Background
2028604 Ontario Ltd. appealed a GST assessment under the Excise Tax Act in 2016. After years of delay, adjournments, missed appearances, address-for-service problems, and costs orders, the appeal was scheduled for trial in March 2027. The corporation’s shareholder and principal officer, Nicholas Cutaia, is also an Ontario lawyer and had acted as its counsel.
After Cutaia confirmed that he intended to testify at trial, the corporation sought leave under section 17.1(1.1) of the Tax Court of Canada Act to have him represent it as an officer rather than as counsel. That provision permits the Court, in special circumstances, to excuse a corporation from the general requirement that it be represented by a lawyer. The Crown opposed the request and filed its own motion seeking dismissal.
The Court’s Holding
Justice Derksen dismissed the corporation’s motion, with costs in the cause. The corporation had not established special circumstances because Cutaia’s affidavit provided no evidence of its financial capacity or inability to retain separate counsel. Its unsupported assertion that counsel’s fees would be disproportionate to the amount at issue was insufficient. That failure alone justified dismissal.
The Court also identified serious concerns about Cutaia serving as both advocate and witness, but did not decide whether he could avoid the professional obligations applying to lawyers by appearing nominally as a corporate officer. The implications were left to the trial judge. The Court further found that the corporation’s AI-assisted submissions contained inaccurate or unsupported references that Cutaia had not adequately checked, warning that litigants remain responsible for verifying AI-generated legal work.
The corporation was ordered to file by November 6, 2026, a notice signed by counsel providing counsel’s name, telephone number, and effective address for service. The Crown’s motion was dismissed without costs because separate motion materials were unnecessary; written opposition to the corporation’s motion would have sufficed.
Key Takeaways
- A corporation seeking permission to proceed through an officer or employee must prove special circumstances with evidence, including clear financial information when inability to afford counsel is asserted.
- A lawyer who is a necessary witness generally should testify and entrust advocacy to another lawyer; changing the lawyer’s nominal role to corporate officer does not necessarily eliminate that concern.
- Lawyers and litigants remain responsible for checking AI-assisted submissions and cannot rely on inaccurate, false, or misleading citations generated by an AI tool.
Why It Matters
The decision illustrates the evidentiary burden facing corporations that seek an exception to the Tax Court’s counsel requirement under the recently enacted section 17.1(1.1). Assertions about litigation expense, without financial records or evidence of anticipated legal costs, will not establish special circumstances.
It also adds to Canadian courts’ warnings about generative AI in legal practice. AI may assist drafting, but counsel must personally verify every cited authority and ensure that the propositions attributed to it are accurate.