COURT OF APPEAL FOR ONTARIO

CITATION: Belgium v. Suthanthiran, 2016 ONCA 525

DATE: 20160630

DOCKET: M46358

Doherty J.A. (In Chambers)

BETWEEN

Attorney General of Canada on behalf of the Kingdom of Belgium

Respondent

and

Krishnan Suthanthiran, Best Theratronics Ltd. and Best Medical Belgium Inc.

Applicants

Scott C. Hutchison and Matthew R. Gourlay, for the applicants

Nancy Dennison, for the respondent

Heard: June 15, 2016

Doherty J.A.:

I

[1] This is an application for leave to appeal under s. 35 of the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp) (the “Act”). That section allows appeals, with leave on questions of law alone, from decisions made under the Act. On June 15, 2016, I granted leave to appeal with reasons to follow. These are those reasons.

[2] The criteria to be applied in considering whether leave to appeal should be granted under the Act are well known and I will not repeat them here: see R. v. Vonk Dairy Products BV (1998), 1998 CanLII 1089 (ON CA), 110 O.A.C. 151 (C.A. In Chambers), at para. 9; Canada (Commissioner of Competition) v. Falconbridge Ltd. (2003), 2003 CanLII 52144 (ON CA), 173 C.C.C. (3d) 466 (Ont. C.A.), at para. 9. I am satisfied that the ground of appeal as narrowed and framed by counsel for the applicant in oral argument meets the test for granting leave to appeal.

II

[3] In May 2014, the Belgian authorities requested the assistance of Canada in searching for and seizing records in the possession of the applicants. The request was made pursuant to a treaty between Canada and Belgium (the “Treaty”) and under the auspices of the Act.

[4] The Belgian authorities alleged that the applicant, Krishnan Suthanthiran, and the corporate applicants controlled by Suthanthiran had defrauded a Belgian subsidiary through a series of fraudulent transactions.

[5] Canadian authorities, acting on behalf of Belgium, obtained a search warrant and executed the warrant on the applicants’ business premises. According to the applicants, the seized material included information containing valuable trade secrets and other highly sensitive commercial information. The applicants contend that if the information were to be revealed to a commercial rival, it could destroy the applicants’ business. The applicants also alleged that one such rival was partially owned by the Belgian government.

[6] After the warrant was executed, the government of Canada, again acting on behalf of Belgium, applied in the Superior Court for an order directing that the seized material be sent to Belgium for use in the ongoing criminal investigation. Maranger J. made the Sending Order. It is from that order which the applicants seek leave to appeal on this motion.

III

[7] On the motion before Maranger J., the applicants raised two preliminary matters. They sought leave to cross-examine the officer who had sworn the affidavit in support of the application for a search warrant, and they sought production of the Request to Send delivered from the Belgian authorities to their Canadian counterparts. Maranger J. dismissed both preliminary motions.

[8] In the factum filed on this motion, counsel for the applicants took issue with both preliminary rulings. In oral argument, however, he did not contend that leave should be granted in respect of either ruling. In my view, neither warrants leave to appeal, and I will not say anything more about either preliminary motion.

[9] On the sending motion itself, the applicants argued first that the order should not be made at all and, second, that if a Sending Order was to be made, conditions should be placed on that order to protect the applicants’ proprietary interests in the sensitive and confidential information contained in some of the material.

[10] The argument that the Sending Order should not be made rested on the assertion that Belgium was acting in bad faith in seeking the Sending Order and would, if it gained custody of the material, share the contents with the applicants’ commercial rival in Belgium. Counsel for the applicants concedes that the bad faith argument failed because of findings of fact made by Maranger J. and that those findings cannot be challenged on appeal. Counsel does not rely on the allegation that Belgium was acting in bad faith in support of the application for leave to appeal.

[11] Counsel does, however, argue that Maranger J. erred in law in holding that he had no jurisdiction to attach terms and conditions to the Sending Order that would protect, to the extent possible, the risk of exposure of trade secrets and other confidential information to the applicants’ commercial competitors. Counsel maintains that under the controlling legislation, Maranger J. had the power to impose terms on the Sending Order that would limit what Belgium could do with the material it received and/or require Belgium to return to the court for a further order should it seek to make use of the documents in a manner not authorized in the Sending Order. Counsel submits that Maranger J. erred in law, at para. 14, when he said:

[T]he concerns raised by the respondent about his intellectual property rights are, in large measure, answered by Article 17 of the Treaty which states “the requesting State shall not disclose or use information or evidence furnished for purposes other than those stated in the request without the prior consent of the central authority of the requested state [Canada]”.

[12] Counsel contends that the executive power to act under the Treaty cannot foreclose the court from exercising its statutory powers under the Act. While the terms of the Treaty may be relevant to the manner in which a court exercises its discretion, Maranger J. was wrong in holding that it pre-empted the exercise of that jurisdiction.

[13] The applicants’ argument rests primarily on the language of s. 15 of the Act. Section 15(1)(b) reads in part:

[A judge may] order that a record or thing seized in execution of the warrant be sent to the state or entity mentioned in subsection 11(1) and include in the order any terms and conditions that the judge considers desirable, including terms and conditions

(i) necessary to give effect to the request mentioned in that subsection

(ii) with respect to the preservation and return to Canada of any record or thing seized, and

(iii) with respect to the protection of the interests of third parties. [Emphasis added.]

[14] Counsel relies on the plain language of s. 15(1)(b), contending that it is broad enough to capture terms that will protect the confidentiality of seized documents after they are sent to the requesting country. He notes that while the applicants are the primary beneficiaries of any order protecting confidentiality, their employees, who would qualify as “third parties” under s. 15(1)(b)(iii), would also benefit by keeping their employment if the sending judge imposed terms which would maintain the confidentiality of the information and allow the applicants to continue to operate their business and pay their employees.

[15] Counsel refers to a line of authority from the British Columbia courts that he interprets as permitting the placing of terms and conditions on Sending Orders akin to those sought in this case. In Canada (Attorney General) v. Sharples, 2006 BCSC 1768, at para. 26, the sending judge approved a term of a s. 15 Sending Order prohibiting dissemination of certain data being sent to the foreign court to anyone other than persons engaged in the specific criminal investigation unless that information had otherwise been made public. Similarly, in Re Stuckey, 2000 BCSC 171, 144 C.C.C. (3d) 184, at para. 13, aff’d on other grounds 2000 BCCA 646, 151 C.C.C. (3d) 312, the court attached a condition to a s. 20 Sending Order that required the requesting country to return to the court for permission if it wished to use any of the material sent to the requesting court in the investigation or prosecution of offences other than the offences identified in the request.

[16] A second Sending Order was made in the same investigation that had led to the Sending Order in Re Stuckey. The second Sending Order also placed limits on the use the requesting state could make of the material sent to it pursuant to the Sending Order. The second order required the requesting state to make a further application to the court if it wished to disseminate the material beyond the limits imposed in the first Sending Order: see Canada (Attorney General) v. Pacific Network Services, 2003 BCSC 171, at paras. 24-27.

[17] Canada sought leave to appeal from the second Sending Order, arguing that the court had erred in law in imposing conditions on the Sending Order: Canada (Attorney General) v. Pacific Network Services, 2003 BCCA 685 (In Chambers). Oppal J.A. refused leave to appeal holding, at para. 12:

The legal question here is whether the chambers judge exercised his discretion according to proper legal principles. A judge making a transmittal order has a wide discretion to impose such terms that are deemed necessary in the interests of justice. The discretion must be exercised judicially. There is no evidence that the chambers judge exercised his discretion in an unfair, arbitrary or capricious manner. It is clear that he was alive to the purposes for which the documents were sought and the need to protect privacy interests. [Emphasis added.]

[18] For the purposes of this leave application, I need go no further than conclude that the British Columbia cases offer support for the applicants’ position that Maranger J. erred in law in his interpretation of the scope of s. 15 of the Act as it relates to the terms and conditions that can be imposed on a Sending Order. The British Columbia cases appear to accept that the sending court may impose limits on the use to be made of documents by the requesting state if those limits protect a legitimate interest, for example a privacy interest, of the party from whom the material was seized. The cases also appear to accept that the court may assume a supervisory role over the requesting state’s use of the documents by requiring that any variation in that use be subject to approval by the court that made the initial Sending Order: see also United States of America v. Bin, 2016 BCSC 124, at para. 27.

[19] Crown counsel does not suggest that the issue raised by the applicants has been directly decided by this court. Although she quite properly points to certain ambiguities in some of the cases from British Columbia (e.g. Sharples, at para. 16), she accepts that those cases offer some support for the applicants’ position. She submits that those cases misinterpret the scope of the sending court’s power to impose terms and conditions on the order.

[20] Crown counsel’s main submission rests on the authorities from this court that speak in broader terms to the overall operation of the Act and the distinct roles assigned under the Act to the court on one hand, and the executive on the other. She argues that under the Act, if a Sending Order is made and the material is sent to the requesting state, any issue that arises as to the use of that material is a matter between Canada and the requesting state. Crown counsel further contends that the distinction between the role of the court and the role of the executive laid out in the Act is reinforced by the terms of the various applicable treaties, including the one at play here, which make it explicit that it is the executive and not the court that will determine whether the requesting state can use or disclose information for purposes other than those set out in the request that precipitated the Sending Order: see R. v. Kachkar, 2014 ONCA 560, 121 O.R. (3d) 197 (In Chambers), at para. 35; Russian Federation v. Pokidyshev (1999), 1999 CanLII 3787 (ON CA), 138 C.C.C. (3d) 321 (Ont. C.A.), at paras. 14-20, 38-40.

[21] The Crown’s arguments have merit. They do not, however, permit me to conclude that the question of law raised by the applicants is settled. Nor can I say that the position urged by the applicants is without merit. To the contrary, I would say that there are formidable arguments for and against the proposition advanced by the applicants. I am also satisfied that the issue raised is of some general importance. It seems that many of the requests for assistance under the Act involve the intersect between complicated international commerce and complicated international crime. Legitimate commercial and privacy concerns are often raised by those who are the targets of the orders made under the Act. I would think that the issue raised on this application could quite easily arise regularly in respect of Sending Orders made under the Act. It would be helpful to the administration of justice to have the issue resolved by this court.

[22] Finally, I am satisfied that granting leave to appeal will not prejudice either party significantly. Counsel undertook to expedite the appeal as a term of granting leave. I am advised that counsel have agreed that the appeal will be heard on September 28, 2016.

IV

[23] For the reasons set out above, I would grant leave to appeal on the following question:

• Did the application judge err in law by refusing to impose terms and conditions within the Sending Order that would minimize the risk that the applicants’ confidential information would be unnecessarily and inappropriately disclosed to third parties?

Released: “DD” “JUN 30 2016”

“Doherty J.A.”