A Prince George businessman mired in a long-running dispute with the Canada Revenue Agency delayed filing a notice of appeal with the Tax Court of Canada because his accountant was waiting for documents from the CRA, the court heard Friday.
Irvin Leroux is claiming the CRA's actions ruined him financially and is suing for compensation. A B.C. Supreme Court trial on the matter started Monday and is expected to continue through most of next week.
In giving an opening statement Monday, CRA lawyer Elizabeth McDonald contended Leroux's troubles were of his own making due to poor record keeping, questionable tax claims and then filing an appeal of those claims after the deadline had passed.
But testifying Friday, Leroux indicated the delay was the CRA's fault.
"If my memory serves me right, I think we were waiting for some documents from Revenue Canada [now called Canada Revenue Agency], a confirmation or something to that effect," Leroux said in response to a question from his lawyer, Laurie Armstrong.
"I can't say what it was but they [the accounting firm] were waiting for a document before they could file an appeal."
Leroux gave his answer during a redirect following initial testimony and then cross-examination from federal government lawyers earlier this week.
Prior to the tax trouble, Leroux said he had faced some "challenges" over paying back a loan from the Business Development Bank of Canada to construct an RV park and an 11-lot subdivision on land he owned near Valemount.
Liens were placed on the property but Leroux said he was able to get additional financing, pay them off and open the park.
"And when you say a 'challenge,' is that the kind of business challenge you were talking about?" Armstrong asked.
"Absolutely, I've done that all my life," Leroux replied.
However, he said it was a different story when he faced income tax and GST debts the CRA had placed against the property.
"It was like locking me in a safe, but don't give me a combination or door to get out of it," Leroux said. "They closed the door to any avenue I had to resolve the issue, it was all closed and that scared me."
The court also heard from a friend and a son-in-law of Leroux's, both who recalled him saying in late December 1998 that a CRA auditor had offered to make the whole tax problem "go away" for $25,000.
At that point, Leroux was being audited for his GST payments and an income tax audit was initiated some time after he turned down what he has called an "extortion" attempt, the court has heard. One of the witnesses recalled Leroux saying he was "very upset" this would happen because the auditor had helped him complete his GST statements every three months.
CRA lawyers have questioned the allegation, saying Leroux waited some 11 years to raise the issue. They also noted that the auditor had died on Dec. 23, 1998.
The court also heard the RV park, which Leroux lost in a foreclosure sale, has apparently continued to be a viable business up to at least two years ago. The friend said it was nearly full when he stayed the night there and although not as well maintained as when Leroux ran it, was still in good condition.
The friend also said he was able to double his money on a lot he acquired in 1998 from Leroux in exchange for $40,000 he originally provided as a loan, selling it for $80,000 about six years ago. The friend said he had previously lent Leroux $20,000 which was paid back about six weeks later.
