Subash Kohli and Dr. Renuka Kohli v. R.C. Moase, B.G. Gillis, J.C.A. Landry, J.A. Van Wart, A.M. Bourgeois, S. Macleod, R.G. Ross, C. Richard, D.A. Keisstead, J.E. Yorke, H.W. Allen, Fm. Landry, M.C. Burchill, N.C. Hobson, Anne Le Blanc, J.D.C. Sequin, R.C. Wood, R.M. Freeze, C.M.D. Robard, E.B. Ross and Attorney General of New Brunswick (Intervenor), [1989] 1 CTC 492, 89 DTC 5336

Ryan, J.A.:—The issues in this appeal are complex in that they relate to the jurisdiction of a superior court over documents seized under search warrants issued by a justice of that court and the jurisdiction of a superior court in a civil action to impound those very documents and to stay any proceedings in which they might be used. In this instance both jurisdictions involved are in the Court of Queen's Bench and, as it happens, the same justice.

The appellants, Subash and Renuka Kohli, are husband and wife and practiced medicine at St. Stephen. On November 28, 1986, four search warrants were issued in the Court of Queen's Bench by Higgins, J. on ex parte applications by the Minister of National Revenue under section 231.3 of the Income Tax Act, S.C. 1986, c. 6, s. 121. The search warrants recite that the two doctors made false or deceptive statements in their income tax returns and wilfully evaded the payment of taxes for the years 1981 to 1984 inclusive contrary to section 239 of the Income Tax Act. Numerous documents were seized.

Instead of making an application to the issuing judge for the return of the documents or other redress under the Income Tax Act, the appellants, on December 17, 1986, commenced a civil proceeding by issuing a notice of action in the Court of Queen's Bench, Trial Division, against the individual income tax department officials and the police officers who executed the warrants. The Minister was not a defendant although under the Act the Minister retains possession of the seized documents. At the same time the appellants made an ex parte application in their civil action to have the documents impounded and all proceedings under the search warrants for alleged offences under the Income Tax Act stayed. An order was issued impounding the documents and staying proceedings.

The main claim of the appellants in the civil action was for a declaration that section 231.3 of the Income Tax Act authorizing the issue of search warrants contravenes section 8 of the Charter of Rights and Freedoms which secures one against unreasonable search or seizure. They relied on the judgment of Dickson, J., writing for the court, in Hunter v. Southam Inc., [1984] 2 S.C.R. 145; 84 D.T.C. 6467.

The judge of the Court of Queen's Bench dismissed the civil action although he appears in many respects to have inexplicably treated the action as though it were an application for judicial review against his earlier acts of issuing the warrants under the Income Tax Act. No judge of the Court of Queen's Bench can sit in judicial review of the decision of a judge of the Court of Queen's Bench except where the first judge is sitting persona designata or in some such unique capacity.

Although there are several grounds of appeal which deal with the particulars of the warrant and the lack of specifics, these claims were answered by the decision in Knox Contracting v. The Queen, [1986] 2 C.T.C. 194; 86 D.T.C. 6417, which held that the issuing of a warrant by a judge of the Court of Queen's Bench under section 231.3 of the Income Tax Act is not subject to review. In the Knox case this Court held that the words “issue a warrant” in the introductory words of subsection 231.3(1) which authorize a judge, in an ex parte application by the Minister to issue a warrant, do not mean "order the issuance of a warrant". If they did mean "order", then a judge would be able to review his ex parte order or at least the ex parte order might be appealable. Under section 231.3, there is no "order" extant.

Impounding Seized Documents

To the date of this appeal no charges had been laid against the appellants. The seized documents have been in the actual custody of R.C. Moase, one of the named defendants, by order of the judge hearing the civil action and subsequently by order of a judge of the Court of Appeal with a prohibition against use of the documents in any proceedings. The latest order relating to the documents was rescinded by the Court of Appeal on the opening date of the appeal hearing.

Distinct Jurisdiction

Can the civil process be invoked to delay or frustrate contemplated prosecutions under an Act of Parliament when some positive step has been instituted toward that purpose, such as the issuing of a search warrant, on sworn evidence that offences have been committed? I think that the answer must be No.

The search warrants were issued by a judge of the Court of Queen's Bench on the ex parte application of the Minister. The warrants were executed. The search warrants require those people executing the warrants to “bring [the documents] or a report in respect thereof, before me or some other Justice if I am unable to act".

Before any documents were brought before the judge of the Court of Queen's Bench acting under the Income Tax Act, a civil action was commenced and an ex parte order was granted staying all procedures and impounding the documents. In my opinion this ex parte order and subse- quent orders which continued and broadened the original order were improper. Under subsections 231.3 (6) and (7), on the return of the warrants, or upon their own application the appellants would have been in the proper forum to seek redress for what they considered to be violations of their rights including Charter rights:

(6) 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.

(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 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 appellants claim that the section under which the search warrants were issued is invalid. The trial judge acting in the civil action, all parties having ignored the exclusive jurisdiction over the documents conferred by the Income Tax Act, proceeded to assume jurisdiction over the documents and to dispose of the action on its merits. Following a six day trial in the civil action the judge dismissed the appellants' claims that their rights under section 8 of the Charter, unreasonable search or seizure, had been violated. I make no comment on the merits of the claim. I am concerned instead with using the civil process to intrude into the realm of the criminal process for an oblique purpose. The blunt purpose of the civil action was to obtain a ruling that would bind any court of criminal jurisdiction which would subsequently try charges against the appellants under the Income Tax Act. The civil action ought to have been stayed until after the Income Tax Act cases had been disposed of or upon a failure to prosecute. In the interim, appropriate redress was available to the appellants under the Income Tax Act, with or without an application for relief under section 24 of the Charter, for an alleged violation of rights under section 8 of the Charter.

Section 24, Canadian Charter of Rights & Freedoms

Any violation of Charter rights is important and will perforce be emphasized to some degree particularly in these early years of the Charter's growing pains, but there are certain traditional domains of exclusivity which must be preserved between the two fields of civil and criminal jurisdictions with respect to procedure which impact on substantive rights and pit the state against the individual. Even this is recognized under section 10 of the Criminal Code which changed the common law thereby permitting parallel proceedings in civil and criminal matters.

Here, the Charter rights of the individual could have been addressed before the judge of the Court of Queen's Bench having jurisdiction under the Income Tax Act or later at trial in another court of competent criminal jurisdiction. It is only when there is no appropriate forum for redress for a violation of the individual’s rights that the party should seek alternative avenues to bring their claims before the courts. In this case for instance, if the prosecution failed to proceed with charges thus eliminating the immediate appropriate forum for initial redress for an unreasonable search or seizure, the offended parties would still have been able to proceed with their civil action for relief. Even if they succeeded in gaining relief in the prosecutions under the Income Tax Act, it would still be open to them to continue a claim civilly.

The fact that a superior court has concurrent jurisdiction with a trial court in which charges have been laid, does not override my conclusions with respect to the facts in this case where because of the orders to stay and to impound documents, no charges have, as yet, been laid. In Mills v. The Queen, [1986] 1 S.C.R. 863; 26 C.C.C. (3d) 481; a seven judge panel agreed, in four different judgments, that a provincial superior court is a court of competent jurisdiction within the meaning of subsection 24(1) when no other forum exists in which to raise a Charter issue. This was reiterated in R. v. Rahey, [1987] 1 S.C.R. 588. Here, the very documents which are the subject of the claim in the civil action are, and were at all times, under the exclusive jurisdiction of the judge of the court of Queen's Bench in his capacity as the judge who issued the warrants under the authority of the Income Tax Act. No one, including himself acting in another capacity, has the authority or power to oust or encroach upon that jurisdiction.

Conclusion

The Supreme Court of Canada has made it clear that everyone in Canada whose rights have been infringed has a wide right to attack constitutionally invalid legislation. This can be done by seeking a mere declaratory order. Although the range is expansive, it is not boundless. It is an abuse of process to use the civil process in order to bind a court of criminal jurisdiction on a matter which that court is eminently competent to deal with and to give at least an initial remedy. In the circumstances of this case the civil action and the attendant orders relating to the seized documents impeded and frustrated intended charges under section 239 of the Income Tax Act for false statements and tax evasion.

The trial judge had no jurisdiction to deal with the seized documents as such. His findings, rulings and orders in relation thereto are nullities. The civil action for a declaration was premature and calculated to interfere with the crimnal process. No appropriate remedy under section 24 of the Charter was available to the civil court while the documents remained under the jurisdiction of the judge acting by virtue of the search warrant provisions of the Income Tax Act. The appeal is dismissed with costs to the respondents in the sum of $1,000.

Appeal dismissed.