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Read the Submissions to the Canadian Federal Court for the January 28 ADCS Trial

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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.”

156 thoughts on “Read the Submissions to the Canadian Federal Court for the January 28 ADCS Trial”

  1. 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:

    “21. First, while it is true that individuals have a low expectation of privacy in information they are required to report on their Canadian annual tax returns, the Accountholder Information at issue in the present case is not information that the plaintiffs are required to report to the CRA or anyone under Canadian law. Rather, as Canada readily admits, it is only US law that requires the plaintiffs to report the Accountholder Information.34

    22. Canada’s proposition that foreign reporting requirements can affect the reasonable expectations of privacy under Canadian law of individuals residing in Canada has concerning implications. For example, if another state’s laws required a person residing in Canada to report to that state obviously private, personal details about their lives – such as their religious practices – Canada could not maintain that by virtue of the mere existence of that other state’s laws those individuals no longer have a reasonable expectation of privacy in that information.

    23. Determining whether the existence of reporting requirements in another state can affect an individual’s reasonable expectation of privacy under Canadian law would invite an analysis of the reasonableness of that other state’s laws. In this case, the Court would be invited to consider the reasonableness of United States tax law and, in particular, citizenship-based taxation. It is submitted that the Court should not engage in such a fraught analysis, but rather should accept that an individual’s reasonable expectation of privacy for the purpose of s. 8 of the Charter is not negated by virtue of the existence of reporting requirements under foreign law. In fact, it should be enhanced.

    24. Second, Canada’s submission assumes that every individual whose Accountholder Information is reported and shared pursuant to the Impugned Provisions is a US citizen and therefore has tax reporting obligations under US law. This is not a reasonable assumption. Canada cannot dispute that the Impugned Provisions result in Accountholder Information belonging to individuals who do not have any reporting obligations under US law being shared with Canada and the United States. This is especially so because Canada does not gather and assess the information necessary to track how many individuals with no US tax obligations have their Accountholder Information reported as a result of the Impugned Provisions, so the number of such individuals remains unknown. Further, an indeterminate number of individuals whose Accountholder Information has been reported are Canadian citizens.35″

    From: http://www.adcs-adsc.ca/CourtSubmissions.html

    — Read the court submissions that you paid for.

  6. 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:

    “ii. The Impugned Provisions are Unreasonable

    (1) The Purpose of the Impugned Provisions

    31. The following discussion of the purpose of the Impugned Provisions relates to both the reasonableness analysis under s. 8 [unreasonable search and seizure], as well as the objective of the Impugned Provisions under s. 1. Canada asserts the same purposes in both contexts.46

    32. 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.”47

    33. 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.

    34. 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. First, the preamble to the IGA and the evidence generally makes clear that the entire genesis of the IGA was FATCA, not a free-standing desire on the part of Canada to obtain additional information. Second, there is no evidence that the receipt of information from the IRS pursuant to the IGA has resulted in any additional tax assessments in Canada that would not have occurred absent the IGA, and its witness on behalf of the CRA admitted she had no knowledge of this ever occurring.48 This Court previously agreed with the assessment of the plaintiffs’ expert that the IGA can be accurately characterized as constituting “asymmetrical exchange of information”.49 There is also no evidence to support the notion that Canada’s purported desire to obtain tax-related information pursuant to the IGA amounts to a pressing and substantial objective, nor can it render reasonable the intrusion on the plaintiffs’ reasonable expectation of privacy.

    35. As to the “primary purpose” Canada identifies, neither the IGA nor the Impugned Provisions make any reference to this purpose. The Supreme Court has stated that “courts should be cautious to articulate the legislative objective in a way that is firmly anchored in the legislative text, considered in its full context.”50

    36. The most reliable and timely objective evidence before the court as to the objective of the Impugned Provisions is the preamble to the IGA, which does not reflect Canada’s stated “primary purpose”. Rather, the preamble to the IGA refers extensively to FATCA and states that both Canada and the United States are “supportive of applying” the underlying policy goal of FATCA, which the preamble says is to “improve tax compliance”.51

    37. In addition to the preamble to the IGA, statements of US legislators from the time FATCA was enacted support the plaintiffs’ contention that it was primarily motivated by an American desire to catch tax evaders. The Impugned Provisions, then, are intended to facilitate this objective.52 In fact, this court has already observed that FATCA was enacted “to improve US tax compliance”, and that “[t]he American authorities were particularly concerned in 2010 with the issue of tax evasion.”53

    38. Even if the purpose of the Impugned Provisions is broader than catching US tax evaders – for example, if the purpose is to apply the “underlying policy goal of FACTA”,54 or improve US tax compliance generally – the Impugned Provisions still are not reasonable. Assisting a foreign state in its tax compliance efforts simply is not sufficiently legitimate for the purpose of s. 8, let alone pressing and substantial for the purpose of s. 1.

    39. 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.55 Not only is the threat of economic harm Canada refers to amorphous and highly uncertain,56 it is so general that it could justify any rights infringement arguably motivated by such a threat from a foreign state.

    40. 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.”

    From Plaintiffs’ Reply Record in: http://www.adcs-adsc.ca/CourtSubmissions.html

    Read these Court submissions.

  7. “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.

  9. “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.

  11. @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?

  13. — 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:

    “K. Section 1 [of Canada’s Charter of Rights and Freedoms]

    60. Canada asserts that the pressing and substantial objective underlying the Impugned Provisions was to (a) avoid “catastrophic” economic consequences, (b) lessen the burden on financial institutions, and (c) to obtain additional information from the US for Canadian tax purposes.79 These purposes are addressed above at paragraphs 31 to 40. For the reasons set out in those paragraphs [see my comment above which contain the paragraphs], the plaintiffs say that these alleged objectives should not be accepted as a pressing and substantial objective under s. 1.80

    61. 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.81 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.

    62. The case of Operation Dismantle that Canada relies is entirely distinguishable.82 That case concerned an application to strike a statement of claim as disclosing no reasonable claim. The plaintiffs alleged that the government’s decision to permit the United States to test cruise missiles in Canadian territory violated their s. 7 Charter rights because it increased the risk of nuclear war. The context of the passage relied on by Canada is the Court’s determination that the causal link alleged by the plaintiffs – cruise missile testing increases the risk of nuclear war – was inherently incapable of prediction because it depended on foreign policy decisions of other nations, and so could not ground a viable claim. That a claim premised entirely on unprovable presumptions about foreign policy decisions cannot be sustained as a preliminary pleadings matter does not mean that Canada is entitled to the presumption that it succeeded in minimally impairing the plaintiffs’ rights in its negotiations with the United States concerning FATCA. Canada does not seek to avert consideration of how foreign states might behave in hypothetical scenarios – as in Operation Dismantle
    – but rather seeks to have this court simply accept its version of events, without scrutiny.

    63. A termination of the IGA is delayed for one year.83 Kevin Shoom, Canada’s witness who participated in the negotiations with the United States that ultimately resulted in the IGA, agreed that any consideration of what would transpire if any part of the Impugned Provisions were declared of no force or effect would be highly speculative. He agreed that it would depend on “a whole lot of considerations,” that Canada would negotiate with the United States to achieve the best possible outcome, and that “we don’t know how the US would respond.”84

    64. Further, none of the purported pressing and substantial objectives identified by Canada justify its use of Accountholder Information obtained pursuant to the Impugned Provisions for domestic tax compliance purposes.

    65. Finally, the plaintiffs do not assert, as Canada suggests, a right “to avoid the consequences of choosing to violate US law.”85 The plaintiffs claim their Charter rights, and they claim that they have been breached by Canadian law for the reasons set out above.

    December 13, 2018
    [Signed]
    Counsel for the Plaintiffs
    Joseph J. Arvay, O.C., Q.C.
    and Arden M. Beddoes
    Arvay Finlay LLP
    1512 – 808 Nelson Street Vancouver BC V6Z 2H2…

    TO:
    Counsel for the Defendants
    Donnaree Nygard and Michael Taylor
    Department of Justice Canada
    BC Regional Office 900 – 840 Howe Street
    Vancouver BC V6Z 2S9…”

    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.

  14. @ 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.

  15. 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:

    “At the time, the previous government could have negotiated more effectively at that time…” he says.

    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:

    “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.”

    Plaintiffs’ court submission in the link to this post has a different take on FATCA and privacy.

  16. Interesting.

    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.”

    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

  17. ‘“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.

  18. @ 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.

  19. “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.”

    “Does a democratically elected legislature [Harper and Trudeau Governments] prevail or do the rights of individuals prevail?”

    See the Brock post: https://isaacbrocksociety.ca/2019/01/11/supporters-of-adcsovereignty-fatca-lawsuit-might-be-interested-in-runnymedesoc-law-and-freedom-conference-jan-1219/

  21. 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.

  22. 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:

    C. The Impugned Provisions Violate Section 8 of the Charter

    51. Section 8 of the Charter states: Everyone has the right to be secure against unreasonable search or seizure. To claim s. 8 protection, a person must establish that they have a reasonable expectation of privacy in the subject matter of the search and/or seizure.43 Determining whether the Impugned Provisions violate s. 8 requires assessing whether they cause a search and/or seizure and, if so, whether the search and/or seizure is reasonable.

    52. The Impugned Provisions authorize both a search and a seizure. In order to constitute a seizure, the taking at issue need not be carried out by the state directly against the person affected. A seizure can occur when a person’s information is taken by the state from a third party, such as a financial institution.44

    53. In the present case, the subject matter of the search and seizure is Accountholder Information belonging to the plaintiffs and other individuals in reasonable hypothetical situations, which may be transmitted to both Canada and the United States. The court may consider reasonable hypothetical situations to determine whether a law complies with the Charter.45

    54. The plaintiffs and other reasonable hypothetical individuals have a reasonable expectation of privacy in their Accountholder Information. Canadian courts have observed that personal financial information prima facie attracts a reasonable expectation of privacy, and that individuals can reasonably expect their financial institutions to keep their information confidential. The fact that the Accountholder Information is already in the hands of Canadian FIs does not affect the plaintiffs’ and hypothetical others’ reasonable expectations of privacy in that information.46

    55. Canada pleads that because the plaintiffs and other US Persons have pre-existing obligations to report certain information to the IRS under US law, their privacy interest in that information is minimal. This overlooks at least two important facts.47

    56. First, although some US Persons in Canada have obligations under US law to report their Accountholder Information to the IRS, they generally do not have an obligation to report this information to Canada. Canada has admitted that the Accountholder Information it receives as a result of the Impugned Provisions can be used for domestic tax compliance purposes.48 As a result, Canada has enhanced information with respect to individuals whose Accountholder Information is reported to it pursuant to the Impugned Provisions, whether those individuals are US Persons or not, as compared to individuals whose Accountholder Information is not reported. Accordingly, the search and seizure of the Accountholder Information that takes place pursuant to the Impugned Provisions results in that information being in the possession of, and potentially actionable by, both Canada and the United States.

    57. Second, it is not disputed that many individuals whose Accountholder Information is shared with the IRS pursuant to the Impugned Provisions do not, in fact, have any reporting obligations under US law. Canada admits that it does not know how many account records have been shared with the IRS which are associated with individuals who are not US Persons.49 Simply, the Impugned Provisions cause Accountholder Information belonging to non-US Persons to be shared with the United States, and the extent to which this occurs is unknown because Canada does not keep track. It is therefore reasonable to hypothesize that non US-Person Canadian citizens have had, and will have, their Accountholder Information shared with both Canada and the United States pursuant to the Impugned Provisions.

    i. The Search and Seizure Pursuant to the Impugned Provisions is Unreasonable

    58. In order to establish that the searches authorized by the Impugned Provisions are reasonable, Canada must demonstrate that the Impugned Provisions are themselves reasonable, and that the manner in which the search and seizure they authorize takes place is reasonable.50 This requires Canada to demonstrate an important state objective, that the privacy intrusion goes no further than necessary to reasonably achieve that objective, and that the intrusion is subject to judicial supervision to guard against abuse.51
    ii.

    59. Warrantless searches are presumptively unreasonable and Canada bears the onus of establishing otherwise.52 Notably, but for the Impugned Provisions, Canada would require a warrant in order to require Canadian FIs to disclose to it the Accountholder Information of unnamed US Persons.53

    60. That the Impugned Provisions authorize warrantless searches without any notice or means of judicial review of any kind is undisputed and fatal to their reasonableness. The reason prior authorization is presumptively required for a search to comply with s. 8 is to prevent unreasonable searches. 54 Canada does not employ any meaningful safeguards to ensure transparency and accountability in terms of how searches pursuant to the Impugned Provisions are conducted; rather, it leaves their conduct to the discretion of Canadian FIs. Even when conducted by the state, discretionary and unreviewable powers of search and seizure are unreasonable and contrary to s. 8.55

    61. Canada cannot demonstrate that the searches and seizures authorized by Impugned Provisions are reasonable because (a) they are warrantless and lack any judicial supervision of any kind, (b) it is impossible to test their reliability in achieving their objective, and (c) they almost certainly capture an inordinate number of individuals who have no US tax and reporting obligations.

    iii. The Impugned Provisions Authorize Warrantless Searches
    iv. It is Impossible to Test the Reliability of the Impugned Provisions

    62. For the Impugned Provisions to be reasonable they must strike a reasonable balance between an important state objective and the invasion of privacy they occasion. This involves an assessment of the reliability of the means employed by the Impugned Provisions in achieving their objective, as well as the availability (or not) of judicial supervision.56

    63. The state objective underlying the Impugned Provisions is to assist the United States in implementing FATCA and finding US tax evaders and cheats.57 This is not an important Canadian objective. However, because Canada does not track even basic data concerning whose privacy is affected by the Impugned Provisions, it is impossible to review their reliability in achieving this objective. As a result, Canada cannot discharge its onus of demonstrating that the warrantless searches authorized by the Impugned Provisions are reasonable.

    64. The determination as to whether a particular individual’s Accountholder Information will be reported to both Canada and the United States is made solely by Canadian FIs, who have discretion in determining, inter alia, whether to report certain accounts – such as Lower Value Accounts – and what to accept as Proof of Loss of US Citizenship.58 But Canada has admitted that it does not oversee – meaningfully or at all – the conduct of Canadian FIs in determining whose Accountholder Information will be reported to both Canada and the United States. It has admitted that it effectively has no data on the makeup of the accounts being reported pursuant to the Impugned Provisions, including the proportion of those accounts that are actually owned (or not) by US Persons, Canadian citizens, or persons having any tax-related obligations at all under US law.59

    v. The Impugned Provisions Capture an Inordinate Number of Innocent Individuals

    65. While the reliability of the Impugned Provisions cannot be accurately tested, they almost certainly capture an inordinate number of individuals with no US tax obligations of any kind. The Supreme Court of Canada has stated that laws which capture an inordinate number of innocent individuals are not reasonable.60

    66. Canada’s evidence is that hundreds of thousands of accounts have been shared and will continue to be shared,61 but that the IRS is likely to only prosecute a very small number of individuals as a result of information it obtains pursuant to the Impugned Provisions.62 Accordingly, the Impugned Provisions capture orders of magnitude more individuals than necessary to achieve their objective.

    67. Finally, it is impossible for Canada to establish that its own use for domestic tax compliance purposes of Accountholder Information obtained pursuant to the Impugned Provisions (to which it admits63) is reasonable because Canada’s use of that information is unrelated to the objective underlying the Impugned Provisions. Canada only possesses this information as an incident to the Impugned Provisions, which are directed at providing this information to the United States, not Canada.

    From Plaintiffs’ 10/03/2018 Complaint in: http://www.adcs-adsc.ca/CourtSubmissions.html

    Please Read these Court submissions.

  23. 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….

  24. @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.)

  25. The Guidance says:

    A financial institution should assume that an account holder is not a U.S. citizen unless the account holder self-certifies that he or she is a U.S. citizen, or provides documentation that either identifies himself or herself as a U.S. citizen (such as a U.S. passport) or reveals an unambiguous indication of a U.S. place of birth.

    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.

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