Date: 19980130
Docket: 94-2911-IT-G
BETWEEN:
LEONARD TAYLOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(Delivered from the bench in Toronto, Ontario, on June 6,
1997.)
Bowman, J.T.C.C.
[1] These appeals are from assessments made under the
Income Tax Act for the appellant's 1986, 1987, 1988,
1989 and 1990 taxation years. In those years, the appellant
claimed to set off against capital gains, net capital losses
which he claims he sustained in 1982.
[2] The appellant's position is that his net capital
losses in 1982 amounted to $166,285.81. The appellant states that
he is a consultant. He appears to have been active in the mining
industry over the years, and it seems obvious that he was active
in the stock market.
[3] In 1984, he realized that it was difficult or impossible
for him to compute the result of his stock market activities, so
he retained a chartered accountant, Mr. Ian Campbell, and gave
him all of the records of his stock trading activities from 1972
on, and certainly for 1982. Mr. Campbell went through these and
prepared schedules setting out the gains and losses sustained by
the appellant, on his calculation, in 1982.
[4] I observe in passing that the appellant did not file
returns for 1983, 1984, 1985, or indeed for the years under
appeal, until the tax department urged him to do so. This was
done in 1993.
[5] The question in this case boils down to one of
credibility. Do I or do I not believe the appellant and Mr.
Campbell? In fact, I do believe him. Mr. Taylor, the appellant,
is a perfectly credible witness. I might say he appears to have
allowed his record-keeping to get into a bit of a mess, but
I do not think that goes to his credibility.
[6] As far as Mr. Campbell is concerned, counsel for the
respondent invites me to disbelieve Mr. Campbell on the basis
that Mr. Campbell at one time, apparently, pleaded guilty,
sometime later, to a falsification of documents thereby
committing certain infractions or breaches of professional
conduct under The Code of Ethics of the Canadian Institute of
Chartered Accountants. I am taking that into account, but I have
no hesitation of believing Mr. Campbell, that he did make these
calculations, and he did so on the basis of the documents that
were given to him.
[7] I accept that the documents were lost. To do otherwise, I
would have had to assume that Mr. Campbell and Mr. Taylor engaged
in some sort of a conspiracy to concoct losses that did not
exist. I can see no basis for doing that.
[8] I was referred to certain decisions of the Alberta Court
of Appeal, having to do with the admissibility of such documents
or such schedules. They are admittedly hearsay, but I have no
doubt they fall within the exceptions to the hearsay rule
discussed in those decisions of the Court of Appeal. In case
anybody chooses to appeal this case, the two decisions are R
v. Monkhouse, [1988] 1 W.W.R. 725, and that of the Appellate
Division of the Alberta Supreme Court in C.P.R. v. City of
Calgary, [1971] 4 W.W.R. 241.
[9] In the circumstances, I find as a fact, based on the
evidence, that the appellant sustained a net capital loss in the
1982 taxation year of $166,285.81, and accordingly, the appellant
is entitled to carry that loss forward under section 111 of the
Income Tax Act to the taxation years 1986, 1987, 1988,
1989 and 1990.
[10] The appeals are, therefore, allowed with costs. The
assessments are to be referred back to the Minister of National
Revenue for reconsideration and reassessment in accordance with
these reasons.
Signed at Ottawa, Canada, this 30th day of January 1998.
"D.G.H. Bowman"
J.T.C.C.
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