O’neill Motors Ltd. v. R., [1996] 1 CTC 2714

Bowman J.T.C.C.: — The question in this proceeding is the remedy, if any, that is available to the appellant under section 24 of the Canadian Charter of Rights and Freedoms in an appeal to this court under the Income Tax Act from reassessments that are based upon information and documents obtained by an illegal search and seizure that has infringed the appellant’s rights under section 8 of the Charter.

The matter was originally framed as a motion for a preliminary determination of a question under Rule 58 of the Tax Court of Canada Rules (General Procedure). In that motion the appellant asked the court for one of two alternative determinations:

(a) A determination that the Notice of Re- assessment is invalid and of no force and effect pursuant to Section 24(1) of the Charter insofar as it is based upon or relies upon evidence of information obtained as a result of the execution of search warrants referred to in this Application.

(b) In the alternative, a determination, pursuant to Section 24(2) of the Charter, that all of the evidence obtained as a result of the execution of search warrants referred to in this Application is inadmissible in this proceeding and that the Minister be excluded from using relying upon any evidence or information obtained as a result of the execution of these search warrants.

Subsequently the matter was recast as a question for determination under section 173 of the Act. Subsection 173(1) reads as follows:

Where the Minister and a taxpayer agree in writing that a question of law, fact or mixed law and fact arising under this Act, in respect of any assessment, proposed assessment, determination or proposed determination, should be determined by the Tax Court of Canada, that question shall be determined by that Court.

The motion under section 58 of the Rules was brought on behalf of all four appellants, Richard O. O’Neill, Christian P. O’Neill, Richard J. O’Neill and O’Neill Motors Limited but the reference under section 173 of the Act related only to the corporate appellant, O’Neill Motors Limited, on the basis that the appeals by the three individuals would abide the result of the court’s determination of the question under section 173. The motion under section 58 of the Rules was left in abeyance pending the disposition of the question under section 173.

The question stated under section 173 of the Act by counsel on behalf of the appellant, and the disposition for which each party contends, are as follows:

(d) The question of law, fact or mixed law and fact that the parties agree should be determined by the Court is as* follows:

Is it appropriate and just in the circumstances for the assessments of tax relevant to this reference to be vacated by virtue of subsection 24(1) of the Canadian Charter of Rights and Freedoms (the “Charter”)?

(e) (i) Her Majesty the Queen seeks a determination that the relevant assessments ought not to be vacated by virtue of subsection 24(1) of the Charter.

(ii) The taxpayer seeks a determination that the relevant assessments ought to be vacated by virtue of subsection 24(1) of the Charter.

The facts to which the parties agreed are set out in Schedule “A” to the reference and to these reasons.

Counsel for the respondent very fairly admitted that the search and seizure under section 231.3 of the Act was a violation of the appellant’s rights under section 8 of the Charter and that the information so obtained was fundamental to the making of the assessments that are now being appealed to this court.

Sections 8 and 24 of the Charter read as follows:

8. Everyone has the right to be secure against unreasonable search or seizure.

24. (1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.

(2) Where, in proceedings under subsection (1), a court concludes that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter, the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute.

For the purposes of the question that I must determine I shall briefly summarize the facts as they are set out more fully in the agreed statement:

Officials of the Department of National Revenue, acting under the authority of a warrant obtained under section 231.3 of the Act, searched for and seized documents in the possession of the appellant. On the basis of information contained in the documents so obtained he assessed the appellant tax, interest and penalties. Subsequent to the seizure of the documents and the making of the assessments the Federal Court of Appeal in Baron v. R., (sub nom. Baron v. Canada) [1991] 1 C.T.C. 125, 91 D.T.C. 5056 (F.C.A.), held section 231.3 to be unconstitutional and declared it to be of no force and effect. Therefore the seizure was warrantless and a violation of the appellant’s rights under the Charter and, accordingly, illegal. The Crown sought leave to appeal the Baron decision to the Supreme Court of Canada. The appellant applied to the Supreme Court of Newfoundland for a return of its documents. Officials of the Department of National Revenue, without returning the documents, applied to a Justice of the Peace for a further warrant authorizing the seizure under section 487 of the Criminal Code (in effect, a re-seizure, since the Minister still had them, and so the seizure was notional). In the application the official refrained from informing the Justice of the Peace that the appellant had applied to the Supreme Court of Newfoundland for a return of the documents or that the Crown was seeking leave to appeal the Baron decision to the Supreme Court of Canada. The Justice of the Peace issued the warrant. The appellant was prosecuted under section 239 of the Act. At the trial before Judge Baker, the appellant argued that the seizure under section 231.3 of the Act was illegal and that the circumstances surrounding the subsequent re-seizure under section 487 of the Criminal Code was an abuse of process and a violation of its rights under sections 7 and 8 of the Charter and that the documents should be excluded from evidence. Judge Baker agreed, excluded the documents from evidence and acquitted the appellant.

Subsequently the Supreme Court of Canada affirmed the Baron v. Canada decision: [1993] 1 S.C.R. 416, [1992] 1 C.T.C. Ill, 93 D.T.C. 5018.

Stripped of essentially peripheral details, the question that emerges is this: Can an assessment, the fundamental basis of which is information that has been obtained by an illegal search and seizure in violation of the appellant’s Charter rights, stand?

Any analysis of this question, which has not previously come before this court, or so far as I am aware, any other court in Canada, must start from the recognition that, in general, in an appeal from an assessment, the issue is the correctness of the product of the assessment and not the process by which the tax was assessed. See Consumers’ Gas Co. v. R. (sub nom. R. v. Consumers' Gas Co.), [1987] 1 C.T.C. 79, 87 D.T.C. 5008 (F.C.A.) at D.T.C. 5012. [1] In this case the assessments were made beyond the three’ year normal reassessment period and penalties under subsection 163(2) were assessed. The onus of establishing that the making of an otherwise statute-barred assessment outside of the normal reassessment period was justified under subsection 152(4) on the basis of misrepresentation, as well as the imposition of penalties, is on the respondent, whereas the onus of establishing that the assessment of tax was too high is on the appellant.

The assessments in question were based upon information and documents obtained on the first seizure, that is to say, the seizure that was made under section 231.3 of the Act which was held to be of no force and effect by the Federal Court of Appeal and the Supreme Court of Canada. The subsequent purported “re-seizure” under section 487 based, as it was, upon an improper withholding of information from the Justice of Peace by an official of the Department of National Revenue, was not the foundation of the assessments, however reprehensible that conduct might have been, and however much it justified the ruling of Judge Baker, with whose reasons and conclusions I am in complete and respectful agreement.

Counsel for the appellant argued that the appropriate remedy where an illegal search and seizure results in the Minister’s obtaining information on which an assessment is based is to vacate the assessment.

Counsel for the respondent based his opposition to this submission on the following grounds:

(a) He contended that whatever impropriety there may have been in the conduct of the Revenue Canada officials surrounding the re-seizure of the documents under section 487 of the Criminal Code, there was none in the original seizure under section 231.3 of the Act which, he argues, was made in good faith. I agree with him if all that is meant by good faith is that the departmental officials could not have foreseen, in obtaining the search warrant and in effecting the search and seizure, that section 231.3 would subsequently be declared unconstitutional. To say, however, that a massive and disruptive assault on the appellant’s premises, in which approximately 90 large cartons were removed and retained for 22 months while an investigation was conducted, for a further 4 months until notices of reassessment were issued, for a further 9 months before charges were laid and for a further 32 months before the matter was brought to trial — a total of approximately 67 months — together with a highly improper withholding of information from a Justice of the Peace in obtaining the second warrant under section 487 of the Criminal Code in order to retain possession of documents that were illegally seized in the first place, is an act of good faith may require a redefinition of that term. Whatever might be said for the proposition that the original section 231.3 seizure, viewed in isolation, was made in “good faith”, that good faith becomes rather tarnished when one looks to the Crown’s subsequent conduct.

(b) Counsel further argued that the documents could have been obtained without a search warrant by means of a requirement under section 231.2 of the Act. This fact, if true, hardly helps the respondent. Quite the contrary. If the documents and information could have been obtained by the simple expedient of serving a requirement why the extreme tactic of a search and seizure? An unconstitutional act is not saved from the consequences of its own illegality by being unnecessary or by the fact that the same result might have been achieved constitutionally. Indeed, as the Supreme Court of Canada observed in R. v. Collins [1987] 1 S.C.R. 265, 74 N.R. 276, 38 D.L.R. (4th) 508 at page 285 (N.R. D.L.R. 526-527), the fact that the evidence could have been obtained without a violation of the Charter tends to render the violation more serious. A search and seizure with its elements of speed, surprise and coercion may well be a more expeditious way of obtaining information necessary for an assessment and a prosecution, but if it constitutes a violation of the rights of the subject its expeditiousness does not justify or excuse it, nor does it erase its illegality.

This of course places the Crown on the horns of a dilemma. Either the evidence could have been obtained legally and without violating the appellant’s Charter rights, or it could not. If it could have, it should have, and its illegality cannot be ignored because an alternative and legal means was available. If it could not have been obtained without violating the appellant’s rights, the Crown should, as Sopinka J. said in R. v. Kokesch [1990] 3 S.C.R. 3, 121 N.R. 161, 1 C.R. (4th) 62 at 29 (N.R. C.R. 68), “leave the suspect alone, not charge ahead and obtain evidence illegally and unconstitutionally.” In that judgment, at pages 27-29 (N.R. C.R. 67-69) he said:

The purpose of considering factors relating to the seriousness of the Charter violation is to assess the disrepute that the administration of justice would suffer as a consequence of judicial acceptance of evidence obtained through a serious Charter breach. The Court must refuse to condone, and must dissociate itself from, egregious police conduct: see, e.g., Collins, supra, at page 285 and 288 (D.L.R. 526-527); and R. v. Greffe, [1990] 1 S.C.R. 755, [1990] 3 W.W.R. 577, per Lamer J., at page 784 and 796 (N.W.R. 599-600 and 608-09). Relevant factors in this portion of the subsection 24(2) inquiry include such questions as: Was the violation deliberate, wilful or flagrant, or was it committed in good faith? Was the violation motivated by urgency or necessity to preserve evidence? Were other investigative techniques available? (See Collins, supra, at page 285 (D.L.R. 526-527).)

Upon considering the facts of the present case, I have concluded that the police conduct at issue represents an extremely serious Charter violation, from several perspectives. I should point out at the outset that I agree with Dickson C.J. that Judge Cashman may have placed too great an emphasis on the availability of other investigative techniques. I cannot, however, draw the same conclusion from that error that Dickson C.J. appears to draw. Dickson C.J. states: “it was the paucity of other investigative techniques that provoked the actions of the police and this fact does not necessarily militate against the admission of the evidence” (page 20). Later in his reasons, Dickson C.J. cites this factor as support for the view that the Charterviolation here was not serious: “The motivation behind the Charter infringement was to obtain evidence in a situation in which other avenues of investigation seemed to have been foreclosed” (page 25). Of course, the reason why other investigative techniques were unavailable is that the police did not have the requisite grounds to obtain either a search warrant or an authorization to intercept private communications pursuant to the Criminal Code.

In my respectful view, the unavailability of other, constitutionally permissible, investigative techniques is neither an excuse nor a justification for constitutionally impermissible investigative techniques. In R. v. Dyment, [1988] 2 S.C.R. 417, 55 D.L.R. (4th) 503, La Forest J. (Dickson C.J. concurring) reiterated the requirement in Hunter Létal v. Southam Inc., [1984] 2 S.C.R. 145, 84 D.T.C. 6467, that where feasible a warrant must be obtained, and stated (at page 437 (D.L.R. 520)):

...when the facts are scrutinized, the most probable reason why no warrant was obtained was because the officer lacked the requisite belief that the accused had committed an offence and that the seizure was likely to yield evidence which was probative of that offence. Not only do the circumstances not reveal circumstances capable of justifying the failure to obtain a warrant, but the conduct of the police failed to comport with the minimal constitutional requirement that there be reasonable and probable grounds to believe that the search would yield evidence.

Where the police have nothing but suspicion and no legal way to obtain other evidence, it follows that they must leave the suspect alone, not charge ahead and obtain evidence illegally and unconstitutionally. Where they take this latter course, the Charter violation is plainly more serious than it would be otherwise, not less. Any other conclusion leads to an indirect but substantial erosion of the Hunter standards. The Crown would happily concede s. 8 violations if they could routinely achieve admission under s. 24(2) with the claim that the police did not obtain a warrant because they did not have reasonable and probable grounds. The irony of this result is self-evident. It should not be forgotten that ex post facto justification of searches by their results is precisely what the Hunter standards were designed to prevent: see Hunter, supra, per Dickson J. (as he then was), at page 160 (D.T.C. 6474); and Greffe, supra, per Lamer J., at page 790 and 798 (W.W.R. 604) and 610-611).

(c) Counsel contended further that a distinction should be made between the treatment of “real” evidence, and “conscripted” evidence. I understand the former to be evidence that exists independently of any breach of the Charter, and the latter to mean evidence that arises as the result of a violation of a Charter right. Counsel argues that the books and records seized from the appellant fall into the former category because they were created by the appellant before any Charter breach occurred and therefore the fact that they were obtained through a violation of the appellant’s Charter rights should not give rise to a remedy under section 24 of the Charter. This distinction between real evidence which exists independently of any Charter violation and, selfincriminating evidence created by a Charter violation has been recognized in R. v. Collins (supra) and discussed in subsequent Supreme Court decisions. I do not find the distinction meaningful in this case. Apart from a confession or admission that is obtained from a person by threats, force or deceit, most illegally obtained evidence has an existence that is independent of the manner in which it is obtained. As I read the decision of the majority of the Supreme Court of Canada in R. v. Burlingham [1995] 2 S.C.R. 206, 124 D.L.R. (4th) 7, in cases subsequent to R. v. Collins, the Supreme Court has been reluctant to found upon the distinction a significantly different treatment of evidence obtained in violation of the subject’s Charter rights. In that case, lacobucci J. said at page 233-34 (D.L.R. 25):

On the other hand, Lamer J. noted that the admission of real evidence obtained in a manner that violates the Charter will rarely operate unfairly for that reason alone. This conclusion militates against the exclusion of the gun in the case at bar. However, I find that, in jurisprudence subsequent to Collins, this Court has consistently shied away from the differential treatment of real evidence. For example, in R. v. Ross, [1989] 1 S.C.R. 3, 46 C.C.C. (3d) 129, at page 16 (C.C.C. 139), Lamer J. emphasized that the admissibility of evidence under s. 24(2) depended ultimately not on its nature as real or testimonial, but on whether or not it would only have been found with the compelled assistance of the accused:

...the use of any evidence that could not have been obtained but for the participation of the accused in the construction of the evidence for the purposes of the trial would tend to render the trial process unfair.

[Emphasis added. I]

These comments are apposite to the case at bar. Further, I draw attention to the conclusions of La Forest J. in R. v. Colarusso, [1994] 1 S.C.R. 20, 87 C.C.C. (3d) 193, at page 74 (C.C.C.), where it was noted that the mere fact that impugned evidence is classified as either real or conscriptive should not in and of itself be determinative.

The exclusion of real evidence was specifically dealt with in the decision of this Court in À. v. Mellenthin, [1992] 3 S.C.R. 615, 76 C.C.C. (3d) 481. The Mellenthin case involved the exclusion of drugs found in a car at a random roadside breathalyser checkstop. Cory J. reiterated the distinction between “independently existing evidence that could have been found without compelled testimony” and “independently existing evidence that would have been found without compelled testimony” (emphasis in original) established by La Forest J. in Thomson Newspapers Ltd. v. Director of Investigation and Research, [1990] 1 S.C.R. 425, 67 D.L.R.

(4th) 161 at page 555 (D.L.R. 257-58). The admission of evidence that simply “could have otherwise been found” will have a higher chance of affecting the fairness of the trial. In Mellenthin, the admission into evidence of the drugs — despite their status as real evidence — would have certainly affected the trial’s fairness because they would not have been found without the improper conduct. The drugs were consequently deemed inadmissible.

(d) Counsel argued that the taxpayer has already had redress under section 24 of the Charter because the evidence has been excluded in the criminal proceedings by Judge Baker and, correspondingly, the Crown has been inhibited in its prosecution of the appellant. It is true that one form of redress has been granted in the criminal proceedings but it does not follow that this exhausts the appellant’s rights under section 24 of the Charter. Implicit in this argument are two propositions that bear examination.

(i) that the rights protected by section 8 of the Charter and the remedies provided in section 24 relate essentially to acts done or rights violated in the course of criminal proceedings. Nothing in the Charter warrants this limitation on the ambit of our supreme law; and

(ii) that section 231.3 of the Act in its former and unconstitutional version, or in its present version with the offending “shall” removed and replaced by the apparently acceptable “may”, authorizes searches and seizures for the purposes of finding evidence of infractions of the Act, not for the purposes of finding evidence that forms the basis of civil assessments of tax. I agree, although there can be no criticism for that reason alone of a civil assessment based upon a constitutionally proper search under section 231.3. Indeed a civil assessment is, as a practical matter, a necessary prerequisite to a prosecution under section 239. It does not however follow that the illegality and unconstitutionality of the methods employed to obtain evidence can be ignored for the purposes of civil assessments made under the Income Tax Act. The point seems self-evident and requires no elaboration.

(e) Counsel argued that to exclude the evidence would be tantamount to vacating the assessment in that the Crown could not, without the seized material, establish the misrepresentation needed to justify the otherwise statute- barred assessments, nor could it adduce the material as evidence justifying the penalties. I daresay this is so, and I shall revert to this point later.

Based on the facts as disclosed in the agreed statement and the arguments of counsel, I can state certain premises upon which my conclusion is founded:

(a) The section 231.3 seizure was unconstitutional and illegal as a violation of the appellant’s rights under section 8 of the Charter.

(b) The seized documents were fundamental to the making of the assessments in issue.

(c) The subsequent purported reseizure of the documents under section 487 is not the seizure that resulted in the assessments, but it undermines any pretence of good faith that might have been available to the Crown. The improper behaviour of the Crown in obtaining the second warrant has two effects that are relevant to the determination that I must make here:

(i) it vitiates any good faith that can be ascribed to the initial seizure; and

(ii) it is the second seizure under which the Crown continues to hold the documents and would warrant, if the broader discretionary remedies envisaged by subsection 24(1) of the Charter were not available, at least the exclusion, under subsection 24(2) of the Charter, of the evidence illegally obtained under the first seizure and improperly retained under the second seizure, for the reasons given by Judge Baker in the criminal prosecution.

(d) While subsection 24(1) of the Charter gives the court a wide discretion in determining the nature of the remedy to be given it does not confer a discretion to deny a remedy. A remedy for a violation of a Charter right must be found. In Nelles v. Ontario [1989] 2 S.C.R. 170, 60 D.L.R. (4th) 609, Lamer J. (as he then was) said at page 196 (D.L.R. 641):

The question arises then, whether s. 24(1) of the Charter confers a right to an individual to seek a remedy from a competent court. In my view it does. When a person can demonstrate that one of his Charter rights has been infringed, access to a court of competent jurisdiction to seek a remedy is essential for the vindication of a constitutional wrong. To create a right without a remedy is antithetical to one of the purposes of the Charter which surely is to allow courts to fashion remedies when constitutional infringements occur.

Similarly, in Lagiorgia v. Canada, (sub nom. Lagiorgia v. The Queen), [1987] 1 C.T.C. 424, 87 D.T.C. 5245 at 426 (D.T.C. 5246) Hugessen

J. said:

Subsection 24(1) mandates the Court to grant a remedy for the breach of any Charter right. While there can be no doubt that there is a vast discretion in the words.

Such remedy as the court considers appropriate and just in the circumstances, we think that it is a discretion to fashion a remedy, not to deny it altogether.

I have come to the conclusion that the appropriate and just remedy in the circumstances is that the assessments based upon the illegally obtained evidence should be vacated. My reasons are as follows:

1. Subsection 24(1) of the Charter gives to a court of competent jurisdiction a “vast discretion”, as stated in Lagiorgia v. Canada, (supra). Similarly, in R. v. Mills, (sub nom. Mills, JH v. The Queen) [1986] 1 S.C.R. 863, 29 D.L.R. (4th) 161 McIntyre J. said at page 965 (D.L.R. 181):

What remedies are available when an application under subsection 24(1) of the Charter succeeds? Subsection 24(1) again is silent on the question. It merely provides that the appellant may obtain such remedy as the court considers “appropriate and just in the circumstances”. It is difficult to imagine language which could give the court a wider and less fettered discretion. It is impossible to reduce this wide discretion to some sort of binding formula for general application in all cases, and it is not for appellate court to pre-empt or cut down this wide discretion.

Here, too, I must fashion a remedy that is appropriate and just. There is no question that this court is a court of competent jurisdiction. (Mills v. R., supra).

2. Most of the numerous authorities quoted by counsel [2] had to do with

(a) whether a search and seizure violated a person’s rights under the Charter;

and

(b) whether the illegally obtained evidence should be excluded under subsection 24(2) of the Charter.

Moreover, for the most part they dealt with criminal proceedings.

With reference to (a) it is admitted (and, indeed, obvious) that the search and seizure under section 231.3 constituted a violation of the appellant’s Charter rights. Equally, the purported re-seizure and continued retention of the documents under the second purported seizure under sec- tion 487 of the Criminal Code constituted a similar violation. With reference to (b) I am not asked to decide in this reference under section 173 of the Income Tax Act whether the documents should be excluded. The sole question is whether the assessments should be vacated. On this point, three observations should be made:

(i) the matter of the exclusion of evidence was fully argued, as if the question formerly put in the application under section 58 of the Rules were before me. If the matter were before me in this reference, or if I had to decide on the hearing of the appeal, I would have no hesitation in excluding the evidence under subsection 24(2) of the Charter if no other remedy were appropriate. The conduct of officials of the Department of National Revenue was, from the initial seizure until the purported re-seizure under section 487 of the Criminal Code a flagrant and egregious violation of the appellant’s rights. The principles enunciated in such cases as Hunter, Collins and Kokesch are equally applicable to these proceedings;

(ii) as observed above, to exclude the evidence under subsection 24(2) of the Charter is tantamount to vacating the assessments, because without it the Crown could not justify either the making of the assessments outside the normal reassessment period or the imposition of penalties. In determining what remedy I should grant in exercising the discretion given the court under subsection 24(1) of the Charter this is a practical consideration that must be taken into account in deciding whether I should limit the remedy to that specifically provided under subsection 24(2) of the Charter.

With reference to the fact that most of the cases considered by the Supreme Court and the Federal Court and other courts throughout Canada had to do with criminal proceedings, I can see no reason to limit the operation of the Charter to such proceedings.

3. The final question is whether the remedy under subsection 24(1) should be limited to that specifically provided under subsection 24(2), the exclusion of evidence, or should, under subsection 24(1), be extended to a vacating of the assessments. I think that in the circumstances of this case it is just and appropriate that the assessments be vacated. Quite apart from the practical consideration that I mentioned above, and that, strictly speaking may, as a purely theoretical and academic matter, possibly be irrelevant, that vacating the assessments and excluding the evidence come to the same result, there are other considerations that impel me to conclude that the assessments should be vacated:

(a) The mere fact that subsection 24(2) spells out one remedy that is available under subsection 24(1) where there is a Charter violation and that would, in the absence of any other remedy under section 24(1), be appropriate (as it certainly is here) does not exclude other remedies under subsection 24(1). Statutory rules of construction such as expressio unius est exclusio alterius cannot be used to limit the ambit of our supreme law or to defeat the broad discretionary powers given to courts under subsection 24(1).

(b) It is not clear from the authorities that I have examined whether subsection 24(1) of the Charter, by itself, would permit a court to exclude evidence obtained in violation of a person’s Charter rights. In R. v. Therens [1985] 1 S.C.R. 614, 18 C.C.C. (3d) 481 Le Dain J., in a dissenting judgment, (McIntyre J. concurring) dealt directly with the question at pages 646-48 (C.C.C. 507-08). At page 647 (C.C.C. 509) he said:

It is clear, in my opinion, that in making explicit provision for the remedy of exclusion of evidence in s. 24(2), following the general terms of s. 24(1), the framers of the Charter, intended that this particular remedy should be governed entirely by the terms of s. 24(2). It is not reasonable to ascribe to the framers of the Charter an intention that the courts should address two tests or standards on an application for the exclusion of evidence - first, whether the admission of the evidence would bring the administration of justice into disrepute, and if not, secondly, whether its exclusion would nevertheless be appropriate and just in the circumstances. The inevitable result of this alternative test or remedy would be that s. 24(2) would become a dead letter. The framers of the Charter could not have intended that the explicit and deliberately adopted limitation in s. 24(2) on the power to exclude evidence because of an infringement or a denial of a guaranteed right or freedom should be undermined or circumvented in such a manner. The opening words of s. 24(2) “Where, in proceedings under subsection (1)” simply refer, in my view, to an application for relief under s. 24(1). They reinforce the conclusion that the test set out in s. 24(2) is to be the exhaustive one for the remedy of exclusion of evidence. I conclude, therefore, that the Saskatchewan Court of Appeal erred in law in affirming the exclusion of the evidence provided by the breathalyser test on the ground that it was appropriate and just in the circumstances, within the meaning of subsection 24(1) of the Charter.

[Emphasis added.]

Estey J. appears to have agreed with the views of Le Dain J. on the applicability of subsection 24(2).

The approach was followed in the Alberta Court of Appeal in À. v. Guest (J.C.), (1994) 155 A.R. 318 5 M.V.R. (3d) 178 (C.A.), and doubted by Lambert J.A. in the British Columbia Court of Appeal in R. v. Gladstone [1985] 6 W.W.R. 504, 22 C.C.C. (3d) 151 at 510-511 (C.C.C. 156-157).

Three possible approaches may be considered where evidence is obtained in circumstances denying or infringing a subject’s Charter rights:

(i) that subsection 24(1) by itself permits the exclusion of such evidence, irrespective of subsection 24(2), if it is just and appropriate to do so (This is the approach rejected by Le Dain J.);

(ii) that subsection 24(2) is the only authority available for the exclusion of evidence, provided that its admission would bring the administration of justice into disrepute, and irrespective of the test in subsection 24(1), whether the exclusion is appropriate and just within the meaning of that subsection;

(iii) that the exclusion of evidence is one of the remedies available under subsection 24(1) if it is just and appropriate to do so but only if its admission would bring the administration of justice into disrepute within the meaning of subsection 24(2). I do not read the judgment of Le Dain J. as rejecting this approach. The words underlined “and if not” imply a rejection of an “either-or” approach, not an approach that comprises the elements of both subsections. Had he intended to reject that approach, he would have said “if so,” not “if not”.

The third interpretation is the narrowest but it is the one that I believe is most consistent with R. v. Burlingham, (supra). Although subsection 24(2) is framed in terms that admit of no discretion - if the conditions set out in subsection (2) are met the evidence shall - not may - be excluded — nonetheless the opening words of subsection (2), “... in proceedings under subsection (1)” leave no doubt that subsection (2) may not be removed from the context of subsection (1). As a practical matter the problem will arise infrequently, if ever, simply because, where the admission of evidence obtained in violation of someone’s Charter rights would bring the administration of justice into disrepute, it is difficult to conceive of circumstances in which it would not at the same time be appropriate and just to exclude it. Even applying the restrictive test in (iii) I would still exclude the evidence, because it would be just and appropriate to do so and its admission would bring the administration of justice into disrepute. The Charter violation was a serious one, the admission of the evidence would impinge on the fairness of the trial and it would unquestionably impinge upon the public perception of the administration of justice if evidence, unconstitutionally obtained and retained and already excluded once, were now to be admitted. Therefore the three tests enunciated by Lamer J. (as he then was) in Collins for the exclusion of evidence under subsection 24(2) have been met. The overall effect of the admission of the evidence on the reputation of the courts and the perception of the administration of justice would be far more adverse than would be its exclusion.

(c) The assessments were based upon illegally and unconstitutionally obtained evidence. Without the evidence so obtained the assessments could not have been made. The evidence was the foundation of, and fundamental to, the assessments. The remedy chosen must be one that will “best vindicate the values expressed in the Charter and to provide the form of remedy to those whose rights have been violated that best achieves that objective” (Osborne v. Canada (Treasury Board), [1991] 2 S.C.R. 69, 82 D.L.R. (4th) 321 (D.L.R. 346) at 104). It is not a mechanism for punishing inappropriate behaviour of governments or governmental officials.

Simply to exclude the evidence would be to force the taxpayer to go to court and attack the assessments or to defend against allegations justifying the making of statute- barred assessments and the imposition of penalties that are based upon evidence that the Minister had only because he violated the appellant’s rights under the Charter. To limit the remedy to the exclusion of the evidence would, in my opinion, render nugatory the very rights that the Charter guarantees. The mere exclusion of evidence is insufficient for this purpose. The court must go further. I can see no reason for not fashioning a remedy under subsection 24(1) that has, as an integral component, an exclusion of evidence under subsection 24(2) but more adequately recognizes the fundamental right that the taxpayer has under section 8 of the Charter. To exclude the evidence only would be in effect to say to the officials of the Department of National Revenue “You have violated the taxpayer’s rights under section 8 of the Charter -by your unconstitutional search and seizure of its records and your unlawful retention of them. On the basis of this unlawfully obtained information you have assessed tax, interest and penalties. You have tried, unsuccessfully, to prosecute the taxpayer under section 239 of the Income Tax Act. You have kept 90 cartons of the taxpayer’s records for upwards of nine years. Now you wish to force the taxpayer to go through a civil trial in the Tax Court to see whether you can sustain assessments based fundamentally on evidence that you obtained illegally, and which under subsection 24(2) of the Charter you may not use at trial. We will let you try, however tenuous your case or remote your chances”.

Such a resolution is not, in itself, an appropriate vindication of the rights of the appellant that section 8 of the Charter guarantees.

While Canadian courts should be careful in applying decisions from foreign jurisdictions that are based upon different statutory schemes (see: Consolidated-Bathurst Ltd. v. R., (sub nom. Consolidated-Bathurst Ltd. v. Canada, [1987] 1 C.T.C. 55, 87 D.T.C. 5001 (F.C.A.)) nonetheless the approach in other jurisdictions may be instructive. In Suarez v. Commissioner of Internal Revenue, 58 United States Tax Court Reports 792 a determination of tax and penalties made by the commissioner was based upon evidence obtained under an unreasonable search and seizure in violation of the taxpayer’s rights enunciated in the fourth amendment to the United States Constitution [3] In a lengthy and erudite judgment the Tax Court of the United States concluded not only that should the evidence be suppressed, but also that the Commissioner had the burden of going forward with constitutionally untainted evidence.

At pages 813-15 Hoyt J., said:

We are not simply confronted herein with a case in which the respondent based his determination on evidence which is inadmissible under the usual rules of evidence, e.g., hearsay. On the contrary, it must be emphasized that the respondent, in preparing his statutory notice, relied solely on evidence which was illegally seized in violation of the provisions of the fourth amendment. We are therefore not dealing with a mere procedural rule of evidence. Cf. Kaufman v. United States, (1969) 394 U.S. 217, 22.L. Ed. 2d 226, 222-225. In Estate of David Smith, supra, we stated (page 656):

...it is well established that — at least where unconstitutional conduct is not involved — the courts will not inquire into the administrative policies and procedures employed by the respondent prior to making his determination.

[Emphasis added. ]

Where infringements of constitutional rights are involved, we are convinced that the determination in a statutory notice should be carefully scrutinized and that some sanction should be imposed to discourage the Commissioner’s use of and reliance on constitutionally inadmissible evidence.

We are unable to agree, however, with the suggestion that the statutory notice here must be declared a nullity. We find no authority for this conclusion. On the contrary, Helvering v. Taylor, 293 U.S. 465 (U.S. S.C. 1935), teaches that when a petitioner makes a showing casting doubt on the validity of a deficiency determination, the statutory notice itself is not rendered void; the result of such showing is that the respondent must then come forward with evidence to establish the existence and amount of any deficiency. See also Federal National Bank of Shawnee, 16 T.C. 54, 63-64 (1951).

We are also unable to agree with petitioners’ argument that the burden of proof in the case should be shifted to respondent. In situations where illegally obtained evidence has appeared, the courts have done no more than place the burden on the prosecutor to cleanse the evidence. Alderman v. United States, 394 U.S. 165, (U.S. 1969); United States v. Wade, 388 U.S. 218 (U.S. 1967), (18L. Ed. 2d. 1149); Nardone v. United States, 308 U.S. 338 (U.S. 1939); Baker v. United States, 430 F.2d 499 (C.A.D.C. 1970); United States v. Copion, 185 F.2d 629, 635 (C.A. 2, 1950). See also United States v. Blue, 384 U.S. 251, 255 (1966).

However, in the realm of the criminal law, where the exclusionary rule was born, suppression of tainted evidence serves as an effective disincentive to its use by the Government because the Government has the burden of proof. Clearly such disincentive does not exit in a civil tax case if the sole action taken is to suppress such evidence and the burden of proof and of going forward with the evidence remains on the taxpayer. We therefore conclude that in addition to suppression of the tainted evidence here we must also take further action.

We believe the respondent has a duty in the case at bar not only to cleanse the evidence but also, if he wishes to be sustained in his determination herein, to present evidence to support it which is free of unconstitutional taint.

We therefore conclude and hold that the determination before us, based entirely on constitutionally inadmissible evidence, carries no presumption of correctness. Because the presumption of correctness has disappeared, the respondent now has the burden of going forward with the proof to establish the existence of a deficiency with independent evidence, separate and apart from the tainted evidence. See Federal National Bank of Shawnee, supra.

In the subsequent trial (61 United States Tax Court Reports 841) the Commissioner adduced no evidence, as the Tax Court in the earlier case held was his duty, and judgment was granted in favour of the petitioners (the taxpayers). Hoyt J. stated at page 845:

As a result of the respondent’s failure to file an amended answer and to go forward with proof at the trial, we are left with a statutory notice of deficiency bereft of its usual presumption of correctness, the pleadings of the parties, and the record of all proceedings herein. The case stands before us without an iota of acceptable evidence to sustain the respondent’s asserted deficiencies.

and at page 845-46:

In Paul J. Byrum, 58 T.C. 731 (1972), we concluded that where a petitioner has introduced sufficient evidence to establish a prima facie case, the burden of producing proof then shifts to respondent to present evidence to the contrary. If he fails to do so he cannot prevail. We stated (page 735):

In the circumstances of this case, we think the evidence produced by petitioner was at least sufficient to establish prima facie that petitioner’s Chappell stock become worthless in 1967. The burden thus shifted to respondent to present evidence to the contrary. Yet he called no witnesses, offered no exhibits to refute the case presented by petitioner, and developed nothing of significance, through cross-examination. On this record, we hold that petitioner is entitled to the disputed deduction.

Here, as in Byrum, petitioners have established a prima facie case and the respondent has failed to go forward with evidence when the burden of doing so has shifted to him, and we have ordered him to produce evidence to establish deficiencies if he is to be sustained. In light of our earlier opinion in this case, the authorities cited therein, our opinion in Paul T. Byrum, supra, and the entire record before us, we must conclude and hold that the respondent cannot be sustained in his determination herein. In the circumstances of this case petitioners must prevail.

[Decision will be entered for the petitioners. I

The decision is of course not binding upon me, but it is an articulate and carefully reasoned approach to a situation that is very close to that with which I am faced here.

The decision in Suarez was subsequently overruled in Guzzetta v. Commissioner, 78 United States Tax Court Reports 173, on the basis of a United States Supreme Court decision, United States v. Janis, 428 U.S. 433 (1976). The basis was that the evidence illegally obtained in that case in violation of the petitioner’s fourth amendment guarantee was obtained by state authorities, but used in Federal proceedings and that in light of the intersovereign transfer of information the exclusionary rule did not apply. The Tax Court of the United States in Guzzetta stated at page 184:

The Supreme Court, after quoting a portion of the Suarez holding, stated:

We disagree with the broad implications of this statement of the Tax Court [the Suarez holding] for two reasons. To the extent that the court did not focus on the deterrent purpose of the exclusionary rule, the law has since been clarified [citation omitted]. Moreover, the court did not distinguish between intersovereign and intrasovereign uses of unconstitutionally seized material. [428 U.S. at page 457.]

As discussed previously, in Janis, the Supreme Court held that evidence illegally obtained by State police officers is admissible in a Federal tax proceeding.

Unlike the situation facing us in Suarez v. Commissioner, supra, we today have a Supreme Court case addressing the issue before us. In situations involving intersovereign violations of the Fourth Amendment, such as the case now before us, United States v. Janis, supra, controls. To the extent that Suarez is inconsistent with Janis with respect to the application of the exclusionary rule, we will no longer follow our prior decision.

The basis upon which Suarez was held inapplicable was a rule having to do with intersovereign as opposed to intrasovereign transfers of information. I presume that if the seizure had been by federal officials rather than state officials Suarez would still be applicable in the U.S. The rule is not applicable here, and even if it were the seizure was effected by the same authority that now seeks to use the evidence. In any event the reasoning in Suarez commends itself.

At page 814, the United States Tax Court in Suarez (supra) stated that:

...in addition to suppression of the tainted evidence we must also take further action.

Here, as well, I believe that I must take further action. Unquestionably it is within the broad discretionary powers given to the court under subsection 24(1) to do what the United States Tax Court did in Suarez, and not only exclude the unconstitutionally obtained evidence, but also cast upon the respondent the burden of establishing the correctness of the assessment with constitutionally untainted evidence. That remedy would not be inappropriate here, but can I take the next step, which the United States Tax Court declined to take, and vacate the assessments? I think that it is appropriate and just that I do so. In the first place subsection 24(1) gives to a court of competent jurisdiction a broad discretionary power to grant a remedy that is “just and appropriate” for a Charter violation. I know of no similar specific power in the United States Constitution. Moreover, the vacating of assessments is one of the powers explicitly given to this court under section 171 of the Income Tax Act. Second, we have counsel’s very fair admission that the evidence that was seized in violation of the appellant’s rights under the Charter was “fundamental” to the assessment. It appears to be conceded that the assessments cannot be sustained without the use of the unconstitutionally obtained evidence and that if the assessments were referred back to the Minister of National Revenue for recon- sideration and reassessment on the basis that all evidence that was illegally obtained be excluded from the Minister’s consideration the Minister would have no evidence on which to base an assessment.

Accordingly, no purpose would be served by following the approach adopted in Suarez because the assessments would ultimately be vacated in any event. Put differently, even if I adopted the Suarez approach, which, in the circumstances of that case appears to be an eminently reasonable one, and placed upon the respondent the onus of sustaining the assessments without the use of the constitutionally tainted evidence, the result would be the same and the assessments would ultimately be vacated.

Therefore, that is what I think should be done. An end should be put to the matter by vacating the assessments.

I would not want my conclusion in this case to be taken as a wholesale sanctioning of the vacating of all assessments where some component of the Minister’s basis of assessment was unconstitutionally obtained information. Other cases may arise in which a simple exclusion of evidence is sufficient, others in which the evidence is of little or no significance in the making of the assessments or where its introduction would not bring the administration of justice into disrepute, or still others in which Suarez solution will commend itself. In the exercise of the discretion vested in the court under section 24 of the Charter one must be vigilant in balancing, on the one hand, the rights of the subject that are protected under the Charter, and on the other, the importance of maintaining the integrity of the selfassessing system. As each case arises these and, no doubt, other factors will play a role and all factors must be assigned their relative weight. In the circumstances of this case I have concluded that the most appropriate exercise of my discretion is to vacate the assessments.

The answer to the question put in this reference:

Is it appropriate and just in the circumstances for the assessments of tax relevant to this reference to be vacated by virtue of subsection 24(1) of the Canadian Charter of Rights and Freedoms (the “Charter”)?

is: Yes.

The appellant is entitled to its costs of this motion.

I am prepared to entertain motions for judgment allowing the appeals and vacating the assessments of O’Neill Motors Limited, as well as of the appellants who were parties to the original application under section 58 of the Rules of the Tax Court of Canada (General Procedure). If the parties agree the motions can be dealt with in writing under section 69 of the Rules or by conference call under section 6 of the Rules.

I should like to conclude these reasons by repeating what I said at the end of the hearing of the reference. I am obliged to counsel for both parties for the professional skill, thoroughness and fairness with which they presented their arguments on this difficult and novel issue.

Order accordingly.