Canada (National Revenue) v. Ghermezian

Date: 20220223

Docket: T-252-19

T-254-19

T-258-19

T-259-19

T-261-19

T-262-19

Citation: 2022 FC 236

Ottawa, Ontario, February 23, 2022

PRESENT: The Honourable Mr. Justice Southcott

BETWEEN:

Docket: T-252-19

Applicant

THE MINISTER OF NATIONAL REVENUE

and

NADER GHERMEZIAN

Respondent

Docket: T-254-19

Applicant

AND BETWEEN:

THE MINISTER OF NATIONAL REVENUE

and

MARC VATURI

Respondent

Page: 2

AND BETWEEN:

Docket: T-258-19

Applicant

THE MINISTER OF NATIONAL REVENUE

and

GHERFAM EQUITIES INC

Respondent

Docket: T-259-19

Applicant

THE MINISTER OF NATIONAL REVENUE

and

PAUL GHERMEZIAN

Respondent

Docket: T-261-19

Applicant

THE MINISTER OF NATIONAL REVENUE

and

RAPHAEL GHERMEZIAN

Respondent

Docket: T-262-19

Page: 3

THE MINISTER OF NATIONAL REVENUE

Applicant

and

JOSHUA GHERMEZIAN

Respondent

JUDGMENT AND REASONS

I.

Overview

[1]

This decision relates to six applications by the Minister of National Revenue [the

Minister], seeking compliance orders under s 231.7 of the Income Tax Act, RSC 1985, c 1 (5th

Supp) [the Act].

[2]

The Respondents are five individuals, all members of the Ghermezian extended family,

and a related corporation, Gherfam Equities Inc. [Gherfam]. Nader Ghermezian (the Respondent

in Court file number T-252-19) and Raphael Ghermezian (the Respondent in Court file number

T-261-19) are brothers. Joshua Ghermezian (the Respondent in Court file number T-262-19) is

the son of Raphael Ghermezian, and Paul Ghermezian (the Respondent in Court file number T-

259-19) is the nephew of Nader Ghermezian and Raphael Ghermezian. Marc Vaturi (the

Respondent in Court file number T-254-19) is the son-in-law of Nader Ghermezian.

Page: 4

[3]

Each of the Minister’s applications seeks an order compelling the relevant Respondent to

provide documents and/or information previously sought by the Minister under s 231.1 and/or s

231.2 of the Act.

[4]

These six applications were heard together, by videoconference employing the Zoom

platform, on January 24 to 27, 2022. As they raise many common issues, these Reasons address

all six applications.

[5]

As explained in greater detail in the Reasons below, these applications are granted,

subject to the remaining steps I have outlined for applying my conclusions surrounding the

Respondents’ success in some of their defence arguments to the development of the form of

compliance order in each application.

II.

Background

[6]

First, a few words about nomenclature. As set out in more detail later in these Reasons,

most of these applications rely on both s 231.1 and s 231.2 of the Act. The issues in these

applications include disputes between the parties on the scope of the powers granted to the

Minister under s 231.1 and s 231.2. For purposes of these Reasons, I will adopt the language

employed by the Minister in her written submissions, referring to the invocation of s 231.1 as a

“Request” and the invocation of s 231.2 as a “Requirement”. I note this is consistent with the

language employed by Justice Fuhrer in Tellza Inc v Canada (National Revenue), 2021 FC 853

[Tellza], in relation to the comparable provisions of the Excise Tax Act, RSC 1985, c E-15

[ETA]). However, I emphasize these terms are adopted solely to enhance the readability of these

Page: 5

Reasons and are not intended to be terms of art or to suggest that a Request issued under s 231.1

gives rise to less compulsion than a Requirement issued under s 231.2. Similarly, without

intending to ascribe any technical significance to it, I will employ the term “Demands” to

encompass generically both Requests and Requirements.

[7]

The Minister commenced each of these six applications by a Notice of Summary

Application dated February 7, 2019. In each application, the Minister asserts that: she issued

Requests and/or Requirements to the relevant Respondent requiring the provision of documents

and/or information related to the administration or enforcement of the Act; the Respondent has

failed to provide all such documentation and/or information; and the Respondent has not asserted

any claim for solicitor-client-privilege in relation thereto. The Minister asserts that she has

therefore met the statutory conditions for the Court to issue a compliance order under s 231.7 of

the Act, ordering the Respondent to provide the outstanding documents and/or information.

[8]

In each application, the Minister has filed an Amended Notice of Summary Application

dated April 7, 2021 [Amended Notice], which specified the particular Demands, or portions

thereof, that the Minister considered to be still outstanding. In the course of the hearing, the

Minister further clarified or refined her Demands in each application, in some cases further

reducing the Demands or portions thereof for which she is seeking a compliance order.

[9]

In each application, the Minister relies upon an affidavit sworn in July 2019 by Andrew

Bowe, who was, at the time, an International and Large Business Case Manager with the Canada

Revenue Agency [CRA] and had conduct of the audit matters in relation to the Respondents. In

Page: 6

T-254-19 (with Mr. Vaturi as the Respondent), Mr. Bowe also affirmed a Supplementary

Affidavit on April 7, 2021 [the Supplementary Affidavit]. The Respondents have cross-examined

Mr. Bowe on his affidavits, and the relevant transcripts have been included in the record in each

application. The Respondents have not otherwise filed any evidence in these proceedings.

[10] In opposing these applications, the Respondents rely in part on arguments surrounding

the admissibility of or, alternatively, the weight that should be afforded to Mr. Bowe’s evidence.

In the proceedings related to Nader Ghermezian, Raphael Ghermezian, and Marc Vaturi, the

Respondents had previously filed motions to strike Mr. Bowe’s affidavits and dismiss the

applications. By Order dated December 15, 2021, Prothonotary Aalto adjourned these motions,

concluding that the issues raised therein should be argued at the hearing of the applications. The

parties presented their arguments on these issues at the commencement of the hearings on

January 24, 2021. This decision will address those arguments.

[11] The Respondents also raise a number of other issues in support of their position that the

applications should be dismissed. Most of the issues are common to some or all of the

applications, although there are also a small number of issues specific to individual applications.

These Reasons will first address the common issues and identify any general conclusions that

can be reached without individually canvassing each application, as well as apply those

conclusions to the applications, to the extent it is possible to do so. I will then turn to the

individual applications, applying the general conclusions to each application where I have not

done so already and addressing any additional issues specific to each application.

Page: 7

III.

Issues

[12] The following issues, common to some or all of the applications, have been raised for the

Court’s adjudication:

A. Whether the affidavits of Andrew Bowe should be struck out or, in the

alternative, afforded little weight;

B. Whether the Respondents were required to provide documents and/or

information in response to a Request issued under s 231.1 of the Act;

C. Whether the individuals who issued the Demands were authorized to do so;

D. Whether the Respondents were properly given notice of the Demands;

E. Whether the Demands provided a reasonable time for compliance;

F. Whether the Demands relate to one or more unnamed persons, requiring the

Minister to seek prior judicial authorization under s 231.2(3) of the Act;

G. Whether the Demands raise ambiguity as to whether their recipient is the same

as the Respondent;

H. Whether the Demands improperly sought the production of foreign-based

information or documents within the meaning of s 231.6 of the Act;

I. If the Court determines that any compliance orders should be issued, whether

such orders should contain an exclusion for documents and information

protected by solicitor-client privilege;

Page: 8

J. If the Court concludes that a compliance order should not be issued in relation

to a portion of a Demand, whether the Court has the authority to sever that

portion and issue an order in relation to the remainder of the Demand; and

K. Whether certain Requirements were ineffective because the Respondents are

not residents of Canada.

IV.

Analysis

A. General Principles Regarding Compliance Orders Under s 231.7

[13] Before turning to the individual issues, it is useful to identify some general principles

relevant to applications under s 231.7 of the Act, the text of which reads as follows:

Compliance order

Ordonnance

231.7 (1) On summary

231.7 (1) Sur demande

application by the Minister, a sommaire du ministre, un juge

judge may, notwithstanding

subsection 238(2), order a

peut, malgré le paragraphe

238(2), ordonner à une

person to provide any access, personne de fournir l’accès,

assistance, information or

document sought by the

Minister under section 231.1

or 231.2 if the judge is

satisfied that

l’aide, les renseignements ou

les documents que le ministre

cherche à obtenir en vertu des

articles 231.1 ou 231.2 s’il est

convaincu de ce qui suit :

(a) the person was

a) la personne n’a pas

fourni l’accès, l’aide, les

renseignements ou les

documents bien qu’elle en

soit tenue par les articles

231.1 ou 231.2;

required under section

231.1 or 231.2 to provide

the access, assistance,

information or document

and did not do so; and

(b) in the case of

b) s’agissant de

information or a

document, the information

renseignements ou de

documents, le privilège

Page: 9

or document is not

des communications entre

client et avocat, au sens

du paragraphe 232(1), ne

peut être invoqué à leur

égard.

protected from disclosure

by solicitor-client privilege

(within the meaning of

subsection 232(1)).

Notice required

Avis

(2) An application under

subsection (1) must not be

heard before the end of five

clear days from the day the

(2) La demande n’est entendue

qu’une fois écoulés cinq jours

francs après signification d’un

avis de la demande à la

notice of application is served personne à l’égard de laquelle

on the person against whom

the order is sought.

l’ordonnance est demandée.

Judge may impose

conditions

Conditions

(3) A judge making an order

under subsection (1) may

impose any conditions in

respect of the order that the

judge considers appropriate.

(3) Le juge peut imposer, à

l’égard de l’ordonnance, les

conditions qu’il estime

indiquées.

Contempt of court

Outrage

(4) If a person fails or refuses (4) Quiconque refuse ou fait

to comply with an order, a

judge may find the person in

contempt of court and the

person is subject to the

défaut de se conformer à une

ordonnance peut être reconnu

coupable d’outrage au

tribunal; il est alors sujet aux

processes and the punishments procédures et sanctions du

of the court to which the judge tribunal l’ayant ainsi reconnu

is appointed.

coupable.

Appeal

Appel

(5) An order by a judge under (5) L’ordonnance visée au

subsection (1) may be

appealed to a court having

appellate jurisdiction over

paragraphe (1) est susceptible

d’appel devant le tribunal

ayant compétence pour

decisions of the court to which entendre les appels des

the judge is appointed. An

appeal does not suspend the

décisions du tribunal ayant

rendu l’ordonnance. Toutefois,

execution of the order unless it l’appel n’a pas pour effet de

is so ordered by a judge of the suspendre l’exécution de

court to which the appeal is

made.

l’ordonnance, sauf ordonnance

Page: 10

contraire d’un juge du tribunal

saisi de l’appel.

[14] As is evident from s 231.7(1), the Minister’s recourse to a compliance order is premised

on the Minister previously having sought access, assistance, information or documentation under

ss 231.1 or 231.2. The text of those sections (which, together with other provisions considered in

these Reasons, are set out in full in Appendix “A”), will be canvassed later in this decision. For

present purposes, it is sufficient to identify that, in the context of Canada’s self-assessment

system for the collection of income tax under the Act, ss 231.1 and 231.2 form part of the broad

suite of powers that Parliament has conferred on the Minister to obtain information and/or

documentation from taxpayers and third parties to verify self-assessments (see R v McKinlay

Transport Ltd, [1990] 1 SCR 627, 68 DLR (4th) 568 [McKinlay] at para 18 (referencing s

231(3), which was the predecessor to s 231.2(1)).

[15] When a person who is subject to a demand under ss 231.1 or 231.2 does not comply with

that demand, s 231.7 entitles the Minister to apply to the Federal Court for an order compelling

compliance. Consistent with the language of s 231.7(1), the Federal Court of Appeal explained in

Minister of National Revenue v Lee, 2016 FCA 53 [Lee] at para 6 that the Court must be satisfied

of three points before granting a compliance order:

i)

The person against whom the order is sought was required under section 231.1

or 231.2 of the Act to provide the access, assistance, information or

documents sought by the Minister;

ii) Although the person was required to provide the information or documents

sought by the Minister, he or she did not do so; and,

iii) The documents or information sought is not protected from disclosure by

solicitor-client privilege as defined within the Act.

Page: 11

[16] The Respondents refer the Court to Minister of National Revenue v Derakhshani, 2009

FCA 190 [Derakhshani], in which the Federal Court of Appeal rejected the Minister’s argument

that, when presented with an application under s 231.2(3) of the Act, a judge has no discretion to

reject the application if the conditions prescribed by that section are met (at paras 17-19). While

that case involved an application under s 231.2(3) to authorize the Minister to a serve a

requirement related to an unnamed person, I agree with the Respondents’ submission that the

Court’s analysis of whether it retains discretion even where the statutory conditions are met

usefully informs the interpretation of s 231.7 as well. Both sections require that the judge be

satisfied that the statutory conditions for the application are met and provide the judge granting

an order the authority to impose any conditions the judge considers appropriate. As these are the

factors that the Court in Derakhshani took into account in identifying the existence of its

discretion, I agree that judicially exercised discretion exists under s 231.7 as well.

[17] Indeed, I do not understand the Minister to dispute this point in the case at hand. In

support of her position on the “severance” issue (canvassed later in these Reasons), that the

Court has the authority to issue an order in relation to a portion of a Demand or application, the

Minister refers to the Court’s discretion to impose such conditions as it considers appropriate.

[18] Because of the potentially serious consequences flowing from the failure to obey a

compliance order, including fines and/or imprisonment, the jurisprudence explains that the Court

should be satisfied that the statutory conditions of s 231.7 have been “clearly met” before

exercising its discretion to grant an order (see Minister of National Revenue v Chamandy, 2014

Page: 12

FC 354 [Chamandy] at para 35; Canada (Minister of National Revenue) v SML Operations

(Canada), 2003 FC 868 [SML Operations] at para 15).

[19] The Respondents also rely on Derakhshani (at paras 16-17) to support their position that

the use of the phrase “if the judge is satisfied” in s 231.7 imposes on the Minister an onus to

adduce and prove all the facts required to satisfy the conditions for the issuance of the

compliance order. In my view, Derakhshani does not stand for this proposition. Paragraphs 16

and 17 rely on that phrase to conclude that the judge has discretion in an application under s

231.7, but do not speak to which party bears the onus in such an application.

[20] The Respondents also rely on this Court’s decision in Ghermezian v Canada (Attorney

General), 2020 FC 1137 [Ghermezian] at paras 24-25, to support their position that the Minister

bears the burden of proof. Again, that authority does not stand for the proposition that the

Respondents advance. Ghermezian involved a number of applications for judicial review,

brought by some of the same parties who are Respondents in the present applications,

challenging a number of Requirements issued by the Minister under s 231.2(1) of the Act. Those

applicants relied on Capital Vision Inc v Minister of National Revenue, 2002 FCT 1317 [Capital

Vision] to support their position that the Minister bore the burden of proving her compliance with

s 231.2(1). This Court rejected that contention, observing that Capital Vision held that the

Minister must comply with the Act but did not state a conclusion on the applicable burden of

proof.

Page: 13

[21] That said, I do not understand the Minister to dispute that, as the party seeking a

compliance order under s 231.7, she has the burden of satisfying the statutory conditions as set

out in Lee, although she submits that whether the requested material is privileged is relevant to

the analysis only if a respondent actually asserts a claim of privilege (see Lee at para 9). I accept

that the overall legal burden in the application resides with the Minister, and I concur that

privilege factors into the analysis only if raised by a respondent, who then bears the burden on

that issue (see Redhead Equipment Ltd v Canada (Attorney General), 2016 SKCA 115 at para

31; Minister of National Revenue v Atlas Tube Canada ULC, 2018 FC 1086 at para 32).

[22] However, the location of the burden becomes more nuanced in connection with particular

defence arguments raised by the Respondents in these applications. Which party bears the

applicable burden is potentially relevant to several of the issues raised in the Respondents’

arguments, including: (a) authority to issue the Demands; (b) proper notice of the Demands to

the Respondents; (c) the reasonableness of the time given for compliance with the Demands; and

(d) whether the Demands improperly sought the production of foreign-based material. The

Respondents submit that the Minister bears the burden on all the issues. In contrast, the Minister

urges the Court to be guided by a general evidentiary principle that the party who alleges a

proposition, and with whom the evidence is likely to reside, bears the applicable burden. Where

necessary, I will return to the question of the burden of proof when considering the individual

issues.

B. Whether the affidavits of Andrew Bowe should be struck out or, in the

alternative, afforded little weight

Page: 14

[23] The Respondents in T-252-19 (Nader Ghermezian), T-254-19 (Marc Vaturi) and T-261-

19 (Raphael Ghermezian) argue that the Court should strike the affidavits of the Minister’s

deponent, Andrew Bowe, in each of these applications. Relying on the fact that the Minister

bears the overall legal burden in these applications, the Respondents submit that, without these

affidavits to support these three applications, the Court should dismiss these applications in full.

In connection with other applications, the Respondents submit that Mr. Bowe’s evidence should

be afforded little or no weight.

[24] The Respondents’ principal arguments in support of these positions fall broadly into two

categories. First, they submit that Mr. Bowe’s affidavits are outdated, incomplete and unreliable.

Second, they submit that Mr. Bowe’s affidavits offend the hearsay rule by providing evidence as

to facts that are outside his personal knowledge. However, particular issues are also raised with

respect to Mr. Bowe’s Supplementary Affidavit in T-254-19. I will begin my analysis with the

Supplementary Affidavit.

(1) Supplementary Affidavit in T-254-19 (MNR v Marc Vaturi)

[25] The Supplementary Affidavit is a relatively brief document, affirmed on April 7, 2021,

which appears intended to update the evidence provided by Mr. Bowe in his original affidavit in

T-254-19, sworn on July 27, 2019. Mr. Bowe states that, subsequent to service of the July 27,

2019 affidavit, CRA received information and documentation from Mr. Vaturi and/or his

representatives. Mr. Bowe then proceeds to identify, through attached exhibits, the information

and documentation received and the items from the relevant Demands that CRA considered to be

outstanding.

Page: 15

[26] The Respondent’s counsel refers to what he characterizes as two “bombshells” revealed

through cross-examination of Mr. Bowe, conducted on November 17 and 18, 2021. First, in

relation to a Demand identified as A-MV-0128, the Respondent notes Mr. Bowe’s evidence that,

to the date of the Supplementary Affidavit, Mr. Vaturi had not provided the outstanding

information and/or documentation identified in follow-up correspondence sent by CRA on

March 10, 2020. In the course of cross-examination, Respondent’s counsel pointed out that Mr.

Vaturi had, in fact, provided a response exceeding 150 pages on November 4, 2020.

[27] The November 4, 2020 response was addressed to Mr. Bowe and copied to the Minister’s

counsel. When presented with this response on the first day of his cross-examination, Mr. Bowe

stated he did not recall seeing it and explained that he was transitioning out of his role at the

relevant time. The Minister’s counsel subsequently investigated this issue and confirmed, on the

second day of cross-examination, that Mr. Vaturi’s submission had been received but was

misfiled and therefore missed in the preparation of Mr. Bowe’s Supplementary Affidavit. Both

Mr. Bowe and the Minister’s counsel confirmed that they were not able to state whether there

was still information or documentation outstanding in relation to A-MV-0128. The Minister

subsequently withdrew her request for a compliance order with respect to this Demand.

[28] The Respondent submits that these events demonstrate that Mr. Bowe affirmed the

Supplementary Affidavit, attesting to facts essential to the Minister’s application, without

knowing, or even making any effort to confirm, whether they were true. Relying on Canada

(Board of Internal Economy) v Canada (Attorney General), 2017 FCA 43 [Board of Internal

Page: 16

Economy] at para 30, the Respondent submits that the affidavit should be struck, because it is

“…so clearly out of bounds … that it ought to be stopped in its tracks.”

[29] I find little merit to the Respondent’s position that the affidavit should be struck. The

evidence suggests that Mr. Bowe was unaware of the November 4, 2020 submission due to an

administrative error. However, even if I were to ascribe to Mr. Bowe a higher level of culpability

in connection with this error, I would find no basis to strike the Supplementary Affidavit as

inadmissible. Certainly, this error could cast doubt on the reliability of his evidence and, if there

was a dispute as to whether Mr. Vaturi had submitted a particular document to CRA, I might

therefore afford more weight to evidence adduced by the Respondent to establish the submission.

However, there is no dispute of that sort raised in this application. Following her investigations,

the Minister’s counsel confirmed that the November 4, 2020 submission had been overlooked,

and the Minister subsequently withdrew her request for a compliance order in connection with

the relevant Demand.

[30] I agree with the Minister’s submission that Board of Internal Economy is distinguishable,

as the affidavit that was struck in that case was found inadmissible because it amounted to a legal

opinion on Canadian law.

[31] The second issue that the Respondent raises in connection with the Supplementary

Affidavit surrounds Mr. Bowe’s explanation during his cross-examination that, notwithstanding

that the affidavit was affirmed in April 2021, it was prepared in June 2020, before he transitioned

out of his role in November 2020. Because Mr. Bowe no longer had current personal knowledge

Page: 17

of CRA’s audit of Mr. Vaturi when he affirmed the Supplementary Affidavit, the Respondent

again argues that it should be struck.

[32] In response to this argument, the Minister explains that she was required to present a

motion seeking an order allowing the filing of the Supplementary Affidavit. The Court issued the

resulting Order on March 30, 2021, granting the motion and permitting the filing of the affidavit.

It was then filed in largely the same form as presented in the motion and authorized by the

Order—which included an appendix setting out the form of the Supplementary Affidavit—

notwithstanding that several months had passed. The Respondent takes issue with this

explanation, noting that the introductory paragraphs of the affidavit were updated to explain the

change in Mr. Bowe’s role.

[33] Again, I find little merit to the Respondent’s argument that the Supplementary Affidavit

is inadmissible and should be struck. I accept that the affidavit is misleading, as it amounts to

testimony by Mr. Bowe that, other than as identified in the updates set out in the affidavit, the

information and documentation sought in the Demands issued to Mr. Vaturi was still outstanding

as of April 2021. It appears to have been Mr. Bowe’s intention that his testimony to that effect

apply as of June 2020 when the affidavit was prepared, but the affidavit does not read that way.

If, in his cross-examination of Mr. Bowe, the Respondent’s counsel had not identified this

irregularity, the Court could have been misled in relying on the Supplementary Affidavit. The

benefit of his identification of this error obviously accrues to the Respondent and, to the extent

there was a dispute between the parties on whether Mr. Vaturi had submitted additional

documentation between June 2020 and April 2021, the Supplementary Affidavit would not assist

Page: 18

the Minister. However, there was no contention that Mr. Vaturi made additional submissions

during this period and, in any event, these circumstances do not raise a basis for the Court to find

the Supplementary Affidavit inadmissible.

(2) Staleness of Affidavits

[34] Turning to the Respondents’ principal inadmissibility arguments, related to the main

affidavits sworn by Mr. Bowe in each of T-252-19, T-254-19 and T-261-19, they submit first

that these affidavits are out of date and should be struck as inadmissible due to their staleness. As

canvassed by the Respondents’ counsel in cross-examination, it is clear that (other than the

Supplementary Affidavit in T-254-19) Mr. Bowe did not prepare additional affidavits to update

his evidence after the original affidavits were sworn on July 27, 2019. Noting that

noncompliance with the Minister’s Demands is one of the statutory conditions for issuance of

compliance order under s 237.1(1), the Respondents submit that Mr. Bowe’s affidavits should be

struck because they are stale. They rely on Fabrikant v Canada, 2017 FC 1115 [Fabrikant], in

support of their argument.

[35] Fabrikant involved an appeal of a prothonotary’s decision, which had refused to waive

the Court’s filing fee for a self-represented vexatious litigant wishing to file an application for

judicial review. The prothonotary dismissed the motion for waiver of the fee on the grounds that

the applicant’s evidence of impecuniosity was prima facie deficient, being based on an affidavit

nearly one year old. Justice Harrington upheld the prothonotary’s decision on several grounds,

including that a motion should be accompanied by a current affidavit and that the prothonotary

was entitled to reject the applicant’s affidavit as stale-dated (at paras 23-24).

Page: 19

[36] I agree with the Minister’s response that Fabrikant does not express a general principle

that the passage of time alone stale dates affidavits, requiring them to be struck. Indeed, it is not

clear from Fabrikant that either the prothonotary or Justice Harrington considered the affidavit to

be inadmissible, as opposed to concluding that, because it was outdated, the evidence simply did

not support the relief requested.

[37] In the case at hand, the fact that Mr. Bowe did not file updated evidence does not make

his original evidence inadmissible. Rather, the Court must consider whether Mr. Bowe’s

evidence, including the date as of which it speaks, supports issuance of the requested compliance

orders. In that respect, it is clear from the records before the Court, including the Amended

Notices, that circumstances have evolved since Mr. Bowe swore his affidavits on July 27, 2019.

The Respondents argue that it is improper for the Minister to simply amend her Notices of

Summary Application, so as to reduce the scope of the Demands to take into account additional

documentation or information that has been received, without filing updated evidence reflecting

the receipt of that material.

[38] I find nothing problematic in the Minister’s approach. Particularly with the significant

scope of the Demands at issue in the present applications, and the length of time that has passed

in bringing these applications to a hearing, it is perhaps not surprising that that the Minister has

received additional material in response to certain Demands. In such circumstances, it is

appropriate for the Minister to reduce the scope of the applications. If, for that reason or others,

the Minister decides to abandon certain Demands or portions thereof, I see no basis for a strict

requirement to file updated evidence explaining the reason for the reduction in scope.

Page: 20

[39] Of course, depending on the particular issues and supporting evidentiary basis raised by a

respondent to a compliance application, the Minister may be unable to succeed without updated

evidence. For instance, if the respondent had adduced evidence that particular responses had

been provided subsequent to the filing of the compliance application, the Minister may be unable

to resist that assertion without additional updated evidence of her own. However, I do not

understand any of the Respondents’ arguments in these applications to be of that nature. As will

be canvassed later in these Reasons, Mr. Vaturi argues in T-254-19 that he has fully complied

with some of the outstanding Demands. However, the Court’s analysis of that argument involves

consideration of the details of the relevant Demands and of the material Mr. Vaturi provided in

response. That argument does not engage a dispute as to whether certain submissions were

actually made or received after the Minister filed her application and therefore will not turn on

the absence of updated affidavit evidence.

[40] In each of the six applications before the Court, Mr. Bowe provided evidence as of July

26, 2019, as to the then outstanding Demands, and swore that the Respondent had not provided

the information and documents responsive to those Demands. As will be explained immediately

below in my analysis of the Respondents’ arguments surrounding hearsay in Mr. Bowe’s

affidavits, any conflict in the evidence including meaningful challenge of Mr. Bowe’s testimony

would require the Court to consider the weight to be afforded to Mr. Bowe’s evidence. However,

with the exception of the November 2020 submission identified earlier in these Reasons, the

Respondents have not adduced evidence, through cross-examination of Mr. Bowe or otherwise,

that they have provided responses to the Demands and portions thereof that the Minister is

presently pursuing that have not been taken into account. The November 2020 submission

Page: 21

identified through cross-examination was addressed through the Minister’s subsequent

withdrawal of the relevant Demand.

[41] As previously noted, noncompliance with the Minister’s Demands is one of the statutory

conditions for issuance of compliance order under s 237.1(1), and the Minister bears the onus of

proof on this condition. However, in the absence of any conflicting evidence, I consider Mr.

Bowe’s evidence sufficient to meet this onus, notwithstanding that it has not been updated.

(3) Hearsay

[42] The Respondents’ second argument in relation to Mr. Bowe’s original affidavits

challenges their admissibility, or alternatively their weight, based on hearsay contained therein.

[43] The first paragraph of each of these affidavits is materially identical, reading as follows:

1. I am an International and Large Business Case Manager with

the Canada Revenue Agency (“CRA”), in the Edmonton Tax

Services Office. In the normal course of my duties I have conduct

of audit matters in respect of the Respondent. I have reviewed the

files and have personal knowledge of the matters hereinafter

deposed to, save and except that which is stated to be based on

information and belief, and where so stated, I verily believe it to be

true.

[44] In his cross-examination in each of T-252-19, T-254-19 and T-261-19, Mr. Bowe

admitted that a large number of paragraphs in his affidavit contained facts that were not based on

his personal knowledge. The Respondents also submit, correctly in my view, that in most cases

the affidavits do not state that these paragraphs are based on information and belief. In his cross-

Page: 22

examination in T-252-19 (Nader Ghermezian), Mr. Bowe confirmed that, in some cases, his

affidavit fails to identify which facts are based and information and belief.

[45] The Respondents therefore argue that the affidavits should be struck as inadmissible, on

the basis that they offend Rule 81 of the Federal Courts Rules, SOR/98-106, and, more

generally, include substantial amounts of inadmissible hearsay. Rule 81 provides as follows:

Content of affidavits

Contenu

81 (1) Affidavits shall be

confined to facts within the

deponent’s personal

81 (1) Les affidavits se

limitent aux faits dont le

déclarant a une connaissance

knowledge except on motions, personnelle, sauf s’ils sont

other than motions for

summary judgment or

summary trial, in which

statements as to the

deponent’s belief, with the

grounds for it, may be

included.

présentés à l’appui d’une

requête – autre qu’une requête

en jugement sommaire ou en

procès sommaire – auquel cas

ils peuvent contenir des

déclarations fondées sur ce

que le déclarant croit être les

faits, avec motifs à l’appui.

Affidavits on belief

Poids de l’affidavit

(2) Where an affidavit is made (2) Lorsqu’un affidavit

on belief, an adverse inference contient des déclarations

may be drawn from the failure fondées sur ce que croit le

of a party to provide evidence déclarant, le fait de ne pas

of persons having personal

knowledge of material facts.

offrir le témoignage de

personnes ayant une

connaissance personnelle des

faits substantiels peut donner

lieu à des conclusions

défavorables.

[46] In support of the inadmissibility of hearsay evidence, the Respondents rely on the

following explanation in the recent decision by the Federal Court of Appeal in Canada (Attorney

General) v Iris Technologies Inc, 2021 FCA 223 [Iris Technologies] at para 32:

Page: 23

32. The rules of evidence, both substantive and procedural,

matter. They matter because they are the foundation of the truth-

seeking role of the courts. They are also the foundation of fairness

in the adjudicative process. They are not to be overlooked, and

there are consequences if they are. Here, the affidavit was wafer

thin. It did not comply with the Ares v. Venner exception to the

hearsay rule, it did not measure up to the statutory exception

specifically designed to facilitate the introduction of documents in

the possession of the CRA and no notice was given under the

Canada Evidence Act of an intention to rely on business records.

Quite apart from the question of the admissibility of evidence in

any individual case, courts have an over-arching concern to ensure

that proceedings unfold in accordance with established laws of

evidence and procedure. This is the foundation of fairness. This

factor militates against admission of the affidavit.

[47] In Iris Technologies, the Federal Court of Appeal ultimately held that the affidavit at

issue was admissible under the common law exception to the hearsay rule based on reliability

and necessity (at para 33). In the case at hand, the Minister does not rely on that particular

exception but rather upon what it refers to as the corporate exception to the hearsay rule. The

Minister refers the Court to Twentieth Century Fox Home Entertainment Canada Limited v

Canada (Attorney General), 2012 FC 823 [Twentieth Century Fox], which considered the

admissibility of an affidavit of a CRA official, filed in response to a judicial review of a decision

under the ETA. Justice Phelan accepted into evidence the hearsay components of the affidavit,

holding that the official’s evidence was in the nature of “corporate” evidence, in that he acted in

a supervisory capacity, was responsible for his subordinates, and was therefore in a position to

know if the facts in his affidavit were true (at paras 23, 26). Twentieth Century Fox was affirmed

on appeal (2013 FCA 25), although without any commentary on this particular issue.

[48] Subsequently, in O’Grady v Canada (Attorney General), 2016 FC 9 [O’Grady], Justice

LeBlanc followed the approach of Twentieth Century Fox to the admissibility of hearsay

Page: 24

evidence, concluding that the affiant in O’Grady, a Director General with Statistics Canada, was,

based on her sphere of responsibility, in a position to know that the facts sworn in her affidavit

were true (at para 19). For similar reasons, Justice LeBlanc also concluded that the affiant was in

a position to swear the affidavit without providing evidence of the persons having personal

knowledge of the material facts (at para 20). The Court declined to draw an adverse inference

under Rule 81(2) and concluded that whether the respondent had provided the best evidence

went to the weight to be accorded to the affidavit by the judge on the hearing of the application

(at para 22).

[49] On appeal, in O’Grady v. Canada (Attorney General), 2016 FCA 221, the Federal Court

of Appeal again relied on Twentieth Century Fox and found no error in Justice LeBlanc’s

decision that the affidavit evidence was admissible, because the affiant, by virtue of her

responsibilities in the Government of Canada, was in a position to depose to the matters in

question without necessarily having personal knowledge (at para 10).

[50] In support of her reliance on this jurisprudence, the Minister refers to Mr. Bowe’s

affidavit and cross-examination evidence. In each of his affidavits, he swore that he was

employed as an International and Large Business Case Manager with CRA. In his cross-

examination in T-252-19 (Nader Ghermezian), he explained that this role involved the duties of a

team leader in CRA’s Audit and Compliance Programs Branch. In his cross-examination in T-

261-19 (Raphael Ghermezian), in the context of questioning about the mailing by a student

employee of a particular Requirement, Mr. Bowe described himself as the supervisor of the

employee, as the individual with the conduct of the audit, and as therefore possessing knowledge

Page: 25

of what happened within the audit file. In T-254-19 (Marc Vaturi), when questioned about

Requirement A-NG-0127, addressed to Mr. Vaturi on June 27, 2018 under the signature of an

individual named John Harasymchuk, Mr. Bowes referred to the Requirement being issued on

his recommendation as the case manager with responsibility for the audit.

[51] In my view, this evidence is sufficient to support the Minister’s reliance on the above

jurisprudence for the admissibility of Mr. Bowe’s affidavits under the corporate exception.

[52] In arriving at this conclusion, I have considered the Respondents’ submission that this

case law supports only the ability of a manager to testify about tasks performed by subordinates.

I disagree that the principle is as limited as the Respondents suggest. I note that, in Coldwater

First Nation v. Canada (Attorney General), 2019 FCA 292 [Coldwater First Nation], the Federal

Court of Appeal explained that evidence is admissible from departmental supervisors or similar

individuals about the activities of their department, the conduct of their employees, and events

taking place in relation to the department, where their knowledge is sufficiently direct and

personal, without having to be directly involved in the conduct, activities, and events (at para

42).

[53] Coldwater First Nation also explains that there is no general “department head”

exception to hearsay that would permit a departmental supervisor to introduce particular

statements made by departmental personnel for the truth of their contents (at para 42). In that

context, I note the Respondents’ submission that this principle does not permit Mr. Bowe to

provide testimony about the various dealings of members of the Ghermezian family. However, I

Page: 26

find compelling the Minister’s submission that, in large measure, Mr. Bowe’s affidavits serve to

set out his understanding of facts that provide relevant contextual background to the issuance of

the Demands. As the Minister is in some respects a stranger to these facts, which are known

principally to the Respondents themselves, CRA’s understanding of such facts may be of limited

significance to the outcome of these applications.

[54] Of course, some of the facts set out in Mr. Bowe’s affidavits could be determinative of

particular issues in these applications. For instance, as will be canvassed later in these Reasons,

the Respondents dispute whether the Demands were properly served upon them. Mr. Bowe’s

evidence explaining how CRA sent the Demands to the Respondents will be significant to the

outcome of this issue. However, his evidence on this issue of falls well within the principle that a

manager can testify to tasks performed by employees.

[55] Mr. Bowe’s evidence as to particular relationships among members of the Ghermezian

family or entities in which they are interested, or their respective business dealings, does not

necessarily have the same significance. As the Minister submits, this evidence may provide

context that assists the Court in understanding the background to the audits underlying the

Demands and in understanding the Demands themselves. However, if the understanding of

certain background facts set out in Mr. Bowe’s affidavit were incorrect, this would not

necessarily invalidate the Demand or a related application for a compliance order. Indeed,

Demands represent a means of obtaining information or documentation from the Respondents,

who are the best source of material that would enable CRA to either verify or change its

understanding.

Page: 27

[56] The Respondents’ arguments in support of their efforts to strike Mr. Bowe’s affidavit

challenge a large number of paragraphs, without identifying particular uses by the Minister of the

evidence in those paragraphs that would offend the distinction identified in Coldwater First

Nation. In the absence of such submissions, I find no basis to conclude that the affidavits, or

particular portions thereof, are inadmissible as adduced for a hearsay purpose outside the scope

of the jurisprudence upon which the Minister relies. Of course, the absence of direct and personal

knowledge on the part of Mr. Bowe could affect the weight to be afforded to his evidence,

particularly in the context of any compelling conflicting evidence or meaningful challenge to his

testimony in cross-examination. However, any such determinations as to weight should be made,

in relation to particular components of Mr. Bowe’s evidence upon which the Minister relies, in

analyzing the individual issues in the applications.

C. Whether the Respondents were required to provide documents and/or

information in response to a Request issued under s 231.1 of the Act

[57] One of the principal issues raised by the Respondents, which relates to most of the

applications, involves the proper statutory interpretation of s 231.1(1) of the Act and the

particular authority it affords to the Minister in her efforts to obtain information and

documentation from the Respondents. As will be explained in more detail below, the

Respondents submit that the Minister has conflated aspects of the authority provided by ss

231.1(1) and 231.2(1). The Respondents argue that many or all of the Requests purportedly

issued under s 231.1(1) sought information and/or documentation that the Minister was

authorized to compel only through a Requirement issued under s 231.2(1). The Requests do not

comply with certain technical requirements of s 231.2(1), and the Minister does not seek to rely

Page: 28

upon s 231.2(1) in support of those Requests. Therefore, the Respondents argue that the Requests

are invalid and cannot support the issuance of a compliance order under s 231.7.

[58] As a starting point, the Respondents again emphasize the Minister’s burden to satisfy the

statutory conditions under s 231.7, one of which is that the person against whom a compliance

order is sought was required under either s 231.1 or 231.2 to provide the access, assistance,

information or documents sought by the Minister. The Respondents submit that, if a Request

falls outside the authority provided by s 231.1, then the recipient was not required to comply, the

statutory condition is not met, and a compliance order cannot be issued in relation to that

Request. I find no basis to disagree with this aspect of the Respondents’ argument.

[59] I therefore turn to the particular bases on which the Respondents argue that Requests are

not authorized by s 231.1(1). Later in these Reasons, I will address other arguments surrounding

limitations on the Minister’s authority to issue Requirements under 231.2(1) related to unnamed

persons and foreign-based information. However, for purposes of the present issue, the

Respondents accept that, through a Requirement properly issued and served under s 231.2(1), the

Minister is authorized, for any purpose related to the administration or enforcement of the Act, to

require any person to provide any information or document. In contrast, the Respondents submit

that s 231.1(1) affords the Minister only an inspection power, i.e., authority (again, for any

purpose related to the administration or enforcement of the Act) to attend at the premises of a

taxpayer or other person to inspect books and records or other documents. The Respondents

argue that s 231.1(1) does not grant the Minister power comparable to s 231.2(1), either to: (a)

compel provision of documents outside the context of an inspection; or (b) compel the provision

Page: 29

of information other than information about the location or provenance of documentation sought

in the context of an inspection.

[60] As suggested by this explanation of the Respondents’ argument, there are two aspects to

their position, both of which they say are offended by the Requests. First, the Respondents

submit that, while an “authorized person” (the meaning of which will be canvassed later in these

Reasons) can rely upon s 231.1(1) to enter business premises and inspect documents that are kept

there, that section provides no authority for the authorized person to issue a written demand

compelling the provision of such documents. Second, the Respondents submit that s 231.1(1)

relates only to pre-existing documentation and does not authorize issuance of a written demand

compelling the recipient to answer questions or otherwise provide substantive (but previously

undocumented) information relevant to a taxpayer’s tax position. The Minister disputes both

aspects of the Respondents’ position, arguing that there is overlap in the powers afforded by ss

231.1 and 231.2 and that the Requests were all validly issued under s 231.1(1). In particular, the

Minister relies on s 231.1(1)(a) as authority for the Requests.

[61] While there is some overlap in the parties’ arguments in relation to these two aspects of

this issue, and I am conscious that the legislation must be interpreted holistically, in my view the

required analysis can be most easily explained by addressing these aspects individually. I will

first consider the question whether s 231.1(1)(a) authorizes the compulsion of documentation

through a written request, outside the context of a physical attendance at premises where an

inspection is being conducted.

(1) Compulsion of Documents

Page: 30

[62] As this issue is one of statutory interpretation, the outcome must be governed by the

modern approach to statutory interpretation, which requires that the words of the statute be read

in their entire context and in their grammatical and ordinary sense, harmoniously with the

scheme of the statute, the object of the statute, and the intention of Parliament. This approach

involves a textual, contextual and purposive analysis to find a meaning that is harmonious with

the statute as a whole (see Canada Trustco Mortgage Co v Canada, 2005 SCC 54 at paras 10-

11).

[63] Starting with the text of the statutory provision at issue, described as the point of

departure for any interpretive exercise (see eBay Canada Ltd v MNR, 2008 FCA 348 [eBay] at

para 32), s 231.1(1) reads as follows:

Inspections

Enquêtes

231.1 (1) An authorized

231.1 (1) Une personne

person may, at all reasonable

autorisée peut, à tout moment

times, for any purpose related raisonnable, pour l’application

to the administration or

enforcement of this Act,

et l’exécution de la présente

loi, à la fois :

(a) inspect, audit or

a) inspecter, vérifier ou

examiner les livres et

registres d’un

contribuable ainsi que

tous documents du

contribuable ou d’une

autre personne qui se

rapportent ou peuvent se

rapporter soit aux

renseignements qui

figurent dans les livres ou

registres du contribuable

ou qui devraient y figurer,

soit à tout montant

examine the books and

records of a taxpayer and

any document of the

taxpayer or of any other

person that relates or may

relate to the information

that is or should be in the

books or records of the

taxpayer or to any amount

payable by the taxpayer

under this Act, and

payable par le

Page: 31

contribuable en vertu de

la présente loi;

(b) examine property in an

inventory of a taxpayer and

any property or process of,

or matter relating to, the

taxpayer or any other

person, an examination of

which may assist the

authorized person in

b) examiner les biens à

porter à l’inventaire d’un

contribuable, ainsi que tout

bien ou tout procédé du

contribuable ou d’une autre

personne ou toute matière

concernant l’un ou l’autre

dont l’examen peut aider la

personne autorisée à établir

l’exactitude de l’inventaire

du contribuable ou à

determining the accuracy of

the inventory of the

taxpayer or in ascertaining

the information that is or

should be in the books or

records of the taxpayer or

any amount payable by the

taxpayer under this Act,

contrôler soit les

renseignements qui figurent

dans les livres ou registres

du contribuable ou qui

devraient y figurer, soit tout

montant payable par le

contribuable en vertu de la

présente loi;

and for those purposes the

authorized person may

à ces fins, la personne

autorisée peut :

(c) subject to subsection

231.1(2), enter into any

premises or place where

any business is carried on,

any property is kept,

anything is done in

connection with any

business or any books or

records are or should be

kept,

c) sous réserve du

paragraphe (2), pénétrer

dans un lieu où est

exploitée une entreprise,

est gardé un bien, est faite

une chose en rapport avec

une entreprise ou sont

tenus ou devraient l’être

des livres ou registres;

(d) and require the owner

or manager of the

d) requérir le propriétaire,

ou la personne ayant la

gestion, du bien ou de

l’entreprise ainsi que

toute autre personne

présente sur les lieux de

lui fournir toute l’aide

raisonnable et de

property or business and

any other person on the

premises or place to give

the authorized person all

reasonable assistance and

to answer all proper

questions relating to the

administration or

répondre à toutes les

questions pertinentes à

Page: 32

enforcement of this Act

and, for that purpose,

require the owner or

manager to attend at the

premises or place with the

authorized person.

l’application et

l’exécution de la présente

loi et, à cette fin, requérir

le propriétaire, ou la

personne ayant la gestion,

de l’accompagner sur les

lieux.

[64] Focusing on this language, the Respondents emphasize that s 231.1(1)(a), upon which the

Minister relies, empowers an authorized person to “inspect, audit or examine…” certain books,

records and other documents. The mid-amble in s 231.1(1) then states that “…for those

purposes…”, meaning the purposes set out in the preceding paragraphs including the right to

inspect, audit or examine, the authorized person is given additional powers under ss 231.1(1)(c)

and (d). Section 231.1(1)(c) entitles the authorized person to enter certain premises or places

where business is carried on or where property, books or records are kept. Section 231.1(1)(d)

requires the owner or manager of the property or business and any other persons at the premises

or place to give the authorized person assistance and answer questions. For that purpose, s

231.1(1)(d) also requires that the owner or manager attend at the premises or place with the

authorized person.

[65] Against that backdrop, the Respondents emphasize that the only obligation expressly

imposed by the language of s 231.1(1) is found in s 231.1(1)(d), where the use of the word

“require” mandates the provision of assistance, answering of questions, and attendance at the

premises or place with the authorized person. There is no express obligation imposed upon a

taxpayer or any other person to provide documents pursuant to a written demand in the nature of

the Requests.

Page: 33

[66] The Respondents also note the reference, in the introductory language of s 231.1(1), to

the powers of that section being exercisable “at all reasonable times,” which they submit is

consistent with an inspection power but not a power to issue a written demand.

[67] Turning to context, the Respondents’ argument compares s 231.1(1) to s 231.2(1), which

reads as follows:

Requirement to provide

documents or information

Production de documents ou

fourniture de

renseignements

231.2 (1) Notwithstanding any 231.2 (1) Malgré les autres

other provision of this Act, the dispositions de la présente loi,

Minister may, subject to

subsection (2), for any

purpose related to the

le ministre peut, sous réserve

du paragraphe (2) et, pour

l’application ou l’exécution de

administration or enforcement la présente loi (y compris la

of this Act (including the

collection of any amount

perception d’un montant

payable par une personne en

payable under this Act by any vertu de la présente loi), d’un

person), of a listed accord international désigné

international agreement or, for ou d’un traité fiscal conclu

greater certainty, of a tax

treaty with another country,

avec un autre pays, par avis

signifié à personne ou envoyé

by notice served personally or par courrier recommandé ou

by registered or certified mail, certifié, exiger d’une

require that any person

provide, within such

reasonable time as is

stipulated in the notice,

personne, dans le délai

raisonnable que précise l’avis

:

(a) any information or

additional information,

including a return of

income or a

a) qu’elle fournisse tout

renseignement ou tout

renseignement

supplémentaire, y

compris une déclaration

de revenu ou une

déclaration

supplementary return; or

supplémentaire;

Page: 34

(b) any document.

b) qu’elle produise des

documents.

[68] Section 231.2(1) expressly empowers the Minister, for purposes including those related

to the administration or enforcement of the Act, to require any person to provide any information

or any document. Unlike s 231.1(1), this language expressly imposes such an obligation upon the

recipient of a Requirement under s 231.2(1). The Respondents submit this comparison suggests

that, where Parliament intends to require a person to provide a document, it does so expressly

and not by implication.

[69] The Respondents also observe that the Minister’s power in s 231.2(1) is subject to a

number of express limitations. As will be canvassed in more detail in relation to other issues later

in these Reasons, these limitations on the Minister’s power include that it: (a) may be exercised

only by the Minister (or a delegate duly authorized under s 220(2.01)); (b) cannot be exercised in

relation to unnamed persons without prior judicial authorization; and (c) may be exercised only

through a notice which specifies a reasonable time for compliance. The Respondents refer to

these limitations as “guardrails” intended to protect taxpayers and other recipients of

requirements issued under s 231.2(1). They submit that the express but somewhat circumscribed

power to demand documentation and information under s 231.2(1), and the absence of similar

guardrails in s 231.1(1), suggest that s 231.1(1) is not intended to authorize the issuance of

demands in the same manner as s 231.2(1).

[70] I note the Minister’s reliance on Redeemer Foundation v Canada (National Revenue),

2008 SCC 46 [Redeemer], in which the majority of the Supreme Court of Canada rejected a

Page: 35

somewhat similar argument. There, the Court found that the limitation in s 231.2, preventing the

Minister from obtaining information about unnamed persons without judicial authorization, did

not prohibit the Minister from seeking the same information under s 231.1 (at paras 14-15).

Nevertheless, in my view, there is logic to the Respondents’ submissions based on the text and

context of the statutory provisions in issue and, in the absence of a purposive analysis, I might be

persuaded by the Respondents’ arguments.

[71] However, as emphasized by the Minister, eBay explains the importance of statutory

interpretation examining the purpose of the provision in question and the statute as a whole so

that, whenever possible, the text of the statute is interpreted in a manner which furthers that

purpose (at para 32). In Minister of National Revenue v Cameco Corporation, 2019 FCA 67

[Cameco], one of the leading authorities on the interpretation of s 231.1, the Federal Court of

Appeal states that the purpose of s 231.1 is to facilitate the Minister’s unencumbered and

immediate access to all books, records and information of the taxpayer (at para 27). More

broadly, eBay explains that the Minister’s broad powers in supervising the regulatory scheme of

the Act are a function of Canada’s self-reporting tax system (at para 34):

34. The Supreme Court of Canada has provided additional

guidance which is relevant to the interpretation of the Act’s

enforcement powers. Thus, in R. v. McKinlay Transport Ltd.,

[1990] 1 S.C.R. 627, a case involving a challenge under section 8

of the Canadian Charter of Rights and Freedoms to the Minister’s

power to require the production of documents, Justice Wilson

noted (at 648) that the major drawback of a self-reporting tax

system such as ours is that some taxpayers will attempt to evade

tax, by failing to report income, for example. Accordingly, she

said:

[T]he Minister of National Revenue must be given

broad powers in supervising this regulatory scheme

to audit taxpayers’ returns and inspect all books and

records which may be relevant to the preparation of

Page: 36

these returns. The Minister must be capable of

exercising these powers whether or not he has

reasonable grounds for believing that a particular

taxpayer has breached the Act. … A spot check or a

system of random monitoring may be the only way

in which the integrity of the tax system can be

maintained.

[72] Cameco also recognizes that the legislative purpose, however important, cannot replace

the language of the statute that Parliament has chosen (at para 27). However, the Minister argues

that the words “inspect, audit or examine…” in s 231.1(1)(a) are broad terms encompassing a

range of activities, which logically include requesting the provision of documents. This

submission is consistent with the statutory interpretation analysis performed in Tellza, in relation

to the comparable provision of the ETA (s 288(1)), which took into account not only the context

and purpose of the ETA as part of Canada’s self-reporting and self-assessing taxation regime, but

also the plain, grammatical, dictionary meaning of “inspect, audit, or examine” (at para 13). The

Court concluded that the inspection power afforded by this provision necessarily entailed the

power to request or require documents to be provided so that the authorized person can conduct

an inspection, audit or examination effectively (at para 18).

[73] Indeed, among the jurisprudence relied upon by both parties in support of their respective

positions on the statutory interpretation issue, Justice Fuhrer’s recent decision in Tellza is the

authority which most directly addresses this aspect of the issue. While Tellza involved an

application for judicial review under the ETA, challenging a written request to obtain electronic

accounting data, rather than a compliance application under the Act, it is apparent from the

decision that the applicant in that case advanced a position essentially identical to that taken by

the Respondents in the case at hand. Given the significance of this particular authority for the

Page: 37

issue now before the Court, it is worthwhile to reproduce a substantial portion of Justice Fuhrer’s

description of the applicant’s position and her reasons for rejecting it (at paras 11-18):

11. Contrary to Tellza’s position that the October 4, 2019 letter

was a “requirement” and not a “request” and hence, should have

issued under the ETA s 289(1), instead of the ETA s 288(1), I am

not persuaded that it was unreasonable for the CRA to issue the

letter under the latter provision instead.

12. The parties do not disagree that the statutory interpretation of

a provision must be consistent with the text, context and purpose of

the provision: Vavilov, above at paras 117-120; see also Rizzo &

Rizzo Shoes Ltd (Re), [1998] 1 SCR 27 at para 21. The role of the

reviewing court, however, on a reasonableness review involving

statutory interpretation is not to “undertake a de novo analysis of

the question or ‘ask itself what the correct decision would have

been’”: Vavilov, above at para 116, citing Law Society of New

Brunswick v Ryan, 2003 SCC 20 at para 50.

13. Taking into account the context and purpose of the ETA, as a

self-reporting and self-assessing taxation regime, as well as the

plain, grammatical, dictionary meaning of “inspect, audit, or

examine”, in my view the CRA’s decision to rely on subsection

288(1) as the basis for issuing the October 4, 2019 letter was

justified. I add that Tellza did not adduce any evidence

contradicting that the letter was issued by an “authorized

person,” as contemplated in the relevant provision.

14. Subsection 288(1) essentially permits the authorized person

to “inspect, audit or examine the documents, property or

processes” of persons with record keeping and reporting

obligations under the ETA, including in connection with any

claimed rebate or refund such as input tax credits or ITCs. Further,

subsection 288(1) and the remainder of section 288 deal with the

conditions under which the authorized person “may” enter business

or commercial premises to carry out these functions.

15. Tellza contends that the “inspection power” under subsection

288(1) is more limited in scope than the “requirement power”

under subsection 289(1) of the ETA, in that the authorized person

is not empowered to request or require information to be provided.

Although I do not disagree with the general proposition about the

more limited scope of subsection 288(1), I cannot agree with the

latter contention for several reasons.

Page: 38

16. First, the ability to inspect premises is permissive; the

provision does not mandate in-person inspections, audits or

examinations. In other words, the inspection power is not limited

to a physical location or locations but rather, in my view, relates to

the person or persons whose documents, property or processes can

be inspected, audited or examined. The purpose of this activity also

is more limited, as contrasted with subsection 289(1), to

determining obligations under Part IX (GST) of the ETA or the

amount of any rebate or refund to which a person is entitled.

Subsection 289(1), on the other hand, operates “[d]espite any other

provision of this Part” and applies more broadly to “any person”

within the confines of the stated purpose. That purpose also is

broader, however, and described as “…any purpose related to the

administration or enforcement of a listed international agreement

or this Part [i.e. Part IX (GST)], including the collection of any

amount payable or remittable under this Part by any person…”

17. Second, the applicable definitions of “document” and

“property” in the ETA s 123(1) are not restricted to physical things.

For example, a “document” is defined as including “money, a

security and a record,” while a “record” is defined as including

“…any other thing containing information, whether in writing or

in any other form.” [Emphasis added.] In addition, “property” is

defined as meaning “any property, whether real or personal,

movable or immovable, tangible or intangible, corporeal or

incorporeal, and includes a right or interest of any kind, a share and

a chose in action, but does not include money.”

18. I thus find that on a plain reading of the applicable definitions,

within the context and purpose of the ETA, subsection 288(1)

indeed grants an authorized person the power to request or require

a taxpayer to provide information in any form. The inspection

power necessarily entails, in my view, the power to request or

require documents to be provided so that the authorized person can

conduct the inspection, audit or examination effectively. I further

find that the authorized person is not limited, in a modern,

electronic era, to an inspection, audit or examination of the

taxpayer’s documents and records at their premises.

[74] I find this analysis compelling and see no reason to depart from it or to decline to apply it

to the provisions of the Act at issue in the case at hand. In so concluding, I have considered the

Respondents’ argument that, because Tellza involved a judicial review, it assessed the relevant

Page: 39

statutory interpretation on the standard of reasonableness, rather than arriving at a definitive

interpretation on the standard of correctness. While the Respondents’ point is noteworthy, I agree

with the Minister’s response, explaining that Tellza is accompanied by a related decision in

Minister of National Revenue v Tellza, 2021 CarswellNat 3964, CanLII 76055 [Tellza No 2] on a

compliance application.

[75] The judicial review application and compliance application, in Tellza and Tellza No 2

respectively, were argued on the same date, and both decisions bear the same date. In Tellza No

2, the Court granted the compliance application, ordering the respondents in that matter to

provide the electronic accounting data that was requested by CRA under s 288(1) of the ETA in

what appears to have been a follow-up to the request that was under judicial review in Tellza.

Tellza No 2 is a recitals-type decision and therefore does not include detailed reasons. However,

it states the Court’s findings, including that, by requests made under s 288(1) of the ETA, the

respondents were required to provide the electronic accounting data, and expressly describes the

Court’s satisfaction that this condition has been met as having regard to the findings in Tellza.

[76] I therefore agree with the Minister’s submission that the combination of these decisions

demonstrates Justice Fuhrer concluding not only that the statutory interpretation set out in detail

in Tellza was reasonable but also that it is the correct interpretation of the relevant provision.

[77] The Minister cites a number of other cases, including appellate authority, in support of

her position on this aspect of the interpretation of s 231.1(1) of the Act. While those cases may

contain language or involve facts that are arguably consistent with the Minister’s position, none

Page: 40

of them other than Tellza demonstrates the precise issue being raised by the parties and subjected

to judicial analysis. However, I consider the conclusion in Tellza (at para 18), that the authorized

person is not limited, in a modern, electronic era, to an inspection, audit or examination of the

taxpayer’s documents and records at their premises, to be consistent with appellate authority

identified by the Minister. Interpreting the compliance provisions of the Act in eBay (at para 42),

the Federal Court of Appeal relied on Society of Composers, Authors and Music Publishers of

Canada v Canadian Assn of Internet Providers, 2004 SCC 45, in concluding that courts should

interpret legislation in light of contemporary technology and, if necessary, “transpose” its terms

to take into account the changed technological environment in which it is to be applied.

[78] In conclusion on this aspect of the statutory interpretation issue, I am satisfied that s

231.1(1) entitles an authorized person to demand provision of documentation without physically

attending at a place or premises where the documentation is kept.

(2) Compulsion of Information

[79] I therefore turn to the second aspect of the statutory interpretation issue, whether s

231.1(1) authorizes compulsion of only pre-existing documentation or whether it authorizes

issuance of a demand compelling the recipient to provide, through written answers to questions,

substantive information relevant to a taxpayer’s tax position.

[80] Again, the Respondents’ submissions focus substantially upon the text of s 231.1(1) and

in particular s 231.1(1)(a), which I will reproduce again for ease of reference:

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231.1 (1) An authorized

231.1 (1) Une personne

person may, at all reasonable

autorisée peut, à tout moment

times, for any purpose related raisonnable, pour l’application

to the administration or

enforcement of this Act,

et l’exécution de la présente

loi, à la fois :

(a) inspect, audit or

a) inspecter, vérifier ou

examiner les livres et

registres d’un

contribuable ainsi que

tous documents du

contribuable ou d’une

autre personne qui se

rapportent ou peuvent se

rapporter soit aux

renseignements qui

figurent dans les livres ou

registres du contribuable

ou qui devraient y figurer,

soit à tout montant

examine the books and

records of a taxpayer and

any document of the

taxpayer or of any other

person that relates or may

relate to the information

that is or should be in the

books or records of the

taxpayer or to any amount

payable by the taxpayer

under this Act, and

payable par le

contribuable en vertu de

la présente loi;

[81] The Respondents emphasize that this text applies the power to inspect or examine to two

categories of material. The first category is the books and records of the taxpayer, and the second

category is any document of the taxpayer or of any other person that relates or may relate to

certain types of information. While the language of this second category references information,

the Respondents submit that reference cannot be read in isolation from the immediately

preceding language. The second category of material that can be compelled is “…any document

of the taxpayer or of any other person that relates or may relate to the information…” [Emphasis

added].

[82] The Respondents submit that it is not possible to interpret this language as authorizing

compulsion of information other than information that is contained in a document. They also

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compare this language with that of s 231.2(1), which expressly authorizes the Minister to require

provision of information, as opposed to a document relating to information.

[83] As with the first aspect of the statutory interpretation issue, the Respondents’ submissions

do not particularly engage with the statutory purpose, which the Minister again emphasizes

involves the provision of broad powers to audit taxpayers in supervising Canada’s self-reporting

and self-assessing regulatory scheme. As with the first aspect, this purpose militates in favour of

a generous interpretation of the scope of s 231.1(1)(a), but achieving the purpose cannot replace

the language of the statute that Parliament has chosen (see Cameco at para 27). Under the first

aspect, I agreed with the Minister that the words “inspect, audit or examine…” in s 231.1(1)(a)

were sufficiently broad that, in keeping with the statutory purpose, they encompassed demands

for the provision of documents. However, notwithstanding the importance of that purpose, I

agree with the Respondents’ position that the words of s 231.1(1)(a) are not capable of being

interpreted to encompass demands for information that is not contained in a document.

[84] As the Respondents submit, Cameco provides strong jurisprudential support for their

position. That case is not completely on point, as it addressed whether the Minister can compel

oral answers to questions posed by CRA auditors (see para 1), as opposed to written answers as

are at issue in the matters at hand. However, it is difficult to escape the conclusion that the

reasoning of the Federal Court of Appeal, rejecting the Minister’s position that s 231.1(1)(a)

provides authority to compel oral answers (see paras 1 and 12), applies also to compelling

written answers.

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[85] As in in the present matters, the respondent in Cameco argued that, relying on the plain

and ordinary meaning of the text in s 231.1(1)(a), the powers conferred under that section are in

respect of documented information, not any information (see para 10). In response, the Minister

argued that the ability to compel oral responses to questions was implicit in the use of the word

“audit” in that section (see para 16). The Federal Court of Appeal rejected that submission,

noting that the power is to “inspect, audit or examine” and that neither “inspect” nor “examine”

suggests a power to compel a person to answer questions. The Court reasoned that, when two or

more words that are capable of analogous meetings are coupled together, they take their colour

from each other, the more general being restricted to a sense analogous to the less general (at

para 18).

[86] As part of its textual analysis, Cameco also references s 231.1(1)(d). The parties disagree

on whether Cameco engages in analysis of s 231.1(1)(d). In reliance on paragraph 21 of the

decision, the Minister argues that it does not. In paragraph 21, the Court emphasizes that the

disposition of the appeal turns on the scope of the power in s 231.1(1)(a) and that the extent to

which s 231.1(1)(d) served as an independent power to compel attendance and answer questions

of the nature proposed by the Minister in that case was not argued in the appeal.

[87] Similarly, in the case at hand, the Minister emphasizes that she relies on s 231.1(1)(a),

not s 231.1(1)(d), in support of her position that she can compel written answers to questions.

Thus, as in Cameco, the Court need not arrive at a definitive conclusion on the meaning of s

231.1(1)(d). That said, I disagree with the Minister’s submission that Cameco did not engage in

analysis of s 231.1(1)(d). Such an analysis is clearly present in the decision and to some extent

Page: 44

informed the Court’s interpretation of s 231.1(1)(a). For that reason, it is worthwhile to canvas

briefly that analysis.

[88] Section 231.1(1)(d) requires the owner or manager, and any other person on the premises

or place where s 231.1(1) powers are exercised, not only to give the authorized person all

reasonable assistance but also “…to answer all proper questions relating to the administration or

enforcement of this Act…”. Cameco explains that this assistance is distinct from responding to

general questions with respect to tax liability or issues arising from the audit. The obligation to

assist is in aid of the inspection, search, examination or review of records (at para 22). Questions

may be asked, and the assistance of the Court can be sought to compel answers, but this relates to

the taxpayer’s knowledge of the provenance and location of records (at para 13). Cameco relies

on this interpretation of s 231.1(1)(d) to support its conclusion that there is no implied

requirement to answer questions in s 231.1(1)(a). It reasons that such an interpretation would

render unnecessary the obligation in s 231.1(1)(d) to answer questions, even of the limited scope

contemplated by that section, and interpretations that render any portion of the statute

meaningless or redundant should be avoided (at para 23).

[89] Turning to context, Cameco notes the significance of s 231.1 immediately following s

230, which imposes an obligation to keep books and records at a person’s place of business. The

Court reasons that the purpose of the two provisions when taken together is to allow the Minister

to independently verify, based on such records, tax liability and compliance with the Act. The

Court concludes that independent verification through an audit is different from compelling

answers to questions (at para 24).

Page: 45

[90] In its purposive analysis, Cameco emphasizes the point (cited earlier in these Reasons)

that, however important the statutory objective of empowering the Minister to verify information

received in the context of Canada’s self-reported taxation system, that objective cannot replace

the language of Parliament (at para 27). The Court also notes that s 231.1(1)(a) is not the only

source of the Minister’s investigative powers, citing other portions of the compliance provisions

including the Minister’s power to seek information and documents under s 231.2 (at para 29).

[91] In countering the Respondents’ reliance on Cameco, the Minister notes that the Court’s

purposive analysis includes a reference to the purpose of s 231.1 including the facilitation of

access to information of a taxpayer (at para 27):

27. The purpose of section 231.1 is to facilitate the Minister’s

unencumbered and immediate access to all books, records and

information of the taxpayer and, in section 231.7, to provide

recourse to the authority of the Court in the face of a refusal.

[Emphasis added]

[92] However, I do not read this statement in Cameco as suggesting that s 231.1 affords the

Minister access to undocumented information, as that interpretation would be inconsistent with

the overall conclusion in Cameco, that the Minister cannot compel oral answers to questions.

Similarly, at the commencement of its textual analysis, Cameco describes the focus of the

powers in paragraphs 231.1(1)(a) and (b) as squarely on the ability of the Minister to access

“…information that is documented, or ought to be documented, in the books and records of the

taxpayer” (at para 15). Again, taken in context, I do not read this description as suggesting the

Minister can access undocumented information. Indeed, immediately thereafter, the Court notes

that references to “books and records” and “documents” course consistently through s 231.1(1)

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and cites BP Canada Energy Co v Minister of National Revenue, 2017 FCA 61 [BP Canada] at

para 58, describing the section as encompassing documents which relate or may relate to the

information that is or should be in the records of the taxpayer.

[93] The statutory interpretation in Cameco concludes with consideration of the legislative

history of paragraph 231.1(1)(a), which the Court notes resulted from 1986 amendments

intended to provide clear limits to CRA’s enforcement powers. At paragraph 32 the Court sets

out portions of the predecessor to the current section 231.1(1) (then s 231) and focuses in

particular on certain language in s 231(c):

(c) require the owner or manager of the property or business and

any other person on the premises or place to give him all

reasonable assistance with his audit or examination and to answer

all proper questions relating to the audit or examination either

orally or, if he so requires, in writing, on oath or by statutory

declaration and, for that purpose, require the owner or manager to

attend at the premises or place with him, and

[Emphasis in Cameco]

[94] Referring to the language in s 231(c) that is no longer found in the current s 231.1(1)(d),

Cameco concludes that its reasoning in rejecting the Minister’s position is supported by the

elimination of the word “orally” from the duty to answer questions, as well as the elimination of

the obligation to give answers under oath or by statutory declaration.

[95] As previously noted, I appreciate that the issue before the Federal Court of Appeal in

Cameco related to demands for information to be provided orally, not in writing, and that the

Court’s analysis was undertaken, and its reasons written, in that context. However, the above

analysis of the legislative history appears equally supportive of the conclusion that the Minister

Page: 47

cannot compel written answers to questions. The language that Parliament eliminated in the

transition from s 231(c) to s 231.1(1)(d) included not only the word “orally” but also the words

“in writing” and, as Cameco notes, the reference to answers by statutory declaration.

[96] Moreover, the Minister has identified no point of principle that would militate in favour

of a different result in the context of demands to answer questions in writing rather than orally.

In my view, the distinction underlying the reasoning in Cameco is between documented and

undocumented information. Section 231.1(1)(a) empowers the Minister to compel provision of

the former but not the latter.

[97] The Minister cites a number of authorities in support of her position that the section

authorizes demands for information, as distinct from documentation, and therefore compels the

recipient of a demand to answer questions in writing. However, as with the first aspect of the

statutory interpretation of s 231.1(1), while those cases may contain language or involve facts

that are arguably consistent with the Minister’s position, they do not (with one exception, which

I will canvass shortly) demonstrate the issue presently before the Court having been raised by the

parties and subjected to judicial analysis.

[98] For instance, the Minister relies on the recent decision of the Federal Court of Appeal in

Friedman v Minister of National Revenue, 2021 FCA 101 [Friedman], which involved a demand

issued by the Minister under s 231.1(1), enclosing a questionnaire which asked for details of the

appellant taxpayers’ property. The taxpayers sought judicial review of this demand, and the

Page: 48

Minister sought a compliance order. The Minister prevailed before the Federal Court, and the

Federal Court of Appeal dismissed the taxpayers’ appeal (see paras 1-3).

[99] The Minister cites Friedman, because it is apparent that the questionnaire that formed the

basis of the Minister’s s 231.1(1) demand sought, at least in part, answers to questions, i.e.,

information as distinct from documentation (see, e.g., para 9). I do not disagree with this

interpretation of the facts underlying Friedman. However, there is no indication in the decision

that the issue presently before this Court, whether s 231.1(1) authorizes the Minister to compel

answers to questions, was raised or argued in that appeal. Friedman provides no analysis of this

issue and therefore cannot be regarded as authority supporting the Minister’s position.

[100] The Minister also relies on the decision in Redeemer, referencing language employed by

the Supreme Court of Canada in its interpretation of s 231.1(1)(a) that she argues supports her

position (at paras 13 and 24):

13. On its face, this section covers the situation at bar. It

authorizes the Minister to examine “information that is or should

be” in the Foundation’s books. The information at issue regarding

third party taxpayers who had contributed to the Foundation was

either in the Foundation’s books, or “should” have been in its

books pursuant to the broad record-keeping requirements created

by s 230(2).

….

24. As mentioned above, s 231.1(1) is broadly worded. It allows

access to “information that is or should be in the books or records

of the taxpayer”. It thus gives access to information about third

parties that is required to be kept by the taxpayer, as well as

information that may not be required to be kept but happens to be

in the taxpayer’s records.

[Emphasis in Redeemer]

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[101] As the Minister submits, Redeemer refers to the Minister having access to “information”

and does not state that such information must be contained in a document to be compellable.

However, again, I do not read this decision as providing any analysis of the particular issue now

before this Court. Redeemer does not refer to the fact that, in the s 231.1(1)(a) description of

what an authorized person may inspect, audit or examine, the phrase “information that is or

should be in the books or records of the taxpayer” is only part of the longer phrase “any

document of the taxpayer or of any other person that relates or may relate to information that is

or should be in the books or records of the taxpayer”. Nor is there any indication in the decision

that this issue was raised and argued before the Court.

[102] Indeed, as pointed out by the Respondents at the hearing of these applications, the

decision of the Federal Court of Appeal (Minister of National Revenue v Redeemer Foundation,

2006 FCA 325 [Redeemer FCA]), which was under appeal in Redeemer, makes clear that this

issue was not raised. The information at issue in Redeemer was a list of charitable donors to the

appellant taxpayer. In Redeemer FCA, the Court explains as follows (at para 36):

36. Section 231(2) requires the Foundation to maintain certain

records to enable the Minister to ascertain if there are grounds for

revoking the Foundation's registration as a charity, and to verify

that the donations which are made to it are eligible for deduction.

The Foundation is specifically required to maintain duplicates of

all receipts which it issues to donors, including the name and

address of the donor. (See Income Tax Regulations, C.R.C., c. 945

at para. 3501(1)(g)). In short, the Foundation was required by law

to maintain the information which the CRA auditor asked it to

produce. As for whether the information was maintained in the

form in which it was requested, i.e., a list, the demand was not

resisted on that basis, perhaps because it is inconceivable that a

charity would not maintain a list of its donors for various purposes

related to fundraising.

[Emphasis added]

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[103] While it is not entirely apparent whether the list of donors was a pre-existing document

when demanded by the Minister, it is clear that the appellant taxpayer was not raising the

statutory interpretation issue that is presently before the Court in these applications.

[104] As I noted above, the Minister relies on one authority that arguably supports her position.

In the recent decision in Canada (National Revenue) v Miller, 2021 FC 851 [Miller], my

colleague, Justice Walker, considered an argument similar to the one raised by the Respondents

in the case at hand. Miller involved an application for a compliance order, related to outstanding

information and documentation sought in a demand issued by CRA under s 231.1 of the Act.

Among other arguments raised by the taxpayer, he relied on Cameco to resist the Minister’s

submission that paragraph 231.1(1)(a) empowered her not only to access the taxpayer’s books

and records but also to request written information relating to such books and records (see para

24). The taxpayer emphasized the references in Cameco to the Minister being entitled to ask

questions related to the provenance, location and maintenance of books and records. He argued

that this authority limited the Minister’s ability to ask questions in reliance on s 231.1 to

information relating to those concepts (see para 31).

[105] The Court rejected this argument, concluding that it ignored two elements of the

reasoning in Cameco. First, Cameco notes the importance of the words used by Parliament,

including the reference in s 231.1(1)(a) to information that should be in the books and records of

the taxpayer. Miller concludes that, if the information should be in the taxpayer’s books and

records, the Minister must be able to gain access to that information in reliance on s 231.1(1) (at

para 31). Second, Miller notes that Cameco reflects a concern as to the scope of the Minister’s

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intended oral questions in that case, which did not relate to information that should have been set

out in the taxpayer’s books and records (at paras 32-33).

[106] Miller then applies its statutory interpretation analysis to the Minister’s particular

requests for information at issue in that case, arriving at different results depending upon whether

the particular information could be characterized as that which should have been documented in

the taxpayer’s books and records. For instance, the Minister sought the terms and conditions of

what appeared to be an oral contract to which the taxpayer was a party. Reasoning that this

request related to information that the taxpayer should have documented in his records, the Court

concluded that this information was proper subject matter for a compliance order (at paras 44-

45). In contrast, the Court declined to include in the order a request for a narrative regarding the

development of the taxpayer’s relationship with the other party to the contract, concluding that

such a description is not information that should be in his books and records (at para 54).

[107] The Respondents note that Miller is under appeal and submit that its reasoning is

inconsistent with that of the Federal Court of Appeal in Cameco and fails to properly parse the

language of s 231.1(1).

[108] In my view, Miller correctly focused upon Cameco as the leading authority governing the

statutory interpretation issue currently before the Court. However, I respectfully disagree with

the conclusion in Miller that Cameco teaches that the governing consideration is whether the

information sought by the Minister should have been in the taxpayer’s books and records. As

noted earlier in these Reasons, Cameco (at para 15) cites the explanation in BP Canada (at para

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58), consistent with the text of s 231.1(1), that the section encompasses documents which relate

or may relate to the information that is or should be in the records of the taxpayer.

[109] Cameco also notes the distinct references in s 231.1 to “books and records” and

“documents” (at para 15). As I read the compliance provisions of the Act, the meaning of “books

and records” is informed by s 230, which requires taxpayers to keep records and books of

account in such form and containing such information as will enable determination of, inter alia,

taxes payable under the Act. The term “document” is in turn defined by s 231 to include money,

security and a record. Therefore, “document” is a broader term than “record” and, at least

potentially, encompasses records within the meaning of s 230 as well as other forms of

documentation that may not fall within that meaning.

[110] Against that backdrop, if an authorized person seeks to compel the provision of

documentation that does not qualify as “the books and records of the taxpayer”, and is relying on

the potentially broader power to compel “any document of the taxpayer or of any other person

that relates or may relate to the information that…should be in the books or records of the

taxpayer”, then I would agree with the reasoning in Miller that it is essential to ask whether the

nature of the information is such that it should be in the books or records. However, an

affirmative answer to this question is a necessary but not a sufficient condition for reliance on

that power. The authorized person must also be seeking a document that relates or may relate to

this information, as it is clear from the language of s 231.1(1)(a) that it is a document that the

person is empowered to inspect, audit or examine. To the extent that Miller concludes otherwise,

I respectfully decline to follow it.

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[111] Having considered the various arguments and authorities, my conclusion on the second

aspect of the statutory interpretation issue is that the Respondents are correct in their position

that s 231.1 of the Act does not authorize issuance of a demand compelling the recipient to

provide, through written answers to questions, substantive information relevant to a taxpayer’s

tax position.

(3) Conclusion on Statutory Interpretation of s 231.1(1) of the Act

[112] Before leaving this issue, I note that in some cases, the Respondents have framed their

arguments on this issue as a submission that the Requests are in “pith and substance” in the

nature of Requirements. The Respondents further argue that, if reframed as Requirements, they

would nevertheless be invalid for various technical reasons (for instance, related to the authority

of the issuing individual or the method of service). In my view, the appropriate analysis is not to

identify the “pith and substance” of the Request and then potentially consider whether it

complies with s 231.2 as a Requirement. Rather, the required analysis is that performed above,

i.e., considering whether s 231.1 provides the authority for the Request. I note that I do not

understand the Minister to be arguing that, to the extent she does not succeed in full on the

statutory interpretation issue, the Requests can be rehabilitated by analysing them as

Requirements. Therefore, to the extent a particular Request may be invalid because, consistent

with my conclusions above, it demands provision of previously undocumented information, I do

not intend to examine whether that Request would be validly issued if treated as a Requirement

under s 231.2.

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[113] As will be apparent from the above analyses and conclusions, the parties have met with

divided success on the issue surrounding statutory interpretation of the scope of s 231.1(1). As

will be explained later in these Reasons when addressing the “severance” issue, my conclusion is

that, if certain Demands include both valid and invalid items, I have discretion to order

compliance with the valid portions, notwithstanding the invalidity of other portions. It will

therefore be necessary for the Court to decide how the conclusions on the statutory interpretation

issue apply to individual items in the Requests and, as a result, which items are valid because

they represent a demand for documentation and which are not valid because they represent a

demand for undocumented information.

[114] At the conclusion of the hearing, recognizing that some form of divided success on this

issue was a possible result in these applications, I raised with counsel the question of whether the

Court should perform this process, applying the statutory interpretation conclusions to the details

of the individual items in the Requests, without receiving further submissions from the parties.

There may be some items where this process is straightforward and others where it is less so, as

there could be a debate on whether a particular item falls into the valid or invalid category.

[115] The Minister’s counsel took no position on the process question but explained that the

Minister was prepared to provide additional submissions if that would be of assistance to the

Court. The Respondents’ counsel advised that they would prefer an opportunity to provide

submissions. Now that the outcome of the statutory interpretation issue is known, my view is that

seeking further submissions is appropriate and will be useful to the Court. As such, when I

analyze the individual Requests and Requirements later in these Reasons, I will not be applying

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the statutory interpretation conclusions in that analysis. At the end of these Reasons, after

addressing the other issues before the Court, I will return to the process for seeking further

submissions to progress these compliance applications to conclusion.

D. Whether the individuals who issued the Demands were authorized to do so

[116] There is a distinction between those who are authorized to issue Requests under s 231.1

of the Act and those who are authorized to issue Requirements under s 231.2. Section 231.1(1)

confers such authority upon an “authorized person”, a term which is defined by s 231 to mean “a

person authorized by the Minister for the purposes of sections 231.1 to 231.5”. In contrast, s

231.2 confers authority upon the Minister herself, although s 220(2.01) allows the Minister to

authorize an officer or a class of officers to exercise powers of the Minister under the Act.

[117] For each of the Requests and Requirements at issue in these applications, the

Respondents submit that the applications must fail, because the Ministers failed to adduce

evidence that the Request or Requirement was authorized in accordance with the provisions

described above. Essentially, the Respondents take the position that the Minster bears a burden

of proof on this point and has failed to meet that burden.

[118] In response, the Minister relies on a rebuttable presumption of validity identified in

applicable jurisprudence. This presumption was explained in Branigan v Canada (Minister of

Citizenship & Immigration), 2004 FC 245, which considered an argument that a report under s

44(1) of the Immigration and Refugee Protection Act, SC 2001, c-27 [IRPA] and s 44(2) referral

to the Immigration Division for an admissibility hearing were invalid, because they did not

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disclose that they were issued by persons designated by the relevant minister, or to whom the

minister had delegated authority under IRPA. In rejecting this argument, Justice Lemieux held as

follows (at para 9):

9. There is no merit to this argument because there is a

presumption of validity and the applicant has adduced no evidence

to impugn the authority of those persons who issued the

documents. I need only cite a few paragraphs of what Justice

Létourneau said in Canada (Minister of Human Resources

Development) v. Weimer [1998] F.C.J. 809 (C.A.).

12. The approval of Mrs. Kukat's application for division of

earnings was given on an official form issued by the Division

of Unadjusted Pensionable Earnings ("Pension Credits")

Canada Pension Plan and signed, in a section reserved to office

use only, by a M. Ali under a heading called "Authorized

Signature". As Walsh J. said in Kightley v. Registrar of Trade

Marks et al. (1982), 65 C.P.R. (2d) 36, at p. 42 (F.C.T.D.), "it

would certainly require great temerity and irresponsibility on

the part of a party signing such a letter purporting to be signed

on behalf of a senior officer if he did not have the authority to

so act". [Emphasis mine]

13. The fact is that a person who signs, or purports to sign, for

a senior officer in a department benefits from a presumption

that he or she has the authority that he or she purports to

exercise until such time as the presumption is rebutted (Ali v.

Minister of Manpower and Immigration, [1976] 1 F.C. 185, at

pp. 188-89 (Fed. C.A.); Molson Companies Ltd. v. John Labatt

Ltd. et al., (1984), 1 C.P.R. (3d) 329, at p. 334 (F.C.T.D.)).

14. No evidence whatsoever has been adduced by the

Respondent which could cast the slightest doubt that the person

who signed was not authorized to sign the approval and which

could have, if not rebutted, at least sufficiently undermined the

presumption of validity which attaches to the signature of an

official document so as to displace the burden and put on

governmental officials the obligation to establish the validity of

the signature as well as the existence of a proper authority

vested in the signatory. Mere unsubstantiated allegations or

speculations by the Respondent are not sufficient to displace

the presumed authority under subsection 24(2) of the

Interpretation Act and the presumption of validity of the

signature.

Page: 57

[119] To the same effect, in the more recent decision, Lim v Canada (Citizenship and

Immigration), 2019 FC 871, Justice Gleeson also relied on Canada (Minister of Human

Resources Development) v Weimer [1998] FCJ 809 (CA), 228 NR 341 [Weimer] in recognizing

that, where an authority is exercised, the person doing so benefits from a strong presumption of

having acted with proper authorization until such time as that presumption is rebutted with

convincing evidence that the decision-maker in fact lacked the required authority (at para 22).

[120] I find that the Minister bears no evidentiary burden on this point, at least not in the

absence of any evidence from the Respondents challenging the authority of those who issued the

Requests and Requirements. In the words of Weimer, the Respondents’ position amounts to

unsubstantiated allegations or speculations, which are not sufficient to displace the presumption

of authority and validity from which the Minister benefits.

[121] I note that, in relation to the Requirements and the delegation of the Minister’s authority

under s 231.2 of the Act, the Minister also seeks to rely on what she describes as CRA’s

delegation matrix, included in the Minister’s Book of Authorities. The Minister points out that,

under the heading of s 231.2(1), the delegation matrix refers to a number of positions including

Manager, Audit, which is significant as all the Requirements at issue in these applications were

issued by an individual named John Harasymchuk, with the title Manager, Audit.

[122] The Respondents oppose the Minister’s reliance on the delegation matrix, arguing that it

does not have the status of a statutory instrument such that it can be included in a book of

authorities without further proof. The Respondents take the position that, if the Minister wished

Page: 58

to rely on the delegation matrix, she was required to include it in the record as an exhibit to an

affidavit. The Minister disputes this position, asserting that the delegations identified in the

matrix are authorized by statute and that the delegation matrix is publicly available on CRA’s

website.

[123] I find the Respondents’ arguments on this subject somewhat inconsistent, as their own

written submissions include an effort to rely on what appears to be an extract from the delegation

matrix on CRA’s website. Those submissions assert that the website indicates the Minister has

authorized only certain categories of persons for the purposes of s 231.1, all at the Director

General, Director, or Assistant Director level. The Minister has convincingly refuted that

argument, explaining that this portion of the delegation matrix identifies not those positions that

are authorized to issue demands under s 231.1, but rather those positions to which the Minister

has delegated the authority to authorize persons to issue such demands.

[124] That said, as a matter of principle, in the absence of a more compelling legal argument

from the Minister that the Court is entitled to rely upon the delegation matrix as a statutory

authority, I agree with the Respondents’ position that the proper method to place this information

before the Court, if necessary to address an issue in dispute, is through evidence. However, for

purposes of the present applications, the Minister succeeds on this issue without needing to rely

on the delegation matrix. In the absence of any evidence or meaningful argument by the

Respondents challenging the authority of those who issued the Requests or Requirements, the

Minister benefits from the presumption of validity, and I find that the persons who issued the

Page: 59

Demands were authorized to do so. Given the breadth of this conclusion, it will not be necessary

for me to revisit this issue when addressing the individual Demands later in these Reasons.

E. Whether the Respondents were properly given notice of the Demands

[125] The Respondents take the position, in particular in relation to the Requirements at issue

in these applications but also in relation to Requests, that they were not provided to them in

manner which represents proper notice. Section 231.2(1) expressly provides that a Requirement

must be served personally or by registered or certified mail. The Respondents take the position

that the Minister has a burden to adduce evidence establishing proper service and that she has

failed to do so. Section 231.1(1) does not prescribe particular methods of giving notice to the

recipient of a Request. However, the Respondents again raise arguments that particular methods

employed by the Minister were not adequate.

[126] In relation to the Requirements, the Minister’s position is that all Requirements in all six

applications were sent to the relevant Respondent by registered mail, a method that complies

with s 231.2. The Minister relies on the evidence of Mr. Bowe in each application to establish

that service was properly effected in this manner. In response, the Respondents raise a particular

argument based on s 244(5) of the Act, which prescribes as follows a method of proving service

by mail:

Proof of service by mail

Preuve de signification par

poste

244(5) Where, by this Act or a 244(5) Lorsque la présente

regulation, provision is made loi ou son règlement prévoit

for sending by mail a request

for information, notice or

demand, an affidavit of an

l’envoi par la poste d’une

demande de renseignements,

d’un avis ou d’une demande

Page: 60

officer of the Canada Revenue formelle, un affidavit d’un

Agency, sworn before a fonctionnaire de l’Agence

commissioner or other person du revenu du Canada,

authorized to take affidavits, souscrit en présence d’un

setting out that the officer has commissaire ou d’une autre

knowledge of the facts in the

particular case, that such a

personne autorisée à

recevoir les affidavits,

request, notice or demand was indiquant qu’il est au

sent by registered letter on a

named day to the person to

whom it was addressed

courant des faits de l’espèce,

que la demande, l’avis ou la

demande formelle en

(indicating the address) and

that the officer identifies as

exhibits attached to the

question a été adressée, par

lettre recommandée, à une

date indiquée, à la personne

à qui elle a été adressée

affidavit the post office

certificate of registration of

(fournissant cette adresse) et

the letter or a true copy of the qu’il identifie comme pièces

relevant portion thereof and a attachées à l’affidavit, le

true copy of the request,

certificat de

notice or demand, shall, in the recommandation de la lettre

absence of proof to the

contrary, be received as

fourni par le bureau de poste

ou une copie conforme de la

evidence of the sending and of partie pertinente du certificat

the request, notice or demand. et une copie conforme de la

demande, de l’avis ou de la

demande formelle, doit être

reçu comme preuve, sauf

preuve contraire, de l’envoi

ainsi que de la demande, de

l’avis ou de la demande

formelle.

[127] The Respondents take the position that compliance with s 244(5) is mandatory, i.e., that

this is the only means by which the Minister can prove by affidavit service by registered mail for

purposes of Requirements issued under s 231.2(1). To the extent Mr. Bowe’s evidence does not

comply with s 244(5), for instance by failing to attach as an exhibit the post office certificate of

registration of the registered letter, the Respondents argue that the Minister has not met her

burden to prove service and a compliance order cannot be issued in relation to the relevant

Requirement.

Page: 61

[128] In response, the Minister refers to court to Boroumend v The Queen, 2016 TCC 256, in

which the Tax Court described s 244(5) as a simple mechanism by which the Minister can prove

mailing by registered mail (at para 8), but also stated that the fact the Minister does not have the

evidence to rely upon s 244(5) does not mean that the Minister cannot prevail. Rather, it means

that the Minister must use other means to prove, on a balance of probabilities, that the relevant

notice was mailed (at para 10).

[129] In support of their position, the Respondents rely on Luxury Home Landscape

Construction Inc v The Queen, 2021 TCC 4 [Luxury Home] at para 24, in which Justice Russell

of the Tax Court considered the Minister’s efforts to prove through affidavit evidence service of

a notice of confirmation of an excise tax assessment. That evidence did not met the requirements

of the ETA provision (s 355(1)) comparable to s 244(5), because it failed to attach the post office

certificate of registration. The Court confirmed that the use of that provision was not the only

means to prove that the relevant notice had been sent by registered mail, noting that the Minister

could have called one or more witnesses to provide viva voce evidence based on personal

knowledge. However, as the Minister had chosen the option of adducing the necessary evidence

by affidavit, the Court held that s 335(1) was engaged, as this provision specifies what

Parliament intended to be required in order to prove by affidavit that a notice has been sent by

registered mail (at para 24).

[130] The Respondents therefore argue that, as the Minister seeks to rely on affidavit evidence

in the applications at hand in order to prove service of the Requirements, that evidence is not

sufficient unless it complies with s 244(5). However, I agree with the Minister’s response that

Page: 62

the analysis in Luxury Home must be considered in the context of the particular proceeding and

issue that was before the Tax Court. That case involved a motion to quash a notice of appeal on

the basis that it was filed out of time. As such, the date that CRA sent the notice of confirmation

to the taxpayer was the date the appeal period began to run, and thus was essential to the

determination of the issue before the Court.

[131] Following his observation that s 335(1) specified what Parliament intended to be required

to prove by affidavit that a notice had been sent by registered mail, Justice Russell referred to the

importance of this evidence, because it commences, effective the “sent” date, the running of the

appeal period (at para 24). The taxpayer had adduced evidence that it never received CRA’s

notice of confirmation. In addition, the affidavit adduced by the CRA appeals officer assigned to

the matter included correspondence with Canada Post that raised questions as to what happened

to the intended registered letter. It is therefore not surprising that, in dismissing the Minister’s

motion to quash the appeal, the Court was concerned that CRA’s affidavit failed to include the

post office certificate of registration as required by s 335(1) of the ETA.

[132] Against that factual backdrop, I do not read Luxury Home as a statement of general

principle that, if the Minister chooses to establish service of a Requirement through affidavit

evidence, that evidence will invariably be insufficient if it does not comply with s 244(5) of the

Act, regardless of the other evidence or particular issue before the Court. Rather, in my view, it

is necessary to consider the particular evidence upon which the Minister relies in these

applications, in the context of the arguments raised by the Respondents that the applications

should fail based on the service issue.

Page: 63

[133] I agree with the Respondents’ submission that, in a compliance application, whether

based on a Request or a Requirement, the Minister should bear the onus to prove service of the

relevant Demand. As identified earlier in these Reasons, the statutory conditions include the

existence of an obligation under ss 231.1 or 231.2 of the Act. This obligation does not exist

unless the recipient has notice of the Demand.

[134] As noted above, the Minister relies upon the evidence of Mr. Bowe to establish service of

the Requests and Requirements in all six applications. With respect to the Requests, the methods

of service upon which the Minister relies vary somewhat in different applications. As such, I will

address the service issue in connection with the Requests later in these Reasons, when

considering other issues specific to the individual applications and Demands. However, with

respect to the Requirements, the Minister relies upon service by registered mail in all

applications, and the evidence of Mr. Bowe is relatively consistent across all matters. It is

therefore efficient to address the service issue in relation to the Requirements at this juncture.

[135] In each application, and in relation to each Requirement that is the subject of the

application, Mr. Bowe swears in his affidavit that CRA sent the Requirement to the relevant

Respondent by registered mail, noting the date of the Requirement and attaching a copy as an

exhibit to the affidavit. The Respondents cross-examined Mr. Bowe in each of the applications

and, in some cases, focused specifically upon his knowledge of CRA’s service of the relevant

Requirements. For instance, as emphasized by both parties at the hearing, the Respondents’

counsel cross-examined Mr. Bowe in T-261-19 (Raphael Ghermezian) on his knowledge of the

two Requirements at issue in that application, identified as A-RUST-0103 and A-GDT-0101.