Fresh step rule was designed to ensure orderly movement of litigation through to trial

Tax – Income tax – Administration and enforcement

Minister reassessed taxpayer under Income Tax Act. Taxpayer appealed. Pre-trial proceedings were completed, and parties filed joint application representing that appeal was ready to be set down for hearing. Taxpayer’s motion for leave to bring motion for order striking Minister’s reply pleading was dismissed on basis that it would contravene Rule 8 of Tax Court of Canada Rules (General Procedure). Taxpayer appealed. Appeal dismissed. Taxpayer did not identify any palpable and overriding error or extricable error in Tax Court’s decision. Facts, including that Reply was filed three years earlier without any deficiencies being raised and that one of taxpayer’s interlocutory motions dismissed as abusive delaying tactic, amply justified decision not to grant leave to taxpayer to file motion. Fresh step rule was designed to ensure orderly movement of litigation through to trial, based on view that if party pleaded over to pleading, it implied waiver of any irregularity that might have been attacked. Tax Court judge’s discretion was exercised consistent with objective of rule and with existing jurisprudence. Taxpayer’s argument that Reply failed to assert material fact so as to deprive Tax Court of jurisdiction to consider R. 8 of Rules was devoid of merit. Any deficiency in Reply bore on validity of reassessment and had no relevance to court’s jurisdiction. Tax Court judge’s reasons fully and fairly explained basis on which he exercised his discretion.

Dilalla v. Canada (2020), 2020 CarswellNat 411, 2020 FCA 39, Donald J. Rennie J.A., Yves de Montigny J.A., and George R. Locke J.A. (F.C.A.).

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