R. v. Klundert (J.), (2004) 190 O.A.C. 36 (CA)

• Court: Court of Appeal (Ontario)
• Case Date: August 30, 2004
• Jurisdiction: Ontario
• Citations: (2004), 190 O.A.C. 36 (CA)

R. v. Klundert (J.) (2004), 190 O.A.C. 36 (CA)

MLB headnote and full text

Temp. Cite: [2004] O.A.C. TBEd. AU.028

Her Majesty the Queen (appellant in file C38044/respondent on cross-appeal in file C38037) v. Jack Klundert (appellant in file C38037/respondent on cross-appeal in file C38044)

(Nos. C38037; C38044)

Indexed As: R. v. Klundert (J.)

Ontario Court of Appeal

Doherty, and Goudge, JJ.A., and Cavarzan, J.(ad hoc)

August 30, 2004.

Summary:

Klundert was charged with making a false statement in his 1993 tax return, contrary to s. 239(1)(a) of the Income Tax Act. He was also charged with tax evasion, contrary to s. 239(1)(d). A court composed of a judge and jury found Klundert guilty of the first offence and not guilty of the second. Klundert and the Crown appealed.

The Ontario Court of Appeal allowed the appeals and ordered a new trial on both counts.

Criminal Law - Topic 4438

Procedure - Verdicts, discharges and dismissals - Inconsistent verdicts - Klundert refused to pay taxes under the Income Tax Act (Can.) - He believed that the Act was unconstitutional - Klundert was charged with making a false statement in his 1993 tax return, contrary to s. 239(1)(a) - He was also charged with tax evasion, contrary to s. 239(1)(d) - Klundert said that his refusal to pay taxes did not constitute an evasion but was instead an honest protest against what he believed to be unlawful government action - This "protestor" defence was left to the jury for both offences - The judge told the jury that they could convict Klundert on the first offence only if the Crown proved that Klundert intended to evade the payment of tax by making a false statement - Klundert was found guilty of the first offence and not guilty of the second - The Ontario Court of Appeal quashed both verdicts and ordered a new trial - It was "legally unacceptable" to accept the "protestor" defence on the second offence and reject the same defence on the first offence - See paragraphs 68 to 79.

Income Tax - Topic 9512

Tax evasion and tax avoidance - General principles - Requirement of intent or wilfulness - Section 239(1)(d) of the Income Tax Act (Can.) provided that every person who, wilfully, in any manner, evaded or attempted to evade payment of taxes imposed by the Act, was guilty of an offence - The Ontario Court of Appeal agreed that it could not be said that the existence of an artifice or scheme was a necessary element of the offence - The court added that, considered in the context of an Act which was "necessarily and notoriously complex", a mistake or ignorance as to one's liability to pay tax under the Act could negate the fault requirement of the provision, regardless of whether it was a factual mistake, a legal mistake, or a combination of both - See paragraphs 34 to 57.

Income Tax - Topic 9512

Tax evasion and tax avoidance - General principles - Requirement of intent or wilfulness - Klundert refused to pay taxes under the Income Tax Act (Can.) - He believed that the Act was unconstitutional - He was charged with tax evasion under s. 239(1)(d) - The trial judge instructed the jury that a person who refused to pay his taxes as a protest could not be convicted of evasion if that protest was made "honestly" - Here, the instruction "became a direction" that a refusal to comply with the Act based on an honest belief that the Act was unconstitutional was a defence to a charge of wilfully evading taxes - The jury was told that Klundert should be acquitted unless the Crown proved beyond a reasonable doubt that he did not have that honest belief - Klundert was acquitted - The Ontario Court of Appeal quashed the acquittal and ordered a new trial - Klundert's evidence as to his beliefs concerning the validity of the Act were irrelevant to his liability under s. 239(1)(d) - The jury should not have heard that evidence - Having heard it, the trial judge should have told the jury that it was irrelevant to Klundert's culpability - See paragraphs 29 to 67.

Cases Noticed:

Anti-Inflation Act, Re, [1976] 2 S.C.R. 373; 9 N.R. 541, consd. [para. 29, footnote 1].

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, refd to. [para. 32].

R. v. Cardoso (P.) (1999), 139 C.C.C.(3d) 430 (Que. C.A.), leave to appeal refused (1999), 252 N.R. 197 (S.C.C.), refd to. [para. 32].

R. v. Sault Ste. Marie (City), [1978] 2 S.C.R. 1299; 21 N.R. 295; 40 C.C.C.(2d) 353, refd to. [para. 32].

Quebec (Deputy Minister of Revenue) v. Service Acier Inoxydable Couture Inc. (1999), 141 C.C.C.(3d) 573 (Que. C.A.), refd to. [para. 36].

R. v. Baker (1973), 6 N.S.R.(2d) 38; 16 C.C.C.(2d) 126 (Co. Ct.), consd. [para. 36].

R. v. Paveley (1976), 30 C.C.C.(2d) 483 (Sask. C.A.), refd to. [para. 37].

R. v. Kidd (1974), 6 O.R.(2d) 769 (H.C.), refd to. [para. 40].

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, consd. [para. 43].

R. v. Buzzanga and Durocher (1979), 49 C.C.C.(2d) 369 (Ont. C.A.), refd to. [para. 44].

R. v. Keegstra, [1990] 3 S.C.R. 697; 117 N.R. 1; 114 A.R. 81; 61 C.C.C.(3d) 1, refd to. [para. 44].

Ratzlaf v. United States (1994), 114 S. Ct. 655, refd to. [para. 44].

R. v. de Wolf (1982), 67 C.C.C.(2d) 43 (B.C.C.A.), refd to. [para. 45, footnote 3].

R. v. Pongrantz, [1982] C.T.C. 259 (F.C.A.), refd to. [para. 45, footnote 3].

R. v. Hefler (1980), 42 N.S.R.(2d) 276; 77 A.P.R. 276 (Co. Ct.), refd to. [para. 45, footnote 3].

R. v. Harding (M.) (2001), 152 O.A.C. 230; 160 C.C.C.(3d) 225 (C.A.), refd to. [para. 47, footnote 4].

R. v. DeMarco (1973), 13 C.C.C.(2d) 369 (Ont. C.A.), refd to. [para. 50].

R. v. Howson, [1966] 3 C.C.C. 348 (Ont. C.A.), refd to. [para. 50].

R. v. Ilczyszyn (1988), 19 O.A.C. 392; 45 C.C.C.(3d) 91 (C.A.), refd to. [para. 50].

R. v. Molis, [1980] 2 S.C.R. 355; 33 N.R. 411, refd to. [para. 54].

R. v. Théroux (R.), [1993] 2 S.C.R. 5; 151 N.R. 104; 54 Q.A.C. 184; 79 C.C.C.(3d) 449, refd to. [para. 54].

R. v. Sihler (1976), 31 C.C.C.(2d) 73 (Ont. C.A.), refd to. [para. 56].

Donnelly v. Commissioner of Inland Revenue, [1960] N.Z.L.R. 469 (S.C.), refd to. [para. 56].

United States v. Bishop (1973), 93 S. Ct. 2008, refd to. [para. 57].

United States v. Pomponio (1976), 97 S. Ct. 22, refd to. [para. 57].

United States v. Cheek (1991), 111 S. Ct. 604, consd. [para. 57].

R. v. Jones and Pamajewon, [1991] 3 S.C.R. 110; 137 N.R. 321; 66 C.C.C.(3d) 512, refd to. [para. 59].

R. v. Watson (P.F.) (1999), 176 Nfld. & P.E.I.R. 263; 540 A.P.R. 263; 137 C.C.C.(3d) 422, refd to. [para. 59].

R. v. McShannock (1980), 55 C.C.C.(2d) 53 (Ont. C.A.), refd to. [para. 75].

R. v. Varga (R.L.) (2001), 150 O.A.C. 358; 159 C.C.C.(3d) 502 (C.A.), refd to. [para. 75].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 239(1)(a) [para. 68]; sect. 239(1)(d) [para. 19].

Authors and Works Noticed:

Hogg, Peter, Constitutional Law of Canada (4th Ed. 1997) (Looseleaf Ed.), pp. 30 to 32 [para. 29, footnote 1].

Innes, W.I., Tax Evasion (1995), pp. 1-13 [para. 74]; 4-10 to 4-15 [para. 45, footnote 3]; 4-45 to 4-51 [para. 74].

MacDonald, V., Taxation Power in Canada (1941), 19 C.B.R. 75, pp. 76, 77 [para. 29, footnote 1].

Mewett, A., Manning, M., Criminal Law (3rd Ed. 1994), pp. 389 to 391 [para. 50].

Stuart, D., Canadian Criminal Law: A Treatise (4th Ed. 2001), pp. 103 to 107 [para. 40, footnote 2].

Stuart, H., Mistake of Law Under the Charter (1998), 40 Crim. L.Q. 476, pp. 486 to 494 [para. 50].

Counsel:

Marie Comiskey and Chris De Sa, for the appellant;

Douglas Christie, for the respondent.

This appeal was heard on February 18, 2004, by Doherty and Goudge, JJ.A., and Cavarzan, J.(ad hoc), of the Ontario Court of Appeal.

The decision of the Court of Appeal was delivered by Doherty, J.A., and released on August 30, 2004.