October 07, 2011

Crestbrook Forest Industries Ltd. (Appellant) v. Her Majesty the Queen (Respondent)

92 DTC 6187
Federal Court of Appeal
February 21, 1992

(Court File No. A-1034-91.)

Appeal procedure — Motion by corporate taxpayer for production of sensitive and confidential information obtained by Revenue Canada from other members of same industry for purposes of conducting survey — Income Tax Act, S.C. 1970-71-72, c. 63, s. 172.

Revenue Canada had commissioned TM Ltd. to produce a survey of pulp and newsprint pricing discounts and commissions in the Canadian pulp and newsprint industry (“the industry”). At Revenue Canada’s request, a large constituency of that industry had thereupon provided some very confidential and sensitive information on their individual pricing policies, but with assurances from Revenue Canada and TM Ltd. that such information would be protected by the strictest confidentiality. Revenue Canada later used the information continued in TM Ltd.’s published Report to reassess the corporate taxpayer (a member of the industry) for its 1984, 1985 and 1986 taxation years. Such reassessments were predicated on the allegations that the taxpayer’s discounts to its customers were in excess of reasonable pulp sales discounts in the industry and that such excess should be added back to the taxpayer’s income for those years. During the course of its appeal to the Federal Court-Trial Division and, upon the Crown’s refusal to produce all of the supporting documents underlying TM Ltd.’s Report, the taxpayer moved for an Order of production. This was granted by the Motions Judge, but on a carefully restricted basis (91 DTC 5521). The taxpayer appealed to the Federal Court of Appeal, alleging, inter alia, that the protective Order made by the Motions Judge was too limiting of its rights to enable it to fight the Minister’s assessment. A number of cross-appellants (comprising other members of the industry), however, filed cross-appeals alleging that their confidences should be respected and that no Order for production ought to have been made at all.

Held: The taxpayer’s appeal was dismissed and the various cross-appeals were allowed. The Crown had obtained the information in issue in confidence from various taxpayers on a voluntary basis and for a specific and defined purpose. Accordingly, it could not subsequently make use of that information for a different purpose, namely, the reassessment of other taxpayers under circumstances which would almost inevitably result in a breach of the Crown’s undertaking of confidence. In addition, the information could not advance the litigation in any event. For these reasons, the Order of the Motions Judge requiring its production should be set aside and the original applications for its production should be dismissed.