Appellate Powers and Procedures

22.35. Either the Commissioner or the taxpayer may appeal to the Supreme Court of a State from any decision of a Board of Review which involves a question of law and the Board shall, at the request of the Commissioner or the taxpayer, refer a question of law arising before a Board to a Supreme Court. The appeal or reference shall be heard by a single Judge of that Court and from his decision either party may appeal to the High Court. A question of law may arise on the facts as found by the Board of Review which facts are not themselves challenged by the appellant or may arise in the finding of the facts themselves where, on the evidentiary material before

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the Board, that finding could not be properly made or where the Board has committed some other error of law in arriving at that finding. The jurisdiction of the Court to entertain an appeal does not depend upon the Court's view that the Board has made an error of law which has affected its decision. Once it appears that some question of law has been involved, the whole decision of the Board and not merely the question of law is open for review on the appeal. The Court will give due weight to the Board's finding of fact, but is not bound by them and will arrive at its own conclusions on the questions of fact which have to be decided. If necessary the Court will hear evidence additional to that which was given before the Board. The essential question for the Court is whether the decision of the Board was correct. If the taxpayer who was dissatisfied with the Commissioner's decision was to by-pass the Board of Review and have his objection treated as an appeal to a Supreme Court, that Court would have the duty both of finding the relevant facts and also of ruling as a matter of law on the questions to which those facts gave rise. Where the Board, in exercising the same functions as the Commissioner, has exercised a discretion, the Court will not invalidate what the Board has done in this connection unless some error of law can be seen to have affected its determination.

22.36. If a taxpayer exercises his option to ensure that his case goes in the first instance to a Board of Review, it is reasonable that he should be bound by a finding of fact by the Board which is arrived at without breach of legal principles. If, on appeal to a Court by the taxpayer, the question of fact was enabled to be re-opened at the request of the taxpayer, there would be no good reason to deny the same right to the Commissioner. If the taxpayer wishes to have the Court determine the facts, he has the right to choose that tribunal to try his case in the first instance. To have two determinations of the same factual issues where no error of law can be discerned in the first instance is only a multiplication of time and expense.

22.37. The Committee would not propose that a Court should have the same general power to exercise discretions as is given to Boards of Review. But there is one situation where it considers that a Court should have power.

22.38. At the present time a Court can examine the validity of the exercise of the Commissioner's discretion to see whether it has been infected by legal error as, for instance, whether it has been exercised on irrelevant or inadmissible grounds and, if so, the Court can set it aside. But under the existing legislation, if the discretion has been validly exercised in point of law, the correctness of its exercise is unexaminable. It cannot substitute its opinion in this regard for that of the Commissioner or that of a Board of Review, although the Court may have before it the identical relevant material as the Commissioner or the Board of Review and be in some cases in the same position to exercise the power. Courts are constantly called upon to exercise discretions of widely differing kinds under both statutory powers and inherent powers. At present, if the case in which the Court finds legal error in the exercise of the discretion is an appeal direct to the Court from the Commissioner, the case is remitted to the Commissioner for further consideration; if it is an appeal from a Board of Review, it is remitted to the Board for the same purpose. Here lie the seeds of further litigation which in some instances will lead to unnecessary expense. The Committee sees no reason why a Court, in a case where it finds legal error in the exercise of a discretion by the Commissioner or by a Board of Review, should not be in the same position as the Commissioner and a Board of Review in regard to the exercise of a discretionary power where it is satisfied that it has the whole of the facts and other relevant considerations before it. In such a case, where the discretion to be exercised is one capable

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of determination by an objective test or standard, the Court should be entitled to exercise the discretion if it sees fit to do so where the Commissioner and the taxpayer, or their representatives, consent.

22.39. What is said in the preceding paragraph covers a main area of present difference in jurisdiction between a Board of Review and a Court which a taxpayer would take into account in deciding whether to take his case to a Board or to a Court. However, the Committee has noted that, once a taxpayer has applied to the Commissioner for a reference to a Board or for an appeal to a Court, his choice of tribunal is unalterable. This position could be made more flexible without disadvantage to the Commissioner and with advantage to a taxpayer in some cases. Accordingly, the Committee recommends that provision be made to enable a taxpayer to change the tribunal which he has chosen at the time he lodges an application for review or appeal. Any such request for a change of tribunal would need to be lodged before the Commissioner has referred the case to a Board or forwarded the objection to a Court.