Section 231.3

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.

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.).

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).

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.

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.

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.

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 ..."

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.

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.

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."

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.

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.

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.

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.

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.

"[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.

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.

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.

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).

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.

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.

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.

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 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.