Nos. T-1724-99
T-1755-99
FEDERAL COURT OF CANADA
(TRIAL DIVISION)
B E T W E E N :
No. T-1724-99
ANGELO DEL ZOTTO,
Applicant,
- and -
THE MINISTER OF NATIONAL REVENUE
and JOHN EDWARD THOMPSON,
Respondent.
A N D B E T W E E N:
No. T-1755-99
HERBERT NOBLE,
Applicant,
- and -
THE MINISTER OF NATIONAL REVENUE
and JOHN EDWARD THOMPSON,
Respondent.
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P R O C E E D I N G S
BEFORE THE HONOURABLE MR. JUSTICE LEMIEUX
Court Room No. 1
361 University Avenue, 8th Floor
on Friday, the 3rd day of December, 1999
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JUDICIAL REVIEW
DECISION WITH REASONS
R E G I S T R A R : Lisa Rotatore
C O U N S E L :
T.G. HEINTZMAN, Esq., Q.C. )
W. C. McDOWELL, Esq. ) for the Applicant
I. BLOOM, Esq., Q.C. )
S. ALBIN, Esq. ) for the Respondent
(i)
I N D E X O F P R O C E E D I N G S
Page No.
Decision
with Reasons . . . . . . . . . . . . . . . 213-250
---Court proceedings recessed at 4:10 p.m., to be reconvened for the rendering of the Decision
---Decision with Reasons rendered at 4:35 p.m.
THE COURT: As I indicated to you, because of the way in which matters now stand, the Hearing Officer has adjourned the inquiry until such time as this Court rendered judgment, and as I understand it, there is a telephone conference call scheduled for developments next week. In the light of that factor, I think it is important for me to give you my judgment in terms of these two judicial review applications.
I will not be as eloquent as I normally do it in writing and I will be referring to a number of documents. Here are my Reasons:
This is a judicial review application by the applicants, Angelo Del Zotto in Court File T-1724-99 and by Herbert Noble in Court File T-1755-99.
These judicial review proceedings concern rulings made by the Honourable Mr. Justice Flanigan, a Hearing Officer appointed to preside over an inquiry initiated by the Minister pursuant to s. 231.4 of the Income Tax Act into the financial affairs of Mr. Del Zotto. These rulings arose out of motions brought by the applicants on August 16th, 17th and 18th, 1999.
In terms of those August 1999 motions, the applicant Angelo Del Zotto sought the following rulings:
1. Having regard to both the provisions of s. 231.4 of the Income Tax Act and the requirements of fairness and natural justice, Mr. Del Zotto seeks a ruling that the stated purpose of the order of Jean Claude Couture who is Chief Judge of the Tax Court, dated December 15th, 1995, appointing Mr. Flanigan to conduct an inquiry "into the affairs of Mr. Angelo Del Zotto" and the authorization of Mr. Pierre Gravelle, dated October 9th, 1992, for an inquiry "into the affairs of Mr. Del Zotto between 1979 and 1985" do not meet the requirements of the Income Tax Act.
(a) The order and authorization failed to state "a purpose related to the administration or enforcement of the Income Tax Act", are impermissibly vague and must be confined to a properly authorized and more specific purpose. In the alternative, the Minister of National Revenue should be required to provide particulars to Mr. Del Zotto of the issues which will be pursued in the course of the inquiry.
(b) Having regard to the specific purpose or in the alternative the particulars so provided, fairness requires that Mr. Del Zotto be given disclosure of all relevant information in the possession of the Minister, the Inquiry Officer, the Hearing Officer and anyone appointed by the Minister for the enforcement or administration of the Income Tax Act well before evidence is called at the hearing to permit him to prepare to cross-examine witnesses and to respond to this evidence.
(c) Fairness requires that Mr. Del Zotto and his counsel be entitled to attend for the course of the entire hearing without limitation and to cross-examine all witnesses who will have been previously led in-chief by the Inquiry Officer or his counsel.
(d) Mr. Del Zotto seeks a determination of whether Mr. Flanigan possesses sufficient institutional independence to meet the requirements of fairness and natural justice.
(e) In accordance with the statute, Mr. Del Zotto seeks a ruling that any subpoena issued by the prior Hearing Officer or for a prior date or place no longer applies and is impermissibly vague and invalid. Mr. Del Zotto seeks a ruling that the only valid subpoenas are those issued by the present Hearing Officer at a place and time appointed by the Hearing Officer.
(f) Mr. Del Zotto seeks direction as to the procedure to be followed to deal with questions to which objection is taken by counsel. The Hearing Officer should record on a separate transcript and videotape questions to which counsel objects but the witness is permitted to answer. Where counsel for the witness instructs the witness not to answer the question at all, direction must be obtained from a Federal Court to determine whether the area of questioning is proper.
(g) Mr. Del Zotto respectfully requests that a Reference to the Federal Court pursuant to section 18.3 of the Federal Court Act be directed for a determination.
In terms of Mr. Noble, submissions were made by his counsel to Mr. Flanigan and basically in terms of the submissions that were made - and I'm reading from those submissions - the following points were made:
1. The subpoena served upon Mr. Noble is invalid, no longer applies and Mr. Noble must be served with a fresh valid subpoena if his attendance is to be required. Mr. Noble respectfully adopts the submissions made on behalf of Mr. Del Zotto.
2. Notice and disclosure regarding Mr. Noble's testimony, Mr. Noble supports the submissions of Mr. Del Zotto that having regard to the provisions of s. 234.1, the terms of reference of the inquiry should be particularized and narrowed. In addition Mr. Noble supports and adopts the submissions of Mr. Del Zotto that he be provided with full disclosure of all relevant information in the possession of the Minister touching on the matters before the inquiry before the evidence is heard at the inquiry, and that is, that Mr. Noble requests an order that he be provided with full notice and disclosure of all relevant information in the possession of the Minister touching upon the matters concerning him upon which evidence will be sought and adduced before the inquiry and full notice and disclosure of all matters and materials upon which it is proposed to question Mr. Noble. Mr. Noble adopts the submissions made on behalf of Mr. Del Zotto. In those submissions, as well as the submissions made by his counsel today, Mr. Gold, the following proposition was put, and that is, without actual knowledge, Mr. Noble cannot prepare for his testimony properly and his counsel can only be of most limited assistance.
In terms of procedural issues, there were a number of points made by counsel for Mr. Noble in submissions before Mr. Flanigan:
1. First, that counsel for the Minister is limited to examination-in-chief, non-leading questions, in his examination of Mr. Noble.
2. That Mr. Noble's counsel may engage in full cross-examination of Mr. Noble concerning any matters relevant to the terms of reference of the inquiry after Mr. Noble has undergone examination by counsel for the Minister.
3. To the extent that matters arise in a witness's testimony which affect Mr. Noble, Mr. Noble should have the right to cross-examine that witness concerning those matters.
There was an issue related to videotaping which I don't think I need to mention at this particular juncture.
There was also an issue again raised today and that is as to the ability of Mr. Gold to represent other witnesses. The submission there is that Mr. Gold and Mr. Noble request directions concerning Mr. Gold's ability to represent other witnesses. But I don't think that that specifically is an issue today and the request really is modified to have Mr. Gold be present at the hearings provided that Mr. Del Zotto consents.
Now, those were the submissions that were made before the Hearing Officer, Mr. Flanigan. As I understand it, from what I've been told today, is that there are three places where we can find the rulings of Mr. Justice Flanigan.
First of all, there is his decision of September the 1st, 1999. Second, there was a reference to the motion record by Mr. Del Zotto on the stay application and that is a transcript of proceedings on September 27th, 1999, where Mr. Flanigan made further rulings. And there's a third piece of document and that's a letter dated October 20th, 1999, from Mr. Flanigan to Mr. McDowell, co-counsel to Mr. Del Zotto.
These motions that were made by the applicants in respect of which judicial review is sought today were opposed by counsel for the respondents.
Now, here is my understanding of the rulings that were made by the Hearing Officer. First, in terms of institutional independence or impartiality, he was satisfied that the legal requirements were met in his situation. He ruled that cases such as Beauregard and Valente did not apply because he is not a judicial body settling disputes and determining rights of parties. And for this proposition he relied upon what Mr. Justice Strayer had said in the Del Zotto and Noble cases challenging under s. 7 and 8 of the Charter these proceedings.
I should just add right now that the Supreme Court of Canada adopted Mr. Justice Strayer's reasoning in his decision which I'll refer to later.
The Hearing Officer as I understand his ruling adopted a more flexible approach enunciated by Chief Justice Lamer in the Canadian Pacific v. Matsqui case and he held that there was a minimal degree of independence required because he was not adjudicating on anything and his function was administrative.
In terms of the security of tenure, the Hearing Officer said that this aspect of institutional independence is not applicable in a situation where you have an ad hoc Tribunal in a case such as his which will not have any or could not have any effect on the future of the Hearing Officer. And any possible improper actions by the Minister, if there were any, could be checked by this Court.
And in terms of financial security, he mentioned that he had a contract with National Revenue and that in these terms financial security was not an issue.
In addition to those comments, as I understand his ruling, the Hearing Officer held that he enjoyed complete autonomy to be exercised within the parameters of the statute. In other words, what he said is that the statute gave him the required autonomy to function in an independent and impartial way. And he added, as I take it, that it took more than a bald assertion of institutional bias or lack of institutional independence to make the case.
In terms of procedural matters, as I understand it, the Hearing Officer acknowledged a duty of fairness and acknowledged that a duty of fairness was owed but that it was not possible to give a general definition as to what will constitute fairness during such an inquiry and that some of those matters must be dealt with by the Hearing Officer as problems arise.
However, he rendered these specific rulings. First on the overbreadth of the terms of reference relying on a comment which Mr. Justice Strayer made in the Del Zotto/Noble constitutional challenge, he agreed with the applicants and limited the scope of the inquiry to matters pertaining to the administration and enforcement of the Act, excluding thereby as irrelevant personal documents which had nothing to do with the collection of taxes.
On the issue of the presence of witnesses and rights of counsel for Mr. Del Zotto, he divided his analysis in terms of the rights of counsel for the witness and the rights of counsel for Mr. Del Zotto.
And in terms of the rights of a witness and counsel for a witness, the Hearing Officer turned to paragraph 231.4(5) of the Income Tax Act which is the section that we're concerned with and it reads as follows: 'Any person who gives evidence in an inquiry authorized under subsection 1 is entitled to be represented by counsel and on request made by him to the Minister to receive a transcript of the evidence given by him.'
The Hearing Officer asked the question: What is meant by "represented" by counsel within the meaning of the above quoted paragraph? In other words he asked himself the question: How far does the right of representation go? And he held that the only rights given to a witness are those rights outlined in the subsection and he determined as follows:
1. Counsel for the witness is able to question the witness after counsel for the Inquiry Officer so as to clarify any matter he may deem requires clarification and to which are not ruled against by the Hearing Officer.
2. Counsel for the witness cannot cross-examine his own witness.
3. The Hearing Officer will grant a fair degree of leeway to ensure that the evidence of the witness is clarified to ensure fairness to that witness.
4. Once those rights are exercised, counsel for that witness has no further rights or standing before the inquiry unless the witness is recalled. He is not entitled to remain throughout the hearing and then make submissions at the end of the inquiry but he may apply with the Hearing Officer at the conclusion of his client's testimony to make submissions in respect of his client's evidence.
5. In another part of his ruling, the Hearing Officer indicated that counsel for a witness could object to improper questioning.
Now, in terms of the rights of Mr. Del Zotto and his counsel, Mr. Flanigan referred to paragraph 6 of the subsection which I have just quoted and that subsection reads as follows:
'Any person whose affairs are investigated in the course of an inquiry authorized under subsection 1 is entitled to be present and to be represented by counsel throughout the inquiry unless the Hearing Officer appointed under subsection 2, in relation to the inquiry, on application by the Minister or a person giving evidence orders otherwise in relation to the whole or any part of the inquiry on the grounds that the presence of that person and his counsel or either of them, would be prejudicial to the effective conduct of the inquiry.'
Again as I understand it, the Hearing Officer asked the same question: What does "represented" mean in that context? And he ruled as follows:
1. Mr. Del Zotto and his counsel are entitled to be present throughout the inquiry unless otherwise ordered.
2. Mr. Del Zotto's rights are no greater than that of a witness; i.e., his counsel is allowed to ask questions of Mr. Del Zotto if he is called - as I understand it, Mr. Del Zotto has not been called - with a view of clarifying that evidence.
3. With respect to witnesses other than his client, Mr. Flanigan ruled that "represented" in the context of subsection 6 meant that counsel for Mr. Del Zotto is entitled to question each witness with a view to clarification and to presenting the evidence in a fair way to Mr. Del Zotto but that this did not mean a full right of cross-examination, only the right to clarify any evidence subject only to the intervention of the Hearing Officer.
And as I understand it, in another part of his ruling Mr. Flanigan indicated that counsel for Mr. Del Zotto could object to improper questioning.
I just want to round out the rulings that Mr. Flanigan made. As I understand it, the rulings made on September 27th, 1999, concerned essentially the position of counsel for the witness. And I'm reading from the memorandum to this Court made by Mr. Noble and I hope that I'm complete in terms of what those subsequent rulings were.
As I understand it, those subsequent rulings were that counsel for Mr. Noble would not be permitted to be present in the inquiry until Mr. Noble is called to testify, that following Mr. Noble's testimony, counsel would then be excluded from the inquiry. The only room for exception was the suggestion by the Hearing Officer that Mr. Gold if he ceased to represent Mr. Noble could apply to stay and assist counsel for Mr. Del Zotto.
And the second clarification is that the Hearing Officer ruled that objections during the course of the inquiry would be noted and dealt with by judicial review upon completion of the inquiry rather than by judicial review for each objection. And during clarifications apparently taken on September 27th, the Hearing Officer advised that incidents of attempts to thwart the proceedings completely would require immediate action.
The third document of clarification is the letter of October 20th, 1999, to Mr. McDowell where, if my notes are correct, the ruling was that Mr. Del Zotto has no right to call witnesses. The Inquiry Officer has the conduct of the hearing subject to what the Hearing Officer may say at any particular time.
| I will just quote now accurately from the letter of October 20th, 1999. He said this and I quote: 'A reading of the decision clearly indicates in my view that Mr. Del Zotto has no right to call witnesses. A Hearing Officer has the conduct of the hearing subject to the Hearing Officer's ruling. |
If the Hearing Officer at the material time is persuaded that in order to ensure fairness a particular witness should be called to clarify any piece of evidence, it can be dealt with at the time. So that means in my view that if the Hearing Officer is persuaded to ensure fairness to a particular witness, that a particular witness could be called to clarify any piece of evidence and that would be subject to a specific ruling.'
On the question of disclosure, either to Mr. Del Zotto or to a witness of what evidence is to be elicited from the witness, he ruled that since no charges had been laid, there was no right to disclosure to either the witness or to Mr. Del Zotto. He relied upon the Supreme Court of Canada's decision in Guay v. Lafleur tempered by the legislative amendments subsequently made.
He said that the inquiry he was conducting was purely an administrative matter which neither decided nor adjudicated upon anything. It was not a judicial or quasi-judicial inquiry but a private investigation. It was a fact finding inquiry launched by the Minister to obtain facts which he or she considers necessary to enable the Minister to discharge his duties or her duties imposed upon the Minister in assessing and collecting taxes and he mentioned that no charges had been made and reassessments have yet to be made. And he said that neither Guay v. Lafleur or the Act gives Mr. Del Zotto the right to direct the matter in which the inquiry is to be conducted.
He also referred to the Supreme Court of Canada's decision in Irvine and mentioned the early stage of the proceedings and the fact that the Court must be alert to the danger of unduly burdening and complicating law enforcement investigative processes. And he said that where a process is at the embryonic stage of fact finding, the gathering of raw materials, the inclination of the Court was not to intervene in the conduct of the investigation.
He also mentioned that there was a contrast between the situation before him and a body with the power to make determinations in the sense of detrimental impact suffered by an individual. He said that the views that the members of the Special Investigations Branch might have in respect of Mr. Del Zotto were only a preliminary view and that the Special Investigations Branch did not decide anything. He distinguished, as I understood it, the Stinchcombe case on the basis that no criminal charges had been laid.
In terms of the issue of the validity of the subpoenas, Mr. Flanigan rejected their invalidity. He referred to the findings of Mr. Justice Strayer in the previous Del Zotto case. He said that they were still valid, that they had not expired, that counsel for Mr. Noble had ample notice and therefore ruled against the motion.
Now, I want to just address two other matters at the start. First of all, standard of review, this is a judicial review proceeding and the question as you know always arises of what is the standard of review.
And looking at the factors which Madam Justice L'Heureux Dube indicated in Baker, decided in July of this year, presence or absence of a privitive clause, expertise of the Tribunal, the purpose of the provision, the nature of the problem involved; and applying those factors, I apply the standard of correctness. There is here no privitive clause. The nature of the problem involved is not one of fact but it's a legal finding at this stage in terms of rulings and was not one in the exercise of discretion but was what involves basically legal matters. In terms of expertise of the Tribunal, I think that's a neutral factor. And so therefore, applying that standard, the question before me is whether the decision of the Hearing Officer is correct in the context of s. 18.1 of the Federal Court Act. The question is: Did he commit any reviewable error?
As I see it, we are dealing with a problem of statute law because Parliament in the Income Tax Act in the two sections that I've quoted delineated in those two subsections the rights of witnesses and the rights of in this case Mr. Del Zotto, the person to be investigated. But in my view it's not solely a matter of statutory interpretation because the content of the right of representation is not specified and recourse must be had to the principles of fairness and the principles of common law to provide what I describe as the fabric against which the participatory rights intended by Parliament must be determined.
Before dealing specifically with the rulings of the Hearing Officer and my views on the matter, I want to make a number of observations. And first is that the Supreme Court of Canada has clearly said repeatedly over the last thirty years that generalizations about the principles of fairness and natural justice are to be avoided, that participatory rights fit on a spectrum, that there is not one mold that fits all situations, that the specific content of participatory rights depends upon the circumstances.
And this is clear from what Madam Justice L'Heureux Dube said in Baker where she said that the concept of procedural fairness is eminently variable and that its content is to be decided in the specific context of each case. And I'm referring particularly at paragraph 21 of her Reasons for Judgment where she says that the existence of the duty of fairness however does not determine what requirements will be applicable in a given set of circumstances and that its content is to be decided in the specific context of each case.
And at paragraph 22, Madam Justice L'Heureux Dube said that although the duty of fairness is flexible and variable and depends on an appreciation of a context of the particular statutes and the rights affected, it was helpful to review the criteria that should be used to determine what procedural rights the duty of fairness requires in a given set of circumstances.
And I'm not going to go through them but they are listed and I'm just going to summarize them. She looked at these following factors: the nature of the decision being made and the process followed in making it. And she observed that the more the process provided for, the function of the Tribunal, the nature of the decision-making body and the determinations which must be made to reach a decision resembled judicial decisions, the more likely that procedural protections closer to the trial model will be required in terms of the duty of fairness.
That's clear and that's set out at page 23. I repeat it. The more the process provided for the function of the Tribunal, the nature of the decision-making and the determination that must be made resembled judicial decision-making, the more likely procedural protections are going to be stringent and closer to the trial model.
The second factor, she looked at the nature of the statutory scheme and the terms of the statute pursuant to which the body operates.
Thirdly, she looked at the nature and extent of the duty of fairness owed in terms of the importance of the decision to the individual and the individuals affected. And she said that the more important the decision is to the lives of those affected and the greater its impact on that person or persons, the more stringent procedural protections will be mandated.
Fourth, she looked at the legitimate expectation of persons challenging the decision also as a factor in determining procedures.
Fifth, it was mentioned today, the analysis of what procedures the duty of fairness requires also takes into account and respects the choice of procedures made by the agency itself, particularly when the statute leaves to the decision-maker the ability to choose its own procedures or when the agency has the expertise in determining what procedures are appropriate in the circumstances.
The second general observation that I have is that the very problem before me has been touched upon in the constitutional challenge in which the applicants were parties. I appreciate the distinction that the challenge by the applicants was a constitutional challenge and it was an attack in that case on the inquiry on its terms of reference and on the subpoena which was issued to Mr. Noble and as I said to you before, the Supreme Court of Canada adopted Mr. Justice Strayer's decision.
But the point that I make here is that what Mr. Justice Strayer had to say in deciding the s. 7 and
s. 8 challenge and the way in which he interpreted the statute and constructed the section have relevance and flow into the determinations which I have to make today. And so to put it another way, there is not a watertight division between what the Supreme Court of Canada said and what Mr. Justice Strayer said in the Del Zotto case and what I have to decide here on administrative law grounds. There is an integral co-mixing of the two issues because he had to make certain decisions related to the inquiry, the scope of the inquiry and other matters.
So what I am going to turn to is Mr. Justice Strayer's decision which is reported at [1997] 3 F.C. 40. And I'm just going to make three or four points which I think are important and that arise out of his decision.
1. He said at paragraph 10 of his decision that: 'An inquiry such as we are concerned with makes no findings and is conducted in private.' And he distinguished that aspect of the matter from a situation which prevailed in Starr v. Houlden on the basis that they involved the criminal nature of potential and public findings of fact and law which he said does not prevail in an inquiry such as this.
He said that the inquiry made no findings of guilt or responsibility and he specifically referred to Madam Justice Wilson's decision in Thompson. And I think it's important to read this note. And it's note 6 from Mr. Justice Strayer's decision and he adopts it. The Thompson case as you know dealt with s. 17 of the Combines Investigation Act. And what he quoted out of Madam Justice Wilson's decision is that s. 17 of the Combines Investigation Act was set up specifically to determine if there was evidence that certain named parties had committed offences "does not determine any rights and impose any liabilities". Mr. Justice Strayer specifically made that part of his ruling, no determination of rights, no determination of liabilities. And that is found specifically at paragraph 5 of his reasons in terms of what I've just said. So I take it that the Supreme Court of Canada in endorsing his reasons adopted his views about rights and liabilities.
The next point arising out of Mr. Justice Strayer's decision is as to the applicant's argument. He said that the applicant's argument that the inquiry is simply gathering evidence for criminal prosecution was overly simplistic and premature because no charges had been laid and that's set out at paragraph 8 of his decision.
Mr. Justice Strayer indicated that the Income Tax Act, though supported by penal sanctions, was essentially administrative in nature and he referred to both the McKinlay Transport case and the Thompson case in the Supreme Court of Canada and he concluded at least for the purposes of my analysis that in this case Revenue Canada has advised - as counsel pointed out to me today - has advised that Mr. Del Zotto may be charged in respect of subsection 1(a) and (d) of 239. And Mr. Justice Strayer at paragraph 23 of his decision indicated that the charges which might possibly be forthcoming involve possible tax evasion through false returns, falsified documents, willful evasion or conspiracy to commit any of the foregoing and I just quote. He said:
'This is not typical criminal law but is a law designed to ensure compliance with the self-reporting requirements of the Income Tax Act and was characterized as part of what is really a regulatory scheme by Mr. Justice LaForest in a passage from Thompson quoted above.'
And just for matter of completeness, Mr. Justice Strayer mentioned at paragraphs 26 and 27 that the subpoena could be attacked generally or in respect of a particular document either before the Hearing Officer or if necessary on judicial review if it can be demonstrated that in particular circumstances someone's constitutional right is about to be violated. And he said objections could also be raised then as to the relevance of a particular document to the legitimate purpose of the inquiry.
And I just quote paragraph 27 where he said: 'Section 231.4 under which this inquiry is held guarantees both to the witness and the "target" of the inquiry the right to be represented by counsel save in exceptional circumstances, notwithstanding suggestions made by counsel for the appellant.'
He found no authority for the proposition that counsel representing a witness or a target would not be allowed to raise objections as to relevance or constitutionality in respect of a particular subpoena or a particular document and he said that was the natural meaning to be given to the word "represented".
There's another case that I want to mention and it was mentioned throughout the proceedings today and that's the Supreme Court of Canada's decision in Irvine v. Canada [1987] 1 S.C.R. 181 where Reasons were delivered by Mr. Justice Estey on behalf of the Court. And this case, as I think we all appreciate, concerned the rights and obligations of persons concerned with the administrative procedures under s. 17 of the Combines Investigation Act, concerned an order made by the Chairman of the then Restrictive Trade Practices Commission to give evidence under oath in the context of an inquiry relating to a possible conspiracy offence under s. 32 of the Combines Investigation Act.
I want to quote s. 20 of that statute because it has some bearing on a problem that I have today. It's s. 20 of the then Combines Investigation Act, reads:
'A member of the Commission may allow any person whose conduct is being inquired into and shall permit any person who is being himself examined under oath to be represented by counsel.'
And Mr. Justice Estey noted at page 201 that the Commission was obliged to permit a witness to be represented by counsel. That was mandatory. But it was discretionary in terms of a person whose conduct is being inquired into.
Then just a couple of other quotes out of Irvine, and I'm referring to page 209 which was a central issue in his case, was the nature and extent of the role of the several counsel for the applicants in terms of the meaning of "represented" under s. 21 of the Act. At page 210 he says: 'The statutory provision of s. 21 is terse. The words critical to this appeal are "to be represented by counsel".'
He said: 'How should the Court properly interpret those words in the context of the Act?' He said: 'They reach the statute with a minimum of judicial interpretation but with a wealth of historical usage in our jurisprudence.'
Mr. Justice Estey then canvassed thoroughly the evolution of the principles of procedural fairness going back for several years and culminating in the progressive evolution that counsel for the applicants have noted today. And I don't think there's any dispute about that.
Now, in terms of s. 20, I'm referring to page 227. He refers back to s. 20 of the Combines Investigation Act and he says that the Act provides both a qualified and unqualified right to counsel. And he makes the point that the section provides no guide to the administrative agency or to the Courts for its implementation or application.
He quoted U.S. jurisprudence on the word "represented". He surveyed Canadian law and he said this - and that's been quoted to me today - he said this at page 231:
'In the light of the important factual and legal differences between a public inquiry held under the Public Inquiries Act and the investigative inquiry which in the present case is held completely in private and which generally do not lead in a systematic way to prejudice, prosecution or deprivation, the public inquiry cases are of little use to resolving the issue before the Court.'
Then he said at page 231:
'Neither s. 20(1) nor the doctrine of fairness provides the applicant with a right to cross-examine witnesses at the inquiry.'
Then he noted the flexibility concept in fairness depends on the nature of the inquiry and the consequences for the individuals and the characteristics of the procedures, the nature of the resulting report and its circulation to the public and the penalties which may result when events succeeding the report are put into train will determine the extent of right of counsel and where counsel is authorized by statute without further directive, the role of such counsel.
He made the point that an investigative body must control its own procedure and when that body has determinative powers, different considerations enter the process and in that circumstance, the case against the investigated must be made known to him. And he said in that case that that was provided for by statute in various stages.
He referred at page 235 to Lord Wilberforce's judgment in Wiseman v. Borneman. He talked about remaining alert to the dangers of unduly burdening and complicating law enforcement, talked about the embryonic form engaged in the gathering of raw material for consideration. And in the particular case, he said that it was sufficient for the Hearing Officer to have allowed all parties to be represented by counsel who could object to improper questioning and re-examine their clients to clarify the testimony given to ensure that the full story was communicated by that witness counsel represented.
I just want to draw your attention to exactly what was at issue - and I'm not going to describe them because it's getting late - but I just wanted to point out to you that the rights which the Hearing Officer was concerned about are described at page 189 of Mr. Justice Estey's decision and what was overruled by the Supreme Court of Canada was what a judgment of this Court had ordered and what was quashed and what was overruled by the Supreme Court of Canada was this: Mr. Justice Collier had quashed a decision of the Hearing Officer -- it was a refusal to permit persons whose conduct is being inquired into and witnesses where represented by counsel to be present throughout the whole of the examination. He had quashed the refusal to permit counsel representing persons whose conduct is being inquired into to re-examine without restriction their own clients and to cross-examine other witnesses.
Mr. Justice Collier had quashed another aspect which is not relevant today. So in a sense the Hearing Officer's decision in Irvine was somewhat parallel to the decisions which the Hearing Officer made in this particular case.
I want to summarize what was said by Madam Justice Wilson in the Thompson case about Irvine. And this is at paragraph -- I don't have the paragraph number but I will quote it. In Thompson Newspapers she said this:
| 'This Court held in Irvine supra that s. 20(1) granted a limited right of counsel to those being examined under oath. Counsel can object to improper questions being put to his client and can re-examine his client to clarify the client's testimony. However, a client is not entitled to be present at the examination of other witnesses and so obviously cannot cross-examine them. With regards to persons whose conduct is being inquired into under the Act, s. 20(1) gives the Commission the discretion to permit them to be represented by counsel.' |
After a rather lengthy introduction, I come down to the specific matters raised and I wish I had more time to expand the reasoning but let me take them one by one because it is my conclusion that these judicial review applications must be dismissed basically on the grounds mandated by my view of what the Supreme Court of Canada said in Baker, my view of what Mr. Justice Strayer said about this very inquiry in the Del Zotto case and my view of what the Supreme Court of Canada decided in the Irvine case, all buttressed against the background of two Supreme Court of Canada decisions which I've referred to in Thompson and McKinlay which have described the nature of these particular provisions of the Income Tax Act and the role in which criminal offences might arise.
First of all, I want to deal - and I'll deal with it briefly - is the submission made by counsel for Mr. Del Zotto that the authorization was unlawful, that there had to be specific allegations, that the specific subject matter had to be identified; there was a right to know the subject matter and the position was taken that they didn't know what was the subject matter to be identified. It could be a Trojan horse giving unlimited powers to the Minister to make a fishing expedition.
Well, I think the Supreme Court of Canada has told us that that's not grounds to invalidate the authorization. And I just turn to what was said in the McKinlay case in terms of the broad list under which s. 231.4 is concerned because they're all opened up by the words that: 'The Minister may for any purpose related to the administration or enforcement of the Act...'
The Supreme Court of Canada referring to a case which I referred to in this discussion with counsel, namely, James Richardson and Sons v. The Minister of National Revenue [1984] 1 S.C.R. 614, where the comment was: Yes, the wording of the subsection - and that subsection concerned was 231.3 of the Income Tax Act - was extremely broad but then they focused on what was a proper purpose.
The Supreme Court of Canada outlined four criteria and said that the test of whether the Minister is acting for a purpose specified in the Act, that is, a purpose related to the administration of the Act, is an objective one and has to be decided on the proper interpretation of the subsection, its application and the circumstances. And if the purpose is to obtain information relevant to the tax liability of some specific person whose liability to tax is under investigation, that was a purpose related to the statute.
In my view, taking that case against the principles that I've indicated, I think that the purpose for the statute in this case meets the requirements of the statute in terms of a proper purpose. I'm also of the view that the scope of the purpose has been sufficiently identified to the applicants so as to enable them in the broad context of the duty of fairness, weighed against the principles that I've indicated, that they in this particular context, the inquiry launched in respect of specified taxation years and in particular the subpoena issued to Mr. Noble which identifies specific transactions, meets the requirements of the statute and the requirements of fairness in the particular circumstances.
I buttress this by three other factors. The nature of the inquiry, the nature of the investigation, it is a fact finding investigation. I accept the proposition put forward by counsel for the Minister that the analogy based on reasonable and probable grounds which was a central factor in arguing this case before the Supreme Court of Canada in terms of s. 8 is also a factor. And I think that the intention of Parliament, when you look at the section, is to enable Revenue Canada to do in the Del Zotto case exactly what Parliament intended. And Parliament intended that the Minister have investigatory tools for the purpose of enforcement and administration of the Act and that it is a fact finding inquiry and that in the particular circumstances the purpose and the subject matter of the inquiry have been sufficiently identified.
In terms of the terms of reference, I think that Mr. Justice Strayer in the Del Zotto case specifically identified the overbreadth and that Mr. Justice Flanigan reduced those by confining the inquiry to its proper purpose, namely, the administration and enforcement of the Act.
In terms of the scope for hearing and the participatory rights, Mr. Heintzman made a very powerful argument that based on the statute that what Parliament intended was the full panoply of participatory rights flowing out of the concept of a hearing and said that Parliament intended that the hearing was contemplated -- he referred to the word "Hearing Officer" and said that the nature of the process that was engaged was a hearing.
With respect to his very able argument, I think that his position misconstrues the statute for three reasons: (1) When you read the statute and read the section, there is a fundamental distinction between the nature of the inquiry which is the Minister's inquiry where the Minister appoints an Inquiry Officer, it being an investigation related to the Income Tax Act and its administration. The role of the Hearing Officer within that process is a very confined and delineated role where his powers are really to referee in a sense the proceedings which are going to take place. His powers are very limited and the powers of the Hearing Officer are very limited because they are conditioned upon s. 4 and 5 of the Inquiries Act. Those are powers of subpoena and those are powers of enforcement in the event that certain matters arise in the conduct of the hearing so that the nature of the hearing and the nature of his role are very, very circumscribed in terms of presiding at the hearing and that is confirmed by the French text of the legislation.
So that in my view, Parliament on a reasonable construction of this statute did not intend that there be a hearing. All that arises here is that there is an investigation made by the Minister and that in the context of that inquiry, then certain matters may come forward where a Hearing Officer is required and that Hearing Officer exercises as I said the powers under the Inquiries Act.
And lastly on this point, I would have said that if Parliament had intended that the full extent of participatory rights flow from the words "hearing", then Parliament would have specified it clearly as it has, for example, in section 23 of the National Transportation Act in 1970, Statutes of Canada, N-17, where indeed the Canadian Transportation Commission in that case had authority to conduct an inquiry but could not make any rulings until it had a hearing. This is vastly different here and that difference was pointed out by a Federal Court of Appeal in the 1993 decision where it analyzed the functions of the statute and analyzed the nature of the decision.
Now, I will be very brief. So that in a sense deals with the matters of the subject matter of the inquiry and the scope of participatory rights. The scope of participatory rights, just to close that off are to be interpreted in my view in a manner that the Supreme Court of Canada dictated in the Irvine case and that the rulings of the Hearing Officer took those into account and correctly applied the law in this respect.
Three very short points. In terms of institutional independence, I have very little to add to the Reasons of Mr. Justice Flanigan. I accept his analysis. I would only say that the only other case that I'm aware of where the issue of an ad hoc Tribunal took place was in the Supreme Court of Canada's decision in Lippe where, an ad hoc Municipal Tribunal in the Province of Quebec, the whole system was validated by the Supreme Court of Canada even though it was ad hoc and even though it dealt with criminal charges. So in my sense are all of the cases such as Beauregard and Valente that we know of do not in the term apply to the kind of function and the kinds of roles that are played by the Hearing Officer in the limited context that he has.
I think I've dealt with cross-examination. Again the principles of Irvine, the principles of procedural fairness, the interpretation arising out of "represented by counsel" flow from that and I see nothing in his decision that misapplied or misconstrued either the statute or the principles of the common law.
In terms of disclosure, I think that again the Hearing Officer's analysis is appropriate. I think that Stinchcombe is applicable and we're not dealing with at this stage any criminal charges. We're dealing with a private investigation by the Minister whose purpose is to obtain the facts. And I see no requirement at all in terms of disclosure which may be appropriate in circumstances different than what the Hearing Officer ruled.
Lastly, two points in terms of the subpoena and the validity of the subpoena, I'm of the view that the subpoena is valid.
1. I think the subpoena itself provided the kind of flexibility within its terms where location, time and circumstance may be changed.
2. Counsel for Mr. Noble was always involved in these proceedings.
3. That the Minister's counsel has always kept potential witnesses also involved.
I take the view that those subpoenas were properly authorized and properly issued and that none of the changed circumstances that have been identified by counsel vitiate in any way the validity of the subpoena. And lastly - I thank you for your patience - I think on the point where counsel for Mr. Noble would assist counsel for Mr. Del Zotto, I have nothing to add to what Mr. Justice Flanigan had to say on the matter and I think that he left the matter open for later discussion.
So in terms of all of that, my overall sense is that what the Hearing Officer did in this particular case met the standards of the statute, met the standards of the common law, devised a system which was appropriate in the circumstances and which respected Parliamentary intent and the principles of fair play.
So for those reasons the judicial review applications are dismissed with costs.
And I want to close by saying to all of you that I very much enjoyed your submissions, very ably argued by all of you. I'm sorry it took so much time but I felt it appropriate to give at least those reasons so that you can consider the next steps.
Thank you very much.
---Whereupon, court proceedings in this matter were
adjourned at 6:15 p.m.
The foregoing is CERTIFIED to be a
true and accurate Computer-Assisted
Transcription (C.A.T.) of my shorthand
notes, to the best of my skill and
ability.
--------------------------------------
Transcription Dept.
[Quality Control]
as per: ------------------------------
LINDA JELLISON, Court Reporter
Telephone: 416-482-3277
Toronto, December 7, 1999.
Rev. December 29, 1999.
Nos. T-1724-99
T-1755-99
FEDERAL COURT OF CANADA
(TRIAL DIVISION)
B E T W E E N :
No. T-1724-99
ANGELO DEL ZOTTO,
Applicant,
- and -
THE MINISTER OF NATIONAL REVENUE
and JOHN EDWARD THOMPSON,
Respondent.
A N D B E T W E E N:
No. T-1755-99
HERBERT NOBLE,
Applicant,
- and -
THE MINISTER OF NATIONAL REVENUE
and JOHN EDWARD THOMPSON,
Respondent.
---------------------------------------------
P R O C E E D I N G S
BEFORE THE HONOURABLE MR. JUSTICE LEMIEUX
Court Room No. 1
361 University Avenue, 8th Floor
on Friday, the 3rd day of December, 1999
----------------------------------------------
JUDICIAL REVIEW
DECISION WITH REASONS
R E G I S T R A R : Lisa Rotatore
C O U N S E L :
T.G. HEINTZMAN, Esq., Q.C. )
W. C. McDOWELL, Esq. ) for the Applicant
I. BLOOM, Esq., Q.C. )
S. ALBIN, Esq. ) for the Respondent
(i)
I N D E X O F P R O C E E D I N G S
Page No.
Decision
with Reasons . . . . . . . . . . . . . . . 213-250
Decision 213
with Reasons
1 ---Court proceedings recessed at 4:10 p.m., to be
2 reconvened for the rendering of the Decision
3
4 ---Decision with Reasons rendered at 4:35 p.m.
5
6 THE COURT: As I indicated to you, because
7 of the way in which matters now stand, the Hearing Officer
8 has adjourned the inquiry until such time as this Court
9 rendered judgment, and as I understand it, there is a
10 telephone conference call scheduled for developments next
11 week. In the light of that factor, I think it is
12 important for me to give you my judgment in terms of these
13 two judicial review applications.
14 I will not be as eloquent as I normally do
15 it in writing and I will be referring to a number of
16 documents. Here are my Reasons:
17 This is a judicial review application by the
18 applicants, Angelo Del Zotto in Court File T-1724-99 and
19 by Herbert Noble in Court File T-1755-99.
20 These judicial review proceedings concern
21 rulings made by the Honourable Mr. Justice Flanigan, a
22 Hearing Officer appointed to preside over an inquiry
23 initiated by the Minister pursuant to s. 231.4 of the
24 Income Tax Act into the financial affairs of Mr. Del
25 Zotto. These rulings arose out of motions brought by the
26 applicants on August 16th, 17th and 18th, 1999.
27 In terms of those August 1999 motions, the
Decision 214
with Reasons
1 applicant Angelo Del Zotto sought the following rulings:
2 1. Having regard to both the provisions of s.
3 231.4 of the Income Tax Act and the requirements of
4 fairness and natural justice, Mr. Del Zotto seeks a ruling
5 that the stated purpose of the order of Jean Claude
6 Couture who is Chief Judge of the Tax Court, dated
7 December 15th, 1995, appointing Mr. Flanigan to conduct an
8 inquiry "into the affairs of Mr. Angelo Del Zotto" and the
9 authorization of Mr. Pierre Gravelle, dated October 9th,
10 1992, for an inquiry "into the affairs of Mr. Del Zotto
11 between 1979 and 1985" do not meet the requirements of the
12 Income Tax Act.
13 (a) The order and authorization failed to
14 state "a purpose related to the administration or
15 enforcement of the Income Tax Act", are impermissibly
16 vague and must be confined to a properly authorized and
17 more specific purpose. In the alternative, the Minister
18 of National Revenue should be required to provide
19 particulars to Mr. Del Zotto of the issues which will be
20 pursued in the course of the inquiry.
21 (b) Having regard to the specific purpose or
22 in the alternative the particulars so provided, fairness
23 requires that Mr. Del Zotto be given disclosure of all
24 relevant information in the possession of the Minister,
25 the Inquiry Officer, the Hearing Officer and anyone
Decision 215
with Reasons
1 appointed by the Minister for the enforcement or
2 administration of the Income Tax Act well before evidence
3 is called at the hearing to permit him to prepare to
4 cross-examine witnesses and to respond to this evidence.
5 (c) Fairness requires that Mr. Del Zotto and
6 his counsel be entitled to attend for the course of the
7 entire hearing without limitation and to cross-examine all
8 witnesses who will have been previously led in-chief by
9 the Inquiry Officer or his counsel.
10 (d) Mr. Del Zotto seeks a determination of
11 whether Mr. Flanigan possesses sufficient institutional
12 independence to meet the requirements of fairness and
13 natural justice.
14 (e) In accordance with the statute, Mr. Del
15 Zotto seeks a ruling that any subpoena issued by the prior
16 Hearing Officer or for a prior date or place no longer
17 applies and is impermissibly vague and invalid. Mr. Del
18 Zotto seeks a ruling that the only valid subpoenas are
19 those issued by the present Hearing Officer at a place and
20 time appointed by the Hearing Officer.
21 (f) Mr. Del Zotto seeks direction as to the
22 procedure to be followed to deal with questions to which
23 objection is taken by counsel. The Hearing Officer should
24 record on a separate transcript and videotape questions to
25 which counsel objects but the witness is permitted to
Decision 216
with Reasons
1 answer. Where counsel for the witness instructs the
2 witness not to answer the question at all, direction must
3 be obtained from a Federal Court to determine whether the
4 area of questioning is proper.
5 (g) Mr. Del Zotto respectfully requests that
6 a Reference to the Federal Court pursuant to section 18.3
7 of the Federal Court Act be directed for a determination.
8 In terms of Mr. Noble, submissions were made
9 by his counsel to Mr. Flanigan and basically in terms of
10 the submissions that were made - and I'm reading from
11 those submissions - the following points were made:
12 1. The subpoena served upon Mr. Noble is
13 invalid, no longer applies and Mr. Noble must be served
14 with a fresh valid subpoena if his attendance is to be
15 required. Mr. Noble respectfully adopts the submissions
16 made on behalf of Mr. Del Zotto.
17 2. Notice and disclosure regarding Mr. Noble's
18 testimony, Mr. Noble supports the submissions of Mr. Del
19 Zotto that having regard to the provisions of s. 234.1,
20 the terms of reference of the inquiry should be
21 particularized and narrowed. In addition Mr. Noble
22 supports and adopts the submissions of Mr. Del Zotto that
23 he be provided with full disclosure of all relevant
24 information in the possession of the Minister touching on
25 the matters before the inquiry before the evidence is
Decision 217
with Reasons
1 heard at the inquiry, and that is, that Mr. Noble requests
2 an order that he be provided with full notice and
3 disclosure of all relevant information in the possession
4 of the Minister touching upon the matters concerning him
5 upon which evidence will be sought and adduced before the
6 inquiry and full notice and disclosure of all matters and
7 materials upon which it is proposed to question Mr. Noble.
8 Mr. Noble adopts the submissions made on
9 behalf of Mr. Del Zotto. In those submissions, as well as
10 the submissions made by his counsel today, Mr. Gold, the
11 following proposition was put, and that is, without actual
12 knowledge, Mr. Noble cannot prepare for his testimony
13 properly and his counsel can only be of most limited
14 assistance.
15 In terms of procedural issues, there were a
16 number of points made by counsel for Mr. Noble in
17 submissions before Mr. Flanigan:
18 1. First, that counsel for the Minister is
19 limited to examination-in-chief, non-leading questions, in
20 his examination of Mr. Noble.
21 2. That Mr. Noble's counsel may engage in full
22 cross-examination of Mr. Noble concerning any matters
23 relevant to the terms of reference of the inquiry after
24 Mr. Noble has undergone examination by counsel for the
25 Minister.
Decision 218
with Reasons
1 3. To the extent that matters arise in a
2 witness's testimony which affect Mr. Noble, Mr. Noble
3 should have the right to cross-examine that witness
4 concerning those matters.
5 There was an issue related to videotaping
6 which I don't think I need to mention at this particular
7 juncture.
8 There was also an issue again raised today
9 and that is as to the ability of Mr. Gold to represent
10 other witnesses. The submission there is that Mr. Gold
11 and Mr. Noble request directions concerning Mr. Gold's
12 ability to represent other witnesses. But I don't think
13 that that specifically is an issue today and the request
14 really is modified to have Mr. Gold be present at the
15 hearings provided that Mr. Del Zotto consents.
16 Now, those were the submissions that were
17 made before the Hearing Officer, Mr. Flanigan. As I
18 understand it, from what I've been told today, is that
19 there are three places where we can find the rulings of
20 Mr. Justice Flanigan.
21 First of all, there is his decision of
22 September the 1st, 1999. Second, there was a reference to
23 the motion record by Mr. Del Zotto on the stay application
24 and that is a transcript of proceedings on September 27th,
25 1999, where Mr. Flanigan made further rulings. And
Decision 219
with Reasons
1 there's a third piece of document and that's a letter
2 dated October 20th, 1999, from Mr. Flanigan to Mr.
3 McDowell, co-counsel to Mr. Del Zotto.
4 These motions that were made by the
5 applicants in respect of which judicial review is sought
6 today were opposed by counsel for the respondents.
7 Now, here is my understanding of the rulings
8 that were made by the Hearing Officer. First, in terms of
9 institutional independence or impartiality, he was
10 satisfied that the legal requirements were met in his
11 situation. He ruled that cases such as Beauregard and
12 Valente did not apply because he is not a judicial body
13 settling disputes and determining rights of parties. And
14 for this proposition he relied upon what Mr. Justice
15 Strayer had said in the Del Zotto and Noble cases
16 challenging under s. 7 and 8 of the Charter these
17 proceedings.
18 I should just add right now that the Supreme
19 Court of Canada adopted Mr. Justice Strayer's reasoning in
20 his decision which I'll refer to later.
21 The Hearing Officer as I understand his
22 ruling adopted a more flexible approach enunciated by
23 Chief Justice Lamer in the Canadian Pacific v. Matsqui
24 case and he held that there was a minimal degree of
25 independence required because he was not adjudicating on
Decision 220
with Reasons
1 anything and his function was administrative.
2 In terms of the security of tenure, the
3 Hearing Officer said that this aspect of institutional
4 independence is not applicable in a situation where you
5 have an ad hoc Tribunal in a case such as his which will
6 not have any or could not have any effect on the future of
7 the Hearing Officer. And any possible improper actions by
8 the Minister, if there were any, could be checked by this
9 Court.
10 And in terms of financial security, he
11 mentioned that he had a contract with National Revenue and
12 that in these terms financial security was not an issue.
13 In addition to those comments, as I
14 understand his ruling, the Hearing Officer held that he
15 enjoyed complete autonomy to be exercised within the
16 parameters of the statute. In other words, what he said
17 is that the statute gave him the required autonomy to
18 function in an independent and impartial way. And he
19 added, as I take it, that it took more than a bald
20 assertion of institutional bias or lack of institutional
21 independence to make the case.
22 In terms of procedural matters, as I
23 understand it, the Hearing Officer acknowledged a duty of
24 fairness and acknowledged that a duty of fairness was owed
25 but that it was not possible to give a general definition
Decision 221
with Reasons
1 as to what will constitute fairness during such an inquiry
2 and that some of those matters must be dealt with by the
3 Hearing Officer as problems arise.
4 However, he rendered these specific rulings.
5 First on the overbreadth of the terms of reference relying
6 on a comment which Mr. Justice Strayer made in the Del
7 Zotto/Noble constitutional challenge, he agreed with the
8 applicants and limited the scope of the inquiry to matters
9 pertaining to the administration and enforcement of the
10 Act, excluding thereby as irrelevant personal documents
11 which had nothing to do with the collection of taxes.
12 On the issue of the presence of witnesses
13 and rights of counsel for Mr. Del Zotto, he divided his
14 analysis in terms of the rights of counsel for the witness
15 and the rights of counsel for Mr. Del Zotto.
16 And in terms of the rights of a witness and
17 counsel for a witness, the Hearing Officer turned to
18 paragraph 231.4(5) of the Income Tax Act which is the
19 section that we're concerned with and it reads as follows:
20 'Any person who gives evidence in an
21 inquiry authorized under subsection 1 is
22 entitled to be represented by counsel and
23 on request made by him to the Minister to
24 receive a transcript of the evidence given
25 by him.'
Decision 222
with Reasons
1 The Hearing Officer asked the question:
2 What is meant by "represented" by counsel within the
3 meaning of the above quoted paragraph? In other words he
4 asked himself the question: How far does the right of
5 representation go? And he held that the only rights given
6 to a witness are those rights outlined in the subsection
7 and he determined as follows:
8 1. Counsel for the witness is able to question
9 the witness after counsel for the Inquiry Officer so as to
10 clarify any matter he may deem requires clarification and
11 to which are not ruled against by the Hearing Officer.
12 2. Counsel for the witness cannot cross-examine
13 his own witness.
14 3. The Hearing Officer will grant a fair degree
15 of leeway to ensure that the evidence of the witness is
16 clarified to ensure fairness to that witness.
17 4. Once those rights are exercised, counsel for
18 that witness has no further rights or standing before the
19 inquiry unless the witness is recalled. He is not
20 entitled to remain throughout the hearing and then make
21 submissions at the end of the inquiry but he may apply
22 with the Hearing Officer at the conclusion of his client's
23 testimony to make submissions in respect of his client's
24 evidence.
25 5. In another part of his ruling, the Hearing
Decision 223
with Reasons
1 Officer indicated that counsel for a witness could object
2 to improper questioning.
3 Now, in terms of the rights of Mr. Del Zotto
4 and his counsel, Mr. Flanigan referred to paragraph 6 of
5 the subsection which I have just quoted and that
6 subsection reads as follows:
7 'Any person whose affairs are
8 investigated in the course of an inquiry
9 authorized under subsection 1 is entitled
10 to be present and to be represented by
11 counsel throughout the inquiry unless the
12 Hearing Officer appointed under subsection
13 2, in relation to the inquiry, on
14 application by the Minister or a person
15 giving evidence orders otherwise in
16 relation to the whole or any part of the
17 inquiry on the grounds that the presence of
18 that person and his counsel or either of
19 them, would be prejudicial to the effective
20 conduct of the inquiry.'
21 Again as I understand it, the Hearing
22 Officer asked the same question: What does "represented"
23 mean in that context? And he ruled as follows:
24 1. Mr. Del Zotto and his counsel are entitled
25 to be present throughout the inquiry unless otherwise
Decision 224
with Reasons
1 ordered.
2 2. Mr. Del Zotto's rights are no greater than
3 that of a witness; i.e., his counsel is allowed to ask
4 questions of Mr. Del Zotto if he is called - as I
5 understand it, Mr. Del Zotto has not been called - with a
6 view of clarifying that evidence.
7 3. With respect to witnesses other than his
8 client, Mr. Flanigan ruled that "represented" in the
9 context of subsection 6 meant that counsel for Mr. Del
10 Zotto is entitled to question each witness with a view to
11 clarification and to presenting the evidence in a fair way
12 to Mr. Del Zotto but that this did not mean a full right
13 of cross-examination, only the right to clarify any
14 evidence subject only to the intervention of the Hearing
15 Officer.
16 And as I understand it, in another part of
17 his ruling Mr. Flanigan indicated that counsel for Mr. Del
18 Zotto could object to improper questioning.
19 I just want to round out the rulings that
20 Mr. Flanigan made. As I understand it, the rulings made
21 on September 27th, 1999, concerned essentially the
22 position of counsel for the witness. And I'm reading from
23 the memorandum to this Court made by Mr. Noble and I hope
24 that I'm complete in terms of what those subsequent
25 rulings were.
Decision 225
with Reasons
1 As I understand it, those subsequent rulings
2 were that counsel for Mr. Noble would not be permitted to
3 be present in the inquiry until Mr. Noble is called to
4 testify, that following Mr. Noble's testimony, counsel
5 would then be excluded from the inquiry. The only room
6 for exception was the suggestion by the Hearing Officer
7 that Mr. Gold if he ceased to represent Mr. Noble could
8 apply to stay and assist counsel for Mr. Del Zotto.
9 And the second clarification is that the
10 Hearing Officer ruled that objections during the course of
11 the inquiry would be noted and dealt with by judicial
12 review upon completion of the inquiry rather than by
13 judicial review for each objection. And during
14 clarifications apparently taken on September 27th, the
15 Hearing Officer advised that incidents of attempts to
16 thwart the proceedings completely would require immediate
17 action.
18 The third document of clarification is the
19 letter of October 20th, 1999, to Mr. McDowell where, if my
20 notes are correct, the ruling was that Mr. Del Zotto has
21 no right to call witnesses. The Inquiry Officer has the
22 conduct of the hearing subject to what the Hearing Officer
23 may say at any particular time.
24 I will just quote now accurately from the
25 letter of October 20th, 1999. He said this and I quote:
Decision 226
with Reasons
1 'A reading of the decision clearly
2 indicates in my view that Mr. Del Zotto has
3 no right to call witnesses. A Hearing
4 Officer has the conduct of the hearing
5 subject to the Hearing Officer's ruling.
6 If the Hearing Officer at the material time
7 is persuaded that in order to ensure
8 fairness a particular witness should be
9 called to clarify any piece of evidence, it
10 can be dealt with at the time. So that
11 means in my view that if the Hearing
12 Officer is persuaded to ensure fairness to
13 a particular witness, that a particular
14 witness could be called to clarify any
15 piece of evidence and that would be subject
16 to a specific ruling.'
17 On the question of disclosure, either to Mr.
18 Del Zotto or to a witness of what evidence is to be
19 elicited from the witness, he ruled that since no charges
20 had been laid, there was no right to disclosure to either
21 the witness or to Mr. Del Zotto. He relied upon the
22 Supreme Court of Canada's decision in Guay v. Lafleur
23 tempered by the legislative amendments subsequently made.
24 He said that the inquiry he was conducting
25 was purely an administrative matter which neither decided
Decision 227
with Reasons
1 nor adjudicated upon anything. It was not a judicial or
2 quasi-judicial inquiry but a private investigation. It
3 was a fact finding inquiry launched by the Minister to
4 obtain facts which he or she considers necessary to enable
5 the Minister to discharge his duties or her duties imposed
6 upon the Minister in assessing and collecting taxes and he
7 mentioned that no charges had been made and reassessments
8 have yet to be made. And he said that neither Guay v.
9 Lafleur or the Act gives Mr. Del Zotto the right to direct
10 the matter in which the inquiry is to be conducted.
11 He also referred to the Supreme Court of
12 Canada's decision in Irvine and mentioned the early stage
13 of the proceedings and the fact that the Court must be
14 alert to the danger of unduly burdening and complicating
15 law enforcement investigative processes. And he said that
16 where a process is at the embryonic stage of fact finding,
17 the gathering of raw materials, the inclination of the
18 Court was not to intervene in the conduct of the
19 investigation.
20 He also mentioned that there was a contrast
21 between the situation before him and a body with the power
22 to make determinations in the sense of detrimental impact
23 suffered by an individual. He said that the views that
24 the members of the Special Investigations Branch might
25 have in respect of Mr. Del Zotto were only a preliminary
Decision 228
with Reasons
1 view and that the Special Investigations Branch did not
2 decide anything. He distinguished, as I understood it,
3 the Stinchcombe case on the basis that no criminal charges
4 had been laid.
5 In terms of the issue of the validity of the
6 subpoenas, Mr. Flanigan rejected their invalidity. He
7 referred to the findings of Mr. Justice Strayer in the
8 previous Del Zotto case. He said that they were still
9 valid, that they had not expired, that counsel for Mr.
10 Noble had ample notice and therefore ruled against the
11 motion.
12 Now, I want to just address two other
13 matters at the start. First of all, standard of review,
14 this is a judicial review proceeding and the question as
15 you know always arises of what is the standard of review.
16 And looking at the factors which Madam
17 Justice L'Heureux Dube indicated in Baker, decided in July
18 of this year, presence or absence of a privitive clause,
19 expertise of the Tribunal, the purpose of the provision,
20 the nature of the problem involved; and applying those
21 factors, I apply the standard of correctness. There is
22 here no privitive clause. The nature of the problem
23 involved is not one of fact but it's a legal finding at
24 this stage in terms of rulings and was not one in the
25 exercise of discretion but was what involves basically
Decision 229
with Reasons
1 legal matters. In terms of expertise of the Tribunal, I
2 think that's a neutral factor. And so therefore, applying
3 that standard, the question before me is whether the
4 decision of the Hearing Officer is correct in the context
5 of s. 18.1 of the Federal Court Act. The question is:
6 Did he commit any reviewable error?
7 As I see it, we are dealing with a problem
8 of statute law because Parliament in the Income Tax Act in
9 the two sections that I've quoted delineated in those two
10 subsections the rights of witnesses and the rights of in
11 this case Mr. Del Zotto, the person to be investigated.
12 But in my view it's not solely a matter of statutory
13 interpretation because the content of the right of
14 representation is not specified and recourse must be had
15 to the principles of fairness and the principles of common
16 law to provide what I describe as the fabric against which
17 the participatory rights intended by Parliament must be
18 determined.
19 Before dealing specifically with the rulings
20 of the Hearing Officer and my views on the matter, I want
21 to make a number of observations. And first is that the
22 Supreme Court of Canada has clearly said repeatedly over
23 the last thirty years that generalizations about the
24 principles of fairness and natural justice are to be
25 avoided, that participatory rights fit on a spectrum, that
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1 there is not one mold that fits all situations, that the
2 specific content of participatory rights depends upon the
3 circumstances.
4 And this is clear from what Madam Justice
5 L'Heureux Dube said in Baker where she said that the
6 concept of procedural fairness is eminently variable and
7 that its content is to be decided in the specific context
8 of each case. And I'm referring particularly at paragraph
9 21 of her Reasons for Judgment where she says that the
10 existence of the duty of fairness however does not
11 determine what requirements will be applicable in a given
12 set of circumstances and that its content is to be decided
13 in the specific context of each case.
14 And at paragraph 22, Madam Justice L'Heureux
15 Dube said that although the duty of fairness is flexible
16 and variable and depends on an appreciation of a context
17 of the particular statutes and the rights affected, it was
18 helpful to review the criteria that should be used to
19 determine what procedural rights the duty of fairness
20 requires in a given set of circumstances.
21 And I'm not going to go through them but
22 they are listed and I'm just going to summarize them. She
23 looked at these following factors: the nature of the
24 decision being made and the process followed in making it.
25 And she observed that the more the process provided for,
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1 the function of the Tribunal, the nature of the
2 decision-making body and the determinations which must be
3 made to reach a decision resembled judicial decisions, the
4 more likely that procedural protections closer to the
5 trial model will be required in terms of the duty of
6 fairness.
7 That's clear and that's set out at page 23.
8 I repeat it. The more the process provided for the
9 function of the Tribunal, the nature of the
10 decision-making and the determination that must be made
11 resembled judicial decision-making, the more likely
12 procedural protections are going to be stringent and
13 closer to the trial model.
14 The second factor, she looked at the nature
15 of the statutory scheme and the terms of the statute
16 pursuant to which the body operates.
17 Thirdly, she looked at the nature and extent
18 of the duty of fairness owed in terms of the importance of
19 the decision to the individual and the individuals
20 affected. And she said that the more important the
21 decision is to the lives of those affected and the greater
22 its impact on that person or persons, the more stringent
23 procedural protections will be mandated.
24 Fourth, she looked at the legitimate
25 expectation of persons challenging the decision also as a
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1 factor in determining procedures.
2 Fifth, it was mentioned today, the analysis
3 of what procedures the duty of fairness requires also
4 takes into account and respects the choice of procedures
5 made by the agency itself, particularly when the statute
6 leaves to the decision-maker the ability to choose its own
7 procedures or when the agency has the expertise in
8 determining what procedures are appropriate in the
9 circumstances.
10 The second general observation that I have
11 is that the very problem before me has been touched upon
12 in the constitutional challenge in which the applicants
13 were parties. I appreciate the distinction that the
14 challenge by the applicants was a constitutional challenge
15 and it was an attack in that case on the inquiry on its
16 terms of reference and on the subpoena which was issued to
17 Mr. Noble and as I said to you before, the Supreme Court
18 of Canada adopted Mr. Justice Strayer's decision.
19 But the point that I make here is that what
20 Mr. Justice Strayer had to say in deciding the s. 7 and
21 s. 8 challenge and the way in which he interpreted the
22 statute and constructed the section have relevance and
23 flow into the determinations which I have to make today.
24 And so to put it another way, there is not a watertight
25 division between what the Supreme Court of Canada said and
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1 what Mr. Justice Strayer said in the Del Zotto case and
2 what I have to decide here on administrative law grounds.
3 There is an integral co-mixing of the two issues because
4 he had to make certain decisions related to the inquiry,
5 the scope of the inquiry and other matters.
6 So what I am going to turn to is Mr. Justice
7 Strayer's decision which is reported at [1997] 3 F.C. 40.
8 And I'm just going to make three or four points which I
9 think are important and that arise out of his decision.
10 1. He said at paragraph 10 of his decision
11 that: 'An inquiry such as we are concerned with makes no
12 findings and is conducted in private.' And he
13 distinguished that aspect of the matter from a situation
14 which prevailed in Starr v. Houlden on the basis that they
15 involved the criminal nature of potential and public
16 findings of fact and law which he said does not prevail in
17 an inquiry such as this.
18 He said that the inquiry made no findings of
19 guilt or responsibility and he specifically referred to
20 Madam Justice Wilson's decision in Thompson. And I think
21 it's important to read this note. And it's note 6 from
22 Mr. Justice Strayer's decision and he adopts it. The
23 Thompson case as you know dealt with s. 17 of the Combines
24 Investigation Act. And what he quoted out of Madam
25 Justice Wilson's decision is that s. 17 of the Combines
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1 Investigation Act was set up specifically to determine if
2 there was evidence that certain named parties had
3 committed offences "does not determine any rights and
4 impose any liabilities". Mr. Justice Strayer specifically
5 made that part of his ruling, no determination of rights,
6 no determination of liabilities. And that is found
7 specifically at paragraph 5 of his reasons in terms of
8 what I've just said. So I take it that the Supreme Court
9 of Canada in endorsing his reasons adopted his views about
10 rights and liabilities.
11 The next point arising out of Mr. Justice
12 Strayer's decision is as to the applicant's argument. He
13 said that the applicant's argument that the inquiry is
14 simply gathering evidence for criminal prosecution was
15 overly simplistic and premature because no charges had
16 been laid and that's set out at paragraph 8 of his
17 decision.
18 Mr. Justice Strayer indicated that the
19 Income Tax Act, though supported by penal sanctions, was
20 essentially administrative in nature and he referred to
21 both the McKinlay Transport case and the Thompson case in
22 the Supreme Court of Canada and he concluded at least for
23 the purposes of my analysis that in this case Revenue
24 Canada has advised - as counsel pointed out to me today -
25 has advised that Mr. Del Zotto may be charged in respect
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1 of subsection 1(a) and (d) of 239. And Mr. Justice
2 Strayer at paragraph 23 of his decision indicated that the
3 charges which might possibly be forthcoming involve
4 possible tax evasion through false returns, falsified
5 documents, willful evasion or conspiracy to commit any of
6 the foregoing and I just quote. He said:
7 'This is not typical criminal law but is
8 a law designed to ensure compliance with
9 the self-reporting requirements of the
10 Income Tax Act and was characterized as
11 part of what is really a regulatory scheme
12 by Mr. Justice LaForest in a passage from
13 Thompson quoted above.'
14 And just for matter of completeness, Mr.
15 Justice Strayer mentioned at paragraphs 26 and 27 that the
16 subpoena could be attacked generally or in respect of a
17 particular document either before the Hearing Officer or
18 if necessary on judicial review if it can be demonstrated
19 that in particular circumstances someone's constitutional
20 right is about to be violated. And he said objections
21 could also be raised then as to the relevance of a
22 particular document to the legitimate purpose of the
23 inquiry.
24 And I just quote paragraph 27 where he said:
25 'Section 231.4 under which this inquiry
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1 is held guarantees both to the witness and
2 the "target" of the inquiry the right to be
3 represented by counsel save in exceptional
4 circumstances, notwithstanding suggestions
5 made by counsel for the appellant.'
6 He found no authority for the proposition
7 that counsel representing a witness or a target would not
8 be allowed to raise objections as to relevance or
9 constitutionality in respect of a particular subpoena or a
10 particular document and he said that was the natural
11 meaning to be given to the word "represented".
12 There's another case that I want to mention
13 and it was mentioned throughout the proceedings today and
14 that's the Supreme Court of Canada's decision in Irvine v.
15 Canada [1987] 1 S.C.R. 181 where Reasons were delivered by
16 Mr. Justice Estey on behalf of the Court. And this case,
17 as I think we all appreciate, concerned the rights and
18 obligations of persons concerned with the administrative
19 procedures under s. 17 of the Combines Investigation Act,
20 concerned an order made by the Chairman of the then
21 Restrictive Trade Practices Commission to give evidence
22 under oath in the context of an inquiry relating to a
23 possible conspiracy offence under s. 32 of the Combines
24 Investigation Act.
25 I want to quote s. 20 of that statute
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1 because it has some bearing on a problem that I have
2 today. It's s. 20 of the then Combines Investigation Act,
3 reads:
4 'A member of the Commission may allow
5 any person whose conduct is being inquired
6 into and shall permit any person who is
7 being himself examined under oath to be
8 represented by counsel.'
9 And Mr. Justice Estey noted at page 201 that
10 the Commission was obliged to permit a witness to be
11 represented by counsel. That was mandatory. But it was
12 discretionary in terms of a person whose conduct is being
13 inquired into.
14 Then just a couple of other quotes out of
15 Irvine, and I'm referring to page 209 which was a central
16 issue in his case, was the nature and extent of the role
17 of the several counsel for the applicants in terms of the
18 meaning of "represented" under s. 21 of the Act. At page
19 210 he says: 'The statutory provision of s. 21 is terse.
20 The words critical to this appeal are "to be represented
21 by counsel".'
22 He said: 'How should the Court properly
23 interpret those words in the context of the Act?' He
24 said: 'They reach the statute with a minimum of judicial
25 interpretation but with a wealth of historical usage in
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1 our jurisprudence.'
2 Mr. Justice Estey then canvassed thoroughly
3 the evolution of the principles of procedural fairness
4 going back for several years and culminating in the
5 progressive evolution that counsel for the applicants have
6 noted today. And I don't think there's any dispute about
7 that.
8 Now, in terms of s. 20, I'm referring to
9 page 227. He refers back to s. 20 of the Combines
10 Investigation Act and he says that the Act provides both a
11 qualified and unqualified right to counsel. And he makes
12 the point that the section provides no guide to the
13 administrative agency or to the Courts for its
14 implementation or application.
15 He quoted U.S. jurisprudence on the word
16 "represented". He surveyed Canadian law and he said this
17 - and that's been quoted to me today - he said this at
18 page 231:
19 'In the light of the important factual
20 and legal differences between a public
21 inquiry held under the Public Inquiries Act
22 and the investigative inquiry which in the
23 present case is held completely in private
24 and which generally do not lead in a
25 systematic way to prejudice, prosecution or
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1 deprivation, the public inquiry cases are
2 of little use to resolving the issue before
3 the Court.'
4 Then he said at page 231:
5 'Neither s. 20(1) nor the doctrine of
6 fairness provides the applicant with a
7 right to cross-examine witnesses at the
8 inquiry.'
9 Then he noted the flexibility concept in
10 fairness depends on the nature of the inquiry and the
11 consequences for the individuals and the characteristics
12 of the procedures, the nature of the resulting report and
13 its circulation to the public and the penalties which may
14 result when events succeeding the report are put into
15 train will determine the extent of right of counsel and
16 where counsel is authorized by statute without further
17 directive, the role of such counsel.
18 He made the point that an investigative body
19 must control its own procedure and when that body has
20 determinative powers, different considerations enter the
21 process and in that circumstance, the case against the
22 investigated must be made known to him. And he said in
23 that case that that was provided for by statute in various
24 stages.
25 He referred at page 235 to Lord
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1 Wilberforce's judgment in Wiseman v. Borneman. He talked
2 about remaining alert to the dangers of unduly burdening
3 and complicating law enforcement, talked about the
4 embryonic form engaged in the gathering of raw material
5 for consideration. And in the particular case, he said
6 that it was sufficient for the Hearing Officer to have
7 allowed all parties to be represented by counsel who could
8 object to improper questioning and re-examine their
9 clients to clarify the testimony given to ensure that the
10 full story was communicated by that witness counsel
11 represented.
12 I just want to draw your attention to
13 exactly what was at issue - and I'm not going to describe
14 them because it's getting late - but I just wanted to
15 point out to you that the rights which the Hearing Officer
16 was concerned about are described at page 189 of Mr.
17 Justice Estey's decision and what was overruled by the
18 Supreme Court of Canada was what a judgment of this Court
19 had ordered and what was quashed and what was overruled by
20 the Supreme Court of Canada was this: Mr. Justice Collier
21 had quashed a decision of the Hearing Officer -- it was a
22 refusal to permit persons whose conduct is being inquired
23 into and witnesses where represented by counsel to be
24 present throughout the whole of the examination. He had
25 quashed the refusal to permit counsel representing persons
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1 whose conduct is being inquired into to re-examine without
2 restriction their own clients and to cross-examine other
3 witnesses.
4 Mr. Justice Collier had quashed another
5 aspect which is not relevant today. So in a sense the
6 Hearing Officer's decision in Irvine was somewhat parallel
7 to the decisions which the Hearing Officer made in this
8 particular case.
9 I want to summarize what was said by Madam
10 Justice Wilson in the Thompson case about Irvine. And
11 this is at paragraph -- I don't have the paragraph number
12 but I will quote it. In Thompson Newspapers she said
13 this:
14 'This Court held in Irvine supra that s.
15 20(1) granted a limited right of counsel to
16 those being examined under oath. Counsel
17 can object to improper questions being put
18 to his client and can re-examine his client
19 to clarify the client's testimony.
20 However, a client is not entitled to be
21 present at the examination of other
22 witnesses and so obviously cannot
23 cross-examine them. With regards to
24 persons whose conduct is being inquired
25 into under the Act, s. 20(1) gives the
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1 Commission the discretion to permit them to
2 be represented by counsel.'
3 After a rather lengthy introduction, I come
4 down to the specific matters raised and I wish I had more
5 time to expand the reasoning but let me take them one by
6 one because it is my conclusion that these judicial review
7 applications must be dismissed basically on the grounds
8 mandated by my view of what the Supreme Court of Canada
9 said in Baker, my view of what Mr. Justice Strayer said
10 about this very inquiry in the Del Zotto case and my view
11 of what the Supreme Court of Canada decided in the Irvine
12 case, all buttressed against the background of two Supreme
13 Court of Canada decisions which I've referred to in
14 Thompson and McKinlay which have described the nature of
15 these particular provisions of the Income Tax Act and the
16 role in which criminal offences might arise.
17 First of all, I want to deal - and I'll deal
18 with it briefly - is the submission made by counsel for
19 Mr. Del Zotto that the authorization was unlawful, that
20 there had to be specific allegations, that the specific
21 subject matter had to be identified; there was a right to
22 know the subject matter and the position was taken that
23 they didn't know what was the subject matter to be
24 identified. It could be a Trojan horse giving unlimited
25 powers to the Minister to make a fishing expedition.
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1 Well, I think the Supreme Court of Canada
2 has told us that that's not grounds to invalidate the
3 authorization. And I just turn to what was said in the
4 McKinlay case in terms of the broad list under which s.
5 231.4 is concerned because they're all opened up by the
6 words that: 'The Minister may for any purpose related to
7 the administration or enforcement of the Act...'
8 The Supreme Court of Canada referring to a
9 case which I referred to in this discussion with counsel,
10 namely, James Richardson and Sons v. The Minister of
11 National Revenue [1984] 1 S.C.R. 614, where the comment
12 was: Yes, the wording of the subsection - and that
13 subsection concerned was 231.3 of the Income Tax Act - was
14 extremely broad but then they focused on what was a proper
15 purpose.
16 The Supreme Court of Canada outlined four
17 criteria and said that the test of whether the Minister is
18 acting for a purpose specified in the Act, that is, a
19 purpose related to the administration of the Act, is an
20 objective one and has to be decided on the proper
21 interpretation of the subsection, its application and the
22 circumstances. And if the purpose is to obtain
23 information relevant to the tax liability of some specific
24 person whose liability to tax is under investigation, that
25 was a purpose related to the statute.
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1 In my view, taking that case against the
2 principles that I've indicated, I think that the purpose
3 for the statute in this case meets the requirements of the
4 statute in terms of a proper purpose. I'm also of the
5 view that the scope of the purpose has been sufficiently
6 identified to the applicants so as to enable them in the
7 broad context of the duty of fairness, weighed against the
8 principles that I've indicated, that they in this
9 particular context, the inquiry launched in respect of
10 specified taxation years and in particular the subpoena
11 issued to Mr. Noble which identifies specific
12 transactions, meets the requirements of the statute and
13 the requirements of fairness in the particular
14 circumstances.
15 I buttress this by three other factors. The
16 nature of the inquiry, the nature of the investigation, it
17 is a fact finding investigation. I accept the proposition
18 put forward by counsel for the Minister that the analogy
19 based on reasonable and probable grounds which was a
20 central factor in arguing this case before the Supreme
21 Court of Canada in terms of s. 8 is also a factor. And I
22 think that the intention of Parliament, when you look at
23 the section, is to enable Revenue Canada to do in the Del
24 Zotto case exactly what Parliament intended. And
25 Parliament intended that the Minister have investigatory
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1 tools for the purpose of enforcement and administration of
2 the Act and that it is a fact finding inquiry and that in
3 the particular circumstances the purpose and the subject
4 matter of the inquiry have been sufficiently identified.
5 In terms of the terms of reference, I think
6 that Mr. Justice Strayer in the Del Zotto case
7 specifically identified the overbreadth and that Mr.
8 Justice Flanigan reduced those by confining the inquiry to
9 its proper purpose, namely, the administration and
10 enforcement of the Act.
11 In terms of the scope for hearing and the
12 participatory rights, Mr. Heintzman made a very powerful
13 argument that based on the statute that what Parliament
14 intended was the full panoply of participatory rights
15 flowing out of the concept of a hearing and said that
16 Parliament intended that the hearing was contemplated --
17 he referred to the word "Hearing Officer" and said that
18 the nature of the process that was engaged was a hearing.
19 With respect to his very able argument, I
20 think that his position misconstrues the statute for three
21 reasons: (1) When you read the statute and read the
22 section, there is a fundamental distinction between the
23 nature of the inquiry which is the Minister's inquiry
24 where the Minister appoints an Inquiry Officer, it being
25 an investigation related to the Income Tax Act and its
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1 administration. The role of the Hearing Officer within
2 that process is a very confined and delineated role where
3 his powers are really to referee in a sense the
4 proceedings which are going to take place. His powers are
5 very limited and the powers of the Hearing Officer are
6 very limited because they are conditioned upon s. 4 and 5
7 of the Inquiries Act. Those are powers of subpoena and
8 those are powers of enforcement in the event that certain
9 matters arise in the conduct of the hearing so that the
10 nature of the hearing and the nature of his role are very,
11 very circumscribed in terms of presiding at the hearing
12 and that is confirmed by the French text of the
13 legislation.
14 So that in my view, Parliament on a
15 reasonable construction of this statute did not intend
16 that there be a hearing. All that arises here is that
17 there is an investigation made by the Minister and that in
18 the context of that inquiry, then certain matters may come
19 forward where a Hearing Officer is required and that
20 Hearing Officer exercises as I said the powers under the
21 Inquiries Act.
22 And lastly on this point, I would have said
23 that if Parliament had intended that the full extent of
24 participatory rights flow from the words "hearing", then
25 Parliament would have specified it clearly as it has, for
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1 example, in section 23 of the National Transportation Act
2 in 1970, Statutes of Canada, N-17, where indeed the
3 Canadian Transportation Commission in that case had
4 authority to conduct an inquiry but could not make any
5 rulings until it had a hearing. This is vastly different
6 here and that difference was pointed out by a Federal
7 Court of Appeal in the 1993 decision where it analyzed the
8 functions of the statute and analyzed the nature of the
9 decision.
10 Now, I will be very brief. So that in a
11 sense deals with the matters of the subject matter of the
12 inquiry and the scope of participatory rights. The scope
13 of participatory rights, just to close that off are to be
14 interpreted in my view in a manner that the Supreme Court
15 of Canada dictated in the Irvine case and that the rulings
16 of the Hearing Officer took those into account and
17 correctly applied the law in this respect.
18 Three very short points. In terms of
19 institutional independence, I have very little to add to
20 the Reasons of Mr. Justice Flanigan. I accept his
21 analysis. I would only say that the only other case that
22 I'm aware of where the issue of an ad hoc Tribunal took
23 place was in the Supreme Court of Canada's decision in
24 Lippe where, an ad hoc Municipal Tribunal in the Province
25 of Quebec, the whole system was validated by the Supreme
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1 Court of Canada even though it was ad hoc and even though
2 it dealt with criminal charges. So in my sense are all of
3 the cases such as Beauregard and Valente that we know of
4 do not in the term apply to the kind of function and the
5 kinds of roles that are played by the Hearing Officer in
6 the limited context that he has.
7 I think I've dealt with cross-examination.
8 Again the principles of Irvine, the principles of
9 procedural fairness, the interpretation arising out of
10 "represented by counsel" flow from that and I see nothing
11 in his decision that misapplied or misconstrued either the
12 statute or the principles of the common law.
13 In terms of disclosure, I think that again
14 the Hearing Officer's analysis is appropriate. I think
15 that Stinchcombe is applicable and we're not dealing with
16 at this stage any criminal charges. We're dealing with a
17 private investigation by the Minister whose purpose is to
18 obtain the facts. And I see no requirement at all in
19 terms of disclosure which may be appropriate in
20 circumstances different than what the Hearing Officer
21 ruled.
22 Lastly, two points in terms of the subpoena
23 and the validity of the subpoena, I'm of the view that the
24 subpoena is valid.
25 1. I think the subpoena itself provided the
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1 kind of flexibility within its terms where location, time
2 and circumstance may be changed.
3 2. Counsel for Mr. Noble was always involved in
4 these proceedings.
5 3. That the Minister's counsel has always kept
6 potential witnesses also involved.
7 I take the view that those subpoenas were
8 properly authorized and properly issued and that none of
9 the changed circumstances that have been identified by
10 counsel vitiate in any way the validity of the subpoena.
11 And lastly - I thank you for your patience
12 - I think on the point where counsel for Mr. Noble would
13 assist counsel for Mr. Del Zotto, I have nothing to add to
14 what Mr. Justice Flanigan had to say on the matter and I
15 think that he left the matter open for later discussion.
16 So in terms of all of that, my overall sense
17 is that what the Hearing Officer did in this particular
18 case met the standards of the statute, met the standards
19 of the common law, devised a system which was appropriate
20 in the circumstances and which respected Parliamentary
21 intent and the principles of fair play.
22 So for those reasons the judicial review
23 applications are dismissed with costs.
24 And I want to close by saying to all of you
25 that I very much enjoyed your submissions, very ably
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1 argued by all of you. I'm sorry it took so much time but
2 I felt it appropriate to give at least those reasons so
3 that you can consider the next steps.
4 Thank you very much.
5
6 ---Whereupon, court proceedings in this matter were
7 adjourned at 6:15 p.m.
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15
16 The foregoing is CERTIFIED to be a
17 true and accurate Computer-Assisted
18 Transcription (C.A.T.) of my shorthand
19 notes, to the best of my skill and
20 ability.
21
22 --------------------------------------
23 Transcription Dept.
24 [Quality Control]
25
26 as per: ------------------------------
27 LINDA JELLISON, Court Reporter
28 Telephone: 416-482-3277
29 Toronto, December 7, 1999.
30 Rev. December 29, 1999.
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