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.