Mahoney,
J:—This
is
a
special
case
stated
pursuant
to
Rule
475.
The
subject
is
issue
estoppel.
The
questions
to
be
answered
are:
1.
Did
the
learned
Trial
Judge
His
Honour
Judge
E
A
Fairbanks,
in
the
criminal
proceedings
Her
Majesty
The
Queen
v
Sheridan
Warehousing
Limited
(the
Plaintiff
herein),
Sheridan
Lax
and
Samuel
Lax,
heard
in
the
Provincial
Court
(Criminal
Division),
Judicial
District
of
Hamilton-Wentworth,
determine
the
fair
market
value
of
the
property
at
80
Brant
Street
in
Hamilton,
Ontario,
(the
“subject
property”)
as
at
December
31,
1971?
2.
If
the
answer
to
question
1
is
in
the
affirmative,
does
such
a
determination
estop
the
Defendant
herein
from
asserting
in
the
present
proceeding
that
the
fair
market
value
of
the
subject
property,
as
at
December
31,
1971,
was
not
more
than
$445,000.00
as
alleged
in
subparagraphs
4(b),
4(c),
4(d),
6,
7,
9
and
10
of
the
Statement
of
Defence.
Transcripts
of
the
reasons
for
judgment
on
conviction,
delivered
orally
December
10,
1980,
and
on
sentencing,
delivered
orally
January
12,
1981,
are
attached
to
the
agreed
statement
of
facts.
The
issue
in
this
action
is
the
taxable
gain
realized
by
the
plaintiff
on
its
disposition
of
real
property
for
$1,400,000
on
December
31,
1972.
It
had
owned
the
property
for
many
years.
The
question
in
dispute
is
the
fair
market
value
of
that
property
on
Valuation
Day,
December
31,
1971,
hereafter
the
“V-Day
value”.
The
plaintiff
and
two
of
its
officers
were
charged
with
tax
evasion.
The
material
part
of
the
charge
against
the
plaintiff
was
that
it
...unlawfully
did
on
or
about
[January
23,
1974,
at
Hamilton,
Ontario]
wilfully
attempt
to
evade
payment
of
taxes
totalling
$168,726.91
imposed
by
the
Income
Tax
Act
on
[the
Plaintiff
for
1972],
by
submitting
false
documents
to
the
Department
of
National
Revenue
purporting
to
be
copies
of
correspondence..
.thereby
committing
an
offence
punishable
under
section
239(1
)(d)
of
the
said
Act.
The
offence
lay
not
in
failure
to
report
the
transaction
but
in
the
submission
of
false
documents
intended
to
corroborate
the
V-Day
value
placed
on
the
property
in
the
plaintiff’s
tax
return.
The
agreed
statement
of
facts
goes
on:
7.
On
December
4,
1979,
the
Plaintiff
pleaded
not
guilty
to
the
said
charge
and
was
tried
before
His
Honour
Provincial
Court
Judge
E
A
Fairbanks,
in
the
Provincial
Court
(Criminal
Division)
for
the
Judicial
District
of
Hamilton-Wentworth
on
December
4,
5,
6
and
7,
1979;
March
31,
1980;
April
1,
2,
and
3,
1980;
and
October
20,
21,
22
and
23,
1980.
8.
The
Crown,
at
trial,
as
evidence
relating
to
the
offence
with
which
the
Plaintiff
and
the
two
others
were
charged,
called
three
expert
appraisers
who
testified
that
the
fair
market
value
of
the
subject
property
at
Valuation
Day
was
$430,000.00,
$445,000.00
and
$500,000.00
respectively.
The
Plaintiff
and
the
two
other
accused,
at
trial,
called
two
expert
appraisers
who
testified
that
the
fair
market
value
of
the
subject
property
at
valuation
day
was
$1,400,000.00.
Paragraphs
9
and
10
recite
the
facts
of
the
conviction
and
sentence
and
identify
the
exhibited
transcripts
and
paragraph
11
states
that
no
appeal
was
taken
from
conviction
or
sentence.
Judge
Fairbanks,
in
convicting
the
plaintiff,
made
no
determination
of
V-
Day
value.
I
think
it
a
fair
interpretation
of
his
decision
that,
while
he
found
the
experts
called
by
the
Crown
more
reliable
than
those
called
by
the
defence,
he
also
found
that
the
Crown’s
experts
erred
in
law
in
refusing
to
consider
the
sale
of
the
subject
property
as
a
transaction
relevant
to
its
V-Day
value.
He
did,
however,
find,
beyond
a
reasonable
doubt,
that
there
had
been
a
taxable
capital
gain
without
quantifying
it.
He
said
he
did
not
have
to
quantify
the
gain.
Subsection
239(1)
provides,
in
part,
that
on
conviction
of
an
offence
thereunder
on
summary
conviction,
a
person
is
liable
to
(f)
a
fine
of
not
less
than
25%
and
not
more
than
double
the
amount
of
the
tax
that
was
sought
to
be
evaded.
.
.
It
is
desirable
to
quote
at
some
length
from
Judge
Fairbanks’
orally
delivered
reasons
on
sentencing:
..
.Now
I
should
point
out
that
in
my
Judgment
that
I
stated
that
the
sale
of
this
property
that’s
in
question
here
should
have
been
considered
in
the
determination
of
fair
market
value.
I
had
no
reasons
by
the
Crown
appraisers
as
to
why
they
rejected
it
and
I
was
left
to
speculate
whether
it
was
arm’s
length
or
whether
it
was
an
open
and
unrestricted
market
and
all
the
legal
principles
and,
as
I
stated
in
my
Judgment,
I
came
to
the
conclusion
that
the
Crown
appraiser
did
not
follow
the
legal
principles
in
determining
the
fair
market
value
of
this
property
and
actually
as
a
result
it
was
not
my
function
to
determine
what
the
fair
market
value
was.
That’s
in
my
opinion
and
I
gave
the
authorities
and
I
can
understand,
of
course,
that
this
matter
is
in
dispute.
I
am
saying
this
with
respect
to
the
fact
that
this
comes
down
as
the
basic
reason
for
the
act
of
backdating
certain
documents
and
submitting
them
to
the
Department.
While
those
comments
were
made
in
the
context
of
his
general
consideration
of
how
severe
the
sentence
should
be,
which
included
the
option
of
imprisonment
for
the
individuals,
I
recite
them
because
they
fairly
summarize,
in
his
own
words,
the
position
Judge
Fairbanks
expressed
on
conviction.
He
went
on
to
consider
further
the
question
of
severity
and
then
continued:
.
.
.Now
I
did
find,
I
had
to
find
in
my
Judgment,
that
there
was
some
tax
payable.
Then
I
have
to
go
back
to
the
section,
the
penalty
section,
of
the
amount
sought
to
be
evaded
and
this
is
the
most
difficult
part
of
this
sentence
because
it
says
it
is
based
on
the
amount
sought
to
be
evaded
and,
in
effect,
it
almost
imposes
on
me
some,
if
I
can
put
it,
calculation
of
that
amount.
...
If
I
have
to
make
my
decision
to
preserve
jurisdiction
of
the
sentence
under
that
section,
I
have
to
make
some
sentence
that’s
relative
to
subsection
239(1
)(f)
which
is
the
penalty
section.
Now
having
found
that
the
assessment
of
the
determination
of
fair
market
value
is
not
satisfactory
to
me,
the
only
evidence
was
the
evidence
of
Mr
Strung*
and
he
was
evasive
and
I
use
that
word
not
that
strongly
but
he
couldn’t
or
didn’t
put
a
figure
on
what
would
be
the
assessment
of
fair
market
value
assuming
that
he
took
into
consideration
the
sale
of
this
property.
The
only
evidence
and
this
is
Mr
Salvona’s*
and
he
was
asked
“assuming
that
this
is
an
arm’s-length
transaction,
what
would
be
your
assessment
of
the
fair
market
value
be”
and
he
said
one
million,
two
hundred
and
fifty
thousand
to
one
million,
three
hundred
and
fifty
thousand
but
no
one
ever
said
that
they
treated
it
as
not
an
arm’s-length
transaction
so
this
is
the
difficulty
that
I
had
with
the
Judgment
and
it
also
to
an
extent
it
affects
the
Sentence
so
all
I
can
do
to
keep
it
in
the
confines
of
that
section
is
to
do
what
Mr
Goodmant
has
already
set
out,
take
one
million,
three
hundred
and
fifty
thousand
dollars
as
some
guideline
for
me
with
respect
to
that
section
to
come
up
with
a
figure
and
that’s
fifty
thousand
dollars
difference.
The
capital
gain
tax,.’p
of
course,
is
after
that,
twenty-five
thousand
dollars.
The
Federal
portion
which
we
are
dealing
with
here
is
ten
thousand
dollars
and
before
I
say
what
I
am
doing
with
that
I
have
to
deal,
of
course,
with
the
deterrent
effects
and
rehabilitation
and..
.character
witnesses.
..
Having
decided
that
the
punishment
should
relate
entirely
to
the
fraud,
that
is
the
attempt
to
deceive
the
fisc,
His
Honour
continued:
It’s
the
act
but
it
has
to
bear
a
relation,
of
course,
to
subsection
(f)
so
I
will
not
consider
a
jail
sentence
as
the
Crown
has
suggested.
That’s
not
appropriate,
under
these
circumstances,
in
my
opinion
and
I’m
only
left
with
one
matter
and
that's
based
on
the
ten
thousand
dollar
amount
sought
to
be
evaded
and
to
express
the
other
element
of
the
punishment
in
the
nature
of
a
fraud,
a
crime
element,
that
one
hundred
percent
of
that
should
be
imposed
so
that
the
company
and
Messrs
Lax
are
fined
ten
thousand
dollars.
...all
are
equally
involved
so
perhaps
the
fine
equally
three
thousand,
three
hundred
and
thirty-three
dollars
and
thirty-three
cents.
..
I
have
quoted
Judge
Fairbanks’
reasons
on
sentencing
at
considerably
more
length
than
may
have
been
necessary
to
avoid
taking
any
relevant
comment
out
of
its
context.
Judge
Fairbanks
was
manifestly
dissatisfied
with
the
evidence
as
to
V-Day
value.
He
rejected
the
evidence
of
the
experts
called
by
the
defence
as
less
reliable
than
those
of
the
Crown’s
but
he
also
rejected
the
evidence
of
the
Crown’s
experts
because
they
did
not
apply
proper
legal
principles
in
arriving
at
their
opinions.
Only
one
Crown
expert,
Salvona,
was
willing
to
express
an
opinion
as
to
V-Day
value
assuming
the
sale
giving
rise
to
the
capital
gain
in
issue
to
be
a
transaction
that
ought
to
have
been
taken
into
account.
He
gave
a
range:
$1,250,000
to
$1,350,000.
Judge
Fairbanks
accepted
the
higher
figure
because
it
resulted
in
the
lowest
capital
gain.
That
effectively
gave
the
benefit
of
any
doubt
to
those
being
sentenced.
He
held
that
paragraph
239(1
)(f)
“almost”
imposed
on
him
a
duty
of
calculating
the
precise
amount
of
tax
sought
to
be
evaded
but
he
did
not
do
so.
The
legality
of
that
approach
is
res
judicata
between
the
parties.
I
am
neither
called
upon,
nor
entitled,
to
conclude
that
Judge
Fairbanks
must
have
determined
the
precise
amount
of
tax
sought
to
be
avoided
and
thus,
necessarily,
the
V-Day
value
because
that,
in
law,
was
what
he
was
required
to
do.
In
other
words,
I
cannot
take
the
approach,
assuming
it
to
be
valid,
that
paragraph
239(1
)(f)
requires
a
finding
of
exactly
how
much
tax
was
sought
to
be
evaded
as
a
prerequisite
to
the
imposition
of
a
fine
and
that,
therefore,
Judge
Fairbanks
must
be
deemed
to
have
made
it.
I
must
say
that
I
do
not
conceive
how
any
precise
finding
of
value
dependent
on
the
opinion
evidence
of
experts
in
land
valuation
could
be
arrived
at
beyond
a
reasonable
doubt.*
This
Court
tries
no
criminals
but
it
sees
and
hears
many
appraisers.
I
am
bound
to
deal
with
the
question
whether
Judge
Fairbanks
determined
the
V-Day
value
as
a
pure
question
of
fact.
Clearly,
he
did
not.
Rather,
being
“almost”
required
to
do
so,
he
adopted
$1,350,000
as
“some
sort
of
guide
line”
that
gave
those
he
was
sentencing
the
benefit
of
the
doubt
which
he
obviously
entertained
as
a
result
of
the
unsatisfactory
state
of
the
expert
evidence.
The
first
question
must
be
answered
in
the
negative.
It
is
a
matter
of
considerable
intellectual
regret
that
I
am
not,
therefore,
called
upon
to
deal
with
the
second.
It
was
most
ably
argued
by
both
counsel.
Costs
of
this
reference
will
be
in
the
case.
Order
THIS
COURT
DOTH
ORDER
AND
ADJUDGE
THAT
His
Honour
Judge
E
A
Fairbanks
did
not,
in
the
criminal
proceeding:
Her
Majesty
the
Queen
v
Sheridan
Warehousing
Limited
(the
plaintiff
herein),
Sheridan
Lax
and
Samuel
Lax,
heard
in
the
Provincial
Court
(Criminal
Division),
Judicial
District
of
Hamilton
Wentworth,
determine
the
fair
market
value
of
the
property
at
80
Brant
Street
in
Hamilton,
Ontario,
as
at
December
31,
1971,
AND
THAT
the
costs
of
this
reference
be
in
the
cause.