Morden,
JA:—The
Attorney
General
of
Canada
on
behalf
of
the
Minister
of
National
Revenue
appeals,
and
Usarco
Limited
cross-appeals,
from
an
order
of
Mr
Justice
Linden
made
on
August
21,
1979
quashing,
in
part,
an
order
of
His
Honour
Judge
Scime
under
subsection
231(2)
of
the
Income
Tax
Act,
RSC
1952
as
enacted
by
SC
1970-71-72,
c
63,
section
1.
Paragraphs
231(1)(a)
and
(d)
(to
which
subsection
231(2)
relates)
and
subsection
231(2)
read:
(1)
Any
person
thereunto
authorized
by
the
Minister,
for
any
purpose
related
to
the
administration
or
enforcement
of
this
Act,
may,
at
all
reasonable
times,
enter
into
any
premises
or
place
where
any
business
is
carried
on
or
any
property
is
kept
or
anything
is
done
in
connection
with
any
business
or
any
books
or
records
are
or
should
be
kept,
and
(a)
audit
or
examine
the
books
and
records
and
any
account,
voucher,
letter,
telegram
or
other
document
which
relates
or
may
relate
to
the
information
that
is
or
should
be
in
the
books
or
records
or
the
amount
of
tax
payable
under
this
Act,
(d)
if,
during
the
course
of
an
audit
or
examination,
it
appears
to
him
that
there
has
been
a
violation
of
this
Act
or
a
regulation,
seize
and
take
away
any
of
the
documents,
books,
records,
papers
or
things
that
may
be
required
as
evidence
as
to
the
violation
of
any
provision
of
this
Act
or
a
regulation.
(2)
The
Minister
shall,
(a)
within
120
days
from
the
date
of
seizure
of
any
documents,
books,
records,
papers
or
things
pursuant
to
paragraph
(1)(d),
or
(b)
if
within
that
time
an
application
is
made
under
this
subsection
that
is,
after
the
expiration
of
that
time,
rejected,
then
forthwith
upon
the
disposition
of
the
application,
return
the
documents,
books,
records,
papers
or
things
to
the
person
from
whom
they
were
seized
unless
a
judge
of
a
superior
court
or
county
court,
on
application
made
by
or
on
behalf
of
the
Minister,
supported
by
evidence
on
oath
establishing
that
the
Minister
had
reasonable
and
probable
grounds
to
believe
that
there
has
been
a
violation
of
this
Act
or
a
regulation
and
that
the
seized
documents,
books,
records,
papers
or
things
are
or
may
be
required
as
evidence
in
relation
thereto,
orders
that
they
be
retained
by
the
Miniser
until
they
are
produced
in
any
court
proceedings,
which
order
the
judge
is
hereby
empowered
to
give
on
ex
parte
application.
The
history
of
this
matter
is
as
follows.
On
May
24
and
June
27,
1977
the
documents
involved
in
this
application
were
voluntarily
delivered
by
the
Comptroller
of
Usarco
Limited
to
officials
of
the
Department
of
National
Revenue
after
they
had
been
briefly
examined
on
Usarco’s
premises
by
these
officials
or
one
of
them.
The
fact
that
they
had
been
briefly
examined
is
not
expressly
stated
in
the
material
but
it
may
be
inferred
therefrom,
and
counsel
for
Usarco
fairly
stated
during
his
submission
that
the
documents
“had
been
seen
on
our
premises.’’
On
December
14,
1977
the
documents
were
returned
to
Usarco
by
the
Department.
Immediately
upon
their
return
they
were
seized
by
the
Department,
purportedly
under
paragraph
231
(1)(d).
On
or
about
March
16,
1978
J
R
Giles,
Director-Taxation,
Hamilton
District
Office
of
the
Department,
applied
to
Judge
Scime
for
a
retention
order
respecting
the
documents.
Judge
Scime
made
the
order
sought
on
March
17,
1978.
It
was
typed
on
the
face
of
the
application.
The
complete
document
reads:
A
PPLICA
TION
ON
BEHALF
OF
the
Minister
of
National
Revenue,
I,
J
R
Giles,
Director-
Taxation,
Hamilton
District
Office,
of
the
Department
of
National
Revenue,
Taxation,
hereby
apply
for
an
order
that
the
documents,
books,
records,
papers
or
things,
seized
on
the
14th
day
of
December,
1977,
under
the
authority
of
the
provisions
of
paragraph
231
(1
)(d)
of
the
Income
Tax
Act
from
the
premises
of
USARCO
LIMITED
at
363
Wellington
Street
North,
Hamilton,
Ontario,
be
returned
by
the
Minister
of
National
Revenue
until
they
are
produced
in
any
court
proceedings.
IN
SUPPORT
OF
this
Application,
I
produce
the
Affidavit
of
Donald
D
Banks
sworn
the
14th
day
of
March,
1978,
which
in
my
opinion
establishes
that
the
Minister
of
National
Revenue
has
reasonable
and
probable
grounds
to
believe
that
there
have
been
violations
of
the
Income
Tax
Act
or
a
Regulation
thereto
and
that
the
seized
documents,
books,
records,
papers
or
things
are
or
may
be
required
in
relation
to
proceedings
against
the
said
USARCO
LIMITED
DATED
AT
Hamilton,
Ontario
this
16th
day
of
March,
1978.
“J
Ft
Giles"
Director-Taxation,
Hamilton
District
Office
I
HEREBY
ORDER
THAT
the
documents,
books,
records,
papers
or
things
referred
to
in
the
above
application
made
on
behalf
of
the
Minister
of
National
Revenue
be
retained
by
him
until
they
are
produced
in
any
court
proceedings.
DATED
AT
Hamilton,
Ontario,
this
17th
day
of
March,
1978.
“J
C
Scime"
Judge
of
the
Judicial
District
of
Hamilton-Wentworth
In
his
affidavit,
referred
to
in
the
application,
Donald
D
Banks,
after
deposing
that
as
an
officer
of
the
Department
he
had
inquired
into
the
financial
affairs
of
Usarco
Limited
and
had
examined
its
books
and
records
and
T-2
income
tax
returns
for
the
taxation
years
1972,
1973,1974
and
1975,
further
deposed:
9.
Also
in
the
course
of
my
enquiries,
I
have
conferred
with
Mr
Ted
Lambersky,
Secretary
Treasurer
of
Parkway
Iron
and
Metal
Company
Limited,
Toronto,
Ontario,
and
I
have
examined
the
records
of
the
said
Parkway
Iron
and
Metal
Company
Limited
for
the
calendar
years
1972,
1973,
1974
and
1975.
6.
During
the
course
of
my
enquiries,
the
said
Ted
Lambersky
stated
that
he
and
Harvey
Zinberg,
president
of
Parkway
Iron
and
Metal
Company
Limited
and
Judson
Knox,
manager
of
the
Metal
Recovery
Division
of
Usarco
Limited
entered
into
an
agreement
whereby:
(a)
Judson
Knox
caused
Usarco
Limited
to
issue
a
payment
to
Parkway
Iron
and
Metal
Company
Limited
allegedly
for
the
purchase
of
non-ferrous
metal
whereas
no
such
metal
had
been
delivered
or
sold
by
Parkway
Iron
and
Metal
Company
Limited
to
Usarco
Limited.
(b)
Ted
Lambersky
negotiated
the
cheque
issued
by
Usarco
Limited
to
Parkway
Iron
and
Metal
Company
Limited
at
the
bank
branch
regularly
used
by
Parkway
Iron
and
Metal
Company
Limited
and
obtained
an
equivalent
amount
of
currency.
(c)
Ted
Lambersky
kept
one-third
of
the
said
amount
of
currency
and
delivered
one-third
of
the
said
amount
of
currency
to
the
said
Harvey
Zinberg
and
the
said
Judson
Knox.
7.
Also
during
the
course
of
my
enquiries,
the
said
Ted
Lambersky
identified
one
hundred
and
eleven
false
transaction,
as
described
in
paragraph
6
of
this
my
Affidavit,
which
occurred
during
the
calendar
years
1972
to
1975
inclusive
as
follows:
|
No
of
False
|
Amount
of
False
|
|
Year
|
transactions
|
transactions
|
|
1972
|
19
|
$
47,643.00
|
|
1973
|
47
|
160,706.98
|
|
1974
|
30
|
123,828.25
|
|
1975
|
15
|
41,129.95
|
|
TOTAL
|
111
|
$373,308.18
|
8.
In
the
course
of
my
examination
of
the
books
and
records
and
T2
income
tax
returns
of
the
said
Usarco
Limited,
I
determined
that
all
of
the
one
hundred
and
eleven
false
transactions
in
the
total
value
of
$373,308.18
as
referred
to
in
paragraph
6
and
paragraph
7
of
this
my
Affidavit
were
claimed
as
a
purchase
and
thereby
deducted
from
income
by
the
said
Usarco
in
its
taxation
years
1972,
1973,
1974
and
1975.
9.
As
a
result
of
my
enquiries,
documents,
books,
records,
papers
or
things
were
seized
under
paragraph
231
(1
)(d)
of
the
Income
Tax
Act
on
December
14,1977
from
the
business
premises
of
the
said
Usarco
Limited.
10.
From
my
experience
as
an
officer
of
the
Department
of
National
Revenue,
Taxation,
I
know
that
the
seized
documents,
books,
records,
papers
or
things
are
needed
to
complete
the
investigation
of
the
said
Usarco
Limited.
11.
As
a
result
of
my
enquiries
and
examination
of
the
seized
documents,
books,
records,
papers
or
things,
I
have
reasonable
grounds
to
believe,
and
do
believe,
that
the
time
required
to
complete
the
investigation
will
extend
beyond
the
120
days
time
limit
set
forth
in
subsection
231(2)
of
the
Income
Tax
Act.
12.
Further,
as
a
result
of
my
enquiries,
I
have
reasonable
grounds
to
believe,
and
do
believe,
that
a
violation
under
Section
239
of
the
Income
Tax
Act
or
a
Regulation
has
been
committed
and
the
said
documents,
books,
records,
papers
or
things
are
or
may
be
required
as
evidence
in
any
subsequent
criminal
or
civil
proceedings
against
the
said
Usarco
Limited.
Two
affidavits
of
Bruce
Robert
Shilton,
a
prosecutor
attached
to
the
Department
of
Justice,
were
filed
before
Linden,
J.
They
were
sworn
on
August
2
and
9,1979.
In
these
affidavits
Mr
Shilton
deposed
that,
some
time
before
June
28,
1979,
informations
were
laid
charging
offences
by
Usarco
Limited,
Judson
Knox
and
others.
Those
material
to
this
appeal
allege
that
Usarco
and
Judson
Knox,
between
November
30,
1971
and
June
1,
1976,
unlawfully
did:
make,
assent
to
or
acquiesce
in
the
making
of
false
or
deceptive
entries
in
records
or
books
of
account
of
the
taxpayer
USARCO
LIMITED,
to
wit:
the
receiv-
ing/recovery
reports
of
the
Metal
Recovery
Department
contrary
to
Section
239(1)(c)
of
the
Income
Tax
Act,
RSC
1952,
Chapter
148,
as
amended,
thereby
resulting
in
the
claiming
of
false
purchases
as
deductions
from
the
income
of
USARCO
LIMITED
in
the
amount
of
$704,562
for
the
taxation
years
1972,
1973,
1974
and
1975;
and,
between
the
same
dates,
wilfully
evade
payment
of
taxes
imposed
by
the
said
Act,
upon
the
said
USARCO
LIMITED
to
wit:
by
claiming
false
purchases
as
deductions
from
income
of
USARCO
LIMITED
in
the
amount
of
$704,562
for
the
taxation
years
1972,
1973,
1974
and
1975,
thereby
evading
payment
of
$217,818
in
taxes
contrary
to
Section
239(1)(d)
of
the
said
Act;
Mr
Shilton
sent
copies
of
the
information
to
Usarco’s
solicitors
on
June
28,
1979.
In
his
first
affidavit
he
deposed
that,
of
the
$704,562
alleged
in
the
charges
mentioned
above,
..
.
approximately
$330,000
of
these
monies
allegedly
relate
to
dealings
between
Usarco
Limited
and
Sam
Allen
and
Son
(sic)
Inc,
a
United
States
Company,
and
the
remainder
of
these
monies
allegedly
relate
to
dealings
between
Usarco
Limited
and
Parkway
Iron
and
Metal
Limited,
a
Canadian
company.
The
prosecution
will
require
as
evidence
of
the
offences
alleged
against
both
Usarco
Limited
and
Judson
Knox
in
said
Counts
documents
of
Usarco
Limited
and
that
relate
to
Sam
Allen
and
Son
(sic)
Inc
and
Parkway
Iron
and
Metal
Limited
and
in
particular
the
following:
.
.
.
There
follows
a
detailed
list
of
cancelled
cheques
of
Usarco
Limited
respecting
Sam
Allen
and
Sons,
Inc,
cancelled
cheques
of
Minkin
Metal
Company,
customs
brokerage-control
copies
of
B-3
forms
for
Sam
Allen
and
Sons,
Inc
and
Minkin
Metal
Company,
purchase
vouchers
for
Sam
Allen
and
Sons,
Inc
and
for
Minkin
Metal
Company,
cancelled
cheques
re
Parkway
Iron
and
Metal
Limited
and
purchase
vouchers
for
Parkway
Iron
and
Metal
Limited.
The
exhibits
filed
indicate
that
both
Sam
Allen
and
Sons,
Inc
and
Minkin
Metal
Company
carry
on
business
in
the
State
of
Michigan.
By
notice
of
motion
dated
July
18,
1979
Usarco
Limited
moved
for
an
order
quashing
Judge
Scime’s
order.
Linden,
J’s
endorsed
reasons
are
as
follows:
Certiorari
granted
quashing
the
Order
of
Judge
Scime
insofar
as
it
purported
to
allow
retention
of
documents
relating
to
anything
other
that
the
facts
alleged
in
paragraphs
6,
7
and
8
of
Bank’s
Affidavit
(Paroain
&
Collavino).
These
documents
to
be
returned
forthwith.
As
far
as
the
documents
relating
to
the
facts
in
6,
7
and
8,
the
material
before
Judge
Scime
is
unassailable,
even
though
the
intitial
taking
of
the
documents
may
have
been
illegal
or
not
in
compliance
with
Section
231
(1)(d).
No
costs
because
of
the
delay
by
the
Appellant.
The
operative
part
of
his
formal
order
reads:
1.
THIS
COURT
DOTH
ORDER
that
certiorari
be
granted
quashing
the
Order
of
Judge
Scime
insofar
as
it
extends
to
documents
relating
to
anything
other
than
the
matters
set
out
in
paragraph
6,
7
and
8
of
the
affidavit
of
Donald
D
Banks
sworn
14
March
1978.
Such
documents
are
to
be
returned
forthwith.
It
would
be
well
at
this
point
to
say
that
there
is
no
issue
concerning
the
amendability
of
subsection
231(2)
order
made
by
a
County
Court
Judge
to
being
quashed
on
an
application
for
certiorari,
if
jurisdictional
error
is
shown.
Nor
is
there
any
issue
that
the
judge
making
a
subsection
231(2)
order
does
so
in
his
capacity
as
a
judge
and
not
as
a
persona
designate
(see
MNR
v
Coopers
&
Lybrand,
[1979]
1
SCR
495;
[1978]
CTC
829;
78
DTC
6528,
coming
to
this
conclusion
with
respect
to
similar
powers
under
subsection
231(4))
and
hence
that
the
matter
was
properly
before
Linden,
J
rather
than
the
Federal
Court.
It
is
also
not
in
dispute,
although
the
parties
did
not
formulate
their
respective
submissions
in
identical
terms,
that
the
judge
would
not
have
had
jurisdiction
to
make
the
order
if
a
necessary
condition
precedent
had
not
been
met
or
if
there
was
no
evidence
before
him
upon
which
he
could
properly
satisfy
himself
that
the
statutory
requisites
had
been
met.
See
Rex
v
Solloway
and
Mills
(1930),
65
OLR
303
at
308-309.
The
principal
contentions
made
on
behalf
of
the
Attorney
General
are
that
Linden,
J
erred:
(1)
in
setting
aside
Judge
Scime’s
order
in
so
far
as
it
related
to
a
portion
of
the
documents
seized
since
there
was
sufficient
evidence
to
enable
him
properly
to
conclude
that
the
Minister
had
reasonable
and
probable
grounds
and,
therefore,
to
make
the
order
that
he
did
under
subsection
231(2);
(2)
in
ordering
the
return
to
Usarco
Limited
of
documents
required
as
prosecution
evidence
in
relation
to
charges
of
tax
evasion
pending
against
Usarco
Limited;
and
(3)
in
exercising
his
discretion
in
favour
of
Usarco
Limited
and
in
quashing
in
part
the
order
of
Judge
Scime
after
the
applicant
had
delayed
in
bringing
the
application
for
approximately
one
year
and
four
months.
Usarco
Limited’s
position
on
its
cross-appeal
is
as
follows:
(1)
the
order
of
Judge
Scime
was
invalidly
made
because
there
had
not
been
a
valid
seizure
under
paragraph
231(1)(d)
and
subsection
(2)
(and
this
states
the
Submission
very
broadly)
the
evidence
in
support
of
the
application
before
Judge
Scime
fell
short
of
justifying
a
retention
order.
In
my
view,
both
the
appeal
and
the
cross-appeal
clearly
turn
on
the
substance
of
the
evidence
before
Judge
Scime
assessed
in
the
light
of
the
requirements
of
subsection
231(2).
I
shall,
therefore,
concentrate
on
this
and
deal
more
briefly
with
the
other
issues
raised.
Logically,
the
first
issue
which
should
be
considered
is
the
validity
of
the
purported
seizure
under
paragraph
231
(1)(d).
The
Validity
of
the
December
14,
1977
Seizure
and
the
Effect
thereof
I
agree
with
the
judgment
of
Le
Dain,
J
in
Royal
American
Shows,
Inc
v
His
Honour
Judge
R
McClelland
and
MNR,
[1978]
1
FC
72;
[1977]
CTC
52;
77
DTC
5052,
that
a
proper
paragraph
231
(1
)(d)
seizure
is
a
jurisdictional
condition
precedent
to
the
making
of
a
valid
retention
order
under
subsection
231(2).
Accordingly,
there
should
be
sufficient
evidence
before
the
judge
bearing
on
the
seizure
to
enable
him
to
be
satisfied
that
this
condition
precedent
has
been
met.
In
the
present
case
I
think
there
was
sufficient
evidence.
I
refer
to
paragraph
9
of
Mr
Brown’s
affidavit:
As
a
result
of
my
enquiries,
documents,
books,
records,
papers
or
things
were
seized
under
paragraph
231(1)(c)
of
the
Income
Tax
Act
on
December
14,1977
from
the
business
premises
of
the
said
Usarco
Limited.
This,
however,
does
not
end
the
matter.
Since
a
lawful
paragraph
231
(1
)(d)
seizure
is
a
jurisdictional
requirement
for
a
subsection
231(2)
order,
the
judge
is
not
the
exclusive
arbiter
of
this
issue.
His
conclusion
is
susceptible
to
challenge
on
an
application
for
certiorari
wherein
additional
evidence
may
be
placed
before
the
court.
That
has
been
done
in
this
case.
The
question
now
is:
was
there
a
lawful
paragraph
231
(1
)(d)
seizure?
Since
the
result
of
the
appeals
before
us
does
not,
in
the
view
that
I
take,
turn
on
the
answer
to
this
question,
and
because
I
find
the
question
to
be
a
difficult
one,
I
do
not
intend
to
come
to
a
final
conclusion
on
it,
but,
in
view
of
the
arguments
addressed
to
us,
I
think
I
should
express
an
opinion
on
it.
It
is
reasonable
to
construe
the
evidence
as
showing
an
entry
into
Usar-
co’s
premises,
the
commencement
of
an
examination,
however
brief,
of
the
records,
the
continuation
of
their
examination
at
the
Department’s
premises
with
Usarco’s
consent,
their
return
to
Usarco’s
premises
and
their
immediate
seizure.
What
Usarco’s
contention
seems
to
come
down
to
is
that
if
the
Departmental
officials
had
re-examined
the
documents
upon
their
return
to
note,
again,
the
violation
or
violations
that
they
had
already
noted,
then
the
seizure
would
have
been
lawful.
It
appears
to
me
that
by
reason
of
the
consent
of
Usarco
the
examination
which
was
conducted
could
be
considered
to
have
been
conducted
under
paragraph
231
(1
)(a),
and
the
fact
that
there
was
a
time
lag
between
the
noting
of
the
violation
and
the
seizure
is
not
material.
Therefore,
I
incline
to
the
view
that
there
was
a
valid
paragraph
231(1)(d)
seizure.
The
reservations
which
I
have
relate
to
whether
one
can
properly
consent
to
a
variation
in
the
application
of
the
provision
and
whether
Usarco,
in
this
case,
can
be
said
to
have
consented
to
what
was
in
fact
and
law
a
paragraph
231(1)(a)
audit
or
examination
off
its
premises.
Was
there
evidence
before
Judge
Scime
capable
of
supporting
his
order?
Subsection
232(2)
requires
the
judge
to
be
satisfied
by
evidence
on
oath
that
the
Minister
has
reasonable
and
probable
grounds
to
believe
(1)
that
there
has
been
a
violation
of
the
Act
or
a
regulation
and
(2)
that
the
seized
documents
are
or
may
be
required
as
evidence
in
relation
thereto.
In
my
view,
the
evidence
before
the
Judge
clearly
fell
short
of
satisfying
requirement
(2)
but,
before
I
deal
with
this
particular
issue
there
are
other
aspects
of
Mr
Banks’
affidavit
that
I
should
mention.
Subsection
231(2)
requires
the
Minister
(or
by
virtue
of
Regulation
900(5),
it
appears,
the
Director
General,
Compliance,
the
Assistant
Director
General,
Compliance
for
Special
Investigations,
or
any
official
holding
a
position
of
Director
in
the
said
Special
Investigations,
of
the
Department
of
National
Revenue,
Taxation)
to
have
reasonable
and
probable
cause
to
believe
in
the
existence
of
the
matters
to
be
covered.
It
may
be
that
the
affidavit
satisfies
this
requirment,
in
an
indirect
way,
in
paragraph
12
where
Mr
Banks
says
that
he
has
reasonable
grounds
to
believe
but
I
cannot
see
any
practical
reason
why
the
affidavit
was
not
addressed
to
the
actual
requirements
of
the
provision.
In
the
same
vein,
the
provision
(at
least,
in
the
English
text)
requires
that
there
be
reasonable
and
probable
grounds.
The
affidavit
refers
only
to
reasonable
grounds.
Further,
paragraph
12
refers
to
a
violation
under
section
239
of
the
Income
Tax
Act
or
a
regulation.
It
is
clear
that
the
range
of
documents
which
may
be
retained
under
subsection
231(2)
has
to
relate
to
the
violation
which,
on
reasonable
and
probable
grounds,
the
Minister
believes
has
been
committed.
In
this
case
the
alleged
violations
appear
to
be
confined
to
paragraphs
239(1)(c)
and
239(1
)(d)
of
the
Act.
There
is
no
suggestion
in
the
material
of
the
violation
of
any
provision
in
the
regulation.
Further,
the
paragraph
does
not
say
that
the
seized
documents
are
or
may
be
required
as
evidence
in
relation
to
the
violation
in
question.
I
merely
advert
to
these
matters
and
base
no
conclusion
on
them.
It
may
well
be
that
they
are
simply
matters
of
form
but
they
may,
with
respect,
also
be
symptomatic
of
a
general
lack
of
attention
to
the
actual
requirements
of
the
provision.
At
the
heart
of
the
matter
is
the
question
whether
there
was
evidence
capable
of
showing
reasonable
and
probable
grounds
for
the
Minister’s
believing
(1)
that
there
had
been
a
violation
of
the
Act
or
a
regulation
and
(2)
that
the
seized
documents
were
or
may
have
been
required
as
evidence
in
relation
thereto.
With
respect
to
(1)
I
cannot
say
that
there
was
no
evidence
capable
of
supporting
the
requisite
belief,
although
I
quite
appreciate,
on
what
is
stated,
the
nature
of
the
difficulties
the
Crown
might
face
in
proving
its
case
against
Usarco.
With
respect
to
(2),
it
is
my
opinion
that
the
affidavit
contains
no
statements
which
could
support
a
belief
that
the
seized
documents
are
or
may
be
required
as
evidence
in
relation
to
any
violation.
The
affidavit
simply
does
not
attempt
to
identify
or
describe,
even
in
a
general
way,
what
documents
were
seized.
This
being
the
case,
there
was
nothing
in
the
affidavit
to
which
the
judge
could
direct
his
mind
on
the
important
question
of
whether
the
Mininster
had
reasonable
and
probable
grounds
to
believe
that
the
seized
documents
were,
or
may
have
been,
required
as
evidence
in
relation
to
the
alleged
violation.
It
is
implicit
in
what
I
have
just
said
that
there
has
to
be
something
in
the
affidavit
to
inform
the
judge
of
the
alleged
grounds
so
that
he
can
properly
exercise
his
judicial
duty
and
that
the
mere
statement
in
the
affidavit
that
someone
(in
this
case,
the
deponent)
has
such
grounds,
without
a
statement
of
them,
is
insufficient.
It
is
quite
clear
from
subsection
231(2)
that
the
matter
of
reasonable
and
probable
grounds
is
not
for
the
conclusive
decision
of
the
Minister.
In
this
regard,
the
following
observations
of
Lord
Radcliffe
in
Nakkuda
Ali
v
M
F
De
S
Jayaratine,
[1951]
AC
66,
which
was
concerned
with
a
provision
reading
“where
the
Controller
has
reasonable
grounds
to
believe
that
any
dealer
is
unfit
to
be
allowed
to
continue
as
a
dealer,”
are
particularly
apposite:
After
all,
words
such
as
these
are
commonly
found
when
a
legislature
or
law-
making
authority
confers
powers
on
a
minister
or
official.
However
read,
they
must
be
intended
to
serve
in
some
sense
as
a
condition
limiting
the
exercise
of
an
otherwise
arbitrary
power.
But
if
the
question
whether
the
condition
has
been
satisfied
is
to
be
conclusively
decided
by
the
man
who
wields
the
power
the
value
of
the
intended
restraint
is
in
effect
nothing.
No
doubt
he
must
not
exercise
the
power
in
bad
faith:
but
the
field
in
which
this
kind
of
question
arises
is
such
that
the
reservation
for
the
case
of
bad
faith
is
hardly
more
than
a
formality.
Their
Lordships
therefore
treat
the
words
in
reg
62,
“where
the
Controller
has
reasonable
grounds
to
believe
that
any
dealer
is
unfit
to
be
allowed
to
continue
as
a
dealer’’
as
imposing
a
condition
that
there
must
in
fact
exist
such
reasonable
grounds,
known
to
the
Controller,
before
he
can
validly
exercise
the
power
of
cancellation.
(p
77)
Not
only
does
the
affidavit
not
even
mention
the
dealing
with
Sam
Allen
and
Sons,
Inc
and
Minkin
Metal
Company,
but,
and
this
is
repetition,
since
it
does
not,
even
in
a
general
way,
state
what
the
seized
documents
were,
it
is
deficient
also
with
respect
to
dealings
with
Parkway
Iron
and
Metal
Company
Limited.
Since
it
is
the
decision
of
the
judge,
acting
under
subsection
231(2),
based
on
the
evidence
before
him,
which
alone
can
afford
a
legal
ground
for
retaining
seized
documents,
resort
cannot
be
had,
at
this
stage,
to
Mr
Shilton’s
affidavits
to
supplement
the
record.
As
far
as
the
particularity
of
the
description
of
the
seized
documents
is
concerned,
it
may
be
mentioned
that
there
do
not
appear
to
be
any
practical
reasons,
and
none
were
suggested
during
the
argument,
why
a
relatively
careful
description
of
them
could
not
reasonably
be
given,
having
regard
to
their
having
been
in
the
Minister’s
possession
for
a
considerable
period
of
time.
This
feature
of
the
process
clearly
distinguishes
this
kind
of
case
from
search
warrant
cases
where
great
particularity
in
the
information
and
the
search
warrant
is
often
not
reasonably
and
practically
possible.
I
appreciate
that
the
provision
does
not
require
that
the
judge
believe
in
or
be
satisfied
as
to,
the
reasonable
and
probable
grounds—but
rather
that
it
be
established
before
him
that
the
Minister
has
such
grounds.
Thus
it
may
be
that
less
detailed
evidence
is
required
by
the
provision
than
if
it
required
the
judge,
directly
to
be
satisfied.
However,
accepting
this,
I
do
not
see
how
it
can
be
“established”
before
the
judge
that
there
are
reasonable
and
probable
grounds
for
the
Minister’s
belief
unless
the
evidence
on
oath
furnishes
some
facts
as
to
the
nature
of
the
seized
documents
and
their
connection
with
the
violation
in
question—rather
than
insulating
such
facts
from
the
judge’s
consideration
under
statements
as
to
the
depondent’s
opinion.
The
nature
of
the
judge’s
duty,
in
this
regard,
cannot
be
significantly
different
from
that
imposed
by
subsection
231(4)
of
the
Income
Tax
Act
respecting
the
approval
of
search
and
seizure
authorizations,
as
to
which
Dickson,
J
has
said:
“The
judge
sits
to
scrutinize
[with
utmost
care]
the
intended
exercise
of
the
ministerial
discretion.”
MNR
v
Coopers
and
Lybrand,
supra.
Quite
apart
from
the
omissions
in
the
affidavit
to
which
I
have
referred
there
are
specific
statements
in
it
which
cast
real
doubt
on
whether
the
Minister
had,
or,
more
directly,
believed
that
he
had,
at
the
time
of
the
application,
evidence
which
could
satisfy
the
requirement
of
subsection
231(2).
It
is
sufficient
if,
within
the
120
days
following
seizure,
the
evidence
before
the
judge
establishes
that
there
are
reasonable
and
probable
grounds
for
the
Minister
to
believe
the
documents
“are
or
may
be
required
as
evidence.”
While
the
continuance
of
the
investigation
after
the
120
days
is
not
in
itself
incompatible
with
subsection
231(2)
being
satisfied
(paragraph
10),
the
specific
statement
in
paragraph
11
“that
the
time
required
to
complete
the
investigation
will
extend
beyond
the
120
days
time
limit
set
forth
in
subsection
231(2)
of
the
Income
Tax
Act”
carries
the
strong
implication,
notwithstanding
the
very
general
statement
in
paragraph
12,
that
at
the
time
of
the
application
the
Minister
did
not
have
reasonable
and
probable
grounds
to
believe
that
the
seized
documents
were,
or
may
have
been,
required
as
evidence.
He
was,
in
effect,
seeking
more
time
in
an
attempt
to
ascertain
if
the
relevant
grounds
existed.
Having
regard
to
the
foregoing
I
am
obliged
to
conclude
that
there
was
no
evidence
before
Judge
Scime
capable
of
supporting
his
order.
If
I
am
wrong
in
this,
and
it
could
be
said
that
there
was
evidence
supporting
his
order,
in
so
far
as
it
extended
to
documents
relating
to
the
matters
set
forth
in
paragraphs
6,
7
and
8
of
Mr
Banks’
affidavit,
then
I
think
that,
since
the
order
is
not
couched
in
terms
which
are
severable,
directly
or
by
incorporation
by
reference
(see
Re
Hoggendoorn
and
Greening
Metal
Products
&
Screening
Equipment
Co
et
al,
[1967]
1
OR
712
at
730
and
733,
reversed
on
other
grounds,
by
[1968]
SCR
30),
it
should
be
quashed
outright,
if
it
is
to
be
quashed
at
all.
The
court
on
a
certiorari
application
does
not
exercise
an
appellate
function
which
may,
depending
on
the
terms
of
the
applicable
Statute,
include
the
power
to
make
the
order
which
should
have
been
made
by
the
tribunal
whose
decision
is
being
reviewed.
The
Defence
Based
on
Delay
I
deal
now
with
the
matter
of
delay.
Judge
Scime’s
order
was
made
on
March
17,
1978.
Usarco
and
its
solicitors
had
the
order
and
all
of
the
material
and
evidence
upon
which
the
order
was
based
since
about
April
6,
1978.
Usarco
had
full
knowledge
of
all
of
the
documents
which
were
seized.
It
did
not
move
to
quash
the
order
until
July
18,
1979.
In
the
meantime,
the
Government,
having
seized
the
documents
because,
to
the
knowledge
of
Usarco,
it
considered
that
they
were
or
may
be
required
as
evidence
in
relation
to
tax
evasion
on
the
amount
of
at
least
$330,000,
considered
them
further
and,
on
the
advice
of
counsel
for
the
Attorney
General
of
Canada,
commenced
a
prosecution
against
Usarco.
According
to
the
affidavit
of
Mr
Shilton,
which
was
not
cross-examination
upon,
all
of
the
seized
documents
are
relevant
to
the
prosecution.
Certiorari
is,
of
course,
a
discretionary
remedy
and
may
be
refused
on
the
ground
of
delay
in
seeking
it.
The
discretion
to
withhold
certiorari,
since
it
may
make
inroads
on
the
rule
of
law,
should
be
exercised
with
the
greatest
care.
See
Wade,
Administrative
Law,
4th
ed
(1977)
at
561.
It
is
also
trite
law
that
we
should
not
reverse
Linden,
J’s
exercise
of
discretion
unless
he
erred
in
principle
or
a
clear
injustice
has
resulted
from
it.
By
reason
of
the
particular
disposition
which
I
propose
with
respect
to
Usarco’s
ancilliary
application
for
an
order
directing
the
return
to
it
of
all
documents
seized
I
do
not
think
that
I
need
pursue
my
consideration
of
this
defence
further
than
to
say
that
the
matter
of
delay
is
relevant
to
the
exercise
of
our
discretion
to
order
the
return
of
the
documents,
and
that,
as
a
defence
to
the
application,
I
would
not
be
prepared
to
interfere
with
the
exercise
of
Linden,
J’s
discretion
on
this
issue.
Order
of
the
Court
Ancilliary
to
that
of
Certiorari
Quashing
the
subsection
231(2)
Order
Considerable
argument
was
submitted
to
us,
based
on
search
warrant
decisions,
as
to
our
inherent
power
to
order
the
return
of
the
seized
documents,
having
regard
to
the
existing
prosecution.
Mr
Olsson
also
submitted
that
if
the
order
of
Judge
Scime
were
quashed
we
should
remit
the
matter
back
to
him
so
that
he
could
decide
it
again
on
more
complete
evidence.
As
far
as
this
latter
option
is
concerned
I
am
not
satisfied
that,
since
the
120
day
time
period
has
long
expired,
there
is
any
jurisdiction
for
a
fresh
order
to
be
made.
Mr
Nathanson
submits
that,
having
regard
to
the
mandatory
terms
of
subsection
231(2)
(“The
Minister
shall
.
.
.
return
the
documents
...)
the
court,
upon
the
quashing
of
the
retention
order,
has
no
choice
but
to
order
that
this
be
done.
This
appears
to
have
been
the
view
of
Linden,
J.
With
respect,
I
do
not
share
this
view.
I
do
not
think
that
subsection
231(2)
dictates
what
a
court,
in
every
case,
is
obliged
to
do
upon
the
granting
of
an
order
of
certiorari
quashing
a
retention
order.
The
subsection
is
intended
to
provide
for
the
return
of
seized
documents
in
cases
where
no
retention
order
is
obtained
within
120
days
of
the
seizure.
It
is
a
natural
and
logical
part
of
the
statutory
scheme.
However,
I
do
not
think
that
the
subsection
extends
to
ousting
the
discretion
of
a
court
to
refuse
to
order
the
Crown
to
return
evidence
to
an
accused
person
where
there
is
evidence
that
it
is
required
for
a
pending
prosecution.
A
refusal
to
exercise
such
a
discretion
has
been
recently
affirmed
by
this
Court:
Regina
v
Model
Power
(A
Division
of
Master
Miniatures
Ltd),
January
25,
1980,
unreported.
While
such
a
discretion
is
one
which
should
be
exercised
with
great
care,
I
am
satisfied
that,
in
the
present
case,
it
is
the
better
course
to
refuse
to
order
the
return
of
the
documents.
As
I
have
just
indicated,
the
long
delay
of
the
applicant
is
a
factor
to
be
considered
on
this
issue.
For
the
foregoing
reasons,
I
would
dismiss
the
appeal,
allow
the
crossappeal,
set
aside
the
order
of
Linden,
J,
and,
in
its
place,
substitute
an
order
quashing
the
order
of
Judge
Scime
in
toto.
I
would
refuse
to
order
the
Crown
to
return
the
seized
documents
to
the
applicant.
Weatherston,
JA
(dissenting):—Some
time
in
1977
officers
of
the
Department
of
National
Revenue,
Taxation,
became
interested
in
the
affairs
of
Usarco
Limited.
At
their
request,
Usarco’s
comptroller
voluntarily
delivered
“certain
documents,
books,
records,
papers
or
things”
to
them.
On
December
14,
1977
officers
of
the
Department
returned
the
documents
to
Usarco
Limited,
but
immediately
seized
and
took
them
away
again
under
the
authority
of
paragraph
231
(1
)(d
of
the
Income
Tax
Act,
RSC
1952,
c
148,
(as
enacted
by
SC
1970-71-72,
c
63).
By
an
order
dated
the
17th
day
of
March,
1978,
on
an
application
made
on
behalf
of
the
Department,
supported
by
the
affidavit
of
Donald
D
Banks,
His
Honour
Judge
J
C
Scime
ordered
that
the
documents
be
retained
until
they
are
produced
in
any
court
proceedings.
The
application
was
necessary
because,
by
subsection
231(2)
of
the
Income
Tax
Act,
the
Minister
would
otherwise
have
been
required
to
return
the
documents
within
120
days
from
the
date
of
their
seizure.
On
the
application
of
Usarco
for
an
order
in
lieu
of
certiorari,
Linden,
J
quashed
the
order
made
by
Judge
Scime
“insofar
as
it
extends
to
documents
relating
to
anything
other
than
the
matters
set
out
in
paragraphs
6,
7
and
8
of
the
affidavit
of
Donald
D
Banks
sworn
14
March
1978.
Such
documents
are
to
be
returned
forthwith”.
The
Attorney
General
and
Usarco
both
appeal.
Counsel
for
Usarco
argued
that
the
documents
were
not
lawfully
seized
in
the
first
place
and,
hence,
there
was
no
foundation
for
the
making
of
a
valid
retention
order.
He
argued
that
because
the
documents
were
seized
immediately
on
their
return
to
Usarco,
they
were
not
seized
during
the
course
of
an
audit
or
examination,
as
provided
in
paragraph
231
(1
)(d)
of
the
Income
Tax
Act.
I
do
not
agree.
The
officers
of
the
Department
of
National
Revenue,
Taxation,
had
had
possession
of
the
documents
since
May
or
June
with
Usarco’s
consent;
the
application
for
a
retention
order
was
not
made
until
the
following
March.
It
offends
common
sense
to
suggest
that
the
examination
had
not
commenced
or
was
completed
on
December
14.
subsection
231(2)
of
the
Income
Tax
Act
is
as
follows:
The
Minister
shall,
(a)
within
120
days
from
the
date
of
seizure
of
any
documents,
books,
records,
papers
or
things
pursuant
to
paragraph
(1)(d),
or
(b)
if
within
that
time
an
application
is
made
under
this
subsection
that
is,
after
the
expiration
of
that
time,
rejected,
then
forthwith
upon
the
disposition
of
the
application,
return
the
documents,
books,
records,
papers
or
things
to
the
person
from
whom
they
were
seized
unless
a
judge
of
a
superior
court
or
county
court,
on
application
made
by
or
on
behalf
of
the
Minister,
supported
by
evidence
on
oath
establishing
that
the
Minister
has
reasonable
and
probable
grounds
to
believe
that
there
has
been
a
violation
of
this
Act
or
a
regulation
and
that
the
seized
documents,
books,
records,
papers
or
things
are
or
may
be
required
as
evidence
in
relation
thereto,
orders
that
they
be
retained
by
the
Minister
until
they
are
produced
in
any
court
proceedings,
which
order
the
judge
is
hereby
empowered
to
give
on
ex
parte
application.
An
application
for
a
retention
order
must,
therefore,
be
supported
by
evidence
on
oath
establishing
that
the
Minister
has
reasonable
and
probable
grounds
to
believe
(a)
that
there
has
been
a
violation
of
the
Act
or
a
regulation;
and
(b)
that
the
seized
documents
are
or
may
be
required
as
evidence
in
relation
to
that
violation.
The
jurisdiction
to
make
a
retention
order
depends
on
the
existence
of
that
evidence.
As
Lord
Esher,
MR
pointed
out
in
The
Queen
v
The
Commissioners
For
Special
Purposes
of
the
Income
Tax
(1888),
21
QBD
313
at
319,
when
a
statute
says
that
a
tribunal
shall
have
jurisdiction
if
certain
facts
exist,
the
tribunal
has
jurisdiction
to
enquire
into
the
existence
of
those
facts.
However,
while
its
decision
is
final,
if
jurisdiction
is
established,
the
determination
that
its
jurisdiction
has
been
established
is
open
to
examination
on
certiorari
by
a
Superior
court.
See
also
R
v
London,
etc,
Rent
Tribunal
Ex
parte
Honig,
[1951]
1
KB
641,
and
R
v
Fulham,
Hammersmith
and
Kensington
Rent
Tribunal;
Ex
parte
Zerek,
[1951]
2
KB
1,
per
Devlin,
J
at
10.
The
only
evidence
before
Judge
Scime
was
Mr
Banks’
affidavit,
but
that
satisfied
the
judge
that
the
Minister
had
reasonable
and
probable
grounds
to
believe
that
the
two
requirements
of
the
statute
had
been
met.
The
affidavit
must
be
examined
as
to
its
sufficiency
to
support
the
judge’s
finding.
The
sufficiency
of
the
evidence
should
be
viewed
objectively.
Nevertheless,
two
observations
should
be
made.
First,
it
is
the
Minister,
and
not
a
judge,
who
must
be
shown
to
have
reasonable
and
probable
grounds
to
believe
that
the
statutory
requirements
have
been
met.
It
must
be
recognized
that
the
Minister
in
charge
of
a
large
government
department
must
rely
to
a
large
extent
on
his
subordinates.
The
Minister
would
have
reasonable
and
probable
grounds
to
believe
in
a
state
of
facts
if
they
were
related
to
him
by
a
trusted
subordinate;
and
perhaps,
too,
if
those
facts
were
no
more
than
deductions
made
by
the
subordinate
from
his
own
observations.
While
the
decision
is
that
of
the
Minister,
he
surely
is
entitled
to
rely
on
the
competence
and
integrity
of
those
under
him.
The
second
observation
is
that
at
this
stage,
although
a
violation
of
the
Act
or
a
regulation
must
be
shown,
no
specific
charge
will
have
been
formulated,
and
so
it
will
be
impossible
to
say
with
precision
what
documents
are
or
may
be
required
as
evidence.
In
paragraphs
6,
7
and
8
of
his
affidavit,
Mr
Banks,
an
officer
of
the
Department
of
National
Revenue,
Taxation,
deposed
as
to
false
transactions
between
Usarco
and
Parkway
Iron
and
Metal
Company
Limited,
which
were
entered
in
Usarco’s
books
as
purchases
and,
thereby,
deducted
from
income
by
Usarco
in
its
taxation
years
1972,1973,
1974
and
1975.
This
is
clear
evidence
of
the
making
of
false
entries
and,
probably,
of
the
evasion
of
payment
of
income
tax,
both
offences
under
the
Income
Tax
Act.
The
first
evidentiary
requirement
was
met.
I
have
more
difficulty
with
the
sufficiency
of
the
evidence
that
the
seized
documents
were
or
might
be
required
as
evidence
in
relation
to
those
violation.
Was
it
shown
that
all
the
seized
documents
were
or
might
be
required
for
that
purpose?
I
have
said
that
the
affidavit
contained
clear
evidence
of
the
making
of
false
entries
and,
probably,
income
tax
evasion.
If,
as
was
the
case,
further
examination
of
the
documents
revealed
evidence
of
other
false
transactions,
those
would
not
necessarily
be
separate
violations
of
the
Income
Tax
Act—they
would
be
further
evidence
of
the
offences
already
evidenced
in
the
affidavit.
Moreover,
some
tax
must
be
payable
before
there
can
be
an
evasion.
An
examination
of
all
the
financial
records
would
surely
be
re-
quired
to
see
if
tax
was
payable
in
any
or
each
of
the
taxation
years,
and
these
records
would
be
required
as
evidence
in
any
prosecution
for
income
tax
evasion.
The
difficulty
is
that
Mr
Banks,
in
his
affidavit,
has
largely
followed
the
form
of
the
statute,
and
has
not
stated
the
actual
facts.
He
said:
9.
As
a
result
of
my
enquiries,
documents,
books,
records,
papers
or
things
were
seized
under
paragraph
231
(1
)(d)
of
the
Income
Tax
Act
on
December
14,
1977
from
the
business
premises
of
the
said
Usarco
Limited.
10.
From
my
experience
as
an
officer
of
the
Department
of
National
Revenue,
Taxation,
I
know
that
the
seized
documents,
books,
records,
papers
or
things
are
needed
to
complete
the
investigation
of
the
said
Usarco
Limited.
11.
As
a
result
of
my
enquiries
and
examination
of
the
seized
documents,
books,
records,
papers
or
things,
I
have
reasonable
grounds
to
believe,
and
do
believe,
that
the
time
required
to
complete
the
investigation
will
extend
beyond
the
120
days
time
limit
set
forth
in
subsection
231(2)
of
the
Income
Tax
Act.
12.
Further,
as
a
result
of
my
enquiries,
I
have
reasonable
grounds
to
believe,
and
do
believe,
that
a
violation
under
Section
239
of
the
Income
Tax
Act
or
a
Regulation
has
been
committed
and
the
said
documents,
books,
records,
papers
or
things
are
or
may
be
required
as
evidence
in
any
subsequent
criminal
or
civil
proceedings
against
the
said
Usarco
Limited.
The
need
for
time
to
complete
the
investigation
was
not
a
valid
ground
for
the
making
of
a
retention
order—the
documents
had
to
be
required
as
evidence
in
relation
to
a
violation
already
disclosed.
All
Mr
Banks
said,
on
this
branch
of
the
evidentiary
requirements,
is
that
he
believes
that
a
violation
under
section
239
of
the
Income
Tax
Act
has
been
committed
and
that
the
seized
documents
are
or
may
be
required
as
evidence.
He
does
not
describe
the
documents
or
show
for
what
purpose
they
might
be
required.
Nevertheless,
I
think
he
has
said
enough
to
justify
Judge
Scime’s
finding
that
it
had
been
established
that
the
Minister
had
reasonable
and
probable
grounds
to
believe
that
the
seized
documents
might
be
required
as
evidence.
Judge
Scime
would
not
expect
the
Minister
personally
to
look
at
all
the
documents.
It
was
open
to
him
to
find
that
the
Minister
was
entitled
to
rely
on
the
sworn
statement
of
his
own
officer,
who
had
examined
the
documents,
that
they
were
or
might
be
required
as
evidence
in
relation
to
the
shown
violations.
At
that
stage
the
question
was
little
more
than
one
of
the
relevancy
of
the
documents
to
any
charge
that
might
be
laid
arising
out
of
the
transactions
described
in
the
affidavit.
In
my
opinion,
Judge
Scime’s
retention
order
ought
not
to
have
been
quashed,
in
whole
or
in
part.
The
appeal
by
the
Attorney
General
of
Canada
should
be
allowed,
and
the
order
of
Linden,
J
set
aside.
The
cross-appeal
should
be
dismissed.
Email this Content