The following article was published by the Canadian Tax Foundation. “John Loukidelis, “Corporate Appellants Need Lawyers” (2021) 21:2 Tax for the Owner-Manager 13-14″
In Canada v. BCS Group Business Services Inc. (2020 FCA 205), the FCA held that a lawyer must represent a corporate appellant in a TCC general procedure appeal. The FCA’s decision is a good example of how a court will interpret statutory provisions that are not expressed clearly.
Background and Context
Section 17.1 of the Tax Court of Canada Act (the TCC Act) provides that in a general procedure appeal to the TCC, “[a] party to a proceeding . . . may appear in person or be represented by counsel” (that is, a lawyer). Rule 30(2) of the Tax Court of Canada Rules (General Procedure) provides that “[w]here a party to a proceeding is not an individual, that party shall be represented by counsel except with leave of the Court and on any conditions that it may determine.”
Mr. Gagnon was the sole shareholder, director, and officer of the appellant (BCS). He was not a lawyer. The TCC gave him leave under rule 30(2) to represent BCS in its general procedure appeal (2018 TCC 120). The Crown appealed to the FCA, which had to decide whether section 17.1 of the TCC Act permitted a non-lawyer to appear on behalf of a corporation. To answer this question about the section, the FCA adopted the “modern approach to statutory interpretation,” which requires a court to read the words of a statute “in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme of the Act, the object and the intention of Parliament.”
Before analyzing section 17.1, the court considered some important context. It noted that at the time the section was drafted, both the common law and Quebec’s civil law required a corporate litigant to be represented by a lawyer. The FCA also noted that if section 17.1 conferred a right on a corporation to be represented by a non-lawyer, then general procedure rule 30(2) would be invalid because it allowed a TCC judge to take away that right or impose conditions on its exercise. Moreover, such an interpretation of section 17.1 would give corporations an unfettered right to be represented by non-lawyers when most other superior courts have the discretion whether to allow it.
Analysis
To interpret section 17.1, the FCA first considered the grammatical and ordinary meaning of “in person.” According to the FCA, the phrase ordinarily means to be physically present, which is impossible for a corporation and which implies that a corporation must be represented by counsel (the only alternative under section 17.1 for a party that does not appear in person).
Some TCC decisions (for example, Sutlej Foods Inc., 2019 TCC 20) have held that because the subject of “appear in person” in section 17.1 is “a party,” and “a party” includes a corporation, it must follow that the definition of “in person” encompasses an agent acting for a corporation. The FCA, however, pointed out that the jurisprudence has accorded some rights but not others to corporations under section 11 of the Charter, even though that section’s grammatical structure is identical to that in section 17.1 of the TCC Act. A corporation, for example, is entitled to be tried within a reasonable time (section 11(b) of the Charter), but it does not enjoy protection against self-incrimination (section 11(c) of the Charter). According to the FCA, then, the grammatical structure of section 17.1 of the TCC Act was not enough to displace the ordinary meaning of “in person” as it relates to a corporation.
Next, the FCA considered the TCC Act as a whole. “In person” appears only in sections 17.1 and 18.14 of the statute. The latter provision governs informal procedure appeals and provides that all parties “may appear in person or may be represented by counsel or an agent” (emphasis added). The FCA reasoned that the addition of “agent” in section 18.14 implied that the wording “in person” itself did not refer to an agent.
Finally, the FCA addressed the object and purpose of section 17.1 by reviewing the history of the TCC, the TCC Act, and the general procedure rules. The Tax Review Board, the TCC’s predecessor, was a tribunal with relatively relaxed rules of evidence and procedure where non-lawyers could represent corporations in any matter before the board. The modern TCC is the product of reforms in the late 1980s that gave the court exclusive original jurisdiction over income tax (and other) appeals and made it subject to more formal rules of evidence and procedure.
Section 17.1 was introduced as part of those reforms, and it did not mention agents, unlike section 18.14 (the informal procedure rule). The first version of rule 30(2) was enacted at the same time, and it required a corporate appellant to be represented by a lawyer.
To the FCA, these changes implied that access-to-justice concerns remained paramount for informal procedure appeals but not for general procedure appeals where other concerns, such as efficiency, were given greater importance. For the FCA, an interpretation of section 17.1 that required a corporation to be represented by counsel was in accordance with the object and purpose of the TCC Act.
Conclusion
As a result of the decision in BCS, a corporation that wants to pursue a general procedure appeal will not have the option to represent itself. Instead, the corporation must be represented by a lawyer. BCS is also a good example of the process that a court will follow to interpret statutory language that is less than clear.
