Written by Ed Kroft, Q.C., Jehad Haymour and Sophie Virji
Practice Directions and Notices to Profession
On April 17, 2020, the Tax Court of Canada released both a Notice to the Public and the Profession and a Practice Direction and Order. The April Notice expands upon the Notices to the Public and the Profession issued on March 13 and March 23, 2020, some of the details of which are outlined in Modified Deadlines for Federal Tax Litigation Proceedings.1 The April Direction notes that, to the extent that the April Direction conflicts with the Practice Directions and Orders that issued on March 16, 2020, and March 23, 2020, the April Direction prevails.
Dealings with the Registry
The Tax Court and its Registry offices across the country remain closed for the transaction of business until further notice, which at the present time includes the period from March 16, 2010, until at least some time in May, 2020.
Cancellation of Sittings
The Tax Court has cancelled all sittings and conference calls scheduled between May 4, 2020, and up to and including May 29, 2020. While the Tax Court will have difficulty in rescheduling the hearings that have been cancelled, the April Notice notes that Registry staff will contact those parties affected by the cancellations in the coming days.
Modified Timelines and Extensions of Time for Filing Notices of Appeal and Replies
The April Notice outlines the suspension of certain timelines and the manner in which application for extension of time provisions will be applied in these exceptional circumstances. Under the April Notice and the April Direction, the computation of time under the Tax Court of Canada Rules (General Procedure), and all other analogous rules made under the Tax Court of Canada Act that the Tax Court has the power to control, will exclude the period beginning on March 16, 2020, and ending on the day that is 60 days after the Tax Court and its offices eventually reopen for the transaction of business.
The April Notice and April Direction also outline a streamlined process to avoid numerous unnecessary applications for extension of time to file Notices of Appeal. Specifically, the Tax Court will treat all Notices of Appeal filed during the period that the Tax Court is closed for the transaction of business and for 60 days thereafter as including an application for an extension of time to file a Notice of Appeal. In turn, the Registry will advise the Respondent (i.e., the Crown) of this fact when it serves a Notice of Appeal on the Crown and will ask the Crown to either confirm that:
- the appeal was filed in a timely manner and no extension is necessary;
- the appeal was filed after the statutory deadline but that the Crown consents to the application; or
- the appeal was filed after the statutory deadline and that the Crown opposes the application.
The Tax Court will also look favourably on applications by the Minister of National Revenue for analogous extensions of the time limits for filing Replies to Notices of Appeal, where such time limits are statutory limits governed by the Tax Court of Canada Act2 (as opposed to being time limits governed by the relevant Tax Court Rules). Accordingly, the Tax Court encourages parties to consent to an extension of the time limits applicable to filing such a Reply.
The April Notice makes no changes relating to statutory filing deadlines over which the Tax Court has no jurisdiction (other than as outlined under heading C above), the availability of the electronic filing system, and the exemption from paper filing and service requirements.
Discussions of the Chief Justice with Tax Court and Bench and Bar Committee
On April 14, 2020, Chief Justice Rossiter of the Tax Court provided the members of the Canadian Bar Association Tax Court Bench and Bar Committee some insight into the timing and manner in which the Tax Court is expected to reopen for business.
Timing for Resumption of Services
The Chief Justice noted that the Tax Court is not a court of essential services, but rather a fiscal court, and it requires a general government direction before it can resume normal operations.
The Chief Justice noted three key dates:
- the date that the Tax Court staff may return to work;
- the date that the Tax Court can reasonably resumes operations and be open for the transaction of Tax Court business; and
- the date that Tax Court sittings may resume.
The latter two key dates are fully dependent upon the timing of the former.
The Tax Court provided a hypothetical timeline for the resumption of normal operations, subject to social distancing demands and other COVID-19 related restrictions, including the need to ensure the safety and health of Tax Court staff and judges and litigation parties and given potential restrictions on the ability to safely travel to the particular Tax Court sittings.
As a starting point, once the relevant government authorities sanction the return to work of providers of non-essential services, Tax Court staff will be allowed to return to work at the Tax Court offices (which timeframe is unknown). It is anticipated that a lead time of approximately two weeks following the return to work of Tax Court staff will be needed before the Tax Court can officially reopen for the transaction of business. It is also anticipated that Tax Court sittings will be resume approximately two weeks after the Tax Court reopens for the transaction for business. The above timelines are guidelines only and are expected to evolve over time.
Notice of Appeal and Service on the Department of Justice
The Chief Justice also noted that a large number of Notices of Appeal have been filed to date during the period of March 16, 2020, which numbers are anticipated to continue to increase. Once the Tax Court resumes normal operations, the Attorney General of Canada can expect to be served with these Notices of Appeal in smaller batches, rather than being served with all Notices of Appeal filed with the Tax Court at the same time.
Addressing the Sittings Backlog of the Tax Court
As the Tax Court noted under the April Notice:
Given the fluidity and evolution of the situation, it is very difficult at this time to assess how the Court will proceed in rescheduling the hearings that have been cancelled. The Court will determine the most fair and expeditious way to do so upon resumption of operations.
The Tax Court has, however, been giving extensive thought to how operations will be ramped up and efficiently returned to normal.
Once the Tax Court is reopened for the transaction of business and sittings have resumed, it is anticipated that additional sittings will be scheduled to the end of 2020 to accommodate the backlog of cases caused by the shutdown of Tax Court operations. During the first six months of the reopening of Tax Court operations, the Tax Court operations will give priority to the matters outlined below with the focus being on the largest Canadian centers. In this regard, the Tax Court tentatively plans on having additional sittings each week in Vancouver (2-3), Calgary (1-2), Edmonton (1-2), Toronto (4-5), Montreal (2-3), Ottawa (1) and Halifax (1). Also, in order to deal the backlog created by the shutdown, the Tax Court anticipates that an additional duty judge will be assigned matters for each week.
Priorities for Hearing Dates to Address Backlog
Priority for Tax Court sittings will likely be given to those matters that were already scheduled in the above-captioned city centers before the closure of the Tax Court on March 16, 2020. Priority for new sittings will also likely be given to those cases where trial has already commenced and to General Procedure matters that were adjourned. Additionally, priority will be given to non-Informal Procedure matters and to case management matters that were scheduled to be heard before the closure of the Tax Court on March 16, 2020.
With respect to adjournment requests brought once the Tax Court is fully operational, the Chief Justice noted that requests for adjournments will be liberally applied, however the Tax Court expects that all parties to the litigation to attempt to accommodate and adhere to the sittings schedule as much as possible to facilitate the efficient handling of matters. In this regard, witnesses and parties will be expected to make themselves as available as possible and adjournment requests based on availability of witnesses will not be looked upon favourably by the Tax Court.
Motions in Writing Delayed
Once the Tax Court is fully operational, the Tax Court will encourage parties to proceed with motions in writing where possible. Where proceeding by way of motions in writing is not possible or if the parties cannot agree to proceeding in this manner, the motion will be put in a queue for a hearing date.
Bennett Jones Insights in Light of the Current Delays
Using the Time to Prepare Your Case
With all of the new demands that will be placed upon the Tax Court's sittings after the Tax Court has reopened for the transaction of business, parties should use this time to work on ways of advancing tax litigation in an expeditious manner. Parties should focus on means of advancing litigation steps such as preparing motions to be brought, agreeing upon written examinations for discovery (or portions thereof), dealing with admissions and other procedural matters, and considering settlement approaches.
Get Your Witnesses Prepared
While we are all under social distancing restrictions, the extensive availability of audio and video conferencing technology allows for the use of virtual meetings to prepare witnesses for trial or further prepare for trial.
Narrow the Issues and Discuss Resolution Opportunities
The closure of the Tax Court has necessitated the need for parties to minimize the instance of other delays in tax litigation that may arise in the normal course. Keeping lines of communication open with opposing counsel to discuss litigation actions, including agreed statements of fact and notices of admit and settlement opportunities, may prove valuable in the long-term in avoiding unnecessary additional delays. These tools should be utilized by litigants in the normal course in any event but become more beneficial in these uncertain times.
If you have any questions about the information in this article, please contact a member of the Bennett Jones Tax group. In addition, please visit our COVID-19 Resource Centre for other COVID-19-related materials.
1 Under the March 23, 2020 Notice to the Public and the Profession, Tax Court sittings and conference calls scheduled up to May 1, 2020 have been cancelled while sittings scheduled beyond May 1, 2020 will proceed. The period beginning on March 16, 2020 and ending on May 1, 2020 are excluded from the computation of time under the Tax Court of Canada Rules (General Procedure).
2 This includes applications for extensions of time limits under subsections 18.16(1) and 18.3003(1) of the Tax Court of Canada Act.