Regina v. Frank Arvai, [1977] CTC 263

McMahon, PJ:—In this matter the accused is charged that between March 13, 1975 and April 18, 1975 he did unlawfully fail to provide to the office of the Minister of National Revenue, at the City of Windsor certain information following demand dated January 30, 1975, made pursuant to subsection 231(3) contrary to subsection 238(2) of the Income Tax Act.

The case for the prosecution related solely to affidavit evidence of Robert Bruce Munden that the notice was served requiring the accused to provide to the Department a statement of Assets and Liabilities for the business known as Pero’s House. There is actually no dispute on the facts. The accused admits he received the letter of demand mentioned in the affidavit. Upon receipt of that letter—he has difficulty with the English language—he contacted his accountant who kept his records with reference to the business. He delivered to him the letter and was advised by the accountant the matter would be taken care of. A week later he again spoke to the accountant and was advised the necessary documents had been filed by him on behalf of the accused. He was subsequently served with a summons. There is no evidence before the Court contradicting the evidence given by the accused. The Crown has relied solely on the affidavit evidence of Mr Munden. There was no viva voce evidence on behalf of the Crown, nothing to dispute in any way the evidence he has given. The Court must in fact, accept the evidence of the accused that he delivered the letter to the accountant and was of the opinion the matter had been dealt with by the accountant. Obviously he changed accountants. Mr Mailloux, Chartered Accountant, testified that he took over in the beginning of this year and has been working since that time in an attempt to complete the records and is still unable to do so because of the lack of records. He thought it would take him another three or four weeks to complete.

The question before the Court on this set of facts is, whether in that type of situation the accused is guilty of the offence charged. On first reading subsection 3 of section 231 one would envisage this section as one that could be considered as strict liability. It reads:

The Minister may, for any purposes related to the administration or enforcement of this Act, by registered letter or by a demand served personally, require from any person (a) any information, or additional information, including a return of income or a supplementary return, or (b) production, or production on oath, of any books, letters, etc statements, financial or otherwise, or other documents, within such reasonable time as may be stipulated therein.

However, it is the view of the Court that this must be read in conjunction with subsection (10) of section 231 which reads:

No person shall hinder or molest or interfere with any person doing anything that he is authorized by or pursuant to this section to do or prevent or attempt to prevent any person doing any such thing and, notwithstanding any other law to the contrary, every person shall, unless he is unable to do so, do everything he is required by or pursuant to this section to do.

I would underline the words “unless he is unable to do so’’.

There is very little cited for the comparison of Courts with reference to the meaning of the term “unless he is able to do so”. Defence counsel gave one case R v Bourassa, [1968] CTC 412; 68 DTC 5287. This Court adjourned this matter to inquire on its own if any other cases had been determined and was able only to find one further case, that being the case of R v Saltron Television Limited, 70 DTC 6116.

Dealing with the Bourassa case, this was an appeal before Justice Macfarlane, in British Columbia, from a decision of a Magistrate. There had been a finding that the accused was not able to comply with the demands because of his inability to read or write. The Court found that rendered him unable to do so. Justice Macfarlane felt since it was a stated case, and there was some evidence on which the Magistrate could make his finding, that the Magistrate did not err in Law. He says:

I would not want my judgment, however, to be interpreted as an invitation to persons to raise a defence based on their inability to deal with either of the official languages, and I think it would be only in the most exceptional and extraordinary circumstances that a defence such as this would succeed. Therefore, I want to make it clear that I am establishing no precedent here by this judgment as to what, on any given case, will be found to be as a fact a defence falling within the words “unable to do so,’’ as used in the Act.

This was again considered by Justice Henderson in the case of R v Saltron Television Ltd, which came by way of stated case from a decision of His Honour W J Tuchtie. There are certain similarities. In that case the accused had retained an accountant to prepare and file the necessary papers or documents including Balance Sheets, and Statement of Profit and Loss of the Company, and Provincial Judge Tuchtie dismissed the charge against the accused. By way of stated case he was reversed by His Lordship who said there was no evidence that the accused had contacted the accountant. The summons had been served on February 11, 1969 and the statements were filed on February 13, 1969. Later he says:

I would determine that a proper requirement was effected by the Minister of National Revenue in accordance with Section 126(2) of the Income Tax Act and the accused did not by its defence relieve itself of that requirement . . . and therefore would be guilty of the offence as charged and the acquittal was erroneous in point of law.

As a matter of law I am finding that this section 231 cannot be construed as a section of strict liability because of the wording of subsection (10). I would feel it would fall into the class of the case referred to by Justice Martin in R v Lowe.

It is my view that once the necessary filing of the affidavit had been made by the prosecution that a prima facie case had been established. There is no onus on the prosecution to establish mens rea. Here the accused is in a position to give evidence on his own behalf rebutting such prima facie case and if he can, establish a reasonable doubt with reference to his inability to comply with the letter of demand. I think the Court can, and must, take judicial notice that, in our present complicated commercial set-up, most persons in the operation of a business require and need the assistance and help of a qualified accountant. That, I suggest, even extends to member of the Bar. Actually, in the operation of a public house such as Pero’s, I must find it was beyond the ability of this accused to properly prepare the Profit and Loss Statement, Balance Sheet or schedule showing the continuity of assets, etc. I would suggest that probably Arvai has not the faintest idea what “continuity of fixed assets etc’’ means. The Court has some question in its own mind. In any event, the accused did what any logical rational business man in this community would do. He took his letter to the man he was relying on as his accountant and delivered that to him. Later, within one week, he checked again to see if the letter had been complied with and he was advised that the letter had been, in fact, complied with.

In that context what then must the Court do in viewing the words “unless he is unable to do so’’? Clearly Arvai could have taken another step and personally attended at the Income Tax Department to see if the papers had been filed. But is this a rational thing to expect a businessman to do? The Crown is relying entirely on the affidavit evidence. There is no evidence before this Court that Arvai received any further communication, so the Court must find there was no such communication, and that Arvai did what he was expected to do under the law. One aspect in interpreting the phrase “unable to do so’’ would include an aspect of knowledge. If a person honestly believes that something required to be done has been done when, in fact, it has not been done, I would suggest that in accepting that would become in that state of mind that gave him this incorrect knowledge he would be unable to comply with the letter of demand [sic]. This is after all a penal statute and any section of that statute when construed by the Court that it raises any ambiguity, must, in the view of the Court, be resolved in favour of the accused. I therefore find the explanation given by Arvai has rebutted the prima facie case of the filing of the affidavit by Mr Munden. I find Arvai has done everything that would logically be expected of a citizen of this country. The charge against the accused will be dismissed.

I should point out one further thing in distinguishing this from R v Saltron Television Ltd supra. There was no evidence that following service the accused had done anything by way of contacting his accountant. This case is, of course, an entirely different factual situation.