Date: 19991022
Docket: 97-3805-IT-G
BETWEEN:
PATRICK VILLENEUVE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Order
Bonner, J.T.C.C.
[1] This is an application by the Respondent for leave to amend the Reply to the Amended Notice of Appeal herein.
[2] The appeal is from assessments which rest on calculations of income made by the net worth method. The Respondent seeks to amend the existing Reply by adding paragraph 15.1 which reads as follows:
15.1 He further states that the Appellant operated a business of importing alcohol illegally into Canada and selling illegally imported alcohol and he states that he failed to report his income from the said business during the period in issue.
[3] The general rule with respect to amendments is stated by the Federal Court of Appeal in The Queen v. Canderel Limited, 93 DTC 5357 at page 5360 as follows:
... the general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice.
[4] In the Affidavit of William Ott, filed in support of the application to amend, the deponent asserts that on August 27, 1998 the Appellant was convicted of conspiracy to smuggle liquor into Canada and the unlawful possession of $25,000.00 in currency, obtained or derived directly or indirectly as a result of the commission of an offence. The deponent states that it is the Respondent's position that illegal activities pursued by the Appellant and the subsequent convictions and forfeiture are relevant to the issue in the appeal, namely, whether the Appellant understated his income for the years in question.
[5] I read paragraph 15.1 as an allegation of material fact, at least in a case such as this where the Respondent takes the position that the Appellant did not, in his returns of income, disclose his income from all sources. The question whether smuggling constituted a source of income to the Appellant during the period in issue is, in my view, is one which is clearly relevant to the determination of the question in issue in the appeal.
[6] The Respondent does not seek to vary the assessments of tax under appeal. He does not seek to increase the assessments. He simply seeks to defend the assessments by pleading a material fact which, if established, would tend to demonstrate that the assessments are well founded. The amendment is therefore, in my view, required to determine the real question in controversy.
[7] An order will therefore issue permitting the amendment requested. Costs of this motion will be in the cause.
Signed at Ottawa, Canada, this 22nd day of October 1999.
"Michael J. Bonner"
J.T.C.C.