143471 Canada Inc. v. Quebec (Attorney General); Tabah v. Quebec (Attorney General)

143471 Canada Inc. v. Quebec (Attorney General); Tabah v. Quebec (Attorney General)
Collection
Supreme Court Judgments
Date
1994-05-26
Report
[1994] 2 SCR 339
Case number
22989
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank
On appeal from
Quebec
Subjects
Civil procedure
Notes
SCC Case Information: 22989
Decision Content
143471 Canada Inc. v. Quebec (Attorney General); Tabah v. Quebec (Attorney General), [1994] 2 S.C.R. 339
The Minister of Revenue of Quebec,
the Deputy Minister of Revenue of Quebec,
the Attorney General of Quebec
and Robert Paulin Appellants
v.
143471 Canada Inc., Leonardo Arcuri,
Francesco Milioto, Antonio Facchino,
John A. Paoletti, Santo Gracioppo
and Casimiro C. Panarello Respondents
and between
The Minister of Revenue of Quebec,
the Deputy Minister of Revenue of Quebec,
the Attorney General of Quebec
and François Laramée Appellants
v.
Maurice Tabah, 116689 Canada Inc.,
Les Entreprises immobilières Maurice Tabah Inc.,
Georges Abouassly, Ibrahim Haddad, Fernand Hétu,
Paul‑Omer Desrosiers, Me Johanne Piette
and Service immobilier Joliette Inc. Respondents
Indexed as: 143471 Canada Inc. v. Quebec (Attorney General); Tabah v. Quebec (Attorney General)
File No.: 22989.
1993: October 5; 1994: May 26.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Cory, McLachlin and Iacobucci JJ.
on appeal from the court of appeal for quebec
Procedure ‑‑ Interlocutory relief ‑‑ Documents seized pursuant to provisions of tax legislation ‑‑ Motions for orders impounding seized documents granted ‑‑ Documents sealed until final judgment rendered on legality of search warrants ‑‑ Whether impounding orders should be set aside.
Commercial documents were seized at the places of business of the corporate respondents and the homes of the respondents Arcuri and Tabah. In both cases the respondents challenged the legality of the search warrants by means of motions in evocation, certiorari and mandamus in which they sought to quash the warrants and attacked the constitutionality of ss. 40 and 40.1 of the Act respecting the Ministère du Revenu ("AMR"), which authorize searches, alleging inter alia that these sections infringe ss. 7 and 8 of the Canadian Charter of Rights and Freedoms . By way of interlocutory relief the respondents appended to their actions motions to have all the seized documents impounded pending a final judgment on the legality of the search warrants. In 143471 Canada Inc., the Superior Court allowed the motion to impound but dismissed the motion in evocation, certiorari and mandamus 15 months later, concluding that s. 40 AMR was constitutional. The respondents appealed that decision. In the meantime the Court of Appeal allowed their motion to impound the seized documents for the duration of the appeal. While this Court's judgment on the appeal from that decision was still under reserve, the Court of Appeal dismissed the appeal with respect to the motion in evocation, certiorari and mandamus. In Tabah, the Superior Court allowed the motion to impound and the Court of Appeal dismissed the appellants' appeal from that judgment. This appeal raises the question whether interlocutory relief in the form of an impounding order should be granted until the validity of the provisions in the AMR authorizing searches has been determined under the Charter .
Held (La Forest, L'Heureux‑Dubé and McLachlin JJ. dissenting): The appeal should be dismissed.
Per Sopinka, Cory and Iacobucci JJ.: In considering an interim measure in the context of a Charter challenge to the validity of the underlying law, a court must consider three criteria: (1) the seriousness of the question to be tried; (2) the possibility of irreparable harm to the applicant if the interim order is refused; and (3) the balance of inconvenience caused to the parties by the interim order. A consideration of these three criteria in this case leads to the conclusion that the impounding orders should be maintained.
First, there is a serious question of law raised in this case.
Second, if the respondents are successful in the main applications, they would suffer irreparable harm if the impounding orders were to be set aside. The searches were made pursuant to the provisions of a regulatory statute dealing with a highly regulated business and the expectation of privacy in the commercial documents seized was thus relatively low. However, there is still some measure of privacy in commercial documents. Since the purpose of the impounding orders is to preserve the rights of the respondents pending a final determination of a legal question which will affect those rights, if the orders are not maintained and the warrants are quashed, the loss of that privacy interest, small as it may be, would in itself constitute irreparable harm. But there is a more significant aspect in this case. The documents were obtained by means of intrusive searches of residential and business premises and so long as the documents are held by or on behalf of the government there is a continuing violation of the respondents' very real and significant privacy interest in those premises. There would thus clearly be irreparable harm to the respondents if the warrants are quashed. The government will have had the continuing possession of these documents in the absence of any authority and in violation of the Charter . The intrusive nature of the searches cannot be isolated from the taking of the documents. Section 69 AMR does not adequately protect the respondents' privacy interests. It prohibits the public release of information contained in the documents but does not protect the respondents from having their privacy interests in their homes and offices violated by the state ‑‑ the very interest that s. 8 of the Charter is aimed at protecting. Finally, it is highly speculative to expect that a breach of privacy interests, not only in the documents, but also in the homes and offices of the respondents, could be compensated in damages.
Third, and most importantly, the balance of inconvenience favours the respondents. The impounding orders protect both the integrity of the documents and the privacy interest of the respondents, and this sensible interlocutory measure does not harm the public interest. The evidence clearly establishes that the granting of impounding orders will not paralyse the enforcement of taxation laws in the province of Quebec, even if in every case where searches were carried out, impounding orders were in fact issued. The Minister of Revenue is still at liberty to carry out searches and effect seizures and can still investigate and proceed under other sections of the Act. An impounding order does no more than delay the Minister viewing the documents seized. Further, the statistics do not disclose a problem of a flood of impounding orders and there is nothing to indicate that there is a probability, or even a real possibility, that there would be a flood of similar requests as a result of granting these applications. There are so few searches and seizures carried out each year under taxation statutes in the province that this case is still one of exemption and not of suspension. Since there is no serious interference with the enforcement of taxation statutes resulting from the granting of the impounding orders, there is no interference with the public interest and, on this basis, the impounding orders should be granted. Moreover, even if it can be said that the irreparable harm the respondents would suffer from the refusal of the impounding orders is small, the impounding orders should be upheld since there is no significant interference with the public interest.
Per Lamer C.J.: Cory J.'s reasons were generally agreed with, subject to one comment. Since the scope of a right guaranteed by the Charter must be assessed in context, it is necessary to take into account all the relevant factors which indicate the importance of a right to the person who enjoys it. This means that one should avoid creating rigid categories that will be used to determine the scope of a constitutional guarantee in a mechanical fashion. The "licensing" theory is therefore of no value in determining the extent of the respondents' expectations of privacy. While the distinction between criminal acts and regulatory offences is a useful and very real one, it should not be used to obscure other aspects of the context of a given case. Yet that is precisely what is likely to happen if one presumes that those who engage in "regulated" activities have accepted a lower level of constitutional protection. The licensing theory is based on an erroneous factual premise since it cannot be said, in a general and abstract manner, that any person engaging in a regulated activity, whatever it may be, automatically acquiesces in a limited application of the Charter to him‑ or herself. Here, when all the relevant factors are taken into account, it can be concluded that the respondents had reasonable expectations of privacy with respect to the documents seized and that they are sufficiently important to justify upholding the impounding orders.
Per La Forest, L'Heureux‑Dubé and McLachlin JJ. (dissenting): A prima facie case, irreparable harm and the balance of convenience are the three criteria relevant in determining whether interlocutory relief should be granted. This analytical framework permits the reconciliation of the rights and freedoms guaranteed in the Charter with the conduct of governmental affairs.
In the present case the first criterion has been met. In view of the serious arguments raised by the respondents against the constitutionality of ss. 40 and 40.1 AMR, it cannot be concluded that the motions in evocation, certiorari and mandamus are frivolous or vexatious. The dismissal of the motion by the Superior Court in 143471 Canada Inc. is a relevant factor, but is not sufficient to alter the fact that serious questions have been raised. Moreover, the precedents regarding stay of proceedings should not be applied without qualification when the constitutionality of legislation is challenged under the Charter , in view of the importance and complexity of the rights and freedoms it guarantees.
With respect to the second criterion, it cannot be concluded that the respondents will suffer irreparable harm if the impounding orders are set aside. The existence of irreparable harm cannot be inferred simply because a breach of a right protected by the Charter is alleged or because the main proceeding itself involves the infringement of a guaranteed right. Both the right and the alleged infringement must be placed in context. In the present case the harm claimed by the respondents relates solely to the fact that the tax authorities will learn the content of the documents seized. Any reasonable expectations of privacy the respondents may have regarding the content of those documents are considerably reduced owing to their relevance in establishing the tax profile of their business and the responsibilities they assume as agents of the government. The search warrants and the seizures were directed only at the respondents' business documents, production of which may be required under the AMR. By allowing a person to object to the production or seizure of documents containing information protected by professional privilege, and prohibiting disclosure of the information obtained in the course of the investigation, the AMR minimizes the risk that the respondents may suffer harm as a result of the implementation by the tax authorities of the investigative scheme provided by that Act. Finally, the possibility that the seized documents may contain information of a personal nature is not sufficient to alter the reasonable expectations of privacy of taxpayers in respect of such documents. On the one hand, the AMR itself does not permit the seizure of documents containing personal information; on the other hand, the respondents themselves have never claimed that such documents were in fact seized. It can therefore not be concluded that the respondents will suffer irreparable harm if the tax authorities examine the contents of the documents seized.
With respect to the third criterion, an assessment of the balance of convenience does not favour the respondents. As the existence of irreparable harm has been ruled out, it is hard to see how the respondents could suffer significant hardship if they were denied the impoundment. Since the only effect of the impounding order is to delay the examination of the documents, it can be assumed that at some point or other the respondents will suffer the hardships associated with an investigation by the Ministère du Revenu, whether or not the sections are declared unconstitutional. On the other hand, if the impoundment is upheld, the delays imposed on the appellants in examining the contents of the seized documents are likely to jeopardize proof of the offences. Even if it is admitted that impoundment does not have the effect of suspending the Minister's investigative powers, there is nothing to suggest that he could make significant progress with his investigation if the impoundment were upheld.
Be that as it may, the present case has ramifications that go beyond the immediate interests of the parties, if only because of the mandate underlying the action of the Ministère ‑‑ namely the implementation and execution of tax legislation. It is thus necessary to take the public interest into account in determining the balance of convenience. Because the AMR is based on the principle of self‑declaration and self‑assessment, the implementation of the investigative provisions contained in ss. 40 and 40.1 AMR is essential if the integrity of the collection system is to be maintained and these investigative powers form the principal tool available to the Ministère to fight tax evasion. Although it is not possible to speak of a "flood of actions", the systematic nature of recent impounding orders cannot be ignored. Since the Ministère must adduce proof beyond a reasonable doubt and in view of the difficulties of proof inherent in the nature of offences against the tax laws, even temporarily watering down investigative powers has more than a symbolic effect on the public interest.
Cases Cited
By Cory J.
Applied: Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110; RJR ‑‑ MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; referred to: Hadmor Productions Ltd. v. Hamilton, [1982] 1 All E.R. 1042; Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627; R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154; Baron v. Canada, [1993] 1 S.C.R. 416; Ameublement Jeanne Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑003335‑872, April 15, 1987; Brochetterie Tino Inc. v. Québec (Procureur général), [1989] R.D.F.Q. 98; Restaurant le Gourmet grec Inc. v. Séguin, [1989] R.D.F.Q. 80; Courrier grec du Canada Ltée v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑002016‑895, February 24, 1989; Cuisines Multiform internationales Inc. v. Angers, [1992] R.D.F.Q. 46; Cuisines Multiform internationales Inc. v. Angers, [1992] R.D.F.Q. 126; Électro Marine Diesel Inc. v. Québec (Procureur général), [1992] R.D.F.Q. 125; Groupe Shakiba Inc. v. Québec (Procureur général), [1993] R.D.F.Q. 70; Zeppetelli v. Canada, [1990] 2 C.T.C. 354.
By Lamer C.J.
Referred to: Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326; Rocket v. Royal College of Dental Surgeons of Ontario, [1990] 2 S.C.R. 232; Kindler v. Canada (Minister of Justice), [1991] 2 S.C.R. 779; R. v. Généreux, [1992] 1 S.C.R. 259; R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154.
By La Forest J. (dissenting)
Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110; RJR ‑‑ MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; Zeppetelli v. Canada, [1990] 2 C.T.C. 354; Baron v. Canada, [1993] 1 S.C.R. 416, aff'g [1991] 1 F.C. 688; Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486; Hunter v. Southam Inc., [1984] 2 S.C.R. 145; Kourtessis v. M.N.R., [1993] 2 S.C.R. 53; R. v. Dyment, [1988] 2 S.C.R. 417; United States of America v. Cotroni, [1989] 1 S.C.R. 1469; Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326; R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154; Air Canada v. British Columbia, [1989] 1 S.C.R. 1161; Fafard Buildings System Inc. v. R., J.E. 90‑1187; Ameublement Jeanne Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑003335‑872, April 15, 1987; Brochetterie Tino Inc. v. Québec (Procureur général), [1989] R.D.F.Q. 98; Restaurant le Gourmet grec Inc. v. Séguin, [1989] R.D.F.Q. 80.
Statutes and Regulations Cited
Act respecting the Ministère du Revenu, R.S.Q., c. M‑31, ss. 34(1) [rep. 1983, c. 49, s. 40], 38(a) [am. 1986, c. 95, s. 190], 39, 40 [rep. 1986, c. 95, s. 191; am. 1988, c. 21, s. 104], 40.1 [ad. 1986, c. 95, s. 191], 40.2 [ad. 1986, c. 95, s. 191], 46 [rep. 1990, c. 4, s. 587], 53 [idem, s. 589], 69, 78 [am. 1982, c. 38, s. 28].
Canadian Charter of Rights and Freedoms, ss. 7 , 8 .
Charter of Human Rights and Freedoms, R.S.Q., c. C‑12, s. 24.1 [ad. 1982, c. 61, s. 1].
Criminal Code, R.S.C., 1985, c. C-46 .
Meals and Hotels Tax Act, R.S.Q., c. T‑3.
APPEAL from judgments of the Quebec Court of Appeal (1992), 32 A.C.W.S. (3d) 226 and [1992] R.D.F.Q. 44, granting the motion to impound seized documents brought by the respondents 143471 Canada Inc. et al., and affirming a judgment of the Superior Court, [1991] R.D.F.Q. 90, granting the motion to impound seized documents brought by the respondents Tabah et al. Appeal dismissed, La Forest, L'Heureux‑Dubé and McLachlin JJ. dissenting.
Michel Dansereau, Judith Kucharsky and Pierre Gonthier, for the appellants.
Guy Du Pont, Basile Angelopoulos and Ariane Bourque, for the respondents.
English version of the reasons delivered by
Lamer C.J. ‑‑ I am generally in agreement with the reasons of Justice Cory. With respect, however, I would like to add a comment concerning the factors he takes into account in assessing the respondents' expectations of privacy.
It is now well settled that the scope of a right guaranteed by the Canadian Charter of Rights and Freedoms must be assessed in context. This method was first explained by Wilson J. in Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326, at pp. 1352‑55, and again applied by the Court in Rocket v. Royal College of Dental Surgeons of Ontario, [1990] 2 S.C.R. 232; Kindler v. Canada (Minister of Justice), [1991] 2 S.C.R. 779; and R. v. Généreux, [1992] 1 S.C.R. 259. It is thus necessary to take into account all the relevant factors which indicate the importance of a right to the person who enjoys it. This also means that we should avoid creating rigid categories that will be used to determine the scope of a constitutional guarantee in a mechanical fashion.
I am concerned about the fact that Cory J. relies on the so‑called "licensing" theory in determining the extent of the respondents' expectations of privacy. This theory, which he explained in detail in his reasons in R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154, at pp. 227‑33, essentially holds that persons engaging in "regulated" activities are presumed to have accepted the existence of such regulation, greater intervention by the state in their activities, and a lower measure of constitutional protection.
In my humble opinion this theory is open to two kinds of criticism.
First, it tends to give credence to the idea that there is a clear distinction between regulatory offences and truly criminal acts, and that there are two different definitions of the rights guaranteed by the Charter corresponding to these two categories of offences. This approach reflects a formalism alien to the contextual method. The distinction between criminal acts and regulatory offences is a useful and very real one, but it should not be used to obscure other aspects of the context of a given case. That is precisely what is likely to happen if we presume that those who engage in "regulated" activities have accepted a lower level of constitutional protection. If there were such a waiver there would be no need to examine the other aspects of the context.
Second, with respect, I am of the view that the licensing theory is based on an erroneous factual premise. It cannot be said, in a general and abstract manner, that persons engaging in regulated sectors of life in society expect a lower level of constitutional protection. It is true that intervention by government officials is generally accepted in certain areas and that accordingly the expectations of privacy of persons working in those areas may be lower. However, this observation cannot be transformed into a general rule presuming that any person engaging in a regulated activity, whatever it may be, automatically acquiesces in a limited application of the Charter to him- or herself. In the present case I cannot say that the respondents agreed to allow the state to search their homes when they set up their restaurant and hotel businesses. In my opinion, there is no factual foundation for such a proposition. We may also take the example of driving an automobile, a highly regulated activity. Can it be said that people who obtain a driver's licence thereby accept that they will not have the full benefit of the rights set forth in the Charter? I do not think so.
In reality the only factual proposition that can be taken as valid is the one set out by Cory J. at p. 377: "Those who enter a regulated field must accept regulations as an integral part of their business operations". The same can be said about the criminal law: anyone who lives in society must accept the rules laid down in the Criminal Code, R.S.C., 1985, c. C‑46 . There is nothing surprising in this: the validity of legislation does not depend on the consent of those to whom it applies. Accordingly, although the statement by Cory J. is correct, it cannot be used as the basis for a valid distinction between various types of offences, depending on whether or not the individuals concerned "accept" the rules in question. All things considered, I do not feel that the "licensing" theory can be of any value in determining the scope of the rights guaranteed by the Charter.
I have nevertheless come to the same conclusion as Cory J. regarding the extent of the respondents' expectations of privacy. Cory J. notes the following factors.
1.The Act respecting the Ministère du Revenu, R.S.Q., c. M‑31, does not create criminal offences in the strict sense. Its purpose is instead to set up an administrative mechanism for the collection of taxes.
2.The Minister may seize a considerable number of documents whose connection with enforcement of the Act may be tenuous.
3.The Act allows for searches at the premises of third parties who are not the subject of an investigation and who may have been in compliance with the Act.
4.Certain searches took place at the respondents' private homes, not their commercial establishments.
5.Searches involve a greater intrusion into individual privacy than a mere demand for production of documents.
From factors 2, 3, 4 and 5 it can be concluded that the respondents had reasonable expectations of privacy with respect to the documents seized by the appellants. The first factor suggests that the scope of these expectations should be treated as relative, but like Cory J. I am of the view that they are sufficiently important to justify upholding the impounding orders.
I would dismiss the appeal with costs.
English version of the reasons of La Forest, L'Heureux-Dubé and McLachlin JJ. delivered by
La Forest J. (dissenting) ‑‑ This case raises the question whether interlocutory relief in the form of an impounding order should be granted until the validity of the provisions authorizing searches in the Act respecting the Ministère du Revenu, R.S.Q., c. M‑31, has been determined under the Canadian Charter of Rights and Freedoms .
Facts
The facts in the two cases giving rise to these appeals are similar and may be summarized as follows. Judges of the Court of Quebec issued written authorizations to conduct searches pursuant to s. 40 of the Act respecting the Ministère du Revenu (hereinafter the "Act"), based on sworn informations that the respondents had inter alia attempted to avoid the payment of sums of money pursuant to the Meals and Hotels Tax Act, R.S.Q., c. T‑3. These authorizations were executed at the places of business of the corporate respondents and the homes of the respondents Arcuri and Tabah. Several documents were seized.
In both cases the respondents challenged the legality of the search warrants by means of motions in evocation, certiorari and mandamus, seeking to quash the seizure authorizations and their execution and to attack the constitutionality of ss. 40 and 40.1 of the Act in light of ss. 7 and 8 of the Canadian Charter of Rights and Freedoms (hereinafter the "Charter ") and s. 24.1 of the Quebec Charter of Human Rights and Freedoms, R.S.Q., c. C‑12. By way of interlocutory relief the respondents appended to their actions motions to have all the seized documents impounded so they could be sealed and given into the custody of a third party pending a final judgment on the legality of the search warrants.
In the 143471 Canada Inc. case, on November 7, 1990, Hannan J. of the Quebec Superior Court allowed the motion to impound the seized documents, until such time as judgment was rendered at trial on the legality of the search warrants: [1990] R.D.F.Q. 104. On February 10, 1992 Croteau J. of the Quebec Superior Court dismissed the motion in evocation, certiorari and mandamus and concluded that s. 40 of the Act was constitutional: [1992] R.D.F.Q. 48. The respondents appealed that decision and asked the Court of Appeal to issue an order impounding the seized documents for the duration of the proceedings. On March 9, 1992, the Court of Appeal allowed the motion to impound the seized documents: (1992), 32 A.C.W.S. (3d) 226. While this Court's judgment on the appeal from that decision was still under reserve, the Quebec Court of Appeal dismissed the appeal with respect to the action in evocation, certiorari and mandamus, on May 18, 1994: J.E. 94-934.
In the Tabah case, on June 18, 1991, Marquis J. of the Quebec Superior Court allowed the motion to impound the seized documents until a judgment was rendered on the legality of the search warrants: [1991] R.D.F.Q. 90. The appellants appealed that judgment. On March 9, 1992, the Court of Appeal dismissed their appeal: [1992] R.D.F.Q. 44.
Judgments of the Courts Below
Quebec Superior Court, 143471 Canada Inc. Case, [1990] R.D.F.Q. 104
Hannan J. characterized the motion to impound as an exemption case since it applied only to the respondents, was confined to the documents seized, and related to the offences alleged. In ruling on the validity of the motion he considered the three criteria set out in Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110, namely, whether there was a serious question to be tried, the irreparable harm the respondents might suffer if the motion was dismissed and the balance of convenience.
Hannan J. noted that the first criterion was difficult to apply at the interlocutory stage. He referred to the opinion expressed by Beetz J. in Metropolitan Stores that the courts are reluctant to grant an interlocutory injunction unless the public interest is weighed in the balance of convenience. Relying on R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627, and Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425, Hannan J. noted that the distinction between the criminal and regulatory contexts with regard to what constitutes a reasonable invasion of privacy was likely to increase that reluctance to order interlocutory relief. He concluded, however, that it was difficult to assess if a prima facie case was made out and proposed to review the other criteria.
In determining whether irreparable harm existed, Hannan J. relied on the Quebec Court of Appeal's decision in Zeppetelli v. Canada, [1990] 2 C.T.C. 354. In that case the court noted that impoundment was an essential preventive measure for the constitutional protection of privacy against a seizure that might eventually be declared unreasonable. In the court's view refusing the impoundment would cause irreparable harm since the disclosure would be an invasion of privacy and would render the protection conferred by the Charter meaningless. Hannan J. considered he was bound by this decision and concluded as follows (at p. 109):
[translation] In this unanimous judgment in Zeppetelli it is possible to draw the inference that once protection of privacy is sought in a case where the intrusion is allegedly unconstitutional (or at least anti‑constitutional), the Court of Appeal considered that the criterion of irreparable harm has been met and, apparently, that the judgment in Dyment would support such a conclusion.
With respect to the balance of convenience criterion, Hannan J. pointed out that the exemption sought by the respondents was very limited in its application and did not have the effect of paralysing any other investigation or prosecution for other offences relating to different periods. He noted the comments made by Baudouin J.A. in Zeppetelli, supra, who pointed out that [translation] "as between inconveniences of an essentially administrative nature and those involving a constitutionally protected fundamental right, the balance must tip in favour of the latter" (p. 357). Hannan J. came to the following conclusion (at p. 110):
[translation] In the present case, where the exceptional stay is restricted to the items already seized, and does not suspend the application of the tax legislation, except in this regard, and where the irreparable harm and balance of convenience are in favour of the applicants until this Court renders a judgment on the motion in evocation, and although the merits of the case are not crystal clear, there is a good basis for granting the present motion to impound.
Quebec Superior Court, Tabah Case, [1991] R.D.F.Q. 90
Like Hannan J., Marquis J. of the Quebec Superior Court relied on Metropolitan Stores and Zeppetelli, supra, in deciding whether to grant the impounding order. He characterized the case as one of exemption since the effect of the motion to impound was only to suspend pendente lite the application of the impugned provisions of the Act as they affected the respondents. Marquis J. proceeded to apply the three relevant criteria in determining whether to grant the respondents' motion.
Marquis J. concluded that the respondents met the prima facie case criterion since the case raised a serious question. In his view the contention put forward by the appellants was not so immediately obvious as to exclude from consideration that put forward by the respondents. In support of this conclusion he relied on the reasons of Hugessen J.A. of the Federal Court of Appeal in Baron v. Canada, [1991] 1 F.C. 688.
Regarding the irreparable harm criterion, Marquis J., after referring to the Court of Appeal's decision in Zeppetelli, supra, concluded (at p. 96):
[translation] While it is true that the seizures have already been made, the evidence shows that the examination of the documents seized is far from being complete. The very purpose of that examination is to identify evidence which might eventually lead to the prosecution of one or more of the [respondents]. It is also this examination of the seized documents which is an invasion of privacy: if the seizures were eventually quashed, irreparable injury would be caused to the [respondents] which could have been prevented by the impoundment.
With respect to the balance of convenience criterion, Marquis J. also relied on the foregoing passage from the Court of Appeal's decision in Zeppetelli, which noted that [translation] "as between inconveniences of an essentially administrative nature and those involving a constitutionally protected fundamental right, the balance must tip in favour of the latter" (p. 357). On the question of the public interest, he noted that although the public is entitled to have the law respected and to have offenders prosecuted, the appellants' fear ‑‑ that applications to impound would become so numerous as to paralyze the operation of the Act ‑‑ was not based on any factual evidence. Accordingly, since the exemption was limited to specific persons and documents and the case raised a serious question, Marquis J. ordered that the documents be impounded until a final judgment was rendered on the legality of the searches.
Quebec Court of Appeal
The Quebec Court of Appeal allowed the motion to impound in the 143471 Canada Inc. case, relying on the principles set out in Zeppetelli and the reasons given in the judgment it rendered the same day in the Tabah case. In the latter the Court of Appeal dismissed the appellants' appeal, being of the view that the purpose of the motion to impound was not to suspend the effect of the Act but simply to delay temporarily access to the seized documents, which might also contain information of a personal nature. The judgment was as follows:
[translation] Whereas in the present case the purpose of the respondents' motion was not to suspend the effect of the Act, since according to its terms the investigations and other measures undertaken against the respondents can continue and have in fact continued;
Whereas the purpose of the motion was only to suspend, on a purely temporary basis, the appellants' access to documents, books and registers which might contain personal items of information and so contravene the protection of privacy guaranteed by law;
Whereas, although this Court is not ruling on the reality or existence of the other criteria, the respondents have both in the Superior Court and in this Court demonstrated a prima facie case and so met the first condition set out above;
Whereas further the Supreme Court of Canada recently heard two cases on not exactly identical but similar points of law in Baron v. Canada and Kourtessis v. M.N.R. and those cases are currently reserved;
In view of Attorney General of Manitoba v. Metropolitan Stores Ltd.; Hunter v. Southam Inc.; Bâtiments Fafard inc./Fafard Building System Inc. v. R. [J.E. 91-1611] and Zeppetelli v. R.
For these reasons:
Dismisses the appeal with costs.
([1992] R.D.F.Q. 44, at p. 45.)
Analysis
In Metropolitan Stores, supra, this Court expressly rejected the presumption of constitutional validity of legislation, understood in its literal sense, as it considered it to be "not compatible with the innovative and evolutive character" of the Charter (p. 124). The presumption of constitutional validity of legislation is at variance with the flexible and generous interpretation that should be given to the Charter in view of the nature of the rights and freedoms entrenched in it: see Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486. Interlocutory relief was refused in Metropolitan Stores, however, and the disputed provisions continued to apply while their constitutionality was being determined. That decision indicates that interlocutory orders suspending the application of legislation will not be granted automatically.
A cautious approach is all the more necessary as the government's activities have ramifications throughout all aspects of life in society. There is much other legislation, in addition to taxation statutes, that includes inspection or investigation systems the implementation of which might give rise to applications designed to impede their operation: legislation on the environment, the professions, labour, health and safety and securities transactions are some examples. The orchestration of a large number of activities regulated by the government might be compromised if litigants could easily avoid the application of legislation adopted by democratically elected legislatures, presumably in the public interest.
In addition there is the problem of systemic delays in court challenges. This cannot be ignored in deciding whether to grant interlocutory relief suspending the application of legislation for the duration of the proceedings. In the present appeal the search authorizations were issued in June 1990 in the 143471 Canada Inc. case and in March 1991 in the Tabah case. In the former case the appeal from the motion in evocation, certiorari and mandamus was dismissed by the Quebec Court of Appeal on May 18, 1994. In the latter the motion has not yet been dealt with at first instance. A final ruling on the validity of these motions, if it were to be made by this Court, is not to be expected for some time.
In this light, it is necessary to adopt an analytical framework that permits the reconciliation of the rights and freedoms entrenched in the Charter with the conduct of governmental affairs. Although this point was not expressly made by the parties, it seems to me entirely appropriate to use the analytical framework developed in Metropolitan Stores, even though this appeal does not raise the question of a stay of proceedings or an injunction. If granted, the remedy sought will exempt the respondents for all practical purposes from the application of the provisions of the Act regarding investigations until the legality of the searches has been determined.
The three criteria set out in Metropolitan Stores ‑‑ prima facie case, irreparable harm and balance of convenience ‑‑ have recently been revisited by this Court in RJR ‑‑ MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. My colleagues Sopinka and Cory JJ. there made an analysis of the principles with which I entirely agree. There is no need to repeat it except as necessary to explain its application to the present case.
Prima Facie Case
The requirement of a prima facie case is explained by the concern with preventing a litigant from avoiding the application of legislation by simply arguing that it is unconstitutional. There must be a mechanism to ensure that frivolous or vexatious actions will not systematically result in interlocutory relief intended to impede the application of legislation. In cases involving a constitutional challenge, particularly when it is based on the Charter , the application of this criterion will be more flexible if the public interest is considered in the analysis of the balance of convenience. It will then be sufficient to note that there is a serious question to be tried. This greater flexibility is necessary in view of the inherent difficulties of determining, at the interlocutory stage, the validity of the constitutional challenge, given the limited evidence and the effect that an exemption from or suspension of the application of a statute can have not only on the parties but also on the public interest.
The appellants argue that the provisions authorizing the searches are in accordance with the principles set out in Hunter v. Southam Inc., [1984] 2 S.C.R. 145. They criticize the Court of Appeal for relying on the fact that Baron v. Canada, [1993] 1 S.C.R. 416, and Kourtessis v. M.N.R., [1993] 2 S.C.R. 53, were still reserved at the time it rendered its decision concluding that there was a prima facie case