Marian F. Galloway v. Her Majesty the Queen^, [1968] CTC 589, 69 DTC 5023

WHITTAKER, J.:—This is an appeal by the appellant from the sentence imposed upon a conviction made by His Worship Magistrate J. MacKenzie of Red Deer, in the Province of Alberta, on August 22, 1968, on a charge that he, the appellant, did between January 1, 1958 and December 31, 1966, at the City of Edmonton, in the Province of Alberta, wilfully evaded the payment of taxes imposed by the Income Tax Act, 1952, ¢. 148, in the amount of $14,340.53 for the taxation years 1958 to 1966 inclusive and did thereby commit an offence by virtue of the provisions of Section 132(1) (d) of the Income Tax Act.

Following a guilty plea, the appellant was ordered to pay a fine in the amount of $10,000, together with costs, and in default of payment imprisonment for a period of one year.

Counsel for the Crown quite fairly presented to the Court a letter from the magistrate dated September 19, 1968, which would otherwise not have been in evidence. It is largely on the basis of this letter that Mr. Shtabsky, who until today has appeared before me as counsel for the Appellant, submitted that the sentenee should be reduced to a fine of $1,500.

Douglas Mallinson, a Crown witness, who is an officer of the Department of National Revenue, Taxation, attached to Special Investigation, Edmonton District, is the only person who gave evidence on this appeal. He impressed me as being a fair and reliable witness. According to his evidence, the appellant is 59 years of age and his main occupation is mixed farming. The appellant carries on his mixed farming operations in the Altario district of the Province of Alberta, where he farms thirteen quarter sections of land personally owned by him and three sections of leased land with about 2,000 acres under cultivation. In addition to his mixed farming operations, the Appellant owns and operates a seed cleaning plant; has a fifty-fifty partnership in three aircraft used for crop spraying; and also operates a D7 caterpillar tractor.

During the period 1958 to 1966 inclusive, the Appellant understated net income totalling $62,707.48 and wilfully evaded payment of federal tax alone totalling $14,840.53. He pleaded guilty to nine charges of making false statements in his T1 Income Tax Returns for the period 1958 to 1966 contrary to the provisions of Section 132(1) (a) of the Income Tax Act in respect of which he was ordered to pay fines totalling $5,200.

A previous investigation of the business affairs of the Appellant by the National Revenue, Special Investigation Section, disclosed suppressions and evasions during the period 1952 to 1957 inclusive in respect of which the Appellant paid tax, penalties and interest totalling about $15,000, of which $2,800 was for penalties. There was no prosecution with respect to the period 1952 to 1957 inclusive.

With respect to the evasion of federal tax alone totalling $14,340.53, in addition to paying tax and interest of $2,382.35 the Appellant has paid non-refundable penalties totalling $3,682.49.

The Appellant kept his books in his own handwriting. When his records were placed under seizure at his home on April 12, 1967, he was found in possession of a cash box containing the sum of $9,070 in bills. During the month of January, 1967, the Appellant made two cash bank deposits of about $7,000 each.

The suppressions were made in four ways, namely : unreported grain sales, unreported livestock sales, unreported seed cleaning and duplicated expenses.

I can only conclude that following payment of the aforementioned sum of about $15,000 for tax, penalties and interest covering the period 1952 to 1957 inclusive the appellant deliberately continued to suppress and evade income tax, despite the previous warning, with the full knowledge that to do so was contrary to the provisions of the Income Tax Act.

While it is true that the Appellant has not pleaded guilty to an offence under the Criminal Code, in the circumstances of the present case he has not merely contravened a statutory law not ordinarily regarded as criminal. In my view he has coldly and deliberately committed a crime and not a petty one.

In determining sentence a Court must consider several factors. The safety of the public is not involved in this ease and I consider the punishment and deterrent factors more important than any reformation or rehabilitation.

In fixing the punishment the Court must take into consideration the nature of the offence, the circumstances in which it was committed, the degree of deliberation shown by the Appellant, his age and character.

There is no evidence before me relating to the Appellant’s character. During argument counsel for the Crown stated, however, that after being caught for the second time the Appellant cooperated with the Department of National Revenue, particularly in giving information leading to the preparation of the comparative balance sheet which is Exhibit 1.

Punishment is also imposed as a deterrent to others from committing similar offences.

I have given serious thought and consideration to imposing a sentence both of a fine and imprisonment. It seems to me that a term of imprisonment for a period of several months might be in order. However, in view of the persuasive arguments of Mr. Bradley, who has first appeared for the Appellant today, the age of the Appellant and his health as set forth in Exhibit 3, 1 have with some degree of doubt decided not to send the appellant to jail.

In my view a fine of $1,500, as suggested by counsel for the appellant, even if it was agreed to by counsel for the Crown, and the Court is not bound by any such agreement between counsel, would be clearly inadequate and manifestly wrong having regard to the nature of the offence and the circumstances of the case. In my judgment a heavier sentence than a fine of $10,000 is called for. I am, therefore, imposing the following sentence, namely : a fine of $10,000 plus an amount of $5,000 pursuant to the provisions of Section 132(1) (e) (i) of the Income Tax Act. It is a sentence which I consider as a fit and adequate sentence having regard to the principles that govern the imposition of punishment by a trial judge as related to the nature of the offence and the circumstances in which it was committed.

In default of payment of the fine of $10,000 plus the amount of $5,000 I order and direct that the Appellant be imprisoned in the Provincial Gaol at Fort Saskatchewan for a period of 18 months.

I perhaps should add that I hope the appellant will realize the error of his ways and resolve henceforth to be a law-abiding member of society.