Samaroo v. The Queen

Samaroo v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2016-12-19
Neutral citation
2016 TCC 290
File numbers
2012-2998(IT)G
Judges and Taxing Officers
Randall S. Bocock
Subjects
Income Tax Act
Decision Content
Docket: 2012-2998(IT)G
BETWEEN:
TONY SAMAROO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2012-3001(IT)G
AND BETWEEN:
HELEN SAMAROO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2012-2997(GST)G
AND BETWEEN:
TONY SAMAROO and HELEN SAMAROO,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent;
Dockets: 2012-3147(GST)G
2012-3148(IT)G
AND BETWEEN:
SAMAROO HOLDINGS LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Dockets: 2012-3149(GST)G
2012-3150(IT)G
AND BETWEEN:
MGM RESTAURANTS LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Preliminary trial motion in the nature of a voir dire called for hearing on September 9, 2016, in Vancouver, British Columbia
Before: The Honourable Mr. Justice Randall S. Bocock
Appearances:
Counsel for the Appellant:
Gavin Laird
Declan Redman
Counsel for the Respondent:
David Everett
Elizabeth McDonald
ORDER
IN ACCORDANCE with the reasons for order and appendices thereto attached;
THIS COURT ORDERS THAT:
the Appellants’ preliminary trial motion by way of voir dire is dismissed;
the request that the findings of fact in the criminal proceeding of R v. Samaroo, 2011 BCPC 0503 (“Samaroo #1”) should apply to the appeals under the doctrines of either issue estoppel or abuse of process is denied and, as such, no party shall be precluded from adducing further evidence at the hearing of the appeals which challenges, rebuts or enhances any finding of fact made in Samaroo #1;
notwithstanding the dismissal of the motion, per se, those findings of fact contained within Samaroo #1 outlined in the attached Appendix I (the “Findings”) to the reasons for order are hereby admitted as evidence of the Appellants for the purposes of the appeals;
it has determined that certain of the Findings impugn and/or potentially demolish the Minister’s assumptions of fact contained in those certain replies of the Respondent and specifically for those Appellants and taxation years described and specified in Appendix II to the reasons for order attached;
therefore, in accordance with subsection 135(2) of the Tax Court of Canada Rules (General Procedure), the Court varies the order of presentation of evidence and argument at the balance of the hearing of the appeals on the following basis:
as to evidence and witnesses
a) the Respondent;
b) the Appellants; and
c) the Respondent in respect of rebuttal evidence
as to argument
a) the Respondent
b) the Appellants; and
c) the Respondent in reply argument followed by the Appellants, but solely to answer any new point of law raised in reply; and
there shall be no order to costs on the motion, but costs are reserved until disposition in the cause.
Signed at Ottawa, Canada, this 20th day of December 2016.
“R.S. Bocock”
Bocock J.
Citation: 2016 TCC 290
Date:20161219
Docket: 2012-2998(IT)G
BETWEEN:
TONY SAMAROO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2012-3001(IT)G
AND BETWEEN:
HELEN SAMAROO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2012-2997(GST)G
AND BETWEEN:
TONY SAMAROO and HELEN SAMAROO,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent;
Dockets: 2012-3147(GST)G
2012-3148(IT)G
AND BETWEEN:
SAMAROO HOLDINGS LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Dockets: 2012-3149(GST)G
2012-3150(IT)G
AND BETWEEN:
MGM RESTAURANTS LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR VOIR DIRE ORDER
Bocock J.
I. Introduction
a) Nature of Motion
[1] The Appellants bring this preliminary motion at the beginning of the trial process. The motion was scheduled to occur some months before the reconvening of the trial and the first calling of evidence. It is a motion in the nature of a voir dire. By definition, it concerns the admissibility or exclusion of evidence. In the present appeals, the ruling regarding of such evidence will likely impact the length, volume and order of evidence and possibly the outcome of the appeals. The evidence to be excluded emanates from factual findings (the “Findings”) in a previous criminal trial for income tax evasion involving some of the Appellants at bar. That previous proceeding occurred in British Columbia provincial court: R v. Samaroo, 2011 BCPC 0503 (“Samaroo #1”). In addition, there was a subsequent order of the British Columbia Supreme Court concerning a consequent civil proceeding for malicious prosecution involving some of the Appellants: Samaroo v. Canada Revenue Agency, 2016 BCSC 531, (“Samaroo #2”).
b) Exclusion of Further Evidence
[2] The Appellants seek an order preventing any party at the hearing of these appeals of the (re)assessments (the “Tax Appeals”) from adducing further evidence which seeks to challenge the Findings determined by the provincial court judge in Samaroo #1, which Findings were further referenced and utilized by a British Columbia Supreme Court Justice in Samaroo #2. The legal bases for this sought exclusion order are issue estoppel or abuse of process.
[3] While issue estoppel and abuse of process have been applied by the Tax Court in factual situations involving guilty verdicts for income tax evasion, the same cannot jurisprudentially be said of an acquittal. Samaroo #1 involved just that verdict: an acquittal. The broad issue is whether this Court should apply issue estoppel or abuse of process in respect of Findings from an acquittal to exclude fully further evidence contradicting or challenging the Findings. And quite apart from the en bloc application of the doctrines, what is the further effect of the Findings on the Tax Appeals, namely (i) to what extent; (ii) to which appeals; and (iii) by what method should such an exclusion order apply.
II. Matters Decided in the Other Proceedings
[4] At the outset, counsel for the parties take differing views of the Tax Appeal issues determined, settled or resolved by the Findings in Samaroo #1 and Samaroo #2.
a) According to the Appellants
[5] Drawing extensively from the provincial court judge’s written reasons for acquittal in Samaroo #1, the Appellants characterize the judge’s findings as manifest, determinative and central to the Respondent’s assumptive facts in the replies to the Tax Appeals. An excerpted portion of the Appellants’ written submissions are included below because they succinctly cite the relevant Findings in Samaroo #1 and their subsequent use in Samaroo #2.
Excerpt from Appellants’ motion materials:
6. The criminal trial in Samaroo #1 had a long procedural history including amendments to the information, particulars, and amended particulars before the trial began.
7. The trial was long:
The trial took 19 days to complete, almost all of which was used for the Crown’s case, and was replete with applications for rulings by both sides. The Crown called 24 witnesses and filed affidavit material. There were 51 Crown exhibits most of which were large binders containing hundreds of working papers, characterized by confusion on occasion because the numbers of the Crown exhibits did not tally with the defense documents, filed as exhibits, which were not referred to.
8. Justice Saunders (the provincial Court judge who heard and decided the matter) acquitted the accused on the issue of whether there was unreported income and misappropriation of cash from unreported income [Samaroo #1].
9. Justice Saunders also made express ‘positive’ findings in favour of the accused. For example, she found:
[61] …it is important to point out that I find Tony Samaroo to be credible. His demeanour was impressive. His explanation is consistent with significant and material aspects of the evidence and is plausible for the reasons set out below.
[62] In general terms, I accept his evidence that he began working hard and saving when he first arrived in Canada in 1970. I accept that he had sound business acumen in the food and entertainment industry and bought and sold businesses with a profit. I accept that he continued to work long hours with Helen after their marriage and accumulated savings from their employment and inherited funds which they held in the form of cash due to their beliefs around banking practices.
[63] In specific terms, as they relate to the different aspects of the Crown’s theory itemized below, Tony Samaroo told Ed Heese about depositing old $100 bills into his corporate account well before the auditor, Glen Foster, came to the MGM in March, 2006. Ed Heese confirms this. Glen Foster was also told this by Tony Samaroo but chose not to believe him.
10. Justice Saunders made express findings of fact [concerning] the Crown’s theory that there was unreported income and misappropriation of unreported cash … based on four assumptions by the Canada Revenue Agency (“CRA”):
[59] The Crown theory, that the Samaroos misappropriated unreported cash and understated their income and the income of the MGM and Samaroo Holdings in contravention of the Income Tax Act and Excise Act, is based on four assumptions: namely, a) the paper trail pursued by Keith Kendal points to almost one million dollars being deposited to the personal accounts of the Samaroos and shareholder loan accounts of the MGM and Samaroo Holdings for taxation years 2004, 2005 and 2006; b) that Tony Samaroo skimmed unreported cash from one till tape or shift per day from the MGM and nightclub to a lesser extent, and deposited the cash into his account and into the shareholder loan account for his and Helen’s benefit; c) Tony and Helen Samaroo used the unreported cash to pay third party suppliers, liquor and wages; and d) the net worth analysis indicates they could not have saved close to a million dollars over the years 1980 to 2003.
11. Justice Saunders then made express findings of fact that each of the CRA’s four assumptions were explained or rendered invalid:
a) Tony Samaroo’s evidence was accepted with respect to the cash deposits;
b) The Crown’s theory that Tony Samaroo skimmed unreported cash from one till tape per day was flawed in significant respects;
c) Tony and Helen Samaroo did not use unreported cash to pay supplies, liquor or wages as alleged; and
d) The CRA’s net worth analysis was inaccurate.
12. The Crown has not raised an alternative basis of assessment in the present cases pursuant to subsection 152(9) or sought to do so.
13. In Samaroo v. Canada Revenue Agency, 2016 BCSC 531, [“Samaroo #2”] Justice Punnett of the Supreme Court of British Columbia found that the requisite elements of issue estoppel were met as between Samaroo #1 and Samaroo #2.
14. In particular, Justice Punnett ruled that the Supreme Court of Canada’s decision in Mahalingan applied such that the findings from Samaroo #1 applied to Samaroo #2 despite there being an acquittal in Samaroo #1: “…whether the finding arises from conviction or an acquittal is irrelevant. It is the determination of the issue that is relevant.”
15. Further, in Samaroo #2 Justice Punnett also ruled, in the alternative, that it would be an abuse of process for the Canada Revenue Agency to seek to relitigate the findings and issues addressed in the Samaroo #1.
b) According to the Respondent
[6] The Respondent does not dispute the content of the Findings submitted by the Appellants, but asserts that such resolved issues cannot be divorced from the differing standard and burden of proof in criminal proceedings: (i) guilt must be proved beyond the threshold of reasonable doubt, and (ii) the Crown bears the burden of so proving such guilt. Therefore, given this differing litigative context, the two consequent contextual conclusions within the Findings were limited to:
a) the testimony of Tony Samaroo, the sole witness for the accused, was credible on certain issues, inter alia, no unreported income, non-taxable sources of cash and no misappropriation of corporate property, and
b) the Crown’s methodology for calculating unreported income, its net worth statement calculation and failure to account for capital cost allowance were flawed.
[7] The Respondent further asserts that in the first finding in a) above, Judge Saunders indicated that the credibility of Mr. Samaroo arose from the plausible nature of his evidence. Since the judge accepted the accused’s testimony, reasonable doubt of guilt was established and an acquittal entered. This is the mandatory first prong of three relating to evaluation of evidence relating to reasonable doubt [1] .
[8] With the second finding in b) above, the Crown failed to prove the net worth analysis beyond a reasonable doubt. To do so legally, the Crown must establish one of two things: disclose through the net worth analysis the likely source of the alleged unreported income; or, disprove all other non-taxable sources of income. The Crown failed to do so. The judge found the calculation lacked such a degree of accuracy and was “worthless” in meeting the Crown’s burden of establishing the criminal standard of proof. In short, the Respondent asserts that the finding was an acquittal because the Crown, who bore the burden of proof, failed to discharge that obligation to prove beyond a reasonable doubt that the Appellants evaded tax contrary to the criminal offence provisions of the Income Tax Act (the “Act”) [2] . In that criminal proceeding the party, namely the Crown, who bore the burden of proof to an enhanced standard of proof was central to the outcome. Both these components are different in these Tax Appeals, at least to the extent of the correctness of the assessment.
III. Legal Basis for Exclusion of Evidence
[9] The Appellants request the exclusion of further evidence contrary to the Findings on the basis of issue estoppel or abuse of process.
i. Pre-requisite criteria for Issue Estoppel
[10] It is agreed agree that the three elements of issue estoppel are as follows:
a. That the same question or issue has been decided (‘issue symmetry’);
b. That the judicial decision which is said to create the estoppel was final; (‘finality’)
c. That the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which estoppel is raised or their privies. (‘mutuality’) [3]
[11] In the matter at bar, finality and mutuality exist in respect of Samaroo #1. The sole outstanding element is whether there is issue symmetry: does the same question or determination exist as between the criminal proceeding in Samaroo #1 and these Tax Appeals?
[12] Moreover, issue estoppel is a discretionary remedy. In Danyluk, the Supreme Court of Canada (“SCC”) considered the application of issue estoppel from a determination made by an administrative tribunal to civil court proceeding. In that case, Justice Binnie held that the first step in applying issue estoppel is for the courts to determine whether the preconditions to the operation of the doctrine have been met. If the preconditions are met, the courts must still determine, as a matter of discretion, whether issue estoppel ought to be applied [4] .
[13] In exercising this residual discretion, courts must ensure that the discretion is exercised to deal with the unique and particular circumstances of the case before them. Within Danyluk, at paragraph 63, Justice Binnie cited with approval the following comments by the Ontario Court of Appeal in Schweneke [5] :
The discretion to refuse to give effect to issue estoppel becomes relevant only where the three prerequisites to the operation of the doctrine exist. . . . The exercise of the discretion is necessarily case specific and depends on the entirety of the circumstances. In exercising the discretion the court must ask - is there something in the circumstances of this case such that the usual operation of the doctrine of issue estoppel would work an injustice?
. . . . .
. . . The discretion must respond to the realities of each case and not to abstract concerns that arise in virtually every case where the finding relied on to support the doctrine was made by a tribunal and not a court. [Emphasis added.]
[14] Specifically, fairness in this inquiry should be considered from two perspectives. First, courts should consider the fairness of the prior proceeding. Second, courts should consider the fairness of using the results in the prior fair proceeding to bar determination of issues in the subsequent proceeding.
ii. Pre-requisite criteria for Abuse of Process
[15] Two of the three elements for abuse of process are the same as those for issue estoppel. However, mutuality need not exist for abuse of process to apply and its primary rationale and purpose is different: the courts’ multiple processes should not compromise the integrity of the justice system by affording a party the opportunity to relitigate the same question twice where doing so would result in a misuse of the courts’ procedures and bring the administration of justice into disrepute [6] .
[16] In City of Toronto, the SCC held that the discretionary factors that apply to prevent issue estoppel from operating in an unfair way are equally available to prevent abuse of process from achieving a similar undesirable result [7] . Therefore, courts also have the residual discretion to apply abuse of process, where preconditions to applying the doctrine are met.
[17] According to the SCC, common to both issue estoppel and abuse of process is the aim to ensure fairness in the judicial decision-making process:
There are many circumstances in which the bar against relitigation, either through the doctrine of res judicata [which includes the doctrine of issue estoppel] or that of abuse of process, would create unfairness. If, for instance, the stakes in the original proceeding were too minor to generate a full and robust response, while the subsequent stakes were considerable, fairness would dictate that the administration of justice would be better served by permitting the second proceeding to go forward than by insisting that finality should prevail [8] .
[Emphasis added.]
[18] Courts’ residual discretion with respect to abuse of process has been recognized by the Tax Court of Canada. In Golden, Justice Boyle held that like issue estoppel, “[a]buse of process is also a doctrine that should only be applied in the Court’s discretion and requires a judicial balancing with a view to deciding a question of fairness [9] .”
[19] It is important, however, to not overstate the importance of fairness as a consideration when exercising the residual discretion in applying abuse of process. The fundamental goal of abuse of process is to uphold the integrity of the judicial system. Therefore, proper application of the doctrine should result in a balancing of different interests, such as finality, fairness, efficiency, and authority of judicial decisions [10] .
IV. Jurisprudence surrounding application of Issue Estoppel or Abuse of Process
a) Varying Standards of Proof, Burdens of Proof and Outcomes/Verdicts
[20] Even where issues or questions before the completed proceeding (i.e. Samaroo #1) and the subsequent proceeding (i.e. The Tax Appeals) have issue symmetry, courts have differentiated between the applicability of issue estoppel and abuse of process where different standards of proof are at play and/or different verdicts or outcomes occur. These differing standards of proof are distinct and longstanding at law: guilt beyond a reasonable doubt in criminal proceedings and occurrence on the balance of probabilities in civil matters. In terms of verdicts in criminal matters, only proof of guilt marshalled by the Crown beyond a reasonable doubt commands a guilty verdict, anything less results in an acquittal. For civil proceedings, proof of occurrence on the balance of probabilities by the party seeking to overturn the status quo results in success of the suit and the granting of relief. That much is well-known, static and fundamental. By contrast, the jurisprudence regarding the transfer of findings among and between standards of proof, burdens of proof and outcomes or verdicts (“transferral”) in the context of issue estoppel and abuse of process remains vague, evolving and tangential. This is borne out in the various scenarios developed in common law Canada by various courts, at various levels and various jurisdictions.
b) Transferral of Findings under Issue Estoppel
i. The Parties’ positions
a) Appellants
[21] The Appellants presented refined arguments surrounding the assertion that issue symmetry existed sufficiently to allow the Findings in Samaroo #1 to apply substantively to the Tax Appeals. The consequence of that application should be broad: no party shall introduce further evidence at the hearing tending to disprove those positive findings of fact.
[22] The Appellant asserts that issue estoppel and abuse of process afford the ready transferral of the Findings from a criminal acquittal on tax evasion to a related tax appeal. Specifically referencing Chief Justice McLaughlin in Mahalingan, [11] the Appellants’ counsel noted with respect to an acquittal in a prior criminal proceeding, “[i]f a particular issue was decided in favour of the accused …, even if the issue was decided on the basis of reasonable doubt, issue estoppel applies.” [12] Specifically, the doctrine of issue estoppel applies to those issues that were expressly or necessarily resolved in the acquittal.
[23] The Appellants state that although the SCC in Mahalingan dealt with issue estoppel in the criminal-to-criminal context, the principles stated by the Chief Justice are equally applicable in the criminal-to-civil context. If Mahalingan is properly interpreted, it represents the latest consideration by the SCC on issue estoppel as a single doctrine. That is, Mahalingan represents the continued evolution of that doctrine of transferral of findings of fact among and between both criminal and civil courts.
[24] In Mahalingan, the majority's analysis was concentrated on resolving problems in the application of issue estoppel and its confusion with abuse of process arising from previous jurisprudence. The Chief Justice stated that such problems are largely resolved if courts confine the application of the doctrine to prior determinations of factual issues as opposed to a focus on different burdens and standards of proof. In reaching such a determination, the Chief Justice had dropped any reference to the criminal law context and thus did not make a specific finding that the issue-centred approach only applies to a criminal-to-criminal transferral context, although that was the situation in Mahalingan. Therefore, the Appellants assert that courts are not precluded from applying issue estoppel from a criminal acquittal to a subsequent civil proceeding. Notably, in Samaroo #2 Justice Punnet expressly followed Mahalingan to find that issue estoppel applied as between the criminal Samaroo #1 and the civil matter resulting in the preliminary decision in Samaroo #2. [13]
[25] Therefore, the Appellants submit that the issues expressly or necessarily resolved (i.e. for which there is issue symmetry) in the Appellant's acquittal in Samaroo #1, whether on the basis of a positive finding of fact or reasonable doubt of guilt, are subject to issue estoppel in the Tax Appeals. The consequence should be the preclusion of the introduction of further evidence to disprove or enhance the Findings.
b) Respondent
[26] In turn, the Respondent submits that issue estoppel does not apply from an acquittal in a criminal proceeding to a subsequent civil proceeding, whether on the basis of a positive finding of fact or reasonable doubt. The only exception to this rule is where the civil proceeding is for malicious prosecution, as was the case Samaroo #2. Samaroo #2 should be read merely as an illustration of this narrow exception.
[27] Further, the Respondent asserts that issue estoppel cannot apply in the case at bar for three other reasons.
[28] First, the difference in the standard of proof between civil and criminal proceedings renders issue estoppel inapplicable in a criminal acquittal to a civil transferral context. Since the standard of proof in civil proceedings is lower than the standard of proof in criminal proceedings, a prior acquittal, as opposed to a conviction, is not determinative of any factual issues to be resolved in a subsequent civil proceeding.
[29] Second, the nature of a criminal conviction and an acquittal is fundamentally different. The former is a positive finding of guilt beyond a reasonable doubt (i.e. a “guilty” verdict); the latter is simply the absence of that finding (i.e. a “not guilty” verdict). To apply issue estoppel from an acquittal to a subsequent civil proceeding would effectively be introducing a third verdict, that of factual innocence. As a matter of public policy, courts should not recognize two classes of acquitted individuals: those who are legally not guilty, and those that are factually innocent. To do so would diminish the significance of the “not guilty” verdict.
[30] Lastly, the Appellants' reliance on Mahalingan is misplaced. Issue estoppel consists of two distinct types: criminal and civil issue estoppel. Mahalingan only considered criminal issue estoppel. Hence, the comments of the Chief Justice are obiter in the criminal to civil transferral context and the Supreme Court of Canada's refinement of the criminal doctrine cannot be extended to the civil doctrine.
iii. Analysis
[31] The Appellants' interpretation of Mahalingan reaches too far in the context of tax litigation concerning the correctness of assessments. To the extent an acquittal in a prior criminal proceeding was based on reasonable doubt, issue estoppel does not apply to a subsequent civil proceeding because logically there exists longstanding and differing standards of proof in criminal and civil proceedings.
[32] The Appellants have characterized Chief Justice McLachlin's refinement of the doctrine of issue estoppel if not incorrectly, then over-generously. At paragraph 17 of Mahalingan, McLachlin CJ held that “the proper and narrower concern of issue estoppel … is particular determinations on the issues supporting the verdict” (emphasis added). The Appellants themselves referred to this in their submissions and concluded that Mahalingan stands for the proposition that “issue estoppel clearly can flow from an acquittal.” It is more accurate to say that the Chief Justice concluded issue estoppel can flow from determinations of factual issues that support a verdict of a criminal acquittal. The focus of the analysis is on the issues, not the outcomes of the prior proceeding.
[33] However, both proceedings referenced in Mahalingan were criminal. The Chief Justice stated at the opening of the decision that “[t]hough it shares many features with its civil law equivalent, criminal issue estoppel is a stand-alone doctrine responsive to the unique characteristics of criminal trials.” The Chief Justice envisages two types of issue estoppel, one for civil proceedings and one for criminal proceedings. The Appellants' characterization of a single doctrine seems to ignore this right-limiting preamble. Any adoption of principles from Mahalingan within the criminal to civil transferral context would necessarily be novel and beyond the express realm of even the obiter dicta in Mahalingan which itself was limited to criminal proceedings only.
[34] Leaving aside for a moment both this conclusion by this Court and the different burden or onus of proof in Tax Appeals (at least in the context of assessment for tax) and criminal proceedings, the Appellants’ suggested focus on the prior factual determination of issues when applying issue estoppel in the criminal to civil transferral context has merit. However, this applies in exceptional cases where there are no issues with respect to the different standards of proof. The underlying policy goal of issue estoppel is to “balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case.” Where, in exceptional cases, factual issues in a prior criminal proceeding have undergone extensive judicial scrutiny and have been conclusively resolved in accordance with the standard of proof for the subsequent proceeding, [14] it serves the public interest to not allow further litigation over these factual issues in the subsequent proceeding, regardless of whether the prior criminal proceeding resulted in an acquittal or a conviction. This marches along with Justice Punnet’s view in Samaroo #2, who fairly summarized the conclusive reasoning of Mahalingan as follows: “whether the finding [that resolved a factual issue in the prior proceeding] arises from a conviction or an acquittal is irrelevant. It is the determination of the issue that is relevant.” [15]
[35] If the focus of issue estoppel is not on the outcome/verdict of a prior criminal proceeding, but on issue symmetry per se, whether the verdict is an acquittal or a conviction, applying issue estoppel would not create a third category of criminal verdicts, that of factually innocence, because the court has not turned its mind to the question of guilt or innocence. In addition, if one is to focus only on how factual issues in the prior proceeding were resolved, so long as the requisite standard of proof in the subsequent proceeding is met and there are no issues regarding the difference in the burden of proof, it is irrelevant whether the prior proceeding was in the nature of a criminal or civil case.
[36] But that is as far as it goes. The Appellants’ argument suffers when one considers the shift in burden of proof from that of civil proceedings to that in these Tax Appeals. In such proceedings generally, the burden is on the taxpayer to demolish the Minister of National Revenue's (the “Minister”) assessing assumptions on the balance of probabilities. [16] In this case, the Appellants' voir dire motion seeks to preclude both parties from adducing evidence for the purpose of challenging factual issues resolved in Samaroo #1. If this position is accepted, this effectively allows the Appellants to discharge their burden of proof without ever being required to affirmatively establish their case in the context of the correctness and quantum of the assessment; the Court would have no information other than the Findings in Samaroo #1 with which to make its own findings with respect to the factual issues allegedly resolved in that case. This definitionally encroaches upon the exclusive and originating jurisdiction of this Court to determine the correctness and extent of the tax assessments in the Tax Appeals. This was also deferentially referenced by Justice Punnet, himself, in Samaroo #2. [17]
[37] This Court’s maintenance of its exclusive and originating jurisdiction should be balanced with the principle of judicial comity. In Houda, Justice Boyle of this Court considered an application for an extension of time to appeal to the tax court where the taxpayer had already obtained an extension of time from the Court of Quebec in respect of corresponding provincial sales tax assessments. Justice Boyle held that after considering whether the Court is bound by the decision of the Court of Quebec under the doctrines of issue estoppel or abuse of process, even if the answers are no, the Court must still determine whether it should extend deference to the Court of Quebec in the interests of judicial comity. [18]
[38] While the Tax Court is not necessarily bound by decisions of courts of coordinate jurisdiction, especially where the relevant legal provisions are not the same, it is advantageous to ensure findings on a single issue are consistent, where possible. [19]
[39] Judicial comity should not be accepted indiscriminately. Where the factual matrix or evidential basis between two cases is different, or where the issue to be decided is different, judicial comity does not apply.
[40] Ultimately as suggested by the Respondent, the purposes of a criminal trial and a tax assessment appeal are fundamentally different. The former is to determine whether the accused is guilty of the elements of the criminal offence beyond a reasonable doubt. The latter is to determine whether the Minister's assessment of the taxpayer's tax liability is correct and, also, the quantum to which such assessed tax liability exists. In the Tax Appeals, while there may be similarities and commonalities in some of the factual issues that need to be resolved before this Court vis-à-vis those already resolved in Samaroo #1, the exclusion of evidence before this Court on the basis of issue estoppel rather than the simple admissions of the Findings fails to recognize a critical object embedded within issue estoppel. The Tax Appeals are not re-litigation at all, but are distinctly mandated legal processes evaluating and determining different legal rights and obligations than do the previous criminal proceedings. In this circumstance, to allow the Appellant's voir dire motion, in toto, gives short shrift to a taxpayer's fundamental obligation in our self-reporting system of establishing the correctness of their tax filings in the face of the Minister’s reassessment.
c) Transferral of the Findings through Abuse of Process
(i) The parties’ positions
[41] There is no great jurisprudential difference between the analysis and reasoning applied above to issue estoppel and that of abuse of process in the context of these Tax Appeals. Issue symmetry and not mutuality (the usual and sole distinction between issue estoppel and abuse of process) is the criteria under consideration on this voir dire motion. That criterion applies to both issue estoppel and abuse of process.
(ii) Analysis
[42] While avoidance of relitigation is the primary concern for the application of issue estoppel, maintaining the Court's exclusive statutory jurisdiction to determine the validity and correctness of tax assessments is also a proper and, in this Court’s discretion, a higher concern with respect to the underlying distinctive purpose of abuse of process: maintenance of the integrity of the judicial decision-making process. If the exclusion order sought by the Appellant is granted, the Court's jurisdiction would be infringed upon to the extent that this Court is precluded from considering any additional rebuttal or reply evidence surrounding the Findings made by Judge Saunders. The same reasoning applies to the Court's consideration of Samaroo #2. However, tax litigation does not work in such a fashion. To maintain and discharge its exclusive jurisdiction, the Court should not give exclusionary effect to the Findings.
[43] Moreover, to give the Findings exclusionary effect would require a legal determination that Judge Saunders make the Findings in the Appellants' favour based solely upon the Appellant’s onus to prove same to the civil standard of proof: the balance of probabilities. This is very much a live point because while Judge Saunders commented favourably on Tony Samaroo's credibility and accepted many aspects of his testimony, she did not address the question of the extent to which she accepted the testimony as true to that standard. The acquittal occurred because she accepted his testimony found within the Findings as sufficiently credible to the extent of establishing reasonable doubt. At law in a criminal proceeding, an acquittal must then be directed. But what of the correctness of the assessment to the extent of the tax liability.
[44] Both counsel are correct in noting that the interests of the parties are not determinative with respect to the application of abuse of process. It is the integrity of the justice system that out-ranks. The Court also agrees that abuse of process should only be applied in clear cases. The conclusion cannot be drawn that Samaroo #1 is such a case.
d) Reconciling the Mis-match of issue estoppel and abuse of process to Tax Appeals
[45] Similarities and commonalities in certain of the factual issues that need to be resolved in the Tax Appeals vis-à-vis those already resolved in Samaroo #1 do exist. However, not all factual issues that need to be resolved in the Tax Appeals have in fact been resolved in Samaroo #1 such that an exclusion order for similar or rebuttal evidence should be issued. Judge Saunders did not consider whether the quantum of reported income was correct in Samaroo #1. As such, applying issue estoppel or abuse of process in this case would cause rather than cure any potential injustice.
[46] Applying the doctrine of issue estoppel or abuse of process to the case at bar is also inconsistent with the spirit of judicial comity. As found by Justice Punnett in Samaroo #2, it is for this specialized Court to determine what evidence is admissible and what factors are to be taken into account in the Tax Appeals; it is not for other courts to speculate on whether abuse of process or some other relief should be granted to the Appellants in these proceedings. [20]
[47] It is within the scope of this concept of this Court’s unique jurisdiction that some recognition and use of the Findings in Samaroo #1, as buttressed in Samaroo #2, may be made. As stated, this is however to be limited by the context of this Court’s exclusive and originating jurisdiction [21] , unique standards and burdens of proof and distinct jurisprudence all reflective of its national, bi-jural and statutory foundations.
[48] In this context, this Court shall apply the Findings to the Tax Appeals. In doing so, it will guard the exclusive and originating jurisdiction of this Court, give voice and effect to the Findings in the lengthly, but asymmetrical criminal proceedings and face directly the equally undesirable results of either granting or refusing, in toto, the voir dire motion. The Findings are admitted and with impact, but not to the exclusion of contrary or enhancing evidence where such further evidence meets the normal test of being probative, relevant and necessary to the unique determination of this Court: the correctness and extent of the levied assessments and the validity of penalties all against multiple appellants and all to the evidential threshold of the balance of probabilities. This reconciliation preserves and respects the integrity of all the courts which have dealt and will deal with these matters, but upholds the integrity of the overall judicial system, while recognizing the differing roles played by each part.
V. The Evidentiary Elements of Tax Appeals, the Impact of the Findings and Utilization of Same in these Appeals
i. The Standard of Proof in Tax Appeals
[49] Hickman Motors enunciates the most recent foundational principles concerning the onus and standard of proof in tax appeals. Justice L'Heureux-Dubé said:
a) The appellant has the initial onus to demolish the Minister's assessing assumptions by at least a prima facie case. The appellant's initial onus is to demolish the exact assumptions made by the Minister, but no more. [22]
b) Where the Minister's assumptions have been demolished, the onus shifts to the Minister to rebut the prima facie case made out by the appellant and to prove the assumptions. If the Minister adduces no evidence, the appellant is entitled to succeed even if the appellant's evidence contained gaps in logic, chronology, and substance. [23]
[50] The SCC Justice continued by saying that “within balance of probabilities, there can be varying degrees of proof required in order to discharge the onus, depending on the subject matter.” [24] Further, the minimum case that the appellant needs to make to discharge her or his initial onus is “a prima facie case”. [25] Read together, these phrases seem to contemplate a shifting standard of proof in tax appeals. That is, the initial onus can be discharged on the basis of a standard less onerous than proof on a balance of probabilities.
[51] This