Dated: 19980306 Docket: 7283 THE COURT OF APPEAL FOR SASKATCHEWAN Coram: Vancise, Sherstobitoff Lane JJ.A. PETER NUSCH and WESTCAN OVERSEAS MARKETING INC. and HER MAJESTY THE QUEEN COUNSEL: Mr. C.R. Stewart for the appellant Mr. Horst H. Dahlem, Q.C. for the Crown DISPOSITION: On Appeal From: Q.B.C.A. 17/96 Appeal Heard: 16 February 1998 Appeal Allowed: 06 March 1998 Written Reasons: 06 March 1998 Reasons By: The Honourable Mr. Justice Lane In Concurrence: The Honourable Mr. Justice Vancise The Honourable Mr. Justice Sherstobitoff LANE J.A. [1] This is a summary conviction appeal by both accused from a decision of a Summary Conviction Appeal Court Judge ordering a new trial on seven counts against the appellants under ss. 239(1)(a) and (d) of the Income Tax Act. The charges against both pertain to willfully evading the payment of taxes and the unlawfully making of a false or deceptive statement in the return of income. [2] The respondent, Crown, had appealed to the Summary Conviction Appeal Court after the trial judge had acquitted the appellants herein. [3] The appeal judge found the trial judge had come to the conclusion he had reasonable doubt the appellants had deceitfully or falsely made statement in completing the tax returns and reasonable doubt they had willfully evaded the payment of taxes, and that such doubt was rooted at least in part in belief the appellants could legally have avoided the payment of tax. Essentially the appeal judge decided the trial judge erred in failing to determine if the payments involved were income and in focussing only on the criminal intent of the accused. The appeal judge ruled he could not say the trial judge’s conclusion would have been the same if he had first determined, as he ought to have, the payments received by the appellants were in fact income and then ordered new trial. [4] In our view the appeal judge misinterpreted the decision of the trial judge. The trial judge proceeded on the worst case scenario, that is that all payments received by the appellants constituted income and then he considered the issue of criminal intent. Thus in our opinion the trial judge properly considered the issue of income before dealing with mens rea. [5] The Crown argues before us the accounting records upon which the claim for deductions were made were, in fact, false thus obviating the liability for tax. The Crown contends the courts below erred in failing to recognize the falsity of the claims. The Crown did not raise this issue in its grounds of appeal to either the Summary Conviction Appeal Court or this Court. The Crown, however, made it clear the issue was fully before the courts below. [6] The Crown is asking this Court to overturn findings of fact made by the trial judge by arguing the returns were false and therefore the basis for such findings was erroneous. In fact, neither the trial judge nor the appeal judge were prepared to make such finding. The trial judge, in response to the Crown’s argument the retruns were false and the records and record keeping were part of an elaborate scheme of deception to avoid taxes, stated “It is also consistent with simple sloppiness.” The appeal judge stated, “In my opinion, there is some question as to whether either accused willfully evaded the payment of income tax, or whether there was any intent to make statement knowing it to be false or deceptive. The bookkeeping was haphazard and sloppy. [7] Both parties agreed the test is set out in R. v. Redpath Industries Ltd. et al. (1984), 84 D.T.C. 6349 at p. 6351: criminal court is not the forum to determine income taxability and to make determinations as to rights to tax assessment or absence of rights of assessment involved. In tax evasion charge, it must appear prima facie from the evidence that the taxability is clear-cut, obvious, indisputable, unquestionable from lack of reporting, before entering the examination of the other facts of the charge, e.g. whether the undisputable taxability, based on income gained, proven and undeclared, leads to conclusion beyond reasonable doubt that it was wilfully omitted by taxpayer in his tax returns. [8] The evidence of taxability was not clear-cut, obvious or indisputable. [9] On the material before us there is no basis prepared to overturn the findings of fact made by the trial judge. See R. v. Andres, 1979 CanLII 2238 (SK CA), [1982] W.W.R. 249. [10] The appeal is therefore allowed and the acquittals ordered by the trial judge are restored. DATED at the City of Regina, in the Province of Saskatchewan, this 6TH day of March, A.D. 1998. LANE J.A. VANCISE J.A. SHERSTOBITOFF J.A.
Both accused appealed the decision of the Summary Conviction Appeal Court Judge ordering a new trial on seven counts under s239(1)(a) and (d) of the Income Tax Act relating to evasion of payment of taxes and unlawfully making of a false or deceptive statement. The appeal judge decided the trial judge erred in failing to determine if the payments involved were income and in focusing only on the criminal intent of the accused. HELD: The appeal was allowed and the acquittals ordered by the trial judge were restored. There was no basis to overturn the findings of fact made by the trial judge. The appeal judge misinterpreted the decision of the trial judge who properly considered the issue of income before dealing with mens rea. The evidence of taxability was not clear-cut, obvious or indisputable.