[OFFICIAL ENGLISH TRANSLATION]
1999-2369(IT)G
BETWEEN:
GÉRARD NÉRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence with the appeals of Pascal Néron (1999-2791(IT)I) on July 11, 12, 13 and 19, 2001, at Québec, Quebec, by
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Appellant: René Roy
Marie-Hélène Bétournay
Counsel for the Respondent: Martin Gentile
JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 1990, 1991, 1992, 1993 and 1994 taxation years are allowed, to the extent set out in the attached Reasons for Judgment.
The appellant is not entitled to any further relief and costs are awarded to the Respondent.
Signed at Ottawa, Canada, this 2nd day of April 2002.
|
''Louise Lamarre Proulx'' |
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
1999-2791(IT)I
BETWEEN:
PASCAL NÉRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence with the appeals of Gérard Néron (1999-2369(IT)G) on July 11, 12, 13 and 19, 2001, at Québec, Quebec by
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Appellant: René Roy
Marie-Hélène Bétournay
Counsel for the Respondent: Martin Gentile
JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 1992, 1993 and 1994 taxation years are allowed, without costs, to the extent set out in the attached Reasons for Judgment.
The appellant is not entitled to any further relief.
Signed at Ottawa, Canada, this 2nd day of April 2002.
|
''Louise Lamarre Proulx'' |
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Date: 20020402
Docket: 1999-2369(IT)G
BETWEEN:
GÉRARD NÉRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND
Docket: 1999-2791(IT)I
BETWEEN:
PASCAL NÉRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Lamarre Proulx, J.T.C.C.
[1] These appeals were heard on common evidence. The appeals by the appellant Gérard Néron for the 1990 to 1994 taxation years have been brought under the general procedure. The appeals by the appellant Pascal Néron for the 1992 to 1994 taxation years have been brought under the informal procedure.
[2] The assessments at issue were made following an audit conducted using the net worth method, which showed discrepancies between declared income and income identified during the audit.
[3] In making the reassessments regarding the appellant Gérard Néron, the Minister of National Revenue (''the Minister'') relied on the following assumptions of fact, set out in paragraph 5 of the Reply to the Notice of Appeal (''the Reply''):
(a) during the 1990, 1991, 1992, 1993 and 1994 taxation years, the appellant earned income from various sources;
(b) during the taxation years at issue, the appellant was a shareholder in a corporation operating as Québec imperméabilisation Enrg.; as well, he operated various businesses in the real estate, automobile, and cleaning industries by means of a numbered corporation;
(c) the appellant did not declare all his income in his income tax returns for the 1990, 1991, 1992, 1993 and 1994 taxation years;
(d) following an audit conducted using the net worth method and following an analysis made at the time of the objection, the Minister observed discrepancies of $43,760 (1990), $30,115 (1991), $94,518 (1992), $25,418 (1993), and $39,194 (1994) in the appellant's capital reconciliation (a copy of the balance sheets and of the capital reconciliation statement prepared by the Minister's staff are appended to this Reply to the Notice of Appeal as Schedule I-1 and form an integral part of the Reply);
(e) the above-mentioned amounts of $43,760 (1990), $30,115 (1991), $94,518 (1992), $25,418 (1993), and $39,194 (1994) constitute income that the appellant failed to declare and must be taken into consideration in computing his income tax for those taxation years;
(f) in filing his income tax returns for the 1990, 1991 and 1992 taxation years, the appellant made a misrepresentation by voluntarily failing to declare substantial income;
(g) the appellant, knowingly or under circumstances amounting to gross negligence, having made false statements on his income tax returns for the 1990, 1991, 1992, 1993 and 1994 taxation years by failing to declare income of $43,760 (1990), $30,115 (1991), $94,518 (1992), $25,418 (1993), and $39,194 (1994), penalties were assessed under subsection 163(2) of the Income Tax Act.
[4] At the beginning of the hearing, counsel for the appellant Gérard Néron produced a certificate from a physician and a certificate from a psychologist concerning the state of Gérard Néron's health. Gérard Néron had an automobile accident in 1991 and fell from a roof in 1997. Apparently the most recent accident had the most after-effects for him, affecting his memory and vision. He has 5 percent vision. This certificate was produced to explain that, although Gérard Néron's testimony might be vague, I should not draw negative conclusions therefrom given the state of his health.
[5] Gérard Néron was the first to testify. He stated that, after completing Grade 8, he went to trade school. He stated that he had had a disability since March 4, 1991, as a result of an automobile accident.
[6] In 1990, Gérard Néron owned a cleaning business, 2318-9848 Québec Inc., operating as Nettoyeur Ultra. Apparently his spouse owned another cleaning business, 2149-9454 Québec Inc., operating as Nettoyeur Léo Grégoire (1988) Enrg. Gérard Néron worked at both these cleaning businesses.
[7] Gérard Néron added that, as a hobby, he and Jacques Lachance were partners in roof treatment and waterproofing. That partnership ended at the end of 1990. Gérard Néron was familiar with roofing work because his father worked in this type of business.
[8] Gérard Néron also had rental income from 16 apartments.
[9] Gérard Néron explained that he had made use of Autos G. N. Enr. in order to reduce insurance costs. He had three sons who drove the car, in addition to himself and his spouse, and there were delivery vehicles for the cleaning businesses. He suggested that in putting these vehicles in the name of Autos G. N., he had only to take out an insurance coverage costing $1,500 annually, and the entire family could drive any vehicle. Apparently, from time to time, he purchased automobiles at auctions. He stated that Autos G. N. Enr. never made a profit. It was operated, not as a public business, but for personal reasons.
[10] Gérard Néron stated that the second accident occurred in July 1997. He fell headfirst onto concrete from a 35-foot roof. He suffered severe head trauma and spent seven and a half months in a coma and a year and a half in hospital.
[11] Gérard Néron stated that, after the accident in 1991, he sold the two cleaning businesses. According to notes to the financial statements of the two corporations, Corporation 2149-9454 disposed of all its assets and did not operate after April 1, 1991. Corporation 2318-9848 ceased its cleaning operations on June 25, 1991. Since that date, this corporation has been in the business of waterproofing buildings, operating as Québec Imperméabilisation Enrg.
[12] Gérard Néron stated that, after 1991, his only other sources of income, aside from rental income, were disability benefits, for example from the Société d'assurance automobile du Québec (''SAAQ''). Apparently he also received disability benefits from Mutual of Omaha, now RBC Insurance. He said that he thought this income amounted to $100 per week. Apparently, he drew these disability benefits until 1994.
[13] As Exhibit A-2, Gérard Néron produced a letter dated April 4, 2001, from RBC Insurance, concerning [translation] ''Claims under Policy #031647276''. This letter reads as follows:
[translation]
...
Further to our telephone conversation, the following are the claims you have made under the above-mentioned policy:
...
From March 11, 1991, to June 2, 1994 $15,274.70
[14] Apparently, from 1991 to 1994 Gérard Néron also received disability benefits of $200 per week from Paul Revere Insurance.
[15] This case was very detailed, but since the most important aspect of the appellant's net worth was the money used to pay for the condominium in Florida in 1992, I shall now present this part of the evidence.
United States (US) bank accounts and condominium in Florida
[16] According to Exhibit I-1-3 (the Schedule to the Reply), in 1991 the appellant's net worth increased by $102,371.08 in assets. In 1992, the amount of these assets was $136.69. However, the adjustments also indicate a withdrawal of $106,190.88 from a US bank account and a condominium costing $60,612.93 recorded under capital property. The appellant claimed that the condominium was paid for from the US$100,000 deposit in the US bank account. The Minister claimed that all the withdrawals from the bank account, including those used to pay for the condominium, must be taken into consideration.
[17] Exhibit I-2 comprises: (a) bank statements of account No. 220221863800 in the name of the appellant Gérard Néron and his then spouse, Chantal Fortier; and (b) a photocopy of a cheque for US$100,000, issued by Dorothy Fortier to Gérard Néron and dated November 12, 1991. That cheque was endorsed by Gérard Néron to bank account No. 2203208726-06.
[18] According to Exhibit A-9 (the report by the Minister's auditors, Jean-Claude Delisle and Nancy Godbout), in early November 1991, Gérard Néron made an electronic transfer of US$101,500 to Dorothy Fortier, his ex-spouse's sister.
[19] Exhibit I-3 is a photocopy of a November 13, 1991, transfer of US$3,500 by the Caisse d'économie de la Vallée de l'Amiante (''CEVA'') to the American Bank, 1811 North Young Circle, Hollywood, Florida. The recipient was Gérard Néron and his bank account number was 2203208726-06, the same bank account to which the above-mentioned cheque was endorsed. According to the Minister's auditors, no statements of that bank account were provided.
[20] In the bank statements of account No. 220221863800 (part of Exhibit I-2), the following transactions were noted. The first transaction was dated December 10, 1991. The balance was US$871.08 on February 11, 1992, and remained at that amount until May 11, 1992. On May 21, 1992, a deposit of US$100,000 was made. The same day, a deposit of US$2,667.67 in interest from account 29018178628 was made; nothing will be known about that bank account either. The auditors agreed that the US$100,000 deposit came from the same amount that was transferred to Dorothy Fortier, remitted by cheque to the appellant on November 11, 1991, and endorsed by him to bank account 2203208726-06.
[21] On May 26, 1992, two withdrawals were made, one for US$35,000 and the other for US$60,000.
[22] On July 7 and 15 and October 6, 1992, deposits of US$1,593, US$11,000 and US$1,000 respectively were made. On October 15, 16, 29, and November 9, 1992, withdrawals of US$2,250, US$2,000, US$8,000, and US$500 respectively were made. The US$8,000 withdrawal was considered a payment for the condominium.
[23] Exhibit A-3 is the purchase contract for the condominium. It shows that a down payment of US$8,000 was made on October 29, 1992. The balance of US$40,239.93 was paid on December 8, 1992.
[24] In bank account No. 220221863800, on December 2, 1992, a deposit of US$34,500 was made. On November 20 and December 8 and 12, 1992, withdrawals of US$500, US$1,000, and US$40,239.93 respectively were made. The last amount was considered a payment for the condominium. On December 15, 21, and 22, 1992, withdrawals of US$1,700, US$90, and US$400 respectively were made.
[25] Exhibit A-4 is a document showing that a safe deposit box was opened on April 3, 1992.
[26] In his testimony, Gérard Néron explained that he had transferred US$100,000 to Dorothy Fortier, the sister of Chantal Fortier, his former spouse, ultimately in order to purchase a condominium. He transferred this money to his sister-in-law instead of opening a bank account directly because he did not know the banks or speak English. Dorothy Fortier lives in Florida and is an American citizen. The US$101,500 that he transferred to his sister-in-law came from the sale of the cleaning businesses. The cleaning businesses were sold shortly after the accident, but the negotiations to sell them had been initiated before the accident.
[27] Gérard Néron explained the withdrawal of US$35,000 as follows. He was friends with Hervé Grenier, a businessperson whom he trusted. After meeting Hervé Grenier in Florida, Gérard Néron mentioned to him that he was interested in lending money. Hervé Grenier told him about a potential borrower, saying that if the appellant wanted to lend $35,000, he too would lend the same amount and that was the $35,000 that was repaid six months later. This loan was made on May 26, 1992 in Florida. The interest rate was 10% for six months. Gérard Néron was reimbursed in one payment plus the interest on December 2, 1992.
[28] Hervé Grenier testified that he has been retired for 15 years, that he and the appellant live in the same neighbourhood in Thetford, and that he owns a condominium in North Miami, Florida. Gérard Néron apparently told Hervé Grenier that he had money to invest. Through another person, they learned that one Jacques Gauthier needed a loan. They each lent $35,000 at 10% for approximately six months. When that term expired, Hervé Grenier was reimbursed for the principal and interest by cheque; he thought that Gérard Néron had received a cheque as well. Hervé Grenier stated that the loan was made in the spring of 1992, in February because he always left Florida at that time of year. Thus, the loan was repaid six months later, in the summer, certainly before April 15.
[29] At another point, the appellant stated that he purchased the condominium in Florida with $100,000 that he had brought to the US and placed in a safe deposit box. From the safe deposit box, he took the $35,000 to lend out leaving the rest of the money there. When asked in what form was the rest of the money in the safe deposit box, he answered that the balance consisted of cash, bank money orders, and bank drafts. He purchased furniture with that money. The safe deposit box was opened with Chantal Fortier (transcript, pages 82 and 83).
[30] I shall present part of additional testimony concerning the appellant's net worth here. Jean-Claude Delisle, an investigator with Revenue Canada's Special Investigations Section, stated that he met with Chantal Fortier at the end of the year. During that meeting, he asked her questions about a bank account in Florida. On this point, she answered: [translation] ''My sister could tell you much more about that because the transfers were made to her bank account.'' On February 6, Jean-Claude Delisle called Dorothy Fortier, who confirmed that Gérard Néron had transferred over $100,000 to her personal bank account, and that she had then issued a cheque to Gérard Néron to repay him this money. Jean-Claude Delisle asked her to provide copies of both sides of the cheques used to transfer the money and of the purchase contract for the condominium.
Testimony by Chantal Fortier
[31] Chantal Fortier was Gérard Néron's common-law spouse for 13 years, from 1979 until the end of 1992. She described their lifestyle as follows: [translation] ''We ate out regularly and travelled two or three times a year. In the spring and fall we went to Florida, and then in the middle of winter we travelled south, say, to Acapulco or Jamaica.'' They dressed well. They both smoked. Expenses were paid for using credit cards or cash. They travelled for pleasure.
[32] Chantal Fortier stated that, after the automobile accident in 1991, Gérard Néron had a number of jobs. He operated the cleaning business and a home roofing company as well. The roofing business had two or three employees and Gérard Néron's son Pascal. When asked whether Gérard Néron worked, Chantal Fortier answered affirmatively, stating that he left every morning for work.
[33] Chantal Fortier has a sister who has lived in Florida for 15 years. Chantal Fortier stated that she was aware that Gérard Néron had apparently transferred $100,000 to her sister Dorothy Fortier in November 1991 and that the money was subsequently repaid to him.
[34] Chantal Fortier purchased the property in Florida on December 4, 1992. She was the one who signed the contracts and issued the cheques; Gérard Néron was not present.
[35] Chantal Fortier did not recall opening a safe deposit box. She stated that she did some research and located a bank account in both names at the First Union (not one of the bank accounts mentioned earlier).
[36] Chantal Fortier stated that the assets of the cleaning businesses were sold for $200,000 in 1991.
[37] I will go over auditor Jean-Claude Delisle's testimony, part of which is reported in paragraph 29 above. He was assigned the files of the appellants and of Chantal Fortier to audit the financial records and income tax returns. He began this investigation around mid-October 1995. He telephoned the appellant Gérard Néron, who told him to call his accountant, saying: [translation] ''I don't have any documents; I don't have anything.'' The auditor replied: [translation] "You must have documents. They're your business." The appellant then said: [translation] ''No, no, I don't have anything; I have nothing at all.'' Jean-Claude Delisle told him: [translation] ''I would still like to meet with you regarding two very important matters: the first is to discuss your personal expenses, and the second concerns a bank authorization signature relating to your bank accounts.'' Gérard Néron was adamant that he did not want to meet with Jean-Claude Delisle and gave him Gaétan Giguère's telephone number.
[38] That same day, Jean-Claude Delisle tried to contact Gaétan Giguère. He left him a message and called him again on November 2, 3 and 6, 1995; there was no response.
[39] At that point, Jean-Claude Delisle contacted Chantal Fortier and met with her on November 6, 1995. She told him that she acted as a nominee for Gérard Néron in various transactions.
[40] Since there was no response to the telephone messages, on November 7 or 8, 1995, Revenue Canada served requirements on the Caisse populaire de Thetford and on the CEVA. Jean-Claude Delisle and Nancy Godbout, another auditor, reviewed the accounts at these two financial institutions. The two auditors must have spent three weeks compiling the withdrawals and deposits.
[41] On November 16, 1995, Jean-Claude Delisle once again called Gaétan Giguère, who finally returned his call. At that point, Gaétan Giguère told Jean-Claude Delisle that he completely disagreed with the audit of Gérard Néron's records, wanted Jean-Claude Delisle to limit himself to the corporation and Gérard Néron's rental income, and stated that there were no books of account or records either for the company or for the real properties. When asked by Jean-Claude Delisle on what basis was the accounting work done, Gaétan Giguère replied that it was done using the deposits, cheques and invoices. When asked to provide a copy of his spreadsheets and entries, he answered that there were no spreadsheets or entries. When asked for the deposits, cheques and invoices, Mr Giguère replied that he could not provide them for the time being. He was then asked to provide the contracts for the vehicles and the documentation he had concerning the disability insurance.
[42] On January 17, 1996, once again Jean-Claude Delisle telephoned Gaétan Giguère, asking him if he had any documents or evidence to provide. When asked whether he had found anything, Gaétan Giguère answered that he had no documents or evidence to provide. He had not obtained them and had absolutely no documents concerning the vehicles. He suggested that Jean-Claude Delisle obtain the list of vehicles from the vehicle registry.
[43] On January 23, 1996, Jean-Claude Delisle met with Chantal Fortier a second time. Nancy Godbout was also present. Jean-Claude Delisle discussed Québec Imperméabilisation with Chantal Fortier. He asked her about the Mercedes. She stated that that car belonged to Gérard Néron. She had a counter letter proving that fact. They then discussed the $19,000 in advances to Gérard Néron shown on Chantal Fortier's financial records for 1989. She told Jean-Claude Delisle that she knew nothing about those amounts of money and that Gaétan Giguère along with Gérard Néron had taken care of that. The financial records had been made on April 4, 1994. Jean-Claude Delisle also discussed 2149-9454 Québec Inc., of which Chantal Fortier was the principal shareholder according to the documents. She told Jean-Claude Delisle that she only signed when Gérard Néron asked her to do so, that she knew absolutely nothing about that company. As for the family home located at 1138, rue Lamonde, it was in Chantal Fortier's name at Gérard Néron's request.
[44] The respondent produced as Exhibit I-4 a notarized agreement dated November 17, 1992, between Chantal Fortier and Gérard Néron, acknowledging that the personal and real properties listed therein belonged to Gérard Néron, notwithstanding any contract or clause to the contrary. The properties referred to were those located at 1138, rue Lamonde; 66, rue Notre-Dame; 104 and 106, rue Blais; and the one in Florida. On May 16, 1995, the appellant signed another document, acknowledging that he was the only actual shareholder in 2149-9454 Québec Inc.
[45] On March 25, 1996, a meeting was held with Chantal Fortier during which she signed a solemn declaration, which was produced as Exhibit I-8.
[46] On the basis of the audit work done on the Canadian bank accounts and the documents received from Florida, a draft assessment was prepared that included a sizeable adjustment, something that Jean-Claude Delisle said needs to be done unfortunately in the absence of co-operation. The draft assessment was mailed on May 14, 1996. The appellant had 30 days in which to respond. On July 2, 1996, a telephone call was received from Gaétan Giguère, requesting an extension of the deadline in order to present a proposal for discussion. On July 25, 1996, Gaétan Giguère appeared at the auditor's office with his own draft. It reported a negative amount of $68,000 as income when Gaétan Giguère himself had reported income of $33,000 in filing Gérard Neron's income tax returns for the 1992 to 1994 taxation years. In the auditors' opinion, therefore, this proposal was not reasonable.
[47] With respect to the condominium in Florida, Gaétan Giguère claimed that it had cost $50,000. He was assured that a problem could be corrected and was asked for the contract. With respect to the withdrawals made to exchange social assistance cheques, even though Jean-Claude Delisle was far from being convinced, he said: [translation]''Well, I need something.''
[48] According to Jean-Claude Delisle, the analysis of cheques deposited at the bank did not show any social assistance cheques from the Quebec government. If Gérard Néron had exchanged cheques, he would have deposited them but they were not found.
[49] The discussion then turned to the possibility that some of the unexplained withdrawals might have been for property maintenance expenditures. Gaétan Giguère was assured that there was no problem and was asked for the invoices.
[50] The discussion then turned to the personal expenditures, then set out in Schedule A comprising Statistics Canada expenditure figures and actual cost-of-living expenditures, and in Schedule C listing the large unexplained withdrawals of $500 and over. Jean-Claude Delisle then told Gaétan Giguère that he had a list of the withdrawals under $500 and that, in light of Schedule A, he had not taken them into consideration.
[51] On August 27, 1996, Jean-Claude Delisle telephoned Gaétan Giguère, who said he had not met with his client and planned to do so in early September. Jean-Claude Delisle called back Gaétan Giguère on September 10, 12, 23, and 26, 1996. Gaétan Giguère returned his call on September 26, 1996. An initial appointment was made for October 1, 1996; this appointment was cancelled. Further calls were made to Gaétan Giguère on October 7 and 8, 1996. On October 8, 1996, Jean-Claude Delisle delivered a revised draft assessment to Gaétan Giguère's secretary. Gaétan Giguère flatly refused to talk and told Jean-Claude Delisle that he would settle the matter at the appeal level.
[52] The next witness to testify was investigator Nancy Godbout. She stated that the auditors limited the review of the cheques issued during the 1990 to 1994 taxation years to the largest amounts, that is, $500 and over. The unexplained withdrawals were set out in Schedule C. With respect to the schedule referred to as FT910, comprising the withdrawals under $500, Nancy Godbout did not look at the details of the cheques. She noted that the banks kept all bank statements on microfiches and cheques on microfilm. She was sent all the cheques issued and deposited by Gérard Néron, and therefore, everything must have been viewed on film.
[53] Exhibit I-1 is made up of four series of documents, numbered I-1-1 to I-1-4, prepared by the respondent for the purposes of assessing the appellant's net worth. Schedule FT910 is found in the first series of documents; Schedule C is found in the second series. The third series includes the schedules written by Appeals Officer Christiane Desroches following the objection and they form part of the Reply. The fourth series provides details about the credit cards.
[54] The personal expenditures set out in Schedule A were initially estimated on the basis of Statistics Canada expenditure figures. They were estimated to total $170,424 from 1990 to 1994. Since the taxpayer's accountant was discussing the amounts of the taxpayer's personal expenditures, the Minister sent him photocopies of the small withdrawals made by the taxpayer from his bank accounts. These small withdrawals make up Schedule FT910, which supports Schedule A.
[55] Christiane Desroches testified. She worked on the appellants' files as an Appeals Officer for the Appeals Division in Québec. Exhibit I-1-3 is the schedule she prepared. Page 1 has to do with the cash on hand in the bank accounts. The increase made in order to express US bank account balances in Canadian dollars was subject to the following admission: the balance should be reduced by $1,690 in 1991; by $19.45 in 1992; by $27 in 1993; and by $35 in 1994.
[56] In order to avoid considering the personal expenditures as being paid out of the large withdrawals, Christiane Desroches set aside Schedule A and considered only Schedule FT910 and Schedule C. In other words, she considered the total of the small withdrawals, plus the large actual cost-of-living expenditures and the large unexplained withdrawals, that is, Schedule C.
[57] Gaétan Giguère, a chartered accountant, testified for the appellants. Although at the hearing he testified before the Minister's auditors testified, I have referred to his testimony after theirs because, chronologically, he played his role after they played theirs.
[58] Gaétan Giguère began looking after the affairs of the appellant Gérard Néron at the end of 1992. He prepared the income tax returns of the appellant and his spouse, as well as the financial statements and income tax returns of the businesses. In October 1993, the appellant received a request from Revenue Canada to produce information regarding his balance sheets and the capital discrepancy for the period from December 31, 1989, to December 31, 1992. The documents were produced on September 29, 1994.
[59] Gaétan Giguère heard from Revenue Canada again around the end of 1995 or the beginning of 1996. On February 8, 1996, Jean-Claude Delisle telephoned him to request information concerning Pascal Néron's file: a financial statement, balance sheets, and capital continuity records. The request was made at that time in order to obtain evidence on maintenance and repairs for the 1992 and 1993 taxation years. That information was produced on March 29, 1996. On April 15, 1996, Jean-Claude Delisle contacted Gaétan Giguère about Pascal Néron's file, for which he wanted to know the cost of the property located at 302, rue St-Alphonse.
[60] Gaétan Giguère first met with Jean-Claude Delisle on July 25, 1996, to discuss the draft assessments he had received: one for $414,015 in the case of Gérard Néron and one for $73,234 in the case of Pascal Néron. Gaétan Giguère met again with Jean-Claude Delisle and Nancy Godbout on October 18 and November 5, 1996. The notices of reassessment were issued on December 9, 1996. On November 25, 1997, Christiane Desroches telephoned to say that she was in charge of the objection file. Following a meeting between Gaétan Giguère and Christiane Desroches on June 19, 1998, Schedule FT910 was sent to Gaétan Giguère by facsimile on June 22, 1998.
[61] Gaétan Giguère presented a summary of all the changes that he considered should be made to the net worth calculated by the Minister. For 1990, instead of an additional income of $43,760.24, he calculated an additional income of $8,339; for 1991, instead of $30,115.24, a negative income of $7,985; for 1992, instead of $94,517.61, a negative income of $4,732; for 1993, instead of an additional income of $25,418.09, a negative income of $7,343; and for 1994, instead of $39,193.70, an additional income of $2,686. As a result, he obtained a negative income of $9,035 instead of an additional total income of $233,005.
[62] Exhibit A-6 is the working paper prepared by Gaétan Giguère. It has eight schedules, identified as Schedules A through H. I shall now review each disputed point raised by Gaétan Giguère and counsel, providing each witness's point of view.
[63] One important point of the objection was that the appellant apparently made monthly cash withdrawals in order to exchange cheques from his tenants, most of whom, he said, were welfare recipients.
[64] Schedule G to Exhibit A-6 produced by Gaétan Giguère dealt with these alleged withdrawals for rental payments, amounting to $8,719.44 in 1990; $9,916.87 in 1991; $12,100 in 1992; $10,795.75 in 1993; and $13,779.85 in 1994, for a total of $55,311.91.
[65] The rental properties are located at 80-84, 88-92, and 66, rue Notre-Dame, Thetford and represent approximately 14 apartments in all.
[66] According to Gérard Néron, the monthly rents payable to him amounted to between $225 and $300. Between 1990 and 1994, he was the one who collected the rents. He stated that he had to check tenants' mailboxes to be sure that they remitted their cheques to him when their cheques came in. He went to the bank for cash and exchanged tenants' pay, unemployment, or social assistance cheques. Sometimes he had $1,500 or $1,000 in his pockets to exchange cheques as requested.
[67] Gérard Néron had a superintendent who was responsible for the building. The superintendent did not collect rents but accompanied the appellant when he collected them.
[68] Testifying for the appellant was Johanne Héon who said that she had been on welfare for three years. From the fall of 1993 to the end of June 1994, she lived in one of the apartments owned by the appellant. She was receiving welfare at that time. She thought that more than half the tenants were on welfare. The appellant would come at the beginning or the end of the month and exchange her welfare cheque. According to her conversations with the other tenants, he proceeded essentially the same way with them.
[69] Another witness was Sonia Parent who did not have an occupation at the time of the hearing. She lived in one of the appellant's apartments in 1996. She was not receiving social assistance. She paid cash at the beginning of every month. More than half the tenants were welfare recipients. She saw Gérard Néron near the mailboxes. He exchanged people's cheques, giving them back the balance from the rent. She always asked for receipts.
[70] During her review of the bank documents, auditor Nancy Godbout saw no cheques from either the Quebec or the federal government. For example, the deposits made during January and February 1994 included a detailed list of all the cheques deposited; none of those cheques was from a government. As well, withdrawals were made regularly throughout the month.
[71] With respect to the allegation that most of the appellant's tenants were welfare recipients, Christiane Desroches noted that she was able to trace the tenants living in the apartments two years later, none of whom were welfare recipients. On the basis of an analysis of the deposits and withdrawals in the file, she found nothing that would enable her to conclude that there was such a system.
[72] One requested adjustment involved the increase from $38,000 to $39,900, in the cost of the house located at 1138, rue Lamonde, Thetford; this increase was from 1990 to 1991 and is indicated under capital property in Exhibit I-1-3. Nancy Godbout explained that the increase from $38,000 to $39,900 from 1990 to 1991 was based on the financial records produced by the accountant. She stated that, according to certain estimates, the improvements for the 1990 taxation year should have amounted to $20,000 (she did not specify the source of these estimates). While leaving this amount at $14,543, the auditors accepted the calculation by the accountant himself that the cost of the property had increased from $38,000 to $39,900. Nonetheless, the accountant noted that this cost included repairs and that the amount of $39,900 should be reduced to $38,000.
[73] One adjustment involved the interest payments in bank account 81741 PR5, the appellant's personal account, which were included in the appellant's personal expenditures. These interest payments amounted to $566.88, $750.70, $2,534.09, $1,823.75, and $939.33 for the 1990 to 1994 taxation years respectively. In Schedule B-2 to Exhibit A-6, the accountant suggested deducting these amounts from the total personal expenditures, arguing that they were interest expenditures incurred for the rental properties.
[74] Nancy Godbout compiled all the loans taken out for the rental properties and obtained approximately the same amounts as those claimed in the income tax returns for each of the taxation years at issue. She therefore considered that the interest paid from the line of credit was not incurred to earn rental income but was incurred for personal reasons.
[75] One requested adjustment was to deduct from the personal expenditures the amounts paid using personal credit cards during the 1990 to 1993 taxation years. The accountant requested that the total of these expenditures, less the deductions already agreed to at the time of the objection, be deducted. He argued that the amounts paid using the credit cards were used for the cleaning businesses, since the highest amount of these expenditures, $7,989, occurred in 1990. These expenditures amounted to $2,792 in 1991 and decreased further in subsequent years. The supporting document produced by the accountant was Schedule B-5 to Exhibit A-6. The expenditures were described in Exhibit I-1-4. They involved trips, for example to Acapulco, restaurant meals, and gasoline. No credit cards for the businesses were found.
[76] The accountant requested that the total of $5,536 in NSF cheques be deducted. These cheques are described in Exhibits B-6 and B-9. The auditors verified the cheques mentioned in Exhibit B-6 with the Caisse populaire; only the cheques mentioned in Exhibit A-7 were returned NSF. A number of the other cheques referred to in Schedule B-6 proved to be not NSF but entirely valid cheques.
[77] Another point raised dealt with Paul Revere insurance. The accountant arrived at a total reduction of $18,533: $6,480 in 1991; $9,653 in 1992; and $2,400 in 1993. The supporting document produced by the accountant was Schedule B-7 to Exhibit A-6. According to the accountant, the list of bank deposits stated in Schedule B-7 was drawn up on the basis of the dates and amounts indicated on the cheque stubs produced as Exhibit A-5. He noted the $800 deposits in particular.
[78] Nancy Godbout explained that the information about the Paul Revere insurance payments was received after the draft assessment was mailed, thus a long time after their research had been completed. The cheque stubs accompanying the disability insurance cheques were sent to her on September 12, 1996. Her job was to consider the cheques individually and to verify whether the corresponding deposits were included in the schedules. She found no cheques from Paul Revere insurance. During her audit, she found cheques from the SAAQ and others from Assurance-vie Desjardins; these cheques were noted and deducted.
[79] With respect to insurance benefits from RBC Insurance, formerly Mutual of Omaha, at issue is whether, when, and in what amount these benefits were paid.
[80] The request to reduce the appellant's net worth by a total amount of $15,275 is based on a letter received on April 4, 2001, referred to in paragraph 13 of these Reasons. Gérard Néron admitted moreover that he had been obliged to hire a lawyer in relation to these claims.
[81] Also at issue is whether the 1991 GMC Sierra was sold to Pascal Néron for $7,250 in the 1994 taxation year. Nancy Godbout explained that, having accepted that these vehicles were purchased and resold at the same amounts, she did not take this vehicle into consideration. There might have been between 15 and 20 transactions from 1990 to 1994. However, she noted the vehicles remaining at the end of each year. She did not include this vehicle in Gérard Néron's net worth since Pascal Néron had purchased it in 1994, the year it was acquired. She included the value of this vehicle in Pascal Néron's net worth.
[82] The accountant requested that the $4,950 value of the 1989 Volkswagen Golf, listed as an asset in Schedule I-1-3, be reduced by the $3,100 cost of repairs found among the small withdrawals. Apparently this vehicle was purchased for $1,500, and the amount of $4,950 was an estimate taken from the ''Red Book''.
[83] The value of the 1992 Dodge Caravan was estimated at $13,275 in the 1993 taxation year (Exhibit I-1-3). Gaétan Giguère claimed that this amount should be reduced by $2,290. He did not provide the invoice, but the taxpayer's bank account indicated that the Caravan was apparently purchased on September 28, 1993 for $8,185. The work sheets produced as Exhibit A-7 include an excerpt from the bank account of Autos G. N. Enr. indicating a withdrawal of $8,185 on September 28, 1993, and withdrawals of $1,038.79 and $1,750 on September 29 and October 27, 1993, respectively, which were apparently made for repairs to the Caravan. When asked how he could know that these withdrawals were used for this specific vehicle, the witness answered that he had discussions with the client and that the costs of the vehicles were paid in this manner. When asked whether he had seen the cheques, he answered: [translation] ''No, these withdrawals were paid to the bearer.'' Counsel for the respondent immediately pointed out that the amount of $1,750 was a cheque issued to Bélanger, Tardif et associés, an insurance agency. The witness responded: [translation] ''That's right, they're transactions that went through Autos G. N., so if it's not a vehicle expenditure...''
[84] Also concerning Exhibit A-6, for the 1992 taxation year the accountant requested a $2,000 reduction with respect to the purchase of a Mazda vehicle. The documents produced as Exhibit A-7 include a receipt for Autos G. N. for $2,000 dated July 10, 1992, from Gérard Néron for a 1988 brown Mazda 929. The Minister did not include this vehicle in the net worth he calculated. It does not appear on the balance sheet under net assets because it was purchased and sold in the same year. According to Gaétan Giguère, this amount formed part of the unexplained withdrawals set out in Schedule C. The accountant requested an $8,435 reduction in 1993 for withdrawals apparently made to pay for car repairs. For 1994, another request was made for $2,696 also with respect to a vehicle; no real explanation was given for this request.
[85] Another point raised by the accountant dealt with errors in Schedule C. Only the errors concerning the amount of $495 in 1992 and the amount of $500 in 1993 were established.
[86] We shall now consider bank account 83383 at the CEVA, a joint account in the names of Jacques Lachance and Gérard Néron for a joint venture in roof treatment and waterproofing. Gérard Néron stated that he lent equipment to Jacques Lachance and occasionally worked with him. This business had no other employees; however, if the appellant was not working, Jacques Lachance worked with someone else, for example his brother.
[87] Schedule E to Exhibit A-6 describes the entries in bank account 83383 at the CEVA. In this instance, the data is accurate and taken from the correct account. The accountant proposed that in calculating the net worth, the amount of all withdrawals from this account be removed except for the large withdrawals made by Gérard Néron, which would mean a reduction of $11,746.28 for the 1990 taxation year.
[88] The accountant also suggested that Gérard Néron might have declared $4,936 of this income in his 1990 income tax return on the ''Other income'' line. This suggestion is an assumption since there is no statement of income and expenditure to support it. Gérard Néron testified that this activity was a hobby.
[89] Nancy Godbout did not take the large withdrawals by Gérard Néron into consideration because, in her opinion, they must have been included in his other bank accounts. In Gérard Néron's net worth, she took into consideration the large withdrawals made by Jacques Lachance. The evidence showed that these large withdrawals were shared equally by the two persons since they were profits taken.
[90] In 1994, the appellants jointly acquired a property located at 486, 4e rue, Thetford Mines. The purchase price was $31,900. At the time of the audit, the cost of repairs was estimated at $32,500, for a total cost of $64,400. Half of that amount, or $31,200, was allocated to each appellant under capital property in the Schedule to the Reply. In terms of the objection, repair costs of $15,470 were accepted. Of that amount, Nancy Godbout accepted that $9,972 had not been paid in 1994 and deducted this amount from Gérard Néron's personal expenditures. As a result, the cost of repairs in 1994 was $5,498.
[91] In the case of Pascal Néron, according to the Reply, the amount recorded under capital property for this house was reduced by $8,515.
[92] The accountant requested a $5,498 reduction in the small or large withdrawals by Gérard Néron, arguing that this amount was used to repair this house and was included in the amount recorded under capital property for this house.
[93] The appellant Pascal Néron, whose appeal was heard with that of Gérard Néron, testified. He has been a driving teacher and owner of a driving school for four years. Counsel for the appellant referred me to the Notice of Objection (Exhibit A-8) for further information about the appellant.
[94] Pascal Néron was born in April 1974 and turned 18 in 1992. During the years at issue, he apparently lived either with his mother in Sherbrooke or with his father in Thetford. Around the fall of 1994, he periodically lived in the house located at 486, 4e rue, which he and his father owned jointly.
[95] Pascal Néron and his father borrowed more than the purchase price, which gave them cash for materials and unforeseen expenditures. The repairs took over 10 months or nearly a year. Sometimes the repairs were done during their spare time; at other times they were done on a full-time basis.
[96] Pascal Néron's mother paid for the groceries. In 1994, Pascal Néron sometimes paid for groceries but most often ate at his father's home. He rarely ate out; in any case, if he ate out with his father, his father paid for the restaurant meal. Pascal Néron did not pay the telephone bill. He did not purchase many clothes in 1992; he might have purchased a few more in 1993. In 1992, 1993 and 1994, he hardly paid anything for gasoline or insurance premiums. He was unsure whether he paid for repairs and maintenance. He first owned a vehicle in 1994.
[97] Pascal Néron estimated his personal expenditures at not more than $50 weekly. In 1994, when his father was in prison after pleading guilty to perjury, Pascal Néron looked after the rents. He looked after all his father's affairs to his father's satisfaction.
[98] Pascal Néron's pick-up truck was worth $6,000 or $7,000. He and his father purchased it at auction. The truck was in Pascal Néron's name; however, Pascal Néron did not recall paying for the insurance. Gérard Néron paid for the Sierra pick-up. Pascal Néron stated that the money came from his father. His father never formally lent him money; his father gave him money because Pascal worked for him.
Analysis and conclusion
[99] Counsel Bétournay for the appellant has reiterated and accepted to some extent the explanations provided by Chantal Fortier and the appellant about the source of the money. The money came from the sale of the assets of the cleaning businesses, which apparently generated several thousands of dollars.
[100] Hervé Grenier's testimony was supposed to confirm that in 1992 he and Gérard Néron had lent equal amounts of money to the same person, but the dates did not coincide. According to Hervé Grenier, the loan was made in February; he always left Florida in mid-April. The loan to Jacques Gauthier was apparently made on May 26, 1992, since that was the date of the withdrawal from the appellant's US bank account.
[101] Despite the discrepancy in the testimony concerning the dates, counsel Bétournay has maintained that the $35,000 withdrawal on May 26, 1992, was justified by the loan made by Gérard Néron to Jacques Gauthier. The $34,500 deposit on December 2, 1992, represented the repayment of this loan. The purpose of the other withdrawal for $60,000 was to put the money in a safe deposit box. Exhibit A-4 has established the existence of this safe deposit box. The various subsequent deposits came from that money.
[102] According to counsel for the respondent, the taxpayer, who knows the truth, has the burden of explaining the facts accurately. The audit was started in 1995. The first draft assessment was mailed on May 14, 1996. If the facts alleged by the auditors were wrong, the appellant could and should have found the US bank account deposit slips. Gérard Néron fell from a roof in 1997, and therefore he still had his memory during the years at issue. He never met with the Revenue Canada officers.
[103] Concerning the withdrawals from the US bank account, I consider that it was for the appellant to establish the continuity and sources of the bank documents, and I conclude for the reasons stated below that there are no grounds to change the respondent's position.
[104] There is one certain source of income: the proceeds of the sale of the cleaning businesses. There is also the waterproofing business. Thus the respondent's position is plausible. I must assume that these possible sources of income were not given the appropriate tax treatment. In other words, these amounts did not become tax-paid or tax-exempt at the outset.
[105] Counsel for the appellant argued neither that Gérard Néron was financially unable to make the investments included in the net worth nor that he had available significant amounts of tax-exempt money; instead, they claimed that he made a loan and used a safe deposit box.
[106] First, the loan has not been established. The testimony was not consistent at all, and there was no documentary evidence. Second, the argument that Gérard Néron used the safe deposit box because he was uncomfortable about bank deposits in the US does not correspond with his ongoing use of bank accounts. He already had a US bank account, No. 2203208726-06, to which he deposited the cheque from his sister-in-law Dorothy Fortier. He produced no statements of this bank account or of the other bank accounts stated at the beginning of these Reasons. Moreover, Chantal Fortier had forgotten that this safe deposit box even existed.
[107] The accountant prepared a list of possible cash withdrawals made in order to exchange tenants' cheques; this list was produced as Schedule G to Exhibit A-6. In 1990, for example, it lists five withdrawals from bank account 83383, the joint account of the appellant and Jacques Lachance. At another point, Gaétan Giguère stated that no withdrawals were made from this account other than for the joint venture. Other possible withdrawals that were suggested proved to be clearly erroneous as well. This list must therefore be set aside as being unfounded. The auditors noted that, in the accounts verified, there was no indication of a consistent pattern of withdrawals at the beginning or at the end of the month. It should also be recalled that some tenants, including Sonia Parent, paid cash. As well, no documentary evidence, such as a sampling of deposited tenants' cheques, was produced. I must therefore conclude that, given the unfounded assumptions in the proposed list of possible withdrawals and the absence of relevant documentary evidence, the respondent's position cannot be challenged.
[108] With respect to the reduction from $39,900 to $38,000 of the cost of the house located at 1138, rue Lamonde for the 1991 and subsequent taxation years, because the increase took repairs into account, I consider that the accountant's reasoning is correct. The cost of the house must therefore be $38,000 for all the taxation years at issue.
[109] With respect to the interest deduction claimed, counsel for the respondent pointed out that there was no reason the appellant apparently used his personal line of credit to pay interest on the rental properties when there was a separate account for each property. Counsel Roy for the appellant questioned whether the interest paid should have been included in the calculation of net worth. It must be immediately pointed out that, if the interest was paid for personal reasons, why would it not be included in the calculation of net worth? Furthermore, I am surprised that the accountant did not raise or was not asked this question earlier.
[110] Statements of rental income from real properties for the 1992 and 1993 taxation years, during which Gaétan Giguère was the accountant, would have constituted sufficient evidence of the interest. Gaétan Giguère produced these statements for 1994 and he indicated a total amount of $19,809.42 for that taxation year. However, there are no invoices proving this amount and thus nothing to prove that the $939.33 claimed as a deduction was included in that amount. Concerning the 1992 and 1993 taxation years, for which $2,534.09 and $1,823.75 respectively were claimed, there is no statement of rental income from real property and certainly no supporting documents in the form of receipts.
[111] As a result, the amounts of interest referred to in Exhibit B-4 cannot be accepted as interest payments on the rental properties.
[112] According to counsel for the respondent, the expenditures paid for using the credit cards were personal expenditures. According to counsel for the appellant, they were business expenditures. The Appeals Officer accepted some of these amounts as possible business expenditures. I consider that the same reasoning could apply to the expenditures for gasoline: they can be considered expenditures for the purposes of the cleaning businesssince they occurred only in the 1990 taxation year when the appellant still had his cleaning business. Concerning the other expenditures for business purposes, such as the trip to Acapulco, the appellant's testimony alone is insufficient.
[113] The auditors allowed deduction of two of the NSF cheques. I allow deduction of the others that were proven, that is, the ones indicated in Exhibit A-5. (It may seem that the cash on hand already took the NSF cheques into account, but since the validity of this reduction was not discussed, I rely on the fact that the auditors already allowed a similar reduction.)
[114] With respect to the benefits paid by the Paul Revere insurance company, at issue is whether these benefits were deposited into the bank accounts that were audited. The accountant's claim that Paul Revere insurance benefits were deposited into Gérard Néron's accounts proved to be unfounded. Here again, the list of possible deposits proposed by the accountant had too many errors to be credible.
[115] With respect to RBC Insurance, the total amount appears to be $15,274. The letter quoted in paragraph 13 of these Reasons is unclear. The fact that a person makes claims on certain dates does not mean that the claims have been paid and it is not evidence of the amounts or the dates of payments. That letter is not sufficient evidence. At the hearing, we learned that there was a dispute between Gérard Néron and RBC Insurance. A lawyer represented his interests with Mutual of Omaha. The appellant could have obtained a letter from that lawyer. Based on the wording of the letter, I cannot accept the appellant's request at all.
[116] With respect to the 1991 GMC Sierra, at issue is in which of the two statements of net worth the value of this vehicle should ultimately be included. Both appellants stated that Pascal Néron did not pay his father for this vehicle. This explanation is plausible. The value of this vehicle must therefore be included in the father's net worth. Unlike the other vehicles he acquired and disposed of at cost, Gérard Néron acquired the GMC Sierra but did not resell it. Thus the purchase price of $8,555 should be included in his net worth. However, the amount that was included in Pascal Néron's net worth will be sufficient.
[117] With respect to the allegations about the 1989 Volkswagen Golf, the 1992 Dodge Caravan, and the 1988 Mazda, the evidence is really too vague and unclear for me to change the respondent's position. Concerning the alleged errors in Schedule C, only those noted in paragraph 85 of these Reasons are accepted.
[118] The joint account at the CEVA with Jacques Lachance for the waterproofing business shows that the profits were withdrawn in identical amounts. Thus we must conclude that the partners were in this business in equal shares. It would be surprising if either partner could withdraw personal spending money from this account. It seems that it was Gérard Néron's $5,575 share in profits that should have been included in his statement of net worth. However, Nancy Godbout stated that she had included Jacques Lachance's share, thinking that the profits taken by Gérard Néron would be included in his other accounts.
[119] The accountant also suggested that the amounts set out in the schedules of small and large withdrawals and the withdrawals from that account be deducted and that only the share of profits taken by Gérard Néron be included. I consider this position the most accurate one. As a result, the amount of $11,746.28calculated by the accountant on the basis (this time) of the exact figures from bank account 83383 is to be deducted.
[120] The accountant asked that $5,498 be excluded from the amount of Gérard Néron's personal expenditures, arguing that this amount was spent on repairs to the house located at 486, 4e rue, Thetford. Initially I saw no reason to deduct this amount from the net worth. At that point I considered that, if this amount were deducted from the personal expenditures, it should in any case be added to the capital expenditures as improvements.
[121] My difficulty in understanding that arose from the fact that the auditors (Exhibit A-9) immediately added the estimated value of the improvements ($32,500) to the cost of the property ($31,900). Normally, it seems to me-at least, that is what the auditors did for the house on rue Lamonde-the cost of the property is indicated and below that amount are the costs of the improvements by year.
[122] As a result, for Pascal Néron, the cost of the property must be $15,950 and not $32,200. However, the reduction of $8,515 already allowed him must be considered. As well, half of $5,498 should be indicated as improvements to this property in 1994.
[123] The same method should be applied to Gérard Néron. As well, half of $5,498 should be deducted from his total personal expenditures since that amount has been included in capital.
[124] Pascal Néron's personal expenditures were estimated at $11,599.68, $11,770.08, and $13,013.08 for the 1992, 1993 and 1994 taxation years respectively. He estimated his personal expenditures at $50 per week. We must take into consideration that he lived at the home of his parents. I consider that $100 per week would be reasonable in these circumstances.
[125] The years from 1990 to 1992 fell outside the normal assessment period. The evidence has clearly shown that the appellants made misrepresentations through neglect, carelessness or wilful default in filing their income tax returns for those years.
[126] With regard to the penalties assessed under subsection 163(2) of the Income Tax Act, concerning Gérard Néron, I consider the comments by Marceau J. in the decision in Cloutier v. The Queen, 78 DTC 6485, at page 6487, appropriate:
The question before the Court is whether the circumstances in which the omission occurred are such that gross negligence may be attributed to the taxpayer: ''gross negligence'' being taken to mean a relatively serious act of negligence, which is difficult to explain and socially inadmissible.
These are the circumstances of this case, in which there is a complete absence of documents. No records were provided to the auditors. The appellant produced no documents, in particular, the deed of sale of the cleaning business, the invoices, or the bank account statements. The appellant's conduct during the taxation years at issue shows an intention to elude application of the provisions of the Act. This conduct constitutes gross negligence and gives rise to the assessment of penalties under subsection 163(2) of the Act.
[127] As for Pascal Néron, I consider that it was not knowingly or under circumstances amounting to gross negligence that he failed to declare all his income for the taxation years at issue. Therefore, the penalties must be cancelled.
[128] The appellants made some gains as a result of this hearing. I could have considered awarding only some of the costs to the respondent. However, the appellants wasted a great deal of time with proposals drawn up by an accountant, which at first glance provided credibility, but those proposals did not stand up under cross-examination because they were based on theory and not on fact. Under these circumstances, the costs must be awarded in total to the respondent.
Signed at Ottawa, Canada, this 2nd day of April 2002.
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''Louise Lamarre Proulx'' |
J.T.C.C.