No Abuse Of Process By Re-Litigation

Tedesco et al1 concerned whether it would be an "abuse of process by re-litigation" if members of a partnership continued to pursue an appeal relating to the validity of a partnership loss determination, after the partnership discontinued its Tax Court of Canada ("TCC") appeal for the same issue. The TCC had struck the individual appellants' notices of appeal but the Federal Court of Appeal ("FCA") reversed and reinstated the appeals.

The appellants were partners in TSI I Limited Partnership (“TSI”), which allocated losses to partners in 2000 and 2001. Each appellant claimed some portion of those losses in determining their income in those years. The Minister of National Revenue (“Minister”) determined that the TSI losses were nil and issued notices in March, 2006. TSI filed notices of objection (“NOOs”) and the Minister ultimately confirmed the determinations. The appellants were reassessed to deny the partnership losses they claimed, they filed NOOs and the reassessments were confirmed. TSI and each appellant filed a notice of appeal to the TCC. The TSI appeal proceeded first. TSI discontinued its appeal by notice of discontinuance, resulting in the deemed dismissal of the appeal pursuant to ss. 16.2 (2) of the Tax Court of Canada Act (“TCC Act”).

Each appellant raised in their notices of appeal the same issues that TSI raised, although they ultimately only pursued the issue of whether the Minister's loss determinations were statute-barred. After the TSI appeal was discontinued, the Crown sought to strike the individual appellants' appeals. The TCC judge raised a preliminary issue concerning the TSI appeal of the Minister's loss determinations: pursuant to ss. 165(1.15),2 an objection to a determination is made by a member of the partnership, and that person must be designated for that purpose in an information return or otherwise expressly authorized by the partnership. TSI was the partnership and not a member. The TCC judge stated that it was unclear why TSI appealed instead of a partner on behalf of the partnership. However, because the formal validity of the appeals had not been previously challenged, TSI's appeal was treated as having been filed on behalf of all of the partners, but also has having been dismissed on behalf of all of the partners when TSI's TCC appeal was discontinued. The TCC judge went on to conclude that if the appellants were allowed to continue to appeal on the basis of the statute-barred argument, that would...