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Motion heard by telephone conference on January 22, 2003, at Ottawa, Ontario,
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ORDER
Upon motion by the Appellants for an Order pursuant to subsection 93(3) of the Tax Court of Canada Rules (General Procedure) requiring Belinda Hatton to attend for discovery examination;
And upon reading the affidavit of David G. Coles, filed;
And upon hear counsel for the parties;
It is ordered that the motion is denied, with costs in the cause.
Signed at Ottawa, Canada, this 28th day of January, 2003.
J.T.C.C.
REASONS FOR ORDER
McArthur J.
[1] This motion is by the Appellants for an Order under subsection 93(3) of the Tax Court of Canada Rules (General Procedure) that the Respondent make Belinda Hatton available for discovery examination. The appeals concern the deduction of scientific research and experimental development expenses.
[2] The Appellants submit that two officers of Canada Customs and Revenue Agency have been examined but that neither one could answer questions with respect to the appeals process which apparently was the responsibility of Belinda Hatton. Counsel for the Appellants concedes that undertakings were not extracted from the two officers examined but states that subsection 93(3) does not require such. The Appellants concluded that it would be much preferable to examine Ms. Hatton rather than having another person explain her role.
[3] Counsel for the Appellants referred to several cases in support of the motion, including Backman v. Canada[1] and General Motors Acceptance Corp. of Canada v. Canada.[2]
[4] Counsel added that Mr. Brian Neil and Mr. Bruce Harnish had an obligation to inform themselves before their examinations yet they had not consulted with Ms. Hatton despite her crucial role in deciding the appeals process. Counsel for the Appellants believes that the decision to complete the appeals process was done by Ms. Hatton and she should explain the reasons for her decisions on discovery.
[5] The Appellants' counsel concluded, in part, that Messrs. Neil and Harnish could speak to their roles in the assessments, but not to the next step in the process, being the appeal of their decision. All overtures for examination of Ms. Hatton had been denied. The motion became necessary to discover information about the CCRA appeals because no one other than Ms. Hatton appeared to have this information. The Appellants must demonstrate that the CCRA appeals conducted by Ms. Hatton came to the wrong conclusion. They must also discover what information Ms. Hatton considered while reaching her conclusions. It is crucial to the litigation that the Appellants be able to determine why their appeals were denied and to discover if they were granted fair and comprehensive consideration after their initial objection to the assessments.
Respondent's Position
[6] Subsection 93(3) requires the Respondent to produce a knowledgeable witness. The Respondent provided Mr. Neil, a science advisor, and Mr. Harnish, the auditor. Belinda Hatton was the appeals officer who reviewed the 1995 and 1996 objections submitted by the Appellant, Blue Wave Seafoods Inc. At the appeals stage, Belinda Hatton made some adjustments in the Appellants' favour to the audit calculations completed by the auditor. No changes were made to the evaluations in Mr. Neil's SRED science report.
Analysis
[7] I agree with the Respondent's counsel that it was open to the Appellants to examine Mr. Neil and Mr. Harnish on the 580 documents previously provided in relation to Ms. Hatton's involvement and request undertakings when required. The Appellants' counsel acknowledges that this was not done but is not a requirement in section 93. I have to disagree. Undertakings are part and parcel of the discovery process. The examiner cannot presume that any or all of the officials of Revenue Canada can be examined.
[8] The following from Judge Mogan's decision in Ashton v. Canada[3]applies to the present facts:
9 It is important to remember that a party being examined is not necessarily giving evidence of personal knowledge. In Champion Truck Bodies Ltd. v. The Queen, [1986] F.C.J. 932, Federal Court Trial Division, July 3, 1986, Strayer J. stated in his closing paragraph:
10 It is not necessary that Lisa Kelly have first-hand knowledge of the letters between Lou Coretti and employees of the Company. Ms. Kelly can locate those letters; inform herself of their content; and undertake to obtain further information from Mr. Coretti if he is still an employee of Revenue Canada. ...
[9] The following statement of Judge Bell in General Motors applies to the present motion. Paragraph 9 of his decision provides:
9 Counsel submitted that Miyazaki was not able to answer questions relating to those assumptions. There are, however, a number of responses which were accepted by Appellant's counsel without counsel having pursued those responses with queries which could have resulted in undertakings and may have resulted in responses to its questions. There is no doubt that answers by Respondent's counsel to certain questions were not clear. However, the way of dealing with that is to persist in the posing of questions which could result in undertakings and responses. The failure to provide appropriate answers on those undertakings would constitute support for an application of this nature.
The Appellants have to be proactive in discovery and ask for undertakings. They did not. Only after receiving unsatisfactory undertakings is a similar application appropriate.
[10] Subsection 93(3) of the Rules reads as follows:
93(3) The Crown, when it is the party to be examined, shall select a knowledgeable officer, servant or employee, nominated by the Deputy Attorney General of Canada, to be examined on behalf of that party, but if the examining party is not satisfied with that person, the examining party may apply to the Court to name some other person.
The rule clearly requires that the Crown shall select one knowledgeable officer. In fact, two knowledgeable officers were made available to answer questions with respect to a science and a financial component. The discovery process was never intended to have the Crown provide three or four witnesses. Discoveries have already lasted five days. There is a pre-hearing conference scheduled for February 10, 2003 and I believe discoveries of expert witnesses will follow. Discoveries are obviously a very useful procedure but at some point, a line must be drawn.
[11] The motion is denied, with costs in the cause.
Signed at Ottawa, Canada, this 28th day of January, 2003.
J.T.C.C.
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| SOURCE: http://decision.tcc-cci.gc.ca/en/2003/html/2003tcc20012140.html | Generated on 2003-03-06 |