Boast v. The Queen

Boast v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2005-05-05 Neutral citation 2005 TCC 316 File numbers 2003-1315(IT)G Judges and Taxing Officers Donald G.H. Bowman Subjects Income Tax Act Decision Content Docket: 2003-1315(IT)G BETWEEN: NIGEL CHARLES BOAST, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Motion heard by way of conference call on March 31, 2005 at Ottawa, Ontario Before: The Honourable D.G.H. Bowman, Chief Justice Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Amy Francis ____________________________________________________________________ ORDER Upon motion by the Appellant pursuant to section 17.1 of the Tax Court of Canada Act, It is ordered that the appellant may conduct an oral examination for discovery at Kelowna of an officer of the respondent. It is further ordered that the respondent may conduct an oral examination of the appellant on the same day. Examinations for discovery and undertakings arising therefrom shall be completed by June 17, 2005. .../2 Costs of this motion shall be in the discretion of the trial judge. Signed at Ottawa, Canada, this 5th day of May 2005. "D.G.H. Bowman" Bowman, C.J. Citation: 2005TCC316 Date: 20050505 Docket: 2003-1315(IT)G BETWEEN: NIGEL CHARLES BOAST, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR ORDER Bowman, C.J. [1] This motion is brought by the appellant under section 17.3 of the Tax Court of Canada Act, which reads: 17.3 (1) Where the aggregate of all amounts in issue in an appeal under the Income Tax Act is $25,000 or less, or where the amount of the loss that is determined under subsection 152(1.1) of that Act and that is in issue is $50,000 or less, an oral examination for discovery shall not be held unless the parties consent thereto or unless one of the parties applies therefor and the Court is of the opinion that the case could not properly be conducted without that examination for discovery. (2) In considering an application under subsection (1), the Court may consider the extent to which the appeal is likely to affect any other appeal of the party who instituted the appeal or relates to an issue that is common to a group or class of persons. (3) The Court shall order an oral examination for discovery in an appeal referred to in subsection (1), on the request of one of the parties, where the party making the request agrees to submit to an oral examination for discovery by the other party and to pay the costs in respect of that examination for discovery of that other party in accordance with the tariff of costs set out in the rules of Court. R.S. 1985, c. 51 (4th Supp.), s. 5; 1993, c. 27, s. 216. [2] I asked the parties for written submissions. The appellant seeks an oral discovery of an officer of the Crown. The respondent is opposed. [3] Counsel for the respondent states in her written submissions that the amount in issue is $24,697.94. This, strictly speaking, is not quite accurate. The definition of "the aggregate of all amounts" in section 2 of the Tax Court of Canada Act excludes interest. According to the Reply to the Notice of Appeal the amount of $24,697.94 includes interest of $3,816.82 so that the amount in issue is $20,881.12. This detail is not germane to the point involved here. [4] Whether the Court grants the appellant's request for an oral discovery is of course a matter of discretion, but the discretion must be exercised on proper principles. [5] Under paragraph (2) of Rule 17.3, "... the Court may consider the extent to which the appeal ... relates to an issue that is common to a group or class of persons". This appeal involves an assessment of director's liability and the same issue arises in an appeal by Mr. Vanderkam who was also a director of Growth Stage Cosmetics Ltd. These appeals are to be heard consecutively. I believe that Mr. Vanderkam and Mr. Boast are a "group" within the meaning of the Rule. [6] The meaning of the word "group" was discussed by Jackett, P. (as he then was) in Buckerfield's Ltd. et al. v. M.N.R., 64 DTC 5301 at 5303. The applicable sense of the word "group" as defined by the Shorter Oxford English Dictionary (1959) is 2. gen. An assemblage of objects standing near together, and forming a collective unity; a knot (of people), a cluster (of things). In early use there is often a notion of confused aggregation. The only other sense that might be applicable is 3. A number of persons or things in a certain relation, or having a certain degree of similarity. Counsel for the appellants referred to other dictionary definitions but I do not find any conflict among them. Apart from the argument on these appeals, the phrase "group of persons" is apt to encompass the companies holding the shares of Buckerfield's and Green Valley or the companies holding the shares of Burrard and Westland, within my understanding of the meaning of that phrase whether or not I seek the aid of dictionaries. [Submissions for appellant] Counsel for the appellants, however, put forward two submissions. These two submissions, as I understand them, are (a) that the word "group" in its ordinary sense does not include any number of persons less than four; and (b) in section 39(4), the word "group" means a group of persons who come together to take advantage of the low rate of tax under section 39 and not a group of persons who come together for any other particular common purpose. In support of the first of these two submissions, as I understand him, counsel submitted that, if Parliament had intended to include two, reference would have been made to a couple or a pair and, if it had intended to include three, reference would have been made to a trio. I cannot accept this submission. The word "group" in its ordinary meaning, as I understand it, can refer to any number of persons from two to infinity. There is nothing in section 39(4) to suggest that there is any intention to omit any of them. Any omission of particular numbers would be, moreover, an obvious gap in the legislative scheme. [7] The fact that a group of persons may have the same issue before the Court is not determinative but it is a factor that the Court should take into account in exercising its discretion under section 17.3. [8] There are of course other considerations. The appellant wants an oral discovery so that he can question the Crown on a large number of notes and memoranda that were produced. He alleges that these notes and memoranda are based on false information. He wants to determine just what information the assessment is based on and to ensure that information is "false and misleading" is not used against him at trial. While I have in the past been somewhat critical of an undue concern about what thoughts went through an assessor's mind at the time the assessment was made, it is still permitted and legitimate to determine what facts were assumed in making the assessment. This can best be done at an oral examination for discovery. [9] Written interrogatories simply are not an acceptable substitute. [10] The respondent argues that the two main issues are due diligence and when the appellant was a director and that these are peculiarly within the appellant's knowledge and require no evidence that is the Minister's knowledge. I agree to a point. As I said in The Cadillac Fairview Corporation Limited v. The Queen, 97 DTC 405 at 407: The appellant pleaded that the payments were made pursuant to the guarantees and this allegation was denied. Counsel for the appellant argued that since the Minister had not pleaded that he "assumed" that the payments were not made pursuant to the guarantees the Minister had the onus of establishing that the payments were not made pursuant to the guarantees. The question is, if not a pure question of law, at least a mixed one of law and fact. In any event the basic assumption made on assessing was that the appellant was not entitled to the capital loss claimed and it was for the appellant to establish the several legal components entitling it to the deduction claimed. An inordinate amount of time is wasted in income tax appeals on questions of onus of proof and on chasing the will-o'-the-wisp of what the Minister may or may not have "assumed". I do not believe that M.N.R. v. Pillsbury Holdings Ltd. [1964] DTC 5184 has completely turned the ordinary rules of practice and pleading on their head. The usual rule - and I see no reason why it should not apply in income tax appeals - is set out in Odgers' Principles of Pleading and Practice, 22nd edition at p. 532: The "burden of proof" is the duty which lies on a party to establish his case. It will lie on A, whenever A must either call some evidence or have judgment given against him. As a rule (but not invariably) it lies upon the party who has in his pleading maintained the affirmative of the issue; for a negative is in general incapable of proof. Ei incumbit probatio qui dicit, non qui negat. The affirmative is generally but not necessarily, maintained by the party who first raises the issue. Thus, the onus lies, as a rule, on the plaintiff to establish every fact which he has asserted in the statement of claim, and on the defendant to prove all facts which he has pleaded by way of confession and avoidance, such as fraud, performance, release, rescission, etc. [11] Nonetheless, I think the facts and issues are of sufficient complexity that the appellant is entitled to examine an officer of the Crown in order to properly conduct his case. I am not unappreciative of the force of the arguments advanced by counsel for the respondent. I tend to share counsel's reservations about the utility or relevance of questioning an officer of the Crown about conversations that an assessor may have had with the appellant. Tax appeals are won or lost on the basis of objective facts not on the basis of what an assessor may have said or thought. It is however important that a taxpayer, particularly an unrepresented one, not be confronted with procedural hurdles to the manner in which he or she wishes to present the case. [12] For the appellant to be denied what he conceives to be an important right to examine for discovery the person who alleges that he was remiss in performing his duties as a director is, I think, contrary to principles of ordinary fairness and, moreover, does nothing to enhance the appearance of justice and fairness to appellants who appear without counsel. It is not up to the Court or the Department of Justice to tell an appellant that a course of action that he wishes to follow is useless or inappropriate. [13] The respondent refers to the expense of having counsel and a witness attend in Kelowna. I do not think this factor should weigh very heavily in the determination that has to be made here. [14] Counsel for the respondent states that the notes referred to by the appellant and appended to his written argument were not included in the respondent's list of documents and are not documents that the respondent intends to rely on at trial. This is not a reason to deny the appellant's right to examine on them. In the partial disclosure rule under Rule 81 only the documents a party intends to rely need be referred to in a list of documents. Nonetheless, there may be other documents that the party does not wish to disclose because they do not support that party's case or are harmful to it but which the opposing party may wish to examine on. The fact that a party does not put a document in the list of documents is scarcely a reason for preventing the other party's examining on it. [15] Paragraph 3 of section 17.3 provides that the Court shall order an oral examination for discovery where the party requesting the order agrees to submit to an oral examination for discovery and pay the costs. This paragraph has no application. Mr. Boast has not agreed to be examined or to pay costs. However, counsel for the Crown has asked that I order that the respondent be entitled to examine the appellant for discovery and I so order. [16] I have not consulted with the parties about time limits for completion of the examinations. I am setting June 17, 2005 for completion of all examinations for discovery in Kelowna and the fulfilment of undertakings. If this timetable is inconvenient for either party they may communicate with the Court and ask for an extension. [17] The costs of this motion shall be in the discretion of the trial judge. Signed at Ottawa, Canada, this 5th day of May 2005. "D.G.H. Bowman" Bowman, C.J. CITATION: 2005TCC316 COURT FILE NO.: 2003-1315(IT)G STYLE OF CAUSE: Nigel Charles Boast and Her Majesty The Queen PLACE OF HEARING: Ottawa, Ontario DATE OF HEARING: March 31, 2005 REASONS FOR ORDER BY: The Honourable D.G.H. Bowman Chief Judge DATE OF ORDER AND REASONS FOR ORDER: May 5, 2005 APPEARANCES: For the Appellant: The Appellant himself Counsel for the Respondent: Amy Francis COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada