2023 FC, 2023 FC 1499

Date : 20231110 Docket: T-1758-18 Citation: 2023 FC 1499 Ottawa, Ontario, November 10, 2023 PRESENT: The Honourable Madam Justice Tsimberis BETWEEN: MILGRAM FOUNDATION Applicant and ATTORNEY GENERAL OF CANADA AND MINISTER OF NATIONAL REVENUE Respondent ORDER AND REASONS UPON MOTION in writing by the Respondents filed on July 21, 2023, pursuant to Rule 369 of the Federal Courts Rules , SOR/98-106 (the “ Rules ” ), to strike in their entirety six (6) affidavits (the First Group) of the Applicant’s Application Record as well as a number of paragraphs of another two (2) affidavits (the Second Group) of the Applicant’s Application Record.

The Respondents also seek a stay of the proceeding until a final decision is rendered in respect of this motion and an order that the time for service of the Respondent’s affidavit under Rule 307 be set at 30 days after a final decision is rendered in respect of this motion; AND UPON reading the Respondents’ Motion Record, the Applicant’s Motion Record in Response as well as the Respondents’ Reply Submissions; AND UPON the Respondents seeking an Order to strike eight affidavits, in full or in part, from the Applicant’s Application Record for being irrelevant and impermissible.

The First Group, affidavits from lawyers, consists of the Marquette Affidavit, the Tessier Affidavit, the Morris Affidavit, the Laishley Affidavit, the Hodge Affidavit, and the Chodikoff Affidavit. The Second Group consists of the Paltzer Affidavit and the Kirouac-Letendre Affidavit, expressing, in parts of the affidavits, personal knowledge of the Applicant’s affairs and the Applicant’s VDP application.

For the reasons that follow, I dismiss the Respondents’ motion to strike: [ 1 ] In their respective submissions, the parties both frame what the Applicant seeks in its Application for Judicial Review as the three following declarations: A. Declaring that the acceptance by the Minister of National Revenue (Minister) of the voluntary disclosure filed by the Applicant gave rise to a binding agreement, pursuant to which only taxation years 2003 to 2014 could be assessed to correct the past omissions disclosed to the Minister by the Applicant; B. Declaring that the Decision is in violation of the Agreement; and, C.

Declaring that the Minister’s decision to resile from the Agreement and their well-known administrative practices with respect to the Voluntary Disclosure Program (VDP) at the time, constitutes an abuse of process, a breach of the duty of procedural fairness, and violated the legitimate expectations of the Applicant. [ 2 ] To support its claim that the Minister “resiled from her well-known administrative practices with respect to the VDP,” the Applicant filed the following evidence: A. Eight affidavits, consisting of the First Group and Second Group; B.

All correspondence and exchanges pertaining to the Disclosure and the audits; and, C. The VDP Manual. [ 3 ] The Respondents allege it is appropriate to deal with the inadmissibility of the affidavits at an interlocutory stage because “it is so clear-cut that there is no need for the Court to have the full record before coming to an assessment of their merits” (R’s memo, para 30).

They rightly point out that this relief is discretionary, which should be exercised sparingly and only in exceptional circumstances ( Canada (Board of Internal Economy) v Canada (Attorney General) , 2017 FCA 43 at para 29 ). [ 4 ] Such exceptional circumstances have been recognized in the following instances: A. The issue of admissibility is “clear-cut”: Association of Universities and Colleges of Canada v Canadian Copyright Licensing Agency (Access Copyright) , 2012 FCA 22 at para 12 ; B.

Where it is in the interest of justice to do so: Canada (Board of Internal Economy) v Canada (Attorney General) , 2017 FCA 43 at para 29 ;

C.

Where a party would be materially prejudiced where not striking an affidavit or portions thereof would impair the orderly hearing ofthe application: Canada (Board of Internal Economy) v Canada (Attorney General), 2017 FCA 43 at para 31. [5] As the Federal Court of Appeal intimated in Gravel v Telus Communications Inc, 2011 FCA 14 at paragraph 5, the rationale forsetting a high bar is that such interlocutory motions are “more often than not, needlessly, a decision on the merits.” While theRespondents frame their submissions around the affidavits being inadmissible as irrelevant because they largely contain explanations ofaffiants’ experiences in tax law and provide opinions on questions of domestic law, I find they are attempting to pre-emptively procure adetermination on the merits of the application. [6] The Applicant’s third sought-after declaration (above at para 1C) speaks to, among other issues, (1) the Minister’s well-knownadministrative practices with respect to the Voluntary Disclosure Program (VDP), and (2) the legitimate expectations of the Applicantwhen filing the VDP.

While the affidavits provide information about third parties that are not the Applicant, such evidence is inherentlynecessary to ascertain the established administrative practices and legitimate expectations that is part of the Applicant’s claim.

Strikingthis evidence wholesale at this point would severely prejudice the Applicant’s ability to establish these administrative practices and anylegitimate expectations argument, because any such evidence would necessarily concern the Minister’s conduct with regard to third-parties. [7] The Respondents contend particularly that the First Group should be struck for containing opinions on domestic tax law, whichwould be inadmissible. I disagree. The First Group provides first-hand information of the manner in which the Minister has previouslyhandled similar files resulting in established administrative practices.

In Canada (MCI) v Vavilov, 2019 SCC 65 [Vavilov] (see paras 106,129, 131), the Supreme Court of Canada has indicated that the conformity of an administrative decision with past practices and decisionsis an element to be considered in the examination of its reasonableness, and such elements are generally relevant: [106] It is unnecessary to catalogue all of the legal or factual considerations that could constrain an administrative decisionmaker in a particular case.

However, in the sections that follow, we discuss a number of elements that will generally berelevant in evaluating whether a given decision is reasonable, namely: the governing statutory scheme; other relevantstatutory or common law; the principles of statutory

interpretation; the evidence before the decision maker and facts ofwhich the decision maker may take notice; the submissions of the parties; the past practices and decisions of theadministrative body; and the potential impact of the decision on the individual to whom it applies. These elements are not achecklist for conducting reasonableness review, and they may vary in significance depending on the context.

They areoffered merely to highlight some elements of the surrounding context that can cause a reviewing court to lose confidence inthe outcome reached. [Emphasis added] [8] Similarly, in Baker v Canada (MCI), (SCC), [1999] 2 SCR 817 at para 26 [Baker], the Supreme Court of Canadaexpressly acknowledged that “procedural fairness take[s] into account the promises or regular practices of administrative decision-makers.” [9] Following Baker, this Court identified that regular practices of administrative decision-makers giving rise to legitimate expectationsmust be clear, unambiguous and unqualified (Honey Fashions Ltd v Canada (Border Services Agency), 2018 FC 1118, at para 45 [Honey Fashions 1st instance]). [10] As referenced by the Applicant, following the Supreme Court’s guidance in Vavilov, the Federal Court of Appeal in Canada(Attorney General) v.

Honey Fashions Ltd., 2020 FCA 64 at paras 30 and 46 [Honey Fashions Appeal] held that “[a]mong theconstraints that bear on the reasonableness of a decision are (…) past practices and past decisions (…)” and that “[a] decision makercannot deviate from earlier decisions or from a long-standing past practice, especially when it is too late for those affected by thesedecisions to adjust their behaviour accordingly, without providing a reasonable explanation for that departure”. [11] In the tax context specifically, this Court has also done this before.

The Applicant points to Dorothea Knitting Mills Ltd v Canada(Minister of National Revenue), 2005 FC 318 [Dorothea Knitting], where a judicial review was granted for a decision by the Ministerrefusing to reinstate the applicant’s claim for a tax credit. There, as here, the Respondents misconceived the argument and evidencebrought forward. In both cases, the Applicant submitted evidence of past treatment of other taxpayers and the Respondents suggested theapplicant could not rely upon it for this reason.

Rightly, the Honourable Madam Justice Mactavish established at paragraph 16 that theApplicant is in fact arguing that a past practice of the CRA gave rise to a legitimate expectation, and the evidence of past treatment ofother taxpayers was submitted to establish that the treatment that gave rise to their expectation was a regular administrative practice. [12] The Respondents’ retort to both Honey Fashions Appeal and Dorothea Knitting, as well as the Applicant’s reliance on Canada(MCI) v Vavilov, 2019 SCC 65, is that the Respondents seem under the impression that this Application is solely seeking a determinationof whether an agreement has been breached.

I respectfully disagree. The facts of this case are similar to Honey Fashions Appeal, in thatthe Applicant seeks a judicial review of a decision by the Minister that the Applicant made a misrepresentation and that additional taxyears must be assessed; the agreement in question is merely one alleged reason the Applicant submits the decision to be unreasonable. [13] With respect to the submissions concerning whether the content of the affidavits constitutes legal

interpretations of domestic law, Ifind the affidavits are factual in nature, speaking to the affiants’ personal practical experiences with the VDP and their understanding ofthe Minister’s practices at the relevant time. I am also concerned that if these affidavits are stricken from the Application Record, therewould be limited material in the record before the Court that speaks to the Minister’s administrative practices with respect to the VDPand the legitimate expectations of the Applicant when filing the VDP.

While the Income Tax Circular IC00-1R4 and the CanadaRevenue Agency VDP Manual constitute evidence of the Minister’s practices with respect to the VDP, these documents emanate fromthe government and the Applicant should be allowed to lawfully put forth evidence to substantiate its claim. [14] The Respondents also raise issues with the fact that some of the affiants have been closely associated with the Applicant at varioustimes, and while that may affect how a trial judge would weigh those affiants’ evidence after the parties have had a full opportunity totest it, it is no reason at this point to strike them entirely.

[ 15 ] To conclude, I find that the judge who hears the Application on the merits is in the best position to evaluate the contents of the affidavits in both the First Group and the Second Group (and transcripts of any cross-examinations on those affidavits) and to give each of them the appropriate weight, if any, in their evaluation of the reasonableness of the decision under review. ORDER in T-1758-18 THIS COURT ORDERS that: 1. The Respondents’ motion to strike is dismissed. 2 . The Respondents shall serve their supporting affidavit(

s) and documentary exhibits and file proof of service within 30 days of this Order; 3 . The time for remaining steps shall follow in accordance with the delays stipulated in the Federal Courts Rules ; 4 . Costs awarded to the Applicant to be assessed in the middle of Column III of Tariff B. "Ekaterina Tsimberis" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-1758-18 STYLE OF CAUSE: MILGRAM FOUNDATION v ATTORNEY GENERAL OF CANADA, AND, MINISTER OF NATIONAL REVENUE DATE OF HEARING: Motion in writing ORDER and reasons: TSIMBERIS J.

DATED: November 10, 2023 WRITTEN SUBMISSIONS BY : PAUL RYAN STEPHEN RUBY LOUISE SUMMERHILL For The Applicant SIMON PETIT JULIEN DUBÉ-SENÉCAL TARA MAGILL For The RespondentS SOLICITORS OF RECORD : RAVINSKY RYAN LEMOINE, LLP MONTREAL, QUÉBEC DAVIES WARD PHILLIPS & VINEBERG, LLP TORONTO, ONTARIO AIRD & BERLIS LLP TORONTO, ONTARIO For The Applicant

ATTORNEY GENERAL OF CANADA MONTREAL, QUÉBEC For The Respondent