2015 QCCQ 351, 2015 QCCQ 351

Unofficial English Translation Agence du revenu du Québec c. Fedele 2015 QCCQ 351 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF D'IBERVILLE "Criminal and Penal Division" No.: 755-61-029138-139 755-73-000724-134 DATE: January 19, 2015; filed January 23, 2015 ______________________________________________________________________ THE HONOURABLE PIERRE BÉLISLE, J.Q.C. PRESIDING ______________________________________________________________________ REVENU QUÉBEC Prosecutor-respondent v.

PASQUALE FEDELE PATRICK ALAIN JACQUES LAVOIE Defendants-petitioners ______________________________________________________________________ JUDGMENT DELIVERED ORALLY ON THE PROSECUTION'S OBJECTION TO THE DISCLOSURE OF CERTAIN DOCUMENTS REQUESTED IN THE CONTEXT OF A MOTION FOR DISCLOSURE (Transcribed with the usual corrections) ______________________________________________________________________ 1) Introduction [ 1 ] The petitioners face various charges related to paragraph 62(

f) of the Act respecting the Ministère du Revenu (now the Tax Administration Act ) and paragraph 327 (1)(

a) of the Exise Tax Act . [ 2 ] In a motion to disclose evidence, the petitioners claim a series of documents that are essential to making full answer and defence and to presenting a Jarvis application contesting the search warrants and seeking the exclusion of evidence. [ 3 ] At the hearing, counsel for the prosecution indicated that the documents requested by the petitioner Pasquale Fedele in paragraphs 53.1 to 53.17 had already been disclosed, did not exist, were clearly irrelevant, were covered by tax secrecy, or were protected by a common law qualified privilege. [ 4 ] The same is true of the documents requested by petitioners Patrick Alain and Jacques Lavoie in paragraphs 64(

a) and 64 ( aa ) to ( jj ) of their motion (see the prosecution's written response on the subject dated December 4, 2014, and filed under exhibit i-10). [ 5 ] It is noteworthy that several of the requested documents have already been disclosed or do not exist. Others are clearly irrelevant, such as copies of invoices for performing searches in the court ledger or land register. [ 6 ] Others concern enterprises (Location Gilbert, for example) that are not being prosecuted. These documents cannot be disclosed because a person's tax record is confidential and cannot be disclosed unless that person's consent has been obtained (see

section 69 of the Tax Administration Act ). [ 7 ] It remains to be determined whether the other requested documents may be disclosed, that is, those describing the procedure and/or internal policy of Revenu Québec concerning the method and/or protocol for identifying, transferring and accepting a file audited by the Investigations Branch or the follow-up of related files identified in the audit once the Investigations Branch has taken charge of the principal file.

2) Positions of the Parties [8] The defence argues that these documents are essential to a proper understanding of the case. The information they containwould allow the defence to verify whether the line separating the tax audit from the Investigations Branch was crossed, which wouldviolate the provisions of the Canadian Charter of Rights and Freedoms. [9] The prosecution objects to the motion and maintains that the disclosure of all of these documents is clearly irrelevant, and thatif it is not, the documents are privileged.

Disclosure would be likely to reveal auditing and investigative methods, programs and actionplans that aim to ensure that all Quebec taxpayers comply with tax laws. [10] If the documents are privileged, the defence offers to review them after entering into a confidentiality agreement ensuring thatthey would not be distributed.

The prosecution responds that the separation between counsel and their clients is insufficiently hermeticand maintains that the public interest is better served by non-disclosure. 3) Analysis and discussion [11] In support of its arguments, the prosecution has filed nine sealed documents into the record, to wit: (

a) the sworn statement of Mr. S. Vinet, Deputy Senior Director of UPAC Investigations with Revenu Québec, dated November 7, 2014(i-9); (

b) eight documents containing detailed descriptions and instructions regarding the auditing and investigative methods and techniques intax matters applied at Revenu Québec (i-1 to i-8). [12] In R. v. Quesnelle, 2014 SCC 46, the Supreme Court reiterated the principles that generally apply to the Crown's duty todisclose in criminal cases.

Thus, since Stinchcombe, (SCC), [1991] 3 S.C.R. 326, and McNeil, 2009 SCC 3 ,[2009] 1 S.C.R. 66, it is trite law that the prosecution has the general obligation to disclose all the relevant information arising from thefruits of the investigation to the accused, without the accused needing to ask for it. In paragraph 11, it states: [11] The Crown has a broad duty to disclose relevant evidence and information to persons charged with criminal offences.

Stinchcombe,at pp. 336-40, provides that the Crown is obliged to disclose all relevant, non-privileged information in its possession or control so as toallow the accused to make full answer and defence. ... [13] In O'Connor, (SCC), [1995] 4 S.C.R. 411 at para. 12, the Supreme Court ruled that the mere existence of anelement is not enough to establish its relevance to the defence but that relevance must be presumed when the element is in the possessionof the Crown. [14] Referring to Stinchcombe, O'Connor and Chaplin rendered by the Supreme Court, Vauclair, J., then of the Superior Court andnow of the Court of Appeal, summarized the state of the law regarding the procedure to be followed in matters respecting disclosure.

InR. v. Berger,[1] at paras. 38 and 50, he wrote: [translation] [38] I reiterate that what is in possession of the Crown is presumed to be relevant. I also note that the Supreme Court did not allow theCrown to immediately eliminate from its duty the elements that are merely irrelevant, which it could have done.

Instead, the Court optedfor the expression "clearly irrelevant", unequivocally indicating that elements that are marginally relevant must be disclosed. [Emphasis in original.] [50] When the evidence is proved to exist, the Crown must justify non-disclosure on the basis of the recognized exceptions.[2] Indeed,the Crown is best placed to explain the relevance or the privilege, as it is the only one with knowledge of the requested information.[3] [Emphasis in original] [15] In McNeil, the Supreme Court specifies that "the presumptive duty on Crown counsel to disclose the fruits of the investigationin their possession under Stinchcombe is premised on the assumptions that the information is relevant and that it will likely comprise thecase against the accused" (at para. 28). [16] The requested documents have been proved to exist.

That being the case, the defence has no initial burden to establish the"likely relevance" of the elements sought, since it is presumed. Consequently, it is up to the prosecution to justify non-disclosure bydemonstrating that the documents are clearly irrelevant or privileged: R. v. Chaplin, (SCC), [1995] 1 S.C.R. 727 atpara. 25. 3.1 Are the requested documents clearly irrelevant? [17] This question must be answered in the negative. [18] I have read the sealed documents submitted by the prosecution. I am not convinced that the information therein is clearlyirrelevant.

In the context of a Jarvis application, some of the information might be useful for the defence to make full answer anddefence. [19] This first part of the objection cannot be sustained. 3.2 Is the information sought protected by privilege?

[20] The prosecution justifies non-disclosure by arguing the common law qualified privilege relating to the protection ofinvestigative methods in tax matters. [21] A simple general allegation by the prosecution stating that disclosing the information would risk unveiling Revenu Québec'sinvestigative techniques would be insufficient. This is why a sworn statement by the Deputy Senior Director of the UPAC InvestigationsBranch of Revenu Québec was filed under seal (i-8) in which he swears that the information should not be disclosed because of publicinterest immunity. [22] In R. v.

Allie, 2014 QCCS 2381, Huot J. of the Superior Court of Quebec, emphasized that several aspects of a police officer'swork may be subject to qualified privilege. In paragraph 15 of his judgment, he wrote: [translation] [15] ... This is the case with the disclosure of investigative methods, or that which could put the safety of third parties at risk.

Theinformation is protected by a common law privilege and it is up to the Court to weigh on a case-by-case basis whether this confidentialityshould be maintained, taking into consideration the right of the accused to make a full answer and defence. [23] In paragraph 17, Huot, J. recalled that the common law qualified privilege was described by the Court of Appeal for Ontario inparagraph 11 of R v. Richards (1997), (ON CA), 115 C.C.C. (3d) 377, (Ont. C.A.), 1997: Disclosure of police investigative techniques is subject to a qualified privilege: R. v. Meuckon (1990), (BC CA), 57C.C.C. (3d) 193 (B.C.C.A.).

Where the claim is made, the judge must first decide whether the information sought is relevant to an issuein the proceedings. Second, if relevant, evidence of the investigative techniques used will not be disclosed if the public interest ineffective police investigation and the protection of those involved in, or who assist in such investigation, outweigh the legitimateinterests of the accused in disclosure of the techniques. The privilege was also recognized by Binder J. in R. v.

Trang (2002), 2002 ABQB 19 , 168 C.C.C. (3d) 145 at paras. 49 and 50where he said: The jurisprudence clearly supports a common law principle in relation to investigative technique where warranted… Clearly, disclosure of investigative techniques may in some cases compromise ongoing investigations and put officers or civilians at risk;it might also cause criminal offenders in the future to modify their activities in order to avoid detection.

There may be other justificationsfor non-disclosure of investigative techniques which are specific to the technique in question. [24] By analogy, the reasoning of the Court of Appeal for Ontario applies to investigative methods used in tax matters, with thenecessary adaptations. [25] A review of the sealed documents indicates that their disclosure would be likely to reveal auditing and investigative methods,programs and action plans that aim to ensure that all Quebec taxpayers comply with tax laws. [26] The prosecution alleges that disclosure would enable enterprises that thus become aware of this information to refine theirstrategies to foil the efforts of auditors and would put a tax auditing system in which self-assessment is the rule at risk. [27] I agree. 4) Conclusion [28] With respect for the contrary opinion, I find that the prosecution's objection on the issue of privilege has merit.

To order thedisclosure of the information would be harmful because of the public interest raised by the prosecution. Non-disclosure must thereforebe prioritized over the petitioners' legitimate interest in complete disclosure. [29] Moreover, the attorney-client agreement submitted by the defendants-petitioners is too weak to ensure the confidentiality of theinformation in the documents they seek.

This is confirmed by the potential for serious consequences to ongoing tax investigations andthe cost to Revenu Québec, which would have to review its investigative and auditing methods following a voluntary or involuntarydisclosure of the contents of the sealed documents. [30] As to redaction, it is obvious that it would not be effective.

FOR THESE REASONS, THE COURT: [31] SUSTAINS the prosecution's objection on the issue of privilege. [32] PROHIBITS the disclosure of any information relating to the auditing and investigative methods, programs and action plansused by Revenu Québec and outlined in the sealed documents. [33] ORDERS that exhibits i-1 to i-8 and i-9 be remitted under seal.

__________________________________ PIERRE BÉLISLE, J.C.Q. Mtre Michel Pouliot Mtre Louis-Philippe Meek-Baillot Unité permanente anticorruption Direction principale des poursuites pénales For Revenu Quebec Mtre Christopher R. Mostovac For Pasquale Fedele Mtre Guy Matte For Patrick Alain and Jacques Lavoie Dates of hearing: November 10, 2014, and December 10, 2014