Law Times

Law TiMes • March 17, 2014 Page 5 www.lawtimesnews.com aced with increasingly complex cases, the Tax Court of Canada is introducing new rules designed to streamline proceedings and en- courage parties to resolve issues or settle before the case gets to trial. Judges will get more leeway to manage cases as they make their way through the system; the role of expert witnesses will be primarily to assist the court; lead cases can resolve issues involving many appellants; and new incentives will encourage parties to settle before the case goes to trial. Under the new rules, proposing a set- tlement and doing so early could have a significant impact on who picks up the tab for the court costs. "Unless otherwise ordered by the court, if an appellant makes an offer of settlement and obtains a judgment as favourable as or more favourable than the terms of the of- fer of settlement, the appellant is entitled to party and party costs to the date of service of the offer," the court wrote. A similar clause applies to respondents who offer to settle. Wilfrid Lefebvre, a senior partner with Norton Rose Fulbright Canada LLP, predicts the move will encourage settlements. "If an offer was made and rejected by the losing party, it can become very ex- pensive," he says. "It's really a measure to give a lot of weight to settlement offers." Carman McNary, a partner with Den- tons Canada LLP in Edmonton, agrees the move will encourage parties to think seriously about the cost-benefit analysis of taking cases to the next stage or pro- ceeding to trial. "I think it will incent all appellants' counsel to have the discussion with the client about the financial impact of mak- ing offers at thresholds that are accept- able with a view to shiing the cost risk of trial." In an interview with Law Times, Tax Court of Canada Justice Frank Pizzitelli says the new rules are a response to the changing nature of the cases coming be- fore the court. "We're seeing a lot more international cases, transfer pricing. We're seeing more general anti-avoidance rule cases. e act is becoming more and more complex and that just leads to a more complex litigation process." Lawyers and their clients will begin to notice a difference before the case even gets to trial, says Pizzitelli. "You're going to see a lot more trial conferences. ere's a lot more manage- ment being done by the court or assign- ing larger files to judges to manage along the way to help them continue moving along the process and deal with any is- sues that come up before trial rather than get to trial and have to adjourn it for one reason or another." For example, if the court is able dur- ing a management conference to iden- tify an issue of law or mixed fact and law that could determine much of the case, the court can encourage parties to make a Rule 58 application and have the judge decide that matter earlier in the process, he says. With cases becoming more complex, the court is also seeing a greater number of expert witnesses, says Pizzitelli. Conse- quently, the court is also moving to better define the role they should play. "We want to make sure that expert witnesses understand that their role is to assist the court and not just represent the client that hires them. So we ask them now to not only confirm that they will follow the code of conduct, which is now attached to the rules, but that they un- derstand the rules and also . . . set out a clearer pathway for what material has to be included in an expert report." e new rules will also allow the court to name joint expert witnesses, Pizzitelli notes. Lefebvre agrees that cases before the Tax Court are becoming more complex and notes some recent cases have in- volved hundreds of people. "e court wants to be very proactive. I think that's the message that is being sent. For litigators, that probably means that they have to act much more quickly and they can expect sometimes to be called and the court will require them to attend . . . either a case management or a settlement conference." However, Lefebvre says changes such as more pretrial conferences and the role of expert witnesses also take away some strategies for litigators. "It's leading to much more openness in the process so there's no trial by ambush." McNary says the changes are in keeping with the Tax Court's direction towards greater access to justice and greater efficiency. However, he questions whether the new lead-case rule will ac- tually have the effect the court is seeking, particularly given the diversity of par- ties, counsel, and evidence sometimes involved in cases before the court. "e impact it is going to have on par- ties who may not perceive they are part of the group could actually complicate the way appeals proceed." Pizzitelli says the Tax Court's rules committee is continuing to examine the rules and lawyers can expect to see more changes in the future, including in areas such as tariffs. "I think we are going to see some changes to try to streamline the process and maybe adopt or acknowledge the ad- vantages of proportionality. We're going to see some possible amendments to costs in the informal rules. We're discussing certain aspects of costs." e goal, he says, is to ensure the Tax Court rules work and the court remains accessible. "Access is an important thing and we don't want to do anything that limits ac- cess unless it is absolutely necessary, obvi- ously, and we want to make sure that once litigants have decided to pursue a case that it moves along and it moves along as economically as possible." 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