Date: 20010918
Docket: 2000-3468-IT-I
BETWEEN:
HECTOR MacKINNON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Margeson, J.T.C.C.
[1] This matter was originally scheduled to be heard in Sydney, Nova Scotia, on the 28th day of June 2001. At that time counsel for the Appellant made a preliminary objection in that the Crown was intending to introduce into evidence in this trial, the evidence of the Appellant, Hector MacKinnon, which he gave in a trial of Her Majesty the Queen v. Ronald James MacKinnon and Theresa Darlene MacKinnon under sections 39(1)(b) and 39(1)(a) of the Revenue Act of Nova Scotia.
[2] At that trial the Appellant, Hector MacKinnon was subpoenaed as a witness and compelled to give testimony at the trial. A copy of the decision of the Court was presented before the commencement of this trial, with the consent of the parties. In that trial, the Appellant Hector MacKinnon, claimed possession of the contraband tobacco. This evidence was intended to be introduced in the trial before the Tax Court of Canada to establish that the accused failed to report revenue for the years 1995, 1996 and 1997 which was the basis upon which the Appellant was reassessed certain amounts as net business income from the illegal sale of tobacco products. Penalties were also assessed against him under section 163(2) of the Income Tax Act ("Act").
[3] It was the position of counsel for the Appellant that the admissibility of such evidence was contrary to section 7 of the Charter of Rights which reads:
Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
It was also contended that it violated section 11(c) of the Charter of Rights which reads:
Any person charged with an offence has the right
(c) not to be compelled to be a witness in proceedings against that person in respect of the offence;
Further, section 13 of the Charter of Rights reads:
Self-Crimination
13. A witness who testifies in any proceedings has the right not to have any incriminating evidence so given used to incriminate that witness in any other proceedings, except in a prosecution for perjury or for the giving of contradictory evidence.
[4] The parties agreed that if the Appellant's arguments prevailed, the appeal should be successful, but if the Appellant's argument did not prevail, and the Respondent's arguments were accepted, that the appeal should be dismissed without a need for the hearing of further evidence.
[5] Counsel for the Appellant wished to make written submissions in the matter and the Court set the date of July 16 for receipt of this submission, with same being exchanged with counsel for the Respondent. The Court ordered that the Respondent would file a reply to this argument, if any, by July 31 and exchange same with counsel for the Appellant. These requirements have been fulfilled.
[6] Counsel for the Respondent took issue with the memorandum filed by counsel for the Appellant arguing that factual allegations were made which were not in evidence before the Court. Such allegations related to whether or not the tobacco to which the assessment relates includes the seized tobacco that was in issue in the trial of Ronald MacKinnon and whether or not the trial judge in that case believed his testimony.
[7] Counsel for the Respondent takes the position that if this Court wishes to base its decision on such evidence, the Respondent should be entitled to call evidence to show that the seized tobacco was not included in the assessment of the Appellant's income for the 1995, 1996 and 1997 taxation years.
[8] This argument by counsel for the Respondent is well taken. These were not issues that were to be addressed in the submissions before this Court. The submissions here were restricted to the issue as to whether or not prior evidence of the Appellant can be received in evidence or whether or not it violated the provisions of the Charter as earlier referred to.
[9] The Court is satisfied that what it has to decide in this case, as a result of the agreement between the parties at the time of the hearing, boils down to whether or not the assessments made against the Appellant in the years 1995, 1996 and 1997 which increased the income of the Appellant in those years to include amounts for the illegal sales of tobacco for those years and the imposition of penalties pursuant to subsection 163(2) of the Act, are "true penal consequences", as outlined in Taylor (R.T.) v. The Queen, 95 DTC 591, bearing in mind the other cases that have been referred to by both counsel. It was the position of counsel for the Respondent that they were not and that their intention and purpose was not to redress wrongs done to society but to maintain the internal discipline of the self-reporting nature of the income tax regime as referred to by Madame Justice Wilson in R. v. Wigglesworth, 45 D.L.R. (4th) 235 at page 252.
[10] Counsel for the Respondent submits that section 13 of the Charter does not grant the Appellant the desired protection that he seeks as the Appellant in this case will not be "convicted" of anything. Her position was that the procedure before the Tax Court of Canada is not a criminal prosecution, but a civil appeal. The Appellant was reassessed to include amounts of net business income for the 1995, 1996 and 1997 taxation years. The allegation was that his business income was earned from the illegal sale of tobacco products. It is that assessment that is now being appealed to the Tax Court of Canada.
[11] She takes the position that the Charter protection from self-incrimination is not applicable in this instance as the proceedings before this Court do not involve penal consequences.
[12] She referred to Knutson v. Saskatchewan Registered Nurses Association, [1990] S.J. No. 603 (C.A.) No. 681; McDonald v. Law Society of Alberta, [1993] A.J. No. 985 (Q.B.); and Taylor, supra.
[13] The submissions of counsel for the Appellant referred to Wigglesworth, supra; Taylor (R.T.), supra; and A. Tyler v. M.N.R., [1991] 1 C.T.C. (F.C.A.). Counsel suggested that there is no distinction between the statements that penal consequences are those which have an intent to promote public order involved within the public sphere of activity whereas fines and penalties for certain sections of the Act are not said to be penal because they are intended to regulate the conduct of taxpayers with reference to the complying with the requirements of the Act. Counsel's position was that both are intended to make society comply with the law. Counsel also relied upon the case of R. v. Mannion, 25 C.R.R., 182 where the Court found that the cross-examination of an accused on prior and uncontested evidence given at the first trial violates section 13 of the Charter and that the new trial of an accused on the same indictment is indicated in the phrase, "in any other proceedings".
[14] Counsel also relied upon the case of Donald v. Law Society of British Columbia, (1984) 7 C.R.R., 305, in support of his proposition that the words "any other proceeding" as used in section 13 of the Charter would encompass the procedure of reassessing Hector MacKinnon. He was being fined and penalized. He was in a Court of law at both levels. The levels involved evidence. The Provincial Court and the Tax Court are not administrative bodies. The judges are not administrators. Revenue Canada employees are administrators. The Provincial Court hearing of Ron MacKinnon falls within the definition of "any other proceeding".
Decision
[15] In the case of Taylor, supra, Judge Sobier, of this Court, dealt extensively with the issue which must be decided here. In that case, when discussing the implications of Wigglesworth, supra, Judge Sobier referred to the argument of counsel for the Appellant in that case that the imposition of penalties amounting to almost $100,000 was tantamount to:
... a fine which by its magnitude would appear to be imposed for the purpose of redressing the wrong done to society at large rather than to the maintenance of internal discipline within the limited sphere of activity.
Judge Sobier also referred to the case of Knutson, supra, which found that:
... fines of up to $10,000 for each offence, leaving aside the additional liability to reprimand, suspension and disbarment, would, in all likelihood, have been found to be a true penal consequence within the meaning of Wigglesworth,... .
However, as Judge Sobier pointed out, we are not dealing with fines in a criminal or quasi-criminal proceeding or disciplinary proceeding before the Tax Court. We are dealing with one of penalties in respect of an administrative matter based upon unreported income. He did not liken these to offences because the penalties were based upon unreported income and apply when a taxpayer makes a false statement on his return either knowingly or under circumstances amounting to gross negligence.
[16] Further, Judge Sobier stated that the matter of the Charter, and in particular paragraph 11(h) has been the subject of review by Judge Sarchuk of this Court in Sommers v. M.N.R., [1991] 1 C.T.C. 2451, 91 DTC 656. In the end result he found that the assessments by the Minister and the penalties imposed as a consequence of such assessments do not come within paragraph 11(h); they are not criminal or quasi-criminal "by nature", nor are the penalties a "true penal consequence".
[17] Judge Sobier further pointed out that a similar conclusion was reached by the Ontario Court of Appeal in The Queen v. Compton Joseph Ferreira, Ont. C.A., 88-4676, July 12, 1988 (unreported). Judge Sobier concurred with these reasons and found that the penalties do not amount to a "true penal consequence". Judge Sobier further found that section 7 affords no safeguard of economic rights.
[18] He referred to the case of Canada v. Caseley, [1991] 1 C.T.C. 211, 90 DTC 6618 (P.E.I.S.C.) where the double jeopardy issue arose with respect to penalties under subsection 163(2) and section 239 of the Act, the latter being a criminal charge dealing with tax evasion.
[19] He referred to Chief Justice MacDonald's statement at pages 216-217 (DTC 6621) where he dealt with the section 7 argument as follows:
Under subsection 163(2) there is no threat to life, liberty or security of the person. Only a monetary penalty may be assessed. In Whitbread v. Walley (1988), 51 D.L.R. (4th) 509, [1988] 5 W.W.R. 313, the British Columbia Court of Appeal, McLachlin J., giving the opinion of the Court, stated at pages 519-20 (W.W.R. 323-24):
To date section 7 has been applied mainly in cases where the physical liberty of the complainant has been infringed or is in danger of infringement. Imprisonment and detention by the state offers classic examples of situations where section 7 clearly applies. ...
At the other end of the scale, it appears clearly that purely economic claims are not within the purview of section 7 of the Charter. No one suggests, for example, that imposition of a monetary disability on a corporation would infringe section 7 if not effected in accordance with the principle of fundamental justice.
[20] Judge Sobier concurred with Chief Justice MacDonald's conclusions and found that the Appellant's rights under the Charter had not been violated and that he was entitled to no remedy under the Charter.
[21] Generally, the learned trial judge found that the imposition of penalties under subsection 163(2) does not constitute an "abuse of process" in any guides which would entitle the Appellant to a Charter remedy.
[22] It is to be noted that this case was referred to by the Federal Court of Appeal at [1997] F.C.J. No. 193 (C.A.) and an application for leave to appeal to the Supreme Court of Canada was dismissed at [1997] S.C.C.A. No. 223.
[23] This Court is satisfied that the assessments that were made increasing the Appellant's income to include amounts from the illegal sale of tobacco for the 1995, 1996 and 1997 taxation years and penalties assessed pursuant to subsection 163(2) of the Act are not of "true penal consequence" as outlined in the case referred to above. Their purpose is to maintain the internal discipline of the self-reporting nature of the income tax regime.
[24] The appeals are dismissed and the Minister's assessment is confirmed.
Signed at Ottawa, Canada, this 18th day of September 2001
"T.E. Margeson"
J.T.C.C.
COURT FILE NO.: 2000-3768(IT)I
STYLE OF CAUSE: Hector MacKinnon and The Queen
PLACE OF HEARING: Sydney, Nova Scotia
DATE OF HEARING: June 28, 2001
REASONS FOR JUDGMENT BY: The Honourable T.E. Margeson
DATE OF JUDGMENT AND
REASONS FOR JUDGMENT: Sept. 18, 2001
APPEARANCES:
Counsel for the Appellant: Hugh R. McLeod
Counsel for the Respondent: Christa MacKinnon and
John Bodurtha
COUNSEL OF RECORD:
For the Appellant:
Name: Hugh R. McLeod
Barrister & Solicitor Inc.
Firm: 275 Charlotte Street, Suite 208
P.O. Box 306
Sydney, Nova Scotia B1P 1C6
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-3468(IT)I
BETWEEN:
HECTOR MacKINNON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on June 28, 2001, at Sydney, Nova Scotia, by
the Honourable Judge T.E. Margeson
Appearances
Counsel for the Appellant: Hugh R. McLeod
Counsel for the Respondent: Christa MacKinnon and
John Bodurtha
JUDGMENT
The appeals from the assessments of tax made under the Income Tax Act for the 1995, 1996 and 1997 taxation years are dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of September 2001.
|
"T.E. Margeson" |
J.T.C.C.