Burnac Corporation Limited, Burnac Realty Investors Limited, Burnac Mortgage Investors Limited and Joseph Burnett v. Minister of National Revenue, [1977] CTC 593, 77 DTC 5414

Mahoney, J:—The applicants seek, in these proceedings, an order to remove into this Court and quash an approval given February 28, 1977 by His Honour Judge Cornish of the County Court of the Judicial District of York pursuant to subsection 231(4) of the Income Tax Act, RSC 1952, c 148 (am SC 1970-71-72, c 63).* [1] Of immediate concern is the preliminary objection taken by the applicants to three motions by the respondent seeking cross-examination of the deponents of affidavits filed in support of the certiorari application.

Judge Cornish’s approval was granted February 28, 1977. The seizure was effected March 1 and these proceedings commenced March 7. In support of their certiorari application, the applicants filed a number of affidavits and, during the early stages of cross-examination on those, the application, originally returnable March 21, was adjourned on consent. It was brought on before Mr Justice Grant on June 20 and further adjourned sine die with directions as to the completion of the cross-examinations of three deponents: the applicant Burnett; Charles M Zeifman and Zoltan Roth, the latter being a resident of Puerto Rico. The cross-examinations of Burnett and Zeifman continued under Mr Justice Grant’s directions until, for a variety of reasons, the respondent found it expedient to launch motions seeking orders requiring the re-attendance of Burnett and Zeifman at their cross-examinations and, under Rule 477, providing for Roth’s cross-examination in Puerto Rico. On the return of these motions, the preliminary Objection which is the subject of this decision was raised. It is founded on allegations of fatal defects in the authorization approved by Judge Cornish and in the process by which his approval was obtained which render further cross-examination on the affidavits redundant and an abuse of process.

I am satisfied that, in considering this objection, I can properly take account only of facts which appear on the record of the approval, that is to say, the approval itself, the authorization approved under subsection 231(4) and the evidence submitted in compliance with subsection 231(5). The latter is an affidavit of Gary E C Baker, sworn February 25, 1977. It seems self-evident that if “the warrant must fall in any event by reason of the errors inherent within both the form of the order and the circumstances under which it was granted” to quote the applicants’ written argument, page 2, that cannot be established by facts that came into existence after the “warrant” or “order” was issued or made or, to state it correctly, as I see it, after the judge’s approval under subsection 231(4) was given. It seems equally self-evident that where that argument is advanced with a view to avoiding further cross-examination on affidavits, recourse cannot be had to facts averred in those affidavits.

The applicants advance eight reasons why the approval ought to be quashed. Some are really restated versions of others and some, while they may be matters of substance to be dealt with at a later stage in these proceedings, cannot be disposed of at this juncture because they are not established by the record. These are:

1. The alleged omission to disclose material facts to Judge Cornish in ex parte proceedings which, if not regarded by him as constituting one or more shams, might have led him to refuse the approval on the basis of a different conclusion as to the nature of certain of the applicants’ transactions than that presently entertained by the respondent.

2. The allegations that what was seized and is being retained pursuant to the authorization exceeded what could have been authorized under subsection 231(4) and what was, in fact, so authorized, and the further allegation that the seizure was effected elsewhere than specifically authorized.

3. The allegation that the whole process of cross-examination on the affidavits and its continuation, including the pending motions in aid thereof, has become, per se, an abuse of process.

The following allegations remain and can be dealt with on the record: firstly, that the authorization approved is fatally deficient because of lack of particularity and, secondly, that the authorization approved was for a purpose not authorized by subsection 231(4).

The document entitled “Authorization to Enter and Search”, after a style of cause and the foregoing title reads, in its entirety, as follows:

The Director General, Special Investigations Directorate, Department of National Revenue, Taxation, hereby authorizes G E C BAKER, R F WELTON, R G COX, B BROOME-SMITH, J T MARLEY, E C DRAKICH, R F THOMPSON, and D C WOOD, officers of the Department of National Revenue, or any of them, together with such members of the Royal Canadian Mounted Police or other peace officers as they, or any of them, may call on to assist them, or any of them, to enter and search, if necessary by force, the following premises and any receptacles or places therein:

(a) The business premises and offices of Burnac Corporation Ltd, Burnac Realty Investors Ltd, Burnac Mortgage Investors Ltd and Joseph Burnett and all storage facilities occupied or controlled by them at 65 Queen Street West, in the Municipality of Metropolitan Toronto, Ontario.

(b) Any vehicles, owned, rented, leased or controlled by Burnac Corporation Ltd, Burnac Realty Investors Ltd, Burnac Mortgage Investors Ltd, or Joseph Burnett.

for documents, books, records, papers or things that may afford evidence as to the violation of any provision of the Income Tax Act or a regulation and to seize and take away any such documents, books, records, papers or things and retain them until they are produced in any court proceedings.

It is then dated and signed by the said Director General. No exception is taken to his authority to have given it.

The authorization is not, in fact, deficient in particularity in any respect raised by the applicants. It is reasonably specific as to what is authorized to be searched for and seized and where that is authorized to be done.

In the result, I reject the preliminary objection on the basis that the authorization is deficient for lack of particularity on its face and turn to the allegation that it was obtained for a purpose not authorized by subsection 231(4). As to that, a careful study of Baker’s affidavit discloses reasonable and probable grounds for the respondent to believe that a number of violations of the Act or regulations had been committed and that what was authorized to be searched for and seized might afford evidence thereof.

The applicants’ argument is that, under subsection 231(4), an authorization must be limited to evidence pertinent to the violation or violations which the Minister has determined have been or are likely to be committed. All of the authorities cited in support of this proposition dealt with search warrants under the Criminal Code, RSC 1970, c C-34, section 443.* [2] Form 5, authorized by subsection 443(3), provides for inclusion of a description of the alleged offence on its face.

The basic schemes of subsections 231(4) and (5) of the Income Tax Act and the comparable provision of the Criminal Code—paragraph 443(1)(b)—are but superficially similar. Both require the formation of an initial belief that a factual situation exists and both require that the belief be predicated on reasonable grounds. What the justice must believe is that evidence with respect to the commission of a crime “Is in a building, receptacle or place’’ and what he can authorize is a search of “the building, receptacle or place’’ for “such thing’’ and the seizure of “it’’. What the Minister must believe is that there has been, or is likely to be, a violation of the Income Tax Act or regulations and what he may authorize is a search of “any building, receptacle or place’’ for “things that may afford evidence as to the violation of any provision’’ of the Act or regulations and the seizure of “any such” thing.

The principle invoked on the myriad occasions, over the years, on which the courts have considered the legality of the issue and use of search warrants, is that such a search and seizure is necessarily a trespass on all that is embraced in the concept “a man’s home is his castle”, and that it is the will of Parliament, in authorizing that trespass, that its prescription be strictly construed by the courts and observed by those authorized. That underlying principle applies equally to authorizations under subsection 231(4) but it is no basis for importation into that subsection of express requirements of the Criminal Code as to search warrants, such as the specification of the alleged offence and the limitation of the search and seizure to evidence of that offence, in the face of the plain intent of subsection 231(4). It contemplates, in clear and unambiguous language, that an authorization may extend to “evidence as to the violation of any provision” (the emphasis mine) of the Act or regulations, not only the violation initially apprehended by the Minister.

While I have been unable to find authority dealing with this exact point, the dicta in Granby Construction & Equipment Ltd v Milley, [1974] CTC 701; 74 DTC 6543, reversing [1974] CTC 562; 74 DTC 6300, a decision of the British Columbia Court of Appeal and of both the Chief Justice of Canada and the Chief Justice of Ontario in Canadian Bank of Commerce v Attorney General of Canada, 62 DTC 1236 (SCC), affirming [1962] CTC 39; 62 DTC 1014 (Ont CA) and [1962] CTC 35; 61 DTC 1264, as to the coersive nature of the power Parliament has given the respondent under section 231, formerly 126, of the Act, power which the Governor in Council may authorize others to exercise, remain pertinent. I will not repeat them but merely observe that, while the 1971 amendments* [3] added to subsection 231(4) the requirement that the Minister have reasonable and probable grounds to believe that a violation has or is about to be committed before authorizing a search and seizure, the stringency of the authorization, once properly given and approved, was in no way modified.

ORDER

The preliminary objections are denied. The respondent may bring on his motions, which have been adjourned sine die pending disposition of the preliminary objections, on two days’ notice to the applicants.