ADCT AND ADCS-ADSC LITIGATION UPDATES: Key Actions, Milestones and Timeline Estimates

SUMMARY OF ADCS AND ADCT LITIGATIONS:

 

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August 24, 2017

UPDATE for Canadian FATCA IGA Lawsuit in Federal Court: Plaintiff Change

This update is to let you know that for health reasons, Ginny, one of our three Plaintiffs, has withdrawn as a Plaintiff in our Canadian FATCA IGA legislation lawsuit.

We are so grateful to Ginny for having been being a part of our team for so many reasons. Her good humour, wit, and wise counsel based upon her experience as an attorney has helped us get through many difficult days during the litigation. She was one of the very few who never had any doubts whatsoever about taking on the personal risk and hardships of being a Plaintiff in a lawsuit against the power of her own government. She provided a service not only to us, but to the entire community worldwide harmed by compliance of their own countries with the foreign FATCA law.

Plaintiffs Gwen and Kazia, the ADCS Board, and our supporters are indebted to Ginny for the sacrifices she and her family have made and we all wish her the very best.

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We have established two non-profit corporations, registered with Corporations Canada, with the objective of ending the harm caused by United States laws, and Canada’s compliance with the foreign laws, to people living outside the U.S.

The first corporation, the Alliance for the Defence of Canadian Sovereignty (see ADCS website), is at present focused on an ongoing lawsuit opposing the Government of Canada’s legislation that enables the U.S. FATCA (Foreign Account Tax Compliance Act) law. The Canadian legislation mandates that Canada must hunt down and turn over, to the U.S. Internal Revenue Service (by way of Canada Revenue), Canadians the United States deems on its own to be “U.S. persons”. ADCS claims that the Canadian legislation violates Canada’s Constitution (sovereignty) and Charter of Rights and Freedoms. Our attorney is Joseph Arvay and his team in Vancouver Canada — and we will be making a submission to the Canadian Federal Court — with the Constitutional-Charter trial to take place in 2017. We suggest that a legal ruling in Canada against the “agreement” between Canada and the United States to implement FATCA may help to defeat both the U.S. FATCA and citizenship taxation laws.

The second corporation, the Alliance for the Defeat of Citizenship Taxation (See ADCT website and ADCT FB blog) aims to sue the Government of the United States itself over its citizenship taxation and related laws. Our U.S. attorney is Jim Butera, in Washington D.C.

The four Directors of ADCS and ADCT are: Stephen Kish (Chair, Toronto Canada), John Richardson (Co-Chair, Legal Counsel, Toronto), Patricia Moon (Secretary-Treasurer, Toronto) and Carol Tapanila (Calgary, Canada). Three Directors have renounced U.S. citizenship and one remains a citizen of both the United States and Canada.

At present, new funding is not being requested for either ADCS or ADCT lawsuits (see also below). For ADCS we expect that this will change in 2017 when (irrespective of who wins or loses in Canada Federal Court) we will need to move to the Federal Court of Appeal and pay for new legal costs to make that happen. No new donations will be requested for the proposed U.S. ADCT “CBT” lawsuit until the Directors receive and approve the legal opinion/outline of arguments from our attorney (see also below). We know that the interests of our supporters are diverse and expect that many may be more inclined to support one and not the other of our litigations.

ADCT UNITED STATES LAWSUIT:

2017.01.30 to present UPDATE:

“Mr. Butera provided to ADCT at the end of October, 2016 an opinion paper (which we must keep confidential) on the U.S. Constitutionality of Citizenship-based taxation.

Over the past three months ADCT has been using the issues raised in the opinion to develop a workable rough outline of a general litigation plan. The opinion paper confirms, not to anyone’s surprise, that some of our legal arguments may well be very challenging in United States Court.

We are continuing to work on the litigation plan. However, since the upcoming U.S. Congressional tax reform package of the Republicans will, irrespective of outcome, significantly impact on our legal strategy (i.e., whether the approved tax reform contains all, some, or no part of the kill-CBT legislation relevant to the claims in our lawsuit) and future funding, ADCT will not be moving forward with the lawsuit or asking for further donations until the US tax reform legislation is passed by Congress and our legal claims can be clarified in light of that legislation.

We thank you again for your support.

John Richardson, Legal Counsel, ADCT”

2016.08 to present
$25,000 (U.S.) has been received from ADCT supporters to fund the cost of a legal opinion/outline of arguments for the U.S. citizenship taxation lawsuit. No further donations will be requested until the Directors approve the legal arguments.

ADCS-ADSC CANADIAN FATCA IGA LAWSUIT:

2016.02 to present
Most of 2016 was spent on obtaining Witnesses willing to “go public” for our upcoming trial. At present our litigators are working on the submission, which includes affidavits from Witnesses (still to be selected) who have experienced harm and from Expert Witnesses. I can’t give you a firm timeline on when the submission will be made, but predict generally that the submission will likely be made in late Winter/Spring Fall of 2017 with the Constitutional-Charter trial taking place in 2017. Litigation moves slowly — please be patient.

2017.04.07
ADCS-ADSC Auditor Report for YE April 30, 2016

2016.06.22
We have and welcome a new (third) Plaintiff, Kazia Highton. See the amended Statement of Claim adding Kazia to our lawsuit.

2016.01.14:

ADCS-ADSC Financial Statements for Fiscal Year Ending April 30, 2015

ADCS-ADSC Auditor Report for YE April 30, 2015

Informal Comments of Treasurer

To see enlarged file, click once on the link, then click on the magnifier

 

ADCS-ADSC Profit & Loss May 2014-April 2015

ADCS-ADSC Balance Sheet as of 30 April 2015
2016.03.08
$594,970 has been donated to pay for the legal costs of our ADCS lawsuit in Federal Court. We now have raised the money needed to take the Constitutional-Charter trial to the Federal Court of Canada, which will take place some time in 2017. It is probably safe to assume that whichever side wins (our Plaintiffs vs. the Government of Canada), the decision will be appealed to the Federal Court of Appeal. When this happens we will need to raise further funds (at present unknown) for the Federal Court of Appeal cost. It is also reasonable to assume that the lawsuit will ultimately find its way to the Supreme Court of Canada.

2016.01.12
Our Vancouver litigators finally received from the Crown attorneys the “discovery documents” relevant to our litigation. This specific action taken by the Crown attorneys (unfortunately) means that the new Liberal Government continues to defend our lawsuit challenging the FATCA IGA implementation legislation.

2015.11.30 to present
Sadly, the political process, even with a change of Government, was not effective. We begin preparations for the Constitutional-Charter trial, to take place sometime next year, but still need more funds (about 10% of total raised) to move to Charter trial.

2015.11.30
Mr. Arvay receives a reply from Crown counsels to his November 9 letter: The counsels advise that they have received no new instructions from the Attorney General and Minister of National Revenue defendants, meaning that Government will continue to defend the lawsuit. Crown counsels also undertake to provide by week end the documents that we need for the Charter Trial.

Many of us had some hope that the new Liberal Government might behave differently from the previous Conservative Government and decide to protect the rights of Canadians and the sovereignty of our country — and we are all disappointed in the response to Mr. Arvay’s letter. We now have no choice but to move to Charter trial.

2015.11.09
Canada now has a new Liberal Government and we have two new defendants who we are suing (new Attorney General, new Minister of National Revenue). Our Litigator Joe Arvay sent today a letter to the Justice lawyers representing the new defendants and asked that the lawyers pass on the letter to the defendants.

Mr. Arvay first reminds the defendants of the many pre-election comments made by Liberal Party MPs, including the new Prime Minister himself (Mr. Justin Trudeau) emphasizing that the FATCA IGA enabling legislation passed by the previous Conservative Government is insufficient to protect Canadians.

He then asks whether the defendants now wish to alter course regarding the defence of the lawsuit (e.g., move to repeal/amend legislation) and asks for the documents we need from the Crown lawyers in order to move on the Charter trial.

2015.11.06
Federal Court of Appeal gives OK for Plaintiffs to “park” Summary Trial appeal:
Following the negative decision of Justice Martineau in the Summary Trial, Plaintiffs Ginny and Gwen instructed the Arvay team to appeal the ruling. Consistent with Federal Court Rules, the Federal Court of Appeal was asked to permit the appeal to be heard together with all other (expected) appeals arising out of the Constitutional-Charter trial. The Crown attorneys did not object to this request and on November 6, 2015 Madam Justice Dawson of the Federal Court of Appeal granted permission to “park” (hold in abeyance) the summary trial appeal until all Charter trial appeals are heard.

This ruling is important because it preserves our right to appeal on arguments that might ultimately prove to be successful, and, by arguing all appeals in one hearing, will also reduce legal costs for all parties.

2015.09.30
Justice Rennie of the Federal Court of Appeal denies our request for a “stay” (injunction) to prevent the September 30 handover of bank account information to the U,S. IRS. Consequently, private information on 155,000 accounts is turned over to the IRS.

2015.09.16
Justice Martineau rules against Plaintiffs’ claims argued in August 4-5 Summary Trial. However, he notes that the Charter of Rights and Freedoms and Constitutional claims filed in August 2014 were separate and not dealt with in the summary trial.  Isaac Brock Society thread on Justice Martineau’s decision.

2015.08.17
Supporters raise a total of $500,000 for Canadian FATCA IGA lawsuit.

2015.08.10
Justice Martineau rules against our preliminary motions and the preliminary motion of the Government. See link.

2015.08.04 to .05
SUMMARY TRIAL HELD IN VANCOUVER FEDERAL COURT. Justice Martineau will try to reach decision by September 13.  Isaac Brock Society thread – Reports on Summary Trial.

2015.07.30 to present
ADDITIONAL SUMMARY TRIAL documents, filings and rulings: See LINK on our ADCS website.

2015.07.20
Plaintiffs provide Motion Record response to Government motion to strike portions of our expert witness testimony.

2015.07.13
Government provides Motion Record in response to our arguments for the Summary Trial. See Volume one and Volume 2.

2015.07.03 to 04-05
Government, plaintiffs, the Court (on July 3) have all agreed on the following dates prior to Ginny and Gwen’s August 4-5 trial:

July 20-24 — Cross examination (which could include Ginny and Gwen) on affidavits, if any

July 30 — Both parties file supplementary material re: cross-examinations

August 4-5 — Ginny and Gwen’s trial takes place at expected time and place.

2015.08.04-05
Federal Court of Canada did not grant us a date (that we requested) in June/July but has directed that our summary trial will be heard at a special sitting at the Federal Court, 701 West Georgia Street, Vancouver, British Columbia, commencing on Tuesday, August 4, 2015 at 9:30 a.m. for a maximum duration of two days.

GINNY AND GWEN’S MOTION RECORD FOR AUGUST 4-5 SUMMARY TRIAL IS NOW POSTED ON OUR ADCS WEBSITE. SEE VOLUME 1, VOLUME 2, VOLUME 3, VOLUME 4. and the Memorandum of Fact and Law.

In the first Government response to our Summary Trial filings (Volume 1 and Volume 2), Government states, as expected, that part of our expert witness testimony should be disallowed. Mr. Arvay disagrees. The Court has agreed to our request that this issue will be debated at the Summary Trial.

We argue that the FATCA IGA enabling legislation is contrary to sections of the Income Tax Act and the Canada-US Tax Treaty. Charter considerations could not be used in the summary trial (but would be used in the full trial).

A full trial with Charter arguments could not happen until some uncertain time next year. The option of a summary trial was selected as our “best bet” from a number of options which offered the opportunity to provide some interim relief that could prevent bank information from being turned over to the IRS before September 30, 2015.

We made the decision to pursue a summary trial approach (in addition to preparing for the full trial with Charter arguments) that at least offered the potential of interim relief (stop the bank records from being turned over before September 30) rather than to not pursue this approach. Had we not taken this summary trial approach (which may or may not be successful), our inaction in waiting for a Charter trial some time in 2016 would have ensured absolutely that the bank records of innocent Canadians would have been turned over to the IRS by September 30, 2015. We hope that our supporters appreciate our position (see also below).

We have received these statements from Government Counsel:

“1) Canada confirms that it is not required to exchange information pursuant to the Intergovernmental Agreement until September 30, 2015.

2) Canada confirms that it has not yet exchanged information with respect to Reportable Accounts pursuant to the Intergovernmental Agreement. The provision of information with another tax administration is normally a confidential matter; however, Canada is prepared to confirm this point at this time.

3) A date for the exchange of information pursuant to the Intergovernmental Agreement has not been set. Again, while the provision of information with another tax information is a confidential matter, we are prepared to indicate that it will not occur before September 15, 2015. In addition, the CRA will only exchange such information through the existing provisions and safeguards of the Canada-US Convention.”

We confirm that the Arvay team will strongly make the case to Federal Court that the Court decision on the August 4 summary trial should be made prior to September 15. We cannot predict the outcome of the summary trial or whether any decision would be successfully appealed or negated in part or whole by legislation. However, we do feel that ultimately we will be moving to a full trial, and appeals, with Charter arguments, and need to prepare for this.

2015.05.01
Our supporters raise another $100,000 — making a total of $400,000 provided in legal fees to the Arvay team.

2015.04.16
Today the attorneys on both sides attended the first case management conference in which the Court (an arbitrator) imposed rules to deal with the Government of Canada-caused delay (review of 100,000 plus documents). I cannot disclose all information from that meeting or specifics of our strategy but can confirm again first that the litigation will be split up into two parts: an early summary trial which does not require any review of documents, and a separate later trial on the remaining constitutional (Charter) issues.

[Ginny, our plaintiff - retired attorney, explains the difference between a "summary trial" vs. the "full trial": "The main difference between a summary trial and a regular trial in Canadian Federal Court is that Summary Trials are more expeditious and generally faster to schedule to argue and to be heard ( i.e. shorter). In most cases it is conducted [only and unlike a regular trial] by means of affidavits and oral legal arguments. However, a judge can also order examinations for discovery and call for viva voce evidence, particularly of expert witnesses if s/he feels expert evidence greatly conflicts. There are also the usual bars to be met: a triable issue etc.” Here is a link here and here that she suggests but the articles are full of legalese. This is a “fast track” way of getting to trial sooner and for us, using the arguments that do not depend on review of the 100,000 plus documents that is holding up the full trial.]

While no date for the first summary trial was set at the case management conference it appears likely (but not definite) that a 2 day hearing will be set either late June or early July 2015 (but see above). The court also directed the federal government to provide us with their list of documents by mid-September. Depending on the outcome of the summary trial an actual trial on the remaining constitutional issues may or may not be necessary (there are many possible variations in this scenario) but if necessary our counsel will be trying to secure a date for the remaining trial in the Spring of 2016. We will release the application for the first trial when it is filed.

2015.03.13
Because Government of Canada will be reviewing over 100,000 “potentially relevant” documents in order to produce an affidavit of documents (see 2015.02.10) there will be a “departure from the timelines set out in the rules”. Consequently, the Federal Court has ordered that a case management judge (as an “umpire”) be brought into the process to keep the proceedings moving efficiently and fairly. This is not unexpected and can be considered to be a positive, but “minor” development. The Arvay team continues work on preparing a new application (see 2015.02.14) that does not depend on the affidavit of documents.

2015.02.14
In response to Government delay (see 2015.02.10) we have instructed Mr. Arvay to begin a legal proceeding (a summary trial) in Federal Court to prevent the Government from disclosing the banking information that it will be collecting from the banks to the U.S. government. Mr. Arvay’s position is that if this application (summary trial see above) is successful that it will be a better outcome than seeking an injunction since an injunction will only be effective until trial. It is possible that there may be an extra cost resulting from this application. See POST from our legal counsel John Richardson.

2015.02.11
Roy Berg, JD LLM (US Tax), is a Barrister and Solicitor and Director of US Tax Law at Moodys Gartner in Canada, and presumably provides tax advice for Canadian citizens who might wish to become U.S. IRS compliant for the entirety of their lives and transfer a portion of their Canadian-made retirement assets to the United States. Today Mr. Berg raised the issue on his company’s website that the characteristics of our two plaintiffs in the Canadian lawsuit (both U.S.-Canada dual citizens at birth) might “nullify” the Canadian lawsuit should a U.S. President Obama budget proposal be enacted into law. Arvay responds to this issue by confirming that the Canadian lawsuit is not dependent on specific characteristics of the two plaintiffs, that should any plaintiff ever lose “standing” additional plaintiffs can be added, that only a single plaintiff with standing is required for the lawsuit, and that witnesses are included in the lawsuit who have different characteristics and span different aspects of harm.

2015.02.10
Today we received correspondence from Government indicating that it will need “likely” sometime in “summer” to process “over 100,000” documents” possibly relevant to our lawsuit and which would be turned over to us. We interpret a “summer” delay to be a delay that more likely means sometime in fall 2015. The Court will grant Government what the Court considers to be a reasonable time to review the documents. The Government now confirms in this correspondence that it aims to introduce a significant delay in the litigation.

2015.01.24
“Small pockets” donors raise $300,000 to date with the monies forwarded to the Arvay legal team — an amazing achievement.

2014.11.10
See Government response to Claims.

2014.08.11
Constitutional Litigator Joseph Arvay, acting on behalf of Plaintiffs Ginny Hillis and Gwen Deegan, and the Alliance for the Defence of Canadian Soverignty, files lawsuit in Canadian Federal Court opposing the legislation enabling the FATCA IGA. See Claims (amended 2014.10.07).

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ADCS-ADSC ACTIONS IN THE UNITED STATES:

2014.10.26
Butera submits on our behalf a request to United States Department of State asking that citizenship renunciation fee increase (to U.S. $2,350) be rescinded, in part because the fee/fee increase violates the U.S Expatriation Act of 1868 and the U.S. Administrative Practices Act. See letter. We assume that Department of State will not respond or that it will respond negatively; however, lack of response to remedy this problem may prove helpful should we proceed to litigation.

2014.09.08
Jim Butera, a Washington D.C. attorney with Jones Walker LLP, is retained by the Alliance for the Defence of Canadian Sovereignty to explore legal options to reverse some practices of the United States government that harm non-resident U.S. citizens and persons.