R. v. Medicine Hat Greenhouses Ltd. and German, (1980) 24 A.R. 38 (ProvCt)

• Judge: McMeekin, P.C.J.
• Court: Provincial Court of Alberta (Canada)
• Case Date: January 16, 1980
• Citations: (1980), 24 A.R. 38 (ProvCt)

R. v. Medicine Hat Greenhouses Ltd. (1980), 24 A.R. 38 (ProvCt)

MLB headnote and full text

R. v. Medicine Hat Greenhouses Ltd. and German

Indexed As: R. v. Medicine Hat Greenhouses Ltd. and German

Alberta Provincial Court

McMeekin, P.C.J.

January 16, 1980.

Summary:

This case arose out of charges against a company and officer for tax evasion contrary to s. 239(1)(d) of the Income Tax Act. The charges arose from expenses incurred by the officer and his family. The expenses were meticulously documented in the company books and deducted as business expenses. The expenses, which were incurred between December 1964 and March 1970, related to trips taken by the officer and his family and to two camper vehicles and a motorbike. The company books were audited each year and unqualified auditors certificates issued. The Crown alleged that the company and officer were in a scheme to bury personal expenses among business expenses. The Alberta Provincial Court dismissed the charges against both accused and held that the Crown failed to prove mens rea or an intention to evade taxes.

Income Tax - Topic 9662

Tax evasion - Evidence and proof - Relevancy - The accused company and company officer were charged with tax evasion contrary to s. 239(1)(d) of the Income Tax Act - Charges arose from expenses incurred by the officer and his family - The expenses were meticulously documented in the company books and deducted as business expenses - During the investigation a diary and other personal correspondence of the officer were seized - When the Crown tendered the documents as evidence, the accused objected on the ground that personal documents were irrelevant to a charge against the company and against himself as a company officer - The Alberta Provincial Court held that a distinction could not be made between the accused as an officer and the accused personally - The Provincial Court held that the information and the documents related to the expenses which gave rise to the charges, so the documents were relevant and admissible - See paragraphs 35 to 50.

Income Tax - Topic 9663

Tax evasion - Evidence and proof - Burden of proof - The accused company and company officer were charged with tax evasion contrary to s. 239(1)(d) of the Income Tax Act - The charges arose from expenses incurred by the officer and his family - The expenses were meticulously documented in the company books and deducted as business expenses - The Crown argued that once the deductions were proved the burden of proof shifted to the accused to show the deductions were legitimate business expenses - The Alberta Provincial Court held that the burden of proof remained on the Crown to prove all elements of the charge including the nature of the expenses deducted - See paragraphs 74 to 83.

Income Tax - Topic 9665

Tax evasion - Evidence and proof - Intention - Mens rea - The accused company and company officer were charged with tax evasion contrary to s. 239 (1)(d) of the Income Tax Act - The charges arose from expenses incurred by the officer and his family - The expenses were meticulously documented in the company books and deducted as business expenses - The expenses which were incurred between December 1964 and March 1970, related to trips taken by the officer and his family and to two camper vehicles and a motorbike - Only a portion of the overall expenses relating to the trips and vehicles were deducted - The company books were audited each year and unqualified auditors certificates issued - The Crown argued that portions of the expenses deducted were not legitimate business expenses and that the company and officer were in a scheme to bury personal expenses among business expenses - The Alberta Provincial Court dismissed the charges against both accused and held that a tax evasion scheme did not exist - The court stated that, because only a portion of the overall expenses were deducted as business expenses, as inference could be made that the portions not deducted related to the personal expenses and what was deducted were legitimate business expenses - The court held that the Crown failed to prove the accused intended to evade taxes and such intention was an essential element of the charge - See paragraphs 84 to 112.

Cases Noticed:

R. v. Ash-Temple Limited et al., 8 C.R. 66, refd to. [para. 25].

R. v. Horne Tooke (1794), 25 How. St. Tr. 1, refd to. [para. 38].

R. v. Hashem, 73 C.C.C. 124, refd to. [para. 38].

R. v. Russel (1920), 51 D.L.R. 1, refd to. [para. 38].

R. v. Paveley (1977), 70 D.L.R.(3d) 237, folld. [para. 61].

R. v. Branch, 76 D.T.C. 6112, refd to. [para. 64].

R. v. Baker (1973), 6 N.S.R.(2d) 38; 16 C.C.C.(2d) 126, refd to. [para. 63].

R. v. Wright, 1 C.R. 40, consd. [para. 73].

R. v. Oliver, [1944] K.B. 68, dist. [para. 75].

Robinson v. The Queen, 10 C.C.C.(2d) 505, dist. [para. 76].

R. v. Volk, 12 C.C.C.(2d) 395, dist. [para. 76].

R. v. Edwards, [1975] 1 Q.B. 27, refd to. [para. 80].

In re Hechter et al., 71 D.T.C. 5066, dist. [para. 86].

R. v. Kidd (1974), 6 O.R.(2d) 769, dist. [para. 90].

R. v. Regehr, 68 D.T.C. 5079, consd. [para. 106].

Statutes Noticed:

Income Tax Act, R.S.C. 1952, c. 148, sect. 12(a) [para. 30]; sect. 12(h) [para. 30]; sect. 12(2) [para. 30]; sect. 56(2) [para. 57].

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 239(1)(d) [para. 4]; sect. 242 [para. 5].

Counsel:

William J. Major, Q.C., for the Crown;

William E. Code, Q.C., for the accused.

This case was heard by McMEEKIN, P.C.J., of the Alberta Provincial Court.

On January 16, 1980, McMEEKIN, P.C.J., delivered the following judgment: