November 19 2017 Toronto

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
• Daniel Bourgeois (DB) 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 approval of agenda

1. Welcome from, AKB. KSS and TLT attended via conference call.
2. The Minutes from the meeting of May 2017, had been previously approved by the Committee.
3. Item VI, B of the Agenda was amended to correct a drafting error and add Rule 156.

II. What’s new at the TCC

A. Resignations, Appointments and Vacancies

4. 4.The CJ advised that there are three vacancies on the court as a result of Justice Judith Woods being elevated to the FCA and of the retirement of Justice Valerie Miller and of Justice Gaston Jorré. Justice Favreau will go supernumerary at the end of February 2018. As well, one judge will be on a one year sabbatical starting in September 2018. The TCC is very short on judges which is causing significant operational challenges.

B. Statistics and Trends / Current Inventory

5. The CJ advised that the TCC is reviewing its statistics the same way it has been for the last several years. ITA and HST Appeals  have both increased. The CJ advised that there are many challenges facing the TCC. The Judicial Advisory Committee (JAC) was only recently appointed to review applications for judicial appointments to the TCC. It is unlikely that new judges will be appointed before  late spring 2018 and, if that is the case,  they will  not be ready to sit until the fall of 2018. With the required training, the new judges would most likely  not be ready to take on a full load until early 2019. Therefore, the TCC is likely to continue experiencing a shortage of judges in the near future.
6. The CJ anticipates that the current tax reform will lead to an increase in litigation resulting in even more files for the TCC. The TCC does not have sufficient staff in the Registry to handle the current load and they are falling further and further behind with the processing of the files. The CJ advised that more judges will not alone solve the problem because of the staff shortage which is placing substantial strain on the available resources of the TCC.
7. As the TCC is 100% paper court, one can’t access files digitally. The TCC does not have the technology and resources currently to do that. The TCC will be exploring the possibility of commencing a pilot project for electronic courtrooms and trials in a few courtrooms across Canada, depending on resources available.
8. The CAS will be receiving $4,000,000. in temporary funding. As the funding is temporary the TCC cannot hire the permanent staff to meet its operational needs and the amount to be allocated to TCC is to be determined.
9. The CJ advised that he has attempted to have a meeting with key government officials to discuss the priorities of the TCC but the meeting did not take place as no one showed up.
10. The CJ advised that, in British Columbia, provincial court facilities are not available for TCC at this time due to staff shortages. The CJ is attempting to address this issue. The TCC may only be sitting in Vancouver B.C. for the near future. As per Hamilton, ON,  the TCC does not have a permanent courtroom in  that city and the TCC has had to use hotels to hold court.
11. The lack of resources available to the TCC is of such concern that the CJ and ACJ are reviewing a number of options to cope with the current situation.
12. The CJ and ACJ will decide what action, if any, will be taken in the near future.

C. Recent Notices to the Public and the Profession

13. There were no recent notices to the public and profession.

D. Requests to Hold Files in Abeyance

14. The CJ advised that there are many reasons why requests may be made to hold files in abeyance. The most common requests involve waiting for a decision from the Federal Court of Appeal or the TCC or  the parties may be in settlement negotiations.
15. The CJ advised that the TCC deals with  many adjournment requests weekly

E. Regional Matters / Issues (if any)

16. The CJ advised that there are not enough proper, secure courtrooms across the country. In Hamilton, Ontario, the TCC has no other option than to hold court in hotels,  which is not acceptable due to security concerns when sitting non courtroom facilities.  Hamilton is the fifth busiest Tax Court sitting location in Canada, following the closure of the Tax Court location in London, Ontario, five years ago. The greater Toronto region volume of appeals has been growing consistently and a permanent TCC location in Hamilton is required.
17. Toronto, IT appeals are up 52% and GST appeals are up 18%.
18. The CJ discussed settlement conferences. The TCC will hold settlement conferences if at least one offer has been exchanged and at least one party requests it.

III. Courts administration service

A. Update From CAS

19. DG reported that CAS has been approved for $19 million of funding ($4 million annually) for increased security measures at federal court facilities across Canada. Security screening should be in place across Canada by the end of 2018 and at the latest by the summer of 2019. DG advises that there are no more complaints from members of the bar and the system is working well.
20. DG reported that $10 million has been approved over five years for IT infrastructure.
21. DG advised that CAS has also been approved for an additional temporary $4 million to assist with capacity issues,  primarily for registry and health and safety issues. It will be a challenge to attract staff for temporary positions, but CAS consider  to hire some permanent staff in the hopes that the funding will become permanent.
22. DG advised that CAS is not able to meet its obligations with respect to  translation due to lack of funds. There is a possibility that  the 2019 budget will address the translation issues and lack of funding.
23. DG reported that the cost to digitize the Federal Courts is estimated at $25 million over five years. CAS will focus on implementing one module at a time until full digitization is achieved. It will be difficult to project any savings from digitization of the courts as IT staff can be more expensive than clerical staff.
24. CAS is currently involved with a pilot project to make six electronic courtrooms across Canada. Should  the pilot project be successful CAS will look at extending the project to other courtrooms. To start, CAS will choose the hearings for the pilot project. The CJ suggested that the parties should not bear the cost to participate in the pilot project.

B. Facilities Relocation/Update

25. Montreal – DG advised that the TCC in Montreal will be in its new location by 2022 subject to funding.
26. Quebec City – The new court facility located at 150 Blvd. René Levesque East will be opening on December 9, 2017. It will be fully equipped for an electronic courtroom.
27. Toronto – More courtroom space is required in Toronto and CAS anticipates that the courts will take an additional floor (8th floor) of the same building in which it currently resides which will increase rent significantly. Hoping to have the additional floor ready by 2021 pending on funding approved.
28. Hamilton – CAS is looking at 2 temporary locations in Hamilton with the hope that a location will become permanent. CAS would like a permanent registry in Hamilton.

IV. TCC rules committee

A. Update from Rules Committee

29. The CJ advised that the committee is finalizing the General Procedure rules. They had hoped the revisions would be completed by March, 2018, but it may be as late as November, 2018.

B. Update on Consolidation of Rules Project

30. Informal Procedure rules are being reduced from 6 sets of rules to 2. There will be a meeting in January, 2018, for the committee to approve the Informal Procedure Rules. The CJ advises that the rules should be finalized by December, 2018.
31. The rules have already been translated.

V. Issues raised by justice Canada

A. Section 174 of the Income Tax Act (Common Questions): The Crown has filed applications under the amended s. 174 in three matters involving multiple taxpayers and anticipates bringing others. Members of the Court have expressed some concern about the use of this provision and the mechanics for its application. The Attorney General intends to outline the vision for the use of s. 174 and to raise for discussion procedural issues which will be common to all applications involving large numbers of taxpayers.

32. DB advises the Crown, pursuant to s. 174 ITA, will make applications in complex matters involving multiple taxpayers where issues are common and may be resolved on objective evidence for everyone. Alternative approaches to group appeals, such as the test case approach, often do not prevent re-litigation of the same issues because all parties may not agree to be bound by the outcome of a test case.
33. The CJ advised that there are limitations in the Act which can cause logistical problems and involve fairness issues which are of concern to the judges. For example, issues may arise as to why a certain case is picked by the Crown and who will represent the appellants at the application. S. 174 applications may affect taxpayers who haven’t even been assessed. An issue arises as to who should bear the costs of a s. 174 application. CJ indicated that consideration should be given to the legislation being tightened up. It is important that all appellants have an opportunity to be heard and all appellants need to agree to be bound by the decision.
34. DB acknowledged that in the absence of legal representation by taxpayers, the manner in which test cases are chosen offers no guarantee that test cases will be a representative sample of the group. The issues of picking test cases and agreements to be bound do not arise with s. 174 applications.  Applications are served on taxpayers who share a common question and who will be bound by the determination.
35. The CJ will discuss this matter with the judges and their input will be passed on to the Tax Court Bench and Bar and Rules Committees.

B. Motions in informal procedural appeals: In 2010, following a request by the Tax Court (at Rules Committee), the Crown generally stopped bringing motions for jurisdictional issues (such as failure to file a notice of objection, appeals from nil assessments, etc.) in informal procedure appeals. Rather than having a motion heard separately, the jurisdictional issue would be raised in the reply and the motion and substantive appeal (if it proceeded) would be dealt with at the same time. This would avoid a taxpayer potentially having to come to court twice. Recently, at least one judge of the court has expressed disapproval with this approach, and asked the Crown to bring a separate motion. Could the court confirm its preferred approach where there are jurisdictional/preliminary concerns with the validity of an informal appeal?

36. The ACJ confirmed that jurisdictional issues should continue to be raised in the Reply in informal procedure appeals and dealt with at the hearing of the appeal.
37. The CJ indicated it is important that the taxpayer doesn’t have to appear in court more than necessary, but acknowledged that in some cases there may be times when the motion may be required to be brought before the substantive appeal.

C. Delays in receiving taxation certificates: The Crown is experiencing delays in receiving certificates of taxation, in some cases there is a delay of more than a year between the time the request is made and a certificate issued. Can these delays be addressed?  

38. The CJ advised that this situation has been rectified and to let him know if it becomes an issue in the future.

VI. Issues raised by CBA members

A. Bill C-58:  Judicial independence and proactive publication.

39. TLT advised that the CBA is following up with Treasury Board and Senate with respect to Bill C-58. There is concern of how publication of travel information with respect to superior court judges, which includes judges of the Tax Court, may affect judicial independence.
40. The CJ also expressed concern as to what information will be available to the public concerning expenses of judges of the Tax Court and how the information will be broken down. The disclosure of too much detail may interfere with the independence of the Court and could have a serious impact on issues of security.
41. TLT advised that the Bill is currently in the House of Commons and the committee is to report back to the House very soon and after third reading will go to Senate.

B. Apparent tension between section 147(3.1), 147(7) and 156 of the Rules, regarding entitlement to substantial indemnity costs.

42. The issue is with the timing of s. 147(7) of the Rules. S. 147(3.1) and (3.2) indicate that the successful party is entitled to substantial indemnity costs after the date of service of the offer to settle if the judgment is as favourable as the successful parties offer:  The question is whether the 30 day time period found in s. 147(7) applies if the trial judge doesn’t deal with the costs at the hearing.
43. The CJ suggested this issue be referred to the Rules Committee to be addressed.

C. Concern about limiting duration of oral discoveries (unless leave obtained)

44. The CJ advised that discoveries are wide open with no time limitation. The Court has the discretion to limit the time should abuse occur.

VII.           Other business

45. Discussion was held concerning Lists of Documents and whether parties should be required to provide full disclosure or partial disclosure. Full disclosure may be more expensive and may not be necessary in all cases.

VIII.         Next meeting

46. The next meeting will be held on May 22, 2018, in Montreal at 1:00 p.m