143471 Canada Inc. v. Quebec (Attorney General); Tabah v. Quebec (Attorney General), 1994 CanLII 89 (SCC), [1994] 2 SCR 339

The Minister of Revenue of Quebec, the Deputy Minister of Revenue of Quebec, the Attorney General of Quebec and Robert Paulin Appellants

v.

143471 Canada Inc., Leonardo Arcuri, Francesco Milioto, Antonio Facchino, John A. Paoletti, Santo Gracioppo and Casimiro C. Panarello Respondents

and between

The Minister of Revenue of Quebec, the Deputy Minister of Revenue of Quebec, the Attorney General of Quebec and François Laramée Appellants

v.

Maurice Tabah, 116689 Canada Inc., Les Entreprises immobilières Maurice Tabah Inc., Georges Abouassly, Ibrahim Haddad, Fernand Hétu, Paul‑Omer Desrosiers, Me Johanne Piette and Service immobilier Joliette Inc. Respondents

Indexed as: 143471 Canada Inc. v. Quebec (Attorney General); Tabah v. Quebec (Attorney General)

File No.: 22989.

1993: October 5; 1994: May 26.

Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Cory, McLachlin and Iacobucci JJ.

on appeal from the court of appeal for quebec

Procedure ‑‑ Interlocutory relief ‑‑ Documents seized pursuant to provisions of tax legislation ‑‑ Motions for orders impounding seized documents granted ‑‑ Documents sealed until final judgment rendered on legality of search warrants ‑‑ Whether impounding orders should be set aside.

Commercial documents were seized at the places of business of the corporate respondents and the homes of the respondents Arcuri and Tabah. In both cases the respondents challenged the legality of the search warrants by means of motions in evocation, certiorari and mandamus in which they sought to quash the warrants and attacked the constitutionality of ss. 40 and 40.1 of the Act respecting the Ministère du Revenu ("AMR"), which authorize searches, alleging inter alia that these sections infringe ss. 7 and 8 of the Canadian Charter of Rights and Freedoms. By way of interlocutory relief the respondents appended to their actions motions to have all the seized documents impounded pending a final judgment on the legality of the search warrants. In 143471 Canada Inc., the Superior Court allowed the motion to impound but dismissed the motion in evocation, certiorari and mandamus 15 months later, concluding that s. 40 AMR was constitutional. The respondents appealed that decision. In the meantime the Court of Appeal allowed their motion to impound the seized documents for the duration of the appeal. While this Court's judgment on the appeal from that decision was still under reserve, the Court of Appeal dismissed the appeal with respect to the motion in evocation, certiorari and mandamus. In Tabah, the Superior Court allowed the motion to impound and the Court of Appeal dismissed the appellants' appeal from that judgment. This appeal raises the question whether interlocutory relief in the form of an impounding order should be granted until the validity of the provisions in the AMR authorizing searches has been determined under the Charter.

Held (La Forest, L'Heureux‑Dubé and McLachlin JJ. dissenting): The appeal should be dismissed.

Per Sopinka, Cory and Iacobucci JJ.: In considering an interim measure in the context of a Charter challenge to the validity of the underlying law, a court must consider three criteria: (1) the seriousness of the question to be tried; (2) the possibility of irreparable harm to the applicant if the interim order is refused; and (3) the balance of inconvenience caused to the parties by the interim order. A consideration of these three criteria in this case leads to the conclusion that the impounding orders should be maintained.

First, there is a serious question of law raised in this case.

Second, if the respondents are successful in the main applications, they would suffer irreparable harm if the impounding orders were to be set aside. The searches were made pursuant to the provisions of a regulatory statute dealing with a highly regulated business and the expectation of privacy in the commercial documents seized was thus relatively low. However, there is still some measure of privacy in commercial documents. Since the purpose of the impounding orders is to preserve the rights of the respondents pending a final determination of a legal question which will affect those rights, if the orders are not maintained and the warrants are quashed, the loss of that privacy interest, small as it may be, would in itself constitute irreparable harm. But there is a more significant aspect in this case. The documents were obtained by means of intrusive searches of residential and business premises and so long as the documents are held by or on behalf of the government there is a continuing violation of the respondents' very real and significant privacy interest in those premises. There would thus clearly be irreparable harm to the respondents if the warrants are quashed. The government will have had the continuing possession of these documents in the absence of any authority and in violation of the Charter. The intrusive nature of the searches cannot be isolated from the taking of the documents. Section 69 AMR does not adequately protect the respondents' privacy interests. It prohibits the public release of information contained in the documents but does not protect the respondents from having their privacy interests in their homes and offices violated by the state ‑‑ the very interest that s. 8 of the Charter is aimed at protecting. Finally, it is highly speculative to expect that a breach of privacy interests, not only in the documents, but also in the homes and offices of the respondents, could be compensated in damages.

Third, and most importantly, the balance of inconvenience favours the respondents. The impounding orders protect both the integrity of the documents and the privacy interest of the respondents, and this sensible interlocutory measure does not harm the public interest. The evidence clearly establishes that the granting of impounding orders will not paralyse the enforcement of taxation laws in the province of Quebec, even if in every case where searches were carried out, impounding orders were in fact issued. The Minister of Revenue is still at liberty to carry out searches and effect seizures and can still investigate and proceed under other sections of the Act. An impounding order does no more than delay the Minister viewing the documents seized. Further, the statistics do not disclose a problem of a flood of impounding orders and there is nothing to indicate that there is a probability, or even a real possibility, that there would be a flood of similar requests as a result of granting these applications. There are so few searches and seizures carried out each year under taxation statutes in the province that this case is still one of exemption and not of suspension. Since there is no serious interference with the enforcement of taxation statutes resulting from the granting of the impounding orders, there is no interference with the public interest and, on this basis, the impounding orders should be granted. Moreover, even if it can be said that the irreparable harm the respondents would suffer from the refusal of the impounding orders is small, the impounding orders should be upheld since there is no significant interference with the public interest.

Per Lamer C.J.: Cory J.'s reasons were generally agreed with, subject to one comment. Since the scope of a right guaranteed by the Charter must be assessed in context, it is necessary to take into account all the relevant factors which indicate the importance of a right to the person who enjoys it. This means that one should avoid creating rigid categories that will be used to determine the scope of a constitutional guarantee in a mechanical fashion. The "licensing" theory is therefore of no value in determining the extent of the respondents' expectations of privacy. While the distinction between criminal acts and regulatory offences is a useful and very real one, it should not be used to obscure other aspects of the context of a given case. Yet that is precisely what is likely to happen if one presumes that those who engage in "regulated" activities have accepted a lower level of constitutional protection. The licensing theory is based on an erroneous factual premise since it cannot be said, in a general and abstract manner, that any person engaging in a regulated activity, whatever it may be, automatically acquiesces in a limited application of the Charter to him‑ or herself. Here, when all the relevant factors are taken into account, it can be concluded that the respondents had reasonable expectations of privacy with respect to the documents seized and that they are sufficiently important to justify upholding the impounding orders.

Per La Forest, L'Heureux‑Dubé and McLachlin JJ. (dissenting): A prima facie case, irreparable harm and the balance of convenience are the three criteria relevant in determining whether interlocutory relief should be granted. This analytical framework permits the reconciliation of the rights and freedoms guaranteed in the Charter with the conduct of governmental affairs.

In the present case the first criterion has been met. In view of the serious arguments raised by the respondents against the constitutionality of ss. 40 and 40.1 AMR, it cannot be concluded that the motions in evocation, certiorari and mandamus are frivolous or vexatious. The dismissal of the motion by the Superior Court in 143471 Canada Inc. is a relevant factor, but is not sufficient to alter the fact that serious questions have been raised. Moreover, the precedents regarding stay of proceedings should not be applied without qualification when the constitutionality of legislation is challenged under the Charter, in view of the importance and complexity of the rights and freedoms it guarantees.

With respect to the second criterion, it cannot be concluded that the respondents will suffer irreparable harm if the impounding orders are set aside. The existence of irreparable harm cannot be inferred simply because a breach of a right protected by the Charter is alleged or because the main proceeding itself involves the infringement of a guaranteed right. Both the right and the alleged infringement must be placed in context. In the present case the harm claimed by the respondents relates solely to the fact that the tax authorities will learn the content of the documents seized. Any reasonable expectations of privacy the respondents may have regarding the content of those documents are considerably reduced owing to their relevance in establishing the tax profile of their business and the responsibilities they assume as agents of the government. The search warrants and the seizures were directed only at the respondents' business documents, production of which may be required under the AMR. By allowing a person to object to the production or seizure of documents containing information protected by professional privilege, and prohibiting disclosure of the information obtained in the course of the investigation, the AMR minimizes the risk that the respondents may suffer harm as a result of the implementation by the tax authorities of the investigative scheme provided by that Act. Finally, the possibility that the seized documents may contain information of a personal nature is not sufficient to alter the reasonable expectations of privacy of taxpayers in respect of such documents. On the one hand, the AMR itself does not permit the seizure of documents containing personal information; on the other hand, the respondents themselves have never claimed that such documents were in fact seized. It can therefore not be concluded that the respondents will suffer irreparable harm if the tax authorities examine the contents of the documents seized.

With respect to the third criterion, an assessment of the balance of convenience does not favour the respondents. As the existence of irreparable harm has been ruled out, it is hard to see how the respondents could suffer significant hardship if they were denied the impoundment. Since the only effect of the impounding order is to delay the examination of the documents, it can be assumed that at some point or other the respondents will suffer the hardships associated with an investigation by the Ministère du Revenu, whether or not the sections are declared unconstitutional. On the other hand, if the impoundment is upheld, the delays imposed on the appellants in examining the contents of the seized documents are likely to jeopardize proof of the offences. Even if it is admitted that impoundment does not have the effect of suspending the Minister's investigative powers, there is nothing to suggest that he could make significant progress with his investigation if the impoundment were upheld.

Be that as it may, the present case has ramifications that go beyond the immediate interests of the parties, if only because of the mandate underlying the action of the Ministère ‑‑ namely the implementation and execution of tax legislation. It is thus necessary to take the public interest into account in determining the balance of convenience. Because the AMR is based on the principle of self‑declaration and self‑assessment, the implementation of the investigative provisions contained in ss. 40 and 40.1 AMR is essential if the integrity of the collection system is to be maintained and these investigative powers form the principal tool available to the Ministère to fight tax evasion. Although it is not possible to speak of a "flood of actions", the systematic nature of recent impounding orders cannot be ignored. Since the Ministère must adduce proof beyond a reasonable doubt and in view of the difficulties of proof inherent in the nature of offences against the tax laws, even temporarily watering down investigative powers has more than a symbolic effect on the public interest.

Cases Cited

By Cory J.

Applied: Manitoba (Attorney General) v. Metropolitan Stores Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110; RJR ‑‑ MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311; referred to: Hadmor Productions Ltd. v. Hamilton, [1982] 1 All E.R. 1042; Aetna Financial Services Ltd. v. Feigelman, 1985 CanLII 55 (SCC), [1985] 1 S.C.R. 2; Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 CanLII 110 (SCC), [1992] 1 S.C.R. 3; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 CanLII 135 (SCC), [1990] 1 S.C.R. 425; R. v. McKinlay Transport Ltd., 1990 CanLII 137 (SCC), [1990] 1 S.C.R. 627; R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154; Baron v. Canada, 1993 CanLII 154 (SCC), [1993] 1 S.C.R. 416; Ameublement Jeanne Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑003335‑872, April 15, 1987; Brochetterie Tino Inc. v. Québec (Procureur général), [1989] R.D.F.Q. 98; Restaurant le Gourmet grec Inc. v. Séguin, [1989] R.D.F.Q. 80; Courrier grec du Canada Ltée v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑002016‑895, February 24, 1989; Cuisines Multiform internationales Inc. v. Angers, [1992] R.D.F.Q. 46; Cuisines Multiform internationales Inc. v. Angers, [1992] R.D.F.Q. 126; Électro Marine Diesel Inc. v. Québec (Procureur général), [1992] R.D.F.Q. 125; Groupe Shakiba Inc. v. Québec (Procureur général), [1993] R.D.F.Q. 70; Zeppetelli v. Canada, 1990 CanLII 3090 (QC CA), [1990] 2 C.T.C. 354.

By Lamer C.J.

Referred to: Edmonton Journal v. Alberta (Attorney General), 1989 CanLII 20 (SCC), [1989] 2 S.C.R. 1326; Rocket v. Royal College of Dental Surgeons of Ontario, 1990 CanLII 121 (SCC), [1990] 2 S.C.R. 232; Kindler v. Canada (Minister of Justice), 1991 CanLII 78 (SCC), [1991] 2 S.C.R. 779; R. v. Généreux, 1992 CanLII 117 (SCC), [1992] 1 S.C.R. 259; R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154.

By La Forest J. (dissenting)

Manitoba (Attorney General) v. Metropolitan Stores Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110; RJR ‑‑ MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311; R. v. McKinlay Transport Ltd., 1990 CanLII 137 (SCC), [1990] 1 S.C.R. 627; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 CanLII 135 (SCC), [1990] 1 S.C.R. 425; Zeppetelli v. Canada, 1990 CanLII 3090 (QC CA), [1990] 2 C.T.C. 354; Baron v. Canada, 1993 CanLII 154 (SCC), [1993] 1 S.C.R. 416, aff'g 1990 CanLII 13083 (FCA), [1991] 1 F.C. 688; Re B.C. Motor Vehicle Act, 1985 CanLII 81 (SCC), [1985] 2 S.C.R. 486; Hunter v. Southam Inc., 1984 CanLII 33 (SCC), [1984] 2 S.C.R. 145; Kourtessis v. M.N.R., 1993 CanLII 137 (SCC), [1993] 2 S.C.R. 53; R. v. Dyment, 1988 CanLII 10 (SCC), [1988] 2 S.C.R. 417; United States of America v. Cotroni, 1989 CanLII 106 (SCC), [1989] 1 S.C.R. 1469; Edmonton Journal v. Alberta (Attorney General), 1989 CanLII 20 (SCC), [1989] 2 S.C.R. 1326; R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154; Air Canada v. British Columbia, 1989 CanLII 95 (SCC), [1989] 1 S.C.R. 1161; Fafard Buildings System Inc. v. R., J.E. 90‑1187; Ameublement Jeanne Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑003335‑872, April 15, 1987; Brochetterie Tino Inc. v. Québec (Procureur général), [1989] R.D.F.Q. 98; Restaurant le Gourmet grec Inc. v. Séguin, [1989] R.D.F.Q. 80.

Statutes and Regulations Cited

Act respecting the Ministère du Revenu, R.S.Q., c. M‑31, ss. 34(1) [rep. 1983, c. 49, s. 40], 38(a) [am. 1986, c. 95, s. 190], 39, 40 [rep. 1986, c. 95, s. 191; am. 1988, c. 21, s. 104], 40.1 [ad. 1986, c. 95, s. 191], 40.2 [ad. 1986, c. 95, s. 191], 46 [rep. 1990, c. 4, s. 587], 53 [idem, s. 589], 69, 78 [am. 1982, c. 38, s. 28].

Canadian Charter of Rights and Freedoms, ss. 7, 8.

Charter of Human Rights and Freedoms, R.S.Q., c. C‑12, s. 24.1 [ad. 1982, c. 61, s. 1].

Criminal Code, R.S.C., 1985, c. C-46.

Meals and Hotels Tax Act, R.S.Q., c. T‑3.

APPEAL from judgments of the Quebec Court of Appeal (1992), 32 A.C.W.S. (3d) 226 and [1992] R.D.F.Q. 44, granting the motion to impound seized documents brought by the respondents 143471 Canada Inc. et al., and affirming a judgment of the Superior Court, [1991] R.D.F.Q. 90, granting the motion to impound seized documents brought by the respondents Tabah et al. Appeal dismissed, La Forest, L'Heureux‑Dubé and McLachlin JJ. dissenting.

Michel Dansereau, Judith Kucharsky and Pierre Gonthier, for the appellants.

Guy Du Pont, Basile Angelopoulos and Ariane Bourque, for the respondents.

English version of the reasons delivered by

By Lamer C.J.

Lamer C.J. ‑‑ I am generally in agreement with the reasons of Justice Cory. With respect, however, I would like to add a comment concerning the factors he takes into account in assessing the respondents' expectations of privacy.

It is now well settled that the scope of a right guaranteed by the Canadian Charter of Rights and Freedoms must be assessed in context. This method was first explained by Wilson J. in Edmonton Journal v. Alberta (Attorney General), 1989 CanLII 20 (SCC), [1989] 2 S.C.R. 1326, at pp. 1352‑55, and again applied by the Court in Rocket v. Royal College of Dental Surgeons of Ontario, 1990 CanLII 121 (SCC), [1990] 2 S.C.R. 232; Kindler v. Canada (Minister of Justice), 1991 CanLII 78 (SCC), [1991] 2 S.C.R. 779; and R. v. Généreux, 1992 CanLII 117 (SCC), [1992] 1 S.C.R. 259. It is thus necessary to take into account all the relevant factors which indicate the importance of a right to the person who enjoys it. This also means that we should avoid creating rigid categories that will be used to determine the scope of a constitutional guarantee in a mechanical fashion.

I am concerned about the fact that Cory J. relies on the so‑called "licensing" theory in determining the extent of the respondents' expectations of privacy. This theory, which he explained in detail in his reasons in R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154, at pp. 227‑33, essentially holds that persons engaging in "regulated" activities are presumed to have accepted the existence of such regulation, greater intervention by the state in their activities, and a lower measure of constitutional protection.

In my humble opinion this theory is open to two kinds of criticism.

First, it tends to give credence to the idea that there is a clear distinction between regulatory offences and truly criminal acts, and that there are two different definitions of the rights guaranteed by the Charter corresponding to these two categories of offences. This approach reflects a formalism alien to the contextual method. The distinction between criminal acts and regulatory offences is a useful and very real one, but it should not be used to obscure other aspects of the context of a given case. That is precisely what is likely to happen if we presume that those who engage in "regulated" activities have accepted a lower level of constitutional protection. If there were such a waiver there would be no need to examine the other aspects of the context.

Second, with respect, I am of the view that the licensing theory is based on an erroneous factual premise. It cannot be said, in a general and abstract manner, that persons engaging in regulated sectors of life in society expect a lower level of constitutional protection. It is true that intervention by government officials is generally accepted in certain areas and that accordingly the expectations of privacy of persons working in those areas may be lower. However, this observation cannot be transformed into a general rule presuming that any person engaging in a regulated activity, whatever it may be, automatically acquiesces in a limited application of the Charter to him- or herself. In the present case I cannot say that the respondents agreed to allow the state to search their homes when they set up their restaurant and hotel businesses. In my opinion, there is no factual foundation for such a proposition. We may also take the example of driving an automobile, a highly regulated activity. Can it be said that people who obtain a driver's licence thereby accept that they will not have the full benefit of the rights set forth in the Charter? I do not think so.

In reality the only factual proposition that can be taken as valid is the one set out by Cory J. at p. 377: "Those who enter a regulated field must accept regulations as an integral part of their business operations". The same can be said about the criminal law: anyone who lives in society must accept the rules laid down in the Criminal Code, R.S.C., 1985, c. C‑46. There is nothing surprising in this: the validity of legislation does not depend on the consent of those to whom it applies. Accordingly, although the statement by Cory J. is correct, it cannot be used as the basis for a valid distinction between various types of offences, depending on whether or not the individuals concerned "accept" the rules in question. All things considered, I do not feel that the "licensing" theory can be of any value in determining the scope of the rights guaranteed by the Charter.

I have nevertheless come to the same conclusion as Cory J. regarding the extent of the respondents' expectations of privacy. Cory J. notes the following factors.

1.The Act respecting the Ministère du Revenu, R.S.Q., c. M‑31, does not create criminal offences in the strict sense. Its purpose is instead to set up an administrative mechanism for the collection of taxes.

2.The Minister may seize a considerable number of documents whose connection with enforcement of the Act may be tenuous.

3.The Act allows for searches at the premises of third parties who are not the subject of an investigation and who may have been in compliance with the Act.

4.Certain searches took place at the respondents' private homes, not their commercial establishments.

5.Searches involve a greater intrusion into individual privacy than a mere demand for production of documents.

From factors 2, 3, 4 and 5 it can be concluded that the respondents had reasonable expectations of privacy with respect to the documents seized by the appellants. The first factor suggests that the scope of these expectations should be treated as relative, but like Cory J. I am of the view that they are sufficiently important to justify upholding the impounding orders.

I would dismiss the appeal with costs.

English version of the reasons of La Forest, L'Heureux-Dubé and McLachlin JJ. delivered by

By La Forest J. (dissenting)

La Forest J. (dissenting) ‑‑ This case raises the question whether interlocutory relief in the form of an impounding order should be granted until the validity of the provisions authorizing searches in the Act respecting the Ministère du Revenu, R.S.Q., c. M‑31, has been determined under the Canadian Charter of Rights and Freedoms.

Facts

The facts in the two cases giving rise to these appeals are similar and may be summarized as follows. Judges of the Court of Quebec issued written authorizations to conduct searches pursuant to s. 40 of the Act respecting the Ministère du Revenu (hereinafter the "Act"), based on sworn informations that the respondents had inter alia attempted to avoid the payment of sums of money pursuant to the Meals and Hotels Tax Act, R.S.Q., c. T‑3. These authorizations were executed at the places of business of the corporate respondents and the homes of the respondents Arcuri and Tabah. Several documents were seized.

In both cases the respondents challenged the legality of the search warrants by means of motions in evocation, certiorari and mandamus, seeking to quash the seizure authorizations and their execution and to attack the constitutionality of ss. 40 and 40.1 of the Act in light of ss. 7 and 8 of the Canadian Charter of Rights and Freedoms (hereinafter the "Charter") and s. 24.1 of the Quebec Charter of Human Rights and Freedoms, R.S.Q., c. C‑12. By way of interlocutory relief the respondents appended to their actions motions to have all the seized documents impounded so they could be sealed and given into the custody of a third party pending a final judgment on the legality of the search warrants.

In the 143471 Canada Inc. case, on November 7, 1990, Hannan J. of the Quebec Superior Court allowed the motion to impound the seized documents, until such time as judgment was rendered at trial on the legality of the search warrants: [1990] R.D.F.Q. 104. On February 10, 1992 Croteau J. of the Quebec Superior Court dismissed the motion in evocation, certiorari and mandamus and concluded that s. 40 of the Act was constitutional: [1992] R.D.F.Q. 48. The respondents appealed that decision and asked the Court of Appeal to issue an order impounding the seized documents for the duration of the proceedings. On March 9, 1992, the Court of Appeal allowed the motion to impound the seized documents: (1992), 32 A.C.W.S. (3d) 226. While this Court's judgment on the appeal from that decision was still under reserve, the Quebec Court of Appeal dismissed the appeal with respect to the action in evocation, certiorari and mandamus, on May 18, 1994: J.E. 94-934.

In the Tabah case, on June 18, 1991, Marquis J. of the Quebec Superior Court allowed the motion to impound the seized documents until a judgment was rendered on the legality of the search warrants: [1991] R.D.F.Q. 90. The appellants appealed that judgment. On March 9, 1992, the Court of Appeal dismissed their appeal: [1992] R.D.F.Q. 44.

Judgments of the Courts Below

Quebec Superior Court, 143471 Canada Inc. Case, [1990] R.D.F.Q. 104

Hannan J. characterized the motion to impound as an exemption case since it applied only to the respondents, was confined to the documents seized, and related to the offences alleged. In ruling on the validity of the motion he considered the three criteria set out in Manitoba (Attorney General) v. Metropolitan Stores Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110, namely, whether there was a serious question to be tried, the irreparable harm the respondents might suffer if the motion was dismissed and the balance of convenience.

Hannan J. noted that the first criterion was difficult to apply at the interlocutory stage. He referred to the opinion expressed by Beetz J. in Metropolitan Stores that the courts are reluctant to grant an interlocutory injunction unless the public interest is weighed in the balance of convenience. Relying on R. v. McKinlay Transport Ltd., 1990 CanLII 137 (SCC), [1990] 1 S.C.R. 627, and Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 CanLII 135 (SCC), [1990] 1 S.C.R. 425, Hannan J. noted that the distinction between the criminal and regulatory contexts with regard to what constitutes a reasonable invasion of privacy was likely to increase that reluctance to order interlocutory relief. He concluded, however, that it was difficult to assess if a prima facie case was made out and proposed to review the other criteria.

In determining whether irreparable harm existed, Hannan J. relied on the Quebec Court of Appeal's decision in Zeppetelli v. Canada, 1990 CanLII 3090 (QC CA), [1990] 2 C.T.C. 354. In that case the court noted that impoundment was an essential preventive measure for the constitutional protection of privacy against a seizure that might eventually be declared unreasonable. In the court's view refusing the impoundment would cause irreparable harm since the disclosure would be an invasion of privacy and would render the protection conferred by the Charter meaningless. Hannan J. considered he was bound by this decision and concluded as follows (at p. 109):

[translation] In this unanimous judgment in Zeppetelli it is possible to draw the inference that once protection of privacy is sought in a case where the intrusion is allegedly unconstitutional (or at least anti‑constitutional), the Court of Appeal considered that the criterion of irreparable harm has been met and, apparently, that the judgment in Dyment would support such a conclusion.

With respect to the balance of convenience criterion, Hannan J. pointed out that the exemption sought by the respondents was very limited in its application and did not have the effect of paralysing any other investigation or prosecution for other offences relating to different periods. He noted the comments made by Baudouin J.A. in Zeppetelli, supra, who pointed out that [translation] "as between inconveniences of an essentially administrative nature and those involving a constitutionally protected fundamental right, the balance must tip in favour of the latter" (p. 357). Hannan J. came to the following conclusion (at p. 110):

[translation] In the present case, where the exceptional stay is restricted to the items already seized, and does not suspend the application of the tax legislation, except in this regard, and where the irreparable harm and balance of convenience are in favour of the applicants until this Court renders a judgment on the motion in evocation, and although the merits of the case are not crystal clear, there is a good basis for granting the present motion to impound.

Quebec Superior Court, Tabah Case, [1991] R.D.F.Q. 90

Like Hannan J., Marquis J. of the Quebec Superior Court relied on Metropolitan Stores and Zeppetelli, supra, in deciding whether to grant the impounding order. He characterized the case as one of exemption since the effect of the motion to impound was only to suspend pendente lite the application of the impugned provisions of the Act as they affected the respondents. Marquis J. proceeded to apply the three relevant criteria in determining whether to grant the respondents' motion.

Marquis J. concluded that the respondents met the prima facie case criterion since the case raised a serious question. In his view the contention put forward by the appellants was not so immediately obvious as to exclude from consideration that put forward by the respondents. In support of this conclusion he relied on the reasons of Hugessen J.A. of the Federal Court of Appeal in Baron v. Canada, 1990 CanLII 13083 (FCA), [1991] 1 F.C. 688.

Regarding the irreparable harm criterion, Marquis J., after referring to the Court of Appeal's decision in Zeppetelli, supra, concluded (at p. 96):

[translation] While it is true that the seizures have already been made, the evidence shows that the examination of the documents seized is far from being complete. The very purpose of that examination is to identify evidence which might eventually lead to the prosecution of one or more of the [respondents]. It is also this examination of the seized documents which is an invasion of privacy: if the seizures were eventually quashed, irreparable injury would be caused to the [respondents] which could have been prevented by the impoundment.

With respect to the balance of convenience criterion, Marquis J. also relied on the foregoing passage from the Court of Appeal's decision in Zeppetelli, which noted that [translation] "as between inconveniences of an essentially administrative nature and those involving a constitutionally protected fundamental right, the balance must tip in favour of the latter" (p. 357). On the question of the public interest, he noted that although the public is entitled to have the law respected and to have offenders prosecuted, the appellants' fear ‑‑ that applications to impound would become so numerous as to paralyze the operation of the Act ‑‑ was not based on any factual evidence. Accordingly, since the exemption was limited to specific persons and documents and the case raised a serious question, Marquis J. ordered that the documents be impounded until a final judgment was rendered on the legality of the searches.

Quebec Court of Appeal

The Quebec Court of Appeal allowed the motion to impound in the 143471 Canada Inc. case, relying on the principles set out in Zeppetelli and the reasons given in the judgment it rendered the same day in the Tabah case. In the latter the Court of Appeal dismissed the appellants' appeal, being of the view that the purpose of the motion to impound was not to suspend the effect of the Act but simply to delay temporarily access to the seized documents, which might also contain information of a personal nature. The judgment was as follows:

[translation] Whereas in the present case the purpose of the respondents' motion was not to suspend the effect of the Act, since according to its terms the investigations and other measures undertaken against the respondents can continue and have in fact continued;

Whereas the purpose of the motion was only to suspend, on a purely temporary basis, the appellants' access to documents, books and registers which might contain personal items of information and so contravene the protection of privacy guaranteed by law;

Whereas, although this Court is not ruling on the reality or existence of the other criteria, the respondents have both in the Superior Court and in this Court demonstrated a prima facie case and so met the first condition set out above;

Whereas further the Supreme Court of Canada recently heard two cases on not exactly identical but similar points of law in Baron v. Canada and Kourtessis v. M.N.R. and those cases are currently reserved;

In view of Attorney General of Manitoba v. Metropolitan Stores Ltd.; Hunter v. Southam Inc.; Bâtiments Fafard inc./Fafard Building System Inc. v. R. [J.E. 91-1611] and Zeppetelli v. R.

For these reasons:

Dismisses the appeal with costs.

([1992] R.D.F.Q. 44, at p. 45.)

Analysis

In Metropolitan Stores, supra, this Court expressly rejected the presumption of constitutional validity of legislation, understood in its literal sense, as it considered it to be "not compatible with the innovative and evolutive character" of the Charter (p. 124). The presumption of constitutional validity of legislation is at variance with the flexible and generous interpretation that should be given to the Charter in view of the nature of the rights and freedoms entrenched in it: see Re B.C. Motor Vehicle Act, 1985 CanLII 81 (SCC), [1985] 2 S.C.R. 486. Interlocutory relief was refused in Metropolitan Stores, however, and the disputed provisions continued to apply while their constitutionality was being determined. That decision indicates that interlocutory orders suspending the application of legislation will not be granted automatically.

A cautious approach is all the more necessary as the government's activities have ramifications throughout all aspects of life in society. There is much other legislation, in addition to taxation statutes, that includes inspection or investigation systems the implementation of which might give rise to applications designed to impede their operation: legislation on the environment, the professions, labour, health and safety and securities transactions are some examples. The orchestration of a large number of activities regulated by the government might be compromised if litigants could easily avoid the application of legislation adopted by democratically elected legislatures, presumably in the public interest.

In addition there is the problem of systemic delays in court challenges. This cannot be ignored in deciding whether to grant interlocutory relief suspending the application of legislation for the duration of the proceedings. In the present appeal the search authorizations were issued in June 1990 in the 143471 Canada Inc. case and in March 1991 in the Tabah case. In the former case the appeal from the motion in evocation, certiorari and mandamus was dismissed by the Quebec Court of Appeal on May 18, 1994. In the latter the motion has not yet been dealt with at first instance. A final ruling on the validity of these motions, if it were to be made by this Court, is not to be expected for some time.

In this light, it is necessary to adopt an analytical framework that permits the reconciliation of the rights and freedoms entrenched in the Charter with the conduct of governmental affairs. Although this point was not expressly made by the parties, it seems to me entirely appropriate to use the analytical framework developed in Metropolitan Stores, even though this appeal does not raise the question of a stay of proceedings or an injunction. If granted, the remedy sought will exempt the respondents for all practical purposes from the application of the provisions of the Act regarding investigations until the legality of the searches has been determined.

The three criteria set out in Metropolitan Stores ‑‑ prima facie case, irreparable harm and balance of convenience ‑‑ have recently been revisited by this Court in RJR ‑‑ MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311. My colleagues Sopinka and Cory JJ. there made an analysis of the principles with which I entirely agree. There is no need to repeat it except as necessary to explain its application to the present case.

Prima Facie Case

The requirement of a prima facie case is explained by the concern with preventing a litigant from avoiding the application of legislation by simply arguing that it is unconstitutional. There must be a mechanism to ensure that frivolous or vexatious actions will not systematically result in interlocutory relief intended to impede the application of legislation. In cases involving a constitutional challenge, particularly when it is based on the Charter, the application of this criterion will be more flexible if the public interest is considered in the analysis of the balance of convenience. It will then be sufficient to note that there is a serious question to be tried. This greater flexibility is necessary in view of the inherent difficulties of determining, at the interlocutory stage, the validity of the constitutional challenge, given the limited evidence and the effect that an exemption from or suspension of the application of a statute can have not only on the parties but also on the public interest.

The appellants argue that the provisions authorizing the searches are in accordance with the principles set out in Hunter v. Southam Inc., 1984 CanLII 33 (SCC), [1984] 2 S.C.R. 145. They criticize the Court of Appeal for relying on the fact that Baron v. Canada, 1993 CanLII 154 (SCC), [1993] 1 S.C.R. 416, and Kourtessis v. M.N.R., 1993 CanLII 137 (SCC), [1993] 2 S.C.R. 53, were still reserved at the time it rendered its decision concluding that there was a prima facie case. In this Court they argued that there is no longer a prima facie case in view of the Court's conclusions in Baron.

In the 143471 Canada Inc. case, although the issue is limited to the constitutionality of ss. 40 and 40.1 of the Act, the respondents put forward other arguments that s. 40 of the Act is unconstitutional, in addition to those dealt with by this Court in Baron. They concede that the latter are now academic. The respondents rely inter alia on the fact that there is no requirement to allege the commission of an offence, or the identification of the premises or the things to be seized; on the argument that s. 40 of the Act is unconstitutional since it is the Minister who technically issues the search warrant; on the fact that there is no express requirement that the judge's authorization be given before the warrant is issued or even before the seizure is carried out; and on the combined effect of ss. 40 and 40.1 of the Act and the legality of "fishing expeditions".

The respondents also plead the unconstitutionality of s. 40.1 of the Act, which refers to the "plain view" doctrine, in support of the motion in evocation, certiorari and mandamus in the Tabah case. This practice has been approved on several occasions by Canadian courts. However, this Court has never ruled on its constitutionality under s. 8 of the Charter. Finally, in addition to the argument that the provision authorizing the seizures is unconstitutional, the respondents argue that the information was inadequate and the seizures were unreasonable.

Since this Court has taken a liberal approach to the application of the first criterion, I am prepared to conclude that there is in both cases a prima facie case. I hasten to add that the Quebec Court of Appeal could not have come to any other conclusion at the time it dealt with the matter since its decision was rendered when Baron and Kourtessis, supra, were under reserve.

One can certainly question whether the fact that the Quebec Superior Court dismissed the motion in evocation, certiorari and mandamus in the 143471 Canada Inc. case imposes a heavier burden in meeting the first criterion. This argument was made by the appellants, who objected that the Court of Appeal had not applied its own case law on stays of proceedings, by virtue of which a stay will very seldom be ordered when there is no apparent defect in the lower court judgment. The dismissal of the motion in evocation, certiorari and mandamus by the Superior Court is certainly a relevant factor, but is not, in this case, sufficient to alter the fact that serious questions have been raised by the respondents. I do not think that the precedents regarding stay of proceedings should be applied without qualification when the constitutionality of legislation is challenged under the Charter, in view of the importance and complexity of the rights and freedoms it entrenches.

Having thus not been persuaded that the respondents' motions in evocation, certiorari and mandamus are frivolous or vexatious, I propose to analyse the other two steps of the test set forth in Metropolitan Stores.

Irreparable Harm

The irreparable harm criterion refers to the harm the applicant may suffer if the interlocutory relief is not granted. If there is no harm or it can be adequately compensated for by an award of damages, there will be little reason to exempt the applicant from the application of the law. In RJR ‑‑ MacDonald, supra, this Court noted that this view of harm is of limited application when a breach of the Charter is alleged. The concept of "irreparable harm" is often associated with that of damages. However, a monetary remedy is not always contemplated in cases where the Charter is invoked. This results from the nature of the rights it guarantees and of the parties. That is why the Court held that in most situations the existence of irreparable harm must be presumed. But when the alleged harm itself takes the form of a breach of a right protected by the Charter, as it does here, the judge who has the responsibility for ruling on the merits of the interlocutory motion is in the best position to determine its nature and extent and whether it is irreparable.

Harm is generally viewed from the standpoint of the person seeking to benefit from the interlocutory relief. Others view it from the standpoint of the person against whom the motion is directed. Although one could at this stage consider the type of harm the Ministère du Revenu might incur if an impounding order were upheld, in my view it is preferable to consider this issue when the balance of convenience is being determined. The same is true of irreparable harm to the public interest. This was the approach taken by this Court in RJR ‑‑ MacDonald, and, as I see it, it is the right one.

The respondents contend that if no impounding order is made they will suffer harm since the examination of the contents of the seized documents by the tax authorities will result in an infringement of their right to privacy. Such harm, they say, would by its very nature be irreparable. The respondents argue that if individuals have the right to be protected against state intrusions and to have the legality of such intrusions tested, it follows that the courts have the power ‑‑ and the duty ‑‑ to protect the privacy of the documents seized and preserve the status quo by ordering that the documents be impounded until the legality of the searches has been determined. The appellants, on the other hand, argue that the respondents would suffer no harm because any reasonable expectations of privacy they might have are limited or perhaps even non‑existent.

The conclusion that the respondents will suffer irreparable harm seems at first sight irrefutable, since they are relying on a breach of a constitutionally protected right, the infringement of which is itself an extension of that resulting from the search. This was the view taken by the Quebec Court of Appeal in Zeppetelli, supra, relied on by Hannan and Marquis JJ. in the case at bar, in concluding that there was irreparable harm. In that case Baudouin J.A. relied on the following passage from this Court's decision in R. v. Dyment, 1988 CanLII 10 (SCC), [1988] 2 S.C.R. 417, at p. 430, in support of the conclusion that if there was no impounding the respondents would suffer irreparable harm:

One further general point must be made, and that is that if the privacy of the individual is to be protected, we cannot afford to wait to vindicate it only after it has been violated. This is inherent in the notion of being secure against unreasonable searches and seizures. Invasions of privacy must be prevented, and where privacy is outweighed by other societal claims, there must be clear rules setting forth the conditions in which it can be violated. This is especially true of law enforcement, which involves the freedom of the subject. [Emphasis in original.]

In Zeppetelli Baudouin J.A. concluded as follows, at p. 356:

[translation] In this case, therefore, impounding is a preventive measure inherent in the constitutional protection of privacy from a seizure which might eventually be found to be unreasonable. According to the rule stated by the Supreme Court, the injury caused would thus be irreparable, as disclosure would be an invasion of privacy and make the protection afforded by the Charter meaningless.

However, the present case can be distinguished from Dyment, where the respondent was challenging the seizure of a bodily fluid without prior authorization. The respondents are objecting here to the examination by the tax authorities of the contents of business documents the seizure of which was previously authorized. The existence of irreparable harm cannot be inferred simply because a breach of a right protected by the Charter is alleged or because the main proceeding itself involves the infringement of an entrenched right. In the present case not only have the courts not yet made a final ruling on whether the searches are unreasonable, but the Quebec Superior Court dismissed the motion in evocation, certiorari and mandamus in the 143471 Canada Inc. case. It seems wrong to conclude as a matter of principle that the right to privacy must in all circumstances take priority over any other interest, for example over giving effect to legislation adopted in the public interest. Both the right and the alleged infringement must be placed in context: see United States of America v. Cotroni, 1989 CanLII 106 (SCC), [1989] 1 S.C.R. 1469, and Edmonton Journal v. Alberta (Attorney General), 1989 CanLII 20 (SCC), [1989] 2 S.C.R. 1326. Accordingly, before concluding that the harm is "irreparable", as required by the second criterion, the existence and extent of the harm must be determined, something which the Court of Appeal seems to have failed to do in the case at bar since it simply said that the seized documents might [translation] "contain personal items of information and so contravene the protection of privacy guaranteed by law" (p. 45 R.D.F.Q.).

There is considerable merit in the proposition that persons who decide to engage in activities regulated by the government are subject to a diminution of their expectations of privacy. In that case, it can be presumed that they have agreed to be subject to the obligations imposed by the legislature that are inherent in the conduct of such activities; see R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154. While in McKinlay Transport, supra, this Court was of the view that power given by s. 231(3) of the Income Tax Act, R.S.C. 1952, c. 148, came within the ambit of s. 8 of the Charter, it held that the criteria laid down in Hunter v. Southam Inc. could be applied more flexibly in a regulatory context. After analysing several lower court decisions, Wilson J. wrote, at p. 647:

I refer to these cases not to approve or disapprove the results achieved but rather as evidence of the need to take a flexible and purposive approach to s. 8 of the Charter. It is consistent with this approach, I believe, to draw a distinction between seizures in the criminal or quasi‑criminal context to which the full rigours of the Hunter criteria will apply, and seizures in the administrative or regulatory context to which a lesser standard may apply depending upon the legislative scheme under review.

McKinlay Transport dealt with the constitutionality of a provision authorizing the tax authorities to require the production of documents. Such a power, though it was characterized as a "seizure" within the meaning of s. 8 of the Charter, was nonetheless different from the power to "search". This distinction was the basis for the qualification to the application of the criteria set out in Hunter v. Southam Inc. In Thomson Newspapers, I underlined that the more invasive character of a search was referable to the importance individuals attached to the inviolability of their homes, and of their workplaces. I added, at p. 522 of the judgment:

The requirement to submit to a search of business premises by agents of the state can therefore amount to a requirement to reveal aspects of one's personal life to the chilling glare of official inspection. It seriously invades the right to be secure against unreasonable search and seizure. This is not the case with a power to order the production of records and documents relevant to the investigation of anti‑competitive offences; there the eyes of the state can see no further than the business records it is entitled to demand. [Emphasis in original.]

The reasons of L'Heureux‑Dubé J. were essentially to the same effect, at p. 594:

Although they are functional equivalents, a requirement to produce documents impairs considerably less on a corporation's or an individual's privacy than the actual entry into, and search of, its place of business or home. This is especially so, in the case of corporations, since, for the reasons given above, a corporation's privacy interest with respect to a request for documents is relatively low.

Wilson J. also made the point in McKinlay Transport, at p. 649:

Thus, when the tax officials seek entry onto the private property of an individual to conduct a search or seizure, the intrusion is much greater than a mere demand for production of documents. The reason for this is that, while a taxpayer may have little expectation of privacy in relation to his business records relevant to the determination of his tax liability, he has a significant privacy interest in the inviolability of his home.

In the case at bar the warrants have already been executed. The question whether the searches were unreasonable is currently before the Quebec courts. In the context of the present appeal the harm claimed by the respondents relates solely to the fact that the tax authorities will learn the content of the documents seized. Any reasonable expectations of privacy the respondents may have regarding the content of those documents are considerably reduced owing to their relevance in establishing the tax profile of their business and the responsibilities they assume as agents of the government in collecting the meals and hotels tax. In this regard, the keeping of several documents seized by the appellants is required by the Act. Section 34(1) provides:

34. (1) Every person who carries on a business or is bound under a fiscal law to deduct, withhold or collect an amount must keep registers and books of account, including an annual inventory in the prescribed manner, at his place of business or residence or at any other place designated by the Minister.

The registers and books shall be kept in the appropriate form and contain information enabling the establishment of the amount that must be deducted, withheld, collected or paid under a fiscal law.

The Act gives the Minister of Revenue certain powers to audit books and registers. Section 38(a) of the Act provides:

38. Any person authorized to do so by the Minister may, for every purpose dealing with the application or enforcement of a fiscal law, enter at any suitable time the premises or places in which a business is carried on or property is kept or in which anything is done relating to any business or where books or registers in accordance with a fiscal law are or must be kept.

The person so authorized by the Minister may:

(a) audit or examine the books and registers and any account, voucher, letter, telegram or other document which may relate to the information contained or that should be contained in the books or registers or to the amount of any duty that must be paid, deducted, withheld or collected under a fiscal law;

Section 39 of the Act gives the Minister of Revenue power to require the production of information and documents:

39. The Minister may, by a formal demand delivered by registered or certified mail or personal service require from any person that he file by registered or certified mail or personal service, within a reasonable delay fixed in the demand:

(a) information or additional information, including a return, report or supplementary return or report exigible under a fiscal law, or

(b) books, letters, accounts, invoices, financial statements or other documents.

The constitutionality of a similar provision has already been determined by this Court in McKinlay Transport, supra, as it relates to the expectation of privacy of a taxpayer. In any event, it does not arise in the present case. The way in which the tax authorities obtained copies of the documents does not alter the nature of the information they contain. In either case the same documents are in question. The search warrants in the case at bar and the seizures resulting from their issuance were directed only at the respondents' business documents, production of which may be required under the Act.

The Act further provides that a person may object to the production or seizure of documents containing information protected by professional privilege: see ss. 46 and 53 of the Act respectively. Some of the respondents raised this objection in the present case, and documents seized in the accountants' offices were sealed and entrusted to the prothonotary of the Superior Court pursuant to s. 46 of the Act.

Finally, disclosure of the information contained in the seized documents is itself prohibited by the Act: the tax authorities may not disclose information obtained in the course of their investigation. The first paragraph of s. 69 of the Act provides:

69. All information obtained in the application of a fiscal law is confidential. No public servant shall use such information for any purpose not provided for by law, communicate such information or allow it to be communicated to a person not legally entitled thereto or allow such a person to examine a document containing such information or have access to it.

These provisions minimize the risk that the respondents may suffer harm as a result of the implementation by the tax authorities of the investigative scheme provided by the Act. Their significance cannot be disregarded. They echo the concerns I expressed in Dyment, supra, at pp. 429‑30:

Finally, there is privacy in relation to information. This too is based on the notion of the dignity and integrity of the individual. . . . In modern society, especially, retention of information about oneself is extremely important. We may, for one reason or another, wish or be compelled to reveal such information, but situations abound where the reasonable expectations of the individual that the information shall remain confidential to the persons to whom, and restricted to the purposes for which it is divulged, must be protected.

Similarly, in McKinlay Transport, supra, Wilson J. noted at p. 650:

A taxpayer's privacy interest with regard to these documents vis‑à‑vis the Minister is relatively low. The Minister has no way of knowing whether certain records are relevant until he has had an opportunity to examine them. At the same time, the taxpayer's privacy interest is protected as much as possible since s. 241 of the Act protects the taxpayer from disclosure of his records or the information contained therein to other persons or agencies.

Some may be concerned that the seized documents may contain information of a personal nature. However, that possibility is not, in my view, sufficient to alter the reasonable expectations of privacy of taxpayers in respect of such documents. On the one hand, the Act itself does not permit the seizure of documents containing personal information. Sections 38 and 40 of the Act, as well as s. 39 which authorizes a demand for the production of documents, are directed only at documents the contents of which have some connection with the application of tax legislation to taxpayers. In the highly unlikely event that documents containing information of a personal nature were seized in the course of exercising investigative powers, a taxpayer could always apply to the courts, seeking their exclusion and any other appropriate relief on the ground, for example, that this went beyond the investigators' statutory authority. On the other hand, the respondents themselves have never claimed that documents of that kind were in fact seized in the case at bar. Indeed, the appellants submitted uncontradicted evidence that all the documents seized, including those seized in the private homes of some of the respondents, were covered by the search warrants and related to their business affairs, in particular to the application of the Act to them. This can be seen by examining the written authorizations and the inventory of the documents seized. In the 143471 Canada Inc. case, for example, the written authorization of the Deputy Minister of Revenue limited the search as follows:

[translation] . . . to search for documents, books, registers, papers or things described in the said written authorization from the judge of the Court of Quebec, namely documents, books, registers, papers or things concerning the operation by 143 471 Canada Inc. of its establishment . . . and the collection by it of the tax provided for in the Meals and Hotels Tax Act (R.S.Q., c. T‑3) during the period from June 26, 1985 to June 30, 1988, in particular:

(a)general ledger, sales journal, purchases journal, cash receipts journal, cash disbursements journal, subsidiary journals, wages journal, general journal;

(b)extra‑accounting registers and work sheets, sales invoices, purchase invoices, financial statements, bank statements, cheques returned paid, deposit slips and other supporting documents, including contracts concluded with its customers and all documents appended thereto;

(c)lists, notebooks or other documents containing information relating or that may be related to the sales of 143 471 Canada Inc. or to the collection by it of the meals and hotels tax;

which may serve as evidence of the offence mentioned in the said written authorization by the judge of the Court of Quebec . . .

The documents seized in the search made in the 143471 Canada Inc. case correspond to those identified in the search warrant: bank statements, journal entries, purchase invoices, cheque stubs, cheques debited, financial statements, wages book, receipt contracts and so on. The same is true of the documents seized in the Tabah case, though the written authorizations and corresponding seizures are more detailed since the information indicated several breaches of the Act. In any event both the authorizations to search and the documents seized related only to the respondents' business affairs, in particular those required to conform with the Act, and did not concern any document likely to contain personal information. Further, unless a party complains of the seizure of information of a personal nature I do not think it is desirable for the judge who has the responsibility to rule on the motion to impound to examine the contents of the documents seized in order to determine whether the order is appropriate. That would make his task more onerous in view of the difficulties inherent in determining whether the information contained in the documents seized is personal.

Accordingly, I find it difficult to see how the respondents will suffer irreparable harm if the tax authorities examine the contents of the documents seized. Since the respondents have not established any other harm, I now propose to consider the final stage of the Metropolitan Stores test.

The Balance of Convenience

The balance of convenience, which constitutes the third criterion relevant in determining whether interlocutory relief should be granted, is designed to weigh the respective hardships the parties may incur depending on whether or not the interlocutory relief is granted.

As the existence of irreparable harm has been ruled out, it is hard to see how the respondents could suffer significant hardship if they were denied the impoundment. As they themselves argue, the only effect of the impounding order is to delay the examination of the documents. It can thus be assumed that at some point or other the respondents will suffer the hardships associated with an investigation by the Ministère du Revenu, whether or not the sections are declared unconstitutional. It should be added that under s. 40.2 of the Act the respondents may obtain copies of the documents seized.

The hardships the appellants are likely to suffer if the impoundment is upheld derive from the delays imposed on the examination of the contents of the seized documents. We may immediately dispose of their effect on the limitations against penal remedies under the Act. Although the impoundment for all practical purposes suspends the investigative proceedings, the actions against the respondents are not jeopardized ‑‑ at least in theory ‑‑ since the Act provides that the five‑year limitation period may be extended to one year from the date the Minister of Revenue learns of evidence sufficient to justify prosecution; see s. 78 of the Act. In the circumstances it is hardly surprising that the appellants placed no great emphasis on the existence of such harm at the hearing; sufficient proof probably could not come to the knowledge of the Minister of Revenue until he had the documents covered by the order in his possession, after the impounding order was lifted.

The appellants added that if the impounding orders are upheld the resulting delays would jeopardize proof of the offences. In this connection they note the difficulties associated with gathering information, the credibility of witnesses, even with the recovery of fees, interest and fines, in view of the risks that the corporate vehicle might be altered or cease to exist. The respondent 143471 Canada Inc. made an assignment of its property on September 1, 1992. While at the present stage of the proceedings this is speculative, the Court can nevertheless take note of the probable occurrence of such hardships. In Zeppetelli, Baudouin J.A. acknowledged that impoundment would prevent the Minister of Revenue [translation] "from having access for the moment to a great deal of information which might allow him to build his case and achieve substantive progress on the matter" (p. 357).

The respondents argued that in any case impoundment does not have the effect of suspending the Minister of Revenue's investigative powers: he can complete his evidence by other means. However, this option, which appreciably moderates the effect of the measure, disregards the fact that the Minister of Revenue must adduce proof beyond a reasonable doubt. Not only is this a weighty burden, but the proof of offences is complicated here by the very nature of tax evasion, which requires a comprehensive analysis of the accounting system of the respondent companies. In the circumstances there is nothing to suggest that the Minister of Revenue could make significant progress with his investigation if the impoundment were upheld. Further, if the measure had the negligible effect suggested by the respondents, then the applicability of the test set forth in Metropolitan Stores would be open to question.

Even if we admit that these hardships are negligible and of a purely administrative nature, the fact remains that the present case has ramifications that go beyond the immediate interests of the parties, if only because of the mandate underlying the action of the Ministère du Revenu. In such a situation Metropolitan Stores invites the courts to take the public interest into account in determining the balance of convenience. In the case at bar the Court of Appeal is not only silent on the point but specifically refused to rule on [translation] "the reality or existence" of this criterion, which is strange to say the least since in the 143471 Canada Inc. case it was not sitting in appeal from the judgment of Hannan J. In Zeppetelli Baudouin J.A. simply stated that [translation] "as between inconveniences of an essentially administrative nature and those involving a constitutionally protected fundamental right, the balance must tip in favour of the latter" (p. 357).

In this regard the appellants rely essentially on the public interest in having the Act observed and enforced. The importance of tax legislation clearly needs no elaboration; see Air Canada v. British Columbia, 1989 CanLII 95 (SCC), [1989] 1 S.C.R. 1161, and McKinlay Transport, supra. Because such legislation is based on the principle of self‑declaration and self‑assessment, the existence of mechanisms making it possible to verify whether taxpayers are subject to the Act is essential. The imposition of such controls is all the more necessary for individuals who act as agents of the government. In Quebec the Act imposes on the Ministère du Revenu the duty of supervising the implementation and execution of tax legislation and confers on it all the powers necessary for this purpose. The implementation of the investigative provisions contained in ss. 40 and 40.1 of the Act is essential if the integrity of the tax collection system is to be maintained. These considerations alone are sufficient to meet the public interest criterion. In RJR ‑‑ MacDonald the Court wrote (at p. 346):

In our view, the concept of inconvenience should be widely construed in Charter cases. In the case of a public authority, the onus of demonstrating irreparable harm to the public interest is less than that of a private applicant. This is partly a function of the nature of the public authority and partly a function of the action sought to be enjoined. The test will nearly always be satisfied simply upon proof that the authority is charged with the duty of promoting or protecting the public interest and upon some indication that the impugned legislation, regulation, or activity was undertaken pursuant to that responsibility. Once these minimal requirements have been met, the court should in most cases assume that irreparable harm to the public interest would result from the restraint of that action.

The respondents added, however, that the delay in examining the contents of the documents seized causes no injury to the public interest since the interlocutory relief is limited to the present case. The argument in this Court centred on proof of a "flood of actions" since the judgments of the Quebec Court of Appeal in Zeppetelli and Fafard Buildings System Inc. v. R., C.A. Montréal, No. 1990 CanLII 3088 (QC CA), 500‑10‑000409‑894, July 10, 1990, J.E. 90‑1187. Such proof was viewed as important by both sides in demonstrating the real effect of the impounding order on the public interest.

In my view proof of a flood of actions ‑‑ or the lack of it ‑‑ is not determinative of whether or not interlocutory relief should be granted. Depending on the nature and scope of the measure contemplated, as well as the particular circumstances of each case, the court might take note of the impact of a decision exempting a party from the application of a statute on future litigants, who would be tempted to rely on it. In Metropolitan Stores Beetz J. wrote (at p. 146):

The reason why exemption cases are assimilated to suspension cases is the precedential value and exemplary effect of exemption cases. Depending on the nature of the cases, to grant an exemption in the form of a stay to one litigant is often to make it difficult to refuse the same remedy to other litigants who find themselves in essentially the same situation, and to risk provoking a cascade of stays and exemptions, the sum of which make them tantamount to a suspension case.

It is not desirable to impose on the party arguing that an interlocutory application should be dismissed a requirement that he prove the harmful effect of previous orders. How could the threshold of such evidence be determined? Such a burden would not only be likely to trivialize the public interest considerations underlying the balance of convenience test, it would be at odds with the preventive purpose of interlocutory relief.

The parties drew the Court's attention to about ten decisions on applications to impound documents incidental to a constitutional challenge based on ss. 40 and 40.1 of the Act. Clearly these few decisions are far from suggesting the existence of a "flood of actions". It is significant, however, that all motions to impound subsequent to the decision of the Court of Appeal in Zeppetelli, supra, have been granted. Needless to say, the orders expressly cited the reasons given by Baudouin J.A. By way of contrast, the applications to impound prior to that decision were denied (except the one in Ameublement Jeanne Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑003335‑872, April 15, 1987, which was granted on consent). For example, in Brochetterie Tino Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500‑05‑008861‑898, July 17, 1989, [1989] R.D.F.Q. 98, Lesyk J. wrote (at pp. 3‑4):

[translation] Granting impoundment of the documents seized would set a precedent in enforcement of the Act that might be followed in seizures of the same kind and might accordingly render ss. 40 and 40.1 of the Act respecting the Ministère du Revenu inoperative for a more or less extended period, with the consequences that might follow for the obligations and duties imposed on the operators of the establishments subject to the Meals and Hotels Tax Act.

Granting the application to impound without extremely sound and exceptional grounds, which do not exist in the present case, would also amount to suspending the application of ss. 40 and 40.1 of the Act respecting the Ministère du Revenu adopted by the democratically elected National Assembly in the common interest. Such impoundment would be likely to temporarily frustrate pursuit of the common interest and would have the effect of preventing the Minister of Revenue from carrying out the duty imposed on him by law, namely of applying tax legislation.

When a Minister of the Crown is prevented from exercising the powers conferred on him by law the public interest of which the Minister is the guardian suffers irreparable harm.

This approach seems to me to be consistent with the above‑cited passages from RJR ‑‑ MacDonald and Metropolitan Stores. See also Restaurant le Gourmet grec Inc. v. Séguin, Sup. Ct. Montréal, No. 500‑05‑004272‑892, April 5, 1989, [1989] R.D.F.Q. 80, where Brassard J. refused to order impoundment on the ground that the harm alleged by the applicant could not override the public interest.

In any event, although it is not possible to speak of a "flood of actions", the systematic nature of the impounding orders since Zeppetelli cannot be ignored, and this can only be enhanced by the Court of Appeal decisions in the present case. To the extent that trial courts are bound by decisions of the Quebec Court of Appeal, it is doubtful whether they have much real manoeuvring room in the exercise of their discretion. Under the present case law it appears that any well‑informed litigant can have an investigation suspended by attaching to his motion for evocation, certiorari and mandamus a motion to impound the documents seized.

The marginal nature of motions to impound is best explained by the limited number of searches conducted each year. As an indication of the impact of impoundment on the public interest the number of searches is certainly a better yardstick than the total of Quebec taxpayers. The evidence shows that implementation of the investigative powers set out in ss. 40 and 40.1 of the Act is likely to lead to the recovery of large sums estimated at about a hundred million dollars in fees, interest and fines, just for the period from April 1, 1988 to March 31, 1992. The amounts involved in the present cases are also non‑negligible since they exceed $250,000, not including, in the Tabah case, an amount of some one million dollars which was allegedly not included in calculating income. Further, if we are to believe certain studies estimating at several hundred million dollars the annual losses resulting from tax evasion, the amounts recovered through the implementation of investigative powers are only the tip of the iceberg. That being the case, we cannot minimize the importance of ss. 40 and 40.1 of the Act, which form the principal tool available to the Ministère du Revenu to fight tax evasion, not only in dealing with ongoing offences but especially for its deterrent value. In view of the burden of proof ‑‑ beyond a reasonable doubt ‑‑ and the difficulties of proof inherent in the nature of offences against the tax laws, even temporarily watering down investigative powers has more than a symbolic effect on the public interest.

The respondents made no arguments regarding the public interest in maintaining impounding orders. It is clear that there is also a public interest in having the government respect the fundamental rights of taxpayers, including the right to privacy and protection against unreasonable intrusions by the government. However, bearing in mind that in the present case the courts have not yet found the intrusion to be unreasonable ‑‑ a question which will be decided in the principal action, with the appropriate relief if necessary ‑‑ this aspect cannot have much weight here, especially when considered in light of the comments I have made regarding irreparable harm. In other words, to paraphrase the reasons of my colleagues in RJR ‑‑ MacDonald, the respondents have not persuaded me of the advantages to the public interest of granting impoundment of the documents seized.

Conclusion

For these reasons I would allow the appeal with costs, set aside the decisions of the Court of Appeal and quash the impounding orders.

The judgment of Sopinka, Cory and Iacobucci JJ. was delivered by

By Cory J.

Cory J. -- In this matter I have had the pleasure of reading the careful reasons of my colleague La Forest J. I am in complete agreement with his view that the governing principles to be applied in this case are set out in the reasons of this Court in Manitoba (Attorney General) v. Metropolitan Stores Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110, and in RJR -- MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311. These decisions indicate that in considering an interim measure such as an injunction or an impounding order in the context of a Charter challenge to the validity of the underlying law a court must consider three factors. The first, is whether a serious question of law is raised. The second, is whether irreparable harm will be occasioned to the applicant if the interim order is refused. The third, requires the court to consider and weigh in the balance the inconveniences caused to the parties by the interim order.

Further, I am in agreement with my colleague that there is a serious question of law raised in this case. It is in the application of the factors pertaining to irreparable harm and the balance of inconvenience that I differ with his views.

The facts giving rise to this appeal are set out in the reasons of La Forest J. and need not be repeated.

The Nature of the Questioned Orders

At the outset I would observe that the orders in issue on this appeal are discretionary in nature. Like all discretionary decisions, they should be accorded a measure of deference. See, for example, Hadmor Productions Ltd. v. Hamilton, [1982] 1 All E.R. 1042; Aetna Financial Services Ltd. v. Feigelman, 1985 CanLII 55 (SCC), [1985] 1 S.C.R. 2, at p. 37; Metropolitan Stores, supra, at pp. 154-56; and Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 CanLII 110 (SCC), [1992] 1 S.C.R. 3, at pp. 76-77. Since I am of the view that the decisions of the judges hearing the original motions were correct, I need not consider the question of deference.

Irreparable Harm

There are a number of matters that must be conceded at the outset. The documents seized in this case are commercial in nature. It follows that there cannot be the same privacy interest in those documents that there would be in personal papers. The expectation of privacy in business records is necessarily low. They do not ordinarily contain the type of personal information that lies at the heart of the constitutional protection of privacy. Further, it must be recognized that the state must have the power to regulate business, both for economic reasons and in order to provide protection to the vulnerable individual against private power. This was set out with great cogency by La Forest J. in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 CanLII 135 (SCC), [1990] 1 S.C.R. 425, at pp. 517-18. It follows that since the search in this case was made pursuant to a regulatory statute in the highly regulated field of restaurants and hotels the expectation of privacy must of necessity be diminished.

Those who enter a regulated field must accept regulations as an integral part of their business operations. It has been recognized that there is a significant distinction between searches and seizures effected pursuant to a regulatory statute and searches and seizures made pursuant to the Criminal Code, R.S.C., 1985, c. C-46, or statutes of a quasi-criminal nature. This was the view of four of five judges in both Thomson Newspapers and in R. v. McKinlay Transport Ltd., 1990 CanLII 137 (SCC), [1990] 1 S.C.R. 627.

In R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154, although there was disagreement as to its application, eight of nine judges affirmed the principle enunciated in Thompson Newspapers and McKinlay Transport that there is a relevant and significant distinction to be drawn between a statute that is criminal and one which is regulatory in nature when the application of the Canadian Charter of Rights and Freedoms to those statutes is to be considered.

In Wholesale Travel Group, I attempted to indicate the basis for the distinction. The distinction can properly be based upon both the licensing concept and the need to protect the vulnerable. In today's complex society, individuals are frequently placed in vulnerable situations. An individual often does not and cannot have the requisite knowledge or training to determine what may be safe and what is dangerous. For example, it is essential that there be regulations to protect the environment from poisonous effluent; to protect individuals from the sale of dangerous products or patent medicines; to ensure there is a reasonable standard of safety in mines, factories, construction sites and all workplaces; to ensure that food is prepared in sanitary conditions and that public and commercial buildings are constructed in a reasonably safe manner. The protection of all, and particularly the vulnerable, by regulation requires that government agencies be authorized to inspect premises and to review books and records. Those who enter a regulated field must be aware of those regulations. By entering that field they have accepted that their business will be regulated.

In McKinlay Transport, the majority of this Court held that the Income Tax Act, R.S.C. 1952, c. 148, is regulatory in nature, since in the words of Wilson J., at p. 641, "it controls the manner in which income tax is calculated and collected". There, it was held that the purpose of the investigation and enforcement provisions of the Act was not so much to penalize criminal conduct as to secure compliance with the provisions of the Act. The legislation at issue in this case (An Act respecting the Ministère du Revenu, R.S.Q., c. M-31) serves the same purpose as the Income Tax Act and like that statute is regulatory in nature. There is, then, a relatively low expectation of privacy in the documents seized in this case.

With all of that stated and accepted, there still remains some measure of privacy in commercial documents. They will inevitably reveal aspects of the business that the operator would rather have kept private. For example, one supplier may be paid on a COD basis and another 90 days after delivery. These arrangements may have arisen from circumstances which prevailed years ago and have continued without thought of change to the present time. A business would never want to have those arrangements made public. Similarly, the record of wages paid to employees may reflect a higher wage rate to a particularly loyal and trusted employee than to another carrying out the same function. This information too is sensitive and something that the business operator would prefer to keep private. It is true that under the Act respecting the Ministère du Revenu the government employees are forbidden to disclose information obtained from the documents. However, the mere fact that the documents have been seized and must be reviewed by the government officers will be a cause for concern for the proprietor of the business.

It must be remembered that ss. 40 and 40.1 of this Act provide for searches and seizures of a wide range of documents ("books, registers, papers or other things that may be used as evidence of an offence against a fiscal law or a regulation made by the Government under such law"). Thus, the government may seize a far broader range of documents than those required by the Act and its regulations to be prepared and maintained by the business enterprise. As well, the Act allows for searches and seizures of documents in the possession of third parties who are not the subject of an investigation. It was these same factors that led four of the five judges sitting on McKinlay Transport to conclude that the compelled production of documents provided for in s. 231(3) of the Income Tax Act constituted a seizure for the purposes of s. 8 of the Charter because there was, for the proprietor, a privacy interest in the documents. That same reasoning is applicable to the facts presented by these cases.

The purpose of an interlocutory stay is to preserve the rights of applicants (the respondents before this Court) pending a final determination of a legal question which will affect those rights. Here, the respondents seek not the return of their documents, but simply the maintenance of the orders that they be held by the court pending the determination of this issue. If it is found that the respondents are correct and that the searches and seizures were unconstitutional, then the privacy right will have effectively been lost as a result of the unconstitutional provisions of the Act. Small as it may be, there is such a privacy interest. If it transpires that the respondents are correct in their constitutional contention, then I would think that the loss of that privacy interest would, in itself, constitute irreparable harm.

Yet there is another aspect which I consider to be far more significant in this case. Namely, that the documents were obtained by means of intrusive searches of residential and business premises.

In Baron v. Canada, 1993 CanLII 154 (SCC), [1993] 1 S.C.R. 416, at p. 444, it was recognized that although characterizations such as "regulatory" and "criminal" are useful for purposes of Charter analysis, they do not provide a complete answer. What must always be considered are the values which are at stake on the facts of the particular case. Here, it is true that the search was made pursuant to the provisions of a regulatory statute dealing with the highly regulated business; however, a court must still be concerned with the nature of the physical searches of private premises. Obviously, searches of private property are far more intrusive than a demand for production of documents. The greater the intrusion by the searchers into the business premises and private residences, the greater weight should be attached to the provisions of s. 8 of the Charter. Thus, although the privacy interest of an individual in business documents pertaining to a regulated field is relatively low, there remains a very real and significant privacy interest in maintaining the inviolability of residential premises, and to a lesser extent of business premises. This was recognized by Wilson J. in McKinlay Transport, supra, at p. 649:

The greater the intrusion into the privacy interests of an individual, the more likely it will be that safeguards akin to those in Hunter will be required. Thus, when the tax officials seek entry onto the private property of an individual to conduct a search or seizure, the intrusion is much greater than a mere demand for production of documents. The reason for this is that, while a taxpayer may have little expectation of privacy in relation to his business records relevant to the determination of his tax liability, he has a significant privacy interest in the inviolability of his home.

It is on this issue that I find that I must take a position diametrically opposed to my colleague. The documents were seized from homes and business premises. The seizure of those documents cannot be divorced from the intrusion into private premises. The search and seizure of the documents are part and parcel of the same sequence of events. They are an integral part of the whole. It should not be said that once the documents are seized it is no longer necessary to consider the intrusion into homes and offices. The documents were obtained as a result of that intrusion. The violation of privacy interest resulting from that intrusion cannot end with the removal of the documents. So long as the documents are held by or on behalf of the appellants there is a continuing violation of the privacy interest of the respondents in their residences and business premises.

The constitutionality of ss. 40 and 40.1 of An Act respecting the Ministère du Revenu will be determined in the principal applications to quash the warrants. Should those sections eventually be found to be unconstitutional, then the searches and seizures will have violated the privacy interest of the respondents in their homes and offices. The government will, without authority, have entered the premises and searched for and seized the documents. Thus the government will have had the continuing possession of the documents in the absence of any authority and in violation of the Charter. This, it seems to me, would constitute irreparable damage to the respondents.

The provision for the impounding orders seems eminently fair for all parties. While the documents are impounded they cannot be altered or changed in any way by the respondents. The documents will thus remain protected while the court carries out the judicial function of determining the constitutionality of the legislation. There could be no question of the fairness and efficacy of such an order if the issue could be determined in a reasonable time; say two weeks or two months, or even six months. If the court cannot determine the issue within a reasonable time, then I wonder whether it is the respondents or the government that should suffer as a result of the delays.

In my view, it is irrelevant that the appellants could have lawfully gained possession of these documents by means of a demand made pursuant to ss. 38 or 39 of the Act. The fact remains that they were gained through searches and seizures conducted pursuant to ss. 40 and 40.1. The appellants chose the method of proceeding. They obtained the documents by means of intrusive searches of residential and business premises. The appellants cannot now rely on the fact the documents might have been obtained in some other way.

I cannot accept the appellants' argument that since s. 69 of the Act provides for the confidentiality of tax documents this section will protect the privacy interests of the respondents. Although s. 69 protects the respondents from public release of information contained in the documents, it does not protect them from having their privacy interests in their homes and offices violated by the state. This is the very interest that s. 8 of the Charter is aimed at protecting. Section 69 does not adequately protect the respondents' privacy interests in the documents. Nor can I accept that the breach of the privacy interest can be quantified and the respondents compensated in damages. There will always be problems in any attempt to quantify and to compensate the breach of a Charter right. The nature of the right to compensation for breaches of Charter rights is still highly uncertain. See RJR -- MacDonald, supra, at p. 342.

In summary then, there is some small privacy interest in commercial documents. The seizure by way of intrusive searches of business premises and private residences was and continues to be an integral part of the seizure. The intrusive nature of the search cannot be isolated from the taking of the documents. It is highly speculative to expect that a breach of privacy interests, not only in the documents, but also in the homes and offices of the respondents, could be compensated in damages. Thus, if the respondents are successful in the principal motions, they would suffer irreparable damage if the impounding orders, which constitute a very fair disposition of the matter, were to be set aside. It is then necessary to consider whether the public interest would be harmed by this apparently fair solution.

Balance of Inconveniences

It is under the balance of inconveniences branch of the Metropolitan Stores test that this case should really be decided. Obviously, the public interest is a very important consideration in determining whether an interlocutory impounding order should be set aside. What is being considered is a regulatory scheme dealing with the restaurant and hotel business. All who enter this field must be aware of the governmental regulations and know that they must comply with them. Those regulations are of great importance for the health and safety of the public. Thus, there clearly is a public good derived from the regulations. That public good must weigh heavily in the public interest in considering whether the interlocutory impounding orders should be set aside. Further the public good which results from the collection of revenues derived from taxation statutes is obviously a factor that should weigh heavily in assessing the balance of convenience. There is no question that to ensure compliance with any taxation legislation powers of investigation and enforcement are essential. These are all factors to be taken into account and considered to be favourable to the position of the Ministère du Revenu.

With all that recognized, it still must be determined whether the holding in escrow of the documents seized pending the determination of the constitutional validity of the search provisions of the Act should be upheld in light of the remaining privacy interest in those documents and in the homes and offices of the respondents. My colleague begins his analysis of the balance of inconveniences by observing that the impounding orders will merely delay the appellants' opportunity to look at the documents seized. Therefore, he continues, it can be presumed that the respondents will at one time or another suffer the inconveniences related to the investigation by the Ministère du Revenu (i.e., the appellants seeing the documents seized). With respect, I disagree. His approach assumes that the respondents will lose the main applications to quash the warrants. Any remedy in the nature of an interlocutory stay or impounding order is predicated on the possibility that the party applying for the stay will eventually be successful. Obviously, if the respondents are successful in the main applications, then they will not suffer a violation of their privacy interests. As I have observed, the impounding orders protect both the integrity of the documents and the privacy interest of the respondents. The impounding order is an eminently sensible interlocutory measure, provided that it does not harm the public interest.

What then is the detriment that the Ministère du Revenu will suffer if the impounding orders are upheld? After a review of the evidence provided in this case, I have come to the conclusion that the Ministère du Revenu and the public interest in the enforcement of taxation statutes would suffer little, if at all, from the granting and maintaining of these orders.

Quite simply, the evidence does not support the appellants' submission that the orders in these cases will paralyse the enforcement of taxation statutes in the province. The appellants are still at liberty to carry out searches and effect seizures. The appellants can still investigate and proceed under other sections of the Act, specifically ss. 38 and 39. Accepting, for the purpose of argument, the appellants' contention that this case will act as a precedent, it must be observed that there are so few searches and seizures carried out each year under taxation statutes in the province that this case is still one of exemption and not of suspension. In RJR -- MacDonald, supra, it was held that the onus of demonstrating harm to the public interest is a relatively low one for government authorities opposing interlocutory orders. The following appears at p. 346:

The test will nearly always be satisfied simply upon proof that the authority is charged with the duty of promoting or protecting the public interest and upon some indication that the impugned legislation, regulation, or activity was undertaken pursuant to that responsibility. Once these minimal requirements have been met, the court should in most cases assume that irreparable harm to the public interest would result from the restraint of that action. [Emphasis added.]

However, the public interest will not always be harmed by granting a stay, particularly where the case in one of exemption rather than suspension (at p. 346):

Consideration of the public interest may also be influenced by other factors. In Metropolitan Stores, it was observed that public interest considerations will weigh more heavily in a "suspension" case than in an "exemption" case. The reason for this is that the public interest is much less likely to be detrimentally affected when a discrete and limited number of applicants are exempted from the application of certain provisions of a law than when the application of the law is suspended entirely.

The sole adverse effect of the impounding orders is that the appellants will not be able to see the documents seized until the constitutionality of the legislation is determined. The evidence indicates that this may delay the investigation in two ways. First the documents seized may well contain evidence which can be used in the prosecution. Secondly, the documents seized may enable the investigators to find additional evidence in the form of witnesses and other documents. The evidence does support the appellants' submission that the delay caused by the impounding orders may make it more difficult for the investigators to find more evidence in the form of other documents and witnesses when the orders are lifted.

However, the evidence also establishes that there are some avenues of investigation which can still be pursued while the impounding orders are in place. Further, it is clear that very few searches are conducted in a year. Quebec has approximately 4.2 million individual taxpayers, 240,000 corporate taxpayers, 223,000 employers, and 302,000 "agents". Despite the large base of taxpayers, the Ministère du Revenu of Quebec, carries out only some 45 investigations per year under all taxation legislation. Further, only some 25 searches and seizures are carried out in these 45 annual investigations. These statistics clearly indicate that the impounding orders will not curtail the investigative process.

The appellants further allege that it is confronted with a problem by the systematic granting of impounding orders with respect to documents seized pursuant to s. 40 of the Act. The appellants refer to eight cases, including the two which are the subject of this appeal.

Those cases are as follows: Ameublement Jeanne Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500-05-003335-872, granted April 15, 1987; Brochetterie Tino Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500-05-008861-898, denied July 17, 1989, [1989] R.D.F.Q. 98; Restaurant le Gourmet grec Inc. v. Séguin, Sup. Ct. Montréal, No. 500-05-004272-892, denied April 5, 1989, [1989] R.D.F.Q. 80; Courrier grec du Canada Ltée v. Québec (Procureur général), Sup. Ct. Montréal, No. 500-05-002016-895, denied February 24, 1989; the present appeal 143471 Canada Inc. and Tabah; Cuisines Multiform internationales Inc. v. Angers, granted January 31, 1992, [1992] R.D.F.Q. 46 (Sup. Ct.), and Sup. Ct. Montréal, No. 500-05-002049-920, granted April 14, 1992, [1992] R.D.F.Q. 126; Électro Marine Diesel Inc. v. Québec (Procureur général), Sup. Ct. Montréal, No. 500-05-005278-922, granted April 28, 1992, [1992] R.D.F.Q. 125. The respondents also brought to the Court's attention Groupe Shakiba Inc. v. Québec (Procureur général), Sup. Ct. Québec, No. 200-05-001644-934, granted June 3, 1993, [1993] R.D.F.Q. 70. These cases reveal that over a six year period, of nine motions, five were granted (one of these, Ameublement Jeanne Inc. was on consent), and four were refused.

It is true that these cases reveal that no applications for impounding orders have been denied since the decision of the Court Appeal of Quebec in Zeppetelli v. Canada, 1990 CanLII 3090 (QC CA), [1990] 2 C.T.C. 354. However, it is also true that they do not disclose a problem of a flood of impounding orders. The figures reveal not a flood, but at most a very slow and irregular trickle. I cannot accept that the enforcement of taxation statutes in the province of Quebec will be paralysed by impounding orders when the scant number of searches and seizures is compared to the number of taxpayers in the province.

It is not without significance that the Superior Court judges who heard the initial applications for the impounding orders, specifically found that there was no evidence that these orders would paralyse the investigation and prosecution of offences. Marquis J. in the Tabah case, [1990] R.D.F.Q. 90, wrote (at p. 96):

[translation] The respondents argue that if the present application is granted there will be such an increase in this type of action that eventually enforcement of the Act will be paralyzed.

It should be noted in this regard that this is a case concerning the meals and hotels tax. The evidence is that the Department conducts forty‑five (45) investigations per year under this Act: twenty‑five (25) of these result in searches. To date an impounding order has only been granted once. The fear of Department employees is understandable but is not based on any factual evidence adduced. [Emphasis added.]

Hannan J. in 143471 Canada Inc., [1990] R.D.F.Q. 104, wrote (at p. 109):

[translation] Clearly this affidavit indicates that the effect of a stay would not be to suspend any other investigation or prosecution of the applicants [respondents before this Court] for any other offence in respect of any other period. It would not have the effect of limiting the application of any tax legislation to any taxpayer or even to the applicants, except for use of the documents subject to the seizure.

Further, there cannot be any suggestion that the orders in these cases were granted on the basis of judicial "rubber stamping". The cases were argued extensively and careful reasons delivered. For example, the argument in the Tabah case lasted three days and that in 143471 Canada Inc. lasted two days. In both cases the reasons given for the orders were careful and detailed.

The evidence clearly establishes that the granting of impounding orders will certainly not paralyse the enforcement of taxation laws in the province of Quebec. Even if in every case where searches were carried out, impounding orders were in fact issued, this would not have the effect of paralysing the enforcement of taxation legislation. It must be remembered that the impounding orders do not prevent searches. They do no more than delay the appellants viewing the documents seized. It cannot be said that the impounding orders in this case so interfere with the enforcement of taxation laws as to seriously harm the public interest. I think it unlikely that citizens will consider that they can break taxation laws with impunity when searches and seizures can still take place. Obviously, the balance of convenience would be very different if the respondents were seeking to have the carrying out of searches and seizures pursuant to ss. 40 and 40.1 of the Act enjoined. Here, the respondents seek no more than the maintenance of the impounding orders. Further, like La Forest J., I would conclude that the limitation period for laying charges will not run while the impounding orders are in effect. In the circumstances, I can reach no other conclusion than that the balance of convenience favours the respondents.

I agree with my colleague that the presence or absence of a flood of applications is not determinative in deciding whether an interlocutory order should be granted. The nature and scope of the order requested, as well as the circumstances of each case will determine whether the court hearing the application should be concerned about a flood of similar requests. However, those concerns cannot be based on mere speculation. In my view, for a court to act based upon those concerns, there must be a substantial risk that there will be a flood of requests.

In this case, the evidence simply does not support the proposition that there is a probability, or even a real possibility, let alone a substantial risk, that there would be a flood of similar requests as a result of granting these applications.

My colleague suggests at the end of his reasons that there is an onus on an applicant for an interlocutory stay or impounding order (the respondents before this Court) to show that granting the stay or impounding order forwards the public interest. The discussion in RJR -- MacDonald at pp. 343-47 on which my colleague relies does not hold that in all cases an applicant for a stay must show that granting such an order is in the public interest. As a general rule all an applicant need show is that the public interest is not hurt by the order. What that passage considers is the situation where an applicant argues not only that its own private interest but also the public interest will be hurt by the refusal of a stay. In those circumstances, the private applicant has a higher threshold than the government respondent to establish that the public interest is served by its position. That is not this case. While in a general sense it can be said that there is a public interest in preventing unconstitutional searches, the respondents in this case do not rely on that public interest to support the impounding orders. Rather, they rely on their own privacy interests, and the fact that the public interest will not be harmed by granting the impounding orders. Thus, the respondents in this case only have to show that granting the orders will not harm the public interest, not that granting the orders will forward the public interest. This the respondents have done.

In summary, the evidence establishes that there is no serious interference with the enforcement of taxation statutes resulting from the granting of the impounding orders. There is then, no interference with the public interest and on this basis the impounding orders should be upheld. Further, even if it can be said that in a certain sense, the irreparable harm the respondents would suffer from the refusal of the impounding orders is small, since there is no significant interference with the public interest, the impounding orders should be upheld.

Delay

As I have indicated, if the judicial system could deal with the constitutional issue within a relatively short period, there would be no question that the impounding order would be the fairest and most reasonable method of proceeding. The prosecution would be protected, since the documents seized would be in safe keeping and could not be altered or changed. At the same time, the respondents' privacy interest in the documents, small though it may be, would be protected. How long is reasonable? Obviously, if the delay were a matter of weeks there would be no problem. Just as clearly, if the determination could be made within six months, there could be no significant prejudice suffered by anyone. It seems the delay will be longer than that in the province of Quebec. Judges of the Trial Division and the Court of Appeal work well and diligently under the pressure of an ever increasing case load. Courts and judges can do no more. Who then should bear the responsibility for that delay? Surely it should not be the individual, where as in this case, a serious question of law is raised as to the constitutional validity of search and seizure provisions of the legislation. The respondents should not suffer as a result of judicial delay. Ordinarily I would trust that this matter could be expedited and disposed of by the Court of Appeal of Quebec as expeditiously as possible. This Court has been advised that the Court of Appeal of Quebec granted the request of the respondent 143471 Canada Inc. to expedite the hearing of the appeal. The appeal was heard April 13, 1994. The Court of Appeal of Quebec dismissed the appeal on May 18, 1994, J.E. 94-934. I would expect that the application of Tabah would be bound by this decision. As a result it is not necessary to consider a direction to expedite the hearing of the appeal in 143471 Canada Inc. or the application in Tabah.

Disposition

In the result, I would dismiss the appeal with costs.

Appeal dismissed with costs, La Forest, L'Heureux‑Dubé and McLachlin JJ. dissenting.

Solicitors for the appellants: Veillette & Associés, Montréal.

Solicitors for the respondents: Phillips & Vineberg, Montréal.

Solicitors for the respondent Hétu: Woods Brouillette Des Marais, Montréal.