The Sherbrooke police seized $1.4M in cash and jewels, along with guns, of the plaintiff (“Brochu”), who had dealings with the underworld (perhaps as a fence). The police then notified the ARQ that there were documents that were of interest to it. The ARQ then arrived at Brochu’s residence at 10 p.m. on June 12, 2014 and served him with a requirement pursuant to s. 39 of the Tax Administration Act (the Quebec equivalent of ITA s. 231.2) to produce a wide range of documents respecting him and five companies for the past 13 years along with a detailed listing of all his personal expenses for those years “immediately” (although the ARQ had not appreciated in preparing the requirement that this was Brochu’s residence). Brochu offered to lock up the residence, and leave it overnight subject to ARQ surveillance, but this was refused, and the ARQ seized 13 boxes of documents, which it sealed and carted away. Two weeks later, the ARQ breached an understanding reached with Brochu’s lawyer that the boxes would be kept under seal, and opened the boxes and examined the contents.
In finding that the requirement and seizure were not authorized by s. 39, Villeneuve JCS stated (at paras. 96-99, TaxInterpretations translation):
Although the Minister can have a certain discretion as to a reasonable period based on the circumstances of a particular matter, the Minister is however required to be realistic in permitting the taxpayer to comply in order to avoid penalties … .
However, when the ARQ required that Brochu provide documents “immediately,” it infringed the spirit of the TAA as it provided absolutely no period in which the latter could comply, and furthermore imposed its ultimatum in a place serving as a taxpayer’s residence.
The absence of any period within which to produce by itself rendered the Requirements abusive.
Furthermore, the impressive quantity of particulars and documents demanded of Brochu rendered it impossible to respond immediately, particularly when taking into account that the Requirements extended to five companies as well as the personal affairs of Brochu over a period of almost 15 years.
After adverting to the Jarvis doctrine, he stated (at paras. 112-114, 120-121):
[T]he primary goal of the intervention of the evening of June 12, 2014 was not merely to conduct a tax audit, but above all to avoid a destruction of evidence. …
In such a case, an Anton Pillar order can constitute a judicial remedy … .
A judicial authorization however is required [therefor] … .
[A] requirement certainly cannot be used to disguise a seizure made without judicial authorization.
In such circumstances, section 8 of the Charter … was infringed by the ARQ… .
In the presence of only meagre evidence as to the actual psychological or other damages suffered by Brochu, he was awarded $10,000 in damages for his “trouble, annoyance and inconvenience,” but was awarded $100,000 in punitive damages “in order to make the ARQ and its auditors understand that ‘the end does not justify the means’ (para. 201).”