LEXPERT MAGAZINE
|
JUNE 2016 55
| TAX LITIGATION |
available, we'll sit in hotels, church halls,
municipal offices or even rinks," Rossiter
says. "We're built for speed and manage our
inventory tightly."
To make things worse, the TCC lacks
jurisdiction in other key areas. By way of
example, only the Federal Court can re-
view the CRA's failure to act lawfully when
making information demands in tax au-
dits; to issue notices of assessment, reassess-
ments, or determinations or pay uncontest-
ed refunds in a timely manner; and to act
lawfully in collection matters. e TCC
also lacks jurisdiction to deal with late fil-
ing of designations or elections, or reassess-
ments issued beyond the expiry of statutory
limitation periods.
e situation confounds and frustrates
Rossiter. "I have never heard a single, soli-
tary rational argument against having one
court deal with all tax matters," he says.
"e public wants it and the Bar wants it."
Besides, it's not an expensive proposi-
tion. "How many changes can be made
where you can say it won't cost the govern-
ment any significant amount of money?"
Rossiter asks.
Alexandra Brown, formerly with the
federal Justice Department and now at
Blake, Cassels & Graydon LLP in Toronto,
will disappear.
"e judges are fighting over jurisdiction
and that remains a divisive issue," Robert-
son says.
So much so that not only will the prob-
lems arising from bifurcation continue
to hover in the background, they'll most
likely get worse.
e reason? e courts are finally start-
ing to respond to demands that the CRA
be held accountable for its actions by im-
posing a duty of care on the tax collector.
Most notable is the jurisprudential trend
recognizing an ongoing duty of care to tax-
payers on the part of tax authorities.
"It will now be easier for businesses and
individuals to argue that the CRA and oth-
er tax authorities must administer the law
in good faith and refrain from behaviour
that is abusive or irrational," says Martin
Sorensen of Bennett Jones LLP in Toronto.
e problem is that they won't be able
to make that argument in the TCC, which
has no jurisdiction to deal with alleged
breaches of the duty or damages ensuing
from those breaches, nor can it provide re-
lief from interest or penalties on the basis
of CRA misconduct. Aggrieved taxpay-
ers, then, have no choice but to start from
scratch and make their way to provincial
superior courts or the Federal Court.
To be sure, the existence of a duty of
good faith might make the CRA and other
tax authorities somewhat easier to deal
with as they suggest that the agency is not
at liberty to intimidate and threaten tax-
payers as it chooses and has a responsibility
to take appropriate care in deciding to take
steps against them.
"ese decisions should over time result
in a difference in the way the CRA treats
taxpayers and their rights," says tax lawyer
David Rotfleisch of Rotfleisch & Samulo-
vitch Professional Corporation in Toronto.
e most notable decision, Agence du
revenu du Québec c. Groupe Enico inc.,
turned on the duty of good faith enshrined
in Québec's Civil Code. But the decision
is in line with two common-law rulings
on the point: both the Federal Court of
Appeal's decision in Canada v. Scheuer,
released just weeks before Enico, and the
British Columbia Supreme Court's 2014
judgment in Leroux v. Canada Revenue
Agency affirmed that the
CRA has a duty
of care to taxpayers.
believes there are "good reasons" why "all
tax-related functions" should be in the ju-
risdiction of one court.
"To have the jurisdiction bifurcated isn't
consistent with judicial economy and it
creates temptations for forum-shopping,"
she says. "Despite the Federal Court of Ap-
peal's best efforts, clarity is sometimes lack-
ing in where relief should be sought, mean-
ing prudent counsel may have to go to both
courts, and that's not a good use of parties'
resources either."
The bugbear, apparently, can be
found in the Federal Court hierarchy.
"It's a very sensitive subject about which
there has been a great deal of acrimony
between the Tax Court and the Federal
Court," former chief justice Rip says. "e
Federal Court has forever been pushing the
merger of the two courts."
In 2012, Paul Crampton, who had re-
cently been appointed Chief Justice of the
Federal Court, publicly disavowed any
plan to revive the merger proposal. He told
media that his priority is "working co-oper-
atively" with the Tax Court.
But simultaneously, Crampton (who de-
clined to speak with Lexpert) resisted the
Canadian Bar Association's proposal that
some 400 tax-related judicial reviews that
his court hears each year be transferred to
the Tax Court. He opined that judicial
reviews were "different types of decisions"
best handled by judges who did judicial re-
views on a daily basis.
"e Federal Court feels better qualified
to do judicial reviews be-
cause administrative law is
part of their bread and but-
ter," Robertson says.
Rip counters that the
TCC leans to recruiting
judges who have good tax or
litigation experience. "You
wouldn't necessarily get that
in the Federal Court where
judges are back and forth
dealing with different areas
of the law," he says.
Muted though the con-
troversy might be by the
twin realities of judicial dis-
cretion and lawyers' reluctance to criticize
courts in front of which they must advance
their clients' interests, it's unlikely that it
"It seems that every significant law
firm in the country is setting up a
tax litigation practice group. It's a big
growth area because governments
are in need of money and they're
going after it more aggressively."
GUY DU PONT
>
DAVIES WARD PHILLIPS
& VINEBERG LLP
