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Citation: |
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Date: 20030124 |
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Docket: 2002-2126(GST)I |
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BETWEEN: |
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WILLIAM N. MARACH, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN,
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Respondent.
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_______________________________________________________________
Appeal heard on October 11, 2002 at Vancouver, British Columbia
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Before: The Honourable Judge R.D. Bell |
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Appearances: |
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Counsel for the Appellant: |
Thomas M. Boddez |
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Counsel for the Respondent: |
Nadine Taylor |
_______________________________________________________________
JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated November 13, 2001, is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
The parties, or either of them, may contact the Court within 30 days regarding costs.
Signed at Ottawa, Canada this 24th day of January, 2003.
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J.T.C.C.
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Citation: |
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Date: 20030124 |
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Docket: 2002-2126(GST)I |
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BETWEEN: |
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WILLIAM N. MARACH, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN,
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Respondent. |
REASONS FOR JUDGMENT
Bell, J.T.C.C.
ISSUE:
[1] The issue is not set forth in the Notice of Appeal. It merely states that the Appellant was not liable to collect tax under the Excise Tax Act ("Act") respecting Goods and Services Tax ("GST") and was not liable for penalties under section 280 of that Act. The Reply to the Notice of Appeal describes the issue as
...whether the Minister properly assessed the Appellant for tax, interest and penalties pursuant to section 296 of the Act.
[2] At the commencement of the hearing, Appellant's counsel explained that the Appellant came to him with income tax documents, not GST documents. Counsel found the GST Notice of Decision and quickly filed a Notice of Appeal. He then explained that he did not amend the Notice of Appeal because he thought the matter would be settled. He then stated that the issue was whether the Appellant was in partnership with one Shigeru Amano ("Amano"), architect.
[3] The Appellant submitted that, on the authority of Decaire & Diesel v. The Queen, [1999] G.S.T.C. 93, the partnership was the person liable to collect and remit GST with the result that the partnership, not the Appellant was liable for GST. Counsel then said that if the Appellant was not in partnership, his appeal would fail.
FACTS:
[4] The Minister of National Revenue ("Minister") assessed the Appellant for GST, interest and penalties respecting the periods from February 1, 1994 to December 31, 1999.
[5] The Appellant testified that he had graduated from the University of British Columbia in architecture in 1968 and that he was a member of the Royal Architectural Institute of Canada. He said that he was in partnership with Amano from 1994 to 1999. He followed this by saying that he was in the practice of architecture and project management into 2000. After work in other jurisdictions and organizations the Appellant said that he joined Amano in the mid-1970s and worked, not as a partner, with him until 1982. He then moved to the Northwest Territories where he remained for ten years, returning to Vancouver in 1992 at which point he contacted Amano who expressed interest in working together. He said that they formed a partnership in 1994 which carried on into January, 2000. He testified that, before moving to Vancouver in 1992, Amano had told him that he was busy with more work and wanted the Appellant to join him as a partner, that architecture was changing and that its new phase was project management and that he, the Appellant, would be a good complement to the firm.
[6] He stated that Amano would continue with the business aspects and would bring in work. The Appellant said that he would do design and production work and project management. He further stated that he and Amano agreed that expenses would "come off the top" and that profits would be calculated and distributed on a 50/50 basis.
[7] The Appellant stated that he did design work, correspondence and "spec writing" in his office at home. He said that the agreement was not reduced to writing because he had known Amano since the 1960's and trusted him. He also said that Amano did not like documents and that he did work on the basis of a handshake or a brief letter. He added that he felt the same.
[8] Appellant's counsel produced a bundle of "break-out" sheets for each of the years 1994 to 1999 inclusive. He said that they were prepared by Amano and given to him. There were 17 sheets for the 1994 year setting forth, by project, the amount of fees received, the amount of overhead, expenses paid to employees in certain cases and on each page, the 50 percent allocation of profit. Many of the sheets for all years bore the endorsement of payment and date of payment. There were 26 such sheets for 1995, 25 sheets for 1996, 19 sheets for 1997, 18 sheets for 1998 and 18 sheets for 1999. He stated that Amano did the accounting, collected the revenue, calculated expenses, prepared the sheets, determined the revenue, and reimbursed him, the Appellant, for expenses. He explained that the sheets were not prepared on a regular basis but whenever Amano had done the bookwork. The sheets for all years allocated 50 percent of the profit to the Appellant.
[9] The Appellant described his work as gathering the required information from clients, preparing the design, approaching structural, mechanical, electrical and code consultants, preparing drawings, dealing with building permits and, sometimes, project managing. He said that he and Amano together spoke to the client at the beginning of a project. They would then decide the scope of the project and garner the necessary information. The Appellant stated that they did work for many of Amano's repeat clients but that if a new client was obtained, Amano would introduce the Appellant as his partner. He said that the consultants were required to receive proposals and that he then reviewed them respecting the scope of work and reasonableness of fee and would negotiate with them for submission to the client. He stated that either Amano or he would ask for a fee adjustment.
[10] The Appellant was referred by counsel to a typical proposal, this one being made to the City of Red Deer, prepared and signed by the Appellant on a letterhead which bore the name "Shigeru Amano Architect" followed by the address. He stated that he and Amano had discussed whether his name would be in the firm and he said that it was "never an issue to me". That letter contains the following language in different places:
In response to your recent proposal call we hereby submit our proposal ...
Our proposal consists of the following ...
We feel our firm ....
... our firm has been involved in design, construction and project management in Red Deer since 1984.
We have just recently completed a major addition ... in which we acted as architects and project managers.
... we have become familiar with contractors, suppliers and building authorities ... in Red Deer.
... ours is a small firm with both principals directly involved in and controlling our projects.
Third, both principals have degrees in architecture and long experience as practicing architects.
In closing, we would like you to know that we are very much taken with Red Deer from our past and present work.
(italics added)
The Appellant testified that "our" and "we" refer to him and Amano.
[11] Counsel then presented, in evidence, the Appellant's curriculum vitae describing the Appellant as:
Partner Shigeru Amano Architect, Richmond B.C.
[12] He stated that when he had worked with Amano before 1994 he submitted invoices and was paid. He then said that in 1994 when they started the partnership, he stopped sending invoices and the aforesaid sheets with profit computation were prepared by Amano.
[13] Also introduced in evidence was a letter on Amano's letterhead dated August 29, 1995 reading as follows:
To whom it may concern:
Shigeru Amano Architect is a professional firm in operation since 1967.
A list of the firm's current projects is attached. Current receivables over the next 12 months, from actual jobs in hand, amount to $345,000. Projected receivables from jobs in hand with Phase 2 approvals pending amount to $49,000.
There are 15 proposals on our current project list that are not included in receivables.
Nick Marach is a 50% partner in this firm, and has been since 1992. His projected income from the current projects is in the $100,000 range.
Shigeru Amano
The Appellant stated that the 1992 date in the last paragraph was in error and should have been 1994.
[14] The Appellant stated that his understanding of liability was that both he and Amano were liable for claims because they were the two professionals and were insured.
[15] The Appellant then said that he severed relations with Amano in December, 2000. He described the illness of Amano's wife growing worse and Amano's attention being directed to her resulting in he, the Appellant, taking on more responsibilities. He said that because Amano's attention was wholly directed to his wife, promotion, contacts and news jobs "didn't happen". He said that very little business was coming in and that there was not enough for him to do.
[16] The Appellant testified that he reported his income as professional income on his income tax returns for the 1994 to 1999 years inclusive. He said that he had no accounting training, that he reported that sum, being a 50 percent share of profit from the aforesaid sheets, and that he deducted the expenses of his home office which he had paid. He said that he did not prepare GST returns for those years, assuming that Amano had done so. He said that their understanding was that Amano would handle the business side, taxes, licenses, et cetera, and that he thought the partnership would have to file respecting GST and that that would be done. He said that he had no experience with GST before joining the firm.
[17] Appellant's counsel presented to him a copy of a letter from Canada Customs & Revenue Agency ("Agency") dated February 16, 2001 stating that it had approved his application for Goods and Services Tax et cetera. He said that he had not applied for that and assumed he was simply assigned a GST number. He stated that he then retained an accounting firm to look into GST, that returns were prepared after he gave them his income tax returns, telling them that his income was from a partnership. He stated that the accountant did not show him the returns before they were filed and that he was disappointed. He said that he had a one-half hour meeting with the accountant who two weeks later retired and "gave my business to someone else". He said that he did not understand why he was registered or why the Agency wanted him to file GST returns. He said that he thought that it would be handled by Amano.
[18] On cross-examination, when asked if he obtained one-half of the business assets when he departed in 2000, he replied that he had not and that it was an issue. He said that he did not see the GST returns, that he had looked for a reputable firm and had relied upon it. When asked if he expected the returns to be filled out in the manner they were, he said that he did not know. He added that this was the first time that he used an accountant respecting tax and that he went to the accountant because he had received the above notice from the Agency.
[19] Respondent's counsel produced a copy of the Appellant's business card which showed the name:
Nicholas Marach
Shigeru Amano Architects
6409 Arbroath Street, Burnaby, B.C. V5E 1C3
Telephone (604) 433-7700/Fax: (604) 433-9481
Counsel asked him if he had any other business card with the word "partner" on it. The Appellant replied negatively. When asked why his name was not on the letterhead he replied that it was not important to him and that it was not worth the cost to produce new letterhead, envelopes, and business cards. When asked if he was introduced by Amano as a partner he replied that at times he was sure he was, but not necessarily for repeat clients. He said that he and Amano went jointly to new clients' premises and that he was introduced by Amano "that way". When asked if he had indicated on his tax return that he was a partner, he replied that he put in his professional income. When asked if he gave anything to the Agency saying that he was a partner in each of the years he replied that he did not think so. When asked if he had intended to be a partner he replied that he could give something to the firm that it didn't have. He further stated that after his time in the Northwest Territories, he was not going to be an employee. When asked if he and Amano had an agreement, he said that they would be splitting profits. When asked if he felt that one-half of the equipment of the firm was his, he replied affirmatively respecting the ones upon which he had made payment, adding that the initial assets were very rudimentary. He explained that he did not ask for a split of the asset value when he left the firm because it was a tense time, not much was coming in, he was experiencing financial hardship, that Amano's wife had died, that he felt badly and that he was sympathetic in those circumstances adding that it "wasn't the time".
[20] The Appellant answered Respondent's counsel's questions to the effect that he did not have a bank account and he did not have signing authority with Amano. He stated that he and Amano prepared fee schedules together. When asked if he was able alone to talk to a client and come to an agreement, Appellant replied: "On behalf of the firm, yes". The Appellant, in response to other queries, stated that Amano saw all of his proposals and that he thought he saw all of Amano's proposals. When asked if he charged GST in the proposals he wrote, he responded "I don't know". He then said that he would imagine whatever was required by law was done. He also said that he did not remember whether Amano's proposals included GST and that that was in Amano's area.
[21] When examined about a line on his 1994 income tax return that referred to net partnership income, nothing appearing there, he said that he didn't see it and that he did not report income for the total business. At that point, Appellant's counsel stated that the Appellant would admit that he described his 50 percent share of partnership income as "gross professional income" and then deducted expenses.
[22] The Appellant described the above referred to letter written by Amano describing him as a partner as being written because he was buying a house and thought that it would be useful. When asked if Amano had discussed GST with him, the Appellant replied that Amano had raised it and asked if he, the Appellant, had "done GST". He said that he thought that Amano was doing it. When he was then asked if had pursued this matter with Amano after that, he replied that he had not done so, it being a very bad time for Amano with his wife ill.
[23] The Appellant's second witness, John Bajan, Chartered Accountant ("Bajan") stated that he was the Chief Financial Officer for a company for whom a 22,000 square foot expansion planned by Amano was being made. He testified that he was the construction manager and that his boss wanted him to build it. He said that the plans were done prior to him starting and that he, at his employer's suggestion, called Amano. He then said that Amano told him that he had not done the plans and that his partner, William Nicholas Marach had done them. He said he visited the Appellant who gave him a tour of the offices and introduced him to various personnel. He stated that the Appellant pointed to Amano's office and said that that was his partner's office.
[24] The Appellant then produced Jean Bumen, an architect, as a witness. She stated that she was an architect and a building code consultant. She said that she had known the Appellant for seven or eight years and had known Amano about the same time. She said that she helped him with three major projects and "smaller issues", being the building code consultant for same. She stated that when she was hired she wanted to know the Appellant's relationship with Amano because the company name was Shigeru Amano only. She added that the Appellant told her that they were partners and that Amano did not say that it was not the case. She stated that mostly Amano did the proposals and the Appellant did the design. She said that both were involved in the projects. On cross-examination she said that Amano was not present when she spoke to the Appellant.
[25] Amano, produced by Respondent's counsel as a witness, stated that he and the Appellant "shared fees 50 percent, on a verbal arrangement". When asked if the Appellant was a partner he responded that he was not registered and that to be a partner one must be registered. When asked if it was intended that the Appellant be a partner Amano responded that he never had it written. He then said that his understanding was that the Appellant was a consultant. Amano also said that he had no invoices from the Appellant after an invoice dated June 28, 1993.
[26] Amano stated that after expenses on the fees, he showed profit. He figured the monthly expenses. He said that initially he took a percentage to establish monthly expenses of roughly $3,000 per month, initially having used a 15 percent factor and later reducing it to 10 percent.
[27] Amano said that he owned the assets in the firm including a computer, a photocopy machine and a fax machine. He said that the charge to the Appellant for these was included in the 15 percent. He said that he did not give any assets to the Appellant when he left the firm and further that the Appellant had no assets of his own in the firm. He stated that the Appellant did not have signing authority on the bank account and that he alone dealt with the bank and money transactions. He said that he prepared the fee quotations, discussing same occasionally with the Appellant. He also said that he had mostly verbal agreements with clients. When asked if he wrote letters to his clients he replied that he guessed "Nick did". When asked with whom clients initially dealt, he responded it was he, that he was the architect, that this was his firm and that it was a proprietorship. He stated that he and the Appellant worked together and when asked if the Appellant took on more responsibility he responded, "not really". When asked if he discussed GST with the Appellant, Amano said "yes" and when asked when that was he responded "no idea". With respect to a Statement of Professional Activities which seems to have been part of a tax return he stated that he reported professional fees as gross income in the amount of $261,358.30, that there was no partnership and that he "owned 100 percent". When asked if he recalled using the word "partner" he replied "yes". He was then referred to the letter addressed "To whom it may concern". He said that it was signed by him and that the purpose was to assist the Appellant in obtaining a loan or mortgage money, to prove he had income. On cross-examination, Amano said that he had never been a partner with an architect but that he had been a partner in a food processing operation, in an apartment developing enterprise and in various partnerships in the past thirty to forty years. He stated that he had prepared the "break-out" sheets, and that he had given cheques to the Appellant for 50 percent of the profit. He stated, with respect to the Red Deer proposal, that the Appellant had prepared the letter, that he, Amano had discussed it with the Appellant and that he had agreed with the contents. When asked why he used the word "partner" in the above referred to letter he said he just wrote it for the bank. When asked if he wrote it to mislead the bank he replied negatively. When asked if he had said in that letter that the Appellant was a 50 percent partner, he replied, "I guess I did". When asked if he told Bajan that the Appellant was a partner he stated that he could not recall.
APPELLANT'S SUBMISSIONS:
[28] Appellant referred to Larry Decaire & Dorrin Diesel dba A-OK Construction v. The Queen, [1999] G.S.T.C. 93, a decision of this Court. After stating that the issue was whether the relationship of Amano and the Appellant was a partnership he referred to the Reasons in Decaire, particularly portions of paragraph 20 and 21.
[20] ... In accordance with the above provisions, a partnership is, for purposes of the Act, defined to be a person. Since that person conducted the business, it is the person providing the taxable supply and required to be registered, it is the person required to file and to calculate tax and it is the person required to collect and remit that tax.
[21] Subsection 145(1), set out above, clearly provides that an activity engaged in by a person as a member of a partnership shall be deemed to be an activity of the partnership and not to be an activity of the person. Support for the conclusion that I have reached lies in the words of subsection 272.1(5), added in respect of the post-April 23, 1996 period, which refers to:
... amounts that became payable or remittable by the partnership ...
it being clearly anticipated that a partnership, under the Act, can be the person who is required to collect and remit tax. Since the partnership was the person which conducted business and since a person includes a partnership under this Act5, that partnership was the person required to collect and remit tax. The Appellants, having had no obligation so to do, this appeal is allowed with the result that they are not liable for tax, interest and penalties as assessed.
__________________
5 It is clear that a partnership is not a person except when expressed by codified law to be such.
[29] Counsel then referred to the British Columbia Partnership Act, section 2 of which reads:
Partnership is the relation which subsists between persons carrying on business in common with a view of profit.
He then referred to section 4(3) which reads:
In determining whether a partnership does or does not exist, regard must be had to the following rules:
...
(c) the receipt by a person of a share of the profits of a business is proof in the absence of evidence to the contrary that he or she is a partner in the business, but the receipt of a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him or her partner in the business ...
[30] Counsel then referred to Backman v. The Queen, 2001 DTC 5149. He highlighted portions of paragraphs 19 and 20, reading as follows:
[19] In law, the meaning of "carrying on a business" may differ depending on the context in which it is used. Provincial partnership acts typically define "business" as including "every trade, occupation and profession". The kinds of factors that may be relevant to determining whether there is a business are contained in the existing legal definitions. One simple definition of "carrying on trade or business" is given in Black's Law Dictionary (6th ed. 1990), at p.214: "To hold one's self out to others as engaged in the selling of goods or services." ...
[20] The existence of a valid partnership does not depend on the creation of a new business because it is sufficient that an existing business was continued. Partnerships may be formed where two parties agree to carry on the existing business of one of them. ...
Counsel then referred to paragraph 21 which reads in part:
[21] ... As was noted in Continental Bank, supra, at paras.34-35, a recognition of the authority of any partner to bind the partnership is relevant, but the fact that the management of a partnership rests with a single partner does not mandate the conclusion that the business was not carried on in common. This is confirmed in Lindley & Banks on Partnership (17th ed. 1995), at p.9, where it is pointed out that one or more parties may in fact run the business on behalf of themselves and the others without jeopardizing the legal status of the arrangement. It may be relevant if the parties held themselves out to third parties as partners, but it is also relevant if the parties did not hold themselves out to third parties as being partners. Other evidence consistent with an intention to carry on business in common includes: the contribution of skill, knowledge or assets to a common undertaking, a joint property interest in the subject-matter of the adventure, the sharing of profits and losses, the filing of income tax returns as a partnership, financial statements and joint bank accounts, as well as correspondence with third parties: see Continental Bank, supra, at paras.24 and 36.
[31] Counsel then stated that perhaps there was conflicting evidence but Amano conceded that the Appellant was sometimes held out as a partner. Counsel referred to evidence from two witnesses to the effect that the Appellant held himself out as a partner. He then said that Bajan said that both Amano and the Appellant held themselves out as partners. He said that there was no joint bank account. He then said that Respondent's counsel tried to make something of the assets not being distributed but stated that they were too few to be important. He submitted that Amano was scrupulous in seeing that the Appellant received his profit. He submitted that when business was carried on in common with a view to profit it was not necessary to find all factors outlined in the partnership description as being required. He referred to Loewen et al v. The Queen, 1998 G.S.T.C. 6 where three Appellants were assessed as a partnership in respect of GST not remitted on a new home built and sold by them. He referred to a letter from the solicitors to the Appellants referring to:
... the sale proceeds due to you.
The judge of this Court stated that the letter was clearly addressed to all three Appellants and could be construed only as a reference to all three Appellants. He added that it may be inferred from the contents of that letter that the Appellants shared in the profits resulting from the construction and sale. He submitted that in the absence of evidence to the contrary he was satisfied that the Appellants carried on business with a view to share in the profits and that, accordingly, a partnership existed.
[32] Counsel stated that the Appellant and Amano were involved in a number of projects over a number of years, not just one project as in the above case. He then referred to Volzke Construction Ltd. v. Westlock Foods Ltd., [1986] 4 W.W.R. 668 where the plaintiff built an addition to a shopping centre for which it was not completely paid. It brought an action against the defendant alleging that it was liable on the construction contract as a partner of a company which had awarded the contract to the plaintiff. The defendant denied liability, claiming it was merely a co-owner of the shopping centre and no partnership existed between it and the other party. The Alberta Court of Appeal, respecting the definition of a partnership in the Alberta Act referred to section 4(c) stating that a receipt by a person of a share of the profits of a business is prima facie proof that that person is a partner in the business. It then concluded that on all the facts, including an agreement between the third party and the defendant to split the profits 80/20 and the fact that they referred to each other as partners, the defendant was a partner in the operation of the shopping centre. Counsel then reminded the Court of the clear agreement of 50 percent of profit and costs determining the distribution in the instant appeal. Counsel also referred to 4 T's Industries Ltd. v. Kahle, 1992 Carswell B.C. 1885, (B.C. Supreme Court).
[33] He submitted that Amano wanted someone to handle detail and manage projects and that was why he brought the Appellant in as a partner.
Counsel then referred to the Statement of Professional Activities, effectively describing Amano's method of reporting and stated that the Appellant simply totalled the "break-out" sheet amounts as his income, being 50 percent of profit.
[34] He referred to the description of the Appellant in Amano's letter, as a partner, the evidence of two other credible witnesses as evidence of partnership and asserted that their testimony was not contradicted. He suggested that Amano chose the word "partner" when it suited his purpose.
RESPONDENT'S SUBMISSIONS:
[35] Respondent's counsel referred to the evidence of the two witnesses who referred to the description of the Appellant as a partner and referred to the 1995 letter referring to the Appellant as a partner and stated that that's all that was written or said respecting partnership.
[36] Counsel referred to Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298 and referred specifically to paragraphs 23, 24 and 25, highlighting certain portions as follows:
[23] The existence of a partnership is dependent on the facts and circumstances of each particular case. It is also determined by what the parties actually intended. ...
[24] ...The indicia of a partnership include the contribution by the parties of money, property, effort, knowledge, skill or other assets to a common undertaking, a joint property interest in the subject-matter of the adventure, the sharing of profits and losses, a mutual right of control or management of the enterprise, the filing of income tax returns as a partnership and joint bank accounts. ...
[25] In cases such as this, where the parties have entered into a formal written agreement to govern their relationship and hold themselves out as partners, the courts should determine whether the agreement contains the type of provisions typically found in a partnership agreement, whether the agreement was acted upon and whether it actually governed the affairs of the parties ...
[37] Counsel stated that Amano contributed the only assets to the firm. She stated that Amano alone dealt with the bank and fee quotations. She said that Amano had reported the entire amount on his return and deducted expenses. She submitted that it was important how the parties held themselves out to the tax department. She said that the Appellant never referred to other income, simply calling it professional come. She said that the Appellant made no suggestion of partnership in his income tax return. She stated that Amano signed the cheques to pay the Appellant, there was no payout at year end, and no splitting of extra funds. She submitted that there were no written documents suggesting partnership.
[38] Counsel then referred to Molinaro v. Canada, [2000] F.C.J. No. 147, particularly paragraph 10 quoting Linden, J.A. from The Queen v. Friedberg, 92 DTC 6031, where he referred to the importance of form.
[39] Counsel ended with the submission that the Appellant did not illustrate due diligence in this case.
APPELLANT'S REPLY SUBMISSIONS:
[40] Appellant's counsel said that the Appellant's income tax information was correct. He stated that the Appellant did not say that he had a sole proprietorship or a partnership. He submitted that professional income could be earned by a proprietor or a partner and that there was nothing sinister about the lack of description of source. He suggested that, respecting GST, the Appellant had no involvement in charging or collecting it and that there was nothing sinister in that fact. He submitted that returns do not tell the tax department anything about a taxpayer's thought process. He also submitted that it was a novel proposition that the partner did not pay for assets when it was his skill and expertise that were contributed to the endeavour.
ANALYSIS AND CONCLUSION:
[41] I have concluded that the Appellant was a partner during the periods in respect of which the Minister assessed GST, interest and penalties. He brought valuable assets, namely his skill and experience, to his relationship with Amano. During the relevant six years he received 123 "break-out" sheets prepared by Amano, each showing the allocation to him of 50 percent of the profit. Amano introduced him to clients as a partner. Amano referred to him in a letter, written to assist him in obtaining bank financing, as "a 50% partner in this firm". His letter written to the City of Red Deer dated February 24, 1999, was replete with words such as "we", "our firm" and "both principals", the Appellant having described the "we" as Amano and himself. He described himself as a partner in his curriculum vitae. He explained, credibly, his reasons for not insisting on him being described as a partner on stationary and business cards. Respecting him not having signing authority on the bank account, he was satisfied with Amano looking after monetary affairs. He explained satisfactorily, referring to the illness and death of Amano's wife, why he did not pursue monetary accounting for what he regarded as his share of physical assets.
[42] His not having described himself as a partner to the Agency is of little, if any significance. His statement that, after returning to Vancouver from the Northwest Territories, he did not intend to be an employee, is significant. Of further significance is the fact that he stopped sending invoices for his services to Amano in 1993.
[43] Amano seemed detached and somewhat irritated while testifying. His denial of the existence of a partnership was abbreviated and dismissive. In spite of the fact that he introduced the Appellant as his partner and described him in a letter as "a 50% partner in this firm" he stated that his firm was a proprietorship. He said he could not recall whether he told Bajan that the Appellant was a partner.
[44] Respondent's counsel made no attempt to describe the Appellant's status, if not a partner. There was no evidence as to Amano having made any source deductions and remittances respecting the Appellant.
[45] The joint endeavour was a relation subsisting between Amano and the Appellant carrying on business in common with a view to profit. Not all indicia of partnership were present in their relationship but that is why the case was before the Courts. It is my conclusion that the preponderance of evidence weighs in favour of the Appellant.
[46] Accordingly, as determined in Decaire (supra) the partnership was the person required to collect and remit tax. It was the "person", as defined in the Act, which conducted business. The Appellant, having had no obligation to do so, the appeal is allowed with the result that he is not liable for tax, interest and penalties as assessed.
[47] Appellant's counsel having requested an opportunity to make submissions respecting costs if his client succeeded in his appeal, the parties or either of them may contact the Court within 30 days regarding costs.
Signed at Ottawa, Canada this 24th day of January, 2003.
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J.T.C.C.
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CITATION: |
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COURT FILE NO.: |
2002-2126(GST)I |
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STYLE OF CAUSE: |
William N. Marach v. The Queen |
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PLACE OF HEARING |
Vancouver, British Columbia |
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DATE OF HEARING |
October 11, 2002 |
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REASONS FOR JUDGMENT BY: |
The Honourable Judge R.D. Bell |
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DATE OF JUDGMENT |
January 24, 2003 |
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APPEARANCES: |
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Counsel for the Appellant: |
Thomas M. Boddez |
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Counsel for the Respondent: |
Nadine Taylor |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
Thomas M. Boddez |
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Firm: |
Thorsteinssons |
Vancouver, British Columbia
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |