Canada (National Revenue) v. Stanchfield, 2009 FC 99
http://www.canlii.org/en/ca/fct/doc/200 ... 9fc99.html
Canada (National Revenue) v. Stanchfield, 2009 FC 72 (CanLII)
http://www.canlii.org/en/ca/fct/doc/200 ... 9fc72.html
While he was charged with income tax evasion under the name Richard Cory Stanchfield he is identified in the two cases as Cory Stanfield so I'll call him that. 2009 FC 72 was decided first, on January 23, 2009. The issue to be determined was;
 This is an application by the Minister of National Revenue, (the “Minister”) pursuant to Rules 466 and 467 of the Federal Courts Rules, S.O.R./98-106, that Mr. Cory Stanchfield be found in contempt of an Order of Mr. Justice Gibson, dated September 26th, 2007. On the basis of the evidence filed by the applicant, I have found that Mr. Stanchfield is in contempt of that Court Order.
The issue in the 2007 court order was a CRA demand for information which Stanchfield had refused to provide.
 The respondent filed an appeal of that Order on October 22, 2007 and obtained a stay of execution of the Order. He later withdrew his appeal and the stay was removed. Following the discontinuance on June 11, 2008, the applicant agreed to give the respondent 30 days to provide the documents required under the Compliance Order before seeking a contempt order.
 Subsequent to that, various correspondence has gone back and forth between the respondent and the applicant’s counsel on the issue of whether Mr. Stanchfield is a “person” obliged to answer the Requirement for Information.
I think you all know where this is going.
 After having heard the arguments of Mr. Stanchfield and of counsel for the applicant, I indicated at the hearing that these motions were dismissed, essentially for the reasons put forward by the applicant. I will now briefly summarize these reasons.
 The first motion is very much related to the central argument advanced by the respondent throughout these proceedings, according to which a distinction should be drawn between Mr. Stanchfield in his capacity as the legal representative of the taxpayer and Mr. Stanchfield as a “natural person” for his own benefit. In his view, a “natural person” does not fall within the scope of the Excise Tax Act. According to the applicant, a careful reading of Mr. Justice Gibson’s Order reveals that it is not directed to him as a natural person but as a legal representative of the taxpayer; had it been otherwise, he would have been given the protection of the Canadian Bill of Rights. On that basis, he sought an Order directing that any reference to him as a natural person be taken out of all documents filed by the applicant, including in the affidavit submitted in support of the motion for a contempt order.
Stanchfield responded to the court order to produce information by saying that there was no information to produce;
 On the issue as to whether the respondent complied with the Order of Mr. Justice Gibson, the Court heard the evidence of Ms. Tove Mills, a Collection Officer with the CRA who had the conduct of the CRA’s collection files relating to the respondent since January 2007. She testified that Mr. Stanchfield failed to provide the information required by the Compliance Order. Appended to her affidavit is the letter sent by Mr. Stanchfield to the CRA, which purports to be his response to the Requirement for Information. It reads as follows:
a) There are no bank accounts, credit union accounts or similar financial institution accounts that Cory Stanchfield has signing authority over, including accounts held in countries other than Canada for the period January 1, 2005 to April 1, 2007
b) There are no trading accounts, investment portfolio, or any other accounts pertaining to the sale of stock, securities, bonds and commodities held directly, indirectly or beneficially for Cory Stanchfield, and therefore there are not list(s) or listing of transactions for the period January 1, 2005 to April 1, 2007
c) There is no money shares, securities, interest, dividends, or any other asset held directly, indirectly or beneficially for Cory Stanchfield, and therefore there are no list(s) for the period January 1, 2005 to April 1, 2007
d) There is no nominees who operated trading and/or investment accounts on behalf of Cory Stanchfield and therefore there are no list(s) for the period January 1, 2005 to April 1, 2007
e) There are no names and address of companies, including companies in countries other than Canada that Cory Stanchfield was a director, shareholder, officer, agent, or nominee and therefore there are no list(s) for the period January 1, 2005 to April 1, 2007.
However the CRA said that he was lying.
 Ms. Tove indicated that this information is not correct or complete. Based on her research, she found that the respondent is president of two limited liability companies registered in the state of Nevada, and that he has signing authority on bank accounts for these two companies. She also found that these bank accounts appear to be used to direct funds to Mr. Stanchfield. It appears further that the respondent had an asset during the relevant time frame, namely a lease of a 2006 car. Finally, copies of corporate searches from the Nevada Secretary of State website show that the respondent is named as a director or officer, during the relevant time period, of six companies; most of them are listed as having annual sales and capital, with no shareholders noted and Mr. Stanchfield as President.
His response to this was to argue that none of the assets uncovered by the CRA had anything to do with him because they were the property of that other Cory Stanchfield;
 None of this information was contradicted by Mr. Stanchfield, who testified first in his capacity as a “natural person, for his own benefit” and as a witness for the respondent, and then as the respondent himself. In his capacity as a “natural person”, he confirmed that he has done the various acts, signed the various documents, incorporated the various companies, held the various accounts, etc. as stated by Ms. Tove Mills. His only disagreement with the applicant stems from the differentiation he attempts to make between his various capacities.
For some reason this did not impress the judge.
 For the reasons already stated previously, this is a distinction that finds no basis in the Act nor in Mr. Justice Gibson’s Order. The distinction drawn by Mr. Stanchfield between his capacity as a natural person and his capacity to act in some other way is entirely of his own doing, and is devoid of any support in the case law. He has conceded that his various identities occupy the same physical body, have the same birth date and sign the same way. In fact, he would be unilaterally choosing in what capacity he acts; this is obviously an untenable proposition, and one that runs afoul of any tenable interpretation of the Act.
 Section 123 of that Act provides that an “individual” means a natural person, and that a “person” means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, union, club, association, commission or other organization of any kind. Nowhere in these definitions do we find a distinction between a natural person and the legal representative of the taxpayer. Moreover, it is beyond dispute that Mr. Stanchfield, in whichever capacity he may choose to act, was clearly contemplated as coming within the Order of Mr. Justice Gibson.
 On the basis of the evidence submitted to the Court, I am therefore of the view that the applicant has established the required prerequisites for a finding of contempt. It does not matter whether Mr. Stanchfield had the intent to contravene the Order of Mr. Justice Gibson, as mens rea is not a required element; it is only relevant as a mitigating factor relative to the penalties to be imposed.
So the judge hit whichever Cory Stanchfied was in court that day with this;
THIS COURT ORDERS that:
1. The respondent is guilty of contempt of court as he failed to comply with the Order of Mr. Justice Gibson dated September 26, 2007;
2. The respondent shall serve and file written submissions on sentencing on or before February 9, 2009;
3. The applicant shall serve and file further written submissions, on or before February 16, 2009, wherein the following factors are to be addressed:
a) Any non-compliance or past violations by the respondent of provisions of the Excise Tax Act, and/or the Income Tax Act;
b) Any further information about the respondent which may assist the Court on sentencing.
4. The applicant shall serve the respondent personally with a true copy of the within Order and Reasons for Order no later than January 26, 2009, and file proof of service with the Registry of the Court.
5. The Judicial Administrator will schedule a teleconference hearing of this matter as expeditiously as possible.
6. Costs will be dealt with after the sentencing hearing.
2009 FC 99 seems to have been heard at the same time as 2009 FC 72 because it refers to the FC 72 decision as having been released while FC 99 was still being heard. The issue in FC 99 was similar.
 In the present application, the Minister of National Revenue (the Minister) seeks a compliance order against Cory Stanchfield pursuant to section 231.7 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the Act) to provide the information and documentation listed in the Minister’s request for information (RFI) sent to Mr. Stanchfield on February 19, 2008.
Cory responded that he was just trying to be helpful. Those dimwits at the CRA were just too unsophisticated in their understanding of the approved Porisky interpretation of income tax laws to realize that they were persecuting the wrong man. So he provided the court with two affidavits, one from each Cory Stanchfield, which, together, should have cleared up the issue of which Cory Stanchfield was present in front of the CRA and the court at any given time. Unfortunately the judge was just as deficient in the correct understanding of income tax laws as the dolts over at the CRA;
 Mr. Stanchfield argues that he did in fact comply with the RFI. He explains that the alleged inadequacies (referred to in the affidavit of Tove Mills) of the response of Cory Stanchfield, the taxpayer and respondent in this application are caused by the Minister’s confusion in attributing to him assets, income and activities of another, distinct entity whom he characterizes as “Cory Stanchfield, in his capacity as a natural person acting in his own capacity and for his own private benefit”. Because this is not the first time similar arguments have been made by Cory Stanchfield as well as other taxpayers in the Vancouver area, it is worth reviewing in some detail the arguments presented by the respondent.
 In his respondent record, Mr. Stanchfield included two affidavits. The first is entitled “Affidavit of Cory Stanchfield (the Respondent)” while the second one is entitled “Affidavit of Cory Stanchfield, in his capacity as a natural person (the Witness)”. In that second affidavit, the affiant states: “Given our similar names, the same date of birth of March 17, 1971; signature, and mailing address. It is my intent to clarify this confusion as to the true ownership of any property and/or activities that are mistakenly assumed to be the Respondent’s.” Also, at paragraph 7 of the said affidavit, the affiant indicates that when the Canada Revenue Agency (CRA) agents came to his residence to serve the respondent, “I answered the door and advised them that I was not the person they were looking for. And at both times, documents were dropped before me or were thrown into my private residence before agents walked away. In both instances, I forwarded these legal documents to the Respondent” (emphasis added). At the direction of the Court, the signatories of each affidavit were to be present at the hearing. It quickly became apparent that there was only one human being involved and that Cory Stanchfield who appeared and argued the case before me had signed both affidavits himself.
 Having established that the Cory Stanchfield referred to in the respondent’s record, the affidavits and the oral arguments under various terms like “natural person,” “natural person acting in its own capacity and for its own benefit,” “the taxpayer,” “the Respondent,” etc, has but one body, one mouth, one brain, one set of hands, and thus is one single human being, one must now review the argument presented by the said Cory Stanchfield to explain his response to the Minister’s RFI, in light of the fact that in his affidavit “in his capacity as a natural person (the Witness)”, he clearly indicates: (1) that he does have a residence and an address in British Columbia; (2) that he has held a variety of positions including for example but not limited to president, secretary and treasurer of several Nevada corporations created by him; (3) that he received remuneration among other things from Mr. Plotnikoff for what he describes as “education regarding the teachings of human rights”; and, (4) that payments received from Mr. Plotnikoff would reference “natural person compensation and/or consulting in the memo line.”
 At paragraph 37 of his written submissions, Mr. Stanchfield says that he knows that he is a person as defined by the Act and that at no point did he argue that he was not, contrary to what, according to him, is asserted in paragraph 6 of the Minister’s memorandum of fact and law. On that basis, he indicates that the case law submitted by the Minister that deals with the issue of not being a person or examining whether the respondent is a natural person or not is immaterial and irrelevant for this is not his position here in this case. Rather, he explains in paragraph 38 of his memorandum of fact and law that when one reviews the correspondence between him and the Minister’s representative, the question being asked was which person in the definition of “person” in the Act was the RFI issued to.
 It is of interest to note that, in a decision rendered after the date of the hearing of the present matter, the respondent was found guilty of contempt of the above-mentioned Court order. In M.N.R. v. Stanchfield, 2009 FC 72 (CanLII), Justice Yves de Montigny found that “The distinction drawn by Mr. Stanchfield between his capacity as a natural person and his capacity to act in some other way is entirely of his own doing, and is devoid of any support in the case law.” (para. 27).
Mr. Stanchfield concluded his submissions before the Court by submitting that the fundamental question of law that needs to be answered by the Court before issuing the requested compliance order is as follows:
Is a natural person, as defined in the Canadian Law Dictionary, 4th Ed., by John A. Yogis, Q.C., acting in their own private capacity for their own private benefit, directly included within the definition of the word “person” as defined in subsection 248(1) of the Income Tax Act of Canada?
If yes, then how does the Court deal with section 2 the Canadian Bill of Rights, where it clearly expresses, “Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared…”, when there is no notwithstanding clause in the Income Tax Act of Canada? [emphasis in original]
 In short, yes, a natural person, acting in their own private capacity for their own private benefit, is directly included within the definition of the word “person” at subsection 248(1) of the Act. This conclusion is not in contradiction with the Canadian Bill of Rights, S.C. 1960, c. 44 (the Bill of Rights) despite the absence of a notwithstanding clause or declaration within the Act because there is no evidence that this act deprives an “individual”, to whom the Bill of Rights applies, of his or her right to the enjoyment of property without due process of law.
 Further, the respondent’s attempts to distinguish the case law which has, in the view of the Court, already fully canvassed this issue must fail. With regards to Kennedy, Justice Sedwick fundamentally decided that “natural persons” are not excluded from the ambit of the Act. The distinction that the Respondent attempts to draw in the present case is a futile one. The difference in the argument presented by Mr. Kennedy in the above-mentioned case in comparison to the one presented by the respondent here is that the respondent attempts to convince the Court of the existence of two separate persons within the same body, one subject to the Act (characterised here as the “Respondent” or the “taxpayer”) and another exempt (characterised here as the “Witness” or the “natural person” or “natural person acting for his own benefit”).
 In ruling that Mr. Kennedy was not exempt from the application of the Act, Justice Sedwick specifically decided that “natural persons” were directly included in the definition of the term “person” contained at subsection 248(1) of the Act. Thus, the distinction advanced by the respondent is immaterial. As will be further explained below, he does not have two distinct capacities. Further, Justice Sedwick’s determination that natural persons are included within the definition of the term “person” contained at subsection 248(1) of the Act is determinative of the argument put forward by the respondent that “Cory Stanchfield, in his capacity as a natural person (the Witness)” cannot be subject to the provisions of the Act. In light of Kennedy, this argument must fail.
Cory said that Judge Gibson decided against him in the last case because of Cory's own error in clearly explaining to the judge exactly who he was dealing with;
 Finally, the attempt by the respondent to convince this Court that a distinction can be made between the present case and the findings of Justice Gibson in M.N.R. v. Stanchfield, above, is equally without merit. This argument hinges on what the respondent says was his own error as to what capacity he was before Justice Gibson. This argument inevitably fails because there is no such question as to capacity. One cannot be in error as to which capacity one is before a Court of law when one has but one single capacity. As Justice de Montigny held in his decision on the application for Mr. Stanchfield to be found in contempt, M.N.R. v. Stanchfield, above, accepting such an argument would be tantamount to accepting that Mr. Stanchfield has the ability to choose “in what capacity he acts; this is obviously an untenable proposition, and one that runs afoul of any tenable interpretation of the Act.” (para. 27). While the act which Justice de Montigny references here is the Excise Tax Act, above, this comment readily applies to the Act which is at issue here.
 The term “natural person” is but a term, among others, that is descriptive of a tangible reality, described in a more tangible fashion by the term “human being”. The Dictionary of Canadian Law defines the term “natural person” with nothing more than the words “a human being”. Indeed, nothing more is required to adequately define the notion. As accurately characterised by Justice Dysart in Hague, a person can be either natural or legal. When a person is natural, it is a human being. Therefore, every human being is a natural person.
 When one uses simply the term “person”, one necessarily includes the notion of the human being, as it is the very essence of the reality represented by this term. This explains why, in the Act, subsection 248(1) does not specifically mention the term “human being” in its definition of the term “person”. This is not necessary given that, as explained by professors Duff, Alarie, Brooks and Philipps in Canadian Income Tax Law, “this definition merely expands on the ordinary meaning of the word “person”” (emphasis added). This is entirely consistent with the approach of the British Columbia Court of Appeal in Lindsay (see above at para. 10). There is thus absolutely no doubt that a natural person is directly included within the definition of the word “person” at subsection 248(1) of the Act.
 The question submitted to the Court by the respondent contains a qualification to the term “natural person”, in that it asks not only if the definition of “person” within the Act includes “natural persons” per say but rather natural persons, “acting in their own private capacity for their own private benefit”. Thus the question which at the hearing the respondent qualified as being the fundamental underpinning of this case, that is the question of capacity. Fundamentally, each individual human being, or natural person, has a legal capacity. As the Black’s Law Dictionary makes clear, an “individual” is something which is “[e]xisting as an indivisible entity” (emphasis added). Cory Stanchfield, the human being or natural person before this Court, is an individual whose entity is indivisible. He has a legal capacity but it too is indivisible. He may act in other capacities than that of his individual capacity but only in such capacities which are recognised by law.
With the deck so obviously loaded against him Cory had no chance of getting a fair trial in front of a judge who had a true understanding of 'nail bangin'' Porisky's interpretive genius.
 That said, has Cory Stanchfield complied with the terms of the RFI sent to him by the Minister on February 19, 2008? In light of the evidence presented to the Court by Mr. Stanchfield (see above at para. 4), it is abundantly clear that he has not. This evidence contains blatant discrepancies with the information provided to the Minister in response to the RFI. The Court is satisfied that the respondent was required under section 231.2 of the Act to provide the information requested in the RFI and that he did not fully comply with this requirement. The Court is equally satisfied that the information requested is not protected by solicitor-client privilege. The Court will thus issue the compliance order requested by the Minister, pursuant to section 231.7 of the Act.
As a result of whatever they got from the above court order, from Russell Porisky's computer, and other sources, in 2012 the Crown charged Stanchfield with six charges of tax evasion and counseling fraud. He was scheduled for a Preliminary Inquiry next week, on February 24th. This was because the Crown had chosen to proceed by Indictment through the Supreme Court of British Columbia rather than through the Provincial Court. A trial in Canada can either be conducted in Provincial Courts or Superior Courts (for example BCSC, ABQB, Ontario Superior Court of Justice). When a trial is conducted in a Provincial Court the sentence penalties are less than at a Superior Court. There are some nuances but that's the basics.
In a Provincial Court trial the process is:
-Crown files an information in Provincial Court starting the process
-there is disclosure and other preliminary matters
-trial in Provincial Court
-if guilty, sentencing
In a Superior Court trial there is another intervening step:
-Crown files an information in Provincial Court starting the process
-there is disclosure and other preliminary matters
-preliminary inquiry in Provincial Court to establish if there is enough evidence to proceed to trial
-if the Crown establishes information so that it is possible to convict the accused, the matter is passed to the Superior Court
-Superior Court may have more preliminary matters
-trial in the Superior Court
-if guilty, sentencing
Dean Clifford's trial has been going on the latter path. The preliminary inquiry evidence threshold is low. The Crown does not have to show all its evidence, just enough to establish there is a possibility of a conviction. The defence has no obligation to call evidence (and they almost never do), but they are allowed to cross-examine the Crown's witnesses. The preliminary inquiry judge is not supposed to balance whether or not he believes Crown evidence, just that it's there. The preliminary inquiry is not quite a pure formality, but it's close.
So I was all set to sit through a dreary preliminary inquiry when it was cancelled and a Chambers session called for yesterday afternoon. As I've said before, most recently in my posting about Menard's hearing, this is just a procedural housekeeping session. However I had no idea what needed to be resolved with Stanchfield so I headed over.
First time I'd seen Stanchfield. Unique to my experience with Poriskyites he came with legal representation. His lawyer seemed on very relaxed terms with Crown Counsel, sort of a "how was the vacation" "Isn't Spain great?" kind of vibe. If they were in an adversarial relationship I failed to see it. The reason became clear immediately, they'd already cut a deal, hammered out a plea bargain, and were just in court to ratify it. Crown Counsel informed the Court that the Preliminary inquiry had been cancelled and that Cory had agreed to plead guilty to two of the six charges in the Information. He pled guilty to charges 4 and 6 and the Crown was dropping charges 1, 2, 3 and 5. Cory's lawyer confirmed this and the judge asked Cory if he agreed. Yes your honour. They arranged for another court hearing about six weeks forward for sentencing and that was it. It turned out that the hearing is May 14th. A fraught anniversary for Burnaby49! That was the day I staggered home from hospital after smashing all those ribs last year.
I have a copy of the Information so I can relate the details of the deal. Since I'm typing it out I'll just give a brief description of the charges dropped and a full description of the charges to which he pled guilty.
Count 1 - Did make or participate in the making of false statements in his 2003 Income Tax return by failing to report $9,030 in income.
Count 2 - Did make or participate in the making of false statements in his 2004 Income Tax return by failing to report $40,623 in income.
Count 3 - Did make or participate in the making of false statements in his 2005 Income Tax return by failing to report $75,108 in income.
Count 5 - Evaded or attempted to evade compliance with the Excise Tax Act or payments to the Goods and Services Tax by failing to remit tax of $12,993 on goods and services sold.
What this means is that Cory did not remit the GST tax applicable on the income he got by counseling tax Fraud. The CRA wants their money regardless of how you make it!
Count 4 - Richard Cory Stanchfield, of the City of Victoria, Province of British Columbia, between December 31, 2002 and August 25, 2010, did wilfully evade or attempt to evade compliance with the Income Tax Act or payment of taxes imposed by the said Act, by failing to report his taxable income in the Amount of $224,048 for the 2003 to 2008 taxation years inclusive, and did thereby evade the payment of taxes in the amount of $31,012, committing an offense contrary to paragraph 239(1)(d) of the said Act.
Count 6 - Richard Cory Stanchfield, at or near the City of Victoria, Province of British Columbia and elsewhere, between December 31, 2001 and August 26, 2010, did counsel various persons to commit the indictable offense of fraud in excess of five thousand dollars, contrary to section 380 of the Criminal Code, and did thereby commit an offesne contrary to section 464(a) of the Criminal Code.
I have no insight into Cory's mind and why he made a deal but it is possible he gave a hard objective assessment of his chances based on the fates of the other Poriskyites who had gone to trial before him. All the ones I could find are in the discussions indexed in this posting;
All of the Porisky participants who went to trial were found guilty and all of the Poriskyites charged with counseling tax evasion went to jail. Our own Quatloos contributor fussygus first came to our attention because he was one of three individuals charged with tax evasion and conspiracy to commit tax evasion. They used Porisky's teachings as the basis for doing this. Fussygus was slated for trial with the other two defendants but he decided to plead guilty before trial and was fined but had no jail sentence was imposed. His two co-defendants had their trial and both got jail terms. Perhaps Cory learned from that.
Note - I've edited this posting because I originally had this as the final paragraph;
All of the Porisky participants who went to trial were found guilty and all of the Poriskyites charged with counseling tax evasion went to jail. However there was one man who counseled but evaded jail, our own Quatloos contributor fussygus! He was slated for trial with two other fraud counselors. He decided to plead guilty before trial and was fined but no jail sentence was imposed. His two co-defendants had their trial and both got jail terms. Perhaps Cory learned from that.
It didn't seem right about the counseling comment so I went back to our discussion on fussygus and checked. Nothing about Carl being charged with counseling there. Since his decision was unreported I figured the best way to clear up my confusion was to ask Carl himself. This was his reply;
We were charged with tax evasion and conspiracy to commit tax evasion along with business. I plead to tax evasion and they stayed conspiracy charge against me. Corp made deal and plead to the conspiracy charge. The other two were found guilty of both. There was no counseling charge and shouldn't have been as we never counseled anyone but ourselves.
hope that clears things up.
So My mistake, sorry Carl!