Canada (Attorney General) v. Foster, 2006 CanLII 38732 (ON CA)

DATE: 20061120

DOCKET: C44677 and C44682

COURT OF APPEAL FOR ONTARIO

WEILER, ROSENBERG and BLAIR JJ.A.

B E T W E E N :

ATTORNEY GENERAL OF CANADA

Janet Henchey and

Claude Lefrançois for the

Respondent (C44677)

Attorney General of Canada

Applicant/Appellant in appeal/

application for leave (C44682)

• and -

Paul Le Vay and

Brendan Van Niejenhuis

THE ATTORNEY GENERAL OF ONTARIO

for Robert Foster et al.

Intervener

• and -

Randy Schwartz

for Attorney General

ROBERT FOSTER, MICHAEL COHL, PAT BRIGHAM, ANTHONY P.L. LLOYD, JOHN M.S. LECKY, MARTIN GOLDFARB, ALLAN SLAIGHT, DAVID CORIAT, GARNET WATCHORN AND GRAHAM GOODCHILD

of Ontario, Intervener

Applicant/Appellant (C44677)

Respondent in appeal/

application for leave (C44682)

• and -

THE MACLAREN ART CENTRE

Respondent

Heard: May 12, 2006

On appeal from the order of Justice Jean A. Forget of the Superior Court of Justice dated December 21, 2005.

ROSENBERG J.A.:

1There are two central issues raised by these appeals from an order made by Forget J. in connection with proceedings under the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.). In the first appeal, Robert Foster et al. [the “collectors”] argue that Forget J. had no jurisdiction to make an evidence-gathering order under s. 18 of the Act when the effect of that order was a search and seizure of their collection of Rodin plasters, then under the control of the MacLaren Art Centre in Barrie, Ontario. In the second appeal, the Attorney General of Canada argues that Forget J. had no jurisdiction to attach certain conditions to the sending order that he made under s. 20 of the Act. The impugned conditions relate to an obligation to pay for the storage of the plasters and related costs as well as an obligation to indemnify the collectors for damage caused during the carrying out of the order. The Attorney General of Canada also argues that the application judge erred in awarding costs of the application to the collectors and the MacLaren. The Attorney General of Ontario intervenes in support of the positions taken by the Attorney General of Canada.

2For the following reasons, I would dismiss the collectors’ appeal and allow the appeal by the Attorney General of Canada.

I. THE FACTS

(1) Some Background about Rodin plasters

3These appeals concern works by the renowned French sculptor, Auguste Rodin. The process followed by Rodin was to create a mold for a sculpture in plaster. The sculpture in plaster would then be cast in bronze at a foundry. While a single plaster could create several bronzes, eventually the founding process would wear upon a plaster and a new plaster would have to be produced. The new plaster was created by casting a mold from a plaster that was still in good condition. In the result, there can be a number of plasters and bronzes of the same statue. Both plasters and bronzes are displayed in museums throughout the world.

4From 1902 until 1952, the Rudier foundry was the exclusive founder of Rodin’s work. After 1952, the Rudier shared rights with other foundries. The Musée Rodin is an organ of the French state, established to perpetuate Rodin’s works and to hold the intellectual property rights relating to them. When Rodin died, he gifted his remaining unsold works to the French state. The Musée has a de facto monopoly over the creation of high quality bronze reproductions of Rodin’s works from the plasters in its possession.

(2) The Collection

5The collection in issue consists of twenty-eight Rodin plasters, which the collectors purchased in 2000 and 2001.¹ The collectors assert that there is no dispute about the provenance of the collection. They say that the plasters came from the Rudier foundry and that previously the Musée has confirmed the provenance of the collection. The collection has been exhibited at the Royal Ontario Museum in Toronto and at the

MacLaren. The collectors originally intended to donate the collection to the MacLaren but that transaction has never been completed. The collection remains at the MacLaren or in storage facilities under its control.

(3) The Dispute

6Before the collectors purchased the collection, it was exhibited in Italy in 1999 and 2000. It appears that at this time the Musée began to take an interest in the collection, although it did nothing to block its subsequent sale to the collectors or the export of the collection to Canada. When, however, the collection was exhibited at the ROM, the Musée, in the words of the collectors, “decided to stir up a controversy”.

7The collectors assert that this controversy is nothing more than an attempt by the Musée to protect its economic interests in reproducing bronze castings of Rodin works. France asserts that the Musée has legal rights over all original plasters and sculptures and that it needs the plasters to pursue an investigation of a corporate entity and an individual that it suspects of various offences in relation to Rodin plasters and bronzes. France alleges that the collection was sold by this corporate entity to the collectors. As I understand it, the allegation is, in part, that the collection is not composed of “originals” but “reproductions” and may have been sold under false pretences.

8In 2001, France requested Canada’s assistance in pursuing its investigation and initially wanted the Canadian police to seize the collection so that it could be examined and authenticated by a recognized Rodin expert. France also wanted to interview various witnesses including officials from the ROM and the MacLaren. The federal Department of Justice suggested a consensual process and contacted the MacLaren to attempt to agree on an expert to examine the collection. The MacLaren suggested two recognized Rodin experts. For reasons that are not germane to this appeal, little progress was made on the file until June 2004 when the collectors wrote directly to counsel with the Department of Justice indicating that they would consent to an inspection of the collection by an expert “subject to presentation to us of the name and CV of the proposed expert”.

9On October 4, 2004, France sent to the Department of Justice the name and CV of Gilles Perrault as its proposed expert. Almost two weeks later the Department sent this material to the collectors. A short time later, the collectors learned that the Department intended to go ahead with an inspection of the collection in early November, apparently without the consent of the collectors. On November 4, 2004, the collectors’ counsel wrote to the counsel in the Department who was handling this file and told her that they would not consent to an examination by M. Perrault because, in their view, he was not qualified. Their view was that M. Perrault, although perhaps an expert in restoration of medieval ecclesiastical sculpture in wood, had no expertise in nineteenth century French sculpture, such as the works by Rodin. The collectors’ counsel also noted a previous indication that the Department might proceed by way of an application for an evidence-gathering order under the Act. He set out various objections to that procedure and claimed that there was no jurisdiction to obtain an evidence-gathering order.

II. THE ORDERS OF THE APPLICATION JUDGE

(1) The Evidence-Gathering Order

10On November 16, 2004, counsel for the Attorney General of Canada (not Ms. Henchey) obtained an ex parte evidence-gathering order under s. 18 of the Act from Forget J. (the application judge). The application was supported by an affidavit of Constable Bédard of the RCMP. The affidavit did not disclose that the collectors objected to the proposed expert or that they disputed the court’s jurisdiction to make the evidence-gathering order. The tenor of the affidavit suggested that the procedure was consensual, at least on the part of the MacLaren. Copies of the order were provided to the MacLaren and to the persons in charge of the other facilities where the collection was being stored the day the order was made.

11On November 30, 2004, counsel for the collectors wrote counsel for the Department. It is apparent that the collectors’ counsel had become aware of a court order. He was, however, uncertain which court had made the order and in his letter stated that he believed the order was issued by the Quebec Superior Court. He also recounted a telephone conversation in which counsel for the Department (not Ms. Henchey) would neither confirm nor deny the existence of any order because the collectors were no longer co-operating. Counsel for the Department did not respond to this letter.

12On December 3, 2004, counsel for the Attorney General of Canada again appeared before the application judge and obtained an amended order that corrected the address of the MacLaren. On December 17, 2004, new counsel for the collectors wrote to the Regional Senior Judge to ask her to intervene to ensure that the Attorney General of Canada did not take further steps without notice to the collectors. At this point, counsel for the Attorney General resumed communication with the collectors’ counsel. The record is silent as to whether the MacLaren provided copies of the order and amended order to the collectors.

13The evidence-gathering order contains a number of terms, only some of which are relevant to these appeals. Those terms may be summarized as follows:

• The persons responsible for the various named locations were to make the plasters available to M. Perrault so that he could examine them, including take micro-samples and conduct micro-tests, “in order to prepare a report on the authenticity, origin and ownership of the bronzes [sic] and plasters”.

• Claudine Ménard, a member of the RCMP, “or another person designated by her” was appointed under s. 18(2)(c) of the Act to receive from M. Perrault all things, documents, notes and other media relating to the information that he collected during his examination. The documents and things were to remain sealed and were to be brought before a judge at the application for a sending order. M. Perrault was to destroy any other notes, photos, or other information gathered during the examination of the plasters.

• The persons in possession of the plasters were prohibited from moving them or allowing them to be handled or returned to their owners “without authorization from a Canadian judge until a final decision [was] rendered concerning the disposal of those plasters” [the impounding order].

14M. Perrault examined the plasters for several days in November and December, 2004. Constable Bédard was present during the examination, as were employees of the MacLaren. During the examination some small pieces came off the plasters. The parties cannot agree on whether the examination damaged the plasters. The Attorney General of Canada says that they were not damaged. The collectors say they were damaged. They also assert that the examination conducted by M. Perrault was misconceived and inappropriate. For example, he took micro-samples and swabbed the plasters. An expert retained by the collectors says that these procedures could not yield any useful information.

(2) The May 20, 2005 Hearing

15On May 20, 2005, counsel for the collectors, the Attorney General of Canada and the MacLaren appeared before the application judge. The Attorney General of Canada applied for a sending order. The collectors applied to have the impounding order lifted, for an opportunity to inspect the collection, and to obtain copies of the material the Attorney General of Canada wanted sent to France. The MacLaren did not oppose the sending order, but did seek to recover its expenses and costs in the proceedings.² The MacLaren did not participate in this appeal.

16The Attorney General of Canada submitted that the collectors had no standing in the application for a sending order. The application judge disagreed. He authorized the MacLaren and the collectors to inspect the samples and notes taken by M. Perrault. He did not lift the impounding order and adjourned the applications to June 2005.

(3) The Sending Order³

17On December 21, 2005, the application judge made an order pursuant to s. 20 of the Act sending the records and things in a report prepared by Constable Bédard to France. The collectors submit that the application judge should not have made this order. The order authorizes sending the material on certain conditions. The Attorney General of Canada submits that the application judge should not have included certain of those terms, namely:

• Requiring “the Applicant” to indemnify the owners for any damage to the plasters, including the cost of repair occasioned by the inspection by M. Perrault [the indemnification term].

• Requiring “the Applicant” to pay costs incurred by “the Respondents” in respect of storage and insurance of the plasters, from December 1, 2004 to December 21, 2005 [the storage costs term].

18To ensure compliance with the terms and conditions of the order, the application judge also ordered that the materials were not to be sent until further order of the court.

19Finally, the application judge ordered “the Applicant” to pay the collectors and the MacLaren their costs of the proceedings, fixed in the amount of $10,000 [the costs order]. There is an error in the title of proceedings in that the applicant is identified as the Republic of France. I will deal with this issue below.

20In deciding to make the sending order, and in setting the above terms, the application judge considered a number of factors. First, he noted that generally the respondents had been attempting to cooperate with the French authorities. There had been negotiations between France [the Musée] and the respondents. In this context, the application judge noted that the determination of which expert should carry out the examination was a point of contention.

21Second, the application judge held that an evidence-gathering order was more desirable than a search warrant because it would be less intrusive. In his view, a seizure of the plasters would have resulted in their relocation to a government facility that could have compromised their integrity. He lifted the impounding order as it was no longer necessary.

22Third, the application judge did not make any finding of misconduct against the Attorney General of Canada in relation to the expert issue. Rather he said the following:

I am of the view that the challenge to the sending order being sought on the basis that the owners do not agree with the chosen expert nor feel that the proper way to proceed was via the Act in question has to my mind little merit.

23Finally, the application judge stated that during the examination by M. Perrault “certain of the plasters being examined were damaged”. As indicated, he made a term of the sending order that the applicant indemnify the owners for any damage to the plasters, including the expense of repairs occasioned by M. Perrault’s inspection. The application judge did not give any express reasons for the term of the sending order that the applicant pay reasonable costs of storage and insurance while the plasters were subject to the impounding order. However, he said the following in relation to the costs of the application:

As to the question of costs we are dealing here with third parties who are not, in any way, shape or form, the target of the French investigation and I can see no reason why their costs of these particular proceedings should not be paid to the Respondents herein. I am of the view that an adequate amount for costs should be fixed at the sum of $10,000 to be paid forthwith […].

III. THE COLLECTORS’ APPEAL

(1) Introduction

24The collectors limit their appeal from the making of the sending order to the single issue of whether there was jurisdiction to make the evidence-gathering order under s. 18 of the Act when, in effect, the Attorney General of Canada sought a search and seizure. They do not challenge the evidentiary basis for making the evidence-gathering order. The collectors say that the evidence-gathering order had all the attributes of a search and seizure: the plasters were impounded, the owners were denied access to them, and the plasters were subjected to a damaging inspection. They submit that impounding and inspection are not authorized by s. 18. The collectors say that, accordingly, the Attorney General of Canada should have been required to comply with the more rigorous standards for obtaining a search warrant under s. 12 of the Act. They also say that they were denied the safeguards normally attending an evidence-gathering order because of the nature of inspection that took place. Finally, as I understand it, the collectors submit that they were denied the protection of having a Canadian police officer execute the search warrant.

25For the following reasons, it is my view that the application judge did have jurisdiction to make the evidence-gathering order under s. 18 of the Act. I am also of the view that, while there are several defects in that order, the judge did not err in making the sending order under s. 20 of the Act. For ease of reference I have attached ss. 18 and 20 of the Act in an Appendix.

(2) Using an Evidence-Gathering Order to Require Production of the Sculptures

26The collectors say that the combined effect of the terms of the evidence-gathering order in this case is, in substance, to authorize a search and seizure. The terms about which they are concerned are that the sculptures were to be produced to M. Perrault, that they could have no access to their property, and that M. Perrault could perform potentially destructive tests. They submit that by using the evidence-gathering order, the Attorney General of Canada was able to avoid the usual safeguards that attend the obtaining and execution of a search warrant. Similarly, the nature of the order obtained in this case was such as to deprive the owners of the usual safeguards that are available in an evidence-gathering order. They thus argue that the judge had no jurisdiction to make this particular evidence-gathering order.

(i) Production of a “thing”

27The collectors submit that s. 18 does not grant jurisdiction to detain or impound property or to permit any form of physical interference with property. In my view, however, the plain wording of s. 18 contemplates production of things such as the plasters in this case for examination. Section 18(2)(a) provides for an order for the examination under oath of a person and includes the power to order that person to bring “any record or thing in his possession or control” in order to produce them to the person conducting the examination. Section 18(2)(b) of the Act gives the court the power to order a person named in the order “to produce any record or thing in his possession or control” to a designated person. Section 18(2)(c) provides that the order may designate a person before whom the examination under para. (2)(a) is to take place or to whom things mentioned in para. (2)(b) are to be produced. The power to order production as an incident of the examination under para. (2)(a) is distinct from the power to order production under para. (2)(b). There would be no need for para. (2)(b) if the production power depended upon an examination under para. (2)(a); para. (2)(b) would be wholly redundant.

28The collectors submit that they were deprived of the ability to object before being required to produce the plasters, the usual safeguard for an evidence-gathering order. As this court said in Canada (Commissioner of Competition) v. Falconbridge Ltd. (2003), 173 C.C.C. (3d) 466 at para. 19:

There are a number of safeguards inherent in the procedure and explicitly provided in the legislation that protect the target of the order. First, as indicated, the authorities do not seize the material sought. The person against whom the order is made must produce them. This gives the person an opportunity to challenge the validity and scope of the order before a court. Second, the judge who made the order or any other judge may vary its terms and conditions pursuant to s. 18(6). Third, s. 18(7) provides that the person may refuse to produce a record or thing if producing the record or thing would disclose information that is protected by Canadian laws relating to privilege or non-disclosure of information. [Emphasis added.]

29It is not unusual for an evidence-gathering order to be made against someone other than the owner of the record or things. Paragraph 18(2)(b) expressly contemplates such a situation. An order to produce requires persons to produce things in their “possession or control”, terms that are not synonymous with ownership. Owners are dependent upon the persons to whom they have entrusted their records or things to either object to production or to notify them so that they may apply for standing and object to the production.

30Further, it is difficult to understand how the collectors would have been in a better position if the Attorney General of Canada had applied for a search warrant, the procedure they say should have been followed. The applications for both of these investigative aids are made ex parte and both a warrant and an order are served on the person in control of the things sought to be seized or produced, as the case may be.

31The orders in this case were served on the MacLaren and the other custodians of the plasters. The MacLaren had the opportunity to object to producing the plasters or could have notified the owners that the order had been made so that they could object to production. I think that the application judge could have included a term requiring that the owners be served with the order, but his failure to do so was not a jurisdictional error. The judge could reasonably take the view that the MacLaren would know who owned the plasters and would notify them accordingly. If the Attorney General of Canada had proceeded by way of search warrant rather than order, the collectors would have been in no better position; they still would have depended upon the MacLaren to notify them of the warrant’s existence.

32In any event, the owners did eventually learn of the order. I agree with the collectors that counsel for the Attorney General of Canada should have sent a copy of the order to counsel for the collectors when she was asked to do so. The collectors were innocent third parties with proprietary interests in valuable works of art. They were entitled to a copy of the order upon request. The possible intervention of the Regional Senior Judge should not have been necessary. However, the collectors do not allege any prejudice flowed from the initial refusal of the Attorney General of Canada to provide them with a copy of the order. Thus, in this case, failure to immediately provide the collectors with a copy of the order does not invalidate it and is not a basis for setting aside the sending order.

33To conclude on this aspect of the appeal, the plasters fall within the meaning of “thing” in s. 18(2)(b) and were therefore producible under that provision.

(ii) The Impounding Order

34The collectors further submit that there was no jurisdiction to make the impounding order, which was, in effect, a seizure. They argue that the authorities should have proceeded by way of search warrant. In my view, this submission misconceives the nature of an evidence-gathering order. There are important differences between an evidence-gathering order and a search warrant but they are similar in the sense that the person in possession of the things seized under the warrant, or produced under the order, loses control of those things. The evidence-gathering order is less intrusive only in the sense that, rather than the authorities entering the premises and seizing the things in what can be a highly disruptive process, the person named in the order is given the opportunity to produce the things sought.

35Section 18(5) provides that the order may include “any terms or conditions that the judge considers desirable, including those relating to the protection of the interests of the person named therein and of third parties”. This broad discretion at least gives the judge jurisdiction to include a term that the judge considers necessary to effect the evidence gathering. It seems to me that, in this case, the application judge had at least two ways to make the order effective. He could have required that the MacLaren produce the plasters by physically moving them to a place under RCMP control. Alternatively, he could, as here, have required that the MacLaren simply make the plasters available to Constable Ménard (or her designate) for examination by her expert and prohibited anyone, including the owners, from removing the plasters until the examination was complete.

36It may be that the order is broader than was absolutely required. There was probably no need to deprive the owners of access to their plasters “until a final decision is rendered concerning the disposal of those plasters”. That term went beyond what was necessary to permit the examination. On the other hand, the order expressly permitted persons to deal with the plasters if they obtained authorization from a judge. It was open to the MacLaren or the owners to seek that authorization and the owners eventually did so in May 2005. This defect was not sufficiently serious to require setting aside the sending order.

(iii) Destructive Testing

37The collectors also submit that the evidence-gathering provisions of the Act do not authorize the kind of destructive testing that was performed by M. Perrault. They suggest that such testing would not even be permissible under a search warrant. As to the latter point, I think the collectors are simply wrong. Once things have been seized under a warrant, it is not uncommon that destructive testing takes place. For example, holes will be cut in an article of clothing to allow for DNA testing of any biological residue and documents may be subjected to chemical fingerprinting processes that can result in permanent harm to the document. As far as the risk of damage, the collectors were in no worse position because the Attorney General of Canada proceeded by way of an evidence-gathering order rather than a warrant. Production of a record or thing contemplates that they will be examined and, depending on the nature of the thing produced, some testing performed. It is within the power of the judge to attach suitable conditions to protect the things from destructive testing, but I cannot read s. 18 as precluding the possibility that the thing produced may be damaged.

38In my view, the collectors’ real complaint is that the order did not contain sufficient terms to safeguard these valuable works of art. I am not convinced that is so. The order was quite specific. First, it identified M. Perrault as the person to conduct the examination. Whatever may be said about his qualifications as an expert in Rodin, he was said to be an expert in restoration of works of art. Second, he was permitted only to “examine them (notably: take photos and measurements, take micro-samples, conduct micro-tests on the patina, examine the surfaces and markings)”. The application judge could reasonably conclude that this kind of examination would safeguard the plasters while permitting the gathering of the necessary evidence. A judge might include a similar term in any search warrant.

39Finally, the order also included the term authorizing the employees of the MacLaren “to handle the plasters so as to make them accessible to Mr. Perrault and to repack them once the examination is completed”. This too provided a safeguard to protect the plasters. If the MacLaren was concerned that these valuable works of art in its control were going to be damaged by the examination, they could have applied to the court to vary the order before producing them. I realize that there is a dispute as to whether the plasters were damaged and that the application judge made a finding that there was some damage, but it hardly seems likely that there would have been less damage if the examination had been conducted pursuant to a search warrant rather than an evidence-gathering order. In my view, the application judge did not exceed his jurisdiction by allowing for the kind of examination that took place in this case.

(3) Other Issues Raised by the Collectors’ Appeal

(i) Identification of the Applicant

40Following oral argument, the court asked for further written submission on several issues including the identification of the Republic of France as the applicant and naming M. Perrault in the order. I turn first to the issue of the identity of the applicant.

41The scheme of the Act contemplates that its investigative tools be invoked by Canadian authorities. The Act does not contemplate a direct application by a foreign state. Thus, s. 11 provides that a “competent authority” shall apply ex parte for a search warrant. Similarly, under s. 17 a competent authority applies ex parte for an evidence-gathering order. Therefore, while the application may be made for the benefit of and at the request of France, it must be made by a competent Canadian authority. In s. 2 of the Act, the term “competent authority” is defined as “the Attorney General of Canada, the attorney general of a province or any person or authority with responsibility in Canada for the investigation or prosecution of offences”. In this case, the competent authority is the Attorney General of Canada. There is a defect in both the application and the order in that the applicant is described as the Republic of France. However, I do not consider this a substantive defect. The Attorney General of Canada concedes that it is bound by the orders made against “the Applicant” and there was no confusion either before the application judge or in this court that the Attorney General of Canada was the party applying for the original s. 18 order or the s. 20 sending order. I would, however, amend the title of proceedings to reflect that the applicant is the Attorney General of Canada.

(ii) Naming M. Perrault in the Order

42The scheme of the legislation provides for judicial authorization before the evidence that has been collected, either under search warrant or through the evidence-gathering order, is released to the requesting state. That judicial authorization occurs when the judge decides to make a sending order, under s. 15 in the case of evidence gathered by search warrant and under s. 20 in the case of an evidence-gathering order.

43A concern in this case is that M. Perrault was named in the evidence-gathering order as the person to whom the things were to be produced. The evidence-gathering order requires that the custodians of the plasters make them available to “the French expert Gilles Perrault so that he can examine them”. M. Perrault is then to turn over the fruits of his examination to Constable Ménard or her designate and to destroy all of his working documents in the presence of the constable or her designate. The actual wording of that term is as follows:

Appointing a member of the Royal Canadian Mounted Police (Claudine Ménard .... or another person designated by her) under paragraph 18(2)(c) of the Mutual Legal Assistance in Criminal Matters Act to receive from the expert all things (samples), documents, notes that are handwritten or recorded on diskette or CD relating to the information that he will collect during his examination of the plasters[.]

44In my view, the s. 18 order should not have directed the custodians to make the plasters available to M. Perrault for examination. Section 18 requires that the records or things be produced to the designated person. I have concluded, however, that directing that the plasters be turned over to M. Perrault is not a substantive defect. I have reached this conclusion notwithstanding a body of authority that suggests that foreign officials should have only minimal involvement in the execution of a search warrant issued under the Act. See United States of America v. Schneider, [2002] B.C.J. No. 1561 (S.C.) at paras. 47 to 51; Germany (Federal Republic) v. Ebke (2001), 2001 NWTSC 52, 158 C.C.C. (3d) 253 (N.W.T.S.C.) at paras. 83-91; United States of America v. Orphanou (2004), 182 C.C.C. (3d) 554 (Ont. S.C.J.).

45I should not be taken as questioning the correctness of those authorities. The fact remains that s. 18 is worded differently than the search warrant provision and both it and the Treaty involved in this case (namely, Treaty between the Government of Canada and the Government of the Republic of France on Mutual Assistance in Penal Matters, 15 December, 1989, Can. T.S. 1991 No. 34) specifically contemplate the involvement of foreign authorities in the gathering of evidence. Article 5(3) of the Treaty provides that authorities of the requesting state can be present at any hearing of witnesses and can conduct examinations of the witnesses. This is consistent with other parts of s. 18, which contemplate that the examinations may be conducted before a judge of a foreign court. See for example s. 18(8)(a), which provides that if the person designated under s. (2)(c) is a judge of a foreign court, the judge may make immediate rulings. The examination conducted by M. Perrault was not an evidentiary hearing in that sense and therefore is not expressly within the terms of the Treaty. However, given these provisions of the Treaty and the Act, having an agent⁴ of the requesting state present at and conducting the kind of examination that was carried out by M. Perrault is not inconsistent with the Treaty or the Act, so long as suitable safeguards are put in place to ensure that the evidence is not sent to the requesting state without judicial authorization.

46There were suitable safeguards in this case. Under the order, M. Perrault was required to turn over all of the evidence to Constable Ménard (or her designate) and to destroy his working papers in her presence. The evidence also shows that Constable Bédard, apparently Constable Ménard’s designate, was present throughout the examination by M. Perrault. Thus, an attempt was made to comply with the Act by requiring that all evidence gathered by the expert be retained by the Canadian designee until the sending order was made.

47In my view, the defect in the s. 18 order in requiring production to M. Perrault is not a basis for refusing to make the sending order under s. 20.

48Accordingly, I would dismiss the collectors’ appeal.

49I make one last comment about the procedure followed in this case. After the inspection orders had been executed, the collectors moved to set aside the terms of the orders impounding the collection. At the request of counsel for the Attorney General of Canada, the collectors agreed to make their submissions concerning the impounding order at the pending sending order hearing. As it turned out, for reasons that are not now material, the hearing was delayed and the collectors’ application became much broader than simply setting aside one term of the orders. In my view, in the future, where persons, like the collectors, with standing to challenge s. 18 orders seek to set aside the orders or vary their terms under s. 18(6), they should move promptly. I say this especially because, as I explain below, they will rarely be entitled to compensation for the costs of complying with the orders.

IV. THE CROWN APPEAL

50The Attorney General of Canada appeals against the costs order and two terms of the sending order: the indemnification term and the storage costs term. I will deal with the two terms of the sending order first.

51However, I wish to make brief reference to a further term imposed by the application judge that is not subject to appeal. He ordered that the materials subject to the sending order were not to be sent without further order of the court “to ensure that all terms and conditions of this Order have been fully satisfied”. I have considerable doubt that this was a proper order. Section 21 of the Act provides: “No record or thing that has been ordered under section 20 to be sent to the state … shall be so sent until the Minister is satisfied that the state or entity has agreed to comply with any terms or conditions imposed in respect of the sending abroad of the record or thing.” In Russian Federation v. Pokidyshev (1999), 138 C.C.C. (3d) 321 (Ont. C.A.) at para. 40, Doherty J.A. held that “a judge under s. 20 is not concerned with the advisability of assisting the foreign jurisdiction or whether the foreign jurisdiction will comply with any order the judge might make. Those matters must be addressed by the Minister of Justice.” Accordingly, it seems to me that the application judge, having made his sending order, should have left it to the Minister to ensure compliance with its terms.

52I have previously noted the error in the application and the order in purporting to identify France as the “Applicant”. For the balance of these reasons, I will identify the entity against which the various orders were made as the Attorney General of Canada. I will also on occasion refer to the sending order terms in issue as the compensation terms.

(1) The Sending Order Terms

(i) General Considerations

53The application judge’s jurisdiction to attach terms to the sending order is found in s. 20(2) of the Act:

(2) An order made under subsection (1) may include any terms or conditions that the judge considers desirable, after having considered any representations of the Minister, the competent authority, the person who produced any record or thing to the person designated under paragraph 18(2)(c) and any person who claims to have an interest in any record or thing so produced, including terms and conditions

(a) necessary to give effect to the request mentioned in subsection 17(1);

(b) with respect to the preservation and return to Canada of any record or thing so produced; and

(c) with respect to the protection of the interests of third parties.

54While s. 20(2) gives a judge a broad discretion to impose “any terms or conditions that the judge considers desirable”, that discretion must be exercised in a manner consistent with the objectives and principles underlying the Act in the broadest sense and the purpose of the sending order specifically.

55Two objectives of the Act are paramount. The Act fulfills Canada’s international obligations to co-operate in the investigation of international crime and to provide legal assistance in criminal matters to other states. Second, by offering assistance to other states, Canada ensures that those states will in turn provide it with assistance when necessary to investigate crimes in which Canada has an interest.

56In addition, since this is criminal legislation, it should be interpreted in a manner that is consistent with the principles that govern the interpretation and application of criminal legislation. In considering a costs order, the paramount principle to bear in mind is that in criminal matters costs are ordinarily not recoverable from, nor paid to, the Crown, the accused or third parties, even where there is a statutory basis for awarding costs. For reasons that I will set out below, I consider this principle applicable to the kind of compensation terms imposed by the application judge in this case.

57Finally, as Fish J.A. said in United States of America v. Ross (1995), 100 C.C.C. (3d) 320 (Que. C.A.) at 324:

Courts must construe both the treaty and the statute in a fair and liberal manner so as to favour the fulfilment by Canada of its international obligations and the accomplishment by Parliament of its legislative objectives.⁵

58In my view, the sending order terms about which the Crown appeals are inconsistent with the objectives of the Act and the principles that govern the interpretation and application of criminal legislation.

59The indemnification and storage costs conditions represent an attempt to compensate the collectors and the MacLaren for damage caused to their property and costs they incurred in the execution of the evidence-gathering order. Absent an express statutory basis, as for example can be found in the victim compensation and restitution provisions of the Criminal Code, a court dealing with criminal matters is not ordinarily concerned with compensation for losses incurred in the course of criminal proceedings.

Compensation of innocent third parties is generally left to civil proceedings. Common laws courts have consistently recognized that the investigation of crime is a responsibility of society as a whole that includes an obligation to provide evidence, even though the cost of doing so may be burdensome financially and psychologically.

60There has not been a great deal of consideration by Canadian courts of the question of compensation of third parties (i.e. persons other than the Crown or the accused) for the expense of complying with orders made in criminal cases.⁶ The most recent consideration of the issue is in Canada (Attorney General) v. Pacific International Securities Inc. (2006), 2006 BCCA 303, 209 C.C.C. (3d) 390 (B.C.C.A.), which also concerned proceedings under the Mutual Assistance in Criminal Matters Act. I will discuss this case in greater detail later in these reasons.

61The closest analogy for making a compensation order in criminal cases can be found in the statutory and common law power to award costs of proceedings against the Crown. The cases that have considered this question offer a helpful benchmark against which to gauge the propriety of the kind of compensation orders made in this case. I will therefore briefly discuss those cases, set out what I say should be the general principles animating orders compensating persons required to comply with orders made in criminal cases, and then turn to the particular context of the Mutual Legal Assistance in Criminal Matters Act, with particular attention to Pacific International.

(ii) Costs in Criminal Matters: General considerations

62The general principle, even where there is a statutory basis for costs, is that costs are not ordinarily imposed in criminal matters. The gradual expansion of the statutory power of sentencing courts to make compensation orders against offenders in favour of victims of crime has not affected this principle as it applies to other participants in the criminal justice system. For example, in R. v. Veri (2000), 71 C.R.R. (2d) 196 at para. 7, this court held that costs will be awarded under s. 809 of the Criminal Code in summary conviction proceedings only where there is “oppressive or improper conduct” on the part of the Crown or other special circumstances exist. Also see R. v. “Glenshiel” (The) (2001), 2001 BCCA 417, 157 C.C.C. (3d) 335 (B.C.C.A.).

63Similarly, in R. v. Garcia (2005), 194 C.C.C. (3d) 361 at para. 11, this court held that while a summary conviction appeal court has a “broad discretion” to award costs under s. 826 of the Criminal Code, the award of costs is the exception not the rule. Speaking for the court at para. 13, Doherty J.A. held that in addition to cases of misconduct by the Crown, costs will be awarded against the Crown where “other exceptional circumstances exist such that fairness requires that the individual litigant not carry the financial burden flowing from his or her involvement in the litigation”. The mere fact that the appeal “raises a legal issue of general importance whose resolution will affect other cases cannot suffice to make the appeal an ‘exceptional’ case warranting a costs order against the Crown” (para. 22). He also referred with approval at para. 12 to the “strong policy reasons” against granting costs for or against the Crown set out in R. v. Robinson (1999), 1999 ABCA 367, 142 C.C.C. (3d) 303 (Alta. C.A.) at 315-16. In Robinson at para. 29, McFadyen J.A. described those policy reasons in these terms:

The reasons for limiting costs are that the Crown is not an ordinary litigant, does not win or lose criminal cases, and conducts prosecutions and makes decisions respecting prosecutions in the public interest. In the absence of proof of misconduct, an award of costs against the Crown would be a harsh penalty for a Crown officer carrying out such public duties.

64In R. v. Rollin (2000), 3 C.P.C. (5th) 116 (Ont. S.C.J.) at para. 13, Pardu J. succinctly summarized the general rule and placed it in the broader context of compensation generally:

Traditionally, the primary focus of criminal proceedings has been determination of the guilt or innocence of accused persons and in the event of conviction, the penalty. Compensation for losses incurred in the course of those proceedings is ordinarily left to civil proceedings and has been limited on public policy grounds. For example, an innocent person who has incurred expenses to defend him or herself cannot recover those costs in the criminal proceedings and may have a civil remedy only in the event of malicious prosecution. Neither jurors nor witnesses are fully compensated for income lost because of attendances at court. The public interest in unconstrained determination of guilt or innocence sometimes results in losses for persons not at fault. The fact that the Applicant has suffered losses for which she is not responsible is not alone sufficient in criminal proceedings to enable a costs order to be made. [Emphasis added.]

65The general rule that witnesses and other innocent third parties (like the innocent accused) are not compensated for losses and expenses occasioned by the criminal process exists despite the fact that these costs can be onerous. A witness, for example, may be jailed as a material witness.⁷ As it was put in Blair v. United States, 250 U.S. 273 (1919) at 281, “The duty, so onerous at times, yet so necessary to the administration of justice according to the forms and modes established in our system of government … is subject to mitigation in exceptional circumstances”.

66Courts have not attempted to exhaustively define the scope of exceptional circumstances, outside Crown misconduct, that will justify an award of costs in a criminal matter. The language used in the cases, however, captures the unusual nature of such an order. For example, in R. v. M. (C.A.) (1996), 105 C.C.C. (3d) 327 (S.C.C.) at 377, the court referred to the “prevailing convention of criminal practice” that, absent oppressive or improper conduct by the Crown, a criminal defendant is generally not entitled to costs unless the circumstances are “remarkable”. To a similar effect is R. v. Leblanc, 1999 NSCA 170, [1999] N.S.J. No. 179 (C.A.) at para. 15. In R. v. King (1986), 26 C.C.C. (3d) 349 (B.C.C.A.) at 351, the court suggested that while the classes of cases for awarding costs beyond improper Crown conduct or a test case were not closed there would have to be “some special category”. In R. v. Curragh Inc. (1997), 113 C.C.C. (3d) 481 (S.C.C.) at para. 13 the circumstances were described as “unique” and justified an order for costs

against the Crown.⁸ In Curragh Inc. the Supreme Court did not, however, identify the jurisdictional basis for awarding costs.

67Even where the courts award costs against the Crown under s. 24(1) of the Charter of Rights and Freedoms, they have interpreted the power to award costs as an appropriate and just remedy relatively narrowly. See R. v. 974649 Ontario Inc. (2001), 2001 SCC 81, 159 C.C.C. (3d) 321 (S.C.C.) at para. 87:

Neither is there any indication that the Crown will be subjected to such awards unfairly or arbitrarily. Crown counsel is not held to a standard of perfection, and costs awards will not flow from every failure to disclose in a timely fashion. Rather, the developing jurisprudence uniformly restricts such awards, at a minimum, to circumstances of a marked and unacceptable departure from the reasonable standards expected of the prosecution. I fail to see how the provision of an expedient remedy in such cases, from a trial court that is not only competent but also ideally situated to make such an assessment, risks disrupting the existing system of justice.⁹ [Emphasis added.]

68Recently, in R. v. Ciarniello, [2006] O.J. No. 3444, this court considered the circumstances in which a costs order may be made against the Crown as a remedy under s. 24(1) in favour of an innocent third party. Speaking for the court, Sharpe J.A. noted that absent a Charter violation, the circumstances in which a costs order will be made against the Crown are narrow. As he said at para. 32: “Routine costs awards in favour of the winning party are a feature of civil, not criminal proceedings.” However, as he said at para. 35, “[b]ecause of their constitutional status, Charter rights have a higher claim to judicial protection than non-Charter rights and s. 24(1) entitles the victim of a Charter breach to an appropriate remedy”. Unlike Ciarniello, this case does not involve a Charter violation, nor does it involve the unusual set of circumstances that occurred in that case.¹⁰

69In my view, a principle that will assist in identifying the exceptional circumstances where costs or any kind of compensation may be awarded (outside the broad remedial powers given a court by s. 24(1) of the Canadian Charter of Rights and Freedoms) lies in the court’s inherent power to protect against abuse of process. This principle is illustrated by reference to the generally accepted statement of when costs are payable in criminal matters, absent express statutory authority, by L'Heureux-Dubé J.A. in Attorney-General of Quebec et al. v. Cronier (1981), 63 C.C.C. (2d) 437 (Que. C.A.) at 449, 451, referred to with approval by this court in R. v. Chapman (2006), 204 C.C.C. (3d) 457 at para. 16:

[TRANSLATION] A superior Court has the power to maintain its authority and to control its procedure so as to put justice in order and efficiently. That this implies sometimes ordering one of the parties and even lawyers to pay the costs of a proceeding in cases of the abuse or of the frivolity of proceedings, of misconduct or dishonesty or [where the proceedings are] taken for some other ulterior motive, is a recognized principle. But the conditions for the exercise of this inherent power must exist.

In my view, nothing in the present case authorized the Superior Court Judge to order the appellants to pay costs by virtue of his inherent powers of control and supervision.

On the one hand, the Judge cannot authorize himself to do indirectly what the Canadian criminal law does not expressly authorize him to do, in the present case, the ordering to pay costs with respect to extraordinary remedies in criminal matters. In the absence of reprehensible conduct by the appellants, or a serious affront to the authority of the Court or of a serious interference with the administration of justice, which is not the present case, the imposition of costs on appellants in the context of the present debate is in no way justified. [Emphasis added.]

(iii) Compensation in the Context of the Mutual Legal Assistance in Criminal Matters Act

(a) Principles in making Compensation Orders under s. 18 of the Act

70The compensation terms in this case were not made under s. 18 as terms or conditions of the evidence-gathering order. Still, I intend to briefly consider this section as it may shed some light on the application judge’s power to make compensation orders as an incident of a sending order under s. 20.

71Section 18(5) is admittedly broadly worded to allow a judge to include any terms or conditions that the judge considers desirable. The section does not, however, give an explicit grant of power to order that one party indemnify another for costs of compliance, except in the narrow circumstances set out in s. 18(10). That subsection recognizes that a person required to comply with an evidence-gathering order is similarly situated to a witness in a criminal proceeding and is therefore entitled to similar compensation. It provides as follows:

A person named in an order made under subsection (1) is entitled to be paid the travel and living expenses to which the person would be entitled if the person were required to attend as a witness before the judge who made the order.

72The inclusion of this specific provision is a strong indication that Parliament intended that the ordinary rules respecting criminal investigations would apply; persons required to comply with a court order or process in a criminal proceeding are expected to bear their own costs. ¹¹

73Similarly, there is no support in the Treaty for this kind of compensation order. The first article of the Treaty indicates that it is related to mutual assistance in the investigation and prosecution of “penal offences”. Article 10 deals with fees and expenses of witnesses and experts and appears to contemplate that those fees and expenses are paid by the requesting state. However, the expenses are limited to an allowance, including an allowance for “subsistence” and travelling expenses. Under article 16, subject to negotiation between Canada and France with respect to “extraordinary expenses”, any other expenses are borne by the requested state, in this case, Canada.

74That said, in my view, if compliance with the order would be oppressive, the judge considering an application under s. 18 would be justified in special cases in putting the requesting state to the choice of paying all or some of the costs or foregoing the order. A term requiring compensation could be imposed either under s. 18(5) or as an incident of the power to protect the court’s process from abuse. Or, as it was put by Mr. Schwartz, counsel for the Intervener, if compliance would be unreasonable, the innocent party may be entitled to compensation. He suggested that compliance would be unreasonable if the costs of compliance would present an undue hardship. I agree that this is an apt description of one circumstance where a compensation order may be appropriate.

75Thus, if compliance with an evidence-gathering order would entail undue financial hardship to the innocent object of the order so that it could be said that requiring the person to comply would be contrary to the interests of justice, the application judge could make an exceptional order relating to payment of costs of compliance.

(b) Compensation Orders as Terms of a Sending Order

76In considering the types of terms or conditions that may properly be attached to a sending order, it is necessary to bear in mind the context in which the order is made. Subject to the question of refusals, which are dealt with in ss. 20(3) and (4), a sending order is made where the evidence-gathering order has been executed and a judge has decided that it is appropriate to send the material to the requesting state. In considering what, if any, terms or conditions to impose, the judge, in my view, is principally concerned with the treatment of the materials to be sent. This is borne out by two of the particularized bases for terms or conditions specified in s. 20(2), namely terms or conditions (a) necessary to give effect to the request from the foreign state and (b) respecting the preservation and return to Canada of the things to be sent. The third particularized basis for imposing terms or conditions, para. (c), is somewhat broader and would seem to involve not only third party interests in the treatment of the things sent, but also the use of those materials. Two of the terms imposed by the application judge in this case fall within the scope of these three particularized bases, namely, (a) a condition that the Minister obtain assurances from France that a copy of the final report by M. Perrault would be provided to the MacLaren and the collectors, and (b) a condition that the use of the report be limited to the purpose for which it was requested, namely the ongoing criminal investigation.

77The indemnification term and the storage costs conditions imposed in this case have nothing to do with the treatment or use of the materials to be sent to France or the collectors’ interest in the materials. These conditions look backward to the manner in which the materials were gathered.

78However, I would not want to foreclose the exceptional possibility that a judge, in considering a sending order application under s. 20 of the Act, could impose a condition or term respecting payment of costs of compliance to remedy an abuse of process. This court has held that in considering whether to make a sending order under s. 15, a judge may take into account the conduct of the Crown in gathering the evidence. ¹² I can see no principled basis for a different interpretation of s. 20. Further, in Pokidyshev at para. 39, Doherty J.A. held that a judge at a s. 20 hearing may consider evidence that “is relevant to the basis upon which the gathering order was obtained”. I tend to think, however, that properly speaking such an order should be made as a variation to the original evidence-gathering order pursuant to s. 18(6).

79In this case, the collectors offered no evidence to show that the costs of compliance with the order entailed exceptional financial hardship that would have justified the storage costs term as part of the evidence-gathering order, let alone required such a term as a condition for sending the material to France. The manner in which the materials were gathered was not abusive of the Canadian court process or so oppressive that the application judge was justified in imposing a term relating to payment of costs of compliance.

80As for the indemnification term, in my view, similar considerations apply. The collectors offered no evidence to show that the execution of the order envisaged the kind of exceptional loss to the collectors that would trigger the court’s inherent jurisdiction to protect its processes from abuse.

81The collectors argue that mutual legal assistance is not an ordinary criminal proceeding and that it is open to the courts to adopt a different approach to costs than is the case with criminal proceedings. Admittedly, mutual legal assistance is different from domestic prosecution in the sense that the immediate beneficiary of the fruits of the investigation is a foreign state rather than the Canadian public. But, like domestic criminal proceedings, mutual legal assistance proceedings are taken in the public interest. Mutual legal assistance provides a means by which members of the Canadian public can have their rights vindicated when it happens that evidence needed for a domestic prosecution exists in another jurisdiction. It is part of the fabric of our system of criminal law; it is not a civil proceeding. As was said by the majority of the court in R. v. Malmo-Levine; R. v. Caine (2003), 2003 SCC 74, 179 C.C.C. (3d) 417 (S.C.C.) at para. 174:

In any system of criminal law there will be prosecutions that turn out to be unfounded, publicity that is unfairly adverse, costs associated with a successful defence, lingering and perhaps unfair consequences attached to a conviction for a relatively minor offence by other jurisdictions, and so on. These effects are serious but they are part of the social and individual costs of having a criminal justice system. Whenever Parliament exercises its criminal law power, such costs will arise.

82For these reasons, I conclude that the application judge erred in principle in making the compensation orders.

(c) Attorney General of Canada v. Pacific International Securities Inc.

83After this appeal was argued, the British Columbia Court of Appeal released its decision in Pacific International. That case concerned an order for reimbursement of expenses under the Act. The parties and the intervener were given an opportunity to provide further written submissions with respect to that decision. We have now received those submissions.

84In Pacific International a judge of the British Columbia Supreme Court made a series of orders requiring a securities dealer to produce various records relating to a prosecution in the United States. While the dealer complied with the first two orders without complaint, when a third order was made, the dealer complained to the Crown that the terms were unduly onerous. The parties agreed that the dealer would comply with the order and could make representations at the sending hearing. The dealer did make representations before the judge presiding at the sending hearing. The judge made the sending order, but also ordered that the Crown pay the dealer its reasonable expenses incurred in complying with the production order. She made the order under s. 20(2)(c). The Federal Crown appealed that order.

85The Court of Appeal considered whether the order for reimbursement of expenses could be justified either under s. 20 or s. 18. With respect to s. 20, Smith J.A., speaking for the entire court on this issue, held that the order could not be justified under s. 20(2). Dealing specifically with s. 20(2)(c), he noted that this paragraph uses the phrase “interests of third parties” and that the party producing the records, the security dealer, was not a third party. He also held more broadly at para. 18 that the use of the phrase “who produced any record of thing” in s. 20(2) signalled that “Parliament intended this discretion to be exercised in respect of matters arising during and after the transmission to the foreign state of evidence already obtained pursuant to s. 18(1).” Smith J.A. also invoked the ejusdem generis principle of interpretation to support this conclusion holding that “the apparently general discretion in s. 20(2) to include any term or condition considered desirable by the judge is limited by the enumerated examples to matters of the same nature, that is, to matters arising during and after the transmission of the evidence”.

86Justice Smith then considered whether the order could have been made under s. 18. In this respect, his opinion does not represent the view of the majority. He held that, unlike s. 20(2), s. 18(5) confers a broad discretion on the judge to impose a condition for reimbursement of expenses. He rejected the argument that the specific reference in s. 18(10) to entitlement to travel and living expenses limited the discretion to order reimbursement of other expenses in s. 18(5). He held that the phrase in s. 18(5) permitting the judge to include terms or conditions that the judge considers desirable “including those relating to the protection of the interests of the person named therein and of third parties” was broad enough to include a term to protect the financial interests of the person named in the order. Accordingly, Smith J.A. would have dismissed the appeal except to order that the term requiring reimbursement of expenses be deemed to have been a variation of the terms or conditions pursuant to s. 18(6).

87Ryan J.A., writing for herself and Saunders J.A., disagreed with Smith J.A. concerning the interpretation of s. 18. She held that the Act is a complete code with respect to expenses and that s. 18(5) could not be read to provide a broad power to include an order for reimbursement of compliance expenses. At para. 59, she reasoned: “Given that subsection (10) deals with expenses, subsection (5) must deal with other ad hoc matters, such as the time, place and manner of the execution of the order and terms designed to protect the privacy interests of witnesses and third parties.”

88Ryan J.A. particularly relied upon Gladstone v. Canada (Attorney General), 2005 SCC 21, [2005] 1 S.C.R. 325, which interpreted a provision of the Fisheries Act, R.S.C. 1985, c. F-14 concerning return of proceeds of sale of fish seized under that act. In Gladstone, the court held that the Act created a complete code dealing with the disposition and return of seized property. Ryan J.A. similarly held that s. 18 creates a complete code relating to payment of expenses of compliance and that the only provision for payment of expenses to witnesses is in s. 18(10). She also relied upon the longstanding practice that neither costs nor expenses are recoverable in criminal proceedings. Accordingly, the Court of Appeal set aside the order requiring the Crown to pay the security dealer’s expenses of compliance.

89While I agree generally with the approach taken by Ryan J.A., I would not place as much weight as she does on the Gladstone decision. Gladstone was decided in a particular context where the statute expressly contemplated payment of interest on amounts owed to the Crown, but made no similar provision in respect of amounts owed by the Crown. There was as well no general provision, like s. 18(5) or s. 20(2), giving the court a broad discretion to impose terms or conditions.

90In their written submissions, the collectors urge this court to reject the reasoning of the majority and of Smith J.A., in part. They point out that the collectors, unlike the MacLaren, are third parties and thus the order could be justified under s. 20(2)(c) in accordance with Smith J.A.’s reasons. They dispute, however, the reasoning that the matters enumerated in paras. (a) to (c) were intended as an exhaustive list of what a judge may order under s. 20(2). In my view, this is not a correct interpretation of the reasons of Smith J.A. He did not hold that paras. (a) to (c) constitute an exhaustive list; such an interpretation would be inconsistent with the wording of s. 20(2). Rather, he held that the inclusion of these examples, as well as the wording of the whole subsection, indicates that the terms or conditions must relate to matters arising during and after transmission to the foreign state. I agree with that interpretation subject to the caveat, for the reasons expressed above, that the sending judge also has the jurisdiction to include terms or conditions to remedy an abuse of the court’s process, or use of the court’s process that would impose oppressive or unreasonable burdens.

91The collectors do, however, support Smith J.A.’s interpretation of s. 18(5) and submit that similarly the order made in this case can be supported under s. 18(6).

92The Attorney General of Canada and the Intervener rely upon the reasons of the majority in Pacific International, which they point out support their position on this appeal. The Intervener relies in particular on the majority’s rejection of the distinction between domestic criminal law and mutual legal assistance. Subject to the reservations I have already expressed, I agree with the reasons of the majority in Pacific International.

(2) The Costs Order

93Much of what I have said above applies to the application judge’s order requiring the Attorney General of Canada to pay the costs of the application. I have not been persuaded that the ordinary rule respecting costs in criminal matters should not apply to a costs order under the Act. While a superior court judge has an inherent jurisdiction to award costs against the competent authority on an application under this Act, absent a breach of the Canadian Charter of Rights and Freedoms the judge should do so only in exceptional circumstances like those discussed by L'Heureux-Dubé J.A. in Cronier or where there has been some similar oppressive conduct.

94The application judge founded his order for costs, not on any kind of misconduct or abuse of process, but on the basis that the MacLaren and the collectors were “not, in any way, shape or form, the target of the French investigation”. Because of this status the judge could “see no reason why their costs of these particular proceedings should not be paid”. This suggests that costs should follow as a matter of course in proceedings under the Act whenever innocent third parties are involved. In my view, that is not the correct approach. The persons named in s. 18 orders are frequently innocent third parties such as financial institutions, other record keepers, or witnesses. To award costs in proceedings under the Act, virtually as a matter of course, would represent a very significant change in the normal criminal law policy. If Parliament had contemplated such a change I would have expected an express provision to that effect.

95I have considered whether it is open to this court to find misconduct to justify the costs order or, alternatively, whether to remit the matter back to the application judge. The application judge made no finding of misconduct on the part of the Department or the requesting state despite the fact that the issue of misconduct and, in particular, material non-disclosure was placed squarely before him. The judge was ideally situated to make such a finding as he had been the judge on the original s. 18 application. I do not think it open to this court to make a finding of misconduct on this record and I can see no justification for remitting the matter back to the application judge, relief that was not requested by the collectors.

96For these reasons, in my view, the costs order cannot stand.

V. DISPOSITION

97Accordingly, I would grant leave to appeal to the collectors and to the Attorney General of Canada. I would dismiss the collectors’ appeal. I would allow the appeal by Attorney General of Canada and strike out clause 2(c) [the indemnification term], clause 2(f) [the storage costs term], and paragraph 4 [costs of the application] of the order of the application judge.

Signature: “M. Rosenberg J.A.”

“I agree K.M. Weiler J.A.”

“I agree R. A. Blair J.A.”

RELEASED: “”KMW” November 20, 2006

APPENDIX

Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.).

s. 18(1) A judge to whom an application is made under subsection 17(2) may make an order for the gathering of evidence, where he is satisfied that there are reasonable grounds to believe that

(a) an offence has been committed; and

(b) evidence of the commission of the offence or information that may reveal the whereabouts of a person who is suspected of having committed the offence will be found in Canada.

(2) An order made under subsection (1) must provide for the manner in which the evidence is to be obtained in order to give effect to the request mentioned in subsection 17(1) and may

(a) order the examination, on oath or otherwise, of a person named therein, order the person to attend at the place fixed by the person designated under paragraph (c) for the examination and to remain in attendance until he is excused by the person so designated, order the person so named, where appropriate, to make a copy of a record or to make a record from data and to bring the copy or record with him, and order the person so named to bring with him any record or thing in his possession or control, in order to produce them to the person before whom the examination takes place;

(b) order a person named therein to make a copy of a record or to make a record from data and to produce the copy or record to the person designated under paragraph (c), order the person to produce any record or thing in his possession or control to the person so designated and provide, where appropriate, for any affidavit or certificate that, pursuant to the request, is to accompany any copy, record or thing so produced;

(c) designate a person before whom the examination referred to in paragraph (a) is to take place or to whom the copies, records, things, affidavits and certificates mentioned in paragraph (b) are to be produced; and

(d) order a person named in it to answer any question and to produce any record or thing to the person designated under paragraph (c) in accordance with the laws of evidence and procedure in the state or entity that presented the request.

(3) For greater certainty, under paragraph (2)(c), a judge who makes an order under subsection (1) may designate himself or herself — either alone or with another person, including another judge — or may designate another person, including another judge.

(4) An order made under subsection (1) may be executed anywhere in Canada.

(5) An order made under subsection (1) may include any terms or conditions that the judge considers desirable, including those relating to the protection of the interests of the person named therein and of third parties.

(6) The judge who made the order under subsection (1) or another judge of the same court may vary its terms and conditions.

(7) A person named in an order made under subsection (1) may refuse to answer any question or to produce a record or thing to the person designated under paragraph (2)(c) if

(a) answering the question or producing the record or thing would disclose information that is protected by the Canadian law of non-disclosure of information or privilege;

(b) requiring the person to answer the question or to produce the record or thing would constitute a breach of a privilege recognized by a law in force in the state or entity that presented the request; or

(c) answering the question or producing the record or thing would constitute the commission by the person of an offence against a law in force in the state or entity that presented the request.

(8) If a person refuses to answer a question or to produce a record or thing, the person designated under paragraph (2)(c)

(a) may, if he or she is a judge of a Canadian or foreign court, make immediate rulings on any objections or issues within his or her jurisdiction; or

(b) shall, in any other case, continue the examination and ask any other question or request the production of any other record or thing mentioned in the order.

(9) A person named in an order made under subsection (1) who, under subsection (7), refuses to answer one or more questions or to produce certain records or things shall, within seven days, give to the person designated under paragraph (2)(c), unless that person has already ruled on the objection under paragraph (8)(a), a detailed statement in writing of the reasons on which the person bases the refusal to answer each question that the person refuses to answer or to produce each record or thing that the person refuses to produce.

(10) A person named in an order made under subsection (1) is entitled to be paid the travel and living expenses to which the person would be entitled if the person were required to attend as a witness before the judge who made the order.

s. 20. (1) A judge to whom a report is made under subsection 19(1) may order that there be sent to the state or entity the report and any record or thing produced, as well as a copy of the order accompanied by a copy of any statement given under subsection 18(9) that contains reasons that purport to be based on a law that applies to the state or entity, as well as any determination of the judge made under subsection 19(3) that the reasons contained in a statement given under subsection 18(9) are well-founded.

(2) An order made under subsection (1) may include any terms or conditions that the judge considers desirable, after having considered any representations of the Minister, the competent authority, the person who produced any record or thing to the person designated under paragraph 18(2)(c) and any person who claims to have an interest in any record or thing so produced, including terms and conditions.

(a) necessary to give effect to the request mentioned in subsection 17(1);

(b) with respect to the preservation and return to Canada of any record or thing so produced; and

(c) with respect to the protection of the interests of third parties.

(3) The execution of an order made under subsection 18(1) that was not completely executed because of a refusal, by reason of a law that applies to the state or entity, to answer one or more questions or to produce certain records or things to the person designated under paragraph 18(2)(c) may be continued, unless a ruling has already been made on the objection under paragraph 18(8)(a), if a court of the state or entity or a person designated by the state or entity determines that the reasons are not well-founded and the state or entity so advises the Minister.

(4) No person named in an order made under subsection 18(1) whose reasons for refusing to answer a question or to produce a record or thing are determined, in accordance with subsection (3), not to be well-founded, or whose objection has been ruled against under paragraph 18(8)(a), shall, during the continued execution of the order or ruling, refuse to answer that question or to produce that record or thing to the person designated under paragraph 18(2)(c), except with the permission of the judge who made the order or ruling or another judge of the same court.

Footnotes

1. 1The evidence-gathering and sending orders include a number of other plasters held by the MacLaren but the principal contest in this case concerns the collection owned by Robert Foster et al. The MacLaren took no part in this appeal and did not oppose the sending order.
2. 2The Crown paid the travel expenses and salaries of the MacLaren employees during the inspection by M. Perrault, in accordance with s. 18(10) of the Act.
3. 3Although both the collectors and the MacLaren were respondents on the application for the sending order, unless the context suggests otherwise, I will use the term “collectors” to refer to the Respondents before the application judge.
4. 4There can be little doubt that M. Perrault was an agent of the Republic of France rather than an agent of the Canadian government or an expert retained by the designated person. He is described in the order as “the French expert”, the only reasonable inference is that he was retained by the requesting state to conduct the examination and he is so described in the reasons making the sending order: “To date, the expert appointed by the Requesting State has conducted an examination of the bronzes and plasters.”
5. 5Referred to with approval by this court in Ni-Met Resources Inc. v. Canada (Attorney General) (2005), 195 C.C.C. (3d) 1 at para. 19.
6. 6There have been some recent cases concerning production orders made under s. 487.012 of the Criminal Code and assistance orders under s. 487.02. Thus, see Tele-Mobile Co. v. Ontario, 2006 ONCJ 229, [2006] O.J. No. 2589 (Ct. J.) and Tele-Mobile Co. (Re), 2004 ONCJ 154, [2004] O.J. No. 3527 (Ct. J.).
7. 7See for example, s. 706 of the Criminal Code.
8. 8In Curragh Inc., the trial judge had improperly contacted senior officials in the prosecutor’s office in an attempt to have a prosecuting counsel removed. The trial judge refused to recuse himself and then later ordered a stay of proceedings. The Supreme Court of Canada held that the judge’s actions gave rise to an apprehension of bias, that he should have recused himself and had no jurisdiction to stay the proceedings and ordered a new trial. Speaking for the majority, La Forest and Cory JJ. noted at para. 13 that while the accused had suffered considerable financial burden of legal costs: “Ordinarily this is something which must be accepted by those charged with criminal offences.” The Supreme Court held that the delays and much of the legal costs incurred “arise from systemic problems that were beyond the control of the appellants” and to a large extent by the improper conduct of the trial judge. Accordingly, in those “unique circumstances” the accused should be able to recover their reasonable legal costs.
9. 9Also see R. v. Logan (2002), 59 O.R. (3d) 575 (C.A.).
10. 10Those unusual circumstances are set out at paragraphs 43 to 45 and included conduct by Crown counsel in Ontario in opposing the innocent third party’s Ontario application despite a clear warning from Crown counsel in British Columbia, where the things were originally seized, that there were serious problems because of the “cavalier and reckless behaviour” (para. 45) of the British Columbia police officer.
11. 11One of the few cases to consider costs under this Act is R. v. Budd, [2004] O.J. No. 3519 (S.C.J.) where McKinnon J. held that the normal rule in criminal cases applied and he refused to order costs against the Crown as the circumstances were not so exceptional or oppressive as to warrant a costs order. See in particular para. 73.
12. 12R. v. Budd (2000), 150 C.C.C. (3d) 108 (Ont. C.A.) at para. 28; R. v. Gladwin (1997), 116 C.C.C. (3d) 471 (Ont. C.A.), leave to appeal to S.C.C. refused, (1997), 117 C.C.C. (3d) vi.