Docket: 2006-1328(IT)G
BETWEEN:
DEJAN KOVINIC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
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Motion heard on August 3, 2006 at Welland, Ontario.
Before: The Honourable Justice G. Sheridan
Appearances:
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Counsel for the Appellant: |
Guy Ungaro |
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Counsel for the Respondent: |
George Boyd Aitken |
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ORDER
Upon motion by the Respondent for an Order pursuant to section 52 of the Tax Court of Canada Rules (General Procedure) requiring the Appellant to deliver particulars within a specified time;
And upon motion by the Respondent, in the alternative, for an order extending the time allowed for the Respondent to file its Reply to the Notice of Appeal pursuant to subsection 44(b) of the Rules of the Tax Court of Canada (General Procedure);
And upon the motion by the Respondent for the costs of this motion in any event of the cause;
And having heard the submissions of counsel and having read the materials filed;
IT IS ORDERED:
1. the Respondent's motion for an order requiring the Appellant to deliver particulars is dismissed;
2. the Respondent shall have 60 days from the date of this Order to file and serve its Reply to the Notice of Appeal; and
3. costs of this motion shall follow the cause
in accordance with the attached Reasons for Order.
Signed at Ottawa, Canada, this 7th day of September, 2006.
"G. Sheridan"
BETWEEN:
and
REASONS FOR ORDER
Sheridan, J.
[1] The Respondent's motion and the grounds therefore are set out below:
The Motion is for:
(a) an Order requiring the Appellant to deliver particulars within a specified time pursuant to section 52 of the Tax Court of Canada Rules (General Procedure);
(b) in the alternative, an order extending the time allowed for the Respondent to file its Reply to the Notice of Appeal pursuant to paragraph 44(1)(b) of the Tax Court of Canada Rules (General Procedure);
(c) the whole with costs in any event of the cause; and
(d) such further and other relief as this Honourable Court deems just.
The Grounds for the Motion are that
(a) the Appellant has failed to supply particulars to the Respondent in spite of the Respondent's Demand for Particulars which Demand for Particulars was served on the Appellant on June 30, 2006; and
(b) the Notice of Appeal as filed does not provide sufficient particulars upon which the Respondent may rely in order to prepare its Reply to the Notice of Appeal.
[2] The Appellant is appealing the 2004 reassessment of the Minister of National Revenue of his 1997, 1998, 1999, 2001 and 2002 taxation years. In so reassessing, the Minister disallowed certain business expenses, thus increasing the Appellant's taxable income and assessed penalties against the Appellant.
[3] The Respondent properly served its Demand for Particulars to which the Appellant served his Answer to the Demand for Particulars within the 30 days permitted. After some further communication between counsel, counsel for the Appellant took the position that the Notice of Appeal and Answer to the Demand for Particulars were sufficiently detailed for the purposes of pleading.
[4] In Zelinski v. The Queen[1], Bowie, J. explained the purpose of pleadings and applicable principles:
[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: [FOOTNOTE 1 : Holmsted and Watson, Ontario Civil Procedure, Vol. 3, pages 25-20 to 25-21.]
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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. ... |
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[5] In considering the submissions of counsel regarding an order for particulars, I am guided by the words of Bowman, T.C.J. (as he then was) in Satin Finish Hardwood Flooring (Ontario) Ltd. v. Canada[2], in which the learned justice reviewed the criteria for ordering particulars:
17 So far as the motion for particulars is concerned, there are several reasons for dismissing it. In the first place the respondent has failed to serve on the appellant's solicitors a demand for particulars. Under section 52 of the rules of the court a motion for particulars can only be brought if such a demand has been served and the opposite party has failed to supply the particulars within 30 days.
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F.P. Bourgault Industries v. Flexi-Coil Ltd., 18 C.P.R. 245 at 246 per Dube J.; Georg Von Opel v. Allcock, Laight & Westwood Ltd., 21 Fox's Canadian Patent Cases 124 per Cameron J. |
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18 Assuming that I have a discretion to hear a motion for particulars in the absence of a prior written demand I have been given no basis upon which I should exercise that discretion. Cf. Curry v. Advocate Gen. Ins., 9 C.P.C. (2d) 247.
19 In the second place no material by way of affidavit or otherwise was put before me to demonstrate that the respondent needed further particulars in order to plead to the notice of appeal and it is certainly not obvious on the face of the notice of appeal. Indeed it was not even suggested in argument. See F.P. Bourgault (supra); Georg Von Opel (supra).
20 In the third place, where particulars are sought before pleading it must be for the purpose of enabling the opposite party to formulate an intelligent response. There is a fundamental difference between particulars required for the purpose of pleading and particulars needed for the purposes of trial. That distinction was clearly expressed by Marceau J. in Embee Electronic Agencies v. Agence Sherwood Agencies Inc., 43 C.P.R. (2d) 285 at 286-287. To the same effect, see Madden v. Madden [1947] O.R. 866, (Ont. C.A.) per Laidlaw J.A. at 873-874; Coco-Cola Co. v. O'Keefe's Beverages Limited [1922] 23 O.W.N. per Riddell J. at 176.
21 Whether or not the type of particulars sought by the respondent may be necessary for the purposes of the trial, they are not necessary for the purposes of preparing a reply. Moreover, given the somewhat unique nature of income tax litigation, the Minister of National Revenue is well aware of all of the facts he needs to respond to the notice of appeal. He should know why he assessed. If the respondent needs more details of the appellant's business for the purposes of trial they can be obtained on an examination for discovery.
[6] At this stage of the litigation, I am not satisfied that the Respondent has made out its case for particulars. As was the case in Satin Finish, supra, no affidavit was filed to demonstrate in what respect particulars are needed before the Respondent can plead to the Notice of Appeal. I am sympathetic to the position of counsel for the Respondent that the Notice of Appeal and Answer to the Demand for Particulars present little more than the basic premise of the Appellant's position: that the Appellant did not prepare his own returns and that the business expenses claimed were correct. In view of what Bowman, C.J. called the "nature of income tax litigation"[3], however, I am not convinced that the Appellant's Notice of Appeal and Answer to the Demand for Particulars, as filed, are in such a state that the Respondent will be unable to craft its Reply to the Notice of Appeal.
[7] For these reasons, I am of the view that the Respondent's motion for particulars is premature and must be dismissed. This does not mean, however, that the Respondent is precluded from seeking particulars at a later stage of the litigation. The Respondent shall have 60 days from the date of this order to file and serve its Reply to the Notice of Appeal. Costs of this motion shall follow the cause.
Signed at Ottawa, Canada, this 7th day of September 2006.
COURT FILE NO.: 2006-1328(IT)G
STYLE OF CAUSE: DEJAN KOVINIC AND THE QUEEN
PLACE OF HEARING: Welland, Ontario
DATE OF HEARING: August 3, 2006
REASONS FOR JUDGEMENT BY: The Honourable Justice Georgette Sheridan
DATE OF JUDGMENT: September 7th, 2006
APPEARANCES:
COUNSEL OF RECORD:
Firm: Guy Ungaro
Niagara Falls, Ontario
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada