R. v. Murdock (M.) and Johnson (S.G.), (1996) 154 N.S.R.(2d) 1 (CA)

• Judge: Hallett, Chipman and Freeman, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: August 19, 1996
• Jurisdiction: Nova Scotia
• Citations: (1996), 154 N.S.R.(2d) 1 (CA)

R. v. Murdock (M.) (1996), 154 N.S.R.(2d) 1 (CA);

    452 A.P.R. 1

MLB headnote and full text

Marion Murdock and Stanley Johnson (appellants) v. Her Majesty The Queen (respondent) and Union of Nova Scotia Indians (intervenor)

(C.A.C. Nos. 120006; 119999; 120007)

Indexed As: R. v. Murdock (M.) and Johnson (S.G.)

Nova Scotia Court of Appeal

Hallett, Chipman and Freeman, JJ.A.

August 19, 1996.

Summary:

Murdock and Johnson (the accused) were status Indians living on reserves in Ontario and Nova Scotia respectively. Murdock sold and delivered tobacco products to Johnson, who sold them out of his three retail stores on the Nova Scotia reserve, including sales to a nonnative. Tobacco tax was not paid on any tobacco imported into Nova Scotia. Neither accused held a Wholesale Vendor permit or a Designated Retail Vendor permit under the Tobacco Tax Act or the Health Services Tax Act. The accused were charged under ss. 380(1)(a) and 465(1)(c) of the Criminal Code with conspiracy to defraud the Nova Scotia government of revenue payable under the Tobacco Tax Act. Before trial, the accused applied for a stay of pro­ceedings on the ground that their right to be tried within a reasonable time (Charter, s. 11(b)) had been denied.

The Nova Scotia Supreme Court, in a judgment not reported in this series of reports, dismissed that application. The accused appealed.

The Nova Scotia Court of Appeal, in a judgment reported 141 N.S.R.(2d) 251; 403 A.P.R. 251, dismissed the appeal on the grounds that it was premature, being an appeal from an interlocutory decision. At trial, the accused challenged the constitu­tionality of the Tobacco Tax Act, claiming that it was ultra vires the province as being an infringement on the federal power re­specting Indians. The accused also sought the exclusion of certain wiretap evidence.

The Nova Scotia Supreme Court, in a judgment not reported in this series of reports, dismissed both applications and convicted the accused. Murdock was sen­tenced to six months' imprisonment plus two years' probation. Johnson was sentenced to 18 months' imprisonment plus two years' probation. Both accused appealed against conviction and sentence. The accused claimed that, inter alia, the Tobacco Tax Act was ultra vires the province for infringing upon the exclusive federal jurisdiction over Indians (Constitution Act, 1867, s. 91(24)); the Act violated aboriginal rights guaranteed under s. 35(1) of the Constitution Act, 1982; the Act was ultra vires the Province as in­direct taxation or as regulation of interpro­vincial trade; the trial judge erred in failing to exclude certain wiretap evidence and in failing to rule that Murdock's right to coun­sel (Charter, s. 10(b)) was denied; and the trial judge erred in determining that the accused possessed the requisite mens rea for fraud. The accused claimed that the Act infringed the exemption from taxation of personal property of an Indian situate on a reserve (Indian Act, s. 87(1)(b)).

The Nova Scotia Court of Appeal dis­missed the appeals against conviction and sentence.

Civil Rights - Topic 1646

Property - Search and seizure - Unrea­sonable search and seizure defined - [See Criminal Law - Topic 5274.5 ].

Civil Rights - Topic 3265

Trials - Due process, fundamental justice and fair hearings - Speedy trial - Ac­cused's right to - Within a reasonable time - What constitutes - The accused and others were charged on July 2, 1992, with conspiracy to defraud the province with revenue payable under the Tobacco Tax Act - Arraignment was adjourned to De­cember 1, 1992 - The preliminary inquiry was held in August 1993 - The trial was set for October 25, 1994 - The case con­cerned the constitutionality of the Tobacco Tax Act - All parties agreed to adjourn to await a Supreme Court of Canada decision in another case that would resolve the issue - That decision did not materialize (leave to appeal withdrawn) - The trial was set for June 20, 1995 - The Nova Scotia Court of Appeal held that the trial judge did not err in finding that the ac­cused's right to be tried within a reason­able time was not denied (Charter, s. 11(b)) - Of the 35 month delay between the charge and trial, 13 months was waived or attributable to the accused - The case was complex, with much disclo­sure by the Crown (wiretap evidence) - A preliminary hearing required more time - Institutional resources were not limitless - The accused suffered no prejudice by the delay - See paragraphs 61 to 131.

Constitutional Law - Topic 1766

Extent of powers conferred - Necessarily incidental doctrine - Legislation necessar­ily incidental to provincial powers - [See Constitutional Law - Topic 5670 ].

Constitutional Law - Topic 5670

Federal jurisdiction (s. 91) - Regulation of trade and commerce - Interprovincial trade - Section 14(1)(a) of the Tobacco Tax Act prohibited importation of tobacco into Nova Scotia unless the person held a wholesale vendor's permit - The accused claimed the Act was ultra vires the prov­ince because it regulated interprovincial trade and encroached on the federal power (Constitution Act, 1867, s. 91(2)) to regu­late trade and commerce - The Nova Scotia Court of Appeal held that ss. 6 and 14(1)(a) of the Act, regulating importation of tobacco, were incidental to the exercise of provincial jurisdiction over direct tax­ation (s. 92(2)) and property and civil rights (s. 92(13)) - The sections did not conflict with the federal power to regulate interprovincial trade, although they may incidentally encroach on that power - See paragraphs 241 to 249.

Constitutional Law - Topic 5770

Federal jurisdiction (s. 91) - Taxation - Direct tax and indirect tax distinguished - [See Constitutional Law - Topic 6831 ].

Constitutional Law - Topic 6831

Provincial jurisdiction (s. 92) - Direct taxation within the province - Tobacco tax - The accused status Indian sold tobacco to nonnatives - The accused claimed that the Tobacco Tax Act was ultra vires the province of Nova Scotia as indirect tax­ation when it required an importer and wholesaler who was a registered Indian to hold a wholesale vendor's permit and pay an amount equal to the tax - The Nova Scotia Court of Appeal held that the Act created a direct tax within the province's jurisdiction - The tax burden fell on the last consumer - The court stated that "due to the exemption from tax granted Indians ... the Indian retail tobacco vendor who is not designated by the Commissioner and therefore cannot obtain quota tobacco, cannot recover the prepaid tax. That is not a reason to declare the Act invalid or inoperative with respect to Johnson (or other Indian retailers who sell to non­natives) or to read down the Act so as to exempt Johnson from payment of the tax on imports of tobacco into the province. This question could only be considered if it was unequivocally proven that the tobacco would be sold only to Indians on the reserve." - See paragraphs 233 to 240.

Criminal Law - Topic 32

Mens rea or intention - Proof of mens rea - The accused were charged under ss. 380(1)(a) and 465(1)(c) of the Criminal Code with conspiracy to defraud the Nova Scotia government of revenue payable under the Tobacco Tax Act - The trial judge inferred the requisite mens rea for fraud based on the totality of the acts of the accused - The trial judge considered the subjective beliefs of the accused in determining that they knew that they were importing contraband tobacco without paying the required tax - The Nova Scotia Court of Appeal held that the trial judge's finding was supported by the evidence - See paragraphs 133 to 141.

Criminal Law - Topic 5274.5

Evidence and witnesses - Interception of private communications - Application for - Evidence in support - The accused claimed that wiretap evidence was obtained in violation of his s. 8 Charter right to be secure from unreasonable search and seizure and should have been excluded - The accused submitted that (1) the affidavit in support of the application lacked essential detail; (2) informants were not identified, rendering their reliability suspect; (3) the information from the in­formants was demonstrably unreliable on the face of the affidavit; (4) other investi­gative techniques were tried and successful (no techniques tried and failed); and (5) there was no factual basis to conclude that other investigative methods were unlikely to succeed - The Nova Scotia Court of Appeal held that the trial judge did not err in finding that the judge issuing the au­thorization had sufficient information to war­rant granting the wiretap authorization and that the accused's s. 8 Charter rights were not infringed - See paragraphs 250 to 266.

Criminal Law - Topic 5859

Sentence - Fraud - The accused (Johnson and Murdock) were convicted of conspir­acy to defraud the province of Nova Scotia of revenue payable under the Tobacco Tax Act - The 51 year old Johnson had a university degree and was a mature, ex­perienced man with an extensive criminal record for tobacco related offences - Johnson was sentenced to 18 months' imprisonment plus two years' probation - The 50 year old Murdock was a widow with two dependent children (aged 11 and 16) at home - She had previous convic­tions - Murdock was sentenced to six months' imprisonment plus two years' probation - The Nova Scotia Court of Appeal dismissed the sentence appeals of both accused - See paragraphs 282 to 292.

Indians, Inuit and Métis - Topic 6012

Aboriginal rights - Proof of - At issue was whether the taxation and licensing scheme imposed by the Nova Scotia Tobacco Tax Act infringed the aboriginal rights of the Mi'kmaq nation contrary to s. 35(1) of the Constitution Act, 1982 - The accused member of the nation had an aboriginal right to use tobacco for personal consumption and ceremonial purposes - The Nova Scotia Court of Appeal stated that assuming "that this use of tobacco constitutes an aboriginal right of some sort, in the absence of evidence, the [accused] have failed to prove that the scope of the aboriginal right to use tobacco extends to include Mi'kmaq Indians dealing, or trad­ing in tobacco between different Indians or Indian Bands in different parts of Canada. And it clearly would not involve selling tobacco to nonnatives." - The court held that the Tobacco Tax Act and Regulations did not infringe any s. 35(1) protected aboriginal rights - See paragraphs 189 to 221.

Indians, Inuit and Métis - Topic 6266

Government of Indians - What laws gov­ern - Provincial laws of general applica­tion - [See Indians, Inuit and Métis - Topic 6510 ].

Indians, Inuit and Métis - Topic 6510

Taxation - Exemption - Personalty on reserve - Section 87(1)(b) of the Indian Act exempted from taxation the personal property of Indians on a reserve - Sections 6 and 14(1)(a) of the Nova Scotia Tobacco Tax Act created a system whereby tobacco could not be brought into Nova Scotia without the person paying the sales tax levied as if it were a retail sale and unless the importer held a wholesale vendor's permit - The Nova Scotia Court of Appeal held that "tobacco in the possession of an Indian on a reserve which is intended to be sold by an Indian retailer to nonnatives is not exempt from taxation by reason of ... s. 87(1)(b)" - Sections 6 and 14(1)(a) were provincial laws of general application designed for the effective collection of tax and applied to retail vendors on reserves - The court stated that "the quota system in Nova Scotia does not impose restrictions on a retail vendor of tobacco products beyond those necessary to ensure as a matter of policy that the volume of tax exempt products on a reserve do not exceed the reasonable requirements of the Indians on reserves. ... there is no erosion of the Indian consumers' alleged right to purchase tax free tobacco." - See para­graphs 149 to 188.

Sales and Service Taxes - Topic 3805

Tobacco tax - Validity of taxing statute - [See Constitutional Law - Topic 6831 ].

Sales and Service Taxes - Topic 3807

Tobacco tax - Liability for - Indians - [See Indians, Inuit and Métis - Topic 6510 ].

Cases Noticed:

R. v. Murdock (M.) (1995), 141 N.S.R.(2d) 251; 403 A.P.R. 251 (C.A.), refd to. [para. 5].

R. v. Johnson (S.G.) (1995), 141 N.S.R.(2d) 133; 403 A.P.R. 133 (C.A.), refd to. [para. 20].

R. v. Morgentaler (1993), 157 N.R. 97; 125 N.S.R.(2d) 81; 349 A.P.R. 81 (S.C.C.), refd to. [para. 44].

R. v. Johnson (S.G.) (1993), 120 N.S.R.(2d) 414; 332 A.P.R. 414 (C.A.), refd to. [para. 46].

Tseshaht Indian Band v. British Columbia (1992), 15 B.C.A.C. 1; 27 W.A.C. 1; 94 D.L.R.(4th) 97 (C.A.), refd to. [para. 46].

R. v. Morin, [1992] 1 S.C.R. 771; 134 N.R. 321; 53 O.A.C. 241; 71 C.C.C.(3d) 1, refd to. [para. 107].

Union of Nova Scotia Indians et al. v. Nova Scotia (Attorney General) (1989), 89 N.S.R.(2d) 121; 227 A.P.R. 121; 54 D.L.R.(4th) 639 (T.D.), refd to. [para. 154].

Johnson et al. v. Nova Scotia (Attorney General) (1990), 96 N.S.R.(2d) 140; 253 A.P.R. 140 (C.A.), refd to. [para. 154].

Hill v. Ontario (Minister of Revenue) (1985), 18 D.L.R.(4th) 537 (Ont. H.C.), refd to. [para. 154].

Francis v. R., [1956] S.C.R. 618, refd to. [para. 154].

Nowegijick v. Minister of National Rev­enue et al., [1983] 1 S.C.R. 29; 46 N.R. 41, red to. [para. 154].

Mitchell and Milton Management Ltd. v. Peguis Indian Band et al., [1990] 2 S.C.R. 85; 110 N.R. 241; 67 Man.R.(2d) 81; [1990] 5 W.W.R. 97; 71 D.L.R.(4th) 129, refd to. [para. 154].

Bomberry and Hill v. Ontario (Minister of Revenue) (1989), 34 O.A.C. 17; 63 D.L.R.(4th) 526 (Div. Ct.), refd to. [para. 154].

R. v. Simon (1985), 62 N.R. 366; 71 N.S.R.(2d) 15; 171 A.P.R. 15 (S.C.C.), refd to. [para. 154].

Milhelm Attea & Brothers Inc. v. Depart­ment of Taxation and Finance of New York (1993), 599 N.Y. Supp.2d 510 (N.Y.C.A.), refd to. [para. 168].

R. v. Nikal (J.B.), [1996] 1 S.C.R. 1013; 196 N.R. 1; 74 B.C.A.C. 161; 121 W.A.C. 161, refd to. [para. 170].

Union of New Brunswick Indians and Tomah v. New Brunswick (Minister of Finance) (1996), 178 N.B.R.(2d) 1; 454 A.P.R. 1, refd to. [para. 183].

R. v. Sparrow, [1990] 1 S.C.R. 1075; 111 N.R. 241; 56 C.C.C.(3d) 263, refd to. [para. 191].

R. v. Denny et al. (1990), 94 N.S.R.(2d) 253; 247 A.P.R. 253; 55 C.C.C.(3d) 322 (C.A.), refd to. [para. 194].

R. v. Isaac (1975), 13 N.S.R.(2d) 460; 9 A.P.R. 460 (C.A.), refd to. [para. 195].

R. v. Yebes, [1987] 2 S.C.R. 168; 78 N.R. 351; 36 C.C.C.(3d) 417; 59 C.R.(3d) 108; 17 B.C.L.R.(2d) 1; [1987] 6 W.W.R. 97, refd to. [para. 225].

Atlantic Smoke Shops Ltd. v. Conlon, [1943] A.C. 550; [1943] 4 D.L.R. 81; [1943] 3 W.W.R. 113 (P.C.), refd to. [para. 236].

Manitoba v. Air Canada and Canada (At­torney General) et al., [1980] 2 S.C.R. 303; 32 N.R. 244; 4 Man.R.(2d) 278, refd to. [para. 238].

Russell v. R. (1882), 7 App. Cas. 829 (P.C.), refd to. [para. 243].

Gallagher v. Lynn, [1937] A.C. 863 (H.L.), refd to. [para. 244].

Shannon v. Lower Mainland Dairy Prod­ucts Board, [1938] A.C. 708 (P.C.), refd to. [para. 246].

R. v. Garofoli et al., [1990] 2 S.C.R. 1421; 116 N.R. 241; 43 O.A.C. 1; 36 Q.A.C. 161; 60 C.C.C.(3d) 161; 80 C.R.(3d) 317, refd to. [para. 251].

R. v. Therens, [1985] 1 S.C.R. 613; 59 N.R. 122; 40 Sask.R. 122; 18 C.C.C.(3d) 481, refd to. [para. 268].

Statutes Noticed:

Canadian Charter of Rights and Freedoms, 1982, sect. 8 [para. 266]; sect. 11(b) [para. 120].

Constitution Act, 1867, sect. 91(24) [para. 35]; sect. 92(2) [para. 38].

Constitution Act, 1982, sect. 35(1) [para. 190].

Health Services Tax Act, R.S.N.S. 1989, c. 198, generally [para. 4].

Indian Act, R.S.C. 1985, c. I-5, sect. 87(1), sect. 88 [para. 30].

Tobacco Marking Regulations - see Tobacco Tax Act Regulations (N.S.).

Tobacco Tax Act, R.S.N.S. 1989, c. 470, sect. 6, sect. 14(1), [para. 30]; sect. 25(1) [para. 228]; sect. 25(2) [para. 30].

Tobacco Tax Act Regulations (N.S.), Tobacco Marking Regulations, Reg. 51/91, sect. 5(2) [para. 31].

Tobacco Tax Act Regulations (N.S.), Tobacco Tax Regulations, sect. 2(2)(d), sect. 4(3), sect. 4(4) [para. 31]; sect. 5(1) [para. 33].

Counsel:

Mary O. Hebb and Donna Hollister Smith, for Marion Murdock;

Mr. Johnson, on his own behalf;

Robert E. Lutes, Q.C., and James Clarke, for the respondent;

Bruce H. Wildsmith, Q.C., for the intervenor.

These appeals were heard on June 10, 1996, before Hallett, Chipman and Freeman, JJ.A., of the Nova Scotia Court of Appeal.

On August 19, 1996, Hallett, J.A., delivered the following judgment for the Court of Appeal.