Corporate veil pierced and property transfer declared unopposable to secure tax debt.
The Minister of National Revenue sought to finalize an interim charging order on a property to satisfy a tax debt owed by Distribution Carflex inc.
The Minister applied to pierce the corporate veil between Carflex and its sole shareholder and director, Yvan Drapeau, who had improperly obtained a $5 million tax refund and used part of it to purchase the property.
Drapeau then transferred the property to another corporation he controlled, 9488-0846 Québec inc.
The Federal Court granted the application, finding the corporate veil should be pierced to prevent fraud.
The Court declared the property transfer unopposable to the Minister as a fraudulent conveyance under the Civil Code of Québec and made the charging order on the property definitive.
Contempt motion dismissed due to reasonable doubt regarding the respondent's actual knowledge of the court order.
His Majesty brought a motion seeking to find Carflex Distribution Inc. and its directing mind, Yvan Drapeau, in civil contempt of court for failing to comply with an order directing Mr. Drapeau to submit to an oral examination and produce documents.
The Federal Court dismissed the motion.
Applying the standard of proof beyond a reasonable doubt, the Court found that the Crown failed to establish that Mr. Drapeau had actual knowledge of the order.
Evidence from Mr. Drapeau and his attending physician established a reasonable doubt that his failure to open emails or answer phone calls was due to a severe depressive state, rather than wilful blindness.
As the second element of contempt was not proven, the respondents were acquitted.
