Date: 20131114
Docket: T-2183-12
Citation: 2013 FC 1154
[UNREVISED ENGLISH
CERTIFIED TRANSLATION]
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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ALBIN
MARANGONI
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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 under sections 466 and 467 of the Federal Courts Rules,
SOR/98-106, (the Rules) finding Albin Marangoni (the respondent) in
contempt of court.
[2]
This is a hearing to allow the respondent to hear proof of
contempt alleged against him, described in this decision, and be prepared to present
a defence against these allegations.
II. Facts
[3]
On February 20, 2012, the applicant served on the
respondent a requirement to obtain disclosure and the production of documents
with respect to his income tax return for the 2009 taxation year (the
requirement) under subsection 231.2(1) of the Income Tax Act, RSC
(1985), c 1 (5th suppl) (the ITA). The respondent had 30 days to send the
following documents to the applicant:
1.
the
statements of all the bank accounts used both for business and personal
purposes;
2.
deposit
slips and/or books;
3.
Mr.
Marangoni's existing contracts, such as short‑, medium‑, or
long-term loan(s), loan sharking, car loan(s), hypothecary loan(s), etc.;
4.
documents
relating to insurance policies;
5.
a
list of all the assets and liabilities for the years 2007 to 2009
(January 1, 2007, to December 31, 2009);
6.
a
list of all the acquisitions and disposals for the years 2007 to 2009 (January
1, 2007, to December 31, 2009);
7.
all
supporting documentation regarding business expenses.
[4]
The respondent refused to identify himself at the time that
the requirement was served.
[5]
The respondent did not follow up on the requirement and was
served with a formal demand by the applicant on July 18, 2012.
[6]
The respondent refused to identify himself at the time of
the service of the formal demand.
[7]
The respondent failed to comply with the requirement
following the formal demand and the applicant prepared an applicant’s record
under section 231.7 of the ITA. The respondent was served the record in his
mailbox on December 13, 2012.
[8]
On January 22, 2013, under section 231.7 of the
ITA, Justice Beaudry issued an order (compliance order) requiring
Albin Marangoni to comply with the requirement within 15 days
following the service of the compliance order, which provided the following:
[Translation]
THIS COURT ORDERS
1. the respondent to respond
to the requirement to produce information and documents, dated January 23,
2012, and issued under subsection 231.2(1) of the ITA, by providing the
following information and documents:
- the
statements of all the bank accounts used both for business and personal
purposes;
- deposit slips and/or books;
- Mr. Marangoni’s
existing contracts, such as short‑,
medium‑, or long-term loan(s), loan sharking, car loan(s), hypothecary
loan(s), etc.;
- the
documents relating to insurance policies;
- a
list of all the assets and liabilities for the years 2007 to 2009 (January 1,
2007, at December 31, 2009);
- a
list of all the acquisitions
and disposals for the years 2007 to 2009 (January 1, 2007, to
December 31, 2009);
- all supporting
documentation regarding business expenses;
2.
the respondent to provide the said information and
documents to The Canada Revenue Agency, in care of Pierre-Marc Fréchette, by
sending them to his office, located at 305 René-Lévesque Boulevard West,
Montréal, H2Z 1A6, within 15 days following the service of this order;
3. WITH
costs against the respondent.
[9]
The compliance order was served personally on the
respondent on January 30, 2013.
[10]
The respondent did not communicate the information and produce
the documents required in the time set by Justice Beaudry in his compliance
order.
[11]
On May 8, 2013, on the applicant’s motion,
Prothonotary Richard Morneau rendered an ex parte order directing
the respondent to appear before this Court to hear the proof of contempt
alleged against him, i.e. the non-compliance with the compliance order of
Justice Beaudry and be ready to present a defence against these allegations
(the show cause order). The show cause order ordered the following:
[Translation]
THE COURT ORDERS THAT:
1. Albin Marangoni
appear before a judge of this Court, at 30 McGill Street, Montréal, at a
special hearing of which the maximum duration will be one hour and will be
conducted in French;
The date
of the special hearing will be set by a subsequent order of the Court
Administrator.
2. Albin Marangoni
be then ready to hear the proof of the alleged act, i.e. failing to comply with
the order of this Court of January 22, 2013, which was served to him
personally on January 30, 2013;
3. Albin Marangoni
be also ready to present his defence to the alleged act, i.e. failing to comply
with the order of this Court of January 22, 2013;
4. The applicant
personally serve on Albin Marangoni the following documents:
(a) a copy of this order
and the applicant’s motion record; and
(b) a
list of the witnesses that the applicant proposes to call, at the date to be
set under paragraph 1 above, to prove the alleged act.
[12]
The applicant was not able to serve the order and the
motion record on the respondent because he did not answer the door and seemed
to avoid service.
[13]
On June 11, 2013, the hearing for contempt was set for
November 4, 2013, by the Court Administrator and the applicant served the
applicant’s record, the witness list, the show cause order and the order
setting the date of the hearing in the respondent’s mailbox.
III. Issue
[14]
Is the respondent guilty of contempt for not complying with
the compliance order of Justice Beaudry and what, if any, is the applicable
sentence?
IV. Relevant statutory provisions
[15]
Contempt of court proceedings before this court are
governed by sections 466 to 472 of the Rules and the statutory provisions
applicable in this case are reproduced in Annex A of this decision.
V. The evidence submitted
[16]
In accordance with subsection 470(1) of the Rules, the
evidence was delivered orally to the Court at the time of the hearing.
A. The
applicant
[17]
The applicant examined Pierre-Marc Fréchette, Canada
Revenue Agency auditor responsible for auditing the small and medium businesses
in the country. He has also been responsible for the respondent’s file since
May 26, 2011, because the respondent has operated since 1995, a sole
proprietorship in the field of nutrition. In addition, the applicant submitted
into evidence, in support of his claims, various exhibits that refer to the
different facts in this matter and set out in the facts section of this
decision.
[18]
The applicant argued that the respondent had knowledge of
the compliance order of Justice Beaudry dated January 22, 2013, because
this order was served on him in person on January 30, 2013. This order
granted the respondent a period of 15 days to comply with the requirement,
which he did not do. Further, the respondent was given formal notice to comply
with the requirement and he was served the show cause order of May 8, 2013, at
the same time as the order of the Court Administrator setting the hearing date.
[19]
Therefore, according to the applicant, the respondent had
knowledge of the requirement that was addressed to him, the formal notice that
he was the subject of and the compliance order he was issued. In conclusion,
the applicant stated that despite her efforts she still received nothing from
the respondent and, consequently, that the respondent did not comply with the
compliance order of Justice Beaudry which, at the same time, made him guilty of
contempt of court.
B. The
respondent
[20]
The respondent stated during his testimony that he
experienced some computer problems that resulted in the loss of documents
required by the applicant. He added that because of his busy schedule, he was
unable to recover the requested documents before now. Questioned about this,
the respondent simply stated that he had not thought about contacting the
applicant for more time so as to comply with the requirement. Also during his
cross-examination, the respondent acknowledged being personally served the compliance
order of Justice Beaudry and not complying with it in the time period
specified.
[21]
In addition, the respondent had in his possession, at the
hearing, a series of documents that he provided to the applicant. In his view,
these documents meet the requirements of the compliance order of Justice
Beaudry The applicant accepted the respondent's documents, but she stated that she
would need to verify them before concluding that they comply with the
compliance order.
VI. Analysis
[22]
Paragraph 466(b) of the Rules provides that a person
is in contempt if he or she disobeys a court order. Further, section 469
of the Rules specifies that a finding of contempt shall be based on proof
beyond a reasonable doubt. Therefore, it falls on the applicant to establish
beyond a reasonable doubt that the respondent acted in contempt.
[23]
To render a guilty verdict, the Court must be satisfied
that the respondent received notice of the order that he is accused of failing
to comply with and that he truly failed to comply with said order.
[24]
First, as regards the compliance order issued by Justice
Beaudry, the service summary of Marc Landreville, bailiff, stated that
this order was personally served on the respondent on January 30, 2013. He
was thus informed of the order that he is accused of not having complied with.
[25]
Afterward, another service summary by Marc Landreville
indicated that the respondent attempted to serve the show cause order on the
respondent on May 27, 2013, but that the service could not have taken
place since he did not respond and he seemed to avoid service. However, the show
cause order was served on the respondent on July 24, 2013, by leaving the
documentation in his mailbox, when the applicant served on him the applicant’s
record in compliance with the order of the Court Administrator of June 11,
2013, setting the hearing date.
[26]
This type of service presents a problem in that
subsection 467(4) of the Rules provides that the show cause order must be
served personally. Meanwhile, section 128 of the Rules sets out what
constitutes personal service:
128. (1)
Personal service of a document on an individual, other than an individual under
a legal disability, is effected:
(a) by leaving the
document with the individual;
(b) by leaving the
document with an adult person residing at the individual's place of residence,
and mailing a copy of the document to the individual at that address;
(c) where the individual
is carrying on a business in Canada, other than a partnership, in a name or
style other than the individual's own name, by leaving the document with the
person apparently having control or management of the business at any place
where the business is carried on in Canada;
(d) by mailing the
document to the individual's last known address, accompanied by an
acknowledgement of receipt form in Form 128, if the individual signs and
returns the acknowledgement of receipt card or signs a post office receipt;
(e) by mailing the
document by registered mail to the individual's last known address, if the
individual signs a post office receipt; or
(f) in any other manner
provided by an Act of Parliament applicable to the proceeding.
[27]
It appears from the record that the show cause order was
not served in accordance with the terms provided by section 128. Indeed,
the bailiff attempted to serve the order, but he was not able to do so. This show
cause order was only served later, with the applicant’s record and the method
of service used—the delivery of the document to the mailbox—is not in
accordance with these terms. The applicant had the opportunity to use section
136 of the Rules to ask the Court to make an order authorizing substitutional
service, but everything leads to believe that she did not avail herself of that
opportunity.
[28]
Further, in his service summary of July 24, 2013,
bailiff Marc Landreville stated that the method of service used is in
accordance with paragraph 140(1)(a) of the Rules. However, this
provision does not apply to documents that require personal service, such as
the show cause order.
[29]
Thus, as regards the record and contrary to what the Rules
dictate, the respondent was not personally served the show cause order.
However, the Rules contain another section that allows the Court to declare
valid service that would otherwise not be authorized. Specifically,
section 147 of the Rules provides
147. Where a
document has been served in a manner not authorized by these Rules or by an
order of the Court, the Court may consider the document to have been validly
served if it is satisfied that the document came to the notice of the person
to be served or that it would have come to that person's notice except for
the person's avoidance of service.
[Emphasis added.]
[30]
In this case, the respondent appeared at the hearing and
testified. Thus, I was also able to conclude that he took notice of the
compliance order. Otherwise, how would he have known that he had to appear?
Thus, I consider that, under section 147 of the Rules, the applicant had
validly served the compliance order on the respondent for the application of
section 467 of the Rules and, therefore, I am satisfied beyond a reasonable
doubt that the respondent was served the compliance order and the show cause
order.
[31]
The Court must then assess whether the respondent indeed
neglected to comply with the compliance order of Justice Beaudry The applicant
claims that the respondent failed to communicate the information and produce
the documents required under the requirement. The respondent acknowledged that
he did not send the documents in time, but stated that it would have been
impossible for him to do so in such a short timeframe because of computer
problems and his busy schedule. However, the respondent could have contacted
the applicant at any time during the proceedings to request a longer filing
deadline, but he stated that he had not thought of it.
[32]
The evidence submitted before the Court establishes that
the respondent was personally notified of the compliance order of Justice
Beaudry, that he did not comply with it within the time period specified and
that despite the fact that he was served the compliance order and the show
cause order. It is true that the respondent provided a series of documents to
the applicant during the hearing. However, as the applicant rightly submitted,
the fact that the respondent may have complied with the compliance order (a
verification of the documents submitted at the hearing must be done before
drawing such a conclusion) does not detract from the reality that contempt of
court was indeed committed.
[33]
Therefore, for these reasons and considering the evidence
before the Court, I am satisfied beyond a reasonable doubt that the respondent
is in contempt of court.
VII. Sentence
[34]
With respect to this matter, the applicant invited the
Court to impose the following sentence on a finding of contempt:
1. The
respondent must pay a fine of $1,500, payable within 10 days of this order;
said payment to be made to the Receiver General for Canada;
2. The
respondent must pay the applicant costs awarded on a solicitor and client basis
of $3,000, payable within 10 days of this order; said payment to be made to the
Receiver General for Canada;
3. The
respondent must comply with the compliance order of Justice Beaudry dated
January 22, 2013, within 30 days of this order.
[35]
Note that this sentence differs from that stated in the
applicant's original submissions: the total costs requested is now higher. At
the hearing, the counsel for the applicant requested to modify her original
application and justified this increase in costs by relying on a decision, Minister
of National Revenue v Bosnjak, 2013 FC 399, 108 WCB (2d) 621,
which she stated having found during recent case law research. Yet this
decision, which dates back to April 2013, pre-dates the filing of her
original submissions. Thus, the applicant was free to find this case law before
submitting her original application. This Court nevertheless allowed the
application to amend by the applicant.
[36]
Section 472 of the Rules specifies the sentences that may
be ordered following a contempt conviction. However, it is important to assess
a series of factors or principles set out in case law relating to sentencing. Justice
Kelen summarized in Canada (Minister of National Revenue) v
Marshall, 2006 FC 788, at para 16, [2006] FCA No 1008, the
applicable criteria to the determination of contempt sentences related to the
ITA:
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.
[37]
As the applicant stated, this is the respondent's first
breach. However, his attitude toward his tax obligations to the Crown
constitutes an aggravating factor, since he breached the compliance order of Justice
Beaudry in a flagrant manner, even after having been informed of the illegality
of his actions. Further, the respondent never showed intent to accept his
responsibility, in addition to complying with the requirement. On the contrary,
he did not want to accept the service of the compliance order. Moreover, he
never contacted the applicant to get more time so as to comply with the
requirement. In contrast, the respondent appeared at the hearing, explained
himself and had in his possession documents that he claims are those sought by
the applicant and gave them to him. These factors favour a more lenient
sentence.
[38]
That is why I am of the view that it is appropriate to
amend and set the conditions of the sentence suggested by the applicant,
specifically so that it helps achieve the primary objective of the sentence,
i.e. ensure compliance with the order of Justice Beaudry
[39]
Therefore, in light of the record, it is appropriate to
order the respondent to pay a fine of $500 and to pay the costs awarded
on a solicitor and client basis of $1,000, all
to be paid to the Receiver General for Canada in 10 monthly payments of $150. The respondent will also be required
to comply, as appropriate, within 30 days of this order, with the
compliance order of Justice Beaudry dated January 22, 2013, by communicating the information and producing the documents
requested under the requirement of February 20, 2012.
ORDER
THE COURT:
1. FINDS the
respondent guilty of contempt of the compliance order of Justice Beaudry dated
January 22, 2013;
2. ORDERS
the respondent to comply with the compliance order of Justice Beaudry dated
January 22, 2013, as appropriate, within 30 days of this order, by
communicating the information and producing the documents requested under the
requirement of February 20, 2012;
3. SENTENCES
the respondent to pay a fine of $500 and costs awarded on a solicitor and
client basis of $1,000, payable in 10 monthly payments of $150, the first
payment to be made one month after this order and the payments must be made to
the Receiver General for Canada.
"Simon Noël"
Certified true
translation
Catherine Jones,
Translator
APPENDIX A –
APPLICABLE LEGISLATIVE PROVISIONS
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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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