Date: 20040401
Dockets: A-28-03
A-30-03
Citation: 2004 FCA 150
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NADON J.A.
A-28-03
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
JUSTIN SAVARD
Respondent
A-30-03
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
DANY HOUDE
Respondent
Hearing held at Québec, Quebec, on April 1, 2004.
Judgment delivered from the bench at Québec, Quebec, on April 1, 2004.
REASONS FOR JUDGMENT OF THE COURT: LÉTOURNEAU J.A.
[1] These are two applications for judicial review by the Attorney General of Canada, in dockets A-28-03 and A-30-03, to set aside two judgments by the Tax Court of Canada, wherein the judge of that Court allowed the appeal of both taxpayers and struck out the penalties that had been imposed on them as well as the related interest.
[2] These two judgments by the Tax Court of Canada echoed the analysis that the same judge made in Villeneuve v. Canada, [2004] F.C.A. 20, as well as her findings. Subsequently, our Court set aside the decisions of the Tax Court of Canada in Villeneuve, supra. Before the hearing of these two applications, we called the attention of the parties' counsel to the existence of our decision and asked them to tell us how and why the outcome of these two applications should not be governed and determined by the principles and the findings in Villeneuve.
[3] Despite the commendable efforts of Mr. Simard, representing both respondents, we are not persuaded that the facts at issue in the two applications before us are different from those in Villeneuve, supra, in which our Court held that the respondents, by cashing the illegal tax refund cheques and by paying substantial kickbacks to those who had obtained the refunds for them, had acquiesced and participated in the scheme set up by CCRA employees to falsify tax records in order to defraud the Agency.
[4] Our Court also held in Villeneuve that the respondents had acted with wilful blindness, that they played an essential part in the realization of the fraudulent scheme and that they had benefited economically.
[5] All of these findings by our Court in Villeneuve are present in the two cases before us. We are dealing with Mr. Savard's and Mr. Houde's participation in the same scheme as in Villeneuve. Both respondents benefited economically. They had to cash the fraudulent refund cheque for the scheme to work. They paid the kickback consisting of two-thirds of the refund obtained. They were either aware that the operation was illegal, or impervious to or unmoved by an illegal act that they suspected, but that they did not want to see at all.
[6] For example, Mr. Savard knew before cashing the $11,000 refund cheque that it had been obtained illegally: see his own admission in a letter dated October 11, 2001. He knew that the kickback that he had to pay, and which - it bears repeating - was two-thirds of the amount received, was nowhere near the $100 that he paid annually to H & R Block to prepare his income tax return.
[7] As for Mr. Houde, in his testimony he acknowledged knowing that the circumstances surrounding this refund matter were dubious, that he was not entitled to a refund and that it was, to use his expression, a "scam": see pages 39, 41 and 45 of the transcript of the testimony. But he found the money tempting and decided to cash it for his benefit rather than to pull out of the scheme and return the money received.
[8] For these reasons, the applications for judicial review will be allowed, the decisions of the Tax Court of Canada set aside and the matter referred back to the Chief Justice of the Tax Court of Canada, or to a judge designated by him, for redetermination on the basis that the appeals of the taxpayers in both of the cases before the Court must be dismissed.
[9] Since these are applications for judicial review made by the Attorney General of Canada of decisions made by the Tax Court of Canada under the informal procedure, the respondents will be entitled to reasonable costs in accordance with section 18.25 of the Tax Court of Canada Act, except that, with respect to the joint hearing of these applications, they will be limited to a single set of costs.
[10] A copy of these reasons will be filed in docket A-30-03 in support of the judgment to be made therein.
"Gilles Létourneau"
J.A.
Certified true translation
Kelley A. Harvey, BA, BCL, LLB
FEDERAL COURT OF APPEAL
SOLICITORS OF RECORD
DOCKET: A-28-03
STYLE OF CAUSE: ATTORNEY GENERAL OF CANADA v. JUSTIN SAVARD
PLACE OF HEARING: QUÉBEC, QUEBEC
DATE OF HEARING: APRIL 1, 2004
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NADON J.A.
REASONS FOR JUDGMENT
OF THE COURT: LÉTOURNEAU J.A.
DATE OF REASONS: APRIL 1, 2004
APPEARANCES:
Martin Gentile/Annick Provencher FOR THE APPLICANT
Isabelle Simard FOR THE RESPONDENT
SOLICITORS OF RECORD:
Department of Justice Canada FOR THE APPLICANT
Montréal, Quebec
Isabelle Simard FOR THE RESPONDENT
Chicoutimi, Quebec
FEDERAL COURT OF APPEAL
SOLICITORS OF RECORD
DOCKET: A-30-03
STYLE OF CAUSE: ATTORNEY GENERAL OF CANADA v. DANY HOUDE
PLACE OF HEARING: QUÉBEC, QUEBEC
DATE OF HEARING APRIL 1, 2004
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NADON J.A.
REASONS FOR JUDGMENT
OF THE COURT: LÉTOURNEAU J.A.
DATE OF REASONS: APRIL 1, 2004
APPEARANCES:
Martin Gentile/Annick Provencher FOR THE APPLICANT
Isabelle Simard FOR THE RESPONDENT
SOLICITORS OF RECORD:
Department of Justice Canada FOR THE APPLICANT
Montréal, Quebec
Isabelle Simard FOR THE RESPONDENT
Chicoutimi, Quebec
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