Date: 20040130
Docket: T-2469-03
Citation: 2004 FC 169
Ottawa, Ontario, the 30th day of January 2004
Present: The Honourable Madam Justice Tremblay-Lamer
BETWEEN:
THE MINISTER OF NATIONAL REVENUE
Applicant
and
TORONTO DOMINION BANK
Respondent
REASONS FOR ORDER AND ORDER
[1] The Court has before it an application for an order pursuant to section 231.7 of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, as amended (the I.T.A.) directing the respondent to provide the applicant with the information sought by a peremptory requirement to provide information sent to the Manager, Toronto Dominion Bank, 3590 rue St-Laurent, Montréal, Quebec, on December 19, 2003, by the Minister of National Revenue (the Minister).
[2] On or about April 12, 2002, Jonathan Myette, a tax debtor, received a cheque made out to himself for $10,000, which he endorsed and deposited in a Toronto Dominion Bank account having No. 4152-291062.
[3] On September 24, 2003, the Minister sent the Toronto Dominion Bank an initial peremptory requirement to provide information regarding account No. 4152-291062.
[4] On October 2, 2003, Sylvain Robineau, section head, administration section, with the branch of the Toronto Dominion Bank at 4750 de la Savane, wrote the Minister indicating that the bank account belonged to a third party and it was refusing to disclose the person's identity.
[5] On October 20, 2003, the Minister sent a second peremptory requirement to provide information to Sylvain Robineau, section head, Toronto Dominion Bank, 4750 de La Savane, Montréal branch, a requirement which was not sent to the right branch.
[6] On October 27, 2003, counsel for the Toronto Dominion Bank wrote the Minister telling him that the Bank was refusing to provide the information requested, mentioning that the information sought concerned a third party and accordingly the Minister had to obtain a court order pursuant to subsection 231.2(3) of the I.T.A.
[7] On December 19, 2003, the Minister sent another peremptory requirement to provide information, addressed this time to the Manager of the Toronto Dominion branch located at 3590 rue St-Laurent in Montréal, and relating to the following information:
(a) the name of the holder of account No. 4152-291062 and his or her address, telephone number, the name of his or her representative and any other information by which he or she could be identified and contacted;
(b) the account number, the name of the holder and the coordinates (address, telephone number and name of representative, if any) of the holder of any account over which Jonathan Myette had a power or power of attorney to make deposits or debit the account by means of cheques, withdrawals or otherwise;
(c) the name and the coordinates (address, telephone number and name of representative, if any) of any person whom the Bank knew acted as nominee or agent for Jonathan Myette and the purposes for which this person acted in that capacity.
[8] The respondent decided not to act on the requirement and is still refusing to provide the information requested in the peremptory requirement.
APPLICABLE PROVISIONS
[9] Sections 231.2 and 231.7 of the I.T.A. provide:
| 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,
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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 :
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| (a) any information or additional information, including a return of income or a supplementary return; or
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a) qu'elle fournisse tout renseignement ou tout renseignement supplémentaire, y compris une déclaration de revenu ou une déclaration supplémentaire;
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| (b) any document.
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b) qu'elle produise des documents.
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| (2) The Minister shall not impose on any person (in this section referred to as a "third party") a requirement under subsection 231.2(1) to provide information or any document relating to one or more unnamed persons unless the Minister first obtains the authorization of a judge under subsection 231.2(3).
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(2) Le ministre ne peut exiger de quiconque -- appelé « tiers » au présent article -- la fourniture de renseignements ou production de documents prévue au paragraphe (1) concernant une ou plusieurs personnes non désignées nommément, sans y être au préalable autorisé par un juge en vertu du paragraphe (3).
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| (3) On ex parte application by the Minister, a judge may, subject to such conditions as the judge considers appropriate, authorize the Minister to impose on a third party a requirement under subsection 231.2(1) relating to an unnamed person or more than one unnamed person (in this section referred to as the "group") where the judge is satisfied by information on oath that
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(3) Sur requête ex parte du ministre, un juge peut, aux conditions qu'il estime indiquées, autoriser le ministre à exiger d'un tiers la fourniture de renseignements ou production de documents prévue au paragraphe (1) concernant une personne non désignée nommément ou plus d'une personne non désignée nommément -- appelée « groupe » au présent article --, s'il est convaincu, sur dénonciation sous serment, de ce qui suit :
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| (a) the person or group is ascertainable; and
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a) cette personne ou ce groupe est identifiable;
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| (b) the requirement is made to verify compliance by the person or persons in the group with any duty or obligation under this Act.
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b) la fourniture ou la production est exigée pour vérifier si cette personne ou les personnes de ce groupe ont respecté quelque devoir ou obligation prévu par la présente loi;
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| (c) (Repealed by S.C. 1996, c. 21, s. 58(1).)
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c) (Abrogé par L.C. 1996, ch. 21, art. 58(1).)
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| (d) (Repealed by S.C. 1996, c. 21, s. 58(1).)
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d) (Abrogé par L.C. 1996, ch. 21, art. 58(1).)
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| (4) Where an authorization is granted under subsection 231.2(3), it shall be served together with the notice referred to in subsection 231.2(1).
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| (4) L'autorisation accordée en vertu du paragraphe (3) doit être jointe à l'avis visé au paragraphe (1).231.7. (1) On summary application by the Minister, a judge may, notwithstanding subsection 238(2), order a person to provide any access, assistance, information or document sought by the Minister under section 231.1 or 231.2 if the judge is satisfied that
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231.7. (1) Sur demande sommaire du ministre, un juge peut, malgré le paragraphe 238(2), ordonner à une personne de fournir l'accès, l'aide, les renseignements ou les documents que le ministre cherche à obtenir en vertu des articles 231.1 ou 231.2 s'il est convaincu de ce qui suit :
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| (a) the person was required under section 231.1 or 231.2 to provide the access, assistance, information or document and did not do so; and
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a) la personne n'a pas fourni l'accès, l'aide, les renseignements ou les documents bien qu'elle en soit tenue par les articles 231.1 ou 231.2;
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| (b) in the case of information or a document, the information or document is not protected from disclosure by solicitor-client privilege (within the meaning of subsection 232(1)).
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b) s'agissant de renseignements ou de documents, le privilège des communications entre client et avocat, au sens du paragraphe 232(1), ne peut être invoqué à leur égard.
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| (2) An application under subsection (1) must not be heard before the end of five clear days from the day the notice of application is served on the person against whom the order is sought.
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(2) La demande n'est entendue qu'une fois écoulés cinq jours francs après signification d'un avis de la demande à la personne à l'égard de laquelle l'ordonnance est demandée.
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| (3) A judge making an order under subsection (1) may impose any conditions in respect of the order that the judge considers appropriate.
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(3) Le juge peut imposer, à l'égard de l'ordonnance, les conditions qu'il estime indiquées.
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| (4) If a person fails or refuses to comply with an order, a judge may find the person in contempt of court and the person is subject to the processes and the punishments of the court to which the judge is appointed.
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(4) Quiconque refuse ou fait défaut de se conformer à une ordonnance peut être reconnu coupable d'outrage au tribunal; il est alors sujet aux procédures et sanctions du tribunal l'ayant ainsi reconnu coupable.
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| (5) An order by a judge under subsection (1) may be appealed to a court having appellate jurisdiction over decisions of the court to which the judge is appointed. An appeal does not suspend the execution of the order unless it is so ordered by a judge of the court to which the appeal is made.
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(5) L'ordonnance visée au paragraphe (1) est susceptible d'appel devant le tribunal ayant compétence pour entendre les appels des décisions du tribunal ayant rendu l'ordonnance. Toutefois, l'appel n'a pas pour effet de suspendre l'exécution de l'ordonnance, sauf ordonnance contraire d'un juge du tribunal saisi de l'appel.
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[10] In the Minister's opinion the information required is relevant to the investigation conducted into the tax debtor Jonathan Myette, and accordingly the Court should adopt a liberal approach in its interpretation of the relevant provisions. The peremptory requirement was based on subsection 231.2(1) I.T.A. If subsections 231.2(1), (2) and (3) were to be interpreted as the respondent does, the Minister could never obtain the type of information required in an investigation into the recovery of a tax debt.
[11] He noted that he was not trying to ascertain whether the third party, the holder of the account, had complied with any duty or obligation mentioned in the I.T.A. Rather, he was ascertaining whether his debtor, Jonathan Myette, who is under investigation, had by his actions tried to reduce his property at the expense of his creditors.
[12] In the circumstances, he maintained he was entitled to require that an order be made by the Court directing the respondent to provide the said information by the peremptory requirement of information dated December 19, 2003.
[13] For its part, the respondent contended that the requirement dated December 19, 2003, like the requirement dated October 20, 2003, was expressly based on subsection 231.2(2) I.T.A. and subsection 231.2(1) I.T.A. clearly cannot apply in the case at bar.
[14] Subsection 231.2(1) I.T.A. only applies when the information required concerns the tax debtor specifically named in the requirement. The tax debtor Jonathan Myette is not the holder of the account referred to in this requirement dated December 19, 2003.
[15] It is not the function of a financial institution to which the requirement is sent to decide on the relevance of the information sought under that requirement. It noted that the procedure created under subsections 231.2(2) and (3) of the I.T.A. has the twofold function of requiring the Canada Customs and Revenue Agency to justify the obtaining of the information required when the requirement relates to unnamed persons and allowing the financial institution to which the requirement is sent to comply with its obligations to its clients.
[16] In the absence of a clear legislative provision or an order of a competent court, it was justified in refusing to act on the requirement dated December 19, 2003.
ANALYSIS
[17] The Minister has the power to require any person to provide any information or document "for any purpose related to the administration or enforcement of this Act".
[18] When the information required concerns the tax debtor named in the requirement, subsection 231.2(1) applies and no prior authorization of a judge is necessary.
[19] However, where a third party is being required to provide information or documents relating to one or more unnamed persons, the Minister must first obtain the authorization of a judge: that is the case here. The Minister is seeking information on the accounts of third parties who have not been previously identified.
[20] Although the latter maintained that he only wanted to ascertain whether his debtor Jonathan Myette, who is under investigation, had tried to reduce his property at the expense of his creditors, it cannot be argued without risk of absurdity that this is a situation covered by subsection 231.2(1), since the Minister is trying to obtain information on the name of the holder of bank account No. 4152-291062 and the names and account numbers of persons whom the Bank knows have acted as nominees for Jonathan Myette. How can it be argued that these persons have been named?
[21] The fact that the information sought could potentially prove to be relevant in the investigation being conducted regarding the tax debtor Jonathan Myette is of no importance. Subsection 231.2(2) is clear: prior authorization is necessary.
[22] In a similar case, Capital Vision Inc. v. M.N.R., [2002] F.C.J. No. 1797 (QL), the defendant had argued that since his investigation dealt with a named person it was the procedure set out in subsection 231.2(1) that should apply and that he did not need judicial authorization to make a requirement regarding the names of the plaintiff's clients. My colleague Heneghan J. did not accept this argument. She said, at paragraph 58:
In my opinion, the Minister's allegation that he needs to know about unnamed persons in order to complete the allegedly ongoing audit of Capital Vision, triggers the operation of subsections 231.2(2) and (3) of the Act dealing with access to information regarding unnamed persons. By proceeding to demand information and documents from Capital Vision in the absence of judicial authorization, the Minister is attempting to do indirectly what he cannot do directly. I refer to Sand Exploration Limited, supra, where the Court said at paragraph 28:
... To obtain the names of unnamed persons from third parties, the Minister must seek a court order. He cannot and should not circumvent that requirement by performing an audit without judicial authorization to obtain the names of such investors. That is what subsections (2) and (3) of section 231.2 are intended to cover.
[23] I admit it may be difficult to obtain authorization from a judge where the latter must be satisfied that the information is required in order to determine whether the person or persons in this group have observed some duty or obligation imposed by this Act. In the case at bar, since the Minister is not conducting an investigation into the holder of the account, this condition therefore has not been met.
[24] In spite of this, I feel that section 232.2(2) does not give rise to such a broad interpretation as the Minister suggests.
[25] First, in M.N.R. v. Sand Exploration Ltd., [1995_] 3 F.C. 44 (T.D.), Rothstein J. stated that the limiting interpretation required by [1984] 1 S.C.R. 614">James Richardson & Sons, Ltd. v. Minister of National Revenue et al., [1984] 1 S.C.R. 614, continued to be valid for interpreting section 232.2.
[26] Further, the wording of section 232.2(2) is clear and in my view does not permit an interpretation that disregards the literal meaning in favour of an interpretation which is considered more likely to advance the objectives of the Act, which might be possible in the case of less clear legislation.
[27] In Canada v. Antosko, [1994] 2 S.C.R. 312, at 326-327, the Supreme Court of Canada said:
While it is true that the courts must view discrete sections of the Income Tax Act in light of the other provisions of the Act and of the purpose of the legislation, and that they must analyze a given transaction in the context of economic and commercial reality, such techniques cannot alter the result where the words of the statute are clear and plain . . . [My emphasis.]
[28] In this regard, I adopt the comment on Antosko, supra, by Peter Hogg, cited with approval by Major J. in Friesen v. Canada, [1995] 3 S.C.R. 103, at 113-114:
. . . P.W. Hogg and J.E. Magee, Principles of Canadian Income Tax Law (1995), Section 22.3(c) "Strict and purposive interpretation", at pp. 453-54:
It would introduce intolerable uncertainty into the Income Tax Act if clear language in a detailed provision of the Act were to be qualified by unexpressed exceptions derived from a court's view of the object and purpose of the provision . . . [The Antosko case] is simply a recognition that "object and purpose" can play only a limited role in the interpretation of a statute that is as precise and detailed as the Income Tax Act.
[29] Further, as P.A. Côté stated in his text The Interpretation of Legislation in Canada, 3d ed., at pages 624 and 625:
The guideline affirming the primacy of the text is principally grounded on two arguments. First, the highly detailed style of drafting for this type of legislation naturally contributes to accentuate the importance of the text for the taxpayer and their counsellors. And, eventually for the official interpreter, the judge. Further, some fear that the tremendous possibility offered when doing away with the literal meaning of the text, in favour of a meaning deemed more apt to promote the objectives of the statute, will introduce too much uncertainty in an area of law where decisions are taken, daily, based on the letter of the provision.
[30] In the context of the case at bar, in which an obligation of confidentiality is imposed on the bank by paragraph 244(d) of the Bank Act, S.C. 1991, c. 6, only a clear provision or an order of the Court can authorize a bank to disregard its obligation.
[31] Subsection 231.2(1) may be viewed as a clear provision authorizing a bank to disclose information on a named person (Denis Racine, "L'État et le secret bancaire" (1992), 33 C. de D. 1235).
[32] On the other hand, subsection 231.2(2) clearly requires judicial authorization when the information concerns an unnamed person. I am unable to find any implicit exception to recognize the difficulty in which the applicant stands.
[33] Consequently, I feel the Bank was justified in refusing to comply with the requirement dated December 19, 2003.
CONCLUSION
[34] As the formalities contained in section 231.2 I.T.A. were not met, the order sought cannot be granted and the motion is dismissed with costs.
ORDER
THE COURT ORDERS that the motion be dismissed with costs.
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"Danièle Tremblay-Lamer"
J.F.C.
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Certified true translation
Suzanne M. Gauthier, C Tr, LLL
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-2469-03
STYLE OF CAUSE: THE MINISTER OF NATIONAL REVENUE
Applicant
and
TORONTO DOMINION BANK
Respondent
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: January 26, 2004
REASONS FOR ORDER BY: THE HONOURABLE MADAM JUSTICE TREMBLAY-LAMER
DATED: January 30, 2004
APPEARANCES:
Marie-Claude Landry FOR THE APPLICANT
Maria Grazia Bittichesu
Philippe Bélanger FOR THE RESPONDENT
SOLICITORS OF RECORD:
Morris Rosenberg FOR THE APPLICANT
Deputy Attorney General of Canada
Montréal, Quebec
McCarthy Tétrault FOR THE RESPONDENT
Montréal, Quebec
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