A-406-81
James Richardson & Sons, Limited (Appellant)
(Applicant and Plaintiff)
v.
Minister of National Revenue (Respondent)
(Respondent and Defendant)
Court of Appeal, Urie, Le Dain JJ. and Lalande
D.J.—Winnipeg, March 9; Ottawa, May 11, 1982.
Judicial review — Prerogative writs — Certiorari —
Applications for certiorari and action for declaration —
Income tax — Minister requested from appellant broker
records or information concerning trading transactions of all
its customers in commodities futures market to check on
compliance with Income Tax Act — S. 231(3) of Act author
izes Minister to require any information or production of
documents for purposes related to administration or enforce
ment of Act — Appellant initially provided information on
"test" basis to enable Department to determine feasibility of
project — In 1979 Department decided to proceed, but appel
lant refused to provide information as not related to genuine
and serious inquiry into tax liability of specific person, and
because information not requested from other security houses,
thus endangering appellant's reputation — In 1980 Depart
ment issued requirements for production of records — Wheth
er requirements issued for purpose related to administration or
enforcement of Act — The Canadian Bank of Commerce v.
The Attorney General of Canada relied upon by appellant —
Appellant's argument that such purpose not met unless infor
mation relates to investigation of tax liability of specific
person or persons — Requirement for information relating to
all appellant's clients allegedly not requirement relating to
specific persons, meaning persons identified by name —
Defendant admits not trying to obtain information concerning
tax liability of specific person — Appellant also submits that
information about class of persons only available on informa
tion returns filed pursuant to regulation made under s.
221(1)(d) of Act — Whether s. 231(3) ultra vires — Whether
requirements invalidated because issued on behalf of Revenue
Canada Taxation, non-existent entity — Whether require
ments invalidated because requiring compliance "without
delay" instead of within reasonable time as stipulated in s.
231(3) — Appeal dismissed — Verification of compliance with
Act is purpose related to administration or enforcement of Act
— Discussion of meaning of "specific person or persons",
`genuine and serious inquiry" and "under investigation" in
Canadian Bank of Commerce case — Discussion of meaning of
"information returns" in s. 221(1)(d) — S. 231(3) intro vires
federal government under s. 91(3) of B.N.A. Act, raising of
money by any mode or system of taxation, which involves what
is related to administration and enforcement of taxation legis
lation — Body of requirements and authorizing signatures
make it clear that requirements issue from Department of
National Revenue — Requirements not invalidated by words
"without delay" — Question of fact whether appellant given
reasonable time for compliance, which in any case affects
compliance issue and not validity of requirements — Income
Tax Act, S.C. 1970-71-72, c. 63, ss. 221(1 )(d), 231(3).
The Trial Division [[1983] 1 F.C. 3] dismissed applications
for certiorari and an action for a declaration challenging the
validity of requirements for information, issued under subsec
tion 231(3) of the Income Tax Act. Subsection 231(3) provides
that the Minister may, for any purposes related to the adminis
tration or enforcement of the Act, require from any person any
information or production of documents. The Minister request
ed from appellant broker records or information concerning
trading transactions of all its customers in the commodities
futures market in order to check on compliance with the Act.
The appellant agreed to provide one month's commodities
statement file for test purposes in 1977 provided that the
information would be used "only for testing purposes" and that
"other investment dealers have been required to provide similar
information". When the Department decided to proceed with
the "Income Tax Compliance Project" in 1979, the appellant
refused to provide the information requested on the ground that
it was not related to a genuine and serious inquiry into the tax
liability of a specific person and because information had not
been requested from other security houses, thus endangering
appellant's reputation. The Department issued two "Require-
ments for Production of Records" in 1980 which the appellant
attacks on four grounds: (1) The requirements were not issued
for a purpose related to the administration or enforcement of
the Act as required by subsection 231(3). The appellant relies
on The Canadian Bank of Commerce v. The Attorney General
of Canada, [1962] S.C.R. 729 to support the proposition that a
requirement for information under subsection 231(3) is not for
a purpose related to administration or enforcement of the Act
unless the purpose is to obtain information that is relevant to
investigation of tax liability of some specific person or persons.
A requirement for information concerning all clients of the
appellant engaged in commodity trading is allegedly not a
requirement related to some specific person or persons, if those
words are taken to mean particular persons identified by name,
and not all persons of a certain class. The defendant admits
that it was not trying to obtain information concerning the tax
liability of a specific person or persons. Furthermore, the
appellant contends that information of the kind sought with
respect to a whole class of persons could only be obtained by an
information return provided for by regulation made by the
Governor in Council pursuant to paragraph 221(1)(d) of the
Act. Paragraph 221(1)(d) permits the Governor in Council to
make regulations requiring any class of persons to make infor-
mation returns respecting any class of information required in
connection with assessments under the Act. (2) Subsection
231 (3) is ultra vires if it purports to authorize requirements for
information of the scope and purpose in the present case. (3)
The requirements are invalid because they were issued on
behalf of "Revenue Canada Taxation", a non-existent entity.
(4) The requirements are invalid because they do not stipulate
a reasonable time for compliance as required by subsection
231(3).
Held, the appeal is dismissed. (1) The requirements were
issued to verify whether there had been compliance with the
Income Tax Act, a purpose related to the administration or
enforcement of the Act. The Canadian Bank of Commerce case
does not purport to treat a genuine and serious inquiry into tax
liability of some specific person or persons as the only valid
purpose under subsection 231(3). In any event, this case may
not be distinguishable from The Canadian Bank of Commerce
case. In the majority judgment, the words "some specific
person or persons" are understood as referring not to named
persons, but merely to existing, identifiable persons. A refer
ence to all of the commodity trading customers of the appellant
comes within this meaning of the words. As to the nature of the
inquiry or investigation, it is not clear whether the references in
The Canadian Bank of Commerce case to the tax liability of
specific persons being "under investigation", meant that the
Department had reason to believe that specific persons had
attempted to evade payment of tax, or merely that the Depart
ment sought to determine whether specific persons had com
plied with the Act. There may be a genuine and serious inquiry
into tax liability without the Department necessarily having
reason to believe that specific persons have attempted to evade
payment of tax. Once the requirements were issued, the
Department was clearly proceeding with the investigation con
templated during the "test period". The requirements repre
sented a genuine and serious inquiry to determine from the best
source of information available whether there had been compli
ance with the Act. As to the supporting argument that informa
tion of the kind sought could only be obtained by an informa
tion return provided for by regulation made pursuant to
paragraph 221(1)(d), what is generally contemplated by an
information return is a report of a payment or receipt that is
taxable. The information sought by the requirements is not a
report of payments by appellant to its customers, but a record
of trading transactions of its customers, from which income of
its customers, as reported in their tax returns may be verified.
(2) The contention that subsection 231 (3) is ultra vires con
flicts with the suggestion that the Governor in Council could
require that such information be provided by an information
return. If the purpose for which the information is required is
related to the administration or enforcement of the Act, then
subsection 231(3) falls within the legislative authority of the
Parliament of Canada under head 3 of section 91 of the B.N.A.
Act, the raising of money by any mode or system of taxation,
which necessarily involves what is related to the administration
and enforcement of taxation legislation. (3) It is clear from the
body of the requirements that they issue from the Department
of National Revenue. They are also signed by an official of the
Department of National Revenue. (4) Use of the words "with-
out delay" in the requirement cannot invalidate it. The stipula
tion of compliance "without delay" must be seen in light of the
fact that appellant was on notice that the Department was
seeking this information in December 1979. Whether a reason
able time for compliance was allowed before appellant was
treated as being in default is a question of fact that affects the
issue of whether there has been compliance or non-compliance,
but not the validity of the requirement.
CASE JUDICIALLY CONSIDERED
CONSIDERED:
The Canadian Bank of Commerce v. The Attorney Gen
eral of Canada, [1962] S.C.R. 729.
APPEAL.
COUNSEL:
W. C. Kushneryk for appellant.
Brian J. Meronek and Brian Hay for
respondent.
SOLICITORS:
Pitblado & Hoskin, Winnipeg, for appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
rendered in English by
LE DAIN J.: This is an appeal from a judgment
of the Trial Division [[1983] 1 F.C. 3] which
dismissed applications for certiorari and an action
for a declaration challenging the validity of
requirements for information under subsection
231(3) of the Income Tax Act, S.C. 1970-71-72, c.
63, which is as follows:
231... .
(3) The Minister may, for any purposes related to the
administration or enforcement of this Act, by registered letter
or by a demand served personally, require from any person
(a) any information or additional information, including a
return of income or a supplementary return, or
(b) production, or production on oath, of any books, letters,
accounts, invoices, statements (financial or otherwise) or
other documents,
within such reasonable time as may be stipulated therein.
The appeal involves two requirements addressed
to the appellant broker for records or information
concerning the trading transactions of all its cus
tomers in the commodities futures market, one on
May 8, 1980 and the other on October 8, 1980.
The requirement of May 8 is the subject of one
application for certiorari (Court File No. T-2478-
80), and the requirement of October 8 is the
subject of another (Court File No. T-5461-80).
The validity of both requirements is also chal
lenged by an action for a declaration (Court File
No. T-5580-80). For greater procedural or juris
dictional certainty the appellant also attacked the
requirements directly in this Court by section 28
applications (Court Files A-317-80 and A-731-
80). With what appears to have been consent, or at
least without objection, the applications for certio-
rari and the action for a declaration were "con-
solidated" by order of the Trial Division on
December 10, 1980. Clearly the intention of the
parties and the Court was that the challenge to
validity should be dealt with on its merits, whether
the proper means of attack was certiorari or an
action for a declaration. While at the hearing in
this Court a question was raised by the Court as to
whether these proceedings could properly be con
solidated, and there was some discussion as to the
proper characterization of the requirements for
purposes of judicial review, it was clear that the
respondent, who had not objected to the consolida
tion, was content to have the issues determined
upon the basis that if the requirements were found
to be invalid the appellant was entitled either to
certiorari or to declaratory relief. The respondent's
jurisdictional objection was directed to the
section 28 applications. I propose that we should
consider the issues on that basis.
The evidence consists of the affidavits, with
exhibits, of Mr. M. R. Kotchan, Assistant Trea
surer of the appellant, in support of the applica
tions for certiorari, and the affidavits, with exhib
its, of Mr. H. T. Yaeger, an auditor of the
Department of National Revenue, in response, as
well as the cross-examination of Mr. Yaeger on his
affidavits. According to the affidavits of Mr.
Yaeger the Minister of National Revenue decided
around October, 1975 that it was necessary to
check on compliance with the Income Tax Act by
traders in the commodities futures market. It is
further stated that specific and independent infor
mation as to the dealings of such traders is avail
able only from commodities futures market
brokers, and that the appellant is among the larg
est of such brokers in Canada.
Between January 1976 and January 1979 there
was correspondence between the Department and
the appellant concerning the possibility of an
"Income Tax Compliance Project" involving com
puter access to the 1976 "clients' commodity
monthly statements" of the appellant. In January
1976 the appellant agreed to maintain these state
ments in a "machine sensitive form" commencing
January 1, 1976. In a letter dated February 17,
1977, concerning this project, the Department
acknowledged that the appellant questioned the
legal authority to require this information, but
proposed that the feasibility of the project be
determined before attempting to resolve the legal
issue. It was suggested that the appellant provide
the Department with one month's commodity
statement file for test purposes on condition that
the Department guarantee the confidentiality of
the information and that no direct or indirect use
be made of it during the "test period". The file
would be returned after the test period regardless
of further action, if any, planned by the Depart
ment, and if the Department decided to pursue the
project a formal requirement for information and
production of documents would be issued. By letter
dated March 3, 1977 the appellant agreed to this
proposal, adding that it was on the understanding
that the information would be used "only for
testing purposes", and that "other investment deal
ers have been requested to provide similar infor
mation". In December 1977 the Department
returned the magnetic tape file which the appel
lant had provided, indicating that it was unable to
use the information at that time because of limited
resources. Pending a final decision on feasibility, it
requested the appellant to retain its 1976 clients'
commodity monthly statements file until June 30,
1978. In September 1978 it requested the appel
lant to retain the 1976 file until December 31,
1978.
In December 1978 the appellant confirmed that
it had retained, at the Minister's request, its
monthly commodity files for 1976, 1977 and 1978,
except for the statements of January 1977 and
January 1978 which it did not have in its posses
sion. By letter dated January 25, 1979, the Depart
ment confirmed that it was now "prepared to
proceed with the processing" of the appellant's
clients' commodity monthly statements file "on a
test basis for the 1977 calendar year, in what has
been previously referred to as an Income Tax
Compliance Project", and sought to determine
when it could begin the project. In reply on Febru-
ary 13, 1979 the appellant stated that "due to the
time involvement of both personnel and computer
it is not practical to proceed on the basis outlined
in your letter". It added that "the information is
available in other forms" and that it would
appreciate receiving confirmation that it was no
longer necessary to retain the magnetic tape files
for the 1977 commodity monthly statements.
On June 28, 1979 Mr. Yaeger wrote on behalf
of the Department to the appellant as follows:
This is to confirm our meeting of June 27th in which we
requested the production of a copy of the monthly magnetic
tape file, known as the Clients' Commodity Monthly State
ments, for each of the months in the 1977 calendar year. We
understand that a search of your tape library indicated that the
January 1977 file was not retained.
Since our last correspondence on this matter in February 1979,
we have obtained the technical expertise with which we feel
confident to be able to process the information on these files.
We now propose the following procedure in processing the
information on a test basis:
—we will supply magnetic tapes to be used by the corporation
in copying the files for the 1977 calendar year. The corpora
tion will provide us with record layouts and other technical
information regarding the copied tapes.
—the Department will guarantee the confidentiality of the data
including assurances that no direct or indirect use will be
made of any information obtained from the files during the
test period.
—on completion of the test period:
(1) the Department will advise the corporation of any intent
to use the information in an Income Tax compliance
project and at that time, as discussed, we will serve a
requirement for the information contained on these files.
(2) the Department agrees to treat the other Canadian
Commodity brokers in a similar manner by also request
ing their files and using the information as required in
the project.
Please contact the writer when and to whom our tapes are to be
delivered to facilitate the copying procedure. Your co-operation
in this matter is appreciated.
Certain tapes were provided by the appellant to
the Department in response to this letter but they
did not contain all the information sought by the
Department, and Mr. Yaeger wrote to the appel
lant on December 21, 1979 as follows:
This letter confirms our telephone conversation of December
19th in which we explained the current status in our "Com-
modity Project".
To date we have successfully translated your 1977 monthly
magnetic tape files for the project, and to facilitate the next
step in our test of this information, we require the following:
(1) A complete listing of office locations, identifying each by
the office number.
(2) A complete listing of customer name and address, identify
ing each by the account number.
As stated in our letter of June 28, 1979, we will advise you if
we intend to use the information for reassessment purposes.
On February 25, 1980, the appellant's solicitors
wrote to Mr. Yaeger as follows, indicating why the
appellant refused to provide the information
requested:
It is our understanding that this information is required for a
test project and is not related to a genuine and serious enquiry
into the tax liability of any specific person or persons.
It appears that this exploratory project is being based on
information from Richardsons alone and not from any other
security house.
As solicitors for Richardsons, we have a real concern about
the authority of the Department to demand this information
and the right of Richardsons to provide it, except under clear
statutory authority and a binding demand order or notice.
Richardsons have an obligation to keep confidential the
business of their customers, and any voluntary breach of this
obligation by Richardsons would be improper and would harm
Richardsons' name and competitive position if it became
known.
In our opinion, neither Section 231(3) or any other section of
the Income Tax Act authorizes the Department to request the
information concerned unless it is related to "a genuine and
serious enquiry into the tax liability of a specific person or
persons".
The preceding words in quote are taken from the case of the
Canadian Imperial [sic1 Bank of Commerce vs Attorney Gen
eral of Canada, Supreme Court of Canada June 25, 1962, 62
DTC 1236 at page 1238.
On May 8, 1980 a "Requirement for Production
of Records" with respect to the 1977 calendar year
was issued by the Director-Taxation in the Win-
nipeg District Office and served on the appellant.
It reads as follows:
For purposes related to the administration or enforcement of
the Income Tax Act, pursuant to the provisions of subsections
231(3)(b) thereof, I hereby require from you production of:
1) A complete listing of customer, name and address, identi
fying each by the account number for the calendar year
1977,
2) A complete listing of branch office locations, identifying
each by the office number, for the calendar year 1977,
as used in the preparation of clients' commodity monthly
statements for the Securities Division.
To comply with this requirement you must produce without
delay any and all of the above referred records to the officer or
officers of the Department of National Revenue who serve this
requirement on you. If this requirement is not complied with,
you may be liable to prosecution without further notice under
subsection 238(2) of the Income Tax Act.
The appellant's solicitors acknowledged the
requirement by letter dated May 14, 1980, indicat
ing that they had advised their client it was not
legally obliged to comply with the requirement,
and that they had been instructed to seek clarifica
tion of the issue of legal authority by proceedings
in the Federal Court.
On October 8, 1980, a "Requirement for infor
mation under paragraph 231(3)(a) of the Income
Tax Act" with respect to the calendar years 1978
and 1979 was issued by the Director-Taxation and
served on the appellant. It reads as follows:
As a result of a series of meetings and exchanges of letters
between your representative and members of this Department,
extending over some five years, you are aware that the Minister
of National Revenue wishes to obtain from you a listing of your
clients for whom it is part of your business to engage in
commodity transactions. On May 8, 1980 a requirement for
production of records was issued to you in respect of the
calendar year 1977 and the issue of the Minister's entitlement
to production of the requested records is presently before the
Court of Queen's Bench, the Trial Division of the Federal
Court and the Federal Court of Appeal.
For purposes of this requirement, which relates to the calen
dar years 1978 and 1979, I wish to make it perfectly clear that
the Minister has no reason to believe that any specific client of
your company for whom you engaged in commodity trading in
those years has either avoided or evaded due payment of
income tax. The Minister takes the position that proper and
fair administration of the Income Tax Act in a consistent and
equitable manner requires him to have available the informa
tion in your records showing the trading in which they engaged,
identifying all persons who engaged in commodity trading
through your company in 1978 and 1979 so that he can relate
this information to the income tax information certified by
those persons liable to taxation, to be a true and correct
statement of their income for the relevant periods. Without the
means even to carry out a random or sample check against such
information, it is obviously impossible for the Minister to
specify which, if any, cases may require further investigation or
information or even to determine whether any of such persons
who may not have filed at all are in fact and in law liable to
pay income tax in Canada.
In the Minister's view, a project of this sort, involving a
broad survey of persons trading in commodity futures, to test
and determine the degree of compliance by such persons with
the legislation, is necessary and is a purpose related to the
administration of the Income Tax Act.
You are therefore required for that purpose pursuant to
paragraph 231(3)(a) of the Income Tax Act to provide to the
Minister by December 8, 1980, the following information for
the period January 1, 1978 to December 31, 1979:
the names and addresses of all persons on whose behalf you
carried out trading in commodities, identifying each by account
number;
the office of your company through which such trading was
carried out;
and the details of all monthly transactions resulting in a net
gain or loss position for each calendar year for each such person
as used in the preparation of your clients' commodity state
ments for the Securities Division.
To comply with this requirement you should forward the
information hereby required, on magnetic computer tape, to the
Director of Taxation, 391 York Avenue, Winnipeg, Manitoba,
by registered mail by December 8, 1980. If you so request, in
your acknowledgment of this letter, arrangements will be made
for an officer of the Department of National Revenue to attend
at your office to receive the information required. Provision of
the information to that officer at the time of his attendance at
your office will be considered as compliance with this require-
ment, if your acknowledgment is received on or before Decem-
ber 8, 1980.
Your attention is directed to the penalty provided in subsec
tion 238(2) of the Income Tax Act for default in complying
with this requirement.
In paragraph 21 of Mr. Yaeger's affidavit it is
stated:
21. THAT without receipt of the information contained in the
said requirements, it is virtually impossible for all practical
purposes for the Minister to enforce the provisions of the Act in
a serious and genuine attempt to ensure compliance by traders
in the commodities futures market, where there is no other
independent means of ascertaining the existence of these
transactions.
The appellant attacks the validity of the require
ments of May 8 and October 8, 1980, on four
grounds which may be summarized as follows:
1. The requirements were not issued for a pur
pose related to the administration or enforce
ment of the Act within the meaning of subsec
tion 231(3).
2. If subsection 231(3) purports to confer au
thority for requirements for information of the
scope and purpose in the present case it is ultra
vires the Parliament of Canada.
3. The requirements are invalid because they
were issued on behalf of "Revenue Canada Tax
ation", a non-existent entity.
4. The requirement of May 8, 1980 is invalid
because it did not stipulate a reasonable time for
compliance as required by subsection 231(3).
All of these contentions were rejected by the
Trial Division.
The first contention is based primarily on the
judgment of the Supreme Court of Canada in The
Canadian Bank of Commerce v. The Attorney
General of Canada, [1962] S.C.R. 729. That case
involved a requirement for information under sub
section 126(2) of the Income Tax Act, R.S.C.
1952, c. 148, which is in exactly the same terms as
the present subsection 231(3). The Bank was
served with a requirement for information con
cerning all its business dealings with the Union
Bank of Switzerland. In the special case on which
the question of validity was determined it was
stated that the information required included "a
great deal of private information in respect of the
business and affairs of the Union Bank of Switzer-
land and of many other corporations and individu
als, some resident in Canada and some not resident
in Canada". It was admitted in the Ontario High
Court that the requirement related to a genuine
and serious inquiry into the tax liability of some
specific person or persons, although it was not
admitted that the tax liability of the Union Bank
of Switzerland was under investigation. The tax
liability of the Canadian Bank of Commerce was
not under investigation. The Supreme Court of
Canada held, affirming the majority judgment of
the Ontario Court of Appeal, that the requirement
was valid since it was for a purpose related to the
administration or enforcement of the Act within
the meaning of subsection 126(2). The Court
based its conclusion on the assumption of fact,
which had been admitted, that the requirement
related to a genuine and serious inquiry into the
tax liability of some specific person or persons.
Kerwin C.J., with whom three other members of
the Court concurred, was of the view that the
specific person whose tax liability was under inves
tigation was the Union Bank of Switzerland, which
was the only person named in the requirement. He
concluded at page 734: "Therefore, so far as the
Union Bank of Switzerland is concerned, if it
carried on business in Canada, it is liable to tax
and it is part of the administration or enforcement
of the Act to discover if the Union Bank was
subject to taxation." Cartwright J. (as he then
was), with whom four other members of the Court
concurred, did not base his conclusion on the
assumption that the tax liability of the Union
Bank of Switzerland was under investigation,
which he said might or might not be the case, but
on the assumption that the requirement related to
a genuine and serious inquiry into the tax liability
of some specific person or persons, whether or not
it might be the Union Bank of Switzerland. He
said at page 739: "The purpose of the requirement,
then, is to obtain information relevant to the tax
liability of some specific person or persons whose
liability to tax is under investigation; this is a
purpose related to the administration or enforce
ment of the Act." All the members of the Court
agreed that it was not necessary that the person to
whom a requirement for information is addressed
be one whose tax liability is under investigation,
and further that a requirement for information is
not rendered invalid by the fact that the informa-
tion sought will disclose private transactions
involving a number of persons who are not under
investigation and may not be liable to tax.
The appellant argues from the judgment in the
Canadian Bank of Commerce case that a require
ment for information under subsection 231(3) is
not for a purpose related to the administration or
enforcement of the Act unless the purpose is to
obtain information that is relevant to the tax liabil
ity of some specific person or persons whose tax
liability is under investigation. It is contended that
the requirements in the present case do not meet
this test. It is said that a requirement for informa
tion concerning all the customers of the appellant
engaged in commodity trading is not a require
ment related to some specific person or persons
within the meaning of the dicta in the Canadian
Bank of Commerce decision. It is further argued
that on the Department's admission none of these
customers is a person whose tax liability is under
investigation, as that was understood in the
Canadian Bank of Commerce case. On the first
branch of the argument the appellant emphasizes
the word "some" as well as "specific" and con
tends that they mean particular persons, identified
by name, and cannot be applied to all persons of a
certain class. The appellant also relies on the
following exchange in the cross-examination of
Mr. Yaeger:
Q. I take it you, and when I say "you" I mean your
Department, were not attempting to obtain information
or records with respect to the tax liability of a specific
person or persons?
A. Not specific persons, no.
Q. Not a specific person or persons?
A. No.
On the second branch of the argument the appel
lant relies particularly on the following statement
in the requirement of October 8, 1980:
For purposes of this requirement, which relates to the calen
dar years 1978 and 1979, I wish to make it perfectly clear that
the Minister has no reason to believe that any specific client of
your company for whom you engaged in commodity trading in
those years has either avoided or evaded due payment of
income tax.
Finally, the appellant emphasizes the references in
the Department's letters to a tax compliance "pro-
ject" and a "test period" as indicating, in its
submission, that the requirements did not relate to
a genuine and serious inquiry into the tax liability
of some specific person or persons, as in the
Canadian Bank of Commerce case.
In my respectful opinion there is nothing in the
judgment of the Supreme Court of Canada in the
Canadian Bank of Commerce case that prevents
us from concluding that the purpose for which the
requirements for records or information were
issued in the present case was a valid one. That
purpose, as disclosed by the affidavit of Mr.
Yaeger and the requirement of October 8, 1980,
was to verify whether there had been compliance
with the Income Tax Act by the commodity trad
ing customers of the appellant. That is clearly in
my opinion a purpose related to the administration
or enforcement of the Act within the meaning of
subsection 231(3). The judgment in Canadian
Bank of Commerce was based on the agreed fact
that the requirement in that case related to a
genuine and serious inquiry into the tax liability of
some specific person or persons, but I do not read
the judgment as purporting to treat that as the
only valid purpose under what is now subsection
231(3). In any event I am far from certain that the
present case is essentially distinguishable from
that on which the majority of the Supreme Court
based their conclusion. In the majority opinion of
Cartwright J. [as he then was] the words "some
specific person or persons" are obviously under
stood as referring not to named persons but merely
to existing, identifiable persons. A reference to all
of the commodity trading customers of the appel
lant comes within this meaning of the words. As to
the nature of the inquiry or investigation, the
essential assumption of fact in the Canadian Bank
of Commerce case was that it was a genuine and
serious inquiry into the tax liability of some specif
ic person or persons. There are references in the
opinions to the tax liability of specific persons
being "under investigation". It is not clear in my
opinion whether these words were understood to
mean that the Department had reason to believe
that specific persons had attempted to evade pay
ment of tax, or merely, as in the present case, that
the Department sought to determine whether spe
cific persons had complied with the Act. There
may be a genuine and serious inquiry into tax
liability without the Department necessarily
having reason to believe that specific persons have
attempted to evade payment of tax. As for the
references in the Department's letters to a tax
compliance "project" and to a "test period", there
was undoubtedly a period in which the Depart
ment was attempting to determine the feasibility
of the project, but with the requirements of May 8
and October 8 it had clearly decided to carry out
the investigation it had originally decided to
attempt in October 1975. There is no doubt that
the requirements represented a genuine and seri
ous inquiry to determine from the best source of
information available whether there had been
compliance with the Act.
In addition to its reliance on the Canadian Bank
of Commerce case the appellant contended, in
support of its interpretation of subsection 231(3),
that information of the kind sought in the present
case with respect to a whole class of persons could
only be properly obtained by an information return
provided for by regulation made by the Governor
in Council pursuant to paragraph 221(1) (d),
which reads:
221. (1) The Governor in Council may make regulations
(d) requiring any class of persons to make information
returns respecting any class of information required in con
nection with assessments under this Act,
The provisions of Part II of the Regulations (sec-
tions 200 and following) show that what is gener
ally contemplated by an information return is a
report of a payment or receipt that is taxable. It is
required of certain persons who make payments ol
various kinds to taxpayers. The information that is
sought by the requirements in the present case is
not a report of payments by the appellant to its
customers, but a record of the trading transactions
of its customers from which the income of the
customers, as reported in their tax returns, may be
verified. Even if paragraph 221(1)(d) confers au
thority to require by regulation that such informa
tion be provided by an information return, that
would not in my opinion, at least until the author
ity under that section were exercised, preclude the
exercise of the authority conferred by subsection
231(3).
The second contention of the appellant is that it
subsection 231(3) authorizes a requirement foi
information of the scope and purpose sought in
this case it is ultra vires the Parliament of Canada.
This contention is in my opinion without any merit
at all and is, indeed, in conflict with the suggestion
that the Governor in Council could require that
such information be provided by an information
return. If the purpose for which the information is
required in the present case is a purpose related tc
the administration or enforcement of the Act then
subsection 231(3), as so construed and applied.
obviously falls within the legislative authority ol
the Parliament of Canada under subsection 91(3)
of the B.N.A. Act—"The raising of Money by any
Mode or System of Taxation." The raising ol
money by taxation necessarily involves what is
related to the administration and enforcement ol
the taxation legislation.
The appellant's third contention is that the
requirements of May 8 and October 8, 1980, are
invalid because they were made on behalf of
"Revenue Canada Taxation", a non-existent
entity. The words "Revenue Canada Taxation' .
appear in the upper left-hand corner of the
requirements, but there is a clear indication in the
body of the requirements that they issue from the
Department of National Revenue, and they are
signed by the Director-Taxation, who is described
in the requirement of May 8, 1980 as "Director-
Taxation Department of National Revenue, Taxa-
tion" and in the requirement of October 8, 1980,
as "Director-Taxation Winnipeg District Office."
There cannot be any doubt on the face of these
requirements that they are signed by an official of
the Department of National Revenue, Taxation.
By subsection 900(2) of the Income Tax Regula
tions, SOR/73-390, an official holding a position
of Director-Taxation in a District Office of the
Department of National Revenue, Taxation, may
exercise the authority of the Minister under sub
section 231(3) of the Act. For these reasons the
third contention is in my opinion without merit.
The appellant's fourth contention is that the
requirement of May 8, 1980 is invalid because it
did not stipulate a reasonable time for compliance
as required by subsection 231(3), but instead
required that the information be provided "without
delay". The stipulation of compliance "without
delay" must be seen in the light of the fact that the
appellant was on notice that the Department was
seeking this information in December 1979. On
this issue I am in agreement with the view taken
by the learned Trial Judge. The use of the words
"without delay" in the requirement of May 8,
1980 cannot invalidate the requirement. Whether
a reasonable time for compliance was allowed
before the appellant was treated as being in
default is a question of fact that affects the issue
whether there has been compliance or non-compli
ance, but not the validity of the requirement.
For all of these reasons I would dismiss the
appeal with costs.
URIE J.: I agree.
LALANDE D.J.: I concur.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.