On March 26, 2019 the British Columbia Court of Appeal heard Keith Lawson's appeal regarding his convictions for income tax evasion and counseling fraud (actually counseling tax evasion). I, of course, was there. Most of the post below was written on the 26th immediately after the hearing. However I delayed posting it because I was waiting for the decision to be released so I could incorporate it in my text. The decision was released this morning so on with my day in court! one note: because the Quatloos word limit restricts how many words (actually characters) are allowed in a single post windbag Burnaby49 had to break the report on the court hearing into two portion. I've picked the morning break as the dividing point. It was all downhill from there anyhow.
Back in the saddle again!
Finally, one of my Porisyites is getting his day at the British Columbia Court of Appeal. This morning Keith Lawson was scheduled to have his appeal on his convictions for income tax evasion and counseling fraud heard. So, after over a year's absence from the courts of British Columbia I dusted off my Office Works 3 subject Notebook and took Skytrain downtown to catch the show. And about time. Keith filed his appeal on October 32, 2016 so it's been about two and a half years since his convictions. I recently posted about the clogged-up British Columbia court system that seems to have endless time to allow defendants to ramble on through days of pointless arguments about their case. But, as you'll see, not today. The British Columbia Court of Appeal ran the hearing like clockwork with a precise, and enforced, time limit.
But first a refresher for those of you who haven't spent the last quarter decade keeping on top of Keith's trial issues. Keith was a follower of tax evader and counselor of tax evasion Russell Porisky. Russ, a carpenter with no tax background or training, promoted an idiotic tax theory that he'd thought up himself which he claimed allowed anyone who didn't want to pay tax to quite legally opt out of the tax system. Way back I posted this explanation from the Canada Revenue Agency about how Porisky's blatantly stupid scheme purportedly worked;
CRA NEWSWIRE
November 30, 2011
DON'T BUY INTO ILLEGAL TAX PROTESTER SCHEMES
The Canada Revenue Agency (CRA) warns all Canadians to beware of individuals that try to convince you that Canadians do not have to pay tax on the income they earn. These individuals, also known as tax protesters, not only fail to report their own earnings, but they also conspire, counsel, and promote these tax schemes.
Natural vs Legal Person
One of the most common false arguments tax protesters use is the natural vs. legal person argument, in which they treat themselves as two separate people for income tax purposes. They define the natural person as the individual that performs the labour required to earn income, and the legal person as the legal entity that the federal government creates through the issuance and use of the social insurance number (SIN). Tax protesters allege that the legal person has to file an income tax and benefit return, and that income received belongs to the natural person and is therefore not subject to Canadian income tax.
Canadian courts have repeatedly and consistently rejected all arguments made in these tax protester schemes.
Serious Consequences
For those involved in tax protester schemes, the CRA will reassess income tax and interest, and charge penalties. In some cases these individuals will be prosecuted for tax evasion. If convicted, they could face significant fines and possibly jail time.
For example, the courts fined an Ontario tax protester approximately $522,000, which represented 150% of the federal taxes evaded. In addition, the individual was given a one year conditional sentence, and was ordered to pay the fine imposed prior to the expiry of the conditional sentence; ordered to remain in Ontario and surrender his passport; and ordered to perform 180 hours of community service.
Correcting your tax affairs
Individuals who would like to correct their tax affairs can voluntarily come forward, and they may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being taken by the CRA against them. These individuals may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program can be found on the CRA Web site at
http://www.cra.gc.ca/voluntarydisclosures.
The CRA reminds Canadians that, when it comes to their tax affairs, they should get independent advice from a reputable professional.
Along with these comments from me;
Apparently this brilliant loophole was thought up by Russell Porisky, a carpenter with a grade-school education. But he thought big! He started Paradigm Education Group, an outfit that gave seminar on his Natural Person/Legal Person bullshit. They advised people how to evade tax by using the Porisky method. Adherents would pay Porisky for his seminars and also a cut of whatever taxes they avoided. He expanded this by essentially allowing franchising, Individuals across Canada would give Porisky seminars under the Paradigm brand, collect fees from the suckers, and pay Porisky a cut. It was all sunshine and smiles until the Canada Revenue Agency started charging them all with criminal tax evasion.
Keep in mind that what they claimed to believe, while moronically stupid, was not, in itself, illegal. If a Porisky "Natural Person" had filed income tax returns reporting his gross income but showing a nil taxable income because the CRA had to go after the other guy, the "Legal Person", there would be no criminal offence because the income had been declared and the tax returns filed. They would have been reassessed to nail them for the taxes they should have paid and then, had they actually believed Porisky's fantasy, they could have gone to Tax Court to argue their position on its merits. This is why, in some of the cases cited above such as Christian Gerard (Another Poriskyite Loser, in French!), the individuals involved were heard in the Tax Court of Canada, a civil court, rather than facing criminal charges. They denied they owed taxes but did not actively engage in evasion.
However this alternative apparently didn't appeal to most of them so they decided to avoid the sticky question of what the CRA might think about the whole scheme by engaging in actual active tax evasion. The classic type, not filing tax returns, getting paid in cash, hiding income, not keeping books and records, what I would call standard bread and butter tax evasion. Where Porisky came in was when they were caught. Then their defense at trial wasn't that they were evading tax but that they were inquisitive searching minds just doing their best to determine their tax responsibilities to the government of Canada. At the end of their search they ran across an expert to guide them. The expert of course being Russell Porisky. The judge at Eva Sydel's evasion trial had some very pointed comments about her claim that it was reasonable to rely on a carpenter with no tax or accounting background for income tax advice. While some of these fools went to court actively fighting for this argument and other just used it to try and justify their actions they all of them lost. Judges tend to be an unsympathetic lot when people engage in criminal activity for the sole purpose of benefiting themselves. Some, like Carl Gustafson, threw themselves on the mercy of the court and got off with a conviction and a fine but no jail term. Others, particularly the promoters, ended up with jail terms.
Porisky himself was convicted of tax evasion and given a jail term (at this time he has appealed, had the conviction quashed, and is facing a re-trial). However his conviction was not for teaching the Paradigm nonsense but by evading tax on the income he got from it. He'd done well out of his scam, he grossed $1,127,185 on his scheme between 2004 and 2008.
http://www.quatloos.com/Q-Forum/viewtop ... 50&t=10250
Keith went into this full frontal both evading tax and, as a Paradigm 'Educator' counseling others how to evade tax using Porisky's system. At trial he tried mightily to convince the judge and jury that Porisky was right but he also brought up another argument, just as imbecilic as the natural man argument, that claimed that the Supreme Court of Canada had said, in the
Stewart decision, that we Canadians had the right to refuse to pay income tax if we don't want to. In Lawson's fantasy world everyone, tax lawyers and accountants, the Canada Revenue Agency and the courts, had completely misinterpreted what the Supreme Court of Canada was really saying in
Stewart. We dullards who just read the text of decisions thought it was about the deductibility of expenses against income. But Keith saw a deeper hidden message in the decision that he alone, of all Canadians, could parse out. It wasn't about expenses at all, it was about whether income was taxable or not. He saw through the superficial purported meaning of
Stewart and saw that what the Supreme Court of Canada was really saying was that we Canadian taxpayers could quite legally chose not to pay tax if we didn't want too. This is what I wrote about Keith's Stewart interpretation over two years ago;
Keith is appealing his convictions on tax evasion and counseling income tax evasion on the basis of his interpretation of the Supreme court of Canada's decision in the
Stewart case;
http://canlii.ca/t/51sg
Stewart was released over fourteen years ago. It was a very important case for income tax practitioners. It changed how the CRA viewed the tax deductibility of claimed expenses in money-losing businesses. It has been closely scrutinized by income tax professionals both inside and outside of the CRA. I can speak first hand on this because I was a CRA auditor when
Stewart was released and I remember the ruckus it caused. Whenever I went out to meet tax lawyers and accountants they'd crow about how we'd finally had our asses handed to us by the Supreme Court.
Stewart has been cited in 250 cases to date.
But nobody, apart from Keith, has ever correctly understood what the Supreme Court was really saying in this decision. I won't go into details yet again on it. Sufficient to say that all we people who made our living in income tax by interpreting and applying court precedence took too shallow a look at
Stewart. We just skimmed the surface and saw only the superficial meaning. This was that taxpayers could deduct expenses from a money losing business if it was run in a professional manner and there was no personal component to it. A classic and much litigated example of taxpayers claiming personal expenses is Amway members with no sales who deduct personal and household expenses against other income. In the past when a real attempt to start a business resulted in a loss the CRA would often disallow expenses on the basis of the REOP (reasonable expectation of profit) test, an arbitrary test made by the CRA auditor handling the file, a guy who'd never started a business.
Stewart ended REOP.
This is all that the best minds in Canadian tax litigation could see in
Stewart but Keith dug much deeper and saw the real meaning that eluded the rest of us. The Supreme court was actually telling us that we Canadians have the individual choice whether we wished to be taxed or not. This is based on a source of income test. If we want to be taxed, no problem, we just say that the source of our income is from a commercial activity, in other words business income. That makes us taxable. But if we choose not to pay tax
Stewart allows this too. All we have to do is say that the source of our income is from a personal endeavour, in other words a hobby. This simple declaration exempts us from income tax regardless of the amount of the income or the actual basis on which we made it. If we make this declaration, and Keith says that he did, then the CRA, the Crown, and the courts are required to accept it as legally binding because
Stewart orders them to allow complete taxpayer discretion on how the source of income test is applied. Why didn't we practitioners see this?
Keith explained this over and over, to the CRA auditors, to the Crown, to the Supreme Court of British Columbia, but nobody had the depth of understanding of tax necessary to see that he was right and so he was convicted notwithstanding
Stewart. And he's going to lose at the British Columbia Court of Appeal (those guys are no better than the rest of us at understanding what
Stewart was really trying to tell us).
But his loss at trial was just a bump on the road. Today was his big chance to set things straight by getting the British Columbia Court of Appeal on his side in interpreting
Stewart. So, at today's appeal hearing Keith went for broke on his
Stewart interpretation but, for insurance, he added one other ground of appeal. This was also covered in his notice of appeal;
1. The Honourable Trial judge erred in entering a plea of guilty in the presence of stated position of the Appellant that he did not understand the charges and did not fail or refuse to enter a plea. The Trial Judge further erred in failing to explain the charges to the appellant at all, or alternatively, sufficient to permit the Appellant to understand them.
In other words if I claim that I'm too dense to understand the charges I can't be tried. Lawson was articulate and focused throughout his trial. He demonstrated a grasp of difficult concepts and argued the convoluted interpretations of law that formed his defense. But when faced with the task of understanding the charges against him he claims to have suddenly devolved into the village idiot. Any readers having unusual difficulty understanding the basics of these;
Count 1
Keith David LAWSON, at or near the City of Burnaby in the Province of British Columbia and elsewhere, between April 15, 2002 and August 26, 2010, did counsel various persons to commit the indictable offence of fraud in excess of five thousand dollars, contrary to section 380 of the Criminal Code and did thereby commit an offence contrary to section 464(a) of the Criminal Code.
Count 2
Keith David LAWSON, of the City of Burnaby, Province of British Columbia, between December 31, 2003 and May 1, 2009, did wilfully evade or attempt to evade payment of taxes imposed by the Income Tax Act in the amount of $46,176.20 for failing to report his taxable income in the amount of $213,213.13 for the 2004, 2005, 2006, 2008, and 2008 taxation years and did thereby commit an offence contrary to section 239(1)(d) of the said Act.
Keep in mind that Lawson had, literally, years between the charges being laid and his trial. Yet he purports to have arrived in court in a fog with no understanding of why he was being tried.
So that sets the stage. Enough background, on to the bloodbath! One big advantage that the British Columbia Court of Appeal has over the Supreme Court of British Columbia is, at least for that lazy sadsack Burnab49, that it starts at 10AM rather than 9AM. So I got to sleep in and miss rush-hour hell going downtown. Not a trivial advantage. Last week I had to be downtown at 8:30 and it was fucking awful. Way worse than when I did it every day when I worked. Two busses and Skytrain, all stuffed past capacity. I couldn't get off Skytrain at my stop because it was so packed I couldn't get to the door. Not a problem today.
I arrived at courtroom 61 to find a few old acquaintances already there, Michael Millar and Cory Stanchfield;
http://www.quatloos.com/Q-Forum/viewtop ... 50&t=10834
http://www.quatloos.com/Q-Forum/viewtop ... 50&t=10464
Millar's presence was easily explained. He also has a pending appeal regarding his conviction on exactly the same charges as Lawson. So he was there to study Lawson's devastating defense arguments and share in the joy of his inevitable victory. But Stanchfield has no skin in the game. He pled guilty to the same charges and served out his conditional sentence. He was apparently here because he's Lawson's friend. Today's hearing must have been very distressing for both of them.
But, now, finally, the moment I've been dreading. Trying to decipher the 17 pages of single-spaced notes in an 8X10 notebook that I scrawled out in just two hours of Keith's relentless torrent of semi-comprehensible gibberish.
The courtroom was large but spectator seating quite limited, a single row of 18 seats. Apart from Millar, Stanchfield, and myself the other spectators were Lawson's father, someone to my left who stayed through the hearing and seemed to be a lawyer, and three men to my right who also stayed through entire proceedings but seemed to be interested in stock investments. There were two Crown counsel, the lawyer who'd handled Keith's trial and another Crown counsel I'd not met but who'd acted for Crown in the Debbie Anderson fiasco I'd attended;
http://www.quatloos.com/Q-Forum/viewtop ... 47#p244255
Very informal before hearing started. Crown called Lawson 'Keith'. In my observation Crown has been very helpful to the Poriskyite defendants, a lot more than you'd expect given their adversarial relationship. Lawson and Millar totally ignored me, not even a nod of recognition. Hurtful after my immense sacrifice of time and effort to record their battles against the tax system.
Then Order In Court was called and the Appeals Bench came in. Two female and one male judge with a female judge in charge. (A note - When I write that the court said something or that the court asked Lawson a question or told him something it could be any one of the three judges. All three participated in the back and forth with Keith.) After counsel and Keith had introduced themselves to the bench the court asked Keith how long he'd planned for making his submissions. He said he had no idea, practiced in front of mirror, self-represented, never faced appeals court before, he's not a lawyer and couldn't afford one, legal aid might help on an appeal of his sentence but not for an appeal of his conviction, doesn't know how things work here . . . . . Helpfully the court knew exactly how long he would take. He was told the hearing was scheduled for four hours and he had the first two of them.
A point on his comment about legal aid. He has two pending appeals. This one, appealing his convictions, and a second hearing appealing his sentences. Both to be held at this court. Obviously, if he won on the conviction issue the sentencing appeal would become moot, so this hearing was first. However, while legal aid seems willing to help him it wouldn't act for him at this hearing, probably because the entire basis of his appeal was total nonsense with no basis in the real law that legal aid lawyers must use rather than the alternate law in Lawson's fantasy world. But a sentencing appeal hearing is based on real world factors so legal aid can represent Lawson there.
Overall Keith seemed surprisingly ill prepared given how important this is to him and how it's been over two years since he filed the appeal. He'd never had to concern himself with time scheduling at trial but it was critical here. He knew before he came today that he had only two hours but he didn't seem to actually comprehend what that meant. The court knew. They were constantly asking him to move on, or "is that all?" "any more points?" or telling him he was repeating himself. If he stopped for more than a few moments they asked if he was finished. He tried to read out extracts from cases he'd cited or documents he thought relevant but the court wouldn't let him, telling him they'd already read everything. Since he hadn't really structured his presentation or tried to do some serious time-management prior to the hearing he essentially floundered through the last half of it.
I think Keith was caught off balance right from the start by the strict way the hearing was run. One point he kept returning to over and over during the hearing was his grievance that the trial judge hadn't coddled him and babied him along during the trial. In Keith's very expansive understanding of his constitutional rights once he'd told the trial judge the magic phrase "I'm a self-represented defendant" the judge was required to actively participate on his behalf as his personal lawyer. She had to be proactive in his defense, pointing out possible defenses that he'd missed, guiding him through the trial process and, in general, helping him in presenting his arguments to the jury in a legally coherent manner. Sadly she'd failed abysmally at this task. But his complaint of judicial neglect got him no sympathy here. His treatment by the trial judge was like a mother's fond kisses compared to how the Court of Appeal handled him. The Court made it clear to him very early in the proceedings that the carefree halcyon days of his trial, where he could amble on forever and repeat himself endlessly, were over.
So on with the show! After clearing up that his mic was cut off after two hours the presiding judge said that they had read everything submitted. Keith mumbled something and the judge told him to speak louder, his microphone did not amplify, it was only there for recording purposes. So he spoke up. A big help to me since I was sitting behind him and initially didn't hear him either. Judge then told Keith he needed to point out everywhere the trial judge was in error. Keith wanted to talks about his bail terms but the judge said to do it later. Makes sense, if he wins this appeal then bail is irrelevant because his convictions will be quashed. If he loses then bail becomes an issue. Spoiler alert, it became an issue. Keith rambled on for a while that he didn't know what he was doing, an assertion he'd prove to us all soon enough.
The Court asked "Are you following your factum"
Another digression. This is a factum;
In Canada, a written submission or memorandum of law submitted to a court. It includes a concise statement of facts, a list of issues, arguments, the relief sought, and appendices containing case, statutory, and other citations.
https://www.irwinlaw.com/cold/factum
Basically his factum contains his whole case including what he was planning to argue at the hearing and the statutory and case authority supporting him. I have a copy of his factum and some of it is, well, astonishing. In one part he said his conviction should be reversed because the trial judge did not, as her duty required, advise the jury that they could totally ignore the law if they wanted and find him innocent even if they thought he was guilty. But this was ok because nobody knows why they decide on their verdict so they'd never get caught. Not the kind of thing that I think would impress a court of appeal. You're probably thinking Burnaby49 made that up? Here you go, right from his factum, (bolding is mine);
18. Although juries are not entitled as a matter of right to refuse to apply the law they do have the power to do so when their consciences permit of no other course. In the face of this power, it is a legal duty incumbent upon the judge to instruct the jury of the availability of this power, and its application. The judges failure to do so, could reasonably leave the jury making a finding of guilt against their consciences. Because juries are not required to give reasons for their decisions, whether this is so can never be accurately determined. The Appellant submits that the failure to instruct the jury on this point should be considered fatal to his conviction.
He's talking about jury nullification, the ability that juries have to decide against the actual law. This rarely happens but can happen in criminal matters that a jury doesn't think should actually be a crime, such as, before the law in Canada changed, personal use of marijuana. But, contrary to Lawson's statement that it was the judge's duty to tell the jury of this on the off-chance they felt that tax evasion shouldn't be a crime, it was actually the judge's duty to try and stop the jury from learning about it. Let's see what the Supreme Court of Canada has to say on the issue;
65 An accused is entitled to a fair trial, including the presumption of innocence, the duty of the Crown to prove guilt beyond a reasonable doubt, and the ability to make full answer and defence. The accused is not entitled to a trial that increases the possibility of jury nullification. If the trial of the accused has not been unfair and no miscarriage of justice has occurred, the accused cannot succeed on an argument that due to some departure from the norm by the trial judge, his chances of jury nullification are lessened. This point is treated in further detail below.
. . . . .
68 The appellant’s second argument is a broad one, that the accused person has some right to jury nullification. How could there be any such “right”? As a matter of logic and principle, the law cannot encourage jury nullification. When it occurs, it may be appropriate to acknowledge that occurrence. But, to echo the words of Morgentaler (1988), saying that jury nullification may occur is distant from deliberately allowing the defence to argue it before a jury or letting a judge raise the possibility of nullification in his or her instructions to the jury.
. . . . .
70 We reject that proposition. The appellant cannot legitimately rely on a broad right to jury nullification. In this case, the trial did not become unfair simply because the trial judge undermined the jury’s de facto power to nullify. In most if not all cases, jury nullification will not be a valid factor in analyzing trial fairness for the accused. Guarding against jury nullification is a desirable and legitimate exercise for a trial judge; in fact a judge is required to take steps to ensure that the jury will apply the law properly. See R. v. Shipley (1784), 4 Dougl. 73, 99 E.R. 774 (K.B.), at p. 824, cited with approval by Dickson C.J. in Morgentaler (1988), at p. 78. Steps taken by a trial judge to guard against jury nullification should not, on that basis alone, prejudice the accused person.
R. v. Latimer
[2001] 1 SCR 3, 2001 SCC 1
http://canlii.ca/t/523c
Latimer is a leading Canadian case on jury nullification. But, oddly, while Lawson has a respect bordering on reverence for the Supreme Court of Canada's
Stewart decision he makes no reference in his factum to
Latimer, another SCC decision. Maybe because
Latimer shows that Lawson's jury ratification argument is exactly the opposite of the judge's actual duty when instructing the jury? Unfortunately for Keith the Court of Appeal tends to be aware of basic principles like this.
Back yet again to Keith's day in court. I have to stop these digressions. After the factum question, which I don't note him as answering, he said the main issues he wanted to bring up were fundamental issues of justice.
1 - Right to be presumed innocent. - Lawson - I don't know how much of my submission I have to refer to.
Court - Don't.
2 - Poverty - I can't afford a lawyer, I need Court's indulgence.
3 - Stevens v the Queen - Para 16-20 SCBC. Paragraph 17 says it is the duty of the judge to guide an unrepresented accused.
Court - Where does this advance your case?
Lawson - I'll get to it later.
Court - Do it now.
However instead of explaining the importance of
Stevens (I can't find the case, it isn't cited in his factum) he suddenly skipped over to his source of income argument and
actus reus. This is
actus reus;
Actus reus is the Latin term used to describe a criminal act. Every crime must be considered in two parts-the physical act of the crime (actus reus) and the mental intent to do the crime (mens rea). To establish actus reus, a lawyer must prove that the accused party was responsible for a deed prohibited by criminal law.
I'll relate what Lawson argued about
actus reus, and it played an important role in his arguments, but I never really understood what he was getting at. Reading his factum didn't enlighten me because he doesn't refer to the term, even once, in the entire 37 page document.
Somehow
actus reus fits into his argument regarding source of income, at least that's what he said after suddenly mentioning it. Lawson said that the judge had refused to apply the
Stewart source of income test.
Stewart is fundamental. "It was a hobby I was engaged in but the judge got tired of hearing it and said I was wrong." It is a principle of duty of the judge to assist me and the judge should have assisted me in telling me where I was doing poorly. It's a common law rule that;
1 - If there is no counsel judge shall give a helping hand
2 - Accused is considered innocent until found guilty.
In the charge to the jury the judge should have said that the Crown had the responsibility to prove that Lawson had a business but during the trial no proof was given but the jury instructions didn't say that. "In the overall course of the trial I was misunderstood and
actus reus was not considered. Not putting this to the jury was a serious error."
Trial fairness - The Queen's Bench of Alberta had been cited by the Crown in their submission. I wanted to submit my concerns about the principle of fairness by allowing Crown to cite (note - at his original trial)
Meads v Meads. It's 144 pages on what OPCA characteristics are. It says "If they wish a fair hearing they must abandon OPCA practices".
Time for another Burnaby49 intervention. I searched
Meads for that quote and didn't find it. Not surprising given that it's not in the decision. I found a link to the quote on Google. The source I found was in a presentation given at the 2012 Department of Justice Annual Conference in Calgary. The conference was titled "The Courts and Beyond: The Architecture Of Justice In Transition". The presentation was titled "Use and Occupancy: Building Codes and Maintenance Manuals in the Court of Queen’s Bench of Alberta" and the paper accompanying the presentation was written by judge Rooke, the author of
Meads v Meads, You can download your own copy of the paper here;
https://ciaj-icaj.ca/wp-content/uploads ... pdf?id=859
Right at the end is a three page appendix called the "Court of Queen’s Bench of Alberta EXECUTIVE SUMMARY Subject:
Meads v. Meads, 2012 ABQB 571". While this was published by Queen's bench there is nothing to indicate that Judge Rooke wrote it or that it is part of the
Meads decision. Its closing statement is;
OPCA litigants have proven highly disruptive, both inside and outside the courts. Their conspiratorial beliefs have led to confrontations with police, security, prosecutorial and other authorities, in-court disobedience, criminal convictions, sanctions for contempt of court, being declared vexatious litigants and a broad range of civil remedies. OPCA litigants consistently harm themselves, other parties involved in the litigation, and the administration of justice.
Meads v. Meads surveys and reviews aspects of OPCA litigation, the persons who promote and use these ideas, and the decade of judicial responses, nationwide. This analysis includes:
1. the identity and activity of known OPCA gurus and OPCA movements;
2. the stereotypic features of OPCA documentation and in-court conduct that identify persons who have adopted OPCA concepts, including Mr. Meads;
3. the arguments and ideas that have been advanced by OPCA litigants (including Mr. Meads) and gurus, and how Canadian courts have categorically rejected OPCA schemes as incorrect; and
4. the responses that courts have taken (and need to take) to litigation that involves OPCA elements.
These Reasons explain and organize OPCA ideas and arguments into groups, and identify global defects that permit more direct response to litigants of this kind. The Reasons also suggest how judges, lawyers opposite, and persons targeted by these abusive schemes can more effectively respond to these problematic litigants. The Reasons explain to Mr. Meads, and other OPCA litigants, that if they wish a fair hearing and decision on the merits of their substantive issues, they will have to abandon these OPCA practices (that raise arguments unknown to and invalid under the law) and, rather, follow Canadian law.
Sloppy work Keith, sloppy work. This executive summary is not part of the
Meads v Meads judgment. It is just a brief review of the highlights of the decision and has no legal weight at all. Keith had included this quote in his submission to show how the Crown's citing
Meads v. Meads at his trial harmed him but, unfortunately for his argument, it wasn't actually in
Meads. However, rather than forgo a good quote, he incorrectly told the appeals court that it was.
I'm never going to get through Keith's two hours at this rate. Apart from the above spurious citation he complained about how Russell Porisky was discussed in
Meads and this disparaged Keith's name because the Porisky discussion, matched up to the above citation, implied that followers of Porisky wouldn't get a fair hearing and he didn't get a fair hearing. "I'm discredited by this comment". He said it "shouldn't have been used to discriminate against me".
However Keith was being too modest when he complained only that he was being indirectly smeared by Porisky being referenced in
Meads. Keith is in there too and mentioned by name! At least his last name;
[93] Porisky and Paradigm advanced this scheme on a commercial basis. Porisky operated a website, and sold instructional materials such as books and DVDs: Porisky Trial Decision, at para. 39. Porisky also conducted seminars where he changed a fee (at para. 39), and provided levels of training and exams (at paras. 101-105). Paradigm operated as something of a pyramid scheme; Porisky also qualified "educators" to further proselytize his approach: Porisky Trial Decision, at paras. 39, 106. At least one of these educators is now also the subject of criminal litigation: R. v. Lawson, 2012 BCSC 356, at para. 21, as are other participants in the Porisky tax evasion ring: R. v. McCartie, 2012 BCSC 928. Many other persons who used Porisky's techniques have already been convicted of tax evasion: Porisky Trial Decision, at para. 63.
I won't quote here what
Meads said about Porisky. It's too lengthy and is totally irrelevant to Lawson's submission. If you want to read it you can find it in paragraphs 87 to 98 here;
Meads v. Meads
2012 ABQB 571
http://canlii.ca/t/fsvjq
Ok, back on track again. After Lawson gave his plaintive lament against
Meads a judge asked him where the disparagement occurred in his case.
Lawson - Well not specific,
Court - You can't point to anything in the transcripts showing that the judge was prejudice?
Lawson - I'd have to go through them.
Court - You were there. Was there anything?
Lawson - I'll have to check the transcripts.
That was unfortunately typical of Lawson's presentation, disorganized and unsupported by facts. He made accusations against the trial judge that he claimed were serious enough to have his convictions reversed but he apparently didn't bother to find any actual examples in the transcripts to support his claim. He seemed to think the appeals court would just take accept his accusations on faith.
So on to something else, his arraignment and his refusal to plead. This idiocy really got the bench going. He said that when he was asked what he pled he said that he didn't understand the charges against him. Court cut in;
Court - You started saying that you were a private person on a special appearance acting in a private capacity without prejudice and under protest.
Lawson - Right. I didn't have the right to plead that I didn't understand the charges. I was charged with evading taxable income but taxable income is a matter of law and that hadn't been proven.
Time for another explanation. It's not in my notes because I was getting too far behind to write everything but at this point Lawson went into a long explanation that he didn't understand the charge because he didn't understand what type of income he was being charged with evading because there were so many different types of income. Income wasn't defined in the Income Tax Act and the courts were wrong to say that income, for tax purposes, was income as normally understood. This was a conclusion of law but income was actually based on fact and law, the fact being the results of the
Stewart analysis he was hanging his hat on. So, before he could understand what income the Crown was referring to when they charged him the Crown was required to do a
Stewart test to see if the money he earned was from a business or a personal endeavor.
What he seemed to be getting at was that under his idiotic interpretation of
Stewart the Supreme Court of Canada gave him the legal right to define the nature of his income source as he wished, either as a tax-free personal endeavor (hobby) or a taxable business. This choice had to be accepted by the Canada Revenue Agency and the courts with no right to dispute it. He had chosen his income, from whatever source, to be income from a personal endeavor. As a result the Crown was required to accept his statement that he was running his Paradigm operation as a hobby regardless of how he was actually making income from it. This was his "Source Test", the CRA had to accept that the source of his income was whatever he said it was.
Had the CRA done the source test that he said they were required to do before laying charges, they would have had to accept that his income was from a hobby because he said so. And, since (in his fantasy world) the Supreme Court of Canada had said that income from a hobby was tax free this would mean that he hadn't evaded tax and he shouldn't be charged. But the Canada Revenue Agency hadn't done the required
Stewart test but instead had just gone ahead and charged him. The Crown hadn't put their cards on the table and defined what the source was of the income he'd avoided tax on so he couldn't understand the case against him. As a result he couldn't plead guilty because, as he understood it, all of his income was hobby sourced and therefore tax-free, so he had no tax to evade. He was only charged because the CRA staff were incompetent buffoons who couldn't understand what
Stewart was telling them. But he couldn't plead not guilty either because that would put him in the jurisdiction of the court which would side with the CRA. So he couldn't make any plea at all and should have been let go because of his inability to understand the charges.
Additionally I think this hobby bullshit is actually the basis of his
actus reus argument.
Actus reus is the physical act of the crime itself. But if he lawfully avoided (not evaded) paying income tax by correctly interpreting and applying
Stewart then there was no crime so no
actus reus. I think that this was his point but it's only a guess. One flaw in that though. Even if he somehow convinced the court that his interpretation of
Stewart was correct that would, at best, only get him off the hook on his personal tax evasion convictions. His fraud conviction for counselling income evasion would still stand. He didn't instruct his 'students' that
Stewart allowed them chose not to pay tax. He taught them how to evade income tax by using Porisky's natural man scheme and he was convicted of fraud on that basis. Since he didn't argue at this hearing that Porisky's scheme wasn't fraudulent the basis of his fraud conviction is still unchalllenged and his
Stewart analysis, right or wrong, is of no use to him. Explanation done. I'll return to Keith's testimony by repeating his last comment;
Lawson - Right. I didn't have the right to plead that I didn't understand the charges. I was charged with evading taxable income but taxable income is a matter of law and that hadn't been proven.
Court - You are saying that the judge was wrong to plead not guilty on your behalf?
Lawson - Yes. It was a conclusion of law submitted as fact. (no, I don't understand that either)
Court - That applies to all charges. Nobody would ever have to make a plea if we accepted your argument.
Lawson - The CRA assumed that I was guilty.
Court (different judge) - You knew full well what you were charged with but you didn't like it? Lawson - Yes.
Court - Get to the next point.
Lawson -
Stewart and the source of income should have been considered before charging me!
He said something else I didn't follow at all about the Attorney general of Canada allowing conclusions of law then said that he'd have understood the charges better if the Crown had explained what they meant by taxable income.
Then Keith brought up one of my cases!
Anchor Pointe Energy, a tax case I was involved in way back in 2001 and 2002.
Court - What's your point?
Lawson - Paragraph 27 and 25.
This is paragraphs 25 and 27 from
Anchor Pointe.
[25] I agree that legal statements or conclusions have no place in the recitation of the Minister's factual assumptions. The implication is that the taxpayer has the onus of demolishing the legal statement or conclusion and, of course, that is not correct. The legal test to be applied is not subject to proof by the parties as if it was a fact. The parties are to make their arguments as to the legal test, but it is the Court that has the ultimate obligation of ruling on questions of law.
[27] In the present case, it appears that the assumptions contained in paragraphs 10(q) and (r) are the factual components of the mixed conclusion of fact and law in paragraph 10(z). If there are other factual components assumed in the conclusion in paragraph 10(z), the Minister should have extricated them and set them out explicitly.
Canada v. Anchor Pointe Energy Ltd.
2003 FCA 294
http://canlii.ca/t/4gxm
While I had to admire Keith's diligence in digging this deep through a very obscure byway for a relevant quote I had to ask myself, and obviously the court did too, how was this in any way relevant to anything?
Court - These are pleadings in Tax Court. What do they have to do with your criminal case?
Lawson - The Tax Court was concerned with conclusions of law being misleading.
Court - The procedures at Tax Court are different.
Lawson - I wasn't told about the meaning of business.
Court - I'm lost. I thought you were talking about your unwillingness to make a plea. Have you changed points?
Lawson - No, I couldn't make a plea because I didn't understand what taxable income was.
Court - Move on to your next ground for appeal.
But he couldn't. He was too fixated on the brilliance of his income argument. He said that the judge fell into error when she had instructed the jury on the meaning of income. Disorganized as ever Keith had some document showing this but after rooting around in the pile in his table he couldn't find it.
Court -What's the point you are making here?
It seemed the point was the Crown's submission to the jury. One problem with that was that the Crown hadn't made any submissions to the jury, the judge did. Lawson was confusing the two.
Court - Where's the error?
Lawson - The judge went quite wrong. The judge said that income was not defined in the Income Tax Act so it must be given its general meaning.
He said that the Crown had brought up the REOP test (Reasonable expectation of Profit) but a newer case is
Stewart. The language used in it has specific connotations. The newer test to determine income is, is there a business? The
Stewart two step test must be used. What the judge told the jury is completely wrong. You don't look at income to determine income (note - that's what I heard him say). You must apply the
Stewart legal test and that was never done.
Then Lawson brought up the
Klundert decision. Quatloos has a discussion on
Klundert;
http://www.quatloos.com/Q-Forum/viewtop ... =50&t=5876
One of Lawson's main arguments is that his trial judge was required to submit to the jury any Looney-Tunes preposterous legal interpretation he claimed to believe. He thinks that this constitutes possible grounds for a not guilty decision on the basis that if he persuaded a jury that he sincerely, really, really sincerely believed that he was lawfully following the Income Tax Act by not paying income tax (using his own legal interpretations of course) then he could not be convicted. This is the
mens rea argument, that if you don't have the mental intent to break a law you're not guilty even if you break it. But, as we discussed in the
Klundert thread, a sincere belief that you are following the law isn't a valid defense in Canada and
Klundert was the decision that put the stake through the heart of that defense.
Jack Klundert was a dentist who also followed Porisky's Paradigm tax evasion scheme. As I wrote in that thread;
Time for an update on Mr. Klundert. It took three trials to find the guy guilty of tax evasion, not because his guilt wasn't abundantly clear but because of boneheaded jury instructions by the first two judges. In the first trial Klundert's defense was that he didn't pay his tax because he had a sincere heartfelt belief that he wasn't required to.
Although this is not a defense in law in Canada . . . . the judge actually instructed the jury that if they believed that Klundert had a sincere belief that he did not have to pay tax he was innocent of tax evasion. So the jury found him innocent.
The Crown appealed this and the appeals court slapped the judge around a bit and ordered a new trial. However the judge in the second trial, while stating that Klundert couldn't use this argument, allowed him to use it! So the appeals court ordered a third trial. This time the judge stomped all Klundert's attempts to argue that he really, really, really didn't believe he had to pay tax and the jury found him guilty of tax evasion in 2010.
Klundert is now the Crown's go-to citation when defendants try a sincere belief defense. Since Lawson wanted to use this defense he had to somehow differentiate his case from
Klundert. How did he plan to achieve this magic? Let the man himself explain.
Lawson now referred to
Klundert saying that the trial judge made a significant error by relying on it. The
Klundert facts were different.
Klundert had admitted that he had income so
actus reus was not an issue. But Lawson had testified that he did not have a business and had never admitted that he had a business. He said that this was exactly what
Stewart was trying to correct in paragraph 60 of the decision.
This is paragraph 60 of Stewart
60 In summary, the issue of whether or not a taxpayer has a source of income is to be determined by looking at the commerciality of the activity in question. Where the activity contains no personal element and is clearly commercial, no further inquiry is necessary. Where the activity could be classified as a personal pursuit, then it must be determined whether or not the activity is being carried on in a sufficiently commercial manner to constitute a source of income. However, to deny the deduction of losses on the simple ground that the losses signify that no business (or property) source exists is contrary to the words and scheme of the Act. Whether or not a business exists is a separate question from the deductibility of expenses. As suggested by the appellant, to disallow deductions based on a reasonable expectation of profit analysis would amount to a case law stop-loss rule which would be contrary to established principles of interpretation, mentioned above, which are applicable to the Act. As well, unlike many statutory stop-loss rules, once deductions are disallowed under the REOP test, the taxpayer cannot carry forward such losses to apply to future income in the event the activity becomes profitable. As stated by Bowman J.T.C.C. in Bélec, supra, at p. 123: “It would be ... unacceptable to permit the Minister [to say] to the taxpayer ‘The fact that you lost money ... proves that you did not have a reasonable expectation of profit, but as soon as you earn some money, it proves that you now have such an expectation.’”
As you'll note there is absolutely nothing there supporting Lawson's fever-dream about being able to say his income was from a hobby and the Supreme Court says that income from a hobby is tax-free. The issue in
Stewart was solely the deductibility of expenses. If you have a business you can deduct them even if you have a loss, if you have a hobby, you can't. That's it.
Lawson, after referring to paragraph 60, started reading it to the court.
Court - Don't. We are familiar with
Stewart.
Lawson - In my trial they didn't do the
Stewart analysis to see if it was a hobby which I always thought it was. Had the test of whether I had a commercial activity been put to the jury the outcome would have been different.
Stewart said that the source test had to be applied first. I didn't have a licensed storefront activity.
Court - What other errors are you arguing?
Lawson - Non-registered activity. We were all learning, trying to find out what income meant. We wanted to restructure our activities to legitimately not pay tax but the judge used words like evade and avoid.
Court - Was it an error for her to do that?
Lawson - Yes, judge should have instructed jury on this.
Court - what should she have said?
Lawson - Judge should have pointed out that an attempt to avoid being liable to pay tax is different than avoiding paying tax. This is a profound error.
At this point another comment about Lawson. He is, hands-down, the most articulate and composed of all of the tax evasion defendants I've watched. But while he seems to place great store on his speaking skills they were actually useless to him because he has no real understanding or knowledge of income tax law to speak about. While his arguments and answers were generally well presented they were just superficial skating over the surface of tax law and devoid of any useful content. At heart all that he was presenting as a defense was that his personal tax beliefs were right and everybody else was wrong. Unfortunately for Keith the Court of Appeal didn't care how articulate he was, they wanted to hear a defense based on real law and relevant jurisprudence and Keith couldn't give them that.
After the last quote above the court asked;
Court - Any other errors?
Which resulted in a tidal wave of articulate gibberish. The charge to the jury pointed out the essential elements of tax evasion but the judge didn't say that you had to analyze the source. There should have been special instructions on this. I never considered it a business. I knew what a business was and I didn't want to become one because that would have made me liable for income tax.
Stewart says that whether an activity is a business rather than a personal endeavor is up to the individual. I knew I had a hobby not a business. I had no control over the fact that I made money, it just happened by chance. I had a tax protester mindset, I admit it, but Porisky made me realize it. I didn't like paying income tax but the Income Tax Act is legal. So I recanted my beliefs and studied tax law. Lawson said that after 2004 he realized that he didn't have to pay income tax. He was willing to pay tax on his income but since he had a hobby he didn't have any income.
Court - Next point.
Lawson hauled a 2009 Tax Court case out of his grab-bag. I didn't catch the name, something about rental income.
Court - We understand where you are coming from. Where did the trial judge err?
Lawson - The judge didn't allow me to present this to a jury.
Court - You wanted the judge to place a no-income defense to the jury?
Lawson - Yes, an error in law.
Court - No. Your interpretation of law has to have an air of reality. You are saying that the judge failed to instruct the jury that you had to be proven to have a business?
Lawson - No.
Court - You are saying that the judge was wrong in not accepting your understanding of law?
Lawson - No.
Court - But the judge did say that income is not defined in the Income Tax Act and you are saying that she was wrong? This is arguing that the judge made an error in law. You are saying that the judge didn't accept your testimony as an understanding of law. Are you saying that the judge erred in her instructions in not saying that
Stewart required the jury to review your intent not to have a business?
Lawson - Yes.
Court - You claim that this is an error in law?
Lawson - Unintelligible gobbling (that's what my notes say)
Lawson, after a few moments to gather his strength after this onslaught, said that the judge went wrong in trying to establish the meaning of income. He gave a bizarre example of how he once went to the United States and, at a fast food place, was asked by a friend to get him a soda. Lawson walked around in a fog trying to figure out what the friend wanted until he saw the soda dispensing stand and realized that 'soda' in the US is what we call 'pop' or 'soft drinks' in Canada. This anecdote somehow related to his case but the connection eluded me. Something about figuring out what 'soda' meant was easy but since the Income Tax Act didn't say what 'income' was the judge had to analyze the meaning and she'd failed to do that.
Lawson - The judge needed to tell the jury what the test of income was. You need to look for evidence that I made income according to
Stewart. Nowhere does the judge say that I had to pursue profit to have a business.
Court - The jury must have found that you had an expectation of profit.
Lawson - That test has been supplanted by
Stewart. My main point is that while the judge gave the jury some of my evidence she didn't point out the significance of it.
Court - We're almost at the break. Any other points you can cover quickly?
But Keith, still reeling from the last barrage, didn't seem to know what to say. So the court called for recess saying that it would allow Lawson to collect his thoughts.
I have in my notes that my left hand, my writing hand, was almost crippled and that only the break saved me. I'm currently on page 17 of the single-spaced Word document I'm recording this on and morning break was called only an hour after court started.
ONLY AN HOUR. Back in the easy-going trial days when Michael Millar would unleash an afternoon long barrage of gibberish about capitalization or jurisdiction I could relax. There was so much endless repetition that I could just casually pluck a comment here or there out of the stream every few minutes and job done. But, at 11:15 on March 26th, 2019 I was seriously wondering if I had the capability to make it through Keith's second hour. What saved me was that Keith was also flagging and his second hour was less the articulate presentation of a coherent set of legal arguments than it was the hopeless attempts of a punch-drunk old pugilist, reeling on the ropes, trying to stay on his feet until the end of the round.