Arbour, Abella and Austin, JJ.A. (orally):— The central argument advanced on behalf of the appellants before this Court is that the trial iudge misapprehended the evidence with respect to the true nature of the arrangements between IBS (US) and CCC, and IBS (US) and CRI respectively, in that he failed to recognize that the contracts created legally enforceable obligations between the parties. Mr. Greenspan submits that there were valid, enforceable contracts requiring payment for research done by IBS (US) at the full face value of the invoices which, in turn, represented fair market value for research conducted during the relevant period of time.
The extensive reasons of the trial judge disclose no such misapprehension. He was fully aware that, pursuant to the advice of their respective solicitors, Mr. Bird and Mr. Corr inserted a final payment date in the contracts for the very purpose of ensuring that the contracts would have all the characteristics of enforceability that would be required to satisfy Revenue Canada. The trial judge found, however, that at the time the invoices were submitted by Mr. Corr for the purpose of drawing from the tax credit escrow funds, neither Mr. Bird nor Mr. Corr had any intention of implementing the deferred payments terms of those contracts. Having made that finding and having considered, in addition, a vast amount of documentary and testimonial evidence, the trial judge was entitled to conclude, as he did, that the invoices did not represent the real intended cost to CCC or to CRI of the work performed by IBS (US). Rather, those invoices were inflated so as to reflect, not the cost of the work done, nor the amount to be paid, but instead, they reflected more closely the amount of scientific research funds available and intended by Corr to be drawn down.
In our view, whether or not the amounts of the invoices could be justified by looking at the hours worked by IBS (US) employees or at the value of their labour in an open market, is irrelevant. The trial judge found, and we agree, that what drove these transactions was the availability, or expected availability, of Scientific Research Tax Credits. The means used to access the tax credit funds were deceitful and dishonest and knowingly calculated to defraud Revenue Canada.
The appeal against conviction is dismissed.
There are both an appeal and a cross-appeal as to sentence. The appellant was found guilty of several charges but, by the application of the Kienapple rule, he was convicted only on two counts of fraud. The total amount of the fraud reflected in these counts represented tax evaded, or attempted to be evaded, in a total amount of approximately $2,000,000. The trial judge imposed a term of imprisonment of two years less a day and fines totalling $750,000, or two years consecutive in default of payment of the fines. Funds are available for the payment of a fine of this magnitude as US $700,000 are on deposit with respect to Mr. Corr's bail.
At trial, the defence took the position that there should be a fine not exceeding $600,000 and a term of imprisonment in the lower end of the reformatory range. The Crown suggested that imprisonment should be for three to five years, and that the total assets on deposit (the equivalent of $852,000) should be considered available for a fine.
We are of the opinion that despite the fact that the convictions were for the criminal offence of fraud, the trial judge was correct in turning, for general guidance, to the cases involving charges under the Income Tax Act for SRTC tax evasion. We think that the sentence imposed was entirely fit and although leave to appeal sentence is granted to both parties, the sentence appeal and the crossappeal are dismissed. We are prepared, however, to recommend that Mr. Corr be considered as a candidate for the Temporary Absence Program.
Appeals dismissed.