Well, for starters, it's exposed how corrupt (as if it needed exposing) our senate is. The Canadian senate is an unelected body. Members are appointed by the party in power. They tend to be political bagmen, party hacks, and whomever the current prime minister owes a favour. For all the pomp and circumstance that they pretend is carried along with their positions they are a pretty unsavory lot. Why is this germane? Because one of our senators, Pana Merchant, is married to Tony Merchant, Canada's most prominent class-action lawyer. She turned out to be the beneficiary of an undisclosed, very carefully hidden, $1.7M trust set up by her husband in a tax haven country. She somehow apparently forgot to disclose that she was the beneficiary of the trust (a required rule of the senate, however all disclosures of personal information under the senate's required rules are kept confidential so that they can be observed or breached at the pleasure of the members). I said apparently because the senate, to protect its own, has refused to say whether she disclosed or not. You can guess what the Canadian public has decided on this issue. The existence of the trust was exposed by this tax leak.
Her husband is extremely litigious in respect to his own taxes. I read all Canadian tax cases and have done so for year and I have never read one where the Tax Court was more harshly critical of the conduct of a taxpayer as it was in the case (link below) where our senator's possibly tax-evading husband went to Tax Court over a squabble about his disclosed income. Normally, in Canadian tax cases, the winner of a case is awarded part to party costs against the loser. These are hypothetical costs set to a schedule which does not reflect actual costs. Where the conduct of the losing part is so reprehensible and unconscionable that the court feels a penalty is applicable the winner is awarded solicitor and client costs which covers everything. The hurdle of bad conduct warranting solicitor and client is so high that it is rarely awarded. In this case, uniquely to my knowledge, the court awarded solicitor and client costs
against Tony Merchant even though he had won. In great indignation he appealed the cost decision to the Federal Court of Appeal which said the Tax Court judge was fully entitled given Merchant's behavior.
This is what the Tax Court said when awarding costs:
59]The jurisprudence on this point has been thoroughly reviewed by Sarchuk J. in Bruhm v. The Queen, 94 DTC 1400 (T.C.C.), and I shall not repeat what he has said. I agree that to award solicitor and client costs against a partially successful party is rare and should be done only in exceptional circumstances. The presiding judge has, under section 147 of the General Procedure Rules, wide discretionary power in respect of the awarding of costs. This is a case for ordering Mr. Merchant to pay the Crown's costs on a solicitor and client basis. From the outset he has done everything possible to obstruct the Crown in its attempt to put its case forward in an orderly way. He has produced documents up to the last minute. He has rendered impossible the conduct of the discovery. The abuse of the assessor, who acted properly throughout, is intolerable. Generally speaking, conduct prior to the commencement of the action is not relevant to the award of costs. The rule is not invariable. Here Mr. Merchant has deliberately frustrated the audit process and the objection process with a view to having matters dealt with by the court that should never have had to come before it. His conduct prior to commencement of the appeal and prior to trial has had a direct impact upon the manner in which the trial proceeded. He has caused a trial that should have lasted no more than one day to last seven days. Moreover such success as he has achieved at trial is no more than he could have achieved at the audit, objection or discovery level had he not seen fit to obstruct the orderly process of assessment and objection laid down in the Income Tax Act and the procedures set out in the rules of this court.
The case is well worth reading to get an idea of a judge driven to rage over the reprehensible conduct of a party at trial:
http://decision.tcc-cci.gc.ca/en/1998/1 ... 53729.html
And here is a link to a news article discussing the exposure of the trust:
http://www.cbc.ca/news/canada/story/201 ... trust.html