Date: 20090219
Docket: T-591-08
Citation: 2009 FC 181
Vancouver, British
Columbia, February 19, 2009
PRESENT: The Honourable Madam Justice Heneghan
BETWEEN:
COASTAL
RESOURCES LIMITED
Applicant
and
THE
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
Coastal
Resources Limited (the “Applicant”) seeks judicial review of the decision of
the Minister of National Revenue (the “Respondent”). In that decision made on
December 14, 2007, the Respondent decided to maintain his earlier decision not
to fully disclose an internal memorandum to the Applicant.
I. Background
[2]
The
Applicant is a taxpayer. By letter dated July 20, 2007, it made a request,
pursuant to the Access to
Information Act, R.S.C., 1985 c. A-1 (the “Act”), for the production
of an internal memorandum concerning the treatment of audits, after the
delivery of the decision of the Federal Court of Appeal in Minister of
National Revenue v. Franklin (2002), 288 N.R. 30 (C.A.).
[3]
By
letter dated September 18, 2007, from Ms. Danielle Jean-Venne, Director, Access
to Information and Privacy Directorate with the Canada Revenue Agency (the
“CRA”), the Applicant was provided with a redacted version of the document.
Certain parts of the document had been redacted on the basis that those portions
were exempt from disclosure pursuant to paragraphs 16(1)(c), 21(1)(b) and
subsection 24(1) of the Act.
[4]
The
Applicant exercised its right to complain to an Information Commissioner,
pursuant to paragraph 30(1)(a) of the Act.
[5]
By
letter dated December 14, 2007, from Ms. Nicole Murdock, Acting Manager, Access
to Information and Privacy Directorate with the CRA, the Applicant was advised
that some of the previously excerpted sections of the Memorandum would now be
disclosed. The relevant section of the letter provides as follows:
As a result of discussions with an
investigator from the Information Commissioner’s office, the exemptions applied
on some of the information previously severed has now been fully disclosed as
indicated on the enclosed pages. You will notice that we are still committed to
maintain the exemption on page 5 of the document.
[6]
The
explanation for non-disclosure of part of page 5 was set out in a letter dated
February 28, 2008, from the Office of the Information Commissioner of Canada, signed by
Ms. Andrea Neill, Assistant Commissioner, Complaints Resolution and
Compliance. Ms. Neill stated the following in her letter:
Having reviewed the remaining withheld
information, it is my view that this information has been properly exempted under
paragraph 16(1)(c). Under this provision, the head of a government institution
may refuse to disclose any record that contains information the disclosure of
which could reasonably be expected to be injurious to the enforcement of any
law of Canada. I am satisfied that
disclosure of the withheld information could reasonably be expected to be
injurious to the enforcement of the Income Tax Act. I am also satisfied
that the department properly exercised its discretion in applying this
exemption.
Since paragraph 16(1)(c) properly applies
to the information, I need not consider the applicability of
paragraph 21(1)(b) to this information. It should be noted that CRA no
longer invokes subsection 24(1) of the Act.
[7]
Subsequently,
the Applicant applied to the Court for judicial review of the Respondent’s
decision to deny access to the requested document.
[8]
Two
affidavits were submitted in support of this application for judicial review.
The Applicant filed the Affidavit of Ms. Sharon Snapkauskas, sworn May 14, 2008. Ms. Snapkauskas’
Affidavit identifies the documents that are relevant to the Applicant’s request
for production of this Memorandum.
[9]
For
his part, the Respondent filed the Affidavit of Ms. Murdock, Acting Manager,
Access to Information and Privacy Directorate with the CRA. In her Affidavit,
Ms. Murdock describes the process that she followed in dealing with the
Applicant’s request for information. Those steps are recorded in a Case Summary
and an Amended Case Summary. The Case Summary was prepared in connection with
the CRA’s first reply to the Applicant and the Amended Case Summary relates to
the second decision, the one that maintained an exemption only with respect to
a part of page 5 of the Memorandum. The second decision is the subject of this
application for judicial review.
[10]
Ms.
Murdock was cross-examined upon her Affidavit and the transcript of that
examination is included in the Applicant’s Application Record. In the course of
her cross-examination, she referred to two other documents. The first document
is a redacted e-mail from Bob Naufal and the second is a fax cover sheet dated
December 11, 2007, from Ms. Carol Anne O’Connor, an employee of the CRA to Ms.
Ginette Grenier of the Office of the Information Commissioner.
[11]
According
to statements made by Counsel for the Respondent in the course of the
cross-examination of Ms. Murdock, the e-mail from Mr. Naufal to Ms. O’Connor
was partially redacted in order to protect from disclosure an explanation from
Mr. Naufal regarding the information that is the subject of this application
for judicial review.
[12]
In
the course of the hearing of the application for judicial review, counsel for
the Respondent advised that the letter referred to in the fax cover sheet,
which was Exhibit B to the transcript of the cross-examination of Ms. Murdock,
was not disclosed for the same reason, that is that disclosure of that letter
would disclose information that is the subject of this application and that
disclosure of the letter would make this judicial review proceeding moot.
[13]
In
the application for judicial review, the relief sought by the Applicant is an
Order directing the Respondent to provide a complete unexpurgated copy of
the Memorandum. In the course of argument, counsel for the Applicant asked also
for the production of unexpurgated copies of Exhibits A and B to the
cross-examination transcript.
II. Discussion and Disposition
[14]
The
Applicant’s request for disclosure of the Memorandum was made pursuant to section 4(1)
of the Act. The purpose of the Act is set out in subsection 2(1), as follows:
|
2. (1) The purpose of this Act is to extend the
present laws of Canada to provide a right of access to information in records
under the control of a government institution in accordance with the
principles that government information should be available to the public,
that necessary exceptions to the right of access should be limited and
specific and that decisions on the disclosure of government information
should be reviewed independently of government.
|
2. (1) La présente loi a pour objet d’élargir l’accès aux documents
de l’administration fédérale en consacrant le principe du droit du public à
leur communication, les exceptions indispensables à ce droit étant précises
et limitées et les décisions quant à la communication étant susceptibles de
recours indépendants du pouvoir exécutif.
|
[15]
The
application for judicial review is taken pursuant to section 41 of the Act,
which provides as follows:
41. Any person
who has been refused access to a record requested under this Act or a part
thereof may, if a complaint has been made to the Information Commissioner in
respect of the refusal, apply to the Court for a review of the matter within
forty-five days after the time the results of an investigation of the
complaint by the Information Commissioner are reported to the complainant
under subsection 37(2) or within such further time as the Court may, either
before or after the expiration of those forty-five days, fix or allow.
|
41. La personne qui s’est vu refuser communication totale ou partielle
d’un document demandé en vertu de la présente loi et qui a déposé ou fait
déposer une plainte à ce sujet devant le Commissaire à l’information peut,
dans un délai de quarante-cinq jours suivant le compte rendu du Commissaire
prévu au paragraphe 37(2), exercer un recours en révision de la décision de
refus devant la Cour. La Cour peut, avant ou après l’expiration du délai, le
proroger ou en autoriser la prorogation.
|
[16]
The
Act contains provisions upon which full disclosure of a record can be refused.
In the present case, full disclosure of the Memorandum was refused on the basis
of paragraph 16(1)(c) of the Act which provides as follows:
|
16. (1) The head of a government institution may
refuse to disclose any record requested under this Act that contains
…
(c) information the disclosure
of which could reasonably be expected to be injurious to the enforcement of
any law of Canada or a province or the conduct of lawful investigations,
including, without restricting the generality of the foregoing, any such
information
(i) relating to the existence or nature of a particular
investigation,
(ii) that would reveal the identity of a confidential
source of information, or
(iii) that was obtained or prepared in the course of an
investigation; or
…
|
16. (1) Le responsable d’une institution fédérale peut refuser la
communication de documents :
…
c) contenant des renseignements dont la divulgation risquerait
vraisemblablement de nuire aux activités destinées à faire respecter les lois
fédérales ou provinciales ou au déroulement d’enquêtes licites, notamment :
(i) des renseignements relatifs à
l’existence ou à la nature d’une enquête déterminée,
(ii) des renseignements qui
permettraient de remonter à une source de renseignements confidentielle,
(iii) des renseignements obtenus ou
préparés au cours d’une enquête;
…
|
[17]
The
Act provides that decisions made on the basis of paragraph 16(1)(c) are
reviewed upon the standard of reasonableness. This is set out in section 50,
which provides as follows:
|
50. Where the
head of a government institution refuses to disclose a record requested under
this Act or a part thereof on the basis of section 14 or 15 or paragraph
16(1)(c) or (d) or 18(d), the Court shall, if it determines that the head of
the institution did not have reasonable grounds on which to refuse to
disclose the record or part thereof, order the head of the institution to
disclose the record or part thereof, subject to such conditions as the Court
deems appropriate, to the person who requested access to the record, or shall
make such other order as the Court deems appropriate.
|
50. Dans les cas où le refus de communication totale ou partielle du
document s’appuyait sur les articles 14 ou 15 ou sur les alinéas 16(1)c) ou d) ou 18d), la Cour, si elle conclut que le refus n’était pas
fondé sur des motifs raisonnables, ordonne, aux conditions qu’elle juge
indiquées, au responsable de l’institution fédérale dont relève le document
en litige d’en donner communication totale ou partielle à la personne qui
avait fait la demande; la Cour rend une autre ordonnance si elle l’estime
indiqué.
|
[18]
In Dunsmuir
v. New
Brunswick,
[2008] 1 S.C.R. 190, the Supreme Court of Canada commented at paragraph 62,
about the manner of identifying the appropriate standard of review, as follows:
62. In summary, the process of judicial review
involves two steps. First, courts ascertain whether the jurisprudence has
already determined in a satisfactory manner the degree of deference to be accorded
with regard to a particular category of question. Second, where the first
inquiry proves unfruitful, courts must proceed to an analysis of the factors
making it possible to identify the proper standard of review.
[19]
The
application of section 50 of the Act was discussed by this Court in X v.
Canada (Minister of National Defence) (1992), 58 F.T.R. 93 at 97 where the
Court found that pursuant to section 50, disclosure could be ordered by
the Court only if it is found that the head of the government institution did
not have reasonable grounds upon which to base the refusal to disclose.
[20]
In Do-Ky
v. Canada (Minister of Foreign
Affairs and International Trade), [1997] 2 F.C. 907 (T.D.), aff’d (1999), 241 N.R.
308 (C.A.), the Court found that
disclosure cannot be ordered by a reviewing court simply because it would have
reached a different conclusion than the head of the government institution. The
prior jurisprudence shows that the standard of reasonableness has been adopted
previously in judicial review proceedings of decisions where paragraph 16(1)(c)
of the Act is at issue.
[21]
The
reviewing court may intervene only if it is satisfied that no reasonable person
could have concluded that the record in question should be exempted from
disclosure, on the basis of the evidence presented to the court.
[22]
In
this case, the Respondent relies on paragraph 16(1)(c) as the basis for
refusing full disclosure. The Affidavit of Ms. Nicole Murdock, together with
the transcript of her cross-examination upon that Affidavit, is presented as
the evidence in support of an exemption from disclosure on the basis of
paragraph 16(1)(c).
[23]
I
note that the Respondent provided copies of the unredacted page 5 of the
Memorandum, together with clear copies of Exhibits A and B that were produced
during the cross-examination of Ms. Murdock, during the hearing of the
application for judicial review. These documents were submitted to this Court
in triplicate, in sealed envelopes and have been reviewed by the Court.
[24]
An
exemption on the basis of paragraph 16(1)(c) of the Act requires consideration
of the purpose of the governing legislation in issue, in this case, the Income
Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the “Income Tax
Act”).
[25]
The Income
Tax Act governs the collection of taxes to be remitted to the consolidated
revenue fund, such fund to be used for the general purpose of the Government of
Canada. The tax collection system is based upon self-reporting. The Minister
has access to a range of remedies under the Income Tax Act to review the
remittance of taxes, including assessment and auditing processes.
[26]
The
Respondent resists production of a fully unredacted version of the internal
memorandum requested by the Applicant on the grounds that such production is
exempt on the basis of paragraph 16(1)(c) of the Income Tax Act, that is, that
the disclosure would “reasonably be expected to be injurious to the enforcement
of any law of Canada”. Having regard to the purpose of the Income Tax Act and
the nature of the document in issue, I am not satisfied that the decision to
withhold production meets the test of reasonableness as discussed in X v. Canada
(Minister of National Defence) and Do-Ky v. Canada (Minister of Foreign
Affairs and International Trade).
[27]
The
evidence of Ms. Murdock does not provide a reasonable basis for the
non-disclosure. In this regard, I refer to the following extracts from the
transcript of the cross-examination of Ms. Murdock:
Q.
That would mean investigations carried out pursuant to the Income Tax Act?
A.
No. Actually, the 16(1)(c) does speak about injurious to lawful investigations
and as well injurious to any act of Canada. And I believe this was a mistake that
was put in because our - - our template puts that little phrase in.
Q.
And so what are you saying it should have said then? Injurious to an act of Canada?
A.
Yes.
Q.
And act with a Capital A, in other words a statute?
A.
It’s the Income Tax Act.
Q.
And it’s the Income Tax Act?
A.
Yes.
Q.
What does that mean then, injurious to the Income Tax Act?
A.
If the information - - in this case if the information were to be released it
would prejudice the use of -- of maybe the audit techniques or - -
Q.
Injurious to the - - perhaps I could use the word administration or
implementation of the Income Tax Act; would that be fair?
A.
I think so.
Q.
Now, I realize that there’s certain questions you won’t want to answer because
it will render the whole judicial application moot if I ask you well, what
was it? But just in a general sense then what was the reasoning here? Can you
be a little bit more specific? Was it thought that the disclosure of that part
of the memorandum, not the facts part, but the other part about the effect of
Franklin on page 5 of the memorandum, was it the considered opinion of you and
the people at the commissioner’s office that the disclosure of that to a
taxpayer, which would, I guess, mean to the citizenry at large, would be
injurious to the administration somehow or another of the Income Tax Act?
And I don’t mean to put words in your mouth, but is that the gist of what
you’re saying?
A.
I’m trying to understand what you’re saying. The information that was taken out
is information that our audit techniques or plans and if disclosed it could
prejudice the - - I guess the Income Tax Act. It could prejudice
our way of doing things. And this is - - I think this is how it is.
[28]
Accordingly,
the application for judicial review is allowed with costs to the Applicant. The decision
of December 14, 2007, is quashed and the unredacted version of page 5 of the
Internal Memorandum shall be provided to the Applicant upon the expiration of
the Applicant’s appeal period, and if a Notice of Appeal is filed, then upon
the further Order of a Court.
[29]
There
is no basis upon which to order disclosure of the unredacted version of the exhibits
that were attached to the transcript of the cross-examination of Ms. Murdock
and no order will be made in that regard.
JUDGMENT
THIS COURT
ORDERS AND ADJUDGES that the
application for judicial review is allowed with costs to the Applicant. The
decision of December 14, 2007, is quashed and the unredacted version of the
Internal Memorandum shall be provided to the Applicant upon the expiry of the
relevant appeal period, and if a Notice of Appeal is filed, then upon further
Order of a Court.
“E. Heneghan”
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