[2011] 2 F.C.R. D-16
Income Tax
Practice
Appeal from Tax Court of Canada (T.C.C.) order (2010 TCC 366) granting motion requiring appellant (Crown) to answer question objected to on discovery, produce internal Canada Revenue Agency (CRA) memoranda—Lehigh Cement Limited (respondent) receiving notices of reassessment pursuant to Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 95(6)(b)—Objective of motion to better understand Crown’s position on scope, object, spirit of s. 95(6)(b)—T.C.C. finding Crown’s resistance in answering question on grounds of principle not in interests of fairness, efficiency, CRA memoranda relevant, directly leading to Crown’s position—Ordering disclosure of memoranda relating to development of CRA general policy—Principal issues whether T.C.C. erring by (1) failing to observe principles of natural justice by accepting factual assertions; (2) making findings of fact unsupported by evidence; (3) ordering production of internal CRA memoranda; (4) ordering Crown to answer hypothetical question aimed at eliciting legal position—Issue 1: Question asked by respondent “specifically but not exclusively” in respect of documents emanating to, from named CRA employees—Such question asked on discovery not breaching principles of natural justice—As to other submissions, clear respondent not improperly giving evidence about matters within his knowledge—Issue 2: T.C.C. reasons falling short of finding of fact that disputed documents either leading directly to Crown’s position on appeal, providing support for assessment—Issue 3: Whether particular question permissible determined by Tax Court of Canada Rules (General Procedure), SOR/90-688a, s. 95(1)—Past amendment to s. 95(1) technical in nature, not materially impacting permissible scope of oral discovery—Court drawing inference from CRA employee memorandum already disclosed as relevant, reassessment of respondent on basis of s. 95(6), that there may very well be subsequent memoranda prepared within CRA considering whether s. 95(6) general anti-avoidance provision—Such documents reasonably likely to advance respondent’s case, damage Crown’s case—Issue 4: Question not pure question of law, not eliciting details of Crown’s legal argument—Respondent entitled to know basis of reassessment—Appeal dismissed.
Lehigh Cement Limited v. Canada (A-263-10, 2011 FCA 120, Dawson J.A., judgment dated March 31, 2011, 21 pp.)