http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/143578/index.do
CBS Canada Holdings Co. v. The Queen (April 12, 2016 – 2016 TCC 85, Lyons J.).
Précis: CBS Canada Holdings Co. (“CBS”) and the Crown reached a settlement on a tax appeal. Subsequently there was a dispute about the terms of the settlement and CBS moved in the Tax Court to enforce it. The Crown moved to strike an affidavit filed by CBS in support of the motion. The affidavit was filed by a lawyer at Blake, Cassels & Graydon LLP which was the firm representing CBS on the motion. The Court found that the affidavit failed to meet the twin criterion of reliability and necessity found in the case law. The affidavit should have been submitted from an employee of CBS and not counsel. CBS was granted leave to file a new affidavit. Costs were awarded to the Crown in any event of the cause.
Decision: It is surprising that this point proceeded to a hearing:
[1] The respondent brought this motion for an order to strike out the affidavit of Deborah Toaze, the affiant (“Respondent’s motion”). Ms. Toaze is a partner at the law firm of Blake, Cassels & Graydon LLP (“Blakes”) representing CBS Canada Holdings Co., (“CBS”) in its appeal. The affidavit and exhibits, (“Affidavit”) were filed in support of the main CBS motion which requests that the appeal be allowed in accordance with Minutes of Settlement (“CBS motion”).
[2] The parties executed Minutes of Settlement (the “Minutes”) pursuant to subsection 169(3) of the Income Tax Act (the “Act”). The Court held the appeal in abeyance to enable the Minister of National Revenue to implement the Minutes and issue notices of reassessment. Five weeks later, the respondent informed CBS that the Minutes cannot be implemented because there is a mistake of fact as to the availability to CBS, for the 2007 taxation years ended March 7, 2007 and December 31, 2007, respectively, under appeal, of additional non‑capital loss carry-forwards from prior years in the amount of $24,366,301 (the “non-capital losses”). The non-capital losses are reflected in Schedule A attached to CBS’ initial written settlement offer and the Minutes.
[3] The ground identified in the Respondent’s motion to strike the Affidavit is that CBS failed to permit effective cross-examination of its affiant, contrary to section 74 of the Tax Court of Canada Rules (General Procedure) (the “Rules”), by invoking privilege over information and exhibits in the Affidavit and by refusing to answer relevant and proper questions. Alternatively, if I am not going to strike the Affidavit as a whole, or portions, I should nonetheless give it no weight.
[Footnote omitted]
There are odd aspects to Ms. Toaze’s cross-examination which clearly did not sit well with Justice Lyons:
[41] During cross-examination, Ms. Toaze confirmed that Blakes is counsel for CBS and Mr. Kroft and Mr.Trossman are identified as counsel on the Notice of Appeal. When asked by respondent counsel if she was also CBS counsel, the following exchanges took place:
65. Q. If you go to the Notice of Appeal, you will see it’s Tab A to your affidavit and, specifically, to page 31. It’s noted that Mr. Kroft and Mr. Trossman are counsel for the Appellant?
A. Yes
66. Q. You are not?
A. That’s correct.
…
68. Q. Are you also counsel for the Appellant, CBS?
A. My name is not listed.
69. Q. Are you counsel?
MR. KROFT: She just indicated, Counsel, previously she was not.
THE WITNESS: My name is not listed.
MR. KROFT: You asked her that.
MS. GOLDSTEIN: No. I asked her if she is counsel. I did not ask her if her name was listed.
MR. KROFT: I think you asked her previously, but carry on.
THE WITNESS: Counsel for the Appellant are Edwin G. Kroft, Q.C., and Jeffrey Trossman.
BY MS. GOLDSTEIN:
70. Q. So you are not counsel for the Appellant?
A. I’m not listed here as counsel for the Appellant.
71. Q. I think we can all see that you are not listed there. I’m asking you: Are you counsel for the Appellant?
A. I’m not sure – I don’t understand the question because counsel for the Appellant is listed on the Notice of Appeal.
72. Q. Are you retained in any capacity as a counsel for the Appellant?
MR. KROFT: Well, Counsel, that’s an improper question.
MS. GOLDSTEIN: Why?
REF-2 MR. KROFT: Because you are asking about whom the Appellant retained. Our firm was retained, and the counsel are stipulated there, so I’m objecting to the question because the witness has already answered the question as well.
[42] In my view, the responses from the affiant amount to obfuscation to straightforward questions that warrant straightforward responses as to the nature of her involvement. In other instances of the read-ins presented, the affiant responded to questions put to her by invoking privilege, raising confidentiality and indicating that the document speaks for itself. From her responses, it appears how Ms. Toaze perceived her role as counsel.
[Footnote omitted]
At the end of the day the Court found the matter not difficult to resolve:
[67] Applying the principles on a motion to strike based on hearsay and based on the foregoing reasons, I conclude that the Affidavit containing hearsay, sworn by the affiant as CBS counsel on a controversial issue, failed to meet the twin criterion of reliability and necessity to assist me in evaluating the evidence for the CBS motion. In exercising my discretion against allowing the Affidavit, as noted by the Federal Court of Appeal in Pluri Vox, the Court should consider if evidence could have been supplied by a person other than counsel. CBS personnel could have done so. The respondent’s motion is granted.
[68] The respondent asks that the Affidavit, in whole or part, be struck. Alternatively, that the Affidavit be admitted but no weight be ascribed. Given the breadth of the impact of Schedule A on the Affidavit and the exhibits, severability is difficult. As such, the Affidavit is struck.
[69] I am granting leave to CBS to file an affidavit in support of the CBS motion.
[70] Costs will be awarded to the respondent in this motion, in any event of the cause.