Originally published on Fasken’s White Collar Post blog, under the title “CRA Can Examine Items Seized During Criminal Investigation Before Validity of Search Warrant Confirmed“.
By Jenny P. Mboutsiadis and Anastasia Reklitis
The Canada Revenue Agency (“CRA”) can examine and make copies of items seized by the Royal Canadian Mounted Police (“RCMP”) pursuant to search warrants issued during a criminal investigation without having to wait for a determination of whether the warrants were valid. This was confirmed by the British Columbia Supreme Court in Canada Revenue Agency v. Royal Canadian Mounted Police, 2016 BCSC 2275. The CRA has not appealed the decision.
In this case, the CRA applied to the court under subsection 490(15) of the Criminal Code, RSC, 1985, c. C-46, for access to items obtained by search warrants. The search warrants had been issued based on the belief that those named in the warrants (“Named Persons”) had committed criminal offences, such as laundering proceeds of crime, possession of property obtained by crime, and importing and trafficking in a controlled substance. The items seized included large amounts of cash, numerous documents and computers, and other electronic devices and media containing business, accounting, and tax records.
The CRA argued that it was permitted access because it is a person “who has an interest in what is detained”, thereby satisfying the applicable Criminal Code provision. The Named Persons opposed the CRA’s application on numerous grounds. The RCMP took no position.
The Named Persons’ first argument was that a determination that the seizure is lawful is a pre-condition to the CRA’s entitlement to access any materials. The Named Persons had already commenced the process in the Provincial Court that could possibly lead to the quashing of some or all of the search warrants and argued that, therefore, the CRA’s application should be adjourned until the validity of the warrants is determined from that process. The court rejected this argument and explained that the warrants were presumptively valid and the Named Persons have the burden to establish otherwise. A mere challenge with vague possibilities was not enough to satisfy the court that the warrants were invalid.
The Named Persons’ second argument was that the CRA’s application should fail because it did not have an interest in the seized items. The court found to the contrary: the CRA did have an interest because the items could be relevant to various tax investigations in which it was involved, which were independent of the RCMP investigations. In particular, the items were relevant to determining potential tax offences involving some or all of the Named Persons, including tax evasion and the filing of false tax returns.
The Named Persons’ third argument was that any order allowing the CRA access should contain specific restrictions relating to privacy, privileged material, and relevance. The court refused to place any restrictions as it did not find it appropriate to limit the examination of the evidence.
The CRA’s application was allowed and access to the seized items was granted. In doing so, the court stated that there is nothing inherently wrong with law enforcement officials cooperating and sharing legally-obtained information. Preventing the CRA from accessing the RCMP gathered information would delay the CRA’s investigation, thereby prejudicing its effectiveness and the likelihood of charges arising from it. The court’s view was that it is in the public interest that the RCMP and CRA investigations proceed concurrently as they concern offences arising from the same search warrants.