Date: 20010703
Docket: 1999-4087-IT-I
BETWEEN:
B.W. STRASSBURGER LIMITED,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(Delivered orally from the Bench at Toronto, Ontario on June 1, 2001)
Bonner, J.T.C.C.
[1] I may say that in the interest of getting this case on for hearing, I have prepared brief reasons which I will give orally now.
[2] The Appellant applies for judgment pursuant to section 63 of the Tax Court of Canada Rules (General Procedure) in respect of the relief sought in the notice of appeal, that is to say, it applies for judgment allowing the appeal with costs and vacating the assessment of July 20th, 1999. The grounds are first, that the Appellant consented to an extension of time for filing the Reply until December 22nd, 1999, so that the deadline for serving the Reply on the Appellant was also December 22nd, 1999, but the respondent served the reply after that date; and second, that the facts alleged in the notice of appeal entitle the Appellant to the relief sought in the notice of appeal.
[3] The facts are that the notice of appeal was served on the Deputy Attorney General on October 1st, 1999. Under section 44 of the rules, the reply was to be filed within 60 days, that is to say, by November 30th, 1999, and served within five days thereafter. Counsel for the Respondent asked counsel for the Appellant for a 30-day extension, from November 10th, 1999. Counsel for the Appellant consented to an extension of time for the filing of the reply until December 22nd, 1999.
[4] On December 22nd, the Respondent filed the reply and forwarded a copy to counsel for the Appellant by registered mail. It was not delivered until December 31st, 1999. Section 44(3) of the rules required that the reply be served, and I quote, "within the time specified in a consent given by the appellant under subsection 1", and clearly the document was served after that time.
[5] The Appellant decided to bring this motion on April 13th, 2000. He did not implement the decision quickly. On September 18th, 2000, counsel for the Appellant attempted to contact counsel for the Respondent to arrange a day for the hearing of this motion as is required by the practice of this Court. Counsel for the Respondent did not respond either to that call or to several subsequent calls made by the Appellant's counsel for that purpose. This motion was finally brought in May of 2001.
[6] It is the position of counsel for the Appellant that there is no provision for the extension of the subsection 63(3) time for service save under what counsel describes as the "soft rules" such as sections 4, 7, 9 and 12. Counsel submits, however, that none of those rules has application in the case of late service of the reply. Section 12, for example, applies to the extension of the time prescribed by these Rules and the time here, he argues, is prescribed by the agreement to extend time and not by the rules themselves.
[7] The application of section 4 of the rules would, according to counsel for the Appellant, rob section 63(2)(b) of all force. Counsel described section 63 as a self-contained code for the filing of service which is excepted from the application of the "soft rules". He argues that it is irrelevant to consider whether the Appellant was prejudiced by the delay in the service of the reply. I do not agree.
[8] In my view, the time for service fixed by section 44(3)(b) of the rules is, though specified in a consent, at the same time a "time prescribed by these rules" within the meaning of subsection 12(1) because the prescribed time incorporates by reference the time named in the consent.
[9] Further, I regard subsection 4(1) of the rules as an over-arching requirement which must be taken into account in all cases where the Rules are to be construed and applied.
[10] In considering whether the Appellant is entitled to the relief sought under section 63 of the rules, I observe that, one, delay in serving the reply is only nine days; two, the Appellant has not suffered any prejudice which cannot be remedied by a rather generous award of costs; three, the Appellant did not move promptly to secure relief. However, I am troubled by the failure of the Respondent to even attempt to explain the delay in serving the reply. Counsel for the Respondent argued that the reason for the delay was irrelevant. I do not agree and moreover it is not irrelevant to the question of costs. I cannot fail to note that the generosity of counsel for the Appellant in consenting to the initial extension was rewarded not only by ingratitude but also by outright rudeness. Many of Mr. Cappell's telephone calls to Ms. Shirtliff-Hinds went unanswered. Conduct of that sort must and will be discouraged by an award of costs. As to substantive remedy, I intend to apply the principle adopted and applied by the Federal Court of Appeal in Carew, [1993] 1 C.T.C. 1, "As a matter of principle, courts today are loath to let procedural technicalities stand in the way of allowing a case to be decided on its merits." As Strayer, J. noted in Muller v. The Queen [1989] 2 F.C. 303 at 306, "It is surely preferable that cases properly commenced in the Court be disposed of on their merits and after a proper hearing rather than through one party taking advantage of the procedural lapse of the other." The issue raised in this appeal is essentially one of fact, namely whether the securities of the Appellant were held on capital or revenue account. This is an issue which, in my view, can only be dealt with on its merits as required under section 4 of the Rules following full discovery and a hearing.
[11] The appropriate remedy is therefore to be found under section 63(2)(a) and (c) of the rules. An order will therefore issue, one, extending the time for service to the reply to the day of the receipt thereof by counsel for the Appellant; two, directing that the appeal proceed to hearing; three, fixing August 10th, 2001, as the deadline for discovery of documents; four, fixing October 31st, 2001, as the deadline for the completion of examinations for discovery and the fulfilment of undertakings arising on discovery.
[12] Finally, the order will direct that the Respondent pay to the Appellant forthwith and in any event of the cause the costs of this motion which, having regard to the conduct of counsel for the Respondent and with a view to emphasizing the importance of compliance of the Rules, I hereby fix the amount of $6,500.
Signed at Ottawa, Canada, this 3rd day of July 2001.
"Michael J. Bonner"
J.T.C.C.