January 27, 2012

Regina (Appellant) v. Bo Ping He, Yun Mei He, and Yi Ming Jiang (Respondents)

2011 DTC 5067
Neutral Citation: 2011 BCSC 368
Supreme Court of British Columbia
Date: March 25, 2011

Court File No. 25363

Search and seizure — Random check of electronic record keeping — Whether seizure of electronic records reasonable in the circumstances — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 230(1), 231.1, 231.2 — Excise Tax Act, R.S.C. 1985, c. E-15, s. 286, 287, 288 — Canadian Charter of Rights and Freedoms, R.S.C. 1982, c. 11, s. 8, 24.

Facts: The Canada Revenue Agency (the “CRA”) undertook a pilot project to evaluate, in real-time, the adequacy and reliability of the point of sales electronic systems of 300 businesses. The taxpayers’ business, a small restaurant, was one of the businesses selected. During the evaluation, which was attended by two CRA officers and a CRA Electronic Commerce Audit Specialist, various electronic records were seized, and the taxpayers were later charged with criminal offences. The British Columbia Provincial Court found that the seized evidence was inadmissible, and the taxpayers were acquitted. The Crown appealed to the British Columbia Supreme Court.

Held: The Crown’s appeal was dismissed. The Court found that the search and seizure was unreasonable, and that the evidence was properly excluded. It was clear that the CRA was not engaged in a genuine and serious inquiry into the tax liability of the taxpayers. As a result, the entry into the taxpayers’ premises was not authorized, and the resulting seizure of the records was unlawful, as was the subsequent copying of the taxpayers’ data. As the actions by the CRA amounted to a warrantless seizure, the CRA was in breach of the taxpayers’ Charter rights to be free from unreasonable search or seizure. The trial judge was correct in determining that the evidence obtained as a result of that seizure should be excluded.