T-895-77
Burnac Corporation Limited, Burnac Realty
Investors Limited, Burnac Mortgage Investors
Limited and Joseph Burnett (Applicants)
v.
Minister of National Revenue (Respondent)
Trial Division, Mahoney J.—Toronto, November
7; Ottawa, November 18, 1977.
Income tax — Preliminary objection in interlocutory motion
in certiorari application Warrant for search and seizure
authorized pursuant to s. 231(4) of the Income Tax Act —
Contended authorization lacked particularity and approved
for a purpose other than permitted by the section — Whether
or not authorization must be limited to evidence pertinent to
the violations claimed by the Minister — Income Tax Act,
S.C. 1970-71-72, c. 63, s. 231(4),(5).
In an application for certiorari, preliminary objections
advanced on the return of interlocutory motions alleged fatal
defects in the Judge's authorization for search and seizure
pursuant to section 231(4),(5) of the Income Tax Act. The
record established two possible defects: (1) a lack of par
ticularity and (2) approval for a purpose not authorized by
section 231(4). It is contended that under section 231(4), an
authorization must be limited to evidence pertinent to the
violation or violations that the Minister determined to have
been or likely to have been committed.
Held, the application is dismissed. The authorization is not
deficient in particularity in any respect raised by the applicants.
Reasonable and probable grounds for respondent's believing
both that a number of violations of the Act or Regulations had
been committed and that what was authorized to be searched
and seized for might afford evidence were disclosed in the
affidavits. What the Minister must believe is that there has
been, or is likely to be, a violation of the Income Tax Act or
Regulations and what he may authorize is a search of "any
building, receptacle or place" for "things that may afford
evidence as to the violation of any provision" of the Act or
Regulations and the seizure of "any such" thing. The section
contemplates, in clear and unambiguous language, that an
authorization may extend to "evidence as to the violation of
any provision" of the Act or Regulations, not only the violation
initially.
Granby Construction v. Milley 74 DTC 6543, referred to.
Canadian Bank of Commerce v. Attorney General of
Canada [1962] S.C.R. 729, referred to.
APPLICATION.
COUNSEL:
I. Outerbridge, Q.C., and R. Carr for
applicants.
Arthur C. Pennington and Geoffrey J. R.
Dyer for respondent.
SOLICITORS:
Outerbridge, Manning & Mueller, Toronto,
for applicants.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for order ren
dered in English by
MAHONEY J.: The applicants seek, in these
proceedings, an order to remove into this Court
and quash an approval given February 28, 1977 by
His Honour Judge Cornish of the County Court of
the Judicial District of York pursuant to subsec
tion 231(4) of the Income Tax Act'. Of immediate
concern is the preliminary objection taken by the
applicants to three motions by the respondent
seeking cross-examination of the deponents of
affidavits filed in support of the certiorari
application.
Judge Cornish's approval was granted February
28, 1977. The seizure was effected March 1 and
these proceedings commenced March 7. In support
S.C. 1970-71-72, c. 63.
231. ...
(4) Where the Minister has reasonable and probable
grounds to believe that a violation of this Act or a regulation
has been committed or is likely to be committed, he may, with
the approval of a judge of a superior or county court, which
approval the judge is hereby empowered to give on ex parte
application, authorize in writing any officer of the Department
of National Revenue, together with such members of the Royal
Canadian Mounted Police or other peace officers as he calls on
to assist him and such other persons as may be named therein,
to enter and search, if necessary by force, any building, recep
tacle or place for documents, books, records, papers or things
that may afford evidence as to the violation of any provision of
this Act or a regulation and to seize and take away any such
documents, books, records, papers or things and retain them
until they are produced in any court proceedings.
(5) An application to a judge under subsection (4) shall be
supported by evidence on oath establishing the facts upon
which the application is based.
of their certiorari application, the applicants filed
a number of affidavits and, during the early stages
of cross-examination on those, the application,
originally returnable March 21, was adjourned on
consent. It was brought on before Mr. Justice
Grant on June 20 and further adjourned sine die
with directions as to the completion of the cross-
examinations of three deponents: the applicant,
Burnett; Charles M. Zeifman and Zoltan Roth,
the latter being a resident of Puerto Rico. The
cross-examinations of Burnett and Zeifman con
tinued under Mr. Justice Grant's directions until,
for a variety of reasons, the respondent found it
expedient to launch motions seeking orders requir
ing the re-attendance of Burnett and Zeifman at
their cross-examinations and, under Rule 477, pro
viding for Roth's cross-examination in Puerto
Rico. On the return of these motions, the prelim
inary objection which is the subject of this decision
was raised. It is founded on allegations of fatal
defects in the authorization approved by Judge
Cornish and in the process by which his approval
was obtained which render further cross-examina
tion on the affidavits redundant and an abuse of
process.
I am satisfied that, in considering this objection,
I can properly take account only of facts which
appear on the record of the approval, that is to say,
the approval itself, the authorization approved
under subsection 231(4) and the evidence submit
ted in compliance with subsection 231(5). The
latter is an affidavit of Gary E. C. Baker, sworn
February 25, 1977. It seems self-evident that if
"the warrant must fall in any event by reason of
the errors inherent within both the form of the
order and the circumstances under which it was
granted" to quote the applicants' written argu
ment, page 2, that cannot be established by facts
that came into existence after the "warrant" or
"order" was issued or made or, to state it correct
ly, as I see it, after the Judge's approval under
subsection 231(4) was given. It seems equally self-
evident that where that argument is advanced with
a view to avoiding further cross-examination on
affidavits, recourse cannot be had to facts averred
in those affidavits.
The applicants advance eight reasons why the
approval ought to be quashed. Some are really
restated versions of others and some, while they
may be matters of substance to be dealt with at a
later stage in these proceedings, cannot be dis
posed of at this juncture because they are not
established by the record. These are:
1. The alleged omission to disclose material
facts to Judge Cornish in ex parte proceedings
which, if not regarded by him as constituting
one or more shams, might have led him to refuse
the approval on the basis of a different conclu
sion as to the nature of certain of the applicants'
transactions than that presently entertained by
the respondent.
2. The allegations that what was seized and is
being retained pursuant to the authorization
exceeded what could have been authorized
under subsection 231(4) and what was, in fact,
so authorized, and the further allegation that
the seizure was effected elsewhere than specifi
cally authorized.
3. The allegation that the whole process of
cross-examination on the affidavits and its con
tinuation, including the pending motions in aid
thereof, has become, per se, an abuse of process.
The following allegations remain and can be dealt
with on the record: firstly, that the authorization
approved is fatally deficient because of lack of
particularity and, secondly, that the authorization
approved was for a purpose not authorized by
subsection 231(4).
The document entitled "Authorization to Enter
and Search", after a style of cause and the forego
ing title reads, in its entirety, as follows:
The Director General, Special Investigations Directorate,
Department of National Revenue, Taxation, hereby authorizes
G. E. C. BAKER, R. F. WELTON, R. G. COX, B. BROOME-SMITH, J.
T. MARLEY, E. C. DRAKICH, R. F. THOMPSON, and D. C. WOOD,
officers of the Department of National Revenue, or any of
them, together with such members of the Royal Canadian
Mounted Police or other peace officers as they, or any of them,
may call on to assist them, or any of them, to enter and search,
if necessary by force, the following premises and any recepta
cles or places therein:
(a) The business premises and offices of Burnac Corporation
Ltd., Burnac Realty Investors Ltd., Burnac Mortgage Inves
tors Ltd. and Joseph Burnett and all storage facilities
occupied or controlled by them at 65 Queen Street West, in
the Municipality of Metropolitan Toronto, Ontario.
(b) Any vehicles, owned, rented, leased or controlled by
Burnac Corporation Ltd., Burnac Realty Investors Ltd.,
Burnac Mortgage Investors Ltd., or Joseph Burnett.
for documents, books, records, papers or things that may afford
evidence as to the violation of any provision of the Income Tax
Act or a regulation and to seize and take away any such
documents, books, records, papers or things and retain them
until they are produced in any court proceedings.
It is then dated and signed by the said Director
General. No exception is taken to his au
thority to have given it.
The authorization is not, in fact, deficient in
particularity in any respect raised by the appli
cants. It is reasonably specific as to what is author
ized to be searched for and seized and where that
is authorized to be done.
In the result, I reject the preliminary objection
on the basis that the authorization is deficient for
lack of particularity on its face and turn to the
allegation, that it was obtained for a purpose not
authorized by subsection 231(4). As to that, a
careful study of Baker's affidavit discloses reason
able and probable grounds for the respondent to
believe that a number of violations of the Act or
Regulations had been committed and that what
was authorized to be searched for and seized might
afford evidence thereof.
The applicants' argument is that, under subsec
tion 231(4), an authorization must be limited to
evidence pertinent to the violation or violations
which the Minister has determined have been or
are likely to be committed. All of the authorities
cited in support of this proposition dealt with
search warrants under the Criminal Code 2 . Form
5, authorized by subsection 443(3), provides for
inclusion of a description of the alleged offence on
its face.
The basic schemes of subsections 231(4) and (5)
of the Income Tax Act and the comparable pro
vision of the Criminal Code—paragraph
443(1)(b)—are but superficially similar. Both
require the formation of an initial belief that a
factual situation exists and both require that the
belief be predicated on reasonable grounds. What
the justice must believe is that evidence with
respect to the commission of a crime "is in a
building, receptacle or place" and what he can
authorize is a search of "the building, receptacle
or place" for "such thing" and the seizure of "it".
What the Minister must believe is that there has
been, or is likely to be, a violation of the Income
Tax Act or Regulations and what he may author
ize is a search of "any building, receptacle or
place" for "things that may afford evidence as to
the violation of any provision" of the Act or Regu
lations and the seizure of "any such" thing.
The principle invoked on the myriad occasions,
over the years, on which the courts have con
2 R.S.C. 1970, c. C-34, s. 443.
443. (1) A justice who is satisfied by information upon oath
in Form 1, that there is reasonable ground to believe that there
is in a building, receptacle or place
(a) anything upon or in respect of which any offence against
this Act has been or is suspected to have been committed,
(b) anything that there is reasonable ground to believe will
afford evidence with respect to the commission of an offence
against this Act, or
(e) anything that there is reasonable ground to believe is
intended to be used for the purpose of committing any
offence against the person for which a person may be arrest
ed without warrant,
may at any time issue a warrant under his hand authorizing a
person named therein or a peace officer to search the building,
receptacle or place for any such thing, and to seize and carry it
before the justice who issued the warrant or some other justice
for the same territorial division to be dealt with by him
according to law.
(3) A search warrant issued under this section may be in
Form 5.
sidered the legality of the issue and use of search
warrants, is that such a search and seizure is
necessarily a trespass on all that is embraced in the
concept: a man's home is his castle, and that it is
the will of Parliament, in authorizing that trespass,
that its prescription be strictly construed by the
courts and observed by those authorized. That
underlying principle applies equally to authoriza
tions under subsection 231(4) but it is no basis for
importation into that subsection of express require
ments of the Criminal Code as to search warrants,
such as the specification of the alleged offence and
the limitation of the search and seizure to evidence
of that offence, in the face of the plain intent of
subsection 231(4). It contemplates, in clear and
unambiguous language, that an authorization may
extend to "evidence as to the violation of any
provision"—the emphasis mine—of the Act or
Regulations, not only the violation initially
apprehended by the Minister.
While I have been unable to find au
thority dealing with this exact point, the dicta in
Granby Construction v. Milley 3 , a decision of the
British Columbia Court of Appeal and of both the
Chief Justice of Canada and the Chief Justice of
Ontario in Canadian Bank of Commerce v. A. G.
of Canada 4 as to the coercive nature of the power
Parliament has given the respondent under section
231, formerly 126, of the Act, power which the
Governor in Council may authorize others to exer
cise, remain pertinent. I will not repeat them but
merely observe that, while the 1971 amendments'
added to subsection 231(4) the requirement that
the Minister have reasonable and probable
grounds to believe that a violation has or is about
to be committed before authorizing a search and
seizure, the stringency of the authorization, once
properly given and approved, was in no way
modified.
3 74 DTC 6543 (B.C.C.A.) reversing 74 DTC 6300
(B.C.S.C.).
4 [1962] S.C.R. 729 affirming 62 DTC 1014 (Ont. C.A.) and
61 DTC 1264 (Ont. S.C.).
5 S.C. 1970-71-72, c. 63.
ORDER
The preliminary objections are denied. The
respondent may bring on his motions, which have
been adjourned sine die pending disposition of the
preliminary objections, on two days' notice to the
applicants.
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