Drake, J.:—On February 24 last Cohen, J. authorized action by the petitioner in accordance with subsection 225.1(1) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). This section provides for a delay in the exercise of various collection procedures; but, under subsection 225.2(2), on the ex parte application of the Minister of National Revenue, a judge, upon being satisfied that collection of taxes due would be "jeopardized" by the delay provided for in subsection 225.1(1), may authorize the Minister to proceed. That is what my brother Cohen did.
Before me, rather than Cohen, J., evidently by consent, is an application under subsection 225.2(8) of the Act to review this authorization. The grounds put forward to justify setting it aside are said to be, first, the failure of the Deputy Minister to make full disclosure of all material circumstances in the first instance; and second, failure to establish that“ "jeopardy" will result from a delay in collection.
The first ground is the suppressio veri which will vitiate any order obtained ex parte in ordinary cases such as an interlocutory injunction: see Gulf Islands Navigation Ltd. v. Seafarers? International Union of North America and Cunningham and Heinekey (1959), 28 W.W.R. 517, 18 D.L.R. (2d) 265: and the second goes to the actual merits of the petitioner's case.
The background facts are well set out in Mr. Green's chambers brief, and are not questioned by Ms. McCormick. I reproduce them here for convenience:
3. The respondent was charged with a number of offences in February/March of 1990. The indictment on which the respondent was tried in the Supreme Court can be found at Tab 6. On the trial of the indictment the Crown stayed proceedings on counts 4, 5, 6 and 7 and counts 9 and 10 were quashed by Mr. Justice Melvin. The respondent was acquitted on counts 1, 2, 3 and 8 on January 31st, 1992.
4. In February and March 1990 the police executed a number of search warrants and seized property and documents from the respondent, some of which are listed in Exhibit "C" to the affidavit of Ronald McPherson Coull filed herein by the petitioner.
5. Most of the property referred to in Coull's affidavit was not tendered by the Crown in the trial proceedings. Despite that, the Crown indicated they would not agree to returning the respondent's property until the applicable appeal period had expired after his acquittal (March 2nd, 1992).
6. In June of 1991, after receiving “ Requirements for Information” from Revenue Canada, the respondent retained the law firm Thorsteinssons in Vancouver to act for him in his dealings with Revenue Canada.
7. Nicholas Smith of Thorsteinssons dealt principally, although not exclusively, with Bradford Anderson at Revenue Canada. Mr. Smith’s contact with Revenue Canada on behalf of the respondent is outlined in his affidavit which is at Tab 4.
8. As his affidavit discloses, Mr. Smith was scheduled to meet with Bradford Anderson on February 24th, 1992 at Thorsteinssons" offices in Vancouver at Mr. Anderson's suggestion. The purpose of this meeting was to have a“ frank discussion" about the respondent's file. Of course, that meeting was cancelled by Mr. Anderson between 9:30 and 10:00 a.m., presumably because the “frank discussion" would have been both irrelevant and somewhat less than “frank” in light of the steps Revenue Canada was then taking without notice to the respondent or his solicitors.
To persuade the court that his authorization ought to be set aside, the applicant must show that the petitioner failed in a duty to show the utmost good faith in his original ex parte application. Where, as here, a lack of disclosure is alleged, that lack must be of serious, material particulars, which, had they been known at first instance, would have moved the judge to refuse the relief sought. Slight omissions which would have no real bearing on the merits of the matter do not constitute any breach of the petitioner's duty to disclose all material considerations. There must be omissions which can fairly be said to have misled the judge. Equity governs.
The principal evidence before Cohen, J. was the affidavit of Bradford Anderson, a civil servant charged with the collection of assessed taxes, sworn on February 21, 1992, shortly before the hearing. Other affidavits therein referred to were also before him.
In May and again in November of 1991, Mr. Anderson served Jackman with formal requirements for information and got no response. At that time Jackman was involved in the prosecution I have referred to. In June of 1991 he retained Mr. Nicholas Smith of the law firm of Thorsteinssons to represent him in the taxation matter. Mr. Smith so notified Mr. Anderson, and spoke with him on various occasions, as well as with a solicitor in the Department of Justice, regarding Jackman's taxation matters. There were many meetings and conferences between Mr. Smith, his client, the Department of Justice and Anderson up to February, 1992, when the conspiracy charges against Jackman were disposed of, some by stays and others by acquittal.
Throughout, I am satisfied, Jackman's position was that he would comply with Revenue Canada's requirements when the criminal charges were dealt with.
Much of the information required had already been seized by the police in the conspiracy matter, and had been retained by the Crown.
This information appears in a report which W.M. Trenholme, a chartered accountant, had furnished to the police: and this report was an exhibit in the preliminary hearing of the conspiracy charges.
None of this was before Cohen, J., and if full disclosure of material facts was to be made, it should have been.
Turning now to the matter of jeopardy, Jackman is said to have sold or disposed of various exigible assets which would or could be security for payment of taxes. This indeed happened: but not for any improper purpose. Certain moneys seized went to his defending solicitors by way of retainer in the conspiracy prosecution, under the authority of a consent order of Oliver, J. Other moneys realized from the sale, at a considerable loss, of a a“ time share” at a Whistler resort, went into the living expenses of Jackman and his family. I need not mention the details of other items of property, which are satisfactorily accounted for.
I conclude that there was, in the ex parte proceedings before Cohen, J., suppressio veri of a material nature: had he been made aware of what has since come to light before me, information which was either known or readily available at the time, it is unlikely in the extreme that he would have made the authorization order he did.
In these circumstances, the authorization should be set aside; costs to the respondent.
Application granted.