[OFFICIAL ENGLISH TRANSLATION]
Date: 20010814
Docket: 2000-1079(IT)I
BETWEEN:
JOUMANA DARGHAM,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This is an appeal from an
assessment made outside of the three-year period provided for
under subsection 163(2) of the Income Tax Act (the
"Act").
[2] The assessment under appeal
concerns two receipts for gifts of $2,000 and $4,000 which the
appellant claims she made to the Ordre libanais des Maronites for
the 1992 and 1993 taxation years respectively.
[3] The assessments were made
following a major investigation which uncovered a downright
fraudulent organization in which a number of taxpayers were
involved.
[4] Abundant documentation confiscated
through a search conducted as part of an investigation revealed
that the Ordre libanais des Maronites had put in place a
veritable network for the sale of charitable receipts.
[5] In general terms, the
investigation showed that the Maronite community issued receipts
for gifts the actual paid amount of which was usually
approximately 20 percent of the amount stated on the
receipt.
[6] The persons involved were often
professionals with large incomes, and word of mouth was very
effective in developing the fraud ring. The investigation also
revealed that taxpayers with more modest incomes also
participated in the scheme.
[7] The organization was, beyond a
doubt, well structured and able to collect large sums of money,
in return for which receipts showing substantially larger amounts
than those actually received were issued. What is more, it was
observed in a number of cases that receipts were even prepared
and issued to individuals who had paid nothing at all but had
undertaken to make a payment upon receiving a tax refund based on
the false and misleading receipts.
[8] The evidence also showed that the
fathers of the Ordre libanais des Maronites clearly had few
scruples and a highly elastic conscience. One of them
deliberately lied when he told the auditor,
Colette Langelier, that premises which she had wanted to
visit in conducting her investigation were essentially private
and contained nothing that was useful and/or used for
administrative purposes.
[9] During the searches, it was
discovered that those same premises housed an array of office
equipment of which abundant use was made in the illegal
activities. It is therefore not surprising that the fathers in
question disappeared when the investigation was completed and
that none of them came to testify in order to help or cooperate
with those who had received the receipts whose plausibility was
questioned by the respondent.
[10] The investigation yielded highly
conclusive and decisive results, to such an extent that, as
a result of the audits, a number of persons who had received
receipts admitted the fraud and cooperated with the authorities,
while others readily accepted the reassessments issued.
[11] In the cases of some, including the
appellant, who had received receipts issued by the Ordre libanais
des Maronites, there was no direct evidence explicitly showing
participation. This absence of direct evidence did not prevent
the investigating auditors from claiming that all those who had
received receipts issued by the Ordre libanais des Maronites had
filed false and misleading receipts.
[12] In the instant case, the respondent
adduced no direct evidence to discharge her burden of proof. Only
circumstantial evidence was produced.
[13] Although such evidence clearly does not
have the quality or objectivity of direct evidence, it can
nevertheless constitute a backdrop against which one conclusion
becomes more likely than another.
[14] The advantage of such circumstantial
evidence for the appellant was that it enabled her to state that
there was no direct evidence that she had not made the two gifts
for which receipts had been issued by the Ordre libanais des
Maronites. Consequently, she vigorously asserted that she had
made the gifts, saying that the receipts were proof of what was
stated thereon and that the Court could not disregard that
fact.
[15] In support of her claims, she contended
that her religion condemned such cheating and that she personally
concurred in that condemnation. The appellant, who had recently
arrived in Canada, testified that she was living with her brother
and sister and, later, with friends; she had the cash to make
such gifts and to be so generous since she was paying no rent and
had minimum expenses.
[16] She contended that she had never spoken
to her brother or sister about her gifts, that she had kept her
contributions secret. The only persons aware of them were herself
and the priests involved in the fraud; those priests moreover
issued the two receipts showing the total gifts made. The amounts
of the receipts obtained represented the total of a number of
small cash gifts made during the year in which they were
issued.
[17] At the end of each of the years in
issue, the many small cash gifts were added up and a receipt for
the total amount was then issued. As chance would have it, the
totals were $2,000 and $4,000 for those years respectively.
[18] I found the appellant's discretion
quite surprising for someone who shares many things with the
members of her family, including matters pertaining to her
finances. The appellant, who had never had a chequing account,
said that she had turned to her brother when she needed to make a
cheque. She indicated, moreover, that this was how she paid her
taxes. She added that she did not remember very clearly, but her
brother may very well have advanced her the money, just as it was
possible that she gave her brother the corresponding amount when
the cheques were issued to pay her taxes.
[19] She mentioned as being normal the fact
that her brother advanced her money if, at the time the cheque
was written, he was in a better financial position than she, thus
showing by that testimony that the members of her family
supported each other in financial matters.
[20] She shared an apartment for which she
apparently did not pay her share of the rent. In short, there
existed within the family harmony and great solidarity, which
does credit to its members. In this context, did she keep to
herself her amazing generosity, the consequences of which were
important, significant and numerous both for her and her family
unit, since they shared virtually everything? She deprived
herself and possibly the members of her family of what was,
considering her modest income, a large amount of money. While the
gifts had significant tax consequences, they implied a cash
disbursement and a significant net loss, assuming the gifts were
actually made.
[21] In and of themselves, these are not
decisive factors. However, they are certainly quite surprising,
particularly since such discretion as that shown by the appellant
has the advantage of not involving anyone in giving
testimony.
[22] The appellant testified that she had
kept detailed accounts regarding the status of her contributions;
the small amounts were donated according to the funds she had
available at a given time. She never indicated what the number of
her contributions may have been or provided details as to the
amounts. Where did the money used for the gifts come from? She
asserted that it came from amounts withdrawn at an automatic
teller machine and also from amounts withdrawn directly at the
counter. In this regard, the appellant never made a single
connection between a withdrawal and any gift. What became of the
handwritten accounting used to record the details of the gifts?
It was apparently destroyed once the receipt was issued and
handed over.
[23] The auditor's analysis itemizing
all the ATM withdrawals for the years in which the gifts were
made established that the total amount of those withdrawals was
less than the amount of the gifts, which were, having regard to
the appellant's income, very large gifts.
[24] In rebuttal, the appellant hastened to
say that the money for the gifts also came from large withdrawals
made at the counter. However, the evidence revealed that the
appellant had, on a few occasions, purchased drafts payable in
U.S. currency, thus giving rise to a presumption that the large
withdrawals may have been used to purchase that foreign currency.
The appellant offered no explanations on the subject.
[25] Throughout the trial, the appellant
often made comments or remarks suggesting that material things
were of little interest to her. For example, she stated that her
gifts were justified by gratitude; according to her, they were a
fair return for having been able to receive scholarships, to
obtain a considerable reduction in her tuition fees, and so
on.
[26] However, in cross-examination it was
shown that the appellant was clearly much more meticulous and
pragmatic in the management of her finances than she wished to
appear. She was moreover obviously uncomfortable when asked about
the amount she had invested in a registered savings plan. Despite
the evidence that large amounts had been withdrawn to purchase
U.S. currency, no explanation was given.
[27] To my great regret, I do not possess
the ability to discover the absolute truth. I must analyze,
assess and reflect on the facts which the parties have put in
evidence.
[28] The claim cannot be made that such an
exercise is infallible in terms of the conclusion arrived at; it
is essentially a process guided by the search for truth, a
process in which, unfortunately, a great deal depends on
perception and interpretation.
[29] In the instant case, I have made a
certain number of observations. First, the appellant was much
more informed than she wished to show. Although she described
herself as a devoutly religious person, very much devoted to her
church and setting little store by material things, it appears
from the evidence that the appellant was much more organized than
that. She kept a record of her many small cash gifts on a piece
of paper which she says she destroyed once the receipts had been
issued. She was never able to describe in detail any of the
circumstances in which any one of the small cash gifts was
made.
[30] The appellant repeated throughout her
testimony that she had in fact made the gifts in return for which
the receipts were issued. She was however unable to produce any
document or witness to confirm or support her lone testimony,
which, it should be pointed out, was very vague on a number of
points. The appellant very frequently said that she did not
remember exactly, and a number of her explanations were unclear
and very sketchy.
[31] When the accuracy of the facts became
uncertain or questionable, the appellant fell back on her
religious principles, asserting that her conscience was clear.
What is more, she said she was shocked and deeply distressed by
the deceitful and fraudulent tactics of the Ordre libanais des
Maronites. When certain highly relevant questions were put to
her, she allowed herself to become aggressive.
[32] While it is theoretically a
possibility-and I stress the word "possibility"-that
the appellant's explanations are true, on a balance of
probabilities the evidence does not support that view. If in fact
the appellant was an innocent victim, as she repeated a number of
times that she was, she should instead consider blaming those
responsible for the fraud, if she was truly a victim thereof.
What is more, saying she was angered by the swindle, the
appellant even made so bold as to criticize Revenue Canada for
not taking the necessary steps to put an end to the scheme of the
Ordre libanais des Maronites from the moment it was first
suspected.
[33] The circumstantial evidence adduced by
the respondent was substantial and coherent. Such evidence is of
course more fallible and more easily disputed or rejected than
direct evidence. In the instant case, however, the evidence was
substantiated and supported by various highly revealing tables.
Those tables and compilations, resulting from very elaborate
analyses, in my view form the basis for the conclusion that, on a
balance of probabilities, the appellant was involved
in and indeed benefited from the system put in place by the
Ordre libanais des Maronites. As a consequence, the appeal should
be dismissed.
Signed at Ottawa, Canada, this 14th day of August 2001.
J.T.C.C.
Translation certified true
on this 12th day of February 2003.
Erich Klein, Revisor
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