Citation: 2007 FCA 346
MINISTER OF NATIONAL REVENUE
GREATER MONTRÉAL REAL ESTATE
REASONS FOR JUDGMENT
The facts and the proceeding
Minister of National Revenue (MNR) is appealing a decision by Madam Justice
Johanne Gauthier (the judge) dated September 6, 2006. This decision set aside
an earlier order dated June 28, 2005, which was made ex parte under
subsection 232.2(3) of the Income Tax Act, R.S.C. 1985 (5th supp.),
c. 1 (the Act). That order authorized the MNR to impose a requirement on the
Greater Montréal Real Estate Board (the GMREB) to provide information and
documents relating to a group of unnamed taxpayers.
is a non-profit organization whose primary mission is to promote and protect
the professional interests of its members. In the course of operating an
inter-agency service, it collects various information about its members and the
properties they are selling.
autumn of 2004, the Canada Customs and Revenue Agency serving the
Montérégie/Rive-sud area set out to verify whether the real estate agents and
licensed brokers living or carrying on business in that area were complying
with the Act. This investigation was intended to determine, inter alia,
whether the agents and brokers had completed their income tax returns properly
and whether they had reported the commissions they had earned.
to carry out this investigation relating to the administration and enforcement
of the Act, the MNR required authorization from a judge under subsection
231.2(3). Section 231.2 states:
Requirement to provide documents or information
Notwithstanding any other provision of this Act, the Minister may, subject to
subsection (2), for any purpose related to the administration or enforcement
of this Act, including the collection of any amount payable under this Act by
any person, by notice served personally or by registered or certified mail,
require that any person provide, within such reasonable time as is stipulated
in the notice,
information or additional information, including a return of income or a
supplementary return; or
(2) The Minister shall not impose on any
person (in this section referred to as a “third party”) a requirement under
subsection 231.2(1) to provide information or any document relating to one or
more unnamed persons unless the Minister first obtains the authorization of a
judge under subsection 231.2(3).
(3) On ex parte application by the
Minister, a judge may, subject to such conditions as the judge considers
appropriate, authorize the Minister to impose on a third party a requirement
under subsection 231.2(1) relating to an unnamed person or more than one
unnamed person (in this section referred to as the “group”) where the judge
is satisfied by information on oath that
person or group is ascertainable; and
requirement is made to verify compliance by the person or persons in the
group with any duty or obligation under this Act.
(d) [Repealed, 1996, c. 21, s. 58(1)]
Service of authorization
(4) Where an authorization is granted
under subsection 231.2(3), it shall be served together with the notice
referred to in subsection 231.2(1).
Review of authorization
(5) Where an authorization is granted
under subsection 231.2(3), a third party on whom a notice is served under
subsection 231.2(1) may, within 15 days after the service of the notice,
apply to the judge who granted the authorization or, where the judge is
unable to act, to another judge of the same court for a review of the
Powers on review
(6) On hearing an application under
subsection 231.2(5), a judge may cancel the authorization previously granted
if the judge is not then satisfied that the conditions in paragraphs
231.2(3)(a) and 231.2(3)(b)
have been met and the judge may confirm or vary the authorization if the
judge is satisfied that those conditions have been met.
provisions are not included in the consolidated text; see relevant amending
Acts. R.S., 1985, c. 1 (5th Supp.), s. 231.2; 1996, c. 21, s. 58; 2000, c.
30, s. 176.
de documents ou fourniture de renseignements
231.2 (1) Malgré les autres dispositions de
la présente loi, le ministre peut, sous réserve du paragraphe (2) et, pour
l’application et l’exécution de la présente loi, y compris la perception d’un
montant payable par une personne en vertu de la présente loi, par avis
signifié à personne ou envoyé par courrier recommandé ou certifié, exiger
d’une personne, dans le délai raisonnable que précise l’avis:
qu’elle fournisse tout renseignement ou tout renseignement supplémentaire, y
compris une déclaration de revenu ou une déclaration supplémentaire;
qu’elle produise des documents.
Personnes non désignées nommément
(2) Le ministre ne peut exiger de
quiconque — appelé « tiers » au présent article — la fourniture de renseignements
ou production de documents prévue au paragraphe (1) concernant une ou
plusieurs personnes non désignées nommément, sans y être au préalable
autorisé par un juge en vertu du paragraphe (3).
(3) Sur requête ex parte du
ministre, un juge peut, aux conditions qu’il estime indiquées, autoriser le
ministre à exiger d’un tiers la fourniture de renseignements ou production de
documents prévue au paragraphe (1) concernant une personne non désignée
nommément ou plus d’une personne non désignée nommément — appelée « groupe »
au présent article —, s’il est convaincu, sur dénonciation sous serment, de
ce qui suit:
cette personne ou ce groupe est identifiable;
fourniture ou la production est exigée pour vérifier si cette personne ou les
personnes de ce groupe ont respecté quelque devoir ou obligation prévu par la
c) et d)
[Abrogés, 1996, ch. 21, art. 58(1)]
Signification ou envoi de l’autorisation
(4) L’autorisation accordée en vertu du
paragraphe (3) doit être jointe à l’avis visé au paragraphe (1).
Révision de l’autorisation
(5) Le tiers à qui un avis est signifié ou
envoyé conformément au paragraphe (1) peut, dans les 15 jours suivant la date
de signification ou d’envoi, demander au juge qui a accordé l’autorisation
prévue au paragraphe (3) ou, en cas d’incapacité de ce juge, à un autre juge
du même tribunal de réviser l’autorisation.
Pouvoir de révision
(6) À l’audition de la requête prévue au
paragraphe (5), le juge peut annuler l’autorisation accordée antérieurement
s’il n’est pas convaincu de l’existence des conditions prévues aux alinéas
(3)a) et b). Il
peut la confirmer ou la modifier s’il est convaincu de leur existence.
dispositions d’application ne sont pas incluses dans la présente
codification; voir les lois modificatives appropriées. L.R. (1985), ch. 1 (5e
suppl.), art. 231.2; 1996, ch. 21, art. 58; 2000, ch. 30, art. 176.
provision clearly states that the ex parte order will be made if the
person or group referred to is ascertainable and if the information or
documents are required to verify compliance with any duty or obligation
under the Act.
order at issue, the judge upheld her initial finding that the group referred to
by the MNR in its ex parte application constituted an ascertainable
group within the meaning of paragraph 231.2(3)(a). She also set
aside her previous order and determined that the “Minister has not established that, at this stage of the
project, the request for information is intended to determine whether each and
every one of the GMREB members (real estate agents and brokers) has complied
with the Act by reporting all of their income”: paragraph 58 of the order.
analysis of section 231.2 of the Act and its application to the facts of this
case are at the heart of the dispute, as evidenced by the parties’ submissions.
The MNR contends that the first judgment is erroneous in that the judge found
that there was no “genuine and serious inquiry” about the agents and brokers
referred to in the request for information. For its part, the GMREB argues that
the judge erred in finding that the group was ascertainable.
therefore propose to examine each of the issues beginning with the GMREB’s
The identifiable group
was correct in finding that the group referred to in the application was
ascertainable under paragraph 231.2(3)(a) of the Act.
argues that a group is ascertainable when the persons in the group have done
something specific together in the pursuit of a common objective, which is not
the case here [TRANSLATION] “because there is no reason to believe
that there is a common link related to the administration of the Act”: respondent’s
memorandum, paragraph 52. The GMREB refers to the decisions in: Canada
(M.N.R.) v. National Foundation for Christian Leadership, 2004 FC 1753
(appeal dismissed: 2005 FCA 246), [Christian Leadership]; Artistic
Ideas Inc. v. Canada (Customs and Revenue Agency), 2005 FCA 68, [Artistic
Ideas]; M.N.R. v. Sand Exploration Ltd. et al.,  3 FC 44,
[Sand Exploration]; and Fédération des caisses populaires Desjardins
du Québec, No: 200-00-000001-94,  2 C.T.C. 159 (Sup. Ct.), [Fédération des caisses].
judgments are of no assistance in this case and do not support the GMREB’s
position on “ascertainable group”. The reasons in these cases must be read with
caution, bearing in mind the particular context of the legislation in effect at
the time they were written since section 231.2 of the Act was significantly
amended in 1996. The other legislative provisions on which the reasons were
based must also be considered.
in Fédération des caisses, the MNR made an arbitrary identification based
on the nature of the transactions and not on the persons making those
transactions. In that case, the individuals or companies had transferred sums
of money out of Canada through the Fédération or one
of the Caisses affiliated with it for a given period. This case required the
analysis of section 231.2 prior to its amendment.
Ideas, our Court authorized the MNR to obtain the names of charitable
organizations involved in “art flips” under subsection 231.2(1), not
subsections (2) or (3). The Court ruled that there was no evidence that the MNR
wanted to obtain the names of the charities to verify their compliance with the
Act. In fact, their names were necessary solely for the Minister’s
investigation of the third party Artistic Ideas.
Exploration and Christian Leadership cases also do not support
GMREB’s argument that the pursuit of a common objective is a prerequisite for a
group to be ascertainable.
GMREB contends that the group is not ascertainable because it numbers close
to 2,000 people: respondent’s memorandum, paragraph 52. This argument is
not convincing. In All Saints Greek Orthodox Church v. Canada (MNR),
2006 FC 374, at least 1300 donors made up the ascertainable group within the
meaning of the Act.
case, the audit involves the group composed of real estate agents and brokers
living or carrying on business in the area served by the Canada Revenue
Agency’s Montérégie/Rive-Sud Tax Services Office. Gauthier J. correctly
concluded that this was an ascertainable group for purposes of section 231.2 of
I will now
deal with the arguments about a genuine and serious inquiry.
The genuine and serious inquiry
accepted the GMREB’s submission that the MNR was not conducting a genuine and
serious inquiry about one or more individuals in the identified group. She
ruled that a genuine and serious inquiry was a condition precedent for judicial
authorization under subsection 231.2(3) of the Act.
suggested that any new application for authorization by the MNR would have to
specify “that a genuine audit is
under way in regard to each and every one of the members of this group and not
only an investigation or project aimed at selecting the members of the group
who are to be audited later”:
paragraph 59 of the order. Consequently, she was not satisfied with the
evidence, ruling that the MNR was only conducting an audit project, and
she set aside her previous order, concluding that there was no genuine and
statutory provision under review does not mention “genuine and serious
inquiry.” This expression, which originated in The Canadian Bank of Commerce
v. The Attorney General of Canada,  S.C.R. 729, [Canadian Bank of
Commerce] and resulted from a simple admission by the parties (ibidem,
p. 733), has since been repeated and argued as if it were an established legal
view, whether a “genuine and serious inquiry” exists is not the appropriate
test in considering an application under subsection 231.2(3) of the Act. The
question is not whether the MNR began a genuine and serious inquiry, let alone
one involving every unnamed person of the group. Rather the question is: was
the applications judge satisfied that the information or documents
relating to one or more unnamed persons (forming an ascertainable group) was
required to verify compliance with the Act?
The Richardson and Canadian
Bank of Commerce decisions
years, the provision under review has been the subject of legislative
amendments that must be borne in mind when analyzing the cases cited by the
parties to support their arguments. I will spend more time discussing Richardson
(James Richardson & Sons) v. the Department of National Revenue, 
1 S.C.R. 614, [Richardson], which, together with Canadian Bank of
Commerce, is cited as the leading case on the concept of serious and
the Supreme Court of Canada reviewed the facts in light of section 231 of the
Act [1970-71-72 (Can.), c. 63]; the relevant parts
at that time read as follows:
The Minister may, for any purposes related to the administration or
enforcement of this act, by registered letter or by a demand served
personally, require from any person
any information or additional information, including a return of income or a
supplementary return, or
production, or production on oath, of any books, letters, accounts, invoices,
statements (financial or otherwise) or other documents.
such reasonable time as may be stipulated therein.
(4) Where the Minister has reasonable and probable grounds to believe
that a violation of this act or a regulation has been committed or is likely
to be committed, he may, with the approval of a judge of a superior or
county court, which approval the judge is hereby empowered to give on ex
parte application, authorize in writing any officer of the Department of
national Revenue, together with such members of the Royal Canadian Mounted
Police or other peace officers as he calls on to assist him and such other
persons as may be named therein, to enter and search, if necessary by
force, any building, receptacle or place for documents, books, records,
papers or things that may afford evidence as to the violation of any
provisions of this Act or a regulation and to seize and take away any
such documents, books, records, papers or things and retain them until they
are produced in any court proceedings.
(5) An application to a judge under subsection (4) shall be supported by
evidence on oath establishing the facts upon which the application is based.
Pour toute fin relative à l’application ou à l’exécution de la présente loi,
le Ministre peut, par lettre recommandée pou par demande à personne exiger de
a) tout renseignement ou tout renseignement
supplémentaire, y compris une déclaration de revenu ou une déclaration
b) la production ou la production sous serment
de livres, lettres, comptes, factures, états (financiers ou autres) ou autres
le délai raisonnable qui peut y être fixé.
Lorsque le Ministre a des motifs raisonnables pour croire qu’une infraction à
cette loi ou à un règlement a été commise ou sera probablement commise, il
peut, avec l’agrément d’un juge d’une cour supérieure ou d’une cour du
comté, agrément que le juge est investi par ce paragraphe, du pouvoir de
donner sur la présentation d’une demande ex parte, autoriser par écrit
tout fonctionnaire du ministère du Revenu national ainsi que tout membre
de la Gendarmerie royale du Canada ou tout autre agent de la paix à
l’assistance desquels il fait appel et toute autre personne qui peut y être
nommée, à entrer et à chercher, usant de la force s’il le faut, dans tout
bâtiment, contenant ou endroit en vue de découvrir les documents, livres,
registres, pièces ou choses qui peuvent servir de preuve au sujet de
l’infraction de toute disposition de la présente loi ou d’un règlement et
à saisir et à emporter ces documents, livres, registres, pièces ou choses et
à les retenir jusqu’à ce qu’ils soient produits devant la cour.
Une demande faite à un juge en vertu du paragraphe (4) sera appuyée d’une
preuve fournie sous serment et établissant la véracité des faits sur lesquels
est fondée la demande.
The section referred to the commission of a violation and
authorized certain persons to enter and search for evidence of the violation.
case, the MNR had decided that it was necessary to
verify whether traders in the commodities futures market were complying
with the Act. In order to do so, the Minister had asked Richardson to provide its clients’
commodity monthly statements so that the information could be processed on a
test basis. Richardson had
supplied the information but with clients’ account numbers only and no means of
identifying them. The MNR had asked for additional information,
including a complete list of customers and personal information about them. Richardson had refused, alleging, inter
alia, that the MNR’s demands were for
“information returns respecting . . . [a] class of information” required in
connection with assessments. Richardson
added that these demands fell instead within the ambit of paragraph 221(1)(d)
and section 233 of the Act, which provided:
221. (1) The Governor in Council may make
requiring any class of persons to make information returns respecting any
class of information required in connection with assessments under this Act;
233. Whether or not he has filed an information
return as required by a regulation made under paragraph 221(1)(d), every
person shall, on demand from the Minister, served personally or by registered
mail, file with the Minister, within such reasonable time as may be
stipulated in the demand, such prescribed information return as is designated
221. (1) Le gouverneur en conseil peut établir des
d) enjoignant à toute catégorie de personnes de
faire des déclarations renfermant des renseignements en ce qui concerne tout
genre de renseignements requis relativement aux cotisations sous le régime de
la présente loi,
233. Qu’elle ait produit ou non une déclaration
renfermant des renseignements requise par un règlement établi selon l’alinéa
221(1)d), toute personne doit, sur demande émanant du Ministre faire
par personne ou par poste recommandée, produire auprès du Ministre la
déclaration prescrite renfermant les renseignements qu’indique la demande,
dans le délai raisonnable que celle-ci peut fixer.
Richardson was successful before the
Supreme Court of Canada, which confirmed that a demand could only be made for
information relative to the tax liability of a person or persons under the
former subsection 231(3) of the Act if a genuine and serious inquiry was being
conducted into the tax liability of such person or persons. The section did not
authorize a general survey of compliance by a class of taxpayers. The MNR was
invited to use paragraph 221(1)(d) to
“obtain a regulation . . . requiring all such traders to file returns of their
transactions in the commodities futures market” (ibidem, p. 625).
The Richardson decision must be read and
applied with caution. In Artistic Ideas, Mr. Justice Rothstein,
writing for the Federal Court of Appeal, was reserved about Richardson
and Bank of Commerce. Rothstein J.A. wrote:
 …These authorities pre-date
subsections 231.2(2) and (3), although it is apparent that their enactment was
prompted, at least in part, by the Richardson case. While they provide useful background, the relevant
legislation is different today than at the time of those decisions.
subsection 231.2(1), as it currently reads, is the former subsection 231(3) supra,
to which, in 1986, Parliament added the terms “notwithstanding any other
provision of this Act” and “subject to subsection 2”. This amendment to section
231.2 did not substantially change the earlier wording.
same time, Parliament added subsections 231.2(2) to (6), which, in 1995, led
Rothstein J., as he then was, to state that compliance with the procedure in
subsections 231(2) and (3) of the Act addressed the “mischief” identified in Richardson
(Sand Exploration, supra).
I do not
believe that Richardson and Canadian Bank of Commerce pose an
obstacle to the MNR’s submission in this case. In Richardson, as I indicated earlier, the MNR
requested information in order to process it on a test basis. Furthermore, the
judgment in Canadian Bank of Commerce was premised on the fact,
acknowledged by the parties, that the requirement in that case was made in good
faith and that it involved a genuine and serious inquiry about specific
persons. Mr. Justice Cartwright wrote on page 738:
appears to be common ground, (i) that the requirement addressed to the
appellant relates to a genuine and serious inquiry into the tax liability of
some specific person or persons …
respect, and unlike Madam Justice Wilson who wrote for the Court in Richardson, I do not believe that
Cartwright J. thereby “makes it clear that his
judgment is premised on that prerequisite being there” (ibidem,
p. 624), that is, that the requirement must relate to a genuine and serious
is more. Prior to 1996, subsection 231.2(3) of the Act required that the
application for authorization be supported by information on oath addressing
the following four conditions:
231.2 (3) …
(a) the person or group is ascertainable;
(b) the requirement is made to verify compliance
by the person or persons in the group with any duty or obligation under this
(c) it is reasonable to expect, based on any
grounds, including information (statistical or otherwise) or past experience
relating to the group or any other persons, that the person or any person in
the group may have failed or may be likely to fail to provide information
that is sought pursuant to the requirement or to otherwise comply with this
(d) the information or documents is not otherwise
more readily available.
231.2 (3) […]
a) cette personne ou ce groupe est identifiable;
b) la fourniture ou la production est exigée pour
vérifier si cette personne ou les personnes de ce groupe ont respecté quelque
devoir ou obligation prévu par la présente loi;
c) il est raisonnable de s’attendre -- pour
n’importe quel motif, notamment des renseignements (statistiques ou autres)
ou l’expérience antérieure, concernant ce groupe ou toute autre personne – à
ce que cette personne ou une personne de ce groupe n’ait pas fourni les
renseignements exigés ou ne les fournisse vraisemblablement pas ou n’ait pas
respecté par ailleurs la présente loi ou ne la respecte vraisemblablement
d) il n’est pas possible d’obtenir plus
facilement les renseignements ou les documents.
the conditions in paragraphs (c) and (d) of subsection (3), i.e.,
reasonable grounds to believe that there has been non-compliance with the Act
and the difficulty in obtaining the information otherwise, were repealed.
Section 231.2 of the Act
currently in effect
to the judge, the MNR had to establish that each and every one of the members
of the GMREB identified in the application was the subject of a genuine and
serious inquiry. Otherwise, the Minister was conducting a fishing expedition,
which is prohibited by Richardson. I do not agree. This finding
perpetuates the reasoning in Canadian Bank of Commerce and Richardson
without distinguishing the facts of the case and the statutory provision
currently in effect.
the MNR’s powers of investigation and audit in the Act are the consideration
for a self-reporting and self-assessing tax system that depends upon the honesty and integrity of
taxpayers for its success (R. v. McKinlay Transport Ltd., 
1 S.C.R. 627).
recognized that the audit powers in section 231.2 of the Act are an intrusive
measure affecting the right to the protection of private information and must
be construed restrictively (Sand Exploration, supra, p. 52).
general principles are not being challenged, but it is nonetheless necessary to
give meaning to the legislative amendments. Commenting on the 1995 Budget Papers,
tax expert David M. Sherman wrote the following about the conditions in
paragraphs (c) and (d):
These restrictions [231.2(3)(c)
and (d)], which make it difficult for Revenue Canada to obtain timely information in order to
verify compliance with the Act, are being eliminated. This proposed measure
will improve Revenue Canada's ability to verify
compliance with the self-assessment system with respect to transactions where
no information reporting is required. [The Practitioner’s Income Tax Act,
32nd ed. (Toronto: Carswell, 2007)].
that removing conditions (c) and (d) from the former subsection
231.2(3) shows Parliament’s intention to ease the MNR’s burden of proof in the
sense suggested by tax expert Sherman because the MNR no longer has to establish
reasonable grounds for believing that a violation has been committed or
demonstrate that the information is not otherwise more readily available.
recognize that a strict interpretation is required, it must not have the effect
of adding another condition to the provision—which occurs if we accept the
respondent’s argument—that is, that the MNR must prove that he or she is
conducting a genuine and serious inquiry relating to unnamed persons referred
to in the application. Nor can the provision be interpreted in such a way as to
re-insert the conditions in paragraphs (c) and (d).
231.2 of the Act must be interpreted by considering all of its parts, including
the headings and sub-headings, which are also part of the statute (Pierre-André
Côté, The Interpretation of Legislation in Canada, 3rd ed.
(Carswell: Scarborough, 2000) p. 79; R. v. Lucas,  1
S.C.R 439, 463). Headings may help to situate a provision within the
general structure of the statute and determine the intention of Parliament.
section 231.2 of the Act? This section is found in Part XV of the Act, entitled
“Administration and Enforcement,” under the heading “General”. Subsections
231.1(1) and 231.2(1) explicitly state that they are intended to be used
for “the administration and enforcement” of the Act.
general expression, which introduces the provision under consideration, allows
us to situate section 231.2 of the Act in context; the section refers to the
MNR’s audit powers, as opposed to its investigative powers. As the Supreme
Court of Canada pointed out in R. v. Jarvis,  3 S.C.R. 757 at 761,
“a distinction can be drawn between the audit and investigative powers” under
policy and interpretation, while not binding, can also be an important factor
where there is doubt as to the meaning of legislation (R. v. Nowegijick,
 1 S.C.R. 29). In the case before us, the respondent is relying on
Information Circular IC71-14R3, entitled The Tax Audit, to establish
that an “audit project” relating to certain members of the GMREB is not an
audit within the meaning of the Act.
argument is without merit. On the one hand, I find that there was, in this
case, an audit within the meaning of the Act. On the other hand, the circular
describes the role, policies and practices of the tax audit; the audit project
is only one of the methods available to the MNR in its “selection of files for
audit” process (ibidem).
case, the MNR asked the respondent to provide a list of its members in a given
geographic area in order to compare the data with the information it already
had. The fact that the MNR was just beginning the audit in no way precludes the
application of paragraph 231.2(3)(b). Clearly, the MNR cannot argue that
each and every one of the members were the subject of a “genuine and serious
inquiry”, which was what the judge criticized: those members are still not
identified. Imposing such a requirement on the MNR neutralizes the utility of
subsections 231.2(2) and (3) of the Act, which permit, under judicial
authorization, verification of the honesty of a tax return.
of what the GMREB says on this point, it appears to me that in removing
paragraphs (c) and (d) from subsection 231.2(3), Parliament
permitted a type of fishing expedition, with the authorization of the Court and
on conditions prescribed by the Act, all for the purpose of facilitating the
MNR’s access to information. It seems to me that the strict approach adopted by
the judge in this case is not appropriate for the provision under review. This
approach, borrowed from Richardson, was necessitated
by the scope of the former statutory provision which, if interpreted too
broadly, left open the possibility of abuse by tax enforcement officials (Sand Exploration, supra).
The applicable test
Despite its penal sanctions, the Act is
essentially and primarily regulatory and administrative. The MNR’s audit
powers, including the powers described in subsection 231.2(3), are necessary to
achieve the objectives of the Act and to ensure compliance with it (McKinlay,
supra; Thomson Newspaper Ltd. v. Canada (Director of
Investigation and Research, Restrictive Trade Practices Commission, 
1 S.C.R. 425).
a tax system based on the principle of self-reporting and self-assessment, the
MNR must be given broad powers to audit taxpayers’ returns
and inspect all records that may be relevant to the preparation of these
returns (Bisaillon et al v. The Queen, 99 D.T.C. 5695 (FCA)).
from my reading of paragraph 231.2(3)(b) that the MNR’s ex parte
application will be granted if the applications judge is satisfied that the
information or documents are required for a tax audit conducted in good faith.
This good faith guarantees that the MNR will act judiciously in the exercise of
its audit power under section 231.2 to ensure the administration and
enforcement of the Act.
thus defined the applicable test on an application for judicial authorization
under subsection 231.2(3), it is my view, based on the MNR’s ex parte
notice of application, supported by the affidavit of auditor Christiane E.
Joly, that the tax audit in this case was conducted in good faith, that it had
a genuine factual basis and that its objective was to ensure compliance with
case, the MNR received documents from the GMREB in March 2005 while auditing a
real estate agent who was a member of the organization. Several months later
came the ex parte application at issue involving certain unnamed members
of the GMREB. The affidavit in support of the application expressly states the
objective: [TRANSLATION] “to determine whether the brokers who
earned commissions following the sale of immovable property complied with all
the duties and obligations under the Act” (appeal book, p. 39). The MNR
therefore satisfied the requirements in the Act and, more specifically, those
in section 231.2.
the hearing and in the event that the Court were to find in favour of the MNR,
counsel indicated that they had reached agreement on the method of exchange of
documents and information. The MNR asks that this agreement be homologated. The
Court cannot accede to this request because the agreement was not filed and the
parties made no submissions about its contents.
I propose to allow the appeal and to set aside the order made by the Federal
Court on September 6, 2005, with costs before both courts.
Gilles Létourneau J.A.”
J.D. Denis Pelletier J.A.”
Jo Egan, LLB