Date: 20100126
Docket: A-258-09
Citation: 2010 FCA 28
CORAM: BLAIS
C.J.
LÉTOURNEAU
J.A.
TRUDEL
J.A.
BETWEEN:
LES RÉSIDENCES MAJEAU INC.
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Montréal, Quebec, on January
26, 2010)
LÉTOURNEAU J.A.
Issues
[1]
This is an
appeal of a decision of Justice Tardif (judge) of the Tax Court of Canada. In
this decision, he confirmed the notice of assessment issued by the Minister of
National Revenue against the appellant for the period from February 1,
2004, to January 31,
2005. He
therefore dismissed the appeal with costs.
[2]
The
appellant submits that the judge erred in law in ruling that his expert’s
report had no probative value and in drawing inappropriate legal conclusions
from his testimony.
[3]
At the
hearing, counsel for the appellant also requested that the penalty imposed on
his client be cancelled, although this conclusion was not mentioned in his
memorandum of fact and law and was not argued.
Analysis of the judge’s decision and the
appellant’s submissions
[4]
Counsel
for the appellant, an experienced lawyer, was aware that he was facing a
significant challenge in this case by contesting the judge’s conclusions
regarding his assessment of the credibility of the report and testimony of his
client’s expert.
[5]
The judge
did not believe the appellant’s expert witness. He described the expert’s
report as superficial, incomplete, simplistic and accommodating to the
appellant. He saw, heard and assessed the expert’s testimony and noted hesitations
and contradictions. He therefore gave that testimony very little weight.
[6]
We have
neither the authority nor the capacity to substitute our assessment of the
expert witness and his report for the one made by the judge.
[7]
As far as
the penalty is concerned, we are satisfied that the judge did not make any
mistake in upholding it. To avoid this penalty, the appellant had to establish
that it was duly diligent.
[8]
According
to Corporation de l’école polytechnique v. Canada, 2004 FCA 127, a defendant may rely on a
defence of due diligence if either of the following can be established: that
the defendant made a reasonable mistake of fact, or that the defendant took
reasonable precautions to avoid the event leading to imposition of the penalty.
[9]
A reasonable
mistake of fact requires a twofold test: subjective and objective. The
subjective test is met if the defendant establishes that he or she was mistaken
as to a factual situation which, if it had existed, would have made his or her act
or omission innocent. In addition, for this aspect of the defence to be effective,
the mistake must be reasonable, i.e. a mistake a reasonable person in the same
circumstances would have made. This is the objective test.
[10]
As already
stated, the second aspect of the defence requires that all reasonable
precautions or measures be taken to avoid the event leading to imposition of
the penalty.
[11]
In this
case, the difference between the assessment of the appellant’s expert ($716,500)
and the construction costs ($1,295,688) is highly significant: $579,188.
[12]
The judge
did not believe that Mr. Majeau, a knowledgeable businessman, could have
made a mistake about the amount of this assessment. It was open to the judge to
reach this conclusion on the basis of the evidence in the record.
[13]
As far as
the measures taken to avoid the event are concerned, the record does not disclose
any.
[14]
For these
reasons, the appeal will be dismissed with costs.
“Gilles
Létourneau”
Certified
true translation
Michael
Palles
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-258-09
STYLE OF CAUSE: LES
RÉSIDENCES MAJEAU INC. v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: January 26, 2010
REASONS FOR JUDGMENT OF THE BLAIS C.J.
COURT BY: LÉTOURNEAU J.A.
TRUDEL J.A.
DELIVERED FROM THE BENCH BY: LÉTOURNEAU J.A.
APPEARANCES:
|
Serge Fournier
|
FOR
THE APPELLANT
|
|
Benoît Denis
Joelle
Bitton
|
FOR
THE RESPONDENT
|
SOLICITORS
OF RECORD:
|
BCF, LLP
Montréal, Quebec
|
FOR THE APPELLANT
|
|
Larivière, Meunier
Montréal,
Quebec
|
FOR THE RESPONDENT
|
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