Granby Construction & Equipment LTD Et Al v. Vernon Robert Milley Et Al, [1974] CTC 562, [1974] DTC 6300

Bouck, J:—The plaintiffs bring this action by way of replevin for the return of certain books and records relating to each of them and alleged to be in the wrongful possession of the defendants. The present motion is for an order for replevin in accordance with the Replevin Act, RSBC 1960, c 339, and the rules made pursuant thereto.

Facts—The plaintiff Granby Construction & Equipment Ltd (Granby) carried on business through 1969, 1970 and 1971 in road construction with its head office at Prince Rupert, British Columbia.

The plaintiff R A McLean (McLean) was a director of the plaintiff companies, a substantial shareholder in Granby and a minor shareholder in the other plaintiff companies during the years 1969, 1970 and 1971 with the exception of the plaintiff Tenmen Securities Ltd in which he was only a director and Haida Finance Company Limited in which he held no shares during the year 1969.

In or about September 1969 Granby entered into an agreement with a company called Norman Manning Ltd (Manning) which resulted in the sale of certain assets of Granby for the sum of $36,000. On or about December 24, 1969 Manning paid $36,000 by way of cheque to Granby as a result of this sale. The fiscal year end for Granby during this period was October 31, and so this sale should have been reflected in the books of Granby for the fiscal year ending October 31, 1970.

The cheque of Manning for $36,000 was endorsed, “For deposit only to the credit of Granby Construction & Equipment Ltd. in the Royal Bank of Canada” and was negotiated on February 4, 1970 through that bank at its branch on 685 West Hastings, Vancouver to the credit of Granby’s account.

On the same day, the Royal Bank of Canada debited the account of Granby by the following entry:

On February 18, 1970 Granby issued a cheque payable to McLean on the same account for $8,000. The inference in respect to McLean is that a portion or all of the $36,000 received by Granby from Manning was paid to McLean or to his credit by reason of the reduction or payment of the loan and by the cheque for $8,000.

From October 16, 1972 until October 27, 1972 one of the defendants, Mr Vernon Robert Milley, an officer of the Department of National Revenue, inquired into the affairs of Granby and McLean for the years 1969, 1970 and 1971 at Prince Rupert, British Columbia. He could not find the sale to Manning recorded in its books, nor did he find any record of receipt of these moneys by McLean in his personal capacity.

The income tax returns of Granby for 1969, 1970 and 1971 failed to show receipt of all or part of this $36,000 paid by Manning. The personal income tax return of McLean for 1969, 1970 and 1971 failed to show receipt of the $36,000 or a portion thereof as a taxable benefit received by him from Granby during that period.

The balance sheet of Granby for the period ended October 31, 1970 showed income for that year of $3,036,902 less expenses of $2,849,360, leaving a net income before depreciation of $187,542. It was conceded this may not have been the aciual balance sheet filed with the 1970 income tax return of Granby since different calculations may have been reported to comply with the Income Tax Act, but that the figures were reasonably comparable to those given to the Department of National Revenue by Granby for the fiscal year end October 31, 1970.

Nothing of consequence happened for some time as a result of the inquiry by Milley in October, 1972 and counsel for the defendants informed me that the Department neither wrote Granby nor McLean nor did any of its officers speak to them and enquire as to the reason for their failing to report this sum in their returns. Finally on September 17, 1973 an application was made by the defendants to His Honour Judge A W McClellan of the County Court of Vancouver under the provisions of subsection 231(4) of the Income Tax Act of Canada, as amended by 1970-71-72, c 63, to search and seize documents belonging to Granby, its affiliates and McLean. Approval for this search and seizure was obtained on that date. The application was supported by an affidavit of Mr V R Milley, sworn September. 7, 1973, and the authorization was approved by the Director, Special Investigations Division, Mr James L Gourlay. The nature of the authorization is important in these proceedings, so I am setting it out in full as follows:

AUTHORIZATION TO ENTER AND SEARCH

The Director, Special Investigations Division, Department of National Revenue, Taxation, hereby authorizes VERNON ROBERT MILLEY, VICTOR RUDOLPH REINERS, RODNEY LLOYD JAMIESON, RAYMOND J MACISAAC, BERNARD VELTKAMP, CHARLES OLOF SELMAN, EDWARD ARMSTRONG HEYES, R S OLNEY, C S HODSON, ANDRIES VAN HEUKELOM, W H SYMONS, and DONALD JUDSON WELLS, 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 of Granby Construction & Equipment Ltd., Prince Rupert, British Columbia.

(b) The private residence of Raymond Alexander McLean, 5687 Chancellor Boulevard, University Endowment Lands, Vancouver, British Columbia.

(c) A safety deposit box registered in the name of Raymond Alexander McLean at the Bank of British Columbia, 990 West Pender Street, Vancouver, British Columbia.

(d) Safety deposit boxes registered in the name of Raymond Alexander McLean at the Royal Bank of Canada, 601-3rd Avenue, Prince Rupert, British Columbia.

for documents, books, records, papers or things which 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,

and

(e) The offices of Louis R. Vannier, Chartered Accountant, and any storage facilities occupied or controlled by him at 600-3rd Avenue West, Prince Rupert, British Columbia.

(f) The offices of Macdonnell, Graham, Errico & Silversides, Barristers & Solicitors, and any storage facilities occupied or controlled by them at 330-

2nd Avenue West, Prince Rupert, British Columbia.

for documents, books, records, papers or things pertaining or relating to Granby Construction & Equipment Ltd, Raymond Alexander McLean, Bedrock Granby Contractors Ltd, Belliveau Enterprises Ltd, Belliveau and Company Contracting Ltd, Empress Ventures (1966) Ltd, Greene Clinic Holdings Ltd, Haida Construction Ltd, Haida Finance Company Ltd, MacKenzie Ventures Ltd, Prince Rupert Equipment Rentals Ltd, Seal Cove Properties Ltd, Tenmen Securities Ltd, and Star Enterprises Ltd, which 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.

GIVEN under my hand at the City of Ottawa, Province of Ontario, this 13th day of September, 1973.

“J L GOURLAY”

Director,

Special Investigations Division

After having considered the application made by the Director of Special Investigations based on the affidavit of Vernon Robert Milley. I hereby approve of the above authorization, which approval is also indicated on the preceding page by my initials.

DATED AT Vancouver, BC this 17th day of September, 1973.

Judge of the County Court of Vancouver.

On or about September 18 and 19, 1973 the authorization was executed by officers of the Department and the RCMP and the books, records, papers and things seized were taken from Prince Rupert and the residence of McLean and then transported to the Department of National Revenue, 1110 West Georgia Street, Vancouver, BC.

An inventory of these books, records, papers and things (hereinafter referred to as the documents) was prepared by the Department and amounted to some 103 foolscap pages describing a multitude of items such as two stenographic notebooks, one filing tray (gun metal), various bank records, files, ledgers, journals, receipt books, forms, time books, price lists, bank statements, deposit books, etc.

At the date of this hearing, some of the items in the inventory had been returned by the Department although no charge had been made against either Granby or McLean or any of the plaintiffs.

McLean filed an affidavit to the effect that he received the $36,000 from Manning and deposited it to an account in the name of Granby at the Royal Bank of Canada mentioned above and that immediately after depositing the proceeds he instructed Gordon Douglas of Prince Rupert to record the receipt in the journal of Granby and to charge the whole of the proceeds to its shareholders’ loan account and a ledger account in respect of William Tocher and himself in equal shares. He said that Douglas acknowledged having received these instructions and acknowledges that he omitted to make the journal entries.

McLean goes on to depose that in June or July of 1970, at a time when the said Gordon Douglas had ceased to be retained by Granby and in the course of reviewing the books of Granby, he observed that these entries had not been made and he therefore instructed Mr Louis R Vannier of the City of Prince Rupert to make the required journal entries.

McLean says that the said Louis Vannier acknowledges having received the instructions and acknowledges that he omitted to make the journal entries which McLean instructed him to do. McLean further swears that in the month of October 1972, while reviewing the books of account of Granby, he observed that his instructions to Vannier had not been carried out nor had the journal entries been made and that on or about October 31, 1972 he prepared a journal voucher for the purpose of recording the proper entries in respect to the transaction between Granby and Manning.

Issues

A number of arguments as to the right of the defendants to seize and retain these documents under subsection 231(4) of the Income Tax Act, as amended by 1970-71-72, c 63 (hereinafter called the Income Tax Act, 1972) were vigorously advanced by both counsel. I hope that counsel will not think it discourteous of me if ! do not deal with each of their arguments since the view I take of this matter makes it necessary for me to consider only the following two issues:

1. Was the authority to search and seize properly exercised in accordance with the Income Tax Act, 1972?

2. If it was not, are the plaintiffs entitled to the return of the documents that were seized and retained by the defendants?

Law

1. Was the authority to search and seize properly exercised in accordance with the Income Tax Act, 1972?

This problem was raised by me during the hearing and in view of the provisions of the Constitutional Questions to Determination Validity Act, RSBC 1960, c 72 and amendments, I directed notice be given to the appropriate persons and the matter then came back for argument by the same counsel. At that time Mr Carruthers advised me he was representing the Attorney-General of Canada. Before I can answer this first question, it is necessary that I ascertain the intention of Parliament as expressed in the Income Tax Act, 1972. For convenience I propose to divide my discussion on this subject into two parts:

(a) When subsection 231(4) was enacted, did Parliament intend to give the Minister a judicial function?

(b) If the Minister was given a judicial function did Parliament give the Governor-in-Council, under paragraph 221(1)(f) the power to delegate this function to anyone else?

Dealing firstly with the problem as to whether or not the Minister has a judicial function. Subsection 126(3) of the Income Tax Act, RSC 1952, c 148, read as follows:

126.(3) The Minister may, for any purpose related to the administration or enforcement of this Act, with the approval of a judge of the Exchequer Court of Canada or of a superior or county court, which approval the judge is hereby empowered to give upon ex parte application, authorize in writing any officer of the Department of National Revenue, together with such members of the Royal Canadian Mounted Police or other peace officers as he calls on to assist him and such other persons as may be named therein, to enter and search, if necessary by force, any building, receptacle or place for documents, books, records, papers or things which may afford evidence as to the violation of any provision of this 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.

The new section under which the defendants proceeded in this matter reads as follows:

231.(4) Where the Minister has reasonable and probable grounds to believe that a violation of this Act or a regulation has been committed or is likely to be committed, he may, with the approval of a judge of a superior or county court, which approval the judge is hereby empowered to give on ex parte application, authorize in writing any officer of the Department of National Revenue, together with such members of the Royal Canadian Mounted Police or other peace officers as he calls on to assist him and such other persons as may be named therein, to enter and search, if necessary by force, any building, receptacle or place for documents, books, records, papers or things that may afford evidence as to the violation of any provision of this 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.

In order to put these sections into perspective it is helpful to consider the state of the common law as it deals with a subject of this kind, since ! am entitled to assume that Parliament was aware of the common law at the time it enacted both subsection 126(3) and subsection 231(4).

Except for the recovery of stolen goods, the common law always rejected the right of anyone in authority to issue and act upon a search warrant other than pursuant to a statute.

Entick v Carrington (1765), 2 Wils 275; 95 ER 807, is the earliest leading authority in England which sets out the restrictions applicable to an officer of the Crown who carries out a search and seizure of a citizen’s documents. In that case, Messengers of the Secretary of State purporting to act upon custom seized certain papers of the plaintiff under a search warrant issued by a justice of the peace on a charge of seditious libel. Tne Court held that the common law allowed no such seizure and there being no statute authorizing it, the plaintiff was entitled to succeed. At page 817 (ER) the Lord Chief Justice said:

Our law holds the property of every man so sacred, that no man can set his foot upon his neighbour’s close without his leave; if he does he is a trespasser though he does no damage at all; if he will tread upon his neighbour’s ground, he must justify it by law . . . We can safely say there is no law in this country to justify the defendants in what they have done; if there was it would destroy the comforts of society; for papers are of the dearest property a man can have.

The same principle was enunciated more recently by Lord Denning, MR in Ghani and others v Jones, [1970] 1 QB 693 at 706:

The common law does not permit police officers or anyone else, to ransack anyone’s house or to search for papers or articles therein or to search his person, simply to see if he may have committed some crime or other. If police officers should so do, they would be guilty of trespass even if they could find something incriminating against him, I should have thought that the Court would not allow it to be used in evidence against him if the conduct of the police officers was so oppressive that it would not be right to allow the Crown to rely upon it: see King v the Queen, 1969, 1 AC 304. »

Historically, Parliament and the courts have worked hand in hand to preserve the liberty of the subject against the exercise of arbitrary authority. In earlier times this was necessary where the Crown attempted to enforce its will by reason of the doctrine of Royal prerogative, rather than in accordance with an act of Parliament. Today, the Crown through the reigning Monarch rarely, if ever, personally exercises his or her prerogative by Royal Command in the same way so as to affect the freedom of the subject.

Despite this difference, the principle remains, and I am entitled to assume that Parliament still possesses the same vital interest that Canadians be free from arbitrary search and seizure unless an appropriate statute spells it out to the contrary in clear and express words. Relating this to the case at bar, if there is an ambiguity in the Income Tax Act, 1972 either as to the right to seize the property of the plaintiffs or as to the method of carrying out the search and seizure, the law quite properly says I am obliged to interpret Parliament’s intention in a way that would be most favourable to the plaintiffs.

Another rule of statutory interpretation requires me to ascertain the intention of Parliament so as to fulfil the objects for which the Act was passed. The opening words of subsection 231(4)—“Where the Minister has reasonable and probable grounds to believe”—illustrate that Parliament intended the Minister to be satisfied on reasonable and probable grounds that a violation of the Act or a regulation has been or is likely to be committed. Such a requirement was not contained in the earlier statute where Parliament described the acts of the Minister as being “for any purpose related to the administration or enforcement of this Act”. I must presume that these opening words in subsection 231(4) were used intentionally by Parliament and a meaning must accordingly be given to them. There does not appear to be any other section of similar wording in the statute. In other words, this is a unique part of the Act as it relates to the Minister’s responsibilities.

The new section contemplates the Minister taking a more active role, if not the sole leading role, in any decision made to invoke the provisions of subsection 231(4), and changes the status of the Minister from being involved in the implementation of a mere ministerial act to that of applying a judicial discretion vested in him by Parliament. This function is much like that exercised by a justice of the peace under section 443 of the Criminal Code of Canada when he is considering whether or not a search warrant should be issued. Consequently, the older decisions on subsection 126(3) are not of much help when deciding how subsection 231(4) should be interpreted.

By reason of the above, I am satisfied Parliament intended to make a significant change when it enacted subsection 231(4) and gave to the Minister a judicial function which he previously did not appear to have.

The next question to answer is whether Parliament gave the Governor-in-Council under paragraph 221(1)(f) the power to delegate this judicial function to anyone else.

The evidence shows that the Minister himself never considered whether there were “reasonable and probable grounds” to believe that the plaintiffs had violated the Act at the time the seizure was made. Instead, this responsibility was delegated to an officer of his Department, Mr James L Gourlay, who exercised the functions of the Minister. Counsel for the defendants contends that this was a proper delegation of the Minister’s power and duties to Mr Gourlay by reason of the authority given under paragraph 221 (1)(f) of the Income Tax Act, 1972, which reads as follows:

221. (1) The Governor in Council may make regulations

(f) authorizing a designated officer or class of officers to exercise powers or perform duties of the Minister under this Act,

In accordance with this section, the Governor in Council passed Regulation 900(5) under the heading “Delegation of the Powers and Duties of the Minister”. This reads:

900. (5) The Director, Special Investigations Division of the Department of National Revenue, Taxation, may exercise the powers and perform the duties of the Minister under subsections 150(2) and 231(3) and (4) of the Act.

The word officer as used in paragraph 221 (1)(f) is not defined in the Act although reference is made to the word in subsection 248(1), but this latter section does not appear to be applicable in these circumstances. The word officer is also not defined in the Interpretation Act, RSC 1970, c 1-23, although mention is made of a “public officer”. Therefore, 1 must consider who is an “officer” within the meaning of paragraph 221 (1)(f). The Act does not say the officer must be an employee of the Department of National Revenue or indeed of the Crown nor does it differentiate between a clerk or a senior official. It is apparent there is a wide variety of persons both within and without the Department of National Revenue who could potentially be considered “officers” according to paragraph 221 (1)(f).

The Governor in Council has interpreted Parliament’s intention under paragraph 221(1)(f) as giving to the Governor in Council the right to delegate the discretion of the Minister to senior officials of the Department of National Revenue. The Governor in Council by Regulation 900(5) appointed the “Director, Special Investigations Division” as the “officer” to act on behalf of the Minister. On September 13, 1973 Mr J L Gourlay occupied this position according to the authorization to enter and search, set out above. If the Governor in Council’s interpretation of the Act is correct, then “officers” other than Mr Gourlay could have been named in Regulation 900(5). Indeed, Mr Milley who conducted the initial investigation of Granby and McLean describes himself as an “officer” of the Department of National Revenue in his affidavit. This analysis casts some doubts as to whether or not the Governor in Council has properly interpreted Parliament’s intention.

in spite of the above, counsel for the defendants submitted that even if the functions of the Minister under subsection 231(4) were delegated to “officers” the intention of Parliament was not frustrated because the discretion of the officers would be subject to the approval of a judge of a county or superior court. Again, this case points to the fact, that with the best will in the world, it is very difficult for any judge of a county or superior court to provide any meaningful supervision over the use of this discretion when the application is made ex parte and based solely on the evidence of the Department.

The application is to a judge as a persona designate and because the Interpretation Act of Canada is different from the Interpretation Act in British Columbia there is no appeal from the judge’s decision. There is also no court record of proceedings before him and the entire matter is clothed in a veil of secrecy. In the present case, the officers of the Department persuaded officials of the County Court of Vancouver to place the seal of the County Court of Vancouver on the authorization. I presume this was done to indicate to others that somehow or other the County Court of Vancouver approved of it. This is not so, and is misleading since the judge was acting only as a persona designate and not as a judge of the County Court.

The importance of the Minister personally considering the exercise of the powers given to him by Parliament under this section is brought into sharp focus by the facts in this case. For instance, it is admitted that none of the defendants or any representative of the Minister spoke to the plaintiffs and inquired as to the reason for the missing entry of $36,000. I would think, that if the Minister had been called upon to perform his function as the Act anticipates and had realized that he was acting in a judicial capacity, he would have enquired as to whether anyone in his Department had received an explanation for the failure of the taxpayer to report this sum. He would also likely have inquired as to the amount of material the officers thought might be necessary to complete their investigation, the length of time they would probably need to keep the material and the location where it would be kept. It would only be after taking all of these and other relevant facts into consideration that the Minister, acting judicially, would decide whether his approval should or should not be given to the use of this section.

The Minister would realize that the power given to him by Parliament is exceptional because the effects of it are far-reaching. For example, he can:

(a) paralyse the day-to-day operation of any size business from the smallest shopkeeper to the largest national enterprise by carrying away all its records for an indeterminate length of time;

(b) authorize the police and others to search any business or private home throughout Canada at any time of the day or night;

(c) retain anything seized for an unspecified length of time without laying any charge;

(d) keep the items seized at any place in Canada whether near the taxpayer’s place of business or residence or otherwise.

While it is true that the Act provides under subsection 231(6) that the person from whom the documents have been seized may, at all reasonable times and subject to reasonable conditions as may be determined by the Minister, inspect the documents seized and obtain copies at his own expense, there is in this section, another discretion given to the Minister. In any event providing copies could often be an illusory concession when the taxpayer’s residence or place of business is in one city and the Department has his documents in another, some hundreds or perhaps thousands of miles away.

The authority to delegate as set out in paragraph 221 (1)(f) describes “powers” and “duties” but makes no express mention of the Minister’s judicial function. The rule of statutory interpretation I must apply states that a judicial function cannot be delegated except by express words contained in the statute. See Broom’s Legal Maxims, 10th ed, 1939, p 571; Vine v National Dock Labour Board, [1956] 3 All ER 939 at 951, and Barnard and others v National Dock Labour Board and another, [1953] 1 All ER 1113 at 1118 and 1121, and Leather v Doolittle Co Ltd, [1928] 2 DLR 805 at 817 and 818.

Counsel for the defendants submitted there were circumstances where the courts have interpreted a statute as giving a right to delegate a judicial function even though this was not expressly set out in the legislation. Although this seems to have been done from time to time when a country was in a state of war or other similar emergency, no such principle appears to have been applied in times of peace nor can the Income Tax Act be elevated to the level where it is entitled to receive this kind of interpretation. The decision of Lord Denning, speaking for the Privy Council in Mungoni v Attorney General of Northern Rhodesia, [1961] 1 All ER 446, was cited as an example where an interpretation was given to a statute so as to allow a right of delegation of a judicial function by implication rather than by express words.

The distinction that exists between the decision of the Privy Council and the decision here, is that the Privy Council was dealing with emergency legislation and the whole tenor of the regulation which was the subject matter of the proceedings suggested a delegation was meant to be given by reason of the language employed. Throughout that regulation the words requiring the Governor to be “satisfied” were apparently used and it was held at p 451:

A detailed study of the regulations convinces them that it was intended that, in all these cases, the Governor should be able to delegate the power together with the fulfilment of the condition precedent to its exercise.

The Income Tax Act, 1972 does not have words similar to those used in subsection 231(4) running throughout the Act and so I cannot infer that Parliament intended the Governor in Council should have the right to delegate the Minister’s judicial function.

All of the above indicates to me that Parliament intended the Minister alone to exercise the judicial function set out in subsection 231(4) and the power of delegation given to the Governor in Council in paragraph 221(1)(f) is not explicit enough to allow the Governor in Council to delegate the functions of the Minister under subsection 231(4) to an officer or designated class of officers.

It follows that Regulation 900(5) is ultra vires the Governor in Council in so far as it purports to give to the Director, Special Investigations Division the authority to decide whether reasonable and probable grounds exist to believe that a violation of the Act has been committed under subsection 231(4). It also follows that because the documents were improperly seized they are not in the lawful custody of the defendants.

In spite of these conclusions, I do not mean to imply that the powers given to the Minister under subsection 231(4) are in any way unenforceable when properly exercised. On the contrary, it is extremely important that the revenue laws of this country should be upheld and where there is evidence of a flagrant violation of them which comes to the attention of the Minister, then he must be able to act and do so decisively. All this judgment decides is that Parliament has legislated to the effect that such a function is too powerful to be initiated by a delegate of the Minister, no matter how fair-minded he may be.

I also do not wish to impute any improper motives to Mr Milley, Mr Gourlay or the other officers of the Department who participated in this matter. I am satisfied they honestly believed they were acting properly and in accordance with the direction set out in the statute. They were merely following past practice which may have been justified under subsection 126(3) of the Income Tax Act, RSC 1952, but is no longer appropriate.

Having come to the conclusion that the documents are in the wrongful possession of the defendants, I will now deal with the second issue:

2. Are the plaintiffs entitled to the return of the documents seized which were taken and retained by the defendants in accordance with the authorization of September 17,1973?

The submission of counsel for the defendants was to the effect that even if I should find the proceedings taken under subsection 231(4) to be a nullity, it did not necessarily follow that the plaintiffs were entitled to an order for replevin. As I understand his argument it consisted of three main points:

(a) This Court does not have jurisdiction to make such an order because authority to question the actions of the Minister can only be taken in the Federal Court.

(b) If it does have jurisdiction, nonetheless the documents retained by the Department are those which may afford evidence as to the violation of provisions of the Income Tax Act and regulations and so cannot be returned to the plaintiffs at this time.

(c) in any event, the defendants only had the right to “retain” the documents under subsection 231(4) and this is distinct from their right of possession. He says that because the Replevin Act only allows an order to be made against someone who has unlawful “possession”, such an order cannot be enforced against the defendants who only “retain” them.

Dealing with the first submission; the suggestion was that since the plaintiffs could have proceeded under section 18 of the Federal Court Act, SC 1970-71-72, c 10 (2nd Supp) to obtain a writ of certiorari, they are not entitled to take these proceedings in this Court by way of replevin.

The Federal Court Act states in paragraph 17(4)(b), that the Federal Court has “concurrent original jurisdiction” in proceedings in which relief is sought against any person for anything done or omitted to be done in the performance of his duties as an officer or servant of the Crown. Consequently, I am satisfied that this Court has jurisdiction to hear an action for replevin because the Federal Court’s jurisdiction is not described as exclusive.

it is also apparent that the nature of the plaintiffs’ claim is one of tort for the unlawful seizure by the defendants of these documents. It is brought under the Replevin Act which is merely a codification of some of the old common law principles of replevin. There is no doubt that such an action may be taken against these defendants in their personal capacity even if at the time they were acting as agents or servants of the Crown. The protection of Crown privilege is one that is open to the person or persons who stand in relation to these defendants as a master does to a servant, eg the Minister, but the doctrine does not provide any defence to these defendants. If damages are awarded as a result of the action of the defendants, the plaintiffs have no remedy against the Minister, the Crown or any of the superiors of the defendants, but must look to the defendants alone to satisfy the judgment.

The second point made by counsel for the defendants was that the documents cannot be ordered returned because they may be required in evidence. This argument deals mainly with an analogy between the results of the quashing of a search warrant and the results arrived at here. Where a search warrant issued under the Criminal Code of Canada has been quashed, there is a large body of authority which holds that despite the invalidity of the warrant and provided the police can show that the material obtained under the warrant is required as evidence in the pending or proposed prosecution, the court should not order the return of such material to the successful applicant either on certiorari or replevin: see Ghani et al v Jones (supra) [1970] and R ex rel Webb v McKenzie, [1973] 2 WWR 193; but contra Berger, J, R v Black, [1973] 6 WWR 371 at 374.

The main reasons for these decisions is because the material seized in its original state may be required as evidence to prove the crime charged. If it is ordered returned to the person from whom it was taken, it may be destroyed, altered or lost so that the evidence to prove the crime is no longer available. I think there is a substantial distinction between cases discussing this principle when dealing with a Criminal Code offence and those dealing with a violation of the Income Tax Act—at least there is a distinction in this case.

in a large number of criminal cases, such things as guns, knives, automobiles and chattels of every description may be seized by a search warrant. These cannot readily be copied and, if returned, may be lost or destroyed so that there is not even any secondary evidence available.

On the other hand, what is usually taken from a taxpayer who is suspected of a violation of the Income Tax Act, and what was taken here, were books, records and papers. In this day and age ail of these are capable of reproduction on a photocopy machine and the evidence here indicates not only did the plaintiffs give to the Department some 3,000 to 4,000 photocopied sheets of its records before the seizure, but also a substantial amount of the documents seized have already been returned to the plaintiffs. As a result, there appears to be no great burden on the Department to photocopy what is necessary for its case and give back all of the original documents to the plaintiffs.

There are other factual weaknesses in the defendants’ case which indicates the justice of this case supports the above finding. Here, the Department knew Granby and McLean had not reported receipt of the $36,000 in 1969/1970 when Mr Milley made his investigation in October of 1972. The Department did nothing about this until September 1973, when it acted under subsection 231(4). As of the date of the hearing in these proceedings, it apparently did not consider the failure to report the receipt of the $36,000 of sufficient gravity to bring charges against any of the plaintiffs under the Income Tax Act. The inference from the material is that it is conducting some sort of an inquiry into the plaintiffs’ records to see if they can find something else, but so far it is only able to say through an affidavit of Mr B A J Dorward, an officer of the Department, that the remaining documents in his opinion may afford evidence as to the violation of any provision of the Act or regulations. He is not able to tie down in what way the documents may be evidence nor what section of the Act or regulation has been violated by the plaintiffs. Furthermore unlike the Criminal Code of Canada, officers of the Department are entitled to access to the plaintiffs’ books of account under subsection 231(1) of the Income Tax Act, 1972 without a warrant.

A different conclusion in a criminal matter was reached by Mcinnes, J of this Court in Mount Pleasant Legion et al v Robertson et al (1964), 44 DLR (2d) 498, but he seems to have based his judgment on matters which provide a sufficient distinction. They are as follows:

(a) the plaintiffs did not allege in their affidavits in those proceedings that there had been a wrongful taking;

(b) the plaintiffs did not allege in their affidavits in those proceedings the value and description of the property;

(c) charges were pending “Police Court” against the plaintiffs at the time of the application in those proceedings.

In this case McLean has set out facts indicating there has been a wrongful taking, described the property and value of the goods within the meaning of the replevin rules. Moreover, no charges are pending under the Income Tax Act against the plaintiffs.

The last point deals with the distinction between the word “possession” and the word “retain” as mentioned above. Counsel for the defendants provided me with some authorities showing how the court had interpreted the word “retain” differently than they had interpreted the word “possession”. He submitted that since the defendants only retained the documents under subsection 231(4), it was up to the plaintiffs to include as a defendant the person or persons who had physical custody or possession of them in the Department or elsewhere. The implication was that the documents may have been given to another officer or sent to another city where they were in the possession of these other officers and as a result the defendants do not have them. The facts he relied on were set out in the affidavit of Mr Milley of April 8, 1974 as follows:

16. That on September 19, 1973, the Authorization was executed at the said premises stated therein, and documents, books, records, papers and things seized were transported to the offices of the Department of National Revenue, Taxation, 1110 West Georgia Street, Vancouver, British Columbia, and are not in my custody or possession.

The Replevin Act allows an order to be made against the defendants for “goods, chattels, property and effects” that have been wrongfully taken or detained. It does not mention that these must be in the possession of the defendants. The statute also provides for what is described as an “order of withernam”. This order is designed to cover the circumstances where the defendants have taken the property to some other location and allows the sheriff to seize other goods of the defendants to the value of the property removed out of the jurisdiction by the defendants. It would seem that the Replevin Act is a wholly appropriate statute to use in this case.

In the event that the defendants do not have possession of the documents and the responsible officers of the Department refuse to give them up in accordance with my judgment, then a further application may be made to this Court invoking its inherent jurisdiction as was done by Berger, J in R v Black (supra), or an application can be made for an order of withernam. i am hopeful that neither of these will be necessary.

Before concluding, I should mention that counsel for the defendants quite rightly pointed out that some of the plaintiffs’ material was defective because the facts set out in their affidavits were stated to come from others upon whom the deponent relied on information received from them, but the deponent failed to state the source of the information. In arriving at my decision I have ignored those portions of the plaintiffs’ evidence which did not state the source of the facts.

Taking all of the above into consideration, I am satisfied that the documents should be returned. See also MacDonald, J, Allis-Chalmers, Rumely Limited v Forbes Equipment Limited, 8 DLR (3d) 105, and Bathville Corporation Ltd v Atkinson et al, [1964] CTC 577; 64 DTC 5330.

Judgment

The plaintiffs are therefore entitled to an order for replevin. In the circumstances of this case I can see no necessity that they post a bond, but since this was not argued before me, I will hear further submissions on it if counsel cannot agree.

Because the Department may require some time to photocopy the balance of the documents in their possession, I am ordering enforcement of this judgment be delayed for ten days after its date as set out below.

As the plaintiffs have succeeded on the motion, they are entitled to their costs in any event of the cause.