Citation: 2011TCC292
Date: 20110616
Docket: 2010-2765(IT)I
BETWEEN:
TU VAN LE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The Appellant was
reassessed to deny the tax credits that he had claimed in relation to the
charitable donations identified by the Appellant in his tax returns for the
following years:
|
Year
|
Organization
|
Amount
|
|
2005
|
CanAfrica International Foundation
|
$14,500
|
|
2006
|
CanAfrica International Foundation
|
$17,000
|
|
2007
|
Triumphant Church of Christ International
|
$15,000
|
|
Total:
|
|
$46,500
|
[2]
The main issue in this
appeal is credibility and whether the Appellant made any gift to the
organizations listed above. It is not sufficient for the Appellant to simply
state that he received the above receipts. In the Reply to the Notice of Appeal
it is stated that one of the assumptions that was made was that the Appellant
did not make any donation to any registered charity (including those listed
above) in any of these years. The Appellant therefore had the initial onus of
proving on a balance of probabilities (i.e. that it is more likely than not),
that this assumption was not correct.
[3]
The Appellant’s story
is that one day in 2005 one or more individuals (whom the Appellant did not
know and he does not recall their names) came to his three bedroom house. The
Appellant had not asked them to come to his house. They simply appeared at his
door. He decided to give them all of the furnishings, clothing, electronic
equipment and all of the other household items that were in the house except
one bed and the dishes. The individual (or individuals) left his house after
the first meeting and returned about three hours later with a truck and took
all of these goods. In addition to all of these goods the Appellant also gave
them $3,000 in cash which he just happened to have in the house. The individuals, on the same day in 2005,
also gave him three receipts for “charitable donations” in the amounts, for the
years and in the names of the organizations listed above. The Appellant
indicated that at one time he did have a list of what was taken and the
“appraisal” amounts but he has lost this list. It also appears that the
Appellant knew very little if anything about the “charitable organizations”. He
stated that the individuals who came to his house identified the organization
that they were representing but he does not recall what organization they had
indicated that they were representing. He also stated during his testimony that
it was the same organization for the receipts for all three years yet it seems
clear that it was one organization for the first two years and another
organization for the third year.
[4]
The first explanation
provided by the Appellant during his testimony (before being cross-examined) to
explain why he would give away almost all of his belongings was that he was
planning to sell these items as he was moving. He, in fact, did move. He moved
from 511 Wellington Avenue, Windsor, Ontario
to 461 Wellington Avenue, Windsor, Ontario.
It does not seem to me that a move of a few metres to another place on the same
street would warrant a sale or the giving away of all (or almost all) of one’s
belongings. He would not even have to cross the street to move the items from
one place to the other as both places would be on the same side of the street.
[5]
Another explanation
provided by the Appellant was that he and his wife were splitting up and she
had moved out. If she had moved out, why did he move to 461 Wellington Avenue? The Appellant stated that he owned the
property located at 511
Wellington Avenue, and that
he did not own the property located at 461 Wellington Avenue. Why would he move from a house that he owned to a place
where he presumably had to pay rent? There was no indication that he had to
sell the property located at 511
Wellington Avenue.
[6]
The Appellant and his
wife had two children who were born in 1982 and 1987. In 2005, they would have
been 23 years old and 18 years old. The Appellant stated that in 2005 the
children lived with him for part of the time and lived with their mother part of
the time. Some of the items that the Appellant stated that he gave away were
items that had been bought for the children. The Appellant stated that he was enraged
with his wife so he gave almost everything away. He stated that she had moved
out and did not want any of the items in the house. This does not explain why
he would give away his items and items that were his children’s.
[7]
In relation to the onus
of proof, Justice Rothstein, writing on
behalf of the Supreme Court of Canada, in F.H. v. McDougall, [2008] 3 S.C.R. 41 stated that:
(4)
The Approach Canadian Courts Should Now Adopt
40 Like
the House of Lords, I think it is time to say, once and for all in Canada, that
there is only one civil standard of proof at common law and that is proof on a balance
of probabilities. Of course, context is all important and a judge should not be
unmindful, where appropriate, of inherent probabilities or improbabilities or
the seriousness of the allegations or consequences. However, these
considerations do not change the standard of proof. …
…
44 …. As Lord Hoffmann
explained in In re B at para. 2:
If a legal rule requires a fact to be proved (a "fact in
issue"), a judge or jury must decide whether or not it happened. There is
no room for a finding that it might have happened. The law operates a binary
system in which the only values are zero and one. The fact either happened or
it did not. If the tribunal is left in doubt, the doubt is resolved by a rule
that one party or the other carries the burden of proof. If the party who bears
the burden of proof fails to discharge it, a value of zero is returned and the
fact is treated as not having happened. If he does discharge it, a value of one
is returned and the fact is treated as having happened.
In my view,
the only practical way in which to reach a factual conclusion in a civil case
is to decide whether it is more likely than not that the event occurred.
45 To
suggest that depending upon the seriousness, the evidence in the civil case
must be scrutinized with greater care implies that in less serious cases the
evidence need not be scrutinized with such care. I think it is inappropriate to
say that there are legally recognized different levels of scrutiny of the
evidence depending upon the seriousness of the case. There is only one legal
rule and that is that in all cases, evidence must be scrutinized with care by
the trial judge.
46 Similarly,
evidence must always be sufficiently clear, convincing and cogent to satisfy
the balance of probabilities test. But again, there is no objective standard to
measure sufficiency. In serious cases, like the present, judges may be faced
with evidence of events that are alleged to have occurred many years before,
where there is little other evidence than that of the plaintiff and defendant.
As difficult as the task may be, the judge must make a decision. If a
responsible judge finds for the plaintiff, it must be accepted that the
evidence was sufficiently clear, convincing and cogent to that judge that the
plaintiff satisfied the balance of probabilities test.
47 Finally
there may be cases in which there is an inherent improbability that an event
occurred. Inherent improbability will always depend upon the circumstances. As
Baroness Hale stated in In re B, at para. 72:
Consider the famous example of the animal seen in Regent's Park. If it is
seen outside the zoo on a stretch of greensward regularly used for walking
dogs, then of course it is more likely to be a dog than a lion. If it is seen
in the zoo next to the lions' enclosure when the door is open, then it may well
be more likely to be a lion than a dog.
48 Some
alleged events may be highly improbable. Others less so. There can be no rule
as to when and to what extent inherent improbability must be taken into account
by a trial judge. As Lord Hoffmann observed at para. 15 of In re B:
Common sense, not law, requires that in deciding this question, regard
should be had, to whatever extent appropriate, to inherent probabilities.
It will be for
the trial judge to decide to what extent, if any, the circumstances suggest
that an allegation is inherently improbable and where appropriate, that may be
taken into account in the assessment of whether the evidence establishes that
it is more likely than not that the event occurred. However, there can be no
rule of law imposing such a formula.
(5)
Conclusion on Standard of Proof
49 In the
result, I would reaffirm that in civil cases there is only one standard of
proof and that is proof on a balance of probabilities. In all civil cases, the
trial judge must scrutinize the relevant evidence with care to determine
whether it is more likely than not that an alleged event occurred.
[8]
That the Appellant
would not only give away almost all of his household items (which the Appellant
claims had a fair market value of $43,500) to strangers who appeared one day at
his door but would also give them $3,000 in cash when the Appellant did not
even know what “charitable organization” he was “donating” the items to, is a
highly improbable event. With only the illogical and inconsistent testimony of
the Appellant in relation to these events, it seems to me that it is more
likely than not that these events did not occur. The Appellant’s explanation of
what happened and why it occurred simply stretches his credibility to the point
of disbelief. I do not accept that the Appellant made any gift of cash or other
property to either the CanAfrica International Foundation or the Triumphant
Church of Christ International in 2005. Since there was no testimony of any
cash or other property that was given by the Appellant to these organizations
in 2006 or 2007, there is no basis for any finding that any cash or other
property was given by the Appellant to either one of these organizations in
2006 or 2007. Therefore I find that the Appellant did not make any gift of cash
or other property to either one of these organizations in 2005, 2006 or 2007.
[9]
The Respondent’s theory
is that the Appellant purchased the charitable donation receipts. Both of the
organizations identified above have had their registration as a registered
charity revoked (the CanAfrica International Foundation on September 8, 2007
and the Triumphant Church of Christ International on June 6, 2009). The
President of CanAfrica International Foundation was charged with fraud in
relation to the issuance of false donation receipts and he pleaded guilty to
these charges on December 15, 2008. At the time of his guilty plea it was stated
that the amount of false donation receipts that he had provided to other
taxpayers was in the order of $21.4 million. As a result of further reviews by
the Canada Revenue Agency it appears that the amount may be as high as $39
million.
[10]
The investigator for
the Canada Revenue Agency who testified at the hearing was not familiar with
the Appellant’s case but had been involved in the investigation of CanAfrica
International Foundation. She stated that the general scheme was to sell a
“charitable donation” receipt for 10% of its face amount. In the Appellant’s
case, since he received “charitable donation” receipts totalling $46,500, this
would mean that the selling price would have been $4,650 (assuming that the
Appellant bought them for 10% of their face amount). This would have been more
than the $3,000 that the Appellant claimed to have paid in cash.
[11]
While the Respondent’s
theory of what happened is more plausible than the Appellant’s story, the
Appellant is not claiming that he was entitled to a tax credit for a charitable
donation based on the version of events as described by the Respondent. In any
event, it does not seem to me that the Appellant would have made a gift if he
would have purchased a charitable donation receipt for 10% (if he paid $4,650)
of the amount for which the receipt was issued or 6.5% (if he paid $3,000) of
the amount for which the receipt was issued.
[12]
In The Queen v. Friedberg,
[1992] 1 C.T.C. 1, 135 N.R. 61, 92 D.T.C. 6031, Justice Linden of the Federal
Court of Appeal stated that:
4 The Income Tax Act does not define the word
“gift”, so that the general principles of law with regard to gifts are utilized
by the courts in these cases. As Mr. Justice Stone explained in The
Queen v. McBurney, [1985] 2 C.T.C. 214, 85 D.T.C. 5433, at page 218
(D.T.C. 5435): “The word gift is not defined in the statute. I can find nothing
in the context to suggest that it is used in a technical rather than its
ordinary sense.” Thus, a gift is a voluntary transfer of property owned by a
donor to a donee, in return for which no benefit or consideration flows to the
donor (see Heald, J. in The Queen v. Zandstra, [1974] C.T.C. 503,
74 D.T.C. 6416, at page 509 (D.T.C. 6420)). The tax advantage which is received
from gifts is not normally considered a “benefit” within this definition, for
to do so would render the charitable donations deductions unavailable to many
donors.
[13]
If a person pays $3,000
(or $4,650) for a receipt that is to be issued for $46,500, this would not be a
gift.
[14]
Justice Campbell also dismissed
the taxpayers’ appeals in relation to amounts that were “donated” to CanAfrica
International Foundation in Tuar v. The Queen, 2010 TCC 236, 2010
DTC 1173 and Scott v. The Queen, 2010 TCC 237.
[15]
In any event, the
Appellant’s appeal was based on his story that he “donated” $46,500 ($3,000 in
cash and $43,500 in goods) in 2005 to strangers who appeared at his door and
who represented charities about which the Appellant apparently knew very
little. Even if I were to accept that the Appellant made this gift (which I do
not accept), the absence of an appraisal report would mean that the Appellant
could not succeed in relation to the amount claimed for the goods. The tax
credit for a donation by an individual to a charitable organization is provided
in subsection 118.1(3) of the Income Tax Act and is based on the
individual’s total gifts. The definition of “total gifts” in subsection
118.1(1) of the Act provides that one of the limiting amounts is the
individual’s total charitable gifts. The definition of “total charitable gifts”
also in subsection 118.1(1) of the Act provides that it is based on the fair
market value of the gift (or
gifts). Without any evidence with
respect to the fair market value of the items, the Appellant cannot succeed in
any event in relation to the $43,500 claimed for the goods.
[16]
As a result the Appellant’s
appeals in relation to the reassessments that denied the Appellant’s claims for
tax credits for charitable donations for 2005, 2006 and 2007 are dismissed,
without costs.
Signed at Halifax, Nova Scotia, this 16th day of June, 2011.
“Wyman W. Webb”
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