Court of Appeal of Quebec

BT Céramiques inc. v. Agence du revenu du Québec

500-10-006542-177, 500-10-006543-175

Dufresne, Schrager, Roy

Appeals from judgments of the Superior Court dismissing applications to exclude evidence, setting aside verdicts of acquittal, and ordering a new trial. Allowed.

The appellants face a number of charges for tax evasion in regards to income tax and sales tax. Before the Court of Quebec, they presented an application to exclude evidence citing the misuse by the Agence du revenu du Québec (ARQ) and the Canada Revenue Agency of their tax audit powers to conduct a criminal investigation without their knowledge. The trial judge granted the application and ordered the exclusion of all of the evidence gathered during the searches that, according to the trial judge, derived from information obtained under the guise of an audit when it was a real investigation, in violation of R. v. Jarvis (S.C. Can., 2002-11-21), 2002 SCC 73, SOQUIJ AZ-50152150, J.E. 2002-2111, [2002] 3 S.C.R. 757. Acquittals were then rendered. However, the Superior Court judge sitting in appeal allowed the CRA’s and the ARQ’s appeals. He dismissed the application to exclude evidence, set aside the verdicts of acquittal, and ordered a new trial. The appellants allege that he committed errors of law in his analysis of the judgment in first instance. They also call into question the standard of review applied by him.  

The appellate judge committed an error of law in intervening as he did, because the trial judgment did not contain a reviewable error. He could not substitute his assessment of the evidence for that of the trial judge. The trial judge did not [TRANSLATION] “alter” the factors set out in Jarvis, nor was she mistaken about the scope of some of them. Indeed, she did not err in concluding that the CRA had enough evidence to allow it to initiate a criminal investigation when it chose instead to launch a new audit of the appellants. She also did not err in concluding that the overall conduct of the tax authorities suggested that they were carrying out a criminal investigation. Her assessment of the factor relating to the transfer, by the auditor, of his file and documents to the investigators was also based on the evidence adduced. The trial judge also did not make a reviewable error in her analysis of the other factors, including those relating to the conduct of the auditor as a mandatary of the investigators or the relevance of the evidence sought. It was also correct for the trial judge to conclude that, once the informations were free of illegally obtained elements, what remained could not justify the issuance of search warrants. Finally, the appellate judge erred in law by substituting his analysis for that of the trial judge regarding the appropriate remedy with respect to the violations of the appellants’ rights. The appeals are therefore allowed and the verdicts of acquittal are restored. 

The trial judgment does not contain the errors of law imputed to it by the appeal judge. Deference was owed to the answers given by the trial judge in her analysis of the evidence in light of each of factors set out in Jarvis. She had not altered the first factor established in that judgment.

*Summary by SOQUIJ
Text of the decision: Http://

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