COURT FILE NO.: CR-12-4751

DATE: 20130807

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Her Majesty The Queen

Respondent

– and –

Kenneth James

Applicant

Counsel: Kevin Wilson and Brendan Gluckman, for the Respondent Scott Bergman, for the Applicant Andrew B. Matheson, for the Third Party, The Toronto-Dominion Bank

HEARD: January 14, 17, February 5, 13, 14, March 14, April 23, and 25, 2013

REASONS FOR DECISION

FUERST J.:

INTRODUCTION

[1] The applicant, Kenneth James, is a lawyer. He faces a number of criminal charges, including money laundering and possession of property obtained by crime.

[2] The police investigation into the applicant’s alleged illegal activities was lengthy and complex. It involved the execution of several search warrants and the issuance of multiple production orders in respect of financial institutions. In addition, multiple bank and securities accounts held by or associated to the applicant are subject to restraint orders issued on the basis that the accounts are offence-related property or the proceeds of crime.

[3] The applicant seeks to vary or vacate the respective restraint orders on the basis that upon review, amplification and excision of improperly obtained information in the affidavits to obtain the orders, there are insufficient grounds to authorize them under the relevant Criminal Code (“the Code”) provisions. Additionally, he seeks damages and costs arising from the making and/or execution of each restraint order, in respect of the respondent Crown, the Royal Canadian Mounted Police (“RCMP”) and/or their agents.

BACKGROUND

[4] The applicant was charged on June 7, 2012, with possession of property obtained by crime specified as approximately $3 million (Canadian), money laundering property specified as approximately $3 million (Canadian) and fraud over.

[5] On September 19, 2012, he was charged with breach of recognizance, and additionally with exporting ephedrine, money laundering property specified as approximately $169,000 in United States currency, possession of property obtained by crime, conspiracy to launder money and conspiracy to export ephedrine.

[6] The charges arose from the applicant’s alleged dealings with Afshin Dastani. Mr. Dastani owned and operated an online nutrition supplement business that sold and unlawfully exported ephedrine. It is alleged that Mr. Dastani provided the applicant with a number of bank drafts that were deposited into various bank accounts held by or associated to the applicant. The applicant then distributed funds, in cash to Mr. Dastani, or to third parties by cheque at Mr. Dastani’s direction.

[7] It is further alleged that, in the spring of 2010, Mr. Dastani started a second ephedrine exportation business, with the applicant. Proceeds of Mr. Dastani’s prior ephedrine business on deposit in accounts held by or associated to the applicant allegedly were used to fund this joint enterprise.

[8] Mr. Dastani was arrested and charged with a variety of offences in May 2011. He ultimately pleaded guilty and received a jail term. Shortly after his arrest, he provided statements to the police in which he described the applicant’s role in his illegal activities. This led to the applicant’s arrest in June 2012.

[9] In the course of a lengthy investigation, the RCMP obtained and served two production orders on The Toronto-Dominion Bank (“TD Bank”), in February 2011 and June 2011. The orders were for information about accounts associated to the applicant.

[10] On December 2, 2011, the RCMP obtained a third production order which was served on TD Bank. Among other things, it referenced six accounts held in the name Kenneth James In Trust [for] Sterling Capital Corporation. All information provided under the order was to be placed in sealed packages pending the determination of any solicitor-client privilege claims. The order required that TD Bank provide “all reasonable assistance to assist the peace officers with their investigation and with the execution of this Order”.

[11] The RCMP also obtained warrants to search the applicant’s two law offices. All documents and data obtained by the third production order and the law office searches has been sealed pending a determination of the applicability of solicitor-client privilege.

[12] On December 6, 2011, December 23, 2011, and October 22, 2012, respectively, the RCMP obtained the three restraint orders that are the subject of this application. The restraint orders authorized the restraint of specific bank and securities accounts held by or associated to the applicant.

PRELIMINARY ISSUES

[13] On January 17, 2013, I ruled that I had jurisdiction to review all three restraint orders, under ss. 462.34(4) and 462.34(6) of the Code in respect of the third order, and on the basis of the court’s inherent jurisdiction to review ex parte orders in respect of the first and second restraints. I also ruled that Mr. Bergman, counsel for the applicant, could cross-examine Sergeant Gordon Aristotle and Constable Michael Robertson, the police officers who swore the affidavits to obtain the restraint orders.

[14] Email messages filed on the application indicated that Crown counsel, Mr. Wilson, provided the applicant’s materials to the police in December 2012 so that they, particularly Sergeant Aristotle, could assist him in preparing the Crown’s response to the application. When Sergeant Aristotle was cross-examined, he said that he and Constable Robertson met with Crown counsel to discuss the merits of the application and to review documents. He agreed that he reviewed a copy of the applicant’s factum and the supporting affidavit. He said that because he and Constable Robertson were the major investigators on the case as well as the affiants on the restraints, there was nowhere else for Crown counsel to go to get information relevant to the application. Constable Robertson confirmed that he and Sergeant Aristotle met with Crown counsel. He said that they did so to seek advice from Crown counsel and get a better understanding of the applicant’s factum filed on this application.

[15] Mr. Bergman, on behalf of the applicant, contends that this conduct was improper.

[16] The police investigation that gives rise to the application is detailed and complex, involving applications for three restraint orders. The application materials are voluminous and the issues raised by the applicant are numerous. It is not surprising that Crown counsel would seek the assistance of the officers as he did. I also note that this occurred before I ruled that Sergeant Aristotle and Constable Robertson would be cross-examined on their affidavits.

[17] In the particular circumstances of this application, the conduct of the Crown and the RCMP officers was not improper, nor do I find that it reflects adversely on the credibility of the officers: see, R. v. Mahmood, 2011 ONCA 693.

RESTRAINT ORDER #1

The Order

[18] On December 6, 2011, a Superior Court judge authorized a restraint order under s. 490.8(3) of the Code. It restrained five TD Bank accounts related to the applicant, with balances totalling approximately $3.8 million.

[19] The basis for the order was that the accounts were offence-related property used as a means of committing the offences of possession of property obtained by crime and laundering the proceeds of crime, and used in connection with those offences and certain drug offences.

[20] Sergeant Aristotle, the officer in charge of the investigation, swore the affidavit in support of the ex parte application. The affidavit purported to demonstrate that in 2009 and 2010 Mr. Dastani provided the applicant with approximately $3 million of combined Canadian and United States funds by way of bank drafts; that the bank drafts moved the funds from Mr. Dastani’s corporate bank accounts into four bank accounts controlled by the applicant; and that the applicant paid out funds to Mr. Dastani and to third parties at Mr. Dastani’s direction from the fifth bank account.

[21] For the purpose of this application, the applicant concedes that there are reasonable grounds to believe that at the time the restraint order was made, the accounts frozen by it held as much as $1.8 million of Mr. Dastani’s money. What is in issue on the application is the balance of approximately $2 million remaining in the accounts at the time the restraint order was made.

The Positions of the Parties

[22] On behalf of the applicant, Mr. Bergman concedes that the restraint order was properly authorized, but submits that the respondent cannot demonstrate on reasonable grounds that the excess beyond a maximum of $1.8 million held in the accounts constitutes offence-related property or the proceeds of crime. The restraint order improperly authorized an over-seizure of approximately $2 million, in violation of the applicant’s rights under s. 8 of the Canadian Charter of Rights and Freedoms (“the Charter”). The restraint order must be varied to limit it to $1.8 million, and the balance of funds in the accounts returned to the applicant.

[23] On behalf of the Crown, Mr. Wilson submits that there was no over-seizure. The order did not direct the restraint of a particular amount of money, rather, it authorized the restraint of the TD accounts on the basis that they are offence-related property used in connection with or as a means of committing particular offences.

Analysis

[24] “Offence-related property” is defined in s. 2 of the Code as property by means or in respect of which an indictable offence under the Code is committed, that is used in any manner in connection with the commission of such an offence, or that is intended to be used for committing such an offence. Under s. 490.8(3), on application by the Crown a judge may make a restraint order prohibiting any person from disposing of or otherwise dealing with any interest in property where the judge is satisfied there are reasonable grounds to believe the property is offence-related property.

[25] In R. v. Trac, 2013 ONCA 246, at para. 80, the court recognized that the definition of “offence-related property” is broad and “reaches property used in any manner in connection with the commission of an indictable offence. The section is aimed at the means, devices or instrumentalities used to commit offences.” In the context of, for example, a money laundering offence, the focus is on the connection of the property to the commission of that offence, not the tracing of the genesis of the property back to criminal activity. The court accepted, at para. 89, that a bank account can be offence-related property, and that it can be offence-related property regardless of whether the credit in it when it was ordered restrained could be traced to money generated by illegal activity: “If an account was used in any way to further the respondent’s money laundering scheme, that account, and more precisely the property in the account at the time of seizure (the credit owed to the account holder by the bank), is offence-related property regardless of the origins of the deposits reflected in the credit in the account.”

[26] For the purpose of this application, the decision in Trac answers the applicant’s submission. The bank accounts subject to restraint are the “offence-related property”. Indeed, this was the position taken by Sergeant Aristotle in his affidavit, where he stated, at para. 24, that “[t]hese bank accounts constitute offence-related property”. For the purpose of this application, it is immaterial whether only some of the property in the accounts at the time the restraint order was made derived from illegal activity. The Crown is not required to demonstrate that all the property in the accounts when the restraint order issued could be traced to illegal activity.

[27] There was no over-seizure and no s. 8 breach.

[28] There is no basis on which to vary the first restraint order.

RESTRAINT ORDER #2

The Order

[29] Sergeant Aristotle testified that soon after the first restraint order was signed, someone from the RCMP telephoned a representative of TD Bank and advised of that fact. The signed order was then emailed to the bank. He said there was no agreement that TD Bank would freeze the accounts pending issuance of a restraint order. The bank was prepared, however, to freeze the accounts once the RCMP advised that a restraint order was signed and would be provided. That was the meaning of the entry in his notes, “Arrangements made for TD to freeze pending restraint.”

[30] Sergeant Aristotle was cross-examined about an email the RCMP sent to TD bank on December 6, 2011, asking for balances in the accounts for which the Crown was seeking the first restraint order. He said that this information was needed so that the Crown and police knew what was restrained. The information was not solicitor-client privileged information in his view, the tenure of the December 2 production order was over, and banks will choose to share such information with the police where they believe that money laundering or the transmission of proceeds of crime is occurring, in light of the protection given by s. 462.47 of the Code.

[31] On December 23, 2011, a Superior Court judge authorized a second restraint order, under s. 490.8(3) of the Code. It restrained two TD Bank term deposit Guaranteed Investment Certificate (“GIC”) accounts related to the applicant. Sergeant Aristotle swore the affidavit in support of the ex parte application.

[32] The basis for the order was that the GIC accounts were offence-related property used to launder and possess proceeds of crime, as they consisted primarily of funds removed from the other TD accounts.

[33] In the application for the December 2 production order, Sergeant Aristotle had sought information about a number of items, including GICs. He testified that he asked for information about GICs not knowing then whether any existed. He said that he learned of the actual existence of the two GIC accounts from Patrick Eichenberg, Senior Counsel with TD Bank’s Legal Department, after the first restraint order was issued. On December 15, 2011, Mr. Eichenberg telephoned him, said that he had some information, and asked if the RCMP had a production order. Sergeant Aristotle referred him to the December 2 order.

[34] Mr. Eichenberg called back and told Sergeant Aristotle that the applicant had recently attended a TD Bank branch to try to cash out two GICs that were worth just over a million dollars in total. Mr. Eichenberg told Sergeant Aristotle that the GICs were held in term deposit accounts in the name of Kenneth James In Trust [for] Sterling Capital Corporation. He said that the bank had not yet provided the requested funds. He asked if this was money laundering.

[35] Sergeant Aristotle told him that the police had no interest in the GIC accounts unless they were related to the restrained bank accounts, and asked if the funds came from the restrained accounts or were to go back into the restrained accounts.

[36] On December 16, 2012, Mr. Eichenberg told Sergeant Aristotle that one of the GICs had been purchased with some funds from one of the restrained TD Bank accounts, account 5204843, that the GIC would reach the end of its term on February 21, 2012, and that at that time the funds would be deposited back into the original bank account. Both Sergeant Aristotle and Mr. Eichenberg knew that account 5204843 was in the name of Kenneth James In Trust [for] Sterling Capital Corporation.

[37] Sergeant Aristotle testified that he had not solicited the December 15 call from Mr. Eichenberg, that he simply followed up with him once he got the call, and that the bank chose to share information with the RCMP.

[38] A decision was made to seek a restraint order for the two GICs, on the basis that the money came from and was to go back into a restrained account or accounts. Sergeant Aristotle testified that the decision was not his own, but was made after consultation with his superiors as well as Crown counsel.

[39] Sergeant Aristotle included the information provided by Mr. Eichenberg in the affidavit to obtain the second restraint order. The decision to do so was made by him, his superior officer Inspector Mark Pearson, and counsel to the Integrated Proceeds of Crime Unit.

[40] On December 16, 2011, Inspector Pearson wrote a letter to Mr. Eichenberg, which Sergeant Aristotle drafted. In it, Inspector Pearson reiterated the fact that five accounts associated with Mr. James had been restrained. He said that on December 15, 2011, the police became aware of the purchase of the GIC with funds from one of the restrained accounts and that upon its maturity the funds would be deposited back into that account. He advised that the police were preparing an application to restrain the GIC and would seek to restrain any other financial instruments that may have been purchased with funds derived from the initially restrained accounts. He added, “Your assistance in preventing the continuation of the offence of money laundering would be greatly appreciated as we work to obtain a Restraint Order from the court.” Sergeant Aristotle emailed the letter to Mr. Eichenberg, who responded that the bank would await receipt of the restraint order.

[41] Prior to December 23, Sergeant Aristotle asked Mr. Eichenberg to provide information about the source of funds used to purchase the second of the two GICs, including the date purchased, the account number from where the funds originated, maturity instructions, who had authority on the account, and to whom the cheque was to be sent on maturity. Information that the source of the funds for the second GIC was four matured GICs, two of which had been purchased with funds from the already restrained bank accounts associated to the applicant, was provided to Sergeant Aristotle by Mr. Eichenberg and another bank employee, Ranjit Rai. This information was included in the affidavit to obtain the second restraint order. Sergeant Aristotle testified that he asked the bank for the information, and the bank was responsive to his request.

[42] On December 24, 2011, Sergeant Aristotle sent an email to Mr. Eichenberg and other TD Bank representatives, advising that a restraint order applicable to the two GICs had been authorized the previous day, and would be served on TD Bank the next business day after the holidays. He wrote, “The information you have provided and your willingness to freeze these accounts while we prepare the Orders has been critical in helping us prevent the continuation of a Money Laundering offence.”

[43] Sergeant Aristotle testified that TD Bank had made a decision on its own to freeze the two GIC accounts before the Crown and RCMP decided to seek a restraint order. He had not directed the bank to freeze the accounts, but by this email he offered encouragement for its having done so.

The Positions of the Parties

[44] On behalf of the applicant, Mr. Bergman submits that the Crown was not entitled to restrain the GIC accounts under s. 490.8 as those funds were not part of the credit in the five bank accounts at the time they were restrained on December 6, 2011. Further, the information that provided the grounds for the second restraint order was obtained in breach of s. 8 of the Charter. The applicant had a reasonable expectation of privacy in the information about the GICs and the RCMP was not entitled to obtain it from TD Bank without judicial authorization, nor was TD Bank entitled to disclose it. TD Bank acted as an agent of the RCMP in freezing the two GIC accounts until such time as the RCMP could obtain a restraint order, and in providing information about the GIC accounts to the RCMP. Further, TD Bank was not permitted to disclose the applicant’s banking information to the police under the Personal Information Protection Electronic Documents Act (“PIPEDA”). In particular s. 7(d) of the Act did not apply because Mr. Eichenberg provided information requested by Sergeant Aristotle. Additionally, the information was obtained by Sergeant Aristotle in contravention of the terms of the December 2, 2011, production order, which required that information obtained pursuant to it be sealed. All information obtained in breach of s. 8, PIPEDA and the production order must be excised from the affidavit to obtain the December 23, 2011, restraint order. Absent that information, the affidavit fails to establish reasonable grounds for the order, and the order must be vacated.

[45] On behalf of the Crown, Mr. Wilson submits that the restraint order is valid. The GIC accounts were subject to restraint as offence-related property. Further, there was no breach of the applicant’s s. 8 rights by the RCMP in obtaining the information that it did or by TD Bank in providing it. The applicant had no reasonable expectation of privacy in the information concerning a corporation, and not a biographical core of personal information. Even if he had a reasonable expectation of privacy in the information, TD Bank did not act as an agent of the RCMP. It did not act on instructions of the police or as their delegate. The bank had its own interest in preventing money laundering or other financial offences. Mr. Eichenberg volunteered the information about the GIC accounts to Sergeant Aristotle. The fact that Sergeant Aristotle asked for specifics does not change the voluntary nature of the disclosure. Further, the police are permitted under s. 487.014(1) of the Code to ask the bank to voluntarily provide information, and the bank is free to provide it or to refuse. The bank chose to provide it and was not prohibited by law from doing so. While Mr. Eichenberg was wrong in his apparent belief that the production order authorized him to provide the information to the police, s. 7(3) of PIPEDA and in particular s. 7(3)(d) gave him that authorization.

[46] The applicant and respondent permitted TD Bank to make submissions as a third party. On behalf of TD Bank, Mr. Matheson submits that it did not violate the applicant’s s. 8 rights by acting as an agent of the RCMP, nor did it act in breach of PIPEDA. As the GIC accounts were business accounts held by the applicant in trust for a corporation, any expectation of privacy on the applicant’s part was minimal. TD Bank’s refusal to cash the GICs preceded the communications between Mr. Eichenberg and Sergeant Aristotle. There is no evidence that the bank made any agreement with the RCMP to freeze the GIC accounts at the RCMP’s behest such that it acted as an agent of the RCMP in doing so, or in providing information about the accounts. The December 2, 2011, production order specifically referred to accounts held in trust by the applicant for Sterling Capital Corporation and imposed on the bank a requirement to provide “reasonable assistance” to the police. Accordingly, it was reasonable for Mr. Eichenberg to communicate with the police about the GIC accounts and the applicant’s activities concerning them. Even if the communications with the RCMP did not fall under the production order, they were permitted under PIPEDA ss. 7.3(c), (c.1), or (d). Financial institutions have legitimate concerns about money laundering and must have some latitude to act to protect their own interests.

Analysis

(i) Were the GIC Accounts Offence-Related Property?

[47] The GIC accounts were properly restrained as offence-related property. On the available information, there were and are reasonable grounds to believe that one of them was created by the movement of funds from a bank account ultimately restrained as offence-related property, and those funds were due to be deposited back into that account, while the other was created in part by the movement of funds derived from accounts ultimately restrained as offence-related property. On the available information, there were and are reasonable grounds to believe that the GIC accounts were used to further the applicant’s alleged money laundering scheme. They were the means by which the offences of money-laundering and possession of money obtained by crime were committed.

(ii) Was the Information About the GIC Accounts Improperly Disclosed by TD Bank or Improperly Acquired by the Police?

[48] The protection of s. 8 of the Charter applies only with respect to state action, and only where the individual had a reasonable expectation of privacy in the thing searched and/or seized.

[49] As I understand Mr. Bergman’s argument, because TD Bank was an agent of the RCMP, its actions breached s. 8 as did those of the police. I will address the “state agent” submission in the course of considering whether the applicant demonstrated that he had a reasonable expectation of privacy in the information about the GICs.

[50] I accept the testimony of Sergeant Aristotle, including his explanation of the various entries in his notes and his communications with representatives of TD Bank.

[51] The applicant’s s. 8 claim is one of privacy in information. Section 8 protects “a biographical core of personal information which individuals in a free and democratic society would wish to maintain and control from dissemination to the state” including “information which tends to reveal intimate details of the lifestyle and personal choices of the individual”: R. v. Plant, [1993] 3 S.C.R. 281, at para. 20.

[52] In determining whether the applicant had a reasonable expectation of privacy in the information about the GICs, the totality of the circumstances, as identified in R. v. Tessling, 2004 SCC 67, at paras. 19 and 31, must be considered.

[53] The information in issue is banking information concerning two GIC accounts, limited to the account numbers, the name of the account holder, the value of the accounts, maturation dates, sources of funds for the GICs, and identification of an account into which at least some of the proceeds would be deposited on maturation. No actual banking records passed from TD Bank to the RCMP.

[54] The accounts were commercial in nature, in that the beneficial owner of them was a corporation. However, they were held in trust for the corporation by the applicant and to that extent he had a direct interest in them and information about them.

[55] In considering whether the applicant had a subjective expectation of privacy in the information, I note that there is jurisprudence which recognizes the relationship of confidentiality between a bank and a client: see, for example, Schreiber v. Canada (Attorney General), [1998] 1 S.C.R. 841. However, the applicant did not testify on the application, nor did he provide a copy of the service agreement (including any privacy policy) between him and TD Bank, which I infer exists given that the bank is one of Canada’s mainstream financial institutions. It is relevant that the applicant is not an unsophisticated person. He is a lawyer who has familiarity with corporate-commercial affairs. Further, I find that as of the time he attended a TD Bank branch to attempt to cash the GICs, he knew that Mr. Dastani had been arrested on allegations of money-laundering, and his own law offices had been searched under warrant. He also knew, because the first restraint order was required to be served on him, that five TD Bank accounts associated to him had been restrained as offence-related property, including the account into which the proceeds of at least one of the GICs was to be deposited on maturation. On this record, I question whether the applicant had a subjective expectation of privacy in the information about the GICs as of December 15, 2011.

[56] Nonetheless, I will take it that the applicant had a subjective expectation of privacy, and go on to consider whether that expectation was objectively reasonable.

[57] Just as in R. v. Ward, 2012 ONCA 660, the applicant and TD Bank had a commercial relationship. TD Bank provided financial services to him. It is necessary to look at the controlling contractual and legislative provisions.

[58] The characterization of the relationship between the bank and the police is a consideration: see Ward at para. 96. I find on this record that TD Bank was not acting as an agent of the police when it froze the GIC accounts or when it passed information about them to the RCMP. On the uncontradicted evidence of Sergeant Aristotle, which I accept, at the point when Mr. Eichenberg telephoned him, the applicant already had attempted to cash the GICs and the bank already had chosen not to provide him with the funds. TD Bank, having been served with three production orders and a restraint order alleging that accounts associated to the applicant were offence-related property, was well aware it was alleged that the applicant used TD Bank accounts to launder money, including the account that was the source of funds for at least one of the GICs. As a financial institution, the bank had its own interests to protect once it was on notice of the allegation the applicant used its services to launder the proceeds of crime. There is no evidence that the bank’s decision not to cash the GICs was directed by the RCMP, that the bank was acting as the RCMP’s delegate in responding to the applicant’s attempt to cash the GICs, or that the bank declined to cash the GICs because of an agreement with the RCMP: see, R. v. Buhay, 2003 SCC 30. I find that the bank acted independently of the police in choosing not to cash the GICs.

[59] The applicant adduced no evidence that he made more than one attempt to cash the GICs, nor did he adduce evidence from a TD Bank representative that the accounts were “frozen” by the bank in the period prior to December 23. Assuming that an ongoing “freeze” was imposed by the bank, I accept Sergeant Aristotle’s evidence that the bank made its own decision to take that action. No evidence to the contrary was adduced from any representative of TD Bank. Inspector Pearson’s letter of December 16, 2011, expresses that the bank’s assistance in preventing the continuation of money laundering would be appreciated, but it is hardly a direction to the bank nor is it confirmation of an agreement between the bank and the police to do or not to do something that would create an agency relationship. At its highest, the letter expresses a hope for the bank’s cooperation. Cooperation is not sufficient to indicate that the bank was acting as an agent of the police: R. v. M. (M.R.), [1998] 3 S.C.R. 393, at para. 29.

[60] Similarly, the evidence does not support a finding that the bank did anything other than make an independent decision to give the information about the GIC accounts to the RCMP. Mr. Eichenberg, by whom or under whose direction the information passed to the police, was Senior Counsel with TD Bank’s Legal Department and not merely a bank employee. He was well aware, as a result of three production orders and the first restraint order served on the bank, that it was alleged the applicant was using accounts at TD Bank to launder money in the millions of dollars. The bank was directly implicated in allegations of money-laundering. It had a legitimate interest in preventing the criminal misuse of its services, particularly in circumstances where accounts associated to the applicant were alleged to be offence-related property subject to forfeiture. Mr. Eichenberg’s initial telephone call to Sergeant Aristotle on December 15, 2011, was not to give information about the GIC accounts per se, but to report activity concerning them that he was concerned might be money-laundering. It is also significant that before he provided information, Mr. Eichenberg had reference to the production order served on the bank on December 2, 2011. The production order applied to documents from January 1, 2007, to December 2, 2011, and required that they be sealed. It did not purport to prevent TD Bank from reporting to the police possible criminal activity in relation to the specified accounts occurring after December 2. In fact, clause 7 of the production order required that employees of TD Bank “are to provide all reasonable assistance to assist the peace officers with their investigation and with the execution of this Order without further representation to this Court.” [emphasis added] A reasonable and informed person would consider these circumstances as some justification for Mr. Eichenberg and his colleagues to provide the police with the information about the GIC accounts.

[61] Any obligation that TD Bank had to maintain confidentiality of information about accounts associated to the applicant would have been governed by a service agreement between them, a privacy policy, and also the terms of PIPEDA. The applicant did not file a copy of the bank’s service agreement or privacy policy on this application. This must weigh against his assertion of a reasonable expectation of privacy.

[62] I find that the communications between Mr. Eichenberg and his colleagues and Sergeant Aristotle from December 15 through to December 23, 2011, were compliant with PIPEDA. Section 7(3)(d) of the Act permits disclosure of personal information to an investigative body on the initiative of an organization where it has reasonable grounds to believe that the information relates to a contravention of the laws of Canada that is being or is about to be committed. On the record before me, I find this provision applicable to the communications between Mr. Eichenberg and his colleagues and Sergeant Aristotle. In light of everything Mr. Eichenberg knew, he had reasonable grounds to believe that the applicant was continuing or attempting to continue to engage in money laundering. It was Mr. Eichenberg who contacted Sergeant Aristotle about the GIC accounts and gave him information on December 15, 2011. Sergeant Aristotle’s inquiries then and subsequently cannot be divorced from that context. They were follow-up inquiries relating to the very information given by Mr. Eichenberg, not requests for information about fresh matters. It is unreasonable to interpret s. 7(3)(d) so narrowly that police officers to whom information is given by organizations like banks about possible criminal activity can do no more than passively receive it and are prevented from asking for specifics or details necessary to take steps in response.

[63] In considering whether any subjective expectation of privacy was objectively reasonable, it also is relevant that the information provided about the GIC accounts was narrow in scope and limited to what was necessary to apply for an order restraining those accounts (which were related to already restrained accounts) as offence-related property. No banking records or banking documents were sought or obtained by the RCMP.

[64] Having regard to all of the above, I am satisfied that a reasonable and informed person would accept that it was reasonable for TD Bank to disclose and the RCMP to acquire the information about the GIC accounts. Put another way, I am satisfied that a reasonable and informed person would not expect that society should recognize that the applicant had a reasonable expectation of privacy in respect of the information about the GIC accounts.

[65] The applicant has failed to demonstrate that he had a reasonable expectation of privacy in the information about the GIC accounts, just as he has failed to demonstrate that TD Bank took the action that it did as a state agent. I find that the information used to obtain the second restraint order was not improperly disclosed by TD Bank or improperly acquired by the RCMP in violation of s. 8 of the Charter.

[66] For the reasons set out above, I find that the information about the GIC accounts was not improperly disclosed by TD Bank or improperly acquired by the RCMP in breach of PIPEDA, or in contravention of the December 2 production order.

[67] There is no basis on which to vacate the second restraint order.

RESTRAINT ORDER #3

The Order

[68] On October 22, 2012, the Superior Court judge who authorized the first restraint order authorized a third restraint order, this time under s. 462.33(3) of the Code. It restrained seven HSBC Bank Canada accounts, two HSBC Securities Canada accounts, and one TD Bank account already restrained by the first order as offence-related property. The order was made ex parte.

[69] The basis for the order was that there were reasonable grounds to believe that the accounts could be ordered forfeited as proceeds of crime, in that sources unrelated to designated offences could not reasonably account for the value of those accounts.

[70] Constable Michael Robertson was the affiant in support of the application. Sergeant Aristotle assisted with the preparation of the affidavit, including financial calculations. As in the case of the two previous applications, the affidavit was reviewed by Crown counsel before the Crown moved forward with the application.

[71] Constable Robertson testified that the goal of his affidavit was to demonstrate that the applicant’s increase in net worth over a period of time could not be reasonably accounted for by his income from sources unrelated to the designated offence of exportation of ephedrine, with which he was charged by the time this restraint order was sought. Constable Robertson used information obtained from Canada Revenue Agency (“CRA”) about the applicant’s declared income, information acquired from HSBC Bank Canada (“HSBC”) about funds held in personal bank and investment accounts to the applicant’s credit, the information from TD Bank about the funds held in the already restrained account, and the applicant’s sworn financial statement filed with the court in the applicant’s divorce proceedings.

[72] Constable Robertson stated at page 14 of his affidavit that, “I do not have a detailed and exhaustive calculation of Kenneth James’ net worth as prepared by an accountant. Rather, I have created this estimate using figures supplied by James at various points in time.” He also referred, at page 56, to his calculation as an “approximate net worth”.

[73] Criminal counsel for Mr. James was aware that the application would be brought, and asked to be notified so that he could attend and make submissions to the application judge. He was not given notice, because of concern on the part of the RCMP and the Crown that the applicant would dissipate the assets if he had such notice of the application and if HSBC released its freeze of the accounts. All of this information was included in Constable Robertson’s affidavit.

The Information Acquired from HSBC

[74] On January 21, 2012, TD Bank wrote to the applicant and told him that it could no longer support his accounts and services. It instructed him to make alternative banking arrangements immediately.

[75] In February and March 2012 the applicant opened a series of commercial and personal accounts at HSBC. He also opened investment accounts with HSBC Securities.

[76] On June 8, 2012, the day after the applicant’s arrest, the RCMP distributed a news release called a “Grid Warning” to all major banks. It did so through the Bank Crime Prevention and Investigation Office (“BCPIO”). It invited any member organization that became aware of suspicious transactions or unexplained balances in accounts associated with the applicant and that wished to get in touch with law enforcement to contact Sergeant Aristotle.

[77] On June 14, 2012, Eve Belhumeur, an analyst with Banque National, which had acquired some HSBC Securities clients, called Sergeant Aristotle in response to the Grid Warning. She told him that the applicant had opened an HSBC brokerage account into which he deposited $250,000 on May 8, 2012. Sergeant Aristotle emailed her a copy of the applicant’s recognizance of bail dated June 13, 2012, which specified that the applicant was not to move any assets in excess of $10,000 except those in his mixed trust account registered with the Law Society of Upper Canada, and gave her the names of corporations over which the applicant or his co-accused Rosemary Cremer might have signing authority over accounts. He asked her to advise HSBC and to have someone contact him about any accounts the applicant and his co-accused might have.

[78] Ms. Belhumeur referred Sergeant Aristotle to Laurence Hopkinson at HSBC. Sergeant Aristotle testified that he spoke to Mr. Hopkinson on June 14 and asked him for the account numbers and balances of any bank and investment accounts for which the applicant or Ms. Cremer had signing authority. He wanted the information so that he could determine whether there were assets that could be subject to restraint and forfeiture, although he did not tell Mr. Hopkinson this. He told Mr. Hopkinson that the police did not have restraint orders and the bank would have to decide what it wished to do with respect to the accounts. Mr. Hopkinson referred Sergeant Aristotle to Charles Perry, who was the Director of Investigations and Physical Security for HSBC Bank Canada and HSBC Securities.

[79] Sergeant Aristotle did not request account statements or supporting documents from the bank.

[80] On June 15, 2012, HSBC advised the applicant’s lawyer that it was unwilling to release any funds from any account over which the applicant or his law firm had control.

[81] The applicant’s recognizance of bail was varied on June 18, 2012, to add a further exception to the clause prohibiting him from moving assets over $10,000. That exception was for disbursements paid through the general account of James and Associates for business purposes. The clause applied to any account or investment over which the applicant or Ms. Cremer had signing authority. HSBC was not advised at that point of the bail variation by either the RCMP or the applicant’s criminal counsel.

[82] On July 17, 2012, a representative of HSBC sent a letter to the applicant stating, “HSBC Bank Canada (“the Bank”) is aware of criminal investigations and allegations that may pertain to funds held in the Accounts. As a result, the Bank has decided to freeze all your banking facilities with the Bank until the Bank has more information regarding this matter.”

[83] The applicant launched a civil action against HSBC on August 9, 2012, seeking to have the freeze of accounts lifted and damages awarded. In response to an inquiry by the applicant’s criminal counsel, Crown counsel wrote on August 10, 2012, that neither the Crown nor the RCMP were directing the actions of HSBC, and that “HSBC has not been advised that a restraint is forthcoming.” Crown counsel sent a subsequent letter to the Applicant’s criminal counsel on August 27, 2012, stating that the RCMP had told HSBC that a restraint order was pending. In its Statement of Defence filed on September 10, 2012, HSBC stated that it was approached by the RCMP on June 14, 2012, and told that the authorities were applying for an order restraining the applicant from dealing with his accounts; that HSBC felt the release of funds would be a violation of the applicant’s bail terms and would expose the bank to liability; and that on August 14, 2012, the RCMP said the accounts contained the proceeds of crime and that they were in the process of completing a restraint order.

[84] On June 15, 26 and 28, 2012, Sergeant Aristotle contacted representatives of HSBC, including Mr. Perry and legal counsel Mark Levet, following up on his request for account numbers and balances for any bank and investment accounts over which the applicant or his co-accused had signing authority. He testified that he did so because he wanted to seek a restraint order if there were HSBC accounts. He assumed there was something with HSBC because of the information Ms. Belhumeur gave him, but he did not know that there was and could not get the information any other way. He could not seek a restraint order unless he had something to act on. There was some urgency to get the order because of the risk that any funds might be dissipated. On June 28, 2012, he told Mr. Levet that there were no restraint orders in place and none were being prepared yet because the RCMP did not have the HSBC account numbers and balances.

[85] On July 19, 2012, Mr. Perry faxed Sergeant Aristotle a list of account numbers, names of account holders which included the applicant, and account balances. This was all the information that the RCMP sought from HSBC. It was included in Constable Robertson’s affidavit to obtain the third restraint order.

[86] The RCMP did not immediately move to restrain the accounts because they were waiting for information from CRA. They wanted to determine the disparity between how much money the applicant had and how much income he had declared for tax purposes.

[87] Mr. Perry testified that both HSBC Bank Canada and HSBC Securities are members of the BCPIO, which is a recognized investigative body under PIPEDA. Although he is not HSBC’s BCPIO liaison, he is permitted to share information about criminal investigations with investigators from other BCPIO members, including law enforcement personnel.

[88] He said that around June 14, 2012, Mr. Hopkinson contacted him and arranged for him to be the liaison with the RCMP concerning Sergeant Aristotle’s request for information. Around that time, Mr. Perry became aware of suspicious transactions related to the applicant and that the applicant’s accounts had been frozen by the bank. He said that the bank’s Anti-Money Laundering department would deal with money laundering concerns, and The Compliance and In-House legal group would make the decision to freeze accounts. Freezing accounts is a pretty common practice of the bank, carried out in the interest of the bank where it believes there is criminal activity. He felt that the bank was justified in freezing the applicant’s accounts because the applicant was charged with money laundering, there was a concern that funds in the accounts were proceeds of crime, and it was important that the bank not be complicit in the movement of funds.

[89] Mr. Perry testified that Sergeant Aristotle told him that there was a money laundering investigation with respect to the applicant and that the RCMP was seeking a production order or a restraint order. Mr. Perry did not have notes and could not remember clearly what Sergeant Aristotle told him or when he told him. He provided Sergeant Aristotle with the information requested, even though it was more information than the bank would normally share with the police, because there were already charges before the court and a recognizance of bail in place.

[90] On August 10, 2012, Mr. Perry sent an email to Sergeant Aristotle inquiring about “the status of the order you are obtaining.” He testified that he did so because in-house counsel had asked him the question. Inspector Pearson wrote to Mr. Perry on August 14, 2012, advising that the Crown was preparing an application to restrain all personal HSBC accounts belonging to the applicant because of alleged money laundering and fraud activities.

[91] On August 22, 2012, counsel for HSBC, Mark Evans, contacted Sergeant Aristotle and asked about the status of the restraint application. Sergeant Aristotle told him that it was with the Crown to review. Mr. Evans asked that the RCMP send the bank a letter requesting that it freeze the applicant’s accounts. Sergeant Aristotle refused. Mr. Evans contacted Sergeant Aristotle again on August 31, 2012, and asked about the status of the restraint application. Sergeant Aristotle told him it was with the Crown for approval. Mr. Evans inquired again on September 17, 2012.

[92] Sergeant Aristotle testified that the RCMP never told HSBC to freeze the applicant’s accounts. Constable Robertson testified that the police had no control over HSBC and it could lift its freeze of the accounts associated to the applicant at any time. In paragraph 77 of his affidavit in support of the third restraint order he said that HSBC could decide to release its freeze of the accounts and that “Neither the police nor the Crown has control over HSBC’s actions.”

The Information Acquired from CRA

[93] On July 10, 2012, Inspector Pearson wrote to CRA requesting copies of the applicant’s income tax returns filed for the period 2005 to 2011. He relied on s. 241(3) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) as authorization for acquisition of the tax information. He enclosed a copy of the Information setting out the offences outstanding against the applicant as of that date, and mentioned that property of a value of $4 million had been restrained. He said that the applicant’s tax records would provide a benchmark of his reported income and “afford evidence of unexplained wealth generated by [the applicant] through the acquisition of offence-related property and/or proceeds of crime.” He summarized the RCMP investigation to date. He concluded by saying that the tax documents “will assist with the judicial process associated to the forfeiture of the money seized as proceeds of crime. As part of my criminal investigation, I am seeking the income tax records to demonstrate the money that was seized in this investigation was acquired as a direct result of illicit criminal activities.”

[94] Sergeant Aristotle testified that he drafted part of the letter. He intended that the information obtained from CRA would be used in Constable Robertson’s affidavit to obtain the third restraint order. It is standard procedure for RCMP investigators to write CRA for tax information when they charge someone with a proceeds of crime offence, so that they can apply for a restraint order. The RCMP always intended to use the tax information to show the applicant’s income, in order to obtain the third restraint order, and they did so. He conceded that the letter did not refer to this pending restraint. But, he did not believe the letter would be interpreted to mean that the police would only use the tax information to seek forfeiture of money already seized, and not to obtain future restraint orders. The third restraint order was part of the continuing police investigation of the applicant.

[95] CRA responded to Inspector Pearson in writing that it was satisfied the information requested was relevant “to the charges laid”. It provided the tax returns, and specified that the information was to be used only in “the legal proceedings identified in your request, where charges were laid”. Sergeant Aristotle took this to be a reference to the charges already laid. He did not see a problem with using the information to obtain the third restraint order, because it is part of the legal proceedings related to those charges.

The Positions of the Parties

[96] On behalf of the applicant, Mr. Bergman contends that the account balance information and the tax information that provided the grounds for the third restraint order was obtained in breach of s. 8 of the Charter. He submits, as he did with respect to TD Bank, that HSBC was acting as a state agent in freezing the accounts and providing account information to the RCMP. Furthermore, PIPEDA did not permit the release of the account balance information in response to Sergeant Aristotle’s request. The tax information was improperly obtained and used by the RCMP for a purpose that was prohibited under the terms of its disclosure. Inspector Pearson’s letter to the CRA referred to the charges laid and the investigation that had taken place as of July 2012. It stated that the tax records would be used to demonstrate that money already seized was acquired as a result of criminal activities and would assist with the judicial process associated to forfeiture of that money. The letter was misleading because it did not say that the information would be used to get another restraint order that effectively seized other funds. Without either or both of the HSBC account information and the tax information, there were insufficient grounds to obtain the third restraint order. In any event, the HSBC Securities accounts should not have been restrained because they are margin accounts funded by the bank and there was no evidence that the applicant provided the bank with any collateral in order to get that funding. Lastly, Constable Robertson’s affidavit was an unreliable net worth calculation that contained stale-dated and false information.

[97] On behalf of the Crown, Mr. Wilson submits that the burden is on the applicant under s. 462.34(6)(a) of the Code to establish on a balance of probabilities that the restraint order should not have been issued. There was no s. 8 breach because the applicant had no reasonable expectation of privacy in the account information including the balances. In any event, there is no evidence that HSBC was acting as an agent of the state. Sergeant Aristotle testified that he told the bank it had to make its own decision, and later refused to give the bank a letter asking HSBC to freeze the accounts. Mr. Perry testified that the bank freezes accounts in its own interests. The fact that Sergeant Aristotle asked the bank for account information and the bank provided it does not make the bank an agent of the state. Further, the bank had the authority under PIPEDA to provide the police with the information. In order to establish the two margin accounts, the bank would have required security from the applicant. He has not shown that that security was untainted, and the net worth calculation suggests otherwise. With respect to the CRA request, charges had been laid in June 2012. The third restraint is part of the legal proceedings against the applicant “in respect of” those charges. This is not affected by the fact that additional charges were laid after the request letter was sent to CRA. Lastly, there was no material non-disclosure or inclusion of knowingly false information in Constable Robertson’s affidavit.

Analysis

(i) Section 462.33 Orders

[98] Section 462.33 applies to “proceeds of crime”, which is defined in s. 462.3(1) to include any property obtained or derived directly or indirectly as a result of the commission of a designated offence, meaning any offence that may be prosecuted as an indictable offence. Under s. 462.33(3) a judge may make a restraint order prohibiting any person from disposing of or otherwise dealing with any interest in the property where the judge is satisfied that there are reasonable grounds to believe that an order of forfeiture may, eventually, be made in respect of the property. Essentially, forfeiture can be ordered only after conviction for a designated offence, where the judge is satisfied that the property is the proceeds of crime or was acquired using proceeds of crime. Where an offender is convicted of specified drug offences, forfeiture must be ordered if the court is satisfied on a balance of probabilities that the income of the offender from sources unrelated to designated offences cannot reasonably account for the value of the property: see s. 462.37.

[99] The purpose of restraint orders under s. 462.33, as expressed in R. v. Laroche, 2002 SCC 72, at para. 55, is to facilitate criminal investigations by making property more accessible to the police and prosecutor, and also to “prevent the disappearance or wasting of the property” so that crime can be punished more effectively and enforcement of forfeiture orders that may be made in the future facilitated.

[100] Section 462.34(6) in conjunction with s. 462.34(4) permits a person charged with a designated offence to apply to have a restraint order revoked, or varied to exclude certain property from its application, on the ground that the order “should not have been made in respect of that property”. In Laroche, at para. 66, the court held that because of that wording, the role of a reviewing judge is not limited to deciding whether the authorizing judge “could” have granted the order. Rather, the reviewing judge “must decide whether he or she would have made the same decision as the authorizing judge, having regard to all of the evidence in the judge’s possession following the hearing of the application for review.” The burden of proof is on the applicant to establish on a balance of probabilities that the restraint order should not have been granted.

(ii) Was the Information About the HSBC Accounts Improperly Disclosed by HSBC or Improperly Acquired by the Police?

[101] The analysis applicable to Mr. Bergman’s submission concerning s. 8 of the Charter mirrors that set out above concerning the second restraint order.

[102] I accept the testimony of Sergeant Aristotle, including his explanation of the various entries in his notes and his communications with representatives of HSBC, and also the testimony of Mr. Perry as to why he provided the information to Sergeant Aristotle.

[103] In deciding whether the applicant had a reasonable expectation of privacy in the information about the HSBC accounts, the totality of the circumstances must be considered.

[104] Mr. Bergman clarified in his submissions that the information at issue is the balances of the bank and investment accounts.

[105] No actual banking records passed from HSBC bank to the RCMP.

[106] The applicant had a direct interest in the HSBC accounts and information about their balances.

[107] Among the materials filed were HSBC documents including a Personal Banking Agreement and a Commercial Account Operating Agreement Terms. The applicant did not, however, testify on this application. He had, by the time the HSBC account information was disclosed, been made aware that two restraint orders were in place referable to bank accounts, and been charged with offences including money laundering and possession of property obtained by crime. I question whether he had a subjective expectation of privacy in the information about the HSBC accounts at that point.

[108] Nonetheless, I will take it that the applicant had a subjective expectation of privacy in the account information, and go on to consider whether that expectation was objectively reasonable.

[109] The relationship between the applicant and HSBC was a commercial one. As in Ward, it is necessary to look at the controlling contractual and legislative provisions.

[110] The characterization of the relationship between the bank and the police is a consideration: see Ward at para. 96. I find on this record that HSBC was not acting as an agent of the police when it froze the accounts or when it passed the account balance information to them. Sergeant Aristotle told Mr. Hopkinson that the bank would have to decide what it wished to do with the accounts. Sergeant Aristotle later refused to provide HSBC with a letter requesting a freeze of the accounts. Consistent with Sergeant Aristotle’s testimony that at no time did the RCMP ask the bank to freeze the accounts, the bank’s letter to the applicant stated, “[T]he Bank has decided to freeze all your banking facilities”. Mr. Perry explained that HSBC commonly freezes accounts where it believes there is criminal activity, in this case the applicant was charged with money laundering, and there was concern that accounts related to him held proceeds of crime. I further find, as I will discuss below, that the bank chose to give Sergeant Aristotle limited account information including the bank balances, when faced with a specific and narrow request and when made aware of the charges against the applicant. As Mr. Perry described, the bank had a legitimate interest in taking steps to prevent the criminal misuse of its services and in voluntarily disclosing information to the police that would assist in investigating possible criminal misuse of its services. That did not make HSBC an agent of the state. I find that the bank acted independently of the police in deciding to freeze the accounts and in choosing to disclose the account information including the account balances.

[111] As the court observed in Ward, PIPEDA contemplates reasonable disclosure of customers’ personal information and recognizes a discretion to disclose personal information to the police in the course of an investigation if certain prerequisites are met. I have referred earlier to s. 7(d). The HSBC information flowed to the police as a result of Ms. Belhumeur’s disclosure to Sergeant Aristotle after the release of the Grid Warning. In other words, the information was disclosed to the police on the initiative of HSBC which had reasonable grounds to believe that it related to a contravention of the laws of Canada that had been committed. All that Sergeant Aristotle did was to follow-up on that disclosure. Alternatively, as Mr. Perry testified, he chose on behalf of HSBC to disclose the information about the account balances under s. 7(c.1) in response to a narrow and specific request by the RCMP for the purpose of a criminal investigation described in the Grid Warning where charges including money laundering had been laid against the account holder and a recognizance of bail was in place. I find that HSBC complied with PIPEDA in disclosing the account balances to the RCMP.

[112] Included in the materials with the HSBC letter of July 17, 2012, was a copy of the Personal Banking Agreement and the Commercial Account Operating Agreement Terms. At page 8 of the former document, the client acknowledges that HSBC must comply with the laws of Canada including laws related to the prevention of money laundering and continues, “I agree that you and HSBC Group may take any action which you or they, in your or their sole discretion, think is necessary to comply with the law”. The latter document states that HSBC “may also disclose Customer information as required to meet all legal and regulatory requirements.” These contractual terms qualify any duty of confidentiality on the part of HSBC. I note that the applicant’s book of legal authorities contains a copy of an HSBC Privacy Code apparently dated June 2010. It makes clear that HSBC will disclose information to government institutions as authorized under PIPEDA.

[113] In considering whether any subjective expectation of privacy was objectively reasonable, it also is relevant that the information provided by HSBC was narrow in scope and limited to what was necessary for the Crown to apply for a restraint order under s 462.33. No banking records or banking documents were sought or obtained by the RCMP.

[114] Having regard to all of the above, I am satisfied that a reasonable and informed person would accept that it was reasonable for HSBC to disclose and the RCMP to acquire the information about the accounts, in particular the account balances. Put another way, I am satisfied that a reasonable and informed person would not expect that society should recognize that the applicant had a reasonable expectation of privacy in respect of the account information, including the account balances.

[115] The applicant has failed to demonstrate that he had a reasonable expectation of privacy in the information about the HSBC account balances, just as he has failed to demonstrate that HSBC took the action that it did as a state agent. I find that the account information used to obtain the third restraint order was not improperly disclosed by HSBC or improperly acquired by the RCMP in violation of s. 8 of the Charter.

[116] For the reasons set out above, I find that the information about the accounts was not improperly disclosed by HSBC or improperly acquired by the RCMP in breach of PIPEDA.

(iii) Was the Income Tax Information Improperly Acquired and Used?

[117] Section 241(3) of the Income Tax Act states that the prohibition against providing taxpayer information to any person does not apply “in respect of” criminal proceedings that have been commenced by the laying of an information. In Slattery (Trustee of) v. Slattery, [1993] 3 S.C.R. 430, the court held at p. 445 that the words “in respect of” in s. 241(3) are very broad, and import meanings such as “in relation to”, “with reference to” and “in connection with”.

[118] At the point when Inspector Pearson wrote to the CRA, charges had been laid against the applicant, including for money laundering. The officer was permitted under s. 241(3) to ask for the tax information “in respect of” the criminal proceedings, and he did so. It might have been better had he specified that the information would be used in a forthcoming application for a third restraint order. But, his letter did say that the tax records would “afford evidence of unexplained wealth generated by [the accused] through the acquisition of offence related property and/or proceeds of crime”. Viewed as a whole, the case against the applicant is one of alleged money laundering and possession of proceeds of crime, related to his involvement with Mr. Dastani. All of the offences with which the applicant is charged are closely connected, there is a connection between the three restraint orders as evidenced by Constable Robertson’s affidavit, as well as between them and the charges laid in June 2012, and there is overlap between the first and third restraint orders. Even though additional charges were laid against the applicant in September 2012, the third restraint order is still part of the “legal proceedings” related to the charges laid in June 2012.

[119] I am satisfied that the tax information was not improperly acquired by the RCMP and that it was not improperly used to obtain the third restraint order.

(iv) The HSBC Securities Accounts

[120] The applicant did not adduce evidence to explain the basis on which these accounts were opened. It appears that the Canadian dollar account was opened with a $250,000 cheque, while the U.S. dollar account was opened with credit extended by the bank. The applicant adduced no evidence to demonstrate that the source of funds for the cheque or alternatively any collateral behind it was untainted. It is a reasonable inference that, as Mr. Bergman conceded, the applicant must have provided the bank with collateral in order to open the U.S. dollar account. The applicant, however, adduced no evidence as to the source of the collateral provided and no evidence that the collateral was untainted.

[121] In the absence of evidence that the source of funds or collateral was untainted, in the context of all the evidence about the applicant’s alleged money laundering activities and possession of the proceeds of crime, the applicant has failed to satisfy me on a balance of probabilities that the two securities accounts should be excluded from the restraint order

(v) Misleading, Inaccurate and/or False Information

[122] Constable Robertson was frank in his affidavit that his net worth calculation was an estimate. He was frank in stating that it was not a detailed and exhaustive calculation as prepared by an accountant. It was reasonable for him to rely on information in the applicant’s 2010 financial statement, which was sworn by the applicant and submitted by him to a court in the course of family law proceedings, rather than on an earlier 2009 report. The affidavit was not false, misleading or inaccurate in any material respect.

[123] Constable Robertson explained why he included reference in the net worth calculations to a vehicle the applicant no longer had, and I accept his explanation. Even if it was inaccurate to include the vehicle and its value was excised from the affidavit, it would make no material difference to the conclusion that the applicant had amassed an increased net worth well in excess of $2 million during the relevant time period, that could not be explained by his income from legitimate sources.

[124] Constable Robertson set out in his affidavit that the applicant’s counsel wished to be notified of the bringing of the application so that he could appear to make submissions, and explained the concern with giving that notice. He did not mislead the application judge. The application judge chose to deal with the application ex parte, as he was entitled to do.

(vi) Summation

[125] For all of these reasons, the applicant has failed to establish on a balance of probabilities that the third restraint order should not have been granted. There is no basis on which to revoke it.

CONCLUSION

[126] The application is dismissed in respect of all three restraint orders.

Justice M.K. Fuerst

Released: August 7, 2013