to the property, funds, as well as which "Antonio Miniaci" was which. (b) All of subparagraph 12 c), which together with the opening part of paragraph 12, reads as follows: 12. The issue(s) to be decided on this appeal are: c) Whether the Respondent has engaged in an abuse of this Court's process by refusing to investigate and rectify the obvious error(s)? (c) All of subparagraph 13 b), which together with the opening part of paragraph 13, reads as follows: 13. The Appellant relies on the following statutory and legal provisions: b) s. 7 of the Charter; and (d) All of subparagraph 14 e), which together with the opening part of paragraph 14, reads (as written) as follows: 14. The reasons for the appeal are that: e) that the assessment and proceeding of Respondent constitutes an abuse of process this Court's process. [2] In the case of Zelinski v. R. (2002 DTC 1204, [2002] 1 C.T.C. 2422 (T.C.C.), affirmed by the Federal Court of Appeal, 2002 DTC 7395, [2003] 1 C.T.C. 53), Bowie J. stated that: 4 The purpose of pleadings is to define the issues in dispute between the parties for the purposes of production, discovery and trial. What is required of a party pleading is to set forth a concise statement of the material facts upon which she relies. Material facts are those facts which, if established at the trial, will tend to show that the party pleading is entitled to the relief sought. Amendments to pleadings should generally be permitted, so long as that can be done without causing prejudice to the opposing party that cannot be compensated by an award of costs or other terms, as the purpose of the Rules is to ensure, so far as possible, a fair trial of the real issues in dispute between the parties. 5 The applicable principle is stated in Holmsted and Watson: This is the rule of pleading: all of the other pleading rules are essentially corollaries or qualifications to this basic rule that the pleader must state the material facts relied upon for his or her claim or defence. The rule involves four separate elements: (1) every pleading must state facts, not mere conclusions of law; (2) it must state material facts and not include facts which are immaterial; (3) it must state facts and not the evidence by which they are to be proved; (4) it must state facts concisely in a summary form. [3] Therefore the facts as recited in the Notice of Appeal must relate to the relief that is sought. In an appeal to this Court, an Appellant is seeking either to vary or vacate an assessment under the Income Tax Act ("Act"). Paragraph 169 of the Act provides as follows: (1) Where a taxpayer has served notice of objection to an assessment under section 165, the taxpayer may appeal to the Tax Court of Canada to have the assessment vacated or varied after either (a) the Minister has confirmed the assessment or reassessed, or (b) 90 days have elapsed after service of the notice of objection and the Minister has not notified the taxpayer that the Minister has vacated or confirmed the assessment or reassessed, but no appeal under this section may be instituted after the expiration of 90 days from the day notice has been mailed to the taxpayer under section 165 that the Minister has confirmed the assessment or reassessed. [4] Section 171 of the Act provides that: (1) The Tax Court of Canada may dispose of an appeal by (a) dismissing it; or (b) allowing it and (i) vacating the assessment, (ii) varying the assessment, or (iii) referring the assessment back to the Minister for reconsideration and reassessment. ... [5] In the decision of the Federal Court of Appeal in the case of Main Rehabilitation Co. v. R. (2004 FCA 403) (leave to appeal to the Supreme Court of Canada was dismissed (343 N.R. 196 (note)), the Federal Court of Appeal made the following comments: 6 In any event, it is also plain and obvious that the Tax Court does not have the jurisdiction to set aside an assessment on the basis of an abuse of process at common law or in breach of section 7 of the Charter. 7 As the Tax Court Judge properly notes in her reasons, although the Tax Court has authority to stay proceedings that are an abuse of its own process (see for instance Yacyshyn v. R. (1999), 99 D.T.C. 5133 (Fed. C.A.) ), Courts have consistently held that the actions of the CCRA cannot be taken into account in an appeal against assessments. 8 This is because what is in issue in an appeal pursuant to section 169 is the validity of the assessment and not the process by which it is established (see for instance the Consumers' Gas Co. v. R. (1986), 87 D.T.C. 5008 (Fed. C.A.) at p. 5012). Put another way, the question is not whether the CCRA officials exercised their powers properly, but whether the amounts assessed can be shown to be properly owing under the Act (Ludco Enterprises Ltd./Entreprises Ludco Ltée v. R. (1994), [1996] 3 C.T.C. 74 (Fed. C.A.) at p. 84). [6] The Main Rehabilitation Co. case dealt with a motion to strike certain provisions from the Notice of Appeal related to a claim that the actions of the Canada Revenue Agency auditor resulted in an abuse of process. Counsel of record for the Appellant in this case is the same person who was the counsel for the Appellant in the Main Rehabilitation Co. case. The test for striking pleadings was also set out in the Main Rehabilitation Co. case, which was stated as follows: 3 The test to be applied for striking out pleadings is whether it is plain and obvious that Main's Notice of Appeal to the Tax Court discloses no reasonable claim. Only if its appeal is certain to fail should the relevant portions of the Notice of Appeal be struck out. As stated, the facts alleged in the Notice of Appeal are assumed to be true. See Hunt v. T & N plc, [1990] 2 S.C.R. 959 (S.C.C.) [7] Since, as noted above, the only matter that can be dealt with by this Court on an appeal under section 169 of the Act is the validity of the assessment itself, the parts of the Notice of Appeal that deal with the conduct of the appeals officer or the Respondent are not relevant in determining the validity of the assessment and therefore are not material facts that relate to the relief that is being sought under section 171 of the Act. [8] With respect to the parts dealing with section 7 of the Charter of Rights and Freedoms ("Charter"), Justice Rothstein, as he then was, made the following comments on section 7 of the Charter in relation to reassessments under the Act in the case of Mathew v. R. (2003 FCA 371): 29 I will accept that the power of reassessment of a taxpayer implicates the administration of justice. However, I do not accept that reassessments of taxpayers result in a deprivation of liberty or security of the person. 30 If there is a right at issue in the case of reassessments in income tax, it is an economic right. In Gosselin, McLachlin C.J.C., for the majority, observed that in Irwin Toy Ltd. c Québec (Procureur général), [1989] 1 S.C.R. 927 (S.C.C.), at 1003, Dickson C.J.C., for the majority, left open the question of whether section 7 could operate to protect "economic rights fundamental to human ... survival". However, there is no suggestion in Gosselin that section 7 is broad enough to encompass economic rights generally or, in particular, in respect of reassessments of income tax. I am, therefore, of the view that the appellants have not demonstrated a deprivation of any right protected by section 7 of the Charter. [9] The Mathew case was affirmed by the Supreme Court of Canada (2005 SCC 55) but the Supreme Court of Canada did not comment on the application of section 7 of the Charter to reassessments under the Act. [10] As a result of the comments of the Federal Court of Appeal in the Mathew case, the references to section 7 of the Charter are not relevant to the validity of the assessment against the Appellant. [11] Counsel for the Appellant acknowledged that the facts as alleged in paragraph 8 of the Notice of Appeal and that the other paragraphs in question did not relate to the validity of the assessment but argued instead that they related to the Appellant's claim for costs on a solicitor-client basis. [12] The Supreme Court of Canada in the case of The Minister of Forests (British Columbia) v. The Okanagan Indian Band, [2003] 3 S.C.R. 371 stated that: 19 The jurisdiction of courts to order costs of a proceeding is a venerable one. The English common law courts did not have inherent jurisdiction over costs, but beginning in the late 13th century they were given the power by statute to order costs in favour of a successful party. Courts of equity had an entirely discretionary jurisdiction to order costs according to the dictates of conscience (see M. M. Orkin, The Law of Costs (2nd ed. (loose-leaf)), at p. 1-1). In the modern Canadian legal system, this equitable and discretionary power survives, and is recognized by the various provincial statutes and rules of civil procedure which make costs a matter for the court's discretion. 20 In the usual case, costs are awarded to the prevailing party after judgment has been given. The standard characteristics of costs awards were summarized by the Divisional Court of the Ontario High Court of Justice in Re Regional Municipality of Hamilton-Wentworth and Hamilton-Wentworth Save the Valley Committee, Inc. (1985), 51 O.R. (2d) 23, at p. 32, as follows: (1) They are an award to be made in favour of a successful or deserving litigant, payable by the loser. (2) Of necessity, the award must await the conclusion of the proceeding, as success or entitlement cannot be determined before that time. (3) They are payable by way of indemnity for allowable expenses and services incurred relevant to the case or proceeding. (4) They are not payable for the purpose of assuring participation in the proceedings. [Emphasis in original.] [13] Since costs are determined by the trial judge following the determination of an appeal, it would be premature in a hearing on the validity of an assessment to lead evidence that, if it is relevant at all, is only relevant in relation to the issue of whether solicitor-client costs should be awarded in relation to the very matter that is the subject of the hearing. Since the conduct of the appeals officer is not relevant to the determination of the issue of the validity of the assessment, any evidence related to the conduct of the appeals officer would not be admissible at the hearing related to the validity of the assessment, as it would be irrelevant. Since the Notice of Appeal is only to include material facts that relate to the issue to be decided, only the material facts that relate to the issue of the validity of the assessment are to be included. [14] Whether solicitor-client costs will be awarded is not an issue to be determined under section 169 of the Act but rather is an issue to be determined in the discretion of the trial judge under section 147 of the Tax Court of Canada Rules (General Procedure) following the conclusion of the proceeding related to the validity of the assessment. In my opinion, to allow the Appellant to introduce evidence at the hearing that is not relevant to the validity of the assessment itself would unnecessarily prolong the hearing. If the Appellant is unsuccessful in challenging the validity of the assessment, then the issue of whether the Appellant is entitled to solicitor-client costs will likely be a moot point. Costs are within the discretion of the trial judge and therefore it is possible that the Appellant could be awarded costs even though the Appellant was unsuccessful at the hearing but it would require exceptional circumstances for this to occur. [15] The Motion of the Respondent is granted and the parts of the Notice of Appeal quoted above that the Respondent has asked to have stricken, are hereby stricken from the Notice of Appeal. [16] As the counsel of record for the Appellant was the same counsel that appeared for the Appellant in the Main Rehabilitation Co. case, the Respondent is entitled to costs in relation to this motion. Signed at Ottawa, Canada, this 18th day of April 2007. "Wyman W. Webb" Webb J. CITATION: 2007TCC230 COURT FILE NO.: 2005-2151(IT)G STYLE OF CAUSE: Nancy Luciano vs. The Minister of National Revenue PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: April 11, 2007 REASONS FOR JUDGMENT BY: The Honourable Justice Wyman W. Webb DATE OF JUDGMENT: April 18, 2007 APPEARANCES: For the Appellant: Peter Martin Counsel for the Respondent: Jenny P. Mboutsiadis COUNSEL OF RECORD: For the Appellant: Name: Rocco Galati Firm: Rocco Galati Law Firm Professional Corporation For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada