[2017] 3 F.C.R. D-12
Income Tax
Practice
Affidavits — Appeal from Tax Court of Canada (T.C.C.) decision (2016 TCC 85) granting Minister of National Revenue’s (Minister) motion to strike affidavit filed by appellant in support of its motion to enforce settlement entered into by its counsel, counsel for Minister — Dispute herein ability of appellant to apply certain non-capital losses to income for certain taxation years — Settlement offer including schedule of appellant’s losses (Schedule) — However, Minister having difficulty implementing minutes of settlement, advising appellant no non-capital losses available, cannot issue reassessment contrary to provisions of Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1 — Appellant’s affidavit setting out events leading to motion by referring to documents, contacts between counsel — Cross-examination on deponent unsatisfactory, limited — Minister therefore moving to have affidavit struck — T.C.C finding pivotal issue in enforcement motion, motion before T.C.C. “accuracy, truth and origin of the non-capital losses” in Schedule — Considering Tax Court of Canada Rules (General Procedure), SOR/90-688a, s. 72 permitting use of statements based on information, belief in affidavit for use on motion provided that source of information, fact of belief specified in affidavit — This information missing in appellant’s supporting affidavit — T.C.C. reasoning s. 72 consistent with principled approach to admissibility of hearsay evidence; that paucity of information surrounding Schedule rendering affidavit hearsay — Finding limitations on Minister’s ability to cross-examine prejudicial to Minister’s position — Main issues test for striking an affidavit; whether Schedule hearsay evidence; proper scope of cross-examination on affidavit — Court may strike affidavit or portions thereof where affidavit: abusive or clearly irrelevant; contains opinion, argument or legal conclusions; or where Court convinced admissibility better resolved at early stage so as to allow hearing to proceed in timely, orderly fashion — Here, T.C.C. struck affidavit because containing hearsay evidence to prove existence, origin of losses — T.C.C. correct to hold that, to extent Schedule tendered to prove truth, origin of losses to which it referred, it was inadmissible — However, T.C.C. erring in attributing to appellant intention to prove non-capital losses by tendering Schedule — Not open to T.C.C. to find that appellant tendering these documents for wider purpose, then holding that contents inadmissible for that purpose because affidavit’s necessity, reliability not tested by cross-examination — As to whether counsel for Minister could nevertheless cross-examine appellant’s affiant on origin, accuracy of non-capital losses in Schedule, an affiant should not be protected from fair cross-examination on information volunteered in affidavit — Affiant should submit to cross-examination on matters set forth in affidavit, to collateral questions arising from affiant’s answers — Questions seeking to explore factual basis of losses not questions about information set out in affidavit nor are they collateral matters — Here, failure to answer questions not depriving Minister of fair hearing — In conclusion, T.C.C. erring in principle in concluding prematurely that contents of appellant’s affidavit tendered in proof of their contents — This error leading to further errors as to scope of cross-examination of affiant — Appeal allowed.
CBS Canada Holdings Co. v. Canada (A-127-16, 2017 FCA 65, Pelletier J.A., judgment dated March 31, 2017, 14 pp.)