Print Three Inc, Laserdata Technology Inc and Jacques Benquesus v. Her Majesty the Queen, [1985] 1 CTC 261

Potts, J [ORALLY]:—This is an application for an order quashing three search warrants and requiring the return of all documents and materials of what soever kind seized pursuant to the warrants, all copies made of the documents and materials and for delivery up to the Court of any notes of, summaries of or any record whatever made of the documents and material or any of them and an injunction restraining the respondent, its servants, agents or anyone acting on her behalf from in any way examining or copying the documents and materials seized pursuant to the said warrants pending the final disposition of this proceeding.

The first issue is the contention that the provisions of section 443 of the Criminal Code, RSC 1970, c-39, as amended are not available for the purpose of authorizing a warrant to search in respect of alleged offences committed pursuant to the provisions of the Income Tax Act, SC 1970-71-72, c. 63, as amended, because the latter statute provides its own code in respect of warrants to search for offences under that statute (subsection 231(4)). The authority for that proposition is subsection 27(2) of the Interpretation Act, RSC 1970, c I-23 which reads:

(2) All the provisions of the Criminal Code relating to indictable offences apply to indictable offences created by an enactment, and all the provisions of the Criminal Code relating to summary conviction offences apply to all other offences created by an enactment, except to the extent that the enactment otherwise provides.

In MNR et al v Kruger Inc et al [1984] CTC 506; 84 DTC 6478 (FCA) Pratte, J of the Federal Court of Appeal stated at 512 (6483 DTC):

In my view, that subsection [231(4)] violates section 8 of the Constitution Act, 1982 in that it contravenes the right of the taxpayer “to be secure against unreasonable search or seizure.”

In the case of Vespoli et al v The Queen et al, [1984] CTC 519; 84 DTC 6489 (FCA), Pratte, J again referred to the issue where he stated at 521 (6490 DTC):

The first issue raised by this appeal, therefore, is whether the seizures were validly made. That question must, in my view, be answered in the appellants’ favour. In my reasons for judgment in the case of The Minister of National Revenue v Kruger Inc (File No Al 153-83), which reasons will be filed at the same time as these, I express the view that subsection 231(4) of the Income Tax Act contravenes section 8 of the Constitution Act, 1982 in that it empowers the Minister, when he has reasons to believe that a taxpayer committed an offence under the Income Tax Act, to authorize a search for documents and things that may afford evidence not only of that offence but, also, of the violation of any other provision of the Income Tax Act. I need not repeat here what I say in those reasons.

Counsel for the applicant argued that subsection 231(4) does not contravene the Charter in so far as it gives the Minister, when he has valid grounds for believing that offences have been committed by a taxpayer, the power to authorize a search and seizure in respect of that offence. Indeed Justice Pratte in the Kruger case said at 512 (6483 DTC):

It is not necessary, in this case, to lay down the various conditions that must be met in order for a search or seizure to be reasonable. It is common ground that subsection 231(4) does not contravene the Charter in so far as it gives the Minister, when he has valid grounds for believing that an offence has been commited by a taxpayer, the power to authorize a search and seizure in respect of that offence. What is challenged is the constitutionality of that subsection in so far as it confers on the Minister, when he has grounds to believe that one particular offence has been committed, the power to authorize a general search and seizure relating to the violation of any of the provisions of the Income Tax Act or the Regulations.

I would be ready to concede that, in certain circumstances, the fact that a taxpayer has committed a serious offence under the Income Tax Act may justify the inference that he probably also committed other offences under the Act. However, I cannot accept the general proposition that the mere fact that a taxpayer has, at a particular time, committed an offence under the Income Tax Act or the Regulations, however trifling that offence, affords sufficient justification for the general power of search and seizure conferred by subsection 231(4). In my view, that subsection violates section 8 of the Constitution Act, 1982 in that it contravenes the right of the taxpayer “to be secure against unreasonable search or seizure.”

With great respect to the learned judge, in my view, his conclusions contradict his reasons and that he ought to have found that subsection 231(4) violates section 8 of the Constitution Act, 1982 in so far as it confers on the Minister, when he has grounds to believe that one particular offence has been committed, the power to authorize a general search and seizure relating to the violation of any of the provisions of the Income Tax Act or of the Regulations.

I am reinforced in this conclusion by reference to Regina v Rao (1984), 12 CCC (3d) 97, (Ont CA) where on 125 Martin, J A, in dealing with paragraph 10( l)(a) of the Narcotic Control Act stated:

Section 10(1)(a) does not, on its face, necessarily clash with s. 8 of the Charter although in some circumstances a warrantless search authorized by that subsection may, in fact, infringe the constitutional requirement of reasonableness secured by s 8 of the Charter, depending upon the circumstances surrounding the particular search. The statute is inoperative to the extent that it authorizes an unreasonable search. Section 52(1) of the Constitution Act, 1982 reads:

52(1) The Constitution of Canada is the supreme law of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency of no force or effect. (Emphasis added.)

The whole basis of the decision of Pratte, J in the Kruger case was that he found those provisions of subsection 231(4) which authorized a general search and seizure as being unreasonable. As he indicated in his earlier reasoning, it would have been far more appropriate to declare that the provisions of subsection 231(4) contravened section 8 of the Constitution Act, 1982 only to the extent that they were unreasonable.

Accordingly, I find subsection 231(4) does not violate section 8 of the Constitution Act, 1982 in so far as it gives the Minister, when he has valid grounds for believing that an offence has been committed by a taxpayer, the power to authorize a search and seizure in respect of that offence.

Accordingly, an order will go as asked in paragraph 1 of the applicant’s memorandum of fact and law, viz.

(a) An order quashing the three search warrants issued herein;

(b) An order requiring the return

(i) of all documents and material of whatsoever kind seized pursuant to the warrants;

(ii) of all copies made of any of the documents and material, and

(iii) for delivery up to the Court of any notes of, summaries of or any

record whatever made of the said documents and material or any of them;

(c) An injunction restraining the respondent, its servants, agents or anyone acting on its behalf from in any way examining or copying the documents and material seized pursuant to the said warrants pending the final disposition of this proceeding.

The applicants are entitled to the costs of this application. Pending any appeal of this decision and the final judicial disposition of the matter, all documents and material seized shall be delivered into the custody of the Administrator of the Supreme Court of Ontario, Osgoode Hall, Toronto, Ontario unless counsel for both parties agree to a more convenient disposal.

Application granted.