Date: 20070614
Docket: T-1847-05
Citation: 2007 FC 636
Montréal,
Quebec, the 14th day of June 2007
PRESENT:
THE HONOURABLE MADAM JUSTICE JOHANNE GAUTHIER
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 statutes: the Income Tax Act, the Canada Pension Plan,
the Employment Insurance Act,
AGAINST:
RÉGIS
DELAUNIÈRE
and
9039-0402
QUÉBEC INC.
Judgment
Debtors
REASONS FOR ORDER AND ORDER
[1]
The
debtors, Régis Delaunière and 9039-0402 Québec Inc., are applying for a review
and a setting aside of the jeopardy collection order issued by Mr. Justice
Simon Noël on October 21, 2005 (subsections 225.2(2) and (3) of the Income
Tax Act).
[2]
The
relevant principles for such an application (including those concerning the
burden of proof) are not the subject of argument before the Court since the
parties agree that these are settled law and are summarized in the following
decisions: Canada (Minister of National Revenue) v. Services M.L. Marengère Inc.,
[2000] 1 C.T.C. 229, [1999] F.C.J. No. 1840 (QL) and Canada v. Satellite
Earth Station Technology Inc., [1989] 2 C.T.C. 291,
[1989] F.C.J. No. 912 (QL).
[3]
The Court
must decide whether or not the totality of evidence before it (the original
evidence submitted to Noël J. and additional evidence submitted by the two
parties for the present application) establishes that there are reasonable
grounds to believe that the collection of the amounts assessed in respect of
the debtors would be jeopardized by a delay in the collection of those
amounts.
[4]
The
Minister of National Revenue presented the following four arguments to Noël J.:
(i)
The
unorthodox behaviour of the debtors, which led to the audit and the issuing of
reassessments (admission from 9039-0402 Québec Inc.’s bookkeeper to the effect
that the president, Mr. Delaunière, had asked her to keep double accounts
for Resto‑Bar La Broue, with the first, [translation] “Food Sales”, being used for the entries in the
sales journal, the general ledger, and income tax returns, and the second, [translation] “Banana Sales”, listing
additional sales not reported by 9039-0402 Québec Inc.);
(ii)
The sale
of Mr. Delaunière’s residence shortly after the draft assessment was received (June
23, 2005);
(iii)
The
intended sale of 9039-0402 Québec Inc.’s sole asset, the Resto-Bar La Broue;
(iv)
The
behaviour of Mr. Delaunière during the audit and, in the context of an appeal
of a previous assessment, the Tax Court of Canada’s findings regarding this
taxpayer’s credibility.
[5]
The Court
is satisfied that the debtors have established that they demonstrated an
intention to sell the residence and the Resto‑Bar before the start of the
audit in September 2004. The debtors also established that, on the facts, the
Resto-Bar had been sold on June 30, 2005, before the application heard by Noël
J. had been filed. However, they have not submitted any evidence that would
make possible a finding that the Minister knew or should have known these
facts.
[6]
The
debtors argued that they did not have and still do not have an intent to
dissipate their assets. With regard to this, the Court echoes Mr. Justice
François Lemieux’s statements in Marengère, supra, at paragraphs
67 and 72 (subparagraph 4):
[67] This case does not turn on intent
or on tax planning; it calls to be determined looking at the matter objectively
and realistically on the ground so to speak. In other words, it is the effect
or result of the taxpayer’s action in dealing with its assets that is important
and relevant in the assessment of the appropriateness of a collection jeopardy
order. Tax liability is not an issue in such proceedings.
[72] (4) … the Minister does not have to
prove fraud or deceit or bad motive.
[7]
In coming
to a decision on this application, the Court cannot take into account the many
facts (conversations with the investigator, etc.) that counsel for the debtors
tried to introduce, since these are not in evidence before the Court.
[8]
The
debtors agree that the merit of the assessments is not a relevant issue in
itself (see for instance Marengère, supra); however, the Court notes
that it can take into account debtors’ unorthodox behaviour in conducting their
affairs (Mann v. Canada (Minister of National Revenue) 2006
FC 1358, [2006] F.C.J. No. 1697 (QL), para. 50, Canada v. Paryniuk 2003
FC 1505, [2003] F.C.J. No. 1924 (QL), para. 13; Canada v. Laframboise
[1986] 2 C.T.C. 274, [1986] 3 F.C. 521, para. 19). In this case, the debtors
have not in any way explained the accounting document [translation] “Banana Sales”. They have not dealt with this
allegation at all. They have also not explained why the selling price of the
Resto‑Bar ($50,000) was handed over by 9039-0402 Québec Inc. to Mr.
Delaunière that same day, or why he rushed to cash the cheque from 9039-0402 Québec
Inc. This money was not in the safety deposit boxes opened after the order of
October 21, 2005 was issued. The Court does not know what happened to it.
[9]
In the circumstances, is it reasonable to believe that
without the order requested by the Minister, there would also be a risk that
the balance of the selling price of the residence ($60,000) would disappear or
be dissipated or used to pay off other debts?
[10]
Having
considered all the evidence, the Court is satisfied that the Minister has met
the test outlined in the Income Tax Act.
[11]
In
addition, the debtors have not convinced the Court that the Minister did not
meet his obligation of reasonable disclosure.
[12]
Consequently,
the debtors’ application is dismissed with costs and the jeopardy collection
order is upheld.
ORDER
The application is dismissed
with costs.
The jeopardy collection order
of October 21, 2005 is upheld.
Judge
Certified
true translation
Gwendolyn
May, LLB
Email this Content