Docket: T-757-14
Citation:
2016 FC 1154
Ottawa, Ontario, October 17, 2016
PRESENT: The
Honourable Madam Justice Tremblay-Lamer
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BETWEEN:
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HELEN DALEY
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Applicant
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and
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ATTORNEY
GENERAL OF CANADA
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Respondent
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and
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PRIVACY
COMMISSIONER OF CANADA
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Intervener
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REASONS AND JUDGMENT
I.
Nature of the Matter
[1]
This is an application for judicial review
pursuant to sections 18 and 18.1 of the Federal Courts Act, RCS 1985, c
F-7 of a report of findings issued by the Office of the Privacy Commissioner of
Canada [the OPC] and of a reconsideration decision rendered by the same with
respect to a complaint against the Canada Revenue Agency [CRA].
II.
Facts
[2]
The applicant, Ms. Helen Daley, is a partner at
the law firm of Wardle Daley Bernstein Bieber LLP, in Toronto, and is
occasionally retained by the CRA for litigation.
[3]
In 2002, the CRA investigated Mr. Holterman and he
was criminally prosecuted before the Ontario Superior Court of Justice in 2003
for tax evasion. Mr. Holterman filed a pre-trial motion seeking to quash five
search warrants which was granted (R. v. Tiffin, [2005] 3 CTC 213).
Disclosure in the course of the pre-trial motions revealed to Mr. Holterman the
names of the prosecutor’s witnesses and he began communicating with them and
threatening them with legal proceedings.
[4]
The applicant was retained by the CRA to defend
Mr. F., a CRA investigator, against Mr. Holterman’s actions before several
regulatory and civil tribunals. She also facilitated the retainer of Ms. T. by
Mr. O., a foreign witness in the criminal case against Mr. Holterman. At Ms.
T.’s request, the applicant provided her with a transcript of Mr. O.’s
interview by Mr. F. in the course of the CRA investigation.
[5]
In 2013, the applicant learned through a partner
at her law firm that she had been found to have violated the Privacy Act,
RSC 1985, c. P-21 [the Privacy Act] following a complaint filed by Mr.
Holterman relating to the disclosure of the transcript.
[6]
On July 17, 2013, the applicant wrote to the OPC
to express her concerns that she had not been informed of the complaint, nor
given the chance to respond to Mr. Holterman’s allegations. She also noted that
she was not an employee of the CRA and that the information transmitted to Ms.
T. was public in nature. The applicant requested that the OPC re-open the
investigation into the complaint.
[7]
On July 26, 2013, the OPC invited the applicant
to submit further information on the public nature of the information
transmitted to Ms. T.
[8]
On September 25, 2013, following the applicant’s
further submissions, the OPC advised her that there were insufficient grounds to
re-open the investigation and that the matter was closed.
III.
Decision
A.
Report of Findings
[9]
The OPC concluded that the matter was
well-founded. Its investigator found that the transcript contained extensive
information about Mr. O.’s business relationship with the complainant and his
opinions and views about the complainant. This met the definition of personal
information in section 3 of the Privacy Act.
[10]
To determine whether the disclosure was authorized
under the Privacy Act, subsection 8(2) of the Privacy Act had to be read in
conjunction with paragraph 241(3)(b) of the Income Tax Act, RCS 1985, c
1 (5th supp.) [ITA], which authorizes disclosure of taxpayer information for
legal proceedings relating to the administration and enforcement of the ITA.
The OPC noted that the disclosure had been made in relation to a civil
proceeding for damages arising out of business dealings and concluded that the
CRA could not rely on paragraph 241(3)(b) of the ITA as the authority for
disclosure. As such, there was no basis for the disclosure under subsection
8(2) of the Privacy Act.
[11]
The OPC recommended that the CRA remind its
criminal investigation staff of the provisions of the Privacy Act and their
application in order to prevent future unauthorized disclosures.
B.
Reconsideration Decision
[12]
Following a thorough review of the evidence
submitted by the applicant, the OPC concluded that it did not have sufficient
grounds to re-open the investigation. More precisely, it did not have reason to
believe that the transcript in question and all of the complainant’s personal
information contained therein was part of the court record or otherwise
publicly available.
[13]
The OPC noted the applicant’s concerns on
procedural fairness, but stated that the investigation and the report were
limited to CRA’s compliance with the Privacy Act and that the report did not
make or purport to make findings regarding any other person’s or entity’s
compliance with the Privacy Act.
IV.
Issues
[14]
This matter raises the following issues:
1.
What is the applicable standard of review?
2.
Did the OPC breach the rules of natural justice
and its duty of fairness toward the applicant?
3.
Did the OPC err in concluding that the
applicant’s disclosure was unauthorized under the Privacy Act and the ITA?
V.
Relevant Provisions
[15]
The relevant provisions are subsection 8(2) of
the Privacy Act and paragraph 241(3)(b) of the ITA, included in Appendix A
attached to these Reasons.
VI.
Submissions of the Parties
A.
The Applicant
[16]
The applicant first argues that she was entitled
to notice of the proceedings because the decision directly harmed her
professional reputation interests. A right to notice arises when an
administrative decision will significantly, directly and necessarily affect a
person’s interest. A duty of fairness will almost always apply to decisions
that are likely to reflect unfavourably on the honesty, competence or integrity
of individuals in the conduct of their profession. The Supreme Court of Canada has
recognized that a lawyer’s professional reputation is of particular importance
to the individual (Hill v Church of Scientology of Toronto, [1995] 2 SCR
1130 at para 180 [Hill]). By concluding that the applicant had failed to
keep an individual’s personal information confidential and breached the Privacy
Act, the OPC harmed the applicant’s professional reputation. There is no merit
to the intervener’s contention that the report was directed solely at the CRA;
the applicant’s conduct was the only one at issue.
[17]
Secondly, the applicant submits that the
personal information contained in the transcript was publicly available because
significant parts of it had been disclosed in open court in the course of the
criminal and civil proceedings involving Mr. Holterman.
[18]
The applicant further argues that the
disclosure was authorized under paragraph 241(3)(b) of the ITA because the
prohibition on the disclosure of taxpayer information does not apply in legal
proceedings related to the administration and enforcement of the ITA. The OPC
erred in concluding that the action between Mr. Holterman and Mr. O. was simply
a claim for damages arising out of business dealings. Mr. Holterman sued Mr. O.
because his testimony before the CRA contradicted the terms of the Minutes of
Settlement agreed to between them in 2003. Mr. Holterman therefore sued Mr. O.
as a direct result of the administration and enforcement of the ITA.
B.
The Respondent
[19]
The respondent is limiting his intervention to
the last issue. He notes that the Privacy Act is a statute of general application
and that subsection 8(2) of the Privacy Act is accommodating of disclosures of
personal information authorized in federal legislation. The original authority
to release the information does not flow from subsection 8(2) of the Privacy
Act, but from section 241 of the ITA. The Minister of Revenue has a wide
discretion to disclose information under its own legislation.
[20]
The plain statutory language of paragraph
241(3)(b) of the ITA requires some relation between the legal proceedings for
which the disclosure will be used and the administration and enforcement of the
ITA. The OPC’s strict and narrow interpretation of the provision indicates no
recognition of the broad and liberal interpretation sanctioned by the Courts.
Coherence within the administration of justice is highly desirable and the OPC
should have deferred to CRA’s interpretation of their own provision to allow
for a complementary and harmonious legislative scheme.
C.
The Intervener
[21]
The intervener submits that it did not have a
duty to notify the applicant. The mere fact that a non-party’s conduct is
referred to or commented upon in administrative proceedings does not entitle
her to notice of the proceedings. The report of findings was directed at the
CRA and the intervener is limited to assessing a government institution’s
compliance with the Privacy Act. The applicant was referred to solely in her
capacity as an agent acting on behalf of CRA, who vigorously defended her
interests in the proceedings. Moreover, the report had no binding consequences
and was not made public.
[22]
The intervener adds that the notice requirements
are comprehensively set out in sections 29 to 35 of the Privacy Act. As long as
the notification requirements are complied with, the OPC benefits from a broad
discretion in its investigation procedures. A duty to notify third parties
would have serious practical implications for the conduct of investigations
under the Privacy Act and would over-formalize what is intended to be an
informal, non-judicial and confidential ombudsman process.
[23]
The intervener argues that the Courts have held
that the legal proceedings referred to in paragraph 241(3)(b) of the ITA must
relate to the administration and enforcement of the ITA for the exemption to
apply. It was reasonable to conclude that the action between Mr. Holterman and
Mr. O. was not related to the ITA, because it was a legal proceeding for
damages arising out of an alleged breach of a settlement agreement between
them. The CRA was not an active participant in those proceedings.
VII.
Analysis
A.
What is the applicable standard of review?
[24]
The applicable standard of review for the issue
of procedural fairness is correctness (Canada (Citizenship and Immigration)
v Khosa, 2009 SCC 12, para 43; Sketchley v Canada (Attorney General),
2005 FCA 404 at para 53-54; Re: Sound v Fitness Industry Council of Canada,
2014 FCA 48 at para 35).
[25]
On the issue of disclosure, the applicant and
the respondent submit that correctness should apply, while the intervener
argues that reasonableness is the appropriate standard. I agree with the
intervener.
[26]
The issue of the applicability of paragraph
241(3)(b) of the ITA requires a thorough examination of the facts of the case.
As such, it is a question of mixed fact and law which presumptively attracts
reasonableness (Dunsmuir v New Brunswick, 2008 SCC 9, para 53 [Dunsmuir]).
I come to the same conclusion upon analysis of the four factors set out in Dunsmuir
at paragraph 64.
[27]
Firstly, the OPC does not benefit from a
privative clause. However, in recent jurisprudence, the absence of a privative
clause has not been decisive and the reasonableness standard has been applied
regardless (Canadian Human Rights Commission v Canada (Attorney General),
2016 FCA 200, para 63). The absence of a privative clause therefore pulls
neither one way nor the other.
[28]
Secondly, the purpose of the Privacy Act, as
stipulated in section 2, is “to extend the present laws
of Canada that protect the privacy of individuals with respect to personal
information about themselves held by a government institution and that provide
individuals with a right of access to that information”. The OPC’s
decision under review was necessarily made in pursuit of this purpose which
points to reasonableness as the standard.
[29]
Thirdly, the nature of the question is one of
mixed fact and law. As stated above, to come to the conclusion that the
disclosure was not authorised under paragraph 241(3)(b) of the ITA, the OPC had
to examine the facts of the underlying cases as well as interpret the law.
There was no extricable question of law. Accordingly, the nature of the
question points to reasonableness.
[30]
Lastly, the OPC operates in a discrete statutory
regime in which it has expertise which also points to reasonableness as the
standard of review. The OPC was created for the proper administration of the
Act. Its role is, inter alia, to ensure that disclosures of personal
information are made in accordance with section 8 of the Privacy Act.
[31]
Pondering these four factors, this Court
concludes that the standard of review of the OPC’s decision is reasonableness.
This Court will therefore not interfere with the OPC’s decision unless it is
not transparent, intelligible, and justified or falls outside the range of
possible, acceptable outcomes in light of the facts and the law (Dunsmuir,
para 47).
B.
Did the OPC breach the rules of natural justice
and its duty of fairness toward the applicant?
[32]
As stated above, the intervener argues that all
principles of natural justice may be ousted by express statutory language or
necessary implication (Ocean Port Hotel Ltd. v. British Columbia (General
Manager, Liquor Control and Licensing Branch), 2001 SCC 52, para 22; Canada
(Attorney General) v. Mavi, 2011 SCC 30 at para 39). His position is that
the notification requirements are comprehensively set out in the Privacy Act
and that the Court should therefore refrain from reading-in additional
notification requirements.
[33]
I disagree. A plain reading of the relevant
provisions of the Act does not lead to the conclusion that the OPC is exempt
from notifying or allowing third parties who may be otherwise affected by its
decision to make representations. The provisions only state that the government
institution must be notified, and that no one else is entitled to make
representations as of right:
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31 Before commencing an investigation of a
complaint under this Act, the Privacy Commissioner shall notify the head of
the government institution concerned of the intention to carry out the
investigation and shall inform the head of the institution of the substance
of the complaint.
[…]
33 (2) In the course of an investigation of a complaint under this
Act by the Privacy Commissioner, the person who made the complaint and the
head of the government institution concerned shall be given an opportunity to
make representations to the Commissioner, but no one is entitled as of right
to be present during, to have access to or to comment on representations made
to the Commissioner by any other person.
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31 Le Commissaire
à la protection de la vie privée, avant de procéder aux enquêtes prévues par
la présente loi, avise le responsable de l’institution fédérale concernée de
son intention d’enquêter et lui fait connaître l’objet de la plainte.
[…]
33 (2) Au cours d’une enquête relative à une plainte, le plaignant
et le responsable de l’institution fédérale concernée doivent avoir la
possibilité de présenter leurs observations au Commissaire à la protection de
la vie privée; toutefois, nul n’a le droit absolu d’être présent lorsqu’une
autre personne présente des observations au Commissaire, ni d’en recevoir
communication ou de faire des commentaires à leur sujet.
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[34]
This does not in any way displace the common law
duty to notify persons who may be significantly and directly affected by the
decision, which was confirmed by the Supreme Court in T.W.U. v Canadian
Radio-Television & Telecommunications Commission, [1995] 2 S.C.R. 781 at
para 29. That the decision is non-binding is also of no consequence. In Morneault
v. Canada (Attorney General), [2001] 1 FCR 30, at para 2, the Federal Court
of Appeal confirmed that a decision’s absence of legal consequences did not bar
relief and thus, review by the Court.
[35]
While the report of findings was directed to the
CRA, it was the applicant’s conduct, as counsel retained by the institution,
which was under scrutiny. The report of finding itself notes:
10. However, in his letter of
complaint to the Privacy Commissioner, the complainant made a clear statement
about not wanting to pursue a formal complaint against the CRA for Mr. F’s
alleged inappropriate use of his personal information in providing this
information to Ms. D: “This
complaint does not include the acts or omissions of the CRA official,
[Mr. F.], as they are presently the subject of other proceedings.” The
investigation into this matter therefore only focused on the complainant’s
allegations of unauthorized disclosure of his personal information by Ms. D. to
Ms. T.
[…]
25. As such, we recommend that CRA
remind its staff in the Criminal Investigations Program, including its legal
counsel, of these provisions of the Act and their proper application
in order to prevent further unauthorized disclosures of this nature.
[Emphasis added]
[36]
The applicant, however, was not an employee of the
CRA, but its legal counsel. As such, her obligations toward the institution
were different than that of an employee. As a lawyer, it is her responsibility
to advise her client about their legal obligations, not the contrary. Her
interests in the context of a complaint under the Privacy Act are thus
necessarily different than that of the CRA. A finding of a violation of the
Privacy Act is of limited consequences for the institution, but has wider
implications for a lawyer working in private practice. In Hill, the
Supreme Court of Canada held:
[177] For all lawyers their reputation is
of paramount importance. Clients depend on the integrity of lawyers, as do
colleagues. Judges rely upon commitments and undertakings given to them by
counsel. Our whole system of administration of justice depends upon counsel's
reputation for integrity. Anything that leads to the tarnishing of a
professional reputation can be disastrous for a lawyer. It matters not that
subsequent to the publication of the libel, Casey Hill received promotions, was
elected a bencher and eventually appointed a trial judge in the General
Division of the Court of Ontario. As a lawyer, Hill would have no way of
knowing what members of the public, colleagues, other lawyers and judges may
have been affected by the dramatic presentation of the allegation that he had been
instrumental in breaching an order of the court and that he was guilty of
criminal contempt.
[37]
The applicant therefore had a direct and
significant interest in protecting her professional reputation and should have
been notified and given the opportunity to make representations in the course
of the investigation. The report of findings harmed her professional
reputation, as Mr. Holterman attempted to use it to affect the course of
another lawsuit he had brought against the CRA, whom the applicant was representing,
and start a letter-writing campaign to smear her reputation. I find that she
has demonstrated the minimum prejudice required to trigger the OPC’s common law
duty of notifying persons who may be directly affected by its decisions.
[38]
I am also of the view that the reconsideration
letter did not cure the breach of procedural fairness. The applicant was only
invited to submit evidence regarding the public nature of the information
disclosed. She was not given a full opportunity to make representations. Moreover,
by the time she was invited to make submissions, the harm had already been
done. The applicant only contacted the OPC after her partner had learned of the
report of findings through Mr. Holterman’s counsel. The OPC’s conclusions had
already been circulated.
[39]
I take note of the intervener’s argument that a
general duty to notify and provide participatory rights to government employees
and agents would complicate the OPC’s investigations, over-formalize the
process and impact its confidentiality. However, the facts of this case do not
give rise to a general duty to notify third parties. The applicant’s situation
as a private lawyer retained to represent a government agency distinguished her
interests from those of the CRA in the specific context of the complaint. The
OPC violated the rules of procedural fairness in not affording the applicant
the opportunity to be heard.
[40]
In light of this conclusion, I do not need to
discuss if the applicant should have been interviewed. However, I will comment
that although the OPC has considerable leeway in determining the procedure to
be followed in the performance of any duty or function of the Commissioner
under the Privacy Act, the applicant, being the only subject of the
investigation, it would appear that to gather relevant information, she should
have been contacted by the investigator in charge of the complaint.
C.
Did the OPC err in concluding that the
applicant's disclosure was unauthorized under the Privacy Act and the ITA?
[41]
To properly analyze this issue, it is important
to understand the general interaction between the Privacy Act and other Acts of
Parliament as contemplated by paragraph 8(2)(b) of the Privacy Act. In Privacy
Act (Can.) (Re), [2000] 3 FCR 82 at para 18, the Federal Court of Appeal
held that:
[18] In this context, paragraph 8(2)(b)
cannot but be interpreted as being a provision that enables Parliament to
confer on any Minister (for example) through a given statute a wide discretion,
both as to form and substance, with respect to the disclosure of information
his department has collected, such discretion, of course, to be exercised in
conformity with the purpose of the Privacy Act. […] But one can simply not
conclude from Parliament's alleged failure, in paragraph 8(2)(b), to be
specific when it clearly intended to be general, that federal government
institutions cannot be authorized under that paragraph to disclose to other
federal institutions personal information that, without any express
restriction, they can disclose to foreign institutions. In using words of wide
import in paragraph 8(2)(b) of the Privacy Act and eventually in paragraph
108(1)(b) of the Customs Act, Parliament clearly left itself a considerable
margin of manoeuvre with respect to its own legislation and took advantage of
it.
[42]
The OPC should therefore not use paragraph
8(2)(b) of the Privacy Act to assume authority to administer, interpret or
exercise the authority statutorily entrusted to another decision-maker in the
other “Acts of Parliament”. At a minimum, it
must take into account the other decision-maker’s interpretation of paragraph
241(3)(b) of the ITA and its related jurisprudence in its analysis. Nothing in
the record indicates that the OPC considered the CRA’s position on the proper
interpretation of paragraph 241(3)(b) of the ITA, in spite of detailed
submissions and offers to discuss the issue in person.
[43]
In Slattery (Trustee of) v. Slattery,
[1993] 3 S.C.R. 430 [Slattery], the Supreme Court held that the
provision should be interpreted broadly. In that case, the legal proceedings at
issue were a matter of bankruptcy. Mr. Slattery had fallen into arrears in
paying income taxes, resulting in an investigation by the CRA. The CRA
eventually petitioned Mr. Slattery into bankruptcy. When he died, a trustee of
his estate was appointed and it was determined that the estate’s assets would
not be sufficient to pay what was owed to the CRA. The estate sued Mr.
Slattery’s wife, who was thought to be hiding assets on his behalf. The estate
sought the testimony of two CRA investigators, to which Mrs. Slattery objected,
citing paragraph 241(3)(b) of the ITA. The Supreme Court stated that:
The connecting phrases used by Parliament in
s. 241(3) are very broad. The confidentiality provisions are stated not to
apply in respect of proceedings relating to the administration or
enforcement of the Income Tax Act.
[Emphasis added]
[44]
It further remarked that both connecting phrases
suggested that a wide rather than narrow view should be taken when considering
whether a proposed disclosure is in respect of proceedings relating to the
administration or enforcement of the ITA.
[45]
The report of findings does not reflect this
broad interpretation. I can only conclude that the OPC erred in ignoring the
factual and legal context of the proceedings between Mr. Holterman and Mr. O.
[46]
The characterization of the legal proceedings by
the OPC as “damages arising out of business dealings” is
misleading. The CRA’s position was that the 2005 legal proceedings related to
the administration or enforcement of the ITA because the information provided
by Mr. O. formed the basis of the criminal charges against Mr. Holterman. Any
legal proceedings calling into question the business dealings that were the
subject of the criminal investigation are necessarily directly related to the
administration and enforcement of the ITA.
[47]
In January 2003, Mr. Holterman first filed a
legal proceeding against Mr. O. which produced the Minutes of Settlement
between the two parties. At that time, Mr. O. had already been interviewed a
first time by the CRA in 2002 in the course of their investigation and the
information provided formed the basis of the charges against Mr. Holterman. The
Minutes of Settlement re-characterized the business transactions between Mr.
Holterman and Mr. O. in a way that contradicted Mr. O.’s testimony to the CRA,
unbeknownst to the investigators.
[48]
In May 2003, Mr. O. voluntarily gave a further
interview to the CRA which produced the transcript at issue in this case. In
this second interview, Mr. O. confirmed his prior testimony to the CRA which
contradicted the Minutes of Settlement. In November 2003, Mr. Holterman
launched legal proceedings against Mr. F. In December 2003, he launched
further legal proceedings against Mr. O. and Mr. F. Both of these proceedings were
stayed in 2004 pending the outcome of the criminal prosecution.
[49]
When Mr. Holterman succeeded in his pre-trial
motion challenging the validity of the information gathered to obtain warrants
on Charter grounds in 2005, he re-launched his December 2003 proceeding
against Mr. O. The statement of claim clearly demonstrates that the information
provided by Mr. O. to the CRA is at the heart of the matter between the
parties. The OPC ignored that but for the CRA investigation Mr.
Holterman would never have sued Mr. O. In my opinion, this is sufficient
to meet the connection threshold set out in paragraph 241(3)(b) of the ITA and
interpreted in the jurisprudence.
[50]
In light of this conclusion, there is no need to
decide if the transcript was public or not.
VIII.
Conclusion
[51]
The application for judicial review is granted.
[52]
The OPC clearly misstated the facts of the case
by ignoring the context in which the proceedings against Mr.O. were brought,
thus erroneously interpreting paragraph 241 (3)(b) ITA. Furthermore, the OPC had
a common law duty to notify the applicant of the complaint even if she was not
a party to it because she had a direct and significant interest in the outcome.
The OPC’s report of findings affected her professional reputation as a lawyer
and she should have been given the opportunity to make representations to
defend her interests.
[53]
For the reasons above, the report of findings is
quashed and the matter is sent back to the OPC for redetermination in
accordance with these Reasons. No costs are awarded.
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