Date: 20001031
Docket:1999-226-GST-I
BETWEEN:
KARL SCHUSTER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion for the determination of a question of law
Motion for particulars heard in part
on October 16, 2000 in Windsor, Ontario, by
the Honourable Alban Garon
Chief Judge
Appearances
Counsel for the Appellant: John Mill
Counsel for the Respondent: Carole Benoit
ORDER
Upon Motion made by the Appellant, Notice of which was dated October 6, 2000, for:
1. A determination of a question of law namely:
a) Whether or not the registration of the Federal Court judgment against the corporation operates as a discharge of the joint obligee director.
b) Is the assessment of the director a nullity for prejudice arising from lack of particularity.
c) Or in the alternative ought the Minister to deliver further particulars in accordance with the demand for particulars attached hereto as Schedule A.
2. Such further and other relief as may be requested and this Honourable Court may allow.
In his Notice of Motion, the Appellant in stating the grounds for the motion referred to section 52 and paragraphs 58(1)(a) and (b) of the Tax Court of Canada Rules (General Procedure).[1]
In the course of hearing this motion on October 16, 2000, the following was agreed by the parties:
a) Counsel for the Appellant was to submit a list of questions relating to the assessment made against the Appellant dated December 2, 1996 to Counsel for the Respondent by Friday, October 20, 2000;
b) Counsel for the Respondent was to provide particulars in respect of each question by November 24, 2000.
In a letter dated October 20, 2000 to the Court and to Counsel for the Respondent, Counsel for the Appellant complied with his part of the agreement and provided a list of the particulars required contained in the following excerpts from the aforementioned letter:
"It is for those reasons that my client requires the following particulars:
Properties
In previous correspondence counsel for the Minister provided a list of ten properties that were involved in the audit. However, upon production the Minister provided information with respect to 14 properties. Despite previous written requests the Minister has never clarified which properties we are dealing with. Therefore, please provide the exact list of the addresses we are dealing with so that we will then know what addresses we do not have to deal with.
Failure to Remit
The Minister takes the position that not all of the transactions involved the sale of 'real property'. There is a distinction: 'building contracts with a lot' and 'building contracts without a lot'. Further, there were a number of projects that were abandoned and the Minister indicates that for some properties there were forfeited deposits; and on other properties there was litigation giving rise to an account receivable. Therefore, for each property please provide the factual basis and the statutory basis that give rise to the liability to remit, together with the dates on which it is said that the obligation to remit arises.
Net Tax
The net tax area has been a source of great confusion for the appellant. Loukar lost substantial amounts of money, being paid to GST registrants, (notionally this ought to result in a return to Loukar). In addition Mr. Schuster also paid out approximately $250,000.00 of his own money to pay debts of Loukar for which he was personally liable. Mr. Schuster is astounded that the Minister can take a position that there is GST owing. Mr. Schuster was careful to follow the directions given by Mr. Feurth in terms of documenting the ITC's, obtaining his rebates, both for GST and FST.
Therefore, with respect to each of the properties in issue please identify and provide the particulars of the following:
a) The total amount of GST it is said that ought to have been collected for each property and the statutory basis for such obligation.
b) The ITC's which were allowed and why.
c) The ITC's that were not allowed and why.
d) The rebates for both GST and FST which were allowed and why.
e) The rebates for both GST and FST which were not allowed and why.
f) Any other amounts in issue.
Also, with the letter of Counsel for the Appellant dated October 20, 2000 referred to above, a Supplementary Notice of Motion was filed with the Court also dated October 20, 2000. The Appellant in the Supplementary Notice of Motion "requests that the Court consider the relief set out below as supplementary to the relief requested in the motion heard on October 16th, 2000, adjourned sine die, to allow the Minister time to file further and better particulars."
In the Appellant's view, the filing of the Supplementary Notice of Motion was done "in order to clear any potential confusion" as "the relief requested by the appellant in the motion for particulars did not identify the proper rule numbers (52 and 53) and was a little confusing as to whether it was a motion for particulars or a motion for the determination of a question of law."
The Supplementary Notice of Motion dated October 20, 2000 reads in part as follows:
THE SUPPLEMENTARY MOTION IS FOR:
1. An order that the Minister provide complete particulars in accordance with the requests for particulars dated August 22nd, and October 20th, 2000.
2. Failing which the Appellant requests that the assessment be struck.
3. Failing which the Appellant requests that the Minister have the burden of proving the failure to remit net tax;
4. Such further and other relief as may be requested and this Honourable Court may allow.
It is ordered that the hearing of the Appellant's motion for the determination of questions of law set out in subparagraphs a) and b) of paragraph numbered 1 of the Notice of Motion dated October 6, 2000, be adjourned sine die.
The hearing of the Appellant's motion for further and better particulars has been heard in part and is adjourned pending the filing and serving of particulars by the Respondent.
It is further ordered that the Respondent supply the particulars required by November 24, 2000.
The hearing of the appeal from the assessment dated December 2, 1996 will be set at a later date once it has been disposed of the motion for particulars and the motion for the determination of questions of law referred to above.
Signed at Ottawa, Canada, this 31st day of October 2000.
"Alban Garon"
C.J.T.C.C.
[1] This appeal is governed by the Tax Court of Canada Rules (Informal Procedure). However, Counsel for both parties treated the proceedings in this appeal as if they were governed by the General Procedure.