Canada (National Revenue) v. Bélanger, 2014 FC 127

Date: 20140204

Docket:

T-1062-13

 

Citation: 2014 FC 127

UNREVISED ENGLISH CERTIFIED TRANSLATION]

Ottawa, Ontario, February 4, 2014

PRESENT: The Honourable Mr. Justice Boivin

 

Docket: T-1062-13
BETWEEN:
MINISTER OF NATIONAL REVENUE
Applicant
and
DANIEL BÉLANGER
Respondent

 

REASONS FOR ORDER AND ORDER

[1]               The Minister of National Revenue (the applicant) seeks an order under sections 466 and 467 of the Federal Courts Rules, SOR/98-106, (the Rules) finding Daniel Bélanger (the respondent) in contempt of court.

 

[2]               The proceeding before this Court consists of a hearing to allow Daniel Bélanger to hear proof of contempt alleged against him and be prepared to present a defence.

Facts

[3]               On March 3, 2013, the applicant served seven (7) requirements to produce information on Daniel Bélanger.

 

[4]               The requirement was issued under paragraph 231.1(1)(a) of the Income Tax Act, RSC 1985, c 1 (5th Supp.) (the Act), which provides as follows:

 

[5]               The requirements to produce information were issued against the following taxpayers:

•         Daniel Bélanger, personally for the 2009, 2010 and 2011 taxation years;

 

•         The Je me prends en main charitable organization, the president of which is the respondent, for the period from September 1, 2009, to August 31, 2011;

 

•         Services conseils Daniel Bélanger, CA Inc., whose sole administrator and shareholder is the respondent, for the years ending September 30, 2010, and September 30, 2011 ;

 

•         Gestion Morchibel Inc., whose sole administrator and shareholder is the respondent, for the 2010 and 2011 taxation years.

 

[6]               The requirements for information served on March 3, 2013, provided the respondent with thirty (30) days to submit the following documentation to the auditor:

•         For Daniel Bélanger: bank and credit card statements, contracts relating to assets, insurance contracts, bank loan and investment contracts, income tax return for the 2009 taxation year, charitable donation receipts relating to income tax returns for 2009, 2010, 2011;

 

•         For Je me prends en main: the organization’s books and records, supporting documentation, banking records, all other contracts or records pertaining to the organization;

 

•         For Services conseils Daniel Bélanger, CA, Inc.: books and records, supporting documentation, banking records, insurance contracts and all other records pertaining to the company.

 

[7]               On April 4, 2013, the respondent provided some of the documents to the applicant, but not all of the documents in the requirements for information issued on March 3, 2013:

•         For Daniel Bélanger: life insurance contracts;

 

•         For Je me prends en main: various receipts, accounting excerpts, life insurance contracts for Luc Cauchon and Annie Bissonnette;

 

•         For Services conseils Daniel Bélanger, CA, Inc.: various explanations regarding ongoing work, records of shares and administrators.

 

[8]               On April 17, 2013, Daniel Bélanger was issued a formal notice to comply in full with all of the requirements to produce information. The respondent did not reply and failed to comply.

[9]               On June 14, 2013, the applicant filed a motion for an order of this Court under section 231.7 of the Act ordering the respondent to comply in full with the seven (7) requirements for information from March 3, 2013.

 

[10]           On July 11, 2013, Daniel Bélanger appeared before the Federal Court in the presence of the applicant.

 

[11]           On July 12, 2013, Justice Yves de Montigny of this Court made the following order:

THE COURT ORDERS Daniel Bélanger to comply in full with the seven requirements to produce information served on him on March and to provide the Minister of National Revenue with

•      all of the documents except credit card statements by July and

•      all of the credit card statements by September

with the exception of those documents already provided by Daniel Bélanger on April 4, 2013;

WITH COSTS of $500.00 to the applicant.

 

[12]           On July 15, 2013, the respondent called the applicant’s counsel to inform her that he would be producing all of the required documents shortly, except for the credit card statements, for which a further sixty (60) days would be needed.

 

[13]           On November 21, 2013, the applicant applied to this Court for an ex parte order directing the respondent to appear before a Justice of this Court for a contempt hearing.

 

[14]           On December 3, 2013, Prothonotary Morneau of this Court made an order in which he ordered the respondent, inter alia, to appear before a Justice of this Court on January 23, 2014, in Quebec City. The order further provided that the respondent be prepared to hear proof of his failure to comply with the July 12, 2013, order by Justice de Montigny, to present his defence to the alleged act and to make submissions on what the appropriate sentence should be, were he to be found in contempt of court.

 

[15]           Daniel Bélanger appeared before this Court on January 23, 2014, in the presence of the applicant.

 

Issue

[16]           Is Daniel Bélanger guilty of contempt of court for not complying with Justice de Montigny’s order? If so, what is the appropriate penalty?

 

[17]           The provisions applicable to this case, namely sections 466 to 472 of the Federal Courts Rules, are reproduced in Appendix A.

 

Evidence

[18]           The parties provided testimony before this Court.

 

            Jamil Jalbert

[19]           Jamil Jalbert testified for the applicant. Mr. Jalbert is an auditor with the Canada Revenue Agency. He explained that on July 11, 2013, he attended the hearing before Justice de Montigny, along with Daniel Bélanger, who had not objected to the requirement. He testified that Daniel Bélanger was aware of the order.

 

[20]           Following the order by Justice de Montigny on July 12, 2013, Daniel Bélanger provided the applicant with a list of general documents on July 19, 2013 (P-1; Exhibit M in support of the affidavit of Jamil Jalbert). Mr. Jalbert testified that this list was incomplete. On July 22, 2013, Daniel Bélanger sent an email with three (3) attachments (P-2). On September 3, 2013, Mr. Jalbert left a message on Daniel Bélanger’s voicemail. Faced with Daniel Bélanger’s silence, Mr. Jalbert served an inventory of missing documents by bailiff (Exhibit N in support of the affidavit of Jamil Jalbert).

 

[21]           After some correspondence, the respondent contacted the applicant on September, 11 2013, stating that he now had all of the records of Je me prends en main and Services conseils Daniel Bélanger, CA, Inc. Daniel Bélanger also informed the applicant that he could obtain cheque stubs directly from the financial institutions and that automobile, insurance, financing and credit contracts were not relevant. Mr. Jalbert left a message on September 12, 2013, another on October 23 and yet another one on October 24, 2013. 

 

[22]           Mr. Jalbert finally managed to speak with Daniel Bélanger on November 1, 2013. The latter promised to call Mr. Jalbert back on November 4, 2013. Mr. Jalbert would wait in vain for that call. Daniel Bélanger would leave him a message over a month later, on December 23, 2013. In the meantime, given the situation and the lack of information, Mr. Jalbert issued requests for information to a number of financial institutions in order to obtain certain documents, particularly bank and credit card statements (P-3).

 

[23]           Thus, Mr. Jalbert explained that Daniel Bélanger, in the three months after Justice de Montigny’s order, seemed to “distil”  the information and was not entirely cooperative in submitting to the applicant all of the documents covered by the order. During cross-examination, on the issue of the bank authorizations that could have been signed by the respondent in order to allow the applicant [translation] “to go directly to the financial institution,” Mr. Jalbert reiterated that Justice de Montigny’s order was clear and that it was up to the applicant to provide the documents. 

 

Daniel Bélanger

[24]           Daniel Bélanger is a chartered accountant by profession. He is currently unemployed. In his testimony, he indicated that he did not consider some of the required documents to be relevant and that, in any event, the applicant could obtain all of the documents he wanted by authorization.

 

[25]           He further stated in his testimony that he failed to submit certain documents such as bank statements because obtaining such records entailed fees that he was unable to pay. On cross-examination he admitted that he had not inquired about the cost of obtaining these statements from all of the financial institutions. He also conceded that the records could have been obtained through the banks’ internet sites.

 

Analysis

[26]           Paragraph 466(b) of the Rules provides that a person is in contempt if he or she disobeys a court order. A finding of contempt shall be based on proof beyond a reasonable doubt. The onus rests on the applicant.

 

[27]           In a recent decision, Canada (Minister of National Revenue – M.N.R.) v Black Sun Rising Inc., 2013 FC 773 at paragraph 7, [2013] FCJ No 824 (QL), Justice Harrington cited the Ontario Court of Appeal in Prescott-Russell Services for Children and Adults v G (N) (2006), 82 O.R. (3d) 686, which summarized the criteria for contempt of court in civil matters:

[7] …

The criteria applicable to a contempt of court conclusion are settled law. A three-pronged test is required. First, the order that was breached must state clearly and unequivocally what should and should not be done. Secondly, the party who disobeys the order must do so deliberately and wilfully. Thirdly, the evidence must show contempt beyond a reasonable doubt. Any doubt must clearly be resolved in favour of the person or entity alleged to have breached the order.

[Citations omitted]

 

[28]           In this case, the evidence shows that Daniel Bélanger was not only informed of Justice de Montigny’s order but that he had agreed to its terms on July 11, 2013, at the hearing. On its very face, Justice de Montigny’s order is clear and unequivocal.

 

[29]           Aside from an incomplete list of documents submitted by Daniel Bélanger, the applicant to this date has produced nothing, despite repeated requests by the respondent. Daniel Bélanger has not provided satisfactory or convincing explanations before this Court that would explain his failure to comply with Justice de Montigny’s order. On the contrary, the evidence shows that Daniel Bélanger instead sought to buy more time by not responding to many of the applicant’s calls. These instances of non-compliance were not involuntary.

 

[30]           Even if certain documents were produced, the fact remains that Daniel Bélanger was in fact in contempt of court in not providing all of the documents and thus not complying with Justice de Montigny’s order, of which he was personally aware. The updated list of missing documents is attached hereto in Appendix B.

 

[31]           The Court notes that the authorizations to which Daniel Bélanger refers would have resulted in an amending of the terms of the order, and in any event would not have allowed the applicant to have access to all of the documents mentioned in the order. Thus, if Daniel Bélanger had wished to proceed in that fashion, he could have requested as much from Justice de Montigny at the hearing of July 11, 2013. The Court further notes that Justice de Montigny had granted him additional time to produce his credit card information.

 

[32]           Therefore, for these reasons and considering the evidence before the Court, I am satisfied beyond a reasonable doubt that Daniel Bélanger is in contempt of court.

 

Sentence

[33]           Rule 472 of the Federal Courts Rules sets out the penalty which may be ordered on a finding of contempt:

 

[34]           In Canada (Minister of National Revenue – M.N.R.) v Marshall, 2006 FC 788 at paragraph 16, [2006] FCJ No 1008 (QL), Justice Kelen sets out the factors to be considered when determining the sentence for contempt of court within the framework of the process under the Income Tax Act:

[16] To summarize, the factors relevant to determining a sentence in contempt proceedings are:

•            i. The primary purpose of imposing sanctions is to ensure compliance with orders of the court. Specific and general deterrence are important to ensure continued public confidence in the administration of justice;

•           ii. Proportionality of sentencing requires striking a balance between enforcing the law and what the Court has called "temperance of justice";

•        iii. Aggravating factors include the objective gravity of the contemptuous conduct, the subjective gravity of the conduct (i.e. whether the conduct was a technical breach or a flagrant act with full knowledge of its unlawfulness), and whether the offender has repeatedly breached orders of the Court; and

•           iv. Mitigating factors might include good faith attempts to comply (even after the breach), apologize or accept responsibility, or whether the breach is a first offence.

 

 

[35]           To the Court’s knowledge, this is a first conviction for Daniel Bélanger. As previously mentioned, although he did submit certain documents, he failed to comply with the order by not disclosing all of them. Daniel Bélanger is a chartered accountant by training. The Court can infer from this that he is in a good position to understand his tax obligations. Although he was in contact with the applicant on a few occasions after July 12, 2013, he also attempted to abscond by not returning certain calls. However, and in contrast to certain decisions on which the applicant relies – i.e. Canada (Minister of National Revenue – M.N.R.) v Bjornstad, 2006 FC 818, [2006] FCJ No 1086 (QL), – Daniel Bélanger did appear at the hearing before this Court on January 23, 2014. He could have produced the documents, which would have weighed in his favour. 

 

[36]           That being the case and, having regard to the circumstances of this case, the sentence suggested by the applicant must be tempered in order to achieve the primary purpose of ensuring compliance with Justice de Montigny’s order. In this case, and at this point, a fine is appropriate for a first contempt finding.

 

 

ORDER

THIS COURT

FINDS Daniel Bélanger to be in contempt of the order by Justice de Montigny dated July12, 2013;

 

ORDERS Daniel Bélanger to comply with the compliance order by Justice de Montigny dated July 12, 2013, within thirty (30) days of this order, by communicating the information and producing the documents requested, a list of which is attached hereto in Appendix B;

 

SENTENCES Daniel Bélanger to pay a fine of $1,500.00 and costs awarded on a solicitor and client basis of $2,500.00 payable within thirty (30) days from the date of service of this order, payment to be made to the Receiver General for Canada.

 

 

 

“Richard Boivin”

 

 

 

 

 

 

Certified true translation

Sebastian Desbarats, Translator

 

 

Appendix A

 

…

 

Federal Courts Rules

 

 

 

 

Appendix B

 

Exhibit O – Missing Documents

 

Je me prends en main

➢  An accounting for the fiscal year ending in August 2010 and 2011;

➢  Trial balance (“attached” written but document not to be found);

➢  I do not understand the explanation of the agenda;

➢  Fees incurred/expenditures (for an amount of $48,000 and $96,000, explanations on the nature of the charges and details);

➢  Receipt for missing 2009 donations: # 4, 5, 6, 8 et seq;

➢  Receipt for missing 2010 donations: # 1,2,3,4,5,6,11 et seq;

➢  Receipt for missing 2011 donations: # 1 to 14 and 16 et seq;

➢  Receipt for missing donations for 2009, 2010 and 2011: 4, 5, 6, 11, 12, 13, 14, 16 et seq.

➢  Statements of account provided to Luc Cauchon.  (If Je me prends en main loaned money to Luc Cauchon, then it must provide him with a statement  of interest, amounts of disbursements or the balance owing);

 

Services conseils Daniel Bélanger, CA Inc.

➢  Minutes book: share certificates, by-laws, articles of incorporation (incorporation certificate and listing of share capital);

➢  All supporting documents for expenditures (regardless of the amount or nature of the expenditure);

➢  All bank statements from 2009-11-25 (date of company’s incorporation) to 2010-11-07 with the exception of those from the Banque Nationale du Canada, account # XX-XXX-23, from November  8, 2010, to September 30, 2011;

➢  All statements from the line of credit (if there is one, only the balance will appear on the bank statement);

➢  All credit card statements with the exception of those from the Banque Nationale du Canada (MasterCard # XXXX XXXXXX XXX398) from December 13, 2010, to September 30, 2011.

➢  Cheque stubs;

➢  An accounting for the fiscal year ending 30-09-2010 (If the accounting for 2010 was by adjustments, you will have to provide details about the origin of the entry (the compilation));

➢  You wrote the following on the explanation sheet: [translation] “taxes receivable only for List of accounts payable and receivable.”  However, there are no accounts receivable in the records produced and only two accounts payable. You are required to submit detailed accounts (amounts and accruals);

➢  Taxes owed (provincial income tax return or explanations of income taxes owed);

➢  T5 and declaration of dividend in 2010;

➢  Financial statements (including notes) ;

 

Daniel Bélanger

➢  All bank statements (including joint accounts) with the exception of:

o   Caisse Desjardins de Lévis, account # XXX21, from January 1, 2009, to December 31, 2011 and account # XXX04, from January 2009, to December 2011;

o   Caisse Desjardins du Cœur de Bellechasse: account # XXX227, from January 1, 2009, to July 14, 2009;

o   Caisse Desjardins du Nord de la Beauce: account # XXX87, from January 1, 2009, to December 31, 2011, and joint account # XXX42, from July 5, 2010, to December 31, 2011.

➢  Credit card statements (Sears, Visa Desjardins, MC Banque Nationale, Citibank MC, …) with the exception of: Sears # XXXXXX-XXXX-XX471-8, from February 20, 2009, to June 19, 2009;

➢  All statements from lines of credit or Accord D (if applicable);

➢  Versa Nissan purchase contract;

➢  Car and home insurance contract;

➢  Paper copy of 2009 tax return (no longer available at CRA);

 

Gestion Morchibel inc. (Gestion Morchibel)

Books and Records

➢  Accounting books or data;

➢  financial statements*

➢  Company book (minutes book) ;

➢  Adjusting entries;

➢  Trial balances;

➢  Travel records;

➢  Agenda of client meetings;

➢  All documents used in preparing income tax returns (spreadsheets, worksheets, …);

 

Supporting Documents

➢  Supporting documents for sales transactions;

➢  Supporting documents for expenditures incurred;

➢  Supporting documents for purchase and/or sale of assets;

 

Bank records

➢  Loan or investment contracts;

➢  Bank and credit card statements;

➢  Returned cheques and deposit slips;

➢  Bank reconciliations;

 

Other documents

➢  List of accounts payable and receivable;

➢  Insurance contracts;

➢  All other company records;

 

 

FEDERAL COURT

SOLICITORS OF RECORD

 

 

 

DOCKET:	T-1062-13
STYLE OF CAUSE:	MINISTER OF NATIONAL REVENUE v DANIEL BÉLANGER

 

PLACE OF HEARING:

                                                            Québec, QuEbec

 

DATE OF HEARING:

                                                            JANUARY 23, 2014

 

REASONS FOR ORDER AND ORDER:

                                                            BOIVIN J.

DATED:

                                                            FEBRUARY 4, 2014

APPEARANCES:

MÉLANIE BÉLEC	FOR THE APPLICANT
DANIEL BÉLANGER	FOR THE RESPONDENT (ON HIS OWN BEHALF)

 

SOLICITORS OF RECORD:  

William F. Pentney Deputy Attorney General of Canada	FOR THE RESPONDENT