George Hatzinicoloau and George Jenkins v. Minister of National Revenue, Anthony Sebastian Alvernia, R.A. Weavers and J. R. Giles, [1987] 1 CTC 365, 87 DTC 5191

Henry, J. [Orally]:—This matter was argued before me on an urgent basis because the charges under the Income Tax Act against the taxpayer were to have come on for trial in the Provincial Court (Criminal Division) of the Judicial District of Halton on Monday, March 2, 1987, a matter of three days from the conclusion of argument. I, therefore, gave my decision on March 27 [sic], and, to save time, have deferred my reasons until now. It is my understanding that the trial of the charges came on on March 2, and the case has now been disposed of. Nevertheless, I am now releasing my reasons for my decision as promised, to be read as of February 27, 1987.

This application is brought under the Canadian Charter of Rights and Freedoms to challenge a seizure made under subsection 231(1) of the Income Tax Act for declaratory relief and for relief under section 24 of the Charter and for an order for prohibition with respect to a trial of the applicant George Hatzinicoloau now pending in the Provincial Court on charges laid under paragraph 139(1 )(a) of the Income Tax Act.

George Hatzinicoloau, the applicant taxpayer, carries on the business of an automobile service station at 2383 Dundas Highway West, Oakville, Ontario. This is the only location where Hatzinicoloau carries on business.

George Jenkins was at all material times Hatzinicoloau’s accountant and had offices at 143 Main Street East, Milton, Ontario.

Subsection 231(1) of the Income Tax Act provides as follows:

231. (1) Investigations.—Any person thereunto authorized by the Minister, for any purpose related to the administration or enforcement of this Act, may, at all reasonable times, enter into any premises or place where any business is carried on or any property is kept or anything is done in connection with any business or any books or records are or should be kept, and

(a) audit or examine the books and records and any account, voucher, letter, telegram or other document which relates or may relate to the information that is or should be in the books or records or the amount of tax payable under this Act,

(b) examine property described by an inventory or any property, process or matter an examination of which may, in his opinion, assist him in determining the accuracy of an inventory or in ascertaining the information that is or should be in the books or records or the amount of any tax payable under this Act,

(c) require the owner or manager of the property or business and any other person on the premises or place to give him all reasonable assistance with his audit or examination and to answer all proper questions relating to the audit or examination either orally or, if he so requires, in writing, on oath or by statutory declaration and, for that purpose, require the owner or manager to attend at the premises or place with him, and

(d) if, during the course of an audit or examination, it appears to him that there has been a violation of this Act or a regulation, seize and take away any of the documents, books, records, papers or things that may be required as evidence as to the violation of any provision of this Act or a regulation.

The following facts, some of which are disputed by the Minister, I take from the version of the applicant’s counsel in his factum, by way of background. In my disposition of this application, it is not necessary to make findings on the facts in dispute:

On or about November 2, 1983 one Donald Crawford (“Crawford”) a field auditor employed by Revenue Canada telephoned Hatzinicoloau and informed him that he intended to conduct an audit and requested Hatzinicoloau to produce all his business records.

Thereafter all Hatzinicoloau’s books and records were collected at Jenkins’ office where Crawford commenced his audit on November 7, 1983. Crawford’s audit of Hatzinicoloau’s books and records was conducted from November 7, 1983 to January 6, 1984 during which Crawford spent 16 days at Jenkins’ office.

On November 7, 1983 Crawford was provided with all of Hatzinicoloau’s books and records with the exception of certain bank deposit slips which were given to Crawford when requested in December, 1983. Throughout his audit Hatzinicoloau and Jenkins co-operated with Crawford, obtained information from third parties for Crawford relating to Hatzinicoloau’s affairs and met with Crawford to answer his questions regarding Hatzinicoloau’s affairs and regarding entries in his records.

As a field auditor Crawford was authorized under s. 231 (1 )(a), (b) and (c) of the Income Tax Act. Therefore Crawford was authorized to audit or examine books, examine property and to require that information be provided to him but was not authorized to effect seizures.

During the course of his audit Crawford came to believe that Hatzinicoloau had not reported all income received in the 1980, 1981 and 1982 fiscal periods. Crawford completed his audit as of December 14, 1983 at which time the matter was referred to Special Investigations Section and to the respondent Anthony Sebastian Alvernia (“Alvernia”) for review. Alvernia met with Crawford, reviewed Crawford’s working papers and instructed Crawford to continue and widen his audit to include the 1978 and 1979 fiscal years. This was Alvernia’s only involvement in the matter during December, 1983.

As a special investigator Alvernia was concerned with violations of the Income Tax Act and was authorized under section 231 (1 )(d) of that Act to effect seizures.

Crawford continued his audit after December 14, 1983. Crawford made his last review of Hatzinicoloau’s records on January 6, 1984. There were no meetings between the applicants and representatives of the Department of National Revenue between January 6, 1984 and February 22, 1984.

In the early part of February 1984 Crawford and Alvernia met to review the matter and Crawford’s working papers were reviewed. Crawford and Alvernia concluded that Hatzinicoloau was receiving income which was not being reported. Alvernia never examined Hatzinicoloau’s records prior to February 22, 1984 and in fact the first opportunity he had to examine the records was after they were in the possession of the Department of National Revenue, that is after February 22, 1984.

In the early part of February 1984 Alvernia instructed Crawford to arrange a meeting where the two of them could meet with Hatzinicoloau and Jenkins. Eventually a mutually convenient date of February 22, 1984 at Jenkins’ office was agreed upon. This date was arranged, at the latest, by February 15, 1984.

The meeting of February 22, 1984, was arranged by Alvernia so that he could determine if the taxpayer had any explanation for the income that he and Crawford had concluded was unreported.

The meeting of February 22, 1984, was held at Jenkins’ office from 10:00 a.m. to 12:30 p.m. During the course of the meeting Hatzinicoloau’s books and records were not examined. Those records were boxed and stored in a room adjacent to the meeting room.

At the beginning of the meeting Jenkins was questioned by Alvernia for a period of 30 to 40 minutes. As a result of Jenkins’ answers to questions and of Hatzinicoloau’s failure to contradict answers given Hatzinicoloau was informed that he was under investigation and was cautioned. Hatzinicoloau’s evidence is that Alvernia and Crawford requested and were voluntarily given his records to remove for examination while Alvernia’s evidence is that he informed Hatzinicoloau at approximately 10:40 a.m. that the records were going to be seized.

During the course of the meeting, at approximately 11:30 the records were brought in to Alvernia from the adjacent room. At 12:30 Alvernia left with all records.

Alvernia also testified that he and Crawford “grabbed” the records at that time. In any event, Alvernia simply "skimmed” the records and confirmed with Crawford that they were the same records Crawford had been examining. Alvernia made no examination of the records.

By letters dated March 2, 1984 Hatzinicoloau and Jenkins were informed that the records "obtained” from them on February 22, 1984, "are now held under seizure in the office of the Department of National Revenue . . .”

On June 18, 1984, the Minister of National Revenue obtained an Order under s. 231(2) of the Income Tax Act authorizing retention of the seized materials. That order was obtained ex parte on the evidence of the Affidavit of Alvernia sworn the 7th day of June, 1984.

At paragraph 12 and 13 of his Affidavit Alvernia attests to the basis upon which he had reasonable and probable grounds to believe that there was unreported income at the time he made his seizure which time is said to be on February 22, 1984, at Jenkins’ office.

Alvernia swears that his belief as of February 22, 1984, was based upon an "examination” of sales notebooks, general ledgers, general journal, sales journals, cheque journals, bank records, repair work orders, expense invoices, accountant’s working papers, duplicate deposit slips and school bus repair and maintenance records. In fact as of February 22, 1984 Alvernia had made no such examination of these materials and his Affidavit was therefore inaccurate and misleading.

Prior to the commencement of this application Hatzinicoloau through his solicitors repeatedly protested the legality of the seizure made and requested the return of his documents. The respondents have refused to return the documents and have taken the position they would simply re-seize in any event. The respondents have further refused to return any documents which are not relefvant to their inquiries.

Having been unable to secure the return of the illegally seized documents this application was commenced on November 26, 1985. By Order of the Honourable Mr. Justice O’Brien dated December 11, 1985, all materials seized were ordered to be sealed and stored with the Sheriff and all copies made were also ordered to be sealed. This order remains in force.

Charges under s. 239 of the Income Tax Act were brought against Hatzinicoloau In January 1986.

Constitutional Validity of paragraph 231(1)(d)

The seizure in this case took place after the Charter had come into force. Paragraph 231 (1)(d) was challenged on the basis that it conflicted with sec- tion 8 of the Charter, which provides that everyone has the right to be secure against unreasonable search or seizure. The provision has been upheld in two cases before this court. The first was New Garden Restaurant and Tavern Limited et al. v. M.N.R., [1983] C.T.C. 332; 83 D.T.C. 5338 (S.C.O.). In that case White, J. of this court, in a carefully reasoned judgment, held that the section did not conflict with the Charter and was valid. That decision and its result were followed by Callon, J. in this court in Roth et al. v. The Queen, [1984] C.T.C. 185, 84 D.T.C. 6181 (S.C.O.). There Callon, J. concluded at 189 (D.T.C. 6184):

The powers and procedures set forth in section 231 of the Act are necessary and appropriate for the due functioning of the taxation system in effect in Canada. They have not become unnecessary or inappropriate by virtue of the enactment of the Charter and they are demonstrably justified in a free and democratic society.

I am bound to observe that neither White, J. nor Callon, J., when they rendered these decisions, had the benefit of the reasons for judgment of the Supreme Court of Canada in Hunter v. Southam, [1985] 2 S.C.R. 145; 11 D.L.R. (4th) 641.

Subsequently, in R. v. Dzagic, [1985] 1 C.T.C. 346; 85 D.T.C. 5252 affirmed [1986] 2 C.T.C. 288; 55 O.R. (2d) 609, Smith, J. was again faced with an attack on the validity of paragraph 231 (1 )(d) as being inconsistent with the taxpayer's right to be secure against unreasonable search or seizure as guaranteed by section 8 of the Charter; he also had before him the issue that the admission into evidence of the seized documents would bring the administration of justice into disrepute as envisaged by subsection 24(2). The issue came before Smith, J. on a motion in Weekly Court on a case stated at the request of the Attorney General of Canada by the Provincial Court Judge, who was seized with the charges laid against the taxpayer. The questions set out in the case stated pursuant to section 762 of the Criminal Code for consideration by Smith, J. were as follows:

(1) Did I err in law in holding that section 231(1)(d) of the Income Tax Act, R.S.C. 1952, chapter 148 is inconsistent with the provisions of section 8 of the Canadian Charter of Rights and Freedoms and that it is therefore of no force and effect?

(2) Did l err in law in holding that the admission into evidence of the seized material at this time would constitute an infringement or denial of the Defendant's rights or freedoms as guaranteed by the Canadian Charter of Rights and Freedoms!

(3) Did I err in law in holding that having regard to all the circumstances, the admission of the evidence of the Defendant's records would bring the administration of justice into disrepute and that such evidence should therefore be excluded pursuant to the provisions of section 24(2) of the Canadian Charter of Rights and Freedoms!

(4) Did I err in law in holding that I could, under section 24(1) of the Canadian Charter of Rights and Freedoms, refuse to admit such evidence on the grounds that such refusal is a just and appropriate remedy in the circumstances?

Smith, J. answered the questions as follows:

In the result, the first question is answered in the negative. In so far as the second question is meant to address the question of retrospectivity, the answer is yes and the remaining two questions will also be answered in the affirmative.

On the facts of that case, the seizure antedated the coming into force of the Charter and an important issue was, therefore, whether the Charter was to be given retrospective effect. On an appeal by the Crown, the Court of Appeal held that the validity of the seizure of documents must be tested against the law as it stood at the time the seizure was made and that at that time paragraph 231 (1)(d) was in force and was not retrospectively affected by the subsequent coming into the force of the Charter.

Therefore, section 8 of the Charter could not be applied to a search or seizure which occurred before the Charter was in force; the seizure was not contrary to the Charter, and, although the trial took place after the Charter was in force, subsection 24(2) of the Charter could not be used to exclude evidence illegally obtained where such illegality did not involve the infringement or denial of an existing Charter right or freedom.

No issue of retrospectivity arises in the case at bar. Having read a careful analysis of Smith, J., who by then had the advantage of the reasons of the Supreme Court of Canada in Southam v. Hunter, I am of the opinion that the rationale of Smith, J. in the case of a post-Charter seizure, is persuasive, and I respectfully adopt it on the point concerning its conflict with the Charter. I accordingly told counsel in the course of argument that I intended to follow Smith, J. on that point, and that I would declare paragraph 231(1)(d) of no effect accordingly.

I add that subsequent to the decision in Dzagic, the Federal Court (Trial Division) also struck down paragraph 231 (1)(d) in F.K. Clayton Group Ltd. et al. v. M.N.R., [1986] 1 C.T.C. 470; 86 D.T.C. 6214. On the constitutional point with which we are here concerned, Walsh, J. concluded at 480 (D.T.C. 6222):

Counsel argues that sections 231 (1)(d) and 231(2) are part of a statutory scheme under the Income Tax Act arising from the admitted necessity of examining and verifying a taxpayer’s records.

While these arguments are persuasive particularly since the jurisprudence appears to still be somewhat unsettled on the issue, I find that on the basis of the majority decision of the Federal Court of Appeal in the Kruger and Vespoli cases (supra) with relation to subsection 231(4) and the comprehensive and sweeping statements made by the Supreme Court in the Southam case I must conclude that paragraph 231 (1)(d) and subsection 231(2) are in the same category as subsection 231(4) and are contrary to section 8 of the Charter.

I have no hesitation, therefore, in holding that the provision in question is in conflict with the Charter and must be held to be of no effect. I am informed by Mr. Flaherty that section 231 has subsequently been repealed and re-enacted.

As indicated in the outline of facts above, subsequent to the seizure, the Minister obtained a retention order from a judge pursuant to subsection 231(2) which provides:

(2) Return of documents, books, etc.—The Minister shall,

(a) within 120 days from the date of seizure of any documents, books, records, papers or things pursuant to paragraph (1)(d) or

(b) if within that time an application is made under this subsection that is, after the expiration of that time, rejected, then forthwith upon the disposition of the application,

return the documents, books, records, papers or things to the person from whom they were seized unless a judge of a superior court or county court, on application made by or on behalf of the Minister, supported by evidence on oath establishing that the Minister has reasonable and probable grounds to believe that there has been a violation of this Act or a regulation and that the seized documents, books, records, papers or things are or may be required as evidence in relation thereto, orders that they be retained by the Minister until they are pro- duced in any court proceedings, which order the judge is hereby empowered to give on ex parte application.

There is no dispute that once the seizure has been held to be unlawful as in conflict with the taxpayer's Charter rights, the retention order upon which it is founded is also void and of no effect. There is, therefore, no authority by which the Minister can retain possession of the document except by a further order of the court.

Return of Documents

This application initially came before O’Brien, J. as motions judge in Weekly Court on December 11, 1985, who adjourned the application to February 18, 1986, when it came before me. O’Brien, J. also ordered the respondents to package and seal all the documents and materials seized pending disposition of the application, the packaged and sealed documents and materials seized to be stored with the Sheriff of the Judicial District of York, pending further order of the court; the applicants could have access to the documents and materials, and were given leave to copy them without making any alterations thereto, upon notice to and in the presence of officials from the Department of National Revenue; the respondents were also ordered to package and seal all copies of any documents or materials seized and retain them sealed pending further order of the court.

By way of further relief the applicants now ask that this court order the seized documents and materials and any copies made by departmental officials to be forthwith returned to them. Mr. Flaherty, on behalf of the Minister, submits that the documents ought not to be returned because they are required for the purposes of the prosecution in the trial which is to commence on Monday next.

First, I deal with the submission made by Mr. Garbig that the applicants are entitled, as of right, to a return of the documents by reason of subsection 231(2), this because there is no valid retention order and the statute is mandatory that, the 120 days, having expired, the documents be returned. Strictly speaking, that is so. It is a factor which simply compounds the unlawful nature of the retention of the documents by the Minister, but within the circumstances of this case, in my opinion, it does not conclude the matter.

The applicants seek relief under section 24 of the Charter which provides as follows:

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

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

The application made under this section asks for the following relief:

(a) a declaration that paragraph 231 (1)(d) of the Income Tax Act is of no force or effect;

(b) an order requiring the respondents to return the documents and other materials to the applicants together with copies and notes thereof made by the officials;

(c) a declaration that the seizure and continuing retention of the materials are illegal;

(d) an order quashing the retention order and;

(e) an order that the evidence obtained by the respondents be excluded from admission in any subsequent proceedings (this latter being contemplated by subsection 24(2) of the Charter).

I think it is now clearly established that under subsection 24(1) of the Charter I have discretion to order return of the seized documents and materials or to refuse to so order. This emerges from the decision of the Court of Appeal in Re Chapman and The Queen (1984), 12 C.C.C. (3d) 1; 46 O.R. (2d) 65, and the subsequent decision of this Court in Re Mandel et al v. The Queen (1986), 25 C.C.C. (3d) 461 (S.C.O.) per Reid, J.; see also the rationale of Walsh, J. in F.K. Clayton Group Ltd. et al. v. M.N.R., supra, and the authorities there cited.

The jurisprudence leaves the matter thus: mere illegality of the seizure is not an automatic ground for ordering return of the property seized to the owner; that is a matter of the exercise of the court's discretion, which, of course, is to be exercised judicially.

Reid, J. in the Mandel case set out the following criteria, which were extracted from the decision in Dobney Foundry Ltd. et al. v. A.G. Canada, [1985] 3 W.W.R. 626 (B.C.C.A.), and which was also cited in F.K. Clayton Group Ltd.:

(1) A reviewing court, on quashing a search warrant, has power to order return of any goods seized under the warrant.

(2) If the Crown shows that the things seized are required to be retained for the purposes of a prosecution, either under a charge already laid or one intended to be laid in respect of a specified chargeable offence, the court may refuse to order the return.

(3) No particular formality is required in order for the Crown to show the requisite element of necessity to retain the things.

(4) The power to order return of goods is incidental to the power to quash but may also arise under subsection 24(1) of the Charter if the search and seizure was unreasonable as well as illegal.

(5) The conduct of the prosecuting authorities in relation to the search and seizure is a factor to be considered in deciding whether to exercise the discretion.

(6) Other factors to be considered in exercising the discretion may be the seriousness of the alleged offence, the degree of potential cogency of the things in proving the charge, the nature of the defect in the warrant and the potential prejudice to the owner from being kept out of possession.

In approaching the circumstances of a particular case it is obvious that these factors will not all be given equal weight and, indeed, other factors may emerge.

In the present case it seems to me that the following are important considerations going to the exercise of my discretion:

(a) charges have been laid against the taxpayer under paragraph 139(1)(a) [sic] of the Income Tax Act based upon an alleged failure to disclose income. These charges are not asserted to be frivolous and they are to be tried in the Provincial Court (Criminal Division) in a matter of a few days; the Crown intends to rely on the seized documents to support the charges, although it may be that not all of the documents will be relevant;

(b) the conduct of the investigation; a considerable amount of time was spent in argument, particularly by Mr. Garbig, in referring to the affidavits filed and cross-examinations thereon in an effort to persuade the court that the conduct of the Minister's investigating staff was irregular or unreasonable as it emerges in the statement of facts set out above, which is, as I have said, in part, disputed; I can summarize by saying that the taxpayer’s complaint is that a wholesale seizure of all documents and records in the boxes in Mr. Jenkins’ office was made with no attempt by the special investigator, Mr. Alvernia, to examine and make a selection among them; that Alvernia did not examine the documents until after the seizure; that Alvernia, in applying for the retention order, made misleading statements to the judge; I make no finding as to these allegations.

(c) the nature of the defect in the seizure; clearly the authority is absent, as the statutory power is of no effect. The seizure was illegal. However, at the time it was made, paragraph 231 (1)(d) had not been struck down by any court and had, to the contrary, been declared valid by this Court in the two decisions of White, J. and Callon, J., to which I have referred; the Supreme Court of Canada had not as yet handed down its judgment in Hunter v. Southam. The Charter, however, was in effect and the section was of no force or effect in law — it required only a decision of the courts to declare that invalidity. However, in the light of the law, as then expounded, the seizure must be regarded as reasonable, being in relation to a statute which, up to that point of time, had been declared valid. In this respect I observe, as did Ewaschuk, J. in R. v. Rowbotham, unreported, November 12, 1984 (S.C.O.), that while a seizure that offends against the taxpayer's Charter rights is per se unreasonable and is void, it may, for purposes of section 24 of the Charter, be reasonable in the sense that it was carried out properly in accordance with the statutory authorization, that at the time the seizure was made had not been struck down by the courts. That is the case here, where, at the time of seizure of the taxpayer's documents, paragraph 231 (1)(d) had as counsel, I think, are agreed not been struck down by any court, and to the contrary had been upheld as valid by this court per White, J. and Callon, J.

In deciding how to exercise the court's discretion in these circumstances, that is, to order the documents returned to the applicants or to refuse to so order, the court should bear in mind the two provisions of section 24. First, in subsection 1, the application is to obtain such remedy as the court considers

appropriate and just in the circumstances; and, second, the possibility that the seized documents may be excluded as inadmissible under subsection 2, a matter that, in my opinion, is ordinarily for the trial judge to decide. Notwithstanding that, in F.K. Clayton Group Ltd. the Federal Court refused to return the documents.

I have, however, to agree with the statement of Joyal, J. in the Federal Court of Canada in the earlier decision of Lagiorgia v. The Queen, [1985] 2 C.T.C. 25: 85 D.T.C. 5554; 18 C.R.R. 348. That case involved the validity of subsection (4) of section 231, which provided for the issue of a search warrant to the Minister by a judge; this subsection has also been struck down as in conflict with the Charter rights of the citizen. Having reached the conclusion that the subsection is void, in face of section 8 of the Charter, he then considered whether or not the seized materials ought to be returned to the taxpayer. Recognizing that the authorities have provided in the preCharter period that unlawfully seized evidence may nevertheless be permitted by the court to remain in the hands of the Crown for purposes of prosecution as a matter of discretion, he recognized the dilemma facing the court in exercising its discretion in face of a breach of the taxpayer's Charter rights. At 33 (D.T.C. 5559; C.R.R. 359) he said:

All this reasoning, however, relates only indirectly to the constitutional aspect of the dispute. Subsection 231(4) of the Income Tax Act is declared null and void and unconstitutional because it is in itself unreasonable and contrary to the right granted everyone under section 8 of the Charter. One cannot easily protect the rights of citizens against unreasonable seizure if, at the same time, the authorities are allowed to benefit from such seizures. One cannot give something and at the same time take it away.

While concurring in the reasons of my brothers Walsh and Denault, JJ., I would thus like to emphasize the importance a court should attach to the impact of our new Charter and the legality of any acts by the public authorities. In the case at bar, the seizure was illegal. It is declared unreasonable owing to the statutory provision on which it was based. The proceedings instituted by the public authorities are illegal. Faced with such illegality, a court must impose a sanction. I cannot conceive of a more equitable sanction that is more in keeping with the thrust of section 8 and the relief provided in subsection 24(1) than a requirement that the documents seized be returned to their owner. The public authorities can always use other legitimate means to carry out their statutory responsibilities and enforce the law.

Joyal, J. concluded by declaring the searches and seizures to be illegal and contrary to section 8 of the Charter and ordered the documents seized to be returned to the taxpayer.

Like Joyal, J., I have difficulty in reconciling the principle that a seizure that infringes the taxpayer's Charter rights is invalid and illegal, and per se unreasonable, with the secondary principle, that, nevertheless, on the notion that if the officers acted reasonably in all the circumstances of the seizure, the evidence so obtained may be retained by the Crown for use in a forthcoming prosecution. The answer to that, in my opinion, lies in the Charter itself. It is part of our common law heritage that evidence obtained unlawfully is, or may be, admissible if it has probative value. That is recognized in Canada (unlike the law of the United States) by subsection 24(2) of the Charter, which prescribes, for such a case, that the court shall exclude the evidence if it established that in all the circumstances the admission of it in the proceedings would bring the administration of justice into disrepute.

This becomes, therefore, ordinarily a matter for a ruling on evidence tendered at trial, and the trial judge will, in all the circumstances of the trial, dispose of the question of admissibility in accordance with that criterion, which is one related to the public interest. In so doing, it would be proper for him to consider the factors outlined in the decisions in Dobney and Mandel. In this respect, the Charter itself envisages that the inadmissibility of the unlawfully seized evidence will be part and parcel of the remedy provided in subsection 24(1). No doubt in a proper case such as one in which there has been flagrant abuse, such flagrant abuse that it offends the conscience of the court, the motions judge may take the matter away from the trial judge. That, surely, must be the exceptional case.

I digress to observe that there is, inherent in this exercise, the problem of avoiding interfering with the trial judge, who will ultimately be called upon to rule on inadmissibility of the evidence under subsection 24(2) of the Charter, if the motions judge attempts to apply the criteria relating to the “reasonableness” of the seizure; those are matters which the trial judge should be left to deal with, unhampered by observations or findings of the motions judge, where he intends to allow the illegally retained materials to be retained by the Crown for the prosecution.

What is involved in the exercise, however, is to balance the invasion of the privacy of the taxpayer against the need of the Crown to use the documents in an imminent prosecution; to return the documents would delay the proceedings and deprive the trial judge of his function to decide on their admissibility; however, as has been pointed out by Mr. Flaherty, it would be open to me to stay an order to return the documents to allow the Crown time to take new proceedings for the purpose of getting a valid Warrant.

If I may make a general observation, it is that, in my opinion, the court needs a compelling reason to exercise its discretion against the taxpayer whose Charter rights are infringed; prima facie the documents ought to be returned. But the court also has to recognize by way of putting the matter in balance, subsection 24(2) of the Charter contemplates that illegally obtained evidence may, nevertheless, be admissible and leave it to the court to determine if it should be admitted at trial.

In the case at bar, if I order the property be returned to the applicant, which is prima facie, the remedy to which he is entitled, I am asked by Mr. Flaherty to allow time to the Minister to obtain a proper warrant and seize the documents lawfully. That, in my opinion, is reasonable. If the evidence has probative value in relation to the charges, which are about to be tried, the quality of that evidence is unchanged by returning it to the owner, and the Minister may, thereafter, have access to it by any lawful means.

If I refuse the application to return the documents, the matter will be dealt with by the trial judge, who will be required to embark upon an inquiry at the appropriate stage of the trial to determine the admissibility of the evidence tendered by the Crown. Counsel for the Minister informs me that at the outset of trial some 44 witnesses are to be called, whose evidence will not touch upon the seized documents; that is expected to take a number of days. Moreover, the Crown, having been denied access to the documents which have been in the custody of the local Sheriff since the order of O’Brien, J., made December 11, 1985, will itself require time to prepare with respect to their use. It is not imperative that the Crown have access to the documents by Monday next when the trial is to commence.

These are factors that I take into account in deciding how to exercise my discretion. However, I feel bound to say that, in my opinion, the prima facie right of the taxpayer to a return of his documents where the seizure has violated his Charter rights ought not to be denied except for very compelling reasons. A mere lending of aid to the Crown in prosecuting its case is by itself not sufficient, no matter how imminent the trial. I find no such compelling circumstances in this case and the Crown is apparently ready to proceed without the documents at the outset. To return the documents appears to me to be more consistent withe the broad principles expounded by the Supreme Court of Canada in Hunter v. Southam, and also in R. v. Therens, [1985] 1 S.C.R. 613 per Estey, J. at 622; 18 D.L.R. (4th) 655 at 663.

An order will therefore issue to the Sheriff to return the documents to the applicants; the order will, however, be stayed for 14 days to permit the Crown to apply for a valid warrant to obtain them, or to take such other lawful steps as the Crown may be advised.

Prohibition

This trial was fixed some time ago to commence on Monday, March 2 — three days hence. On February 3, counsel for the accused taxpayer applied for an adjournment pending release of the seized documents, so that he might prepare his full answer and defence. The adjournment was refused.

Mr. Garbig asks that I make an order prohibiting the trial judge from proceeding with the trial. The principal ground is that the refusal of the adjournment deprives the accused of his ability to make his full answer and defence.

I have reviewed the transcript of the discussion between counsel and the judge who will conduct the trial, and it appears that the judge was satisfied that the initial 44 witnesses to be called by the Crown would not be giving evidence based upon the seized documents, and if at a later stage the defence felt it important to cross-examine them with the assistance of the documents, a proper opportunity could be made to recall the witnesses for that purpose. While that seems to me to present complications, that is a matter for the trial judge's management of the trial. I also observe that since the order of O’Brien, J. in early December 1985, the accused has had access to the documents with leave to make copies thereof, and, in my opinion, it appears to me to be unrealistic to say that once he knew the charges, he could not, so far as the documents are concerned, have commenced his preparation.

It is my opinion that the trial judge ought to be left to manage this trial in the light of the situation presented to him next Monday. It will be necessary for him at that time to hear the problems of the defence in preparing its full answer and defence; the Crown will also need time to obtain and examine the documents if they are to be used. In other words, the trial judge will at that time decide how the trial should proceed. In the circumstances this court is not justified in prohibiting the trial judge from proceeding with the trial, and the motion for an order to do so is therefore dismissed.

Having communicated my decision to counsel on February 27, I then endorsed the record as follows:

Order to issue directing the Sheriff to deliver the seized documents to applicants, as well as the copies of the documents described in para. 5 of the Order of O'Brien J. This order is stayed for 14 days to permit the Minister to take such action as he may be advised with respect to the documents. Motion to prohibit trial judge from proceeding with trial is dismissed.

Costs of this application (including the motion for prohibition) and of the proceeding before O'Brien J., to be paid by Minister to Applicants (partyparty scale). This includes the charges of the Sheriff which are to be assessed.

Order to issue as asked in paras. (a), (c) and (d), of the Application. As to para. (e), I am not deciding this point — no order.

Order accordingly.