Ploughman v. The Queen

Ploughman v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2017-04-25
Neutral citation
2017 TCC 64
File numbers
2014-935(IT)G
Judges and Taxing Officers
Don R. Sommerfeldt
Subjects
Income Tax Act
Decision Content
Docket: 2014-935(IT)G
BETWEEN:
GLENN F. PLOUGHMAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on February 10 and 11, 2016, at St. John's, Newfoundland
By: The Honourable Justice Don R. Sommerfeldt
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
André LeBlanc
AMENDED JUDGMENT
The Appeal from the assessment dated July 10, 2007 and made under section 163.2 of the Income Tax Act is dismissed, with costs in favour of the Respondent, to be calculated according to Tariff B of Schedule II to the Tax Court of Canada Rules (General Procedure).
This Amended Judgment is issued in substitution of the Judgment dated April 25, 2017.
Signed at Edmonton, Alberta, this 10th day of May, 2017.
“Don R. Sommerfeldt”
Sommerfeldt J.
Citation: 2017 TCC 64
Date: 20170425
Docket: 2014-935(IT)G
BETWEEN:
GLENN F. PLOUGHMAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sommerfeldt J.
I. INTRODUCTION
[1] These Reasons pertain to an Appeal brought by Glenn F. Ploughman against an assessment under section 163.2 of the Income Tax Act [1] (the “ITA”). That section is colloquially referred to as the third-party penalty provision. In 2001 and 2002, Mr. Ploughman had a connection to a charitable donation program (the “Donation Program”). The nature and extent of his connection to the Donation Program were significant issues in this Appeal.
[2] The Donation Program was the same charitable donation program in respect of which Julie Guindon, a lawyer in Ottawa, issued a legal opinion on September 19, 2001. The Canada Revenue Agency (the “CRA”) assessed Ms. Guindon under section 163.2 of the ITA and her appeal from that assessment was ultimately decided in favour of the Crown by the Supreme Court of Canada. [2] Mr. Ploughman maintained that his connection to the Donation Program was significantly different from, and substantially less than, that of Ms. Guindon and certain other individuals who could be described as the promoters or developers of the Donation Program. The CRA considered Mr. Ploughman to be one of the promoters or creators of the Donation Program, and assessed him accordingly.
[3] In his reasons, the trial judge who heard Ms. Guindon’s appeal set out an agreed statement of facts, in which reference is made to Mr. Ploughman. It should be noted that Mr. Ploughman was not a party to that appeal, nor was he a party to the agreement that resulted in that agreed statement of facts. Accordingly, I have not made reference to, or relied on, that agreed statement of facts insofar as it refers to Mr. Ploughman.
II. ISSUE
[4] The issue in this Appeal is whether Mr. Ploughman participated in, assented to or acquiesced in the making of, statements by 135 of the participants in the Donation Program that Mr. Ploughman knew, or would reasonably be expected to have known but for circumstances amounting to culpable conduct, were false statements that could be used by or on behalf of those participants for a purpose of the ITA. In part, this requires a determination of whether Mr. Ploughman was merely a canvasser or a marketer for the Donation Program (as he alleges), whether he participated in the creation, or was a promoter, of the Donation Program (as the Crown has assumed), or whether he may have had some other connection to the Donation Program or to the false statements.
III. FACTUAL BACKGROUND
[5] In 2001, Lee Goudie, a land developer, was endeavouring to develop a hotel and casino resort to be known as “Hawkes Nest Plantation Golf Resort and Casino” (“Hawkes Nest”) in the Turks and Caicos Islands (“TCI”). Mr. Goudie and Mr. Ploughman first met in the mid-1990s. [3] They reconnected in 2001, at which time Mr. Ploughman indicated that he was interested in Hawkes Nest, which led to a business connection with Mr. Goudie for the purpose of furthering the Hawkes Nest development project (the “Development Project”). As Mr. Ploughman was a financial advisor in 2001, his role (according to Mr. Goudie) was to assist in raising the financing to fund the Development Project. While there was relatively little evidence concerning the early financing arrangements for the Development Project, it appears that, in the spring and summer of 2001, a number of initial investors (the “Founding Members”) had loaned money to TDL to provide partial funding for the project. [4]
[6] The development of Hawkes Nest was to be carried out through a corporation. For this purpose, arrangements were made for the incorporation of Tropical Development Ltd. (“TDL”). [5] TDL was incorporated in the TCI, apparently under the auspices of a TCI law firm known as Misick & Stanbrook. Although none of TDL’s constating or organizational documents were produced in evidence, it appears that initially Mr. Goudie was the sole shareholder of TDL. Mr. Goudie testified that, during the course of developing Hawkes Nest, TDL issued sufficient shares to Mr. Ploughman to result in him becoming a 50% shareholder, but that, when Mr. Ploughman subsequently became embroiled in a lawsuit with Datile Securities Inc. (“DSI”), Mr. Ploughman requested that Mr. Goudie arrange for all but one of his shares to be transferred to Mr. Goudie. [6] Mr. Ploughman testified that he did not, at any time, become a shareholder of TDL.
[7] Due to a slowdown in the tourism business in the wake of the 911 catastrophe, and the resultant reticence on the part of investors to invest in tourist-based properties at that time, in the fall of 2001 TDL realized that it faced a funding shortfall. Mr. Goudie testified that, in the face of this realization, Mr. Ploughman suggested that TDL could raise additional funds by promoting a charitable donation program (defined above as the “Donation Program”) based on the creation or acquisition of a timeshare property and the donation of vacation ownership weeks to registered charities. Mr. Goudie indicated that Mr. Ploughman had knowledge and experience pertaining to the implementation of charitable donation programs.
[8] To implement the Donation Program, certain steps were identified and assignments were made. Mr. Goudie testified that he or TDL were responsible for the preparation or provision of the following documents:
a) the promotional material for the Global Trust of Canada (the “Global Trust”); [7]
b) the Sale Agreement, pursuant to which TDL was to sell certain timeshare vacation ownership weeks to the settlor (the “Settlor”) of the Global Trust;
c) the Deed of Gift of Vacation Ownership Weeks, pursuant to which the Settlor was to settle the above-mentioned vacation ownership weeks on the trustee (the “Trustee”) of the Global Trust;
d) the rules and regulations of Hawkes Nest;
e) an independent evaluation of the vacation ownership weeks, to be prepared on behalf of the registered charities to which the vacation ownership weeks would eventually be given;
f) the Marketing and Sales Agreement with TDL; [8] and
g) the conveyance of the various vacation ownership weeks from the Trustee to the charitable donors (the “Donors”) (i.e., the participants in the Donation Program), who were the Class A Beneficiaries of the Global Trust. [9]
[9] Mr. Goudie testified that Mr. Ploughman was to provide the remaining documents that were required to implement the Donation Program. According to Mr. Goudie, those documents were:
a) the Deed of Trust;
b) the document creating a charge against the vacation ownership weeks;
c) the applications pursuant to which the prospective participants in the Donation Program would apply to become Class A Beneficiaries of the Global Trust;
d) an opinion of legal counsel in TCI concerning the legal title to the vacation ownership weeks;
e) a resolution of the trustee of the Global Trust distributing the vacation ownership weeks to the Class A Beneficiaries of that trust; and
f) the Deeds of Gift of vacation ownership weeks by the Class A Beneficiaries (i.e., the Donors) to a registered charity. [10]
Mr. Ploughman testified vehemently that he was not expected to, and did not, prepare or provide any of the documents listed above. [11]
[10] Mr. Goudie understood that a legal opinion would be required in respect of the Donation Program. Accordingly, in mid-2001 Mr. Goudie made arrangements to retain Ms. Guindon. On July 10, 2001, Ms. Guindon sent a letter to TDL to the attention of Mr. Goudie, confirming the nature of her engagement. That letter also contained the following statement:
I also wish to confirm that I indicated to you that the opinion does not fall within my field of expertise. Therefore, I recommended that you have it reviewed by other professionals such as a tax lawyer and an accountant to ensure the accuracy of the opinion. I am aware that this may result in additional fees, however, I believe that this is not unreasonable in light of the block fee that I am charging you. You also confirmed your request that the opinion letter should be addressed to KGR Tax Services Ltd since they are the trustees of Global Trust of Canada, the trust designated for the Charitable Donation Program. [12]
There was no evidence that Mr. Ploughman saw the above-mentioned letter in 2001.
[11] As noted by Ms. Guindon in her letter, KGR Tax Services Ltd. (“KGR”) had agreed to be the trustee of the Global Trust. KGR was owned equally by Mr. Ploughman, Richard St.-Denis and Keith Benson (both of whom were business associates of Mr. Ploughman). It carried on a tax preparation business. Mr. Ploughman indicated that it was in the summer of 2001 when KGR agreed to be the trustee of the Global Trust, and that he and his fellow shareholders (whom he described as partners) agreed to having KGR act as the trustee, as the trustee fees would generate some cash flow for KGR. [13] Mr. Ploughman was the president of KGR.
[12] In her testimony, Ms. Guindon stated that she met Mr. Ploughman through Mr. St.-Denis, who was her cousin and who had been her financial advisor for many years. Ms. Guindon was introduced to the Donation Program on May 15, 2001, when she met with Mr. St.-Denis and Mr. Goudie. [14] Ms. Guindon stated that she subsequently had several meetings in respect of the Donation Program over the summer and fall of 2011, as follows:
a) On May 30, 2001, Ms. Guindon met with Mr. St.-Denis, Mr. Goudie and Mr. Ploughman at 331 Somerset Street West, Ottawa. [15] Ms. Guindon indicated that the meeting was either at the office of DSI (which was the entity with which Mr. Ploughman was then affiliated) or the office of TDL. The purpose of the meeting was to explain to Ms. Guindon the Donation Program, which was to be based on a charitable donation program which involved the Athletic Trust of Canada (the “Athletic Trust”) in respect of which Mr. Ploughman and Mr. St.-Denis had been canvassers in 2000. According to Ms. Guindon, Mr. Ploughman took the lead in explaining the Athletic Trust program.
b) On July 3, 2001, there was a follow-up meeting. Mr. Goudie attended that meeting with Ms. Guindon, but she cannot remember whether Mr. Ploughman or Mr. St.-Denis also attended. [16]
c) On August 23, 2001, Ms. Guindon attended a meeting with Mr. Goudie at 331 Somerset Street West. Mr. Ploughman participated in the meeting by telephone. [17]
[13] In his testimony, Mr. Ploughman acknowledged that he met with Ms. Guindon, apparently on more than one date, although he has forgotten the precise dates. He stated that the purpose of meeting with Ms. Guindon was to explain to her how the Athletic Trust program worked. He also stated that, when he was meeting with Ms. Guindon, he did not know that Mr. Goudie was planning a charitable donation program of his own, although he suspected that such might be the case. [18]
[14] As mentioned, the Donation Program was modelled on the Athletic Trust charitable donation program, with which Mr. Ploughman and Mr. St.-Denis had been involved as canvassers in 2000. In essence, it was anticipated that, in 2001, under the Donation Program, a trust would be established to acquire timeshare units (i.e., vacation ownership weeks) in respect of a property in TCI. Subsequently, the trust would distribute those timeshare units to its beneficiaries, who would be individuals (in these Reasons, sometimes called the “Donors” or the “Class A Beneficiaries”) found by Mr. Ploughman, Mr. St.-Denis and other canvassers, and the Donors would subsequently donate their timeshare units to a registered charity, whereupon they would each receive from the charity an official receipt [19] showing the amount of the donation as being an amount equal to the fair market value of the donated units. As the timeshare units would be encumbered by a lien relating to the initial acquisition and financing of the timeshare units, and as the charity apparently (or purportedly) could not accept properties subject to an encumbrance, the Donors were expected to make a payment to the lienholder to remove the lien before the donation of the timeshare units to the charity was completed. A timeshare marketing agent was to be engaged by the charity to sell the donated timeshare units to the public. For each timeshare unit sold, an amount representing profit and stipulated to be at least $500 per unit was to be paid to the charity.
[15] Thus, the Donation Program was dependent on having available timeshare units. In this regard, TDL made arrangements to purchase a sixteen-room hotel, which was known as the Arawak Inn and which was located in TCI on land adjacent to the site of the proposed Hawkes Nest development.
[16] After TDL acquired the Arawak Inn, TDL undertook renovations to upgrade the property in conjunction with its conversion from a hotel to a timeshare facility. To facilitate the renovations, TDL engaged the services of Iva Dianne Customs Design, which was a partnership formed by Mr. Ploughman and his wife, Iva Dianne Ploughman, and which carried on the business of providing design and furnishing services.
[17] Over the summer of 2001, Ms. Guindon prepared multiple drafts of her proposed opinion letter. She kept those letters in her file, but discussed the details of the Donation Program from time to time with Mr. Goudie, Mr. St.-Denis and (according to her) Mr. Ploughman, and made revisions to the proposed opinion letter as she obtained additional information.
[18] On the second page of her opinion letter, she listed the various documents that she ostensibly had reviewed in formulating her opinion. While some of those documents were finalized before Ms. Guindon issued her opinion on September 19, 2001, other documents existed only in draft form in 2001, and some documents were never completed. Some of the draft documents that were reviewed by Ms. Guindon were actually only photocopies of the Athletic Trust documents that had been marked up or annotated by hand to show the proposed revisions that would be needed to convert such documents into those that could be used in the Donation Program. When Ms. Guindon prepared her opinion, those annotated photocopies had not yet been retyped or reformatted to insert the handwritten revisions.
[19] Ms. Guindon stated that she was relying on Mr. Goudie and Mr. Ploughman to provide her with the documents listed on page 2 of her opinion letter. She also stated that she assumed, as time passed and she had heard nothing further, that the documents must have been obtained and that everything was in order. Mr. Ploughman testified that, since Ms. Guindon stated in her opinion letter that she had reviewed the documents, he assumed that such documents had been finalized and provided to her. It seems that each was relying on the other and hoping for the best. It also seems that neither was inclined to ask the hard questions about the status of the documents. As it ultimately turned out, the documents never were finalized, and the Global Trust and the timeshare units never were created.
[20] Ms. Guindon coincidentally happened to be the president of a registered charity, Les Guides franco-canadiennes (District d’Ottawa) (“Les Guides”). Mr. St.-Denis and (according to Ms. Guindon) Mr. Ploughman asked her in October 2001 if Les Guides would be interested in becoming involved in the Donation Program. [20] Ms. Guindon subsequently presented the proposal to the board of directors of Les Guides, which approved the participation of Les Guides in the Donation Program.
[21] Mr. Ploughman testified that, in 2001, his sister-in-law was working in his office in Ottawa. She had previously worked for the 4-H Provincial Council of Newfoundland (“4-H”) and, upon seeing the promotional package for the Donation Program, she suggested to Mr. Ploughman that it would make sense for 4-H to be one of the charities in that program. Subsequently, she approached 4-H, which apparently agreed to participate. However, in early January 2002 there was a wholesale change in the board of directors and executive committee of 4-H, and the new directors felt that there was insufficient time to analyse the Donation Program and to prepare the official receipts. Accordingly, they caused 4-H to withdraw from participation. [21]
[22] The structure for the Donation Program contemplated the creation of an entity that would be an intermediary between the Donors and the registered charities and that would also provide certain services to the charities. In this regard, Mr. St.-Denis arranged for the incorporation, under the Canada Business Corporations Act, [22] of Suntopic International Advisors Ltd. (“SIA”) on September 18, 2001. [23]
[23] Ms. Guindon had further communication with Mr. St.-Denis and Mr. Ploughman in early 2002, when it became necessary to prepare the official receipts to be issued by Les Guides to the 140 individuals who had purportedly donated timeshare units to Les Guides. Ms. Guindon stated that Les Guides did not have sufficient staff to prepare 140 receipts; therefore, according to her, Mr. St.-Denis and Mr. Ploughman offered to have to the receipts prepared in their office. [24] On Saturday, February 9, 2002, Ms. Guindon and another individual, who was the treasurer of Les Guides, attended at the offices of Mr. St.-Denis and Mr. Ploughman, where Ms. Guindon and the treasurer reviewed and signed the official receipts, which were subsequently sent to the 140 Donors, 135 of whom included those receipts with their respective income tax returns and claimed a charitable donation tax credit. [25] Each of those receipts stated that the particular Donor had made an in-kind donation of a specified number of “Biennial Weeks Vacation Ownership at Arawak Inn & Beach Resort.” As those vacation ownership weeks (or timeshare units) were never created, and thus were never donated by the Donors to Les Guides, each receipt contained a false statement.
[24] The statements that triggered the CRA’s application of section 163.2 of the ITA were the official receipts issued by Les Guides to the 135 Donors who included those receipts with their respective tax returns. As the receipts were signed by Ms. Guindon or the treasurer of Les Guides, the Crown has not alleged that Mr. Ploughman made the statements. Rather, it is the position of the Crown that Mr. Ploughman participated in, assented to or acquiesced in the making of the false statements which are embodied in the official receipts.
IV. WITNESS RELIABILITY
[25] As the Crown bears the burden of proof in respect of an assessment under section 163.2 of the ITA, [26] the Crown presented its case first. [27] Counsel for the Crown called three witnesses: Mr. Goudie, Ms. Guindon and Todd Collins, who is an official of the CRA. Mr. Ploughman testified on his own behalf. He did not call any other witnesses.
[26] Mr. Collins gave evidence concerning the calculation of the amount of the assessed penalty. I found his testimony to be credible and reliable. As well, Mr. Ploughman stated that he has no quarrel as to the amount of the penalty, although he vigorously maintained that he is not liable for the penalty.
[27] I found the evidence presented by Mr. Ploughman, on the one hand, and by Mr. Goudie and Ms. Guindon, on the other hand, to be a classic “he said, they said” situation. As indicated above, Mr. Goudie and Ms. Guindon stated that Mr. Ploughman was an active participant in the planning and creation of the Donation Program. In fact, they described him as the one who knew how the Donation Program was supposed to be implemented and the one who took the lead in directing that implementation. On the other hand, Mr. Ploughman adamantly insisted that he was not involved whatsoever in the planning or implementation of the Donation Program or the preparation of the official receipts issued by Les Guides. [28]
[28] Each of those three witnesses appeared to fall victim to the typical human response of endeavouring to show his or her actions in the best possible light. As I listened to the testimony of Mr. Ploughman, Ms. Guindon and Mr. Goudie, my sense was that each of them seemed to believe that he or she was being forthright and truthful. However, as the events which were the subject of the hearing occurred 14 to 15 years ago, it was evident that memories had faded and the respective recollections of some of the details of the Donation Program and the involvement of various individuals in respect of the Donation Program had waned to some extent. As well, I had the impression that there was, whether consciously or unconsciously, an element of finger pointing on the part of those three witnesses. It seemed that their memories may have been coloured by an inclination to shift blame to someone else, to portray his or her involvement in respect of the Donation Program in the best possible light, or to suppress the memory of one’s own questionable conduct.
[29] There are circumstances that raise questions concerning the credibility and reliability of each of those three witnesses. As readers of the Guindon case are aware, Ms. Guindon signed a tax opinion letter in which she stated that she had reviewed various documents, when, in fact, many of those documents had not even been prepared or finalized when she signed the letter. This raises concerns about her credibility. As well, based on the decision in her own appeal, it appears that, on June 12, 2003, at a time when Ms. Guindon knew that the CRA would not accept the charitable donations associated with the Donation Program, she made representations to the CRA regarding her own claim in respect of her donation in 2001 of vacation ownership weeks to Les Guides. In commenting on that conduct, Bédard J stated that Ms. Guindon lied to the authorities and that such conduct reflected negatively on her character. [29]
[30] During the hearing of this Appeal, it became apparent that on February 27, 2012, Mr. Goudie sent a letter to Lewis Martin of DSI, which had sued Mr. Ploughman, and in the letter Mr. Goudie told Mr. Martin that Mr. Ploughman did not own any shares in TDL. According to Mr. Goudie (but not Mr. Ploughman), this was an incorrect statement. Although Mr. Goudie testified that Mr. Ploughman had pressured him into sending the letter, the fact remains that Mr. Goudie sent what he acknowledges was a misleading and incorrect letter, which raises concerns about his credibility.
[31] I found Mr. Ploughman’s testimony during cross-examination to be evasive, defiant and self-serving. An example of Mr. Ploughman’s evasiveness pertains to his answers during cross-examination in respect of the ownership of the Arawak Inn. When asked whether that property had been purchased through TDL, Mr. Ploughman replied:
I wasn’t sure and I’m still not sure which company actually bought the - again, he had three separate names to companies. He had Tropical Development. He had Tropical Development International. He had Tropical Amusements. So even today, I’m not sure which entity bought the Arawak Inn. [30]
As explained in footnote 5 above, all three of the terms used by Mr. Ploughman in this answer actually referred to the corporation that I have designated as TDL in these Reasons. I am not concerned that Mr. Ploughman, in giving this answer, used three different names to refer to TDL, because all three of those names, and others, were used by Mr. Goudie, Mr. St.-Denis and Mr. Ploughman in 2001 and 2002 to refer to TDL. What concerns me is his assertion that he was not sure which entity bought the Arawak Inn, as that assertion appeared to be an evasive statement.
[32] The evasiveness becomes apparent when one reads a letter that Mr. Ploughman sent to the Class A Beneficiaries on April 5, 2002, in which he referred to “Gordon Kerr, legal counsel to Tropical Development Ltd (owner of the Arawak Inn and Beach Resort).” [31] Similarly, a report prepared by Mr. Ploughman on February 20, 2004 suggests that he was aware then that TDL was the purchaser of the Arawak Inn. [32] The evasiveness is also evident when one reviews certain Minutes of Settlement that Mr. Ploughman entered into with the Crown in 2011, to settle a tax dispute in respect of the business carried on by Iva Dianne Customs Design, [33] which, as indicated above, was a partnership formed by Mr. Ploughman and his wife. In those Minutes, which Mr. Ploughman, as the appellant in that appeal, signed on November 14, 2011, the following statement was made:
The Appellant’s [i.e., Mr. Ploughman’s] business, Iva Dianne Customs Design (“Iva Dianne”), of which the Appellant is a 50% partner, invoiced Tropical Development Ltd. (“Tropical) in 2001 and 2002 in the amounts of $168,906 and $145,937 respectively…. [34]
On or about November 17, 2011, Mr. Ploughman sent to the CRA a Request for Taxpayer Relief, with an accompanying letter, containing the following statement:
During taxation year 2001 Iva Dianne Design undertook a contract of work to renovate a small Hotel and Bar complex, located on Grand Turk Island – one of the Turks and Caicos Islands – owned by a TCI-registered company Tropical Development Ltd (Tropical). [35]
Thus, contrary to what Mr. Ploughman said during his cross-examination (to the effect that, in 2001, as well as in 2016, he did not know which entity had purchased the Arawak Inn), the above documents indicate that in 2002, 2004 and 2011 he seemed quite certain that it was TDL that had purchased the Arawak Inn.
[33] Apart from the evasiveness described in the preceding paragraph, I have other serious concerns about Mr. Ploughman’s credibility, for several reasons, including the following inconsistencies or contradictions in his evidence:
a) During his cross-examination, Mr. Ploughman testified that, when the renovations to the Arawak Inn began, he was not aware that the objective was to convert that building into a timeshare facility. He also testified that it was his recollection that his wife’s job was to increase the value of the Arawak Inn as a one-star (or lower) hotel to a three-star hotel. [36] However, on February 20, 2004, Mr. Ploughman wrote a report on the Development Project and the Donation Program, in which he stated:
The sole purpose of purchasing the Arawak Inn property was to convert the property from a hotel to a “time-share” in order to establish a “real property” that could be utilized by The Global Trust of Canada as a Charitable Donation vehicle. Knowing that the Arawak Inn had gone into bankruptcy being operated as a hotel property, there was never any intention to operate the Arawak Inn as a hotel and repeat that scenario. [37] [Italics in original.]
b) During his testimony, Mr. Ploughman stated that he was not involved in the creation or incorporation of SIA, and that he only became involved with SIA in 2004 when it was necessary to sign an annual return, [38] which he did as the secretary of SIA. In that same capacity, he signed the 2002 and 2003 corporate income tax returns of SIA, which he had prepared, which showed that he was the secretary of SIA and which stated that he owned 50% of the issued common shares of SIA in 2002 and 2003. [39] In addition, the 2002 tax return implied that Mr. Ploughman was a 50% shareholder of SIA in 2001, which was the year in which SIA was incorporated. [40] Hence, it seems that Mr. Ploughman was involved with SIA well before 2004.
c) During his cross-examination, Mr. Ploughman went so far as to state that before March 2004 he did not even know about the existence of SIA. I find this statement difficult to accept, given that the full name of SIA appears at least nine times in Ms. Guindon’s opinion letter of September 19, 2001. More specifically, it appears four times in paragraph 2(l), twice in paragraph 2(n) and three times in section 3 of that letter. Furthermore, the Deeds of Gift by the various Donors were addressed to SIA. Mr. Ploughman signed at least four of those Deeds of Gift as the witness of the signature of the particular Donor. [41]
d) In his Answer, which was filed with the Court on October 24, 2014, Mr. Ploughman stated that, to the best of his knowledge, KGR never purported to act as the trustee of the Global Trust. [42] That statement is contradicted by several documents, including:
the Beneficiary Applications, which were addressed to KGR, as the trustee of the Global Trust, and at least two of which showed Mr. Ploughman as the canvasser for the particular applicant; [43]
the Certificates issued by KGR, as the trustee of the Global Trust, to the various participants in the Donation Program (although Mr. Ploughman has stated that those Certificates were issued without his knowledge); [44]
a document entitled Official Certification of Fair Market Value of Charitable Donation, which was dated December 31, 2001, was issued on the letterhead of the Global Trust, and showed KGR as the trustee of that trust; [45]
the letter to the Donors that was dated March 18, 2002, the first paragraph of which began with the phrase “As Trustee of the Global Trust of Canada and as the President of the charity involved,” which was written on KGR letterhead, and which was signed by Ms. Guindon, in her capacity as the president of Les Guides, and by Mr. Ploughman, who, below his signature, was described as “President KGR Tax Services Ltd Trustee of Global Trust of Canada;” [46] and
the letter dated April 5, 2002, which was written on KGR letterhead, which was addressed to the beneficiaries of the Global Trust, which was signed by Mr. Ploughman and which, below his signature and name, stated “for the Trustees [sic] of Global Trust of Canada.” [47]
While Mr. Ploughman has stated that the Certificates described in clause ii above were prepared by someone other than himself, and while the authorship of the documents described in clauses i and iii above is unclear, the two letters described in clauses iv and v above were signed by Mr. Ploughman, in his capacity as the president of KGR, which was purporting to act as the trustee of the Global Trust.
e) During his evidence in chief, Mr. Ploughman stated that Mr. Goudie “very generously took advantage of information that I had available in my office, which was the Athletic Trust Program.” [48] This assertion had, in essence, also been made on September 20, 2006, when Mr. Ploughman’s then solicitor sent a letter to the CRA, in response to the CRA’s proposal letter of June 12, 2006, which indicated that the CRA proposed to assess Mr. Ploughman under section 163.2 of the ITA. Mr. Ploughman confirmed that he gave to his solicitor the information on which the solicitor’s letter was based. [49] During his cross-examination, Mr. Ploughman acknowledged that he saw and approved the letter before it was sent to the CRA. On page 7 of that letter, Mr. Ploughman’s solicitor stated:
Mr. Ploughman and his company, as indicated, had acted as canvassers in the Ottawa area for the 2000 product [i.e., the Athletic Trust donation program]. When those activities were completed, some explanatory and promotional materials from that campaign were left over, and were available for review in Ploughman’s Ottawa office. They were seen there by Goudie, who obtained a complete set of them some time during the summer of 2001. [50]
During his cross-examination, Mr. Ploughman initially stated that “the only place that he [Mr. Goudie] could have gotten them [the Athletic Trust materials] was from my office.” [51] As the cross-examination continued, Mr. Ploughman acknowledged that he had distributed at least 50 to 100 copies of the Athletic Trust materials to individuals whom he had canvassed in 2000, such that Mr. Goudie could have obtained those materials from some place other than Mr. Ploughman’s office. He further acknowledged that he was not sure that Mr. Goudie saw those materials in his (Mr. Ploughman’s) office. He also conceded that he had told his solicitor something that he was not able to affirm as being the truth. [52] Thus, Mr. Ploughman acknowledged that he was not convinced of the veracity of all of the information that he gave to his solicitor for inclusion in the letter of September 20, 2006.
f) In the letter of September 20, 2006, from Mr. Ploughman’s solicitor to the CRA, the following statement appears:
It is important to understand, as well, that the compensation arrangements between Goudie and Ploughman did not involve any direct monetary compensation to the latter for his marketing efforts, whether to investors generally or to charitable trust investors in particular. [53]
However, on February 17, 2002, Mr. Ploughman had sent a fax to Mr. Goudie, which began with the statement, “We have a very serious financial situation that only you can fix.” [54] Mr. Ploughman went on to explain that he and his colleagues had raised US$394,500 in cash from the Donation Program, as well as arranging for some of the Founding Members to convert their promissory notes into charitable donations. Mr. Ploughman then stated, “The problem is … we have not been paid the $75,990 USD commissions owed and it must be done immediately!” [Boldface emphasis and ellipses in original.] Thus, contrary to what Mr. Ploughman instructed his solicitor to say in the letter of September 20, 2006, it seems that there was an arrangement, at least in Mr. Ploughman’s mind, for the payment of direct monetary compensation for his marketing efforts in respect of the Donation Program.
For the reasons set out above, particularly the inconsistencies or contradictions between Mr. Ploughman’s testimony and various documents, [55] I have found that Mr. Ploughman was not a credible witness. I am not certain whether the above inconsistencies or contradictions arose from a desire to mislead or from a faulty memory, but, either way, Mr. Ploughman’s testimony is unreliable.
[34] Given my concerns about the credibility and reliability of the three main witnesses, I have endeavoured to base my decision on the available documentary evidence, much of which was created contemporaneously with, or shortly after, the events in question.
V. ANALYSIS
A. Statutory Provisions
[35] Section 163.2 of the ITA was announced in conjunction with the federal budget of 1999 and subsequently added to the ITA, with effect for statements made after June 29, 2000. The Supreme Court of Canada has held that the section imposes an administrative penalty, and not a criminal fine. [56] In this Appeal, Mr. Ploughman did not argue that section 163.2 of the ITA was penal in nature or that he was entitled to the procedural safeguards in section 11 of the Canadian Charter of Rights and Freedoms. Rather, he argued that he did not participate in the creation, planning or preparation of the Donation Program and that he had no involvement in the creation, signing or distribution of the official receipts issued by Les Guides.
[36] The Crown assessed Mr. Ploughman on the basis that subsections 163.2(2) and (4) were both applicable. Those subsections read as follows:
(2) Every person who makes or furnishes, participates in the making of or causes another person to make or furnish a statement that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct, is a false statement that could be used by another person (in subsections (6) and (15) referred to as the “other person”) for a purpose of this Act is liable to a penalty in respect of the false statement.
(4) Every person who makes, or participates in, assents to or acquiesces in the making of, a statement to, or by or on behalf of, another person (in this subsection, subsections (5) and (6), paragraph (12)(c) and subsection (15) referred to as the “other person”) that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct, is a false statement that could be used by or on behalf of the other person for a purpose of this Act is liable to a penalty in respect of the false statement.
B. Review of Documents
[37] As indicated above, I have endeavoured to base my decision on the documentation that was prepared, primarily in 2001 and 2002, in respect of the Donation Program. The documents that indicate that Mr. Ploughman may have had a connection to the Donation Program, and my comments (which are italicized) in respect of those documents, are summarized below.
a) In a memo dated August 15, 2001, on TDL letterhead, sent by Mr. St.-Denis to the Founding Members, Mr. St.-Denis indicated that:
(i) at 7:30 p.m. on August 8, 2001, Mr. Goudie and Mr. Ploughman attended a dinner meeting on Grand Turk Island, during which Gordon Kerr, TDL’s lawyer in TCI, introduced Mr. Goudie and Mr. Ploughman to a local contractor who could resolve the problem of shifting sand in the waters off the Arawak Inn, and
ii) at 9:00 a.m. on August 9, 2001, on Grand Turk Island, Mr. Goudie and Mr. Ploughman “met with the lawyers to sign the final documents for the purchase of the Arawak Inn” and to change “the name from Tropical Amusement Inc to Tropical Development International.” [57]
Comment: During his cross-examination, Mr. Ploughman stated that he attended the dinner meeting on August 8, 2001, as well as a question and answer session at 2:30 p.m. on the same day. However, he was adamant that he did not attend the meeting with the lawyers on August 9, 2001. [58]
As Mr. St.-Denis’ memo is hearsay and as its author was not called as a witness, I have not given any weight to it.
b) The Annual Return (Form 22) filed by SIA with Industry Canada for 2002 and 2003 shows that Mr. Ploughman was the secretary of that corporation. [59]
Comment: As indicated above, when discussing Mr. Ploughman’s credibility, it is my view that Mr. Ploughman became involved with SIA in 2001 or 2002, and that his involvement with SIA was greater than he acknowledged during his testimony.
c) Two Beneficiary Applications, dated December 8 and 14, 2001, respectively, show that Mr. Ploughman was the canvasser for two individuals who applied to be considered as Class A Beneficiaries of the Global Trust. The Applications were addressed to KGR, which was described as the trustee. [60]
Comment: While the two Applications make it clear that KGR was intended to be the trustee of the Global Trust, it is not certain that Mr. Ploughman actually saw those documents in December 2001. Although his name appears on the documents, it was hand-printed, rather than signed. Furthermore, the handwriting used to print his name on each of the two documents appears to be different. Hence, it is possible that other persons printed Mr. Ploughman’s name on those documents.
d) Two Promissory Notes, each showing a due date of December 14, 2001, but dated by the particular makers as of December 13 and 14, 2001 respectively, made by the two individuals referred to in the preceding subparagraph, and delivered to TDL in respect of the encumbrance attaching to c