Practice National Taxation

Taxpayers must articulate reasons for not responding to questions in motions in Tax Court

Quigley v The King outlines the appropriate questions and responses during the discovery stage, explains tax lawyer and accountant David J Rotfleisch

Author: David J. Rotfleisch
David Rotfleisch, CPA, JD
David J Rotfleisch, CPA, JD is the founding tax lawyer of and Rotfleisch & Samulovitch P.C., a Toronto-based boutique tax law corporate law firm.

DISCOVERY is part of the process in most litigation including in appearing before the Tax Court of Canada. In discovery, each of the parties produce documents that they intend to rely on in court, and examine adverse parties under oath or by way of written examination questions. This examination of the adverse party was at centre of the ongoing case of Richard Quigley v The King heard before the Tax Court. The tax litigation lawyer acting on behalf of the Canada Revenue Agency in this case brought a motion to compel Mr. Quigley to provide answers during discovery, however, the motion was denied by the Tax Court.

Background to the Motion to Compel Discovery Answers

Charitable donations are encouraged under the Income Tax Act through the allowance of charitable tax credits. The charitable tax credit allows taxpayers to reduce their tax owing based on a percentage of charitable donations they make. The misuse of this program has culminated in the CRA attempting to crack down on charitable donation schemes, which has resulted in various Tax Court cases including those of Mariano v The Queen in 2015, Tudora v The Queen in 2019, and now, Quigley.

Richard Quigley, when filing his 2006 tax return, claimed approximately $3,000,000 in donation tax credits in respect of gifts he made through the Global Learning Gifting Initiative ("GLGI"). The Minister of National Revenue reassessed Mr. Quigley to deny those credits. This denial is the central focus of Mr. Quigley's appeal.

This case shares many similar characteristics to the other cases mentioned above. All three involved the denial of charitable donation tax credits claimed on their tax returns around the same time, 2004-2006. They all also involved the donation program GLGI. These similarities were important even at the discovery process as the CRA would ask Mr. Quigley about Mariano.

During the discovery process the CRA posed two questions, which Mr. Quigley refused to answer. The first one related to assumptions of fact pled by the CRA in the Reply. The second related to the Tax Court decision in Mariano. As mentioned, the motion was brought by the CRA specifically to make Quigley answer these questions.

The motion for a court order sought by the CRA was granted in part. The first question was found to be satisfied and excluded from the court order. The second question would, however, be included in the order allowing the CRA a chance to ask questions to Mr. Quigley again.

Question 1: Fulfilling an undertaking

Mr. Quigley had during his examination for discovery given an undertaking to the CRA. An undertaking is a legal promise or commitment to provide certain information or perform specific actions. In this case, Mr. Quigley undertook to confirm whether the answers provided by his counsel in Exhibit R-1, which contained assumptions of fact, represented his position on the appeal. Additionally, for the facts that he pled as having no knowledge of, advise of any facts that he is aware of, to dispute such assumptions of fact. Thus, creating two parts to the undertaking.

The first part of the undertaking was not in dispute. At the discovery, when counsel for the CRA asked Mr. Quigley to confirm that his counsel's answers in Exhibit R-1 were accurate, his counsel objected. The parties would however agree for Mr. Quigley to undertake to advise if the answers given in counsel's response to Exhibit R-1 were Mr. Quigley's position on his appeal. Mr. Quigley's would respond to the undertaking, stating that "The answers represent my answers and were made on my behalf by my counsel, but they do not represent my entire position on this appeal." The Tax Court found that this satisfied the first part of the undertaking. Thus, through the first part of the undertaking Quigley adopted his counsel's response and took the position that he had no knowledge of over 100 assumptions of fact.

The second half of the undertaking required Quigley to advise whether he was aware of any facts to dispute those assumptions. To this Mr. Quigley responded that "I am unable to dispute an assumption when I have no knowledge of the purported facts supporting an assumption." The Tax Court found that this answer was not responsive, as the question did not ask whether he was able to dispute the assumptions. Rather, it was whether he was aware of any facts to dispute the assumptions. In submissions for the motion, Mr. Quigley's counsel stated that "If Mr. Quigley had further knowledge, he would have provided such information and documents to [the Respondent]. He does not have such further information or documents." The Tax Court treated this statement as Mr. Quigley's response to the undertaking.

The Tax Court found that the undertaking was then satisfied through the foregoing, however the Tax Court had to address one related issue. The motion brought by the CRA specifically sought an order compelling Mr. Quigley to answer the following question: (a) to advise what facts, if any, the appellant is aware of that dispute the assumptions of fact pled by the respondent in the Reply to the Notice of Appeal; (i) additionally, for the facts that the appellant pleads to have no knowledge of, to advise of any facts that dispute such assumptions. While acknowledging that (i) was satisfied, the Tax Court could not find where Mr. Quigley had undertaken to answer (a). Thus, ruling that part (i) was satisfied and that the Tax Court would not order Mr. Quigley to respond to paragraph (a).

Question 2: Can you be asked about other cases?

This motion also asked that Mr. Quigley be ordered to advise what facts, if any, he is aware of that distinguished his appeal from the one in Mariano. The Tax Court made note that the original question and the one that was put forward in the motion differed. At discovery Mr. Quigley was asked not whether his appeal could be distinguished from Mariano but rather whether he was aware of any differences between the facts in his appeal and the facts in Mariano. The Tax Court addressed both versions.

The first issue that Mr. Quigley raised about the question in the motion was that it was a legal question. That the CRA was asking Mr. Quigley to reach a legal conclusion whether the trial judge would find that this case distinguishable from Mariano. Further arguing that to allow the CRA to ask such a question would be opening the option to ask the same question of taxpayers in every appeal whether their facts can be distinguished from any number of cases. The Tax Court agreed and found that the question was not a proper question for discovery.

As for the original question, the CRA submitted that the focus of the original was on the facts and not legal analysis. Nonetheless, the Tax Court only agreed with the CRA in part. Finding that the original question focused on facts within Mr. Quigley's knowledge, but still required him to undertake a legal analysis when comparing findings of fact between the cases. Additionally, Quigley would need to determine what were findings of fact or a finding of mixed fact and law, and then discern which findings of fact gave rise to the finding of mixed fact and law. The Tax Court found that this would be inappropriate.

The Tax Court furthermore recognized that the original question was vague, as he could not possibly answer the question without knowing what the CRA thought were the findings of fact in Mariano.

Appropriate Questions and Responses During Discovery

Certain questions could have been asked by the CRA about the findings of fact in Mariano. If there were questions related to the Mariano case that were relevant to the case at hand, then they could have been asked without tying the question to a finding of fact in Mariano. In this case this was not done by the CRA; however, this was in part due to Mr. Quigley not fully explaining the basis of his objection. Thus, the CRA was not able to rephrase the question into an appropriate form.

Recognizing this, the Tax Court decided to give the CRA another chance to do so. Thus, the order granted from this motion allowed Mr. Quigley to be served with a list of findings of fact in Mariano to which Mr. Quigley shall advise whether he is aware of any differences between the facts in his appeal from Mariano and specify those differences. Mr. Quigley would not be allowed object to answering a given Mariano fact on the basis that he does not agree that the fact was an actual finding of fact but may object to answering on the basis that it is actually a finding of mixed fact and law.

Having a motion brought forward in a Tax Court case adds delay to the conclusion of the case. In addition to the time costs of the delay, there may also be additional monetary costs, such as in legal fees. As was found by the Tax Court in this case, even if the taxpayer has legitimate grounds for not responding to a question during discovery, he, or she, must articulate their reasoning for doing so. If that had been done in this case, then the motion may have been avoided, or the results from it could have favoured Mr. Quigley more.

David J Rotfleisch, CPA, JD is the founding tax lawyer of and Rotfleisch & Samulovitch P.C., a Toronto-based boutique tax law corporate law firm and is a Certified Specialist in Taxation Law who has completed the CICA in-depth tax planning course. He appears regularly in print, radio and TV and blogs extensively.  

With over 30 years of experience as both a lawyer and chartered professional accountant, he has helped start-up businesses, cryptocurrency traders, resident and non-resident business owners and corporations with their tax planning, with will and estate planning, voluntary disclosures and tax dispute resolution including tax audit representation and tax litigation. Visit and email David at

Read the original article in full on Taxpage. Author photo courtesy Rotfleisch & Samulovitch P.C. Title image: iStock (modified). 

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