Docket: A-488-15
Citation: 2016 FCA 313
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CORAM:
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NADON J.A.
NEAR J.A.
RENNIE J.A.
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BETWEEN:
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MASIH BOROUMAND
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Appellant
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and
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HER MAJESTY THE
QUEEN
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Respondent
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REASONS FOR
JUDGMENT
NEAR J.A.
[1]
The appellant, Masih Boroumand, appeals from the
Order of the Tax Court of Canada, dated October 15, 2015, as amended on November
5, 2015 (2015 TCC 239). In that decision, Associate Chief Justice Lamarre (the
Judge) dismissed the appellant’s appeals from reassessments made under the Income
Tax Act, R.S.C., 1985, c. 1 (5th Supp.) and the Excise Tax Act, R.S.C.,
1985, c. E-15 for the 2004, 2006 and 2007 taxation years and allowed those for
the 2003 and 2005 taxation years only for the purpose of adjusting the
underreported income to reflect the respondent’s concessions.
[2]
The Judge found that the appellant had
unreported income of $3,669,458 and that he had not demonstrated that the
source of the unreported funds was not taxable. The Judge also found that the
Minister of National Revenue (the Minister) was justified in reassessing the
taxation years outside the statutory period and in imposing gross negligence
penalties. In coming to her decision, the Judge refused to admit documents from
money exchange enterprises purporting to show that the appellant received
nearly two million dollars from Iran. The appellant’s main ground of appeal is
that the Judge erred in refusing to admit the documents under an exception to
the rule excluding hearsay evidence.
[3]
The Supreme Court of Canada has found that “the trial judge is well placed to determine the extent to
which the hearsay dangers of a particular case are of concern and whether they
can be sufficiently alleviated.” Further, a trial judge’s ruling on
admissibility is entitled to deference so long as it is informed by correct
principles of law (R v. Blackman, 2008 SCC 37 at para 36, [2008] 2 S.C.R.
298). In my view, there is no reason to interfere with the Judge’s ruling on
the admissibility of the money exchange documents.
[4]
It was not disputed that the relevant documents
were hearsay and, therefore, presumptively inadmissible.
[5]
Section 30 of the Canada Evidence Act,
R.S.C., 1985, c. C-5 (CEA) provides a statutory hearsay exception for
records made in the usual and ordinary course of business (i.e. business
records).
[6]
To determine whether the evidence meets the
statutory exception, the court may, pursuant to subsection 30(6) of the CEA,
examine the documents and hear evidence as to the circumstances of the creation
of the documents and draw any reasonable inference. Despite assertions by the
appellant that the money exchange documents were created in the usual and
ordinary course of business of the money exchange enterprise, these assertions
were unsupported by evidence. There was no affidavit evidence and the appellant
did not call any witnesses from the money exchange enterprises. The Judge found
that “the appellant offered no explanation as to the
circumstances in which the records were made” (reasons at para. 49). As
such, there is no basis on which to interfere with the Judge’s finding.
[7]
In addition, subsection 30(7) of the CEA
required the appellant to give the respondent seven days’ notice of his
intention to introduce the money exchange documents as business records. The
Judge found that the appellant did not provide the required notice (reasons at
para. 45). The appellant argued that he satisfied this requirement when he
produced the money exchange documents along with other documents as part of
discovery. Further, one day before the hearing, appellant’s previous counsel
asked respondent’s counsel if he was going to allow the “significant documentation from the businesses which received
the money” as business records or whether summoning witnesses was
necessary. Respondent’s counsel replied that he expected counsel to follow the
rules of evidence (AB, Vol. 3, Tab I (1), p. 695). While the CEA does
not specify the form of notice required, the notice should sufficiently
describe which documents are to be introduced and indicate the intention to
introduce them as business records. As such, I find no reviewable error in the
Judge’s finding that the appellant had not provided the required notice.
Further, while the Judge has discretion to dispense with the notice requirement
under subsection 30(7), the appellant has provided no reason to interfere with
the Judge’s decision not to do so, other than the possible failings of his
previous counsel.
[8]
Alternatively, the appellant argued that
documents that do not satisfy the requirements under section 30 of the CEA
may still be admitted under the common law business records exception. As the
appellant provided no evidence as to the circumstances in which the money
exchange documents were made, he cannot satisfy the three requirements of the
common law business records exception, specifically that: the creator(s) of the
records had personal knowledge of the information in those records; the records
were made contemporaneously with the act; and the creator(s) had a duty to
record the information (Ares v. Venner, [1970] S.C.R. 608, 14 D.L.R.
(3d) 4).
[9]
The appellant also suggested that the money
exchange documents were admissible through the principled approach. As the
Judge correctly indicated, hearsay evidence may overcome the general
exclusionary rule if shown to be reliable and necessary (reasons at para. 47).
Through the principled approach, hearsay evidence may only be admitted if its
contents are trustworthy because of the way it came into existence or if the
circumstances allow the ultimate trier of fact to adequately assess its worth (R
v. Khelawon, 2006 SCC 57 at paras. 2-3, [2006] 2 S.C.R. 787). In addition
to finding that the appellant provided no evidence as to the creation of the
money exchange documents, the Judge found that some of the documents showed the
appellant as both the sender and recipient of the funds. Further, the appellant
testified that he occasionally made loans to one of the money service
businesses, which, the Judge found, raised questions about the relationship
between the two (reasons at para. 49). In light of those findings, the Judge
determined that the hearsay evidence did not satisfy the requirement of
reliability. The Judge did not err in refusing to admit the money exchange
documents on that basis.
[10]
The remaining issues raised by the appellants
are questions of fact or of mixed fact and law, and the court may only
intervene if a palpable and overriding error is established (Housen v.
Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).
[11]
The appellant submits that, because the Judge
failed to admit the money exchange documents, she made a palpable and
overriding error in finding that the appellant did not identify the source of
the funds nor show that the funds were not taxable income. As I am of the view
that the Judge correctly determined that the hearsay evidence was inadmissible,
the appellant’s argument lacks foundation. As such, I find no reviewable error
in the Judge’s findings. In any event, even if the hearsay evidence had been
admitted by the Judge, I am of the view that the money exchange documents do
not identify the source of funds nor show that the funds were not taxable.
[12]
The appellant also alleges that the Judge made a
palpable and overriding error in upholding the Minister’s reassessment outside
the statutory period and imposition of gross negligence penalties under
subparagraph 152(4)(a)(i) and subsection 163(2) of the Income Tax Act.
No error is alleged in the Judge’s articulation of what is required to apply
those provisions. The Judge found that the appellant had unreported income and
did not provide a plausible explanation for the discrepancy between his
reported income and net worth (reasons at para. 67). The Judge also found that
the appellant made serious and lengthy omissions in income declared and
provided inconsistent and incomplete evidence (reasons at para. 70). There is
no basis on which to interfere with the Judge’s determination that the Minister
met her burden and was entitled to impose gross negligence penalties and
reassess outside the statutory period.
[13]
I would dismiss the appeal with costs.
"David G. Near"
“I agree.
M. Nadon J.A.”
“I agree.
Donald J. Rennie J.A.”
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