May 19 2016 Calgary

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 (HAG) Associate Assistant Deputy Attorney General

Canadian Bar Association (CBA)

• Dominic C. Belley (DCB) Norton Rose Fulbright (Montreal)
• Alexandra K. Brown, Chair (AKB) Blake, Cassels & Graydon LLP (Toronto)
• Bruce S. Russell, QC (BSR) McInnes Cooper (Halifax)
• Dennis A. Wyslobicky (DAW) (Oakville)
• 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 & introduction of new member

HG advised that Ms. Lynn Lovett, Assistant Deputy Minister – Tax Law Services Portfolio, has been appointed to the Committee to replace Micheline Van-Erum, former Assistant Deputy Attorney General who recently retired. Ms. Lovett was not able to attend this meeting.

II. Approval of agenda

The agenda was approved as circulated with no amendments.

III. Approval of minutes of  meeting on November 22, 2015

The minutes of the November 22, 2015 Committee meeting were approved.

IV. What’s new at the TCC

A. Resignations, Appointments and Vacancies

1. The CJ advised that former Chief Justice Rip retired from his supernumerary status in December 2015 and Justice Campbell Miller became supernumerary in February 2016. Supernumerary Justice Hershfield will retire on May 31, 2016, following which the Court will be comprised of 21 full-time Justices and four supernumerary Justices and there will be one vacancy to be filled.

B. Statistics & Trends / Current Inventory

2. With respect to the total inventory of Court proceedings in 2015, ITA informal appeals increased by 56%, general procedure appeals were stable and GST appeals increased by 10%. On a three-year rolling average basis, for Québec and eastward there had been a decline in appeals and applications, while Ontario and westward there was an increase in the total inventory of appeals and applications, with the Toronto area having the largest inventory, followed next by Vancouver and Montréal.
3. For appeals filed to the Court, approximately 80% are income tax appeals, approximately 15% are GST appeals and approximately 5% are CPP/EI appeals.

C. Matters from the Court

1. Security at Court Facilities

4. Increased security measures continue to be implemented at all of the Court facilities across Canada, including metal detection scanning equipment. On implementation, all persons entering each Court facility including lawyers will be required to pass through the scanning equipment.

2. Toronto Motions Day Pilot Project - Update

5. The CJ advised that the pilot project in Toronto for motion days on the first and third Mondays of each month, with approximately four motions set down on each motion day, had commenced in February 2016. These motions days are for motions that require approximately two hours or less, and do not include complex motions (such as relating to discoveries) which require a half day or more. To date, the Toronto motions days have been very successful from the Court’s perspective so far and the Court has received positive feedback from counsel for the litigants. If the conclusion of the pilot project is that motions days are beneficial, the Court anticipates rolling out similar designated motions days pilot projects in Vancouver and Montréal in 2017.

3. Common Book of Authorities Update

6. A pilot project is underway in Toronto involving the Court having available in the courtroom for the parties and the presiding Justice a Common Books of Authorities containing 27 frequently cited judicial authorities, which need not be reproduced by the parties. This pilot project is the subject of a Notice to the Public and Profession from the CJ dated March 31, 2016 (which can be found on the Court’s website). At this time, no assessment is yet available on the merits of this pilot project.

4. Other Matters

7. The CJ advised that the Court’s number one administrative priority is updating the Court’s computer information and technology systems.

D. Regional Matters / Issues (if any)

8. The Court is not aware of any particular regional issues requiring its attention. The Court opened a registry office in St. John's Newfoundland in June 2015. As a result, there are now TCC registry offices in every province with the exception of Prince Edward Island and Saskatchewan.
9. The CJ noted that further courtroom space is required in Toronto based on the volume of applications and appeals being heard at that location.

V. Report from the courts administration service (CAS)

A. General Update from CAS

10. DG reported that CAS had received $8 million of funding towards improving the Court’s information technology infrastructure.
11. Government has approved $2 million funding to relocate the Court facilities in Québec City by May 2017. Various relocation options are being considered.
12. CAS is in the process of implementing a five-year plan for increased overall security measures at all TCC facilities across the country (consistent with the trend of increased security in other Canadian courts), including metal detection scanning equipment. It is anticipated that at some of the TCC’s locations there will be a “fast track” lane available for certain categories of individuals.
13. A three year extension of the lease for the Montréal court facility to 2022 has been obtained, with anticipated relocation of that Montréal facility to a new location.
14. There remains the possibility that in the future the Court may move from 200 Kent Street to an anticipated new Federal Judicial Building but there has been no official announcement regarding that new building.
15. More courtroom space is required in Toronto.
16. In Vancouver the Court may have to relocate in 2024, and possible alternative new locations are under review.

VI. TCC rules committee

A. General Update From the Rules Committee

1. Update on the Consolidation of the TCC Rules Project

17. The CJ noted there will be no significant substantive changes in the proposed new General Procedure Rules as compared to the existing General Procedure Rules. It is expected the new General Procedure Rules will be passed in October 2016 and then published in the Canada Gazette following the required process.
18. The TCC Rules Committee’s revisionary work on consolidating the existing five separate sets of Informal Procedure Rules into two sets, one relating to CPP and EI appeals and another relating to income tax and all other informal appeals, is substantially completed. The new Informal Procedure Rules reflect a substantial change in presentation in an effort to be of greater assistance to self-represented litigants. It is expected the new Informal Procedure Rules will be passed in October 2016 and then published in the Canada Gazette following the required process.

2. Update on the Review of the TCC Costs Tariff

19. A review of the Tariff in the General Procedure Rules will be undertaken once the work on the consolidation of the TCC Rules is completed.

VII. Matters of concern for the department of justice

20. HG advised that the DOJ will not be pursuing the e-service pilot project, which previously had been discussed as a possibility, due to CAS currently working on implementing expanded e-service capabilities as part of its ongoing improvement efforts in the Court’s information technology area.
21. At least three ITA section 174 applications for determination of a common question, which affects a number of taxpayers (group litigation), have been initiated by the DOJ in 2016, one of which affects approximately 35 taxpayers, another of which affects approximately 65 taxpayers, and the most recent application potentially will affect approximately 15,000 taxpayers. The CJ noted these group appeals typically raise a number of challenges, particularly when there are a large number of self-represented litigants (e.g., determining which taxpayers will be bound and which taxpayers will not be bound by the section 174 determination). These applications usually involve case management.
22. HG commented on the DOJ’s concern that in some instances the Court seems to have held back and collected a number of recently filed notices of appeal and then served all of those notices of appeal on the DOJ in a single batch, resulting in a batch of replies all coming due on the same day. The DOJ requests that notices of appeal filed on staggered dates be served on staggered dates as well, and not served in a batch.

DM explained that the instances of some delay in service of notices of appeal have not been intentional on the part of the Court, but rather have been the result of recent reduced staff  levels at the Court due to unfilled positions. It is expected that delays in serving notices of appeal on the DOJ will be minimized in the near future as a result of some upcoming hiring of new Registry staff, which should expedite the serving of notices of appeal.

VIII. Issues raised by CBA members

A. Timing of Approval/Publishing of the TCB&B Committee Minutes

23. There will be a commitment by all Committee members to having the minutes of the Committee meetings more quickly drafted, circulated, reviewed, amended, finalized and forwarded to the CBA for more timely posting of the minutes, for the benefit of CBA members. TLT noted that the minutes, which are drafted in English, will be posted by CBA as soon as they are approved by the Committee. In accordance with past translation practices, the approved English minutes eventually are translated into French and then posted by the CBA.

B. Specific Issues

Informal Procedure Monetary Threshold

24. There apparently is some confusion among CBA members about whether the $50,000 informal procedure “amount in dispute” threshold in s. 18.3001 of the Tax Court of Canada Act applies to (1) the entire GST/HST amount in an appeal, regardless of how many years or reporting periods are involved in the notice of assessment, (2) amounts on an annual basis within an appeal, regardless of how many reporting periods there are in a year, or (3) amounts on a reporting period basis within an appeal. The question is important in terms of an appellant’s waiver of “amounts in dispute” in excess of the $50,000 threshold if the appellant chooses to proceed under the informal procedure. The issue may relate to the fact that s. 300(2) of the Excise Tax Act permits the Canada Revenue Agency to assess several reporting periods in the same notice of assessment if it so wishes. In practice, CRA auditors therefore have a choice of whether to issue several notices of assessment covering individual reporting periods, or whether to issue a single notice of assessment covering all reporting periods under the audit.

This question was raised to some extent at this Committee’s May 30, 2013 meeting in the context of whether a Practice Note could be issued because the issue may be particularly relevant to self-represented taxpayers. The answer from the Committee referred to the Triple G Corp case (2005 FCA 192), which has been interpreted by some to mean the amount in dispute globally for the entire notice of assessment, and not annually or by reporting period covered by a notice of assessment.

On the other hand, some of the Court’s registry officers are apparently telling counsel that the $50,000 threshold applies on a reporting period basis (which could be annual, quarterly or monthly, depending on the taxpayer’s specific reporting period). In this case, for example, the $50,000 threshold potentially would apply to each monthly reporting period if the taxpayer was a monthly filer, even if the taxpayer was assessed for a four year period covering 48 reporting periods (i.e., there would be 48 “amounts in dispute” to consider for purposes of the rule in such case).

Could the Court please confirm its official position, if it has one, and whether a Practice Direction might be issued?

25. Response: The ACJ advised that the Court’s position is that the $50,000 limit applies to the entire amount in dispute in the filed notice of appeal. The $50,000 limit does not apply on either a reporting period basis or an annual basis. As each notice of assessment can be the subject of a separate notice of appeal, the CRA’s discretion to issue separate assessments for each reporting period or otherwise, can have a significant impact.  The taxpayer can choose to file a separate notice of appeal for each assessment or to join the assessments in one notice of appeal. In any event, the definition of "amount in dispute" in s. 2.2(2)(c) of the Tax Court of Canada Act governs the calculation of the $50,000 limit for the appeal. The Court will consider issuing a Practice Note on this matter.

Service of Notices of Appeal

26. A revisiting of the issue of significant delays in the Vancouver registry between filing a notice of appeal and service thereof on the DOJ – six-week delays are now happening and the matter appears to be getting worse, not better. Are delays related to processing of payments for filing?
27. Response: DM noted that delays in service of filed notices of appeal have been an issue and concern across Canada and is not unique to the Vancouver area. DM believes the average time between filing a notice of appeal and service on the DOJ will be reduced in the near future once hiring of further Court staff has been completed and the new employees are in place, as noted in paragraph [22].
28. A CBA member noted that they file notices of appeal electronically using the TCC’s website, and observed that it seems to take the Court an awfully long time to process and serve it on the Crown. Is it faster to file documents with the Court electronically or over the counter?
29. Response: The Court’s preferred method for litigants filing documents with the Court is electronically rather than a hard copy over-the-counter or by fax.

Possible Limiting of Discovery

30. The Ontario Rules of Civil Procedure limit examinations for discovery to seven hours, except with the consent of other parties or the leave of the court. This makes a lot of sense. Would it also make sense in the TCC? There are more and more motions to the TCC relating to refusals and objections, so a time limit rule might require counsel to focus. A limit might also improve access to justice by reducing litigants’ costs to bring a matter before the Court.

The Ontario rule states:

31.05.1 (1) No party shall, in conducting oral examinations for discovery, exceed a total of seven hours of examination, regardless of the number of parties or other persons to be examined, except with the consent of the parties or with leave of the court. O. Reg. 438/08, s. 29.

31. Response: This question of a time limit on examinations for discovery has been raised with, and will be considered by, the TCC Rules Committee. As a related matter, the TCC Rules Committee also has raised for consideration the merits of whether the TCC should adopt a discovery plan approach, as provided under the Ontario Rules of Civil Procedure. This possibility of adopting a discovery plan approach will be raised for input comments to be provided by the TCC Justices.

Settlement Where Expert Reports Involved     

32. Subsection 145(7) of the General Procedure Rules requires expert reports to be served at least 90 days before a hearing, and rebuttal reports are filed at least 60 days before under s. 145(15). Subsections 147 (3.1), (3.2) and (3.3) of the General Procedure Rules provide more favourable substantial indemnity costs to successful litigants where written offers to settle are made not less than 90 days before the commencement of the hearing. In some cases, however, such as those involving expert appraisals of real estate, it is difficult to make an offer to settle until expert reports and rebuttal reports are exchanged. Would the Court consider reducing the time before hearing within which an offer to settle can be made (e.g. from 90 days to 30 days before the hearing), to make these settlement offer rules in s. 147 more effective in such cases?
33. Response: The CJ acknowledged this is a good question which has not yet been considered by the TCC Rules Committee. This question first will be raised with the TCC Justices to first receive their input, and then this question will go to the TCC Rules Committee for consideration.

Revisiting Question About Discovery Relating to Evidence

34. A CBA member raised a question discussed at the June 11, 2015 meeting of this Committee about s. 95 of the General Procedure Rules and the right to demand evidence on discovery.

The response from the Minutes of that meeting states:

DOJ: the problem is resolved if the question is correctly phrased: ‘Do you have a contract to support your allegation of the transaction.’ It is not appropriate to ask ‘provide me with all the evidence that you intend to use to prove the facts’ - as that is counsel’s work product.

Are there any further thoughts?  

35. Response: The Committee agrees that the issue of the interpretation of the scope and application of section 95 of General Procedure Rules ultimately will be a matter to be determined on a case-by-case basis and, if necessary, by a Justice of this Court, so no further input will be provided by this Committee. However, HG noted that the Crown and the DOJ does not make a practice of not disclosing to a taxpayer documents from the relevant CRA file or other evidence.

Audio Recording of Proceedings

36. What is the TCC’s procedure for audio recordings. A CBA member observed an informal procedure appeal recently where, before the Registrar departed to retrieve the Judge from Chambers, the Registrar informed the parties that an audio recording would be made of the proceeding for the purposes of the transcript. The Registrar told the parties that the audio recording would start just before the Registrar departed the courtroom and would end at the conclusion of the hearing. The parties were warned not to make any remarks before the Justice entered the courtroom as they would be included on the transcript. Is this the Tax Court’s official procedure for audio recordings? Could the Registrar start the recording when the Judge enters the courtroom and the matter is called?
37. Response: CAS advised that digital audio recording systems are being installed in all TCC courtrooms. As a standard practice, the digital audio recording system is started when the presiding Registrar leaves her or his seat to leave the courtroom to get the presiding Justice at the commencement of the proceeding. The Registrar is to advise those in the courtroom that the recording system is turned on as soon as she or he goes to get the presiding Justice.

IX. Retiring member/committee vacancy

38. It was acknowledged that Dennis Wyslobicky was nearing the end of his three year term to the Committee and would cease to be a member of the Committee at the end of August 2016. The other members of the Committee thanked Dennis for his service to the Committee and his recent leadership as Chair of the Committee. The CBA will be announcing a replacement member for the Committee in the near future.

X. Next meeting

39. The proposed tentative date for the next meeting is Sunday, November 27, 2016 commencing at 9:00 a.m. in Calgary, Alberta in connection with the Canadian Tax Foundation Annual Conference which will commence on that date in Calgary.