Tax Court of Canada


Goods and Services Tax

Administration and enforcement

Sole officer, director and shareholder not entitled to represent corporation

Corporation filed motion seeking order to allow Z to represent corporation in action. According to Z’s affidavit, he was sole officer, director and shareholder of corporation. No details were provided as to financial situation of corporation and it was not alleged that corporation was unable to pay. Relevant rule was in s. 30(2) of Tax Court of Canada Rules (General Procedure). Rule did not provide specific requirements as to when relevant leave was to be granted. It was left for court to develop reasonable criteria taking into account variety of circumstances. Motion dismissed. Corporation had not demonstrated that it was unable to pay for counsel. With over $115,000 at stake, this was not case where legal costs would overwhelm amount at issue. Case was not as easy or straightforward as corporation believed it to be. Based on documents that corporation attached to notice of appeal and on reply filed by Minister of National Revenue, biggest amounts in issue appeared to be related to output tax. Based on materials, assessment was in large measure based on Minister’s analysis of deposits into corporation’s bank accounts and into Z’s bank account. Corporation seemed to claim that deposits into Z’s account related to Z’s business unrelated to corporation’s business. Organizing evidence of detailed nature relating to all deposits in issue and all input tax credits in issue was not likely to be easy or straightforward. Both corporation’s submissions and affidavit asserted that all of corporation’s representations were pure factual documents and that documents were unavailable in audit process. It was not clear that Z understood that he would have to testify to explain documents and put them in context to show errors in bank deposits analysis and to show why certain input tax credits were justified. Z would not be able to adequately represent corporation. There was no necessity to allow agent because of inability to pay counsel, given that amount in issue was significant, that it was not shown that Z was able to adequately represent corporation, and given public interest in having effective trial process while attempting to limit costs.

WJZ Enterprises v. R. (2017), 2017 CarswellNat 1404, 2017 TCC 57, Gaston Jorré J. (T.C.C. [General Procedure]).

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