May 30 2013 Toronto

Present

Tax Court of Canada (TCC)

• The Honourable Gerald J. Rip Chief Justice ("CJ")
• The Honourable Eugene Rossiter Associate Chief Justice ("ACJ")

Courts Administration Service (“CAS”)

• Daniel Gosselin Chief Administrator, Courts Administration Service (CAS)
• Cristina Damiani Executive Director and General Counsel
• Marie-Eve Aubry Registrar
• Geneviève Salvas Legal Counsel

Department of Justice (Canada) ("DOJ")

• Micheline Van-Erum ("MVE") Assistant Deputy Attorney General
• Sandra Phillips ("SP") Associate Assistant Deputy Attorney General

Canadian Bar Association (CBA)

• Guy Du Pont, Ad.E. (“GDP”) Davies Ward Phillips & Vineberg LLP
• Carman R. McNary (“CRM”) Dentons Canada LLP
• David D. Robertson, Esq. (“DDR”) Couzin Taylor LLP
• David E. Spiro (“DES”) Dentons LLP
• Max Weder, Esq. (“MW”) Davis LLP
• Tamra L.Thomson CBA

The meeting commenced at 9:00 a.m. The CJ welcomed the attendees. DAW was welcomed to the Committee. Outgoing David Spiro was thanked for his faithful and devoted service to the Committee.

I. What’s new at the TCC

A. Minutes approved

1. The minutes of the 2 May 2012 meeting of the Bench and Bar Committee (“B&B”) were approved.

B. Appointments and vacancies

2. One vacancy to replace Webb J., now Webb JA. No indication as to when next appointment will be made. There are pending retirements (two or three likely before year end).

C. Statistics and trends

3. The ACJ reported:
   1. (a)2012 saw 18.4% increase in appeals overall. There has been a significant increase in income tax and GST appeals – 27.4% Income Tax Informal, 19.2% Income Tax General, 9.6% GST Appeals. There has been a significant decrease in OAS, CPP/EI (upwards of 60% decrease) and a significant increase in applications for extensions of time;
   2. (b)historically, the TCC maintains an annual inventory of 4,000 matters. In the current year, the TCC has seen an increase of 900 additional cases in its inventory, including applications;
   3. (c)in terms of settlements, current rate is 49.5% of cases (and where settlement conferences are held, settlement occurs in more than 55%). It was also noted by the TCC that there is no longer any issue with delays in reserved judgments being issued; and
   4. (d)it was noted by a representative of the CBA that CRA has, purposively or not, taken a harder line on applications for extension of time to file objections.

 

4. The CJ reported that:
   1. (a)there are scheduling issues in Montréal with hearing dates being set one to two years out. It is believed this problem is arising because of a reluctance to use settlement conference procedures and in particular on the part of the Agence du revenu du Québec (“ArQ”). This issue has been raised with the ArQ and at the CBA in Montréal; and
   2. (b)to address this issue, if an appeal involves both GST and QST, the TCC will no longer hold the GST appeal in abeyance pending a decision on the QST appeal by the Cour du Québec (“CQ”). If the GST appeal can be heard by the TCC before the QST case in the CQ, the TCC policy is now to set the GST matter down regardless.

D. Pro bono project

5. DES reported:
   1. (a)the 2011/12 pilot project was largely successful and has been continued in 2012/13. It started in Toronto and in 2012-13, expanded to Montréal (6 students in each city and 9 appeals in total.) It appears that students, judges and taxpayers were all pleased with the program;
   2. (b)Pro Bono Students Canada has limited resources but having said that, there is a PSBC chapter at Dalhousie and there is hope to add a program with McInnes Cooper in Halifax;
   3. (c)with respect to this program, the CJ requested that the TCC be provided six to seven months notice in order to deal with scheduling of the appeals;
   4. (d)one challenge is always timing because the goal is to provide pleadings to students prior to the Christmas break;
   5. (e)the preliminary selection for eligible cases is currently done by Denton Canada LLP. The proposed list is then sent to Pro Bono Students Canada who approaches the taxpayers. The first six to reply positively are accepted into the program;
   6. (f)there is also interest from the University of Ottawa (Civil Law) to become involved. DES noted that Pro Bono Students Canada may not have sufficient resources to provide additional support; and
   7. (g)currently, the students do not get any credit, but do receive excellent experience.

 

6. In Western Canada, the Bar noted that University of Alberta and Community Legal Clinic have programs but nothing specific for tax. There appeared to be interest in Calgary, but nothing appears to have germinated as of yet. Student legal services in Edmonton operates on a different model whereby they get involved early on before the notice of appeal.

E. Access to justice subcommittee

7. DES reported that after discussions with Campbell Miller J. and representatives from the committee, Justin Kutyan (KPMG Law) and Matt Cohen (Pro Bono Law Ontario) have taken the lead in creating a Pro Bono Amicus Duty Counsel Pilot Program. The program must still be reviewed with the DoJ and a meeting has been scheduled. The current plan is to undertake a pilot project in Toronto.

8. The issue was raised as to whether the duty counsel would be amicus (no solicitor-client privilege) or counsel for the appellants. This will be reviewed.

9. There was further discussion about access to the program.

F. Common book of authorities – (see appendices 1 and 2)

10. The DoJ reported that it had been working cooperatively with the Bar to develop a common list of authorities for cases that counsel would not be required to reproduce in books of authorities. The intent is that once the list has been agreed, the TCC will issue a practice note. The TCC indicated that it will review the list and report back at the next meeting.

G. Social security tribunal (“sst”)

11. The TCC reported its understanding that the SST has been delayed one year, although legislation to transfer jurisdiction over CPP/EI and OAS to SST has not yet been introduced.

H. TCC website

12. The Bar noted that the TCC’s website hearing schedule does not indicate what type of hearing has been scheduled, and that it would be beneficial to have key documents posted to the website, and one indicia the TCC could use would be to post any documents where counsel have contacted the court to request copies.

13. The TCC noted, however, that the TCC’s current website system does not have the capacity to link scanned documents on the website.

I. TCC rules committee

14. With respect to all proposed changes to the Rules, the TCC reported that all new rules have been published in the Canada Gazette and that they are in the Minister’s office waiting his signature.

J. Department of finance proposal to improve tcc caseload – (bill c-60)

15. It is anticipated that the Bill will be passed by the House prior to the summer recess.

II. .Report from the CAS

16. Ms. Brazeau has been appointed as chair of the new Social Security Tribunal. As a consequence, CAS is looking for a new Deputy Chief Administrator, Judicial and Registry Services. It is anticipated that the appointment will be made before September 2013.

17. New equipment for digital audio recording is being rolled out across the country. This includes video conferencing technology.

18. A threat and risk assessment is being completed in respect of security and survey is being conducted. As well, a benchmarking with other jurisdictions and the provincial courts with a report is expected for the end of June.

19. The Supreme Court of Canada rehabilitation project is being pursued but funding has not been secured yet. The other project is the relocation of the Montréal Office. The present lease has been renewed until 2019 but after that, the CAS is looking for a new location for CAS and the four courts in Montréal.

20. The CAS sought an increase in budget over the next five years of $11-12M/year for IT infrastructure, security, accommodation, etc., but funding was not included in the last federal budget.

III. Issues raised by email survey

A. Residence of judges

21. The TCC noted nothing further to report following decision of the Judicial Council.

B. Mediation

22. The TCC reported that a subcommittee of the Rules Committee has discussed mediation in tax appeals. It was also noted that the CRA has a mediation program and that the TCC’s settlement conference procedures also provided a form of mediation.

23. DDR noted an item in the previous meeting minutes about mediation that was tabled with a possibility of heading to the Rules Committee. There is a keen interest in using mediation wherever possible and an interest in participating in any discussion about mediation in the TCC.

24. DDR worked on a project with senior counsel at the DoJ to find a meaningful space for mediation. Perhaps enough time has passed for thinking to have changed.

Discussion: The DoJ confirmed that mediation was something it has reviewed in the past. Discussion ensued noting that as long as the CRA must settle on a principled basis, a mediated resolution would be a challenge. The TCC also noted that more than 50% of TCC matters in which a settlement conference is held are settled.

C. Saving Paper (see item I(e) above)

DISCUSSION: List of cases submitted by MW from other counsel including for example: Hickman Motors, Johnson, Canada Trustco, Lipson, Anchor Pointe, Loewen, Imperial Tobacco, Main Rehabilitation, etc.. The DoJ will review and consider for inclusion.

D. Practice note 17 regarding offers to settle - letter received from beaty f. Beaubier of stevenson hood thornton beaubier llp, saskatoon

1. Informal procedure hearings

The practice we have seen is that the Tax Court will schedule the hearing of an Informal Procedure case without providing prior notification to legal counsel to first determine a mutually-convenient date (having regard, for example, to time commitments of legal counsel, their clients and witnesses). We have been required on more than one occasion, after having received notice of a trial date from the Tax Court to request that the Tax Court cancel the peremptorily scheduled trial date and reschedule the same. While oftentimes Informal Procedure cases are not all that long and do not require very many witnesses, the same cannot be said for GST appeals which can on occasion give rise to the need for expert witnesses and multi-day trials.

Our recommendation to the Tax Court is that before setting a trial date in an Informal Procedure hearing, particularly where the taxpayer is represented by legal counsel, the Tax Court first contact the parties and/or their legal counsel and invite submissions regarding trial dates.

Discussion: This would require additional resources from the TCC which are currently not available. In addition, the TCC practice must be uniform for both represented and unrepresented litigants. Current resources do not permit this approach.

2. Settlement Conferences

We note that the Tax Court generally will not schedule a settlement conference unless the length of trial is expected to exceed two days. We have had a number of situations where the length of trial is scheduled for two days, thereby falling under the threshold of a mandatory settlement conference. We recommend that the Tax Court revisit its practice and schedule pre-hearing conferences on any trial which is otherwise scheduled for more than one day.

The TCC requires its judges to travel across the country. A considerable amount of time and expense is expended in order to fly a judge and transport the Court files to the city in which the hearing is scheduled to take place. From a cost-benefit perspective, if a pre-hearing settlement conference was held, it may well lead to settlements or reduce the number of issues that need to be heard at the time of trial, thereby freeing up Court time and reducing related expenses for the TCC.

Discussion: The TCC responded to this question by noting that the two-day requirement was merely a rule of thumb, not something cast in stone. The TCC noted that where requested, each case is reviewed to determine if a settlement conference is worthwhile. However, one of the criteria for which the TCC looks is that the parties have attempted to settle the case on their own.

3. Additional sitting dates

One last item that we would bring to the attention of the TCC is that in some parts of the country (such as Saskatchewan), it appears to be getting more difficult to arrange for TCC hearings. While this may not be the case in major centers such as Vancouver, Calgary, Toronto and Montreal, we have noticed in our province there appear to be fewer weeks set by the TCC for trial dates. It would be most appreciated if either additional weeks were set aside for hearings or perhaps (as noted above) more resources were made available for preconference hearings which may in turn reduce the need (at least in some cases) for trials.

Discussion: The TCC noted that it has increased the number of sitting weeks per year per judge from 22 to 25 weeks per year. However, sitting days in locations are based on inventory in the various locations across the country.

E. From david m. Sherman

I have an issue with the new amendments introducing a $50,000 threshold for GST Informal Procedure appeals. I pointed this out in an email to Finance and Justice when the proposed amendments were first announced, but nothing was changed.

The amendments will require the General Procedure for a GST/HST appeal when the "amount in dispute" exceeds $50,000. See proposed TCCA para. 18.3001(c) in Bill C-60, the Budget bill now before Parliament.

However, it's unclear what this means. On its face and as defined, it means the total amount under appeal in the entire appeal. However, based on the case law awarding costs in the Informal Procedure when the "amount in dispute" did not exceed $7,000, "amount in dispute" could apply to each YEAR under appeal, so that an appeal of 4 years of assessment, with say $40,000 at stake for each year, could be under the Informal Procedure. (I suppose the theory is that each year could have been appealed separately, though whether that is true depends on how the CRA worded its Notice(s) of Assessment.) See Quesnel & District Minor Hockey Assn. v. Canada, [1997] G.S.T.C. 41 (TCC), though there is also case law that seems to go the other way: see section M(iii) of my Canada GST Service commentary to ETA section 306, also on Taxnet Pro and GST Partner.

Does resolution of this question have to wait for a case to bring it up and argue it, or can the Bench & Bar Committee discuss and resolve how the Informal Procedure threshold should be administered, and perhaps a Practice Note be issued? The practical problem with awaiting a case is that representatives in the Informal Procedure, by the nature of that Procedure, tend not to be lawyers who are able to argue this issue properly. (Of course, any Practice Note could presumably be overruled by an appeal to the FCA on the meaning of "amount in dispute".)

My personal preference is that "amount in dispute" apply to each year under appeal, but my main interest is in creating certainty as to how the appeal process applies in these situations. (I have no current involvement in any file where this issue will be relevant.)

Discussion: See the Federal Court of Appeal’s decision in Canada v. Triple G Corp., 2005 FCA 192 (“Triple G”).

F. From Daniel Sandler - TCC motion decisions

I would appreciate it if you could bring to the attention of the Bar & Bench Committee a change in Tax Court policy regarding publishing reasons for judgment on motions. I was advised at the start of the recent motion for increased costs that the Tax Court judges have been advised that reasons for judgment on motions will no longer be published by the Tax Court as a matter of course.

It may be that at least reasons for judgment in selected motion cases will continue to be published (I noticed that the reasons for judgment in my particular case have been posted on the Tax Court website).

I think that the publication of reasons for judgment in motions should be a topic for discussion in the upcoming Bar & Bench Committee meeting so that the practice can be made aware of the current practice of the Court and discuss in general the publication of reasons in motions.”

Discussion: The challenge from the TCC’s perspective is that everything published by it must be translated. The TCC’s current practice is that if a decision is believed to be significant, the judge is to refer it to the CJ, who then makes a determination as to whether the decision is of sufficient significance and if so, the judgment is published.

G. Communications between the court and counsel
from max weder as presented by vancouver bar members

A Practice Direction would be helpful to clarify that all written communications among counsel and the Court & Registry should be copied to all other counsel. We have noticed an increasing trend of counsel not being copied in communications to the Court. There have also been a few instances where the Registry has communicated in writing to one party without copying the other.

Discussion: The Registry staff have been instructed by the TCC to copy opposing counsel on communications received from opposing counsel.

A Practice Direction or Notice to the Profession would also be helpful to clarify when electronic mail communications will be made by the Court. At this point, there does not appear to be any consistency as to when communications are sent by email or mail. Also, is there a way in which counsel can elect to receive all communications by email?

Discussion:

H. Scheduling trials, settlement conferences and status hearings

Because the Registry operates on Eastern Standard Time, and because there is only one Hearings Coordinator per region, it would assist the parties if the Court were to post on their website available sittings in the major cities once a week.

See the practice of the BC Courts

See the practice of the FCA

Discussion: Sitting dates are published in advance on the TCC website.

I. Timetable orders

Standard timeframe of 30-60-30-30 days is not sufficient in General Procedure appeals, particularly because of DOJ staff shortages; recommend standard 60-90-60-60 days

Discussion: The TCC will generally rely upon the dates proposed by the parties. SP and MW agreed to review issues relating to timetable orders and report back to the Committee.

25. If the TCC is inclined to award costs against a party following the submission of a request to amend a timetable Order on account of delay, that party should first be provided with the opportunity to provide submissions as to the reasons for the delay. In many cases, there is a valid explanation for the delay.

Discussion: The CJ noted that the TCC generally asks why the amendment is being requested. However, the earlier the request is made, the less likely costs will be awarded.

J. Service of notices of appeal

26. The present timeframe is about 2 to 3 weeks for an appeal filed locally in the Vancouver Registry. Is there a way to speed up this process? Will filing Notices of Appeal electronically allow for a faster service period?
27. DoJ is routinely requesting extensions with regard to the filing of the Reply, therefore it is important it be served promptly.

Discussion: The certificate of service takes time to produce and process and due to staffing resources with CAS. The CAS will review its process.

K. Notices of motion

28. The timeframes of 7 days and 2 days are not adequate. The TCC Rules permit “as of right” cross-examinations on affidavits, so further warning is necessary
    1. Recommendation 10 business days; 4 business days
29. The Responding party’s position on motion: recommend that the responding party be required to file an “Application Response” (see BC Court Rule 8-1(9) and Form 33)
    1. avoids confusion over materials relied upon;
    2. prevents motion by ambush; prepares the Judge for the motion;
    3. Clear what aspects of motion are consented to
30. Consider amending the Tariff for motions: distinguish between ½ day and full day and opposed or not opposed; consider a scale based on the complexity of the motion (e.g., a Rule 58 motion is far more complex than a motion to compel answers on XFD)

Discussion: The has been dealt with new amendments to Rules 67, 68, and 104, and will be in the new set of rules.

IV. Matters of concern to the DOJ

1. (a)E-service – Update

 

31. The DoJ advised of their upcoming Electronic service pilot project. As this is not currently provided for in the Rules, it would require a Direction from the TCC. The DoJ reported pilot project would likely take place in fall 2013 in Ottawa and Toronto and only with a select number of cases.

DISCUSSION: The DoJ advised of its upcoming Electronic service pilot project. As e-service is not currently provided for in the Rules, a Direction from the TCC would be necessary to allow the pilot to proceed. The TCC indicated that it would be amenable to issuing such a Directive and asked that a draft be provided to the TCC.

V. Next meeting

32. The meeting was adjourned at 12:00 p.m. the next meeting will be held on Sunday morning (November 24^th) in Toronto, at the Canadian Tax Foundation Annual Conference.

Appendix 1