What is the Fast-track Settlement Conferences Process?

August 18, 2020 Talar Stockton

As the Tax Court of Canada (TCC) reopens, questions remain regarding new procedures and protocols.

The TCC closure prevented the court from hearing over 1,000 hearings, causing backlog and delays.¹ The fast-track settlement and preliminary ruling docket procedure can be used to expedite appeals.

In this post, we explain how these measures work.

The Fast-track Settlement Conference Process (FTS)

The Fast-track Settlement Conference Process was introduced on July 21, 2020, in the TCC’S Practice Note No. 24. The FTS is a temporary initiative that provides an additional avenue for appeal resolution.²

FTS Procedure

Parties must file a joint written request with the Court, “to the attention of the Chief Justice or Associate Chief Justice.”³ The FTS process does not require parties to have made a written offer of settlement. An FTS can “only be initiated by a joint application and no party may unilaterally apply.”⁴

Parties are encouraged to file their application by July 2020.⁵

The request cannot be longer than 12 pages and must include:

The amount in issue;
Material facts in dispute;
Key issues to be discussed at the settlement conference;
Each party’s position on issues to be discussed;
Why parties believe their appeal is suitable for a settlement conference;
Any settlement offers that have been made to date;
The appeal’s current stage of discovery; and
The parties’ preferred venue for a settlement conference, being one of Vancouver, Toronto, or Montreal.⁶

The official language the request is written in will be the language used at the hearing.⁷

After the application is made, assigned judges may contact parties (either jointly or individually) to determine if the appeal is suitable for the FTS process.⁸ ⁹

The judge will provide the parties with a date and location for the conference (in Vancouver, Toronto or Montreal, with the possibility of remote conferences).¹⁰ FTS conferences will be scheduled within 90 days of the request.¹¹ Conferences will take place in October and November 2020. There is a strictly limited ability to change conference dates.¹²

Eligibility for FTS

Parties must be filing General Procedure appeals to be eligible for the FTS process. A reply to the Notice of Appeal must have been filed. Both parties must agree, in writing, to apply for an FTS conference.¹³

Failure to Settle Appeal

If parties fail to settle their appeal through the FTS process, the appeal returns to the scheduling queue at the “same stage as it was prior to the fast-track settlement conference being held.”¹⁴ The judge who conducted the settlement conference will not sit as the trial judge if the appeal goes to trial, and cannot communicate with the trial judge about the conference.

The Preliminary Ruling Docket Procedure

The TCC introduced the preliminary ruling docket procedure as a pilot project in December 2019, as a cost-effective path for parties seeking resolutions through the Court. Those whose appeals are accepted into the preliminary ruling docket receive a non-binding preliminary ruling on their appeals from a TCC judge.¹⁵

Hearings will take place in Toronto and Vancouver. Due to the COVID-19 pandemic, the Court added an additional year to the pilot project’s duration, so the project will run until December 31, 2021.¹⁶

Eligibility

An appeal qualifies for the preliminary ruling docket if:

The trial is expected to last more than two days;
A preliminary hearing ruling is expected to last no more than two days;
Both parties are represented by counsel;
The appeal is a general procedure appeal;
Appeal only involves questions of fact or mixed fact and law
If the appeal is under the Income Tax Act, either the a) aggregate amount of all amounts in issue is greater than $25,000 and less than or equal to $300,000 per taxation year or b) the amount of loss that is determined under subsection 152.1(1) of the Income Tax Act and is in issue is more than $50,000 but less than or equal to $600,000 per year
in the case of an appeal under Part IX of the Excise Tax Act, the amount in dispute is greater than $50,000 and less than or equal to $300,000 per reporting period.¹⁷

Procedure

Parties must make a joint application for a preliminary ruling on a written appeal within 120 days of the close of pleadings.¹⁸ The Court requests applicants include the following information to assess whether the case is appropriate for the preliminary ruling:

Reasons why the parties believe a preliminary ruling would be beneficial;
Parties’ estimate of the length of the trial if the appeal were to proceed to trial;
Parties’ estimate of the length of the preliminary ruling hearing;
Amount in issue (excluding interest) by taxation year or reporting period;
Whether there are any related appeals;
Number of witnesses each party intends to call to preliminary ruling hearing;
If a party wishes to call forth an expert witness, an explanation of exceptional circumstances that would justify the Court allowing for such a witness to be called;
A list of documents that each party intends to submit at the preliminary ruling hearing and why they are relevant to the issue.¹⁹

The Court will decide if the case is suitable to be placed on the preliminary ruling docket and will advise applicants accordingly.²⁰

If you are able to proceed with a preliminary ruling hearing, you must serve and file a pre-hearing brief at least 15 days prior to the hearing. This brief should be under 20 pages and include facts, issues, law, and analysis that you intend to use.²¹

The judge will issue a ruling within 60 days after the hearing has ended. The two parties will have 30 days to formally consent or disagree with the ruling.²²

If the parties agree with the ruling, they will jointly file their consent on a without costs basis, in accordance with the judge’s ruling.²³ If parties do not consent, the case returns to the typical litigation timetable and continues under General Procedure with a different judge. ²⁴ If only one party rejects the ruling, the primary ruling becomes a settlement offered on the non-accepting party by the accepting party.²⁵

Conclusion

If you are thinking of applying for either the fast-track settlement or the preliminary ruling docket, consult the official TCC website to apply for each program.

Also, refer to our post regarding updates around the TCC’s reopening, including safety procedures and precautions. Don’t forget to check the TCC’s website regularly in order to stay up-to-date with any changes that may happen.