The Burden of Proof

The Tax Court of Canada (TCC) recently decided that, although a relevant factor, prior convictions in criminal proceedings resulting from plea bargains are not determinative of the relevant facts and issues in a subsequent civil tax appeal.

In McIntyre v. The Queen, a husband and wife brought a motion pursuant to Rule 58 of the Tax Court of Canada Rules. This rule allows taxpayers to ask the court to make determinations on questions of law prior to a formal hearing in order to streamline the matters in issue. The appellants were attempting to argue that the agreed facts featured in their prior criminal case should be exclusively considered as the facts as they pertain to certain aspects of their civil tax appeal.

The appellants’ argument was based on the doctrines of res judicata and abuse of process. These doctrines are argued to preclude a party from bringing an action against another when those same issues have already been determined in earlier court proceedings. The doctrines protect finality in litigation, preservation of the courts’ and the litigants’ resources, and the integrity of the justice system. 

The Honourable Justice Campbell was presented with a dearth of case law from counsel for the Minister of National Revenue before holding that, although the doctrine of estoppel may apply to civil tax assessments, it is inapplicable where there is a prior criminal conviction resulting from a plea bargain as opposed to an actual trial with judicial findings of fact. Campbell J. also pointed out that the issues were not all the same, and therefore estoppel could not prevent new judicial findings in the circumstances.  

In essence, the TCC in McIntyre v. The Queen held that estoppel could not apply in the circumstances because the prior criminal case had not been fully adjudicated, but rather settled as a plea bargain, and therefore the evidence had not been fully weighted and examined. It would therefore not be an abuse of process for the court to fully consider that evidence in the civil trial. In fact, Campbell J. noted that it would be unfair for the Minister of National Revenue if she were to be inhibited from making submissions on that evidence in the civil trial.

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.