Tax Court of Canada Judgments

 

 

 

 

Docket: 2007-4938(IT)G

BETWEEN:

NEIL MCFADYEN,

Appellant,

and

 

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

 

Motion heard on May 8, 2008, at Toronto, Ontario.

 

Before: The Honourable Gerald J. Rip, Chief Justice

 

Appearances:

 

For the Appellant:	The Appellant himself
Counsel for the Respondent:	Andrew Miller

____________________________________________________________________

 

ORDER

          Upon motion made by counsel for the respondent for an order quashing the Amended Notice of Appeal, or in the alternative an order striking certain paragraphs of the Amended Notice of Appeal, or in the further alternative an order granting the respondent an extension of 60 days within which to file a Reply to the Amended Notice of Appeal, and an order granting the respondent its costs on the motion;

 

          Upon reading the affidavits of the appellant, Sheridan Gardner and Craig Harvey, filed;

 

          And upon hearing what was alleged by the parties;

 

          The motion is granted as follows:

 

          All allegations of fact, argument and other provisions of the 2007 Amended Notice of Appeal, in particular, and without limiting the generality, paragraphs 59‑64, 70-77, 79, 81-86, 88, 89, 91-99, 101-107, 109-141, 143-159, 162-167, 169, 249-251, the last sentence of paragraph 252, subparagraph (d)(vi) and subparagraph (f) of paragraph 253, are struck from the 2007 Amended Notice of Appeal, save and except for provisions relating only and directly to the issue of the calculation of interest, statutory provisions upon which the appellant relies in advancing the interest issue, the reasons he intends to submit in support of the interest issue and the relief he seeks on the interest issue, as referred to in subparagraph K of paragraph 170 of the 2007 Amended Notice of Appeal, which provisions shall not be struck from the 2007 Amended Notice of Appeal.

 

          The appellant shall file a Further Amended Notice of Appeal raising only the issue of the calculation of interest that he wishes to appeal, such Further Amended Notice of Appeal to be filed within 90 days of this order.

 

          Respondent shall have 60 days from receipt of the Further Amended Notice of Appeal to file a Reply to the Further Notice of Appeal.

 

          Costs of this motion shall be awarded to the respondent.

 

Signed at Ottawa, Canada, this 31st day of July 2008.

 

 

 

 

 

 

 

 

Citation: 2008 TCC 441

Date: 20080731

Docket: 2007-4938(IT)G

BETWEEN:

NEIL MCFADYEN,

Appellant,

and

 

HER MAJESTY THE QUEEN,

Respondent.

 

REASONS FOR ORDER

 

Rip, C.J.

 

[1]              The respondent, Her Majesty The Queen, has made an application for an order quashing the Amended Notice of Appeal or, in the alternative, for an order striking out the following paragraphs from the Amended Notice of Appeal: 59-64, 70-77, 79, 81-86, 88, 89, 91-99, 101-107, 109-141, 143-159, 162-167, 169, subparagraph K of 170, 249-251, the last sentence of paragraph 252, subparagraph (d)(vi) and subparagraph (f) of paragraph 253. These paragraphs are set out in Appendix I to these reasons.

 

[2]              On December 17, 2007, Mr. Neil Barry McFadyen, the appellant, amended his Notice of Appeal from assessments for 1993, 1994 and 1995 taxation years, notices of which are dated March 6, 2006 ("2006 reassessments"). The issue in the appeals is whether, in those taxation years, the appellant was resident in Canada.

 

[3]              The appellant, on or about May 10, 1999, filed an Amended Notice of Appeal ("1999 Amended Notice of Appeal") to this Court from reassessments of income tax for 1993, 1994 and 1995, notices of which were dated December 16, 1996 ("1996 reassessments") on the basis he was not a resident of Canada or Ontario during these years. The appellant's spouse at the time had accepted a position as an employee of the Canadian Government at the Canadian Embassy in Tokyo, Japan. The appellant terminated his employment in Canada and in 1992 the appellant, his wife and child moved to Japan. The appellant apparently performed services in Japan for the Canadian Embassy in 1993 and 1994 both as an employee and as an independent contractor. In 1994 and 1995 the appellant also was employed by a securities firm in Tokyo. In his 1999 Amended Notice of Appeal he stated the issues to be decided were as follows:

 

46.       Was the Appellant a factual resident of Canada or ordinarily resident in Canada in 1993, 1994 and up to September 1995?

 

47.       Was the Appellant a deemed resident of Canada in 1993, 1994 and up to September 1995, as a result of his spouse being an officer or servant of Canada and his being resident in Canada in any previous year, pursuant to the provisions of ss. 250(1)(e) of the ITA?

 

48.       Whether the Appellant was a resident of Japan, as that term is used in the Canada/Japan Income Tax Convention, such that income derived by him is taxable only in Japan, pursuant to the provisions of Articles 14, 15 and 18 of the Canada/Japan Income Tax Convention.

 

49.       Whether, if the Appellant was a deemed resident of Canada pursuant to the provisions of ss. 250(1)(e) of the ITA, those provisions are of no force and effect because they are contrary to the provisions of the Charter of Rights and Freedoms, s. 15, in that they deprive the Appellant of the right to equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on marital status.

 

[4]              The appeals from the 1996 reassessments were heard by Garon C.J..[1] He held that Mr. McFadyen, on all of the facts submitted, was a factual resident of Canada during 1993, 1994 and 1995 and was thus ordinarily resident in Canada within the meaning of subsection 259(3) of the Income Tax Act ("Act"). Also, Garon C.J. held that the appellant was subject to the deeming provision contained in former paragraph 250(1)(e) of the Act with respect to embassy staff and that the provision was not contrary to subsection 15(1) of the Canadian Charter of Rights. Mr. McFadyen filed an appeal to the Federal Court of Appeal; the appeal was allowed only to the extent that, in assessing, the Minister of National Revenue ("Minister") was to credit tax paid to Japan.[2] Application for leave to the Supreme Court of Canada was denied. In 2003 Mr. McFadyen was reassessed pursuant to the judgment of the Federal Court of Appeal.[3]

 

[5]              In the meantime, Mr. McFadyen's spouse, Sheridan Gardner, who was employed in the Canadian Embassy was having her own tax problems with her status as resident with respect to federal and Ontario assessments. Finally, the Ontario Ministry of Finance agreed that she was not a resident of Ontario in the years in appeal and the Ministry of Finance consented to judgment allowing her appeal. Also, the Ontario tax authority acknowledged that Mr. McFadyen was not a resident of Ontario at the times and, as a result, the Canada Revenue Agency ("CRA"), the current tax authority, issued the Ontario 2006 reassessments to Mr. McFadyen.

 

[6]              After objecting to the 2006 reassessments, Mr. McFadyen filed a Notice of Appeal, followed by an Amended Notice of Appeal, dated August 29, 2007 ("2007 Amended Notice of Appeal"), from the 2006 reassessments. Mr. McFadyen recognizes 11 issues for appeal. These issues are set out in Annex II to these reasons. The main thrust of his 2007 Amended Notice of Appeal is that he was not resident of Canada during the years in appeal, the same issue as in the 1996 Amended Notice of Appeal.

 

[7]              The grounds for the respondent's motion are the following:

 

a)      the appeals with respect to the appellant's 1993, 1994 and 1995 taxation years are res judicata, scandalous, frivolous or vexatious, or an abuse of process;

 

b)      in the alternative, the March 6, 2006 reassessments with respect to the appellant's 1993, 1994 and 1995 taxation years were nil assessments;

 

c)      in the further alternative, the appeals are moot because even if the appellant were to be successful, the income tax refunds would remain with the CRA, as pre-bankruptcy income tax refunds vest in the trustee for distribution to the creditors and the appellant declared bankruptcy in 2003, with the CRA holding 98% of the unsecured debt;

 

d)      in the further alternative:

 

I.       paragraphs 59-64, 70-77, 79, 81-86, 88, 89, 91-99, 101-107, 109-141, 143-159, and 162-167 do not plead material facts;

 

II.      paragraph 169, subparagraph K of 170; 249-251, the last sentence of 252, subparagraph (d)(vi) of 253 and subparagraph (f) of 253 are not within the Court's jurisdiction.

 

[8]              The respondent relies on the following statutory provisions:

 

e)      sections 53 and 44(1)(b) of the Tax Court of Canada Rules (General Procedure);

 

f)       subsections 152(1), 152(3.1), 152(4), 165(1), 165(1.1), 169(1), 169(2) and 171(1) of the Income Tax Act;

 

g)      section 12 of the Tax Court of Canada Act;

 

h)      sections 41(11), 67 and 71 of the Bankruptcy and Insolvency Act.

 

[9]              The respondent produced an affidavit of Craig Harvey, a program officer who was previously an appeals officer with the CRA and its predecessor organizations. Mr. Harvey stated that he has personal knowledge of the matters he deposed to and that he has examined the tax authority's records relating to Mr. McFadyen's 1993, 1994 and 1995 taxation years.

 

[10]         Attached to Mr. Harvey's affidavit are numerous documents, including a copy of the appellant's 1999 Amended Notice of Appeal; a copy of the respondent's Amended Reply to the Amended Notice of Appeal; a copy of Reasons for Judgment of Garon C.J. dismissing the appeals; a copy of the appellant's Notice of Appeal to the Federal Court of Appeal; a copy of the Reasons for Judgment of the Federal Court of Appeal allowing the appellant's appeal only in respect to allowing the appellant a foreign tax credit with respect to Japanese tax withheld from his 1994 and 1995 income, and a concession the respondent says the Minister made with respect to the appellant's salary for 1993, but otherwise dismissing the appeals; a copy of internal CRA memorandum instructing the tax authority to reassess the appellant in accordance with the reasons of the Federal Court of Appeal; a copy of the appellant's application for leave to appeal to the Supreme Court of Canada and a copy of the judgment of the Supreme Court of Canada dismissing the application; a copy of the appellant's motion record requesting the Chief Justice of Canada to reconsider the dismissal of the application for leave to appeal to the Supreme Court of Canada and a copy of a letter dated July 10, 2003 from the Registrar of the Supreme Court of Canada advising the appellant that his motion was rejected; copies of documents relating to the appellant's bankruptcy; copies of documents relating to reassessments for tax for 1993, 1994 and 1995 pursuant to the Ontario Income Tax Act; and correspondence between Mr. McFadyen and officers of the CRA.

 

[11]         Mr. McFadyen also filed an affidavit raising "some additional facts to those in my Amended Notice of Appeal [ ] support that res judicata and/or issue estoppel should not apply and in the event that they do apply special circumstances that I believe warrant them not to apply." Attached to his affidavit are documents that include copies of internal government documents, notes and/or correspondence with various government agencies or departments, including the tax authority; notices of reassessment, dated December 16, 1996, for 1993, 1994 and 1995; Notices of Reassessment, dated March 18, 2003, with respect to 1993, 1994 and 1995 taxation years as well as explanations of changes from prior reassessments; notices of the 2006 reassessments and explanations of changes from prior assessments; 1999 Amended Reply to the Notice of Appeal; formal judgment of the Federal Court of Appeal with respect to applications for judicial review of decisions of the Canadian Human Rights Commission; correspondence between Hon. John Manley and the Executive Assistant to the Minister; Chapter 3 of the 2007 Report of the Auditor General with respect to Human Resources Management – Foreign Affairs and International Trade Canada; and transcript of evidence of the House of Commons Standing Committee on Public Accounts, April 15, 2008.

 

[12]         Also produced by Mr. McFadyen was an affidavit of Sheridan Gardner, his former spouse, to whom he was married in 1993, 1994 and 1995. Ms. Gardner was assessed federal and Ontario income tax for 1993 and 1994 on the basis that she was a "factual resident" in Ontario during these years. She objected to the assessments which were confirmed; she appealed the assessments to this Court. She states that on September 14, 2000 the respondent "made a motion in which the Tax Court of Canada held that I was a deemed resident and the Tax Court did not have jurisdiction to decide my Ontario residency status." Apparently the federal tax authority at the time did not provide Ms. Gardner with the correct information regarding her appeal rights concerning the provincial assessments. The Ontario Ministry of Finance advised her on November 28, 2000 that the provincial assessments had not been confirmed. Ms. Gardner had the right at the time to appeal her Ontario assessments to the Ontario Superior Court of Justice. By Notice dated June 29, 2001 the Canada Customs and Revenue Agency confirmed the Ontario assessments and informed Ms. Gardner of her right to appeal to the Ontario Court.

 

[13]         On February 18, 2005 Lalonde J. of the Ontario Superior Court of Justice approved a consent allowing Ms. Gardner's appeals for 1993 and 1994 on the basis that she was not resident in Ontario during 1993 and 1994. And, as stated earlier, it was on this basis that Ontario agreed that Mr. McFadyen also was not a resident of Ontario in 1993, 1994 and 1995 and his provincial assessments were reduced to nil.

 

a)       The Notices of Reassessment issued in 1996 to Mr. McFadyen described the reassessments as follows:

 

	Net Federal Tax	Net Provincial Tax	Total Interest Adjustment
1993	$ 6,512.23	$3,667.08	$   104.50 dr.
1994	$29,299.27	$18,991.56	$7,789.04  dr.
1995[4]	$18,040.25	$11,131.10	$1,743.17 dr.

 

b)      Notices of Reassessment issued on March 18, 2003 described the reassessments made in accordance with the judgment of the Federal Court of Appeal as follows:

 

	Net Federal Tax	Net Provincial Tax	Total Interest Adjustment
1993	$ 4,223.88	$ 2,378.49	$3,857.94 cr.
1994	$28,274.23	$18,991.56	$1,121.57 cr.
1995	$13,308.80	$11,131.10	$3,818.02 cr.

 

c)       The Notices of Reassessment issued in 2006 described the reassessments as follows:

 

	Net Federal Tax	Net Provincial Tax	Total Interest Adjustment
1993	$ 4,223.88	Nil	$ 3,260.62 cr.
1994	$28,274.23	Nil	$11,210.70 cr.
1995	$13,308.80	Nil	$ 4,988.80 cr.

 

The notes of explanation of the changes to income tax state that "Your Ontario taxes payable have been reduced to $0.00".

 

[14]         It is clear that the 2006 reassessments were only in respect of assessments issued pursuant to the Ontario Income Tax Act and not the Income Tax Act of Canada. The federal tax assessments for 1993, 1994 and 1995 issued in 2006 are identical with those issued in 2003. It may well be that the Notices of Assessments were different from the notices issued in 2003 in that the Ontario 2006 income tax reassessments were reduced to nil but a notice of assessment or reassessment is not an assessment or reassessment; it only informs the taxpayer of amounts of tax, interest and penalty, if any, assessed under the federal Income Tax Act and the relevant provincial Income Tax Act as well as assessment of contributions for Canada Pension Plan and the Employment Insurance Act. In the appeals at bar, no change has been made in the 2006 reassessments of federal income tax from those assessed in 2003. And it is the federal income tax that Mr. McFadyen is purporting to appeal.

 

[15]         The appellant has no right of appeal for taxes assessed to the Tax Court of Canada as a result of the 2006 reassessments. The right to appeal is granted by subsection 169(1) of the Act. As I infer in the preceding paragraph, the right of appeal arises in respect of an assessment, not a notice of assessment. The distinction between the two was highlighted by Thorson, P. in Pure Spring Co. v. M.N.R.:[5]

 

The assessment is different from the notice of assessment; the one is an operation, the other a piece of paper. The nature of the assessment operation was clearly stated by the Chief Justice of Australia, Isaacs A.C.J., in Federal Commissioner of Taxation v. Clarke (1927) 40 C.L.R. 246 at p. 277:

 

"An assessment is only the ascertainment and fixation of liability,"

 

. . .

 

It is the opinion as formed, and not the material on which it was based, that is one of the circumstances relevant to the assessment. The assessment, as I see it, is the summation of all the factors representing tax liability, ascertained in a variety of ways, and the fixation of the total after all the necessary computations have been made.

 

[16]         An assessment occurs when the Minister determines a taxpayer’s liability to pay tax. The receipt of a notice of assessment is not the same as being assessed. An assessment is something more than merely a notice that it has been made.

 

[17]         The 2006 Notices of Reassessment accomplished two objectives. Firstly, the appellant’s provincial tax liability for the years in issue was reduced to nil. An assessment of provincial tax liability pursuant to a provincial statute does not give rise to a right to appeal federal tax.

 

[18]         The appellant also appears to have been assessed for interest on his federal taxes that had accrued since the Notice of Reassessment issued in 2003. The appellant contends that the assessment of interest on federal tax reopens the entire federal assessment to appeal. I cannot agree.

 

[19]         Subsection 152(1) of the Act provides for the Minister to assess tax for the year as well as interest and penalties. An assessment of interest is distinct from an assessment of tax, it is the result of a tax assessment.

 

[20]         Subsection 152(4) provides that a taxpayer may not be assessed beyond the "normal reassessment period," as defined in subsection 152(3.1) of the Act. Considering that reassessments for 1993, 1994 and 1995 had been issued in 1996, it is obvious that the 2006 Notices of Reassessment were issued beyond the "normal reassessment period." Even if the Minister had wanted to reassess the appellant for federal taxes, thus granting the appellant a right of appeal, the Minister was statute barred from doing so.

 

[21]         The appellant was reassessed in 2003 in accordance with the judgment of the Federal Court of Appeal. As the 2003 reassessments of the appellant’s tax liability were issued pursuant to an order of a court, subsection 169(2) of the Act would have applied to those appeals. Subsection 169(2) precludes an appeal from an assessment based on a court order, except on matters relating to the assessment that were not finally determined by the Court. If the appellant had objected to the 2003 Notices of Assessment, subsection 169(2) would have precluded him from raising any issue raised in the current appeals. This raises the following question: why should the 2006 Notices of Assessment, which only update the amount of interest payable on the federal tax liability, grant the appellant a greater right of appeal than did the 2003 reassessments? The answer is that they do not.

 

[22]         The parties raised the issue of res judicata and I shall deal with it. There are two branches to the doctrine of res judicata: cause of action estoppel and issue estoppel. The distinction between the two branches of res judicata was set out by Dickson J., as he then was, in Angle v. M.N.R.,[6] as follows:

 

. . . The first, "cause of action estoppel", precludes a person from bringing an action against another when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction . . . The second species of estoppel per rem judicatam is known as "issue estoppel", a phrase coined by Higgins J. of the High Court of Australia in Hoystead v. Federal Commissioner of Taxation [(1921), 29 C.L.R. 537], at p. 561:

 

I fully recognize the distinction between the doctrine of res judicata where another action is brought for the same cause of action as has been the subject of previous adjudication, and the doctrine of estoppel where, the cause of action being different, some point or issue of fact has already been decided (I may call it "issue-estoppel").

 

[23]         The parties to this motion have argued the applicability of issue estoppel to this case. Based upon the view expressed in Angle,[7] it appears that cause of action estoppel is the more appropriate doctrine to apply to these facts. The appellant seeks to relitigate his assessed liability to pay income tax on his worldwide income for the taxation years 1993, 1994, and 1995. It is the same set of facts and the same assessment of taxes (subject to the adjustments ordered by the Federal Court of Appeal) as in the earlier litigation. It seems clear that the cause of action the appellant seeks to put forward currently is the same cause of action as was litigated before Garon, C.J.. Therefore, I consider that cause of action estoppel is the doctrine applicable on this motion.

 

[24]         The classic statement of the doctrine of cause of action estoppel is found in Henderson v. Henderson.[8] In holding that a default judgment out of England prevented the raising of new defenses in a proceeding in England, Wigram V.C. stated the rule as follows, at page 319:

 

            In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgement, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.

 

[25]         Henderson not only forecloses the relitigation of issues that have been conclusively decided by a court of competent jurisdiction. It also enunciates what has been referred to as the "might or ought" principle[9] - matters that properly should have been part of the original litigation but that a party failed to argue cannot be raised in subsequent litigation.[10]

 

[26]         The requirements to establish cause of action estoppel are well settled in Canadian law. The case of Bjarnarson v. Manitoba[11] sets out four requirements, relying on the leading decision of the Supreme Court of Canada:

 

The Supreme Court of Canada in the case of Town of Grandview v. Doering (1975), 61 D.L.R. (3d) 455, identified four criteria that must be present before the doctrine of cause of action estoppel would apply:

 

1. There must be a final decision of a court of competent jurisdiction in the prior action;

 

2. The parties to the subsequent litigation must have been parties to or in privy with the parties to the prior action [mutuality];

 

3. The cause of action in the prior action must not be separate and distinct; and

 

4. The basis of the cause of action and the subsequent action was argued or could have been argued in the prior action if the parties had exercised reasonable diligence.

 

[27]         The decision of Garon C.J. was a final decision of a court of competent jurisdiction and the same parties in that prior litigation are now before this Court. As discussed above, the appeal of the same assessment of tax liability for the same taxation years constitutes the same cause of action. Finally, all issues put forth in the 2007 Amended Notice of Appeal (with one exception to be discussed later) were either argued or, with the exercise of reasonable diligence, could have been argued in the earlier appeal. Therefore, the requirements for the application of cause of action estoppel have been met.

 

[28]         Cause of action estoppel appears to be the proper basis for deciding this motion. However, as the parties directed this Court’s attention to authorities dealing with issue estoppel, I will briefly consider the applicability of that branch of res judicata.

 

[29]         The leading case on issue estoppel in Canada is Angle, supra. Dickson, J., as he then was, writing for a majority of the Supreme Court, cited Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2),[12] for three requirements to apply issue estoppel:

 

. . . (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

 

[30]         Dickson, J. referred to Spens v. I.R.C.,[13] to impose a fourth requirement to the doctrine's application:

 

... whether the determination on which it is sought to found the estoppel is 'so fundamental to the substantive decision that the latter cannot stand without the former. Nothing less than this will do'.

 

[31]         As previously mentioned, when considering cause of action estoppel it is clear that the previous judicial decision was final and that the same parties to the previous litigation are parties to the current proceeding.

 

[32]         This issue of whether the same questions have been decided in the previous litigation deserves some comment. The appellant seeks to raise new issues in this appeal that he did not raise in the proceeding before Garon, C.J.. This seems to indicate that issue estoppel would not now preclude him from addressing these issues in the current proceeding. However, several Canadian courts have adopted the "might or ought" principle’s application to issue estoppel as well as cause of action estoppel. Indeed, the Federal Court of Appeal in Apotex Inc. v. Merck & Co. (C.A.),[14] did just that. The position of the common law may continue to evolve in this respect. The decision in Apotex is a decision of the Supreme Court of Canada and is of the highest authority. The "might or ought" principle applies to issue estoppel to prevent new issues from being raised now that should have been raised in the previous litigation.

 

[33]         The Supreme Court of Canada in Danyluk v. Ainsworth Technologies Inc.,[15] firmly established that there is a judicial discretion whether to apply issue estoppel when the requirements of that doctrine have been met. Similarly, judicial discretion seems to exist with respect to cause of action estoppel.[16]

 

[34]         In Danyluk, supra, the Supreme Court of Canada relied on its previous decision in General Motors of Canada Ltd. v. Naken,[17] for the proposition that judicial discretion should have a limited application when reviewing previous decisions made by a court.  The scope for applying discretion in this case should be very limited.

 

[35]         The appellant seeks to rely on Withler v. Canada (Attorney General),[18] for the proposition that the party seeking to apply res judicata has the onus of establishing that judicial discretion should not be applied. I think this interpretation is a misreading of Withler and is contradicted by Gebreselassie v. VCR Active Media Ltd.[19] The appellant bears the onus of establishing that the limited discretion ought to be applied.

 

[36]         The appellant cites Withler for the proposition that res judicata should not be applied if it will inflict a serious injustice. I accept that view. There can be no doubt that the appellant has experienced serious personal consequences from the previous litigation, including a personal bankruptcy. However, these serious personal consequences cannot be equated with serious injustice. This is not a situation where the appellant has experienced a lack of due process, despite his arguments to the contrary. The appellant has not drawn my attention to any evidence that a serious injustice would arise by the application of res judicata and, thus, I will not exercise my discretion in the appellant's favour.

 

[37]         Given that either cause of action estoppel or issue estoppel apply to preclude relitigation in this case, I am asked to determine whether special circumstances exist to suspend the application of those doctrines. The application of special circumstances also flows from the decision in Henderson, supra.

 

[38]         The appellant submits that there is new evidence viz. a consent decision of the Ontario Superior Court that warrants a rehearing of this matter. With regards to new evidence, Donald J. Lange, The Doctrine of Res Judicata in Canada,[20] summarizes the special circumstance of new evidence nicely:

 

. . . Where fraud is not involved, the common law position with respect to new evidence is very clear. For new evidence to preclude the operation of issue estoppel or cause of action estoppel resulting from an entered judgment, the new evidence must be practically conclusive of the matter. The incontrovertible nature of the new evidence is at the heart of the test. It must be virtually impossible to controvert the new evidence.

[Footnote omitted.]

[39]         The rationale for the limited application of the special circumstance of new evidence was put forward in Phosphate Sewage Co. v. Molleson,[21] which was cited with approval by the Supreme Court in Grandview  v. Doering,[22] read as follows:

 

As I understand the law with regard to res judicata, it is not the case, and it would be intolerable if it were the case, that a party who has been unsuccessful in a litigation can be allowed to re-open that litigation merely by saying, that since the former litigation there is another fact going exactly in the same direction with the facts stated before, leading up to the same relief which I asked for before, but it being in addition to the facts which I have mentioned, it ought now to be allowed to be the foundation of a new litigation, and I should be allowed to commence a new litigation merely upon the allegation of this additional fact. My Lords, the only way in which that could possibly be admitted would be if the litigant were prepared to say, I will shew you that this is a fact which entirely changes the aspect of the case, and I will shew you further that it was not, and could not by reasonable diligence have been, ascertained by me before. Now I do not stop to consider whether the fact here, if it had come under the description which is represented by the words res noviter veniens in notitiam, would have been sufficient to have changed the whole aspect of the case. I very much doubt it. It appears to me to be nothing more than an additional ingredient which alone would not have been sufficient to give a right to relief which otherwise the parties were not entitled to.

 

[40]         The determination by the Ontario Ministry of Finance of the appellant’s provincial residency is not the type of conclusive evidence that will attract the sought after relief. Neither is the judgment of Lalonde J. since, among other things, it was a judgment on consent under a provincial statute. There is no basis to apply special circumstances to this case.

 

Interest

 

[41]         In the 2007 Amended Notice of Appeal, subparagraph K of paragraph 170, a provision the respondent seeks to strike, the appellant raises the following issue:

 

            Whether the Minister incorrectly calculated the interest and refund adjustments for the 1993, 1994 and 1995 reassessments and/or applied them contrary to s. 68 of the Bankruptcy and Insolvency Act.

 

[42]         The respondent contends that subparagraph 170 K of the 2007 Amended Notice of Appeal be struck for lack of jurisdiction. Subparagraph 170 K appears to include two matters affecting interest. The second part of the provision questions the application of any refund; this is a collections issue and is not a matter before me. However, the first part of subparagraph 170 K alleges that the Minister has incorrectly calculated the interest on the tax liability. This part should not be struck. The notices for 2006 reassessments do indicate interest accrued on federal tax unpaid. As there are new amounts of interest calculated and assessed, the appellant should be permitted to challenge the Minister’s computation of interest. Furthermore, this is not the type of issue that reasonably could have been raised in previous litigation such that res judicata would apply.

 

[43]         Therefore all allegations of fact, argument and other provisions of the 2007 Amended Notice of Appeal will be struck, save and except for provisions relating only and directly to the issue of the calculation of interest, statutory provisions upon which the appellant relies in advancing the interest issue and the reasons he intends to submit in support of the interest issue and the relief he seeks on the interest issue. In fact, all provisions relating to issues other than interest in the 2007 Amended Notice of Appeal are struck.

 

[44]         To maintain the current Amended Notice of Appeal with almost all of its provisions struck may cause confusion to all. Therefore the appellant shall provide a Further Amended Notice of Appeal raising only the issue of the calculation of interest that he wishes to appeal, such Further Amended Notice of Appeal to be filed within 90 days of this order. The respondent shall have 60 days from receipt of the Further Amended Notice of Appeal to file a Reply to the Further Notice of Appeal. Costs of this application shall be awarded to the respondent.

 

Signed at Ottawa, Canada, this 31st day of July 2008.

 

 

"Gerald J. Rip"

 

 

 

APPENDIX I

 

 

 

APPENDIX II

 

 

 

CITATION:                                       2008 TCC 441

 

COURT FILE NO.:                            2007-4938(IT)G

 

STYLE OF CAUSE:                          NEIL MCFADYEN v. THE QUEEN

 

PLACE OF HEARING:                     Ottawa, Ontario

 

DATE OF HEARING:                       May 8, 2008

 

REASONS FOR ORDER BY:           The Honourable Gerald J. Rip,

                                                          Chief Justice

 

DATE OF ORDER:                           July 31, 2008

 

APPEARANCES:

 

For the Appellant:	The Appellant himself
Counsel for the Respondent:	Andrew Miller

 

COUNSEL OF RECORD:

 

       For the Appellant:

 

                          Name:                     

 

                            Firm:

 

       For the Respondent:                    John H. Sims, Q.C.

                                                          Deputy Attorney General of Canada

                                                          Ottawa, Canada