Statutory Interpretation in eBay v. Minister of National Revenue

Statutory Interpretation in eBay v. Minister of National Revenue

On Nov. 7, the Federal Court of Appeal released their decision in eBay v. Minister of National Revenue, 2008 FCA 348.  This case involved the appeal of an ex parte order of the Federal Court under s. 231.2 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) to produce information identifying “PowerSellers” in Canada.  The contentious issue in this case was whether the Minister could have used the general provision of s. 231.2 to order the production of such information when another section of the Act (s. 231.6) explicitly contemplated ‘foreign-based information’.  The distinction is important because s. 231.6 did not allow the Minister to obtain an order to produce foreign-based information relating to unnamed persons. 

eBay argued that the information in this case was ‘foreign-based’, because the information sought was stored on servers in the US, and managed by a Swiss subsidiary of American company eBay Inc. Justice Evans rejected such a characterization.  He did so by applying the Supreme Court of Canada’s admonition in Society of Composers, Authors and Music Publishers in Canada v. Canadian Association of Internet Providers, [2004] 2 S.C.R 427 (SOCAN) to “transpose” provisions of a piece of legislation to the technological environment in which it is applied (para. 42).  That is, he reasoned that since the original purpose of the s. 231.6 provision was to prevent the imposition of an unduly onerous burden in producing foreign physical materials, this purpose would not be achieved in the context of this case because the impugned information could be so easily accessed by eBay Canada employees.  As such, he concluded that the information sought of eBay is not foreign-based. At para. 48, he writes,

"[W]ith the click of a mouse, the appellants make the information appear on the screens on their desks in Toronto and Vancouver, or anywhere else in Canada.  It is as easily accessible as documents in their filing cabinets in their Canadian offices.  Hence, it makes no sense in my view to insist that information stored on servers outside Canada is as a matter of law located outside Canada for the purpose of section 231.6 because it has not been downloaded.  Who, afterall, goes to the site of servers in order to read the information stored on them?"

Given this characterization, Justice Evans concluded that the information sought from eBay Canada did not fall within the scope of s. 231.6.  Accordingly, he did not consider whether s. 231.6 reduced the Minister’s general power under s. 231.2.  Without any limitation on the general power of s. 231.2, it was concluded that the Minister’s exercise of power under that section was properly authorized.


This case seems consistent with other cases where existing law is interpreted in light of modern technological changes.  However, in this case, Justice Evans interestingly derives a broad principle of statutory interpretation from SOCAN.  That is, while SOCAN could have arguably been confined to copyright law, or strictly to its pronouncements on telecommunications as Justice Hughes in the lower court read, Justice Evans has derived a broader principle of “transpos[ing] the terms [of a given piece of legislation] to take into account the changed technological environment in which it is to be applied.” (para. 42).

Such a principle, although seemingly broad, seems like a correct description of what many courts have done in light of the advent of the Internet over the last decade.  (For a brief sample, see the examples given at para. 41 of SOCAN, or more recently, the Crookes decision out of the British Columbia Supreme Court: our comment here).  By explicitly articulating and identifying such a principle, future disputes regarding the application of old legislation in new technological environments (in the federal courts at least, and hopefully also in provincial courts) can rest on more solid footing by pointing to this principle for its analysis instead of having to rationalize why technology should be taken into account during statutory interpretation.  In the inevitable game of catch-up the law plays with constantly changing technology, such a principled analytical approach is a helpful tool.