Canada vs Canadian Imperical Bank of Commerce, December 2018, Tax Court of Canada, Case No. 2018 TCC 248

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In the course of an ongoing Canadian triel concerning transfer pricing adjustments in the amounts of $3,000,000,000, the Canadian Imperical Bank of Commerce had brought a motion for leave to call in seven expert witnesses – included four transfer pricing experts.

The motion was dismissed by the Court. The Federal Court Rules impose a high threshold on parties seeking to call additional expert witnesses. The fact that the appeals involved lots of money did not make them “significant to public”. Issues surrounding application of transfer pricing rules to settlement payments and relevance of accounting treatment to deductibility of expenditures within corporate group were not of broad application and need to resolve them was not particularly pressing.

Expert evidence would be important in complex and technical areas of accounting and transfer pricing issues, but that alone could not support presumption that more than five transfer pricing expert witnesses would be needed.

Taxpayer did not establish that experts’ evidence would not be duplicative. While more experts might be needed because traditional transaction-based transfer pricing methods could not be applied given unusual subject of transfer pricing inquiry, disparity with Minister’s one transfer pricing expert suggested that taxpayer was attempting to win through numbers. Taxpayer’s delay in bringing motion would not be considered due to Minister’s failure to argue for such consideration, but it would otherwise have been given very significant weight. Only factor that supported taxpayer’s motion was that additional costs associated with extra witnesses paled in relation to amount in dispute, and mere fact that there was lot of money at stake was insufficient to allow motion.

In summary, the only factor supporting the motion was that the additional costs associated with calling two additional expert witnesses were small compared to the amount in dispute. The mere fact that there is a lot of money at stake is an insufficient reason to allow the motion.

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