Date: 20011120
Docket: 1999-1746-IT-G
BETWEEN:
HELGA ZELINSKI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Order
Bowie J.
[1] There are two motions before me. One is brought by the Respondent for an Order striking out numerous paragraphs of the Amended Notice of Appeal. The other is brought by the Appellant for an Order permitting her to further amend the Notice of Appeal to add several more paragraphs.
[2] The Appellant was assessed under section 160 of the Income Tax Act (the Act). The Minister of National Revenue (the Minister) takes the position that one Herman Gebele (Herman), to whom the Appellant was married at one time, transferred real property to her for no, or inadequate, consideration, at a time when he was indebted to the Crown for unpaid income tax, and that Herman and the Appellant were not acting at arm's length at the time. The amount assessed is $306,636.38. This appeal is from that assessment. A number of objections to the assessment were raised initially. With the consent of the Respondent an amended Notice of Appeal was filed. The Respondent's consent, it appears, was not to a specific proposed amended pleading. Confronted with the Amended Notice of Appeal, the Respondent now moves to strike out paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 24, 25, 27, 28 and 34, on the basis that they are frivolous, vexatious, and an abuse, and are likely to prejudice or delay the fair hearing of the appeal. Although the motion is framed in the language of Rule 58 of the Tax Court of Canada Rules (General Procedure) (the Rules), the real objection to these paragraphs is that they do not plead material facts.
[3] The Respondent having moved against the Amended Notice of Appeal, the Appellant now moves to add some 10 additional paragraphs or subparagraphs, falling into two categories. One group is intended to raise for the first time objections to the assessment based on sections 7 and 8 of the Canadian Charter of Rights and Freedoms (the Charter). The second seeks to invoke the Principles of the Nuremberg Tribunal, 1950 (the Nuremberg Principles) and the Charter of the United Nations (the U.N. Charter). These further amendments are opposed by the Respondent, with the exception of a minor amendment to the prayer for relief.
[4] The purpose of pleadings is to define the issues in dispute between the parties for the purposes of production, discovery and trial. What is required of a party pleading is to set forth a concise statement of the material facts upon which she relies. Material facts are those facts which, if established at the trial, will tend to show that the party pleading is entitled to the relief sought. Amendments to pleadings should generally be permitted, so long as that can be done without causing prejudice to the opposing party that cannot be compensated by an award of costs or other terms, as the purpose of the Rules is to ensure, so far as possible, a fair trial of the real issues in dispute between the parties.
[5] The applicable principle is stated in Holmsted and Watson:[1]
This is the rule of pleading: all of the other pleading rules are essentially corollaries or qualifications to this basic rule that the pleader must state the material facts relied upon for his or her claim or defence. The rule involves four separate elements: (1) every pleading must state facts, not mere conclusions of law; (2) it must state material facts and not include facts which are immaterial; (3) it must state facts and not the evidence by which they are to be proved; (4) it must state facts concisely in a summary form.
Applying these principles, I approach both motions on the basis that the test to be applied is whether the paragraphs in dispute, and those that the Appellant proposes to add, are proper pleadings of material facts. The Appellant's motion seeks to add two issues to those now pleaded. She should be permitted to do so, unless it is plain and obvious that they are so ill-founded in law that they could not succeed at trial, even if the facts upon which they depend were established to be true.
[6] The following facts are material to an appeal from an assessment under section 160:
i) whether there was a transfer of property to the Appellant;
ii) whether the Appellant gave consideration for the transfer, and if so the value of that consideration;
iii) the fair market value of the property at the time of the transfer;
iv) whether the transferor and the Appellant were acting at arms' length at the time of the transfer;
v) whether the transferor was indebted to the Crown for unpaid tax at the time of that transfer, and if so, the amount of that indebtedness at the time of the transfer; and;
vi) whether the assessment or assessments giving rise to that indebtedness are well founded in fact and law.
[7] I shall not reproduce in full the paragraphs that the Respondent attacks. They may be conveniently dealt with in two groups. First, however, I note that counsel for the Appellant conceded during the hearing of the motion that paragraphs 18, 21, 24, 25, 27, 28 and 34 cannot be sustained. They will be struck out.
Paragraphs 9, 10, 11, 12, and 13.
[8] These contain allegations that Herman and a corporation called Herman's Auto Repair Service Centre Limited (Herman's Auto) filed certain income tax returns, that the Appellant believes them to have filed certain other income tax returns, and that certain assets of Herman's Auto were transferred to a bank in Bermuda. If these facts were established at trial, they could have no bearing on the validity of the assessment under appeal. Counsel for the Appellant suggested that paragraphs 12 and 13 would be relevant to whether certain assessments against Herman had been made after the time limited by the Act. This submission was based upon an improper understanding of the provisions of the Act dealing with the Minister's obligation to assess. All the contents of these paragraphs are immaterial to the issues. They will be struck out.
Paragraphs 15, 16, 17, 19 and 20
[9] These paragraphs allege certain conduct on the part of officers of the Respondent in connection with the investigation that gave rise to the assessment under appeal. Paragraph 19 also makes reference to an operations manual, which, it is alleged, these officers failed to comply with in their investigation. Paragraph 20 alleges that certain parts of that manual "¼ are particularly relevant herein". The position advanced by counsel for the Appellant in argument is that the Appellant's right under section 8 of the Charter to be secure against unreasonable search and seizure was violated by the conduct of these officers. He relies on R. v. Dial Drug Stores Ltd.,[2] a decision dealing with evidence in the context of a criminal proceeding, for the proposition that the Appellant is entitled to have the assessment vacated by reason of the conduct of the officers.
[10] It is clear from such decisions as The Queen v. O'Neill Motors,[3] The Queen v. Norman Jurchison and Norway Insulation Inc.[4] and The Queen v. Norwood[5] that even if the Appellant were to establish a breach of section 8 of the Charter by the investigators, she would not be entitled to judgment vacating the assessment unless it were established that the Crown had no evidence other than that gathered in contravention of the Charter by which it could seek to uphold the assessment. The Amended Notice of Appeal contains no such plea; indeed, it does not even plead reliance on section 8 at all, a failing which counsel for the Appellant seeks to remedy by his motion to further amend the pleading.
[11] Nevertheless, the allegations pleaded in paragraphs 15, 16, 17 and 19 will be relevant to an objection to the admissibility of evidence which the Appellant intends to make at the trial. The merit of that objection will be a matter for the trial judge to deal with, if and when the evidence is tendered. In the meantime, however, I can see no reason why the Appellant should not be entitled to raise in her pleading the factual issue as to the manner in which evidence has been gathered by the officers of the Respondent, even though as presently pleaded it is material only to the issue of admissibility, and not to the substantive relief sought in the appeal. The issue will likely be a live one at the trial. Paragraphs 15, 16, 17 and 19 will therefore not be struck out. Paragraph 20, however, is immaterial, and will be struck out.
The Appellant's motion
[12] The paragraphs that the Appellant moves to add to the Amended Notice of Appeal fall into two categories. Proposed paragraphs 17A, 35(l) and 36A would invoke sections 1, 7, 8 and 24 of the Charter. Paragraphs 34A, 34B, 34C, 34D, 36B and 36C seek to rely on the Nuremberg Principles and the U.N. Charter. A further minor amendment to the relief sought is consented to by counsel for the Respondent.
The Charter of Rights and Freedoms
[13] I have already concluded above that the Appellant may plead allegations that her rights under the Charter were infringed in the course of the investigation, which gave rise to the assessment against her. It follows that she may specifically plead reliance on section 8 of the Charter. Reliance upon section 7 is, however, foreclosed by the decision of the Federal Court of Appeal in A. Tyler v. M.N.R.[6] The Court there made a distinction between the use of information in a tax audit and in a criminal investigation, for the purposes of section 7 of the Charter. At page 20, Stone J.A. said:
¼ in the context of the tax audit the deprivation [of rights] does not amount to a breach of the principles of fundamental justice. In the tax audit per se there is no suspect and no accused. The procedure is entirely administrative in nature.
[14] The Appellant may amend her Notice of Appeal to rely upon sections 8 and 24 of the Charter, on the basis of the facts already pleaded. This Court has no jurisdiction to grant the declaratory relief the Appellant proposes to seek, however.
The Nuremberg Principles and the U.N. Charter
[15] Proposed paragraphs 34A, 34B, 34C and 34D may be summarized as a plea that the Appellant is not bound to pay taxes (presumably including a derivative assessment under section 160 of the Act) because the Government of Canada will spend some of the money that it raises through taxation on weapons of mass destruction, contrary to the Nuremberg Principles and the U.N. Charter. The affidavit of the Appellant filed in support of her motion does not address any questions of conscience in this connection. Paragraphs 34A and 34B simply would plead that she does not choose to support the Government of Canada because it is "¼ involved in an agreement with other nations that involve the will and the capacity to murder hundreds of millions of defenceless human beings".
[16] These are essentially the same arguments that were before the Federal Court in Prior v. The Queen.[7] The Notice of Appeal was struck out in that case, on the basis that the Appellant could not possibly succeed at trial in an appeal which was based solely on the proposition that the Appellant was not obliged to pay taxes to the government that would be used for the purpose of acquiring weapons of war. Counsel for the Appellant sought to distinguish this case on the basis that the argument there was based on sections 2(a) and 15 of the Charter, and did not, as here, rely on the Nuremberg Principles and the U.N. Charter. Those two documents, however worthy, cannot weigh more heavily in the judicial scales than the Charter of Rights and Freedoms, which is, of course, an integral part of Canada's constitution. The essence of the decision in Prior was to the effect that section 2(a) of the Charter could not displace the taxing power in section 91(3) of the Constitution Act, 1867. It follows that the Appellant's argument based upon the Nuremberg Principles and the U.N. Charter could not possibly succeed. If these paragraphs had been pleaded in the original Notice of Appeal they would have been susceptible of being struck out. The Appellant is therefore not entitled to the proposed amendment.
[17] The Respondent has been substantially successful on both motions. Costs will be to the Respondent, in the cause.
Signed at Ottawa, Canada, this 20th day of November, 2001.
J.T.C.C.
E.A.Bowie
COURT FILE NO.: 1999-1746(IT)G
STYLE OF CAUSE: Helga Zelinski and Her Majesty the Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: November 7, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge E.A. Bowie
DATE OF JUDGMENT: November 20, 2001
APPEARANCES:
Counsel for the Appellant: George Gligoric
Counsel for the Respondent: David E. Spiro and Brianna Caryll
COUNSEL OF RECORD:
For the Appellant:
Name: George Gligoric
Firm: George Gligoric
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-1746(IT)G
BETWEEN:
HELGA ZELINSKI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion heard on November 7, 2001, at Toronto, Ontario, by
the Honourable Judge E.A. Bowie
Appearances
Counsel for the Appellant: George Gligoric
Counsel for the Respondent: David E. Spiro and Brianna Caryll
ORDER
UPON motion brought by counsel for the Respondent for an Order striking out paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 24, 25, 27, 28 and 34 of the Amended Notice of Appeal on the grounds that they are frivolous, vexatious, and an abuse, and are likely to prejudice or delay the fair hearing of the appeal; and
UPON motion brought by counsel for the Appellant for an Order permitting a further amendment of the Notice of Appeal; and
UPON reading the Amended Notice of Appeal and the Affidavit of Helga Zelinski, filed; and
UPON hearing counsel for the parties;
IT IS HEREBY ORDERED THAT:
1. Paragraphs 9, 10, 11, 12, 13, 14, 18, 20, 21, 24, 25, 27, 28 and 34 of the Amended Notice of Appeal are hereby struck out;
2. The Appellant shall have leave to further amend the Amended Notice of Appeal to plead and rely on section 8 of the Canadian Charter of Rights and Freedoms, and to add the words "or vacated" to subparagraph 38(a), such further amended Notice of Appeal to be filed and served by December 15, 2001;
3. The Respondent shall have 45 days following service of the Further Amended Notice of Appeal within which to deliver a Reply;
4. The Order of the Chief Judge dated July 6, 2001 is amended to provide that the parties shall file and serve lists of documents pursuant to Rule 82 (full disclosure) by February 28, 2002, examinations for discovery shall be completed by March 29, 2002, and undertakings shall be fulfilled by April 30, 2002. The final paragraph of that Order remains in force.
5. The Respondent is entitled to the costs of both motions, in the cause.
Signed at Ottawa, Ontario, on the 20th day of November, 2001.
|
"E.A. Bowie" |
J.T.C.C.