I posted previously on the decision of the Federal Court of Appeal in Canada (Minister of National Revenue) v. Ellingson, 2006 FCA 202, which was decided in light of the Supreme Court of Canada’s decision in R v. Jarvis, [2002] 3 S.C.R. 757, 2002 SCC 73. The Ontario Court of Appeal has now weighed in on the subject in R. v. Tiffin, 2008 ONCA 306. In this case, the Court of Appeal considered a trial court finding that the CRA had abused its audit power in pursuit of a criminal investigation. The Court considered whether the evidence gathered using the audit power should be excluded. Ultimately, in a split decision, the Court decided that a significant portion of the evidence should not be excluded even though the trial judge concluded that the CRA personnel involved had acted in bad faith and dishonestly. The decision is also interesting for the insight it gives into the methods used by the CRA’s “Special Enforcement Program” and the distinction between an investigation and an audit.For example, the one of the Justices noted that the general conduct of the “auditor” seemed to be more consistent with an investigation rather than an audit:
[47] Based on the evidence at trial, the trial judge found that “the hallmark of an audit is that the auditor and the subject get together.” And, as a CRA witness testified, audits need to be “open and transparent”. In this case, Liviero, over a period of almost two years, conducted his activities without once meeting with the subject, Holterman. Moreover, the evidence was that Liviero chose a covert approach, which was more characteristic of an investigation.
[48] Liviero’s approach included driving by Holterman’s residence, credit bureau checks, share searches, CPIC and PIRS[1] searches, court house attendances, and third party interviews about fraud. Liviero himself admitted that what he was conducting was “considerably different” from the type of audit described to the public by CRA.
[49] Throughout the period that Liviero had the file, he referred to himself as a member of the Investigations Division. At times he referred to himself as a “SEP Auditor/Investigator” and at times as a “SEP Investigator”. He never referred to himself as a “SEP Auditor” or as an “Auditor”.
[50] Coupled with the evidence, the trial judge also considered the dishonesty of Liviero and fourteen other findings and conclusions, which he relied on to decide this factor. In the end, the trial judge’s reliance on Liviero’s belief is not in conflict with the evidence, or made in the complete absence of evidence and so does not reveal a palpable and overriding error.
As an interesting aside, local lawyers Dean Paquette and Paola Konge acted for one of the respondents in the appeal.
