Claude Quirion v. Minister of National Revenue, [1982] CTC 2497, 82 DTC 1512

Roland St Onge [TRANSLATION]:—The appeal by Mr Claude Quirion, a notary, came before me at Quebec City, Quebec, on May 4, 1981, and the issue is whether the appellant knowingly failed to report income of $20,000 for his 1975 taxation year.

Relying on the following assumptions of fact, the respondent maintained the affirmative:

In assessing the appellant for the 1975 taxation year, the Minister of National Revenue relied on the following assumptions of fact, inter alia:

(a) during the 1975 taxation year, the appellant practised the profession of notary;

(b) during that year, the appellant rendered professional services to GBGM Enr for $25,000;

(c) in return for his professional services, the appellant received fees of $25,000 in cash in 1975;

(d) an initial cash payment of $5,000 was made to the appellant on June 13, 1975;

(e) another cash payment of $5,000 was made to the appellant on November 15, 1975;

(f) on November 25, 1975, GBGM Enr paid the appellant $15,000 in cash in

final payment of fees for professional services rendered by the appellant:

(g) in computing his income for the 1975 taxation year, the appellant reported only $5,000 of the total $25,000 received from GBGM Enr;

(h) in computing his income for the 1975 taxation year, the appellant knowingly or under circumstances amounting to gross negligence, failed to report an income of $20,000 or participated in, assented to or acquiesced in this omission.

The two witnesses, Mr Bourassa and Mr Gagné, both engineers, revealed that at least $25,000 had been paid to the appellant, Mr Quirion, after a loan had been obtained from the Banque Provinciale to discharge a first mortgage of some $750,000 which they owed.

On June 13, 1975, Mr Bourassa handed over $5,000 in cash and managed to obtain a copy of a receipt for this amount only with some difficulty. After this initial payment, Mr Gagne continued negotiations with the appellant, and on October 21, 1975, he made an additional cash payment of $5,000. When the documents were signed, he handed the appellant an envelope containing $15,000 in cash.

There is no doubt, and evidence to this effect was presented by the appellant, that he did receive at least $25,000 in cash. The appellant’s counsel was unable to get the witnesses to admit that part of this amount was earmarked for third parties. The net income reported by the appellant for the year in question was $25,950, and he is alleged to have failed to report $20,000.

Since the appellant was not present on May 4, 1981, an adjournment was granted to enable him to testify on May 6, 1981 at 11:00 am. When he was examined as a witness, he testified he had received only $5,000 at his home from Mr Gagne and had promised to return this payment to him, if he did not obtain the $750,000 loan. He changed his testimony, however, when he was shown Exhibit A-4, a copy of a receipt dated June 13, 1975 made out to Mr Jacques Bourassa, which read as follows:

CTC C Quirion v MNR (TRB) 2499

I, the undersigned, Claude Quirion, acknowledge that I have received from Jacques Bourassa the sum of $5,000 as a fee for negotiating and obtaining a loan of $750,000, repayment of which is to be guaranteed by a first mortgage on the Montminy Building in Quebec City. I undertake to repay this $5,000, if a letter is not given to Mr Bourassa on June 16, 1975 confirming a conventional loan for $750,000 at 11 per cent per annum for a five-year period. Moreover, this promise to lend shall be valid for a period of one hundred and twenty days. In witness whereof I have signed at Ste-Foy on June 13, 1975. Claude Quirion.

At this point, Mr Quirion changed his testimony, and admitted having received two $5,000 payments, but added that he had given one of these payments to Mr Gagné. The second receipt, made out to Mr Gagné, read as follows:

I, the undersigned, acknowledge that I have received from Gérard-M Gagné, a representative of CBGM Enr, the sum of $5,000 for the sale of the Montminy building to François Prévost, according to the conditions imposed by GBGM Enr. It is understood that this sale must be completed by November 15, 1975 at the latest, and that GBGM Enr shall be completely discharged of all debts owed to the Banque Provinciale due Canada in respect of the mortgage on the Montminy Building, failing which the undersigned shall return the above-mentioned sum to GBGM Enr. Signed at Ste-Foy, on October 21, 1975. Claude Quirion.

The first payment had been made by Mr Bourassa as a fee for negotiating and obtaining a loan of $750,000, while some five months later another $5,000 was received from Mr Gagné for the sale of the Montminy Building to François Prévost. This receipt also stipulated that the appellant was to return the payment, if the sale had not been completed by November 15, 1975 at the latest, and if all debts in respect of the mortgage held by the Banque Provinciale had not been discharged.

On October 3, 1975, a few days before the end of the one hundred and twenty day period, Bourassa & Associés obtained a $750,000 loan from the Banque Provinciale du Canada. On November 27, 1975, the building was sold to Mr. Jean-Pierre Rodrigue for $790,000 cash. On July 3, 1975, Mr Bourassa wrote to thank the appellant as follows:

On behalf of my associates and myself, we would like to thank you for the interest you have shown in our request. We would like you to communicate our gratitude to Mr Michel Lavoie, Vice-President, Operations.

Yours sincerely. Signed Jacques Bourassa.

Counsel for the appellant argued as follows:

1. The appellant received $5,000, and not $25,000;

2. The Board should examine the evidence as a whole and accept Mr Quirion’s version;

3. Counsel wonders why Bourassa and Gagné requested a receipt for $5,000 and not $25,000;

4. The receipt given either Mr Bourassa or Mr Gagné was a conditional payment, and the appellant asked for its return, because it contained an obligation on his part.

In closing, he said that written evidence is superior to oral testimony, and that the appellant’s evidence is as probable as the respondent’s.

Counsel for the respondent contended that Messrs Bourassa and Gagné had told the truth, since they testified separately and not in one another’s presence, and that the payment of $10,000 to Mr Quirion was corroborated by the existence and filing of two receipts and that a further $15,000 was given to the notary when the documents were signed.

When this case came before the Board, the appellant was not present, and his counsel used the respondent’s two witnesses to try to prove that the $20,000 had been used to pay commissions to others besides the appellant. However, when Mr Quirion testified, he categorically denied ever receiving more than $5,000. He changed his testimony when he was shown the receipt made out to Mr Bourassa, and admitted that he had in fact received $10,000, but said he had given $5,000 of it to Mr Gagné. In short, he changed his tune altogether: there was no more talk of payments to third parties, and he sought to turn the written evidence in his favour.

I have difficulty believing that the appellant did return $5,000 to Mr Gagne, because the evidence showed beyond a shadow of a doubt that he had fulfilled his obligations towards GBGM Enr to obtain a loan from the Banque Provinciale and to sell the building to Mr Rodrigue. The fact that the sale was made several days past the deadline and the purchaser was Mr Rodrigue instead of Mr François Prévost was not, in the circumstances, a valid reason for repaying $5,000 to Mr Gagné.

The Board also lays great weight on the letter of thanks written by Mr Bourassa. The documentary evidence is far more in the respondent’s favour than the appellant’s, and I agree with the latter’s counsel, when he says that written evidence is better than oral testimony.

Through these two witnesses, Messrs Bourassa and Gagne, the appellant proved that he had received at least $25,000, and Mr Quirion’s testimony, which was far from convincing, was unsuccessful in contradicting their testimony. The appellant, who had the burden of proof, failed to show that the Minister’s assessment was incorrect in fact and in law.

Accordingly, the appeal is dismissed.

Appeal dismissed.