Proportionality and the Train of Inquiry in Tax Court Discovery: A Search for the End of the Line

The need for reform of discovery practice in the Tax Court of Canada in larger, more complex, cases is evident. Time-intensive motions arising from disputes over the scope of discovery not only cause considerable delay and expense to the litigants; they also stretch judicial resources in a court where such resources are limited to begin with. In addition, taxpayers are disproportionately affected by discovery that too often strays into, and in some cases focuses on, areas of peripheral relevance. This article reviews current discovery practices in the Tax Court of Canada, identifies issues of concern, and recommends options for reform. The authors consider the principal causes of unfocused discovery, which include the specific procedural rules as well as the systemic dynamics of Canadian tax litigation. The authors then look to procedural reforms in other jurisdictions as offering some guidance for potential solutions, with a focus on the principle of proportionality. They challenge the presumption that strict adherence to the "train-of-inquiry" threshold for relevance is indispensable for a fair and effective discovery, given that other jurisdictions have generally moved away from that threshold as the sole or default standard for relevance. The authors conclude by outlining proposals for achieving a more efficient and focused discovery process to reduce costs and delays in resolution, and to ease the growing burden on the Tax Court, while preserving the fundamental objectives of discovery.