A-355-87
John Shairp (Appellant)
v.
Her Majesty The Queen (Respondent)
INDEXED AS: SHAIRP v. M.N.R.
Court of Appeal, Heald, Mahoney and Marceau
JJ.—Calgary, October 5; Ottawa, October 19,
1988.
Practice — Judgments and orders — Tax Court Judge,
after hearing evidence, stated intention to allow appeal
Parties recalled to Court and informed appeal dismissed
Judgment, rendered June 11, allowed appeal — Amended
judgment of July 17 dismissing appeal — Whether Tax Court
erred in law or acted without jurisdiction in rendering amend
ed judgment — Amended judgment valid as clear judgment
had not expressed manifest intention of Court — Opinion
expressed in morning could be reversed in afternoon as within
Judge's jurisdiction — Preliminary view of judge did not
render him functus officio as conclusions did not finally
dispose of appeal — Until judgment filed, pronouncement of
judge in open court merely expression of opinion which
remains subject to reconsideration.
Income tax — Disposition of appeals by Tax Court of
Canada S. 171 of Income Tax Act merely concerned with
content of decision and does not introduce distinction between
"disposition" and "decision" of matter whereby oral disposi
tion of no effect until decision put into writing — Whether
Judge functus officio having indicated intention to allow
appeal.
The taxpayer appealed a reassessment which determined that
profit realized on the sale of a house in which the appellant, a
building contractor, had lived briefly was income from an
adventure in the nature of trade rather than a capital gain on
the disposition of a principal residence. After hearing the
evidence the Tax Court Judge stated: " ... I should ... allow
the appeal". The parties were, however, recalled after lunch
and the Judge announced that he had changed his mind and
decided to dismiss the appeal. Still later, a judgment was issued
which purported to allow the appeal. Finally, an amended
judgment was issued, dismissing the appeal. The question is
whether the Tax Court erred in law or acted without jurisdic
tion in rendering the amended judgment. The Trial Judge,
relying on subsections 171(1) and 171(4) of the Income Tax
Act, found that as the decisions of the Tax Court must be in
writing, the Judge could vary his preliminary view until such
time as a formal decision had been rendered. The Trial Judge
also found that the amended judgment was valid as the original
judgment had not expressed the manifest intention of the
Court.
Held, the appeal should be dismissed.
The Trial Judge was correct in his determination, but his
application of subsections 171(1) and 171(4) of the Income
Tax Act could not be agreed with. Those provisions are solely
concerned with the content of a decision and do not purport to
introduce a distinction between a "disposition" and a "deci-
sion" whereby an oral disposition has no effect until reduced to
writing. The matter at hand is one of jurisdiction. The Judge
would have retained jurisdiction unless his morning pronounce
ment can be interpreted as having finally disposed of the appeal
thus rendering him functus officio. The Tax Court Judge's
preliminary conclusions were merely an expression of opinion
which in law had no decisive effect and remained subject to
reconsideration. Although it was only in extraordinary circum
stances that a judge would give his opinion at the end of a
hearing then render a completely different judgment, it was
clear that the Judge was acting within his jurisdiction as he was
still seized of the matter.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Rules, C.R.C., c. 663, RR. 337(1), 474.
Income Tax Act, S.C. 1970-71-72, c. 63, ss. 17l(1),(4)
(as am. by S.C. 1980-81-82-83, c. 158, item 2).
Tax Court of Canada Act, S.C. 1980-81-82-83, c. 158,
s. 17.
CASES JUDICIALLY CONSIDERED
APPLIED:
Fruehauf Trailer Co. v. McCrea, [1955] 3 D.L.R. 543
(N.B.C.A.); M.N.R. v. Gunnar Mining Ltd., [1970] DTC
6135 (Ex. C.); Paper Machinery Ltd. et al. v. J. O. Ross
Engineering Corp. et al., [1934] S.C.R. 186; In re Harri-
son's Share Under Settlement; In re Williams' Will
Trusts; In re Ropner's Settlement Trusts, [1955] Ch. 260
(C.A.); Pittalis v Sherefettin, [1986] 2 All ER 227
(C.A.); Lunenburg v. Pub. Service Comm. of Bridgewa-
ter (1983), 34 C.P.C. 235 (N.S.C.A.).
REFERRED TO:
Re Barrell Enterprises, [ 1972] 3 All ER 631; [ 1973] I
W.L.R. 19 (C.A.).
COUNSEL:
James A. Butlin for appellant.
Helen C. Turner for respondent.
SOLICITORS:
Butlin, Biggs & Coultry, Calgary, for
appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
rendered in English by
MARCEAU J.: This appeal is from a preliminary
determination on a question of law, made by a
judge of the Trial Division pursuant to Rule 474 of
the Rules of the Court [Federal Court Rules,
C.R.C., c. 663]. To understand the question as it
was put to the Trial Judge, the very special factual
context in which it arose has to be known. I will
therefore set out the facts first.
The appellant, a building contractor, had
appealed to the Tax Court of Canada a reassess
ment made against him by the Minister of Nation
al Revenue with respect to a particular taxation
year. The dispute concerned the qualification for
tax purposes (income from an adventure in the
nature of trade or capital gain on the disposition of
a principal residence) of the profit he had realized
on the sale of a house in which he had lived for a
few months. The case came on for hearing on the
morning of May 3, 1984, and at the end of the
argument, just before the noon recess, the presid
ing Judge made known his reaction to the evidence
heard and explained his views as to law concluding
the whole by stating: "... I feel that I should find
in his (the appellant's) favour and allow the
appeal". During the recess, however, the Judge
had second thoughts. He recalled the parties and,
on resuming the hearing in the afternoon, he
informed them that a more thorough analysis of
some cases he had been referred to had led him to
change his mind; thereupon, giving reasons for his
newly acquired views, he announced that he was
dismissing the appeal. The situation was no doubt
unusual enough but it was unfortunately to be
even further complicated. On June 11, 1984,
through an unexplained cause, a formal judgment
of the Tax Court, signed inexplicably by the
Judge, was issued purporting to allow the appeal.
This judgment was however replaced on July 17,
1984 by an amended judgment, again signed by
the Judge, dismissing the appeal.
The question of law submitted for determination
will now be easily appreciated:
Did the Tax Court err in law or act without jurisdiction in
rendering the amended judgment dated July 17, 1984?
The learned Trial Judge came to a negative
answer on the basis of the following reasoning. He
first noted that the only statutory provisions
having relevance to the issue were section 17 of the
Tax Court of Canada Act [S.C. 1980-81-82-83,
c. 158] and subsections 171(1) and 171(4) of the
Income Tax Act [S.C. 1970-71-72, c. 63; as am.
by S.C. 1980-81-82-83, c. 158, item 2] which read:
17. The Court shall give reasons for its decisions but, except
where the Court deems it advisable in any particular case to
give reasons in writing, the reasons given by it need not be in
writing.
171. (1) The Tax Court of Canada may dispose of an
appeal by
(a) dismissing it; or
(b) allowing it and
(i) vacating the assessment,
(ii) varying the assessment, or
(iii) referring the assessment back to the Minister for
reconsideration and reassessment.
(4) Upon the disposition of an appeal, the Tax Court of
Canada shall forthwith forward, by registered mail, a copy of
the decision and any written reasons given therefor to the
Minister and the appellant.
Drawing from the wording of subsection 171(4) a
requirement that a decision of the Tax Court be in
writing, the learned Judge considered that therein
lay the answer to the first question to be settled,
namely whether the Tax Court Judge, having
allowed the appeal in the morning, could dismiss it
in the afternoon. "Until such time as the formal
decision, judgment or order is made pursuant to
subsection 171(4) of the Income Tax Act, he
wrote, the court has power to reconsider and vary
it (Fruehauf Trailer Co. v. McCrea, [1955] 3
D.L.R. 543 (N.B.C.A.)) at pages 547-8." Coming
then to the second question, whether the formal
judgment of June 11, 1984 could be replaced by an
amended one, he simply pointed out that, bearing
in mind the reasons given on the afternoon of May
3, 1984, it was clear that this judgment had not
expressed the manifest intention of the Court. He
held this to be, as stated by Mr. Justice Jackett in
M.N.R. v. Gunnar Mining Ltd., [1970] DTC 6135
(Ex. C.), one of the two instances where a court
remains empowered to amend a judgment already
drawn up and entered.
In my view, the Trial Judge was correct in his
determination, but I have some difficulty with his
reasoning. Not that I would dispute the validity of
what he wrote when dealing with the second ques
tion. Indeed, if the Tax Court Judge could with
draw the conclusion he had reached in the morning
of May 3 and come back with a new one in the
afternoon, I do not see how it could be doubted
that the formal judgment of June 11th had been
issued in error and could therefore be replaced by
an amended one.' But I have difficulty in relying
only on section 171(4) of the Income Tax Act to
find the answer to the first question. I think coun
sel for the appellant is right in taking exception to
a position which would rely solely on the wording
adopted in that section in order to introduce a
distinction between a "disposition" and a "deci-
sion", and deduce that an oral disposition has no
effect as long as it has not become a decision by
being put in writing. It seems to me that the first
subsection of section 171 is merely concerned with
the content of a decision, that is to say with what
the Court is entitled to do in disposing of an
appeal, while the fourth paragraph only requires,
at least on its face, that some writing be made of
the decision.
I would prefer to approach this question of
whether the judge could reverse in the afternoon
the conclusion he had announced in the morning
on the basis of the following propositions. Firstly,
we are concerned exclusively with a matter of
jurisdiction. Secondly, the only possible reason
why the judge could have been without jurisdiction
to change his conclusion is that his morning pro
' See on this point the decision of the Supreme Court of
Canada in Paper Machinery Ltd. et al. v. J. O. Ross Engineer
ing Corp. et al., [ 1934] S.C.R. 186, the headnote of which read
thus:
The court has no power to amend a judgment which has been
drawn up and entered, except (I) where there has been a
slip in drawing it up, or (2) where there has been error in
expressing the manifest intention of the court. (In re
Swire, 30 Ch. D. 239; Ainsworth v. Wilding, [1896] I Ch.
673; MacCarthy v. Agard, [1933] 2 K.B. 417, and other
cases, cited.).
nouncement had rendered him functus officio, his
connection with the case from then on being lim
ited to correcting incidental errors. Thirdly, the
morning pronouncement could only have rendered
the judge functus officio if, as such, it had had the
effect of finally disposing of the appeal.
[f I think that the Tax Court Judge could dc
what he did, it is because I do not see how his
morning pronouncement could be seen as having
disposed of the appeal before him. In my view, in
the absence of any specific provision empowering
him to deliver judgment orally in open court, such
as Rule 337(1) of the general rules of this Court,'
a judge of a court of record can only dispose
finally, on behalf of the court, of a matter he has
been seized of by filing and entering a written
decision. There is no such provision to that effect
in the rules of practice of the Tax Court of Canada
and I even doubt such a provision could accord
with the above cited section 17 of its enabling
statute, which, by contemplating only the possibili
ty of oral reasons, seems to exclude in any event
oral decrees. It follows, in my view, that until
judgment is filed the pronouncement of a judge,
even made in open court and in the presence of a
registrar, is merely an expression of opinion and a
declaration of intention, which in law have no
decisive effect and therefore remain subject to
reconsideration. One would certainly assume that
only in extraordinary circumstances would a
judge, who sees fit, at the end of a hearing, to
publicly pronounce his reasoned opinion and
express his intention as to how he will dispose of
the case, would later present differing reasons and
a completely different judgment. But his jurisdic
tion to do so would seem to me to be unfettered if
he continues to be seized of the matter as obvious
ly he does.
2 Rule 337. (1) The Court may dispose of any matter that has
been the subject-matter of a hearing
(a) by delivering judgment from the bench before the hear
ing of the case has been concluded, or
(b) after having reserved judgment at the conclusion of the
hearing, by depositing the necessary document in the
Registry,
in the manner provided by paragraph (2).
While the case law on the point is not as clear
and consistent as one would have hoped, I consider
this view I have just expressed amply supported by
authority. It is true that I cannot refer to any
judgment where the presence or absence of a
provision, such as Federal Court Rule 337(1),
empowering the Court to dispose of a matter by
delivering judgment from the bench, has been
presented as a relevant factor, as I suggested it
would be. It is true also that there are judgments
which urge that only in exceptional circumstances
could a judge consider altering a decree after
verbal utterance (without however—it ought to be
noted—giving any indication as to what could
qualify as exceptional circumstances and whether
the limitation would be based on a legal principle
or on a moral or practical requirement). 3 But I
know of no case where the jurisdiction of a judge
to vary a verbal pronouncement made in open
court prior to the entering of a formal judgment
has been denied. Reference to a few recent deci
sions will suffice. In England, the issue was
explored at some length in In re Harrison's Share
Under Settlement; In re Williams' Will Trusts; In
re Ropner's Settlement Trusts, [1955] Ch. 260
(C.A.). The headnote to the unanimous decision of
the Court of Appeal reads, in part, thus [at pages
260-261]:
Held, that an order pronounced by a judge, whether in open
court or in chambers, can always be withdrawn, altered or
modified by him, either on his own initiative or on the applica
tion of a party, until such time as the order has been drawn up,
passed and entered. The oral order is meanwhile provisionally
effective, and can be treated as a subsisting order where the
justice of the case requires it and the right of withdrawal would
not thereby be prevented or prejudiced.
When a judge has pronounced judgment, he retains control
over the case until the order giving effect to his judgment is
formally completed; such control, however, must be used in
accordance with his discretion, exercised judicially and not
capriciously.
3 This is the position taken in Halsbury's Laws of England,
fourth edition, Vol. 26, para. 555, the only case being referred
to in support thereof being: Re Barrell Enterprises, [1972] 3
All ER 631; [1973] 1 W.L.R. 19 (C.A.).
The Court of Appeal reaffirmed the principle in
Pittalis v Sherefettin, [1986] 2 All ER 227 (C.A.)
[at page 228 (headnote)]:
A judge, including a county court judge, could always recall
and reconsider his decision up until the time his order was
drawn up or perfected. The county court judge had therefore
been entitled to recall his judgment and allow the application
after previously announcing that he intended to dismiss it, and
in any event, even if there was no general principle permitting
him to do so, the circumstances were sufficiently exceptional to
permit him to do so.
In Canada in the case of Lunenburg v. Pub.
Service Comm. of Bridgewater (1983), 34 C.P.C.
235, the Nova Scotia Supreme Court, Appeal
Division faced a situation remarkably similar to
the one before us, and its decision is properly
summarized by the headnote in the following way
[at pages 235-236]:
The oral decision of the County Court Judge did not dispose
of the proceeding; the proceeding was not disposed of until
there was an order duly entered, and as a result the Judge was
not functus officio at the time he issued the written addendum
to his decision. There was no question of a clerical error or
omission here, so that Nova Scotia Civil Procedure R. 15.07
did not apply.
It is my opinion therefore that the Trial Judge's
determination was correct and the appeal should
be dismissed with costs.
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