Executive Summary: Key Legal and Evidentiary Issues

• Corporate parties in Tax Court general procedure must be represented by counsel unless special circumstances justify otherwise.

• No financial hardship was shown; the Appellant previously retained and paid four lawyers.

• The complexity of the donation scheme and evidentiary burdens makes self-representation impractical.

• The Appellant filed and then withdrew a flawed motion to admit public records, incurring wasted costs.

• Mr. Khunkhun’s familial connection to a key witness creates an unavoidable conflict of interest.

• The Court ordered the Appellant to appoint counsel by May 5, 2025, or risk dismissal of the appeals.

Background of the appeals

The Appellant, 684761 B.C. Ltd., brought two appeals concerning its 2008 taxation year. The first appeal, commenced in 2013, challenges a reassessment disallowing a claimed charitable donation of $936,000. The Respondent alleges this donation was part of a complex scheme involving related litigation and the involvement of Mr. Onkar Khunkhun’s brother-in-law.

The second appeal, initiated in 2017, contests an additional assessment imposing a gross negligence penalty under subsection 163(2) of the Income Tax Act. This penalty relates to the same $936,000 donation. Because this assessment was made beyond the normal reassessment period and without a waiver, the Crown must prove misrepresentation attributable to neglect, carelessness, or willful default under subparagraph 152(4)(a)(i) of the ITA.

Procedural motions and legal framework

The Appellant filed two motions: one for leave to allow Mr. Khunkhun, its sole shareholder, director, and officer, to represent the corporation in Tax Court under subsection 17.1(1.1) of the Tax Court of Canada Act and subsection 30(2) of the Tax Court of Canada Rules (General Procedure), and a second motion to admit public records into evidence. The latter was withdrawn at the hearing’s outset.

Under subsection 17.1(1.1), corporate parties in general procedure cases must be represented by counsel unless the Court grants leave due to “special circumstances.” These same principles were historically applied under subsection 30(2) of the Rules, even before the 2024 statutory amendment.

Court’s analysis and findings

Justice David E. Spiro denied the motion for self-representation based on three primary factors:

1. No financial impediment: The Appellant had been represented by four lawyers over the course of the litigation, none of whom cited non-payment as the reason for withdrawing. Mr. Khunkhun consistently funded the Appellant, and there was no suggestion this would change.

2. Inadequate capability for trial representation: Mr. Khunkhun demonstrated a lack of familiarity with legal procedures. He filed an ill-founded motion to admit public records and could not articulate the applicable legal test for his own motion. Additionally, since his brother-in-law is a key witness, Khunkhun would face inherent difficulties in handling witness examinations.

3. Inability to prepare for trial: The trial involved complex evidentiary burdens, with differing onus in each appeal. Strategic decisions concerning consolidation, order of proceedings, and witness handling were beyond the scope of an untrained layperson. The evidence dated back 17 years, further complicating preparation.

Outcome and orders of the Court

The Court dismissed both motions: the request for self-representation and the withdrawn motion to admit public records. Costs were fixed at $700 for the representation motion and $350 for the evidence motion. The Appellant was ordered to appoint counsel of record by May 5, 2025. Failure to do so may result in a show cause hearing or a motion to dismiss both appeals for want of prosecution.