https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/351974/index.do
Canadian Imperial Bank of Commerce (December 7, 2018 – 2018 TCC 248, Graham J.).
Précis: Subsection 145(4) of the Tax Court of Canada Rules (General Procedure) provides that a party cannot call more than 5 expert witnesses at a hearing without leave of the Court. CIBC moved for leave to call 7 expert witnesses in a complex transfer pricing case involving a deduction in the range of $3 billion. The Court rejected CIBC’s application and ordered CIBC to advise the Crown which 5 out of its 7 experts it proposed to call at trial within 7 days of the decision on the application.
Decision: Among other factors the Court held that CIBC had not demonstrated that the additional evidence would not be duplicative:
[44] Al Meghji is the lead counsel for CIBC. CIBC filed an affidavit from Mr. Meghji in which he stated that the evidence of the seven expert witnesses is not duplicative. Mr. Meghji was not cross-examined on his affidavit. CIBC submits that I must therefore draw the conclusion that the evidence will not be duplicative. I disagree. Mr. Meghji’s own affidavit undermines his statement. He describes Mr. James’ evidence as a functional analysis of CIBC and its subsidiaries. Yet Mr. Meghji’s descriptions of the evidence of Dr. Michael I. Cragg indicates that Dr. Cragg will also be presenting a functional analysis of CIBC and its subsidiaries. Mr. Meghji also indicates that one of its proposed expert witnesses, an economist named Dr. T. Scott Newlon, will both be expressing his own expert opinion and providing an expert report rebutting the testimony of the Respondent’s transfer pricing expert, Dr. Sanjay Unni. However, Mr. Meghji also indicates that CIBC intends to call another economist named Dr. Brian Becker for the sole purpose of rebutting Dr. Unni’s report. This strikes me as being what is colloquially referred to as “piling on”.
[45] Based on all of the foregoing, CIBC has not convinced me that the evidence of its transfer pricing experts will not be duplicative. Therefore, this factor argues against allowing the motion.
[Footnotes omitted]
Nor was the motion timely:
[52] Had the Respondent argued that I should consider the timeliness of CIBC’s motion, I would have given this factor very significant weight. Counsel for CIBC has clearly been aware for many months of the need to bring this motion but waited until less than two months before trial to do so. As a result, CIBC gained an inappropriate tactical advantage by leaving the Respondent uncertain of what expert witnesses she would face at trial.
Thus the motion was dismissed and CIBC was ordered to advise the Crown which 5 out of its 7 experts it proposed to call at trial within 7 days.
The reports were to be amended as necessary:
[65] Once CIBC selects the two expert witnesses that it is not going to rely upon, the parties may need to amend their rebuttal and surrebuttal expert reports to remove references to the opinions of those expert witnesses. The parties shall have until January 4, 2019 to serve such amended rebuttal expert reports and until January 18, 2019 to serve such amended surrebuttal expert reports.
[66] For greater certainty, neither party shall amend any of its expert reports other than in accordance with the above. Without limiting the generality of the foregoing, CIBC shall not amend any of its expert reports to incorporate the opinions expressed by the two expert witnesses who will no longer be testifying.oregoing, CIBC shall not amend any of its expert reports to incorporate the opinions expressed by the two expert witnesses who will no longer be testifying.
Costs were awarded to the Crown:
[67] Costs of the motion are awarded to the Respondent in an amount to be determined when costs are established for the entire trial.
[68] While I have not considered the timeliness of CIBC’s motion in deciding this issue, I will consider that factor when determining the amount of costs. As set out above, the Respondent suffered prejudice as a result of CIBC’s failure to bring the motion in a timely manner. While that prejudice may not have been material in comparison to the amount in issue, it is still something that the Respondent should be entitled to recover through costs.
All in all, not a good day for the taxpayer.