Hunter
J.:
—
The
taxpayer,
Marie
Steele
(“Steele”)
applies
for
a
review
of
the
jeopardy
order
obtained
by
the
Minister
of
National
Revenue
(the
“Minister”)
on
October
24,
1995.
The
Minister
obtained
the
order
pursuant
to
subsection
225.2(2)
of
the
Income
Tax
Act,
R.S.C.
1985,
c.
l(5th
Supp.)
as
amended.
Steele
has
the
right
pursuant
to
subsection
225.2(8)
to
apply
for
a
review
of
the
jeopardy
order
and
subsection
225.
2(11)
states
that
the
judge
hearing
the
review
application:
...
shall
determine
the
question
summarily
and
may
confirm,
set
aside
or
vary
the
authorization
and
may
confirm,
set
aside
or
vary
the
authorization
and
make
such
other
order
as
the
judge
considers
appropriate.
In
Minister
of
National
Revenue
v.
Landru,
(sub
nom.
Landru
v.
Canada)
[1993]
1
C.T.C.
93,
107
Sask.
R.
1
(Q.B.),
Geatros
J.
Considered
a
similar
application
and
following
a
review
of
the
relevant
authorities,
he
held
that
the
taxpayer
has
the
initial
burden
to
put
evidence
before
the
court
that
there
are
reasonable
grounds
to
doubt
that
the
test
required
in
subsection
225.2(2)
has
been
met
but
that
the
ultimate
burden
is
on
the
Crown.
The
court
considering
the
review
of
the
order
may
consider
both
the
evidence
on
the
original
application
under
subsection
225.2(2)
and
any
evidence
presented
by
the
parties
at
the
review
hearing.
The
test
that
must
be
satisfied
is
that
on
a
balance
of
probability,
the
evidence
leads
to
the
conclusion
that
it
is
more
likely
than
not
than
collection
would
be
jeopardized
by
delay.
Primarily,
there
are
four
transactions
that
cause
the
Minister
to
believe
that
Steele
would
waste,
liquidate
or
transfer
assets
to
jeopardize
collection
of
the
debt
(by
reason
of
the
reassessment
delivered
coincident
with
the
jeopardy
order)
through
her
inability
to
pay.
The
four
alleged
transactions
are:
1.
the
transfer
of
substantially
all
the
assets
of
the
corporation
Hotshot
Transporter
Services
Ltd.
(“Hotshot”)
of
which
Steele
is
the
sole
shareholder
and
director
and
the
assignment
of
the
payments
to
Steele’s
husband
who
is
a
recently
discharged
bankrupt;
2.
the
sale
of
the
motor
home;
3.
the
transfer
of
the
jeep
to
John
Steele
(the
husband)
in
September,
1995;
and
4.
the
conduct
of
John
Steele
during
the
seizure
by
the
deputy
sheriff
pursuant
to
the
jeopardy
order.
With
respect
to
each
of
these
transactions
Steele
deposes
that
in
1994
on
the
advice
of
the
accountant
for
Hotshot
to
her
and
as
a
result
of
this
transfer,
Steele
paid
an
additional
$9,000
in
income
tax
for
the
1994
year.
In
August
1995,
Steele
sold
the
motorhome
and
received
a
cheque
for
$61,000
jointly
payable
to
John
Steele
and
the
Bank
of
Nova
Scotia,
which
held
a
security
interest
in
the
motorhome.
Of
the
$61,000,
the
Bank
of
Nova
Scotia
was
repaid
$47,500.
With
the
consent
of
the
Bank
of
Nova
Scotia,
the
remaining
sale
proceeds
were
released
to
the
Steeles
and
$10,000
of
the
sale
proceeds
were
paid
to
the
Trustee
in
Bankruptcy
of
the
estate
of
John
Steele.
John
Steele
had
received
a
conditional
discharge
order
in
February,
1995,
Steele
registered
the
jeep
in
the
name
of
John
Steele
so
as
“to
reflect
the
fact
that
John
Steele
was
the
primary
user
of
the
vehicle”.
Counsel
for
Steele
submits
that
the
sale
of
the
motorhome
is
irrelevant
because
the
bank
held
the
security
interest
in
the
motorhome
and
that
it
was
only
the
largeness
of
the
bank
which
allowed
John
Steele
to
retain
$10,000
of
the
sale
proceeds
so
that
he
could
obtain
his
absolute
discharge.
Therefore,
because
of
the
security
interest
these
funds
would
not
have
been
available
to
the
Minister
in
any
event.
With
respect
to
the
transfer
of
the
jeep,
Steele
submits
that
this
was
non-arm’s
length
transaction
and
therefore
the
Minister
can
utilize
section
160
of
the
Income
Tax
Act
to
effect
collection
of
taxes
owing,
and,
therefore,
the
asset
has
not
been
put
out
of
the
reach
of
the
Minister.
The
assets
of
Hotshot
were
sold
in
July,
1995,
for
$150,000
payable
at
$2,500
per
month
for
60
months.
Hotshot
then
retained
John
Steele
to
provide
it
with
a
comprehensive
business
plan
which
would
assess
the
viability
of
a
business
similar
to
Hotshot
in
British
Columbia
and
Ontario.
In
October,
1995,
Hotshot
assigned
the
monthly
sale
proceeds
of
$2,500
to
John
Steele
for
compensation
payable
to
him
for
providing
this
business
plan.
Counsel
for
Steele
submits
that
the
transactions
with
respect
to
Hotshot
are
irrelevant
because
Steele
is
the
sole
shareholder
and
director,
but
the
payments
for
the
sale
of
the
assets
were
not
being
made
personally
to
Steele.
There
is
a
services
contract
between
John
Steele
and
Hotshot
which
evidences
the
assignment
of
the
sale
proceeds
to
John
Steele,
as
contractor,
for
the
preparation
of
the
comprehensive
business
plan.
The
Minister
files
further
affidavits
in
reply.
The
Minister
submits
that
even
though
the
transactions
are
non-arm’s
length,
they
are
relevant
because
they
show
that
Steele
is
disposing
of
assets.
Further,
the
Minister
submits
that
the
transactions
by
hotshot
are
relevant
because
following
the
sale
of
the
assets
and
the
assignment
of
the
proceeds
of
the
sale
to
John
Steele,
the
value
of
the
shares
is
greatly
diminished.
This
again,
the
Minister
argues,
shows
that
Steele
is
engaging
in
transactions
which
may
jeopardize
the
collection
of
amounts
which
in
the
final
result
may
be
owing
to
the
Minister
and
that
any
further
delays
will
jeopardize
the
collection
process.
James
Wytosky,
a
tax
collection
officer,
states
that
based
on
information
provided
to
him
in
April
1994
by
John
Steele
that
Hotshot
has
carried
on
business
using
approximately
50
leased
operators.
Wytosky
consulted
with
a
representative
of
E.M.
Brown
and
Associates,
a
consulting
firm
in
Saskatoon,
and
he
was
advised
that
the
estimated
fair
market
value
of
such
a
business
plan
for
a
transportation
company
that
conducts
operations
on
an
international
basis
like
Hotshot
would
be
at
its
highest,
worth
$6,000.
The
Minister
argues
that
the
assignment
of
the
proceeds
of
the
sale
of
the
assets
of
Hotshot
to
John
Steele
is
in
effect
the
assignment
of
the
only
valuable
corporate
asset
and
accordingly
Steele’s
shares
become
worthless
once
the
corporate
assets
are
transferred.
The
Minister
argues
that
this
is
a
factor
to
be
considered
in
deciding
whether
the
jeopardy
order
should
remain
in
effect.
The
Minister
filed
motor
vehicle
registration
searches
which
indicate
that
the
jeep
and
motorhome
were
never
registered
in
the
name
of
Hotshot
but
were
always
registered
at
motor
vehicles
in
the
personal
name(s)
of
Steele
or
her
husband.
The
Minister
submits
that
even
if
these
chattels
were
subject
to
the
bank’s
security
interest,
that
the
sale
of
the
motorhome
and
the
transfer
of
the
registration
of
the
jeep
into
John
Steele’s
name,
indicate
an
intention
by
Steele
to
move
assets
out
of
her
name
which
will
impede
the
collection
process
for
any
amount
of
debt
that
is
finally
ascertained
that
Steele
owes
to
the
Minister.
The
Minister
seized
the
books
and
records
of
Steele
and
315107
Saskatchewan
Ltd.
Pursuant
to
subsections
487
and
489
of
the
Criminal
Code,
R.S.C.
1985,
c.
C-46
in
March,
1995
and
Steele
had
notice
of
investigation
of
Steele
and
the
corporation.
The
Minister
submits
that
Steele
knew
she
was
being
investigated
and
this
together
with
the
transfer
of
assets
to
John
Steele
since
his
discharge
in
bankruptcy,
is
another
indic-
tor
that
Steele
is
attempting
to
move
assets
out
of
her
name
and
that
this
may
jeopardize
the
collections
of
any
amounts
finally
determined
to
be
owed
by
Steele
to
the
Minister.
The
last
complaint
is
that
when
Steele
was
served
with
the
jeopardy
order,
that
during
the
course
of
the
sheriff
seizing
assets,
John
Steele
drove
away
with
a
large
cargo
trailer
before
the
trailer
could
be
examined
for
contents.
When
the
trailer
was
later
delivered
to
the
sheriff
at
the
court
house,
the
trailer
was
empty.
The
Minister
wants
this
Court
to
infer
that
there
were
assets
in
the
trailer
that
were
subsequently
hidden
by
John
Steele.
The
net
result
based
on
all
the
evidence
filed
is
that
prior
to
these
transactions,
Steele
had
an
interest
in
the
jeep
and
motorhome,
both
which
were
subject
to
security
interest
registered
by
a
bank.
She
is
the
sole
shareholder
and
director
of
Hotshot,
which
corporation
had
assets
worth
at
least
$150,000.
Since
these
transactions,
Steele
no
longer
has
a
jeep
registered
in
her
name
and
the
motorhome
has
been
sold
and
from
the
proceeds
of
$61,000
the
sum
of
$47,500
was
used
to
reduce
debt.
The
corporate
asset
of
$150,000
has
been
assigned
to
John
Steele.
However,
as
these
transactions
are
non-arm’s
length
the
Minster
has
no
concern
with
respect
to
collection
because
of
the
effect
of
section
160
of
the
Income
Tax
Act.
For
all
these
reasons,
I
am
not
satisfied
on
the
evidence
that
it
is
more
likely
than
not
that
collection
would
be
jeopardized
by
delay.
Accordingly,
pursuant
to
subsection
225.2(11)
the
jeopardy
order
is
set
aside.
The
jeopardy
order
was
set
aside.
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