Federal Court of Appeal: A Corporation Must be Represented by Counsel in Tax Appeals

After a series of conflicting decisions from the Tax Court of Canada on the issue of non-lawyers representing corporate taxpayers in General Procedure appeals, the Federal Court of Appeal has clarified that a corporation cannot appear “in person” and must be represented by counsel.

In BCS Group Business Services Inc.[1], the Tax Court granted the corporate taxpayer’s motion seeking leave to have its sole shareholder, director, and principal officer act on its behalf in its General Procedure appeal. The Crown appealed. At the outset, the Federal Court of Appeal noted that its role is not to change the authentic meaning of legislation when it is properly interpreted: “We are not to envisage what the best policy might be, or examine our own personal preferences about who should represent corporations before the TCC in a proceeding subject to the General Procedure. Instead, our task is to interpret the legislation following the accepted method set out by the Supreme Court of Canada and call it as it is.”[2]

Section 17.1 of the Tax Court of Canada Act provides:

Right to appear

17.1(1) A party to a proceeding in respect of which this section applies [General Procedure] may appear in person or be represented by counsel, but where the party wishes to be represented by counsel, only a person who is referred to in subsection (2) shall represent a party.

Officers of the Court

(2) Every person who may practise as a barrister, advocate, attorney or solicitor in any of the provinces may so practise in the Court and is an officer of the Court.

Unless limited by legislation, courts have an implicit power or discretion to control their own process. As a result, courts have adopted rules of procedure allowing them to grant leave to corporations to be represented by individuals other than counsel in special circumstances. Rule 30 of the Tax Court of Canada Rules (General Procedure) provides in part:

Representation by Counsel

30(1) Subject to subsection (3), a party to a proceeding who is an individual may act in person or be represented by counsel.

(2) Where a party to a proceeding is not an individual, that party shall be represented by counsel except with leave of the Court and on any conditions that it may determine.

The Crown argued that even though a corporation has the status of a separate legal entity and is a legal person, it has no physical body so it cannot appear in person at the hearing as is required by the ordinary meaning of the expression “in person”. As a result, it must be represented by a physical person, in this case, a lawyer. The corporate taxpayer argued that a corporation is a person and a party to the appeal, and in accordance with section 17.1, the corporation can exercise its right to appear in person through someone who personifies the corporation.

In accordance with the modern approach to statutory interpretation, the Federal Court of Appeal examined the legislative framework, the grammatical and ordinary meaning of the words “in person”, other uses of the words “in person” in the Tax Court of Canada Act, and the object and purpose of section 17.1 to determine that a corporation can only be represented by counsel in a General Procedure appeal.

[1] BCS Group Business Services Inc. v The Queen, 2018 TCC 120.

[2] The Queen v BCS Group Business Services Inc., 2020 FCA 205 at para 3.

The foregoing information provides only an overview of Federal tax appeals. If you have questions in the above regard, please contact Alanna Mar at 613-566-2273 or at [email protected].