Section 231.3

Subsection 231.3(1) - Search warrant


Kourtessis v. M.N.R., 93 DTC 5137, [1993] 2 S.C.R. 53, [1993] 1 CTC 301

No appeal could be mounted against an order made under s. 231.3(1) by resort to provincial procedures for appeals. However, the appellants could pursue an action for a declaration in the provincial court. Here, a declaration was made that s. 231.3 and the search warrant issued thereunder was of no force or effect and that the Revenue Canada officials should be ordered to return the goods and copies that had been seized by them.

Knox Contracting Ltd. v. Canada, 90 DTC 6447, [1990] 2 S.C.R. 338, [1990] 2 CTC 262

The provisions of ss.231.3 and 239 are by their nature criminal law. Because appeals from interlocutory orders by the parties in criminal proceedings must be based upon a statutory provision and no such statutory provision exists, no appeal lies to the provincial Court of Appeal from an order issuing search warrants (per Cory J.). Parliament in choosing a criminal sanction, has chosen to adopt the ordinary procedures of the criminal law for the enforcement of the Income Tax Act, with the result that no appeal lies from such an order (per La Forest J.).

Subsection 231.3(4)

Subsection 231.3(3) - Evidence


Baron v. Canada, 93 DTC 5018, [1993] 1 S.C.R. 416, [1993] 1 CTC 111

Because s. 231.3 removed the residual discretion of the issuing judge to refuse to issue a search warrant in the proper circumstances, notwithstanding that the statutory criteria for its issuance had been met, it violated s. 8 of the Charter and, therefore, was of no force or effect, and search warrants issued and executed pursuant to it were invalid. It was noted, however, that nothing turned on the omission of the word "probable" from s. 231.3(3) ("'reasonableness' comprehends a requirement of probability" (p. 5028)), and that s. 231.3(3) did not violate the "standard of credibly-based probability" established in the Hunter decision (84 DTC 6467).

Words and Phrases

Carlini Bros. Body Shop Ltd. v. The Queen, 92 DTC 6543, [1993] 1 CTC 55 (Ont. Ct. J. - G.D.)

Brockenshire J. was persuaded by the decision of the Federal Court of Appeal in the Barren decision that s. 231.3 of the Act was invalid, and that therefore, search warrants issued thereunder were also invalid.

Gutsche v. MNR, 91 DTC 5647, [1992] 1 CTC 123 (Alta. Q.B.)

The Baron decision of the Federal Court of Appeal (in which s. 231.3 was found to be contrary to section 8 of the Charter because a judge was accorded no discretion as to whether to issue a warrant) was preferred to the decision of the British Columbia Court of Appeal in Kourtessis. However, assuming that s. 231.3 was valid, the applicant failed to persuade Waite J. that there had been non-disclosure or misrepresentation that was material in the sense that disclosure of the misstatement at the time that the warrants were sought would have precluded their issue.

Kourtessis and Hellenic Import-Export Co. Ltd. v. MNR, 89 DTC 5464, [1990] 1 CTC 241 (BCCA), aff'd 93 DTC 5137, [1993] 2 S.C.R. 53

There is no right of appeal from an order made pursuant to s. 231.3. Interlocutory appeals in criminal matters must be statutorily based, and neither the Criminal Code nor the Charter gave such a right of appeal.

Locke, J.A. found that notwithstanding the absence of a reasonable "and probable" wording, s. 231.3 establishes a more-probable-than-not test.

Solvent Petroleum Extraction Inc. v. The Queen, 89 DTC 5381 (FCA)

Before finding that a seizure pursuant to s. 231.3 was not contrary to s. 8 of the Charter, Desjardins J. stated:

"[I]f the issuing judge comes to the conclusion that the conditions of paragraphs 231.3(3)(a), (b) and (c) are met, he need not nor is he permitted to consider whether there has been a previous substantive voluntary compliance by the taxpayer, whether further documents might be remitted voluntarily, or whether the applicant for the warrants has taken all reasonable steps to obtain the information from an alternative source ..."

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 s. 231(4) fixed in s. 231.3 18

F.K. Clayton Group Ltd. v. MNR, 88 DTC 6202, [1988] 1 CTC 353 (FCA)

The issuing judge must make his own independent assessment of the facts placed before him and draw his own conclusions from those facts as to what offence there are reasonable grounds to believe has been committed. Therefore, the issuing judge is not confined under s. 231.3(3) to being satisfied that the offence being investigated has been committed.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 in-audit seizure provision was void 80

Corr v. The Queen, 87 DTC 5330, [1987] 2 CTC 104 (Ont CA)

see also 88 DTC 6233 (S.C.O.)

A taxpayer, after the granting of a search warrant, is only entitled to cross-examine the deponent Revenue Canada officer on his affidavits sworn in support of the application for the search warrants where there are allegations of deliberate falsehood or omission or reckless disregard for the truth. Such allegations must be made out, as to the facts, to the extent of a prima facie case.

Cleaver and Walkinshaw Ltd. v. R., 87 DTC 5055, [1987] 1 CTC 200 (BCSC)

Revenue Canada was able to satisfy the court that it had investigated alternative sources and taken reasonable steps to obtain the information therefrom before seeking a warrant. MacDonald J. also adopted the following statement from the Print Three case: "A search warrant is not intended to be carte blanche, but at the same time the applicants must be afforded a reasonable latitude in describing the things that they have reasonable grounds to believe they might find."

Re Precision Mechanics Ltd., 86 DTC 6445, [1986] 2 CTC 240 (Queb. S.Ct.)

An application was dismissed because the information used to apply for the warrant had been obtained, in part, from a previous illegal seizure of documents.

The Queen v. Print Three Inc., 85 DTC 5303, [1985] 2 CTC 48 (Ont CA)

S.231(4) is unconstitutional in its entirety and "cannot be severed into good and bad parts".

In addition to the reasons given in Kruger, s. 231(4) is in breach of s. 8 of the Charter to the extent that it does not comply with the following criteria: (1) there must be an independent arbiter (such as a judge, but not the Minister) who is satisfied that there are reasonable grounds for believing that an offence has been committed; (2) the Minister must present to the arbiter or judge grounds to believe that evidence is likely to be found at the place of search; (3) there must be statutory direction as to what is to be issued by the judge in granting his approval; and (4) the authorization must specify the things to be searched for.

MNR v. Kruger Inc., 84 DTC 6478, [1984] CTC 506, [1984] CTC 519, 84 DTC 6489 (FCA)

Although an authorization given by the Minister pursuant to s. 231(4) cannot be challenged either for violation of the principles of natural justice or for lack of procedural fairness, the authorization may be quashed by certiorari for lack of jurisdiction or error of law on the face of the record. Here, the motions judge had properly quashed the authorization on the ground that it violated s. 8 of the Charter.

Before regard is had to s. 8 of the Charter, the natural meaning of the words in s. 231(4) indicates that the Minister is empowered to authorize a search for and seizure of documents or things relating not only to the violation that he has reasonable grounds to believe has been committed but also to the violation of any provision of the Act or Regulations.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 no link betweeen seizure right and offence 105

Butler Manufacturing Co. (Canada) Ltd. v. MNR, 83 DTC 5361 (S.C.O.)

It was found that it was Parliament's intention to permit cross-examination on affidavits filed in support of the Minister's prior ex parte application to the Ontario County Court for an order authorizing search and seizure, in light of the potentially crippling effect of that search and seizure on the taxpayer's business and the need for an expeditious procedure for reviewing the County Court's authorization.

Goodman v. Rompkey et al., 82 DTC 6256, [1982] CTC 192, [1982] 1 S.C.R. 589, 82 DTC 6167

Even assuming that the Quebec Court of Appeal had the inherent jurisdiction to intervene where an approval by a Superior Court Judge exceeded his jurisdiction, his jurisdiction had not been exceeded here where the affidavit which he had before him stated "in great detail the reasonable grounds which the Minister had to believe offences had been committed", even though as a result of his approval the Department employees had seized all of the appellant professional accountant's audit and tax files.

Kelly Douglas and Co. Ltd. v. The Queen, 82 DTC 6036, [1981] CTC 457 (BCSC)

"[T]he only seizure that is authorized is of documents that may afford evidence of a violation." Consequently, "the authorization [of the judge] does not permit documents to be taken that have not been examined or searched for their evidentiary value in proving a violation". Because this standard was not met by the "wholesale seizure" of the taxpayer's documents, and because there had been material non-disclosure in the affidavits in support of the application, all the seized documents were ordered to be returned.

Royal Craft Products Ltd. v. The Queen, 80 DTC 6143, [1980] CTC 97 (Alta. C.A.)

A S.231(4) authorization is issued as part of an investigation for any violation of the Act. Here, although the S.231(5) affidavit referred only to a possible violation in 1971, the judge properly did not limit the authorization to the seizure of records relating to the alleged 1971 violation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(3) 47

In re Paroian, 80 DTC 6077, [1980] CTC 131, 80 DTC 6078 (Ont.C.A.)

S.231(4) does not require that the authorized search be confined to the violation with respect to which there are reasonable and probable grounds. The authorization may also permit the search for, and seizure of, evidence respecting other violations.

In re Corsini, 79 DTC 5356 (S.C.O.)

An approval given by a County Court judge is subject to review by the Supreme Court of Ontario.

There is no right to cross-examine upon the affidavit presented to the County Court judge.

The County Court judge granting the approval must have jurisdiction in accordance with the applicable County Court Judges Act. Here, the approval was quashed because a judge of the County of Middlesex gave an approval respecting premises situate in the County of Kent, without receiving an extra-territorial authorization pursuant to what is now s. 17(2) of the County Judges Act (Ontario).

Minister of National Revenue v. Coopers and Lybrand, 78 DTC 6528, [1978] CTC 829, [1979] 1 S.C.R. 495

The power exercised by the Minister under s. 231(4) is properly characterized as investigatory, rather than adjudicatory. Since a s. 231(4) authorization is not a decision which is required by law to be made on a judicial or quasi-judicial basis, such an authorization is not subject to review under s. 28 of the Federal Court Act.

See Also

Agence du revenu du Québec v. 9229-0188 Québec Inc. (Saramac Schokbéton Québec Inc.), 2018 QCCA 1039

search warrant annuled based on failure to disclose that lawyers worked at the targeted premises

When the ARQ laid the information seeking a search warrant for a search of the taxpayers’ office, it did not disclose, despite being aware that this was likely, that a lawyer and notary worked at those premises, and the search warrant accordingly was issued by the Justice of the Peace without knowledge of this. In affirming the finding of Dallaire JCS below to annul the search warrant and to order a return of the seized documents, and after noting (at para. 13) that in fact in this case there had been issues as to the proper protection of legal privilege, Mainville JCA stated (at para. 18, TaxInterpretations translation):

It is not disputed that where lawyers or privileged information are at issue and certain facts are presented with a view to, or with the result of, inducing the magistrate to err or be duped, the integrity of the judicial process is engaged.

9162-4676 Québec Inc. (known as Trimax) v. ARQ, 2016 QCCA 962

law firm search invalidated for failure of the information to demonstrate that there was no alternative for getting the documents

According to the ARQ, the appellant (“Trimax”) had been claiming input tax refunds and credits for QST and GST on fictitious purchases, with the “suppliers” not making any remittances of the amounts received by them on account of QST or GST, and with an agreed portion of the payments made by Trimax on the invoices being paid back to it. Search warrants were granted to the ARQ, with the searches executed at the premises of Trimax, its accountants and its law firm. Before the Superior Court, Trimax alleged various irregularities and omissions in the information which had been laid before the authorizing judge. In confirming the finding of the Superior Court that these deficiencies were not sufficient to indicate that the search warrants on the premises of Trimax and its accountants were properly granted, Hilton JCA stated (at para. 35, TI translation):

[T]he role of the reviewing judge is not to examine the validity of the claims as to the essential elements of the offence alleged in the information, but merely to verify if there are elements of evidence to which the authorizing judge could reasonably give credence in granting the application.

Before voiding the search warrant for the law firm premises and ordering the related documents to be returned, Hilton JCA stated (at paras. 43, 44, 47, 48, 51):

Justice Arbour reminded…in Lavalee, Rackel & Heintz v. Canada[2002] 3 S.C.R. 209 [para. 49]:

…Before searching a law office, the investigative authorities must satisfy the issuing justice that there exists no other reasonable alternative to the search. …

The Agency had an affirmative obligation, which it disregarded, to demonstrate that there was no other alternative solution, and the judge could not ignore this. …

[T]he simple fact that a Trimax representative had mentioned that there were documents at his lawyer did not establish that such documents could not be found elsewhere. …

The absence of an alternative solution was not at all addressed in the information and the judge could not satisfy her formal review obligation respecting such absence on the basis of other alleged facts. …

[I]t would appear that it was ease and convenience which motivated the request for a search warrant for the law firm… .

The material fact that the law firm covered by the warrant acted for Trimax against the Agency in taxation files should have been disclosed. The Agency failed in its obligation…to be “full and frank” [citing Arujo, [2000] 2 S.C.R. 992, para. 46].

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 search of law firm must demonstrate no alternative 140

Uber Canada Inc. v. ARQ, 2016 QCCS 2158, aff'd 2016 QCCA 1303

it was reasonable for ARQ on a search to seize smart phones and laptops to make subsequent complete copies

The ARQ obtained a search warrant for searching an Uber Canada office in Montreal. In order to be granted the search warrant, the ARQ employee laying the information was required to have reasonable grounds to believe that Uber Canada was committing an offence. The search warrant was granted inter alia on the grounds that Uber Canada was aiding the drivers in committing the offence of wilfully evading the collection of QST - by virtue of its system for collecting the customer fares (through the customers’ credit cards) not treating those fares as being subject to QST (or GST).

On the search, 74 smart phones and 14 computers, which included personal information, were seized. Uber Canada argued before Cournoyer JCS (as quoted at para. 242) that "the warrants should have included a computer search protocol," and that:

A valid search warrant cannot authorize, on the one hand, the making of “mirror images” or the taking of computers and smartphones in order to, on the other hand, seize only information that may afford evidence of technical tax offences.

Cournoyer JCS quoted (at para. 266) a statement of Professor Kerr in the U.S. that:

The massive storage capacity of computers, combined with the ease of hiding evidence inside them, ensures that computer searches usually take a lot of time. If the government must find a needle in the haystack, and searching the haystack may take weeks or longer, the government must choose among three unhappy choices. First, they can seize the entire haystack for subsequent searching off-site. Second, they can bring a few officers to the haystack and have them stay there for a few weeks as they search through it. Or third, they can simply accept that haystack warrants cannot be executed because haystack searches are too time-consuming. Among these three choices, the first is the least bad option.

and then stated (at para. 282, TI translation) that:

The Court shares the analysis of Professor Kerr that there does not exist any realistic alternative to the complete seizure of the digital devices and their subsequent search - which inevitably will lead to access to information which was not within the scope of the search warrant.

When the search of the Uber Canada office commenced, the computers were promptly rebooted remotely from San Francisco. He stated (at para. 228) that "this conduct, which bears the attributes of an attempted obstruction of justice, permitted the judge to conclude that Uber wished to hide proof of its illegal conduct from the attention of the tax authorities."

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 240 - Subsection 240(1.1) Uber drivers, as operators of “taxi” businesses, likely were required to register for QST 284
Tax Topics - General Concepts - Illegality Uber drivers' breach of provincial registration statute did not justify their failure to register for QST purposes 238
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 seizure of computers containing personal information was the only practicable approach 142

Subsection 231.3(6) - Retention of things seized


MNR v. Canadian Bio-mass Research, 90 DTC 6564, [1990] 2 CTC 416 (FCTD)

The issuing of a retention order under s. 231.3(6) is not conditional upon the report having been made "as soon as practicable" as required by s. 231.3(5). In other words, that admonition is directory rather than mandatory in nature.

Re Hertel (1986), 37 DLR (4th) 706 (BCSC)

In light of the doctrine of separation of powers and the principle of the independence of the judiciary, it was appropriate to interpret the word "shall" to mean "may" so as to leave discretion in the court as to whether seized items can be retained by Revenue Canada.

Words and Phrases

Subsection 231.3(7) - Return of things seized


In re Smith, 82 DTC 6198 (NBCA)

S.231(2) "does not give any discretion to the judge as to the time which the Minister may retain documents legally seized under S.231(1)(d), the judge's sole power being to decide on the basis of the evidence presented to him whether the Minister has a right to retain the documents which have been seized". Accordingly, a direction in the judge's order that the seized documents be retained "not beyond eight months from date hereof" was struck out.

In re Usarco Ltd., 80 DTC 6085, [1980] CTC 145 (Ont CA)

In order for a retention order to be granted, it must be established before the judge that there were reasonable and probable grounds for the Minister's belief. This cannot be established "unless the evidence on oath furnishes some facts as to the nature of the seized documents and their connection with the violation in question - rather than insulating such facts from the judge's consideration under statements as to the deponent's opinion."

In granting an order of certiorari quashing a retention order, the Court refused to order the Crown to return the evidence to the accused because there was evidence that it was required for a pending prosecution.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(3) 27

See Also

Re Corr, 86 DTC 6476 (SCO)

After the applicants already had brought a motion to quash warrants which had authorized the search and seizure of documents, the court granted an order impounding the documents so that investigating officers would not have access to them pending the decision of the court on the previous motion.