Scott Slipp Nissan Ltd. v. Canada (Attorney General)

Scott Slipp Nissan Ltd. v. Canada (Attorney General)
Court (s) Database
Federal Court Decisions
Date
2005-10-31
Neutral citation
2005 FC 1477
File numbers
T-2195-03
Notes
Digest
Decision Content
Date: 20051031
Docket: T-2195-03
Citation: 2005 FC 1477
BETWEEN:
SCOTT SLIPP NISSAN LIMITED
Applicant
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER
PHELAN J.
BACKGROUND
[1] This judicial review concerns the rights of a taxpayer under s. 295 of the Excise Tax Act ("Act") to the disclosure of third party information at the Notice of Objection stage of a dispute with the Canada Revenue Agency ("CRA"). S. 295 is similar to but not identical to s. 241 of the Income Tax Act.
[2] In the course of challenging harmonized sales tax ("HST") assessments under the Act, the Applicant requested the complete audit files for two assessments.
[3] After repeated requests, on October 24, 2003, CRA released a heavily redacted portion of the audit file but refused to release the balance of the file on the basis that it contained third party information. That refusal has resulted in this judicial review.
[4] Subsequent to the refusal to disclose the decision, CRA made a second decision on or about November 24, 2004, about which it gave notice to the third parties and the Applicant, to release the third party information unless the relevant third party(ies) brought legal proceedings to prevent release or alternatively consented to the release of the information. The issue of this second decision, and the disclosure of confidential information about the Applicant which was contained in the CRA notice to third parties, is the subject of a further judicial review in Court file no. T-2108-04.
[5] The Applicant claims that it is entitled under s. 295 of the Act to relevant information related to the basis of the assessment against it. This judicial review raises three issues:
1. Does the Minister have a duty to release this information to the Applicant?
2. If there is no such duty, does the Minister have a discretion to release this information?
3. If there is discretion, was that discretion exercised on proper grounds?
[6] The term "Minister" used in these Reasons includes (unless otherwise indicated) the "officials" charged with the relevant responsibility under s. 295.
FACTS
[7] The facts of this case arose against the backdrop of an investigation into whether a number of car dealers in the Atlantic Provinces were involved in "car-flipping". In general, this is considered to be a scheme by which cars are allegedly sold to purchasers through an out-of-area intermediary for purposes of avoiding some or all of the HST.
[8] Following an assessment by CRA pursuant to the Act, on May 14, 2004, the Applicant requested of CRA the complete audit file in the following terms:
We intend to file Notices of Objection shortly ... In this regard I write to request, pursuant to the Appeals Renewal Initiative, receipt of a copy of the complete audit file concerning these two HST assessments, particularly, including all narrative reports written by the auditors and other CRA officials, if applicable.
[9] Following a series of letters from the Applicant's counsel pressing for disclosure and after the Notice of Objection was filed, on October 24, 2003, a CRA official, S. Denny, advised the Applicant that, while it would release some information, CRA would not release the audit report and various schedules because they contain "third party information". The precise wording of the decision is important:
We have reviewed the differences between the reports and have concluded that the report that is in the audit file contains third party information that we are unable to provide you at this time.
... the schedules contain third party information that we are unable to provide you at this time.
[10] It has been a given in this litigation that third party information is the same as "confidential information" under s. 295 of the Act. The third party information encompasses more than information exclusively about another taxpayer. The information includes information about the taxpayer supplied to CRA by another taxpayer.
[11] The Applicant put considerable reliance in its correspondence with CRA on the Appeals Renewal Initiative ("ARI"), a document from what was then CCRA (now CRA) that outlined its policy with respect to appeals. While more will be said about this document, of particular relevance to this case is the obligation said to be part of the role and responsibilities of an appeals officer to:
explain to taxpayers the basis of the assessment and make available all relevant documents supporting the issues under dispute.
(emphasis added)
[12] In these proceedings, Denny filed an affidavit purporting to explain her decision to refuse disclosure of information. In that affidavit, Denny outlined further reasons for her refusal including:
· that the information was of a nature that implied that other automobile dealers and others may have been involved in a scheme to defraud the Minister of tax revenues;
· some of the information was references to other information.
· some of the information might be competitively sensitive and that reputations might be damaged.
· some of the information would not assist the Applicant in understanding and challenging the assessment.
[13] However, prior to making the decision to refuse release, internal communication between CRA officials, particularly the e-mail of June 10, 2003, expressed concern about the class of information: that it came from third parties to CRA. There was never any indication that there was a concern about how the information may be used, misused or misunderstood.
[14] This concern was reinforced by the meeting between Applicant's counsel and Denny's superior on November 18, 2003, as recorded in counsel's letter of November 21, 2003.
[15] While CRA may have considered the elements outlined in Denny's affidavit, I prefer the evidentiary record most proximate to the decision of October 24, 2003 and the decision's wording itself as to the principle upon which CRA refused to disclose the requested information.
[16] After the judicial review of the October 24, 2003 decision was filed, the Respondent sought to strike out this judicial review. It was unsuccessful before Justice O'Keefe. It then sought to have the matter declared moot, again without success.
[17] While this case and File T-2108-04 (dealing with the second decision) were not heard together, the decision in this matter was deferred until after the hearing of the T-2108-04 matter so that the Court had a more complete appreciation of the matters in issue under s. 295.
[18] In the motion to strike the judicial review, Justice O'Keefe, while not addressing or deciding the merits of the judicial review, made reference to the problem raised by incomplete disclosure at the Notice of Objection stage. Since I concur with his analysis of the problem, that the Notice of Objection stage must be an informed process, I repeat the relevant portion of his judgment:
It is clear that I disagree with the Attorney General's position that documentary disclosure must be obtained by proceeding on appeal to the Tax Court of Canada. The Attorney General's view of the statutory scheme would force taxpayers to proceed with a potentially uninformed Notice of Objection process which would have little or no chance of success, simply to be able to proceed to the Tax Court of Canada's documentary disclosure procedures. In my view, to adopt such an interpretation of the statutory scheme would detract from the intended purpose of the Notice of Objection stage, which is to provide a taxpayer with a meaningful opportunity to persuade the Minister of National Revenue that its assessment should be vacated or a reassessment made. The Notice of Objection stage was not meant to be uninformed or de facto forcibly waived for parties who dispute the sufficiency of CCRA's information disclosure.
ANALYSIS
[19] The Minister's decision not to disclose is based upon his view of the legal rights of the Applicant to disclosure of confidential information. Applying the functional and pragmatic test to this decision, I have concluded that since the issue is one of interpretation of ministerial powers, the standard of review is correctness.
Statutory Scheme
[20] A dispute under the Act proceeds in much the same manner as a dispute under the Income Tax Act. From the taxpayer's perspective, there is an assessment phase, the Notice of Objection phase and finally the litigation phase at the Tax Court of Canada.
[21] A taxpayer is entitled to file a Notice of Objection to the tax assessment. Such filing commences the dispute process with CRA. The Notice of Objection process is usually conducted through correspondence, submissions and meetings with a view to understanding and challenging the assessment, resolving the dispute or narrowing the issues before the matter proceeds to litigation. It is an important process for the taxpayer in knowing whether and on what basis to dispute CRA's assessment. It is an essential step toward litigation.
[22] As part of the assessment, and as happened here, CRA officials can obtain, voluntarily or under compulsion, information including documents from other persons. The legislative scheme controlling the use of that information is set forth in s. 295 of the Act; the complete version of the section is at Appendix A to these Reasons.
[23] The Court is advised that this is the first case considering these issues under s. 295 as it now reads. However, there is case law under the comparable provision of the Income Tax Act. For completeness, s. 241 of the Income Tax Act is attached as Appendix B.
[24] For purposes of these reasons, the critical subsections of s. 295 of the Act are set out:
(1) In this section,
...
"confidential information" means information of any kind and in any form that relates to one or more persons and that is
(a) obtained by or on behalf of the Minister for the purposes of this Part, or
(b) prepared from information referred to in paragraph (a),
but does not include information that does not directly or indirectly reveal the identity of the person to whom it relates;
(2) Except as authorized under this section, no official shall knowingly
(a) provide, or allow to be provided, to any person any confidential information;
(b) allow any person to have access to any confidential information; or
(c) use any confidential information other than in the course of the administration or enforcement of this Part.
(4) Subsections (2) and (3) do not apply in respect of
(a) criminal proceedings, either by indictment or on summary conviction, that have been commenced by the laying of an information or the preferring of an indictment, under an Act of Parliament; or
(b) any legal proceedings relating to the administration or enforcement of this Act, the Canada Pension Plan, the Employment Insurance Act, the Unemployment Insurance Act or any other Act of Parliament or law of a province that provides for the imposition of a tax or duty.
(5) An official may
(a) provide such confidential information to any person as may reasonably be regarded as necessary for the purpose of the administration or enforcement of this Act, solely for that purpose;
(b) provide to a person confidential information that can reasonably be regarded as necessary for the purposes of determining any liability or obligation of the person or any refund, rebate or input tax credit to which the person is or may become entitled under this Act;
(6) An official may provide confidential information relating to a person
(a) to that person; and
(b) with the consent of that person, to any other person.
(1) Les définitions qui suivent s'appliquent au présent article.
...
« renseignement confidentiel » Renseignement de toute nature et sous toute forme concernant une ou plusieurs personnes et qui, selon le cas :
a) est obtenu par le ministre ou en son nom pour l'application de la présente partie;
b) est tiré d'un renseignement visé à l'alinéa a).
N'est pas un renseignement confidentiel le renseignement qui ne révèle pas, même indirectement, l'identité de la personne en cause.
(2) Sauf autorisation prévue au présent article, il est interdit à un fonctionnaire :
a) de fournir sciemment à quiconque un renseignement confidentiel ou d'en permettre sciemment la fourniture;
b) de permettre sciemment à quiconque d'avoir accès à un renseignement confidentiel;
c) d'utiliser sciemment un renseignement confidentiel en dehors du cadre de l'application ou de l'exécution de la présente partie.
(4) Les paragraphes (2) et (3) ne s'appliquent :
a) ni aux poursuites criminelles, sur déclaration de culpabilité par procédure sommaire ou sur acte d'accusation, engagées par le dépôt d'une dénonciation ou d'un acte d'accusation, en vertu d'une loi fédérale;
b) ni aux procédures judiciaires ayant trait à l'application ou à l'exécution de la présente loi, du Régime de pensions du Canada, de la Loi sur l'assurance-emploi, de la Loi sur l'assurance-chômage ou de toute loi fédérale ou provinciale qui prévoit l'imposition ou la perception d'un impôt, d'une taxe ou d'un droit.
(5) Un fonctionnaire peut :
a) fournir à une personne un renseignement confidentiel qu'il est raisonnable de considérer comme nécessaire à l'application ou à l'exécution de la présente loi, mais uniquement à cette fin;
b) fournir à une personne un renseignement confidentiel qu'il est raisonnable de considérer comme nécessaire à la détermination de tout montant dont la personne est redevable ou du remboursement ou du crédit de taxe sur les intrants auquel elle a droit, ou pourrait avoir droit, en vertu de la présente loi;
(6) Un fonctionnaire peut fournir un renseignement confidentiel :
a) à la personne en cause;
b) à toute autre personne, avec le consentement de la personne en cause.
Obligation to Disclose
[25] It is the Applicant's position that the Minister is obliged to release the third party information requested because it is necessary for the administration and enforcement of the Act - of which the Notice of Objection is a critical component. The Applicant argues that the word "may" in ss. 295(5) is directory in nature. It also argues that the Appeals Renewal Initiative ("ARI"), being CRA's view of how the appeals process will operate, confirms this interpretation. The Applicant also relies on the ARI to argue that if the Minister has discretion, then the Minister must apply the ARI under the principle of legitimate expectation.
[26] Despite the able argument of counsel, I cannot agree that "may" means "shall". When one looks at the interpretative principles, the scheme of the provision, its purpose and its wording, I conclude that "may" means "may".
[27] The starting point of the analysis is the Interpretation Act. S. 11 thereof makes it clear that the premise in statutory interpretation is that "may" is permissive.
11. The expression "shall" is to be construed as imperative and the expression "may" as permissive.
11. L'obligation s'exprime essentiellement par l'indicatif présent du verbe porteur de sens principal et, à l'occasion, par des verbes ou expressions comportant cette notion. L'octroi de pouvoirs, de droits, d'autorisations ou de facultés s'exprime essentiellement par le verbe « pouvoir » et, à l'occasion, par des expressions comportant ces notions.
[28] It is recognized in Sullivan R., Sullivan and Driedger On the Construction of Statutes (2002 Butterworths Canada 4th ed) at p. 56-60 that the use of the word "may" implies discretion but does not preclude obligation:
The interpreter must determine whether there is anything in the statute or in the circumstances that expressly or impliedly obliges the exercise of the power.
[29] As noted by the author, there are many cases in which the courts have found that the power conferred by "may" is coupled with a duty once all the conditions for the exercise of the power have been met. Therefore the broad discretion implied by "may" becomes more limited and is dependent on the purpose of the provision in issue and the circumstances of the operation of that provision.
[30] In my view, the Supreme Court of Canada, in dealing with s. 241 of the Income Tax Act, has laid out the relevant interpretative principles for the analogous provision, s. 295 of the Excise Tax Act. The principal decisions are: Glover v. Minister of National Revenue, [1981] 2 S.C.R. 561, [1982] CTC 29, (1981), 82 D.T.C. 6035 and Slattery (Trustee of) v. Slattery, [1993] 2 C.T.C. 243 (S.C.C.), [1993] 3 S.C.R. 430.
[31] In Glover, a trial judge ordered Revenue Canada to disclose the address of a taxpayer who had abducted his children in violation of a court order granting custody to the children's mother. While the decision at the Ontario Court of Appeal (whose reasoning was adopted by the Supreme Court of Canada) turned on an expression "person legally entitled thereto" (a phrase since removed from s. 241), the Ontario Court of Appeal made some comments on the legislative purpose of the confidentiality provisions of the Income Tax Act which are germane to this Act.
[32] The Court of Appeal held that s. 241 of the Income Tax Act is a comprehensive code designed to protect the confidentiality of all information given to the Minister for purposes of the Income Tax Act. The Court went on to describe subsection 4 as a "permissive section":
The absolute prohibition as defined and limited in the first three subsections of s. 241, leads directly into s-s. (4). This permissive subsection and its components allow, for the purposes of the effective working of the entire statute, the communication of confidential information obtained for the purpose of the legislation to other persons as therein defined and limited. These persons are, equally, on receipt of the confidential information, under the ukase of s. 241(1). Section 241(4), as has been recently pointed out by this Court, sets out certain exceptions largely of an administrative nature, to the restrictions imposed by the section: Re Herman et al and Deputy A.-G. Can. (1979), 26 O.R. (2d) 520 at p. 529, 103 D.L.R. (3d) 491 at p. 500, 13 C.P.C. 363.
[33] Given the similarity between this section of the Income Tax Act and s. 295 of the Act, the same principles are applicable. S. 295 of the Act is a comprehensive code designed to protect the confidentiality of information given to the Minister for purposes of the Act.
[34] In addition, just as subsection 4 of s. 241 of the Income Tax Act is a "permissive section", I interpret ss. 5 of s. 295 to be permissive as well. While the wording of the subsections is somewhat different, the subsections are similar in purpose and operation.
[35] The Supreme Court, in Slattery, was dealing with whether information obtained from a taxpayer for purposes of the Income Tax Act could be used by the Minister in an action to declare that property, belonging to the spouse of the bankrupt taxpayer, rightfully belonged to the trustee in bankruptcy. The Court concluded that such evidence could be used because its use was related to the enforcement of the Income Tax Act.
[36] In tracing the history of s. 241 of the Income Tax Act, the Court underscored that, under Canada's self-assessment and self-reporting system, confidentiality of taxpayer information is an important element of the system. The Court held that s. 241 involved a balancing of interests - the privacy of a taxpayer versus "the interests of the Minister in being allowed to disclose taxpayer information to the extent necessary for the effective administration and enforcement" of the Act.
[37] The Court emphasized that the taxpayer's privacy interest at stake was principally in relation to the taxpayer's finances. Only in exceptional situations does the privacy interest give way to the interest of state. The regime of non-disclosure is based on the need for confidence in a voluntary disclosure system.
[38] The Court in Slattery also recognized the need for an exception both for administration and enforcement purposes as well as for litigation:
Parliament has also recognized, however, that if personal information obtained cannot be used to assist in tax collection when required, including tax collection by way of judicial enforcement, the possession of such information will be useless. Disclosure of information obtained through tax returns or collected in the course of tax investigations may be necessary during litigation in order to ensure that all relevant information is before the court, and thereby to assist in the correct disposition of litigation. But this necessity is sanctioned by Parliament in a very limited number of situations. Disclosure is authorized in criminal proceedings and other proceedings as set out in subsection 241(3). Certain other situations are specified in subsection 241(4), which have been described by the Ontario Court of Appeal as being "largely of an administrative nature" (Glover v. Glover (No. 1), supra, at page 397).
[39] It is worth noting that the word "proceedings" is used in the context of court proceedings. I have concluded that the Notice of Objection is not a proceeding as contemplated by the applicable section of the Excise Tax Act. As such, the Applicant is not entitled to disclosure by reason of s. 295(3), which holds that the prohibition against disclosure does not apply to criminal or certain other civil legal proceedings.
[40] In my view of the authorities, based on the purpose of the provision to foreclose disclosure except in limited circumstances, and the plain meaning of the word "may", the Applicant cannot succeed on the argument that "may" should be interpreted as "shall" and that therefore the Minister or officials are required, upon demand, at the Notice of Objection stage to release confidential information.
[41] Section 295 is permissive and therefore must be read as giving a limited discretion to release confidential information.
Discretion to Disclose
[42] Having concluded that s. 295 gives to the Minister discretion to release confidential information, for purposes of this section, I find that this discretion is limited to those matters set out in subsection 5.
[43] This case raises the problem of lifting the lid on information which is prima facie confidential. It is simpler to conclude that the lid should never be lifted, this may avoid difficult issues of balancing competing interests and potentially prolonging the litigation process. On the other hand, it may also deny taxpayers' rights and the opportunity to deal more knowledgeably and earlier with the issues in its tax dispute.
[44] In concluding that "may" is permissive, the section opens up the difficult task of establishing the boundaries of when the Minister may properly disclose confidential information. The exercise of that discretion must take account of the balancing of privacy interests, and the proper administration and enforcement of the Act. It must take account of the importance to the system of the confidentiality regime and yet allow for the meaningful exercise of rights accorded other taxpayers to challenge tax assessments.
[45] The Applicant placed considerable reliance on the CRA policy document ARI. The policy expresses many noble sentiments such as that the process of the internal review process must be "fair", "transparent", and "efficient".
[46] With respect to the resolution of objections, the ARI commits appeals officers (those dealing with Notices of Objection) and auditors in the following terms:
The appeals official will:
- review assessments under objection in an objective, impartial, professional manner, and decide whether to confirm, allow, or vary the assessment;
- explain to taxpayers the basis of the assessment and make available all relevant documents supporting the issues under dispute;
- be available to taxpayers and their representatives for meetings to discuss the issues;
- consider any taxpayer proposal to solve the disputed assessment;
- contact the auditor, when necessary, to better understand the facts and reasons behind the assessment;
- advise taxpayers of any discussions with the auditor and provide copies of the minutes of these discussions;
- invite the auditor to attend meetings with taxpayers, where the appeals officer deems it appropriate and taxpayers agree; and
- explain to taxpayers the position reached by Appeals.
The auditor will:
- provide the appeals officer with all documents supporting the assessment;
- explain the basis of the assessment when required to do so by the appeals officer;
- attend meetings with the appeals officer and taxpayers, when requested to do so by the appeals officer and when taxpayers agree; and
- review further information at the request of the appeals officer and with the knowledge of the taxpayer, particularly when this information is extensive, or was not produced at the time of the audit, and advise the appeals officer in writing, who will then make the decision.
(emphasis added)
[47] A reasonable person reading this policy could easily conclude that a taxpayer would receive all the relevant documents supporting the assessment, no matter the source of those documents.
[48] However, the principle of legitimate expectation that might otherwise arise cannot override the operation of the statute. This policy and any document disclosure emanating from it must be grounded in the exception to the general prohibition against disclosure of confidential information.
[49] In my view, the Notice of Objection stage of the appeal process accords a taxpayer the important right to know the true basis of an assessment, to consider its position, to make meaningful responses to departmental officials. The goal of the process includes assurance that the assessment process is fair, to resolve tax issues without resorting to litigation and to narrowing any issues to be litigated. To deny a taxpayer as meaningful disclosure as the circumstances allow does not serve the interests of the administration and enforcement of the Act.
[50] The right to proceed through the Notice of Objection stage cannot be denuded of value by a blanket claim of confidentiality. If that process is to be meaningful, it must equip the disputing taxpayer with sufficient information, particularly when CRA relies on sources outside the control of the taxpayer. It is not a sufficient answer to a request for documents that all will be disclosed when the taxpayer proceeds to court.
[51] There are three bases upon which the Minister may disclose the confidential information requested by the Applicant. The first is paragraph 295(4)(a) under which confidential information reasonably regarded as necessary for the purpose of the administration and enforcement of the Act may be disclosed. The second is paragraph 295(4)(b) where disclosure of the confidential information for purposes of determining any liability or obligation of the person is permitted. The third basis is found in paragraph 295(6)(a) under which the Minister may provide confidential information relating to that person to that same person.
[52] The Applicant says that the release of the confidential information to the Applicant is clearly necessary for it to properly deal with its Notice of Objection and the underlying assessment. The Minister never challenged the necessity of that disclosure. The purpose of the disclosure is to allow for the proper administration of the Act, which includes the Notice of Objection process. The disclosure is solely for that purpose. As such, it falls squarely within paragraph 295(5)(a) of the Act.
[53] The disclosure is also necessary for the determination of the liability or obligation of the taxpayer, as contemplated by paragraph 295(5)(b). Since the litigation process exemption (s. 295(3)) covers the interests of the Minister in determining liability or obligations, as found in Slattery, paragraph 295(5)(b) must include the administrative processes and is focused on disclosure for the use of the taxpayer. Other provisions cover disclosure for governmental purposes. The disclosure requested is to permit the Applicant to better know and potentially reduce or eliminate his alleged tax liability. Disclosure in this case would meet the purpose of and be consistent with the words in paragraph 295(5)(b).
[54] The further basis for disclosure under subsection (6) provides that the Minister may have provided confidential information relating to the Applicant.
(6) An official may provide confidential information relating to a person
(a) to that person; and
(b) with the consent of that person, to any other person.
(6) Un fonctionnaire peut fournir un renseignement confidentiel :
a) à la personne en cause;
b) à toute autre personne, avec le consentement de la personne en cause.
[55] Confidential information is any information which relates to any person that is obtained by the Minister for purposes of this Part (the Goods and Services portion of the Act). It can be information that relates to anyone.
[56] The confidential information covered by ss. 6 is narrower than the other provisions of s. 295 in that it covers information obtained by the Minister related to the specific person. The Minister can give to that person requesting the information such information as relates to that same person.
[57] Therefore the Minister can give to the Applicant information relating to the Applicant (assuming it was obtained for purposes of that part of the Act) whether that information was provided to the Minister by the Applicant or from some other source.
[58] Consent may be given to provide information about the first person (the Applicant) if it is to be given to some other person (see paragraph 295(6)(b)).
[59] In exercising the discretion to disclose confidential information, the Minister would have to have regard for the nature of the information. There is a qualitative difference between information held by CRA that relates solely to the tax affairs and business of the third party and information supplied by the third party, especially supplied under compulsion, that relates to the other taxpayer's (in this instance, the Applicant's) tax affairs and business. Some information seems to blur this difference, having a dual character in that it discloses information about a third party and about the taxpayer/Applicant. A contract between the third party and the Applicant, for example, discloses information about both.
[60] A further consideration is whether refusal to disclose serves any properly useful purpose or is consistent with the proper administration of the Act. Relevant documents will have to be disclosed in any Tax Court litigation. Even if the Minister does not proceed to reassess or confirm the assessment in a short period, a taxpayer has the right under s. 306 of the Act to proceed to the Tax Court 180 days after the filing of the Notice of Objection if the Minister has not vacated, reassessed or confirmed the assessment. Therefore disclosure would occur in that context.
[61] There is no policy reason to prevent earlier disclosure of information that would be disclosed in Court in due course. Delay is not a proper ground for non-disclosure.
[62] Control of the disclosure can be a condition by the Minister under subparagraph 295(5)(c)(i):
An official may ...
(c) provide, allow to be provided, or allow inspection of or access to any confidential information to or by
(i) a person ... that the Minister may authorize, subject to such conditions as the Minister may specify.
(emphasis added)
[63] In addition, there are criminal sanctions for breaches of the Act including fines and imprisonment that are available to control misuse of disclosure.
[64] Further, the Minister can, and indeed may be required to, give notice to the third party of any anticipated disclosure of its information (as was done in the second decision) which allows such a party to take steps to protect its confidentiality interests.
[65] Having found that the Applicant is entitled to the disclosure of information relevant to the assessment - information considered by CRA in making this assessment - it is important to bear in mind that it is disclosure of information not necessarily document discovery to which the Applicant is entitled.
[66] While disclosure of documents may be, and is generally, the more effective method of disclosure, it is not the only method. Summaries of the evidence and redacted documents are at least two other methods of disclosure. Failure to make proper disclosure could well form a basis for costs awards or other compensation. Nevertheless, the Minister retains a discretion, exercised on proper consideration, to fashion the most appropriate form of the disclosure of the information so long as it meets the requirements of fairness, accuracy and completeness.
[67] With respect to the first decision, the Minister failed to take proper account of his discretion, and failed to take into account relevant facts and principles. The decision was based solely on the fact that the information at issue came from a third party.
[68] The first decision demonstrated an error in law in concluding that the mere fact that there was confidential information precluded disclosure to the Applicant.
[69] There is nothing in the record of this case to suggest that disclosure of this confidential information would interfere with the administration or enforcement of the Act, such as interfering with an ongoing investigation. Nor is there anything to suggest that any privilege is imperilled. The suggestion in the Denny affidavit that the information would not assist the Applicant involves a presumption that the Minister knows what will assist the taxpayer. It is not for the Minister to protect the Applicant from itself. Commercially sensitive information about the third party's business can be protected and is likely irrelevant to the basis for the Applicant's tax assessment.
[70] The Minister's second decision to release the information - the efficacy of the manner of carrying out that decision is the subject matter of another judgment - is an admission that the release of the confidential information is necessary under s. 295(5). That decision merely confirms that the Minister's discretion should have been exercised, in the first instance, in favour of the Applicant.
CONCLUSION
[71] In answering the issues identified in these Reasons, I have concluded that there is no absolute duty on the Minister to disclose confidential information; that there is a discretion to do so on grounds provided in the Act; and that the Minister failed to properly exercise this discretion to disclose.
[72] The Minister's first decision to refuse to disclose the relevant information requested will be quashed. The matter will be referred back to the Minister to implement his second decision in a manner consistent with the reasons in Court file no. T-2108-04.
[73] The Applicant has requested costs on a solicitor-client basis because of the time and expense incurred resisting the Minister's attempts to delay and strike out this judicial review for one reason or another.
[74] There is no reprehensible or scandalous conduct by the Respondent or its counsel that would justify a solicitor-client award.
[75] I have considered the factors in Rule 400. The particularly relevant ones are the result, the amount at issue, the importance and complexity, the public interest and conduct which lengthens the litigation. While the Applicant was successful, it was not on the principal grounds advanced. The amounts were not in issue; the issue was important but not overly complex; there was a mixture of public interest and the Applicant's own private interest involved; there was some conduct which lengthened the process but there is nothing to suggest that it was not bona fides litigation.
[76] Under the circumstances, the Applicant should have its costs in accordance with the normal scale (Column III Tariff B).
"Michael L. Phelan"
JUDGE
APPENDIX A
Excise Tax Act, R.S. 1985, c. E-15
295. (1) In this section,
"authorized person" means a person who is engaged or employed, or who was formerly engaged or employed, by or on behalf of Her Majesty in right of Canada to assist in carrying out the provisions of this Act;
"business number" means the number (other than a Social Insurance Number) used by the Minister to identify
(a) a registrant for the purposes of this Part, or
(b) an applicant (other than an individual) for a rebate under this Part;
"confidential information" means information of any kind and in any form that relates to one or more persons and that is
(a) obtained by or on behalf of the Minister for the purposes of this Part, or
(b) prepared from information referred to in paragraph (a),
but does not include information that does not directly or indirectly reveal the identity of the person to whom it relates;
"court of appeal" has the meaning assigned by the definition of that expression in section 2 of the Criminal Code;
"official" means a person who is employed in the service of, who occupies a position of responsibility in the service of, or who is engaged by or on behalf of, Her Majesty in right of Canada or a province, or a person who was formerly so employed, who formerly occupied such a position or who formerly was so engaged.
(2) Except as authorized under this section, no official shall knowingly
(a) provide, or allow to be provided, to any person any confidential information;
(b) allow any person to have access to any confidential information; or
(c) use any confidential information other than in the course of the administration or enforcement of this Part.
(3) Notwithstanding any other Act of Parliament or other law, no official shall be required, in connection with any legal proceedings, to give or produce evidence relating to any confidential information.
(4) Subsections (2) and (3) do not apply in respect of
(a) criminal proceedings, either by indictment or on summary conviction, that have been commenced by the laying of an information or the preferring of an indictment, under an Act of Parliament; or
(b) any legal proceedings relating to the administration or enforcement of this Act, the Canada Pension Plan, the Employment Insurance Act, the Unemployment Insurance Act or any other Act of Parliament or law of a province that provides for the imposition of a tax or duty.
(4.1) The Minister may provide to appropriate persons any confidential information relating to imminent danger of death or physical injury to any individual.
(5) An official may
(a) provide such confidential information to any person as may reasonably be regarded as necessary for the purpose of the administration or enforcement of this Act, solely for that purpose;
(b) provide to a person confidential information that can reasonably be regarded as necessary for the purposes of determining any liability or obligation of the person or any refund, rebate or input tax credit to which the person is or may become entitled under this Act;
(c) provide, allow to be provided, or allow inspection of or access to any confidential information to or by
(i) any person, or any person within a class of persons, that the Minister may authorize, subject to such conditions as the Minister may specify, or
(ii) any person otherwise legally entitled thereto by reason of an Act of Parliament, solely for the purposes for which that person is entitled to the information;
(d) provide confidential information
(i) to an official of the Department of Finance solely for the purposes of the formulation or evaluation of fiscal policy or for the purposes of an administration agreement, as defined in subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act, entered into with an aboriginal government, as defined in that subsection, or for the purposes of an administration agreement, as defined in subsection 2(1) of the First