R. v. Jarvis (W.J.), (2002) 295 N.R. 201 (SCC)

• Judge: McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.
• Court: Supreme Court (Canada)
• Case Date: November 21, 2002
• Jurisdiction: Canada (Federal)
• Citations: (2002), 295 N.R. 201 (SCC);2002 SCC 73

R. v. Jarvis (W.J.) (2002), 295 N.R. 201 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2002] N.R. TBEd. NO.015

Warren James Jarvis (appellant) v. Her Majesty the Queen (respondent) and the Attorney General for Ontario, the Attorney General of Quebec and the Criminal Lawyers' Association (Ontario) (interveners)

(28378; 2002 SCC 73; 2002 CSC 73)

Indexed As: R. v. Jarvis (W.J.)

Supreme Court of Canada

McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.

November 21, 2002.

Summary:

Revenue Canada officials conducted an "audit" under s. 231.1 of the Income Tax Act and obtained evidence from Jarvis under compulsion of law. The file was transferred to Special Investigations. Jarvis was misled into believing that the audit function was ongoing and was not cautioned that he had the right to remain silent. Revenue Canada used the information obtained in support of its application for a warrant to search Jar­vis's home, his accountant's office and documents already in Revenue Canada's pos­session. Jarvis was charged with income tax offences. He claimed that his ss. 7 and 8 Charter rights were violated and the evidence obtained should be excluded pursuant to s. 24(2).

The Alberta Provincial Court, in a decision reported at 195 A.R. 251, held that Revenue Canada violated Jarvis's ss. 7 and 8 Charter rights and excluded the evidence (the first decision). Thereafter, Jarvis asserted that banking records were obtained as part of the investigation (as distinct from the audit) in violation of his s. 8 Charter rights and should be excluded from evidence.

The Alberta Provincial Court, in a decision reported at 204 A.R. 123, concluded that Revenue Canada violated Jarvis's s. 8 Char­ter rights and excluded the evidence (the second decision). The Crown appealed the Provincial Court's rulings.

The Alberta Court of Queen's Bench, in a decision reported at 225 A.R. 225, allowed the appeal in part from the first decision, holding that although there had been a s. 7 Charter breach, s. 8 had not been contra­vened and evidence other than Jarvis's testi­mony should not have been excluded. The court affirmed the second decision, but di­rected a new trial. The accused appealed.

The Alberta Court of Appeal, in a decision reported at 271 A.R. 263; 234 W.A.C. 263, dismissed the appeal. The accused appealed.

The Supreme Court of Canada dismissed the appeal and affirmed the order for a new trial.

Civil Rights - Topic 1508

Property - General principles - Expectation of privacy - The Supreme Court of Canada discussed the protection afforded by s. 8 of the Charter respecting informational priv­acy and the context specific approach to what was reasonable - See paragraphs 69 to 72 - The court stated that "Generally, an individual has a diminished expectation of privacy in respect of records and docu­ments that he or she produces during the ordinary course of regulated activities ... In the particular context of the self-assessment and self-reporting income tax régime, a taxpayer's privacy interest in records that may be relevant to the filing of his or her tax return is relatively low" - See para­graph 72.

Civil Rights - Topic 1508

Property - General principles - Expectation of privacy - The Supreme Court of Canada stated that, with respect to s. 8 of the Charter, taxpayers had little privacy inter­est in the materials and records that they were obliged to keep under the Income Tax Act and produce during an audit - Once an aud­i­tor has inspected or required a given document under ss. 231.1(1) and 231.2(1) of the Act, the taxpayer could not truly be said to have a reasonable expecta­tion that the auditor would guard its confi­dentiality - There was nothing preventing auditors from passing to investigators files contain­ing validly obtained audit materials - There was no principle of use immunity that prevented investigators, in the exercise of their investigative function, from mak­ing use of evidence obtained through the proper exercise of the audit function - Nor, in respect of validly obtained audit infor­mation, was there any principle of deriva­tive use immunity that would require the trial judge to apply the "but for" test from R. v. R.J.S. (S.C.C.) - If evidence came to light as a result of information validly contained in the auditor's file, then investi­gators could make use of it - See para­graph 95.

Civil Rights - Topic 1525

Property - Personal property - Personal papers - [See both Civil Rights - Topic 1508 ].

Civil Rights - Topic 3160

Trials - Due process, fundamental justice and fair hearings - Criminal and quasi-criminal proceedings - Right to remain silent and protection against self-incrimi­nation (Charter, s. 7) - The Supreme Court of Canada stated that it was beyond doubt that an accused taxpayer's liberty interest under s. 7 of the Charter was engaged by the introduction of statutorily compelled information at his trial for offences under s. 239 of the Income Tax Act - "In giving expression to this principle, however, s. 7 does not envelop an abstract and absolute rule that would prevent the use of informa­tion in all contexts in which it is statutorily compelled ... A court must begin 'on the ground', with a concrete and contextual analysis of all the circumstances, in order to determine whether or not the principle against self-incrimination is actually engaged ... This analysis necessarily in­volves a balancing of principles. One must, in assessing the limits on compel­lability demanded by the principle against self-incrimination, consider the opposing prin­ciple of fundamental justice suggesting that relevant evidence should be available to the trier of fact in a search for truth ... These competing interests will often be brought to the foreground in regulatory contexts, where the procedures being chal­lenged have generally been designed (and are employed) as part of an administrative scheme in the public inter­est" - See para­graphs 67 and 68.

Civil Rights - Topic 3160

Trials - Due process, fundamental justice and fair hearings - Criminal and quasi-criminal proceedings - Right to remain silent and protection against self-incrimi­nation (Charter, s. 7) - The Supreme Court of Canada stated that, with respect to s. 7 of the Charter, when the predominant purpose of a tax official's question or inquiry was the determination of penal liability, the "full panoply" of Charter rights were engaged for the taxpayer's protection - A number of consequences followed from this - First no further state­ments could be compelled from the taxpayer by way of s. 231.1(1)(d) for the purpose of advancing the criminal investi­gation - Likewise no written documents could be inspected or examined except by way of judicial warrant under s. 231.3 of the Income Tax Act or s. 487 of the Criminal Code and no documents could be required, from the taxpayer or any third party for the purpose of advancing the criminal investigation - Tax officials con­ducting inquiries, the predominant purpose of which was the determination of penal liability, did not have the benefit of ss. 231.1(1) and 231.2(1) requirement powers - See paragraph 96.

Civil Rights - Topic 3160

Trials - Due process, fundamental justice and fair hearings - Criminal and quasi-criminal proceedings - Right to remain silent and protection against self-incrimi­nation (Charter, s. 7) - The Supreme Court of Canada stated that "(1) Although the [Income Tax Act] is a regulatory statute, a distinction can be drawn between the audit and investigative powers that it grants to the Minister. (2) When, in light of all relevant circumstances, it is apparent that CCRA [Canadian Customs and Revenue Agency] officials are not engaged in the verification of tax liability, but are engaged in the determination of penal liability under s. 239, the adversarial relationship between the state and the individual exists. As a result, Charter protections are engaged. (3) When this is the case, investi­gators must provide the taxpayer with a proper warning. The powers of compulsion in ss. 231.1(1) and 231.2(1) are not avail­able, and search warrants are required in order to further the investigation." - See paragraph 99.

Civil Rights - Topic 3160

Trials - Due process, fundamental justice and fair hearings - Criminal and quasi-criminal proceedings - Right to remain silent and protection against self-incrimi­nation (Charter, s. 7) - An auditor was accompanied by her supervisor while auditing Jarvis under s. 231.1 of the Income Tax Act - The file was transferred to Special Investigations - Jarvis was mis­led into believing that the audit was ongoing - An investigator obtained a search warrant based on information obtained by the auditor - The Supreme Court of Canada held that the auditor's mislead­ing tactics had not been used to obtain information under ss. 231.1(1) and 231.2(1) for the predominant purpose of determining penal liability under s. 239 - As the adversarial relationship had not crystallized, it was not improper for the supervisor to accompany the auditor for the purpose of providing a second opinion on transferring the file - No investigation into penal liability occurred until the trans­fer at which time the Charter was engaged - Accordingly, the information gathered by the auditor was admissible in the warrant application, the warrant was validly issued and the resulting evidence was admissible -However, the use of banking records obtained by the investigator pursuant to s. 231.2(1) requirement letters after the inves­tigation was well underway violated the accused's s. 7 Charter rights - The court excluded the banking records - See para­graphs 100 to 106.

Civil Rights - Topic 4304.2

Protection against self-incrimination - General - Compellability - Documents - [See first Civil Rights - Topic 3160 ].

Civil Rights - Topic 4350

Protection against self-incrimination - Self-incriminating documents - Production of - Denial of right - [See first and fourth Civil Rights - Topic 3160 ].

Civil Rights - Topic 4456

Protection against self-incrimination - Proceedings to which protection does not apply - Income tax audits and inquiries - [See first and fourth Civil Rights - Topic 3160 ].

Income Tax - Topic 8965

Administration - Communication of infor­mation - Use in criminal proceedings - [See second Civil Rights - Topic 1508 and first, second, and fourth Civil Rights -Topic 3160 ].

Income Tax - Topic 8965

Administration - Communication of infor­mation - Use in criminal proceedings - The Supreme Court of Canada held that when the predominant purpose of a tax official's inquiry was the determination of penal liability constitutional protections against self-incrimination applied - The court stated that "The predominant purpose test does not thereby prevent the CCRA [Cana­dian Customs and Revenue Agency] from conducting parallel criminal investigations and administrative audits. The fact that the CCRA is investigating a taxpayer's penal liability, does not preclude the possibility of a simultaneous investigation, the pre­dominant purpose of which is a determina­tion of the same taxpayer's tax liability. However, if an investigation into penal liability is subsequently commenced, the investigators can avail themselves of that information obtained pursuant to the audit powers prior to the commencement of the criminal investigation, but not with respect to information obtained pursuant to such powers subsequent to the commencement of the investigation into penal liability. This is no less true where the investiga­tions into penal liability and tax liability are in respect of the same tax period. So long as the predominant purpose of the parallel investigation actually is the deter­mination of tax liability, the auditors may continue to resort to ss. 231.1(1) and 231.2(1). It may well be that there will be circumstances in which the CCRA officials conducting the tax liability inquiry will desire to inform the taxpayer that a crimi­nal investigation also is under way and that the taxpayer is not obliged to comply with the requirement powers of ss. 231.1(1) and 231.2(1) for the purposes of the criminal investigation. On the other hand, the auth­orities may wish to avail themselves of the search warrant procedures under ss. 231.3 of the ITA or 487 of the Criminal Code to access the documents necessary to advance the criminal investigation. ..." - See para­graph 97.

Income Tax - Topic 9206

Enforcement - General - Duties of income tax officials - [See third Civil Rights - Topic 3160 ].

Income Tax - Topic 9221

Enforcement - Inquiry (incl. audit) - Gen­eral - [See second Income Tax - Topic 8965 ].

Income Tax - Topic 9251

Enforcement - Production of information - General - [See first Civil Rights - Topic 1508 ].

Income Tax - Topic 9255

Enforcement - Production of information - Demand of information - General - [See second Civil Rights - Topic 1508 , all Civil Rights - Topic 3160 and second Income Tax - Topic 8965 ].

Income Tax - Topic 9255

Enforcement - Production of information - Demand of information - General - The inspection and requirement powers under ss. 231.1(1) and 231.2(1) of the Income Tax Act were available "for any purpose related to administration or enforcement" of the Act - The Supreme Court of Canada stated that although the terms were, at first glance, extremely broad, when considered in their entire context, they did not include the prosecution of s. 239 offences - Where an inquiry's predominant purpose was the determination of penal liability (thereby engaging the adversarial relationship be­tween the taxpayer and tax officials), tax officials had to relinquish the authority to use the powers under ss. 231.1(1) and 231.2(1) - The determination of when the relationship became effectively adversarial was a contextual one which took into ac­count all relevant factors - The court listed some of the factors relevant to ascer­taining whether an inquiry's predominant purpose was the determination of penal liability - See paragraphs 77 to 94.

Income Tax - Topic 9302

Enforcement - Search and seizure - Search warrants - [See third and fourth Civil Rights - Topic 3160 ].

Cases Noticed:

British Columbia Securities Commission v. Branch and Levitt, [1995] 2 S.C.R. 3; 180 N.R. 241; 60 B.C.A.C. 1; 99 W.A.C. 1, refd to. [para. 38].

R. v. Norway Insulation Inc. (1995), 23 O.R.(3d) 432 (Gen. Div.), affing. [1995] 2 C.T.C. 451 (Ont. Prov. Div.), refd to. [para. 39].

R. v. Araujo (A.) et al., [2000] 2 S.C.R. 992; 262 N.R. 346; 143 B.C.A.C. 257; 235 W.A.C. 257, refd to. [para. 44].

Del Zotto v. Minister of National Revenue, [1997] 3 F.C. 40; 215 N.R. 184 (F.C.A.), revd. [1999] 1 S.C.R. 3; 252 N.R. 201, refd to. [para. 48].

R. v. McKinlay Transport Ltd. and C.T. Transport Inc., [1990] 1 S.C.R. 627; 106 N.R. 385; 39 O.A.C. 385, refd to. [para. 48].

Thomson Newspapers Ltd. v. Director of Investigation and Research, Combines Investigation Act et al., [1990] 1 S.C.R. 425; 106 N.R. 161; 39 O.A.C. 161, refd to. [para. 48].

Knox Contracting Ltd. and Knox v. Canada and Minister of National Rev­enue et al., [1990] 2 S.C.R. 338; 110 N.R. 171; 106 N.B.R.(2d) 408; 265 A.P.R. 408, refd to. [para. 48].

Québec (Sous-ministre du Revenu) et autres v. 143471 Canada Inc. et autres, [1994] 2 S.C.R. 339; 167 N.R. 321; 61 Q.A.C. 81, refd to. [para. 48].

143471 Canada Inc. v. Quebec (Attorney General) - see Québec (Sous-ministre du Revenu) et autres v. 143471 Canada Inc. et autres.

R. v. Hydro-Québec, [1997] 3 S.C.R. 213; 217 N.R. 241, refd to. [para. 48].

Smerchanski v. Minister of National Rev­enue, [1977] 2 S.C.R. 23; 9 N.R. 459, refd to. [para. 49].

R. v. Wholesale Travel Group Inc. and Chedore, [1991] 3 S.C.R. 154; 130 N.R. 1; 49 O.A.C. 161, refd to. [para. 55].

Comité paritaire de l'industrie de la che­mise v. Potash et Sélection Milton, [1994] 2 S.C.R. 406; 168 N.R. 241; 61 Q.A.C. 241, refd to. [para. 55].

Minister of National Revenue v. Grim­wood, [1987] 2 S.C.R. 755; 81 N.R. 153, refd to. [para. 55].

R. v. Ling (C.K.) (2002), 295 N.R. 273; 173 B.C.A.C. 161; 283 W.A.C. 161 (S.C.C.), refd to. [para. 59].

Ramm, Re, [1958] O.R. 98 (C.A.), refd to. [para. 60].

Southam Inc. v. Hunter, [1984] 2 S.C.R. 145; 55 N.R. 241; 55 A.R. 291, refd to. [para. 61].

City National Leasing Ltd. v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332, refd to. [para. 61].

R. v. Nova Scotia Pharmaceutical Society et al. (No. 2), [1992] 2 S.C.R. 606; 139 N.R. 241; 114 N.S.R.(2d) 91; 313 A.P.R. 91, refd to. [para. 61].

Baron et al. v. Minister of National Rev­enue et al., [1993] 1 S.C.R. 416; 146 N.R. 270, refd to. [para. 62].

Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326; 102 N.R. 321; 103 A.R. 321, refd to. [para. 63].

Symes v. Minister of National Revenue, [1993] 4 S.C.R. 695; 161 N.R. 243, refd to. [para. 63].

R. v. Lyons, [1987] 2 S.C.R. 309; 80 N.R. 161; 82 N.S.R.(2d) 271; 207 A.P.R. 271, refd to. [para. 64].

Société Radio-Canada v. Nouveau-Bruns­wick (Procureur général) et autres, [1991] 3 S.C.R. 459; 130 N.R. 362; 119 N.B.R.(2d) 271; 300 A.P.R. 271, refd to. [para. 64].

Canadian Broadcasting Corp. v. New Brunswick (Attorney General) - see Société Radio-Canada v. Nouveau-Bruns­wick (Procureur général) et autres.

Reference Re Section 94(2) of the Motor Vehicle Act (B.C.), [1985] 2 S.C.R. 486; 63 N.R. 266, refd to. [para. 67].

Reference Re Sections 193 and 195.1(1)(c) of the Criminal Code, [1990] 1 S.C.R. 1123; 109 N.R. 81; 68 Man.R.(2d) 1, refd to. [para. 67].

R. v. R.J.S., [1995] 1 S.C.R. 451; 177 N.R. 81; 78 O.A.C. 161, refd to. [para. 67].

R. v. M.B.P., [1994] 1 S.C.R. 555; 165 N.R. 321; 70 O.A.C. 161, refd to. [para. 67].

R. v. Jones (S.), [1994] 2 S.C.R. 229; 166 N.R. 321; 43 B.C.A.C. 241; 69 W.A.C. 241, refd to. [para. 67].

R. v. Fitzpatrick (B.), [1995] 4 S.C.R. 154; 188 N.R. 248; 65 B.C.A.C. 1; 106 W.A.C. 1, refd to. [para. 67].

R. v. White (J.K.), [1999] 2 S.C.R. 417; 240 N.R. 1; 123 B.C.A.C. 161; 201 W.A.C. 161, refd to. [para. 67].

R. v. Plant (R.S.), [1993] 3 S.C.R. 281; 157 N.R. 321; 145 A.R. 104; 55 W.A.C. 104, refd to. [para. 70].

Smith v. Canada (Attorney General) (2001), 279 N.R. 197 (S.C.C.), refd to. [para. 71].

Bell ExpressVu Limited Partnership v. Rex et al. (2002), 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1 (S.C.C.), refd to. [para. 77].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 77].

R. v. Gladue (J.T.), [1999] 1 S.C.R. 688; 238 N.R. 1; 121 B.C.A.C. 161; 198 W.A.C. 161, refd to. [para. 77].

Canadian Bank of Commerce v. Canada (Attorney General), [1962] S.C.R. 729, refd to. [para. 80].

Richardson (James) & Sons Ltd. v. Minis­ter of National Revenue, [1984] 1 S.C.R. 614; 54 N.R. 241, refd to. [para. 80].

Multiform Manufacturing Co. et autres v. R. et autres, [1990] 2 S.C.R. 624; 113 N.R. 373; 32 Q.A.C. 241, refd to. [para. 83].

R. v. Bjellebo (E.S.) et al. (1999), 102 O.T.C. 81 (Gen. Div.), refd to. [para. 85].

R. v. Pheasant, [2001] G.S.T.C. 8 (Ont.), refd to. [para. 85].

R. v. Chusid (S.), [2001] O.T.C. 866; 57 O.R.(3d) 20 (Sup. Ct.), refd to. [para. 85].

R. v. Roberts, [1998] B.C.J. No. 3184 (Prov. Ct.), refd to. [para. 86].

R. v. Dial Drug Stores Ltd. (2001), 52 O.R.(3d) 367, refd to. [para. 86].

Samson et al. v. Canada et al., [1995] 3 F.C. 306; 189 N.R. 89 (F.C.A.), leave to appeal refused [1996] 1 S.C.R. ix; 203 N.R. 315, refd to. [para. 86].

Samson v. Addy - see Samson et al. v. Canada et al.

R. v. Yip (F.) et al. (2000), 278 A.R. 124 (Q.B.), refd to. [para. 86].

R. v. Anderson (D.) et al. (2001), 209 Sask.R. 117 (Q.B.), refd to. [para. 86].

R. v. Seaside Chevrolet Oldsmobile Ltd. et al. (2002), 248 N.B.R.(2d) 132; 646 A.P.R. 132 (Prov. Ct.), refd to. [para. 86].

R. v. Warawa (A.J.) (1997), 208 A.R. 81 (Q.B.), refd to. [para. 86].

R. v. Coghlan, [1994] 1 C.T.C. 164 (Ont. Prov. Div.), refd to. [para. 87].

Gorenko et al. v. Canada et al., [1997] R.J.Q. 2482 (Sup. Ct.), affd. [1999] Q.J. No. 6268 (C.A.), leave to appeal granted [2000] 2 S.C.R. ix; 252 N.R. 399, refd to. [para. 87].

Roncarelli v. Duplessis, [1959] S.C.R. 121, refd to. [para. 91].

Babcock et al. v. Canada (Attorney Gen­eral) et al. (2002), 289 N.R. 341; 168 B.C.A.C. 50; 275 W.A.C. 50 (S.C.C.), refd to. [para. 91].

Director of Investigation and Research, Competition Act v. Southam Inc. et al., [1997] 1 S.C.R. 748; 209 N.R. 20, refd to. [para. 100].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 231.1(1), sect. 231.1(2), sect. 239 [para. 37].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Stat­utes (2nd Ed. 1983), p. 87 [para. 77].

Krishna, Vern, The Fundamentals of Cana­dian Income Tax (6th Ed. 2000), pp. 22 [para. 49]; 767, 772 [para. 50]; 810 [para. 83].

Counsel:

Alan D. Macleod, Q.C., and Wendy K. McCallum, for the appellant;

S. David Frankel, Q.C., Bruce Harper and Janet Henchey, for the respondent;

Trevor Shaw, for the intervener, the Attorney General for Ontario;

Gilles Laporte and Monique Rousseau, for the intervener, the Attorney General of Quebec;

Scott K. Fenton, for the intervener, the Criminal Lawyers' Association (Ontario).

Solicitors of Record:

Macleod Dixon, Calgary, Alberta, for the appellant;

Department of Justice, Vancouver, British Columbia, for the respondent;

Ministry of the Attorney General, Toronto, Ontario, for the intervener, the Attorney General for Ontario;

Department of Justice, Sainte-Foy, Quebec, for the intervener, the Attorney General of Quebec;

Scott K. Fenton, Toronto, Ontario, for the intervener, the Criminal Lawyers' Asso­ciation (Ontario).

This appeal was heard on June 13, 2002, before McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ., of the Supreme Court of Canada.

The decision of the Supreme Court of Canada was delivered in both official lan­guages on November 21, 2002, by Iacobucci and Major, JJ.