R. v. Vinkle, [1999] 2 CTC 212

McEwan J.:

Ronald Stewart Vinkle was charged on two different informations with 11 counts of failing to provide information pursuant to s. 231.2(1) (a) of the Income Tax Act. The first information included five counts pertaining to the taxation years 1990 to 1993, and the second included six counts pertaining to the taxation years 1987 to 1994. Copies are attached to these reasons as Schedules I and 2.

Both informations were originally set to be tried together. At one point at the request of the defence, the Crown agreed to an adjournment. Then, before the date that had originally been set, the defence advised that it would be able to proceed. By that time, however, the Crown, having assumed that the matter would be put over, was only able to proceed on the first information. By agreement between counsel, the informations were tried separately, before different Provincial Court Judges.

The trial on the first information proceeded on affidavit evidence, pursuant to S. 244 of the Income Tax Act. The Provincial Court Judge found on the authority of N.M. Skalbania Ltd. v. R. (1989), 89 D.T.C. 5495 (B.C. Co. Ct.) that proof of “a serious and ongoing investigation” was a prerequisite to charges under Section 231.2(1). Mr. Vinkle was acquitted. The Crown appeals that ruling to this court.

The trial on the second information proceeded rather differently. It started before Provincial Court Judge Enderton, who retired before it could be completed. Again, by agreement between counsel, another Provincial Court Judge finished the matter on the basis of a transcript of the earlier part of the proceeding. Between the beginning of the trial and its resumption before the new Judge, the Crown produced documents that the defence had not seen before. Two were styled “Memorandum of Understanding”, and one was called “Working Arrangements”. These set out a protocol for co-operation between the R.C.M.P. and Revenue Canada to combat “Organized Crime”. They are attached to these reasons as Schedules 3, 4 and 5.

The documents gave rise to a different set of arguments at the second trial. The Crown did not proceed on affidavits as it had in the first, but called evidence. The nature of the “investigation” that had been conducted was, understandably, very much in issue. At the close of the Crown’s case, the defence applied for a Judicial Stay of Proceedings or an order for exclusion of evidence on the basis of breaches of sections 7, 8 and 11 of the Charter, and on the general grounds of abuse of process. In an extensive written decision, Provincial Court Judge Fabbro denied the applications and found Mr. Vinkle guilty of the offences charged. In doing so, however, he was moved to fashion a Charter remedy directing that the information generated in the investigation not be used for the purpose of bringing any future criminal prosecution. Mr. Vinkle has appealed this decision.

Il

This court’s jurisdiction on a summary conviction appeal is found, by way of sections 813 and 822(1), in s. 686(1) to 686(4) of the Criminal Code:

686. (1) On the hearing of an appeal against a conviction ... the court of appeal

(a) may allow the appeal where it is of the opinion that

(i) the verdict should be set aside on the ground that it is unreasonable or cannot be supported by the evidence,

(ii) the judgment of the trial court should be set aside on the ground of a wrong decision on a question of law, or

(iii) on any ground there was a miscarriage of justice;

(b) may dismiss the appeal where

(i) the court is of the opinion that the appellant, although he was not properly convicted on a count or part of the indictment, was properly convicted on another count or part of the indictment,

(ii) the appea 1 is not decided in favour of the appellant on any ground mentioned in paragraph (a), or

(iii) notwithstanding that the court is of the opinion that on any ground mentioned in subparagraph (a)(ii) the appeal might be decided in favour of the appellant, it is of the opinion that no substantial wrong or miscarriage of justice has occurred, or

(iv) notwithstanding any procedural irregularity at trial, the trial court had jurisdiction over the class of offence of which the appellant was convicted and the court of appeal is of the opinion that the appellant suffered no prejudice thereby;

(2) Where a court of appeal allows an appeal under paragraph (1)(a), it shall quash the conviction and

(a) direct a judgment or verdict of acquittal to be entered; or

(b) order a new trial.

(3) Where a court of appeal dismisses an appeal under subparagraph ( 1 )(b)(i), it may substitute the verdict that in its opinion should have been found and

(a) affirm the sentence passed by the trial court; or

(b) impose a sentence that is warranted in law or remit the matter to the trial court and direct the trial court to impose a sentence that is warranted in law.

(4) Where an appeal is from an acquittal the court of appeal may

(a) dismiss the appeal; or

(b) allow the appeal, set aside the verdict and

(i) order a new trial, or

(ii) except where the verdict is that of a court composed of a judge and jury, enter a verdict of guilty with respect to the offence of which, in its opinion, the accused should have been found guilty but for the error in law, and pass a sentence that is warranted in law, or remit the matter to the trial court and direct the trial court to impose a sentence that is warranted in law.

The test to be applied respecting questions of fact was expressed in RV. Manj (May 15, 1995), Doc. Victoria VI02077 (B.C. C.A.) by Madam Justice Ryan:

It is ... not the function of the summary conviction appeal judge to re-try the case. His-or-her function, where the appeal is based on a question of fact, is to determine whether the conclusion of the trial judge was unreasonable. The summary conviction appeal judge must to some extent re-weigh the evidence, but in the end the question is whether the evidence is reasonably capable of supporting the trial judge’s conclusion.

This court can, of course, reverse the court below on the basis of an error of law.

III

I turn now to the appeal of the ruling on the first information. On January 25, 1996 the Honourable Judge Sperry considered three different motions brought at the close of the Crown’s case. That case had proceeded on an agreed statement of evidence, and on an affidavit, respectively demonstrating service of demands under section 231.2(1) (a) of the Income Tax Act, and the fact that there had been no response by the date stipulated in the notice. Section 231.2(1) reads as follows:

Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as is stipulated in the notice,

(a) any information or additional information, including a return of income or a supplementary return; or

(b) any document.

Two of the objections were dealt with shortly by the trial Judge. The first was an argument that the requests were invalid because they had not been made in both official languages. Counsel for Mr. Vinkle cited sections 77 and 78 of the Official Languages Act and s. 16 of the Charter in support of this proposition. While agreeing that he would have had no hesitation in dismissing the charges had he the power to do so, Judge Sperry ruled that the Official Languages Act vested jurisdiction exclusively in the Federal Court of Canada.

The second objection was that the Crown had failed to prove that Mr. Vinkle was a “resident” of Canada. Judge Sperry ruled that on a plain reading of the word “person” in s. 231.2(1) neither residency nor tax liability is a prerequisite to a demand. He dismissed the argument.

Although neither of these objections was re-asserted in this court by way of cross-appeal, counsel for Mr. Vinkle argued that R. v. Malien (1992), 70 C.C.C. (3d) 561 (B.C. C.A.) is authority that such matters may be always be revisited on appeal. From that case he cited Chief Justice McEachern:

It has been held over and over again that an appeal is from the judgment or order made in the court below, and not from the reasons for judgment. The principle is well expressed by Laskin C.J.C. in R. v. Gee (1982), 68 C.C.C. (2d) 516 at p. 519, 139 D.L.R. (3d) 587, [1982], 2 S.C.R. 286:

It is a well-established principle of our criminal law that a respondent to an appeal here is entitled to hold a judgment in his favour on any grounds available to that respondent which were raised below and are accepted by this court, notwithstanding that those grounds were not supported below and the appellant has based the appeal here on completely different grounds.

On the Official Languages Act issue, nothing was put before me other than section 77 and 78 of the Official Languages Act and section 1 [6] of the Charter, as if the argument were self-evident. I think Judge Sperry was correct in finding that section 77 of the Official Languages Act creates a rem- edy exclusively administered by the Federal Court. I am not sure it would constitute the only remedy if I were satisfied that as a matter of law the Crown must notify every person charged with an offence in both official languages. However, I see nothing in the language of the Charter or the Official Languages Act that mandates such notice. In the absence of any substantive issue - Mr. Vinkle does not suggest that he does not understand English, and has not requested to be tried in French - I would hesitate to rule on this basis without clear authority. None has been shown to me. In short, while I am not convinced on the basis on which Judge Sperry ruled, I find that conclusion was correct.

On the issue respecting the interpretation of “person” in Section 231.2(1), I think Judge Sperry was correct and I would not disturb his ruling.

Judge Sperry’s disposition of Mr. Vinkle’s third objection gives rise to the Crown appeal. He found that the Crown was obliged to prove a “genuine and serious enquiry” as an element of its case. He found it had not done so and dismissed the charges.

In coming to this conclusion, Judge Sperry considered what he perceived to be two lines of cases. The pertinent part of his analysis is as follows:

Counsel for Mr. Vinkle submits that the facts at bar are on all fours with the facts in R. v. Skalbania. found in 89 D.T.C. 5495, an appeal from a Provincial Court Judgment before County Court Judge Van Der Hoop, delivered in April 7, 1989.

The Crown says that the facts are on all fours with those in R. v. Coordinated Realty Projects Ltd., a decision of Mr. Justice Dohm on appeal from a Provincial Court judge with reasons delivered on August 15, 1989.

Counsel for both Crown and accused are correct in that for all legal purposes both cases are on all fours with the case at bar.

While Coordinated Realty Projects Ltd. is the more recent case by four months, it appears that despite the fact that the same counsel acted for the Crown in both cases, Skalbania was not put before Mr. Justice Dohm. Justice Dohm relied on R. v. Dakus, an Alberta Queen’s Bench decision delivered in July of 1988.

Again, despite the fact that the same Crown argued both Skalbania and Coordinated Realty Projects Ltd., it appears that Dakus was not put before Judge Van Der Hoop. In Dakus and in Coordinated Realty Projects Ltd., the appeal judge found that the Crown need not show a “genuine and serious inquiry regarding information requested relating to the tax liability of a specific person.” In Skalbania, Judge Van Der Hoop says in essence that before the Crown can say Revenue Canada is involved in a “genuine and serious inquiry” (in the words of Madam Justice Wilson in the Richardson case) the prerequisite to a charge under Section 232.2(1) (a), the Crown must show an ongoing investigation, not just a failure to file a return when it was due an owing, and that a Section 150(2) demand is and should be made available with the attendant legal consequences for failure to comply therewith.

1 wish Justice Dohm had had the chance to seek Judge Van Der Hoop’s reasoning. It is, I think, compelling. I, at any rate, am compelled and find that the Crown have not met the threshold test of showing a genuine and serious inquiry. They could and should, all other things being equal, have demanded a return and received it or charged for failure to do that before going to Section 232.2(1) (a).

In the Skalbania decision Mr. Justice Van Der Hoop was dealing primarily with the distinction between section 150(2) of the Income Tax Act and section 231.2(1 )(a). Section 150(2) gives the Minister of National Revenue the authority to demand a tax return. The powers under s. 231.2(1) are more searching and the penalties more severe. It has long been held that section 231.2(1) and its predecessors are not a proper way to achieve the routine objective for which section 150(2) is designed, but that it is

only available to the Minister to obtain information relevant to the tax liability of some specific person or persons if the tax lability of such person or persons is the subject of a genuine and serious enquiry.

(see James Richardson & Sons Ltd. v. Minister of National Revenue (1984), 9 D.L.R. (4th) 1 (S.C.C.) @ p. 9, per Madam Justice Wilson).

The facts actually before Mr. Justice Van Der Hoop in Skalbania are of some significance:

At trial, in the court below, the Crown admitted as a fact that the returns of the company for the relevant years have indicated that there is no tax payable due and owing by that company for those years, and that the demands that were made of the company by the tax department were made not as a result of any ongoing investigation into the affairs of Mr. Skalbania or the corporate defendant, but merely because no return in question had been file when it was due and owing. [Emphasis added]

Judge Van Der Hoop concluded, in light of this admission, that the accused had been charged under the wrong section.

In À. v. Co-ordinated Realty Projects Ltd. (January 1, 1989), Doc. Vancouver CC890934 (B.C. S.C.), Mr. Justice Dohm adopted the reasoning in R. v. Dakus (1988), 87 A.R. 374 (Alta. Q.B.), a decision of Mr. Justice Girgulis of the Alberta Court of Queen’s Bench, the essence of which is found in the following passage:

If the tax liability of an accused person is not the object of a genuine and serious inquiry by the Minister, then it cannot be said that the Minister is acting for a purpose relating to the administration or enforcement of the act when he asks that accused for information relevant to that accused’s tax liability. But that does not mean to say that the Crown must establish as an essential element of its case affirmative evidence of genuine and serious inquiry regarding the information requested relating to the tax liability of a specific person. If evidence raises an issue as to whether or not the inquiry is a genuine or serious one, then the Crown must satisfy the trier of fact, beyond a reasonable doubt, that the purpose of the Requirement or demand is not a subterfuge or a frivolous one, but is a proper demand for information relating to tax liability of the accused, that is, it is a genuine and serious inquiry. [Emphasis added]

Having reviewed both cases, I do not think they are at odds. In Skalbania, Judge Van Der Hoop was not required to decide whether the Crown had established a prima facie case, he was dealing with evidence, in the form of admissions, that section 231.2(1) had been used when there was no ongoing and serious enquiry. Properly understood, I think the case is nothing more than a particular example of the principles asserted in Dakus . It does not stand for the proposition that proof of a genuine or serious or ongoing enquiry is an essential element of a prima facie case.

I find, as did Mr. Justice Dohm, that the reasoning in Dakus is persuasive, and that the trial judge erred in law in holding that there was an onus on the Crown to prove a “genuine and serious enquiry” as an element of its case. Accordingly, the acquittal is set aside. Because it is evident on the record that further argument on other issues had been reserved, and there may now be a matter of new evidence based on the subsequent disclosure of the documents appended as Schedules 3, 4, and 5, I remit the case to the Provincial Court for a new trial.

IV

Respecting the appeal on the second information (Schedule 2), the roles are reversed. Mr. Vinkle seeks to set aside his conviction by His Honour Judge Fabbro on six counts under s. 231.2(1). The errors alleged include:

a) That the conviction is against the weight of the evidence;

b) That the conviction is based on erroneous conclusions of fact:

C) That the conviction is based on errors of law:

d) That the learned trial court judge erred in failing to find that the Ac- cused’s rights under the Charter of Rights and Freedoms had been violated by the investigation and that he was not bound to assist the investigation;

e) That the learned trial court judge erred in determining that the Crown had not breached its duty of disclosure to the defence;

f) That the learned trial court judge erred in failing to find that the Crown was engaged in an investigation of the accused for the purposes of determining whether he had committed an offence;

g) That the learned trial court judge erred in failing to provide the Accused with the Right to Silence, at the investigatory stage, pursuant to the principles of Regina v. Hebert, and Section 7 of the Charter of Rights and Freedoms:

h) That the learned trial court judge erred in failing to find that the proceedings as a whole amounted to an abuse of process, in view of the history of this entire matter;

1) Such other grounds as Counsel may advise.

[From the Notice of Appeal]

In argument, on appeal, counsel for Mr. Vinkle raised the issue of residency that Judge Sperry dismissed in the trial of the first information. I rule, as I did relative to that decision, that there is no merit in that submission. The section authorizes demands of “any person” without qualification as to residency or status as a tax payer.

The rest of the issues raised on this appeal have largely to do with the documents which came to light in the midst of the first day of trial. In cross- examination a Special Investigator with Revenue Canada, Tom Redden, alluded to an agreement between his department and the R.C.M.P. respecting tax enforcement against persons suspected of having illegal income. The Crown produced documents evidencing this agreement in the hiatus between the close of the Crown’s case on August 19, 1996 before Judge En- derton, and the resumption of trial on December 17, 1996 before Judge Fabbro. At that time the defence entered the three documents (Schedules 3, 4 and 5) as exhibits in its case.

The appellant’s first argument was that he was prejudiced by the late disclosure of this material. Counsel complains that Mr. Vinkle has been “forced into a multiplicity of proceedings”, referring to the fact that the case before Judge Sperry proceeded without benefit of disclosure of the documents, although the cases were, in principle, indistinguishable and had originally been scheduled together. Counsel further submitted that “clearly complexity, cost and the multiplicity of proceedings that now exist in the two appeals and the proceedings below is directly the result of the failure of the Crown to make adequate and timely disclosure to the defence when specifically asked for this type of disclosure”.

In his written reasons Judge Fabbro found that there had not been a specific request for the documents, and that, in any event, there was no prejudice on the case before him.

Having reviewed the transcript and the reasons I cannot find that the ruling of the trial judge on this point was unreasonable. From the broader perspective of the two appeals I am called upon to consider, and to which the argument on appeal was largely directed, I also cannot find that the position of the appellant has been compromised by lack of disclosure. While the fact that he did not have the documents may have influenced counsel to proceed with the trial on the first information when he would otherwise not have done so, the bifurcation of this proceeding came about because of the appellant counsel’s request for an adjournment, not because of any activity on the part of the Crown. In light of the disposition of the first matter before Judge Sperry and now on this appeal, I can see no prejudice to the defence. I cannot find that there is any merit to the appellant’s argument on the issue of non-disclosure.

V

The primary ground on which this appeal is brought is that the relationship between the police and Revenue Canada disclosed in the “memoranda” and “working arrangements” renders Revenue Canada’s requests under s. 231.2(1) of the Act infringements on the appellant’s Charter right against self-incrimination.

In R. v. McKinlay Transport Ltd. (1990), 55 C.C.C. (3d) 530 (S.C.C.), the Supreme Court of Canada ruled that Section 231.2(1) of the Income Tax Act does not infringe the Charter. The headnote summarizes:

The Income Tax Act is essentially a regulatory statute which controls the manner in which income tax is calculated and collected. It is based on the principle of self-reporting and self assessment. To ensure compliance with the Act, the Minister of National Revenue must be given broad powers to audit taxpayers’ returns and inspect all relevant records whether or not he has reasonable grounds for believing that a particular taxpayer has breached the Act. The integrity of the tax system can be maintained only by a system of random monitoring and s. 231(3) provides the least intrusive means by which effective monitoring of compliance with the Act can be effected. A taxpayer’s expectation of privacy with regard to the documents in question vis-a-vis the Minister is relatively low. This Act forbids the disclosure of the taxpayer’s records or the information contained therein to other persons or agencies. Therefore, the seizure contemplated by s. 231(3) is reasonable and does not infringe s. 8 of the Charter.

Section 241 reads as follows:

(1) Except as authorized by this section, no official shall

(a) knowingly provide, or knowingly allow to be provided, to any person any taxpayer information:

(b) knowingly allow any person to have access to any taxpayer information; or

(c) knowingly use any taxpayer information otherwise than in the course of the administration or enforcement of this Act, the Canada Pension Plan or the Unemployment Insurance Act or for the purpose for which it was provided under this section.

(2) Notwithstanding any other Act of Parliament or other law, no official shall be required, in connection with any legal proceedings, to give or produce evidence relating to any taxpayer information.

(3) Subsections (1) and (2) do not apply in respect of

(a) criminal proceedings, either by indictment or on summary conviction, that have been commenced by the laying of an information or the preferring of an indictment, under any Act of Parliament; or

(b) any legal proceedings relating to the administration or enforcement of this Act, the Canada Pension Plan or the Unemployment Insurance Act or any other Act of Parliament or law of a province that provides for the imposition or collection of a tax or duty.

I think it obvious, upon reflection, that section 241 not only affords protection to the taxpayer but is also essential to the integrity of the tax system itself. The “administrative” rationale for the compulsory processes re-en- forcing a voluntary tax system evaporate to the extent the system is porous of the information obtained.

A perusal of the “memoranda” and the “working arrangements” however, reveals that the wall erected by s. 241 is, by virtue of these protocols, rubbed very thin indeed. The “over-all objective” of the Special Enforcement Program between the R.C.M.P. and Revenue Canada is expressed in the “Working Arrangements” in the following terms:

In order to address more effectively the accumulation of unreported illicit wealth amassed by Organized Crime and increase the effectiveness of criminal law enforcement and thus cause maximum disruption to Organized Crime, stem the infiltration of legitimate business by criminal elements, and reduce the activities of Organized Crime on society, RCT and the RCMP agree to act in concert with one another in combatting Organized Crime through enforcement under the Income Tax Act.

The “Working Arrangement” appears to be generally intended to lend the investigative expertise of the R.C.M.P. to the rigorous enforcement of the Income Tax Act against persons suspected of participation in “Organized Crime”, defined, rather broadly, as meaning:

one person alone, or more than one person consorting together, who partici- pate(s) on a continuing basis in illegal activities either directly or indirectly for gain

To the extent tax information flows to the members of the R.C.M.P. assigned to the Special Enforcement Program, the memorandum acknowledges the limit imposed by s. 241:

ii) The RCMP acknowledges that the communication or use of all tax information and tax documents received by the designated members or their superiors for the purposes of this program is subject to the restrictions set forth in section 241 of the Income Tax Act, ...

The dual role into which the R.C.M.P., - the agency normally responsible for criminal law enforcement - is cast by this arrangement is, despite the special designation of the members assigned, rather disturbing. It has been the subject of comment in our courts.

In R. v. Harris (1995), Doc. Vancouver CC931055 (B.C. S.C.) (unreported) [reported (1995), 95 D.T.C. 5653 (B.C. S.C.)] Mr. Justice Oliver, sitting on appeal of a summary conviction court, found that the program

... in all fairness cannot be said to be solely regulatory or administrative. Indeed the first step in Anderson’s procedure is to identify persons earning income from illegal activities and determine their position in the criminal community. The appellant would have the Court turn a blind eye to the close working relationship between the Department of National Revenue and the R.C.M. Police existing under the Special Enforcement Program. With respect, I am not prepared to do that. It is not the function of the Income Tax Act alone which must be considered in this case (as it was in McKinlay Transport Ltd.); rather, it is the function of the Income Tax Act in conjunction with the special Enforcement Program which must be considered. I am in agreement with the court below which found that McKinlay Transport Ltd. is distinguishable, and further, that in the context of this case there is a criminal or quasi-criminal function apparent in the procedures and methods which were followed.

Harris was a case in which evidence was obtained in a narcotics prosecution in breach of an accused’s Charter rights. It was excluded from the trial and the accused was acquitted. The illegally obtained evidence was later used as the foundation for an investigation under the Program. The Provincial Court Judge trying the tax case concluded that without the illegally obtained evidence, no Revenue Canada investigation would have started. The Judge ruled that in the context of “what is really a criminal investigation, the accused’s Charter rights to silence would be breached”. On the appeal Mr. Justice Oliver upheld this reasoning. In doing so he adopted the principle relating to compellability set out by the Supreme Court of Canada in British Columbia (Securities Commission) v. Branch, [1995] 2 S.C.R. 3 (S.C.C.), at pp. 14-15:

… the crucial question is whether the predominant purpose for seeking the evidence is to obtain incriminating evidence against the person compelled to testify or rather some legitimate public purpose...

Indeed, even if the terms of reference authorize an inquiry for a legitimate purpose in some circumstances, the object of compelling a particular witness may still be for the purpose of obtaining incriminating evidence.

[I]f it is established that the predominant purpose is not to obtain the relevant evidence for the purpose of the instant proceeding, but rather to incriminate the witness, the party seeking to compel the witness must justify the potential prejudice to the right of the witness against self-incrimination.

Mr. Justice Oliver distinguished R. v. Tyler (1990), 120 N.R. 140 (Fed. C.A.):

In Tyler, Revenue Canada initiated its own investigation based upon newspaper reports of alleged criminal conduct. In the instant case, the evidence is that no independent investigation was launched by Revenue Canada, even after gaining knowledge of certain relevant newspaper offences against Harris had failed.

It can be seen from all this that the application of the Branch test to demands under s. 231.2(1) must be assessed according to the “dominant purpose” of the request. In À. v. Caswell (February 9, 1994), Doc. Campbell River 17893 (B.C. Prov. Ct.), circumstances similar to those before this court moved the Honourable Judge Doherty to enter a judicial stay, adopting the Harris analysis. In doing so observed:

1 am satisfied that in all the circumstances of this case that the s. 231 Requirement Notices, while issued under the guise of a regulatory scheme, were in reality means to be used as a investigatory tool for the purposes of gathering evidence of prosecution of the Caswells for possible offences under the Income Tax Act and/or the Criminal Code. The Caswells were entitled to invoke their Charter right to remain silent at the investigatory stage and as a result could not be compelled to respond the s. 231 Requirement Demand.

Vi

I turn now to the present case. In his written reasons Judge Fabbro carefully reviewed the evidence of the R.C.M.P. officer, Corporal Kalin, and the Revenue Canada Employee, Tom Redden, both of whom conducted aspects of the investigation. He made the following findings of fact:

28 1) On the evidence of the two investigators I am satisfied that this investi-

gation of the accused could be categorized as a special investigation originating from the said memorandum between Revenue Canada and the R.C.M.P.

29 2) I conclude that the R.C.M.P. officer gave information to Revenue Can-

ada concerning income that they believed the accused was receiving and that evidence prompted Revenue Canada to make the requirements or Demands of the accused pursuant to the provisions of the ITA.

30 3) I conclude that the R.C.M.P. did not have independent evidence to sup-

port an independent criminal investigation of the accused under the Narcotic Control Act or under any other statute including the Criminal Code. The R.C.M.P. at best, had a suspicion that the accused was in receipt of income gained from illegal means and while they simply held this suspicion they had no concrete evidence to bring a prosecution against the accused.

31 4) The basis for this suspicion or belief was the following:

a) That the accused owned a home and a new car without any debt or encumbrance:

b) That he had never filed tax returns:

C) That his wife had made a statement to that effect in an assault investigation carried on by the R.C.M.P.;

d) That the accused had sold a farm back east;

e) That they believed that he was involved in narcotics; and

f) That they had conducted other searches pertaining to his finances and also did a criminal record check of the accused.

32 5) With respect to the purpose for which the demands or requirement of

the accused were made by Revenue Canada, while I am satisfied that the above beliefs were held by the investigators, while I am satisfied this was a special investigation prompted by the memorandum of agreement between the R.C.M.P. and Revenue Canada, on the testimony of the officers all that one can say is that a criminal prosecution sometime in the future was a possibility.

33 I am satisfied that this is a case where no criminal charges were outstanding or contemplated, and the investigation by the R.C.M.P. and Revenue Canada of the accused, was at the investigatory stage.

Judge Fabbro went on to make the following comments on the evidence: 48 Despite the attack upon the motives of Mr. Redden through cross-examination, he never conceded that in the end his purpose was to bring a criminal prosecution against the second accused through the information he gained from the Demands made upon the accused. To the contrary, he testified that he had no intention to bring charges against the accused. Cpl. Kalin said that while he gathered information he turned it over to Mr. Redden and it was Revenue Canada’s discretion as to how to proceed. He said that this was not a separate criminal investigation but a special investigation only and that Revenue Canada made the decision as to what occurred next.

49 On one hand they conceded the special investigatory nature of their investigation and on the other hand they testified that they had no interest in bringing criminal charges against the accused.

Judge Fabbro then found that because the accused had not been charged with an offence there was no breach of his s. 11(c) Charter rights. Respecting the accused’s section 7 and 8 Charter rights, he found:

56 With respect to both Section 7 and 8 of the CRF a constitutional remedy will follow if the investigation can be thought of as criminal as was the case in R. v. Harris (supra). I conclude that in light of the testimony of the Crown witnesses that the investigation of the accused was not at the time the Demands were made of him in aid of a criminal prosecution or brought under the guise of a regulatory or administrative investigation or for the collateral purpose to affect a successful criminal prosecution against the accused and because of that I am of the view that a Stay of proceedings should not follow or flow from this investigation as this is not the clearest of cases as contemplated in R. v. O’Connor (supra). Because it amounts to an acquittal a Judicial Stay of proceedings is the most drastic of remedies and is reserved for only the clearest of cases.

He then found that the offences charged had been made out. He reserved decision on penalty pending further submissions by counsel.

Judge Fabbro then went on to provide a constitutional remedy on the following basis:

63 While I have concluded that a Stay of proceedings is not an appropriate remedy to be granted to the accused in the circumstances of this case, I must concede that the end purpose of a special investigation has to be a criminal prosecution. 1 am amazed that counsel on cross-examination of the two Crown witnesses could not illicit directly that admission. In fact the witnesses said quite the contrary, despite the existence of the said memorandum. In the case at bar, the potential or the possibility of a criminal prosecution is alive, notwithstanding, the tated intention or motives of the investigators at the stage of the investigation when Demands were made of the accused. In R, v. Harris (supra) Oliver, J. held that where the investigation takes on the description of a special prosecution flowing from the memorandum of agreement the possibility of a criminal prosecution is heightened.

64 In R, v. Tyler (supra) even though the trial judge was not prepared to infer a criminal investigation, the court nevertheless fashioned a constitutional remedy protecting the accused, Section 7 rights by ordering that no information provided by the accused could be released to the R.C.M.P. while narcotic related charges remained outstanding.

65 Such a remedy would seem not to be appropriate where no criminal charges were contemplated or outstanding as in this case. Such a view, however, ignores that the authorities might delay a consideration of or the bringing of a criminal prosecution in order to obtain financial information based on Demands made of the accused under the ITA that would support or be used in a derivative manner in - criminal investigation or prosecution, which is the end purpose of a special investigation initiated by the said memorandum.

66 In R. v. Tyler (supra) the court fashioned a remedy to protect a taxpayer’s right against self-incrimination concluding that there was a threat of depravation of this right. Stone, J.A. addressed this issue at pages 16 and 17 when he stated:

While the Supreme Court of Canada has yet to render a definitive judgment, it seems to me from what has been said in that Court so far that an anticipated infringement of a Charter right may be made the subject of a subsection 24(1) remedy in limited circumstances. Thus in Operation Dismantle Inc. v. R., [1985] 1 SCR 441, Dickson C.J., for the majority stated at page 456:

‘A person, whether the government or a private individual, cannot be held liable under the law for an action unless that right causes the depravation, or threat or depravation, of legal rights’; and at page 486, Wilson J. spoke of the need to: ‘establish at least a threat of violation if not an actual violation’. More recently, R. v. Vermette [1988] 1 SCR 985 relying on Operation Dismantle, further illustrates the willingness of the Supreme Court of Canada to take a somewhat expansive view of the powers contained in subsection 24(1) to grant a remedy. LaForest J., speaking for the Court, noted, at page 992, that a remedy under that subsection is available.

.. not only in the case of actual interference with the guaranteed rights, but also when an apprehension of such an interference at a future trial can be established by the applicant.

67 It should be also noted that the invocation of Section 241.(1) of the ITA in the said memorandum does not offer any protection to the taxpayer in a criminal prosecution by virtue of Section 241.(3) of the ITA.

68 I accordingly direct that any financial information compelled to be given by the accused by my order pursuant to Section 238(2) of the ITA, if made, shall be used only for the regulatory and administrative purposes of the ITA and shall not be conveyed to the R.C.M.P. for the purpose of bringing a criminal prosecution against the accused. This remedy flows from the anticipated breach of the accused’s rights against self-incrimination resulting from a special investigation and prosecution of the accused as contemplated in the said memorandum. [Emphasis added]

I think the observations of the trial judge at paragraph 63 of the Reasons (reproduced above) point to a fundamental flaw in the whole process before him. It is evident that Judge Fabbro felt limited by the literal evidence of witnesses he had not seen or heard, to make the findings of fact he did. It is also evident that he was sceptical of what the witnesses said as to the “dominant purpose” of their investigation, to the point where he felt obliged to offer the accused some protection notwithstanding his finding that the accused had failed to carry the burden of establishing a Charter breach on the evidence in the transcripts. I think it is clear that if Judge Fabbro’s misgivings were grounded in findings of fact, the case would arguably fall within the analysis in Caswell, if not Harris.

Inasmuch as, in the words of the Supreme Court of Canada in Branch (above):

The crucial questions is whether the predominant purpose for seeking the evidence is to obtain incriminating evidence against the person compelled to testify or rather some legitimate public purpose. [Emphasis added]

The credibility of the Crown witnesses on this subject s crucial.

Notwithstanding the acquiescence of counsel, I think the manner in which the trial proceeded deprived the trial Judge of essential evidence, that is, the opportunity to see and hear the critical witnesses. This may well have had a significant, if not determinative, influence on the core issue of their credibility as to the dominant purpose of their activities. It would have left the Judge in a position to make findings of fact that would either confirm or allay what he was constrained in the circumstances to express as mere suspicions.

In my view the procedure adopted created at least the appearance of an unfair, because incomplete, adjudicative process, and no conviction should rest upon it. (See À. v. Duke, [1985] 6 W.W.R. 386 (Alta. C.A.).

Accordingly I quash the conviction and order a new trial.

In the circumstances, I do not consider it necessary to address the objections raised by the appellant as to the legality of the constitutional remedy fashioned by the trial Judge, and I decline to do so.

Appeal allowed. Cross-appeal allowed.

Schedule 1 — Information/Denonciation

This is the information of/Les présentes constituent La dénonciation de Thomas Page Redden, Special Investigator and Officer of the Department of National Revenue (the “informant’Vle “dénonciateur”) of/de the City of Penticton, British Columbia.

The informant says that he has reasonable and probable grounds to believe and does believe that/Le dénonciateur déclare qu’il a des motifs raisonaab- les et probables de croire que

Count 1: Ronald Stewart Vinkle, on or about December 31, 1994 at the

village of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form T1 for the taxation year ended December 31, 1990, as required pursuant to the provisions of paragraph 231.2(1 )(a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 2: Ronald Stewart Vinkle, on or about December 31, 1994 at the

village of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form T1 for the taxation year ended December 31, 1991, as required pursuant to the provisions of paragraph 231.2(1 )(a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 3: Ronald Stewart Vinkle, on or about December 31, 1994 at the

village of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form T1 for the taxation year ended December 31, 1992, as required pursuant to the provisions of paragraph 231.2(1) (a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 4: Ronald Stewart Vinkle, on or about December 31, 1994 at the

village of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form T1 for the taxation year ended December 31, 1993, as required pursuant to the provisions of paragraph 231.2(1 )(a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 5: Ronald Stewart Vinkle, on or about December 31, 1994 at the

village of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Statement of his Assets and Liabilities as at December 31, 1993, as required pursuant to the provisions of paragraph 231.2(1 )(a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

SWORN BEFORE ME/ASSERMENTÉ DEVANT MOI

ON/LE February 9 1995 [signature]

(Signature of Informant/Signature du dénonciateur)

AT/A Nelson. PROCESS/Summons Auth.

CONFIRME

British Columbia/Colombie-Britannique ACTE DE PROCÉDURE

[signature]

A Justice of the Peace in and for the Province of British Columbia Juge de paix dans et pour la province de la Colombie-Britannique

[signature]

A Justice of the Peace in and for the Province of British Columbia

Juge de paix dans et pour La province de La Colombie- Britannique

Schedule 2 — Information/Déonciation

This is the information of/Les présentes constituent La dénonciation de Thomas Page Redden, Special Investigator and Officer of the Department of National Revenue (the “informant’Vle “dénonciateur”) of/de the City of Penticton, British Columbia.

The informant says that he had reasonable and probable grounds to believe and does believe that/Le dénonciateur déclare qu’il a des motifs raisonaab- les et probables de croire que

Count 1: Ronald Stewart Vinkle, on or about June 26, 1995 at the village

of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form TI for the taxation year ended December 31, 1987, as required pursuant to the provisions of paragraph 231.2(1)(a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 2: Ronald Stewart Vinkle, on or about June 26, 1995 at the village

of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form T1 for the taxation year ended December 31, 1988, as required pursuant to the provisions of paragraph 231.2(1) (a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 3: Ronald Stewart Vinkle, on or about June 26, 1995 at the village

of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form TI for the taxation year ended December 31, 1989, as required pursuant to the provisions of paragraph 231.2(1) (a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 4: Ronald Stewart Vinkle, on or about June 26, 1995 at the village

of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Income Tax Return on Form TI for the taxation year ended December 31, 1994, as required pursuant to the provisions of paragraph 231.2(1) (a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 5: Ronald Stewart Vinkle, on or about June 26, 1995 at the village

of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide a signed Statement of his Assets and Liabilities as at December 31, 1994, as required pursuant to the provisions of paragraph 231.2(1) (a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

Count 6: Ronald Stewart Vinkle, on or about June 26, 1995 at the village

of Kaslo and elsewhere in the Province of British Columbia, unlawfully failed to provide signed Estimates of his Living Costs for the years 1987, 1988, 1989, 1990, 1991, 1992, 1993 and 1994, as required pursuant to the provisions of paragraph 231.2(1) (a) of the Income Tax Act, and did thereby commit an offence contrary to the provisions of subsection 238(1) of the said Act.

SWORN BEFORE ME/ASSERMENTÉ DEVANT MOI

ON/LE July 24 1995 [signature]

(Signature of Informant/Signature du dénonciateur)

AT/A Penticton

British Columbia/Colombie-Britannique ACTE DE PROCEDURE

PROCESS//illegible text] CONFIRMED/CONFIRME

[signature]

A Justice of the Peace in and for the Province of British Columbia Juge de paix dans et pour la province de la Colombie-Britannique

[signature]

A Justice of the Peace in and for the Province of British Columbia Juge de paix dans et pour la province de la Colombie-Britannique

Schedule 3 — Memorandum of Understanding

BETWEEN

THE DEPARTMENT OF NATIONAL REVENUE as represented herein by the Assistant Deputy Minister Taxation Programs Branch (hereinafter referred to as RCT)

AND

THE ROYAL CANADIAN MOUNTED POLICE as represented herein by the Deputy Commissioner Operations of the Royal Canadian Mounted Police (hereinafter referred to as the RCMP)

The purpose of this agreement is to provide a description of the commitments by RCT and the RCMP with respect to searches and seizures conducted by RCT. This agreement does not pertain to any joint investigations conducted by the RCMP and RCT under the Income Tax Act.

WHEREAS it is the responsibility of RCT to administer and enforce the Income Tax Act with respect to all individuals and corporations; and

WHEREAS it is the the responsibility of the RCMP to enforce such laws made by or under the authority of the Parliament of Canada, including the Criminal Code of Canada;

NOW, THEREFORE, RCT and the RCMP have agreed as follows:

1. The RCMP is entering into this Memorandum of Understanding on the authority of sections 4, 5 and 18 of the Royal Canadian Mounted Police Act, and section 17 of the Royal Canadian Mounted Police Regulations, 1988.

2. This assistance will be restricted to situations where a breach of the peace can be reasonably anticipated by RCT and RCT has so advised the RCMP. This will generally include a taxpayer’s residence and on occasion his busi- ness premises; however, this would not normally include law and accounting firms, financial institutions and other third parties.

3. The RCMP will remain at the scene of the search until such time as the scene is secure and a breach of the peace is unlikely to occur. This decision will be made between the RCT and RCMP members in charge at the scene.

4. When possible, RCT will give the RCMP reasonable notice prior to conducting a search which requires RCMP assistance.

5. The RCMP will provide assistance to RCT in all provinces and the two territories of Canada.

6. Due to the restrictions set forth in Section 241 of the Income Tax Act, the RCMP members will only assist in a peace keeping capacity. They will not be actively involved in the searching.

7. The Commanding Officers of the respective RCMP divisions will be responsible to designate the necessary resources. RCMP Commanding Officers will notify the regional offices of RCT of the relevant policies with respect to resources at the local level.

8. Semi-annually, the Chief of Special Investigations of the District Office of RCT and the Officer in charge of the respective Divisional RCMP Commercial Crime Sections will meet to review and evaluate performance in relation to this agreement.

9. Any conflicts which cannot be resolved at the Division-District level will be advanced through the District Office Section Chief/Officer in Charge to the Director General, Audit and the Director of Economic Crime, respectively.

10. The RCMP shall provide RCT with an invoice prior to March 1 of each fiscal year respecting the cost of one (1) RCMP person-year as submitted to the Treasury Board of Canada for a new separately controlled (RCMP) person-year for the prior fiscal year. The RCMP will advise RCT prior to November 1 of each fiscal year, the cost of one (1) separately controlled (RCMP) person-year to be used in preparation of the Multi-Year Operational Plan for the upcoming fiscal year. RCT will reimburse the RCMP via Interdepartmental Settlement Notice within 30 days from the date of an invoice being received.

11. This Memorandum of Understanding may be amended at any time with the mutual consent of both parties or may be terminated by either RCT or the RCMP upon written notice to the other party.

Signed. [signature]

Assistant Deputy Minister

Taxation Programs Branch

RCT

Date 30/1/92

Signed, [signature]

Deputy Commissioner

Operations

RCMP

Date 92/01/14

Schedule 4 — Working Arrangements Between

THE DEPARTMENT OF NATIONAL REVENUE as represented herein by the Assistant Deputy Minister Taxation Programs Branch (hereinafter referred to as RCT).

AND

THE ROYAL CANADIAN MOUNTED POLICE as represented herein by the Deputy Commissioner Operations (hereinafter referred to as the RCMP).

I. Introduction:

The various activities which are carried out under these Working Arrangements will be categorized by the RCMP as the Tax Program and by RCT as the Special Enforcement Program (hereinafter the Program).

The parties acknowledge that their overall objective is:

In order to address more effectively the accumulation of unreported illicit wealth amassed by Organized Crime and increase the effectiveness of criminal law enforcement and thus cause maximum disruption to Organized Crime, stem the infiltration of legitimate business by criminal elements, and reduce the activities of Organized Crime on society, RCT and the RCMP agree to act in concert with one another in combatting Organized Crime through enforcement under the Income Tax Act.

II. Definitions:

For the purposes of these Working Arrangements,

1. “designated members” - means those members of the RCMP who have

been designated in writing by the Director, Economic Crime Direc- torate, for the purpose of assisting RCT in the enforcement of the Income Tax Act,

2. “investigators” - means those employees of RCT who have been as- signed to the Program,

3. “joint investigation” - means a joint investigation relating to the en- forcement of the Income Tax Act for purposes consistent with the objective set out above,

4. “organized crime” - means one person alone, or more than one person consorting together, who participate(s) on a continuing basis in illegal activities either directly or indirectly for gain,

5. “RCMP document” - means any document, except that relating to wire tap information, to which RCT has been given access by the RCMP, for purposes of the administration or enforcement of the Income Tax Act,

6. “RCMP information” - means any information, except wiretap informa tion, communicated by the RCMP to RCT for purposes of the administration or enforcement of the Income Tax Act,

7. “selected subject” - means a person(s) who participates on a continuing basis in illegal activities either directly or indirectly for gain,

8. “tax document” - means information in computer form such as magnetic tapes, disks, cassettes, floppy diskettes, and other similar products, and any book, record, writing, return or other like instrument (including any data contained in or available to a computer system, which is reproduced in the form of a printout or other intelligible output), except an RCMP document, obtained by or on behalf of the Minister of National Revenue for the purposes of the Income Tax Act,

9. “tax information” - means any information, except RCMP information and wiretap information that 1s:

a) obtained by or on behalf of the Minister of National Revenue

for the purposes of the Income Tax Act, or

b) prepared from information referred to in paragraph (a) by the Minister or in official of RCT,

This would include any and all information obtained for purposes of this program by either an official of RCT and or the RCMP designated member,

10. “wiretap information” - means information or documents pertaining to,

or tapes, transcripts or summaries of, private communications (as de- fined in section 183 of the Criminal Code of Canada) which have been legally intercepted in a manner described in subsection 184(2) of the Criminal Code of Canada.

Both parties hereby agree to the following working arrangements in carrying out the objectives of this Program.

111. The Methods:

(a) Identifying persons earning income from illegal activities and determining their position in the criminal community.

(b) Carrying out preliminary investigation in relation to case development; pursuing an active enforcement program in getting non filers to file tax returns, statements of assets and liabilities, and carrying through with prosecutions for non-filing and/or non-compliance where warranted.

(c) Investigating and developing cases for referral to the Department of Justice for tax evasion prosecution standards within established guidelines and resources. Carrying out audits towards assessment/re-assessment where the foregoing criteria have not been met.

(d) Providing the maximum information to the Collections Division in order to maximize the actual collection of taxes, penalties and interest assessed under the Program.

IV. Responsibilities:

Members and investigators are responsible for the effective conduct of the Program in meeting it’s objective.

A. The Role of the RCMP includes:

1) locating and identifying individuals who are involved in illegal activity and determining the scope of their activity;

ii) obtaining information and documentation of the individual’s lifestyle, assets and liabilities, business associates, etc

iii) meeting with RCT investigators for the preliminary evaluation of information (RCT + RCMP) and decision on whether to include the individual(s) as subjects of the Program;

iv) preparing, with the investigator, an appropriate investigation plan for the assigned file;

v) participating in the actions planned to the greatest extent possible;

vi) undertaking, where feasible and mutually agreeable to both parties, all necessary investigation and court brief preparation for the referral of prosecutions under the I.T.A. to the Department of Justice.

vil) testifying in court, as required, as a witness in ITA prosecutions on their knowledge of transactions entered into and business procedures and techniques used by persons engaged in the illegal activity.

viii) assisting as peace officers and/or members of the Program on SEP search actions.

B. The Role of RCT is:

i) to administer and enforce the ITA with respect to all selected subjects of the Program, which includes those activities listed under “The Methods”.

ii) to evaluate and decide on the selection of program subjects in conjunction with the members.

iii) to meet with their RCMP counterparts on at least a quarterly basis:

a) to analyze the results of the program.

b) to review current inventory of subjects for selection purposes.

c) to evaluate the program and its future direction based on the above.

V. Unresolved or Problem Areas:

Any problems or issues that cannot be resolved at the unit level should be forwarded through the District Office, Section Chief/Officer in Charge to the Director General, Audit and Director E.C.D. respectively.

VI. Work Reviews:

Semi-annually, the Chief of Special Investigations of the District Office will meet with the O.I.C. (Officer-in-Charge), Commercial Crime Section of the RCMP division to review and evaluate the progress achieved in relation to the priorities of the Program.

VII. Conditions and Procedures Respecting the Communication of Information:

A. Where, in the performance of its responsibilities under these Working Arrangements, RCT or the RCMP communicates information or provides access to documents to the other, such communication or provision of ac- cess will be carried out in accordance with the following conditions and procedures:

i) RCT will provide authorized members such tax information or tax documents in its possession which in RCT’s opinion will assist in the development or the conduct of any joint investigation, for purposes of that investigation.

ii) The RCMP acknowledges that the communication or use of all tax information and tax documents received by the designated members or their superiors for the purposes of this program is subject to the restrictions set forth in section 241 of the Income Tax Act, parts of which are attached hereto as an extract to Appendix A.

iii) The RCMP will provide RCT with such RCMP information, RCMP documents, and wiretap information in its possession which in the RCMP’s opinion will assist in the development or in the conduct of any joint investigation.

iv) (a) RCT acknowledges that all RCMP information and RCMP documents which it receives from the RCMP, will be treated as protected and RCMP information and RCMP documents will not, without the express authority of the RCMP, be disclosed to persons other than individuals who are members of the Special Investigations units of RCT, their superiors and legal counsel acting for and on behalf of RCT

iv) (b) RCT acknowledges that all wiretap information which it receives from the RCMP in accordance with section 193(2)(b) of the Criminal Code of Canada, will be treated as protected and will not be disclosed or used except in accordance with Section 193 of the Criminal Code.

v) RCT and the RCMP agree to protect all information communicated and documents provided under these Working Arrangements in accordance with the conditions and procedures in Appendix A.

VIII. Date of Effect and Termination:

These Working Arrangements shall come into effect on the 1st day of February, 1992, and shall remain in effect until revised or terminated by either RCT or the RCMP.

The Director General, Audit Directorate, RCT and the Director, Economic Crime Directorate, RCMP shall review these arrangements annually and decide whether any revisions are necessary.

These arrangements will terminate ninety days after either party gives written notice to the other of its intention to terminate them.

Signed.[signature]

Assistant Deputy Minister

Taxation Program Branch

RCT

Date 30/1/92

Signed.[signature]

Deputy Commissioner

Operations

RCMP

Date 92/01/14

“k” — The Protection of Information

General

1. All information and documents provided under this Memorandum of Understanding shall be designated “PROTECTED”.

2. The R.C.M.P. and R.C.T. shall observe the provisions of applicable government security policy and standards approved by Treasury Board.

3. The R.C.M.P. and R.C.T. will develop systems and procedures that will leave an adequate trail for auditing the protection of information and documents provided by this Memorandum of Understanding.

4. All information and documents provided under this Memorandum of Understanding shall be maintained and accounted for in accordance with records management policies and practices as contained in Treasury Board Administration Policy (Chapter 460 et al).

Access

Sa. With the exception of administrative functions, access to information

and documents shall be controlled and restricted to authorized R.C.M.P. employees and R.C.T. employees who have a Level 1, 2 or 3 security clearance or enhanced reliability status and a need to know.

Sb. R.C.M.P. employees shall read and sign a declaration drawing their

attention to Section 241 and subsection 2.2 of Section 239 of the Income lax Act and shall be made aware of this Appendix.

Sc. R.C.T. employees shall be made aware of this Appendix.

Marking

6a Information and documents which the R.C.M.P. originates shall be marked “PROTECTED B”.

6b. Information and documents which R.C.T. originates shall be marked

“PROTECTED”. However, such information and documents shall be marked “PROTECTED B” by the R.C.M.P. upon their receipt from R.C.T. in order to ensure they are afforded appropriate safeguards.

-a description of information involved;

-the date and place of the incident;

-the extent of known or probable compromise and the identity of unathorized persons who had or are believed to have had access to the information;

-action taken or contemplated by the notifying party; and

-any information which may assist in assessing the loss or compromise.

lib. If information or a document is found after notification of loss has

been sent, the circumstances under which it was found shall be provided immediately to the other party’s security official.

IIc. A follow-up report shall be forwarded to the other party’s security

official by the responsible officials. The report shall outline the results of any investigation. The report shall include the steps that have been taken to prevent this loss or disclosure from recurring.

Audits

12. R.C.T. or the R.C.M.P. may request that the other party carry out a security audit of the safeguards afforded to the infomation or documents. Such audits shall be arranged through the appropriate security officials. Costs of any such audit shall be borne by the requesting party.

Extract

Income Tax Act - section 241

-Subsection 239(2.2)

241(1) Except as authorized by this section, no official or authorized person shall

(a) knowingly communicate or knowingly allow to be communicated to any person any information obtained by or on behalf of the Minister for the purposes of this Act or the Petroleum and Gas Revenue Tax Act,

(b) knowingly allow any person to inspect or to have access to any book, record, writing, return or other document obtained by or on behalf of the Minister for the purposes of this Act or the Petroleum and Gas Revenue Tax Act,

(c) knowingly use, other than in the course of his duties in connection with the administration or enforcement of this Act or the Petroleum and Gas Revenue Tax Act, any information obtained by or on behalf of the Minister for the purposes of this Act or the Petroleum and Gas Revenue Tax Act.

241(10) in this section,

(a) “official” means any person employed in or occupying a position of responsibility (i) in the service of Her Majesty in right of Canada or a province, or (ii) in the service of an authority engaged in administering a law of a province similar to the Pension Benefits Standards Act, 1985, or any person formerly so employed or formerly occupying a position therein;

(b) “authorized person” means any person engaged or employed, or formerly engaged or employed, by or on behalf of Her Majesty in right of Canada or a province to assist in carrying out the purposes and provisions of this Act or the Petroleum and Gas Revenue Tax Act.

239(2.2) Every person

(a) who contravenes subsection 241(1), or

(b) to whom information has been provided pursuant to subsection 241(4) and who knowingly uses, communicates or allows to be communicated such information for any purpose other than that for which it was provided, is guilty of an offence and is liable on summary conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both such fine and imprisonment.

THIS IS TO CERTIFY that I have read and understood the above and I will not use, communicate, allow to be communicated or knowingly use information obtained from RevenueCanada, Taxation for any purpose other than a purpose for which it was provided.

Date

Signature

Schedule 5 — Confidential

Memorandum of Understanding Between the Department of National Revenue, Taxation and the Department of the Solicitor General

In order to attack more effectively through prosecution under the Income Tax Act the accumulation of unreported illicit wealth amassed by Organized Crime and increase the effectiveness of criminal law enforcement and thus cause maximum disruption to Organized Crime, stem the infiltration of legitimate business by criminal elements, and reduce the impact of the activities of Organized Crime on society, the Departments of National Revenue, Taxation and of the Solicitor General agree to act in concert with one another in combatting Organized Crime through prosecution under the Income Tax Act and, more specifically, agree formally to the following:

1. The Minister of National Revenue, pursuant to the provisions of subsection (4) of Section 241 of the Income Tax Act, hereby designates the members of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police as authorized persons for the purpose of assisting him and his officials in carrying out investigations for such purposes as the Minister of National Revenue may designate related to the administration or enforcement of the Income Tax Act.

2. The Royal Canadian Mounted Police acknowledges that the members of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police will conduct for the purposes of the Income Tax Act, such investigations of such persons as the Minister of National Revenue may from time to time request, except when the So- licitor General is of the opinion that having regard to the current tasks of the Royal Canadian Mounted Police and the availability of manpower, it is not practical for such investigations to be conducted.

3. The Minister of National Revenue will furnish the Directorate of Criminal Investigations of the Royal Canadian Mounted Police with such information or material in his possession which in the Minister’s opinion will facilitate the conduct of any investigation which the Directorate of Criminal Investigations of the Royal Canadian Mounted Police is carrying out on behalf of the Minister.

4. The Royal Canadian Mounted Police acknowledges that all information obtained for the purposes of the Income Tax Act by the members of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police in the conduct of investigations referred to in clause 2 hereof are subject to the restrictions set forth in Section 241 and that in particular, no member of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police will knowingly communicate or knowingly allow to be communicated to any person other than those persons designated by the Minister of National Revenue any information obtained by or on behalf of the

5. The Solicitor General of Canada agrees to provide the Minister with the names of individuals whom the Directorate of Criminal Investigations of the Royal Canadian Mounted Police suspects of being involved in organized crime and in evading or understating the amount of their income, together with all intelligence information available to it on these individuals.

6. The Minister acknowledges that all information which he receives from the Solicitor General of Canada either prior to or as a result of investigations which have been carried on by members of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police as authorized persons will be treated as confidential information and will not, without the express authority of the Royal Canadian Mounted Police, be disclosed to persons other than designated individuals who are members of the Special Investigations Division of the Department of National Revenue and their superior officers.

7. The Minister agrees that if he should conclude that any investigation which is being conducted by members of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police pursuant to the provisions of clause 2 hereof is not likely to be fruitful and is being discontinued by his officials, he will immediately so advise the Directorate of Criminal Investigations of the Royal Canadian Mounted Police.

8. Members of the Directorate of Criminal Investigations of the Royal Canadian Mounted Police will assist National Revenue, Taxation to develop evidentiary standards to establish offences on the basis of testimony relative to cash transactions where documentation is limited or non-existent and will, in circumstances considered appropriate by both National Revenue, Taxation and the Royal Canadian Mounted Police, allow its criminal intelligence investigators to give evidence in court on their knowledge of financial transactions entered into and business procedures and techniques used by members of organized crime prosecuted by National Revenue, Taxation.

9. This agreement will take effect upon the approval by Cabinet of the recommendations contained in a memorandum to Cabinet by the Minister of National Revenue and concurred in by the Solicitor General dated April 27, 1972.

[signature]

Deputy Solicitor General

[signature]

Deputy Minister of National Revenue for Taxation