



COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Mahmood, 2016 ONCA 75

DATE: 20160126

DOCKET: C57421 and C59069

MacPherson, MacFarland and Roberts JJ.A.

BETWEEN

C57421

Her Majesty the Queen

Appellant

and

Najam Mahmood

Respondent

AND BETWEEN

C59069

Her Majesty the Queen

Respondent

and

Najam Mahmood

Appellant

Najam Mahmood, acting in person

Erin Carley, for Her Majesty the Queen

Heard: December 1, 2015

On appeal from the conviction entered by Justice Gordon
    D. Lemon of the Superior Court of Justice on December 21, 2012, sitting with a
    jury, and the sentence imposed on July 5, 2013.

MacPherson J.A.:

A.

Introduction

[1]

On December 21, 2012, following a jury trial, Najam Mahmood was
    convicted of eight counts of tax evasion under the
Income Tax Act
,
    R.S.C. 1985, c. 1 (5th Supp.) (
ITA
) and the
Excise Tax Act
,
    R.S.C. 1985, c. E-15 (
ETA
). More specifically, he was convicted of
    tax evasion pursuant to s. 239(1)(d) of the
ITA
in respect of the
    2003, 2004, 2005 and 2006 taxation years and failing to remit GST collected
    during each of these taxation years pursuant to s. 327(1)(c) of the
ETA
.

[2]

On July 5, 2013, Mr. Mahmood was sentenced to one year in jail (less
    time served of one month) and eight fines totalling $687,000, with ten years to
    pay.

[3]

Mr. Mahmood appeals the convictions. The Crown appeals the sentence.

B.

Facts

[4]

Between 2003 and 2006, Mr. Mahmood operated a business teaching foreign
    exchange trading. He earned approximately $3,000,000 in the form of tuition
    fees and commissions. He did not file tax returns in respect of these years and
    thereby evaded the payment of $358,588 in income taxes. He also failed to pay
    $116,412 in GST. The total tax evaded during the four-year period was $475,000.

C.

Mr. Mahmoods conviction appeal

[5]

At the conclusion of Mr. Mahmoods oral submissions on his conviction
    appeal, the court indicated that the appeal would be dismissed, with reasons to
    follow. These are those reasons.

[6]

Mr. Mahmoods principal submission is that the trial judge confused the
    jury by making no distinction between tax evasion (illegal) and tax avoidance
    (legal) in the course of his charge to the jury.

[7]

I do not accept this submission. In his jury charge, the trial judge set
    out the essential elements of the offence of tax evasion that the Crown must
    prove:

For you to find Mr. Mahmood guilty of any of these counts,
    Crown counsel must prove each of these essential elements beyond a reasonable
    doubt:


i.

that Mr. Mahmood knew that tax was owed under the Act as charged;


ii.

that Mr. Mahmood did something or engaged in a course of conduct that
    avoided or attempted to avoid the payment of tax;


iii.

that Mr. Mahmood intended to avoid or intended to attempt to avoid
    payment of that tax.

[8]

In my view, this was an accurate and sufficient charge on this issue.
    The language the trial judge used mirrors this courts enumeration of the
    elements of the offence of tax evasion in
R. v. Klundert
(2004), 187
    C.C.C. (3d) 417, at para. 47:

In most cases of tax evasion, the trial judge will adequately
    describe the elements of the offence by instructing the jury that they must be
    satisfied beyond a reasonable doubt that the accused:

·

did something or engaged in a course of conduct that avoided or
    attempted to avoid the payment of tax imposed by the Act;

·

knew there was tax imposed by the Act; and

·

engaged in the conduct for the purpose of avoiding or attempting
    to avoid payment of tax imposed by the Act or knowing that avoiding payment of
    tax imposed by the Act was a virtual certain consequence of his actions. [Footnotes
    omitted.]

[9]

Moreover, I would observe that in the context of $3,000,000 in fees and
    commissions over a four-year period, no income tax returns filed for those
    years, and not one penny of income tax or GST remitted, there is no air of
    reality to a potential tax avoidance versus tax evasion explanation for Mr.
    Mahmoods conduct.

[10]

I
    would dismiss the conviction appeal.

D.

Crown sentence appeal

[11]

The
    sentence imposed by the trial judge had three components  a custodial term of
    one year, fines totalling $687,000 (150 per cent of the tax evaded), and a ten-year
    period to pay the fines. The Crown challenges the first and third of these
    components.

(1)

The custodial sentence

[12]

The
    Crowns principal argument is that the sentence imposed on Mr. Mahmood was
    manifestly unfit; it describes Mr. Mahmoods scheme to avoid paying taxes as
    pre-planned, flagrant and massive. Accordingly, a penitentiary sentence 
    indeed, one of at least three years  was required.

[13]

Although
    I regard this as a close call on this issue, in the end I cannot say that the
    custodial sentence imposed by the trial judge, with comprehensive reasons and
    careful attention to relevant case authorities from many Canadian
    jurisdictions, attracts the label manifestly unfit.

[14]

The
    starting point is the obvious one: appellate courts must accord substantial
    deference to sentences imposed by trial judges: see
R. v. Shropshire
,
    [1995] 4 S.C.R. 227, at para. 46;
R. v. M.(C.A.)
, [1996] 1 S.C.R. 500,
    at paras. 90-91; and
R. v. Lacasse
, 2015 SCC 64, at para. 39.

[15]

The
    trial judge carefully considered a myriad of aggravating and mitigating
    factors.

[16]

The
    trial judge rejected Mr. Mahmoods position, namely, that a conditional
    sentence of eight months should be imposed:

I do not find that a conditional sentence would be appropriate
    here.

This deliberate flouting of the law will not be prevented by a
    conditional sentence. Others may think that such a mistake is worth making
    given the price to pay if a non-custodial term is imposed.

[17]

However,
    the trial judge also rejected a custodial penitentiary sentence. He pointed out
    that Mr. Mahmood had no criminal record, that the amount of tax evaded, although
    substantial, was not as high as in other reported cases, and that [t]he arrest
    and conviction have been hard on both him and his family. In my view, these
    are all relevant factors.

[18]

In
    summary, the trial judge identified and weighed the relevant aggravating and
    mitigating factors. I might have weighed them differently, attaching more
    weight to the aggravating factors and the principle of general deterrence.
    However, that is not the role of an appellate court. As explained by Wagner J.
    in
Lacasse
, at paras. 49 and 78:

[A]n appellate court may not intervene simply because it would
    have weighed the relevant factors differently.



[D]etermining the weight to be given to aggravating or
    mitigating circumstances falls strictly within the sentencing judges
    discretion. The decision to weigh such factors in a given way is not in itself
    an error that opens the door to appellate intervention unless the weighing is
    unreasonable.

I cannot say that the trial judges weighing of the
    relevant factors was unreasonable.

[19]

Before
    concluding, I want to comment on one aspect of the trial judges reasons on the
    nature and quantum of sentence. The trial judge said:

In some cases for which a substantial prison term was ordered,
    the individuals received funds from the government rather than simply failed to
    pay. See:
R. v. Alexander Street Lofts Development Corporation Inc.
,
    2007 ONCA 309, 86 O.R. (3d) 710, leave to appeal to S.C.C. refused, [2007]
    S.C.C.A. No. 378.

[20]

This
    passage is found in the middle of a section of the reasons where the trial
    judge distinguishes categories of cases relied on by the Crown. There is
    nothing in this courts reasons in
Alexander Street Lofts
to support
    such a distinction and I would reject it. Evasion of the payment of $475,000 in
    taxes is the same as wrongly obtaining $475,000 from the public purse.

(2)

Time to pay fines

[21]

Through
    a miscommunication between counsel and the trial judge, the trial judge
    concluded his reasons for sentence, including the imposition of fines totalling
    $687,000, without addressing the issue of time to pay the fines. After hearing
    argument on this issue, the trial judge said:

I need to address the issue of time to pay the fine The Crown
    submits that Mr. Mahmood should pay within two years. The defence, ten years.



Mr. Mahmood probably has full ability to pay. Mr. Mahmood
    likely has the ability to pay immediately. But I am not persuaded beyond a
    reasonable doubt that he can do so. I accept the defence request to allow Mr.
    Mahmood ten years to pay the fines.

[22]

The
    Crown contends that the trial judge applied the wrong test in dealing with this
    component of the sentence. I agree. In
R. v. Topp
, 2011 SCC 43, [2011]
    3 S.C.R. 119, the court considered s. 734 of the
Criminal Code
which
    deals with fines and forfeitures. Fish J. said, at para. 24:

In determining whether the record contains sufficient evidence
    to satisfy the court that the offender can afford to pay the contemplated
    fine, the trial judge must be satisfied,
on a balance of probabilities
,
    of the offenders ability to pay. [Emphasis in original.]

[23]

An
    offenders ability to pay is inextricably linked with the time an offender has
    to pay the fine. If an offender does not have the ability to pay immediately,
    he or she must be given sufficient time to pay that is reasonable in all the
    circumstances:
R. v. Wu,
2003 SCC 73, [2003] 3 S.C.R. 530,

at
    para. 31.


[24]

It
    is obvious from the record, and from the trial judges reasons set out above
    (probably, likely), that the trial judge was persuaded on a balance of probabilities
    that Mr. Mahmood has the ability to pay the fines, and indeed to do so
    immediately. It follows that a ten-year period to pay the fines is completely
    antithetical to the purpose of s. 734 of the
Code
and unreasonable in all the circumstances
.

[25]

I
    would allow the appeal on this issue. The Crown did not seek to have the fines
    paid immediately before this court or the court below. I would therefore grant
    Mr. Mahmood a period of two years from the date of release of these reasons to
    pay the fine and any applicable surcharge.

E.

Disposition

[26]

I
    would dismiss Mr. Mahmoods conviction appeal.

[27]

I
    would dismiss the Crowns appeal relating to the custodial portion of Mr.
    Mahmoods sentence.

[28]

I
    would allow the Crowns appeal relating to the time given to Mr. Mahmood to pay
    the fine portion of the sentence. I would grant Mr. Mahmood two years from the
    date of these reasons to pay the $687,000 fine and any applicable surcharge.

Released: January 26, 2016 (J.C.M.)

J.C. MacPherson J.A.

I agree. J. MacFarland J.A.

I agree. L.B. Roberts J.A.


