R. v. Klundert, 2011 ONCJ 45

COURT FILE No.: 09/20157 Citation: R. v. Klundert , 2011 ONCJ 45 ONTARIO COURT OF JUSTICE BETWEEN: HER MAJESTY THE QUEEN — AND — JACK KLUNDERT Before Justice Gregory A. Campbell HEARD: September 7, 8, 10 and 22, 2010 RELEASED: February 3, 2011 Edward Posliff for the Federal Crown Douglas Christie for the Accused CAMPBELL J.: BACKGROUND : 1 . The accused has practiced as an optometrist in the City of Windsor since graduating from university in 1979. It was in or around 1992 when he reviewed a journal that questioned the constitutionality of Federal Income Tax.

Following further consideration of the matter, and in particular commencing with the taxation year 1993 and continuing thereafter through to and including 2005, Jack Klundert filed T1 returns that failed to disclose his personal income or expenses. 2 . As a result, he has had to deal with two separate prosecutions. First, in regard to the taxation years 1993 through to and including 1997. That matter has been tried three times and two of those verdicts were dealt with on appeal. The second and separate prosecution concerns the taxation years 2000 – 2005 which has been prosecuted in this court.

I understand that Jack Klundert has attended court more than two dozen times in relation to both trials and his appeals. THE SUBJECT PROCEEDING : 3 . The prosecution alleges that Jack Klundert made false or deceptive statements in his T1 returns dated 2000 to 2005. The prosecution also asserts that the accused’s total unreported taxable income was $576,644,00 during those years and as a result, the Crown submits that the accused attempted to evade taxes of $168,975.00 by failing to report that income. 4 .

The accused testified that insofar as he was already being prosecuted by the State in regard to taxation years 1993 through to 1997, he had no obligation to disclose further and what he regarded to be potentially damaging evidence. Dr. Klundert also indicated that for the majority of time at issue, he had no income to report because 100% of the money that he was entitled to receive for professional services was being garnished by the Canada Revenue Agency directly from the Ontario Health Insurance Plan. THE FACTS:

A. T1 Returns 5 . T1 records from the Winnipeg Tax Centre for the years commencing 2000 through to and including 2005 were produced and marked as exhibits in the proceedings. The forms and their contents were identified by the accused as his returns, subject only to certain redline entries that included numeric amounts apparently inserted by tax centre representatives for the purpose of completing final assessments. In all other respects, the accused confirmed these were in fact his T1 returns with his handwritten entries.

In every T1 filed, Jack Klundert wrote a note on the face of the form questioning the federal government’s constitutional authority to impose income tax. 6 . Some of the noteworthy and relevant entries that were made by him are outlined in

Schedule A attached. B. Billing for Professional Services 7 . Vicki Molden was a secretary and office manager employed by Dr. Klundert from 1995 through to 2004. She testified that part of her responsibilities included billing and payments from O.H.I.P. for and on behalf of Dr. Klundert. This responsibility was ongoing during the years 2000, 2001, 2002 and part way into 2003 when they changed their billing procedure. During these years, Ms.

Molden would compile the information required by the Ontario Health Insurance Plan on a computer disk including the patient’s name, address and particulars of the services provided and then submit the information directly to O.H.I.P. with a request for payment. The information on the disk would then be processed by O.H.I.P. and payment would follow in accordance with standard practices. 8 . Ms. Molden indicated, and Dr. Klundert confirmed that in or around the middle of 2003 they changed their billing practices by no longer billing O.H.IP. directly. Instead, the patient was now required to pay Dr.

Klundert directly and would receive a receipt with instructions on how to recover reimbursement from OHIP. Ms. Molden and Dr. Klundert would assist the patient if requested and submit the receipt for reimbursement directly to O.H.I.P on behalf of the patient. The cash money paid was received directly by Dr. Klundert. 9 . Ms. Molden testified that insofar as her wages and salary were concerned, she had been paid by cheque but this changed in or around the same time when the accused revised the patient billing practices. At that point, she began to receive her earnings in cash.

At all material times, including the time when Ms. Molden received payment of her wages in cash, her earnings were subject to statutory deductions for Canada Pension Plan, Employee Insurance and Income Tax. 10 . Both Ms. Molden and Jack Klundert testified that the Canada Revenue Agency had in place a 100 per cent garnishment with the Ministry of Health in respect of any payments Dr. Klundert was entitled to receive, throughout the years 2000, 2001, 2002 and 2003 through to and including that point when Dr. Klundert changed his fee payment practices.

Accordingly, 100 per cent of the billings requesting payment from O.H.I.P. during that period was never received directly by Dr. Klundert but rather paid by the Ministry of Health to the Canada Revenue Agency. CRA Investigation and findings 11 . At the request of the Canada Revenue Agency, the Ministry of Health reviewed its electronic payment history data and identified payments made by the Ministry of Health directly to Dr. Klundert for services provided and payments made to reimburse patients for payments made by them to Dr. Klundert for insurable benefits. The following is a

summary of payments made by the Ministry of Health: 2000 $199,550.65 2001 $163,956.65 2002 $113,386.35 2003 $ 72,417.00 $ 91,834.50 2004 $136,200.55

2005 $ 60,586.65 $837,934.00 12 . Tom Dresser is an investigator with the Canada Revenue Agency. He reviewed the O.H.I.P. payment history for the years 2000 through to 2005, inclusive, and the accused’s year-end T4 Summaries with respect to his employees. From these T4 Summaries, Mr. Dresser was able to identify some of the expenses Dr. Klundert would have incurred as a result of wages paid and employer contributions for employment insurance and Canada Pension Plan. 13 . In an effort to identify other expenses Dr. Klundert may have incurred, Mr.

Dresser wrote to him in January 2006 but did not receive the benefit of any reply. He also followed up with the accused in 2009. This time he received a note in response indicating “There had to be more expenses.” No further particulars were provided. Accordingly, Mr. Dresser was only able to identify expenses for wages, Canada Pension Plan and unemployment insurance, the particulars of which were as follows: 2000 $ 79,075.00 2001 $ 54,725.00 2002 $ 54,357.00 2003 $ 42,614.00 2004 $ 21,142.00 2005 $ 9,377.00 $261,290.00 14 . Based on the foregoing, Mr. Dresser had the benefit of the O.H.I.P. payment

summary and certain identifiable expenses gleaned from the T4 statements on file. This allowed him to subtract those expenses from the O.H.I.P. payments made on his behalf for the years 2000 through to 2005. As a result, Mr. Dresser came up with a net figure he described as unreported taxable income for each taxation year and then applied the marginal tax rate for each year to determine the amount of income tax evaded. The total amounts are set out in

Schedule B attached. 15 . Mr. Dresser stated that he undertook the foregoing steps and calculations because the T1 Income Tax statements filed by the accused underestimated his income. In his opinion, the failure to include values or simply indicating “N/A” was the same as saying that he had no income and as such, was an understatement of his income. Evidence of Jack Klundert 16 . Jack Klundert explained his reason for filing the T1 forms in the manner indicated.

He maintained that he committed no offence as he was careful not to file a false or deceptive statement and at no time attempted to evade the payment of income tax. 17 . He testified that when he filed his tax return in 1993 he held the belief that Federal Income Tax was unconstitutional insofar as the authority to effect direct taxation was vested exclusively with the provinces. Notwithstanding this belief, Jack Klundert held the opinion that he was nevertheless required to file a tax return so he did so but decided to include only personal information.

The only numeric value the accused included in his T1 return from that date forward was a zero recorded under ‘Balance owing’. The following is what Jack Klundert had to say during his examination in-chief on this point: Question: Why would you not fill in numeric values where you had previously put in numeric values? Answer: Again, I felt federal charged income tax was unconstitutional.

So, to give them information to make it easier to prosecute me in terms of giving statement of how much I made, I was no longer going to cooperate with them and so I knew I had to fill out an income tax form but I felt that I was not going to put in numbers any longer like I had in 1992 and previously. 18 . Dr. Klundert testified that he believed there were two likely outcomes as a result of his decision. Firstly, that the Canada Revenue Agency would likely prosecute him for failure to file as required by law. To his surprise, however, the Canada Revenue

Agency charged him with making false statements on his return and tax evasion. Secondly, Dr. Klundert anticipated that with the eventual prosecution, he could advance his constitutional challenge to the Federal Government’s authority to collect personal income tax. 19 . In or around 1997, Canada Revenue Agency made demands for information and ultimately proceeded with its prosecution against the accused for making false statements and evading taxes for the years 1993 through to 1997.

By the time Jack Klundert was required to prepare and filed his T1 returns for the taxation years (2000 – 2005) at issue in this proceeding, he was already being prosecuted in the courts. 20 . Dr. Klundert testified that when he prepared his 2000 return and filed it on April 21, 2001, he held the opinion that he was required to file or face prosecution. However, he concluded that because his prosecution for the years 1993 through to 1997 was ongoing, he should remain consistent and file the forms just as he had done previously.

He added that he didn’t provide additional information and in particular refused to insert numeric values on the basis that had the right to remain silent in accordance with the Canadian Bill of Rights. 21 . Dr. Klundert had this to say during his examination in-chief. Question: In any of the other court appearances (concerning prosecution years 1993 to 1997) did you ever rely on your right to remain silent as a defence? Answer: Not in any of the other court appearances. Question: From 1997 on did you ever make that claim? Answer: Only now at this court case. Question: Why is this different?

Answer: Because those years (1993 – 1997) I still had to contend with...and I needed to be consistent and not lie or give any information that would incriminate me on that particular case so I had to fill it out the same way as I did in previous years. Question: And were you contemplating testifying in 2010 (for 1993 – 1997)? Answer: Yes. I was...aware of the possibility of cross-examination. Question: What did you understand the effect of filing in the manner that you did on the returns for 2000 – 2005?

Answer: I knew that they wouldn’t be happy with the way that I filled them out and that I’d have to come to court for them as well...and incur financial consequences (time off work, hire lawyer, garnishee, court, etc. and keep the lien on my house) in order to bring the validity of the Income Tax Act to court. Question: Did you ever anticipate receiving a benefit from the returns 2000 – 2005? Answer: No. None at all. I knew that I had to fill them out consistently the same way and I stood on my right to remain silent and not to give information that might incriminate me.

Question: Why would any information that you might have given the numeric values incriminate you? Answer: Because it would be inconsistent with numeric values I had given in the years 1993 to 1997 and so that if it was inconsistent, they would claim that I would be lying about those years (1993 – 1997). 22 . Dr. Klundert went on to indicate later in his evidence that his concern for self-incrimination was restricted to numeric values and not in regard to disclosing other information.

In particular, when asked about information omitted from his 2005 T1, including the fact that he didn’t sign his name or put his social insurance number, date of birth, or identify the name of his spouse or social insurance number, he had the following to say: Question: You didn’t need to omit that information in order to maintain your right against self-incrimination, isn’t that right? Answer: Self-incrimination would have been about numbers and about how much money I had made during those years...I don’t believe there is any self-incrimination about whether I put my wife’s name or S.I.N. up there. 23 .

Accordingly, Dr. Klundert essentially indicated that he needed to be consistent because he was still being prosecuted in regard to prior returns and he recognized that he had the right to remain silent to avoid self-incrimination.

24. Insofar as evading taxes are concerned, Dr. Klundert said that he believed the Canada Revenue Agency would recover itsmoney notwithstanding his decision to exclude any numeric values on his T1 returns. In this regard the accused stated, “I needed to beconsistent and I knew they had the power and ability to find out all of the information they needed to complete the assessment and thengarnish my wages so I wasn’t evading any income tax...and there was no intent to evade tax...they could take that money at any time theywanted.” 25. Dr.

Klundert stated that Canada Revenue Agency began to garnish his wages in 1999 and has continued to do so through todate. By his calculations, over $900,000 has been garnished. He maintains that if he filed returns from 1993 onward as he had done inprevious years, the Canada Revenue Agency would have been entitled to considerably less than the $900,000 they have garnished. 26. Dr. Klundert was asked about the income he was assessed as having been earned from O.H.I.P. during the taxation years 2000($199,551.00), 2001 ($163,957.00), 2002 ($113,386.00) and 2003 ($72,417.00).

He testified that 100 per cent of that money wasgarnished by the Canada Revenue Agency and received by it directly from O.H.I.P. He went on to indicate that none of that money was“ever received” by him and was “...never in [his] possession” and that he had “no control” over the money and that he “never consented”to the money being transferred to Canada Revenue Agency by O.H.I.P. ISSUES and ANALYSIS 27.

Before embarking on an analysis of the issues, I should point out that during submissions, counsel for the defence moved for astay of proceedings alleging prosecutorial misconduct on the basis that by the time the third trial was scheduled in respect of the originalprosecution, this matter could have been dealt with at the same time as the facts at issue and allegations made both in the originalprosecution and this one were essentially the same. For reasons that will follow at the end of this judgement, the motion to stay isdismissed.

Summary Conviction Limitation period 28. The defence submitted that the proceeding was a nullity insofar as the Crown elected to proceed summarily and theinformation was laid more than six months after the subject matter of the proceeding arose, contrary to

section 786 of the Criminal Codeof Canada. 29. The T1 returns at issue were dated as early as April 21st, 2001 and concluded July 11th, 2006. The information which forms the basis of the charges before the court was sworn nearly three years later on April 15th, 2009. I have no information to indicate that thedefence ever consented to the proceeding being instituted more than six months after the dates at issue. 30. The prosecutor relied on the Income Tax Act, Section 244 (4) that subsection provides that “An information or complaint underthe provisions of the Criminal Code relating to

summary convictions, in respect of an offence under this act may be laid or made at anytime but not later than 8 years after the day on which the matter of the information or complaint arose.” 31. This issue was addressed by the Supreme Court of Canada in R. v. Machacek (1961), (SCC), 129 C.C.C. 1(S.C.C.). In Machacek the Supreme Court indicated that the criminal code expressly allowed for other legislation to extend thelimitation period with the words “except where otherwise provided by law”. The Court recognized that the Income Tax Act allowed foran information to be laid then up to five years after the day on which the matter arose, stating that the

section in the Income Tax Act fellwithin the “otherwise provided by law” provision. The court adopted reasoning indicating that there was a sound policy reason why thelonger limitation period for Income Tax matters should prevail. 32. Based on the foregoing, the laying of the information sworn before the Justice of the Peace on April 15th, 2009 was within eight years of the first offence date reflected in Count 1 being April 21st, 2001 and as such, the proceeding has been properly constituted.None of the allegations fall outside of the limitation period at issue. Did Jack Klundert make false or deceptive statements in his T1 returns 2000 – 2005 by failing to report income?

33 . This rather broad issue addresses the allegations in Counts 1 through 6. To answer this question, two sub issues must be addressed. Firstly, whether the accused failed to report income and if so, whether that failure to report income was a false or deceptive statement. 34 . It is not in dispute that the T1 returns filed in this proceeding for the years 2000 through to and including 2005 were prepared by Dr. Klundert, but for some redline entries which I am satisfied were not his but rather agents of the Canada Revenue Agency. In every instance Dr.

Klundert inserted either a zero or “N.A” with respect to income over balance owing. 35 . Evidence from the office manager and the accused confirms that Dr. Klundert continued to practice as an optometrist in the City of Windsor during the relevant period of time and billed O.H.I.P. for his services throughout 2000, 2001, 2002 and part of 2003 until he reached a point in 2003 when he determined that he would no longer bill O.H.I.P. but rather receive payment directly from his patients. 36 . The assertion that Dr.

Klundert did not have any reportable income between 2000 and part way in to 2003 because his earnings were garnished by the Canada Revenue Agency directly from O.H.I.P. was to my mind wholly without merit. Clearly the Doctor was providing professional services for which he was entitled to receive payment from O.H.I.P. He requested payment in the usual and ordinary course of his business by submitting requests for payment to OHIP electronically. His entitlement to be paid was clearly recognized by OHIP as it took steps to pay the money out. However as garnishee, OHIP’s payment to Dr.

Klundert was intercepted and redirected to the garnishor, CRA. The fact that the cash was never actually received by him was of no consequence as it was income generated by him and made payable to a third party for his benefit. As such, those earnings were subject to taxation as if they were earnings within his hands. 37 . In the absence of Jack Klundert having any proprietary interest to that money, Canada Revenue Agency would not have recovered pursuant to the garnishment.

And, of course, O.H.I.P. would not have paid out the money pursuant to the garnishment unless the money was in fact money that was owing to or was the property of Dr. Klundert. 38 . Insofar as the years 2003 (part) through to and including 2005 are concerned, Dr. Klundert continued to work but the billing practice changed. Part way into 2003, payment started to be made directly to Dr. Klundert by his patients and confirmation of same arose with the submission of requests for reimbursement from O.H.I.P by patients from time to time. 39 .

The Ontario Health Insurance Plan recorded the payments made to patients as reimbursement for payments they had made to Dr. Klundert. 40 . In the foregoing, it is apparent that Dr. Klundert received income throughout the taxation years 2000 through to and including 2005. The only evidence I have in regard to that income was from the testimony of Mr. Dresser who reviewed the O.H.I.P. payment

summary, the particulars of which are set out in

Schedule B attached to this judgment. 41 . I am satisfied that Dr. Klundert had unreported taxable income as reflected in

Schedule B and that none of that income was reported in the T1 returns for those taxation years and as such the element of the offence concerning the failure to report income has been made out. 42 . Whether the accused’s failure to report income was false or deceptive is a separate consideration. 43 . It was argued by the defence that the failure to put down numeric values was neither false nor deceptive. Dr.

Klundert argued that Canada Revenue Agency had full access to all of his billings and the means to secure whatever information it required so the failure to insert numeric values was really of no consequence in that he was not deceiving anybody. 44 . There can be no doubt that Dr. Klundert generated income during these taxation years in values that cannot be equated to either “zero” or “N.A.”. To insert “N.A.” as total income and “zero” for balance owing while having generated taxable income in the amounts reflected in

Schedule B are to my mind a false statements insofar as those entries fail to identify any or even a portion of the actual income earned.

45 . From the foregoing, I am satisfied that the actus reas of the offence has been made out. The T1 returns filed by the accused were false insofar as they failed to disclose that income. 46 . Insofar as the mens rea of the offence is concerned, Counsel were in agreement that this is a specific intent offence. To that end, the prosecution must prove that Dr. Klundert not only made false and or deceive statements in the T1 forms submitted to the Canada Revenue Agency, but that he knowingly did so. 47 . The defence argued that Dr.

Klundert at all material times held an honest belief that he wasn’t filing false or deceptive T1 returns for several reasons. Firstly, because Dr. Klundert did not receive the money in his hands from O.H.I.P. during the years 2000 through to part way in to 2003 because his billings were being garnished. Secondly, because Dr. Klundert believed the government was fully aware of his income through the 100 per cent garnishment of OHIP billings; and finally, because Dr.

Klundert had the right to remain silent and avoid self-incrimination which would have been the result if he had completed the T1 returns fully with particulars about his income. 48 . Insofar as the assertion that the failure to be in possession or control of money in his own hands is concerned, it is clear to me Dr. Klundert fully understood that money paid out to CRA pursuant to the 100% garnishment was money that was, but for the garnishment, due and payable to him. His office manager compiled the data in regard to services provided to patients and submitting same to O.H.I.P for payment.

The requests for payment were obviously approved or remittance to CRA would not have followed. But for the garnishment, the money would have been delivered to the accused. It is readily apparent from Dr. Klundert’s own actions that this was fully understood by him. After three and one half years of watching 100% of his OHIP billings being redirected to CRA, Dr. Klundert directed his office administrator to implement a new procedure that required patients to pay for services in cash.

This was an effort to defeat the garnishment that was in place and put income for professional services directly into his hands. 49 . Dr. Klundert is an educated man who ran his own professional practice for years. This included the employment of staff, handling contracts and accounts, bookkeeping, billing procedures and of course generating income. 50 . I am satisfied that Dr. Klundert was at all material times aware that the payments made by O.H.I.P. to Canada Revenue Agency were made for and on his behalf with money that was his but otherwise became payable to CRA pursuant to the garnishment. 51 .

Insofar as the further assertion is concerned that Dr. Klundert had an honest belief that the government was aware of all of his income so that the failure to disclose numeric values was of no consequence, I found the argument less than believable.

As I understand the argument, I am being asked to accept that it is reasonable to conclude that this educated professional who has testified to reading the Constitution and legal analysis from lawyers and tax experts in regard to income taxation and the separation of powers and individual rights and freedoms formed the opinion that it was really unnecessary for him to report income on the basis that the government had the ability and the means to find out in any event. 52 . The argument was made on the basis that that Dr.

Klundert was already being prosecuted by the Canada Revenue Agency so they knew where he was and what he was up to. Essentially, he has indicated that because the agency has inexhaustible resources, time and money that there was really no need to report income because the agency would find out on its own in any event. I am unable to find that the Doctor had such an honest belief. 53 . The defence further argued that Dr. Klundert was put in the unfortunate position of being compelled by statute to file a T1 return and report income while being prosecuted by the very agency charged with collecting income. 54 .

Section 238 of the Income Tax Act provides that “Every person who has failed to file or make a return as and when required by or under this Act or a regulation… is guilty of an offence and, in addition to any penalty otherwise provided, is liable on

summary conviction to a fine and or imprisonment.” 55 . During Dr. Klundert’s testimony, he was asked by his counsel why he would not provide numeric values when he had previously done so. Dr. Klundert stated that he held the opinion that federal income tax was unconstitutional and he therefore decided that he would no longer co-operate. Notwithstanding the decision to not cooperate, he concluded that he had an obligation to fill out and file the income tax form. Based on these considerations, he made a conscious decision not to include numeric values.

56 . Back in 1993 when he formulated this opinion, he anticipated that two things would happen. Firstly, that he would be prosecuted for failure to file his return and secondly, the eventual prosecution would give him an opportunity to challenge the law and in particular the federal government’s authority to collect personal income tax. 57 . With this backdrop, Dr. Klundert was asked about his decision to continue to file essentially incomplete T1 returns for the taxation years 2000 – 2005. He provided two reasons. First, that he wanted to remain consistent with what he had done since 1993.

Second, he said that he had the right to remain silent pursuant to the Canadian Bill of Rights. 58 . Dr. Klundert’s counsel argued that whether Dr. Klundert was correct or incorrect on the law in regard to whether or not he had the right to remain silent and based on that belief, refused to disclose details of income in his T1 returns, the fact that he held an honest belief that he had no obligation to do so for fear of self-incrimination was sufficient to raise a reasonable doubt as to his guilt on the basis that Dr.

Klundert lacked the requisite specific intent required to make out the offence of making a false or deceptive statement by failing to report income. 59 . Counsel relied on a series of cases and principles of law including the Canadian Bill of Rights to support this position as it related to statements made under statutory compulsion and rulings of inadmissibility for infringing an individual’s constitutionally protected right against self incrimination and the right to remain silent. 60 . This case is no different than any other case requiring a careful consideration of the particular facts.

The facts of this case must be closely examined with a contextual analysis of all the circumstances in order to determine whether or not the principle against self incrimination is actually engaged. 61 . Dr. Klundert was, at the time when these occurrences arose, someone who had been prosecuted for several years. The matter concerning his returns for 1993 through to and including 1997 had been the subject of an extensive investigation, and at least one trial and appeal that resulted in a new trial being ordered by the time the subject T1 returns were being filled out. 62 . Counsel for Dr.

Klundert asserted that his client and the CRA were adverse in interest. To my mind, they were certainly adversarial insofar as that prosecution was concerned but I’m not of the opinion that prosecution relieved Dr. Klundert of his obligations under the income tax act indefinitely or until the original prosecution and all of its appeals that followed eventually came to an end? Such a conclusion would be an absurdity. 63 . It seems to me that the argument being advanced has been taken out of context. I may have found more merit in it if we were retrying the original prosecution. That is to say, if Dr.

Klundert had completed the T1 returns properly with all numeric values for the years 2000 through to 2005 and the crown moved to rely on those entries during that prosecution for the taxation years 1993 through to 1997, Dr. Klundert would to my mind then be in a better position to argue that the information in those forms ought to be excluded as the completion of the T1 returns were compelled by statute and therefore should not be admissible as evidence in that proceeding. 64 .

To argue however, that a refusal to disclose income was the product of a conscious decision to exercise the right to remain silent in regard to completing tax returns for years that were not the subject matter of a prosecution before the court is a distorted

interpretation of the principle against self incrimination. 65 . Quite separate and apart from having difficulty with the legal argument, I have good reason to doubt the sincerity of the evidence on this point. A review of the T1 returns reveal that 2005 was the first year that any reference was made to the Canadian Bill of Rights and little more about it or why the reference was made was provided other than to indicate “as an actual person, the income tax is against my human rights and freedoms that I have under the Canadian Bill of Rights”. 66 . In cross-examination Dr.

Klundert stated that the first time he ever raised the issue of the Bill of Rights was during this trial. The Canadian Bill of Rights addresses much more than the protection against self-incrimination. I am of the opinion that Dr. Klundert’s reference to the Canadian Bill of Rights in the 2005 T1 return was little more than a restatement of what Dr. Klundert had stated over and over again on previous returns; that is, that he held the opinion that as an individual, the federal government had no jurisdiction to collect direct income tax.

67 . In addition, I cannot lose sight of how Dr. Klundert changed the way he did business in 2003 by requiring patients to pay him directly. This decision shows a consciousness more closely related to the position Dr. Klundert has taken since 1993 being that he “… was no longer going to co-operate…” The reference to the Canadian Bill of Rights and more particularly the right to silence had nothing whatsoever to do with a fear of self incrimination that could arise should he disclose income. 68 . The right to silence argument appears to have been an afterthought. What is clear to me is that Dr.

Klundert made a conscious decision to file T1 returns in a manner that would be consistent with the earlier returns filed so as to maintain his position and argument as originally advanced since 1993. This had nothing to do with any right to remain silent. 69 . I am satisfied that Dr. Klundert was careful and considered in his approach and wanted to maintain some continuity but that decision had nothing to do with constitutionally protected rights and statutorily compelled statements. It had everything to do with a settled intention not to report income. 70 . I have considered the whole of what Dr.

Klundert had to say and the submissions of counsel suggesting that he had an honest belief that he was not filing a false or deceptive statement by failing to report income. I am not left with any doubt by what he had to say on these points. With all of this, I would also note that it is telling in regard to just how well Dr. Klundert understood what he was doing from a review of the signature page with standard form certification as to the completeness of the return that was treated differently by Dr. Klundert following the year 2000. 71 . In particular, the T1 – 2000 contains Dr.

Klundert’s signature in the certification box indicating that the information provided in his return was correct, complete and fully discloses all of his income. In the years that followed, Dr. Klundert consciously did not sign on the certification line and in other instances he crossed out the certification statement and other times he signed and dated the form but in another location. 72 . There is nothing in his testimony or from my review of the whole of the documentation and evidence placed before me that causes me to have a reasonable doubt as to his guilt. 73 .

I found the evidence presented by the prosecution to be compelling, reliable and sufficiently persuasive to make out the onus of proof. I am satisfied from the whole of the evidence that Dr. Klundert did make false or deceptive statements in his T1 returns for the years 2000 through to and including 2005 by failing to report income in the amounts set out in

Schedule B and as particularized in Counts 1 through 6. Accordingly, findings of guilt will be entered on those six counts. Did Jack Klundert wilfully evade or attempt to evade the payment of $168,975.00 in taxes by failing to report income during the years 2000 – 2005? 74 . I have already concluded above that Jack Klundert made a conscious decision to not report his income during those taxation years. Count 7 however alleges a separate offence. The question here is whether Jack Klundert failed to report income for the purpose of evading or attempting to evade the payment of income tax. 75 .

For reasons previously indicated, a decision by Dr. Klundert not to disclose or report income was a tactical decision on his part that was to remain consistent and steadfastly defiant by his refusal to co-operate with CRA which he saw as having no legitimacy. 76 . While I found previously that Dr. Klundert’s assertion that CRA had the means and resources available to collect was not a basis or justifiable excuse to refrain from completing his T1 properly and reporting income, I am nevertheless left with reason to believe, insofar as this count is concerned, that Dr.

Klundert held an honest belief that he was neither attempting nor in fact evading taxes. In this respect the circumstances are unique. Let me be clear. I’m not suggesting that a bald assertion of belief that CRA will eventually receive its money is sufficient to raise a reasonable doubt with respect to this element of the offence. Dr. Klundert’s circumstances were unique.

At the time when he was preparing his T1 returns, the accused had not only been involved in a long and drawn out prosecution, there was a lien against his personal residence in favour of CRA and his professional earnings were being garnished at 100 per cent at least until part way into 2003. And while Dr. Klundert did make a conscious decision to change his billing practices so as to avoid that 100 per cent garnishment, he continued to operate his practice openly with the assistance of staff and assisted patients with filing requests for reimbursement from O.H.I.P.

T4 returns were also filed all of which he would have been aware would be readily available to the Canada Revenue Agency and which was eventually relied on by the agency for the purpose of this prosecution.

77 . I’m satisfied that Dr. Klundert was clearly conducting himself as an obstructionist and remained defiant against a government that he at least at one point believed was exceeding its constitutional authority. Nevertheless, I am satisfied that the accused held an honest belief that with the security CRA had against his property and mechanism it had in place to recover that which was owing to it, he at no time held the opinion or belief that he would in fact be evading the payment of income tax for those calendar years. 78 . Accordingly, Count 7 is dismissed. Stay of Proceedings 79 .

As indicated previously, the defence moved for a stay of proceedings at the end of trial alleging prosecutorial misconduct on the basis that by the time when the third trial was scheduled to be underway from the original prosecution, this matter could have been dealt with concurrently as the facts at issue and allegations made both in the original prosecution and this one were essentially the same. To this end, the defence argued that the subject trial was essentially a fourth trial involving the same parties addressing the same or similar issues and after a great many years. 80 .

It appears to me that notwithstanding the fact that the T1 returns have apparently been filed in a consistent manner dating back to the dates and times at issue in the original prosecution, the transactions at issue were separate and distinct as to time. I was informed that the original prosecution concerned taxation years 1993 through to 1997. For some undisclosed reason, there was a break or no prosecution concerning the taxation years 1998 and 1999. The years at issue in this proceeding are 2000 through to and including 2005. 81 .

Moreover, it appears to me that the position of the defence has changed somewhat from the original prosecution, most recently with the assertion of a right to remain silent. 82 . The circumstances at issue are not only in regard to different transactions that occurred at different times, but also did not present themselves together for consideration as to prosecution at the same time. The original charges were laid after 1997 and the first trial was held before 2001 when the first T1 was filed and many years before 2009 when the subject information was sworn. 83 .

To my mind, this was a separate proceeding involving separate taxation years that was commenced only after the original prosecution had been tried at least two times and had two trips to the court of appeal. It is the Crown’s prerogative to elect its mode of trial and proceed as it sees fit subject of course to basic principles of fundamental justice. This matter proceeded summarily whereas the other matter had wound its way through the Superior Court and Court of Appeal for approximately 9 years before this case was called to trial. 84 .

I suspect that if the crown elected to proceed by indictment the trial of the action would have followed the original trial in any event. Even then, it would have required some collective effort between counsel to work out admissions and or agreed facts to streamline that process. I did not have the benefit of any information from either counsel in regard to any efforts from the defence that were ignored or proposals to proceed in that regard. 85 .

In the absence of something more compelling to persuade me that there was some tactical gain to the prosecution or disadvantage to the accused that resulted in prejudice that may have arisen during the defence of this matter, I am of the opinion that Jack Klundert’s right to be tried with reasonable dispatch and procedural fairness has not been compromised. 86 . As indicated previously, the motion for a stay of the proceeding is dismissed. Dated at Windsor this 3 rd day of February, 2011. ____________________________

Justice Gregory A. Campbell Ontario Court of Justice

Schedule ‘A’ R. v.

Klundert 2000 - Personal Identification (Name, Name of Spouse, Address and D.O.B.) - “N.A.” written in for employment income, total income, net income, Taxable income and non-refundable tax credit - “0” entered for total payable and balance owing - Signature under certification indicating “I certify that the information given on this return and in any documents attached is correct, complete and fully discloses all my income” - Handwritten notation “I refuse to pay an illegal and unconstitutional federal Income tax” 2001 - Personal Identification (Name, S.I.N.) - “0” entered for balance owing - Handwritten notation “I am now more convinced than ever that federal direct income tax is unconstitutional.

You are breaking the law of the land.” - Certification: did not sign on certification line but rather signed and dated form at the bottom of the page 2002 - Personal Identification (Name, Name of Spouse, Address, S.I.N. and D.O.B.) - “N.A.” (at Total Income and Net Income) - “0” entered for balance owing - Notation: “I repeat, it is against the constitution for the federal government to collect direct income tax.” - Certification: horizontal line put through certification statement. Signature date and telephone number, however, included

2003 - Personal Identification (Name, Name of Spouse, Address, S.I.N. and D.O.B.) - “0” entered for balance owing - Notation: “It is unconstitutional for the federal government to charge personal direct income tax.” - Certification: signed and dated below the box where certification is required (as done in 2001) 2004 - Personal Identification (Name, Address, Province, Language and Married) - “0” entered for net balance owing - Notation: “It is against the constitution of Canada for the federal government to charge direct, personal income tax.

Only the provinces can do so.” - Certification: signed below where certification required and not in certification box 2005 - Personal Identification (Name, Address, S.I.N. and D.O.B.) - “0” entered for balance owing - Notation: “As an actual person, the income tax is against my human rights and freedoms that I have under the Canadian Bill of Rights.” - Certification: form not signed at all

Schedule ‘B’ R. v. Klundert

Taxation Year Unreported Marginal Tax Rate Tax Evaded Taxable Income 2000 $120,476.00 30.45% $36,685.00 2001 $109,232.00 29.00% $31,677.00 2002 $59,029.00 29.00% $17,118.00 2003 $121,638.00 29.00% $35,275.00 2004 $115,059.00 29.00% $33,367.00 2005 $51,210.00 29.00% $14,851.00 $168,974.00