R. v. Gaudet, [1999] 3 CTC 191

Lampert Prov. J.:

Introduction

The accused, Y von Gaudet, is charged with five counts under the Income Tax Act. It is alleged that he made false statements in tax returns relating to the taxation years 1988, 1989, 1990, 1991 and 1992 and did thereby fail to report income.

It is also alleged that between December 31st 1988 and May 1st 1993, he did wilfully evade the payment of taxes in the amount of $287,241.00, by failing to report income in the amount of $1,043,315.00 for the 1989, 1990, 1991 and 1992 taxation years.

The issues now before me for determination have arisen in the course of a Voir Dire hearing into the admissibility of certain Crown evidence. The Voir Dire hearing was held over a period of six days, that is April 22nd, 23rd and 24th and May 26th, 27th and 28th 1997, following which decision was reserved until today, August 1st 1997.

During the Voir Dire hearing, the Crown produced for cross-examination, by defence counsel, numerous witnesses. Following their cross-examination, there was re-direct examination by Crown counsel. By this unusual procedure, these witnesses did not undergo direct-examination but rather, cross-examination and re-direct examination only.

Revenue Canada has obtained documentary evidence, as well as information, through interviews with Mr. Gaudet and other parties. It has also obtained evidence by using the so-called Canada/U.S. Tax Treaty, by auditing Mr. Gaudet and Westmorland Fisheries Ltd, and by seizures effected pursuant to Search Warrants issued by Provincial Court Judge Alfred Brien. Counsel for Mr. Gaudet maintain that all of the evidence in question should be excluded at trial because of alleged violations of Mr. Gaudet’s rights under various sections of the Charter of Rights and Freedoms.

The Facts

Following is a summary of the relevant facts of this case.

During November, 1992, James Snow, an auditor with the Saint John office of Revenue Canada, was assigned to do an audit of Westmorland Fisheries Limited, hereinafter called “Westmorland Fisheries”. Mr. Snow is a certified general accountant and has been with Revenue Canada for about 25 years. During the relevant time, he was classified as an auditor with Revenue Canada but had worked previously in Special Investigations for about two and a half years and had also been Chief of Appeals, for a period. Brian Raymond Lynch, who was a “group head” with Revenue Canada at the relevant time and Snow’s supervisor, acknowledged that the audit was “probably” being done as part of a general review of the fishing industry.

The audit was to be for the taxation years 1989 to 1992 inclusive and Mr. Snow first attended the Westmorland Fisheries premises during the first or second week of November, 1992. Snow spent about three weeks conducting the audit and during his testimony, described the company’s records and books as being “okay” and indicated that they “tied in”. Mr. Snow received good co-operation from company bookkeeper Charline Gaudet as well as from Yvon Gaudet, personally. Following the general audit, Mr. Snow had some questions about wages being paid to the wives of the principal shareholders of the company, that is Yvon Gaudet and Edgar A. Cormier, as well as automobile standby charges. Letters were written to Messrs. Gaudet and Cormier on February 10th, 1993, outlining Mr. Snow’s findings. The letters gave Cormier and Gaudet 30 days to respond to the suggested adjustments to their personal tax returns. The letters indicate that in the event of a taxpayer, such as Gaudet or Cormier, failing to respond to such a reassessment, the policy of Revenue Canada was to consider such failure as agreement by the taxpayer to the suggested adjustments, following which the adjustments, as outlined in the letter, would be processed and reassessments made.

During February 1993, James Vickers, an auditor with Revenue Canada, was assigned to audit one Peter Furlong, of the Plaster Rock area. Furlong sold fish and farm produce, along the highway. During the audit, he informed Vickers about making cash payments to Westmorland Fisheries, during 1989, totalling $20,312.95, for fish purchased (See page 7 of Exhibit D-l). He was able to show Vickers invoices, totalling approximately $1,500.00, for cash purchases and also showed him sheets from a notebook where he supposedly had recorded cash purchases from Westmorland Fisheries totalling in excess of $18,000.00 (See pages 10 and 11 of Exhibit D- I). Following receipt of this information, Vickers filed a T-133 with his group head, Brian Lynch. This T-133 is marked as exhibit D-l (pages 7 to II) and is dated March 24th, 1993.

Brian Lynch described the T-133 as a “tax lead” and indicated that it’s something that is very important to the success of the work of Revenue Canada. Mr. Lynch further indicated that a so-called “tax lead” is not conclusive evidence of tax evasion but is indicative only of the possibility of it. He acknowledged that in the majority of cases in which a T-133 is filed, the files are not referred to the Special Investigations Branch. At the time of receipt of the T-133, it was not known by Revenue Canada if the sales totalling in excess of $20,000.00, as shown in the T-133, were recorded in the books of Westmorland Fisheries.

The T-133 was sent to James Snow sometime in April of 1993. Mr. Lynch then had discussions with Snow and it was agreed that this “lead” should be checked out before the audit of Westmorland Fisheries was finalized.

On or about May 17th and 18th, 1993, Snow went back to Westmorland Fisheries and reviewed the company’s records in detail, following which he concluded that the cash sales referred to by Peter Furlong were not shown in the company’s books. Mr. Gaudet was not advised as to the reason Snow was there.

On or about May 25th, 1993, Brian Lynch and James Snow reviewed the results of the latter’s most recent visit to the Westmorland Fisheries office. It was decided that Snow would interview Yvon Gaudet with the information which he had. Snow returned to the Westmorland Fisheries plant on June 1 st or 2nd. While there, he again reviewed the books of Westmorland Fisheries and questioned Mr. Gaudet about cash sales. Gaudet was told about an invoice to Peter Furlong for $723.80 and that this cash sale apparently had not been recorded in the books of the company. Gaudet indicated that he could not remember the details about the sale and asked Snow, “If there was anymore.” Gaudet also asked for more information, more detail. Snow told Gaudet that he did not have further information, “at this point,” because “I would have to do more work.”. This was obviously untrue. Thus, at this meeting, although auditor Snow was in possession of extensive information concerning cash sales to Furlong, he did not provide this informa tion to Gaudet, even after being asked to do so. Neither was Gaudet informed of the possibility of charges being laid against him under the Income Tax Act. However, according to page 22A of Exhibit D-1, Mr. Snow’s notes of this meeting, he did tell Gaudet of the “serious nature of the situation if additional information is found to indicate unreported cash sales.”

Subsequent to this meeting, and before the middle of June, auditor Snow, and perhaps Brian Lynch, met with John Landry of the Special Investigations Unit and, as Lynch admitted: “We would have told him of the strong possibility of tax evasion.”

John Landry, at the relevant time, was a liaison officer between the Audit Division and the Special Investigations Branch and his raison d’être was apparently to make auditors aware of the fact that fraud could exist in a particular file.

James Snow also again met with Mr. Landry in order to receive instructions as to how next to proceed.

Landry wrote a memo to Snow, dated July 15th, 1993 (see Exhibit D-1, page 26). In the memo, Landry made specific recommendations to Snow as to what he is to do next. He sets out a plan of action and following receipt of this memo, Snow spoke to Brian Lynch and a decision was made that Snow should go back to the Westmorland Fisheries plant and do some more checking. Snow, in fact, went back and did what Landry directed him to do. These visits were made on August 17th, 18th and 19th 1993. In addition to reviewing company documents, separate interviews were held with Messrs. Gaudet and Cormier (on August 19th). Mr. Leo Bastarache, of Special Investigations, also attended the August 19th interview, in view of the fact (according to Brian Lynch) that it is the practice of the Special Investigations Unit that all of their meetings with a taxpayer must be attended by two investigators, and not only one.

On August 24th 1993, Edgar Cormier called Mr. Snow (see Memo page 35 Exhibit D-1), said that he and Mr. Gaudet were concerned about the large percentage of missing invoices detected by Snow and provided some explanations about this issue, as well as information about goods shipped to the United States.

On August 30th, 1993, Snow and Lynch again met with Mr. Landry, after which a T-134 was prepared and filed with the Special Investigations Unit.. This document is referred to as a “referral to Special Investigations”. Snow fully expected the file in question would be returned to him by Spe- cial Investigations, in view of the fact that Revenue Canada auditors could only substantiate approximately $1,500.00 in unreported cash sales. He felt that they had a problem with the quantum of untraceable cash sales and that Special Investigations would have to reject it. Snow testified that the Special Investigations Unit was probably not very busy at that time and was looking for some work. Therefore, the file was proceeded ahead with, rather than being returned to Snow.

Once a T-134 is filed with Special Investigations, this unit has to assess the file as soon as possible and then decide either to refer it for a preliminary investigation or to reject it and to return the file to the auditor who carried out the audit.

By Memo dated September 1st, 1993, Mr. Landry advised Vince Pranjivan, Chief of Special Investigations, that the quantum of the file was low and that all of the information had come from the same source, namely Peter Furlong. He went on to say that because of the problem with the quantum on the file, “If we cannot find more, we will have to reject the file.”

Mr. Guy J. Belle-Isle, an accountant with Revenue Canada, had been attached to the Special Investigations Unit since February, 1992, and had been with Revenue Canada for about 7 years. He is now 36 years old. In late September, 1993, Mr. Belle-Isle became involved with this file. By October 6, 1993, the file had been accepted for preliminary investigation by Special Investigations. Mr. Belle-Isle took charge of the file as of January of 1994.

Mr. Belle-Isle met with Yvon Gaudet on October 6th, October 13th and November 4th of 1993 and on April 20th and July 19th 1994.

On January 12th, 1994, Mr. Snow was advised by the Special Investigations Unit that they would further investigate this file. (See Memo, page 48, Exhibit D-1).

An Information to Obtain Search Warrant was sworn to by Mr. Belle- Isle on October 24th, 1994 before Provincial Court Judge Alfred H. Brien. 3 Search Warrants were issued and were executed on October 27th of the same year (see exhibit D-3).

As a result of various information obtained by Mr. Belle-Isle during his numerous visits to the offices of Westmorland Fisheries, Mr. Belle-Isle contacted authorities in the United States, through the Revenue Canada Tax Directorate, and made four or five visits to various locations in the United States. In addition to these visits, and via the so-called Canada/U.S. Tax Treaty, Belle-Isle asked for, and obtained, various corporate documents from various banking institutions and other sources in the United States.

The formal name of the treaty in question is the CANADA-UNITED STATES TAX CONVENTION (1980). It was established as a Statute of Canada in the TAX CONVENTION ACT, S.C. 1984, c.20. Under Article XXVII of the Convention, Canada and the United States agree to exchange information. The powers contained in this treaty enable Revenue Canada to secure legal assistance from U.S. authorities in investigating criminal matters.

Information obtained by Revenue Canada authorities during this initial audit of Westmorland Fisheries led them to a full audit and, eventually, a criminal investigation of one of Westmorland Fisheries’ principal shareholders, Yvon Gaudet.

On February 12th, 1996, six charges, under the Income Tax Act, were laid against Yvon Gaudet. These charges relate to the taxation years 1988, 1989, 1990, 1991 and 1992. Mr. Gaudet is alleged to have failed to report income during the period December 31st, 1988 to May 1st, 1993 in the amount of $1,043,315.00 and is alleged to have wilfully evaded the payment of income taxes totalling $287,241.00.

Issues

The decisions to be made by me involve the admissibility of evidence obtained by Revenue Canada from various sources and over a lengthy period of time, commencing from the time that Mr. Snow began the audit of Westmorland Fisheries. The evidence in question will be broken down, for convenience sake, into the following groupings:

(a) The evidence obtained during the official audit of Westmorland Fisheries and Mr. Gaudet.

(b) The evidence obtained during the subsequent criminal investigation of Mr. Gaudet and Westmorland Fisheries.

(c) The evidence obtained during the execution of the three search warrants of October, 1994, including that evidence obtained via so- called PLAIN VIEW SEARCHES.

(d) The evidence obtained from United States’ sources.

In each case, the first question to be answered is whether Mr. Gaudet’s rights under the Charter of Rights and Freedoms were violated, in the method of gathering the evidence in question. The second determination is whether, in cases where violations did occur, the evidence in question should be excluded at trial.

In addition, the following must be considered:

(a) Is a stay of proceedings an appropriate remedy in this case, because the many alleged violations of numerous of Gaudet’s Charter rights amount to an abuse of process?

Was the Seizure of Documents Under the Auditing Powers of Sections 231.1 and 231.5 of Income Tax Act Illegal?

Section 231.1 of the Income Tax Act undoubtedly confers on Revenue Canada very wide powers. This Section allows an official from Revenue Canada to inspect, audit or examine books, records and documents of the taxpayer and any document of any other person that may relate to the information that is or should be in the books or records of the taxpayer. Revenue Canada auditors can also examine the taxpayer’s inventory and enter a business premises or any premises where books or records are kept. It also requires that the owner, manager and any other persons on the premises give the Revenue Canada official all reasonable assistance and answer all proper questions relating to the adminstration and enforcement of the Income Tax Act.

Section 231.5 of the Income Tax Act permits Revenue Canada officials to make copies of relevant documents for the purposes of their audit. This Section also forbids persons from hindering, molesting or interfering with anyone from Revenue Canada performing an audit. Penalties for failure to comply with the Sections in question consist of a fine of not less than $1,000.00 and not more than $25,000.00 and, in addition, imprisonment for up to 12 months.

It is the contention of counsel for Mr. Gaudet that if the so-called audit of him was authorized by Section 231.1 of the Income Tax Act and the obtaining of documents belonging to him, and those of other persons, was authorized by Section 231.5 of the Income Tax Act, then these two Sections are inconsistent with Articles 7 and 8 of the Charter and, thus, of no force or effect, pursuant to Article 52 of the Constitution Acct.

The relevant sections of the Charter provide as follows:

7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.

8. Everyone has the right to be secure against unreasonable search or seizure.

I would say at the outset that there can be no doubt that the initial audit conducted by James Snow was authorized by the Sections in question of the Income Tax Act. The question remains as to whether this auditing power is, in effect, an unreasonable search or seizure which could, in effect, make these sections “unconstitutional”. I agree with defence counsel’s contention that the right to privacy lies at the heart of the protection guaranteed by Articles 7 and 8 of the Charter. However, this must be looked at in conjunction with the fact that the voluntary reporting under the Income Tax Act is the foundation for the collection of taxes. And, undoubtedly, the collection of income tax is of utmost importance to the Government of Canada. And, for this collection system to be effective and efficient, there must be, in effect, a workable mechanism for the detection and enforcement of non- compliance. In Canada, our tax reporting system and our tax collecting system is a self-reporting and self-assessing one and depends, for its success, upon the honesty and integrity of the taxpayer.

Without a doubt, and, as conceded by the Crown, the standards of judicial authorization, based on reasonable and probable grounds, should be met before highly intrusive searches, such as a search of a home or office against the will of the occupant, is carried out. However, I do not believe that those standards apply to what is, in effect, an inspection, on sight, of business documents carried out pursuant to Section 231.1. In order for the federal tax scheme to be successful, it is absolutely imperative that officials from Revenue Canada have this right to carry out on-sight inspections of a taxpayer’s business and personal records.

For the above stated reasons, and after considering the Collins and Stillman cases [R. v. Collins, [1987] 1 S.C.R. 265 (S.C.C.); R. v. Stillman (1997), 5 C.R. (5th) 1 (S.C.C.)] which are reviewed later on in this decision, I am not prepared to hold that Sections 231.1 and 231.5 of the Income Tax Act are inconsistent with Articles 7 and 8 of the Charter.

In arriving at this decision, I have also looked closely at, and placed much weight on, the decision in Thomson Newspapers Ltd. v. Canada (Director of Investigation & Research) (1990), 54 C.C.C. (3d) 417 (S.C.C.) In this case, it was argued that an order made under the Combines Investigation Act, directing officers of a corporation to appear before a regulatory body to be examined under oath and produce documents, violated Sections 7 and 8 of the Charter. This argument was rejected by the Supreme Court of Canada. Mr. Justice LaForest enunciated the principle that there is only a relatively low expectation of privacy, in respect of premises or documents that are used or produced in the course of activities that although lawful, are subject to state regulation as a matter of course. He held that state inspection of the premises and documents is a routine and expected feature of participation in such activity. In the case at bar, I would draw a parallel between activities subject to state regulation and the collection of taxes under the Income Tax Act.

It is to be noted that when an auditor from Revenue Canada conducts an audit of a business or an individual, they are doing so to ascertain whether that business or individual has complied with the provisions of the Income Tax Act. The auditors are seeking information in the course of regulation of the lawful individual or business activity and are not investigating a criminal offence. Just because the Income Tax Act provides sanctions usually associated with the criminal law, for those not cooperating with auditors during the process of an audit, does not necessarily mean that those subject to its operation have the same expectation of privacy as persons suspected of committing what are, by their very nature, criminal offenses.

At page 515 of the Thomson Newspapers case, supra, Mr. Justice LaFor- est said:

As a final comment I would point out that the Combines Investigation Act is not, as regards sanctions, unlike the Income Tax Act.

In the Thomson Newspapers case, supra, an appeal was rejected on the basis that the order to appear before the tribunal was not considered to be an unreasonable seizure, having regard to the low expectation of privacy which individuals have in regard to the documents that fall within the scope of the Combines Investigation Act and the important and difficult task of law enforcement in which it assists.

There can be no doubt that the powers under Section 231 .1 and 231.5 of the Income Tax Act closely resemble those powers upheld in the Thomson Newspapers case. A very important distinction between these sections and the impugned legislation in Canada (Director of Investigation & Research, Combines Investigation Branch) v. Southam Inc., [1984] 2 S.C.R. 145 (S.C.C.) is that in the relevant sections of the Income Tax Act, the powers provide authority for an on-sight demand for production of documents and does not give Revenue Canada officers the power to search. It merely gives them the authority to require documents to be produced for inspection. The powers under this section and the way they are used are relatively non-in- trusive and cannot be compared to a search and seizure carried out pursuant to a search warrant. The powers under the two are like night and day.

I am satisfied that the provisions contained in the two relevant sections of the Income Tax Act are reasonable and that they provide for the requiring of the production of documents and other material in a reasonable manner.

As stated previously, I am satisfied that sections 231.1 and 231.5 of the Income Tax Act are not inconsistent with articles 7 and 8 of the Charter.

Whether Documents and Information Obtained by Revenue Canada Officials During their Audit can be Used in their Subsequent Criminal Investigation?

It is important to emphasize that when the initial audit of Westmorland Fisheries began, there was no suspicion whatsoever of any wrongdoing, or tax evasion, on the part of the company, or any of its partners. In fact, even after the preliminary stages of the audit had been completed and a letter had been sent to the company, and its two principle partners, outlining the auditor’s findings, there were no such suspicions. The company was being audited as part of a closer look being given to the fishing industry by Revenue Canada. Thus, before auditor Snow received the T-133, in April of 1993, there were still no suspicions of tax evasion. And, as stated previously I am satisfied that when Mr. Snow went back to the Westmorland Fisheries plant on or about May 17th or 18th of the same year, there were still no suspicions of tax evasion. He was going back merely to check out a report of cash sales being made to Mr. Furlong and to determine if these cash sales were reported in the books of Westmorland Fisheries.

This situation is far different from one where a source provides Revenue Canada with a “tip” or “lead” about the existence of tax evasion.

The Crown relies on two cases to support the contention that the various inspection powers, provided by Section 231.1 of the Income Tax Act, cannot be used by Revenue Canada to gather evidence by means of an audit, for an eventual prosecution under the Income Tax Act. These two case are R. v. Norway Insulation Inc. (1994), 24 C.R.R. (2d) D-6 (Ont. Prov. Div.); affirmed (1995), 95 D.T.C. 5328 (Ont. Gen. Div.) and R. v. Jarvis, [1997] 5 W.W.R. 461 (Alta. Prov. Ct.). However, I am of the opinion that both cases are Clearly distinguishable, on their facts, from the case at bar.

In Norway, supra, an auditor referred a case to the Special Investigations Unit of National Revenue, after completing an audit and detecting what he felt was unreported income. After the file was formerly assigned to Special Investigations, it was then sent back to the auditor to do additional work and this additional work was the basis for a later obtained search warrant. The court held that the use by the auditor of his authority, pursuant to Section 231.1 of the Income Tax Act, in the second audit, amounted to an illegal search. In the case at bar, Mr. Snow, who did the original audit, detected nothing untoward during his original audit of the company. During his first visit back to the company, after receiving the T-133, Snow sought to clarify the matter of unreported income. Mr. Snow stated quite clearly during his testimony that he was returning to Westmorland Fisheries to see how the company handled cash sales. He said he placed little weight on the $18,00.00 in supposed cash sales because there was no documentation to back it up. It was only one taxpayer’s word against another’s. When he was not able to clarify these cash sales, he subsequently returned to the company and advised Mr. Gaudet of the situation. I do not believe that Snow, in any way, used his auditing powers, under Section 231.1 of the Income Tax Act, to gather information for a criminal (or quasi criminal) investigation.

In the Jarvis, case supra, Revenue Canada decided to audit the tax returns of Mr. Jarvis and that of his late wife, an artist, after the Chief of Auditing had received an anonymous letter indicating that the accused had failed to report some, or all, of income from the sale of art and suggesting that the Department of National Revenue should check certain named galleries for information about the accused’s art sale activities. This was undoubtedly a “lead” from an informant. An audit was eventually arranged and various documentation was provided by the accused, subsequent to which the file was referred to Special Investigations. The court held that the auditor doing the audit believed, prior to the first visit to the taxpayer, that income had been significantly unreported and, therefore, the auditor was performing an investigation, rather than an audit. This, again, is substantially different from the case at bar where prior to the first visit by auditor Snow to the Westmorland Fisheries plant, there were no suspicions whatsoever, or no leads or information, that would indicate that tax evasion had occurred.

Therefore, as stated previously, I am satisfied that both the Norway and Jarvis cases can, and should, be distinguished from the fact situation of the case at bar. In Jarvis, supra, Judge Fardsham concluded that Section 231.1 of the Income Tax Act cannot be used to further an investigation, as opposed to an audit. The accused thought he was being audited and was deemed to be aware of his obligation to co-operate under Section 231.1 of the Income Tax Act. He thought he had a positive duty to answer questions put to him by Revenue Canada auditors. However, because he was being investigated for an offence, as opposed to simply being audited, he was entitled to exercise the right to silence and could have refused to answer the questions.

In summary, in the case at bar, Revenue Canada officials can use evidence obtained during their audit for purposes of their investigation. And, their seizure of documents during the audit, pursuant to the Income Tax Act., Sections 231.1 and 231.5, was legal.

I want to point out that in my opinion, neither the Norway case, supra, nor the Jarvis case, supra, nor any of the other cases cited by defence counsel, stand for the proposition that in a situation, such as the case at bar, where National Revenue, without any prior indication of tax evasion by the taxpayer, set out to do an audit, and at some later time, the audit becomes an investigation, Revenue Canada is then precluded from using the information secured during the audit either during the investigation or in connection with any search warrant related thereto. The case, of course, is somewhat different where National Revenue officials, under the guise of conducting an investigation, commence an audit, and then attempt to use that information secured during the so-called audit, which in fact was an investigation, during later investigatory proceedings.

Is There an Expectation of Privacy Regarding Personal Expenditures,

ie Charitable Donations, and Documentation in the Hands of the Accused’s Accountant?

A number of documents were obtained, on February 4th 1994, from Centre Nouvelle Vie. This religious facility was the recipient of extensive charitable donations from both the accused and his wife, Rose-Marie Gaudet. Guy Belle-Isle testified that some of the records of Centre Nouvelle Vie were “borrowed” by him, and were used to assist in compiling information used in the preparation of a Net Worth Statement of the accused. The evidence would appear to indicate that these documents were turned over voluntarily to Mr. Belle-Isle.

The question remains whether the accused had a reasonable expectation of privacy with respect to these records. I am of the opinion that he did not. The records in question are records which would show charitable donations and have nothing at all, in actual fact, to do with religion. If, in fact, this is a legal, valid, religious institution and qualifies for charitable donations under the Income Tax Act, then one would assume that there are other contributors to this institution, in addition to Mr. Gaudet. Therefore, Mr. Gaudet has no reasonable expectation of privacy concerning the records of this institu- tion. If I am wrong on this point and, in fact, Mr. Gaudet is deemed to have a reasonable expectation of privacy with respect to the Centre Nouvelle Vie documents, then under the jurisprudence enunciated in the Collins and Stillman cases, I am of the opinion that this evidence is admissible at trial. There is also the question of documents taken from the office of Paul Bourque, who was Mr. Gaudet’s and Westmorland Fisheries chartered accountant. The Crown concedes that the accused did have a reasonable expectation of privacy with respect to these records. However, their retrieval is authorized under Section 231 of the Income Tax Act and, I am of the opinion that, in any case, these documents are admissible under the guidelines established in the Collins and Stillman cases.

I want to also add that in my opinion, had Mr. Belle-Isle not obtained documents from the two sources in the manner in which he did, ie. without a search warrant, he could have obtained them, without any difficulty whatsoever, by means of a Search Warrant. Revenue Canada would have obviously known about the existence of Centre Nouvelle Vie form Mr. Gaudet’s tax returns. They would also have obviously known, from the same source, that Mr. Bourque was both Mr. Gaudet’s and Westmorland Fisheries’ accountant. With the knowledge at hand, as stated earlier, I have no doubt that all of the documentation in question could have very easily been obtained via a Search Warrant.

This being the case, and in accordance with the principles enunciated in the Collins and Stillman, cases, even if this expectation of privacy existed with repect to both sources of documents, they are still admissible at trial.

I am aware of a recent decision of the Federal Court of Canada, Del Zotto v. Canada, T-2022-93, Federal Court of Canada, T. D. (1997) [reported (1997), 143 D.L.R. (4th) 340 (Fed. T.D.)], in which the court had to consider whether the use of the inquiry powers under Section 231.4 of the Income Tax Act violated the Section 8 Charter Rights of the taxpayer. In this case, the court dealt with the so-called “expectation of privacy” doctrine. This decision was over-turned on appeal, by a decision rendered by the Federal Court of Appeal on June 10th, 1997. The court was split two to one in overturning the decision of the trial judge. This decision does have some relevance to the case at bar, but neither the facts nor issues are on point and, therefore, I do not consider myself bound by the reasoning, or decision, found therein. As well, I would adapt the reasoning in the Thomson Newspapers Ltd. case, supra, in deciding that the documents in question are admissible at trial.

When Audit Stopped and Investigation Started

A question which now must be answered is precisely when Revenue Canada’s audit of Mr. Gaudet concluded and their criminal investigation began. In order to answer this question, a careful review of the evidence presented at the Voir Dire must be carried out.

As stated previously, Brian Lynch testified that the T-133 document was sent to auditor James Snow in April of 1993. Thereafter, on or about May 17th or 18th of the same year, Snow went back to the Westmorland Fisheries plant and determined that the cash sales reported by Peter Furlong were not reported in the company’s books. Mr. Gaudet was not advised, at this time, why Snow had returned to review company records. Up to and including this visit to the company plant by Snow, ie. in mid May, 1993, I am satisfied that an investigation had not yet been instigated of Mr. Gaudet and that Revenue Canada was, in fact, merely checking out a tax lead and this could be considered as a part of the audit of Westmorland Fisheries, an audit which had not yet been completed. In my opinion, the investigation did not commence until more than a month later.

In early June of 1993, following discussions with Brian Lynch, it was decided, as mentioned earlier, that Snow would return to the Westmorland Fisheries plant and confront Gaudet with the information on hand. This was done. Later, and still in early June, Mr. Snow met with Brian Lynch and advised him that the cash sales, as reported by Furlong, were not found in the books of Westmorland Fisheries and that Y von Gaudet could not account for them. According to Mr. Lynch’s testimony, at this point, he was mandated to refer the file to the Special Investigations Unit. He further testified that shortly after this early June meeting, he, Lynch, or auditor Snow spoke with someone from the Special Investigations Unit. Lynch testified that this conversation, or meeting, probably happened before June 15th, 1993. He also testified that, “We would tell them of the strong possibility of tax evasion”, in this case.

It must be noted that the objective, or purpose of the Special Investigations Unit is “to plan and administer criminal investigation programs.” [See Tax Operation Manual of Revenue Canada, Section 1111(1).] It should also be noted that courts have held, in many cases, that when a case is placed in the hands of the Special Investigations Unit, the case at that moment becomes a criminal investigation (See R. v. Norway Insulation Inc. (1995), 95 D.T.C. 5328 (Ont. Gen. Div.).

From a review of the aforementioned, and other evidence, I am satisfied, that from June 15th, 1993 onward, a criminal investigation of Yvon Gaudet had been initiated by Revenue Canada.

The next visit to the Westmorland Fisheries offices were made by auditor Snow on August 17th, 18th and 19th of 1993 and, as stated previously, by the time these visits were made, Revenue Canada was already involved in a criminal investigation of Yvon Gaudet.

I believe the following quote is relevant to my previous comments. It is from À. v. Norway, supra, LaForme, J. said the following:

While Mr. Persaud’s [of the Audit Department] duties pursuant to s.231.1(1) of the Income Tax Act were of a regulatory nature and consistent with the Act, that changed after Special Investigations became involved and directed the subsequent work. It is at that point that the Respondents were no longer merely being audited but, in fact, were now being investigated for offences which could result in extensive fines and a two year jail term. In other words, “deprivation of liberty” was at stake. At that point, the intrusions of Revenue Canada into the privacy of the Respondents was for more than monitoring compliance with the Income Tax Act. The provisions of s.231.1(1) were, in the case at bar, being relied upon and employed by Revenue Canada as quasi-cri minai legislation thus requiring greater safeguards to the individual. Section 231.1(1) is designed as a regular audit tool to ensure compliance with the Act. It is not designed to gather evidence for the purpose of a criminal prosecution. It should not be used to boot-strap the Ministry investigators into a position where they can obtain a warrant which would otherwise be unattainable.

In considering what test to use, in determining whether inquiries by Revenue Canada are part of an audit or part of an investigation, I have followed a decision of the Supreme Court of Canada, British Columbia (Securities Commission) v. Branch (1995), 180 N.R. 241 (S.C.C.).

In addition, I would cite Samson v. R. (1995), 189 N.R. 89 (Fed. C.A.). Hugessen, J.A. said at page 109, in referring to the Branch decision:

If I read this passage correctly it is necessary, in determining the predominant purpose of an inquiry, to examine its entice context and in particular the legislative and regulatory background against which it is held. Only such an examination can indicate the real purpose of the testimony sought.

I am of the opinion that the Branch test, as interpreted by Hugessen, J.A. in the Samson case, supra, must be applied when determining whether the acts of Mr. Snow, and the other officials from Revenue Canada, were directed to an audit of the accused or to a criminal investigation of him.

I want to emphasize also that a determination of whether the audit was still ongoing, or whether a criminal investigation had commenced, should not be determined on the basis of how officials of Revenue Canada describe what they were doing. In other words, I am not prepared to accept that an audit was ongoing, rather than a criminal investigation, just because officials from Revenue Canada describe it as such. The determination must be made on the basis of the facts of the case.

Categories of Non-Compliance

Auditor James Snow testified that Revenue Canada performs audits on tax payers to make sure of compliance because the system of paying income tax in Canada is based on voluntariness.

Mr. Snow emphasized that just because deficiencies, omissions and evidence of non-compliance is found during an audit, this does not necessarily lead to an investigation and the subsequent laying of charges.

Mr. Snow defined the following categories of non-compliance:

1. Oversights. When oversights are detected, a re-assessment is carried out by the auditor.

2. Misinterpretation of the law.

3. Errors in calculations.

4. Deliberate omissions.

5. Gross negligence. This is a case where a taxpayer, knew what he or she was doing, but let it happen.

6. Gross negligence to the point of being criminal.

7. Criminal evasion or fraud. Tf this is detected, the auditor has to first satisfy himself that there is criminal evasion or fraud. The audit is then stopped and the file referred to the Special Investigations Unit.

It is most important to understand, as I stated earlier, that there are numerous situations where an audit reveals something untoward in a company or an individual’s tax records. This does not mean, in all cases, that the audit will eventually become a criminal investigation, and the matter will be turned over to the Special Investigations Unit. It is only in cases where criminal evasion or fraud is suspected that the Special Investigations Unit will become involved.

Effect of Audit Becoming an Investigation and What is Therefore Triggered

In view of my previous finding that the audit had become a criminal investigation after approximately June 15, 1993, it therefore follows that the visits made to Gaudet by auditor Snow on August 17th, 18th and 19th, 1993, as well as the meetings which Guy Belle-Isle held with Mr. Gaudet, on October 6th, 13th and November 4th of 1993 as well as April 20th and July 19th of 1994, were all investigatory in nature and part of an investigatory process. This being the case, was there an obligation on the particular Revenue Canada officials conducting the interviews to caution Mr. Gaudet (before conducting the said interviews) as to his right to remain SILENT.

An accused person being investigated for an offence is entitled to exercise the right to silence. This was reaffirmed by Mr. Justice Sopinka in the Thomson Newspapers Ltd. case, supra. At page 548, His Lordship quotes Martin, J.A. in À. v. Esposito (1985), 24 C.C.C. (3d) 88 (Ont. C.A.) at page 94:

The right of a suspect or an accused to remain silent is deeply rooted in our legal tradition. The right operates both at the investigative stage of the criminal process and at the trial stage.

Mr. Justice Cory of the Supreme Court of Canada said basically the same thing in À. v. Chambers (1990), 59 C.C.C. (3d) 321 (S.C.C.) at page 340.

Thus, during the August meetings with Snow and all of the meetings with Guy Belle-Isle, Mr. Gaudet had a right to silence and had no obligation in law to answer questions put to him by the Revenue Canada officials. However, since he knew that he was being audited under the Income Tax Act, and had not been advised that the matter had now progressed to a criminal investigation, Gaudet must still have been operating under the wrong conclusion that s.231.1(1) of the Income Tax Act still applied and that he was, therefore, bound by law to answer the inquiries and comply with the requests made by the officials from Revenue Canada.

Thus, during the meetings in question after mid-June of 1993, Gaudet was labouring under two types of misapprehensions:

(a) he did not know of his right to silence; and

(b) he thought he had a legal duty to provide information to the people from Revenue Canada, because of s.231.1(1) of the Income Tax Act.

The purpose of this type of caution is fairly clear: The accused person is told of his or her right to silence.

That right to silence has long been established in the common law. In addition, s.7 of Charter of Rights and Freedoms also protects the right to silence.

Was there an absolute obligation, in the case before me, which would oblige the officials from Revenue Canada to caution Mr. Gaudet, of his right to silence, before each and every meeting with him, after the audit had turned into an investigation? I am of the opinion that where a taxpayer has been led by the officials in question to believe that a statutory requirement to answer questions continues to apply to that taxpayer when it does not, then the authorities have an obligation to inform the taxpayer that the obligation no longer applies. That can best be accomplished by the taxpayer being told that the Revenue Canada officials are involved in an investigation of his or her tax affairs with respect to a possible offence (as distinguished from an audit), and providing the taxpayer with a caution, as to the right to silence, in the usual form (see R. v. Jarvis, a decision of the Provincial Court of Alberta, Criminal Division, Judge A. A. Fradsham, issued at Calgary, Alberta on February 25th, 1997 [reported [1997] 5 W.W.R. 461 (Alta. Prov. Ct.)], which I referred to earlier in this decision).

It is necessary to determine if the Revenue Canada officials, conducting the interview in question, were “persons in authority”. On this point, I would adopt the position of Mr. Justice Cory, then of the Ontario Court of Appeal, in À. v. B. (A.) (1986), 26 C.C.C. (3d) 17 (Ont. C.A.). From his reasoning, I would conclude that at all of the relevant meetings in question, Mr. Gaudet no doubt felt that Snow and Belle-Isle, as well as the other Revenue Canada officials dealing with him, were “persons in authority” because, from his perspective, they were engaged in an audit of his affairs and had powers, under the Income Tax Act, to compel his co-operation. As a result, there was an obligation, for an official from Revenue Canada to provide Gaudet with a caution, about his right to silence, at the commencement of each of these meetings.

I might add that Mr. Belle-Isle, acknowledged that once Revenue Canada officials decide to do a full scale investigation, they must not only tell the taxpayer that he is under investigation. In addition, the taxpayer must be given the standard Caution, as to his right to silence. Mr. Belle-Isle acknowledged that this is Revenue Canada policy.

Did the Failure to Caution the Accused, as to His Right to Silence, at Each of the Meetings, After Mid-June, 1993, Result in a Violation of the Accused’s Section 7 Charter Right?

In deciding this point, I would refer to the decision of the Supreme Court of Canada in R. v. S. (R.J.) (1995), 96 C.C.C. (3d) 1 (S.C.C.), as well as R. v. Hebert (1990), 57 C.C.C. (3d) 1 (S.C.C.), also a decision of the Supreme Court of Canada. From a review of these cases, I am of the opinion that the right to silence protection, contained in s.7 of the Charter of Rights and Freedoms, extends not only to those detained but also, to those who are being investigated for alleged criminal or quasi-criminal acts.

It appears obvious from a review of the case law that a failure to provide a caution, as to the right to silence, to a person does not invariably result in a s.7 breach any more than it would invariably result in a statement being declared involuntary. What must be examined are the particular circumstances of each case.

In the case at bar, I would follow the reasoning of Fradsham, J., in Jarvis, supra, where he said at page 37:

In the case at bar, Jarvis was in a significantly different position from a suspect in most criminal investigations. Unlike most criminal suspects, the law compelled Jarvis to co-operate by answering questions and providing documents if he was the subject of an audit under the Income Tax Act. Jarvis was told that he was being audited but was not told when he met Revenue Canada officials on April I 1th that the audit had become an investigation. Since he was being investigated (as opposed to audited), the legal compulsion to co-operate no longer existed and Jarvis enjoyed the s.7 Charter right to silence. Therefore, unlike most persons being investigated for criminal offences, Jarvis as a result of the failure of the authorities to tell him that the audit had become an investigation, believed that he was still compelled by law to answer questions and provide information.

It is that distinction in the situation of Jarvis which makes the failure to caution him so very serious and, in my view, a violation of his s.7 Charter rights.

From the evidence, I am satisfied that Mr. Snow did not provide the usual Caution, as to the right to silence, to Mr. Gaudet, prior to their meetings on August 17th, 18th and 19th of 1993.

With respect to the meetings between Mr. Belle-Isle and Mr. Gaudet, I am satisfied from the evidence that Mr. Gaudet was cautioned, as to his right to silence, prior to the meetings which took place on October 6th and October 13th, 1993 and April 20th and July 19th of 1994. However, the evidence is clear, and Mr. Belle-Isle admitted so, that Mr. Gaudet was not cautioned, as to his right to silence, prior to the meeting which took place November 4th, 1993.

From the aforementioned, I find as a fact that Mr. Gaudet’s s.7 Charter right was violated at the meetings which took place on August 17th, 18th and 19th, 1993, involving auditor James Snow, and the meeting of November 4th, 1993, involving Guy Belle-Isle.

Effect of the Breach of Mr. Gaudet’s Section 7 Charter Right During the Meetings of August 17th, 18th, and 19th 1993 and November 4th 1994

Later in this decision, when reviewing the evidence obtained by Revenue Canada against Mr. Gaudet from sources in the United States, I review the Collins and Stillman cases, in deciding whether the evidence in question should be excluded, under Section 24(2) of the Charter. I do not believe that it is necessary to review the relevant jurisprudence twice, regarding Section 24(2) exclusion, in deciding whether the evidence obtained at the meetings in questions, in violation of Mr. Gaudet’s Section 7 Charter Right, should be excluded. The same jurisprudence is obviously applicable and relevant. I would simply add the following.

As I later mention, in quoting from the article by Don Stuart, of Queen’s University, found in 5 C.R. (5th), at page 99, after a lengthy review of recent Section 24(2) jurisprudence from the Supreme Court of Canada, Mr. Justice Cory in the Stillman case, summarizes his views and then provides a further short-form summary of the proper approach to take. The first step is to classify the evidence in question as conscriptive or non-conscriptive based upon the manner in which the evidence was obtained. In the case at bar, the evidence, obtained from the subject meetings, would be classified as conscriptive. Mr. Justice Cory then goes on to state that if the evidence is conscriptive, as it is here, and the Crown fails to demonstrate, on a balance of probabilities, that the evidence would have been discovered by alternative non-conscriptive means, then its admission will render the trial unfair. I believe that in the case at bar, the Crown has failed to demonstrate, on the balance of probabilities, that the subject evidence would have been discovered by alternative non-conscriptive means. Thus, I believe that the admission of the evidence obtained at the subject meetings would render the trial of Mr. Gaudet unfair. Mr. Justice Cory goes on to say that the court, as a general rule, will exclude evidence obtained in this manner, without considering the seriousness of the Charter breach or the effect of exclusion on the repute of the administration of justice. He says that this must be the result, since an unfair trial would necessarily bring the administration of justice into disrepute.

I would also opine that even if some, or all, of the evidence obtained by Revenue Canada officials at the crucial meetings, ie in mid August, 1993 and on Nov. 4, 1994, were to be considered as non-conscriptive evidence, my decision would not change.

In the Stillman case, Mr. Justice Cory pointed out that if the evidence in question is non-conscriptive, its admission will not render the trial unfair and, in considering whether or not to exclude this evidence under Section 24(2), the court must then proceed to consider the seriousness of the breach and the effect of the exclusion on the repute of the administration of justice. As to the seriousness of the breach, I am of the opinion that this breach, without question, is a very serious one. The right to remain silent is a very fundamental right and it is very important, to the administration of justice and to our justice system as a whole, that this right be respected. With respect to the effect of exclusion of this non-conscriptive evidence, were it to be classified as such, on the repute of the administration of justice, I am of the firm opinion that the ends of justice, and the reputation of justice, would be better served, were this evidence to be excluded.

In summary, then, I am satisfied that even if the evidence obtained at the meetings on August 17, 18 and 19, 1993 and November 4, 1994 were to be considered as non-conscriptive evidence, it must be excluded under Section 24(2) of the Charter.

In my opinion, the admission of the subject evidence at trial would bring the adminstration of justice into disrepute. Any fair minded lay-person, would, no doubt, find it offensive and contrary to the fair administration of justice for evidence to be obtained in the manner that it was.

In the result, following the principles outlined in the Collins and Stillman cases, and the other cases emanating from the Supreme Court of Canada, I am of the opinion that the evidence obtained from either Yvon Gaudet, Edgar Belliveau, Westmorland Fisheries, or any of its employees or shareholders, during the meetings of August 17th, 18th, 19th, 1993 and November 4th 1994, must be excluded at trial.

Effect of Failure of Revenue Canada Officials to Explain Caution (As to His Right to Silence) to Mr. Gaudet

Counsel for Mr. Gaudet have put forth the argument that Revenue Canada officials were under an obligation to explain this Caution to Mr. Gaudet, after it was read to him. They imply that he, Mr. Gaudet, did not understand it. I do not accept this contention. From the evidence, I am satisfied that at the meetings where Gaudet was read the caution in advance of the meeting, he indicated to the Revenue Canada investigator or investigators that he did understand it. If, in fact, he did not understand the Caution, as to his right to remain silent, then the obligation was on him to advise the person giving the Caution of this fact.

The evidence is that Yvon Gaudet is a high school graduate and had also taken some business courses over the years. One must also consider the fact, which was obviously within the knowledge of the Revenue Canada investigators at the time of giving this Caution, that Mr. Gaudet was operating, or was a very active participant in the operation of, a multimillion dollar fish plant. Thus, there was no reason in the world for the Revenue Canada officials to suspect that Mr. Gaudet would not understand the full meaning of the Caution, as to his right to silence, which is a very simple and straight forward one. The situation would, obviously, be quite different in situations where Revenue Canada officials were dealing with a taxpayer who had limited education or there existed a language problem. There is no evidence whatsoever before me that language presented a difficulty in this case.

Was There a Violation of Mr. Gaudet’s Section 10 Charter Right?

It is the contention of counsel for Mr. Gaudet that he should have been informed about the Revenue Canada investigation of him and that this failure to do so constituted a breach of his Section 10(a) Charter right. It is also alleged that since he did not know of this investigation, he could not properly exercise his right to counsel under Section 10(b) of the Charter. Thus, the allegation is that his Section 10(a) and Section 10(b) Charter rights were violated.

Section 10(a) and 10(b) of the Charter state as follows:

10. Everyone has the right on arrest or detention

(a) to be informed promptly of the reasons therefore;

(b) to retain and instruct counsel without delay and to be informed of that right;

At the outset, I would point out the opening words of Section 10, that is, “Everyone has the right on arrest or detention". I am of the opinion that during auditor Snow’s interviews with Mr. Gaudet, during his visits to the Westmorland Fisheries plant on August 17th, 18th and 19th 1993, at which time, as I have already stated, I believe an investigation had started, and during all of the meetings which Mr. Belle-Isle had with Mr. Gaudet at the Westmorland Fisheries Plant, there was no arrest or detention, even though Snow and Belle-Isle were “persons in authority”. Just because “persons, or a person, in authority” was dealing with him certainly does not mean that Gaudet was being detained. For this reason, I do not feel that the Section 10 Charter right came into play. My rationale for coming to this decision follows.

I have reviewed the cases cited by counsel for Mr. Gauder which, in effect, define when a “detention” has taken place. In R. v. Therens, [1985] 1 S.C.R. 613 (S.C.C.), it was decided that a detention, under Section 10, includes any tangible restraint of liberty. At page 641-642, LeDain J. stated:

In addition to the case of deprivation of liberty by physical constraint, there is in my opinion a detention within Section 10 of the Charter when a police officer or other agent of the state assumes control over the movement of a person by a demand or direction which may have significant legal consequence and which prevents or impedes access to counsel.

I do not believe that what transpired at any of the meetings in question, between Mr. Gaudet and various officials from Revenue Canada, would fit the definition of “detention” as outlined in the Therens case.

Also, in R. v. Thomsen, [1988] 1 S.C.R. 640 (S.C.C.), the term “detention” was dealt with again, this time in the context of a police officer asking an accused to take a test for alcohol consumption from a roadside screening device, a situation vastly different from the case at bar.

Should I be wrong on this point, and were I to find that Mr. Gaudet’s Section 10(a) and 10(b) Charter rights had come into play, due to the fact that he was under detention, I would find, on the evidence, that these Section 10(a) and 10(b) rights, to which he was entitled, had not been violated. I say so for the following reasons:

With respect to the Section 10(a) Charter right

1. Under Section 10(a), Mr. Gaudet had the right to be informed promptly of the reasons for his detention. He would have understood, as early as the first few days of June, 1993, that he was involved in a serious situation. According to auditor Snow’s notes, page 22A of Exhibit D-l. ... “I told Mr. Gaudet the serious nature of the situation, if additional information is found to indicate unreported cash sales.” Any reasonably intelligent person, having been told that cash sales had been reported by Mr. Furlong to Revenue Canada and realizing that Revenue Canada was now looking into this report, had to understand that while an audit may still have been going on, if the matter was not satisfactorily resolved, then Revenue Canada would be heading towards an investigation.

2. When auditor Snow interviewed Mr. Gaudet on August 19th 1993, accompanying him was Leo Bastarache of the Special Investigations Unit. Upon learning the identity of Mr. Bastarache and what department he came from, and there is no evidence before me that Mr. Gaudet did not know this information, he had to understand that something more than an audit might be going on.

3. During Mr. Belle-Isle’s first interview with Mr. Gaudet, on August 6th 1993 and during most, if not all, of his subsequent meetings with Mr. Gaudet, the evidence is that at the start of these meetings, Mr. Gaudet was read the standard Caution, indicating to him that he had the right to instruct counsel without delay. Gaudet had never been read such a Caution by Mr. Snow, and the fact that such a Caution was now being read to him, prior to the start of the meetings, had to indicate to him that he was no longer merely being audited but now that something different was taking place, something in the nature of a criminal investigation.

4. Th mere fact that he was paid so many visits by Revenue Canada officials, after he had received a letter from Mr. Snow outlining the findings of his preliminary audit, had to make him realize that what was going on now was different from an audit and that an investigation was now taking place.

5. I accept Guy Belle-Isle’s evidence that during his meetings of October 6, 1993 and October 13, 1993, with Mr. Gaudet, either he or John Landry, who accompanied him, told the Accused that he was now the subject of a preliminary criminal investigation. Thus, from October 6, 1993 onward, Gaudet could not assert that he did not know that he was the subject of a criminal investigation. It naturally follows that this Sec. 10(a) argument would only be applicable to the mid-August, 1993, meetings held between auditor Snow and Gaudet, since these were the first meetings held between the two, after the criminal investigation had begun. Since I have already ruled that all evidence obtained by Revenue Canada at these August meetings must be excluded, for other reasons, then this Section 10(a) argument becomes moot.

It might be argued that even though Mr. Gaudet knew that the audit was completed and that what was now taking place was a criminal investigation, there was an obligation on Revenue Canada officials to inform him of the specific nature of the investigation. I am of the opinion that this was not necessary. During. Snow’s visit to Mr. Gaudet, during the first few days of June, 1993, Gaudet was questioned about cash sales and was told about an invoice in the amount of $723.80 for a cash sale which had apparently not been recorded in the books of the company. During Mr. Snow’s visit (with Leo Bastarache) to Mr. Gaudet in mid-August of 1993, Mr. Gaudet was told about National Revenue’s concern about the large percentage of missing invoices. From Exhibit D-6, page 1, it can be seen that during Guy Belle- Isle’s visit to Mr. Gaudet, on October 13th 1993, he was questioned about missing invoices which, “Would have been used to ship fish products on consignment to Frostar and Mill Brook Cold Storage.” Thus, it can be seen that from early June of 1993 onward, it would have been obvious to anyone attending the subsequent meetings that an investigation was on going by Revenue Canada into missing invoices. In fact, there could be no mistake of this and I find it quite odd for Mr. Gaudet to now put forth the suggestion that he was not aware that an investigation was ongoing and did not know the nature of that investigation.

As to the Section 10(b) right:

Section 10(b) provides that everyone has the right on arrest or detention to retain and instruct counsel without delay and to be informed of that right. Mr. Snow did not, at any of his meetings with Gaudet, ever read such a Caution to him. I previously decided in this decision that because he was not advised of his right to remain silent, which should have been given to him once the audit had turned into an investigation, any evidence derived from the meetings in question was not admissible at trial. This would include all evidence obtained at the August 17th, 18th and 19th meetings held between auditor Snow and Mr. Gaudet. Obviously, the Caution, with respect to the right to retain and instruct counsel without delay, should also have been given by Snow to Gaudet at these mid-August meetings and the failure to do so would necessitate all evidence derived from these meetings being excluded at trial, pursuant to Section 24(2) of the Charter. 1 need not enter into a full and complete review of the jurisprudence related to this matter of exclusion under Section 24(2), except to say that this Section 10(b) right is a very sacred one and under the circumstances, I am satisfied that the jurisprudence from the Supreme Court of Canada would dictate that this evidence be excluded. See review later on of Collins and Stillman cases.

With respect to the meetings between Mr. Belle-Isle and Mr. Gaudet on October 6th, October 13th and November 4th 1993 as well as April 20th and July 19th of 1994, I am satisfied that Mr. Gaudet was advised of his right to retain and instruct counsel without delay, prior to each of these meetings, except for one meeting, that is, before the meeting of November 4th 1993. I have already decided that because he was not advised of his right to remain silent, any evidence obtained during that November 4th meeting must be excluded.

Thus, concerning the August 17th, 18th and 19th meetings, with auditor Snow, and the November 4th 1993 meeting involving Guy Belle-Isle, the evidence obtained at these meetings must be excluded at trial for 2 reasons, that is, because the Accused was neither advised of his right to remain silent nor his right to retain and instruct counsel without delay.

From the evidence of Mr. Belle-Isle, it appears that on one or more of the dates previously mentioned, he met with Gaudet more than once. My understanding of the evidence is that there would be discussions with Mr. Gaudet during a first meeting of the day, and during a subsequent meeting, Mr. Belle-Isle would visit Gaudet simply to pick up records which Gaudet had agreed at the first meeting that day to turn over to Belle-Isle. I do not believe that prior to this so-called second meeting of the day, Mr. Belle-Isle would have to again caution Mr. Gaudet, where he had, in fact, done so, prior to their first meeting of the day. So long as there were no further discussions during these second meetings, and it was solely for the purpose of picking up material which Gaudet had earlier in the day agreed to provide Belle-Isle, then I am of the opinion that the Caution, with respect to counsel, need not have been read, prior to this second meeting.

Counsel for Mr. Gaudet also puts forth the suggestion that National Revenue officials were not only obligated to read Mr. Gaudet the Caution, with respect to his Right to Counsel, but also had an obligation to make sure that he understood it and that they had to explain it to him. I would refer to the decision of the Supreme Court of Canada in R. v. Baig, [1987] 2 S.C.R. 537, 37 C.C.C. (3d) 181 (S.C.C.), where the court found that where there is no evidence that an accused did not understand the Section 10(b) Caution, and there is no evidence that the police should have been aware that the accused did not understand, the onus is on the accused to prove that he asked for the right but it was denied, or that he was denied any opportunity to ask for it. Such is not the case here. The Baig case, supra, also appears to stand for the proposition that where there are no special circumstances indicating that an accused may not understand the Section 10(b) Caution, the police are under no obligation to ensure themselves that he/she understands that Caution.

With respect to these allegations by counsel for Mr. Gaudet, ie. that he should have been given more time to comprehend the meaning of the Charter Caution, or that he did not fully understand it, or that it should have been explained to him, I would also make reference to the following decisions that is À. v. Hollis (1992), 76 C.C.C. (3d) 421 (B.C. C.A.) and R. v. Bircham (1995), 95 W.A.C. 247 (Sask. C.A.), a decision of the Saskatchewan Court of Appeal.

In the result, under the circumstances of the case at bar, I reject defence counsel’s argument with respect to there being an obligation on Revenue Canada officials to explain this Caution to Mr. Gaudet, to make certain that he understood it and to give him more time to comprehend it.

Discussion Concerning the Obtaining of Documents from the United States Under the So-Called Canada/U.S Tax Treaty

I decided on March 27th 1997 that the Canadian standard for issuance of a search warrant is required to be satisfied before the Minister of Justice and Attorney General of Canada could submit Letters of Request asking U.S. authorities to search for and seize certain documents relating to Mr. Gaudet’s business dealings in that foreign country. In view of the fact that the Canadian standard for the issuance of a search warrant was not satisfied before the Letter of Requests were submitted, it follows that Revenue Canada officials did, in securing various documents from the American authorities, violate the rights of the accused, as guaranteed by section 8 of the Charter. Of course, this does not necessarily mean that all documentation obtained via this procedure, and all documentation and information obtained by Mr. Belle-Isle during his various visits to the United States, should be automatically excluded at trial.

Even if I am satisfied that Mr. Gaudet’s right under Section 8 of the Charter was violated, the test set out in Section 24(2) of the Charter, that is, that the admission of the evidence would bring the adminstration of justice into disrepute, must be met.

In a paper entitled EXCLUSION OF EVIDENCE UNDER SECTION 24(2) OF THE CHARTER and delivered to The New Judges Training Program, sponsored by the Canadian Association of Provincial Court Judges and delivered in April of 1997, Mr. Justice James C. MacPherson of the Ontario Court of Justice had the following to say in summarizing the jurisprudence in connection with Section 24(2) of the Charter:

Section 24(2) of the Charter has fundamentally altered the judicial landscape and brought about a revolution in the exclusion of evidence that was obtained in an unconstitutional manner. The Supreme Court has wrestled with the nature and scope of the remedy in over 60 cases. The general principle that can be derived from these decisions is that exclusion of evidence is a broad remedy that is applied in circumstances where the accused is conscripted against himself or herself in assisting the Crown to obtain evidence that it would not have otherwise been able to obtain. Evidence obtained in such a manner would make the trial unfair and, therefore, must be excluded.

The court has created an informal hierarchy of rights that assists in determining the conscriptive nature of a breach. This means that while the distinction between real and self-emanating evidence has been blurred, the Supreme Court has made it clear that real evidence is less likely to be excluded unless there is an element of forced conscription in its location. On the other hand, self-emanating evidence will generally be excluded unless the Crown could have legally obliged the accused to create the evidence.

Courts should, unless the evidence is obviously conscriptive and there were no reasonable alternatives to aid in the discovery of the evidence, enter into an analysis of the other two criteria for exclusion. While the fair trial criteria favours the exclusion of evidence, the other two criteria are more neutral. While the Supreme Court has not explicitly repeated the Collins requirement for a balancing of the three criteria, courts should at least consider the seriousness of the violation and the effect of the exclusion.

The first case I want to deal with, and a most important one in deciding the question at hand, is À. v. Collins, [1987] 1 S.C.R. 265 (S.C.C.).

Lamer, J. (as he then was) at page 283, listed the following factors that the courts have most frequently considered in determining whether the admission of evidence would bring the administration of justice into disrepute: I. What kind of evidence was obtained? 2. What Charter Right was infringed? 3. Was the Charter violation serious or was it of a merely technical nature? 4. Was it deliberate, wilful or flagrant, or was it inadvertent or committed in good faith? 5. Did it occur in circumstances of urgency or necessity? 6. Were there other investigatory techniques available? 7. Would the evidence have been obtained in any event? 8. Is the offence serious?

At page 284, he said the following:

Real evidence that was obtained in a manner that violated the Charter will rarely operate unfairly for that reason alone. The real evidence existed irrespective of the violation of the Charter and its use does not render the trial unfair. However, the situation is very different with respect to cases where, after a violation of the Charter the accused is conscripted against himself through a confession or other evidence emanating from him. The use of such evidence would render the trial unfair, for it did not exist prior to the violation and it strikes at one of the fundamental tenets of a fair trial, the right against self-incrimination. Such infringement will generally arise in the context of an infringement of the right to counsel.

Mr. Justice Lamer goes on to say that there are other factors which are relevant to the seriousness of the Charter violation and thus to the disrepute that will result from judicial acceptance of evidence obtained through that violation. At page 285, he said: As LeDain J. wrote in Therens, supra, at page 652:

The relative seriousness of the constitutional violation has been assessed in the light of whether it was committed in good faith, or was inadvertent or of a merely technical nature, or whether it was deliberate, wilful or flagrant. Another relevant consideration is whether the action which constituted the constitutional violation was motivated by urgency or necessity to prevent the loss or destruction of the evidence.

Chief Justice Lamer goes on to say, at page 285:

The final relevant group of factors consists of those that relate to the effect of excluding the evidence. The question under Section 24(2) is whether the system’s repute would be better served by the omission or the exclusion of the evidence, and it is thus necessary to consider any disrepute that may result from the exclusion of the evidence. In my view, the administration of justice would be brought into disrepute by the exclusion of evidence essential to substantiate the charge, and thus the acquittal of the accused, because of a trivial breach of the Charter. Such disrepute would be greater if the offence was more serious. I would thus agree with Professor Morissette that evidence is more likely to be excluded if the offence is less serious. I hasten to add, however, that if the admission of the evidence would result in an unfair trail, the seriousness of the offence could not render that evidence admissible. If any relevance is to be given to the seriousness of the offence in the context of the fairness of the trial, it operates in the opposite sense: the more serious the offence, the more damaging to system’s repute would be an unfair trail.

Finally, a factor which in my view, is irrelevant is the availability of other remedies. Once it has been decided that the adminstration of justice would be brought into disrepute by the admission of the evidence, the disrepute will not be lessened by the existence of some ancillary remedy.

In the Jarvis case, supra, Fradsham J., at page 72, summarizes the factors to be considered in deciding whether to exclude evidence under Section 24(2):

I. Factors which relate to the fairness of the trial (e.g.: did the evidence pre-exist the Charter breach or was the Charter breach an integral part of the existence of the evidence?); 2. Factors which relate to the seriousness of the Charter breach (was it committed in good faith or inadvertently or flagrantly or somewhere in

between?); 3. Factors which address this question: is the inclusion or exclusion of the evidence more likely to bring the administration of justice into disrepute?

Fradsham J. pointed out, at page 72, that Chief Justice Lamer came to a conclusion that one must consider whether the admission of the evidence could, as opposed to would bring the adminstration of justice into disrepute:

Section 24(2) should thus be read as ‘the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings could bring the administration of justice into disrepute’. This is a less onerous test...

Section 24(2), and its application, was very recently considered by the Supreme Court of Canada in R. v. Stillman (1997), 5 C.R. (5th) 1 (S.C.C.). In Stillman, supra, reference is made to the proposition that if the admission of evidence which is obtained in violation of a Charter right would render a trial unfair, then that evidence must be excluded. One must first classify the type of evidence in question. Evidence to be considered under “fairness” would generally fall into one of two categories, that is, non-conscriptive or conscriptive evidence. The admission of evidence falling into the former category will rarely operate to render the trial unfair. However, if the evidence is classified as non-conscriptive, the court then should move on to consider two of the tests set out in Collins, supra, that is, the seriousness of the Charter violation and the effect of the exclusion.

in an article entitled STILLMAN: LIMITING SEARCH INCIDENT TO ARREST, CONSENT SEARCHES AND REFINING THE SECTION 24(2) TEST, by Don Stuart, Faculty of Law, Queen’s University, found in 5 C.R. (5th), at page 99, the author reviews the opinion of Cory J. (in Stillman) in connection with an analysis of Section 24(2) and says the following at page 104:

After a lengthy review of recent Section 24(2) jurisprudence from the Supreme Court, Cory J. summarizes his views and then provided a further short form summary of the proper approach as follows:

1. Classify the evidence as conscriptive or non-conscriptive based upon the manner in which the evidence was obtained. If the evidence was non-conscriptive, its admission will not render the trial unfair and the court will proceed to consider the seriousness of the breach and the effect of exclusion on the repute of the adminstration of justice. 2. If the evidence is conscriptive and the Crown fails to demonstrate on the balance of probabilities that the evidence would have been discovered by alternative non-conscriptive means, then its admission will render the trial unfair. The court as a general rule, will exclude the evidence without considering the seriousness of the breach or the effect of exclusion on the repute of the administration of justice. This must be the result since an unfair trial would necessarily bring the adminstration of justice into disrepute. 3. If the evidence is found to be conscriptive and the Crown demonstrates on a balance of probabilities that it would have been discovered by alternative non-conscriptive means, then its admission will generally not render the trial unfair. However, the seriousness of the Charter Breach and the effect of exclusion on the repute of the administration of justice will have to be considered.

In recent decisions, it would appear that the Supreme Court of Canada has emphasized that the question of whether evidence is “real evidence” is not a decisive question in determining whether to exclude illegally obtained evidence on grounds of fairness. Rather the important question is whether the illegally obtained evidence was “conscriptive”, meaning whether an Accused was in some way instrumental in the prosecutor’s acquiring the illegally obtained evidence. Because admitting conscriptive evidence would be a form of self-incrimination, admitting conscriptive evidence could have a seriously adverse affect on the fairness of the trial.

In Stillman, supra, conscriptive evidence was explained as follows at paragraphs 113-114;

[para 113] If the evidence, obtained in a manner which violates the Charter, involved the accused being compelled to incriminate himself either by a statement or the use as evidence of the body or of bodily substances it will be classified as conscriptive evidence. See Manninen, supra; Ross, supra, and Bartle, supra. On the other hand, if the evidence, obtained in a manner which violates the Charter, did not involve the accused being compelled to incriminate himself either by a statement or the use as evidence of the body or of bodily substances it will be classified as non-conscriptive evidence. See R. v. Silveira, [1995] 2 S.C.R. 297, and Evans, supra.

[para 114] Conscripted or self-incriminating evidence may lead to what has been termed derivative evidence. This phrase has been used to describe “real” evidence which has been “derived” from, that is to say found as a result of, the conscriptive evidence. The evidence discovered would be classified as conscriptive, since the accused’s compelled statement was a necessary cause of its discovery. In those cases, the courts must carefully review the events leading up to the finding of the evidence rather than simply considering whether the ultimate piece of evidence which the Crown is seeking to introduce is “real” evidence.

It is within this framework that I must consider whether the documentary evidence, and other evidence, obtained by Mr. Belle-Isle from American authorities, both by virtue of the Letters of Request and his various visits to the United States, should be excluded at trial.

Application of the Principles Expressed in Collins and Stillman to the Case at Bar

Earlier in this decision, I discussed the eight factors which Lamer J. in the Collins case, supra, indicated the courts have most frequently considered in determining whether the admission of evidence would bring the administration of justice into disrepute.

1. The type of evidence obtained. In the case at bar, the evidence was real evidence and as Lamer stated in the Collins case, “real evidence that was obtained in a manner that violated the Charter will rarely operate unfairly for that reason alone. The real evidence existed irrespective of the violation of the Charter and its use does not render the trial unfair.”

2. What Charter Right was infringed? In this case, it was the Section 8 Charter right, which is an important one.

3. Was the Charter violation serious or was it of a merely technical nature. This Charter violation was no doubt serious. However, it was technical in nature in the sense that while Revenue Canada officials did follow the Canada/U.S. Tax Treaty, this was not enough and they perhaps should have done more.

4. Was it deliberate, wilful or flagrant, or was it inadvertent or committed in good faith? I am satisfied that this violation was not committed deliberately or flagrantly. Mr. Belle-Isle was taking a course of action prescribed by law. He was following the provisions of the Canada/U.S. Tax Treaty and had no way of knowing, at that time, that he was violating the Section 8 Charter right of the accused. I might add that Mr. Belle-Isle initiated the process under the Canada/U.S Tax Treaty well before the case of the Schreiber v. Canada (Attorney General), decided by the Federal Court of Appeal. This decision is dated March 12/97 [reported (1997), 6 C.R. (5th) 314 (Fed. C.A.)]. I am satisfied that this Charter violation was inadvertent and committed in good faith.

5. Did d occur in circumstances of urgency or necessity? It is quite pos sible that Revenue Canada officials believed that if they did not proceed ahead as quickly as possible, with respect to the documents in the United States, the documents might be destroyed. By the time requests were made for potential evidence located in the United States, the search warrants in Canada had already been executed against, inter alia, Mr. Gaudet’s home, his office, and the office of his Chartered Accountant. Thus, by December of 1994, Mr. Gaudet had to have realized that Revenue of Canada officials were involved in a very serious and major investigation. Revenue Canada officials, no doubt, realized that he was aware of this fact, and they may have feared that if they did not move quickly to obtain this potential evidence located in the United States, it might be destroyed. I would refer again to the words of LeDain J. in Therens, supra, where he said at page 652: “another relevant consideration is whether the action which constituted the constitutional violation was motivated by urgency or necessity to prevent the loss or destruction of the evidence.”

There is a further Supplementary Request For Assistance, dated August 30th 1995, and this document, on page 2, contains the following sentence: “We have already executed search warrants on Westmorland Fisheries Ltd. on October 27th 1994 pursuant to Section 487 of the Criminal Code and we have time restrictions placed on us by the courts. We therefore have to complete our work on a timely basis and we should like to proceed as soon as possible," This statement is indicative of the fact that Mr. Belle-Isle felt that time was of the essence and that he had to move quickly on this file in securing evidence from United States sources. I would also refer to a letter dated January 31st 1995, also a part of Exhibit D-15, addressed to Ms. Regina M. Deanehan, Assistant Commissioner (International), Internal Revenue Service of the United States. This letter is written over the signature of Carole Gouin, Director General, International Tax Programs Directorate, and also refers to time being of the essence in this file. Page two of the letter contains the following sentence, “Due to time limitations imposed upon the Department to lay tax evasion charges, we appreciate to obtain the requested information expeditiously.” An almost identical sentence, referring to this time limitation, is contained in a follow-up letter, between the same two parties and dated August, 1995.

6. Were there other investigatory techniques available? Yes. The Charter violation would not have happened had Mr. Belle-isle, in a process suggested in the Schreiber case, gone before a judge and received that judge’s permission to proceed ahead, before he initiated the process under the Can- ada/U.S. Tax Treaty. In other words, Mr. Belle-Isle could have made sure that the judge was satisfied that the Canadian standard for the issuance of search warrant had been met.

7. Would the evidence have been obtained in any event? In my opinion, yes. I am convinced that had Mr. Belle-isle gone before a judge, prior to initiating the process under the Canada/U.S. Tax Treaty, the judge would have had no difficulty deciding that the Canadian standard for issuing a search warrant had been achieved. I believe that a very important consideration here is that on October 24th 1994, approximately two months before Mr. Belle-Isle initiated the procedure under the Canada/U.S Tax Treaty, Provincial Court Judge Alfred H. Brien of Saint John had issued 3 search warrants, authorizing the search of various businesses, as well as the personal residence of Mr. Gaudet. Thus, Judge Brien was obviously satisfied that there were reasonable grounds for believing that certain items ie. the things to be searched for, would afford evidence of the commission of offences under the Income Tax Act. It was not until December 20th 1994 that Mr. Belle-isle delivered a Request For Assistance to the Director General International Tax Program’s Directorate. A request of August 8th 1995 sought permission and assistance to travel to an American company in Massachusetts. The fact that Mr. Belle-isle sought and obtained a search warrant, relating of course to a Canadian search only, is, I believe, indicative of the fact that the breach of Mr. Gaudet’s Charter right here was not deliberate, wilful or flagrant. Mr. Belle-Isle had every right to believe that once he had already obtained permission from a New Brunswick Judge for a search warrant, he would not require further judicial authority for proceeding under the Canada/U.S. Tax Treaty. Granted, the things to be searched for were quite different and located in 2 different countries. But the point is that Mr. Belle-Isle had already satisfied a judge that there were reasonable and probable grounds to believe that the items searched for would provide evidence of criminal activity. And I appreciate here that the items to be searched for were obviously different, but the point is that an appearance had been made before a judge.

8. Is the offence serious? Yes, of this there can be no doubt. Mr. Gaudet is charged with five offenses, involving unreported income exceeding one million dollars and is charged with evading the payment of taxes in an amount exceeding one quarter of a million dollars.

In my view, there is no doubt that the administration of justice would be brought into great disrepute were evidence to be excluded, evidence essential to substantiate the charge, and thus result in the acquittal of the accused, because of a “technical” breach of the Charter. I use the word “technical” not because I believe that the Charter right in question is an insignificant one. Quite the contrary. I use the term only because of the fact that those who breached this right of the accused had no way of knowing that they were breaching his Section 8 Charter right. The breach was not of the usual type seen in our courts. The offences in question, as mentioned previously, are very serious ones and I am of the opinion that the administration of justice would suffer far more should the evidence be excluded and the ac- cused acquitted, than if the evidence were admitted, despite the Charter breach.

As stated earlier, in Stillman, supra, the court decided that evidence to be considered under “fairness”, would generally fall into one of two categories, that is, non-conscriptive or conscriptive evidence. I am satisfied, that the evidence in question, obtained by Revenue Canada officials under the Canada/U.S Tax Treaty, should be classified as non-conscriptive evidence. Stillman states that the admission of non-conscriptive evidence will rarely operate to render a trial unfair. However, once the evidence is classified as non-conscriptive, the court must then move on to consider two of the tests set out in Collins, supra, that is, the seriousness of the Charter violation and the effect of its exclusion. Both of these tests have been considered earlier in this decision.

I want to emphasize that in my opinion, Revenue Canada officials, when proceeding under the Canada/U.S. Tax Treaty, were not on a fishing expedition in the United States for evidence against Mr. Gaudet. These officials had already conducted a major investigation in Canada, had obtained 3 search warranst from a provincial court judge, and had conducted search and seizures in Mr. Gaudet’s home, office, and in the office of his chartered accountant.

Exhibit D-15 consists of, inter alia, a copy of the Request for Assistance, dated December 20th 1994, and addressed to the International Tax Program Directorate, Attention: Andre Viau. This document contains a large quantity of information relating to Mr. Gaudet and Westmorland Fisheries Ltd. and provides the basis for the request for assistance from the U.S authorities. Also a part of Exhibit D-15 is a Supplementary Request for Assistance, addressed to the same party and dated May 24th 1995. This document provides further information about the business dealings of Mr. Gaudet and Westmorland Fisheries and is indicative of the fact that National Revenue officials were not on a fishing expedition but, rather, had a large amount of information available to them, indicating potential criminal activity by Mr. Gaudet and/or his companies.

It was suggested by counsel for Mr. Gaudet during the Voir Dire hearings that in deciding whether to exclude or not to exclude the evidence in question, as well as other evidence obtained by Revenue Canada officials, that I look not only at the facts of the case at bar. Rather, it was suggested that I look at other possible situations and attempt to determine how my decision might effect the system of justice as a whole. I have done this, and am of the opinion that permitting the Crown to use the evidence obtained in the United States would not, in any way, bring the administration of justice into disrepute. Nor would it trivialize the breach of Mr. Gaudet’s Section 8 Charter Right which occurred here. As I said earlier, I am of the opinion that members of the public would be far more scandalized were this evidence to be ruled non-admissible, as opposed to it being ruled admissible.

After a very careful review of the evidence submitted during the Voir Dire, after having had a close look at the material presented to me by counsel for both sides and after a careful study of the relevant jurisprudence, I am satisfied that a weighing of the relevant factors favours the admission at trial of all evidence obtained by the Crown in the United States via the Can- ada/U.S. Tax Treaty.

Search Warrant - Was There a Section 8 Charter Breach?

Mr. Gaudet’s counsel maintains that the Information to Obtain a Search Warrant in this case contains information which is erroneous and information obtained in violation of the accused’s s.7 Charter right. It was further submitted that without that erroneous and tainted information, the three search warrants would not have been granted and that, therefore, the materials seized by Revenue Canada, pursuant to the search warrants, were seized in violation of the accused’s s.8 Charter right, i.e. the right “to be secure against unreasonable search or seizure”.

I should add that basically the same Information to Obtain Search Warrant was used for all 3 search warrants. The 3 search warrants differed only in specifying the different locations to be searched.

The first question to be answered is whether all, or parts, of the Information to Obtain the Search Warrant should be excised.

The Information to Obtain the Search Warrant (hereinafter called the “Information”) allegedly contains averments based on facts elicited from various sources, including the numerous meetings held with the accused, by both auditor Snow and Guy Belle-Isle. From the evidence, it is also clear that the Information contained so-called averments which were erroneous. I have already determined that the fruits of some of the meetings, i.e. the meetings in mid-August involving auditor Snow and the November 4th meeting involving Guy Belle-Isle, were obtained by virtue of a violation of Mr. Gaudet’s s.7 Charter right.

The next task is to assess the impact of those findings on the validity of the search conducted pursuant to the search warrants. To do this, one must review the relevant case law dealing with search warrants.

The following jurisprudence is outlined in Jarvis, supra, beginning at page 39. Some of these principles, emerging from the relevant cases, follow:

1. Mr. Justice Sopinka, of the Supreme Court of Canada, said in R. v. Wiley (1993), 84 C.C.C. (3d) 161 (S.C.C.) at page 169:

... a search warrant issued in reliance, in part, on facts which are found to be inadmissible on review will continue to be valid if it can be shown that the warrant would have issued even if the inadmissible fact had been excised from the Information sworn to obtain the warrant.

2. With respect to erroneous statements in the Information the cases can be divided into three general categories: intentional misstatement; reckless misstatement; and careless misstatement. False statements, regardless of how they came to be in the Information, are to be disregarded when determining whether sufficient evidence was put before the granting judicial officer to justify the issuance of a search warrant [see R. v. Church of Scientology (1987), 31 C.C.C. (3d) 449 (Ont. C.A.).]

3. If the allegations in the Information are deliberately misleading, then the evidence obtained through execution of the resulting search warrant will be excluded. See R. v. Brassard (1992), 107 Sask. R. 12 (Sask. Q.B.).

4. Evidence obtained as a result of Charter breach must be excised from the Information. See R. v. Carrier (1996), 181 A.R. 284 (Alta. C.A.).

5. A test for reviewing the Information was set out by Mr. Justice Sopinka in R. v. Garofoli (1990), 60 C.C.C. (3d) 161 (S.C.C.). At page 187-188:

The correct approach is set out in the reasons of Martin, J.A. in this appeal. He states at page 119:

If the trial judge concludes that, on the material before the authorizing judge, there was no basis upon which he could be satisfied that the preconditions for the granting of the authorization exist, then, it seems to me that the trial judge is required to find that the search or seizure contravenes s.8 of the Charter.

The reviewing judge does not substitute his or her view for that of the authorizing judge. If, based on the record which was before the authorizing judge as amplified on the review, the reviewing judge concludes that the authorizing judge could have granted the authorization, then he or she should not interfere. In this process, the existence of fraud, non-disclosure, misleading evidence and new evidence are all relevant, but, rather than being a prerequisite to review, their sole impact is to determine whether there continues to be any basis for the decision of the authorizing judge.

Averments Based on Facts Elicited at the August 17th, 18th and 19th Meetings and the November 4th Meeting

These meetings provided Revenue Canada with a great deal of information. All of this information is tainted by the s.7 Charter breach and must be excised from the Information. As a result, the following paragraphs, which contain or are dependent upon information obtained from those meetings, must be excised from the Information:

Paragraph (14)(h) — page 11 (only the information obtained by auditor Snow during the August 19th, 1993 meeting should be excised.)

Paragraph (14)(1) — page 11.

Paragraph (17) — page 14.

Paragraph (18) — page 14.

Averments Which are False

The Information, as mentioned previously, contained some averments which were false. From a complete and careful review of the evidence, I am satisfied that the inclusion of those false statements were the result of carelessness. These false averments were neither an attempt to intentionally mislead Judge Brien, nor the result of reckless disregard for the truth. I am satisfied that the averments which were, in effect, false, were extremely minor in nature and were not of real substance. Accordingly, they need not be excised from the Information.

Do the Remaining Portions of the Information Support the Granting of a Search Warrant?

The Criminal Code requires that the Information to Obtain Search Warrant satisfy the judicial officer that there are reasonable grounds to believe that in the place or places sought to be searched, there are things which will afford evidence of the commission of an offence. What is the standard for “reasonable grounds”? Wilson, J. answered that question in R. v. Debot (1989), 52 C.C.C. (3d) 193 (S.C.C.) at page 213:

The question as to what standard of proof must be met in order to establish reasonable grounds for a search may be disposed of quickly. I agree with Martin. J.A. that the appropriate standard is one of “reasonable probability” rather than “proof beyond a reasonable doubt” or “prima facie case”. The phrase “reasonable belief” also approximates the requisite standard.

From a careful review of the Information to Obtain Search Warrant, I am satisfied that the remaining portions of the Information do provide those reasonable grounds for the issuance of a Search Warrant, even with the false statements contained therein having been completely disregarded.

Conclusion

In summary, then, my conclusion is that the searches conducted under authority of Judge Brien’s Search Warrants by Revenue Canada, in general, were valid, but that all of the documentation and information received by Revenue Canada from the meetings with Mr. Gaudet involving auditor Snow, on August 17th, 18th and 19th, 1993 and with Mr. Belle-Isle, on November 4th, 1993, are to be excluded and are not admissible at trial.

I would add the following comments concerning the search warrants and the law, in general, in connection with search warrants.

There is ample jurisprudence to support the proposition that an informant has a duty to make full and frank disclosure to a judicial officer issuing a search warrant. In addition, where there is evidence that the informant acted in bad faith by intentionally and recklessly not making full and frank disclosure of material facts, a search warrant may be quashed. See Société Radio-Canada c. Nouveau-Brunswick (Procureur général) (1989), 55 C.C.C. (3d) 133 (N.B. C.A.). In the case at bar, I am satisfied that there is no evidence before me that Mr. Belle-Isle acted in bad faith or that he intentionally and recklessly did not make full and frank disclosure of material facts, in the Information to Obtain Search Warrant.

As stated earlier, the Supreme Court of Canada case R. v. Wiley, supra, stands for the proposition that evidence obtained contrary to an accused’s Charter rights, and which is excluded under s.24(2) of the Charter, must be excised from the Information. This I have done earlier in this decision.

In R. v. Wiley, supra, following R. v. Garofoli, supra, the court decided (as I stated earlier) that a search warrant issued in reliance, in part, of facts which are found to be inadmissible on review, will continue to be valid, if it can be shown that the search warrant would have been issued even if the inadmissible facts had been excised from the Information. I am satisfied, in the case at bar, that Judge Brien would have issued the subject search warrant, even if the inadmissible facts and paragraphs referred to earlier, had been excised from the Information.

Defence Counsel's Attempt to Have the Search Warrants Quashed

There was some argument during the Voir Dire as to exactly what my powers were ie. what I could and could not do, in connection with the search warrants.

At the outset, I would point out that a search warrant, and the sworn Information supporting it, are presumed valid. See R. v. Collins (1989), 48 C.C.C. (3d) 343 (Ont. C.A.).

The law is also clear that any effort to quash a search warrant must be brought before a Superior Court on judicial review. See R. v. Mills, [1986] 1 S.C.R. 863 (S.C.C.). The role, or function, of a superior court in reviewing the issuance of a search warrant is clearly set out in the text Criminal Pleadings and Practice in Canada by E.G. Ewaschuk, 2nd edition, at page 3-24:

The function of a superior court in reviewing the issuance of a search warrant, where a charge has not been laid, is not to conduct a de novo hearing but to decide whether the information given to the justice permitted him to act judicially in exercising his discretion in issuing the search warrant. It is not for the superior court judge to substitute his view for that of the issuing justice. A search warrant may be quashed only for jurisdictional error. Where a “charge has been laid”, the practice is not to hear the motion to quash but to defer the matter to the trial judge to be heard as a “s. 8 Charter motion”. [See R v. Jack- son (1983), 9 C.C.C. (3d) 125 and Société Radio-Canada v. Nouveau-Brunswick (Procureur-General) (1989), 55 C.C.C. (3d) 133]. The reviewing court must determine whether there was some evidence after excluding any invalid parts of the information, upon which the issuing justice could determine that a search warrant should be granted. The reviewing court must look at the “totality of circumstances” before the issuing justice, [See R. v. Church of Scientology (No.6); R. v. Walsh (1987), 31 C.C.C. (3d) 449.] after having excised or expunged evidence which has been illegally obtained. Furthermore, the existence of fraud, non-disclosure, misleading evidence and “new-evidence” led at the hearing are all relevant to the determination of whether the remaining evidence constituted “some evidence” capable of justifying the issuance of the search warrant, [See R. v. Grant, [1993] 3 S.C.R. 223] though the “new evidence” may not amplify or strengthen the Crown’s case in favour of the reasonableness of the issuance of the search warrant. The “results” - fruits - of the execution of the search warrant may not be considered on the motion to quash; only the “contents” of the information filed in support of the issuance of the warrant may be considered.

It is also clear that a reviewing court may quash a search warrant where the informant has “deliberately misled” the issuing justice but not for “inadvertent error”. See Bâtiments Fafard Inc. c. Canada, September 18th 1981, Quebec Court of Appeal [reported (1991), 41 Q.A.C. 254 (Que. C.A.)].

Ewaschuk goes on to say that “the reviewing court may find jurisdictional error where the informant has behaved fraudulently in the sense of having deliberately made false statements or has acted unconscionably in the sense of making reckless and misleading disclosure or has recklessly omitted to make material disclosure. However, the failure to disclose material facts will not likely be fatal, in the absence of bad faith, on the part of the informant, [See Société Radio-Canada c. Nouveau-Brunswick (Procureur général), [1991] 3 S.C.R. 459 (S.C.C.) at pages 482-483.], which occurs when the informant deliberately intends to mislead the justice of the peace or acts with reckless disregard for the truth.”

However, the above tests do not apply at trial. Ewaschuk described the role of the trial judge as follows, at page 3-25:

At trial, the judge must determine on a s. 8 Charter motion whether there remains any basis for the issuance of the search warrant after the deletion of false and tainted evidence and after the addition of material facts not disclosed to the issuing justice which favour non-issuance of the warrant. [See R. v. Garofoli, [1990] 2 S.C.R. 1421]

As to the s. 8 Charter motion, Ewaschuk has the following to say, at page 3-32:

An accused may apply at trial to review the reasonableness of the issuance of a search warrant. In reviewing the issuance of the search warrant, the trial judge must determine whether the issuing justice had an evidentiary basis from the supporting information to grant the warrant. The accused must establish, on a balance of probabilities, that there was no basis on which the issuing justice could have been satisfied from the supporting information that there were reasonable and probable grounds to believe that there was in a particular place any item that would afford evidence with respect to the commission of a specified federal offence or some other pre-condition specified in s. 487 (1) of the Criminal Code. All factually erroneous references must be deleted from this aspect of the s. 8 review and the existence of fraud, non-disclosure, misleading evidence and “new evidence” led on the motion at trial are all relevant to the determination whether the remaining evidence constituted “some evidence” capable of justifying the issuance of the search warrant. See R. v. Grant, [1993] 3 S.C.R. 223.

Even fraudulent disclosure or non-disclosure is only relevant to the issue of whether the “remaining evidence” is capable of justifying the issuance of the warrant, [See Bisson, R. v. Bisson. [1994] 3 S.C.R. 1097], though the “new evidence” may not amplify or strengthen the Crown’s case in favour of the reasonableness of the issuance of the search warrant. Furthermore, the trial judge may review the information to determine whether the informant perpetrated a fraud on the issuing justice if the information contains deliberate falsehoods, reckless and material non-disclosure, or reckless and materially erroneous disclosure. See R. v. Garofoli, supra.

Ewaschuk also deals with the excision of tainted information, at page 3- 33, as follows:

A trial court, in hearing a Charter motion, may not consider evidence, referred to in an information filed in support of the issuance of a search warrant, which has been obtained by unreasonable means. The evidence must be excised to prevent the state from benefitting from the “unreasonable” acts of police officers. Thus, the Crown may not rely on facts within an information which were obtained in a manner contrary to the Charter. See R. v. Wiley, [1993] 3 S.C.R. 263.

Therefore, my responsibility must be to determine, on a s.8 Charter motion, whether there remains any basis for the issuance of a search warrant, after I have deleted false and tainted evidence and after the addition of material facts not disclosed to the issuing judge which favour non-issuance of the warrant. See Garofoli, supra, and Bisson, supra. Also, I must look at the “totality” of the circumstances.

It is to be noted that counsel for Mr. Gaudet brought an application before Mr. Justice McLellan of the Court of Queen’s Bench in March of 1995, pursuant to Rule 69 of the Rules of Court. In this application, counsel for Mr. Gaudet sought the quashing of Judge Brien’s search warrants on the basis that:

1. Guy Belle-Isle, put an alleged Information before the aforesaid Learned Provincial Court Judge that does not comply and accurately disclose to the said Provincial Court Judge, in the grounds for belief portion of the alleged Information, material facts.

2. On the face of the alleged Information it appears that:

(a) the alleged informant did not swear to the alleged Information;

(b) there is no allegation therein by the said informant stating that he believes the material therein to be true: and

(c) there is no sworn Information.

This application was dismissed by Mr. Justice McLellan.

In summary then, I am satisfied that counsel for the accused has not satisfied the onus of establishing that there was no basis for the issuance of the search warrants, after removal of any false statements and the addition of certain material facts. Therefore, the search warrants will stand and the Charter motion in relation thereto is denied.

Request for Exclusion of All Evidence Obtained on “Plain View Searches”

Section 489 of the Criminal Code, as it read in 1994, provided as follows:

489. Every person who executes a warrant issued under Section 462.32, 487, 487.01 or 487.1 may seize, in addition to the things mentioned in the warrant, anything that the person believes on reasonable grounds has been obtained by or has been used in the commission of an offence.

The commentary following this Section says as follows:

This section describes the circumstances under which a person executing a proceeds of crime, conventional search or tele-warrant, or general investigative warrant may seize things in addition to what is mentioned in the warrant. A person executing the warrant may seize anything that, on reasonable grounds, he/she believes has been obtained by or used in the commission of an offence.

As mentioned previously, on October 24th, 1994, Provincial Court Judge Alfred H. Brien issued three search warrants in connection with the case at bar. The warrants were executed on October 27th 1994, and a large quantity of documents were seized from individuals and companies. In addition to the documents referred to in the three search warrants, the Crown obtained a large quantity of other documents, by virtue of the “plain view doctrine,” under Section 489 of the Criminal Code. It is defence counsel’s submission that Section 489 of the Criminal Code “does not embody the constitutional minimum requirement inherent in the proper application of the doctrine of plain view consistent with Articles 7 and 8 of the Charter.” Defence counsel request that Article 489 of the Criminal Code be declared of no force or effect failing which any seizure authorized thereby would give rise to warrantless seizures which infringe upon the right of the accused to be secure against unreasonable searches and seizures.

A discussion of the plain view doctrine can be found in /?. v. Mousseau (1994), 94 C.C.C. (3d) 84 (Ont. Gen. Div.). Brockenshire J., at page 85, defined the issue to be decided as follows:

Is the “Plain View Doctrine” a part of Canadian Criminal Common Law, so as to define a limit on permissable searches and seizures outside of the ambit of a search warrant.

He answered this question at page 88:

What the officer did went past any inadvertent coming-across of evidence, and past any test of immediate apparancey, but what he did was reasonable in the circumstances, and that, not the “Plain View Doctrine,” is the rule in Canada.

At page 88, Brockenshire J. says the following:

The American “Plain View Doctrine” was defined by the Supreme Court of the United States in Texas v. Brown, 460 U.S. 730 (1983), as requiring first a lawful intrusion, secondly, discovery of the evidence “inadvertently”, and thirdly, that it be “immediately apparent” that the object may be evidence of a crime, contraband, or otherwise subject to seizure. My opinion from my review of the Canadian cases, is that the Canadian courts have repeatedly said that if a seizure can pass the American “Plain View” test, it would be accepted as reasonable in Canada.

He states later on, on the same page:

My view is that our common law, like that of England, is that if an officer is executing a warrant, he may seize, in addition to the things mentioned in the warrant, anything that he believes on reasonable grounds has been obtained by the commission of an offence. The constitutional protection is simply against “unreasonable search and seizure”. The touchstone in Canada is “reasonableness in the circumstances”, without artificial limitations as to spatial scope or intensity.

And, at page 87:

Examination of these, and of the Criminal Law bases on Quick Law, does not turn up any Superior Court decision in Canada in which a seizure was found to be illegal or unconstitutional because the things were not in “Plain View”. Instead, the “Plain Doctrine” would be relied on to support the reasonableness of the search.

In my opinion, defence counsel’s interpretation of the law, as it stands today, with respect to Section 489 of the Code and seizures of the type made here, is incorrect. It would be completely unreasonable, in the extreme, once a search warrant has already been obtained to search a particular premises, to leave behind, on that premises, documents which are found during the search, which appear to relate to the commission of the alleged offence, but which are not specifically mentioned in a search warrant.

Therefore, with respect to these so-called “plain-view” documents, my decision is that they are all admissible at trial.

Is a Stay of Proceedings Appropriate?

One of the remedies sought by counsel for the accused is a stay of proceedings, pursuant to Section 24(1) of the Charter, based on a number of alleged violations of the accused’s Charter Rights. This request for a stay is based on an allegation that the actions of Revenue Canada officials against Mr. Gaudet constituted an abuse of process under the Charter.

Before the Charter, a stay of proceedings could be issued, on the Court’s inherent jurisdiction, where an abuse of process would justify a stay. However, since the advent of the Charter, a judge may consider abuse of process as a Charter claim, and a stay can be granted, as a remedy under Section 24(1).

The leading case governing the use of a stay of proceedings is R. v. O'Connor (1995), 103 C.C.C. (3d) 1 (S.C.C.), a decision of the Supreme Court of Canada. In O'Connor, a case which dealt mainly with the issue of non-disclosure, the Court indicated that although the remedy for a violation of non-disclosure will typically be a disclosure order, and an adjournment, there may be some extreme cases where the prejudice to the accused’s ability to make full answer and defence, or to the integrity of the justice system, is irremediable. In those clearest of cases, a stay of proceedings will be appropriate. Thus, the Court established the basic criteria to be looked at in considering whether to issue a stay of proceedings. After a careful review of the O'Connor decision, I am not convinced that a stay of proceedings is an appropriate remedy in the case at bar.

Counsel for the accused has referred me to numerous other cases, all of which have been considered. In R. v. Koornneef (November 2, 1991), McGowan Prov. J. (Ont. Prov. Div.), the claim of abuse of process was based on pre-charge delay and that the conduct of the Revenue Canada investigators was so oppressive as to be abusive.

In Koornneef, supra, McGowan J. made the following comment at page 17, which I find very helpful:

Before I can grant a stay of proceedings in this case, I must be satisfied, upon a balance of probabilities, that the conduct of the executive, ie., the investigator or the prosecutors, was of such a nature that it offends the community’s sense of fair play and decency and constitutes a violation of the accused’s inherent right to a fair trial in our system of Justice.

In the case at bar, I am of the opinion that the conduct of the investigators from National Revenue certainly was not of such a nature that would offend the community’s sense of fair play and decency, and I do not believe that their conduct constituted a violation of Mr. Gaudet’s inherent right to a fair trial, or that it was oppressive.

I have also reviewed the decision of Judge Murray Cain of the Provincial Court of New Brunswick in R. v. Doherty (October 3, 1996), Cain Prov. J. (N.B. Prov. Ct.). Judge Cain said the following at paragraph 18:

A stay of proceedings will only be appropriate when the prejudice caused by the abuse in question will be manifested, perpetrated or aggravated through the conduct of the trial and no other remedy is reasonably capable of removing that prejudice.

The facts of the case at bar certainly do not fall within this description.

In this regard, I would like to make a few final comments. As I stated earlier, Counsel for Mr. Gaudet has suggested that it is important that I look at the behaviour of the various Revenue Canada officials, who dealt with Mr. Gaudet throughout this matter, in a general way and that I look at the “whole picture”, rather than analyzing specific events individually. Having done this, I have come to the conclusion that the actions, or lack thereof, of the various Revenue Canada officials, which amounted to breaches of various of Mr. Gaudet’s Charter rights, were occasioned not by mal-intent, not by a flagrant and purposeful disregard for his rights and not as a way of, in effect, “ambushing” him and thereby surprising him and getting access to information and documents which they would not have otherwise obtained. Rather, I am of the opinion that the Revenue Canada officials, in numerous of the situations which happened here, either did not know that they were breaching the accused’s Charter rights, were merely following the law as it existed, or were simply careless and negligent in the manner in which they carried out their investigation. For example, as I have stated earlier, the breach of Mr. Gaudet’s Charter rights occasioned by the securing of evidence from the United States was done in compliance with the laws of this country. Mr. Belle-Isle was acting in accordance with the provisions of the Canada/U.S. Tax Treaty and for this, I do not believe he can be faulted. With respect to the various omissions pointed out by defence counsel in the Information to Obtain Search Warrant and the certain misstatement of facts contained therein, I am satisfied that these were caused by negligence and inadvertence and were not an attempt to mislead the judge who eventually issued the search warrants. And, with respect to the failure of Revenue Canada officials to caution Mr. Gaudet as to his right to silence, prior to numerous of their meetings with him, I am satisfied that this failure occurred because the Revenue Canada officials in question were either negligent and forgot to administer the caution or, in the case of the August 1993 meetings, did not believe that it was necessary to issue this caution, because auditor James Snow honestly believed he was conducting an audit, and not a crimi- nal investigation, and therefore there was no necessity of giving this caution, as to the right to silence.

I would emphasize, in this regard, that these so-called “Charter violators” are not police officers but rather, officials of National Revenue. While this fact certainly does not excuse their breaching of the Accused’s Charter rights, and certainly does not lessen their obligation to be ever-mindful of the importance of the Charter, and does not lessen the consequences of this breaching, I do believe that it helps to better explain how these breaches could have occurred. While most police officers would be dealing with criminal investigations on an almost daily basis and thus, would be dealing with Charter matters with great regularity, such is certainly not the case with Revenue Canada officials.

In summary, while officials from Revenue Canada certainly did make some errors in judgement and, in fact, did, during various of their dealings with Mr. Gaudet, violate one or more of his Charter rights, I am not satisfied that Mr. Gaudet suffered extensive abuse of his rights under the Charter. Neither am I convinced that these errors in judgement and violations of Mr. Gaudet’s rights will prevent him from having a fair trial. Further I am satisfied that there are other remedies available, short of a stay of proceedings, which are more appropriate.

Therefore, the accused’s request for a stay of proceedings is denied.

Request denied.