Canada (National Revenue) v. Ghermezian

Canada (National Revenue) v. Ghermezian
Court (s) Database
Federal Court Decisions
Date
2022-02-23
Neutral citation
2022 FC 236
File numbers
T-252-19, T-254-19, T-258-19, T-259-19, T-261-19, T-262-19
Notes
A correction was made on January 19th, 2024
Reported Decision
Decision Content
Date: 20220223
Docket: T-252-19
T-254-19
T-258-19
T-259-19
T-261-19
T-262-19
Citation: 2022 FC 236
Ottawa, Ontario, February 23, 2022
PRESENT: The Honourable Mr. Justice Southcott
BETWEEN:
Docket: T-252-19
THE MINISTER OF NATIONAL REVENUE
Applicant
and
NADER GHERMEZIAN
Respondent
AND BETWEEN:
Docket: T-254-19
THE MINISTER OF NATIONAL REVENUE
Applicant
and
MARC VATURI
Respondent
AND BETWEEN:
Docket: T-258-19
THE MINISTER OF NATIONAL REVENUE
Applicant
and
GHERFAM EQUITIES INC
Respondent
AND BETWEEN:
Docket: T-259-19
THE MINISTER OF NATIONAL REVENUE
Applicant
and
PAUL GHERMEZIAN
Respondent
AND BETWEEN:
Docket: T-261-19
THE MINISTER OF NATIONAL REVENUE
Applicant
and
RAPHAEL GHERMEZIAN
Respondent
AND BETWEEN:
Docket: T-262-19
THE MINISTER OF NATIONAL REVENUE
Applicant
and
JOSHUA GHERMEZIAN
Respondent
JUDGMENT AND REASONS
I. Overview
[1] This decision relates to six applications by the Minister of National Revenue [the Minister], seeking compliance orders under s 231.7 of the Income Tax Act, RSC 1985, c 1 (5th Supp) [the Act].
[2] The Respondents are five individuals, all members of the Ghermezian extended family, and a related corporation, Gherfam Equities Inc. [Gherfam]. Nader Ghermezian (the Respondent in Court file number T-252-19) and Raphael Ghermezian (the Respondent in Court file number T-261-19) are brothers. Joshua Ghermezian (the Respondent in Court file number T-262-19) is the son of Raphael Ghermezian, and Paul Ghermezian (the Respondent in Court file number T-259-19) is the nephew of Nader Ghermezian and Raphael Ghermezian. Marc Vaturi (the Respondent in Court file number T-254-19) is the son-in-law of Nader Ghermezian.
[3] Each of the Minister’s applications seeks an order compelling the relevant Respondent to provide documents and/or information previously sought by the Minister under s 231.1 and/or s 231.2 of the Act.
[4] These six applications were heard together, by videoconference employing the Zoom platform, on January 24 to 27, 2022. As they raise many common issues, these Reasons address all six applications.
[5] As explained in greater detail in the Reasons below, these applications are granted, subject to the remaining steps I have outlined for applying my conclusions surrounding the Respondents’ success in some of their defence arguments to the development of the form of compliance order in each application.
II. Background
[6] First, a few words about nomenclature. As set out in more detail later in these Reasons, most of these applications rely on both s 231.1 and s 231.2 of the Act. The issues in these applications include disputes between the parties on the scope of the powers granted to the Minister under s 231.1 and s 231.2. For purposes of these Reasons, I will adopt the language employed by the Minister in her written submissions, referring to the invocation of s 231.1 as a “Request” and the invocation of s 231.2 as a “Requirement”. I note this is consistent with the language employed by Justice Fuhrer in Tellza Inc v Canada (National Revenue), 2021 FC 853 [Tellza], in relation to the comparable provisions of the Excise Tax Act, RSC 1985, c E-15 [ETA]). However, I emphasize these terms are adopted solely to enhance the readability of these Reasons and are not intended to be terms of art or to suggest that a Request issued under s 231.1 gives rise to less compulsion than a Requirement issued under s 231.2. Similarly, without intending to ascribe any technical significance to it, I will employ the term “Demands” to encompass generically both Requests and Requirements.
[7] The Minister commenced each of these six applications by a Notice of Summary Application dated February 7, 2019. In each application, the Minister asserts that: she issued Requests and/or Requirements to the relevant Respondent requiring the provision of documents and/or information related to the administration or enforcement of the Act; the Respondent has failed to provide all such documentation and/or information; and the Respondent has not asserted any claim for solicitor-client-privilege in relation thereto. The Minister asserts that she has therefore met the statutory conditions for the Court to issue a compliance order under s 231.7 of the Act, ordering the Respondent to provide the outstanding documents and/or information.
[8] In each application, the Minister has filed an Amended Notice of Summary Application dated April 7, 2021 [Amended Notice], which specified the particular Demands, or portions thereof, that the Minister considered to be still outstanding. In the course of the hearing, the Minister further clarified or refined her Demands in each application, in some cases further reducing the Demands or portions thereof for which she is seeking a compliance order.
[9] In each application, the Minister relies upon an affidavit sworn in July 2019 by Andrew Bowe, who was, at the time, an International and Large Business Case Manager with the Canada Revenue Agency [CRA] and had conduct of the audit matters in relation to the Respondents. In T-254-19 (with Mr. Vaturi as the Respondent), Mr. Bowe also affirmed a Supplementary Affidavit on April 7, 2021 [the Supplementary Affidavit]. The Respondents have cross-examined Mr. Bowe on his affidavits, and the relevant transcripts have been included in the record in each application. The Respondents have not otherwise filed any evidence in these proceedings.
[10] In opposing these applications, the Respondents rely in part on arguments surrounding the admissibility of or, alternatively, the weight that should be afforded to Mr. Bowe’s evidence. In the proceedings related to Nader Ghermezian, Raphael Ghermezian, and Marc Vaturi, the Respondents had previously filed motions to strike Mr. Bowe’s affidavits and dismiss the applications. By Order dated December 15, 2021, Prothonotary Aalto adjourned these motions, concluding that the issues raised therein should be argued at the hearing of the applications. The parties presented their arguments on these issues at the commencement of the hearings on January 24, 2021. This decision will address those arguments.
[11] The Respondents also raise a number of other issues in support of their position that the applications should be dismissed. Most of the issues are common to some or all of the applications, although there are also a small number of issues specific to individual applications. These Reasons will first address the common issues and identify any general conclusions that can be reached without individually canvassing each application, as well as apply those conclusions to the applications, to the extent it is possible to do so. I will then turn to the individual applications, applying the general conclusions to each application where I have not done so already and addressing any additional issues specific to each application.
III. Issues
[12] The following issues, common to some or all of the applications, have been raised for the Court’s adjudication:
Whether the affidavits of Andrew Bowe should be struck out or, in the alternative, afforded little weight;
Whether the Respondents were required to provide documents and/or information in response to a Request issued under s 231.1 of the Act;
Whether the individuals who issued the Demands were authorized to do so;
Whether the Respondents were properly given notice of the Demands;
Whether the Demands provided a reasonable time for compliance;
Whether the Demands relate to one or more unnamed persons, requiring the Minister to seek prior judicial authorization under s 231.2(3) of the Act;
Whether the Demands raise ambiguity as to whether their recipient is the same as the Respondent;
Whether the Demands improperly sought the production of foreign-based information or documents within the meaning of s 231.6 of the Act;
If the Court determines that any compliance orders should be issued, whether such orders should contain an exclusion for documents and information protected by solicitor-client privilege;
If the Court concludes that a compliance order should not be issued in relation to a portion of a Demand, whether the Court has the authority to sever that portion and issue an order in relation to the remainder of the Demand; and
Whether certain Requirements were ineffective because the Respondents are not residents of Canada.
IV. Analysis
A. General Principles Regarding Compliance Orders Under s 231.7
[13] Before turning to the individual issues, it is useful to identify some general principles relevant to applications under s 231.7 of the Act, the text of which reads as follows:
Compliance order
Ordonnance
231.7 (1) On summary application by the Minister, a judge may, notwithstanding subsection 238(2), order a person to provide any access, assistance, information or document sought by the Minister under section 231.1 or 231.2 if the judge is satisfied that
231.7 (1) Sur demande sommaire du ministre, un juge peut, malgré le paragraphe 238(2), ordonner à une personne de fournir l’accès, l’aide, les renseignements ou les documents que le ministre cherche à obtenir en vertu des articles 231.1 ou 231.2 s’il est convaincu de ce qui suit :
(a) the person was required under section 231.1 or 231.2 to provide the access, assistance, information or document and did not do so; and
a) la personne n’a pas fourni l’accès, l’aide, les renseignements ou les documents bien qu’elle en soit tenue par les articles 231.1 ou 231.2;
(b) in the case of information or a document, the information or document is not protected from disclosure by solicitor-client privilege (within the meaning of subsection 232(1)).
b) s’agissant de renseignements ou de documents, le privilège des communications entre client et avocat, au sens du paragraphe 232(1), ne peut être invoqué à leur égard.
Notice required
Avis
(2) An application under subsection (1) must not be heard before the end of five clear days from the day the notice of application is served on the person against whom the order is sought.
(2) La demande n’est entendue qu’une fois écoulés cinq jours francs après signification d’un avis de la demande à la personne à l’égard de laquelle l’ordonnance est demandée.
Judge may impose conditions
Conditions
(3) A judge making an order under subsection (1) may impose any conditions in respect of the order that the judge considers appropriate.
(3) Le juge peut imposer, à l’égard de l’ordonnance, les conditions qu’il estime indiquées.
Contempt of court
Outrage
(4) If a person fails or refuses to comply with an order, a judge may find the person in contempt of court and the person is subject to the processes and the punishments of the court to which the judge is appointed.
(4) Quiconque refuse ou fait défaut de se conformer à une ordonnance peut être reconnu coupable d’outrage au tribunal; il est alors sujet aux procédures et sanctions du tribunal l’ayant ainsi reconnu coupable.
Appeal
Appel
(5) An order by a judge under subsection (1) may be appealed to a court having appellate jurisdiction over decisions of the court to which the judge is appointed. An appeal does not suspend the execution of the order unless it is so ordered by a judge of the court to which the appeal is made.
(5) L’ordonnance visée au paragraphe (1) est susceptible d’appel devant le tribunal ayant compétence pour entendre les appels des décisions du tribunal ayant rendu l’ordonnance. Toutefois, l’appel n’a pas pour effet de suspendre l’exécution de l’ordonnance, sauf ordonnance contraire d’un juge du tribunal saisi de l’appel.
[14] As is evident from s 231.7(1), the Minister’s recourse to a compliance order is premised on the Minister previously having sought access, assistance, information or documentation under ss 231.1 or 231.2. The text of those sections (which, together with other provisions considered in these Reasons, are set out in full in Appendix “A”), will be canvassed later in this decision. For present purposes, it is sufficient to identify that, in the context of Canada’s self-assessment system for the collection of income tax under the Act, ss 231.1 and 231.2 form part of the broad suite of powers that Parliament has conferred on the Minister to obtain information and/or documentation from taxpayers and third parties to verify self-assessments (see R v McKinlay Transport Ltd, [1990] 1 SCR 627, 68 DLR (4th) 568 [McKinlay] at para 18 (referencing s 231(3), which was the predecessor to s 231.2(1)).
[15] When a person who is subject to a demand under ss 231.1 or 231.2 does not comply with that demand, s 231.7 entitles the Minister to apply to the Federal Court for an order compelling compliance. Consistent with the language of s 231.7(1), the Federal Court of Appeal explained in Minister of National Revenue v Lee, 2016 FCA 53 [Lee] at para 6 that the Court must be satisfied of three points before granting a compliance order:
i)The person against whom the order is sought was required under section 231.1 or 231.2 of the Act to provide the access, assistance, information or documents sought by the Minister;
ii)Although the person was required to provide the information or documents sought by the Minister, he or she did not do so; and,
iii)The documents or information sought is not protected from disclosure by solicitor-client privilege as defined within the Act.
[16] The Respondents refer the Court to Minister of National Revenue v Derakhshani, 2009 FCA 190 [Derakhshani], in which the Federal Court of Appeal rejected the Minister’s argument that, when presented with an application under s 231.2(3) of the Act, a judge has no discretion to reject the application if the conditions prescribed by that section are met (at paras 17-19). While that case involved an application under s 231.2(3) to authorize the Minister to a serve a requirement related to an unnamed person, I agree with the Respondents’ submission that the Court’s analysis of whether it retains discretion even where the statutory conditions are met usefully informs the interpretation of s 231.7 as well. Both sections require that the judge be satisfied that the statutory conditions for the application are met and provide the judge granting an order the authority to impose any conditions the judge considers appropriate. As these are the factors that the Court in Derakhshani took into account in identifying the existence of its discretion, I agree that judicially exercised discretion exists under s 231.7 as well.
[17] Indeed, I do not understand the Minister to dispute this point in the case at hand. In support of her position on the “severance” issue (canvassed later in these Reasons), that the Court has the authority to issue an order in relation to a portion of a Demand or application, the Minister refers to the Court’s discretion to impose such conditions as it considers appropriate.
[18] Because of the potentially serious consequences flowing from the failure to obey a compliance order, including fines and/or imprisonment, the jurisprudence explains that the Court should be satisfied that the statutory conditions of s 231.7 have been “clearly met” before exercising its discretion to grant an order (see Minister of National Revenue v Chamandy, 2014 FC 354 [Chamandy] at para 35; Canada (Minister of National Revenue) v SML Operations (Canada), 2003 FC 868 [SML Operations] at para 15).
[19] The Respondents also rely on Derakhshani (at paras 16-17) to support their position that the use of the phrase “if the judge is satisfied” in s 231.7 imposes on the Minister an onus to adduce and prove all the facts required to satisfy the conditions for the issuance of the compliance order. In my view, Derakhshani does not stand for this proposition. Paragraphs 16 and 17 rely on that phrase to conclude that the judge has discretion in an application under s 231.7, but do not speak to which party bears the onus in such an application.
[20] The Respondents also rely on this Court’s decision in Ghermezian v Canada (Attorney General), 2020 FC 1137 [Ghermezian] at paras 24-25, to support their position that the Minister bears the burden of proof. Again, that authority does not stand for the proposition that the Respondents advance. Ghermezian involved a number of applications for judicial review, brought by some of the same parties who are Respondents in the present applications, challenging a number of Requirements issued by the Minister under s 231.2(1) of the Act. Those applicants relied on Capital Vision Inc v Minister of National Revenue, 2002 FCT 1317 [Capital Vision] to support their position that the Minister bore the burden of proving her compliance with s 231.2(1). This Court rejected that contention, observing that Capital Vision held that the Minister must comply with the Act but did not state a conclusion on the applicable burden of proof.
[21] That said, I do not understand the Minister to dispute that, as the party seeking a compliance order under s 231.7, she has the burden of satisfying the statutory conditions as set out in Lee, although she submits that whether the requested material is privileged is relevant to the analysis only if a respondent actually asserts a claim of privilege (see Lee at para 9). I accept that the overall legal burden in the application resides with the Minister, and I concur that privilege factors into the analysis only if raised by a respondent, who then bears the burden on that issue (see Redhead Equipment Ltd v Canada (Attorney General), 2016 SKCA 115 at para 31; Minister of National Revenue v Atlas Tube Canada ULC, 2018 FC 1086 at para 32).
[22] However, the location of the burden becomes more nuanced in connection with particular defence arguments raised by the Respondents in these applications. Which party bears the applicable burden is potentially relevant to several of the issues raised in the Respondents’ arguments, including: (a) authority to issue the Demands; (b) proper notice of the Demands to the Respondents; (c) the reasonableness of the time given for compliance with the Demands; and (d) whether the Demands improperly sought the production of foreign-based material. The Respondents submit that the Minister bears the burden on all the issues. In contrast, the Minister urges the Court to be guided by a general evidentiary principle that the party who alleges a proposition, and with whom the evidence is likely to reside, bears the applicable burden. Where necessary, I will return to the question of the burden of proof when considering the individual issues.
B. Whether the affidavits of Andrew Bowe should be struck out or, in the alternative, afforded little weight
[23] The Respondents in T-252-19 (Nader Ghermezian), T-254-19 (Marc Vaturi) and T-261-19 (Raphael Ghermezian) argue that the Court should strike the affidavits of the Minister’s deponent, Andrew Bowe, in each of these applications. Relying on the fact that the Minister bears the overall legal burden in these applications, the Respondents submit that, without these affidavits to support these three applications, the Court should dismiss these applications in full. In connection with other applications, the Respondents submit that Mr. Bowe’s evidence should be afforded little or no weight.
[24] The Respondents’ principal arguments in support of these positions fall broadly into two categories. First, they submit that Mr. Bowe’s affidavits are outdated, incomplete and unreliable. Second, they submit that Mr. Bowe’s affidavits offend the hearsay rule by providing evidence as to facts that are outside his personal knowledge. However, particular issues are also raised with respect to Mr. Bowe’s Supplementary Affidavit in T-254-19. I will begin my analysis with the Supplementary Affidavit.
(1) Supplementary Affidavit in T-254-19 (MNR v Marc Vaturi)
[25] The Supplementary Affidavit is a relatively brief document, affirmed on April 7, 2021, which appears intended to update the evidence provided by Mr. Bowe in his original affidavit in T-254-19, sworn on July 27, 2019. Mr. Bowe states that, subsequent to service of the July 27, 2019 affidavit, CRA received information and documentation from Mr. Vaturi and/or his representatives. Mr. Bowe then proceeds to identify, through attached exhibits, the information and documentation received and the items from the relevant Demands that CRA considered to be outstanding.
[26] The Respondent’s counsel refers to what he characterizes as two “bombshells” revealed through cross-examination of Mr. Bowe, conducted on November 17 and 18, 2021. First, in relation to a Demand identified as A-MV-0128, the Respondent notes Mr. Bowe’s evidence that, to the date of the Supplementary Affidavit, Mr. Vaturi had not provided the outstanding information and/or documentation identified in follow-up correspondence sent by CRA on March 10, 2020. In the course of cross-examination, Respondent’s counsel pointed out that Mr. Vaturi had, in fact, provided a response exceeding 150 pages on November 4, 2020.
[27] The November 4, 2020 response was addressed to Mr. Bowe and copied to the Minister’s counsel. When presented with this response on the first day of his cross-examination, Mr. Bowe stated he did not recall seeing it and explained that he was transitioning out of his role at the relevant time. The Minister’s counsel subsequently investigated this issue and confirmed, on the second day of cross-examination, that Mr. Vaturi’s submission had been received but was misfiled and therefore missed in the preparation of Mr. Bowe’s Supplementary Affidavit. Both Mr. Bowe and the Minister’s counsel confirmed that they were not able to state whether there was still information or documentation outstanding in relation to A-MV-0128. The Minister subsequently withdrew her request for a compliance order with respect to this Demand.
[28] The Respondent submits that these events demonstrate that Mr. Bowe affirmed the Supplementary Affidavit, attesting to facts essential to the Minister’s application, without knowing, or even making any effort to confirm, whether they were true. Relying on Canada (Board of Internal Economy) v Canada (Attorney General), 2017 FCA 43 [Board of Internal Economy] at para 30, the Respondent submits that the affidavit should be struck, because it is “…so clearly out of bounds … that it ought to be stopped in its tracks.”
[29] I find little merit to the Respondent’s position that the affidavit should be struck. The evidence suggests that Mr. Bowe was unaware of the November 4, 2020 submission due to an administrative error. However, even if I were to ascribe to Mr. Bowe a higher level of culpability in connection with this error, I would find no basis to strike the Supplementary Affidavit as inadmissible. Certainly, this error could cast doubt on the reliability of his evidence and, if there was a dispute as to whether Mr. Vaturi had submitted a particular document to CRA, I might therefore afford more weight to evidence adduced by the Respondent to establish the submission. However, there is no dispute of that sort raised in this application. Following her investigations, the Minister’s counsel confirmed that the November 4, 2020 submission had been overlooked, and the Minister subsequently withdrew her request for a compliance order in connection with the relevant Demand.
[30] I agree with the Minister’s submission that Board of Internal Economy is distinguishable, as the affidavit that was struck in that case was found inadmissible because it amounted to a legal opinion on Canadian law.
[31] The second issue that the Respondent raises in connection with the Supplementary Affidavit surrounds Mr. Bowe’s explanation during his cross-examination that, notwithstanding that the affidavit was affirmed in April 2021, it was prepared in June 2020, before he transitioned out of his role in November 2020. Because Mr. Bowe no longer had current personal knowledge of CRA’s audit of Mr. Vaturi when he affirmed the Supplementary Affidavit, the Respondent again argues that it should be struck.
[32] In response to this argument, the Minister explains that she was required to present a motion seeking an order allowing the filing of the Supplementary Affidavit. The Court issued the resulting Order on March 30, 2021, granting the motion and permitting the filing of the affidavit. It was then filed in largely the same form as presented in the motion and authorized by the Order—which included an appendix setting out the form of the Supplementary Affidavit— notwithstanding that several months had passed. The Respondent takes issue with this explanation, noting that the introductory paragraphs of the affidavit were updated to explain the change in Mr. Bowe’s role.
[33] Again, I find little merit to the Respondent’s argument that the Supplementary Affidavit is inadmissible and should be struck. I accept that the affidavit is misleading, as it amounts to testimony by Mr. Bowe that, other than as identified in the updates set out in the affidavit, the information and documentation sought in the Demands issued to Mr. Vaturi was still outstanding as of April 2021. It appears to have been Mr. Bowe’s intention that his testimony to that effect apply as of June 2020 when the affidavit was prepared, but the affidavit does not read that way. If, in his cross-examination of Mr. Bowe, the Respondent’s counsel had not identified this irregularity, the Court could have been misled in relying on the Supplementary Affidavit. The benefit of his identification of this error obviously accrues to the Respondent and, to the extent there was a dispute between the parties on whether Mr. Vaturi had submitted additional documentation between June 2020 and April 2021, the Supplementary Affidavit would not assist the Minister. However, there was no contention that Mr. Vaturi made additional submissions during this period and, in any event, these circumstances do not raise a basis for the Court to find the Supplementary Affidavit inadmissible.
(2) Staleness of Affidavits
[34] Turning to the Respondents’ principal inadmissibility arguments, related to the main affidavits sworn by Mr. Bowe in each of T-252-19, T-254-19 and T-261-19, they submit first that these affidavits are out of date and should be struck as inadmissible due to their staleness. As canvassed by the Respondents’ counsel in cross-examination, it is clear that (other than the Supplementary Affidavit in T-254-19) Mr. Bowe did not prepare additional affidavits to update his evidence after the original affidavits were sworn on July 27, 2019. Noting that noncompliance with the Minister’s Demands is one of the statutory conditions for issuance of compliance order under s 237.1(1), the Respondents submit that Mr. Bowe’s affidavits should be struck because they are stale. They rely on Fabrikant v Canada, 2017 FC 1115 [Fabrikant], in support of their argument.
[35] Fabrikant involved an appeal of a prothonotary’s decision, which had refused to waive the Court’s filing fee for a self-represented vexatious litigant wishing to file an application for judicial review. The prothonotary dismissed the motion for waiver of the fee on the grounds that the applicant’s evidence of impecuniosity was prima facie deficient, being based on an affidavit nearly one year old. Justice Harrington upheld the prothonotary’s decision on several grounds, including that a motion should be accompanied by a current affidavit and that the prothonotary was entitled to reject the applicant’s affidavit as stale-dated (at paras 23-24).
[36] I agree with the Minister’s response that Fabrikant does not express a general principle that the passage of time alone stale dates affidavits, requiring them to be struck. Indeed, it is not clear from Fabrikant that either the prothonotary or Justice Harrington considered the affidavit to be inadmissible, as opposed to concluding that, because it was outdated, the evidence simply did not support the relief requested.
[37] In the case at hand, the fact that Mr. Bowe did not file updated evidence does not make his original evidence inadmissible. Rather, the Court must consider whether Mr. Bowe’s evidence, including the date as of which it speaks, supports issuance of the requested compliance orders. In that respect, it is clear from the records before the Court, including the Amended Notices, that circumstances have evolved since Mr. Bowe swore his affidavits on July 27, 2019. The Respondents argue that it is improper for the Minister to simply amend her Notices of Summary Application, so as to reduce the scope of the Demands to take into account additional documentation or information that has been received, without filing updated evidence reflecting the receipt of that material.
[38] I find nothing problematic in the Minister’s approach. Particularly with the significant scope of the Demands at issue in the present applications, and the length of time that has passed in bringing these applications to a hearing, it is perhaps not surprising that the Minister has received additional material in response to certain Demands. In such circumstances, it is appropriate for the Minister to reduce the scope of the applications. If, for that reason or others, the Minister decides to abandon certain Demands or portions thereof, I see no basis for a strict requirement to file updated evidence explaining the reason for the reduction in scope.
[39] Of course, depending on the particular issues and supporting evidentiary basis raised by a respondent to a compliance application, the Minister may be unable to succeed without updated evidence. For instance, if the respondent had adduced evidence that particular responses had been provided subsequent to the filing of the compliance application, the Minister may be unable to resist that assertion without additional updated evidence of her own. However, I do not understand any of the Respondents’ arguments in these applications to be of that nature. As will be canvassed later in these Reasons, Mr. Vaturi argues in T-254-19 that he has fully complied with some of the outstanding Demands. However, the Court’s analysis of that argument involves consideration of the details of the relevant Demands and of the material Mr. Vaturi provided in response. That argument does not engage a dispute as to whether certain submissions were actually made or received after the Minister filed her application and therefore will not turn on the absence of updated affidavit evidence.
[40] In each of the six applications before the Court, Mr. Bowe provided evidence as of July 26, 2019, as to the then outstanding Demands, and swore that the Respondent had not provided the information and documents responsive to those Demands. As will be explained immediately below in my analysis of the Respondents’ arguments surrounding hearsay in Mr. Bowe’s affidavits, any conflict in the evidence including meaningful challenge of Mr. Bowe’s testimony would require the Court to consider the weight to be afforded to Mr. Bowe’s evidence. However, with the exception of the November 2020 submission identified earlier in these Reasons, the Respondents have not adduced evidence, through cross-examination of Mr. Bowe or otherwise, that they have provided responses to the Demands and portions thereof that the Minister is presently pursuing that have not been taken into account. The November 2020 submission identified through cross-examination was addressed through the Minister’s subsequent withdrawal of the relevant Demand.
[41] As previously noted, noncompliance with the Minister’s Demands is one of the statutory conditions for issuance of compliance order under s 237.1(1), and the Minister bears the onus of proof on this condition. However, in the absence of any conflicting evidence, I consider Mr. Bowe’s evidence sufficient to meet this onus, notwithstanding that it has not been updated.
(3) Hearsay
[42] The Respondents’ second argument in relation to Mr. Bowe’s original affidavits challenges their admissibility, or alternatively their weight, based on hearsay contained therein.
[43] The first paragraph of each of these affidavits is materially identical, reading as follows:
1. I am an International and Large Business Case Manager with the Canada Revenue Agency (“CRA”), in the Edmonton Tax Services Office. In the normal course of my duties I have conduct of audit matters in respect of the Respondent. I have reviewed the files and have personal knowledge of the matters hereinafter deposed to, save and except that which is stated to be based on information and belief, and where so stated, I verily believe it to be true.
[44] In his cross-examination in each of T-252-19, T-254-19 and T-261-19, Mr. Bowe admitted that a large number of paragraphs in his affidavit contained facts that were not based on his personal knowledge. The Respondents also submit, correctly in my view, that in most cases the affidavits do not state that these paragraphs are based on information and belief. In his cross-examination in T-252-19 (Nader Ghermezian), Mr. Bowe confirmed that, in some cases, his affidavit fails to identify which facts are based on information and belief.
[45] The Respondents therefore argue that the affidavits should be struck as inadmissible, on the basis that they offend Rule 81 of the Federal Courts Rules, SOR/98-106, and, more generally, include substantial amounts of inadmissible hearsay. Rule 81 provides as follows:
Content of affidavits
Contenu
81 (1) Affidavits shall be confined to facts within the deponent’s personal knowledge except on motions, other than motions for summary judgment or summary trial, in which statements as to the deponent’s belief, with the grounds for it, may be included.
81 (1) Les affidavits se limitent aux faits dont le déclarant a une connaissance personnelle, sauf s’ils sont présentés à l’appui d’une requête – autre qu’une requête en jugement sommaire ou en procès sommaire – auquel cas ils peuvent contenir des déclarations fondées sur ce que le déclarant croit être les faits, avec motifs à l’appui.
Affidavits on belief
Poids de l’affidavit
(2) Where an affidavit is made on belief, an adverse inference may be drawn from the failure of a party to provide evidence of persons having personal knowledge of material facts.
(2) Lorsqu’un affidavit contient des déclarations fondées sur ce que croit le déclarant, le fait de ne pas offrir le témoignage de personnes ayant une connaissance personnelle des faits substantiels peut donner lieu à des conclusions défavorables.
[46] In support of the inadmissibility of hearsay evidence, the Respondents rely on the following explanation in the recent decision by the Federal Court of Appeal in Canada (Attorney General) v Iris Technologies Inc, 2021 FCA 223 [Iris Technologies] at para 32:
32. The rules of evidence, both substantive and procedural, matter. They matter because they are the foundation of the truth-seeking role of the courts. They are also the foundation of fairness in the adjudicative process. They are not to be overlooked, and there are consequences if they are. Here, the affidavit was wafer thin. It did not comply with the Ares v. Venner exception to the hearsay rule, it did not measure up to the statutory exception specifically designed to facilitate the introduction of documents in the possession of the CRA and no notice was given under the Canada Evidence Act of an intention to rely on business records. Quite apart from the question of the admissibility of evidence in any individual case, courts have an over-arching concern to ensure that proceedings unfold in accordance with established laws of evidence and procedure. This is the foundation of fairness. This factor militates against admission of the affidavit.
[47] In Iris Technologies, the Federal Court of Appeal ultimately held that the affidavit at issue was admissible under the common law exception to the hearsay rule based on reliability and necessity (at para 33). In the case at hand, the Minister does not rely on that particular exception but rather upon what it refers to as the corporate exception to the hearsay rule. The Minister refers the Court to Twentieth Century Fox Home Entertainment Canada Limited v Canada (Attorney General), 2012 FC 823 [Twentieth Century Fox], which considered the admissibility of an affidavit of a CRA official, filed in response to a judicial review of a decision under the ETA. Justice Phelan accepted into evidence the hearsay components of the affidavit, holding that the official’s evidence was in the nature of “corporate” evidence, in that he acted in a supervisory capacity, was responsible for his subordinates, and was therefore in a position to know if the facts in his affidavit were true (at paras 23, 26). Twentieth Century Fox was affirmed on appeal (2013 FCA 25), although without any commentary on this particular issue.
[48] Subsequently, in O’Grady v Canada (Attorney General), 2016 FC 9 [O’Grady], Justice LeBlanc followed the approach of Twentieth Century Fox to the admissibility of hearsay evidence, concluding that the affiant in O’Grady, a Director General with Statistics Canada, was, based on her sphere of responsibility, in a position to know that the facts sworn in her affidavit were true (at para 19). For similar reasons, Justice LeBlanc also concluded that the affiant was in a position to swear the affidavit without providing evidence of the persons having personal knowledge of the material facts (at para 20). The Court declined to draw an adverse inference under Rule 81(2) and concluded that whether the respondent had provided the best evidence went to the weight to be accorded to the affidavit by the judge on the hearing of the application (at para 22).
[49] On appeal, in O’Grady v. Canada (Attorney General), 2016 FCA 221, the Federal Court of Appeal again relied on Twentieth Century Fox and found no error in Justice LeBlanc’s decision that the affidavit evidence was admissible, because the affiant, by virtue of her responsibilities in the Government of Canada, was in a position to depose to the matters in question without necessarily having personal knowledge (at para 10).
[50] In support of her reliance on this jurisprudence, the Minister refers to Mr. Bowe’s affidavit and cross-examination evidence. In each of his affidavits, he swore that he was employed as an International and Large Business Case Manager with CRA. In his cross-examination in T-252-19 (Nader Ghermezian), he explained that this role involved the duties of a team leader in CRA’s Audit and Compliance Programs Branch. In his cross-examination in T-261-19 (Raphael Ghermezian), in the context of questioning about the mailing by a student employee of a particular Requirement, Mr. Bowe described himself as the supervisor of the employee, as the individual with the conduct of the audit, and as therefore possessing knowledge of what happened within the audit file. In T-254-19 (Marc Vaturi), when questioned about Requirement A-NG-0127, addressed to Mr. Vaturi on June 27, 2018 under the signature of an individual named John Harasymchuk, Mr. Bowe referred to the Requirement being issued on his recommendation as the case manager with responsibility for the audit.
[51] In my view, this evidence is sufficient to support the Minister’s reliance on the above jurisprudence for the admissibility of Mr. Bowe’s affidavits under the corporate exception.
[52] In arriving at this conclusion, I have considered the Respondents’ submission that this case law supports only the ability of a manager to testify about tasks performed by subordinates. I disagree that the principle is as limited as the Respondents suggest. I note that, in Coldwater First Nation v. Canada (Attorney Gene