http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/108240/index.do 
Ghaffar v. The Queen (February 5, 2015 – 2015 TCC 46, Graham J.).
Précis: The taxpayer appealed assessments of his 2003 and 2004 taxation years. Neither he nor his counsel appeared at a show cause hearing and on October 6, 2010 the Tax Court issued a default judgment dismissing his appeal. The taxpayer obtained another lawyer and moved on September 27, 2011 to have the default judgment set aside. The Registry advised him by letter dated October 7, 2011 that his application was outside of the 30 period provided by the Rules for such applications and on February 11, 2013 he brought a motion to extend the 30 day period. The Tax Court found that the appeal had merit since it involved penalties and the onus was on the Crown to justify the imposition of penalties. The Court found that the taxpayer’s initial lawyer had performed inadequately because of physical and mental problems. Nevertheless the Court concluded that the taxpayer had not demonstrated a continuing intention to pursue his appeal, the application would prejudice the Crown and that the taxpayer had not adequately explained his delay in bringing a motion to extend the 30 day period. Accordingly the appeal was dismissed with costs of $3,000 payable to the Crown.
Decision: The taxpayer appealed assessments of his 2003 and 2004 taxation years. The appeals were dismissed in a default judgment when neither he nor his then lawyer appeared at a show cause hearing. He moved to set aside that judgment but was told he was too late under the Rules. He then moved to extend the time for an application to set aside the judgment:
[1] Abdul Ghaffar filed Notices of Appeal in respect of reassessments of his 2003 and 2004 taxation years. During the course of the litigation, the Court ordered Mr. Ghaffar to attend a show cause hearing. Neither Mr. Ghaffar nor his former counsel attended that hearing. Accordingly, the Court dismissed Mr. Ghaffar’s appeal. The Judgment dismissing Mr. Ghaffar’s appeal was issued on October 6, 2010 (the “Default Judgment”). Mr. Ghaffar applied to have that dismissal set aside pursuant to subsection 140(2) of the
Tax Court of Canada Rules (General Procedure). Subsection 140(2) permits the Court to set aside such a judgment if the taxpayer brings an application to have it set aside within 30 days. Mr. Ghaffar did not apply to have the Default Judgment set aside until September 27, 2011 (the “Application”), well after the 30 day period had expired. The Respondent opposed the Application on the basis that the time for bringing an application had expired. By letter dated October 7, 2011, the Tax Court Registry advised Mr. Ghaffar that his request to set the Default Judgment aside had been denied. Mr. Ghaffar brought a motion dated February 11, 2013 (the “Motion”), effectively seeking an extension of time to apply to have the Default Judgment set aside.
The Crown argued that the Court was functus because of the October 7, 2011 letter from the Registry. The Court rejected the argument:
[2] The Respondent raises a preliminary question as to whether I am
functus officio. The Respondent argues the letter dated October 7, 2011 was a final order of the Court and thus that Mr. Ghaffar does not have the ability to re‑argue the issue before me. I disagree. A letter from the Registry signed by a registry officer is not an order of this Court. Subsection 167(1) of the Rules states that applications shall be disposed of by issuing an order and subsection 167(2) (when read in conjunction with the definition of “judgment” in section 2) requires such orders to be signed. While the subsection does not say so explicitly, I cannot imagine that subsection 167(2) could contemplate an order being signed by anyone other than a judge or, in very limited circumstances not applicable here, the Judicial Administrator.
[3] Since no order was ever signed, in essence, the Application remains outstanding and the Motion merely fleshes out the Application and requests an extension of time. On the basis of the foregoing, I do not find myself to be functus officio. I will treat the Motion as being supplemental to the Application and these reasons shall deal with them both. I will deal first with the request for an extension of time.
[Footnotes omitted]
The Court then set out the four requirements for an extension of time under section 12 of the Rules:
(a) a continuing intention to pursue the appeal;
(b) that the appeal has some merit;
(c) that no prejudice to the Respondent arises from the delay; and
(d) that a reasonable explanation is given for the delay.
The show cause hearing arose out of the taxpayer’s repeated failures to answer undertakings given on discovery. The taxpayer tried to lay the blame on his former counsel. The Court accepted the fact that the former counsel had both physical and mental health problems but was still concerned about the taxpayer’s credibility:
[9] On the other hand, I struggle with Mr. Ghaffar’s credibility. Mr. Ghaffar testified that his former counsel never phoned him or his accountant, Mr. Ahmed, but later described receiving two phone calls from former counsel within a couple of days[6]. It was as if Mr. Ghaffar knew that it was important that he testify that he had not had adequate communication from his former counsel but was unsure exactly when that lack of communication was supposed to have occurred. He denied communication even when it was implausible (i.e. in the case of counsel not phoning to tell him when to attend discoveries). He then admitted it when it seemed beneficial (i.e. in the case of two phone calls arranging and then cancelling a meeting). He then backtracked when he seemed to have admitted too much (i.e. to deny that he knew the meeting was about undertakings or that undertakings were discussed on the phone call since his position was that he did not know what undertakings were required). Similarly, Mr. Ghaffar testified that he had received the October 7, 2011 letter from the Registry denying the Application and had immediately given it to Mr. Ahmed to translate for him but then stated that Mr. Ahmed had not told him that the Application had been denied. It was as if he wanted to appear to have been acting with speed and diligence while, at the same time, being unaware what was happening. Taken together, these implausible denials have caused me to question whether Mr. Ghaffar’s otherwise seemingly plausible denials are credible.
[Footnote omitted]
The Court also concluded that the evidence did not disclose the taxpayer’s continuing intention to pursue his appeal:
[15] However, I find that Mr. Ghaffar’s failure to satisfy his undertakings was an indication that he lacked an intention to pursue his appeal. In reaching that conclusion I am not just considering the fact that he failed to satisfy the undertakings by the deadline, but, more importantly, that he continued to fail to satisfy them for more than a year and a half thereafter. I understand that part of counsel’s role when dealing with some types clients is to pressure them to satisfy their undertakings. Clearly Mr. Ghaffar was one of these types of clients. I also understand that, without that pressure, those types of clients might not take any action on their own. I would be prepared to accept that Mr. Ghaffar may have continued to do nothing towards satisfying his undertakings for some period of time after his former counsel ceased contact with him because he was relying on counsel to tell him what to do and when to do it. However, at a certain point, given the poor relationship that had developed between Mr. Ghaffar and his former counsel and given the amount of time that had passed, Mr. Ghaffar should have taken the step of either contacting his former counsel, retaining new counsel or contacting the Court. He did none of these things. In fact, there is no evidence that he did anything in relation to his appeal from July 2010 to August 2011.
The Court found that the appeal had merit:
[17] One of the issues on appeal is the application of gross negligence penalties. Since the Respondent bears the onus of proving gross negligence penalties, I cannot see how I could reach any conclusion other than that the Appeal has merit.
However granting the extension would prejudice the Crown:
[19] The Respondent will be prejudiced in a way that cannot be compensated by costs if the extension of time is granted. While the Respondent still has copies of the documents from the Respondent’s list of documents, the Respondent no longer has copies of the rest of Mr. Ghaffar’s file relating to the taxation years in issue. Not only does this prevent the Respondent from referring to the file, it also prevents the Respondent from filing a supplemental list of documents if the need arises, introducing documents to impeach a witness on cross-examination or verifying that any documents produced by Mr. Ghaffar in a supplemental list of documents have not previously been produced to the CRA for some other purpose.
The Court also concluded that the taxpayer had not adequately explained the delays between receiving the October 7, 2011 letter from the Registry and taking the extension motion on February 11, 2013.
As a result the taxpayer had met only one of the four requirements of section 12 of the Rules therefore the application was denied, with costs of $3,000 payable to the Crown.