Date: 20030530
Docket: T-845-03
Citation: 2003 FCT 689
Vancouver, British Columbia, Friday, the 30th day of May, 2003
Present: THE HONOURABLE MR. JUSTICE BLAIS
BETWEEN:
PAUL S. BINING and
PARMINDER KAUR BINING
Applicants
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR ORDER AND ORDER
[1] This is a motion dated the 28th of May 2003, on behalf of the Applicants for an Order staying the May 1, 2003 Requirement to Provide Information issued to the Applicants until such time as the Notice of Application filed by the Applicants on May 21, 2003, has been heard and the Court has determined that the Applicants are required to provide the requested information.
[2] This is a last minute application. The Applicants have asked that this application should be heard on an emergency basis on Friday, the 30th of May, 2003.
[3] I have carefully reviewed both records by the Applicants and the Respondent.
BACKGROUND
[4] By way of letter dated March 18, 2003, the Respondent asked the Applicants to answer certain questions. On April 10, 2003, the Respondent wrote to advise that if answers were not received by April 24, 2003, the Respondent would have no other choice but to act on the information available on the file.
[5] On May 1, 2003, the Applicants were both served by a Notice of Requirement to Provide Information pursuant to subsection 231.2(1) of the Income Tax Act and 289(1) of the Excise Tax Act.
[6] Essentially, the Notices of Requirement to Provide Information are referring to the same questions as the letter sent to the Applicants on March 18, 2003.
[7] On May 21, 2003, the Applicants filed an application under section 18 and 18.1 of the Federal Court Act for a declaration that the Requirements are an abuse of process and constitute an infringement of section 7 and 8 of the Canadian Charter of Rights and Freedoms and should be set aside pursuant to subsection 24(1) of the Charter, and a declaration that the Requirements are otherwise invalid and unlawful and should be set aside in accordance with paragraph 18.1(a) and 18.1(3)(b) of the Federal Court Act. The Applicants are now requesting an order for a stay of the May 1, 3003 Requirement to Provide Information on the basis that this application raises a serious issue, that the Applicants will suffer irreparable harm if the Requirement is not stayed, and that the balance of convenience favours the Applicants.
SERIOUS ISSUE
[8] The Applicants suggest that the Respondent is in possession of all documentary evidence necessary to support a reassessment and that this reassessment should take into account the unexplained bank deposits which are the object of the Requirement.
[9] The Applicants suggest that responding to the Requirement would have the purpose of eliminating any non-income source for the unidentified bank deposits and to lead to the conclusion that the unidentified deposits are unreported income. The Applicants suggest that the purpose of the Requirement is only to eventually proceed with a criminal investigation based on the unexplained bank deposits found in the audit, and that the Requirement in this context is used with the objective of a criminal investigation and that the Applicants should not be in a position to self-incriminate with responses to those Requirements.
[10] The Applicants rely on recent Supreme Court of Canada decisions 2002 SCC 73">R. v. Jarvis 2002 SCC 73 and 2002 SCC 74">R. v. Ling 2002 SCC 74 where "the Court found that the predominant purpose of a particular enquiry is to determine penal liability, CCRA officials must relinquish the authority to use the statutory compulsion powers in section 231.2 of the Income Tax Act."
[11] On the other side, the Respondent suggests that it is in possession of bank statements of the Applicants and that those statements show unidentified deposits.
[12] The Respondent suggests that this Requirement is totally reasonable in the circumstances, and that "the May 1, 2003 Requirements request legitimate information regarding non-taxable sources of income to the Applicants, such as gambling winnings, lottery winnings, loans, inheritance, etc." The Respondent also disagrees with the suggestion by the Applicants that the Respondent has only to reassess the Applicants and it will be up to the Tax Court to decide on whether those deposits eventually would be considered as revenues and could be taxable.
[13] The Respondent finally mentioned that the possibility that the Applicants should be the object of criminal prosecution is there anyway, and that the answers that would be provided to the Requirements would allow the Respondent to make a more accurate assessment.
[14] The arguments raised by the Applicants do not constitute a valid reason not to respond to the Requirements.
[15] In my view, the Respondent has provided strong arguments supporting its position.
[16] I have no hesitation in concluding that the Applicants failed to demonstrate that there is a serious issue to be tried.
IRREPARABLE HARM
[17] The Applicants suggest that they will suffer irreparable harm if a stay is not granted because they will be compelled under criminal penalty to provide potentially incriminating evidence that could eventually be used against them in a criminal prosecution for tax evasion and, at the same time, if the Applicants fail to comply with the Requirements, they may be liable to criminal prosecution for such failure to comply suggesting that they are in a catch-22 situation.
[18] The Respondent reacts to those allegations by saying that if the Minister is not provided with an answer within a reasonable time-frame the Minister will be statute-barred from reassessing, and also argues that if the information that is requested is provided and it is decided later that the information was collected in violation of the Applicants' constitutional rights, it will not be possible to use that information in any subsequent criminal proceedings anyway.
[19] I have no hesitation in concluding that the Applicants will not suffer irreparable harm if a stay is not granted at this time.
[20] As I mentioned at the hearing, as it is suggested by the Applicants, if the majority of the responses to the Requirement would be rendered in the negative, I don't see how the natural inference could be drawn that the amount of deposits in the bank account should be considered as revenue and could imply criminal prosecution for tax evasion.
[21] How could one suggest that by providing no information on the origin of bank deposits, it could be seen as self-incriminating? The wording of the Act would have to be stretched considerably to arrive at such conclusions, which I am not ready to do.
BALANCE OF CONVENIENCE
[22] Both parties suggest that the balance of convenience is in their favour, but I have no hesitation, with the evidence that has been provided, to conclude that the balance of convenience favours the Respondent.
ORDER
[23] THEREFORE, it is hereby ordered that this application for a stay is dismissed with costs payable forthwith to the Respondent.
(Sgd.) "Pierre Blais"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-845-03
STYLE OF CAUSE: PAUL S. BINING ET AL. V. HMQ
PLACE OF HEARING: Vancouver, B.C.
DATE OF HEARING: May 30, 2003
REASONS FOR ORDER: BLAIS J.
DATED: May 30, 2003
APPEARANCES:
Mr. Thomas M. Boddez FOR APPLICANTS
Mr. Robert Carvalho FOR RESPONDENT
SOLICITORS OF RECORD:
Thorsteinssons Tax Lawyers FOR APPLICANTS
Vancouver, B.C.
Morris Rosenberg FOR RESPONDENT
Deputy Attorney General of Canada
Ottawa, ON
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