This was a companion decision to RBC Life Insurance.
The Minister had obtained authorizations from the Federal Court under s. 231.2(3) to require the taxpayer to produce information relating to the employees of its corporate customers who had participated in a promotional cruise organized by the taxpayer.
The trial judge's decision to grant the taxpayer's application under s. 231.2(6) and cancel the authorization was based on similar reasoning as in RBC, and was therefore upheld. Stratas J.A. noted two additional observations worth making. He stated (at para. 6):
Key to the Federal Court's decision was the failure of the Minister to disclose in the ex parte application that there was an alternative source by which the information it desired could be obtained. As the Federal Court noted in its reasons, this Court has held that the existence of an alternative source is a material fact that should be disclosed in the ex parte application and "[a] judge must not be left in the dark on such an important point": M.N.R. v. Derakhshani, 2009 FCA 190 at paragraph 29.
Regarding the Minister's submission that the authorization should nevertheless be upheld because of the interest of verifying compliance with the Act, Stratas J.A. stated (at para. 7):
Considering the relevance of the non-disclosure to the court's discretion to issue the authorization, the reasons behind the disclosure requirement, the extent of the culpability associated with the non-disclosure, and the importance and significance of the matters not disclosed, the Federal Court exercised its discretion to cancel the authorization. The Minister has not persuaded me that there is any error in principle or palpable and overriding error vitiating the Federal Court's exercise of discretion.