Section 231.2(1) of the ITA (and s.289(1) ETA) gives the Minister a broad power to compel the disclosure of information or documents. In language which imposes some but little restriction, the section provides that the Minister may “for any purpose related to the administration or enforcement of this Act…require that any person provide, within such reasonable time as stipulated in the notice” any information or document.
Section 238 of the ITA (326(1) ETA) makes it an offence to fail to comply with a Requirement.
Until the recent decision in R. v. Sedhu, 2015 BCCA 92 (03 March 2015) there has been inconsistency in decided cases with respect to whether, in a prosecution for non-compliance with a Requirement, Crown must prove beyond a reasonable doubt that the time stipulated in the notice was reasonable because the reasonableness of the stipulated time is an essential element of the offence.
In Sedhu the appellant was given 90 days to file tax returns for a corporate entity. The Requirements to file were not complied with. At trial the appellant argued, and the trial judge accepted that the time provided for compliance was not reasonable and an acquittal was entered on that basis. The trial judge held “because that period of time was not proved to be reasonable before the court, evidence is lacking on that one point, and there must be an acquittal as a result of a missing part of an essential element.”
The result and the trial judge’s legal analysis on this point was overturned on summary conviction appeal and, on further appeal to the British Columbia Court of Appeal, the court held that reasonableness of the time given to comply with a Requirement is not an element of the offence that the Crown must prove. Instead, it is relevant to a defence that may be available to a person charged.
At the outset, the appeal court observed that “[t]his is a case of first instance…[and] [t]here is no settled jurisprudence on the actus reus of the offences in question or the onus of proof of reasonableness.”
After considering existing previously decided cases and principles of statutory interpretation the appeal court concluded:
In their grammatical and ordinary sense, the words used in these statutes suggest that the Minister is directed by Parliament, when making a demand, to stipulate a reasonable time for compliance. The offence, as described by the statute, is not failure to comply with a demand within a reasonable time… but, rather, failure to comply with the demand. It does not state the individual must comply with a notice that contains a reasonable time to comply, but rather within the time specified in the notice. It does not express that the individual has an entitlement to a reasonable time to respond to the notice.
Therefore, according to the appeal court, for there to be a conviction under these provisions in the ITA or ETA, Crown must prove beyond a reasonable doubt: (1) identity; (2) jurisdiction; (3) service of the notice, and; (4) failure to comply with the notice.
The court also addressed available defences. Because the offences are offences of strict liability, “an accused person must have an opportunity to demonstrate due diligence; that the time provided to comply with the requirement was unreasonable; or that the demand was not made for purposes related to the administration or enforcement of the Act.”
It is interesting and significant that the defence of due diligence is distinct from whether the time given for compliance is unreasonable. And, while according to the appeal court in Sedhu the reasonableness of the time requirement is to be determined objectively, the clear recognition of this as a defence will undoubtedly give rise to interesting litigation in relation to what is objectively reasonable on the facts of a given case.
Trial courts confronted with this interpretive task will undoubtedly be guided by Sedhu in which the appeal court noted that “the words used in these statutes suggest that the Minister is directed by Parliament, when making a demand, to stipulate a reasonable time for compliance” and that the “time requirements are not pre-determined but are to be fixed with reference to the nature of the demand made when it is made.”
These passages suggest that in being directed to stipulate a reasonable time for compliance, the Minister will be required to consider factors which include, but are not limited to, “the nature of the demand”. And whether the Minister has considered appropriate factors or has stipulated a time period which is objectively reasonable will be the grist for future litigation.