Taxpayer's Motion to Strike Allegations Unsuccessful in Tax Court of Canada

Docket: 2023-1005(GST)G BETWEEN: [NAME], Appellant, and HIS [NAME], Respondent . Motion heard on June 8, 2026, at Toronto, Ontario Before: The [NAME] : Counsel for the Appellant: [redacted] Counsel for the Respondent: [redacted]

ORDER Upon hearing from the parties and review of affidavit evidence and written submissions; The Appellant’s motion seeking to strike paragraphs of the Reply to the Notice of Appeal as set out in Schedule A to the Notice of Motion and to strike documents from the Respondent’s List of Documents (Partial Disclosure) set out in Schedule B to the Notice of Motion, is dismissed. The Respondent’s motion seeking to consolidate this appeal with Court Files 2023-1006(GST)G and 2023-1016(GST)G is dismissed. No costs are awarded. Signed this 9th day of July 2026. “[NAME]” [NAME] J. Docket: 2023-1006(GST)G BETWEEN: [NAME], Appellant, and HIS [NAME], Respondent. Motion heard on June 8, 2026, at Toronto, Ontario Before: The [NAME] : Counsel for the Appellant: [redacted] Counsel for the Respondent: [redacted]

ORDER Upon hearing from the parties and review of affidavit evidence and written submissions; The Appellant’s motion seeking to strike paragraphs of the Reply to the Notice of Appeal as set out in Schedule A to the Notice of Motion, and to strike documents from the Respondent’s List of Documents (Partial Disclosure) set out in Schedule B to the Notice of Motion, is dismissed. The Respondent’s motion seeking to consolidate this appeal with Court Files 2023-1005(GST)G and 2023-1016(GST)G is dismissed. No costs are awarded. Signed this 9th day of July 2026. “[NAME]” [NAME] J. Docket: 2023-1016(GST)G BETWEEN: [NAME], Appellant, and HIS [NAME], Respondent. Motion heard on June 8, 2026, at Toronto, Ontario Before: The [NAME] : Counsel for the Appellant: [redacted] Counsel for the Respondent: [redacted]

ORDER Upon hearing from the parties and review of affidavit evidence and written submissions; The Appellant’s motion seeking to strike paragraphs of the Reply to the Notice of Appeal as set out in Schedule A to the Notice of Motion and to strike documents from the Respondent’s List of Documents (Partial Disclosure) set out in Schedule B to the Notice of Motion, is dismissed. The Respondent’s motion seeking to consolidate this appeal with Court Files 2023-1005(GST)G and 2023-1006(GST)G is dismissed. No costs are awarded. Signed this 9th day of July 2026. “[NAME]” [NAME] J. Citation: 2026 TCC 129 Date: 20260709 Docket: 2023-1005(GST)G BETWEEN: [NAME], Appellant, and HIS [NAME], Respondent, Docket: 2023-1006(GST)G AND BETWEEN: [NAME], Appellant, and HIS [NAME], Respondent, Docket: 2023-1016(GST)G AND BETWEEN: [NAME], Appellant, and HIS [NAME], Respondent.

REASONS FOR

ORDER [NAME] J. [ 1 ] [NAME] and her sons [NAME] and [NAME] each brought a motion to strike portions of the Reply to Notice of Appeal and to strike certain documents listed in the Respondent’s List of Documents (Partial Disclosure). [ 2 ] The Respondent brought two motions in each appeal. The first seeks consolidation of the three appeals. The second sought leave to Amend the Replies to the Notice of Appeal but was withdrawn during the hearing of the motion. [ 3 ] Both sets of motions are dismissed. A.

BACKGROUND [ 4 ] The issue in each of the three appeals is whether each of the [NAME] was a “builder” within the meaning of the Excise Tax Act and if so, whether GST/HST was payable under the Act ’s self‑supply provisions. [ 5 ] [NAME] was assessed in respect of the sale of a newly constructed residence at [ADDRESS], Toronto. [NAME] was assessed in respect of a property at [ADDRESS], Toronto and another at [ADDRESS], Toronto. [NAME] was assessed in respect of a property at [NAME], Toronto. [ 6 ] The Minister’s position is that the properties were sold as adventures in the nature of trade. The Minister pleads that the family functioned together to acquire, demolish, rebuild, hold as inventory and then sell residential properties, in the name of different family members. The Minister assumed that the family purchased and sold eleven properties between 2004 and 2018, and demolished and rebuilt luxury homes on seven of those properties before sale. [1] [ 7 ] The [NAME] each take the position that the properties were acquired and occupied as personal residences, and subsequent sales resulted from changes in personal circumstances. The [NAME] each state that they were not a builder within the ambit of section 123 of the Act , and purchase and sale was not an adventure in the nature of trade. [2] [ 8 ] [ADDRESS] granted the Respondent an Order on October 17, 2025 compelling answers to questions asked on examination for discovery. Motion to Strike [ 9 ] The [NAME] seek to strike paragraphs of the Minister’s assumptions of fact addressing family finances, corporate activities of taxpayers not assessed, residential property transactions other than those giving rise to the assessment, financing arrangements, occupancy of properties and construction activities. [ 10 ] Many of the impugned assumptions involve properties other than the four at issue in the three appeals. Many of the impugned assumptions also reference other members of the family, who the Respondent asserts were involved in the purchase, construction and sale of the subject properties. [ 11 ] The [NAME]’ position is that the impugned assumptions relate to transactions and persons not relevant to the issues under appeal. The [NAME] argue that those assumptions, and certain documents listed in the Respondent’s List of Documents (Partial Disclosure), should be struck pursuant to section 53 of the Rules. [ 12 ] The parties have competing theories of the case. The [NAME] maintain that they are separate individuals and each sale of property must be considered on its own. The Respondent’s position is that the transactions were adventures in the nature of trade and the family was financially supported through the purchase and sale of residential homes, including those at issue in the appeals. [3] [ 13 ] The [NAME] argue that the Minister did not reassess on the basis that the [NAME] were part of a business or joint venture. The Respondent, on the other hand, argues that it did assume that the members of the family functioned together. At examination for discovery the Respondent stated “functioning together” meant working as one business entity. B. LAW 1. It is not plain and obvious that the allegations are irrelevant [ 14 ] The [NAME] move under section 53 of the Tax Court of Canada Rules (General Procedure) : Striking out a Pleading or other Document 53 (1) [ADDRESS] may, on its own initiative or on application by a party, strike out or expunge all or part of a pleading or other document with or without leave to amend, on the ground that the pleading or other document (a) may prejudice or delay the fair hearing of the appeal; (b) is scandalous, frivolous or vexatious; (c) is an abuse of the process of the Court; or (d) discloses no reasonable grounds for appeal or opposing the appeal. [ 15 ] When deciding the requirements if this section of the Rules have been satisfied, I must consider the need to facilitate “the just, most expeditious and least expensive determination” of the matters in dispute. [4] [ 16 ] The test for striking a pleading has been set out by the Supreme Court of Canada [5] and confirms a claim will be struck only if it is plain and obvious, assuming the facts plead to be true, that the pleading discloses no reasonable cause of action. Pleadings may prejudice or delay the fair hearing of an appeal if it is plain and obvious that the pleading is irrelevant to the issues to be resolved. [6] [ 17 ] A pleading will be stuck only where there is no question that the impugned allegation is irrelevant. Relevance is to be determined by the trial judge unless it is plain and obvious that the allegations can never be relevant. [7] [ 18 ] The [NAME] also rely on paragraph 53(1)(b) of the Rules , which permits a document or a part of a pleading to be struck when it is obviously scandalous, frivolous or vexatious, and paragraph 53(1)(c) of the Rules which permits portions of a pleading or document to be struck as an abuse of process. The Appellant argues that the allegations are prejudicial and may result in a trier of fact giving more weight to evidence or facts than they deserve. [ 19 ] The [NAME] point to the decision of this Court in [COMPANY] [8] . In that case [NAME]. stated that an assessment raises a narrow issue that should not be complicated with allegations that are not relevant to the outcome of the litigation, that cannot affect the merits of the assessment or could prolong discovery and trial. C. ANALYSIS 1. The Impugned Assumptions are relevant to the issues in dispute [ 20 ] The Minister assumed that the [NAME] functioned together when acquiring, financing, constructing, holding and disposing of residential properties. [9] The Minister’s legal position is that the properties were sold as part of adventures in the nature of trade such that the [NAME] were “builders” as defined in subsection 123(1) of the Act . [10] [ 21 ] “An adventure in the nature of trade” is a judicial concept [11] used to determine when purchase and sale transactions are of a business nature. Intention to profit is a key element of that determination. [ 22 ] [COMPANY] [12] sets out a number of factors that can be considered when determining if property was held and sold as part of an adventure or concern in the nature of trade. Among those factors are the nature of the property sold, the length of period of ownership, the frequency or number of other similar transactions, work expended on or in connection with the property, the circumstances that were responsible for the sale of the property and motive. [ 23 ] The Minister’s assumptions provide relevant background to the Minister’s position regarding the [NAME]’ intentions and whether the activities formed part of a broader profit‑motivated enterprise. Assumptions involving allegations of intention, motive, frequency and number of similar transactions, work expended on the property and circumstances of sale could potentially be relevant factors for consideration by the trial judge. [ 24 ] I cannot conclude that the impugned assumptions are not relevant to the issues in dispute. Whether the Minister’s assumptions are sufficient to establish that the [NAME] were engaged in adventures in the nature of trade is a question for the trial judge.

2. Prohibition against propensity not applicable [ 25 ] The [NAME] rely on the prohibition against propensity, a maxim of the law of evidence that prevents a finder of fact from basing their finding on the subject’s propensity to engage in similar activities. Similar fact evidence is largely inadmissible, particularly in the context of criminal matters. The [NAME] argue that the prohibition has similar bearing on litigation in this Court. [ 26 ] The [NAME] point to the decision of this Court in [NAME] [13] as authority for the proposition that the impugned assumptions are improper insofar as they include information relating to [NAME]. That decision highlights the importance of establishing a link between the actions of the [NAME] and the actions of the taxpayer. It supports the proposition that relevance of those allegations is established in the context of the pleading. [ 27 ] In this case, the Replies state that the Minister’s position is that each of the [NAME] acted in concert with one another and with the [NAME] as part of the adventure in the nature of trade. Relevance of the allegations has been established in the context of the Minister’s assessment. [ 28 ] The [NAME] also point to the decision of this Court in [COMPANY]. [14] as authority for their argument that pleadings that indicate a propensity are prejudicial. That case references the Supreme Court of Canada’s decision in [NAME] [15] , which addresses use of similar fact evidence in sexual assault cases. The Supreme Court determined that the probative value of testimony of similar allegations of sexual assaults outweighed its probative effect. [ADDRESS] discussed the exclusionary rule as most famously articulated by [NAME]: It is undoubtedly not competent for the prosecution to adduce evidence tending to shew that the accused has been guilty of criminal acts other than those covered by the indictment, for the purpose of leading to the conclusion that the accused is a person likely from his criminal conduct or character to have committed the offence for which he is being tried. [16] [ 29 ] The principle has little bearing on this motion. The Respondent in this case does not make allegations of criminal conduct or criminal charges, as was the case in [COMPANY] . Nor are the impugned assumptions directed at persuading the trier of fact to find that the [NAME] committed an offence because of similar past conduct. The trier of fact in this case will be asked to determine if the [NAME] were engaged in adventure in the nature of trade such that they were “builders” for the purpose of the Act. [ 30 ] [NAME] and [NAME] demonstrate that similar fact evidence in the context of residential house sale is permissible in tax disputes. It is appropriate to leave to the trial judge the question of whether allegations of sale of properties not giving rise to the Minister’s assessments are relevant and persuasive.

3. The Impugned Assumptions are not prejudicial [ 31 ] I do not share the Appellant’s concern that the allegations concerning [NAME] will be prejudicial and may result in a trier of fact giving more weight to facts than they deserve. It is entirely appropriate for the trial judge to consider the Respondent’s allegations in the context of a full hearing and determine if they are relevant to the question of whether the [NAME] were “builders” for the purpose of the Act . Indeed, the trial judge’s role will be to assign weight to the evidence before her or him. The mere existence of the impugned assumptions is not enough to persuade me that they could distort the trial judge’s analysis. [ 32 ] The [NAME] also argue that the allegations will unnecessarily prolong the trial of each Appellant’s assessment on its merits and will contribute to continued delay with completing examination for discovery. While it is true that striking assumptions from a pleading will shorten a hearing or a discovery process, that is not the sole consideration when striking a pleading. [17] [ 33 ] The impugned assumptions are pled in neutral language and describe factual matters that were considered during the assessment. I cannot conclude that they are abusive, inflammatory or contain prejudicial allegations. [ 34 ] One of the assumptions in each pleading asserts that the family functioned together to demolish, rebuild, hold as inventory and sell properties in different family members’ names in order to avoid paying GST/HST on the self‑supply of newly constructed residential complexes. The [NAME] argue that the assumption amounts to speculation of a tax avoidance scheme without a factual foundation. [ 35 ] The use of the word “avoid” does carry unique significance in the tax context; however, the allegation of the [NAME]’ intent is not so scandalous, frivolous or vexatious that it warrants striking. The trial judge can determine if the [NAME]’ did intend to avoid paying GST/HST and the relevance, if any, of that assumption. It is not apparent to me that that impugned assumption may prejudice or delay the fair hearing of the appeal, is an abuse of this Court’s process or discloses no reasonable grounds for opposing the appeal. [ 36 ] The [NAME] have not convinced me that the impugned assumptions constitute an abuse of process. The correctness, ultimate relevance and persuasiveness of the impugned assumptions are properly left to the trial judge. The trial judge will be in the best position to determine if the pled facts are sufficient to meet the applicable legal tests, or if the pled facts are relevant to the applicable legal tests. [18]

4. Section 295 of the Act authorizes use of confidential information [ 37 ] The [NAME] also take issue with the fact that information relating to [NAME]’s reported income are pled in the Replies, and argue this disclosure is contrary to section 295 of the Act . [ 38 ] This objection is part of the [NAME]’ motion to strike under section 53 of the Rules . The question is whether such disclosure requires part of the pleadings or documents to be struck because they may prejudice or delay the fair hearing of the appeal, are scandalous, frivolous or vexatious, are an abuse of the process of the Court or disclose no reasonable grounds for opposing the appeal. [ 39 ] Subsection 295(2) of the Act states: (2) Provision of Information – Except as authorized under this section, no official shall knowingly (a) provide, or allow to be provided, to any person any confidential information; (b) allow any person to have access to any confidential information; or (c) use any confidential information other than in the course of the administration or enforcement of this Part. [ 40 ] The impugned assumptions contain information relating to [NAME], spouse of [NAME] and father of [NAME] and [NAME], as well as information relating to corporations including [COMPANY], co‑owned by [NAME] and [NAME] and their involvement with properties giving rise to the assessment. In the case of [NAME], assumptions were made about her father [NAME] and his involvement with a property giving rise to the assessment. [ 41 ] I am satisfied that the information disclosed in the impugned assumptions was so disclosed in the course of administration or enforcement of Part IX of the Act , and the [NAME] have not demonstrated that the disclosure will prejudice or delay the fair hearing of the appeal, are scandalous, frivolous or vexatious, are an abuse of the process of the Court or disclose no reasonable grounds for opposing the appeal.

5. Fresh Step Rule Applies [ 42 ] Section 8 of the Rules addresses timeliness of attacks on procedural irregularities:

8. A motion to attack a proceeding or a step, document or direction in a proceeding for irregularity shall not be made, (a) after the expiry of a reasonable time after the moving party knows or ought reasonably to have known of the irregularity, or (b) if the moving party has taken any further step in the proceeding after obtaining knowledge of the irregularity, except with leave of the Court. [ 43 ] The [NAME]’ position is that section 8 of the Rules does not apply. They argue that the impugned paragraphs and documents are not irregularities, and the “fresh step” rule codified in section 8 is limited to situations involving an irregularity. The [NAME] argue that they moved once it became apparent that the pleadings were presenting a barrier to refusals made at examination for discovery. [ 44 ] This situation demonstrates the importance of the fresh step rule . [ 45 ] In 2025 the parties argued a motion before this Court about the relevance of questions asked at examination for discovery. At that motion, the [NAME] raised the very issues before me in this motion. In both motions, the [NAME] argued that the intention and conduct of other taxpayer is irrelevant to the appeal of these [NAME], and that the Respondent’s allegations are scandalous. [ 46 ] That motion resulted in an Order dated October 17, 2025 compelling the [NAME] to attend examination for discovery and to provide the requested information. [ 47 ] The [NAME]’ motion before me, asking the Court to strike portions of the Reply, ought to have been brought at an earlier stage of this litigation and at the latest before commencement of examination for discovery. [ 48 ] Instead, unhappy with the October 17, 2025 Order compelling disclosure of information, the [NAME] now seek to strike portions of the pleading, thus limiting the scope of relevance of questions asked at examination for discovery. This amounts to a collateral attack on the October 17, 2025 Order of this Court. [ 49 ] The fresh step rule is grounded in principle, not pedantry. Rules governing the progression of litigation serve an important role in ensuring procedural fairness. The Rules support this Court’s ability to control its own process, and to give shape and order to the adversarial process. [ 50 ] There will be exceptional circumstances where a party was not able to bring an interlocutory motion at the ideal time or where the remedy sought extends beyond an irregularity. This is not one of those instances. [ 51 ] [NAME]’ counsel was candid; these motions were brought as a direct result of the [NAME]’ lack of success with the October 2025 motions. I conclude that the motions were brought in an effort to curb the scope of ongoing examination for discovery. That is not a satisfactory explanation for having “pled over” a pleading by proceeding to documentary discovery, then written discovery and then a motion to limit the scope of discovery. [ 52 ] I have already found that the [NAME]’ motions should be dismissed on their merits. Additionally, I would have dismissed the motions as ill‑timed, referencing section 8 of the Rules.

6. The Motions Will Not Be Consolidated [ 53 ] The Respondent moves for an Order to consolidate all three appeals. [ 54 ] The [NAME] oppose the motion to consolidate and will not consent to an Order that the matters be heard on common evidence. [ 55 ] It is not surprising that the Respondent is seeking consolidation given its theory of the case. But just as the Respondent is entitled to proceed in this litigation to advance its theory of the case, so too are the [NAME] entitled to advance their theory of their cases. [ 56 ] Consolidation would serve to advance the Respondent’s case at the detriment of the [NAME]’. Additionally, consolidation at this stage of litigation is not necessary. To date, the parties have proceeded cooperatively with all three appeals advancing on the same timeline without consolidation. [ 57 ] Just as it is appropriate to leave to the trial judge the question of relevance of the impugned assumptions, it is appropriate to defer to the trial judge on management of the conduct of the hearing. D. COSTS [ 58 ] The [NAME] were unsuccessful with their motions, and the Respondent was unsuccessful with its retaliatory motion. No costs will be awarded for any of the motions. Signed this 9th day of July 2026. “[NAME]” [NAME] J. CITATION: 2026 TCC 129 COURT FILE NOS.: 2023-1005(GST)G 2023-1006(GST)G 2023-1016(GST)G STYLES OF CAUSE: [NAME] AND HIS [NAME]; [NAME] AND HIS [NAME]; and [NAME] AND HIS [NAME] OF HEARING: Toronto, Ontario DATE OF HEARING: June 8, 2026

REASONS FOR

ORDER BY: The [NAME] OF

ORDER: July 9, 2026 APPEARANCES: Counsel for the [NAME]: [NAME] Counsel for the Respondent: [redacted] COUNSEL OF RECORD: For the [NAME]: Name: [NAME]: [NAME]. Toronto, Ontario [1] [NAME], paras 11.249 and 11.250; [NAME], paras 10.249 and 10.250; [NAME], paras 11.252 and 11.253. [2] [NAME] Notice of Appeal, paras 30 and 31; [NAME] Notice of Appeal ,paras 28 and 29; [NAME] Notice of Appeal, paras 35 and 36. [3] [NAME], paras 11.246 and 11.248; [NAME], paras 10.246 and 10.248; [NAME], paras 11.249 and 11.251. [4] Canada v [NAME] , 2023 FCA 178 at para 37; Section 4 of the Rules . [5] R v [COMPANY], 2011 SCC 42 at 17; see also Canadian Imperial Bank of Commerce v R , 2013 FCA 122 at 7. [6] [COMPANY] v [NAME], 2024 TCC 30 at para 48. [7] [NAME] v [NAME] , 2023 TCC 71 at para 28; [NAME] v The Queen, 2017 TCC 71 at para 12-13, aff’d 2017 FCA 229; [NAME] v [NAME], 2023 TCC 66 at para 5. [8] [COMPANY] v The Queen , 2005 TCC 727. [9] [NAME], para 11.250; [NAME], para 10.246; [NAME], para 11.249. [10] [NAME], paras 14 and 15; [NAME], paras 13 and 14; [NAME], para 14 and 15. [11] Friesen v HMQ , [1995] 3 SCR 103 at paras 14 to 16. [12] [COMPANY] v The Minister of National Revenue, [1986] 2 CTC 259 (FCTD). [13] [NAME] v [NAME] , 2023 TCC 49 at para 65, 66. [14] [COMPANY]. v. [NAME] , 2026 TCC 66. [15] R v [NAME], 2022 SCC 56. [16] [NAME] at 33 citing [NAME] v Attorney-General for New South Wales , [1984] AC 57 (PC) at 65. [17] [NAME] v The Queen , 2014 FCA 184. [18] [NAME] v Canada , 2009 FCA 83 at para 20 – 23.