Court Supreme of Canada Guay v. Lafleur, [1965] S.C.R. 12 Date: 1964-10-06 Philippe Guay Appellant; and Rene Lafleur Respondent.
1964: June 2, 3; 1964: October 6. Present: Taschereau C.J. and Cartwright, Fauteux, Abbott, Martland, Judson, Ritchie, Hall and Spence JJ. ON APPEAL FROM THE COURT OF QUEEN'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC
Taxation--Income tax--Investigation--Inquiry by person authorized by Minister into the affairs of taxpayer--Whether taxpayer entitled to be present and represented by counsel at hearings--Injunction--Income Tax Act, R.S.C. 1952, c. 148, s. 126(4), (8)--Inquiries Act, R.S.C. 1952, c. 154, ss. 4, 5--Canadian Bill of Rights, 1960 (Can.), c. 44, s. 2 (e)--Public Inquiries Act, R.S.O. 1960, c. 323, s. 5--Security Frauds Prevention Act, 1930 (B.C.), c. 64, ss. 10, 29. The appellant, an officer of the Department of National Revenue, was authorized by the Deputy Minister, under s. 126(4) of the Income Tax Act, R.S.C. 1952, c. 148, to make an inquiry into the affairs of the respondent and thirteen other individuals, corporations and estates. A number of persons were summoned for the purpose of being questioned under oath regarding the affairs of the persons subject to the inquiry. But the respondent was not summoned to appear nor did he receive any official notice that this inquiry was being held. At the opening of the inquiry, attorneys appeared on behalf of the respondent and asked that the latter be allowed to be present and to be represented by counsel during the examination of all persons summoned by the investigator. This request was refused. Whereupon, the respondent applied to the Superior Court for an injunction asking that the sittings be suspended until the respondent had obtained from the investigator the authorization to be present and to be represented. The injunction was granted by the trial judge; and his judgment was affirmed by a majority judgment in the Court of Appeal. The investigator was granted leave to appeal to this Court. Held (Hall J. dissenting): The appeal should be allowed and the injunction dismissed. Per Taschereau C.J. and Cartwright, Fauteux, Abbott, Martland, Judson and Ritchie JJ.: Section 2 (e) of the Canadian Bill of Rights had no application since no rights and obligations of the respondent were to be determined by the person conducting the investigation. The investigation was a purely administrative matter which could neither decide nor adjudicate upon anything. It was neither a judicial nor a quasi-judicial inquiry but a private investigation at which the respondent was not entitled to be present or represented by counsel. The power given to the Minister under s. 126 (4) is to enable him to obtain the facts which he considers necessary to enable him to discharge the duty imposed on him of assessing and collecting the taxes payable under the Act. The taxpayer's right is not affected until an assessment is made. Then all the appeal provisions mentioned in the Act are open to him. As a purely administrative matter where the person holding the inquiry neither decides nor adjudicates
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upon anything, it was not for the Courts to specify how that inquiry was to be conducted except to the extent, if any, that the subject's rights are denied him. The fact that the investigator was given certain limited powers of compelling witnesses to attend before him and testify under oath did not change the nature of the inquiry. Per Cartwright J.: Generally speaking, apart from some statutory provisions making it applicable, the maxim "Audi alteram partem" did not apply to an administrative officer whose function was simply to collect information and make a report, and who had no power either to impose a liability or to give a decision affecting the rights of the parties, as in the present case. Per Spence J.: The investigation was a purely administrative matter which could neither decide nor adjudicate upon anything. To give effect to the respondent's demand even without the right to cross-examine the witnesses would be for the judiciary to attempt to impose its own methods on an administrative officer and the judiciary should not make such an attempt. Saint John v. Fraser, [1935] S.C.R. 441, referred to. The fact that the investigator was bound to act judicially in the sense of being fair and impartial did not require him to permit the respondent and his counsel to be present whether or not such counsel were to attempt to cross-examine witnesses. Hall J. dissenting: The respondent's right to a fair and impartial investigation implied that he had the right to attend and to be represented by counsel. Although he was not acting in a judicial capacity or performing a judicial function, the investigator was clothed with all the outward attributes of a judicial body. The terms of his appointment authorized under s. 126 of the Act did not exclude the making of recommendations arising out of the inquiry. On the contrary it was implicit to the inquiry that some judgment on the facts and information obtained would be made by the investigator in his report to the Deputy Minister. APPEAL from a judgment of the Court of Queen's Bench, Appeal Side, Province of Quebec1, affirming the granting of an injunction by the trial judge. Appeal allowed, Hall J. dissenting. Rodrigue Bdard, Q.C., and Roger Tass, for the appellant. Roch Pinard, Q.C., for the respondent. The judgment of Taschereau C.J. and Fauteux, Abbott, Martland, Judson and Ritchie JJ. was delivered by ABBOTT J.:--The material facts in this case are not in dispute. The sole issue is whether the respondent is entitled to be present and represented by counsel at an enquiry conducted by appellant under the Income Tax Act.
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The appellant is an officer of the Department of National Revenue. On December 28, 1960, he was authorized in writing by the Deputy Minister of National Revenue, acting for his
1
[1963] Que. Q.B. 623, [1963] C.T.C. 201, 63 D.T.C. 1098.
Minister under the provisions of the Act, "to investigate the affairs" of the respondent and thirteen other individuals, corporations and estates. The appellant commenced the investigation on January 10, 1961, after summoning a number of persons (of whom respondent was not one) to appear on that date at the office of the Department of National Revenue in Montreal, to be questioned under oath regarding the affairs of the persons subject to the enquiry. The persons summoned for examination were permitted to be represented by counsel if they so desired. At the opening of the enquiry, attorneys appeared before appellant on behalf of respondent and asked that respondent be allowed to be present and to be represented by counsel during the examination of all persons summoned by the appellant. That request was refused. The same day respondent applied to the Superior Court for an injunction asking for an order -- que lesdites sances de ladite commission soient suspendues jusqu' ce que le demandeur ait obtenu du dfendeur l'autorisation d'tre prsent et d'tre reprsent toutes et chacune desdites sances par ses procureurs. On January 12,1961, the date fixed for the hearing on the application for an interlocutory injunction, the appellant agreed to suspend his investigation until judgment was rendered on the application, and therefore no interlocutory order was necessary. On February 17, 1961, Mr. Justice Brossard in a considered judgment granted the injunction asked for in the following terms: ACCUEILLE la requte en injonction du demandeur; ORDONNE que les sances du dfendeur agissant en sa qualit d'enquteur nomm par le sous-ministre du Revenu national en date du 28 dcembre 1960 et en vertu des dispositions de l'article 126(4) de la Loi de l'impt sur le revenu soient suspendues jusqu' ce que le demandeur ait obtenu du dfendeur l'autorisation d'y tre prsent et d'y tre reprsent par ses procureurs; le tout sans frais mais avec recommandation que les frais du demandeur soient pays par le mis-en-cause. That judgment was affirmed by the Court of Queen's Bench2, Hyde and Montgomery JJ. dissenting.
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As I have indicated, under the terms of his appointment, the appellant was authorized--
2
[1963] Que. Q.B. 623, [1963] C.T.C. 201, 63 D.T.C. 1098.
to make an inquiry, as authorized by Section 126, subsections 4 and 8 of the said Income Tax Act which sections give the person authorized to make the inquiry all the powers and authorities conferred on a commissioner by sections 4 and 5 of the Inquiries Act or which may be conferred on a commissioner under section 11 thereof, into the affairs of RENE LAFLEUR, MARIE-MARTHE LAFLEUR, FRANCOIS FOURNELLE, DAME HENRIETTE LAFLEUR-FOURNELLE, JEAN FAUVIER, JEAN CHAPOLARD, RAOUL DASSERRE, P. SUTTER, HENRI CLOUARD, LUC LEMAIRE-LAFLEUR LTEE, LES PLACEMENTS MONTCALM LIMITEE, EDIFICE LAFLEUR LTEE, SUCCESSION LEONARD LAFLEUR, and the ESTATE OF HERMAS FOURNELLE. The relevant statutory provisions referred to in that authorization are: Income Tax Act 126 (4) The Minister may, for any purpose related to the administration or enforcement of this Act, authorize any person, whether or not he is an officer of the Department of National Revenue, to make such inquiry as he may deem necessary with reference to anything relating to the administration or enforcement of this Act. (8) For the purpose of an inquiry authorized under subsection (4), the person authorized to make the inquiry has all the powers and authorities conferred on a commissioner by sections 4 and 5 of the Inquiries Act or which may be conferred on a commissioner under section 11 thereof. Inquiries Act 4. The Commissioners have the power of summoning before them any witnesses, and of requiring them to give evidence on oath, or on solemn affirmation if they are persons entitled to affirm in civil matters, and orally or in writing, and to produce such documents and things as the commissioners deem requisite to the full investigation of the matters into which they are appointed to examine. 5. The Commissioners have the same power to enforce the attendance of witnesses and to compel them to give evidence as is vested in any court of record in civil cases. Section 11 of the Inquiries Act referred to in the authorization does not appear to be material to the present proceedings. The rights claimed by the respondent are not to be found in the Income Tax Act or the Inquiries Act, and this was recognized by the learned trial judge. He appears to have based his judgment primarily upon the ground that, in refusing to permit the respondent to be present and represented by counsel, appellant had infringed the provisions of
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the Canadian Bill of Rights specifically s. 2 (e) which seeks to ensure the right of all persons -- to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations.
With respect to this section it is sufficient to say that it can have no application since no rights and obligations are determined by the person appointed to conduct the investigation. There are no common reasons of the majority in the Court of Queen's Bench. Mr. Justice Bissonnette and Mr. Justice Rinfret held that the investigation was a quasi-judicial one and that consequently respondent had a right to be heard. Mr. Justice Rinfret also held that the enquiry infringed the Canadian Bill of Rights. Mr. Justice Owen was of opinion that the enquiry is an administrative matter and that the Canadian Bill of Rights was not infringed. He held however that respondent was entitled to be present and represented by counsel for the following reasons: Lafleur's right to a fair and impartial investigation implies that he has the right to attend and to be represented by counsel at the sittings of the Inquiry. The proposed investigation into the affairs of Lafleur with Lafleur and his counsel excluded would, in my opinion, be a one-sided and prejudiced Inquiry. The presence of Lafleur and his counsel at the Inquiry would tend to discourage exaggerated or biased evidence by the witnesses called and to remind Guay and counsel for the Minister of their duty to act with fairness and impartiality. According to the fundamental principle of law which requires that the present investigation be fair and impartial Lafleur is entitled to attend the sittings of the Inquiry and to be represented by legal counsel at such sittings. Hyde and Montgomery JJ. dissenting, held that the investigation conducted by appellant on behalf of the Minister, is a purely administrative matter which can neither decide nor adjudicate upon anything, that it is not a judicial or quasi-judicial enquiry but a private investigation at which the respondent is not entitled to be present or represented by counsel. I am in respectful agreement with Hyde and Montgomery JJ. and there is very little I desire to add to what they have said in their reasons. The power given to the Minister under s. 126(4) to authorize an enquiry to be made on his behalf, is only one
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of a number of similar powers of enquiry granted to the Minister under the Act. These powers are granted to enable the Minister to obtain the facts which he considers necessary to enable him to discharge the duty imposed on him of assessing and collecting the taxes payable
under the Act. The taxpayer's right is not affected until an assessment is made. Then all the appeal provisions mentioned in the Act are open to him. The fact that a person authorized to make an investigation on behalf of the Minister is given certain limited powers of compelling witnesses to attend before him and testify under oath, does not, in my opinion, change the nature of the enquiry. That view was admirably expressed by Mr. Justice Hyde whose words I adopt: As a purely administrative matter where the person holding the inquiry neither decides nor adjudicates upon anything, it is not for the Courts to specify how that inquiry is to be conducted except to the extent, if any, that the subject's rights are denied him. The taking of sworn statements is a common everyday occurrence. The deponent is frequently examined in subsequent Court proceedings where the interests of another may be affected by the statements of that witness. I know of no requirement in law that any person likely to be affected in such a way is entitled to be present with counsel when such a sworn statement is originally made, and I see little distinction from the proceeding in issue. I would allow the appeal and dismiss the application for the injunction, with costs throughout. CARTWRIGHT J.:--The relevant facts and the questions raised on this appeal are set out in the reasons of my brother Abbott. I agree with the conclusion at which he has arrived and wish to add only a few observations. The function of the appellant under the terms of his appointment is simply gather to information; his duties are administrative, they are neither judicial nor quasi-judicial. There are, of course, many administrative bodies which are bound by the maxim "audi alteram partem" but the condition of their being so bound is that they have power to give a decision which affects the rights of, or imposes liabilities upon, others. It was of a body having such power that Lord Loreburn L.C. said in Board of Education v. Rice3: I need not add that ... they must act in good faith and fairly listen to both sides, for that is a duty lying upon everyone who decides anything.
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The appellant in the case at bar has no power to decide anything.
3
[1911] A.C. 179 at 182, 80 L.J.K.B. 769.
In Lapointe v. L'Association de Bienfaisance et de Retraite de la Police de Montreal4, Lord Macnaghten, delivering the judgment of the Judicial Committee, cited with approval the following passage from the judgment of Kelly C.B. in Wood v. Wood5, which was adopted by Rinfret C.J. in L'Alliance des Professeurs Catholiques de Montral v. Labour Relations Board6: They are bound in the exercise of their functions by the rule expressed in the maxim 'Audi alteram partem' that no man should be condemned to consequence resulting from alleged misconduct unheard, and without having the opportunity of making his defence. This rule is not confined to the conduct of strictly legal tribunals, but is applicable to every tribunal or body of persons invested with authority to adjudicate upon matters involving civil consequences to individuals. The appellant in the case at bar is not invested with authority to adjudicate upon any matter. Generally speaking, apart from some statutory provision making it applicable, the maxim "audi alteram partem" does not apply to an administrative officer whose function is simply to collect information and make a report and who has no power either to impose a liability or to give a decision affecting the rights of parties. In the case of Re The Ontario Crime Commission, Ex Parte Feeley and McDermott7, the Court of Appeal for Ontario held that while the question, whether persons against whom grave allegations of criminal conduct were made should be permitted to be represented before the Commissioner conducting an inquiry to ascertain facts and without power to make any decision binding on anyone, was one committed to the discretion of the Commissioner, the Court of Appeal had authority to review his decision and substitute its discretion for his. Schroeder J.A. who gave the reasons of the majority made it clear that this result flowed from the terms of s. 5 of the Public Inquiries Act of Ontario, R.S.O. 1960, c. 323, a statutory provision which the learned Justice of Appeal aptly described as unique. Laidlaw J.A., dissenting, reached the opposite conclusion. I refrain from attempting to choose between these con[Page 19]
flicting views; it is unnecessary to do so for the purpose of deciding the case before us as there is no similar statutory provision relating to the inquiry which the appellant is conducting.
4 5
[1906] A.C. 535 at 540, 75 L.J.P.C. 73. (1874), L.R. 9 Ex. 192 at 196, 43 L.J. Ex. 153. 6 [1953] 2 S.C.R. 140 at 152, 107 C.C.C. 183, 4 D.L.R. 161. 7 [1962] O.R. 572, 133 C.C.C. 116, 34 D.L.R. (2d) 451.
The only statutory provision relied on by the respondent is clause (e) of s. 2 of the Canadian Bill of Rights, 1960 (Can.), c. 44, which reads as follows: 2. ...no law of Canada shall be construed or applied so as to ... (e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations; This does not assist the respondent, for the appellant has no power to determine any of the former's rights or obligations. In conclusion I wish to express my general agreement with the reasons of my brother Abbott and with those of Hyde and Montgomery JJ. I would dispose of the appeal as proposed by my brother Abbott. HALL J. (dissenting):--The relevant facts and the questions raised on this appeal are set out in the reasons of my brother Abbott. With deference, however, I cannot agree with the conclusion reached by him and by the other members of the Court. I see no alternative to the position taken by Owen J. in the Court of Queen's Bench8 that "Lafleur's right to a fair and impartial investigation implies that he has the right to attend and to be represented by counsel at the sittings of the inquiry." Although he was not acting in a judicial capacity or performing a judicial function, Guay was clothed with all the outward attributes of a judicial body, including the right to subpoena witnesses, to have them questioned under oath by counsel for the Crown and to compel them to give evidence as might any court of record in civil cases. Anyone entering the room in which the inquiry was begun would have thought himself in a judicial hearing or proceeding akin thereto. From this scene only one person is missing--the man whose affairs are under investigation. The door is barred to him. That, in my view, is a denial of a fair and impartial hearing to this man. It is urged that the requirement of acting judicially is absent here because Guay as Commissioner was not required
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to make a decision, that he was merely to conduct an inquiry and to make a report to the Deputy Minister who had authorized and named him to make the inquiry. I do not read the
8
[1963] Que. Q.B. 623, [1963] C.T.C. 201, 63 D.T.C. 1098.
terms of Guay's appointment authorized by s. 126 of the Income Tax Act as excluding the making of recommendations arising out of the inquiry. I think it is implicit to the inquiry that some judgment on the facts and information obtained would be made by Guay in his report to the Deputy Minister. If the Deputy Minister (who is said to be the person who would make the decision) had himself conducted the inquiry, he would have been required to act judicially in the sense that he must act fairly and impartially. See St. John v. Fraser9. Surely when the powers are given to a subordinate, the requirement of acting judicially is even stronger. One cannot ignore the reality of the situation that in such cases the decision is made by the subordinate but put out in the name of the Deputy Minister. I would, accordingly, dismiss the appeal with costs. SPENCE J.:--I have had the opportunity of reading the reasons of my brother Abbott and I agree in the result. It would appear, however, that it would be proper to examine the decision of this Court in St. John v. Fraser10. There, Fraser was appointed by the Attorney General of British Columbia under the provisions of s. 10 of the Securities Fraud Prevention Act of that province to carry on an investigation in reference to the affairs of Wayside Consolidated Gold Mines Limited. It appearing during the examination that the Vancouver Stock and Bond Company Limited had underwritten a large part of a new issue of stock to the former company, St. John, the Vancouver company's business manager, was examined by the investigator on four occasions. The solicitor for Mr. St. John and the Vancouver company was present on all of those occasions and their counsel on the last two. Both the solicitor and the counsel took part in the examinations of Mr. St. John and the counsel was afforded the fullest opportunity for argument on his clients' behalf. The investigator had in the meantime examined some other witnesses on matters connected with St. John and the Vancouver company's conduct without notice to them and with no opportunity for their counsel to cross-examine such witnesses.
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Their counsel requested a copy of the evidence given by two particular witnesses and the investigator informed such counsel that in view of the fact that St. John was about to be recalled to give further evidence he would furnish the counsel with the copies of the transcript
9
10
[1935] S.C.R. 441, 3 D.L.R. 465, 64 C.C.C. 90. [1935] S.C.R. 441, 3 D.L.R. 465, 64 C.C.C. 90.
of the evidence so requested after Mr. St. John had been further examined, and suggested that then counsel could recall St. John to give any further evidence or explanation that might be desired. It was admitted on behalf of the Attorney General that he had taken the position after counsel for Mr. St. John and the Vancouver company had intervened in the case, that such counsel was not entitled to cross-examine any witnesses who had been examined by the investigator in the course of the investigations and that he, the Attorney General, had so instructed the investigator. The solicitor for Mr. St. John and the Vancouver company then applied for an injunction restraining the investigator from proceeding with the investigation in so far as it related to the conduct or actions of either St. John or the Vancouver company and from making any finding or r...