Court Information

Court File No.: Central East Newmarket 4911-998-12-07774-00; 4911-998-12-04751-01; -02

Date: February 20, 2015

Ontario Court of Justice

Parties

Between:

Her Majesty the Queen

— AND —

Rosemary Cremer and Kenneth James

Before: Justice David S. Rose

Heard on: December 4, 2014, January 5, 6, 8, 9, & 13, 2015

Reasons for Judgment released on: February 20, 2015

Counsel

K. Wilson and B. Gluckman — counsel for the Crown

S. Weinstein — counsel for the accused Rosemary Cremer

S. Bergman — counsel for the accused Kenneth James

ROSE J.:

1. Introduction

[1] Kenneth James, Rosemary Cremer and James and Associates stand charged with the following offences between January 1, 2009 and June 7, 2012:

1. Possession Property Obtained by Crime, namely $3,000,000 in Canadian funds, contrary to s. 354(1)(a) of the Criminal Code.

Kenneth James and Rosemary Cremer stand charged with the following offences between January 1, 2009 and June 7, 2012:

2. Deal with $3,000,000 in Canadian funds with intent to conceal, contrary to s. 462.31(1) of the Criminal Code.

Kenneth James alone is charged with the following offences between January 1, 2009 and June 7, 2012:

3. Defraud Government of Canada Over $5,000, contrary to s. 380(1) of the Criminal Code;

4. Unlawful Export of a Controlled Substance between May 25, 2010 and August 31, 2011, contrary to s. 6(1) of the Controlled Drugs and Substances Act;

5. Deal with $169,000 between May 25, 2010 and August 31, 2011, contrary to s. 462.31(1)(a) of the Criminal Code;

6. Possession of Property Obtained by Crime between May 25, 2010 and August 31, 2011, contrary to s. 354(1)(a) of the Criminal Code;

7. Conspiracy with Afshin Dastani between May 25, 2010 and August 31, 2011 to unlawfully export a Controlled Substance, contrary to s. 6(1) of the Controlled Drugs and Substances Act and s. 465(1)(c) of the Criminal Code;

8. Conspiracy with Afshin Dastani between May 25, 2010 and August 31, 2011 to deal with property, namely $169,000 in Canadian funds with intent to conceal, contrary to s. 462.31(1)(a) of the Criminal Code.

[2] Both Mr. James and Ms. Cremer elected to be tried before me and pleaded not guilty to all charges.

[3] James Associates is charged with the following between May 26 and May 27, 2010:

9. Deal with $419,509 in Canadian funds with intent to conceal, contrary to s. 462.31(1) of the Criminal Code;

10. Possession of Property Obtained by Crime, namely $419,509, contrary to s. 354(1)(a) of the Criminal Code.

[4] Kenneth James entered a plea of not guilty to this charge on behalf of James and Associates.

[5] In addition, the corporation Sterling Capital is charged with dealing with $106,000 in Canadian funds with intent to conceal, contrary to s. 462.31(1) between January 1, 2009 and June 7, 2012.

[6] Sterling Capital is also charged with Possession Property Obtained by Crime between January 1, 2009 and June 7, 2012, namely $106,000. Sterling did not appear for arraignment and did not plead to this charge. I am told by counsel that process was never issued for Sterling and it is not before the court.

[7] Eveline Holdings Inc. is charged with dealing with $2,500,000 in Canadian funds between January 1, 2009 and June 7, 2012, with intent to conceal, contrary to s. 462.31(1) of the Criminal Code. Eveline is also charged with Possession of Property Obtained by Crime between January 1, 2009 and June 7, 2012, namely $2,500,000, contrary to s. 354(1)(a) of the Criminal Code. Eveline did not appear for arraignment and did not plead to this charge. I am told by counsel that process never issued for Eveline and it is not before the court.

[8] Both Mr. James, Ms. Cremer and James Associates apply to stay these charges. They allege an infringement of their rights under s. 11(b) of the Charter of Rights and Freedoms.

2. Overview

[9] The Royal Canadian Mounted Police (RCMP) began investigating an ephedrine exportation scheme back in 2010. Search Warrants and Production Orders against an individual, Afshin Dastani, and various bank accounts were executed in 2010 and 2011. In December of 2011, Search Warrants were issued against Mr. James' two law offices and his bank accounts. Mr. James, a lawyer, was in private practise when he was arrested. This engaged concerns about protection of solicitor and client privilege on behalf of Mr. James' clients. Mr. Dastani began to cooperate with the RCMP and, on June 7, 2012, Mr. James and Ms. Cremer were arrested. Further Search Warrants and Production Orders were executed against various locations associated with Mr. James and Ms. Cremer. Documents and computers were seized.

[10] A process to protect the legal privilege belonging to Mr. James' clients was initiated, first with the retainer of Referees, and later with a computer expert (The Lavallee hearings). The Crown contacted the Superior Court in the summer of 2012 with a view to shepherding the Lavallee process to its completion. Further Production Orders were executed in August of 2012. Mr. James and Ms. Cremer were arrested again for bail violations and further related charges in September 2012. Both were released on bail again. Many, many emails were exchanged, many batches of disclosure provided, and many court appearances were completed with a view to marshalling this case forward in the Superior Court and in this court.

[11] The case appeared in this court for pre-trial in October 2012 but by that time the Lavallee process had commenced in the Superior Court. R.S.J. Fuerst assumed case management of the Lavallee process, and signed many Orders allowing the Lavallee process to unfold. The Lavallee hearing itself was brought on July 24, 2014, before McCarthy J., when he ordered various materials released to the Crown. On July 24, 2014, McCarthy J. made several rulings regarding the documents obtained by Search Warrant or Production Order. Some rulings are in dispute in this Application. The Lavallee process was completed on September 18, 2014.

[12] In the late fall of 2013, it became apparent that the Crown wished to obtain documents from the Turks and Caicos. This ultimately required a formal letter from the Superior Court. These documents arrived in Canada and were disclosed in December 2014.

[13] In this court some ten judicial pre-trials were completed and two sets of trial/preliminary hearing dates were both set down and then vacated because of the incompleteness of the Lavallee process.

[14] In December 2014, the accused pleaded not guilty before me and commenced this Application. Documentary disclosure was still being provided after commencement of the Application. This Application was to have been completed in December 2014, with trial dates commencing and completing in January through March 2015. Because of the late disclosure, the December 2014 Application dates were lost and this Application was argued in January 2015. Further trial dates have therefore been reserved in June 2015. Counsel have, however, agreed that the period of overall delay which grounds this Application is some 33 months.

3. Legal Principles

3.1 Section 11(b) of the Charter

[15] There is now a considerable body of case law from senior appellate courts on how s. 11(b) is to be interpreted. R. v. Morin, (1992), 71 C.C.C. (3d) 1, is a convenient, if not mandated, jumping off point. The primary purpose of s. 11(b) is the protection of the individual. There is also a secondary interest engaged, namely that of society as a whole in seeing that those accused of a criminal offence be treated "humanely and fairly" (Morin at p. 12). Furthermore, there is also a societal interest in law enforcement. This interest is adverse to the accused and Courts deciding 11(b) Applications must consider that, "As the seriousness of the offence increases, so does the societal demand that the accused be brought to trial." (Morin at p. 13).

[16] More specifically, Sopinka J. outlined the factors which must be considered in a given case:

1. Overall length of the delay;

2. Waiver of any time periods;

3. Reasons for the delay, including:

   • a. Inherent time requirements,
   • b. Actions of the accused,
   • c. Actions of the crown,
   • d. Limits on institutional resources,
   • e. Other reasons for the delay, and

4. Prejudice to the accused.

[17] The focus must be on the reasonableness of the overall delay and not any one time period (see R. v. Conway, [1989] 1 S.C.R. 1659 (S.C.C.), at p. 1674). The overall length of delay starts when the charge is laid (see R. v. Cisar 2014 ONCA 2373 at para. 28), but sometimes pre-charge delay may have "…an influence on the over-all determination as to whether post-charge delay is unreasonable…" (Morin at p. 14). As Nordheimer J. wrote in R. v. Topol 2007 CarswellOnt 5585 (at par. 36),

Put another way, if the complexity of the case and the amount of disclosure required is asserted as a reason to increase the inherent time requirements of the case then, in making the determination of what is a reasonable period of time for those steps, some consideration must, in fairness, be given to the amount of time that the police and the Crown had, or took, to address those issues before charges were laid.

[18] Waiver of delay periods must be explicit such that the court is satisfied that the accused, or his or her lawyer, has turned their mind to their conduct amounting to waiver. Without that element of explicitness, conduct by the accused must be considered under a different heading, namely 'actions of the accused.'

[19] Some of the factors set forth above need to be expanded in order to provide a legal context for the case at Bar.

3.2 Reasons for the Delay – Inherent Time Requirements

[20] Each case requires a certain amount of time to come to trial which is purely a function of its inherent need. Inherent delay is considered neutral and it includes delays arising from extraordinary events. There is some subtlety to this, insofar as some extraordinary events may be remedied by the Crown and, at that point, the delay arising ceases to be inherent delay and becomes Crown delay (see R. v. MacDougall (1998), 128 C.CC.(3d) 483 (SCC)).

[21] It is worth quoting from Morin on this point.

36 All offences have certain inherent time requirements which inevitably lead to delay. Just as the fire truck must get to the fire, so must a case be prepared. The complexity of the trial is one requirement which has often been mentioned. All other factors being equal, the more complicated a case, the longer it will take counsel to prepare for trial and for the trial to be conducted once it begins. For example, a fraud case may involve the analysis of many documents, some conspiracies may involve a large number of witnesses and other cases may involve numerous intercepted communications which all must be transcribed and analyzed. The inherent requirements of such cases will serve to excuse longer periods of delay than for cases which are less complex. Each case will bring its own set of facts which must be evaluated. Account must also be taken of the fact that counsel for the prosecution and the defence cannot be expected to devote their time exclusively to one case. The amount of time that should be allowed counsel is well within the field of expertise of trial judges.

[22] When there is a dispute as to the relative complexity or simplicity of a given case, the assessment is done on an objective basis. In R. v. Shertzer et al 2009 ONCA 742, the Crown and defence disagreed about the relative complexity of the case. The Court of Appeal took in the following factors in determining complexity: number of accused; time-frame of allegations; whether a conspiracy count was on the Indictment; whether there was a preliminary hearing; and the volume and ability to provide disclosure (see Shertzer at paras. 124 – 125). I do not understand this list to be exhaustive, but merely indicia of complexity relative to that case.

[23] In many indictable cases the trial will proceed before a jury after having a preliminary hearing. To this Sopinka J. remarked in Morin (at para.38),

Clearly a longer time must be allowed for cases that must proceed through a "two stage" trial process than for cases which do not require a preliminary hearing. Equally, a two stage process will involve additional inherent delays such as further pre-trial meetings and added court dates

[24] Examples of inherent delay include, when a Crown witness recants (see R. v. Qureshi (2004), 190 C.C.C. (3d) 453 (Ont. C.A.), or extraordinary events occurring during the course of the trial such as a judge falling ill (see MacDougall supra).

3.3 Reasons for the Delay – Actions of the Accused

[25] Accused persons are entitled take steps before trial, for which ensuing delay falls in this category. I quote from Morin at length here too, because it was argued in the Crown factum that the Applicant, Mr. James, was to be blamed for portions of the delay. In argument that position was softened. Sopinka J. clearly scotches any idea that blame is part of the analysis.

39 This aspect of the reasons for the delay should not be read as putting the "blame" on the accused for certain portions of delay. There is no necessity to impute improper motives to the accused in considering this factor. Included under this heading are all actions taken by the accused which may have caused delay. In this section I am concerned with actions of the accused which are voluntarily undertaken. Actions which could be included in this category include change of venue motions, attacks on wiretap packets, adjournments which do not amount to waiver, attacks on search warrants, etc. I do not wish to be interpreted as advocating that the accused sacrifice all preliminary procedures and strategy, but simply point out that if the accused chooses to take such action, this will be taken into account in determining what length of delay is reasonable.

3.4 Reasons for the Delay – Actions of the Crown

[26] Similarly, when the Crown takes certain steps which have the effect of delaying the trial, it is not an exercise in blame. Rather, it merely contributes to the explanation of why there is a delay in the trial. In Morin (at para. 41), Sopinka J. provided examples of Crown delay, including adjournment requests, change of venue applications, or the Crown wish to have a particular witness attend at the trial. Again, these would be merely examples of actions taken by the Crown for which the Crown bears responsibility if such steps cause delay.

3.5 Prejudice to the Accused

[27] It is the Crown who must bring the accused to trial where actions of one co-accused have the result of delaying the trial of another co-accused (see Morin at para. 57, R. v. Heaslip 1983 CarswellOnt 105 (C.A.) at para. 35, and also R. v. Topol supra).

[28] While prejudice may be actual, or inferred from the length of the delay, it is now axiomatic that the longer the delay, the more likely that an inference of prejudice will be drawn. Both the Crown and accused are entitled to bring evidence proving or disproving prejudice. Examples of actual prejudice include pre-trial incarceration, or restrictive bail terms. The degree of prejudice is a factor determining the reasonableness of overall delay.

3.6 Admissibility of Prior Rulings

[29] In reply to para. 2 of the Respondent's Factum, Mr. Bergman urges me to place no weight on Justice McCarthy's third endorsement, namely that Mr. James is the alter ego of both Eveline Holdings and Sterling Capital. He directs me to British Columbia (Attorney General) v. Malik 2011 SCC 18. In that case the Supreme Court considered whether a prior judgment from a civil or criminal case is admissible in subsequent interlocutory proceedings. The Court there found that the admissibility of prior civil or criminal decisions was dependant on the purpose for which the prior decision is put forward. If admissible, the weight to be given to that earlier proceeding rests on the following factors: the identity of the participants; the similarity of issues; the nature of the prior proceedings; the opportunity of the prejudiced party to contest the impugned ruling; and all the varying circumstances of the particular case (see Malik at para. 48).

[30] The Crown submits in reply that it would be an abuse of process to, in effect, re-open McCarthy J.'s ruling. In support, Mr. Gluckman cites Toronto (City) v. Canadian Union of Public Employees, Local 79 2003 SCC 63, [2003] 3 S.C.R. 77. The legal doctrine of abuse of process applies in the circumstances to preclude re-litigation of the issue. To do so, he says, would violate such principles as judicial economy, consistency, finality and integrity of the administration of justice (Toronto (City) v. CUPE at para. 37).

[31] While there is some merit in law to Mr. Gluckman's position, the more rigid doctrine of abuse of process appears to have been overtaken by the Supreme Court's ruling in Malik. As indicated above, in Malik the Court is clear that it is now a two stage process. Admissibility of the prior judgment is determined by the intended purpose and use. Weight is then determined by factors more fully described infra (see Malik at paras. 46 – 48).

3.7 Lavallee Proceedings

[32] The factual record in this Application contains substantial material generated from the fact that Mr. James' two law offices were the subject of search warrants. The parties disagree about the consequences that flowed from this for 11(b) purposes. Since law office seizures are fairly uncommon in criminal law, the jurisprudence considering that process requires some examination.

[33] It has been fairly observed that legal advice is a necessary function of our legal system. As Binnie J. said in Blood Tribe Department of Health v. Canada (Privacy Commissioner) SCC 44 (at para. 9),

Solicitor-client privilege is fundamental to the proper functioning of our legal system. The complex of rules and procedures is such that, realistically speaking, it cannot be navigated without a lawyer's expert advice. It is said that anyone who represents himself or herself has a fool for a client, yet a lawyer's advice is only as good as the factual information the client provides. Experience shows that people who have a legal problem will often not make a clean breast of the facts to a lawyer without an assurance of confidentiality "as close to absolute as possible."

[34] The evolution of the law of solicitor and client has taken some time. What began as a rule of evidence evolved into a substantive, or legal, rule. It was in Descoteaux v. Mierzwinski, [1982] 1 S.C.R. 860 (at para. 71) that Lamer J. spoke of the privilege in sweeping terms.

In summary, a lawyer's client is entitled to have all communications made with a view to obtaining legal advice kept confidential. Whether communications are made to the lawyer himself or to employees, and whether they deal with matters of an administrative nature such as financial means or with the actual nature of the legal problem, all information which a person must provide in order to obtain legal advice and which is given in confidence for that purpose enjoys the privileges attached to confidentiality. This confidentiality attaches to all communications made within the framework of the solicitor-client relationship, which arises as soon as the potential client takes the first steps, and consequently even before the formal retainer is established.

It follows that solicitor and client communications attract an elevated expectation of privacy, which is "close to absolute" (see AG Canada v. Federation of Law Societies of Canada 2015 SCC 7 at par. 44 quoting from R. v. Lavallee Rackel & Heintz 2002 SCC 61).

[35] Search of a lawyer's office can, understandably, pose great difficulty to law enforcement agencies seeking records in that domain and no less so for the lawyer entrusted with the privilege. In R. v. Lavallee Rackel & Heintz 2002 SCC 61, the Court struck down s. 488.1 of the Criminal Code, which purported to allow search warrants to be executed against lawyers' offices. In her majority judgment, Arbour J. suggested that Parliament try again to enact legislation permitting search of a lawyer's office with the following factors in mind. In the absence of legislation replacing s. 488.1, these factors are of some assistance in determining how to search a lawyer's office in a Charter compliant manner. These, she said, were the general principles applicable to law office searches as a matter of common law (R. v. Lavallee Rackel & Heintz at para. 49):

1. No search warrant can be issued with regards to documents that are known to be protected by solicitor-client privilege.

2. Before searching a law office, the investigative authorities must satisfy the issuing justice that there exists no other reasonable alternative to the search.

3. When allowing a law office to be searched, the issuing justice must be rigorously demanding so to afford maximum protection of solicitor-client confidentiality.

4. Except when the warrant specifically authorizes the immediate examination, copying and seizure of an identified document, all documents in possession of a lawyer must be sealed before being examined or removed from the lawyer's possession.

5. Every effort must be made to contact the lawyer and the client at the time of the execution of the search warrant. Where the lawyer or the client cannot be contacted, a representative of the Bar should be allowed to oversee the sealing and seizure of documents.

6. The investigative officer executing the warrant should report to the Justice of the Peace the efforts made to contact all potential privilege holders, who should then be given a reasonable opportunity to assert a claim of privilege and, if that claim is contested, to have the issue judicially decided.

7. If notification of potential privilege holders is not possible, the lawyer who had custody of the documents seized, or another lawyer appointed either by the Law Society or by the court, should examine the documents to determine whether a claim of privilege should be asserted, and should be given a reasonable opportunity to do so.

8. The Attorney General may make submissions on the issue of privilege, but should not be permitted to inspect the documents beforehand. The prosecuting authority can only inspect the documents if and when it is determined by a judge that the documents are not privileged.

9. Where sealed documents are found not to be privileged, they may be used in the normal course of the investigation.

10. Where documents are found to be privileged, they are to be returned immediately to the holder of the privilege, or to a person designated by the court.

[36] S. 488.1 was never replaced, and while at first blush the above ten factors might seem like a checklist, they are not (see AG Canada v. Federation of Law Societies of Canada at par.53). This poses some procedural uncertainty regarding the seizure and use by the Crown of materials seized from a lawyers office. From my review there is only a small body of case law post Lavallee which considers Arbour J.'s factors. (see The Law of Privilege in Canada, Hubbard, Magotiaux & Duncan: Canada Law Book at pages 11-116.4 – 11-121). In R. v. Law Office of Simon Rosenfeld [2003] O.J. No. 834 (S.C.), Nordheimer J. sat on one such Application. There the Crown had argued that it was the Law Society which was responsible for determining the issue of solicitor and client privilege. Justice Nordheimer disagreed, saying that it was the court's responsibility (at para. 9), and therefore "...it is the court that must take responsibility for the process" (para. 12, see also Ministry of Attorney General v. Law Society of Upper Canada 2010 ONSC 2150 at para. 27). Nordheimer J. appointed a Referee to examine the seized documents and notify those clients that could be identified of the process which was to unfold, thereby providing them with an opportunity to participate in the process. In the case before him, as the one before me, Nordheimer J. noted that the lawyer was not just the subject of a search warrant, but also an accused. The question was whether the lawyer should therefore be compelled to provide the Referee with an affidavit listing the names and last known addresses of the clients whose documents had been seized. Nordheimer J. made such an order.

[37] In Law Office of Simon Rosenfeld, Nordheimer J. reiterated the importance of the process to public interest in the administration of justice. This echoes the broad pronouncements seen above in Descoteaux. Because the Crown represents the public, it is the Crown that bears the cost of the Referee in R. v. Law Office of Simon Rosenfeld (at para. 20).

[38] In a subsequent decision (Ministry of Attorney General v. Law Society of Upper Canada 2010 ONSC 2150), Justice Hennessy went so far as to reject the Attorney General's submission that electronic storage devices seized from a law office should be stored and examined by a Referee at a police station (at para. 35). This, per Hennessy J., involved a minimal risk of inadvertent or intentional breach of solicitor and client privilege, but an unacceptable one nonetheless. Her Honour explained,

As I have said earlier, the protocol proposed by the Attorney General includes a minimal risk. A minimal risk is not a guarantee that there could never be either inadvertent or intentional breach of the solicitor-client privilege. Perhaps when dealing with human beings there is never a guarantee that a system of locks and seals is fail-safe; perfection in this area is no more likely than any other area of human endeavour. While the risk is minimal, the consequences of any failure of this system would be monumental. Any number of ongoing prosecutions would be at risk if there was any finding whatsoever of the slightest breach of the solicitor-client privilege no matter how inadvertent.

What can be seen is that all levels of Court take the protection of solicitor and client privilege most seriously - particularly when dealing with Lavallee type hearings.

[39] The procedure to be followed when a lawyer's office is the subject of a search warrant is outlined in a Law Society Circular.

4. Principles Applied

4.1 Length of Delay

[40] The charges against Mr. James and Ms. Cremer were laid in June 2012 and both Applicants and the Respondent agree that the 33 months is the period of overall delay. As a threshold issue, in my view this is sufficiently long to raise an issue as to its reasonableness.

4.2 Waiver

[41] I can find no waivers on the record by either the Crown or defence.

4.3 Reasons for the Delay

[42] At the outset of this heading I must emphasize that this case is exceptional insofar as it proceeded in this Court and also in the Superior Court at the same time. As will be seen, the Applicants proceeded to trial in this Court after numerous judicial pre-trials, but scheduling the trial was delayed because of the Lavallee proceedings unfolding in the Superior Court at the same time. I also add that the factual record of this Application is complex, but not every email, court order or event needs be referred to here. For ease of reference only I will break down the overall period into smaller sections.

4.3(a) Period 1 - Pre-Charge Period between May 25, 2010 and June 6, 2010

[43] In Period 1, the investigation of the money laundering activities commenced with the May 25, 2010 execution of a search warrant by the Royal Canadian Mounted Police (RCMP) Toronto Integrated Proceeds of Crime (TIPOC) unit on the residence of Afshin Dastani. Mr. Dastani is the co-conspirator named in Counts 7 and 8 above. That search warrant yielded a quantity of ephedrine, a very large amount of currency, and a bank draft for some $354,000. Following that, TIPOC pursued records from bank accounts for companies related to Dastani.

[44] On February 8, 2011 and June 20, 2011, TIPOC obtained Production Orders for bank accounts at TD Bank. These bank accounts were for Kenneth James and companies associated with Mr. James, namely Eveline Holdings Inc. (Eveline) and Sterling Capital Corporation (Sterling). The basis for the Production Orders was TIPOC's theory that Sterling and Eveline were involved in laundering the proceeds from Dastani's unlawful ephedrine export scheme.

[45] Notably, neither the February 8, 2011 Production Order or the June 20, 2011 Production Order contain language which order the seized documents placed in the custody of the court. Neither order the appointment of a Referee.

[46] In May of 2011, Dastani himself was charged with 67 drug, fraud and money laundering offences. In March 2013 he pleaded guilty to eight of those charges and received a jail term. Dastani proceeded through the process on a separate Information and was never co-accused with either Mr. James or Ms. Cremer.

[47] Sgt. Gordon Aristotle of TIPOC has been a lead investigator throughout and, in the summer of 2011 he was in contact with the Law Society of Upper Canada regarding how to lawfully obtain process for the seizure of documents associated with a practising lawyer. It was the TIPOC intention to seize documents from the Law Society about Mr. James. Aristotle's notes were filed in this Application. They reveal several conversations in July and August 2011 between himself and staff at the Law Society and also between himself and other RCMP officers about this. On August 8, 2011, Aristotle notes that he, "Met with team to advise them that warrant put off. We need to get it right." I can only conclude that the process of obtaining documents regarding a lawyer was novel for TIPOC, and also that some caution was being exercised. That search warrant was signed by Bourque J. on August 23, 2011.

[48] On December 2, 2011, Cavion J. signed a search warrant authorizing the search of Mr. James' law office in Concord, the seizure of corporate and bank documents for many entities. This warrant included two Assistance Orders. One authorized an independent Referee, Scott Fenton, to take all necessary steps to protect solicitor and client privilege. Another appointed an independent Forensic examiner, Steve Rogers, to assist in imaging electronic data seized so that the Referee could perform his functions. That search warrant was executed four days later. In December of 2011, Restraint and Management Orders were issued from the Superior Court for five TD bank accounts and two GICs with a value of some five million dollars.

[49] Mr. Dastani began to cooperate with the RCMP in the winter of 2012. He gave three statements to TIPOC between February 8 and May 11, 2012. On February 12, 2012, he gave a written waiver of Solicitor and Client Privilege as against Kenneth James. That waiver included six companies. Dastani acknowledged that his discussions and communications with Kenneth James were not for the purpose of obtaining legal advice and not privileged.

[50] Rounding out this period was several Production Orders signed by Gorewich J. on June 4, 2012. Those Orders sought telephone records for Dastani, as well as gambling and banking records for Ms. Cremer.

[51] On June 6, 2012, Stong J. authorized the search and seizure of documents inside Mr. James' law office in Concord, Ontario and purports to permit the search and seizure of documents and electronic media inside Ms. Cremer's residence. Again, Mr. Fenton was appointed the Referee, this time with Mr. Scott Hutchison. Both Referees were appointed with a view to notifying clients and protecting the solicitor and client privilege of Mr. James' clients. On June 7, 2012, Stong J. signed a second warrant similarly worded to the June 6 warrant, except that Ms. Cremer's residence is more explicitly set forth as a target location.

[52] I conclude my examination of Period 1 with these observations. Three of the charges against Mr. James and Ms. Cremer include allegations within, and right up to the end of, Period 1. During this period it is also clear to me that the investigation was unfolding both as regards taking out and executing various search warrants and production orders (some of which involved assistance orders to comply with), and also as regards the cooperation of Dastani.

4.3(b) Period 2 – June 7 to December 31, 2012 – 207 Days

4.3(b)(i) Ontario Court Proceedings

[53] On June 7, 2012, both Mr. James and Ms. Cremer were arrested and brought to court for bail hearings. Both were ultimately released – Ms. Cremer on consent and Mr. James on June 18, 2012, after a contested show cause hearing. Mr. James' bail terms are restrictive, involving reporting, residence, and travel restrictions. The Show Cause hearing from June 13, 2012 reflects the Crown's concerns on the primary ground. Mr. James and Ms. Cremer were charged again on September 19, 2012, and again released after an appearance in bail court. The second arrest involved Counts 4 – 8 above, as well as other separate offences for which I understand both accused have since had a trial and been acquitted. Those separate offences are not relevant for purposes of this Application.

[54] The Superior Court proceeding came up at the Applicant's first appearance out of custody. On October 9, 2012, a judicial pre-trial was held before Chisvin J. It was clear that the Ontario Court proceedings were waiting to see how the Superior Court proceeding would be resolved. Notwithstanding that, dates were set for a trial or preliminary hearing commencing April 22, 2013. Chisvin J. noted that, given the many outstanding issues, the accused would not be called on to make an election. Mr. Bergman asked aloud whether the Crown wished to abandon the documents without going through the privilege application and go to trial.

[55] Chisvin J. conducted a second judicial pre-trial on December 12, 2012, after which he said in court that, "We are still waiting on Applications in the Superior Court and the Referee is to continue reviewing material so that it can be disclosed".

4.3(b)(ii) Superior Court Proceedings

[56] On July 9, 2012 Ms. Otter, counsel at the Public Prosecution Service of Canada (PPSC), contacted the Toronto Superior Court to advise the Court of the proposed procedure for the proceedings. Ultimately she was advised that the Newmarket Courthouse would deal with it. August 22, 2012 was set as a Case Management Hearing before Fuerst J. At that meeting it was agreed that the Crown and Referees would draft a protocol/process to ensure that solicitor and client privilege was protected while moving the process forward. Mr. James would be provided the opportunity to give input.

[57] The exchanges between Ms. Otter, Mr. Bergman, Mr. Fenton, Mr. Hutchison and others, in the time frame September 26, 2012 to October 2, 2012 reveal that a draft protocol for release, imaging, and search of electronic data seized at Ms. Cremer's residence was being circulated. This culminates in an Order by Fuerst J. on October 3, 2012 ordering, among other things, the continuation of the appointment of Messrs. Fenton and Hutchison and a procedure for examination and release of documents. That Order stipulated (at para. 5) that if the volume of materials to be copied warrants, the Referees must consult with the PPSC regarding expenses prior to making copies.

[58] Notably, on September 26, 2012, it appeared that while Mr. Rogers had been appointed an examiner in the December 2, 2011 search warrant of Mr. James' law office, his retainer had not been confirmed by September 26, 2012. Ms. Otter emailed the various lawyers on September 27, 2012 that "…we have been somewhat delayed by getting the contract formalized."

[59] Mr. Rogers' appointment was duly confirmed and, on November 14, 2012, Fuerst J. signed an Order confirming Mr. Rogers' appointment as part of the process and stipulating a protocol for him to examine the electronic data seized from Mr. James' law practise.

[60] On September 27, 2012, Ms. Otter took the position that the various banking documents seized prior to then were not privileged and that if any party disagreed this discreet issue could be litigated. This email should be placed in context. On September 10, 2012, Ms. Otter had emailed Messrs. Bergman and Weinstein to say that Mr. James' banking records were a "first priority" for the Crown and need not be reviewed by the Referees. Ms. Otter said that, "While I appreciate that there are materials seized pursuant to the search warrants, the Crown's case in relation to the "Dastani" related investigation is complete with the exception of James' banking records".

[61] On December 10 and 11, 2012, Mr. Fenton and Mr. Rogers attended at the Superior Court, 393 University Avenue in Toronto, where the seized materials were under lock and key and Mr. Rogers made an electronic copy of the data. Mr. Rogers then took the scanned image of the electronic data to his office in London, Ontario for analysis.

[62] In the period following the November 14, 2012 Order of Fuerst J., the Referees were working actively in their role to separate privileged material from non-privileged material. Potential clients, and therefore privilege holders, were identified. The emails confirm that the Referees were hard at their task.

[63] On December 14, 2012 Mr. Bergman emailed both Referees to say that Mr. James would like to assist with determining potential claims of privilege for the documents seized under the December 2, 2011 Production Order and the documents seized at Ms. Cremer's residence.

[64] On December 20, 2012, Mr. Rogers emailed the Referees and the Crown to express concern. He was relying on the police, via the Crown, to supply him with some key words to facilitate the electronic search of the data that he had copied from the seized computers on December 10 and 11. At that point he still didn't have them and, with the holiday season looming, wrote that "it is not possible for me to conduct my analysis, provide access to the data to the Referees for your review, remove the privileged documents and prepare and release the final subset of documents in my report in those 6 days. I would be doing a disservice to the prosecution and the defence should I attempt to do so".

[65] Up to and including December 21, 2012, the Crown provided seven waves of disclosure.

[66] I find that in Period 2, the Superior Court Lavallee proceedings were unfolding at a diligent pace for the most part. Referees were fulfilling their given tasks without any real delay. Fuerst J. was managing the Lavallee process without delay. Proceedings were being held up in the Ontario Court because of the Superior Court proceedings. As I will discuss more fully below, given the nature of this case, and the requirement of a Lavallee process, subject to one exception, the case could move forward no faster.

[67] As discussed above, the digital forensic examiner, Digital Evidence International Inc. (DEI), was appointed by Order of Cavion J. on December 2, 2011. Nearly 11 months later, on September 26, 2012, the Crown had still not obtained its own internal approval for DEI's retainer. As a result, I find that this caused a delay in moving the Lavallee process forward in Period 1.

[68] There is no explanation why DEI's retainer was still in limbo as late as September 26, 2012, other than bureaucratic inertia. Given the Court Order stipulating DEI in the Assistance Order of December 2, 2011, I find that the period from July 9, to September 26, 2012 is Crown delay. I find that the Crown knew as early as December 2, 2011 of the need to retain DEI and approvals for the retainer should have been in place, or well under way, once the accused were arrested. Ms. Otter was canvassing dates for the Lavallee hearing on July 9, 2012, but had no retainer in place to fulfill Cavion J.'s Assistance Order from December 2, 2011. I find that the Crown was on notice in the intervening eight months of the need to retain DEI but did nothing.

[69] Steps 4, 5, and 7 from Lavallee, as discussed above, are not optional when documents are seized from a lawyer's office. Fulfilling those steps is what was driving this process in Period 2 and, except for the delay in retaining DEI, the Referees and court were moving carefully, but diligently, to that end. The complexity of this case is self-evident. The various Production Orders and Search Warrants had yielded many boxes of documents and a substantial amount of electronic data. Some of this was clearly not privileged, but a lot needed to be vetted through the Lavallee process, which is by law inherent in this case.

[70] Therefore, 114 days of this period are Crown delay. The balance, or 93 days, are inherent delay.

4.3(c) Period 3 – January 1, 2013 to February 20, 2014 – 415 days

4.3(c)(i) Ontario Court of Justice Proceedings

[71] All accused appeared before Chisvin J. on January 28, 2013 for a pre-trial. At that time he noted that, until the Superior Court proceedings are resolved, the case in the Ontario Court is at a "standstill." It appears that the April trial or preliminary hearing time was being held available. At that time it was not clear what the accused mode of trial would be.

[72] A further pre-trial was held on March 6, 2013, when it appears that the April 22, 2013 dates were vacated because,

…the process of cataloguing and addressing the privilege issues with respect to those documents is still unfolding before Madam Justice Fuerst, and it is clear that those documents will not be able to be made available as disclosure in time for us to make use of the April and May dates.

[73] Accordingly, new dates of the week of October 21, 2013 and the week of October 28, 2013 were set aside. I infer from the March 6, 2013 attendance that delay issues were now on the minds of counsel because various statements regarding availability before October 21, 2013 were made for the record. As will be seen below, the October 21, 2013 date itself had to be vacated because the Lavallee process had not been completed in the Superior Court. Therefore, any delay in bringing the case to trial in this time frame had nothing to do with counsel's availability in the Ontario Court, nor the Ontario Court's ability to accommodate a two week proceeding – be it trial or preliminary hearing.

[74] A judicial pre-trial was held in this court on April 10, 2013 and then again on August 30, 2013. On the latter date, the October 2013 trial/preliminary hearing dates were vacated for exactly the same reason that the April 2013 dates were vacated – the Lavallee process was still not completed. According to Messrs. Weinstein and Bergman, "it's as a result of the Lavallee process that we cannot proceed at this time." According to Mr. Wilson, the Crown's motivation as regards completion of the Lavallee process was two-fold:

...the Crown is not going to release the documents and proceed, partly because it is important to the administration of justice that the trial proceed on the best evidence possible and we only know that we have that once we know what's in those documents and we're able to proceed on that. And also because its anticipated that part of the process will involve an application for a forfeiture of a large amount of money and that application would be effectively proceeding in a vacuum if we didn't know with some kind of specificity how much money we were going after. That's part of what we are going to be finding out once we get those documents.

[75] It appears that all parties were motivated to have dates available in the Ontario Court in anticipation of the Lavallee process being completed, even though there was no certainty about when that would be. So, the weeks of September 8, and 15, 2014 were set aside for that purpose. Disclosure was provided by the Crown in three further waves during Period 2: July 9, 2013; August 15, 2013 and September 23, 2013.

4.3(c)(ii) Superior Court of Justice

[76] Following up on Mr. James' offer to assist with the review of documents subject to the Lavallee process, on January 9, 2013 Mr. Bergman emailed the Referees to advise there is likely a claim of privilege that would be asserted with respect to the following entities listed from Sgt. Aristotle's chart: Ford Glen Group Ltd; Sterling Capital Corporation; and Eveline Holdings. Mr. Bergman went on to say that the party to notify is a lawyer in the Turks and Caicos, Bruce Twa of the Twa Marcelin, Wolf firm.

[77] On January 14, 2013, Fuerst J. signed two Orders. One was to extend to February 28, 2013 the time allowed for completion of the Examiner's report, and the second was to expand the scope of the seized materials subject to the Lavallee process.

[78] It should be pointed out that the issue of key word searches was not without controversy during this period. Sgt. Aristotle took the position that searching the seized electronic data by means of key words was not "practical", but nonetheless provided some five pages of terms for that purpose. These terms were as specific as 15-digit alphanumeric sequences from drivers licences, and as undiscriminating as the term "Ken". That list provided some 40 million hits from documents from Mr. James' law offices, which was too large to be useful. Mr. Rogers tinkered with the search term criteria through March and April 2013, which resulted in a final result of 4,178 documents. Data seized at Ms. Cremer's residence had similar problems. Some 3.5 million "hits" were turned up before Mr. Rogers' system crashed, he was instructed to discontinue that portion of his work. What is clear from the correspondence in this time frame is that the very method of how to search electronic data was proving to be difficult to formulate. As Mr. Fenton put it, in response to Messrs. Bergman and Weinstein's complaints about delay, "The reality is that this is a complex process involving multiple computers that is inherently time consuming for all the professionals involved." Without this method in place no analysis could be done, without which it was not possible to proceed to the next stage of the Lavallee process, namely separating the privileged and non-privileged documents.

[79] A USB data stick was provided to both accused in the hope that either might be of assistance in identifying privileged material. This met with the comment from Mr. Bergman on March 19, 2013 that the volume of files was so large (some 638,647) that it would be too time consuming and costly to demand that Mr. James be compelled to participate in the review.

[80] Mr. Rogers ultimately turned his findings over to the Referees on March 22, 2013 and April 6, 2013. His report was finalized on July 1, 2013.

[81] On February 22, 2013, Fuerst J. granted an Order permitting Mr. James to examine the TD banking records seized under the December 2, 2011 search warrants and production orders signed by Cavion J. The reason for this was so that Mr. James might determine, and assist with determining, which documents were subject to a privilege claim. After that Mr. Fenton was required to take steps to notify the potential privilege holder. That inspection by Mr. James did in fact occur on February 27, 2013. Mr. Bergman then wrote to Mr. Fenton on March 20, 2013 to say that all of the contents of the 13 boxes appear to be subject to a privilege claim, apart from a smaller folder.

[82] The record discloses that the Referee Scott Fenton was now faced with the task for notifying potential privilege holders in the Turks and Caicos. Mr. Fenton inferred that the TD Bank records might not be privileged but were nonetheless being brought within the Lavallee proceedings. Nonetheless, Mr. Fenton had to notify the potential off-shore privilege holders. The Twa Marcelin law firm hired local counsel, who notified Mr. Fenton that Twa Marcelin no longer acted for the potential privilege holders. Mr. Fenton therefore had to resort to newspaper advertisements to notify potential privilege holders. That process had its own turns, since the Globe and Mail would charge more than twice the fee of the National Post to run the Canadian ad. Accordingly, Fuerst J. had to amend her earlier Order to permit placing the notice ad in the National Post and not the Globe and Mail.

[83] On June 25, 2013, Fuerst J. set Lavallee hearing dates of July 23 and August 30, 2013. The July 23, 2013 date was lost because the Crown ran out of time to file its Application materials. The August 30, 2013 date was lost because the Referees were still providing information to the Crown as late as August 12.

[84] The record before me has no explanation as to what was happening in the weeks and months following the abandoned August 30 Lavallee hearing date. On November 4, 2013, Mr. Hutchison emailed the Crown and Mr. Bergman to ask "…where we stand on this matter... Is there anything that Mr. Fenton or I in our capacity as Referees should be doing, or any upcoming date of which we should be aware." The Lavallee process was stalled, for no apparent reason. In argument Mr. Gluckman fairly conceded that, while the Crown was revisiting its strategy in this time frame, there was nothing in the record to confirm that fact. The process appears to have been re-activated on November 25, 2013.

[85] In the period of January 6, 2014 to February 20, 2014, there was renewed discussion by all parties about whether privilege was being claimed by Mr. James over parcels of the now substantial material. Ms. Otter for the PPSC asked about various materials and Mr. Bergman responded, on January 13, 2014, that Mr. James was not asserting privilege over, for instance, any of the HSBC materials. This allowed Mr. Fenton to release those documents to the Crown immediately.

[86] On February 10, 2014, Mr. James attended at the courthouse for another review of the seized materials. On February 11, 2014, Scott Fenton emailed Mr. Bergman to probe Mr. James' continued assertion of privilege. He pointed out that the TD Bank records for which Mr. James had previously claimed a privilege, "…appear to be universally non-privileged transaction and banking records which would not ordinarily be subject to privilege." This tends to echo the position that Ms. Otter took back in September of 2012.

[87] That brought a response from Mr. Bergman on February 20, 2014, which abandoned any claim of privilege regarding 10 boxes of the TD Bank records obtained under the December 6, 2011 Production Order. This mostly reversed the position that Mr. James had taken since March 20, 2013. Once the revised position was taken, Mr. Fenton said that he would then provide documents to the Crown.

[88] In Period 3 the Crown took formal steps to obtain documents located in the Turks and Caicos regarding corporate registration documents which might assist in identifying beneficial ownership of Sterling and Eveline. This took the form of an "Official Request by Canada to the Competent Authority of Turks and Caicos", which was a letter by Ms. Henchey, a lawyer at the Department of Justice, dated May 30, 2013. The request was made on an expedited basis.

4.3(c)(iv) Conclusion – Reasons for the Delay Period 3

[89] During Period 3 the entire delay in the Ontario Court's inability to make use of assigned trial or preliminary hearing dates is because of the failure of the Lavallee process to complete in the Superior Court. In examining that process the following periods stand out. From August 15, 2013 to November 25, 2013, the second Lavallee hearing dates had been vacated because of either the Crown not filing its materials or the parties weren't ready to proceed because of further materials forthcoming from the Referees. Yet the Crown did nothing to move that part of the process forward. The Referees were asking for direction in what was to them a stalled matter, and it was stalled because the Crown permitted it to be. The Police had searched a lawyer's office and seized materials. The Crown was the Applicant in the Lavallee process and was required to take steps to move it forward, even if there were obstacles. A trial was being held up and the Crown knew this full well. The failure of the Crown to take any steps at all in this period is my reason for finding that this period is Crown delay.

[90] On March 20, 2013, Mr. James claimed privilege over some 13 boxes of TD banking records, and in doing so required that any privilege holders be notified before the Referee could take a position regarding whether the privilege prevailed, or whether the documents were not privileged and could be turned over to the Crown. That position was almost completely reversed 11 months later. The Crown initially took the position that this amounts to an improper assertion of privilege and a deliberate delay. In oral argument, Mr. Gluckman softened his position to one of unnecessary assertion of privilege, not improper.

[91] Morin makes clear that the defence is fully entitled to take positions in the pre-trial process which, though not blameworthy, nonetheless have the effect of delaying the proceedings. Mr. James was not required by any Court Order to participate in the Lavallee process. His cooperation was permitted, per the February 22, 2013 Order of Fuerst J. in order for him, according to Mr. Bergman, to "…fulfill his enhanced obligations as counsel charged with an ongoing duty to protect clients and former clients' privileged information." Whether Mr. James has such an enhanced obligation may or may not be correct, since Mr. James was a conflicted lawyer by virtue of being charged himself. What I find, however, is that Mr. James took a position on the privilege cloaking 11 boxes of documents, which he reversed after 11 months. Whether he was entitled to take this position or not, it was a position which I do not blame him for. Blame is not part of the legal test under Morin. It did nonetheless delay the release of those documents to the Crown and therefore the disclosure process. The TD Bank records were known by all to be integral to the Crown's case as far back as September 2012. The position taken by Mr. James on March 20, 2013 therefore delayed the disclosure process of 11 boxes of material for 11 months. I find that Mr. James' approach to disclosure in this period affected the pace of disclosure.

[92] It should be clear now that, within the period of March 20, 2013 to February 20, 2014 is the Crown delay from August 15, 2013 to November 25, 2013. I therefore subtract the Crown delay in this period (102 days) from the delay attributable to Mr. James (337 days). Mr. James is therefore responsible for 235 days of delay in Period 3 which is defence delay.

[93] The balance of Period 3, some 78 days I attribute to inherent delay because of the complexity of the Lavallee hearing and its effect on the proceedings in the Ontario Court.

[94] Within Period 3 a number of significant technical issues arose were inherent to Lavallee process. These included how to efficiently search large volumes of electronic data, and how to properly notify privilege holders in another country. I find that these were procedures mandated by the Lavallee process, for which the Crown could do little to assist. The Superior Court - in law - controlled the process with the aid of Referees. The Referees were, on this record, diligent in their attempts to move the matter forward, responding to each twist and turn as best they could. There were no institutional limitations. The Court made itself readily available to conduct case conferences and sign the necessary Orders. If the work of the Referees had been completed in the summer of 2013 the Lavallee hearing would have been held then.

4.3(d) Period 4 – February 21, 2014 to December 4, 2014 – 286 days

4.3(d)(i) Ontario Court of Justice

[95] Another judicial pre-trial was held on July 29, 2014, before Chisvin J. By then the Lavallee hearing had commenced before McCarthy J. and resulted in the release to the Crown of "two or three boxes." Another 15 boxes of material remained for determination at the continuation of the Lavallee hearing and Mr. Wilson was hopeful that 12 of those would be released as early as August 11. At that point the accused had not yet made an election as to mode of trial and the transcript reflects Chisvin J.'s hope that the election could be made on August 15. To that end Mr. Bergman candidly advised the Court that he was not confident Mr. James would be in a position to make such an election in that time frame, given the substantial amount of material that was expected.

[96] All parties appeared again on August 15, 2014 before Chisvin J. for a pre-trial. At that time the 12 boxes referred to on July 29, 2014 were still not released from the Lavallee process. The mode of trial was therefore still not determined. The election was still contingent on the release of the documents from the Lavallee process. Accordingly, target dates were set for November 6 - 18, subject to confirmation in September. Ultimately, new target dates were set before me on October 7, 2014. The new dates were for four days of 11(b) Motion, and 21 consecutive dates in the New Year for the trial proper.

[97] On December 4, 2014, there was outstanding disclosure as a result of Crown efforts to obtain documents situated in the Turks and Caicos. In the result, both accused were arraigned, elected trial before me and pleaded not guilty. Ms. Cremer's viva voce evidence was heard that day and the balance of the 11(b) argument went to January 5, 2014, when it completed after five days. I reserved judgement on the 11(b) to February 20, 2014, with trial dates to continue until June 26, 2014.

[98] It became clear in her evidence on December 4, 2014 that Ms. Cremer has, quite unfortunately, experienced some health issues and would not be able to appear at a joint trial in the winter and spring of 2014 because of that. Accordingly, I have been advised by the Crown that in the event the 11(b) Application is dismissed, Ms. Cremer will be severed from Mr. James and proceed to trial when she is physically able to. This Application therefore applies to Ms. Cremer on the basis of the agreed upon 33 months of overall delay.

4.3(d)(ii) Superior Court of Justice

[99] As of May 2014 the Parties were in the process of getting ready for a Lavallee hearing. To that end, a date had been set with the Superior Court in Newmarket and an updated log was filed which outlined the various documents that would be the subject of the hearing. That log was ultimately provided to the Crown after allowing Mr. James to review it. The log listed many categories of documents seized from Mr. James' two law offices. Among them were several categories of documents for Sterling and Eveline. Some were litigation files, some weren't. Dates in the spring of 2014 for the Lavallee hearing were exchanged by all lawyers. By April 16, Lavallee hearing dates of July 23 and 24, 2014 were obtained from the Court. In other words, once asked, the Superior Court scheduled the necessary hearing date some three months away.

[100] On July 24, 2014, the Referees, the Crown, and Mr. Bergman appeared before Justice McCarthy in the Superior Court to commence the Lavallee hearing. Mr. Fenton advised the Court that Mr. James had been cooperative in assisting the Referee, which had the effect of reducing the number of documents in issue. His Honour released five rulings that day:

i. Motion by Mr. James to challenge the evidence in the Affidavit of Sgt. Aristotle filed in support of the Lavallee Application. Motion denied.

ii. Motion by Mr. James/Mr. Bergman for standing on the Lavallee Application. Motion denied.

iii. Finding that Kenneth James is the principal and directing mind of both Sterling and Eveline, and therefore no solicitor and client relationship between Mr. James and those two corporations. Referees directed to continue their assignment on those companies' documents without regard to any solicitor and client privilege issues between them and Mr. James or James & Associates.

iv. Finding that there is no privilege attaching to three categories of documents (TD Bank documents, TD Bank materials, HSBC materials) and ordering their release to the Crown. Balance of the Application adjourned.

v. Order that two more boxes of documents should be released to the Crown upon the advice of the Referees.

[101] By August 1, 2014, Mr. Fenton was advising that substantial documentation was now available for pick up by the RCMP, upon further order of the Court. The balance of the Lavallee hearing involved several specific potential privilege holders, who were given the opportunity to make any further submissions regarding privilege issue for their documents found in the possession of Mr. James or James Associates.

[102] On September 18, 2014, the Lavallee hearing was concluded. McCarthy J. ordered documentation released to the RCMP and some returned back to the trustees of Mr. James' law practise. That did not, however, bring the Superior Court proceedings to a conclusion.

[103] On May 15, 2014. Mr. Wilson had notified Mr. Bergman that it proposed to bring a Motion for Directions in the Superior Court to formally request assistance in obtaining the documents requested in 2013 by Ms. Henchey. This Application was not pursued until December 2014. It appears that these documents had actually been obtained by the Crown sometime prior to that time, but in order to "officially obtain the records" the government of Turks and Caicos was compelling such a process. Without such a procedure, there was the risk of a diplomatic incident between the two countries. The documents were duly obtained in December 2014 and a Compendium was filed on the Application by the Applicants. It appears to show corporate documentation for Eveline, Sterling, and Ford Glen Group.

4.3(d)(iii) Principles Applied

[104] As a preliminary issue, I find that all Endorsements of McCarthy J. from the Lavallee hearings are admissible at the 11(b) Application for the purpose of showing what happened at the conclusion of the Lavallee process. It is clear from reading the July 24 and September 18, 2014 Endorsements that His Honour was merely making the necessary findings required in order to fulfill the Court's obligations as set forth in Lavallee. McCarthy J. was not asked to pronounce on the process that brought the case to him, save and except for Ruling 1, where he would not hear Mr. Bergman's argument that the material in support of the hearing was obtained in violation of Fuerst J.'s Order of October 3, 2012. The basis for that ruling was that Mr. James had no standing. Incidentally, he said that he was not persuaded that the Referees had fallen into non-compliance or had compromised their role. I do not read this as a finding regarding how the Lavallee process was brought before the Court.

[105] Accordingly, the Endorsements of McCarthy J. are admitted into this Application for the limited purpose of showing when the Lavallee hearing was conducted and so when material was ordered released to the Crown. Under the weight portion of the Malik test, the parties are not the same, since the Referees are not parties to the 11(b) Application, and Mr. James was denied standing before McCarthy J. Accordingly, Mr. James had no opportunity to contest the facts at the Lavallee hearing. The issue before me is quite different than the issue before the Superior Court in July and September of 2014. I am directed by the Court in Morin not to engage in a blame exercise as part of time attribution. On the other hand, McCarthy J. was not concerned with the reasons why the Lavallee hearing was heard when it was. For those reasons, I will not go behind the McCarthy Endorsements in order to find that Mr. James improperly asserted privilege in the period leading up to the Lavallee hearing. In any event, I understand the Crown to have modified that position from para. 2 of their factum to now be one of, effectively, Mr. James asserted privilege over documents which delayed disclosure. Therefore, for the limited purpose of showing what happened at the Lavallee hearing and when the hearing was, the Endorsements are admitted and taken at face value.

[106] In this period all parties were moving towards the Lavallee hearing and the resulting disclosure, which would ensure that the accused could make an informed election about mode of trial. Clearly, the defence did not have enough disclosure to make their election and that continued to be held up by the Lavallee process. I also take at face value Mr. Fenton's comment to McCarthy J. that Mr. James was cooperative in reducing the number of documents in issue at the Lavallee hearing. The Crown is correct that McCarthy J. found that Mr. James was the alter ego of Sterling and Eveline, but his position on those documents appeared to have no discernable effect on when the Lavallee hearing was heard. In that sense Mr. James' position regarding the Eveline/Sterling documents is different than him taking a position on the 11 boxes of TD Bank documents in March of 2013 and then reversing himself on that very issue 11 months later. There is no evidence of a direct relationship regarding Mr. James' position on the Sterling/Eveline privilege position delaying the Lavallee hearing or substantial disclosure. For purposes of this ruling, I accept that part of the material ordered released on July 24, 2014 was highly important to the Crown, namely the Sterling and Eveline bank records. Given the amount of material which was bound up in the Lavallee hearing, however, there was no material delay because of Mr. James' assertion of the privilege.

[107] The Lavallee hearing, as I have said above, was a special and required feature of this case and had to be completed prior to this case going to trial. It was demonstrably complex and for the most part governed by the Referees as officers of the Court. Once McCarthy J. ruled that documents could be released to the Crown, there was an inevitable period when the newly released documents had to copied and disclosed to the defence.

[108] The documents which were sought by the Crown in the Turks and Caicos for over one year also fall within the unusual complexity of the case. Requests were made of the government of Turks and Caicos as early as May 2013, but, unusually, those could not be released to the defence without a particular request being sent by the Superior Court to the Turks and Caicos. The record reflects the Crown attempting to figure out how to release documents already in their possession without causing a diplomatic row. This speaks of complexity, and therefore inherent delay.

[109] The entirety of Period 4 is therefore inherent delay.

4.3(e) Period 5 – December 5, 2014 until March 12, 2015 – 97 days

[110] I was asked to rule on this 11(b) Application based on an overall period of 33 months, which goes up to the period of March 12, 2015, when the trial was original expected to end. In this period the trial commenced with the 11(b) Application and would have ended, had the 11(b) Application been heard and ruled upon prior to January 5, 2015, when the trial proper would have started. This period therefore would have accommodated a three-week trial in the Ontario Court. Those dates were set on October 7, 2014, after a pre-trial with Chisvin J. The Court could therefore accommodate the trial to commence after 88 days, which is institutional delay. The balance of the time from the commencement of the trial proper on January 5, 2015 to its otherwise completion of the trial March 12, 2015 is inherent delay.

[111] The figures presented to me in argument by both Crown and the Applicants were 33 months of overall delay, which included 78 days of institutional delay. It is the difference between those two figures which is in dispute. The 78 days of institutional delay will be placed in the scheme to reflect the time between when both Crown and defence were ready to go to trial but the Court could not accommodate them.

[112] In argument the Applicants fixed 12 months as the inherent time requirements in this case, and that the Lavallee hearing should have been completed by December 2012. Respectfully, I disagree. It is clear that a number of complications arose during this process, which the Referees were essentially tasked to sort out, which they did. But this took time. These included problems of efficiently searching a substantial amount of documentation and electronic data, notifying potential privilege holders, and then bringing that material before a Judge for a Lavallee hearing. This is an unusually complex case, particularly when it is recalled that a Lavallee hearing itself is exceptional. Applying the criteria for assessing complexity from Shertzer (infra), here there are two accused, the allegations cover a two-year period, there is a conspiracy count on the Indictment, and the disclosure is voluminous. I reject outright the argument that this case is not complex and that 12 months is the inherent time requirement.

Summary

	Crown Delay	Defence Delay	Inherent Delay	Institutional Delay
Period 1	Pre-charge period
Period 2	114 days	0 days	93 days
Period 3	102 days	235 days	78 days
Period 4			286 days
Period 5				78 days
Totals:	216 days	235 days	457 days	78 days

[113] The delay period is therefore attributed as follows: 216 days Crown delay, 235 days defence delay, 457 days inherent delay, 78 days Institutional delay.

4.4 Other Reasons for the Delay

[114] I can find no evidence of institutional delay other than the 78 days agreed upon by all parties. Indeed, the Ontario Court made itself available on fairly short notice to conduct a trial or preliminary hearing. The December 4 trial date was set less than three months before. Institutional limitations have a very small role in the reasons for the delay of this case.

[115] I can find no other reasons for the delay, other than what is outlined above.

4.5 Prejudice

4.5(a) To Mr. James

[116] Mr. James alleges specific prejudice. One form is his inability to practise law because of the charges. Indeed, his bail speaks to that, in term vii, which stipulates that he must advise the Law Society of the instant charges and abide by restrictions which they place on him. While this would normally pose a restriction on practising law in and of itself, the context must be highlighted. Mr. James had been before the Law Society on disciplinary matters relating to mortgage frauds, and those proceedings had been initiated in May of 2010. The Law Society had actually commenced a disciplinary hearing against Mr. James on March 2, 2011, more than 15 months prior to his arrest. Accordingly, I place virtually no weight on the specific prejudice purportedly flowing from Mr. James' difficulty to practise law because of these charges.

[117] Mr. James also alleges that the bail terms restricted his ability to deal with his funds. The bail does include a term restricting the movement of assets in excess of $10,000.00. The Crown interprets this to mean "single transactions" in excess of $10,000.00, which is not overly onerous. My initial understanding of that term was that it prohibits dealing with assets in excess of $10,000 even if the specific transaction is less than that amount. However, if the Crown is taking that interpretive position as regards Mr. James' bail, then I will rely on that to find that this provision is not onerous.

[118] Mr. James also alleges specific prejudice from actions taken by the TD Bank, which deprived him of three amounts ($35,005.00, $51,641.09, and $3,240.33). These withdrawals were taken, according to Mr. James, in violation of a Restraint Order issued by the Superior Court. Such prejudice does not arise from the delay in the proceedings, but rather from the apparently unilateral action of a third party. I do not find this is prejudice arising from the delay in the case.

[119] Mr. James also claims that the Lavallee process caused additional financial expense, which was prejudicial to him. As I have found above, the Lavallee process was complex and, subject to my comments above about Crown and Defence delay, involved inherent delay. I do not find that the Crown delay in the Lavallee process was so long as to cause significant and obvious prejudice to Mr. James.

[120] Part of the claimed prejudice to Mr. James is Sgt. Aristotle's contact, via Mr. Bergman, wishing Mr. James a happy birthday. The wisdom of Sgt. Aristotle's email escapes me, but I am not prepared to find that this caused Mr. James prejudice.

4.5(b) To Ms. Cremer

[121] Ms. Cremer testified before me regarding her health, in addition to filing an affidavit and a physician's report. She suffers from anxiety, and now cancer. I found her evidence to be credible. When Ms. Cremer was arrested, Sgt. Aristotle told her that she should cooperate with the police because he had crushed and destroyed Mr. Dastani and Mr. James would never see the light of day. This was done at the outset of the proceedings. I find that this amounted to a veiled threat that bad things would occur to Ms. Cremer if she did not cooperate. It is a bizarre thing for a Sergeant of the RCMP to say. There is nothing in the evidence to contradict Ms. Cremer on this point. Taken alone this might not amount to prejudice, but Ms. Cremer had a pre-existing anxiety issue which was exacerbated by Sgt. Aristotle's threat. I find that the Aristotle threat aggravated Ms. Cremer's anxiety over the course of the proceedings. This is specific prejudice. To be clear, I find that Sgt. Aristotle's comment to Mr. Bergman about Mr. James' birthday indicates some particular animosity toward the accused, which was both open and uncalled for by a policeman of his rank. It is in that context that his comment to Ms. Cremer is understood. This was, to some extent, aggravated by Ms. Cremer's contact with Cst. Destead, who in a brief, albeit polite conversation, reiterated that Ms. Cremer should cooperate with the RCMP.

[122] The specific prejudice to Ms. Cremer includes inability to work. Because of the fact of being charged, and resulting stigmatization, she does not work and has given up on attempting to find work. I find this to be some evidence of specific prejudice. Unlike Mr. James, there is no evidence before me that Ms. Cremer was subject to potentially career-ending proceedings well prior to her arrest.

[123] Ms. Cremer also claims specific prejudice flowing from the delay in the proceedings, both in terms of legal fees and also in ability to travel for a funeral of a cousin. I do not find prejudice from the former, because Ms. Cremer's role in the Lavallee process was quite limited. The record before me has very few references to her counsel, who was really only involved in bail issues, remands and judicial pre-trials in the Ontario Court. These did take place over a long period of time, but each appearance was quite limited. I find that, while the bail did prohibit her from travelling, there is no evidence that any rush variation was sought and denied. As such, I am unable to find specific prejudice from her travel restriction.

[124] I conclude my analysis of Ms. Cremer's prejudice with the following findings. It is clear from the record that Ms. Cremer had an extremely limited role in the unfolding Lavallee process. The allegations have her as an employee of Mr. James in the capacity of bookkeeper. She was a potential privilege holder in some of the seized documents. She had at one point reserved the right to claim privilege over a cheque, but just prior to the commencement of the Lavallee hearing clarified that she was not claiming such a privilege. I find this to be so limited involvement in the Lavallee process that she played no real part in it – unlike Mr. James.

[125] Mr. Weinstein argues that the Crown delay in bringing the Lavallee hearing exacerbates the lengthy delay against her. I have sympathy for this argument but, as I have found, the Crown and institutional delay in this case amounts to a little over 294 days, or just under 10 months. The balance of the 33 months is either inherent delay, or defence delay caused by Mr. James. The Lavallee process may have been driven by the Crown's interest in having possession of documents seized from a law office, but it was the Referees and the Superior Court that had to do the majority of the work of bringing the process to fruition, not the Crown. This case is therefore distinguishable from R. v. Topol 2008 CarswellOnt 721 (C.A.), where one accused had his case delayed because the Crown stood by and acquiesced to the defence adjournments of the other co-accused to convenience counsel. That was the single biggest cause of delay in Topol. In the case at Bar, the single biggest cause of delay is a Lavallee proceeding which was inherent to the case. The disclosure arising from the Lavallee hearing affected not just Mr. James but Ms. Cremer too. She was similarly situated to Mr. James insofar as she was not in a position to make an election as to mode of trial as late as August 15, 2014 because of the impending disclosure being released by McCarthy J.

[126] As against both accused I have not been alerted to any actual prejudice to their ability to make full answer and defence. In any event I would not find any. This appears to be case relying on substantial documentation which is not prone to failing memories. I do not find any impairment of the Applicants ability to lead evidence, cross-examine witnesses or otherwise raise a defence.

4.5(c) Inferred Prejudice

[127] The overall length of delay gives rise to some very minimal inferred prejudice, which is involved in the inevitable stress arising from delay in criminal cases. The inferred prejudice is not itself sufficient to materially shorten the constitutionally acceptable delay period.

5.6 Balancing the Interests

[128] My finding above is that the Crown and institutional delay, when combined, amounts to just under 10 months. This is the unjustified period of delay (see R. v. Lahiry 2011 CarswellOnt 12516 (S.C.) at para. 145) in the case, and is not unreasonable given the complexity. In cases where the unreasonable delay is not long, balancing society's interest in a trial on merits gains increasing importance in the 11(b) analysis (See R. v. Qureshi et al (2004), 190 C.C.C.(3d) 453 (Ont. C.A); R. v. Lahiry supra at para. 87).

[129] Society always has an interest in a criminal trial being heard on its merits, the question is by how much. The charges in the case at Bar involve allegations of money laundering by a practising lawyer and his bookkeeper. To aggravate that further, there are allegations this involved the use of corporate entities located off-shore. On its face it is an allegation of money laundering by a person in which society presumptively places its trust. The dollar value of the scheme is alleged to be measured in millions. In my humble opinion, society has a very great interest in this trial being heard on its merits.

6. Conclusion

[130] Mr. James' prejudice is inherent because of the length of this case. When balanced against the overall delay periods discussed in par. 112, and considering Society's interest in a trial on its merits, Mr. James has not made out a s. 11(b) violation. His Application is therefore dismissed.

[131] Ms. Cremer has established specific prejudice over and above the inherent prejudice from an overall 33 month delay period. Notwithstanding that, and the fact that she is more peripheral to the allegations than Mr. James, it is still at this point insufficient to establish a s. 11(b) violation on her part. Her Application is also dismissed.

[132] It follows that the Application is likewise dismissed against James Associates.

[133] I thank Mr. Bergman, Mr. Gluckman and Mr. Weinstein for their extremely helpful submissions and materials.

Released: February 20, 2015

Signed: "Justice David S. Rose"