Dockets:
T-2115-11
T-2116-11
T-2117-11
T-2118-11
Citation: 2013 FC 919
[UNREVISED ENGLISH CERTIFIED
TRANSLATION]
Ottawa, Ontario, August 30, 2013
PRESENT: The Honourable Mr. Justice Scott
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Docket:
T-2115-11
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BETWEEN:
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GISELLA PALMERINO
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Applicant
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and
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MINISTER OF NATIONAL REVENUE
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Respondent
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Docket:
T-2116-11
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AND BETWEEN:
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RODOLFO PALMERINO
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Applicant
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and
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MINISTER OF NATIONAL REVENUE
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Respondent
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Docket:
T-2117-11
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AND BETWEEN:
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ALFREDO MAGALHAES
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Applicant
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and
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MINISTER OF NATIONAL REVENUE
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Respondent
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Docket:
T-2118-11
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AND BETWEEN:
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FRANCESCO BRUNO
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Applicant
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and
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MINISTER OF NATIONAL REVENUE
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Respondent
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REASONS FOR JUDGMENT AND JUDGMENT
I. Introduction
[1] Pursuant to section 41 of the Privacy Act, RSC 1985, c P-21 [PA],
this is an application by Gisella Palmerino (the applicant) for judicial review
of a decision by the Canada Revenue Agency [CRA] to refuse disclosure of all
information concerning her – said information emanating from or received and/or
held by 137 employees or officers of the CRA covering the period from January 2004
to May 2010.
[2] For the following reasons, this application for
judicial review is allowed.
II. The
facts
[3] On April 26, 2010, and May 7 and 10, 2010, the applicant filed
requests with the CRA under the PA.
[4] The applicant sought to obtain, among other things, copies of all:
[Translation]
(a) … internal and external correspondence;
(b) internal reports including all drafts;
(c) personal agendas;
(d) information;
(e) memos and personal notes, both handwritten and
electronic;
(f) e-mails written, sent or received via the CRA’s
electronic address;
(g) electronic, video or audio recordings (if there are any).
[5] The CRA responded on July 14, 2010, refusing to release the said information
under paragraphs 16(1)(a) and 16(1)(c) of the Access to
Information Act, RSC 1985, c A-1 [ATIA], since the information had
apparently been prepared and obtained in connection with an investigation.
[6] The applicant then filed a complaint with the Office of the Privacy
Commissioner (the Office) dealing with the handling of her request for personal
information.
[7] On November 16, 2011, Arthur Dunfee, Director General of the Office,
dismissed the applicant’s complaint as without merit. Mr. Dunfee indicated that
the CRA had informed him that its refusal was based on paragraphs 22(1)(a)
and 22(1)(b) of the PA rather than paragraphs 16(1)(a) and 16(1)(c)
of the ATIA. Consequently, the Office assessed the merits of the CRA’s refusal
to provide access to the requested information under paragraphs 22(1)(a)
and 22(1)(b) of the PA.
[8] On December 29, 2011, the applicant filed this application for
judicial review.
III. Legislation
[9] The statutory provisions applicable to the case at bar can be found
in the appendix to this judgment.
IV. Issues and Standard of Review
A. Issues
1. Was the CRA justified in denying access
to the requested documents under the terms of paragraphs 22(1)(a) and 22(1)(b) of
the PA?
2. If so, did the CRA err in exercising
the discretionary authority conferred on it by subsection 22(1) of the PA to
refuse to disclose the personal information requested by the applicant?
B. Standard
of Review
[10]
In paragraph 15 of Barta v Canada (Attorney
General), 2006 FC 1152 [Barta], Justice Gibson finds that the
standard of review applicable to the first issue cited is that of correctness,
while for the second issue, it is reasonableness. Here is what Justice Gibson
has to say:
[15] On the
facts of this matter, in addition to subparagraph 22(1)(a)(i) of the Act,
paragraph 22(1)(b) and sections 26 and 27 of the Act have been relied on
as bases for exemption. Each of those provisions, like subparagraph
22(1)(a)(i), provides for discretion as to whether or not the exemption should
be applied. Thus, then, I am satisfied that in reviewing exemptions under those
provisions, as with a review of exemptions under subparagraph 22(1)(a)(i), the
appropriate standard of review on whether the requested information falls
within the category of exemption is correctness and, as to the exercise of
discretion whether or not to release the information assuming it falls within
the category of exemption is reasonableness simpliciter.
[11]
Justice O’Keefe arrived at the same conclusions in
Thurlow v Canada (Royal Canadian Mounted Police), 2003 FC 1414 [Thurlow],
at paragraphs 34 and 39 (see also Blank v Canada (Justice), 2009 FC 1221,
at paragraph 29 and Leahy v Canada (Minister of Citizenship and Immigration),
2012 FCA 227 [Leahy], at paragraphs 96 to 99).
[12]
In paragraph 57 of Dunsmuir v New Brunswick,
2008 SCC 9, the Supreme Court states the following:
[57] An exhaustive review is not required in every case to
determine the proper standard of review. Here again, existing
jurisprudence may be helpful in identifying some of the questions that
generally fall to be determined according to the correctness standard (Cartaway
Resources Corp. (Re), [2004] 1 S.C.R. 672, 2004 SCC 26). This simply means
that the analysis required is already deemed to have been performed and need
not be repeated.
[13]
Since case law has satisfactorily established
the standards of review applicable to both issues at hand, the Court will
therefore apply the standard of correctness for the first issue and reasonableness
for the second.
V. Positions
of the parties
A. Applicant’s
position
[14]
The applicant submits that the CRA’s decision to
deny her requests for personal information based on paragraph 22(1)(a) of
the PA is unreasonable since these requests were for periods prior to April 7, 2008,
in other words, before the official start of the investigation for tax fraud. The
applicant, subjected to a third CRA audit covering fiscal years 2004 and 2005, submits
that she is entitled to access the documents and notes taken by the auditors.
Thus, she maintains that the respondent may not argue that the [Translation] “documents sought … are, in
almost every case, documents obtained and prepared as part of the investigation
for tax fraud … since Spring 2008” (respondent’s record, page 2).
[15]
Counsel for the applicant has drawn the Court’s attention
to Schedule III of the Privacy Regulations, SOR/83-508, which lists the investigating bodies
that can invoke the exemption in paragraph 22(1)(a). He points out that
only investigations conducted by the Special
Investigations Directorate, Department of National Revenue (which has since
become the Canada Revenue Agency) qualify for this exemption. Counsel
further argues that the investigation must be lawful, which he claims is not
the case here, since the respondent’s officers allegedly proceeded via
information obtained as part of the audit, which does not fall under paragraph 22(1)(a)
of the PA. He refers the Court to the document introduced as R-20, consisting
of the notes from a meeting held May 9, 2007, where the respondent’s officer, Marc
Proulx, makes it clear to the applicant’s accountant that he is conducting a
routine audit.
[16]
In addition, the applicant states that the
requested information will make it possible to judge the legality of the
actions taken by the CRA regarding the handling of her tax files as well as the
search warrant executed against her.
[17]
The applicant adds that she has reasons to
believe that the CRA conducted disguised tax audits of BT Céramiques inc.,
Francesco Bruno, Alfredo Magalhaes, Rodolfo Palmerino and herself, in violation
of the principles set out by the Supreme Court in R v Jarvis, 2002 SCC 73.
She would like access to documents that will enable her to confirm her statements
and exercise her rights enshrined in the Canadian Charter of Rights and
Freedoms, Part 1 of the Constitution Act, 1982, constituting
Schedule B to the Canada Act 1982 (UK), 1982, c 11 [Charter].
[18]
The applicant also recalled that the Court of Quebec
judge acquitted, via a directed verdict, Alfredo Magalhaes and Rodolfo
Palmerino, in their criminal case No. 500-73-003418-106, a decision that was
upheld on appeal by Justice St-Gelais of the Superior Court (Docket No. 500-36-005835-114).
The criminal case against applicants Gisella Palmerino and Francesco Bruno also
came to an end.
[19]
The applicant submits that the CRA’s
investigations for tax fraud have been closed for several months. Accordingly,
the respondent cannot argue that the information for disclosure might interfere
with an investigation. She argues that the exemption under subparagraph 22(1)(b)(i)
cannot be applied in the case at bar.
[20]
The applicant adds that she is not seeking to
obtain information that could be used to identify police informants, and that
she consents to this information being redacted before the requested documents are
given to her.
[21]
Lastly, the applicant states that, solely for
the purposes of the present application for judicial review, she is not seeking
to obtain copies of the documents seized at her residence\ and at that of third
parties. According to her, waiving access to these two sets of documents would
eliminate 90% of the documents identified by the respondent; originally, 812 boxes
and electronic files containing some 1,623,000 pages were sought.
[22]
The applicant points out that Ms. Landreville’s
affidavit shows that the evidence considered was insufficient, since Ms.
Landreville mentions [Translation]
“almost all of the documents,” which suggests that certain documents apparently
were not obtained as part of the investigation for fraud. Further, counsel for the
applicant alleges that Ms. Juneau’s affidavit offers no details whatsoever on
how Mr. Vallée went about his sampling. It is therefore argued that the
evidence to support the intelligibility and merits of the decision to apply the
exemption under paragraph 22(1)(a) is deficient.
B. Respondent’s position
[23]
Relying on the affidavit filed by Valérie
Landreville, investigator with the Enforcement and
Disclosures Directorate of the CRA, the respondent submits that the
documents sought by the applicant, in her access requests, were obtained or
prepared as part of tax fraud investigations launched on April 7, 2008, and
that as a result, they come under the exemption under paragraph 22(1)(a)
of the PA.
[24]
In response to the applicant’s argument that
paragraph 22(1)(b) of the PA can no longer be applied because the
investigations are closed, the respondent states that at the time the CRA rendered
the decision contested in this application, i.e. on July 14, 2010, the
investigation was still underway and paragraph 22(1)(b) applied.
[25]
At the hearing, counsel for the respondent argued
that even the documents prepared and obtained as part of a routine audit become
subject to the exemption under paragraph 22(1)(a) once they are placed
in the fraud investigation file.
[26]
Moreover, the respondent argues that the Court
must not take account of the context in Jarvis, above. According
to him, in an application for judicial review of the decision to apply the exemption
under paragraph 22(1)(a), the Court must disregard the reasons that led
the applicant to file her request for information under the terms of the PA. The
Court must confine itself to judging the decision to deny access to the requested
documents.
VI. Analysis
[27]
Both parties readily acknowledge that under paragraph
22(1)(a) of the PA, the CRA was entitled to refuse to disclose to the applicant
all the documents obtained or prepared by the Agency after April 7, 2008, which
is when the tax fraud investigation commenced.
[28]
However, the applicant disputes the CRA’s
refusal to disclose documents obtained or prepared between January 2004 and
April 7, 2008. To the extent that documents were drafted and compiled between
these dates, it is up to the Court to determine whether, as at July 14, 2010 (the
disclosure refusal date), the CRA had valid reasons to believe that their
disclosure might very well undermine the investigation that remained open at
the time.
[29]
If that was the case, did the CRA have the right
to refuse to disclose the documents sought under paragraph 22(1)(b) of
the PA?
[30]
In Lavigne v Canada (Office of the Commissioner of Official Languages),
2002 SCC 53 [Lavigne], the Supreme Court addressed the quality of
the reasons that could justify non-disclosure of personal information:
58 The non-disclosure of personal information provided in
s. 22(1)(b) is authorized only where disclosure “could reasonably
be expected” to be injurious to investigations. As Richard J. said in Canada (Information Commissioner) v.
Canada (Immigration and Refugee Board), supra,
at para. 43, “[t]he reasonable expectation of probable harm implies a
confident belief”. There must be a clear and direct connection between
the disclosure of specific information and the injury that is alleged.
The sole objective of non-disclosure must not be to facilitate the work of the
body in question; there must be professional experience that justifies
non-disclosure. Confidentiality of personal information must only be protected
where justified by the facts and its purpose must be to enhance compliance with
the law. ….
[31]
The applicant’s argument that the exemption under
paragraph 22(1)(b) of the PA does not apply, because the CRA’s tax fraud
investigations are now closed, has no basis and must therefore be rejected. The
CRA’s decision of July 14, 2010, is the subject of this application for
judicial review. The investigations were still underway as of that date.
[32]
Section 47 of the PA is clear: the burden of
establishing that the head of a government institution is authorized to refuse
to disclose personal information shall be on the government institution concerned.
If the respondent cannot demonstrate that there are reasonable grounds for
refusal, this Court may, under sections 48 and 49 of the PA, order that the documents
sought be disclosed to the applicant.
[33]
In the case at bar, the respondent has introduced
an affidavit filed by Valérie Landreville, investigator with the Enforcement and Disclosures Directorate of the CRA,
in which she indicated that almost all of the documents sought by the applicant
were obtained and prepared as part of the investigation and therefore come
under the exemption under paragraph 22(1)(a) of the PA.
[34]
The respondent has also submitted an affidavit filed
by Marie-Claude Juneau, Director, Access to Information and Privacy Directorate
of the CRA. In it, the latter indicates that the information requests submitted
by the applicant were assigned to Gilles Vallée, a senior analyst experienced
in access to information and privacy [ATIP] in Montréal.
[35]
In June 2010, Mr. Vallée went to the Montréal Tax Services Office to consult the documents.
After discussions with the managers of the CRA’s Enforcement
and Disclosures Directorate, he was provided with a written recommendation from
them to protect all of the documents, because (1) the documents were
obtained and/or prepared by an investigative body, for an investigation that
led to the laying of criminal charges; and (2) disclosure could prejudice an ongoing
investigation.
[36]
Given the volume of documents and the
investigations underway, Mr. Vallée apparently proceeded with a sampling that
he considered relevant to the requests, in order to confirm the validity of the
recommendations made to him. He found that it would be reasonable to accept the
recommendation to protect all of the documents. This is what is reported in Ms.
Juneau’s affidavit.
[37]
If the respondent is right and all the requested
documents were obtained and compiled by the CRA as part of their investigation,
the debate is closed and the application for judicial review must be dismissed.
However, if the CRA is refusing to disclose documents that it obtained before
the start of the investigation, the Court must determine whether the exercise of
this discretionary authority is justified.
[38]
The affidavits filed by Valérie Landreville and
Marie-Claude Juneau do not reasonably allow us to conclude that disclosing the documents
would have likely risked undermining the investigation by the CRA.
[39]
The respondent is not invoking any other
specific fact to establish the existence of a likely risk of prejudicing the
investigation. As the Supreme Court tells us in Lavigne:
61 There are cases in which disclosure of the personal
information requested could reasonably be expected to be injurious to the
conduct of investigations, and consequently the information could be kept
private. There must nevertheless be evidence from which this can
reasonably be concluded.
[40]
In the case at bar, the respondent’s decision, in
response to the many requests filed by the applicant, is based solely on
paragraphs 16(1)(a) and 16(1)(c) of the ATIA. This is clearly a
mistake, since the respondent is referencing the ATIA rather than the PA.
[41]
However, following the complaint filed by the
applicant with the Office of the Privacy Commissioner, Arthur Dunfee, Director General,
Complaints and Investigations, rectified the situation in paragraph 2 of his
investigation summary when he clarified that the applicant’s file was dealt
with under paragraphs 22(1)(a) and 22(1)(b) of the PA. In light
of paragraphs 16 to 18 of the decision by the Supreme Court in Newfoundland
and Labrador Nurses' Union v Newfoundland-and-Labrador (Treasury Board), 2011
SCC 62, the Court is of the opinion that the reference to the wrong statute in
the decision is not a fatal error in the circumstances.
[42]
Mr. Dunfee then laid out the reasons that
enabled him to dismiss the applicant’s complaint. He stated the following:
Section 22(1)(a) of
the Act allows a government institution to withhold personal information if it
was obtained or prepared by an investigative body during the course of a lawful
investigation. Unlike other exempting provisions of the Act, this
provision does not contain an injury test. In order to claim section 22(1) (a),
the department need only demonstrate that the information at issue is less than
20 years old and that it was prepared or obtained in the course of a lawful
investigation by an investigative body listed in Schedule III of the Privacy
Regulations.
In this case, the
information exempted under the provision was prepared by CRA’s Enforcement
Division, formerly the Special Investigation Division, which is indeed an
investigative body for the purpose of the Act, and all of the other
requirements of this provision have been met as well. Therefore while CRA is
not in itself an investigative body, it had the legal authority to invoke this
exemption at the time it was claimed.
[43]
In paragraphs 93 and 94 of its decision in Leahy,
above, the Federal Court of Appeal sets out the role of a reviewing court in
the area of access to information, namely to adjudicate disputes and ensure “appropriate government accountability,
while at the same time protecting democratic values and effective governance.”
[44]
In paragraph 100 of its decision, the Court
states the following in relation to the case in question:
… As explained below, the evidentiary record
before us is so thin that we cannot properly assess whether the decisions were
correct or reasonable. Among other things, we cannot tell from the record who
applied the exemptions to the documents, what definition of those exemptions
was used, and what consideration was given to the exercise of discretion.
Without that basic information, we cannot assess the correctness or the
reasonableness of the decisions made. In short, this Court has been prevented
from discharging its role on judicial review.
[45]
Unfortunately, the Court finds itself in an analogous
position in the case at bar. First of all, it must be said that Ms. Juneau’s
decision letter of July 14, 2010, offers no clarification, and even cites non-applicable
provisions of the ATIA. The Court rejects this letter out of hand. Looking at
Mr. Dunfee’s decision, here again the terseness and lack of reasons strike
us as unreasonable. Indeed, the applicant was given no clarification regarding
the reasons her requests were denied, other than the fact that the CRA has
investigative authority, which is mentioned in Schedule III, and that the
requested information was compiled as part of an investigation.
[46]
What test was applied to establish that the
requested documents and reports were all produced as part of the investigation,
including those documents predating April 7, 2008? No one knows.
[47]
However, the affidavits filed by the respondent are
illuminating, in that they enable the Court to find that the respondent erred
in invoking paragraph 22(1)(a) and that the respondent’s decision under paragraph
22(1)(b) is unreasonable, for the following reasons:
[48]
First, the affiant Valérie Landreville claimed
the following in paragraphs 5 and 6 of her affidavit:
[Translation]
5. I know that the documents
sought in the access to information requests submitted by the applicants are
almost all documents obtained and prepared as part of tax fraud investigations into
the applicants’ affairs that the Canada Revenue Agency’s Enforcement and Disclosures Directorate launched in
the spring of 2008.
6. There is no doubt
in my mind that almost all of the documents and information targeted in the
access to information requests submitted by the applicants were obtained or
prepared by the Canada Revenue Agency in accordance with the Income Tax Act with
a view to combating tax fraud.
[49]
Questioned about her affidavit, Ms. Landreville offered
the following clarification:
[Translation]
I didn’t have access
to what was provided by all of these hundred and thirty-seven (137) applicants,
so I can’t say that I know about all of the documents. (See Examination, page 9,
lines 5 to 8, applicant’s record, page 142)
[50]
Later, she adds [Translation]
“so, the majority of them, I know that it’s…..I can say that it’s the majority
of the documents, but there are definitely some I don’t have access to, so I
can’t say anything about those ones.” (see Examination, page 11, lines 9 to 14,
applicant’s record, page144)
[51]
How, then, can the respondent maintain that all
of the requested documents can come under the exemption in paragraph 22(1)(a)?
[52]
Furthermore, the affidavit filed by Ms. Juneau does
not enable the Court to confirm that the CRA handled the request on the basis of
the investigation start date, since she indicates that Mr. Vallée proceeded
via sampling, with no clarification.
[53]
The evidence before the Court does not enable us
to determine which documents produced by which employee and bearing which date were
actually consulted to determine that the 1,623,000 come under the exemption. Also,
documents R-1 to R-25 filed by the applicant establish that officers in the
criminal investigations service, including Mr. Paquette, consulted the applicant’s
computer files well before the start of the fraud investigation. Under the
circumstances, there is no choice but to conclude that this decision to deny
access to the requested documents cannot be justified, at least for some of the
documents.
[54]
As Justice Rothstein recalls in Kaiser v Minister
of National Revenue, [1995] FCJ No 926, at paragraph 2:
… There is no doubt
the onus is on the respondent to establish disclosure should not be made, The
Court must be given an explanation of how or why the harm alleged might
reasonably be expected to result from disclosure of the specific information.
This is not a case where harm from disclosure is self-evident. . I have been
asked to infer that harm will result if disclosure is allowed. In order to make
such an inference, explanations provided by the Minister must clearly
demonstrate a linkage between disclosure and the harm alleged so as to justify
confidentiality.
[55]
The Court must reject the interpretation proposed
by the respondent, whereby the documents obtained in connection with a simple audit
are automatically subject to the exemption in paragraph 22(1)(a) once
they are placed in a fraud investigation file. Allowing this interpretation would
harm the fundamental rights recognized by the Charter. The Supreme Court
reminds us, and rightly so, of the quasi-constitutional nature of the PA in its
decision in Lavigne above. Moreover, the respondent cites no authority
to support this interpretation. What is more, Schedule III of the Regulations concerns
criminal investigations and not routine audits under the Income Tax Act,
RSC 1985, c. 1 (5th Supp).
[56]
Nor can the Court subscribe to the respondent’s argument
that for judicial reviews of a decision made under paragraphs 22(1)(a) and
22(1)(b) of the PA, it cannot consider the applicant’s aims. Just as it
is incumbent upon the respondent to justify its refusal, so too can the context
and events surrounding the gathering of the requested information become pivotal,
in certain circumstances. In the case at bar, the applicant seeks to challenge
the lawfulness of part of the investigation into her activities in order to
protect her rights guaranteed under the Charter and as defined in Jarvis
(cited earlier). This fact cannot be ignored by the Court, especially since
the respondent is offering no clarification as to the nature of the harm it may
incur.
[57]
The evidence presented by the respondent to justify
his refusal to provide access to the requested documents demonstrates that some
of the documents may have been obtained outside the confines of the fraud
investigation. Moreover, the tests and methodology employed to determine
whether the requested documents were actually obtained and compiled as part of
the fraud investigation and not during the audit are not clear. In the circumstances,
the respondent’s refusal is unreasonable, and the Court must allow the
application for judicial review. The present decision is applicable mutatis mutandis
to dockets T-2116-11, T-2117-11 and T-2118-11, and shall be placed in each of
these dockets.
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