A-577-77
In re Collavino Brothers Construction Company
Limited
Court of Appeal, Heald and Urie JJ. and MacKay
D.J.—Toronto, December 21, 1977 and January
13, 1978.
Judicial review — Order authorizing entry and search for
evidence relating to violation of Income Tax Act or a regula
tion — Order containing no restriction as to specific nature of
documents, time span covered by documents, relationship of
documents to a particular transaction or transactions or the
indication of any specific violation or violations of the Act or
Regulations — Income Tax Act, S.C. 1970-71-72, c. 63, ss.
231(4),(5) — Federal Court Act, R.S.C. 1970 (2nd Supp.), c.
10, s. 28.
This is a section 28 application on behalf of a firm of
chartered accountants to review and set aside the decision or
order of the Director General, Special Investigations Director
ate, Department of National Revenue, Taxation and of a
county court Judge, authorizing persons to enter and search
applicant's offices and storage facilities for documents, books,
records or papers, etc., relating to Collavino Brothers Construc
tion Company Limited, that could afford evidence of any
violation of any provision of the Income Tax Act or a regula
tion. Applicant complains that the order contains no restriction
or limitation whatsoever as to the specific nature of the docu
ments, the time span covered by the documentation, the rela
tionship of the documentation to a particular transaction or
transactions, or the indication of any specific violation or
violations of the Act or Regulations.
Held, (MacKay D.J. dissenting): the application is allowed.
Per Heald J.: "The violation" referred to in the latter portion
of section 231(4) has reference to "a violation" in the opening
words of the subsection. Read in this fashion, the subsection
clearly restricts the authority to seize, and to take away, etc., to
the violation in respect of which the Minister has reasonable
and probable grounds, and evidence, on oath, establishing the
facts upon which the application is based. Since the evidence
filed by the Minister implicates those documents, etc., of
Collavino relating only to one group of transactions, it follows
that authorization to seize and take away, etc., should likewise
be restricted to those same documents. It would be absurd to
interpret section 231(4) in such a way as to enable the Taxation
Department to seize every scrap of paper relating to Collavino.
Per Urie J.: Since, in establishing the facts necessary to
obtain the Judge's approval to the Minister's authorization,
reference should be made to a specific violation of the Act, to
say that the authorization thus approved permits the removal of
all documents, books, etc. from the premises of the innocent
third party whether related to the alleged violation or any other
violation, or not, defies logic, is not supported by section
231(4), and is an unwarranted extension of the statutory power.
Per MacKay D.J. dissenting: The effect of section 231(4) is
that, while the evidence before a judge on an application to
approve an authorization to search and seize may be in relation
to only one violation of the Act, if the officers conducting the
search in respect of that violation find evidence of any other
violations of the Act, they may also seize that evidence. Docu
ments not affording evidence of any violation should not have
been seized as such seizure was unauthorized. The difficulty in
this case, however, is that this section 28 application seeks to
set aside or quash the authorization to search and seize. There
was no error in respect of the authorization. The applicant's
remedy with respect to illegally seized documents lies
elsewhere.
Re United Distillers Ltd. (1964) 88 C.C.C. 338, con
sidered. Canadian Bank of Commerce v. Attorney General
of Canada [1962] 2 S.C.R. 729, distinguished.
APPLICATION for judicial review.
COUNSEL:
R. E. Barnes, Q.C., and K. W. Cheung for
Coopers & Lybrand.
P. Schnier for Minister of National Revenue.
SOLICITORS:
Wilson, Barnes, Walker, Montello, Beach &
Perfect, Windsor, for Coopers & Lybrand.
Deputy Attorney General of Canada for Min
ister of National Revenue.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is a section 28 application on
behalf of Coopers & Lybrand, Chartered Account
ants to review and set aside the decision or order of
the Director General, Special Investigations Direc
torate, Department of National Revenue, Taxa
tion, and His Honour Judge Carl Zalev, Judge of
the County Court of the County of Essex dated at
Windsor, August 2, 1977, authorizing G. W.
Atkinson and others mentioned in the said docu
ment entitled "Authorization to Enter and
Search" applicant's offices and storage facilities in
the City of Windsor for documents, books, records,
papers or things pertaining or relating to Collavino
Brothers Construction Company Limited (herein-
after Collavino) that may afford evidence as to the
violation of any provision of the Income Tax Act
or a regulation and to seize and take away any
such documents, books, records, papers or things
and to retain them until they are produced in any
Court proceeding.
The authority for the making of the order above
referred to is said to be subsections 231(4) and (5)
of the Income Tax Act, S.C. 1970-71-72, c. 63,
which read as follows:
231... .
(4) Where the Minister has reasonable and probable
grounds to believe that a violation of this Act or a regulation
has been committed or is likely to be committed, he may, with
the approval of a judge of a superior or county court, which
approval the judge is hereby empowered to give on ex parte
application, authorize in writing any officer of the Department
of National Revenue, together with such members of the Royal
Canadian Mounted Police or other peace officers as he calls on
to assist him and such other persons as may be named therein,
to enter and search, if necessary by force, any building, recep
tacle or place for documents, books, records, papers or things
that may afford evidence as to the violation of any provision of
this Act or a regulation and to seize and take away any such
documents, books, records, papers or things and retain them
until they are produced in any court proceedings.
(5) An application to a judge under subsection (4) shall be
supported by evidence on oath establishing the facts upon
which the application is based.
The authorization in question also relates to
other documentation in the possession and control
of persons other than the applicant and in places
other than the applicant's premises. However, this
section 28 application is restricted to the authori
zation in so far only as it relates to documentation
in the possession of the applicant in the places
therein specified and only to the extent that the
authorization applies to the applicant.
Applicant's main complaint concerning subject
authorization is that it contains no restriction or
limitation whatsoever as to the specific nature of
the documents, the time span covered by the docu
mentation, the relationship of the documentation
to any particular transaction or transactions, or
the indication of any specific violation or violations
of the Act or Regulations. The material filed in
support of the application for the authorization is
contained in three affidavits which establish that
the applicant is a firm of chartered accountants
and, as such, acted as accountants for Collavino
and prepared that company's tax returns for the
taxation years 1974 and 1975. It was also estab
lished that the applicant has in its possession work
ing papers and other documents relating generally
to the affairs of Collavino and not restricted to the
years in question. There is no suggestion in the
evidence that this applicant was party to any viola
tion of the Income Tax Act or Regulations nor
does the evidence establish the relationship of Col-
lavino to any transaction that might constitute a
violation of the Act or Regulations except with
respect to construction contracts involving Kendan
Manufacturing Limited (hereinafter Kendan) and
one Dan Bryan, the President, General Manager
and owner of one-third of the common shares of
Kendan. While the applicant does not agree that
the evidence establishes "reasonable and probable
grounds" for believing that there was participation
by Collavino in the Kendan and Bryan transac
tions amounting to any offence whatsoever by
Collavino, the applicant attacks subject authoriza
tion on the wider ground that if it extended to
documents in the applicant's possession at all, it
should have been restricted to documentation per
taining to the dealings between Collavino on the
one hand and Kendan and Bryan on the other.
Applicant says that the authorization is defective
and should be quashed in so far as it relates to this
applicant because it is completely unrestricted in
its application to the Collavino documentation
concerning times, category, nature, content and
subject matter.
An analysis of the words used in section 231(4)
of the Act, supra, has convinced me that there is
substance in applicant's argument. The opening
words of subsection (4) require the Minister to
have reasonable and probable grounds for believ
ing that "a violation of this Act . .. has been
committed or is likely to be committed. ..." [Ital-
ics are mine.] The closing words which authorize
the seizing and taking away of documents, etc.,
restrict such authorization to documents etc., "that
may afford evidence as to the violation of any
provision of this Act. ..." [Italics are mine.] It
seems clear to me that "the violation" referred to
in the latter portion of subsection (4) has reference
to "a violation" specified in the opening words of
the subsection. Read in this fashion, the subsection
clearly restricts the authority to seize, and to take
away, etc., to the violation in respect of which the
Minister has reasonable and probable grounds and
in respect of which, he is required, by subsection
(5), to have evidence, on oath, which establishes
the facts upon which the application is based.
Thus, on the facts here present, since the evidence
filed by the Minister implicates those documents,
etc., of Collavino relating only to the Kendan and
Bryan transactions, it follows that the authoriza
tion to seize and take away, etc., should likewise be
restricted to those same documents.
I agree with applicant's counsel that it would be
ludicrous and absurd to interpret section 231(4) in
such a way as to enable the Taxation Department
to seize and take away every scrap of paper in
applicant's custody relating to Collavino from "the
year 1919 onward" as counsel put it, and covering
every house contract and every building contract
involving Collavino and myriad owners through
the years, based on evidence of possible violations
of the Act in two taxation years and for two
building owners. To read that subsection as con
tended by counsel for the respondent, it is neces
sary, in my view, to read into the subsection the
word "any" before the word "violation" in the
closing words of the subsection. Thus, the subsec
tion would have to read "that may afford evidence
as to any violation of any provision of this
Act...." As a result, it can be seen that the word
"the" has to be deleted and the word "any" sub
stituted therefor. However, giving the words used
their grammatical and ordinary sense, and without
having to add to or delete from the words used by
Parliament, the subsection must necessarily be
interpreted in the manner urged upon us by appli
cant's counsel.
It is my further view, that in the event of there
being a doubt as to the construction of a taxing
statute, the taxpayer is to be given the benefit of
that doubt on the ground that Parliament may, in
such circumstances, be presumed not to have
intended to interfere with private rights'. While I
have no such doubt in the instant case, for the
reasons above stated, were there such a doubt in
The Construction of Statutes, E. A. Driedger, pp. 152 and
153.
my mind, I would resolve it in favour of the
taxpayer for the reasons given by Dr. Driedger and
referred to supra.
Respondent's counsel relied on the case of
Canadian Bank of Commerce v. Attorney General
of Canada 2 . In my view, that case is clearly distin
guishable from the present case. First of all, the
section of the Income Tax Act there under review
was section 126 of the Act which is the predecessor
to the present Act. Section 126 empowered the
Minister to search "for any purpose related to the
administration or enforcement of this Act". It
seems to me that such a purpose is much broader
than "[a belief] that a violation of this Act ... has
been committed or is likely to be committed," the
wording used in the present section. There are
other significant differences between section 126
and section 231(4) of the present Act. The present
section 231(4) requires the Minister to have
reasonable and probable grounds for his belief in
the violation and subsection (5) requires sworn
evidence of the facts upon which the belief is
based. It seems to me that subsections 231(4) and
(5) clearly signify the recognition by Parliament
that the powers conferred under section 231(4),
involving as they do serious interference with the
common law rights to property and privacy, must
be carefully circumscribed and have built into
them, concomitant safeguards.
These significant differences between the rele
vant sections of the governing Income Tax Act
make the Canadian Bank of Commerce case
(supra) decision, in my opinion, inapplicable to the
case at bar.
Accordingly, and for the foregoing reasons, I
would allow this section 28 application, set aside
the order of the Director General, Special Investi
gations Directorate, Department of National
Revenue, Taxation, and His Honour Judge Carl
Zalev, dated August 2, 1977 and refer the matter
back to the said Director General and Judge Zalev
for the issuance of a new authorization restricting
the right to seize documents, books, records,
papers or things to those in the possession of the
applicant which are related to the dealings be
tween Collavino, Dan Bryan and Kendan, concern
2 [1962] S.C.R. 729.
ing the construction of the Bryan residence and the
construction of the addition to Kendan's plant.
* * *
The following are the reasons for judgment
rendered in English by
URIE J.: This is a section 28 application to
review and set aside an "Authorization to Enter
and Search" issued pursuant to section 231(4) of
the Income Tax Act by the Director General,
Special Investigations Directorate of the Depart
ment of National Revenue, Taxation, on the 28th
day of June 1977, and approved by His Honour
Judge Zalev of the County Court of the County of
Essex on August 2, 1977. The authorization in
question included in it the right to enter and
search the premises of the applicant.
Briefly the salient facts disclosed in the affidavit
evidence filed in support of the motion for approv
al of the authorization are these.
The applicant is a firm of chartered accountants
which carries on ,the practice of its profession at
two locations in Windsor, Ontario, inter alia.
Among the clients of the applicant firm is Col-
lavino Brothers Construction Company Limited,
(hereinafter referred to as Collavino Brothers),
which we were told is a large general construction
firm, with its business premises in Windsor. In the
course of its business Collavino Brothers entered
into a signed contract for the construction of a
house in Windsor for one Dan Bryan for the sum
of $43,000 under the supervision of an architect.
Cost records disclose, it was deposed, that the
actual costs of construction of the house, including
overhead, was $90,397. The actual amount paid to
the contractor as at June 9, 1977, the date on
which one of the affidavits was sworn, was
$37,200.
Collavino Brothers also constructed an addition
to the existing plant of Kendan Manufacturing
Limited of which Dan Bryan now is apparently
President. Total billings for that job amounted to
$364,500 of which $4,500 was written off as a bad
debt. The records of Collavino Brothers disclose
that the accumulated costs, including overhead, for
the plant addition, amounted to $226,827.
The affidavit of John William Brown, an officer
of the Department of National Revenue, Taxation,
at the Windsor District Taxation office sets forth
in more detail the above facts and states that the
loss to Collavino Brothers on the construction of
the Bryan house was $53,197 while the profit on
the addition to the Kendan plant was $133,173.
Paragraphs 12 to 18 inclusive then set forth the
basis upon which the respondent sought the
approval of the authorization to enter and search:
12. I annex to this my affidavit, the affidavit of David Foy,
identified as Exhibit "A". As a result of my examination of the
said Exhibit "A" and as a result of my enquiry, I have
reasonable grounds to believe and do believe that Collavino
Brothers Construction Company Limited and Mario Collavino
have made false or deceptive entries in the books of account of
the said Collavino Brothers Construction Company Limited by
including in the billings for the construction of the addition to
the plant of Kendan Manufacturing Limited an approximate
amount of $53,197. as being a portion of the cost of the
residence of Dan Bryan, shareholder of Kendan Manufacturing
Limited.
13. As a result of my examination of the said Exhibit "A", and
as a result of my inquiry, I have reasonable grounds for
believing and do believe that Collavino Brothers Construction
Company Limited has committed an offence under section 239
of the Income Tax Act and Amendments thereto by making
false or deceptive entries in the books of account of the said
Collavino Brothers Construction Company Limited in the
course of the years 1974 and 1975.
14. I annex to this my affidavit, the affidavit of Gregory
Atkinson, identified as Exhibit "B". As a result of my examina
tion of the said affidavit and as a result of my enquiry, I have
reasonable grounds for believing and do believe that Kendan
Manufacturing Limited has included in its Fixed Assets Build
ing Account the cost of the addition to its plant as being
$360,000., including therein the approximate $53,197. portion
of the cost of the residence to Dan Bryan as shown in para
graph 10. of this my affidavit. Kendan Manufacturing Limited
claimed Capital Cost Allowance on the amount of $360,000.,
thereby improperly claiming Capital Cost Allowance on the
amount of $53,197. as a deduction against its income in its T2
return of income for the 1975 taxation year.
15. As a consequence of my examination of the T1 returns of
income of Dan Bryan filed for the years 1974 and 1975, I know
that the said Dan Bryan has not reported as a benefit any
portion of the $53,197. partial cost of his residence paid by
Kendan Manufacturing Limited in his T1 returns of income for
the years 1974 and 1975.
16. As a result of my enquiry, I have reasonable grounds for
believing and do believe that Kendan Manufacturing Limited
and Dan Bryan have committed an offence under Section 239
of the Income Tax Act and Amendments thereto by making
false or deceptive statements in the returns of income of the
said Kendan Manufacturing Limited for the taxation years
1974 and 1975.
17. Collavino Brothers Construction Company Limited owns
an office and building shop at Walker Road and Highway 401
wherein it is known that business records and papers pertaining
to the operations of Collavino Brothers Construction Company
Limited for the taxation years 1974 and 1975 are located.
18. Coopers & Lybrand, 500 Ouellette Avenue, Windsor,
Ontario, Chartered Accountants, as accountants for Collavino
Brothers Construction Company Limited, prepared the finan
cial statements and returns of income of the said Collavino
Brothers Construction Company Limited for the years 1974
and 1975 and have in their possession working papers and other
documents relating to the tax affairs of the said Collavino
Brothers Construction Company Limited.
The relevant portions of the authorization to
enter and search approved by Judge Zalev are as
follows:
The Director General, Special Investigations Directorate,
Department of National Revenue, Taxation, hereby authorizes
G. W. ATKINSON, H. R. JANE, ... officers of the Department of
National Revenue, or any of them, together with such members
of the Royal Canadian Mounted Police or other peace officers
as they, or any of them, may call on to assist them, or any of
them, to enter and search, if necessary by force, the following
premises and any receptacles or places therein:
(a) The business premises of Collavino Brothers Construc
tion Company Limited at R. R. Walker Road at Highway
401, Windsor, Ontario.
(b) The business premises of Kendan Manufacturing Lim
ited at 770 Division Road, Windsor, Ontario.
(c) The private residence of Dan Bryan at 3790 Huntington
Avenue, Windsor, Ontario.
for documents, books, records, papers or things that may afford
evidence as to the violation of any provision of the Income Tax
Act or a regulation and to seize and take away any such
documents, books, records, papers or things and retain them
until they are produced in any court proceedings, and
(d) The offices of Coopers & Lybrand, Chartered Account
ants, and all storage facilities occupied or controlled by them
at 500 Ouellette Avenue, Windsor, Ontario.
(e) The offices of Coopers & Lybrand, Chartered Account
ants, and all storage facilities occupied or controlled by them
at 201 Shepherd Street East, Windsor, Ontario.
GIVEN under my hand at the City of Ottawa, Province of
Ontario, this 28th day of June, 1977.
Director General
Special Investigations Directorate of the
Department of National Revenue, Taxation.
After having considered the application made by the Director
General of Special Investigations based on the affidavit of John
William Brown, I hereby approve the above authorization,
which approval is also indicated on the preceding page by my
initials.
DATED at Windsor this 2nd day of August 1977.
"Carl Zalev"
CARL ZALEV
Judge of the County Court of Essex.
The authorization was issued and approved pur
suant to section 231(4) and (5) of the Income Tax
Act, and Regulation 900(5) of the Income Tax
Regulations:
231... .
(4) Where the Minister has reasonable and probable
grounds to believe that a violation of this Act or a regulation
has been committed or is likely to be committed, he may, with
the approval of a judge of a superior or county court, which
approval the judge is hereby empowered to give on ex parte
application, authorize in writing any officer of the Department
of National Revenue, together with such members of the Royal
Canadian Mounted Police or other peace officers as he calls on
to assist him and such other persons as may be named therein,
to enter and search, if necessary by force, any building, recep
tacle or place for documents, books, records, papers or things
that may afford evidence as to the violation of any provision of
this Act or a regulation and to seize and take away any such
documents, books, records, papers or things and retain them
until they are produced in any court proceedings.
(5) An application to a judge under subsection (4) shall be
supported by evidence on oath establishing the facts upon
which the application is based.
900... .
(5) The Director General, Special Investigations Directorate
of the Department of National Revenue, Taxation, and any
official holding a position of Director in that Directorate, may
exercise the powers and perform the duties of the Minister
under subsections 150(2), 231(2), (3) and (4) and subsection
244(4) of the Act.
While there is nothing in the evidence before us
to indicate what was seized by the National Reve
nue officers from the offices of Coopers &
Lybrand, we were advised that everything in the
possession of that firm relating in any way whatso
ever to Collavino Brothers Construction Company
Limited was seized and none has been returned
although the applicant has been given access to it
on occasion, apparently at the place it is kept by
the Department of National Revenue.
While he originally took the position that there
was no evidence before Judge Zalev which could
on reasonable and probable grounds indicate that
the Collavino Brothers had in any way violated
any provisions of the Income Tax Act, applicant's
counsel later candidly conceded that there was
sufficient evidence to warrant the entry and search
not only of their premises but also those of the
applicant firm which is, of course, in no way
implicated in any alleged violation. However, in
his view, the authorization for the seizure and
retention should have been limited to those docu
ments, books, records, papers and things relating
to the contracts Collavino Brothers had with
Kendan Manufacturing Limited and Daniel
Bryan. I take it that by this concession he agrees
that there were reasonable and probable grounds
upon which the Director General could have con
cluded that a violation of a provision of the Income
Tax Act may have occurred whether or not Col-
lavino Brothers was a party to the violation, and
that its records relating to the two contracts might
be relevant in determining whether or not there
was in fact a violation.
In my view, counsel was correct in conceding
that reasonable and probable grounds existed for
believing that a violation of the Income Tax Act
had been committed. There was ample evidence
for the Director General and the learned Judge so
concluding. The more difficult question is whether
or not the authorization, couched in the broad
language that it is, is, as a result, defective.
I am of the opinion that the question must be
determined by an examination of the historical
background of search and seizure practice, the
statutory context in which the subsection appears
and the plain meaning of the words of the subsec
tion interpreted as they must be in their historical
and actual context.
It is trite to say that, from the beginning, it has
been recognized that the issuance of a warrant to
search, which generally speaking has been empow
ered, at least in this country, by statute, is an
extraordinary remedy which is repugnant to the
usual right that an individual possesses to maintain
inviolate his own property and the property of
others which may be in his lawful possession. The
Courts have, thus, been zealous in seeking to
ensure that the statutory power of entry, search
and seizure is not abused by excesses in the
application of the power so given. Nowhere has
that zeal been more apparent than in the case of a
warrant directed against a person who is an owner
or occupier of property or is in lawful possession of
goods, documents or records of others and is, in
relation to the transaction giving rise to the exer
cise of the statutory power, an innocent third
party. 3 While the bulk of the jurisprudence relates
to entry, search and seizures in respect of warrants
issued pursuant to the applicable provisions of the
Criminal Code, there seems logically to be no
reason why the basic principle of limiting the
ambit of seizure in strict conformity to the statu
tory power should not apply in respect of the
authorization granted pursuant to section 231(4)
of the Income Tax Act.
The issue to be decided in this application then
is whether or not all the material seized from the
offices of the applicant should have been subject to
seizure and retention by the terms of the
authorization.
As previously shown, the authorization directs
the persons designated therein to enter and search
the offices of the applicant firm, inter alia, "for
documents, books, records, papers or things per
taining or relating to Collavino Brothers Construc
tion Company Limited that may afford evidence
as to the violation of any provision of the Income
Tax Act or a regulation and to seize and take
away any such documents, books, papers or things
and to retain them until they are produced in any
court proceedings ...." [Emphasis is mine.]
It is the contention of the respondent that the
words used conform precisely to the wording of the
latter part of section 231(4) which, of course, is
true, and thus the Minister through his designated
officials was entitled to seize and retain without
restriction, anything from the premises of Coopers
& Lybrand relating to Collavino Brothers which
might afford evidence as to the violation of any
provision of the Act whether in respect of the
violation which formed the basis of the application
for approval of the Minister's authorization or not.
Since the language is in conformity with the words
of the section it is not defective and, in counsel's
view, if the officers effecting the seizures exceeded
the authority granted by the authorization the
remedy lies elsewhere but the validity of the docu
ment is not open to challenge.
3 See Re United Distillers Limited (1964) 88 C.C.C. 338 at
341.
Subsection (5) of section 231 requires that the
application to a judge under subsection (4) be
supported by evidence on oath establishing the
facts upon which the application is based. As will
have been noted from the portions of the affidavit
of Mr. Brown set forth earlier herein, a violation of
section 239 of the Income Tax Act is alleged.
Supporting evidence respecting the violation is set
forth in his affidavit as well as the other affidavits
filed "establishing the facts upon which the
application is based." It is clear, therefore, that it
is that violation which has to be established to the
satisfaction of the judge by reason of the opening
words of subsection (4), namely: "Where the Min
ister has reasonable and probable grounds to
believe that a violation of this Act or a regulation
has been committed ...".
Since, in establishing the facts necessary to
obtain the judge's approval to the Minister's
authorization, reference should be made to a spe
cific violation of the Act, it defies logic, in my
view, to say as does counsel for the Minister, that
the authorization thus approved permits the re
moval of all documents, books, records, papers or
things from the premises of the innocent third
party whether related to the alleged violation or
any other violation, or not. Not only does it defy
logic but it is not supported, in my view, by the
wording of section 231(4) and represents an
unwarranted extension of the statutory power,
which, as earlier noted, should be confined strictly
to that given by Parliament.
To facilitate understanding the position of the
Minister, section 231(4), for convenience stripped
to its essentials, would read as follows:
Where the Minister has reasonable and probable grounds to
believe that a violation of this Act or a regulation has been
committed ... he may, with the approval of a judge ...
authorize ... any officer ... to enter and search ... any
building ... for documents, books ... that may afford evidence
as to the violation of any provision of this Act ... and to seize
and take away any such documents ... and retain them....
[The emphasis is mine.]
It is the submission of counsel for the Minister
that once a violation has been established to the
satisfaction of the judge, the authorization given
need no longer apply only to the violation cited in
support of the application for approval, but may
extend to any violation of any provision of the Act
by virtue of the underlined words in the stripped
down version of the section above set forth. It
follows then, in his view, that all documents of
Collavino Brothers in the possession of the appli
cant may be seized.
In my opinion this submission does not correctly
interpret the section for the following reasons.
Firstly, when a violation is referred to in the
opening words it refers to the violation specified in
the evidence establishing the facts.
Secondly, the violation referred to in the latter
words of the section must mean the same violation
established by the evidence. If this were not so
surely Parliament would have either used the
article "a" in referring to the violation or the word
"any". Use of either would have erased any doubt
as to what was intended.
Thirdly, it will be noted that in the earlier
portion of the section, the words used were "a
violation of this Act . .." . This surely encompasses
every provision of the Act. Thus, there can be no
support for counsel, it seems to me, in the use later
in the section of the words "the violation of any
provision of this Act." Both phrases refer to exact
ly the same thing. The key is found in the use of
the article "a" in the first phrase and the article
"the" in the second phrase, not in the use of the
word "any" in conjunction with the word "provi-
sion". In my opinion, clearly the violation is that
established on reasonable and probable grounds by
the evidence.
Fourthly, such an interpretation is consistent
with the requirement of proof under subsection
(5). It seems to me that there would be little
necessity for the existence of that subsection if the
view of the Minister were to prevail. Moreover, it
is more in accord with the philosophy of entry,
search and seizure provisions that requires a limi
tation on the arbitrary invasion of a person's prop
erty rights, namely that it is exercisable only in
strict conformity with the enabling statute.
To the extent then that it appears to permit the
seizure of all of the documents, books, records,
papers or things in relation to Collavino Brothers
in the possession of the applicant the authorization
is defective.
Accordingly, I would set aside the authorization
and remit the matter to the Minister and Judge
Zalev for the issuance of a new authorization
restricting the right to seize documents, books,
records, papers or things in the possession of the
applicant related to the dealings between Collavino
Brothers Construction Company Limited, Dan
Bryan and Kendan Manufacturing Limited con
cerning the construction of the Bryan residence
and the construction of the addition to the plant of
Kendan Manufacturing Limited.
* * *
The following are the reasons for judgment
rendered in English by
MACKAY D.J. (dissenting): The facts giving
rise to this section 28 application are not in dispute
and are fully set out in the reasons for judgment of
my brothers Heald and Urie, so that I need refer
to them only briefly.
The applicant, Coopers & Lybrand is a firm of
chartered accountants. One of its clients is Col-
lavino Brothers Construction Company Limited, a
firm of contractors engaged in the building
industry.
Purporting to act under a written authorization
to search and seize signed on behalf of the Minis
ter of National Revenue by the Director General
of the Special Investigations Branch of the Depart
ment of National Revenue, which written authori
zation was approved by His Honour Judge Zalev,
officers of the department seized all documents
and papers in the possession of the applicant that
belonged to or were in reference to the affairs of
its client Collavino Brothers.
The authorization to search and seize and the
approval by Judge Zalev were issued pursuant to
section 231 subsections (4) and (5) of the Income
Tax Act.
They are as follows:
231... .
(4) Where the Minister has reasonable and probable
grounds to believe that a violation of this Act or a regulation
has been committed or is likely to be committed, he may, with
the approval of a judge of a superior or county court, which
approval the judge is hereby empowered to give on ex parte
application, authorize in writing any officer of the Department
of National Revenue, together with such members of the Royal
Canadian Mounted Police or other peace officers as he calls on
to assist him and such other persons as may be named therein,
to enter and search, if necessary by force, any building, recep
tacle or place for documents, books, records, papers or things
that may afford evidence as to the violation of any provision of
this Act or a regulation and to seize and take away any such
documents, books, records, papers or things and retain them
until they are produced in any court proceedings.
(5) An application to a judge under subsection (4) shall be
supported by evidence on oath establishing the facts upon
which the application is based. [The underlining is mine.]
The application to Judge Zalev was supported
by affidavits that had reference to only one viola
tion of the Income Tax Act. That was a transac
tion involving Collavino Brothers, one Dan Bryan,
and Kendan Manufacturing Limited.
The authorization to search and seize in so far
as it relates to the issue in this case authorized a
number of named persons to enter and search and
was as follows:
(d) The offices of Coopers & Lybrand, Chartered Account
ants, and all storage facilities occupied or controlled by them
at 500 Ouellette Avenue, Windsor, Ontario.
(e) The offices of Coopers & Lybrand, Chartered Account
ants, and all storage facilities occupied or controlled by them
at 201 Shepherd Street East, Windsor, Ontario.
for documents, books, records, papers or things pertaining or
relating to Collavino Brothers Construction Company Limited
that may afford evidence as to the violation of any provision of
the Income Tax Act or a regulation and to seize and take away
any such documents, books, records, papers or things and retain
them until they are produced in any court proceedings, and
The submission of counsel for the applicants is
that the authorization to search should by its terms
have been limited to a search only for documents
that would be evidence in respect of the one viola
tion referred to in the affidavits before Judge
Zalev, and that because of its very broad and
comprehensive terms, it should not have been
approved by the judge.
I am unable to agree with this submission. The
authorization follows the exact wording of section
231 subsection (4). The first part of subsection
(4), dealing with approval by a judge refers to a
violation of this Act, etc. The later part authoriz
ing the search and seizure empowers the officers
conducting the search to seize books, documents
and papers that may afford evidence as to the
violation of any provision of the Act or regulations.
"Any" is defined in The Shorter Oxford Eng-
lish Dictionary as "... no matter which, of what
kind, or how many.... In affirm. sentences: =...
Every one of the sort named.... A quantity or
number however great or small... . Of any kind or
sort whatever... .
In my view, the effect of section 231 subsection
(4) is that, while the evidence before a judge on an
application to approve an authorization to search
and seize may be in relation to only one violation
of the Act, if the officers conducting the search in
respect of that violation find evidence of any other
violations of the Act, they may also seize that
evidence.
It is of interest to note that officers acting on a
search warrant issued under the provisions of the
Criminal Code have similar powers to seize evi
dence in respect of offences other than the one in
respect of which the search warrant was issued.
Section 445 of the Criminal Code is as follows:
445. Every person who executes a warrant issued under
section 443 may seize, in addition to the things mentioned in
the warrant, anything that on reasonable grounds he believes
has been obtained by or has been used in the commission of an
offence, and carry it before the justice who issued the warrant
or some other justice for the same territorial division, to be
dealt with in accordance with section 446.
It is not disputed that the persons designated to
conduct the search in the present case seized many
documents and papers that did not afford evidence
of any violation of the Act.
Such documents and papers should not have
been seized. The authorization to search and seize
did not authorize such seizure.
The difficulty in this case, however, is that the
application under section 28 is to set aside or
quash the order of Judge Zalev approving the
authorization to search and seize. There was no
error in law in respect of the authorization. It was
in the terms authorized by the statute and there
was no error in law on the part of Judge Zalev in
approving the authorization.
The error was on the part of the persons subse
quently conducting the search in exceeding the au
thority granted to them by the authorization.
The fact that those persons acted beyond and
outside the authority granted by the authorization
does not render the authorization or its approval
by Judge Zalev invalid. I would dismiss the section
28 application.
In its notice of motion, the applicant also asks
for what it describes as ancillary orders,
(1) asking that all documents seized be deliv
ered to the sheriff of Essex County and held by
him pending the outcome of the litigation,
and
(2) an order directing that all documents,
papers seized be returned to the applicant.
This Court has no jurisdiction on a section 28
application to make such orders. The applicant's
remedy in respect of the illegally seized documents
lies elsewhere.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.