UPDATE: FATCA IGA litigation in Canada Federal Court: The guts of our Plaintiffs’ (Gwen and Kazia) arguments and those of the Government we oppose (for simplicity, “Canada”) can now be found in four court documents (that our supporters paid for) submitted between October 3 and December 13, 2018 (see below for some excerpts). The Court submissions can be found on our ADCS website.
The trial, which fleshes out the written arguments in orals in Federal Court, has been held the week of January 28, 2019 in Vancouver.
OUR TRIAL WOULD NOT HAVE HAPPENED WITHOUT THE GENEROUS SUPPORT OF BROCKERS. Somehow you found the monies to pay for this trial.
THE FEDERAL COURT DOCUMENTS THAT OUR SUPPORTERS PAID FOR:
1. October 3, 2018 Plaintiffs’ Complaint. We argue in part that Canada’s FATCA IGA legislation violates Sections 7, 8, and 15, of our Charter of Rights and Freedoms and the sovereignty of our country. Includes: ” …the principle of nonintervention between states is a cornerstone of the international order and intrinsically connected to state sovereignty; it is undoubtedly considered by all Canadians to be fundamental to their notion of justice that Canada will not expose them to enforcement of another state’s laws; and it is predictable and easily applied – simply, Canada may not allow other state to enforce their laws on individuals residing in Canada.”
2. November 21, 2018 Canada’s response to Plaintiffs’ Complaint. Many arguments including: Canada argues that it responded wisely to a threat from a bully:“…severe consequences to the Canadian financial sector, its customers and investors, and to the Canadian economy as a whole if Canadian financial institutions were unable or unwilling to comply with FATCA.” “…the plaintiffs have no standing..” because their accounts were not turned over, etc. “The CRS has been adopted by over 100 countries, including Canada…” “While it is acknowledged that the Impugned Provisions cause the seizure of information for the purposes of s.8, the plaintiffs do not have an objectively reasonable expectation of privacy in that information.” “The plaintiffs argue for the recognition of a novel principle of fundamental justice “that Canada will not deny its citizens the protection of Canadian sovereignty”. This proposed principle does not meet the requirements of a principle of fundamental justice as outlined by the Supreme Court of Canada.” “Avoiding the possibility of such catastrophic effects as a decline in GDP, labour income, employment, a depreciation of the Canadian dollar and a lowering of the standard of living of Canadians, are certainly sufficiently pressing and substantial to justify any minimal limitation on rights which may be found to a be result of the Impugned Provisions.”
3. December 7, 2018 Plaintiff’s response to Canada’s motion to strike out some testimony of our witnesses. Includes: “Canada seeks to strike the entirety of the Second Nightingale Affidavit based on a lack of relevance. The Second Nightingale Affidavit concerns the Exit Tax. As explained in the plaintiffs’ Memorandum of Fact and Law, the Exit Tax is relevant context in this constitutional case because it constitutes part of the burden faced by some individuals of avoiding exposure to the Impugned Provisions.” “The out of court statements referred to by Ms. Tapanila to which Canada objects are not adduced for the truth of their contents, but rather for the fact that they were made. The plaintiffs do not rely on the legal advice lay witnesses were given for the truth of its contents. Rather, the plaintiffs rely on the fact that these witnesses sought and paid for legal advice, in many cases from multiple lawyers and at significant expense. This evidence establishes that it can be onerous and costly for an individual to determine whether and how they may be affected by the Impugned Provisions – and if they are affected, whether and how they may avoid this by changing their immigration status under US law – as referred to in the plaintiffs’ Memorandum of Fact and Law, at paragraph 19. The specific legal opinions lay witnesses received are not relevant to this point.” [I will not provide a link to this short submission, which includes the names of witnesses other than that of Carol Tapanila, whose name is already in the public domain.]
4. December 13, 2018 Plaintiffs’ reply record for the Summary Trial. Includes: “This is the first time Canada has raised standing as an issue. It does not plead that the plaintiffs lack standing in its Amended Statement of Defence. Canada’s assertion that the plaintiffs’ rights have not been affected by the Impugned Provisions is incorrect. It is undisputed that the plaintiffs bear US Person Indicia, since they both have an unambiguous US Place of Birth. As a result, any Low Value Accounts they own now or in the future may be reported and shared pursuant to the Impugned Provisions. For Lower Value Accounts or High Value Accounts that they own now or in the future,the relevant FIs are required pursuant to the Impugned Provisions to obtain or review the plaintiffs’ Proof of Loss of US Citizenship.” “Further, or in the alternative, the plaintiffs have public interest standing to challenge the Impugned Provisions…Relatedly, in an earlier summary trial in this proceeding, this Court declined to grant costs given “the public interest involved in clarifying the scope of novel provisions affecting hundreds of thousands of Canadian citizens.” etc. “Canada relies on the expert report of Matthias Oschinski for the proposition that if all of Canada’s big banks did not comply with FATCA, and the Impugned Provisions were not implemented, Canada would face significant negative economic impacts. In fact, Mr. Oschinski agreed that the severity of those impacts was subject to a “great deal of uncertainty” More importantly…” “This Court has already observed that the Common Reporting Standard is different from FATCA in “significant ways”. Comparing the CRS and the Impugned Provisions – as Canada does in various parts of its argument – does not aid in the resolution of this case.”
“…the record before the court actually does not establish that the plaintiffs have US tax reporting obligations [!]. There is no expert evidence before the court that considers the plaintiffs’ immigration and citizenship status under US law. The plaintiffs are affected by the Impugned Provisions because they bear US Person Indicia, not because they are US citizens. This is important: it is the presence or absence of US Person Indicia – as defined in the Impugned Provisions – that determines whether an individual is affected by the Impugned Provisions, not their citizenship status under US law. As noted above, Canada’s submission unreasonably assumes that the two are perfectly correlated.” “Canada states that its primary purpose in enacting the Impugned Provisions was to “avoid the potentially catastrophic impacts of FATCA on Canadian financial institutions, their customers and the Canadian economy.” It says its secondary purposes were to (a) lessen “the burden of the direct application of FATCA on Canadian financial institutions and their customers” and (b) “obtaining additional automatic exchange of information from the US to Canada for Canadian taxation purposes.” Assuming that the first of the secondary purpose is different than the alleged primary purpose, we do not accept that lessening of an undefined “burden” would be a legitimate objective for purpose of s. 8 or s. 1. As to Canada’s secondary purpose (b), while it is supported by one paragraph of the preamble to the IGA, it is undermined by all other relevant evidence and the effect of the law…Third, and in any event, Canada’s articulation of its “primary purpose” is too general to be accepted. A purpose that is articulated in too general terms will provide no meaningful check on the means employed to achieve it. Not only is the threat of economic harm Canada refers to amorphous and highly uncertain, it is so general that it could justify any rights infringement arguably motivated by such a threat from a foreign state…Canada effectively maintains that it enacted the Impugned Provisions under duress from a foreign state. The Court should be very slow to accept this as a justification for infringements of the Charter. Canada is expected to defend the constitutional rights and freedoms of its citizens and not bargain them away or capitulate to threats from a foreign bully state. The notion that a foreign state could indirectly cause the violation of a Charter right in circumstances where Canada could not do so directly simply cannot be accepted. This is a deeply illiberal proposition and it would undermine the principle of the rule of law which explicitly animates the Charter. ”
“Further, even if a desire to avoid financial punishment by a foreign state is accepted as the actual objective underlying the Impugned Provisions, and is considered a valid basis to violate a Charter right, there is significant uncertainty surrounding (a) whether the United States actually would have inflicted that punishment if Canada did not abide, or would do so now if the Impugned Provisions were declared of no force or effect, and (b) the severity of the financial consequences if they were to materialize.” “Canada does not deny that the CRA will use Accountholder Information obtained pursuant to the Impugned Provisions for domestic tax compliance work, nor does it refute the plaintiffs’ contention that such use is unrelated to the objectives of the Impugned Provisions. However, Canada relies on Jarvis for the proposition that “once information is validly gathered by the CRA any reasonable expectation of privacy in the information is lost.” On this basis, it suggests that the CRA’s use of this information is not unreasonable. Jarvis cannot be applied to the present case in the manner suggested by Canada. First…”
“In asserting that the Impugned Provisions are minimally impairing, Canada states that it is not the court’s role to speculate about whether Canada could have achieved a better deal through negotiations with the United States. We disagree. It is Canada’s onus to prove that the Impugned Provisions are minimally impairing and if its claim is that it had no choice because of US demands then it must prove that by appropriate evidence.”
“Finally, the plaintiffs do not assert, as Canada suggests, a right “to avoid the consequences of choosing to violate US law.” The plaintiffs claim their Charter rights, and they claim that they have been breached by Canadian law for the reasons set out above.”
Plaintiffs assert: “The Plaintiffs and Other Hypothetical Individuals Have a Reasonable Expectation of Privacy in the Accountholder Information”
Plaintiffs say this in part on privacy in the court submission:
From: http://www.adcs-adsc.ca/CourtSubmissions.html
— Read the court submissions that you paid for.
Excellent.
If they rule in our favor what is the need for an appeal?
The government will appeal the decision if the government loses.
In our January 28 FATCA lawsuit trial in Canada’s Federal Court,
“The onus of proving a [Canadian Charter] section 1 justification [for limiting the rights of Canadian citizens] rests with the government, and the government should be prepared to adduce appropriate evidence.”
https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/check/art1.html
Whether we win or lose the Canadian Federal Court FATCA case may come down to the arguments re: Section 1 of Canada’s Charter, which (pretty much) says that it’s ok for Canada to infringe on Charter rights of Canadians, but only under certain conditions (including e.g., the limit on the right has to be reasonable, demonstrably justified, legislative goal is pressing and substantial, etc. see: https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/check/art1.html)
It is Canada that has to prove to the court section 1 justification for infringement of Charter rights.
Plaintiffs address this section 1 question in part by a discussion in a court submission on the actual “purpose” of Canada’s FATCA IGA legislation. Plaintiffs say:
From Plaintiffs’ Reply Record in: http://www.adcs-adsc.ca/CourtSubmissions.html
Read these Court submissions.
“Canada is expected to defend the constitutional rights and freedoms of its citizens and not bargain them away or capitulate to threats from a foreign bully state.”
Hear! Here! All of the plaintiffs’ replies are very well articulated and completely reasonable (IMHO). Canada has many Chinese-Canadians living here. The Canadian parliament would never have enforced the Chinese one-child policy on them (when it was in effect), no matter how much China wanted to prevent their citizens from using Canada and other countries to have larger families. Many years ago I helped to register some of those “over-limit” births. If China had had a population control equivalent of FATCA I guess they would have threatened to sanction me with a 30% loss of wages. I know that hypothetical diversion is absurd but then so is the US FATCA legislation and Canada’s capitulence to it. The point is, if the USA can bully Canada into implementing its FATCA farce then it lays down a precedent for other absurdities being forced upon us using the tried-and-true sanction threat. Stand up now or accept standing down forever. Let’s hope our justice system has more backbone than our parliament.
You may find this trend interesting. Of course FATCA, De-Risking and other US interference around the world are involved.
http://www.msn.com/en-xl/northamerica/northamerica-top-stories/to-avoid-trumps-sanctions-countries-turn-to-stone-age-trade/ar-BBS00Am?li=BBKxOeO&ocid=spartandhp
“If China had had a population control equivalent of FATCA I guess they would have threatened to sanction me with a 30% loss of wages.”
They would have taken 30% of your children. No wait, that wouldn’t satisfy Chinese law. They would prohibit your second and later children from getting vaccinations, schooling, employment, marriages, etc.
@ ND — 🙂
@EmBee
Great analogy, hope you will be at the trial to keep everyone’s spirits up.
@ND
Great retort
Similar to the US then, where many kids get second rate schooling, healthcare, housing & employment opportunities?
No, unlike China, the US does the same to its first-born children as it does to the rest.
— Continuing the Canadian Charter Section 1 discussion in which our side responds to Canada’s assertion that our rights can be infringed because FATCA is a “pressing and substantial objective”, here is what Plaintiffs’ lawyers say about Section 1 at the very end of the reply record:
Again, “The onus of proving a [Canadian Charter] section 1 justification [for limiting the rights of Canadian citizens] rests with the government, and the government should be prepared to adduce appropriate evidence.”
From Plaintiffs’ Reply Record in: http://www.adcs-adsc.ca/CourtSubmissions.html
Please Read these Court submissions that you paid for.
@ Heidi
I’ll be there in spirit. Right now I wish it was possible to bundle up a big packet of good luck to send to Gwen, Kazia, the steadfast ADCS team and their lawyers. Seems all I’ve got lately is a bundle of nerves as I wait to hear the outcome of this court case.
@ Stephen Kish
I have the pdf on my desktop and I am reading it. Thanks for keeping us updated. I hope you are weathering well whatever storm of nerves you might be experiencing.
Some might remember Canadian politician Scott Brison — in the news today for his decision to leave politics.
Brison is a good example of a reason why we are forced into a FATCA IGA trial in Canada: As a politician in opposition he (like his boss Justin Trudeau) “sharply criticized” the foreign FATCA law, but once in government, as Treasury Board President, he gave the green light to Canada’s compliance with FATCA.
Politician Brison, not unexpectedly, blames everything on the previous Conservative government:
From:
https://ipolitics.ca/2016/03/22/brison-garneau-endorse-deal-to-share-canadian-banking-records-with-irs/
In the above article, Revenue Minister Diane Lebouthillier, one of the Ministers who Plaintiffs are suing, says that Canada’s FATCA agreement with U.S. (made under threat of harm) is ok because:
Plaintiffs’ court submission in the link to this post has a different take on FATCA and privacy.
Interesting.
And yet the 1942 Technical Explanation (written by America) seems to positively gloat about how the 1942 Convention “allows but does not obligate” the two States “to obtain and provide information that would not be available to the requesting State under its laws or administrative practice or that in different circumstances would not be available to the State requested to provide the information.”
https://www.irs.gov/pub/irs-trty/canatech.pdf
‘“Minister Lebouthillier wants to reassure Canadians that all exchanges of information are subject to strict confidentiality rules,” reads the e-mail sent by Lebouthillier’s office. [and]
“The CRA ensures that tax cooperation with its foreign partners is done in a manner fully consistent with privacy rights in Canada. It is important to note that Canada and the United States have a long history of exchanging tax information in a fair and responsible manner, going back to 1942.”’
The US’s idea of a fair and responsible manner includes disclosing all tax return information to the public. One cause of action in one of my court cases involved the US Department of Justice disclosing my social security number (along with the rest of a tax return) to the public.
US Court of Appeal for the 9th Circuit, docket number 15-55334, Diamond v. US:
‘The district properly dismissed Diamond’s second cause of action for unauthorized disclosures of his social security number because the disclosures at issue were expressly authorized by statute. See 26 U.S.C. § 6103(h)(4)(A) (providing that a return or return information may be disclosed in a “judicial or administrative proceeding pertaining to tax administration” if the taxpayer is a party to the proceeding). Contrary to Diamond’s contention, this disclosure authorization does not apply only when disclosures are made under seal.’
I hope ADCS’s lawyers have time to add this proof of inconsistency with Canada’s privacy rights.
@ Norman Diamond
As I was reading your comment I was thinking the same as in your last sentence. I hope your bullet gets picked up and put in the ADCS ammo belt. To the US government, privacy protection means nothing. Our loss is their gain.
“On January 11 and 12, 2019 the Runnymede Society is running its annual law and freedom conference. In general terms, the Conference is designed to debate the question of whether there should be limits on the powers of democratically elected legislatures. If so, what should those limits be? How does S. 1 of the Charter [discussed in the comments above] interact with the rights enshrined in the Charter? This should be of interest to all of those who are interested in the ADCS-ADSC FATCA lawsuit.”
See the Brock post: http://isaacbrocksociety.ca/2019/01/11/supporters-of-adcsovereignty-fatca-lawsuit-might-be-interested-in-runnymedesoc-law-and-freedom-conference-jan-1219/
Is ADSC also raising funds for a CBT lawsuit or has that been dropped?
Bob, ADCS is not involved in any CBT lawsuit — our only focus at the moment is keeping the Canadian FATCA IGA lawsuit fully funded — and ADCT was not able to secure funding for a CBT lawsuit.
More on the written court submissions for our January 28 Canadian Federal Court FATCA IGA trial:
Here is Plaintiff’s detailed explanation, in the October 3 2018 complaint, why Canada’s FATCA IGA legislation violates section 8 (unreasonable search and seizure) of Canada’s Charter:
From Plaintiffs’ 10/03/2018 Complaint in: http://www.adcs-adsc.ca/CourtSubmissions.html
Please Read these Court submissions.
A quick question/observation/comment on Stephen Kish’s (immediately above) comment:
I think it’s important to note also that should one refuse to accept the bank’s requirement to fill out W8,9 or equivalent (presumably for existing accounts) that this could also trigger reporting to the USA. I hope that “arrow” is already in the quiver, as this would be quite relevant. Talk about violation of one’s rights….
@PierreD
In practice I think the W8 or W9 isn’t required often for routine FATCA compliance, though it would for anything touching US investments. Most banks have their own forms now, with slight variations in language around citizenship and/or tax residency. But in principle your point is a good one – if a customer refuses to cooperate and answer questions on an existing account, the assumption is that they are a US person and the account is reported as recalcitrant. (A new account simply would not be opened if the customer refused to answer a citizenship question.)
The Guidance says:
But banks could presumably ignore the Guidance and err on what they may see as the side of safety. It sounds as if nobody in the CRA has much idea what decisions the banks are actually making.