R. v. Wallen

Court Information

Court: Ontario Court of Justice

Date: January 10, 2020

Court File No.: 18-00399

Citation: 2020 ONCJ 652

Parties

Between:

Her Majesty the Queen

— AND —

William Wallen

Before: Justice F. Javed

Heard on: July 15, 16, 17, 18, 19, September 10, 19, 20, October 4, November 1, 28, 2019

Reasons for Judgment released: January 10, 2020

Counsel

Crown counsel: E. Carley, S. Virk

Defendant: William Wallen (self-represented)

F. JAVED J.:

I. INTRODUCTION

[1] William Wallen (the defendant) was tried before the court on eight (8) counts of improperly claiming or obtaining refunds, under s.239(1.1) (a) and (e) of the Income Tax Act, R.S.C. (1985), C.1 (5th Supp.) (the "ITA").

[2] Mr. Wallen chose to represent himself at trial.

[3] The Crown proceeded by summary conviction.

A. Overview of the Positions of the Parties

[4] The Crown's overall position is that Mr. Wallen allegedly prepared and filed T2 Corporate Income Tax Returns ("T2 Returns") containing false claims in relation to taxes withheld at source for the purpose of fraudulently obtaining refunds under the ITA. The Crown argues Mr. Wallen is a "tax protestor" who believes he is a natural person and therefore is not obligated to pay any taxes, which is illegal under the ITA. The Crown says this tax protestor argument has been decisively considered and rejected by the Court of Appeal in R. v. Klundert, [2004] O.J. No. 3515 at para. 67 ("Klundert 1"), leave to appeal to the Supreme Court of Canada refused, [2004] S.C.C.A. No. 463 [Klundert 2], and again in R. v. Klundert, 2008 ONCA 767 [Klundert 3], leave to appeal to the Supreme Court of Canada refused, [2008] S.C.C.A. 522 [Klundert 4].

[5] In addition, the Crown says based on the oral and written arguments raised by Mr. Wallen in this case, Mr. Wallen bears the hallmarks of an Organized Pseudo-Legal Commercial Argument ("OPCA") litigant or sometimes referred to as a "Freemen of the Land" litigant, which rejects the jurisdiction of a court over a natural person. The Crown says this litigation tactic has been decisively considered and rejected by other courts as having no legal merit: Meads v. Meads, 2012 ABQB 571, Ali v. Ford, 2014 ONSC 6665; R. v. Duncan, 2013 ONCJ 160.

[6] In the end, the Crown invites the court to convict Mr. Wallen of all counts because he did not launch any challenge to the admissible evidence which proves his guilt beyond a reasonable doubt. Any arguments raised by Mr. Wallen either had no merit or were not grounded in the evidence and therefore should be rejected.

[7] Mr. Wallen takes the position that he is not an OPCA or Freemen of the Land litigant. He says the Crown did not prove his identity, as the charged party, William WALLEN. Further, the court had no jurisdiction to try him as the charged party, William WALLEN. He invited the court to dismiss all the charges.

B. Overview of the Trial Proceedings

[8] The trial proceedings commenced on July 15, 2019 with arraignment. Mr. Wallen refused to enter any plea, thus the court entered a plea of not guilty for him: s.606(2), Criminal Code.

[9] The trial was estimated to last 5 days but spanned a number of additional days. Some of this was due to the courts schedule and schedules of witnesses, but the main reason was due to the issues raised by Mr. Wallen, which required additional time to prepare and deliver submissions. At the request of the court, the parties exchanged final written submissions. All of the written material was attached to the information to complete the court record.

[10] During the trial proceedings, Mr. Wallen was punctual, courteous and engaged in the court process. With no legal training, he conducted himself responsibly, taking direction from the court and making informed decisions and concessions. He raised a number of issues, even if some were devoid of merit. Many of these issues shared a common complaint, namely, that the court did not have jurisdiction to try him or the offences. As the Crown argues, this argument is often raised by an OPCA litigant, which Mr. Wallen strenuously took the position, he was not. This trial was not about whether the Crown proved he was either an OPCA or Freemen of the Land litigant. Instead, I made it clear to Mr. Wallen that as the trier of fact, the sole focus of this trial was whether the Crown's admissible evidence proved his guilt of the eight offences beyond a reasonable doubt.

[11] Mr. Wallen filed five pre-trial motions in writing. They were styled as follows:

(i) Notice of Application (January 9, 2019) alleging that the failure of the Crown to recognize, acknowledge the existence, validity, of subrogation rights as part of civil due process. "I am not the principle debtor of the Birth Certificate". He sought an order granting a "decree ordering the termination and windup of the Birth Certificate" and "As the surety, a decree granting the subrogation rights as creditor and return of my interest";

(ii) Notice of Subrogation Rights and Substitution for Creditor at Trial (May 27, 2019). Mr. Wallen alleged (1) conflict and variance in law and (2) third-party surety has been making payments on behalf of the defendant in absence of creditor and owner;

(iii) Notice of Subrogation Rights and Substitution for Creditor at Trial (April 10, 2019). Mr. Wallen alleged the same is item (ii) above;

(iv) Notice of Conflict or Variance of Law (March 11, 2019); and

(v) Request to Redeem (mortgaged property) filed on March 7, 2019.

[12] Ms. Carley responded in writing to all motions with a Respondent's Record, which contained a factum. Her position was that Mr. Wallen was using debunked OPCA litigation tactics. She submitted that Mr. Wallen's self-proclaimed immunity from tax obligations and the attempt to re-characterize his legal and personal identity has been decided in the past by courts as having no merit. She invited all the applications to be summarily dismissed.

[13] At the commencement of the trial, Mr. Wallen also filed another motion, styled as "Affidavit of William George Wallen". This application challenged the jurisdiction of the court. Ms. Carley similarly submitted that if the court were to permit Mr. Wallen to raise this late application, it too should be summarily dismissed as devoid of any merit.

[14] In an oral ruling, I agreed with the Crown's position. In R. v. Cody, 2017 SCC 31, [2017] SCJ No. 31, at para. 38, the Supreme Court encouraged trial judges to use their inherent case management powers to minimize delay. This includes summarily dismissing frivolous applications where they have no reasonable chance of success. However, I permitted Mr. Wallen to advance the new motion speaking to the court's jurisdiction. This was not because I believed it had a reasonable chance of success but because of concerns of procedural fairness as Mr. Wallen was representing himself. I ruled the court had jurisdiction over him and the offences before the court (See Ruling 1).

[15] As the trial progressed, Mr. Wallen continued to repeat the jurisdictional complaint and raised other issues arguing, inter alia, that his civil rights were repeatedly being violated by Crown counsel, the Canada Revenue Agency ("CRA") and sometimes, the court process itself. With some assistance from the court, these arguments were reframed as challenges to the admissibility of certain evidence that the Crown sought to tender, both on the basis of relevance and materiality and alleged violations of the Charter of Rights and Freedoms (Charter). In summary, I made seven rulings on the following issues:

• Ruling 1: Jurisdiction of the Court
• Ruling 2: Leave to Raise a Constitutional Issue (s.8 Charter Challenge)
• Ruling 3: Admissibility of Records
• Ruling 4: Admissibility of Documents
• Ruling 5: Admissibility of Spreadsheet Prepared by Investigator, Dylan Dinardo
• Ruling 6: Admissibility of Expert Evidence (Handwriting Analyst)
• Ruling 7: Admissibility of Documents Attributed to John Corbo

[16] The above rulings were delivered orally and on some occasion, in writing, to assist Mr. Wallen with conducting his defence as the trial progressed.

[17] Mr. Wallen's final written submissions did not respond to the Crown's written submissions, which addressed the legal issues in the case. Accordingly, I gave him the opportunity to file amended submissions after reviewing the Crown's arguments. He chose to do so and filed another application titled "The Constitution Act, 1982". In this application, Mr. Wallen asserted a violation of his s.7 Charter rights and sought various injunctions as remedies. The Crown says this application is also without merit and should be summarily dismissed as another OPCA litigation tactic.

[18] I reserved to review the voluminous material and consider my verdict. The following are my reasons for judgment.

II. THE OFFENCES AND THE LAW

A. The Alleged Offences

[19] The information alleged a total of eight (8) offences. I will simply summarize the counts below:

(1) Income tax refund of $35,267 to 7665083 Canada Inc. in T2 Corporate Income Tax return for the 2010 taxation year (October 9 – 16, 2012);

(2) Income tax refund of $50,669 to 7665083 Canada Inc. in T2 Corporate Income Tax return for the 2011 taxation year (July 16 to July 21, 2012);

(3) Income tax refund of $38,203 to 7665083 Canada Inc. in T2 Corporate Income Tax return for the 2012 taxation year (February 26 to March 6, 2013);

(4) Income tax refund of $56,502 to 7665083 Canada Inc. in T2 Corporate Income Tax return for the 2013 taxation year (September 5 to 13, 2014);

(5) Income tax refund of $43,652 to 7665083 Canada Inc. in T2 Corporate Income Tax return for the 2014 taxation year (April 14 to 21, 2015);

(6) Refunds of $244,293 in the T2 Corporate Income Tax returns filed on behalf of 7665083 Canada Inc. for the 2010, 2011, 2012, 2013 and 2014 taxation years;

(7) Income tax refund of $633,399 to 8820309 Canada Inc. in the T2 Corporate Income Tax return for the 2014 taxation year (April 24 to May 2, 2015); and

(8) Refund of $633,399 to 8820309 Canada Inc. in the T2 Corporate Income Tax return for the 2014 taxation year (December 31, 2013 to May 2, 2015).

[20] Counts 1 to 5 and 7 alleged that Mr. Wallen was involved in the "making, or participating in, assenting to or acquiescing in the making of a false or deceptive statement in a return, certificate, statement or answer filed or made under the ITA or a regulation" that resulted in obtaining or claiming an unlawful refund pursuant to s.239(1.1) (a) of the ITA.

[21] Counts 6 and 8 alleged that Mr. Wallen "wilfully in any manner" obtained or claimed a refund or credit under the ITA that he was not entitled to pursuant to s.239(1.1) (e) of the ITA.

B. The Elements of the Offences

[22] Section 239(1.1) of the ITA reads:

Offenses re refunds and credits

(1.1) Every person who obtains or claims a refund or credit under this Act to which the person or any other person is not entitled or obtains or claims a refund or credit under this Act in an amount that is greater than the amount to which the person or other person is entitled

(a) by making, or participating in, assenting to or acquiescing in the making of, a false or deceptive statement in a return, certificate, statement or answer filed or made under this Act or a regulation,

(b) by destroying, altering, mutilating, hiding or otherwise disposing of a record or book of account of the person or other person,

(c) by making, or assenting to or acquiescing in the making of, a false or deceptive entry in a record or book of account of the person or other person,

(d) by omitting, or assenting to or acquiescing in an omission to enter a material particular in a record or book of account of the person or other person,

(e) wilfully in any manner, or

(f) by conspiring with any person to commit any offence under this subsection,

is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to

(g) a fine of not less than 50% and not more than 200% of the amount by which the amount of the refund or credit obtained or claimed exceeds the amount, if any, of the refund or credit to which the person or other person, as the case may be, is entitled, or

(h) both the fine described in paragraph 239(1.1)(g) and imprisonment for a term not exceeding 2 years.

[23] The elements of the offences are well settled. They were described by Justice Doherty writing for the Court of Appeal in Klundert 1 and also in R. v. Rosie, [2012] B.C.J. No. 2621 (B.C.S.C.) at para. 5. Mr. Wallen understood that the elements of the offences were required to be proven by the Crown on a standard of proof beyond a reasonable doubt. When the proceedings veered off to a tangent, I implored Mr. Wallen to stay focused on the elements of the offences.

[24] As noted, Mr. Wallen took the position that the court proceedings were a civil action between William WALLEN and the CRA who he maintains was engaged in "illegal taxation". Mr. Wallen argued he was trying to abate the name on the information, as he was not the person who was charged with the offences (William WALLEN). Ms. Carley says this too is a futile OPCA litigation tactic. I reminded him that he was charged under the ITA with offences that required the Crown to prove beyond a reasonable doubt the acts (the actus reus) and that he intended to commit the acts (the mens rea). Both must co-exist for a conviction to be registered.

[25] In this case, the actus reus involves proof beyond a reasonable doubt of the following elements of the offence:

(i) False or deceptive statements were made in each filed T2 Return;

(ii) Mr. Wallen made or participated in, assented to or acquiesced in the making of the false or deceptive statements;

(iii) A refund was claimed; and

(iv) Neither 7665083 Canada Inc. nor 8820309 Canada Inc. was entitled to the refund(s) claimed.

[26] Further, the Crown must also prove beyond a reasonable doubt that Mr. Wallen knew the statements were false or deceptive, and that the receipt or claiming of a refund by someone who was not entitled to it, could be a consequence of the false or deceptive statement. In the case of the two s.239(1.1) (e) offences (counts 6 and 8), the Crown must also prove that Mr. Wallen willfully claimed or obtained a refund that he knew he wasn't entitled to.

C. Reasonable Doubt

[27] This is a criminal trial where the standard of proof is beyond a reasonable doubt. Reasonable doubt is a matter of common sense and human experience and must be grounded in the evidence. As a standard, it does not require proof beyond all doubt, nor is it proof to an absolute certainty. At the same time, reasonable doubt lies far closer to absolute certainty that it does to a balance of probabilities.

[28] Mr. Wallen chose not to testify. I take nothing from this. There was no onus on Mr. Wallen to prove his innocence. The burden remains with the Crown to prove his guilt. In cases involving credibility assessments, the law requires that I must apply and carefully follow the three-prong test set out in W.D. v. The Queen, [1991] 1 S.C.R. 742 ("WD"). The WD test is the same if an accused party testifies or not. In R. v. B.D., 2011 ONCA 51, the Court of Appeal has instructed that even in cases where an accused does not testify, WD must be applied where there is conflicting exculpatory evidence adduced through the Crown's witnesses that is favorable to an accused. This must be assessed in the context of all the evidence. Here, Mr. Wallen did not seriously challenge the credibility of the Crown's witnesses but did challenge some of the conclusions reached by the lead investigator, Mr. Dinardo.

D. Duties to Self-represented Litigant

[29] As a self-represented litigant, I explained to Mr. Wallen that the law required me to ensure that he receives a fair, but not a perfect trial: R. v. Dimmock (1996), 47 C.R. (4th) 120 (B.C.C.A.), at para. 20. To this end, I guided him as the trial unfolded to bring out his defence with full force and effect: R. v. Richards, 2017 ONCA 424 at paras. 110-113; R. v. Chemama, 2016 ONCA 579, 351 O.A.C. 381, at para. 13; R. v. Tran (2001), 156 C.C.C. (3d) 1 (Ont. C.A.), at para. 22; R. v. McGibbon (1988), 45 C.C.C. (3d) 334 (Ont. C.A.), at p. 347. In Richards, supra, Justice Watt described (at para. 111) that the duty owed to self-represented litigants is circumscribed by a standard of reasonableness. He wrote: "[T]he trial judge is not, and must not become, counsel for the accused. The judge is not entitled, indeed prohibited, from providing the assistance of the kind counsel would furnish when retained to do so: Chemama, at para. 14; R. v. Taubler (1987), 20 O.A.C. 64 (C.A.), at para. 30; R. v. Turlon (1989), 49 C.C.C. (3d) 186 (Ont. C.A.), at p. 191; McGibbon, at p. 349. A standard of reasonableness accommodates a range of options to ensure the necessary degree of assistance and eschews a single exclusive response".

[30] Following the above advice, the parties invited me to review the transcripts of the judicial pre-trial ("JPT") proceedings conducted in open court on September 21, 2018 and January 16, 2019. These two transcripts were attached to the information. I agreed to do so because it would assist me in discharging my duty to assist Mr. Wallen as a self-represented litigant. To the extent that the transcripts revealed discussions about factual issues, I simply disabused my mind of these details, which is often required of trial judges sitting without a jury. After reviewing the above transcripts, I learned that Mr. Wallen initially objected to the jurisdiction of the JPT court but ultimately participated in the proceedings. He confirmed he had full disclosure and understood the allegations against him. Mr. Wallen took the position that he was misled by the CRA in his discussions with them. The JPT court identified this a potential defence of officially induced error and explained this to him. Ms. Carley, who was present for both JPT's, also advised that the Crown was not aware of any alleged misleading communication between the CRA and Mr. Wallen and offered to look into the issue. I raise this issue in these reasons because after the Crown closed their case, I returned to this issue and asked Mr. Wallen if he was still advancing this position and if he needed assistance in calling witnesses. Apart from asking the court to call one witness, he choose not to call any other witness(es) that might breathe some life into this potential defence as he told me his alleged communication(s) with the CRA employee were over 5 years old and he didn't have a clear memory nor would he suspect the employee would. When I inquired from the Crown if there was any air of reality to any defence of officially induced error based on the Crown's disclosure, I was told no such communications existed. The only communication that did exist, became, at the request of Mr. Wallen, exhibits in the trial to advance his defence (Exhibits 11, 12, 16 and 18).

[31] After the first JPT, the parties estimated the trial to last 5 days. As the trial progressed, it was clear this was an inadequate trial estimate. I do not fault anybody for this estimate because the issues were somewhat complex and Mr. Wallen raised a number of issues. Ms. Carley was alive to potential s.11(b) delay issues and took meaningful steps to minimize delay. Mr. Wallen did not raise any complaints with delay. Indeed, he told me the opposite, namely, he was not concerned with delay and urged the court to take as much time it needed in rendering reasons.

[32] A second JPT proceeding was held on January 16, 2019. I have reviewed this transcript as well. During this proceeding, Mr. Wallen filed a motion to have his "subrogation and substitution rights" to be heard at trial. Ms. Carley advised this motion was filed in the Superior Court of Justice before Mr. Justice O'Connell who guided Mr. Wallen to file any pre-trial motions related to ITA allegations before the trial judge. The parties brought the matter forward before the JPT Justice for directions. The JPT Justice guided him on how to file this and any pre-trial applications in compliance with the rules. To be clear, I am not relying on what was said or what happened at any JPT or any out of court appearance as an evidentiary basis to determine the outcome in this case. I simply averted to the JPT's to explain how I approached my task of attempting to assist Mr. Wallen and ensuring he received a fair trial.

[33] During the course of the trial, the Crown sought to tender evidence seized pursuant to a search warrant under s.487 of the Criminal Code authorizing the search of the business premises of 7665083 Canada Inc., the dwelling of William Wallen, Pauline Wallen and Sara Wallen and or the William George Wallen Trust, located at 123 Apple Blossom Boulevard in Bowmanville, Ontario. This is the residential address of Mr. Wallen. The affiant in respect of this Information to Obtain ("ITO") was the lead investigator, Dylan Dinardo. The search warrant was authorized by a Justice of the Peace on November 23, 2016. This evidence related mainly to documents and tax records allegedly prepared by Mr. Wallen and sent to the CRA and other parties, which the Crown said was in furtherance of the alleged offences. Mr. Wallen did not file a formal Charter challenge arguing a violation of his rights under s.8 as an unreasonable search and seizure but objected to the admissibility of this evidence. I deployed my case management powers and permitted him to seek leave to argue the s.8 Charter argument. Mr. Wallen took the position that the search warrant was unlawful because it was not issued under the ITA and should have been. I dismissed this application citing R. v. Watts, [2012] O.J. No. 4482, aff'd [2018] O.J. No. 799 (Ont. C.A.) See Ruling 2. All of the seized records/documents were admissible from a constitutional perspective.

[34] Finally, I ordered transcripts of the evidence at the court's expense to assist Mr. Wallen who often chose not to take notes. I did this to assist the parties in keeping track of the evidence, which is helpful for a self-represented party but also helpful in a case with documentary evidence.

III. THE TRIAL RECORD

A. The Witnesses

[35] The Crown called a number of witnesses. Ms. Carley helpfully provided a list of witnesses and a calendar of their availability to assist with preparation. I will review the evidence of the witnesses below, but for context, will provide a brief background of their role in the trial proceedings:

(i) Dylan Dinardo is employed by the CRA and was the lead investigator in Mr. Wallen's case. He was called by the Crown on the admissibility voir dires of various records to prove relevance and materiality. Mr. Wallen did not agree with blending this evidence, thus he testified on the trial proper after the successful admissibility rulings. He provided evidence about the various business and tax records and documents. He also prepared worksheets or summaries, which I found were anchored in proven facts. These summaries were admissible as demonstrative aids to assist the court in making sense of the voluminous documents: R. v. Scheel, [1978] O.J. No. 888 (C.A.) at para. 13; R. v. Ajise, 2018 ONCA 494, [2018] OJ No. 2896 (C.A.) at para. 23. The summaries were also relied on by Mr. Wallen during his defence.

(ii) John Corbo is a civilian who gave evidence with respect to his dealings with Mr. Wallen in respect of a 2014 T2 Corporate Tax Return. He testified that Mr. Wallen prepared this return on behalf of 8820309 Canada Inc., a company owned by Mr. Corbo (counts 7 and 8);

(iii) Tobin Tanaka was qualified as a forensic document examiner after a voir dire. Mr. Wallen did not object to his qualifications and tested his opinion with a careful cross-examination. Mr. Tanaka prepared two reports related to his handwriting analyses. He gave opinion evidence after comparing the signatures of Mr. Wallen on various documents received by the CRA and known documents taken from his residence;

(iv) Stephane Denis is a computer forensic analyst who explained the steps he took in extracting and searching records from seized electronic media that was authorized pursuant to the s.487 search warrant; and

(v) Various "seizing officers" testified including Derek Chen, Anand Dattani, Sharon Frydenhal, Aynsley Jenkins, Faustin Mariampillai, Mathieu Mireault-Beaulieu, Bruce Petitpas, Marisa Sequeira and Cory van der Meer. They all testified about their participation in the execution of the search warrant at Mr. Wallen's residence, 123 Apple Blossom Blvd in Bowmanville, Ontario. Mr. Wallen was not prepared to admit their evidence or admit continuity. I am satisfied with the continuity of the records and documents that were seized from Mr. Wallen's residence. There was no gap in the continuity of the records. Indeed, Mr. Dinardo compared all the seized records to the records that were made exhibits and testified there were no gaps in the chain of continuity. I accept this evidence.

[36] As noted above, Mr. Wallen did not testify in his defence. With the assistance of the court and Ms. Carley, he called Mr. Chris Cahill who is trained as a Chartered Accountant and was employed with the CRA. He testified he was a researcher with CRA and discovered "anomalies" with a number of taxpayers which lead to a more detailed review of the T2 filings involving Mr. Wallen in July 2015. He referred the matter for further investigation, which ultimately led to audits and the current criminal charges against Mr. Wallen under the ITA.

B. The Exhibits

[37] The parties filed a number of exhibits during the trial. The record was voluminous with tax records and other documents. Ms. Carley provided me with bench copies and had a second copy of the materials for Mr. Wallen. Some of these records were sent to the CRA by Mr. Wallen and some related to documents prepared by investigators, that were relied on by the parties in their evidence and submissions. All, but three exhibits were tendered by Crown counsel. The numbering of exhibits became somewhat complicated because many were marked for identification subject to admissibility rulings. As the trial progressed, many out of town witnesses were called out of turn to accommodate their travel schedules, thus the order of exhibits also became somewhat complicated. For ease of reference, I will reproduce a chart of the exhibits below:

Exhibit Number	Description of Exhibit
1A	Crown's Trial Binder Volume 1 (Original Documents)
1B	Crown's Trial Binder Volume 1 (Copies of Documents)
2A	Crown's Trial Binder Volume 4
3A	Crown's Trial Binder Volume 5
4A	Crown's Trial Binder Volume 6 (Original Documents)
4B	Crown's Trial Binder Volume 6 (Copies of Documents)
5A	Crown's Trial Binder Volume 3
6B	Crown's Trial Binder Volume 2
7	Correspondence from Crown counsel to Mr. Wallen dated August 22, 2019
8B	Updated continuity worksheet (in Volume 2) prepared by Dylan Dinardo
9	Tax slips prepared by Dylan Dinardo
10	Crown's Trial Binder Volume 8
11	Exchange of Information Request memo dated March 14, 2017 (tendered by Mr. Wallen)
12	Response of Information Request memo dated June 8, 2017 (tendered by Mr. Wallen)
13	Crown's Trial Binder Volume 9
14	Curriculum Vitae of Tobin Tanaka
15	Working Notes of Tobin Tanaka
16	Response of Information Request memo dated June 8, 2017 (original, duplicate of Exhibit 12)
17A	Crown's Trial Binder Volume 7 (Handwriting Analysis)
17B	Crown's Trial Binder Volume 7, Tabs 1-2
18	Revised email from J. Labadie on October 2, 2019 to Dylan Dinardo (tendered by Mr. Wallen)
19	Defence submissions dated October 22, 2019
20	Defence submissions dated November 28, 2019

IV. ANALYSIS

[38] I will now consider whether the Crown has met its high burden of proving the offences beyond a reasonable doubt. I will start with the overarching elements of identification and jurisdiction before I turn to the elements of the offences.

A. Proof of Jurisdiction

[39] The Crown must prove beyond a reasonable doubt that the eight offences were committed "in the Town of Bowmanville, in the Region of Durham and elsewhere in the Province of Ontario". Mr. Wallen did not raise any arguments about this element of the offence. I am satisfied that the evidence easily establishes that Mr. Wallen's residential address was and remains 123 Apple Blossom Blvd., Bowmanville, Ontario. This address appears in the tax records, personal documents and correspondence with CRA and was the location of the search warrant. Further, I draw the inference that the impugned tax records, documents and T2 returns were all prepared at Mr. Wallen's residence in Bowmanville and sent to the CRA from this residence. This is strong evidence of jurisdiction.

[40] As for the other jurisdictional arguments raised by Mr. Wallen, they were ruled to have no merit (Ruling 1). In final submissions, Mr. Wallen raised related arguments that the CRA was illegally collecting taxes from him, thus didn't have jurisdiction to do so. He also said the court had no jurisdiction to try any offences related to a "William WALLEN" which is different from how his name appears in the impugned tax records referring Mr. Wallen in different ways. Ms. Carley submits these are common OPCA litigation tactics and have no merit. I agree. I rely on the comprehensive analysis and rejection of these arguments by Justice Rooke in Meads v. Meads, supra at paras. 412-413, 568-571 and Ali v. Ford, supra at para. 8. It is noteworthy that the Meads v. Meads, supra, decision was found on a computer in Mr. Wallen's residence which leads to one inference that he was aware of these spurious arguments and was attempting to advance them in this case.

B. Proof of Identity

[41] Mr. Wallen argued that the Crown didn't prove identity because the information alleges charges against an "un-assumed name". When pressed on details about this complaint, he said all the documents and records that were entered into evidence incorrectly identify him as "Wallen". He says his true identity is actually, Wallen, William George.

[42] Ms. Carley responds that this argument has no merit because it is a common OPCA litigation tactic. In any event, she says the evidence establishes that the tax records, documents and T2 returns on behalf of 7665083 Canada Inc. and the T2 records for 8820309, all relate to Mr. William Wallen, as the defendant.

[43] I agree with the Crown's position.

[44] This argument about identity is a different gloss on the jurisdiction argument (at paragraph 40 above), which I held had no merit. I am satisfied that the Crown has proven identification beyond a reasonable doubt. Not only was there ample direct evidence of identification, from the in court identification of John Corbo who identified Mr. Wallen, but also plenty of circumstantial evidence which proved identity. For example, there were a number of documents, which contained Mr. Wallen's name as William Wallen. This name visually matched his identity. I am able to compare the person on the documents with the person who responded to "Mr. Wallen" in the courtroom, which I find was one and the same individual. One such example is Mr. Wallen's driver's license in Exhibit 3A (Volume 5), Tab 4, pages, 15-16. Many personal records also matched with his residential address of 123 Apple Blossom Blvd. in Bowmanville, Ontario, another piece of circumstantial evidence proving identity.

[45] I will now discuss the substantive counts before the court.

C. Proof of Actus Reus

[46] As noted above, counts 1-5 and 7 relate to s.239(1.1) (a) of the ITA which involves the making and/or participating in false statements while counts 6 and 8 relate to s.239(1.1)(e) of the ITA, which involves wilfully obtaining or claiming a refund knowing one is not entitled to it. Ms. Carley submits despite the different subsection of the offences, the evidence in relation to counts 1-6 is the same, as is the evidence for counts 7-8 in respect of all the essential elements of the offences. I agree. For this reason, I will discuss the evidence for counts 1-6 together and take the same approach for counts 7-8, the counts involving Mr. Corbo.

Counts 1-6

(i) False or Deceptive Statements were Made

[47] I am satisfied that the evidence as a whole establishes that for each count, the Crown has proven beyond a reasonable doubt that false or deceptive statements were made. I am equally satisfied that the defendant, Mr. Wallen, participated in these false or deceptive statements.

[48] The evidence establishes that Mr. Wallen incorporated 7665083 Canada Inc. on October 1, 2010. Mr. Wallen was listed as the director of the corporation: Exhibit 4A (Volume 6, Tabs 1-3). This instrument was created to advance the tax filing method, which involved the improper creation and use of trusts.

[49] Mr. Wallen filed a declaration of trust with the CRA in relation to the William George Wallen Estate ("The Wallen Trust"). The records show that T3 Returns were filed for 2010: Exhibit 1A (Volume 1, Tab 62) 2011 Exhibit 1A (Volume 1, Tab 70) and 2013: Exhibit 1A (Volume 1, Tab 83).

[50] On February 25, 2014, Mr. Wallen filed the Wallen Trust document, which included a "Memorandum of Wishes" dated October 4, 2010: Exhibit 4A (Volume 6, Tab 10)

[51] I find that Mr. Wallen's purpose in doing so was to show that 7665083 Canada Inc. was a debtor to the Wallen Trust in respect of all real and personal property owned by Mr. Wallen. Exhibit 4A (Volume 6, Tab 10).

[52] Mr. Wallen created another trust, the "WGW International Trust", which purportedly owned 100% of preferred shares of 7665083 Canada Inc. Exhibit 1A (Volume 1, Tab 43).

[53] Ms. Carley submits there is ample evidence that all the T2 Returns submitted by Mr. Wallen for 7665083 Canada Inc. contained false statements. She relied on the evidence of Mr. Dinardo who prepared a working paper (Exhibit 9), which shows that the amounts on the filed T2 Returns for 7665083 Canada Inc. were based on personal income earned and taxes withheld at source from Mr. Wallen and his family members. I find that the amounts reported on the T2 Returns did not represent any legitimate business expenses, income or taxes that had been withheld at source from the company.

[54] I found Mr. Dinardo to be a balanced and credible witness. He testified on the admissibility voir dires as well as the trial proper. Mr. Dinardo analyzed and compared the T5008 and T3 tax slips that Mr. Wallen created which were purportedly issued by trusts to support the amounts claimed at line 800 of the T2 Returns. His working paper (Exhibit 9) also analyzes the filed T1141 and T1142 forms, which Mr. Wallen filed to support the refunds claimed. Mr. Dinardo said his analysis revealed that the various T4 slips issued to the family members of the Wallen's for the 2010 tax year matched the amount claimed at line 800 in the 2010 T2 Return filed on behalf of 7665083 Canada Inc.

[55] Mr. Dinardo also testified that the line 800 amounts on the 2013 T2 Return filed on behalf of 7665083 Canada Inc. and the sum of the T4 slips issued to the Wallen family members was listed as $3.02, when in fact the correct difference between the sums and the line 800 amount claimed for 2011, 2012 and 2014, was $13,966.83, $2698.77 and $5191.42, respectively.

[56] Further, Mr. Dinardo also determined that the total income reported on the T4 slips issued to Mr. Wallen and his family members is either equal to or greater than the sum of expenses plus current income taxes reported on the 765083 Canada Inc. T2 Returns. Ms. Carley submitted there is a strong inference that 7665083 Canada Inc. did not carry on any business and did not incur any expenses. In support, she relied on the evidence of Mr. Dinardo who determined that for each of the taxation years from 2010-2014, 7665083 Canada Inc. reported nil revenue. Losses were reported based on the expenses (comprised of the income earned by the Wallen family members in the tax years). I agree with the Crown's position, as this inference arises from the evidence.

[57] Ms. Carley also argues that Mr. Wallen created T3 slips which were purportedly issued by the Wallen Trust for 2010-2011 or "WGW International" Trust/7665083 Canada Inc." for 2012. He also created T5008 slips purportedly issued by the Wallen Trust (2010-2011) and 7665083 Canada Inc. (2012). These slips represented that the recipient of the amounts on these slips was the CRA. I accept the submission that the only inference to be drawn from doing this was to improperly support the amounts claimed on line 800 in the 2010-2012 T2 Returns of 7665083 Canada Inc.

[58] Mr. Dinardo's evidence is that the amounts reported on the T5008 slips were virtually the same (2010 and 2012) or slightly less than the 2011 amounts claimed at line 800 in the T2 Returns filed for 7665083 Canada Inc. The same can be said for the T3 slips.

[59] Mr. Dinardo also determined that Mr. Wallen filed T1141 and or T1142 forms with the CRA that purported to support the amounts claimed at line 800 in the filed 2010, 2011 and 2012 T2 Returns for 7665083 Canada Inc. He explained that the T1141 form is used to report a transfer or loan to a specified foreign trust or a non-resident corporation controlled by the trust. The stated purpose of the T1142 form is to report the receipt of a distribution or loan from a non-resident trust. I agree with the Crown that the neither Mr. Wallen, 7665083 Canada Inc. nor the Wallen Trust are eligible entities to use these forms because they all reside in Canada. This is further evidence of a false statement.

[60] Similar to above, the amounts reported on the Forms T1141 and T1142 were either the same (2010 and 2012) or slightly less than (2011) the amounts claimed at line 800 in the T2 Returns filed for 7665083 Canada Inc.

[61] Mr. Dinardo determined that the expenses claimed on the T2 Returns filed on behalf of 7665083 Canada Inc. were based on the income earned by Mr. Wallen and his family members. They also show that the amounts claimed at line 800 of the T2 Returns were based on taxes withheld at source from the personal income of Mr. Wallen and his family members. I agree with the Crown that this is "compelling evidence" that the T2 Returns contained false statements.

[62] For the above reasons, the Crown has proven that false or deceptive statements were made in each filed T2 Return in respect of counts 1-6.

(ii) Mr. Wallen made or participated in, assented to or acquiesced in the making of the false or deceptive statements

[63] Ms. Carley submitted that the evidence of the forensic document examiner, Tobin Tanaka along with the rest of the evidence easily supports an inference that Mr. Wallen created the T2 Returns for the taxation years involved in counts 1-6. Mr. Tanaka was qualified as an expert after a voir dire. Mr. Wallen agreed to a blended voir dire and cross-examined Mr. Tanaka. I found Mr. Tanaka to be an impressive and careful witness. He has over 26 years of experience and has been qualified as an expert on 5 prior occasions including in the case of Rosie, supra. He authored two handwriting analyses (Exhibit K, Tabs 1 and 2) based on a book of writings purportedly authored by Mr. Wallen (Exhibit M) and his working papers, which showed the process of the handwriting comparison (Exhibit N). Mr. Tanaka was given a large pool of documents by Mr. Dinardo after the search warrant execution, which contained Mr. Wallen's known signatures. After separating Pauline Wallen's signatures out of those documents, he was left with Mr. Wallen's known signatures. Mr. Tanaka explained the seven point scale of conclusions ranging from "identification and elimination" to "inconclusive". In terms of his methodology, he first examined the known documents which were originals and photocopies and made notes to determine if they could be compared. He determined they could be. He prepared "master patterns" for all known samples then used these patterns to compare them to unknown samples. He formed an opinion that there were 38 known signatures that matched the questioned signatures (S.1) that disclosed a "significant combination of similarities with no significant differences". He also opined there were 7 "strong possibilities" of known signatures matching questioned signatures (S.2), and 15 with a "combination of similarities with some features not totally accounted for in the known signatures". In some cases, he could not make clear identifications because of poor penmanship or fading. In cross-examination, he agreed that he would not be able to say with complete confidence who authored the documents. However, he testified that T3 Returns that were filed contained what he believed were Mr. Wallen's signatures. Ms. Carley also pointed to the following items which bore a strong similarity in Exhibit 1A: a letter to CRA re: WGW International Trust (Volume 1, Tab 43), a T1141 Form re: WGW International Trust Exhibit (Volume 1, Tab 43), letter to CRA re Wallen Trust (Volume 1, Tab 77) and numerous documents provided to the CRA re: Wallen Trust (Volume 1, Tab 82, pages 749, 752, 757, 758, 761, 763, 768)

[64] It is noteworthy that in respect of all the counts, the T2 Returns that were sent and received by the CRA all were signed by "William Wallen", suggesting he (Mr. Wallen, the defendant) sent them. Based on Mr. Tanaka's evidence along with the rest of the evidence, I draw the inference that Mr. Wallen wrote the signatures on page 8 of the 2010, 2011, 2012 and 2013 T2 Returns that were filed.

[65] When I consider the evidence as a whole, I find there is an irresistible inference that Mr. Wallen made and participated in the impugned T2 Returns which contained the false statements.

(iii) Refunds were issued

[66] The third element requires the Crown to prove that refunds or credits were claimed or obtained by the CRA in respect of the false statements made by Mr. Wallen. There is ample evidence of this element.

[67] Mr. Dinardo confirmed that the CRA issued refunds to 7665083 Canada Inc. as follows: (a) $50,759 by cheque on October 16, 2012 as per the refund claimed in the 2011 T2 Return Exhibit 4A (Volume 6, Tab 27); and (b) $56,548 by direct deposit on November 4, 2014 as per the refund claimed in the 2013 T2 Return Exhibit 4A (Volume 6, Tab 27).

[68] Further, the 2011 and 2013 tax refunds were deposited into Scotiabank account #13862-01022-10 which is registered to 7665083 Canada Inc. The records show that Mr. Wallen and his spouse, Pauline Wallen have signing authority for this account and can direct the flow of funds for this account. The bank statements show that Mr. Wallen used the funds for personal expenditures including mortgage bills, payments to the Receiver General of Canada, insurance and other withdrawals, cheques and fees Exhibit 3A (Volume 5, Tab 5, 30). I agree with the Crown that this is further evidence that Mr. Wallen submitted the T2 Returns because the funds were used by him or for his benefit.

[69] In summary, Mr. Wallen claimed the following at line 800 of the T2 Returns for 7665083 Canada Inc:

• Count 1: refund of $35,267 claimed;
• Count 2: refund of $50,669 claimed (and received);
• Count 3: refund of $38,203 claimed;
• Count 4: refund of $56,502 claimed (and received); and
• Count 5: refund of 46,652 claimed;

(iv) 7665083 Canada Inc. was not entitled to the refund claimed

[70] The final element easily flows from proof of the false and or deceptive statements, namely that recipients of the refunds were not legally entitled to them. In this case, 7665083 Canada Inc. was not entitled to claim these refunds as they were premised on false information and thus were unlawful. There is proof of this element.

The Refunds were Issued by the CRA

[71] Mr. Wallen disputed the actus reus of two of the offences by arguing that in the case of the two received refunds for 2011 and 2013, the CRA issued refunds and would not have done so if they were unwarranted. In other words, the refunds could not be based on false information, otherwise, the CRA wouldn't have issued the refunds. The argument follows that the T2 Returns did not contain false information.

[72] I do not accept this illogical argument because the CRA would have no way of knowing that the T2 Returns contained false information until they were examined in closer details. That's what happened here.

[73] Mr. Dinardo testified that the tax filing system in Canada is self-reporting and premised on the representations made by the taxpayer or the person filing on behalf of the taxpayer. He said it's an imperfect system based on good faith and can sometimes result in unwarranted refunds unless it is caught during an assessment or by an auditor, later on. That is what happened in this case with Mr. Cahill who came across "red flags" about the tax filing method. These red flags involved improper use of trusts and corporations. When he dug further, he saw discrepancies with documents filed by Mr. Wallen and realized this was potentially an illegal tax filing method. It was only after an investigation, the CRA fully learned of his sophisticated albeit, illegal, tax filing method. The fact that refunds were issued in two cases doesn't make the false statements in the T2 Returns true statements. They just weren't caught until after the refunds had gone out. I accept this is a consequence of a self-directed tax system. I'm satisfied the Crown has proven the actus reus of counts 1-6.

Counts 7-8

[74] Counts 7 and 8 alleged false and or deceptive statements in respect of T2 Returns for 8820309 Canada Inc. This resulted in a claimed refund of $633,399. Ms. Carley submits that the combination of the evidence of Mr. Corbo, along with many records seized from Mr. Wallen's residence easily makes out the actus reus of counts 7-8. Mr. Wallen didn't seriously challenge the evidence of Mr. Corbo despite cross-examining him. Instead, his questions were designed to suggest that Mr. Corbo was complicit in his tax filing scheme which might suggest it wasn't improper.

Evidence of Mr. Corbo

[75] Mr. Corbo testified that he met Mr. Wallen through a friend, Patrick Hill in North York. Mr. Wallen was consulted in order to set up a trust to claim back a tax refund. The parties signed a non-disclosure agreement, which I agree is some evidence that Mr. Wallen wanted his tax filing scheme to be confidential. This was signed on March 16, 2014. Mr. Corbo said he paid Mr. Wallen either $5,000 or $10,000 in cash at the time of the signed agreement.

[76] Mr. Corbo understood that the CRA would pay him for taxes paid and he would "gift" Mr. Wallen 12% of any refund received because of his "experience and knowledge". Mr. Wallen explained that he would create a trust and a company and then would claim tax credits for a refund and a cheque would be sent to Mr. Corbo for the taxes paid. Mr. Corbo understood that he could not discuss or publicize any of his dealings with Mr. Wallen as it was "private company information".

[77] The Will and New Testament and Memorandum of Wishes for the Corbo Trust was created by Mr. Wallen for Mr. Corbo to sign and send to the CRA so they could recognize the trust. Mr. Corbo mailed this document to the CRA on September 11, 2014. Thereafter, the Corbo Trust was established on December 4, 2014. The CRA provided a trust account number to Mr. Corbo and he shared it with Mr. Wallen. Mr. Corbo then created and incorporated 8820309 Canada Inc. on March 16, 2014.

The Email Communication

[78] The Crown tendered emails between Mr. Corbo and Mr. Wallen. I am satisfied Mr. Corbo authenticated these emails as being authored by Mr. Wallen. They clearly depict an email address of Mr. Wallen and he self-identifies himself in the emails. In my view, these emails contain inculpatory evidence of Mr. Wallen's tax filing scheme. I have not used this evidence as similar acts as there was no such application. Mr. Corbo said he spoke to Mr. Wallen about "natural persons." Mr. Wallen told him he could claim back taxes legally for "John". The purpose of providing CRA statements to him was to fill in the T2 Return figures to claim the refund. The statements Mr. Corbo provided showed the taxes paid in the past personally and by Mr. Corbo's two companies. He said he understood that taxes previously paid were to be paid back to the trust. Mr. Corbo provided documentation to Mr. Wallen so that he could prepare the T2 Returns and claim back the taxes as refunds.

[79] Mr. Corbo had discussions with Mr. Wallen about a birth certificate and the acknowledgement of a "John" as a natural person. Mr. Wallen told Mr. Corbo that his birth certificate was required for the establishment of the trust to prove "John" as the beneficiary of the trust. Mr. Wallen also explained to him that a "strawman" is "some sort of separation of natural person – the strawman is a corporate entity of John".

[80] Mr. Corbo also testified that Mr. Wallen's successful returns of his tax filing scheme induced him to participate. Mr. Corbo was shown and recognized the T2 Return for 8820309 Canada Inc. while testifying. He admitted signing it and knew it was seeking a refund of $633,399. The address on the return was Mr. Corbo's address and he provided details which appeared in the documents to Mr. Wallen by email so that he could complete the T2 Return. He did not understand how to do it himself so he relied on his expertise. Mr. Corbo explained that the number of $633,399 is the amount of taxes paid over the past 5 years that according to Mr. Wallen, "the Canada Inc. company is entitled to". Mr. Wallen completed the numbers on Schedule 100. Mr. Corbo provided him with a balance sheet and income statements for the companies he owns and his personal income tax statements for the past 5 years and they were used by Mr. Wallen to complete the T2 Returns.

[81] Mr. Corbo understood from Mr. Wallen that he was entitled to 100% of the trust and the trust is the beneficiary of the proceeds of the company – the proceeds being the refunds claimed.

[82] Mr. Corbo understood from Mr. Wallen that he was entitled to 100% of the trust and the trust is the beneficiary of the proceeds of the company – the proceeds being the refunds claimed.

[83] Finally, Mr. Corbo testified that while he provided documents and materials to Mr. Wallen, he did not complete the T2 Returns. It was solely Mr. Wallen. However, he signed page 8 of the T2 Return, understanding from Mr. Wallen he had to. He knew that he was seeking a refund from the CRA of $633,399. He also confirmed that he did not send the T2 Return to CRA.

The Confirmatory Evidence Supporting the Credibility of Mr. Corbo

[84] In my view, Mr. Corbo was an unsophisticated taxpayer and was likely duped. He said he didn't know what the figures meant. I tend to believe him. There's nothing about his evidence which causes me to question his credibility. He was testifying about objective documents and his understanding or lack thereof of the documents. He also identified Mr. Wallen and was a direct witness about Mr. Wallen's nefarious activities. He gave powerful evidence. Ms. Carley invites the court to accept Mr. Corbo's evidence, which she says was confirmed by the following objective evidence:

(a) A copy of the signed Non-Disclosure Agreement, dated March 16, 2014, which incidentally, was the same date that 8820309 Canada Inc. was incorporated: Exhibit 6B (Volume 2, Tab 104);

(b) A copy of Mr. Corbo's CRA application for a trust account number, both unsigned and signed versions, which were seized from Mr. Wallen's residence Exhibit 4A (Volume 4, Tab 26), Exhibit 6B, Volume 2, Tab 105);

(c) A copy of an email from Mr. Corbo enclosing all the incorporation documents for 8820309 Canada Inc. which were seized from Mr. Wallen's residence: Exhibit E (Volume 3, Tab 3);

(d) An electronic copy of a similar version of the "Will and New Testament and Memorandum of Wishes" for the Corbo Trust, as well as a copy of the Power of Attorney which was seized from Mr. Wallen's residence: Exhibit E (Volume 3, Tabs, 1, 2);

(e) A copy of the Will and New Testament and Memorandum of Wishes, and the Power of Attorney were attached to the emails between Mr. Wallen and Mr. Corbo: Exhibit 2A (Volume 4, Tabs 26, 28-29);

(f) An electronic copy of the unsigned version of the 2014 T2 Return for 8820309 Canada Inc. which was filed with the CRA was seized from Mr. Wallen's computer: Exhibit 5A (Volume 3, Tab 7);

(g) A summary containing information used to complete the 2014 T2 Return for 8820309 Canada Inc. was seized from Mr. Wallen's residence. Numbers on the summary match those in the filed T2 Return. For example, the losses ($12,418.494) match the refund amount claimed ($633,399), Exhibit 5A (Volume 3, Tab 5);

(h) A copy of a letter to the CRA Chief of Appeals and Notice of Objection in relation to 8820309 Canada Inc. was seized from Mr. Wallen's residence, which the Crown says is further proof Mr. Wallen prepared the T2 Return, otherwise, why have the letter: Exhibit 5A (Volume 3, Tabs 8-9); and

(i) There are email exchanges between Mr. Corbo and Mr. Wallen regarding the filing of the T2 Return and the anticipated amount of the refund being claimed: Exhibit 2A (Volume 4, Tabs 30-31).

[85] Further, Mr. Tanaka testified that the address on the envelope in relation to the 2014 T2 Return (8820309 Canada Inc.) and sent to the CRA [Exhibit K, Volume 7, Tab 2] showed a "significant combination of similarities with no significant differences in the writing". He was able to opine that Mr. Wallen wrote the questioned handwriting in 17 questioned documents relating to this matter. When this evidence, which I accept, is considered with the evidence of Mr. Corbo, who was providing information to Mr. Wallen, a strong inference arises that Mr. Wallen prepared the T2 Returns for 8820309. Along with this, there is a strong inference that the Corbo Trust and 8820309 Canada Inc. were created for the sole purpose of claiming an unwarranted refund on the 2014 T2 Return filed on behalf of 8820309 Canada Inc.

[86] I am satisfied that the Crown has proven the actus reus of the offences in counts 7-8 beyond a reasonable doubt.

[87] Turning next to the issue of mens rea.

D. Proof of Mens Rea

[88] The mens rea component of the offences in s.239(1.1) of the ITA is distinguished by Parliament's use of the term "wilfully in any manner" in subsection (e) of the ITA. The offences in s.239(1.1) (a) do not make reference to "wilfully" which may suggest that the offences in (e) have a different and higher fault requirement. For this reason, it makes some sense to first consider if the higher fault requirement has been met for the offences in s.239(1.1)(e) of the ITA.

[89] In Klundert 1, Doherty J.A. considered the mens rea for the tax evasion offence in s.239(1) (d) of the ITA at paras. 43 onwards. In doing so, he discussed the use of similar language in that provision which also uses "wilfully" as the requisite fault requirement. At para. 44, he said "While the word 'wilfully' refers to a culpable mental state, the exact meaning of the word will depend on the context in which it is used: R. v. Buzzanga and Durocher, (1979), 49 CCC (2d) 369 at 379-85 (Ont. C.A.); R. v. Keegstra (1990), 61 C.C.C. (3d) 1 per Dickson J. at p.57-58, McLachlin J. at 118 (SCC); Ratzlaf v. U.S. 114 S.Ct. 655 at 659 (1994). Doherty J.A. went on to hold that the fault requirement in the s.239(1) (d) offence was 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: see Buzzanga, supra, at 383-385.

[90] At paragraph 48 Doherty J.A. held:

The requirements of knowledge and purpose, which together make up the fault component of the offence are closely related. A person who does not know that there is a tax imposed by the Act cannot do something for the purpose of evading payment of that tax. That same person may, however, know there is a tax imposed under the Act, and do something that has the effect of evading the payment of that tax without necessary having done so for the purpose of evading the payment of the tax.

[91] I find the analysis of the term "wilful" in the tax evasion provision highly persuasive in the context of the s.239(1.1)(e) offence which relates to the wilful obtaining or wilful claiming of a refund or credit under the ITA which the person knows she is not entitled to.

Counts 7-8

[92] Count 8 refers to the wilful obtaining or claiming of a refund under the ITA of $633,399 in the T2 Return for 8820309 Canada Inc. for the 2014 taxation year. Count 7 refers to the making of false or deceptive statements in respect of the T2 Return for 8820309 Canada Inc. in respect of this taxation year. In my view, there is no doubt that Mr. Wallen's knowledge of the false statements and purpose co-existed. Mr. Corbo said the Corbo trust was created for the sole purpose of seeking refunds of taxes already paid by Mr. Corbo and his family members. He said the company carried on no business activity and the amount of the refund claimed was directly linked to the prior taxes paid by him personally, his companies and his family members. The losses and amounts claimed on line 800 of the return were based on information in financial records provided to Mr. Wallen by Mr. Corbo regarding his other companies and family members. The $633,399 refund claimed represented the income tax previously paid by Mr. Corbo, his companies and his family members. This leads to the irresistible inference that Mr. Wallen knew the T2 Returns he prepared and Mr. Corbo signed seeking a refund of $633,399 was based on false information.

[93] Moreover, I am satisfied Mr. Wallen prepared the T2 Returns for 8820309 Canada Inc. knowing the statements in the T2 Return were false. He was aware of the sources for the amounts inputted in the return. He knew there were no losses incurred and no taxes withheld at source from the company. He knew the refund claimed was a result of his tax filing method, which is premised on the "strawman" theory of separating a person from his legal obligation to pay tax through the use of a trust. He acted wilfully in obtaining a refund that he knew 8820309 Canada Inc. was not entitled to.

[94] I am satisfied that the Crown has proven the mens rea beyond a reasonable doubt of both counts 7-8.

Counts 1-6

[95] Count 6 refers to the s.239(1.1) (e) offence of wilfully claiming or obtaining a refund under the ITA, totalling $244,293 in the T2 Returns for 7665083 Canada Inc. for the 2010, 2011, 2012, 2013 and 2014 taxation years. Counts 1-5 relate to the making of false or deceptive statements in respect of these taxation years.

[96] Ms. Carley submits that Mr. Wallen's mens rea could easily be inferred from all the circumstances based on Mr. Wallen's tax filing method, which was based on the "strawman theory" which is a false tax filing method. Further, his emails to various parties are reliable evidence of his use of the illegal strawman theory. The documents seized from his residence and documents sent to the CRA purport to put his strawman theory in practice. It was submitted that Mr. Wallen knowingly participated in and promoted a tax protestor filing method which involved the creation of trusts, the filing of various tax slips/forms and the claiming of large false losses on T2 Returns. All of this was done with the purpose of triggering unwarranted refunds from the CRA.

[97] I agree with the Crown's position.

[98] First, as discussed above, there is ample proof that Mr. Wallen knew the amounts on the T2 Returns for 7665083 Canada Inc. were false because the T4 slips for the purported business expenses were his own personal income and that of his family members. And, the taxes purportedly withheld at source from the company were taxes that had been withheld at source for the personal income of Mr. Wallen and his family members.

[99] Second, Mr. Wallen filed a T1 adjustment request in relation to his 2009 T1 Return on August 13, 2010 in which he attempted to increase the amount of tax withheld at source on line 437 of his personal T1 return: Exhibit 1A (Volume 1, Tab 11). He also created and submitted T5 slips that purported to support the claim at line 437 that taxes had been withheld at source: Exhibit 1A (Volume 1, Tab 13). This shows he was active in creating false statements.

[100] In response, on February 4, 2011, the CRA wrote to Mr. Wallen the following:

"The CRA does not support the participation in claims that declare oneself exempt from tax resulting from your personal financial transactions with the various financial institutions you deal with nor does the CRA support the participation in claims that declare oneself exempt from tax resulting from an arrangement per private contract…" Exhibit 1A (Volume 1, Tab 17)

[101] Ms. Carley notes that in a follow up letter dated January 20, 2012, the CRA further advised Mr. Wallen:

"The T5 and T5008 investment slips you have prepared to support the losses/deductions and taxes withheld represent your personal debt to various financial and retail institutions. There are no provisions under the Income Tax Act that allow a taxpayer to issue investment slips which represent there [sic] personal debt with the various institutions in which they deal with." Exhibit 1A (Volume 1, Tab 8, page 74 and Tab 20)

[102] It is reasonable to infer that Mr. Wallen received and read this correspondence because it's clear he was communicating with the CRA. On this basis, I accept the Crown's submission that Mr. Wallen had prior knowledge that he could not create and submit tax slips that purported to increase the amount of taxes withheld at source from income in order to generate tax refunds. The first T2 Return filed on behalf of 7665083 Canada Inc. was received by the CRA on July 20, 2012, which is approximately 6 months after Mr. Wallen received the above letter. This is strong evidence of Mr. Wallen's purpose in creating the false documents.

[103] Third, Ms. Carley argues that Mr. Wallen created trusts in order to further his natural person and strawman theory with a view to escape tax liability. I agree with this position. The evidence establishes that the Wallen Trust document (dated October 4, 2010) purports to be an agreement between "William G Wallen SETTLOR and OWNER, WILLIAM GEORGE WALLEN (A CORPORATION) as TRUSTEE and WILLIAM GEORGE WALLEN ESTATE (A CORPORATION) as TRUSTEE". The language in the trust document seems to suggest that taxation is for an improper purpose or mistake and that taxes should be returned to the human being through the use of intermediary trustees and trusts. There is no doubt that Mr. Wallen was attempting to escape tax liability and knew this was an unlawful means to do so.

[104] Fourth, there is evidence obtained from the search warrant at Mr. Wallen's residence relating to email communication, which speaks to his nefarious intention and purpose in attempting to escape tax liability. After an admissibility voir dire, I determined that the emails were admissible as evidence (Ruling 3). These emails were obtained from Bell Canada and were authored by Mr. Wallen. In them, Mr. Wallen admits to knowingly participating in a tax filing method (described above), which involves the creation of a corporation and a trust in order to receive income tax refunds. He promoted his strawman theory as a "back door" to obtaining refunds. In some cases, he celebrated the fact that his theory worked and he obtained refunds from the CRA.

[105] Ms. Carley relied on several emails in Exhibit 2A (Volume 4, Tab 2) as evidence of Mr. Wallen's guilty intent. I do not have to reference all of them but suffice to say, there is substantial merit to the Crown's argument. For example, on August 14, 2012, Mr. Wallen authored emails to "Burk". He attached numerous documents including a trust document template, a T1141 and T1142 Form, a T5008 summary. He advised "Burk" to keep the information confidential and private, implying he didn't want his tax filing method shared.

[106] In an email dated August 13, 2012 (page 5), Mr. Wallen explained his tax filing method as a way to convert his T4 income into losses. He wrote:

"I setup an international business corporation with a foreign trust attached as a flow through entity. I only file as a non resident now. Using this method one can easily receive their income tax back. As for the capitol losses this is the only way you can claim as a creditor as you can in no way be associated with the corporate part of the government of Canada the ITA only deals with corporate entities either sole proprietorship, partnership or registered company you must operate as a foreign entity this changes you from a debtor to a creditor and you change the government benefits back to obligations . This is where they get us we operate as a sole proprietorship but as a government officer .all you have to do is quit like any other company but you have to tender you resignation correctly. You must use the ITA to transfer debt obligations and wages and capitol gains back to the registered company but they have to go through the foreign office as a trust the trust can not retain any capitol as section 94 1 c describes . It is all passed through to the registered corporation as the beneficiary .

The register company operates just like any other business with deductions ect. As per the ITA a capitol loss has to occur before a business loss can be claimed. You claim the capitol losses through the trust via T1141 and T1142 . You then file a T2 return for the trust for the financial statement. The corporation is the debtor and the trust is the creditor.

very simple.

You file a memorandum of wishes and a trust deed with an addendum each year showing debts and obligations owed back to the trust.

Now your T4 earnings become a capitol loss for you and all borrowings as well.

Bill"

[107] Mr. Wallen celebrated his tax filing method in another email (Exhibit 2A, Volume 4, Tab 3, pages 47-48):

"Ya just got home today been at the cottage l ook what was in the mail ya hooo. Hi boys got this assessment seems I get a refund of $ 50669 . 00. They check the account then i ssue a cheq u e. The capitol l osses are too be c l a i med as a cap i tol gain refund. That will be done on next springs returns were off to the races . The credit is for income taxes paid only as a over payment.

Shit this is fun

Bill"

[108] Of note, the refund Mr. Wallen spoke of in the above email is the same amount of the refund related to the 2011 Taxation year. Mr. Wallen explained his "back door" tax filing method: Exhibit 2A (Volume 4, Tab 7)

"Some of these forms are not fillable . You include t4 slips. The t5008 and t3 flat will show taxes paid to CRA for refund must be included with T2 return . The schedule 4 and schedule 6 show losses for the trust and corporation combined kool just like the director said you put the trust down on schedule 22 .

Do you realise how much fun I could have with these guys now. The secret is to file through the back door

On the t2 you will fill in line 800 for taxes paid to be returned to you show payment by the t3 flat t5008 and t1142. Show trust number on t1142. you sin on t5008 and t3 flat trust is payer/trader

See you boys Monday

Bill the pirate"

[109] Mr. Wallen suggested he is following the strawman theory in order to receive refunds and remove government control: Exhibit 2A (Volume 4, Tab 8, page 95)

"As for the CRA the process works. It took 2 years of fighting but they are leav i ng me alone now. I sent you a copy of the latest assessment a refund has been issued on the 16 oct this is the second refund . There are 4 people I have setup this way they have tax credits and are to receive refunds as well. I have told them I will do their books and filling for them as it is easier to do than explain.

The government is a parent company and the strawman is a franchise all the trust does is remove the government control and you control the strawman now."

[110] Further, he wrote: Exhibit 2A, Tab 19, page 220:

"I think they are looking at my files to assess the damage I could do to the system. I will update the guide and sent it. I use Turbotax incorporated here to do the return . After you have received your tax numbers .

I will keep quite. I think we will have to liquidate the SIN account to teach these pricks who is in control."

" Please have people contact me about filing as per guide I am going to update the process plus currently taxpayers are getting refund checks . the CRA and Canadian government are not in a good position so I will continue to put some heat under their asses."

[111] Moreover, in an email in Exhibit 2A, (Volume 4, Tab 45), Mr. Wallen stated that he is now charging people for his "expertise" and that by charging people, they believe his tax theory:

"i have been doing this for others. average time with consultation is about 100 hours minimum fee is $5000 . 00 and up depending on client I refuse to work for free. Minimum percentage is 10 % of tax refunds . I have one client that paid $15,000 for two letters from a lawyer that did nothing

I will go anywhere in the country as long as my travel is covered and the $

5000.00. I spend about $1000.00 on registration alone per trust.

As soon as I started charging people started to believe what you tell them"

[112] Ms. Carley submits that the above emails prove that Mr. Wallen was knowingly participating in and promoting a tax protestor filing method. They reveal that the sole purpose for the creation of the trusts, the filing of various tax slips and forms and the claiming of large false losses on the T2 Returns was to trigger the CRA to issue refunds. I agree.

[113] I accept that by reporting no revenues for 7665083 Canada Inc. and claiming large false expenses, Mr. Wallen knowingly put 7665083 Canada Inc. into a net loss position for income tax purposes. It can easily be inferred that he knew the claims of "tax withheld at source" at line 800 on the T2 Returns were false and that such claims could cause the CRA to issue unwarranted refunds.

[114] For the above reasons, I'm satisfied the Crown has proven beyond a reasonable doubt that Mr. Wallen wilfully made false statements in the T2 Returns for the purpose of obtaining or claiming refunds that he knew 7665083 Canada Inc. was not entitled to for the 2010, 2011, 2012, 2013 and 2014 taxation years. There is ample evidence of mens rea for counts 1-6.

E. The Officially Induced Error Argument

[115] In final submissions, Mr. Wallen argued that in his dealings with the CRA, they advised him that his tax records were incomplete, which is different from saying they were false. Further, he said he asked the auditor(s) if there was a "problem" with the filings and "they" said no. He maintained he was led astray by the CRA. Moreover, he said he used tax software, which would have caught any false statements and because the software "worked" by allowing him to file the T2 Returns, it means he didn't make any false statements.

[116] The doctrine of "officially induced error" was described by the Supreme Court in R. v. Jorgensen, [1995] 4 S.C.R. 55. At para. 36, the Supreme Court held:

In summary, officially induced error of law functions as an excuse rather than a full defence. It can only be raised after the Crown has proven all elements of the offence. In order for an accused to rely on this excuse, she must show, after establishing she made an error of law, that she considered her legal position, consulted an appropriate official, obtained reasonable advice and relied on that advice in her actions. Accordingly, none of the four justifications for the rule that ignorance of the law does not excuse which Stuart outlined is undermined by this defence. There is no evidentiary problem. The accused, who is the only one capable of bringing this evidence, is solely responsible for it. Ignorance of the law is not encouraged because informing oneself about the law is a necessary element of the excuse. Each person is not a law unto himself because this excuse does not affect culpability. Ignorance of the law remains blameworthy in and of itself. In these specific instances, however, the blame is, in a sense, shared with the state official who gave the erroneous advice. (my emphasis added)

[117] Ms. Carley submits there is simply no evidence of an officially induced error. Mr. Wallen chose not to testify, and considering the record as a whole, there is nothing that arises which suggests there is an air of reality to his position. When Mr. Wallen was pressed on whether he was going to pursue this issue, he declined. The exhibits he tendered (Exhibits 7, 11 and 12) do not speak to this issue. Nor does the evidence of Mr. Cahill who Mr. Wallen insisted be called as a witness and he was. As noted earlier, Mr. Cahill was a researcher with the CRA who ultimately referred Mr. Wallen's tax filings to the criminal investigations branch of the CRA. Mr. Wallen asked him if he knew a person named Alan Schepens. Mr. Cahill said he may have but couldn't recall any details. Mr. Wallen did not explore this further so I don't know the role of Mr. Schepens, if any, in this case. It did not raise any air of reality that Mr. Wallen had been led astray. At the risk of being repetitive, I find Mr. Wallen knew his tax filing method was illegal and he made this very clear to others in his various emails referenced above. He was pursuing his strawman theory in an effort to thwart the CRA's ability to collect taxes. There's no evidence he was led astray by the CRA.

[118] Finally, there is no evidence before me related to the tax filing software and whether it has the ability to root out false statements. In submissions, Mr. Wallen said he used Turbo Tax but that has nothing to do with his creation and use of trusts and false tax slips. I'm not sure how tax software would know how to tell the difference between false and true information. This argument has no merit either.

F. The Mistake of Law Argument

[119] Mr. Wallen's position, which is evident from his Charter materials, cross-examination of witnesses and submissions to the court appears to be that it was his prerogative to collect back his self-earned property from the CRA. His s.7 Charter argument advanced the position that the CRA had no legal right to collect taxes and in doing so, were acting without jurisdiction and committing unconstitutional acts. In my view, this position is no different from that of Dr. Klundert, which the Court of Appeal and Supreme Court of Canada firmly rejected as having no merit.

[120] In Klundert 2, Doherty J.A. reviewed the fault requirement for the "wilful" evasion of tax in s.239(1)(d) of the ITA and accepted the Crown's concession that an error in law may lead to a reasonable doubt as to whether an individual wilfully evaded tax (at para. 56). However, when dealing with Mr. Klundert's position, which was a belief that the ITA is beyond the powers of the federal government, and therefore invalid, he held that this mistake of law did not negate the fault component (at para. 58). At para. 59, Doherty J.A. held:

A person's mistaken belief that a statute is invalid or is otherwise not applicable to that person's conduct is a mistake of law. It is, however, a mistake of law that is irrelevant to the existence of the fault requirement in s.229(1)(d) [4] Nor can that kind of mistake of law provide a freestanding excuse for the commission of a crime: Criminal Code, s.19; R. v. Jones (1991), 66 CCC (3d) 512 at 516-517 (SCC); R. v. Watson (1999), 137 CCC (3d) 422 at 431-33 (Nfld. C.A.)

[121] Further, at para. 60 Doherty J.A. added:

There are solid policy reasons for drawing a distinction between an accused who mistakenly believes that he or she is complying with the Act and an accused who knowingly violates the Act, but mistakenly believes that the Act is invalid. The former is trying to comply with the law. Particularly where the law is complex, a mistake concerning the applicable law can logically negate the blameworthiness of the person's conduct. The latter is not trying to obey the law, but is instead deciding which laws should be obeyed. An acquittal based on a mistaken belief as to the validity of the law would undermine the rule of law.

[122] Finally, Doherty J.A. held that Dr. Klundert's evidence as to his beliefs concerning the validity of the Act were irrelevant to his liability under s.239(1)(d). The same could be said for Mr. Wallen who wilfully claimed refunds under the ITA for 7665083 Canada Inc. and 8820309 Canada Inc. that he knew the recipient wasn't entitled to by making false statements.

[123] In Klundert 3, Dr. Klundert advanced the same "tax protestor" argument. Like Mr. Wallen, Dr. Klundert argued he was a natural person and therefore was not obligated to pay taxes. The Court of Appeal held at para. 20, this type of mistake of law is not a defence. The court said … "this is a jurisdictional argument (and one which is void of merit) that leads to a mistake of law which does not afford a defence".

[124] There is simply no cogent evidence that Mr. Wallen was trying to comply with the law. Mr. Cahill testified that during his research, he discovered a number of taxpayers who in his review, bore the hallmarks of tax protestors. It exposed the CRA to potentially unwarranted refunds of over $8 million dollars, so he decided to dig further. The other taxpayers, like Mr. Wallen, were improperly using trusts. He didn't reach out to Mr. Wallen to "fix" the invalid trust and improper use of deeds because it was clear in his mind that this was a tax protestor ideology. I do not find that Mr. Wallen was simply confused and was trying to comply with the law because when the evidence is considered as a whole, Mr. Wallen took deliberate steps towards advancing his tax protestor ideology. There is no merit to the submission that he was simply confused or misguided in his views about the proper use of trusts. The bulk of Mr. Cahill's evidence was spent on challenging him on his understanding of the lawful uses of trusts, deeds, direct and indirect taxes, the use of notaries, the use of foreign trusts purportedly registered with the Internal Revenue Service (IRS) and the like. Some leeway was given to pursuing this line of questioning but in the end, Mr. Cahill testified the T2 returns filed by Mr. Wallen contained objectively unusual statements involving the use of trusts and foreign trusts which piqued his interest and was a conduit into a further criminal investigation.

[125] All the evidence points in one direction. Mr. Wallen made a conscious decision that the CRA was illegally collecting taxes from him so he developed an elaborate scheme of improperly using trusts, property and other false instruments to create and file false T2 Returns, knowing that he could claim refunds that were unwarranted under the ITA. There is no doubt in my mind that Mr. Wallen presented as a sophisticated tax protestor. Any mistake of law argument is without merit.

[126] I agree with the Crown's response to Mr. Wallen's s.7 Charter argument that Mr. Wallen is misguided in believing that he is not bound by the law nor subject to the authority of the courts. There is no injunction to be awarded.

[127] Accordingly, the s.7 Charter argument has no merit and is dismissed.

V. CONCLUSION

[128] The Crown has met their high burden of proof. The evidence of guilt in this case is overwhelming. For all of the above reasons, Mr. Wallen, the defendant who was tried before me for these offences, will be found guilty of all eight counts on the information.

[129] I would be remiss if I didn't acknowledge the conduct of Crown counsel, Ms. Carley, who was assisted by her co-counsel, Ms. Virk. Cases involving self-represented litigants are challenging for courts and taxing on the administration of justice. Ms. Carley made this burden easier with her preparation, organization, candour and fairness. She diligently assisted the court and Mr. Wallen. Her exemplary conduct ensured Mr. Wallen received a fair trial. The court is grateful for her professionalism and assistance.

Released: January 10, 2020

"Signed Mr. Justice F. Javed"

Footnotes

[1] The litigation in Klundert spanned three trials. In the first two trials, Dr. Klundert was acquitted but on both occasions, the Court of Appeal reversed the acquittals and sent the matter back for a new trial. In 2011, Dr. Klundert was convicted of tax evasion and sentenced to a 12 month jail sentence, which on appeal, the Court of Appeal converted into a conditional sentence: R. v. Klundert, [2011] ONCA 4528 (Klundert 5). Dr. Klundert's application for leave to appeal the conviction to the Supreme Court of Canada was dismissed: [2011] S.C.C.A. No. 512 [Klundert 6].

[2] Mr. Wallen objected to the jurisdiction of the court to try him and the offences. I dismissed this argument in the first pre-trial motion and provided reasons for doing so. As the trial progressed, Mr. Wallen returned to this issue based on how his name was depicted in various documents, including William Wallen, Wallen (singular), WALLEN (singular) or William WALLEN (as particularized in the information). In these reasons, I will refer to Mr. Wallen as the defendant, which encompasses all iterations of his name as described.

[3] Through inadvertence, Exhibit K (Handwriting Analysis) was entered as a lettered exhibit twice.

[4] This appears to be a typographical error as the reasons as a whole support that it was meant to read 239(1)(d), not 229(1)(d) [of the ITA].

[5] Meads v Meads, supra at para. 554; 434-439; Ali v. Ford, supra at paras. 8-11, Ei v. Moriog, 2016 ONSC 4476, 2016 CarswellOnt 10815 at paras. 2-3; O'Brien v. Murchland, 2013 ONSC 4576, 2013 CarswellOnt 9769 at paras. 14-17.