Sherman c. Canada (Ministre du revenue national), 2002 FCT 586

Date: 20020522

Docket: T-612-00

Neutral citation: 2002 FCT 586

BETWEEN:

                                                              DAVID M. SHERMAN

                                                                                                                                                       Applicant

                                                                                 and

                                          THE MINISTER OF NATIONAL REVENUE

                                                                                                                                                   Respondent

                                                            REASONS FOR ORDER

McKEOWN J.

[1]                 The applicant seeks judicial review of a decision of the Minister of National Revenue (the "Minister"), wherein the Minister refused to disclose information under the Access to Information Act ("the Act"). The applicant seeks an order that the information requested be disclosed, and an order for costs, regardless of the outcome of this application.

[2]                 The issue is:    was the information properly exempted from disclosure pursuant to paragraphs 13(1)(a), 15(1), 16(1)(b) or 16(1)(c) of the Act?

FACTS:

The Request:

[3]                 The applicant applied to Revenue Canada by way of letter dated February 19, 1999, for disclosure of certain information regarding the extent to which Revenue Canada uses the United States Internal Revenue Service ("IRS") to collect Canadian taxes, and the extent to which the IRS uses Revenue Canada to collect U.S. taxes. Specifically, the request asked:

With respect to Article XXIV A of the Canada-United States Tax Convention, which permits Revenue Canada to seek collection assistance from the U.S. Internal Revenue Services (IRS), and permits the IRS to seek collection assistance from Revenue Canada:

1.           Since this provision came into force in 1995, how many requests have been made by Revenue Canada to the IRS? How many requests have been made by the IRS to Revenue Canada?

2.           What were the total dollars involved in collection assistance requested by Revenue Canada of the IRS? By the IRS of Revenue Canada?

3.           What percentage of the requests have been accepted for action by the IRS? By Revenue Canada?

4.           What percentage of the requests acted on have resulted in successful action by the IRS? By Revenue Canada?

             5.            What percentage of the dollars requested have been collected by the IRS and remitted to Revenue Canada? Collected by Revenue Canada and remitted to the IRS?

6.            Can I get breakdowns of each of the above numbers by year (1995, 1996, 1997, 1998)?

[4]                 On May 10, 1999, the Director of the Access to Information and Privacy Division, Revenue Canada, stated in a letter that the information requested is exempt from disclosure pursuant to paragraphs 13(1)(a), 16(1)(b) and (c) of the Act.

[5]                 Four days later the applicant complained to the Information Commissioner. He submitted that the information sought is statistical information, and is thus not confidential or provided by the IRS to Canada so as to fall within paragraph 13(1)(a). With respect to paragraph 16(1)(b), the applicant argued that the information relates to the collection of taxes and not to investigative techniques and investigations. With respect to paragraph 16(1)(c), he submitted that the information cannot reasonably be expected to be injurious to the enforcement of Canadian laws or to the conduct of investigations, as the matter deals only with collections, and the provision for assistance in collection is in the law.

[6]                 The Information Commissioner, in a letter dated February 22, 2000, stated that the applicant's complaint was not substantiated. With respect to paragraph 13(1)(a), he found that the information was obtained in confidence from the government of a foreign state, it was not in the public domain and there was no consent for disclosure. With respect to paragraphs 16(1)(b) and (c), he found that the disclosure could reasonably be expected to be injurious to the enforcement of a law of Canada, and was satisfied that the discretion was properly exercised. He also indicated with respect to the request for a yearly breakdown, that yearly information had not been compiled.

The Convention

[7]                 Canada and the United States are parties to the Convention Between Canada and the United States of America with respect to Taxes on Income and on Capital, as amended by the Protocols signed June 14, 1983 and March 28, 1984 (the "Convention"). The purpose of the Convention is to avoid double taxation and prevent fiscal evasion with respect to taxes on income and on capital.

[8]                 The purpose of Article XXVIA is for Canada and the United States to lend assistance to each other in the collection of taxes. The two countries agree that any information received by either one of them under the Convention shall be treated as secret in the same manner as information obtained under the taxation laws of Canada and the United States and shall be disclosed only to persons or authorities involved in the assessment of, collection of, or the administration and enforcement in relation to taxes to which the Convention applies.

[9]                 In accordance with Article XXVII, all information exchanged in relation to Article XXVIA of the Convention is treated as secret by both the Canada Customs and Revenue Agency ("CCRA") and the IRS and the Competent Authorities of each shall exchange the information. There is a provision in paragraph 1 of Article XXVII which reads:

They may disclose the information in public court proceedings or in judicial decisions.

[10]            Based on correspondence with the IRS, the Canadian Competent Authority under the Convention concluded that the release of the requested information in this case would lead to a change in IRS policy resulting in unwillingness to exchange important information under the Convention.

ANALYSIS:

[11]            I will now determine whether the information was properly exempted from disclosure pursuant to paragraph 13(1)(a) of the Act. In applying any of the exemption provisions it is important to keep in mind the purpose of the Act as set out in subsection 2(1):

[12]            In Rubin v. Canada (Minister of Transport) (C.A.) [1998] 2 F.C. 430, McDonald J.A. commented on this purpose and referred to Dagg v. Canada (Minister of Finance) [1997] 2 S.C.R. 403 where LaForest J.stated:

Rights to state-held information are designed to improve the workings of government; to make it more effective, responsive and accountable. Consequently,

while the Access to Information Act recognizes a broad right of access to "any record under the control of a government institution" (s. 4(1)), it is important to have regard to the overarching purposes of the Act in determining whether an exemption to that general right should be granted.

McDonald J.A. went on to state:

In my opinion, therefore, all exemptions must be interpreted in light of this clause. That is, all exemptions to access must be limited and specific. This means that where there are two interpretations open to the Court, it must, given Parliament's stated intention, choose the one that infringes on the public's right to access the least. It is only in this way that the purpose of the Act can be achieved. It follows that an interpretation of an exemption that allows the government to withhold information from public scrutiny weakens the stated purpose of the Act.

It is important to emphasize that this does not mean that the Court is to redraft the exemptions found in the Act in order to create more narrow exemptions. A court must always work within the language it has been given. If the meaning is plain, it is not for this Court, or any other court, to alter it.

[13]            I note as well that the burden of proof required to establish an exemption is that of the balance of probabilities (Tridel Corp v. CMHC (1996) 115 F.T.R. 185 at 196 (T.D.)). The onus rests on the party resisting disclosure. (Societe Gamma Inc. v. The Department of the Secretary of State of Canada 79 F.T.R. 42 (T.D.))

[14]            In this case the Information Commissioner also determined that the information was exempt from disclosure under the exemptions provided for in paragraphs 13(1)(a), 16(1)(b) and 16(1)(c). The opinion of the Commissioner is a factor for the Court to consider when determining whether the information should be disclosed. (Rubin v. Canada (Canada Mortgage and Housing Corporation), [1989] 1 F.C. 265 (F.C.A.) at 272).

[15]            I will now set out paragraph 13(1)(a), which reads as follows:

[16]            Subsection 13(2) permits the head of a government institution to disclose a record containing information described in subsection (1) if the government from whom the information was obtained consents to disclosure or makes the information public. This subsection is inapplicable in this case as the IRS has neither consented to the disclosure nor made the information public.

[17]            Paragraph 13(1)(a) contains a mandatory exemption where information was obtained in confidence from the government of a foreign state. In reviewing decisions not to disclose pursuant to a mandatory exemption, the Court's role is to determine whether the head of the government institution erred in the factual determination that the requested information falls within the exemption. See Canadian Jewish Congress v. Canada (Minister of Employment and Immigration), [1996] 1 F.C. 268 (T.D.). As well as being a mandatory exemption it is also a

class exemption since disclosure of the information does not have to cause any harm. See Ruby v. Canada (Royal Canadian Mounted Police), [1998] 2 F.C. 351 (F.C.T.D.) at paragraph 46.

[18]            There are three requirements that must be met in order for the information to fall within paragraph 13(1)(a) of the Act. The first requirement is that the information must be obtained in confidence from the foreign government, i.e. the United States. In this case the records containing the information are a compilation of statistics about the collection assistance given by Canada to the United States and received by Canada from the United States under the Convention. Under Article XXVIA of the Convention, the United States makes requests for Canada's collection assistance and Canada makes requests for the United States' collection assistance.    The applicant submits that the information was not collected from the United States. The applicant submits that the information he requests is simply statistics from the CCRA's own files on the extent to which collection assistance has taken place. The applicant submits that no individual records need to be disclosed and that statistics about the information are not the same as the information itself. However, in my view the statistics are an integral part of the information supplied under the Convention, as the statistics could not exist without the information from the United States. The Government of Canada is free to choose what part of their own information they choose to release in statistical form, however, the difference is that by releasing such statistics with respect to their own data it does not interfere with relations with foreign countries. The IRS has told Canada it does not want the information disclosed. It could jeopardize working relations between Canada and the United States under the Convention.

[19]            The second requirement of paragraph 13(1)(a) is that the information must have been obtained in confidence.

[20]            All information exchanged under Article XXVII of the Convention relating to Article XXVIA of the Convention is treated as secret by both CCRA and the IRS. The applicant submitted that since domestic statistics are released, there should be no change in policy with respect to statistics obtained through foreign governments. It is clear that if the applicant was requesting specific records and information exchanged with respect to individual taxpayers pursuant to the Convention there would be no question that this would be confidential information to which paragraph 13(1)(a) would apply. The information requested is about information exchanged under the Convention, and therefore, it should be treated in the same manner as information exchanged under the Convention. It should be treated as secret. Nadon J. in Do-Ky v. Canada (Minister of Foreign Affairs and International Trade), [1997] 2 F.C. 907 at 916 set out a number of principles which are applicable to access to information cases. The eighth principle reads as follows:

8. Each distinct record must be considered on its own and in the context of all the documents requested for release, as the total contents of the release are bound to have considerable bearing on the reasonable consequences of its disclosure.

The position of the United States Government on the release of the information is that it considers it to have been sent and received in confidence and that the information should not be

released. This provides further support for the view that the requested information was obtained in confidence.

[21]            The third requirement of paragraph 13(1)(a) is the information must have been obtained from the government of a foreign state and there is no dispute that the IRS is an institution of the United States Government or that the United States is a foreign state.

[22]            Once it is determined that the information falls within the mandatory exemption contained in paragraph 13(1)(a), the head of the government institution must refuse to disclose the information unless the United States either consents to disclosure or makes the information public. I am satisfied that the United States has not consented to the disclosure and has not made the information public based on the evidence before me. In light of my finding under paragraph 13(1)(a) I do not have to consider subsection 15(1), or paragraphs 16(1)(b) and 16(1)(c).

[23]            I must now decide whether the applicant is entitled to costs. In spite of losing this application, section 53 of the Act provides as follows:

[24]            I cannot agree with the applicant that important new principles have been raised in relation to the Act. The issue of whether the statistical summary in this case falls within the

exemptions is primarily a factual determination based on the evidence before me and does not involve important new principles.

[25]            I note, however, that the applicant brought this application in the public interest and does not stand to benefit personally from the disclosure. Accordingly, I will exercise my discretion to declare that there shall be no costs in this matter.

[26]            The application for judicial review is dismissed without costs.

   "W. P. McKeown"

                                                                                                      J.F.C.C.                        

TORONTO, ONTARIO                                                                                                    

May 22, 2002

FEDERAL COURT OF CANADA

    Names of Counsel and Solicitors of Record

COURT NO:                       T-612-00

STYLE OF CAUSE:                 DAVID M. SHERMAN

                                                Applicant

- and -

THE MINISTER OF NATIONAL

REVENUE

                                               Respondent

DATE OF HEARING:         TUESDAY, MAY 7, 2002

PLACE OF HEARING:        TORONTO, ONTARIO

REASONS FOR ORDER BY:    MCKEOWN J.

DATED:                    WEDNESDAY, MAY 22, 2002

APPEARANCES BY:        Mr. David M. Sherman

For the Applicant, on his own behalf

Mr. David W. Chodikoff

Ms. Sointula Kirkpatrick

For the Respondent

SOLICITORS OF RECORD:David M. Sherman

53 Bevshire Circle

Thornhill, Ontario

L4J 5B4

For the Applicant, on his own behalf

Morris Rosenberg

Deputy Attorney General of Canada

For the Respondent

FEDERAL COURT OF CANADA

     Date: 20020522

     Docket: T-612-00

BETWEEN:

DAVID M. SHERMAN

                     Applicant

- and -

THE MINISTER OF NATIONAL

REVENUE

                    Respondent

REASONS FOR ORDER