Two months after their marriage, the taxpayer received from her husband (“CC”) the transfer of a property valued in excess of his subsequently assessed tax liabilities for various taxation years including his 1988 and 1989 years (as a result of losses from a partnership investment being denied). The Crown now acknowledged that it had failed to establish that CRA had received a timely waiver by the CC for his 1988 year, but argued that the taxpayer was now precluded from raising this issue since the group appeal by CC and the other taxpayers involved in the partnership venture had been dismissed (in Makuz, 2006 TCC 263) and, furthermore, that it was an abuse of process for this issue to now be raised in the taxpayer’s s. 160 appeal.
Biringer JA confirmed the Tax Court’s finding (based on Gaucher) that the taxpayer was not precluded from disputing the validity of the assessments of her under s. 160(2) on the grounds that the waivers proffered by CRA were invalid, even though this issue might have been raised, but was not, in the Makuz appeal. In rejecting the Crown’s abuse of process submission, she stated (at para. 23):
Here, the statute-barred issue in respect of the underlying reassessments was not before the Tax Court in Makuz, the respondent was not a party to that litigation and the Tax Court determined that it was “untenable” to expect her to have raised the issue. The respondent’s personal liability is now at issue. Fairness and respect for the “basic rule of natural justice” referred to in Gaucher outweigh concerns for possible inconsistency in the decisions.