T-4424-81
Réjean Racine (Applicant)
v.
The Queen (Respondent)
and
Michel Gailloux (Mis -en-cause)
Trial Division, Dubé J.—Montreal, September 21;
Ottawa, September 28, 1981.
Crown — Seizure — Application to quash a seizure and
have the seized property returned to applicant — Mis -en-
cause, an inspector under the Precious Metals Marking Act,
seized some jewellery kept in a safety deposit box of a bank
following seizure of same by an R.C.M.P. officer on appli
cant's premises — Section 7 of the Act providing for seizure by
inspector on dealer's premises — Whether seizure of property
located at an R.C.M.P. station or in a safety deposit box of a
bank, lawful — Seizure quashed — Section 7 of the Act
authorized the inspector to seize the article on a dealer's
premises and nowhere else — Precious Metals Marking Act,
R.S.C. 1970, c. P-19, s. 7 — Income Tax Act, S.C. 1970-71-
72, c. 63, s. 231(1)(d) — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 18.
Royal American Shows, Inc. v. Minister of National
Revenue [1978] 1 F.C. 72 (reversing [1976] 1 F.C. 269),
applied. Burnett v. Minister of National Revenue 77 DTC
5059, referred to.
APPLICATION.
COUNSEL:
Denis Peloquin for applicant.
Richard Corbeil for respondent and mis -en-
cause.
SOLICITORS:
Denis Peloquin, Montreal, for applicant.
Deputy Attorney General of Canada for re
spondent and mis - en - cause.
The following is the English version of the
reasons for judgment rendered by
Dust J.: This is an application for a seizure to
be quashed and vacated and the seized property
returned pursuant to section 18 of the Federal
Court Act, R.S.C. 1970 (2nd Supp.), c. 10.
On April 3, 1981, in response to a telephone call
from Daniel Roy, a Royal Canadian Mounted
Police officer, the mis -en-cause, who is an inspec
tor designated under the Precious Metals Marking
Act,' went to the Réjean Racine jewellery store in
St -Hyacinthe, Quebec, and undertook an inspec
tion of all the jewellery on display. He found that
several pieces of jewellery bore a marking which
was not in accordance with the said Act. He then
identified 218 pieces of jewellery which were set
apart in a bag by officer Roy, who kept them in his
possession, as he intended to seize them and in fact
did seize them in connection with alleged offences
under the Customs Act, R.S.C. 1970, c. C-40.
On June 26, 1981 officer Roy told inspector
Gailloux that the 218 pieces of jewellery in ques
tion were now available. The two men met at the
St -Hyacinthe R.C.M.P. office and went to the
bank where the bag containing the jewellery was
being kept in a safety deposit box. The inspector
made the seizure and wrote up a notice of seizure
and retention, then took possession of the jewellery
which officer Roy gave him. The inspector subse
quently found that offences had been committed
with respect to 109 of the 218 pieces of jewellery
seized.
The inspector alleged by affidavit that formal
informations for offences against the Precious
Metals Marking Act would be laid by September
24, 1981 with respect to these pieces of jewellery.
He further stated that on September 10, 1981 a
seizure of the 218 pieces of jewellery was made
and that he was appointed custodian of the said
jewellery under the latter seizure. This seizure was
made pursuant to an order of a judge of the
Federal Court, acting on a certificate filed in the
Registry of this Court under the authority of the
Income Tax Act, S.C. 1970-71-72, c. 63, ordering
any bailiff responsible for executing the writ of
fieri facias to open premises and appoint a custodi
an other than the debtor.
Applicant alleged that the seizure made by in
spector Michel Gailloux on June 26, 1981 is
unlawful and contrary to the Precious Metals
Marking Act. The powers of entering, inspecting
' R.S.C. 1970, c. P-19.
and seizing under that Act are contained in section
7, which reads as follows:
7. (1) An inspector may at any reasonable time enter the
premises of any dealer, require the production for inspection of
any precious metal article upon the premises of a dealer and
seize any such article that he reasonably suspects is marked
otherwise than in accordance with this Act and the regulations.
(2) Any article seized pursuant to subsection (1) may be
retained for a period of ninety days and, if before the expiration
of such period any proceedings in respect to such article are
taken under this Act, the article may be retained until such
proceedings are finally disposed of.
Applicant maintained that the inspector's power
is thus to enter a dealer's premises, require the
production of a precious metal article found there
and seize it on the premises; the inspector is not
entitled to seize an article which is located at an
R.C.M.P. station (the location described in the
notice of seizure and retention), or in a safety
deposit box of a bank (as alleged in the inspector's
affidavit).
In Royal American Shows, Inc. v. M.N.R. 2 , an
agent of the Minister had seized certain docu
ments of the appellant which were located at the
Edmonton police station, pursuant to the provi
sions of paragraph 231(1)(d) of the Income Tax
Act 3 . The Trial Judge held that the power of
seizure was traditionally subject to review by the
Court, and that it was the Trial Division which
exercised jurisdiction in the circumstances. A
majority of the Court of Appeal held that the
power of seizure defined in the aforementioned
2 [ 1976] 1 F.C. 269.
3 S.C. 1970-71-72, c. 63.
231. (1) Any person thereunto authorized by the Minister,
for any purpose related to the administration or enforcement
of this Act, may, at all reasonable times, enter into any
premises or place where any business is carried on or any
property is kept or anything is done in connection with any
business or any books or records are or should be kept, and
(d) if, during the course of an audit or examination, it
appears to him that there has been a violation of this Act
or a regulation, seize and take away any of the documents,
books, records, papers or things that may be required as
evidence as to the violation of any provision of this Act or
a regulation.
paragraph could not validly be exercised at the
location where it had purported to be exercised.
This extract" from the decision of Le Dain J.
clarifies the position:
I turn then to the,question of whether a seizure at the
Edmonton City Police Station is one that could be authorized
by section 231(1)(d). In my opinion section 231(1)(d) cannot
be construed to mean that an authorized person may seize and
take away any documents, books, records, papers or things
wherever and under whatever circumstances he may find them.
It is not an independent and unqualified power of seizure. The
object of section 231(1) is to permit a person authorized by the
Minister to enter certain places for the purpose of making an
audit or examination. If in the course of such audit or examina
tion it appears to him that there has been a violation of the Act
or regulations he may seize and take away any documents,
books, records, papers or things that may be required as
evidence of such violation. It is a power of seizure that arises in
certain defined circumstances. It is related to the power to
enter for the purpose of audit or examination and is necessarily
limited in its potential scope by that power. The power to seize
can only be validly exercised if it is exercised pursuant to an
entry and audit or examination authorized by section
231(1)(a).
The Edmonton City Police Station is obviously not a place
where any business is carried on or anything is done in connec
tion with any business within the meaning of section 231(1).
Shortly afterwards, my brother Mahoney J.
quashed a seizure and returned documents seized,
under the provisions of the same paragraph
231(1)(d) of the Income Tax Act, at an R.C.M.P.
station in Toronto. He ordered the return of the
documents to the appellant company. 5
In my view, the provisions of section 7 of the
Precious Metals Marking Act are even more spe
cific than those of the aforementioned paragraph
of the Income Tax Act. A measure as drastic as
the seizure of private property must be carried out
strictly within the limits prescribed by the Act. In
the case at bar, section 7 authorized the inspector
to seize the article on a dealer's premises, and
nowhere else. This seizure must therefore be
quashed.
However, it does not follow that the 218 pieces
of jewellery must be returned to applicant.
It should be borne in mind that two other seiz
ures, the legality of which is not in dispute, were
made with respect to the same articles: the first
4 [1978] 1 F.C. 72, at pp. 82-83.
5 Burnett v. M.N.R. 77 DTC 5059.
seizure by the R.C.M.P. under the Customs Act,
and the more recent seizure by the Minister of
National Revenue under the Income Tax Act.
Following this second seizure the articles remained
in the possession of inspector Gailloux, who had
custody of them. It is accordingly ordered that the
jewellery in question remain in the latter's posses
sion as custodian on behalf of the Minister of
National Revenue, pursuant to the order of this
Court dated April 16, 1981 as executed by the
bailiff on September 10, 1981.
Counsel for the respondent and the mis -en-cause
requested a period of ten days to file an appeal
from this decision in the event that the seizure was
quashed. This request is justified and must similar
ly be allowed in favour of applicant; the mis -en-
cause, as custodian on behalf of the Minister of
National Revenue, shall therefore not relinquish
the jewellery before the ten-day period has ex
pired, or before a decision of the Court of Appeal
if the present decision is appealed.
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.