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 Source: http://reports.fja.gc.ca/fc/src/shtml/2003/pub/v4/2003fc32569.shtml Reference: [2003] 4 F.C. 865  A-387-02 2003 FCA 202 David M. Sherman (Appellant) v. The Minister of National Revenue (Respondent) Indexed as: Sherman v. M.N.R. (C.A.) Court of Appeal, Desjardins, Létourneau and Evans JJ.A.--Toronto, February 18; Ottawa, May 6, 2003. Access to Information -- M.N.R. refusing request for access to statistics on collaborative tax collection efforts by CCRA, American IRS -- Denial upheld by Information Commissioner, F.C.T.D. -- Information sought by tax consultant, author to assess cost efficiency of tax collection assistance system, whether M.N.R. discharging public duty of enforcing tax laws -- Minister's position: requested information exempt from disclosure under Access to Information Act, ss. 13(1)(a), 16(1)(b), (c) -- Appeal dealing only with s. 13(1)(a), F.C.T.D. Judge not having considered other paragraphs -- Judge below satisfied three requirements for s. 13(1)(a) exemption met, mandatory exemption applied -- Appellant's argument: s. 13(1)(a) inapplicable to statistics generated by Canadian authorities though derived from information received in confidence under Canada-U.S.A. Convention -- Appeal allowed -- Mere fact information exists not caught by s. 13(1)(a) mandatory exemption -- Convention, implementing statute are public documents -- Conclusion of T.D. Judge requiring liberal interpretation of exemption provision contrary to case law holding exemptions to be narrowly construed -- Taken to limits, meaning all taxation statistics, enforcement initiatives could be withheld from public -- Statistics generated by M.N.R. not exempt under paragraph unless revealing contents of information -- Whether all information exchanged under Art. XXVII relating to XXVI A of Convention to be treated as secret -- Paragraph 1, Art. XXVII more limited than American legislation -- Principles applied to specific requests -- Some of information sought protected, some not -- Records to which access sought not before Court, may contain voluminous exempt information so that severance impossible -- Case therefore remitted to T.D. to examine records, redetermine. Income Tax -- Enforcement -- Collections -- Art. XXVII relating to Art. XXVI A of Protocol amending Convention Between Canada, U.S.A. re: Taxes on Income, Capital -- IRS, CCRA providing to each other tax collection assistance -- Tax consultant, author requesting statistics to assess cost -- efficiency of tax collection assistance system, whether M.N.R. discharging public duty to enforce tax laws -- Revenue Canada's position: information exempt from disclosure under Access to Information Act, ss. 13(1)(a), 16(1)(b), (c) -- Information obtained in confidence from IRS -- Appeal to F.C.A. from T.D. decision upholding disclosure refusal -- Convention, implementing legislation are public documents -- Conclusion of F.C.T.D. Judge, taken to limits, meaning all statistics on taxation laws, enforcement initiatives could be withheld -- Carries implications way beyond application of mutual tax assistance Convention -- Paragraph 1, Art. XXVII of Convention not requiring statistics compiled by M.N.R. to be treated as secret if contain no information received under Convention -- Upon application of principles to specific information requested, some exempt from disclosure under Act, s. 13(1)(a), some not. Practice -- Costs -- Lawyer, acting on own behalf, in partially successful litigation seeking access to information regarding Canada-U.S.A. Convention with respect to Taxes on Income, Capital -- M.N.R. arguing, as self-represented litigant, appellant entitled to disbursements only -- Now accepted costs perform several functions: regulate, indemnify, deter -- These legitimate purposes compromised by rule self-represented litigants denied costs -- Rule relaxed in recent Ont. C.A., F.C.T.D. decisions -- Appellant awarded disbursements, moderate allowance for time preparing, presenting case before F.C.T.D., F.C.A. on proof forgoing remunerative activity. This was an appeal from the decision of McKeown J. upholding the Minister of National Revenue's refusal to disclose information as to the extent to which the Canada Customs and Revenue Agency (CCRA) uses the American Internal Revenue Service (IRS) to collect Canadian taxes as well as the extent to which the IRS uses the Canadian Agency to collect American taxes. At issue was the extent of the Minister's right under paragraph 13(1)(a) of the Access to Information Act to deny access to information obtained in confidence from the IRS. Appellant, an author and tax consultant, sought disclosure of statistical information as to the number of requests made, total dollars involved, percentage of requests accepted for action, percentage of requests resulting in successful action and percentage of dollars requested that have been collected and remitted. Appellant wanted breakdowns of these statistics for each of the years 1995, 1996, 1997 and 1998. Revenue Canada's Director of Access took the position that the requested information was exempt from disclosure under paragraphs 13(1)(a), 16(1)(b) and (c) of the Act and that ruling was sustained by the Information Commissioner and, upon judicial review, by a Judge of the Federal Court Trial Division. This appeal dealt only with paragraph 13(1)(a), the Judge below having declined to consider the other paragraphs. The Judge found that for information to be protected under paragraph 13(1)(a) there were three requirements that had to be met: (1) information obtained from a foreign state; (2) obtained in confidence; (3) obtained from the government or an institution of a foreign state. The Judge was satisfied that, all these requirements having been met, the mandatory exemption applied. It was noteworthy that appellant did not seek this information for personal gain but rather to assess the cost efficiency of the tax collection assistance system and to determine whether the Minister is discharging his public duty of enforcing the tax laws for the benefit of Canadian taxpayers. Appellant argued that paragraph 13(1)(a) had no application to statistical information generated by Canadian authorities although derived from information obtained in confidence under the Canada-U.S.A. Convention. To accept the Judge's reasoning would mean that the disclosure of just about every statistic regarding CCRA operations could be suppressed. Appellant further challenged the Minister's position that all information exchanged under Article XXVII of the Convention is lawfully treated by the IRS and CCRA as secret. Held, the appeal should be allowed and the matter referred back to the Trial Division for a new determination of appellant's right to access. What is significant for the purpose of paragraph 13(1)(a) is not so much the source of the record to which access is sought as both the confidential nature and the source of the information it contains. In other words, the record sought is not to be confused with the information that it contains. While His Lordship did not err in interpreting paragraph 13(1)(a), that left open the question as to whether the Minister might reveal the very fact of the existence of information obtained in confidence from the United States as well as the volume (statistical numbers) of such information so long as the contents of the information were not revealed. It was concluded that the mere fact that such information exists is not caught by the paragraph 13(1)(a) mandatory exemption. This conclusion was based on the fact that the Convention allowing for the exchange of confidential information and the laws implementing it are public documents. To confirm what everyone already knows is no disclosure but what is more problematic is the question of the volume of exchange of such information, in terms of requests made and money sought, collected and remitted, coming from the United States. If the Judge's conclusion extended to statistics generated by the Canadian government from the confidential information it received from the IRS, that was too encompassing as it would require a liberal interpretation of the mandatory exemption in paragraph 13(1)(a). That would go against cases in which this Court has held that exemptions, especially mandatory class exemptions, are to be narrowly construed. Taken to its limits, this conclusion would mean that all statistics in taxation laws and government operations to enforce them could be withheld. The conclusion would thus have implications going far beyond the scope of paragraph 13(1)(a) of the Act and of the mutual tax assistance Convention. For the statistics generated by the Minister to fall within the paragraph, they would have to reveal more than the existence and volume of confidential information received from the IRS. They would have to reveal the contents of the information. This was not to say that a disclosure refusal might not be justifiable under some other provision in the Act. The next issue for determination was whether all information exchanged under Article XXVII relating to Article XXVI A of the Convention ought to be treated as secret. Paragraph 1 of Article XXVII of the Convention does not require that statistical information compiled by the Minister in relation to the functioning of the tax collection assistance regime be treated as secret, provided that it contains no information received under the Convention by Canada from another Contracting State. Secrecy under the Convention attaches only to information received in confidence from the IRS. This does not go as far as the American legislation which provides an exemption for "any other information exchanged pursuant to a tax Convention" if treated as confidential or secret under the Convention. Paragraph 1, Article XXVII is much more limited than is the American legislation. Having established the applicable principles, these had to be applied to the specific information requests here at issue. The request for a yearly breakdown could not be provided in that no such breakdown exists. The number of assistance requests is not exempt from disclosure under paragraph 13(1)(a). The aggregate of the dollar value of IRS assistance requests should be protected, confidentiality not being lost even though it is true that each amount loses its individuality when aggregated. But the total value of CCRA's requests to IRS is not exempt from disclosure. The percentages of actions taken and the success thereof are not exempt. As for the question on the percentage of dollars collected and remitted by both the IRS and CCRA, the amount remitted to the IRS is exempt. To disclose the percentage collected would be to reveal the aggregate of dollars claimed by the IRS and that was information obtained in confidence from a Contracting State. The statistic regarding the percentage and amount collected and remitted by the IRS is confidential information within paragraph 13(1)(a). While the statistic is Canadian information, its nature is such that it is actually American information obtained in confidence from the IRS. Due to a misunderstanding, the material to which appellant seeks access was not filed with the Court. So it may be that the record contains voluminous information exempt from disclosure and that the information sought cannot be severed therefrom, rendering lawful disclosure impossible. In these circumstances, the matter had to be sent back to the Trial Division to examine the records and redetermine the request in accordance with these reasons for judgment and, if necessary, to determine whether the discretionary exemptions under paragraphs 16(1)(b) and (c) are here applicable. Appellant, a lawyer, acted on his own behalf and sought an award of costs. This was resisted by the Minister, who argued that, as a self-represented litigant, appellant was, at most, entitled only to disbursements. The Court's Rules are unfair to the self-represented litigant: he obtains no costs if he wins, but experiences the full wrath of the costs rules if he loses. There is recent case law recognizing the necessity for alleviating the unfairness of the costs rules to self-represented litigants so that the awarding of costs can fulfill its multiple purposes of regulating, indemnification and deterrence. Even so, limits have to be placed on a self-represented litigant's entitlement to costs. The early Chancery rule was that such a lay litigant should be awarded only a "moderate" allowance for time lost in preparation and presentation of his case. As the Federal Court Act, and Rules stand, a lay litigant cannot be awarded counsel fees. It would be proper to award appellant his disbursements along with a moderate allowance to cover his time and effort in preparing and presenting his case before both the Court's Trial and Appeal Divisions given that he can prove that he incurred cost by forgoing remunerative activity. statutes and regulations judicially considered Access to Information Act, R.S.C., 1985, c. A-1, ss. 2(1), 13(1)(a), (2), 16(1)(b),(c), 53(2).
cases judicially considered applied: Fong v. Chan (1999), 46 O.R. (3d) 330; 181 D.L.R. (4th) 614; 128 O.A.C. 2 (C.A.); Lavigne v. Canada (Human Resources Development) (1998), 229 N.R. 205 (F.C.A.); Canada (Attorney General) v. Kahn (1998), 160 F.T.R. 83 (F.C.T.D.); Coath v. Bruno Gerussi (The), 2002 FCT 385; [2002] F.C.J. No. 495 (T.D.) (QL). distinguished: Tax Analysts v. I.R.S., 217 F.Supp.2d 23 (D.D.C. 2002). considered: Davidson v. Canada (Solicitor General), [1989] 2 F.C. 341; (1989), 36 Admin. L.R. 251; 47 C.C.C. (3d) 104; 24 C.P.R. (3d) 129; 98 N.R. 126 (C.A.); McBeth v. Dalhousie University (1986), 72 N.S.R. (2d) 224; 26 D.L.R. (4th) 321; 10 C.P.C. (2d) 69; 23 C.R.R. 317 (S.C. (A.D.)); Desjarlais v. Canada (2002), 216 F.T.R. 207 (F.C.T.D.). referred to: Housen v. Nikolaisen, [2002] 2 S.C.R. 235; (2002), 211 D.L.R. (4th) 577; [2002] 7 W.W.R. 1; 10 C.C.L.T. (3d) 157; 30 M.P.L.R. (3d) 1; 286 N.R. 1; 219 Sask. R. 1; Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd. (2002), 211 D.L.R. (4th) 696; 17 C.P.R. (4th) 478; 288 N.R. 201 (F.C.A.); Canada (Information Commissioner) v. Canada (Commissioner of the Royal Canadian Mounted Police) (2003), 224 D.L.R. (4th) 1; 47 Admin. L.R. (3d) 1; 24 C.P.R. (4th) 129; 301 N.R. 41; Rubin v. Canada (Minister of Transport), [1998] 2 F.C. 430; (1997), 154 D.L.R (4th) 414; 221 N.R. 145 (C.A.). authors cited Drapeau, M. W. and M. A. Racicot. Federal Access to Information and Privacy Legislation Annotated 2003. Toronto: Carswell, 2002. APPEAL from a Trial Division decision ([2002] 3 C.T.C. 347; (2002), 222 F.T.R. 145; [2002] G.S.T.C. 74) denying an application for judicial review of the decision of the Information Commissioner upholding the refusal of a request for access to information concerning tax collection assistance sought from and provided to the American Internal Revenue Service. Appeal allowed and case referred back to the Trial Division for a new determination of appellant's right of access. appearances: David M. Sherman on his own behalf. David W. Chodikoff and Sointula Kirkpatrick for respondent. solicitors of record: Deputy Attorney General of Canada for respondent. The following are the reasons for judgment rendered in English by [1]Létourneau J.A.: This appeal raises a question of public and governmental interest and concern: to what extent, pursuant to paragraph 13(1)(a) of the Access to Information Act, R.S.C., 1985, c. A-1 (Act) and paragraph 1 of Article XXVII relating to Article XXVI A of the Protocol amending the Convention Between Canada and the United States of America with respect to Taxes on Income and on Capital (Convention), can the Minister of National Revenue (Minister) deny the appellant access to information in the hands of Revenue Canada relating to tax collection assistance sought from and provided to the U.S. Internal Revenue Services (IRS)? At issue is the scope of the respondent's right under paragraph 13(1)(a) of the Act to refuse access to information obtained in confidence from the IRS. Paragraph 1 of Article XXVII is relevant to the interpretation of paragraph 13(1)(a) as it determines the conditions under which information exchanged under the Convention is confidential. The Convention and the amending Protocol were implemented respectively by an Act known as the Canada-United States Tax Convention Act, 1984, S.C. 1984, c. 20 and an Act to amend the Canada-United States Tax Convention Act, 1984, S.C. 1995, c. 34. [2]I should state at the outset that my assessment of the issue raised by this appeal has been made more difficult, and has been somewhat hampered, by the fact that the material to which the appellant seeks access has not been filed with us in confidential form as a result of a misunderstanding. It remains possible, however, to review the decision under appeal and to determine under paragraph 13(1)(a) of the Act the principles governing disclosure of information obtained pursuant to the Convention. Without indulging in speculation, it may be possible to apply these principles to some of the requests made by the appellant. [3]I should also issue a warning. The fact that disclosure of the requested records may not be prohibited by paragraph 13(1)(a) of the Act does not necessarily entail that they will be released. The information that they contain may be protected under other provisions of the Act or of taxation statutes. Our role is limited to determining the scope of paragraph 13(1)(a) in relation to paragraph 1 of Article XXVII of the Convention relied upon by the Judge to dismiss the appellant's application for judicial review. Facts and Procedure [4]The appellant, Mr. David M. Sherman, is a tax consultant and author. By letter dated February 19, 1999, he requested disclosure of the following statistical information from Revenue Canada (now the Canada Customs and Revenue Agency (CCRA)): With respect to Article XXVI A of the Canada-United States Tax Convention, which permits Revenue Canada to seek collection assistance from the U.S. Internal Revenue Services (IRS), and permits the IRS to seek collection assistance from Revenue Canada: 1. Since this provision came into force in 1995, how many requests have been made by Revenue Canada to the IRS? How many requests have been made by the IRS to Revenue Canada? 2. What were the total dollars involved in collection assistance requested by Revenue Canada of the IRS? By the IRS of Revenue Canada? 3. What percentage of the requests have been accepted for action by the IRS? By Revenue Canada? 4. What percentage of the requests acted on have resulted in successful action by the IRS? By Revenue Canada? 5. What percentage of the dollars requested have been collected by the IRS and remitted to Revenue Canada? Collected by Revenue Canada and remitted to the IRS? 6. Can I get breakdowns of each of the above numbers by year (1995, 1996, 1997, 1998)? [Emphasis added.] In short, the appellant wants to have access to the statistical information compiled by the Minister. He wants to know the number of requests made by CCRA and its American counterpart, the IRS, the amount of dollars claimed, the level of acceptance by each agency, the success rate in collecting monies due and the amount of dollars effectively collected and remitted. [5]On May 10, 1999, the Director of the Access to Information and Privacy Division, Revenue Canada, informed the appellant in a letter that the information requested is exempt from disclosure pursuant to paragraphs 13(1)(a), 16(1)(b) and (c) of the Act. The appellant filed a complaint with the Information Commissioner. [6]By letter dated February 22, 2000, the Information Commissioner dismissed the appellant's complaint as not being substantiated. He found that the information was obtained in confidence from the government of a foreign state and that disclosure could reasonably be expected to be injurious to the enforcement of a law of Canada. The appellant made an application for judicial review of this decision to the Federal Court, Trial Division. [7]On May 22, 2002, the appellant's application for judicial review was dismissed [[2002] 3 C.T.C. 347 (F.C.T.D.)]. Hence the appeal. [8]I should add that the issue on appeal, as regards access under the Act, was limited to the applicability of paragraph 13(1)(a) because the Judge of the Trial Division (Judge) refrained from considering paragraphs 16(1)(b) and (c). He was of the view that the mandatory exemption in paragraph 13(1)(a) of the Act applied and that consent to disclosure had been refused by the United States. Paragraph 13(1)(a) and subsection 13(2) read: 13. (1) Subject to subsection (2), the head of a government institution shall refuse to disclose any record requested under this Act that contains information that was obtained in confidence from (a) the government of a foreign state or an institution thereof; . . . (2) The head of a government institution may disclose any record requested under this Act that contains information described in subsection (1) if the government, organization or institution from which the information was obtained (a) consents to the disclosure; or (b) makes the information public. The decision of the Judge [9]The Judge made a number of findings that are not in dispute. The burden of proof required to establish an exemption from disclosure rests on the party resisting disclosure. The entitlement to an exemption must be established on a balance of probabilities. The opinion of the Information Commissioner is a factor for the Court to consider when determining whether the information should be disclosed. [10]The purpose of the Act, as expressed in subsection 2(1), is to provide a broad right of access to information in records under the control of a government institution. Consequently, all exemptions must be limited and specific and, in case of ambiguity, the court should choose the interpretation that infringes on the public's right to access the least. [11]The Judge found that three requirements had to be met for the information to fall within the scope of paragraph 13(1)(a): the information must be obtained from a foreign state, it must have been obtained in confidence and it must have been obtained from the government or an institution of a foreign state. He was also of the view that all information exchanged under the Convention was to be treated as secret by both the Canadian and the American tax departments. The essence of his decision with respect to these matters is found in the following excerpts of paragraphs 18 and 20 of his decision: In this case the records containing the information are a compilation of statistics about the collection assistance given by Canada to the United States and received by Canada from the United States under the Convention. Under Article XXVIA of the Convention, the United States makes requests for Canada's collection assistance and Canada makes requests for the United States' collection assistance. The applicant submits that the information was not collected from the United States. The applicant submits that the information he requests is simply statistics from the CCRA's own files on the extent to which collection assistance has taken place. The applicant submits that no individual records need to be disclosed and that statistics about the information are not the same as the information itself. However, in my view the statistics are an integral part of the information supplied under the Convention, as the statistics could not exist without the information from the United States. The Government of Canada is free to choose what part of their own information they choose to release in statistical form, however, the difference is that by releasing such statistics with respect to their own data it does not interfere with relations with foreign countries. The IRS has told Canada it does not want the information disclosed. It could jeopardize working relations between Canada and the United States under the Convention. . . . All information exchanged under Article XXVII of the Convention relating to Article XXVIA of the Convention is treated as secret by both CCRA and the IRS. The applicant submitted that since domestic statistics are released, there should be no change in policy with respect to statistics obtained through foreign governments. It is clear that if the applicant was requesting specific records and information exchanged with respect to individual taxpayers pursuant to the Convention there would be no question that this would be confidential information to which paragraph 13(1)(a) would apply. The information requested is about information exchanged under the Convention, and therefore, it should be treated in the same manner as information exchanged under the Convention. It should be treated as secret. . . . The position of the United States Government on the release of the information is that it considers it to have been sent and received in confidence and that the information should not be released. This provides further support for the view that the requested information was obtained in confidence. [Emphasis added.] He was satisfied that the conditions of paragraph 13(1)(a) and subsection 13(2) had been met and that the mandatory exemption applied, leaving the Minister with no choice but to refuse disclosure of the requested information. Analysis of the Judge's decision [12]It is accepted that the appellant is not seeking the denied information for personal gain. As a researcher and author, the appellant is interested in assessing the actual as well as the cost efficiency of the tax collection assistance system. He is also interested in determining, from the Canadian perspective, the extent to which the Minister is performing his public duty to enforce the taxation laws to the benefit of Canadian taxpayers. The appellant clearly stated before the Judge and before us that he is not seeking any personal information relating to taxpayers which, he agrees, is and should remain confidential. He wants access to statistical information regarding the system jointly put in place by the American and the Canadian governments.
[13]The appellant first takes issue with the Judge's conclusion that the "statistics [sought] are an integral part of the information supplied under the Convention, as the statistics could not exist without the information from the United States". He submits that paragraph 13(1)(a) of the Act does not apply to statistical information generated by the Canadian authorities and derived from information obtained in confidence under the Convention. Otherwise, to accept the Judge's conclusion would mean, in his view, that no statistical information derived from confidential information could be released even though such statistical information reveals nothing of the confidential information. For example, the Minister would be able to suppress disclosure of virtually any statistics about the operation of the CCRA. [14]The appellant also challenges the Judge's acceptance of the Canadian government's position that all information exchanged under Article XXVII of the Convention relating to Article XXVI A is lawfully treated as secret by both CCRA and the IRS and should remain secret. [15]It is the appellant's contention that both conclusions of the Judge involve an error of law as regards the scope and application of paragraph 13(1)(a) and the Convention. More specifically, the conclusions are based on a misinterpretation of the text of the Convention and a misunderstanding, in paragraph 13(1)(a), of the words "information that was obtained in confidence from" the government of a foreign state. The respondent takes the view that the Judge's conclusions are merely a factual determination that the information requested was exempt from disclosure under the Act and the Convention. [16]I shall address the two submissions of the appellant after a brief statement of the standard of review applicable in these proceedings.
[17]The parties to the appeal agree on the following. Errors of law are to be assessed on a standard of correctness. Findings of fact cannot be overturned unless resulting from a palpable and overriding error: Housen v. Nikolaisen, [2002] 2 S.C.R. 235. Mixed findings of fact and law are governed by a criterion of reasonableness simpliciter. I would add that where a legal issue is extricable from the mixed question, the determination of the legal issue is reviewable on a standard of correctness: Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd. (2002), 211 D.L.R. (4th) 696 (F.C.A.), at paragraph 51.
[18]Paragraph 13(1)(a) of the Act mandates the non-disclosure of records by the minister which contain information that was obtained in confidence from, in this case, the United States. It does not necessarily follow, as contended initially, that the scope of the provision does not or cannot extend to Canadian information, that is to say information that is generated or produced here in Canada by Canadian authorities. I have no doubt that information, whether in statistical form or not, generated by Canadian authorities which would contain information obtained in confidence from a foreign government would fall under the scope of the mandatory exemption. For example, a letter written by the minister, but containing information provided by the United States in confidence or referring to such information in a manner revealing its contents, is a Canadian record containing, in part or in its entirety, information falling within the parameters of the exemption in paragraph 13(1)(a). What is significant for the purpose of paragraph 13(1)(a) is not so much the source of the record to which access is sought as both the confidential nature and the source of the information it contains: see by analogy Canada (Information Commissioner) v. Canada (Commissioner of the Royal Canadian Mounted Police) (2003), 224 D.L.R. (4th) 1 (S.C.C.), at paragraph 32. That appears clearly and plainly from the words a "record requested under the Act that contains information that was obtained in confidence from . . . the government of a foreign state" (emphasis added). In other words, the record sought is not to be confused with the information that it contains. The record may be Canadian, but the contents American. Of course, and I know it is trite to say, a Canadian record containing information, whether confidential or not, obtained from a Canadian source is not caught by the prohibition found in paragraph 13(1)(a). [19]I believe the Judge was fully aware of the need for the Minister not to violate the terms of paragraph 13(1)(a) when releasing or disclosing its own information. This is what I think he meant when, discussing the scope of paragraph 13(1)(a), he wrote at paragraph 18 of his reasons, previously cited, that "[t]he Government of Canada is free to choose what part of their own information they choose to release in statistical form". However, as the Judge added, the Government when releasing such statistics with respect to its own data must ensure that it is not interfering with relations with foreign countries who refuse consent to disclosure of the information contained in the requested record. In other words, a record created by the Canadian government, but composed of information obtained in confidence, in this case, from the United States government, cannot be disclosed, directly or indirectly through a release by the Canadian government of its own information, by reason of paragraph 13(1)(a) unless consent is obtained in accordance with subsection 13(2) of the Act. [20]This is what I understand the Judge to be saying in paragraph 18 of his decision. To the extent that this is what was said, I see no legal error in his interpretation of paragraph 13(1)(a). However, this leaves open the question of whether the Minister, in the context of this Convention, may reveal the very fact of the existence of information obtained in confidence from the United States as well as the volume, in terms of statistical numbers, of such information without, of course, revealing the contents of the information itself. [21]After careful consideration, I have come to the conclusion that the mere fact that such information exists is not caught by the mandatory exemption of paragraph 13(1)(a). I base my conclusion on the fact that the Convention allowing for the exchange of confidential information and the laws implementing it are public documents. On the one hand, the public is aware that information relating to individual taxpayers is confidential. On the other hand, it expects that, in the context of a mutual assistance agreement on tax collection, confidential information necessary to collect taxes will be exchanged between the parties to the agreement. To merely confirm the existence of what everybody already knows or of what is common knowledge is no disclosure. More problematic, however, is the question of the volume of exchange of such information, in terms of requests made and money sought, collected and remitted, coming from the United States. [22]The Judge was of the view that statistics were an integral part of the confidential information supplied and could not exist without that information. Therefore, statistics fell under the mandatory exemption in paragraph 13(1)(a). I understand the Judge as referring to statistics made and provided by the IRS. Such statistics are, of course, information obtained in confidence from an institution of a foreign state and I see no error in law in the Judge's conclusion. [23]However, if the Judge meant also to cover statistics generated by the Canadian government from the confidential information it received from the IRS, then I believe the conclusion is too encompassing and, in order to be sustained, requires a liberal interpretation of the mandatory exemption in paragraph 13(1)(a). Yet, as previously mentioned, exemptions, especially mandatory class exemptions like this one, which presume disclosure of the information to have a detrimental effect, are to be specific and narrowly construed and interpreted: Rubin v. Canada (Minister of Transport), [1998] 2 F.C. 430 (C.A.), at pages 442-444; M. W. Drapeau and M. A. Racicot, Federal Access to Information and Privacy Legislation Annotated 2003, Carswell, Toronto, pages 351, 356 and 357. Taken to its limits, this conclusion that statistics derived from confidential information are an integral part of that information could and would mean that all statistics about taxation laws and, indeed, government operations to enforce these laws could be withheld. This conclusion, as appears from its wording, carries implications way beyond the scope of application of paragraph 13(1)(a) of the Act and the scope of application of this mutual tax assistance Convention. [24]In my view, for the statistics generated by the Minister to fall within the parameters of paragraph 13(1)(a), these statistics have to reveal more than the existence and volume of the confidential information obtained from the IRS: they have to reveal the contents of the information. Statistical information prepared by the minister which reveals, for example, that 50 requests for assistance relating to the Excise Tax Act [R.S.C., 1985, c. E-15] and 105 such requests regarding the Income Tax Act [R.S.C., 1985 (5th Supp.), c. 1] were made by the IRS is not disclosure of information itself obtained in confidence from an institution of a foreign government which triggers the application of paragraph 13(1)(a) and satisfies the meaning of information referred to therein. [25]As I previously warned at the beginning of these reasons, this interpretation of paragraph 13(1)(a) does not mean that a refusal to disclose cannot be justified under other mandatory or discretionary exemptions under the Act. This is what, I believe, the Judge had in mind when he wrote that the Government of Canada is free to release its own information in statistical form, but it must ensure that it does not interfere with relations with foreign countries.
[26]As I mentioned earlier, the Judge concluded that all information exchanged under Article XXVII of the Convention relating to Article XXVI A ought to be treated as secret as it was so treated both by CCRA and the IRS. He essentially provided two reasons for his conclusion which are so intertwined that I will discuss them together. First, although the information requested was about information exchanged under the Convention, it should be treated as if it were the information itself exchanged under the Convention. The second reason is the fact that the IRS believed that the information was sent to and received by Canada in confidence. The issue of confidentiality of the information exchanged under the Convention is governed by Article XXVII, paragraph 1 of the Convention which reads: 1. . . . Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the taxation laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the administration and enforcement in respect of, or the determination of appeals in relation to the taxes . . . covered by the Convention. . . . Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. [Emphasis added.] [27]This paragraph applies only to information received by Canada which must then be treated as secret. In principle, it does not extend to information sent by Canada to the IRS. Canadian requests for assistance of the IRS, for example, are not information required by this paragraph to be treated as secret by the Minister unless they also contain information received from the IRS which the Convention requires to be treated as secret. The legal basis for confidentiality of the Canadian information thus sent has to be found in some other provisions, such as section 241 of the Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1 as amended and section 295 [as enacted by S.C. 1990, c. 45, s. 12] of the Excise Tax Act, R.S.C., 1985, c. E-15 as amended which, broadly speaking, prohibit disclosure of information relating to individual taxpayers. These two sections have not been argued by the respondent in support of his position before the Judge and before us. I, therefore, refrain from determining the scope and impact of these two sections on the appellant's request. That being said, I believe that paragraph 1 of Article XXVII of the Convention does not require that statistical information that the Minister compiled relating to the functioning of the tax collection assistance regime be treated as secret, provided the statistics contain no information received under the Convention by Canada from another Contracting State. [28]At the hearing, counsel for the respondent drew our attention to the recent decision of the United States District Court for the District of Columbia in Tax Analysts v. I.R.S., 217 F.Supp.2d 23. He cited this decision rendered on August 5, 2002 for the proposition that all information exchanged under a tax convention, like the one in the present instance, is secret and exempt from disclosure. The decision is interesting not only for what it says, but also for what it reveals. [29]The plaintiff, Tax Analysts, was a corporation whose primary public education function was to publish information concerning the enactment and administration of the tax laws of the United States. It made requests, under the U.S. Freedom of Information Act [5 U.S.C. § 552 (1994)], to the IRS for information relating to the Pacific Association of Tax Administrators (PATA). It sought all records of the IRS relating to PATA, including its meetings, deliberations, decisions and staffing. The PATA consisted of the United States, Japan, Australia and Canada. The records of the IRS contained information exchanged by the members of PATA at tax conventions on a broad range of issues such as cross-border tax avoidance, tax evasion and other international tax concerns. The information thus exchanged was subject to a secrecy provision identical to the one found in our Convention as well as in the United States Model Income Tax Convention, Article 26, clause 1. [30]The District Court concluded that all the requested information from the conventions was exempt from disclosure not so much on the basis of the secrecy provision identical to the one in our Convention as on the basis of a provision recently enacted by Congress to ensure the confidentiality of information arising under treaty obligations. Section 6105 of the United States Code [Internal Revenue Code, Title 26], enacted in 2000, creates a treaty secrecy exemption. It states as a general rule that tax convention information shall not be disclosed. "Tax convention information" and "tax convention" are defined in the following broad terms: For purposes of this section -- (1) Tax convention information
(2) Tax convention
Exception No. 4 to the non-disclosure rule allows for the information not relating to a particular taxpayer to be disclosed only "if the Secretary determines, after consultation with each other party to the tax convention, that such disclosure would not impair tax administration". [31]At pages 27-28 of its decision, the District Court wrote: Nonetheless, the plaintiff insists that Section 6103 is controlling and points to a D.C. Circuit holding that Section 6103 does not protect legal analysis and legal conclusions. Tax Analysts v. IRS, 117 F. 3d 607, 611-12 (D.C.Cir.1997); Pl.'s Opp'n & Cross-Mot. at 19. This case does not apply, however, since Section 6103 is not at issue in the case at bar. Indeed, in response to the D.C. Circuit's opinion in Tax Analysts, Congress enacted Section 6105, expressing its clear intent to fully exempt previously unprotected information under Section 6103 if the material qualifies as "tax convention information". Tax Analysts, 152 F.Supp.2d at 12; H.R. Conf. Rep. No. 106-1033, at 1008-09. . . . Congress's recent enactment of Section 6105 indicates that it intended for tax convention information to be subject to heightened disclosure standards as opposed to enacting legislation that would protect information that was already exempt from disclosure under Section 6103. 26 U.S.C. § 6105. Furthermore, the "IRS has expressed the precise concern that Congress sought to address in enacting § 6105 . . . to avoid adversely affecting the working relationship among treaty partners". [Emphasis added.] [32]To the extent that the Judge concluded, as he appears to have, that all information under the Convention, including purely Canadian information sent to the United States, is to be treated as secret by Canada, I believe he was in error. Secrecy under the Convention attaches only to information received in confidence from the IRS. This is to be contrasted with paragraph 6105(1)(E) of the U.S. Code [Title 26] which protects not only information received by a Contracting State, but "any other information exchanged pursuant to a tax convention" [emphasis added] when the information is treated as confidential or secret under that tax convention. I can see a desire on the part of the parties to the Convention to shield behind secrecy and to treat as confidential all information exchanged under the Convention. However, paragraph 1 of Article XXVII is much more limited in scope than section 6105 of 26 U.S.C. If Parliament intended to provide this kind of blanket secrecy and confidentiality claimed by the respondent, it should have said so. It is not our role to rewrite what Parliament intended and ought to have said, but failed to say. Our role is to implement what it actually and unambiguously said, even though unintended. [33]I believe that, at this point and before addressing the appellant's specific request, it would be useful to summarize my findings with respect to the Minister's denial of access, pursuant to paragraph 13(1)(a) of the Act, to information exchanged under the Convention: (a) paragraph 13(1)(a) of the Act applies only to information obtained in confidence by the Minister from the IRS, and, pursuant to paragraph 1 of Article XXVII of the Convention, only information received by the Minister from the IRS is to be treated as secret: it does not apply to Canadian information, that is to say information produced or generated in Canada and sent by the minister to the IRS unless that information also contains information received in confidence from the IRS and the contents of that confidential information would be revealed by the disclosure of the Canadian information; (b) mere confirmation of the very fact that information has been obtained in confidence by the Minister under the Convention is not disclosure within the terms of paragraph 13(1)(a) of the Act: it is mere confirmation of what everybody already knows and reasonably expects; (c) statistics obtained by the Minister in confidence from the IRS under the Convention is secret information under paragraph 1 of Article XXVII of the Convention to which paragraph 13(1)(a) of the Act applies; (d) statistics generated by the Minister and derived from information obtained in confidence from the IRS are not information falling within the parameters of paragraph 1 of Article XXVII of the Convention and to which paragraph 13(1)(a) of the Act applies, unless their disclosure would reveal the contents of the confidential information itself. [34]I now turn to apply these principles to the appellant's requests for access to CCRA's records. Application of these principles to the appellant's requests for access to CCRA's records [35]In his question No. 6, previously cited, the appellant requested the yearly breakdown of the statistics covering the subject-matter of his five previous questions. We were told by counsel for the respondent, and the appellant accepts the respondent's answer to his question, that no breakdown by year exists. This disposes of question No. 6. [36]Pursuant to question No. 1, the appellant seeks access to information regarding the number of requests for assistance made by CCRA to the IRS and by the IRS to CCRA. The record containing information coming from Canada which reveals the number of requests made by CCRA to the IRS is not exempt from disclosure under paragraph 13(1)(a) of the Act. Nor is the record which contains information as to the number of requests made by the IRS to CCRA when such information comes from Canada, even though the statistic is derived from information obtained in confidence from the IRS. [37]Question No. 2 relates to the total amount of dollars involved in the various requests made for collection assistance. I believe that each amount of money mentioned in each specific request made by the IRS to CCRA is information relating to a taxpayer obtained in confidence by CCRA from an institution of a foreign country. In this sense, it is information under the Convention in a way that statistics about the number of requests is not. So, in my respectful view, is the aggregate of these amounts. While it is true that each amount loses its individuality when aggregated together, I do not think this reasoning applies to the issue of confidentiality. The individual amounts, so to speak, aggregate rather than lose their confidentiality. Therefore, this aspect of the appellant's request falls under the exemption from disclosure pursuant to paragraph 13(1)(a) of the Act. However, no such exemption under these provisions applies to the total amount of dollars involved in the requests made by CCRA to the IRS. [38]Questions Nos. 3 and 4 have their focus on action and success. They ensue logically from question No. 1. The appellant wants to know the percentage of requests accepted for action and the rate of success. I believe the reasoning applied in answering question No. 1 governs the answer to these two questions and that the conclusion is the same as the one arrived at in question No. 1. These percentages are not exempt from disclosure. [39]Through question No. 5, the appellant seeks to obtain information about the percentage of dollars collected and remitted by CCRA and the IRS. As for question No. 2, the amount of money collected on behalf of and remitted to the IRS is exempt from disclosure. To disclose the percentage collected is to reveal the aggregate of the dollars claimed by the IRS, an information that was obtained by CCRA in confidence from a Contracting State. However, notwithstanding that the aggregate of dollars claimed by CCRA falls outside the ambit of the exemption rule, the statistic in terms of percentage and amount of monies collected and remitted by the IRS is confidential information within the meaning of paragraph 13(1)(a). The statistic is Canadian information about U.S. information, but the nature of the Canadian information is such that it is actually the U.S. information itself obtained in confidence from the IRS. [40]For ease of reference and understanding, I reproduce in schematic form my conclusions with respect to the appellant's request for access to CCRA's records and the application of paragraph 13(1)(a) of the Act:
[41]I have come to these conclusions regarding the appellant's request for access without examining the records. I do not know what form the information sought by the appellant takes in the record. The record may contain voluminous information exempt from disclosure, and it may be that the information requested cannot be severed from the confidential information therein, thereby making lawful disclosure impossible. [42]In addition, the Judge's decision left open for an eventual determination the merits of the injury test exemptions claimed by the Minister pursuant to paragraphs 16(1)(b) and (c) of the Act. [43]In these circumstances, I believe the better, if not the only sensible, course of action open is to send the matter back to the Trial Division of this Court for an examination of the requested records and a redetermination of the appellant's request in accordance with the findings of this Court on the scope of paragraph 13(1)(a) of the Act and paragraph 1 of Article XXVII of the Convention. Should the judge on redetermination, after examination of the material, conclude that part of the appellant's request for disclosure is not subject to the mandatory exemption under the Act, he should then proceed to assess the respondent's claimed discretionary exemptions under paragraphs 16(1)(b) and (c) of the Act. The appellant's entitlement to costs [44]Relying upon subsection 53(2) of the Act, the appellant seeks to be awarded costs whether his appeal is granted or not. He is a lawyer who represented himself in the proceedings in the Trial Division and before us. Counsel for the respondent submits that, as a self-represented litigant, the appellant is at best entitled only to disbursements. Furthermore, he challenges the appellant's view that new principles have been raised under the Act for interpretation. I need not deal with this last point in view of my conclusion that the appeal should be granted. I simply wish to add that the appeal raised new issues of public interest as regards the interpretation of paragraph 1 of Article XXVII of the Convention and the extent to which paragraph 13(1)(a) of the Act applies, in the context of that Convention, to material generated and derived by the Minister from confidential information obtained from the United States. [45]This Court in Davidson v. Canada (Solicitor General), [1989] 2 F.C. 341 (C.A.), at pages 345-346, resorted to the concept of equality before the law to deny costs to a self-represented barrister and solicitor. Mahoney J.A. wrote: In my opinion, that barrister and solicitor is primarily a self-represented litigant and, for purposes of taxation of costs, is to be so treated. It seems to me patently more offensive to the concept of equality before the law to treat one self-represented litigant differently from another only because one is a barrister and solicitor than to treat two self-represented litigants the same even though one is a barrister and solicitor. Interestingly enough, three years earlier in McBeth v. Dalhousie University (1986), 72 N.S.R. (2d) 224, at pages 230-232, the Nova Scotia Court of Appeal also resorted to the concept of equality before the law to reach the opposite conclusion: the practice of not allowing costs to an unrepresented litigant was purely discriminatory. The Nova Scotia Court of Appeal held that unrepresented litigants should be awarded their costs the same as a litigant who is represented by counsel. [46]It is now generally accepted that an award of costs may perform more than one function. Costs under modern rules may serve to regulate, indemnify and deter. They regulate by promoting early settlements and restraint. They deter impetuous, frivolous and abusive behaviour and litigation. They seek to compensate, at least in part, the successful party who has incurred, sometimes, large expenses to vindicate its rights. These three legitimate purposes are compromised by a stern rule that self-represented litigants are not entitled to costs. A claimant is not adequately compensated for the time and effort devoted to prepare for the conduct of his litigation. Nor is he compensated for the cost of soliciting a lawyer's advice at the early stage or during the course of the proceedings. His opponent is not inclined to settle since he not only incurs no costs in case of a loss or a refusal of a reasonable settlement, but he recovers his full costs if he is successful. Rule 420 of our Rules [Federal Court Rules, 1998, SOR/98-106], to take one example, then fails to achieve the very purpose for which it was enacted, namely an early settlement of cases through an award of deterrent costs. Conversely, the self-represented litigant obtains no costs if he wins, but experiences the full wrath of the costs rules if he loses. [47]Recent cases have recognized the need to alleviate the unfairness of the self-represented litigant rule and to allow modern costs rules to fulfill their multiple purposes. In Fong v. Chan (1999), 46 O.R. (3d) 330, at page 338, the Ontario Court of Appeal concluded from a substantial review of the case law "that the preponderance of modern authority supports the contention that both self-represented lawyers and self-represented lay litigants may be awarded costs and that such costs may include allowance for counsel fees". The Court went on to rule that the award of costs remains discretionary. [48]At paragraph 26 of its decision, the Court also fixed limits in the following terms on self-represented litigants' entitlement to costs: I would also add that self-represented litigants, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel. As the Chorley case, supra, recognized, all litigants suffer a loss of time through their involvement in the legal process. The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by forgoing remunerative activity. As the early Chancery rule recognized, a self-represented lay litigant should receive only a "moderate" or "reasonable" allowance for the loss of time devoted to preparing and presenting the case. This excludes routine awards on a per diem basis to litigants who would ordinarily be in attendance at court in any event. [49]The Trial Division of this Court has, on occasions, relaxed the rule enacted in Davidson, supra, while recognizing, as Marceau J.A. did in Lavigne v. Canada (Human Resources Development) (1998), 229 N.R. 205 (F.C.A.), that lay litigants cannot receive counsel fees under the Federal Court Act [R.S.C., 1985, c. F-7] and the Federal Court Rules (1998) unless amendments are made to the Act or the Rules. [50]In Canada (Attorney General) v. Kahn (1998), 160 F.T.R. 83 (F.C.T.D.), Teitelbaum J. allowed a self-represented respondent, against whom judicial review proceedings were brought and discontinued, the sum of $5,607.51 incurred by the respondent to defend himself. This amount was awarded to reimburse the respondent for the sums he had paid to obtain legal advice on the judicial review application and on a notice of motion for costs. The learned Judge also ordered the payment of a lump sum ($2,500) to reimburse the respondent for his "lost" time in defending his interests. [51]In Coath v. Bruno Gerussi (The), 2002 FCT 385; [2002] F.C.J. No. 495 (T.D.) (QL), Prothonotary Hargrave followed the Kahn decision and awarded costs to a self-represented litigant for time lost in defending his interests: see also Desjarlais v. Canada (2002), 216 F.T.R. 207 (F.C.T.D.) where the claim for costs by a self-represented litigant was dismissed as premature. [52]The appellant devoted the time and effort to do the work that would have normally been done by the lawyer who would have represented him if one had been retained to conduct litigation. In addition, the two proceedings in which the appellant was involved were not trials at which his attendance would have been required. They were proceedings which he would not have had to attend but for the fact that he was self-represented. While staying within the parameters of our Rules, I believe it is proper to award the appellant, in addition to his disbursements and on his filing appropriate evidence to support the claim, the following costs: a moderate allowance for the time and effort devoted to preparing and presenting the case before both the Trial and the Appeal Divisions on proof that the appellant, in so doing, incurred an opportunity cost by forgoing remunerative activity. Conclusion [53]For these reasons, I would allow the appeal, set aside the decision of the Judge rendered on May 22, 2002 and refer the matter back to the Associate Chief Justice of the Trial Division, or a judge that he designates, for a new determination of the appellant's right to access the requested records in light of this Court's interpretation of paragraph 1 of Article XXVII of the Convention, paragraph 13(1)(a) and, if need be, paragraphs 16(1)(b) and (c) of the Act. I would allow the appellant his disbursements and costs as determined by these reasons. Desjardins J.A.: I concur. Evans J.A.: I concur. |
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