Date: 19990921
Docket: A-315-99
| CORAM: MARCEAU J.A. |
DESJARDINS J.A.
LÉTOURNEAU J.A.
BETWEEN:
JEAN-ALAIN BISAILLON
and
HYPNAT LTÉE
and
HYPNAT LTÉE, COURTIER,
Appellants
(Plaintiffs),
AND:
HER MAJESTY THE QUEEN
and
MINISTER OF NATIONAL REVENUE
and
CAROLE GOUIN, in her capacity as
Director of the Montreal Taxation Services Office,
Revenue Canada,
Respondent
(Defendants),
and
LAURENTIAN BANK OF CANADA,
Respondent
(Defendant).
Hearing held at Montréal, Quebec on Tuesday, September 21, 1999
Judgment from the bench at Montréal, Quebec on Tuesday, September 21, 1999
REASONS FOR JUDGMENT OF THE COURT BY: LÉTOURNEAU J.A.
Date: 19990921
Docket: A-315-99
| CORAM: MARCEAU J.A. |
DESJARDINS J.A.
LÉTOURNEAU J.A.
BETWEEN:
JEAN-ALAIN BISAILLON
and
HYPNAT LTÉE
and
HYPNAT LTÉE, COURTIER,
Appellants
(Plaintiffs),
AND:
HER MAJESTY THE QUEEN
and
MINISTER OF NATIONAL REVENUE
and
CAROLE GOUIN, in her capacity as
Director of the Montreal Taxation Services Office,
Revenue Canada,
Respondent
(Defendants),
and
LAURENTIAN BANK OF CANADA,
Respondent
(Defendant).
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the bench at Montréal, Quebec
on Tuesday, September 21, 1999)
LÉTOURNEAU J.A.
[1] We consider that the motions judge, Denault J., made no error in exercising his discretion that would warrant our intervention when he dismissed the interim application made by the appellants to stay execution of a requirement to provide information from the Minister of National Revenue pursuant to s. 231.2(1) of the Income Tax Act (R.S.C. 1985, c. 1- "the Act"). That section reads:
| ARTICLE 231.2: Production de documents ou fourniture de renseignements. (1) Malgré les autres dispositions de la présente loi, le ministre peut, sous réserve du paragraphe (2) et, pour l'application et l'exécution de la présente loi, par avis signifié à personne ou envoyé par courrier recommandé ou certifié, exiger d'une personne, dans le délai raisonnable que précise l'avis : a) qu'elle fournisse tout renseignement ou tout renseignement supplémentaire, y compris une déclaration de revenu ou une déclaration supplémentaire; b) qu'elle produise des documents |
SECTION 231.2: Requirements to provide documents or information. (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as is stipulated in the notice, (a) any information or additional information, including a return of income or a supplementary return; or (b) any document |
[2] The motions judge properly came to the conclusion that in the action brought by the appellants there were no serious questions of law to be tried.
[3] In fact, McKinlay Transport Ltd.,1 a judgment by the Supreme Court of Canada, applies in the case at bar and disposes of the constitutional arguments made by the appellants. In that case the Supreme Court concluded that:
| (a) the Act is essentially a regulatory measure; |
| (b) s. 231(3) (the predecessor of s. 231.2(1)) is not criminal or quasi-criminal law; |
| (c) application of that subsection constitutes a seizure since it infringes the individual"s expectations of privacy; |
| (d) only unreasonable seizures contravene s. 8 of the Charter of Rights and Freedoms; |
| (e) seizure in an administrative and regulatory context must be distinguished from seizure in a criminal or quasi-criminal situation; |
| (f) in a taxation system based on the principle of self-reporting and self-assessment, the Minister of National Revenue has to have broad powers to audit taxpayers' returns and inspect records which may have been used to prepare those returns; |
| (g) the Minister of National Revenue must be able to exercise these powers whether or not he has reasonable grounds to believe that a particular taxpayer has breached the Act; |
| (h) s. 231(3) provides the least intrusive means by which effective monitoring of compliance with the Act can be carried out; and |
| (i) the taxpayer's privacy interest with regard to documents which may be relevant in income tax returns is relatively low in relation to the Minister. |
[4] In our opinion, it is not a serious argument for the appellants to say that a requirement to provide documents or information, like the one at bar, infringes the constitutional provisions of ss. 7 and 8 of the Charter when that requirement is made as part of a genuine administrative investigation for the purpose of recovering money owed and with a real objective of collecting information in that connection. Of course, it cannot be used as a stratagem for the covert purpose of obtaining information to be used in criminal proceedings.
[5] Having said that, the fact that the Minister has reasonable grounds to believe that an offence may have been committed or the fact that the information obtained pursuant to the ministerial requirement may eventually be used for other than the administrative or civil purpose for which it was initially requested does not have the effect of distorting the initial requirement or its purpose, transforming the administrative investigation into a criminal one and preventing the information requested from being obtained and used to ensure compliance with the Act at the civil and administrative level.
[6] This is especially true as in the case at bar the requirement of information made by the Collections Section of the Department of National Revenue was made to a third party, the Laurentian Bank of Canada, and intended both to enable the Minister to determine whether the substantial amounts (1.5 million) which Hypnat Ltée, Courtier admitted owing to Hypnat Ltée were paid to the latter despite the peremptory demand for payment made to the former by the Minister, and despite the action taken by the Department in 1998 to seize this account receivable, and even more importantly, to audit the debtor's financial position. We will return to this last point below. The requirement made pursuant to s. 231.2(1) was made squarely and ostensibly as part of a proceeding to recover the tax debt which the Department had against Hypnat Ltée.
[7] The appellants argued that the information so obtained would be used by the Minister in proceedings of a criminal nature already initiated pursuant to s. 239(1)(a) and (d) of the Act against two of them, Mr. Bisaillon and Hypnat Ltée, for the 1991 and 1992 taxation years in the case of Hypnat Ltée and 1992 for Mr. Bisaillon. The evidence in support of these arguments seems to the Court to be at best speculative.
[8] First, the debt which was the subject of a requirement of information concerns only Hypnat Ltée, Courtier and relates to 1994, a taxation year subsequent to those which had previously given rise to the prosecutions. Apart from the speculations of the appellants, it is not clear that this requirement, which was essentially intended to establish for purposes of collecting the money owed whether the debtor was solvent and whether other execution machinery ought to be used, would be of any value in prosecuting the offences charged. There was no evidence in the record of any nexus between this requirement made to Hypnat Ltée, Courtier, which it should be noted was not the subject of any criminal prosecution, and the criminal charges laid against Mr. Bisaillon and Hypnat Ltée. There is nothing to suggest, still less to prove, that the administrative investigation under way is only a device used by the Department to obtain further evidence in the criminal proceedings. Consequently, there is nothing to rebut the presumption that the said investigation and resulting measures to collect a duly established debt are legitimate.
[9] Further, if as the appellants alleged and feared the Department's Investigations Branch were to see fit to use the said information in the criminal proceedings, the appellants charged might then assert their constitutional rights at the time the infringement was imminent and so oppose their use in that forum.2 The mere possibility that wrongful use might be made of information obtained pursuant to an administrative investigating power exercised in accordance with the Act clearly cannot compromise the existence of that power or prevent or invalidate its exercise.
[10] Similarly, we consider that there is no merit in the appellants' argument that the requirement of information addressed to the Laurentian Bank of Canada is nothing but an illegal "fishing expedition". McKinlay Transport Ltd., supra, and Richardson v. Minister of National Revenue3 recognized that it is often difficult for the Minister making a requirement for information or documents to know exactly what documents he is looking for, and so to describe them with great precision and an abundance of detail.
[11] First, the Laurentian Bank of Canada, which was required to produce the documents, did not object that the requirement was so vague and imprecise that it would have difficulty complying, or be unable to do so. Second, in the case at bar the preremptory demand for payment made to Hypnat Ltée, Courtier amounted to a garnishment, as Revenue Canada was exercising the rights of Hypnat Ltée in respect of Hypnat Ltée, Courtier. The purpose of the requirement of information that followed was thus to determine the financial situation and solvency of the third party, and seen from this viewpoint and that of collection of the tax debt it is neither vague nor improper.
[12] Finally, the requirement of information pursuant to s. 231.2(1) meets each of the criteria of validity laid down in Richardson:
| (a) the Minister is acting for a legitimate purpose specified and authorized by the Act, namely the collection of a due and payable tax debt; |
| (b) the requirement of information relates to the tax liability of a person (Hypnat Ltée), that liability is under administrative investigation and the obtaining of information is necessary in general to ensure compliance with the Act, and in particular the collection of money owed to Revenue Canada; |
| (c) the person from whom the information is sought does not have to be the one whose liability to tax is under investigation; and |
| (d) the requirement is valid even though the giving of the information may disclose private transactions involving persons who are not under investigation and may not be liable to tax. |
[13] As there are no serious questions of law to be tried in the action brought by the appellants in case T-291-99, the Court considers that the motions judge was right to deny the appellants' motion for a stay and that the appeal at bar should be dismissed with costs.
| Gilles Létourneau J.A. |
Certified true translation
Bernard Olivier, LL. B.
| Cour d'appel fédérale Date: 19990921 Docket: A-315-99 Between: JEAN-ALAIN BISAILLON and HYPNAT LTÉE and HYPNAT LTÉE, COURTIER, Appellants (Plaintiffs), AND: HER MAJESTY THE QUEEN and MINISTER OF NATIONAL REVENUE and CAROLE GOUIN, in her capacity as Director of the Montreal Taxation Services Office, Revenue Canada, Respondent (Defendants), AND LAURENTIAN BANK OF CANADA, Respondent (Defendant). REASONS FOR ORDER |
FEDERAL COURT OF CANADA
APPEAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT No.: A-315-99
STYLE OF CAUSE: JEAN-ALAIN BISAILLON,
HYPNAT LTÉE,
HYPNAT LTÉE, COURTIER,
Appellants
(Plaintiffs),
AND:
HER MAJESTY THE QUEEN
and
MINISTER OF NATIONAL REVENUE
and
CAROLE GOUIN, in her capacity as
Director of the Montreal Taxation Services Office,
Revenue Canada,
Respondent
(Defendants),
AND
LAURENTIAN BANK OF CANADA,
Respondent
(Defendant).
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: September 21, 1999
REASONS FOR JUDGMENT OF THE COURT (MARCEAU, DESJARDINS AND LÉTOURNEAU JJ.A.)
READ FROM THE BENCH BY: LÉTOURNEAU J.A.
DATED: September 21, 1999
APPEARANCES:
Marc-André Boutin for the appellant
| Maria Grazia Bittichesu for the respondent Her Majesty the Queen, Minister of National Revenue, Carole Gouin, in her capacity as Director of the Montréal Taxation Services Office, Revenue Canada |
SOLICITORS OF RECORD:
Goodman, Phillips & Vineberg for the appellant
Montréal, Quebec
| Morris Rosenberg Deputy Attorney General of Canada Ottawa, Ontario |
for the respondent Her Majesty the Queen, Minister of National Revenu, Carole Gouin in her capacity as Director of the Montréal Taxation Services Office, Revenue Canada |
No one for the respondent Laurentian Bank of Canada
__________________1 R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627, at 641, 642, 643, 647, 648, 649 and 650.
2 Del Zotto v. Canada, [1997] 3 F.C. 40, at 63 (F.C.A.), dissenting opinion of Strayer J.A. upheld by the Supreme Court of Canada, 99 D.T.C. 3029.
3 [1984] 1 S.C.R. 614, at 625. See also Gorenko v. R., [1997] R.J.Q. 2482 (S.C.), affirmed by Quebec Court of Appeal, C.A.M. No. 500-10-001098, February 23, 1999. Application for leave to appeal to the Supreme Court of Canada filed.