Canadian Lawyer

50 J U L Y 2 0 1 5 w w w . C A N A D I A N L a w y e r m a g . c o m The appeal is expected to be heard in the fall and comes at an interesting time. The Law Society of Upper Canada has just seen Joe Groia elected as a bencher. For those living in a cave, Groia earned the LSUC's wrath over his successful defence of former Bre-X geologist John Felderhof on insider trading charges. It took issue with Groia's trial conduct and he was convicted under the Law Society Act with incivility. His case is under appeal. The McKesson case now opens the door for the civility word police to move the fight from the oral argument arena and conduct in court to a startling new level: scrutinizing factums. That is if you believe Boyle's argu- ment that the appellant's factum impugned his integrity, and I suggest you don't. Judges normally develop non-piercing body armour that fends off slings, arrows, and bullets from well-armed appeal coun- sel. But it appears Boyle forgot to suit up the day he read the McKesson appeal factum, filed by a contingent of Bay Street lawyers, including the likable Paul Schabas of Blake Cassels & Graydon LLP and the affable Al Meghji, a tax litigator at Osler Hoskin & Harcourt LLP. So what's Boyle's beef? He feels the fac- tum goes too far calling into question his ruling and "crosses the line as to what is appropriate." According to Boyle, "English is a very rich language; the Appellant and its counsel could have forcefully advanced their chosen grounds for appeal without the use of unqualified extreme statements which attack the personal or professional integrity of the trial judge." He writes: the "Appellant has wrongly accused me of being untruthful, dishonest and deceitful." He accuses the lawyers of doing so "intentionally under the guise of fearlessly advancing and representing the interest of McKesson Canada." The problem is that nowhere in their factum did the lawyers use the words Boyle complains about or carry out the character assassination he claims. Rather, he appears to interpret arguments about errors in law and fact as an attack on his integrity. His ruling last September essen- tially amounted to a respondent's factum, with a section-by-section takedown of the appellant's arguments. A supplementary factum for the appel- lant, filed by Marie Henein, said it best, not- ing that this was "not a momentary lapse" on Boyle's part. Rather, he combed through 4,000 pages of trial records to assemble his rebuttal. He entered the appeal arena, creat- ing a greater mess. McKesson was a complex year-long transfer pricing trial where the heart of the dispute was the discount rate McKes- son applied to a non-arm's length contract involving the sale of $462-million in receiv- ables to an inter-related company. Boyle ruled against McKesson and took issue with its expert witnesses. In the appeal, McKesson's lawyers accuse the judge of reframing the case from that initially pleaded by the Crown, making the trial unfair. They include the usual attacks suggesting the trial judge mis- applied the law and facts and did not have the evidentiary basis for making some of his rulings. They also write the justice had "palpable antipathy" towards the taxpayer, its witnesses, and counsel. Among the concerns: Boyle erred by relying on propositions never put to McKesson; he ignored the assumption of risk undertaken by the company buying the receivables; and he misconstrued the arm's-length principle. The result was the "flawed process" and errors in law led to an "absurd result." Boyle, in his supplementary reasons, refutes the claims, calling some "delib- erately misleading" and indicating some arguments were raised to "advance confu- sion, not clarity or accuracy." Henein's supplementary factum takes issue with the judge's intervention in the appeals process, calling it "improper." She asks for a new trial. Henein writes that tak- ing issues with law and fact is the "bread and butter of appellate advocacy," and the "hurt feelings" of a trial judge cannot impede an appeal court from fixing errors. The Crown's appeal factum says the recusal reasons did not compromise the fairness of the trial or appeal and the appeal court can make its finding based on Boyle's original decision, which should be upheld. The federal appeal court is entering dangerous waters. How — and if — it chooses to respond to Boyle's criticism of the lawyers' appellate tactics and factum could easily blow up into another Groia- like incivility circus. Remember, the LSUC pursued Groia based on comments in judicial rulings, rather than an individual complaint. Let's hope the appeal court treads those deep waters carefully and keeps the dark forces of civility at bay. Jim Middlemiss is a principal at WebNewsManagement.com. B A C K PA G E O P I N I O N @JimMiddlemiss By Jim Middlemiss t's not often that transfer-pricing cases are looked at beyond tax lawyers. But McKesson Canada Corp. v. The Queen has caught the attention of the litigation bar. That's because Tax Court Justice Patrick Boyle recused himself from the case last fall after taking issue with arguments filed in an appeal factum. He responded by writing his own 47-page ruling defending his original decision and calling out the lawyers who filed the appeal. Sound bizarre? It is. And now the Federal Court of Appeal has been asked to grant a new trial. Welcome to the McKesson case, which has the danger of expand- ing the civility movement into the realm of written argument. That should concern appellate litigators across the country, who negotiate the delicate task of attacking lower court rulings and calling out judges' findings of law and fact. Tax judge's beef opens incivility doors I

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