Van Rooy v. MNR, 88 DTC 6323, [1988] 2 CTC 78 (FCA)

Urie, J.: —This application pursuant to section 28 of the Federal Court Act seeks to set aside a judgment rendered by the Associate Chief Judge of the Tax Court of Canada, in which he held that issue estoppel based on the conviction of the respondent for tax evasion by an Ontario Provincial Court Judge, did not lie in an appeal to the Tax Court to preclude the appeal of the respondent from an assessment to tax. The relevant facts, briefly stated, are these.

The Facts

On July 25, 1975 the applicant Minister reassessed the respondent for his 1973 taxation year by including in his taxable income, the sum of $60,000 which the respondent allegedly had failed to report in his computation of that income for the 1973 taxation year. The respondent served a notice of objection on the applicant on October 16, 1975. It was not until October 6, 1978 that the applicant Minister confirmed the reassessment.

Prior to the respondent having filed his notice of objection, he had been charged in the Judicial District of Norfolk, Ontario, with the offence of tax evasion pursuant to paragraph 239(1)(d) of the Income Tax Act, ("the Act") and he was convicted thereon on March 7, 1978. The certificate of conviction is dated the day of conviction. The relevant portion reads that he:

. . . unlawfully wilfully did evade payment of taxes imposed by the Income Tax Act, to wit: by suppressing income in the sum of $60,000 for the taxation year 1973 thereby evading payment of $19,165.82 contrary to section 239(1)(d) of the Income Tax Act.

No appeal was taken from this conviction.

On December 19, 1978 the respondent filed a notice of appeal to the Tax Review Board from the reassessment. In his reply thereto the Minister assumed in paragraph 3(a) that:

(a) the Appellant was involved in a curious transaction involving a diamond scheme which, although the specific facts concerning the scheme remain uncertain because of the conflicting stories given by the Appellant [Respondent here] resulted in a profit to the Appellant [Respondent here] of $60,000.

The Issues

It is the applicant's contention that the sum of $60,000 income which was found by the Provincial Court Judge to have been suppressed by the respondent in computing his income for the 1973 taxation year was the sum of $60,000 included by the Minister in the respondent's income by way of the reassessment of tax dated July 25, 1975, supra. Put another way, the criminal conviction of the respondent for failing to disclose income in the sum of $60,000 was based on the same facts as those upon which the Minister relied in the reassessment. That being so, it is in the applicant's view, a proper case for the application of issue estoppel and the learned Associate Chief Judge of the Tax Court erred, in counsel's view, in finding that this form of res judicata cannot be asserted in a civil proceeding on the basis of the judicial determination made in a previous criminal proceeding. This is the first issue in this judicial review proceeding.

The second issue arises out of the alleged error by the Associate Chief Judge in holding that the respondent's conviction for tax evasion was not the same issue as that sought to be raised by the respondent, as appellant in the Tax Court of Canada, on his appeal from the applicant Minister's reassessment of the respondent's 1973 taxable income.

The Tax Court Judgment

After reviewing carefully the key jurisprudence relating to issue estoppel and the requirements for its application as derived from that jurisprudence, the learned trial judge adopted the requirements of issue estoppel propounded by Lord Guest in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] A.C. 853 at 935; [1965] 2 All E.R. 536 at 565 which had been in turn cited with approval by Dickson, J. (as he then was) in Angle v. M.N.R., [1975] 2 S.C.R. 248 at 255; 74 D.T.C. 6278 at 6280 viz:

(1) that the same question has been decided;

(2) that the judicial decision which is said to create the estoppel was final; and,

(3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies

Dickson, J. in the Angle case also held, adopting the words of Megarry, J. in Spens v. I.R.C., [1970] 3 All E.R. 295 at 301, that the nature of the inquiry which must be made is:

. . I whether the determination of which it is sought to found the estoppel is "so fundamental” to that substantive decision that the latter cannot stand without the former. Nothing less than this will do.

The Associate Chief Judge then made his finding as to the first issue herein, in the following passage from his reasons:* [1]

It is clear from the authorities cited and others including Gushue v. The Queen, [1980] 1 S.C.R. 798 at 802-3, that issue estoppel applies where the judicial decision relied upon to found issue estoppel and the proceedings in which it is invoked are both criminal in nature. The same is true of civil proceedings. Reported decisions on issue estoppel are rare that involve a hybrid where, as in this appeal, the judicial decision relied upon arises out of a prosecution for an offence and the proceeding in which issue estoppel is asserted is civil in nature. Sheridan* [2] is such a case, but it did not decide whether issue estoppel applies in these circumstances. Because of the comprehensive consideration it gave to issue estoppel mention is made of Mcllkenny v. Chief Constable of West Midlands Police Force and another and related appeals, [1980] 2 All E.R. 227 (C.A.). As Lord Diplock noted, the hearing before the English Court of Appeal occupied 12 days and involved the citation of 77 authorities.

In my view issue estoppel can have no application to the combination of litigation just described. An appeal from an assessment is, of course, civil in nature. It is basic to issue estoppel in civil proceedings that there be reciprocity or mutuality: see, for example, Humphrys per Lord Edmund-Davies at page 51. The third requirement of issue estoppel regarding identity of parties or their privies is founded on this rule. Mutuality cannot exist in cases like the one at hand. Assume, for example, that a taxpayer is acquitted on a charge under paragraph 239(1)(d) of having wilfully failed to include $10,000 in income in computing his income for a taxation year. In addition to being prosecuted he has been reassessed by the Minister of National Revenue who added the $10,000 in computing his income for the same year. The taxpayer appeals the reassessment and the appeal comes on for hearing after the acquittal. Could he successfully invoke issue estoppel thereby succeeding on the appeal? I think not. In prosecutions for alleged offenses the fundamental question is whether the Crown has established beyond a reasonable doubt that the accused did the act complained of. The answer determines his liability to penal punishment. Generally the basic question to be answered on an appeal from an assessment of tax payable is whether the appellant has established on a balance of probability that the Minister erred in his assessment. The answer will determine his liability to tax. What transpires with respect to a prosecution does not lend itself to being equated with the fundamental question on an appeal from an assessment.

I believe the same can be said regarding a case where the question is whether a taxpayer is liable to a penalty under subsection 163(2) of the Act. I do not think that his acquittal on a charge under paragraph 239(1)(d) of having wilfully failed to include $10,000 in computing his income would estop the Minister on an appeal to this Court from establishing on a balance of probabilities, as is required under subsection 163(3) of the Act, that the taxpayer is liable to a penalty in relation to the $10,000.

An appeal to this Court from a reassessment to tax is not litigating afresh the same issue that existed between the same parties on a prosecution for an alleged violation of paragraph 239(1)(d) even though both proceedings may be founded on essentially the same facts.

As to the second issue, the trial judge, having assumed for the purpose of argument that the doctrine of issue estoppel could apply in circumstances such as those which prevail here, was satisfied that the second and third requirements for the application of issue estoppel had been met in this case. However, he was unable to find the identity of issues that met the first requirement and therefore held that this failure was fatal to the contention of the applicant that issue estoppel precluded the respondent from successfully pursuing its appeal from the applicant Minister’s reassessment of the respondent's 1973 taxable income.

Conclusion

1. The First Issue:

While it is tempting for purposes of this application to assume that the doctrine of issue estoppel applies and to proceed immediately to the second issue, I think it important that this Court express its views on its application in circumstances such as those which prevail here.

I must first say that I am unable to agree with the learned Associate Chief Judge, as a general proposition, that "[W]hat transpires with respect to a prosecution does not lend itself to being equated with the fundamental question on an appeal from an assessment." In its context that statement appears to have been based on the differences in the quality of proof required in criminal and civil cases. I have been unable to find in the cases to which we were referred on this subject that lack of identity of issue could be founded on such differences. In fact, I would have thought that the contrary would be true since the burden in a criminal case of proof beyond a reasonable doubt is substantially higher than that in a civil proceeding where the proof required is on a balance of probabilities. Surely the former encompasses the latter if all the facts adduced in evidence are identical or substantially so at least when a conviction has been entered against the accused. If that is so I fail to understand how the differences in the requirement of proof can found the assertion by the trial judge to which I have referred.

That view, of course, is not applicable necessarily in the situation envisaged by the learned judge where a taxpayer has been acquitted of a charge of evasion of tax under the Income Tax Act and is subsequently reassessed under the Act by adding previously undisclosed income to his taxable income. The differences in burden of proof may indeed be relevant in those circumstances. The reasoning of Lamer, J. (concurred in by McIntyre and Estey, JJ.) in Grdic v. The Queen, [1985] 1 S.C.R. 810 at 825; 19 C.C.C. (3d) 289 at 293-94 illustrates the distinction:

There are not different kinds of acquittals and, on that point, I share the view that "As a matter of fundamental policy in the administration of the criminal law it must be accepted by the Crown in a subsequent criminal proceeding that an acquittal is the equivalent to a finding of innocence”: see Martin L. Friedland, Double Jeopardy (1969), Clarendon Press, Oxford, p. 129, also Chitty, i, 648; R. v. Plummer, [1902] 2 K.B. 339 at p. 349. To reach behind the acquittal, to qualify it, is, in effect, to introduce the verdict of "not proven", which is not, has never been and should not be part of our law.

However, this does not mean that, for the purpose of the application of the doctrine of res judicata, the Crown is estopped from relitigating all or any of the issues raised in the first trial. But it does mean that any issue, the resolution of which had to be in favour of the accused as a prerequisite to the acquittal, is irrevocably deemed to have been found conclusively in favour of the accused: see R. v. Carlson, [1970] 5 C.C.C. 147, [1970] 3 O.R. 213; contra, Villemaire v. The Queen (1962), 39 C.R. 297 at p. 300. This is so even though the judgment might well be the result of a reasonable doubt on that issue, and even when the judge has said so or expressed views that indicate clearly that his finding, though inuring to the benefit of the accused, had been arrived at with reluctance and the judge has suggested that it is not conclusively in favour of the accused.

An acquittal on the charge of tax evasion in this case would have meant that the Crown had failed to prove beyond reasonable doubt that the accused “did wilfully evade payment of taxes imposed by the Income Tax Act. . . .”* [3] The element of "wilfulness", for example, in the alleged evasion of tax had to be proven beyond reasonable doubt as did each of the other ingredients of the offence. On the other hand, on the reassessment, no proof of "wilfulness" is required. The burden is to establish on a balance of probabilities that the respondent failed to report certain income in his tax return. Had there been a requirement to prove wilfulness it would, as I see it, be "deemed to have been found conclusively in favour of the accused" — the situation foreseen by Lamer, J. in the passage from Grdic quoted above.+ [4]

Aside from the above-noted apparent basis for his decision that issue estoppel, consequent upon the findings of fact made in the course of a criminal prosecution, can have no application in appeals from reassessments, it appears to me that such a conclusion flies in the face of a number of cases of persuasive authority.

The existence of the doctrine, its relationship to abuse of process and the admissibility of certificates of conviction in civil proceedings have been the subject of many cases in the United Kingdom, United States, New Zealand and in the Supreme Court of Canada as well the Superior Courts in this country. For purposes of this appeal only a few need be referred to.

Unquestionably, the most thorough analysis of the jurisprudence was that undertaken by North, P. in the New Zealand Court of Appeal case of Jorgenson v. News Media (Auckland) Limited, [1969] N.Z.L.R. 961. In the result, the Court refused to follow the English Court of Appeal decision in Hollington v. F. Hewthorn & Co. Ltd., [1943] A.C. 601 and held that, in the context of abuse of process, not only was a certificate of conviction admissible in evidence in a civil proceeding in that country, it was "some evidence” of guilt in the crime charged at the time and place in the indictment. The decision in Hollington had held that a certificate of conviction was inadmissible in subsequent civil proceedings. It is a decision which was frequently criticized by academic writers and in other courts. Finally, both the English Court of Appeal and the House of Lords respectively, in Mcllkenny v. Chief Constable of West Midlands et al., [1980] 1 Q.B. 283 and sub nom. Hunter v. Chief Constable of West Midlands Police et al., [1982] A.C. 529 disavowed what was said in Hollington. Lord Diplock who delivered the principal judgment, had this to say at pages 542-43 of the report:

The passage from Lord Halsbury’s speech [in Reichel v. Magrath (1889), 14 App. Cas. 665] deserves repetition here in full:

. . . I think it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again. My Lords, this is the first case to be reported in which the final decision against which it is sought to initiate a collateral attack by means of a civil action has been a final decision reached by a court of criminal jurisdiction.

This raises a possible complication that the onus of proof of facts that lies upon the prosecution in criminal proceedings is higher than that required of parties to civil proceedings who seek in those proceedings to prove facts on which they rely. Thus a decision in a criminal case upon a particular question in favour of a defendant, whether by way of acquittal or a ruling on a voir dire, is not inconsistent with the fact that the decision would have been against him if all that were required were the civil standard of proof on the balance of probabilities. This is why acquittals were not made admissible in evidence in civil actions by the Civil Evidence Act 1968. In contrast to this a decision on a particular question against a defendant in a criminal case, such as Bridge J.'s ruling on the voir dire in the murder trial, is reached upon the higher criminal standard of proof beyond all reasonable doubt and is wholly inconsistent with any possibility that the decision would not have been against him if the same question had fallen to be decided in civil proceedings instead of criminal.

It should be noted that the case arose from the refusal of a trial judge to strike out a statement of claim and in the Court of Appeal only one of the three justices, Lord Denning, relied exclusively on the certificate of conviction in the context of issue estoppel. The other two members of the panel, on the facts of the particular case, preferred to base their conclusions on abuse of process although one, Sir George Baker, did not rule out issue estoppel as being applicable and would have struck out the statement of claim on both grounds.

With respect to the Court of Appeal judgments, Lord Diplock had this to say:

Lord Denning M.R. and Sir George Baker were also in favour of extending the description “issue estoppel" to cover the particular example of abuse of process of the court presented by the instant case — a question to which much of the judgment of Lord Denning is addressed. Goff L.J. on the other hand, expressed his own view, which had been shared by Cantley J., that such extension would involve a misuse of that expression. But if what Hunter is seeking to do in initiating this civil action is an abuse of the process of the court, as I understand all your Lordships are satisfied that it is, the question whether it also qualifies to bear the label “issue estoppel" is a matter not of substance but of semantics.

Nevertheless it is my own view, which I understand is shared by all your Lordships, that it would be best, in order to avoid confusion, if the use of the description “issue estoppel" in English law, at any rate (it does not appear to have been adopted in the United States), were restricted to that species of estoppel per rem judicatam that may arise in civil actions between the same parties or their privies, of which the characteristics are illustrated in a judgment of my own in Mills v. Cooper, [1967] 2 Q.B. 459, 468-469 that was adopted and approved by this House in Reg. v. Humphrys, [1977] A.C. 1, the case in which it was also held that “issue estoppel" had no place in English criminal law.

The latter statement is inapplicable in Canada because the Supreme Court in Gushue v. The Queen, [1980] 1 1S.C.R. 798, found that issue estoppel is part of the criminal law of Canada.

Canadian courts too have wrestled with the problem as to when issue estoppel may lie. Demeter v. British Pacific Life Insurance Co. (1984), 48 O.R.

(2d) 266 is a case in which the appellant was convicted of the murder of his wife. Subsequently, he sued in three separate actions, the respondent insurance companies upon policies of insurance whereby the respondents had agreed to pay to the survivor of the appellant or his wife, certain sums upon the death of the other. In rejecting the appeal the Ontario Court of Appeal found that the appellant was seeking to relitigate the very issue that was decided against him at his criminal trial. It held that Hollington, supra, was not the law of Ontario and that the attempt to relitigate was an abuse of the process of the court.

Re Del Core and Ontario College of Pharmacists (1985), 51 O.R. (2d) 1, is another Ontario Court of Appeal decision ultimately decided on the principle of abuse of process. In concurring reasons for judgment for the majority Blair, J. A. said this at pages 21-22 of the report:

I agree with my brother Houlden that such evidence constitutes prima facie and not conclusive proof of the fact of guilt in civil proceedings. The prior conviction must of course be relevant to the subsequent proceedings. Its weight and significance will depend on the circumstances of each case. The rationale for this rule of evidence is expounded by the Court of Appeal of New Zealand in Jorgensen v. News Media (Auckland) Ltd., [1969] N.Z.L.R. 961, where, after a careful review of the authorities, it concluded that the rule in Hollington v. Hewthorn did not extend to New Zealand. After holding that a certificate of conviction was conclusive evidence of that conviction, North P. stated at page 980:

[P]roof of . . . conviction . . . while not conclusive of . . . guilt, is evidence admissible in proof of the fact of guilt. Whether such evidence discharges the evidentiary burden of proof at any stage of the trial will be for the Court to decide on the evidence tendered.

I also agree with his comment at p. 980 on the weighing of such evidence:

.. . I do not overlook the practical difficulties which in some cases may arise in determining what weight should be given to proof of a conviction of a crime which is again in issue in the civil proceedings but I think these difficulties are more apparent than real for the weight to be given to the conviction will vary very considerably according to the nature of the civil action with which the Court is concerned and the circumstances surrounding the conviction. If it is a judge alone case he should have little difficulty in determining what weight should be given to the conviction. If it is a jury case no doubt it will require a careful direction by the judge.

Since evidence of prior convictions affords only prima facie proof of guilt it follows that its effect may be countered in a variety of ways. For example, the conviction may be challenged or its effect mitigated by explanation of the circumstances surrounding the conviction. It is both unnecessary and imprudent to attempt any exhaustive enumeration. The law of Ontario is only now emerging from the long shadow cast over it by the decision in Hollington v. Hewthorn, supra. It would be highly undesirable to replace this arbitrary rule by prescribing equally rigid rules to replace it. The law should remain flexible to permit its application to the varying circumstances of particular cases.

From the foregoing it can be seen that the Ontario Court of Appeal had no difficulty in finding that in a proper case proof of the conviction of a party would provide in a civil proceeding some evidence or prima facie evidence of the fact of guilt, the effect of which may be subject to some kind of examination in the civil proceeding. In both the Demeter and Del Core cases the Courts found that to permit the actions to proceed would have constituted an abuse of process. However, I can see no reason why the same considerations should not apply to cases in which there is a plea of issue estoppel just as Lord Denning and Sir George Baker held in the Mcllkenny case, supra.

While precisely on point, the judgment of this Court in The Queen v. Aimonetti, [1985] 2 F.C. 370 is of interest in that the principle of issue estoppel was applied in a situation originally adjudicated upon by a Provincial Court judge in a matter which arose out of a criminal investigation. The respondent in that appeal had been arrested and at the same time a sum of money had been seized under authority of the Narcotics Control Act. The refusal of a writ of certiorari against the Provincial Court order, by the Manitoba Queen's Bench was upheld in the Court of Appeal and leave to the Supreme Court of Canada was refused.

The respondent then instituted proceedings in this Court in which he sought a judgment for the money seized together with interest. In the Trial Division, on a preliminary determination under the Rules, it was held, inter alia, that issue estoppel did not lie. The issue in the Court of Appeal was whether the respondent's right to possession of the money had been conclusively determined in the restoration proceedings so as to bar the respondent from asking this Court to arrive at a different result. Mahoney, J. speaking on behalf of the Court said at pages 378 and 371 that:

The appellant’s counsel did not take the position that the estoppel here was a cause of action estoppel. I think he might have. I do not see that the right asserted in the application for a restoration order under subsection 10(5) is any different than the right asserted in the statement of claim here. In both proceedings, the respondent has sought only to be put in possession of the same thing. I see no valid distinction in the fact that the thing actually seized, i.e., the identical notes and coins, might have been returned to him had a restoration order been granted whereas in this proceeding what is sought is an equivalent sum of money plus interest.

In any event, an issue estoppel is clearly established. The refusal of a restoration order, taken with the consequences of that refusal prescribed by subsection 10(7) that "the thing so seized shall be delivered to the Minister who may make such disposition thereof as he thinks fit” seems to me to determine conclusively the issue of the right to possession of a thing lawfully seized under paragraph 10(1)(c). The determination of the right to possession of the thing is neither collateral nor incidental to the making or refusal of a restoration order but the direct legal result of it. The refusal was a judicial decision, competently made and final, and the parties to the proceeding were the same as here.

Perhaps the closest that this Court has come to the issue in the present case is in Morin v. National S.H.U. Committees et al., [1985] 1 F.C. 3 where the Court held that where a prisoner acquitted by a jury of the murder of a fellow inmate was, notwithstanding his acquittal, segregated in a special holding unit, the subsequent penitentiary proceedings whether disciplinary or administrative in nature, or otherwise, were not only identical in substance to the criminal trial but also led to what, in character, purpose and effect, were criminal sanctions. Therefore, the respondents clearly misdirected themselves as to the law when they refused to give effect to the criminal acquittal. Collateral or issue estoppel was discussed by the majority but the judgment really turned on the nature of the prison disciplinary body, which was found to be analogous to a criminal process rather than civil in nature. The precise issue in this application thus, differs.

I take it from all of the foregoing that there is no doubt that issue estoppel may be raised in this Court in a proper case. The nature of the proof required to rebut the prima facie proof of the issues to be decided in a civil proceeding by filing a certificate of conviction have not, to my knowledge, been canvassed here before.

I conclude this brief survey of issue estoppel jurisprudence by referring to one U.S. Supreme Court decision, viz. Parklane Hosiery Co., Inc. v. Store, 99 S. Ct. 645 at 649 (1979). In the United States issue estoppel is known as collateral estoppel and on that subject Stewart, J. had this to say:

Collateral estoppel, like the related doctrine of res judicata, has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation.

Affirming an earlier decision of the Court in Blonder-Tongue Laboratories Inc. v. University of Illinois Foundation, 91S. Ct. 1434, the Court held that a plea of collateral estoppel could succeed against any party or his privy who was a party to previous litigation whether or not the party claiming the estoppel had been a party or privy in the earlier litigation. In other words mutuality of parties in issue estoppel cases was found not to be a requirement. It is fair to say, I think, that no Canadian court has gone that far in issue estoppel cases and there is no necessity to discuss that problem in this case because the parties were the same in each proceeding. That being acknowledged, I must say that I lean very much to the reasoning of the Supreme Court in the Blonder-Tongue case. Where the problem of mutuality has arisen in other Canadian courts, the cases have been disposed of on the basis of the Court's inherent jurisdiction to prevent an abuse of process, as was done in the Demeter and Del Core cases, so that its requirement in issue estoppel cases in Canada, has not been decided to my knowledge.

On the basis of all of the foregoing, I am of the opinion that the Associate Chief Judge erred in concluding that issue estoppel could not apply in a civil proceeding where the estoppel is based upon a conviction in a criminal case. It therefore, becomes necessary to determine whether or not on the facts of this case, it does apply.

The Second Issue

Did the learned trial judge err in holding that the issue decided in Provincial Court when the respondent was convicted of tax evasion was not the same issue as that sought to be raised by the appellant before the Tax Court of Canada on the respondent's appeal from his reassessment under the Income Tax Act.

To appreciate the question arising out of this issue it is necessary to advert to the tests formulated by Lord Guest in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] A.C. 853 at 935; [1966] 2 All C.R. 536 at 565 which were approved by the Supreme Court of Canada in Angle v. M.N.R., [1975] 2 S.C.R. 248; 74 D.T.C. 6278, supra, in the quotation earlier referred to herein and which, for convenience sake, I repeat;

(1) that the same question has been decided,

(2) that the judicial decision which is said to create the estoppel was final; and

(3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

Dickson, J., as he then was, added a fourth refinement to the first test, namely, that the question out of which the estoppel is said to arise must have been fundamental to the decision arrived at in the earlier proceedings. Put another way, the question is, was the previous decision “so fundamental" to that substantive decision that the latter cannot stand without the former? Nothing less than this will do. This, Dickson, J. pointed out, is the test enunciated by the authors of Spencer, Bower and Turner in, Doctrine of Res Judicata.

The learned Associate Chief Judge had no difficulty in finding that the requirements of tests two and three had been met. For the reasons which he gave I fully agree with him.

As to the first test, however, he was unable to find that there was a sufficient identity of issues in the two proceedings for him to conclude that the same question will be decided as that decided in the earlier proceeding. He so concluded by referring to the reasons for judgment of the Provincial Court judge at the accused's tax evasion trial where it was held, inter alia, that:

I therefore conclude that while the amounts of suppressed income and tax is [sic] evaded as recited in count number two before the Court, have not been proven with exactness by the Crown. There is sufficient evidence to prove beyond a reasonable doubt, the suppression by the accused of substantial income in the taxation year, 1973 which in turn would result in wilful tax evasion. The accused accordingly, will be found guilty of count number two.

[My emphasis. I

The trial judge did not regard this finding as compliance with the first requirement of issue estoppel so that the applicant's contention that the doctrine of issue estoppel applied in respect of the respondent's appeal from his reassessment to tax, failed.

Counsel for the applicant attacked this finding on three bases:

(1) Where issue estoppel is asserted, only the previous formal judgment or order may be examined, i.e., it was improper in this case for the Associate Chief Judge to have gone behind the certificate of conviction and to have had regard to the Provincial Court judge's reasons for judgment in deciding that there was insufficient identity of issue for issue estoppel to lie;

(2) Alternatively, counsel said, if the reasons for judgment modify the certificate of conviction as to the amount of income suppressed as disclosed in the certificate, then issue estoppel lies to prevent the respondent from raising the question of whether or not he did knowingly suppress such amount, as modified; and

(3) In the further alternative, if the certificate of conviction constitutes only prima facie evidence of the truth of the facts therein contained, it may be rebutted only by showing that there exists fresh evidence of a substantially material nature which could not have been available to the respondent at the criminal trial and which would negative the presumption of the truth of the allegations in the certificate or that his conviction was obtained by fraud or collusion.

I will deal with those attacks seriatim.

(1) It should again be noted that the certificate of conviction states that the respondent, ”. . . unlawfully did evade payment of taxes . . . by suppressing income in the sum of $60,000 for the taxation year 1973 . . .”. Again as previously noted, the learned Provincial Court judge, in his reasons, said that the amount of suppressed income had not been proven “with exactness by the Crown" but the suppression was of “substantial income”. Since, as I have earlier said, the probative value of a certificate of conviction in an issue estoppel situation is at least similar to, if not identical with its probative value in abuse of process cases, the facts stated therein are at least prima [5] facie evidence of, or some evidence of, the truth of the facts stated therein* which can be rebutted. While I am very cognizant of the conceptual difficulties in defining the limits of the rebuttal evidence which may be adduced and the danger thereby of exposing to relitigation the very issues which led to the conviction, on the facts of this case as exposed in the reasons for judgment of the Provincial Court judge, I have no difficulty in concluding that, in the broad sense, the fundamental decision of tax evasion found in the criminal proceeding is equally fundamental in the reassessment to tax on the basis of failure to disclose certain income. However, the narrower issue within that broad fundamental decision is one which is equally fundamental for purposes of the tax appeal, namely, the quantum of suppressed income, has been exposed to doubt. Therefore, assuming that a Court is entitled to have regard to the reasons for judgment and not just to the certificate of conviction, I agree with the Associate Chief Judge at least with respect to the issue of quantum, that issue estoppel does not lie because a lack of identity of issue.

I turn now to the question of the propriety of looking behind the certificate at the judge's reasons. In a case in the Trial Division, in which the facts were altogether different, The Sheridan Warehousing Limited v. The Queen, [1983] C.T.C. 90; 83 D.T.C. 5095, my brother Mahoney, J. examined the reasons of the convicting Provincial Court judge in that case to ascertain whether that judge, in convicting the plaintiff of tax evasion had made a V-Day fair market valuation of certain real property. Mahoney, J. found that he had not and he was not called upon, therefore, to make a finding on whether issue estoppel lay in that case. The importance of the decision for purposes of the case at bar is that he did look at reasons for judgment of the criminal court in deciding a question raised in a tax appeal.

I, too, have no difficulty in concluding that it is not improper to examine the reasons for judgment to ascertain whether in fact issue estoppel is properly pleaded. It matters not, in the circumstances as I see them here, whether examining the reasons is viewed as a matter of rebuttal of the prima facie proof arising from production of the certificate of conviction or is the exercise of judicial discretion dependant on the particular facts of each case, which is the approach taken in some United States authorities. Determining the identity of issues is the object of the examination and since that is a crucial element in the applicability of the issue estoppel, regard should be had to the facts which led the trial judge to convict.

(2) The position of counsel for the applicant on the alternative plea is that at least $40,000 was proven to have been suppressed, at least to the satisfaction of the trial judge. While I concede that I have had some difficulty in following the complex evidence adduced on the monetary aspects of the evasion, it is clear on the whole, I think, that the learned judge had been unable to determine with any precision the exact amount evaded.* [6] In fact he said "I believe there was a substantial sum evaded but I don't know how much." Nor did he appear to accept the submission of counsel for the Minister that over and above any capital gains there appeared to be some $40,000 suppressed. That being so, in my view, it is not possible to find, in effect, that the certificate of conviction can, on the evidence, be modified to show a lesser sum than $60,000 as the amount evaded. There is thus doubt, at the very least, that the existence of the conviction can or should estop the civil proceedings.

(3) As to the second alternative attack, I can only say that obviously if it can be shown that a conviction was obtained by fraud or collusion, neither should the conviction stand nor should any proceeding dependent upon it be permitted. As to the necessity for new or fresh evidence to sustain a challenge to the certificate of conviction I can see no need for such a limitation either in principle or upon authority. Thus, I see no merit in this branch of the applicant's attacks.

Accordingly, for all of the foregoing reasons I would dismiss the section 28 application.

Application dismissed.