Balancing Comity and Convenience: Jurisdictional Issues Raised by Virtual Examinations

The Rules – In Person Attendance as Default Procedure 

The default procedure under the Tax Court of Canada Rules (General Procedure) requires that witnesses be physically present in Court for an oral examination at a hearing.[1] However, the Court possesses the discretion to direct that any step in an appeal may be conducted by videoconference,[2] and may further dispense with compliance with any rule at any time, where and as necessary in the interests of justice.[3]

The Court permits parties to jointly apply for a virtual or hybrid proceeding.[4] The application form requires counsel to provide the location and time zone (during the virtual proceeding) for each of the counsel, parties, witnesses, and other participants. The Court’s Virtual and Hybrid Proceeding Guide provides that, on the instruction of the presiding Court Registrar, witnesses will take an oath or make a solemn affirmation.

Outside of providing the location of a witness, the application form does not address whether the local laws applicable to a witness located in a foreign country may present an obstacle to the giving of that testimony at trial, even where a witness is prepared to do so voluntarily.

While some jurisdictions have permissive domestic legislation (for example, in the United States, subsection 1782(b) of Title 28 of the United States Code permits any individual in the United States to voluntarily provide testimony for use in a foreign proceeding by “any manner acceptable to [them]”[5] with respect to depositions) some jurisdictions may have blocking legislation in force which prohibits the taking of testimony by video link, or requires advance permission to do so. Accordingly, a party seeking to introduce virtual testimony from a witness located in a foreign jurisdiction should raise the issue in advance and on direction from the Court. Counsel should determine whether the law of the state where the witness is located permits virtual participation, and if any additional permissions from a foreign authority are required, for example, a Letter of Request seeking the direct taking of evidence using videoconferencing. A helpful starting point in the analysis of potential foreign requirements are the international treaties and commentary discussed below.

Canadian Criminal Procedure

In other Canadian procedures, s. 714.2 of the Criminal Code[6] expressly addresses the taking videoconference evidence from abroad in criminal proceedings, which can include tax fraud.[7]It provides that a court shall receive evidence by videoconference from a witness outside of Canada, unless it can be demonstrated receiving such testimony would be contrary to the principles of fundamental justice.[8] A party who wishes to call a witness by videoconference outside of Canada shall give notice to the court and the other parties at least 10 days before the witness is scheduled to testify.[9] If a court declines to receive the evidence, it shall include its reasons in the record.[10]

Subject to complying with the 10-day notice requirement, s. 714.2 clearly places the onus on the party objecting to the video link to demonstrate why it would be contrary to the principles of fundamental justice (rather than using a lesser test like being prejudicial to the other party).[11]

When a witness is located outside of Canada, the oath or affirmation shall be given either (a) in accordance with Canadian law, (b) in accordance with the law of the jurisdiction where the witness is, or (c) in any manner that demonstrates the witness understands they must tell the truth.[12]

The Criminal Code expressly deems videoconference evidence from abroad to be as if it were given in Canada, and in accordance with Canadian law for the purpose of Canadian laws concerning evidence, procedure, perjury, and contempt.[13] This deeming provision renders section 6(2) of the Criminal Code inapplicable, which generally prohibits a person from being convicted of perjury committed outside Canada. (The potential for conflicts between s. 714.2 and the foreign law of a witness is beyond the scope of this paper).   

Section 714.1 provides criteria for a court to consider when determining whether to accept evidence from a witness via audio or video conferencing from within Canada, including: (a) the location and personal circumstances of the witness, (b) the costs that would be incurred if the witness were to appear in person, (d) the suitability of the location where the witness will give evidence. The appropriate parameters for trial judges to consider in permitting videoconference testimony within Canada has been further outlined by appellate Courts.[14] CRA employees have been permitted to testify virtually from within Canada in proceedings relating to criminal tax offences pursuant to this provision.[15]

Conventions and International Guidance

The Permanent Bureau of the Hague Conference on Private International Law has prepared a Guide to Good Practice on the Use of Video-Link under the Evidence Convention,[16] a thorough resource on issues arising in connection with international virtual testimony.

For example, the Guide notes that the probative value of the testimony itself may also be deemed less when a video-link is used, depending on whether the relevant penal provisions (e.g., relating to perjury or contempt) are enforceable in the place from which the witness is providing evidence.

Additionally, the Guide emphasizes that video conferencing is a compliment to, and not a substitute for, the traditional methods of obtaining evidence.[17] In situations where it might be necessary to employ video conferencing for obtaining evidence, permission should be sought from the country in which the evidence is being obtained.[18] In situations where a letter of request is provided the following legal safeguards have been recognized to ensure compliance with international law, these safeguards are not definitive nor exhaustive in relation to the use of letters of request:

1. The request is made in writing, contains all necessary information, and is accepted by the competent authority;
2. The request falls within the scope of the relevant treaty;
3. The request is technically feasible;
4. The request is not contrary to the national law or fundamental legal principles of the contracting parties involved;
5. The taking of evidence is performed on a voluntary basis without the need for coercive measures.[19]

While Canada is not a signatory to The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters,[20]  the country profiles[21] prepared by party states indicate whether those state’s domestic laws allow a foreign Court to directly take evidence by video-link. Note that opinion is divided as to whether taxation matters fall within the scope of the Convention.[22]

The European Union has also enacted legislation that provides a helpful roadmap for international judicial cooperation with respect to videoconference examinations.  On July 1, 2022, the European Parliament enacted an Evidence Regulation[23] which would allow the Court of a Member State to take evidence directly from another Member State by videoconference, after having asked permission from the designated central authority of that Member State through the exchange of forms. Notably, the direct taking of evidence by the requesting Court may only take place if it can be carried out on a voluntary basis without the use of coercive measures.

Conclusion

As noted above, the Tax Court has not yet established a standard procedure for requests to admit virtual testimony from abroad at trial and there are no analogous deeming provisions to those in the Criminal Code permitting virtual testimony as though given in Canada. In recent panel discussions, members of the Tax Court have encouraged counsel to consider these issues in advance and have cautioned that litigants should not expect the Court to allow video testimony without prior notice.

A party requesting that the Tax Court exercise its discretion to allow virtual testimony in a hearing should address the issue with Counsel and the Court well in advance of trial to obtain judicial approval. Depending on the legislation and treaties in the state where the proposed witness is located, counsel may consider relying on an affidavit from a foreign legal professional establishing that direct video testimony is permissible under foreign laws, or obtaining a letter of request to take direct virtual testimony.

 

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