Date: 20010503
Docket: A-168-01
Neutral citation: 2001 FCA 138
BETWEEN:
MARGOT ERDMANN
Plaintiff
- and
HER MAJESTY THE QUEEN
Defendant
Docket: A-169-01
BETWEEN:
MARGOT ERDMANN
Plaintiff
- and
HER MAJESTY THE QUEEN
Defendant
Motion dealt with in writing without appearance of parties
ORDER delivered at Ottawa, Ontario, May 3, 2001
REASONS FOR ORDER BY: SHARLOW J.A.
Date: 20010503
Docket: A-168-01
Neutral citation: 2001 FCA 138
PRESENT: SHARLOW J.A.
BETWEEN:
MARGOT ERDMANN
Plaintiff
- and
HER MAJESTY THE QUEEN
Defendant
Docket: A-169-01
BETWEEN:
MARGOT ERDMANN
Plaintiff
- and
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER
SHARLOW J.A.
In 1999, the applicant Margot Erdmann was assessed under section 160 of the Income Tax Act and under section 325 of the Excise Tax Act. The assessments were based on the allegation that on April 21, 1998 Mr. John Swift, who then had tax debts outstanding under both statutes, transferred certain property to Ms. Erdmann, then his spouse, for less than fair market value consideration. Ms. Erdmann appealed both assessments to the Tax Court of Canada. On January 8, 2001, the two appeals were heard jointly and on common evidence under the informal procedure rules of the Tax Court, with Mr. Swift representing Ms. Erdmann.
It appears that the only issue raised in the Tax Court was whether the Crown had correctly determined the fair market value of the transferred property. No challenge was made to the validity or correctness of the underlying tax debts of Mr. Swift, although such a challenge could have been made: Gaucher v. Canada, [2000] F.C.J. No. 1869 (QL), 2000 D.T.C. 6678 (F.C.A.).
In judgments dated January 30, 2001, a judge of the Tax Court of Canada dismissed both of Ms. Erdmann's appeals. On March 5, 2001, Ms. Erdmann commenced these proceedings, which are applications for judicial review of the two Tax Court judgments.
I note parenthetically that the tax assessments made against Mr. Swift were the subject of separate appeals in the Tax Court, but Mr. Swift was declared bankrupt and his trustee in bankruptcy discontinued the Tax Court appeals. Mr. Swift apparently has appealed to this Court to challenge the discontinuance. Those appeals are scheduled to be heard in June 2001.
Before me is a motion by Mr. Swift under Rule 114 of the Federal Court Rules, 1998 to be made a party to both applications, and to be appointed as the representative for both parties. The Crown opposes both motions.
Rule 114 relates to class or representative proceedings. Mr. Swift asserts an interest in these proceedings because, he says, he will have a legal or moral obligation to reimburse her if these applications for judicial review do not succeed.
In my view, Mr. Swift's reliance on Rule 114 is misplaced. These applications for judicial review are not appropriate for class or representative proceedings.
I have considered whether Mr. Swift could have been named as a party to these proceedings on the basis of Rule 303. I have concluded that he is not a proper party to these applications merely because his tax debts form the basis of the assessments against Ms. Erdmann. In this regard, I note that he had the opportunity to challenge the validity and correctness of the assessments originally made against him. He took that opportunity and is still pursuing his challenge through proceedings in this Court, although the proceedings have taken an unusual turn because of the intervention of his trustee in bankruptcy.
I note also that, to the extent that the tax debts of Mr. Swift are reduced or discharged as the result of the proceedings taken in this Court by Mr. Swift, the liability of Ms. Erdmann will be similarly discharged or reduced. That is so regardless of the judgment of the Tax Court in her appeals or the outcome of these applications for judicial review, because her liability is vicarious only. Any reduction in the underlying tax debts must, as a matter of law, reduce her liability accordingly.
I have also considered whether this is an appropriate case to grant Mr. Swift leave to represent Ms. Erdmann even though he is not a lawyer. According to Rule 119, an individual may act in person or be represented by a lawyer. There is no specific provision that permits a non-lawyer to represent a litigant who is an individual.
An argument might be made that the Court has the inherent jurisdiction to permit representation by a non-lawyer if the interests of justice so require. Assuming, without deciding, that I have the requisite jurisdiction, I would not be inclined to exercise it in this case to permit Ms. Erdmann to be represented by Mr. Swift.
The material filed to date indicates that Mr. Swift knows the relevant facts of this case but I must say with some regret that he does not appreciate the nature of judicial review, nor does he understand the procedures that ought to be followed. For example, it appears that he is of the incorrect view that these proceedings represent an opportunity to litigate anew the merits of Ms. Erdmann's appeals. In these circumstances, the participation of Mr. Swift as a representative of Ms. Erdmann probably would not assist the Court in dealing with the issues raised in her applications. Ms. Erdmann must either take over the proceedings herself, or retain counsel (who may be appointed as her solicitor of record upon compliance with Rule 124).
The dismissal of this motion is without prejudice to the right of Ms. Erdmann to request at the hearing of these applications that Mr. Swift be permitted to speak on her behalf, assuming she is not then represented by counsel.
Karen R. Sharlow
J.A.