February 2021 Tax Court update on getting back to business – Top ten takeaways

11 February 2021

On February 9, Chief Justice ("CJ") Rossiter of the Tax Court of Canada ("TCC") provided the third TCC reopening update. Here are our top ten highlights.[1]

  1. As of June 22, 2020, the TCC's registry staff were returning to their offices, along with law clerks and administrative support personnel and steps were taken towards returning to conducting hearings, albeit limited to the major cities. An additional 78 sitting weeks were scheduled to at least partially relieve the 212 sitting weeks that were lost between March and June, with priority given to cancelled sittings in the order they were cancelled.
     
  2. Notwithstanding the TCC's best efforts to reschedule postponed appeals, these plans met with mixed success, as both appellants and the Crown were generally reluctant to proceed and adjournment requests rose sharply.
     
  3. Despite the dramatic slowdown in sittings, the TCC's inventory of cases at the end of 2020 was about the same as it was at the end of 2019, due to the fact that new appeals launched during 2020 were down by 50%. The observation was that the Canada Revenue Agency ("CRA") slowdown likely contributed to fewer new matters. However, a deluge of new appeals is expected from late 2021 running through to 2023, as the CRA reignites is processes.
     
  4. The TCC used this break in the action to reduce the number of judgments under reserve to their lowest level, although there may be delays in them being published. This is something CJ Rossiter monitors, regularly and closely.
     
  5. As of July, 2020, courtroom retrofits and safety procedures were in place, with spaces reconfigured for protection of the health and safety of all, including the use of plexiglass screens, hand sanitizer, proper ventilation, social distancing and masks. The TCC must of course observe all local, provincial and federal guidance, which has been fluid with updates on an almost daily basis, resulting in managing the situation being practically a full-time job. The CJ and the Associate Chief Justice considered all the factors, including the status and trends of the virus, what the CRA was doing and the lockdown in Ontario, which impacted the GTA, with 44% of the TCC's inventory, all of which was discussed with the TCC's staff. Out of an abundance of caution, all hearings between November 30, 2020 and January 18, 2021 were cancelled, which was then extended until February 15 and then again until March 15.
     
  6. In mid-December, the Courts Administration Service, which supports the TCC, flagged certain aerosol issues, requiring TCC staffing to be limited to 50%. Then in January, Ontario's stay-at-home order required TCC staffing to be limited to essential services, further reducing those working to 22%. This in turn impeded judicial workflow.
     
  7. CJ Rossiter then provided an update on the TCC's use of technology. Policies are being developed for virtual hearings and conferences. Virtual settlement conferences are complicated by the need for breakout rooms and confidentiality and final testing is happening this week. While there are a couple of hybrid virtual/paper trials coming up as a pilot project, litigants and their counsel need to temper their expectations for virtual hearings. Significant internal training is needed, in addition to the technological requirements. The TCC does not have the technology nor the training for electronic documentary evidence. As an example of the TCC's lagging technological capacity, the TCC's Ottawa offices had WIFI operational only as of November 17, 2020.
     
  8. CJ Rossiter commented on a number of interlocutory procedural matters. Although the TCC remains open to giving rulings under the preliminary ruling docket, there has only been one to date. The use of the fast track settlement process has been similarly disappointing. It is only available at the request of both parties, since there was "no use in dragging people to the altar". The TCC rules do not adequately provide for electronic service. Videoconferences may be available for matters that do not involve evidence, including motions and oral argument. The TCC will remain flexible and reasonable in response to requests for extended timetables.
     
  9. Statutory and rules changes are in the works to facilitate certain procedural matters and access to justice, including rules for group appeals and a rule for agents.
     
  10. Going forward, the TCC will resume scheduling hearings as soon as possible and will reassess the situation in early March. It is unclear whether there will be virtual public hearings. The TCC is not expected to issue another blanket extension for all matters, as was done previously. Although it has not yet been budgeted, the TCC is seeking further funding to cope with the anticipated upcoming deluge of appeals, including for at least three more judges, as well as a desire for prothonotaries to handle procedural matters.

While we continue to provide updates on tax dispute resolution before the TCC as further information becomes available, if you have any questions or need help to resolve a pending tax dispute, please do not hesitate to contact us.

 

[1] While we hope our summary is both helpful and accurate, readers are encouraged to check the TCC's rules, practice notes, directions and orders, to ensure all necessary steps are being taken to properly manage their own TCC appeals.


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