A-277-87
Minister of National Revenue (Applicant)
v.
William Van Rooy (Respondent)
INDEXED AS: VAN ROM , v. M.N.R. (C.A.)
Court of Appeal, Heald, Urie and Stone JJ.—
Toronto, May 2; Ottawa, June 20, 1988.
Estoppel — Issue estoppel based on conviction of tax eva
sion (criminal offence) may apply in appeal from reassessment
for income tax (civil proceeding) — As higher burden of proof
in criminal cases, conviction normally encompassing issues in
civil proceeding — Acquittal of criminal offence not necessari
ly conclusive in civil proceeding as different levels of proof and
different elements requiring proof i.e. wilfulness in criminal
charge — Where quantum of suppressed income in doubt in
criminal proceeding, issue estoppel not applicable in appeal
from reassessment as requirement of identity of issues not met
— Quantum fundamental issue in both criminal and civil
proceedings.
Criminal justice — Evidence — Certificate of conviction of
tax evasion properly introduced in appeal from reassessment
of income tax — Certificate of conviction rebuttable prima
facie proof of failure to disclose income — Tax Court properly
going behind certificate to reasons for judgment to determine
whether identity of issues, and therefore whether issue estoppel
applies — Justified either as rebuttal of prima facie proof or
exercise of judicial discretion.
Income tax — Reassessment — Issue estoppel based on
conviction for tax evasion may apply upon appeal from reas
sessment — Acquittal of criminal charge not necessarily con
clusive as possibly different elements requiring proof i.e. wil
fulness in tax evasion charge — Identity of issues required —
Where doubt as to amount of suppressed income, issue estop-
pel not applying.
The Minister reassessed the respondent by including $60,000
in his taxable income for 1973. The respondent was subsequent
ly convicted of tax evasion for having suppressed income in the
amount of $60,000. On appeal to the Tax Court, the Minister
alleged that the respondent had been involved in a curious
diamond scheme resulting in a profit of $60,000. The Tax
Court concluded that issue estoppel could not be asserted in a
civil proceeding based on a criminal conviction as there was no
mutuality. The requirement as to identity of issues had not
been met in that the respondent's conviction did not involve the
same issue as that raised on the appeal against the reassess
ment. The Tax Court went behind the certificate of conviction
to the reasons of the Provincial Court Judge, wherein doubt
was raised as to the quantum of suppressed income. The
applicant argued that the criminal and civil proceedings were
based on the same facts. The issues upon appeal were the
following: (1) whether the Tax Court erred in finding that res
judicata could not be asserted in a civil proceeding on the basis
of a judicial determination in a previous criminal proceeding
(2) whether the Tax Court erred in holding that there was not
identity of issues so that on the facts of this case issue estoppel
did not apply, and (3) whether it was improper to have gone
behind the certificate of conviction.
Held, the application should be dismissed.
(1) The Trial Judge erred in concluding that issue estoppel
could not apply in a civil proceeding where the estoppel was
based on a conviction in a criminal case. This conclusion was
apparently based on the differences in the quality of proof
required in criminal and civil cases. However, lack of identity
of issue could not be founded on such differences. In fact, the
opposite is probably true since the burden of proof in a criminal
case is much higher than that in a civil case. The former would
encompass the latter if the facts were substantially the same.
However, the differences in the burden of proof may be rele
vant where a taxpayer is acquitted of tax evasion and subse
quently reassessed. As wilfulness is an element which must be
proved for a criminal conviction, but not on a reassessment, an
acquittal on a charge of tax evasion would not necessarily be
conclusive in an appeal from a reassessment.
(2) The Tax Court correctly held that issue estoppel did not
lie because of a lack of identity of issue with respect to the
quantum of income. The failure to disclose certain income was
fundamental to both the tax evasion proceedings and the appeal
from the reassessment. However, the narrower issue of the
amount of suppressed income was also fundamental to both
proceedings, and was exposed to doubt by the Provincial Court
Judge's reasons for judgment.
(3) The Tax Court properly examined the reasons for judg
ment of the criminal court to determine whether issue estoppel
applied. Examining the reasons may be justified either as a
matter of rebuttal of the prima facie proof arising from produc
tion of the certificate of conviction or as the exercise of judicial
discretion dependent on the particular facts of each case. The
object of the examination is to determine the identity of issues
and since that is a crucial element in the applicability of issue
estoppel, regard should be had to the facts which led to a
conviction. The certificate of conviction should not be modified
to show that a lesser sum was evaded as the Provincial Court
Judge was clearly unable to determine with any precision the
amount evaded.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s.
28.
Income Tax Act, S.C. 1970-71-72, c. 63, s. 239(1)(d).
CASES JUDICIALLY CONSIDERED
APPLIED:
Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2),
[1967] 1 A.C. 853 (H.L.); Angle v. M.N.R., [1975] 2
S.C.R. 248; Spens v. Inland Revenue Comrs, [1970] 3
All ER 295 (Ch. D.); Sheridon Warehousing Limited v.
The Queen (1983), 83 DTC 5095 (F.C.T.D.).
CONSIDERED:
Morin v. National SHU Committee, [1985] 1 F.C. 3
(C.A.); Jorgensen v. News Media (Auckland) Ltd.,
[1969] N.Z.L.R. 961 (C.A.); Hollington v. Hewthorn
(F.) & Co., [1943] K.B. 587 (C.A.); Mcllkenny v. Chief
Constable of the West Midlands, [1980] Q.B. 283
(C.A.); afrd (sub nom Hunter v. Chief Constable of the
West Midlands Police), [1982] A.C. 529 (H.L.); Gushue
v. The Queen, [1980] I S.C.R. 798; Demeter v. British
Pacific Life Insurance Co. and two other actions (1984),
48 O.R. (2d) 266 (C.A.); Re Del Core and Ontario
College of Pharmacists (1985), 51 O.R. (2d) I (C.A.);
R. v. Aimonetti, [1985] 2 F.C. 370 (C.A.); Parklane
Hosiery Co., Inc. v. Shore, 99 S.Ct. 645 (1979); Blonder-
Tongue Laboratories Inc. v. University of Illinois Foun
dation, 91 S.Ct. 1434 (1971); Grdic v. The Queen, [ 1985]
1 S.C.R. 810; 19 C.C.C. (3d) 289.
AUTHORS CITED
Bower, George Spencer and Turner, Sir Alexander King-
come The Doctrine of Res Judicata, London: Butter-
worths, 1969.
COUNSEL:
Roger E. Taylor and Alexandra K. Brown for
applicant.
Harold Stafford, Q.C. for respondent.
SOLICITORS:
Deputy Attorney General of Canada for
applicant.
Stafford & Associates, St. Thomas, Ontario,
for respondent.
The following are the reasons for judgment
rendered in English by
URIE J.: This application pursuant to section 28
of the Federal Court Act [R.S.C. 1970 (2nd
Supp.), c. 10] seeks to set aside a judgment ren
dered by the Associate Chief Judge of the Tax
Court of Canada [(1987), 87 DTC 299; [1987] 1
C.T.C. 2437], in which he held that issue estoppel
based on the conviction of the respondent for tax
evasion by an Ontario Provincial Court Judge, did
not lie in an appeal to the Tax Court to preclude
the appeal of the respondent from an assessment to
tax. The relevant facts, briefly stated, are these.
THE FACTS
On July 25, 1975 the applicant Minister reas
sessed the respondent for his 1973 taxation year by
including in his taxable income, the sum of
$60,000 which the respondent allegedly had failed
to report in his computation of that income for the
1973 taxation year. The respondent served a notice
of objection on the applicant on October 16, 1975.
It was not until October 6, 1978, that the applicant
Minister confirmed the reassessment.
Prior to the respondent having filed his notice of
objection, he had been charged in the Judicial
District of Norfolk, Ontario, with the offence of
tax evasion pursuant to paragraph 239(1)(d) of
the Income Tax Act [S.C. 1970-71-72, c. 63],
("the Act") and he was convicted thereon on
March 7, 1978. The certificate of conviction is
dated the day of conviction. The relevant portion
reads that he:
... unlawfully wilfully did evade payment of taxes imposed by
the Income Tax Act, to wit: by suppressing income in the sum
of $60,000 for the taxation year 1973 thereby evading payment
of $19,165.82 contrary to section 239(1)(d) of the Income Tax
Act.
No appeal was taken from this conviction.
On December 19, 1978 the respondent filed a
notice of appeal to the Tax Review Board from the
reassessment. In his reply thereto the Minister
assumed in paragraph 3(a) that:
(a) the Appellant was involved in a curious transaction
involving a diamond scheme which, although the specific facts
concerning the scheme remain uncertain because of the con
flicting stories given by the Appellant [respondent here] result
ed in a profit to the Appellant [respondent here] of $60,000.
THE ISSUES
It is the applicant's contention that the sum of
$60,000 income which was found by the Provincial
Court Judge to have been suppressed by the
respondent in computing his income for the 1973
taxation year was the same sum of $60,000 includ
ed by the Minister in the respondent's income by
way of the reassessment of tax dated July 25,
1975, supra. Put another way, the criminal convic
tion of the respondent for failing to disclose
income in the sum of $60,000 was based on the
same facts as those upon which the Minister relied
in the reassessment. That being so, it is in the
applicant's view, a proper case for the application
of issue estoppel and the learned Associate Chief
Judge of the Tax Court erred, in counsel's view, in
finding that this form of res judicata cannot be
asserted in a civil proceeding on the basis of the
judicial determination made in a previous criminal
proceeding. This is the first issue in this judicial
review proceeding.
The second issue arises out of the alleged error
by the Associate Chief Judge in holding that the
respondent's conviction for tax evasion was not the
same issue as that sought to be raised by the
respondent, as appellant in the Tax Court of
Canada, on his appeal from the applicant Minis
ter's reassessment of the respondent's 1973 taxable
income.
THE TAX COURT JUDGMENT
After reviewing carefully the key jurisprudence
relating to issue estoppel and the requirements for
its application as derived from that jurisprudence,
the learned Trial Judge adopted the requirements
of issue estoppel propounded by Lord Guest in
Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No.
2), [1967] 1 A.C. 853 (H.L.), at page 935 which
had been in turn cited with approval by Dickson J.
(as he then was) in Angle v. M.N.R., [1975] 2
S.C.R. 248, at page 254, viz:
(1) that the same question has been decided; (2) that the
judicial decision which is said to create the estoppel was final;
and, (3) that the parties to the judicial decision or their privies
were the same persons as the parties to the proceedings in
which the estoppel is raised or their privies.
Dickson J. in the Angle case also held, adopting
the words of Megarry J. in Spens v. Inland Reve
nue Comrs, [1970] 3 All ER 295 (Ch. D.), at page
301, that the nature of the inquiry which must be
made is:
... whether the determination on which it is sought to found
the estoppel is "so fundamental"' to the substantive decision
that the latter cannot stand without the former. Nothing less
than this will do.
The Associate Chief Judge then made his find
ing as to the first issue herein, in the following
passage from his reasons:'
It is clear from the authorities cited and others including
Gushue v. The Queen, [1980] 1 S.C.R. 798 at 802-3, that issue
estoppel applies where the judicial decision relied upon to found
issue estoppel and the proceedings in which it is invoked are
both criminal in nature. The same is true of civil proceedings.
Reported decisions on issue estoppel are rare that involve a
hybrid where, as in this appeal, the judicial decision relied upon
arises out of a prosecution for an offence and the proceeding in
which issue estoppel is asserted is civil in nature. Sheridon
[Sheridon Warehousing Limited v. Q. (1983), 83 DTC 5095
(F.C.T.D.)] is such a case, but it did not decide whether issue
estoppel applies in these circumstances. Because of the compre
hensive consideration it gave to issue estoppel mention is made
of Mcllkenny v. Chief Constable of West Midlands Police
Force and another and related appeals [1980] 2 All E.R. 227
(C.A.). As Lord Diplock noted, the hearing before the English
Court of Appeal occupied 12 days and involved the citation of
77 authorities.
' Appeal Book, at pp. 304 DTC; 2443-2444 C.T.C.
In my view issue estoppel can have no application to the
combination of litigation just described. An appeal from an
assessment is, of course, civil in nature. It is basic to issue
estoppel in civil proceedings that there be reciprocity or mutu
ality; see, for example, Humphrys per Lord Edmund-Davies at
page 51. The third requirement of issue estoppel regarding
identity of parties or their privies is founded on this rule.
Mutuality cannot exist in cases like the one at hand. Assume,
for example, that a taxpayer is acquitted on a charge under
paragraph 239(1)(d) of having wilfully failed to include
$10,000 in income in computing his income for a taxation year.
In addition to being prosecuted he has been reassessed by the
Minister of National Revenue who added the $10,000 in com
puting his income for the same year. The taxpayer appeals the
reassessment and the appeal comes on for hearing after the
acquittal. Could he successfully invoke issue estoppel thereby
succeeding on the appeal? I think not. In prosecutions for
alleged offences the fundamental question is whether the
Crown has established beyond a reasonable doubt that the
accused did the act complained of. The answer determines his
liability to penal punishment. Generally the basic question to be
answered on an appeal from an assessment of tax payable is
whether the appellant has established on a balance of probabili
ty that the Minister erred in his assessment. The answer will
determine his liability to tax. What transpires with respect to a
prosecution does not lend itself to being equated with the
fundamental question on an appeal from an assessment.
I believe the same can be said regarding a case where the
question is whether a taxpayer is liable to a penalty under
subsection 163(2) of the Act. I do not think that his acquittal
on a charge under paragraph 239(1)(d) of having wilfully
failed to include $10,000 in computing his income would estop
the Minister on an appeal to this Court from establishing on a
balance of probabilities, as is required under subsection 163(3)
of the Act, that the taxpayer is liable to a penalty in relation to
the $10,000.
An appeal to this Court from a reassessment to tax is not
litigating afresh the same issue that existed between the same
parties on a prosecution for an alleged violation of paragraph
239(1)(d) even though both proceedings may be founded on
essentially the same facts.
As to the second issue, the Trial Judge, having
assumed for the purpose of argument that the
doctrine of issue estoppel could apply in circum
stances such as those which prevail here, was
satisfied that the second and third requirements
for the application of issue estoppel had been met
in this case. However, he was unable to find the
identity of issues that met the first requirement
and therefore held that this failure was fatal to the
contention of the applicant that issue estoppel
precluded the respondent from successfully pursu
ing its appeal from the applicant Minister's reas
sessment of the respondent's 1973 taxable income.
CONCLUSION
1. The First Issue:
While it is tempting for purposes of this applica
tion to assume that the doctrine of issue estoppel
applies and to proceed immediately to the second
issue, I think it important that this Court express
its views on its application in circumstances such
as those which prevail here.
I must first say that I am unable to agree with
the learned Associate Chief Judge, as a general
proposition, that "What transpires with respect to
a prosecution does not lend itself to being equated
with the fundamental question on an appeal from
an assessment." In its context that statement
appears to have been based on the differences in
the quality of proof required in criminal and civil
cases. I have been unable to find in the cases to
which we were referred on this subject that lack of
identity of issue could be founded on such differ
ences. In fact, I would have thought that the
contrary would be true since the burden in a
criminal case of proof beyond a reasonable doubt
is substantially higher than that in a civil proceed
ing where the proof required is on a balance of
probabilities. Surely the former encompasses the
latter if all the facts adduced in evidence are
identical or substantially so at least when a convic
tion has been entered against the accused. If that
is so I fail to understand how the differences in the
requirement of proof can found the assertion by
the Trial Judge to which I have referred.
That view, of course, is not applicable necessari
ly in the situation envisaged by the learned Judge
where a taxpayer has been acquitted of a charge of
evasion of tax under the Income Tax Act and is
subsequently reassessed under the Act by adding
previously undisclosed income to his taxable
income. The differences in burden of proof may
indeed be relevant in those circumstances. The
reasoning of Lamer J. (concurred in by McIntyre
and Estey JJ.) in Grdic v. The Queen, [1985] 1
S.C.R. 810, at pages 825-826; 19 C.C.C. (3d) 289,
at pages 293-294 illustrates the distinction:
There are not different kinds of acquittals and, on that point,
I share the view that "as a matter of fundamental policy in the
administration of the criminal law it must be accepted by the
Crown in a subsequent criminal proceeding that an acquittal is
the equivalent to a finding of innocence" (see Friedland,
Double Jeopardy (1969), at p. 129, also Chitty i, 648; R. v.
Plummer, [1902] 2 K.B. 339 at p. 349. To reach behind the
acquittal, to qualify it, is in effect to introduce the verdict of
"not proven", which is not, has never been, and should not be
part of our law.
However, this does not mean that, for the purpose of the
application of the doctrine of res judicata, the Crown is
estopped from relitigating all or any of the issues raised in the
first trial. But it does mean that any issue, the resolution of
which had to be in favour of the accused as a prerequisite to the
acquittal, is irrevocably deemed to have been found conclusive
ly in favour of the accused (see R. v. Carlson, [1970] 3 O.R.
213; contra, Villemaire v. The Queen (1962), 39 C.R. 297 at p.
300. This is so even though the judgment might well be the
result of a reasonable doubt on that issue, and even when the
judge has said so or expressed views that indicate clearly that
his finding, though inuring to the benefit of the accused, had
been arrived at with reluctance and the judge has suggested
that it is not conclusively in favour of the accused.
An acquittal on the charge of tax evasion in this
case would have meant that the Crown had failed
to prove beyond reasonable doubt that the accused
"did wilfully evade payment of taxes imposed by
the Income Tax Act ...." 2 The element of "wil-
fulness" for example, in the alleged evasion of tax
had to be proven beyond reasonable doubt as did
each of the other ingredients of the offence. On the
other hand, on the reassessment, no proof of "wil-
fulness" is required. The burden is to establish on
a balance of probabilities that the respondent
failed to report certain income in his tax return.
Had there been a requirement to prove wilfulness
2 Appeal Book, p. 72.
it would, as I see it, be "deemed to have been
found conclusively in favour of the accused"—the
situation foreseen by Lamer J. in the passage from
Grdic quoted above. 3
Aside from the above-noted apparent basis for
his decision that issue estoppel, consequent upon
the findings of fact made in the course of a
criminal prosecution, can have no application in
appeals from reassessments, it appears to me that
such a conclusion flies in the face of a number of
cases of persuasive authority.
The existence of the doctrine, its relationship to
abuse of process and the admissibility of certifi
cates of conviction in civil proceedings have been
the subject of many cases in the United Kingdom,
United States, New Zealand and in the Supreme
Court of Canada and as well the Superior Courts
in this country. For purposes of this appeal only a
few need be referred to.
Unquestionably, the most thorough analysis of
the jurisprudence was that undertaken by North P.
in the New Zealand Court of Appeal case of
Jorgensen v. News Media (Auckland) Ltd., [1969]
N.Z.L.R. 961. In the result, the Court refused to
follow the English Court of Appeal decision in
Hollington v. Hewthorn (F.) & Co., [1943] K.B.
587, at page 601 and held that, in the context of
abuse of process, not only was a certificate of
conviction admissible in evidence in a civil pro
ceeding in that country, it was "some evidence" of
guilt in the crime charged at the time and place in
the indictment. The decision in Hollington had
held that a certificate of conviction was inadmiss
ible in subsequent civil proceedings. It is a decision
which was frequently criticized by academic writ
3 In Morin v. National SHU Review Committee, [1985] 1
F.C. 3 (C.A.) MacGuigan J., at p. 29 said: "It would be hard to
disagree with the proposition that a criminal acquittal cannot
be a bar to a subsequent civil action arising out of the same
facts."
ers and in other courts. Finally, both the English
Court of Appeal and the House of Lords respec
tively, in Mcllkenny v. Chief Constable of the
West Midlands, [1980] Q.B. 283 (C.A.) and sub
nom Hunter v. Chief Constable of the West Mid
lands Police, [1982] A.C. 529 (H.L.) disavowed
what was said in Hollington. Lord Diplock who
delivered the principal judgment, had this to say at
pages 542 and 543 of the report:
The passage from Lord Halsbury's speech [in Reichel v.
Magrath, (1889) 14 App.Cas. 665, at p. 668] deserves repeti
tion here in full:
.. I think it would be a scandal to the administration of
justice if, the same question having been disposed of by one
case, the litigant were to be permitted by changing the form
of the proceedings to set up the same case again."
My Lords, this is the first case to be reported in which the
final decision against which it is sought to initiate a collateral
attack by means of a civil action has been a final decision
reached by a court of criminal jurisdiction. This raises a
possible complication that the onus of proof of facts that lies
upon the prosecution in criminal proceedings is higher than
that required of parties to civil proceedings who seek in those
proceedings to prove facts on which they rely. Thus a decision
in a criminal case upon a particular question in favour of a
defendant, whether by way of acquittal or a ruling on a voir
dire, is not inconsistent with the fact that the decision would
have been against him if all that were required were the civil
standard of proof on the balance of probabilities. This is why
acquittals were not made admissible in evidence in civil actions
by the Civil Evidence Act 1968. In contrast to this a decision on
a particular question against a defendant in a criminal case,
such as Bridge J.'s ruling on the voir dire in the murder trial, is
reached upon the higher criminal standard of proof beyond all
reasonable doubt and is wholly inconsistent with any possibility
that the decision would not have been against him if the same
question had fallen to be decided in civil proceedings instead of
criminal.
It should be noted that the case arose from the
refusal of a Trial Judge to strike out a statement
of claim and in the Court of Appeal only one of
the three justices, Lord Denning, relied exclusively
on the certificate of conviction in the context of
issue estoppel. The other two members of the
panel, on the facts of the particular case, preferred
to base their conclusions on abuse of process
although one, Sir George Baker, did not rule out
issue estoppel as being applicable and would have
struck out the statement of claim on both grounds.
With respect to the Court of Appeal judgments,
Lord Diplock had this to say [at pages 540-541]:
Lord Denning M.R. and Sir George Baker were also in
favour of extending the description "issue estoppel" to cover the
particular example of abuse of process of the court presented by
the instant case—a question to which much of the judgment of
Lord Denning is addressed. Goff L.J., on the other hand,
expressed his own view, which had been shared by Cantley J.,
that such extension would involve a misuse of that expression.
But if what Hunter is seeking to do in initiating this civil action
is an abuse of the process of the court, as I understand all your
Lordships are satisfied that it is, the question whether it also
qualifies to bear the label "issue estoppel" is a matter not of
substance but of semantics.
Nevertheless it is my own view, which I understand is shared
by all your Lordships, that it would be best, in order to avoid
confusion, if the use of the description "issue estoppel" in
English law, at any rate (it does not appear to have been
adopted in the United States), were restricted to that species of
estoppel per rem judicatam that may arise in civil actions
between the same parties or their privies, of which the charac
teristics are stated in a judgment of my own in Mills v. Cooper
[1967] 2 Q.B. 459, 468-469 that was adopted and approved by
this House in Reg. v. Humphrys [1977] A.C. 1, the case in
which it was also held that "issue estoppel" had no place in
English criminal law.
The latter statement is inapplicable in Canada
because the Supreme Court in Gushue v. The
Queen, [1980] 1 S.C.R. 798, found that issue
estoppel is part of the criminal law of Canada.
Canadian courts too have wrestled with the
problem as to when issue estoppel may lie. Deme-
ter v. British Pacific Life Insurance Co. and two
other actions (1984), 48 O.R. (2d) 266 (C.A.) is a
case in which the appellant was convicted of the
murder of his wife. Subsequently, he sued in three
separate actions, the respondent insurance compa
nies upon policies of insurance whereby the
respondents had agreed to pay to the survivor of
the appellant or his wife, certain sums upon the
death of the other. In rejecting the appeal the
Ontario Court of Appeal found that the appellant
was seeking to relitigate the very issue that was
decided against him at his criminal trial. It held
that Hollington, supra, was not the law of Ontario
and that the attempt to relitigate was an abuse of
the process of the court.
Re Del Core and Ontario College of Pharma
cists (1985), 51 O.R. (2d) 1, is another Ontario
Court of Appeal decision ultimately decided on the
principle of abuse of process. In concurring reasons
for judgment for the majority Blair J.A. said this
at pages 21 and 22 of the report:
I agree with my brother Houlden that such evidence consti
tutes prima facie and not conclusive proof of the fact of guilt in
civil proceedings. The prior conviction must of course be rele
vant to the subsequent proceedings. Its weight and significance
will depend on the circumstances of each case. The rationale
for this rule of evidence is expounded by the Court of Appeal of
New Zealand in Jorgensen v. News Media (Auckland) Ltd.,
[1969] N.Z.L.R. 961, where, after a careful review of the
authorities, it concluded that the rule in Hollington v. Hew-
thorn did not extend to New Zealand. After holding that a
certificate of conviction was conclusive evidence of that convic
tion, North P. stated at page 980:
[P]roof of ... conviction ... while not conclusive of ...
guilt, is evidence admissible in proof of the fact of guilt.
Whether such evidence discharges the evidentiary burden of
proof at any stage of the trial will be for the Court to decide
on the evidence tendered.
I also agree with his comment at p. 980 on the weighing of such
evidence:
... I do not overlook the practical difficulties which in some
cases may arise in determining what weight should be given
to proof of a conviction of a crime which is again in issue in
the civil proceedings but I think these difficulties are more
apparent than real for the weight to be given to the convic
tion will vary very considerably according to the nature of
the civil action with which the Court is concerned and the
circumstances surrounding the conviction. If it is a Judge
alone case he should have little difficulty in determining
what weight should be given to the conviction. If it is a jury
case no doubt it will require a careful direction by the Judge.
Since evidence of prior convictions affords only prima facie
proof of guilt it follows that its effect may be countered in a
variety of ways. For example, the conviction may be challenged
or its effect mitigated by explanation of the circumstances
surrounding the conviction. It is both unnecessary and impru
dent to attempt any exhaustive enumeration. The law of
Ontario is only now emerging from the long shadow cast over it
by the decision in Hollington v. Hewthorn, supra. It would be
highly undesirable to replace this arbitrary rule by prescribing
equally rigid rules to replace it. The law should remain flexible
to permit its application to the varying circumstances of par
ticular cases.
From the foregoing it can be seen that the
Ontario Court of Appeal had no difficulty in
finding that in a proper case proof of the convic
tion of a party would provide in a civil proceeding
some evidence or prima facie evidence of the fact
of guilt, the effect of which may be subject to some
kind of examination in the civil proceeding. In
both the Demeter and Del Core cases the courts
found that to permit the actions to proceed would
have constituted an abuse of process. However, I
can see no reason why the same considerations
should not apply to cases in which there is a plea
of issue estoppel just as Lord Denning and Sir
George Baker held in the Mcllkenny case, supra.
While not precisely on point, the judgment of
this Court in R. v. Aimonetti, [1985] 2 F.C. 370 is
of interest in that the principle of issue estoppel
was applied in a situation originally adjudicated
upon by a Provincial Court Judge in a matter
which arose out of a criminal investigation. The
respondent in that appeal had been arrested and at
the same time a sum of money had been seized
under authority of the Narcotics Control Act
[R.S.C. 1970, c. N-1]. The refusal of a writ of
certiorari against the Provincial Court order, by
the Manitoba Queen's Bench was upheld in the
Court of Appeal [(1981), 8 Man. R. (2d) 271] and
leave to appeal to the Supreme Court of Canada
was refused [[1981] 1 S.C.R. 17].
The respondent then instituted proceedings in
this Court in which he sought a judgment for the
money seized together with interest. In the Trial
Division [[1983] 2 F.C. 282], on a preliminary
determination under the Rules [Federal Court
Rules, C.R.C., c. 663], it was held, inter alia, that
issue estoppel did not lie. The issue in the Court of
Appeal was whether the respondent's right to
possession of the money had been conclusively
determined in the restoration proceedings so as to
bar the respondent from asking this Court to
arrive at a different result. Mahoney J. speaking
on behalf of the Court said at pages 376 and 377
that:
The appellant's counsel did not take the position that the
estoppel here was a cause of action estoppel. I think he might
have. I do not see that the right asserted in the application for a
restoration order under subsection 10(5) is any different than
the right asserted in the statement of claim here. In both
proceedings, the respondent has sought only to be put in
possession of the same thing. I see no valid distinction in the
fact that the thing actually seized, i.e., the identical notes and
coins, might have been returned to him had a restoration order
been granted whereas in this proceeding what is sought is an
equivalent sum of money plus interest.
In any event, an issue estoppel is clearly established. The
refusal of a restoration order, taken with the consequences of
that refusal prescribed by subsection 10(7) that "the thing so
seized shall be delivered to the Minister who may make such
disposition thereof as he thinks fit" seems to me to determine
conclusively the issue of the right to possession of a thing
lawfully seized under paragraph 10(1)(c). The determination of
the right to possession of the thing is neither collateral nor
incidental to the making or refusal of a restoration order but
the direct legal result of it. The refusal was a judicial decision,
competently made and final, and the parties to the proceeding
were the same as here.
Perhaps the closest that this Court has come to
the issue in the present case is in Morin v. Nation
al SHU Review Committee, [1985] 1 F.C. 3
(C.A.) where the Court held that where a prisoner
acquitted by a jury of the murder of a fellow
inmate was, notwithstanding his acquittal, segre
gated in a special holding unit, the subsequent
penitentiary proceedings whether disciplinary or
administrative in nature, or otherwise, were not
only identical in substance to the criminal trial but
also led to what, in character, purpose and effect,
were criminal sanctions. Therefore, the respon
dents clearly misdirected themselves as to the law
when they refused to give effect to the criminal
acquittal. Collateral or issue estoppel was dis
cussed by the majority but the judgment really
turned on the nature of the prison disciplinary
body, which was found to be analogous to a crimi
nal process rather than civil in nature. The precise
issue in this application thus, differs.
I take it from all of the foregoing that there is
no doubt that issue estoppel may be raised in this
Court in a proper case. The nature of the proof
required to rebut the prima facie proof of the
issues to be decided in a civil proceeding by filing a
certificate of conviction have not, to my knowl
edge, been canvassed here before.
I conclude this brief survey of issue estoppel
jurisprudence by referring to one U.S. Supreme
Court decision, viz. Parklane Hosiery Co., Inc. v.
Shore, 99 S.Ct. 645 (1979), at page 649. In the
United States issue estoppel is known as collateral
estoppel and on that subject Stewart J. had this to
say:
Collateral estoppel, like the related doctrine of res judicata,
has the dual purpose of protecting litigants from the burden of
relitigating an identical issue with the same party or his privy
and of promoting judicial economy by preventing needless
litigation.
Affirming an earlier decision of the Court in
Blonder-Tongue Laboratories, Inc. v. University
of Illinois Foundation, 91 S.Ct. 1434 (1971), the
Court held that a plea of collateral estoppel could
succeed against any party or his privy who was a
party to previous litigation whether or not the
party claiming the estoppel had been a party or
privy in the earlier litigation. In other words mutu
ality of parties in issue estoppel cases was found
not to be a requirement. It is fair to say, I think,
that no Canadian court has gone that far in issue
estoppel cases and there is no necessity to discuss
that problem in this case because the parties were
the same in each proceeding. That being acknowl
edged, I must say that I lean very much to the
reasoning of the Supreme Court in the Blonder-
Tongue case. Where the problem of mutuality has
arisen in other Canadian courts, the cases have
been disposed of on the basis of the court's inher
ent jurisdiction to prevent an abuse of process, as
was done in the Demeter and Del Core cases, so
that its requirement in issue estoppel cases in
Canada, has not been decided to my knowledge.
On the basis of all of the foregoing, I am of the
opinion that the Associate Chief Judge erred in
concluding that issue estoppel could not apply in a
civil proceeding where the estoppel is based upon a
conviction in a criminal case. It therefore, becomes
necessary to determine whether or not on the facts
of this case, it does apply.
THE SECOND ISSUE
Did the learned Trial Judge err in holding that
the issue decided in Provincial Court when the
respondent was convicted of tax evasion was not
the same issue as that sought to be raised by the
appellant before the Tax Court of Canada on the
respondent's appeal from his reassessment under
the Income Tax Act.
To appreciate the question arising out of this
issue it is necessary to advert to the tests formu
lated by Lord Guest in Carl Zeiss Stiftung v.
Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853
(H.L.), at page 935 which were approved by the
Supreme Court of Canada in Angle v. M.N.R.,
[1975] 2 S.C.R. 248, supra, in the quotation ear
lier referred to herein and which, for convenience
sake, I repeat:
(1) that the same question has been decided; (2) that the
judicial decision which is said to create the estoppel was final;
and, (3) that the parties to the judicial decision or their privies
were the same persons as the parties to the proceedings in
which the estoppel is raised or their privies.
Dickson J., as he then was, added a fourth
refinement to the first test, namely, that the ques
tion out of which the estoppel is said to arise must
have been fundamental to the decision arrived at
in the earlier proceedings. Put another way, the
question is, was the previous decision "so funda
mental" to that substantive decision that the latter
cannot stand without the former? Nothing less
than this will do. This Dickson J. pointed out, is
the test enunciated by the authors of George
Spencer Bower and Sir Alexander Kingcome
Turner in The Doctrine of Res Judicata, London:
Butterworths, 1969.
The learned Associate Chief Judge had no dif
ficulty in finding that the requirements of tests two
and three had been met. For the reasons which he
gave I fully agree with him.
As to the first test, however, he was unable to
find that there was a sufficient identity of issues in
the two proceedings for him to conclude that the
same question will be decided as that decided in
the earlier proceeding. He so concluded by refer
ring to the reasons for judgment of the Provincial
Court Judge at the accused's tax evasion trial
where it was held, inter alia, that:
1 therefore conclude that while the amounts of suppressed
income and tax is [sic] evaded as recited in count number two
before the Court, have not been proven with exactness by the
Crown. There is sufficient evidence to prove beyond a reason
able doubt, the suppression by the accused of substantial
income in the taxation year, 1973 which in turn would result in
wilful tax evasion. The accused accordingly, will be found
guilty of count number two. [My emphasis.]
The Trial Judge did not regard this finding as
compliance with the first requirement of issue
estoppel so that the applicant's contention that the
doctrine of issue estoppel applied in respect of the
respondent's appeal from his reassessment to tax,
failed.
Counsel for the applicant attacked this finding
on three bases:
(1) Where issue estoppel is asserted, only the pre
vious formal judgment or order may be examined,
i.e., it was improper in this case for the Associate
Chief Judge to have gone behind the certificate of
conviction and to have had regard to the Provincial
Court Judge's reasons for judgment in deciding
that there was insufficient identity of issue for
issue estoppel to lie;
(2) Alternatively, counsel said, if the reasons for
judgment modify the certificate of conviction as to
the amount of income suppressed as disclosed in
the certificate, then issue estoppel lies to prevent
the respondent from raising the question of wheth
er or not he did knowingly suppress such amount,
as modified; and
(3) In the further alternative, if the certificate of
conviction constitutes only prima facie evidence of
the truth of the facts therein contained, it may be
rebutted only by showing that there exists fresh
evidence of a substantially material nature which
could not have been available to the respondent at
the criminal trial and which would negative the
presumption of the truth of the allegations in the
certificate or that his conviction was obtained by
fraud or collusion.
I will deal with those attacks seriatim.
(1) It should again be noted that the certificate
of conviction states that the respondent, "unlaw-
fully ... did evade payment of taxes ... by sup
pressing income in the sum of $60,000 for the
taxation year 1973". Again as previously noted,
the learned Provincial Court Judge, in his reasons,
said that the amount of suppressed income had not
been proven "with exactness by the Crown" but
the suppression was of "substantial income".
Since, as I have earlier said, the probative value of
a certificate of conviction in an issue estoppel
situation is at least similar to, if not identical with
its probative value in abuse of process cases, the
facts stated therein are at least prima facie evi
dence of, or some evidence of, the truth of the facts
stated therein 4 which can be rebutted. While I am
very cognizant of the conceptual difficulties in
defining the limits of the rebuttal evidence which
may be adduced and the danger thereby of expos
4 Re Del Core and Ontario College of Pharmacists, supra,
p. 501.
ing to relitigation the very issues which led to the
conviction, on the facts of this case as exposed in
the reasons for judgment of the Provincial Court
Judge, I have no difficulty in concluding that, in
the broad sense, the fundamental decision of tax
evasion found in the criminal proceeding is equally
fundamental in the reassessment to tax on the
basis of failure to disclose certain income. How
ever, the narrower issue within that broad funda
mental decision, one which is equally fundamental
for purposes of the tax appeal, namely, the quan
tum of suppressed income, has been exposed to
doubt. Therefore, assuming that a Court is entitled
to have regard to the reasons for judgment and not
just to the certificate of conviction, I agree with
the Associate Chief Judge at least with respect to
the issue of quantum, that issue estoppel does not
lie because of a lack of identity of issue.
I turn now to the question of the propriety of
looking behind the certificate at the Judge's rea
sons. In a case in the Trial Division, in which the
facts were altogether different, Sheridon Ware
housing Limited v. The Queen (1983), 83 DTC
5095 (F.C.T.D.), my brother Mahoney J. exam
ined the reasons of the convicting Provincial Court
Judge in that case to ascertain whether that Judge,
in convicting the plaintiff of tax evasion had made
a `"-Day fair market valuation of certain real
property. Mahoney J. found that he had not and
he was not called upon, therefore, to make a
finding on whether issue estoppel lay in that case.
The importance of the decision for purposes of the
case at bar is that he did look at reasons for
judgment of the criminal court in deciding a ques
tion raised in a tax appeal.
I, too, have no difficulty in concluding that it is
not improper to examine the reasons for judgment
to ascertain whether in fact issue estoppel is prop
erly pleaded. It matters not, in the circumstances
as I see them here, whether examining the reasons
is viewed as a matter of rebuttal of the prima facie
proof arising from production of the certificate of
conviction or is the exercise of judicial discretion
dependent on the particular facts of each case,
which is the approach taken in some United States
authorities. Determining the identity of issues is
the object of the examination and since that is a
crucial element in the applicability of the issue
estoppel, regard should be had to the facts which
led the Trial Judge to convict.
(2) The position of counsel for the applicant on
the alternative plea is that at least $40,000 was
proven to have been suppressed, at least to the
satisfaction of the Provincial Court Judge. While I
concede that I have had some difficulty in follow
ing the complex evidence adduced on the monetary
aspects of the evasion, it is clear on the whole, I
think, that the learned Judge had been unable to
determine with any precision the exact amount
evaded. 5 In fact he said "I believe there was a
substantial sum evaded but I don't know how
much." Nor did he appear to accept the submis
sion of counsel for the Minister that over and
above any capital gains there appeared to be some
$40,000 suppressed. That being so, in my view, it
is not possible to find, in effect, that the certificate
of conviction can, on the evidence, be modified to
show a lesser sum than $60,000 as the amount
evaded. There is thus doubt, at the very least, that
the existence of the conviction can or should estop
the civil proceedings.
(3) As to the second alternative attack, I can
only say that obviously if it can be shown that a
conviction was obtained by fraud or collusion,
neither should the conviction stand nor should any
proceeding dependent upon it be permitted. As to
the necessity for new or fresh evidence to sustain a
5 See Appeal Book, p. 95.
challenge to the certificate of conviction I can see
no need for such a limitation either in principle or
upon authority. Thus, I see no merit in this branch
of the applicant's attacks.
Accordingly, for all of the foregoing reasons I
would dismiss the section 28 application.
HEALD J.: I agree.
STONE J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.