An interesting case I have followed for the last while has finally ended at the Supreme Court of Canada.  Nelson Meikle doesn’t like to pay taxes.  While none of us do, Mr. Meikle decided that he was not going to pay taxes at all.  So, from 1994 to 1999, he simply did not file any tax returns.  In 2000, he received a notice from the Canada Revenue Agency demanding that he file his tax returns.  Mr. Meikle’s response was to be a smart-alec.  He filed his tax returns, but put “N/A” for almost all entries on the forms.  The reason for doing this?  Mr. Meikle claimed that the Canadian federal government lacked authority to tax its citizens.  Needless to say, Revenue Canada was not amused.

Mr. Meikle, however, pursued his views and they ultimately ended up being aired before the British Columbia courts after Mr. Meikle had been criminally charged on six counts.  Not surprisingly, Mr. Meikle wasn’t warmly received by the courts.   The trial judge sentenced Mr. Meikle to pay a total of $4,500 and imposed a prison sentence of 3 months.  The B.C. Court of Appeal set aside the jail time, but increased the amount of the fines to $2,500 per count (being $18,000 in total fines).  Today, the Supreme Court dismissed Mr. Meikle’s application for leave to appeal.

If there are only two things that are guaranteed in life – death and taxes – and it’s a truism that you cannot cheat death, it appears that it’s also a truism that you cannot cheat the taxman either.  I suppose we can give Mr. Meikle credit for sticking to his beliefs – no matter how quixotic they may be.  Unfortunately for him, that credit cannot be used to reduce his tax liability.

CALC

Firstly, let me wish all of my clients and colleagues in the U.S. a Happy Independence Day!

You come to realize that you are buying far too many things at Staples (Business Depot) when they start sending their quarterly magazine direct to your home.  But it does often have interesting articles and I thought I would comment today on one of them in the latest, Summer, issue.  In “The Good Habit Groove” a list is given of the 14 management habits to help improve your company’s organization.  If people want the list, then can either e-mail me or they can drop by their local Staples and pick up a free copy of the magazine.

One of the items (number 2) is that companies should periodically review all vendor contracts.  The basis of this item was to ensure that your company is getting the best rates.  I agree with this item, but also for a legal purpose.  I often have clients who come to me with problems with their customers.  Usually it relates to customers not paying my clients and the clients then ask what they can do about the situation.  In one case, my client had a poorly drafted vendor contract (which the client had drafted without my assistance) that was somewhat vague in terms of when and how payment was to be made.  In another case, the client had a fine contract – so long as it was paid.  If the client was not paid, there was nothing setting out what was to happen (for example, no indication that goods were supplied on a Net 30 days basis or something similar so that interest would accrue on unpaid balances after the 30 day period).

In these cases the client is left with a problem.  The law of contracts has a rule known as “contra proferentem” which means that if there is any ambiguity or uncertainty in a contract and one interpretation of the contract helps one side while another interpretation helps the other side, the court will use the interpretation that helps the side that did not draft the contract.  In other words, if you have a vague or ambiguous contract then since you are the one who drafted it, you take the risk that the ambiguity will be used against you.

So, should you periodically check your vendor contracts?  Most definitely.  Do it to determine the business aspects of the contract (eg. are you getting the best terms for your work or product) but also for the legal aspects of the contract.  Should you have your contracts reviewed by a lawyer?  In a perfect world, you bet.  But even if you do not, you should at least consider revising your wording to deal with problems you have had in the past.  Again, you may want to consult a lawyer at least with respect to that wording, rather than the whole agreement. 

The problem, of course, is that we are all busy and my clients have often been burned by problems in the wording of their contracts but they’ve thought “it’s just a one-time thing” and they don’t come see me until it starts to become a consistent problem.  But, if you are taking the time to periodically review your vendor contracts for other issues, give yourself an extra few minutes to look at it and consider the legal aspects and the problems you have had in the past.  In this case, an ounce of prevention may well be better than the pound of cure later on.

CALC