Jean-Guy Dubreuil v. Minister of National Revenue, [1993] 2 CTC 2004, [1993] 1 CTC 2094, [1993] DTC 540

Couture, C.T.C.C.J.:—This is an appeal from an assessment for the 1988 taxation year. The facts underlying the assessment are relatively simple.

The appellant was under a conditional judgment of divorce pronounced by the Quebec Superior Court in 1986. By the terms of that judgment, the appellant was obliged, inter alia, to pay his former wife alimony of $100 per week, which was subject to indexation.

It appears from an undated and unsigned document entitled "Transaction" [translation] which was produced by the appellant that in 1988 he and his former wife negotiated an agreement varying the operative parts of the judgment of the Superior Court with respect to alimony.

Although that document was not dated or signed, the appellant admitted in his testimony that it was the basis for a lump sum payment of $10,000 which he gave his former wife and claimed as a deduction in computing his income for the 1988 taxation year.

The relevant paragraphs read as follows:

2. The husband shall pay to the wife upon the final judgment of divorce being pronounced the sum of $10,000 as lump sum alimony, for which the wife gives the husband full and final discharge.

3. The wife expressly waives her right to any other alimony for herself, in any form whatsoever;

4. The parties mutually and reciprocally waive the benefits conferred on them both by their marriage contract and by their status as spouses;

5. The parties authorize their respective solicitors to file a statement of out-of- court settlement on the record in the Court of Appeal, each party to pay his or her own costs;

6. The wife undertakes to file an application for a final judgment of divorce in the Superior Court without delay, at her own expense;

7. The parties reciprocally undertake to sign any document required to give effect hereto;

[Translation.]

In assessing the appellant, the respondent disallowed the deduction in question, on the ground that the amount paid was not alimony or an allowance payable on a periodic basis as required by the provisions of paragraphs 60(b) and 60(c) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

Were it not for the provisions of paragraphs 60(b) and 60(c) the payment of alimony or an allowance to a person would not be deductible in computing the payer's income. Similarly, it would not be taxable in the hands of the person who receives it were it not for paragraphs 56(1)(b) and 56(1)(c). It would be quite simply a payment in the nature of capital.

In order for such alimony or such an allowance to be deductible, it must be payable in accordance with the strict requirements of the legislation. The legislation requires that alimony or an allowance be payable on a periodic basis in order for the payer to be able to deduct it in computing his or her income for a taxation year.

Paragraphs 60(b) and (c) read as follows:

60 (b) Alimony payments.—an amount paid by the taxpayer in the year, pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written agreement, as alimony or other allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the marriage, or both the recipient and the children of the marriage, if he was living apart from, and was separated pursuant to a divorce, judicial separation or written separation agreement from, his spouse or former spouse to whom he was required to make the payment at the time the payment was made and throughout the remainder of the year.

(c) an amount paid by the taxpayer in the year, pursuant to an order of a competent tribunal, as an allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the recipient, or both the recipient and children of the recipient if, at the time the payment was made and throughout the remain- der of the year, he was living apart from his spouse to whom he was required to make the payment.

The deductibility of a payment of a lump sum as alimony was considered by the Supreme Court of Canada in M.N.R. v. Armstrong, [1956] S.C.R. 446, [1956] C.T.C. 93, 56 D.T.C. 1044. The facts were summarized as follows:

The respondent was divorced by his wife in 1948. The divorce decree provided for the payment of $100 monthly to his wife for the maintenance of their daughter until she reached the age of sixteen years. The payments ordered were made until the summer of 1950. At that time his wife accepted a lump sum of $4,000 in full settlement of all amounts payable in the future. The Minister disallowed the deduction of this lump sum payment from the respondent's 1950 income. Both the Appeal Board (7 Tax A.B.C. 264, 52 D.T.C. 414) and the Exchequer Court ([1954] C.T.C. 236, 54 D.T.C. 1104) ruled in favour of the taxpayer. The Minister appealed to the Supreme Court.

The appeal was allowed.

The Honourable Mr. Justice Kellock stated, in his reasons at page 95 C.T.C. (D.T.C. 1045):

If, for example, the respondent had agreed with his wife that he should purchase for her a house in return for a release of all further liability under the decree, the purchase price could not, by any stretch of language, be brought within the section. The same principle must apply to a lump sum paid directly to the wife to purchase the release. Such an outlay made in commutation of the periodic sums payable under the decree is in the nature of a capital payment to which the statute does not extend.

It seems clear to me, on the evidence, that the $10,000 payment made by the appellant to his former wife was made not under the judgment of the Superior Court, but under the terms of a subsequent agreement between the parties, and that there was no provision in that agreement for payment on a periodic basis. On the contrary, the relevant paragraph stipulates payment of a lump sum, which does not comply with the requirements of paragraphs 60(b) and (c).

Moreover, it seems to me to be indisputable that the payment in question was made by the appellant in order to terminate his obligations to his former wife under the judgment of the Superior Court, and not as alimony or other allowance.

In the circumstances, it is impossible for me to accept the appellant's arguments with respect to the deduction of this payment, since it was not a payment on a periodic basis, and moreover, as the Supreme Court held, it was in the nature of a capital payment for which the legislation does not authorize a deduction.

For these reasons, the appeal is dismissed.

Appeal dismissed.

Jacques Alain v. Her Majesty The Queen (informal procedure)

[Indexed as: Alain (J.) v. Canada]

Tax Court of Canada (Tremblay T.C.C.J.), September 30, 1992 (Court File No. 92-1474).

Income tax—Federal—Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72,

c. 63)—163(2), (3)—Unreported income—Deductibility of interest and penalties paid

The Minister reassessed the appellant for his 1986 to 1989 taxation years by disallowing deductions claimed for interest and penalties paid on account of a provincial tax assessment. The appellant also claimed a deduction for road building and garage expenses and contended that the Minister failed to take into account certain invoices which were dirty and hard to read. The reassessment also added to the appellant's income the value of an apartment which he lived in rent-free and which was owned by R Ltd of which the appellant was a shareholder. Revenue from the sale of timber was also added to the appellant's income, and penalties were assessed. The appellant appealed.

HELD:

The Court found that the appellant was not a credible witness. It disallowed the deductions claimed and accepted evidence that the appellant had received and cashed cheques as payment for the timber which he sold even though the cheques were in the name of Jacquelin Jacques. It ruled that the appellant had knowingly failed to include the amount of the timber sales in his income which justified the penalties which were assessed against him. Appeal dismissed.

The appellant appeared on his own behalf.

Louis Tassé for the respondent.

Cases referred to:

Johnston v. M.N.R., [1948] S.C.R. 486, [1948] C.T.C. 195, 3 D.T.C. 1182.

Tremblay, T.C.C.J.:—This case was heard under the informal procedure on September 18,1992, in Québec City, Quebec.

1. Point at issue

According to the notice of appeal and the reply to the notice of appeal, the point for determination is whether the appellant was correct, first, in deducting from taxable income for 1986 the sum of $11,731 as a non-capital loss carryback from 1987 and, second, in not including the sums of $25,559, $4,821 and $15,288 in the calculation of income for the 1987, 1988 and 1989 taxation years respectively.

According to the respondent, the income was determined roughly from sales of timber not included, expenses claimed and disallowed and benefits received from a company in which he was a shareholder.

A penalty of $1,043.17 was also assessed by the respondent under subsection 163(2) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

2. Burden of proof

2.01 The burden is on the appellant to show that the respondent's assessments are incorrect. This burden of proof results from a number of judicial decisions, including the judgment by the Supreme Court of Canada in Johnston v. M.N.R., [1948] S.C.R. 486, [1948] C.T.C. 195, 3 D.T.C. 1182.

2.02 The facts assumed by the respondent in the instant case are described in subparagraphs (a) to (o) of paragraph 3 of the reply to the notice of appeal. They read as follows:

3. In computing this reassessment, the Minister took for granted, in particular, the following facts:

(a) during the years in issue, the appellant was a shareholder of Résidences funéraires St-Raymond Inc.” (the"corporation"); [admitted]

(b) in the 1988 taxation year, the corporation was the owner of an apartment in which the appellant lived during the entire year; [admitted]

(c) no rent was paid to the corporation by the appellant for the said apartment; [admitted]

(d) the fair market value of the rent of that apartment was $3,600 for the 1988 taxation year. The corporation thus conferred a benefit of $3,600 on the appellant as a shareholder; [admitted]

(e) in the 1989 taxation year, the corporation granted a benefit of $6,220 to the appellant as a shareholder. That benefit arose from the following accounting entries:

Cash	$6,219.47
Director advances	$6,219.47

These entries should have credited "Revenue" since the corporation's revenue had been underestimated as follows:

Rent	$3,950
Funeral revenue	$2,269.47
TOTAL	$6,219.47	[denied]

(f) during the 1989 taxation year, the shareholder received loans granted by the corporation totalling $8,348; ("Maybe" [translation]]

(g) during the period in issue, the appellant also operated a logging business and had rental income; [admitted]

(h) when he declared his income for the 1987 taxation year, the appellant did

not include all the income he had received during that year; [denied]

(i) during the 1987 taxation year, the appellant sold timber to "Industries Grondin Ltée” for the following amounts:

17/08/1987	invoice no. 5084	$11,182.05
31/08/1987	invoice no. 5132	$11,192.37

The cheques totalling $22,374.42 issued in payment of these sales [sic] were cashed by the appellant, but the latter did not declare them as income; [denied]

(j) in thus failing to declare his logging income, the appellant knowingly or under circumstances amounting to gross negligence made or participated in, assented to or acquiesced in the making of, a false statement or omission in the income tax return filed for the 1987 taxation year, as a result of which the tax that he would have been required to pay based on the information provided in the income tax return filed for that year was less than the amount of tax to be paid for that year; [denied]

(k) during the 1987 taxation year, the appellant received a provincial income tax assessment including a penalty and interest. The appellant claimed that penalty and that interest totalling $3,184.43 as a business expense; [ignored]

(l) during the 1988 taxation year, the appellant claimed an expense of $500.69 in respect of the digging of a field at Val des Pins; [admitted because it was for a road to be built]

(m) the expenses incurred by the appellant and described in subparagraphs (k) and (I) were not incurred for the purpose of earning income from a business or property or of making a business or property generate income, but rather constituted personal or living expenses of the appellant; [denied]

(n) as a forestry producer, the appellant received the amounts of $720.43 in 1988 and $720.43 in 1989 from the Ministry of Energy and Resources under the property tax reimbursement program. The appellant claimed the total property taxes as business expenses, without reducing the amount by the sums received in reimbursement; [ignored]

(o) the appellant carried a non-capital loss of $11,731 incurred during the 1987 taxation year back to the 1986 taxation year. As a result of the appellant's reassessment by the Minister, this loss carry-back was disallowed because there was no longer any non-capital loss incurred in 1987 and therefore no amount to carry back to the 1986 taxation year." [ignored]

[Translation.]

2.03 The burden of proof with respect to the penalty assessed under subsection 163(2) of the Act, however, is on the respondent's shoulders under subsection 163(3).

3. Facts

3.01 At the very start of his testimony, the appellant informed the Court that he did not know how to read.

3.02 Concerning his logging business, the appellant maintained that he owned 1,000 hectares of wood lots. Those lots were allegedly located in Portneuf and Beauport. He did not have any in Stoneham. Nor did he know a Mrs. Christiane Arsenault of that place.

3.03 According to him, logging was not profitable. He did it for fun. Roads had to be built in order to haul out the timber, which resulted in expenses. However, according to the statements of profit and loss appended to the returns, gross profits totalled $73,032 in 1986, $12,927 in 1987, $33,385 in 1988 and $62,116 in 1989. According to him, what little timber he produced was allegedly sold to the Union des producteurs agricoles (U.P.A.). He argued that he did not know Les Industries Grondin Ltée (Grondin) of Ste-Marie de Beauce, even though the respondent had filed documents (statements of account and cheques) as Exhibits 1-1 and 1-2 issued by that company and referring to purchases made from the appellant for the amount of $22,374.42 and a cheque for the same amount issued to the order of the appellant. Statement of account no. 4970 shows that 103,660 feet of timber (73,369 + 30,291) were sold. Against his income from timber sales in 1988, the appellant had claimed, inter alia, an expense of $500.69 for work done by Les Entreprises Victorin Noreau Inc., whose invoice was dated June 20, 1988 (Exhibit I-4). In particular, there were four hours of work at $50 an hour and one truck for one hour to transport stumps ($42.50). There was also one load of crushed stone spread with a backhoe. All this work was allegedly done in Val des Pins. According to the appellant, its purpose was to build a road in order to haul out timber. In addition to the $500.69, there was allegedly an expense of $720.31 for the purchase and spreading of gravel in order to maintain the roads. Lastly, concerning the sale of wood, the appellant argued that the profit from the sale of trees that had fallen down was tax exempt.

3.04 The appellant also said he was an ambulance man. He was allegedly the proprietor of Ambulances St-Raymond de Portneuf. He owned that business during the years in issue and still does today.

3.05 The appellant argued that he was a shareholder in“ Résidences funéraires St-Raymond Inc.” during the years in issue, but not any longer. It is his wife Madeleine Boutet who directs that company.

3.06 The appellant filed 22 invoices from various garages jointly under the number A-1:

—11 invoices from Garage du Coin Inc., of St-Raymond de Portneuf, totalling $4,663;

—six invoices from Garage Lionel Moisan, of St-Raymond de Portneuf, totalling $2,586;

—one invoice on which the name of the garage owner did not appear in print, but was written by hand, along with the address, J. Robert, Roy Street, for $505;

—one invoice of the same kind, written by hand, in the name of Roland Paquet, but without an address, for $1,774;

—one invoice of the same kind from Raymond Roy, Côté Street, in St-Jules, for $1,225;

—one final invoice of the same kind, in the name of Raymond Côté, Camille Street, in Ste-Madeleine; amount illegible.

The customer's name did not appear on any of the 17 copies of invoices issued by Garage du Coin or Garage Lionel Moisan. The originals were also very dirty. According to the appellant, the invoices were allegedly left in his truck and stained with oil or grease.

The customer’s name, that is Jacques Alain or J. Alain or Al lai n, can be read on the other five invoices.

Of all these invoices, six concerned 1987, eight 1988 and eight 1989. The appellant argued that the respondent had refused to take these expenses into account.

3.07 As part of Exhibit A-1, the appellant also filed photocopies of two documents as contracts.

The first document concerned the sale of a mechanical shovel manufactured in 1980, bearing the number MS5070102205 for the amount of $23,500. The name of the vendor, Jacques Alain, is fairly legible. The name of the purchaser is illegible. One sentence in the body of the letter reads: “The sum of $23,500 will be paid by the cheques from the sale of wood of saw [sic] sawn timber” [translation]. By way of a date, one can read only "1987".

The second document reads: "Return shovel 1980 no. MS5070102205 poor condition return total sum $23,500. Donor: illegible. Donee: Jacques Alain” [translation]. Here again, the only date was"1987".

The appellant testified on this subject that the other party consisted of three persons whose names he did not remember. He argued that he repaid the donor in cash. The purchasers had previously written a cheque in payment of the sale [sic].

3.08 In summary form, the respondent's claim in respect of the years in issue is as follows:

Paragraph 3 of the reply to the notice of appeal cited above (2.02) provides the basis for the respondent's claim. The latter summoned four witnesses.

3.08.1 In 1986, the appellant claimed a loss of $11,731, which he allegedly incurred in 1987, against income for that year. The financial statement appended to his return for this last year shows gross income of $12,927 from timber sales. Against that income, he claimed expenses of $27,359 (gasoline, repairs: $12,759; bank interest: $4,534; wages and social benefits: $3,239; trucking: $4,931, etc.), yielding a net loss of $24,432. The accounting firm of Bernier, Mercier, Desrosiers stated that the information provided by the taxpayer was not audited. To determine whether this loss was valid, we must examine the respondent's position, considering income for 1987.

3.08.2 1987

3.08.2 (1) The amount of $22,374.42 from timber sales which the respondent included in income comes from Exhibits 1-1 and 1-2 (3.03), which the respondent's auditor, Mr. Mercier, found when auditing the books of the company Grondin. These two exhibits dated July 6, 1987 (statement of account no. 4970) and July 7, 1987 (cheque no. 5560) were cancelled. They also appeared as cancelled in Exhibit 1-6, which was a list of Grondin's log suppliers (with dates, quantities of timber, price paid and statement of account number). Reference was made to the cancelled sale in statement of account no. 4970 and cheque no. 5560 in the amount of $22,374.42. The recorded quantity of timber sold was 103,660.

Exhibit 1-7 was also a list of Grondin’s log suppliers. It shows that, on August 19, 1987, a supplier named Jacquelin Jacques apparently sold 51,625 feet of timber (invoice no. 5084) for $11,182.05. Cheque no. 5890 for this amount was issued the same day to Jacquelin Jacques. On August 31, 1987, the same individual allegedly sold Grondin 52,035 feet of timber (invoice no. 5132) for the sum of $11,192.37. A cheque for that amount (no. 12) was issued to Jacquelin Jacques that same day. The number of feet of timber sold was itemized in Exhibit 1-8 (invoice nos. 5084 and 5132):

Invoice no. 5084

34,585 feet (fir, spruce, 12')

17,040 feet (fir, spruce, 14’, 16’)

51,625

Invoice no. 5132

38,784 feet (fir, spruce, 12')

13,251 feet (fir, spruce, 14', 16')

52,035

[Translation.]

The total number of feet of timber sold was thus 103,660, that is the same that, on the statement of account, cancels [sic] that bearing the no. 4970 above.

3.08.2 (2) With respect to the two above-mentioned cheques for $11,182.05 (no. 5890) and $11,192.37 (no. 5132), Mrs. Christiane Arsenault of Stoneham testified that she was co-proprietor with her husband of the convenience store in that place, that she had known the appellant since 1979 and that, on September 18, 1987, she had cashed a cheque (no. 12) dated August 17, 1987 to the order of Jacquelin Jacques for $11,182.05 at the Stoneham Caisse populaire. On September 25, 1987, she also cashed a cheque dated August 31,1987 to the order of Jacquelin Jacques for $11,192.77. Exhibit 1-3 showed a photocopying of the two cheques:

—the signatures of Jacquelin Jacques and Chris [sic] Arsenault can be read very clearly on the front and back of both cheques;

—according to Mrs. Arsenault, the appellant was the same person who had signed Jacquelin Jacques and it was to him that she had remitted the cash amounts after picking them up at the Caisse populaire.

3.08.2 (3) With regard to these timber sales in the amount of $22,374.42, it appears from Exhibit I-5 that the transportation of the 103,660 feet of wood was done by Mr. Marcel L. Denis. It cost $5,183. The 16 statements of account issued by Grondin to acknowledge receipt of the logs along with the number of feet purchased from the lots of Jacques Alain in Stoneham were part of Exhibit 1-5.

3.08.2 (4) It therefore appears clear that the appellant and Jacquelin Jacques were the same person. Furthermore, the sum of $22,374.42, which is the amount on the statement of account no. 4970 and on cheque no. 5560, also represents the total of the two cheques cashed in August, that is $11,182.05 + $11,192.77 $22,374.42 [sic]. That sum was properly included in the appellant's income for 1987.

3.08.2 (5) Still with regard to 1987, the sum of $3,184.43 appears among the interest expenses in the business expenses which the appellant claimed. However, this sum consists of penalties and interest assessed by the provincial Minister of Revenue. The appellant submitted no evidence to the contrary. The assumption of fact stated above (2.02:3(k)) stands.

3.08.2 (6) It therefore appears from the two preceding paragraphs that total income of $25,559 ($22,374 + $3,185) is to be added to the income for 1987, thus offsetting the loss of $24,432 (3.08.1) as well as the loss carry-back of $11,731 for 1986.

3.08.3 1988

3.08.3 (1) A first amount of $1,221 in expenses claimed was disallowed by the respondent for 1988.

This amount of $1,221 consisted of the sum of $500.69 (Exhibit 1-4) and an amount of $720.31 for a load of gravel, all of which was to be used to build and maintain roads (3.03). With regard to the amount of $500.69, examination of Exhibit 1-4 shows that the three hours of work done by a backhoe concerned, inter alia, the digging of a disposal field, which in itself had nothing to do with the construction and maintenance of roads in the forest. Mrs. Madeleine Boutet told the respondent's auditors that this expense (Exhibit 1-4) was one concerning her own cottage located in Val des Pins. That confirmed that the removal of the tree stumps and loads of stone described in Exhibit I-4 were also work for the cottage. The amount at issue, then, is a personal expense, not an expense incurred in order to earn income, and one therefore not deductible.

As for the amount of $720.31, the reason described by the respondent in subparagraph 3(n) of the reply to the notice of appeal cited in paragraph 2.02 of this decision was simply ignored by the appellant. He submitted no evidence to rebut the auditor’s evidence confirming the content of that subparagraph, that is that the appellant had claimed the property taxes as an expense, even though that expense had been reimbursed by the Minister of Energy and Resources.

3.08.3 (2) Still with respect to 1988, the sum of $3,600 was added to income because of the benefit which the appellant received by living in a dwelling which Résidences funéraires St-Raymond owned, which was admitted by the appellant (2.02:3(a), (b), (c), (d)).

3.08.3 (3) It appears from the appellant’s return that, in that year, 1988, gross profit from the sale of timber was $33,385, and expenses were $52,463, yielding a business loss of $19,078. The accountant emphasized that he had accepted the appellant's figures without auditing them. The respondent did not dispute the above figures.

3.08.4 1989

3.08.4 (1) The sum of $720.31 added in 1989 was of the same nature as ‘that claimed in 1988 and included in the sum of $1,221 (3.08.3(1)) and was described in subparagraph 3(n) of the reply to the notice of appeal (2.02).

3.08.4 (2) The sum of $6,220 added to the appellant's income in 1989 was a sum received by him, but was in fact income of Résidences funéraires St-Raymond in the form of rental income ($3,950) and in so-called "funeral" income ($2,269.47) (2.02:3(e)). The appellant submitted no rebuttal evidence.

3.08.4 (3) The amount of $8,348 consists of two loans made to the appellant by Résidences funéraires St-Raymond, which the appellant did not deny (2.03:3(f)). The evidence suggests that these loans were not repaid within the legal time limit. The appellant submitted no evidence to the contrary.

3.08.4 (4) It appears that the gross profit from the sale of timber in 1989 was $62,116 and the net income, $748.20. The accountant had done no audit. The respondent did not dispute the figures.

3.09 After completing their audit work, the respondent's auditors met with the appellant's accountant, Mr. Desrosiers, to explain to him how they had arrived at the additional income. The latter agreed to all the changes.

The Court asked the appellant why he had not summoned his accountant as a witness. He answered that he had not wanted to come. There is no doubt that, based on the evidence adduced, the amounts included in income for the years in dispute, 1987 to 1989, must be maintained and that the loss carry-back in the computation of taxable income for 1986 must be disallowed (3.08.2(6)).

3.10 Penalty

The penalty of $1,043.17 assessed by the respondent in respect of the sum of $22,374.42 included in income in 1987 (3.08.2(1), (2), (3), (4)) under paragraph 163(2)(a) of the Act must be maintained. This provision reads as follows:

163 (2) False statements or omissions.—Every person who, knowingly, or under circumstances amounting to gross negligence in the carrying out of any duty or obligation imposed by or under this Act, has made or has participated in, assented to or acquiesced in the making of a false statement or omission in a return, form, certificate, statement or answer (in this section referred to as a "return") filed or made in respect of a taxation year as required by or under this Act or a regulation, is liable to a penalty of

(a) 25 per cent of the amount, if any, by which. . . .

There is no doubt in my mind that the appellant knowingly failed to claim the sum of $22,374.42.

Why was the cheque of July 7,1987 for $22,374.42 in his name cancelled and replaced in August 1987 by two cheques totalling $22,374.42?

Why were these two cheques in the name of Jacquelin Jacques? Why did Jacquelin Jacques, who was the same person as Jacques Alain, cash both cheques for cash? Why did he deny knowing Mrs. Christiane Arsenault (3.2) when she herself had known him since 1979 (3.08.2(2))? Why did the appellant deny owning wood lots in Stoneham (3.02), when he sold 103,600 feet of timber from those lots (3.08.2(3))?

Why did he deny knowing Les Industries Grondin Ltée (3.03) when he sold them $22,374.42 worth of timber (3.08.2)?

The Court must find that he has no credibility and that the penalty was well justified. The amount of the penalty was determined in accordance with the Act (Exhibit 1-10).

4, Recommendations

The appellant complained that he suffered an injustice because the respondent refused to consider the garage expenses spread over the years 1987, 1988 and 1989 and described in paragraph 3.06.

If such is the case, the Court understands the respondent's position because 17 of the 22 invoices do not bear the name of the client, that is of the appellant. Given the latter's lack of credibility, it would be better that these documents were forgotten.

The Court is nevertheless prepared to recommend that the respondent review these invoices, but on the following conditions:

1. Because of the harassment of the respondent's auditors by the appellant or by one of his friends for him, evidence of which was submitted, discussions concerning these invoices shall take place through the appellant's accountant.

2. The expense described in each invoice shall be identified with respect to each piece of machinery and each source of income (ambulance, timber, possibly even Résidences funéraires St-Raymond). Furthermore, the 17 unidentified invoices in the appellant's name shall be so identified by the garage owner involved.

3. The appellant shall remit the invoices thus identified to his accountant within three weeks of the mailing of this decision. The respondent's auditor will communicate with the accountant at the end of that time. If the accountant does not have the documents in hand duly classified and identified, the present recommendation shall become null and void.

5. Conclusion

The appeal is dismissed subject to the above recommendations.

Appeal dismissed.