Cases
ACI Properties v. The Queen, 2014 DTC 5036 [at 6718], 2014 FCA 45
Another taxpayer ("AFT") made a payment to the appellant ("ACI") of $1.95 million, which it characterized as a deductible management fee and ACI characterized as a capital receipt. A reassessment of ACI treated the fee as income to it. Following ACI's appeal of the reassessment, the Minister brought an application under s. 174 to determine the characterization of the $1.95 million payment.
ACI was concerned that distinct s. 174 proceedings would cause it to lose a tactical advantage relating to the particular assumptions previously made (and pleaded) by the Minister. After noting (at para. 25) that "the fact that steps taken by the Minister…deprive the appellant of a tactical advantage is not, in and of itself, an abuse of process," Pelletier JA indicated that while s. 174(3)(a) appeared to contemplate such a distinct proceeding, this case instead fell under s. 174(3)(b), where such advantage would not be lost.
MNR v. RBC Life Insurance Company, 2013 FCA 50
The taxpayers offered "10-8" insurance plans to their customers, which generated exempt income and deductible interest. Under a 10-8 plan, the customer borrows money at 10% tax-deductible interest, and uses the borrowed amount to obtain an investment vehicle that returns 8% tax-exempt interest. After the Minister obtained authorizations from the Federal Court under s. 231.2(3) requiring the taxpayers to disclose customer lists, the taxpayers successfully applied under s. 231.2(6) to have those prior authorizations cancelled. The Minister had withheld significant information on the original application, including that CRA was deliberately engaging in an "audit blitz" so as to have a chilling effect on the 10-8 plans, notwithstanding that they were acknowledged to technically work.
The Court affirmed the cancellation of the authorizations. In response to a submission that a judge reviewing such authorization under s. 231.2(6) may only consider specifically whether the conditions in s. 231.2(3)(a) and (b) are satisfied, Stratas J.A. stated that the existence of judicial discretion is essential to the constitutional validity of an authorization in the first place under s. 231.2(3) (para. 23), that the "review under subsection 231.2(6) must include a discretionary element and is not limited to verifying that the two statutory preconditions are met" (para. 27), and that the alternative would render the Court "powerless" to address an abuse of process (para. 28): such as the withholding of relevant information - for example "the Minister could misinform the judge about the inconvenience and cost to persons who will be subject to the authorization" (para. 30); or even "bald lies" (para. 29).
Since Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626 at paras. 35-38, the Federal Courts have had "plenary powers" analogous to the inherent powers of a provincial superior court (para. 35), which include the power to address abuse of process.
Special Risks Holdings Inc. v. The Queen, 84 DTC 6054, [1984] CTC 71 (FCTD), aff'd 84 DTC 6215, [1984] CTC 563 (FCA)
"It is inherent in the good faith application of the Rule that further discoveries of documents will not be sought or further investigations made thereafter, save in preparation for trial, but not of a nature to require postponement of same." A motion for further discovery that was filed only 6 days before the day that had been set for trial, and which consequently would have delayed the trial if successful, was dismissed as being an abuse of the process of the Court.
Medicine Hat Greenhouse Ltd. and German v. R., 79 DTC 5091, [1980] CTC 114 (Alta. C.A.)
Assuming the absence of fraudulent intent or improper motive involved in specifying the date contained in the certificate, the certificate is conclusive evidence as to the date upon which the evidence justifying a prosecution came to the attention of the Minister. In addition, delay in initiating a prosecution which is not barred by a limitation period does not constitute an abuse of process.
See Also
McIntyre v. The Queen, 2014 DTC 1116 [at 3258], 2014 TCC 111
Two of the taxpayers were convicted based on a plea-bargain. The Minister's subsequent assessments of the taxpayers was based on amounts greater those in the plea bargain. After finding that neither the issue estoppel nor abuse of process doctrines applied to prevent the reassessment (see summary under General Concepts - Res Judicata), Campbell J stated (at para. 46):
Finally, I conclude that to restrict the Minister in the civil tax appeals before this Court to the Agreed Facts, established pursuant to a plea bargain, would constitute an abuse of process. Otherwise, unfairness would result because the parties would effectively be prohibited from tendering evidence in the appeals before this Court when no evidence was tendered or weighed in the prior criminal proceedings and no judicial findings of fact were made.
Congiu v. The Queen, 2013 CCI 271, aff'd 2014 FCA 73
The appellant was appealing an assessment made by Revenue Quebec on behalf of the (federal) Minister under s. 270(4) of the Excise Tax Act in respect of a debt of a corporation of which she had been a receiver. Angers J noted (at para. 4) that (TaxInterpretations translation):
The issues before me are essentially the same as those put before Justice Lareau of the Court of Quebec and on which he has already pronounced. Only the legislative provisions on which the assessments rest are different ... .
There was an agreed statement of facts based on the findings of Lareau J.
In finding that the issues before him were not res judicata, Angers J stated (at para. 8) that it was difficult to conclude:
that the provincial and federal assessments have the same subject. Their amounts and legal basis are different. Finally ... there is not an identity of the parties, as the federal and Quebec governments are not the same person.
However, it would constitute an abuse of process to consider the issues in the present appeal given their similarity to those disposed of by Lareau J. A different outcome in this appeal would be viewed as contradictory to the earlier decision (para. 13), whereas the objective instead was for judicial comity and that "judgments on the same question be coherent" (para. 16).
In the Federal Court of Appeal (also dealing with an appeal on an ETA s. 325 issue), Blais CJ stated (at (para. 7) that "the decision of Justice Angers applying the principles of judicial comity [courtoisie judiciaire] was quite justified in the particular circumstances" and further noted the the Court of Quebec decision had since been affirmed in the Quebec Court of Appeal.
Golden v. The Queen, 2008 DTC 3363, 2008 TCC 173
Issue estoppel applied to preclude the taxpayer from litigating before the Tax Court the question whether an amount of $34,000 should have been included in his income. Although the finding of a jury that he had committed tax evasion in respect of this amount did not turn on the particular quantum of the amount that he had failed to report, that quantum was part of the sentencing process made by the judge in that criminal proceeding. Furthermore, given that there had been proof of criminal mens rea beyond a reasonable doubt, this satisfied the onus on the Crown respecting the s. 163(2) gross negligence penalty.
It also would have been an abuse of process for the taxpayer's wife to re-litigate whether a $217,000 shareholder loan should be included in her income given that the only alleged unfairness was that, in the criminal proceedings, there had been an agreement that Mr. and Mrs. Golden would be treated as one taxpayer, so that no particular finding was made as to whose income the amount should be included in.