Charter (Constitution Act, 1982)

With respect to a submission that the sixteen-month delay between the announcement in the November 1981 Budget of the repeal of the income averaging annuity contract provisions and the enactment of the implementing legislation was excessive and, therefore, was contrary to the rule of law, Noël J. noted that the courts only were able to determine whether an asserted parliamentary privilege (in this instance, the budget process) was necessary to the legislative body's capacity to function, and was not able to examine the content of a particular exercise of a valid privilege. Because it is well recognized that the budgetary process, and specifically the practice of making taxation measure applicable as of the date of the ministerial announcement, is well within the framework of parliamentary privilege, in this case, the particular exercise of that privilege (i.e., the sixteen-month delay) could not be challenged.

S.34 of the Excise Tax Act, which the trial judge found to give arbitrary administrative discretion to the Minister and to thus be contrary to the rule of law, was held by the Court of Appeal not to be contrary to the rule of law. However the determination by the Minister of the "fair" price of goods was quashed, because he omitted to consider relevant material.

The appellant was a not-for profit federal corporation formed to preach Atheism through charitable activities. The Minister denied its registration application. The appellant unsuccessfully submitted that the common law test which governing the advancement of religion as a head of charity was invalid as contrary to ss. 2, 15, and 27 of the Charter.

After having noted (at para. 10) that ‘fundamental characteristics of religion include that the followers have a faith in a higher power such as God, entity, or Supreme Being; that followers worship this higher power; and that the religion consists of a particular and comprehensive system of faith and worship,” Rivoalen JA found that the Minister’s denial of the appellant’s registration as a charity did not violate its rights under the Charter, stating (at paras. 15 and 16):

Section 27 of the Charter is not a substantive provision that can be violated and is “relevant only as an aid to interpretation” … . The respondent, however, concedes that the state’s duty of religious neutrality under section 2(a) of the Charter relates to section 27, in part “with a view to promoting and enhancing diversity” … .

… [S]ection 2 of the Charter protects the rights of the appellant’s members to practise their beliefs in Atheism and the Minister cannot interfere with the practice of these beliefs … . However, I find in this case that the Minister’s refusal to register the appellant as a charitable organization does not interfere in a manner that is more than trivial or insubstantial with the appellant’s members ability to practise their atheistic beliefs. The appellant can continue to carry out its purpose and its activities without charitable registration … .

The search and seizure procedures described in s. 231.3 are acceptable and within the reasonable limits prescribed by law under s. 1 of the Charter.

The fact that s. 118(1) at the time provided a greater benefit to an unmarried couple with a child than to a married couple with a child could not be characterized as discrimination based on religion contrary to s. 15 of the Charter; nor did it interfere with either's religious belief or practice contrary to s. 2(a) of the Charter.

The taxpayer's statement of claim, which sought a reduction in his tax on the basis that part of those taxes would be used to finance abortions, did not disclose any reasonable cause of action.

The taxpayer (a Quaker) who paid 10.5% of her tax liability to the Peace Tax Fund rather than to the Receiver General, was not entitled to a declaration that being required to pay the full amount of her tax liability would infringe her rights under ss.2(a) and 15 of the Charter.

Federal Court Rule 317 provides that “A party may request material relevant to an application that is in the possession of a tribunal [e.g., CRA] whose order is the subject of the application….” The taxpayer requested material relevant to its requested order that CRA requirements for information pursuant to ss. 231.1 and 231.6 be set aside on the basis that they were invalid or overly broad. CRA provided material, but in redacted form, and sought an order pursuant to s. 37 of the Canada Evidence Act to justify this redaction based on full disclosure being injurious to the public interest. The only support provided for this request was a certificate issued by the Director General of the International and Large Business Directorate baldly asserting that such disclosure could be used to circumvent ongoing audit operations.

Noël J found that to fulfil his judicial function it was necessary for him to review the unredacted material himself on an ex parte basis, and so ordered. He also stated (at paras. 13-14):

Toronto Star Newspaper Ltd v Ontario, 2005 SCC 41 [stated]:

1. In any constitutional climate, the administration of justice thrives on exposure to light — and withers under a cloud of secrecy.

2. That lesson of history is enshrined in the Canadian Charter of Rights and Freedoms. Section 2(b) of the Charter guarantees, in more comprehensive terms, freedom of communication and freedom of expression. These fundamental and closely related freedoms both depend for their vitality on public access to information of public interest. What goes on in the courts ought therefore to be, and manifestly is, of central concern to Canadians.

As Fish J explained so eloquently in Toronto Star, open and transparent judicial proceedings are fundamental principles of the Canadian legal system. However, limited exceptions to this principle are necessary for the proper functioning and integrity of our legal system ... .

Different methods of taxing income from a business or employment did not place any direct restrictions on the appellants' freedom of expression under s. 2(b) or freedom of association under s. 2(d).

The requirement under s. 151 to calculate and estimate taxes owing does not breach the right to freedom of opinion.

Contributions paid by the taxpayer (a former resident of the U.K. and a dual citizen of Canada and the U.K.) to the U.K. Inland Revenue Department in order to maintain rights to a future old age pension in the U.K. did not qualify as non-business income taxes because the payments were made on a voluntary basis. Campbell T.C.J. quoted Lawson v. Interior Tree, Fruit and Committee of Direction, [1931] S.C.R. 357 that "A tax is a levy, enforceable by law imposed under the authority of a legislature imposed by public body and levied for a public purpose".

Campbell T.C.J. stated (at p. 766) that:

"The failure of the Act to include a deduction or tax credit for contributions to a foreign insurance plan in no way interferes with the Appellant's right to move within Canada, to leave or to pursue a livelihood here."

In the underlying constitutional challenge, the Federation sought a declaration that ss. 237.3 and 237.4 were of no force or effect to the extent they applied to legal professionals, in their role as such based on the reporting requirements in those sections contravening ss. 7 and 8 of the Charter. On this application for an interim injunction, the Federation sought to exempt legal professionals from the operation of ss. 237.3 and 237.4 until the constitutional challenge was determined on the merits.

Before agreeing to grant the injunction, Warren J found (at para. 35) that she was:

satisfied that the Federation has established at least two types of irreparable harm that would result if the injunction sought is not granted:

• if confidential or privileged information is disclosed as a result of legislation that is ultimately found to be unconstitutional, individual clients will be irreparably harmed by the loss of professional secrecy, which cannot be undone, and the prospect of that occurring will have a chilling effect on the ability of individual clients to consult with their lawyers fully and freely pending a final determination of the constitutional challenge; and

• the potential for the unconstitutional reporting of confidential and privileged information, and the conflicts of interest between lawyers and their clients that will arise as a result of potentially unconstitutional legislation, would irrevocably damage the solicitor-client relationship and harm the public interest by undermining the public’s confidence in an independent bar.

The Friedmans, a married couple, who had not filed T1135 returns, each received Requests for Information under s. 231.1(1) (“RFIs”) that were addressed to them personally.

After rejecting the taxpayers’ submission that they should not be required to comply because it was unclear whether the RFIs were directed to them individually or to their related entities, Pamel J went on to reject a submission that the RFIs contravened s. 13 of the Charter, stating (at para. 76):

The ITA’s legitimate purpose in allowing the CRA to audit taxpayers—to ensure compliance with our taxation system—must thus be balanced against the section 7 rights invoked by the Friedmans, with the consideration that the sole object of section 7 is to offer protection in “extraordinary or exceptional circumstances” when the impugned legislation is unjust. I do not believe that a routine civil taxation audit rises to that level, especially when weighed against the overall purpose of sections 231.1 and 231.7 in the larger context of our self-reporting and self-assessing taxation system.

In 2009, the French authorities obtained the Falciani List (on which an HSBC employee in Switzerland had copied account holder information) and pursuant to Art. 26 of the Canada-France Convention provided information to CRA showing inter alia that the taxpayer had a large HSBC account in Switzerland. However, the taxpayer had not reported such assets, or any interest thereon, and CRA proceeded to send three request letters in 2015 and 2016 pursuant to s 231.1(1). The taxpayer ultimately responded, but without providing any information concerning any HSBC account in Switzerland. On November 8, 2016, the Minister applied under s 231.7(1) for a compliance order.

In rejecting the taxpayer’s submission that CRA’s use of “stolen” information violated the taxpayer’s Charter rights, Russell J stated (at para. 64):

The issues raised by the Applicant on this point were addressed … by the Quebec Court of Appeal [Berger, 2016 QCCA 226]. … The Quebec Court of Appeal affirmed the Quebec Superior Court’s decision that Mr. Berger’s rights under ss 7 and 8 of the Charter were not violated by the ARQ relying on the same HSBC List as was relied on in the present case.

A couple who operated a restaurant in B.C. were awarded $1.7 million in damages (including $750,000 in punitive damages) against CRA for malicious prosecution. In concluding that the prosecution was initiated by CRA, Punnett J stated that the prosecutors “relied on Mr. Kendal [the principal CRA investigator] and the CRA to gather the evidence, draft the final Information, and essentially, do charge approval.”

In finding CRA malice, he stated that the Mr. Kendall “knowingly misstated evidence essential to the proof of the actus reus despite being aware of its importance, [and] filed a misleading report knowing it would be relied upon to authorize the prosecution.”

He went on to find that, as the taxpayers’ s. 7 Charter rights had also been breached, damages would have been payable under s. 24 of the Charter if their damages had not already been recoverable in tort, stating (at para 289):

As I have found the CRA initiated the prosecution of the plaintiffs when it was wrongful to do so, their s. 7 Charter rights have been breached. Mr. Kendal suppressed exculpatory evidence from the defence, and created inculpatory evidence in an effort to secure a conviction. The CRA used the powers of the State in the form of a criminal prosecution to wrongfully and maliciously prosecute the Samaroos.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act required law firms to verify the identity and record the identity of clients for whom they acted as "financial intermediaries," collect and retain financial records when receiving or paying funds for purposes other than professional fees, disbursements, expenses or bail, and allowed the anti-money laundering a federal agency (FINTRAC) to make warrantless reviews of such records subject to the firm following a specified procedure for claiming solicitor-client privilege. Non-compliance was punishable by imprisonment.

The Court largely confirmed the findings below that the provisions should be variously struck (in the case of the search and seizure provisions), or read down to exclude lawyers (for record keeping etc.). The impugned provisions breached the clients' rights against unreasonable search and seizure (see summary under Charter, s. 8).

The majority also found that the provisions contravened Section 7. One of the elements of a lawyer's duties is commitment to the client's cause - i.e. "ensuring that a divided loyalty does not cause the lawyer to 'soft peddle' his or her defence of a client" (para. 103, quoting Neil, 2002 SCC 70, at para. 70). Cromwell J stated (at para. 84):

We should, in my view, recognize as a principle of fundamental justice that the state cannot impose duties on lawyers that undermine their duty of commitment to their clients' causes. Subject to justification being established, it follows that the state cannot deprive someone of life, liberty or security of the person otherwise than in accordance with this principle.

Metzger J. rejected a submission of the accused that as the Crown did not produce the original Income Tax Act but instead utilized a commercial consolidation of the Act published by CCH Canadian Limited, the accused was unable to make a full answer and defence, contrary to section 7 of the Charter.

Rothstein J.A., in rejecting an argument that the GAAR was contrary to section 7, stated that there was no suggestion in Gosselin v. Quebec (A.G.), 2002 SCC 84 "that section 7 is broad enough to encompass economic rights generally or, in particular, in respect of reassessments of income tax" and, in rejecting an argument that the "abuse" test in subsection 245(4) was unconstitutionally vague, stated that "subsection 245(4), having been interpreted and applied on numerous occasions by the Courts, is capable of supporting legal debate and coherent judicial interpretation".

All statements made by the taxpayer to Revenue Canada were not admissible given the failure of Revenue Canada to caution him as to his rights and inform him that he was under investigation for tax evasion. However, there is a distinction for section 8 purposes between oral admissions made out of compulsion and documents containing communications made before such compulsion and independently of it. Various documentary evidence did not qualify as derivative evidence which could not have been obtained, or the significance of which could not have been appreciated, but for the compelled statements of the accused. Accordingly, there was no breach of s. 7 of the Charter in obtaining such documentary evidence.

The trial judge had erred in agreeing to set down the question, as to whether s. 245 of the Act was unconstitutionally vague, without the benefit of adjudicative facts which had given rise to the application of s. 245 in the case before him.

An enquiry under s. 231.4 into the financial affairs of a taxpayer ("Del Zotto") did not violate s. 7 of the Charter given that Del Zotto was not subpoenaed to attend or to give evidence or produce documents at the enquiry, and that the lawyer and business executive who was served with such a subpoena did not (unlike Del Zotto) face criminal charges under the Act. Accordingly, there was no violation of the "case to meet" and "right to silence" principles.

The requirement to appear and to bring documents was not sufficiently intrusive to justify imposing the Hunter standards under the aegis of section 8 of the Charter.

A retroactive amendment to s. 110(1)(f)(iii) of the Act was not contrary to ss.7 and 15 of the Charter.

The taxpayer's rights under s. 7 of the Charter were not infringed by s. 167(5)(a) of the Income Tax Act.

The laying of tax evasion charges approximately two years after the Minister first reassessed the taxpayer for the taxation years in question was reasonable given that "evidence needed to make a tax assessment is not of the same high standard required for criminal prosecution", and the fact that investigation continued up to the time of the laying of the charges.

A demand under s. 231.2(1)(a) of the Act for information the disclosure of which potentially could prejudice the taxpayer in relation to charges which had previously been brought against him under the Narcotics Act was contrary to section 7 of the Charter given that there was no prohibition against Revenue Canada communicating the information obtained to the police.

Revenue Canada officials obtained a warrant to search the residence of the appellant and then, six months later, obtained an appointment for a hearing pursuant to s. 231.4(2). An application to quash the hearing was dismissed, because the taxpayer had made no specific claim to immunity in respect of any specific question, and had not shown any basis upon which any answer might tend to inciminate him with respect to any specific criminal offence.

With respect to s. 8 of the Charter, no search or seizure was involved, and the procedure under s. 231.4 was not unreasonable.

Where the Department of National Revenue had acted in gross disregard of the rights of the accused, the proceedings against the accused were stayed, for to permit the prosecution to proceed would not be in accordance with fundamental principles of justice.

S.7 cannot be relied upon where infringement of the individual's liberty or security, if any, does not result from the operation of Canadian law, but solely from the operation of Bahamian law in the Bahamas.

Woods JA confirmed the rejection by the Federal Court of the position of two American citizens, who had had no significant connection with the U.S. since early childhood, that the information-reporting requirements in ITA Part XVIII (the “Impugned Provisions”) resulted in the unreasonable seizure of financial information belonging to U.S. persons in Canada, contrary to s. 8 of the Charter.

She noted (at para. 34) that the appellants’ submission (at para. 33) that “the purpose of the Impugned Provisions is to facilitate the interests of the United States” rather than Canada was “diametrically opposed to the Federal Court’s finding” that “’a major purpose for the enactment of the Impugned Provisions was to avoid the potentially catastrophic impact of FATCA on Canadian financial institutions, their customers and the Canadian economy as a whole.”"

Before rejecting the appellants’ submission (at para. 36) “that the state interest in avoiding the consequences of FATCA is not relevant to the reasonableness test in s. 8 of the Charter ,” she stated (at para. 37):

The appellants did not refer to any judicial authority to support that the s. 8 reasonableness test does not encompass a state interest in avoiding the consequences of FATCA.

She further stated (at paras. 54, 56 and 62-63):

The Impugned Provisions are clearly regulatory in nature … [and] are similar to information automatically provided to the CRA for regulatory purposes (e.g., T4s by employers, T5s by financial institutions, and taxpayers’ annual disclosure of foreign holdings). …

It is difficult to see how a seizure contemplated by the Impugned Provisions significantly intrudes into privacy interests, as the appellants appear to suggest. Accordingly, I see no reason in this case to revisit the comment in Jarvis that the entire ITA is a regulatory statute. …

Quite simply, the Impugned Provisions are an example of international cooperation in the administration of income tax laws. …

Moreover, the appellants have not demonstrated that the Impugned Provisions are more intrusive than is necessary to be effective, or that Canada could have achieved a more favourable outcome for affected persons.

The respondent taxpayer alleged that the requirement letters issued to him pursuant to ITA s. 231.2 were invalid because they were issued for the predominant purpose of furthering criminal investigations contrary to Jarvis. In finding that the taxpayer’s statement of claim should be struck, Woods JA applied the principle that even “if … a party is a stranger to a transaction, the transaction must still be described with sufficient detail that the other party can identify it” (para. 80) and noted, regarding the taxpayer’s allegation (para. 76) that the Audit Division shared information gathered from the requirement letters with criminal investigators, that “the statement of claim did not identify with particularity any criminal investigation into the Respondent” (para. 82) and that the “pleading does not link the alleged sharing of information to any particular criminal investigation” (para. 83). Furthermore, although a general statement of the Minister suggested “that audits may precede criminal investigations … this is permitted in Jarvis” (para. 72).

However, the taxpayer was given leave to file an amended statement of claim on the condition that “the pleading identify with particularity the facts giving rise to the cause of action” (para. 96).

Woods JA also found that there was an absence of the required particularity in the taxpayer’s pleaded allegation that the CRA shares taxpayer information obtained through requirement letters with domestic and international criminal law enforcement, including CRA’s Criminal Investigation Division, the RCMP, the FBI and CSIS. The legislative provisions that were impugned in this regard were ITA s. 241(4)(e)(iv) (re the CSIS), s. 241(4)(e)(xii) (disclosures under tax treaties etc.), ss. 241(9) and (9.1) (disclosures to governmental institutions re specified threats or illegal activities), and s. 241(9.5) (disclosures to police organization re specified serious offences). She stated (at paras. 106-107):

[T]he pleading does not properly ground the legislative challenge because it does not provide any material facts which, if taken as true, would demonstrate that the CRA shared the Respondent’s taxpayer information pursuant to these provisions.

The legislative challenge in the statement of claim is aptly described by the motions judge as unfocussed and factually empty.

The taxpayer sought to challenge, through judicial review, information requests made by CRA (who was reviewing his residency status) to other countries’ tax authorities. After he had requested the certified record contemplated by Federal Court Rules 317 and 318, he was contacted four months later by a journalist inquiring about the application. The taxpayer immediately obtained a judicial provisional confidentiality order, and launched an application for a declaration that the material communicated in accordance with Rule 318 to the Court Registrar did not form part of the public court file, but was rather akin to documents produced on discovery so as to be subject to an implied undertaking of confidentiality.

After agreeing with Pamel J below that such documents were part of the court file and thus accessible to the public under Rule 26 unless a confidentiality order was obtained, Montigny JA went on to reject the taxpayer’s submission (in reliance on Gernhart) that making the certified record public as a matter of course violated section 8 of the Charter, stating (at para. 70, 72 and 75, TaxInterpretations translation):

Anyone engaging the courts in an action … must expect that large parts of his or her private life will become publicly accessible. This is the case under Rule 26, as well as under paragraph 241(3)(b) of the ITA, which provides that the confidentiality of information provided to the Minister does not apply in legal proceedings relating to the administration or enforcement of the Act. …

The documents were not transmitted by the Minister automatically but at the request of Mr. Rémillard, and the information was not disseminated "indiscriminately" but only according to the criteria determined by Mr. Rémillard himself. This is a far cry from the state interfering in the private affairs of the appellant, as was the case in Gernhart and Dyment. Far from transmitting confidential information without his consent and without informing him, it was rather at Mr. Rémillard's own request that the Minister transmitted the relevant documents to the Court Registry. …

… Mr. Rémillard could have availed himself of the mechanism provided by Rule 151 and requested the Court to issue an order to protect the confidentiality of certain information contained in the documents transmitted.

An auditor (Power) performed an audit of a company, that then extended to seven related companies, that had very poor record-keeping and that had been making large input tax credit and rebate claims. A month after having visited the business premises and interviewed the registrants, she concluded that the matter should be referred to the Criminal Investigation Division. In concluding that the evidence gathered by Power should not be excluded on Jarvis grounds (so that it was admissible in the subsequent criminal proceeding), Gogan J stated (at paras. 87, 93):

[I]t is a nuanced distinction … between a registrant being unable to support claims made (the audit conclusion and one potentially explained by poor record keeping) and a registrant making false or fraudulent statements to CRA (a criminal conclusion potentially explained by having no legitimate records). In this case, I am satisfied that any evidence obtained came as a result of Power’s audit inquiries.

… I find that the predominant purpose of the investigation did not turn to criminal or penal liability until after the completion of Power’s interviews with each of the accused. …

The taxpayer, a retired businessman living in Barbados, sought to challenge, through judicial review, information requests made by CRA (who was reviewing his residency status) to other countries’ tax authorities. After he had requested the certified record contemplated by Federal Court Rules 317 and 318, he was contacted by a journalist inquiring about the application. The taxpayer immediately obtained a judicial provisional confidentiality order, and launched an application for a declaration that the material communicated in accordance with Rule 318 did not form part of the public court file, but was rather akin to documents produced on discovery so as to be subject to an implied undertaking of confidentiality. Pamel J concluded that there were significant differences between discovery procedures and the communication of the certified record, and that the latter was not subject to the implied undertaking rule. Pamel J referred in numerous places in his reasons for judgment to the “open court” principle, including the statement by the Supreme Court in Sierra Club, 2002 SCC 41, that “[t]he link between openness in judicial proceedings and freedom of expression has been firmly established by this Court.”

The taxpayer also argued that making the certified record public as a matter of course violated section 8 of the Charter, in reliance on Gernhart.

The Court distinguished Gernhart on the basis that in a judicial review application before the federal court, it is the applicant who requests the certified record (as happened here). Hence, the transmission did not constitute a “search and seizure”. Pamel J stated (at para. 181, TaxInterpretations translation):

It was he who made the applications under section 317 of the FCR. This means that he controlled the timing of this introduction. … [H]e had the option of asking the Court to make an order to protect any information he wished to keep private and confidential. … [S]ection 318 of the FCR should not be considered in isolation. Faced with a problem such as the one faced by Rémillard, the Court is capable of finding a solution that balances, to the extent possible, the objectives of meaningful review of administrative decisions, procedural fairness, and the protection of any legitimate interest in confidentiality while at the same time maintaining the open court principle … .

The Court also suggested (without deciding the point) that even if there were a seizure for s. 8 purposes, it would not be unreasonable given the objectives for the certified record to be communicated to the Court in the context of a judicial review application.

Both plaintiffs were American citizens as a result of each having been born in the U.S., although neither spent more than a few years there as children. Both were now Canadian citizens, and neither one has any real ongoing connection with the U.S. They unsuccessfully challenged the constitutionality of the “Impugned Provisions” (ITA ss. 263 to 269, and the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act), asserting that (i) they resulted in the unreasonable seizure of financial information belonging to U.S. persons in Canada, contrary to s. 8 of the Charter, and (ii) they imposed a burden on such persons because of their citizenship or their national or ethnic origin, contrary to s. 15 of the Charter.

Respecting the first ground, Mactavish J found (at para. 7) that “while the Impugned Provisions allow for the seizure of account information, seizures carried out pursuant to the Impugned Provisions are not unreasonable and thus do not violate section 8 of the Charter.” In this regard, she noted:

• (at para. 293) that respecting the “seizure in this case [of] banking information that is turned over to the CRA by Canadian financial institutions … the mechanism of the seizure is minimally intrusive, suggesting that there is an objectively lower expectation of privacy …”,
• (at para. 306):

The fact that the Plaintiffs and other U.S. persons have the pre-existing obligation to report their banking information to the IRS under American tax laws (as well as the obligation to file the FBAR reports that are required under the U.S. Bank Secrecy Act) suggests that their privacy interest in that information is limited.

• (at para. 316) that “one of the major purposes underlying the … enactment of the Impugned Provisions was to avoid the potentially catastrophic impact that compliance with FATCA would have for Canadian financial institutions, their customers and the Canadian economy as a whole [re the imposition of 30% withholding tax]”
• in seeking to avoid this result “it is doubtful that Canada could have negotiated a better deal with the United States” (para. 325)
• under the common reporting standard as codified in ITA Part XIX, “the sharing of taxpayer information between countries has received international acceptance,” para. 337),
• (at para. 338) that “The reasonableness of seizures that are carried out in accordance with the Impugned Provisions is further confirmed by the fact that the banking information in issue is shared with the IRS in confidence, in accordance with the provisions of the Canada-U.S. Tax Treaty.”

She then stated (at para. 349):

I also agree with the Defendants that the benefit that would accrue to those affected by the Impugned Provisions by their ability to ignore their obligations under American tax laws is outweighed by the need to protect Canada as a whole from the economic consequences of FATCA.

In July 2013 a CRA auditor (Mrs. Voth) became suspicious that the corporation under audit (“MMFL”) had paid for substantial construction work on the home of its individual shareholder (Mr. Mariani). However, she did not turn the file over to the criminal investigations group until February 2014, when she encountered evidence suggesting to her that the invoices on hand at MMFL from the building contractor (Capoferro) had been fraudulently altered to disguise that this was going on. The criminal investigations unit then did a search of the MMFL business premises and the residence of Mr. Mariani in December 2015 pursuant to a search warrant, removed computers and digital data storage, along with boxes of paper documents, from both sites, and over the course of several months extracted business records from the computers and data storage units. Tax evasion charges ultimately were laid against MMFL and Mr. Mariani under ITA s. 239(1)(d) and ETA s. 327(1).

After noting (at para. 36) that “There appears to be no clear line between when a CRA auditor will chose to administer a civil penalty as opposed to transferring the matter over to investigations for the laying of actual charges and for the imposition of penal sanctions.,” and (at para. 42) that in July 2013 “any reasonable person would have suspected that MMFL was paying for the work done by Capoferro on Mr. Mariani’s personal residence and that Mr. Mariani was declaring a personal expense as a business expense,” Greene J found that the evidence supported “Mrs. Voth’s assertion that up until February 2014 she was only exploring civil penalties and civil liability” (para. 52). Accordingly, the evidence obtained on the search should not be excluded on Jarvis grounds.

However, the search warrant did not authorize the CRA investigators to conduct a thorough search of the data storage units. Accordingly (para. 67):

the CRA investigators violated Mr. Mariani’s and MMFL’s section 8 Charter rights when they conducted a thorough search of the data storage units found in the premises at MMFL and at Mr. Mariani’s residence.

However, the “admission of the evidence at the Applicants’ trial would not put the administration of justice into disrepute” under the Charter s. 24(2) test given that “while all Charter breaches are serious, the breaches in the case at bar are at the lower end of the continuum” (para. 79). In particular, the “the CRA investigators honestly believed that the warrant permitted the search of the computers and the ability to forensically examine the computers” (para. 79) and since the “CRA officers limited their search to banking records, tax forms, invoices and similar documents,” “the privacy interest was arguably reduced” (para. 80). Accordingly, the evidence should not be excluded.

The CRA special investigations division issued s. 231.2 requirements to two banks to get the taxpayer’s bank statements, and used these to assess him for over $5M a year in unreported business income. The taxpayer’s pleadings in the Tax Court included the assertion that, since he was under investigation at the time that the requirements were issued, the information thereby obtained was inadmissible as his s. 8 Charter rights had been infringed.

In confirming that the Tax Court had correctly struck out this pleading, Webb JA stated (at paras. 14, 17):

While using requirements under section 231.2 of the ITA to obtain information or documents after an investigation has commenced may result in that information or those documents not being admissible in a proceeding related to the prosecution of offences under section 239 of the ITA, it does not preclude that information or documents from being admissible in a Tax Court of Canada proceeding where the issue is the validity of an assessment issued under the ITA. …

[T]he CRA’s power to issue requirements under section 231.2 of the ITA to obtain information or documents that will be used for the administrative purpose of reassessing a taxpayer is not suspended by the commencement of an investigation.

The Sherbrooke police seized $1.4M in cash and jewels, along with guns, of the plaintiff (“Brochu”), who had “underworld dealings.” The ARQ then arrived at the same premises (his residence) at 10 p.m. and served him with a requirement pursuant to the Quebec equivalent of ITA s. 231.2 to produce a wide range of documents “immediately,” and then carted away 13 boxes of documents. Before finding that this requirement was a disguised seizure made without judicial authorization, and awarding Brochu $10,000 in damages for “trouble, vexation and inconvenience,” as well as $100,000 in punitive damages “in order to make the ARQ and its auditors understand that ‘the end does not justify the means’ (para. 201),” Villeneuve JCS stated (at paras. 97-99, 120-121)

[W]hen the ARQ required that Brochu provide documents “immediately,” it infringed the spirit of the TAA as it provided absolutely no period in which the latter could comply, and furthermore imposed its ultimatum in a place serving as a taxpayer’s residence.

The absence of any period within which to produce by itself rendered the Requirements abusive.

Furthermore, the impressive quantity of particulars and documents demanded of Brochu rendered it impossible to respond immediately, particularly when taking into account that the Requirements extended to five companies as well as the personal affairs of Brochu over a period of almost 15 years. …

[A] requirement certainly cannot be used to disguise a seizure made without judicial authorization.

In such circumstances, section 8 of the Charter … was infringed by the ARQ… .

Although the ARQ acted hastily because it was concerned about the destruction of evidence, the correct remedy for this was an Anton Pillar order, which required judicial authorization (none was obtained)

Stratas JA found that Chambre des notaires and Thompson did not invalidate s. 231.7, and that there the Supreme Court instead had merely “read down section 231.7 to exclude lawyers and notaries,” so that the taxpayer was required to disclose materials which were not covered by solicitor-client privilege.

On a search of a Montreal office of Uber Canada (authorized pursuant to s. 40 of the Quebec Tax Administration Act), 74 smart phones and 14 computers, which included personal information, were seized. Uber Canada argued before Cournoyer JCS (as quoted at para. 242) that "by authorizing Revenu Québec to take the Applicant’s computers and smartphone without contents limitations, the warrants simply disregarded the constitutional requirement to authorize only the seizures of things that may afford evidence of alleged offences.”

Cournoyer JCS stated (at para. 282, TI translation):

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.

Notaries practising law in Quebec received requirements under s. 231.2 to provide documents or information relating to clients for tax collection or audit purposes. Wagner and Gason JJ found (at paras. 87, 94):

[T]he requirement scheme in the ITA infringes s. 8 of the Charter and must be declared to be unconstitutional insofar as it applies to notaries and lawyers in Quebec.

…[T]he exception for a lawyer’s accounting records set out in the definition of “solicitor‑client privilege” in s. 232(1) of the ITA is unconstitutional and invalid. The manner in which it limits the scope of professional secrecy is not absolutely necessary to achieve the purposes of the ITA, which means that the exception is contrary to s. 8 of the Charter.

In support of the first conclusion, they stated (at para. 44):

The defects in question are that the client is given no notice of the requirement, that an inappropriate burden is placed solely on the notary or lawyer concerned, that compelling disclosure of the information being sought is not absolutely necessary and that no measures have been taken to help mitigate the impairment of professional secrecy.

Respecting the absence of reasonable mitigation measures, they noted (at para. 68) that it was helpful to their analysis that the ARQ and the Chambre des notaires had reached a settlement in which it was agreed that, before issuing a formal demand, the ARQ would try to obtain the information from various public records or by requesting the information from the taxpayer or another third party to the contract, that the permission of the taxpayer would be sought if the ARQ determined that only a lawyer or notary had the information, that if the ARQ determined that professional secrecy did not apply, a court order would be sought, that any formal demand would specify the information or documents covered, and that a notary who invoked professional secrecy in good faith would not be prosecuted.

Respecting the impermissible breadth of the exception in s. 232(1) for accounting records, they noted (at para. 72) that “even where accounting information includes no description of work, it may in itself, if disclosed, reveal confidential and privileged information,” so that, for example, client names and even the amount of fees may be protected.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act required law firms to verify the identity and record the identity of clients for whom they acted as "financial intermediaries," collect and retain financial records when receiving or paying funds for purposes other than professional fees, disbursements, expenses or bail, and allowed the anti-money laundering a federal agency (FINTRAC) to make warrantless reviews of such records subject to the firm following a specified procedure for claiming solicitor-client privilege.

The Court largely confirmed the findings below that the provisions should be variously struck (in the case of the search and seizure provisions), or read down to exclude lawyers (for record keeping etc.). The impugned provisions breached the clients' rights against unreasonable search and seizure. The statutory accommodations for privilege in the Act were less robust than conventional solicitor-client privilege. For example, privilege could be lost if not asserted on a timely basis, which was found in Lavallee to be unacceptable. The Minister argued that Lavallee applied where law enforcement officials were seeking evidence of criminal wrongdoing, and not in connection with a regulatory compliance regime. The immediate problem with this position was that the Act was expressly aimed at finding criminal wrongdoing, and threatened imprisonment of lawyers for non-compliance.

Moreover, the bar in Lavallee against erosions of privilege was not confined to a criminal context. Cromwell J stated (at para. 38) "the reasonable expectation of privacy in relation to communications subject to solicitor-client privilege is invariably high, regardless of the context," and quoted with approval the statement of Arbour J in Lavalee that "all information protected by the solicitor-client privilege is out of reach for the state."

He further noted (at para. 55) that one of the objectionable features of the procedure for claiming privilege under the Act was that it had to be asserted on behalf of a named client (stating that "the name of the client may itself be (although is not always) subject to solicitor-client privilege") and further stated that "the same ... may be said about the obligation of the lawyer under s. 64(10) to provide the authorities with the latest known address for the client."

The taxpayer had been convicted of over 30 GST-related offences. In the course of appealing the related reassessments, she moved, on Charter grounds, to exclude from evidence any information the Minister obtained from Requests for Information, arguing that the RFIs were made in the course of a criminal investigation.

The trial judge dismissed the taxpayer's motion, finding that the situation involved a concurrent criminal investigation and audit. Trudel JA further added (at para. 9):

The Judge's legal finding accords with Jarvis and with the self-assessment and the self-reporting nature of the income tax regime. Whether the CRA could properly use such documents to prosecute the appellant for criminal offences under the ETA is irrelevant to the current civil proceedings.

In any event, even if the taxpayer were correct that her rights were breached, it was "at best a technical breach" which did not call for a remedy under s. 24(2) of the Charter (para. 9).

The respondent ("Jakabfy") was a lawyer who received a Request from the Minister for information relating to his clients' sale of a property. Claiming solicitor-client privilege pursuant to his clients' instructions, he refused to disclose the documents without a court order. Zinn J found that the documents in question did not relate to legal advice and therefore granted the Minister's requested order, but agreed with Jakabfy that he should not have costs awarded against him.

In the course of his reasons, Zinn J stated:

Counsel for the Minister ... brought to our attention the decision of the Québec Superiour Court in Chambre des notaires du Québec c. Canada (Precureur général), 2010 QCCS 4215, [2010 JQ 8868] which held that sections 231.2 and 231.7 and the definition of "solicitor-client privilege" in subsection 232(1) of the Income Tax Act were contrary to sections 7 and 8 of the Canadian Charter of Rights and Freedoms and are of no force and effect as against Quebec notaries and lawyers with respect to documents and information protected by "professional secrecy." That decision is under appeal.

This Court declines to follow that decision for three reasons. First, a decision of the Québec Superior Court is not binding on this Court. Second, the decision appears to rely heavily on the professional obligations of notaries and lawyers set out in their respective Codes of Professional Conduct, which is not applicable to the Respondent. Third, and most importantly, there is no "professional secrecy" or privilege attaching to the requested documents and information in Ontario jurisprudence.

RCMP officers commenced an investigation of the accused, a Canadian businessman, for suspected money laundering activities. They sought permission from the Turks and Caicos Islands authorities to conduct parts of their investigation on the Islands where the accused’s investment company is located. A detective of the Turks and Caicos police force, who was in charge of criminal investigations on the Islands, agreed to allow the RCMP to continue the investigation on Turks and Caicos territory, but on the basis that he would be in charge. During a one-year period, the RCMP officers conducted searches of the accused’s office on the Islands and on each occasion such police officer was with them. There were no warrants authorizing the perimeter searches of the accused’s office, but the RCMP officers understood warrants to be in place for the covert entries.

The Court held (at paras. 88, 90) that s. 8 of the Charter did not generally apply to searches and seizures in other countries. Rather, the only reasonable approach is to apply the law of the state in which the activities occur, subject to the Charter’s fair trial safeguards and to the limits on comity that may prevent Canadian officers from participating in activities that, though authorized by the laws of another state, would cause Canada to be in violation of its international obligations in respect of human rights.

A criminal investigation in the territory of another state cannot be a matter within the authority of Parliament or the provincial legislatures because they have no jurisdiction to authorize enforcement abroad. Under international law, each state’s exercise of sovereignty within its territory is dependent on the right to be free from intrusion by other states in its affairs and the duty of every other state to refrain from interference. In some cases, the evidence may establish that the foreign state consented to the exercise of Canadian enforcement jurisdiction within its territory. Where, as here, the host state consents, the Charter can apply to the activities of Canadian officers in foreign investigations, so that the investigation would be a matter within the authority of Parliament and would fall within the scope of s. 32(1) of the Charter.

The trial judge had erred in excluding evidence obtained by Revenue Canada given that the auditors were not shown to have obtained their information in the course of an investigation rather than an audit.

An investigation by CCRA of the taxpayer was not transmuted into a criminal investigation until the auditor met with Special Investigations and referred the file to them for their consideration. Reilly J. noted (at p. 5219) that:

"The mere fact that the audit was provoked as a result of suspicion of non-compliance does not turn it into an investigation to determine penal liability."

The applicants received letters entitled Requirement to Provide Information and Documents With Respect to Donations Made For Charitable Organizations

The record as a whole including testimony of CCRA investigators indicated that the predominant purpose of the investigation giving rise to the Requirements was prosecution of the applicants for tax evasion. The Requirements issued to the individual applicants were ordered to be quashed, whereas those issued to the corporate applicants were upheld given that the privacy interests of corporate entities are minimal as compared with those of individuals.

In addition to other defects that potentially could be cured by a modest judicial redrafting of the provision, section 488.1 of the Criminal Code was fundamentally flawed in that it failed to ensure that clients were given a reasonable opportunity to exercise their constitutional prerogative to assert or waive their privilege but, instead, established a procedure whereby the privilege could be lost if the lawyers whose law offices were being searched did not advance claims of solicitor-client privilege on a timely basis. Arbour J stated (at para. 24):

It is critical to emphasize here that all information protected by the solicitor-client privilege is out of reach for the state. It cannot be forcibly discovered or disclosed and it is inadmissible in court. It is the privilege of the client and the lawyer acts as a gatekeeper, ethically bound to protect the privileged information that belongs to his or her client. Therefore, any privileged information acquired by the state without the consent of the privilege holder is information that the state is not entitled to as a rule of fundamental justice.

Accordingly, the proper course of action was to declare section 488.1 unconstitutional and strike it down pursuant to section 52 of the Constitution Act, 1982.

The photocopying by a Revenue Canada auditor of notes made by an accountant in his interview with the taxpayer which the auditor obtained from an empty office at the time the accountant was out of town was not authorized by s. 231.1(1). Sharlow J.A. stated (at p. 5114) that "one might question whether an auditor can be said to have exercised his powers of investigation at a 'reasonable time' if he takes a document from an accountant's private office when he knows the accountant is out of town". Furthermore, because the taxpayer had a reasonable expectation of privacy (notwithstanding that "a taxpayer's expectation of privacy in an accountant's notes recording personal information are at the low end of the scale"), there was a breach of the taxpayer's rights under s. 8 of the Charter. The appropriate remedy under s. 24 of the Charter was exclusion of the notes as evidence given that the notes were not relied upon to justify the reassessments of the taxpayer.

Although Revenue Canada investigators improperly had not informed the taxpayer that he was being investigated for tax evasion, this failure in their evidence-gathering process did not boot-strap Revenue Canada into a position where they obtained a search warrant that would otherwise be unobtainable. In particular, the documents pre-existed the improper audit investigation, they were all readily discoverable, they were real evidence, they were reliable and formed part of a self-reporting scheme. Accordingly, there was no s. 8 breach.

The taxpayer successfully argued that because the effect of s. 176(1) was to make their tax return publicly available, such requirement entailed an unreasonable seizure contrary to s. 8 of the Charter. S.176(1) was struck down in its entirety.

The evidence collected by Revenue Canada auditors respecting the taxpayer was excluded because, from the start, the evidence had been gathered in connection with an investigation by Revenue Canada of the underground economy including, in this case, the sale of used cars.

Revenue Canada was unable to use in prosecution documents and statements that Special Investigations had obtained without letting the accused know (and, in fact, misleading him in this regard) that he was the subject of a criminal investigation rather than an ordinary audit.

The use of s. 231.1 to obtain bank records and records of a solicitor who had acted for the accused breached the reasonable expectations of privacy of the accused. Bagnall J. found that the use of the evidence so obtained without judicial authorization was not permitted under s. 24(2) of the Charter.

A demand made pursuant to s. 231.1(1), to a trustee in bankruptcy for working papers that it had prepared to analyze irregularities between the corporation in question and its shareholders did not violate the Charter.

S.231.4 and subpoenas issued under it were of no force and effect because s. 231.4 violated s. 8 of the Charter.

Because the purpose of the Special Enforcement Branch of Revenue Canada Special Investigations was to cause maximum disruption to criminal operations rather than collecting revenue, a demand made by the Special Investigations Branch pursuant to s. 231.2(1) of the Act had a criminal aspect rather than a purely regulatory or administrative aspect. Accordingly, the accused could not be charged with failure to comply with the demand because it, in turn, was based on information that had been obtained from the RCMP Drug Squad in contravention of the accused's rights under s. 8 of the Charter.

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.

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

After finding that a demand under former s. 231(3) would constitute a "seizure" for purposes of s. 8 of the Charter because the compelled production of documents pursuant to s. 231(3) very well could extend to information and documents to which the taxpayer had a privacy interest in need of protection under s. 8 of the Charter, Wilson J. went on to find that such a seizure did not entail an unreasonable intrusion on the taxpayer's privacy interest. She stated (at p. 6251):

"s.231(3) provides the least intrusive means by which effective monitoring of compliance with the Income Tax Act can be effected. It involves no invasion of a taxpayer's home or business premises. It simply calls for the production of records which may be relevant to the filing of an income tax return. A taxpayer's privacy interest with regard to these documents vis-á-vis the Minister is relatively low."

The procedure in s. 231.3 is consistent with s. 8 of the Charter.

s.231.3 meets the deficiencies previously found in the search and seizure procedure under the former s. 231(4).

S. 231(1)(d) was contrary to the Charter because it did not provide for prior judicial authorization, there was no objective standard against which to test the validity of the seizure, only the appearance of a violation was required to justify a seizure, there was too broad a category of documents that could be seized, there was no limitation of the section to situations of urgency and there was no opportunity to contest the seizure before it took place.

"S.8 of the Charter cannot be applied to a search or seizure which occurred before the coming into effect of the Charter."

"The completely arbitrary and discretionary power of seizure from third parties" conferred by s. 231(3) was found to contravene s. 8. S.231(1)(d) was conceded by the Crown also to be inconsistent with s. 8 of the Charter.

Documents seized at a private residence were excluded from evidence.

Evidence obtained from an illegal seizure is inadmissible, regardless whether the seizure was made in good faith. Here, however, bad faith was amply demonstrated.

The temporary lifting of writs of execution under a consent order to allow for the sale of the applicant's home and to allow for the payment of the proceeds into Court, followed by the refiling of the writs, did not entail any "seizure".

Articles improperly seized by the Crown should be returned even if they may be required as evidence in subsequent proceedings.

S. 231(4) contravenes the right of the taxpayer to be secure against unreasonable search or seizure because it confers "on the Minister, when he has grounds to believe that one particular offence has been committed, the power to authorize a general search and seizure relating to the violation of any of the provisions of the Income Tax Act or the Regulations." The Court could not "accept the general proposition that the mere fact that a taxpayer has, at a particular time, committed an offence ... however trifling that offence, affords sufficient justification for the general power of search and seizure conferred by subsection 231(4)."

Since a purpose of s. 8 is to protect individuals from unjustified state intrusions upon their privacy, s. 8 requires a means of preventing unjustified searches before they happen, and thus in general requires a system of prior authorization, not one of subsequent validation. The person authorizing the search must be able to act in a judicial capacity in applying what must be an objective standard embodied in legislation as to what must be established in order for the interests of the individual to give way to those of the state.

"It is not unreasonable to garnishee assets as a result of the filing of a certificate under Section [223] of the Act for income tax assessments."

"The powers and procedures set forth in section 231 of the Act are necessary and appropriate for the due functioning of the Taxation system in effect in Canada. They have not become unnecessary or inappropriate by virtue of the enactment of the Charter and they are demonstrably justified in a free and democratic society."

The seizure of the taxpayer's shares in a private company under a writ of fi. fa. as security for what, under the operation of ss.222 and 223(2), was a debt owing to the Crown in respect of reassessed taxes, would not constitute an unreasonable seizure, it being expected that Revenue Canada will not maliciously, or unnecessarily, sell shares or other assets of the taxpayer.

The preparer's penalty under s. 163.3(4) is not a criminal penalty so that the preparer does not benefit from procedural protections under s. 11 of the Charter. Rothstein J stated that "the magnitude of penalties under s. 163.2(4) is directly tied to the objective of deterring non-compliance with the ITA" (para. 84).

See summary under s. 163.2(4).

The taxpayer provided grossly negligent opinions on a charitable donation scheme (which unbeknownst to her was a scam) and signed charitable donation receipts in connection therewith. The Minister assessed her for penalties under s. 163.2(5).

The Tax Court had found that s. 163.2 created an offence - so that the taxpayer's assessment should be vacated as she had not been given the rights guaranteed by s. 11 of the Charter. The Tax Court lacked jurisdiction to make this finding as the taxpayer had not served notice of this constitutional question on the federal and provincial Attorneys General.

Stratas JA rejected an alternative submission that the taxpayer could assert those s. 11 rights (such as proof beyond a reasonable doubt) which did not override the wording of s. 163.2 ("section 11 is not a buffet table" (para. 35)) - and went on to note that, in any event, s. 163.2 did not create an offence: the penalties under s. 163.2 are "not about condemning morally blameworthy conduct," but rather for "ensuring that this discrete regulatory and administrative field of endeavour [i.e. taxation] works properly" (para. 41).

The Court could "find no evidence of any real or concrete prejudice having been suffered or likely to be suffered by Mr. Rahey as a result of the trial judge's delay," and Mr. Rahey's s. 11(b) right accordingly had not been infringed.

There is no offence in issue in the tax audit. Therefore, s. 11(c) of the Charter has no application to a requirement for information made in an audit pursuant to s. 231.2(1).

It was indicated that the statement in S.244(4) that the Minister's certificate as to the day on which sufficient evidence of the occurrence of an offence came to his knowledge "is conclusive evidence thereof", is not rendered inoperative under SS.7 or 11(d) of the Charter. "The section in no way affects the substantive offence with which the accused is charged".

S.158(2) of the Act is not contrary to s. 11(d) of the Charter. It "does not create a criminal offence but is merely a civil matter permitting a demand for payment to be made without waiting 30 days from the mailing of the Notice of Assessment."

Because proceedings under s. 163(2) are of an administrative nature (there being no charge, no trial, no sentence or any fine in excess of an amount calculated to compensate the Minister for the costs of an investigation), there was no violation of s. 11(h) of the Charter in bringing proceedings against the taxpayer under s. 239(1)(d) after the taxpayer had been assessed under s. 163(2).

The Minister assessed the taxpayers under s. 163(2) for penalties, and shortly thereafter the taxpayers were convicted under s. 239(1). The taxpayers applied to the Supreme Court of British Columbia for an order declaring that the imposition of the penalties, in light of their previous convictions, amounted to their being punished for the same offence twice. It was held that s. 163(2) did not create an "offence", because the penalty assessments were "properly characterized as private matters of a regulatory nature - primarily intended to regulate the conduct of taxpayers with reference to their complying with the requirements" of the income tax legislation, whereas prosecutions for a violation of s. 239 "are properly characterized as criminal and penal matters intended to 'promote public order and welfare within a public sphere of activity' by deterring the public from the commission of flagrant breaches of the Income Tax Act." In addition, s. 163(2) did not impose "punitive sanctions [which] were so severe as to constitute 'a true penal consequence'." Finally, in light of the presumption that an assessment is valid and binding until an appeal court varies or vacates it, the penalties effectively constituted punishment of the taxpayers before their conviction under s. 239(1), rather than afterwards.

S.11 deals only with offences that are prosecuted in a criminal or penal proceeding, and s. 163(2) penalties are not assessed in such a proceeding.

The Court found that the taxpayer was liable for penalties under s. 163.2 for participating in the making of false statements relating to 134 taxpayers' claims for charitable tax credits.

Stratas JA stated obiter dicta that it was unlikely that s. 163.2 penalties could ever amount to cruel and unusual punishment given that s. 163.2 penalties are based on a formula that attempts to "gauge the extent to which the impugned conduct may have affected the tax system" - in this case, 50% of the amount of tax that the 134 participants sought to avoid.

The Friedmans, a married couple, who had each received Requests for Information under s. 231.1(1) (“RFIs”) that were addressed to them personally, appealed the Federal Court decision granting a compliance order against them under s. 231.7(1). They submitted inter alia that ss. 231.1(1) and 231.7(1) infringed their rights under s. 13 of the Charter in that those provisions did not prohibit use of the information gathered in any subsequent criminal proceedings. In rejecting this submission, Pelletier JA stated (at paras. 34-35, 38-39):

The difficulty which the Friedmans cannot surmount is that their arguments lack a factual foundation and, in the case of their request for a declaration protecting them from the risk of subsequent self-incrimination, is premature. …

The jurisprudence is clear (and abundant) that courts should not decide constitutional cases in a factual vacuum. …

… [L]egislation which, on its face, contains Charter violations may yet be found to be constitutional on the basis of contextual facts and the balancing of interests pursuant to section 1 of the Charter. …

In the present case, there are no facts in support of the Friedmans’ constitutional arguments; there are merely hypothetical possibilities which may or may not arise. … [I]t was conceded that there was no basis for alleging a disguised criminal investigation. This absence of material facts applies to the Friedmans’ section 13 arguments. As a result, there is no factual basis upon which this Court might consider the constitutional validity or inoperability of subsections 231.1(1) and 231.7(1) of the Act.

He went on to find that, in any event, even though Jarvis (which “established a predominant purpose test to determine if inquiries by the Minister were intended to determine a taxpayer’s tax liability or a taxpayer’s criminal liability” (para. 41)) dealt explicitly only with ss. 7 and 8 of the Charter, and not s. 13 thereof, that test nonetheless appeared to be applicable here, where there was no criminal investigation.

Pelletier JA went on to state (at para. 44):

This does not preclude the Friedmans from raising the constitutional invalidity or inoperability of these provisions should the need arise in subsequent proceedings.

The Friedmans, a married couple, who had not filed T1135 returns, each received Requests for Information under s. 231.1(1) (“RFIs”) that were addressed to them personally.

After rejecting the taxpayers’ submission that they should not be required to comply because it was unclear whether the RFIs were directed to them individually or to their related entities, Pamel J went on to reject a submission that the RFIs contravened s. 13 of the Charter, stating (at para. 69):

Section 13 of the Charter applies when testimony is used to incriminate a person in “other proceedings”. There are no such “other proceedings” at present, and section 13 would only be engaged if and when the Friedmans are charged with a criminal offence.

Both plaintiffs were American citizens as a result of each having been born in the U.S., although neither spent more than a few years there as children. Both were now Canadian citizens, and neither one has any real ongoing connection with the U.S. They unsuccessfully challenged the constitutionality of the “Impugned Provisions” (ITA ss. 263 to 269, and the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act), asserting that (i) they resulted in the unreasonable seizure of financial information belonging to U.S. persons in Canada, contrary to s. 8 of the Charter, and (ii) they imposed a burden on such persons because of their citizenship or their national or ethnic origin, contrary to s. 15 of the Charter.

Respecting the second ground, Mactavish J noted (at para.395) that: “'National origin' is one of the grounds enumerated in section 15, whereas the Supreme Court held in Andrews [[1989] that “citizenship” is an analogous ground” and (at para. 424) that “the Impugned Provisions draw a distinction between U.S. persons and non-U.S. persons based, at least in part, on their citizenship and/or their national origin.”

However, she then found (at para. 430) that “insulating persons resident in this country from their obligations under duly-enacted laws of another democratic state is not a value that section 15 of the Charter was designed to foster” and also noted (at para. 439) that “the decision of the Canadian government to share these individuals’ banking information with the IRS because their American citizenship or national origin makes them subject to American tax laws does not devalue their worth as individuals.”

The appellant received a Refugee Protection Claimant Document on October 12, 2011 after arriving in Canada from Palestine with her son. On...

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The taxpayer’s claim against CRA for negligence in failing to revoke the registration of a charity on a timely-enough basis (so that he suffered losses as a result of making supposedly valuable donations to the charity) was struck by Dunphy J in its entirety. In addition he struck the s. 15 Charter claim of the taxpayer as frivolous, stating (at para 30):

It cannot be concluded from the facts pleaded that taxpayers making donations in kind through a barter network are members of an enumerated or analogous group under s. 15(1)… .

A naturopath "prescribed" various herbs, vitamins and supplements for the treatment of the taxpayers' myalgic encephalomyelitis, chronic fatigue and immune dysfunction syndrome, multiple chemical sensitivity, and fibromyalgia. Ryers JA upheld the Tax Court's denial of the taxpayers' resulting claim for medical expense tax credits. Contrary to s. 118.2(2)(n), the items in question could be lawfully obtained without a prescription.

Ryers JA dismissed the taxpayer's argument that this constituted discrimination. Auton, [2004] 3 S.C.R. 657, establishes that there is nothing discriminatory in a legislative choice not to accord a particular benefit, unless that choice has a discriminatory purpose, policy or effect (paras. 13-14). There was no directly discriminatory purpose in Parliament's decision to restrict METCs to the specific items permitted under s. 1

The taxpayer's son did not reside with him when he incurred expenses in caring for his son, and therefore the expenses were not "child care expenses" under s. 63(3). Near J. confirmed that s. 63(3) is not discriminatory under the Charter, as it does not perpetuate a disadvantage by perpetuation of prejudice or stereotypes. The mere deprivation of a financial benefit that would be available to parents with custody of their children is not enough to establish discrimination against parents without custody.

The legislative choice reflected in s. 118(1)(b)(ii)(D), that no credit would be provided to young adults over the age of 18 who remained dependant upon their parents but were not suffering from a mental or physical infirmity, did not engage the right to equality set out in s. 15 of the Charter given the absence of direct or indirect discrimination in this legislative design.

The Tax Court erred in considering the taxpayer's claim that his section 15 Charter rights had been violated when officials at the Department of Indian Affairs caused an order-in-council to be issued that specified that members of an Indian band had to be of Canadian ancestry (the taxpayer being of American ancestry) in the absence of notice being given by the taxpayer under subsection 19.2(1) of the Tax Court of Canada Act that he was raising an issue as to the constitutional operability of a regulation. The impugned conduct by the officials represented a breach of proper conduct under administrative law rather than representing differential treatment based on the taxpayer's personal characteristic and, therefore, did not represent a Charter violation.

Paragraph (f) of the definition of in s. 122.6 of the Act, which provided that a female parent is presumed to be primarily responsible for the care and upbringing of a qualified dependant where the dependant resides with her, did not impair the sense of human dignity of the taxpayer as a member of a group (fathers) who were thereby accorded sex-base differential treatment and, therefore, did not violate s. 15 of the Charter.

Article XXVI A of the Canada-U.S. Convention was contrary to section 15 of the Charter in light of the citizenship preference contained in paragraph 8 of Article XXVI A.

The Minister allowed some medical expense tax credits in respect of care for a son of the taxpayer who suffered from congenital brain malformation [ultimately] but disallowed credits in respect of such items as books, compact discs, toys, computer equipment, and a van that was used by all family members. The taxpayer unsuccessfully advanced a Charter remedy that would have involved a judicial redrafting of s. 118.2(2) to allow a medical expense tax credit for all disability related expenses, including those incurred in the home rather than in an institution. The taxpayer failed to advance evidence to establish that the differential treatment accorded by s. 118.2(2) to institutional and home care gave families an incentive to choose institutional care for their disabled children over home care, thereby (as it was argued) perpetuating an historic negative stereotyping of disabled people.

The 18-year age limit in s. 118(1)(b)(ii)(D) was not contrary to s. 15(1) of the Charter (and would have been justified under s. 1 of the Charter if it were).

In rejecting a submission that the forward averaging provisions of the Income Tax Act discriminated against poor taxpayers by tying the forward averaging credit to the top marginal rate, Hugessen J.A. stated that "the establishment of different tax rates for different income tax brackets does not constitute discrimination on a ground enumerated in s. 15 or on any analogous ground".

S.56(1)(b), which required the inclusion of child maintenance payments in the hands of the recipient (in this case, the former wife of the payor) did not, when considered in conjunction with the corresponding deduction in s. 60(b) and in light of the requirement under family law to take the income tax position of the recipient into account, did not impose a burden on the recipient because there would be a corresponding gross-up for the amount of such tax in most instances and, because the income-splitting effect of the provisions made more resources available for the payment of maintenance.

In response to a submission that s. 122.5 discriminated against children under the age of 19 because it is only their parents who are entitled to claim the tax credit on their behalf, Létourneau J.A. found that the applicants had failed to establish any prejudice or stereotyping in these circumstances, nor any fundamental unfairness. Accordingly, the provision was not contrary to s. 15(1) of the Charter.

The exclusion from the definition of "earned income" in s. 146(1) of such sources of income as pensions, family allowances, interests and other investment income was not contrary to s. 15(1) of the Charter. The definition effectively drew a distinction among taxpayers on the basis of sources of income rather than any basis of discrimination proscribed by s. 15(1).

The limitation on the deduction of child care expenses in s. 63 of the Act did not violate s. 15(1) of the Charter in the absence of evidence that women disproportionately pay child care expenses. However, Iacobucci J. noted (p. 6026) that:

"if, for example, it could be established that women are more likely than men to head single-parent households, one can imagine that an adverse effects analysis involving single mothers might well take a different course, since child care expenses would thus disproportionately fall upon women."

The fact that s. 118(1) at the time provided a greater benefit to an unmarried couple with a child than to a married couple with a child could not be characterized as discrimination based on religion contrary to s. 15 of the Charter; nor did it interfere with either's religious belief or practice contrary to s. 2(a) of the Charter.

The more stringent requirements under the Income Tax Act for the deduction of expenses by an employee rather than a self-employed businessman (and, in particular, the alleged deductibility by businesses of fees paid to the National Citizens' Coalition) did not constitute discrimination against a group (i.e., employees) for purposes of subsection 15(1). "This huge group of taxpayers is not a 'discrete and insular minority'".

S.8(1)(m) of the Act (which establishes a $3500 limit for pension plan contributions) is a provision of general application and is not specifically directed at federally-appointed judges (who are required to contribute more than the limit to a statutory plan). S.8(1)(m) accordingly does not offend s. 15 of the Charter.

The Crown is not an "individual" for purposes of s. 15(1) and an attack under s. 15(1) on Crown prerogative powers accordingly failed.

The Attorney General's right of election in s. 239(2) does not contravene s. 15 of the Charter. S.239(2) "provides the Attorney General with sufficient flexibility to take the specific circumstances of each case into account and ensure that, in each case, the interests of justice are served."

The requirement in s. 146(2)(b)(iii) that an RRSP not provide for maturity after the end of the year in which the annuitant attains the age of 71 does not violate the Charter.

In finding that the failure of the Act to allow a deduction or tax credit for contributions to a foreign insurance plan did not represent an infringement of section 15 of the Charter, Campbell T.C.J. stated (at p. 767):

"All employed Canadian citizens are required to make CPP contributions and are entitled to a corresponding deduction ... . Citizens of this country whether of U.K. national origin or Canadian national origin are not entitled to a like deduction for contributions made to a foreign insurance plan. There is no differential treatment as nationality does not come into play."

The appellant (M), who had been a representative for an insurance company (“Industrial”) and had been treated by it as an independent contractor, appealed to the Tax Court on the basis that he had instead been employed in insurable employment for Employment Insurance purposes. At the hearing, Industrial was an intervenor and called witnesses whose testimony in French would not have been understood by M. Rather than providing M with an interpreter, the Tax Court Judge exerted pressure on Industrial's witnesses to testify in English, which counsel for Industrial communicated was problematic. The Judge also required Industrial’s counsel to make his legal arguments in English, even though this was difficult for him.

Before affirming the decision of the Federal Court of Appeal ordering a new hearing before a different judge in response to these violations of the witness’s and counsel’s language rights under s. 133 of the Constitution Act, 1867, s. 19 of the Charter and ss. 14 and 15 of the Official Languages Act (with the OLA being described at para. 25 as providing language rights that were “quasi-constitutional in nature,” Gascon and Côté JJ stated (at paras 40, 46, 48, 64 and 78):

… [T]he right at issue in this case is that of speaking in the official language of one's choice. … A person may choose to stick to a single official language or may even change his or her mind while testifying.

[B]ecause language rights are not procedural rights, the fact that a violation has had no impact on the fairness of the hearing is in principle not relevant to the remedy … . Indeed, even if there was no error in the decision on the merits, the language rights in question would be compromised if no remedy was granted

… [A] new hearing will generally be an appropriate remedy for most language rights violations … because such a violation deprives one party of the possibility of having access to Canadian justice in the official language of his or her choice. … A judge's failure to take the rights of the persons before him or her into account constitutes both an error of law and a denial of natural justice independently of the quality of his or her judgment and the absence of substantive errors.

The judge’s insistence that [Industrial’s counsel] speak English during most of his argument constitutes a flagrant violation of the lawyer’s language rights.

… [T]he order for a new hearing was fully justified. … The violations were numerous and, in some cases, serious and repeated, and they brought the administration of justice into disrepute.

In finding that the definition of "earned income" in s. 146(1) of the Act did not violate s. 20(1) of the Charter, Mahoney J.A. stated:

"While we would not wish to suggest that it is beyond the wit of the drafters of the Income Tax Act to achieve a measure of incomprehensibility that might run afoul of subsection 20(1), we do not think that paragraph 146(1)(c) has quite arrived."

A couple who operated a restaurant in B.C. have been awarded $1.7 million in damages (including $750,000 in punitive damages) against CRA for malicious prosecution. After so finding, Punnett also found (at paras 289, 336 and 337):

As I have found the CRA initiated the prosecution of the plaintiffs when it was wrongful to do so, their s. 7 Charter rights have been breached. Mr. Kendal suppressed exculpatory evidence from the defence, and created inculpatory evidence in an effort to secure a conviction. The CRA used the powers of the State in the form of a criminal prosecution to wrongfully and maliciously prosecute the Samaroos.

The Court in Vancouver (City) v. Ward, 2010 SCC 27, found that s. 24(1) is broad enough to encompass claims for damages as a result of Charter breaches.

…As I have awarded the plaintiffs punitive damages, I decline to order damages under s. 24(1) of the Charter.

Where the Crown has made an illegal seizure, the "heavy burden" upon it to justify retention of the seized documents, and copies and extracts thereof, cannot be satisfied by a simple assertion that the things seized are needed for a prosecution.

Although a Court has the discretion under s. 24(1) to award damages to a taxpayer respecting an unconstitutional seizure by the Crown, such an award was not appropriate here where the Crown had made an unconstitutional seizure in good faith. The appropriate sanction was to order a return of the taxpayer's documents (but not documents seized at the premises of his accountant) to him.

Where a seizure of records was unlawful by reason of S.8 of the Charter, the records improperly seized should be returned even if they may be required as evidence in subsequent proceedings.

S.24 cannot be invoked with retrospective effect, and accordingly cannot apply to an alleged seizure that took place before 1982.

Although in an application under the Judicial Review Procedure Act (Ontario) for an order in the nature of certiorari the applicant is generally precluded from adducing evidence to supplement the record, it would appear that such a restriction would not apply to a s. 24 remedy for search or seizure contrary to s. 8 of the Charter.

A CRA auditor had a strong suspicion that the audited company (MMFL) had been paying for substantial construction work on its individual shareholder’s home, but she did not transfer the file over to criminal investigations until eight months later when she encountered evidence suggesting that invoices on hand at MMFL from the building contractor had been fraudulently altered to disguise that this was going on. Greene J found that this did not engage the Jarvis doctrine based on evidence of the CRA auditor that, up until that point, she was exploring s. 163(2) civil penalties rather than considering it to be a criminal matter. Accordingly, the evidence subsequently seized pursuant to a search warrant after the transfer of the file to criminal investigations was not excluded by Greene J on Jarvis grounds.

However, there was a deficiency in the search warrant. It authorized CRA to seize records and data storage units, but did not authorize CRA to conduct a thorough search of the data storage units. However, Greene J found that s. 24(2) permitted this evidence seized contrary to s. 8 of the Charter to be used at trial since the admission of such evidence would not put the “administration of justice into disrepute.” In particular, “the CRA investigators honestly believed that the warrant permitted the search of the computers and the ability to forensically examine the computers” (para. 79) and since the “CRA officers limited their search to banking records, tax forms, invoices and similar documents,” “the privacy interest was arguably reduced” (para. 80).

Following a seizure conducted in good faith of documents of the taxpayer pursuant to s. 231.3 of the Act, that provision was found in the Baron case to be unconstitutional. The Department officials, after having unsuccessfully tried to obtain a further warrant, had agreed to return the documents in question to the taxpayer's law firm. The officials then "concocted a scheme whereby they would not really return the documents but would hand them over temporarily and then reseize them immediately pursuant to a new legal warrant" (which they obtained without informing the Court of the relevant circumstances).

At issue were reassessments of the taxpayer for unreported income. Although the conduct of the officials was "not so 'flagrant and egregious' as to support the extreme remedy of vacating these reassessments in light of the minimal importance of the additional evidence obtained by these violations" (p. 6344), the Department was directed to exclude from the reassessments the amount of additional unreported income discovered as a result of the second seizure. Linden J.A. had previously noted (at p. 6342) that "the use of tainted evidence in a criminal proceeding is a much more serious matter than in a civil proceeding".

The admission of evidence seized pursuant to seizure under s. 231.3 would not bring the administration of justice into disrepute because, when the warrants were originally obtained, there was no suggestion that there might be a constitutional problem with s. 231.3, full and complete disclosure was made to the issuing judge and the Revenue Canada investigators acted appropriately.

Documentary evidence that the Crown had seized pursuant to a search warrant granted pursuant to s. 231.3 of the Act prior to the decision of the Supreme Court of Canada in the Baron case and that the Department had unsuccessfully applied to re-seize pursuant to 487 of the Criminal Code was found to be inadmissible.

The Minister made what was subsequently held to be an unconstitutional seizure pursuant to the former s. 231(1)(d) and was ordered to return the seized documents. The admission of some of this evidence to support a fresh application for a warrant pursuant to s. 231.3 would not bring the administration of justice into disrepute.

S.24(2) cannot apply to exclude illegally obtained evidence where the ilegality did not entail infringement of the Charter.

The secretive photocopying by a tax auditor of a document of the taxpayer and the production of that document at trial would not constitute conduct that 'shocks the community', and thus would not bring the administration of justice into disrepute. (Obiter)

The appellants, all status Indians, were gasoline retailers on the Kahnawake Reserve who did not charge or collect taxes under the Excise Tax Act, Quebec Sales Tax Act or Quebec Fuel Tax Act on their gasoline sales notwithstanding that most of their customers were not Indian.

After finding that s. 35 of the Constitution Act, 1982 did not accord an unfettered right to trade, Hesler CJQ found further found that the Royal Proclamation of 1763 did not provide an Aboriginal right to free and unfettered trade (protected from derogation by s. 25 of the Constitution Act, 1982), stating (at para 63):

Its objective was to protect them from the abuses of certain unscrupulous merchants, by obliging the latter to obtain a licence. Nothing in the text of the Royal Proclamation or its historical context gives rise to the conclusion that British Crown promised Aboriginals an unrestricted right to trade that was exempt from regulation of any kind.