Medicine Hat Greenhouses Ltd. v. R., 81 DTC 5100, [1981] CTC 141 (Alta. C.A.)

Harradence, J:—The corporate and individual accused were jointly charged with wilfully evading payment of income tax between December 1964 and March 1970, contrary to paragraph 239(1 )(d) of the Income Tax Act, SC 1970-71-72 c 63.

Paragraph 239(1 )(d) is as follows:

Every person who has

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

is guilty of an offence, and, in addition to any penalty otherwise provided, is liable on summary conviction . . .

The individual accused was charged in his capacity as president of the corporate accused, by virtue of section 242 of the Income Tax Act, which provides:

Where a corporation is guilty of an offence under this Act, an officer, director or agent of the corporation who directed, authorized, assented to, acquiesced in, or participated in, the commission of the offence is a party to and guilty of the offence and is liable on conviction to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted.

The theory of the Crown is that the individual accused caused the corporation to expend sums of money in payment of expenses incurred by him and his family that did not relate to company business. The individual accused’s wife was an officer and director of the company. Such disbursements were then deducted from the company’s income.

No evidence was led by the accused. Both accused were acquitted at trial in Provincial Court. On appeal by the Crown to the Court of Queen’s Bench, the verdict of acquittal of the accused was set aside and a conviction recorded. Both accused appealed to this Court.

In commenting on the case for the crown the learned Provincial Court judge said:

The evidence led consisted chiefly of company and personal documentation seized from the two accused and introduced through one Mr Jacobs, an official with the Department of National Revenue.

The documentation for the most part consisted of vouchers, receipts, cancelled cheques and similar items, outlining various travel expenses incurred by Mr. and Mrs. German and in a few instances certain children of the Germans, all of which were charged as business expenses to the corporate accused which in turn wrote them off as business expenses in its tax returns for the years 1965 to 1969 inclusive.

The expenses incurred by the Germans were either paid directly by the corporate accused or alternatively reimbursed to Mr German in those cases where he had paid the expenses himself.

It should be stated at the outset that there is no suggestion in any of the evidence that the corporate accused failed to report any of its income, nor is there any Suggestion in any of the evidence that either accused falsified the expenses claimed, either by deceitfully inflating the amount or recording expenses not actually incurred.

He further commented that:

Indeed all the expenses challenged by the Minister of National Revenue were painstakingly documented and recorded in accordance with normal accounting procedure.

The learned Provincial Court judge also found that these expenses were duly claimed in the tax returns filed. He confined:

The books of the corporate accused were audited each year by a firm of chartered accountants, who in each case issued an unqualified auditors certificate.

The position taken by the Crown, however, was that these challenged expenses were not business expenses of the corporate accused but were in fact benefits conferred upon an officer which were not recorded or reported to the Minister as such and consequently attracted no tax in the hands of the recipient.

It became clear in the cross-examination of Mr Jacobs that the Crown was taking the position the challenged expenses, though considered by the tax department as benefits conferred upon an officer, by reason of their nature were still not deductible by the corporate accused as expenses made to gain income.

As a result these expenses were properly taxable in the hands of the corporate accused and, further, as a benefit conferred upon an officer, they would also be taxable in the hands of Mr German.

In considering evidence led by the Crown concerning the impugned travelling expenses, the learned Provincial Court judge said:

Also seized from the personal files of Mr German located in the offices his law firm shared with the corporate accused in Calgary was personal correspondence, diaries and other material which the crown sought to introduce as evidence respecting the nature and purpose of the various trips challenged and the uses to which the above mentioned vehicles were put.

The personal documentation referred to was admitted into evidence over the objections of the defence which argued that such personal documentation was irrelevant to the charge against the corporate accused. The defence further argued that since the charge against Mr German personally was based entirely upon his position as an officer and director of the company the personal charge must be viewed in a narrow sense as being against him only in his capacity as an officer and not as against him personally in the broadest sense. Accordingly, such documentation would also not be relevant in the charge against Mr German.

The Crown’s position was simply that the documentation was obtained from the possession of one of the accused and was accordingly admissible.

The learned Provincial Court judge found the evidence to be admissible as did the learned Queen’s Bench justice when the issue was argued before him on the appeal to the Court of Queen’s Bench.

The same issue was argued on the appeal to this Court.

It is not necessary, however, to resolve the issue on admissibility in order to dispose of the appeal.

The Crown at trial took the position that in a prosecution under paragraph 239(1 )(d) they need only prove that outlays and expenses were deducted whereupon the burden shifted to the accused of proving that these outlays or expenses came within the provisions of section 12 of the then Income Tax Act, RSC 1952 c 148. The relevant sections of section 12 are as follows:

In computing income, no deduction shall be made in respect of (a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from property or a business of the taxpayer, . ..

(h) Personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodgings) incurred by the taxpayer while away from home in the course of carrying on his business, . . .

(2) In computing income, no deduction shall be made in respect of an outlay or expense otherwise deductible except to the extent that the outlay or expense was reasonable in the circumstances.

The learned Provincial Court judge rejected this submission. He said:

While it is true that the general provisions governing the deductibility of expenses may be found in Section 12 of the Income Tax Act, it is clear that the section under which the two accused have been charged is paragraph 239(1 )(d). As has been submitted by the defence, there are no exceptions or provisos to be found in paragraph 239(1 )(d). There is an absolute prohibition against evasion, not a prohibition with qualifications, and accordingly, I am satisfied that the onus remains upon the Crown throughout to prove the elements of the charge. The accused is not therefore charged with the burden of proving that the expenses claimed were in fact a business expense.

In summing up the learned Provincial Court judge said:

The evidence led respecting the majority of these trips, and much of the evidence led respecting the camper expenses including capital cost allowances, is, in my view, insufficient to draw an inference that they were not incurred for business purposes. It follows that if I can’t make that inference, I can hardly infer mens rea.

The documentation put in by the Crown falls short in many instances of firmly establishing the purpose of the trip, although it may well have established a personal element in the trip. In other cases, it may have established a personal motive but does not go the one step further in establishing that little or no business accomplished.

The court notes that the accused corporation had customers all over Canada and Suppliers in both Europe and North America. In most cases, the documentation appeared to indicate that only a portion of the expenses were claimed, and one might just as easily draw an inference that the portions declared related to business and those not claimed related to personal matters.

The Crown argued vigorously that it would be mere speculation in some areas to infer that business was done, however, it is equally speculation that business was done, however, it is equally speculation that business was not done and as I have found, the onus is on the Crown to establish both elements of their case beyond reasonable doubt.

In some cases it was apparent that expenses challenged related to periods of time between conventions considered to be legitimate business endeavours, however, no attempt was made by the Crown to show that in fact there could be no savings in costs by reason of that accused remaining in that area rather than returning to Calgary, a point acknoweledged by Mr Jacobs to be a legitimate business decision.

The learned Provincial Court judge concluded:

As I have previously indicated, in my view, a substantial portion of the Crown’s case terms of trips and vehicle expenses must be rejected since the evidence fails to satisfy me beyond reasonable doubt that the expenses incurred were in fact purely personal in nature and not for business purposes.

The few cases where I can make such an inference would not satisfy the requirements of the Regehr [68 DTC 5070] decision in the sense that mens rea must be inferred from them. The taxpayers of this country are entitled to take the position, without fear of criminal prosecution, that certain types of expenses, while on the face of them appearing to be personal in nature, by reason of special circumstances qualify as business deductions.

In my view, after considering the whole of the evidence, this case is very similar to the situation in R v Hummel, 76 DTC 6114, the headnote of which states:

“The taxpayer was not guilty. Mens rea was an essential ingredient in the offences charged and the Crown failed to discharge the onus of proving that the taxpayer had any guilty intention. The evidence established that the often- ces were borderline cases and the taxpayer’s treatment of the items of income and expenditure to his advantage did not make him guilty even though that treatment was wrong.”

Bearing in mind the foregoing conclusions, I need not deal with the other points raised by the defence in their submissions.

In the result, I find both accused not guilty.

The Crown appealed the acquittal to the Court of Queen’s Bench. The charges involved in the appeal by the Crown to the Court of Queen’s Bench and in the appeal to this court covered seven trips in Canada and abroad, and capital cost allowances on motor vehicles. The learned Queen’s Bench justice allowed the appeal, set aside the acquittal and entered a conviction against the accused. Both accused appealed to this court. The issues raised in this appeal are whether in a charge under paragaraph 239(1 )(d) of the Income Tax Act, the onus ordinarily on the Crown to establish each element of the offence beyond a reasonable doubt does not apply. A further issue is the test to be applied by the “appeal court” to the evidence, where the Crown in an appeal on the record challenges an acquittal on a question of fact, and whether that test was applied.

In dealing with the first issue on the appeal to the Court of Queen’s Bench, the learned Queen’s Bench justice quoted the reasons advanced by the learned Provincial Court judge for rejecting the Crown’s submission (They are set out earlier in these reasons) and said:

It is obvious from this quotation that while the trial judge did not disagree with the authorities as to an onus being placed on the accused, in certain instances where an enactment specified exceptions, privisoes (sic) or exemptions, he found that in this case that the Section 239, under which the charge was laid, does not contain any such exceptions and provisoes (sic), and, therefore, the principles of an onus on the accused does not apply and that he was not confronted with making a decision on the provisions of Section 12 and its exception.

I cannot agree with this outlook. While paragraph 239(1 )(d) is the charging section of the Act, reference must be had to the provisions of section 12 in order to determine what provisions were allegedly contravened and how they were contravened.

the wording of 239 says: “in any manner”, the manner obviously to be found in section 12 or other sections of the Act which prohibit the doing of certain things and, therefore, we must refer to it.

Paragraph 12(1)(a)(h) and subsection 12(2) is the operative section which defines the nature of the prohibitions in the Act which the accused have allegedly broken and, therefore, allows the crown to lay charges under paragraph 239(1 )(d).

By reason of this, the learned trial judge was in error in refusing to consider the provisions of section 12 in determining the degree of proof the Crown was obliged to present.

In this appeal it is the Crown’s submission that by reasons of the exceptions of section 12 they are only obliged to present a prima facie case that the expenses were personal in the initial instance. If the accused then failed to discharge the onus which has then passed to discharge a persuasive burden of proof so as to raise a reasonable doubt, then the Crown has no obligation to prove these exceptions.

The learned Queen’s Bench justice referred to section 730 of the Canadian Criminal Code (I have set it out for convenience):

730. (1) No exception, exemption, proviso, excuse or qualification prescribed by law is required to be set out or negatived, as the case may be, in an information.

(2) The burden of proving that an exception, exemption, proviso, excuse or qualification prescribed by law operates in favor of the defendant is on the defendant, and the prosecutor is not required, except by way of rebuttal, to prove that the exception, exemption, proviso, excuse or qualification does not operate in favour of the defendant, whether or not it is set out in the information.

Relying on this section of the Canadian Criminal Code and the authorities of R v Edwards (1975), 1 QB 27 and R v Volk, (1973) 6 WWR 29 he found that:

With reference only to the seven trips and the question of the camper, I’m of the view that they (the Crown) have established a prima facie case that the expenses and capital cost allowances were incurred for personal use.

And,

I accept these authorities as saying that in this instance the burden of showing the exception, that the expenses and capital cost allowances were business expenses lay on the accused in this instance. They did not give evidence and did not discharge this onus.

He said:

In acquitting the accused the trial judge did speculate to some extent that a portion of the trips could be for business. In doing so he had no evidence on which to base such inference or speculation.

In principles laid down in R v Wild and other similar cases, there must be some evidence to support such an inference and in my view he was in error doing so.

With deference, the learned Queen’s Bench justice misconstrued both the meaning and implication of the wording of paragraph 239(1 )(d) and section 12 of the Income Tax Act. Paragraph 239(1 )(d) does not make it an offence per se to contravene a provision of the Income Tax Act. Such a contravention may be an ingredient to be established in a charge under that section but to do so without more [evidence] falls far short of proving a charge of wilful evasion under that section. The contravention may or may not be wilful. It is clear that the entire offence is contained within the wording of paragraph 239(1 )(d) and no provision is made for any exception to the offence so created. Further, ‘‘the degree of proof that the Crown was obliged to present” is, with deference to the learned Queen’s Bench justice, not in any way determined by section 12. That degree or onus is established by the words “wilfully” and “evade”, both contained within paragraph 239(1 )(d).

In my opinion the Crown obtains no assistance from the wording of section 12. If section 12 made it an offence for a taxpayer to deduct outlays or expenses incurred by him except where the outlays or expenses of the taxpayer may be deducted for the purpose of computing income.

It follows that section 730 CCC and the authorities relied on by the learned Queen’s Bench justice had no application in the matter on appeal to him. The accused had no exception to bring himself within. The onus throughout remained on the Crown to establish evasion beyond a reasonable doubt; and similarly to establish the wilfulness of that evasion beyond a reasonable doubt. When therefore the learned Provincial Court judge observed that it would be speculating to find, in the absence of evidence, what was the personal element in the trips, he fell into no error. The onus was on the Crown to establish this point. The learned Queen’s Bench justice was in error in holding otherwise.

I now turn to the second issue in this appeal, the test to be applied by the appeal court where the crown in an appeal on the record challenges an acquittal on a question of fact. The learned Queen’s Bench justice took the following position with respect to the evidence:

To me it is evident further that expenses claimed as business expenses are beyond a reasonable doubt personal expenses. There is concrete evidence that shows this by itself without any need to speculate or draw inferences in order to arrive at that conclusion . . .

And,

The Crown did prove the evasion beyond a reasonable doubt as to the amount of $28,682.24. It must be prove the presence of the mens rea or the criminal mind or criminal intent on the part of the accused company. The trial judge found no means rea in that although he found a substantial portion of the expenses in some of the trips to be personal, there was no mens rea because all expenses were not Claimed and the books were audited by the auditor of the company thereby leading to an element of doubt. This is paraphrasing the paragraph in the trial judge’s decision.

In determining mens rea or not, we are dealing with trying to ascertain a state of mind. In this case the company’s mind has to be determined through the mind of its president. A state of mind can only be determined in the absence of evidence by an accused through the facts as to a person’s action at the time.

He stated,

In this case the Company’s mind has to be determined through the mind of its president.

He concluded:

From all the evidence, I find that the company claimed these expenses with the intention of evading or attempting to evade the payment of tax and did to wilfully. The necessary mens rea was present.

The Crown prosecuted its appeal to the Court of Queen’s Bench under section 748 of the Criminal Code.

Except where otherwise provded by law,

(a) the defendant in proceedings under this Part may appeal to the appeal court

(i) from a conviction or order made against him, or

(ii) against a sentence passed upon him; and

(b) the informant, the Attorney General or his agent in proceedings under this Part may appeal to the appeal court

(i) from an order dismissing an information, or

(ii) against a sentence passed upon a defendant,

and the Attorney General of Canada or his agent has the same rights of appeal in proceedings instituted at the instance of the Government of Canada and conducted by or on behalf of that government as the Attorney General of a province or his agent has under this paragraph.

The Crown maintained in this Court that it might appeal from an acquittal on a question of fact and relied on the reasoning of Farris, CUBC in Fl v Antonelli (1977), 38 CCC (2d) 206 in support of that contention, who said at 211-12:

In my view, the recent amendments change the procedure on appeal and not the jurisdiction of the appeal court. There is nothing in the present section 755 to suggest that Parliament intended to change the grounds on which an appeal could be brought or to limit the jurisdiction of the appeal Court. It is significant that the sections incorporated by reference into subsection 755(1) do not include section 605, paragraph (1)(a) of which reads as follows:

The Attorney General or counsel instructed by him for the purpose may appeal to the court of appeal

(a) against a judgment or verdict of acquittal of a trial court in proceedings by indictment on any ground of appeal that involves a question of law alone

To my mind, this fact alone is conclusive that the Crown’s right of appeal in summary conviction matters remains unrestricted.

Counsel for the appellant relied heavily on the incorporation of subparagraph 613(4)(b)(ii). Subsection (4) (am. 1974-75-76, c 93, s 75) as a whole reads:

Where an appeal is from an acquittal the court of appeal may

(a) dismiss the appeal; or

(b) allow the appeal, set aside the verdict and

(1) order a new trial, or

(ii) except where the verdict is that of a court composed of a judge and jury, enter a verdict of guilty with respect to the offence of which, in its opinion, the accused should have been found guilty but for the error in law, and pass a sentence that is warranted in law.

He argued that the words “but for the error in law” were sufficient to restrict by implication the Crown’s right of appeal to questions of law alone. This argument is unsound. The incorporating section, subsection 755(1), qualifies its absolute incorporation with the words mutatis mutandis. They mean, of course, “with the necessary changes in points of detail” (see Jowitt’s Dictionary of English Law 2nd ed (1977)). It seems to me that a necessary change which must be made in subsection (4) when it is applied to summary conviction appeals is the striking out of the words “but for the error of law”. Those words are a necessary part of the section as it applies to appeals in proceedings by way of indictment because of the application of paragraph 605(1 )(a) restricting the Crown to appeals on questions of law alone. However, as has already been pointed out, paragraph 605(1 )(a) does not apply to appeals in summary conviction matters and the words “but for the error in law” are thus irrelevant in that context.

These reasons were adopted by the Saskatchewan Court of Appeal in F v Nelson (1979), 3 WWR 97 at 105. The Manitoba Court of Appeal in R v Purves and Purves, 50 CCC (2d) 211, though divided in the result were unanimous in agreeing with Farris, CUBC that in summary conviction matters on appeal did lie on a question of fact.

In R v Odette an unreported decision of the Ontario County Court, Salhany, CCJ, disagreed with the reasoning in Antonelli (supra) and held that the Crown on an appeal from an acquittal in summary conviction proceedings was restricted to question of law alone. With respect, I agree with the reasoning of Farris, CJBC and hold that an appeal does lie on a question of fact from an acquittal in summary conviction proceedings.

It therefore becomes necessary to examine the legislation by which Parliament expressly provided for an appeal on a question of fact. Subsection 603(1) gives a convicted accused such a right of appeal.

(1) A person who is convicted by a trial court in proceedings by indictment may appeal to the court of appeal

(a) against his conviction

(i) on any ground of appeal that involves a question of law alone,

(ii) on any ground of appeal that involves a question of fact or a question of mixed law and fact, with leave of the court of appeal or a judge thereof or upon the certificate of the trial judge that the case is a proper case for appeal, or

(iii) on any ground of appeal not mentioned in sub-paragraph (i) or (ii) that appears to the court of appeal to be a sufficient ground of appeal, with leave of the court of appeal; or . . .

(Italics added)

Subparagraph 613(1 )(a)(i) sets out the powers of an appellate tribunal in proceedings by indictment where the appeal from conviction is on a question of fact.

On the hearing of an appeal against a conviction . . . the Court of Appeal

(a) may allow the appeal where it is of the opinion that

(i) the verdict should be set aside on the ground that it is unreasonable or cannot be supported by the evidence . . .

The test to be followed in the application of subparagraph 613(1 )(a)(i) by an appellate tribunal on an appeal from conviction in indictable matters was laid down by Pigeon, J speaking for the majority of the Supreme Court of Canada in R v Corbett (1953), 14 CCC (2d) 385 at 386-7:

In other words, the Court of Appeal must satisfy itself not only that there was evidence requiring the case to be submitted to the jury, but also that the weight of such evidence is not so weak that a verdict of guilty is unreasonable. This cannot be taken to mean that the Court of Appeal is to substitute its opinion for that of the jury. The word of the enactment is “unreasonable” not “unjustified”. The jurors are the triers of the facts and their finding is not to be set aside because the judges in appeal do not think they would have made the same finding if sitting as jurors. This is only to be done if they come to the conclusion that the verdict is such that no 12 reasonable men could possibly have reached it acting judicially.

This test was held to be applicable to an appeal on the record against conviction in summary conviction matters by this Court in R v Ponsford, 41 CCC (2d) 433.

In R v Colbeck, 42 CCC (2d) 117 the accused/respondent in summary proceedings was convicted ahd fined on a charge of impaired driving. He appealed to the County Court who heard his appeal on the record pursuant to subsection 755(1) CCC. His appeal was allowed and the conviction quashed. The Crown appealed to the Ontario Court of Appeal on the point of law that the County Court judge erred in the exercise of his appellate jurisdiction under subparagraph 613(1 )(a)(i). In allowing the appeal and restoring the conviction MacKinnon, ACJO who gave the judgment of the Court said in dealing with the powers of the County Court judge in his appellate role:

His duty and jurisdiction as an appellate tribunal acting under subparagraph 613(1 )(a)(i) was not to retry the case, but to determine whether, as it was put by Mr Justice Pigeon in Corbett v The Queen (1973), 14 CCC (2d) 385 at p 386; 42 DLR (3d) 142; (1975), 2 SCR 275, the evidence was “so weak that a verdict of guilty is unreasonable. This cannot be taken to mean that the Court of Appeal is to Substitute its opinion for that of a jury”.

Subsection 613(4) sets out the powers of an appellate tribunal where the appeal is from acquittal on a question of law.

Where an appeal is from an acquittal the court of appeal may

(a) dismiss the appeal; or

(b) allow the appeal, set aside the verdict and

(i) order a new trial, or

(ii) except where the verdict is that of a court composed of a judge and jury, enter a verdict of guilty with respect to the offence of which, in its opinion, the accused should have been found guilty but for the error in law, and pass a sentence that is warranted in law.

(Italics added)

The words “mutatis mutandis" in subsection 755(1) CCC make necessary a change in subparagraph 613(4)(b)(ii) by striking out the words “but for error in law”. This was pointed out by Farris, CUBC in Antonelli (Supra).

The words were struck out of subsection 613(4) as “a necessary change in point of detail’ because the grounds of appeal are no longer restricted to a question of law but include a question of fact. A further necessary change in point of detail would be to include in the section, words which Parliament has found appropriate to designate the powers of an appellate tribunal hearing an appeal on a question of fact. Those words are contained in subparagraph 613(1 )(a)(i), a section not excluded but expressly designated by subsection 755(1) to apply “mutatis mutandis” to those appeals.

The necessary change in point of detail would alter subparagraph 613(4)(b) to include the following:

Where the appeal is from an acquittal the Court of Appeal may allow the appeal and set aside the verdict on the ground that it is unreasonable or cannot be supported by the evidence.

At this point I refer again to R v Purves (supra). The Manitoba Court of Appeal in R v Purves (supra) were unanimous in holding that cases interpreting subparagraph 613(1 )(a)(i) — particularly Corbett (supra), and P v Zaritec Industries Ltd et al (1975), 24 CCC (2d) 180 — had no application to appeals against acquittal. The majority of the Court relied in this regard on the pronouncement of Cartwright, CJC in Ciglen v The Queen (1970), 4 CCC 83 at pp 90-1 :

When an appeal is brought from a conviction of an indictable offence the Court of Appeal has power to allow the appeal if “it is of the opinion that the verdict should be set aside on the ground that it is unreasonable or cannot be supported by the evidence”: but that Court has no corresponding power in an appeal from an

acquittal; such a power could be conferred only by Parliament; its creation would be without precedent in the Commonwealth.

(Italics added)

The passage relied on by the majority of the Manitoba Court of Appeal can have no application to summary conviction matters. In Ciglen (supra) the Crown proceeded by way of indictment and appealed against an acquittal. The appeal therefore was limited to a question of law alone in subsection 605(1) CCC.

Subsection 755(1) CCC has swept away the reason for holding that the pronouncement of Cartwright, CJC in Ciglen (supra) applied to appeals from acquittals in summary conviction matters. To paraphrase his statement in P v Ciglen (supra), the power which could only be conferred by Parliament, the creation of which would be without precedent in the Commonwealth has now been conferred by Parliament and is part of the law of Canada relating to summary conviction appeals. With deference, I decline to follow the Manitoba Court of Appeal on that point. I am of the opinion that the test laid down by Pigeon, J in P v Corbett (supra) was applicable to this case and should have been applied by the learned Queen’s Bench justice.

Parliament has seen fit to add to the Crown’s arsenal a new weapon; the right in summary conviction matters to challenge an acquittal on a question of fact in an appeal on the record. To hold that the test is not applicable is to accept that it was the intention of Parliament to ignore those fundamental principles of criminal jurisprudence, hammered out on the anvil of centuries of experience in the criminal law, and designed to safeguard the accused individual from a miscarriage of justice. Without those words added to subparagraph 613(4)(b)(ii) and the test applied an inequality would evolve completely opposed to our concept of the administration of criminal justice. That inequality would place an accused at a serious disadvantage in these appellate proceedings. It would confer on the Crown an advantage which would violate that concept of fairness necessary to maintain confidence in the administration of criminal justice. The reasons for judgment of the learned Queen’s Bench justice clearly imply that he did not apply that test. Rather, they disclose that in reversing the findings of the learned Provincial Court judge that the Crown had not proved beyond a reasonable doubt, that the travelling expenses and camper cost allowances were not incurred for business purposes, he was retrying the case. His reasons, to paraphrase Pigeon, J in Corbett (supra) reveal that he substituted his opinion on those issues for that of the trier of fact. He set aside the findings of the learned Provincial Court judge on those issues because he would have made different findings had he been sitting as a court of first instance, and not because he came to the conclusion that the learned Provincial Court judge in experiencing a reasonable doubt on those issues was not acting judicially. This constituted [an] error in law in the exercise of his appellate jurisdiction.

I would therefore grant leave to appeal, allow the appeal and restore the acquittal of both appellants pronounced by the learned Provincial Court judge.

Stevenson, J:—I am in agreement with the conclusions of my brother Har- radence that the learned Queen’s Bench justice erred in finding an onus on the accused and did not recognize the limits imposed upon him acting as an appellate tribunal on an appeal as to facts.

I do not propose reviewing the facts but I find it helpful to an appreciation of the Crown’s position to outline some of them. The corporation had been the subject of an income tax audit just prior to the period in question. It had deducted automobile expenses and these were permitted subject to an apparently arbitrary charge back to the user for personal use. This same pattern was followed during the period in question. The Crown’s position is that there should have been a much larger charge back. On the audit travel expenses were also allowed for officers, employees and at least on one occasion the spouse of an employee. The company claimed travel expenses, the subject here, in the period following the audit. We do not know if all of the expenses of any particular trip were claimed. Again, the Crown points to the magnitude. Before us it was conceded that the Crown could not prove that these charges were not for the purpose of earning income. It relied firstly, and as we have said, erroneously, on the onus. It then relied on “a strong prima facie case”. Given the previous experience I would not be prepared to draw the inference necessary to sustain the charge. At worst, I would say of the corporation that it is likely that more should have been charged back for the automobile expense to the user and there is some suspicion that it either included too many of the travel expenses or failed to charge back some of those expenses. In these circumstances the learned Provincial Court judge’s conclusion that the expenses may have been made for the purpose of earning income is not speculative. While in civil proceedings the onus would be on the corporation here the Crown simply failed to prove that the expenses were not for the purpose of earning income.

I assume, that under the provisions of section 748 of the Code the Crown is not restricted to an appeal on law alone. I prefer, however, to do as did the majority in Purves, [1980] 1 WWR 148 and not express an opinion on the power of the Court of Queen’s Bench acting under section 613 on an appeal from acquittal. In Antonelli, cited by Harradence, JA, the British Columbia Court of Appeal found it a “necessary change in detail” to delete the words “but for the error in law”, in subsection 613(4). Harradence, JA accepts that deletion. I prefer to leave a decision on that question for a case in which we have had the benefit of full argument. It seems to me at least arguable that on an appeal which does not involve an “error in law” the Court of Queen’s Bench may be restricted to ordering a new trial.

Section 748 gives the Crown a right of appeal on an acquittal. Section 755 applies section 613. Subsection 613(4) prescribes the powers the appellate court has. The imposition of a guilty verdict after acquittal at first instance is a power not lightly granted and it appears to me that Parliament might well have chosen to allow the substitution of a finding of guilt only where there was an error in law. I do not want to be taken, by this judgment, as foreclosing that argument.

I concur in the disposition of the appeal proposed by my brother, Harradence.

I am authorized by Lieberman, JA to state he concurs in this judgment.