Promex Group Inc. v. R., [1998] 3 CTC 2128

Bowman T . C.J.:

The appellant’s motion and the respondent’s motion were heard consecutively. The appellant seeks the following relief:

(a) an order striking out or expunging the Respondent’s Reply without leave to amend on the ground that it and the assessment under appeal, are an abuse of the process of the court;

(b) directing the hearing of, and hearing the following issue on the evidence filed by the parties on this motion namely:

(i) is it appropriate and just in the circumstances for the assessments in question on the appeal to be vacated because the assessments were based upon documents obtained by the Department of National Revenue (“Revenue Canada”) in contravention of a confidentiality order dated August 23, 1989 in Supreme Court of Ontario Court File No. 26744/88, section 137 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, an implied undertaking not to make use of the documents for any purpose other than in the action in which they were produced, solicitor and client privilege, due process and sections 8 and 24 of the Canadian Charter of Rights and Freedoms; or in the alternative;

(ii) is it appropriate and just in the circumstances that all of the documents obtained by Revenue Canada in contravention of the confidentiality order, section 137 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, the implied undertaking not to make use of the documents for any purpose other than in the action in which they were produced, solicitor and client privilege, due process and sections 8 and 24 of the Canadian Charter of Rights and Freedoms be inadmissible on the appeal, and that Her Majesty The Queen (“Her Majesty”) be excluded from using or relying upon the documents, and upon any evidence or information obtained as a result of obtaining the documents;

(c) restraining the Respondent from using or relying upon the documents more particularly set forth in Schedule “A” attached hereto and upon any evidence or information obtained as a result of obtaining the documents;

(d) excluding the said documents and any evidence or information obtained as a result of obtaining the documents from the evidence to be adduced at the hearing of the Appeal;

(e) vacating the assessments which are the subject of the Appeal by the Appellant;

(f) allowing the Appeal with costs; or

(g) such further and other order as counsel may advise and this Honourable Court permit.

The respondent’s motion is for an order that the appellant serve and file a “better and complete” list of documents under section 82 of the General Procedure Rules.

I shall deal with the appellant’s motion first. The various forms of relief sought, which include the striking out of the reply, the vacating of the assessments, or the exclusion of evidence obtained from the registry of the Ontario Court, are all premised essentially upon the Minister having obtained and used information and documents to which, according to the appellant, he was not entitled.

The evidence on the motion consisted of an affidavit by Steven Klein, corporate counsel for the appellant as well as a number of exhibits to that affidavit, a number of documents from the file in the registry of the Ontario Court, portions of the examination for discovery of Michael Vantil, an assessor with the Department of National Revenue, together with a number of reports and other documents produced on Mr. Vantil’s discovery and an affidavit of Margaret J. Nott together with the reasons for decision of Master Peppiatt of the Supreme Court of Ontario.

No viva voce evidence was adduced by either party.

I shall endeavour to summarize the evidence briefly. In March of 1988 one Israel Katz, a former employee of one or more of the corporate defendants, sued Promex (the appellant), a number of other corporate defendants and Joshua and Arie Lapsker. Mr. Katz claimed damages, an appointment of an interim receiver and an intern injunction and other relief as the result of the termination of his relationship and the breach of a contract in the Hebrew language. Evidently he made a number of serious allegations against the defendants that Mr. Klein says sought to damage, impugn and defame the reputation of the defendants. The pleadings were not put in evidence.

Katz’ solicitors examined the defendant’s solicitor William C. De Lucia in the action. He refused to answer certain questions and a motion was brought before Master Peppiatt, who ordered his files relating to a transaction to sell shares or assets of one of the defendant’s to IMS Communications Inc. to be produced to Katz’s solicitors. It is alleged that these documents were protected by solicitor client privilege, or work product privilege. Nonetheless Master Peppiatt, rightly or wrongly, ordered their production and I assume they were produced.

The defendants concluded that an anonymous caller was divulging to third parties the contents of the documents produced, as well as the allegedly defamatory statements made by Mr. Katz and directing them to the court house to review the documents filed. A motion was therefore brought under section 137 of the Courts of Justice Act for an order that the documents filed in the action be sealed up and treated as confidential.

Subsections (1) and (2) of section 137 of that act read:

(1) On payment of the prescribed fee, a person is entitled to see any document filed in a civil proceeding in a court, unless an Act or an order of the court provides otherwise.

(2) A court may order that any document filed in a civil proceeding before it be treated as confidential, sealed and not form part of the public record.

Mr. Katz, in two affidavits filed in the action agreed to such an order that the documents be sealed and treated as confidential to prevent such information being disclosed to non-parties and agreed to give an undertaking to that effect.

Mr. Justice Isaac (as he then was) and Mr. Justice Sutherland both made orders that the documents filed in the action be sealed and treated as confidential.

Mr. Katz and the defendants entered into interim Minutes of Settlement and Mr. Katz agreed that he would not continue to make any assertions in the action or any other action or at trial of improper or illegal conduct or fraud on the part of the defendants.

Mr. Katz was petitioned into bankruptcy. On March 13, 1992 his action was dismissed without costs. He died in December of 1997.

The confidentiality orders have not been vacated or varied.

I come now to the tax assessments in question in these appeals. One of the issues is the deductibility of interest on loans made to the appellant by Rie-Comm International Inc., a non-resident corporation, and the imposition of withholding tax thereon. Essentially the question is whether the appellant Promex and Rie-Comm were are arm’s length. This has a bearing on the application of the so-called “thin capitalization rule” in subsection 18(4) of the Income Tax Act which restricts the deduction of interest under some circumstances, and also on the application of the exemption from withholding tax under subparagraph 212(1 )(Z?)(vii).

This is a largely factual issue upon which the appellant would have the onus.

The first audit for 1987 and 1988 was done by a Mr. Henry, an assessor with the Department of National Revenue. He evidently accepted that Promex and Rie-Comm were at arm’s length, because he did not disallow any portion of the interest paid, and he did not conclude that the payments were subject to non-resident withholding tax.

Subsequently Mr. Michael Vantil conducted an audit for 1989 and 1990 and he came to a different conclusion. He assessed tax for 1989 and 1990 disallowing the interest expense under subsection 18(4) and imposing withholding tax under section 212 in respect of interest paid in 1988, 1989 and 1990. Confirmation of the assessment followed the filing of objections, and these appeals ensued.

It seems clear that Mr. Vantil carried out his audit as the result of information provided by an unnamed informant, the identity of whom he refused to disclose. That refusal was the subject of a previous motion in which I refused to order the respondent to reveal the informant’s name, on the basis of informant’s privilege. Attached to Mr. Klein’s affidavit was an affidavit of Ms. Nott. The portions of her affidavit relevant to the commencement of the audit based on the information provided by the informant are set out in my reasons in the prior motion and need not be reproduced here. Mr. Vantil referred the matter to the Special Investigations Branch, but no criminal proceedings were instituted.

In the course of his audit Mr. Vantil attended on a number of occasions at the registry of the Supreme Court of Ontario. Notwithstanding the interim confidentiality order made by Mr. Justice Isaac or the confidentiality order made by Mr. Justice Sutherland, Mr. Vantil was given access to the files in Mr. Katz’s action and was permitted not only to read the documents in it but also to make copies.

There is an issue between the parties whether Mr. Vantil was aware of the order or whether he fully appreciated its significance. Counsel for the respondent does not admit that he knew of it or that he was aware of what its effect on him might be. Both parties relied on portions of Mr. Vantil’s examination for discovery to establish what he did or did not know, or might or might not have known. There is obviously a question of credibility here. To attempt to determine Mr. Vantil’s state of mind with respect to the confidentiality order on the basis of the material filed on this motion is an impossible task.

It seems probable that he saw the order, but how closely he read it, what significance he attached to it, and what he considered to be its legal effect are all matters of conjecture. If his state of mind is relevant it can only be determined if he appears as a witness in open court and his evidence is tested by cross-examination. Any one of a number of hypotheses suggest themselves:

(a) he did not know of the order;

(b) he knew of the order but was unaware of its full legal significance;

(c) he knew of it but decided that it did not bind him and could not prevent him from carrying out his duties to obtain information relevant to the determination of the appellant’s tax liability.

Whatever may have been Mr. Vantil’s state of mind, three irrefutable facts remain:

(a) there was a valid confidentiality order in respect of the material on the Katz file;

(b) Mr. Vantil was given access to the file and obtained information from it;

(c) some of the material and information that he obtained was useful to him in making the assessments in question.

It appears from the evidence that Mr. Vantil had access to other information and material. He seems to have been given information by the unnamed informant. Moreover, Schedule A to Mr. Klein’s affidavit sets out the respondent’s lists of documents and the source of the documents. Some of the documents are alleged to have come from Mr. De Lucia’s files that Master Peppiatt ordered produced. Whether these documents were also in the court file and therefore subject to the confidentiality order, or were obtained from Mr. De Lucia directly is not clear.

The appellant’s solicitors sought dates from this court for an order restraining the Crown from using the material so obtained by Mr. Vantil. The respondent then moved in the Ontario Court for an order “regularizing” its possession of the documents obtained from the court file and for directions as to what the Crown should do with the documents in its possession. I am not sure what is meant by “regularize” or what direction a judge of the Ontario Court can give that would affect the proceedings in this court. In any event, the motion in the Ontario Court is scheduled to be heard on the same day as the trial of the appeal in this court, May 11, 1998.

To the extent possible, I shall endeavour to deal with the matters raised by the appellant although as will be apparent from the reasons that follow some of the relief that it seeks is more appropriately dealt with by the trial judge.

In essence, the issue on this motion boils down to what relief, if any, on a motion before trial in an appeal in this court, is available to an appellant where an assessment is based upon documents that have been ordered sealed and treated as confidential by the Supreme Court of Ontario. Any analysis of this question must be based upon a recognition of a number of considerations, as follows:

(a) it is entirely within the jurisdiction of the Supreme Court of Ontario to make such an order under section 137 of The Courts of Justice

Act:

(b) the Minister of National Revenue, and persons acting under his authority, are not parties to the action in the Ontario Court;

(c) the officer who obtained the documents and the information contained therein was freely given access to them by the officials in the Ontario Court;

(d) the Minister of National Revenue has a statutory obligation to assess tax in accordance with the facts and the law;

(e) this court has an obligation to hear appeals from such assessments and to determine their correctness in accordance with the facts and the law;

(f) it is not in the interests of justice that relevant information be kept from the court, unless there are compelling reasons for doing so; and

(g) we are concerned here with a balancing of interests. On the one hand there is the interest that the courts and the public have in ensuring that all relevant information be available to the court in tax litigation that affects the fisc. On the other hand, there is the importance that orders of the courts in civil disputes — such for example as confidentiality orders of the type made by Mr. Justice Sutherland — be respected, as well as the legitimate reliance that litigants have that such orders will be obeyed and that their affairs will be kept confidential, when they are not only covered by such orders, but also subject to an implied undertaking that they will not be used for purposes other than those for which they were produced.

It is with these conflicting interests in mind that the problem in this case must be approached.

The confidentiality order

It is contended that Mr. Vantil had knowledge of the confidentiality order and that in continuing to look at the material in the Katz file, and in photocopying parts of it and in using the information so obtained in making the assessments in question he was in breach of and in contempt of the order. As noted above, the evidence of his knowledge of the order, or his appreciation of its effect, is less than satisfactory. Even if I were prepared, however, to draw the inference that he knew about the order, it is inappropriate for me to conclude that his actions were in contempt of the Ontario Court. That is a matter for that Court to determine. The Tax Court of Canada can hardly be expected to hold a person in absentia to be in contempt of another court’s order.

Abuse of process

It is further contended that to use this material in making the assessment is an abuse of the process of the court (this court, I assume). I have difficulty in seeing how the performance of the administrative act of assessing can ever be an abuse of the process of this court. At the time the assessment is made, this court simply is not in the picture.

Does the reliance upon the material in an appeal constitute an abuse of process? That is a more difficult question and it involves a consideration of the nature of an appeal from an assessment. It is a proceeding in which the taxpayer has the onus of showing that the assessment is wrong. In practice it involves the Minister’s pleading of “assumptions” which the taxpayer must attempt to demolish. The Minister has an obligation to disclose the basis of the assessment and, in this case, it is set out in paragraphs (c) to (p) of section 23 of the reply. These are facts that, if unchallenged, must be taken as true. Moreover, the notice of appeal contains, in paragraphs 8 through 26 allegations which, if established, would raise a prima facie case that the assessments were wrong. Paragraphs 19 and 20 allege that the appellant and its principal shareholder Lapsker dealt with Rie-Comm on an arm’s length basis. Although an arm’s length relationship is required for subparagraph 212(l)(Z?)(vii), subsections 18(4) (the thin capitalization rule) and 18(5) require that for the rule not to apply the non-resident have less than 25% of the shares of the Canadian company. Even if the Minister had simply denied the allegations in the notice of appeal, the appellant would still have had the onus of establishing the facts alleged by it to bring it outside of subsection 18(4) and within subparagraph 212(1 )(£>)(vii). One of the heads of relief sought by the appellant is that paragraphs (c) and (m), which it appears are based on information from the file in the Ontario Court, be stricken on the ground, inter alia, that to plead them constitutes an abuse of process.

It is not in my view an abuse of this court’s process to disclose fully the basis of the assessment, regardless of the source of the information on which it is based. Whatever other remedies may be available to the appellant its remedy does not lie in the concept of abuse of process. On the contrary, it could well be an abuse of process for the Minister to withhold facts central to the making of the assessment, or to conjure up assumptions that were not in fact made. Indeed, we have the authority of Johnston v. Minister of National Revenue, [1948] S.C.R. 486 (S.C.C.) that the Minister has an affirmative obligation to disclose the findings of fact and law on which he founded the assessment.

Implied undertaking

I turn now to the concept of implied undertaking. It is well entrenched in our law. When documents are produced in an action there is an implied undertaking that they will not be used for collateral purposes. The undertaking is one that is impliedly given by one party and his or her counsel to the other party. Here we have the Minister of National Revenue, through his officer Mr. Van til, not a party to the Katz action or the implied undertaking, obtaining information from the court file. Whether the court officials who, rightly or wrongly, gave Mr. Vantil access to the files ought to have done so, there is certainly no breach of any undertaking by the Minister or his officials.

Schedule A to Mr. Klein’s affidavit sets out portions of the respondent’s list of documents, as well as their source. Items 33, 35, 36, 37, 50, 51, 58, 59, 60, 61, 62 and 64 in the respondent’s list of June 27, 1997, as well as items 38, 45, 51 to 62 in the respondent’s list of November 14, 1997!, as well as Exhibit 17 to Mr. Vantil’s discovery are all said to have come from Mr. De Lucia’s file on the IMS purchase which Master Peppiatt ordered produced. It is not clear from the evidence whether these documents were found on the court file or Mr. De Lucia handed them over to Mr. Vantil voluntarily, or whether the unnamed informant (who the appellant believes may have been the late Mr. Katz) gave them to Mr. Vantil. It is entirely possible that if either of the latter two hypotheses is true either the informant, if it was Mr. Katz, or someone else was in breach of the implied undertaking. That is, however, a matter between the parties to the Katz action, which has since been dismissed.

I do not think that the implied undertaking to which some of these documents may be subject binds the Minister of National Revenue who obtains the information, whether from one of the parties or a third party. The cases referred to by the appellant (Carbone v. De La Rocha (1993), 13 O.R. (3d) 355 (Ont. Gen. Div.); 755568 Ontario Ltd. v. Linchris Homes Ltd. (1990), 1 O.R. (3d) 649 (Ont. Gen. Div.); Orfus Realty v. D.G. Jewellery of Canada Ltd. (1995), 24 O.R. (3d) 379 (Ont. C.A.)), involved an attempted use by one of the parties of documents produced by the other party either to found an action or to give to third parties. This was held to constitute a breach of an implied undertaking not to use the documents for a collateral or ulterior purpose. In Merck & Co. v. Apotex Inc., [1996] 2 F.C. 223 (Fed. T.D.) was a contempt proceeding in which MacKay J. recognized the existence of an implied undertaking. In none of these cases however, was there a use by a third party, a stranger to the proceedings in which the implied undertaking arose, called into question. In Riddick v. Thames Board Mills Ltd., [1977] 1 Q.B. 881 (Eng. C.A.) an employee, in an action for damages for wrongful arrest and false imprisonment, obtained production from the company of a memorandum. The action was settled. Subsequently, the plaintiff sued the company for damages for defamation based on the memorandum. The English Court of Appeal held that the action should be dismissed. Lord Denning M.R. said at page 896:

I proceed to hold the balance in the present case. On the one hand discovery has been had in the first action. It enabled that action to be disposed of. The public interest there has served its purpose. Should it go further so as to enable the memorandum of April 16, 1969, to be used for this libel action? I think not. The memorandum was obtained by compulsion. Compulsion is an invasion of a private right to keep one’s documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party — or anyone else — to use the documents for any ulterior or alien purpose.

The addition of the observation in “ — or anyone else — ” by Lord Denning was not necessary to the decision and of course was obiter dictum. It does not appear to have been adopted by the other two judges on the panel.

In Distillers Co. (Biochemicals) Ltd. v. Times Newspapers Ltd. (1974), [1975] 1 All E.R. 41 (Eng. Q.B.) a number of claimants sued the plaintiff for damages arising out of the use of the drug thalidomide. On discovery, they obtained from the plaintiff a large number ofdocuments which they handed over to a Dr Phillips whom they had retained to advise them. He sold the documents to the Times Newspapers Ltd. Talbot J. issued an injunction against the Times, restraining its publication of the documents. At page 48 he said:

These submissions can therefore be summarised as follows. (I) The. plaintiffs claim an overriding protection from publication and use of their documents which they were compelled to disclose in the action against them. They claim this protection involves those in whose hands the documents come, particularly where the possession was unlawfully obtained. I do not doubt the correctness of this proposition; I do not think that on the authorities and for the proper administration of justice it can be argued to the contrary. Those who disclose documents on discovery are entitled to the protection of the court against any use of the documents otherwise than in the action in which they are disclosed. I also consider that this protection can be extended to prevent the use of the documents by any person in whose hands they come unless it be directly connected with the action in which they are produced. I am further of the opinion that it is a matter of importance to the public, and therefore of public interest, that documents disclosed on discovery should not be permitted to be put to improper use and that the court should give its protection in the right case.

A number of observations about this statement should be made. One can readily see the merit in preventing a person into whose hands documents come that are obtained in breach of an implied undertaking of the type involved here from publishing them. Here, however, the Minister has no intention of publishing them. He has used them as the basis of an assessment and may well intend to use them in defending the assessment. There may well be public policy considerations in preventing a newspaper from publishing material obtained by purchase from one who had an obligation to keep it confidential. Here, however, we are dealing with a Minister of the Crown who has a statutory duty to assess in accordance with the facts and the law and with a taxpayer who is challenging its own income tax assessment before this court contending that relevant documentation cannot be disclosed by the Minister and need not be disclosed by it in the very proceedings in which it seeks to challenge the assessment.

In Crestbrook Forest Industries Ltd. v. R., [1992] 1 C.T.C. 100 (Fed. C.A.) it was held that the Crown could not use information obtained in confidence from taxpayers to assess other taxpayers. The holding is succinctly stated by Hugessen J.A. at page 101:

In our view, where the Crown has obtained information in confidence from taxpayers on a voluntary basis and for a specific and defined purpose, it may not subsequently make use of that information for a different purpose, namely the reassessment of other taxpayers, in circumstances where such use will almost inevitably result in a breach of the Crown’s undertaking of confidence.

Given the uncontradicted evidence before us, it is clear that the information which the appellant now seeks was obtained from others by the Crown in confidence and for purposes which had nothing to do with the appellant’s income tax liability. That being so, the Crown cannot rely on it, and its production for discovery, or at trial, should not be permitted. Whether or not the Crown can continue to rely on the assumptions which it has pleaded as underlying its reassessment is a question which is not before us.

That case, in my respectful view, has nothing to do with the issue here. The Minister did not obtain the information in confidence. He obtained it, it seems, simply by asking for it.

I am not prepared to extend the implied undertaking concept to this case, so as to prevent the Minister of National Revenue from using such information in making the assessments or relying on it.

Solicitor client privilege

It was also contended that the information obtained from Mr. De Lucia’s files under compulsion of an order by Master Peppiatt was subject to the solicitor client privilege and the work product privilege. Master Peppiatt does not appear to have thought so and I do not propose to second-guess his judgement on the matter. The documents have been produced in the Katz action and whatever privilege may have been attached to them has disappeared (Descôteaux c. Mierzwinski, [1982] 1 S.C.R. 860 (S.C.C.), at 871; The Law of Evidence in Canada, Sopinka, Lederman and Bryant at pages 672 to 677). The authors state that, based on English authority, it may be possible in equity to enjoin the use of privileged information that has illegally or inadvertently come into a parties possession. That is not within my jurisdiction, but it may be open to the appellant to raise the matter before the trial judge if any of the material from Mr. De Lucia’s file is sought to be introduced.

The Charter

It is contended that when Mr. Vantil attended at the Ontario Court, examined the documents and took copies this constituted an “unreasonable search or seizure”, contrary to section 8 of the Canadian Charter of Rights and Freedoms. Had there been no confidentiality order I doubt that merely attending at the court, examining the file and making copies could be regarded as a search or seizure at all, much less an unreasonable one. I do not think that either R. v. McKinlay Transport Ltd. (1990), 68 D.L.R. (4th) 568 (S.C.C.) or Comité paritaire de l’industrie de la chemise c. Sélection Milton (1994), 115 D.L.R. (4th) 702 (S.C.C.), cited by counsel for the appellant, supports the proposition that the examination of a public file constitutes a search or seizure. The argument must therefore be that the existence of the confidentiality order and the fact that Mr. Vantil was permitted access to the file notwithstanding that order, not only turns his inspection and copying of the file into a search or seizure, but makes it unreasonable as well. Assuming the examination and copying of a court file in the custody of the court and in a public court registry is a search or seizure — a proposition that I find doubtful — and assuming further that the confidentiality order renders it illegal, does it follow that the appellant’s Charter rights under section 8 have been violated? Illegality and unreasonableness are not necessarily conterminous. Every time a court order is breached it does not follow that someone’s Charter rights are violated.

Nonetheless, the appellant’s argument is not without merit. The appellant had a reasonable expectation that the documents that were ordered sealed and kept confidential would remain so. The case is somewhat similar to that decided in the Alberta Provincial Court in R. v. Corail (1993), 146 A.R. 202 (Alta. Prov. Ct.). There a police constable took a copy of the accused’s fingerprints from the Young Offenders Section of the Identification Branch without complying with section 44.1(1) of the Young Offenders Act, Fradsham Prov. Ct. J. said:

[para23] Likewise here, Mr. Corail had a reasonable expectation of privacy with respect to his Young Offender records kept by the police and reasonably expected that his privacy would not be invaded except as provided for under the Young Offenders Act.

[para24] I am satisfied that Constable Lee, in obtaining and copying Mr. Corall’s young offender records (including fingerprints), in respect of which Mr. Corail had a reasonable expectation of privacy, conducted a search and seizure as those terms are used in the Charter of Rights and Freedoms.

(C) Was The Search and Seizure Unreasonable?

[para25] As noted above, Constable Lee violated the accused’s reasonable expectation of privacy when she obtained his young offender records and thereby conducted a search and seizure.

[para26] Was the search and seizure “reasonable”? Mr. Justice Lamer (as he then was) said in R. v. Collins (1987) 74 N.R. 276 (S.C.C.), at p. 290:

A search will be reasonable if it is authorized by law, if the law itself is reasonable and if the manner in which the search was carried out is reasonable.

[para27] On behalf of the majority in R. v. Debot (1990) 102 N.R. 161 (S.C.C.), at p. 165, he again confirmed that position.

[para28] In the case at Bar, the matters of the reasonableness of the law and the manner of the search are not in question. Rather, the issue is whether the search and seizure conducted was authorized by law. I have already determined that section 44.1(1) of the Young Offenders Act requires that a request be made and granted before an inspection of young offender records takes place. That did not occur in this case. Both Constable Lee’s search and seizure of Mr. Corall’s young offender records were unreasonable and accordingly section 8 of the Charter was violated.

The court then considered whether the appropriate remedy would be to exclude the evidence. After a careful review of the authorities, and in particular, R. v. Simmons (1988), 89 N.R. 1 (S.C.C.), he concluded that to exclude the evidence would bring the administration of justice into disrepute.

I agree that there has been a violation of the appellant’s reasonable expectation of privacy and therefore a possible breach of its section 8 Charter rights. I do not however propose on this motion to determine what remedy, if any, is appropriate under section 24 of the Charter. It is not the role of a motions judge to rule on whether evidence should be excluded. That is the province of the trial judge.

Another remedy suggested by the appellant is that the portions of the reply containing information obtained from the court files or Mr. De Lucia’s files be struck out, or that the assessments be vacated. I regard this remedy as overkill. The appellant bases its case for vacating of the assessments on my decision in O'Neill Motors Ltd. v. R. (1995), 96 D.T.C. 1486 (T.C.C.). Since that case is under appeal to the Federal Court of Appeal, I shall not comment on it beyond observing that it was a very different case from this one. All of the facts were agreed to, including the fact that there was a violation of the appellant’s Charter rights. It involved a massive, intrusive and illegal seizure of the appellant’s documents, and an attempted re-seizure based on an attempt to mislead a Justice of the Peace. Since the Charter gave the court a discretion in determining the remedy to be granted, I believed that the most appropriate remedy was to vacate the assessments. There was the added element that the Crown had the onus of establishing that the statute-barred years could be reopened.

I continue to be of the view that the vacating of the assessments which I ordered in O'Neill was the most appropriate remedy in the circumstances of that case. That is not the case here. In O'Neill at page 1496 I said:

I would not want my conclusion in this case to be taken as a wholesale sanctioning of the vacating of all assessments where some component of the Minister’s basis of assessment was unconstitutionally obtained information. Other cases may arise in which a simple exclusion of evidence is sufficient, others in which the evidence is of little or no significance in the making of the assessments or where its introduction would not bring the administration of justice into disrepute, or still others in which Suarez solution will commend itself. In the exercise of the discretion vested in the court under section 24 of the Charter one must be vigilant in balancing, on the one hand, the rights of the subject that are protected under the Charter, and on the other, the importance of maintaining the integrity of the self-assessing system. As each case arises these and, no doubt, other factors will play a role and all factors must be assigned their relative weight. In the circumstances of this case I have concluded that the most appropriate exercise of my discretion is to vacate the assessments.

The question of solicitor client privilege, as well as the remedy, if any, that is available as the result of the violation of the appellant’s reasonable expectation of privacy, are matters that can be raised before the trial judge where it is assumed a proper evidentiary foundation will be laid.

The appellant’s motion is therefore dismissed.

The costs of this motion should be left to the discretion of the trial judge.

I turn now to the respondent’s motion for a further and complete list of documents verified by affidavit under section 82 of the Rules.

The appellant contends that the respondent is not entitled to bring this motion because it is in contempt of the confidentiality order of the Ontario Court. This begs the question. I have made no finding that the respondent is in contempt of the Ontario Court, nor could I do so.

In Paul Magder Furs Ltd. v. Ontario (Attorney General) (1991), 6 O.R. (3d) 188 (Ont. C.A.) it was held that it was an abuse of process to assert a right to be heard by the court and at the same time refuse to undertake to obey an order of the court. The case has no application here. The Minister of National Revenue has not been found in contempt of the Ontario Court and in any event it is a different court from the Tax Court of Canada. The respondent is therefore entitled to bring the motion.

On the merits of the motion, I think the respondent is entitled to the order it seeks. The appellant sought full production under section 82 of the Rules and this was agreed to. It has not in its affidavit of documents under section 82 claimed solicitor client privilege on the documents in the file of the solicitor, Mr. De Lucia. If it has copies of the documents that are covered by the confidentiality order, as seems virtually certain, it must produce them if they are relevant. If it does not have them it should say so. In this regard I am in respectful agreement with the decision of the Alberta Court of Appeal in Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co. (1988), 90 A.R. 323 (Alta. C.A.) where Laycraft C.J.A. ordered the production of documents that were the subject of a confidentiality order in the United States. I find it somewhat absurd that a party to a proceeding in the Tax Court of Canada can refuse to produce relevant documents because it has, as the result of its own motion and on consent in another court, caused those documents to be covered by a confidentiality order — particularly long after the action in which the order was made has been dismissed.

There will be an order that the appellant serve on the respondent and file with the court a further affidavit under section 82 in which it lists all relevant documents in its possession or control, including the originals or copies of any documents in its possession that were the subject of the confidentiality order in Katz v. Lapsker (November 29, 1988), Doc. 26744/88 (Ont. Master), as well as the originals or copies of all documents in its possession from the file of Mr. De Lucia ordered by Master Peppiatt to be produced in that action.

Costs will be in the discretion of the trial judge.

Motion dismissed; Cross-Motion granted.