MICHAEL DADOUN Applicant v. ATTORNEY GENERAL OF CANADA, 2021 FC 461

Date: 20210518 Docket: T-488-21 Citation: 2021 FC 461 Montréal, (Quebec), May 18, 2021 PRESENT: The Honourable Mr. Justice Martineau BETWEEN: MICHAEL DADOUN Applicant and ATTORNEY GENERAL OF CANADA Respondent ORDER AND REASONS [ 1 ] The applicant is a taxpayer who challenges the legality of a request for information issued by the Canada Revenue Agency [CRA] under the authority of

section 231.1 of the Income Tax Act , RSC 1985, c 1 (5 th Supp ) [ ITA ]. The respondent has moved to strike the applicant’s application for judicial review [application]. [ 2 ] For the reasons that follow, the motion to strike is granted. I. AUDIT AND REQUEST FOR INFORMATION [ 3 ] The CRA Offshore Compliance Specialized Team is currently conducting an audit of the applicant’s income tax returns for the years 2006 to 2019 [years under review]. On February 4, 2021, the auditor, Mr.

Eric Fortin, sent a letter to the applicant to inform him that the CRA intends to verify and review any and all offshore holdings and transactions that he or his related entities ought to have reported as required by the ITA . [ 4 ] In order to expedite and facilitate the audit, the auditor indicated in the request for information that he will require a clear understanding of all entities with which the applicant had a relationship during the years under review.

For this purpose, the auditor requests that the applicant completes a questionnaire which seeks, amongst other things, personal information, banking and investing information, information relating to interest in unlisted companies, information relating to relationship to personal trusts, and information relating to interest in partnerships and joint ventures. II.

APPLICATION FOR JUDICIAL REVIEW [ 5 ] On February 24, 2021, the applicant commenced a proceeding before this Court seeking the judicial review of the request for information [decision]. [ 6 ] The applicant alleges that CRA’s audit and decision are illegal. In particular, at paragraph 9 of the notice of application, the applicant alleges that " “[i]n the Decision, the CRA informed the Applicant that the CRA had in its possession information that has led the CRA to determine that the Applicant may have offshore holdings that he has failed to disclose [ sic ] as required by the ITA ” " .

At paragraph 12, the applicant makes the following assertion based on the alleged content of the decision: " “It is obvious that the CRA claims to be in possession of information to assess the Applicant regarding alleged foreign assets and it is obvious that the CRA is conducting a criminal or penal investigation for tax evasion under the guise of a civil audit in order to obtain self-incriminating information from the Applicant.” " [ 7 ] As a result, the applicant seeks from this Court the issuance of an order declaring that the CRA “crossed the Rubicon” as per the case R v Jarvis , 2002 SCC 73 [ Jarvis ]; an order declaring that the decision is null and void because it violates the applicant’s rights and freedoms protected by articles 7, 8, 11 and 13 of the Canadian Charter of Rights and Freedom ,

Part 1 of the Constitution Act, 1982 , being

Schedule B to the Canada Act, 1982 (UK), 1982 c 11 [ Charter ]; an order declaring that sections 231.1 and 231.7 of the ITA infringe on articles 7 , 8 , 11 and 13 of the Charter and are consequently of no force or effect; an order quashing the decision and declaring it illegal, null and void; and an interim order pursuant to

section 18.2 of the Federal Courts Act , RSC 1985, c F-7 , suspending the obligation of the applicant to comply with the decision pending final disposition of the application. III. MOTIONS TO STRIKE [ 8 ] On April 16, 2021, the respondent filed the present motion to strike, alleging that this application is bereft of any possibility of success, and further constitute an abuse of process. A similar motion is made by the respondent in file T-356-21 involving another taxpayer’s application for judicial review who is almost identical. The applicants are both represented by the same counsel, Me Louis- Frédérick Côté.

The motions to strike were heard concurrently by the Court. [ 9 ] Asserting that the application in this case and the one in file T-356-21 are bereft of any possibility of success, the respondent rely on

the state of the law which is well established. Counsel invites the Court to read the decision of the Supreme Court in Jarvis, as well asthe following two decisions of the Court, dismissing similar applications where the same allegations and arguments were made:Campbell v Attorney General of Canada, 2018 FC 683 [Campbell] and Friedman v Attorney General of Canada, 2019 FC 1583[Friedman]. In this respect, the Court notes that the decision in Campbell is final, but the one rendered in Friedman is in appeal.

Theappeal was heard on April 12, 2021, but the judgment of the Federal Court of Appeal has not been rendered at this date. [10] At the hearing, the respondent submitted to the Court that an adjournment or a stay of proceedings pending a decision of the FederalCourt of Appeal in Friedman was not necessary and would unduly delay the audit in this case. The appeal in question strictly relates tothe alleged breach of

section 13 of the Charter. Considering that the respondent’s motion to strike does not turn on a pure question oflaw, but can be decided on the basis that the applicants have both failed to plead material facts supporting the claim that there is anongoing criminal or penal investigation, the Court will consider the merit of the two motions to strike.

Furthermore, considering theconcerns expressed by the Court at the hearing, respondent’s counsel did not press the Court to determine whether there is an abuse ofprocess because this application and the one in file T-356-21 are also almost identical to five other applications (including the ones madein Campbell and Friedman) filed by the applicants’ counsel. IV.

LEGAL PRINCIPLES [11] As held by the Federal Court of Appeal in Canada (National Revenue) v JP Morgan Asset Management (Canada) Inc, 2013 FCA250 at para 47 [JP Morgan], the Court will strike a notice of application for judicial review only where it is "“so clearly improper as tobe bereft of any possibility of success”": David Bull Laboratories (Canada) Inc v Pharmacia Inc, (FCA), [1995] 1 FC588 at page 600 (CA).

There must be a “show stopper” or a “knockout punch” – an obvious, fatal flaw striking at the root of this Court’spower to entertain the application: Rahman v Public Service Labour Relations Board, 2013 FCA 117 at paragraph 7; Donaldson vWestern Grain Storage By-Products, 2012 FCA 286 at paragraph 6; cf. Hunt v Carey Canada Inc, (SCC), [1990] 2 SCR959. [12] There are two justifications for such a high threshold.

First, the Federal Courts’ jurisdiction to strike a notice of application isfounded not in the Rules but in the Courts’ plenary jurisdiction to restrain the misuse or abuse of courts’ processes: David Bull at page600; Canada (National Revenue) v RBC Life Insurance Company, 2013 FCA 50. Second, applications for judicial review must bebrought quickly and must proceed “without delay” and “in a

summary way”: subsection 18.1(2) and

section 18.4 of Federal Courts Act.An unmeritorious motion – one that raises matters that should be advanced at the hearing on the merits – frustrates that objective. [13] I am also mindful of what I have earlier stated in Turp v Canada (Foreign Affairs), 2018 FC 12: [19] According to the case law, the Court may strike an application for judicial review for want of a reasonable cause ofaction. However, the motions judge’s discretion must not be trivialized.

This discretion is exercised only in the mostexceptional circumstances, namely when the application is bereft of any possibility of success. […] [20] The underlying principle is that in a motion to strike, the facts alleged in the notice of application for judicial review areassumed to be true, unless they are manifestly incapable of being proven (see, by analogy: subsection 221(2) of the Rules;see also Operation Dismantle v The Queen, (SCC), [1985] 1 SCR 441 at page 455; 18 DLR (4th) 481;Imperial Tobacco at paragraph 22; JP Morgan at paragraph 52).

This eliminates the need to submit the facts through anaffidavit. This does not apply where a document is referred to and incorporated by reference in a notice of application, whichmay merely be appended, nothing more, for the assistance of the Court (see JP Morgan at paragraph 54). [21] […] [22] In a motion to strike, the Court must read the notice of application for judicial review in such a way as to grasp its truenature (see, in general, JP Morgan).

The Court must perform a comprehensive and practical reading, without getting miredin matters of form. […] [14] Having read the notice of application in light of the allegations made and the actual content of the decision challenged by theapplicant, I am satisfied that the present application should be struck by the Court as it is bereft of any possibility of success. V. NO REASONABLE CAUSE OF ACTION [15] I agree with the respondent that the state of the law with respect to the purpose and use of a request for information has been settledfor a long time now.

In 2002, the Supreme Court made it crystal clear in Jarvis: where the predominant purpose of a particular inquiry isthe determination of penal liability, CRA officials must relinquish the authority to use the inspection and requirements powers undersection 231.1 of the ITA. In Jarvis at paragraph 88, the Supreme Court used the expression “crossed the Rubicon” to describe a situation"“when the inquiry in question engages the adversarial relationship between a taxpayer and the state”".

Thus, the question of whether theCRA has “crossed the Rubicon” is essentially one of fact; this supposes the existence of some evidence to that effect. Such claim cannotbe based on pure speculation.

A simple assertion of the conclusion upon which the Court is called to rule upon on the merit of theapplication is not an allegation of material fact (Merchant Law Group v Canada (Revenue Agency), 2010 FCA 184 at para 34). [16] In the present case, the fundamental problem and flaw is that there are no particularized allegations in the notice of application thatcan reasonably sustain the claim made by the applicant that the CRA has “crossed the Rubicon”.

The bald allegations made atparagraphs 9 and 12 of the notice of application are based on pure speculation and constitute a misreading of the decision legallyquestioned by the applicant. I cannot infer from a reading of the request for information – which refers to the ongoing audit undersubsection 231.1(1) of the ITA – that there is any parallel criminal or penal investigation. Indeed, as candidly acknowledged by theapplicant during the hearing, the applicant has presently no evidence supporting the bald allegations made in paragraphs 9 and 12 of the

notice of application. As it is now construed, the true nature of the application serves one purpose: obtain the record of the CRA whilethe audit is still ongoing. [17] At the heart of this case is the applicant’s dissatisfaction with the current mechanisms available under the law to obtain the CRA’srecord. Because

section 16.1 of the Access to Information Act, RSC 1985, c A-1, effectively prohibits the disclosure of any recordobtained or created in the course of an investigation, examination or audit while it is still ongoing, the applicant is now resorting to thisCourt’s process to obtain same. In particular, the applicant requests in his notice of application that the respondent provides him,pursuant to Rule 317 of the Federal Courts Rules, SOR/98-106, with a detailed list of documents, which comprises: (

a) A complete copy of all documents, in any and all formats, including emails, in the possession of the CRA (including theircurrent or former officers, employees or agents) in undertaking and engaging the enforcement mechanism of the ITA againstthe Applicant for their taxation years 2006 to 2019 inclusively; (

b) A complete copy of all the documents, in any and all formats, including emails, in possession of the CRA (audit,objection, appeals, collection, voluntary disclosure and penal or criminal investigation) related to the taxation years 2006 to2019 of the Applicant, which includes, but is not limited to the following documents: (

i) Audit report(s); (ii) The complete CRA file(s); (iii) All of the CRA’s worksheets, schedules and notes taken by an employee, officer or agent of the CRA; (iv) All declaration made by a third party to a representative of the CRA in relation to the Applicant; (

v) All documents submitted or exchanged in the context of an investigation; (vi) All documents submitted or exchanged in relation to any criminal or penal investigations program of the CRA; (vii) A copy of the identification badges or the information provided by these identification badges of all of the CRArepresentatives that have or had access to the Applicant’s files; (viii) A copy of the business card of all of the CRA representatives that have or had access to the Applicant’s file; (ix) The timesheets of all the CRA representatives that worked or are working on the Applicant’s files; (

x) All the case number(

s) related to the Applicant; (xi) All the T133 and/or T134 related to the Applicant; (

c) This includes, but is not limited to, all such information in the possession, control or files of Éric Fortin. [18] Allowing the applicant to circumvent the mechanisms in place by permitting him to proceed to such a fishing expedition in thetribunal’s record would effectively transform this Court in an access to information commission.

This is simply not the role of this Courtor the purpose of Rule 317 as explained by Justice Pelletier in Access Information Agency Inc v Canada (Attorney General), 2007 FCA224: "“When dealing with a judicial review, it is not a matter of requesting the disclosure of any document which could be relevant in thehopes of later establishing relevance. Such a procedure is entirely inconsistent with the

summary nature of judicial review.”" [19] To sum up, a taxpayer can file a judicial review application where some evidence exists that the CRA has “crossed the Rubicon”.This was the case for example in Stanfield v Canada (Minister of National Revenue), 2005 FC 1010, where the letter sent to the taxpayercontained a note that a criminal investigation was underway. However, this is not the case here from a reading of the decision.

Indeed,there is no allegation of fact and no documentary evidence justifying the Court to question the mention in the questionnaire that the"“information is collected under subsection 231.1(1) of the Income Tax Act for audit purposes”" [emphasis added]. [20] Since the claim made by the applicant that there is an ongoing criminal or penal inquiry is speculative, there is no prospect that theCourt would grant any of the remedies sought in the notice of application.

Moreover, with respect to the applicant’s claim that the auditpower granted to the CRA under sections 231.1 and 231.7 are inconsistent with the Charter, I note that

section 7 of the Charter does notprotect information gathered under

section 231.1 of the ITA and does not infringe on

section 8 of the Charter either (Del Zotto v Canada, (FCA), [1997] 3 FC 40 (CA), rev’d (SCC), [1999] 1 SCR 3; Jarvis; Campbell at paras 13-14;Friedman at paras 70 and 77). Subsection 11(

c) of the Charter is also irrelevant to this case because the applicant is not charged with anoffence (Campbell; Friedman; Martineau v MNR, 2004 SCC 81; Guidon v Canada, 2015 SCC 41). Finally,

section 13 of the Charter isnot applicable at this stage as it applies when testimony is used to incriminate a person in “other proceedings” and there is no “otherproceeding” right now (R v Nedelcu, 2012 SCC 59 at paras 6-7; Campbell at 10; Friedman at 69). VI. CONCLUSION [21] In conclusion, the notice of application filed by the applicant fails to disclose any material facts that, assumed to be true, woulddisclose a reasonable cause of action, and this Court is satisfied that the application is bereft of any possibility of success. [22] The motion is granted. The application is struck.

The respondent seeks costs in the amount of $1,500 against the applicant. Thisamount is reasonable in the circumstances.

ORDER in T-488-21 THIS COURT’S JUDGMENT is that: 1 . The motion to strike is granted; 2 . The application for judicial review is struck; and 3 . The applicant shall pay to the respondent a lump sum of $1,500 as taxable costs. "Luc Martineau" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKETS: T-488-21 STYLE OF CAUSE: MICHAEL DADOUN v THE ATTORNEY GENERAL OF CANADA PLACE OF HEARING: held by videoconference in montreal, quebec DATE OF HEARING: May 4, 2021 JUDGMENT AND REASONS: MARTINEAU J.

DATED: MAY 18, 2021 APPEARANCES : Me Louis-Frédérick Côté For The Applicant Me Pierre Lamothe For The Respondent SOLICITORS OF RECORD : Spiegel Sohmer Inc. Montréal, Québec For The Applicant Attorney General of Canada Montréal, Québec For The Respondent