Citation: 2010 TCC 90
Date: 20100215
Docket: 2009-345(IT)I
BETWEEN:
NEVILLE TYRELL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
EDITED VERSION OF TRANSCRIPT
OF REASONS FOR JUDGMENT
[delivered
orally from the Bench at Toronto, Ontario, on January 18, 2010]
Boyle J.
[1]
This is an informal tax
appeal by Mr. Tyrell involving approximately $10,000 of income assessed
for 2004. Mr. Tyrell is a retired truck driver who has represented himself
in court.
[2]
I am allowing Mr.
Tyrell’s appeal, because the Crown has the burden of proof and has not provided
sufficient evidence to persuade me on a balance of probabilities of its version
of the events.
[3]
Today is not the first
court appearance required on this matter. The trial was first set down before
me last August. At the outset of last August's hearing the Crown asked to amend
its reply, since its assumptions were that the amount was business income
earned by Mr. Tyrell as an independent contractor trucker, and that was
its legal position. The original reply did not plead section 5, dealing with
employment income.
[4]
I allowed the Crown’s
motion to amend its reply, but adjourned the hearing to allow Mr. Tyrell
time to prepare. To that point he was only trying to explain that he was not an
independent contractor but was an employee, so he did not have $10,000 of
business income and appropriate withholdings should have been made. The
adjournment has given both sides the time to more fully prepare.
[5]
I must note that again
we have the Crown filing an inadequately drafted original reply. The Crown is
choosing to have non‑lawyers, so‑called agents, who I understand
are the Canada Revenue Agency employees, prepare legal proceedings before this
Court. I said before and repeat that this can produce some very unfortunate
results, and at times those will end up having to be borne by the Crown.
[6]
Last August the Crown
was represented by a student. In this case the Crown is fortunate that last
August I did not do what the then Associate Chief Justice Bowman did in 2002 in
Poulton v. Canada, [2002] 2 C.T.C. 2405, which was
approved by Justice of Appeal Rothstein of the Federal Court in Burton v.
The Queen, 2006 DTC 6133, in 2006. Neither of these cases was
referred to me last August.
[7]
These cases provide
generally that procedural fairness requires that self represented individual
taxpayers in informal tax appeals not be faced with last‑minute, start‑of‑trial,
limited notice, informal requests by the Crown to amend its pleadings in a very
material way.
[8]
Had I been made aware
of the Federal Court of Appeal’s decision in Burton, I would have refused to exercise my discretion and allow the
amendment to the reply, in which case Mr. Tyrell’s appeal would have been
allowed then, and today's further appearance would not have been necessary.
[9]
In any event, the Crown
bears the burden of proof to satisfy me on a balance of probabilities of its
alternative position in its amended reply that the $10,000 was additional
employment income earned and for which tax withholdings were not withheld and
remitted.
[10]
A further amendment to
the Crown’s position was received at the opening of today’s hearing. The Crown
confirmed that it would no longer be pursuing the penalties assessed against
Mr. Tyrell.
[11]
Yet another amendment
to the Crown’s position came in the course of this morning. The Crown agreed
that it had no real evidence to support its primary position that
Mr. Tyrell was an independent contractor. That is, the Crown agreed with
Mr. Tyrell that he was always and only ever an employee of Quality
Haulage.
[12]
The remaining
disagreements between the parties were, when did Mr. Tyrell work there,
did he receive the cheques in question, and had employee withholdings been
made.
[13]
Mr. Tyrell
testified that he worked for Quality Haulage from the fall of 2003 to
September 2004. The cheques in question are for the period September through
December 2004. The Crown did not call a witness who could testify to
Mr. Tyrell actually working at Quality Haulage in that period to
contradict his testimony.
[14]
The Crown’s only
witness was the outside bookkeeper and accountant for Quality Haulage. She had
prepared Mr. Tyrell’s T4 for employment income and a T5018 for his
independent contractor payments, based primarily on information provided by the
company's bookkeeper, who was the owner’s sister.
[15]
The Crown’s position
today is that the T5018 amounts were in error and should have also been
reflected on the T4. The taxpayer’s position is also that it was all employment
income, but he maintains all deductions were made weekly — “they took their
money.”
[16]
Implicit in the
taxpayer's position is that he agrees that the T5018 was wrongly issued on
behalf of his employer, but the answer is not just to say the income should
have been reflected on his T4. His position is that the additional
withholdings should also be reflected on the T4 as both income and
withholdings.
[17]
The Crown has not
satisfied me with sufficient evidence to conclude its version of events is
correct.
[18]
Neither the owner of
the business or his sister testified, nor do I have any employer reconciliation
of its aggregate employee withholdings. Clearly, Quality Haulage made some
mistake or other in the information it gave its outside accountant, which
formed the basis of the T4 issued to Mr. Tyrell. The evidence does not
allow me to conclude, even on a balance of probabilities, which of the possible
mistakes it was.
[19]
Further, Mr. Tyrell
acknowledges that the signatures on the copies of the backs of the cheques were
his, but that since he did not receive any cheques in the period, he did not
actually endorse any cheques. He suggests it must have been doctored at some
point by his employer or someone else.
[20]
In evidence before me
are photocopies of the backs of cheques, separate from the copies of the fronts
of the cheques. The originals, which would have proved valuable, were not
entered in evidence, even though the company's accountant testified she still
had them in storage somewhere.
[21]
I was not given any
evidence of how Mr. Tyrell’s employer had issued the T4 for the year 2003.
I was not given a Record of Earnings prepared by the employer for Employment
Insurance purposes.
[22]
While I am left with
some doubts about what actually happened, clearly the Crown did not lead
sufficient evidence in support of its position and inconsistent with Mr. Tyrell's
testimony to satisfy me on a balance of probabilities that the reassessment
should stand.
[23]
I am allowing the
appeal and referring the assessment back to the Minister for reconsideration
and reassessment in accordance with these reasons. I am also fixing costs in
Mr. Tyrell’s favour at $200.
[24]
We are adjourned. Thank
you, Madam Court Reporter. Thank you, Mr. Registrar. Thank you,
Mr. Tyrell. Thank you, Ms. Hurst.
Signed at Ottawa, Canada, this 15th day of February 2010.
"Patrick Boyle"
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