R. v. Breakell (M.A.) et al., 2009 ABCA 173

• Judge: Fraser, C.J.A., Côté and Paperny, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: April 07, 2009
• Citations: 2009 ABCA 173;(2009), 454 A.R. 205 (CA)

R. v. Breakell (M.A.) (2009), 454 A.R. 205 (CA);

      455 W.A.C. 205

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. MY.041

Her Majesty the Queen (respondent) v. Mark Andrew Breakell (appellant) and Mark A. Breakell Professional Corporation (not a party to the appeal)

(0801-0250-A; 2009 ABCA 173)

Indexed As: R. v. Breakell (M.A.) et al.

Alberta Court of Appeal

Fraser, C.J.A., Côté and Paperny, JJ.A.

May 8, 2009.

Summary:

Breakell was convicted of two counts that he made false or deceptive statements in his T1 income tax returns for 1998 and 1999 by failing to report taxable income, contrary to s. 239(1)(a) of the Income Tax Act (ITA), and of one count that he wilfully evaded the payment of income tax for the tax years 1998 and 1999, contrary to s. 239(1)(d) of the ITA, by failing to report taxable income for those years. Breakell's unreported income related to capital gains/income he realized disposing of shares in a number of companies. Breakell appealed from the convictions, arguing that the trial judge erred in law by: (i) misinterpreting the legal requirements for specific intent by failing to consider the impugned share dispositions individually and, in particular, those relating to Hartland Pipe Services Ltd.; (ii) concluding that Breakell had the necessary specific intent to found the convictions on counts 2 and 3 in respect of the transactions involving Hartland shares; and (iii) improperly using evidence of specific intent from the 1998 tax year to found convictions with respect to the 1999 tax year.

The Alberta Court of Appeal dismissed the appeal.

Criminal Law - Topic 39.4

General principles - Mens rea or intention - Doctrine of wilful blindness - [See third Income Tax - Topic 9512 ].

Evidence - Topic 1255

Relevant facts - Relevance and materiality - Similar acts - To prove intent or guilty knowledge - Breakell was convicted of two counts that he made false or deceptive statements in his T1 income tax returns for 1998 and 1999 by failing to report taxable income, contrary to s. 239(1)(a) of the Income Tax Act (ITA), and of one count that he wilfully evaded the payment of income tax for the tax years 1998 and 1999, contrary to s. 239(1)(d) of the ITA, by failing to report taxable income for those years - Breakell appealed, arguing that the trial judge erred in improperly using evidence of specific intent from the 1998 tax year to found convictions with respect to the 1999 tax year - The Alberta Court of Appeal rejected the argument - The trial judge specially stated "I have not considered the evidence relating to the 1998 charges as admissible similar fact evidence in relation to the 1999 T1 Tax Return" - It was also clear from the trial judge's reasons that he did consider the two tax years separately, and made distinct findings for each of those two years, without using findings from one to bolster findings for the other - See paragraphs 36 to 37.

Income Tax - Topic 9350

Enforcement - Offences - False statements - [See Income Tax - Topic 9510 and all Income Tax - Topic 9512 ].

Income Tax - Topic 9510

Tax evasion and tax avoidance - General principles - What constitutes evasion - Breakell was convicted of two counts that he made false or deceptive statements in his T1 income tax returns for 1998 and 1999 by failing to report taxable income, contrary to s. 239(1)(a) of the Income Tax Act (ITA), and of one count that he wilfully evaded the payment of income tax for the tax years 1998 and 1999, contrary to s. 239(1)(d) of the ITA, by failing to report taxable income for those years - Breakell's unreported income related to capital gains/income he realized disposing of shares in a number of companies - Breakell appealed - He did not challenge the convictions in respect of the 1998 tax year and, except for share transactions involving Hartland Pipe Services Ltd., he did not challenge any of the trial judge's findings related to any of the other undisclosed share transactions for the 1999 tax year - However, with respect to the undisclosed Hartland share transactions for the 1999 tax year, Breakell argued that the trial judge had not found that Breakell possessed the necessary specific intent in relation to those transactions or, if he had so found, then he erred in so concluding - The Alberta Court of Appeal dismissed the appeal - The defence approach amounted to an attack on the trial judge's reasons and not on the conviction itself - The Crown charged one global count under s. 239(1)(a) for the 1999 tax year rather than separate counts for each alleged violation and one global count for tax evasion for the tax years under s. 239(1)(d) rather than separate counts for each alleged violation - It was therefore enough if the taxpayer made false statements in respect of one transaction or wilfully evaded, or attempted to wilfully evade, income tax on one transaction only in the tax year in question - Based on the trial judge's findings regarding Breakell's failure to disclose share transactions involving 19 companies other than Hartland for the 1999 tax year and his intentions relating thereto, Breakell was guilty of making false statements in respect of his 1999 tax return contrary to s. 239(1)(a) and of wilfully evading tax for that year contrary to s. 239(1)(d) - Further, Breakell did not dispute any of the findings related to the 1998 tax year and those findings would, by themselves, support the conviction under s. 239(1)(d) - See paragraphs 10 to 13.

Income Tax - Topic 9512

Tax evasion and tax avoidance - General principles - Requirement of intent or wilfulness - Breakell was convicted of two counts that he made false or deceptive statements in his T1 income tax returns for 1998 and 1999 by failing to report taxable income, contrary to s. 239(1)(a) of the Income Tax Act (ITA), and of one count that he wilfully evaded the payment of income tax for the tax years 1998 and 1999, contrary to s. 239(1)(d) of the ITA, by failing to report taxable income for those years - Breakell's unreported income related to capital gains/income he realized disposing of shares in a number of companies, including Hartland Pipe Services Ltd. - Breakell appealed, arguing that the trial judge never dealt expressly with the undisclosed Hartland transactions for the 1999 tax year and thus, never made any finding of specific intent relating to them - The Alberta Court of Appeal dismissed the appeal - While the trial judge did not outline each and every undisclosed Hartland share disposition for the 1999 tax year, the reasons for judgment revealed that the trial judge inferentially found that Breakell possessed the required specific intent in relation to his failure to disclose the various Hartland share dispositions in his 1999 tax returns and his evasion or attempted evasion of income tax in relation thereto - Moreover, with respect to count 2, the trial judge expressly found that Breakell had made false or deceptive statements in his 1999 return by failing to report taxable income in the sum of $1,281,421 - That amount included Breakell's taxable income from the undisclosed Hartland share transactions, thereby contradicting the suggestion that the trial judge did not find the required specific intent in regard to those transactions - Finally, the findings that the trial judge made on wilful blindness for the 1999 tax year clearly applied to all undeclared stock transactions for that year, including those relating to Hartland - See paragraphs 19 to 23.

Income Tax - Topic 9512

Tax evasion and tax avoidance - General principles - Requirement of intent or wilfulness - Breakell, a chartered accountant, was convicted of two counts that he made false or deceptive statements in his T1 income tax returns for 1998 and 1999 by failing to report taxable income, contrary to s. 239(1)(a) of the Income Tax Act (ITA), and of one count that he wilfully evaded the payment of income tax for the tax years 1998 and 1999, contrary to s. 239(1)(d) of the ITA, by failing to report taxable income for those years - Breakell's unreported income related to capital gains/income he realized disposing of shares in a number of companies - Breakell appealed, arguing that the trial judge erred in concluding that Breakell had the necessary specific intent to found the convictions on counts 2 and 3 in respect of the transactions involving shares of Hartland Pipe Services Ltd. - The defence emphasized both the complexity of the calculations and the extensive time required to determine Breakell's capital gains and losses relating to the disposition of his shares in Hartland - The Alberta Court of Appeal dismissed the appeal - Complexity was not a stand-alone defence to tax evasion - The court stated that "The number of undisclosed Hartland transactions, their significant value and the time frame over which they occurred were all facts the trial judge was entitled to take into account - and did - in reaching his conclusion that the Crown had proven the requisite specific intent beyond a reasonable doubt in respect of Breakell's undisclosed share transactions, including those relating to Hartland. The trial judge was also entitled to take into account Breakell's education, professional background, work experience and knowledge in reaching the conclusion he did" - See paragraphs 25 to 32.

Income Tax - Topic 9512

Tax evasion and tax avoidance - General principles - Requirement of intent or wilfulness - Breakell, a chartered accountant, was convicted of two counts that he made false or deceptive statements in his T1 income tax returns for 1998 and 1999 by failing to report taxable income, contrary to s. 239(1)(a) of the Income Tax Act (ITA), and of one count that he wilfully evaded the payment of income tax for the tax years 1998 and 1999, contrary to s. 239(1)(d) of the ITA, by failing to report taxable income for those years - Breakell appealed, arguing that the trial judge erred in concluding that Breakell had the necessary specific intent to found the convictions on counts 2 and 3 in respect of the transactions involving shares of Hartland Pipe Services Ltd. - The Alberta Court of Appeal dismissed the appeal - There was no basis to interfere with the trial judge's implicit findings that Breakell possessed the required specific intent under each of ss. 239(1)(a) and (d) in respect of the undisclosed Hartland share transactions for the 1999 tax year - The trial judge had also found in the alternative that Breakell was wilfully blind - The court stated that "The trial judge found that a number of factors justified his conclusion that Breakell possessed the necessary specific intent with respect to the 1999 tax year. That included Breakell's disregard of his unopened mail, Breakell's recognition of the inherent deficiencies in the StockWatch program, and Breakell's failure to take any steps to obtain accurate information and determine the true extent of his stock market activities. As a result, the trial judge concluded that, in completing his 1999 tax return, Breakell suspected the fact that he had other taxable capital gains, but refrained from obtaining final confirmation because he wanted to be able to deny actual knowledge" - Those findings were available to the trial judge and there was no reviewable error in the way in which he dealt with the wilful blindness issue - See paragraphs 33 to 34.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 15].

R. v. François (L.), [1994] 2 S.C.R. 827; 169 N.R. 241; 73 O.A.C. 161; 116 D.L.R.(4th) 69, refd to. [para. 15].

R. v. Gagnon (L.), [2006] 1 S.C.R. 621; 347 N.R. 355; 2006 SCC 17, refd to. [para. 15].

R. v. Clark (D.M.), [2005] 1 S.C.R. 6; 329 N.R. 10; 208 B.C.A.C. 6; 344 W.A.C. 6; 2005 SCC 2, refd to. [para. 15].

Knox Contracting Ltd. and Knox v. Canada and Minister of National Revenue et al., [1990] 2 S.C.R. 338; 110 N.R. 171; 106 N.B.R.(2d) 408; 265 A.P.R. 408; 73 D.L.R.(4th) 110, refd to. [para. 17].

R. v. Derose (A.S.) et al. (2001), 297 A.R. 51; 2001 ABPC 146 (Prov. Ct.), refd to. [para. 17].

R. v. Klundert (J.) (2004), 190 O.A.C. 36; 242 D.L.R.(4th) 644; 187 C.C.C.(3d) 417 (C.A.), refd to. [para. 17].

R. v. Docherty, [1989] 2 S.C.R. 941; 101 N.R. 161; 78 Nfld. & P.E.I.R. 315; 244 A.P.R. 315; 51 C.C.C.(3d) 1, refd to. [para. 17].

R. v. Sansregret, [1985] 1 S.C.R. 570; 58 N.R. 123; 35 Man.R.(2d) 1; 17 D.L.R.(4th) 577; 18 C.C.C.(3d) 223, refd to. [para. 18].

R. v. Harding (M.) (2001), 152 O.A.C. 230; 207 D.L.R.(4th) 686; 160 C.C.C.(3d) 225 (C.A.), refd to. [para. 18].

Counsel:

R.G. Mitchell and K. Locke, for the respondent;

C.R. Stewart and L.A. Goldbach, for the appellant.

This appeal was heard on April 7, 2009, before Fraser, C.J.A., Côté and Paperny, JJ.A., of the Alberta Court of Appeal. The following memorandum of judgment of the Court of Appeal was filed on May 8, 2009.