Barbara Segal v. Minister of National Revenue, [1992] 2 CTC 2514, 92 DTC 2202

Tremblay, T.C.C.J.:—This appeal was heard on March 22, 1991 and on May 29,1992 at the city of Montreal (Quebec).

1. Point at issue

The point at issue is whether the appellant is responsible for the debt of $51,680.20 owed by her husband Mr. Norman Barmash to the respondent for the 1975, 1976, 1977, 1980 and 1981 taxation years.

According to the respondent, in December 1986 Mr. Norman Barmash transferred to the appellant's bank account (Banque Nationale de Paris) the sum of $50,000 and on February 27, 1987, the sum of $12,500. Therefore, the respondent concluded that pursuant to paragraph 160(1)(e) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"), the transferee must pay to the respondent the debt of the transferor.

The appellant transferee contends that the sum of $50,000 transferred to her on December 11, 1986 was repayment of an advance made by her to Norman Barmash (her present husband).

2. Burden of proof

2.01 The burden of proof is on the appellant to show that the respondent's reassessments are incorrect. This burden of proof results particularly from several judicial decisions, including the judgment delivered 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 In the same judgment, the Court decided that the assumed facts on which the respondent based his reassessments were also deemed to be correct. In the present case, the assumed facts are described in paragraphs 2(a) to (h) of the repy to notice of appeal as follows:

2. In assessing the appellant, the Minister of National Revenue relied, inter alia, on the following assumption of facts:

(a) Mr. Norman Barmash (also known as Norman Burmash and Norman Bar- mish) is indebted towards the Crown for income tax, interest and penalties in respect to his 1975, 1976, 1977, 1980 and 1981 taxation years; [admitted]

(b) as of June 1, 1987 Mr. Norman Barmash’s fiscal debt represented the following amounts:

Date of

assessment Year Income tax Penalties Interest* Total

11-06-76 1975 — $ 5,236.00 $ 5,236.00

—

"‘ additional interest of $2,298.84 is to be added up to January 12, 1988 which raises the total debt to $51,680.20.

(c) on December 11, 1986 Mr. Norman Barmash deposited the sum of $50,000 in appellant's bank account at Banque Nationale de Paris; [admitted]

(d) on February 27, 1987, Mr. Norman Barmash also deposited an additional sum of $12,500 in appellant's bank account at Banque Nationale de Paris; [admitted]

(e) consequently, Mr. Norman Barmash (the transferor) transferred to appellant (the transferee) the sum of $62,500; [admitted]

(f) at the time of the transfers appellant gave no consideration for the amount of $62,500; [denied]

(g) at the time of the transfers, appellant and Mr. Norman Barmash were not dealing at arm's length [denied] or alternatively, appellant is a person who has since become the legal spouse of Mr. Norman Barmash; [admitted]

(h) appellant (the transferee) is jointly and severally liable to pay an amount of $51,680.20 owing by the transferor; [denied]

3. Facts

The facts and circumstances leading to the present case may be summarized as follows:

3.01 Mr. Norman Barmash, the appellant's husband, is indebted to the Crown for income tax interest and penalties in respect of his 1975, 1976, 1977, 1980 and 1981 taxation years for the amount of $51,680.20.

3.02 On December 11, 1986, Mr. Barmash deposited $50,000 in the appellant's bank account. On February 27, 1987, he also deposited an additional $12,500 in the same bank account for a total of $62,500 (Exhibit R-5).

3.03 On January 5, 1987, Mr. Barmash and the appellant Mrs. Barbara Segal were married in Palm Beach, Florida (Exhibits A-3 and A-5). They had already been living together for approximately three or four years.

Around the end of 1983, the appellant's mother, Mrs. Policoff, became ill. Mr. Barmash and the appellant moved in with her to take care of her. At that time, Mrs. Policoff had her house in Outremont (Quebec).

3.04 In 1986, Mr. Barmash took care of selling Mrs. Policoff's house. She got $131,000 for it. He also purchased on behalf of Mrs. Policoff the present house in Westmount for the amount of $510, 000 (Exhibit A-11). The three of them are still living in that house.

From the evidence, the appellant's mother appears to be a wealthy woman.

3.05 During the hearing, Mr. Barmash testified that since he suffered a heart attack in 1982, he has not worked much. When he did, it was not financially profitable. However, prior to 1982, Mr. Barmash was always active in the automobile business. He had a dealership in Montreal and also one in Calgary.

3.06 In 1984, the appellant gave Mr. Barmash a power of attorney which gave him the authority to withdraw money and draw cheques from her bank account. Furthermore, he was granted power of attorney from Mrs. Policoff. In consequence, he had power to withdraw money from and draw cheques on both accounts.

3.07 The appellant testified that she has never worked for money. Her financial resources came substantially from her mother and from the money her ex- husband undertook to pay her in the conditional judgment of divorce dated October 8, 1980 (Exhibit A-6). A part of it also came from Empire Auctioneers from whom she sold furniture (Exhibit A-9).

Her ex-husband undertook to pay her $32,000 annually plus $7,000 per annum to put in the R.R.S.P. and a lump sum payment of $100,000. He respected his engagement for about three years (from 1980 until 1983). However, concerning the lump payment of $100,000, both parties made a final settlement for the sum of $18,000.

3.08 The appellant testified that she was not aware of what was going in and going out. Her husband, Mr. Barmash, had a power of attorney. He could do whatever he wanted, she trusted him.

She also testified that from time to time her mother would deposit in her bank account different sums of money. But she does not know how much money she may have received from her mother every year.

3.09 Exhibit R-3 shows a list of cheques deposited by Norman Burmash in the bank account of Mrs. Barbara Segal at Banque Nationale de Paris.

All of the cheques listed arise from Capitol Auto Center, Location Quartier Nord, Gaby Popper or from Empire Auctioneers.

3.10 Empire Auctioneers is a business that sells people's goods in public auctions in return for a commission.

Through Empire Auctioneers, the appellant sold several items (Exhibits A-1, A-2) and furniture for about $18,000.

3.11 As to Capitol Auto Center and Location Quartier Nord, both companies were owned by Mr. Dubrofsky whom Mr. Barmash has known for several years and with whom he has been involved in car dealing.

As to Mr. Popper, Mr. Barmash testified that he was “also someone with whom he has exchanged a couple of cheques” (Exhibit R-3).

3.12 Exhibit R-3 demonstrated that the total amount of the cheques made by Capitol Auto Center came to $95,795, from Location Quartier Nord, $16,650 and from Gaby Popper, $68,525.

3.13 Barbara Segal was the beneficiary of all the cheques deposited in her bank account. During the cross-examination by the respondent, Mr. Barmash explained the circumstances of these deposits as follows: (T.S., page 96)

HIS HONOUR: What is the signature on the cheque, the first cheque?

WITNESS: A. It's Ruben Dubrofsky, the gentleman whose name I gave you earlier from Capitol Auto Center or Location Quartier Nord.

HIS HONOUR: Centre d'autos Capitol?

WITNESS: A. That is correct.

Me BEDIRIAN:

Q. Tab 2, and we have, the first page was the accounting voucher of the bank?

A. Yes, that means it was a postdated cheque.

Q. Yes. And we have here the cheque of October. . .

A. Second (2nd).

Q. Nineteen eighty-six (1986) of twelve hundred dollars ($1,200)?

A. That's another postdated cheque, that’s the same postdated cheque. In other words, this again shows, Your Honour that they would give me a cheque which I would hold for several days and I would give it to the bank and deposit it on the due date, they would then charge me a three dollar ($3) charge which was usual for depositing the cheque for you on its due date.

Q. So why was this deposited in the bank account of Barbara Segal?

A. Barbara Segal had some money in her account and I had no account of my own. In effect Barbara Segal was lending him the, exchanging cheques with him for a few days, for three (3) days, four (4) days at a time, he would then give me postdated cheques to replace the amounts.

In other words I would give him a cheque for twelve hundred dollars ($1,200) for example. He would give me a cheque back, say five (5) days later, dated five (5) days later for the temporary loan of that twelve hundred dollars ($1,200) and that's where these cheques are deposited from.

Q. What is the purpose of this cheque exchange between you. . .

A. It was obvious he was short of money temporarily and he would borrow, exchange cheques with me, that's what it was for. I wasn't giving them to him.

3.14 A little further (T.S., page 106), he added:

Me BEDIRIAN: Q. We have another cheque of. . .

A. Twelve hundred dollars ($1,200), that was part of a series of cheques. _. .

Q. Made also by. . .

A. Ruben Dubrofsky, endorsed by me.

Q. This was made in the name of Barbara Segal and endorsed by you and deposited?

A. Correct.

Q. So all the dealings with Centre d'Autos, with Mr. Dubrofsky, his two (2) companies, these were income from business or whether exchange of cheques?

A. No, they were exchange of cheques, they weren't income.

Q. You never sold a car?

A. No, I didn't sell any cars. I would sell occasionally to premium customers and we were friends. His father and my father had been partners forty (40) years previously, they were very close friends and I grew up with him. But they wouldn't, if I could find the records or if we can get them through the bank, Your Honour, you will see cheques outgoing from the account to cover all these.

Q. Okay, I'll go to Tab 14 now. Now I have a cheque made to the order of Barbara Segal for five thousand dollars ($5,000), the Centre d’autos Capitol Inc.?

A. M-m.

Q. Cheque made by Ruben Dubrofsky and this indicates it’s for a Sierra nineteen eighty-three (1983) on the cheque?

A. I don’t know why he would write anything on this cheque, that wasn't my problem.

HIS HONOUR: Where do you find that?

THE WITNESS: In the lower left-hand corner.

HIS HONOUR: Nineteen eighty-three (1983) Sierra?

WITNESS: A. That presumably would be an Oldsmobile Sierra, Your Honour. I never owned an Oldsmobile Sierra Your Honour, I never owned one. How he writes it on his cheque I suppose is his own internal thing but I never owned an Oldsmobile Sierra for him to pay me that. I suppose that was his reason for his cheque, to give a reason why he was writing the cheques, because he was writing me a lot of cheques.

3.15 In consequence, Mr. Barmash testified that most of the cheques he got from Mr. Dubrofsky and others (Exhibit R-3) were almost exclusively exchanges of cheques.

As he explained, he would loan to Mr. Dubrofsky amounts of money that he would take out from Barbara Segal’s bank account and immediately, Mr. Dubrofsky would sign him postdated cheques for the same amounts.

3.16 He did explain the cheques exchange by the fact that Mr. Dubrofsky was always short of money.

Q. What's the purpose of exchanging cheques?

A. Because he was always short of money. He would change, what it was is he would have a roll, you know, he would, every few days or every day he would give me cheques and then give me, take a cheque from me and give me a cheque for two (2) or three (3) days later and so that he could keep up with his, subsequently that’s what put him out of business is he owed so much money to so many people that he could no longer keep it up.

3.17 Mr. Barmash explained the fact that many amounts on the cheques were the same and that for a loan of $3,000 for example, the loaner (Dubrofsky) would give him back five cheques of $600, each based over a certain period of time.

3.18 Moreover, he testified that the cheques were all made out to Barbara Segal's name because the money loaned was hers. Although, he also admitted that during this period, he had substantial money problems and a lot of creditors were after him. Accordingly, that certainly explains why at the time he did not have any bank account,"he did not want to put anything in his name”, testified the appellant. However, Mr. Barmash testified that the moneys used by him were mostly his mother-in-law's or his wife's or Ruben Dubrofsky's or Paul Smith's. . ., or a combination of those thereof (3.08).

3.19 The sums of $50,000 and $12,500. During the cross-examination, Mr. Barmash explained that the specific amount of money of $50,000 was a loan from Paul Smith used to pay back Barbara Segal for the aggregate sums of money that he had borrowed her over a two-year period.

Mr. Barmash testified that “the $50,000 was a part of a loan from Mr. Smith. That's part of what Mr. Smith at a later time sued me for". (T.S., page 150) That cheque was made to Mr. Barmash and deposited in Barbara Segal's bank account (Exhibit R-5). On December 31, 1986, the same amount of $50,000 was debited from the account (Exhibit A-10).

3.20 As to the amount of $12,500, he explained that it was a deposit originally given by Mrs. Policoff as a down payment on the property in Westmount which she has later purchased. That money was then returned.

He contends that even if the cheque was made in his name (Exhibit R-5), it was for Mrs. Policoff. This cheque was from Mr. Shadeed, representative of the Sheik from whom Mrs. Policoff bought the house.

Mr. Barmash testified that at that time he had a signing authority on Mrs. Policoff's behalf for quite a while (3.06).

3.21 The detailed statement of Banque Nationale de Paris of the appellant shows that on December 11, 1986, the sum of $50,000 was deposited in the appellant's account (Exhibit A-10).

Then, on January 5, 1987, an equal sum of $50,000 was withdrawn from the account.

The statement also shows that on February 27, 1987, the sum of $12,500 was deposited in the account.

3.22 On January 18, 1990, Mr. Barmash was examined on discovery after plea in the case of Ace Finance Corporation Limitée, plaintiff, versus Normand Barmash and Ruby Dubrofsky, and 2426-8237 Québec Inc., defendant and Motor Automa Inc., third party and Sara Policoff and Les Motos et Autos M.A. Inc., interveners (Exhibit R-4).

The relevant passage of the examination reads as follows, at page 7:

Q. . . . but you said that you’re presently unemployed. When is the last time you were employed?

A. I haven't bought or sold any cars for, oh, my goodness, almost a year, I'd say, months and months.

Q. Almost a year, and prior to that year period you were employed by whom?

A. I was employed buying and selling cars for myself, if you want.

Q. So you were operating a business on your own?

A. Yes.

[at page 15:]

Q. Now, you testified that you started doing business with Mr. Dubrofsky approximately five (5) years ago, buying and selling cars through his business, Automobile Vista?

A. I came back from Calgary, I had no dealership, I had no bond, I began to buy the odd car. Mr. Dubrofsky let me buy them on his name, he would sell them, he would then take a share of the profits.

Q. Now, then how would he distribute or how would he give you your share of the sale or profits of that car?

A. By cheque.

[at page 18:]

Me GAGNON:

Q. Now, how would those proceeds of those sales be distributed to you?

A. The proceeds of the sales themselves would be paid by cheque. There was also a question of cheques being exchanged with Mr. Dubrofsky and I quite often and Mr. Dubrofsky would be short of money and there would be money in various accounts or accounts that I had signed for and I would lend him money for a day, for two (2), in exchange of cheques, so there was a lot of those cheques.

Q. But when it came to give you your share of the sale of the profit or whatever, would that be done generally by means of a cheque issued to somebody?

A. Yes.

Q. Now, were cheques issued to your mother-in-law or to your wife in respect to some of those sales that you are referring to that you effected through Mr. Dubrofsky's companies?

A. Some of them would be referred to my wife, not to my mother-in-law.

[at page 19:]

Q. Are you aware if there were cheques to your mother-in-law?

A. Occasionally.

Q. Do you know—

A. Very occasionally.

Q. Do you know in respect of what cheques were being issued to your mother-in- law?

A. Cheques were issued, if cheques were occasionally issued to my mother-in-law these would be for exchanges of cheques.

Q. And would you be a bit more precise, because I’m not clear when you say exchange of cheques?

A. If Ruby needed some money for a day or two (2) or three (3) I would give him a cheque for it and then he would give me a cheque post-dated for two (2) or three

(3) or four (4) days later and then I would deposit his cheque two (2), three (3), four (4) days later, and it would be paid in due course.

Q. But why, if you loaned Ruby money, why would the cheque be given to your mother-in-law?

A. Because in some cases the cheques were deposited into her account, in some cases into my wife’s account.

Q. Now, why were cheques made out to your wife’s name?

A. Because the account was in her name.

Q. But if I understand you correctly, although the cheques were made out to her name because she had an account, the proceeds of those cheques were really yours as a result of your business transactions?

A. By and large, yes.

Q. Did you at the relevant time have any bank accounts?

A. No, I didn’t.

3.23 Mr. Barmash then testified that all the transfers of money with Dubrofsky and Popper were always done by cheque.

HIS HONOUR: And when you transferred him money it's always by cheque?

WITNESS:

A. Yes, I have cheques for these, I have cheques for these, Your Honour. Unfortunately they've chosen only to show this one and not the full picture as I think it should be.

4. Law—cases at law—analysis

4.01 Law

The main provision of the Income Tax Act involved in this appeal is paragraph 160(1)(e). It reads as follows:

160. Tax liability re property transferred not at arm's length.

(1) Where a person has, on or after the 1st day of May, 1951, transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to

(e) the transferee and transferor are jointly and severally liable to pay under this Act an amount equal to the lesser of

(i) the amount, if any, by which the fair market value of the property at the time it was transferred exceeds the fair market value at that time of the consideration given for the property, and

(ii) the aggregate of all amounts each of which is an amount that the transferor is liable to pay under this Act in or in respect of the taxation year in which the property was transferred or any preceding taxation year,

but nothing in this subsection shall be deemed to limit the liability of the transferor under any other provision of this Act.

4.02 Cases at law

The parties referred the Court to the following cases at law:

1. Estate of David Fasken v. M.N.R., [1948] Ex. C.R. 580, [1948] C.T.C. 265, 49 D.T.C. 491;

2. German v. M.N.R., [1957] C.T.C. 291, 57 D.T.C. 1216;

3. LaMarche v. M.N.R., [1983] C.T.C. 2314, 83 D.T.C. 260;

4. Lindsay v. M.N.R., [1990] 1 C.T.C. 2245, 90 D.T.C. 1085;

5. Zeal and Gold Ltd. v. M.N.R., [1973] C.T.C. 129, 73 D.T.C. 5116;

6. Swiss Bank Corporation v. M.N.R., [1972] C.T.C. 614, 72 D.T.C. 6470;

7. Dunlop v. M.N.R., [1991] 2 C.T.C. 2246, 91 D.T.C. 948;

8. Winsor v. M.N.R., [1991] 2 C.T.C. 2378, 91 D.T.C. 1170;

9. D’Aoust v. M.N.R., [1990] 1 C.T.C. 2360, 90 D.T.C. 1257;

10. Charrier v. M.N.R., [1989] 1 C.T.C. 2214, 89 D.T.C. 104;

11. Massey Ferguson v. The Queen, [1977] C.T.C. 6, 77 D.T.C. 5013;

12. John Altenhof v. M.N.R., [1973] C.T.C. 2309, 73 D.T.C. 239.

4.03 Analysis

4.03.1 The issue of the present case is whether the total amount of $62,500 deposited in the appellant's bank account by Mr. Barmash was made in satisfaction of indebtedness owed by Mr. Barmash to the appellant.

4.03.2 Appellant's contention

The fact that Mr. Barmash was liable for tax in the amount of $51,680.20 is not in dispute. Mr. Barmash admitted during the hearing that he did owe the said amount. Moreover, the appellant's contention is that the payments made by Mr. Barmash to her were reimbursement of the moneys he had drawn from her account. Consequently, the cheques were not a gift to her but a repayment of the debt.

4.03.3 The appellant's attorney submits three arguments. First, he submits that the statements of the appellant's bank account (Exhibits A-9 and A-10) establish clearly that the funds from both accounts emanated not just from Mr. Barmash but surely from Mrs. Segal and Mrs. Policoff.

4.03.4 Secondly, he contends that Mr. Barmash, having a power of attorney to withdraw from the appellant's account, was obviously borrowing and repaying money to the appellant. He submits that the main source of these funds were in fact the appellant and Mrs. Policoff.

4.03.5 He therefore contends that the appellant had money of her own (3.07) which was borrowed from Mr. Barmash. Consequently, the appellant never benefitted from the payment of $62,500.

4.03.6 Thirdly, he strongly stresses the fact that the financial transactions of Mrs. Policoff, Mrs. Barbara Segal and Mr. Norman Barmash were done mainly through one bank account (Banque Nationale de Paris).

In consequence and once again, the moneys he had used were not in fact his own money but moneys he borrowed from the appellants bank account.

Therefore, the respondent submits that Mr. Barmash having the sole authority, all cheques were drawn on the account of the Banque Nationale de Paris by him. The appellant in fact, had nothing to do with the account. It was only in her name and she left all the power to her husband.

4.03.7 The respondent's argument

The respondent, on the other hand, contends that at the time of the transfer, the appellant gave no consideration for the amount of $62,500.

He submits that apart from the said amount of $62,500, different amounts totalizing about $100,000 (Exhibit R-3) were also transferred to the appellant's account.

Moreover, the respondent also submits that the existence of a loan contract between the appellant and Mr. Barmash has not been proved by the appellant. He therefore contends that the amount in dispute being over $1,000, testimonial proof cannot be accepted according to section 1233 of the Civil Code.

4.03.8 The respondent also submits that in the present case, there is no credibility concerning the testimony of Mr. Barmash and the appellant.

4.03.9 Analysis of the Court

The Court must examine the facts in order to determine if there was really a loan contract between the parties.

4.03.10 As I understand it, the appellant's submission relies strongly on the fact that Mr. Barmash had total access to her bank account. Having a power of attorney, he had a right to withdraw whatever moneys he needed or wished to use.

4.03.11 Mr. Barmash, having a power of attorney, he certainly did have "total access" to the appellant's bank account. However, at this point of the analysis, it proves only that the appellant and Mr. Barmash were doing their transactions through the same bank account.

4.03.12 The first significant fact, which is the fact that the main reason for Mr. Barmash not to have a bank account, is that at a particular time, he was in a precarious financial situation (3.19). Accordingly, he used the appellant's bank account to carry out any necessary transactions.

4.03.13 Could the cheques deposited in the appellant's bank account have been almost exclusively exchange of cheques? (Exhibits R-3, R-5).

The evidence was submitted in respect of the cheques of $50,000 and $12,500 (Exhibit R-5) and many others (Exhibit R-3) (3.21). However, no evidence was submitted in respect of the cheques apparently made by Mr. Barmash to Dubrofsky for the exchange of cheques (3.23).

In fact, the appellant's attorney wants the Court to deduce from the facts (3.01 to 3.23) that undoubtedly, Mr. Barmash owed the money to the appellant and that the numerous cheques endorsed by him and deposited in Mrs. Segal's bank account were all exchanges of cheques.

4.03.14 The Court has seen the detailed statements of the appellant’s bank account at Bank of Montreal and at Banque Nationale de Paris for the years of 1983, 1984, 1985 and 1986 (Exhibits A-7 and A-10). Exhibit A-10 shows that there were 522 transactions in the account at the Banque Nationale de Paris in 1986.

Those statements did show numerous sums of money deposited or debited from the account. We can see some sums of money being deposited and then a few days later withdrawn from the account. Or sometimes, money was withdrawn and then soon after the same amount was deposited.

However, once again the appellant has not brought to the Court any concrete evidence of her contention.

It is not the role of the Court to try to infer from the facts the proof that has not been made by the appellant.

If the appellant wanted to prove such an exchange of cheques and such a loan contract, she should have brought such evidence before the Court.

No evidence of such cheques was brought to the Court, no effort was made, it seems, to trace those cheques. Moreover, no evidence was submitted in respect of the money borrowed from the appellants bank account.

4.03.15 There was no written agreement between the appellant and Mr. Barmash to prove the borrowing.

Sometimes the Court recognized the validity of verbal agreement as in the cases of John Altenhof (4.02(12)) and Massey Ferguson (4.02(11)).

However, it is appropriate to quote this excerpt of the Dunlop case (4.02(7)) at page 2251 (D.T.C. 951):

Despite the fact that verbal agreements may be valid, this surely does not lighten the burden to prove the existence of a bona fide agreement, on the contrary, it might render heavier the appellant's burden of proving his allegations. As stated by Mr. Justice Cardin of the Altenhof case at page 2305 (D.T.C. 240), “in the absence of a written document, the Board must rely on the facts and the credibility of the appellant".

In other words, the lack of a written document transfers entirely the validity of the proof on the facts and on the appellant's credibility regarding those facts.

Here, the facts do not seem conclusive enough to the Court to prove that bona fide agreements for repayment had been made.

It is the same thing in the present case. Therefore, the facts will be strengthened or weakened by the credibility of the witnesses.

4.03.16 The Court has great doubt concerning the credibility of the witnesses.

During the hearing, the Court had many occasions to strongly doubt both witnesses' allegations and personal views of the facts.

Before this Court, Mr. Barmash testified that since 1982 he had not worked much (3.05). However, in January, 1990, when he was examined on discovery after plea, he testified that he" had not worked for almost a year". Before that, he was "buying and selling cars for myself', he said (3.22).

During the year 1986, in the only account at the Banque Nationale de Paris there were more than 520 transactions (4.03.14). Were they only exchange of cheques?

It also appeared to the Court that the conduct of the appellant may be described as wilful blindness. In fact, how can she be aware of such a loan contract when at the same time, she does not have any idea of what is going on in her own bank account (3.08)?

4.03.17 In the same way, if the $50,000 cheque deposited on December 11, 1986, was to reimburse the appellant, why, only a few days after, was the same sum debited, and to whom (3.19)?

4.03.18 To succeed in convincing the Court, more documents would be needed to confirm the appellant's explanations.

In the content of section 160, the blindness of the appellant cannot lighten the burden of proof. She had to prove the existence of a loan and the reimbursement of it. She did not do so.

In his testimony, Mr. Barmash criticizes the respondent for not having requested all the cheques from the bank "to give the full picture” (3.23). The burden of proof is on the appellant's shoulders. She also had the right to request them from the bank.

4.03.19 The terms of subsection 160(1) of the law are clear. In any transfer of property between persons not dealing at arm's length where one of those two persons is responsible for a certain amount of income tax toward the Minister, those individuals are jointly and severally liable for the amount due. In the present case, the appellant has not succeeded in establishing that the Minister was wrong in assessing the appellant in the amount of $51,680.20 as moneys transferred to her by her spouse while he was liable for tax in an amount greater than the amount assessed.

5. Conclusion

For the above reasons, the appeal is dismissed.

Appeal dismissed.