R v. Kulash et al Date:, 2014 BCPC 219

Citation: R v. Kulash et al Date: 20140527 2014 BCPC 0219 File No: 57361-1 Registry: RICHMOND IN THE PROVINCIAL COURT OF BRITISH COLUMBIA REGINA v. STACEY KULACH AND STEVE KULASH TAXIDERMY LTD. REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE P. CHEN Counsel for the Crown: K. Westell Appearing for Steve Kurlash Taxidermy Ltd. : Steve Kulash Place of Hearing: Richmond , B.C. Dates of Hearing: February 18 and 27, 2014 and May 26 and 27, 2014

Date of Judgment: May 27, 2014 [ 1 ] THE COURT : Mr. Kulash has been charged on two counts in this Information. The first count is that: Between the 25th day of November 2011 and the 21st day of February 2012, inclusive, in the City of Richmond, Mr. Kulash did unlawfully use land at 12060 No. 2 Road, situated within an area zoned Agriculture (AG1), by carrying on a taxidermy studio, contrary to s. 1.4.1 of the Richmond Zoning Bylaw No. 8500, thereby committing an offence pursuant to s. 1.10.3(

a) of the said Bylaw. On Count 2, Mr. Kulash has been charged that: Between the 25th day of November 2011 and the 21st day of February 2012, inclusive, also at 12060 No. 2 Road, in the City of Richmond, Province of British Columbia, he did carry on a business, a taxidermy studio, on the property without a business licence, contrary to s. 4.1.1 of the Richmond Business Licence Bylaw No. 7360, thereby committing an offence pursuant to s. 5.1 of the said Bylaw. [ 2 ] There has been quite a lot of evidence led at this trial by the Crown. Mr. Kulash also gave evidence and called witnesses, including Mr.

Haldeman, his landlord, and Mr. Lilholt, a neighbour tenant on Mr. Haldeman's property. [ 3 ] It is clear from the evidence that Mr. Kulash was operating a taxidermy studio on the property during the period described in both counts. Mr. Kulash, in his own evidence, has admitted to such. [ 4 ] Having heard the evidence of the accused and of Mr. Haldeman, what became clear was the basis upon which Mr. Kulash's defence was resting. Both Mr. Kulash and Mr.

Haldeman testified that, when the two of them first met to discuss the lease and occupancy of the premises in question for the purpose of operating a taxidermy studio, Mr. Kulash asked Mr. Haldeman whether it was “okay to run a taxidermy studio”. I am satisfied, on the evidence of both Mr. Kulash and Mr. Haldeman, that Mr. Haldeman assured him that it would be fine for him to operate a taxidermy studio on the property and that he did not need a business licence. [ 5 ] Quite a lot of time was taken up by Mr. Haldeman’s evidence with respect to the reason he gave that advice. Mr.

Haldeman was, and remains, of the view that he can operate businesses on his property, including businesses that fall outside of those uses permitted under the AG1 zoning bylaw. Mr. Haldeman gave evidence that he had been operating businesses on that property for 45 years. [ 6 ] Mr. Haldeman produced a Court of Revision Decision Notice document from 1997. That Decision Notice described the decision that was rendered by the Court of Revision.

It states at the very top of that notice that: “You have received this notice because the 1997 assessment for the property described below was appealed to the Court of Revision. The court has ordered the assessment to be changed as shown on this notice.” [ 7 ] On this notice, what changed was the classifications that were set by the Assessment Authority. The original assessment stated that land would be assessed a value and a class of $438,000 as residential and $14,800 as farm. These are the original assessments. The total assessed value was $626,000.

The Court of Revision's decision changed those values and classes as follows: Land was reduced from $438,000 residential to $386,000 residential, and there was a figure of $69,300 value and a class allocated as business/other. Farm value was reduced from $14,800 to $11,400. With respect to the buildings, those were changed and slightly reduced from $174,000 residential, to $30,000 for business/other and $138,000 for residential. [ 8 ] Ms. Ivy Wong, Revenue Manager for the City of Richmond, testified for the Crown and gave evidence regarding this Decision Notice.

She testified that, invariably, these appeals of the B.C. Assessment Authority's assessments are made by property owners. However, this one took place before she assumed her current position with the City of Richmond 16 years ago (this is from 17 years ago) so that

part is not particularly clear. In any event, that does not affect my decision. [ 9 ] In cross-examination she was asked, "Doesn't the classification being changed to a business/other mean that you can run a business there?" Ms. Wong's answer was that such a classification only means that there was a commercial use of a portion of that property. It does not mean that the City condoned the use. It means that when the B.C. Assessment Authority went to look at the property, they observed some commercial use. The City would otherwise have no way of knowing that. [ 10 ] Mr.

Haldeman was a bit of an advocate during his evidence and it is clear that he remains an advocate. He, himself, has his own court case still outstanding. It is understandable that he would be an advocate, and that is why I declined his request to speak during closing submissions. There were two reasons. First of all, it was not a request that was being made by Mr. Kulash and, in fact, Mr. Kulash was asking Mr. Haldeman, "Why did you want to speak?" Secondly, I would not have been satisfied in any event that it would have been appropriate to grant Mr.

Haldeman the right of audience in this proceeding for the purpose of engaging in submissions on behalf of Mr. Kulash, as he clearly has his own agenda. That was clear during his evidence.

[ 11 ] Mr. Haldeman is of the view, according to his evidence, that this classification of his property in 1997 to include business/other for both land and building constituted some kind of a contract between himself and the City. Mr. Haldeman was of the view that this contract obligated the City to allow Mr.

Haldeman to have businesses that were not otherwise conforming, or not conforming at all, to the usages permitted under the zoning bylaw that applied to it and to have those businesses operate without interference from the City. [ 12 ] It is not necessary to my decision today, but it is my view that a comment with respect to that argument is in order here, as Mr. Kulash may share Mr. Haldeman’s view. That may have been one of the reasons why he did what he did. [ 13 ] Taxing authorities and taxing powers are quite different from other legislation.

Taxing authorities can tax people on income that may be derived illegally. Taxing powers are generally framed very broadly. Even revenue derived through criminal activity may be subject to taxation. Perhaps I will give an example to Mr. Kulash because it is my sense that Mr. Kulash is not the most sophisticated businessperson, and may not otherwise appreciate this. But I do not know if you have heard of a criminal who operated during the depression by the name of Al Capone. [ 14 ] MR. KULASH: Yes, I've heard of him. [ 15 ] THE COURT: You know what he went to jail for? [ 16 ] MR.

KULASH: Income tax fraud or not paying his taxes. [ 17 ] THE COURT: For not paying his taxes on revenue that he received from criminal activity. [ 18 ] MR. KULASH: For bootlegging. [ 19 ] THE COURT: Exactly. The taxing authority had the power to tax all revenue even though it was derived from criminal activity. That did not mean it was all right for Mr. Capone to do his criminal activity. Those are completely separate concepts. You see, from the point of view of the taxing authority, if some of this property has been used commercially, and Mr.

Haldeman is deriving some income that he perhaps should not be, that does not deprive the taxing authority the right to collect its piece of the revenue. They are entitled to tax him according to that classification, because he is deriving some revenue from it. [ 20 ] Now, of course, this is different legislation that we are dealing with here. I am just sharing that with you to illustrate that the powers under taxing authorities and taxing legislation is different. Those powers are broader than things like land use legislation.

One does not necessarily bind the other. [ 21 ] I turn now to the defence of due diligence. Mr. Kulash did ask Mr. Haldeman whether it was okay to operate his taxidermy business on his property. However, the test of due diligence is a fairly high one. [ 22 ] When Mr. Westell was making his submissions about strict liability. I am not sure if you appreciated all that that meant, Mr. Kulash. [ 23 ] MR. KULASH: I -- I didn't. [ 24 ] THE COURT: Let me explain it to you.

Regulatory statutes, regulatory laws, are generally almost always what is called “strict liability” - fishing regulations, parking meters, things like that. It is no excuse to say, "I didn't mean to leave my car there that long," or, "My watch indicated that I still had time. I should have set my watch better." That is the nature of strict liability offences. It does not require that you really intended to break a law because they are regulatory and are governed by strict liability. It is not absolute liability, which means you are guilty no matter what.

Strict liability means you would have a defence if you were duly diligent, that is, that you did everything within your power not to commit that offence, but it still happened.

For example, where a restaurant serves liquor after hours, the proprietor may show that he had provided written instructions to his staff not to serve any drinks after a certain hour, that he did spot checks, that he had spoken to them, that those requirements were posted on a wall, and that he did absolutely everything that was reasonable to ensure that his staff did not serve drinks after the hour beyond which they were forbidden to serve drinks. That could be a defence. [ 25 ] That defence is one that could be available, but it is a high test. Mr.

Kulash, I do not think you have met that test by just simply asking Mr. Haldeman whether it was okay or whether you needed a licence. The people you should have asked are the City. They are the ones you get the licence from. I know you relied on Mr. Haldeman but you did not go further. To meet the test of due diligence, Mr. Kulash, it is my view that you should have gone further than just relying on Mr. Haldeman. You know that the licence comes from the City, you know that the zoning is done by the City.

Accordingly, it is the City of Richmond that you should have made the relevant inquiries of. [ 26 ] I understand you are not a sophisticated businessperson. I have heard you describe your history in the business. It is an unfortunate situation. This was your father's business. He operated it for over 40 years and he died in a house fire. You were helping him out, but you never learned the business side of it, and suddenly it fell to you to operate the business. You are not really a businessperson. You only know some taxidermy. I understand that.

But that is a consideration that would be more relevant to sentencing – not to liability. The test is what the reasonable person would have done. The reasonable person would have gone to the City. In fact, inspectors from the fire department had mentioned it to you. Even if they had not, it would be incumbent upon you to check with the City to ask, "Do I need one? Do I not need one? Is the zoning okay?" You did not do that. [ 27 ] I have been a bit longwinded about this, but I just wanted to make sure, Mr.

Kulash, that you understand the decision that I am about to make, and that is, I am afraid, that I am going to have to find you liable on both counts. You operated a business in property that was not zoned for the usage that you put it to, and you operated without a business licence. [ 28 ] I find that both counts have been made out.

(REASONS FOR JUDGMENT CONCLUDED)