Executive Summary: Key Legal and Evidentiary Issues

• Appellant Amir Salehi sought to amend his notice of appeal after the evidentiary portion of the trial had closed, raising a new argument regarding the purchaser's HST registration status under s. 221(2) of the Excise Tax Act.

• Judicial notice of CRA website search results regarding Heritage Seven Properties Ltd.'s GST registration status was refused by the Court.

• An affidavit submitted in support of the motion was rejected because it was based on information sourced from the appellant's own counsel, violating the prohibition against solicitors acting as both witness and advocate.

• The test for amending pleadings post-evidence was assessed under Canderel, Continental Bank Leasing, and Family Delicatessen, balancing fairness, timeliness, and the interests of justice.

• Re-opening of evidence was evaluated against the two-part Sagaz test — likelihood of changing the outcome and due diligence — with the Court finding the criteria are not exhaustive under Rule 138.

• Costs of the motion were fixed at $1,200 payable by the appellant in any event of the cause, with the respondent's request for $50,000 in costs thrown away deferred to the conclusion of the trial.

The underlying dispute and the sale of two properties

Amir Salehi appealed an assessment of Harmonized Sales Tax (HST) by the Canada Revenue Agency (CRA) on the sale of two new houses. The appeal, filed under docket 2022-31(GST)G, was heard before Justice Michael U. Ezri at the Tax Court of Canada in Toronto. The two properties at issue were 58 Walder and 17 Dunblaine Avenue. It was the assessment relating to the second property, 17 Dunblaine Avenue, that gave rise to the motion at the centre of this decision. The purchaser of 17 Dunblaine was Heritage Seven Properties Ltd., which acquired the property from the appellant or his mother.

The trial proceedings and the last-minute request

The trial unfolded over four days in December 2025, and by December 18, 2025, the evidence was essentially concluded for both parties. On that date, after housekeeping matters were addressed and the respondent closed its case, Justice Ezri asked the appellant whether his case was also closed. Rather than confirming closure, appellant's counsel made an unexpected request: she asked the Court to take judicial notice of a document — specifically, a printout from the CRA's website that she had obtained on December 17, 2025, querying whether Heritage Seven Properties Ltd. had been registered for HST at the time it purchased 17 Dunblaine. Counsel proposed that this would ground an argument under s. 221(2) of the Excise Tax Act (ETA), asserting that the appellant was not obligated to collect GST on the sale because the purchaser, as a registrant, would directly report and remit the tax to the CRA.

The judicial notice and pleading issues

Justice Ezri declined to take judicial notice of the registration status of Heritage Seven Properties. The Court observed that the document counsel handed up was not an Interpretation Bulletin as she had analogized, but rather CRA website search results. The request also raised a more fundamental problem: the argument based on s. 221(2) of the ETA had never been pleaded by the appellant. The notice of appeal did not allege that Heritage Seven was registered for HST, and the s. 221(2) argument was not part of the original case. While the appellant attempted to argue the position was implicitly raised by including section 221 in the pleaded provisions, the Court and respondent pointed out that s. 221 applied equally to both properties, and the real issue being raised was not whether the tax was exigible but rather who would remit the tax if the sale turned out to be subject to tax — a materially different question. The Court also noted that during the cross-examination of the CRA auditor, the appellant's counsel had asked whether the purchaser had been registered, but the auditor did not know the answer. Recognizing the potential importance of the issue, the Court adjourned the hearing and invited the appellant to bring a motion to amend his pleadings and re-open the evidence.

The motion to amend pleadings

The appellant subsequently brought a motion to file an amended notice of appeal alleging that Heritage Seven was a GST registrant as of the date of the purchase of 17 Dunblaine and raising an argument under paragraph 221(2)(b) of the ETA. Justice Ezri noted that the amended notice of appeal incorrectly asserted that no tax was exigible if the appellant was a builder; in fact, if the appellant is a builder, tax is exigible, but the question was whether the appellant was required to collect tax from Heritage Seven or whether Heritage Seven would directly report and remit tax to the CRA. Despite these issues, the Court was satisfied the respondent understood the case it had to meet. Applying the legal test for amending pleadings, the Court referenced Canderel Ltd v R, which held that the nearer to the end of the trial a motion to amend is made, the more difficult it will be to get through the hurdles of injustice to the other party and the interests of justice. The Court also cited Continental Bank Leasing Corporation v R, which emphasized a balancing of factors including timeliness, potential delay, reliance by the opposing party, and whether the amendment would facilitate the court's consideration of the true substance of the dispute. Additionally, the Court referenced Family Delicatessen Ltd v London (City of), which held that at some point, delay in seeking an amendment will be so lengthy, and the justification so inadequate, that prejudice to the responding party will be presumed. On balance, the Court found the amendment should be allowed, reasoning that the facts regarding the GST status of Heritage Seven were relatively straightforward and the respondent had not alleged any prejudice that was not compensable by costs.

The rejected affidavit

The appellant's motion included an affidavit sworn by a law clerk/paralegal of the appellant, attaching two printouts as exhibits. However, the affiant was not the person who procured the printouts — the affidavit deposed that counsel for the appellant had conducted the search attached as the second exhibit, without specifying which of the two appellant's counsel actually did so. Justice Ezri refused to accept the affidavit, citing the well-established principle that counsel should almost never be the affiant or the source of an affiant's information on a contentious matter, as a counsel who acts as an affiant or whose evidence comes before a court via a conduit becomes in effect a witness and puts their credibility into issue. The Court relied on Canada v Irving Equipment, which explained that counsel acting as a witness risks conflicts of interest between advocacy and truthful testimony, and referenced Federal Court Rule 82, which provides that a solicitor shall not both depose to an affidavit and present argument to the Court based on that affidavit. The Court also cited Manraj v Bour and Gutierrez v Watchtower Bible and Tract Society of Canada, reinforcing that a lawyer cannot circumvent this prohibition by having someone else swear an affidavit based on information and belief from the lawyer.

Re-opening of evidence

Beyond amending pleadings, the appellant also needed to re-open the evidence — a pleading that Heritage Seven was registered for the GST would be of no value if evidence on the point could not be adduced. Applying the Sagaz test, which requires that the new evidence would likely change the outcome of the case and that the evidence could not have been obtained before trial through the exercise of due diligence, the Court acknowledged the appellant fell short on the second branch. There was no particular reason why the appellant did not raise the issue of Heritage Seven's registration status at an earlier stage — the matter could have been considered at the audit stage, the objection stage, or at any point throughout the litigation process; the appellant simply missed the issue. However, Justice Ezri held that the considerations under Rule 138 of the Tax Court Rules are not confined to the two Sagaz criteria, noting that the Supreme Court in Sagaz does not state the two criteria are exhaustive. Rule 138 grants broad discretion to re-open a hearing "for such purposes and upon such terms as are just." The Court weighed several countervailing factors: although the evidence was closed, the argument had not yet started and the case had not yet been decided, making re-opening less onerous than in Sagaz; the issue was fairly discrete, affecting only one of the two properties and relating to contained matters such as Heritage Seven's registration status and possible GST/HST filings; many of the central facts were likely already within the respondent's knowledge; and any time and expenses incurred by the respondent could be mitigated at least in part by costs awards. The Court also observed that the agreement of purchase and sale for Dunblaine provided that if the supply was taxable, then HST was included in the purchase price, meaning the appellant may have collected HST even if he was not supposed to have, without reporting or remitting the tax collected in error. Further, neither party had yet turned their minds to section 194 of the ETA, which addresses the communications about HST that may or may not pass between a vendor and purchaser of real property.

The ruling and outcome

Justice Ezri granted the appellant's motion to amend the notice of appeal and ordered the case re-opened on specific terms. The amended notice of appeal was deemed filed and served as of the date of the Order, February 12, 2026. The respondent was given until February 27, 2026 to file and serve an amended reply. A detailed timetable was set: supplemental document lists and copies to be exchanged by March 13, 2026; a further round of oral discoveries (each party allotted one half day) by March 27, 2026; undertakings answered by April 10, 2026; written follow-up questions served by April 24, 2026; and answers to follow-up questions served by May 15, 2026. The re-opening of evidence was expressly limited to permit only evidence relevant to the pleadings amendments, and all evidence at the resumption of the hearing remained subject to the rules of evidence. If a party wished to call an additional witness, a will-say statement was to be served no later than 15 days before the resumption of the hearing. The parties were to provide their availability for two days of hearing for the week of June 1, 2026, and also for the remainder of 2026 starting with the week of June 22, 2026, by February 27, 2026. The appellant was ordered to bear its own costs for all follow-up discovery and to pay the respondent's costs and disbursements for the documentary and oral discovery steps in accordance with the Tariff, in any event of the cause. The costs of the motion were fixed at $1,200, payable by the appellant to the respondent by March 13, 2026 — the tariff amount for a motion lasting a day or part of a day being $700, with the increase reflecting the avoidable nature of the motion and coverage for disbursements. The respondent's request for $50,000 in costs thrown away was deferred, with the Court noting it was too soon to adjudicate that issue before the appeal was heard and decided, and the respondent was free to renew the request at the end of the trial. No exact final monetary award in the underlying appeal can be determined at this stage, as the case remains ongoing.