Donald Brian Maclvor v. Minister of National Revenue (Informal Procedure), [1993] 2 CTC 2901

Teskey, T.C.C.J. (orally):— Normally the Court does not give judgments right off the top at the end of a trial. This judge usually goes back into chambers and spends about an hour or two writing out the judgment that is reasonable, that is logical and then the conclusion.

I think they are reasonable, logical conclusions. The Court of Appeal may, on numerous cases in the future, decide I am not reasonable and logical.

However, I am aware that any costs awarded in a case are only a small percentage and to make this taxpayer pay a lawyer again, tomorrow, to come back and get a judgment that would be much more detailed than what I am going to give, would only hurt him financially and that is why I am going to give rambled reasons for judgment now.

The appellant appeals from a reassessment for the year 1988 and in his appeal he has elected to proceed with the informal procedure.

The appellant has been a car salesman for many years and is one of the top three salesman in a Ford dealership here at the Lakehead.

His wife was the first witness and she came in the box and gave a story. The appellant then went into the box and gave his testimony. I believe that in order not to find for the appellant I am forced into the position of saying I reject the appellant’s wife's testimony and I reject the appellant's testimony and I am prepared to do that.

I think Mrs. Maclvor was a very credible witness. She came forth, she said, "1 have done my husband's tax returns for some 15 years. We had expenses in 1985 and 1986 of so much and we claimed them. We got a letter. My husband did not want to end up in trouble with the tax department, did not want to end up in court, so when it came to 1988, although I had $7,000 plus, in receipts, I only claimed $2,000" I am rounding for the purposes of the judgment.

! either have to accept her testimony or reject it and I see no reason not to accept her testimony. Most taxpayers are frightened stiff of Revenue Canada and their auditors. So the taxpayer filed a return, claiming $2,000 in round figures.

Counsel for the Minister is not making an issue that the Court has jurisdiction to consider expenses in excess of the amount of expenses claimed in the tax return.

Now the appellant, himself. The Court is again in the same position; were these receipts that he produced fraudulent or not? Again, I see no reason to wipe out or disallow any receipt because it is fraudulent.

If they are legitimate — he has come in, he says, “I spent this money out of my pocket because it helped me to keep a reputation and make sales.” Therefore, having come to the conclusion that the man was not perjuring himself, then I can come to no other conclusion than he made the payments that he said he made.

There was a receipt for $365 that when he looked at it he said, Oh, this is not a receipt.” And immediately his counsel abandoned it. His claim for expenses was $7,832.97, so the claim was reduced to $7,467.91.

There was another receipt that he said," You know, I may have split this with Randy.” That receipt was for $76.66. The onus is on the appellant to prove. He did not prove that he paid the whole thing on that one, so I have to take another $38.33 off, which reduces his claim to $7,429.64.

Now I know that reasonableness was not pleaded by the Minister, but I believe that I, at the end of the day, have to look at reasonable. And here is a man that declared an income from sales of $45,261 and he claims expenses now, of $7,429.64. Is that reasonable? I do not find it unreasonable.

If the money was spent, and there is no reason for me to hold that it was not spent, then there is no reason not to allow it.

The appeal is allowed, the matter referred back to the Minister for reconsideration and reassessment on the basis that the appellant spent a total of $7,429.64 for the purposes of earning income or to put it another way, he had additional expenses of $5,789.24 than was originally allowed.

Counsel, if you wish to make an argument for any more than the normal order of costs, I will — you can make that argument. I can tell you right now I have a very closed mind on it.

MR. MacIVOR: I think I will waive my argument to costs, Your Honour.

HIS HONOUR: I did not say — yes, no costs.

MR. MacIVOR: I would like some party and party costs, I think, Your Honour.

HIS HONOUR: Yes, there is no reason why you should not have the usual costs.

There is a duty, I think, on counsel to resolve exactly what we went through today, but that duty rests on both. If I do not allow party and party costs, I am penalizing the appellant, but the duty on an expense case is just as strong, on the other side, to try and resolve this.

I would have thought the normal procedure would be, on a file like this, that the filing of the notice of appeal and long, before the notice of trial, that counsel for the Minister would be on to counsel for the appellant, saying, "Where can we go? What can we do? Can we get together? What have you got?” and so on.

On the other hand, I think there is a duty on the appellant to do exactly the same thing. Obviously, it either did not happen or if it did happen, it did not resolve anything, so I see no reason why the usual party and party costs not be awarded.

All right, that is the judgment.

Appeal allowed.