A-248-02
2003 FCA 303
David Alfred Wagg (Applicant)
v.
Her Majesty the Queen (Respondent)
Indexed as: Wagg v. Canada (F.C.A.)
Federal Court of Appeal, Richard C.J., Isaac and Pelletier JJ. A.--Regina, May 21; Ottawa, July 11, 2003.
Judges and Courts -- T.C.C. Informal Procedure -- Application to quash consent judgment -- Unrepresented litigant -- Whether coerced into signing consent judgment -- Adjournment to consult counsel denied by T.C.J. though not opposed by Crown -- Appeal dismissed -- Judge's discretion to deny adjournment rarely interfered with -- Not unfair to hold litigant to choice to act on own behalf once trial begun -- Issue of court administration: contrary to interests of justice to have judges, courtrooms sit idle -- Under T.C.C. Informal Procedure, as in small claims courts, proper for Judge to be proactive, interventionist to focus, assist parties on matters of concern to Court -- Per Isaac J.A. dissenting: while T.C.J. motivated by desire to save taxpayer money, adjournment denial, failure to allow taxpayer to complete testimony, make arguments, strong encouragement to accept assessment, tantamount to coercion -- Certain remarks by Judge indicating awareness conduct cause for concern.
Practice -- Judgments and Orders -- Consent judgment -- Application to quash consent judgment signed by self-represented litigant in T.C.C. Informal Procedure -- Adjournment to consult counsel denied, granted an hour's recess to consider position -- Issue: whether taxpayer coerced into signing consent judgment -- Fair trial not denied -- Consent order represents compromise, can be set aside on any ground invalidating contract -- While coercion invalidating settlement, onus of proof on party seeking to set consent judgment aside -- Interventions by T.C.J. aimed at assisting taxpayer in putting case before Court -- Absent compelling evidence purported consent no consent at all, Appeal Court not anxious to set aside agreement freely entered into.
This was a section 28 application to set aside a Tax Court of Canada consent judgment allowing in part taxpayer's appeal with respect to an Excise Tax Act reassessment and disallowance of input tax credits. The issue before this Court did not turn on the facts dealt with by the Court below but rather the conduct of the Tax Court Informal Procedure hearing at which taxpayer had appeared on his own behalf. In view of certain remarks made by the Judge during the hearing, taxpayer sought an adjournment to consult counsel but the Judge indicated that he was not inclined to grant an adjournment. Following further discussion, taxpayer requested time to "kind of think this thing over" and the Judge offered to allow him another hour. He added that "You've had the benefit of some comments. Either you throw them aside or you proceed. I don't want to bully you. It's open for you to proceed . . . but all I'm doing . . . is advising you of . . . the possible disadvantage that it could put you in". When taxpayer replied that "we'll just leave it as it is", the Judge proposed that he consent to judgment. The Judge wanted a signed consent so that taxpayer could not later "change his mind or something". Taxpayer signed a consent to judgment whereunder he was reassessed and received a credit of $323, which reduced his indebtedness to $5,556.
The question upon this appeal was whether taxpayer was coerced into signing the consent judgment. While it was not raised by applicant, the Court had to consider whether the refusal of an adjournment constituted a denial of natural justice or a breach of procedural fairness.
Held (Isaac J.A. dissenting), the appeal should be dismissed.
Per Pelletier J.A. (Richard C.J. concurring): whether to grant an adjournment is within a judge's discretion and a refusal is interfered with in exceptional circumstances only. It has been held that, absent prejudice, refusal of an adjournment neither deprives a tribunal of jurisdiction nor is grounds to quash its decision. Applicant had not been denied a fair trial. Once a trial has begun, it is not unfair that a litigant be held to the choice of being self represented. Where, as here, an appellant is unsure of his position, fairness requirements are satisfied by the giving of an opportunity for reflection. Implicit in the decision to act for oneself is a willingness to accept the consequences resulting from inexperience or lack of training. Not to be disregarded was the matter of court administration: it is contrary to the interests of justice that judges and courtrooms sit idle due to the failure of litigants to do what they should have done before their case was called. The Trial Judge's refusal to grant a lengthier adjournment was not unfair.
Turning to the issue of coercion, a consent order represents a compromise and can be set aside on any ground which would invalidate a contract. While coercion would invalidate the settlement, the onus of proof lies on the party who seeks to set the consent judgment aside. A review of the transcript revealed that the Judge had conducted the hearing in a proactive manner, alerting applicant to the contradiction inherent in his position: if found to have furnished a non-exempt supply (and thus eligible for input tax credits) he would then be liable to remit tax on the sale of supplies. Where a litigant is unrepresented, a judge is entitled to intervene to focus the proceedings on the issue for determination. Under the Informal Procedure, Tax Court Judges--like judges at small claims courts--can properly be interventionist in order to focus and assist the parties by indicating any areas of concern to the court. Taken as a whole, the Judge's interventions were directed at assisting applicant in putting his case before the Court and were not coercive. While the Judge did express his view as to the likely outcome of the case, he explained his reasoning and made it clear that it was for applicant to decide how to proceed. Applicant was not entitled to resile from the choice he made. Absent compelling evidence that purported consent was no consent at all, a reviewing court ought not be anxious to set aside an agreement freely entered into.
Per Isaac J.A. (dissenting): While applicant was giving his evidence, the Tax Court Judge advised him that, if he proceeded with his appeal, he would be at risk of ending up worse off. Without having heard all the facts or applicant's argument, and obviously being uncertain as to the relevant legal principles, the Judge encouraged applicant to consider agreeing with the assessment. When applicant requested an adjournment so that he could consult counsel, this was denied even though the Crown did not oppose an adjournment. The Judge expressed the opinion that "it's not a question of whether or not the situation is clear. It's a question of you've got a trial date, it's set for today". Following a recess to allow Crown counsel to prepare a consent to judgment, the hearing concluded--apparently in applicant's absence--with the Judge remarking to counsel "I hope he wasn't too grumpy. I understand he did sign it, though" and after counsel explained to the Judge the benefits applicant would derive from the consent judgment, the Judge concluded by saying "when he's got one foot in and one foot out, he wasn't going to have a landmark decision from me . . . so I think you did fine".
The record indicated that the Judge was motivated by the desire to assist applicant in saving money. But his efforts on applicant's behalf were outweighed by the adjournment denial, his failure to permit applicant to complete his testimony and make arguments and his strong encouragement that applicant agree with the assessment. The adjournment refusal, which led to the consent to judgment, was tantamount to coercion. This was not a situation where an unrepresented litigant underestimated the complexity of the case but one where he received an unexpected surprise when told that if he did not consent to judgment, he would incur the risk of increasing his tax obligation. The conduct of the Judge was oppressive, leaving applicant feeling powerless and without choice. The Judge's remarks that he wished not to "bully" applicant and that he hoped applicant was not "too grumpy" suggested his awareness that his conduct may have been cause for concern. A new trial should be ordered.
statutes and regulations judicially
considered
Excise Tax Act, R.S.C., 1985, c. E-15, ss. 148(1) (as enacted by S.C. 1990, c. 45, s. 12; 1997, c. 10, s. 9), 171(1) (as enacted by S.C. 1990, c. 45, s. 12; 1993, c. 27, s. 37; 1997, c. 10, s. 163), 240(1) (as enacted by S.C. 1990, c. 45, s. 12; 1993, c. 27, s. 100), (3) (as enacted by S.C. 1990, c. 45, s. 12; 1993, c. 27, s. 100; 1997, c. 10, ss. 54, 218), Sch. V, Part VII (as enacted by S.C. 1990, c. 45, s. 18).
| Federal Court Act, R.S.C., 1985, c. F-7, s. 28 (as am. by S.C. 1990, c. 8, s. 8). |
| Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1. |
| Tax Court of Canada Act, R.S.C., 1985, c. T-2, s. 18.3001 (as enacted by S.C. 1990, c. 45, s. 61; 1998, c. 19, s. 296). |
cases judicially considered
applied:
Asomadu-Acheampong v. Minister of Employment and Immigration (1993), 69 F.T.R. 60 (F.C.T.D.); Kinley v. Krahn (1995), 96 W.A.C. 139; 58 B.C.A.C. 139 (C.A.); Lieb v. Smith et al. (1994), 120 Nfld. & P.E.I.R. 201 (S.C.T.D.); Racz v. Mission (Dist.) (1988), 22 B.C.L.R. (2d) 70; 28 C.P.C. (2d) 74 (C.A.); Davids v. Davids (1999), 125 O.A.C. 375 (C.A.); Garry v. Pohlmann (c.o.b. Bro Bros Roofing) (2001), 12 C.P.C. (5th) 107 (B.C.S.C.).
considered:
Clayton v. Earthcraft Landscape Ltd. (2002), 210 N.S.R. (2d) 101 (S.C.).
referred to:
Pierre v. Minister of Manpower and Immigration, [1978] 2 F.C. 849; (1978), 21 N.R. 91 (C.A.); Prassad v. Canada (Minister of Employment and Immigration), [1989] 1 S.C.R. 560; (1989), 57 D.L.R. (4th) 663; [1989] 3 W.W.R. 289; 36 Admin. L.R. 72; 7 Imm. L.R. (2d) 253; 93 N.R. 81; Siloch v. Canada (Minister of Employment and Immigration) (1993), 10 Admin. L.R. (2d) 285; 18 Imm. L.R. (2d) 239; 151 N.R. 76 (F.C.A.); R. v. Richard and Sassano (1992), 55 O.A.C. 43 (C.A.); Garden v. Canada, [2000] 1 C.T.C. 106 (F.C.A.); Cardinal et al. v. Director of Kent Institution, [1985] 2 S.C.R. 643; (1985), 24 D.L.R. (4th) 44; [1986] 1 W.W.R. 577; 69 B.C.L.R. 255; 16 Admin. L.R. 233; 23 C.C.C. (3d) 118; 49 C.R. (3d) 35; 63 N.R. 353.
authors cited
Krishna, Vern. The Fundamentals of Canadian Income Tax, 7th ed. Toronto: Carswell, 2002.
APPLICATION for judicial review, under Federal Court Act, section 28, of a Tax Court of Canada consent judgment. Application denied by the majority of a Federal Court of Appeal panel.
appearances:
David A. Wagg on his own behalf.
Lyle Bouvier for respondent.
solicitors of record:
Deputy Attorney General of Canada for respondent.
The following are the reasons for judgment rendered in English by
[1]Pelletier J.A.: The applicant, David Alfred Wagg, is a registrant under the Excise Tax Act, R.S.C., 1985, c. E-15 (the Act). By notice of reassessment dated May 25, 1999, the Minister of National Revenue reassessed the applicant for the period from April 1, 1995 to March 31, 1999, as a result of which the applicant became liable for unremitted tax of $745.08 while input tax credits totalling $3,970.59 which the applicant had claimed were disallowed. The applicant appealed his reassessment to the Tax Court of Canada where he appeared without counsel on August 8, 2001. As matters unfolded, the applicant signed a consent to judgment by which his appeal was allowed in part to account for a calculation error, but was otherwise dismissed as to his entitlement to input tax credits. The applicant now claims that the settlement should be set aside for various reasons, not the least of which is that he was made to feel that he had no choice but to sign the consent to judgment.
THE FACTS
[2]The facts underlying the appeal are not particularly complex. The applicant registered for purposes of the Act in 1992 and was assigned a registration number. The applicant operated a property management service during 1995 in the course of which he provided taxable services in respect of which he remitted no tax. In reassessing the applicant, the Minister assumed that the applicant had received consideration of $14,192 for those services and so that he was required to collect and remit $745.08 with respect to his supply of property management services.
[3]At the same time, the applicant also received consideration of $3,578.80 with respect to the supply of life insurance services in 1995. The applicant provided no property management services after 1995, deriving all of his income for the balance of the period under review from his life insurance business. For the reporting periods commencing from June 30, 1995 to March 31, 1999, the applicant filed returns in which he reported no tax collected but claimed input tax credits totalling $4,385.14. The Minister disallowed the applicant's claim for input tax credits on the basis that his life insurance business involved an exempt supply on which no tax was collectible, and therefore no input tax credits could be claimed. The point which the applicant sought to make in his appeal was that he ought not to be considered as providing an exempt supply, and should therefore be able to claim his input tax credits.
[4]In the course of the trial, the applicant explained that he had been informed that it would be advantageous for him to register so as to claim input tax credits but that, on the other hand, sales under $30,000 were exempt from GST (respondent's record, at page 25). As it turns out, the Court, and the applicant, were informed that the reality is that a vendor whose sales do not exceed $30,000 is not required to register, but once a vendor is registered, tax is collectible on all sales of a taxable supply (respondent's record, at page 43).
[5]Those are the facts which defined the taxation issue before the Court. But the issue before this Court does not turn on those facts, but on the conduct of the hearing before the Tax Court Judge. In order to properly convey the sense of the proceeding before the Judge, it will be necessary to quote extensively from the transcript of the hearing.
THE HEARING OF THE APPEAL
[6]The matter proceeded under the Informal Procedure which is provided for in section 18.3001[as enacted by S.C. 1990, c. 45, s. 61; 1998, c. 19, s. 296] and following of the Tax Court Act, R.S.C., 1985, c. T-2. The Informal Procedure is the equivalent of a "small claims" process. It is available only when the aggregate of all tax amounts does not exceed $12,000, when the amount of the less in issue does not exceed $24,000 or when the only amount in dispute is the amount of interest. The Informal Procedure is a streamlined procedure where the taxpayer can represent him or herself or can be represented by an agent: Vern Krishna, The Fundamentals of Canadian Income Tax, 7th ed. (Toronto: Carswell, 2002), at pages 25-26.
[7]The Judge began by briefly explaining the procedure to the applicant. The applicant was then sworn in and made a brief opening statement. This was followed by some questions which the Judge asked in relation to the applicant's contracts with the life insurers which he represented. The Judge then directed the applicant's attention to the reply to notice of appeal and asked him whether or not he admitted each of the Minister's assumptions of fact. In the course of this several inconsistencies in the Minister's numbers were identified. The Judge attempted to clarify, as best he could, the correct numbers, pointing out to counsel for the Minister that the burden of the inconsistencies fell upon the Minister (respondent's record, at page 40). At the end of this exercise, the Judge summarized the situation as follows:
HIS HONOUR: Oh, I glossed over that, I'm sorry, because I said that the Appellant didn't want to admit that, so I glossed over that. Thank you. So relative to the issues, Mr. Wagg, you've got a reduction in your credits for 1995--part of the assessment period falls in 1995. You've got a reduction in your credits of $106 --
THE WITNESS: Mmhmm.
HIS HONOUR:--because they say that relates to insurance. You've agreed with that. You haven't agreed that insurance necessarily should be treated that way, but you've agreed with the proportions and the numbers?
MR. BOUVIER: Correct, Your Honour.
HIS HONOUR: You also understand that there is another $755 that they'll want to collect from you because you failed to collect GST and make remittances of GST on your management services, and you're going to have to argue as to why you don't have that responsibility or give me some facts that support your ultimate argument. And then, lastly, they have denied you your credits for your insurance services throughout this period. You've collected no taxes or remitted no taxes. They aren't saying you had to, but they just don't want you to have the credits.
THE WITNESS: Correct.
[8]The Judge then asked the applicant why he felt he didn't have to collect and remit taxes on his management services and why he felt he was entitled to input tax credits on sales of life insurance. The applicant related what he said he had been told about registration and the $30,000 threshold for collecting and remitting tax. The Judge then asked counsel for the Crown whether the applicant could retroactively surrender his registration so as to be rid of the obligation to remit tax on sales of less than $30,000. The Judge then stated his motive in asking this question (respondent's record, at page 44):
So I'm asking at this point because I haven't heard the rest of the facts or the rest of the argument yet, but I doubt very much if I can find anything that would favour your not having a remittance obligation and still being in the system to collect your credits. I mean that's just not likely to be what the law provides and not likely any room that I would give you on that.
[9]In the course of his discussion with counsel for the Minister, the Judge came back to this same question (respondent's record, at page 46):
. . . I don't know whether or not the Crown can administra-tively resolve this $300 issue for you--that was one of the purposes of my questions--because I don't see any harm, subject to the ability of Revenue to do it. I mean, they're responsible to ensure that the Act is enforced on its terms. They can't make constant little side deals with everybody. That's contrary to the principles of law. On the other hand, if there is an administrative practice that does permit one to de-register, in effect, and re-reconcile the numbers, then I would suggest that even for $300, that's something that Mr. Bouvier [Counsel for the Minister] can consider. That would take us to the more important question, and that is whether or not your services are exempt services, which is--we have to know a little bit more about the facts, I guess, and there is a legal question that turns on that. That would be a more material issue, I suppose.
[10]This then lead the Judge to consider the issue of the status of the services provided by the applicant in his life insurance business:
HIS HONOUR: . . . Okay, let's go on to the next issue, which is the insurance claims. You understand that Revenue Canada is saying that insurance, financial services, are exempt and if they're exempt, you don't have to charge your GST obligations and you get credit. Again, you're facing a situation, though, that if they are creditable as non-exempt services, then you're in the catch-22 that you should have collected and remitted. You can't be in the system for just the good part and out of the system for the bad part. I don't think the Crown is going to let you argue that. Now, if you understand that, then we've got a couple of choices. We can proceed and if I find that you're right, you're going to owe them seven percent. I'm not sure that I can do that. They haven't really assessed on that basis, but if they haven't really assessed, I can't increase his assessment.
MR. BOUVIER: You can't increase the assessment, but--the amount of tax assessed can increase, but if you find that it's a non-exempt service, the finding of this Court, an assessment will issue following when it's sent back for re-assessment with respect to the seven percent. That's just by operation of the Act. You can't have somebody get the credit without being taxable.
HIS HONOUR: Well, I'm not sure if that's right, but you have a risk if Mr. Bouvier is right, let's put it that way.
MR. BOUVIER: Well, yeah, I'd say there is a risk. I can't say for sure.
HIS HONOUR: I'd say that there is a risk that what would happen if I find in your favour, you're going to be worse off; do you understand that?
THE WITNESS: Would you repeat that, Your Honour?
HIS HONOUR: I think there is a risk that if I find in your favour, that you could be worse off because I have--in order for you to get your ITCs as claimed, I'm going to have to find that these are taxable services. If they're taxable services, you should have charged, collected and remitted seven percent, and the Crown is going to come along and say, "If I give you your ITCs"--they're going to come back and say, "Well, you owe us now the seven percent." And if they're successful in doing that, you will--and in theory that's fair; right? You can't be in for the good and out for the bad.
THE WITNESS: I understand that. I understand that, Your Honour, and --
HIS HONOUR: So you stand to be worse off by virtue of this assessment. On the other hand, you could just agree to the assessment and that might save you money. Why don't you think about that? Maybe this is a good time to recess. Do you understand my point?
THE WITNESS: I understand your point, Your Honour. I would like to make one, you know--well, I guess first of all, you know, when we come back from recess, a clarification --
HIS HONOUR: Yes.
THE WITNESS:--and then point out my position in terms of being defined as a financial institution.
HIS HONOUR: But won't you understand if you're not a financial institution, you have to charge seven percent. Are you going to be able to go back on all these contracts and collect seven percent from the people that bought insurance?
THE WITNESS: No.
HIS HONOUR: It's out of your pocket; do you understand that?
THE WITNESS: Right.
HIS HONOUR: If you win your argument, you're going to lose financially; do you understand that?
THE WITNESS: I understand that.
HIS HONOUR: Okay. So let's recess --
THE WITNESS: Can I ask a question, Your Honour?
HIS HONOUR: Yes, you can.
THE WITNESS: So what you're saying is in terms of--assuming I wasn't a life insurance salesman, let's just leave that aside, and that I was a commissioned grocery sales--a commissioned grocery sales salesman paying my own expenses out in the field--which I can get into that later with regards to the contract--are you saying that--I guess my question is input tax credits are not allowed to be claimed unless you're collecting on the other end? Is that what you're saying?
HIS HONOUR: Yes.
THE WITNESS: Okay.
HIS HONOUR: And you can tell me that every Revenue Canada person that you ever talked to and you can show me letters that told you that that was all wrong wouldn't make a difference. You're subject to the laws Parliament drew, and Revenue Canada people that may or may not have quoted you otherwise can't write the law. They hopefully do their best.
THE WITNESS: Yes.
HIS HONOUR: And the fact that you may have gotten into the system, for example, by registering when you maybe didn't have to or shouldn't have registered --
THE WITNESS: Right.
HIS HONOUR:--maybe they can administratively facilitate something if it's an administrative practice. They can't make a deal. We've already dealt with that issue, and Mr. Bouvier will find out what they can do on that. I'm just simply asking you to consider whether or not you want to proceed with your appeal. The fundamental question that you raise is not a trivial question, and I'm sure there will be lots of examples that have come before the courts on agencies where they deal with agencies in respect of zero rated or, more particularly, exempt services trying to get into the system or out of the system. But I don't see it's to your advantage to be in this debate necessarily. So can we recess?
[11]When Court resumed, counsel for the Minister advised the Court that the applicant wished an adjournment to consult with counsel:
MR. BOUVIER: Thank you for your patience, Your Honour. I've had discussions with Mr. Wagg over the break, the recess, and he advises me that he wants an opportunity to discuss the matter with legal counsel and an opportunity to consider what you said. We're not opposed to adjourning this matter at this point.
HIS HONOUR: Well, I'm not inclined to adjourn this matter. You have a scheduled date. You know the matter is proceeding today. You have to have your material and your position ready to proceed. Did you make your call to Winnipeg?
[12]The discussion then turned to the possibility of the applicant retroactively ceasing to be registered, a course of action which counsel for the Minister advised was not available. The Judge summarized the position for the applicant and then returned to the issue of the status of the life insurance business:
HIS HONOUR: . . . So the only issue that you've made some ground on is that the credit has been reduced from--the disallowed credits have been reduced from 3,855 to 3,696, so approximately $150 improvement in your position. And we haven't resolved the issue legally necessarily, but I can advise you that you're not going to have one foot in the system and one foot out of the system, you know what I mean?
THE WITNESS: Yeah.
HIS HONOUR: It's not going to happen. And that--similarly, that will happen in respect of the life insurance. You're not going to get your one foot in and one foot out. So if you win the appeal, you're likely to be worse off on the assumption that Revenue Canada --
THE WITNESS: I would have to go back and collect GST.
HIS HONOUR: Good luck. You have to pay it.
THE WITNESS: Right, I understand that.
HIS HONOUR: Your chances of collecting it, I have no idea. You can use your own imagination on that. In any event, do you want to proceed? We're proceeding. I'm not going to adjourn.
THE WITNESS: Well, I guess my feeling is in lieu of what's been said and I'll just--Your Honour, just to clarify what you've said, you can't claim just input tax credits on your expenses, whether they're an exempt or non-exempt supply, without collecting the GST on the other end; that's what you're saying, if I have that correct?
HIS HONOUR: The only provisions of the Act that I'm familiar with that say otherwise are for what are called zero rated because those are in the system and you have to charge the tax and you have to collect it and you have to remit it and, therefore, you get the credits. The amount that you collect and remit is zero, so mechanically it states in the Act that you get the credit. This is not a zero-rated service, and therefore you can't have one foot in and one foot out. And I assume that not only is that the Respondent's position, but the Respondent, in argument, is going to show me sections of the Act that put him in that position. I've been there before, I'm not just surmising, and if you get a lawyer to tell you otherwise, just appeal, but you won't, I don't think.
THE WITNESS: Well, I guess--I guess just even though with the arguments I have in terms of, you know, I not being a financial institution kind of thing, I'd like an opportunity to, Your Honour, if possible, to kind of think this thing over, but I don't think there is much to think over either, on the other hand.
HIS HONOUR: How much time do you want? I mean, if you want me to give another hour, I'll give you another hour. If you're asking me to come back here another day or another time, the answer is no.
THE WITNESS: No.
HIS HONOUR: The situation is that--it's not a question of whether or not the situation is clear. It's a question of you've got a trial date, it's set for today.
THE WITNESS: Right.
HIS HONOUR: Barring any very cogent and emergent reason to adjourn, I'm not giving you an adjournment. You had notice of the hearing and you come and you argue. You've had the benefit of some comments. Either you throw them aside or you proceed. I don't want to bully you. It's open for you to proceed if you want, but all I'm doing, as a courtesy, is advising you of what the law is, my understanding of it, what the likely resolve of this Court is going to be, and the possible disadvantage that it could put you in. Now, if you want another hour to think about it, I'll give you another hour. If you want three hours to think about it, I'll come back. I don't think it's reasonable for me to give you much more time than that.
THE WITNESS: No, I don't think so. I think we'll just leave it as it is and --
HIS HONOUR: Do you want to withdraw your appeal or do you want to take advantage of the 2 or $300, in which case I think I would like a consent to judgment?
[13]The applicant did not reply as the Judge and counsel for the Crown engaged in a conversation about the mechanics of concluding the file in the course of which the Judge explained how he wished to proceed:
HIS HONOUR: . . . I'll come back with the administrative practice for you if you want, but what it acknowledges is that there is a consent to re-assess on a certain basis, and that if that re-assessment on that basis does not occur within its defined time, 60 or 90 days, then it's brought back up before the Court. Now, I prefer not to do that because then Mr. Wagg can change his mind or something. I'd rather have a signed consent, not something that's written that's in the record. I want his signature on it, I want your signature on it, and if you need more time, then take more time. But my understanding is that the reason I'm doing this as opposed to dismissing it is that I don't want you to lose the advantage of what's been--what I've declared as a reversal of the onus of proof which Mr. Bouvier has accepted. He's accepted that the discrepancy number, a couple of hundred dollars, is going to be resolved in your favour.
So the appeal is going to be allowed, but only to the extent of allowing you an additional credit over and above the assessment of the discrepancy amount. Once you identify the amount, I think that the consent is three lines plus your style.
[14]The Judge and Mr. Bouvier discussed the length of the adjournment, at which point the applicant intervened:
THE WITNESS: So you want me back here at 1:30?
MR. BOUVIER: Well, you can stand down and we'll discuss it with you --
HIS HONOUR: Yes, you're excused from the witness box and just wait until after this next short matter, which will take five minutes, and then you'll discuss the timing with Mr. Bouvier.
[15]When Court reconvened, counsel for the Minister tendered the consent to judgment signed by the applicant. The reassessment pursuant to the consent to judgment took place and resulted in a credit to the applicant of some $323, which reduced the amount of his indebtedness to $5,556.29.
THE APPLICANT'S SUBMISSIONS
[16]In his notice of application, the applicant sets out the following grounds for his application:
- Conflicting statements exist within THE REPLY TO NOTICE OF APPEAL
- The Tax Court of Canada based its decision on erroneous findings of fact with regard to not allowing material to be submitted as evidence. This material is as follows:
| 1- Contract between Industrial Alliance Pacific Insurance and the Applicant (EXHIBIT C) |
| 2- Statement of relevant arguments and facts in support of my appeal--(EXHIBIT D) |
- The Tax Court of Canada failed to observe principles of natural justice and procedural fairness in arriving at its decision.
- THE APPLICANT FELT COERCED INTO SIGNING THE "CONSENT TO JUDGMENT" AND WAS OF THE UNDERSTANDING THAT THERE WAS NO OTHER ALTERNATIVE [Emphasis in the original.]
[17]In so far as the failure to allow the applicant to submit his evidence is concerned, the transcript shows that the applicant's contract with Industrial Alliance Pacific Insurance (formerly Northwest Life) was submitted as Exhibit A-1 (respondent's record, at page 27). Furthermore, at the end of the hearing, the applicant submitted a document which is not described in the transcript to the Judge, who accepted it. There is nothing which would support the suggestion that the applicant was prevented from tendering the documents which he wished to tender.
ISSUES
[18]The essence of the appeal is that the applicant seeks to set aside a consent judgment on the ground that his consent was coerced. While it is not specifically raised by the applicant, the question of the refusal to grant an adjournment might also be raised as a ground of review. In my view, the issues in this appeal are the following:
(1) Did the Judge's refusal to grant the applicant an adjournment to consult with counsel amount to a denial of natural justice or a breach of procedural fairness?
(2) Should the consent to judgment be set aside?
ANALYSIS
DENIAL OF ADJOURNMENT
[19]It is trite law that the decision as to whether to grant an adjournment is a discretionary decision, which must be made fairly (see Pierre v. Minister of Manpower and Immigration, [1978] 2 F.C. 849 (C.A.), at page 851, cited with approval in Prassad v. Canada (Minister of Employment and Immigration), [1989] 1 S.C.R. 560, at page 569). There is no presumption that everyone is entitled to an adjournment. The Court will not interfere in the refusal to grant an adjournment unless there are exceptional circumstances (see Siloch v. Canada (Minister of Employment and Immigration) (1993), 10 Admin. L.R. (2d) 285 (F.C.A.)). Similarly, while it is in both the Court's and the litigant's best interests to have parties represented by counsel, the right to counsel is not absolute. In Asomadu-Acheampong v. Minister of Employment and Immigration (1993), 69 F.T.R. 60 (F.C.T.D.), Joyal J. said the following in response to a submission that the right to counsel was unqualified (at paragraph 8):
I respectfully beg to disagree. A right to counsel is no more absolute than the right of a tribunal to determine its own process. In the event that there is a conflict between the two, I believe that for the right to counsel to predominate over the other, regard must be had to surrounding circumstances to determine if in fact an applicant has suffered any prejudice. In my view, the right to counsel is but an adjunct to the doctrine of natural justice and fairness, to the rule of audi alteram partem, to the rule of full answer and defence and to similar rules which have long developed to assure that the rights and obligations of any person subject to any kind of inquiry are to be adjudged and determined according to law. Unless there be found a breach of any such rule, resulting in some prejudice to a person, it cannot be said that a refusal to adjourn deprives a tribunal of its jurisdiction or is grounds to quash its decision.
[20]This is so even in criminal cases (see R. v. Richard and Sassano (1992), 55 O.A.C. 43 (C.A.), at paragraph 6). Consequently, the starting point of the analysis of this issue must be that the applicant was not entitled as of right to an adjournment to retain counsel.
[21]On facts very similar to those before the Court in the present appeal, the British Columbia Court of Appeal, in Kinley v. Krahn (1995), 96 W.A.C. 139 (B.C.C.A.), upheld a trial judge's refusal to grant a self-represented litigant an adjournment to seek counsel, for the following reasons [at paragraph 19]:
The reluctance of this court to interfere with matters relating to the management of trials is well known. That is founded upon principle as well as upon authorities too numerous to mention. I do note, however, the remarks of Mr. Justice Macfarlane, sitting in chambers on an application for leave to appeal, as singularly apposite to the facts before us. I refer to p. 7 of his reasons in GEAC Canada Ltd. v. Prologic Computer Corporation, unreported, April 11, 1989, Vancouver Registry No. CA010671 (B.C.C.A.):
"This court is loath to interfere with the management of trials. It is loath to interfere with the decision of judges to adjourn or not to adjourn trials. The question of adjournments is largely a matter of discretion and this court will not interfere with the exercise by a trial judge of discretion unless it can be shown that he was clearly wrong in the decision that he made. I am not persuaded that Mr. Justice Spencer erred in exercising his discretion to refuse the adjournment. I agree with him when he says that preparation can continue forever but sometime that must stop and the trial must start."
[22]One could argue about whether the issue is the refusal to grant an adjournment or whether the adjournment which was offered was reasonable in the circumstances. However, in both cases, the test is the same. Was the applicant denied a fair trial when the trial judge refused to set the matter down for another day so as to allow the applicant to consult counsel once the trial judge had explained the ramifications of his position to him? In my view, he was not.
[23]Litigants represent themselves for a variety of reasons. If they come to realize before the commencement of trial that they have underestimated the complexity of the task before them, it is in their interest and the Court's to allow them to obtain representation. But once a trial is underway, I do not think it unfair to hold appellants to their choice to represent themselves, and to be guided by their own judgment.
[24]The decision to represent oneself is not irrevocable, nor is it trivial. Persons who undertake to represent themselves in matters of the complexity of the Income Tax Act [R.S.C., 1985 (5th Supp.), c. 1] or the Excise Tax Act must assume the responsibility of being ready to proceed when their appeal is called. If they embark upon the hearing of their appeal, they are representing to the Court that they understand the subject-matter sufficiently to be able to proceed. It may later become patently obvious that they are not, and in such a case, a trial judge must be governed by considerations of fairness, both to the appellant and to the respondent. However, where an appellant is simply unsure of his or her position, as was the case here, the requirements of fairness can be met by an opportunity for reflection.
[25]Putting the matter another way, litigants who choose to represent themselves must accept the consequences of their choice (Lieb v. Smith et al. (1994), 120 Nfld. & P.E.I.R. 201 (S.C.T.D.), at paragraph 16):
Thus, while the court will take into account the lack of experience and training of the litigant, that litigant must also realize that, implicit in the decision to act as his or her own counsel is the willingness to accept the consequences that may flow from such lack of experience or training.
[26]While the administrative requirements of the court system cannot be allowed to stand in the way of a fair hearing, they are not irrelevant considerations when it comes to deciding what is reasonable in the circumstances. It is not in the interests of justice to have judges idle and courtrooms empty so as to permit litigants to do that which they were bound to do before their case was called. This can only lead to delays in deciding cases which are before the Court, lengthens the time that other litigants must wait for their court date, and adds to the cost of operating the court system.
[27]I am satisfied that the Trial Judge's refusal to grant a lengthier adjournment than the one which he offered the applicant was not unfair and does not justify this Court's intervention.
ANALYSIS
SETTING ASIDE THE CONSENT JUDGMENT
[28]The applicant's second ground of appeal is that the judgment to which he consented should be set aside on the ground that his consent was coerced.
[29]In Racz v. Mission (Dist.) (1988), 22 B.C.L.R. (2d) 70 (C.A.), at page 72, the British Columbia Court of Appeal described a consent judgment in the following terms:
An order entered by consent is in effect an agreement of compromise and such an order may be set aside on any ground which would invalidate a contract. In all other respects the judgment has full force and validity.
[30]The onus of establishing the facts which would invalidate the "agreement of compromise" is on the person seeking to set aside the consent judgment. Coercion, if proved, would invalidate a settlement. A review of the passages from the transcript which are reproduced earlier in these reasons shows that the Trial Judge was very proactive in the conduct of the hearing. He discouraged the applicant from making speeches in the guise of giving evidence. He led the applicant through each of the Crown's assumptions of fact in its reply to the notice of appeal to see which were admitted and which were not. He attempted to find an administrative solution to the applicant's problem by inquiring as to the possibility of retroactively revoking the applicant's registration. Finally, he alerted the applicant to the contradiction inherent in his position: if he was found to supplying a non-exempt supply, so as to be eligible to claim input tax credits, he would also be liable to remit tax on his sale of supplies.
[31]This level of involvement on the part of a trial judge would be objectionable if the litigant were represented by counsel. But where the litigant is self represented, the Court can intervene for the purpose of focussing the proceedings on the issue before the Court. In Davids v. Davids (1999), 125 O.A.C. 375 (C.A.), the Ontario Court of Appeal discussed the role of a trial judge where one of the parties is unrepresented [at paragraph 36]:
Fairness does not demand that the unrepresented litigant be able to present his case as effectively as a competent lawyer. Rather, it demands that he have a fair opportunity to present his case to the best of his ability. Nor does fairness dictate that the unrepresented litigant have a lawyer's familiarity with procedures and forensic tactics. It does require that the trial judge treat the litigant fairly and attempt to accommodate unrepresented litigants' unfamiliarity with the process so as to permit them to present their case. In doing so, the trial judge must, of course, respect the rights of the other party.
[32]There is authority to the effect that a trial judge who is faced with an unrepresented litigant has an obligation to direct that litigant's attention to salient points of law and procedure. In Clayton v. Earthcraft Landscape Ltd. (2002), 210 N.S.R. (2d) 101 (S.C.), the Nova Scotia Supreme Court overturned the decision of a small claims adjudicator who did not draw to the litigant's attention that his documentary evidence would be entitled to more weight if he called the author of the document as a witness. The following comments by Preston J. in Garry v. Pohlmann (c.o.b. Bro Bros Roofing) (2001), 12 C.P.C. (5th) 107 (B.C.S.C.), made in the context of proceedings in small claims court, are applicable, in my view, to dealings with unrepresented litigants under the Informal Procedure in the Tax Court [at paragraph 46]:
Given the nature of small claims proceedings, appellate courts have recognized that the role of trial judges in small claims court is often, by necessity, more interventionist. As noted by Farley J. in Wil v. Burdman (c.o.b. Cingarella Restaurant), [1998] O.J. No. 2533 (Ont. C.J.--Gen. Div.), the task of a small claims judge is, in general, difficult and it is not inappropriate for a trial judge to attempt to focus and assist the parties by indicating an area of concern to the court.
[33]I accept this as a correct statement of principle. A trial judge who is dealing with an unrepresented litigant has the right and the obligation to ensure that the litigant understands the nature of the proceedings. This may well require the judge to intervene in the proceedings. However, the trial judge must be careful not to give the perception of having closed his or her mind to the matter before the Court. Taking the Trial Judge's interventions as a whole, I am satisfied that they were directed to assisting the applicant to put his case before the Court and were not, in any sense, coercive.
[34]However, it may be suggested that the Trial Judge went too far when he indicated his view of the likely outcome of the appeal before he had heard all the applicant had to say. Certainly, the applicant now complains that he was not given the opportunity to make all his arguments. I have already rejected the suggestion that the applicant was not allowed to file his documents but it may be that the applicant felt that the result of his appeal was a foregone conclusion.
[35]Did the Trial Judge's specific interventions go beyond the range of appropriate comment? While it is true that the Judge expressed a view as to the likely outcome of the case, he explained his reasoning to the applicant who indicated that he understood the issues raised. The key issue was a legal one which did not turn on findings of fact. The Trial Judge made it clear that the choice of how to proceed was the applicant's to make. He offered him time to reflect upon his options. I can see nothing which would justify allowing the applicant to resile from the choice which he made.
[36]The burden of dealing with unrepresented litigants falls most heavily on trial courts. Courts of appeal should be careful not to make this task even more difficult by being overly critical of attempts to assist the litigants and to move the process along. The trial judge's overarching responsibility is to ensure that the trial or hearing is fair. If, after taking into account the whole of the circumstances, the reviewing court is satisfied that the trial was fair, it ought not to intervene simply because the trial judge departed from the standards of perfection at one point or another. This is all the more true where a matter is resolved by consent. Absent compelling evidence that the purported consent amounted to no consent at all, a reviewing court should not be anxious to set aside agreements freely entered into.
[37]For these reasons, I would dismiss the appeal with costs.
Richard C.J.: I agree.
* * *
The following are the reasons for judgment rendered in English by
[38]Isaac J.A. (dissenting reasons): I have had the benefit of reading, in draft, the reasons for judgment that my colleague Pelletier J.A. has circulated. With much regret, I am unable to subscribe to them and must state my reasons.
FACTUAL BACKGROUND
[39]The judgment of the Tax Court of Canada which is the subject of this section 28 [Federal Court Act, R.S.C., 1985, c. F-7 (as am. by S.C. 1990, c. 8, s. 8)] application, allowed the applicant's appeal in part from an assessment conducted by the Minister of National Revenue (the Minister) under the Excise Tax Act, R.S.C., 1985, c. E-15 (ETA) was consented to by both parties.
[40]David Wagg (the applicant) is an independent life insurance agent. In 1992, he registered for the purposes of the ETA and was assigned a goods and services tax (GST) registration number, even though he was not required to do so. Pursuant to subsection 240(1) [as enacted by S.C. 1990, c. 45, s. 12; 1993, c. 27, s. 100] of the ETA (which sets out who is required to register) and subsection 148(1) [as enacted by S.C. 1990, c. 45, s. 12; 1997, c. 10, s. 9] (which defines the term "small suppliers"), someone whose taxable supplies amounted to $30,000 or less per year does not have to register.
[41]In addition to selling life insurance, the applicant supplied property management services for which he received consideration in the amount of $10,644 during 1995. He also received $3,578.80 with respect to arranging for the issue of and maintaining life insurance policies during the same year.
[42]Subsection 240(3) [as enacted by S.C. 1990, c. 45, s. 12; 1993, c. 27, s. 100; 1997, ch. 10, ss. 54, 218] of the ETA permits small suppliers, whose taxable supplies are $30,000 or less, to register voluntarily, and subsection 171(1) [as enacted by S.C. 1990, c. 45, s. 12; 1993, c. 27, s. 37; 1997, c. 10, s. 163] provides that small suppliers who choose to register are treated the same as any other registrants. They are required to collect and remit GST and are entitled to receive input tax credits (ITCs).
[43]The applicant was required to collect and remit GST in the amount of $745.08 on his supply of property management services for 1995, but he failed to remit this tax. He, nonetheless, claimed ITCs amounting to $529.36 in respect of this supply and life insurance services supplied during the period of April 1, 1995 to December 31, 1995, and ITCs amounting to $3,855.78 for life insurance services supplied from January 1, 1996 to March 31, 1999.
[44]The respondent agrees that the applicant was entitled to claim ITCs in the amount of $255.35 for his supply of property management services during 1995, but did not agree that he was entitled to ITCs in relation to his supply of life insurance services. The reason being that life insurance is an exempt supply of a financial service (pursuant to Part VII [as enacted by S.C. 1990, c. 45, s. 18] of Schedule V to the ETA) to which GST does not apply and ITCs cannot be claimed. Consequently, the Minister disallowed ITCs amounting to $106.61 claimed in respect of the applicant's supply of life insurance services during 1995.
[45]By notice of assessment, dated May 25, 1999, the Minister assessed the applicant net tax of $489.73, interest of $449.58 and penalties of $624.05 for the period of April 1, 1995 to March 31, 1999. The amount assessed as net tax included adjustments for the $745.08 in unreported tax and disallowed ITCs of $3,970.59. At trial, counsel for the respondent conceded that the Minister made an error in not disallowing ITCs in the amount of $166.55 in respect of his supply of property management services. This is reflected in the consent to judgment.
[46]By notice of objection, dated August 20, 1999, the applicant took issue with the Minister's assessment on the basis that as a self-employed life insurance agent he should be able to claim ITCs on his expenses. The Minister confirmed the assessment with a notice of decision, dated June 13, 2000, explaining why the applicant was not entitled to claim ITCs from 1996 onward.
[47]The applicant appealed his assessment to the Tax Court of Canada. The appeal was heard on August 8, 2001, at which the applicant represented himself. At the end of the hearing the Court allowed the appeal in part and remitted the matter to the Minister for reconsideration and reassessment in light of the consent to judgment.
TAX COURT TRIAL
[48]At the commencement of the trial, the learned Tax Court Judge explained the procedures to the applicant and advised him that he bore the onus of establishing that the Minister's assumptions were not true. The applicant then commenced his sworn testimony. The Judge guided the applicant through his testimony respecting the nature of his work as a life insurance agent. Next, he began to guide the applicant through the respondent's reply to the notice of appeal in order to distill the relevant facts and points in issue, but this was left incomplete because of interventions by the Judge as will appear more fully later in these reasons.
[49]Throughout the applicant's testimony, the Judge attempted to explain to him the applicable legal issues. The applicant indicated that he understood. The Judge also focussed on the issue of whether or not an administrative mechanism existed which allowed the applicant to deregister retroactively for the purposes of the ETA in order to decrease his tax liability. The preoccupation of the Judge with this issue appears from the following exchange (trial transcript, at pages 24-27):
HIS HONOUR: Is there any administrative practice relative to agreeing not to collect ITCs if one registers mistakenly? Is there any practice that --
MR. BOUVIER: Administratively speaking, he didn't--I don't believe Mr. Wagg ever achieved the $30,000 amount they're required to register for GST. Administratively speaking, he should have de-registered for GST, got rid of his GST.
HIS HONOUR: Well, my point is, from an administrative practice point of view, I mean, let's say Mr. Wagg said, "Look, I misunderstood, I registered. I should have de-registered. I know if I de-register, I'm not going to get my ITCs, but my ITCs are lower than, my remittance obligation, so I can go back to where I should have been" --
MR. BOUVIER: Right.
HIS HONOUR:--"and the net result will be less of a financial obligation. So I'm asking at this point because I haven't heard the rest of the facts or the rest of the argument yet, but I doubt very much if I can find anything that would favour your not having a remittance obligation and still being in the system to collect your credits. I mean, that's just not likely to be what the law provides and not likely any room that I would give you on that.
MR. BOUVIER: We're only dealing with the period of 19--1995 where they've assessed the remittance, where they said you had to collect and remit, and it's only $745. They've allowed him ITCs on the 745 minus 106. So really, in 1995, the tax liability to Mr. Wagg is minuscule, and I don't have a number in front of me.
HIS HONOUR: Well, it's a few hundred dollars.
MR. BOUVIER: Yes.
HIS HONOUR: I mean, 700 out of his pocket and 400 into his pocket. He's not getting the 500 that he's claimed because there is 106 of it that you're attributing to insurance --
MR. BOUVIER: Right.
HIS HONOUR:--in any event, so he's still going to be--he's still going to be out some $300. Hardly, by the way outside the principle of the matter, which I don't want to make light of, there is a lot of resources here today to figure out what's the appropriate provision --
MR. BOUVIER: Yes.
HIS HONOUR:--for $300 either way. I don't know whether or not the Crown can administratively resolve this $300 issue for you--that was one of the purposes of my questions--because I don't see any harm, subject to the ability of Revenue to do it. I mean. They're responsible to ensure that the Act is enforced on its terms. They can't make constant little side deals with everybody. That's contrary to the principles of law. On the other hand, if there is an administrative practice that does permit one to de-register, in effect, and re-reconcile the numbers, then I would suggest that even for $300, that's something that Mr. Bouvier can consider.
. . .
MR. BOUVIER: . . .I'd have to discuss whether it's possible, the administrative practice is possible to allow Mr. Wagg to de-register for the 1995 period. If I may have five minutes, I could probably canvass it.
HIS HONOUR: Well, let's wait for another reason to recess and then you can do all the things. You can make the call, you can--it's not as if this is going to resolve everything. [Emphasis added.]
[50]Before the recess, the Judge told the applicant, while he was on the stand to give his evidence, that if he proceeded with the appeal, he risked ending up worse off. For ease of reference I reproduce below a portion of the trial transcript which contains these statements (trial transcript, at pages 28-33):
HIS HONOUR: . . . You understand that Revenue Canada is saying that insurance, financial services, are exempt and if they're exempt, you don't have to charge your GST obligations and you get credit. Again, you're facing a situation, though, that if they are creditable as non-exempt services, then you're in the catch-22 that you should have collected and remitted. You can't be in the system for just the good part and out of the system for the bad part. I don't think the Crown is going to let you argue that. Now, if you understand that, then we've got a couple of choices. We can proceed and if I find that you're right, you're going to owe them seven percent. I'm not sure that I can do that. They haven't really assessed on that basis, but if they haven't really assessed, I can't increase his assessment.
MR. BOUVIER: You can't increase the assessment, but--the amount of tax assessed can increase, but if you find that it's a non-exempt service, the finding of this Court, an assessment will issue following when it's sent back for re-assessment with respect to the seven percent. That's just by operation of the Act. You can't have somebody get the credit without being taxable.
HIS HONOUR: Well, I'm not sure if that's right, but you have a risk if Mr. Bouvier is right, let's put it that way.
MR. BOUVIER: Well, yeah, I'd say there is a risk. I can't say for sure.
HIS HONOUR: I'd say that there is a risk that what would happen if I find in your favour, you're going to be worse off; do you understand that?
THE WITNESS: Would you repeat that, Your Honour?
HIS HONOUR: I think there is a risk that if I find in your favour, that you could be worse off because I have--in order for you to get your ITCs as claimed, I'm going to have to find that these are taxable services. If they're taxable services, you should have charged, collected and remitted seven percent, and the Crown is going to come along and say, "If I give you your ITCs"--they're going to come back and say, "Well, you owe us now the seven percent." And if they're successful in doing that, you will--and in theory that's fair; right? You can't be in for the good and out for the bad.
THE WITNESS: I understand that. I understand that, Your Honour, and --
HIS HONOUR: So you stand to be worse off by virtue of this assessment. On the other hand, you could just agree to the assessment and that might save you money. Why don't you think about that? Maybe this is a good time to recess. Do you understand my point?
THE WITNESS: I understand your point, Your Honour. I would like to make one, you know--well, I guess first of all, you know, when we come back from recess, a clarification --
HIS HONOUR: Yes.
THE WITNESS:--and then point out my position in terms of being defined as a financial institution.
HIS HONOUR: But don't you understand if you're not a financial institution, you have to charge seven percent. Are you going to be able to go back on all these contracts and collect seven percent from the people that bought insurance?
THE WITNESS: No.
HIS HONOUR: It's out of your pocket; do you understand that?
THE WITNESS: Right.
HIS HONOUR: If you win your argument, you're going to lose financially; do you understand that?
THE WITNESS: I understand that.
HIS HONOUR: Okay. So let's recess --
THE WITNESS: Can I ask a question, Your Honour?
HIS HONOUR: Yes, you can.
THE WITNESS: So what you're saying is in terms of--assuming I wasn't a life insurance salesman, let's just leave that aside, and that I was a commissioned grocery sales--a commissioned grocery sales salesman paying my own expenses out in the field--which I can get into that later with regards to the contract--are you saying that--I guess my question is input tax credits are not allowed to be claimed unless you're collecting on the other end? Is that what you're saying?
HIS HONOUR: Yes.
THE WITNESS: Okay.
HIS HONOUR: And you can tell me that every Revenue Canada person that you ever talked to and you can show me letters that told you that that was all wrong wouldn't make a difference. You're subject to the laws Parliament drew, and Revenue Canada people that may or may not have quoted you otherwise can't write the law. They hopefully do their best.
THE WITNESS: Yes.
HIS HONOUR: And the fact that you may have gotten into the system, for example, by registering when you maybe didn't have to or shouldn't have registered --
THE WITNESS: Right.
HIS HONOUR:--maybe they can administratively facilitate something if it's an administrative practice. They can't make a deal. We've already dealt with that issue, and Mr. Bouvier will find out what they can do on that. I'm just simply asking you to consider whether or not you want to proceed with your appeal. The fundamental question that you raise is not a trivial question, and I'm sure there will be lots of examples that have come before the courts on agencies where they deal with agencies in respect of zero rated or, more particularly, exempt services trying to get into the system or out of the system. But I don't see it's to your advantage to be in this debate necessarily. So can we recess? [Emphasis added.]
[51]These two exchanges illustrate that, without having heard all the facts or the applicant's argument, and without being certain as to the applicable legal principles, the Judge encouraged the applicant to consider agreeing with the Minister's assessment.
[52]After receiving this advice, the applicant indicated that he understood the point which the Judge made; but when the hearing resumed, he requested an adjournment for the purpose of discussing the matter with legal counsel and considering his options. The Judge refused this request even though the respondent did not oppose adjourning the matter. Here is the colloquy between the Judge and counsel for the respondent on this subject (trial transcript, at page 33):
MR. BOUVIER: Thanks you for your patience, Your Honour. I've had discussions with Mr. Wagg over the break, the recess, and he advises me that he wants an opportunity to discuss this matter with legal counsel and an opportunity to consider what you said. We're not opposed to adjourning this matter at this point.
HIS HONOUR: Well, I'm not inclined to adjourn this matter. You have a scheduled date. You know the matter is proceeding today. You have to have your material and your position ready to proceed.
[53]Subsequently, the Judge asked the applicant whether he wanted to proceed with the appeal at which point the following exchange ensued (trial transcript, at pages 35-40):
HIS HONOUR: . . . In any event, do you want to proceed? We're proceeding. I'm not going to adjourn
THE WITNESS: Well, I guess my feeling is in [light] of what's been said and I'll just--Your Honour, just to clarify what you've said, you can't claim just input tax credits on your expenses, whether they're an exempt or a non-exempt supply, without collecting the GST on the other end; that's what you're saying, if I have you correct?
HIS HONOUR: The only provisions of the Act that I'm familiar with that say otherwise are for what are called zero rated because those are in the system and you have to charge the tax and you have to collect it and you have to remit it and, therefore, you get the credits. The amount that you collect and remit is zero, so mechanically it states in the Act that you get the credit. This is not a zero-rated service, and therefore you can't have one foot out. And I assume that not only is that the Respondent's position, but the Respondent, in argument, is going to show me sections of the Act that put him in that position. I've been there before, I'm not just surmising, and if you get a lawyer to tell you otherwise, just appeal, but you won't, I don't think.
THE WITNESS: Well, I guess--I guess just even though with the arguments I have in terms of, you know, I not being a financial institution kind of thing, I'd like an opportunity to, Your Honour, if possible, to kind of think this thing over, but I don't think there is much to think over either, on the other hand.
HIS HONOUR: How much time do you want? I mean, if you want me to give you another hour, I'll give you another hour. If you're asking me to come back here another day or another time, the answer is no.
THE WITNESS: No.
HIS HONOUR: The situation is that--it's not a question of whether or not the situation is clear. It's a question of you've got a trial date, it's set for today.
THE WITNESS: Right.
HIS HONOUR: Barring any very cogent and emergent reason to adjourn, I'm not giving you an adjournment. You had notice of the hearing and you come and you argue. You've the benefit of some comments. Either you throw them aside or you proceed. I don't want to bully you. It's open for you to proceed if you want, but all I'm doing, as a courtesy, is advising you of what the law is, my understanding of it, what the likely resolve of this Court is going to be, and the possible disadvantage that it could put you in. Now, if you want another hour to think about it, I'll give you another hour. If you want three hours to think about it, I'll come back. I don't think it's reasonable for me to give you much more time than that.
THE WITNESS: No, I don't think so. I think we'll just leave it as it is and --
HIS HONOUR: Do you want to withdraw your appeal or do you want to take advantage of the 2 or $300, in which case I think I would like a consent to judgment?
MR. BOUVIER: Okay, what we'll do is I'll have to draft something up, of course, with proper figures because the Reply is somewhat inaccurate, so I'll have to put something together.
HIS HONOUR: That's fine. And can you do that within the next two or three hours?
MR. BOUVIER: I could--if we could adjourn until 1:30 maybe.
HIS HONOUR: Okay. We'll adjourn till 1:30 and --
MR. BOUVIER: If not a formal written up consent to judgment, at least I'll have something to read into the Court orally with the correct figures.
HIS HONOUR: Well, the other way to do it is--where is it? One-sixty --
MR. BOUVIER: 169(3).
HIS HONOUR: Right, and --
MR BOUVIER: That's the Income Tax Act provision, and I'm not sure that there is --
HIS HONOUR: Well, actually, the court procedure on that is that, in effect, we adjourn it and you have a period of time--I'll come back with the administrative practice for you if you want, but what it acknowledges is that there is a consent to re-assess on a certain basis, and that if that re-assessment on that basis does not occur within its defined time, 60 or 90 days, then it's brought back up before the Court. Now, I prefer not to do that because then Mr. Wagg can change his mind or something. I'd rather have a signed consent, not something that's written that's in the record. I want his signature on it, I want your signature on it, and if you need more time, then take more time. But my understanding is that the reason I'm doing this as opposed to dismissing it is that I don't want you to lose the advantage of what's been--what I've declared as a reversal of the onus of proof, which Mr. Bouvier has accepted. He's accepted that the discrepancy number, a couple of hundred dollars, is going to be resolved in your favour.
So the appeal is going to be allowed, but only to the extent of allowing you an additional credit over and above the assessment of this discrepancy amount. Once you identify the amount, I think that the consent is three lines plus your style.
MR. BOUVIER: Right, yes.
HIS HONOUR: We will adjourn till--is 1:30 fine or do you want to make it 12:00 or do you want to make it 2:00?
MR. BOUVIER: 1:30 would be good for me. We should actually call the Gunner Industries matter.
HIS HONOUR: Yes, thanks for reminding me.
THE WITNESS: So you want me back here at 1:30?
MR. BOUVIER: Well, you can stand down and we'll discuss it with you --
HIS HONOUR: Yes, you are excused from the witness box and just wait until after this next short matter, which will take five minutes, and then you'll discuss the timing with Mr. Bouvier.
THE WITNESS: Did you want my copy of --
HIS HONOUR: I can take it if you like, but you're disposing of this matter by consent is the way I understand you're prepared to do.
THE WITNESS: Yeah.
HIS HONOUR: So I don't need it. If you want, I'll take it for the file.
THE WITNESS: Well, you could, I guess.
HIS HONOUR: Thank you. [Emphasis added.]
[54]Thereafter, the Court recessed for just over two-and-a-half hours to give counsel for the respondent time to prepare a consent to judgment. Following this second recess, the trial concluded with the following exchange between counsel for the respondent and the Judge, which took place in the apparent absence of the applicant (trial transcript, at pages 40-41):
HIS HONOUR: I hope he wasn't too grumpy. I understand he did sign it, though.
MR. BOUVIER: He did sign it. We've made his day, actually, because he's carved out a portion of the GST from his expenses so he can reopen the expense which he's carved our and has been disallowed as the tax credits. The one-sixty--the figure that I'm using is a discrepancy, the 166.55.
HIS HONOUR: And how do you mean that it's opened up --
MR. BOUVIER: Well, because he's carved out the GST portion of his expenses and he's input tax credited them on his Income Tax Return, he can go back and reopen his Income Tax Returns for `98 and `99, the ones that aren't statute barred and claim then as expenses, which he's going to do, and he's going to de-register today.
HIS HONOUR: I'm surprised you couldn't help him somewhat there, but when he's got one foot in and one foot out, he wasn't going to have a landmark decision from me, I don't think, so I think you did fine. Thank you very much.
[55]As I have already said, the applicant signed the consent to judgment which allowed his appeal in part and entitled him to additional ITCs in the amount of $166.55 for the April 1, 1995 to December 31, 1995 assessment period with respect to his supply of property management services.
SUBMISSIONS OF THE PARTIES
[56]In his submissions before this Court, the applicant argued that the Judge failed to observe the principles of natural justice and procedural fairness, and that he failed to exercise his jurisdiction to determine the issues before him. Specifically, the applicant complained that he was not allowed to present his arguments and evidence to the Court, and that he did not understand the implications of signing the consent to judgment. Furthermore, the applicant says that he felt coerced into signing the consent to judgment.
[57]In contrast, the respondent submitted that the applicant was given an opportunity to present his case and that the applicant chose to sign the consent to judgment.
ISSUES
[58]This application requires the Court to determine whether the judgment below should be set aside because the applicant's consent was obtained through coercion.
ANALYSIS
[59]I agree with Pelletier J.A. that an adjournment of a trial is within the discretion of the presiding judge. But, whether a new trial will result from the judge's refusal to grant the adjournment will depend on the circumstances surrounding the request and subsequent refusal (see Siloch v. Canada (Minister of Employment and Immigration) (1993), 10 Admin. L.R. (2d) 285 (F.C.A.) and Garden v. Canada, [2000] 1 C.T.C. 106 (F.C.A.)).
[60]As my learned colleague points out, the Judge went to considerable length to ensure that the applicant understood the trial process. The record indicates that he appears to have been motivated by a desire to assist the applicant in saving money. This is the inference I have drawn from reading the record respecting the Judge's suggestion to the respondent to consider whether or not it was administratively possible for the applicant to deregister retroactively for 1995 as a means of reducing his tax liability by a few hundred dollars. Similarly, the Judge encouraged the applicant to take advantage of the reversed onus of proof which entitled him to additional ITCs. However, these efforts on the applicant's behalf, superficially laudable though they might be, are, in my opinion, outweighed by his refusal to grant the adjournment requested by the applicant, his failure to allow the applicant to complete his testimony and to make arguments, and his strong encouragement of the applicant to agree with Minister's assessment. In my respectful view, this refusal of the adjournment, which led to the consent to judgment, is tantamount to coercion and was unfair to the applicant.
[61]In making this comment, I am not unmindful of the need to expedite matters, where practical and possible, so as to not exacerbate the backlog of cases already plaguing the court system. Trial judges have a responsibility, particularly when dealing with unrepresented litigants, to strike a balance between the desire to resolve matters expeditiously, and the need to adjudicate cases in a principled manner that employs a fair process and preserves the appearance of justice.
[62]In my respectful view, the matter before us is not a case of a litigant who simply underestimated the complexity of his case. It is, rather, one where a self-represented taxpayer received an unexpected surprise when the Judge told him that he ought to consent to judgment rather than proceed with the trial in order to avoid the risk of increasing his tax obligation. In these circumstances, the failure on the part of the Judge to grant the adjournment, his failure to let the applicant continue with his evidence, his failure to permit the applicant to make argument, and his advising the applicant to consent to judgment, amounted to a breach in procedural fairness. With the greatest respect to those who take a different view, the Judge's conduct was oppressive and without doubt left the applicant with a feeling of powerlessness and without choice. To use the applicant's language: he was coerced into signing the consent to judgment.
[63]The language which the Judge used supports this conclusion. For example, he told the applicant that he did not want to "bully" him and he told counsel for the respondent that he hoped the applicant was not "too grumpy" when asked to sign the consent judgment. These words, in the context in which they appear in the trial transcript, lead me to conclude that the Judge was aware that his conduct may have been cause for concern.
[64]Having concluded that the Judge breached the procedural fairness to which the applicant was entitled, I am of the view that a new trial must be ordered. In coming to this conclusion I am guided by the teachings of Supreme Court of Canada articulated in Cardinal et al. v. Director of Kent Institution, [1985] 2 S.C.R. 643, at page 661, by LeDain J. who, in writing for the Court, stated:
. . . that the denial of a right to a fair hearing must always render a decision invalid, whether or not it may appear to a reviewing court that the hearing would likely have resulted in a different decision. The right to a fair hearing must be regarded as an independent, unqualified right which finds its essential justification in the sense of procedural justice which any person affected by an administrative decision is entitled to have. It is not for a court to deny that right and sense of justice on the basis of speculation as to what the result might have been has there been a hearing. . . .
CONCLUSION
[65]For all these reasons, I would allow this section 28 application with costs, set aside the decision below, and order a new trial before a different judge of the Tax Court.