BETWEEN:
GEOFFREY BELCHETZ
LINDA LECKIE MOREL
and
Heard at Toronto, Ontario, on May 11, 2006.
Judgment delivered from the Bench at Toronto, Ontario, on May 11, 2006.
REASONS FOR JUDGMENT OF THE COURT BY: SHARLOW J.A.
Docket: A-479-05
Citation: 2006 FCA 177
CORAM: LINDENJ.A.
NOËL J.A.
SHARLOW J.A.
BETWEEN:
ALLAN GARBER
GEOFFREY BELCHETZ
LINDA LECKIE MOREL
Appellants
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on May 11, 2006)
[1] This is an appeal of a judgment of Chief Justice Bowman of the Tax Court of Canada (2005 TCC 635) dismissing the motion of the appellants for an order striking out the reply filed by the Crown in the appellants' income tax appeals or, in the alternative, for an order allowing the appeals and vacating the reassessments.
[2] The motion was based on a number of allegations about the conduct of the Crown over a long period of time. There was considerable debate in the Tax Court and in this Court over whether certain decisions were made by the Minister or the Minister's officials, or by the Department of Justice or its lawyers. In our view, the correct disposition of this appeal does not turn on who made the relevant decisions.
[3] The appellants allege that in 1994 the Crown wrongfully repudiated an agreement by which all outstanding issues in the appellants' income tax appeals would have been settled. The appellants also allege that the repudiation of the settlement agreement, and the Crown's subsequent refusal to consider certain settlement proposals, were motivated by extraneous considerations, namely its desire not to compromise criminal proceedings against certain individuals (not the appellants) who were involved in the transactions that are the subject of the income tax appeals. The appellants say that they are entitled to the remedies sought because the Crown has abused the process of the Tax Court.
[4] The income tax appeals in issue in this case were commenced in the Tax Court in 1991. A settlement agreement was made and then quickly repudiated by the Crown in 1994. The appellants took no steps at that time to attempt to enforce the agreement, or to seek a remedy for what they now claim to be a wrongful repudiation of the settlement agreement. On the contrary, they apparently accepted the repudiation and continued with settlement discussions. Those discussions did not result in a settlement. The discussions were discontinued early in 2005.
[5] Meanwhile, examinations for discovery and other pre-trial matters have been pursued, to the point where the Crown now says it is ready for trial, subject to the appellants' compliance with certain undertakings. It appears that the appellants have not conducted examinations for discovery, although the Crown says that its nominee has been made available.
[6] Chief Justice Bowman dismissed the appellants' motion because he concluded that there is no provision in the Tax Court of Canada Rules (General Procedure), SOR/90-688, and no legal principle, that would require or permit him to strike out the Crown's reply or order that the reassessments in issue be vacated. He rejected the appellants' argument that there had been an abuse of the process of the Tax Court because the settlement negotiations were not part of the Court's process. This is well explained at paragraph 33 of his reasons:
[33] Where the settlement negotiations take place outside of the context of a pre-trial conference (as was the case here) there is no power that this Court has to enforce parties to act reasonably or to bargain in good faith. A party can approach the settlement negotiations in a contrary, perverse and downright cantankerous frame of mind or can refuse altogether to negotiate, and there is really nothing this Court can do about it, except, perhaps, after the case has been heard, to take into consideration in awarding costs under section 147 of the Rules an offer of settlement made by one of the parties.
[7] We are all of the view that Chief Justice Bowman made no error of law in dismissing the appellants' motion, for the reasons he gave.
[8] With respect to undue delay, we agree with Chief Justice Bowman that the parties are more or less equally to blame. We are not persuaded that the delays attributable to the Crown warrant the remedies sought by the appellants.
[9] While these conclusions are sufficient to dispose of this appeal, we would add a further comment relating to the appellants' submissions about the scope of the Minister's discretion relating to the administration of the Income Tax Act.
[10] The record discloses that the Crown was motivated primarily by a concern that any settlement it reached with the appellants would have to be consistent with the factual allegations in the related criminal proceedings. We do not accept the argument of the appellants that this was an extraneous consideration. The criminal proceedings were related to the income tax appeals in this case, in the sense that they involved the same transactions. They also involved allegations that the accused individuals had defrauded all Canadian taxpayers. In our view, the Crown is entitled, when making a decision about the conduct of an income tax appeal in the Tax Court, to ensure that its position conforms to the Income Tax Act, and is consistent with the position taken by the Crown in related criminal proceedings. That is so whether the decision in question is made by the Minister or by the Department of Justice. We do not accept the argument of the appellants that the scope of the Minister's discretion is narrower than that in relation to a decision made under subsection 169(3) of the Income Tax Act.
[11] This appeal will be dismissed with costs.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-479-05
STYLE OF CAUSE: ALLAN GARBER
GEOFFREY D. BELCHETZ
LINDA LECKIE MOREL
Appellants
- and -
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR JUDGMENT
OF THE COURT BY: LINDEN, NOËL & SHARLOW JJ.A.
DELIVERED FROM THE BENCH BY: SHARLOW J.A.
APPEARANCES:
| FOR THE APPELLANTS
|
|
|
Rosemary Fincham |
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Toronto, Ontario |
FOR THE APPELLANTS
|
|
Deputy Attorney General of Canada |
FOR THE RESPONDENT |