COURT FILE NO.: CV-20-00009461-0000

DATE: July 5, 2019

ONTARIO COURT OF JUSTICE

BETWEEN:

Her Majesty the Queen in Right of Ontario as represented by the Ministry of Finance

— and —

1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc., aka Le Jardin Special Event Centre Inc., aka Le Jardin Conference and Event Centre Inc., aka 622192 Ontario Ltd. o/a Chateau Le Jardin Conference and Event Venue, aka Chateau Le Jardin Inc., aka Chateau Le Jardin Catering Inc., and Carlo Parentela aka Carmelo Parentela

Before: Justice of the Peace R. S. Shousterman

Heard on: August 20 and September 28, 2015; November 17 – 19, 2015; January 18 – 20, 2016; April 4 and 5, 2016; July 26 – 29, 2016; September 7 and 8, 2016; December 5 – 7, 2016; February 9, 10 and 14, 2017; April 10, 11 and 13, 2017; October 6, 2017; November 3, 2017; December 1, 2017 and February 5, 2018

Reasons for Judgment released on: July 5, 2019

Counsel:

• D. Ferland — Counsel for the Ministry of Finance
• C. Argiropoulos — Counsel for the Defendants

JUSTICE OF THE PEACE SHOUSTERMAN:

1. Introduction

Le Jardin operates a banquet hall located at 8440 Highway 27, Woodbridge, Ontario. The venue hosts various events such as weddings and corporate functions, all of which attract retail sales tax. Casual and full time employees are required to work at these events.

On October 6, 2010 and October 14, 2010 the Investigations and Inspections Branch of the Ministry of Finance ("the Ministry") received a referral from the Health Tax Branch and Retail Sales Tax Audit Branch of the Ministry which prompted an investigation into the business affairs of 1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc. and Le Jardin Special Event Centre Inc.

Over the course of the investigation the Ministry discovered that between January 2007 and July 2012 the venue changed its operating name numerous times, initially operating as Le Jardin Special Event Centre Inc., then becoming Le Jardin Conference and Event Centre Inc. which was incorporated in 2008. A third change was to Chateau Le Jardin Conference and Event Venue which name was registered to 622912 Ontario Ltd. in May 2011.

On September 12, 2012, the Investigations and Inspections Branch of the Ministry executed search warrants at 8440 Highway 27, Woodbridge and at the business premises of Le Jardin's accountant, Walsh Business and Management Ltd. in Toronto. Thousands of paper documents and electronic records were seized during the search as well as computers.

The Ministry's review of the documents, electronic records and computers resulted in 1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc., also known as Le Jardin Special Event Centre Inc., Le Jardin Conference and Event Centre Inc., 622192 Ontario Ltd. o/a Chateau Le Jardin Conference and Event Venue, Chateau Le Jardin Inc., and Chateau Le Jardin Catering Inc., (collectively referred to as "Le Jardin") and its director and officer, Carlo Parentela aka Carmelo Parentela, being charged with numerous offences under the Retail Sales Tax Act, R.S.O. 1990, c. R. 31 ("RSTA") and the Employer Health Tax Act, R.S.O. 1990, c. E. 11 ("EHTA"). Mara Vanin, the controller of Le Jardin was initially charged however those charges were stayed on December 5, 2016.

Mr. Parentela filed a Notice of Intention to File a Division 1 Proposal under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("BIA") on July 31, 2015.

622192 Ontario Ltd. filed a Division 1 Proposal under the BIA on or about July 31, 2015.

1375923 Ontario Inc. assigned itself into bankruptcy on or about July 31, 2015.

2. The Charges

Le Jardin and Mr. Parentela are charged with 69 counts under the EHTA:

(a) Pursuant to s. 32: failing to deliver annual returns x 5,

(b) Pursuant to s. 35: failing to deliver statements and remittances x 63, and

(c) Pursuant to s. 31(5): wilfully evade tax x 1.

Le Jardin and Mr. Parentela are charged with 62 counts under the RSTA:

(a) Pursuant to s. 32(4)(d): wilfully evade tax x 1

(b) Pursuant to s. 32(4)(a): making false or deceptive statements in returns x 28

(c) Pursuant to s. 13(2): failing to remit tax collected x 1

(d) Pursuant to s. 44(2): vendor failing to collect sales tax x 1

(e) Pursuant to s. 41(1): failing to file returns within required time period x 31

Le Jardin Conference and Event Centre Inc. and Mr. Parentela are charged with two counts under the RSTA:

(a) Pursuant to s. 5(7): operating without a vendor permit x 1

(b) Pursuant to s. 32(4)(d): wilfully failing to register as a vendor x 1

3. The Relationship of the Corporations

(a) 622192 Ontario Ltd.

622192 Ontario Ltd. was incorporated April 25, 1985. Its business address was 8440 Highway 27, Woodbridge. On March 27, 1986 it registered the names Le Jardin De Toronto Restaurant and Up Town Comedy Cabaret. On June 4, 1992 it changed its name to Le Jardin De Toronto. On February 14, 1994 it also registered the name Canadian Soccer Federation. On February 1, 1995 the business name Le Jardin Enterprises was registered.

On May 31, 2011 the business name of the corporation was changed to Chateau Le Jardin Conference and Event Venue.

622192 Ontario Ltd. registered with the Ministry and was issued vendor permit no. 4561-0991 under the RSTA on May 9, 1985. The vendor permit account was closed February 29, 2000. The reason provided for the closure was that the corporation was no longer operating.

622192 Ontario Ltd. registered with the Ministry as an employer under the EHTA on October 26, 1989. The registration was terminated October 24, 2003.

622192 Ontario Ltd. was the only company to hold a liquor licence between May 1, 2007 – June 30, 2010 at 8440 Highway 27, Woodbridge.

Mr. Parentela was the sole officer and director of the corporation.

(b) Parentela Holdings Ltd.

Parentela Holdings Ltd. was incorporated July 17, 1998. It is the owner of the property located at 8440 Highway 27, Woodbridge. Mr. Parentela was the sole officer and director from December 22, 2009; prior to that his parents Giuseppe and Teresa Parentela were the officers and directors from July 17, 1999 - December 22, 2009 and Mr. Parentela was the treasurer. Mr. Parentela remained treasurer after assuming the roles of sole officer and director on December 22, 2009.

(c) 1375923 Ontario Inc.

1375923 Ontario Inc. was incorporated September 17, 1999. It operated under the registered name Le Jardin Banquet and Conference Centre Inc. until December 16, 2004 when it changed its name to Le Jardin Special Event Centre Inc. On July 22, 2010 the corporation changed its name to 1375923 Ontario Inc.

The business addresses of 1375923 Ontario Inc., Le Jardin Banquet and Conference Centre Inc., and Le Jardin Special Event Centre Inc., were 8440 Highway 27, Woodbridge.

Mr. Parentela was the sole officer and director of the corporation, its successor Le Jardin Special Event Centre Inc., and that company's successor (1375923 Ontario Inc.) until September 17, 2010 when Orlando Catala was appointed officer and director. Mr. Parentela was appointed general manager July 13, 2011.

The corporation registered with the Ministry and was issued vendor permit no. 9525-8043 under the RSTA on March 17, 2000. The registration ceased June 30, 2010 with the advent of the harmonized sales tax ("HST").

The corporation registered with the Ministry as an employer under the EHTA on July 6, 2005.

(d) Le Jardin Conference and Event Centre Inc.

Le Jardin Conference and Event Centre Inc. was incorporated January 15, 2008. Its business address was 8440 Highway 27, Woodbridge.

Le Jardin Conference and Event Centre Inc. did not register with the Ministry and did not have a vendor permit under the RSTA. It did not register with the Ministry as an employer under the EHTA.

Mr. Parentela was the sole officer and director of the corporation.

On May 27, 2010 the corporation registered the business name Simcha Catering.

On June 30, 2010 the corporation registered the business name Preslin Hospitality Linen Services.

(e) Chateau Le Jardin Inc.

Chateau Le Jardin Inc. was incorporated December 3, 2010. On June 28, 2011 the corporation changed its name to Chateau Le Jardin Catering Inc. Mr. Parentela was the sole officer and director of the corporations.

The business addresses of Chateau Le Jardin Inc. and Chateau Le Jardin Catering Inc. were 8440 Highway 27, Woodbridge.

A vendor permit was not required due to the advent of HST.

The corporation registered with the Ministry as an employer under the EHTA on November 4, 2014.

4. The Audit

(a) The Evidence of Dawud Azaad Baksh

Dawud Azaad Baksh is a Certified General Accountant and a tax auditor employed by the Ministry of Finance.

Mr. Baksh testified that in mid-April 2010 he was assigned a file pertaining to an audit of 1375923 Ontario Inc. under the RSTA.

On April 17, 2010 Mr. Baksh spoke with Ms. Vanin who identified herself as the corporation's bookkeeper. Mr. Baksh told Ms. Vanin the corporation had been selected for a Retail Sales Tax ("RST") audit. Ms. Vanin provided him with the name of Orlando Catala, the general manager.

On April 27, 2010 Mr. Baksh spoke with Mr. Catala. As a result of their conversation Mr. Baksh sent a Request for Records to Mr. Catala dated April 28, 2010 advising the audit would commence May 20, 2010. The audit was postponed because Mr. Catala advised there were no books and records available.

On May 20, 2010 a letter was sent to Mr. Parentela advising of the cancellation of the audit at the request of Mr. Catala. A new date was suggested for the audit. The letter advised that if no response was received an estimated assessment under s. 18(2) of the RSTA would be processed.

On June 9, 2010, Mr. Baksh and his team lead, Dilip Singh, met with Mr. Catala at the corporation's business premises at 8440 Highway 27, Woodbridge. They were given a tour of the premises and advised that the records previously requested were with the external accountant, A.J. Sharma, who was out of the country. They were advised the records would be made available July 14, 2010.

Mr. Baksh sent a letter to Mr. Parentela advising him of the meeting with Mr. Catala and that the records would be made available July 14, 2010. Mr. Parentela was advised that he needed to complete and signs letters of delegated authorization for the Ministry to speak with the external accountant. Mr. Parentela did not respond to the letter of June 9, 2010 so Mr. Baksh telephoned Mr. Parentela on June 18 and 23, 2010. Mr. Baksh left voicemails on both those dates advising Mr. Parentela he had not received the written authorization to speak with the external accountant.

Mr. Baksh testified that there had been discussion of conducting a joint audit with the Health Tax Branch and so both branches sent out separate letters to the corporation advising they wished to schedule a meeting for July 14, 2010.

On July 13, 2010 Mr. Catala contacted Mr. Baksh and indicated there was no point in meeting because there were no records. Mr. Catala was told to speak with Mr. Baksh's team lead, Mr. Singh. Mr. Catala did not speak with Mr. Singh and, as a result, on July 14, 2010, Messrs. Baksh and Singh, as well as Samantha Dorish and her manager Manoj Sharma, attended at 8440 Highway 27, Woodbridge to conduct the joint RST and Employer Health Tax ("EHT") audits.

The parties advised the receptionist they were to meet with Mr. Catala and the books and records were to be provided so that they could do the audit. The receptionist was not aware of the meeting. She showed the Ministry's representatives into a boardroom where they waited some 30 – 40 minutes. No one attended the boardroom and the Ministry's representatives left after providing their business cards to the receptionist and requested that they be provided to Messrs. Catala and Parentela and that they contact the Ministry. The audits did not take place.

On July 15, 2010 a letter was sent to Mr. Parentela advising that representatives of the Ministry had attended the business the previous day and that no one from the corporation was present to meet with them. The letter referenced the earlier June correspondence and advised that as a result of the failure to provide the documentation required for the audit, the Ministry had assessed RST owing from the period August 1, 2006 – June 30, 2010 of $3,790,577.31, inclusive of penalties and interest to July 14, 2010. The letter attached a tax and interest summary and provided information as to how to object. The letter also advised that if the corporation wished to provide any other information it could do so until August 13, 2010. No response was received and the Ministry processed the estimated assessment. The corporation was notified of same on August 16, 2010.

When questioned how the Ministry came up with the almost 3.8 million dollar figure Mr. Baksh advised that since the corporation did not comply with the request to produce the books and records, the Ministry looked at other information from August 2006 – June 2010 including inter alia: the 2006 financial statement for Le Jardin Special Event Centre Inc. which was the only one filed, information from the Liquor Licence Board relating to purchases, sales reported on the Liquor Licence Board's system for the audit period, revenue reported on financial statements, information reported on monthly returns and available data up to June 2009 and calculated an error rate of 63%. The error rate was applied to the amounts reported and tax was estimated on those amounts. No determination was made as to room rental, alcohol sold or food sold.

Mr. Baksh admitted that the estimate was high because it is always hoped that upon receiving the Notice of Assessment from the Ministry the taxpayer will provide the missing documentation so that proper figures can be calculated.

Mr. Baksh testified he eventually heard from Mr. Parentela. They met at a later date with people from the collections department.

(b) The Evidence of Samantha Dorish

Samantha Dorish is a senior field auditor with the Ministry of Finance.

Ms. Dorish testified that on June 14, 2010 she was assigned to conduct an EHT audit for Le Jardin Special Event Centre Inc. (1375923 Ontario Inc.) for the period of January 1, 2006 – December 31, 2009.

Ms. Dorish and her manager, Manoj Sharma, met with Messrs. Baksh and Singh on June 14, 2010. She was advised that a joint RST and EHT audit would be conducted on July 14, 2010.

Ms. Dorish contacted the corporation. She spoke with Ms. Vanin who advised that the external accountant was handling the RST audit. She advised Ms. Vanin she required an authorization form to be completed for the EHT information so that Ms. Dorish could speak with the accountant. Ms. Dorish faxed the form to Ms. Vanin on June 14, 2010.

On July 14, 2010 Ms. Dorish attended 8440 Highway 27, Woodbridge. She noted numerous motor vehicles parked outside the premises. Ms. Dorish was accompanied by Messrs. Sharma, Baksh and Singh. They attended at the reception desk and identified themselves as being from the Ministry. They advised they had an appointment. The receptionist advised no one was there and indicated she would make a telephone call. The parties were directed to a boardroom where they waited for some time. No one from the corporation attended and so they left after providing their business cards to the receptionist.

On July 15, 2010 a letter was sent to Mr. Parentela advising that representatives of the Ministry had attended the premises the previous day and that no one from the corporation was present to meet with them. The letter referenced the earlier June correspondence and advised that as a result of the failure to provide the documentation required for the audit, the Ministry had assessed EHT owing from the period of January 1, 2006 – December 31, 2009 of $132,003.50.

A balance was owed of $67,646.11 and therefore the net balance due and owing after the audit was $199,649.61.

Ms. Dorish was asked how the assessment was calculated at $132,003.50. She advised that the assessment was based on the corporate tax returns. She testified that since the last corporate return filed was for 2006, and since no records had been provided, the assessment was based on information from the RST audit. Ms. Dorish admitted that the statement of account indicates the amount is an estimate and is done to prod the taxpayer into providing the requisite information so that the correct amount can be calculated.

Ms. Dorish never received a response to the July 15, 2010 letter.

5. The Search Briefing

As a result of the unsuccessful attempts to conduct both audits, in October 2010, Nicole Burley, a senior forensic accounting investigator with the Ministry of Finance, received referrals regarding EHT and RST pertaining to 1375923 Ontario Inc.

Ms. Burley reviewed the audit reports and the assessments including the notices of assessments. She noted the RST referral also referenced another numbered company and Le Jardin Banquet and Conference Centre Inc., and that there were a series of business cards attached to the audit information.

Ms. Burley conducted numerous preliminary searches in which she discovered the following:

i. there were numerous related companies operating at 8440 Highway 27, Woodbridge;

ii. the companies changed names and at least on one occasion, the name change from Le Jardin Banquet and Conference Centre Inc. to Le Jardin Special Event Centre Inc. was not registered with the Ministry;

iii. Mr. Parentela was listed as the sole officer and director of those companies;

iv. Le Jardin had filed EHT for 2003, 2004 and 2005. The EHT returns were signed by Mara Vanin. One return was filed in 2006 but no remittance had been made. The amount owing for EHT for 2006 was $15,000; and

v. 1375923 Ontario Inc. was registered as a vendor for the purposes of RST. The corporation had filed returns from March 2003 – January 2007 in a timely fashion. The returns for February 2007 – 2008 were filed in 2008. The corporation continued filing the RST returns, albeit late, until October 2009 when they stopped providing the RST returns. Specifically, no RST returns were filed by Le Jardin for the period October 1, 2009 – June 30, 2010.

Ms. Burley searched Ministry of Transportation records and learned the following:

i. Mr. Parentela's first name "Carlo" did not come up; instead the name "Carmelo" was shown as the first name. The home address was 125 – 5 Marine Parade, Etobicoke. Six motor vehicles were registered: a motorcycle, two vans, a 1984 white Jaguar, a Honda Accord and a Suzuki;

ii. nine motor vehicles were registered to Le Jardin Special Event Centre Inc.: a BMW, Mercedes, Lincoln, Audi and Ford. Four of the nine motor vehicles were leased: a Land Rover, another Mercedes, a Ferrari and a Porsche; and

iii. Mara Vanin resided at 12 Sheila Court, Rexdale. She owned a 2006 Chevrolet.

Ms. Burley conducted an MPAC search on the Woodbridge address. She discovered the owner of the property was Parentela Holdings Limited. She conducted a corporate search and discovered the company had been registered in 1998. Its head office was located at 8440 Highway 27, Woodbridge. The officer and director was Mr. Parentela. The prior officers and directors were Teresa and Giuseppe Parentela whom Ms. Burley believed to be Mr. Parentela's parents. They ceased to be officers and directors of the corporation in 2009.

Ms. Burley drove by 8440 Highway 27 on October 25, 2011. She described it as a large two storey building in the shape of a castle with adjacent parking. There was signage on the side of the building indicating where the office was located. There were two signs off Highway 27: Le Jardin Way and Parentela Blvd.

Ms. Burley conducted further searches in November 2011. She discovered reference to Chateau Le Jardin Inc. and searched it. She learned that Chateau Le Jardin Inc. was never registered as an employer or vendor. She found a reference to a schedule prepared by Andrew Walsh of Walsh Business and Tax Management Ltd. aka Walsh Business and Management Ltd. ("Walsh Business and Management Ltd."). She searched Walsh Business and Management Ltd. and learned that Andrew Walsh is a financial analyst conducting business from 1287 St. Clair Avenue West, Suite 7, Toronto.

Ms. Burley contacted Mr. Walsh and they met. During the course of this meeting Mr. Walsh advised he had been hired by Mr. Parentela to address the assessment issues and to update the tax filings.

On September 7, 2012, His Worship Griffith granted the warrants to search 8440 Highway 27, Woodbridge and Walsh Business and Management Ltd. at 1287 St. Clair Avenue West, Unit 7, Toronto.

On September 11, 2012, a search briefing was held at the Ministry's Pickering office. Ms. Burley, Susan Coates, Dean Leach, Libero Papagni, Stacey Gatti, David Verschurren, Collin Taggart, Scott Timmins, Julia Cautillo, Michael De Andrade, Andrew Van Oosten, Ronald Zimmerling, Randy Korn, Andrew Jourard, Jaswinder Brar and Tim Daley attended the briefing. Ms. Burley advised the members of the search team that they were going to be searching a company called 1375923 Ontario Inc., which was operating as Le Jardin Banquet and Conference Centre Inc. and as Le Jardin Special Event Centre Inc., as well as the offices of the company's accountants, Walsh Business and Management Ltd. She advised that the searches pertained to RST for the period of January 1, 2007 – June 30, 2010, and EHT for the period January 1, 2007 – July 31, 2012, as well as business records pertaining to the purchase and sale of alcohol at the premises located at 8440 Highway 27, Woodbridge and the purchase and sale of alcohol by 622192 Ontario Ltd. operating as Le Jardin De Toronto Banquet Hall for the period January 1, 2007 – June 30, 2010.

She outlined what the case was about and what the parties were to search for, namely any relevant documentary or electronic evidence that would support the investigation under the RSTA and the EHTA for the time frames mentioned above. The members of the search team were told to review the search warrants to ensure the dates were correct and their names were spelled correctly on the warrant. Ms. Burley divided the group into teams, with one team searching Le Jardin's premises and the other searching Walsh Business and Management Ltd. Mr. Brar was assigned the lead on the search of Walsh Business and Management Ltd. Messrs. Korn and Daley were assigned to accompany him. Messrs. Brar, Korn and Daley were instructed that if their search of Walsh Business and Management Ltd. was finished early enough in the day they were to attend Le Jardin's premises and assist in the search there.

A second search briefing was held the morning of September 12, 2012. Yemisi Beckley and Mary Chaffey attended the second briefing. They were advised by Ms. Burley what the case was about and what they were to search for. They were provided with the search warrants and told to review them to ensure the dates were correct and their names spelled correctly on the warrant. Two York Region police officers met with Ms. Burley and Ms. Coates. The officers were provided with the warrant to search Le Jardin's premises.

6. The Search

(a) The Evidence of Nicole Burley

Nicole Burley is a senior forensic accounting investigator with the Ministry of Finance. She investigates allegations of tax evasion. Ms. Burley was the lead investigator on this matter.

Ms. Burley, Susan Coates and the two York Region police officers entered Le Jardin's premises at 10:09 am on September 12, 2012. They proceeded upstairs. Ms. Burley identified herself to the receptionist, Ashley, and asked if Mr. Parentela was available. She was told he was not in. Ms. Burley asked if Orlando Catala was in and Ashley indicated she did not know who that was. Ms. Burley asked if Ms. Vanin was available and Ashley pointed to Ms. Vanin's office.

Ms. Burley entered Ms. Vanin's office. Kathy Szubert was present. Ms. Burley identified herself to Ms. Vanin and served her with the warrant. Ms. Vanin was on the telephone and interrupted her conversation to receive the warrant. She appeared upset. Ms. Szubert contacted Mr. Parentela who indicated he would be attending the premises.

Ms. Burley called in the search team. Frank Salerno unlocked the doors.

Mr. Parentela arrived between 10:30 – 10:45 am. Ms. Burley showed him the warrant. Mr. Parentela advised that 1375923 Ontario Inc. was no longer operating at 8440 Highway 27, Woodbridge. He further stated that there were no records on the premises. Ms. Burley cautioned Mr. Parentela who said he understood the caution and wanted to contact his lawyer, Gregory Kanargelidis at Blakes.

Ms. Burley testified she spoke with Mr. Kanargelidis. She identified herself to him, advised about the warrant and the nature of the investigation. At Mr. Kanargelidis' request, she had Mr. Parentela scan him a copy of the warrant. Mr. Kanargelidis told Ms. Burley that 1375923 Ontario Inc. was no longer operating and the records were not at the Woodbridge premises.

Ms. Burley spoke with Mr. Kanargelidis, Paul Schabas and Max Shapiro of Blakes at 11:34 am. They expressed concerns regarding the Ministry viewing items outside the scope of the warrant. They requested the search stop until Mr. Shapiro could attend the premises. Ms. Burley contacted her manager and counsel and the parties agreed that the search would stop for half an hour so that Mr. Parentela's lawyers could examine the cloned hard drives of the computers.

Mr. Shapiro and Zachary Silver of Blakes arrived at 12:45 pm. Ms. Burley showed them the warrant, took them to where the majority of the search team was situated, and introduced them to Andrew Van Oosten who explained the cloning process to them. Ms. Burley advised Messrs. Shapiro and Silver that she would prepare an inventory of items seized and seek a detention order. Messrs. Shapiro and Silver spoke privately with Mr. Parentela.

Ms. Burley testified she assisted Ms. Coates with her search. At 3:21 pm she found a file folder labelled "bank". It contained bank statements and cancelled cheques. She seized RST notices from the Ministry, liquor purchase orders, cheques payable to cash, brunch receipts, beer store receipts and staff schedules. She placed those items in an envelope labelled NB1 and then placed that envelope in a box labelled NB1. Ms. Coates placed her envelopes in that box as well.

Ms. Burley testified that all boxes were funnelled through her. At 4:40 pm Messrs. Shapiro and Silver started reviewing the boxes containing the items seized. Ms. Burley was present as the contents of each box were reviewed by counsel.

Ms. Burley testified eleven boxes of items were seized. Ten of the eleven boxes were secured by Tim Daley in his motor vehicle. One of the eleven boxes was seized from Ms. Vanin's office. Six hard drives were taken and put into separate evidence bags. The hard drives were secured in a special vault.

On September 13, 2012, at the request of Mr. Shapiro, Ms. Burley emailed the Information to Obtain to Messrs. Shapiro, Kanargelidis and Schabas, as well as to Tony Wong, at Blakes.

7. Post Search

Ms. Burley inventoried the items seized, including where the item had been seized from and the name of the seizing officer. She met with Ms. Vanin and Mr. Walsh and returned some records to them. She then prepared a Report to Justice and obtained detention orders for the remaining items seized from Le Jardin's premises as well as for the items seized from Walsh Business and Management Ltd.

On September 24, 2012 Ms. Burley sent a letter to Messrs. Parentela, Kanargelidis and Walsh advising of the detention order. She received a response from Mr. Shapiro requesting another week to review the cloned hard drives to search for solicitor client privileged documents.

On September 27, 2012 Mr. Korn was instructed to start reviewing the Le Jardin files. He described his task as sorting the documents, not performing any qualitative assessment of them.

From September 27 – 29, 2012 Mr. Korn imaged the seized hard drives on to the Ministry's server. Once done he placed the seized hard drives in evidence bags and returned them to the secure storage area in the Ministry's office.

On October 19, 2012 Mr. Korn received a copy of a letter addressed to Ms. Burley from Blakes in which claims of solicitor-client privilege and litigation privilege were being made with respect to in excess of one thousand documents. The Ministry was provided with a list of the privileged documents including the computer the document was on and the name of the document. Mr. Korn testified that Blakes had opened up the documents and may have modified them. As a result the hash values Blakes provided for each document were not the same that the Ministry had. Since the hash values were not the same Mr. Korn searched the privileged documents by taking the list of privileged documents, sorting them using Excel, determining a list for each of the hard drives, and then bookmarking the documents to see whether a claim for privilege was made regarding that specific document or not. If privilege was being claimed over the document Mr. Korn segregated the document and deselected it from those he bookmarked.

Privilege was not claimed over the Simply Accounting files. On November 8, 2012 Mr. Korn utilized a virtualization tool to look at the Simply Accounting files.

Mr. Korn testified that other searches were done. For example on November 2, 2012 he searched "SHA". That search produced over one million results. Mr. Korn stated it was too large to look at. He also searched terms found in some of the paper documents that had been seized. He testified that he received a number of hits in a computer program called Sales Logix. The Sales Logix material was found on the hard drive of Mr. Parentela's computer.

On November 13, 2012 Mr. Jourard received a CD and some files on a thumb drive from Mr. Korn. He prepared a concordance of the contents of the spreadsheet files and the PDF files for Ms. Burley's review.

On November 20, 2012, Mr. Jourard started working with the Simply Accounting files. He produced various reports in a spreadsheet format including a trial balance, a list of transactions and a detailed transactional report.

Ms. Burley requested further detention orders on November 23, 2012, which were granted by His Worship Malik.

Ms. Burley then commenced her review of the banking information and invoices seized. She was subsequently advised by Blakes that privilege was not being claimed on Ms. Vanin's computer and so the Ministry began its review of the contents of Ms. Vanin's hard drive.

Mr. Korn reviewed all six hard drives as well as the thumb drive taken from Mr. Walsh's office. In November 2012 he provided Ms. Burley with CDs containing the Simply Accounting files and the Excel files from Ms. Vanin's hard drive and the thumb drive from the search of Walsh Business and Management Ltd. In February 2013 Mr. Korn provided Ms. Burley with a disc containing the PDFs from the hard drives.

In February 2013 Mr. Korn advised Ms. Burley that he had a spreadsheet from Mr. Parentela's computer which containing a listing of sales from March 2007 – June 2010. This list contained the event number, name, price, date of event and sales person. From this spreadsheet Ms. Burley identified $32,982,109.54 in sales however based on the invoices she had as well as the information contained in the Simply Accounting software she only found $21,725,200.58 in sales for the same time period.

In February 2013 Mr. Korn virtualized Mr. Parentela's hard drive. Ms. Vanin's hard drive was also virtualized. Mr. Korn made copies for Ms. Burley. He made a disc of what was on Mr. Walsh's thumb drive. He made a disc of the Simply Accounting documents on Ms. Vanin's hard drive.

In May 2013 Mr. Korn prepared a report for disclosure purposes which combined the information from the CDs and DVDs into one report. This report included the Simply Accounting files from Ms. Vanin's and Mr. Walsh's computers, the Excel documents on Ms. Vanin's computer, the Excel T documents, Word documents, RTF files and the PDFs that were found on the six hard drives and the thumb drive. Mr. Korn provided his report to Ms. Burley.

The Simply Accounting files and Excel documents that Mr. Korn found on Ms. Vanin's computer hard drive were entered into evidence as Exhibit 17.

Mr. Korn introduced Exhibit 19. This DVD contained over 6,000 documents transferred from the hard drives of the computers seized from Le Jardin and consisted of the following:

i. 111 Excel documents from Mr. Parentela's computer including inter alia Event Sales Summary Reports, Le Jardin Corporate Sales and Social Sales, Accounts Receivables, Function Summary Reports, Labour Reports and Recordings of employees and remuneration paid in cash;

ii. 988 Excel accounting documents from Ms. Vanin's computer including inter alia trial balances, Labour Reports, bank reconciliations and income statements;

iii. 3,250 PDF documents consisting of inter alia quotes, contracts, work orders, invoices, menus and brochures;

iv. 2,281 Word documents; and

v. a Sales Logix Excel document found on Mr. Parentela's computer's hard drive recording sales for the period of February 1997 – November 2012.

Mr. Korn testified the documents listed in (iii) – (v) above were found on different hard drives of the seized computers from Le Jardin.

Mr. Jourard testified he also prepared a payroll report for 2009. He explained how he reviewed the general ledger reports from the Simply Accounting software to summarize payments made to persons the Ministry knew were on payroll and aggregated that payroll information according to the general ledger and compared it to what was reported on the T4s that had been seized.

The report listed the name of the individual, the amount as per the T4, the payroll amount, the amount from the general ledger and then compared the difference between gross pay from the T4 and the general ledger. He found there were differences between the T4s and the general ledger as the amounts in the general ledger were significantly higher than what was produced on the T4s.

Mr. Jourard completed the report in April 2013 and provided it to Ms. Burley.

On May 16, 2013 Mr. Jourard accompanied Ms. Burley to an interview with Andrew Walsh. The interview took place at Mr. Walsh's office.

On May 14, 2015 Mr. Jourard accompanied Ms. Burley to an interview with Mara Vanin. The interview took place at Ms. Vanin's home in Etobicoke. Ms. Burley, Ms. Vanin, Ms. Vanin's lawyer and her mother were present.

On Oct 20, 2015 Mr. Jourard accompanied Ms. Burley to an interview at the CRA office in North York to interview AJ Sharma.

8. The Continuing Evidence of Nicole Burley

Ms. Burley testified about the results of her investigation. I have attempted to categorize the different aspects of her testimony by topic.

(a) RST

(1) Document Review

Ms. Burley testified that in concluding that Le Jardin had collected $1,743,284.68 in retail sales tax from its customers between the period of May 1, 2007 – June 30, 2010, she reviewed the documents and business records seized pursuant to the search warrants. She concluded that Le Jardin had realized $32,690,162.53 in sales during the relevant time period although Le Jardin reported $13,688,629.32 in total sales to the Ministry of Finance.

Ms. Burley testified there were thousands of bills and contracts seized for the period of May 2007 – June 2010. These documents had been found in, inter alia, the accounting office, the banquet manager's room, the back hallway and Mr. Parentela's office. As she indicated, some 53 invoices located in the garbage can in Mr. Parentela's office were seized by Ms. Chaffey. She noted that every invoice also contained elements of EHT because staff were required to work the event. She testified that in coming to her conclusions she did not count any events that were cancelled.

Ms. Burley reviewed every invoice and event contract to determine whether taxes had been paid and collected. She testified that as she reviewed the documents she noticed certain patterns emerged:

i. cash payments did not always include tax;

ii. events were sold at a price per person with few exceptions;

iii. items such as food and liquor were bundled together at one price and not itemized;

iv. liquor sales were often included in the price per person or by way of cash;

v. despite events clearly indicating alcohol was to be served there was no separate charge for alcohol tax;

vi. hall rental was not always itemized whereas seat covers, charger plates and coat check generally were;

vii. there was no consistent pattern in the application of tax, whether at 8%, 10% or no tax applied at all;

viii. where tax was charged, there were mathematical errors in the appropriate rate of tax and the calculation itself;

ix. deposits were made by cheque which were in turn made out to cash; and

x. the sale price in the invoice did not always match the amount of the total price showing in the Sales Logix excel spreadsheet found in Mr. Parentela's computer.

Ms. Burley testified she prepared a Schedule "A" which listed events where taxes were collected but not remitted (Exhibit 82), and a Schedule "B" (Exhibit 48) which dealt with sales tax not collected. An Amended Schedule "B" was marked as Exhibit 173.

(2) Tax Collected but Not Remitted

Ms. Burley based her calculation of tax collected but not remitted on the event sale documents and on the Sales Logix excel spreadsheet found on the hard drive of Mr. Parentela's computer.

(A) Event Sale Documents

As previously indicated the event sale documents included invoices, contracts and work orders which had been seized. On the basis of her review of the event sales documents, Ms. Burley concluded that Le Jardin generated $4,784,060.50 in sales and collected $296,511.96 in retail sales tax from its customers.

Ms. Burley testified she created a chart where she recorded the event number, the name, date, price, adjustments and if PST was collected whether it was at 8% or 10%. The chart set out the tax collected by Le Jardin. Ms. Burley was clear that this chart just set out the amount of tax collected, not whether the amount was correct or not.

Ms. Burley testified that most event sale documents were priced at a price per person cost and did not provide a breakdown of items included in the sale. For example:

i. Exhibit 62, Event 21524, Fotiny and John Wedding, priced at a price per person cost;

ii. Exhibit 71, Event 21548, Interstone 2007 Holiday Event, priced at a price per person cost;

iii. Exhibit 73, Event 21943, Vinyl Window Group Holiday Luncheon, priced at a price per person cost; and

iv. Exhibit 75, Event 21964, Fotiou Frames Holiday Party, priced at a price per person cost.

The pricing scheme of price per person also resulted in taxable and non-taxable items being packaged together. For example, numerous invoices contained charges for coat check or room rental as part of the all in pricing. Ms. Burley testified that although room rental and coat check are not items subject to retail sales tax, by bundling the taxable and non-taxable items together Le Jardin collected tax from its customers for a non-taxable item. Ms. Burley testified that in accordance with the provisions of the RSTA she used the actual amount of PST shown as collected from the customer on the total sale as per the event sale documents.

(B) Sales Logix

Le Jardin recorded event sales and contracts by way of an excel spreadsheet using Sales Logix software. The spreadsheet was found on the hard drive of Mr. Parentela's computer. It recorded event details such as the date, event number, event name, customer name, total price, salesperson's name and status of the sale ie whether it was complete or an order. Ms. Burley testified that according to the Sales Logix excel spreadsheet 3,461 events were held at Le Jardin during the time period of the charges.

Ms. Burley testified that out of the 3,461 events, 699 could be traced to actual invoices, contracts or work orders. She testified that while many of the remaining events could be traced to function summary reports and deposit reports not all sales documents and/or reports were found during the search.

Ms. Burley testified that where no detailed record of an event was found, she worked with Mr. Jourard and came up with a formula to determine the taxable amount of the sale recorded in the Sales Logix excel spreadsheet:

• total price of event minus 8% for PST, 5% for GST and 15% for gratuities resulting in a subtotal
• RST applied to the subtotal

Ms. Burley testified that she decided to err on the side of caution and not include the 10% liquor tax even though many events such as weddings and golf tournaments would have included alcohol.

The list of the 2,766 events where Ms. Burley used the formula set out above to calculate the amount of tax collected by Le Jardin was filed as Exhibit 79: PST per Sub-Total Document.

Ms. Burley concluded that based on the entries in the Sales Logix excel spreadsheet Le Jardin generated a further $23,275,820.65 in sales during the relevant time period. As a result, Le Jardin would have attracted an additional $1,446,772.72 in retail sales tax.

(C) Conclusions on Tax Collected but Not Remitted

Ms. Burley testified she then merged Exhibits 61 and 79 into a document she titled "PST Collected and PST Within a Total" and which was marked as Exhibit 97. This document set out the amounts for every month from May 2007 – June 2010. The total amount collected was $1,743,284,68.

Ms. Burley testified she searched the ONTTAX database to determine the amount of PST remitted by Le Jardin during the relevant period. Her search resulted in the following findings which she titled "Schedule A" and which was marked as Exhibit 82:

i. from May 2007 – October 2008, no RST was remitted with returns;

ii. between November 2008 – September 2009, $69,030.00 was remitted with returns;

iii. no remittances were made with returns since September 2009;

iv. no filings or payments were made between October 2009 – June 2010; and

v. additional payments of $365,135.86 were made between June 4, 2007 – August 31, 2009.

Ms. Burley concluded that between May 2007 and June 2010 Le Jardin generated total sales in the amount of $28,059,881.15 and collected $1,743,284.68 on account of retail sales tax. She concluded Le Jardin had remitted $428,165.86 on account of PST, and thus failed to remit the amount of $1,315,118.82.

(3) Sales Tax Not Collected

Ms. Burley testified that in her review of the documents that had been seized, a significant number of invoices, contracts and work orders showed that Le Jardin did not charge its customers retail sales tax.

Ms. Burley prepared a chart pertaining to sales tax not collected. The chart was marked Exhibit 48.

Ms. Burley testified she arrived at the numbers by looking at the actual source records such as invoices, contracts and work orders. She compared them to function summary reports and staff schedules. She noted that many invoices were paid in cash and paid in full. She also noted that if GST was not collected neither was PST.

As she went through her evidence regarding sales tax not collected, Ms. Burley stated there were errors in her calculations. One example she gave pertained to how she had initially concluded that Ethnic Catering did not have to remit tax but upon further review she realized it should have as it had taxable supplies. As a result she amended the chart (Exhibit 48) and the amended chart was admitted into evidence as Exhibit 173.

Ms. Burley further broke down the amended chart on a monthly basis and summarized it. She concluded that the amount of $344,407.53 in sales tax had not been collected.

(b) Employer Health Tax

Ms. Burley testified that the EHTA imposes a payroll tax payable by all employers on remuneration paid to employees. The Act provides an exemption to the payment of the tax on the first $400,000.00 of their total Ontario remuneration. Employers with a total Ontario remuneration in excess of $400,000.00 are required to deliver an Annual Return with the Ministry of Finance by March 15 of the following year. The tax, calculated at a rate of 1.95% on the total Ontario remuneration in excess of the $400,000.00 exemption, is payable with the annual return.

Ms. Burley explained that employers are required to self-register with the Ministry. Employers with an annual payroll in excess of $600,000.00 are also required to file monthly instalments and payroll statements with the Ministry of Finance. The monthly instalments are based on the remuneration paid in the prior month and are due on the 15th day of the month. The Ministry sends the forms to the employer for completion.

Ms. Burley further explained that the annual return is tantamount to a check whereby the employer can reconcile health tax discrepancies made in the monthly statements.

Ms. Burley testified that during the relevant time period 1375923 Ontario Inc. was registered as an employer. That notwithstanding remuneration was also paid to employees and T4s were submitted to the Canada Revenue Agency by Le Jardin Banquet and Conference Centre Inc., Le Jardin Special Event Centre Inc., Le Jardin Conference and Event Centre Inc., Chateau Le Jardin Conference and Event Venue, Chateau Le Jardin Inc., and Chateau Le Jardin Catering Inc.

Ms. Burley testified that Le Jardin's estimated payroll was in excess of $700,000.00 per annum. As a result, she determined that Le Jardin was required to remit both monthly and annual instalments. Ms. Burley searched the ONTTAX database to determine whether returns had been filed. She discovered that annual returns had been filed for 2000 – 2004 and for 2006. No return had been filed for 2005 and nothing had been filed after 2006.

Ms. Burley testified the search yielded payroll records and payroll information, as well as notices of assessment from the Ministry. These documents consisted of paper documents as well as information from the Simply Accounting software program.

Ms. Burley reviewed all of the documents and computer records. She reviewed source records including pay stubs and cheques. She reviewed the payroll records. She concluded that the amount of EHT evaded was $294,998.65.

As she reviewed the paper documents as well as the information from the Simply Accounting software program she noted the following:

i. Le Jardin maintained two separate forms of remuneration in their computerized records;

ii. employees were paid bi-weekly either by cheque, cash or a combination of both;

iii. only thirty to forty employees were characterized as salaried employees;

iv. salaried employees had source deductions taken off their pay cheques however the rate of vacation pay varied from 4% to 6%. Salaried employees received T4 slips;

v. salaried employees also received bonuses and/or commission on top of salary. These payments were recorded in Simply Accounting account 5417. No source deductions were taken from these payments and they were not included on the T4 slips;

vi. salaried employees received additional bi-weekly payments in lieu of benefits. These payments were recorded in Simply Accounting account 5415. No source deductions were taken from these payments and they were not included on the T4 slips;

vii. Le Jardin also had staff who were paid hourly. The amounts paid to the hourly employees were recorded in Simply Accounting account 5415. Hourly employees were described in Simply Accounting account 5415 as labour/casual for the 2007 – 2009 calendar years, as a subcontracting expense for the 2009 – 2012 years and subsequently as wages. They too were paid bi-weekly with the majority of their payments being by cheque made out to cash. No source deductions were made for hourly staff. Ms. Burley was unable to find any evidence that hourly staff were issued T4 slips;

viii. Mr. Parentela's family was on the payroll; and

ix. paycheques were signed by Mr. Parentela or stamped with his signature except for a period in 2011.

Ms. Burley testified she analyzed the information and removed entries that were statute barred as well as those that were not on payroll such as wedding party consultants. She testified she was able to trace the majority of cheques made out to cash with the exception of two or three by looking at the pay period and the amount of the cheque and comparing it to Exhibit 187: Transaction by Account Reports for 2007 – 2012.

An example provided by Ms. Burley regarding the payments made out to cash was that of July 30, 2010, found in Tab 8 of Exhibit 189: Payroll Records 2007 - 2011. The total amount paid out in cash for that pay period was $88,153.00. Payment was made by Le Jardin Conference and Event Centre Inc.

Ms. Burley testified that T4s were found in the accounting office at Le Jardin's premises and seized during the search. These T4s were for the period 2007 – 2009. Ms. Burley compiled them in Exhibit 191: T4s 2007 – 2009. From these T4s she obtained the following information:

i. The employer was Le Jardin Special Event Centre Inc.;

ii. for 2007 there were 36 T4s and the total amount reported was $769,099.39;

iii. for 2008 there were 23 T4s and the total amount reported was $635,903.63; and

iv. for 2009 there were 31 T4s and the total amount reported was $707,070.63.

Ms. Burley testified that she reviewed staff assignment sheets and labour reports amongst other documents that had been seized. From her review of these documents she concluded that Le Jardin employed well in excess of 30 employees. She provided examples of this for certain weekends she randomly sampled so as to give some context to the number of events that were run as well as the number of staff required to staff the events. These staff assignment sheets were marked as Exhibit 192: Staff Assignment Sheets 2007 – 2009 and included the following weekends as well as Saturday, September 19, 2009:

i. May 4 – 6, 2007;

ii. October 24 – 26, 2008; and

iii. April 17 – 19, 2009.

After reviewing the payroll records and Simply Accounting, Ms. Burley concluded that Le Jardin paid $17,128,136.31 in remuneration to its employees between January 1, 2007 and July 31, 2012. Ms. Burley's conclusion, along with the breakdown on a year by year basis, was admitted into evidence as Exhibit 188: Schedule "C":

2007 $2,658,193.06 2008 $3,010,359.21 2009 $3,245,676.43 2010 $3,073,457.73 2011 $3,260,905.73 2012 (to July 31 only) $1,879,544.15

After applying the requisite calculations set out under the EHTA Ms. Burley determined that the amount of tax owing was $294,998.65.

9. The Evidence of Mara Vanin

Ms. Vanin commenced employment at Le Jardin in April 2001. By then she had worked as a legal secretary and had done payroll and accounts payable for Ontario Paving. She does not have any formal accounting education.

Ms. Vanin testified that initially Le Jardin was looking for someone to do accounts payable for a year as their accounts payable clerk was on maternity leave. The clerk returned and left for a further maternity leave. Ms. Vanin was hired full time. She reported to Mr. Parentela. They had a good working relationship. She did not, however, view herself as Mr. Parentela's "right hand person". She did not attend meetings with bankers or brokers. She did accounts payable, paid suppliers and prepared time sheets for casual staff.

Ms. Vanin testified Mr. Parentela made every financial decision. She reported to him. She testified there was a lot of money going in and out.

In or about April 2013 Ms. Burley contacted Ms. Vanin about providing a statement. Ms. Vanin contacted Mr. Kanargelidis who indicated he would prefer her not to speak with Ms. Burley. She complied.

Ms. Vanin's employment at Le Jardin ended in June 2013 as a result of the loss of her eyesight. Ms. Vanin was unable to answer whether she would have continued being employed at Le Jardin had she not lost her vision.

In or about October 2014 Ms. Burley contacted Ms. Vanin again. Ms. Vanin retained her own counsel. Ms. Vanin met with Ms. Burley and Mr. Jourard at her home on May 14, 2015. Ms. Vanin's counsel was present. Ms. Vanin provided a taped statement.

Ms. Vanin entered into a resolution agreement with the Ministry in which she agreed to testify as a witness for the prosecution. The Ministry stayed the charges against Ms. Vanin prior to her giving evidence in court.

Ms. Vanin testified about numerous subjects including but not limited to the computer programs (Simply Accounting and Sales Logix), cash sales, deposit entries, remittance of taxes (RST and EHT), the corporations, and her relationships with Orlando Catala, Andrew Walsh and Carlo Parentela. Ms. Vanin's testimony regarding her relationships with Messrs. Walsh and Parentela is dealt with in further detail in the analysis section of my judgment.

(a) Sales

Ms. Vanin described how sales contracts and invoicing were done. Sales contracts were generated by Le Jardin event coordinators. Once signed one copy of the sales contract went to Mr. Parentela, another to the event coordinator and one to the client. Invoices were generated by the event coordinators once the event was finalized. Payment was usually provided to the event coordinator who would deposit the funds into a safe room.

Ms. Vanin described the safe room as an office accessible from Mr. Parentela's boardroom which was adjacent to his office. She described the safe room as having two doors, each requiring thumbprint access. She testified that Mr. Parentela was the only person who had access to the fingerprint accessible rooms and that he was aware of and kept track of all money coming in. According to Ms. Vanin all revenue from Le Jardin went to Mr. Parentela including the proceeds from cash bar ticket sales.

(b) Record Keeping: Simply Accounting

Ms. Vanin testified she used Simply Accounting software to post sales. She testified that up until late 2009/early 2010 the Simply Accounting software was only located on her personal work computer.

Ms. Vanin described how on a monthly basis she would collect the deposit books, review the entries and reconcile the deposit books with the bank statements. She indicated that the bank statements also included credit card payments received by Le Jardin. Those sales were posted in Simply Accounting as "one time customer" because the entries in the deposit books did not have any information other than a name. Deposits listed in the deposit book were posted to Simply Accounting as were credit card payments.

Ms. Vanin testified that she was not provided with copies of the event contracts or invoices. As a result when she looked after PST she would determine the amount of tax owing by taking the monthly sales amount as per the deposit books and bank statements and divide that number by 1.13 or 1.15 and multiply by .08. Since she did not have the contracts or invoices to work from, Ms. Vanin could not calculate the liquor sales which should have been taxed at 10%. Ms. Vanin testified PST was due by the 21st of each month and that she would make partial payment if there was not enough money.

(c) Cash Sales

Ms. Vanin testified there were numerous cash transactions which were not included in the deposit books she had access to. She provided a few examples:

i. if the client paid cash for an event the money would go directly into Mr. Parentela's mail slot into the safe room;

ii. the deposit books she had access to did not include cash payments;

iii. Mr. Parentela had mortgages and expenses (both business and personal) that were not being paid from the deposits she knew about; and

iv. the deposit book she had access to matched the bank statements.

Ms. Vanin stated that if she questioned Ms. Peruzza regarding how much cash Le Jardin had received the previous week, Ms. Peruzza would report her to Mr. Parentela's sister Linda who, in turn, would advise Mr. Parentela. Ms. Vanin would then be spoken to by Mr. Parentela.

Ms. Vanin testified she believed cash sales were recorded by Mr. Parentela in Sales Logix, a computer program she did not have access to.

(d) Sales Logix

Ms. Vanin described Sales Logix as a computer program used to organize events for the different halls at Le Jardin's premises. It was set out as a separate drive on the computer.

According to Ms. Vanin, Sales Logix listed the halls, availability of the hall, event size and organized menus. The price of each item had a cost associated to it and one simply plugged in the menu and the system would come up with a price per person calculation which could then be adjusted if so required. Sales Logix also produced function summary reports, event summary reports, labour reports and also provided print outs regarding date of the event, the number of the event, the description of the event, payment made, whether there was an outstanding balance and the number of persons attending the event.

Ms. Vanin did not have access to Sales Logix. Neither did Messrs. Catala or Walsh. The sales people, event coordinators, managers and Mr. Parentela had access to Sales Logix. Only Mr. Parentela had administrator access which enabled him to make changes on the date of the event as well as changes to past events including clearing the event from the program. Any deletions or additions (such as the number of people attending an event) made prior to the date of the event were emailed to Mr. Parentela.

On cross-examination Ms. Vanin stated that if she did not know something it was easier to ask Mr. Parentela for the information.

(e) Deposits

Ms. Vanin testified that Mr. Parentela's assistant prepared bank deposits and that Norm Aboutaire did the actual depositing of the money.

(f) Expenses

Ms. Vanin handled Le Jardin's expenses throughout the course of her employment from 2001 until June 2013.

She was aware of the monthly expenses of approximately $700,000.00 and she testified how, on occasion, she was concerned because the monthly expenses were in excess of monies shown as being received. She testified that Mr. Parentela was aware of the monthly expenses and that his philosophy was always to pay the outstanding mortgages first. The mortgages on the property as well as the mortgages for Mr. Parentela's home and that of his ex-spouse were run through the business.

(g) Financial Statements

Ms. Vanin was shown a number of documents filed as exhibits which contained inconsistencies with respect to the amount of sales reported to the Ministry and the amount of sales recorded in other business documents or in-house records for the same time period. Many of the documents were read out loud to her.

Ms. Vanin testified she was aware that numbers were inflated for the purposes of obtaining loans. For example, in the early 2000s, Mr. Parentela decided to expand the front part of the banquet hall. He required financing for the expansion. Construction liens were registered on title. Mr. Parentela was also involved in a project in downtown Toronto at 1 King Street East. The deal fell through and Mr. Parentela was sued.

Ms. Vanin assisted Mr. Parentela in preparing unaudited financial statements to present to potential lenders to qualify for financing.

Financial statements were prepared at Mr. Parentela's request. When asked how a financial statement was done Ms. Vanin stated: "Carlo would say I need a financial. I need it to show sales of X and a profit of Y".

Ms. Vanin described how she had created a template for a financial statement. She would input the amounts from the deposit books and bank statements into the template and create an excel document. She testified she would adjust the numbers on excel to comply with what Mr. Parentela asked for, enter it into Simply Accounting, save it on excel, print it and then email the document to Mr. Parentela who would further amend it to show increased sales and other adjustments to conform with the increased sales such as changes to labour.

Once Mr. Parentela was satisfied with the figures, Ms. Vanin would make the adjusting entry in Simply Accounting, save it to excel and email the document for Mr. Walsh for his review. Mr. Walsh would further tweak the numbers and email the document back to her. She would enter Mr. Walsh's adjustments in her computer. Once Mr. Parentela and Mr. Walsh were satisfied with the numbers either Mr. Walsh would finalize and produce an unaudited financial statement or Mr. Di Manno would. Ms. Vanin did not believe Le Jardin ever had audited financial statements.

Ms. Vanin testified that financial statements were provided to BDC, Meridian, TD and RBC. She stated that Mr. Parentela needed money to finance the construction of the banquet hall and in order to obtain the necessary funds he had to show that the sales and profits could maintain the loan sought. Meridian advanced $10.5 million dollars. According to Ms. Vanin this was based on the financial statement indicating that sales revenue was in excess of $11.6 million dollars for the year ended January 31, 2011. Ms. Vanin testified she believed the $11.6 million dollar figure to be more accurate than the one reporting some $4.3 million dollars in sales revenue for the same time period.

Ms. Vanin testified that year end returns were prepared by Mr. Walsh starting in 2008 or 2009. Mr. Walsh did not have access to Simply Accounting and relied on the numbers she provided him along with the sales revenue reported in the deposit books and the bank statements she was privy to. Mr. Walsh did not have access to invoices or sales contracts nor did he ask to see them.

(h) Orlando Catala

Ms. Vanin testified that in or about July 2006 Mr. Parentela hired Orlando Catala to look after the tax remittances and to liaise with the government. Prior to then Ms. Vanin had dealt with the tax filings however Mr. Parentela became critical of how she was doing the tax filings as he believed she was remitting tax on items that were tax exempt. Ms. Vanin was not sure why he believed this as she reviewed the tax filings with him which were based on information provided to her.

Ms. Vanin was led to believe that Mr. Catala was a tax consultant specialist. She was told that he would deal with ongoing correspondence and the mail, including correspondence from the Ministry of Finance.

Ms. Vanin initially met with Mr. Catala at Manhattan Sandwiches, located at 290 Richmond Street, Toronto. Ms. Vanin was not impressed with Mr. Catala and had misgivings from the start. That notwithstanding, she showed him deposit books and sales returns for previous years. Mr. Catala told her that he would look after all remittances, calculate the returns and redo the prior returns to claim credits and compensation she had missed.

Ms. Vanin testified that mid-month she provided Mr. Catala with the deposit books, credit card statements and bank statements for the prior month. She testified that Mr. Catala had a formula which allocated certain percentages towards hall rental, liquor, food and gratuities, and on that basis he determined what was owing for taxes. He did not review contracts or invoices.

Ms. Vanin did not verify Mr. Catala's calculations. She accepted them as correct. She filled in the tax returns. Mr. Catala told her that he could not sign the returns because he was not an employee and she had to sign them. She complied. She would then email Mr. Parentela, advise him that she had met with Mr. Catala, that a certain amount was due for the taxes and that Mr. Catala wanted to be paid his $5,000.00 fee. Mr. Parentela would meet with Mr. Catala and provide him with the funds to pay the taxes as well as his fee. Mr. Catala would then attend the bank and make the payment.

Ms. Vanin testified that once Mr. Catala took over she was no longer aware of Le Jardin's PST debt to the Ministry. She never filed an electronic return and believed those types of returns had been filed by Mr. Catala and/or Mr. Walsh.

As time went on Ms. Vanin's concerns regarding Mr. Catala's lack of accounting knowledge and experience grew. It became obvious to her that Mr. Catala was not a tax consultant. She believed that the company was paying significant monies to Mr. Catala for little or no return. For example, Exhibit 93 Orlando Consulting Vendor Aged Detail at Sept 2008, showed Mr. Catala had been paid $102,000.00 for a period of 7 months. Ms. Vanin expressed her concerns to Mr. Parentela who summarily dismissed them by telling her to just provide Mr. Catala with the information and he would clean up the mess she had made.

By 2009 Ms. Vanin no longer trusted the figures provided by Mr. Catala. She refused to sign any returns after March 31, 2009.

(i) The Transfer of 1375923 Ontario Inc. and the Other Company Name Changes

Ms. Vanin testified that in or about 2008 Mr. Parentela decided to transfer his interest in 1375923 Ontario Inc. to Mr. Catala. The actual transfer did not take place until September 10, 2010 because Mr. Catala had been ill and was not able to sign the paperwork.

Ms. Vanin testified that 1375923 Ontario Inc. carried debt and had no assets or revenue coming in. The debt related to legal fees owing to Lang Michener and the construction loans (and liens).

Ms. Vanin understood that Mr. Catala agreed to take over 1375923 Ontario Inc. because he too had some write offs that he could use with the company. There was no monetary consideration for the transfer; it was a share transfer. Mr. Catala was appointed officer and director of 1375923 Ontario Inc.

Ms. Vanin testified there was no change on the day to day operations of the business. The banquet hall continued operating. The event coordinators told the clients where to direct payment such that revenue was recorded by, inter alia, Chateau Le Jardin Catering Inc. and 622192 Ontario Ltd.

Mr. Parentela was named general manager of 1375923 Ontario Inc. on July 13, 2011. Ms. Vanin testified this was because Mr. Parentela wanted to appeal the assessments raised against Le Jardin by the Ministry and in order to do so he had to be back on record with the numbered company.

When asked about the different company names operating at Le Jardin over the years Ms. Vanin indicated she had nothing to do with the numerous name changes. Her role was to contact counsel at Mr. Parentela's request. Ms. Vanin testified she had thought counsel would have reported the name change(s) to the Ministry; she did not know this was required.

According to Ms. Vanin, and with the exception of the transfer of 1375923 Ontario Inc. to Mr. Catala on September 10, 2010, the following companies were owned by Mr. Parentela during the charge period:

• Chateau Le Jardin Inc.
• Chateau Le Jardin Catering Inc.
• 1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc.
• 1375923 Ontario Inc. o/a Le Jardin Special Event Centre Inc.
• Le Jardin Conference and Event Centre Inc.
• Parentela Holdings Ltd.
• 622192 Ontario Ltd.

Ms. Vanin testified that 622192 Ontario Ltd. held the liquor licence for the banquet hall. It did not have a bank account and thus the revenue from the sales of liquor went through the other companies.

(j) The Audit and the Search

In 2007 Mr. Parentela signed a letter appointing Mr. Catala as the contact for government matters. All mail pertaining to the numbered company went to Mr. Catala. Mail specifically addressed to Mr. Parentela continued to be left for him outside his office in a plastic folder on the wall.

According to Ms. Vanin, Mr. Parentela knew he was obligated to file tax remittances but since Mr. Catala had assumed the office of officer and director of the corporation, he believed it was incumbent upon Mr. Catala to deal with the tax issues.

Ms. Vanin testified she was aware the Ministry would be conducting an audit as Mr. Catala had spoken to her about it. She was aware that the Ministry had requested business records as part of the audit process and was told by Mr. Catala not to provide anything. Ms. Vanin told Mr. Parentela about the meeting.

Ms. Vanin was asked by Mr. Catala to put water and cups in the boardroom. He instructed her to not provide any documents nor to speak with the auditors. She complied. Neither she nor Mr. Parentela attended the meeting.

Ms. Vanin testified that Mr. Parentela was also aware of the July 14, 2010 meeting with the auditors and that Mr. Catala asked them not to attend. Neither she nor Mr. Parentela attended the meeting.

Ms. Vanin testified that when Mr. Parentela received the notices of assessment he called her on the intercom and asked what Mr. Catala did. She replied she did not know. Mr. Parentela asked what she had said for the Ministry to reach the conclusions about the specific amounts owing. She told Mr. Parentela she had not spoken with the Ministry.

Ms. Vanin testified she was present September 12, 2012, the day the search warrant was executed at Le Jardin. Ms. Vanin was on the cellphone with her sister who had just been diagnosed with thyroid cancer. She was very upset, completed her telephone call and then spoke with Ms. Burley. She was told not to touch anything in her office. Her computer was seized and the hard drive copied.

Ms. Vanin contacted Mr. Parentela who instructed her to telephone Messrs. Kanargelidis and Catala. Mr. Kanargelidis was in court but he dispatched two lawyers from Blakes to attend Le Jardin. Ms. Vanin was not able to reach Mr. Catala. When Mr. Parentela arrived at Le Jardin's premises he told her not to speak with anyone save and except to ask each person from the Ministry for their business card. Ms. Vanin complied.

Ms. Vanin testified she was present throughout the day until the Ministry's representatives left.

Ms. Vanin testified that following the execution of the search warrant she had a few conversations with Mr. Parentela who assured her that she had nothing to worry about. He told her the issue was between him and Mr. Catala.

Ms. Vanin met with Mr. Kanargelidis. She stated he questioned her about Le Jardin generally and about the relationship between Messrs. Parentela and Catala.

Ms. Vanin continued to work directly for Mr. Parentela however she refused to carry out duties relating to the government. In October 2012 Mr. Parentela hired Ms. Mammone to look after filing the taxes.

(k) RST (PST)

Ms. Vanin looked after the calculation of PST owing and prepared returns until 2006 when Mr. Catala was retained to do this work. Ms. Vanin continued to be familiar with the monthly returns as she was the one who provided documentation to Mr. Catala and signed the returns. She notified Mr. Parentela of the amount of PST owing as calculated by Mr. Catala. The funds to pay the taxes were provided by Mr. Parentela to Mr. Catala.

Ms. Vanin testified she was aware there were many late returns between 2007 and 2008. She indicated this was because there were cash flow problems due to the construction and renovation of the premises. As she stated: "after the construction phase it felt like there was never any money". Payment of taxes was sporadic at best.

Ms. Vanin testified the Ministry would regularly send out notices when returns were not filed on time. She testified that prior to Mr. Catala becoming the contact for government matters these notices were provided to Mr. Parentela.

(l) EHT

Ms. Vanin testified that although she was responsible for payroll her duties did not include the calculation of employer health tax payable. She testified that until Mr. Catala became responsible for EHT, she would attend the accountant's office with the T4s. The accountant would prepare the returns which she signed and remitted to the Ministry along with payment.

Ms. Vanin was aware that no EHT returns were filed after Mr. Catala took over in 2006. She stated she mentioned it to the accountants and whoever else would listen. She stated Mr. Parentela was aware that EHT returns were not filed after 2006.

Ms. Vanin testified she processed the paycheques of salaried employees bi-weekly. Source deductions were taken. Salaried employees included office staff, management and Mr. Parentela as well as Mr. Parentela's four children and his former spouse.

Paycheques were signed by Mr. Parentela. When Mr. Parentela was not available Mr. Melillo utilized Mr. Parentela's signing stamp. When Mr. Walsh was retained he too signed the paycheques.

Ms. Vanin testified that only salaried employees paid by cheque received T4s because Mr. Parentela had set up the system that way prior to her employment at Le Jardin. The T4s were produced using Simply Accounting. The filings to the Ministry only included the wages shown on the T4s.

Ms. Vanin testified that salaried employees also received bi-weekly cash payments to cover employee benefits such as cellphone, vehicle allowance, and dental and medical benefits. She stated that the salaried employees were expected to declare these payments on their tax returns. Ms. Vanin indicated that she had spoken with Mr. Parentela about setting up a drug plan and providing a proper employee benefit structure but he declined to do so. Instead the cash payments continued.

Ms. Vanin testified that event coordinators also received commission which was paid bi-weekly in cash.

Neither the bi-weekly cash payments nor commission payments had source deductions taken. The payments did not appear on the salaried employees' T4s.

Ms. Vanin testified that payments to non-salaried employees were entered in Simply Accounting as "Labour-Casual" or "Subcontracting Expense" (the terms changed at some point in time). These casual employees included anyone who was not employed full time and paid hourly such as wait staff, extra cooks and weekend set up staff.

Casual employees were required to submit timesheets. The timesheets were verified by managers. Once verified, the casual employees would be paid in cash. The cash came from Mr. Parentela.

Taxes were not deducted from casual employees. T4s were not issued for employees paid in cash.

Ms. Vanin testified she only recorded the hourly summary sheets provided to her. She input the information into Simply Accounting under "Labour Casual" or "Subcontracting Expense". In other words, not all casual employees were accounted for in Simply Accounting; only those that she received information about.

Ms. Vanin was asked what percentage of payroll went to salaried employees compared to casual employees. She responded she did not know.

Ms. Vanin testified that prior to adopting Sales Logix labour reports were completed manually. She testified she did not do labour reports after 2005; she just gave cheques to Mr. Parentela for his signature.

Ms. Vanin testified that labour reports generated through Sales Logix were printed on a weekly basis and made available Monday or Tuesday for budget meetings. The Sales Logix program projected personnel services that may be required based on numbers of guests and event type. Messrs. Parentela and Melillo each received a copy of the weekly labour report.

Ms. Vanin indicated a lot of people were needed for the banquet hall to operate at full capacity. In her review of Tab 2, Exhibit 192 Ms. Vanin confirmed that on one October weekend in 2008 there were 155 entries for employees working that weekend. She stated it was easy to get 100+ employees working if the banquet halls were occupied. Of those, the majority of the employees would not be full time salaried employees save and except for the manager and chef.

Ms. Vanin testified that hourly employees were required to use a numerical time clock to record their shift. Initially hourly employees clocked in using a finger scan but this changed to a full hand scan when the number of employees exceeded one hundred. On cross-examination Ms. Vanin admitted that between casual and full time staff there were over one hundred people working at Le Jardin during the relevant time period.

10. The Evidence of Andrew Walsh

Andrew Walsh is a financial analyst. He works in management accounting and does consulting work.

In 2010 Mr. Walsh was introduced to Mr. Parentela by a chartered accountant he often works with, John Di Manno. Mr. Di Manno told him there were concerns that GST and PST for Le Jardin were not being calculated correctly and statements were not being remitted on time.

Mr. Walsh met with Mr. Di Manno and Mr. Parentela at Le Jardin's premises. Mr. Parentela advised that he wanted to ensure that federal and provincial taxes were being paid and that the proper documents were being filed. EHT was not discussed and Mr. Walsh never dealt with it.

On the basis of the initial conversation Mr. Walsh believed that Le Jardin was a new company; he subsequently learned it was not.

Mr. Walsh described Mr. Parentela's involvement in Le Jardin as being all over the place. He testified Mr. Parentela knew if the business was doing well or not. He described how he would tell Mr. Parentela that a certain amount of money was owed for taxes and Mr. Parentela would say that was not possible as Mr. Parentela did not want to accept what Mr. Walsh told him.

Mr. Walsh communicated directly with Mr. Parentela. He reported to Mr. Parentela.

Mr. Walsh described Ms. Vanin as the controller. He testified that Ms. Vanin was aware of the bills that needed to be paid and she was good at reducing prices. He testified that Ms. Vanin was quick to respond to any requests for information made by him. He believed she looked after tax remittances and agreed with the defence's suggestion that Mr. Parentela relied on Ms. Vanin for calculating the tax returns. Mr. Walsh was not aware of Mr. Catala, Le Jardin's tax consultant since 2006, and stated he had never met him.

Mr. Walsh testified that his business was searched on September 12, 2012. Business records including but not limited to year end information and bank statements pertaining to Le Jardin were seized.

(a) RST

In June 2010 Mr. Parentela asked Mr. Walsh to attend a meeting with representatives from the Ministry regarding an assessment. Mr. Walsh believed this was going to be a first meeting of the parties as Mr. Parentela had not provided him with copies of letters and/or requests for information in advance of the meeting; he subsequently learned that the Ministry had attempted to conduct an audit, without success. Mr. Walsh instructed Mr. Parentela to schedule a new meeting in the next few weeks so that a payment plan could be discussed. According to Mr. Walsh, Mr. Parentela was not happy with his advice as he did not believe he owed the money. A meeting was scheduled to take place at Le Jardin's premises the following week.

Mr. Walsh testified he asked Ms. Vanin to provide him with sales reports, GST reports and PST reports in order to prepare a financial analysis. Ms. Vanin provided him with Simply Accounting printouts for the period covering the assessment.

Mr. Walsh discovered there were numerous companies operating simultaneously on the premises. He testified that the companies were so intertwined and had used the same set of books that it was difficult to extrapolate figures. He therefore concluded that it made sense for the amount of tax owing to be calculated from all the companies combined.

Mr. Walsh admitted he did not conduct an independent review. He looked at sales reports but did not match them with statements or invoices. He found reports showing a lesser tax than the amount assessed or a lesser amount of sales on which the assessment was based. He also discovered there were missing sales. Mr. Walsh did not discuss company sales with Mr. Parentela prior to or during his analysis. Instead he admitted taking the reports provided at face value. He did not cross reference them with function summary reports, event contracts, work orders or invoices. He did not have access to Sales Logix.

On the basis of the documentation received, Mr. Walsh determined that the amount owing for RST was $74,432.04. He provided that information to Messrs. Parentela and Kanargelidis as well as to the Ministry at the subsequent meeting. No agreement was reached between the parties. Mr. Kanargelidis advised the Ministry that an objection and notice of appeal would be filed.

As part of the objection and appeal process Mr. Walsh began a more in depth review of sales. He testified he reviewed journal entries, sales documents, invoices and event sheets. He did not review any invoices or work orders in electronic pdf format.

Mr. Walsh was shown two examples of pdf invoices from Exhibit 175:

i. contract 23603 Number 7 Repair Centre Ltd.; and

ii. contract 24287 Homelife Empire 2008 Holiday Party.

Mr. Walsh testified that neither contract was a Simply Accounting file, nor as he referred to it in its other name, a SAGE file. He indicated he believed the invoices would have been generated from Sales Logix. He did not have access to or review Sales Logix and thus would not have reviewed the contracts.

Mr. Walsh testified regarding the difference between his findings of tax payable and that of the Ministry:

i. he indicated that where there was no breakdown in pricing the Ministry applied sales tax on all sales including hall rental. Hall rental is not subject to provincial sales tax;

ii. he believed there was a coding error in the Simply Accounting program. Specifically, he believed the coding for taxes was not correct resulting in the wrong tax rate being applied. Mr. Walsh testified he entered the invoices and coded the items as per information provided to him by Mr. Parentela. Ms. Vanin had earlier testified that Simply Accounting was not set up to automatically calculate taxes and she had to manually enter the figures; and

iii. he believed the Ministry had calculated tax on events that did not take place.

Mr. Walsh acknowledged that under the RSTA sales tax is payable on the total sale price when items are bundled. That notwithstanding, he testified that as part of his review he unbundled and then re-bundled items listed for a sale event in order to remove the cost of the hall rental portion.

Mr. Walsh testified that as he continued his review, the amount owing for RST increased to in excess of one million dollars.

On July 31, 2014, he calculated the aggregate amount owing for RST as $947,504.77. As the amount of $407,764.13 had been paid, the total amount outstanding was $539,740.64.

On September 22, 2014, he had finished his review of the disclosure and calculated the aggregate amount owing as $1,025,051.59. As the amount of $407,764.13 had been paid, the total amount outstanding was $617,287.46.

(b) Financial Statements

Mr. Walsh testified that he did bank reconciliations and reconciled payroll remittance forms. He also prepared tax returns for the numerous companies. He based the tax returns on the sales revenue he received from Ms. Vanin. He testified that this was often produced as an excel spreadsheet from the Simply Accounting program and when it was not Ms. Vanin would send direct information to him. He accepted the information provided to him and did not conduct any independent investigation or review.

Mr. Walsh testified that Parentela Holdings Ltd. sought a loan from Meridian Credit Union. Meridian asked for consolidated statements of the operating companies. He provided a letter and created a consolidated financial statement for Meridian for the year ended January 31, 2011, which disclosed, inter alia, the following:

i. sales revenue of $11,603,356.00; and

ii. salaries and wages of $3,532,536.00.

The financial statement for the year ended January 31, 2011 at Tabs 1 and 4 of Exhibit 224 set out the following information:

i. sales revenue of $4,311,083.00; and

ii. salaries and wages of $893,526.00.

When asked if he could explain the discrepancy in the financial statements, Mr. Walsh admitted he could not. He testified he thought it was because the financial statement in Tab 2 pertained to the Le Jardin Group [of companies] whereas the financial statements in Tabs 1 and 4 only pertained to the one company, Le Jardin Conference and Event Centre Inc.

(c) EHT

Mr. Walsh testified he never dealt with EHT. He testified he was never asked to deal with it and admitted that was an oversight on his part. He did, however, assist with payroll by signing the paycheques prepared by Ms. Vanin when Mr. Parentela was not available.

Mr. Walsh believed payroll was not large as he only signed some 15 paycheques. He believed the pay period to be every two weeks but did not recall the names of the employees who received paycheques. He admitted that casual labour was often posted as something akin to cost of goods and that certain casual labourers would have T4 slips and others would not. Mr. Walsh admitted he did not conduct an independent review of salaried employees receiving T4s or those working for cash.

11. The Evidence of Larry Joslin

Larry Joslin is a Certified Management Accountant, a Certified Public Accountant and a Certified Fraud Examiner. He worked as an investigator with the Canada Revenue Agency until 1991 when he opened Joslin's Investigative Accounting Inc., a business providing financial investigative services.

After a voir dire I qualified Mr. Joslin as an expert witness however I restricted his testimony to the areas of accounting and forensic fraud examination. I excluded Mr. Joslin's March 3, 2017 report for reasons provided April 11, 2017. I did, however, admit Mr. Joslin's March 30, 2017 report as well as two addendums into evidence subject to cross-examination by the Crown.

Mr. Joslin testified approximately 65% of his work involves civil cases and the remaining 35% involve criminal matters. He admitted that in criminal matters he generally testifies on behalf of the defence.

Mr. Joslin testified that he was retained by the defendants in December 2016. He testified that in order to prepare his March 30, 2017 report he reviewed information provided to him by counsel as well as the exhibits. He reviewed the disclosure albeit in a cursory fashion: as he testified he reviewed a summary of the disclosure. He admitted he is not familiar with the Ministry's policies regarding inter alia record keeping and reporting. Mr. Joslin did not speak with Mr. Parentela.

Mr. Joslin testified that the purpose of the report was twofold:

i. first, to show that there was a grey area as to what should be and should not be taxed. If a matter came within what he determined to be a grey area then he believed it should not have been taxed; and

ii. second, to determine whether the evidence presented was sufficient for the charges.

12. Analysis

(a) Introduction

In coming to my decision regarding this prosecution, I have reviewed the hundreds of exhibits and the thousands of documents contained within those exhibits, as well as the submissions of both the crown and the defence including the caselaw relied upon.

An issue was raised by the defendants regarding the crown's material, namely that page 10 was mostly bare. Both the hard copy and electronic copy of the crown's written submissions I received have a full and complete page 10. Since I was not contacted by either side to deal with this issue, I will assume that the parties dealt with it themselves. That being said, since it was raised in the defendants' submissions, I felt it necessary to touch on the matter.

Ordinarily I would not comment on the appropriateness of the submissions received, however, in the circumstances of this case I need to. Both parties' submissions often strained for facts not in evidence. That being said I will comment on what I perceive to be three of the more egregious and unsupported submissions:

i. the defendants submit that the prosecution was essentially a ruse to justify the initial assessment amounts claimed to be due and owing;

ii. the defendants submit that Ms. Vanin was either coached by the prosecution or coerced into testifying because she too had been charged; and

iii. the defendants submit that the trial was replete with innuendo and snide remarks about Mr. Parentela's character – so much so that it was palpable to counsel and to Mr. Parentela.

None of the prosecution witnesses or the defence's expert witness, Mr. Joslin, testified that the prosecution of this matter was manufactured to justify the initial assessment amounts claimed to be due and owing. None of the prosecution witnesses were cross-examined on this issue. Ms. Burley and Messrs. Walsh and Joslin testified that monies were owed to the Minister; only the quantum was in dispute. I therefore find that there is no merit to this submission.

Ms. Vanin was not cross-examined on the allegation that her testimony had been coerced. She was not cross-examined on whether her testimony had been coached. There is no evidence that suggests such an allegation is correct.

If I had believed there were any snide remarks or any inappropriate remarks made during the course of the trial, I would have interfered and cautioned the party who made the remark. My trial management power would have permitted such a concern to be raised by the Court without either party concluding they had been prejudiced. I do not recall having been placed in such a position.

The fact that Mr. Parentela is or was wealthy is irrelevant to this prosecution. The fact that he personally or through a business owned or leased numerous motor vehicles as well as a boat, had an interest in a restaurant and an interest in a condominium building in downtown Toronto, is irrelevant to this prosecution. It was the results of the MTO, ONTTAX, MPAC and corporate searches which disclosed the relationship between Mr. Parentela and the numerous corporations.

On cross-examination Ms. Burley stated that the fact that Mr. Parentela "owns a Bentley, a Ferrari and a yacht is not indicative of sales tax owing". I agree. There is no animus in this statement. There is nothing snide in this statement.

Ms. Burley also testified about the content of articles she had read in the Globe and Mail and Toronto Star in which Mr. Parentela described Le Jardin's origins as a family business which had done very well. Ms. Burley indicated that she perceived the articles to be akin to Mr. Parentela attempting to advertise the business. Again, there is no animus in this statement. There is nothing snide in this statement.

I therefore find there is no merit to this submission.

Suffice it to say, in coming to my decision I have disregarded each and every submission which is not based in evidence before the Court. I do not intend to deal with the numerous rhetorical questions set out in the parties' submissions. To be clear whenever a submission was grounded in evidence before the Court I have considered it fully.

(b) The Witnesses

It is accepted that the determination of the credibility and reliability of a witness is fundamental to the judicial task. It has been recognized that the determination is more an art than a science, and is not a purely intellectual exercise. The factors involved can be challenging to verbalize: R v R.E.M., 2008 SCC 51 at para. 49.

That being said, the factors include the witness' ability to observe events, the firmness of his/her memory, the ability to resist the influence of interest to modify his/her recollection, whether the witness' evidence harmonizes with independent evidence that has been accepted, whether the witness changes his/her testimony during examination in chief and cross-examination, whether the witness has a motive to lie and the demeanour of a witness generally: Faryna v. Chorny, [1952], 2 D.L.R. 354 (BCCA); R v S(R.D.), [1997] 3 S.C.R. 484 (SCC).

The defendants attacked Ms. Vanin's credibility and the reliability of her evidence on multiple fronts. They submit that she was motivated to lie as she had initially been charged. They submit that the decision of the crown to stay the charges against Ms. Vanin was done in order to compel damaging testimony as against Mr. Parentela. They further submit that Mr. Parentela relied on Ms. Vanin to his detriment and that she was the author of the problems that bring Le Jardin and Mr. Parentela before this Court.

I disagree. I heard no evidence that would lead me to conclude Ms. Vanin's testimony was coached or coerced or that it was anything other than forthright. Ms. Vanin was not cross-examined on that issue.

Ms. Vanin testified she had wanted to speak with Ms. Burley as early as 2013 and that Mr. Kanargelidis had told her not to. It was not until almost two years later, after Ms. Vanin had retained her own counsel, that she met with Ms. Burley and provided a videotaped statement in the presence of her own counsel.

On the basis of the evidence I heard, I cannot find that Mr. Parentela relied on Ms. Vanin and suffered as a result. I cannot find that Ms. Vanin authored the problems that bring Le Jardin and Mr. Parentela before this Court. Ms. Vanin was not the person involved in remitting RST or EHT during the charge period. That job was taken over by Mr. Catala in 2006 and then, at least insofar as RST was concerned, by Mr. Walsh in 2010. Despite holding the title of controller, she really was the go-between between Mr. Catala and Mr. Parentela, and then between Mr. Walsh and Mr. Parentela on taxation issues. The attempt to attribute fault to Ms. Vanin for a situation that was not of her making is consistent with her testimony that she would be made a scapegoat.

In evaluating Ms. Vanin's testimony against the balance of the evidence as a whole, I find that the defendants' criticisms of her do not impugn her credibility on material issues or impeach the reliability of her evidence. I therefore find there is no merit to this submission.

I found all of the witnesses to be polite and engaged. I found all of the witnesses did their best to answer the questions asked of them. Although at times I found Mr. Joslin to be overtly partisan thereby bringing into question his ability to act as an expert, nonetheless I do not find that any witness was less than candid with the Court. Each witness made a concerted effort to answer questions helpfully and truthfully. Each witness admitted what he/she did not know. Each witness acknowledged difficulties in their testimony where difficulties existed. It is not my intention to respond to each allegation made against each witness; I will deal with what I perceive to be the problems of the testimony of the main witnesses later on in this decision.

In its simplest form, this prosecution pertains to the failure of Le Jardin and its director, Mr. Parentela, to remit the appropriate documentation at the appropriate time, and to fail to pay taxes due and owing to the Minister of Finance.

Le Jardin was chosen for an audit. Despite numerous communications with Ms. Vanin, Mr. Catala and Mr. Parentela, no one at Le Jardin cooperated. Neither books nor records were provided. Authorizations to speak with accountants were not provided. When the auditors attended at Le Jardin's premises for a pre-arranged meeting, they were left in a boardroom for some 30 – 40 minutes. No one came to meet them. No one seemed aware of the scheduled meeting.

The defendants do not deny that they failed to cooperate with the Ministry's audit personnel. They do not deny that they failed to produce documentation. They do not deny that the Ministry sent remittance notices and made conclusions regarding the amounts owing based on the documentation that the Ministry had in its possession. The defendants submit that the investigation and subsequent prosecution were flawed as they were intended to solely buttress the audit conclusions regarding the amounts owing as opposed to obtaining the truth.

I disagree. Aside from the fact that I heard no evidence which would support such a conclusion, the end result of the investigation conducted by Ms. Burley was numbers considerably different than those determined by the audit department.

Corporate searches were conducted on Le Jardin. The Ministry discovered that between January 2007 – July 2012, Le Jardin changed its operating name numerous times. The Ministry was never notified of any change in operating name or entity.

Search warrants were issued to search for any relevant documentary or electronic evidence that would support the investigation.

The search team that attended the premises at 8440 Highway 27, Woodbridge, seized thousands of documents, the majority of which were located in the banquet manager's storage area on the second floor and in three filing cabinets located outside Louis Fernandes' office, as well as in Mr. Parentela's office and in close proximity to Ms. Vanin's desk. Computer forensic investigators seized hard drives from six different computers.

The search team that attended Mr. Walsh's office premises also seized numerous documents.

The defendants submit that the members of the search team could not testify as to the authenticity of the documents seized or speak to the truth of their contents. The defendants further submit that Ms. Chaffey's testimony regarding finding numerous items in the garbage can in Mr. Parentela's office while he was alone in the office prior to letting Ms. Chaffey enter is not indicative of mala fides including but not limited to an attempt to conceal documents while the search was ongoing.

The members of the search teams testified as to the specific areas they were assigned to search and what they found. As documents were seized, the member of the search team placed them in envelopes which he/she labelled with their initials. The envelopes were then placed in boxes either labelled with the initials of that search team member or of another member of the search team. The documents were reviewed by counsel from Blakes on site and in the presence of the member of the search team that had seized the document and/or Ms. Burley. Counsel also reviewed the manner in which the hard drives had been cloned. Once counsel was satisfied and indicated the seized items could be released, the boxes and hard drives were transported to the Ministry's offices and locked in the vault. I therefore find that there was continuity throughout.

I heard no evidence that suggested Mr. Parentela attempted to conceal documents by placing them in the garbage can. I heard no evidence that suggested he attempted to destroy documents in his office by placing them in the garbage can. Even if there was an attempt at concealment, such attempt was ill founded as Mr. Parentela should have known that the members of the search team would look in the garbage can in his office. The fact that members of the search team did not find a secret room off of Mr. Parentela's office does not invalidate what they found and seized.

I heard no evidence that Ms. Burley's evidence was not independent from that of the audit branch of the Ministry of Finance.

Ms. Burley's evidence was straight forward. It was detailed and somewhat clinical as she described how she had reviewed every document seized and how she had put together similar documents and constructed charts listing each document. She described how she had correlated each document as against each chart where possible. She described how she ordered each document in terms of its importance and where there were conflicting documents which one she relied upon in coming to her conclusion(s). She detailed the methodology she utilized in calculating taxes owing where invoices showed zero tax collected and compared them to other business records so as to corroborate her findings.

Ms. Burley testified that numerous personal net worth statements pertaining to Mr. Parentela as well as financial statements pertaining to Le Jardin had been seized. Ms. Vanin testified as to how Mr. Parentela would ask her to prepare these statements and then change the numbers, which she did. Mr. Walsh testified that he too prepared different financial statements for Le Jardin and that he changed numbers at the behest of Mr. Parentela.

I heard no evidence that the net worth statements and/or the financial statements were considered as evidence pertaining to the quantum of taxes alleged to be owing. Even if I had heard such evidence, I could not so find. That being said, the testimony pertaining to the personal net worth statements of Mr. Parentela and the financial statements of the corporation(s) is that they were done for different financial institutions as well as private lenders and there was some puffery involved.

The defendants submit that Ms. Vanin's evidence was self-exculpatory, vague, self-serving and disingenuous. The crown submits that the description of Ms. Vanin's evidence as self-serving and self-exculpatory is solely based on the fact that she was also charged by the Ministry and later testified as a crown witness.

Ms. Burley testified that Ms. Vanin was initially charged because:

i. she was the controller;

ii. she had incriminating matters on the hard drive of her computer relating to sales amounts; and

iii. she had signed EHT and RST returns.

As Ms. Burley stated: "I believe she had a firm hand in understanding the financial situation". The evidence of Ms. Vanin is clear that she did to a certain extent. I say this because Ms. Vanin was aware:

i. that cash was received by Mr. Parentela and not accounted for;

ii. that there were discrepancies in the amounts being shown as going out and those coming in; and

iii. that the figures on the financial statements as well as Mr. Parentela's net worth statements were inflated or reduced at Mr. Parentela's request depending upon the financial institution or private lender that the statement was to go to.

The decision of the crown to stay the charges against Ms. Vanin was the crown's decision. The Court cannot interfere in prosecutorial discretion. That being said, on the basis of the evidence I heard, I cannot conclude that Ms. Vanin's evidence was self-exculpatory, vague, self-serving or disingenuous. To the contrary, and as stated earlier, I found her to be polite and engaged. She admitted what she did not know. She was not shaken in cross-examination.

Ms. Vanin's evidence was not contradicted. Ms. Vanin was employed at Le Jardin for twelve years. During this period she worked as the bookkeeper. Although Mr. Parentela changed her title to controller, her responsibilities never changed. She did not have signing authority or decision making authority on important business matters. She did not meet with bankers or lenders, except to drop off documents. She did not attend meetings with Messrs. Parentela, Walsh and Kanargelidis. She did not have access to all of Le Jardin's records and thus was unaware of its true sales revenue.

Ms. Vanin reported to Mr. Parentela and worked with him. On the basis of the documentation she was privy to, she had some awareness of Le Jardin's financial and business operations. She had some awareness of Mr. Parentela's personal situation. As previously discussed, she was not cognisant of the true picture. Ms. Vanin testified she knew that not all sales revenue was recorded in the deposit books and bank statements accessible to her. She knew cash was received by Mr. Parentela and how it was provided to him. She knew that Mr. Parentela paid some of the part-time employees with envelopes stuffed with cash.

Ms. Vanin testified there would often be a shortfall leading her to make inquiries of Mr. Parentela to ensure that Mr. Parentela's personal expenses as well as the business' expenses (including inter alia mortgages, construction costs and legal fees) were being covered. She testified she had a good handle on expenses as she paid the bills. She did not handle money coming in and did not make the deposits.

I heard no evidence which contradicted Ms. Vanin's knowledge that there were cash sales. Numerous invoices and sales documents tendered as exhibits corroborate Ms. Vanin's testimony that Le Jardin regularly dealt in cash sales. Further, I heard no evidence which contradicted Ms. Vanin's evidence that numerous employees were paid in cash. Ms. Vanin testified she prepared some thirty T4s although Le Jardin employed significantly more people than that. Finally, I heard no evidence which contradicted Ms. Vanin's testimony regarding the cash payments made by Mr. Parentela or upon his direction.

Ms. Vanin indicated that Mr. Parentela was fully aware of Le Jardin's day-to-day operations and financial obligations. Every financial decision was made by him. As she stated: "everything went through Carlo – all major decisions went through him. A simple decision to hire a waiter or waitress did not have to go through Carlo".

The defendants submit that the "Crown would have the court believe that Mr. Parentela is supremely unlikable, despicable, unsavoury, and at the very least, unpleasant to work for". I am uncertain where such a submission would come from as it is not based on any testimony I heard. Ms. Vanin described Mr. Parentela as a hands on employer who liked things done his way. When she expressed concerns to him about the mortgages and/or Mr. Catala, her concerns were dismissed. When she raised issues regarding cash payments received and not accounted for, she was spoken to by Mr. Parentela.

Ms. Vanin testified that at times she felt as though Mr. Parentela could be a bully. At the same time, Ms. Vanin indicated Mr. Parentela was generally a good employer and there was not a lot of turnover at Le Jardin. While Ms. Vanin may have felt unhappy at the way certain things were handled at Le Jardin, nonetheless she remained employed at the banquet hall until she lost her vision. While Ms. Vanin may have had concerns when she overheard Mr. Parentela suggesting she might be made a scapegoat, she did not quit her employment. Mr. Walsh had nothing negative to say about Mr. Parentela.

Ms. Vanin's responsibility for looking after PST was taken over by Mr. Catala in 2006. Prior to being replaced, Ms. Vanin was aware of Le Jardin's tax obligations, communicated with the Ministry and arranged a payment plan for Le Jardin's outstanding tax liability. Once Mr. Catala was retained her involvement with remitting provincial tax was limited to advising Mr. Parentela of what was owed as calculated by Mr. Catala. Although Ms. Vanin expressed reservations about Mr. Catala to Mr. Parentela, those were ignored. As a result she continued to sign her name to the tax returns prepared by Mr. Catala until 2009 when she stated she could not continue to do so as she did not trust the figures.

Ms. Vanin was not responsible for EHT. Until Mr. Catala was retained, Ms. Vanin would attend at the accountant's office to have him prepare the EHT returns. Once Mr. Catala was retained in 2006, her involvement with EHT ended. Her evidence was not disputed. The defendants' submission that this is "unbelievable" is unsupported by the evidence.

Ms. Vanin testified she continued to follow the payroll system which had been in place prior to her being hired. She did not question payroll practices. As she testified when asked about Mr. Parentela's children being on payroll she stated "I was not going to question what he does with his family". The defendants submission that Ms. Vanin's testimony regarding the payroll practices pertaining to Mr. Parentela's family is "an attempt to muddy waters and paint Mr. Parentela in a less than flattering light" is unsupported by the evidence. It was an answer to a question that was asked.

The defence submits that Ms. Vanin has some type of mala fides vis-à-vis Mr. Parentela and, as a result, her testimony should not be viewed as credible. I do not find this to be the case. I found Ms. Vanin to be credible. I found her testimony to be reliable. I believe her. Ms. Vanin had no difficulty in admitting what she did not know or did not recollect. For example, on occasion she admitted she had no recollection of preparing certain letters that had been found on the hard drive of her computer however she admitted that if they had been found on her computer then she would have authored them.

There is no doubt that Ms. Vanin worked closely with Mr. Parentela. She was candid in describing her relationship with Mr. Catala and her growing concerns regarding the service he was providing Le Jardin. She did not downplay her knowledge of the problems with the remittance of taxes. Ms. Vanin candidly admitted her concerns that too much money was being spent without enough revenue being seen coming in. She described how she would play with numbers and consistently change financial documents at the request of Mr. Parentela.

Ms. Vanin admitted that following the search of the premises her relationship with Mr. Parentela began to change. She told Mr. Parentela she did not want to do any work with the government and he hired someone to do that job. She overheard Mr. Parentela suggest to John Jalovec that she would be his scapegoat. Ms. Vanin testified she was afraid Mr. Parentela was going to blame her for not paying the taxes.

Notwithstanding any of the above Ms. Vanin continued to work with Mr. Parentela. She continued to report to him. She cooperated with Messrs. Catala, Walsh and Kanargelidis. She remained employed at Le Jardin until she lost her sight.

Mr. Walsh was hired by Mr. Parentela in 2010. He testified he communicated directly with Mr. Parentela and reported to him. Mr. Walsh stated Mr. Parentela was involved with the business and was aware if the business was doing well or not.

On the basis of the evidence I heard, Mr. Walsh was completely unaware of Orlando Catala's involvement with Le Jardin and Mr. Parentela. This makes no sense. Mr. Catala was the person tasked with liaising with the government and remitting taxes from 2006 onwards. Yet Mr. Walsh was unaware of his existence. He never met him. Instead, he erroneously believed Ms. Vanin was in charge of looking after tax remittances and that Mr. Parentela relied upon her to calculate the returns. As previously indicated, this is what Ms. Vanin did for the RST returns prior to 2006.

I accept that Mr. Walsh and Ms. Vanin had a good working relationship. Mr. Walsh testified that Ms. Vanin was quick to respond to requests for information made by him. Contrary to the submissions of both counsel, Mr. Walsh indicated Ms. Vanin was aware of the bills that needed to be paid and she was "good at reducing prices". Mr. Walsh did not opine on Ms. Vanin's competence as a controller; in fact, on cross-examination he admitted that Ms. Vanin would not have been a good controller in a large operation. He stated that everyone went to Ms. Vanin for money issues, however she was not included in any meetings he had with Messrs. Parentela and Kanargelidis.

Mr. Walsh determined that the amount owed for RST was $617,287.46. He did not deal with EHT.

Although not specifically admitted, there is no doubt Mr. Walsh did not conduct a fulsome review. He admitted he was familiar with the Sales Logix software program. He knew that Le Jardin used the Sales Logix software program yet he did not have access to it. He did not request access to the Sales Logix software program from Mr. Parentela, to whom he reported. Mr. Walsh admitted the information in Sales Logix would have helped with his analysis. He admitted that in coming to his conclusion that the amount of sales tax collected for the period of the assessment was $1,025,051.59, he did not review the Sales Logix excel spreadsheet as well as some 400 electronic documents in PDF form. Instead, he based his conclusions on the Simply Accounting files he received from Ms. Vanin as well as on some documentary disclosure.

Accordingly I cannot find that the conclusion drawn by Mr. Walsh, namely that the amount owed for RST was $617,287.46 was correct. As an aside I note that Mr. Walsh's calculations were incorrect as Le Jardin had remitted $428,165.86 to the Minister of Finance and thus the amount found owing by Mr. Walsh should have been $596,885.73.

Mr. Joslin was qualified as an expert witness in accounting and fraud examination. I had some difficulty with the testimony provided by Mr. Joslin as well as the conclusions from his report. I say this for the following reasons:

i. First, Mr. Joslin did not appear to have much knowledge of the business operations at Le Jardin. He was unaware of Mr. Parentela's role as general manager.

ii. Second, although Mr. Joslin testified he was interested in documentary evidence, nonetheless he admitted that he did not review all documentation. He did not review Mr. Walsh's notes and summaries. He did not cross reference the Sales Logix excel spreadsheet to work orders, function summary reports or to the testimony of customers who held events at Le Jardin. He admitted he did not rely upon the Sales Logix excel spreadsheet in coming to his conclusions.

Mr. Joslin testified he did not review the oral evidence of any of the witnesses. He reviewed some exhibits. As he stated: "I looked to what was presented in court. It was not my responsibility to make the crown's case. The crown had put its case in". When cross-examined about whether he would have approached matters differently while at the Canada Revenue Agency, he admitted he would have looked beyond the invoices, work orders and contracts. He did not do that here.

iii. Third, Mr. Joslin gave unsupported testimony. For example, there was no evidence to support his belief that Le Jardin staff made inadvertent errors in the calculation of sales tax or that there was no system of checks and balances when it came to sales and the applicability of tax.

When asked on cross-examination why some invoices were correct and others were not, Mr. Joslin was not able to answer the question.

Invoices from Exhibit 176: Invoices Tax Not Collected Book III were put to Mr. Joslin on cross-examination. He was asked about the same or similar errors being shown on invoices where the salespersons were Marco Ozomarzo, Sandro Calcagno, Gabrielle Verchessi, and Nina Greco. Mr. Joslin's response was that the errors were widespread throughout all salespeople. He stated that he disagreed that the system was designed to not break down the items yet he could not explain why some invoices had items broken down and others did not.

When Exhibit 98: Management Control Systems and Exhibit 125: Contract General Conditions were put to Mr. Joslin on cross-examination he did not appear to have any knowledge and/or recollection of having reviewed the documents. When asked whether Exhibits 98 and 125 indicate Le Jardin had a system of checks and balances in place when it came to sales and the applicability of tax, Mr. Joslin admitted the documents existed but then qualified his response by stating it was unknown whether they were acted upon.

iv. Fourth, Mr. Joslin was candid in admitting he did not understand the application of provincial sales tax. He admitted that he did not know whether certain items were or were not taxable and that, on occasion, he would follow Ms. Burley's lead on determining what was or was not taxable. Mr. Joslin admitted he took a cursory look at the legislation only insofar as it related to the more serious charges of tax evasion. He stated he attempted to research Ministry guides pertaining to banquet halls but never went outside the scope of that limited search to look at other potentially relevant guides pertaining to matters such as rentals and labour.

An example of this is the conclusion Mr. Joslin reached regarding variances for matters such as, inter alia"set up". Mr. Joslin was unaware that the Retail Sales Tax Act defines taxable service. He was unaware of how labour is interpreted. As a result he failed to distinguish between the acts of setting up the room as opposed to setting a table. This, in turn, led to numerous variances pertaining to set up costs for certain events listed in Exhibit 175: Tax Not Collected, an example of which is set out below:

August 9, 2008: Ashley and Long Wedding. Mr. Joslin testified he deducted in excess of $500.00 for set up and catering. Again, his interpretation is inconsistent with the legislation as well as the evidence that indicates there was a set up supervisor and notes pertaining to how the room was to be set up.

Another example was his assumption that "cash bar" was a non-taxable service. Mr. Joslin could not explain how he came to this conclusion other than stating he assumed cash bar meant a fee was charged to have a cash bar or it was included in the price per person fee. I did not hear any evidence that suggests this interpretation was correct. Further, Mr. Joslin could not explain how if a fee was charged to have a cash bar why it was paid post event or why there were inconsistencies in pricing for a cash bar from one event to another.

When asked on cross-examination about his interpretation, Mr. Joslin responded by saying "if my interpretation is wrong it is up to the court to say so". So be it: his interpretation is not correct.

v. Fifth, Mr. Joslin gave legal opinions which exceeded his scope of expertise. For example:

i. he opined on whether certain evidence bore the indicia of a civil issue as opposed to a criminal one;

ii. he opined on what evidence demonstrated mens rea, the level of proof required and whether the crown had proven its case beyond a reasonable doubt; and

iii. he opined that the Ministry is only entitled to tax that should have been collected rather than what was collected.

Mr. Joslin spent considerable time testifying about deductions for "civil" issues. In essence Mr. Joslin was suggesting to the court that the tax amounts had been proven in his mind to a civil standard only and so they should be deducted because they were not proven beyond a reasonable doubt.

The purpose of the Provincial Offences Act, R.S.O. 1990, c. P.33 is set out in s. 2(1) which states:

The purpose of this Act is to replace the summary conviction procedure for the prosecution of provincial offences, including the provisions adopted by reference to the Criminal Code (Canada), with a procedure that reflects the distinction between provincial offences and criminal offences.

The legislation is clear: the distinction is not between civil and criminal offences as opined upon by Mr. Joslin; it is between criminal and quasi-criminal offences. Provincial offences proceedings are penal in nature.

The crown submits that Mr. Joslin was not objective. She submits he was partisan. She submits little weight should be given to his evidence. The defendants submit Mr. Joslin's evidence was objective and non-partisan and should be accepted by the Court.

As Cromwell J. stated at paragraph 10 in White Burgess Langille Inman v Abbott and Haliburton Co., 2015 SCC 23:

10 In my view, expert witnesses have a duty to the court to give fair, objective and non-partisan opinion evidence. They must be aware of this duty and able and willing to carry it out. If they do not meet this threshold requirement, their evidence should not be admitted. Once this threshold is met, however, concerns about an expert witness's independence or impartiality should be considered as part of the overall weighing of the costs and benefits of admitting the evidence. This common law approach is, of course, subject to statutory and related provisions which may establish different rules of admissibility.

Contrary to the submission of the defendants, I find that Mr. Joslin was unable to agree with the Crown on the most uncontentious issues as they affected his clients. For example:

i. with respect to the contract review procedures set out in Exhibit 126 and found on Mr. Parentela's computer, he acknowledged the content of the document but then minimized it by stating: "it seems to me that someone set out instructions but where they went from there who knows";

ii. with respect to the Sales Logix notes set out in Exhibit 109 and found on Mr. Parentela's computer he stated that he did not see anything abnormal in there being an option for charging PST or GST; and

iii. he would not agree that s. 1 of the Retail Sales Tax Act defines taxable service and the definition would include set up.

Mr. Joslin's inability to concede anything affected his impartiality and independence as an expert.

On the basis of the reasons set out above, I do not put much weight on Mr. Joslin's expert report and on his testimony. I do not find that Mr. Joslin's evidence was impartial or that of a truly independent witness.

Even if I am incorrect regarding my conclusion as to how much weight should be given to Mr. Joslin's testimony including his expert report, on the basis of his own evidence I do not find that he conducted a fulsome review. I base that on Mr. Joslin's admissions pertaining to the numerous documents he did not look at in order to come to his conclusions as well as his admission that he did not review the testimony of any of the witnesses that had preceded him.

(c) Business Records

Thousands of documents in paper format as well as on the hard drives of six computers were seized from Le Jardin's business premises as well as the business premises of its then accountant, Mr. Walsh. The defendants did not bring an application under s. 8 of the Charter. The defendants did not object to the documents being admitted into evidence.

Section 16 of the RSTA requires vendors to keep business records:

(1) Every manufacturer, wholesaler, importer, jobber, agent and vendor shall keep records of their purchases and sales of tangible personal property whether for consumption or use or for resale which records clearly identify the persons to whom sales for resale are made, and any failure to do so constitutes an offence against this Act.

(2) Every vendor of taxable services shall keep records of all purchases and sales made by the vendor of tangible personal property, and records of all purchases and sales made by the vendor of taxable services, whether for consumption, use or resale, and any failure to do so constitutes an offence under this Act.

Regulation 1012 requires the records to be kept at the person's place of business or residence in Ontario. Section 21 states:

(1) Every person required to keep records under section 16 of the Act shall keep records at the person's place of business or residence in Ontario in sufficient form and containing sufficient information in order that the Minister may determine the amount of tax charged, collected, payable and remitted.

(2) Records may be kept in a form that is a reproduction made by any photographic, photostatic, microfiling or other process that reproduces an exact copy of the original record, if the person required to keep the record provides reasonable access to any equipment required in order to read the reproduced record.

(3) Records may be kept by the use of electronic data processing media if the person required to keep the records,

(a) allows the Minister to conduct reasonable tests on the hardware and software comprising the system in order to verify the accuracy of the processing of transactions and the accuracy of data processing controls;

(b) provides full information on all computer programs and changes thereto; and

(c) maintains an accounting system designed to provide access to primary source documents and data containing the transactions recorded by the data processing system.

The defendants admit they were required to keep business records.

Ms. Burley cross-referenced invoices, contracts, and work orders to the sales recorded in the Sales Logix excel spreadsheet and was able to show that most of the event sale documents contained in the exhibit books were traceable to the Sales Logix excel spreadsheet.

Ms. Burley's evidence pertaining to function summary reports, labour reports and staff assignment sheets also showed that the events recorded in the Sales Logix excel spreadsheet did take place.

The defendants submit that the documents should be given little or no weight because the documents were not authenticated by the author or recipient and the truth of the contents has not been verified. The crown submits that the documents are documents in possession of the accused and thus admissible and reliable as original evidence. The crown further submits that the documents are business records and therefore fall within the exception to the hearsay rule. The crown submits that many of the documents by their very nature did not require authentication as they are either original evidence or fall within s. 35 of the Evidence Act, R.S.O. 1990, c. E.23 ("Evidence Act").

Section 35(1) of the Evidence Act defines business and record as follows:

"business" includes every kind of business, profession, occupation, calling, operation or activity, whether carried on for profit or otherwise;

"record" includes any information that is recorded or stored by means of any device.

In R v Ramratten, 2015 ONCJ 567, Bacchus J. dealt with the admissibility of business records on a voir dire. While I recognize that the issues before Bacchus J. dealt with admissibility and not weight, nonetheless what she had to say regarding the routes to the admissibility of business records bears repeating:

62. Evidence that an accused was in possession of a document or has acknowledged, adopted or acted on the document, is admissible as direct or circumstantial evidence of the truth of its contents under the admissions exception to the hearsay rule. R v Wood (2001) 2001 NSCA 38 , 157 C.C.C. (3d) 389; Phipson on Evidence (15th ed) (London: Sweet & Maxwell Ltd., 2000).

63. If a document is not linked to an accused person in the manner described above, its admissibility is governed by the application of an exclusionary hearsay rule. Records may be introduced as business records either via statute (s. 30 CEA), via the common law business exception, or pursuant to the principled exception to hearsay. Where there are multiple means of introducing a document into evidence, the Crown is not required to choose among them.

Ramratten was a criminal prosecution relating to fraudulent activity involving persons associated with the Salvation Army and one of its distribution centres. The fraudulent activities came to light during the course of an audit. Search warrants and productions orders were obtained. Documents were seized by the police pursuant to the search warrants. The admissibility of some of the documents seized were considered by Bacchus J. on the voir dire.

As Ramratten was a criminal prosecution, it dealt with the admissibility of business records under the Canada Evidence Act, R.S.C. 1985, C. C-5. Section 30(1) states:

Where oral evidence in respect of a matter would be admissible in a legal proceeding, a record made in the usual and ordinary course of business that contains information in respect of that matter is admissible in evidence under this section in the legal proceeding on production of the record.

The provisions pertaining to business records under the Canada Evidence Act and the Evidence Act are similar albeit not the same and therefore I rely upon them with the necessary modifications.

The crown submits that Le Jardin's business records are original evidence and therefore not hearsay. Accordingly the records are automatically admissible and can be used for the truth of their contents. The crown submits the business records are reliable.

The common law provides that documents found in possession of a party are admissible for various purposes. Canadian authorities have adopted the doctrine of documents in possession as articulated in Phipson on Evidence, 13 ed., (London: Sweet and Maxwell, 1982) at para. 21-09:

Documents which are, or have been, in the possession of a party will, as we have seen, generally be admissible against him as original (circumstantial) evidence to show his knowledge of their contents, his connection with or complicity in, the transactions to which they relate, or his state of mind with reference thereto. They will further be receivable against him as admissions (ie. exceptions to the hearsay rule) to prove the truth of their contents if he has any way recognised, adopted or acted upon them.

Evidence must be presented as to the nature of the possession of the accused. Mere possession creates a presumption that the possessor had knowledge of the contents. The documents may be used to prove the truth of the contents contained in them if the party has recognized, adopted or acted on them.

In this case, the documents belong to Le Jardin. They are the property of Le Jardin. They were kept by Le Jardin. They were seized from Le Jardin's business premises as well as from the office of Le Jardin's accountant, Mr. Walsh. The documents seized from Mr. Walsh's office related to Le Jardin.

The defendants submit there is a serious and significant dispute as to the veracity of the truth of the documents' contents. The defendants did not lead any evidence on this issue. Such a bald assertion without any evidence is problematic.

As I indicated earlier in this decision, I reviewed the documents. The documents themselves relate to the day to day activities of Le Jardin. Specifically, they relate inter alia to sales, to employees and to business transactions involving employees, management and third parties such as banks, private lenders and the government. The documents relate to the functioning of the banquet hall and the duties of those employed on either a full time or part time basis. They relate to the operations of Le Jardin from the most senior level down to the part time staff. They are factual in nature.

The crown submits, in the alternative, that the business records introduced into evidence fall within the business record hearsay exception.

Section 35(2) of the Evidence Act states:

Any writing or record made of any act, transaction, occurrence or event is admissible as evidence of such act, transaction, occurrence or event if made in the usual and ordinary course of any business and it was in the usual and ordinary course of such business to make such writing or record at the time of such act, transaction, occurrence or event or within a reasonable time thereafter.

Section 35(4) further provides:

The circumstances of the making of such a writing or record, including lack of personal knowledge by the maker, may be shown to affect its weight, but such circumstances do not affect its admissibility.

In the voir dire motion as to the admissibility of business records under s. 35 of the Evidence Act in R v Felderhof, 2005 ONCJ 406 , Hryn J. set out, in paragraph 27, eight requirements that need to be met for a document to be considered a business record:

1. Record made on some regular basis, routinely, systematically
2. of an act, transaction, occurrence or event,
3. and not of opinion, diagnosis, impression, history, summary or recommendation
4. made in the usual and ordinary course of business
5. if it was in the usual and ordinary course of such business to make such record,
6. pursuant to a business duty
7. at the time of such act or within a reasonable time
8. and where the record contains hearsay, both the maker and the informant must be acting in the usual and ordinary course of business.

These eight requirements essentially constitute s. 35(2) of the Evidence Act.

In this case the documents record an event or occurrence, were made in the usual and ordinary course of business of Le Jardin, made regularly, made at the time of the act or within a reasonable time thereafter and made pursuant to a business duty by an author acting in the usual and ordinary course of the business.

I find that the documents listed in Schedule "A" attached to this decision are business records pursuant to s. 35 of the Evidence Act as well as original evidence connecting Mr. Parentela and Le Jardin to the documents without resort to the hearsay exception. As previously indicated, these documents were found during the course of the execution of the search warrants. The documents were either in paper form or found on the hard drives of computers, including Mr. Parentela's personal work computer.

Ms. Vanin identified and explained many of the business records tendered as evidence. Her identification of and explanation of the business records was not challenged. Her evidence supplements my conclusion that the documents in Schedule "A" attached are admissible for the truth of their content. They are reliable.

Further, and with respect to the Sales Logix excel spreadsheet, I find that the recording of the event sales in the Sales Logix excel spreadsheet was made in the usual and ordinary course of business of Le Jardin.

I also find that the documents listed in Schedule "B" are a compilation of documents put together in a book format solely for ease of reference and they too are original evidence and/or business records. As such I find these business records to be admissible for the truth of their content. They are reliable.

The defendants appear to rely upon the common law exception to adduce business records.

At common law a business record is admissible to prove the truth of its contents if:

i. it was made at or near the time of the matter recorded;

ii. it was made by someone with personal knowledge of the matter recorded and whose position obliged them to record the information; and

iii. it was made in the ordinary course of business.

The defendants rely upon the Supreme Court of Canada decision in Ares v Venner, [1970] S.C.R. 608. In that case, the main issue dealt with the admissibility of notes made by hospital nurses who attended to the care of a patient. The nurses did not testify at trial although they were in the courtroom and able to do so if necessary. The Supreme Court of Canada held at page 626 as follows:

Hospital records, including nurses' notes, made contemporaneously by someone having a personal knowledge of the matters then being recorded and under a duty to make the entry or record should be received in evidence as prima facie proof of the facts stated therein.

The Alberta Court of Appeal summarized the common law records admissibility rule in R v O'Neil, 2012 ABCA 162, as follows:

i. an original entry; ii. made contemporaneously; iii. in the routine; iv. of business; v. by a recorder functioning in the usual and ordinary course of a system in effect for the preparation of business records; vi. who had a duty to make the record; and vii. who had no motive to misrepresent.

While the defendants are correct in their interpretation of the common law exception, nonetheless in this case the crown is not relying upon the common law exception or upon the principled approach.

The defendants submit that the majority of documents seized are internal business documents not required to be produced as part of any reporting or remittance obligation to the Ministry. I disagree. Le Jardin was requested to produce documents for an audit. It did not respond. A further request was made of Le Jardin to have an authorization signed thereby permitting the auditors to speak with Le Jardin's accountant(s). Yet again Le Jardin did not respond.

The Evidence Act does not define internal document. As previously set out, it defines business records. I was not provided with any caselaw nor have I found any in support of the defendants' position.

(d) Director's Liability

The corporate searches as well as the testimony of Ms. Burley and Ms. Vanin indicate that Mr. Parentela was the sole shareholder, director, officer and operating mind of Le Jardin. Both Mr. Walsh and Ms. Vanin reported to and took direction from Mr. Parentela.

Numerous pieces of correspondence in the name of Mr. Parentela as manager of Le Jardin Special Event Centre Inc., president and general manager of Le Jardin [Banquet Halls], and on behalf of 622192 Ontario Ltd. were also entered as exhibits.

Both the RSTA and the EHTA provide for the liability of a corporation's officers and directors. Specifically:

Sections 42 and 43 of the RSTA state, in part, as follows:

42. Any officer, director or agent of a corporation, or any other person, who directed, authorized, assented to, acquiesced in or participated in the commission of any act by the corporation which is an offence under this Act, or the omission of any act the omission of which is an offence under this Act, is guilty of an offence and on conviction is liable to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted of any offence under this Act.

43.(1) Where a corporation has failed to collect tax or has collected tax and failed to remit the tax or has failed to pay any interest or penalty relating thereto, the directors of the corporation at the time the corporation was required to collect or remit the taxes or to pay the interest or penalty relating thereto, are jointly and severally liable, together with the corporation to pay such amounts.

(3) A director of a corporation is not liable for a failure described under subsection (1) if the director exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances.

Section 36 of the EHTA states:

Where a corporation is guilty of an offence under this Act, any officer, director or agent of the corporation who directed, authorized, assented to, acquiesced in, or participated in, the commission of the offence is guilty of the offence and on conviction is liable to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted.

The crown submits that Mr. Parentela was at all relevant times the operating and controlling mind of Le Jardin. She submits he was not a passive or absentee director but was the decision maker for the business and that he was fully aware of all aspects of Le Jardin's sales and payroll practices. The defendants submit that Mr. Parentela was not hands on when it came to bookkeeping and accounting for Le Jardin and specifically the reporting and remittances of taxes.

I disagree with the defendants. The evidence of Ms. Vanin was that Mr. Parentela was involved in the day to day business of Le Jardin. The evidence of Mr. Walsh was that Mr. Parentela was all over the place and he knew if the business was doing well or not. According to Mr. Walsh, in an early retainer meeting with Messrs. Parentela and Di Manno, Mr. Parentela advised that he wanted to ensure that federal and provincial taxes were being paid and that the proper documents were being filed. According to Mr. Walsh, Mr. Parentela was well aware of the tax obligations but was unhappy with the amount(s) required to be remitted. According to Ms. Vanin, she was replaced by Mr. Catala because Mr. Parentela believed she was not calculating taxes correctly as the business was paying too much in taxes and Mr. Catala could reduce them as he had certain write offs he could utilize.

Mr. Parentela received all deposits plus the deposit reports, held all cash collected and signed off on the bank reconciliations. He received the weekly event collections reports.

Ms. Vanin and Mr. Walsh reported to and took direction from Mr. Parentela. They both testified that they drafted financial documents at Mr. Parentela's behest and made the amendments sought by him.

Ms. Burley testified that Le Jardin event sales were recorded using Sales Logix software. Ms. Vanin and Mr. Walsh stated that Le Jardin used the Sales Logix software in the operation of the business. Ms. Vanin, Mr. Catala and Mr. Walsh did not have access to Sales Logix; only Mr. Parentela had the administrative rights to it. Mr. Parentela's computer's hard drive contained a Sales Logix excel spreadsheet. This spreadsheet indicated whether the event had been completed or was simply an order. Sales Logix also generated event sales summary reports, deposit reports, labour reports, contracts, work orders and invoices.

The Sales Logix documentation was found on the hard drive of Mr. Parentela's computer. He was the only person with administrative access to the Sales Logix software program. As Ms. Vanin testified, this enabled Mr. Parentela to make changes to the documentation after an event, including deleting the existence of the event. I have previously found the Sales Logix documents to be business records pursuant to s. 35 of the Evidence Act as well as original evidence.

That being said, Ms. Burley testified that Le Jardin stopped updating the status of events in Sales Logix in or about February 2010. This resulted in events not showing as complete despite that being the result.

An example of this is contract 27390 found in Exhibit 177: Invoices Tax Not Collected Book IV. Jessica Pompeo testified she was a member of an event planning committee involved with Roaring for the Cure, a woman's event put on by the Foundation for Princess Margaret Hospital. She testified that events were held at Le Jardin in 2009 and 2010.

Ms. Pompeo testified about the event held June 18, 2010 which she attended. She testified the contract was for $11,000.00 all in. No taxes were shown. The contract was cross-referenced with the Sales Logix excel spreadsheet and was depicted as an order and not as complete, despite the event having taken place and having been paid for. The amount shown on the Sales Logix excel spreadsheet was $11,968.00.

Ms. Burley testified that the Sales Logix excel spreadsheet showed $32,690,162.53 in event sales for the relevant period. The evidence is undeniable that Mr. Parentela knew the true sales revenue and chose not to disclose it to Ms. Vanin or to Messrs. Catala and Walsh. I say this for the following reasons:

i. Ms. Vanin, Mr. Catala and Mr. Walsh did not have access to Sales Logix. As such, they could only rely upon the sales recorded in Simply Accounting on which to base the tax remittances;

ii. Ms. Vanin testified Simply Accounting did not include cash sales, including bar;

iii. Ms. Vanin and Mr. Walsh were aware that Le Jardin received cash payments. Ms. Vanin described how cash was deposited into a mail slot in a safe room to which Mr. Parentela only had thumbprint access;

iv. Ms. Vanin testified how when she asked about cash received on the weekend Mr. Parentela would admonish her;

v. Ms. Vanin testified that the monies Le Jardin showed as received were not consistent with monies being paid out and that when she bought those concerns to Mr. Parentela he brushed them aside; and

vi. Ms. Vanin testified Le Jardin paid numerous employees in cash which came from Mr. Parentela.

Ms. Vanin was the individual who provided the Simply Accounting and bookkeeping information to Messrs. Catala and Walsh. As Ms. Vanin did not have access to the correct sales information, neither would Messrs. Catala or Walsh.

Accordingly I find that Mr. Parentela intentionally withheld the correct sales revenue from Ms. Vanin and Messrs. Catala and Walsh in order to minimize Le Jardin's tax liability.

Mr. Parentela registered 622912 Ontario Ltd. and 1375923 Ontario Inc. as employers with the Ministry of Finance. As the operating mind of the business he was responsible for reporting Le Jardin's remuneration to the Ministry and paying the requisite amount of employer health tax.

Ms. Vanin testified that her duties did not include the calculation of EHT. She testified she last filed an EHT return on behalf of Le Jardin in 2006. The payment of the taxes came from Mr. Parentela. I heard no evidence regarding whether Mr. Catala participated or did not participate in the remuneration of employees. Mr. Walsh testified he occasionally signed paycheques when Mr. Parentela was not present. Mr. Parentela was the person who signed the paycheques and either directed cash envelopes be provided to part time employees or distributed those cash envelopes himself.

In conclusion, no monthly employer health tax statements, instalments, annual returns or payments were made by Le Jardin to the Minister of Finance since 2006. The earlier filings and payments made by Mr. Parentela clearly indicate he was well aware of Le Jardin's obligations under the legislation and chose not to comply.

The same can be said for retail sales tax. Mr. Parentela applied for and obtained a vendor permit for 1375923 Ontario Inc. on March 17, 2000. He knew that Le Jardin was required to collect and remit PST to the Ministry.

Mr. Parentela had previously signed remittance cheques. That notwithstanding, no returns have been filed and no PST remittances have been made since September 2009. The earlier filings and payments made by Mr. Parentela clearly indicate he was well aware of Le Jardin's obligations under the legislation and chose not to comply.

I accept that Mr. Parentela hired numerous persons to deal with the remittance of tax. Ms. Vanin reported to Mr. Parentela. Ms. Vanin provided the documentation prepared by Mr. Catala to Mr. Parentela for his review. Mr. Catala and Mr. Parentela would meet to review the tax remittances prepared by Mr. Catala. According to Ms. Vanin, Mr. Parentela would then provide Mr. Catala with the funds to pay the taxes as well as with his draw.

The defendants submit that Ms. Vanin was unqualified to deal with the tax remittances. That may well be the reason why Mr. Catala was hired. While Ms. Vanin believed Mr. Catala to be unqualified to do the job, nonetheless Mr. Parentela continued to have Mr. Catala ostensibly prepare and remit the taxes until Mr. Walsh was hired in 2010. As Mr. Walsh testified, he would tell Mr. Parentela that a certain amount was owed. Mr. Parentela would say that was not possible. Mr. Parentela would make him review the reports, which he did. Most of the time Mr. Parentela would agree with him but he did not want to accept the answer.

The defendants submit that Mr. Parentela relied on his multiple employees to deal with the multitude of day-to-day tasks associated with the running of Le Jardin. That may well be correct as there were protocols in place setting out the duties of the employees. For example, Le Jardin had protocols which set out management control systems (Exhibit 98) as well as the accounting department task list which required inter alia that labour reports are to be provided to Mr. Parentela by Tuesday (Exhibit 99). Both exhibits detail the segregation of duties of Le Jardin's employees. This is consistent with Ms. Vanin's testimony regarding the provision of labour reports as well as decision making authority. Exhibit 86: List of Items Required to Complete Review Dated October 31, 2008, states, in part, that Mr. Parentela is the only person with signing authority and he is the person who makes decisions. This is consistent with Ms. Vanin's testimony that Mr. Parentela was a hands on employer and that all major decisions went through him. I heard no evidence suggesting otherwise.

I find Mr. Parentela's attempt to distance himself from the tax obligations to be inconsistent with the way Le Jardin operated. Although Ms. Vanin and then Mr. Catala and then Mr. Walsh were supposed to look after tax remittances, neither Ms. Vanin nor Mr. Walsh were responsible for EHT remittances. Further, on the evidence I heard, Ms. Vanin historically reviewed the tax remittances with Mr. Parentela and he provided the funds to pay the taxes. Mr. Walsh reviewed the tax remittances with Mr. Parentela. Ms. Vanin believed that Mr. Catala reviewed the tax remittances with Mr. Parentela who also provided him with the funds to pay. Mr. Walsh also reviewed the tax remittances with Mr. Parentela who provided the funds to pay. While Ms. Vanin's belief as to what Messrs. Catala and Parentela did regarding payment of taxes may be hearsay, nonetheless her belief is consistent with the way Mr. Parentela did things while she was in charge of dealing with the tax remittances and the continuation of same once Mr. Walsh was retained.

In my opinion Mr. Parentela's submission that he did not know or was unaware of the tax obligations is not supported by the evidence. There was no evidence from the defendants regarding this issue. Numerous notices of assessment and statement of account letters sent by the Ministry of Finance were seized during the execution of the search warrant at Le Jardin's premises. I am bolstered in my opinion by Exhibit 128, being a letter from Mr. Parentela to the CRA. In this letter dated January 25, 2006, Mr. Parentela evinces knowledge of the GST and source deductions requirements. It is inconceivable that he was aware of his federal tax obligations but not aware of his ongoing obligations under the RSTA and the EHTA especially when filings had been made in the past and he had signed the cheques for those filings.

On the basis of the evidence I heard, I find that Mr. Parentela engaged in a course of conduct that was deceptive. This deceptive conducted resulted in a course of ongoing tax evasion intended to minimize the amount of tax to be paid to the Ministry. I say this for the following reasons:

i. Mr. Parentela operated the business under two names at the same time for a period of time;

ii. Mr. Parentela did not obtain a vendor permit for Le Jardin Conference and Event Centre Inc.;

iii. Mr. Parentela did not notify the Ministry of Finance of the change in name of the corporation;

iv. Mr. Parentela did not cooperate with the auditors. Specifically he failed to produce the books and records requested for the purpose of the audit;

v. Mr. Parentela did not enable Ms. Vanin, Mr. Catala or Mr. Walsh to access the correct sales numbers from Sales Logix;

vi. Mr. Parentela did not enable Ms. Vanin or Mr. Walsh to access information pertaining to cash sales;

vii. Mr. Parentela lied to Ms. Burley when he told her that there were no records pertaining to 1375923 Ontario Inc. on the premises of Le Jardin as some were found on site; and

viii. Mr. Parentela instituted a payroll system whereby only a portion of Le Jardin employees received T4 slips.

(e) The Charges

(1) Retail Sales Tax Act

The RSTA requires vendors of tangible property to collect tax and hold it in trust for Her Majesty. Vendor is defined in section 1(b) of the Act as follows:

"vendor" means a person who, in the ordinary course of business, sells or renders a taxable service.

It is not disputed that Le Jardin was a vendor within the meaning of the Act.

Section 2 of the RSTA sets out the rate of tax to be charged for purchasers of tangible personal property. The rate is 8%. Liquor, beer and wine are taxed at 10%.

(A) Wilfully Evade Tax

Le Jardin and Mr. Parentela, as director, are each charged with one count of wilfully evading the payment of tax. Section 32(4) (d) of the RSTA states:

(4) Every person is guilty of an offence who has,

(d) wilfully, in any manner, evaded or attempted to evade compliance with this Act or payment of taxes imposed by this Act

The offence is a mens rea offence. The mens rea component of the offence of tax evasion is set out by Doherty J.A. in R v Klundert, [2004] O.J. No. 3515 (ONCA) at para 46:

More precisely I think the fault component in s. 239(1)(d) is twofold. First, the accused must know that tax is owing under the Act and second, the accused must intend to avoid or intend to attempt to avoid payment of that tax. An accused intends to avoid, or intends to attempt to avoid, payment of taxes owing under the Act where that is his purpose, or where he knows that his course of conduct is virtually certain to result in the avoiding of tax owing under the Act.

Klundert was an appeal from a conviction of making a false statement on an income tax return and a cross-appeal from an acquittal on the charge of tax evasion. While the case dealt with charges under the Income Tax Act s. 239(1) (d) is similar to s. 32(4) (d) of the RSTA.

Ms. Burley testified that Le Jardin realized $32,690,162.53 in revenue from sales during the relevant time period but only reported $13,688,629.32 in total sales to the Minister of Finance.

Le Jardin collected $1,743,284.68 in retail sales tax from its customers during the relevant time period. Ms. Burley testified Le Jardin only reported $362,649.29 on its monthly returns. Specifically:

i. between April 4, 2008 – October 16, 2008, the Minister of Finance received sixteen RST returns for the months of May 2007 – August 2008. The total amount reported on those sixteen RST returns was $271,116.36; and

ii. RST returns were filed individually for the months of September 2008 – September 2009. The amounts reported on those returns totalled $91,532.93.

Mr. Parentela was the operating mind of Le Jardin. He made all decisions for Le Jardin. He knew that taxes had to be paid as they had been paid in the past. He had historically signed the cheques for the tax remittances. He was aware of the requirements for payment of taxes and yet Le Jardin stopped making payments.

Ms. Vanin testified that when Mr. Catala took over the responsibility for completing the retail sales tax returns, he would provide her with figures that she would input into the returns. Ms. Vanin would email Mr. Parentela and advise him that she had met with Mr. Catala, that a certain amount was due for the retail sales tax, and that Mr. Catala wanted to be paid his fee. Ms. Vanin believed that Mr. Parentela would subsequently meet with Mr. Catala, provide him with the funds to pay the taxes as well as his fees, and Mr. Catala would then attend the bank and make the payment. She was buttressed in her belief as Mr. Catala would attend her office, they would discuss what he was there for, he would await Mr. Parentela and then meet with Mr. Parentela. The RST returns filed for the months of May 2007 – September 2009 corroborate Ms. Vanin's testimony.

At the same time Mr. Parentela did not disclose the amounts of cash Le Jardin received to Ms. Vanin and, as a result, these amounts were not entered into Simply Accounting. He did not enable his bookkeeper/controller, his tax consultant and his accountant to have access to Sales Logix. This was Mr. Parentela's decision. I heard no evidence to the contrary.

Mr. Parentela's actions minimized the quantum of RST due and owing. Again, I heard no evidence that would suggest the defendants did not understand what they were doing.

By not disclosing cash payments and by not permitting those persons who were hired to prepare the retail sales tax returns to have complete access to all forms of record keeping such as through Sales Logix, the defendants engaged in a course of conduct which had the effect of evading payment of taxes owing under the RSTA.

No defence was led on this issue. Accordingly, on the basis of the evidence I heard, I find that Le Jardin and Mr. Parentela, as director, wilfully failed to declare $1,380,635.39, more or less, in retail sales tax. I therefore find the defendants guilty of the offence as set out.

(B) Making False or Deceptive Statements in Returns

Le Jardin and Mr. Parentela, as director, are charged with 28 counts of making false or deceptive statements in a retail sales tax return. Section 32(4) (a) of the RSTA states:

(4) Every person is guilty of an offence who has,

(a) made, or participated in, assented to or acquiesced in the making of, false or deceptive statements in a return, certificate, statement or answer, delivered or made as required by or under this Act or the regulations

The crown submits that of the twenty nine retail sales tax returns filed by Le Jardin, twenty eight contained false or deceptive statements by understating the amount of retail sales tax collected.

Ms. Burley testified that in coming to her conclusion that 28 retail sales tax returns were false she relied on the source documents. If there were no source documents she relied upon the calculation on the Sales Logix excel spreadsheet.

Ms. Burley testified that Le Jardin appeared to use a formula to calculate the amount of retail sales tax collected as opposed to relying on the actual tax records. Ms. Burley testified that between May 2007 and September 2009 there seemed to be a trend showing approximately 33.3% of taxable sales being declared and thus reported. In light of this she prepared Exhibit 183: RST Reported Formula where she broke down the items on a month by month basis, compared the amount of taxes to sales to get a ratio. Ms. Burley testified she obtained a factor 37.5 which was consistent. She stated that the factor changed and then returned to 37.8. She concluded that:

i. eighteen retail sales tax returns filed showed the amount of retail sales tax reported is the sales amount divided by 37.5. This resulted in the declared tax being 2.7% of the total sales amount reported; and

ii. eleven retail sales tax returns showed a range of 2.7% to 5.6% of the total sales for that month.

The defendants submit the formula referred to above is speculative and manufactured from seized internal Le Jardin documents which have not been authenticated or verified as to the truth of their contents. I disagree. The formula referred to by Ms. Burley consists of her mathematical calculations based on what was set out on the business records. I have previously found those records to be admissible as to the truth of their contents.

As previously indicated, Mr. Parentela has been running Le Jardin's business operations since 1987. He was, at all material times, well aware of Le Jardin's obligations as a vendor under the RSTA.

The evidence is clear that Mr. Parentela withheld the true amount of sales revenue from Ms. Vanin, Mr. Catala and Mr. Walsh by not enabling them to have access to Sales Logix and by not providing them with information pertaining to the amounts of cash received. The draft RST returns were emailed to Mr. Parentela for his review and approval. I heard no evidence regarding Mr. Parentela correcting or amending the draft RST returns to include cash payments or information available from Sales Logix. As such, the returns, when filed, were always incorrect as they did not show the true amount of sales revenue. Mr. Parentela was the only person who knew the truth and therefore I find that Mr. Parentela knew the amounts of PST being reported as tax payable were understated and not true.

I disagree with the crown's submission that Mr. Parentela purposefully hired under qualified people. There is no evidence to suggest that is correct. While there is no doubt that there were problems with the work Ms. Vanin, Mr. Catala and Mr. Walsh did, those problems were, in my opinion, mostly as a result of Mr. Parentela's decision to withhold necessary information from them.

The defendants did not present any evidence in answer to the charges.

Accordingly I find the defendants guilty of the offences as set out.

(C) Failing to Remit Retail Sales Tax Collected

Le Jardin and Mr. Parentela, as director, are charged with failing to remit retail sales tax in the amount of $1,315,118.82, more or less.

Section 13 of the RSTA states:

(1) All taxes and all amounts collected as or on account of tax by a vendor under this Act shall, subject to subsections 2(16) and (16.3), be remitted to the Minister at the time or times and in the manner prescribed by the Regulations.

(2) Every person who contravenes subsection (1) is guilty of an offence and is liable on conviction to one or both of the following penalties in addition to any penalty otherwise provided by this Act:

1. A fine that is,

i. A minimum of $100 or 25 per cent of the amount of tax and amounts collected as, or on account of, tax under this Act that were not remitted, whichever is greater, and

ii. A maximum of double the amount of tax and amounts collected as, or on account of, tax under this Act that were not remitted, if the maximum so calculated is greater than $100.

2. Imprisonment for a term of not more than two years.

Section 45 of the RSTA states that the onus of proof is on the accused to show that the tax was paid, collected or remitted.

Ms. Burley testified Le Jardin collected $1,743,284.68 in RST from its customers between May 2007 – June 2010 and remitted $428,165.86. She concluded that Le Jardin collected but did not remit RST in the amount of $1,315,118.82.

Mr. Joslin testified that the amount of RST collected and not remitted was either $0.00 or $865,103.37 depending upon which scenario was preferred. In coming to his conclusions Mr. Joslin reduced the figures arrived at by Ms. Burley by what he viewed as staff errors, room rental and what he viewed as unsupported event figures. He admitted he did not:

i. review function summary reports, deposit reports or labour reports;

ii. cross reference the Sales Logix excel spreadsheet to work orders, function summary reports or to the testimony of customer who held events at Le Jardin;

iii. ask Mr. Parentela for Le Jardin's business records to review them; or

iv. review Mr. Walsh's notes and summaries,

all of which Ms. Burley testified to having done in order to arrive at her conclusion.

Under s. 13 of the Act, the amount of RST to be remitted is based on the amount of RST collected from the vendor's customers. It does not matter if that amount was incorrect.

Mr. Joslin concluded that incorrect amounts were collected from Le Jardin's customers. Even if I were to accept his conclusion, the legislation is clear: the amount of tax to be remitted is based on what is collected from the customer, whether that amount is correct or not: Ironworkers Local 736/765 Rodmen Benefit Plan v Minister of Finance at para. 9 and 16.

In this case Le Jardin collected $1,743,284.68 in RST from its customers during the relevant time period. Le Jardin remitted $428.165.86 to the Minister of Finance. Accordingly I find that Le Jardin failed to remit $1,315,118.82, more or less.

The offence of failing to remit retail sales tax collected is one of strict liability. In R v Sault Ste Marie, [1978] 2 SCR 1299 the Supreme Court of Canada recognized three categories of offences. Dickson J., in writing for the Court, held at pp. 1325 – 1326:

I conclude, for the reasons which I have sought to express, that there are compelling grounds for the recognition of three categories of offences rather than the traditional two:

1. Offences in which mens rea, consisting of some positive state of mind such as intent, knowledge, or recklessness, must be proved by the prosecution either as an inference from the nature of the act committed, or by additional evidence.

2. Offences in which there is no necessity for the prosecution to prove the existence of men rea; the doing of the prohibited act prima facie imports the offence, leaving it open to the accused to avoid liability by proving that he took all reasonable care. This involves consideration of what a reasonable man would have done in the circumstances. The defence will be available if the accused reasonably believed in a mistaken set of facts which, if true, would render the act or omission innocent, or if he took all reasonable steps to avoid the particular event. These offences may property be called offences of strict liability. Mr. Justice Estey so referred to them in Hickey's case.

3. Offences of absolute liability where it is not open to the accused to exculpate himself by showing that he was free of fault.

Offences which are criminal in the true sense fall in the first category. Public welfare offences would prima facie be in the second category. They are not subject to the presumption of full mens rea. An offence of this type would fall in the first category only if such words as "wilfully""with intent""knowingly", or "intentionally" are contained in the statutory provision creating the offence. On the other hand, the principle that punishment should in general not be inflicted on those without fault applies. Offences of absolute liability would be those in respect of which the Legislature had made it clear that guilt would follow proof merely of the prescribed act. The overall regulatory pattern adopted by the Legislature, the subject matter of the legislation, the importance of the penalty, and the precision of the language used will be primary considerations in determining whether the offence falls into the third category.

As Libman J. writes in Libman on Regulatory Offences in Canada (British Columbia: Earlscourt Legal Press Inc., 2002) at page 6-2:

The essence of a strict liability offence is that in order to avoid conviction the defendant must prove, on a balance of probabilities"either that he had an honest but mistaken belief in facts which, if true, would render the act innocent, or that he exercised all reasonable care so as to avoid committing the offence": R v Pontes, [1995], 3 S.C.R. 44.

On the basis of the evidence I heard I cannot find that a defence of due diligence was raised. Mr. Joslin's testimony did not present any evidence as to whether the defendants had taken reasonable care. His report and his testimony only deal with the numbers; not with the acts. The onus was on the defendants to present some evidence. They did not do so. Neither Le Jardin nor Mr. Parentela have met the onus under s. 45 of the RSTA. Accordingly, I find the defendants guilty of the offence as set out.

(D) Failing to Collect Retail Sales Tax

Le Jardin and Mr. Parentela, as director, are charged with failing to collect retail sales tax in the amount of $344,407.53, more or less.

Section 10 of the RSTA states:

Every vendor is an agent of the Minister and as such shall levy and collect the taxes imposed by this Act upon the purchaser or consumer.

As a vendor Le Jardin was required to collect retail sales tax.

Section 40(1) of the RSTA states:

No vendor shall advertise or post or otherwise quote a price that includes the tax imposed by this Act unless the vendor specifies separately the amount of the tax payable under this Act, and no vendor shall hold out or state to the public or to any purchaser, directly or indirectly, that the tax or any part thereof imposed by this Act will be assumed or absorbed by such vendor or that it will not be considered as an element in the price to the purchaser or, if added, that it or any part thereof will be refunded.

Subsection 40(2) permits the Minister of Finance to authorize a vendor to advertise or quote a price that includes the tax. I heard no evidence that suggests that Le Jardin ever received such an authorization from the Minister.

Section 44(2) of the RSTA states:

Every person who fails to collect the tax imposed by this Act is guilty of an offence and is liable on conviction to a fine equal to the amount of the tax that should have been collected as determined under subsection (3) and, in addition, an amount not less than $50 and not more than $2,000.

Ms. Burley's review of the invoices, contracts and work orders seized during the search of Le Jardin's premises showed Le Jardin charged customers a rate based on price per person with $0.00 being charged for PST. On the basis of her findings Ms. Burley concluded that Le Jardin failed to collect $344,407.53 in retail sales tax.

Mr. Joslin testified that the amount of tax not collected was $254,898.55. He based his conclusions by deducting $3,855.30 for variances in 44 events and $85,623.68 for what he characterized as the estimated civil portion which included the room rental portion of the sale. I disagree with Mr. Joslin's conclusions regarding the amount of tax not collected for the reasons set out below.

Mr. Joslin determined that set up, buffet service, cash bar, labour for catered events, table rental, equipment and staff are excluded items. They are not.

Section 1 of the RSTA defines sale, in part, as follows:

"sale" means,

(a) any transfer of title or possession, exchange, barter, lease or rental, conditional or otherwise, including a sale on credit or where the price is payable by instalments, or any other contract whereby at a price or other consideration a person delivers to another person tangible personal property,

(a.1) the provision of any charge or billing, including periodic payments,

(i) upon rendering or providing or upon any undertaking to render or provide to another person a taxable service

and under (d):

the furnishing, preparation or service for a consideration of food, meals or drinks.

Taxable service is defined under s. 1 (c) of the RSTA as follows:

labour provided to install, assemble, dismantle, adjust, repair or maintain tangible personal property other than a computer program

In my opinion Mr. Joslin erred in concluding that certain items were not taxable when in fact they were and are. He also erred in excluding an estimated room rental amount from the packaged sale price and in concluding that this exclusion would be a civil amount.

That being said, even if I am incorrect on the quantum, both the defence and prosecution are in agreement that the defendants failed to collect retail sales tax.

The offence of failing to collect sales tax is one of strict liability. No evidence was led by the defence on this issue. The defendants attempt to rely on their own business records which indicate that Le Jardin had a system of checks and balances in place when it came to sales and the applicability of tax, yet their expert testified that he was uncertain the defendants actually used it. Mr. Joslin also testified that he did not see anything wrong in Le Jardin having the option to charge or not charge GST or PST to its customers. While I disagree with the conclusions drawn by Mr. Joslin, I cannot conclude that the defendants acted with due diligence. On the basis of the evidence I heard this defence fails.

I therefore find the defendants guilty of the offence as set out.

(E) Failing to File Retail Sales Tax Returns as Prescribed

Le Jardin and Mr. Parentela, as director, are charged with 31 counts of failing to file RST returns within the required time period being the 23rd day of each month.

Section 15(1) of the RSTA states:

Every vendor shall make returns to the Minister and shall keep such records in the form and substance as are prescribed by the regulations, and any failure so to do constitutes an offence against this Act.

Section 41(1) of the Act states:

Every person who has failed to deliver a return as and when required by this Act or the regulations is guilty of an offence and on conviction is liable to a fine of not less than $50 for each day during which the default continues.

Section 5(1) of Regulation 1013 states:

On or before the 23rd day of each month, every vendor shall make a return to the Minister, on a form provided by the Minister, of all transactions described in subsection (1.0.1) that took place during the calendar month immediately preceding and shall remit to the Minister with the return the tax collectable or payable by the vendor during that month with respect to the transactions.

Subsection 1.0.1 applies to sales made by the vendor in Ontario.

Le Jardin was required to file returns on a monthly basis. Janie Mackay testified that in June 2013 she searched the ONTTAX database to determine what filings 1375923 Ontario Inc. and its associated companies had made under the RSTA. She discovered that over the thirty eight month period from May 1, 2007 – June 30, 2010 the following had occurred:

i. 9 retail sales tax returns were not filed for the period of October 1, 2009 – June 30, 2010; and

ii. 29 retail sales tax returns had been filed however:

a. 7 were filed in accordance with the Act; and

b. 22 were not filed within the prescribed timeframe.

Ms. Burley provided details regarding the dates of the filings of the retail sales tax returns. She testified that the following had occurred:

i. the retail sales tax returns for the period May 2007 – February 2008 were signed and certified by Ms. Vanin. They were filed April 4, 2008. No remittance was made;

ii. the retail sales tax returns for the period March – June 2008 were filed electronically and not received by the Ministry until August 8, 2008. No remittance was made;

iii. the retail sales tax returns for the period July – August 2008 were filed electronically and not received by the Ministry until October 16, 2008. No remittance was made;

iv. the retail sales tax return for September 2008 was filed electronically and not received by the Ministry until November 13, 2008. No remittance was made;

v. the retail sales tax return for October 2008 was filed electronically and not received by the Ministry until May 7, 2009. No remittance was made;

vi. the retail sales tax returns for November 2008 – February 2009 were signed and certified by Ms. Vanin. They were filed on time and taxes were remitted;

vii. the retail sales tax return for March 2009 was signed and certified by Ms. Vanin. It was filed late. Tax and payment of a penalty were remitted;

viii. the retail sales tax return for April 2009 was filed electronically and not received by the Ministry until June 3, 2009. Tax was remitted;

ix. the retail sales tax return for May 2009 was neither signed nor certified. It was not received by the Ministry until August 27, 2009. No remittance was made at the time however monies were received at a later date and the Ministry applied these funds to the return;

x. the retail sales tax return for June 2009 was neither signed nor certified. It was received on time and tax was remitted;

xi. the retail sales tax return for July 2009 was neither signed nor certified. It was received four days late. No remittance was made at the time however monies were received at a later date;

xii. the retail sales tax return for August 2009 was neither signed nor certified. It was received on time and tax was remitted;

xiii. the retail sales tax return for September 2009 was filed electronically and not received by the Ministry until November 20, 2009. Tax was remitted; and

xiv. no retail sales tax returns were filed for October 2009 – June 2010.

The offence under s. 41(1) of the RSTA is a strict liability offence. Neither Le Jardin nor Mr. Parentela presented a defence to this charge. I heard no evidence to suggest a due diligence defence was made out.

The evidence is undisputed, namely that on 32 occasions the RST returns were filed either late or not at all. Accordingly, I find the defendants guilty of the offence as set out.

(F) Operating Without a Vendor Permit

Le Jardin Conference and Event Centre Inc. and Mr. Parentela, as director, are charged with operating without a vendor permit.

Section 5(1) of the RSTA states:

No vendor shall sell any taxable tangible personal property or sell any taxable service or own or operate any place of amusement the price of admission to which is taxable unless the vendor has applied for, and the Minister has issued to the vendor, a permit to transact business in Ontario and the permit is in force at the time of such sale.

Subsections (5) and (7) continue:

(5) A permit issued under this section is valid only for the vendor in whose name it is issued, and only for so long as the vendor therein named transacts business in Ontario or until the permit is suspended or cancelled, as the case may be.

(7) Every vendor who fails to comply with this section is guilty of an offence and on conviction is liable to a fine of not less than $100 for each day or part of a day on which the offence occurs or continues.

Ms. Burley testified that as she reviewed the numerous invoices, contracts, function summary reports and work orders she noticed that sometime in or about June 2008 the name Le Jardin Conference and Event Centre Inc. started to be used interchangeably with that of Le Jardin Special Event Centre Inc. until 2009 when it began to be used more predominantly. She testified that despite the different corporate names, no changes were made to Le Jardin's software to distinguish one entity from the other and receipts were co-mingled. The documents she reviewed showed the same telephone and fax numbers as well as the same website. Personnel remained the same.

Ms. Burley testified that a number of menus and presentation folders were seized during the search. The menus and presentation folders showed the different names of the corporations that were being used: Le Jardin Conference and Event Centre Inc., Chateau Le Jardin Conference and Event Venue, Le Jardin Special Event Centre Inc. and Simcha Catering.

This is consistent with Ms. Vanin's testimony that when the corporations changed names she did not modify the accounting books to reflect the change. Instead, she continued to post to Simply Accounting regardless of the name of the corporation.

It also corroborates Mr. Walsh's testimony that there were numerous companies operating simultaneously on the premises and that they were so intertwined and had used the same set of books that it was difficult to extrapolate figures.

Le Jardin Conference and Event Centre Inc. was incorporated January 15, 2008.

Ms. Hamlin testified she searched Le Jardin Conference and Event Centre Inc. to ascertain whether it had registered as a vendor and been issued a vendor permit. She stated Le Jardin Conference and Event Centre Inc. did not register as a vendor between its incorporation date and June 30, 2010. As a result it had not been issued a vendor permit.

No defence was raised. On the basis of the evidence I find that the Minister was never advised by Mr. Parentela that the banquet hall was operating under a new name. I also find that Mr. Parentela did not apply for a vendor permit for the new corporation.

Accordingly, I find the defendants guilty of the offence as set out.

(G) Wilfully Failing to Register as a Vendor

Le Jardin Conference and Event Centre Inc. and Mr. Parentela, as director, are charged with wilfully failing to register as a vendor.

Section 32(4) (d) of the RSTA states:

Every person is guilty of an offence who has

wilfully, in any manner, evaded or attempted to evade compliance with this Act or payment of taxes imposed by this Act…

I have previously found that Le Jardin Conference and Event Centre Inc. was operating without having obtained a vendor permit from the date of incorporation, being January 15, 2008, until the end of the charge period, being June 30, 2010.

Ms. Vanin testified that she had nothing to do with the decisions to change the names of the corporations. Her role was to contact a lawyer at Mr. Parentela's request to effect the changes, including the incorporation of new companies, which she did.

Ms. Vanin testified that with the exception of the transfer of 1375923 Ontario Inc. to Mr. Catala on September 10, 2010, the following companies were solely owned by Mr. Parentela during the relevant time period:

Chateau Le Jardin Inc., Chateau Le Jardin Catering Inc., 1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc., 1375923 Ontario Inc. o/a Le Jardin Special Event Centre Inc., Le Jardin Conference and Event Centre Inc., Parentela Holdings Ltd., and 622192 Ontario Ltd.

The corporate searches also disclosed numerous other businesses in which Mr. Parentela had an interest including but not limited to Canadian Soccer Federation, Simcha Catering and Preslin Linen Hospitality Services.

Mr. Parentela had previously obtained vendor permits for 622192 Ontario Ltd. and 1375923 Ontario Inc. He was well aware that vendor permits were required. As the director of Le Jardin Conference and Event Centre Inc., Mr. Parentela had a duty to ensure that the new operating name of the facility was registered and that a vendor permit was issued. Mr. Parentela did not disclose the existence of the new corporation.

No defence was raised.

Accordingly I find the defendants guilty of the offence as set out.

(2) Employer Health Tax Act

The EHTA requires employers to impose a health tax on all employees. EHT is a payroll tax payable by employers on remuneration paid to employees in Ontario. Remuneration means employment income that is taxable under sections 5, 6 and 7 of the Income Tax Act, R.S.C., 1985, c.1 (5th Supp.).

A T4 slip is used to report inter alia salary, wages, bonuses, vacation pay and benefits. Amounts reported on T4 slips are taxable for EHT purposes.

Employers are required to report remuneration paid to each employee, including all statutory deductions, on the T4 slip. Remuneration reported for all employees is then summarized on the T4 Summary.

Employers are required to file the annual T4 Summary and T4 slips with the Canada Revenue Service ("CRA"). The CRA, through an information exchange agreement with the Ministry of Finance, provides the Ministry with the T4 Summary for compliance purposes.

Prior to January 1, 2014, eligible employers were exempt for the first $400,000.00 of their total annual Ontario remuneration. This is the time period dealt with in this prosecution. The employer is obligated to register with the Ministry if its remuneration for the year exceeds the allowable exemption amount. Once registered the Ministry issues blank annual returns and monthly instalment statements to be completed and filed as required. Employers with an annual payroll greater than $600,000.00 are required to file monthly instalments and statements with the Ministry by the 15th day of the following month. In this case the evidence is undisputed that Le Jardin's annual remuneration exceeded the $600,000.00 threshold thereby requiring delivery of the annual return as well as monthly statements and remittances.

(A) Failing to Deliver Annual Employer Health Tax Returns

Le Jardin and Mr. Parentela, as director, are charged with five counts each of failing to deliver annual employer health tax returns for the years ending:

December 31, 2007; December 31, 2008; December 31, 2009; December 31, 2010; and December 31, 2011.

Section 5(1) of the EHTA states:

Every taxpayer who is liable to pay tax under this Act for a year shall deliver to the Minister, on or before the prescribed date applicable to that taxpayer, a return in a form approved by the Minister setting out the amount of tax payable for the year under this Act, the amount or amounts on which the tax was calculated and such other information as may be required by the Minister for the purposes of this Act.

Section 32 of the EHTA states:

Every person who fails to deliver a return at the time and in the manner required by this Act or the regulations, or who fails to supply information or fails to produce material as required by section 15, is guilty of an offence and is liable on conviction to a fine of not less than $50 and not more than $500 for each day or part of a day on which the offence occurs or continues.

Lois Hamlin testified she searched 1375923 Ontario Inc. and discovered it had registered as an employer with the Ministry on July 6, 2005. She also searched Le Jardin Conference and Event Centre Inc., Chateau Le Jardin Inc., and Chateau Le Jardin Catering Inc. to ascertain whether any of these companies was registered as an employer for the period of January 1, 2007 – July 31, 2012. None of the three companies were registered as an employer during the relevant time period.

Ms. Burley testified she searched ONTTAX to ascertain whether 1375923 Ontario Inc. had filed EHT returns. She discovered information that pre-dated the time period of the investigation. Specifically, she discovered that returns had been filed for 2000 – 2004 and 2006. No EHT return had been filed for 2005 and nothing had been filed after 2006.

Susan Fitzwilliam testified she searched 1375923 Ontario Inc. to ascertain whether the company had filed annual EHT returns for the period of 2007 - 2011. It had not.

EHT returns had, however, been filed by 622192 Ontario Ltd. for 2014 and 2015.

The Ministry sent statements of account and notices to Le Jardin advising that the corporation was in default of its annual and instalment filing obligations. A number of these statements were seized during the execution of the search warrants.

Le Jardin's remuneration to employees exceeded the $400,000.00 annual exemption. As a result, Le Jardin was required to deliver annual returns for the 2007, 2008, 2009, 2010 and 2011 years. It did not do so.

The defendants submit they acted with due diligence by relying upon Ms. Vanin.

In my opinion the defence is not made out. I heard no evidence that suggests the defendants relied upon Ms. Vanin to ensure that Le Jardin delivered the annual EHT returns. Ms. Vanin testified she was not responsible for EHT; instead she would attend at the accountant's office with the T4s and wait for the accountant to prepare the annual return. The last time Ms. Vanin did this was in 2006. Ms. Vanin did not perform this duty post the hiring of Mr. Catala in 2006.

The onus is on the defendants to show due diligence. They did not. They did not lead any evidence with respect to this charge.

I therefore find Le Jardin and Mr. Parentela, as director, guilty of the offence of failing to deliver annual employer health tax returns.

(B) Failing to Deliver Employer Health Tax Statements and Remittances

Le Jardin and Mr. Parentela, as director, are charged with 63 counts of failing to deliver the monthly statements and remittances required under the EHTA for the period of May 2007 – July 2012 inclusive.

Section 3(1) of the EHTA states:

Except as otherwise provided, every taxpayer shall pay instalments on account of the tax payable for a year under this Act as required under the following rules:

1. An employer who pays, for the year 2000 or a subsequent year, total Ontario remuneration for the year that exceeds $600,000.00 shall pay monthly instalments to the Minister at the prescribed times.

The obligation to remit is dealt with further in s. 3(9):

Every taxpayer shall remit to the Minister each instalment of tax that the taxpayer is required to pay under this Act together with a statement in a form approved by the Minister setting out the amount of the instalment, the amounts on which the instalment was calculated and such other information as may be required by the Minister for the purposes of this Act.

Section 35 of the EHTA states:

Every person who contravenes or fails to comply with any provision of this Act or the regulations is guilty of an offence and on conviction, where no other fine is provided in this Act, is liable for each day or part of a day on which the offence occurs or continues to a fine of not more than $5,000.00.

The evidence is undisputed that Le Jardin's annual payroll was in excess of $600,000.00. As such, Le Jardin was required to file and deliver monthly remittances.

Ms. Fitzwilliam testified she searched 1375923 Ontario Inc. to ascertain whether it had filed and made monthly remittances for the period of January 2007 – July 2012 and that it had not done so.

For the reasons previously set out, the defendants' submission that Ms. Vanin's testimony regarding her lack of involvement with EHT was not believable is unsupported by the evidence.

No defence was raised by the defendants.

I therefore find Le Jardin and Mr. Parentela, as director, guilty of the offences of failing to deliver employer health tax statements and remittances.

(C) Wilfully Evading Compliance with the Act

Le Jardin and Mr. Parentela, as director, are charged with wilfully evading compliance with the EHTA.

Section 2(1) of the EHTA states:

Every employer shall pay to the Crown in right of Ontario a tax calculated in accordance with this Act.

Section 31(5) of the EHTA states:

Every person who wilfully in any manner evades or attempts to evade compliance with this Act or payment of the tax imposed by this Act is guilty of an offence.

The evidence of Ms. Burley was that between January 1, 2007 – July 31, 2012 Le Jardin paid $17,128,136.31 in remuneration to its employees and thus failed to remit EHT in the amount of $294,998.65.

Mr. Joslin concluded that the amount owing for EHT was $270,593.66. He based this on excluding $136,413.33 in wages because the accounting entries indicated payment by cash without a name attached to the cash payment and by crediting Le Jardin with the full $400,000.00 annual exemption amount for 2012 despite the charge period ending in July of that year. Ms. Burley pro-rated the 2012 annual exemption.

Ms. Burley testified as to how she traced cash payments through the accounting records and was able to account for almost every payment with the exception of two or three. Mr. Joslin did not do this.

Mr. Joslin provided numerous reasons as to why he did not trace the cash payments including but not limited to his assumption that cash payments could have been made to suppliers. I heard no evidence that suggests this assumption was correct.

On the basis of the evidence I heard as well as the documents that were admitted into evidence, I cannot conclude that Mr. Joslin's calculations were correct. In my opinion it was incorrect for Mr. Joslin to credit Le Jardin with the full amount of the exemption for the partial year. While I recognize he was entitled to do so, a more equitable result would have been to pro-rate the exemption as Ms. Burley did. I therefore find that the amount of EHT that was not remitted was $294,998.65.

The above notwithstanding, even if I am incorrect on the issue as to whether Le Jardin should have been credited with the full amount of the annual exemption or a portion thereof, it does not change the conclusion that Le Jardin failed to remit EHT. It simply changes the quantum. As Mr. Joslin testified, the difference between his number and Ms. Burley's would be closer to $20,000.00 instead of the $24,000.00+ difference. Nothing much turns on this as the charge is wilfully evading compliance with the act.

Ms. Vanin's duties did not include the calculation of EHT. She was aware that EHT returns were not being filed after Mr. Catala was retained. She mentioned it to the accountants and to whoever else would listen, to no avail. She testified that Mr. Parentela was aware that EHT returns were not filed after 2006. Mr. Walsh was candid in admitting he did not deal with EHT.

Mr. Parentela was aware of Le Jardin's obligation to file EHT as historically this had been done. I heard no evidence to the contrary.

Le Jardin had certain ways in which it dealt with its employees. It categorized employees in different manners. It paid cash to its full time employees to use towards inter alia medical and dental expenses which were not covered. It paid cash commission to its full time sales coordinators. The onus was on the full time employees to declare these cash payments as they were not included on their paycheques and T4s.

Le Jardin also paid cash to its part time employees. Ms. Vanin testified regarding how cash was distributed in envelopes that were filled by Mr. Parentela. Mr. Verschurren testified that he found envelopes filled with cash in a drawer in Mr. Melillo's office.

By paying cash to its employees, both full and part-time, Le Jardin and Mr. Parentela attempted to minimize the amount of the payroll. By minimizing the amount of the payroll they reduced the amount of EHT that was required to be remitted to the Minister of Finance and therefore attempted to evade compliance with the EHTA.

I therefore find Le Jardin and Mr. Parentela, as director, guilty of the offence of wilfully evading compliance with the EHTA by failing to report and pay EHT in the amount of $294,998.65, more or less.

Rhonda S. Shousterman, J.P.

July 5, 2019

Schedule "A"

Invoices Contracts Contract Conditions Contract Review Procedures Work orders Event Price Records Event Sales Summary Reports Function Summary Reports Labour Reports Staff Assignment Sheets Sales Logix Excel spreadsheet Sales Logix Notes Simply Accounting Records 2225 PST Payable: Simply Accounting Records of employees including T4s and remuneration paid in cash Wage Categories Wages and Salary List Staff Salaries Clock Information (clocking in of employees) Employee Lists including Christmas Gift Lists to Employees Ministry of Finance records regarding registrations, filings and remittances of RST and EHT PST cheques signed by Mr. Parentela and remitted to the Ministry Management Control Systems Accounting Department Task List Accounts Receivable Bank Reconciliations Cash Flow Statement Deposit Reports Income Statements Monthly Obligations Trial Balances GST Input and Collected List of Items Needed to Complete Review Payments to Orlando Catala Review Engagement Letter dated January 31, 2009 Accountant Engagement Letter dated August 17, 2010 Letter dated March 23, 2000 from Mr. Parentela to RST Office Letter dated September 23, 2004 from Le Jardin to the Minister of Finance Letter dated February 21, 2007 from Ms. Vanin to the Minister of Finance Letter dated March 8, 2007 from Ms. Vanin to the Minister of Finance Letter dated May 19, 2007 from Ms. Vanin to the Minister of Finance Letter dated May 22, 2007 from Ms. Vanin to the Minister of Finance Letter dated December 15, 2008 from Ms. Vanin To Whom It May Concern Letter dated October 17, 2008 from Mr. Parentela To Whom It May Concern giving Mr. Catala authorization to discuss tax account Letter dated July 2011 giving Mr. Parentela authorization to represent 1375923 Ontario Inc. Unaudited Financial Statements T4s for years 2007 – 2009 Organizational Chart Corporation History 2008 Remittances Menus Brochures

Schedule "B"

Sales Tax Not Collected Per Source Record Sales Tax Not Collected Per Month Schedules A, B and C Schedule B Amended PST Per Sub-total Document Chart of Sales Collected Invoices PST Collected Invoices Tax Not Collected PST Collected and PST Within a Total PST Tax Ratio Cross Check Analysis PST Per Investigation v PST Payable Recorded in Simply Accounting RST Not Reported, Schedule of False Returns RST Reported, Formula RST Returns Late Filed Transaction by Account Reports EHT/RST Notices of Assessment Seized EHT Book