Does a corporate taxpayer have to be represented by a lawyer before the Tax Court of Canada? Can a company’s director represent the company? These questions were considered by the Federal Court of Appeal in HMQ v BCS Group Business Services Inc.
In BCS, the company brought a motion under subsection 30(2) of the Tax Court of Canada Rules (General Procedure) (the “Rules”) to have its sole shareholder, director, and principal officer act on the company’s behalf before the Tax Court of Canada.
Section 17.1 of the Tax Court of Canada Act (the “Act”) provides that a party to a proceeding before the Tax Court may appear in person or be represented by counsel. Where a party wishes to be represented by counsel, only a lawyer may represent the party. However, subsection 30(2) of the Rules (“Rule 30(2)”) provides that where a party to a proceeding is not an individual (such as a corporation), that party shall be represented by a lawyer except with leave of the Tax Court. Hence, there is a contradiction in the Act and the Rules: on one hand, section 17.1 of the Act says that a party who wishes to be represented by counsel must be represented by a lawyer; on the other hand, Rule 30(2) says that a corporation must be represented by a lawyer unless it has been granted leave of the Tax Court.
In 2017, the question of who may represent a corporation in proceedings before the Tax Court was considered in Masa Sushi Japanese Restaurant Inc. v. The Queen, 2017 TCC 239. In that decision, the Tax Court found that a corporation, being a legal fiction, cannot appear “in person”, so its only option is to be represented by a lawyer under section 17.1 of the Act. Therefore, the court found Rule 30(2) to be ultra vires.
In BCS, the Tax Court disagreed with the decision in Masa Sushi and allowed the company’s motion. The Tax Court noted that the Act and Rules allow directors and officers of a corporation to be the “in person” embodiment of the corporation. On this basis, the Tax Court held that a corporation is allowed to appear before the Tax Court in person and does so by seeking leave under Rule 30(2).
On appeal to the Federal Court of Appeal, the only issue was the meaning of the words “in person” in section 17.1 of the Act. The Federal Court of Appeal concluded that since “in person” means “physically present”, it is logical to conclude that only an individual has the option to appear in person or be represented by a lawyer. Accordingly, the Federal Court of Appeal held that a corporation has no choice but to be represented by a lawyer.