Date: 20030130
Docket: T-2124-02
Montréal, Quebec, January 30, 2003
Present: The Honourable Mr. Justice Lemieux
IN THE MATTER OF THE INCOME TAX ACT
BETWEEN:
LOUIS-PIERRE LAPOINTE
Plaintiff
and
HER MAJESTY THE QUEEN
and
THE MINISTER OF NATIONAL REVENUE
and
ALAIN DION, IN HIS CAPACITY AS MANAGER,
REVENUE RECOVERY,
MONTRÉAL TAX SERVICES OFFICE
DEPARTMENT OF NATIONAL REVENUE
Defendants
and
ROYAL BANK OF CANADA
Third party
ORDER
For reasons filed, this application for a stay is dismissed with costs.
"François Lemieux"
Judge
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L.
Date: 20030130
Docket: T-2124-02
Neutral Citation: 2003 FCT 102
IN THE MATTER OF THE INCOME TAX ACT
BETWEEN:
LOUIS-PIERRE LAPOINTE
Plaintiff
and
HER MAJESTY THE QUEEN
and
THE MINISTER OF NATIONAL REVENUE
and
ALAIN DION, IN HIS CAPACITY AS MANAGER,
REVENUE RECOVERY,
MONTRÉAL TAX SERVICES OFFICE
DEPARTMENT OF NATIONAL REVENUE
Defendants
and
ROYAL BANK OF CANADA
Third party
REASONS FOR ORDER
LEMIEUX J.
[1] Louis-Pierre Lapointe is seeking a stay of execution until final judgment is rendered in the main proceeding, so that the Royal Bank of Canada (the Bank) does not respond to the letter of requirement for the production of information and documents, dated November 25, 2002, issued by the Canada Customs and Revenue Agency (the Agency) pursuant to section 231.2 of the Income Tax Act (the Act), which reads as follows:
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231.2. (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act, including the collection of any amount payable under this Act by any person, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as is stipulated in the notice,
(a) any information or additional information, including a return of income or a supplementary return; or
(b) any document.
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231.2. (1) Malgré les autres dispositions de la présente loi, le ministre peut, sous réserve du paragraphe (2) et, pour l'application et l'exécution de la présente loi, y compris la perception d'un montant payable par une personne en vertu de la présente loi, par avis signifié à personne ou envoyé par courrier recommandé ou certifié, exiger d'une personne, dans le délai raisonnable que précise l'avis :
a) qu'elle fournisse tout renseignement ou tout renseignement supplémentaire, y compris une déclaration de revenu ou une déclaration supplémentaire;
b) qu'elle produise des documents.
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[2] In his statement of claim, Mr. Lapointe asks that this Court declare the letter of requirement void and of no effect on the grounds: (1) of its "[translation] far too broad [nature], which makes it in reality a veritable fishing expedition aimed at rummaging around in the plaintiff's affairs", and (2) that section 231.2(1)(a) and (b) do not allow the Agency to obtain any document or information unless that authority "[translation] is fettered by certain limitations including restrictions as to relevance and time".
Facts
[3] The letter, from the Agency to the Place Ville-Marie branch of the Bank, demands that the Bank furnish:
(a) "[translation] a statement of all entries made in all the accounts in your branch that are known to be or to have been maintained or controlled by or on behalf of [Louis-Pierre Lapointe] ... and in all joint accounts ... and of all entries that are known to concern or to have concerned the affairs of [Louis-Pierre Lapointe] in any other account kept in your branch, including the sundries and other similar accounts".
(b) "[translation] a detailed statement of all transactions performed, including loans, discounts and securities pledged as collateral, the rental of safety deposit boxes, the custody of and transactions in securities in your branch involving [Louis-Pierre Lapointe] ...."
(c) "[translation] all documents, including authorizations, powers of attorney, transfers by mail or by telegram ... that are known to concern or to have concerned the entries and transactions appearing in the statements demanded in paragraphs (a) and (b) above".
[4] The letter of requirement dated November 25, 2002, includes an appendix that reads as follows:
[translation]
This appendix is an integral part of the Letter of Requirement concerning the supply and production of documents attached hereto.
Without restricting the generality of the foregoing, we wish more specifically to be informed concerning the following questions:
- The above-captioned person has a loan bearing number 291246832 for which you issued, on March 16, 2001, "A confirmation of payments of principal and interest for the year 2000", a copy of which is attached hereto.
- We would like to receive:
(a) The copy of the loan agreement signed by the client
(b) The copy of the supporting documentation for the six most recent payments made by the client.
We thank you in advance for your assistance.
[5] In support of their opposition to the stay, the defendants submit the affidavit of Wilfrid Edmond, a collection officer with the Agency, who testifies:
[translation]
1. that Mr. Lapointe has been in recovery since April 1997 of a large tax debt for several taxation years.
2. within the context of its efforts to recover this taxation debt, the Agency has engaged in certain proceedings: request for payment, audits of Mr. Lapointe's income tax returns in which he claimed deductions for financial costs pertaining to a loan with the Royal Bank.
3. the purpose of the request for information is to find information that would enable it to locate assets in Mr. Lapointe's name with a view to recovery of the debt owing to the Minister.
Analysis and conclusion
[6] The burden that the plaintiff's counsel had to overcome was a heavy one, because this Court, both at trial and on appeal, in Jean-Alain Bisaillon et al. and Her Majesty the Queen et al. (docket T-291-99, May 12, 1999, per Denault J. at trial, and docket A-315-99, September 21, 1999, FCA), refused a stay of execution of a requirement to provide information and production of documents issued by the Minister under section 231.2(1) of the Act.
[7] I have reviewed the letter of requirement issued in Bisaillon, supra, by the Department of National Revenue on January 26, 1999, to the Laurentian Bank of Canada, 1100 René-Lévesque Boulevard West branch, and I have compared it with the one in this case. The two letters of requirement are identical in paragraphs (a) and (b), and almost identical in so far as the remainder is concerned. They differ in the particulars of their appendix.
[8] In Bisaillon, supra, Denault J. dismissed the plaintiffs' submissions "[translation] that the letter of requirement for information and production of documents is unduly value and is in fact simply a fishing expedition".
[9] On appeal, Denault J.'s decision was upheld. Létourneau J.A. wrote:
[10] Similarly, we consider that there is no merit in the appellants' argument that the requirement of information addressed to the Laurentian Bank of Canada is nothing but an illegal "fishing expedition". McKinlay Transport Ltd., supra, and Richardson v. Minister of National Revenue recognized that it is often difficult for the Minister making a requirement for information or documents to know exactly what documents he is looking for, and so to describe them with great precision and an abundance of detail.
[11] First, the Laurentian Bank of Canada, which was required to produce the documents, did not object that the requirement was so vague and imprecise that it would have difficulty complying, or be unable to do so. Second, in the case at bar the preremptory [sic] demand for payment made to Hypnat Ltée, Courtier amounted to a garnishment, as Revenue Canada was exercising the rights of Hypnat Ltée in respect of Hypnat Ltée, Courtier. The purpose of the requirement of information that followed was thus to determine the financial situation and solvency of the third party, and seen from this viewpoint and that of collection of the tax debt it is neither vague nor improper.
[12] Finally, the requirement of information pursuant to s. 231.2(1) meets each of the criteria of validity laid down in Richardson:
(a) the Minister is acting for a legitimate purpose specified and authorized by the Act, namely the collection of a due and payable tax debt;
(b) the requirement of information relates to the tax liability of a person (Hypnat Ltée), that liability is under administrative investigation and the obtaining of information is necessary in general to ensure compliance with the Act, and in particular the collection of money owed to Revenue Canada;
(c) the person from whom the information is sought does not have to be the one whose liability to tax is under investigation; and
(d) the requirement is valid even though the giving of the information may disclose private transactions involving persons who are not under investigation and may not be liable to tax.
[13] As there are no serious questions of law to be tried in the action brought by the appellants in case T-291-99, the Court considers that the motions judge was right to deny the appellants' motion for a stay and that the appeal at bar should be dismissed with costs.
[10] Mr. Lapointe's counsel argues in support of his request for an interim stay that (1) the Agency's letter of requirement is unnecessary and vexatious considering the scope of what is required as information and productions; (2) there are no time limitations on the required information and production; and (3) the requirement represents a fishing expedition.
[11] I note that in this case there is no allegation that the letter of requirement is aimed at collecting evidence on which to base a criminal charge, as alleged in Bisaillon, supra.
[12] I consider that the plaintiff's submissions do not raise any serious issue. The letter of requirement in this case is identical to the one examined by the Court in Bisaillon, supra. The arguments cited by the plaintiffs in both cases are similar in substance. They have already been dismissed in Bisaillon, supra.
[13] I would add that it is clear that what interests the Agency is the loan issued in 2001 and the information requested is intended for the pursuit of Mr. Lapointe's assets. This perspective frames the request in time, as does the Bank's obligation to maintain its records for only fifteen years (see section 74 of the Bank Act, R.S.C. 1985, c. B-1).
[14] Furthermore, the plaintiff has provided no evidence that he would suffer irreparable harm if the stay were not granted.
[15] For these reasons, this application for stay is dismissed with costs.
"François Lemieux"
Judge
Montréal, Quebec
January 30, 2003
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L.
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20030130
Docket: T-2124-02
Between:
LOUIS-PIERRE LAPOINTE
Plaintiff
and
HER MAJESTY THE QUEEN
and
THE MINISTER OF NATIONAL REVENUE
and
ALAIN DION, IN HIS CAPACITY AS MANAGER,
REVENUE RECOVERY,
MONTRÉAL TAX SERVICES OFFICE
DEPARTMENT OF NATIONAL REVENUE
Defendants
and
ROYAL BANK OF CANADA
Third party
REASONS FOR ORDER
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET NO: T-2124-02
STYLE: LOUIS-PIERRE LAPOINTE
and
HER MAJESTY THE QUEEN
and
THE MINISTER OF NATIONAL REVENUE
and
ALAIN DION, IN HIS CAPACITY AS MANAGER,
REVENUE RECOVERY,
MONTRÉAL TAX SERVICES OFFICE
DEPARTMENT OF NATIONAL REVENUE
and
ROYAL BANK OF CANADA
Third party
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: January 27, 2003
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE LEMIEUX
DATED: January 30, 2003
APPEARANCES:
Josée Cavalancia FOR THE PLAINTIFF
Maria-Grazia Bittichesu FOR THE DEFENDANTS
SOLICITORS OF RECORD:
Brouillette, Charpentier, Fortin FOR THE PLAINTIFF
Montréal, Quebec
Morris Rosenberg FOR THE DEFENDANTS
Deputy Attorney General of Canada
Montréal, Quebec
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