Words and Phrases - "good faith"

Sommerfeldt J found that the individual (Mr. Ploughman) who, despite his submissions to the contrary, was found to be a creator or promoter of the charitable donation scheme at issue in Guindon, was also liable for s. 163.2 penalties. Shortly before the April 30 filing deadline, Mr. Ploughman sent a letter to the donors recommending that they submit their (false) charitable receipts to CRA. At that time, he was aware that the timeshare units which had purportedly been donated in the previous year had not yet been created, and was also aware that the trust which purportedly had distributed those units to the donors had not yet been settled (or was indifferent as to whether this was the case). Thus, Mr. Ploughman “participated in, assented to or acquiesced in the making of” the false donor statements.

Mr. Ploughman submitted that he had relied in good faith on the opinion letter of Ms. Guindon in viewing the legal steps pertaining to the donation program had been completed satisfactorily, as well as oral assurance of a Turks and Caicos Islands lawyer (Mr. Kerr) that the timeshare units would be created by April 30, 2002. Sommerfeldt J found that such reliance did not satisfy the statutory criteria of s. 163.2(6) and in any event, was not done in good faith. Respecting the first point, he noted that under s. 163.2(6), “the information on which the advisor relies must be provided by the person who ultimately makes the false statement or by someone acting on behalf of that person,” whereas here, the information which he claimed to have relied upon was not “provided to him by or on behalf of those Donors” (para. 64).

Respecting the second point, he noted that although phrase noted that although the phrase “good faith” has been interpreted as referring to the “’actual, existing state of the mind, whether so from ignorance, skepticism, sophistry, delusion, fanaticism, or imbecility, and without regard to what it should be from given legal standards of law or reason’,” he preferred the standard applied in MacAlpine v T.H. [1991] 5 WWR 699 (BCCA) of:

Honesty of intention, and freedom from knowledge of circumstances which ought to put the holder on inquiry.

Here, Mr. Ploughman should have known that steps referenced in the legal opinion, such as the creation of the trust, had not yet occurred, and should have been on notice that the process for creating the timeshare units was proceeding slowly.