Thomas A. Corr and Others v. Her Majesty the Queen in Right of Canada and Others, [1987] 1 CTC 148, 87 DTC 5047

Steele, J.:—Two motions were heard by the Court. One, by the applicant Thomas A. Corr (Corr) and others, is to strike out four “informations to obtain a search warrant pursuant to s. 231.3 of the Income Tax Act” and to quash the four search warrants granted by Callaghan, A.C.J.H.C., and in the alternative, to compel the informant to attend for cross-examination on his affidavit filed in support of the application for the search warrants. The other is brought by the Minister of National Revenue (the Minister) to dismiss the notice of examination served upon the informant to attend for cross-examination on his affidavit that is referred to in the first application.

The applicable portion of the Income Tax Act (the Act), as enacted by S.C. 1986, c. 6, s. 121, is as follows:

231.3 (1) A judge may, on ex parte application by the Minister issue a warrant in writing authorizing any person named therein to enter and search any building, receptacle or place for any document or thing that may afford evidence as to the commission of an offence under this Act and to seize and, as soon as practicable, bring the document or thing before, or make a report in respect thereof to, the judge or, where the judge is unable to act, another judge of the same court to be dealt with by the judge in accordance with this section.

(2) An application under subsection (1) shall be supported by information on oath establishing the facts on which the application is based.

(3) A judge shall issue the warrant referred to in subsection (1) where he is satisfied that there are reasonable grounds to believe that

(a) an offence under this Act has been committed;

(b) a document or thing that may afford evidence of the commission of the offence is likely to be found; and

(c) the building, receptacle or place specified in the application is likely to contain such a document or thing.

(4) A warrant issued under subsection (1) shall refer to the offence for which it is issued, identify the building, receptacle or place to be searched and the person alleged to have committed the offence and it shall be reasonably specific as to any document or thing to be searched for and seized.

(5) Any person who executes a warrant under subsection (1) may seize, in addition to the document or thing referred to in subsection (1), any other document or thing that he believes on reasonable grounds affords evidence of the commission of an offence under this Act and shall as soon as practicable bring the document or thing before, or make a report in respect thereof to, the judge who issued the warrant or, where the judge is unable to act, another judge of the same court to be dealt with by the judge in accordance with this section.

(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 judge referred to must be a superior court judge.

The applicant Corr does not question the validity of the legislation, or that the applications for the orders may be brought ex parte. The argument is that the applicant has a right to cross-examine on the informant's affidavit used in support of the application for the search warrant after he learns of the order and applies to have the order set aside.

Giuseppe Vettese (the informant) swore an affidavit in support of the informations. Based upon it, Callaghan, A.C.J.H.C. ordered the issuance of warrants to search four different premises and seize documents therein. The alleged offences in question relate to scientific research expenditures and alleged false statements relating to tax allowances therefor, and also relate to the personal income tax return of Corr.

Corr's motion is to strike out the informations and to quash the search warrants. There is no authority to quash an order of a superior court judge. The motion brought by Corr was argued by his counsel on the basis of it being an application to set aside or vary the order of Callaghan, A.C.J.H.C., and to order cross-examination in connection with such motion.

If the order or search warrant may be reviewed, the weight to be given to the information may be considered at that time. The informations cannot be struck out entirely. Subsection 231.3(7) relates only to the return of documents and things seized. It does not relate to the search warrant itself.

Counsel for the Minister submitted that the test set out in Re Church of Scientology and The Queen (No. 4) (1985), 17 C.C.C. (3d) 489 (Scientology case) was applicable. While that case is of assistance by way of reference, it is not applicable to the present motion because it dealt with a motion to quash a lower court order by way of certiorari.

No part of section 231.3 or any other section of the Act provides for a review of an order made under the section.

The information and search warrant are part of an investigatory proceeding leading towards possible charges being laid. Subsection 231.3(3) specifically refers to the necessity of their being reasonable grounds of an offence having been committed.

The Act creates an offence and therefore, by virtue of subsection 27(2) of the Interpretation Act, R.S.C. 1970, I-23, the provisions of the Criminal Code and the Rules thereunder are applicable. Criminal Rule 2 provides that the Rules of Civil Procedure apply with necessary modifications where no other express provision is made. There being no express provision, Rules 37.14, 39.01 and 39.02 of the Rules of Civil Procedure apply.

If the Criminal Code did not apply, then the same Rules of Civil Procedure would apply in the first instance.

Former Criminal Rule 2 expressly excluded former Civil Rule 230 that allowed the examination of a witness prior to a motion and incorporated former Rule 231 which permitted viva voce examination of witnesses before the court only with leave. Neither of these provisions are now applicable under the new Criminal Rule 2 and therefore many decisions rendered prior to the new Rules are inapplicable.

In my opinion, Rule 37.14 permits Corr, who is affected by the order authorizing the search warrant, to move to set aside or vary that order.

Rule 39.02(1) provides as follows:

Where a party to a motion or application has served every affidavit on which the party intends to rely, he or she may cross-examine the deponent of any affidavit served by a party who is adverse in interest on the motion or application.

There is a prima facie right to cross-examine that can only be defeated by lack of reasonable diligence. There is no such lack of diligence in the present case.

Counsel for the Minister submitted that Corr has not complied with the provisions of Rule 39.02(1) because the Minister has not filed any affidavit on the motion by Corr. His position is that Corr has brought the motion to set aside and has filed an affidavit which attaches, as an exhibit thereto, the affidavit filed by the informant on the ex parte application for the search warrant. He submits that the Minister did not file or serve any affidavit on the motion to set aside, and therefore the informant's affidavit on the ex parte application cannot be cross-examined upon. If the Minister's position is correct, there could never be a case where a party having obtained an ex parte order could be cross-examined on the affidavit material used in support thereof. The party need only refuse to respond to the affidavit material filed on the application to set aside. Under these circumstances the party would be entitled to cross-examine upon the affidavit filed by the applicant but there could be no cross-examination on any material used by the party who obtained the ex parte order. This would be unfair and unjust and would be the result of a narrow literal interpretation of the Rule. Rule 1.04

(1) requires a liberal construction of all Rules to secure a just determination of every proceeding on its merits.

In Volckmar v. Krupp, [1958] O.W.N. 303, it was held that there was a right to cross-examine on an affidavit filed on an ex parte application when a motion is brought to set aside such an order.

Relying on Roskate Investments Ltd. et al. v. Hefner et al., 13 O.R. (2d) 599, the Minister argued that the search warrants having been exercised the matter was disposed of, and that there was now no right to cross-examine. However, in the Volckmar case, supra, it was held that the matter was not disposed of where there was a motion to set aside the order.

In my opinion, Corr is entitled to cross-examine the informant on his affidavit. All affidavits have been served by Corr and the informant's affidavit is before the court, and he is adverse in interest. This conclusion is consistent with the reasoning of Master Linton in Butler Manufacturing Co. (Canada) Ltd. v. M.N.R., 83 D.T.C. 5361.

I arrive at the same conclusion by analogy to Wilson v. The Queen, [1983] 2 S.C.R. 594; 4 D.L.R. (4th) 577. No specific right of appeal is granted from an order to issue a search warrant, nor is there from an order authorizing a wiretap, under the Criminal Code. In my opinion, the reasoning of McIntyre, J., relating to wiretap authorizations, is applicable to search warrants, where he stated, at 607 (D.L.R. 603), as follows:

Since no right of appeal is given from the granting of an authorization and since prerogative relief by certiorari would not appear to be applicable (there being no question of jurisdiction), any application for review of an authorization must, in my opinion, be made to the court that made it. There is authority for adopting this procedure. An authorization is granted on the basis of an ex parte application. In civil matters, there is a body of jurisprudence which deals with the review of ex parte orders. There is a widely recognized rule that an ex parte order may be reviewed by the judge who made it . ..

At 608 (D.L.R. 604), he further stated that another judge of the same court can review an ex parte order and then said:

... In the case of Gulf Islands Navigation Ltd v. Seafarers' International Union (1959), 18 D.L.R. (2d) 625 (B.C.C.A.), Smith J.A. said, at pp. 626-27:

After considering the cases, which are neither as conclusive nor as consistent as they might be, I am of opinion that the weight of authority supports the following propositions as to one Judge’s dealings with another judge’s ex parte order: (1) He has power to discharge the order or dissolve the injunction, (2) he ought not to exercise this power, but ought to refer the motion to the first Judge, except in special circumstances, e.g., where he acts by consent or by leave of the first Judge, or where the first Judge is not available to hear the motion; (3) if the second Judge hears the motion, he should hear it de novo as to both the law and facts involved.

I would accept these words in the case of review of a wiretap authorization with one reservation. The reviewing judge must not substitute his discretion for that of the authorizing judge. Only if the facts upon which the authorization was granted are found to be different from the facts proved on the ex parte review should the authorization be disturbed. It is my opinion that, in view of the silence on this subject in the Criminal Code and the confusion thereby created, the practice above-described should be adopted.

I also adopt as applicable the reasoning of Dickson, J., as he then was, in the Wilson case, supra, at 624 (D.L.R. 592), as follows:

.. .These authorizations are made ex party and in camera. If it is admitted that there is a right of the trial judge to go behind an apparently valid authorization, it must be possible to ask questions on cross-examination to find out if there is any basis upon which to argue invalidity. It is of little avail to defence counsel to have a statement of law that an authorization can be held to be invalid if obtained, for example, by material non-disclosure and then preclude counsel from asking questions tending to show there has in fact been non-disclosure. The questioning can be such as to enable defence counsel to get some indication of whether the authorization was properly obtained, without the disclosure of information which, in the opinion of the judge, ought to be kept confidential . . .

At the hearing of the motion, I heard extensive argument on the merits of the application so that I could understand the entire application of Corr. However, in view of my conclusion that Corr has a right to cross-examine, it would be inappropriate for me to comment thereon. That is a matter for the judge hearing the actual motion to set aside the order of Callaghan, A.C.J.H.C. after cross-examination has taken place.

For these reasons, the informant is ordered to attend for cross- examination on his affidavits at a time and place to be agreed upon by counsel, and failing agreement to be fixed by this Court. He is also directed to inform himself of the necessary information so as to properly answer relevant questions. The balance of Corr’s motion is adjourned pending the cross-examination. The motion brought by the Minister is dismissed.

Corr is entitled to his costs as of one motion.

Order accordingly.