This recent Tax Court of Canada case finally rips the lid off the scandal and exposes the depravity into which the CRA has sunk in its quest to break the Fiscal Arbitrators. Only one brave, solitary lawyer stands between Douglas McCarthy, our current terrified victim, and the CRA Torquemada's most diabolical torture device; The Comfy Chair! Or in legal terms, asking him questions that he doesn't want to answer!
McCarthy v. The Queen
http://decision.tcc-cci.gc.ca/tcc-cci/d ... 1/index.do
This is an appeal to the Tax Court of Canada regarding the CRA's reassessment of Mr. McCarthy which disallowed all of his claimed fake business expenses and hit him with a gross negligence penalty under subsection 163(2) of the Income Tax Act for claiming them. This penalty is equal to 50% of the taxes the taxpayer attempted to avoid.
All of the Fiscal Arbitrators have been reassessed and penalized under 163(2). A few have appealed the entire reassessment, expense claims and penalty and lost because the Tax Court of Canada agrees with the CRA that you can't claim what were basically fraudulent faked expenses against your income. Some have appealed just the 163(2) penalty on the basis that they weren't grossly negligent but had tried really hard to file an accurate return by getting highly qualified scammers to prepare their tax returns. They all, without exception, lost. But Mr. McCarthy, is confronting the odds and going for the gusto, apparently appealing both the reassessment and the penalty. I say "apparently" because it is uncertain at the moment since the decision I'm reviewing isn't the actual Tax Court hearing to decide on the issues but a procedural hearing to decide on some matters relating to discovery.
For those of you unfamiliar with the term discovery this is how Wikipedia defines it;
https://en.wikipedia.org/wiki/Discovery_(law)Discovery, in the law of the United States and other countries, is a pre-trial procedure in a lawsuit in which each party, through the law of civil procedure, can obtain evidence from the other party or parties by means of discovery devices such as a request for answers to interrogatories, request for production of documents, request for admissions and depositions. Discovery can be obtained from non-parties using subpoenas. When a discovery request is objected to, the requesting party may seek the assistance of the court by filing a motion to compel discovery.
The Crown was attempting to do a discovery on Mr. McCarthy and he was refusing to participate so the Crown, rather than doing the decent humane thing and just let him have his unverified expenses, went to the Tax Court of Canada to force the issue;
But Mr. McCarty wasn't just flying blind. He had top-notch legal advice. He'd retained a lawyer to advocate his position that the Crown should just drop the whole thing without a trial and allow him his deductions. I turn now to the Respondent’s request, the reasons for allowing it and the reasons for not accepting the opposition of the Appellant. This matter was set down for hearing previously. There was a previous scheduling order requiring discoveries to be completed. They were extended by the prior case management judge and, in spite of an appointment for examination being taken out within the time frame contemplated by the extended scheduling order, the taxpayer did not appear for discovery.
The lawyer had come up with four reasons why his client should not be compelled to participate in discovery and why the case should be dropped. They involved court tyranny and the Canadian government's torture of his client, the violation of his right to enjoy property under the Canadian Bill of Rights, and common law coercion.
First the tyranny;
His remedy? His client had already won and the case was over!! The taxpayer’s counsel has opposed the Respondent’s motion to extend the time to complete discovery on four grounds. Mr. Sumner’s first argument was that the hearing date of November 27, 2015 was adjourned by an order of the Judicial Administrator. This was done in response to requests from both parties and, most recently before her order, a request from the Respondent.
 Mr. Sumner argued that the Judicial Administrator’s behaviour is that of a tyrant, that she has no basis to issue scheduling orders, or this adjournment order, nor does the Court or the Chief Justice have any power to authorize her to do that. Mr. Sumner points out his concern that an order that is not signed by a judge may not be appealable to a higher court.
But the court wasn't buying it since McCarthy had chosen to appeal to The Tax Court and the acts of the Judicial Administrator were foursquare within the legislated rights of the court; He takes the position that since the November 27, 2015 trial was never properly adjourned and, since the onus with respect to the penalties under dispute is on the Respondent, the taxpayer should be considered to have already won his appeal, at least in respect of the penalties.
 Mr. Sumner’s position on this ground is that, if they have already won the appeal, they should not have to be completing discoveries ahead of another trial date.
Well on to the next argument, enjoyment of the use and posession of property; As pointed out to counsel by the Court, the Tax Court of Canada Act, duly passed by Parliament, provides expressly in section 23:
 For that reason, I am rejecting Mr. Sumner’s opposition on that ground.23(1) The Chief Justice may designate an employee of the Courts Administration Service as the Judicial Administrator of the Court.
(2) The Judicial Administrator of the Court shall perform any non-judicial work that may be delegated to him or her by the Chief Justice of the Court, in accordance with the instructions given by the Chief Justice, including
(a) the making of an order fixing the time and place of a hearing, or adjourning a hearing; and
(b) arranging for the distribution of judicial business in the Court.
Why? Because he doesn't want to pay any taxes at all so it is his right not to pay regardless of whether or not he has been correctly assessed. If he files saying that he owes no tax that should be the end of the matter. What could be fairer? Taxpayer counsel’s second argument was that Mr. McCarthy’s right under the Canadian Bill of Rights to not be deprived of the enjoyment of his property except in accordance with due process of law is offended if Mr. McCarthy is required to answer questions on discovery.
I'm guessing that paragraph 14 means that the CRA has to have a trial hearing prior to reassessing him rather than after. However this argument wasn't a complete stand-alone argument. It was just legal foreplay leading to the money shot, government's blatant torture of his client! Mr. Sumner’s argument is that the property the enjoyment of which Mr. McCarthy is being deprived is Mr. McCarthy’s right to not be legally obligated to pay money to the government and that Mr. McCarthy is deprived of that right when the government assessed him differently than he filed because, following an assessment, he is obligated to pay the amount or have a debt owing.
 Mr. Sumner argues that at that point, given the nature of the objection and appeals process under the Income Tax Act and the Tax Court of Canada Act, there has been an absence of due process that is total; Mr. McCarthy had no hearing before the assessment or reassessment against him was issued
So fine, after that preamble, let's move on to the torture argument; Mr. Sumner did not wish to argue at today’s hearing that the entire assessment is invalid because of this breach of the Canadian Bill of Rights.
 After a thorough discussion of the Bill of Rights, Mr. Sumner ultimately indicated he was not pursuing the Bill of Rights’ property-interest argument against attending discovery, but merely to inform certain aspects of the torture and coercion arguments he advanced.
And, admit it, who amongst us doesn't think that having to fill out an income tax return is a form of torture? I was a CRA auditor and, for most of my working life, I filled out my own income tax return sitting at the kitchen table with the receipts and the blank return. I considered it a form of discipline. Even I finally couldn't take it any more and I now pay someone else do it for me. So I feel your pain Doug, I've been tortured by them too! Mr. Sumner’s third argument opposing attending discovery is that, in circumstances where Her Majesty the Queen is a party to the proceedings, being compelled to attend at discovery and provide answers under oath constitutes torture as defined in the Criminal Code of Canada.
 His position is that Her Majesty seeking to exercise her right to discovery constitutes torture. Mr. Sumner’s position is that the Rules of this Court which require the Appellant to provide information on discovery sanction coercion constituting torture given that this is causing Mr. McCarthy mental distress, and since Her Majesty the Queen is a party to this proceeding and Her Majesty the Queen is always behaving coercively.
 Similarly, fleshed out, he believes any order of this Court to complete such a discovery, assuming that order also causes further mental distress to Mr. McCarthy, constitutes torture.
Sadly the court's comments on this aspect of the hearing were so cursory that they were just a blatant insult to a fellow human being suffering under the yoke of an antagonistic dictatorial government;
What? Enough said? It's like the court is dismissing the pleas of yet another broken victim of the CRA as just so much bullshit! Subsection 269.1(4) of the Criminal Code dealing with torture provides that, in any proceedings over which Parliament has jurisdiction, any statement obtained as a result of torture is inadmissible in evidence, except as evidence that the statement was obtained as a result of torture. Mr. Sumner’s position is that this means that attending discovery would not only constitute torture, but would only provide inadmissible evidence.
 I am not at all persuaded by Mr. Sumner’s arguments or his authorities that this Court’s discovery processes mandated by the Rules, and which form a very integral part of due process and natural justice in this Court, and provide processes to be followed for the better administration of justice, constitute torture. Enough said.
So on to Douglas's last shot;
But, yet again, the result was nothing but another Tax Court Beat-down. Mr. Sumner’s fourth argument is related to torture, and that is that compelling a person to complete discovery constitutes coercion at common law. If coercion is applied, then it is the taxpayer counsel’s position that the person being coerced has a reaction to it that it is not voluntary. He then takes the position that if Her Majesty the Queen is a party she is always coercive, in effect assuming the coercion, and concludes that if the result is that the answers on discovery under oath are not voluntary as a result, those answers would be inadmissible because they would not be credible, presumably because the taxpayer, his client, might not be telling the truth.
 This argument is very similar to, but different from, the torture argument. It is not being raised with respect to the Rules requiring an appellant to deliver a list of documents and documents on that list; the Appellant is in fact willing to do that within seven days. Mr. Sumner does again state that the Court would be coercive if it issued an order compelling discovery of the Appellant.
So who is this fearless budding Clarence Darrow presenting these four cutting-edge arguments to the court, all of which were brutally kneecapped? He's this guy; I am not persuaded that the Crown is always coercive or should be presumed to always be coercive or always acts in a coercive manner. What was argued before me falls short, far short, of persuading me that such is the case.
 For those reasons, I will be signing the order that I outlined at the outset, providing for a list of documents, providing full copies of the documents on that list and extending the time within which discovery is to be completed, which is in effect ordering the taxpayer to complete discoveries in accordance with the Rules, all as I said at the outset.
For the Appellant: Joel Allan Sumner
Firm: Sumner LawToronto, Ontario
But he's also this guy;
For more details try this;JOEL ALLAN SUMNER [#243307], 38, of Toronto, was disbarred Dec. 20, 2014 and ordered to comply with rule 9.20 of the California Rules of Court.
Sumner failed to appear at his disciplinary trial which led to his default being entered. He then filed a motion to set aside the default but the State Bar Court denied it.
The charges were deemed admitted. Sumner committed an act involving moral turpitude by sending intimidating and threatening emails to San Bernardino County Chief Deputy District Attorney John P. Kochis and others.
http://www.calbarjournal.com/May2015/At ... ments.aspx
Apparently being disbarred from practicing law in California for moral turpitude is not a barrier to practicing law in Ontario.
According to the schedule set by the judge the case should have it's hearing on Friday February 26th so our lawyer has one more shot at it. I wait with anticipation to see how he will pull a last moment miraculous win from this series of disasters!