Grenon v Canada Revenue Agency, 2023 ABKB 0707

Court of King’s Bench of Alberta Citation: Grenon v Canada Revenue Agency, 2023 ABKB 0707 Date: 20231212 Docket: 1501 01439 Registry: Calgary Between: James T.

Grenon Plaintiff - and - Canada Revenue Agency, Attorney General for Canada, Scott Shelton, Gordon Lawrence, Derek Carroll, Gordon Ross, Helen Little, Andre Baril, Jane Doe, John Doe, Bruce Lo, Lizy Jacob and Judith Thain Defendant Corrected judgment: A corrigendum was issued on December 14, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Case Management Decision of the Honourable Justice M.H. Bourque _______________________________________________________

Background [1] The Plaintiff, James T. Grenon (“Grenon”) seeks to file an amended Statement of Claim in this action against CanadaRevenue Agency (“CRA”), the Attorney General of Canada (“AG”) and several named individuals (the “Individual Defendants”)(collectively, I will refer to the CRA, the AG and the Individual Defendants as the “Crown”). Grenon’s original Statement of Claim wasfiled on February 5, 2015. Shortly thereafter and prior to filing a Statement of Defence, the Crown applied to strike the Statement ofClaim. That application was heard by Dario J. and the relief sought was largely granted: Grenon v Canada Revenue Agency, 2016ABQB 260. In particular, she held that: (

a) Grenon’s claim that reassessments issued by CRA were “improper, unlawful and invalid” was outside the jurisdiction of this Courtand should be struck; (

b) Grenon’s claims pertaining to abuses of the processes of the Federal Court were outside the jurisdiction of this Court and should bestruck; (

c) Grenon’s claim of inducing breach of contractual relations and fiduciary duty had no reasonable prospect of success and shouldstruck; (

d) Grenon’s claim of negligence also had no reasonable prospect of success because the CRA owed no duty of care to an individualtaxpayer; (

e) Grenon’s claim for the tort of abuse of process had no reasonable prospect of success; (

f) Given that Grenon’s claims that related to a registered retirement savings plan (“Grenon RRSP”), they were brought by the wrongparty and disclosed no reasonable prospect of success. [2] As a result, Dario J. struck several paragraphs of the Statement of Claim that appeared under individual headings related tothe above-referenced struck claims. In addition, she struck certain defined terms as being improper, such as “Extensive ImproperAuditing Activities”, “Improper Collection Activities” and “CRA Shakedown Strategy”.

Dario J. allowed Grenon’s claim ofmisfeasance in public office (the “Misfeasance in Public Office Claim”) to remain because (at para 98): “it cannot be said at this pointthat the allegations of misfeasance in public office ... have no reasonable prospect”, though she stayed the claim as it could not bedetermined until the Tax Court of Canada ruled on the validity of various income tax reassessments. [3] Grenon appealed and the Court of Appeal largely upheld Justice Dario’s decision (Grenon v. Canada Revenue Agency,2017 ABCA 96, application for leave to appeal dismissed, (SCC)).

The Court of Appeal reversed Dario J.’s decisiononly as it related to the Grenon RRSP. In all other respects, the Court of Appeal upheld Justice Dario’s decision, though paragraphs 45 to49 of their Memorandum of Judgment foreshadowed the instant application: [45] Finally, the appellant argues the chambers judge erred by striking certain paragraphs without considering whether they werestill relevant to the misfeasance claim.

The appellant argues that the consequence of the chambers judge’s decision is that a disjointedstatement of claim now remains. [46] It is a fair observation that the chambers judge did not consider whether the paragraphs she intended to strike from thestatement of claim in relation to the other causes of action were nevertheless still relevant to the appellant’s claim for misfeasance beforedeciding to strike them from the statement of claim. [47] The tort of misfeasance in public office requires proof of a deliberate and unlawful act by an individual engaged in publicoffice that is intended to injure.

Some of the paragraphs the chambers judge correctly struck engage the conduct and comportment ofCRA that might be relevant to the issue of intention on the misfeasance claim.

However, several of the paragraphs plead conclusionswhich are of course improper in a statement of claim. [48] The chambers judge concluded that the paragraphs that are specifically referenced in the statement of claim under the heading“Misfeasance in Public Office” are sufficient to ground such a claim and it would be inappropriate for this Court to decide, on appeal,what paragraphs are uniquely associated with the claims that are correctly struck. [49] The appellant has the right to apply to amend the statement of claim.

Amendments may well be necessary when theramifications of the chambers judge’s decision can be seen more clearly. In addition, the respondents may be entitled to seek further andbetter particulars of the claim the appellant advances once the consequences of the chambers judge’s decision are known. [4] In April 2021, the Tax Court of Canada ruled on the tax litigation matters: Grenon v. The Queen, 2021 TCC 30; MagrenHoldings Ltd. v. The Queen, 2021 TCC 42; Grenon v. The Queen, 2021 TCC 89. Grenon has appealed he Federal Court of Appeal, anda panel of that Court heard the appeals in May 2023.

No decision had been released at the time this application was argued. Followingthe decision of the Tax Court of Canada, Grenon submits that he took steps to move the present action forward by: (

a) Deleting language that Dario J. struck; (

b) Adding particulars to the Misfeasance Claim; (

c) Adding particulars of ongoing unlawful conduct that is related to the existing misfeasance claim including the addition offacts previously pled in a Federal Court action, which had been filed to preserve Grenon’s rights while this action was stayed. [5] In addition, Grenon reinserted several paragraphs that had been struck (27, 28, 29, 31, 41, 43, 44, 45, 49, 54, 56, 57 and 59)on the basis that they are still relevant to the Misfeasance in Public Office Claim and that the pleading would otherwise be disjointed and

lacking in necessary context. I will refer to these paragraphs as the “ Reinserted Struck Paragraphs ”. They are set out in

Schedule A to these Reasons. [ 6 ] To better understand these reasons, I have also reproduced paragraphs 60 to 61.1 of the proposed Amended Statement of Claim which articulate Grenon’s Misfeasance in Public Office Claim (words deleted from the original Statement of Claim show strikethrough; words added are underlined): D. Misfeasance in Public Office 60. The CRA Personnel, in undertaking the Extensive Improper Auditing Activities and then the Improper Collection activities, based on the Improper Motives, engaged in misfeasance in public office as they: (

a) Were engaged in deliberate, improper, and unlawful abuse of power, in the purported exercise by them of their powers as public officers, the particulars of which are set out above; (

b) Were aware, or were reckless , or willfully blind , or indifferent, that their actions: (

i) Were an unlawful excess of their powers of administration and enforcement under the ITA, the particulars of which are set out above; and (ii) Would likely harm Mr. Grenon, the particulars of which are set out above and below. 61. For example, the CRA Personnel had (or ought to have had) no reasonable belief in the validity of the Reassessments as they: (

a) Were wholly duplicative in nature and contrary to the applicable case law; (

b) Knew penalties and penalty taxes were not allowable under GAAR assessments; (

c) Ignored the applicable limitation periods; (

d) Evolved approaches on how to tax after the Reassessments were issued and appealed, subsequently resorting to calling the MFT investments a sham; and (

e) Knowingly purported to overtax through Reassessments for the purposes of freezing Mr. Grenon’s assets under the Jeopardy Orders and for pressuring Mr. Grenon to settle regardless of the legitimacy of the taxes. 61.1 Further, the CRA Personnel had no reasonable belief that their actions in respect of the Creditor Agreement and Post-RRSP Trust were valid as: (

a) They were aware of the contractual and fiduciary duties that the CIBC owed to Mr. Grenon; (

b) They were aware that Mr. Grenon had no knowledge of the Creditor Agreement and would have objected to it; (

c) They purported to grant rights to the CIBC under the Creditor Agreement that they knew were beyond any legitimate rights the CIBC had through its contractual and fiduciary relationship with Mr. Grenon; and (

d) They refused to take any action to either reject the Income Tax Return or take steps to prevent or reverse the resulting Assessment. 62. The Crown and the CRA are liable for the misfeasance in public office of each and all of the CRA Personnel. (

d) Before moving on, I will point out that the wording of the Misfeasance in Public Office claim in the proposed Amended Statement of Claim as set out above, with the exception of the addition of paragraph 61.1, is nearly exactly the same as what was contained in the Statement of Claim that was the subject of Dario J.’s decision. [ 7 ] Grenon also seeks to amend the claim by adding another Individual Defendant, M. Belot, an officer of the CRA.

The Crown did not oppose that relief, provided a parallel action in the Federal Court was discontinued. [ 8 ] Relying on Rule 3.62, Grenon attempted to file the Amended Statement of Claim as of right on the basis that pleadings had not closed, given that no defence had been filed. However, the pleading was not accepted for filing by the Clerk’s office presumably because of the Court of Appeal’s direction in paragraph 49 above. Grenon subsequently sought a fiat to file the Amended Statement of Claim, which Applications Judge Prowse (“ AJ Prowse ”) denied on October 7, 2022.

His endorsement noted that “it may be that you can amend as of right but that can be determined on the return of the application.” [ 9 ] Following a joint request of the parties, on February 13, 2023, Acting Associate Chief Justice Jeffrey appointed me as Case Management Justice for this action. I initially met with the parties on April 28, 2023, and made an order to facilitate this application. The parties filed extensive briefs and materials in advance of the August 22, 2023 hearing.

Issue #1: What is required Procedurally to File an Amended Statement of Claim in this Action given the Court of Appeal’s Direction?

[ 10 ] Grenon starts with the proposition that he has the unilateral right to amend his pleading prior to the filing of a Statement of Defence and that he may do so without the consent of the Crown or a Court Order. He submits that AJ Prowse was being cautious considering there having been a previous application to strike, and that the adversarial process of having the Crown able to make submissions would forestall any irregularity.

Grenon submits that this application should be treated as an application by the Crown to strike, rather than an application to amend. [ 11 ] On the other hand, the Crown argues that Grenon is required to seek the Court’s explicit authorization to plead the Reinserted Struck Paragraphs because to reinsert them, as of right, would be contrary to the existing court order striking them.

The Defendants submit that AJ Prowse was correct to require Grenon to apply to amend his statement of claim on notice, and that the Court of Appeal’s direction is consistent with rules 1.4 and 3.65 permitting the making of procedural orders in the interests of efficiency and effectiveness. [ 12 ] I agree with the Crown that Grenon was required to apply for an order to amend his statement of claim.

Absent the earlier application to strike and resultant order and the Court of Appeal direction, the general rule about when a party can amend a pleading would have applied: if pleadings are not closed, no leave is required; however, if they are closed, then the party seeking to amend must obtain leave. However, this case presents unique circumstances which the Court of Appeal clearly anticipated. That said, I am satisfied that an Order should be granted allowing the Amended Statement of Claim to be filed.

Moreover, the Reinserted Struck Paragraphs provide useful background, context, and narrative that are sufficiently relevant to the Misfeasance in Public Office Claim. With them, the Amended Statement of Claim assists in telling the story Grenon believes sets up the cause of action and basis for the remedy he seeks in a reasonably clear and logical way ( AF v. Alberta , 2014 ABQB 216 [ AF ] at para 38 ).

Issue #2: Does the Amended Statement of Claim Sufficiently Particularize the Alleged Misfeasance against the Individual Defendants? [ 13 ] The Crown argues that the proposed Amended Statement of Claim does not sufficiently particularize the allegations against all the Individual Defendants and that Grenon should be required to do so.

The Crown argues that this is required to allow the litigation to proceed efficiently and cost-effectively, to reduce the number of interlocutory motions, and to inform the parties in advance of the case they must meet so that they can take steps to deal with it. [ 14 ] On behalf of the Individual Defendants, the Crown argues that many of the allegations are advanced against the CRA and the CRA Personnel, and that specific factual allegations are only advanced in respect of three named Individual Defendants.

They argue that a pleading that advances a misfeasance claim must be specific and requires more than a bald pleading. They say that specific allegations must be made for each component of the tort and that they must contain material facts about specific officials and their specific unlawful purpose in acting as they did. [ 15 ] The Crown relies on several cases, including Madadi v Nichols , 2021 BCCA 10 [ Madadi ], Polsom v Couston , 2014 ABQB 43 [ Polsom ], Trillium Power Wind Corporation v Ontario (Ministry of Natural Resources) , 2013 ONCA 683 [ Trillium ], G.H. v. Alcock , 2013 ABCA 24 [ Alcock ], and AF .

While these cases address the sufficiency of pleadings relating to the tort of misfeasance in public office more generally, none of them arose in the context of an argument that the pleading insufficiently identified or particularized the alleged misfeasance of the Individual Defendants. [ 16 ] It is important to recall that Dario J. previously determined that the Misfeasance in Public Office Claim was viable, and she allowed it to continue.

She dismissed the Crown application to remove the Individual Defendants as parties (at para 137) and dismissed the Crown’s argument that the Statement of Claim contained no allegation of any action taken by the Individual Defendants that would constitute deliberate unlawful conduct. Commencing at para 141, she explained her reasoning as follows: ... [t]he allegations in the Statement of Claim under the heading “Misfeasance in Public Office” are made against the CRA Personnel.

Those allegations are somewhat factually vague, but effectively, the assertion is that the CRA Personnel issued the Reassessments with no reasonable belief in their validity.

The allegations are not specific to any particular individual. [142] Grenon cites AF v Alberta , 2014 ABQB 216 , 587 AR 165, in which Graesser J. stated at para. 39 that the plaintiffs’ pleadings for misfeasance in public office failed because they did not comply with “the requirement to specify exactly who the offending Crown agent or authority was, and what he or she did or failed to do.” At first blush, this would not seem to be of assistance to Grenon, given that he also does not specify what individual is responsible for what act.

Instead, Grenon seems to assert that all of the individuals comprised within the CRA Personnel were part of the alleged misfeasance.

Given, however, that Grenon defines the term “CRA Personnel” to include specific named individuals, I find that this requirement is satisfied for the limited purposes of defeating the present application to strike these pleadings. [143] Accordingly, I find that it is not plain and obvious that the claims for misfeasance in public office against the Management Defendants have no reasonable prospect of success and I decline to strike them as defendants. [ 17 ] The Crown did not appeal Dario J.’s decision in this respect; however, the Crown seeks to strike Grenon’s statement of claim on bases previously argued and dismissed.

In my view, it would be inappropriate for me to redetermine this issue. In any event, I am not persuaded that the cases relied on by the Crown would lead to a different result. [ 18 ] Madadi dealt with an application to amend a claim to add defendants to a misfeasance in public office claim. In dismissing the appeal from the Chambers’ decision allowing the addition of third parties, the British Columbia Court of Appeal held as follows: [71] The tort of misfeasance in public office requires more than a bald pleading that a public official acted with the intention of harming the plaintiff.

There must be material facts about specific officials and their specific unlawful purpose in acting as they did. The

material facts may lack detail in the early stages of a proceeding, but it is generally sufficient to establish “a narrow window ofopportunity” to make out the claim: Trillium Power Wind Corporation v. Ontario (Ministry of Natural Resources), 2013 ONCA 683 atparas. 59–61. [72] The Claim sets out the elements of the tort of misfeasance in public office.

The material facts that relate to the appellants includethe alleged discriminatory reasoning described above, maintaining the proceedings in the context of the overall delay, and imposing apenalty of an additional year of suspension knowing that the respondent’s teaching certificate had been suspended since 2005 for non-payment of fees. In my opinion, these pleaded facts, taken together with the pleas of knowledge that the conduct was unlawful,subjective awareness of the consequential harm to the respondent, and improper purpose, sufficiently plead the tort of misfeasance inpublic office.

With respect to the harm element, the reasons for penalty indicate that the panel members considered evidence that therespondent had been working, but it is clear that he was not working as a teacher.

Other than that, the evidence does not call into questionthe existence of the pleaded facts. [73] While the respondent may well have further challenges in pursuing this claim, it is my view that he has established a possiblecause of action against the appellants sufficient to meet the initial threshold under Rule 6-2(7)(c). [emphasis added] [19] Trillium dealt with an application to strike a claim for misfeasance in public office arising from Ontario’s decision to cancelits wind power policy initiative.

The motions judge dismissed the claim on the basis that it disclosed no reasonable cause of actionagainst the Province of Ontario (Trillium Power Wind Corporation v. Ontario (Natural Resources), 2012 ONSC 5619, Goldstein J.). The Ontario Court of Appeal disagreed and allowed the claim to remain. [59] The pleading is disorganized and prolix, and must be brought into conformity with the ruling in the previous

section of thesereasons. That said, in our view the specific factual allegations in paras. 54 and 61 of the statement of claim are sufficient to pass musteras a valid pleading of misfeasance in public office. The pleading makes allegations about specific public officials and their specificunlawful purpose in acting as they did: L. (A.) v. Ontario (Minister of Community and Social Services) (2006), (ONCA), 83 O.R. (3d) 512, [2006] O.J. No. 4673 (C.A.), at para. 37, leave to appeal to S.C.C. refused [2007] S.C.C.A.

No. 36. [20] To put that passage in its proper context, the motion judge indicated that the identity of the public officials was particularizedas including the Energy Minister, the Environment Minister, the Natural Resources Minister, the Premier, along with their senior staff (atpara 20).

Second, the relevant portions of the Statement of Claim (reproduced paragraph 34 of the Court of Appeal decision) containedthe following claims: [54.] Trillium Power states that the Defendant's decision to issue the press release on February 11, 2011, was done in bad faith and wasspecifically a consequence of Trillium Power's prior notification of their scheduled closing of financing with Dundee Corporation, withthe intent to stop the process and confiscate Trillium Power's offshore wind power development before it could be financed forapproximately $26 million dollars, to begin construction of its proposed initial site south-west of Main Duck Island, in east Lake Ontario. [61.] Trillium Power further states that the Defendant's decision and the cancellation and confiscation in February, 2011 was specificallytargeted to stop Trillium Power's offshore wind power project in Lake Ontario before Trillium Power had the financial resources tolitigate with the Province of Ontario. [21] Given that context, the Ontario Court of Appeal held that (at para 61) “on the facts pleaded, including the particulars, ‘thereexists a narrow window of opportunity for [the appellant] to make out its claim in misfeasance’.

The appellant cannot provide moreparticulars now because many of the necessary supporting facts would be within Ontario's knowledge and control, and there has been nodocument production or discovery.” The Court of Appeal allowed the misfeasance in public office claim to remain. Like in the instantcase, paragraphs 54 and 61 in the action involving Trillium do not appear to contain specific allegations about individual public officialswho engaged in the alleged unlawful acts purporting to ground the claim.

Instead, the more generic term “Defendant” was used, and theOntario Court of Appeal clearly found that to be sufficient. [22] Polsom dealt with an application to strike a claim in misfeasance in public office against a Crown prosecutor. In that case, theplaintiff claimed she had been molested by her stepfather, who eventually faced criminal charges. Those charges were subsequentlystayed because of the delay in bringing the matter to trial.

The plaintiff commenced an action against the Crown prosecutor for the tort ofmisfeasance in public office, grounding her claim in the prosecutor’s failure to provide disclosure. Like in Madadi, the issue on theapplication to strike did not squarely address the issue of the specificity of allegations against individual defendants in the context of amisfeasance in public office claim at an early stage. [23] Alcock involved an action by an individual who reported having been sexually assaulted by an employee of a youth socialorganization whose actions against several defendants had been summarily dismissed.

In upholding the Chambers’ Justice’s decision tosummarily dismiss a claim in misfeasance in public office against the Public Trustee, the Court of Appeal reasoned that the amendedstatement of claim contained (at para 58) “no material facts that show that Weir’s conduct was unlawful and deliberate, or that he wasaware that his conduct was likely to injure G.H.”.

While the Court of Appeal stated the general test for sufficiency of pleadings in thecontext of a misfeasance in public office claim, the Court did not address the degree of specificity required in a claim against a group ofindividuals. [24] AF also dealt with a lawsuit commenced by an individual who reported having been sexually assaulted while in foster care.

The Crown relies on Graesser J.’s statement at paragraph 39, where he says “the problem is that the Plaintiffs have not complied withthe requirement to specify exactly who the offending Crown agent or authority was, and what he or she did or failed to do” and that “thePlaintiffs need to put forward amendments which provide sufficient facts and identify individuals whom they claim to have abused theiroffice”.

As discussed in paragraph 142 of Justice Dario’s decision, Grenon previously relied on the exact same passage, and sheaccepted that by asserting that the CRA Personnel (defined as including the Individual Defendants) were part of the alleged misfeasance,Grenon had satisfied the threshold set in AF. I see no reason to revisit her decision currently.

[ 25 ] In response, Grenon referred to several cases, including Saskatchewan Power Corporation v City of Swift Current , 2007 SKCA 27 [ SaskPower ], Merchant Law Group v Canada Revenue Agency , 2010 FCA 184 [ Merchant ], St.

John’s Port Authority and Adventure Tours Inc. , 2011 FCA 198 [ Port Authority ], and Grand River Enterprises Six Nations Ltd. v Attorney General (Canada) , 2017 ONCA 526 [ Grand River Enterprises ]. [ 26 ] In SaskPower , the Chambers Judge struck a misfeasance in public office claim because (at para 22): “as the tort required a mental element of ‘bad faith’ or ‘dishonesty’, it was necessary for the plaintiff to identify the officer or employee who acted in bad faith or dishonestly, and further, the specific facts of the conduct must be pleaded.” At issue was the City of Swift Current’s claim in misfeasance in public office against SaskPower based on the allegation that the latter’s corporate policy to charge unfair costs and fees was implemented to reduce the value of the former’s distribution system.

In that context, the City argued that the identity of the employees or official who acted on behalf of SaskPower was not a necessary element of the tort. The Court of Appeal agreed with the City’s argument, holding: [29] It is my view that SaskPower’s argument confuses the City’s claim of direct liability as against SaskPower with a claim based upon vicarious liability. A corporation may itself be found liable for an intentional tort. A corporate entity must, of course, act through the medium of individuals who are the directing mind of the corporation.

The identity of such individuals, however, is a matter of evidence, not an essential element of the tort. [30] It is not in dispute that a corporation may be found liable for this intentional tort, nor do the parties dispute the test for misfeasance in a public office as set out in Odhavji Estate . Of course the tortious conduct must be the legal cause of the injuries and the injuries must be compensable. The question is whether intention can be established for the purposes of finding liability against SaskPower without naming a specific individual or individuals. [31] In 1515545 Ontario Ltd. v.

Niagara Falls (City) the Ontario Court of Appeal upheld the striking of a claim alleged against the City for malfeasance of public office because the motions judge found the appellant's evidence did not meet the test for establishing misfeasance in public office. However, the Court proceeded on the assumption that it was possible for a municipality to be liable for its alleged tortious conduct. Further, in Georgian Glen Development Ltd. v. Barrie (City) , [10] Howden J. said: 11 The plaintiff in this case has sued the municipality, a municipal corporation, rather than an individual officer or officers.

The caselaw demonstrates that courts have not maintained any distinction between officer holders and the office itself. The tort of misfeasance in public office has been sustained against a wide variety of defendants including individual officer holders, municipalities and government ministries and bodies . [See Note 1 below] The seminal case of Three Rivers District Council v. Bank of England

(2002) W.L.R. 1220 (H.L.) noted that the term "public office" has a wide meaning. Three Rivers and the other cases implicitly suggest that proceedings can be maintained against an individual office holder as well as against an entire entity as in this case. [Emphasis added] [32] In the instant case the Chambers judge further found the City had not pleaded the tort was the legal cause of its injuries and further had not pleaded such injuries were compensable in law.

In fact, the City did plead in its Statement of Particulars in reply to SaskPower’s Demand for Particulars, several examples of what it alleges to be unlawful conduct. The City argues the attempt is sufficient to ground the tort. The City, in my view, clearly pleaded that SaskPower’s actions (in its capacity as a public office) were done deliberately for the purpose of reducing the value of Swift Current Light and Power to force a sale of the transmission entity at a depressed price (paragraph 12 of the Statement of Claim).

Assuming the facts in the Statement of Claim to be true, I cannot say it is plain and obvious the Statement of Claim discloses no reasonable cause of action and paragraph 16(

c) should not have been struck. The Chambers judge erred by analyzing the issue as one of vicarious liability as argued by SaskPower as opposed to analyzing the claim as being one of direct liability as argued by the City. [ 27 ] Merchant is an appellate decision on a motion Judge’s decision to strike out the appellant law firms’ claim against the CRA and the Attorney General on the basis that they had failed to plead sufficient material facts for the tort of misfeasance in public office.

Although it was not necessary for the Federal Court of Appeal to address that issue because of other holdings, it received full argument on the issue and viewed it as an issue of general importance. Dealing with the issue of whether it is a requirement of pleading to identify, with any particularity, the officials alleged to be involved in the misfeasance, the Federal Court of Appeal provided the following guidance: [36] The Federal Court also found (at paragraph 23) that the pleading was deficient because the Crown’s liability is vicarious (see

section 10 of the Crown Liability and Proceedings Act , R.S.C. 1985, c. C-50 ) and so the identity of the particular individuals who are alleged to have engaged in misfeasance in public office must be named. As noted above, in this case, paragraphs 5 and 12 of the amended statement of claim implicate entire departments and potentially others in the Government of Canada.

The pleading fails to identify, with any particularity, the officials allegedly involved in the misfeasance . [37] In this Court, the respondents submit that plaintiffs pleading this tort must always state the actual name of the individuals who committed the alleged misfeasance. In my view, such a requirement, if applied strictly in every case, would impose too onerous a burden upon plaintiffs in some cases. In addition, it would go beyond the level of particularity necessary to fulfil the purposes of pleadings in civil proceedings. [38] I do agree that the individuals involved should be identified.

The plaintiff is obligated under Rule 174 to plead material facts and the identity of the individual who are alleged to have engaged in misfeasance is a material fact which must be pleaded. But how particular does the identification have to be? In many cases, it may be impossible for a plaintiff to identify by name the particular individual who was responsible. However, in cases such as this, a plaintiff should be able to identify a particular group of individuals who were dealing with the matter, one or more of whom were allegedly responsible.

This might involve identifying job positions, an organizational branch, an office, or a building in which those dealing with the matter worked. Often such information is readily available from the oral and written communications and dealings among the parties that gave rise to the claim. In cases such as this, identification at least at this level of particularity, will usually be sufficient. The purposes of pleadings will be fulfilled: the issues in the action will be

defined with reasonable precision, the respondents will have enough information to investigate the matter and the respondents will beable to plead adequately in response within the time limits set out in the Rules. [emphasis added] [28] Port Authority, another Federal Court of Appeal decision, was decided shortly after and it affirmed Merchant. At para 61,the Court summarized Merchant as follows: [61] First, Merchant does not impose pleadings requirements that will stop plaintiffs from asserting genuine claims.

It is true thatMerchant requires that a statement of claim asserting this tort must identify the individuals who “count” for the purposes of this tort. ButMerchant makes it clear that names are not necessarily required.

As said in Merchant (at paragraph 38), it may suffice to plead a“particular group of individuals who were dealing with the matter,” “job positions,” an “organizational branch, an office, or a building inwhich those dealing with the matter worked.” This information is usually “readily available from the oral and written communicationsand dealings among the parties that gave rise to the claim.” In cases such as the case at bar, there have been many communications anddealings and so there should be little practical difficulty in satisfying this requirement. [29] In Grand River Enterprises, the Attorney General appealed a motion judge’s decision refusing to strike a claim formisfeasance in public office, arguing that the plaintiffs had failed to plead sufficient particulars regarding misfeasance, that they hadfailed to identify the Ministers responsible for the alleged misfeasance, and that they failed to properly plead bad faith.

With respect tothe identification issue, the Attorney General argued that if the 34 Ministers who at various times held office maliciously failed toenforce the law, then material facts grounding those allegations had to be pleaded. The Ontario Court of Appeal rejected this argument(commencing at para 87): [87] In my view the fact that not all Ministers are identified by name is not fatal to this claim. [88] This court’s decision in Granite Power Corp. v.

Ontario (2004), (ON CA), 72 O.R. (3d) 194 (C.A.), leaveto appeal refused, [2004] S.C.C.A No. 409, supports the argument that the failure to name specific people within an organization maynot necessarily result in a misfeasance claim being struck. In Granite Power, it was simply pleaded that the “Minister and/or his officesand staff” had acted with misfeasance. This court concluded the claim should not be struck even though it suffered from “a lack of clarityand precision”: para. 34.

This court held that there existed “a narrow window of opportunity for Granite to make out its claim ofmisfeasance” and that “[r]egardless of how difficult it may be to establish, Granite should not be ‘driven from the judgment seat’ at thatjuncture of the proceeding": paras. 40, 42. [89] Cases such as the following reflect an acknowledgment that, at the outset of litigation, a plaintiff may not be privy toinformation about the internal workings of an organization and which particular individual or individuals within an organization mayhave taken or failed to take a particular action: Capital Solar Power Corp. v.

Ontario Power Authority, 2015 ONSC 2116, at paras. 13-14; Swift Current (City) v. Saskatchewan Power Corp., 2007 SKCA 27, 293 Sask. R. 6, at para. 29; and Georgian Glen DevelopmentLtd. v. Barrie (City) (2005), 13 M.P.L.R. (4th) 194 (Ont. S.C.), at para. 11. [90] This is such a case. The respondents have identified the group of individuals said to be responsible for misfeasance in publicoffice by title instead of by name. Similar to Granite Power, the respondents have identified a class of persons. It is difficult to expect therespondents to be more specific at the pleadings stage.

As the motion judge acknowledged, much will depend on the evidence thatemerges. [30] In my view, the decisions in Merchant, Port Authority and Grand River Enterprises address this issue more directly andrespond to the Crown’s position that Grenon’s pleadings do not particularize the alleged misfeasance against all Individual Defendants.

Like Justice Dario, I am satisfied that Grenon has met the minimum required for the Misfeasance in Public Office Claim at the pleadingsstage, by identifying the group of individuals (in this case, the CRA Personnel) which he says are responsible for misfeasance in publicoffice and in stating (at paras 60 to 61.1 of the Amended Statement of Claim).

Paraphrasing the Ontario Court of Appeal’s decision inGrand River Enterprises (at para 90): “it is difficult to expect [Grenon] to be more specific at the pleadings stage ... [however] muchwill depend on the evidence that emerges.” For these reasons, I am not satisfied that the amended Statement of Claim should be struckbecause it fails to sufficiently articulate allegations against the Individual Defendants. [31] That said, I offer two additional comments or observations. First, the decision to allow the Misfeasance in Public OfficeClaim to proceed does not speak to its strength or likelihood of success.

Second, Merchant, Port Authority and Grand River Enterprisesall appear to be misfeasance in public office claims made against the Attorney General and/or a governmental authority such as theCRA. None of the case reports suggest individual public officials were named as parties.

In this case, Grenon has taken a differentapproach by taking action against the Individual Defendants even though he asserts at paragraph 62 of the Amended Statement of Claimthat “the Crown and the CRA are liable for the misfeasance in public office of each and all of the CRA Personnel.” The Crown has notfiled a defence and it is unknown at this time whether the Crown will admit liability for its personnel, assuming the claim is made out, orwhether the Crown will advance a position that, for example, the CRA Personnel acted outside the scope of their authority.

Regardless,there may come a point in time in the prosecution of this action where the sustainability of the claim against one or more of theIndividual Defendants may necessitate revisiting, particularly in the absence of specific allegations of misconduct or unlawful activityassociated to an Individual Defendant.

Issue #3: Should any other Part of the Proposed AmendedStatement of Claim be Struck? [32] The Crown also advanced several other arguments that parts of the proposed Amended Statement of Claim should be struck. [33] First, the Crown takes issue with paragraphs relating events around the obtaining of jeopardy orders in the Federal Court.

According to the Crown’s submissions, the paragraphs are hopeless and should be refused and that Grenon’s challenges to the Federal Court’s jeopardy orders can only be dealt with in the Federal Court. In my view, the Crown’s submission should not be accepted for two reasons. First, Grenon is not seeking to overturn the jeopardy orders and his counsel acknowledged that any remedy pertaining to the jeopardy orders themselves can only be granted by the Federal Court.

Second, I accept that the purpose of including the jeopardy orders paragraphs is to comprehensively enumerate and particularize the actions taken by the CRA as background to the Misfeasance in Public Office Claim. [ 34 ] Similarly, the Crown takes issue with paragraphs recounting the history of CRA auditing activities of Grenon, commencing in “2007 or earlier” arguing that auditing activities and the issuance of proposal letters do not found a misfeasance claim and that the Reinserted Struck Paragraphs in that regard do not disclose any unlawful acts. For the same reasons as in paragraph Error!

Reference source not found. , I reject the Crown’s submissions. First, the impugned paragraphs provide background and narrative that are relevant to the Misfeasance in Public Office Claim. Second, I do not accept the notion that each paragraph in a statement of claim must be parsed and analyzed to determine whether it, individually, founds a particular claim. Some leeway must be given to litigants to tell their story (within reason) and to provide background and narrative that is relevant to a particular claim.

To require otherwise would lead not only to disjointed pleadings, but also to unnecessary demands for particulars. I am not satisfied that the inclusion of facts describing the auditing activities falls outside the boundaries of proper pleading in the context of this case. [ 35 ] Lastly, the Crown argues that several paragraphs of the proposed Amended Statement of Claim (not limited to the Reinserted Struck Paragraphs) include improper evidence, argument and legal conclusions and do not advance a cause of action or contain material facts.

In my view, the impugned paragraphs, some of which are additions to the Statement of Claim, while lengthy and descriptive, are sufficiently related to the Misfeasance in Public Office claim or provide narrative and context and Grenon should be allowed to plead them. As the Crown acknowledges, some argument or conclusory statements may be allowed in a pleading if they assist in determining the issues to be decided. I am not satisfied that any of the impugned paragraphs cross the line. Disposition [ 36 ] For all these reasons, an Order shall issue that the proposed Amended Statement of Claim be accepted for filing.

Heard on the 22 nd day of August, 2023. Dated at the City of Calgary, Alberta this 12 th day of December, 2023. M.H. Bourque J.C.K.B.A. Appearances: L. Warner D. Marshall for the Plaintiff A. Jinnouchi M. Nicolls for the Defendant

_______________________________________________________ Corrigendum of the Case Management Decision of The Honourable Justice M.H. Bourque _______________________________________________________ Para 30 - “ For these reasons, I am not satisfied that the amended Statement of Claim should be struck because it fails to sufficiently articulate allegations against the Individual Defendants.”

Schedule A – Reinserted Struck Paragraphs C. Conduct of the CRA and the CRA Personnel 1. AUDIT 27. In 2007 or earlier, the CRA commenced a far-reaching audit that included: (

a) Mr. Grenon and business entities related to Mr. Grenon, including the CIBC RRSP and MFTs; (

b) Seeking thousands of irrelevant or publicly available documents, from CIBC, with no request of Mr. Grenon for those documents first, which damaged Mr. Grenon’s relationship with CIBC. (

c) Seeking solicitor-client privileged documents from an accounting firm of a public MFT which was audited by an independent accounting firm, in which Mr. Grenon was the majority unit holder, and subsequently making an unsuccessful application demanding the disclosure of the solicitor-client privileged documents; (

d) Extensive onsite auditing and copying of documents by CRA Personnel; (

e) The delivery of dozens of letters to Mr. Grenon and numerous entities and individuals encompassing hundreds of tax year ends, frequently citing unknown entities, demanding a colossal amount of information, on unreasonable timelines, under threat of penal sanction, including information already provided (more than once); and (

f) Continual contact of Mr. Grenon directly despite being formally advised that Mr. Grenon had appointed a representative, as entitled to address the CRA’s audit activities. (the “Auditing Activities”) 28. Despite the nature and scope of the Auditing Activities, the CRA received responses to all demands for information and cooperative access to records, albeit the CRA provided some time extensions, which were met. 29. Mr.

Grenon, following numerous informal complaints to the Supervising Auditors, formally objected to the Auditing Activities, including that those actions had breached the CRA’s own Fairness Pledge, Taxpayer’s Bill of Rights and Commitment to Small Business . 31. Following five years of auditing activities, the CRA Personnel issued a proposal letter to Mr. Grenon dated April 24, 2012 (the “ First Proposal Letter ”). The First Proposal Letter was: (

a) The first notice that Mr. Grenon ever received that the CRA believed any tax was owing; and (

b) Issued after February 2012, when Mr. Grenon and his common law partner were accepted for residency by the New Zealand government. 41. The Reassessments were improper, unlawful, and invalid for reasons including that: (

a) The Reassessments were based on transactions for which there should have been no tax at all, given that the transactions were wholly compliant with the requirement, spirit, and intent of the [Income Tax Act]; (

b) The Reassessments were purportedly based on taxing the same transactions four times:

(

i) The income from the TPIs was now being taxed:

(1) Inside the CIBC RRSP; and

(2) In Mr. Grenon’s hands personally; (ii) A penalty tax of 1% per month on the value of the TPIs was being assessed against the CIBC RRSP; and (iii) Mr. Grenon was being assessed a 1% per month penalty tax on amounts that the CRA deemed that the CIBC RRSP paid out to Mr. Grenon and also deemed that Mr. Grenon then recontributed them; (

c) The alleged amounts owing were for amounts in excess of 10 times the total profitability of the TPIs (a 1,000% “tax” rate), and several times the value of the TPIs. 43. For instance, on the basis of the Reassessments, but before Mr. Grenon was aware of the Reassessments, the CRA Personnel then improperly sought and obtained two ex parte jeopardy orders dated March 7, 2013, one against Mr. Grenon (the “ Personal JO ”), and one against the CIBC RRSP (the “ RRSP JO ”) (collectively, the “ Jeopardy Orders ”). 44. The Jeopardy Orders were obtained by the CRA Personnel on the evidence of Thain.

The CRA Personnel, through Thain, failed to advise the Federal Court of numerous additional facts that were known or reasonably should have been known to Thain or the CRA Personnel, and that were relevant and material to the ex parte application, including that the CRA Personnel were aware that: (

a) Mr. Grenon and the entities in which he had been involved had a history of following all tax laws; (

b) Mr. Grenon was considering moving to New Zealand prior to any proposals or reassessments and was in no way concealing his activities including publicly listing his home for sale; (

c) They had been conducting searches on Mr. Grenon’s and his common law partner’s assets in July to September 2012 prior to any reassessments. Therefore, CRA could have sought an order without any rush, but did not do so; (

d) New Zealand was not a place one would go to avoid taxes for reasons including that the New Treaty would allow the reciprocal enforcement of taxes between Canada and New Zealand; (

e) Mr. Grenon had good reasons for the transactions the CRA sought to interrupt, including that the pending New Treaty (which could have changed at any time) would substantially increase the taxes owing upon Mr. Grenon withdrawing assets from his RRSP Trusts; (

f) Mr. Grenon had substantial assets in Canada outside the CIBC RRSP, yet Thain provided evidence to the Federal Court that Mr. Grenon had virtually no other assets in Canada; (

g) The Reassessments were based on wholly duplicative theories of taxation and included penalty taxes and interest not allowable under GAAR; (

h) The Reassessments took Mr. Grenon’s purported tax liability under the First and Second Proposal Letters from a high of $3.8 million only days before, to $205 million, without any notice to Mr. Grenon or hint that this might occur; (

i) They had undervalued the MFT investments, for instance, even giving assets worth over $50 million dollars a zero value; and (

j) Mr. Grenon had extensive family, friend and business connections in Canada. 45. The CRA and the CRA Personnel knew, or were reckless or willfully blind about the fact that there was no legitimate basis to obtain the Jeopardy Orders. 49. In addition, CRA refused to advise CIBC that CIBC would not be held personally liable for any taxes of the CIBC RRSP, and therefore CIBC is acting adverse to Mr. Grenon’s interests in trying to ensure that it is protected regardless of the remoteness of any actual risk to it. 54. In addition, Mr. Grenon and the CIBC RRSP applied to overturn the Jeopardy Orders. The CRA maintained the JO until Mr. Grenon had gone to the extensive effort of: (

a) Providing voluminous fact and expert evidence prepared and served on the CRA in connection with the set aside motion, even though most of those facts and those expert conclusions were know to the CRA at the time that the Jeopardy Orders were first sought and obtained; and (

b) Traveling to Calgary to be cross-examined on his Affidavit. Only then did the CRA consent to the setting aside of the Personal JO, by a July 15, 2014 Consent Order of the Federal Court of Canada. Following that, in or around October, 2014, Mr. Grenon was able to and did withdraw his assets from the RGMP RRSP. 56. In addition, the CRA and the CRA Personnel refused to agree to set aside the RRSP JO. This continued to cause Mr. Grenon to suffer damage, and was maintained improperly by the CRA and the CRA Personnel, with particulars including: (

a) Mr. Grenon is an intervener in those proceedings and, in those proceedings, evidence was filed that Mr. Grenon filed in applying to set aside the Personal JO. Pursuant to an Order of the Federal Court, the CRA was required to conduct any cross-examination of Mr. Grenon by January 23, 2015, and the CRA was not allowed to ask any questions on subjects on which it had already questioned Mr.

Grenon in the Personal JO proceedings; (

b) Mr. Grenon was scheduled to be cross-examined on January 7, 2015. Immediately before the holiday period, the CRA and the CRA Personnel instructed that a Direction to Attend be served on Mr. Grenon’s counsel on Friday, December 19, 2014; (

c) That Direction to Attend demanded that Mr. Grenon provide, at his cross-examination, tens of thousands of pages of documents that would have been impossible to produce in the available time, and would ultimately have taken hundreds of hours of both Mr. Grenon’s and his advisors’ time to gather. The majority of the demanded documents had already been made available to the CRA following its audit and collection activities and some were even publicly available. Many were irrelevant to the question at hand. Most significantly, the documents related to a topic that was prohibited by the Federal Court Order referenced above; (

d) As the CRA and the CRA Personnel knew would be the case, Mr. Grenon and his advisors were forced to work over the holiday period to apply for relief to the Federal Court in early January. A motion was submitted to the Federal Court, alleging, among other things, that the CRA was subverting the prior Order of the Court; and (

e) Shortly after Mr. Grenon submitted these materials to the Federal Court, the CRA agreed to a Consent Ordre that had the effect of withdrawing its Direction to Attend and its demand for documents, and the CRA decided not to question Mr. Grenon on the affidavit at all. 57. The CRA and the CRA Personnel knew that these actions subverted a prior Order of the Court, and undertook them with the intention and effect of harming Mr. Grenon. 5.

Summary Regarding Conduct of CRA and CRA Personnel 59. The CRA and CRA Personnel undertook the Auditing Activities, the Collection Activities and the subsequent steps related to the Creditor Agreement and Post RRSP Trust, motivated: (

a) By a desire to justify their thousands of work hours; (

b) By an overzealous pursuit of Mr. Grenon in particular, driven by a lack of objectivity and by malice toward Mr. Grenon; (

c) By an overarching strategy, planned, set and directed by and from the highest levels within the CRA: (

i) To pursue, in a fervent and capricious manner, Mr. Grenon in particular; (ii) To act under the guise of assessing legitimate taxes and of proceeding with related legitimate court processes, but without any reasonable belief in a legal basis for the actions or positions taken; and (iii) To harm Mr. Grenon’s legitimate interests and to use the power of the state to take unlawful steps to, among other things, deprive him of his legal rights, and with a view to attempting to pressure Mr.

Grenon into negotiating a settlement on unreasonable terms, (the “ CRA Objective ”), (collectively, the “Improper Motives”), all of which led to the issuance of the Reassessments, the pursuit and continuation of the Jeopardy Orders, and the many other steps taken by the CRA and the CRA Personnel as detailed herein.