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Administrative - Self-Incrimination. Deegan v. Canada (Attorney General)
In Deegan v. Canada (Attorney General) (Fed CA, 2022) the Federal Court of Appeal considered a Charter s.8 [ubreasonable search and seizure] action where the plaintiffs sought declaration against treaty tax provisions that required financial institutions to disclose records to the Minister of National Revenue, who in turn was required to disclose them to the United States for their tax assessment purposes. In the privacy element of the s.8 test, the court considered R v Jarvis (SCC, 2002) as the leading Supreme Court of Canada case on the criminal use of administratively-disclosed records:[46] The next question is whether this possibility is a significant intrusion into the privacy interests of affected persons. The starting point is R. v. Jarvis, 2002 SCC 73, [2002] 3 S.C.R. 757 in which the Supreme Court made a distinction between audit and investigative materials obtained by the Canada Revenue Agency (CRA).
[47] With respect to audit materials, the Court considered s. 8 of the Charter and concluded that "“taxpayers have very little privacy interest in the materials and records that they are obliged to keep under the ITA, and that they are obliged to produce during an audit. … [T]here is nothing preventing auditors from passing to investigators their files containing validly obtained audit materials.”" (Jarvis at para. 95). Accordingly, s. 8 does not prevent audit material from being used for a criminal prosecution by the CRA.
[48] The Court in Jarvis took a different view of criminal investigative materials and s. 7 of the Charter. Section 7 protects against self-incrimination:7 Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
"7 ""Chacun a droit à la vie, à la liberté et à la sécurité de sa personne; il ne peut être porté atteinte à ce droit qu’en conformité avec les principes de justice fondamentale." [49] With respect to s. 7, the Court wrote that: "“when the predominant purpose of a question or inquiry is the determination of penal liability, the ‘full panoply’ of Charter rights are engaged for the taxpayer’s protection.”" (Jarvis at para. 96).
[50] The circumstances in this case are quite different from the facts in Jarvis. However, the general comments in Jarvis, above, concerning the use of audit materials is useful in this case. The Federal Court recognized this when it determined that the Impugned Provisions are "“essentially of an administrative nature.”" (para. 268). This suggests that there is very little privacy interest in the seized information even though the United States may use the information for purposes of a criminal prosecution.
[51] The appellants take issue with one aspect of Jarvis. They acknowledge that Jarvis characterizes the ITA as a regulatory statute even though non-compliance with the statute may lead to criminal charges. However, the appellants suggest there is nothing regulatory about prosecutions under the ITA and that a more nuanced approach to characterizing the ITA should be taken. They suggest that it is timely and appropriate to revisit the comment in Jarvis that the ITA is a regulatory statute.
[52] Jarvis is of course binding on the Federal Court and this Court. Accordingly, Justice Mactavish did not err in relying on it.
[53] As for whether the comment from Jarvis should be revisited by the Supreme Court, the appellants have failed to demonstrate that this is appropriate in the context of this case.
[54] The Impugned Provisions are clearly regulatory in nature. As set out in the Federal Court’s reasons, the Impugned Provisions are similar to information automatically provided to the CRA for regulatory purposes (e.g., T4s by employers, T5s by financial institutions, and taxpayers’ annual disclosure of foreign holdings).
[55] Further, the automatic disclosure of information embodied in the Impugned Provisions has gained widespread international support through the development of a common reporting standard. The standard is reflected in amendments to the ITA in ss. 270-281.
[56] It is difficult to see how a seizure contemplated by the Impugned Provisions significantly intrudes into privacy interests, as the appellants appear to suggest. Accordingly, I see no reason in this case to revisit the comment in Jarvis that the entire ITA is a regulatory statute.
[57] At the hearing, the appellants further suggest that the predominant purpose test developed in Jarvis in the context of s. 7 of the Charter, should be imported into the Impugned Provisions. This test provides that, with respect to s. 7, if the predominant purpose of an inquiry is the determination of penal liability, the ‘full panoply’ of Charter rights applies. (Jarvis at para. 96).
[58] The appellants were not able to describe with specificity how the Jarvis predominant purpose test could apply to the Impugned Provisions. Without a clearer explanation from the appellants as to how the predominant purpose test is relevant in this appeal, the submission will not be pursued further.
[59] In the result, I conclude that the Impugned Provisions do not intrude significantly on the privacy interests of affected persons simply on the basis that the information may possibly be used for a criminal prosecution. . Sakab Saudi Holding Company v. Saad Khalid S Al Jabri [for numbered case cites, see the main link]
In Sakab Saudi Holding Company v. Saad Khalid S Al Jabri (Div Court, 2023) the Divisional Court comments on the use of evidence disclosed under administrative statutory duties, in subsequent criminal proceedings:[32] I would draw an analogy to situations where there are parallel administrative and enforcement powers, such as the enforcement scheme in the Income Tax Act.[25] Taxpayers are required to provide information and documents in income tax returns. Tax authorities have administrative powers to compel information and documents, including, among other things, the power to audit books and records of a taxpayer. Where tax authorities pursue prosecution of an offence under the Income Tax Act, they may not use administrative enforcement powers, because they are conscriptive. Instead, they may have recourse to investigative powers associated with criminal prosecutions, such as search warrants. The taxpayer still has an obligation to file complete and accurate tax returns: these obligations are not suspended because of a nascent or actual prosecution.
[33] I note this point, not because it affects the disposition of this appeal, but to be clear that the motion judge’s decision does not open a pathway for use of compelled disclosure (whether pursuant to a Mareva order or pursuant to the Rules of Civil Procedure) for the purpose of obtaining evidence for a prosecution for contempt of court which is penal, rather than coercive, in nature. As is the case in enforcement of the Income Tax Act, compelled disclosure to ensure compliance with the Act is not inherently for the purpose of prosecution. The court has the power to restrain abuse of the civil justice process for the purpose of a penal contempt prosecution, and neither the decision below nor this decision on appeal holds otherwise.[26]
....
[46] In respect to further requests for production of documents, the motion judge considered a line of authorities[33] to the effect that documents compelled prior to criminal proceedings, for other lawful purposes, are not inadmissible in subsequent criminal proceedings. The motion judge then considered R. v. Jarvis, upon which the appellants relied, in support of the proposition that when an investigation shifts from administrative to criminal in nature, administrative powers may no longer be used to compel a taxpayer to provide documents and information, in violation of their right to remain silent.[34] The motion judge then concluded as follows (the “Production Ruling”):The Court in Jarvis did not provide for an exception to the taxpayer’s Charter rights where the documents required from the taxpayer exist independently of any state compulsion.
I do not agree that Branch[35] is authority for the proposition that where documents exist independently of any state compulsion, the principle against self-incrimination under the Charter does not apply. The plaintiffs have brought a contempt of court motion seeking remedies against Dr. Saad and Mohammed. The plaintiffs having done so, the Charter rights of Dr. Saad and Mohammed are engaged. The plaintiffs cannot conscript Dr. Saad and Mohammed to assist in the prosecution of the contempt motion against them by compelling them to assemble and produce documents which the plaintiffs reserve the right to use to convict them of contempt of court.
This conclusion applies to both Dr. Saad and Mohammed. Although the documents sought from Mohammed are sought under the Mohammed Mareva Order and the contempt motion against Mohammed is brought in respect of the Saad Mareva Order, the plaintiffs reserve the right to use any documents produced by Mohammed to aid in the prosecution of the contempt motion against him. In these circumstances, the principle against self-incrimination under the Charter is engaged in respect of Mohammed and Dr. Saad.
Mohammed is not required to produce the requested documents to the plaintiffs for use on the contempt motion. I agree with the motion judge’s analysis except for one core point: an allegation of contempt does not transform proceedings from civil to criminal unless the court also finds that the contempt allegation is predominately penal rather coercive. If the contempt motion is predominantly coercive, then the nature of the proceedings has not been “transformed” to criminal.
[47] The problem with the Admissibility Ruling and the Production Ruling are their apparent inconsistency, in principle, with the motion judge’s decision respecting Issues 1 and 2. It is clear that the motion judge wrestled with this problem, and he correctly concluded that the weight of authority supported drawing a distinction between compelled evidence provided prior to an allegation of contempt and compelled evidence provided after an allegation of contempt. This context does matter, but it does not determine the issue.
[48] First, the motion judge is correct in finding that the Mareva order continues in force and the appellants’ obligations thereunder likewise continue. On the basis of the Mareva order, undertakings must be answered and information and documents provided.
[49] Second, until the respondents seek to rely on information and documents compelled from the appellants in support of the contempt motion, the court need not rule on the admissibility of that evidence.
[50] Third, if the respondents do seek to rely on information and documents compelled from the appellants and provided by them after commencement of the contempt motion, at that time the court should assess the “predominant purpose” of the contempt motion, by analogy to R. v. Jarvis.[36] If the court finds that the predominant purpose of the contempt motion is “coercive” rather than “penal” then the evidence may be compelled and will not be inadmissible because it is conscriptive.[37] If the court finds that the predominant purpose of the contempt motion is penal, then the moving party may pursue alternative approaches to obtain evidence for the contempt motion. . Deegan v. Canada (Attorney General)
In Deegan v. Canada (Attorney General) (Fed CA, 2022) the Federal Court of Appeal considered a Charter s.8 [unreasonable search and seizure] action where the plaintiffs sought declaration against treaty tax provisions that required financial institutions to disclose records to the Minister of National Revenue, who in turn was required to disclose them to the United States for their tax assessment purposes. In the privacy element of the s.8 test, the court considered R v Jarvis (SCC, 2002) as the leading Supreme Court of Canada case on the criminal use of administratively-disclosed records:[46] The next question is whether this possibility is a significant intrusion into the privacy interests of affected persons. The starting point is R. v. Jarvis, 2002 SCC 73, [2002] 3 S.C.R. 757 in which the Supreme Court made a distinction between audit and investigative materials obtained by the Canada Revenue Agency (CRA).
[47] With respect to audit materials, the Court considered s. 8 of the Charter and concluded that "“taxpayers have very little privacy interest in the materials and records that they are obliged to keep under the ITA, and that they are obliged to produce during an audit. … [T]here is nothing preventing auditors from passing to investigators their files containing validly obtained audit materials.”" (Jarvis at para. 95). Accordingly, s. 8 does not prevent audit material from being used for a criminal prosecution by the CRA.
[48] The Court in Jarvis took a different view of criminal investigative materials and s. 7 of the Charter. Section 7 protects against self-incrimination:7 Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
"7 ""Chacun a droit à la vie, à la liberté et à la sécurité de sa personne; il ne peut être porté atteinte à ce droit qu’en conformité avec les principes de justice fondamentale." [49] With respect to s. 7, the Court wrote that: "“when the predominant purpose of a question or inquiry is the determination of penal liability, the ‘full panoply’ of Charter rights are engaged for the taxpayer’s protection.”" (Jarvis at para. 96).
[50] The circumstances in this case are quite different from the facts in Jarvis. However, the general comments in Jarvis, above, concerning the use of audit materials is useful in this case. The Federal Court recognized this when it determined that the Impugned Provisions are "“essentially of an administrative nature.”" (para. 268). This suggests that there is very little privacy interest in the seized information even though the United States may use the information for purposes of a criminal prosecution.
[51] The appellants take issue with one aspect of Jarvis. They acknowledge that Jarvis characterizes the ITA as a regulatory statute even though non-compliance with the statute may lead to criminal charges. However, the appellants suggest there is nothing regulatory about prosecutions under the ITA and that a more nuanced approach to characterizing the ITA should be taken. They suggest that it is timely and appropriate to revisit the comment in Jarvis that the ITA is a regulatory statute.
[52] Jarvis is of course binding on the Federal Court and this Court. Accordingly, Justice Mactavish did not err in relying on it.
[53] As for whether the comment from Jarvis should be revisited by the Supreme Court, the appellants have failed to demonstrate that this is appropriate in the context of this case.
[54] The Impugned Provisions are clearly regulatory in nature. As set out in the Federal Court’s reasons, the Impugned Provisions are similar to information automatically provided to the CRA for regulatory purposes (e.g., T4s by employers, T5s by financial institutions, and taxpayers’ annual disclosure of foreign holdings).
[55] Further, the automatic disclosure of information embodied in the Impugned Provisions has gained widespread international support through the development of a common reporting standard. The standard is reflected in amendments to the ITA in ss. 270-281.
[56] It is difficult to see how a seizure contemplated by the Impugned Provisions significantly intrudes into privacy interests, as the appellants appear to suggest. Accordingly, I see no reason in this case to revisit the comment in Jarvis that the entire ITA is a regulatory statute.
[57] At the hearing, the appellants further suggest that the predominant purpose test developed in Jarvis in the context of s. 7 of the Charter, should be imported into the Impugned Provisions. This test provides that, with respect to s. 7, if the predominant purpose of an inquiry is the determination of penal liability, the ‘full panoply’ of Charter rights applies. (Jarvis at para. 96).
[58] The appellants were not able to describe with specificity how the Jarvis predominant purpose test could apply to the Impugned Provisions. Without a clearer explanation from the appellants as to how the predominant purpose test is relevant in this appeal, the submission will not be pursued further.
[59] In the result, I conclude that the Impugned Provisions do not intrude significantly on the privacy interests of affected persons simply on the basis that the information may possibly be used for a criminal prosecution.
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