Date: 20010228
Docket: 2000-1798-IT-I
BETWEEN:
ELWIRA SOKOLOWSKA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for order
Hershfield, J.T.C.C.
[1] A Notice of Appeal was filed on April 28, 2000 by Elwira Sokolowska in respect of Notices of Reassessment for the years 1995 through 1999 inclusive. That timely Notices of Objection and Appeals have been filed has not been disputed (except the 1999 taxation year which I will deal with shortly) but no Reply to the Notice of Appeal has been filed in respect of such Appeals. Instead, a letter was delivered by the Respondent's counsel to the Court and to the Appellant, late in the day, yesterday, being the day before this trial was scheduled to proceed (the February 19 letter). The February 19 letter is not a Reply. It states no facts, makes no denials and makes no assumptions. It is in the nature of argument except for an apparent concession to consent to an order allowing the deduction of 1989 allowable business investment losses "as claimed" in specific amounts for each of the 1996, 1997 and 1998 years. There is no indication in the Appeal, however, that this is the Order being sought by the Appellant in this matter. Indeed, it seems that the Appellant, in her Notice of Appeal, is claiming entitlement to larger allowable business investment losses than the specified amounts referred to in the February 19 letter. If that is the case, I see nothing wrong in that. There is authority permitting an Appellant to use the appeal process as a means to effecting an amendment to a return as filed. The Notice of Appeal asserts losses in 1995 totalling $268,896.65. That part of such loss ($109,744.87) relates to a 1989 transaction does not necessarily negate the assertion in the Appeal that 1995 was the correct year to recognize such loss. I understand that it is this loss, carried forward, that the Appeal seeks to have recognized in 1996, 1997 and 1998, and that this would give effect to an adjustment to the losses claimed in those years. The adjusted loss claim would then exceed the losses accepted in the February 19 letter. Further, it appears, by reference in the Notice of Appeal to a 1998 Adjustment Request and to Schedules to the Notice of Appeal, that a different division of losses for 1995 is being claimed as between the Appellant and a second taxpayer, not a party to this appeal, namely, her deceased father. This construction of the Notice of Appeal is confirmed by the February 19 letter which argues that any reallocation of losses between the Appellant and her late father is res judicata (an argument I will deal with shortly).[1] The Notice of Appeal also recites errors in calculating losses, most of which seem to predate 1995. Without a Reply, all such asserted facts are taken to be true and the onus of proof falls on the Respondent to disprove them.
[2] The Respondent has come to trial unprepared to proceed. It can present no witnesses or exhibits. There was no advance notice of the request for an adjournment and an extension of time to file a Reply. While an Order allowing the Appeal might well be justified in the circumstances, counsel for the Respondent has asked for an adjournment and extension of time to file a Reply to the Notice of Appeal. The request to file a late Reply was made pursuant to subsection 44(2) of the General Procedure Rules which ensures that the onus of proof in respect of the Appeal would remain on the Respondent. Preserving the shift in the onus of proof so that it falls on the Respondent both as to proving any assumptions it may make in its Reply and as to disproving the assertions in the Notice of Appeal is critical, in my view, to granting the adjournment and extension of time to file and serve a Reply. Otherwise, the Appellant is, in my view, materially and unjustly prejudiced by such Order. Counsel for the Respondent has given the Court his undertaking that the Respondent would not take a position at the trial of the Appeal that would have the effect of undermining this burden on the Respondent. This is a difficult undertaking to make but was made by Mr. Wheeler with a full understanding of its import. Given that the Notice of Appeal was seemingly prepared without the assistance of a lawyer and given language difficulties apparent from a reading of the Notice, the difficulty with the undertaking will be discerning the assertions in the Notice in respect of which the onus has shifted. There is a conflict here if the inclination of the Respondent is to take a narrow view as to the factual matters in respect of which it has the burden of proof. That the Appellant is without legal counsel will exacerbate this conflict. The performance of the undertaking then, to avoid prejudice to the Appellant, may require the Respondent, in accepting the burden of proof on particular points, to lean toward erring in favour of the Appellant. Mr. Wheeler acknowledged that the intent of the undertaking was to ensure that the Appellant was to suffer no prejudice as a result of my granting the Order requested, including no prejudice in respect of the benefit to be afforded the Appellant in respect of the shift in the onus of proof.
[3] That this is an informal proceeding should not, in my view, bar me from invoking subsection 44(2) of the General Procedure Rules. The matter should be heard on its merits and I am satisfied with Mr. Wheeler's undertakings that, if I grant the Order requested, the Minister will not take any position with respect to the Appeal inconsistent with the assurances given that the Appellant would suffer no prejudice as a result of my granting the Order including, specifically, no prejudice in respect of the benefit to be afforded the Appellant in respect of the shift in the onus of proof. Also included in such undertakings were the Respondent's specific undertaking not to withdraw the Respondent's consent, as set out in the February 19 letter, to an order allowing the deduction of 1989 allowable business investment losses as claimed by the Appellant for each of 1996, 1997 and 1998 (should the Appellant decide that such resolve of that issue is acceptable) and its undertaking to consent to pay costs to the Appellant for attending here today in the amount of $100.00. The Order requested is granted in light of these undertakings. Accordingly, this matter is adjourned until June 15, 2001, and the Respondent shall have 60 days from the date hereof to file and serve a Reply to the Notice of Appeal.
[4] For the record I note that the February 19 letter also asserts that the Appeal in respect of the 1999 year is premature and that the 1995 appeal is res judicata. The Appellant did not deny that the 1999 appeal was filed within 90 days of filing a timely Notice of Objection and was therefore premature. Accordingly the parties consented to an order that the Notice of Appeal be accepted as timely filed this 20th day of February 2001. With respect to the Appeal for 1995 being res judicata, I find no basis for such assertion. While I have adjourned the trial of this Appeal, I feel it necessary to comment on such argument as it relates to the undertaking given today upon which I have relied. The argument is that a decision of this Court as to the allocation or division of losses between the Appellant and her late father in respect of an earlier year prevents the Appellant from arguing a different allocation in 1995 where the losses arose allegedly from the same investments. I disagree. It is open for the Appellant, in respect of a different taxation year, to assert a different division of losses. This is a new appeal concerning a new year in respect of which the Respondent will now bear the full onus of proof. That was the premise on which the Order to adjourn was made. In the earlier decision of this Court, the onus of proving the loss allocation was on the Appellant.
[5] For the record, I note that the Appellant appeared today acting as a translator for her mother who was speaking as her, the Appellant's, representative. I advised the Appellant that when the trial of this matter commenced, the Court would make arrangements for a translator. Even if counsel for the Respondent agreed with the Appellant being the translator for her own spokesperson, the Appellant was cautioned that it was possible that the Court would not permit it. Further, I note that the Appellant asked if the trial now scheduled for June 15, 2001 could be joined with a forthcoming appeal to be filed on behalf of her late father (or on behalf of her late father's estate) by his (or its) legal representative. Since no such appeal had been filed, there was no basis to consider the request and the request was denied.
Signed at Ottawa, Canada, this 28th day of February 2001.
"J.E. Hershfield"
J.T.C.C.
[1] Reference is made to "construction " of the Notice of Appeal as it is clear that it was written without the assistance of counsel and by an author whose first language was not English, the language in which the Notice was written.