Re Precision Mechanics Ltd., 86 DTC 6445, [1986] 2 CTC 240 (Queb. S.Ct.)

Phelan, J.:—Presented to me is the application for the issue of a warrant pursuant to the provisions of section 231.3 of the Income Tax Act (R.S.C. 1952, c. 143, as amended to February 13, 1986) in respect of the above, together with the information, under subsection 231.3 (2) thereof sworn by Jean-Louis Morin, an investigator of the Department of National Revenue.

The section concerned provides that such application and information may be presented ex parte to a judge of the Superior Court having jurisdiction in the province where the matter arises, who may issue the warrant and who subject to the provisions of subsection (3) of section 231.3 shall do so.

Here the applicant, and this to his credit in the circumstances, chose not to proceed ex parte in chambers, but in open court, having notified counsel for the parties involved who appeared and made representations to the undersigned in respect of such application, all of which in view of a rather lengthy and somewhat complex chronology of litigious events in relation to the taxpayers concerned and the offences under the statute they are alleged to have committed.

That part of such history which concerns us at this stage of the present proceedings is recounted in the reasons for judgment of the majority of the Federal Court (Appeal Division) delivered by Pratte, J.A. in the matter of D. Vespoli et al. v. The Queen et al., [1984] C.T.C. 519 at 520-21; 84 D.T.C. 6489-90:

On June 10, 1982, Mr. Alain Ducharme, an officer of the Department of National Revenue, swore an affidavit stating facts which gave him reasonable grounds to believe

(a) that Precision Mechanics Ltd., Domenico Vespoli and Gregorio Posca had violated the Income Tax Act by making false and deceptive statements in the income tax returns of Precision Mechanics Ltd. for the 1976 and 1978 taxation years; and

(b) that Precision Mechanics Ltd. and Domenico Vespoli had violated section 239 of the Income Tax Act by making false and deceptive statements in the income tax return of Precision Mechanics Ltd. for the 1979 taxation year and by making false or deceptive entries in the books of that company for the 1980 taxation year.

After the swearing of that affidavit, Mr. Gerard Leblond, Director, Special Investigations Division of the Department of National Revenue, Taxation acting pursuant to subsection 231(4) of the Income Tax Act, signed a document whereby he authorized named officers of the Department of National Revenue to enter and search

(a) the business premises of Precision Mechanics Ltd. at 11880 and 11890 56th Avenue, Rivières-des-Prairies, Montreal, Quebec, and the residences of Domenico Vespoli and Gregorio Posca ‘‘for documents, books, records, papers or things that may afford evidence as to the violation of any provision of the Income Tax 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;” and

(b) the business premises of Paradis Vespoli Ltée at 10190 Hôtel de Ville Avenue, Montreal North, Quebec, and the offices of Verchère, Noël and Eddy, lawyers, and Bernard Goodman, C.A., “for documents records, papers or things pertaining or relating to Precision Mechanics Limited, Domenico Vespoli and Gregorio Posca, that may afford evidence as to the violation of any provision of the Income Tax 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”;

On June 25, 1982, that authorization was approved by Mr. Justice Gratton for the Superior Court of the Province of Quebec for the years 1976, 1977, 1978, 1979 and 1980.

The officers of the Department were about to proceed to the searches authorized by Mr. Leblond when they learned that Paradis Vespoli Ltée and Precision Mechanics Ltd. had moved to a new address. Instead of going back to Mr. Leblond and to the Superior Court Judge, they obtained a search warrant pursuant to section 443 of the Criminal Code authorizing them to enter and search the new premises of Paradis Vespoli Ltée and Precision Mechanics Ltd.

On July 8, 1982, the premises described in the authorization signed by Mr. Leblond and those described in the warrant were searched and numerous documents were seized.

The appellants thus applied to the Superior Court for an order quashing the search warrant issued pursuant to section 443 of the Criminal Code on the ground that the Criminal Code provisions dealing with search and seizure were superseded by those of the Income Tax Act on the same subject. That application was granted and, as a consequence, all documents that had been seized pursuant to the warrant were returned to the appellants.

A few days later, a new authorization to search and seize was signed pursuant to subsection 231(4) of the Income Tax Act. That authorization mentioned the new address of Precision Mechanics Ltd. and Paradis Vespoli Ltée but made no reference to the offices of Bernard Goodman, C.A., and of Verchère, Noël and Eddy; otherwise, it was couched in the same terms as the authorization signed by Mr. Leblond on June 23, 1982. That new authorization was approved by Mr. Justice Beauregard of the Superior Court on August 4, 1982, and, on August 9, 1982, the new premises of Precision Mechanics Ltd. and Paradis Vespoli Ltée were searched and a number of things were seized.

The Court found at 521 (D.T.C. 6491):

It follows, therefore, that the seizures made of July 8 and August 9, 1982, pursuant to subsection 231(4) of the Income Tax Act, were illegal. It also follows, in my view, that everything that was then seized should be returned to appellants.

In the information presently before me, the informant discloses that he would have been involved in the execution of the warrants and the events surrounding the seizures of July 8 and August 9, 1982 (Paragraphs 4, 14 and 15 of the information). More particularly he candidly states in paragraph 16 thereof:

Au cours de son enquête le dénonciateur a examiné les choses saisies le 8 juillet et le 9 août 1982 en vertu du paragraphe 231(4) de la Loi de L'Impôt sur le Revenu.

In the penultimate paragraph of the information now before me Morin, avers:

Comme résultat des renseignements obtenus et mentionnés à la présente, le dénonciateur a des motifs raisonnables de croire que lesdites choses à rechercher:

(1) existent,

(2) sont dans ledit endroit à perquisitionner,

(3) constitueront des éléments de preuve relativement à la perpétration des infractions à la Loi de l'impôt sur le revenu décrites à la présente.

Informant then concludes for the issue of the search warrant.

On June 30, 1986 at the continuation of the hearing on this matter counsel for the taxpayers involved sought to examine the informant upon his allegations sworn in the information to determine as to whether, and to what extent, such allegations related to information he acquired from his examination of items found and seized in the execution of the earlier warrants on July 8 and August 9, found to be illegal by the judgment of the Appeal Division of the Federal Court of Canada in its judgment of August 30, 1984 (cited supra). Counsel for the applicant objected vigorously to such viva voce examination of informant but stated that he was prepared to admit on his clients’ behalf:

(a) that the informant did indeed examine the materials seized on July 8 and August 9, 1982 (In any event such is alleged in the information);

(b) that if examined in court informant would be unable to state with any precision to what extent any factual allegation of the information would have been founded in intelligence he would have gleaned from his examination of such materials; and

(c) such intelligence (in the investigative sense) may have found its way into internal reports and documentation of the applicants’ Department but not by way of copies or extracts.

To my mind, at least, such admissions obviated the need of any examination of Mr. Morin for the purpose of determining if the allegations of the information constituted admissible evidence for the purposes of subsection 231.3(3).

Counsel for the parties implicated in the information argues that their rights under section 8 of the Canadian Charter of Rights and Freedoms — Part One, the Constitution Act, 1982, as amended to June 21, 1984, which provides that:

8. Everyone has the right to be secure against unreasonable search or seizure.

have been violated, and that he would invoke the remedial provisions under section 24 of the Charter in his clients’ behalf.

24. (1) Anyone whose rights or freedoms, as guaranteed by the Charter have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.

(2) Where, in proceedings under subsection (1) a Court concludes that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter, the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute.

The pretension of Mr. Du Pont that a judge of the Superior Court of a Province, seized of an application and information under section 231.3 of the Income Tax Act, would have jurisdiction to entertain submissions on the part of the taxpayers involved to the effect that their rights under the Charter have been violated and seeking remedial measures thereunder, where the matter is not dealt with ex parte is not contested by the applicant’s counsel. In the matter of James Henry Mills v. The Queen, [1986] 1 S.C.R. 863, in which judgment was rendered on June 26, 1986 by the Supreme Court of Canada it was held that a provincial Superior Court, and by logical extension a judge thereof exercising his jurisdiction as such, will always be a court of competent jurisdiction under subsection 24(1) of the Charter at first instance, that is to say where the issue arises in proceedings before it. The Superior Court will of course continue to have jurisdiction by way of revision where prerogative claims are advanced.

I am persuaded that in indicating that applications for search warrants under subsection 231(3) be made to a judge of the Superior Court having jurisdiction in the Province where the matter arises (231. interpretative provisions) Parliament intended such indication be to such judge qua judge of such court exercising his powers as such and that the persona designata argument will not have application in the present instance.

Counsel for the taxpayers involved urges that in all the circumstances of the matter the information of J. L. Morin be excluded in that the factual material upon which it is based was obtained in a manner that infringed or denied the rights and freedoms of his clients guaranteed by section 8 of the Charter and that its admission in this proceeding would bring the administration of justice in disrepute.

I am referred to the case of Regina v. Therens, reported at [1985] 1 S.C.R. 613; 18 C.C.C. (3d) 481 in which the majority of the Supreme Court of Canada, confirming the Court of Appeal, of Saskatchewan, dismissed an appeal by Her Majesty against the exclusion by a judge of first instance of breathalyzer evidence tendered in a prosecution of an “over 80” offence under subsection 235(1) of the Criminal Code on the ground that it had been obtained in violation or disregard of the accused’s constitutional rights under paragraph 10(b) of the Charter to retain and instruct counsel and to be advised of such right upon detention.

Here the evidence and the only evidence is the information, dated June 16, 1986, in which informant admittedly would have utilized the knowledge he obtained from his examination of materials searched for and seized in a manner which was declared to have been illegal by Appeal Division of the Federal Court of Canada in August of 1984 in Domenico Vespoli et al (supra). Illegal search or seizure is surely “unreasonable" within the meaning of section 8 of the Charter.

There is a further parallel to the Therens matter where Mr. Justice LeDain (dissenting), would have noted the good faith of the police officers concerned in view of the earlier interpretations of the old statute styled Canadian Bill of Rights. He would have held that in the circumstances the administration of justice would not have been brought in disrepute. The searches and seizures of July 8 and August 9, 1982 in this matter were made under the former section 231.4 of the Income Tax Act, declared to be unconstitutional and inoperative in this matter in August of 1984. Here one must resolve the matter as to whether materials seized in good faith in 1982, or the continuing knowledge of their contents after the 1984 judgment, may be utilized in formulating a demand for the issue of a warrant under section 231.3 of the statute in 1986 without violating such Charter rights.

The majority of the Supreme Court in Therens would reply in the negative.

See Estey, J. at 621 (C.C.C. 488):

This brings one to the core issue in this appeal, namely, the admissibility of the evidence as to the alcohol content in the respondent’s blood as determined by the test taken under s. 235(1) of the Code.

The admissibility of this evidence in my view and again I am in respectful agreement with my colleague Le Dain J., falls to be determined by s. 24(2) of the Charter and not by reason of s-s. (1) of that section, as was the view of the Court of Appeal below (5 C.C.C. (3d) 409 148 D.L.R. (3d) 672, 33 C.R. (3d) 204). Subsection

(2) alone in the Charter of Rights empowers a court to exclude evidence where “that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter.” Subsection (2) goes on to direct, in mandatory terms:

24(2) . . . the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute. (Emphasis added).

Here the police authority has flagrantly violated a Charter right without any statutory authority for so doing. Such an overt violation as occurred here must, in my view, result in the rejection of the evidence thereby obtained. We are here dealing only with direct evidence or evidence thereby obtained directly and I leave to another day any consideration of evidence thereby indirectly obtained. To do otherwise than reject this evidence on the facts and circumstances in this appeal would be to invite police officers to disregard Charter rights of the citizen and to do so with an assurance of impunity. If s. 10(b) of the Charter of Rights can be offended without any statutory authority for the police conduct here in question and without the loss of admissibility of evidence obtained by such a breach then s. 10(b) would be stripped of any meaning and would have no place in the catalogue of “legal rights” found in the Charter.

The admissibility of the information here falls to be determined by reference to subsection 24(2) and not subsection 24(1) of the Charter, as in Therens. The information is based, at least in part, upon intelligence declared by the courts to have been illegally obtained in a search and seizure which violated Charter rights, and such determination prior to the date of the information. I may but conclude in these circumstances that the admission of the information to my consideration would bring the administration of justice into disrepute as in Therens and I must therefore exclude it under subsection 24(2) of the Charter.

This being so there is no admissible proof before me to satisfy me under the provisions of subsection 231.3(3) that a warrant should issue.

I have not made reference to the related but, in my view, at best, peripheral questions raised in the litigation respecting mandamus proceedings directed towards a justice of the peace consequent upon her declining jurisdiction to deal with an information respecting the issue of a warrant under the provisions of section 443 of the Criminal Code. These culminated in the judgment of the Court of Appeal of Quebec dated February 5, 1986 and the subsequent refusal of the Supreme Court to grant leave to appeal.

The single issue here, that is the question of exclusion of evidence under subsection 24(2) of the Charter was not at issue in that litigation.

The dismissal of the present application entails not the declining, but the exercise of jurisdiction under subsection 231.3(3) of the statute.

The present application must, therefore, BE DENIED.

Application denied.