IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           Mr. Scholz is charged in Information #1037 with 3 Counts of violating the Excise Tax Act. The alleged violations are of Section 327(1) (a), Section 327 (1) (c) and Section 327 (1) (d) with respect to his claim for GST/HST Rebates relating to property at 1071 Groveland Road, West Vancouver, BC (“the Property”).

[2]           Additionally, Mr. Scholz is charged with 2 separate Criminal Code Counts involving the use or using two separate forged Documents, believing or knowing them to be forged and presenting them to Canada Revenue Agency as genuine thereby, violating Section 368 (1) (b) of the Criminal Code. One of the Documents was a Bare Trust and Agency Agreement between Mr. Scholz as the Beneficiary and 1071 Groveland Properties Ltd. as Bare Trustee; and the other Document was a Lease Agreement between 1071 Groveland Properties Ltd. and Mr. Scholz.

[3]           The two Criminal Code Charges are related to the allegations under the Excise Tax Act set out above. He is alleged to have prepared and given both false Documents to Canada Revenue in order to obtain GST/HST Rebates to which he was not legally entitled.

[4]           Mr. Scholz was previously married and had children with his first wife. He then married Carolyn Scholz (“Carolyn”) in 1999.

[5]           In August 2009, Mr. Scholz and Carolyn decided to build what Mr. Scholz described as “Carolyn’s dream house”. The Building Permit was issued on August 10, 2010.

[6]           At the time Mr. Scholz and Carolyn were living in a rental home on Chartwell Street in West Vancouver.

[7]           The vacant property that they wanted to build on was at 1071 Groveland Road, West Vancouver, BC.

[8]           Mr. Scholz was a multimillionaire. He was a very busy businessman who frequently was travelling on business outside of Vancouver. Carolyn was an interior designer but was not fully engaged in the practice of her profession.

[9]           They decided that Carolyn would be in charge of building their new home, the reasons being that Carolyn would be present in West Vancouver daily whereas Mr. Scholz would often be out of the City. Carolyn had more time to spare, the house was being built as Carolyn’s “dream home” and Carolyn had experience and training as an interior designer.

[10]        It was their original joint intention to move into the house as their residence.

[11]        Together, they chose their architect (“McLeod Bovell”) and their General Contractor (”Rimrock”).The Owner/ Principal of Rimrock was, Mr. Williams.

[12]        The Building Permit was issued on August 9, 2010.

[13]        The house was to be built on vacant land at 1071 Groveland Road, West Vancouver, BC. The house was to have 7 bedrooms, 8 bathrooms, 6 full baths, 2 half baths and a living area of 10,291 square feet. In addition, there was to be another 1650 square feet for a garage, a storage area and an in-law suite. The total square footage was shown as between 7000-8000 square feet at a cost of approximately $3 million (but was not a guaranteed price).

[14]        They wanted the house to be this large because they had a blended family with multiple adult children and grandchildren. In addition, the plan was to have Mr. Scholz’s Mother occupy a large independent suite which was to be built as part of the house.

[15]        Mr. Scholz began to claim HST/GST Rebates as soon as the construction of the house started.

[16]        Prior to the involvement of the Scholzes, the Registered Title to The Property showed the Owner as “1071 Groveland Properties Ltd.” but they were holding the Property as “Bare Trustee and Nominee” for Beedie Industrial Projects Ltd. (“Beedie”). Ryan Beedie was the Sole Director and Sole Shareholder of 1071 Groveland Properties Ltd.

[17]        On August 27, 2009, Carolyn bought 100% of the shares in 1071 Groveland Properties Ltd. Carolyn paid $1.475 million to Beedie Industrial Projects Ltd. to transfer their 100% Beneficial Interests to her.

[18]        The $1.475 million that Carolyn paid to Beedie Industrial Projects Ltd. came exclusively from Mr. Scholz’s funds, not from Carolyn’s own funds.

[19]        On August 27, 2009, Beedie and Carolyn, executed a Transfer of Beedie’s 100% beneficial interest in the Property to Carolyn ONLY.

[20]        After that Transfer on August 27, 2009, the Title to the Property remained registered in the Company’s name, that is, 1071 Groveland Properties Ltd. and still showed 1071 Groveland Properties Ltd. as being, the “Bare Trustee” but Beedie’s name was deleted from the Title Document and per, The Beedie/Carolyn Transfer of Beneficial Interest to Carolyn ONLY (on August 27, 2009), Carolyn would now be the 100% Beneficiary.

[21]        In August 2009, 1071 Groveland Properties Ltd. appointed Mr. Scholz as Secretary and Director of that Company and Carolyn was appointed as a Director and the President of that Company. All shares in 1071 Groveland Properties Ltd. remained only in Carolyn’s name.

[22]        All of the funds to acquire the land, the Company shares, the Assignment of the Bare Trust, to Carolyn and to build the new house, came from Mr. Scholz and not from Carolyn. Mr. Scholz’s funds came from the proceeds of the sale of his previous marital home and from profits which his own companies had earned. There were no mortgages ever involved.

[23]        He testified that he wanted the property to be only in Carolyn’s name to keep their matrimonial home immune from any potential future creditors or claims from his ex-wife or his children.

[24]        The building began in 2010, with Carolyn in charge and using Rimrock and McLeod Bovell Inc., as the General Contractor and the Architect/Designers, respectively.

[25]        A Budget had been created but by November 2010, building costs were going exorbitantly over Budget. The anticipated costs went from $3 million to over $6.1 million and the size of the house went up to 11,000 square feet.

[26]        Mr. Scholz testified that he first became aware of the Budget excess at a meeting at his office with Carolyn, Mr. Williams of Rimrock and Ms. Bovell. He said that he had left all of the house building in Carolyn’s hands and he had just assumed, that all had been going well. When he discovered the costs were skyrocketing, he was shocked and upset.

[27]        Mr. Scholz testified that he remained silent at the meeting and did not raise his personal distress and concerns to anyone at the meeting.

[28]        Mr. Scholz further testified that after this meeting, he made the decision to sell the house.

[29]        In testimony, he first said that he did not tell Carolyn that they would have to sell the Property. He said that was because she was so upset at the Budget Meeting and he did not want to devastate her. He said that he simply told her that they really could not afford those kind of building costs. Later in his testimony, he said that some while later, he just “caustically” and quickly mentioned to her that the house was going to be way too expensive for them to build and that they would have to sell it but there were no discussions of any kind after that.

[30]        In the following months, Mr. Scholz still did not say anything to Rimrock nor to McLeod Bovell.

[31]        After he said that he decided to sell the Property, Mr. Scholz did not hire a realtor, did not interview any realtors about listing the property, nor did he make any inquires what price the Property could sell for then, as is, compared to what it might sell for after all construction was completed.

[32]        When the Crown asked why he did not immediately put the house on the Market, he said that in his personal view, the house in that state, would have be sold at a fraction of its value. He said that if a house were still under construction, it would command substantially less per square foot than when construction was fully completed.

[33]        When the Crown asked why he did not simply cut back on the enormous size of the house to save money, he said that the foundation was already poured so it was impossible to cut back on the size of the house without spending thousands and thousands of dollars to do so. He also said that construction would be delayed for a very long time if he did that. He would also have to pay for and submit all new architect and builder’s drawings to City Hall and apply for a new building permit and all of that would mean additional costs and additional delay.

[34]        When the Crown asked why he did not decide to cut back on some of the planned luxuries, like the pool, incredible gardens, the finely crafted built-ins, the very costly bathroom and kitchen fixtures, the floating stairway, the media room, the outside pond, the indoor putting green, the special wall for family portraits, etc., Mr. Scholz said that if the house was to be marketed as a luxury home, he could not cut back on these things. He said that if he were selling a luxury house, all of the finishings and surroundings had to be first rate or the house would never sell for what it should sell for. He did say that he cut out the special Family Portrait Wall from the Plans but the Crown produced a letter from Carolyn to a portrait artist several months after the Budget Meeting, inquiring about doing family portraits for their portrait wall.

[35]        When the Crown asked Mr. Scholz, why, if he was such a wealthy man, would he not have simply taken out a mortgage on the house in November 2012 when the building costs were skyrocketing and use that money to continue building the house? Mr. Scholz responded that a long time ago, he had personal mortgages foreclosed on him and he lost everything, including his home. He said that he had made himself a promise that he would never put himself in that situation again. He said that since that time, he had never personally taken out any mortgages in his personal capacity. In any of his personal matters, including his homes, he would pay in cash from his company’s earnings and never took out mortgages or personal loans. He said he would only take out mortgages or loans on his business properties and then only if his personal Guaranty was not required by the lender.

[36]        They continued to build their dream house. They did not list the Property. He still did not tell his Builder or his Architect about his plan to sell the house after construction was completed. He never even mentioned it again to Carolyn, let alone discuss it with her again. The fact that never told his wife that than their plan for her dream home was “dead”, is hard to believe. It is also hard to accept that he would let his wife merrily go on building her dream home when he knew that that it was never going to happen.

[37]        The Canada Revenue Special Examiner, Mr. Wong, first started to question Mr. Scholz about his GST/HST Claims in November of 2011

[38]        In November 2012, Ms. Skrypnikova took over as the Special Examiner and commenced a review of Mr. Scholz’s GST/HST Claims. She had several telephone calls with him.

[39]        Mr. Scholz sent her a copy of a Bare Trust and Agency Agreement purporting to have been executed by 1071 Groveland Properties Ltd. and Mr. Scholz, whereby, 1071 Groveland Properties Ltd. would hold the Property as Trustee for Mr. Scholz and only Mr. Scholz as the Sole Beneficiary of the Property. No one at Canada Revenue had ever been told of the existence of such a Document and no one at Canada Revenue had ever seen this Document before.

[40]        This Document came to Ms. Skrypnikova right after she had told Mr. Scholz on January 9, 2013, that his claims for current and past GST Rebates were being rejected by Canada Revenue and they were assessing the FMV of the Property to be $6.8 million and that would be the figure that would be used to calculate the amount of GST/HST he would have to pay to Canada Revenue.

[41]        They issued a Formal Notice of Assessment (in August 2013) explaining to him that accordance with s. 286 of the Excise Tax Act  that the GST/HST rebates he had received would have to be repaid. Mr. Scholz then told Ms. Skrypnikova that he had mistakenly believed he was entitled to claim GST Rebates even when he was building the house to occupy with his wife as their matrimonial home. He admitted to her that he had been wrong and that he had not been attempting to get something that he was not entitled to. He said the same thing when he was under Oath at the Trial. On both occasions, he said, that he had simply made “an ignorant, sloppy and incompetent mistake but it was an honest mistake.”

[42]        Going back to the timeline, in September 2012, out of the clear blue, came an unsolicited offer to purchase a commercial property in Edmonton in which he was a part owner. The Edmonton building had not been listed for sale. He said the Offer came in at more than double what it was really worth. The Offer came in September 2012 but the sale was not scheduled to complete until February 2013. The profit which Mr. Scholz expected to realize was to be approximately $4 million.

[43]        Mr. Scholz testified that based upon his past experience in business, he could not spend money until it was actually in his pocket. Accordingly, although he thought that the money might end up coming to him come to him in February 2013, there was no certainty that it would. Consequently, he said that his intention remained to sell the Property when construction was completed, unless of course that money actually ended up in his hands in February 2013.

[44]        After the Edmonton Offer had been received, Mr. Scholz still did not list the Property, interview any potential realtors, or tell his Builder, his Architect or his Wife that the dream house plan might be revived. He just continued, he said, to proceed as before, with the intention to sell the Property after the house was done.

[45]         The Builder, Architect and his Wife, of course, all still thought that the house they were building was being built for Mr. and Mrs. Scholz to live in.

[46]        The Edmonton sale did complete and Mr. Scholz did receive his $4 million profit in February 2013.

[47]        Mr. Scholz and Carolyn moved into the Property in late November or early December 2012.

[48]        Construction of the Property finished in April 2014 and the Final Occupancy Permit was issued.

[49]        The Scholzes lived together in the Property until they separated in 2017.

[50]        It should be noted that starting from the beginning of construction, continuing after they moved into the Property in November or December 2012 and continuing on all the way until June 2013, Mr. Scholz was claiming GST/HST Rebates.

[51]        I want to return now for a moment to set out how the Property in question came to be acquired and make reference to some of the documentation which was involved at the beginning and thereafter.

[52]        Prior to the involvement of the Scholzes, the Title to the Property showed the Registered Owner of the Property, as being, “1071 Groveland Properties Ltd.”, but holding the Property as a “Bare Trustee and Nominee for Beedie Industrial Projects Ltd.” Ryan Beedie, was the sole Director and Sole Shareholder of 1071 Groveland Properties Ltd.

[53]        On August 27, 2009, Carolyn bought 100% of the shares of 1071 Groveland Properties Ltd.

[54]        On August 27, 2009, Carolyn paid $1.475 million to Beedie Industrial Projects Ltd. to transfer their 100% Beneficial Interest to her.

[55]        The $1.475 million that Carolyn paid to Beedie Industrial Projects Ltd. came from Mr. Scholz’s funds, not from her own funds. He testified that the money came from the proceeds of sale of his former matrimonial home and from his Companies’ earnings.

[56]        On August 27, 2009, Ryan Beedie, signing on behalf of Beedie Industrial Projects Ltd., executed a Transfer of their 100% Beneficial Interest in the Property to Carolyn (only).

[57]        In August 2009, 1071 Groveland Properties Ltd. appointed Mr. Scholz as the Secretary and Director of the Company. Carolyn was appointed as the President and as a Director of the Company. All Shares in 1071 Groveland Properties Ltd. remained in Carolyn’s name only.

[58]        Much later on (October 2011,) Mr. Scholz drew and had executed a Declaration of Agreement that purported to be entered into between 1071 Groveland Properties Ltd. as “Trustee” and Mr. Scholz and Carolyn as Joint “Beneficiaries”. This Document was back dated to show as being drawn and executed on,” August --, 2010”. The actual day in August was left blank. This Document declared that 1071 Groveland Properties Ltd. would be holding the property in Trust for both Mr. Scholz and Carolyn. Mr. Scholz testified that he created this Document to satisfy Canada Revenue’s position (which originally was told  to him by Special Examiner, Mr. Wong) that he could not claim GST Rebates as a Builder unless he was either on Title or could show that he had a legitimate Beneficial Interest in the Property.

[59]        However, Mr. Scholz testified that later on, he drew and executed another Declaration of Bare Trust and Agency Agreement with 1071 Groveland Properties Ltd. purporting to have been drawn and executed on August 27, 2009 (although that Document does not show a specific day in August 2009 when it was executed). This time the Document purported to give Mr. Scholz a 100% Beneficial Interest in the Property owned and registered in the name of 1071 Groveland Properties Ltd. The Document purported to name Mr. Scholz as the sole Beneficiary and that the Bare Trustee, 1071 Groveland Properties Ltd., was to have no equitable or beneficial interest whatsoever in the Property.

[60]        The Document further set out that the Bare Trustee would hold Mr. Scholz’s 100% beneficial interest in the Property, including without limitation, all income therefrom and all proceeds from the disposition of all or any part thereof in trust for Mr. Scholz. The Agreement also specifically provided that the Bare Trustee (1071 Groveland Properties Ltd.) would hold the Property, “subject to the terms of any lease, and sublease”. The Document further provided that, “the Bare Trustee will deal with the registered title of the Property solely on and strictly in accordance with the direction of the Beneficiary” (Mr. Scholz).

[61]        The Document itself nor any Resolution approving this transaction were located in the Minute Book or Documents Files of 1071 Groveland Properties Ltd. which were kept at Mr. Scholz’s office on Terminal Avenue in Vancouver.

[62]        This Document was prepared by Mr. Scholz and executed by Mr. Scholz and 1071 Groveland Properties Ltd. On January 13, 2013, with Carolyn signing on behalf of the Company.

[63]        This Document had been prepared by Mr. Scholz after he was told by Ms. Skrypnikova that they needed some further proof that he indeed was a beneficial owner of the Property and thereby was eligible to claim GST Rebates if his intention for part of the time, was to build and sell. He said that he put himself down as the 100% Beneficial Owner because he was afraid that Ms. Skrypnikova might not be satisfied with the Joint Beneficiary Document that he previously given to her predecessor.

[64]        This was all strange because Mr. Scholz was adamant in his Testimony that he did not want to have Property registered in his name as Owner or to show him as a person with any Beneficial Interest in the Property. He was adamant that he wanted the Property (which was to be his matrimonial home), to be unassailable by any future creditors, his ex-wife, or his children. He wanted to make certain that no one in the future would be able to put a lien and foreclose on the Property. He said that was the reason behind making sure that Carolyn had the 100% Assignment of Beedie Industrial Projects Ltd.’s Beneficial Interest in the Property and why, she alone, became the sole owner of 100% of the Shares in 1071 Groveland Properties Ltd. He simply did not want his name on anything that could possibly be attached by any potential future creditors or family members. He wanted his matrimonial home to be totally secure.

[65]        Why would Mr. Scholz, on the same day that Beedie Industrial Projects Ltd. were transferring their 100% beneficial Interest to Carolyn, and 1071 Groveland Properties Ltd. were transferring all of their Shares to Carolyn, execute a Documents giving himself any Beneficial Interest in the Property?

[66]        I find that all of these impugned Documents that Mr. Scholz gave to Canada Revenue were created only for the purpose of trying to satisfy them that he had a beneficial ownership in the property and could claim GST Rebates.

[67]        I find that the Documents were not created and executed on August 27, 2009.

[68]        I find that at all times, only Carolyn was a beneficial owner and that Mr. Scholz prepared, executed and backdated the challenged Documents well after the original 2009 legitimate documents had been prepared and executed, giving her the exclusive ownership of the Property.

[69]        Indeed, Mr. Scholz did not deny creating and back dating the Documents. He said that he was just trying to provide documentary evidence that he thought Canada Revenue were wanting to see. He said that he had no intent to create these Documents so as to be able to illegally qualify for GST Rebates. I do not believe him. These Documents clearly were an attempt have Canada Revenue give him GST Rebates, it is that pure and simple

[70]        Mr. Scholz fraudulently created these Documents after the August 2009, purchase and did so for the sole purpose of trying to get Canada Revenue to allow him to claim GST/HST Rebates. He did this in an attempt to falsely show Canada Revenue that he had an interest in the Property as a Beneficial Owner and therefore could lawfully claim GST Rebates on the Property from the time he decided to sell until the time he reverted to his original intention to move into the home.

[71]        There is also the matter of a Lease, executed purportedly between Mr. Scholz and 1071 Groveland Properties Ltd. on September 1, 2009.

[72]        I appreciate that the Lease is not specifically named as being included in Counts 1 and 2 relating to the Excise Tax Act charges, but nevertheless it is part of a course of conduct that is relevant to both the Criminal Code and the Excise Tax Act charges.

[73]        The Lease was between Mr. Scholz as the Tenant and 1071 Groveland Properties Ltd. as the Landlord provided for a 20 year tenancy; the right for the Tenant to renew the Lease upon expiration of the term; the Tenant would cover all of the costs of any repairs and maintenance; the Tenant would pay the property taxes and utility bills; the Tenant would improve the leased premises during the term without any set off, abatement, compensation or deduction whatsoever from gross rent payable to the Landlord; the Tenant will construct a house on the leased premises; if the house was completed and sold within 5 years, the Landlord would assign the Lease to the purchaser; the Landlord, upon the sale, would pay Mr. Scholz $ 4.5 million; and all of the foregoing was in consideration of Mr. Scholz not having to pay any Monthly Gross Rent to the Landlord.

[74]        The existence of the Lease had not been disclosed to Canada Revenue until Mr. Yoon, on October 28, 2013, told Mr. Scholz that his GST Claims were going to be declined. Mr. Yoon told him that even if they accepted his changes of intentions, there would still be a self-supply obligation starting when he gave up his intention to sell.

[75]        He also told Mr. Scholz that the Fair Market Value that Canada Revenue would be using would be $6.8 million as the value as of that date (the date he decided that he would not selling the Property). Mr. Scholz knew that this figure was way too high (and he was correct) but decided that producing a Lease would have two consequences: it would show them that he had a beneficial interest in the Property and would make them lower the FMV because they would know that any house that came with a 20 year tenancy agreement would be very hard to sell and would have a negative impact on the price that anyone would be willing to pay for the house.

[76]        So, in summary, it is clear that:

[77]        The troubling questions that arise in all of this is that Mr. Scholz had always insisted that he wanted to make certain that Carolyn was the sole beneficiary of the Property. Initially, he made sure that she signed documents which would show that she acquired a 100% of the Shares in 1071 Groveland Properties Ltd. and that she executed documents with Beedie Industrial Projects Ltd. to transfer their 100% beneficial interest exclusively to her.

[78]        Why would Mr. Scholz, later on, create and execute all these other Documents which would have the effect of putting himself as a joint or sole Beneficiary? These Documents would have the effect of completely undoing all of the initial careful structuring done to keep only Carolyn having an interest in the Property.

[79]        He admitted that he only created the Documents to satisfy Canada Revenue when they were asserting that he was not shown as an Owner on Title and there were no documents showing him as having any beneficial interest in the Property. He testified that he thought that it was perfectly fine to have created these subsequent Documents because Canada Revenue wanted “something in writing” and he thought, as a spouse, he always had a beneficial interest in the Property, anyway. He said that he did not really see anything wrong in drawing up these Documents after the fact. If that was what it was going to take to get the GST Rebates, he was quite willing to create something for them.

[80]        The only problem was that he did not tell Canada Revenue that he had created these Documents until later on, after he realized they would help him make a successful Claim for GST.

[81]        He passed off the Documents to Canada Revenue as authentic Documents and they were not authentic, that is to say, they were not created for any legitimate purpose relating to the building of the house.

[82]        Returning to the to the time sequence, on May 10, 2013, Mr. Scholz received a Notice of Assessment from Canada Revenue explaining to him that they had, in error, classified him as “a Builder” and that the GST Rebates which he had previously claimed and received would have to be returned to Canada Revenue.

[83]        Another significant fact in this Case is that it was only after he received the Notice of Assessment in May of 2013, that, for the very first time, Mr. Scholz told Canada Revenue that he had originally acquired the land to build a matrimonial home but that while it was still under construction, he became aware that the costs of construction were so out of control that he would have to sell the house; he told them, also for the first time, that in February 2013, he was able to sell an Edmonton property which he had co-owned and received sale proceeds of $4 million and therefore no longer had to sell the house but would be keeping the house as his own to live in with his wife. He then offered to repay the approximately $350,000.00 that he had previously received from Canada Revenue in GST and HST Rebates.

[84]        This disclosure was not made to Canada Revenue until 3 ½ months after he received the money from the sale of the Edmonton property which he said was the day that he had decided to revert to his original intention to move into the Property as his matrimonial home. He chose not to disclose any of this until they sent him a Notice of Assessment. He did not voluntarily come forward on his own. It was only after the Notice of Assessment was issued that he gave them all this information. Until then, he was quite content to continue collecting GST Rebates and not offer to return the GST Rebates that he had received.

[85]        It should be remembered that Mr. Scholz was claiming GST/HST Rebates from the beginning of construction, continued to do so after he had moved into the home in November or December 2012, and even continued to make GST Rebate Claims until June 2013.

[86]        When construction began, Carolyn and Mr. Scholz were living in a rental house on Chartwell Street in West Vancouver. In November 2012, their Landlord gave them Notice that their Lease would be terminated because the property was going to be redeveloped. They decided to move into Groveland Road (most likely) in December 2012, even though it was only about 75% complete and there was no Occupancy Permit, yet.

[87]        It is important to point out that when Ms. Skrypnikova called him in January 2013 to ask where he was living, he lied to her. He said that he was still living on Chartwell Street (the rental unit). In Court, he admitted that he was already living in the house but misled her about that. He said that he and his wife had actually moved into the Property in late November or early December 2012. Ms. Skrypnikova had driven by the Property before the call and it had appeared to her that someone was living in the house and she suspected that it was the Scholzes.

[88]        He said that he lied because he did not want the City to come after him for moving in without an Occupancy Permit. This does not make sense. Ms. Skrypnikova was with the Federal Canada Revenue Branch and would have nothing to do with the City of West Vancouver Building Permit Department. It would though, make sense to lie to Canada Revenue if he did not want them to know that he was living in the Property while still claiming GST Rebates (nor paying back the Rebates that he had already received).

[89]        The Law requires a Judge to consider all of the evidence presented at the trial and follow the steps of Analysis set out in the case of R. v. W.(D), [1991] 1 SCR42.

[90]        Dealing first with the evidence of Mr. Scholz, I did not believe his testimony.

[91]        I do not believe that he ever intended to sell the Property.

[92]        I do not believe that he ever legitimately became a Beneficial Owner of the Property, either by himself or jointly with Carolyn.

[93]        I do not believe that it was a result of an innocent mistake of law, that he initially and thereafter for months, claimed GST/HST Rebates.

[94]        The following are the reasons why I did not believe Mr. Scholz.

[95]        Dealing first with Mr. Scholz’s testimony that he changed his original intention to build a home for himself and Carolyn to live in, to an intention later on, to sell the home. He testified that his intention to sell lasted from November 2010 until February 2013. The November 2010 date was when he learned of the skyrocketing building costs. The February 2013 date was when he received the sale proceeds from the sale of his Edmonton property.

[96]        I find that his actions were not consistent with his stated change of intention:

[97]        It was only after Canada Revenue told him that they were going to Assess him and that he would have to self-supply, that he told them for the first time that he had honestly been mistaken about his entitlement to GST/HST Rebates when building a matrimonial home to live in and he offered to repay all of the GST Rebates that he had received. It wasn’t as if he told them about his mistaken belief and offered to repay them on his own and before he knew that they were going to formally send him a Notice of Assessment.

[98]        Mr. Scholz’s testimony and the Crown’s case against him, both have to be looked at in the light of what Mr. Scholz’s past experience was. This would be in keeping with proceeding through the Analysis of his evidence and the Analysis of the Crown’s evidence as per the R v. W.(D.), 1991 CanLII 93 (SCC), [1991] 1 SCR 742.

[99]        Mr. Scholz was obviously intelligent, learned in corporate law, well versed in commercial business dealings, and had an enormous amount of experience in the ins and outs of acquiring and managing real estate ventures (both by supplying the capital and running the operations).

[100]     In my view, Mr. Scholz tried to present himself as just an inexperienced husband involved in building his family home; as just being” sloppy, incompetent” in his own words; he professed ignorance of the simple GST Law that forbid people who were building their own residences from claiming GST Rebates; he tried to present himself just like an ordinary layperson just following the instructions from Canada Revenue to provide them with documentation that they seemed to want.

[101]     All the while, he was drawing up complicated Legal Documents after the fact and post-dating them to make it appear as if they had been drawn and executed close to the time when the Property was purchased.

[102]     Another telling point was that Mr. Scholz also had specifically instructed his Builder, his Architect and a Company named, Precision Greens, to send some of their Invoices to his Company instead of to him or Carolyn personally and to leave off any references on the Invoices to the Groveland Property. He agreed that there were 8-10 of these Invoices that came to his Company Office during construction.

[103]     I did not believe Mr. Scholz’s testimony nor his Mia Culpas.

[104]     None of the explanations that he offered to explain his actions had any ring of truth or common sense to them. In the previous Paragraphs of this Judgment, I have tried to set out the reasons why I found Mr. Scholz’s testimony to be concocted, untruthful, farfetched and defying logic.

[105]     Having disbelieved Mr. Scholz, I still must look closely at the Crown’s case to determine whether, on their evidence alone, there is proof beyond a reasonable doubt that he is guilty of committing all 5 offences as set out in the Indictment.

[106]     The Vive Voce testimony called by the Crown, the documentary evidence that they tendered, plus The Agreed Statement of Facts filed, all taken together, in my view, was sufficient Crown evidence to convict Mr. Scholz of all Counts.

[107]     I will not again be going through all of the Crown’s evidence which was tendered and accepted by me at the Trial. The reason for that is that I believe that I have already a done that in composing and writing the previous Pages. To repeat it all, would be both redundant and unnecessary, in my view. Hopefully, when reading the last 18 Pages, it will be clear to any Reader and to Mr. Scholz in particular, on what basis and why I came to the conclusion that the Crown’s case was so cogent and complete as to have proved Mr. Scholz’s guilt beyond any reasonable doubt on all Counts in the Indictment.

[108]     I cannot end the Judgment without addressing a several Issues. They are: (a) the Mens Rea and Actus Reus required for the Excise Tax Act charges and for the Criminal Code Charges; (b) the Defence of Ignorance or Mistake of Law; and (c) the Challenge by the Defence of the Crown’s failure to follow the Browne v. Dunn Rule.

[109]     I have reviewed the required Mens Rea which must be proven to have been in place in order to convict an accused of committing offences under Sections 327(1)(a),(c) and (d) of the Excise Tax Act. I am satisfied that the Crown proved beyond a reasonable doubt that Mr. Scholz had the requisite Mens Rea. The Mens Rea required was that Mr. Scholz knowingly made false statements and deliberately supplied documents that he created to support his false statements to Canada Revenue and he did that knowingly and intentionally to escape paying GST to Canada Revenue. See the cases of R. v. Klundert, 2004 CanLII (Ont CA) at para 47; R. v. Goeff, 2010 ABQB 100 at para 7; R. v. Theroux, 1993 CanLII 134 (SCC), 1993 2 SCR 5; R. v. Miller, 2016 BCSC 2039 at paras 14-16.

[110]     Mr. Justice Doherty in the Klundert No.1 case (supra) ,very succinctly described the Mens Rea required for an Excise Tax Act s. 327 violation. In Paragraph 46, he wrote as follows:

[111]     The Defence Counsel argued that the Concept of Ignorance or Mistake of Law should apply when assessing whether Ignorance or innocent Mistake of Law could negate the Criminal Mens Rea required to establish the Tax charges. The Defence Counsel cited some of Mr. Justice Doherty’s comments in the R. v. Klundert (No.1) case (supra). Doherty, JA was referring to the Income Tax Act and the Excise Tax Act being hugely complicated pieces of legislation with constant amendments and Bulletins, thereby making it extremely hard for any layperson to comprehend and follow what the Law was.

[112]     Although the comments are certainly true for many parts of the Income Tax Act and Excise Tax Act, we are not dealing here with anything but simple, clear and easy to understand provisions of the Excise Tax Act. The relevant Sections related to this Case are simple, straight forward and easy to understand: if you are building your own home to live in, you cannot claim any GST Rebates; if you are a Builder who has title to or a beneficial interest in the house and are building it to sell, then you can claim GST Rebates. That is not complicated at all, even for a layman, let alone a commercial lawyer and businessman with Mr. Scholz’s background and experience.

[113]     As I have already said, I did not believe Mr. Scholz’s testimony.

[114]     I found that:

[115]     As for the Actus Reus, I was satisfied that the Crown proved the requisite Actus Reus beyond a reasonable doubt with respect to the Tax Counts; see: R. v. Benson, 2012 MBCA 94 and; R. v. Patry, 2018 BCSC 1524 .The Crown proved beyond a reasonable doubt that Mr. Scholz had neither title nor beneficial interest in the Property and that he never intended to sell the Property. He was therefore ineligible to claim GST Rebates under the Excise Tax Act because he failed to meet the two prerequisites to qualify as a Builder’s lawfully able to claim GST Rebates.

[116]     The Actus Reus for the Criminal Code Counts were proven beyond a reasonable doubt because I found that Mr. Scholz created documents and back dated them, knowingly and intentionally, for one purpose only and that was to induce Canada Revenue to allow him GST Rebates to which he was not lawfully entitled .

[117]     Forgery is defined in s .366(1) of the Criminal Code as follows:

[118]     “False document” is defined in s. 321 of the Criminal Code and the relevant portion, reads as follows:

[119]     The Count in this Case which is under s.368 (1) (b) of the Criminal Code provides that:

[120]     The Actus Reus of uttering a forged document is causing or attempting to cause any person to use, deal with or act on a forged document as if it were genuine (R. v. Valois, (1986) 1986 CanLII 55 (SCC), 1 SCR 278 at paras 4-5)

[121]     The Mens Rea required to prove uttering a forged document is that the accused must be shown to have the knowledge that the document is forged and specifically, intended to cause another person to act on it. That is precisely what the Crown proved beyond a reasonable doubt that Mr. Scholz did with the knowledge and intent.

[122]     I had no difficulty in concluding that the Crown had proven, beyond a reasonable doubt, that Mr. Scholz met the Actus Reus and Mens Rea requirements in order to convict him of both of the Criminal Code Counts.

[123]     Lastly, turning to Defence Counsel’s argument that the Crown failed to follow the Browne v. Dunn Rule (Browne v. Dunn 1893 CanLII 65 (FOREP), 1893, 6 R.67 (House of Lords)) by specially putting to him the versions given by the Crown Witness, thereby taking away from him the opportunity to directly refute their versions of events and thereby it made his Trial unfair.

[124]     Defence Counsel submitted that notwithstanding whatever findings the Court might be inclined to make against Mr. Scholz, he should be granted acquittals due to this fatal error by the Crown.

[125]     Firstly, I have read and considered the Text Book,Sopinka, Law of Evidence, 4th Edition at 16.197 and a number of cases dealing with the Browne v. Dunn Rule. The cases which were particularly helpful were: ICBC v. Hamman, 2020 BCCA 170; R. v. Drydgen, 2013 BCCA 253; R. v. Werkman, 2007 ABCA 130; R. v. Lyttle, 2004 SCC 5; R. v. Henderson, (1999) 1999 CanLII 2358 (ON CA), 44 OR (3^rd) 628 (Ont.CA.) at page 636; R. v. Quansah, 2015 ONCA 237; R. v. Scheideman, 2001 ABCA 94; R. v. Giroux, (2006) 2006 CanLII 10736 (ON CA), 210 O.A.C. 50 (Ont. CA); R. v. Verney, (1993) 1993 CanLII 14688 (ON CA), 67 OAC 279; and R. v. Iverson, 2016 BCPC 282.

[126]     To summarize the cases, the Rule is not merely a procedural rule, it is a rule of trial fairness that gives a witness including, of course, a Party or an Accused who takes the Stand, an opportunity to explain why the contradictory evidence or the inferences to be drawn from it, should not be accepted; it does not require the cross-examiner to  present each and every bit of contradictory evidence in the case to the witness (described in the R. v. Verney case, as a Crown Counsel having to “slog” through their cross-examination; the Rule requires that Counsel put  only “matters of substance” (in the words of the R. v. Giroux case (supra) to the witness; and finally, it is totally within the trial judge’s discretion to acquit, or give less weight to the contradictory evidence or rule that the non-compliance with the rule was inconsequential in the particular case before the Court.

[127]     In the Case at Bar, in his written Argument, Defence Counsel worded his complaint this way, “as discussed further below, Mr. Scholz was not challenged on several key parts of his testimony. The cross-examination was lengthy and covered a wide range of complex and technical issues, yet on key points pertaining to Mr. Scholz’s credibility and intentions, he was not specifically confronted with the Crown’s theory. More particularly, Mr. Scholz was not specifically confronted with the Crown’s theory that he was a tax cheat, that his statements to the CRA were false, and that certain documents were forgeries.”

[128]     In fairness to Defence Counsel, in other places in his written Argument and then in his Oral Argument, he did get into some more specific details about his concerns: (a) that it wasn’t suggested to Mr. Scholz that he was lying about his changing intentions concerning living in the Property; and (b) that he was not directly asked whether Ms. Skrypnikovova’s version of the telephone conversation with him in January 2013, was accurate and also, whether she may have told him at some point in time that it was “mandatory” that he provide her with some proof of ownership in order to allow her to give him any GST Tax Rebates

[129]     As the Trial Judge, I had the ability to closely observe how the Crown Counsel was cross-examining Mr. Scholz and to carefully watch how Mr. Scholz was reacting to the questioning.

[130]     As I saw the cross-examination unfolding, Mr. Scholz seemed to be given ”free rein” to answer in whatever way he wanted and to  answer at any length he wanted.

[131]     My observations were that Crown Counsel was very low key in his cross-examinant of Mr. Scholz. By that, I mean that he was slow paced and did not “pepper” him with questions, he did not interrupt his answers and he was not aggressive in his tone or manner. Quite the contrary, he was very subdued, polite and respectful to Mr. Scholz.

[132]     The Crown mainly asked Mr. Scholz open ended questions as opposed to what are often referred to as “Yes or No Questions”. This allowed Mr. Scholz to have great latitude in answering questions and on many occasions, he certainly did use the opportunity to answer at length.

[133]     Counsel methodically raised all the “matters of substance” spoken to by the Witnesses and on each matte and asked Mr. Scholz to give both his comments and his version of what was said or what he intended to convey to the Witnesses in those conversations.

[134]     Crown Counsel also, methodically showed each and every material document that was referred to referred to by the Witnesses. In every case, Mr. Scholz was asked for his comments on the document and what his intention was in drafting the document, be it a legal document or an e-mail that he sent.

[135]     Crown Counsel also presented to Mr. Scholz with all the documents and e-mails that were sent to him and addressed by the Witnesses. Again, each time, he was asked to comment on the document and asked how he interpreted the document.

[136]     The same method was followed when documents which were seized from his offices and were addressed by the Witnesses.

[137]     I observed Mr. Scholz to be comfortable, at least as comfortable as one can be when they are in the midst of their own Criminal Trial. He did not appear to be at all irritated or distressed by the manner or the questioning. He did not seem to have any trouble completing his answers as he saw fit. Neither he nor his Counsel had to interrupt the cross-examination with an objection that Crown Counsel was “cutting him off” or not allowing him to complete his answers.

[138]     In the final analysis, I find that Mr. Scholz was given a full opportunity to address each part of the Crown’s theory against him and each material piece of testimony and document that the Crown witnesses discussed to his to his detriment.

[139]     The questioning in his cross-examination, in no way, was a surprise to him or could possibly have been seen as  an ”ambush”, in the words used in the Verney Judgment.

[140]     Mention was made in the Hamman case that the Court should take into account whether or not the issue was raised by Counsel at the close of the opposing Party’s case and whether an application was made to recall the Plaintiff in that case.

[141]     In my view, those considerations would equally apply to a criminal case upon the Crown closing their case.

[142]     At the end of the Crown’s Case in our Case, Defence Counsel did not raise the issue or make an application to recall Mr. Scholz to address with him any pieces of material testimony given by the Crown Witnesses that thought his Client was not given the opportunity to address in his cross- examination.

[143]     According to the Hamman Decision, this is of significance because it allows the Judge to address the issue of fairness of the Trial right there and then and accede to the application to recall the Accrued for re-examination to address questions about significant things that the Crown Witnesses had spoken of but the Crown did not cross- examine on.

[144]     In our Case, Defence Counsel remained silent at the end of the Crown’s case and only raised the issue in his Final Argument

[145]     I find that Mr. Scholz was not surprised (“ambushed”) by any of the evidence tendered by the Crown (be it vive voce or by way of documents), there were no material matters that he was not given an opportunity to address and therefore the fairness of his Trial was not impinged.

[146]     The end result is that Mr. Scholz is hereby CONVICTED of all 5 Counts in the Indictment.