Baron v. Canada

Baron v. Canada
Collection
Supreme Court Judgments
Date
1993-01-21
Report
[1993] 1 SCR 416
Case number
22298
Judges
La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Cory, Peter deCarteret; McLachlin, Beverley; Stevenson, William; Iacobucci, Frank
On appeal from
Federal Court of Appeal
Subjects
Taxation
Notes
SCC Case Information: 22298
Decision Content
Baron v. Canada, [1993] 1 S.C.R. 416
Her Majesty The Queen,
the Attorney General of Canada
and the Honourable Otto Jelinek in his
capacity as Minister of National Revenue Appellants
v.
Berl Baron and Howard Baron, C.A. Respondents
and
The Attorney General for Ontario and
the Attorney General of Quebec Interveners
Indexed as: Baron v. Canada
File No.: 22298.
1992: February 6; 1993: January 21.
Present: La Forest, L'Heureux‑Dubé, Sopinka, Cory, McLachlin, Stevenson* and Iacobucci JJ.
on appeal from the federal court of appeal
Income tax ‑‑ Enforcement ‑‑ Search and seizure ‑‑ Warrant authorizing search and seizure executed ‑‑ Provision of Income Tax Act authorizing issuance of warrants restricting judicial discretion to issue warrants ‑‑ Whether s. 231.3 of the Income Tax Act infringing ss. 7 and 8 of the Charter ‑‑ Income Tax Act, S.C. 1970‑71‑72, c. 63, s. 231.3 [ad. S.C. 1986, c. 6, s. 121] ‑‑ Canadian Charter of Rights and Freedoms, s. 8 .
Revenue Canada officers believed certain documents belonging to the respondents could afford evidence of the commission of various alleged offences under the Income Tax Act. The Federal Court, Trial Division, issued warrants under s. 231.3 of the Act to search respondents' residences and business premises and a large number of documents were seized. This section provided that the judge hearing the application "shall issue the warrant" where the judge is satisfied that there are reasonable grounds to believe an offence under the Act has been committed, a document or thing that may afford evidence of the commission of the offence is likely to be found, and the place to be searched is likely to contain such a document or thing.
In 1989, respondents brought three motions and instituted an action in the Federal Court, Trial Division, seeking orders setting aside the search warrants, declaring s. 231.3 contrary to ss. 7 , 8 and 15 of the Canadian Charter of Rights and Freedoms , ordering the return or destruction of the items seized and of any summaries, notes or diagrams made from those items, and prohibiting the department from using such material.
The proceedings were dismissed with a single set of reasons. The Federal Court of Appeal considered the four appeals together and held s. 231.3 of the Income Tax Act to be contrary to ss. 7 and 8 of the Charter , allowing the appeals and quashing the search warrants on the basis that s. 231.3 of the Act violated ss. 7 and 8 of the Charter . On consent, the Minister appealed only one of the Court of Appeal's judgments to this Court. The constitutional question before the Court queried whether s. 231.3 limited the rights and freedoms guaranteed by ss. 7 and 8 of the Charter .
Held: The appeal should be dismissed. Section 231.3 of the Income Tax Act violates s. 8 of the Charter and is of no force or effect.
A residual discretion in the judiciary to refuse to issue a search warrant in appropriate circumstances even though the statutory criteria for its issuance have been met is required by s. 8 of the Charter and s. 231.3(3) removed this residual discretion.
The exercise of a judicial discretion in the decision to grant or withhold authorization for a search warrant was fundamental to the scheme of prior authorization which is an indispensable requirement for compliance with s. 8 . The decision to grant or withhold the warrant requires the balancing of two interests: that of the individual to be free of intrusions of the state and that of the state to intrude on the privacy of the individual for the purpose of law enforcement. The circumstances in which these conflicting interests must be balanced will vary greatly. The strength of the interests will be affected by matters such as the nature of the offence alleged, the nature of the intrusion sought including the place to be searched, the time of the search and the person or persons who are the subjects of the search. In order to take account of the various factors affecting the balancing of the two interests, the authorizing judge must be empowered to consider all the circumstances. No set of criteria will always be determinative or sufficient to override the right of the individual to privacy. It is imperative, therefore, that a sufficient degree of flexibility be accorded to the authorizing officer in order that justice be done to the respective interests involved. The requirement that the officer authorizing the seizure be independent and capable of acting judicially is inconsistent with the notion that the state can dictate to him or her the precise circumstances under which the right of the individual can be overborne.
Section 231.3(3) provides that a judge "shall" issue the warrant once satisfied that the three statutory conditions set out therein have been satisfied. The word "shall" is normally to be construed as imperative unless such an interpretation would be utterly inconsistent with the context in which it has been used and would render the sections irrational or meaningless. Nothing in the context of s. 231.3 renders an imperative interpretation of the word "shall" in s. 231.3(3) inconsistent with the balance of the section or makes it irrational or meaningless.
Due to this imperative language, the issuing judge's discretionary power to attach pre-conditions to the issue of the warrant cannot be exercised once the statutory criteria for the issue of the warrant have been met. Moreover, a judge's inherent power to prevent an abuse of the court's process or a violation of a constitutional right does not confer on an issuing judge the discretion to refuse to issue a warrant in those circumstances. If the conditions set out in the subsection are exhaustive of all the conditions precedent of a reasonable search, an application which meets all of those conditions cannot be an abuse of the process.
The removal of the discretion to refuse to issue a warrant when all statutory criteria are met takes away the issuing judge's "balance wheel" function. In order to fulfil properly the "balance wheel" role required by s. 8 of the Charter , a judge must be able to weigh all the surrounding circumstances to determine whether in each case the interests of the state are superior to the individual's right to privacy. By restricting the factors that a judge may consider, Parliament has improperly restricted a judge's ability to assess the reasonableness of a search.
Section 231.3(3) denies the issuing judge the discretion to refuse to issue a warrant where in all the circumstances a search or seizure would be unreasonable and, indeed, may require a judge to authorize an unreasonable search or seizure. By using the word "shall" the subsection violates s. 8 of the Charter .
Classifying a statute as regulatory, while it may affect the exercise of discretion by the authorizing judge, is not a basis for reading the requirement for a residual discretion out of s. 8 . What is ultimately important are not labels (though these are undoubtedly useful), but the values at stake in the particular context. Given the intrusive nature of searches and the corresponding purpose of such a search to gather evidence for the prosecution of a taxpayer, there is no reason for a radical departure from the guidelines and principles expressed in Hunter v. Southam Inc., [1984] 2 S.C.R. 145. The effect of any lessened expectation of privacy by reason of the character of the
Income Tax Act will affect the authorizing judge's exercise of discretion but cannot justify eliminating it.
The argument was rejected that the "reasonable grounds" standard in s. 231.3(3) is constitutionally insufficient as being a lower standard than "reasonable and probable grounds", while only the latter satisfies s. 8 of the Charter . Nothing turns on the omission of the word "probable" from s. 231.3(3) . The standard that the subsection sets out is one of credibly based probability, which is the standard required by s. 8 . "Reasonable" is the same as "reasonable and probable" and imports the same standard. "Reasonable" comprehends a requirement of probability. The use of an interpretative "gloss" on the word to make it conform to constitutional requirements is an unnecessary strain on the meaning of the word. The alleged distinction between the two phrases was a "refined distinction" of the type found in American constitutional jurisprudence and is to be avoided in the interpretation of s. 8 of the Charter .
Section 231.3(3)(b), requiring the authorizing judge to be satisfied that a document or thing which "may afford evidence" is "likely to be found", does not water down the minimum constitutional standard for the probability that the search will unearth evidence. The need to protect individuals against unreasonable searches in the form of "fishing expeditions" by the state has been recognized. A standard of credibly based probability rather than mere suspicion must be applied in determining when an individual's interest in privacy is subordinate to the needs of law enforcement. The formulation in s. 231.3(3)(b) meets the "credibly based probability" standard required by s. 8 through its use of the word "likely" which imports the criterion of probability. The use of the word "may" regarding the use of the thing found as evidence in a prosecution simply reflects one of the realities of the investigation of offences. It is impossible to know with certainty at an early stage in any investigation what particular items will provide evidence in a trial.
The issue of whether s. 231.3(5) allowed the same kind of "wholesale search and seizures" without prior authorization which was found under the predecessor legislation to violate s. 8 of the Charter should be left to be resolved until such time as this Court is presented with a situation in which the provision was relied upon to seize documents.
No analysis under s. 1 of the Charter was undertaken. The burden was on the government to establish that the law constituted a reasonable limit, and it made no attempt to do so.
Cases Cited
Considered: Hunter v. Southam Inc., [1984] 2 S.C.R. 145; R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627; Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860; Canadian Broadcasting Corp. v. Lessard, [1991] 3 S.C.R. 421; Canadian Broadcasting Corp. v. New Brunswick (Attorney General), [1991] 3 S.C.R. 459; referred to: Kourtessis v. M.N.R., S.C.C., No. 21654, on appeal from (1989), 39 B.C.L.R. (2d) 1; Solvent Petroleum Extraction Inc. v. Canada (M.N.R.), [1990] 1 F.C. 20 (C.A.), aff'g [1988] 3 F.C. 465 (leave to appeal refused, [1989] 2 S.C.R. xi); Minister of National Revenue v. Kruger Inc., [1984] 2 F.C. 535; R. v. Simmons, [1988] 2 S.C.R. 495; Re Print Three Inc. and The Queen (1985), 20 C.C.C. (3d) 392, leave to appeal refused, [1985] 2 S.C.R. x; Kohli v. Moase (1987), 86 N.B.R. (2d) 15, aff'd on other grounds (1989), 55 D.L.R. (4th) 740; R. v. Thompson, [1990] 2 S.C.R. 1111; Minister of National Revenue v. Paroian, [1980] C.T.C. 131; Selye v. Quebec, [1982] R.D.F.Q. 173; Beauregard v. Canada, [1986] 2 S.C.R. 56; Re Manitoba Language Rights, [1985] 1 S.C.R. 721; R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; R. v. Rao (1984), 12 C.C.C. (3d) 97, leave to appeal refused, [1984] 2 S.C.R. ix; R. v. Debot, [1989] 2 S.C.R. 1140, aff'g (1986), 30 C.C.C. (3d) 207; Goguen v. Shannon (1989), 50 C.C.C. (3d) 45; Nima v. McInnes (1988), 45 C.C.C. (3d) 419; Wiens v. The Queen (1973), 24 C.R.N.S. 341; R. v. Burnett, [1985] 2 C.T.C. 227; Danson v. Ontario (Attorney General), [1990] 2 S.C.R. 1086; MacKay v. Manitoba, [1989] 2 S.C.R. 357; R v. Edwards Books and Art Ltd., [1986] 2 S.C.R. 713; Slaight Communications Inc. v. Davidson, [1989] 1 S.C.R. 1038; Osborne v. Canada (Treasury Board), [1991] 2 S.C.R. 69; Schachter v. Canada, [1992] 2 S.C.R. 679.
Statutes and Regulations Cited
Canadian Bill of Rights, R.S.C., 1985, App. III, s. 2.
Canadian Charter of Rights and Freedoms, ss. 1 , 7 , 8 , 11 (d), 15 .
Combines Investigation Act, R.S.C. 1970, c. C‑23, s. 10(1).
Competition Act, R.S.C. 1970, c. C‑23.
Constitution Act, 1982, s. 52(1) .
Criminal Code, R.S.C. 1970, c. C‑34, s. 443 [now R.S.C., 1985, c. C-46, s. 487 ].
Customs Act, R.S.C., 1985, c. 1 (2nd Supp .), s. 111(1) .
Income Tax Act, S.C. 1970‑71‑72, c. 63, ss. 121, 231.3(1), (2), (3), (4), (5), (6), (7), (8) [ad. S.C. 1986, c. 6] [formerly s. 231(4)], 239(1)(c), (d), 443 [now R.S.C., 1985, c. C-46, s. 487 ].
Interpretation Act, R.S.C., 1985, c. I‑21, s. 11 .
APPEAL from a judgment of the Federal Court of Appeal, [1991] 1 F.C. 688, [1991] 1 C.T.C. 125 (1990), 91 D.T.C. 5055, 122 N.R. 47, supplementary reasons, [1991] 1 F.C. 712, [1991] 1 C.T.C. 408 (1991), 91 D.T.C. 5134) granting an appeal from a judgment of Reed J., [1990] 2 F.C. 262, [1990] 1 C.T.C. 84 (1989), 30 F.T.R. 188, 90 D.T.C. 6040. Appeal dismissed. Section 231.3(3) of the Income Tax Act violates s. 8 of the Charter and is of no force or effect.
John R. Power, Q.C., Pierre Loiselle, Q.C., and Robert Frater, for the appellants.
Guy Dupont, Basile Angelopoulos and Ariane Bourque, for the respondents.
Janet E. Minor and Tanya Lee, for the intervener the Attorney General for Ontario.
Yves Ouellette, Judith Kucharsky and Diane Bouchard, for the intervener the Attorney General of Quebec.
//Sopinka J.//
The judgment of the Court was delivered by
Sopinka J. --
I. Introduction
This appeal was heard concurrently with Kourtessis v. M.N.R., S.C.C., No. 21654. Both appeals address the validity of search warrants issued and executed under s. 231.3 of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended [hereinafter ITA]. In each case the persons subjected to search and seizure applied in court to have the searches and seizures invalidated and set aside, and the things seized returned, on the ground that s. 231.3 of the ITA violates ss. 7 and 8 of the Canadian Charter of Rights and Freedoms and that consequently, the section and the impugned warrants, searches and seizures are of no force or effect. Kourtessis also raises an additional issue as to the jurisdiction of the Court of Appeal and of this Court to hear the appeal. Judgment in that appeal will be released in due course.
The nub of this appeal is the ITA's limitation of the judicial discretion of the issuing judge by use of the word "shall" in s. 231.3(3). I conclude, for reasons I will state below, that s. 231.3 of the ITA violates s. 8 of the Charter in so far as it removes the residual discretion of the issuing judge to refuse to issue a search warrant in the proper circumstances, notwithstanding that the statutory criteria for its issuance have been met. By reason of this violation and pursuant to s. 52(1) of the Constitution Act, 1982 , s. 231.3 is of no force or effect and the search warrants issued and executed thereunder against the respondents are also invalid and of no force or effect.
In my view, the appeal can be disposed of entirely on the basis of s. 8 of the Charter . It is therefore not necessary to consider the respondents' argument that s. 7 was also violated. Nor do I propose to consider separately the question of whether the impugned section improperly interferes with judicial independence. In my view, this is merely another ground which supports my conclusion with respect to the importance of a residual judicial discretion.
Neither the parties nor the interveners have made arguments or referred to any evidence either in this appeal or in Kourtessis in relation to s. 1 of the Charter or capable of demonstrating that the violation of s. 8 is justified within the meaning of s. 1 . It will therefore not be necessary to consider whether this legislation permitting unreasonable searches can be demonstrably justified as a reasonable limit on the right to be secure against unreasonable searches.
II. The Facts
After an investigation, Revenue Canada officers formed the opinion that certain documents belonging to the respondents Berl and Howard Baron could afford evidence of the commission of various alleged offences under the ITA. The allegation was that Xentec Laboratories Inc. had made false or deceptive entries in its books of account and evaded or attempted to evade compliance with the ITA, in violation of ITA ss. 239(1)(c) and (d). On August 7, 1986, Strayer J. of the Federal Court, Trial Division, issued warrants to search the Barons' residences and business premises (the law firm Baron and Abrams, and the accounting firm Baron, Merton). The warrants were executed and a large number of documents were seized.
On June 21, 1989 Berl and Howard Baron brought three motions and instituted an action in the Federal Court, Trial Division. The motions sought orders:
(a)setting aside the search warrants;
(b)declaring s. 231.3 ITA of no force or effect pursuant to s. 52 of the Constitution Act, 1982 , because it is inconsistent with ss. 7 , 8 and 15 of the Charter ;
(c)ordering the return to the Barons of all the items seized and extracts or copies thereof;
(d)ordering the return of all summaries, notes or diagrams taken from the items seized;
(e)prohibiting the Department from using the items or summaries, notes, diagrams or information taken thereof; and
(f)ordering the destruction of all summaries, copies, notes or diagrams not returned to the Barons.
The ground for the motions was that the searches and seizures were unreasonable because s. 231.3 ITA is inconsistent with ss. 7 , 8 and 15 of the Charter and consequently is of no force or effect.
The relief requested in the action instituted at the same time as the motions was to the same effect. The Barons sought a declaration that s. 231.3 ITA was inconsistent with ss. 7 , 8 and 15 of the Charter and of no force or effect, and that the warrants and searches and seizures which followed were unreasonable and consequently of no force or effect. They also sought an order compelling the return, non-use or destruction of items seized and copies and summaries thereof corresponding to paragraphs (c) through (f) of the relief sought in the motions, above.
As the trial judge, Reed J., summarized, [1990] 2 F.C. 262, at pp. 266-67, the respondents contended that the search and seizure provisions in s. 231.3 were invalid because:
. . . (1) subsection 231.3(3) allows no discretion to a judge to guard against abusive searches and seizures -- it requires a judge to issue a warrant if satisfied that there are reasonable grounds to believe that an offence has been committed and that evidence of that offence is likely to be found in certain premises; (2) subsection 231.3(5) allows wholesale searches and seizures, without adequate authorization, and therefore does not meet the requirements of a constitutionally valid search and seizure power, as set out in Hunter v. Southam Inc., [1984] 2 S.C.R. 145, ... ; (3) the requirements under subsection 231.3(3) do not meet the requirements of Hunter v. Southam (supra) because they only require that there be reasonable grounds to believe that an offence has been committed -- this is a lesser test than one requiring that there be "reasonable and probable" grounds; (4) the provisions of section 231.3 offend section 15 of the Canadian Charter of Rights and Freedoms ... because there are two avenues by which warrants can be obtained ... and the appeal provisions differ depending upon which route is chosen .... [Emphasis in original.]
The respondents also attacked some of the warrants on the basis that they did not contain a clause protecting documents which were subject to solicitor-client privilege or which arose in the course of an accountant-client confidential relationship.
The motions and action for a declaration were dismissed with a single set of reasons by Reed J. These judgments were appealed to the Federal Court of Appeal, which allowed all four appeals: Baron v. Canada, [1991] 1 F.C. 688. Hugessen J.A. (for the court) dealt with all four appeals together as they raised identical issues. He held that s. 231.3 violated ss. 7 and 8 of the Charter and was consequently of no force or effect, and quashed the search warrants. With the consent of the Barons, the Minister sought to appeal only one of the Court of Appeal's judgments to this Court. Leave to appeal to this Court was granted on May 16, 1991 at which time it was ordered that Baron be heard on the same day as Kourtessis.
III. The Issues
On June 20, 1991, Chief Justice Lamer stated the following constitutional question for the consideration of the Court:
Whether s. 231.3 of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended by S.C. 1986, c. 6, limits the rights and freedoms guaranteed by ss. 7 and 8 of the Canadian Charter of Rights and Freedoms , Part I of the Constitution Act, 1982 , being Schedule B of the Canada Act, 1982 (U.K.), 1982, c. 11, and is consequently of no force or effect pursuant to s. 52 of the Constitution Act, 1982 , Schedule B, Canada Act, 1982 (U.K.), 1982, c. 11.
It is to be noted that only ss. 7 and 8 of the Charter are invoked before this Court. The argument based on the s. 15 equality guarantee has been abandoned as a basis on which to attack s. 231.3 and the warrants. Section 231.3 is alleged to infringe ss. 7 and 8 of the Charter in the following respects:
1.subs. (3) is invalid in that it removes from the authorizing judge a residual discretion;
2.subs. (3) is invalid in that "reasonable grounds" fails to meet the minimum constitutional standard of "reasonable and probable grounds";
3.subs. (3)(b) is invalid in that the words "may afford evidence" fail to meet the minimum constitutional standard for the discovery of evidence;
4.subs. (5) is invalid in that it authorizes a wholesale search and seizure.
IV. Pertinent Legislation
A.Income Tax Act, S.C. 1970-71-72, c. 63, as amended by S.C. 1986, c. 6, s. 121.
The provision under which the search warrants in both cases were sought and issued and which forms the centrepiece of the present litigation is s. 231.3 of the ITA, which I reproduce here in its entirety.
231.3 (1) A judge may, on ex parte application by the Minister, issue a warrant in writing authorizing any person named therein to enter and search any building, receptacle or place for any document or thing that may afford evidence as to the commission of an offence under this Act and to seize and, as soon as practicable, bring the document or thing before, or make a report in respect thereof to, the judge or, where the judge is unable to act, another judge of the same court to be dealt with by the judge in accordance with this section.
(2) An application under subsection (1) shall be supported by information on oath establishing the facts on which the application is based.
(3) A judge shall issue the warrant referred to in subsection (1) where he is satisfied that there are reasonable grounds to believe that
(a) an offence under this Act has been committed;
(b) a document or thing that may afford evidence of the commission of the offence is likely to be found; and
(c) the building, receptacle or place specified in the application is likely to contain such a document or thing.
(4) A warrant issued under subsection (1) shall refer to the offence for which it is issued, identify the building, receptacle or place to be searched and the person alleged to have committed the offence and it shall be reasonably specific as to any document or thing to be searched for and seized.
(5) Any person who executes a warrant under subsection (1) may seize, in addition to the document or thing referred to in subsection (1), any other document or thing that he believes on reasonable grounds affords evidence of the commission of an offence under this Act and shall as soon as practicable bring the document or thing before, or make a report in respect thereof to, the judge who issued the warrant or, where the judge is unable to act, another judge of the same court to be dealt with by the judge in accordance with this section.
(6) Subject to subsection (7), where any document or thing seized under subsection (1) or (5) is brought before a judge or a report in respect thereof is made to a judge, the judge shall, unless the Minister waives retention, order that it be retained by the Minister, who shall take reasonable care to ensure that it is preserved until the conclusion of any investigation into the offence in relation to which the document or thing was seized or until it is required to be produced for the purposes of a criminal proceeding.
(7) Where any document or thing seized under subsection (1) or (5) is brought before a judge or a report in respect thereof is made to a judge, the judge may, of his own motion or on summary application by a person with an interest in the document or thing on three clear days notice of application to the Deputy Attorney General of Canada, order that the document or thing be returned to the person from whom it was seized or the person who is otherwise legally entitled thereto if the judge is satisfied that the document or thing
(a) will not be required for an investigation or a criminal proceeding; or
(b) was not seized in accordance with the warrant or this section.
(8) The person from whom any document or thing is seized pursuant to this section is entitled, at all reasonable times and subject to such reasonable conditions as may be imposed by the Minister, to inspect the document or thing and to obtain one copy of the document at the expense of the Minister.
B. Canadian Charter of Rights and Freedoms
8. Everyone has the right to be secure against unreasonable search or seizure.
V. Judgments Below
A. Federal Court, Trial Division (Reed J.)
Reed J. dealt with each of the respondents' attacks on s. 231.3 in turn. First came the issue of judicial discretion. She felt bound by the Federal Court of Appeal's decision in Solvent Petroleum Extraction Inc. v. Canada (M.N.R.), [1990] 1 F.C. 20 (C.A.), aff'g [1988] 3 F.C. 465, leave to appeal refused, [1989] 2 S.C.R. xi [hereinafter Solvent Petroleum], in which Desjardins J.A. (Pratte and Stone JJ.A., concurring) said, at p. 24, that if the statutory conditions are met, the issuing judge must issue the warrant. Reed J. then cited other decisions and authorities on the interpretation of the word "shall", some holding it to be mandatory, others holding it to have been a slip by the legislature, which had intended to say "may". She then reproduced a long excerpt from the British Columbia Court of Appeal's reasons in Kourtessis v. M.N.R. (1989), 39 B.C.L.R. (2d) 1, in which Locke J.A. concluded that while s. 231.3(3) deprives the issuing judge of the discretion to refuse a warrant once the statutory criteria are met, it preserves the judge's crucial "balance wheel" function of deciding whether the facts before him or her are sufficient to warrant an intrusion of privacy, and thus does not defeat the standards of Hunter v. Southam Inc., [1984] 2 S.C.R. 145. In any event, Locke J.A. held the judge may attach conditions to the execution of the warrant. Reed J. thought that perhaps s. 2 of the Canadian Bill of Rights, R.S.C., 1985, App. III, or the court's inherent control over the abuse of its own process, might allow an issuing judge to refuse to issue an abusive warrant. She agreed that certainly the issuing judge could attach conditions to the warrant. But ultimately she declined to decide the question of whether ss. 231.3(3) removed the issuing judge's discretion to refuse to issue a warrant where to do so would be abusive, since in her view no abusive search or seizure in violation of s. 8 of the Charter had occurred in this case and there was no factual underpinning for the argument (at p. 275).
Then came the issue of wholesale search and seizure under s. 231.3(5). Reed J. referred to the general requirement of prior authorization enunciated in Hunter, supra, and the Federal Court of Appeal's judgment in Minister of National Revenue v. Kruger Inc., [1984] 2 F.C. 535, striking down as too wide and general the search power in s. 231.3's predecessor (s. 231(4), which allowed the seizure of anything that may afford evidence of the violation of any provision of the ITA or a regulation). She then quoted extensively from Solvent Petroleum, supra, in which the Federal Court of Appeal held that the "plain view" seizure permitted by the ITA met the test of reasonableness and therefore of validity. Reed J. held that decision to be binding on her.
The next issue was whether it was sufficient to require only "reasonable grounds to believe" (s. 231.3(3)) instead of "reasonable and probable grounds". Reed J. referred extensively to the British Columbia Court of Appeal's decision in Kourtessis, supra, which held that "reasonable" in the context of s. 231.3(3) satisfied the "more-probable-than-not test" required by Hunter, supra. She then referred to R. v. Simmons, [1988] 2 S.C.R. 495, at p. 523, which stated the Hunter test to be "reasonable and probable grounds", and juxtaposed that with the conclusion reached in Solvent Petroleum, supra (adopting Lysyk J.'s conclusion in Kourtessis, supra) that the absence of a statutory requirement for probable as well as reasonable grounds for belief was not constitutionally fatal since the only explicit requirement in s. 8 is that of reasonableness which comprehended a requirement of probability.
Reed J. then went on to reject the respondents' s. 15 argument and their arguments based on solicitor-client or accountant-client privilege. She dismissed the application with one set of costs.
B.Federal Court of Appeal (Hugessen J.A., Pratte and Marceau JJ.A., concurring)
Hugessen J.A. wrote the reasons for the court's decision. He started by considering the characterization of the search and seizure provisions of the ITA for the purposes of determining the taxpayer's reasonable expectation of privacy under s. 8 of the Charter . He rejected the contention that the procedures constituted an administrative enforcement mechanism as described in R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627, holding instead that they were concerned with the detection and prosecution of crime. No easing of Charter standards was therefore justified; on the contrary, "nothing less than the full panoply of Charter protection is appropriate" (at p. 694).
Hugessen J.A. then broached the substantive issues. On the first question of judicial discretion and the use of the words "shall issue" in s. 231.3(3), he held that any text which specifically excludes the residual discretion to refuse to issue a warrant where the circumstances do not justify an invasion of privacy "will, for that reason alone, run afoul of sections 7 and 8 of the Charter as authorizing an unreasonable search and seizure and one that is in breach of the principles of fundamental justice" (at pp. 694-95). He rejected the trial judge's suggestion that s. 231.3(3) could be "read down" to preserve a residual discretion and held that the context of s. 231.3 and the fact that the section's use of "shall" is unique in Canadian search warrant legislation show that the word was intended to be mandatory and imperative. He referred to but rejected the British Columbia Court of Appeal's holding in Kourtessis, supra, that the judge's discretion to determine whether the statutory criteria are met satisfies the Hunter standard and that in any event the issuing judge may attach conditions to the warrant. He placed considerable emphasis on this Court's decision in Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860, deriving from that case the proposition that the existence of judicial discretion is a prerequisite to the reasonableness of a search and to our notions of fundamental justice. Moreover, in his view, Descôteaux establishes that any legislative attempt to define exhaustively when a search will be reasonable is impossible. He concluded that the ultimate protection for the citizen against unreasonable searches resides in the power to refuse to issue a warrant even when all the conditions prescribed by Parliament are met.
Hugessen J.A. went on to consider the other grounds of appeal. He cited, inter alia, Dickson J.'s (as he then was) statement in Hunter, supra, at p. 167, that the standards in s. 443 of the Criminal Code, R.S.C. 1970, c. C-34, ("reasonable ground") and the U.S. Fourth Amendment ("probable cause") are identical. From this he held at p. 707 that the words "reasonable grounds" in s. 231.3(3) met the "more likely than not" standard of probability required for a search to be reasonable. Next, he held at p. 708 that s. 231.3(3)(b) did not pass constitutional muster, since by using the words "may afford evidence" it failed to meet the standard of Hunter, supra that there be reasonable grounds to believe that evidence will be found. Finally, he held that there was no reason to interfere with the court's previous holding in Solvent Petroleum, supra, that s. 231.3(5) does not authorize unreasonable "wholesale" searches and seizures. As a result, the appeals were allowed, s. 231.3 was declared of no force or effect and the search warrants were quashed.
VI. Analysis: The Constitutional Validity of s. 231.3
A. Legislative History
Section 231.3 was enacted by Parliament in 1986 in response to a number of appellate court decisions finding that the previous search warrant provisions of the ITA violate s. 8 of the Charter . The predecessor to s. 231.3 read as follows:
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, receptacle 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.
In Minister of National Revenue v. Kruger Inc., supra, s. 231(4) was held to contravene s. 8 of the Charter in that it gave the Minister, when he or she believed one offence to have been committed, the power to authorize a general search and seizure relating to the violation of any of the provisions of the Act or its regulations. The Ontario Court of Appeal agreed with this holding in Re Print Three Inc. and The Queen (1985), 20 C.C.C. (3d) 392, leave to appeal refused [1985] 2 S.C.R. x, and found additional reasons that the section violated s. 8 (at p. 396):
In our view, there are additional reasons to those relied upon by the Federal Court of Appeal for holding the subsection to be in breach of s. 8 . It is clear that to meet the standards of reasonableness there must first be an independent arbiter (judge) who is satisfied that there are reasonable grounds for believing that an offence has been committed (see Hunter et al v. Southam Inc., supra). In s. 231(4) and (5), it is the Minister who has to have the reasonable and probable grounds and there is no standard or conditions precedent set out for the judge on which to base his assessment of whether the Minister's belief is properly founded. Mr. Kelly argued that the only reasonable construction of s-s. 5 is that facts must be laid before the judge so he can be satisfied that the Minister has reasonable and probable grounds. Even if the subsection could be so construed, there are, as we have noted, additional flaws in s. 231(4) and (5). There is no requirement that the Minister have grounds to believe that evidence is likely to be found at the place of the search and there is no requirement that he present such grounds to the judge. There is, equally, no direction as to what is to be issued by the judge in granting his "approval". It is the Minister who issues what is, in essence, the warrant. Finally, the Minister is not required in the authorization to specify the things to be searched for.
The new version addresses these defects. Subsection 231.3(3) now makes it clear that prior to the issuance of a search warrant under the Act a judge must be satisfied that there are reasonable grounds to believe that a particular offence has been committed under the Act and that a document or thing that may afford evidence of the commission of that offence is likely to be found in the building, receptacle or place specified in the application. Moreover, s. 231.3(4) requires particulars to be stated within the warrant as to what may be searched for and seized.
The constitutionality of s. 231.3 of the ITA has been considered in a number of lower court and appellate court decisions. The majority of these have upheld s. 231.3: see for example Kohli v. Moase (1987), 86 N.B.R. (2d) 15 (Q.B.), aff'd on other grounds (1989), 55 D.L.R. (4th) 740 (N.B.C.A.), Solvent Petroleum, supra, and Kourtessis, supra. In my view, however, the amended legislation is still inadequate.
B. Applying Section 8 of the Charter
(1) Denial of Residual Discretion: Subs. (3)
This issue requires a decision as to whether legislation which authorizes a search or seizure must provide for a residual discretion in the judicial officer who issues the warrant. It is contended by the respondents and the Federal Court of Appeal so held that legislation that fails to do so violates s. 8 of the Charter . Reliance is placed on this Court's decision in Hunter, supra, and cases that have followed it. The appellants contend that this was not one of the conditions laid down by Hunter, that if it was it does not apply here and in any event the impugned section does provide a discretion that satisfies the dictates of s. 8 .
In my view, an analysis of the principles on which Hunter was based shows that the exercise of a judicial discretion in the decision to grant or withhold authorization for a warrant of search was fundamental to the scheme of prior authorization which Dickson J. prescribed as an indispensable requirement for compliance with s. 8 in that case. The judgment makes very clear that the decision to grant or withhold the warrant requires the balancing of two interests: that of the individual to be free of intrusions of the state and that of the state to intrude on the privacy of the individual for the purpose of law enforcement. At pages 158-60 of the judgment, Dickson J. stated:
In my view the interests protected by s. 8 are of a wider ambit than those enunciated in Entick v. Carrington. Section 8 is an entrenched constitutional provision. It is not therefore vulnerable to encroachment by legislative enactments in the same way as common law protections. There is, further, nothing in the language of the section to restrict it to the protection of property or to associate it with the law of trespass. It guarantees a broad and general right to be secure from unreasonable search and seizure.
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Like the Supreme Court of the United States, I would be wary of foreclosing the possibility that the right to be secure against unreasonable search and seizure m