Her Majesty the Queen - v. -, 2013 SKPC 140

IN THE PROVINCIAL COURT OF SASKATCHEWAN Citation: 2013 SKPC 140 Date: September 4, 2013 Information: 33611017 Location: Saskatoon _____________________________________________________________________________ Between: Her Majesty the Queen - and - Robert L. Tiffin Appearing: C.L. Carlson For the Crown R.C. Wempe B.F. Beaubier, Q.C. For the Accused A.S.A. Doucette JUDGMENT Q.D. AGNEW , J [ 1 ] I find the accused, Robert Tiffin, guilty of tax evasion as set out in the first of the charges against him on the Information before the Court [1] , and direct that a conviction be entered with respect to that count.

I also find him guilty of filing false tax returns, as set out in counts two through five of the same Information, but pursuant to the principle in R. v. Kienapple [2] , I direct that a judicial stay be entered with respect to those charges following expiration of all applicable appeal periods. My reasons for those conclusions follow.

[ 2 ] The actus reus of the offences is admitted by the accused. He clearly failed to report income as indicated in the Information. There is no dispute about the amount of income unreported, nor about the amount of tax which would have been payable on that income. The question is whether or not the accused had the required mens rea for conviction. The accused testified specifically with respect to mens rea , and his credibility is clearly critical to this case.

Nonetheless, the Crown bears the onus of proving his guilt beyond a reasonable doubt. [ 3 ] The Crown’s case, in essence, is that the accused must have had the mens rea for the offences. The accused did not accurately report his professional income for the four tax years in question; specifically, he did not provide any figure at all for his gross professional income (“GPI”), and estimated in round thousands of dollars his net professional income (“NPI”). The accused operated for over three decades the business of an accounting firm, as a sole proprietorship.

Although not an accountant himself, and possessing no formal qualifications of any sort, he held himself out through his business as being very knowledgeable about business operations, bookkeeping and personal and corporate income tax matters. He continues to do so to this date, charging up to $500.00 per hour for his expertise. Obviously, both he and those clients who pay that rate have a very high opinion of his knowledge and skill.

It is inconceivable, says the Crown, that such a man might believe it acceptable not to keep proper records, and to file estimates for his NPI; it is surely suspicious, argues the Crown, that those estimates were consistently low, to the tune of a cumulative four-year total in excess of $200,000.00; it is clear, concludes the Crown, that the accused did this deliberately in order to evade paying tax on that income. This is a powerful argument. [ 4 ] The accused, however, says he has an explanation.

He says that the evidence shows that while he erred, he did so without any intention to avoid tax; indeed, he says, he always intended to go back and complete proper records, accurately calculate his NPI, and report it. Thus, says the accused, he lacked the mens rea for the subject offences. He says that at the very least, I should have a reasonable doubt, and therefore acquit him.

As will be seen, I have rejected his explanation, and have found the requisite mens rea . [ 5 ] I will review the background evidence, then discuss the issue of mens rea in more detail, and then consider evidence relating to the accused’s credibility. 1. Evidence [ 6 ] The accused’s 2004 personal tax return, the T-1 form, shows NPI of exactly $20,000.00. GPI is shown as $1.00, although since the rest of the return is typed and this figure is in writing, it is not clear that this was the accused’s act.

It is clear, in any event, that GPI is either misstated or not stated at all. [ 7 ] The 2005 T-1 has no entry for GPI, and shows NPI of $30,000.00. [ 8 ] The 2006 T-1 has no entry for GPI, and shows NPI of $35,000.00. [ 9 ] In 2007, as in 2004, there is a handwritten notation of $1.00 for GPI, for which I make the same comments as the 2004 return; NPI is reported to be $42,000.00. [ 10 ] The accused was candid in stating that GPI and NPI were not reported accurately. He stated that the former was of “no significance”.

He also stated that the latter was nothing but an “estimate” which he had made at the time, fully intending to revise and re- file his tax returns in due course. During the four years which are the subject of the charges, the accused meticulously kept his business documents, in the sense of an organized system of filing his receipts, invoices and other original documents.

He had not, however, made organized records from those original documents, in the sense of journals, synoptics, a general ledger, a cheque or disbursement ledger or any similar systematic means of tracking, categorizing and summarizing the information from the raw material of the original documents. [3] The information to calculate GPI and NPI was available to him in that raw material, but could be found only by creating such summaries.

Eventually, both Canada Revenue Agency (“CRA”, used in this judgment to refer both to the current Agency and its predecessors) and the accused had to create such documents from the raw material: in CRA’s case, in order to determine that income had been under-reported, and in the accused’s case, in order to file accurate T-1s. The accused estimated that it took him 500-600 hours to do this for the years 2006 and 2007. I state this merely to indicate what the accused’s evidence was: I do not accept that in fact it took him

this long, given the dim view I have of the accused’s credibility generally. [ 11 ] In completing the T-1s, the accused testified that when he used estimates for NPI, he knew that except by coincidence, the number would not be correct. [ 12 ] The manner in which the accused says he arrived at his estimate of NPI is interesting. According to the accused, the estimates he used were accurate “to the best of [his] ability”, were his “best guess at the time”, were “close” and (in the case of 2006), “could be cents out.” In fact, his estimates under-reported his NPI as follows: tax year reported NPI (

A) actual NPI (

B) unreported NPI (B-A) 2004 $20,000.00 $35,288.04 $15,288.00 2005 30,000.00 65,867.48 35,867.00 2006 35,000.00 91,740.54 56,740.00 2007 42,000.00 138,883.85 96,884.00 [ 13 ] In light of his quoted statements about his belief in the accuracy of his estimates, and the clear lack of accuracy of those estimates, the obvious question is how did the accused come up with those estimates. He testified that he tried to determine how much money was “coming home”.

In 2004, for example, he testified that he and his wife were just getting by, but also had income from her employment (at the accused’s business) and some pension income. From those pieces of information, he came up with the estimate that his NPI was $20,000.00. In subsequent years, the business seemed to be doing more work, albeit with increased costs, and he thought he was bringing home a bit more money, so he increased his estimates. [ 14 ] According to the accused, it was always his intention to file corrected T-1s for the years in question.

He simply needed to take the documentation he had for those years, and create the necessary records from them. He could then use that information to calculate NPI. It is not clear that he ever intended to report GPI, although I note that it would be necessary to calculate GPI in order to find NPI. What prevented him from taking these steps? [ 15 ] The answer given by the accused to that question requires some background. What follows in the next several paragraphs is a

summary of the evidence provided by the accused: (

a) according to the accused, the roots of the situation stretch back to 1996. In that year, medical problems with his elderly parents had escalated. He wanted them to move into his house with he and his wife, but they were too independent and resisted so doing. Finally, in February 1997, they moved in. The accused and his wife looked after them until, in April 1998, the accused’s father died; this was followed by the death of the accused’s mother two months later, in June 1998. They both died in the accused’s home, in his arms.

In November 1998, a lawsuit was commenced by the accused’s brother against the accused, his wife and his youngest daughter, over the parents’ estates. The lawsuit went to trial in 2004, after Examinations for Discovery, mediation and all of the other procedures for a trial in the Court of Queen’s Bench. Judgment went against the accused [4] , who had to provide an accounting; there was further litigation over recovery of the costs of looking after the parents; there was an (unsuccessful) appeal against the trial judgment.

There were negotiations and mediation between the parties, which ultimately resulted in a settlement in January 2009; (

b) the lawsuit, as well as the facts which led to it, had a number of effects on the accused. His son, who had been working at the accused’s office at the time, and his eldest daughter both effectively disowned him when the lawsuit began. Apparently they have both married since; the accused was not invited to the weddings. He believes he has grandchildren, whom he has never seen, nor does he know their names.

His younger daughter was named as a defendant in the lawsuit, along with the accused and his wife, and although she was exonerated, she nonetheless took the matter very hard, encountered personal problems, and has moved away. The accused has had little contact with her since late 2004. The accused and his wife had to move out of their condominium unit as a result of the judgment, as well as losing a second nearby unit. There was also considerable media attention from the outcome of the estate trial;

(

c) during this period, the accused encountered other problems. His mother-in-law died in 2000, followed by other family deaths. In 2001, the accused was diagnosed with high blood pressure. One of the accused’s employees left, taking some business with him. The business had to move on relatively short notice. It suffered computer problems; (

d) also during this period, the accused faced a number of financial pressures, including the cost of the estate litigation. He sold assets, cashed in investments and accumulated over $200,000.00 in credit card debt. [ 16 ] Because of these factors, the accused testified, he was “so totally emotionally overwhelmed” that he was unable to keep proper records in his business, and thus had to rely on estimates for his NPI in completing his T-1s in the subject years.

His brief refers to him being “emotionally exhausted and depressed” [5] , although I note that there is no evidence of clinical depression - I take the term in context to refer simply to a general emotional state, rather than a medical diagnosis. The accused’s brief says he “did not have the time or the emotional strength” [6] to complete his business records so as to be able to properly file a T-1. 2. Mens rea [ 17 ] There is some disagreement between Crown and defence about the details of the mens rea requirement. Both sides have cited cases, and made strong arguments, in favour of their respective positions.

I find that I do not have to choose between them, since even taking the accused’s view of mens rea , I am convinced of his guilt beyond a reasonable doubt. Taking the strongest view possible in favour of the accused, the mens rea requirements are as set out in three cases cited by the accused: (

i) the exact nature of that mens rea is a planned, intended, or deliberate concealment or deception.

Careless [sic] or recklessness in completing the Income Tax Return would be insufficient. [7] (ii) an accused cannot be convicted . . . unless the Crown proves a false or deceptive statement done deliberately and deceitfully with the specific intent to evade the payment of tax ... a false statement is not merely an inaccurate statement, but one made fraudulently, with mens rea or the intent to deceive. [8] (iii) it must be proven that [the accused] committed the alleged acts either intentionally or with a wilful blindness to the falsity of the . . . return; mere carelessness or inattention will not support a conviction . . . [9] [ 18 ] The accused argues that extenuating circumstances can be evidence in negating mens rea .

He cites in support of this proposition R. v. Branch [10] , in which the accused argued that he was emotionally unable to deal with his tax matters and was “emotionally washed up”. The accused also cites R. v.

Philp [11] , in which the accused, a lawyer, had a chronic inability to deal with paperwork, left his wife and children to establish a new relationship, suffered a heart attack, and had his law partner killed in a courthouse in a case in which the accused himself might well have appeared. [ 19 ] The difficulty for the accused in attempting to bring his case within the same rubric as Branch and Philp is that the accused in those cases were believed; I, however, do not believe Mr. Tiffin.

Accepting for the purpose of argument that circumstances such as his could negate mens rea , nonetheless I have to conclude, or at least have a reasonable doubt, that in his particular case they actually did. I am not prepared to come to that conclusion. I simply do not accept his evidence that he was unable to do the tasks necessary to enable him to file accurately; nor does any other evidence in this matter raise even a reasonable doubt in my mind.

I find, for the reasons I outline below, that he deliberately and knowingly understated his NPI, for the specific purpose of not paying tax. [ 20 ] There are cases [12] in which the existence of “secretive acts and efforts to conceal”, the “destruction of records or documents” and similar facts have been taken as indicia of an intention to commit tax evasion or, alternatively, the mens rea for filing a false return.

However, I am not aware of any authority which states these are required elements, and I in fact conclude to the contrary: while it may be the norm that such indicia exist, they are by no means required. In the case of any accused before the Court, the question is always

simply one of whether or not the Court is satisfied that the mens rea exists beyond a reasonable doubt. Various indicia are simply guides to assist: their presence or absence is not, in and of themselves, conclusive. A naïve person, or one with little experience in income tax, might attempt to evade tax by being secretive and destroying records; however, a more knowledgeable taxpayer might well attempt to accomplish the same by filing in a more sophisticated but less secretive way, or in a manner which might subsequently allow them to claim to have been misunderstood or their actions misinterpreted.

The presence or absence of these factors, then, can be of assistance to the Court, but is not determinative. The final determination of the mens rea must still be made by the Court in each individual case, dependant on findings of fact and credibility particular to that case, and subject always to the requirement that the Court be satisfied beyond a reasonable doubt of the guilt of the accused. 3. Credibility [ 21 ] The burden of proof of mens rea is of course on the Crown, to prove beyond a reasonable doubt.

Having said that, in the absence of a confession or similar positive evidence, mens rea usually has to be proven by inference: a person is presumed to have intended the natural or foreseeable consequences of their actions, for example, although this presumption is simply a common-sense, logical one and not one which is driven by law. [13] In the present case the accused carried on a persistent pattern of conduct over the course of several years, which had the result of under-reporting his income by extremely large amounts each year.

In 2004, his reported NPI was just over one-half of his actual NPI; in every other year in question, it was significantly less than half of actual NPI. Over the course of the four years in question, the accused failed to report just over $200,000.00 in income; this under-reporting resulting in him not paying almost $50,000.00 in tax. The logical conclusion is that the accused intended exactly that result. [ 22 ] As stated, however, this is simply a common-sense conclusion drawn from those facts.

The accused argues that there is another explanation, which I should accept or at least find sufficiently plausible to raise a reasonable doubt: he was so distracted by his troubles, so emotionally drained by the various problems he was encountering, that he was incapable of doing the work necessary to calculate accurately his NPI on the four T-1s in question, or indeed to do so at any later point prior to the CRA audit commencing. He was “overwhelmed emotionally and was depressed” as a result of his “extenuating circumstances”. [ 23 ] The essence of the accused’s defence therefore relies on his own credibility.

I have to believe at least enough of what he says about his mental state to raise a reasonable doubt. [ 24 ] The accused has put forward the proposition that his credibility is not reviewable by the Court. The basis for this position is that the Crown did not cross-examine him with respect to his allegations of emotional turmoil, etc. Not having been cross-examined on them, he contends, they must now be accepted. He cites in support of this proposition the House of Lords in Browne v. Dunn [14] . [ 25 ] With all due respect, I disagree with his position.

The credibility of a witness is ultimately for the Court to determine, even if that witness is the accused. Decisions by the Crown with respect to cross-examination cannot fetter the Court in making its determination. The Crown is entitled to conduct its case as it sees fit; however, it is ultimately the task of the Court to determine what witnesses are believed, and to what extent, and then to decide the impact of that belief on the evidence. Decisions by counsel with respect to questioning of a witness cannot prevent the Court from discharging its duty.

The accused put forward his evidence; I find it incredible and not capable of belief. Counsel’s tactical decisions regarding cross-examination cannot make me believe the unbelievable. [ 26 ] In addition to that point, I note that the situation in Browne was considerably different than the one before me. The comments of Lord Halsbury, quoted in the above footnote, are specifically stated to be in concurrence with those of the Lord Chancellor.

Lord Herschell, L.C., in the course of his own remarks, makes it clear that his objection is to any attempt “to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.” [15] In the present matter, that objection does not apply. It was clear throughout the trial that all parties understood from the beginning that the credibility of the accused’s explanation was going to be of critical importance.

Lord Herschell’s remarks are directed to an ambush scenario, where credibility is brought into question after the witness is gone from the stand and has no opportunity to defend himself. The present case is exactly the opposite: the accused took the stand knowing that his credibility was crucial to his case. There was no ambush. [ 27 ] Having already stated that I do not believe the accused, I will now give some specifics as to why I found his testimony

unbelievable. What follows are simply examples; I do not propose to specify every instance of when, or in what exact manner, I found a problem with the accused’s testimony. The purpose of the examples below is simply to give the accused, appellate courts and anyone else who may read this judgment some idea of why I have concluded as I have with respect to the accused’s credibility. [ 28 ] Before I do so, however, I wish to emphasize one point which did not have any bearing on my decision. During the course of the trial, I received evidence with respect to the accused’s tax situation in years prior to 2004.

I have concluded that such information is of no assistance to me in determining the matters in question. The Crown seemed to be suggesting to me that I should draw certain conclusions from the fact that the accused did not file tax returns in certain years prior to 2004, for example. There are various, perfectly legal, reasons why a person might not file tax returns. There was no evidence led before me about why the accused did not file. That being the case, I cannot draw an adverse inference against him for the years in which he did not file tax returns. (

a) documentation complete [ 29 ] The evidence is clear that while the accused’s records were not complete, his documents were complete. That is, the accused kept, in an organized manner, all of the “raw materials” needed to create the normal accounting records from which true statements of GPI and NPI could be created. [ 30 ] The evidence was also clear that the accused was the only person who performed any bookkeeping functions with respect to the business.

He created each invoice, based on his employees’ time sheets: he calculated the time, decided on the amount of the invoice and gave the necessary information to a secretary, who typed up the invoice. He retained control of the office copies of the invoices. The accused was also the person who paid the bills of the office, including personally deciding which bills were to be paid. He received the invoices; he wrote the cheques; he created the cheque stubs; and he created a monthly list indicating the amount of the GST on each invoice paid in order to credit that against the GST collected.

Although it would have been very simple to do, and would have made subsequent calculation of GPI and NPI much simpler, he did not in that list specify the amount of each bill paid, but rather only the amount of the GST paid in each such bill. [ 31 ] The accused did the payroll for the business; he handled the payroll records and calculated the payroll deductions to be paid to the federal government; he totalled invoices and expense amounts; he tracked GST paid and collected, and created the GST returns; he calculated and created the PST returns; he wrote the cheques and had them forwarded as required.

All of those returns were calculated exactly, precisely and correctly - the CRA audit included those matters, and the auditor found no significant variances between what the accused reported and what should have been reported. All returns were filed on time: typically on the due date, with the annual exception of December, when the return would be filed early.

The accused was in the habit of closing the business for the week between Christmas and New Year’s, and it appears that he therefore calculated and paid the applicable amounts prior to that break. [ 32 ] The accused personally created his T-1 tax returns for the taxation years 2004 through 2007. He completed, fully and accurately, the Statement of Rental Income, including gross revenues and all expenses.

His medical expenses were carefully documented and tallied, even in a year in which they were extensive. [ 33 ] In fact, the accused’s record-keeping was exemplary, except in one respect: he did not enter his income and expenses on a general ledger or any other set of books from which he would have been easily able to determine his NPI. Why would he have chosen to omit this simple step? [ 34 ] He argues that doing so would have taken up a great deal of time, and points to the fact that reconstructing such information for two years took him, by his estimates, 500-600 hours.

There was never any explanation of how he came up with that figure: he clearly did not actually track his hours, and he offered no information which might allow me to assess the accuracy of that estimate. From my assessment of his credibility generally, I do not accept that estimate as accurate; however, I accept that it took him a very considerable amount of time. Of course, had he recorded such information as each transaction occurred, even if it took him the same amount of time, it would have been spread out over the course of two entire years, and would accordingly have been much less onerous.

Why would he not have done so?

[ 35 ] I suppose it could be suggested that he did not realize it was necessary, to begin with. Could he have honestly believed that he would soon be able to get back to his documents, and create proper records? There is an obvious flaw in any such suggestion, however.

Even if I accept that in 2004, for example, the accused did not keep a general ledger because of the emotional difficulties and the time pressures he was under, and intended to complete the entire year’s bookkeeping at some point after the year was over; even if I accept the same thing for 2005; at some point, the accused must have realized that he was not getting to his bookkeeping as quickly as he claims to have wanted to, and similarly must have realized that he would be able to avoid that same problem in future years by doing what virtually everyone else in the business world does, namely tracking his income and expenses in a ledger or a synoptic as they arose.

Counsel for the accused argues that keeping his books in this manner would have taken as much time as it took the accused to reconstruct his books later; I am unconvinced. Even if I give the accused the benefit of the doubt on this point, however, it does not assist him. The fact is that making a one-line entry in a synoptic or journal when an expense was incurred would have taken a matter of seconds; certainly under a minute.

While it may be that the accused would have found it difficult to find an entire hour to enter sixty or more of these entries at one time, it is inconceivable that he would not have been able to find in the course of his day one extra minute or less to record one entry as it was incurred. [ 36 ] Accordingly, even if I accept his argument for 2004, even for 2005, eventually he must have realized that firstly, he was not catching up on his bookkeeping the way he had intended, and secondly that entering items “as incurred” would be much more efficient, and would actually get the job done, while costing minimal additional time out of his day.

If I accept that he must have come to this realization, then I must also accept that he chose not to undertake that change in his procedures. Rather, I must conclude that the accused made a conscious decision to continue with his previous method: the method which, to his certain knowledge, was resulting in an inaccurate reporting of his income tax. His denials are not believable. Finding him unbelievable for subsequent years lessens his credibility in his claims for earlier years, as well. (

b) no time to complete records [ 37 ] The accused testified that he fully intended to complete his books and records, and file proper tax returns for the years in question, once the estate litigation was completed. He testified that the litigation was completed by way of settlement in January 2009.

Prior to that, he testified, he was unable to do so not only because of stress but also due to the demands on his time caused by the litigation, amongst other things. [ 38 ] In his brief, the accused specifically referred to various aspects of the litigation as being causally related to his failure to keep proper books. In particular, he made mention of “document discovery, examinations for discovery, court motions [and] a pre-trial conference”. [ 39 ] I note that the trial decision in the estate litigation is dated February 19, 2004; the trial itself, then, was concluded in late 2003 or early 2004.

By coincidence, 2004 is the first year for which the accused is charged with not filing properly. The 2004 T-1 was of course due by the end of April 2005. [ 40 ] Given the timing of the trial, obviously most if not all pre-trial procedures would have been concluded before 2004. Pleadings, document discovery, examinations for discovery, court motions and almost certainly the pre-trial conference would all have occurred prior to 2004.

That being the case, and while those events may form a backdrop to the events of 2004 and later, they obviously did not take up any time in 2004 which the accused could otherwise have devoted to proper bookkeeping. [ 41 ] After the trial, there was an appeal, an accounting and settlement negotiations. The accused says that these too took up time and prevented him from keeping proper books. There was, however, no detail provided at all in the evidence of how much time all of this took out of the five years which the accused had between the trial judgment and the eventual settlement.

I was told of “a hearing application respecting an accounting, an appeal to the Saskatchewan Court of Appeal and finally, meetings and negotiations”. The accused said that in the five years after the trial a key employee left and started his own business, the accused had to move his own business premises, and he encountered computer problems.

All of these things, he said, contributed to the lack of time for completion of his records. [ 42 ] Five years is a great deal of time; yet the accused would have me believe that over that entire five years, he was unable to get to even one of the four years which he knew he had to work on. During the course of that five years, he was not only unable to finish his records: he was not able so much as to start on a single year’s records. Over the course of five long years, he not once put pencil to paper, opened his records, or attempted in any way even to start to begin to commence work on completing his records.

Still, he wishes me to believe that throughout this five year period, he always fully intended to do this work as soon as he was able.

[ 43 ] Once the estate litigation was concluded by a settlement in January 2009, the accused according to his evidence was at last in a position to begin work on his books and records, so as to correct any inaccuracies in his previous filings for these four tax years. That is not in fact what happened. [ 44 ] It turned out that he had other priorities before beginning work on his tax records for 2004 to 2007.

Notwithstanding all of the other pressures on his time and attention which had been constantly preventing him from properly completing his tax records and returns, he had managed to incorporate a corporation, plan and execute a s. 85 rollover of the business to that corporation and begin all of the associated documentation with respect to it. Rather than work on his business records, he decided to complete the work on his s. 85 rollover. He also had to file a corporate tax return for his new corporation by June 30, 2009 and file his personal tax return by April 30, 2009.

By necessary implication from the accused’s own testimony, all of these matters took priority over his legal obligation to correct his incorrect tax returns - notwithstanding his claim to me that he was finally in a position as of January 2009 to begin work on correcting his incorrect T-1s. [ 45 ] Mr. Tiffin presumably had some idea of the scope of the task.

Furthermore, he would have been aware in January 2009 that the personal income-tax season was shortly going to be upon him, a season when, according to his evidence, he would undoubtedly be so busy that he would not be able to do this work (since this was the reason he gave for being unable to deal with CRA during its audit in that period).

Nonetheless, in the course of several weeks between completion of the settlement and being told by CRA that he was being audited, he did not take a single step toward beginning work on his books and records for these tax years. [ 46 ] Despite this, he wants me to believe that he always intended to get his books in order and re-file as soon as possible. [ 47 ] The accused claims that he did not have the time to put his records in order and file proper returns. I find that he had the time, and made a deliberate decision not to do so. (

c) personal effects [ 48 ] The accused argued that, in addition to having no time to do his records, various issues arising both before and after 2004 left him “emotionally exhausted” and therefore unable to complete his records and file proper tax returns. [ 49 ] According to the accused, the estate litigation left him estranged from two of his three children. Apparently his two eldest children effectively disowned him when the litigation commenced, in 1998, and he has had virtually no contact with them since.

I note, however, that these events occurred in 1998; although the non-contact was ongoing, and apparently there have been marriages and births since 1998, I would still have expected the impact to have lessened somewhat by 2004, six years later and the first year in which it is alleged he attempted to evade taxes and filed a false return. [ 50 ] Based on watching and listening to the accused, and considering all of his testimony, I simply do not believe him when he says that these problems, or even these in conjunction with all of the other problems he claimed to have had, prevented him from completing his records and filing accurate T-1s.

He has not convinced me; he has not even raised a reasonable doubt. (

d) use of estimates [ 51 ] The accused says that he never tried to hide the fact that he was using estimates for his NPI, and that this shows that he intended to correct his figures as soon as he could. He alleges, in fact, that he made it clear to CRA that he was using estimates. According to him, this clarity was provided by the fact that he did not provide any Statement of Professional Activities or financial statements, did not provide any amount for his GPI (or specified it as $0.00) and claimed NPI each year in some round multiple of $1,000.00. According to him, these should have been “flags” for CRA.

[ 52 ] In fact, it appears that CRA did find these to be peculiar. I find it difficult, however, to go from that fact to the accused’s allegation that this somehow provided “notice” to CRA that he was using estimates for his filings. The fact that CRA noted these irregularities is not the same as them being a clear and unmistakable sign that the accused was using estimates.

Although CRA witnesses testified that these oddities in the filing were noted, none of them stated that they understood from those facts that the accused was deliberately trying to communicate to CRA that he was using estimates. [ 53 ] It remains a mystery to me why, if in fact the accused wanted CRA to know he was using estimates for his net professional income, he would not simply write “estimate” beside that figure on his tax return. [ 54 ] Instead, he alleges, he chose to rely on CRA properly interpreting the hints he gave. This, he claims, is proof that he was not trying to hide anything from CRA.

I have a great deal of difficulty accepting this allegation. I am left with the belief that the reason for filing in this manner, rather than expressly stating that the figure was an “estimate”, was precisely so that if he was caught, he would be able to make the claim he is making now - that this is all just a misunderstanding. (

e) accuracy of estimates [ 55 ] During the period covered by the charges, the accused’s taxable income was increasing enormously over his reported income. It is inconceivable that, by the end of 2007, when his NPI was almost $100,000.00 more than he reported, he was unaware of a considerable discrepancy. In both 2005 and 2006, his actual NPI was more than double his estimated NPI. In each year, he was making tens of thousands of dollars more than he claims to have thought he was.

It is impossible for me to believe that he did not know that this was the case, yet throughout the four years in question he refused to take the simple steps that would have allowed him to report NPI accurately in subsequent years. I can only conclude from this that he knew he was under-reporting income, and that he wished to continue to do so, in order to avoid paying tax. [ 56 ] I will refer again to this issue below, under the

section entitled “Evasions”. (

f) professional knowledge [ 57 ] The accused operated, and apparently still operates, a public accounting business. Amongst other services, he provides bookkeeping services, tax-completion and -filing services, and tax advising. There is no suggestion that he is not competent in these areas; indeed, during the course of his testimony, he took some pains to try to impress me with his knowledge in these areas.

He testified that his firm would not advise its clients to estimate their income on their tax returns. [ 58 ] Of course, at the same time as he was demonstrating his knowledge of all of these fields, he was telling me that during the four years in question he never kept proper books, never completed proper records, and never filed accurate tax returns. [ 59 ] It is clear from the evidence that the accused was aware of the proper accounting methods whereby he could have tracked and reported accurate numbers for his NPI. He knew he needed to do it; indeed, he testified that he always intended to do it.

He had consistently done the same with respect to his rental income, which conceptually contains the same calculations and processes as required for his NPI. [ 60 ] There is caselaw supporting the proposition that those with greater knowledge are to be held to a higher standard. [16] For the purposes of the present case, the proposition might better be phrased that an accused’s degree of knowledge and experience form part of the context in which his actions must be assessed.

Here, the accused’s specialized skills and knowledge meant that it would be easier for him to understand what needed to be done, and to put in place the mechanisms to do it. Indeed, those were precisely among the services offered by his firm. To suggest that he was incapable, for a period of not months but years, of so doing is not credible.

(

g) evasions [ 61 ] During the course of cross-examination, the accused was at times noticeably evasive. It was not clear whether he was trying to avoid an inconvenient answer, or was being flippant or sarcastic. Whichever may have motivated him, it certainly detracted from the credibility of his testimony. [ 62 ] He was asked about his business consulting practice, in particular what sort of consulting he did.

I expected to hear that he advised his clients on accounting systems and programs, or streamlining their business practices, or whether they should use an outside payroll-management firm rather than doing payroll in-house, or something of that nature. Instead, the accused’s response to the question was, “Ask me a question, I’ll try to answer it.” [ 63 ] When questioned about his estimate of NPI for 2005, he said he believed at that time that his estimate was “close”.

Asked why he believed that, he said he “felt [he] was close because of the way [he] estimated it.” Pressed to explain the way he estimated NPI, he stated that it was “based on what [he] was taking home to make ends meet.” In other words, he claimed to believe that this method of determining NPI - a gut feeling based on how generally he and his wife seemed to be doing over the course of the year - gave him confidence that his estimate of NPI would be “close”. Not “ could be close”, not “ might be close”, but “ was close”.

The statement is ridiculous on its face. [ 64 ] When questioned about his estimate of NPI for 2007, the accused stated that it was the “best guess I had available to me.” Again, according to the accused this guess was based on nothing more than a gut feeling, derived from how generally his and his wife’s financial situation seemed to be going. In other words, the accused picked a number out of the air, with virtually no information to support it. Referring to this as a “best guess” is odd, particularly coming from a person in his line of work.

It is painfully obvious that this is not in fact the best information available to the accused; even a

summary review of his GST returns would have given him a good idea of his revenue, for instance. Although determining deductions from income would have been more complex, the suggestion that his gut feeling was the best method available to him to come up with an estimate is patently absurd. [ 65 ] Anthony Cooper, a Crown witness from CRA, demonstrated a method of calculating an estimate for NPI using only the information contained in the payroll and GST returns filed by the accused: that is, using information which the accused was keeping up to date throughout each tax year in question.

For 2007, this method came within $5,714.14 of the actual NPI for that year: a difference of roughly 5%, and certainly much closer than the accused’s “best guess”, which by contrast was almost $94,000.00, or almost 70%, off. [17] [ 66 ] That same calculation gave an estimated value of $386,891.00 for GPI, versus the actual figure of $388,048.22, a difference of under $1,200.00. The accused denied that this estimate of GPI was “pretty close”.

However, he said the difference in gross revenues in 2006 as calculated from GST returns ($316,561.00) and actual GPI ($320,233.62), a difference of over $3,600.00, was “pretty close”. [ 67 ] In other words, in answers just a couple of minutes apart, the accused called a difference of over $3,600.00 “pretty close” but said that a difference in the same figures, for a different year, of one-third the size was not “pretty close”.

To demonstrate further the absurdity of those answers, and bearing in mind that they come from a person whose livelihood revolves around accurate numbers, the “close” difference is roughly 1.1%; the “not close” difference is roughly 0.3%. [ 68 ] For all of the above reasons, among others, I have concluded that I simply do not believe the accused’s evidence. 4. Conclusion [ 69 ] Whether or not the Court can convict an accused of both tax evasion and filing a false return, both arising from the same facts, has been the subject of some judicial comment.

Although the issue was raised by defence counsel in passing, neither side made reference to it in their respective briefs.

[ 70 ] In Saskatchewan, the issue was considered by the Court of Appeal in R. v. Lavoie [18] . The Court concluded that there was no bar to convictions for both offences. However, that decision was rendered prior to the Supreme Court of Canada considering a similar issue in R. v. Kienapple [19] .

Although no authority binding on me has so held, other courts have indicated their view that Kienapple has the effect of overruling Lavoie . [20] In addition, although I have found a number of decisions in which Kienapple is referred to as a reason for entering convictions for evasion but not filing false returns, or vice versa, [21] I have not found any which assert that the Kienapple principle does not apply to such scenarios. [ 71 ] Accordingly, while I am convinced beyond a reasonable doubt that the accused is guilty of each and every charge against him, as indicated above I have convicted him solely on count one, the charge of tax evasion in the tax years 2004 through 2007, and directed a judicial stay against the other charges at the expiration of all applicable appeal periods. [ 72 ] I am deliberately not deciding the question of whether or not a conviction could result from an estimate made on a T-1 with the intention of later filing an accurate return, as that was not the situation I found here, and deciding that question is not necessary to my conclusions in this case. [ 73 ] As a final matter, I would like to express my appreciation for the work done by both Crown and defence counsel in presenting this case.

It was clear to me that a great deal of work had gone into simplifying and streamlining both the evidence and its presentation, so that the trial could focus on the real issues of the case. I note that voluminous material, comprising 26 binders in total, was admitted by consent. Furthermore, defence made 10 pages of admissions at the outset of trial. What could have been a weeks-long marathon was instead made into a much more manageable matter of a few days. [ 74 ] Such efficiencies do not happen by chance.

It requires a greater focus on the part of counsel to identify in advance exactly what the issues are in the particular case, and what evidence is (and perhaps more importantly, what evidence is not) needed for those issues. It also requires reasonable counsel on both sides. [ 75 ] It is simple for counsel to come into court and throw everything into issue; it takes competent, confident counsel to identify the real issues, quickly dispose of matters which are not contentious, and focus on the crux of the case. I was fortunate to have such counsel before me in this matter. __________________________ Q.D.

Agnew, J [1] The charges against the accused are that he: (1) between December 31, 2003 and July 21, 2008, at Saskatoon, Saskatchewan, failed to report $204,779.00 of taxable income for the 2004 to 2007 taxation years, inclusive, and did thereby wilfully evade the payment of tax imposed by the Income Tax Act in the amount of $49,561.00 contrary to paragraph 239(1)(

d) of the Income Tax Act ; (2) on or about July 5, 2005, at Saskatoon, Saskatchewan, failed to report $15,288.00 of taxable income on his return filed as required by the Income Tax Act for the 2004 taxation year and thereby made, participated in, assented to or acquiesced in the making of a false or deceptive statement, contrary to paragraph 239(1)(

a) of the Act ;

(3) on or about June 22, 2006, at Saskatoon, Saskatchewan, failed to report $35,867.00 of taxable income on his return filed asrequired by the Income Tax Act for the 2005 taxation year and thereby made, participated in, assented to or acquiesced in the making of afalse or deceptive statement, contrary to paragraph 239(1)(

a) of the Act; (4) on or about June 26, 2007, at Saskatoon, Saskatchewan, failed to report $56,740.00 of taxable income on his return filed as requiredby the Income Tax Act for the 2006 taxation year and thereby made, participated in, assented to or acquiesced in the making of a false ordeceptive statement, contrary to paragraph 239(1)(

a) of the Act; (5) on or about July 21, 2008, at Saskatoon, Saskatchewan, failed to report $96,884.00 of taxable income on his return filed as requiredby the Income Tax Act for the 2007 taxation year and thereby made, participated in, assented to or acquiesced in the making of a false ordeceptive statement, contrary to paragraph 239(1)(

a) of the Act. [2] (SCC), [1975] 1 S.C.R. 729, 26 C.R.N.S. 1, 15 C.C.C. (2d) 524, 44 D.L.R. (3d) 351, 1 N.R. 322. [3]The sole exception to this was the accused’s keeping of sufficient records to enable him to calculate and remit his GST, PSTand payroll deduction amounts. [4]See Tiffin Estate v. Tiffin, [2004] S.J. No. 108, 2004 SKQB 60, 129 A.C.W.S. (3d) 633. This decision is included simply for reference. Its conclusions are not directly relevant to the present matter, and any comments orconclusions which may have been drawn in that decision, such as with respect to the credibility of witnesses, have formed no

part in myconclusions in this judgment. [5]Paragraph 12. [6]Paragraph 14. [7]R. v. Simons, (BC PC), [1977] B.C.J. No. 60, [1977] C.T.C. 371, 77 D.T.C. 5232 (B.C. Prov. Ct.) at para.11. [8]R. v. Bromley, [2004] B.C.J. No. 481, 2004 BCPC 48, [2004] 3 C.T.C. 58 (B.C. Prov. Ct.) at para. 144. [9]R. v. Chusid, (ON SC), [2002] O.J. No. 4644, [2002] O.T.C. 934, [2003] 4 C.T.C. 228, 56 W.C.B. (2d) 76(Ont. S.C.) at para. 19. [10] (AB KB), 76 D.T.C. 6112, [1976] C.T.C. 193 #2 (Alta. Dist. Ct.). [11]1993 O.J. No. 3296 (Ont. Ct. of J. (Prov. Div.)). [12]See, for example, R. v.

Templeman, 2006 ONCJ 55. [13]See, for example, R. v.

Robinson, (SCC), [1996] 1 S.C.R. 683, 133 D.L.R. (4th) 42, 194 N.R. 181,[1996] 4 W.W.R. 609, J.E. 96-670, 72 B.C.A.C. 161, 105 C.C.C. (3d) 97, 46 C.R. (4th) 1, 34 C.R.R. (2d) 205, 30 W.C.B. (2d)206 at paragraph 14. [14](1893), 1893 CanLII 65 (FOREP), 6 R. 67 at pp. 76 - 77, per Lord Halsbury: To my mind nothing would be more absolutely unjust than not to cross-examine witnesses upon evidence which they have given, so as togive them notice, and to give them an opportunity of explanation, and an opportunity very often to defend their own character, and, nothaving given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has beendirected either to their credit or to the accuracy of the facts they have deposed to. [15]Page 71. [16]See, for example, R. v.

Jones, [2001] A.J. No. 1484, 2001 ABPC 221, 301 A.R. 317, 2001 D.T.C. 5689, 51 W.C.B. (2d)458 (Alta. Prov. Ct.). [17] I recognize that this calculation was shown on cross-examination, with respect to the 2004 tax year, to be considerably more flawed than the 2007 figures alone make it appear. I have referred to it here to contrast itwith the accused’s comment, specifically referring to 2007, of “best guess available”.

[18] (SK CA), [1970] C.T.C. 476, 73 W.W.R. 753, 70 D.T.C. 6113, [1970] 5 C.C.C. 331. [19]Supra, footnote 2. [20]See, for example, R. v. Koklenhof and Koklenhof, (ON CJ), [1975] C.T.C. 554, 27 C.C.C. (2d) 573, 75D.T.C. 5386 (Ont. P.C.). [21]See, for example, R. v. Thetrault, (AB CJ), [1976] C.T.C. 719, 76 D.T.C. 6425 (Alta. P.C.); R. v. Medina Construction Co. Limited and Crossan, [1985] N.J. No. 38 (S.C. Newf. - C.A.); R. v. Ling, 2000 BCCA 562, 144B.C.A.C. 92, 149 C.C.C. (3d) 127, 47 W.C.B. (2d) 548, 236 W.A.C. 92, [2000] B.C.J. No. 2082, [2002] 4 C.T.C. 122.