Date:
20090325
Docket:
ITA-4872-03
Citation:
2009 FC 315
[ENGLISH
TRANSLATION]
Montréal, Quebec, March25, 2009
PRESENT:
Richard Morneau, Esq., Prothonotary
In
the matter of the Income Tax Act,
-and-
In
the matter of an assessment or assessments by the Minister of National Revenue
under one or more of the following acts: the Income Tax Act, the Canada
Pension Plan and the Employment Insurance Act,
AGAINST:
Christian
Avard
410 Rue Comte
Lasalle, Quebec
H8R 3C8
REASONS
FOR ORDER AND ORDER
[1]
This
is a motion by the judgment creditor (hereinafter the Crown) primarily under
Rule 449 of the Federal Courts Rules (the Rules) to have various interim
garnishment orders (in the singular, IGO) issued by this Court in 2008 against
a number of pharmacists converted into final garnishment orders (in the
singular, FGO).
[2]
This
dispute only indirectly and unfortunately involves these pharmacists, who use
the services of a pharmaceutical drug delivery company. The actual legal
dispute is between the Crown, on the one hand, and, on the other, the judgment
debtor (Mr. Avard) and the third party (Mr. Rochon), who are acting
collectively.
[3]
In
view of the legal proceedings to date, the crux of the problem consists of
determining whether Mr. Rochon and Mr. Avard have succeeded in presenting the
Court with preponderant evidence that shows, contrary to what the Court found
in the IGO as a result of the supporting evidence that the Crown submitted,
that Mr. Rochon, rather than Mr. Avard, is the true owner of the A.R.
Livre-Rapide delivery company.
[4]
In
other words, that Mr. Rochon cannot be seen as Mr. Avard’s nominee for the
purposes of a contract negotiated between himself and Mr. Avard on November 8,
2003, through which Mr. Avard apparently sold this pharmaceutical drug
delivery company to Mr. Rochon. All things considered, to prove that this sale
was not simply a sham intended to allow Mr. Avard to maintain control, for all
intents and purposes, of the delivery company and to collect the vast majority
of the company’s earnings.
Essential
background
[5]
On
May 29, 2003, this Court issued an order authorizing an immediate execution
against Mr. Avard in docket T87903 of this Court. The Crown submitted into
evidence in that case that Mr. Avard had used the services of eight (8)
nominees to hide his delivery company’s earnings or rental income.
[6]
Mr.
Avard did not dispute that order, nor did he dispute the various garnishment
actions subsequently taken in that case, essentially along the same lines as
the present actions.
[7]
Up
until June 1, 2003, Mr. Avard had operated his pharmaceutical drug delivery
company, then known as “La Farma-Ssie.”
[8]
However,
on June 1, 2003, Mr. Avard feigned the sale of his delivery company to his son,
Yanick Avard, under a new corporate name, then known as “Délivrapide.”
[9]
As
a result of this situation, on July 10, 2003, the Court issued IGOs that were
converted to FGOs on September 26, 2003.
[10]
On
August 2, 2003, Mr. Avard sold to Alain Rochon the right to service eight (8)
pharmacies that were clients retaining Mr. Avard’s delivery services. That is
when Mr. Rochon registered the company under the corporate name “A.R.
Livre-Rapide.”
[11]
As
the Court understands it, on October 30, 2003, the Crown made an agreement with
Mr. Avard and Mr. Rochon to settle the situation involving all the
garnishments in effect or foreseeable in the very near future (the October 30,
2003 agreement).
[12]
As
of November 2003, Mr. Avard reportedly still had many clients to whom he had
been providing his services for at least a year in some cases. On October 30,
2003, when he signed the agreement with the Canada Revenue Agency, Mr. Avard
failed to mention this fact.
[13]
On
November 8, 2003, Mr. Avard and Mr. Rochon made the agreement that is central
to the current dispute and that involved Mr. Avard selling all of his remaining
clients to Mr. Rochon, namely delivery services to twelve (12) pharmacies that
were added one after the other over the years (the November 8, 2003 clientele
sale).
[14]
Between
2005 and 2007, Mr. Avard deposited the amount of $275,839.95 into the account
of his wife, Renée Couture, in the form of cheques issued by all the pharmacies
as payment for the company’s delivery services.
|
YEAR
|
AMOUNT
|
|
2005
|
$129,176.55
|
|
2006
|
$101,234.86
|
|
2007 (March 2007 to
September 2007)
|
$45,428.54
|
Analysis
[15]
Contrary
to Mr. Rochon’s claim, I do not find that the nature of the October 30, 2003
agreement, to which the Crown was a party, is such that it prevents the Crown
from proposing its theory, first, in its evidence for obtaining the IGO, then
later, in a supplementary affidavit that it filed further to a scheduling order
established by this Court.
[16]
In
this respect, I can conclude only that this transaction, namely the October 30,
2003 agreement, must be res judicata with respect to the Crown when it
comes to the true nature of the company’s sale on August 2, 2003. It seems to
me that on October 30, 2003, we must find that the Crown, through the agreement
made on that date, sought mainly, if not only, to definitively settle the
outcome of the various IGOs and FGOs obtained as of that date or to be obtained
shortly thereafter (namely November 4, 2003). Moreover, the following passage
taken from the FGO dated November 4, 2003, supports this argument:
[translation] WHEREAS the Crown, the
debtor and the third party made an agreement on October 30, 2003 (“the October
30 agreement”) to comprehensively settle this case and the Crown’s other
motions against the garnishee pharmacies;
[17]
Moreover,
we must in any event accept that Mr. Rochon breached his obligations regarding
the disclosure of the total number of pharmacies served and therefore that the
October 30, 2003 agreement allows the Crown to continue to argue in collection
procedures that Mr. Rochon was acting as a nominee for Mr. Avard.
[18]
This
being established, we come to the clientele sale on November 8, 2003. The
contract showing this sale was produced by Mr. Rochon as an exhibit in his
affidavit dated January 22, 2009.
[19]
This
sale — for the price of $375,000.00 —was seemingly intended to allow Mr. Rochon
to serve twelve (12) other pharmacist clients in addition to the eight (8)
clients who were part of the sale on August 2, 2003.
[20]
After
having carefully considered all of the evidence and arguments brought to the
Court’s attention by the parties in their motion records and pleadings during
the hearing, I cannot conclude that Mr. Rochon has provided valid evidence or
arguments that constitute the contrary evidence sought by the IGO.
[21]
With
respect specifically to the burden of proof in this dispute, it must be noted
that the Court determined the following as part of the IGO on the basis of the
Crown’s evidence available at that time:
[translation]... it would appear at
least prima facie and subject to the provision of evidence to the
contrary that the judgment debtor is the true owner of the A.R.
Livre-Rapide delivery company and that, as a result, all amounts owed by the
garnishee to A.R. Livre-Rapide are in fact owed to the judgment debtor
Christian Avard; [Emphasis added.]
[22]
It
is thus erroneous to think that this burden of proof rests entirely on the
Crown’s shoulders or that the Crown’s burden is greater or more strict than the
balance of probabilities. In my view, any contrary reasoning results from a
misinterpretation of the Rules and the text of the IGO itself.
[23]
As
for the Rules, subrule 449(1)(b) stipulates that the Court may issue an
IGO that requires the third party (here, we understand that it is Mr. Rochon
who showed cause in this regard) to appear to justify why the Court should not
move ahead with the garnishment.
[24]
Rule
449(1) reads as follows:
|
449. (1) Subject
to rules 452 and 456, on the ex parte motion of a judgment
creditor, the Court may order
(a) that
(i)
a debt owing or accruing from a person in Canada to a judgment debtor, or
(ii)
a debt owing or accruing from a person outside Canada to a judgment debtor,
where the debt is one for which the person might be sued in Canada by the
judgment debtor,
be
attached to answer the judgment debt; and
(b) that the
person attend, at a specified time and place, to show cause why the
person should not pay to the judgment creditor the debt or any lesser amount
sufficient to satisfy the judgment.
|
449.
(1) Sous réserve des règles 452 et 456, la
Cour peut, sur requête ex parte du créancier judiciaire, ordonner
:
a) que toutes les
créances suivantes du débiteur judiciaire dont un tiers lui est redevable
soient saisies-arrêtées pour le paiement de la dette constatée par le
jugement :
(i)
les créances échues ou à échoir dont est redevable un tiers se trouvant au
Canada,
(ii)
les créances échues ou à échoir dont est redevable un tiers ne se trouvant
pas au Canada et à l’égard desquelles le débiteur judiciaire pourrait
intenter une poursuite au Canada;
b)
que le tiers se présente, aux date, heure et lieu précisés, pour
faire valoir les raisons pour lesquelles il ne devrait pas payer au créancier
judiciaire la dette dont il est redevable au débiteur judiciaire ou la
partie de celle-ci requise pour l’exécution du jugement.
[Je
souligne.]
|
[25]
It
is in this spirit that the IGO, at pages 2 and 3, contains the following two
(2) excerpts:
[translation]... it would appear at least
prima facie and subject to the provision of evidence to the contrary
that the judgment debtor is the true owner of the A.R. Livre-Rapide delivery
company and that, as a result, all amounts owed by the garnishee to A.R.
Livre-Rapide are in fact owed to the judgment debtor Christian Avard; [page 2]
IT
IS ALSO ORDERED that Alain Rochon be added as a third party to this case
and that he appear before this Court at the time and place specified above for
showing cause, to present his reasons why this Court should not issue a
final garnishment order. [page 3]
[Emphasis
added.].
[26]
Thus,
in my opinion, this is more a sharing of the burden in a FGO, namely for the
Crown to complement or support its prima facie evidence seen in the IGO,
and, for Mr. Rochon, to contest the evidence brought by the Crown.
[27]
As
mentioned earlier, I do not think that Mr. Rochon has successfully contested
the evidence brought by the Crown. On the contrary, I think that the Crown,
through the evidence filed in this case to date, has established on a balance
of probabilities serious, precise and concordant presumptions supporting that
Mr. Avard is still the owner of the delivery company now known as A.R.
Livre-Rapide and that he is using Mr. Rochon to evade his tax obligations and
to continue operating his delivery company.
[28]
Among
other things, the Court finds in this regard that the November 8, 2003
clientele sale was concluded for a substantial amount. This impression remains
despite the explanations that Mr. Rochon tried to give regarding the price
of this sale in comparison to the price of the sale on August 2, 2003.
[29]
The
most striking point, however, is that the entire sum was payable to Mr. Avard
in a very phased manner through his direct receipt of cheques issued regularly
by the pharmacists for delivery services rendered. Here, the Court notes that
the absence of any payment during and as part of the conclusion of the November
8, 2003 clientele sale is an element that, with respect to the August 2, 2003
sale, seems to have also gained the attention of Justice Boisvert of the Court
of Quebec when he ruled on the sentencing of Mr. Avard in 2006 for filing false
tax returns, among other things. In paragraph [14] of his reasons, Boisvert J.
stated the following:
[translation] Then,... [Mr. Avard]
purported to sell his delivery company to an employee, Alain Rochon, although
no payment was made.
[30]
Furthermore,
the nature of this November 8, 2003 clientele sale is such that it favours Mr.
Avard, with the result being that Mr. Rochon did not gain ownership of the
clientele sold until the end of December 2007.
[31]
Thus,
as previously mentioned, between 2005 and 2007, the payment method for the sale
price enabled Mr. Avard to deposit into the account of his wife, Renée Couture,
cheques totalling $275,839.95 issued by all of the pharmacies as payment for
the company’s delivery services.
[32]
It
is also important to note that Mr. Rochon admitted in an out-of-court
examination on affidavit that he knew nothing about the company he was
purchasing and that it was, in fact, Mr. Avard who controlled the company.
[33]
Additionally,
it is far from certain that the pharmacists had truly been advised of this
November 8, 2003 clientele sale because neither Mr. Avard nor Mr. Rochon could
ultimately find the letters purportedly sent to the pharmacies following the
sale.
[34]
The
Court is strongly led to believe that this sale was not mentioned outside the
circle formed by Mr. Avard, his entourage and Mr. Rochon since, besides the
absence of proof of letters to the pharmacies, in January 2005, more than
thirteen (13) months after the alleged sale, many pharmacies were still making
their cheques payable to Délivrapide.
[35]
Indeed,
all the evidence submitted by the Crown demonstrates on a balance of
probabilities that the November 8, 2003 clientele sale was not real and that
Mr. Avard had, at all relevant times, maintained control of the A.R.
Livre-Rapide delivery company.
[36]
A
reading of the transcripts of Mr. Rochon’s and Mr. Avard’s examinations on
affidavit clearly shows that Mr. Rochon had always let Mr. Avard prepare and
administer all aspects of the company despite the purported November 8, 2003
clientele sale.
[37]
Consequently,
I find that the Crown has discharged its burden of proof and that the Court is
justified in essentially converting the IGOs issued in 2008 to FGOs, the whole
with costs. The Court hereby requests that the Crown’s attorney send the drafts
of the final garnishment orders required with respect to the various pharmacies
concerned.
[38]
Any
other argument raised by Mr. Rochon that is not directly addressed here is
dismissed for reasons that the Crown asserts in paragraphs 6 et seq. of
its rebuttal representations filed on February 27, 2009.
ORDER
THE
COURT essentially
converts the IGOs issued in 2008 to FGOs, the whole with costs. The Court
hereby requests that the Crown’s attorney send it, within twenty (20) days of
this order, the drafts of the final garnishment orders required with respect to
the various pharmacies concerned.
“Richard
Morneau”
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