http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/126735/index.do
Tuccaro v. The Queen (November 20, 2015 – 2015 TCC 290, Hershfield J.).
Précis: This is a decision on two conflicting motions:
[1] The Respondent (the “Crown”) has brought a motion seeking an Order pursuant to section 58 of the Tax Court of Canada Rules (General Procedure) (the “Rules”) to determine the following question:
Is the Appellant [Mr. Tuccaro] precluded from re-litigating the issue of whether his income is exempt from income taxation pursuant to Treaty 8, on the basis of issue estoppel?
[2] The Appellant has brought a motion seeking an Order pursuant to sections 48 and 53 of the Rules to strike certain portions of the Crown’s Reply to the Amended Notice of Appeal.
[Footnote omitted]
Lurking in the background are two prior Federal Court of Appeal decisions, Beniot and Tuccaro, the latter made in the same proceeding. In a nutshell the Federal Court of Appeal held that Mr. Tuccaro’s appeal was not, on the evidence before an earlier motions Judge, barred by reason of issue estoppel since the evidence before the Court on that motion did not support that finding. In this proceeding the Crown moved to determine the issue estoppel question under a section 58 motion; Mr. Tuccaro argued that the decision of the Court of Appeal required that certain portions of the Crown’s Reply challenging the Appellant’s reliance on Treaty 8 be struck.
Ultimately the Tax Court concluded that both these matters were best determined by a trial Judge and not on a motion. Thus both motions were dismissed, with each party bearing their own costs.
Decision: The Tax Court dismissed the Crown’s motion for a section 58 hearing on issue estoppel:
[31] Further still, there is the question of whether the resolution of the estoppel issue would necessarily have to be dealt with at trial. If, at the discretion of the trial judge, the trial was limited in the first instance to the application of section 87, the need to consider evidence and argument in respect of Treaty 8 would be obviated if there was a finding that favoured the Appellant. As this way of managing the appeal would mean that a determination of this question before trial might, in the end, save neither time nor expense, I am further disinclined to grant the Rule 58 motion.
[32] The trial judge should and will have such discretion to manage this appeal, bifurcating it as deemed necessary for its expedient resolution. That discretion could include, in addition to trying the section 87 issue first, dealing with the question of issue estoppel before considering Treaty 8. A decision now not to grant the motion for a Rule 58 determination will not prevent the trial judge from dealing with that question at any point if the pleadings of the Respondent raise the issue (as they will for the reasons addressed under the next heading).
The Court similarly denied Mr. Tuccaro’s motion:
[47] Accordingly, I would deny the Appellant’s motion to strike those paragraphs of the Reply or portions thereof that relate to Treaty 8.
[48] While I have said that I am at ease with this view, and I am as a matter of law, I must confess that the result of this Order, viewed as a whole, does have a troubling aspect.
[49] I have potentially afforded the Appellant an opportunity to bring evidence of the intent of parties to a treaty entered into over a hundred years ago. As this evidence was presumably available and of more recent provenance at the time of the Benoit litigation, one wonders, as a practical matter, as more time passes, how many individual attempts at invoking Treaty 8, as providing an all-encompassing exemption from taxation, can be tried.
[50] In any event, the trial judge will inevitably have ultimate authority over how to deal with the Treaty 8 issue.
Thus both motions were dismissed, with each party bearing their own costs.