November 27 2016 Calgary

  • 27 novembre 2016

(Disponible uniquement en anglais)

Attendees

Tax Court of Canada (TCC)

  • The Honourable Eugene Rossiter Chief Justice
  • The Honourable Lucie Lamarre Associate Chief Justice

Courts Administration Service (CAS)

  • Daniel Gosselin (DG) Chief Administrator
  • Cristina Damiani (CD) Executive Director & General Counsel
  • Geneviève Salvas (GS) Legal Counsel
  • Donald MacNeil (DM) Registrar

Justice Canada (DOJ)

  • Lynn Lovett (LL) Assistant Deputy Minister, Tax Law Services Portfolio
  • Henry Gluch (HG) Deputy Assistant Deputy Minister

Canadian Bar Association (CBA)

  • Dominic C. Belley (DCB) Norton Rose Fulbright (Montreal)
  • Alexandra K. Brown, Chair (AKB) Blake, Cassels & Graydon LLP (Toronto)
  • D'Arcy Schieman (DS) Osler, Hoskin & Harcourt LLP (Toronto)
  • D. Andrew Rouse (DAR) Peters Rouse (Fredericton)
  • Ken S. Skingle (KSS) Felesky Flynn LLP (Calgary)
  • Tamra L. Thomson (TLT) - CBA – Director, Legislation and Law Reform

The meeting commenced at 9:00.

I. Welcome and introduction of new members

Introductory remarks by AKB.

LL and DAR are welcome as new members of the Committee.

II. Approval of agenda and minutes

The May 2016 minutes had been approved by email.

The agenda was approved as circulated with no amendments.

III. What’s new at the TCC

A. Resignations, Appointments and Vacancies

  1. The CJ advised that there is currently one vacancy and another vacancy is expected in May 2017 due to Justice Valerie Miller’s retirement. There is a possibility for a second retirement in June 2017. There is one new appointment, Justice Bruce Russell (to be sworn in on December 9, 2016 in Halifax; his first hearings are expected to be in February 2017). The TCC is currently composed of 21 judges and four supernumeraries. Future appointments are dependent on the constitution of the new Judicial Advisory Committee (JAC) by the Governor in Council. The CJ’s nominee will be Justice Bocock. It is anticipated that there will be three meetings annually to review candidacies. There is a concern that the application form may not be appropriate for TCC candidates; DOJ has been advised. Although not a statutory requirement, regional representation should be considered in future appointments, with an expectation that there would be a new judge from Ontario. Future candidates will have to apply when the new JAC is constituted.

B. Statistics and Trends / Current Inventory

  1. The CJ advised that the TCC’s volume is consistently increasing (up 25 % over five years). The inventory of income tax appeals under the informal procedure is up 80%; GST appeals under the informal procedure are up 30%; general procedure appeals are up 20%. As a result, it is expected that the TCC will need more staff to deal with the increased workload, especially document entry (mainly in Ottawa and Toronto). Regionally, inventory is decreasing in the Maritimes; it is flat in Quebec; while it is increasing elsewhere. Larger files typically go to Toronto.

C. Notice to the Public and the Profession – Motions Day in Vancouver and Montreal

  1. The CJ advised that the Motions Day pilot project in Toronto is a huge success. There will be similar pilot projects for regular motions day in Vancouver and Montreal in 2017. A Notice to the Profession will be issued. It remains possible to contact the Hearings Coordinator to obtain a date for the presentation of a motion.

D. Requests to hold files in abeyance

  1. The CJ advised that requests are typically granted if the request is made to proceed with an Application for Rectification before a provincial Superior Court or if the request is to hold a file in abeyance while another case is scheduled to proceed based on similar facts and/or issues. The CJ advised that it is not the TCC’s practice to grant request for adjournment on the ground that the CRA has not responded to a taxpayer’s access to information request. DOJ undertook to look into the matter and indicated that when the CRA access to information officer has failed to provide a document, the DOJ should provide it.

E. Regional Matters / Issues (if any)

  1. The ACJ has granted requests for adjournment in several Quebec GST cases due to the Quebec lawyers’ general strike. It is anticipated that the strike will trigger a significant decrease in GST trials in Montreal and Quebec City, which could be compensated by income tax trials. Although Replies have to be filed despite the strike, the Court will not schedule GST hearings for a time.  The CJ advised that the new courtroom in St. John’s, NFLD is fully operational. The CJ also reminded CBA members to advise TCC promptly if a case is settled so that TCC can assign another case for hearing, or at least prevent judge from flying out. CBA members asked whether TCC would consider posting freed up hearing dates that parties could access; the CJ said parties can always contact hearings coordinator and ask that they be advised of any cancellations in a particular city or cities.

IV. Courts administration service

A. Update from CAS

  1. The CJ indicated that the TCC aims to have NOAs served within 14 days after filing. Currently, the statistics are that NOAs are served as follows
    • 1-7 days:            10-15%
    • 8-14 days:         40%
    • 15-21 days:      20%
    • 22-28 days:      10%
    • 24-35 days:      10%
    • 35 days:             5-10%
  2. The CJ indicated that NOAs are filed in 11 court registries across the country. In the past they were sent to the TCC headquarters in Ottawa in batches. This is no longer the case. NOAs are now sent individually, as received. The TCC’s goal is to process each NOA within 72 hours. The CJ indicated that one problem is that serving NOAs may not be a priority compared to other more urgent requests (e.g. adjournments).

B. Facilities Relocation

  1. The CJ advised that the St. John’s, NFLD facility is now operational. There will be a new facility in Quebec City (RenĂ© LĂ©vesque Blvd.) ready in 2017. The lease for the Montreal facility has been renewed for two additional years. In Toronto, an additional floor has been requested in the same facility. In Vancouver, is it foreseeable that a new facility will be necessary within five years. Finally, there is a possibility for a new judicial building in Ottawa adjacent to the SCC.

V. TCC rules committee

A. Update from Rules Committee

Consolidation of Rules Project

  1. The CJ advised that the General Procedure Rules have been finalized and approved in English; a draft French translation is currently being circulated and to be revised by the Rules Committee. There will be an update every five years thereafter. As for the Informal Procedure Rules, the objective is to consolidate five sets of rules into two sets. The final draft should be considered by the Rules Committee early in 2017. Once approved, it will be translated into French. The final steps are the review by DOJ drafters and then publication in the Canada Gazette.

Review of Tax Court Costs Tariff

  1. The CJ advised that a review of the Tariff would be a next major undertaking of the Rules Committee.

Social Security Tribunal and Transition from TCC

  1. The CJ indicated that, in accordance with legislation enacted by Parliament, EI/CPP cases are to be transferred from the TCC to the Social Security Tribunal. However, currently, EI/CPP cases continue to be in the jurisdiction of the TCC. No dates are known for transition to tribunal.

E-Service – Pilot Project

  1. HG indicated that the e-service pilot project will not go ahead. It has been superseded by the CAS review of IT.

VI. Issues raised by justice Canada

A. Hearings by videoconference or teleconference 1

  1. In what circumstances will the court consider requests that a hearing be conducted by videoconference or teleconference? Can this be requested unilaterally by one party or does the request need to be on consent? Will the court consider a request if the matter (ex. status hearing) has already been set down for a hearing in person? Will the court consider a request for the following:
  • Litigation process conferences (status hearings; case management hearings; trial management conferences; settlement conferences);
  • Motions;
  • Applications for extension of time to appeal or object under the ITA or ETA;
  • IP appeals;
  • GP appeals.
  1. The CJ indicated that the TCC will not consider videoconference or teleconference for hearings of appeals, settlement conferences, and unlikely for hearings of motions. However, a case management conference could be held by videoconference or teleconference, if the case management judge so directs. Teleconferences typically work very well in the context of status hearings, but when the taxpayer is self-represented, the presiding judge usually prefers to have parties in front of him or her. In the context of an appeal, the presiding judge could consider a request to hear evidence of a witness located outside of the country by videoconference. It should be noted that technology for videoconference or teleconference is not readily available in every location.

B. Settlement Conferences 2

  1. Will the Court consider a waiver of the requirement that settlement conference briefs be filed if the parties agree that a conference may be useful? For example, would the court waive the requirement for settlement conference briefs and convene a settlement conference where:
  • The parties agree that a settlement conference may lead to a settlement of some or all of the issues;
  • The parties agree that this could be done with the presiding judge reviewing the pleadings and several key documents;
  • The parties agree that this could be done in a teleconference of 90 minutes.
  1. The CJ advised that settlement conferences should only be considered if the hearing of an appeal is expected to take two days or more. If the trial is less than two days, the CJ might consider the amount under appeal and schedule a settlement conference for ½ day. Settlement offers must have been exchanged before the conference. A factum must be filed in advance of the settlement conference; the factum must not be more than 10 pages, but it can be less than 10 pages and can simply refer to the pleadings. Settlement conferences must always be in person.

C. Applications for extension of time under the ITA or ETA 3

  1. The court registry in some cases sets applications down for hearing within 30 days of service of the application on the Crown. Could this be extended to 45 or 60 days to allow more time to file the Crown’s response, and supporting affidavit if necessary?
  2. The CJ indicated that the TCC will consider not setting down applications on 30 days’ notice and will consider extending it to 45 days. CBA members are grateful for receipt of MNR’s response to applications, although they are not mandatory.

D. Timetable Orders 4

  1. There have been instances where the court has rejected timetables proposed by the parties on consent at a status hearing and issued a timetable order with truncated periods. If unable to comply with the timetable order, the parties must make a request to amend the timetable order. Is this situation avoidable?
  2. The CJ indicated that the refusal of a timetable proposed by the parties is a rarity. The parties must have the conduct of their own file. If the timetable proposed by the parties is reasonable, there should be no problem. If the parties propose no timetable and a status hearing has to be scheduled, the timetable will be at the judge’s discretion.

VII. Issues raised by CBA members

A. Questions about the discovery process

  1. Could TCC discovery procedures be revised to reflect the importance of proportionality, as in some other court rules across the country? In addition, other courts’ rules limit the duration of examinations without leave. Without these rules, there is little recourse for examinations that drag on for days.
  2. The CJ indicated that imposing a limit on the duration of examinations is contrary to the view that the parties have the conduct of their litigation. The TCC has no plan to amend its rules to limit the duration of examinations. However, the duration of an examination goes to the issue of proportionality, which will be considered by the Rules Committee, as well as the possibility to adopt a full disclosure rule in every case
  3. The practice at examinations for discovery of taking matters under advisement has substantially increased. In addition, as a result of this practice, responses are not provided to many questions and opposing counsel does not become aware of the refusal to answer until the deadline for answering undertakings. There are a number of related questions. Does the Court think a new litigation timetable is necessary in these circumstances, where there has been a court-ordered schedule? Is an extension of time required for counsel to bring a motion in response to inadequate answers or refusals?
  4. DOJ indicated that this is not a policy DOJ favours; in some cases, it may be appropriate, but not generally. The problem is that if a matter taken under advisement is ultimately answered, it is the party’s counsel and not the nominee who provides the answer. Reference is made to MediaTube Corp v. Bell Canada, 2015 FC 391, a decision of Prothonotary Aalto where he is critical of this practice.
  5. Would the Court consider amending the TCC rules to mirror those of other courts where failure to advise within a specified period results in the “taking under advisement” deemed to be a refusal?
  6. The matter is referred to the Rules Committee.

B. Bifurcation for GST cases

  1. The Income Tax Act has a particular provision for bifurcation, the Excise Tax Act does not. Is bifurcation permissible as part of the Court’s inherent jurisdiction to handle its own matters?
  2. The CJ indicated that he has never seen it. AKB will follow up with the lawyer who raised the issue to see whether this is anything more than an academic issue. This would require a legislative change to the ETA similar to s. 171(2) of the ITA.

C. Timing to serve notice of appeal by the TCC 

  1. In some cases it is taking 3-4 weeks for the Tax Court to serve the Crown. Concern has been expressed about this delay.
  2. Please see items #6-7 (above).

D. Motions

  1. Concern has been expressed that the timing for filing materials (7 days and 2 days) is typically insufficient.
  2. The CJ indicated that judges would like to have the materials in advance. DOJ indicated that it might be difficult, especially if there is a cross-examination on affidavit. The matter is referred to the Rules Committee.

E. Confidentiality Clauses

  1. The minutes of the November 2015 B&B meeting note that including confidentiality clauses in minutes of settlement is not a normal requirement of Justice Canada. A Justice lawyer recently stated that there are exceptions to this policy, and generally when Justice Canada would like to get an exception they get it, that is, insist on a confidentiality clause. Could Justice Canada provide an update on the policy?
  2. DOJ does not normally request inclusion of confidentiality clauses in minutes of settlement relating to TCC appeals. DOJ may exceptionally make such a request. If an appellant’s counsel is of the view that DOJ is improperly requesting inclusion of a confidentiality clause, they can bring the matter to the attention of the DOJ or CBA members of this committee.

F. Electronic Infrastructure

  1. The CAS has requested additional funding to upgrade its electronic systems. Should the Committee forward a letter of support; see the attached draft letter from the Federal Court Bench and Bar Committee.
  2. The TCC B&B Committee, excluding DOJ members, will forward a similar letter of support. 5

G. Costs

  1. Could the Court clarify whether the fact that the Respondent has assumed contradictory alternative positions is a consideration that may justify increased costs?
  2. This is a matter left to a decision of the court in the circumstances of a particular case. The court would have jurisdiction under 147(3) of the Rules.

H. Notices of Appeal

  1. Would the Court permit an Application to add to the Notice of Appeal a request that the matter be assigned to a Justice lawyer in a particular location? This is in aid of having a Justice lawyer engaged in a location near the witnesses and evidence rather than near the presumed home base of counsel. (This issue is separate from the question of the Department of Justice redirecting workload to address internal resource issues).
  2. The CJ indicated that this is an internal matter with the DOJ. DOJ indicated that a proposed rule change will require that an appellant indicate in the notice of appeal of the place of hearing. The TCC Registry and the DOJ assume the place of hearing is the hearing location closest to the city where the appellant’s counsel is located, or if self-represented, the city where the appellant is located. DOJ indicated that appellants are encouraged to advise the DOJ if the place of hearing is other than assumed, or if most of the pre-hearing litigation steps are likely to occur in a particular city. However, DOJ counsel will not necessarily be assigned from that city.

I. Taxpayer Information

  1. Would the court consider making the names of other appellants/taxpayers available to appellants in lead cases, to address the issue of free-riders, especially those whose disputes are at the objection stage? Could the TCC Rules be amended to address this issue?
  2. The CJ indicated that the Rules will not be amended. Group appeals are usually under case management.  A case management judge may have a list of appeals that are part of the group. It will be up to the case management judge to determine whether and to whom the list should be provided. The TCC has no jurisdiction with respect to cases that are not before the TCC. Before the NOA is filed, the information is confidential under 241 ITA. Once the NOA is filed, the information contained in the NOA is public.

VIII. Other business

  1. The ACJ advised the Committee that the TCC will change its position regarding item #25 of the May 19, 2016 TCC B&B Committee Meeting. The issue has to do with the “amount in dispute” for the purposes of the NOA in GST appeals. The TCC will consider that the “amount in dispute” is the amount for each period, even if the Notice of Assessment contains several periods. However, if the NOA is for the same issue the “amount in dispute” will be the total of all amounts for the same issue.

IX. Next meeting

Tentatively: Thursday, May 18, 2017, in Montreal.

End Notes

1 TCC Rules (GP), Rules 6 and 125-126.2 / Practice Notes 3 and 17.

2 TCC Rules (GP), Rule 126.2 / Practice Note 17.

3 Income Tax Act, s. 166.2, 167; TCC Act, s. 18.19(1), 18.29(3)(a)(vii).

4 TCC Rules (GP), Rule 125(5)(a)(i) and 125(7)(a) / Practice Notes 14 and 17.