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2026-10-30

Grier, 2017 FCA 129: no bias and no unfairness in a Fiscal Arbitrators penalty appeal heard under the informal procedure

2017 FCA 129 · Federal Court of Appeal

Provisions

ITA s. 163ITA s. 244

Text

Author: Sas Tullo

This is a Federal Court of Appeal decision in one of the many appeals by former clients of Fiscal Arbitrators, the tax preparer that persuaded thousands of Canadians to claim fictitious business losses. Mr. Grier had lost in the Tax Court, which upheld a gross negligence penalty for 2009. On appeal he did not dispute the penalty but argued that the trial judge was biased, that he was unfairly refused an adjournment, and that his Charter argument was brushed aside. The Court of Appeal dismissed the appeal. The decision matters to self-represented taxpayers because it explains what the informal procedure does not give them, and how high the bar for an allegation of bias is.

Facts

Mr. Grier claimed a business loss of $120,572 for 2009, described as receipts “as agent” of $18,664.06 less an “amount to principal from agent” of $139,236.06, and requested carrybacks to 2006, 2007, and 2008 totalling $104,755. His only other 2009 income was $15,817 in unemployment insurance benefits. He received refunds of $20,831.56 before reassessments denied the loss (para 4). The Tax Court dismissed his appeals and upheld the gross negligence penalty (para 1); the only issue at trial was whether the penalty for 2009 under subsection 163(2) of the Income Tax Act was justified (para 2).

Mr. Grier was the only witness and produced no documentary evidence of any business; his only document was an affidavit sworn on the morning of the hearing, March 21, 2016. The Minister relied on his examination, his own CRA filings and correspondence, and an affidavit of a CRA officer under subsection 244(9) (para 5), documents he appears to have received four days before the hearing (para 6).

The Tax Court found, in a detailed oral decision, that Mr. Grier had been wilfully blind in placing his absolute trust in Fiscal Arbitrators, applying the indicia in Torres v. The Queen, 2013 TCC 380 at para 65, confirmed in Strachan v. The Queen, 2015 FCA 60 (para 3). The affidavit asserted that labour is private property that cannot yield a taxable gain and that source deductions offend “section 15.1” of the Charter because individuals are not treated like major corporations (para 8); the Tax Court called it boilerplate generated by Fiscal Arbitrators and its imitators (para 10). The decision under appeal is not reviewed here.

Issues

Mr. Grier, representing himself, did not contest the findings on the assessment. He argued that the Tax Court breached its duty to act fairly and failed seriously to consider his affidavit (para 7), including his subsection 15(1) Charter argument (para 8). The bias allegation rested on the refusal of an adjournment, disregard of a case management order of August 5, 2015, inappropriate language, and the brevity of the reasons on his position (para 20). He also raised, for the first time, subsection 6(2) of the Charter (para 17).

Holding

The appeal was dismissed with costs fixed at $1,000, all inclusive (para 36). The subsection 15(1) argument was not properly raised and had no merit (paras 14-16); the subsection 6(2) argument was new and not considered (para 17); the refusal of the adjournment was not unfair (paras 32-33); and the judge’s language did not give rise to a reasonable apprehension of bias (paras 34-35).

The court’s reasoning

Gauthier J.A. wrote for a panel that included de Montigny and Woods JJ.A. On the Charter argument, Mr. Grier could not say at the hearing what wages he meant or what evidence supported the claim (para 11), nor identify the ground of discrimination relied on (para 12); the panel had faced a similar situation days earlier in Engel v. Canada, 2017 FCA 122 (para 13). The argument was not in the notice of appeal, and no notice of constitutional question had been served under section 19.2 of the Tax Court of Canada Act, normally a prerequisite to a Charter challenge (para 14). The Tax Court’s brief treatment was unsurprising (para 15), and in any event the discrimination alleged was not based on an enumerated or analogous ground (para 16). The subsection 6(2) argument, undeveloped and never raised below, would not be entertained (para 17).

On bias, the Court stressed that the allegation questions the integrity of the trial judge and of the administration of justice and requires convincing evidence (para 18). The test asks whether “an informed person viewing the matter realistically and practically conclude that the judge would not decide fairly” (para 19). There is no absolute right to an adjournment to retain counsel, citing Wagg v. Canada (Attorney General), 2003 FCA 303 at para 19 (para 22). Mr. Grier had asked for time to “discover” the Minister’s documents and then said a lawyer he hoped to retain was too busy (paras 23-24). His real reliance was on the order of August 5, 2015, which set general procedure deadlines for documents and discovery (para 25); the Minister explained that it had been issued in error during case management of some 321 Fiscal Arbitrators appeals, and Mr. Grier had not answered the Tax Court’s request for comments (para 26).

The Tax Court was right to proceed. Mr. Grier had elected the informal procedure, to which the General Procedure Rules do not apply and which is meant to deal expeditiously with appeals by self-represented litigants (para 28). Under subsection 18.15(3) of the Tax Court of Canada Act the Court is not bound by technical rules of evidence and must proceed as informally and expeditiously as fairness permits (para 29). The order was spent, and discovery is generally unavailable under the informal procedure (para 30). The Tax Court retained the power to admit the Minister’s documents, which Mr. Grier said he did not recall receiving, having forwarded CRA correspondence to Fiscal Arbitrators (para 31), and which mostly evidenced the facts pleaded in his own notice of appeal (para 32); it had treated both sides alike by allowing his affidavit without notice (para 33). The trial judge had used stronger language than he should have (para 34), but he later made clear that he meant the arguments were nonsensical, which alone could not establish a reasonable apprehension of bias (para 35).

Practical implications

The decision belongs to a cluster of June 2017 judgments on Fiscal Arbitrators appeals; its companion, Engel v. Canada, 2017 FCA 122, reached the same result (para 13). On the merits the law is settled; the Torres indicia, approved in Strachan, support a finding of wilful blindness where a taxpayer claims an implausible loss on the preparer’s say-so (para 3). Section 163 of the Income Tax Act has been amended several times since 2017, most recently in 2026, but the opening words of subsection 163(2), which impose the penalty for a false statement made knowingly or under circumstances amounting to gross negligence, are unchanged on the Justice Laws website.

In my view the enduring value of the case lies in its procedural rulings. A taxpayer who elects the informal procedure cannot later insist on general procedure discovery, even where a case management order mistakenly imposed it (paras 28-30). Late admission of the taxpayer’s own filings and CRA correspondence is not unfair (para 32). A Charter challenge must be pleaded with a notice of constitutional question, failing which the trial judge may deal with it summarily (paras 14-15). And intemperate language from the bench, while not condoned, will not establish bias where the judge’s meaning is clarified and the hearing was even-handed (paras 18, 34-35). Whether an appeal was taken is not verified here.

For a self-represented taxpayer, the case is a reminder that the informal procedure trades procedural tools for speed, and that a constitutional point must be raised before the hearing, with the required notice. For advisers, it closes another door on the Fiscal Arbitrators scheme.

This comment is general information, not legal advice. The law may have changed since the decision; check the current text in the tax wiki.

Grier v. Canada, 2017 FCA 129, reasons for judgment delivered at Ottawa on June 20, 2017, after a hearing at Toronto on June 15, 2017; Gauthier, de Montigny, and Woods JJ.A. (reasons by Gauthier J.A.); docket A-135-16. Reasons on the Federal Court of Appeal’s site. Also on CanLII. The appeal was from the oral judgment of Rowe D.J. of the Tax Court of Canada dated March 31, 2016, in docket 2013-1837(IT)I, an informal procedure appeal for which no published reasons with a neutral citation were found on the Tax Court’s site.