R. v. Hayward, 2013 ONCJ 668

Citation: R. v. Hayward , 2013 ONCJ 668 IN THE MATTER OF the Retail Sales Tax Act, R.S.O. 1990, c. R.31 Between Her Majesty the Queen (Ministry of Finance of Ontario) prosecutor and Eugena R. Hayward and 1146037 Ontario Limited operating as The Ascot Room defendants Ontario Court of Justice Caledon, Ontario Quon J.P. Reasons for Sentence Pleas entered on: July 19, 2012 Sentence hearing held: May 24 and August 21, 2013. Sentence rendered: November 29, 2013. Counsel: V. Hawkes , Prosecutor for the Ministry of Finance C.

Hunter , counsel for Eugena Hayward and 1146037 Ontario Limited o/a The Ascot Room on pleas entered by defendants on July 19, 2012 (counsel’s application to be removed as solicitor of record based on ethical grounds granted on May 24, 2013).

Eugena Hayward, representing herself after application by counsel to be removed as solicitor of record had been granted on May 24,2013. Eugena Hayward, representing 1146037 Ontario Limited o/a The Ascot Room, after application by counsel to be removed as solicitorof record had been granted on May 24, 2013. Charges defendants were convicted on: 1.

Eugena Hayward, charged and convicted for being an officer, director or agent of 1146037 Ontario Limited o/a The AscotRoom, a vendor under the Retail Sales Tax Act who willfully evaded or attempted to evade compliance with that Act betweenAugust 1, 2004 to February 23, 2009, by failing to disclose and remit to the Minister of Finance retail sales tax collections in theamount of $33,826.12 more or less, contrary to clause s. 32(4)(

d) of Retail Sales Tax Act, R.S.O. 1990, c. R.31. 2. Eugena Hayward, charged and convicted for being an officer, director or agent of 1146037 Ontario Limited o/a The AscotRoom, a vendor under the Retail Sales Tax Act who willfully evaded or attempted to evade compliance with that Act betweenAugust 1, 2004 to February 23, 2009, by failing to collect and remit to the Minister of Finance retail sales tax collections in theamount of $207,040.30 more or less, contrary to s. 32(4)(

d) of Retail Sales Tax Act, R.S.O. 1990, c. R.31. 3. 1146037 Ontario Limited o/a The Ascot Room, charged and convicted for being vendor under the Retail Sales Tax Act whowillfully evaded or attempted to evade compliance with that Act between August 1, 2004 to February 23, 2009, by failing todisclose and remit to the Minister of Finance retail sales tax collections in the amount of $33,826.12 more or less, contrary to s.32(4)(

d) of Retail Sales Tax Act, R.S.O. 1990, c. R.31. 4. 1146037 Ontario Limited o/a The Ascot Room, charged and convicted for being vendor under the Retail Sales Tax Act whowillfully evaded or attempted to evade compliance with that Act between August 1, 2004 to February 23, 2009, by failing tocollect and remit to the Minister of Finance retail sales tax collections in the amount of $207,040.30 more or less, contrary to s.32(4)(

d) of Retail Sales Tax Act, R.S.O. 1990, c. R.31. Cases Considered or Referred To: R. v. Beach Motors, [2002] O.J. No. 4458 (QL) (O.C.J.), per Quon J.P. R. v. Chan, 2012 ABPC 272 , [2012] A.J. No. 1023 (QL) (Alta. Prov. Ct.), per Fradsham J. R. v. Chobotar (2012), unreported (Man. Prov. Ct.), per Stannard J. R. v. Coffin (2006), 2006 QCCA 471 , 210 C.C.C. (3d) 227 (Q.C.A.). R. v. Cotton Felts (1982), (ON CA), 2 C.C.C. (3d) 287 (O.C.A.), per Martin, Zuber and Blair JJ.A. R. v. Cunningham, 2010 SCC 10 , [2010] S.C.J. No. 10 (QL) (S.C.C.).

R. v. Drabinsky, 2011 ONCA 582 , [2011] O.J. No. 4022 (QL) (O.C.A.), per Doherty, Goudge, and Armstrong JJ.A. R. v. Elless, [2007] B.C.J. No. 1452 (QL) (B.C.S.C.). R. v. Jones (1994), (SCC), 89 C.C.C. (3d) 353, 114 D.L.R. (4th) 645, [1994] 2 S.C.R. 229 (S.C.C.) R. v. Kirk (c.o.b. B.A. Holdings), 2005 ONCJ 352 , [2005] O.J. No. 3316 (QL) (O.C.J.), per Kukurin J. R. v. Knox Contracting, (SCC), [1990] 2 S.C.R. 338 (S.C.C.). R. v. Luoma, [2010] B.C.J. No. 2215 (QL) (B.C.S.C.). R. v. M. (C.A.) (1996), (SCC), 105 C.C.C. (3d) 327 (S.C.C.). R. v. Pauchay (2003), 35 M.V.R. (4th) 247, [2003] S.J. No. 221 (QL) (S.Q.B.).

R. v. P.H.H. (No. 2), [1997] O.J. No. 4234 (QL) (Ont. Ct. (Prov. Div.)), per Renaud J. R. v. Rosenberg, [1993] O.J. No. 3260 (QL) (Ont. Ct. (Gen. Div.)), per Watt J. R v. Sears (1978), (ON CA), 39 C.C.C. (2d) 199 (O.C.A.), per Arnup, Dubin and Zuber, JJ.A. R. v. Seto, [2010] O.J. No. 5438 (QL) (O.C.J.), per Young J. R. v. Solomon, 2008 SCC 62 , [2008] S.C.J. No. 55 (QL) (S.C.C.). R. v. Topp, [2011] S.C.J. No. 43 (QL), 2011 SCC 43 (S.C.C.). R. v. Tyskerud, [2013] B.C.J. No. 2183 (QL), 2013 BCPC 277 (B.C. Prov. Ct.), per MacCarthy J. R. v. Virk, [2002] O.J. No. 4102 (QL) (O.C.J.), per Madigan J.P. R. v.

Ward (1980), (ON CA), 56 C.C.C. (2d) 15 (O.C.A.), per Martin, Blair and Goodman JJ.A. R. v. Witen, [2012] O.J. No. 3226 (QL), 2012 ONSC 4151 (S.C.J.O), per Hambly J. Statutes, Regulations and Rules Cited:

Corporations Information Act , R.S.O. 1990, c. C.39. Criminal Code , R.S.C. 1985, c. C-46, ss. 718, 718.1 , and 718.2 . Provincial Offences Act , R.S.O. 1990, c. P.33. Retail Sales Tax Act , R.S.O. 1990, c. R.31, ss. 13(1), 22(1) , 32(4) (d), 32(4.1) , 32(4.1)(1), 32(4.1)(2), 42 , 43(1) , and 44(8) . Reference material considered: Ruby, C. Sentencing (2ed) (Toronto, Canada: Butterworths, 1980), pp. 262-263, 284-285. Stewart, S. Stewart on Provincial Offences Procedure in Ontario (3ed.) (Toronto, Canada: Earlscourt Legal Press, Inc., 2011), pp. 369 to 371. Exhibits Entered: Exhibit "1" - one page document entitled, “1146037 Ontario Limited operating as The Ascot Room, case #2009-02-365,

Schedule “B” (to support the offence pursuant to ss. 13(2) of the Retail Sales Tax Act ), showing retail sales tax collected, retail sales tax reported and remitted, and retail sales tax collected and not reported and remitted for retail sales tax return periods of Jan-05, Jul-05, Jan-06, Jul-06, Jan-07, Jul-07, Jan-08, Jul-08, and Jan-09. The

schedule indicates that the total for the nine return periods was $33,826.12 (with adjustment of ($506.43)) of retail sales tax collected, in which the details were obtained from Quickbooks & vendor’s business records; that the total for the nine return periods was $0.00 of retail sales tax reported and remitted; and the total for the nine return periods was $33,826.12 (with adjustment of ($506.43)) of retail sales tax collected and not reported and remitted. Exhibit "2" - one page document entitled, “1146037 Ontario Limited operating as The Ascot Room, case #2009-02-365,

Schedule “A” (to support the offence pursuant to ss. 44(2) of the Retail Sales Tax Act ), showing retail sales tax not collected, retail sales tax reported and remitted, and retail sales tax not collected and not reported and remitted for retail sales tax return periods of Aug- 04, Sep-04, Oct-04, Nov-04, Dec-04, Feb-05, Mar-05, Apr-05, May-05, Jun-05, Aug-05, Sep-05, Oct-05, Nov-05, Dec-05, Feb-06, Mar- 06, Apr-06, May-06, Jun-06, Aug-06, Sep-06, Ovt-06, Nov-06, Dec-06, Feb-07, Mar-07, Apr-07, May-07, Jun-07, Aug-07, Sep-07, Oct- 07, Nov-07, Dec.07, Feb-08, Mar-08, Apr-08, May-08, Jun-08, Aug-08, Sep-08, Oct-08, Nov-08, and Dec-08. The

schedule indicates that the total for the forty-five return periods was $207,040.30 (with adjustment of ($2,886.67)) of retail sales tax not collected, in which the details were obtained from Quickbooks & vendor’s business records; that the total for the forty-five return periods was $0.00 of retail sales tax reported and remitted; and the total for the forty-five return periods $207,040.30 (with adjustment of ($2,886.67)) of retail sales tax not collected and not reported and remitted. The

schedule also indicated, “no records found” for the return periods of Aug-08 and Sep-08. Exhibit "3" - package of case law (50 pages). Exhibit "3A" - two documents printed 11/06/2012: (1) a two-page document entitled, “1146037 Ontario Limited o/a as The Ascot Room: RST Returns By Period , with headings of “Period”, “Status”, “Due”, and “Received” for the periods from of 30-Jun-10 to 31- Aug-96; and (2) a two-page document entitled, “1146037 Ontario Limited o/a as The Ascot Room, with headings of “Period”, “Tax”, “Penalty”, “Interest”, “Credit”, and “Balance” for the periods from of 30-Jun-10 to 31-Aug-96.

The second document had totals of Tax: 479,134.16, Penalty: 44,204.56, Interest: 333,080.01, Credit: (147,724.96), and Balance: 708,693.77 (4 pages). Exhibit "3B" - document entitled, Corporate Inquiry , regarding 1146037 Ontario Limited as of 2012-11-13 showing incorporation date of “1995-09-05”, the status as “active”, with Registered Office address of “36 Millward Street, Erin, Ontario” and Principal Office

address in Ontario of “17228 Olde Main Street, Belfountain, Ontario”; and the first and sole director of the corporation is “G.R. Hayward” who commenced on “1995-09-05” and the first and sole director’s address is “36 Millward Street, Erin, Ontario”; and when update filed on 2007-07-19 for return year 2006, the sole director of the corporation was listed as “Genie Hayward” (7 pages).

Exhibit "3C" - copy of email sent from Nick DeMaria to Valerie Hawkes dated May 21, 2013, at 11:23 AM, indicating 3 webpage links and showing pages from the three internet webpage links in respect to the operation of the “Ascot Room” and Genie Hayward’s active involvement with the “Ascot Room” for April 28, 2013, April 19, 2013, and May 12, 2013 (4 pages). Exhibit "3D" - Corporate Inquiry regarding 2199970 Ontario Inc. as of 2012-11-13 showing incorporation date of “2009-03-09”, the status as “active”, with registered Office address of “care of Robert Venables, 6003 10 th Line, P.O.

Box 984, R.R. #1, Erin, Ontario” and principal office address in Ontario of care of Robert Venables, 6003 10 th Line, P.O. Box 984, R.R. #1, Erin, Ontario”; and the first and sole director and an officer of the corporation is “R. Venables” who commenced on “2009-03-09”; and the first and sole director’s address is “6003 10 th Line, P.O. Box 984, R.R. #1, Erin, Ontario”; and the initial return dated “2009-03-25” and effective on “2009-05- 01” was signed by “Robert Church” (6 pages).

Exhibit "3E" - document entitled, “Payments - 1146037 Ontario Limited o/a as The Ascot Room” , with headings: Account Type; Account; Period; Trans Type; Amount; Posted, which shows that 6 payments towards RST were paid totaling 29,036.41 and the following amount were posted on the following dates: (1) 9,721.95 posted to 24-Mar-09; 8,050.63 posted to 17-Mar-09; 7,030.39 posted to 04-Mar-09; 3,721.88 posted to 04-Mar-09; 328.65 posted to 25-Feb-09; 182.91 posted to 22-Jan-10 (1 page).

Exhibit "3F" - copy of document entitled, Joan Clements: “Collection history notes, documents & e-mails, which includes copies of Sheriff’s Report dated September 25, 2009, Certificate In Lieu of Return of Writ as to Goods dated September 25, 2009, fax dated Nov. 12, 2009 to Nick DeMaria regarding Continuing Legal Action issue date of May 27, 2009, e-mails dated Sept. 23, 2010, and document entitled, Revenue Collections Branch Accounts Receivable Strategy : Enforcement of Warrants of Seizure and Sale for Seizure of Cash, Cheques & Credits Cards Receipts where balance is equal to or exceeds $500,000 (17 pages).

Exhibit "3G" - copy of two documents: (1) one document entitled, “Warrant of Seizure and Sale”, in the matter of the Retail Sales Tax Act , in respect to “1146037 Ontario Limited operating as The Ascot Room”, directed to the sheriff of the County of Wellington to seize and sell the real and personal property of the named corporation for the amount of $118, 828.11, dated October 22, 1999; and (2) one document entitled, “Warrant of Seizure and Sale”, in the matter of the Retail Sales Tax Act, in respect to “1146037 Ontario Limited operating as The Ascot Room”, directed to the sheriff of the Regional Municipality of Peel to seize and sell the real and personal property of the named corporation for the amount of $92,991.09, dated March 31, 2000 (2 pages).

Exhibit "3H" - copy of printout of MPAC (Municipal Property Assessment Corporation) document, last updated October 22, 2012, for municipal address 17228 OLD MAIN ST., Belfountain, (Plan CAL2 PT NW LOT 6 MAIN ST BELFOUNTAIN), indicating that First Owner Name is “HAYWARD GENIE”. The second page indicates that the new owner is “HAYWARD GENIE” and the sale date is 1999/07/01 for $185,000 (2 pages).

Exhibit "3I" - copy of printout dated 05/21/2013 of MPAC (Municipal Property Assessment Corporation) document, for municipal address 17228 OLD MAIN ST., Belfountain, (Plan CAL2 PT NW LOT 6 MAIN ST BELFOUNTAIN), indicating that First Owner Name is HAYWARD GENIE with a roll total of 343500. The second page indicates that HAYWARD GENIE is the Owner/Occupier with a DOB of [removed for privacy] (3 pages). . Exhibit "3J" - copy of printout dated 10/23/2012 of MPAC (Municipal Property Assessment Corporation) document, for municipal address 6003 TENTH LINE, P.O. Box 984, Erin, Ontario, (CON 11 W PT LOT 28 RP 61R1461

PART 3), indicating that First Owner Name is VENABLES ROBERT CHARLES with a roll total of 867000 and that HAYWARD GENIE RENEA is a joint Owner with VENABLES ROBERT CHARLES. The second page indicates that the new owner is VENABLES ROBERT CHARLES and the sale date is 2001/11/01 for $390,000 (4 pages). Exhibit "3K" - copy of printout dated 05/21/2013 of MPAC (Municipal Property Assessment Corporation) document, for municipal address 6003 TENTH LINE, P.O. Box 984, Erin, Ontario, (CON 11 W PT LOT 28 RP 61R1461

PART 3), indicating that First Owner Name is VENABLES ROBERT CHARLES with a roll total of 877,475 and that HAYWARD GENIE RENEA is a joint Owner with VENABLES ROBERT CHARLES (4 pages). .

Exhibit "3L" - Copy of RIN Record for Vehicles for individual named Hayward, Eugena, Renae with D.O.B. [removed for privacy] (44 years) indicating 9 records of snowmobiles, trailers commercial and passenger vehicles, which 8 active vehicles and 1 inactive vehicle (1 page). Exhibit "3M" - Copy of RIN Record for Vehicles for individual named Venable, Robert C. with D.O.B. [removed for privacy] (60 years) indicating 19 records of snowmobiles, trailers commercial and passenger vehicles, which 8 active vehicles and 11 inactive vehicles (1 page).

Exhibit "3N" - PPSR Request report dated October 19, 2012 for Eugena Hayward (aka Eugena Renae Hayward, aka Genie Hayward, “1146037 Ontario Limited with trade name of The Ascot Room”, and 2199970 Ontario Inc., showing the only Secured Party/Lien Claimant is the Minister of Finance of Ontario and the increased secure amount from $244,170 to $620,044 (12 pages). Exhibit "3O" - PPSR Request report dated October 19, 2012 for Robert Venables showing a 2012 Chevrolet Silverado with secured party as Resmor Trust Company (5 pages).

Exhibit "3P" - package of documents entitled GENIE: CRA Personal Tax Returns from 2003 to 2008 (last return filed is 2008) (50 pages) Exhibit "3Q" - package of documents entitled ROBERT VENABLES: Last return filed for 2008 (11 pages). Exhibit "3R" - copies of colour photographs taken from Facebook page of The Ascot Room on August 20, 2013, for the purpose of showing that the business operating as the Ascot Room is still an active and viable business or undertaking (3 pages).

Exhibit "4" - Pre-Sentence Report dated May 14, 2013, prepared by Rea Williams, probation and parole officer, Brampton Probation & Parole, 155 Clark Boulevard, Unit 15, Brampton, Ontario (5 pages). 1. INTRODUCTION [ 1 ] Prior to July 1, 2010, and the harmonization of sales tax collection in Ontario with the federal government, vendors of certain goods and services in Ontario, by virtue of the Retail Sales Tax Act , R.S.O. 1990, c.

R.31, had the legal obligation to collect provincial retail sales tax (“RST”) on the goods and services they had sold or provided in Ontario and then report and remit that retail sales tax collected to the Minister of Finance of Ontario.

And, to ensure that vendors would comply with their statutory obligation to collect, report, and remit the proper amount of retail sales tax to the Minister of Finance, the Ontario Legislature had bestowed the Retail Sales Tax Act with significant penalties that could be imposed against vendors who had been convicted of willfully evading or attempting to evade compliance with those legal obligations to collect, report, and remit that provincial retail sales tax.

The penalties that could be imposed against such convicted vendors under the Retail Sales Tax Act include fines of up to 200% of the retail sales tax owing and/or a period of imprisonment for an individual of up to a maximum of two years. [ 2 ] In this particular prosecution under the Retail Sales Tax Act , Ontario’s Ministry of Finance (previously known as the Ministry of Revenue) had charged the defendants, Eugena Renae Hayward and 1146037 Ontario Limited, who were operating a women’s retail apparel store in Belfountain, Ontario under the style name of “The Ascot Room”, for not complying with their legal obligations under the statute and of committing offences in respect to willfully not remitting retail sales tax to the Minister of Finance during 54 reporting periods from August 1, 2004 to February 23, 2009.

In total, 128 charges under the Retail Sales Tax Act had been laid against both defendants on three separate informations. Of those 128 charges, Hayward had entered guilty pleas to only two of the charges.

Similarly, the corporate defendant had also entered guilty pleas to only two of the 128 charges. [ 3 ] Specifically, on July 19, 2012, which is approximately two and a half years after the 128 charges were laid, both Hayward and the corporate defendant had voluntarily and in the presence of their legal counsel pled guilty to offences in respect of the corporate defendant being a vendor under the Retail Sales Tax Act , who had willfully failed to disclose and remit $33,826.12 of retail sales tax that had been collected by the corporate defendant during the period in question, and also for the corporate defendant’s willful failure to collect and remit retail sales tax in the amount of $207,040.30, during that same period, which are offences contrary to s. 32(4) (

d) of the Retail Sales Tax Act . Consequently, the total amount of the retail sales tax that the defendants had either collected, but not remitted, or that it had failed to collect and remit to the Minister of Finance, had been $240,866.42. Moreover, the Ministry of Finance contends that

instead of remitting that retail sales tax, the defendant Eugena Hayward had used this money, which had being collected or ought to have been collected in trust for and belonging to the citizens of Ontario, for her own benefit and to support Hayward’s lavish lifestyle. [ 4 ] Furthermore, after the guilty pleas by the defendants had been accepted and convictions had been entered against both defendants for committing those four offences under s. 32(4) (d), the sentencing hearing had been adjourned on consent to November 15, 2012.

However, on November 15th the sentencing hearing could not proceed, as the convicted defendant, Eugena Hayward, had supposedly been out of the country for a family emergency. The hearing was then adjourned to January 10, 2013. Through her legal counsel, the defendant had also been ordered to produce proof she had been out of the country on November 15, 2012, and proof of the family emergency. On January 10 th , Hayward attended and did provide satisfactory proof of the nature of the emergency and that she had been physically out of the country.

And, because a custodial sentence had been a possibility for Hayward, the sentencing hearing was then adjourned to May 24, 2013, so that a Pre-Sentence Report could be prepared and used at the sentencing hearing for Hayward. However, on May 24th, prior to the actual sentencing hearing commencing, the defendants’ legal counsel brought an application to be removed as counsel of record for ethical reasons. The application was granted and the defendants’ legal counsel was then permitted to get off the record and no longer represent the defendants.

The defendants then sought an adjournment of the sentencing hearing to obtain new legal representation, which had been fervently opposed by the Ministry of Finance.

After considering the numerous delays, the 25 court appearances already made in these proceedings since the first appearance of the defendants on February 22, 2010, the prejudice that would ensue to the Ministry of Finance if the matter was further delayed, and what appeared to be the defendants’ lack of effort to proceed expeditiously in these proceedings, the defendants’ application for an adjournment to obtain new legal representation was not granted and the sentencing hearing commenced on May 24, 2013, with the defendants representing themselves. [ 5 ] Moreover, when the sentencing hearing finally commenced on May 24th, it had been nearly 3½ years after the date on which the first information had been sworn on December 16, 2009, and over 3 years since the second and third informations had been sworn on February 10, 2010.

In regards to the hearing, the Ministry of Finance called Nick DeMaria, a Ministry of Finance investigator, as its first witness, as well as proffering documents as evidence during the first day of the sentencing hearing. [ 6 ] After the Ministry of Finance and the defendants had completed the examination and cross-examination of the Ministry of Finance investigator, the hearing was then adjourned to August 21, 2013.

The defendants were then advised that they could still retain legal counsel for the continuation of the sentencing hearing and that transcripts could also be ordered by the defendants in order to assist them. In addition, the Ministry of Finance had been also ordered to make DeMaria, the Ministry of Finance investigator, who had already completed his testimony, be available for the defendants to further cross-examine on August 21, 2013, if they so wished.

On the resumption of the hearing on August 21 st , the defendants had decided not to retain any legal representation, so the defendants proceeded with the sentencing hearing still representing themselves.

The Ministry of Finance then called an additional witness, Lisa Liberty, an undercover Ministry of Finance investigator, to show that the defendant, Eugena Hayward, had been still involved in or working in the women’s retail apparel store known as “The Ascot Room”, when the undercover investigator had attended at the premises of “The Ascot Room” located at 17228 Olde Main Street in Belfountain, Ontario on August 9, 2013. [ 7 ] Moreover, the individual defendant, Eugene Hayward, did not testify in the sentencing hearing, but had tried to proffer factual evidence during the sentencing hearing through oral submissions that were not given under oath or affirmation, even though she had been informed by the court that although sentencing hearings are less formal in nature and more flexible in regards to the rules of evidence, factual evidence that had not been given under oath or affirmation and not subject to cross-examination may be given very little weight as trustworthy and credible evidence. [ 8 ] And, in their submissions on the appropriate sentence, the Ministry of Finance contends that to meet the objectives of denunciation and deterrence a custodial sentence of 60 to 90 days would be appropriate in the circumstances and should be imposed on the individual defendant, Eugena Hayward, as the operating mind of the defendant corporation, and that a fine of double the amount of retail sales owing should also be imposed against Hayward, since she had been one of the worst offenders in one of the worst cases of evading remitting retail sales tax.

On the other hand, the Ministry submitted that they would be content with a suspended sentence for the corporate defendant, since the corporate defendant did not have any assets. [ 9 ] In response to Ministry’s submissions, the defendant, Eugena Hayward, submitted that she had always said she would pay and had never been running from any amount, and that she had not sold the property and then try to run and hide, nor had she tried to hide from any of this.

More important, Hayward contends that she had not said that she was not going to pay, but just needed to know what the exact numbers were and not the assessments that the Ministry had been going by. Moreover, Hayward said she would still be willing to do that when she had received an accurate set of numbers to act on. In addition, Hayward contends emphatically that she had not been given any remuneration from any company and that she also does not even have a bank account.

She also said that she just wants to have the correct numbers and that she wants to be able to pay and stop the assessments, penalties, and interest, which greatly takes over what the actual amounts are. Finally, she submitted that if the Ministry would like to accept a $50,000 fine from her to have these charges dropped and to clear things, then she would also be fine with that.

[ 10 ] After submissions on sentence were completed by both the Ministry of Finance and the defendants, the decision on sentence was reserved and the matter was then adjourned to November 29, 2013 for the court’s decision. These are, therefore, my written reasons in respect to sentence: 2. STATUTORY PENALTIES [ 11 ] As a consequence of both the individual defendant, Eugena Hayward, and the corporate defendant, 1146037 Ontario Limited, operating as The Ascot Room, being convicted of committing two counts each under s. 32(4) (

d) of the Retail Sales Tax Act , R.S.O. 1990, c. R.31, they both face being sentenced to the following penalties, respectively, under s. 32(4.1)(1), of a minimum fine of the greater of $1000 or 50% of the retail sales tax that had been evaded or that should have been remitted to the Minister of Finance to a maximum fine of double the retail sales tax that that had been evaded or that should have been remitted to the Minister of Finance, if the maximum amount calculated is more than $1000.

In addition, besides a fine that could be imposed against the individual defendant, Eugena Hayward, s. 32(4.1)(2) also provides that an individual could be sentenced to a maximum period of imprisonment of not more than two years [ emphasis is mine below ]: False statements 32(4) Every person is guilty of an offence who has , … (

d) wilfully, in any manner, evaded or attempted to evade compliance with this Act or payment of taxes imposed by this Act; or … Penalty, false statement 32(4.1) A person convicted of an offence under subsection (4) is liable to one or both of the following penalties in addition to any penalty otherwise provided by the Act: 1.

A fine that is, i. a minimum of $1,000 or 50 per cent of the amount of tax that should have been remitted as collected or payable or that was sought to be evaded, whichever is greater, and ii. a maximum of double the amount of tax that should have been remitted as collected or payable or that was sought to be evaded, if the maximum so calculated is greater than $1,000. 2.

Imprisonment for a term of not more than two years . [ 12 ] Furthermore, s. 44(8) of the Retail Sales Tax Act provides that if a convicted offender is sentenced to pay a fine, the trial justice can also sentence the offender to serve a sentence of imprisonment for not more than one year in default of payment of that fine [ emphasis is mine below ]: Default in paying fine 44(8) Where a fine provided for in this Act is imposed on any person as the result of the person’s conviction for the commission of an offence against this Act, a sentence of imprisonment for not more than one year in default of payment of the fine may also be imposed on

such person. 3. BACKGROUND (

a) The Corporate Defendant [ 13 ] The corporate defendant, 1146037 Ontario Limited, had been incorporated in Ontario on September 5, 1995. Moreover, from the information required to be provided in an initial return under the Corporations Information Act , R.S.O. 1990, c. C.39, the corporate defendant’s registered office address is listed as 36 Millward Street, Erin, Ontario, while its principal place of business is listed as 17228 Olde Main Street, Belfountain, Ontario (see Ex. 3B).

In addition, the corporate defendant had been operating as a women’s apparel retail store under the style name of “The Ascot Room” at 17228 Olde Main Street in Belfountain, Ontario. Furthermore, as those Corporate Inquiry documents entered as Exhibit 3B indicate, the corporate defendant, 1146037 Ontario Limited, has not been dissolved and is still listed as an active corporation. (

b) The Operating Mind Of The Corporate Defendant [ 14 ] In addition, from those Corporate Inquiry documents entered as Exhibit 3B, when the corporate defendant, 1146037 Ontario Limited, was incorporated on September 5, 1995, it is also indicated that its first and sole director was “G.R. Hayward”, who is the individual defendant, and who had commenced as a director for the corporate defendant on September 5, 1995. Hayward’s address had also been listed as 36 Millward Street, Erin, Ontario.

In addition, Hayward had also been listed as the signing officer for the corporate defendant for the 2006 return year that had been received by the Companies Branch on July 19, 2007.

Moreover, these Corporate Inquiry documents also indicate in the updated return filed for the corporate defendant on July 19, 2007, for the 2006 return year, that the sole director of the corporate defendant had been “Genie Hayward”, who is the individual defendant. [ 15 ] In addition, s. 42 of the Retail Sales Tax Act provides that any officer, director, or agent of a corporation, or any other person, who directed, authorized, assented to, acquiesced in or participated in the commission of any act by the corporation, which is an offence under the Retail Sales Tax Act , or the omission of any act which would constitute an offence under this Act, would also be guilty of an offence, and on conviction, would be liable to the punishment provided for the offence, whether or not the corporation has been prosecuted or convicted of any offence under the Retail Sales Tax Act .

In addition, s. 43(1) of the Retail Sales Tax Act makes the persons, who were the directors of the corporation at the time the corporation had failed to collect retail sales tax, or had collected that tax, but had failed to remit that retail sales tax to the Minister of Finance, or at the time the corporation had failed to pay any interest or penalty relating to those taxes, jointly and severally liable with the corporation to pay those amounts [emphasis is mine below]: Officers, etc., of corporation 42.

Any officer, director or agent of a corporation, or any other person, who directed, authorized, assented to, acquiesced in or participated in the commission of any act by the corporation which is an offence under this Act, or the omission of any act the omission of which is an offence under this Act, is guilty of an offence and on conviction is liable to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted of any offence under this Act . Directors 43

(1) Where a corporation has failed to collect tax or has collected tax and failed to remit the tax or has failed to pay any interest or penalty relating thereto, the directors of the corporation at the time the corporation was required to collect or remit the taxes or to pay the interest or penalty relating thereto, are jointly and severally liable, together with the corporation to pay such amounts. Exception 43(2) A director of a corporation is not liable under subsection (1) unless ,

(

a) a warrant of execution for the amount of the corporation’s liability as described in subsection (1) has been issued under clause 37(1) (

b) and directed to the sheriff of the county or district in which any property of the corporation is located or situate and the warrant has been returned by the sheriff unsatisfied in whole or in part ; (

b) the corporation becomes subject to a proceeding to which

section 22 applies and a claim has been made under that

section at any time from the date that the Minister should have been advised of the commencement of those proceedings to the date that is six months after the remaining property of the vendor has been finally disposed of; … Prudent director 43(3) A director of a corporation is not liable for a failure described under subsection (1) if the director exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances . … (

c) The Nature And Status Of The Business Known As “The Ascot Room” [ 16 ] “The Ascot Room” is a women’s retail apparel store located in the hamlet of Belfountain, Ontario. The store sells or retails women’s apparel and shoes from Italy and Montreal .

As indicated in ads or webpage links showing events involving “The Ascot Room” for April 28, 2013, April 19, 2013, and May 12, 2013, that were found by Nick DeMaria on an internet search and submitted as Exhibit 3C, “The Ascot Room” recently had held an outlet sale at Erin’s Main Street Outlet located at 67 Main Street in Erin, Ontario, which is at a different location from its principal place of business in Belfountain, and that it had also been involved in holding Fashion shows at different locations in 2013. [ 17 ] Furthermore, “The Ascot Room” had been operated by the corporate defendant, 1146037 Ontario Limited, until the Ministry of Finance issued bank demand or garnishment letters to the corporate defendant’s bank to seize any money in the corporate defendant’s bank accounts and to transfer the seized money to the Ministry.

Once the money had been seized from the defendant’s bank accounts as part of the Ministry’s collection action against the corporate defendant, the corporate defendant’s assets, including the business known as “The Ascot Room”, were transferred in the early half of 2009 from the corporate defendant to a new corporation named, 2199970 Ontario Inc., that was controlled by Robert Venables, who happens to be the common-law husband of the individual defendant, Eugena Hayward. [ 18 ] It further has been proven by the Ministry of Finance that this retail store known as “The Ascot Room” is still in business and that it has been in business for approximately 18 years and has been operating continuously at the same location of 17228 Olde Main Street in Belfountain since at least September 20, 1995 , when “The Ascot Room” had been issued a R.S.T. vendor’s permit, which is also shortly after the corporate defendant, 1146037 Ontario Limited, had been incorporated in Ontario on September 5, 1995. [ 19 ] Moreover, the status of “The Ascot Room” as an ongoing concern had been confirmed by undercover Ministry of Finance investigator, Lisa Liberty, who had attended at 17228 Olde Main Street in Belfountain, Ontario, on August 9, 2013, and had testified to observing “The Ascot Room” on that date still in operation and still open for business as a women’s apparel retail store. (

d) Eugena Hayward’s Ongoing Involvement In The Business Known As “The Ascot Room” [ 20 ] Eugena Hayward has submitted that she presently does not receive any compensation from any company and only volunteers at events or functions involving “The Ascot Room”. Furthermore, in the Pre-Sentence Report entered as Exhibit 4, Hayward informed the probation officer who prepared the report that she is currently unemployed, does not have a source of income, and is being supported by her common-law spouse of 12 years.

In addition, Hayward informed the writer of the report that her mother and her common-law spouse assist her with the necessities of life. Furthermore, she had informed the writer of the pre-sentence report that she had been self- employed from 1996 to 2009 at a ladies clothing store, but this employment had ended because she “fell behind with taxes, and the government closed the bank account”.

[ 21 ] However, the Ministry of Finance in disputing Hayward’s submission about not being employed and not having any involvement with the business known as “The Ascot Room” had called evidence to contradict her contentions.

First, Nick DeMaria testified that he had found ads and webpage links when he conducted an internet search that has been entered as Exhibit 3C, that had revealed that Eugena Hayward’s name had appeared in respect to a fund raising event held on April 28, 2013, at the Brampton Golf and Country Club which had indicated an event with “Fashions by Genie Hayward of The Ascot Room in Belfountain”; a Family Transition Place charity event held on April 19, 2013 at the Hockley Vallet Resort with “The Ascot Room” as a fashion show contributor; and an event entitled “Women Celebrating Women Fashion Show at The Caledon Country Club with fashions from “The Ascot Room”. [ 22 ] In addition, Lisa Liberty, a Ministry of Finance investigator, testified that while she had been posing as a customer inside the retail store known as “The Ascot Room” on August 9, 2013, located at 17228 Olde Main Street, Belfountain, Ontario, Liberty had been approached and served by the individual defendant, Eugena Hayward. [ 23 ] Ergo, I find Eugena Hayward’s contention that she is not involved with the retail store known as “The Ascot Room” not to be genuine, considering the evidence to the contrary that had been submitted by the Ministry of Finance in respect to the ads and webpage links entered as Exhibit 3C that mention Hayward’s name in association with “The Ascot Room” and the evidence that Hayward had been serving Lisa Liberty, a Ministry of Finance investigator, while Liberty had been posing as a customer inside “The Ascot Room” on August 9, 2013. (

e) The Seizure Of Funds From The Corporate Defendant’s Bank Accounts In Early 2009 By The Ministry Of Finance As Part Of Its Collection Action Against The Defendants [ 24 ] As a consequence of the corporate defendant, 1146037 Ontario Limited, not filing returns and not remitting retail sales tax to the Ministry of Finance, and because of the unsuccessful efforts by the Ministry of Finance to get the corporate defendant to comply with the Retail Sales Tax Act and that the debt to the Minister of Finance had gone back to 1996, the Ministry commenced collection action against the corporate defendant and issued a bank demand or garnishment letter in February of 2009 to the bank or banks where the corporate defendant had its bank accounts (see Joan Clements’ collection history notes in Ex. 3F, particularly the “Retail Sales Tax Special Investigation Referral” document that indicates the debt goes back to 1996).

The money in the corporate defendant’s bank accounts were then seized and forwarded to the Ministry of Finance.

As indicated in the documents entered as Exhibit 3F, the Ministry of Finance in their collection action received from the corporate defendant’s bank accounts, in respect to these bank demand letters, payments of $328.65 on February 24, 2009; $8,050,63 on March 16, 2009; $9721.95 on March 24, 2009; and $10,752.27 on April 9, 2009, which is a total of $28,853.50 of retail sales tax that had been owing to the Ministry of Finance. [ 25 ] Moreover, Nick DeMaria, the Ministry of Finance investigator, testified that any moneys collected from or paid by the corporate defendant or by Eugena Hayward in respect to the retail sales tax owing by the corporate defendant is credited or applied chronologically first to the oldest reporting period that is still outstanding and to the amount owing for that particular reporting period.

DeMaria also said that any of the moneys that had been collected from or paid in respect to the outstanding amount of retail sales tax owed by the corporate defendant to the Minister of Finance had not been applied or been credited to the offence period in question, of August 1, 2004 to February 23, 2009.

In addition, since the defendants has been first charged on December 16, 2009 , when the first information of the three informations had been sworn, Nick DeMaria testified that the defendants have not remitted or paid any retail sales tax owing towards or for that period covering August 1, 2004 to February 23, 2009. [ 26 ] In addition, the Ministry’s efforts to get the corporate defendant to comply with its statutory duties as a vendor had commenced and had been ongoing prior to May 15, 1998.

This is indicated in Joan Clements’ memorandum dated February 25, 2009, entitled “Accounts receivable strategy: enforcement of warrants of seizure and sale for seizure of cash, cheques & credit cards receipts where balance is equal to or exceeds $500,000”, which is contained in Exhibit 3F: Background: This account was referred to the collections May 15, 1998 and the London Tax Office on November 11, 2008. The outstanding RST debt of $576,687.48 is a result of estimated assessments from August 1, 2004 to December 31, 2008 as well as non paid returns from August 1, 1997 to July 31, 2004.

The outstanding CT [Corporation Tax] balance of $11,529.67 is a result of non paid returns for the period ends January 31, 2004 to January 31, 2006 and there are 2 returns in default for January 31, 2007 and January 31, 2008.

Collection Action: Progressive collection action has been ongoing since June 18, 1998 including letters and legal actions. To date we have been unsuccessful in resolving the outstanding balance. A writ is registered with the Sheriff of the Regional Municipality of Peel and a lien is also registered. A bank demand was issued February 2, 2009 … [ 27 ] Moreover, on May 22, 2009, the Ministry of Finance then implemented its next stage of trying to collect the retail sales tax owing from the corporate defendant by obtaining a writ for the Sheriff to seize the corporate defendant’s assets (see Joan Clements’ collection history notes in Ex. 3F). (

f) Transferring Assets From The Defendant Corporation To A New Corporation In Which Eugena Hayward’s Common-Law Husband Is The New Corporation’s Director And President [ 28 ] In addition, Nick DeMaria, the Ministry of Finance investigator, had testified that a fter these funds had been seized from the corporate defendant’s bank accounts through the bank demand or garnishment letters, a new corporation was incorporated and the corporate defendant’s assets, including the business known as “The Ascot Room”, were then transferred to this new corporation. [ 29 ] Nick DeMaria also testified that when the Sheriff, who had a writ to seize the corporate defendant’s assets in order to collect the retail sales tax owing to the Ministry, had attended at the premises where “The Ascot Room” was being operated at 17228 Old Main Street, Belfountain, Ontario, the Sheriff learned that the corporate defendant’s assets had been transferred to a new corporation.

The Ministry also received a Sheriff’s report dated September 25, 2009, with a “certificate Of Nulla Bona”, indicating that when a Sheriff’s officer attended at the business premises located at 17228 Old Main Street, Belfountain, Ontario to serve the Notice of Seizure on the corporate defendant, the officer had noticed that the business at that location was now being operated by a corporation named 2199970 Ontario Inc. (see Joan Clements’ collection history notes in Ex. 3F). [ 30 ] This new corporation, 2199970 Ontario Inc., had been incorporated on March 9, 2009, shortly after the first amount had been seized from the corporate defendant’s bank accounts on February 24, 2009.

In addition, the Corporate Inquiry for 2199970 Ontario Inc. indicates that its Registered Office address is listed as “care of Robert Venables, 6003 10 th Line, P.O. Box 984, R.R. #1, Erin, Ontario” and that its principal office address in Ontario was listed as “care of Robert Venables, 6003 10 th Line, P.O. Box 984, R.R. #1, Erin, Ontario” (see Ex. 3D). Furthermore, Exhibit 3D also lists the first and sole director and an officer of the corporation as “R.

Venables” who commenced as a director and officer of this new corporation on March 9, 2009. [ 31 ] Furthermore, DeMaria testified that Robert Venables is the common-law husband of the individual defendant, Eugena Hayward. Moreover, Exhibits 3J and 3K also indicate that Robert Venables and Eugena Hayward are the joint owners of a property with the municipal address of 6003 10th Line, P.O.

Box 984, Erin, Ontario, which is the Registered Office address of 2199970 Ontario Inc. [ 32 ] In addition, the Pre-Sentence Report dated May 14, 2013, that was prepared for the individual defendant, Eugena Hayward, also indicates that her common-law husband is self-employed as a carpenter and is also the owner of a retail company (see Ex. 4). [ 33 ] Moreover, once the assets from the corporate defendant were transferred to the new corporation named, 2199970 Ontario Inc., the Ministry of Finance’s collection endeavours and effort to seize the corporate defendant’s assets to satisfy the retail sales tax owing were thwarted. [ 34 ] In addition, DeMaria testified that the new corporation, 2199970 Ontario Inc., had not been registered as a vendor pursuant to the Retail Sales Tax Act .

This is also indicated in Joan Clements’ collection history notes in Exhibit 3F for November 12, 2009. [ 35 ] Furthermore, the individual defendant, Eugena Hayward, also had submitted and acknowledged that the probation office who had prepared the Pre-Sentence Report had also contacted Robert Venables in respect to the preparation of the report, but that Venables had not been able to reach that probation officer when Venables tried to return the telephone call.

[ 36 ] Moreover, there is no evidence that would contradict or show that Robert Venables is not the common-law husband of the individual defendant, Eugena Hayward. (

g) The Amount Of Retail Sales Tax The Corporate Defendant Collected and Failed To Remit Or Failed to Collect and Not Remit To The Minister Of Finance [ 37 ] In addition, two documents had been entered as exhibits by the Ministry of Finance without objection by the defendants’ legal counsel, referred to as

Schedule A (Exhibit 2) and

Schedule B (Exhibit 1) that showed there had been 54 months or 54 reporting periods in which retail sales tax had not been collected and not remitted or had been collected but not remitted to the Ministry of Finance.

Schedule B (Exhibit 1) was in relation to count #1 for both informations numbered 103100 and 103099 and represented a period of nine months of retail sales tax that had been collected but not remitted of $33,826.12. On the other hand,

Schedule A (Exhibit 2) was in relation to count #2 for both informations numbered 103100 and 103099 and represented a period of 45 months in which $207,040.30 of retail sales tax had not been collected and not remitted to the Ministry of Finance. The defendants’ legal counsel stated that this had been substantially correct and admitted. Exhibits 1 and 2 also indicate in respective footnotes that the details of the retail sales tax collected in Exhibit 1 and the details of the retail sales tax not collected in Exhibit 2 had been obtained from Quickbooks and the corporate defendant’s business records. These two documentary exhibits are reproduced below: Ex. 1

Schedule to show retail sales tax collected, retail sales tax reported and remitted, and retail sales tax collected and not reported and remitted Retail Sales Tax Return Period Retail Sales Tax Collected** Retail Sales Tax Reported and Remitted Retail Sales Tax Collected and Not Reported and Remitted Jan-05 $3,829.01 * $3,829.01 Jul-05 $4,310.60 * $4,310.60 Jan-06 $2,796.38 * $2,796.38 Jul-06 $6,060.62 * $6,060.62 Jan-07 $3,116.85 * $3,116.85 Jul-07 $6,035.92 * $6,035.92 Jan-08 $3,405.47 * $3,405.47 Jul-08 $3,651.45 * $3,651.45 Jan-09 $1,126.25 * $1,126.25 Sub-total $34,332.55 $0.00 $34,332.55 --adjustment*** ($506.43) ($506.43) TOTAL $33,826.12 $33,826.12 * Retail Sales Tax return Not Filed ** Details obtained from Quickbooks & vendor’s business records *** Year-end adjustment JE#24 for fiscal YE 01/31/07 applied equally to all 12 periods in fiscal.

NOTE: This

schedule supports the offence pursuant to s. 13(2) of Retail Sales Tax Act ********************************* Ex. 2

Schedule to show retail sales tax not collected, retail sales tax reported and remitted, and retail sales tax not collected and not reported and remitted Retail Sales Tax Return Period Retail Sales Tax Not Collected** Retail Sales Tax Reported and Remitted Retail Sales Tax Not Collected and Not Reported and Remitted Aug-04 $3,969.19 * $3,969.19 Sep-04 $8,159.36 * $8,159.36 Oct-04 $6,398.84 * $6,398.84 Nov-04 $5,356.21 * $5,356.21 Dec-04 $3,825.14 * $3,825.14 Feb-05 $2,743.86 * $2,743.86 Mar-05 $5,712.98 * $5,712.98 Apr-05 $5,023.54 * $5,023.54 May-05 $5,109.64 * $5,109.64 Jun-05 $3,675.54 * $3,675.54 Aug-05 $3,603.98 * $3,603.98 Sep-05 $7,221.27 * $7,221.27 Oct-05 $7,402.85 * $7,402.85 Nov-05 $5,312.18 * $5,312.18 Dec-05 $3,570.06 * $3,570.06 Feb-06 $3,783.82 * $3,783.82 Mar-06 $4,834.03 * $4,834.03 Apr-06 $5,861.17 * $5,861.17 May-06 $5,788.13 * $5,788.13 Jun-06 $3,772.91 * $3,772.91 Aug-06 $3,064.48 * $3,064.48 Sep-06 $6,848.46 * $6,848.46 Oct-06 $5,936.33 * $5,936.33 Nov-06 $4,833.16 * $4,833.16 Dec-06 $4,045.38 * $4,045.38 Feb-07 $3,133.10 * $3,133.10 Mar-07 $4,232.08 * $4,232.08 Apr-07 $6,050.77 * $6,050.77 May-07 $5,681.63 * $5,681.63 Jun-07 $2,654.89 * $2,654.89 Aug-07 $3,002.32 * $3,002.32 Sep-07 $5,702.58 * $5,702.58 Oct-07 $8,957.05 * $8,957.05 Nov-07 $4,015.88 * $4,015.88 Dec-07 $4,267.15 * $4,267.15 Feb-08 $2,176.44 * $2,176.44 Mar-08 $2,989.62 * $2,989.62 Apr-08 $5,491.54 * $5,491.54 May-08 $5,403.27 * $5,403.27 Jun-08 $6,314.61 * $6,314.61 Aug-08 No records found * Sep-08 No records found * Oct-08 $6,112.71 * $6,112.71 Nov-08 $4,256.32 * $4,256.32 Dec-08 $3,632.50 * $3,632.50 Sub-total $209,926.97 $0.00 $209,926.97 --adjustment*** ($2,886.67) ($2,886.67) TOTAL $207,040.30 $0.00 $207,040.30

* Retail Sales Tax return Not Filed ** Details obtained from Quickbooks & vendor’s business records *** Year-end adjustment JE#24 for fiscal YE 01/31/07 applied equally to all 12 periods in fiscal. NOTE: This

schedule supports the offence pursuant to s. 44(2) of Retail Sales Tax Act [ 38 ] Moreover, even though the individual defendant, Eugena Hayward, suggested in her sentencing submissions that the total numbers are not correct, the facts provided to the court by the Ministry after the guilty pleas had been entered by the defendants voluntarily and in the presence of the defendant’s legal counsel, especially the two documents entered as Exhibits 1 and 2 showing the retail sales tax owing to the Minister of Finance had totaled $240,866.42, had been admitted as being substantially correct by the defendant’s legal counsel.

Furthermore, Exhibits 1 and 2 also indicate in respective footnotes that the details of the retail sales tax collected in Exhibit 1 and the details of the retail sales tax not collected in Exhibit 2 had been obtained from Quickbooks and from “the corporate defendant’s business records”.

Moreover, only two reporting periods had no records from the corporate defendant’s business records for the Ministry of Finance to calculate the retail sales tax owing, but that the Ministry had estimated the two amounts of tax owing to be $4,000 for each reporting period (see Exhibit 3A for the reporting periods of 31-Aug-08 and 30-Sep-08). [ 39 ] Accordingly, there is no credible and trustworthy evidence submitted in the sentencing hearing by the defendants that would contradict the total amount of tax owing to the Minister of Finance that had been shown in Exhibits 1 and 2.

Also, the defendants and their accountants have had over two years, since the first date the defendants had appeared in court to answer to these charges on February 22, 2010, to prepare and to contradict those amounts set out in Exhibits 1 and 2 before the guilty pleas were voluntarily entered by the defendants on July 19, 2012, in the presence of their legal counsel. (

h) Dividends Paid To Eugena Hayward By The Corporate Defendant For the Tax Years 2004 to 2008 [ 40 ] From Eugena Hayward’s personal income tax returns she had filed (see income tax returns in Ex. 3P), Hayward reported receiving taxable dividend income of $15,000 in her return for the tax year of 2004; taxable dividend income of $40,000 in her return for the tax year of 2005; taxable dividend income of $165,000 in her return for the tax year of 2006; taxable dividend income of $75,000 in her return for the tax year of 2007; and taxable dividend income of $131,250 in her return for the tax year of 2008, that had been received from the corporate defendant. [ 41 ] Accordingly, the total taxable dividend income received from the corporate dividend that had been reported by the operating mind of the corporate defendant, Eugena Hayward, in her income tax returns for the tax years 2004 to 2008 had been $426,250. [ 42 ] Furthermore, for the 2003 tax year, Hayward did not receive any dividend income from the corporate defendant, but did receive a T4 statement of remuneration paid that had been issued by the corporate defendant, 1146037 Ontario Limited, to “Genie Hayward”, indicating in box 14 that Hayward received employment income of $54,700 from the corporate defendant .

Also, in her 2003 income tax return Eugena Hayward reported receiving $14,400 in gross rents for the property she owns located at 17228 Olde Main Street in Belfountain, Ontario, which is where the corporate defendant had operated “The Ascot Room”. Hayward also reported $14,612.41 in expenses related to that property, in which she further reported that she had a net loss of $212.41 in respect to renting out her property.

It is also noteworthy that as part of the expenses claimed in respect to the rental income for Hayward’s commercial property located at 17228 Olde Main Street is interest of $5,639.85, which could refer to interest related to a mortgage on the property. [ 43 ] In addition, for the 2004 tax year, a T5 statement of investment income had been issued by the corporate defendant, 1146037 Ontario Limited, to “Genie Hayward”, indicating in box 10 that the actual amount of dividends other than eligible dividends paid to Hayward was $12,000 and that in box 11 the taxable amount of dividends was $15,000 for Hayward.

In other words, the actual dividend paid out by the corporate defendant to Hayward for the 2004 tax year is $12,000, which is then multiplied by 125% to determine the reported taxable dividend as $15,000. [ 44 ] Also for the 2006 tax year, a T5 statement of investment income had been issued by the corporate defendant, 1146037 Ontario Limited, to “Genie Hayward” indicating in box 10 that the actual amount of dividends other than eligible dividends paid to Hayward was $132,000 and that in box 11 the taxable amount of dividends was $165,000 for Hayward.

In other words, the actual dividend paid out by the corporate defendant to Hayward for the 2006 tax year is $132,000, which is then multiplied by 125% to determine the reported taxable dividend as $165,000.

[ 45 ] Hence, instead of the corporate defendant remitting the retail sales tax owing to the Minister of Finance for the tax years of 2004, 2005, 2006, 2007 and 2008, it instead paid out dividends to its operating mind, Eugena Hayward, of $12,000 for the 2004 tax year (based on a taxable dividend of $15,000); $32,000 for the 2005 tax year (based on a taxable dividend of $40,000); $132,000 for the 2006 tax year (based on a taxable dividend of $165,000); $60,000 for the 2007 tax year (based on a taxable dividend of $75,000); and $105,000 for the 2008 tax year (based on a taxable dividend of 131,250). [ 46 ] In sum, the corporate defendant paid out $341,000 to Eugena Hayward in actual dividends for the tax years 2004, 2005, 2006, and 2008, while at the same time it had failed to remit the total of $240,866.42 in retail sales tax to the Minister of Finance for the 54 reporting periods from August 1, 2004 to February 23, 2009. (

i) There were 128 Charges Laid In Total Under The Retail Sales Tax Act Against The Defendants [ 47 ] The first information numbered “093735” was sworn on December 16, 2009, and contained one charge against the corporate defendant, 1146037 Ontario Limited, operating as The Ascot Room, of being a vendor who “failed to remit retail sales tax collections of $33,826.12 more or less to the Minister of Finance between August 1, 2004 and February 23, 2009, at the Town of Caledon, contrary to s. 13(1) of the Retail Sales Tax Act , R.S.O. 1990, c. R.31 .

A summons was also issued on this information to the corporate defendant requiring it to appear on February 22, 2010. [ 48 ] For the second information numbered “103099”, it had been sworn on February 10, 2010, and contained 63 charges under the Retail Sales Tax Act against the vendor 1146037 Ontario Limited, operating as The Ascot Room, between August 1, 2004 and February 23, 2009, at the Town of Caledon.

A summons was also issued to the corporate defendant requiring it to appear on February 22, 2010. [ 49 ] And, for the third information numbered “103100”, it had been sworn on February 10, 2010, and contained 64 charges under the Retail Sales Tax Act against Eugena Renae Hayward, as an officer, director, or agent of the vendor 1146037 Ontario Limited, operating as The Ascot Room, between August 1, 2004 and February 23, 2009, at the Town of Caledon. A summons was also issued to the defendant, Eugena Renae Hayward, requiring her to appear on February 22, 2010. (

j) The Four Offences Under the Retail Sales Tax Act That The Defendants Had Entered Voluntary And Informed Guilty Pleas To And For Which They Were Convicted of Committing [ 50 ] The individual defendant, Eugena Hayward, on July 19, 2012, voluntarily and while being represented by legal counsel entered guilty pleas to committing two offences under the Retail Sales Tax Act in respect to information no. 103100, namely counts #1 and #2: (1) that Eugena Renae Hayward, 17228 Old Main Street, Belfountain, ON, being an officer, director, or agent of 1146037 Ontario Limited, operating as The Ascot Room, a vendor under the provisions of the Retail Sales Tax Act, R.S.O. 1990, c.

R.31 (as amended), did, between August 1, 2004 and February 23, 2009, at the Town of Caledon in the Regional Municipality of Peel, or elsewhere in the Province of Ontario, willfully evade or attempt to evade compliance with the said Act, in that they did fail to disclose and remit to the Minister of Finance retail sales tax collections in the amount of $33,826.12 more or less, such being an offence pursuant to clause 32(4) (

d) of the said Act, (2) and further, the said Eugena Renae Hayward, being an officer, director, or agent of 1146037 Ontario Limited, operating as The Ascot Room, a vendor under the provisions of the Retail Sales Tax Act, R.S.O. 1990, c. R.31 (as amended), did, between August 1, 2004 and February 23, 2009, at the Town of Caledon in the Regional Municipality of Peel, or elsewhere in the Province of Ontario, willfully evade or attempt to evade compliance with the said Act, in that they did fail to collect and remit to the Minister of Finance retail sales tax collections in the amount of $207,040.30 more or less, such being an offence pursuant to clause 32(4)(

d) of the said Act. [ 51 ] As for the corporate defendant 1146037 Ontario Limited, operating as The Ascot Room , Eugena Hayward, a director of the corporation, on July 19, 2012, voluntarily and while being represented by legal counsel entered guilty pleas on behalf of the corporation to the corporate defendant committing two offences under the Retail Sales Tax Act in respect to information no. 103099, namely, counts #1 and #2: (1) that 1146037 Ontario Limited, operating as The Ascot Room, being a vendor under the provisions of the Retail Sales Tax Act , R.S.O. 1990, c. R.31 (as amended), did, between August 1, 2004 and February 23, 2009, at the Town of Caledon in the Regional

Municipality of Peel, or elsewhere in the Province of Ontario, willfully evade or attempt to evade compliance with the said Act, in that it did fail to disclose and remit to the Minister of Finance retail sales tax collections in the amount of $33,826.12 more or less, such being an offence pursuant to clause 32(4)(

d) of the said Act, (2) and further, the said 1146037 Ontario Limited, operating as The Ascot Room, being a vendor under the provisions of the Retail Sales Tax Act , R.S.O. 1990, c. R.31 (as amended)), did, between August 1, 2004 and February 23, 2009, at the Town of Caledon in the Regional Municipality of Peel, or elsewhere in the Province of Ontario, willfully evade or attempt to evade compliance with the said Act, in that it did fail to collect and remit to the Minister of Finance, retail sales tax collections in the amount of $207,040.30 more or less, such being an offence pursuant to clause 32(4)(

d) of the said Act; [ 52 ] The individual defendant, Eugena Hayward and the corporate defendant, 1146037 Ontario Limited, operating as The Ascot Room, after entering guilty pleas to two counts of committing an offence under s. 32(4) (

d) of the Retail Sales Tax Act , R.S.O. 1990, c. R.31, were then convicted of willfully evading or attempting to evade compliance with the Retail Sales Tax Act and the payment of retail sales tax that had totalled $240,866.42 between August 1, 2004 to February 23, 2009. Section 32(4) (

d) provides that [ emphasis is mine below ]: False statements 32(4) Every person is guilty of an offence who has , … (

d) wilfully, in any manner, evaded or attempted to evade compliance with this Act or payment of taxes imposed by this Act; or … (

k) Statement Of Facts Provided By The Ministry Of Finance On July 19, 2012, After The Guilty Pleas Were Entered By The Defendants [ 53 ] After the guilty pleas were entered on July 19, 2012, the Ministry of Finance provided a factual basis for the guilty pleas, which were: (1) that the corporate defendant, 1 146037 Ontario Limited, is a corporation registered under the laws of Ontario, which operates a women’s apparel retail store under the trade name of “The Ascot Room” at 17228 Olde Main Street, Belfountain, Ontario and it retails women’s clothing and shoes from Italy and Montreal. (2) that the corporation, 1 146037 Ontario Limited, received its Articles of Incorporation on September 5, 1995; (3) that the sole director of the corporation, 1 146037 Ontario Limited, is listed as Genie R.

Hayward; (4) that “The Ascot Room” was issued R.S.T. Vendor Permit number 1911-1819 on September 20, 1995, and that the vendor permit is still active; (5) that Eugena Hayward is the sole director, and as a result, the operating mind of the corporation, 1 146037 Ontario Limited, operating as “The Ascot Room”; (6) that Eugena Hayward is actively involved in the business on a daily basis and makes the decisions for the corporation;

(7) and, as the sole operating mind, Eugena Hayward is responsible for ensuring the collection of, reporting, and remitting of retail sales tax; (8) that after the investigation commenced against Eugenia Hayward, but before any debt collection could take place [defence counsel added that some level of collection had already been started by both levels of government and that money had already been taken from some accounts and that accounts had already been seized and that new accounts had been opened so that the business could continue to operate] , Hayward transferred all of the assets of the corporation, 1146037 Ontario Limited, to a new corporation named, 2199021 Ontario Inc. (9) that the matter in respect of the corporation, 1146037 Ontario Limited, and Eugena Hayward had been referred to the Investigations Branch by the Revenue Collections Branch of the Ministry of Finance. (10) that search warrants, as a result of the referral to the Investigations Branch, had been granted for the business premises of Robinson, Loft and Brohman (now RLB L.L.P.) at Guelph, Ontario under the authority of s. 159 of the Provincial Offences Act , and that the team seized bank statements, credit card statements, financial statements, reconciliation details, general ledgers, blank retail sales tax returns, G.S.T. returns, “The Ascot Room” sales and tax statements, and correspondence for the periods of the investigation, which was August 1, 2004 to June 30, 2009 inclusive. (11) that, as a result of that investigation, two schedules,

Schedule A and

Schedule B, which sets out 54 months whereby tax was either not collected and not remitted or tax was simply collected and not remitted, and which is how the total numbers were calculated. (12) that for count #1 for both defendants,

Schedule B, which is marked as Exhibit 1, sets out for a total of nine months that retail sales tax was collected, but not remitted in the amount of $33,826.12. (13) that for count #2 for both defendants,

Schedule A, which is marked as Exhibit 2, sets out for a total of 45 months that retail sales tax was not collected and not remitted in the amount of $207,040.30. [ 54 ] In addition, legal counsel for the defendants had informed and stated to the court that the Ministry’s statement on the relevant factual background for the guilty pleas by the defendants had been substantially correct and admitted, but added that in respect to the Ministry’s statement of facts that the bank accounts and the name of the business had been transferred after the investigation began but prior to any collection taking place, that however in fact, there had already been collections started or taking place from both levels of government and that money had been taken out of some bank accounts and that accounts were being seized so debt collection on some level had already begun, and that in order to continue on with the business, new bank accounts were opened. [ 55 ] After the guilty pleas had been made by both defendants and convictions entered against both defendants on July 19, 2012, legal counsel for the defendants, with the consent of the Ministry, had asked for an adjournment of the sentencing hearing to allow the defendants to put a plan in place, since they would need a little bit of time to do that.

The adjournment of the sentencing hearing was then granted for approximately four months to November 15, 2012. (

l) Adjournment Of Sentencing Hearing That Had Been Scheduled For November 15, 2012 [ 56 ] On November 15, 2012, the sentencing hearing could not proceed as the defendant, Eugenie Hayward, was out of the country on a family-related emergency. The hearing was then adjourned to January 10, 2013.

Because of the concern on whether the absence of Hayward was genuine, the defendant was ordered through her legal counsel to produce proof she had been out of the country on November 15, 2012, and to also provide proof of that family emergency. [ 57 ] On January 10 th , Hayward appeared with such proof and the court was satisfied that the nature of the emergency that required Hayward to be physically out of the country on November 15, 2012, was an excusable absence. [ 58 ] In addition, the court was informed by the defendants’ legal counsel that a pre-sentence report would be prepared for Eugenie Hayward because a custodial sentence had been a possibility for Hayward and that it would be available before May 24, 2013.

The

sentencing hearing was then adjourned until May 24, 2013. (

m) Defence Counsel’s Application to Be Removed As Solicitor Of Record On May 24, 2013 [59] On May 24, 2013, legal counsel for the defendants brought an application to be removed as solicitor of record because of ethicalgrounds, which had arisen the night before the sentencing hearing was to commence on May 24, 2013. The application by thedefendants’ legal counsel to be removed as solicitor of record for the defendants on ethical grounds based on R. v. Cunningham, 2010SCC 10 , [2010] S.C.J. No. 10 (QL) (S.C.C.) was then granted. (

n) Defendants’ Application For An Adjournment To Retain New Counsel And For Their New Accountant To PrepareFinancial Documents And To Withdraw Their Guilty Pleas Were Not Granted And Submissions On Sentence Commenced onMay 24, 2013 [60] The defendants then sought an adjournment to retain new legal counsel and permission to withdraw or retract their guilty pleasentered on July 19, 2012.

The defendants’ request for an adjournment to retain new counsel was not granted as it had appeared that thedefendant had not been dealing with these proceedings with diligence or in good faith and the adjournment to retain counsel wouldfurther delay the proceedings that had already been going on since the defendants’ first appearance in court on February 22, 2010, and inwhich there had already been 25 court appearances, including May 24, 2013.

Furthermore, an adjournment to retain new legal counselwould have severely prejudiced the Ministry of Finance and the societal interest in having this proceeding completed in an expeditiousmanner. [61] In addition, the defendants’ request to retract or withdraw their guilty pleas were also not allowed, since the defendants had beenrepresented by capable legal counsel on July 19, 2012, when the defendants had voluntarily entered their guilty pleas. In R. v. Pauchay (2003), 35 M.V.R. (4th) 247, [2003] S.J.

No. 221 (QL) (S.Q.B.), at para. 13, the court hearing the sentence appeal held that theonus is on the accused to prove their plea had not be voluntary, unequivocal or informed and that the onus on the accused toestablish that their pleas had been invalid would be particularly difficult when it had been entered in the presence of and withthe benefit of counsel [emphasis is mine below]: … The trial judge has the discretion to expunge a guilty plea. But the onus is on the accused to prove that his plea was not voluntary,unequivocal or informed. R. v. Oxby, 2000 SKCA 129 , [2000] S.J. No. 667 (Sask.

C.A.) para. 15; R. v. T.(R.) (1993), (ON CA), 17 C.R. (4th) 247 (Ont. C.A.) p. 5 of 13. Where the guilty plea was entered with the benefit of counsel, the onuson the applicant to establish that it is invalid is particularly difficult. R. v. Clermont (1996), (NS CA), 150 N.S.R.(2d) 264 (N.S. C.A.); R. v. Musey (2001), 2001 SKQB 240 , 209 Sask.R. 163 (Q.B.). The offer of a "plea bargain" is a factorthat may well impinge on the issue of whether the plea was voluntary. R. v. T.(R.), supra. But no case was referred to me in which aguilty plea was expunged on this basis alone. R. v.

Rubenstein (1988), (ON CA), 41 C.C.C. (3d) 91 (Ont.

C.A.), leaveto appeal Supreme Court of Canada refused (1988), 87 N.R. 77 n, is to the contrary. [62] Moreover, the individual defendant, Eugena Hayward, further submitted that they needed an adjournment because thedefendants’ new accountant had been preparing new financial statements to show that the defendants did not commit the offences, butagain, this further request for adjournment had been rejected as the defendants had more than sufficient time to have an accountantprepare financial documents in this proceeding, since the defendants had made their first court appearance on these charges on February22, 2010, and that the request to withdraw their guilty pleas had not appeared to have been a request made in good faith, as well as therehad been no evidence or an evidentiary basis that an accountant was doing such work nor documentary evidence that would support sucha submission, considering that the total amount of the retail sales tax owing had been determined by the Ministry of Finance from thecorporate defendant’s own financial records that had been seized earlier by the Ministry and set out in schedules entered as Exhibits 1and 2.

Furthermore, it appeared that this further request for an adjournment for her supposedly new accountant to prepare financialdocuments was another insincere attempt by the defendants to delay the proceedings, considering there had already been 24 courtappearances up to that point and that these proceedings had been going on for approximately 3 years and 3 months, as of the defendants’first appearance date of February 22, 2010. [63] After the defendants’ multi-faceted application for an adjournment had been denied, the Ministry of Finance then began theirsentencing submissions and the calling of viva voce evidence on May 24, 2013. [64] To support their submissions for a custodial sentence and a 200% fine based on the retail sales tax owing for Eugena Hayward,

the Ministry of Finance called Nick DeMaria, a Ministry of Finance investigator, as its first witness, as well as proffering documentary evidence during the first day of the sentencing hearing. [ 65 ] However, the sentencing hearing could not be completed on May 24 th , so after the Ministry of Finance and the defendants had completed the examination and cross-examination of Nick DeMaria, the hearing was then adjourned to August 21, 2013.

The defendants were also advised by the court that they could still retain legal counsel for the continuation of the sentencing hearing and that transcripts could also be ordered by the defendants in order to assist them for the resumption of the hearing.

In addition, the court also ordered the Ministry of Finance to make Nick DeMaria, the Ministry of Finance investigator, who had already completed his testimony, to be available for the defendants for further cross-examination on August 21, 2013, if they so wished. [ 66 ] This also allowed the defendants to retain legal counsel, if they wished, to prepare the defendants’ sentencing submissions and order transcripts of the Ministry’s sentencing submissions and evidence presented on May 24 th .

The sentencing hearing then resumed on August 21, 2013, but the defendants’ had not retained legal counsel to prepare sentencing submissions, nor did they provide proof on that date that the defendants’ new accountant had been preparing new financial documents, nor did the defendants call their new accountant to testify in the continuation of the sentencing hearing. [ 67 ] On the resumption of the hearing on August 21 st , as the defendants did not appear with new legal counsel or with any legal representation, the defendants proceeded with the resumption of the sentencing hearing still representing themselves.

The Ministry of Finance on the resumption of the hearing then called an additional witness, Lisa Liberty, an undercover Ministry of Finance investigator. Lisa Liberty testified she had been posing as a customer in the women’s retail apparel store known as “The Ascot Room” located at 17228 Olde Main Street in Belfountain, Ontario on August 9, 2013, and had been approached and served by Eugena Hayward. (

o) What Is Total The Number Of Appearances From The Date The Informations Were Sworn Until The Sentencing Hearing Was Completed? [ 68 ] For the present proceeding, three informations were sworn by Senior Investigator Nick De Maria from the Ministry of Revenue (as the Ministry of Finance was called then), in respect to charges under the Retail Sales Tax Act , R.S.O. 1990, c.

R.31, against both 1146037 Ontario Limited, operating as The Ascot Room, and against its sole director, Eugena Hayward . [ 69 ] The first information numbered “093735” was sworn on December 16, 2009, and contained one charge against the corporate defendant, 1146037 Ontario Limited, operating as The Ascot Room, of being a vendor who “failed to remit retail sales tax collections of $33,826.12 more or less to the Minister of Finance between August 1, 2004 and February 23, 2009, at the Town of Caledon, contrary to s. 13(1) of the Retail Sales Tax Act , R.S.O. 1990, c. R.31 .

A summons was also issued on this information to the corporate defendant requiring it to appear on February 22, 2010. [ 70 ] For the second information numbered “103099”, it had been sworn on February 10, 2010, and contained 63 charges laid under the Retail Sales Tax Act against the vendor 1146037 Ontario Limited, operating as The Ascot Room.

A summons was also issued to the corporate defendant requiring it to appear on February 22, 2010. [ 71 ] And, for the third information numbered “103100”, it had been sworn on February 10, 2010, and contained 64 charges laid under the Retail Sales Tax Act against Eugena Renae Hayward, as an officer, director, or agent of the vendor 1146037 Ontario Limited, operating as The Ascot Room.

A summons was also issued to the defendant, Eugena Renae Hayward, requiring her to appear on February 22, 2010. [ 72 ] The following table sets out the number and date of the appearance, as well as the purpose of the adjournment: Court Appearances

1 February 22, 2010 First appearance in court by defendants. 2 March 22, 2010 Adjourned to be spoken to. 3 May 17, 2010 Adjourned to be spoken to. 4 July 5, 2010 Legal representative appears on record and matter adjourned to be spoken to. 5 August 16, 2010 Legal representative appears on record and matter adjourned to be spoken to. 6 September 13, 2010 Legal representative appears on record and matter adjourned to be spoken to. 7 October 25, 2010 Legal representative appears on record and matter adjourned to be spoken to. 8 November 25, 2010 Legal representative appears on record and matter adjourned for judicial pre- trial. 9 January 19, 2011 Judicial pre-trial commenced. 10 January 31, 2011 Judicial pre-trial continued and agent for legal counsel C.

Hunter appears on record. 11 February 14, 2011 agent for legal counsel C. Hunter appears and matter adjourned to be spoken to. 12 April 27, 2011 agent for legal counsel C. Hunter appears and matter adjourned to be spoken to. 13 July 27, 2011 agent for legal counsel C.

Hunter appears and matter adjourned to be spoken to. 14 September 7, 2011 Legal representative appears and matter adjourned to be spoken to. 15 October 31, 2011 Legal representative appears and matter adjourned to be spoken to. 16 December 12, 2011 Legal representative appears and trial dates scheduled for four days: April 24, 26, May 1, May 3, 2012. 17 March 5, 2012 Legal representative appears and matter adjourned to be spoken to. 18 March 15, 2012 Legal representative appears and matter adjourned to be spoken to. 19 April 5, 2012 Legal representative appears and matter adjourned to be spoken to. 20 April 26, 2012 Legal representative appears and trial dates scheduled for three days: July 19, 24, 26, 2012. 21 June 4, 2012 Legal representative appears and trial dates confirmed for three days: July 19, 24, 26, 2012. 22 July 19, 2012 Defendants appear with legal counsel, C.

Hunter, and enter guilty pleas to 4 charges of the 128 total charges. 23 November 15, 2012 Defendant fails to appear for sentencing hearing and hearing adjourned. Defendant Hayward ordered to bring proof she had been out of country for family emergency. 24 January

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