Her Majesty the Queen v. Bernard Peter Lahaye, [1994] 2 CTC 416

Archambault J. (orally):— I think the issue of whether or not to order particulars really becomes a balancing act in the final analysis. On the one hand, in accordance with section 587, the Court may, if it is satisfied that it is necessary for a fair trial, order the Crown to furnish particulars.

On the other side of the coin is the fact that the route of particulars is not to be used to unduly fetter or straight jacket the Crown.

I accept the proposition that an order can be made under section 587, notwithstanding that the charges as contained in an Information comply with the requirements of the Code, and more particular, section 581. And of course, that has already been ruled on res judicata on this matter.

Notwithstanding that charges have been ruled sufficient and valid in accordance with section 581, particulars may still be ordered if they're deemed necessary for a fair trial.

Another principle which is particularly important in determining the necessity to supply particulars is that particulars mustn't — is that evidence must not be ordered disclosed under the guides of particulars.

Now, that becomes a bit more of tricky an application as to where the particulars end and evidence begins. And obviously that is a matter which varies with the circumstances of each case.

In assessing whether particulars should be ordered, the Court is, of course, entitled to consider what information has already been supplied to Defence or what information is in the knowledge of Defence.

And as was indicated in R. v. Cousins, 102 Sask R. 217, [1992] 5 W.W.R. 277 (Q.B.), there may be no need for particulars where the accused has been fully informed of the nature of the allegations through the evidence taken at the preliminary inquiry or a trial or through other means.

Now, I think other means includes disclosure as is now not only optional on the part of the Crown, but mandatory in view of the application of the Charter.

It is significant that the cases dealing with disclosure, that quite a number of them are pre-Charter. And where the Courts were not in the habit of making orders for disclosure and the Crown, in those days, was not in the habit of routinely providing disclosure.

Now, that has changed significantly since R. v. Stinchcombe, [1991] 3 S.C.R. 326, 68 C.C.C. (3d) 1. And consequently it becomes a factor to look at in assessing whether or not an order for particulars should be made.

Now, I agree with the Defence position that if particulars are required for a fair trial, that may not necessarily be complimented or offset by disclosure. If the charges are not — or if there is not adequate information in the charges as contained in the information and particulars are required to properly identify the transaction, then disclosure does not preclude the ordering of particulars.

And of course, as I mentioned earlier, and as Mr. Justice Ewaschuk (ph) indicates in his “Criminal Pleadings and Practice in Canada" paragraph 98050:

There is no power to order particulars of the evidence by which the Crown may seek to prove its case as distinguished from particulars of the charge itself.

And he also makes the point at paragraph 98120:

The Court will consider the information already within the knowledge of the accused in deciding whether or not to order particulars. And for this purpose, the trial judge may have regard to the evidence tendered at the preliminary inquiry.

Of course, in this case there has been no preliminary inquiry. It’s a summary conviction offence. However, it was acknowledged that there was full disclosure and there has been some supplementary disclosure made in a letter which is filed today, which was a letter sent in reply to the demand for particulars.

Now, insofar as the particulars, the specific particulars which have been requested

[End of Tape 15/94/#1; ; Start of Tape 16/94/#1 ]

THE COURT: Okay. Paragraphs A and B stipulate as follows:

Particulars of what income was allegedly not reported and who paid the income which was allegedly not reported.

Now, those two paragraphs relate to the source of the income. Paragraph C, the date of the alleged payment. Now, it should be noted that each count provides a stipulated amount of income which was not reported and for a given taxation year or more than one.

By and large, by reading of the case law, is to the effect that dates are not all that relevant and are not normally supplied by way of particulars. It was in one of the cases because, and I believe it was the Cominco Ltd. v. The Queen, [1984] C.T.C. 548, 84 D.T.C. 6535 (F.C.T.D.), because there were a number of coconspirators and some of the companies had ceased doing business before the period, the two parameters within which the conspiracy was alleged to have taken place.

Some of the companies had ceased to do business. Some were not in existence at the time the conspiracies were alleged to have started. So in that case the Court said, yes, in order to be fair to those companies who are jointly charged, dates become relevant. But otherwise dates are normally a matter of evidence as opposed to particulars. And I would say that it would be especially true when you're talking about specified amount of income in a specific taxation year.

In terms of paragraph D, the amount of income allegedly received and not reported, well, there again, I repeat that the amount of income in each count is specifically set out as the precise amount for a given taxation year or, in one or two counts perhaps, two, up to three years.

And then finally paragraph E, particulars with respect to any allegation of the Crown regarding expenses improperly claimed. That is, what expenses and what amount were they allegedly incurred.

Well, it seems to me that the Crown has not alleged any false statement regarding improper claim for expenses. All the counts imply either a false statement or a failure to report income by — a failure to pay tax by failing to report income. There is no allegation that there is a false statement by making some false statement regarding ineligible expenses. So in my view, subsection (e) is really irrelevant to the charges as they're formulated. The Crown is bound by the fact that they've stipulated the means whereby the false statement is made or if there is a failure to pay the tax. And each one of those is by failure to report income.

Now, if within the calculation of the income there is some exception made for expenses or otherwise, that to me is a matter of evidence and not a matter of particulars, particularly in view of the way in which the charges are formulated.

I would like to go back to a couple of points that I made in the judgment I issued in November regarding the application to quash ([1994] 1 C.T.C). Some remarks I made at pages 12 to 14. And I am quoting:

The transactions which form the basis of the charges herein are either the making of a false or deceptive statement in an income tax return for a specified taxation year(s) or evading the payment of taxes for specified taxation year(s). In each case the manner or means of committing the offence is specified to be the failure to declare income of a specified amount. In my view that sufficiently identifies the transaction and gives the accused reasonable information with respect to the act or omission to be proved against them as required by subsection 581(3).

Under the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") all persons resident in Canada are required to pay income tax upon taxable income for each taxation year. That is a single requirement universally applicable to all persons who earn taxable income in this country.

And then I made a comparison with excise taxes because of the citation of the decision of my brother Judge Goldstein.

Excise taxes, on the other hand, apply only to specified goods and services. Excise taxes are not levied on all goods and services, but only on those stipulated in the Excise Tax Act. Accordingly, under that Act, it may well be that in order to bring a charge from the general to the particular it is necessary to specify which goods and services are involved in the transaction.

Such is not the case with respect to income tax which applies to all income unless specifically exempt. Admittedly one can evade the payment of income taxes in more than one way, e.g., by failing to disclose taxable income, or by falsely claiming deductions to reduce income. In this case the manner of evading payment of income taxes or making a false statement is specified in the charge, i.e., the failure to declare a specified amount of income. That, in my view, gives the accused reasonable information as to the act or omission to be proved against him. Further, given that the charges stipulate the amount of income and the taxation year, applicable, the transactions referred to are sufficiently identified.

The Court fully recognizes that there are numerous sources from which taxable income can be generated. However, in my view, that is a matter for Crown disclosure and evidence, and need not be identified in the charge. Hence all counts as contained in the information before the Court comply with the requirements of subsection 581(3) and the absence of particulars further identifying the sources of the income indicated do not vitiate the charges.

Now, in my view, this still holds today despite section 585 given that information has been disclosed. And indeed if it hasn't been fully disclosed, then the Crown is hereby required to do so.

In my view, the charges as contained in the Information identify the transaction as a failure to pay a specified amount of tax or a failure to report a specified amount of income for a specific year.

In my view, given disclosure, it is not necessary to further particularize the Information. To identify whether that income comes from one source or indeed several sources, that information, I understand, has been and if not should be disclosed as part of the disclosure. But I don't think it should be particularized in the Information. And I don't think it’s necessary given the Information which is available to the Crown to the Defence that it should be made by way of particulars.

And that would have been the only section under which I might have considered giving particulars because I find that is paragraphs A and B. The others are more a matter of evidence and are not matters that are required to make the charge one which can be fairly met.

For those reasons, and on the basis of adequate disclosure, I will not make any further order for particulars.

However, as I've said, if the Defence is not satisfied that they have the full information which the Crown alleges it has, then they should make a further demand and the Crown should provide the Information by way of disclosure.

Application dismissed.

Her Majesty The Queen v. Antonio and Elsie Lusaya

[Indexed as: A. Lusaya, R. v.]

Ontario Court (Provincial Division) (Babe J.), January 20, 1994.

Criminal Code, R.S.C. 1985, c. C-46—231.1—Canadian Charter of Rights and Freedoms—

The accused, husband and wife, were charged with tax evasion under the Income Tax Act. In the course of trial, the Crown sought to introduce certain oral responses that the male accused, A, made to D and C, the Revenue Canada auditors, during an audit conducted at A's home. A voir dire was held to determine the admissibility of the responses. Both D and C testified on the voir dire but the accused did not call any evidence. The evidence on the voir dire indicated that in early 1991, D and C arranged to audit the accused at their house. D and C attended at the house on about five or six occasions and requested explanations of various items on the income and expense statements filed as part of the accuseds' tax returns. At all times, the relationship between the auditors and the accused was cordial and on one occasion, a visit by D was cut short because A indicated that he had some business come up unexpectedly and he had to leave. In their submissions made after the voir dire, the accused argued that there was no caution administered, and that by returning to the accuseds’ house on several occasions, there was an oppressive atmosphere created, and therefore the statements were not voluntary. For the purposes of the voir dire, it was agreed that D and C were persons in authority.

HELD:

The questioning took place in A's house and most of the time that they were there, D and C were simply examining the documents. Accordingly, the accuseds’ right to counsel as expressed by paragraph 10(b) of the Canadian Charter of Rights and Freedoms was not violated because there had been no detention. There was no need for a caution to have been administered in the course of the auditing procedure. In addition, there was no atmosphere of oppression created by the auditors. A was at ease and co-operative. He was free to move about. He was free to terminate the interviews when he needed to. In other words, what A said was said free from any hope of advantage or fear of prejudice held out to him by the auditors. Furthermore, even if the statements had been made under compulsion of statute, that fact alone did not mean that the statements were not voluntary. In the result, the court was Satisfied beyond a reasonable doubt that the statements made in the course of the audit by A were voluntary and were therefore to be admitted in evidence at the trial. Order accordingly.

R. Shekter for the plaintiff.

R. Ehrlich for the defendent.

Cases referred to:

R. v. Roberts, 95 Nfld. & P.E.I.R. 49, 301 A.P.R. 49;

R. v. Esposito (1985), 24 C.C.C. (3d) 88, 53 O.R. (2d) 356;

R. v. Boudreau, [1949] S.C.R. 262, 94 C.C.C. 1, [1949] 3 D.L.R. 81:

R. v. Fitton, [1956] S.C.R. 958, 116 C.C.C. 1, 6 D.L.R. (2d) 529;

Miranda v. Arizona (1966), 384 U.S. 436;

Orozco v. Texas (1969), 394 U.S. 324;

R. v. Marshall, [1961] S.C.R. 123, 129 C.C.C. 232, 26 D.L.R. (2d) 459.

Babe J.: (orally):— Antonio Lusaya and Elsie Lusaya, who are husband and wife, are being tried before me pursuant to the Crown's election to proceed summarily on an Information containing some 72 counts under the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

Antonio Lusaya is charged with tax evasion with respect to his own returns. Mr. and Mrs. Lusaya are both charged with respect to Mrs. Lusaya’s returns; and Antonio Lusaya, in most of the counts, is charged with tax evasion with respect to returns that he prepared for a number of clients of his tax preparation business.

In the course of the trial, the Crown seeks to introduce certain oral responses that the defendant Antonio Lusaya made to Messrs. Duncan and Chan, for the most part to Mr. Duncan, in the course of an audit of his own 1987, 1988 and 1989 returns which was conducted at his home. These responses were made to requests for explanations of various items on the income and expense statements filed as part of his own returns and his wife's returns, which he indicated he had prepared for Mrs. Lusaya, and the evidence is that the investigators received the consent of Mrs. Lusaya to speak to her husband with respect to the returns that he had prepared for her.

I might say that on the voir dire the Crown called both Mr. Duncan and Mr. Chan, who were the only officials of Revenue Canada who dealt with the defendant in the course of the audit, and no evidence was called for the defence so that the only evidence I have on this voir dire is the evidence of Duncan and Chan.

Now, their evidence is that in early 1991 other employees, or perhaps Mr. Chan, I guess Mr. Chan was actually concerned with it, had conducted an audit of one Frutman, who had apparently had his return prepared by the defendant, and there was a statement obtained from him that the rental loss or business loss that had been claimed on that return was fictitious; that he had no knowledge of it; and that it had apparently been put there by the male defendant. That prompted the investigators to request or call up the defendant's own returns, as well as his wife's. They noted that those returns had reported business and rental losses, and it was determined that they would conduct an audit of those returns.

I have been referred to section 231.1 of the Criminal Code, and clearly officials of Revenue Canada are entitled to inspect the records of taxpayers, and a code is set out in section 231.1 and following that permits that to be enforced where necessary. I might say that I have been advised by the Crown that these provisions have been the subject of constitutional attack in recent years, but their constitutionality has been upheld. That is not an issue before me, because on the facts of this case, the officials did not avail themselves of the compulsory provisions of section 231.1 and following sections, but in any event I am not surprised that the highest courts in the country have upheld the constitutionality of these sections, because the Canadian income tax system is based on voluntary compliance and voluntary disclosure, or as the Crown put it the honour system, and while it may be that most taxpayers will act honestly and disclose their income accurately, there are always those who would take advantage of any honour system for their own advantage, and there would have to be some sort of check on that. But, in any event, under the Act Mr. Chan and Mr. Duncan were lawfully entitled to examine the records of the defendant.

Their evidence is that, in order to arrange to do that, Mr. Duncan telephoned the defendant and arranged a mutually agreeable appointment for February 12, 1991. On that occasion both Mr. Chan and Mr. Duncan attended at the defendant's house at the time they had arranged. The meeting was rather brief, although, as I understand it there was some discussion about the 1987 return, because most of the material was not available, or had not been assembled by the defendant. Accordingly, they left, and a further appointment was made after a fuller explanation of what they required. Mr. Duncan returned alone on February 26, when he spent the whole day going over the documents. He returned again on February 28 when he was there for a couple of hours. That meeting was cut short because the defendant indicated that he had some other business come up unexpectedly and he had to leave, and Mr. Duncan indicated that while he was invited to stay by the defendant and go over the documents, it is the policy of the Department not to be alone in a citizen's house, so he left as well.

A further visit was paid again with Mr. Chan on March 8. Mr. Duncan spent the whole day there, although Mr. Chan left some time in the morning and on that occasion some explanations were requested of items which had been claimed on the income and expense statements. These questions as I have noted them mainly refer to matters which on the face of it was not clear what they had referred to, or items which Mr. Duncan had not been able to total to reconcile with the items claimed, or explanations were asked as to on what basis certain expenses had been apportioned between business and personal use.

There was an arrangement made to return on March 13 to check some items concerning the price for which a car had been purchased, but on that occasion apparently the material requested was left by the defendant on his steps, although he was not present and Mr. Duncan indicated he did not examine the documents on that date because he did not feel he had the right to take the items with him, and accordingly a further appointment was made for March 15. At that time Mr. Chan was there, and they completed their review of the material provided by the defendant, and there were a number of questions again put on that date of the same sort as I have outlined before. The questions asked were the sort of thing like what was meant by certain entries such as "accounts receivable, bad debts" and there was one item where there appeared to be a total expense claimed that, although the expense was claimed to the penny, appeared to be exactly $7 thousand more than the receipts that had been found and totalled by Mr. Duncan. There was an explanation asked as to on what basis 80 per cent of heat, light and water had been claimed for business use with respect to the house. There were also some questions about a rental loss claimed for another property, and the circumstances in which that had been acquired and disposed of. That is the sort of thing that was being asked. I am not attempting to detail the questions and answers which were obtained at this time. I am simply attempting to indicate what sort of discussion was held and what sort of answers the Crown is seeking to tender at this stage, for whatever use may be made of those replies.

Now, I might indicate at the outset that, as pointed out by the Crown, no notice has been given that there is a constitutional issue raised here, and the Crown did not address me on that. Nor did the defence in any specific way, although there was cross-examination on the lack of advice of the right to retain and instruct counsel. That was extensively put to the witnesses in cross-examination. In argument there were suggestions or submissions made about denial of natural justice, bringing the administration of justice into disrepute, and not giving constitutional rights. This was not brought home in any coherent way to either specific rights guaranteed by the Charter or as to what remedy, if any, might be appropriate under the Charter. However, I think that in a general way the Charter has been brought into it, and I will deal with it briefly in my reasons.

I would further indicate that the Crown has advised me that the only case that he is aware of which deals directly with the issue of the admissibility of answers given by a taxpayer in the course of an audit being performed pursuant to provisions of section 231.1 and following, is the decision of the Newfoundland Provincial Court in R. v. Roberts, 95 Nfld. & P.E.I.R. 49, 301 A.P.R. 49, and I am advised by the Crown that that was dealt with on the basis that an auditor is not a person in authority, and therefore the rules as to confessions do not apply, and it would follow from that, that anything that was said to the auditor could be admitted without a voir dire, just as any sort of other admission in a legal proceeding could be admitted.

The Crown, however, has not relied on that case, and we have proceeded on the basis that the auditors were persons in authority, and that, accordingly, the admissibility of statements made to them in the course of the audit is subject to a voir dire, and their admissibility is conditioned upon the proof by the Crown of their voluntariness, and the onus, of course, is beyond a reasonable doubt. As I have indicated, there is no case law directly relevant to statements made to auditors in the course of audits and the matter the Crown suggests then falls to be decided under the general principles governing the proof of voluntariness of statements made to persons in authority, which are pretty well settled in Canadian criminal law.

Now, the general principle of course is that, and the cases are legion, is that "voluntary" in this instance means that the statement has been obtained without fear of prejudice or hope of advantage held out by a person in authority. That has been perhaps enlarged to the extent that if the people in authority create an oppressive atmosphere that could also cause a statement to be excluded, although I would think that the oppressive atmosphere as outlined in cases really comes within the scope of the traditional terms “inducement” or “fear of prejudice". One of the examples that was cited to me by the Crown from Professor Lederman's book on evidence was an instance where a prisoner's clothes had been taken from him for forensic examination, and he had been left naked in the cell for a period of time before questioning. Perhaps out of a certain feeling of charity to the interrogators, the Court in that case held there was no improper motive in that, although I would have thought it would not be very difficult to view that as an inducement that would overbear the free will of the subject. In any event, there is nothing of that nature here.

Now, as I understand the submissions of the defence, which were lengthy but not particularly focused, the points are that there was no caution administered, and that by returning to the defendant's house on the occasions referred to, there was an oppressive atmosphere created, and therefore the statements were not voluntary.

Now, I am only going to refer here to one authority for various reasons. First of all, it was decided by the Court of Appeal after the Charter is in force, so it is obviously current law in the sense that some of the pre-Charter cases might now be questioned. Secondly, it is the unanimous judgment of the Court of Appeal of Ontario delivered b Mr. Justice Martin and it is characteristically clear and thorough. It also deals with the time when cautions are required and what is the effect of the absence of a caution, and in dealing with that Mr. Justice Martin compares not only the law of Canada but the current law of both the United States and England, and it also deals with the case where questions are put to a suspect at the stage of an investigation. That is the decision in R. v. Esposito (1985), 24 C.C.C. (3d) 88, 53 O.R. (2d) 356.

Now, in that case police officers were investigating charges of fraud and forgery involving the use of a stolen credit card. The credit card had been used on a number of occasions at a gas station where the defendant was employed and the police attended at his residence to question him concerning the invoices. During the questioning the accused admitted that he had made out the invoices but he denied signing them. Several other questions were asked about that, and ultimately the officer indicated to the defendant that he did not believe him; that he was placing him under arrest; and at that point the usual cautions and advice as to right to counsel under the Charter were administered. The Court of Appeal held that those statements were properly admitted.

To deal briefly with the issue of the Charter, Mr. Justice Martin indicated that at that stage the defendant was not detained and, of course, the right to be advised of your right to counsel under section 10(b) of the Charter arises upon arrest or detention. Mr. Justice Martin indicated that on the facts of that case, the right to be so advised, was not triggered, and I think that the case is authority similarly here. I see no detention of the defendant on the evidence as I have it. The evidence is that the questioning took place in his home. I might say that most of the time that the auditors were there they were examining his documents. They were not dealing directly with him, and the evidence is he was in and out of the basement where the examination of documents was taking place. He was answering the door, dealing with other matters of his daily routine, and on the one occasion that I have alluded to, the interview was cut short when the defendant indicated that he had to leave. It is quite clear to me that he was not under detention, and therefore the Charter right to counsel did not arise. As I have indicated, there has been no specific application for Charter relief.

Accordingly, the matter as I see it, falls to be decided under the test of voluntariness and Esposito, supra, is also authority for the proposition that the test for voluntariness is the same now as it was before the Charter and the Charter has not added any additional requirements as to warnings and cautions.

Now, it is further clear from Esposito, supra, that the law in Canada is still as it was set out in R. v. Boudreau, [1949] S.C.R. 262, 94 C.C.C. 1, [1949] 3 D.L.R. 81. That is a well known case which was cited to me by the Crown, and established that, in Canada, whether a caution was given may be a factor and sometimes an important factor in determining whether a statement was voluntary but it is not decisive. Mr. Justice Martin also cites the later decision of Mr. Justice Rand in R. v. Fitton, [1956] S.C.R. 958, 116 C.C.C. 1, 6 D.L.R. (2d) 529 at pages 963-64 (C.C.C. 6; D.L.R. 534) for the test of voluntariness. He concludes at page 96 (O.R. 364):

Thus, it was well established in Canada prior to the enactment of the Charter that the giving of a caution was not a prerequisite to the admissibility of statements made by a person in response to police questioning, even if that person was in custody. It obviously follows that a caution was not required where the person questioned was not in custody.

He goes on to say that the law as enunciated in Boudreau, supra, has survived the Charter.

He notes that, in England, Rule Two of the Judges' Rules issued in 1912 provided that a caution should be administered whenever a police officer had made up his mind to charge a person. At that stage he should first caution the person before asking questions or further questions. It is clear then that, under the original Judges' Rules, on the evidence in this case, as I have it, we were far ahead of any need for a caution in the course of this audit, because there was no decision made to charge the defendant.

The Judges' Rules in England, as Mr. Justice Martin points out, were changed in 1964 to provide that a police officer should administer a caution as soon as he had evidence which would afford reasonable grounds for suspecting that a person had committed the offence. Whatever the scope of reasonable grounds for suspecting may be, it seems to me that there were no grounds for suspecting an offence here, in relation to the defendant's own return, which is all he was being asked about, or the return of his wife. He is asked about both those returns, but there were no grounds for suspecting an offence had been committed until those returns and supporting documents had been examined and audited and explanations asked for. So, accordingly, I am of the view that there was no non-compliance even with the English Judges' Rules of 1964.

The English position was changed again when the Judges' Rules were replaced with something called the Code of Practice under the Police and Criminal Evidence Act of 1984 (U.K.), and that Code provides that a caution should be administered by a police officer at such time as he has grounds to suspect that a person has committed an offence. So that it is the stage of suspicion that would seem to bring about the need for a caution in England now, which is quite an early stage in proceedings, and it may be that cautions are administered in England now as soon as a person is under suspicion.

That, of course, is not the law of Canada, as Mr. Justice Martin has made clear, and it also appears that, according to him, the law of England is that even there that is merely a factor to be taken into account in deciding whether to exclude evidence. He cites the textbook on the Police and Criminal Evidence Act, 1984 (U.K.) by Michael Zander at pages 89, 94, 98 and 272. So that even under the strict rules as to when a caution should be administered in England that is not conclusive.

He also examines the current American authorities. He notes at page 99 (O.R. 367) that he does not hold that section 10 of the Charter: ”. . .imports the requirement of the panoply of warnings that under Miranda v. Arizona (1966), 384 U.S. 436 (S.C.). . .must precede any custodial interrogation of a subject by the police as a condition of admissibility of statements made by the suspect as the result of the interrogation". He does, however, review the American cases as to what constitutes custodial interrogation, which triggers the Miranda warnings, and he notes the decision of the Supreme Court of the United States in Orozco v. Texas (1969), 394 U.S. 324 as to the American position. He indicates that the American test as set out in McCormick on Evidence is (page 387):

Whether custody exists, then, where no actual restraint has been imposed should depend upon whether the suspect both actually and reasonably perceived that if he attempted to break off the confrontation with the officers this would be prevented. This has, in general, been the approach of the lower courts.

Accordingly, under the law of the United States it would appear that no warning was necessary in the circumstances here.

It is clear to me that under the current law of Canada there is no Charter requirement of a warning, and under the law of Canada no caution was required, and even under the current law of England, while it might have been the desirable practice to administer a caution at the outset, that would not be conclusive as to admissibility.

Accordingly, I am satisfied on the evidence as I have heard it, that there was no need for a caution to be administered in the course of the auditing procedure. I am further satisfied on the evidence that there was no atmosphere of oppression created by the investigators as that term has been used in the cases. Their evidence is unequivocal that the defendant was at ease, and co-operative. He was free to move about. He was free to terminate the interviews when he needed to. In other words, I am satisfied that what he said was said free from any hope of advantage or fear of prejudice held out to him by the auditors.

The other point which has been dealt with by the Crown in argument and raised inferentially in the submissions by the defence, is the question of whether a statutory compulsion to provide information makes a statement involuntary. I think that the law in Canada is clear that it does not. The Crown referred me to the 3rd edition of Kauffman On Confessions at page 117. There the learned author refers to the decision of the Supreme Court of Canada in R. v. Marshall, [1961] S.C.R. 123, 129 C.C.C. 232, 26 D.L.R. (2d) 459. In that case the Supreme Court of Canada was dealing with the admissibility in criminal proceedings of the compulsory statement that a person involved in an accident is compelled to provide to a police officer under the Ontario Highway Traffic Act, R.S.O. 1960, c. 172. It was held in that case that a statement made under compulsion of a statute is not, by reason of that fact alone, rendered inadmissible in criminal proceedings against the person making it. I understand that subsequent cases have held, however, that the voluntariness of such a statement in the sense as used in the confession cases must be established. That, I think, is a reasonable position if one looks at the rationale for the confession rule. The confession rule is, first of all, designed to guarantee the truthfulness of statements admitted, because the policy of the law is the Court should not admit coerced statements because they are liable to amount to false confessions, and in an extreme case, of course, tortured confessions might be obtained and the Court would not admit them. The cases have said there is also a subsidiary purpose of controlling the behaviour or persons enforcing the law so as to prevent inappropriate means being used to get a person to speak. Where there is compulsion of a statute that statement then has not been coerced in that sense so there is not the same danger of falsehood and, furthermore, there is no criticism to be made of the persons taking the statement. Of course even if a statement must be made under compulsion of a statute, if inappropriate means are used to force the person to make that statement, which would come within the confession rule, then that is something that would have to be canvassed by the Court. But, in any event, the mere fact that the statement was made under compulsion of a statute does not mean that it is not a voluntary statement as that term is defined in the case law.

In any event, in this case the evidence is that the statements were not made under the compulsion of the statute. They were made by the defendant without reference to his statutory duty to make the statements.

I am, then, satisfied beyond a reasonable doubt that the statements made in the course of the audit by the defendant are voluntary and they are to be admitted in evidence at the trial.

Ruling granted.

Brian A. Donovan v. Her Majesty The Queen (as represented by the

[Indexed as: Donovan (B.) v. Canada (A.-G.)]

New Brunswick Court of Queen's Bench (Riordon J.), November 29, 1993 (Court Doc. N/C/124/91).

Income tax—Federal—Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72,

C. 63)—231.3,239—Criminal Code, R.S.C. 1985, c. 046—487, 490—Canadian Charter of

In 1989 the Department of National Revenue ("the Department") began investigating the affairs of the applicant. As a result on July 10, 1990, the Department obtained three search warrants authorizing the search of the applicant’s business premises, the applicant's residence and the office of his accountant. Shortly after, on November 28, 1990, the Federal Court of Appeal in Baron v. The Queen declared section 231.3 of the Income Tax Act to be invalid. There followed numerous requests for the return of the seized documents and other legal manoeuverings. Finally, in January 1993, it was apparently agreed by the parties that the Department would return the documents to the applicant. The Department did, in fact, purport to return the documents. The Department returned the original documents to the places where the documents were initially seized three years earlier. In the case of certain documents, they were delivered to the applicant's former business premises which had not been used as an office by the applicant for approximately two years and which were now being used as a garage. When the members of the Department arrived at this garage, they met two persons who were doing maintenance work on a grader and left the documents with them. The documents were delivered around 9:35 a.m. on January 26, 1993 and were re-seized around 10:00 a.m. pursuant to two search warrants just issued by Judge S, a Provincial Court judge. In obtaining these two new search warrants, the Department did not disclose the manner of the purported return of the documents nor did it inform the judge that copies of the documents had been retained by the Department. The applicant then applied to set aside the search warrants of January 26, 1993, to have all copies of the documents returned to him and for an order prohibiting the Department from applying for further search warrants without giving three days notice of any such application.

HELD:

The purported return of the seized documents to the applicant to unknown individuals at a garage which obviously was not his office business premises could not be said to be an actual return of the seized documents to applicant. Accordingly, the statement contained in the information before Judge S that the documents had been seized and had been returned to "the business premises of the applicant” was misleading and its correctness was questionable. This misleading statement was sufficiently significant and sufficiently misleading and incomplete in specifics that the proper course was to quash the search warrants. Furthermore, when the Department obtained the two new search warrants on January 26, 1993, the validity of the first warrants that had been obtained in July 1990 was not yet finally decided upon with the result that the three original warrants were still legally and technically in effect irrespective of the agreements of counsel and decisions of the other courts in other cases. Accordingly, the new search warrants that were issued were simultaneous search warrants and not successive search warrants. In the result, all of the search warrants involved were quashed and all copies of the documents were ordered to be returned forthwith. The request that notice be given in the event of any other application for a search warrant was, however, denied. Application granted in part.

George Fill iter and

David R. Oley tor the applicant.

John B.D. Logan for the respondents.

Cases referred to:

Baron v. Canada, [1991] 1 C.T.C. 25, 91 D.T.C. 5055; amended [1991] 1 C.T.C.

408, 91 D.T.C. 5134 (F.C.A.); aff'd [1993] 1 S.C.R. 416, [1993] 1 C.T.C. 111, 93 D.T.C. 5018;

Kourtessis v. M.N.R., [1993] 2 S.C.R. 53, [1993] 1 C.T.C. 301, 93 D.T.C. 5137;

R. v. Peel Air Services Ltd., [1993] 1 C.T.C. 71, 92 D.T.C. 6553 (Ont. Gen. Div.);

aff'd June 23, 1993, Doc. CA C13199 (Ont. C.A.) (unreported).

Riordon J.:—In this application Brian A. Donovan requests an order to quash search warrants issued by the Provincial Court under the authority of the Criminal Code, R.S.C. 1985, c. C-46 that the documents seized as a result be returned and that the respondent be prohibited from applying for further search warrants without giving three days' notice of any such application.

It is necessary to review some of the background as it relates to the present matters that must be addressed. In 1989 the Department of National Revenue (The "Department") began investigating the affairs of the applicant, Brian A. Donovan, of Renous. As a result on June 25, 1990, Claudette Miller (formerly Claudette Richard) swore an Information to obtain three search warrants and on July 10, 1990 the warrants were issued by Mr. Justice Turney Jones under the authority of section 231.3 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). The warrants were executed by members of the Department on July 17, 1990 as authorized at the business premises of Mr. Donovan, at his residence and at the office of his accountant, H. M. Parlee and Company. Subsequently on August 3, 1990 Mr. Justice Jones issued an Order for the retention of the various items that had been seized.

Shortly after, on November 28, 1990, the Federal Court of Appeal in its decision in the case of Baron v. Canada, [1991] 1 C.T.C. 25, 91 D.T.C. 5055; amended [1991] 1 C.T.C. 408, 91 D.T.C. 5134 (F.C.A.); aff'd [1993] 1 S.C.R. 416, [1993] 1 C.T.C. 111, 93 D.T.C. 5018, declared section 231.3 of the Income Tax Act to be invalid as it was unconstitutional. Relying on this decision, counsel for Mr. Donovan requested officials of the Department to return the records that had been seized.

Rather than return the records, counsel for Mr. Donovan was informed that an application would be made to the Provincial Court for authority to reseize the records pursuant to section 487 of the Criminal Code. Even though such applications are usually made ex parte, notice was given to Mr. Donovan that the request would be made to Judge Stymiest of the Provincial Court on May 28, 1991 for the desired search warrants and the request was made as contemplated. Both parties were represented by legal counsel and Judge Stymiest reserved his decision. Eventually by decision dated October 1, 1991 the request of the Department for the search warrants pursuant to section 487 of the Criminal Code was denied. Judge Stymiest concluded that what was being requested was a simultaneous search warrant rather than a successive search warrant and that it should not be issued.

In the meantime on May 24, 1991 legal action was commenced in this Court on behalf of Mr. Donovan against the Department challenging the validity of section 231.3 of the Income Tax Act. Eventually that action was discontinued and another action was commenced on behalf of Mr. Donovan against the Department on July 9, 1991.

On December 2, 1991, Claudette Miller on behalf of he Department swore an Information before Judge Stymiest of the Provincial Court alleging that Mr. Donovan had contravened section 239 of the Income Tax Act.

On January 2, 1992, a notice of motion was filed with this Court requesting determination prior to trial of several questions of law including the question of the constitutional validity of section 231.3 of the Income Tax Act, the validity of the search warrants that had been issued on July 10, 1990, the effect of the searches carried out and for the return of the documents seized. That motion was to be heard on February 3, 1992.

On January 13, 1992 the parties to the criminal proceeding appeared before the Provincial Court and at the request of counsel for Mr. Donovan the matter was adjourned without plea.

On January 29, 1992, prior to the hearing of the motion, agreement was reached to adjourn the civil proceeding and the criminal proceeding pending an anticipated decision of the Supreme Court of Canada in the Baron, supra, case which had been appealed. A letter purporting to set out the terms of the agreement to adjourn was written by counsel for Mr. Donovan to counsel for the Department on January 27,1992 (a copy is set out at pages 71 to 73 of the Record). It must be noted that this document is not signed or acknowledged by counsel for the Department as was requested in the document. It is however to be noted that a copy of the letter is attached to the Information sworn to obtain the search warrant by Claudette Miller before Judge Stymiest on January 26, 1993 and that copy is signed by counsel for the Department.

Paragraphs (b), (c) and (d) of the letter state:

(b) we are prepared to agree to an adjournment sine die of the Motion currently before Justice Riordon and returnable on February 3, 1992 as well as deferring any further activity in the case until the Supreme Court decides the Baron/Kourtessis cases [[1993] 2 S.C.R. 53, [1993] 1 C.T.C. 301, 93 D.T.C. 5137]. The Defendants, Her Majesty The Queen in Right of Canada, Attorney General of Canada and Otto Jelinek in his capacity as Minister of National Revenue will file their notice of intent to defend but not their statement of defence.

(c) the Crown is prepared to consent to the seized documents being sealed under the authority and in the possession of the Director of the Saint John office of the Department of National Revenue, to be so kept during the adjournment period. The Crown undertakes that the seized documents together with any copies or summaries thereof will not be used during the adjournment period unless consented to in writing by the taxpayer. The taxpayer agrees to having the seized documents stored by the Department of National Revenue in any secure place.

(d) Once Baron/Kourtessis has been decided the Crown would have a period of ten days from the date of the decision to file its statement of Defence. Should the Supreme Court decision go against the Department of National Revenue it would forthwith return the seized documents to the taxpayer and the taxpayer would have the right to immediately apply to the Court for an order for return from the Department of all copies of seized documents together with all summaries, notes or diagrams taken from the documents, books, records, papers or other items seized from the taxpayer and also for an order ordering the destruction of all summaries, copies, notes or diagrams which have not been returned by the Department. Should the decision be in the Department's favour the taxpayer reserves the right to continue his challenge less the constitutional aspects of it.

A letter of the same date from counsel for the Department to counsel for Mr. Donovan states in part:

Further to our telephone conversation of Friday we have discussed your most recent proposal with Mr. Vince Pranjivan this morning and he has agreed that they are agreeable.

The decision of the Supreme Court of Canada in the Baron case, supra, was given on January 21, 1993, it upheld the earlier decision of the Federal Court of Appeal and confirmed that section 231.3 violates section 8 of the Charter and was therefore of no force or effect.

Immediately after the decision of the Supreme Court of Canada was handed down, counsel for Mr. Donovan requested that the documents that had been seized under the authority of the search warrants of July 10, 1990 be returned. An exchange of letters by fax between Mr. Oley, counsel for Mr. Donovan, and Mr. Logan, for the Department followed. On January 21, 1993, Mr. Oley wrote Mr. Logan, paragraph 2 of that letter states:

Pursuant to paragraph (d) of our agreement as set out in my faxed correspondence to you dated January 27, 1992 and as accepted by your faxed correspondence to me under date of January 27, 1992 I am hereby formally requesting and do request on behalf of my client, Brian Donovan, the immediate return to this office to the attention of Brian Donovan all documents seized pursuant to the alleged search warrants issued on July 10, 1990 pursuant to section 231.3 of the Income Tax Act, S.C. 1970-71-72, c. 63 as amended by S.C. 1986, c. 6, s. 121, which were executed on July 17, 1990 at the personal and business premises of Brian Donovan and also at the offices of his accountant, H. M. Parlee and Company together with all copies of the seized documents together with all summaries, notes or diagrams taken from the documents, books, records, papers or other items seized pursuant to the said alleged Warrants.

On January 22, Mr. Logan replied:

We acknowledge receipt of your letter of January 21, 1993. We shall confirm the details for the return of the documents early next week. We trust this is satisfactory.

On January 25, Mr. Oley wrote:

This acknowledges receipt of your faxed letter dated January 22, 1993.

Please let us know when we shall have the return of the documentation set out in my letter of January 21, 1993.

On January 25, Mr. Logan replied:

Further to your letter of today's date we shall be returning the documentation on Tuesday, January 26, 1993.

Further to our agreement of last January, we do not intend to return our working copy, extracts, summaries, etc. We note from my review of your statement of claim that subparagraph 22(e) through (h) deals with this aspect of the dispute and would appreciate your Clarification as to whether you intend to pursue this aspect of your claim or start a fresh action.

Mr. Oley, under the impression that all documents would be returned to his law office in Fredericton, informed Mr. Donovan that the documents would be returned to that location on January 26th and that he should be present to take possession of the documents. On January 26 Mr. Donovan accordingly went to Fredericton. The documents were not however returned to Fredericton.

On the morning of January 26, 1993 members of the Department purported to return the seized records. Those that had been taken from Mr. Donovan's accountant were returned there and those that had been seized from Mr. Donovan were delivered to the 1990 location of Mr. Donovan's business office in Renous at somewhere around 9:35 a.m. This building, where the documents were delivered that morning, had not been used as an office by Mr. Donovan for approximately two years and in January 1993 was being used as a garage. It is located approximately one mile from the residence of Mr. Donovan and his then business office. When the members of the Department arrived at this garage, they met a Mr. Floyd Jardine of Quarryville and Stephen Gillespie of Blackville who at the time were doing maintenance work on a grader. Mr. Gillespie is employed by N.B.P. Enterprises Ltd. as a mechanic and welder and Mr. Jardine is employed as a machine operator by Algo Enterprises Ltd. The documents were left at the garage but not for ong.

Even though the original seized documents were returned in the aforementioned manner, copies of the records that had been made were not returned.

At around 10:00 a.m. or some 15 minutes after the documents had been left in the garage, another representative of the Department and a police officer arrived at the garage and again seized all the documents that had just been delivered. They were seized under the authority of a search warrant issued by Judge Stymiest of the Provincial Court earlier that morning.

Documents that had been seized at the offices of H. M. Parlee and Company under the authority of the July 10, 1990 search warrant were returned at somewhere between 8:30 and 9:00 a.m. on January 26, 1993 and reseized at approximately 10:00 to 10:15 a.m. the same day under the authority of a search warrant issued by Judge Stymiest of the Provincial Court pursuant to the authority of the Criminal Code.

Claudette Miller of the Department in the early morning of January 26 attended at the Provincial Court to apply for search warrants to search the business premises of Mr. Donovan and the offices of H. M. Parlee and Co. On being advised that the records previously seized had been returned, an application was made to the Provincial Court pursuant to the provisions of the Criminal Code for two search warrants. Ms. Miller received final confirmation of the return of the records at 9:35 a.m. and swore the Information at 9:37 a.m. to obtain the two new search warrants. The search warrants were obtained shortly after and immediately executed.

Mr. Donovan's solicitor on later being advised immediately informed counsel of the Department that an application would be made to this Court to quash the search warrants and on February 16 the notice of application that must presently be dealt with was filed.

On February 18, 1993 the Department made the reports to the Judge of the Provincial Court as contemplated by section 490 of the Criminal Code and obtained two orders for the detention of the seized records.

With this background it is necessary to address the application filed on behalf of Mr. Donovan to quash the warrants issued on January 26, 1993 and the request for the return of the documents seized under the authority of the warrants and also the request to prohibit further applications for search warrants without three days' notice.

The written submission filed on behalf of the Department raises the jurisdiction of the Court to deal with the present application. At the hearing however this question was not pursued and counsel for the Department acknowledged that this Court does have the jurisdiction to address the present application. This question of jurisdiction has been addressed by the Supreme Court of Canada in the decision of Kourtessis v. M.N.R., [1993] 2 S.C.R. 53, [1993] 1 C.T.C. 301, 93 D.T.C. 5137. At page 112 (C.T.C. 326, D.T.C. 5156) of that decision Mr. Justice Sopinka said:

Searches and seizures involve the most serious invasion of privacy. Search warrants issued under the Criminal Code can be attacked by motion to quash brought before the superior court of the province. The grounds include failure to disclose, lack of specificity, the existence of less intrusive investigatory procedures and the like. See Schumiatcher v. A.-G. (Sask.) Re: Search Warrant (1960), 34 C.R. 154, 33 W.W.R. 134, (Sask. Q.B.), Re Church of Scientology, et al. v. The Queen (No. 6), (sub nom. R. v. Church of Scientology of Toronto) 30 C.R.R. 238 (Ont. C.A.) supra, and R. v. Sismey (1990), 55 C.C.C. (3d) 281, 1 C.R.R. (2d) 381 (B.C. C.A.) I would be surprised if this procedure were not available to a citizen who is subject to a search under the ITA.

At page 115 (C.T.C. 328, D.T.C. 5157) he said:

The superior courts have jurisdiction to entertain such applications even if the superior court to which the application is made is not the trial court. However, a superior court has a discretion to refuse to do so unless, in the opinion of the superior court, given the nature of the violation and the need for a timely review, it is better suited than the trial court to deal with the matter. See Mills v. The Queen, [1986] 1 S.C.R. 863, 29 D.L.R. (4th) 161 supra, per Lamer J. at pages 891-96 (D.L.R. 196-200), and per LaForest J. at pages 976-77, 3 ’d by the full Court in R. v. Smith, [1989] 2 S.C.R. 1120, 52 C.C.C. (3d) 97 supra, at pages 1129-30 (C.C.C. 104). The superior court would therefore have jurisdic- tion to entertain an action for a declaration seeking this kind of relief but subject to the same discretion to refuse to exercise it. The superior court's discretion to decline to exercise its jurisdiction on the basis set out in Mills and Smith, supra, is buttressed by the discretionary nature of declaratory relief by virtue of which the court can refuse to entertain such an action for a variety of reasons. The Court is justified in refusing to entertain the action if there is another procedure available in which more effective relief can be obtained or the court decides that the legislature intended that the other procedure should be followed.

I have decided in these circumstances that I should exercise discretion and entertain this application. Although it is not a matter specifically dealt with in the present application, it is without question now clear in light of the Baron decision above referred to that the search warrants that were issued by Mr. Justice Jones pursuant to section 231.3 of the Income Tax Act are invalid and therefore of no force or effect. The Supreme Court of Canada in the Baron case concluded that section 231.3 of the Income Tax Act violated section 8 of the Charter. The warrants issued by Mr. Justice Jones on July 10 and executed on July 17, 1990 have remained in effect to the present time. Perhaps it may only be a formality, and the Department has, as I understand their submission, taken the position that it has abandoned these search warrants. Nevertheless, they remain outstanding search warrants issued by a Court Order that are still in effect and which have not been rescinded, modified or quashed. To address this situation I direct that the search warrants of July 10, 1990 be quashed and order that all documents seized thereunder and any copies made of those documents be returned to Mr. Donovan.

I have some difficulty with the manner in which the documents seized under the authority of the search warrants of July 10, 1990 purport to have been returned to Mr. Donovan and were returned to his former accountant on January 26, 1993. By an Order of the Court of Queen's Bench of Mr. Justice Jones entitled "Order For Retention" dated August 3, 1990 it was the Court Order that the documents that had been seized, which are listed, be detained by the Minister of National Revenue. That Order stated:

IT IS ORDERED that the documents and things referred to in Appendix “B” attached be retained by the Minister [of] National Revenue in accordance with subsection 231.3(6) of the Income Tax Act.

Subsection 231.3(6) of the Act provides:

231.3(6) Retention of things seized.—Subject to subsection (7), where any document or thing seized under subsection (1) or (5) is brought before a judge or a report in respect thereof is made to a judge, the judge shall, unless the Minister waives retention, order that it be retained by the Minister, who shall take reasonable care to ensure that it is preserved until the conclusion of any investigation into the offence in relation to which the document or thing was seized or until it is required to be produced for the purposes of a criminal proceeding.

Subsection 231.3(7) provides:

231.3(7) Return of things seized.— Where any document or thing seized under subsection (1) or (5) is brought before a judge or a report in respect thereof is made to a judge, the judge may, of his own motion or on summary application by a person with an interest in the document or thing on three clear days notice of application to the Deputy Attorney General of Canada, order that the document or thing be returned to the person from whom it was seized or the person who is otherwise legally entitled thereto if the judge is satisfied that the document or thing

(a) will not be required for an investigation or a criminal proceeding; or

(b) was not seized in accordance with the warrant or this section.

The manner in which the documents seized are purported to have been returned to Mr. Donovan and were returned to the office of Mr. Parlee are not in compliance with the Court retention order in effect and violate the provisions of subsection 231.3(6). This section requires that the Minister shall take reasonable care to ensure that the documents are preserved until the conclusion of any investigation into the offence in relation to which the document or thing was seized or until it is required to be produced for purposes of a criminal proceeding. There is no evidence of any application, summary or otherwise, as is contemplated by subsection 231.3(7) to request permission of a judge to return any document to the person from whom it was seized. Surely to return seized documents in the manner that they were returned without getting permission to do so from the Court which ordered them to be retained until certain specified events would occur as is provided for in the Statutes contravenes the retention order of the Court, the provisions of the Act and the mandatory obligation imposed on the Minister to take reasonable care to ensure that they be preserved. The retention order of the Court should and I believe would remain in effect irrespective of any agreement reached between counsel for the respective parties with respect to the return of seized documents until such time as the Court would sanction the agreement.

It is submitted by counsel for Mr. Donovan that in respect to the search warrants issued by Judge Stymiest in January 1993 the officials of the Department failed to make full disclosure to Judge Stymiest. More specifically it is alleged that they failed to disclose the agreement that had been reached to return the seized documents to the office of Mr. Donovan's lawyer in Fredericton. Also that they failed to disclose that the earlier Order of Mr. Justice Jones for the issuance of search warrants was still in effect and had not been rescinded. It is also alleged that they did not disclose that the documents were returned to the former office location of Mr. Donovan and not to his then office or his residence. It is also submitted that the procedure used constituted an abuse of process and that as the search warrants of July 10, 1990 were still technically in effect, the search warrants issued by Judge Stymiest on January 26 were simultaneous and not successive. It is argued that even if the Department says it abandoned the search warrants issued by Mr. Justice Jones and purported to return originals, it did not return all copies of the documents that had been made.

It is submitted on behalf of the Department that its officials have followed the rules and have acted in good faith and that the rules were changed by the Court decision in the Baron case, supra. It is submitted that although counsel for Mr. Donovan wanted the seized documents returned to his office in January 1993 after the decision of the Baron case was made, the Department officials had only agreed to return the documents to the taxpayer and that the return of the documents on January 26 was a bona fide return. It is submitted that the Department intended to return the documents and immediately reseize them and that the procedure set out in the Criminal Code to obtain a search warrant was properly followed. Counsel for the Department argues that the search warrants of January 26, 1993 were successive and not simultaneous, there was no material nondisclosure in the Information to obtain them, there was no abuse of process, the matter was not res judicata and there were sufficient grounds to support the issuance of the warrants.

The return of documents seized while keeping copies of the documents as was done in the matter before me is not a complete and effectual return of the documents that had been seized. The return of documents seized from the office of Mr. Donovan and from his residence to a garage, even though it was the former location of Mr. Donovan's office and to leave them there with individuals working on a grader and not ascertaining who these people were and making a determination that they had authority to receive such documents, is questionable practice and at least careless; and would not constitute a return of the seized documents to Mr. Donovan. Even Mr. Terry LeBlanc of the Department who was involved in the return of the documents was surprised. In his affidavit of March 11th he says:

Upon entering what I remembered as the office I was surprised to find it virtually empty. Failure to at least get a receipt from someone in a position of authority authorized to act on behalf of Mr. Donovan acknowledging receipt of the documents when they were returned in the fashion that they were is to say the least somewhat unusual. It is noted that a receipt was requested of and obtained by Mr. Parlee when documents were returned to his accounting office. If an agreement had been reached to return the documents to the offices of Mr. Donovan's solicitor, as had been understood by Mr. Oley, rightly or wrongly, to return the documents in the fashion that they were without at least notifying Mr. Oley cannot be considered to be entirely straightforward. In these circumstances I have difficulty in concluding and cannot accept that the documents that had been seized from Mr. Donovan had been returned to him.

The sworn Information of Claudette Miller of January 26, 1993 should be examined closely. Paragraph 7 states that the Department agreed to return the records seized under authority of the warrants of July 10, 1990 if the Supreme Court upheld the Baron decision. A copy of the written agreement of January 27, 1992 signed by both solicitors is attached to the Information. Paragraph 9 of that Information is as follows:

9. On January 26, 1993, I was informed by Terry LeBlanc that he along with Greg Boudreau, officers of the Department of National Revenue, Taxation, delivered the documents or things as listed in Appendix B of Exhibit D-1 and Appendix B and D of Exhibit D-2 attached to this Information, to the business premises of Brian A. Donovan, in Renous, N.B., as described in paragraph "a" of PLACES TO BE SEARCHED.

A copy of the Information sworn on June 25, 1990 in support of the request for the warrants issued on July 10, 1990 is attached to the Information of Ms. Miller of January 26.

The Information of January 26, 1993 makes no mention of the action instituted in this Court or the application outstanding. However the agreement concluded on January 27, 1992 and the letter confirming that agreement is attached and reference is made in that letter of the adjournment of the motion that had been made to the Court of Queen's Bench. The Information does not disclose any communications between the parties relating to the return of the documents after the Supreme Court of Canada decision in Baron was handed down and the request made for the return of the documents made by counsel for Mr. Donovan. The Information does not make any reference to the status of the outstanding retention order of Mr. Justice Jones of August 3, 1990 other than to say that the documents seized pursuant to the search warrants were ordered to be retained by Mr. Justice Jones pursuant to subsection 231.3(6) of the Income Tax Act. Copies of the retention orders were attached. The Information does not disclose the specific details of the return of the seized documents to the business premises of Mr. Donovan if one could conclude that they were in fact returned to his business premises. It is certainly clear now that the documents were not returned to his business premises but to a garage where his business office premises were formerly located. It is now clear that paragraph 9 of the Information quoted above lacks detail, lacks specificity and its correctness is questionable. The Information does not specifically disclose that copies of all the documents that were seized were kept. The Information does not specifically state that the earlier search warrants had been abandoned. The Information does not specifically disclose that documents seized from the residence of Mr. and Mrs. Donovan were not returned there and why they were not returned there. The Information states that documents listed in the Appendices were returned. There is no indication that these were all of the documents seized and retained. In any event, as I stated earlier, no mention is made that copies were retained. It was not disclosed that the documents seized had not been returned personally to Mr. Donovan or to an authorized representative.

In the Kourtessis decision, supra, at page 112 (C.T.C. 326, D.T.C. 5156) Mr. Justice Sopinka said: (quoted in part earlier at page 430 of this decision)

Indeed, in an earlier proceeding in this case, warrants were quashed by Proudfoot J. for lack of disclosure and specificity. Searches and seizures involve the most serious invasion of privacy. Search warrants issued under the Criminal Code can be attacked by motion to quash brought before the superior court of the province. The grounds include failure to disclose, lack of specificity, the existence of less intrusive investigatory procedures and the like. See Shumiatcher v. A.-G. (Sask), Church of Scientology, supra, and

K. v. Sismey, supra.

The purported return of the seized documents to Mr. Donovan to unknown individuals at a garage which obviously was not his office business premises cannot be said to be an actual return of the seized documents to Mr. Donovan. The statement contained in the Information before Judge Stymiest that the documents that had been seized had been returned to "the business premises of Brian

A. Donovan" is misleading and as said above its correctness is questionable. Without question the document, that is, the Information was drafted and prepared in advance in anticipation that the documents would be returned. It was not corrected or at least clarified in the haste to obtain new search warrants. Within minutes of the return of the seized documents the Information was sworn. It is difficult to say if this misleading and incorrect information was something that was done deliberately or inadvertently. I am of the view that it was done inadvertently.

As I see it this misleading statement in the Information is sufficiently significant and sufficiently misleading and incomplete in specifics that the proper course is to quash the search warrants. This I believe is only proper in light of all of the above detailed failure to disclose and lack of specificity. Particularly so in light of the fact that even though an unsuccessful attempt was made to return original seized documents yet copies were kept and the Information failed to at least disclose to the Judge to whom the application was made that copies were kept.

Also as I see it the Department obtained two new search warrants on January 26, 1993 when in actual fact the validity of the first warrants that had been obtained from Mr. Justice Jones in July of 1990 were not yet finally decided upon and were still legally and technically in effect irrespective of the agreements of counsel and decisions of other Courts in other cases. The new search warrants that were issued were simultaneous search warrants and not successive search warrants. Reference can be made to the text, The Law of Search and Seizure, 2nd Edition, by James A. Fontana, page 192.

It is also quite significant as I see it that the Federal Court of Canada decision in Baron v. Canada was decided on or about November 28, 1990; a few months after the documents were seized from Mr. Donovan and though an application for warrants was denied by Judge Stymiest in October 1991, the application for the new search warrants was only made some two years after the trial decision in Baron. Delay was addressed in the case of R. v. Peel Air Services Ltd., [1993] 1 C.T.C. 71, 92 D.T.C. 6553 (Ont. Gen. Div.); aff'd June 23, 1993, Doc. CA C13199 (Ont. C.A.) (unreported), where the Crown sought to introduce documents that had been seized by a search warrant issued under the authority of [former] subsection 231(3), at page 73 (D.T.C. 6554) the following appears:

Not surprisingly, Judge Tabach held, [unreported] (filed with Registrar Oct. 20, 1992) at page 182 of his ruling, that "some action must be taken to legitimize conduct that is subsequently held to be inappropriate”, and excluded the documents under s. 24 of the Charter. Refusing to save their admission under s. 1, he stated at page 181 of his ruling as follows:

In my view, the administration of justice will be brought into disrepute by judicial condonation of unacceptable action or inaction by prosecutorial agencies. Permitting evidence that had been unlawfully obtained and held where immediate specific action was possible to legitimize the seizure and retention, in my view, would bring the administration of justice into disrepute. This Court cannot condone the unlawful retention of documents of any person facing a charge even though the unlawful retention and possession was undertaken without evil intent or without malice.In this case, the retention of the documents, on the evidence before me, is attributable to nothing more than inaction, which I suspect in itself is or was caused by a number of factors. There is nothing in the evidence to indicate that there was any mala fides or blatant conduct or unfair tactics by Revenue Canada or the prosecution in the general sense. The short point, however, is that documents were in the possession of the investigatorial and prosecutorial authorities for a long period of time without judicial sanction or authorization.

In conclusion I therefore direct that the two search warrants issued by His Honour Judge Stymiest on January 26, 1993 be quashed. Also I direct that all documents seized by the Department under the authority of the two search warrants together with all copies of those documents be forthwith returned to Mr. Brian A. Donovan or his authorized agent and to the offices of his accountant, H. M. Parlee, respectively. As stated earlier, the warrants issued on July 10, 1990 should also be quashed and the retention order of August 3, 1990 should be and is terminated and cancelled. All documents seized under the authority of the July 1990 search warrants and copies of any documents made of those records are also to be forthwith returned to Mr. Donovan and to H. M. Parlee and Company.

The request that notice be given in the event of any other application for a search warrant is denied.

Order to quash allowed.