Sherman v. Canada (Minister of National Revenue)

Sherman v. Canada (Minister of National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2003-05-06 Neutral citation 2003 FCA 202 File numbers A-387-02 Notes Reported Decision Decision Content Date: 20030506 Docket: A-387-02 Neutral citation: 2003 FCA 202 CORAM: DESJARDINS J.A. LÉTOURNEAU J.A. EVANS J.A. BETWEEN: DAVID M. SHERMAN Appellant and THE MINISTER OF NATIONAL REVENUE Respondent Heard at Toronto, Ontario, on February 18, 2003. Judgment delivered at Ottawa, Ontario, on May 6, 2003. REASONS FOR JUDGMENT BY: LÉTOURNEAU J.A. CONCURRED IN BY: DESJARDINS J.A. EVANS J.A. Date: 20030506 Docket: A-387-02 Neutral citation: 2003 FCA 202 CORAM: DESJARDINS J.A. LÉTOURNEAU J.A. EVANS J.A. BETWEEN: DAVID M. SHERMAN Appellant and THE MINISTER OF NATIONAL REVENUE Respondent REASONS FOR JUDGMENT LÉTOURNEAU J.A. [1] 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 clause 1 of Article XXVII relating to Article XXVIA 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. Clause 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 clause 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. 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 sub-section (1) if the government, organization or institution from which the information was obtained (a) consents to the disclosure; or (b) makes the information public. 13. (1) Sous réserve du paragraphe (2), le responsable d'une institution fédérale est tenu de refuser la communication de documents contenant des renseignements obtenus à titre confidentiel : a) des gouvernements des États étrangers ou de leurs organismes; [...] (2) Le responsable d'une institution fédérale peut donner communication de documents contenant des renseignements visés au paragraphe (1) si le gouvernement, l'organisation, l'administration ou l'organisme qui les a fournis : a) consent à la communication; b) rend les renseignements publics. 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: [18]..... 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. [20] 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 paragraphs 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. a) The appellant's ground of appeal [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 XXVIA 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. b) The standard of review [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 S.C.C. 33. 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., 17 C.P.R. (4th) 478, at paragraph 51 (F.C.A.). c) The scope of paragraph 13(1)(a) of the Act [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 S.C.C. 8, 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 "the 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, [1998] 2 F.C. 430, pages 442 to 444; M.W. Drapeau and M.A. Racicot, Federal Access to Information and Privacy Legislation Annotated 2003, Thomson/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 and 105 such requests regarding the Income Tax Act 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. d) Whether all information exchanged under Article XXVII relating to Article XXVIA of the Convention ought to be treated as secret [26] As I mentioned earlier, the judge concluded that all information exchanged under Article XXVII of the Convention relating to Article XXVIA 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, clause 1 of the Convention which reads: 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. Les renseignements reçus par un État contractant sont tenus secrets de la même manière que les renseignements obtenus en application de la législation fiscale de cet État et ne sont communiqués qu'aux personnes ou autorités (y compris les tribunaux et organes administratifs) concernées par l'établissement ou le recouvrement des impôts visés par la Convention, par l'administration et la mise à exécution de ces impôts, ou par les décisions sur les recours relatifs à ces impôts. Ces personnes ou autorités n'utilisent ces renseignements qu'à ces fins. Elles peuvent faire état de ces renseignements au cours d'audiences publiques de tribunaux ou dans des jugements. (emphasis added) [27] This clause 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 clause 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, c. 1 (5th Suppl.) as amended and section 295 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 clause 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. Internal Revenue Service, 217 F. Supp. 2d 23; 90 A.F.T.R. 2d (RIA) 5554. 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, 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, 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 The term "tax convention information" means any- (A) agreement entered into with the competent authority of one or more foreign governments pursuant to a tax convention, (B) application for relief under a tax convention, (C) background information related to such agreement or application, (D) document implementing such agreement, and (E) other information exchanged pursuant to a tax convention which is treated as confidential or secret under the tax convention. (2) Tax convention The term "tax convention" means - (A) any income tax or gift and estate tax convention, or (B) any other convention or bilateral agreement including multilateral conventions and agreements and any agreement with a possession of the United States providing for the avoidance of double taxation, the prevention of fiscal evasion, non-discrimination with respect to taxes, the exchange of tax relevant information with the United States, or mutual assistance in tax matters. (emphasis added) 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 page 4 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, 326 U.S. App. D.C. 53, 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 which protects not only information received by a Contracting State, but "any other information exchanged pursuant to a tax convention" 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, clause 1 of Article XXVII is much more limited in scope than section 6105 of the U.S. Code. 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 clause 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 clause 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 clause 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 no. 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 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: Types of information requested by Mr. Sherman Info. pertaining to CCRA requests to IRS Info. pertaining to IRS requests to CCRA 1. Number of requests made Requests made by CCRA to IRS - Not exempted - It is Canadian info. about Canadian info. Therefore, it is not covered by para. 13(1)(a) Requests made by IRS to CCRA - Not exempted - It is Canadian info. about U.S. info.; but the Canadian info. does not reveal the content of the U.S. information and is not covered by para. 13(1)(a) 2. Total dollars in collection assistance claimed Dollars involved in CCRA requests to IRS - Not exempted - It is Canadian info. about Canadian info. Therefore, it is not covered by para. 13(1)(a) Dollars involved in IRS requests to CCRA - Exempted - It is Canadian info. about U.S. info; but, the Canadian info. is the U.S. confidential info. itself in aggregate form and so is covered by para. 13(1)(a) 3. Percentage of requests accepted for action Percentage of CCRA requests accepted by IRS for action - Not exempted - It is Canadian info. about U.S. info.; but the Canadian info. does not reveal the content of the U.S. confidential info. - it is only statistical Percentage of IRS requests accepted by CCRA for action - Not exempted - It is Canadian info. about Canadian info. Therefore, it is not covered by para. 13(1)(a) 4. Percentage of requests acted upon that were successful Percentage of CCRA requests to IRS successfully acted upon by IRS - Not exempted - It is Canadian info. about U.S. info.; but the Canadian info. does not reveal the content of the U.S. confidential info. - it is only statistical Percentage of IRS requests to CCRA successfully acted upon by CCRA - Not exempted - It is Canadian info. about Canadian info. Therefore, it is not covered by para. 13(1)(a) 5. Percentage of total dollars requested that has been collected and remitted Percentage of total dollars in respect of CCRA requests to IRS that has been remitted to CCRA - Exempted - It is Canadian info. about U.S. info., but the Canadian info. is really the U.S. info. itself as it reveals the content of the info. received in confidence from the U.S. Percentage of total dollars in respect of IRS requests to CCRA that has been remitted to IRS - Exempted - It is Canadian info. about Canadian info., but the Canadian info. would reveal the total amount of dollars claimed by the IRS which is confidential and it is therefore covered by para. 13(1)(a) 6. Breakdowns by year N/A N/A [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 clause 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 clause 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, [1989] 2 F.C. 341, at pages 345-46 (F.C.A.), 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. Governors of Dalhousie College (1986), 26 D.L.R. (4th) 321, at pages 328-330, 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, 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 et al. v. Chan et al. (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 and the Federal Court Rules unless amendments are made to the Act or the Rules. [50] In Canada (Attorney General) v. Kahn (1998), 160 F.T.R. 83, Teitelbaum J. allowed a self-represented respondent, against whom judicial review proceedings were brought and discontinued, the sum of $5607.51 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 ($2,500.00) to reimburse the respondent for his "lost" time in defending his interests. [51] In Coath v. "Bruno Gerussi" (The), 2002 F.C.T. 385, 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 F.C.T. 95 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 clause 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. "Gilles Létourneau" J.A. "I concur, Alice Desjardins J.A." "I agree John M. Evans J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-387-02 STYLE OF CAUSE: DAVID M. SHERMAN v. THE MINISTER OF NATIONAL REVENUE PLACE OF HEARING: TORONTO, ONTARIO DATE OF HEARING: February 18, 2003 REASONS FOR JUDGMENT: LÉTOURNEAU J.A. CONCURRED IN BY: DESJARDINS J.A. EVANS J.A. DATED: May 6, 2003 APPEARANCES: Mr. David M. Sherman ON HIS OWN BEHALF Mr. David W. Chodikoff FOR THE RESPONDENT Ms. Sointula Kirkpatrick SOLICITORS OF RECORD: Department of Justice FOR THE RESPONDENT 130 King Street West, Suite 3400 Toronto, Ontario M5X 1K6