The
Court:—The
appellant
was
convicted
in
Provincial
Court
of
wilfully
evading
the
payment
of
federal
taxes
imposed
by
the
Income
Tax
Act
by
failing
to
declare
taxable
income
in
the
amount
of
$141,917.23
for
the
taxation
years
1979
and
1980
thereby
evading
payment
of
taxes
in
the
amount
of
$48,557.63
contrary
to
paragraph
239(1)(d)
of
the
Income
Tax
Act.
During
the
years
1979
and
1980,
the
appellant
filed
personal
income
tax
returns
in
which
he
declared
the
sums
of
$19,413.25
and
$29,815.10
respectively.
He
did
not
declare
an
additional
$141,917.23
of
taxable
income
received
during
those
two
years.
It
is
conceded
that
this
latter
sum
is
taxable
income
but
it
is
submitted
on
behalf
of
the
appellant
that
he
had
incurred
losses
in
his
farming
operations,
particularly
with
respect
to
his
one-third
interest
in
a
partnership
farming
Squirrel
Island,
which
more
than
offset
the
additional
tax
liability
that
the
undeclared
income
attracted.
On
this
appeal
the
Court
is
restricted
to
questions
of
law
alone
and
this
submission
has
been
taken
away
from
the
appellant
by
the
findings
of
fact
of
the
trial
judge.
He
found
that
the
appellant
had
conveyed
his
farming
operations,
including
his
partnership
interest
in
Squirrel
Island,
to
a
limited
company
he
controlled,
called
Westland
Farms
Limited.
The
losses,
in
the
main,
were
incurred
at
the
Squirrel
Island
operation,
and
accordingly
were
available
to
Westland
and
not
the
appellant
for
income
tax
purposes.
Counsel
for
the
appellant
submitted
that
there
was
no
credible
evidence
to
support
the
finding
that
the
appellant's
interest
in
Squirrel
Island
was
conveyed
to
Westland,
but
this
is
not
the
test.
There
must
be
no
evidence
to
raise
a
question
of
law
and
here
there
was
evidence
that
the
Squirrel
Island
operation
was
a
Westland
operation
and
that
the
income
from
that
operation
was
received
by
Westland
and
reported
as
part
of
its
income
in
its
income
tax
returns.
Squirrel
Island
made
no
payments
to
the
appellant
personally
from
its
operations,
but
it
did
make
payments
to
Westland
and
to
its
other
two
partners,
Felix
Lucier
and
Edgewood
Farms.
In
addition,
there
was
evidence
upon
which
the
trial
judge
could
properly
find
that
the
appellant
transferred
to
Westland
all
his
farming
operations
including
his
one-
third
interest
in
pumps
located
at
Squirrel
Island
and
his
one-third
interest
in
prepaid
land
rentals
made
on
behalf
of
Squirrel
Island.
Part
of
the
undeclared
income
consisted
of
$31,400
in
wages
paid
to
the
appellant
by
Westland
for
his
services.
It
was
submitted
by
counsel
for
the
appellant
that
the
trial
judge
misdirected
himself
as
to
the
onus
of
proof
on
the
Crown
when
he
found
that
"the
defendant
knew
or
ought
to
have
known
that
he
was
receiving
wages
in
1978,
1979
and
1980
which
he
was
not
declaring".
Counsel
submitted
that
it
was
necessary
for
the
Crown
to
establish
mens
rea
on
the
part
of
the
appellant
and
that
this
direction
contemplated
negligence.
Although
the
use
of
this
language
is
unfortunate,
looking
at
the
reasons
as
a
whole,
it
is
clear
that
the
trial
judge
applied
the
proper
standard
that
the
appellant
wilfully
evaded
the
payment
of
taxes
by
not
declaring
sums
that
he
knew
to
be
income
and
thereby
evaded
payment
of
taxes
thereon.
Wages
are
clearly
income
and
these
amounts
were
recorded
in
the
appellant's
books
in
what
was
described
by
the
trial
judge
as
"a
very
tidy
office
at
his
own
home
farm
where
his
records
were
kept
in
an
orderly
fashion”.
The
complaint
about
lack
of
mens
rea
founders
when
it
appears,
as
the
trial
judge
found,
that
the
balance
of
the
undeclared
income
was
made
up
of
income
of
Westland
that
the
appellant
appropriated,
interest
on
a
promissory
note,
and
most
significantly,
interest
on
$75,000
in
cash
that
he
had
transferred
by
courier
to
the
Cayman
Islands.
Accordingly,
although
leave
to
appeal
is
granted,
the
appeal
is
dismissed.
Appeal
dismissed.
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