Canada: Daley v. Canada (Attorney General) Toronto Tax Lawyer Case Comment Part 3

Last Updated: December 22 2016
Article by David Rotfleisch

Daley v. Canada (Attorney General) – 2016 FC 1154 – Judicial Review of Privacy Commissioner Findings – Toronto Tax Lawyer Case Comment

Part III: Unauthorized Disclosure Issue and Case Comment Conclusion

The issue of whether Ms. Daley was entitled to a duty of fairness is discussed in detail by our expert Toronto Tax Lawyers in Part II of this case comment. Part III will look at the decision of the Office of the Privacy Commissioner of Canada about the unauthorized disclosure and whether it was reasonable. The Federal Court identified interpretation issues and decided that it was not.

The Unauthorized Disclosure of Mr. O's Interview Transcript to Ms. T

The Court found that the disclosure was not unauthorized and determined that the OPC had assumed authority which was statutorily entrusted to another decision-maker (The Minister of Revenue or CRA) through an Act of Parliament (the Income Tax Act). They were unreasonable in assuming this authority and incorrectly interpreted paragraph 241(3)(b) of the Income Tax Act. Paragraph 241(3)(b) lays out when the CRA can disclose taxpayer information. Unless authorized by a provision in section 241 of the Income Tax Act, the CRA must keep taxpayer information private.

The Federal Court of Canada in Privacy Act (Can.) (Re) ([2003] 3 FCR 82) determined that paragraph 8(2)(b) of the Privacy Act enables Parliament to confer wide discretion about the disclosure of information their departments have collected to a Minister. The Court concluded that, at minimum, the OPC must take into account the CRA's interpretation of paragraph 241(3)(b) and related jurisprudence in its analysis. The Office of the Privacy Commissioner of Canada failed to do so and used a narrow interpretation approach as opposed to the CRA's stance that it should be interpreted broadly.

In Slattery (Trustee of) v Slattery ([1993] 3 SCR 430) the Supreme Court of Canada stated that the language in paragraph 241(3)(b) was broad. Broad language indicates that a wide view should be used when considering if a disclosure was made in respect of proceedings relating to the administration of the Income Tax Act. Confidentiality does not apply if a disclosure is made in respect of proceedings relating to the administration or enforcement of the Income Tax Act.

The Court stated that the Office of the Privacy Commissioner of Canada characterized the proceedings between Mr. H and Mr. O as "damages arising out of business dealings." This characterization led to the conclusion that the disclosure of the transcript was made for proceedings not relating to the enforcement of Income Tax Act. The Court found that this characterization of the facts was misleading.

In 2002, CRA interviewed Mr. O as part of an investigation and the information he provided formed the basis of the charges against Mr. H. In January of 2003, Mr. H sued Mr. O and Minutes of Settlement were produced. The Minutes of Settlement contradicted the information provided in the interview. In May of 2003, Mr. O gave a further interview to CRA. In this interview Mr. O confirmed his prior testimony (contrary to the Minutes of Settlement). The interview in May 2003 produced the transcript that Ms. Daley disclosed to Ms. T. A slew of litigation followed as Mr. H re-launched civil proceedings commenced in 2003 after successfully challenging the criminal proceedings on Charter grounds.

The Court found that if the CRA had not investigated Mr. H, Mr H would never have sued Mr. O. The Court determined that the causal connection between the CRA's initial investigation and Mr. H's subsequent civil proceedings was enough to meet the broad connection criteria in paragraph 241(3)(b) of the Income Tax Act.


Judicial Review of the Office of the Privacy Commissioner of Canada's decision was granted. The Court concluded that a duty of fairness was owed to Ms. Daley. The Court also concluded that the Office of the Privacy Commissioner of Canada misstated the facts of the case by ignoring the context surrounding why proceedings against Mr. O were brought. The Office of the Privacy Commissioner of Canada's report of findings was quashed and sent back to the Office of the Privacy Commissioner of Canada for redetermination. Judicial overview of administrative decisions also applies to other government institutions such as the Canada Revenue Agency. For some taxation issues, the Tax Court of Canada may not be the appropriate venue to challenge the decision. Our expert Toronto Tax lawyers can assess your tax issues and represent you at the appropriate court to provide you with the tax help you require.

Continue Reading the previous part about Daley v. Canada (Attorney General) Toronto Tax Lawyer Case Comment Part 2

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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