Tax Court Orders Claimant to Fulfill Undertakings

OUTCOME: Dismissed

Docket: 2024-1803(IT)G BETWEEN: [APPELLANT] Appellant, and HIS [NAME] THE [NAME], Respondent . Motion heard on January 29, 2026 at Vancouver, British Columbia Before: The [NAME] [NAME] [NAME] : Counsel for the Appellant: [redacted] Counsel for the Respondent: [redacted] AND UPON reviewing the affidavit evidence and the oral and written submissions of counsel for the Appellant and counsel for the Respondent; AND IN ACCORDANCE with the attached Reasons for Order;

IT IS ORDERED that: 1. the Appellant is to provide answers to [NAME] 1, 2, 18 and 19 made at examination for discovery no later than March 20, 2026; 2. on or before April 30, 2026, the parties shall file one of the following with the Court: (a) a joint application to fix a time and place for the hearing using Form 123; (b) a letter requesting a settlement conference (refer to Practice Note 21); or (c) a letter confirming that the appeal will settle and the anticipated date of settlement; and 3. Costs of this motion are awarded to the Respondent in any event of the cause. Signed this 18th day of February 2026. [NAME]” [APPELLANT] J Docket: 2024-1804(IT)G BETWEEN: [NAME] [APPELLANT], Appellant, and HIS [NAME] THE [NAME], Respondent. Motion heard on January 29, 2026 at Vancouver, British Columbia Before: The [NAME] [NAME] [NAME] : Counsel for the Appellant: [redacted] Counsel for the Respondent: [redacted] AND UPON reviewing the affidavit evidence and the oral and written submissions of counsel for the Appellant and counsel for the Respondent; AND IN ACCORDANCE with the attached Reasons for Order;

IT IS ORDERED that: on or before April 30, 2026 the parties shall file one of the following with the Court: (a) a joint application to fix a time and place for the hearing using Form 123; (b) a letter requesting a settlement conference (refer to Practice Note 21); or (c) a letter confirming that the appeal will settle and the anticipated date of settlement. Signed this 18th day of February 2026 . “[NAME]” [NAME] J. Citation: 2026 [NAME] 36 Date: 20260218 Docket: 2024-1803(IT)G BETWEEN: [NAME] [APPELLANT], Appellant, and HIS [NAME] THE [NAME], Respondent, Docket: 2024-1804(IT)G AND BETWEEN: [NAME] [APPELLANT], Applicant, and HIS [NAME] THE [NAME], Respondent.

REASONS FOR

ORDER [NAME]. Introduction [ 1 ] The Respondent seeks an order compelling answers to four questions posed at the examination for discovery of [NAME] [APPELLANT]. [NAME] undertook to answer those questions. Five business days before the deadline for answering [NAME], [NAME] advised that the questions would not be answered. [ 2 ] For the reasons that follow, I am issuing an Order requiring [NAME] [APPELLANT] answer [NAME] 1, 2, 18 and 19. [ 3 ] Counsel’s [NAME] create a binding promise to provide requested information. [NAME] to provide an answer to a question asked at examination for discovery is an important element of the litigation process. Resiling from [NAME] is not something to be taking lightly, and in any event requires leave of this Court. [ 4 ] Additionally, the four [NAME] seek information relevant to matters in issue. Even if counsel had refused to answer the questions, rather than [NAME] to answer them, and this were an ordinary motion to compel, I would find that the four [NAME] are proper questions. [ 5 ] The Respondent also moves for an amendment to the timetable order dated November 20, 2024. The amendment is granted. Mr. [APPELLANT] has until March 20, 2026 to provide answers to [NAME] 1, 2, 18 and 19. The parties have until April 30, 2026 to file a joint application to fix a time and place for the hearing, file a letter requesting a settlement conference or file a letter confirming that the appeal will settle and the anticipated date of settlement. Background [ 6 ] [NAME] disposed of four properties in 2018 and 2021. These appeals turn on whether those dispositions were on account of income or capital. Also at issue is application of penalties pursuant to subsection 163(2) of the Income Tax Act ( ITA ). [ 7 ] An Order of this Court dated November 20, 2024, set a timetable for completion of steps in litigation, including setting a deadline for answering [NAME] of July 4, 2025, and for communicating with the Court by August 8, 2025. [ 8 ] The Respondent examined [NAME] [APPELLANT] on May 20, 2025 and [NAME] [APPELLANT] on May 21, 2025. [NAME] were given at the examination for discovery of [NAME] [APPELLANT], with a deadline set for delivery of answers of July 4, 2025. Answers were delivered June 26, 2025. [ 9 ] On August 1, 2025, the Respondent asked [NAME] to reconsider the refusals. The Respondent directed the Appellant to portions of the Notice of Appeal in support of its’ position that [NAME] sought information relevant to the proceeding. On August 4, 2025, [NAME] advised by email that she would seek reconsidered responses from Mr. [APPELLANT]. On August 6, 2025, the Respondent filed a joint request to amend the November 20, 2024 Order setting a deadline of August 8, 2025 to report to this Court because the parties required more time to complete [NAME] responses. [ 10 ] On September 2, 2025, the Registry of this Court advised that the parties needed to bring a motion to extend the deadline to provide a response to [NAME]. This motion seeks a new deadline for [NAME]’ delivery of answers to [NAME] and new deadline for all parties to report to the Court. Respondent’s Position [ 11 ] The Respondent seeks answers to four [NAME] given at the examination for discovery of Mr. [APPELLANT] held on May 21, 2025: [NAME] 1 asks how much the monthly mortgage payments were for the property located at 7403-203B Street Langley; [NAME] asks how many rental properties were owned by [NAME]; [NAME] asks for a list of properties held in [NAME]’ [NAME]; [NAME] seeks copies of the mortgage documents related to properties held by the [NAME] from 2010 to 2021. [ 12 ] The Respondent’s position is that the questions are relevant to matters in issue and points to paragraphs 13 and 28 of Mr. [APPELLANT]’s pleading:

13. The Appellant further states that he has a history of compliance, and where a property has been purchased on account of income for the purposes of selling the same at a profit, the Appellant has reported the transactions as such, and paid the appropriate tax accordingly.

28. The Appellant’s conduct in relation to the [APPELLANT] is further bolstered when viewed as against the Appellant’s means of dealing with properties in general. [NAME]’ Position [ 13 ] [NAME] oppose the motion and ask for the matter to be dismissed and ask for judgment in the Appeal in favour of [NAME]. [ 14 ] The basis for [NAME]’ refusal to answer the [NAME] is that the [NAME] reassessed only [NAME]’ 2018 and 2021 taxation years and did not reassess [NAME]’ [NAME]. [ 15 ] [NAME] argue that the information falls into two categories, either: the documents lack a connection to facts at issue, or to relevant tax years; or the documents are those of corporate taxpayers which were not a part of the audit, were not reassessed and thus are non-parties to the appeals. [ 16 ] [NAME] further assert that as the Respondent is seeking production of information beyond the court-ordered deadline for answering [NAME], and failed or refused to take steps in advance of the relevant deadline (July 4, 2025). [NAME] state that this Court should dismiss the motion and allow the appeal in whole. [NAME] rely on sections 70 and 8 of the Tax Court of Canada Rules (General Procedure) (the “Rules” ) in support of this position. [ 17 ] [NAME] also state that the information is not relevant because the auditor had the ability to obtain the undertaken information. [NAME] are a Promise [ 18 ] The courts have long held that [NAME] constitute an unequivocal promise from one party to another. [ 19 ] [ADDRESS] considered the role of [NAME] in the discovery process in a number of decisions, including [NAME] v Canada , 2022 DTC 1108, [COMPANY]. v R , 2006 [NAME] 378 and [NAME] v Canada , 2024 [NAME] 164. Each of those decisions considered that an [NAME] is an unequivocal promise to perform a certain act. [ 20 ] The Ontario Superior Court decision in [NAME] v [NAME], 2001 CarswellOnt 3828 has been cited in several decisions of this Court, and in particular the following paragraphs that succinctly convey the import of counsel’s [NAME]: [8] …An [NAME] is an acknowledgement that the question is proper and that the subject-matter of the [NAME] is relevant. Put crudely, should counsel be permitted to renege on a production-[NAME] when he or she subsequently comes to the belief that a document or part thereof is not relevant in the action? This question invades the sanctity of a solicitor's [NAME]. [9] An [NAME] is an unequivocal promise to perform a certain act. I do not see any material difference between, for example, an [NAME] given in the context of a real estate transaction (when lawyers undertake to do, or obtain, something necessary to complete the transaction) and an [NAME] given on an examination for discovery. Each involves a promise. In an examination for discovery, the [NAME] may be given by the litigant being examined or it may come from his or her counsel. Both are equally binding. [ 21 ] In [COMPANY] v [COMPANY]. , 2023 FC 819 the Federal Court considered the binding nature of [NAME] given during examination for discovery. That court held that an [NAME] is an unequivocal promise that must be strictly and scrupulously fulfilled, and that there is no principled basis to allow unilateral reconsideration of [NAME]. Permitting parties to resile from [NAME] would introduce uncertainty into the discovery process and increase motions related to [NAME]. [ 22 ] A party cannot simply resile from an [NAME] made at examination for discovery simply by sending counsel a letter and advising their position has changed. [NAME] were represented by counsel, who could have taken any number of steps if they were concerned about potential relevance of the questions. They could have asked the questioner for a brief explanation of relevance. They could have taken the question under advisement and provided a considered response at a later time. Or they could have refused to answer the question. Instead, they chose to promise to provide the requested information. [ 23 ] Instead, [NAME] were made. Then [NAME] advised that they intended to resile from the [NAME] by simply sending a letter shortly before the court‑ordered deadline to provide answers to [NAME]. [ 24 ] [NAME] now take the position that the Respondent is at fault for not moving to extend the deadline to provide answers to [NAME], between June 26 and July 4, 2026. [ 25 ] I find the Respondent’s actions to address the breach were appropriate. Counsel for the Respondent wrote to counsel for the Appellant to ask counsel to reconsider, advising as to the relevance of the questions, and offering to work with counsel to obtain an extension of time. It is not the Respondent’s responsibility to seek an extension of time for [NAME] to fulfil their [NAME]. [ 26 ] If any party is responsible for the breached Order, it is [NAME]. [NAME] were the first party to breach the November 20, 2024 Order when they failed to provide answers to [NAME] on July 4, 2025. Relevance [ 27 ] It is too late to refuse to provide an answer to an [NAME] on the grounds of relevance once an unqualified [NAME] has been given ( [COMPANY].). However, I have also considered [NAME]’ position and determined that in any event, the four [NAME] in issue were proper questions. [ 28 ] Subsection 95(1) of the Rules requires a person examined as part of the discovery process to answer, to the best of that person’s knowledge, information and belief, any proper question relevant to any matter in issue in the proceeding. [ 29 ] The scope of relevance has been considered by this Court and the Federal Court of Appeal, and is summarized in Canada v [COMPANY] , 2011 FCA 120: [34] The jurisprudence establishes that a question is relevant when there is a reasonable likelihood that it might elicit information which may directly or indirectly enable the party seeking the answer to advance its case or to damage the case of its adversary, or which fairly might lead to a train of inquiry that may either advance the questioning party's case or damage the case of its adversary. Whether this test is met will depend on the allegations the questioning party seeks to establish or refute. [NAME] at paragraph 10, [COMPANY]. v. [COMPANY]. , 2008 FCA 287, 381 N.R. 93 at paragraphs 61 to 64; [NAME]. v. [COMPANY] . at paragraphs 30 to 33. [35] Where relevance is established the Court retains discretion to disallow a question. The exercise of this discretion requires a weighing of the potential value of the answer against the risk that a party is abusing the discovery process. [NAME]. v. [COMPANY] . at paragraph 34. [ADDRESS] might disallow a relevant question where responding to it would place undue hardship on the answering party, where there are other means of obtaining the information sought, or where "the question forms part of a 'fishing expedition' of vague and far-reaching scope": [NAME]. v. [COMPANY]. , 2003 FCA 438, 312 N.R. 273 at paragraph 10; [COMPANY]. v. [COMPANY]. , 2008 FCA 131, 166 A.C.W.S. (3d) 850 at paragraph 3. [ 30 ] Mr. [APPELLANT] plead at paragraph 13 of his Notice of Appeal that [NAME]’ means of dealing with properties in general is relevant to the determination of the appeal. [ 31 ] The Respondent plead in subparagraph 13 (e) that the Appellant has a history of purchasing and selling properties for profit, at subparagraph 13(f) that the Appellant has an above average understanding of the real estate market and at subparagraph 14(b) that the Appellant and spouse had the ability to manage [NAME] that deal mainly in buying and selling real properties for many years (sic). [ 32 ] Given the scope of relevance framed by the pleadings, I conclude that these questions fall within the broad scope of relevance. It is for the trial judge to determine if the information produced in response to the [NAME] is relevant for the purposes of determining the appeal. [NAME] 1 [ 33 ] Mr. [APPELLANT]’s counsel undertook to advise the amount of monthly payments made for the 7403-203B Street Langley property. The initial response was “we’ll do our best” and was later refused for relevance. [ 34 ] What may have been meant by this response is that the Appellant would attempt to provide the information if obtainable. This is not a case where the Appellant is now advising of its best efforts but stating that the information was not obtainable. The Appellant is now advising that it refuses to engage in its best efforts to obtain the information. The Appellant has given no reason for refusing to fulfil its [NAME] aside from relevance. Relevance was admitted when the [NAME] was made. [ 35 ] Although 7403-203B Street Langley is not one of the subject properties at issue in the appeal, both parties have put in issue [NAME]’ treatment of other real properties. [NAME] initially refused this question, I would have found it to be proper as the information sought falls within the broad scope of relevance for the purpose of examination for discovery. [NAME] [ 36 ] The Appellant undertook to advise how many rental properties were owned by [NAME]. Counsel for the Appellant initially agreed to provide the information and later advised that the question was refused on the basis of being overbroad, as well as on the basis that this information was provided as part of document production. I conclude that the Appellant must answer the [NAME]. [ 37 ] The [NAME] made was to provide the number of properties owned by [NAME]. This question cannot be answered only by reference to documents. The documents may or may not include all properties owned by [NAME]. The question is relevant to matters in issue given that both parties put in issue [NAME]’ experience generally with real estate properties. [NAME] 18 and 19 [ 38 ] Counsel for Mr. [APPELLANT] undertook to provide a list of properties held by [NAME]’ [NAME] between 2010 to 2021. Counsel later refused to provide the information on the basis that it was irrelevant and overly broad. [ 39 ] The question arose from testimony at discovery that the Appellant was the property manager. He was asked if he recalled if the properties purchased through [NAME] had mortgages. The Appellant answered that he didn’t know, but he thought that most did. [ 40 ] [NAME] sought copies of mortgage documents related to properties held by [NAME] between 2010 to 2021. Counsel for the Appellant initially agreed to provide the information, then by a letter dated June 26, 2025, refused to provide the information based on relevance. [ 41 ] Aside from the fact that counsel provided an [NAME] to provide answers to questions 18 and 19 and thus admitted relevance, I would have also found that these questions are proper. Both parties put in issue [NAME]’ general experience with real estate. The questions are not overly broad. They specify a time frame and the specific information sought. Duplication of Production [ 42 ] At the hearing of the motion, [NAME] argued that the [NAME] need not be answered because the [NAME] ought to have sought the information during the audit. [ 43 ] Relevance at examination for discovery is defined by the pleadings ( [NAME] v The Queen , 2004 [NAME] 636 at paras 10 and 13), and not by the Notice of Reassessment, as asserted by [NAME] ([NAME]’ Response to Motion at para 55). [ 44 ] Examinations for discovery in tax cases are not limited in scope because the Minister may have had an opportunity to obtain information prior to litigation (see [NAME] v The Queen , 2005 [NAME] 65 at para 19; [NAME] v The [NAME] , 2023 [NAME] 115 at paras 46, 47). So too may a taxpayer obtain information at examination for discovery that it could have obtained during audit. The purposes of producing information in the context of litigation include protection under the implied [NAME] rule, ability to produce the information at hearing and reducing “ambush” at hearing. Case Management [ 45 ] [NAME] ask for case management. They are free to make that request to the Chief Justice in accordance with Section 126 of the Rules. Costs [ 46 ] The Appellant, Mr. [APPELLANT], ought to have provided responses to his own [NAME] by July 4, 2025. Its failure to do so resulted in the need for the Respondent to bring this motion. One set of the costs of this motion are therefore awarded to the Respondent in any event of the cause. Signed this 18th day of February 2026. “[NAME]” [NAME]. CITATION: 2026 [NAME] 36 COURT FILE NO.: 2024-1803(IT)G 2024-1804(IT)G STYLE OF CAUSE: [NAME] [APPELLANT] AND HIS [NAME] THE [NAME] [APPELLANT] AND HIS [NAME] THE [NAME] OF HEARING: Vancouver, British Columbia DATE OF HEARING: January 29, 2026

REASONS FOR

ORDER BY: The [NAME] [NAME] [NAME] OF

ORDER: February 18, 2026 APPEARANCES: [NAME]: [APPELLANT] Counsel for the Respondent: [redacted] COUNSEL OF RECORD: For the Applicant: [redacted] [APPELLANT]: [NAME], British Columbia For the Respondent: [redacted]