In Estevan provincial court on Monday, constitutional challenges from the defence kicked off the start of a two-week trial for a couple charged under the Income Tax Act (ITA) and the Excise Tax Act (ETA).
Norman Desautels and Dorothy-Anne Desautels of Alida have been charged with making false statements in their tax returns forms and claiming a tax credit to which they are not entitled by making false statements. Norman is also charged with making false statements in a claim in order to evade payment of tax, with the Crown alleging they evaded more than $90,000 in federal tax.
The Desautels are representing themselves throughout the proceedings and sat with a Holy Bible between them. Judge Karl Bazin presided over the proceedings.
Glennys McVeigh, counsel with the Public Prosecution Service of Canada, gave opening statements. She is one of two prosecutors on the file and noted they will call three witnesses from the Canadian Revenue Agency and one more who is the lead investigator on the file.
The Desautels said there were some disclosure issues, noting they did not receive disclosure in a timely manner following a request on Nov. 4. Norman said there was no response from prosecutors within the required 10-day period.
McVeigh said disclosure was first given to the Desautels on July 14. The accused returned the disclosure the following day. Dorothy said what was given to them was a "box of garbage."
The Nov. 4 request for disclosure by the Desautels included 14 items. McVeigh said the Crown provided one of the 14 items.
"We provided everything they requested that was available and relevant," she said.
Bazin ruled that the Crown made full disclosure, deeming the disclosure items not received to be "irrelevant."
Norman told the judge, "I did not consent to a trial. I don't know why we're here. I don't understand."
Chief federal prosecutor Christine Haynes, addressed the issue of consenting to the trial, noting that not guilty pleas were entered for both of the accused, which is the court's prerogative when the accused refuse to enter pleas.
In an opening statement, McVeigh called the case a "really simple" one.
She said Norman earned income as a cattle farmer and servicing oil wells from 2003 to 2008. She added that he filed tax returns in 2001 and 2002 that included business income, followed by returns in 2004 and 2005 that showed no business income. After that, she said he stopped filing tax returns altogether.
Dorothy, she said, did the same, not including her husband's business income in her returns for 2004 and 2005. She made false statements in her tax return and from 2004 to 2008, McVeigh said the unreported net income for those years is $494,671.36. She said the amount of federal tax evaded is $90,679.80.
McVeigh said they filed fake returns low enough that they would qualify for the Canada child tax credit. She added that they filed for the credit and received $8,869 from 2003 to 2005.
Norman, she continued, made about $80,000 as a cattle farmer and $5,000 from oil well servicing, which he did on his own.
"The case is simple. Norman Desautels earns income, doesn't report it ... and they receive child tax credits they aren't qualified for."
The prosecution submitted a number of affidavits. The Desautels objected to all of the affidavits on the basis that they weren't backed up by oral witnesses. Norman added that the affidavits should not be accepted because there was no criminal jurisdiction to prosecute.
The Desautels argued that the ITA and ETA are not legal acts because they never received royal assent, noting they are based on an act from 1948 that never received royal assent and wasn't published by the Queen's Printer.
The prosecutors said there is no provision for witnesses to be presented with the affidavit and noted that the provincial court had authority to prosecute because they were proceeding by summary conviction, which is the realm of the province. Bazin permitted the affidavits and said the Desautels' arguments don't affect the admissibility of the affidavits.
"How can they be admitted when there's no contract? The act doesn't exist," said Dorothy.
Bazin said they are free to make the argument that the affidavits are not permitted without witnesses at the end of the trial but not right now.
"Is it not your duty to follow the law?" Norman asked the judge.
"We're following the evidentiary process now," Bazin responded.
"You are aiding the Crown in perpetrating a fraud against the estate," Norman said, then calling on Bazin to accuse himself and dismiss the case.
After Bazin deemed the affidavits permissible, the Desautels became a little upset by the way the trial was moving forward.
"You're not taking notice of my administration of process," Norman told Bazin, referring to a document he submitted to the court.
Bazin said they would have their chance to submit evidence, but the Crown gets to present their evidence first.
"My evidence is already in," Norman said, again referring to the document. "We did our judicial process. You've obviously ignored it."
As Dorothy began packing her bag, she asked Bazin, "Can I see your oath? Show me your oath in this courtroom."
She then put on her coat and left.
"I make a motion that this case be dismissed," said Norman, packing things from the desk.
"Are you staying or leaving?" Bazin asked him.
"No, this is it. It's obvious it doesn't make any difference whether I'm here or not."
Bazin suggested the prosecutors would proceed ex parte if he chose to follow his wife out the door. Norman asked for a 10-minute recess. The Desautels returned shortly after court reconvened.
The Crown began its case by calling Phyllis Kingston, who works for the non-filing and non-registered unit of the Canadian Revenue Agency in Regina.
She was dealing with the Desautels' file in August 2005 and noticed there wasn't any business or farm income reported for 2003 and 2004 as had previously been reported. Kingston told the court she didn't feel the report was filed accurately and requested that farming and business information be provided on the T-2124 and T-2042 forms that she sent to them.
Norman asked her, "Was I performing a specific function of government?"
Kingston said she had no knowledge of that. He then asked if there were any payroll records. Kingston said she had payer information but no payroll records.
Norman then requested Bazin strike Kingston's claims from the record on the basis of prejudice. Bazin denied the motion. When the Desautels protested Bazin said, "I've made my ruling."
"On whose authority?" asked Dorothy.
The Crown's second witness was Jackie Osborne, who was a collection enforcement officer with CRA in Regina in 2006. She said after receiving the Desautels unfiled GST matter, she issued requirements to pay on the Royal Bank of Canada, Prairie Pride Credit Union, Bank of Montreal and Ford Credit noting that a new truck had been purchased. She also issued garnishments with the banks so the outstanding debts would be paid. No funds were found in their accounts with those banks.
When she found that the Royal Bank was allowing cash to flow through the account while there was a garnishee on it, Osborne ordered the Royal Bank to pay a debt of $20,652 that was owing in 2006.
The Desautels brought Douglas Nagel, who wished to speak for himself, but Bazin didn't allow the request. Nagel was found guilty of similar charges in Regina and called the proceedings against the Desautels a "travesty."
The trial continued Tuesday with the Crown's final two witnesses being called. One witness may take a couple of days to get through, with the trial set to end on Dec. 16.
