R. v. Agopsowicz, 93 DTC 5416, [1994] 1 CTC 119 (Sask. P. Ct.)

Fenwick, J. (orally):—Now is the time set for the decision in the Charter application. I’m prepared to deliver that decision now, and I'll do that.

The accused, Stanley George Agopsowicz, stands charged that he:

Did in the Province of Saskatchewan, between December 31, 1984 and May 2, 1989, wilfully evade the payment of taxes imposed by the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") for the 1985, 1986, 1987 and 1988 taxation years in the amount of $46,036.45, by failing to declare income in the amount of $176,160.65 on his income tax returns filed for the said taxation years and by providing a net income for himself in the amount of nil on the income tax returns of Lorraine Agopsowicz, filed for the 1985 and 1986 taxation years and did thereby commit an offence contrary to paragraph 239(1 )(d) of the Income Tax Act.

He is also charged with four counts of making false or deceptive statements contrary to paragraph 239(1 )(a) of the Income Tax Act. These latter charges allege the method by which he evaded payment of the taxes in the first count.

With respect to the major issue in this application, the accused alleges, and the Crown acknowledges, that the accused's right under section 8 of the Canadian Charter of Rights and Freedoms to be secure against unreasonable search or seizure was infringed. The accused has applied pursuant to subsection 24(1) of the Charter to have evidence obtained by the Crown in violation of section 8 excluded pursuant to subsection 24(2) of the Charter. Section 24 of the Charter provides:

24 (1) Anyone whose rights or freedoms as guaranteed by this 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.

Defence and Crown counsel requested that the Court hear evidence and argument and render its decision with respect to this application before proceeding with the lengthy trial on the charges themselves as it is expected that a decision adverse to the Crown would cause the prosecution to be terminated.

Revenue Canada conducted an audit and an enquiry into the financial affairs of the accused. On August 30, 1990, upon the application of the Director General, Compliance, Research and Investigations Directorate of the Department of National Revenue, pursuant to subsection 231.3(3) of the Income Tax Act warrants to enter and search the residence and outbuildings of the accused, together with his business premises and all storage facilities for his proprietorship Antiques A to Z, were granted by Mr. Justice W.R. Matheson. The search warrants were executed contemporaneously on September 6, 1990 by officers of National Revenue, assisted by the Regina City Police and the documents which are the subject of this application were seized. On September 2, 1990, Mr. Justice K.R.N. MacLeod granted an order for retention of the items seized, pursuant to subsection 233.3(6) of the Income Tax Act.

Section 231.3 was enacted by Parliament in 1986 in response to a number of appellate court decisions finding that the previous search warrant provisions of the Income Tax Act violated section 8 of the Charter. In November of 1990, the Federal Court of Appeal in Baron v. Canada, [1991] 1 C.T.C. 125, 91 D.T.C. 5055, held that this new regime for search and seizure violated sections 7 and 8 of the Charter and was consequently of no force and effect and quashed the search warrant. On appeal the Supreme Court of Canada, in a judgment rendered January 21,1993, ([1993] 1 S.C.R. 416, [1993] 1 C.T.C. 111,93 D.T.C. 5018), held that section 231.3 violated section 8 of the Charter and is of no force and effect because a residual discretion in the judiciary to refuse to issue a search warrant in appropriate circumstances, even though the statutory criteria for its issuance have been met, is required by section 8 of the Charter. Subsection 231.3(3) removed this residual discretion. In the Baron case the Supreme Court did not consider whether the evidence obtained could, despite the violation, nonetheless be introduced into evidence. Faced with the Federal Court of Appeal decision in Baron, the Department of National Revenue applied to Judge Boyce of the Provincial Court of Saskatchewan for a warrant under section 487 of the Criminal Code, authorizing it to, in effect, reseize the documents that had been seized under the previous warrants on September 6, 1990. Notice of this application was given to the accused and he opposed it. His Honour Judge Boyce, on April 22, 1991, declined to authorize a warrant stating:

What I think is accurately expressed in the information is a reference to a reseizure. I know of no precedent in that regard, and I am sure counsel have pursued the matter. The Crown points out to me certain decisions that can be taken to operate in their favour, but the factual situation is quite distinguishable. My practical position is I've got to either observe the Queen's Bench order or disregard it. The Crown puts to me that I am entitled to. I don't share that view. I can see a course of action that could be followed, to have the matter before me in regular fashion, but it seems to me a shortcut is being pursued.

Whilst the order of Queen's Bench stands, I feel I must have regard to it. Whether or not that order can be properly attacked, the order quashed, then, of course, the situation is much simpler. But I do not consider that it is within my jurisdiction to quash it. I wouldn't pretend to and, by the same token, I do not pretend to disregard that order, unless and until, of course, an appropriate superior authority intervenes in the situation.

I find myself without jurisdiction. Any other course would involve disregard for an existing order.

No further judicial steps were taken by either party until February 15,1993, the date set for the commencement of the trial on the present charges, at which time the accused launched the application presently under consideration.

There is no dispute that because section 231.3 of the Income Tax Act violates section 8 of the Charter, section 231.3 is of no force and effect and therefore the search warrants issued and executed thereunder are also invalid and of no force and effect. The search in law was warrantless and unreasonable. Thus it can be said the Department has retained the documents for the period from September 9, 1990, until today, a period of almost two and one- half years, without a proper foundation. That, however, is not the end of the matter.

The Supreme Court of Canada, in R. v. Collins, [1987] 1 S.C.R. 265, 38 D.L.R. (4th) 508, 56 C.R. (3d) 193, considered the question of when evidence obtained by violation of section 8 of the Charter must be excluded. The test, of course, is set out in subsection 24(2) of the Charter. That is, 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 measures to be applied are not precise and well-defined as the standards available for weights and distances. There are no precise standards. As Lamer, J. points out on page 286 (S.C.R., D.L.R. 528, C.R. 213), the test will only take on concrete meaning through the disposition of the cases. At pages 280-81 (S.C.R., D.L.R. 523, C.R. 208) the Court states:

It is whether the admission of evidence would bring the administration of justice into disrepute that is the applicable test. Misconduct by the police in the investigatory process often has some effect on the repute of the administration of justice, but subsection 24(2) is not a remedy for police misconduct, requiring the exclusion of the evidence if, because of this misconduct, the administration of justice was brought into disrepute. Subsection 24(2) could well have been drafted in that way, but it was not. Rather, the drafters of the Charter decided to focus on the admission of the evidence in the proceedings, and the purpose of subsection 24(2) is to prevent having the admission of justice brought into further disrepute by the admission of the evidence in the proceedings. This further disrepute will result from the admission of evidence that would deprive the accused of a fair hearing, or from judicial condonation of unacceptable conduct by the investigatory and prosecutorial agencies. It will also be necessary to consider any disrepute that may result from the exclusion of the evidence. It would be inconsistent with the purpose of subsection 24(2) to exclude evidence if its exclusion would bring the administration of justice into greater disrepute than would its admission. Finally, it must be emphasized that even though the inquiry under subsection 24(2) will necessarily focus on the specific prosecution, it is the long-term consequences of regular admission or exclusion of this type of evidence on the repute of the administration of justice which must be considered.

At page 282 (S.C.R., D.L.R. 524, C.R. 209), the Supreme Court adopts a reasonable person test, as follows:

Would the admission of the evidence bring the administration of justice into disrepute in the eyes of a reasonable man, dispassionate and fully apprised of the circumstances of the case? The reasonable person is usually the average person in the community, but only when that community's current mood is reasonable.

Beginning at page 283 (S.C.R., D.L.R. 525, C.R. 210), the factors most frequently considered and to be balanced are enumerated. These are:

— What kind of evidence was obtained?

— What Charter right was infringed?

— Was the Charter violation serious or was it merely of a technical nature? — Was it deliberate, wilful or flagrant, or was it inadvertent or committed in good faith?

— Did it occur in circumstances of urgency or necessity?

— Were there other investigatory techniques available?

— Would the evidence have been obtained in any event?

— Is the offence serious?

— Is the evidence essential to substantiate the charge?

— Are other remedies available?

There are three categories of factors to be considered in assessing the admissibility of evidence under subsection 24(2) of the Charter, and these concern:

1. The effect of the admission of the evidence on the fairness of the trial;

2. The seriousness of the violation; and

3. The effect of exclusion on the reputation of the administration of justice.

Some evidence can be considered under more than one of these categories.

Discussing the first category, Lamer, J. states at pages 284-85 (S.C.R., D.L.R. 526, C.R. 211):

. . . I find it useful to group the factors according to the way in which they affect the repute of the administration of justice. Certain factors listed are relevant in determining the effect of the admission of the evidence on the fairness of the trial, The trial is a key part of the administration of justice, and the fairness of Canadian trials is a major source of the repute of the system and is now a right guaranteed by subsection 11(d) of the Charter. If the admission of the evidence in some way affects the fairness of the trial, then the admission of the evidence would tend to bring the administration of justice into disrepute and, subject to a consideration of the other factors, the evidence generally should be excluded.

It is clear to me that the factors relevant to this determination will include the nature of the evidence obtained as a result of the violation and the nature of the right violated and not so much the manner in which the right was violated. Real evidence that was obtained in a manner that violated the Charter will rarely operate unfairly for that reason alone. The real evidence existed irrespective of the violation of the Charter and its use does not render the trial unfair. However, the situation is very different with respect to cases where, after a violation of the Charter, the accused is conscripted against himself through a confession or other evidence emanating from him. The use of such evidence would render the trial unfair, for it did not exist prior to the violation and it strikes at one of the fundamental tenets of a fair trial, the right against self-incrimination. Such evidence will generally arise in the context of an infringement of the right to counsel. The use of self-incriminating evidence obtained following a denial of the right to counsel will generally go to the very fairness of the trial and should generally be excluded. Several Courts of Appeal have also emphasized this distinction between re-existin real evidence and self-incriminatory evidence created following a breach of the Charter. It may also be relevant, in certain circumstances, that the evidence would have been obtained in any event without the violation of the Charter.

In the present case, the evidence sought to be excluded is real evidence, that is, it did not come into existence as a result of the Charter breach. Therefore, it is less likely to be excluded. However, the comments of R.J. Delisle in an article entitled “Collins: An Unjustified Distinction", (1987) 56 C.R. (3d) 216 commend themselves to me. At page 217 he states:

It is difficult, if not impossible, to understand why the fairness of a trial would or would not be affected by the admission of evidence obtained as the result of a Charter violation depending on the type of evidence obtained during the investi- gation. The knowledge of the accused's involvement in the offence existed prior to the Charter violation but was produced for our examination by his self- incriminatory statement following the Charter violation; the real evidence existed prior to the violation but was produced for our examination only by its discovery through the unconstitutional search.

In my opinion, Mr. Justice Vancise in R. v. Baylis (1988), 66 Sask. R. 268, 65 C.R. (3d) 62,43 C.C.C. (3d) 514 (C.A.), provides some judicial support for these comments when he states (Sask. R. 289, C.R. 90, C.C.C. 541-42):

Is the evidence physical or "real evidence" which existed irrespective of the violation of the Charter, such as incriminating evidence obtained in an unreasonable search, or is it evidence emanating from the accused himself, such as a confession. In the latter case the evidence did not exist prior to the violation, and its use violates the tenet of fundamental justice, the right against selfincrimination. In the former case, the violation of the right to oe secure against unreasonable search or seizure is in my opinion as fundamental as the right against self-incrimination. For my part, I can see no difference between the situation where an accused gives the police information which results in the discovery of crucial incriminative evidence which leads to conviction (a denial of his right to be secure against self-incrimination) and where the police discover crucial incriminating evidence in the course of an unreasonable and illegal search. I hasten to add, the section in Collins appears to place greater emphasis on selfincrimination than on the violation. of rights which result in the illegal and unreasonable obtainment of evidence.

Whatever the relative importance of the difference between" real evidence" and "evidence which didn't pre-exist the Charter breach” may be, I am satisfied that a reasonable man would be moved by the comments of Professor Delisle and Mr. Justice Vancise, to carefully weigh the effect of the admission of the “real evidence" in this case would have with respect to bringing the administration of justice into disrespect.

At page 285 (S.C.R., D.L.R. 527, C.R. 212) of the Collins decision, the Court states the following with respect to the second category:

There are other factors which are relevant to the seriousness of the Charter violation and thus to the disrepute that will result from judicial acceptance of evidence obtained through that violation. As Le Dain J. wrote in Therens ([1985] 1 S.C.R. 613, 18 D.L.R. (4th) 655, 18 C.C.C. (3d) 481) at page 652 (S.C.R., D.L.R. 686, C.C.C. 512):

The relative seriousness of the constitutional violation has been assessed in the light of whether it was committed in good faith, or was inadvertent or of a merely technical nature, or whether it was deliberate, wilful or flagrant. Another relevant consideration is whether the action which constituted the constitutional violation was motivated by urgency or necessity to prevent the loss or destruction of the evidence.

Originally, the violation here was committed in good faith and was not deliberate, wilful or flagrant. The Department acted on a law that had not been successfully attacked. However, not long after the seizure, the Department became aware of the breach and acted only to the extent set out above.

The questions of urgency or the necessity to prevent the loss or destruction of the evidence are not relevant here with respect to the original seizure.

At pages 285-86 (S.C.R., D.L.R. 527, C.R. 212), the Court discusses the third category:

The final relevant group of factors consists of those that relate to the effect of excluding the evidence. The question under s. 24(2) is whether the system's repute will be better served by the admission or the exclusion of the evidence, and it is thus necessary to consider any disrepute that may result from the exclusion of the evidence. In my view, the administration of justice would be brought into disrepute by the exclusion of evidence essential to substantiate the charge, and thus the acquittal of the accused, because of a trivial breach of the Charter. Such disrepute would be greater if the offence was more serious. I would thus agree with Professor Morissette that evidence is more likely to be excluded if the offence is less serious. I hasten to add, however, that if the admission of the evidence would result in an unfair trial, the seriousness of the offence could not render that evidence admissible. If any relevance is to be given to the seriousness of the offence in the context of the fairness of the trial, it operates in the opposite sense: the more serious the offence, the more damaging to the system's repute would be an unfair trial.

Counsel for the accused denounced the conduct of the officers of National Revenue in strong terms. I am not prepared to accept his descriptions. In this case, so much depends on where the focus is placed. On behalf of the Crown it can be submitted that the Department, whose job it is to administer the provisions of the Income Tax Act, obtained a warrant in accordance with the law as it then existed. After it was discovered that there were problems with the law, the Department attempted to remedy the situation by obtaining a Criminal Code search warrant. This application was denied. After this, it continued to hold the documents, allowing access to the accused if he wished, knowing that the courts have, in the past, allowed the introduction of evidence obtained in violation of the Charter. The documents seized were real evidence. The case for the Crown is at an end, as I understand it, if the documents are excluded.

Different considerations prevail if one were to focus on the rights and the plight of the accused. His section 8 Charter rights were violated. In Baron at pages 444-45 (S.C.R., C.T.C. 124, D.T.C. 5027), Mr. Justice Sopinka states:

Section 231.3 contemplates and authorizes the physical entry and search, against the will of the occupant, of private premises, even those occupied by innocent third parties against whom no allegation of impropriety is levelled. The purpose of the search is to provide evidence to be used in the prosecution of Income Tax Act offences. Physical search of private premises (I mean private in the sense of private property, regardless of whether the public is permitted to enter the premises to do business) is the greatest intrusion of privacy short of a violation of bodily integrity.

And he continues at page 445 (S.C.R., C.T.C. 124, D.T.C. 5027):

The intrusive nature of a physical search has been acknowledged by the Court on various occasions . . . . Warrants for the search of any premises constitute a significant intrusion on the privacy of an individual that is both upsetting and disruptive.

The seizure has continued for close to two and one-half years and although the violation at the outset was inadvertent, it has continued long after the Crown was seized with the knowledge of the violation. While the allegations against the accused are serious, they are under a revenue-raising statute and not under one involving bodily harm or the evils associated with drug trafficking. The former search and seizure provisions of the Income Tax Act, were defective as were these.

In R. v. Cancor Software Corp., [1992] 1 C.T.C. 68, 91 D.T.C. 5456, the Ontario Court of Justice (General Division), dealing with evidence seized under the same provisions as in the present case, came to the conclusion that the evidence should be accepted rather than rejected. In that case the seized items were not held as long after the Charter violation was apparent as in the present case.

In another Ontario Court of Justice decision, R. v. Peel Air Services Ltd., [1993] 1 C.T.C. 71, 92 D.T.C. 6553, the Court came to the opposite conclusion, upholding a Provincial Court decision disallowing the introduction of the evidence. In Peel, the Crown attempted unsuccessfully to obtain a section 487 Criminal Code warrant in applications both before a Justice of the Peace and a Judge of the Provincial Court. At page 73 (D.T.C. 6554) Belleghem stated:

Not surprisingly, Judge Takach held, at page 182 of his ruling, that "some action must be taken to legitimize conduct that is subsequently held to be inappropriate", and excluded the documents under section 24 of the Charter. Refusing to save their admission under section 1, he stated at page 181 of his ruling as follows:

In my view, the administration of justice will be brought into disrepute by judicial condonation of unacceptable action or inaction by prosecutorial agencies. Permitting evidence that had been unlawfully obtained and held where immediate specific action was possible to legitimize the seizure and retention, in my view, would bring the administration of justice into disrepute.

Beginning at page 176 Judge Takach of the Provincial Court set out four options which, in his opinion, were available to the Crown. First, he suggests, it could attempt to appeal or otherwise review the decisions not to grant a Criminal Code search warrant. Secondly, the Crown could have brought another application before another Judge or Justice, to authorize continued seizure or withholding of the documents. Thirdly, the Crown could have returned the documents to the accused parties and began anew. Finally, the Crown could have opted to do nothing further in the hope that, notwithstanding the unlawful possession of the documents, they nevertheless would be admitted into evidence as not bringing the administration of justice into disrepute.

While I am not certain that each option suggested is a viable one, I think it incumbent on the Crown in the circumstances of the present case to demonstrate that it has attempted to take all possible steps to remedy its faulty position. I would think it possible that the Crown could have attempted to return the seized items and immediately and properly seize them. They were not illegal substances like drugs or prohibited weapons.

I do not intend to examine each possibility open to the Crown and although, in Carlini Bros. Body Shop Ltd. v. R., [1993] 1 C.T.C. 55, 92 D.T.C. 6543 (Gen. Div.) and in Hatzinicoloau v. M.N.R., [1987] 1 C.T.C. 365, 87 D.T.C. 5191 (S.C.O.), it was the accused who applied for the return, the cases do demonstrate that the courts have been willing to delay the implementation of the order for a return to the taxpayer of items seized, to allow the Crown to reseize or continue the existing seizure by other judicial means.

Although one can well have sympathy for the Department of National Revenue, and can understand the difficulties which it encountered when its statutory authority was later ruled unconstitutional and when the law is not always clear, in the end weighing and balancing the factors established in Collins in this case, I have come to the conclusion that the breach of the Charter rights of the accused should result in an order for the exclusion of the evidence obtained pursuant to the search warrants in question, and there will be an order to that effect.

MS. JANKE: With respect to the—I assume that this decision is on the—the trial itself, with respect to the trial itself then, the Crown would not call—would call no further evidence.

THE COURT: Okay. Thank you very much. I take it you're calling no evidence?

MR. WILLIAMS: That's correct, Your Honour.

THE COURT: No one wishes to present any argument? Accordingly, with respect to each count, I find the accused not guilty. Thank you counsel.

Application allowed.