Executive Summary: Key Legal and Evidentiary Issues

• Calroc Industries Inc. sought to file two affidavits from its chief financial officer as fresh evidence on its appeal of a Board of Revenue Commissioners decision upholding a provincial sales tax liability of $1,397,256.71.
   
• No prior case law had analyzed when s. 21(12) of The Revenue and Financial Services Act permits the Court to allow fresh evidence on appeal.
   
• Justice Sinclair held that the test in Palmer v The Queen governs, rejecting both the judicial review approach in Chaboyer v Saskatchewan and the Trademarks Act test in Products Unlimited, Inc. v Five Seasons Comfort Limited.
   
• Neither affidavit met the due diligence criterion, because the information was available to Calroc before the Board hearing.
   
• Credibility of an alleged complete set of customer invoices was contested, given the Board's finding that Calroc appeared to have manipulated or issued multiple versions of customer invoices.
   
• Interests of justice warranted admitting Calroc's first general ledger for July 2018 to December 2020 despite the lack of due diligence, since the auditor relied on it and Finance conceded its credibility.
   

Facts of the case

Calroc Industries Inc. received a notice of assessment on July 22, 2024 for unpaid provincial sales tax (PST) covering July 1, 2018 to April 30, 2024, following an audit by the Ministry of Finance. Finance initially determined that Calroc owed $1,623,597.82 in unremitted PST. After Calroc appealed, Finance found errors in its own calculations and issued a revised audit package on December 13, 2024, setting Calroc's liability at $1,397,256.71.

The revised calculation divided the audit into three periods. For July 2018 to May 2021, Calroc had reported collecting $561,667.91 in PST, while Finance, relying on a general ledger produced by Calroc (GL1), found that $681,223.81 had been collected, leaving $199,555.90 owing [figure as stated in the decision; the arithmetic difference between the two stated sums is $119,555.90]. Calroc reported no PST collected for June 2021 to February 2023, but Finance rejected that position based on information from Calroc's customers and other sources. Finance then estimated $430,500 owing for that period by averaging the PST collected in the 2018 to 2021 years under GL1. Using GL1, Finance also found unremitted PST of $234,908 for March 2023 to April 2024. Separately, Finance concluded that adjustments Calroc made to its PST payable account, labelled "Schedule 02 – Posting Errors" and totalling $206,850.70, were not supported by the documentation Calroc supplied. Calroc had tried to justify them with a second general ledger (GL2) containing different information than GL1. These amounts, plus interest and penalties, produced the $1,397,256.71 liability.

Unrepresented throughout the Board process, Calroc filed written submissions and documentary evidence on June 20, 2025. Finance filed its materials on August 5, 2025, and Calroc filed final submissions on August 18, 2025. At the September 4, 2025 hearing, Calroc's chief financial officer, Pam Wells, and Finance's auditor, Rebecca Douan, each testified and were cross-examined. Ms. Wells told the Board that Calroc was completing a forensic audit of PST collected from 2021 to 2024 and that its accounting program had "crashed." The record does not indicate that Calroc sought an adjournment to complete that audit. The parties also did not file the 2018 and 2019 portions of GL1. Ultimately, the Board upheld Finance's determination.

While still self-represented, Calroc filed an affidavit of Ms. Wells sworn December 19, 2025 (the First Affidavit), one page long excluding its five exhibits. Ms. Wells described Exhibit "A" as Calroc's "audited financial documents" and suggested it established that Calroc owes $309,510.37 in PST. Nothing on its face indicated it was audited. It appeared to be general ledger reports for January 1, 2018 to April 30, 2024, generated October 16, 2025, and the Court could not tell whether it mirrored GL1, GL2 or another ledger altogether. Other exhibits included an email chain with a customer about an invoice sent but not paid, a notice of application filed in Regina on October 24, 2025, an apparently unfiled originating application, and an affidavit of personal service with related documents not marked as filed.

After retaining counsel, Calroc filed a Second Affidavit containing far more narrative. In it, Ms. Wells admitted she had unknowingly given the auditor incorrect information. Exhibit "A" contained the GL1 information Ms. Douan reviewed for July 1, 2018 to December 31, 2020, most of which had not been before the Board. For the first audit period, Calroc disputed Finance's calculations only for July 31, 2018, August 31, 2018, December 31, 2018 and January 31, 2020. Exhibits "C" and "D" broke down GL1 information by month, with highlighting meant to show that Ms. Douan failed to account for journal entries that reversed other entries. Further exhibits included:

• an alleged complete set of original, uncancelled invoices issued from June 2021 to April 2024 (Exhibit "F"), with calculations based on them (Exhibits "G" to "K");
• a customer email requesting that an invoice be cancelled (Exhibit "L");
• an April 2024 bank statement showing a $187,173.75 deposit (Exhibit "M"), offered to show that Calroc received only 25% of an invoiced amount, on Calroc's argument that PST was payable only on the amount paid.

Remaining exhibits duplicated hearing book pages, some with highlighting, or set out Calroc's own calculations.

Policy and legislative provisions at issue

The appeal proceeds under The Revenue and Financial Services Act, SS 1983, c R-22.01. Section 62(1) permits the minister or an appellant to appeal a Board decision in accordance with ss. 21 to 23. Under s. 21(11), the Court applies correctness to questions of law and palpable and overriding error to questions of fact and mixed fact and law. Section 21(12) directs the Court to hear the appeal based on the material before the Board "and on any further material or evidence that the court may, on any terms that it considers appropriate, permit." Remedies under s. 21(13) allow the Court to affirm the Board's decision, amend or reverse it insofar as it rests on an error in law, or refer the assessment back to the minister for reconsideration.

Calroc contrasted s. 21(12) with s. 227.1 of The Planning and Development Act, 2007, SS 2007, c P-13.2, which expressly provides that new evidence is not to be called on appeal unless certain criteria are met. The Court also compared s. 21(12) with s. 683 of the Criminal Code, RSC 1985, c C-46 (formerly s. 610, considered in Palmer), and with s. 56(5) of the Trademarks Act, RSC 1985, c T-13.

Reasoning and analysis

Justice Sinclair noted a tension between the two subsections. Section 21(11) mirrors the appellate standard from Housen v Nikolaisen, 2002 SCC 33, yet s. 21(12) arguably allows more latitude to supplement the record than a traditional appeal would. Calroc argued that s. 21(12) grants broad discretion. Finance accepted that discretion exists but maintained it must be exercised on principle and read alongside s. 21(11), so that the appeal does not become a hearing de novo. Finance pointed to the judicial review test in Chaboyer v Saskatchewan, 2021 SKQB 200, and, in addition or alternatively, to Palmer. At oral argument, the Court invited counsel to consider Products Unlimited, Inc. v Five Seasons Comfort Limited, 2026 FC 48; Calroc endorsed that test in further written argument, and Finance opposed it.

Siding with Finance, the Court adopted the Palmer test for several reasons. An appellate standard of review suggests new evidence should be considered only in rare circumstances, and Barendregt v Grebliunas, 2022 SCC 22, directs appellate courts to apply Palmer whenever a party seeks to adduce additional evidence. Nor did the language of s. 21(12) differ significantly from s. 683 of the Criminal Code, since both confer discretion. Because the Act prescribes an appeal rather than judicial review, the judicial review test was not appropriately imported, consistent with Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65. Products Unlimited, Inc. was distinguishable because s. 56(5) of the Trademarks Act signals a possible appeal de novo where material new evidence is filed, and the Act contains no equivalent language.

Applying the four Palmer criteria as summarized in Barendregt, the Court found due diligence lacking for both affidavits. Nothing showed the information was unavailable at the time of the Board hearing. The First Affidavit mostly contained Ms. Wells' conclusions, its court document exhibits had no bearing on the appeal, and Calroc offered no reason why Exhibits "A" and "B" could not have gone before the Board. For the Second Affidavit, GL1, the visual aids and the highlighted hearing book documents were all available earlier. Calroc should also have been able to obtain the invoices at Exhibit "F" with reasonable diligence. It did not seek an adjournment to gather them and gave only sparse evidence of its efforts. Exhibits "L" and "M" were likewise available.

On relevance, the First Affidavit offered little bearing on any issue, with exhibits that were either irrelevant or too lacking in context to affect the outcome. By contrast, several Second Affidavit exhibits were potentially relevant. Ms. Douan used Exhibit "A" for one audit period. Because the Board accepted averaging the July 2018 to May 2021 PST across June 2021 to February 2023, Exhibit "A" also bore on that later period. Exhibits "C", "D", "F", "G" to "K", "L" and "M" were also potentially relevant. Exhibits "B", "N" and "O", however, were hearing book material, while Exhibits "E" and "P" were visual aids, with Exhibit "E" more properly understood as argument.

Credibility was not established for the First Affidavit. It asserted that "our forensic audit is true and factual" without evidence that a forensic audit had been completed. It also alleged that the Board had refused correct documents, which the hearing evidence did not support, and it attached an Exhibit "A" of uncertain origin. In the Second Affidavit, the GL1 material in Exhibits "A", "C" and "D" was credible, and Finance conceded in oral argument that GL1 meets the threshold. Hearing book duplicates were credible, Exhibits "E" and "P" were argument rather than evidence, and there was no reason to doubt the genuineness of Exhibits "L" and "M".

Exhibit "F" was contested. Finance pointed out that during the audit Calroc supplied invoices that did not match those sent to customers. The Board had also declined to give weight to Calroc's positions because they rested on "inconsistent and potentially troubling accounting practices." The Palmer question, however, is only whether evidence is reasonably capable of belief. Since the Court could neither accept nor reject Ms. Wells' description of Exhibit "F", the invoices and the calculations in Exhibits "G" to "K" passed this stage.

Only the Second Affidavit could have affected the result. A significant part of the assessed PST rested on GL1 for 2018 to 2021, yet the Board did not have the entire ledger for those years. If Ms. Douan missed information in the 2018 to 2020 period, as Calroc claims, that could significantly change the PST payable. If genuine, a complete set of invoices could also have affected the Board's findings.

Despite the lack of due diligence, the Court admitted Exhibit "A" of the Second Affidavit in the interests of justice. GL1 was an essential document that should have been before the Board, and Ms. Douan relied on it for her audit determinations. Excluding it risked injustice, and admitting it would not turn the appeal into a hearing de novo, particularly as Finance accepted its credibility. Paragraphs 1 to 7 of the Second Affidavit were admitted as context for Exhibit "A".

The Court declined to relax due diligence for the rest, noting that much of it could be advanced as argument and some was already in evidence. Admitting Exhibit "F" and the documents derived from it would convert the appeal into one de novo, since Finance might want to file responding evidence and cross-examine Ms. Wells. The Court would not permit a "re-do" of the Board hearing. Calroc's failure to present this evidence to the Board may have stemmed from an unwise decision not to retain counsel earlier, and it must live with that consequence.

Ruling and overall outcome

Finance's application to strike the First Affidavit was granted [the decision elsewhere frames the proceeding as Calroc's application to adduce fresh evidence, which Finance opposed]. Costs of $500 were awarded to Finance against Calroc, payable forthwith. Calroc's application to introduce further material or evidence succeeded only in part: the Court will consider paragraphs 1 to 7 and Exhibit "A" of the Second Affidavit and will disregard the balance. No costs were awarded on that application given the mixed success. The parties have leave to arrange a conference call with Justice Sinclair to address issues arising from the decision, including whether Finance wishes to file response materials to the admitted portions. Because the underlying appeal of the $1,397,256.71 assessment remains undecided, the only amount ordered in this fiat is the $500 costs award in Finance's favour.