Date:
20121017
Docket:
T-1623-09
Citation:
2012 FC 1207
Ottawa, Ontario,
October 17, 2012
PRESENT: The
Honourable Mr. Justice O'Reilly
BETWEEN:
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JEAN BREAU
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Applicant
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and
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THE MINISTER OF NATIONAL
REVENUE
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Respondent
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AND BETWEEN:
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Docket: T-1625-09
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JOHN STEPHAN, SANDRA DELAHAYE,
KENNETH MCGOWAN, WILLIAM HAVER, SCOTT COVERT, DAVID PRENTICE, ANDREW LLOYD,
ANDREPA HOLDINGS LTD., CANAVISTA FINANCIAL CENTER INC., AND WINBIG SPORTS
INC.
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Applicants
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and
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THE MINISTER OF NATIONAL
REVENUE
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
I. Overview
[1]
The
applicants ask me to set aside several requirements for information [RFIs]
issued by the Minister of National Revenue in 2009. The RFIs ask the applicants
to provide information about their financial and tax history. The applicants
claim that the RFIs were improperly issued for the purpose of gathering
information for a criminal investigation against them. Accordingly, they
contend that the RFIs violated their right to remain silent protected under s 7
of the Canadian Charter of Rights and Freedoms.
[2]
The
applicants were allegedly involved in a tax plan operated by the Independent
Business Consultants Association [IBCA], in which business losses could be sold
to other taxpayers. Investors in the plan paid $1 for every $4 or $5 of
business losses. They claimed the losses on their tax returns, offsetting their
income from other sources and reducing their overall tax liability.
[3]
The
principal applicant, Mr Jean Breau, and others, told investors that IBCA
provided management advice to struggling companies. These companies then became
partners in IBCA and provided the losses that were subsequently sold in units to
purchasers. The management advice was provided by a company called Synergy
Group (2000) Inc [Synergy], of which Mr Breau was the officer, director and
agent. The other applicants include Mr Scott Covert, a consultant to Synergy,
and a number of individual and corporate agents who sold IBCA partnership units
(Mr David Prentice, Mr William Haver, Mr John Stephan, Mr Andrew Lloyd, Mr
Kenneth McGowan, and Ms Sandra Delahaye; Winbig Sports Inc, Andrepa Holdings
Ltd and Canavista Financial Centre Inc). Some of the agents were also unit
purchasers.
[4]
The
Canada Revenue Agency [CRA] explored this arrangement in three ways. First, it
conducted audits of unit purchasers beginning in 2005.
[5]
Second,
the CRA began a criminal investigation of the promoters of the plan. The CRA’s
Criminal Investigation Program [CIP] investigated the 2004 and 2005 tax years,
and later included the 2006 tax year. In 2008, an investigator, Mr Andrew Suga,
swore an information to obtain production orders in respect of a
number of banks. The information mentioned Mr Breau as a promoter of the tax
plan, and Mr Covert and Mr Lloyd as individuals receiving sales commissions. Later,
in 2010, Mr Suga obtained a warrant to search for and seize records to support
the criminal investigation.
[6]
Third,
the CRA carried out civil audits on the applicants in respect of the 2004 to
2007 tax years and asked them to provide relevant information and documents.
However, none of them responded. As a result, they received the RFIs referred
to above. None of them responded to those, either. Rather, they began these
proceedings seeking to overturn the RFIs, arguing that the RFIs were issued in
furtherance of the criminal investigation and, therefore, are not valid.
[7]
In
my view, the RFIs were properly issued to the applicants in furtherance of a mainly
civil purpose – audits of the 2004 to 2007 tax years. Their predominant purpose
was not to support the parallel criminal investigation. Accordingly, the RFIs
do not infringe on the applicants’ Charter rights to remain silent. I
must, therefore, dismiss this application for judicial review.
II. The Legal Framework
[8]
The
Minister has the power to require a taxpayer to provide information for any
purpose related to the administration or enforcement of the Income Tax Act,
RSC 1985, c 1 (5th Supp) [Act] (s 231.2(1); all enactments
cited are set out in an Annex). The Minister may also obtain a search warrant
from a judge by showing reasonable grounds to believe that a person has
committed an offence under the Act, that a document or other thing may provide
evidence of that offence, and that the place identified in the warrant is where
that evidence is likely to be found (s 231.3(3)). In addition, a judge can
order a person (other than a person under investigation) to produce or prepare
documents relevant to an offence against any Act of Parliament (s 487.012, Criminal
Code, RSC 1985, c C-46).
[9]
On
its face, because it refers to “enforcement” of the Act, s 231.2(1) appears to
permit the use of civil powers in aid of a criminal investigation or
prosecution. However, in the criminal law, persons suspected of committing
crimes have a right to silence and the right not to incriminate themselves.
These rights fall within the Charter’s protection of the right to
liberty and the principles of fundamental justice (s 7). These rights cannot be
circumvented by using civil powers for a criminal purpose.
[10]
The
Supreme Court of Canada has explicitly recognized that s 7 of the Charter
protects
taxpayers against the use of RFIs to further a criminal investigation (R v
Jarvis, 2002 SCC 73). In circumstances where “the predominant purpose of a
particular inquiry is the determination of penal liability,” the Minister
cannot, despite its broad language, use the requirement power in s 231.2(1) (at
para 88). In a given case, to decide whether the predominant purpose for issuing
an RFI was to determine a taxpayer’s penal liability, the court must look at
“the totality of the circumstances, and make a determination as to whether the
inquiry or question in issue engages the adversarial relationship between the
state and the individual” (at para 93). The relevant factors include:
1.
Did
the authorities have reasonable grounds to lay charges? Does it appear from the
record that a decision to proceed with a criminal investigation could have
been made?
2.
Was
the general conduct of the authorities such that it was consistent with the
pursuit of a criminal investigation?
3.
Had
the auditor transferred his or her files and materials to the investigators?
4.
Was
the conduct of the auditor such that he or she was effectively acting as an
agent for the investigators?
5.
Does
it appear that the investigators intended to use the auditor as their agent in
the collection of evidence?
6.
Is
the evidence sought relevant to taxpayer liability generally? Or, as is the
case with evidence as to the taxpayer’s mens rea, is the evidence
relevant only to the taxpayer’s penal liability?
7.
Are
there any other circumstances or factors that can lead the trial judge to the
conclusion that the compliance audit had in reality become a criminal
investigation? (At para 94.)
[11]
RFIs
can be challenged on judicial review on the basis that they were improperly
issued to serve penal purposes (Kligman v Canada (Minister of National
Revenue), 2004 FCA 152; Stanfield v Minister of National Revenue,
2005 DTC 5454).
[12]
Therefore,
the essential question before me is whether the predominant purpose of the RFIs
in this case was to collect information from the applicants to support a
criminal investigation or prosecution against them. If so, the RFIs are
invalid. If not, the applicants must comply with them.
[13]
To
determine whether the predominant purpose of the RFIs was to obtain information
for a criminal investigation, I must look at all of the surrounding
circumstances and consider the factors outlined above. I begin by reviewing the
RFIs themselves.
III. The Requirements for
Information [RFIs]
[14]
The RFIs were signed by Mr Jack Meggetto, Assistant
Director of the Enforcement Division in the Toronto North Tax Services Office,
on August 4, 2009. Each RFI stated that the information was being sought
pursuant to s 231.2(1) for the administration and enforcement of the Act and
required delivery of the requested information within 60 days.
[15]
The RFIs requested financial information about the time
period from January 1, 2004 to December 31, 2007, including:
- All documentation to support business income and
expenses;
- Personal bank statements;
- All documents and information in the applicants’
possession or control related to IBCA and other entities, including
Synergy Group (2000) Inc;
- Any legal opinions or advice, research,
correspondence, promotional materials, literature and documents that were
involved in the tax plan and the sale of the units;
- A description of the applicants’ educational
background and experience in tax matters; and
- The minutes of any meeting in which the tax plan was
discussed.
[16]
The RFIs also asked the applicants to reply to a number of
questions, including:
- How did you learn of the IBCA alternative tax
strategy?
- Please explain your understanding of how the IBCA tax
strategy worked.
- What types of business revenue do you have? How do you
earn your income?
- What agreements/contracts do you have?
- What products do you promote?
- What are your qualifications and training?
- What due diligence have you performed to ensure the
validity of the products?
- What, if any, dealings do you have with Synergy Group (2000)
Inc and IBCA?
- What type of taxable sales do you have for GST
purposes?
- Do you have any employees, agents or subcontractors?
What are their responsibilities?
- How is the remuneration of the employees, agents or
subcontractors determined?
- Do you reimburse any of the employees or
subcontractors’ expenses? Please explain.
[17]
The RFIs informed the applicants that they had to provide
original documents or certified copies and, if they did not comply within the 60-day time frame, they could be
prosecuted.
IV. Were
the RFIs issued for the predominant purpose of a criminal investigation?
[18]
The applicants submit that the predominant purpose of the
RFIs was to further a criminal investigation. They suggest that the Criminal
Investigation Program [CIP] referred their files back to the
civil auditors in order to obtain evidence for a possible criminal prosecution.
[19]
The applicants also maintain that the circumstances
surrounding the issuance of the RFIs support a finding that their predominant
purpose was to determine their penal liability, not to further a civil audit.
They point to the following circumstances:
• In July 2006, the auditors referred the audit of
the 2004-05 taxation years to the Enforcement Division for purposes of a
criminal investigation. Therefore, when the RFIs were issued in 2009, a
criminal investigation was already ongoing. Indeed, there is no dispute that Mr
Jean Breau was under criminal investigation when the RFIs were issued. As for
the others, the informations sworn by Mr Suga in 2008 and 2010 stated that the
“promoters” of the tax plan were under criminal investigation and, in the CRA’s
Case Profiles, all of the applicants were called “promoters”. In addition, Mr
Breau and two other applicants were specifically identified in both the 2008
and 2010 Suga informations.
• The RFIs did not disclose the existence
of the ongoing criminal investigation, did not tell the applicants whether they
were subjects of a criminal investigation, and did not advise the applicants of
their right to remain silent.
• The RFIs were prepared with the input of Mr
Meggetto, a senior official in the Enforcement Division, which confirms that
the information sought in the RFIs would be used in a criminal investigation.
Indeed, many of the requests for information and the questions contained in the
RFIs appear to relate to the applicants’ mens rea, an issue relevant
only to their criminal liability;
• Ms Kim Campbell, the lead auditor on the civil audit, exchanged
information and communications with the criminal investigators throughout 2007.
The investigators never instructed Ms Campbell not to reveal any information
she learned after July 2006 (the date of the referral of the 2004-05 audit to
the criminal investigators). Moreover, the ongoing meetings, communications and
exchanges of information between Mr Suga and the civil auditors were also
consistent with cross-fertilization between the civil and criminal domains.
• For at least three out
of the four taxation years 2004-2007, the applicants’ tax returns were charged
out to the Enforcement Division of the CRA. The applicants submit that their
returns were in the possession of criminal investigators when the RFIs were
issued. Further, correspondence between the civil auditors and Ms Sandra
Delahaye (one of the applicants) took place after the date when information was
forwarded to the criminal investigators. The civil auditors continued to
transfer files and materials to the criminal investigators, including “new
leads” obtained from other sources in 2007. Finally, Mr Suga met with the civil
auditors after December 2007 to examine their work and discuss their findings.
• Ms Campbell met with the investigators in November
2006 and, from December 2006 to December 2007, the rate of communication
between them increased. Ms Campbell was the contact person for the criminal
investigators, and she sent them documents, taxpayer information,
correspondence relating to the 2005-2006 taxation years, as well as “new leads”
up until December 2008. This information was sent at the encouragement of the
criminal investigators, who also instructed Ms Campbell on how to deal with
phone calls from investors. Ms Campbell admitted sending Mr Suga information she
had obtained subsequent to the date when the referral had been made to the
criminal investigators.
[20]
Despite the applicants’ characterization of the
circumstances surrounding the issuance of the RFIs, I am not satisfied that
they have shown that the predominant purpose of the RFIs was to further a
criminal investigation or support a prosecution. I will address each of the
factors from Jarvis separately:
(a)
Did the authorities have reasonable grounds to lay charges? Does it appear
from the record that a decision to proceed with a criminal investigation could
have been made?
[21]
Clearly,
Mr Breau was
the subject of a criminal investigation at the time the RFIs were issued. The
fact that he was the main subject of the 2008 Suga information suggests that
the authorities felt they had reasonable grounds to believe that he had
committed offences.
[22]
As
for the other applicants, there is little evidence to suggest that a criminal
investigation was underway. Some of the applicants subjectively believed that
they were under criminal investigation, based on the following:
• The
letters sent to the unit purchasers in 2009, including some of the applicants,
stated that the “scheme and the promoters of the scheme” were subject to a
criminal investigation. However, there is little evidence to suggest that the
applicants, other than Mr Breau, were considered “promoters”.
• Before the RFIs were issued, two auditors, Mr Dino Martino and Mr
Ken Nitsotolis, prepared a series of Case Profiles on each of the applicants
which described them as “promoters”. However, these memoranda do not
distinguish “promoters” from “agents”, unlike the 2008 Suga information which
differentiates between “promoters” and “representatives of the promoters”.
There is no other evidence that the applicants (other than Mr Breau) were
considered “promoters” for the purposes of a criminal investigation.
• The 2008 Suga
information named Mr Breau and mentioned Mr Covert and Mr Lloyd. However, Mr
Covert and Mr Lloyd are identified only as recipients of commission payments in
connection with the scheme, not as subjects of the investigation. Further,
several applicants did not see the information until after this application for
judicial review was filed in September 2009, so it could not have provided
grounds for their belief that a criminal investigation against them was
underway when the RFIs were issued.
• The
civil auditors sent letters to the applicants in 2009 stating that the scope of
the audit included their involvement with the IBCA and Synergy, both of which
were under criminal investigation at the time. However, there was no indication
that the applicants themselves were under criminal investigation.
• The
RFIs were signed by Mr Meggetto, a senior official in Enforcement. However,
there is no indication that Mr Meggetto had any significant role in the
criminal investigation. He was not included in the list of criminal
investigators in the Suga informations. It appears that Mr Meggetto signed the
RFIs simply because he happened to be the only Assistant Director in the office
on August 4, 2009.
• The
civil audit of the applicants and the related criminal investigation were both
conducted out of the Toronto North Tax Services Office. However, the fact that
two divisions occupy one office does not, in itself, prove that they are acting
on each other’s behalf or even sharing information. In addition, the applicants
seem to have assumed that because the full name of the audit division was “Tax
Avoidance Section, Verification and Enforcement,” it also had responsibility
for criminal investigations. That is not the case.
[23]
Some
of the applicants conceded that they did not believe they were under criminal
investigation at the time the RFIs were issued, or that they had no actual
evidence to support their subjective belief that they were under criminal
investigation. Others had planned to comply with the RFIs until they were
informed that Synergy was going to file an application for judicial review to
overturn them. Accordingly, in light of the evidence on this issue, I cannot
conclude that the applicants, other than Mr Breau, have shown that they were
the subjects of a criminal investigation at the time the RFIs were issued, or
that the authorities had reasonable grounds to lay criminal charges.
(b) Was the
general conduct of the authorities such that it was consistent with the pursuit
of a criminal investigation?
[24]
While
Mr Breau was the subject of a criminal investigation at the time the RFIs were
issued, there is no evidence that the authorities treated the other applicants
as subjects of a criminal investigation.
(c) Had the auditor transferred files and materials to the investigators?
[25]
There
is little evidence of any transfer of files or materials from the civil
auditors to investigators. However, there is some evidence that some
information relating to a number of the applicants was in the possession of
investigators at certain points in time.
[26]
For example, all of Mr Breau’s tax returns for 2004-2007
had been charged out to Enforcement at the time the RFIs were issued. The same
is true for Mr Covert’s 2006 return and Mr Prentice’s 2004 return.
[27]
At the time the RFIs were issued, Mr McGowan’s 2006 tax
return had been charged out to Enforcement. It was later transferred back to
the Audit Division. Similarly, Mr Haver’s 2004 and
2005 tax returns had been charged out to Enforcement, but both returns were
later transferred to Appeals (a separate division from both Audits and
Investigations) by the time the RFIs were issued.
[28]
None of Mr Lloyd’s, Mr Stephan’s or Ms Delahaye’s tax returns
had been charged out to Enforcement at the time the RFIs were issued.
(d) Was the
conduct of the auditor such that he or she was effectively acting as an agent
for the investigators?
[29]
In September 2006, the Enforcement Division accepted a referral
from the Audit Division and began a criminal investigation of the IBCA
promoters, including Mr Breau, for the 2004-2005 taxation years. Although all
audit work on the 2004-2005 taxation years ceased after the Enforcement Division
accepted the referral, Ms Campbell continued to communicate with and pass
information to Enforcement.
[30]
In November 2006, Ms Campbell was coordinating all the files,
including receiving new material from taxpayers, until Enforcement physically
took possession of them.
[31]
In February 2007, Ms Campbell was receiving information, such as
tax returns and other “leads”, and passing it to Enforcement at their request. In
May 2007, Ms Campbell received further instructions from Enforcement regarding
the treatment of the files. In April 2008, she and another civil auditor
were interviewed by Mr Suga. Ms Campbell then sent Mr Suga all the
documentation relating to the tax scheme that was still in her possession.
[32]
As I see it, Ms Campbell was simply passing along to investigators
information that came into her hands. She was not seeking out information or
using any of her authority as an auditor to supplement the evidence supporting
the criminal investigation. I would not characterize this as an agency
relationship between the investigators and the auditor.
(e)
Does it appear that the investigators intended to use the auditor as their
agent in the collection of evidence?
[33]
It is clear that Enforcement did not intend to use Ms
Campbell (or any other auditor) as its agent in the collection of evidence. In his
2008 information, Mr Suga acknowledged that a CRA audit was under way “for
fiscal period(s) subsequent to 2004 and 2005”, but that:
[T]his
Information to Obtain does not contain any information obtained by the
CRA Auditor(s) in the course of this current CRA audit, nor any information
obtained by them subsequent to the original referral which gave rise to the
investigation disclosed in this Information to Obtain.
[34]
Mr Suga seems to have been aware that using civil auditors
for the collection of evidence for a criminal investigation would violate the
taxpayers’ Charter rights.
[35]
However, other investigators asked Ms Campbell to forward
T1s and other information that appeared to be part of the IBCA investigation. For
example, in May 2007, Mr Lonnie Nichols in Enforcement gave Ms Campbell
instructions regarding the treatment of the relevant files. To
a limited degree, therefore, it appears that Ms Campbell may have been regarded
as an agent for some of the investigators, though not for the principal investigator,
Mr Suga.
(f)
Is the evidence sought relevant to taxpayer liability generally? Or, as is
the case with evidence as to the taxpayer's mens rea, is the evidence
relevant only to the taxpayer's penal liability?
[36]
While some of the documents requested in the RFIs are
conventional ones for audit purposes (documentation to support business income
and expenses, personal bank statements, etc.), many of the questions asked of
the applicants seem relevant to their mens rea. For example, the
applicants were asked about any dealings they had with Synergy or the IBCA,
their understanding of how the IBCA tax strategy worked, the products they
promoted, the due diligence they had performed to ensure the validity of those
products, and their qualifications and training, which would reflect on their
understanding of the tax scheme.
[37]
These questions seem to be directed at the extent of the
applicants’ knowledge about the legality of the tax scheme: Stanfield, above,
at para 65. This obviously goes to the applicants’ mens rea and their
penal liability. However, these questions were also directed at issues relevant
to civil penalties under the Income Tax Act, particularly penalties for
“culpable conduct” under s 163.2. Therefore, the evidence sought was relevant not
only to the applicants’ penal liability, but their civil liability as well.
(g) Are there any
other circumstances or factors that can lead the trial judge to the conclusion
that the compliance audit had in reality become a criminal investigation?
[38]
There are five additional questions to be asked regarding
“other circumstances or factors” suggesting the existence of an ongoing
criminal investigation (Stanfield, above, at paras 66-70):
(i) Were the
criminal investigation and audits being conducted simultaneously or otherwise interconnecting
and, if so, for what purpose?
[39]
The civil audit of the unit purchasers and the promoters of the tax plan for the 2004
taxation year began in September 2005. In 2006, the audit expanded to include
the 2005 taxation year. In July 2006, the audit for taxation years 2004-2005
was referred to Enforcement. When Enforcement accepted the investigation in
September that year, the Audit department ceased all work on the 2004-2005
taxation years. In July 2008, Mr Suga swore an information relating to the
criminal investigation of the 2004-2005 taxation years.
[40]
In early 2007, the Enforcement team began to receive tax returns for 2006,
and expanded its investigation to that year. Toward the end of 2007,
Enforcement returned the 2006 files to the Audit team, which began an audit for
the 2006 taxation year. In early 2009, the Audit team began issuing Notices of
Reassessment regarding the 2006 taxation year.
[41]
In late 2008,
the Audit team began an audit of all the applicants for the 2004-2007 taxation
years. Initial contact letters were sent to the applicants in March 2009, and
the RFIs were sent in August 2009. In April 2009, the Audit team began auditing
all 2007-2008 tax returns relating to the scheme.
[42]
It appears,
therefore, that the criminal investigation and audits were somewhat
interconnected. The 2004-2005 audit was begun by the Audit team and then passed
to Enforcement. The 2006 audit began in Enforcement, but was then passed to the
Audit team. Throughout this time period, members of the Audit and Enforcement
teams were interacting with and passing information to each other.
[43]
Clearly,
there was simultaneous activity on both the criminal and civil fronts. However,
the evidence does not indicate a clear purpose for this interconnectedness. It
does indicate that:
• Ms Campbell passed
information regarding the 2006 taxation year to Enforcement while the criminal
investigation of the promoters (including Mr Breau) for that year was taking
place; and
• Enforcement had
possession of the files of Mr Breau, Mr Covert and Mr Prentice while the civil
audits were in progress and when the RFIs were issued.
[44]
While neither
Mr Covert nor Mr Prentice was under criminal investigation at the time, Mr
Breau was.
(ii)
What was the nature of the flow of information between
Audit and Enforcement, both during and after the criminal investigation?
[45]
Information flowed between Audit and Enforcement after
September 2006, when Enforcement began the criminal investigation of the
promoters for the 2004-2005 taxation years. The flow of information between the
two divisions was fairly regular, especially in 2007.
(iii)
What was the level of importance of the contact between
Audit and Enforcement while the criminal investigation was ongoing, as well as
after it apparently ended?
[46]
Communications between Audit and Enforcement (particularly
between Ms Campbell and the investigators) were not particularly significant, relating
mainly to administrative contact and the transmission of information falling
into the hands of auditors, not sought out by them.
(iv)
Considering the complexity of the factual and fiscal
situations in the present case, how does this impact on the predominant purpose
to be assessed?
[47]
The investigation of the tax plan was broad in scope,
involving 1,307 unit purchasers and $196,249,505 in IBCA losses. Numerous
taxpayers, promoters, agents and corporate entities have been involved, as well
as several CRA departments. However, there is no evidence that any of the applicants
other than Mr Breau were under criminal investigation at the time the RFIs were
issued. The complexity of the plan does not suggest, in itself, that the investigators
resorted to the RFIs as a means of gathering information to support a criminal
investigation.
(v)
Without obtaining the documents and information requested,
will the Minister be put in a position in which the audit functions under the
Act cannot be met?
[48]
In respect of Mr Breau, the Enforcement Division had already
obtained production orders pursuant to Mr Suga’s 2008 information. It later
obtained a search warrant. To my mind this casts doubt on whether the RFIs were
meant to supplement the criminal investigation; Enforcement seems to have been
on a different track, relying on different means. This suggests that the RFI’s
predominant purpose was not to determine Mr Breau’s penal liability. That was
the predominant purpose of the information, not the RFI.
[49]
At the same time, the RFI may well be necessary to
determine Mr Breau’s civil liability.
[50]
As for the other applicants, they have not responded to the
RFIs, and some of them have not provided any information to the CRA at all. If
their RFIs were quashed, it is doubtful that the Minister could meet his audit
functions under the Act.
V. Conclusion
and Disposition
[51]
Mr Breau was the only applicant under criminal investigation at
the time the RFIs were issued. There is no objective evidence indicating that
the other applicants were under criminal investigation. It is, therefore, only Mr
Breau’s s 7 liberty interests that are engaged in this case. The mere fact that
Mr Breau was under criminal investigation is not enough to defeat the RFI.
Auditors can continue to assess civil liability while a criminal investigation
unfolds. If auditors were forced to cease work after an investigation
commenced, taxpayers could avoid civil liability when their conduct raised
concerns of criminal conduct.
[52]
In addition, if civil auditors were prevented from asking
questions whose answers were potentially relevant to taxpayers’ penal
liability, they could obtain little information at all.
[53]
Clearly, whether a matter has been sent for a criminal
investigation is a significant factor in determining whether an adversarial
relationship exists between the state and the taxpayer. Further, when civil
auditors remain involved, their conduct must be scrutinized closely to
determine whether the criminal investigators are relying on civil auditors to
use their authority under s 231.2(1) to obtain evidence for a prosecution: Jarvis,
above, at para 92.
[54]
However, taking all of the circumstances of this case into
account, I find that the predominant purpose of the RFIs issued against the applicants,
including Mr Jean Breau, was civil. Therefore, their s 7 Charter rights
– specifically, the right to remain silent and to avoid self-incrimination
– were not triggered.
[55]
I would, therefore, dismiss this application with costs.
JUDGMENT
THIS
COURT’S JUDGMENT is that:
1.
The
application for judicial review is dismissed with costs.
2.
These
reasons relate to Court File Numbers T-1623-09 and T-1625-09. The original of
the reasons will be filed in T-1623-09, and a copy will be placed in file
T-1625-09.
“James W. O’Reilly”
Annex
|
Criminal Code, RSC 1985,
c C-46
Production order
487.012 (1) A justice or judge may order a person, other than a
person under investigation for an offence referred to in paragraph (3)(a),
(a) to produce documents, or copies of them
certified by affidavit to be true copies, or to produce data; or
(b) to prepare a document based on documents or
data already in existence and produce it.
Production to peace officer
(2) The order shall require the documents or data to be
produced within the time, at the place and in the form specified and given
(a)
to a peace officer named in the order; or
(b)
to a public officer named in the order, who has been appointed or designated
to administer or enforce a federal or provincial law and whose duties include
the enforcement of this or any other Act of Parliament.
Conditions for issuance of order
(3) Before making an order, the justice or judge must be
satisfied, on the basis of an ex parte application containing information on
oath in writing, that there are reasonable grounds to believe that
(a) an offence against this Act or any other Act
of Parliament has been or is suspected to have been committed;
(b) the documents or data will afford evidence
respecting the commission of the offence; and
(c) the person who is subject to the order has
possession or control of the documents or data.
Terms and conditions
(4) The order may contain any terms and conditions that
the justice or judge considers advisable in the circumstances, including
terms and conditions to protect a privileged communication between a lawyer
and their client or, in the province of Quebec, between a lawyer or a notary
and their client.
Power to revoke, renew or vary order
(5) The justice or judge who made the order, or a judge
of the same territorial division, may revoke, renew or vary the order on an
ex parte application made by the peace officer or public officer named in the
order.
Application
(6) Sections 489.1 and 490 apply, with any
modifications that the circumstances require, in respect of documents or data
produced under this section.
Probative force of copies
(7) Every copy of a document produced under this section,
on proof by affidavit that it is a true copy, is admissible in evidence in
proceedings under this or any other Act of Parliament and has the same
probative force as the original document would have if it had been proved in
the ordinary way.
Return of copies
(8) Copies of documents produced under this section
need not be returned.
Income Tax Act, RSC 1985, c
1 (5th Supp)
Inspections
231.1 (1) An
authorized person may, at all reasonable times, for any purpose related to
the administration or enforcement of this Act,
(a)
inspect, audit or examine the books and records of a taxpayer and any
document of the taxpayer or of any other person that relates or may relate to
the information that is or should be in the books or records of the taxpayer
or to any amount payable by the taxpayer under this Act, and
(b)
examine property in an inventory of a taxpayer and any property or process
of, or matter relating to, the taxpayer or any other person, an examination
of which may assist the authorized person in determining the accuracy of the
inventory of the taxpayer or in ascertaining the information that is or
should be in the books or records of the taxpayer or any amount payable by
the taxpayer under this Act, and for those purposes the authorized person may
(c)
subject to subsection 231.1(2), enter into any premises or place where any
business is carried on, any property is kept, anything is done in connection
with any business or any books or records are or should be kept, and
(d)
require the owner or manager of the property or business and any other person
on the premises or place to give the authorized person all reasonable
assistance and to answer all proper questions relating to the administration
or enforcement of this Act and, for that purpose, require the owner or
manager to attend at the premises or place with the authorized person.
Requirement to provide documents or information
231.2 (1)
Notwithstanding any other provision of this Act, the Minister may, subject to
subsection (2), for any purpose related to the administration or enforcement
of this Act (including the collection of any amount payable
under this Act by any person), of a comprehensive tax
information exchange agreement between Canada and another country or
jurisdiction that is in force and has effect or, for greater certainty, of a
tax treaty with another country, by notice served personally or by registered
or certified mail, require that any person provide, within such reasonable
time as stipulated in the
notice,
(a)
any information or additional information, including a return of income or a
supplementary return; or
(b) any document.
Search warrant
231.3 (1) A judge
may, on ex parte application by the Minister, issue a warrant in
writing authorizing any person named therein to enter and search any
building, receptacle or place for any document or thing that may afford
evidence as to the commission of an offence under this Act and to seize the
document or thing and,
as soon as practicable, bring it before, or make a report
in respect of it to, the judge or, where the judge is unable to act, another
judge of the same court to be dealt with by the judge in accordance with this
section.
(2) An application under subsection 231.3(1) shall be
supported by information on oath establishing the facts on which the
application is based.
(3) A judge may issue the warrant referred to in
subsection 231.3(1) where the judge is satisfied that there are reasonable
grounds to believe that
(a)
an offence under this Act was committed;
(b) a
document or thing that may afford evidence of the commission of the offence
is likely to be found; and
(c)
the building, receptacle or place specified in the application is likely to
contain such a document or thing.
(4) A warrant issued under subsection 231.3(1) shall
refer to the offence for which it is issued, identify the building,
receptacle or place to be searched and the person alleged to have committed
the offence and it shall be reasonably specific as to any document or thing to
be searched for and seized.
Canadian Charter of Rights and Freedoms, Part I of the Constitution
Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11
7. Everyone has
the right to life, liberty and security of the person and the right not to be
deprived thereof except in accordance with the principles of fundamental
justice.
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Code
criminel, LRC 1985, ch C-46
Ordonnance
de communication
487.012 (1)
Sauf si elle fait l’objet d’une enquête relative à l’infraction visée à
l’alinéa (3)a), un juge de paix ou un juge peut ordonner à une
personne :
a) de
communiquer des documents — originaux ou copies certifiées conformes par
affidavit — ou des données;
b) de
préparer un document à partir de documents ou données existants et de le
communiquer.
Communication
à un agent de la paix
(2)
L’ordonnance précise le moment, le lieu et la forme de la communication ainsi
que la personne à qui elle est faite — agent de la paix ou fonctionnaire
public nommé ou désigné pour l’application ou l’exécution d’une loi fédérale
ou provinciale et chargé notamment de faire observer la présente loi ou toute
autre loi fédérale.
Conditions à
remplir
(3) Le
juge de paix ou le juge ne rend l’ordonnance que s’il est convaincu, à la
suite d’une dénonciation par écrit faite sous serment et présentée ex parte,
qu’il existe des motifs raisonnables de croire que les conditions suivantes
sont réunies :
a)
une infraction à la présente loi ou à toute autre loi fédérale a été ou est
présumée avoir été commise;
b)
les documents ou données fourniront une preuve touchant la perpétration de
l’infraction;
c)
les documents ou données sont en la possession de la personne en cause ou à
sa disposition.
Conditions
(4)
L’ordonnance peut être assortie des conditions que le juge de paix ou le juge
estime indiquées, notamment pour protéger les communications privilégiées
entre l’avocat — et, dans la province de Québec, le notaire — et son client.
Modification,
renouvellement et révocation
(5) Le
juge de paix ou le juge qui a rendu l’ordonnance — ou un juge de la même
circonscription territoriale — peut, sur demande présentée ex parte par
l’agent de la paix ou le fonctionnaire public nommé dans l’ordonnance, la
modifier, la renouveler ou la révoquer.
Application
(6) Les
articles 489.1 et 490 s’appliquent, avec les adaptations nécessaires, aux
documents ou données communiqués sous le régime du présent article.
Valeur
probante
(7) La
copie d’un document communiquée sous le régime du présent article est, à la
condition d’être certifiée conforme à l’original par affidavit, admissible en
preuve dans toute procédure sous le régime de la présente loi ou de toute
autre loi fédérale et a la même valeur probante que l’original aurait eue
s’il avait été déposé en preuve de la façon normale.
Copies
(8) Il
n’est pas nécessaire de retourner les copies de documents qui ont été
communiquées sous le régime du présent article.
Loi de
l’impôt sur le revenu, LRC 1985, ch 1 (5e suppl)
Enquêtes
231.1 (1)
Une personne autorisée peut, à tout moment raisonnable, pour l’application et
l’exécution de la présente loi, à la fois:
a)
inspecter, vérifier ou examiner les livres et registres d’un contribuable
ainsi que tous documents du contribuable ou d’une autre personne qui se
rapportent ou peuvent se rapporter soit aux renseignements qui figurant dans
les livres ou registres du contribuable ou qui devraient y figurer, soit à
tout montant payable par le contribuable en vertu de la présente loi;
b)
examiner les biens à porter à l’inventaire d’un contribuable, ainsi que tout
bien ou tout procédé du contribuable ou d’une autre personne ou toute matière
concernant l’un ou l’autre dont l’examen peut aider la personne autorisée à
établir l’exactitude de l’inventaire du contribuable ou à contrôler soit les
renseignements
qui
figurent dans les livres ou registres du contribuable ou qui devraient y
figurer, soit tout montant payable par le contribuable en vertu de la
présente loi; à ces fins, la personne autorisée peut:
c)
sous réserve du paragraphe (2), pénétrer dans un lieu où est exploitée une
entreprise, est gardé un bien, est faite une chose en rapport avec une
entreprise ou sont tenus ou devraient l’être des livres ou registres;
d)
requérir le propriétaire, ou la personne ayant la gestion, du bien ou de
l’entreprise ainsi que toute autre personne présente sur les lieux de lui
fournir toute l’aide raisonnable et de répondre à toutes les questions
pertinentes à l’application et l’exécution de la présente loi et, à cette
fin, requérir le propriétaire, ou la personne ayant la gestion, de
l’accompagner sur les lieux.
Production
de documents ou fourniture de renseignements
231.2 (1)
Malgré les autres dispositions de la présente loi, le ministre peut, sous
réserve du paragraphe (2) et pour l’application ou l’exécution de la présente
loi (y compris la perception d’un montant payable par une personne en vertu
de la présente loi), d’un accord général d’échange de renseignements fiscaux
entre le Canada et un autre pays ou territoire qui est en vigueur et s’applique
ou d’un traité fiscal conclu avec un autre pays, par avis signifié à personne
ou envoyé par courrier recommandé ou certifié, exiger d’une personne, dans le
délai raisonnable que précise l’avis:
a)
qu’elle fournisse tout renseignement ou tout renseignement supplémentaire, y
compris une déclaration de revenu ou une déclaration supplémentaire;
b)
qu’elle produise des documents.
Requête pour
mandat de perquisition
231.3 (1)
Sur requête ex parte du ministre, un juge peut décerner un mandat
écrit qui autorise toute personne qui y est nommée à pénétrer dans tout
bâtiment, contenant ou endroit et y perquisitionner pour y chercher des
documents ou choses qui peuvent constituer des éléments de preuve de la
perpétration d’une infraction à
la présente
loi, à saisir ces documents ou choses et, dès que matériellement possible,
soit à les apporter au juge ou, en cas d’incapacité de celui-ci, à un autre
juge du même tribunal, soit à lui en faire rapport, pour que le juge en
dispose conformément au présent article.
(2) La
requête visée au paragraphe (1) doit être appuyée par une dénonciation sous
serment qui expose les faits au soutien de la requête.
(3) Le
juge saisi de la requête peut décerner le mandat mentionné au paragraphe (1)
s’il est convaincu qu’il existe des motifs raisonnables de croire ce qui
suit:
a)
une infraction prévue par la présente loi a été commise;
b)
des documents ou choses qui peuvent constituer des éléments de preuve de la perpétration
de l’infraction seront vraisemblablement trouvés;
c) le
bâtiment, contenant ou endroit précis dans la requête contient
vraisemblablement de tels documents ou choses.
(4) Un
mandat décerné en vertu du paragraphe (1) doit indiquer l’infraction pour
laquelle il est décerné, dans quel bâtiment, contenant ou endroit
perquisitionner ainsi que la personne à qui l’infraction est imputée. Il doit
donner suffisamment de précisions sur les documents ou choses à chercher et à
saisir.
Charte Canadienne des
Droits et Libertés, Édictée
comme l'annexe B de la Loi de 1982 sur le Canada, 1982, ch 11
7. Chacun a droit à la vie, à la
liberté et à la sécurité de sa personne; il ne peut être porté atteinte à ce
droit qu'en conformité avec les principes de justice fondamentale.
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