Jerome,
A.CJ.:—The
respondents'
applications
by
way
of
originating
notice
of
motion
for
a
review,
pursuant
to
subsection
225.2(8)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act"),
of
my
order
dated
July
18,
1989
were
heard
together
at
Toronto,
Ontario
on
January
15,
1990,
January
19,
1990
and
on
April
2,
1990.
The
order,
commonly
referred
to
as
a
"jeopardy
collection
order",
was
granted
on
an
ex
parte
application
pursuant
to
subsection
225.2(2)
and
authorized
the
Minister
of
National
Revenue
(the
"Minister")
to
forthwith
take
any
of
the
collection
actions
described
in
paragraphs
225.1(1)(a)
to
(g)
of
the
Income
Tax
Act
with
respect
to
the
respondents'
tax
debt.
On
August
21,
1990
at
Toronto,
Ontario,
I
dismissed
the
respondents'
applications
for
reasons
iven
orally
from
the
Bench
and
indicated
that
these
written
reasons
would
follow.
Background
By
notices
of
assessment
and
reassessment
dated
June
15,
1989
the
respondent
Duncan
was
assessed
and
reassessed
with
respect
to
his
1985,
1986
and
1987
taxation
years
and
the
respondent
Petroff
was
reassessed
with
respect
to
his
1984,
1985,
1986
and
1987
taxation
years.
This
resulted
in
an
unpaid
income
tax
liability
of
$511,621.41
for
the
respondent
Duncan
and
an
unpaid
income
tax
liability
of
$583,512.27
for
the
respondent
Petroff.
On
February
11,
1988
the
respondents
were
apprehended
in
the
United
States
of
America
and
charged
with
drug
trafficking
offences.
The
respondents
were
subsequently
released
on
bail
upon
each
posting
a
cash
bond
with
the
United
States
Court
in
the
amount
of
$750,000
U.S.
On
October
3,
1989
the
respondents
pleaded
guilty
to
a
charge
of
conspiracy
to
distribute
a
narcotic
substance
and
agreements
were
reached
between
the
Assistant
United
States
Attorney
and
the
respondents,
subject
to
judicial
approval,
that
the
sentence
to
be
imposed
would
be
121
months
in
jail.
The
respondents
signed
consent
judgments
directing
payment
to
the
United
States
Government
of
money
in
the
amount
of
$1,021,010
which
was
in
their
possession
and
seized
by
the
United
States
authorities
at
the
time
of
their
arrest.
By
originating
notice
of
motion
dated
July
17,
1989
the
applicant
made
an
ex
parte
motion
pursuant
to
subsection
225.2(2)
of
the
Income
Tax
Act
on
July
1989
for
an
order
authorizing
the
Minister
to
proceed
without
delay
on
collection
proceedings
with
respect
to
the
respondents'
tax
debt.
Upon
hearing
counsel
for
the
applicant
and
upon
reading
the
affidavits
of
Terry
Hale,
Chief
of
Collections,
Mississauga
District
Office
of
Revenue
Canada,
sworn
July
14
and
July
18,
1989,
by
order
dated
July
18,
1989
I
authorized
the
Minister
to
take
forthwith
any
of
the
actions
described
in
paragraphs
225.1(1)(a)
to
(g)
of
the
Income
Tax
Act.
I
also
directed
that
service
of
the
order
be
effected
by
sending
a
photostatic
copy
to
the
respondents
by
registered
mail
on
or
before
July
21,
1989.
On
July
18,
1989,
certificates
were
registered
in
the
Federal
Court
of
Canada
pursuant
to
section
223
of
the
Income
Tax
Act
certifying
that
the
respondents
were
in
arrears
with
respect
to
taxes.
As
a
result
of
the
order,
the
Minister
caused
registrations
to
be
made
on
the
title
of
certain
properties
of
the
respondents.
By
notice
of
motion
dated
July
26,
1989
the
applicant
sought
an
order
that,
unless
sufficient
cause
to
the
contrary
be
shown,
the
respondent
Duncan's
lands
described
in
Instrument
No.
CT
847090
registered
in
the
Land
Registry
Office
in
Toronto
be
charged
with
the
judgment
in
favour
of
the
applicant
in
the
amount
of
$517,456.47,
together
with
interest
as
specified
in
the
certificate
dated
July
18,
1989.
A
"Charging
Order
to
Show
Cause"
was
issued
on
July
27,
1989.
By
notice
of
motion
dated
August
18,
1989,
the
respondents
apply
pursuant
to
subsection
225.2(8)
of
the
Act
for
a
review
of
the
order
of
July
18,
1989
and,
by
supplementary
notice
of
motion
dated
August
24,
1989,
the
respondent
Duncan
seeks
inter
alia
to
set
aside
the
Charging
Order
to
Show
Cause
dated
July
27,
1989,
on
the
basis
that
proper
disclosure
had
not
been
made.
They
also
allege
that
both
section
225.2
of
the
Act
and
the
order
and
directions
thereto
are
an
unreasonable
seizure
contrary
to
section
8
of
the
Canadian
Charter
of
Rights
and
Freedoms,
Constitution
Act,
1982
(the
"Charter"),
that
they
deny
the
respondents'
right
to
life,
liberty
and
security
of
the
person
contrary
to
section
7
of
the
Charter,
and
that
they
constitute
cruel
and
unusual
treatment
or
punishment
contrary
to
section
12
of
the
Charter.
Relevant
Statutory
Provisions
The
relevant
statutory
provisions
are
sections
225.1
and
225.2
of
the
Income
Tax
Act
as
amended
by
S.C.
1988,
c.
55,
ss.
169
and
170:
225.1
(1)
Where
a
taxpayer
is
liable
for
the
payment
of
an
amount
assessed
under
this
Act,
the
Minister
shall
not,
for
the
purpose
of
collecting
the
amount,
(a)
commence
legal
proceedings
in
a
court,
(b)
certify
the
amount
under
section
223,
(c)
require
a
person
to
make
a
payment
under
subsection
224(1),
(d)
require
an
institution
or
a
person
to
make
a
payment
under
subsection
224(1.1),
(e)
require
the
retention
of
the
amount
by
way
of
deduction
or
set-off
under
section
224.1,
(f)
require
a
person
to
turn
over
moneys
under
subsection
224.3(1),
or
(g)
give
a
notice,
issue
a
certificate
or
make
a
direction
under
subsection
225(1)
before
the
day
that
is
90
days
after
the
day
of
mailing
of
the
notice
of
assessment.
225.2
(1)
In
this
section,
"judge"
means
a
judge
or
a
local
judge
of
a
superior
court
of
a
province
or
a
judge
of
the
Federal
Court
of
Canada.
(2)
Notwithstanding
section
225.1,
where,
on
an
ex
parte
application
by
the
Minister,
a
judge
is
satisfied
that
there
are
reasonable
grounds
to
believe
that
the
collection
of
all
or
any
part
of
an
amount
assessed
in
respect
of
a
taxpayer
would
be
jeopardized
by
a
delay
in
the
collection
thereof,
he
shall,
on
such
terms
as
he
considers
reasonable
in
the
circumstances,
authorize
the
Minister
to
take
forthwith
any
of
the
actions
described
in
paragraphs
225.1
(1)(a)
to
(g)
with
respect
to
the
amount.
(4)
Statements
contained
in
an
affidavit
filed
in
the
context
of
an
application
under
this
section
may
be
based
on
belief
with
the
grounds
therefor.
(5)
An
authorization
granted
under
this
section
in
respect
of
a
taxpayer
shall
be
served
by
the
Minister
on
the
taxpayer
within
72
hours
after
it
is
granted,
except
where
the
judge
orders
the
authorization
to
be
served
at
some
other
time
specified
in
the
authorization,
and,
where
a
notice
of
assessment
has
not
been
sent
to
the
taxpayer
at
or
before
the
time
of
the
application,
the
notice
of
assessment
shall
be
served
together
with
the
authorization.
(6)
For
the
purposes
of
subsection
(5),
service
on
a
taxpayer
shall
be
effected
by
(a)
personal
service
on
the
taxpayer;
or
(b)
service
in
accordance
with
directions,
if
any,
of
a
judge.
(8)
Where
a
judge
of
a
court
has
granted
an
authorization
under
this
section
in
respect
of
a
taxpayer,
the
taxpayer
may,
upon
6
clear
days
notice
to
the
Deputy
Attorney
General
of
Canada,
apply
to
a
judge
of
the
court
to
review
the
authorization.
(9)
An
application
under
subsection
(8)
shall
be
made
(a)
within
30
days
from
the
day
on
which
the
authorization
was
served
on
the
taxpayer
in
accordance
with
this
section;
or
(b)
within
such
further
time
as
a
judge
may
allow,
upon
being
satisfied
that
the
application
was
made
as
soon
as
practicable.
(11)
On
an
application
under
subsection
(8),
the
judge
shall
determine
the
question
summarily
and
may
confirm,
set
aside
or
vary
the
authorization
and
may
make
such
other
order
as
he
considers
appropriate.
(13)
No
appeal
lies
from
an
order
of
a
judge
made
pursuant
to
subsection
(11).
Issues
The
issues
may
be
summarized
as
follows:
1.
The
application
and
effect
of
the
Charter
with
respect
to
the
order
dated
July
18,
1989;
and
2.
Has
the
test
required
by
section
225.2
of
the
Income
Tax
Act
been
met?
Were
there
reasonable
grounds
to
consider
that
the
collection
of
the
amounts
assessed
in
respect
of
the
respondents
would
be
jeopardized
by
a
delay
in
the
collection
thereof
and
was
there
full
and
frank
disclosure
on
the
ex
parte
application?
Argument
The
Charter
Issue
The
respondents
submit
that
the
ex
parte
order
dated
July
18,
1989
pursuant
to
subsection
225.2(2)
of
the
Income
Tax
Act
is
contrary
to
sections
7
and
8
of
the
Charter
although
they
concede
that
the
statutory
provision
itself
is
not
under
attack
in
this
proceeding.
They
suggest,
however,
that
the
deficiencies
contained
in
section
225.2
can
be
"read
down"
for
our
present
purposes
and
that
the
order
should
be
measured
against
the
statutory
provisions
as
properly
interpreted
in
accordance
with
the
Charter.
In
the
alternative,
the
respondents
submit
that
the
order
constitutes
an
unreasonable
seizure
in
that
it
does
not
comply
with
the
stringent
requirements
for
a
reasonable
search
and
seizure
enunciated
by
the
Supreme
Court
of
Canada
in
Hunter
v.
Southam
Inc.,
[1984]
2
S.C.R.
145;
11
D.L.R.
(4th)
641.
The
order
authorizing
immediate
collection
action
is
an
unreasonable
seizure
because
it
was
made
upon
virtually
no
evidence
or
credibly-based
probability
that
such
actions
were
required
to
prevent
evasion
of
the
payment
of
the
assessed
taxes
such
as
to
prevail
over
the
respondents'
rights
to
be
"left
alone".
The
respondents
further
submit
that
in
this
instance,
the
deprivation
of
their
property
by
the
Minister
affects
the
respondents'
right
to
life,
liberty
and
security
of
the
person
contrary
to
section
7
of
the
Charter.
The
“freezing”
or
"seizure"
of
their
assets
while
facing
serious
criminal
charges
and
other
legal
proceedings
that
may
result
in
incarceration
if
unsuccessfully
or
inadequately
defended,
is
an
infringement
of
their
section
7
Charter
rights.
In
addition,
the
interference,
authorized
on
an
ex
parte
application,
is
not
in
accordance
with
the
principles
of
fundamental
justice.
The
applicant
submits,
however,
that
an
enactment
that
provides
for
a
judicial
prior
authorization
of
a
search
does
not
necessarily
offend
section
8
of
the
Charter.
Furthermore,
the
applicant
suggests
that
the
only
appropriate
forum
for
constitutional
challenges
or
declaratory
judgments
is
that
involving
a
trial
and
not
a
motion
or
summary
proceeding.
In
any
event,
the
applicant
suggests
that
the
respondents'
arguments
are
misdirected
in
view
of
the
fact
that
an
order
under
section
225.2
and
the
directions
thereto
do
not
constitute
a
"seizure"
for
the
purposes
of
section
8
of
the
Charter.
Furthermore,
section
8
does
not
relate
to
real
property
rights
and
section
7
does
not
extend
to
protect
property
and
pure
economic
rights.
Finally,
the
effect
of
section
225.2
is
not
a
punishment
as
that
term
is
used
in
section
12
of
the
Charter.
Has
the
test
required
by
section
225.2
of
the
Income
Tax
Act
been
met?
The
essential
elements
of
the
respondents'
arguments
are
summarized
as
follows.
The
respondents
state
that
mortgages
were
placed
or
renewed
on
their
real
property
in
Canada
and
that
assets
were
encumbered
or
sold
only
in
an
effort
to
raise
funds
to
cover
bail-related
and
living
expenses
and
for
no
improper
purpose.
The
respondents
explained
that
in
California
they
were
required
to
satisfy
the
court
that
no
drug-related
funds
were
used
as
bail,
so
mortgage
funds
were
obtained.
The
respondents
state
that
although
the
notices
of
reassessment
were
dated
June
15,
1989,
they
were
not
mailed
until
July
17,
1989
and
they
suggest
that
at
least
a
genuine
attempt
to
give
notice
of
the
reassessments
was
a
condition
precedent
to
the
relief
granted
in
the
order.
Furthermore,
they
suggest
that
material
facts
were
not
disclosed
and
that
misleading
evidence
was
presented
at
the
ex
parte
hearing.
They
suggest
that
Mr.
Hale's
affidavits
intimate
that
they
were
selling
or
encumbering
their
assets
in
breach
of
the
conditions
of
bail.
They
state
that
there
was
no
evidence
that
they
had
disposed
of
or
attempted
to
dispose
of
assets
subsequent
to
the
dates
of
the
notices
and
that
there
is
no
evidence
that
they
were
attempting
to
avoid
their
tax
obligations.
Rather,
the
respondents
state
that
assets
were
dealt
with
in
the
ordinary
course
of
utilization
and
they
submit
that
the
applicant
has
failed
to
show
that
the
collection
of
moneys
owing
for
taxes
would
be
“jeopardized
by
a
delay
in
the
collection
thereof".
The
applicant
submits
that
if
the
evidence
on
the
balance
of
probabilities
leads
to
a
conclusion
that
it
is
more
likely
than
not
that
the
collection
would
be
jeopardized
by
a
delay
then
the
order
should
be
allowed
to
stand.
Relying
on
the
decision
of
Joyal,
J.
in
Laframboise
v.
The
Queen,
[1986]
2
C.T.C.
274;
86
D.T.C.
6396,
the
applicant
submits
that
the
nature
of
the
assessment
itself
raises
reasonable
apprehension
that
the
order
is
justified.
Analysis
The
Charter
Issue
After
carefully
considering
the
extensive
argument
put
forth
by
the
parties
I
find
that
the
Charter
should
not
form
a
part
of
the
judgment
in
this
matter
for
the
following
reasons.
First,
the
parties
acknowledge
that
the
relevant
sections
of
the
Income
Tax
Act
are
not
under
attack
in
this
application
and
they
cannot
be
attacked
in
a
proceeding
of
this
nature.
In
Rothmans
of
Pall
Mall
Canada
Ltd.
v.
M.N.R.
(No.
2),
[1976]
2
F.C.
512;
[1976]
C.T.C.
347
(C.A.)
at
349
(F.C.
515),
Le
Dain,
J.A.
[as
he
then
was],
on
behalf
of
the
Court,
held
that
"under
the
Rules
declaratory
relief
cannot
be
sought
by
originating
motion
but
only
by
an
action".
More
recently,
in
Turmel
v.
C.R.T.C.
(1985),
16
C.R.R.
9
(F.C.T.D.),
Dubé,
J.
explained
this
requirement
[at
11]:
I
appreciate
that
time
was
and
still
is
of
the
essence
.
.
.
but
constitutional
matters
cannot
be
solved
on
such
a
summary
proceeding.
The
solution
is
for
the
application
to
proceed
by
way
of
a
declaratory
action
that
would
allow
for
pleadings
and
discovery.
The
Court,
apprised
of
all
the
relevant
facts
and
with
the
benefit
of
legal
arguments,
would
then
be
in
a
position
to
adjudge
whether
or
not
the
equitable
basis
principle
as
interpreted
by
the
Court
is
now
in
violation
of
s.
15
of
the
Charter.
Also,
I
note
that
in
Berendt
v.
The
Queen,
an
unreported
decision
of
the
Supreme
Court
of
Ontario,
Eberle,
J.
expressed
similar
concerns:
The
notice
of
motion
attacks
s.
225.2
of
the
Income
Tax
Act.
I
believe
that
it
is
misdirected.
That
section
does
not
provide
for
anything
even
resembling
a
seizure
of
the
money,
nor
even
for
the
institution
of
collection
procedures.
It
provides
only
for
a
decision
of
the
Minister
to
override
the
90
day
delay
of
collection
procedures
imposed
by
s.
225.1.
As
a
result
of
the
decision
taken
under
s.
225.2,
it
only
becomes
open
to
the
Minister
to
take
immediate
collection
actions
as
authorized
elsewhere
in
the
Act,
if
he
so
desires.
Thus,
[the]
attack
on
s.
225.2
is
in
my
view
quite
misdirected
and
fails
because
of
its
misconception
of
what
that
section
does.
In
spite
of
that
conclusion,
it
is
evident
that
the
applicant
really
seeks
to
attack
the
collection
powers
statutorily
given
to
the
Minister
by
ss.
222,
223
and
224
of
the
Act.
The
constitutional
validity
of
other
sections
of
the
Income
Tax
Act
related
to
administrative
enforcement
mechanisms
has
also
been
considered
by
this
court.
In
Re
McLeod
and
M.N.R.
(1983),
146
D.L.R.
(3d)
561
(F.C.T.D.),
Dubé,
J.
determined
that
section
222
and
subsections
223(2)
and
158(1)
of
the
Income
Tax
Act
,
were
not
contrary
to
section
8
of
the
Charter.
In
that
case
there
was
no
allegation
that
the
collection
proceedings
were
not
carried
out
according
to
the
provisions
set
out
in
the
Act.
However,
the
applicant
in
effect
sought
a
declaration
that
these
provisions
were
contrary
to
section
8
of
the
Charter.
Dubé,
J.
commented
[at
564]:
The
applicant
offers
no
jurisprudence
to
support
such
a
sweeping
demand.
The
crux
of
his
argument,
as
I
understand
it,
is
that
the
common
shares
in
his
company
ought
not
to
be
seized
pending
his
appeal
as
"at
the
present
time
I
am
not
in
a
position
to
provide
payment
of
the
assessed
amounts".
This
is
surely
not
evidence
of
a
breach
of
the
applicants
rights
to
be
secure
against
seizure.
As
I
pointed
out
at
the
hearing,
the
Income
Tax
Act
is
a
rigorous
document.
Parliament
has
ruled
that
taxes
be
paid
within
30
days
from
assessment,
whether
the
taxpayer
files
an
appeal
or
not.
The
obvious
purpose
of
such
an
imposition
is
to
prevent
a
massive
wave
of
taxpayers'
appeals
launched
for
the
sole
purpose
of
delaying
the
payment
of
taxes.
Finally,
as
acknowledged
by
counsel
for
the
respondents,
the
Charter
does
not
in
specific
terms
directly
affect
property
rights
and
I
have
grave
doubts
that
what
took
place
here
constitutes
a
"seizure".
The
result
of
the
application
was
not
a
seizure
in
the
true
sense
of
the
word.
Indeed,
the
taxpayers’
assets
were
not
altered
in
any
way
and
there
was
no
transfer
of
title.
While
the
filing
of
a
caution
on
title
may
prevent
or
otherwise
restrict
the
disposition
of
the
property,
it
is
far
from
certain
that
it
constitutes
a
seizure.
I
do
not
believe
that
activities
pursued
by
the
Minister
in
accordance
with
the
administrative
enforcement
mechanisms
of
a
regulatory
statute
that
effectively
"freeze"
a
taxpayer's
assets
constitute
a
"seizure"
in
the
sense
required
to
bring
these
activities
within
the
scrutiny
of
the
standards
set
by
the
Supreme
Court
in
Hunter
v.
Southam
Inc.,
supra.
A
constitutional
attack
has
clearly
not
been
made
with
respect
to
the
provisions
of
the
Income
Tax
Act
and
the
respondents'
Charter
arguments
cannot
succeed.
Has
the
test
required
by
section
225.2
of
the
Income
Tax
Act
been
met?
In
reviewing
the
authorization
granted
under
subsection
225.2(2),
it
is
necessary
to
consider
whether
there
are
reasonable
grounds
to
believe
that
the
collection
of
all
or
any
part
of
an
amount
assessed
in
respect
of
a
taxpayer
would
be
jeopardized
by
the
delay
in
the
collection
thereof.
McNair,
J.
in
Danielson
v.
Deputy
A.-G.
Canada
and
M.N.R.,
[1986]
D.T.C.
6518
at
6519;
[1986]
2
C.T.C.
380
at
381
(F.C.T.D.),
enunciated
the
test
to
be
met
with
respect
to
the
previous
subsection
225.2(1):
”.
.
.
the
issue
is
not
whether
the
collection
per
se
is
in
jeopardy
but
rather
whether
the
actual
jeopardy
arises
from
the
likely
delay
in
the
collection
thereof."
This
test
continues
to
be
appropriate
despite
the
1985
amendments:
The
Queen
v.
Satellite
Earth
Station
Technology
Inc.,
[1989]
2
C.T.C.
291;
89
D.T.C.
5506;
30
F.T.R.
94
(F.C.T.D.).
In
Satellite
Earth,
MacKay,
J.
reviewed
the
factors
to
be
considered
by
a
court
on
a
subsection
225.2(8)
review
of
a
jeopardy
collection
order.
After
considering
the
case
law
dealing
with
the
former
version
of
section
225.2
he
concluded
[at
296-97
(D.T.C.
5510)]
that
in
a
subsection
225.2(8)
application
the
Minister
has
the
ultimate
burden
of
justifying
the
decision
despite
the
fact
that
section
225.2
as
amended
no
longer
includes
the
former
subsection
(5)
that
specifically
stated
that
"on
the
hearing
of
an
application
under
paragraph
2(c),
the
burden
of
justifying
the
decision
is
on
the
Minister".
However,
the
initial
burden
is
on
the
taxpayer
to
show
that
there
are
reasonable
grounds
to
doubt
that
the
test
has
been
met.
In
an
application
to
review
a
"jeopardy
order"
originally
granted
under
subsection
225.2(2)
the
issue
will
be
whether
that
Order
will
now
be
set
aside
or
varied.
In
this,
an
applicant
under
subsection
225.2(8)
has
the
initial
burden
to
muster
evidence,
whether
by
affidavits,
by
cross-examination
of
affiants
on
behalf
of
the
Crown,
or
both,
that
there
are
reasonable
grounds
to
doubt
that
the
test
required
by
subsection
225.2(2)
has
been
met.
Thus
the
ultimate
burden
on
the
Crown
established
by
subsection
225.2(2)
continues
when
an
order
granted
by
the
court
is
reviewed
under
subsection
225.2(8).
Occasionally
there
may
be
concern
about
whether
the
Order
should
have
been
made
initially,
but
I
expect
that
this
will
not
often
be
the
principal
focus,
unless
there
appears
to
have
been
a
serious
procedural
flaw
in
the
original
application.
.
.
.
The
evidence
must
be
considered
in
relation
to
the
test
established
by
subsection
225.2(2)
itself
and
by
relevant
cases,
that
is,
whether
on
a
balance
of
probability
the
evidence
leads
to
the
conclusion
that
it
is
more
likely
than
not
that
collection
would
be
jeopardized
by
delay.
Mere
suspicion
that
collection
will
be
jeopardized
by
the
delay
is
not
sufficient:
1853-9049
Québec
Inc.
v.
The
Queen,
[1987]
1
C.T.C.
137;
87
D.T.C.
5093
(F.C.T.D.).
In
1853-9049
Québec
Inc.,
Rouleau,
J.
[at
142-43
(D.T.C.
5097-98)]
.
provided
additional
guidance
with
respect
to
the
test
set
out
in
the
former
section
225.2
which
continues
to
be
appropriate
today:
I
agree
with
McNair,
J.
[in
Danielson]
when
he
says
that
the
Minister
can
require
payment
of
the
assessment
forthwith
if
a
taxpayer
may
not
be
in
a
position
to
pay
simply
because
of
the
passage
of
time
allowed
by
the
Act.
The
amount
of
money
involved
is
not
significant:
what
the
Minister
has
to
know
is
whether
the
taxpayer's
assets
can
be
liquidated
in
the
meantime
or
be
seized
by
other
creditors
and
so
not
available
to
him.
.
.
.
In
my
opinion,
this
latitude
allows
the
Minister
to
rely
on
the
exceptional
provisions
contained
in
subsection
225.2(1)
whenever,
on
a
balance
of
probability,
the
time
allowed
by
the
taxpayer
by
subsection
225.1(1)
would
jeopardize
his
debt.
I
emphasize
on
a
balance
of
probability,
not
beyond
all
reasonable
doubt.
.
.
.
.
.
.
The
Minister
may
certainly
act
not
only
in
cases
of
fraud
or
situations
amounting
to
fraud,
but
also
in
cases
where
the
taxpayer
may
waste,
liquidate
or
otherwise
transfer
his
property
to
escape
the
tax
authorities:
in
short,
to
meet
any
situation
in
which
a
taxpayer's
assets
may
vanish
into
thin
air
because
of
the
passage
of
time.
[Emphasis
added.]
The
issue
before
me
then
is
whether
the
rights
of
the
respondents
have
been
offended
by
the
manner
in
which
the
Minister
availed
himself
of
these
rather
extraordinary
provisions
and
alternatively,
whether
the
order
should
be
struck
because
the
Minister
has
failed
to
observe
and
respect
the
high
standard
of
disclosure
to
the
court
that
is
required
on
ex
parte
applications.
There
have
been
cases
in
our
court
in
which
the
right
to
seizure,
the
right
to
enter
premises,
the
right
to
affect
a
number
of
draconian
measures
under
the
Income
Tax
Act
have
been
found
to
be
invalid.
Noteworthy
is
the
Federal
Court
of
Appeal's
decision
in
Baron
v.
Canada,
[1991]
1
C.T.C.
125;
91
D.T.C.
5055
that
Revenue
Canada's
use
of
search
warrants
obtained
under
section
231.3
of
the
Income
Tax
Act
violates
the
right
to
be
secure
against
unreasonable
search
and
seizure.
The
Court
[at
129
(D.T.C.
5058)]
found
that
the
use
of
the
term
“shall”
deprived
the
issuing
officer
of
any
residual
discretion
and
for
that
reason
alone
the
provision
ran
afoul
of
sections
7
and
8
of
the
Charter.
Important
for
our
purposes
is
that
unlike
section
225.2,
the
Court
found
that
section
231.3
was
concerned
with
the
detection
and
prosecution
of
crime
and,
therefore,
“nothing
less
than
the
full
panoply
of
Charter
protection
is
appropriate".
Furthermore,
the
constitutional
validity
of
a
particular
statutory
provision
was
in
question
in
Baron
and
other
similar
cases.
Nor
can
I
overlook
the
fact
that
the
provision
as
it
now
stands
has
a
greater
safeguard
than
its
predecessor.
Under
the
Income
Tax
Act
as
amended,
sections
222
to
228
set
out
a
variety
of
procedures
for
the
collection
of
moneys
owed
to
Her
Majesty
for
taxes,
interest,
penalties
or
other
charges
under
the
Act.
In
1985
the
Act
was
amended
and
section
225.1
was
added
to
postpone
these
collection
processes
during
the
time
allowed
for
a
taxpayer
to
file
a
notice
of
objection
with
respect
to
the
assessment
or
reassessment
of
his
taxes.
However,
in
exceptional
circumstances
where
“it
could
reasonably
be
considered
that
collection
of
an
amount
assessed
would
be
prejudiced
by
the
delay”,
the
Minister
under
the
former
section
225.2
could
institute
collection
proceedings.
In
1988,
the
provisions
were
once
again
revised
and
section
225.2
was
amended
to
require
prior
authorization
by
a
court
before
"jeopardy
collection”
procedures
could
be
initiated.
Although
previously
not
required,
the
present
provision
requires
the
Minister
to
appear
in
court
to
avail
himself
of
these
special
collection
provisions
if
he
wishes
to
do
so
before
the
period
for
filing
notices
of
objection
has
expired.
To
succeed,
therefore,
the
respondents
must
establish
the
failure
of
the
Minister
to
adhere
to
and
respect
the
standard
of
disclosure.
Clearly,
an
applicant,
on
an
ex
parte
application,
must
exercise
utmost
good
faith
and
ensure
full
and
frank
disclosure
to
be
successful.
In
D./M.N.R.
v.
Atchison,
[1989]
1
C.T.C.
342;
89
D.T.C.
5088
(B.C.S.C.),
Sheppard,
L.J.S.C.
allowed
the
taxpayer's
application
to
have
a
jeopardy
collection
order
set
aside
because
the
Minister
had
not
made
full
disclosure
with
respect
to
the
allegations
in
its
ex
parte
application.
The
court
must
always
be
careful
to
ensure
that
the
same
standard
is
applied
to
all
taxpayers
irrespective
of
their
relative
wealth
and
irrespective
of
whether
the
taxpayer
has
run
afoul
of
the
law.
However,
as
Joyal,
J.
observed
in
Laframboise,
supra,
the
nature
of
the
assessment
itself
may
raise
a
reasonable
apprehension
of
jeopardy.
In
the
present
case
the
concern
expressed
by
the
Minister
was
that
there
has
been
substantial
income
and
that
the
income
was
drug-related.
This
turns
out
to
have
been
entirely
verified
by
cross-examination,
by
reply
material
and
by
subsequent
events.
On
the
balance
of
probabilities,
delay
may
jeopardize
the
collection
of
the
taxpayers'
tax
debt.
Finally
in
the
light
of
other
factual
confirmation,
the
alleged
deficiencies
in
I
the
evidence
presented
by
the
Minister
at
the
ex
parte
motion
would
not
appear
to
warrant
setting
the
order
aside.
In
Laframboise,
Joyal,
J.
dealt
with
the
taxpayer's
argument
that
there
were
serious
deficiencies
in
the
affidavit
evidence
submitted
on
behalf
of
the
Minister
and
the
argument
that
evidence,
when
submitted
in
affidavit
form,
must
be
strictly
construed.
He
commented
[at
C.T.C.
278
(D.T.C.
6398)]:
The
taxpayer's
counsel
might
have
an
arguable
point
were
the
evidence
before
me
limited
to
that
particular
affidavit.
As
counsel
for
the
Crown
reminded
me,
however,
I
am
entitled
to
look
at
all
the
evidence
contained
in
the
other
affidavits.
These
affidavits
might
also
be
submitted
to
theological
dissection
by
anyone
who
is
dialectically
inclined
but
I
find
on
the
whole
that
those
essential
elements
in
these
affidavits
and
in
the
evidence
which
they
contain
pass
the
well-known
tests
and
are
sufficiently
demonstrated
to
justify
the
Minister's
actions.
Accordingly,
I
conclude
that
the
level
of
disclosure
by
the
Minister
was
adequate,
particularly
since
nothing
was
taken
from
the
taxpayers
until
they
had
been
notified
of
these
registrations
on
title
by
the
Minister.
Conclusion
The
respondents'
applications
are
dismissed
for
the
reasons
outlined
above.
There
will
be
no
order
as
to
costs.
Applications
dismissed.
Email this Content