Date: 20020228
Dockets: 1999-4149-IT-G, 1999-4309-IT-G,
2000-3987-GST-G and 2000-4302-IT-G
BETWEEN:
JAMES T. GRENON,
GRENCORP MANAGEMENT INC.,
COLBORNE CAPITAL CORPORATION, and
COLBORNE CAPITAL CORPORATION,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Counsel for the Appellants: Carman R. McNary
Counsel for the Respondent: J.E. Fulcher
____________________________________________________________________
Reasonsfor Order
(Delivered orally from the Bench at Edmonton, Alberta, on January 9, 2002)
McArthur J.
[1] This is a motion by the Respondent for an order that all four appeals be heard one immediately after the other on common evidence pursuant to subsection 4(2) and section 26 of the Tax Court of Canada Rules (General Procedure), and for an order for costs of the motion. They are presently separated in two pairs. The predominant issue in the Grenon/Grencorp appeals is whether the taxpayer was a trader in securities. The predominant issue in the Colborne appeals is the deductibility of expenses and the goods and services tax thereon but there is a trading in securities issue similar to that in the Grenon/Grencorp appeals.
[2] The Respondent submits that the requested order will avoid multiplicity of trials and the possibility of inconsistent decisions as well as promote the most expeditious and inexpensive determination of the common questions of fact and law arising out of these appeals. The Appellant opposes such an order on the grounds that the Westar expense in the Colborne actions is an issue that has nothing to do with those in the Grenon/Grencorp actions and by including this very time-consuming expense hearing would further complicate an already very complex set of issues in the Grenon/Grencorp appeals.
[3] The Appellant adds that it is too late to join the actions. Grenon and Grencorp are almost advanced to the point of setting a trial date, while Colborne has yet to have discoveries. James Grenon sets out his position in his affidavit dated December 28, 2001 particularly in paragraphs (dd), (ee), (ff), (gg), (hh), (ii), (jj) and (kk) which read as follows:
(dd) At no time prior to completion of the oral examinations already conducted did the Crown or its counsel raise the possibility that the two Colborne Income Tax and GST Appeals could or should also be joined to the conduct of the Grenon Appeals.
(ee) No examinations have been commenced with respect to the issues present in the Colborne Income Tax and GST Appeals, nor were those issues considered in preparing the Lists of Documents that have already been completed.
(ff) My solicitor informs me that if the Grenon Appeals are heard in conjunction with the Colborne Income Tax and GST Appeals there will be a substantial delay in bringing the Grenon Appeals to Court in that we will have to review the Lists of Documents filed in order to include documents relevant to the unique issues present in the Colborne Income Tax and GST Appeals, and then we will have to commence oral examinations for discovery on those issues.
(gg) My solicitor further informs me that the issues presented in the Colborne Income Tax and GST Appeals, if joined to the Grenon Appeals, would add substantial greater complexity to an already complex set of issues present in the Grenon Appeals. Further, my solicitor informs me and I believe that if the Colborne Income Tax and GST Appeals were to be heard in conjunction with the Grenon Appeals, the trial of the issues would take considerably more time to prepare for, and to present at, trial.
(hh) Specifically, the Colborne Income Tax and GST Appeals require a focus on the issue of deductibility of legal costs with respect to specific litigation in the past (the "Deductibility Issue"). This issue has no direct parallel to any issue present in the Grenon Appeal, and relates to a further complex and detailed array of facts. I am concurrently swearing Affidavits in each of those appeals with respect to those particular facts and issues and how they impact on this application, and will not restate what I depose in those Affidavits.
(ii) In order for the Court to determine the deductibility of the legal expenses incurred by Colborne in the Westar case, as described in my Affidavits, it will be necessary to present extensive evidence originating in the past litigation, evidence which is not necessary to the Grenon Appeals.
(jj) As the Deductibility Issue only relates to the Colborne Income Tax and GST Appeals, which relate to a different party (Colborne Capital Corporation) (although I am a director of that company), and at later period of time, evidence as to the business plan of Colborne is not directly relevant to the Grenon Appeals.
(kk) My solicitor informs me that none of the issues identified by the Respondent in its Notice of Motion and supporting Affidavit are identical between the different parties to the Grenon Appeals and the Colborne Income Tax and GST Appeals, although certain issues are similar."
[4] Sections 4 and 26 of the Tax Court of Canada Rules (General Procedure) read as follows:
4(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every proceeding on its merits.
4(2) Where matters are not provided for in these rules, the practice shall be determined by the Court, either on a motion for directions or after the event if no such motion has been made.
26 Where two or more proceedings are pending in the Court and
(a) they have in common a question of law or fact or mixed law and fact arising out of one and the same transaction or occurrence or series of transactions or occurrences, or
(b) for any other reason, a direction ought to be made under this section,
the Court may direct that,
(c) the proceedings be consolidated or heard at the same time or one immediately after the other, or
(d) any of the proceedings be stayed until the determination of any other of them.
[5] Primarily for the reasons set forth by Respondent's counsel, the motion is granted, without costs. No costs are ordered because I agree with the Appellant that this motion could have been brought much earlier. The advantages of having the appeals heard together far outweigh the Appellants' submissions to the contrary. Included in my reasons is the fact that with the goodwill and excellent reputations of both counsel who are highly experienced before this Court, I have no doubt that they can have the desired discoveries in Colborne in the near future and bring all procedures in all actions in a parallel or up-to-date position. The advantage of avoiding a multiplicity of proceedings, hearing the same witnesses twice and the possibility of inconsistent judgments, outweighs the negatives.
[6] I accept the Respondent's statement that Westar evidence would be called in the Grenon and Grencorp appeals, joined or not. I believe there is no reason to prevent the Appellant to deal with the issues transaction by transaction while joined. All four appeals have common issues and require many of the same witnesses. Mr. Grenon's intention in every one of the trading issues may be very important in all appeals. In general, I accept the submissions of the Respondent. It does not serve a purpose to repeat them. The motion is allowed and no order is made as to costs.
Signed at Ottawa, Canada, this 28th day of February, 2002.
"C.H. McArthur"
J.T.C.C.
COURT FILE NO.: 1999-4149(IT)G, 1999-4309(IT)G
1999-3987(GST)G, 1999-4302(IT)G
STYLE OF CAUSE: JAMES T. GRENON, GRENCORP
MANAGEMENT INC., COLBORNE
CAPITAL CORPORATION and
COLBORNE CAPITAL CORPORATION
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: January 9, 2002
REASONS FOR ORDER BY: The Honourable Judge C.H. McArthur
DATE OF ORDER: January 15, 2002
APPEARANCES:
Counsel for the Appellant: Carman R. McNary
Counsel for the Respondent: J.E. Fulcher
COUNSEL OF RECORD:
For the Appellant:
Name: Carman R. McNary
Firm: Fraser Milner Casgrain
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada