Elbadawi v. R. - FCA: Appeals of Tax Court decision and costs award dismissed from bench

 Elbadawi v. R. - FCA:  Appeals of Tax Court decision and costs award dismissed from bench


Elbadawi v. Canada  (February 23, 2016 – 2016 FCA 57, Dawson (author), Near, Boivin JJ. A.).

Précis:  Mr. Elbadawi appealed to the Tax Court in connection with the assessment of unreported shareholder benefits against him, his wife and his son.  The trial lasted 10 days. His wife’s appeal was successful and his son’s appeal was partly successful.  Mr. Elbadawi was however completely unsuccessful and the Court awarded costs in the amount of $86,240.14 against him to sanction his conduct during the course of the trial.  He appealed to the Federal Court of Appeal but did not meet with any luck there either.  His appeal of his tax liability was dismissed from the bench.  Similarly his appeal of the costs award in the Tax Court was dismissed.  The Crown was awarded costs in both appeals.

Decision:   The Court of Appeal found no reviewable error in the main appeal:

[3]               In reaching her decision on the main appeal, the Judge made the following findings of fact:

i)                    The appellant treated all of his corporate entities as being interchangeable with him.

ii)                  There was a scarcity of records and supporting documentation.

iii)                The Judge received only the appellant’s self-serving testimony and very little else to support his allegation that he did not receive the income attributed to him.

iv)                In addition to being self-serving, the appellant’s testimony was vague and, at times, evasive and contradictory. None of his assertions were supported by documentation, and he did not call his accountant to testify.

v)                  Some documentation submitted by the appellant had been altered.

vi)                The Judge could not give any weight to the appellant’s evidence because of the credibility issues and lack of corroborative evidence.

[4]               These findings have not been demonstrated to be vitiated by any palpable and overriding error and they are dispositive of the appeal.

On the issue of costs the Court of Appeal accepted the conclusions of the Tax Court Judge:

[5]               With respect to the issue of costs, the appellant failed to make any submissions on the issue of costs before the Tax Court. The Judge found that the respondent’s work in respect of the proceeding in the Tax Court was much greater than would normally be required, largely due to the difficulties in dealing with the appellant. Throughout the proceeding in the Tax Court, the appellant’s focus centred upon the conduct of officials of the Canada Revenue Agency during the assessment process. This, notwithstanding what the Judge characterized to be her “explanations and repeated redirections” to the appellant. In the Judge’s words, this “accounted in large part for the hearing ballooning from its allotted five days for hearing to the ten days it took to complete”. As the Judge ultimately concluded at paragraph 28 of her supplementary reasons, the appellant disregarded her warnings “because his goal was a fact-finding mission against the [Canada Revenue Agency] in order to implement” a civil suit against a number of individuals employed by the Canada Revenue Agency and others.

[6]               Additionally, the Judge listed unnecessary steps required in the proceeding as a result of the appellant’s conduct.

[7]               In this circumstance, no error has been demonstrated in the Judge’s discretionary order as to costs.

As a result both appeals were dismissed from the bench, with costs.