2006 BCSC 355 Trac v. British Columbia (Minister of Provincial Revenue)

Before: The Honourable Madam Justice H. Holmes

Reasons for Judgment

Counsel for the Petitioner/Appellant:	N.S. Ganapathi M.Z. Galambos
Counsel for the Respondent:	D.R. Poore A. Maloney
Date and Place of Trial/Hearing:	December 5-7, 2005
	Vancouver, B.C.

INTRODUCTION

[1] Mary Trac appeals a decision of the Minister of Provincial Revenue confirming an assessment of $655,092.49 under the British Columbia Tobacco Tax Act. The assessment assumes that over an eight-month period in 2001 Ms. Trac illegally imported from Ontario twenty-four large shipments of cigarettes, comprising a total of 24,115 cartons of 200 cigarettes. Ms. Trac denies knowledge of the shipments and of any importation of cigarettes to British Columbia.

[2] As I will explain at more length below, l am satisfied that Ms. Trac, through her own evidence, has met her initial burden to displace the assumptions underlying the assessment.

[3] The burden therefore shifts to the Crown to prove on a balance of probabilities that cigarettes were shipped as alleged and that Ms. Trac received the shipments.

[4] For the reasons set out below, I conclude that the Crown has proven the former requirement but not the latter. Although the evidence establishes that shipments of cigarettes were made to Ms. Trac’s residence, it does not establish that Ms. Trac received or even knew about them.

[5] The assessment therefore cannot stand.

PROCEDURAL CONTEXT

[6] The assessment issued on July 9, 2004 from the Ministry of Provincial Revenue, Consumer Taxation Branch for tax under the Act in the amount of $530,530 plus interest of $124,562.49, and thus a total of $655,092.49. The assessment followed after some communications initiated by Ministry officials with Ms. Trac and her counsel.

[7] Ms. Trac appealed the assessment to the Minister under s. 23(1) of the Act on July 21, 2004. The Minister confirmed the assessment on January 17, 2005.

[8] The appeal comes to this court by way of petition under s. 24(1) of the Act, and is therefore a new hearing:

24(1.1) An appeal under this section is a new hearing that is not limited to the evidence and issues that were before the minister.

[9] By s. 24(2) of the Act, the Supreme Court Rules relating to originating applications apply to the appeal, with the exception of Rule 49 (which deals otherwise with appeals). The appeal was argued on the basis of a large body of written material, which included numerous affidavits and transcripts of cross-examinations of most, and possibly all, of the affiants.

THE BURDEN OF PROOF IN RELATION TO THE ASSESSMENT

[10] Section 25.1(1) of the Act places on Ms. Trac the burden of displacing the assessment:

25.1(1) Evidence that an assessment has been made or a penalty has been imposed under this Act is proof, in the absence of evidence to the contrary, that the amount stated in the assessment or imposed as a penalty is due and owing, and the onus of proving otherwise is on the person assessed or penalized.

[11] Section 25.1(1) codifies the common law principle that the onus of disproving a tax assessment rests on the person disputing it.

[12] In Dwyer v. Canada, [2003] F.C.J. No. 1265, 2003 FCA 322, the Federal Court of Appeal discussed at length the now settled principles that the taxpayer bears the initial burden of displacing the Minister’s assumptions, after which the onus shifts to the Minister to prove the assumptions that support the assessment. The court referred extensively to the remarks of L'Heureux-Dubé J. in Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336 (at ¶92-95):

It is trite law that in taxation the standard of proof is the civil balance of probabilities: Dobieco Ltd. v. Minister of National Revenue, [1966] S.C.R. 95, and that within balance of probabilities, there can be varying degrees of proof required in order to discharge the onus, depending on the subject matter: Continental Insurance Co. v. Dalton Cartage Co., [1982] 1 S.C.R. 164; Pallan v. M.N.R., 90 D.T.C. 1102 (T.C.C.), at p. 1106. The Minister, in making assessments, proceeds on assumptions (Bayridge Estates Ltd. v. M.N.R., 59 D.T.C. 1098 (Ex. Ct.), at p. 1101) and the initial onus is on the taxpayer to "demolish" the Minister's assumptions in the assessment (Johnston v. Minister of National Revenue, [1948] S.C.R. 486; Kennedy v. M.N.R., 73 D.T.C. 5359 (F.C.A.), at p. 5361). The initial burden is only to "demolish" the exact assumptions made by the Minister but no more: First Fund Genesis Corp. v. The Queen, 90 D.T.C. 6337 (F.C.T.D.), at p. 6340.

This initial onus of "demolishing" the Minister's exact assumptions is met where the appellant makes out at least a prima facie case: Kamin v. M.N.R., 93 D.T.C. 62 (T.C.C.) …

Where the Minister's assumptions have been "demolished" by the appellant, "the onus . . . shifts to the Minister to rebut the prima facie case" made out by the appellant and to prove the assumptions: Magilb Development Corp. v. The Queen, 87 D.T.C. 5012 (F.C.T.D.), at p. 5018. Hence, in the case at bar, the onus has shifted to the Minister to prove its assumptions that there are "two businesses" and "no income".

Where the burden has shifted to the Minister, and the Minister adduces no evidence whatsoever, the taxpayer is entitled to succeed ….

[13] The court in Dwyer also referred to Island Telecom Inc. v. Prince Edward Island (Regulatory and Appeals Commission) (1999), 176 D.L.R. (4th) 356 (P.E.I.C.A.). In that case, the court noted that the initial burden on the taxpayer flows from the very nature of the self-reporting and self-assessing tax system in which the facts are usually uniquely within the knowledge and control of the taxpayer:

[16] The sales tax regime in this province, like income tax, is self-reporting and self-assessing. This gives a special position to the assumptions made by the Commissioner in issuing a notice of assessment. In Pollock v. Canada (Minister of National Revenue - M.N.R.) (1993), 161 N.R. 232 (F.C.A.), Hugessen J. stated at para. 18:

The special position of the assumptions made by the Minister in taxation litigation is another matter altogether. It is founded on the very nature of a self-reporting and self-assessing system in which the authorities are obliged to rely, as a rule, on the disclosures made to them by the taxpayer himself as to facts and matters which are peculiarly within his own knowledge. When assessing, the Minister may have to assume certain matters to be different from or additions to what the taxpayer has disclosed. …

…

[22] Each assessment is based on the assumption of a set a facts by the Minister or, in the case of sales tax, the Provincial Tax Commissioner. In a self-reporting and self-assessing tax regime such as the one established for sales tax and the one established by the Income Tax Act, these assumptions are really the Minister's interpretation or view of the facts as disclosed by the taxpayer. The facts are, therefore, uniquely within the knowledge and control of the taxpayer. Consequently, it is not unfair to place a burden upon the taxpayer to disprove those facts when on appeal the taxpayer seeks to have the assessment declared incorrect. …

[14] Mr. Poore submits that Ms. Trac faces a similar burden by the effect of s. 22(7.1) of the Act:

22(7.1) Evidence that a dealer has acquired tobacco is proof, in the absence of evidence to the contrary, that the dealer has sold that tobacco in British Columbia and has collected an amount at least equal to the tax payable by the consumer in respect of that tobacco, and the onus of proving otherwise is on the dealer.

[15] By the definition in s. 1 of the Act, a “dealer” is:

... a person who, either at wholesale or at retail,

(a) sells or offers to sell, in British Columbia, tobacco, or

(b) keeps for sale, in British Columbia, tobacco;

In the Act, a “dealer stands in contrast to a “consumer” who essentially acquires tobacco for his or her own use or consumption, or for the use or consumption by others at his or her expense.

[16] Mr. Poore submits that the presumption in s. 22(7.1) applies because, by the Minister’s assumptions, Ms. Trac was a “dealer” and she acquired the assessed tobacco. He submits that unless Ms. Trac meets the initial burden to displace those assumptions, she is therefore presumed, by the effect of s. 22(7.1), to also have sold that tobacco so as to be liable for the applicable tax.

[17] The difficulty with this submission is that it confuses the assumptions which support the Minister’s assessment with evidence that supports the statutory presumption. The presumption in s. 22(7.1) applies where the evidence establishes that a person is a dealer and has acquired tobacco, not where the Minister assumes that state of affairs. The assessment cannot invoke in its support a statutory presumption that has only an assumed state of affairs, and not evidence, to ground it.

[18] The presumption in s. 22(7.1) may come into play if the evidence establishes that Ms. Trac sold tobacco or kept it for sale, and thus was a dealer, and that she acquired the assessed tobacco. However, without evidence to establish those threshold facts, the statutory presumption cannot be invoked.

[19] I therefore approach the case in accordance with the well-settled principles concerning the burden of proof applicable to tax assessments, as also reflected in s. 25.1(1) of the Act. Those principles require that Ms. Trac meet an initial burden to displace the assumptions underlying the assessment; if she does, they require the Minister to prove the basis for the assessment. The statutory presumption in s. 22(7.1) has no role at the first of those stages.

THE EVIDENCE

Its Relationship to the Burden of Proof

[20] To satisfy her initial burden of displacing the assumptions underlying the assessment, Ms. Trac relies on her own evidence by affidavit and in cross-examination that she knew nothing of the shipments or of any importation of cigarettes.

[21] Mr. Poore stresses, and it is not disputed, that the case is Ms. Trac’s to prove, and therefore that the evidence tendered by the Crown requires consideration only if Ms. Trac meets her initial burden to displace the Minister’s assumptions. He submits that Ms. Trac has not met her initial burden because she relies in that regard on her own affidavit and cross-examination and those are utterly unworthy of belief.

[22] In order to determine whether Ms. Trac’s evidence is sufficiently credible and reliable to displace the Minister’s assumptions, it is necessary to understand the assumed facts to which Ms. Trac responded in giving her evidence. I will therefore outline the evidence on which the Crown relies before returning to whether Ms. Trac has met her initial burden.

The Twenty-Four Assessed Shipments

[23] The assessment relies largely on the records of a shipping company, Concord Transportation Inc., as showing twenty-four shipments from Ontario to Ms. Trac’s home in Vancouver.

[24] The shipping documents relating to the twenty-four assessed shipments provide evidence of the following. Each of the twenty-four assessed shipments was sent to Concord by the same shipping company in Ontario, and contained either eleven or twelve boxes. Each shipment was pre-paid, instructed Concord to contact the recipient in Vancouver at an indicated telephone number, and instructed Concord to deliver the shipment to the same residential address, that of Ms. Trac and others on Lincoln Street, Vancouver. There was one exception: for one of the twenty-four shipments, the residential address indicated was an earlier home of Ms. Trac and other family members. For twenty-three of the twenty-four assessed shipments, the consignee or person to be notified of the arrival of the shipment in Vancouver was Vien Trac. Vien Trac was Ms. Trac’s father; he passed away in March 2005. For all of those shipments, the contact number for Concord to call was a particular telephone number which other evidence established to be Ms. Trac’s cellular telephone number. For the remaining assessed shipment, the consignee was shown not as Vien Trac but as Ms. Trac, and the contact phone number was the cellular telephone number of Rita Jiang, Ms. Trac’s sister, one of the family members with whom Ms. Trac lived.

[25] It is undisputed that at the time of the shipments Ms. Trac lived with her husband and their two children, her now-deceased father Vien Trac, her sister Rita Jiang and her sister’s husband, and two other children (the Jiangs’ daughter and another niece). Ms. Trac indicates that at some point in 2001 a family friend moved in as a tenant; however, it is not clear in the evidence whether he had separate accommodation within the residence.

[26] Ms. Trac owns a one-half interest in the Lincoln Street residence in joint tenancy with her husband. Her brother-in-law, Rita Jiang’s husband, owns the other one-half interest.

[27] As regards evidence of actual delivery, the Crown relies only on the shipping records, which show the signatures of drivers and of recipients of the shipments verifying delivery to the consignee. There is no evidence from, for example, drivers who delivered shipments or neighbours who observed shipments being delivered.

[28] Nothing in the circumstances or in the shipping documents concerning the twenty-four assessed shipments indicates that the shipments were of cigarettes. The inference that the shipments contained cigarettes flows only from two seizures, one in April 2000 (before the assessed shipments) and another in October 2001 (following the assessed shipments). I turn now to the evidence of those seized shipments.

The April 2000 Cigarette Shipment

[29] Acting on information from a confidential informant, R.C.M.P. officers went to Concord’s premises on Annacis Island to examine a shipment Concord had received. They determined that the shipment contained cigarettes and waited for it to be picked up.

[30] Two vehicles arrived. Ms. Trac’s husband drove a rental van with Ms. Trac’s sister, Rita Jiang, as passenger. Ms. Trac drove a Honda car. The shipment of fourteen shrink-wrapped boxes was loaded into the van; the van and the Honda began to drive away; the police stopped both vehicles. The boxes seized from the van were later found to contain 1,283 cartons of assorted Canadian cigarettes with markings which suggested that they had been imported from Ontario.

[31] Ms. Trac’s husband and sister were arrested at the scene. Ms. Trac was dealt with separately by a different police officer than dealt with her husband and her sister. Ms. Trac was detained and questioned at the scene but was not arrested. The shipment was seized but all three parties were permitted to proceed. There is no evidence that Ms. Trac was advised that her detention concerned suspected importation of cigarettes, or that the shipments were unpacked in her presence or within her view.

[32] Ms. Trac’s husband and sister were advised that charges might follow, but none have. Nor is there any indication in the evidence that a tax assessment has been issued in relation to this shipment.

[33] The Crown relies on similarities between the shipping documents for this April 2000 shipment and the twenty-four assessed shipments to establish that the twenty-four assessed shipments must also have contained cigarettes. The shipping documents for the April 2000 shipment, similarly to those for the assessed shipments, describe the shipment as personal effects, the weight as 450 pounds, show the shipment to have been pre-paid, and instruct Concord to contact the recipient at the number listed; two numbers were shown, Ms. Trac’s cellular telephone number and her sister’s cellular telephone number.

[34] In cross-examination, Ms. Trac explained that she had driven to Annacis Island to show her husband and sister the way there, understanding that they were picking up personal effects shipped by the family friend/tenant from Toronto. She explained that she had no idea either at the time or even after the seizure that the shipment contained cigarettes.

Two Intercepted Shipments of Cigarettes in October 2001

[35] Again acting on information from a confidential informant, R.C.M.P. officers intercepted two shipments at Concord’s premises in October 2001.

[36] Each of the two shipments contained twelve boxes weighing 800 pounds that were found to contain a total of 2,402 cartons of various brands of cigarettes bearing the Ontario tax-paid tape.

[37] The shipping documents said to relate to these two shipments are similar to those relating to the twenty-four assessed shipments. They show the same shipping company in Ontario, the same approximate weight, the same approximate number of boxes, that the shipment was pre-paid, and that Concord was to contact the recipient at the listed number and to deliver the shipments to the Lincoln Street address. For each of these two shipments, the consignee was listed as Vien Trac and the contact number was Ms. Trac’s cellular telephone number.

[38] When delivery of one of these shipments was attempted, an unidentified female person at Ms. Trac’s residence rejected delivery, and gave the driver a handwritten note that read, “This is not my freight. Return it back to the sender”.

DISCUSSION

Has Ms. Trac Met Her Initial Burden?

[39] As noted above, it is common ground that Ms. Trac bears the burden of displacing the assumptions underlying the assessment. Precisely what that burden entails in the present circumstances is not as clear.

[40] Mr. Poore submits that Ms. Trac cannot meet her burden of displacing the Minister’s assumptions merely by denying knowledge of the fact or content of the shipments. He submits that either she must provide evidence from others in the residence who may have knowledge of or involvement with the assessed shipments, or she must provide some detail as to why it is that she knows nothing of the shipments.

[41] By the Crown’s position, to discharge the initial burden Ms. Trac would have to explain to whom the shipments were delivered at the residence or, if they were not so delivered, why the Concord shipping documents suggest that they were.

[42] The difficulty with this position is that it would require Ms. Trac to investigate and explain assumptions which, by her position, are not only erroneous but are also based on facts or assumed facts wholly outside her sphere of personal knowledge or involvement.

[43] In circumstances where, as discussed in Island Telecom, a taxpayer has provided information to the taxing authority from which the authority draws inferences and conclusions, the burden here suggested by the Crown may well be reasonable. The facts are uniquely within the knowledge and control of the taxpayer, who may reasonably be required to provide further detail to correct what he or she contends to be the taxing authority’s erroneous inferences or conclusions from those facts.

[44] Here, by contrast, the assessment is not based on information provided by the taxpayer, but rather arrived on the taxpayer’s doorstep essentially out of the blue. It is the Crown’s position that the taxpayer has knowledge and control of the relevant facts, but that matter is very much in dispute and lies at the heart of the appeal.

[45] L'Heureux-Dubé J. in Hickman, as quoted above in Dwyer, noted at ¶92 that “within the balance of probabilities, there can be varying degrees of proof required in order to discharge the onus, depending on the subject matter”.

[46] As the court in Island Telecom at ¶15 explained, the initial burden on a taxpayer operates in conjunction with a concurrent burden on the Crown to disclose the basis for the assumptions so that the taxpayer can meet them:

Joyal J. [in First Fund Genesis Corp. v. Her Majesty the Queen, 90 D.T.C. 6337 (F.C.T.D.)] goes on to point out there is a concurrent burden on the Crown to play fair and to disclose to the taxpayer the facts and the rulings of law which give rise to the dispute over the assessment. In making the assessment, the Crown has relied on certain assumptions of fact and the taxpayer has the right to know these assumptions so as to be able to meet the case against him. As these facts are already in the knowledge of the taxpayer, the Crown is obligated to do no more than disclose the assumptions it relied upon and then the onus is on the taxpayer to rebut, or as Rand J. said in Johnston, "to demolish" the assumptions made by the Minister. …

[47] This concurrent burden on the Crown has significance in the present situation, where Ms. Trac’s counsel had great difficulty ascertaining the information on which the Ministry relied and where some of the Ministry’s initial assumptions were incorrect.

[48] As to the former problem, in response to counsel’s courteous letters, the Ministry explained that it relied in part on information from the R.C.M.P. that it was not entitled to disclose; the Ministry therefore disclosed only the shipping documents relating to the assessed shipments with its initial correspondence to Ms. Trac. Counsel’s numerous communications to the R.C.M.P. appear to have been mislaid; no bad faith is suggested in this regard, but the result was that Ms. Trac and her counsel were not apprised of the full case against her for a very long period of time.

[49] As to the latter problem, until corrected by Ms. Trac’s counsel the Ministry erroneously assumed Vien Trac (to whom the shipments were directed) and Ms. Trac to be one and the same person. It also assumed almost throughout that Ms. Trac was arrested with her husband and sister in April 2000 and with them was found in possession of cigarettes.

[50] These problems bear somewhat on my assessment of Ms. Trac’s evidence under cross-examination and on the weight of her initial burden to displace the Minister’s assumptions, as I will discuss below.

[51] In my view the circumstances here are such that the initial onus on Ms. Trac is relatively light, and does not require her to provide detail to explain circumstances of which, by her position, she has absolutely no knowledge. Her own sworn denial may be sufficient to discharge the onus.

[52] Mr. Poore submits that Ms. Trac’s own bare denial can be given no weight because it is not credible.

[53] Ms. Trac was subjected to a lengthy, probing, and aggressive cross-examination. I would have concerns about the propriety of certain aspects of the cross-examination had not her counsel, who was with her during the cross-examination, later assured the court that Ms. Trac willingly underwent the cross-examination as part of a deliberate strategy to convey the strength of her position to the Ministry.

[54] The character of the cross-examination nonetheless affects the way in which I view Ms. Trac’s responses. For example, and while I am entirely confident that this was unintended, one significant area of the cross-examination was misleading. Cross-examining counsel appeared to hold the mistaken understanding (that began with the R.C.M.P. referral letter to the Ministry) that Ms. Trac had been arrested in relation to the April 2000 shipment; he purported to confront her with the falsity of her own evidence otherwise and her inability in any event, as a non-lawyer, to dispute the erroneous version he put to her. This and other features of the cross-examination may well have confused Ms. Trac or impaired her ability to respond comfortably to the cross-examination in an effort to assist the inquiry into the truth.

[55] I therefore cannot accept the Crown’s submissions that Ms. Trac was evasive, shifting, self-contradictory, and implausible. Her cross-examination, as I view it, stands as a consistent denial that she knew of any shipments to the house or of any importation of cigarettes.

[56] I find that Ms. Trac’s evidence by affidavit and under cross-examination is more than sufficient to meet the initial burden of displacing the assumptions underlying the assessment.

[57] The onus therefore shifts to the Minister to prove the basis for the assessment. In the circumstances here, the Minister must prove that the assessed shipments were made, that they contained cigarettes, and that they were Ms. Trac’s shipments.

Were the Assessed Shipments Made?

[58] I am satisfied that the shipping records together with the evidence of Concord’s usual practice as to deliveries establish that the twenty-four assessed shipments were delivered to Ms. Trac’s residence in the circumstances and according to the delivery instructions set out in the records. The evidence therefore establishes that on the indicated dates over the course of eight months each of the twenty-four assessed shipments containing eleven or twelve boxes was delivered to Ms. Trac’s residence, delivery likely arranged by the shipping company contacting someone at Ms. Trac’s cellular telephone number.

[59] The documents also indicate that the boxes contained personal effects, weighed usually between 600-800 pounds for each shipment, and were shipped by a “Johnny Lam”. However, that information is not admitted for the truth of its content, because it is derived from the records of the Ontario company which shipped to Concord. In order for business records to be admissible under s. 42 of the B.C. Evidence Act or otherwise as an exception to the hearsay rule, they must relate to matters of which “direct oral evidence of a fact would be admissible”. The content of the Ontario company’s records are not admissible through the Concord witnesses for the truth of their content.

Did the Assessed Shipments Contain Cigarettes?

[60] I am also satisfied that because of the similarities between the records relating to the twenty-four assessed shipments and those relating to the seized shipments of cigarettes, on a balance of probabilities the Crown has proven that the assessed shipments were of cigarettes.

Were the Assessed Shipments Ms. Trac’s?

[61] The key remaining issue is whether Ms. Trac imported or received the assessed shipments.

[62] The shipping documents for the assessed shipments all show either Vien Trac or Mary Trac as the consignee or person to be notified; as I mentioned above, initially the Ministry mistakenly understood these to be the same person.

[63] With that misunderstanding resolved, the Crown now emphasizes four key points associating Ms. Trac with the twenty-four assessed shipments:

1. twenty-three of the assessed shipments were directed and delivered to her home, and the twenty-fourth to her previous address

2. for twenty-three of the twenty-four assessed shipments, Ms. Trac’s cellular telephone number is shown and, as I find, was used as the number for Concord to contact to arrange delivery on arrival of the shipment in Vancouver

3. for the remaining assessed shipment, Ms. Trac is named as the consignee and

4. given the large size of the shipments, it is implausible to suppose that they may have arrived at the residence without Ms. Trac’s participation or knowledge.

[64] There were five adults living the house, not including the tenant (about whose occupation of the residence there was little evidence). There is no evidence to suggest that shipments of this size would necessarily have been obvious to every adult in the house; indeed, there was evidence of a garage at the back at the house to which at least some of the shipments were delivered. Moreover, for long periods each day Ms. Trac was at work and therefore absent from the residence. Without her participation or knowledge, the shipments could have been delivered to the house or garage and then transported elsewhere for re-sale, or placed for longer-term storage in the garage.

[65] For many of the shipments, the documents show a form of signature by Vien Trac as recipient. There are numerous significant variations, even to the untrained eye, among those signatures. However, to the extent that the shipping records indicate delivery to a particular person at the Lincoln Street address, the person is Vien Trac and not Ms. Trac.

[66] The evidence associating specifically Ms. Trac, as opposed to any of the other adults, with the shipments consists only in the fact that her cellular telephone number is shown, and was likely used, in order to arrange delivery of the shipments, and that in one instance her name was shown as consignee. There is no notation on the shipping documents confirming actual contact with anyone at Ms. Trac’s cellular telephone number.

[67] Ms. Trac stresses that her cellular telephone was available for the use of others within the residence over significant periods of time. Ms. Trac worked full-time as a hospital worker and was not permitted to take her cellular telephone to work; she therefore left the cellular telephone at home where it was available for others’ use.

[68] Ms. Trac explained further that when she was at home, she customarily forwarded calls from her cellular telephone to the home telephone (land line). Thus incoming calls on the cellular telephone number would ring on the land line in the residence which anyone in the residence could answer.

[69] The records for Ms. Trac’s cellular telephone indicate that although she is the registered owner of the phone and the account, her husband is the indicated user. However, I do not place much weight on this evidence as indicating the actual main user.

[70] The frailty of the Crown’s case in this area arises from its heavy dependence on the inference that since Ms. Trac’s cellular telephone number was the point of contact for delivery, Ms. Trac must have known about the shipments. In the circumstances I have outlined, I do not draw that inference.

[71] Mr. Poore submits that an adverse inference should flow from Ms. Trac’s failure to adduce evidence from those who could cast light on the shipments. It is common ground that the court may draw an adverse inference from the failure of a party to an action to adduce evidence that the circumstances of the action indicate should be adduced: Murray v. Saskatoon, [1952] 2 D.L.R. 499 (Sask. C.A.). Mr. Poore submits that Ms. Trac’s position, if well-based, can reasonably be expected to be supported by her close family members, and that her failure to adduce their evidence therefore undermines her position.

[72] The difficulty with this submission is that the inference Mr. Poore suggests is not the only reasonable inference from Ms. Trac’s failure to adduce the evidence of other family members. Equally reasonable is the inference that by offering their evidence, some or all of those family members would exonerate Ms. Trac but implicate themselves.

[73] The situation is far removed from that in Trinh v. British Columbia, [2002] B.C.J. No. 66, 2002 BCSC 57, on which both parties rely, where the taxpayer who unsuccessfully disputed an assessment under the same Act had been arrested in possession of a large quantity of cigarettes on a previous occasion and offered almost no evidence to displace the Minister’s assumptions in relation to the assessed shipments at issue in the appeal. The small delivery and moving service that received the shipments was his; however, his sparse affidavits offered no explanation as to whether he received the assessed shipments as his own or, rather, conveyed them to a third party.

[74] Throughout her lengthy cross-examination, Ms. Trac maintained her position that she never knew anything about any shipments to the house or of any importation of cigarettes. She explained that she at no time, even after receiving the notice of assessment, knew that the seized April 2000 shipment contained or was alleged to contain cigarettes; there is no evidence otherwise except, as the Crown suggests, the inherent likelihood that her husband or her sister, who were arrested in relation to cigarette importation by that shipment would have told her that the seized shipment contained cigarettes. I find that suggestion to be speculative.

[75] In all of the circumstances, I am unable to find that the Crown has proven on a balance of probabilities Ms. Trac’s own association with the shipments, as contrasted with that of other family members living in the residence with her.

[76] The assessment therefore cannot stand.

ORDER

[77] The appeal is allowed.

“H. Holmes, J.”
The Honourable Madam Justice H. Holmes

Citation:	*Trac v. British Columbia (Minister of Provincial Revenue),*
	2006 BCSC 355