http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/109093/index.do
Benaroch v. The Queen (April 16, 2015 – 2015 TCC 91, Favreau J.).
Précis: This is somewhat of an odd case. Mr. Benaroch was assessed as a director of 4158831 Canada Inc. in respect of unpaid GST of that corporation. At the Tax Court hearing the Crown failed to produce a certificate of the Federal Court showing the corporate debt or a report of the sheriff showing the writ returned unpaid. The Crown then filed a motion for a rehearing in order to produce that evidence (which, it seems, was in the Crown’s possession all along but not disclosed in its list of documents).
The Tax Court refused to permit a rehearing on the basis that the Crown had not met the evidentiary requirements of the jurisprudence, i.e., the evidence was available to the Crown at the first hearing and simply not produced. Costs on the motion for a rehearing were awarded to Mr. Benaroch.
Decision: This appears to be simply a case of the Crown forgetting to prove a central element of its case, i.e., that the requirements of paragraph 323(2)(a) of the Excise Tax Act had been met:
(2) Limitations – A director of a corporation is not liable under subsection (1) unless
(a) a certificate for the amount of the corporation’s liability referred to in that subsection has been registered in the Federal Court under section 316 and execution for that amount has been returned unsatisfied in whole or in part;
The taxpayer had brought the matter into play in his pleadings:
[8] Under the heading “Liability of the director of the Company”, paragraph 36 of the Notice of Appeal reads as follows:
36. First, the Appellant request [sic] that the Respondent provides evidence that the condition for the application of section 323 of the ETA have been met.
The Crown had the material in its possession all along and did not disclose them in its list of documents or at the first hearing. On the basis of the jurisprudence that Crown was not entitled to a rehearing:
[24] Given that the respondent did not meet at least one of the criteria stated by the Supreme Court of Canada in Sagaz, supra, this is not an appropriate case for reopening the hearing under section 138 of the Rules.
[25] At paragraph 36 of his Notice of Appeal, the appellant requested that the respondent submit the evidence that the conditions for applying section 323 of the ETA have been met. I see nothing in that paragraph that could have misled counsel for the respondent. At paragraph 29 of the Reply to the Notice of Appeal, it is specified with regard to paragraphs 36 to 38 of the Notice of Appeal that the respondent defers to the provisions of section 323 of the ETA. The parties were not taken by surprise, and section 323 must be read in its entirety. The conditions for its application are in subsection 323(2), and the respondent has the burden of showing that the conditions of application are met for the director’s liability to arise.
[26] The fact that the assessment made in respect of the appellant is a third party assessment or an underlying assessment following the transfer of property between persons not at arm’s length does not change the fact that the respondent must first establish the director’s liability. The burden of proof is the same in all cases.
The motion was dismissed with costs.