Date: 20131114
Docket: T-695-12
Citation: 2013 FC 1155
Ottawa, Ontario, November 14, 2013
PRESENT: The
Honourable Mr. Justice Simon Noël
BETWEEN:
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THE MINISTER OF NATIONAL REVENUE
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Applicant
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and
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ROSARIO VALLELONGA
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Respondent
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REASONS FOR ORDER AND ORDER
I. Introduction
[1]
The Minister of National Revenue [the “Applicant”] seeks an Order pursuant
to sections 466 and 467 of the Federal Courts Rules, SOR/98-106, [the
“Rules”] that Mr. Rosario
Vallelonga [the “Respondent”] is in
contempt of Court.
[2]
This proceeding is a hearing for the Respondent to hear proof of an act with which he is charged and which is
outlined below and to be prepared to present any defense that he may have.
II. Factual background
[3]
The Applicant sent a Requirement for Information dated November 16,
2011 to the Respondent in order to obtain from him information and documents
with regard to undeclared revenues [the “Information and Documents”]. The
required material was to be provided on or before December 21, 2011.
The Applicant sought to obtain the following information:
1.
accounting records and registers, i.e. general ledger, trial balance,
grouping of accounts that tie to the tax returns, adjusting entries, etc.;
2.
a list of bank accounts and the related statements for each month of the
civil years 2008 and 2009;
3.
a list of all credit card accounts and the related statements for each
month of the civic years 2008 and 2009;
4.
a clear conciliation of the occupancy for all properties for civil years
2008 and 2009;
5.
investment statements for each month of the civil years 2008 and 2009
held with the
following
financial institutions:
a) Laurentian
Bank of Canada;
b) Royal
Bank of Canada;
c) National
Bank of Canada;
d) Community
Bank;
e)
Other financial institutions in the United States;
6.
invoices and proof of payment of the following expenses for:
a) 350 boul. de la Concorde (Laval):
i. maintenance
and repairs respectively, $30,041 and $9,157 for 2008 and 2009;
ii. insurance, $9,730 for
both years;
iii. utilities respectively,
$17,352 and $2,148;
iv. motor vehicle expenses; please
show calculation and a list of all costs
included;
v. property taxes; please provide
statements for both years;
b) 6015 rue Bocage (Montreal):
i. maintenance
and repairs respectively, $13,858 and $21,607 for 2008 and 2009;
ii. poperty
taxes; please provide statements for both years.
c) 6035 rue Bocage (Montreal):
i. maintenance and
repairs respectively, $18,396 and $24,998 for 2008 and
2009;
ii. property
taxes; please provide statements for both years;
iii. interest
expenses respectively, $3,126 and $3,277; please provide statements;
iv. legal accounting and
professional fees; please provide related statements;
d) 8672 Bloomfield (Montreal):
i. maintenance and repairs $11,366 for 2008.
7.
dispositions contracts and all statements supporting the dispositions
cost for the following properties:
a) 8680
Champagneur;
b) 6828 Clark;
c) 7455
Lajeunesse;
d) 8615 Bloomfield;
e) 8672 Bloomfield.
[4]
The Respondent failed to provide the Information and Documents requested.
[5]
The Applicant then sought an Order from this Court on May 7, 2012.
By Order (the “Compliance Order”), this Court ordered the Respondent to comply
with the Applicant’s Request for Information. More specifically, the Court
stated the following:
THIS COURT ORDERS pursuant
to section 231.7 of the Income Tax Act that the respondent shall comply
with the notice issued by the Minister and shall forthwith, and in any event
not later than 30 days after being served with this Order, provide the Information and Documents to a Canada Revenue Agency officer acting under the authority
conferred by the Income Tax Act or such other person designated.
[6]
The Compliance Order was personally served on the Respondent on
May 15, 2012.
[7]
The Respondent once again failed to provide the required material.
[8]
On February 18, 2013, Madam Prothonotary Mireille Tabib,
satisfied of the existence of a prima facie case of contempt committed
by the Respondent, granted an Order (the “Show Cause Order”) pursuant to
section 467 of the Rules which directed the Respondent to appear
before this Court on April 15, 2013, and to be prepared to present any
defense that he may have to the charge that he is guilty of contempt of Court
for breaching the Compliance Order. More specifically, the Court stated
the following:
THIS COURT ORDERS
THAT:
1.
The Respondent appears before a Judge of the Federal Court in the City of
Montreal in the province of Quebec on Monday, the 15th day of April,
2013 at 9:30 a.m. to hear proof of the following acts, purportedly committed by
him, with which he is charged herein and to be prepared to present any defence
that he may have to the charge that he is guilty of contempt of this Honourable
Court for breaching the Order of the Honourable Justice Simon Noël dated May 7,
2012, that is:
a)by Order of the Federal Court dated May 7, 2012 (the
“Compliance Order”)
the Respondent was ordered to provide the Information and Documents sought by
the Applicant pursuant to subsections 231.2 and 231-7 of the Income Tax Act;
b) the Compliance Order was personally served on the
Respondent
on May 15, 2012; and
c)the Respondent has not provided the Information and
Documents as required
by the Compliance Order within the thirty (30) days stipulated in the Order, or
at all.
THIS COURT FURTHER
ORDERS THAT:
1. Service of this Show Cause Order on the Respondent shall
include copies
of:
a)the Affidavit of Siradiou Barry, sworn February 11, 2013;
b) the Affidavit of Jean Caron, sworn May 15, 2012;
c)the Order of the Honourable Justice Simon Noël, dated
May
7, 2012.
[9]
The Show Cause Order was personally served on the Respondent on
March 1, 2013.
[10]
The hearing resulting from the Show Cause Order has been deferred
for health reasons.
III. Issue
[11]
Is the Respondent guilty of contempt of Court and if so, what is the
appropriate penalty?
IV. Relevant legislation
[12]
Contempt proceedings in this Court are governed by Rules 466 to 472
of the Rules. The relevant provisions for the case at bar are reproduced
in the Appendix A to this document.
V. Evidence
[13]
The evidence given was provided orally to the Court pursuant to subsection 470(1)
of the Rules.
[14]
The Applicant produced two witnesses in support of her claims. The
first witness was Mr. Siradiou Barry, of the Canada Revenue
Agency’s Audit Division, who was responsible for the Respondent’s case. Mr.
Barry’s testimony spoke of the numerous occasions on which the Canada Revenue
Agency tried to obtain the requested Information and Documents from the Respondent.
The second testimony came from Mr. Jean Caron, bailiff, who testified
as to the service of the various documents emanating from the Applicant to the Respondent.
The Applicant also produced a number of elements of proof, all of which refer
to the facts of the case at bar that are listed in the “Facts” section above.
[15]
The Applicant argues that the Respondent was aware of this Court’s
Compliance Order dated May 7, 2012, as it was personally served on him on
May 15, 2012. According to the Compliance Order, the Respondent had 30 days
following being served with the Order to comply with the Request for Information. The Applicant has yet to receive any of the requested Information and Documents.
Furthermore, the Respondent was served with the Show Cause Order dated
February 18, 2013 on March 1, 2013.
[16]
The Applicant submits that the Respondent was made aware of the Request
for Information, of the Compliance Order and of the Show Cause Order and that
he has still not produced any of the Information and Documents requested. The
Applicant adds that the Respondent, by not providing said Information and Documents, has failed to comply with the Compliance Order and is therefore to be
held in contempt.
[17]
The Applicant did not testify and chose to produce his submissions by
way of a written document which serves no purpose with regard to the charges against
him. However, he indicated that he understood the matter and that he would
produce the Information and Documents requested in the 60 days following
this Order.
VI. Analysis
[18]
Under paragraph 466(b) of the Rules, a person who
disobeys an Order of the Court is guilty of contempt of Court, and according to
section 469 of the Rules, a finding of contempt must rely on proof
beyond a reasonable doubt. Thus, the Applicant bears the onus of proving the
existence of contempt beyond a reasonable doubt.
[19]
In order to find the Respondent in contempt of Court, this Court must therefore
be satisfied that the Respondent has had notice of the Order with which he is
charged to have failed to comply and that the Respondent indeed breached this Order.
[20]
First, regarding the Compliance Order, the certificate of service
prepared by the bailiff Jean Caron following service states that the
Respondent was indeed personally served with the Compliance Order on
May 15, 2012.
[21]
Moreover, the Respondent was served with the Show Cause Order on
March 1, 2013, as indicated in the certificate of service prepared by the
bailiff Jean Caron. He had therefore received notice of the Show
Cause Order pursuant to subsection 467(4) of the Rules and knew
exactly what would be expected of him as a result of this Order.
[22]
On the evidence before the Court, I find that the Applicant proved
beyond a reasonable doubt that the Respondent had been personally served with
the Compliance Order and the Show Cause Order.
[23]
Second, this Court needs to determine whether the Respondent has indeed breached
the Compliance Order by not complying with its terms. The Applicant submitted that
the Respondent did fail to provide the information it first required under the
Requirement for Information. In this regard, the Respondent acknowledged having
failed to produce the requested Information and Documents but indicated having
the intention of doing so in the following 60 days.
[24]
The evidence presented to the Court is to the effect that the Respondent
was personally made aware of the Compliance Order requiring him to disclose the
cited Information and Documents, that he has failed to do so in the allotted
time, and that he has yet to do it, despite having been served with the
Compliance Order and the Show Cause Order. While this Court recognizes the fact
that the Respondent has undertaken to provide the Applicant with the requested Information and Documents, this situation in no way changes the reality of the present matter:
contempt of Court indeed occurred. Therefore, considering such evidence, this
Court is satisfied beyond a reasonable doubt that the Respondent is guilty of
contempt of Court.
VII. Sentence
[25]
In the present matter, the Applicant seeks the following sentence:
1. The Respondent will pay a fine of $3,000 and $14,731.59 in solicitor-client
costs to the Applicant, including the costs of the contempt hearing, within
30 days from the date of service of the Order, failing which the
Respondent shall be subject to imprisonment for 30 days.
2.
If, within 30 days from the date of service of the Order, the
Respondent arranges with the Applicant for an oral examination under oath and
provides evidence satisfactory to the Court that the Respondent is not able to
pay the fine or the costs, or both, or that he needs an extended period of time
to pay, then the Respondent shall not be imprisoned for failure to pay the fine
or costs, or both.
3.
If the Applicant informs the Court by affidavit that either the fine or
the costs or both have not been paid within 30 days from the date of
service of the Order, and that the Respondent has not arranged with the
Applicant for an oral examination under oath with respect to the Respondent’s
ability to pay the fine or the costs or both, the Court shall issue a warrant
for the Respondent’s imprisonment for 30 days.
4.
The Respondent is to provide the Information and Documents, as set out
in the Compliance Order, within 60 days from the date of service of the
Order, or provide the Applicant with an affidavit explaining why he is not able
to provide the Information and Documents, failing for which the Respondent
shall be imprisoned until such time as the Respondent complies with the
Compliance Order.
5.
If the Applicant informs the Court by affidavit that the Respondent has
not, within 60 days of service of this Order, provided the Information and Documents and has not provided an affidavit explaining why he is not able to
provide the Information and Documents, the Court shall issue a warrant for the
Respondent’s imprisonment for a maximum of three years or until such time
as the Respondent complies with the Compliance Order.
[26]
The penalties that may be imposed on a finding of contempt are listed in
section 472 of the Rules. However, the determination of this kind
of sentence also requires the consideration of certain factors or principles
set out in case law. In Canada (Minister of National Revenue) v Marshall,
2006 FC 788 at para 16, [2006] FCJ No 1008 [Marshall],
Justice Kelen summarized these relevant factors in the case of contempt
proceedings pertaining to the Income Tax Act, RSC 1985, c 1 (5th Supp.):
a) 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;
b) Proportionality of sentencing requires striking a
balance between enforcing the law and what the Court has called
"temperance of justice;"
c) 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
d) 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.
[27]
In determining the sentence to be imposed in the present matter, this
Court took into account the Respondent’s conduct throughout the proceedings: he
completely ignored the Requirement for Information and demonstrated no true intention
of ever cooperating with the Applicant. Reading the parties’ factums, I clearly
noticed that the Respondent ignored several letters sent and meetings set up by
the Applicant; however, when he did not ignore said letters, the Respondent opted
to reply by sending long and tedious letters – and various other pseudo-legal
documents – demanding the immediate payment of advance costs, setting out
requirements and conditions for the “delicate contract negotiations” entailed
by the communications and went so far as charging fees to the Applicant (prescribed
in a detailed fees schedule) for his cooperation. The Applicant went so far as sending
bills to the Applicant and ceasing all of the little cooperation he had shown
so far until payment was made.
[28]
The fact that the Respondent appeared before the Court and undertook to
provide the Applicant with the requested Information and Documents is a
mitigating factor not to be ignored. That being said, the Respondent
continuously failed to deliver the Information and Documents required by the
Applicant all the while knowing that he was lawfully obligated to do so, and
this constitutes an aggravating factor. And despite this being the Respondent’s
first breach, this Court feels it appropriate to grant, subject to a few minor
changes, the Order and the penalties requested by the Applicant, which I deem
reasonable and proportionate and which facilitate the achievement of the
primary purpose of the sanctions, i.e. compliance with the Orders of the Court.
[29]
Thus, this Court concludes that given the circumstances of the case the
Applicant is to pay a fine, to pay the Applicant’s costs and to comply with this
Court’s Compliance Order dated May 7, 2012 by providing the Information and Documents listed in the Applicant’s Requirement for Information dated
November 16, 2011 according to the terms of this present Order.
ORDER
THIS
COURT ORDERS that:
1.
The Respondent is guilty of contempt of Court
and shall pay a fine of $3,000 and $14,731.59 in solicitor-client
costs to the Applicant, including the costs of the contempt hearing, within 60 days
from the date of service of this Order. Failure to pay the fine or the costs,
or both, shall result in the imprisonment of the Respondent under the
conditions set out in paragraphs 2 and 3, below.
2.
The Respondent shall not be imprisoned for
failure to pay the fine or costs, or both, if, within 30 days from the
date of service of this Order, the Respondent arranges with the Applicant for
an oral examination under oath and provides evidence satisfactory to the Court
that the Respondent is not able to pay the fine or the costs, or both, or that
he needs an extended period of time to pay.
3.
If the Applicant informs the Court by affidavit
that either the fine or the costs, or both, have not been paid within 60 days
from the date of service of this Order, and that the Respondent has not
arranged with the Applicant for an oral examination under oath with respect to
the Respondent’s ability to pay the fine or the costs, or both, the Court shall
issue a warrant for the Respondent’s imprisonment for a maximum of 30 days
or until such time as the Respondent pays the fine and the costs.
4.
The Respondent shall provide the Information and Documents, as set out in the Compliance Order, within 60 days from the date of
service of this Order, or provide the Applicant with an affidavit explaining
why he is not able to provide the Information and Documents. Failure to provide
said Information and Document shall result in the imprisonment of the
Respondent under the conditions set out in paragraph 5, below.
5.
If the Applicant informs the Court by affidavit
that the Respondent has not, within 60 days of service of this Order,
provided the Information and Documents and has not provided an affidavit
explaining why he is not able to provide the Information and Documents, this
Court shall issue a warrant for the Respondent’s imprisonment for a maximum of
three years or until such time as the Respondent complies with the
Compliance Order.
6.
The sentences set out in paragraphs 3 and 5
above are to run concurrently.
“Simon Noël”
APPENDIX A – RELEVANT LEGISLATION
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Federal Court Rules, SOR/98-106
Contempt Orders
Contempt
466. Subject to rule 467, a person is guilty of
contempt of Court who
[…]
(b) disobeys a process or order of the Court;
[…]
Right to a hearing
467. (1) Subject to rule 468, before a person may
be found in contempt of Court, the person alleged to be in contempt shall be
served with an order, made on the motion of a person who has an interest in
the proceeding or at the Court's own initiative, requiring the person alleged
to be in contempt
(a) to appear before a judge at a time and place
stipulated in the order;
(b) to be prepared to hear proof of the act with which the
person is charged, which shall be described in the order with sufficient
particularity to enable the person to know the nature of the case against the
person; and
(c) to be prepared to present any defence that the person
may have.
Ex parte motion
(2) A motion for an order under subsection (1) may be made
ex parte.
Burden of proof
(3) An order may be made under subsection (1) if the Court
is satisfied that there is a prima facie case that contempt has been
committed.
Service of contempt order
(4) An order under subsection (1) shall be personally
served, together with any supporting documents, unless otherwise ordered by
the Court.
[…]
Burden of proof
469. A finding of contempt shall be based on proof
beyond a reasonable doubt.
Evidence to be oral
470. (1) Unless the Court directs otherwise,
evidence on a motion for a contempt order, other than an order under
subsection 467(1), shall be oral.
Testimony not compellable
(2) A person alleged to be in contempt may not be
compelled to testify.
[…]
Penalty
472. Where a person is found to be in contempt, a
judge may order that
(a) the person be imprisoned for a period of less than
five years or until the person complies with the order;
(b) the person be imprisoned for a period of less than
five years if the person fails to comply with the order;
(c) the person pay a fine;
(d) the person do or refrain from doing any act;
(e) in respect of a person referred to in rule 429, the
person's property be sequestered; and
(f) the person pay costs.
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Règles des Cours fédérales, DORS/98-106
Ordonnances pour outrage
Outrage
466. Sous réserve de la règle 467, est coupable d’outrage au tribunal
quiconque :
[…]
b) désobéit à un moyen de contrainte ou à
une ordonnance de la Cour;
[…]
Droit à une audience
467. (1)
Sous réserve de la règle 468, avant qu’une personne puisse être reconnue
coupable d’outrage au tribunal, une ordonnance, rendue sur requête d’une
personne ayant un intérêt dans l’instance ou sur l’initiative de la Cour,
doit lui être signifiée. Cette ordonnance lui enjoint :
a) de comparaître devant un juge aux
date, heure et lieu précisés;
b) d’être prête à entendre la preuve de
l’acte qui lui est reproché, dont une description suffisamment détaillée est
donnée pour lui permettre de connaître la nature des accusations portées
contre elle;
c) d’être prête à présenter une défense.
Requête ex parte
(2) Une requête peut être présentée ex
parte pour obtenir l’ordonnance visée au paragraphe (1).
Fardeau de preuve
(3) La Cour peut rendre l’ordonnance
visée au paragraphe (1) si elle est d’avis qu’il existe une preuve prima
facie de l’outrage reproché.
Signification de l’ordonnance
(4) Sauf ordonnance contraire de la Cour,
l’ordonnance visée au paragraphe (1) et les documents à l’appui sont
signifiés à personne.
[…]
Fardeau de preuve
469. La
déclaration de culpabilité dans le cas d’outrage au tribunal est fondée sur
une preuve hors de tout doute raisonnable.
Témoignages oraux
470. (1)
Sauf directives contraires de la Cour, les témoignages dans le cadre d’une
requête pour une ordonnance d’outrage au tribunal, sauf celle visée au
paragraphe 467(1), sont donnés oralement.
Témoignage facultatif
(2) La personne à qui l’outrage au
tribunal est reproché ne peut être contrainte à témoigner.
[…]
Peine
472.
Lorsqu’une personne est reconnue coupable d’outrage au tribunal, le juge peut
ordonner :
a) qu’elle soit incarcérée pour une
période de moins de cinq ans ou jusqu’à ce qu’elle se conforme à
l’ordonnance;
b) qu’elle soit incarcérée pour une
période de moins de cinq ans si elle ne se conforme pas à l’ordonnance;
c) qu’elle paie une amende;
d) qu’elle accomplisse un acte ou
s’abstienne de l’accomplir;
e) que les biens de la personne soient
mis sous séquestre, dans le cas visé à la règle 429;
f) qu’elle soit condamnée aux dépens.
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