Tax Court of Canada Judgments

[OFFICIAL ENGLISH TRANSLATION]

Docket: 2000-458(IT)G

BETWEEN:

GHASSAN KIWAN,

Appellant,

And

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeals heard with the appeals of Ziad Hanna (2000-956 (IT)G),Ramzi Salamé (2000-964(IT)G) and May Nassar (2000-965(IT)G)

on October 21 and 22, 2003, at Montreal, Quebec.

Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:	Me Yves Ouellette
Counsel for the Respondent:	Me Nathalie Lessard Me Simon-Nicolas Crépin

___________________________________________________________________

JUDGMENT

          The appeals from the assessments under the Income Tax Act for the 1990, 1991, 1992, 1993, 1994 and 1995 taxation years are dismissed with costs in favour of the Respondent pursuant to the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 18^th day of August, 2004.

"P. R. Dussault"

Dussault, J.

Certified true translation
Colette Beaulne

[OFFICIAL ENGLISH TRANSLATION]

Docket: 2000-956(IT)G

BETWEEN:

ZIAD HANNA,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeals heard with the appeals of Ghassan Kiwan (2000-458(IT)G),

Ramzi Salamé (2000-964(IT)G) and May Nassar (2000-965(IT)G),

on October 21 and 22, 2003, at Montreal, Quebec.

Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:	Me Yves Ouellette
Counsel for the Respondent:	Me Nathalie Lessard Me Simon-Nicolas Crépin

____________________________________________________________________

JUDGMENT

          The appeals from the assessments under the Income Tax Act for the 1992, 1993, 1994 and 1995 taxation years are dismissed with costs in favour of the Respondent pursuant to the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 18^th day of August, 2004.

"P. R. Dussault"

Dussault, J.

Certified true translation
Colette Beaulne

[OFFICIAL ENGLISH TRANSLATION]

Docket: 2000-964(IT)G

BETWEEN:

RAMZI SALAMÉ,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeals heard with the appeals of Ghassan Kiwan (2000-458(IT)G),

Ziad Hanna (2000-956(IT)G) and May Nassar (2000-965(IT)G),

on October 21 and 22, 2003, at Montreal, Quebec.

Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:	Me Yves Ouellette
Counsel for the Respondent:	Me Nathalie Lessard Me Simon-Nicolas Crépin

____________________________________________________________________

JUDGMENT

          The appeals from the assessments under the Income Tax Act for the 1990, 1991, 1992 and 1993 taxation years are dismissed with costs in the favour of the Respondent pursuant to the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 18^th day of August, 2004.

"P. R. Dussault"

Dussault, J.

Certified true translation
Colette Beaulne

[OFFICIAL ENGLISH TRANSLATION]

Docket: 2000-965(IT)G

BETWEEN:

MAY NASSAR,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeals heard with the appeals of Ghassan Kiwan (2000-458(IT)G,

Ziad Hanna (2000-956(IT)G) and Ramzi Salamé (2000-964(IT)G),

on October 21 and 22, 2003, at Montreal, Quebec.

Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:	Me Yves Ouellette
Counsel for the Respondent:	Me Nathalie Lessard Me Simon-Nicolas Crépin

__________________________________________________________________

JUDGMENT

          The appeals from the assessments under the Income Tax Act for the 1994 and 1995 taxation years are dismissed with costs in favour of the Respondent pursuant to the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 18^th day of August, 2004.

"P. R. Dussault"

Dussault, J.

Certified true translation
Colette Beaulne

[OFFICIAL ENGLISH TRANSLATION]

Citation: 2004TCC136

Date: 20040818

Docket: 2000-458(IT)G

BETWEEN:

GHASSAN KIWAN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent,

AND BETWEEN:

Docket: 2000-956(IT)G

ZIAD HANNA,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent,

AND BETWEEN:

Docket: 2000-964(IT)G

RAMZI SALAMÉ,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent,

AND BETWEEN:

Docket: 2000-965(IT)G

MAY NASSAR,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Dussault, J.

[1]      These appeals were heard on partially shared evidence only. They are appeals from assessments disallowing the Appellants credits for charitable donations to the Ordre antonien libanais des Maronites / Antonian Order of Lebanese Maronites (the "A.O.L.M.") and imposing penalties on them pursuant to subsection 163(2) of the Income Tax Act (the "Act") for knowingly, or under circumstances amounting to gross negligence, making false statements in their tax returns. Further, some assessments were made outside the normal reassessment period on the grounds that a misrepresentation attributable to wilful default was made in filing the relevant tax returns and providing information under the Act.

[2]      Mr. Ghassan Kiwan was disallowed credits for $5,000, $20,700, $12,500, $9,500, $11,500 and $6,000 in charitable donations for each year from 1990 to 1995 respectively. Assessments for the 1990 to 1993 taxation years inclusive were made outside the normal reassessment period.

[3]      Mr. Ziad Hanna was disallowed credits for $5,500, $9,000, $5,100 and $5,500 in charitable donations for each year from 1992 to 1995 respectively. Taking into account the maximum allowed and credit carryovers, credits of $5,500 in 1992, $6,672 in 1993, $7,348 in 1994 and $5,580 in 1995 were claimed. The assessments for the 1992 and 1993 years were made outside the normal reassessment period.

[4]      Mr. Ramzi Salamé was disallowed credits for $9,600, $10,000, $5,000 and $10,000 in charitable donations for each of the years from 1990 to 1993 respectively. The assessments for the four years were made outside the normal reassessment period.

[5]      Ms. May Nassar was disallowed credits for $3,900 and $3,000 in charitable donations in the 1994 and 1995 taxation years respectively. A $3,831 credit was claimed in 1994.

[6]      Ms. May Nassar is Mr. Ziad Hanna's spouse. None of the other Appellants are related.

[7]      In the amended replies to the Notice of Appeal, the Respondent alleges that the Minister of National Revenue (the "Minister") based the assessments at issue on the assumption that the Appellants had not donated the amounts in question to the A.O.L.M. and had not provided valid receipts containing the prescribed information because the donation amounts indicated on them were false. It is therefore alleged that the Appellants did not make the donations for which they claim credits on their tax returns. Instead, they participated in a scheme involving the A.O.L.M. either issuing a receipt for an amount paid by cheque by a taxpayer and providing this same taxpayer with an equivalent or similar amount of money in cash or issuing a taxpayer a receipt on which a certain cash donation is indicated when the taxpayer had not paid any amount or paid a smaller amount in cash than that indicated on the receipt.   

[8]      In the case of the four Appellants, almost all of the donations mentioned were made by cheque, meaning that the scheme involved the Order issuing a receipt for an amount paid by cheque and the Appellant being reimbursed in cash.

[9]      Each of the Appellants testified. Given the difficulties involved in being present in Montreal, Mr. Ghassan Kiwan testified via videoconference from Saudi Arabia.   

[10]     The following people testified for the Respondent:

Ms. Isabelle Mercier;

Ms. Colette Langelier, a Revenue Canada auditor;

Mr. Gaétan Ouellette, a Revenue Canada investigator;

Mr. Michel Yazbeck;

Mr. Elias Farhat;

Mr. Marcel Thibodeau.

[11]     Counsel for the Appellants objected to both the testimonial and documentary evidence submitted by the Respondent. He first cited subsection 24(2) of the Canadian Charter of Rights and Freedoms (the "Charter"), section 40 of the Canada Evidence Act and section 2858 of the Civil Code of Quebec (the "Civil Code") to exclude all evidence the Minister obtained further to the information on the scheme provided by Ms. Isabelle Mercier. According to counsel for the Appellants, when the information was provided, the Minister was involved in a criminal investigation, not a compliance audit investigation, and the Minister did not obtain, but should have obtained, the appropriate search warrants. The rights and freedoms guaranteed by the Charter were therefore infringed such that the admission of the evidence would bring the administration of justice into disrepute.

[12]     Counsel for the Appellants also objected to the evidence submitted by the Respondent allegedly showing that a significant number of people participated in the scheme and obtained false receipts for charitable donations. This objection was based on the assertion that the Respondent was endeavouring to provide evidence of similar activities, evidence which according to counsel was neither admissible nor relevant to ruling on the appeals at hand. While the evidence was being presented, counsel for the Appellants frequently objected to specific evidence by citing the hearsay rule and questioning the relevance.

[13]     On the first issue, counsel for the Respondent stated that the Minister first conducted a compliance audit on the A.O.L.M. and it was not until later that a decision was made to conduct a criminal investigation. From that point on, all the appropriate search and seizure warrants were obtained.

[14]     On the second issue, counsel for the Respondent pointed out that the evidence provided was circumstantial, that such evidence was completely admissible and that it allegedly showed not only that a scheme drawn up by the A.O.L.M. existed, but also that it was an extensive scheme given the large number of donors that had participated in it.

[15]     Under the circumstances, and before turning to each of the Appellants' cases, I feel it necessary to refer to the evidence submitted with a view to situating ourselves within the general context of this case, which resulted in criminal proceedings being instituted against about fifteen donors and assessments being made for more than one thousand taxpayers.

The context

[16]     On March 30, 1994, Ms. Isabelle Mercier, a physician, and her accountant, Mr. Gaétan Picard, met with Mr. Raymond Galimi, a team leader at Revenue Canada (which has since become the Canada Customs and Revenue Agency ("CCRA")), Ms. Colette Langelier, an auditor, and Mr. Gaétan Ouellette, a special investigations investigator. Mr. Picard requested the meeting with Mr. Galimi, whom he knew, because his client wanted to provide information on receipts being issued for fraudulent charitable donations by what she described as the St-Antoine-le-Grand order located at 1530 Ducharme Avenue in Outremont, Quebec.    The minutes of this meeting were signed by Ms. Colette Langelier on March 31, 1994 (Exhibit I-7). During the meeting, Ms. Mercier said that two priests, Father Antoine Sleiman and Father Youssef El-Kamar, were involved in the scheme. Ms. Mercier also identified her spouse, Mr. Samir El-Boustany, and Mr. Fadi Basile, a physician, as organizers of this scheme with the priests. Based on Ms. Mercier's statement, the scheme consisted in receipts being issued for a larger amount than the amount donated and the issuing of receipts for donations made by cheque where the donor is given back a portion of the donation in cash. According to Ms. Mercier, the organization involved kept only 25% to 50%. Ms. Mercier also said that her husband took a percentage of the cash amounts and she named another person she knew at that time, Naji Abi Nader, who, she said, had benefited from the scheme for a number of years through her husband. She said that this person gave her husband a cheque for $20,000 several times a year when he was in Montreal. In return, this person received an envelope from her husband containing bills that she said she had personally counted. She said that the scheme involved the Lebanese community and that many medical professionals benefited from it. She admitted that she had benefited from it personally until 1990, and her husband, until 1992. Ms. Mercier also stated that she had always been against this way of doing things and as a result she agreed to pay the tax and the applicable penalties and interest.

[17]     At the time that Ms. Mercier provided this information, she was separated from her husband and was involved in divorce proceedings. However, when she testified, she stated that although she had enough problems without adding more by facing criminal charges for making fraudulent donations, she was not seeking revenge.

[18]     According to Ms. Langelier, after the meeting with Ms. Mercier and a discussion, Mr. Galimi decided to have the organization audited and asked her to conduct the audit. At that time, Ms. Langelier was a "senior" tax avoidance officer.

[19]     The first step Ms. Langelier took was to obtain the A.O.L.M.'s file from the Charities Division in Ottawa, specifically, the returns filed by the organization which contained the list of donors. Ms. Langelier quickly learned from that Division that the A.O.L.M. had already been audited in 1990 for the 1984 to 1987 taxation years and that a follow-up had been conducted in late 1992 concerning the 1990 and 1991 taxation years. An audit report had been prepared in January 1993. Some problems had already been identified in connection with the dates of the receipts issued and the A.O.L.M.'s method of accounting for the money received because only cheques had been deposited. Since the bulk of the amounts received had to be sent to Lebanon, the Order had to be able to control how the funds were actually used. The A.O.L.M. was asked to make certain commitments and documents were also requested which had not been submitted. It seems that the Charities Division was about to suspend the A.O.L.M.'s registration. Ms. Langelier said that the 1993 return had not been filed as of May 1994. Given the facts discovered during previous audits, including the fact that the A.O.L.M. did not deposit cash donations, it was possible to establish links with Ms. Mercier's information, such that it was decided that the organization would be audited to see whether it had changed its way of doing things.

[20]     Therefore, after reading the A.O.L.M.'s statements and previous audit reports, Ms. Langelier began the audit of the 1989 to 1993 taxation years.

[21]     On September 8, 1994, Ms. Langelier, together with Mr. Galimi, met with Ms. Mercier and her accountant again at her accountant's office with a view to asking Ms. Mercier more questions about the documentation she had sent further to the meeting on March 30, 1994.

[22]     In late September 1994, after telephoning the A.O.L.M. and making an appointment with the organization's accountant, a Mr. Ralph Nahas, Ms. Langelier went to the organization's premises and asked to examine all the accounting documents, monthly bank statements, cheques, deposit slips, invoices and official receipt books. Ms. Langelier had asked that the A.O.L.M.'s 1993 return be submitted to her directly, which was done at the beginning of the audit. The on-site audit took about one month, until late October 1994, during which she went to the premises seven or eight times, once accompanied by Mr. Galimi, her team leader. Ms. Langelier consulted all the documents available for the period beginning in August 1994 and later completed her work for the rest of 1994 and for 1995.   

[23]     Using the bank documents consulted and the other documents already in her possession, such as lists of donors included with the A.O.L.M.'s returns, Ms. Langelier created two data bases with a view to reconciling the receipts issued with the amounts deposited in bank accounts. Therefore, the purpose of this reconciliation exercise was to specifically identify the donor cheque number, the amount and date of the cheque, the date the cheque was deposited, and the number, date and amount of the receipt issued.

[24]     Ms. Langelier stated that she was checking whether the A.O.L.M. had in fact used 90% of the donations collected each year for charitable purposes (Exhibit I-11).

[25]     Ms. Langelier's exhaustive analysis enabled her to determine that, on the one hand, hardly any cash deposits were made, and on the other, that the A.O.L.M. had in large part withdrawn as cash the deposited cheque amounts shortly after they were deposited (see Exhibits I-10, Vol. 1 and 2, and I-12). The A.O.L.M. claimed that the amounts withdrawn in Canadian funds were placed in a safe then sent to Lebanon in suitcases carried by priests or nuns on their way through Canada. According to Ms. Langelier, despite requests for proof of the amount and date of each of these shipments of money to Lebanon or even the date of exchange of the Canadian currency, the A.O.L.M. was unable to provide the information requested and to demonstrate that the amounts in its records had in fact been sent to Lebanon.

[26]     Ms. Langelier also tried to determine the extent of untraceable cash donations. She said that she was told that envelopes with donors' names on them were kept in the safe so that the organization could issue a receipt at the end of the year for cash donations made during the year. During her October 1994 audit, Ms. Langelier not only found that there was no cash in the safe, but there were not any envelopes with donors' names on them either. In this connection, she was allegedly sent in the spring of 1995 a document in Arabic that she had translated. Ms. Langelier said that this document showed only the end-of-year total of official receipts issued for cash donations.

[27]     Based on the A.O.L.M's cheques made out to cash and the official receipts issued for cash donations that were not usually deposited, Ms. Langelier found that there was no trace of how almost all of the amounts received by the A.O.L.M. were used. She stated that she was unable to trace 95% of these amounts in 1991, 92% in 1992 and 84% in 1993. The amounts entered in the A.O.L.M.'s records as being Lebanese donations totalled $520,398, $964,950, $2,000,000, $2,000,000 and $2,680,000 from 1989 to 1993 respectively (Exhibit I-11).

[28]     Exhibit I-11 shows, among other things, a significant number of cash withdrawals compared to the amounts on official receipts issued and donations deposited. For example, in 1991, the A.O.L.M. issued official receipts for a total of $2,436,142 in donations and deposited a total of $1,302,135, of which $1,152,741 in cash was withdrawn. In 1992, official receipts were issued for a total of $2,728,670. A total of $1,173,685 in donations was deposited of which $1,090,528 in cash was withdrawn.

[29]     Ms. Langelier did not complete her audit work until June 1995. She then made an appointment with the Special Investigations Division with a view to referring the matter to that section for investigation.

[30]     According to Ms. Langelier, she was able to identify three types of schemes through her audit and analysis work:

1)        official receipts were issued for cheques of the same amount, the cheques were deposited and then cheques were written out to cash by the A.O.L.M.;

2)        back-dated receipts were issued for payments made by cheque in a subsequent year for only a fraction of the amount of the receipt;

3)        official receipts were issued but not supported by a payment by cheque.

[31]     Ms. Langelier stated that certain audits of donors' tax returns enabled her to confirm that the first situation occurred primarily with professionals and the second, mainly salaried workers and retirees.

[32]     The referral to Investigations was officially approved on June 29, 1995. Ms. Langelier stated that she had not had any contact with Mr. Ouellette or anyone else from the Special Investigations Section between March 1994 and June 1995, which was further confirmed by Mr. Ouellette.

[33]     Mr. Gaétan Ouellette is currently retired. He has 25 years of experience as an investigator in the Special Investigations Section, where he held positions at almost all levels.

[34]     In March 1994, he was a liaison and development officer in the Section, which was responsible, among other things, for welcoming people who would like to provide information. It was in this capacity that he was asked to attend the meeting with Ms. Isabelle Mercier and her accountant. According to Mr. Ouellette, during this meeting, which was also attended by Ms. Langelier and Mr. Galimi, and which was held in the latter's office, Ms. Mercier provided information on what she claimed to be a receipt-selling scheme that had been cooked up in a monastery; she provided the names of a few people who were involved in the scheme; she mentioned that she had been personally involved perhaps one or two years before; and she explained a bit about how the scheme worked, specifically, the percentage the people involved actually paid.

[35]     At the end of the meeting, and after discussing the matter, it was decided that the case would be handled by Audit and not be investigated. At this point, it is important to recall Mr. Ouellette's response[1] to this decision:

[TRANSLATION]

          Q. Why didn't you request an investigation in this case?

          R. Well, I am not personally convinced that we had the grounds when we met with Ms. Mercier to investigate the issue. Firstly, we did not know... we were not aware of the scope of the phenomenon; we were not very familiar with the organization; Ms. Mercier had not really given us figures that were terribly impressive. Based on all of that, we do not conduct an investigation just to obtain that type of information.

[36]      In his testimony, Mr. Ouellette stated categorically that neither he nor anyone else in the Special Investigations Section had had any type of contact with Ms. Langelier, her team leader, Mr. Galimi, or with anyone in the Audit Division between March 30, 1994 and when the issue was referred to the Special Investigations Section on June 29, 1995 or shortly before. Similarly, he stated that he had not received any documents from anyone during this same period. He also said that he had not had any contact either with Ms. Isabelle Mercier or her accountant before the investigation began. Mr. Ouellette stated that he had simply not taken an interest in the matter or enquired about it during the period from March 1994 to June 1995.

[37]      Mr. Ouellette said that the meeting about the referral to the Special Investigations Section was probably held a few days before the referral form was officially signed. Ms. Langelier and Mr. Galimi attended the meeting. Mr. Ouellette was also there as well as Mr. Ratté, the head of the Special Investigations Section and perhaps a team leader from the Special Investigations Section. Mr. Ouellette said that the decision to accept the referral was made during this meeting.

[38]      Mr. Ouellette stated that later, after a number of discussions, the decision was initially made to assign the case to one team and one investigator in particular. However, the investigator declined the case allegedly because of his workload. The case was eventually assigned to Mr. Ouellette because of a shortage of investigators. Further, he said that it was a very sensitive case which required expertise. He was chosen because of his many years of experience in the Special Investigations Section.

[39]      Mr. Ouellette said that after reviewing the tables prepared by Ms. Langelier which consisted in a compilation of all the banking information and receipts issued by the A.O.L.M., he was convinced that a scheme was involved (Exhibit I-9).

[40]      After returning from vacation, Mr. Ouellette contacted Ms. Isabelle Mercier on August 23, 1995, to set up a meeting, the purpose of which was to inform her that there were grounds for an investigation and to have her sign an affidavit, which he told her he would use for the investigation. Mr. Ouellette said that Ms. Mercier asked that Ms. Langelier, whom she knew, be at the meeting, which he agreed to. The meeting was held in a Special Investigations Section office.

[41]      In late October or early November 1995, Mr. Ouellette laid down information about the A.O.L.M. and its accountant Ralph Nahas, with a view to obtaining warrants to search the A.O.L.M. monastery and the office of the organization's accountant.

[42]      The A.O.L.M. search warrant was executed on November 8, 1995 in the presence of Father Jean Slim, who was in charge of the monastery. Mr. Ouellette said that he finally presented himself several hours after the group of investigators had entered the premises and the people present had refused to provide their names. Father Slim was served the official warning as were Messrs. Ralph Nahas and Samir El-Boustany, who had arrived at the monastery a little earlier.

[43]      Ms. Langelier, who had attended the investigators' meeting before the search, was present at the search with a view to obtaining information on places where documents could be found.

[44]      The search warrant for the accountant, Ralph Nahas, could not be served because the address provided, and even checked with his professional association, was incorrect. A search warrant for the residence of Mr. Nahas was finally executed on July 10, 1996. The residence of Mr. Samir El-Boustany, the husband of Ms. Isabelle Mercier, was also searched on that same date. Another warrant, for a Mr. Jamousse, was not executed because he had left Canada and was in the United States. Mr. El-Boustany was one of the heads of the A.O.L.M. and Mr. Jamousse had been mentioned as a donor recruiter on a document seized from the A.O.L.M. during the search on November 8, 1995.

[45]      Mr. Ouellette said that four types of tax avoidance schemes were discovered during the investigation:

1)       cheques were written for the exact amount of the receipt issued by the A.O.L.M. and the donor was reimbursed an amount in cash, most often 80% or 85% of the amount of the receipt;

2)       receipts were sold for 15% or 20% of the amount of the receipt;

3)       cheques were written for 15% or 20% of the amount of the receipt;

4)       receipts were issued for no consideration.

[46]      Mr. Ouellette said that about 20 donors who received receipts for a total of $100,000 or more between 1989 and 1994 were the subject of a criminal investigation. Finally, 16 charges were laid and 12 people pleaded guilty. Three charges were withdrawn and proceedings were stayed in one case.

[47]      Forty to 50 boxes of documents were seized during the November 8, 1995 search and they contained mainly accounting and banking documents, including deposit slips (Exhibit I-10, Vol. 1 and 2), cheques made out to cash by the A.O.L.M. (Exhibit I-12) and cheque stubs (Exhibit A-8, Book 6)[2].

[48]      The documents seized were in Father Slim's office, the adjoining library and in the basement.

[49]      A diskette was among the documents seized from the A.O.L.M. on November 8, 1995, and it contained an electronic file entitled "Biblio-Reç" (Exhibit I-21, Tab 3). This nine-page document contains information on 354 receipts issued by the A.O.L.M. in 1993. The information on these receipts, which are listed in the document sequentially, is provided in 15 columns. Among other things, columns B to J first show in many cases the percentage paid (generally 15% or 20%), then the receipt number, the donor's first and last name, his or her telephone number, the amount of the receipt, the amount "payable", the amount "paid", and the "remaining amount payable". Mr. Ouellette said that these last three columns show the amount the donor is to be paid, has already paid or has left to pay. He also said that his subsequent checks showed that the CA indicated in column K means that the receipt was provided for cash. The amount indicated in column L entitled "nôtre [ours]" is the amount the A.O.L.M kept. In some cases, the entry in column M entitled "via" means the person who recruited the donor. The name of Mr. Jamousse, who has already been mentioned, is found. Mr. Ouellette was able to justify his interpretation of Biblio-Reç using information gathered from other documents seized from the A.O.L.M., such as photocopies of donors' cheques, envelopes, and other torn-up documents that were placed in a waste basket.

[50]      Other documents were seized later from the residence of the accountant, Ralph Nahas, including two printed electronic files, one entitled "Biblio-Avant moi [Biblio before me]" (Exhibit I-21, Tab 15), and the other, " Biblio-Reç (Exhibit I-21, Tab 16). This latter file is not the same as that seized from the A.O.L.M. on November 8, 1995. It contains sequence numbers 355 to 495, which are not included in the file seized from the A.O.L.M. on November 8, 1995 (Exhibit I-21, Tab 3). However, the two files seized from the accountant are incomplete, as only the information in columns A to E is included, that is, the receipt number, the donor's first and last name, his or her telephone number and the amount of the receipt. Mr. Ouellette hypothesized that a more complete document had to have existed at one point. Mr. Ouellette said that several donors in the "Biblio-Avant moi" file pleaded guilty or confessed.

[51]      Donors were questioned during the investigation. Confessions were made in several cases (Exhibit I-21, Tab 10). Mr. Ouellette said that more than 50 other people also confessed to the same lawyer.

[52]      Mr. Ouellette said that other donors confessed later after information on the scheme and its terms and conditions were sent to the Audit Division with a view to reassessing donors. Mr. Ouellette mentioned that at that point he recommended that donors that had received receipts for less than $1,000 (Exhibit I-21, Tab 11) not be included in that reassessment.

[53]      The names of certain people who confessed to receiving a forged receipt for 1993 are included in "Biblio-Reç", while the names of a number of others are not (Exhibit I-21, Tabs 3, 10 and 11).

[54]      Mr. Ouellette said that just over 1,000 people were reassessed for the 1989 to 1995 years. Of these, about one hundred appealed to this Court.

[55]     Mr. Ouellette did not conduct any investigations concerning the Appellants. I would also like to point out that none of the Appellants were specifically audited before the reassessments were made. However, the names of three of the Appellants can be found in documents seized from the A.O.L.M., and from Ralph Nahas. I will discuss them at the appropriate time.

[56]     At the Respondent's request, in addition to Ms. Isabelle Mercier, three other donors testified to receiving receipts for larger amounts than the donations actually made.

[57]     Mr. Michel Yazbeck is a dentist originally from Lebanon. He moved to Canada in 1979. He said he remembers hearing about the A.O.L.M. issuing tax receipts in the Lebanese community, but not where. He said that he received a receipt for $10,000 in 1990, for $10,000 in 1991, and for $8,000 in 1992, by providing in each case the monastery's priest with a cheque for the amount concerned. Two weeks later, after the cheque had been cashed, he went back to the monastery and was given $8,000 cash, for example, for the $10,000 cheque. He said it was the same procedure each time. He said that he was issued the receipt dated December 22, 1992 for $8,000 in 1993 when he was preparing his tax return for 1992 (Exhibit I-5). Mr. Yazbeck confessed to Revenue Canada in February 1997 to receiving 80% of the amount of the cheque in cash (Exhibit I-6).

[58]     Mr. Elias Farhat is an engineer. He is also from Lebanon. For his part, he said that he received a receipt for $10,000 in 1993 and two receipts, one for $5,000 and the other for $4,500, in 1994 for paying only an amount in cash equivalent to 1/5 of the amount of the receipts (Exhibit I-17). He said that at a party in Montreal, a friend told him that he could make a donation and receive a receipt for a larger amount than the donation. He stated that this information travelled by word of mouth in the Maronite community. However, the receipt dated December 31, 1993 for $10,000 was allegedly received after a visit to the monastery in January or February 1994; that time he paid $2,000 in cash. He said that he was mailed the receipt later because at that point he was working in Sept-Îles. His name and the relevant information on this donation are found in "Biblio-Reç" at number 92. The receipt number is 122 (Exhibit I-21, Tab 3).

[59]     Mr. Marcel Thibodeau is now retired. He used to be a teacher. He said his accountant, Jean-Maurice Labelle, told him in March 1993 when he was preparing his 1992 tax return that it was possible to obtain a receipt for five times more than the amount paid in cash. Mr. Thibodeau said that he gave Mr. Labelle $1,000 cash and was given an A.O.L.M. receipt dated December 31, 1992 for $5,000 (Exhibit I-19, Page 1).

[60]     Mr. Thibodeau said that he received a telephone call in December 1993 from a Mr. Roger Antabli, who asked him if he wanted to "participate" again in 1993. If he did, he had to go to Buffet Antabli on Acadie Nord Boulevard before December 31. Mr. Thibodeau said that Mr. Labelle had told him that Mr. Antabli was the "contact" who would call him. Mr. Thibodeau therefore went to the designated location and gave the person who introduced himself as Mr. Antabli $2,000 cash. In return, he was given a receipt for $8,000 that had already been filled out (Exhibit I-19, Page 2). Mr. Thibodeau's name appears on the printout of the electronic file entitled "Biblio-Reç" seized from the A.O.L.M.'s accountant (Exhibit I-21, Tab 16). The number is 390, the receipt number is 429 and the amount indicated for the receipt is $8,000. As already mentioned, there is no other information in this second part of "Biblio-Reç". Mr. Thibodeau received another $8,000 receipt after the same procedure was followed in late 1994 (Exhibit I-19, Page 3).

[61]     Mr. Thibodeau's spouse also made a donation to the A.O.L.M. and after she received a notice of reassessment disallowing the tax credit, Mr. Thibodeau contacted Mr. Gaétan Ouellette using the telephone number with the notice of assessment, with a view to making a disclosure. Since Mr. Ouellette had asked him to send a letter, Mr. Thibodeau then sent him a letter of confession (Exhibit I-20).

[62]      Ms. Mercier told us during her testimony what she personally knew about the scheme, which her husband, Mr. El-Boustany, had organized. Father Sleiman told Ms. Mercier about the scheme during a meeting attended by her husband in the basement of the church. The conversation allegedly continued a little later in the priests' office. She said that her husband had also explained the scheme to another person who came to the house. Ms. Mercier stated that she had personally made donations from 1988 to 1990 by giving her husband cheques who then gave them to the priests, specifically to Father Sleiman, Father Slim and Father El-Kamar. Ms. Mercier stated that the latter and her husband became friends and was the person with whom her husband primarily dealt. Ms. Mercier received receipts for the amount of the cheque issued (Exhibit I-18). However, her husband allegedly received cash refunds of 50% to 80% of the cheque amounts. He allegedly deposited these cash deposits himself initially in a bank account for the mortgage on the house and then in a joint account. Ms. Mercier, however, said she was unaware of the total amount deposited in this way in these accounts.

[63]      While she provided few details about the information provided at the March 30, 1994 meeting, Ms. Mercier mentioned in her testimony the names of the people she knew who had allegedly participated in the scheme at that time. She explained, more specifically, that a friend from outside Montreal, Mr. Naji Abi Nader, gave her husband a cheque for $20,000 three times a year, and in return, her husband gave him a receipt for the exact amount of the cheque and $16,000 in cash. Each time, the receipt and the cash, in $1,000 or $100 bills, were placed in an envelope that her husband kept in a desk in their bedroom. Ms. Mercier said she saw the receipt and counted the money in the envelope three or four times, but was unsure in exactly which year. She had also allegedly personally seen her husband give the envelope to this person on one occasion. She also mentioned in passing that even afterward she found a receipt made out to Mr. Abi Nader in the truck her husband often used.

[64]      Ms. Mercier also mentioned, without, however, being too clear, that after the meeting on March 30, 1994, she had met with Mr. Gaétan Ouellette from the Special Investigations Section a second time in 1994, not in 1995, and at that meeting she gave him her own receipts obtained for tax purposes for 1989 and 1990. The meeting was allegedly held in the same office as the first meeting. Ms. Mercier was, however, unable to confirm whether Ms. Langelier or Mr. Galimi were at this meeting.

[65]      I would like to simply point out here that Ms. Langelier testified that she and Mr. Galimi met with Ms. Mercier a second time on September 8, in her accountant's office. For his part, Mr. Gaétan Ouellette stated that he did not have any contact with Ms. Mercier between the date of the first meeting, March 31, 1994 and August 23, 1995, the date when he had her sign an affidavit after the case was sent to the Special Investigations Section. Mr. Ouellette stated that he had contacted Ms. Mercier a few times after August 23, 1995, as did investigators from Quebec who were looking after the case of Mr. Abi Nader.

The Appellants

Ghassan Kiwan

[66]      Appellant Ghassan Kiwan is currently a consulting cardiologist for the Aramco oil company in Saudi Arabia. He left Quebec in July 1997.

[67]      Mr. Kiwan immigrated to Canada in 1977 and obtained his licence to practice medicine in Quebec in 1982. After specializing in internal medicine and cardiology, he became an associate cardiologist and then head of the cardiology department at the Lanaudière regional hospital in Joliette. At that time, he was living in Repentigny and did so until he moved to Saudi Arabia in July 1997.

[68]      Mr. Kiwan testified that he is a practicing Maronite Catholic and started attending mass at the A.O.L.M. church on Ducharme Street in Outremont in 1983 or 1984.

[69]      He said that from 1990 to 1995 in particular, he attended mass about twice a month and various parties to raise money for the hall and the monastery that the A.O.L.M. had built. He also said he occasionally went to other churches, such as in Repentigny, Joliette and Montreal.

[70]      Mr. Kiwan mentioned that he was also a member of the Maronite Union, which also raised money for the same purposes as the A.O.L.M. He said that his brother, Roger Kiwan, and Mr. Fadi Basile also belonged to this civil charity organization which assisted Maronites and needy people in general.

[71]      Under cross-examination, Mr. Kiwan said that he referred many patients to Mr. Fadi Basile, a cardiologist who practiced in Montreal, with whom he also had fairly frequent contact. Mr. Basile was also a personal friend and a friend of his brother Émile. Mr. Kiwan testified that he had always been involved in charity work and knew the Maronite priests, including the head of the monastery to whom he had provided sample medications to be sent to Lebanon. Mr. Kiwan said that he did not know Messrs. Nahas, Jamousse or Abi Nader, but said that he knew Mr. Nabil Attié, a friend of his brother Émile Kiwan.

[72]      Under cross-examination, Mr. Kiwan stated that he had always made his donations by cheque and gave them to the accountant priest when he made short visits to the monastery on Friday nights when he was not on call and while his wife was shopping in Montreal. That was also when he received the receipt. He said that he gave the father superior a cheque after mass on Sunday only twice: once he was with his brother Émile and the other, his wife.

[73]      Mr. Kiwan stated that he never received a cash refund from anyone and did not know of anyone who made donations to the A.O.L.M. at that time. He said that the subject was quite simply never discussed in public. He said he had never personally encouraged anyone to make donations, and that he had never discussed, even in his family, and more specifically with his brother, Émile Kiwan, the donations he made to the A.O.L.M. because it was a personal, charitable gesture. He said that any discussions he did have were general in nature and were limited to acknowledging the need to assist the A.O.L.M. and its works. Mr. Kiwan testified that he and his brother Émile Kiwan discussed the issue of donations for the first time in the summer of 2003.

[74]      Mr. Kiwan said that he heard about forged or fixed receipts in late 1996 or early 1997 when he was in Joliette looking after transferring between 4,000 and 5,000 patient files to colleagues in preparation for his move to Saudi Arabia. He said he was angry at the time and totally disappointed and said that the question being asked was where the money had gone because the A.O.L.M. was having financial problems.

[75]      Mr. Kiwan made his first donation to the A.O.L.M. in 1990 and his last in 1995. He said that in the late 1980s, people made donations to the collection taken at Sunday masses. Then, at some point, the A.O.L.M. was apparently given permission to issue tax receipts and the priests from the monastery allegedly told him this either at mass or during a meeting. Mr. Kiwan said that the priests starting requesting donations themselves starting in 1990.

[76]     The following is information from the receipts Mr. Ghassan Kiwan received from the A.O.L.M. (Exhibit I-15, Tab 8):

[77]      Mr. Kiwan said that he did not receive any receipts for donations to the A.O.L.M. before 1990 because he was starting to work, was already involved in a Eucharistic centre in Lebanon, and was also making donations to the hospital where he worked.

[78]      Mr. Kiwan said that he contributed more to the A.O.L.M. at the beginning because his salary was increasing and then he decreased his donations because of his family obligations after his children were born.

[79]      Mr. Kiwan stopped making donations to the A.O.L.M. in June 1995. The date of the last receipt is June 25, 1995. When asked to explain why 1995 was the only year since 1990 for which he did not obtain a receipt in December, he said that he had numerous obligations at that time and that his income had decreased 30% as a result of the salary cuts imposed by the Government of Quebec starting in August 1995. He was allegedly forced to withdraw money from his Registered Retirement Savings Plan (RRSP) to pay his taxes as a result of this decrease in income. Since he did not mention his financial problems in an examination for discovery on February 6, 2003, Mr. Kiwan explained that he did not think of it at the time. Under cross-examination, he also mentioned that people in the Lebanese community had been talking about forged receipts, though he had previously stated that he had not read about the false receipt problem in the newspaper until late 1996 or early 1997.

[80]      Mr. Kiwan, who donated more than $65,000 to the A.O.L.M. between 1990 and 1995, did not take any special steps with the Order to endeavour to determine what had become of the donated money. He said he did not see the priests in Montreal again and, although he has been to Lebanon since, he never discussed the issue with the heads of the Order. However, after receiving a Notice of Reassessment in 1997, he contacted his accountant, and, after checking his cheque book, attempted to obtain from his bank all the cheques he had written and had been cashed by the A.O.L.M. (Exhibit A-9, Tab 14). Despite the request, Mr. Kiwan was able only to obtain a photocopy of a few cheques (Exhibit A-9, Tab 15).

[81]      As in the case of the other Appellants, Ms. Langelier made out some calculations to determine how much of the donations were reported in relation to the 20% limit on net income and in relation to disposable income. In the case of Mr. Kiwan, who had a high income from professional activities, although they were sizeable, the donations were well below the allowable limit and did not represent a significant proportion of his disposable income (Exhibit I-16).

[82]      It is important to immediately point out here some specific points in the case of Mr. Ghassan Kiwan.

[83]     First, Appellant Ghassan Kiwan's name was found on a document in a waste basket seized from the A.O.L.M. during the November 8, 1995 search (Exhibit I-21, Tab 6, Page 1). The author of the sheet is unknown, but five names are mentioned, including those of the Appellant and his brother Émile Kiwan. Beside each name is the amount of the receipt and "déjà rendu [received]" and a second amount which is 80% of the first amount. In the case of Mr. Ghassan Kiwan, the amount indicated for the receipt is $5,000, and the amount indicated as "déjà rendu" is $4,000. Mr. Kiwan received a receipt for $5,000 in 1994. Mr. Ouellette testified that this proved that a scheme existed where a receipt was issued for the total amount of a cheque and cash was subsequently refunded for 80% of the cheque amount. He also pointed out that Mr. Nabil Attié, whose name was also found in this document, had pleaded guilty to two charges brought against him.   

[84]      Then, Appellant Ghassan Kiwan testified that he had handed most of the cheques to one of the priests in the monastery during his short visits on Friday evenings while his wife was shopping. He said that he was issued receipts on the spot. He testified that two times at the most he gave his cheque to the father superior at Sunday masses.

[85]      When the dates on the receipts were checked, none of the dates on the receipts fell on a Friday and four of the dates on the receipts, that is, December 15, 1991, June 7, 1992, December 6, 1992, and June 25, 1995, were Sundays.

[86]      Further, Mr. Kiwan testified that donations were a personal matter, that he did not discuss it with his family, except to acknowledge the need to assist the A.O.L.M. He also testified that his brother Émile was never with him when he went to the monastery, except perhaps once after mass. He also testified that he had never discussed his donations in detail with family members, particularly not with his brother Émile Kiwan.

[87]      When we look at the list of donors the A.O.L.M. submitted with its tax returns on T3010 forms from 1990 to 1994, we see that nine times out of twelve, the number on the receipt issued to the Appellant either immediately precedes or follows the receipt issued to his brother Émile Kiwan. The receipts were issued the same day in five cases, one day later in two cases, and a few days later on two occasions. We can also see that in seven out of nine cases, the receipts issued are for the same amount, that there is a difference of only $100 in one case and a difference of $1,500 in the last case (Exhibit I-8, Tabs 7 to 11).

[88]      In her testimony concerning Mr. Kiwan's case, Ms. Langelier also pointed out that most of the numbers on the receipts issued to this Appellant immediately preceded or followed the numbers on the receipts issued to his brother.

[89]      During his testimony, Mr. Kiwan also stated that in 1995, he did not make a donation to the A.O.L.M. in December as he usually did in previous years because his income had decreased significantly as a result of cuts implemented by the Government of Quebec. He even said that he had had to cash in some of his RRSPs to pay his taxes.

[90]      The figures from Mr. Kiwan's tax returns show not only that his 1995 income from professional activities did not decrease from 1994, but that it had increased by nearly $25,000, and had increased by more than $50,000 from 1993. An $84,000 business loss was however claimed in 1995, but no explanations were provided. Mr. Kiwan's income from professional activities did not decrease substantially until 1996 and no funds were withdrawn from his RRSP in 1995 or 1996. In 1997, only $5,000 was withdrawn (Exhibit I-16, Page 2).

[91]      I would like to immediately point out that the above-mentioned circumstances did not occur by accident. On the contrary, the only possible conclusion is that the donations were not made in the way or at the times described. We can also infer that the donations of the Appellant and his brother were almost completely coordinated. The Appellant's testimony to the effect that his donations were confidential, and that he and his brother did not discuss the issue, as well as the timing and the way in which the donations were made is quite simply not credible.

Ramzi Salamé

[92]     Mr. Salamé is currently the Senior Program Specialist in Higher Education at the regional UNESCO office in Beirut, Lebanon. He left Canada on January 8, 1994 to take up this UNESCO position first in Jordan, then in Lebanon.

[93]     Mr. Salamé is originally from Lebanon and moved to Canada in 1970. After obtaining his masters and doctoral degrees in Psychology, he held a lecturer position at the University of Montreal from 1973 to 1977. In 1977, he accepted a position as a professor at Université Laval, where he taught until his departure in 1994.

[94]     Mr. Salamé said that he never had any close ties to the Lebanese communities in Montreal or Quebec City.

[95]     While he was on sabbatical during the first part of 1992 and the first part of 1993, he traveled in France and to Lebanon.

[96]     Mr. Salamé was born a Melkite Greek Catholic, but says he is an agnostic.

[97]     Mr. Salamé stated that in early October 1998, while he was at a conference in Paris, he first heard about a problem involving his donations to the A.O.L.M. During a telephone conversation with his wife, who was living in Beirut, she told him that someone from the Caisse populaire Desjardins at l'Université Laval, where he held an account and had a line of credit, had called and said that it was urgent that he speak with Mr. Salamé. Mr. Salamé therefore telephoned the accounts manager as soon as he could and was told that Revenue Canada had seized between $13,000 and $16,000 from his account; this seizure was made in connection with donations the tax authorities had not recognized as such (Exhibit A-4).

[98]     Mr. Salamé then obtained leave from his principal and first went to the Caisse populaire in Quebec City, then on Sunday, October 18, 1998, to the A.O.L.M. monastery, the address he had for which was in Outremont. After mass, he met with the priest who was officiating to find out what was happening. After a few explanations, this priest allegedly gave him the name of his counsel handling this matter, M^e Ouellette.

[99]     Mr. Salamé then telephoned M^e Ouellette, who gave him an appointment the same day at his office in Place Ville-Marie. Mr. Salamé took an oath there confirming the truth and accuracy of all the donations he had made to the A.O.L.M. between 1989 and 1993 (Exhibit A-2).

[100] During his testimony, Mr. Salamé categorically denied ever having had any meetings other than that on October 18, 1998 with the A.O.L.M.'s priests. He stated that he had never spoken to them either, because he had made all of his donations by cheque, which he had mailed, and he had also received his receipts by mail.

[101] Mr. Salamé wrote three cheques to the A.O.L.M.: one for $9,600 dated December 23, 1990; another for $10,000 dated December 9, 1991; and another for $5,000 dated December 16, 1992 and received a receipt for the donated amount for each year (Exhibit A-3).

[102] However, the donation in 1993 was allegedly made differently. Mr. Salamé confirmed that he had signed two cheques over to the A.O.L.M. that his two brothers-in-law who lived in Atlanta, Georgia, United States had made out to him for US$3,500 or US$3,600 each. Mr. Salamé explained that his brothers-in-law owed him money from purchasing the family home in Lebanon and they repaid this debt by writing cheques on their account in the United States. He said that partial payments such as these were frequently made. When he visited his brothers-in-law, they might give him cheques made out to him and signed in advance, but he filled in the date and amount later after they telephoned him to advise him that the money was available. Mr. Salamé said that the US currency account he held shows that this is how his brothers-in-law made payments.

[103]    Mr. Salamé said that after he sent these two cheques, he received a receipt from the A.O.L.M. for $10,000 in the mail. He said that this amount was justified because it was pretty much equal to the amounts of the US dollar cheques he had sent.

[104]    Mr. Salamé stated that before he made donations to the A.O.L.M., he donated many times to the victims of the war in Lebanon when he visited a few times each year in the 1970s and 1980s.

[105]    During one of his visits to Lebanon in 1988 or 1989, a childhood friend, a retired colonel named Hélou, asked for direct assistance and allegedly told him about the A.O.L.M. in Montreal and the colonel allegedly gave him the address of the monastery. Mr. Salamé said that he was the one who had first explained to this friend the benefit, for Canadians of Lebanese and other origins, of being able to make donations to an organization in Canada instead of making direct donations on the spot, because they could receive tax credits. In this way, he said that the donations could be larger and the funds collected could be sent to Lebanon or used for local work. This was when this friend allegedly gave him the name and address of the A.O.L.M. in Outremont, nothing more.

[106]    Mr. Salamé therefore confirmed that this was how he found out about the A.O.L.M., of which he knew nothing before, and started making donations to this organization in 1990, simply by mail, when he did not even know the name of the people in charge, who he simply described later as priests or monks (Exhibit I-3). He allegedly attached a note to his first cheque dated December 23, 1990 for $9,600, requesting that the assistance he was providing be directed to charitable work in the area he grew up in Lebanon. Further, he said that he later heard through his brother that the A.O.L.M. had in fact distributed funds to a charitable group working in that part of the country. No further details were, however, provided in this regard.

[107]    Mr. Salamé admitted that he could make larger donations than in previous years because he received a tax credit and that he had in fact calculated each year, albeit in an approximate manner, the amount of the possible donation to obtain the credit and took the allowable limit into account.

[108]    Although he donated $9,600 in 1990 and $10,000 in 1991, Mr. Salamé sent only one cheque to the A.O.L.M. in 1992 for $5,000. The explanation provided was that his father had passed away in July 1992, and at a de requiem mass in memory of his father, celebrated by the priest from the Melkite Greek Catholic parish in Quebec City who ran the Université Laval chapel, he made a large donation of $7,500 to the Melkite mission. He made another $3,000 donation to the same organization in 1993.

[109]    Under cross-examination, Mr. Salamé said that he did not know anyone who had made donations to the A.O.L.M. and that he was never told personally between 1990 and 1993, about any scheme involving the A.O.L.M. issuing false receipts. However, although he earlier said that he had found out that there was a problem with his receipts for charitable donations in October 1998 after funds had been seized from his account, he later admitted that Revenue Canada had informed him of it in a letter dated January 9, 1997, which he had responded to on February 2, 1997 (Exhibits I-2 and I-3). Mr. Salamé said that he had completely forgotten about that letter and even that he had responded to it.

[110]    I will point out here that mention is simply made in the Revenue Canada letter that an audit of the A.O.L.M.'s books and records had shown that a tax avoidance scheme existed involving the issuance of receipts for charitable donations and a proposal had been made to disallow all donations made to this organization. However, in his response, Mr. Salamé pointed out that if the organization had been able to misappropriate funds, he did not see why, as a taxpayer, he should be held responsible for the actions of unknown third parties with whom he had contact solely through the mail.

[111]    Mr. Salamé was unable to explain why he had mentioned misappropriation of funds when there was no mention of this in the Revenue Canada letter. He was also unable to explain what he understood "tax evasion" to mean; it seemed that he was completely unaware of this expression.

[112]    Although he did not take any steps personally with the A.O.L.M. in Lebanon or Canada after he received the letter from Revenue Canada to determine what had become of the $34,600 he had donated, Mr. Salamé nonetheless stated that he had obtained information from Lebanon to the effect that the bulk of the money he had donated had been transferred to a charity in his old neighbourhood. Here, again, no details were provided in this regard.

[113]    Under cross-examination, Mr. Salamé was asked to explain certain deposits made without his bankbook and at the ABM to his Caisse populaire Desjardins account at the Université Laval on dates close to the dates the A.O.L.M. cheques were deposited (Exhibit A-3).

[114]    First, the December 23, 1990 cheque for $9,600 was not cashed until March 15, 1991. The corresponding receipt, number 1527, is dated December 31, 1990. Mr. Salamé hypothesized that the A.O.L.M. had perhaps delayed cashing it because he had attached a note to the cheque requesting that his contribution be made to an organization in a specific area of Lebanon and the A.O.L.M. may have wanted to consider this possibility. Mr. Salamé did not mention any names or provide any other details.

[115]    Further, Mr. Salamé's account statement shows that $8,657 was deposited without his bankbook on March 22, 1991. Mr. Salamé did not hesitate to explain that it was a transfer from an inactive account he held at the Caisse populaire Saint-Sacrement in Quebec City and that this transfer was made with a view to purchasing a house. Bank statements from this latter account were not submitted as evidence.

[116]    The account statement also shows that $7,987 was deposited without bankbook on May 2, 1991 and Mr. Salamé was unable to explain this along with several other deposits without bankbook shown.

[117]    On December 18, 1991, the $10,000 cheque dated December 9, 1991 made out to the A.O.L.M. was debited from Mr. Salamé's bank account. Mr. Salamé's account statement shows that three ABM deposits were made on December 19, 1991: $3,000, $2,300 and $3,000 (Exhibit A-3).

[118]    Mr. Salamé explained that he was in Montreal on December 19, 1991, and was taking a flight that night to Europe with his wife and two children for the first part of his sabbatical, the first six months of 1992. He said that he personally had $10,000 cash in Canadian and US dollars that he had planned to take for the trip and one of his brothers-in-law had given him $2,600 or $2,300 cash before he left. Mr. Salamé explained that his two brothers-in-law were living in the United States at the time, but had lived in Montreal and then Toronto before they moved to the United States. Since they owed him money from the purchase of the family home in Lebanon, when he met them, one of them had allegedly given him the amount in question in funds withdrawn from a bank account he still had in Toronto.

[119]    Mr. Salamé explained that the previous summer a Mr. Abdallah Akiki had borrowed $6,000 from Mr. Salamé's brother in Lebanon to start a business in Montreal. Since this Mr. Akiki had already demonstrated an interest on several occasions in repaying the amount in question because he had changed his mind, Mr. Salamé stated that he had had a meeting before he left in a café or a gas station in Montreal and that Mr. Akiki had allegedly given him the $6,000 in bills, in Canadian dollars which he had taken to Lebanon and kept until then. Since he then had too much money on him, Mr. Salamé stated that he had then made the three deposits in question at the Caisse populaire in Côte-Vertu on his way to the Montreal airport. Mr. Salamé said that he made the first deposit, the $3,000, because he wanted to keep the other $3,000 from the $6,000 Mr. Akiki had given him. Then, he deposited what he said was the $2,300 from his brother-in-law so that he would have a record of it. Finally, the second $3,000 deposit was allegedly made after he returned to the car and told his wife, who was waiting, that he had deposited only $3,000 of the $6,000 Mr. Akiki had given him. She then allegedly told him to deposit it all because they already had enough money and he was coming back to Quebec City himself in February. That explains the second $3,000 deposit. The entries in the bankbook show that the first two deposits, the $3,000 and the $2,300, were made at 8:29 p.m. and the last, the $3,000, at 8:30 p.m. Mr. Salamé explained that he remembered situations and clearly remembered those deposits because they were made under special circumstances. He also remembered when his bank account was seized in 1998, but not the letter he received from Revenue Canada in 1997.

[120]    Mr. Salamé said that there were a number of deposits without bankbook on his account and that after he left, his sister-in-law was able to make these deposits. A $4,200 deposit was made on January 3, 1992.

[121]    The $5,000 cheque dated December 16, 1992 to the order of the A.O.L.M. was debited from Mr. Salamé's bank account on December 22, 1992. The account statement shows a $4,000 deposit without bankbook on January 5, 1993 (Exhibit A-3). Mr. Salamé was unable to explain this deposit because he had already stated that he had left the country on sabbatical. However, he pointed out that there had been other deposits without bankbook over the years and he had not been asked to explain where the deposited funds came from. Another deposit without bankbook, $4,200, was made on January 6, 1993.

[122]    I must point out here that further to a close review of bank statements, it is possible to note that there are indeed a considerable number of deposits without bankbook, more than 70 in fact, between 1990 and 1994, not counting those in a second US currency account (Exhibit A-3). The reconciliation exercise is clearly incomplete. We can nonetheless see that shortly after the A.O.L.M. cashes his cheque, Mr. Salamé always deposits between 80% and 90% of the cheque amount.

[123]    Mr. Salamé stated that he continued making donations after he left the country in January 1994. He said that these donations were made directly in cash, particularly to people and families in Lebanon. Mr. Salamé said that that he no longer asks for tax receipts because his salary is not taxable.

[124]    Mr. Salamé stated that he did not attempt to contact an A.O.L.M. representative to obtain additional proof of his donations. He said that he had only gone to the A.O.L.M. monastery once, and that was on October 18, 1998.

[125]    During her testimony involving Mr. Salamé's case, Ms. Langelier, the auditor, explained that the A.O.L.M. used books of 25 receipts until 1993. After 1993, there were only 10 receipts in each book. She said that receipt number 1527 issued to Mr. Salamé, a receipt dated December 31, 1990 for $9,600, was from a receipt book with receipts numbered from 1526 to 1550, a number of which were also dated December 31, 1990, but matched, according to the information on deposit slips, cheques deposited on March 14, 1991, totalling $25,300 (Exhibit I-10, Vol. 1, Tab 4, Page 44 and Exhibit I-9, Page 17). Ms. Langelier concluded that the receipt issued to Mr. Salamé had been antedated. However, Ms. Langelier admitted that she had never had the donors' cheques in her possession, more specifically, Mr. Salamé's cheque.

[126]    I would like to comment here that I do not see how being in possession of the cheque could have changed this conclusion. We now know the date of the cheque, the date it was deposited and the date of the receipt. Exhibit I-9 shows that the A.O.L.M. deposited cheques in its possession if not relatively quickly, then very quickly, and these deposits were often followed by cash withdrawals. We can count here about fifteen deposits of a number of cheques at once for significant amounts; these deposits were made between January and April 1991. A number of the receipts are, however, dated December 31, 1990 (Exhibit I-9, Pages 15 to 18). The same thing happens year after year and we see that a significant percentage of cheques are deposited in February, March and April of one year and the receipts are dated December 31 of the previous year or another date in December. Although the receipts do not seem to have always been issued in sequence, this is a constant factor from one year to the next (Exhibit I-9, Pages 8, 15 to 18, 26 to 28, 35, 36, 42, 43 to 48). Messrs. Thibodeau, Yazbeck and Farhat testified that in their cases, antedated receipts were issued for payments made by cheque or in cash during the first few months of the following year.

[127]    In my opinion, there is not simply a possibility, but a strong probability that the deposits made during the first few months of a year are for payments made by cheque or in cash shortly before the date of deposit, even if the receipts are dated in December, particularly December 31, of the previous year.

[128]    Although Ms. Langelier found that the dates the cheques for the $10,000 and $5,000 donations in 1991 and 1992 respectively were deposited are the same or within a few days of the date of the receipts, she did not find any deposits made in 1993, a year for which receipt number 349 dated December 31, 1993 was issued for a $10,000 donation. She explained that she was also unable to find any deposits corresponding to the ten receipts from this book in particular. She said, however, that a receipt from a previous book, number 340, and receipts from a subsequent book numbered 363, 365 and 367, correspond to deposits made between March 25 and 29, 1994 (Exhibit I-9, Page 43).Ms. Langelier concluded that they were cash donations for which receipts had been antedated. Under cross-examination, Ms. Langelier admitted, however, that certain deposit slips were sometimes missing. Mr. Ouellette said that the receipts were not always issued in sequence.

[129]    Further, still in connection with this 1993 donation, which was allegedly made by means of two US currency cheques sent to the A.O.L.M., Ms. Langelier said that she did not find any deposits of US dollars and that to her knowledge, the A.O.L.M. did not have a US currency account.

[130]    Finally, Ms. Langelier explained the calculations she had done for the hearing to demonstrate the size of the donations in relation to the allowable 20% limit on net income and in relation to Mr. Salamé's disposable income. She calculated that Mr. Salamé's donations to the A.O.L.M. were 73% to 82% of the allowable 20% limit on net income and that they represented 23%, 24%, 14% and 30% of his disposable income (including source deductions) for each of the years between 1990 and 1993 respectively (Exhibit I-13). Between 1990 and 1993, Mr. Salamé's total annual income was between $72,000 and $75,000.

[131]    One last point that should be mentioned in Mr. Salamé's case is that his name appears in Biblio-Reç (Exhibit I-21, Tab 3, Page 8). It appears in Biblio-Reç as sequence number 319 in relation to receipt number 349 for $10,000 obtained in 1993. As opposed to what is done in the case of most donors whose name is included in this file, there is no other mention than the first and last names and the amount of the receipt, $10,000. In his testimony, Mr. Ouellette stated that he had been unable to find when this amount was deposited and hypothesized that no payment had been made.

Ziad Hanna

[132]    Mr. Ziad Hanna is an engineer and project manager. He is originally from Lebanon and moved to Montreal in 1990. He was born a Melkite Greek Catholic and is practicing. In 1994, he married May Nassar, who is a Maronite Catholic.

[133]    Mr. Hanna explained that quite soon after he moved to Montreal, people with whom he had been in contact showed him the main landmarks in the Lebanese community, such as churches, grocery stores and restaurants. This was when he heard about the A.O.L.M. church, another Maronite church, the Saint-Maron church on Henri-Bourassa Boulevard in Montreal, and about the Melkite church, which at the time was located downtown and then north of the city of Montreal on Gouin Boulevard. He said that at first, he mainly went to mass at the Saint-Maron church. However, when a priest at the A.O.L.M. church asked for donations to cover the cost of a specific surgical procedure, he was told by the person collecting the donations after mass that he could obtain a tax receipt. After he read some Revenue Canada brochures on the topic and with the dual purpose of assisting victims of the war in Lebanon and obtaining tax deductions, he decided to make donations to the A.O.L.M. in 1992. He explained that he had at that time a better salary and had savings. He admitted that he had in fact calculated, albeit roughly, the maximum contribution he could make within the allowable limit.

[134]    Mr. Hanna said that he preferred this type of tax shelter to buying flow-through shares because he could help people and obtain a tax refund. Although he did in fact purchase flow-through shares starting in 1996, he did not fail to point out that the value of the shares usually changed quickly and drastically.

[135]    Mr. Hanna explained that he donated to the A.O.L.M. instead of the Melkite church because a larger percentage of Lebanese Christians are Maronites and Melkites are primarily Christians from, among other places, Egypt, Syria and Jordan. Therefore, he said there was no guarantee that a donation to the Melkites would be used to assist people in Lebanon. To further explain his donations to the A.O.L.M. rather than the Saint-Maron church, he said that the A.O.L.M. was in some ways a backbone for Christians in Lebanon. He did not try to obtain information on whether the Saint-Maron church also issued tax receipts for donations.

[136] Mr. Hanna said that he subsequently went to mass more frequently at the A.O.L.M. because it was closer to his home. He explained, however, that he initially did not go to the A.O.L.M. church just for mass, but also to meet people he knew after mass in the church basement or to participate in social activities, mainly political discussions. He said that he occasionally spoke to the priests and those he knew over the years were Father El-Kamar and Father Claude Nadras.

[137] Mr. Hanna said that before 1992, his donations to the Sunday collection would have been no more than $500 or $600 a year. After he discovered that he could make donations and obtain a tax deduction, Mr. Hanna said that he started donating to the A.O.L.M. in 1992. Mr. Hanna explained that at the time, he made an appointment by telephone with a priest at the monastery, went to the monastery, wrote the $5,500 cheque in the monastery and a receipt was filled out, while he waited, for the same amount and dated the same day. He said, however, that it was probably that first time, in 1992, rather than 1993, as he had indicated during the discovery phase, that the priest was somewhat reluctant, perhaps because he saw that Mr. Hanna was young, and perhaps did not think that he had the money required.

[138] We were unable to trace the cheque, despite Mr. Hanna's request, because the National Bank of Canada had destroyed it. However, a bank representative testified that the cheque had cleared the account between August 20 and September 30, 1992 (Exhibit A-5, Tab 17). I will point out immediately here that the receipt obtained was dated September 2, 1992. I will discuss this issue later in connection with Ms. Langelier's findings during her testimony.

[139] In 1993, Mr. Hanna followed the same procedure and provided a cheque for $9,000 dated November 24, 1993 (Exhibit A-5, Tab 14). The cheque was, however, cashed on November 23, 1993. Mr. Hanna categorically stated that when he went to the monastery to make his donations, he wrote out the cheque on the spot and put that day's date on it and never wrote postdated cheques. He said it was just a banking error, which was in fact corrected when the bank reversed the transaction and debited the account on November 24, 1993 (Exhibit A-5, Tab 19). It is clear, however, that the cheque was in the A.O.L.M.'s possession on November 23 and that it was deposited on that date because it was stamped by two different banks on that date: the National Bank of Canada, where Mr. Hanna had his account, and the Bank of Montreal, where the cheque was deposited (Exhibits A-5, Tab 14, and I-10, Vol. 2, Tab 3, Page 9).

[140] Mr. Hanna also said that the priest had always filled out the receipt in front of him when he gave him his cheque and put that day's date on it. In the case at hand, the receipt is dated December 2, 1993, not November 23 or 24, 1993 (Exhibits A-5, Tab 23, and I-8, Tab 10, Page 219).

[141] Mr. Hanna wrote a cheque for $5,100 and dated it December 12, 1994 and followed the same procedure and allegedly donated it to the monastery (Exhibit A-5, Tab 15). It is strange that a National Bank of Canada representative was able to confirm that this cheque had been destroyed, since a photocopy was submitted as evidence (Exhibit A-5, Tab 17). The receipt obtained for the same amount is dated the same day (Exhibit A-5, Tab 24).

[142] In 1995, Mr. Hanna gave the A.O.L.M. a cheque for $5,500 dated November 14, 1995 (Exhibit A-5, Tab 16). The receipt for the same amount is dated the same day (Exhibit A-5, Tab 25). However, the cheque was not deposited until December 5, 1995 (Exhibits A-5, Tab 21, and A-6). Although his bank account shows a balance of only $1,122.74 as at November 14, 1995, Mr. Hanna said that he never asked the A.O.L.M. to delay depositing his cheque. He said the line of credit associated with the account could cover the amount of the cheque. He stated that he had never used this line of credit to make donations and had not borrowed either. Further, among the transactions on his account, $11,000 was transferred on November 29, 1995. Mr. Hanna explained that a term investment that had become due had been transferred.

[143] Mr. Hanna's name is in the "Biblio-Avant Moi" file seized from the A.O.L.M.'s accountant. As we know, this file contains the name of certain donors and the amount of the receipt issued in 1993 to each. His name appears at sequence number 77. The receipt issued was number 2861 and was for $9,000. As with all the other people, the file does not contain any further information (Exhibit I-21, Tab 15, Page 2).

[144] During her testimony concerning Mr. Hanna's case, Ms. Langelier showed that the $5,500 cheque issued in 1992 had in fact been deposited on August 25 (Exhibit I-9, Page 30). As I mentioned earlier, the corresponding receipt, number 2426, is dated September 2, 1992 (Exhibit A-5, Tab 22).

[145] According to Ms. Langelier, Mr. Hanna's cheque for $9,000 was deposited on November 23, 1993 (Exhibit I-9, Page 40). The corresponding receipt, number 2861, is dated December 2, 1993 (Exhibit A-5, Tab 23).

[146] For the purposes of the hearing, Ms. Langelier also calculated the receipt amounts received from the A.O.L.M. in relation to the 20% limit on net income and also in relation to Mr. Hanna's disposable income for each of the years at issue (Exhibit I-14). In 1992, the $5,500 is below the 20% limit on net income. In 1993, the $9,000 donation is well above the limit. Taking into account the carryover of a portion of the 1993 and 1994 donations, the limit is reached for 1994. In 1995, the donation is below the allowable limit.

[147] Regarding the amounts of the receipts obtained in relation to Mr. Hanna's disposable income, Ms. Langelier calculated the percentages to be 22%, 44%, 22% and 27% for each of the years from 1992 to 1995 respectively.

[148] Mr. Hanna's tax returns submitted as evidence show a total income of $37,282, $45,288, $44,781 and $43,311 for each of the years from 1992 to 1995 respectively. Contributions of $10,119, $7,838 and $7,959 were also made to an RRSP for each of the 1993, 1994 and 1995 years respectively (Exhibit A-5, Tabs 1 to 4).

[149] During his testimony, Mr. Hanna reported paying only about $475 in rent a month in 1992 and 1993, and about $600 a month in 1994 and 1995. He said that he had credit cards at the time, but always paid off the balance, except in the case of the credit card from the Ordre des ingénieurs, which he used for business traveling expenses. He said that his expenses, including interest on the credit card, were covered by his employer.

[150] Under cross-examination concerning his personal finances, Mr. Hanna also said that he gave his parents money starting at least in 1994 on a fairly regular basis. He usually gave them $125 a month. He said that it was to recognize what his parents had done for him, among other things, allowing him to study in the United States before he moved to Canada (Exhibit I-4). Mr. Hanna also said that he was repaying $50 a month on a student loan. Exhibit I-4 shows, however, that larger amounts were repaid in 1994, and varied, but were usually between $75 and $125 a month. The payments were occasionally higher.

[151] Mr. Hanna categorically stated that he had never personally encouraged anyone to donate to the A.O.L.M., except his wife in 1994 and in 1995, and that he did not know anyone else at that time who donated or could have donated to the Order.

[152] During his testimony, Mr. Hanna stated that he had not heard anything about the false receipt scheme until he read an article about it in The Gazette at most a few months before he received the notices of reassessment. This is clearly an error because the initial articles were published in newspapers in January 1996, and the reassessments were not made until June 2, 1997 (Exhibit A-5, Tabs 5 to 8).

[153] When he heard about the scheme, Mr. Hanna said that he was worried because the scheme could tarnish the reputation of the Lebanese community. He did not, however, discuss it with the priests at the monastery, saying that he preferred keeping it to himself. As soon as Revenue Canada informed him that it was considering disallowing his donations, Mr. Hanna said he quickly responded and took the necessary steps with his bank to obtain copies of his cheques (Exhibit A-5, Tabs 26 and 27). He said that no further steps with the A.O.L.M. were required because Revenue Canada, not the A.O.L.M., intervened and he felt the cheques and receipts were sufficient proof.

[154] After he responded to the Revenue Canada letter and sent his documents, Mr. Hanna said he never received any acknowledgement or heard from anyone at Revenue Canada until he received the notices of reassessment.

[155] He said he then asked a colleague to try to find a lawyer or tax professional, but did not tell him why. A few days later, this colleague allegedly gave him a the number of a lawyer, a M^e Gagnon, who represented him at the objection stage. Mr. Hanna's case was then transferred to M^e Ouellette, his counsel in the case at hand.

[156]    Mr. Hanna said that he did not make any sizeable donations to the A.O.L.M. after 1995, but said he continued to contribute on Sundays, attend parties and purchase lottery tickets for a total he estimated to be less than $1,000 a year. No additional evidence was provided in this regard.

May Nassar

[157] Ms. Nassar is originally from Lebanon and moved to Canada in 1992. She has been a nurse since 1993. She married Mr. Ziad Hanna in August 1994. They first met at a party in the basement of the A.O.L.M. church.

[158] Ms. Hanna is a Maronite Catholic. She is practicing and said that does not mean that she just goes to church, she also attends religious and social meetings. In 1994 and 1995, Ms. Nassar went to mass at the A.O.L.M. church about four times a month, but at that point more frequently attended mass at the Saint-Maron church on Henri-Bourassa Boulevard in Montreal. This was also where meetings on Saturday nights were often held. Ms. Nassar said that starting in 1996, after she had her first child, she more often went to mass at the A.O.L.M. church.

[159] Ms. Nassar said that she had personally heard a priest solicit donations for a specific cause, such as, to cover the cost of an operation in the United States for a person from Lebanon or to assist the needy. She said that these requests were not, however, a regular occurrence, but were made perhaps every six months. She said that such a request was made only once in her presence and that was when she allegedly heard for the first time about receipts being issued for donations.

[160] However, Mr. Hanna allegedly did not tell her about the large donations he had made in the past until after they were married. He allegedly encouraged her to do the same. Ms. Nassar said that her husband calculated the maximum amount she could contribute and she agreed to donate these amounts. She allegedly made the donations with a view to assisting the needy recover from the war in Lebanon although she was aware that she could also obtain a tax credit for the donated amounts.

[161] Ms. Nassar said that in 1994 and 1995, she went to the monastery with her husband to personally give a priest the cheques and to receive in return a receipt for the cheque amount. She does not remember whether it was her or her husband who had made an appointment and does not remember the name of the priest or priests she met. However, she said that she knew some priests who came and went over the years, such as Father El-Kamar and Father Claude Nadras.

[162] In 1994, a $3,900 cheque dated December 12, 1994 was written on the joint bank account she held with Mr. Ziad Hanna for the donation to the A.O.L.M. (Exhibit A-7, Tab 8). Ms. Nassar received a receipt for the same amount and with that day's date on it (Exhibit A-7, Tab 12). In 1995, a $3,000 cheque dated November 14, 1995, was also written on the joint bank account (Exhibit A-7, Tab 9). The receipt issued by the A.O.L.M. had that day's date on it (Exhibit A-7, Tab 13).

[163] Ms. Nassar stated that she did not make any donations before 1994 because she did not have the means to do so. She explained that she was able to make donations to the A.O.L.M. in 1994 and 1995 because she had a joint bank account with Mr. Hanna. After 1995, she made only minimal donations of $10 or $20.

[164] During her testimony concerning Ms. Nassar, Ms. Langelier stated that the receipt amounts reached the 20% limit on net income for each of 1994 and 1995 (Exhibit I-14). In fact, the limit was exceeded somewhat in 1994 and was 75% of the limit in 1995.

[165] Ms. Nassar testified that she never personally encouraged anyone to donate to the A.O.L.M., did not know anyone else who donated to the A.O.L.M., and never spoke to anyone, not family members or anyone else in Montreal or Lebanon, about her donations. She said it was a very personal issue for her. She said that she never heard anyone say at mass or at meetings that receipts for larger amounts than the amounts actually donated could be obtained from the A.O.L.M. She said that, after she read reports in the newspapers about the scandal, she realized she knew a number of people who had made donations. Ms. Nassar said she was shocked by the articles in The Gazette and La Presse newspapers and that it had an impact on her professional life because people asked her a lot of questions at work.

[166] The articles at issue actually appeared for the first time in The Gazette on January 11, 1996 and in the La Presse newspaper on January 14, 1996, and Ms. Nassar subsequently agreed with these dates because she did not initially remember them.

[167] Following the lead of her husband, Mr. Ziad Hanna, Ms. Nassar did not take any steps with the A.O.L.M. to obtain information or verify the accuracy of the newspaper articles. The only steps she took were in the summer of 1997 in response to the Revenue Canada letter. Ms. Nassar's response, like that of Mr. Hanna, was to the effect that she had proof, which consisted in her cheques and her receipts for her donations (Exhibit A-7, Tab 15).

The issue of excluding evidence

[168]    It was clearly established, particularly during the testimony of Mr. Gaétan Ouellette, that the Appellants were not investigated with a view to establishing their penal liability. Revenue Canada simply made reassessments disallowing the tax credits claimed for charitable donations. It was also shown that these reassessments were made without any of the individual Appellants being audited.

[169] However, counsel for the Appellants maintains that all the evidence submitted by the Respondent and obtained during the audit of the A.O.L.M., and subsequently when the search and seizure warrants were executed, should be excluded for the purposes of the appeals at hand pursuant to subsection 24(2) of the Charter, section 40 of the Canada Evidence Act and the first paragraph of section 2858 of the Civil Code. These provisions read as follows:

Canadian Charter of Rights and Freedoms

          24(2) Where, in proceedings under subsection (1), a court concludes that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter, the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute.

Canada Evidence Act

          40. In all proceedings over which Parliament has legislative authority, the laws of evidence in force in the province in which those proceedings are taken, including the laws of proof of service of any warrant, summons, subpoena or other document, subject to this Act and other Acts of Parliament, apply to those proceedings.

Civil Code of Quebec

Sec. 2858. The court shall, even of its own motion, reject any evidence obtained under such circumstances that fundamental rights and freedoms are breached and that its use would tend to bring the administration of justice into disrepute.

The latter criterion is not taken into account in the case of violation of the right of professional privilege.

[170]    Counsel for the Appellants claims that the A.O.L.M. audit conducted by Ms. Colette Langelier, Revenue Canada, further to the information provided by Ms. Isabelle Mercier on March 30, 1994 was in effect, from the beginning, a criminal investigation, not a compliance audit. He maintains that Ms. Langelier conducted this investigation on behalf of the Special Investigations Section and she consequently should have obtained a proper search and seizure warrant from the outset, which she did not do. Specific mention in this regard was made of the status of Ms. Langelier and of Mr. Ouellette within the same overall Audit Division, their presence at various meetings and their role throughout the process, from the information provided by Ms. Mercier to the searches and seizures executed at the A.O.L.M. and the accountant's office.

[171]    According to counsel for the Appellants, Exhibit I-7, which consists of Ms. Mercier's information, contained enough information to launch a criminal investigation. He said that the Appellants were the individuals involved in this investigation and in this capacity they can invoke subsection 24(2) of the Charter, section 40 of the Canada Evidence Act and section 2858 of the Civil Code with a view to excluding any evidence obtained after the information provided on March 30, 1994, because this evidence was obtained illegally.

[172]    Counsel for the Appellants cites primarily the Supreme Court of Canada decision in Q. v. Jarvis, [2002] 3 S.C.R. 757, 2002 SCC 73. He also cites more specifically, the decisions in Ruby v. Canada (Solicitor General), [2000] 3 F.C. 589, Q. v. Dyment, [1988] 2 S.C.R. 417, Q. v. Edwards, [1996] 1 S.C.R. 128 (reference is made to Justice Laforest's dissenting opinion in paragraphs 58 to 69) and Michaud v. Quebec (A.G.), [1996] 3 S.C.R. 3, to support his argument that the Appellants, as the individuals concerned, have the necessary interest and standing to have the evidence illegally obtained by the federal authorities excluded.

[173]    Counsel for the Respondent in turn maintain that none of the Appellants' rights and freedoms were infringed, meaning that subsection 24(2) of the Charter is inapplicable in the case at hand.

[174]    Counsel for the Respondent point out in connection with section 7 of the Charter, first, that no criminal charges were laid against the Appellants and, second, that making reassessments does not interfere with the life, liberty or security of a taxpayer.

[175]    As for section 8 of the Charter in which provision is made that everyone has the right to be secure against unreasonable search or seizure, counsel for the Respondent pointed out that this is a personal right and that the Appellants did not demonstrate in any way that they had any reasonable expectation of confidentiality where the documents seized from the A.O.L.M. or from the home of the Order's accountant, Ralph Nahas, were concerned. They point out that there is little reasonable expectation of confidentiality involved in documents subject to audits to ensure compliance with the Act. They also pointed out that Appellants claiming a credit for this type of charitable donation have to expect to provide their cheques and other documents involved in receipts for donations such as these. Finally, they maintain that when a non-profit organization subject to specific regulations is involved, one must expect this organization to be subject to a number of audits. In support of their arguments, counsel for the Respondent refer in particular to the decisions rendered in Edwards (supra), Mathew v. Canada, 2003 F.C.A 371, [2003] F.C.J. No. 1470 (Q.L.), Jarvis (supra) and Q. v. Pheasant, [2000] O.J. No. 4237 (Ont. Court of Justice) (Q.L.).

[176] Counsel for the Respondent nonetheless maintain that Ms. Langelier's audit of the A.O.L.M. was a compliance audit the main goal of which was not to determine whether there was any penal liability. In this connection, they point out the similarity between the facts in the case at hand and those reported in Jarvis, supra, particularly the methods used by the tax authorities. Counsel for the Respondent maintain that the application of the criteria developed by the Supreme Court of Canada in this case do not allow one to conclude that a criminal investigation began when the decision was made to conduct an audit further to the March 30, 1994 meeting during which Ms. Mercier provided a tip about a scheme whereby false receipts were issued.

[177] I agree with the position of counsel for the Respondent. Counsel for the Appellants cites first subsection 24(2) of the Charter on the grounds that evidence was obtained in violation of the A.O.L.M.'s rights and freedoms and that hence the Appellants may rely on this violation in order to have the evidence thereby obtained excluded.

[178] In this regard and assuming that there was a violation, which I definitely do not recognize, it is important to point out that specific mention is made in the introduction to subsection 24(2) of the Charter of proceedings in subsection (1) of the same section, proceedings brought by a person whose rights or freedoms guaranteed under the Charter have been infringed or denied. This position was in fact adopted by the majority of the Supreme Court of Canada in Edwards, supra. The Appellants never demonstrated that any of their rights or freedoms guaranteed by the Charter had been infringed. More specifically, in connection with section 7 of the Charter, it is important to reiterate that no charges were brought against the Appellants nor were they even the subject of a criminal investigation.

[179] As for the protection provided under section 8 of the Charter against unreasonable search or seizure, it was never established that the Appellants could have a reasonable expectation of privacy in relation to the documents seized from the A.O.L.M. or from the home of the accountant, Ralph Nahas.

[180] Further, the purpose of section 2858 of the Civil Code is to exclude from any civil proceeding any evidence obtained illegally, that is, under such circumstances that fundamental rights and freedoms are breached and that its use would tend to bring the administration of justice into disrepute.

[181] Fundamental rights and freedoms are not defined, but at the very least must mean those guaranteed by the Charter, as shown by the comment made by the Quebec Minister of Justice in connection with section 2858. The following is an excerpt from the Code civil du Québec, Commentaires du Ministre de la Justice [Quebec Civil Code, comments by the Minister of Justice], Les Publications du Québec, tome II, at pages 1789 and 1790:

Sec. 2858.

[...]

[TRANSLATION]

Comment

Except for cases falling under subsection 24(2) of the Canadian Charter of Rights and Freedoms, the fact that evidence was obtained illegally had no bearing on whether it was admissible; evidence had only to be relevant and otherwise admissible.

Section 2858 extends the application of the section 24 principle to include all civil cases involving fundamental rights and freedoms, except when the right to professional secrecy has been violated, in accordance with section 9 of the Quebec Charter of Human Rights and Freedoms (R.S.Q., Chapter C-12). In this case, the evidence is inadmissible, without the court having to take into consideration the criterion whereby the use of such evidence would tend to bring the administration of justice into disrepute.

Further, since it is a matter of infringement of fundamental rights, the court can ex officio raise the inadmissibility of the evidence contrary to the general principle provided for in section 2859.

[182] If the Court must ex officio reject evidence obtained illegally whose use would tend to bring the administration of justice into disrepute, the issue obviously is to determine who can be protected by section 2858 in civil cases. While it is clear that someone whose fundamental rights and freedoms have been infringed or denied may avail him or herself of this provision, one could also claim that third parties could as well, since there is no limitation similar to that found at the very beginning of subsection 24(2) of the Charter.

[183] In L'admissibilité de la preuve obtenue en violation des droits et libertés fondamentaux en matière civile [the admissibility of evidence obtained in violation of fundamental civil rights and freedoms], Montréal, Wilson & Lafleur, 1996, the author, Guylaine Couture, explains this opinion as follows on pages 53 and 54:

[TRANSLATION]

In our opinion, the solution should be different for the evidence exclusion rule provided for in section 2858 of the Quebec Civil Code. This provision does not limit recourse solely to the "victim" of the violation, and there are grounds to allow persons with sufficient interest to rely on this provision in order to exclude evidence obtained in violation of rights and freedoms. In practice, this special feature has significant repercussions because it could be to a party's advantage to cite section 2858 of the Quebec Civil Code instead of subsection 24(2) of the Canadian Charter.

[184] No authority is cited to support this statement. Further, it should be noted that if subsection 24(2) were extended to civil cases, the protection would be well above and beyond that provided to accused persons in criminal cases whose rights and freedoms have not, however, been infringed directly. The Supreme Court decision in Edwards (supra) can be cited in this regard. Nonetheless, it would still have to be established in the case at hand that the evidence was obtained illegally. This was not done, in my opinion, and I therefore need not examine the issue further.

[185] In terms of taxation, in its decision in Jarvis (supra), the Supreme Court of Canada distinguished between Revenue Canada's audit and investigation functions and provided some factors to be considered in applying this distinction. The repercussions of the distinction are set out in paragraph 88 of the decision as follows:

88    In our view, where the predominant purpose of a particular inquiry is the determination of penal liability, CCRA officials must relinquish the [page804] authority to use the inspection and requirement powers under ss. 231.1(1) and 231.2(1). In essence, officials "cross the Rubicon" when the inquiry in question engages the adversarial relationship between the taxpayer and the state. There is no clear formula that can answer whether or not this is the case. Rather, to determine whether the predominant purpose of the inquiry in question is the determination of penal liability, one must look to all factors that bear upon the nature of that inquiry

[186] In Jarvis (supra), the Court details the various steps the tax authorities followed in the procedure, from the tip from a third party, through the auditors' communications with the taxpayer, the audit of books and records and the referral of the case to investigation, up to, finally, the point where search and seizure warrants were obtained. It must be acknowledged that the steps themselves are very similar to those in the case at hand, that is, the audit and the subsequent investigation to which the A.O.L.M. was subject.

[187] In Jarvis (supra), the Supreme Court of Canada stresses the importance of establishing, given the context and all relevant factors, the predominant purpose of an inquiry conducted by the tax authorities. It cautions, however, that it may not always be true that the predominant purpose of an inquiry is the determination of the penal liability of a taxpayer. The following is an excerpt from paragraphs 89 and 90 of the Supreme Court of Canada decision:

89     To begin with, the mere existence of reasonable grounds that an offence may have occurred is by itself insufficient to support the conclusion that the predominant purpose of an inquiry is the determination of penal liability. Even where reasonable grounds to suspect an offence exist, it will not always be true that the predominant purpose of an inquiry is the determination of penal liability. In this regard, courts must guard against creating procedural shackles on regulatory officials; it would be undesirable to "force the regulatory hand" by removing the possibility of seeking the lesser administrative penalties on every occasion in which reasonable grounds existed of more culpable conduct. This point was clearly stated in McKinlay Transport, supra, at p. 648, where Wilson J. wrote: "The Minister must be capable of exercising these [broad supervisory] powers whether or not he has reasonable grounds for believing that a particular taxpayer has breached the Act." While reasonable grounds indeed constitute a necessary condition for the issuance of a search warrant to further a criminal investigation (s. 231.3 of the ITA; Criminal Code, s. 487), and might in certain cases serve to indicate that the audit powers were misused, their existence is not a sufficient indicator that the CCRA is conducting a de facto investigation. In most cases, if all ingredients of an offence are reasonably thought to have occurred, it is likely that the investigation function is triggered.

90     All the more, the test cannot be set at the level of mere suspicion that an offence has occurred. Auditors may, during the course of their inspections, suspect all manner of taxpayer wrongdoing, but it certainly cannot be the case that, from the moment such suspicion is formed, an investigation has begun. On what evidence could investigators ever obtain a search warrant if the whiff of suspicion were enough to freeze auditorial fact-finding? The state interest in prosecuting those who wilfully evade their taxes is of great importance, and we should be careful to avoid rendering nugatory the state's ability to investigate and obtain evidence of these offences.

(My emphasis.)

[188] The Court set out a non-exhaustive series of factors to be examined in paragraph 94 of the decision:

In this connection, the trial judge will look at all factors, including but not limited to such questions as:

(a)		Did the authorities have reasonable grounds to lay charges? Does it appear from the record that a decision to proceed with a criminal investigation could have been made?
(b)		Was the general conduct of the authorities such that it was consistent with the pursuit of a criminal investigation?
(c)		Had the auditor transferred his or her files and materials to the investigators?
(d)		Was the conduct of the auditor such that he or she was effectively acting as an agent for the investigators?
(e)		Does it appear that the investigators intended to use the auditor as their agent in the collection of evidence?
(f)		Is the evidence sought relevant to taxpayer liability generally? Or, as is the case with evidence as to the taxpayer's mens rea, is the evidence relevant only to the taxpayer's penal liability?
(g)		Are there any other circumstances or factors that can lead the trial judge to the conclusion that the compliance audit had in reality become a criminal investigation?

[189]Counsel for the Appellants maintain that after Ms. Mercier provided her tip (Exhibit I-7), the authorities could have decided to conduct a criminal investigation. I disagree, although one could suspect, or even have reasonable grounds for believing that offences had been committed. As Mr. Ouellette noted in his testimony, Ms. Mercier named only a few people, the people present did not know the organization, and the figures Ms. Mercier provided were not terribly impressive. As Mr. Ouellette said, they do not decide to conduct an investigation at the outset when they receive this type of information. The authorities decided to conduct first and foremost a compliance audit and I do not feel that the predominant purpose of any of the components of the audit conducted by Ms. Langelier was at that point to determine anyone's penal liability. The organization and the people running it were unknown. Ms. Mercier had provided the name of some priests and a religious organization. I do not feel that the authorities had, when the tip was provided, reasonable grounds to bring charges or launch an inquiry immediately to this end. Ms. Langelier's audit was, in my opinion, conducted in accordance with the decision made to conduct an audit and there is nothing to show that her predominant objective was to determine the penal liability of the A.O.L.M., one of its many priests or even the heads of the Order. No evidence was provided to show that a criminal investigation was being conducted instead of an audit or that Ms. Langelier was acting as an agent of the Special Investigations Section or of Mr. Ouellette in collecting evidence of penal liability. The fully independent audit was conducted in order to determine whether the A.O.L.M. had in fact complied with the stringent requirements of the Act governing how the funds collected from its donors were used and for which official receipts had been issued. Her work consisted first and foremost of an accounting reconciliation exercise, as demonstrated by the results provided (Exhibits I-9 and I-11). Ms. Langelier's analysis is part and parcel of a compliance audit and all the documents consulted on site were documents the A.O.L.M. had to keep for the purposes of the Act. There is no proof that she tried to obtain or look for other evidence with a view to determining anyone's penal liability. We cannot say that Ms. Langelier was Mr. Ouellette's agent because he subsequently used her reconciliation work and that the predominant purpose of her audit was to determine several people's penal liability. We cannot say that because an audit ends up being referred for an investigation and the investigators base their investigation on the results of Ms. Langelier's audit, that the audit becomes retroactively an ab initio investigation. Further, this technique was recognized in Jarvis (supra). In the case at hand, during the entire audit period, that is, from late March 1994 to late June 1995, Ms. Langelier had absolutely no contact of any kind with an investigator from the Special Investigations Section, including with Mr. Ouellette. The latter further pointed out that he was neither interested in nor aware of the case during that entire period.

[190] To argue that it was a criminal investigation from the start, Counsel for the Appellants pointed out that, at that time, the Special Investigations Section was ultimately part of the Audit Division. He also claims that the meeting with Ms. Mercier should have been held in a Special Investigations Section office, not in the office of Ms. Langelier's team leader, Mr. Galimi. I do not see how it can be inferred from these facts that the audit was a criminal investigation from the start.

[191] Further, once Ms. Langelier decided to refer the case for an investigation, I do not feel that it is significant that Mr. Ouellette was at the referral meeting and was subsequently selected as the investigator for the case because it is clear that the investigation began when the referral to the Special Investigations Section was approved.

[192] Ms. Langelier went to the A.O.L.M.'s premises six or seven times in October 1994, including once with her team leader, to examine the books, records, banking and other relevant documents for the main purpose of establishing whether the A.O.L.M. was complying with the requirements of the Act, particularly with respect to the provisions governing the use of funds obtained from donors. Ms. Langelier therefore attempted to trace the donations received. After the on-site audit in October 1994, Ms. Langelier carried out extensive analysis work that lasted several months and enabled her to uncover a fake receipt issuing scheme; it was a sizeable scheme, hence the referral to the Special Investigations Section in June 1995. Between October 1994 and June 1995, Ms. Langelier had no further contact with the A.O.L.M., other than when she received in the spring of 1995 a document the Order had previously agreed to send her. This document was in Arabic. Ms. Langelier had it translated and found that it showed the year-end total of receipts issued for cash donations.

[193] Under the circumstances, I feel that Ms. Langelier's audit was what it should have been, that is, first and foremost a compliance audit. In my opinion, the investigation itself began when the case was referred to the Special Investigations Section on June 29, 1995 (Exhibit I-22).

[194] I therefore conclude that the fundamental rights and freedoms of the A.O.L.M. or any other individual were not infringed or denied and that there was absolutely no infringement of those of the Appellants, meaning that section 2858 of the Civil Code cannot be cited or applied in the case at hand to exclude evidence.

The scheme and its scope

[195] I have already described in detail the evidence the Respondent submitted concerning the A.O.L.M.'s fake receipt issuing scheme. We know, too, that charges were laid against some donors who received receipts for amounts over $100,000 between 1989 and 1995 and that most of them pleaded guilty. We also know that more than one thousand taxpayers were reassessed and that few of them appealed from these reassessments. The decisions rendered are public. Some taxpayers won, others lost. The "Biblio-Reç" file seized from the A.O.L.M. for 1993 provides a fairly good idea not only of the scope of the scheme, but also the methods used. Four taxpayers testified as to the procedure for obtaining their receipts. Some dealt directly with the A.O.L.M. priests and others dealt with an intermediary. We also know that the scheme lasted for a number of years and that the A.O.L.M. had extremely large amounts of cash, which could not be traced, to make the scheme work. This was all within a context that is impossible to ignore. It does not, however, mean that all donors were issued fake receipts. As counsel for the Appellants maintained, we cannot blame the Appellants nor other taxpayers, for that matter, for the reprehensible activities of third parties and conclude that they too were involved in the scheme. We need not refer to many decisions to recognize that the evidence of the activities of third parties is neither admissible nor relevant to decisions concerning the activities of the Appellants. However, in my opinion, evidence of the state of affairs or the context, such as, in the case at hand, the existence of a large-scale scheme carried out over a number of years, is both admissible and relevant.

[196] Thus, there are at least two undeniable facts that are not totally irrelevant. We were able to see that fake receipts were not issued on an isolated, occasional or even episodic basis by one individual to a few donors, but rather it was a major and systematic fraud scheme involving, on the one hand, the priests running the A.O.L.M. and, on the other, several hundred taxpayers. The existence of the electronic files seized speaks volumes in this regard. It is impossible, however, not to take into account the fact that the Appellants dealt with the same people in the A.O.L.M. to make their donations and obtain receipts.

[197]    If we base ourselves solely on the four taxpayers who testified to having obtained fake receipts from the A.O.L.M., that is, Ms. Isabelle Mercier and Messrs. Farhat, Yazbeck and Thibodeau, almost all of the receipts issued to these people were signed by Fathers Sleiman, El-Kamar and Nadras (Exhibits I-5, I-17, I-18 and I-19). The four Appellants obtained receipts bearing the same signatures (Mr. Salamé, Exhibit I-1, Tab 6; Mr. Kiwan, Exhibit I-15, Tab 8; Mr. Hanna, Exhibit A-5, Tabs 22 to 25; Ms. Nassar, Exhibit A-7, Tab 12).

[198] The second fact involves the very knowledge of the scheme. We definitely cannot conclude after reviewing the "Biblio-Reçu" file containing the names of hundreds of donors that the scheme involved only a few people who allegedly kept it a secret. It is hard to believe that a secret shared by hundreds of people can remain a secret for long, particularly for a number of years. Based on the testimony of Messrs. Farhat and Yazbeck, the scheme was common knowledge and was spread by word of mouth in the Lebanese community. It is therefore surprising to note that some of the Appellants, who attended mass, meetings or other events at the A.O.L.M. church, testified that they had never heard about the scheme before reading about it in the newspaper. This is true for all the Appellants except Mr. Salamé.

Evidence

[199] The parties recognize that the burden of proof with respect to demonstrating participation in the scheme, on the balance of probabilities, is on the Respondent with regard to Mr. Salamé from 1990 to 1993, Mr. Kiwan, 1990 to 1993, and Mr. Hanna, 1992 and 1993. Similarly, the burden of proof is on the Respondent to demonstrate in the same manner the facts that justify the imposition of penalties pursuant to subsection 163(2) of the Act.

[200] The Respondent provided circumstantial evidence to demonstrate that the Appellants had participated in the scheme primarily by receiving cash refunds. The Respondent said that in cases where the cheques issued by the Appellants were traced, the amount of the cheque and the receipt are the same. The allegation is that cash refunds were made. The Appellants responded to the evidence submitted by the Respondent, among other things, through their testimony and by submitting a certain number of documents, such as bank statements. It goes without saying that the credibility of such testimony is crucial in these cases.

[201] Provision is made in section 2804 of the Civil Code for the level of proof required in civil cases as follows:

            Evidence is sufficient if it renders the existence of a fact more probable than its non-existence, unless the law requires more convincing proof.

[202] In his textbook entitled La preuve civile [civil evidence] 3^rd edition, Les Éditions Yvon Blais Inc., 2003, writer Jean-Claude Royer points out in paragraph 174 on page 113 that "the requisite degree of evidence is a matter of quality, not quantity" and that "evidence is not assessed in terms of the number of instances of testimony; rather, it is based on the persuasiveness."

[203] In paragraph 175 on the same page, he points out that direct evidence directly involving the fact in dispute is generally preferable to indirect evidence or proof by circumstantial evidence consisting of relevant facts that allow the existence of litigious facts to be inferred, but adds that under certain circumstances, the court may prefer circumstantial evidence to direct evidence.

[204] In paragraph 178 on page 116, Jean-Claude Royer also points out that the testimony of one person may be enough to discharge the burden of persuasion. He also points out that a judge is not required to believe a witness who is not contradicted. In this connection, he cites the Quebec Court of Appeal decision in Légaré v. The Shawinigan Water and Power Co. Ltd., [1972] A.C. 372. In this case, the court wrote the following on pages 373 and 374:

[TRANSLATION]

            [...] However, tribunals are not required to believe witnesses, even if they are not contradicted by other witnesses. Their version may be unlikely because of circumstances shown in the evidence or as a result of good common sense [...]

Facts concerning the Appellants

General comment

[205] It is surprising that none of the Appellants tried to obtain any evidence from the A.O.L.M. to support their statements about their actual donations. No one was called to testify to confirm that the Appellants were, like other taxpayers could also have been, exceptions and not involved in the widespread scheme that was established and known throughout the Lebanese community as some taxpayers came to confirm. However, what is even more surprising is that none of the Appellants even tried to obtain any information from the A.O.L.M. or to contact anyone in charge at the A.O.L.M., although they said they were shocked when they heard about the scandal.

Ghassan Kiwan

[206] I already described earlier, in paragraphs 84 and 85, the extent to which the testimony of Mr. Kiwan as to when he made his alleged donations and obtained his receipts, that is, in most cases, during brief visits to the A.O.L.M. monastery on Friday evenings, was completely untrue, given the dates on the cheques and receipts which are easy to verify by consulting a calendar for the years involved.

[207] Mr. Kiwan's testimony to the effect that his donations were strictly a personal and confidential issue and that there was absolutely no discussion in the family, and more specifically with his brother, Émile Kiwan, also completely contradicts the evidence submitted. The receipts provided instead demonstrate that the two brothers' donations to the A.O.L.M. were almost completely coordinated.

[208] The explanations, such as the decrease in income, provided for the lack of a donation in December 1995 are also totally inconsistent with the details submitted by the Respondent on his income during the years at issue.

[209] This information alone is enough for me to reject all of his testimony, which is absolutely not credible. Further, when faced with that sort of testimony, I am more inclined to think that if someone starts systematically lying about certain secondary facts, he or she is trying to cover up more important facts.

[210] Mr. Kiwan also stated that in late 1996 or early 1997, when he was preparing to move to Saudi Arabia, he heard about the A.O.L.M.'s scheme. However, we know that articles had already started appearing in newspapers in January 1996.

[211] Finally, I will reiterate the fact that Mr. Kiwan's name appears among the names of other donors in a document seized from the A.O.L.M. on November 8, 1995. In the document, "déjà rendu [received]" and $4,000 is indicated along with mention that Mr. Kiwan is to be provided a $5,000 receipt.

[212] All of the foregoing is more than enough to convince me that it is more than simply probable that Mr. Kiwan participated in the A.O.L.M.'s scheme during the years at issue.

Ramzi Salamé

[213] Mr. Salamé obtained receipts totalling over $34,600 from the A.O.L.M. between 1990 and 1993. In his case, the most surprising statements are that he knew absolutely nothing about the A.O.L.M. other than its address, that he did not even know the priests' names, that he never communicated with anyone at the A.O.L.M. during all those years, that he simply mailed all his donations and that his receipts arrived by mail. Further, he did not hear about the A.O.L.M. until he was in Lebanon explaining to a friend that the benefit of donating to a Canadian organization instead of making direct donations in Lebanon was that he received tax credits. Although he was well informed about this benefit, it is surprising to note that he did not seek out an admissible organization personally because he had nonetheless been living in Quebec for a number of years.

[214] When Revenue Canada informed him in 1997 that his donations had been disallowed, he suggested himself that the A.O.L.M. may have misappropriated funds. He nonetheless never took any steps whatsoever either in Lebanon or Canada to find out what had actually happened. In his testimony, he simply stated in an extremely vague and general manner that he had been told that his donations had in fact been sent to a charitable organization in the area where he grew up. It was not until 1998 when he learned that his bank account had been seized that he really reacted, went to the A.O.L.M. church in Outremont, asked a priest a few questions after mass, obtained the name of a lawyer and signed a solemn declaration that his donations had in fact been made.

[215] However, the evidence submitted by the Respondent tends to show that there were in fact some problems involving the actual date of the cheques Mr. Salamé provided the A.O.L.M. and the date the receipts for 1990 and 1993 were issued. Based on Ms. Langelier's audit described in paragraphs 125 to 129 above, it was concluded that there was a very great possibility that the receipts were not issued for these two years until the following year. Further, it is surprising that the cheque dated December 23, 1990 was not cashed until March 15, 1991, when we know that the A.O.L.M. deposited donors' cheques very frequently and usually shortly after receiving them. As for the US dollar cheques endorsed by Mr. Salamé that he allegedly sent to the A.O.L.M. in 1993 and for which he received a $10,000 receipt dated December 31, 1993, I agree first of all that this is a surprising way to make a donation and that Mr. Salamé was never able to trace these cheques afterward. It could not be shown that these cheques had been cashed or deposited. The issue is whether these cheques actually existed. The total lack of information on the $10,000 receipt dated December 31, 1993 Mr. Salamé was provided is quite simply perplexing and open to any and all hypotheses.

[216] However, the most important information to be noted is the deposits into Mr. Salamé's bank account shortly after his cheques were cashed in 1990, 1991 and 1992 and the explanations provided for this under cross-examination. This information is provided in paragraphs 113 to 122 above. There were definitely many deposits into Mr. Salamé's bank account that he was not asked to justify. However, on three different occasions, three years in a row, deposits were made representing 80% or more of the amount of cheques cashed by the A.O.L.M. shortly before. Three coincidences? It is hard to believe. Mr. Salamé quickly explained one deposit, dated March 22, 1991, as being a transfer from an inactive account for the purpose of purchasing a house. How was he able to so easily recall a simple transfer from one account to another on a specific date when he was unable to explain the deposit of a roughly equivalent amount a little later? The $4,000 deposit on January 5, 1993 was never explained because Mr. Salamé stated that he had already left the country on his sabbatical.

[217] I am most interested in the explanations provided by Mr. Salamé concerning the three successive cash deposits dated December 19, 1991. They are both the most surprising and the least credible. These cash deposits were made in Montreal while he was on his way to the airport. At a meeting with one of his brothers-in-law before his departure, Mr. Salamé was allegedly first given $2,600, which was subsequently changed to $2,300 in bills from a bank in Toronto where this brother-in-law who had emigrated to the United States still held an account. The money was allegedly given to Mr. Salamé in repayment of a debt related to the purchase of the family home in Lebanon. We were wondering first why this amount of money was being handled in cash. Mr. Salamé stated that his brothers-in-law gave him US dollar cheques when they repaid him the money they owed. These were the cheques Mr. Salamé received and allegedly endorsed to make his donation in 1993. Finally, the explanation is, in my opinion, far from satisfactory. It however becomes absolutely unbelievable when Mr. Salamé said that a Mr. Akiki gave him $6,000 in cash at a meeting in a café or gas station immediately before he left the country. To begin with, Mr. Salamé, who said he had a very good memory of situations and particularly circumstances surrounding the deposits at issue, should have remembered if the meeting had been held in a café or in a gas station. The difference is nonetheless not negligible. Then Mr. Salamé explained that Mr. Akiki wanted to give back this amount that he had borrowed in bills from Mr. Salamé's brother in Lebanon. However, Mr. Salamé was leaving that evening for Europe and was to travel to Lebanon. One wonders therefore why he would have first decided to deposit $3,000 in his own bank account, since this money was supposed to go to his brother. The second $3,000 deposit is just as incomprehensible since, once again, it was, according to Mr. Salamé, money Mr. Akiki wanted to return to his brother. In short, I feel that the explanations provided under the circumstances are far-fetched and therefore not fully credible. This can only affect his testimony as a whole.

[218] Among the other information to be retained, there is definitely the size of the amounts involved, particularly in relation to Mr. Salamé's disposable income. Mr. Salamé did make sizeable donations to another organization in 1992 and 1993. I am, however, swayed more by the evidence submitted by the Respondent and described above in detail.

[219] In short, all of the evidence submitted in the case at hand, the most important elements of which I have just reviewed, lead me to conclude, not, however, without some hesitation, that Mr. Salamé was probably involved in the A.O.L.M.'s scheme during the years at issue.

[220] In my opinion, the penalties stand as a result of this probability because these steps could have only been taken wilfully and knowingly.

Ziad Hanna

[221] The facts in Mr. Hanna's case are described in paragraphs 132 to 156 above.

[222] The information that I found the most significant is the fact that despite his categorical statements, Mr. Hanna did not submit his cheques and obtain receipts at the same time and dated the same day in both 1992 and 1993. The evidence is clear in this regard. As in Mr. Kiwan's case, it tarnishes his testimony as a whole and tends to show that there is in fact something to hide and that the events did not occur as he described.

[223] I also bore in mind the date his $9,000 cheque was submitted to the A.O.L.M. in 1993. The cheque is dated November 24, 1993. However, despite Mr. Hanna's repeated statement to the effect that the cheque was made out and given to an A.O.L.M. priest on the same day, it is clear that the A.O.L.M. had already had it in its possession since at least November 23, 1993. There is incontestable proof that the cheque was deposited on that date. It is clearly not a simple banking error, contrary to what Mr. Hanna tried to explain. Further, his continued insistence in the face of the evidence of this version of the facts also compromises the credibility of his testimony.

[224] Based on the evidence submitted, Mr. Hanna was clearly looking for a way to decrease his taxes and he calculated the maximum allowable for his income to establish the amount of his donations. Most surprising, however, is that he considered his donations to be a form of tax shelter and compared the amounts supposedly donated over the years at issue to amounts he subsequently invested in flow-through shares. The comparison seems inconsistent to say the least.   

[225] The amounts for which Mr. Hanna in fact obtained receipts from the A.O.L.M. between 1992 and 1995 are of such magnitude in relation to his disposable income that there is very little probability in my opinion that they were actual donations. This is all the more striking when we consider the level of income, personal obligations and sizeable amounts invested in RRSPs during the years at issue. A person who donates 22%, 44%, 22% and 27% of his or her disposable income to charity, as Mr. Hanna claims to have done during the years at issue, surpasses by a great deal the usual standards of generosity and common sense. The fact that Mr. Hanna was unable to demonstrate, other than by a simple statement, any sizeable donation made in the years before or after the years at issue strengthens the view whereby donations of such magnitude to the A.O.L.M. cannot reasonably be considered to be realistic for a person who has only been working for a few years, who has average income and has other obligations, such as current expenditures, parental assistance and repayment of a student loan. Mention was also made of the relatively large contributions to his RRSPs.

[226] Counsel for the Appellants cited, among other things, the Budget Speech delivered by the Honourable Paul Martin, Minister of Finance, on February 22, 1994, and the document entitled Tax Measures: Supplementary Information, to stress the importance the Government placed on charitable donations in Canadian society and, more specifically, to highlight the incentive provided by means of a credit corresponding to the maximum tax rate with a view to placing more emphasis on the donation rather than the donor's income. Please note that this statement was made to explain the fact that the credit had been changed and applied to amounts over $200, rather than $250. Having said this, I do not see how this would have affected the Appellants, who all obtained receipts for large amounts, and particularly in the case of Mr. Hanna, very large amounts compared to income. I will add here the comment that the 20% limit on net income provided for in the Act is certainly not within the reach of everyone's budget and the value of tax credits alone cannot explain donations of this size by a taxpayer whose financial capacity is far from unlimited, more like average, or relatively limited.

[227] Finally, another important fact that I noted is that Mr. Hanna did not take any steps with the A.O.L.M. and, after he claims to have heard about the scheme, never tried to obtain any information from anyone on how the significant amounts he was supposed to have donated were used. On the contrary, he continued to attend mass at the A.O.L.M. church regularly after 1995 as if nothing had happened. That is fairly revealing in Mr. Hanna's case because it shows that he probably knew about the scheme beforehand and had been involved in it.

May Nassar

[228] The facts in Ms. Nassar's case are set out in paragraphs 157 to 167 above. Shortly after they were married in August 1994, Mr. Ziad Hanna encouraged Ms. Nassar to donate to the A.O.L.M.

[229] Ms. Nassar had not made any significant donations before 1994, because she did not have the means to do so. She explained that she was able to make donations in 1994 and 1995 because she and Mr. Hanna had a joint bank account and she therefore had more means for making donations. She made only minimal donations after 1995. Ms. Nassar's explanation as to how she found out about the possibility of obtaining receipts seems like a virtual copy of Mr. Hanna's explanations in this regard. However, several years passed between the two events and Ms. Nassar was not even in the country when Mr. Hanna says he heard about it for the first time.

[230] Ms. Nassar's total income was $20,626 in 1994 and $21,376 in 1995. She obtained receipts from the A.O.L.M. for $3,900 in 1994 and $3,000 in 1995, which represented 19% of her total income in 1994 and 28% of her disposable income, that is, after source deductions, and 14% and 19% respectively in 1995.

[231] Ms. Nassar admitted that her husband had used her income to calculate the amounts she could donate and stated that she had agreed. Under the circumstances, it is difficult to say that Ms. Hanna's motivation was any different than her husband's. I would add here, however, that it is difficult to believe that someone who had not been working very long and had just gotten married could be this generous.

[232] Like her husband, and although she continued going to mass at the A.O.L.M. church after she heard about the scandal in 1996, Ms. Nassar admitted that she never took any steps to attempt to find out what had really happened and what became of the amounts donated.

[233] Finally, I will add that the little credibility Mr. Hanna's testimony has obviously influences my assessment of Ms. Nassar's testimony because immediately after they were married in 1994, Mr. Hanna encouraged her to donate to the A.O.L.M.

[234] As in Mr. Hanna's case, I conclude that Ms. Nassar was probably also involved in the A.O.L.M.'s fake receipt scheme for donations during the years at issue.

Final comment and decision

[235] Having found that the Appellants were likely involved in the A.O.L.M.'s fake receipt issuing scheme and therefore that the receipts obtained are not likely for the amounts actually donated to the A.O. L. M., I must uphold the assessments disallowing the credits claimed, including those for the years for which assessments were made outside the normal reassessment period.

[236] This finding obviously includes upholding the penalties imposed under subsection 163(2) of the Act since, under the circumstances, tax credits were probably claimed that should not have been, using fake receipts obtained from the A.O.L.M., and these steps can therefore only have been taken wilfully and knowingly.

[237] Consequently, the appeals are dismissed, with costs to the Respondent.

Signed at Ottawa, Canada, this 18^th day of August, 2004.

"P. R. Dussault"

Dussault, J.

Certified true translation
Colette Beaulne

CITATION:

2004TCC136

COURT DOCKET NO:

2000-458(IT)G, 2000-956(IT)G, 2000-964(IT)G and 2000-965(IT)G

STYLE OF CAUSES:

Ghassan Kiwan v. The Queen Ziad Hanna v. The Queen Ramzi Salamé v. The Queen May Nassar v. The Queen

PLACE OF HEARING:

Montreal, Quebec

DATES OF HEARINGS:

June 2, 3, 4 and 5, 2003 October 21 and 22, 2003

REASONS FOR JUDGMENT BY:

The Honourable Judge P. R. Dussault

DATE OF JUDGMENT:

August 18, 2004

APPEARANCES:

Counsel for the Appellants:	Me Yves Ouellette
Counsel for the Respondent:	Me Nathalie Lessard Me Simon-Nicolas Crépin

SOLICITOR OF RECORD:

For the Appellants:
	Name: Firm: City:	Me Yves Ouellette Gowlings Avocats Montreal, Quebec

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada

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