November 25 2018 Vancouver

Attendees

Tax Court of Canada (TCC)

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

Courts Administration Service (CAS)

• Chantal Carbonneau (CC), Deputy Chief Administrator
• Daniel Gosselin (DG) Chief Administrator
• Cristina Damiani (CD) Executive Director & General Counsel
• Sophie Matte (SM) Executive 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)

• Alexandra K. Brown, Chair (AKB) Blake, Cassels & Graydon LLP (Toronto)
• Neil Bass (NB) Aird & Berlis (Toronto)
• D'Arcy Schieman (DS) Osler, Hoskin & Harcourt LLP (Toronto)
• D. Andrew Rouse (DAR) Peters Rouse (Fredericton)
• Nathalie Goyette (NG) PwC Law LLP (Montreal)
• Tamra L. Thomson (TLT) - CBA – Director, Legislation and Law Reform

The meeting commenced at 9:00.

I. Welcome, approval of agenda and introductory comments

1. Welcome to all from AKB, especially new members Nathalie Goyette and Neil Bass. DS and TLT attended via conference call.
2. The Minutes from the meeting of May 22, 2018, had been previously approved by the Committee.
3. The Committee expressed its thanks to Ken Skingle and Dominic Belley for their contributions to the Committee during their three year term.

II. What’s new at the TCC

A. Resignations, Appointments and Vacancies

4. The CJ advised that there are no resignations to report.
5. Justice Favreau has gone supernumerary as of February 2018. Justice C. Miller who is now supernumerary is retiring on April 30, 2019. Justice Paris is scheduled to retire on April 3, 2019.
6. Currently there is one vacancy to be filled on the TCC and may be filled by December 2018 (since filled with the appointment of  Justice Gabrielle St-Hilaire).
7. The CJ advised that there have been three new appointments to the TCC:  Justice K.A. Siobhan Monaghan, Justice Susan Wong and Justice Ronald MacPhee.
8. The CJ advised that the government’s delay in filling the vacancies at the TCC has resulted or will result in a loss of 144 sitting weeks by December 31, 2018 as the newly appointed judges will not have sufficient training to preside at hearings until 2019. The delay in filling the vacancies was not due to any failure on behalf of the TCC or the Judicial Advisory Committee. The CJ expressed concern about ensuring access to justice without a more timely appointments process.

B. Statistics and Trends / Current Inventory

9. The CJ advised that the TCC appeals inventory in 2018 has currently leveled off.
10. Between December 2012 to December 2018, Ontario has seen a large increase in appeals, in particular in Toronto, which has experienced an 82.7% increase in appeals during that time. Over the same period appeals across Canada have increased by 28%. There has been a slight increase in Montreal and Vancouver, and the inventory is steady in the Maritimes.
11. The CJ cautioned that the number of appeals may increase significantly in the future as the CRA has a large number of objections currently in its system and ongoing international tax matters.

C. Issues Relating to Section 174 Applications

12. The CJ advised there is no further update at this time regarding s. 174 Applications as the DOJ has yet to respond to the issues raised at the meeting held on May 22, 2018 with the Committee, Tax Court Judges and other members of the bar. The CJ encouraged the Government to make a decision on this issue and stated that section 174 applications will be held in abeyance in the meantime.
13. The CJ pointed out that the issues surrounding s. 174 Applications are very important as the protection of the taxpayers’ rights is at stake.

D. Regional Matters/Issues

Facilities

14. The CJ advised that there have been  an issue with the availability of provincial courts facilities in B.C. due to provincial labour legislation and agreements which may ultimately result in the TCC sitting in fewer locations in that province should the issue remain.
15. The CJ advised that the TCC may sit in Hamilton, Ontario, three weeks a month instead of two weeks due to the increase in volume of appeals in Ontario.
16. More courtroom space is required in Toronto and it is expected that the TCC will take an additional floor in 2020/2021 in the building in which it currently resides.
17. A new CAS facility is expected to open in Montreal by 2022.
18. The courtroom in St. Johns, NL had to be temporarily closed due to a faulty sprinkler.

Bill C-58

19. The CJ advised that Bill C-58 continues to cause serious concern for judges of the TCC on several bases:
    1. It is already the case that all judges’ expense claims are reviewed by the Federal Commissioner of Judicial Affairs. As well, expenses are subject to audit by the Office of the Auditor General.
    2. The publication of judicial expenses for each individual judge will cause a potential serious security issue for the judges. The CJ has proposed instead that aggregate data be provided quarterly.
    3. As judges of the TCC are required to travel extensively the public may look at the published expenses negatively which would be damaging to the reputation of the judges and the TCC.
    4. This public scrutiny may negatively impact the willingness of candidates to seek a judicial appointment to the TCC.
    5. The publication of TCC expenses could result in the TCC sitting in fewer locations across Canada in order to reduce expenses. This could seriously affect the public’s right to access to justice. The TCC currently sits in 59 locations across Canada while the Federal Court only sits in 14 locations across Canada. The CJ would not like the TCC to sit in only 14 locations across Canada.
20. The CJ advised that the TCC has provided the government with potential amendments to Bill C-58.
21. TLT advised that the CBA has appeared before Committees in the Senate and the House to raise its concerns with respect to Bill C-58.

Funding

22. The CJ advised that funding of $41 million to CAS over five years has been approved. This will enable the TCC to hire more staff and personnel to meet its operational needs.
23. The CJ hopes that the additional staff will improve timelines for appeals.

Electronic Courtrooms

24. Currently the TCC is 100% paper court. The TCC does not have the technology and resources available to digitize the Court and conduct electronic hearings. The TCC cannot allow the parties to a hearing to pay the cost of conducting electronic hearings because that would result in a two tier system which would not be fair to all taxpayers and raises issues about ownership of the record. Therefore, electronic trials will not take place until funding is provided by government to digitize all TCC records.
25. CAS is still moving forward with its pilot project for electronic courtrooms and trials in a few courtrooms across Canada.
26. The CJ advised that there are only 4 or 5 judges of the TCC who could currently conduct an electronic trial.

Inventory

27. The CJ advised that the inventory of appeals are and will be increasing. Group appeals can drive the inventory up significantly. Informal appeals have significantly increased and the TCC is now scheduling the appeals a year in advance of the hearings. This is creating a problem as the Federal Court is scheduling its hearings only six months in advance which is causing a conflict for courtroom access with the scheduling of the TCC.
28. The CJ advised that there are not enough TCC judges  to handle the TCC inventory on a timely basis. The TCC needs more resources for case management and settlement conferences. The TCC has requested two prothonotary positions and three additional judges positions.

III. Courts administration service

A. Update From CAS

29. CC advised that funding of $47 million has been approved over five years for Program Integrity.
30. CC advised that 29 new positions were approved for TCC.
31. CAS has concerns with respect to the lack of funding for translation of decisions of TCC and the other courts it serves. CAS requested funding of $50 million, but only received $2 million, which is inadequate to carry out the translation services required. CAS contracted some translation services out to private companies, however, due to many errors, the translation of decisions will be carried out by the Translation Bureau only. Therefore, the Translation Bureau will require additional translators.
32. CC advised that the shortage of funding is resulting in translations taking far too long.
33. CC explained that jurilinguists have legal backgrounds and review the translations to ensure they are accurate from a legal perspective.
34. The CJ advised that CAS has five jurilinguists at the TCC now who are specialized in tax issues and there are not enough jurilinguists available at this time.
35. The CJ is concerned with the delays in translation. Some decisions must be translated simultaneously with the release of the decision in the original language, for example decisions of national importance, while other cases are translated as staffing allows. Parties are suffering as the release of decisions may be delayed for months while waiting to be translated.
36. CAS requires a new court and registry management system. A product in use at the Alberta Court of Appeal may be suitable.
37. CC advised that CAS has filed a business case to build a new building in Montreal on land that has been purchased.
38. In Toronto the TCC may need two additional floors to handle the ever increasing volume of appeals.
39. The court in Hamilton is up and running. Due to the increase of appeals in Hamilton a bigger permanent facility may be necessary.
40. Additional space may also be required in Ottawa.
41. CAS has been busy revamping the websites of all the courts, including TCC, and hopes they will be completed by March 31, 2019.

IV. TCC rules committee

A. Update from Rules Committee

42. The CJ advised that the General Procedure Rules have been consolidated and revised and are currently with the DOJ for its review. When DOJ completes its review the new draft will be sent back to TCC. The CJ expects it will take at least six more months before the Rules are completed.
43. The amendments to and consolidation of the Informal Procedure Rules are following the same process as the General Procedure.
44. The CJ advised that the TCC is going to review the group appeal rule.
45. The CJ commented that the awarding of costs against the unsuccessful party is an ineffective tool due to the relative insignificance of the costs awarded. He suggested that perhaps costs could be awarded to a third party (including the court) in some circumstances such as where the parties have agreed not to seek costs from each other.
46. The CJ commented that a new tariff for costs should be considered and the judge hearing the appeal could decide into which classification the appeal fits.
47. Also, there may be regional considerations which may affect the award of costs which would allow the judge to deviate from the tariff. For example, hourly rates of lawyers are very different in different locations across Canada. Lawyers for the crown are currently limited by the Treasury Board to a set hourly rate for purposes of costs which may not be fair to the crown.
48. AKB mentioned the practice in other courts where parties file their bills of costs at the beginning of the trial in a sealed envelope which helps prevent posturing by parties when the trial is over.
49. The CJ advised that judges of TCC will be canvassed with respect to any amendments they feel are necessary to the TCC Act, the Rules or the Income Tax Act.
50. The Rules Committee is scheduled to meet in January or February, 2019.

V. Issues raised by justice Canada

A. Adjustment by court of timeline agreed upon by counsel

51. DB wanted to know what factors may influence the court to change the timelines agreed upon by the parties.
52. The CJ advised that agreed upon timelines may not be accepted by the court when the timelines are not reasonable. Usually, the timelines agreed upon by the parties are accepted by the court. If the parties require more time they should provide the court with reasons and the more information provided to the court to support their request the better. The TCC has an obligation to ensure files move along.

B. The necessity of a party to provide proof to the court to support a scheduling conflict by a member of a law society

53. DB inquired as to what proof is required by the court when members of the bar request a scheduling change or adjournment for reasons such as sickness, travel conflicts or scheduling conflicts in another court.
54. The CJ advised that the Hearings Coordinator has a checklist which may require the party or counsel seeking an adjournment for illness to provide proof in some circumstances such as a medical certificate. If the adjournment is requested for another reason, for instance, travel or scheduling conflicts, counsel may have to provide evidence proving the conflict. The TCC will not adjourn a hearing due to a conflict of a lawyer in another court if the TCC had booked the hearing date first.

C. Section 174 Applications  

55. DB advised that issues surrounding s. 174 Applications raise financial, budgetary and resource issues and DOJ requires more time to address this complex issue.
56. DOJ would like to provide a complete response to stakeholders.
57. DB agreed that DOJ would provide at least a partial response before the end of the year and hopefully a complete response before the Committee’s next meeting.

VI. Issues raised by CBA members

A. Requirement that discovery be written below prescribed threshold

• CBA members have expressed concern regarding the requirement that discoveries are to be by written interrogatories when the amount involved is below $50,000. The concern is that written interrogatories are often more arduous and time consuming that oral discoveries. As well, written interrogatories are often not as complete as an oral discovery.
• It was noted that the parties can agree to conduct an oral discovery or a party can bring a motion to the court if the circumstances warrant an oral discovery and the parties did not agree.

B. Process for claiming costs: requiring parties to provide bill of costs at start of hearing (at least large Class “C” cases)

60. The rationale for this proposal was addressed when the Committee discussed “costs” earlier in the meeting.
61. The Committee recommended that this issue be referred to the Rules Committee.

C. Possibility of limiting duration of examinations for discovery absent court order

62. This possibility has been raised by certain CBA members. The CJ stated that the proposal is not acceptable to the Court.

D. Rules 54-57: Rules do not require filing proof of service of amended pleading with the court

63. A CBA member raised the issue that when filing an amended pleading, the amending party is not required by the rules to file proof of service on other parties. The concern was that there may be a gap where a party files an amended pleading before the close of pleadings unbeknownst to the other party.
64. The Committee recommended referring this issue to the Rules Committee.

VII. Other business

A. s. 82 List of Documents

65. A CBA member raised concern about a party, and in particular the Crown, requesting a full disclosure List of Documents. There is concern that full disclosure lists can be a fishing expedition which creates more work and therefore more costs to the appellants which may dissuade a taxpayer from appealing or continuing the appeal.

B. Moving an appeal from Informal Procedure to General Procedure

66. A CBA member had expressed concern about abuse of the Crown’s ability to move an appeal from the Informal Procedure to the General Procedure.
67. The ACJ commented that should a party wish to move an appeal from the Informal Procedure to the General Procedure the party(s) will have to bring a motion and provide sufficient reasons why the appeal should be moved.

C. Mandatory Case Management and Settlement Conferences

68. The CJ commented that any party may request a settlement conference as long as there has been an exchange of offers and the parties appear in person. The court will not conduct settlement conferences by conference call. A request for a settlement conference may be refused by the court if the request is made too close to the hearing date as another available judge must be assigned to hear the settlement conference, which is not always possible.
69. The CJ also commented that the TCC welcomes case management and they are doing more every year.

VIII. Next meeting

70. The next meeting of the Tax Court Bench & Bar Committee will be held on June 18, 2019 in Charlottetown, Prince Edward Island.