Date: 20010307
Docket: A-122-99
A-289-99
A-123-99
Neutral Citation: 2001 FCA 53
CORAM: DÉCARY J.A.
ROTHSTEIN J.A.
MALONE J.A.
A-122-99
A-289-99
BETWEEN:
GUNTHER W. SCHMIDT
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
----------------------------------
A-123-99
BETWEEN:
LORE G. SCHMIDT
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
Heard at Vancouver, British Columbia, on Wednesday, February 28, 2001.
JUDGMENT delivered at Ottawa, Ontario, on Wednesday, March 7, 2001.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
MALONE J.A.
Date: 20010307
Docket: A-122-99
A-289-99
A-123-99
Neutral Citation: 2001 FCA 53
CORAM: DÉCARY J.A.
ROTHSTEIN J.A.
MALONE J.A.
A-122-99
A-289-99
BETWEEN:
GUNTHER W. SCHMIDT
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
----------------------------------
A-123-99
BETWEEN:
LORE G. SCHMIDT
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
DÉCARY J.A.
| _. These appeals are from a Judgment dated January 27, 1999 and an Order dated April 7, 1999 of the Honourable Judge Rip of the Tax Court of Canada. The appeals were heard together and will be disposed of with one set of reasons. |
| _. Appeal No. A-122-99 is an appeal by Gunther W. Schmidt ("Mr. Schmidt") from Judge Rip's Judgment dated January 27, 1999 dismissing his appeal from four Notices of Assessment issued by the Minister of National Revenue (the "Minister") as follows: |
| (a) An assessment under s. 227.1 of the Income Tax Act (the "Act") for the unpaid Part VIII tax liability of Q.I.X. Facilities Corporation ("Facilities") in the amount of $13,326,662. |
| (b) An assessment under s. 227.1 of the Act for the unpaid Part VIII tax liability of Q.I.X. Computer corporation ("Computer") in the amount of $3,386,875 and penalties pursuant to s. 163(2) of the Act in the amount of $160,417 (federal portion of penalties: $107,099). |
| (c) An assessment under ss. 56(2) and 15(2) of the Act in respect of an indirect transfer of $272,000 from Computer to RDM Research International Inc. ("RDM Research") and penalties pursuant to s. 163(2) of the Act in the amount of $35,593 (federal portion of penalties: $23,770). |
| (d) An assessment under ss. 56(2) and 6(1) of the Act in respect of an indirect transfer of $1,200,000 from Facilities to RDM Research. |
| _. Appeal No. A-123-99 is an appeal by Lore G. Schmidt ("Mrs. Schmidt") from Judge Rip's Judgment dated January 27, 1999 dismissing her appeal from a Notice of Assessment issued by the Minister under s. 160 of the Act for $75,000. This assessment was made on the basis that Mr. Schmidt had transferred his half of their residence to her for $1. Mrs. Schmidt became jointly and severally liable for his tax liability to the extent of the $75,000 value of the property transferred to her. |
| _. Appeal No. A-289-99 is an appeal by Mr. Schmidt from Judge Rip's Order dated April 7, 1999 which provided that Mr. Schmidt was not entitled to relief in forma pauperis from paying costs of the Tax Court trial and other matters. |
| _. I shall deal with these appeals in their reverse order. |
Appeal No. A-289-99
| _. Judge Rip has closely reviewed the written representation filed by Mr. Schmidt and he was fully aware of Mr. Schmidt's difficult financial situation. Yet, he found the relief in forma pauperis which had been granted to Mr. Schmidt up to the trial should not be continued. Rule 147 of the Tax Court of Canada Rules (General Procedure) gives that Court "full discretionary power over the payment of the costs." Judge Rip exercised his discretion in a manner that does not warrant the intervention of the Court. The appeal should be dismissed. |
Appeal No. A-123-99
| _. This appeal was mentioned in passing by Mrs. Schmidt in her oral argument and not at all in the Memorandum of Fact and Law. Clearly, Judge Rip's judgment is based on findings of fact which are supported by the evidence. The appeal should be dismissed. |
Appeal No. A-122-99
| _. The thrust of Mr. Schmidt's argument is that Judge Rip erred in allowing the case to proceed despite the unfairness which resulted from an alleged non-disclosure of documents. |
| _. I have reviewed the procedural history of these proceedings, the various orders that were issued by the Tax Court Judge pertaining to disclosure, the unusual context in which the case developed, i.e. in parallel with criminal proceedings instituted against Mr. Schmidt and the transcript of the hearing before Judge Rip. I am more than satisfied that Judge Rip, and the Judges who had been involved in this file before him, did everything they could to enable Mr. Schmidt to have access to the documents prior to the hearing and eventually to file at the hearing and even thereafter whatever document he thought was relevant. Mr. Schmidt is obviously of the view that there was some unfairness in the criminal trial that eventually led to his conviction and his imprisonment, but this is not a matter that can be decided in the Tax Court or in this Court. |
| _. On the facts that were before him, it was open to Judge Rip to dismiss the taxpayer's appeal. This appeal should also be dismissed. |
| _. The three appeals should therefore be dismissed with one set of costs against Mr. Schmidt and no costs against Mrs. Schmidt. |
(Robert Décary)
J.A.
I agree
Marshall Rothstein
I agree
B. Malone
J.A.