Date: 20011023
Docket: 2000-1084-IT-I
BETWEEN:
JOHN M. JANSSEN JR.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Judgment
Teskey, J.
[1]
The Appellant, in his Notice of Appeal wherein he appealed his
assessment of income tax for the years 1994, 1995 and 1996,
elected the informal procedure.
[2]
The 1994 assessment added to the Appellant's income
approximately $13,600, of which $8,000 was cash missing from a
bank deposit bag on July 23, 1994 and stock of $5,600
missing from the Canadian Tire Store in Paris, Ontario, in which
the Appellant was an employee.
[3]
The 1995 assessment added to the Appellant's income the sum
of approximately $38,800, of which $8,429 was cash arising from
fraudulent merchandise return vouchers and $30,300 of stock
missing from the store.
[4]
The 1996 assessment is where Revenue Canada gave the Appellant a
deduction of $8,000, being the $8,000 paid by way of restitution,
and on consent, this appeal is dismissed.
[5]
Factual cases such as this depend on the credibility of all the
witnesses. I find that I can accept some of the testimony of the
witnesses but must reject some of it.
[6]
The Appellant started his employment at the Canadian Tire Store
in October of 1993 as parts manager. In 1994, he was promoted to
the position of store manager for one-half of the store and
later as manager of the full store. The Appellant received his
set of keys for the store approximately two weeks before
July 23, 1994. His employment was terminated on the
July 19, 1995.
[7]
The owner of the store, Michael Wright ("Wright")
is a well educated, articulate individual who gave his testimony
from memory of events that took place six or seven years ago. At
the conclusion of the first day of hearing and before
cross-examination was to commence, the hearing was
adjourned, mainly because Wright did not have many records with
him so that when he re-attended, he could have all available
records. Unfortunately, Wright did not bring any records with him
at the continuation of the hearing. This created the position
that some of his testimony was guestimate only on some things.
Also, a great portion of his testimony was hearsay. I am
satisfied that he would not deliberately mislead the Court in any
way.
[8]
When Wright purchased the Paris store on February 10, 1993,
which was his first retail store, a complete inventory was taken
of all the stock. When he sold the store in July 1996, again a
complete inventory of all stock was taken. The actual figures for
the total shrinkage for the period of February 1993 to
July 1996 were never given.
[9]
Wright guestimated that the shrinkage for the first period, i.e.
February 1993 to August 1993, was $23,000, for the next
period (his company's year end is August), August 1993
to August 1994, was $60,000 (the second period), and for the
next period of May 1994 to August 1995, $60,000 (the third
period), and for the next period of August 1995 to July 1996 (the
final period, being 11 months) $40,000 to $50,000.
[10] The Court
not having the actual year-end inventories of the stock or
the final inventory figures of July 1996 when the store was sold,
I conclude that many people were stealing from this store. The
Appellant was not employed in either the first or final
period.
[11] In this
store, there were 99 product classes with some 18,000 different
products. On an ongoing basis, from time to time a product class
would be inventoried and shortage (shrinkage) would be taken into
account and more product ordered. Also, when the computer would
show a particular item in stock that could not be found, again an
adjustment would be made and the item replaced.
[12] Wright
does not know when the stock disappeared. I put to him this
example: when he purchased the store in February of 1993, the
stock contained five widgets and during the period of
February 1993 to July of 1996, the store had purchased 100
more widgets and sold, over the same period, 100 widgets.
The computer would show five widgets in stock. Then, an inventory
of the stock in July of 1996 would reveal no widgets in the
store, thus over the period of February 1993 to July of 1996,
five widgets had been stolen. They could have been stolen
individually or in bunches. They could have been the original
five widgets or all of the new delivered widgets or some of both.
All he would know is that five widgets were stolen between
February 1993 and July 1996. Wright agreed with this.
[13] With the
above in mind, given that Wright did not annually inventory all
the stock in the store, and again not at the time the
Appellant's employment was terminated, the shrinkage for the
different periods is mostly guesswork, with possibly some slight
degree of accuracy, because of the inventory of product classes
taken from time to time. As the original inventory and closing
inventory was never produced, the total actual shrinkage during
Wright's total ownership period is not before the Court so
that it could be reconciled against his guestimate shrinkage for
each of the above mentioned periods.
[14] The
problem is even though the actual figures are not before the
Court, the missing inventory could have gone missing before the
Appellant became an employee, and again before he had keys to the
store and after his employment was terminated.
[15] A great
deal was made that some of the closing inventory alleged to have
been taken by the Appellant must have been when he was manager.
Since he did not get his keys to the store until July 1994, and
since the guestimated stock losses for the second and third
periods were identical, I am not prepared to find that the
Appellant took stock in the fall of 1994.
[16] In regard
to the $8,000 in the overnight deposit bag, the evidence against
the Appellant is as follow:
Shelly Walters ("Walters")
"I would do the deposit in the morning and as usual, I
would put it in the safe and I would lock the safe. We have keys
to the little door at the bank to deposit it in the bank at
night."
When questioned about why she had said she may have left the
deposit bag on the counter, she gave this answer:
"I could have, yes. Yes, I have said that to people.
There could be numerous people, I don't know".
[17] I really
question that the night deposit would be made up in the morning
on a busy Saturday morning.
Marilyn Cameron ("Cameron")
[18] She said
in chief: "I am not sure exactly when it would have been
placed in, but probably around three or maybe before. And near
the end of the day, which could be six o'clock, I went to the
safe, which was locked and I opened it up and there was no bank
bag in there". She was asked this question:
"You mentioned that the bag was put in the safe at three
o'clock in the afternoon. Did you see it put in the
safe"?
The answer was "No". And to the question, at some
other point, "Did she tell you that she may have left it out
on the counter"?
The answer was "Yes".
[19] The
Appellant was not under any suspicion at the time and it was only
in July 1995, a year later, that allegations were made that the
Appellant had taken the night deposit.
[20]
Cameron's evidence that the deposit would be made up around
three o'clock is probably a little more accurate. There is no
evidence that the Appellant was still in the store, only a
statement to the effect that he left early. I strongly suspect
the night deposit would be made up much later than three
o'clock as the store would be making sales right up to six
o'clock.
[21] Counsel
for the Respondent produced to the Appellant in
cross-examination his bank statement dated March 22,
1995 and suggested that a $7,000 entry was a deposit. Then, in
argument, he suggested that was part of the money from the
deposit that disappeared on July 23, 1994 that he deposited
in March 1995. However, the $7,000 entry is not a deposit.
Just previous to that, the balance is shown on the statement as
$11,684.15 and, after the $7,000 entry, the balance is $4,684.15.
The $7,000 entry was either a withdrawal or a cheque written on
this account, it was not a deposit. With the Appellant's
fierce denial of this, I find on a balance of probability that in
the year 1994, he did not steal the bank deposit, as well as any
stock.
[22] The year
1995 presents a problem. In July 1995, when his father's van
was parked at the back door, the Appellant smashed the burglar
alarm. At the time, he had the keys to the back door and the code
to the alarm. He claims he only took several cans of paint and
stain that were not saleable.
[23] When
questioned in cross-examination on this point as to whether he
did it or admitted to Wright that he did it, the questions and
answers were:
Q.
Now I understand that on occasion, sir, when the alarm was on,
you opened the door for your own purposes, for purposes of
removing merchandise and that on that particular occasion, just
put an end to the alarm by either using a crowbar or a
sledgehammer. Do you remember that?
A.
No, I don't.
Q.
And you explained to Mr. Wright that you had to put an end to the
alarm. This was an event, an occasion that you openly discussed
with Mr. Wright. Your honesty and integrity was not in issue
in those days and you frankly admitted to him that you were the
one who broke the alarm. Do you remember that?
A.
No, I don't remember that.
Q.
Now, it's my understanding, sir, that you often on Tuesday
and Wednesday nights you were regularly the last one to leave the
store; the one to close the store?
A.
Yes, it could be.
[24] There
were several people other than the Appellant in the stockroom
that evening, namely John Wilton, the parts manager, and the
Appellant's mother and father. None of these people were
called as witnesses. I am driven to the conclusion that their
testimony would have been detrimental to the Appellant.
[25] From
July 1994, the Appellant had access to large items. But, the
total shrinkage for the store during Wright's ownership does
not vary that significantly from his guestimates for the various
periods.
[26] I accept
Wright's testimony that the Appellant admitted that he
smashed the alarm.
[27] Having
said that, I find Wright a truthful, fair, intelligent, well
educated person and do believe, as a new store owner, that he was
learning on the job and that as time went on, he was more and
more security conscious. I also believe that more than just the
Appellant was stealing from Wright. The fraud that the Appellant
pleaded guilty to was deliberate and someone acting in this
manner undoubtedly would steal merchandise.
[28] If there
had been annual inventories taken and an inventory taken
immediately after the Appellant's dismissal, determining the
true facts would have been substantially easier.
[29] Taking
Wright's estimated figures of shrinkage of $40,000 to $50,000
for the last 11-month period when the Appellant was not in
the store and assuming the shrinkage to be constant, the
12-month period would have been $50,000. There is only
$10,000 less than the previous period where the Respondent claims
that the Appellant fraudulently stole $8,500 cash using false
return vouchers and $30,000 in inventory. Yet, the total
shrinkage for that year is only $60,000. After deducting the
$8,500 from the $60,000, that means stock lost was somewhere near
$51,500.
[30]
Obviously, many people were stealing from the Canadian Tire Store
in Paris, Ontario, when Wright was the owner.
[31] The
Respondent's position is that since the Appellant has
admitted to fraudulently stealing $8,429 in cash, he should be
presumed to be responsible for stealing all the large unusual
items that went missing sometime during the ownership of the
store by Wright. I disagree.
Onus of proof
[32] The
leading case on this issue is the Supreme Court of Canada
decision by Laskin, C.J., in the Continental Insurance Company
v. Dalton Cartage Co., [1982] 1 S.C.R. 164. At page 168,
he said:
Admittedly, the standard of proof that was applicable in the
criminal Court was proof beyond a reasonable doubt that Morkin
was the thief. The standard of proof in the civil case has been
repeatedly held to be somewhat less, and how much less is a
matter that depends on all the circumstances and the gravity of
the accusation.
He then said, at page 170, when dealing with the trial
judges' comments:
... In my opinion, Keith J. in dealing with the burden of
proof could properly consider the cogency of the evidence offered
to support proof on a balance of probabilities and this is what
he did when he referred to proof commensurate with the gravity of
the allegations or of the accusation of theft by the temporary
driver. There is necessarily a matter of judgment involved in
weighing evidence that goes to the burden of proof, and a trial
judge is justified in scrutinizing evidence with greater care if
there are serious allegations to be established by the proof that
is offered. I put the matter in the words used by Lord Denning in
Bater v. Bater, supra, at p. 459, as follows:
It is true that by our law there is a higher standard of proof
in criminal cases than in civil cases, but this is subject to the
qualification that there is no absolute standard in either case.
In criminal cases the charge must be proved beyond reasonable
doubt, but there may be degrees of proof within that standard.
Many great judges have said that, in proportion as the crime is
enormous, so ought the proof to be clear. So also in civil cases.
The case may be proved by a preponderance of probability, but
there may be degrees of probability within that standard. The
degree depends on the subject-matter. A civil court, when
considering a charge of fraud, will naturally require a higher
degree of probability than that which it would require if
considering whether negligence were established. It does not
adopt so high a degree as a criminal court, even when it is
considering a charge of a criminal nature, but still it does
require a degree of probability which is commensurate with the
occasion.
[33] The only
conclusion I can come to is that the Appellant smashed the alarm
when he, Wilton and his mother and father were in the stock room
to cover up theft that would be considered an outside job rather
than an inside job by a person with keys and the code. I find
that the Appellant's assessment for 1995 should be reduced to
$5,000 for stock stolen from the store at the time the alarm was
smashed as that is probably all the van would hold, together with
the vouchers that were not in dispute in the amount of $8,429.
There is just no other acceptable evidence against the
Appellant.
[34] There
will be an order issued where the 1996 appeal is dismissed on
consent. The 1994 and 1995 appeals are allowed and the
assessments are referred back to the Minister of National Revenue
for reconsideration and reassessment on the basis that the
assessments are to be reduced by the sum of $13,663 for 1994 and
by the sum of $25,366 to $13,434 for 1995. There will be no award
of costs.
Signed at Ottawa, Canada, this 23rd day of October 2001.
"Gordon Teskey"
J.T.C.C.
COURT FILE
NO.:
2000-1084(IT)I
STYLE OF
CAUSE:
John M. Jansen Jr. and The Queen
PLACE OF
HEARING:
London, Ontario and
Hamilton, Ontario
DATES OF
HEARING:
April 12, 2001 in London, Ontario and
October 17, 2001 in Hamilton, Ontario
REASONS FOR JUDGMENT BY: The Hon.
Judge Gordon Teskey
DATE OF
JUDGMENT:
October 23, 2001
APPEARANCES:
Counsel for the Appellant: William Glover
Counsel for the
Respondent:
Roger Leclaire
COUNSEL OF RECORD:
For the
Appellant:
Name:
William Glover,
Firm:
William Glover,
Barrister & Solicitor
St.Thomas, Ontario
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-1084(IT)I
BETWEEN:
JOHN M. JANSSEN JR.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on April 12, 2001 at London,
Ontario and on
October 17, 2001 at Hamilton, Ontario, by
the Honourable Judge Gordon Teskey
Appearances
Counsel for the
Appellant:
William Glover
Counsel for the
Respondent:
Roger Leclaire
JUDGMENT
The appeals from the assessments made under the Income Tax
Act for the 1994 and 1995 years are allowed and the
assessments are referred back to the Minister of National Revenue
for reconsideration and reassessment on the basis that the
assessments are to be reduced by the sum of $13,663 for the year
1994 and by the sum of $25,366 to $13,434 for the year 1995.
There will be no award of costs, all in accordance with the
attached Reasons for Judgment.
The appeal for the year 1996 is dismissed on consent.
Signed at Ottawa, Canada, this 23rd day of October, 2001.
J.T.C.C.
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