SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CRIMJ(F)3431/09
DATE: 20130129
RE: HER MAJESTY THE QUEEN v. DEBORAH DIECKMANN AND GEORGE SALMON
BEFORE: Baltman J.
COUNSEL:
X. Proestos for the Crown
H. Epstein for Ms. Dieckmann
E. Brown for Mr. Salmon
HEARD: January 7 and 8, 2013
Ruling on Application to Quash Subpoena
Overview
[1] The applicants are charged with fraud. It is alleged they operated a number of businesses which stole several million dollars from the federal government, in the way of “source deductions.” According to the Crown, the accused carried on a seemingly legitimate business providing payroll services to various employers. However, instead of remitting amounts collected to Canada Revenue Agency (CRA), they allegedly converted them to their own use.
[2] The Crown alleges that the applicants attempted to conceal their identities as the real operators of these businesses by enlisting naïve or impecunious friends and relatives, who served as nominee directors, and further shielded themselves from liability by employing misguided professionals.
[3] The applicants employed the law firm Beard Winter LLP and, in particular, Peter Silverberg, a solicitor with that firm to provide legal services, with respect to a variety of business matters and several companies associated with the applicants.
[4] During the investigation that led to these charges, various representatives of CRA met with, among others, nominee directors, an accountant (Wayne Stubbington), and Mr. Silverberg. Prior to the preliminary hearing the Crown served a subpoena duces tecum upon Mr. Silverberg. Mr. Silverberg complied with the subpoena and attended the preliminary hearing with four boxes of documents, claiming solicitor-client privilege over their entirety. The applicants objected to the documents being produced to the Crown or the court on the basis of a subpoena, and argued that production of the documents would violate their rights under s.8 of the Charter. The Crown asserted that the documents were admissible, because either: a) they were not privileged; or b) any documents that were in fact privileged were admissible pursuant to the crime fraud exception.
[5] Justice Allen, who presided over the preliminary hearing, determined that he had no jurisdiction to rule on an alleged s. 8 violation at a preliminary hearing. Mr. Silverberg retained control over the documents and was served with a further subpoena to attend and bring the documents to the trial.
[6] This case was supervised by Justice Durno prior to trial in the Superior Court. During the case supervision process the parties agreed that the trial judge, in advance of jury selection, should determine any issues concerning the documents being held by Mr. Silverberg. One of the applicants, Ms. Dieckmann, then directed Mr. Silverberg to deliver “her files” to her counsel. The Crown, who had been given notice of this request, brought an “urgent” motion before Durno J. for directions. At that motion the parties agreed that, without prejudice to anyone’s position, copies of the documents would be provided to the applicants and the originals would be sealed and stored with the court, pending further determination by the trial judge.
[7] The original trial judge in this matter was Justice Corbett. In November 2010, during pre-trial motions, he dealt with a preliminary objection by the defence to the effect that Mr. Silverberg’s documents should have been obtained by way of a search warrant rather than as a subpoena. Corbett J. dismissed that argument, ruling that the Crown was within its rights to obtain the documents by way of subpoena.
The trial proceeded before Corbett J. and a jury in March 2011, but after eight days ended in a mistrial when he recused himself for a conflict of interest.
[8] When I was appointed as the new trial judge, I was asked to determine whether Corbett J.’s ruling on the subpoena issue should stand or the matter should be re-litigated. I decided the matter needed to be re-heard. In the course of hearing submissions it was necessary for me to review Corbett J.’s previous ruling and the reasons that accompanied it. I recognize that my ruling is identical to his and some of my reasons parallel concerns that he previously identified. That said, in view of my determination that it was necessary to re-litigate the pre-trial motions, I have approached this motion independently and not relied upon his comments, except to the extent they assist me in understanding the history of these proceedings.
Position of the Parties
[9] The Defence argues that any materials obtained by way of subpoena violate their rights under s. 8 of the Charter, and should therefore be excluded under s. 24(2). It maintains that whenever the Crown wishes to seize, examine or copy documents in the possession of a lawyer who claims privilege over those documents, the law requires the Crown to seize the materials pursuant to a search warrant issued in accordance with the guidelines set down in R. v. Lavallee, 2002 SCC 61, [2002] 3 S.C.R. 209.
[10] The Crown maintains that s. 8 of the Charter is not even engaged here, because the subpoena process is neither a search nor a seizure. Alternatively, even if the documents were obtained pursuant to a search or seizure, the Crown asserts that the subpoena process is a valid method of obtaining private records.
Analysis
a. Was there a “search” or “seizure” within the meaning of s. 8 of the Charter?
[11] In order for s. 8 to even apply, there must “first” be a search or a seizure: R. v. Jarvis, 2002 SCC 73, [2002] S.C.J. No. 76, para. 69. Assuming a search or a seizure has occurred, it must then be determined whether either of those actions was unreasonable, as section 8 protects only a reasonable expectation of privacy: Hunter et al v. Southam Inc., 1984 33 (SCC), [1984] S.C.J. No. 36.
[12] When focussed on the first criterion of establishing a search or a seizure, this application comes to a grinding halt, as in my view neither such event occurred. It is important to understand the physical trajectory of the documents in issue. When Mr. Silverberg received the subpoena he placed his files in four boxes and brought the boxes to court. He then announced that he was claiming privilege over the documents. The parties all agreed that copies of the documents should be provided to defence counsel, and that Justice Corbett could review them. The boxes were then sealed and put in the custody of the court.
[13] The upshot is that from the time Mr. Silverberg received the subpoena until the documents were delivered into court, no one in the Crown’s office, or on behalf of the prosecution, got access to them, in any fashion. There was no invasion by the state; no one ordered them to be disclosed and no one so much as peeked at them, except on consent. It is therefore blatantly clear there was no “search”.
[14] Nor is there any evidence of a seizure. The essence of a seizure is the taking of something from a person by a public authority without consent. Here nobody took anything from anybody without prior consent. Mr. Silverberg was ordered to bring his files to court, and did so, but they remained in his custody until the parties agreed on how they should be handled further.
[15] It is significant that the subpoena in question was issued under s. 699(1) of the Code. This provision is contained within Part XXII, entitled “Procuring Attendance”. The section, by its own wording, deals solely with getting people and documents physically before the court, hence the title “Procuring Attendance”. What happens after that is up to the Court. By its own language s. 699 has nothing to do with searching or seizing. The power of the subpoena is limited to requiring a person’s attendance with records.
[16] The applicants assert that because they have a reasonable expectation of privacy in their lawyer’s files, it must follow that any attempt to procure them amounts to at least a seizure, if not a search. That is circular reasoning; while the purpose of s. 8 is to protect privacy, and there is no doubt that clients have a reasonable expectation of privacy in their solicitor’s files, there is no search or seizure unless that expectation has first been invaded in some way by the state.[^1] It is only then that the court must address the level of privacy expected.
[17] Significantly, the applicants could not provide me with a single authority stating that the mere issuance of a subpoena amounts to a search or a seizure. That is likely because merely requiring a lawyer to transport files from his office to the courthouse does not in any way intrude upon or reveal anything about their contents, or even remove them from his custody. Unless and until the Court orders them to be detained, transferred, shared or copied – presumably only after hearing submissions from the affected parties - there has been no intrusion, and therefore no search or seizure. It is important to remember that the issue on this motion is not whether the impugned materials are presumptively protected by solicitor and client privilege – obviously they are – or whether they are nonetheless admissible pursuant to the crime fraud exception – that is to be determined later - but rather, and simply, how do we get them to court in the first place?
[18] Given my conclusion that neither a search nor a seizure occurred here, there is no basis to consider whether a breach of s. 8 has occurred. However, in case I am wrong on that point, I will proceed to consider whether a subpoena is a valid method of obtaining private records.
b. Is a subpoena a valid method of obtaining private records?
[19] The applicants maintain that the Crown cannot obtain documents from a solicitor’s office by way of a subpoena. They say the Crown must use a search warrant. They rely upon the Supreme Court of Canada decision in Lavallee, and upon the decision of Justice Trotter in R. v. V.I., 2008 36164 (ON SC), [2008] O.J. No. 2856 (S.C.).
[20] Turning first to the Lavallee decision, I do not agree that it requires the Crown to use a search warrant. Lavallee was not about that. Rather it set out guidelines for how law office searches must be conducted, and concluded that s. 488.1 is unconstitutional because its provisions allowed for excessive intrusion into the realm of solicitor-client privilege. The decision expressly does not consider the process for authorizing the search of a lawyer’s office nor alternatives to obtaining privileged records by means other than a search warrant. Arbour J. specifically drew this distinction when identifying the issue on appeal, in para. 22:
It seems clear from this background that s.488.1 of the Code was enacted in an effort to address the specificity of the searches of lawyers’ business premises and, in particular, to ensure that privileged communications made to a lawyer were properly exempted from the reach of that investigative technique…That is, s. 488.1 does not attempt to deal with the process for authorizing the search of law offices but merely with the manner in which they are carried out. The question before us is whether this attempt reached the constitutional mark.
[emphasis added]
[21] Moreover, Lavallee prescribes that before a search warrant is granted on a law office, the authorities should consider other alternatives: at para. 49 Justice Arbour sets out ten principles to serve as “guidelines” for “both the search authorization process and the general manner in which the search must be carried out”, the second of which states:
Before searching a law office, the investigative authorities must satisfy the issuing justice that there exists no other reasonable alternative to the search.
[emphasis added]
[22] This stipulation suggests that a search warrant is not the only legitimate means of obtaining privileged material. Presumably a “reasonable alternative” is one that is just as effective but less intrusive, which is precisely the advantage of a subpoena. Where, as here, there is no concern that the solicitor is party to any wrongdoing, a subpoena insures that the records will arrive safely and intact, without the risk of privileged documents being inadvertently opened or read. At that point it is incumbent upon the court to insure that Lavallee protections are considered. I cannot conceive of how the court is in a worse position to do that than any referee who may be supervising the search at the lawyer’s office; quite the contrary, in a courtroom the judge can control the process by insuring that the records remain sealed until all the affected parties have the opportunity to make submissions, as opposed to a lawyer’s office where, without all the parties present, mistakes can inadvertently occur.
[23] That the subpoena at least poses no disadvantage over the search warrant may be the reason why, in this case, the Law Society accepted that the procedures used were Lavallee “compliant” and therefore solicitor client privilege was being adequately protected. While the Law Society’s position is not determinative, its conclusions contradict the applicants’ submissions about the dangers associated with upholding the subpoena.
[24] I recognize that Trotter J. came to a different conclusion in V.I. However, aside from the fact that that decision is not binding upon me, the circumstances there were different in many ways. First, the case involved employment records, not solicitor and client documents. More importantly, in that case, unlike here, the Crown conceded that there had been a “seizure” and therefore s. 8 of the Charter was triggered. In fact, at an earlier appearance when the Crown requested access to the records, counsel for the defendant – remarkably - did not object. A subpoena does not allow someone to turn over records without further inquiry; that it happened that way in V.I. does not mean it is what should happen.
[25] After setting out the factual background, Justice Trotter discussed some of the similarities and differences between the search warrant power and the power to issue a subpoena, correctly observing that while “a search warrant transfers control over what is seized into the hands of the state… a subpoena compels the production of these items to the court from which the subpoena issued.” The court “may” then transfer control of these items to one of the parties: para. 14.
[26] The rationale for Justice Trotter’s conclusion that a search warrant should have been used rather than a subpoena is set out in paragraph 19:
The police should have applied for a search warrant to obtain Ms. V.I.’s employment records. In failing to do so, the police denied her the protections of the search warrant provisions of the Criminal Code, which are now underwritten by s. 8 of the Charter. The police were no more entitled to access Ms. V.I.’s employment records with a subpoena than they were entitled to subpoena her legal file from her current or former counsel: see Lavallee, Rackel & Heintz v. Canada (Attorney General); White, Ottenheimer & Baker v. Canada (Attorney General); R. v. Fink (2002), 2002 SCC 61, 167 C.C.C. (3d) 1 (S.C.C.). A search warrant is required in both instances. This is not to suggest that the police cannot use the subpoena process for investigative purposes, once judicial proceedings are afoot. However, in this case, where the sole purpose in obtaining the subpoena was to obtain the private records of an accused person, an application to obtain a search warrant was required [endnote referred to below]. The failure to obtain a search warrant infringed Ms. V.I.’s rights under s. 8 of the Charter. [emphasis added]
[27] My difficulty with that reasoning is threefold: first, it assumes that by using the subpoena the police got access to Ms. V.I.’s employment records, when in fact they did not get access to them; they merely compelled their delivery to court. It was only when the records were turned over to the Crown that the state got access, and in V.I. that only happened with the consent of defence counsel.
[28] Second, in support of his conclusion Trotter J. relies upon Lavallee; as I have already explained, nowhere in Lavallee does the court find that records may be compelled only by use of a search warrant - quite the contrary.
[29] Third, Trotter J.’s penultimate conclusion, found in the second last statement of the paragraph, is supported by a case (Regina v. Serendip Physiotherapy Clinic, 2004 39011 (ON CA), [2004] O.J. No. 4653 (C.A.)) which, as he acknowledges in an endnote, does not address the issue of the adequacy of a subpoena vs. a search warrant.
[30] It is not clear to me to what extent the distinguishing features of V.I. that I identified above influenced Trotter J. to conclude as he did; to the extent his conclusion stands irrespective of those distinguishing facts, I must respectfully disagree with him. I recognize there are many cases where search warrants have been issued to authorize searches and seizures from lawyers’ offices, and counsel provided no precedent for the use of a subpoena rather than a search warrant. That does not mean a subpoena has never been used in these circumstances; it is merely that it has never been formally challenged before.[^1]
[31] To summarize, I conclude as follows:
A subpoena is a valid method of obtaining documents from a lawyer’s office;
Rather than precluding a subpoena, Lavallee requires that methods other than a search warrant be used when they are available;
The principles set out in Lavallee should be applied by analogy to documents produced through a subpoena, in order to insure that the full protection of solicitor-client privilege is accorded.
Conclusion
[32] For the reasons set out above, I conclude that the applicants’ motion cannot succeed, on two bases: first, the documents in issue were not obtained pursuant to a search or seizure; second, and in the alternative, the subpoena process is a valid method of obtaining private records.
Baltman J.
DATE: January 29, 2013
[^1]: See “Search and Seizure Law in Canada”, Volume 1, by Hutchinson, Morton, Bury and Reinhart, 2-1 to 2-6.
[^2]: Shortly after reading these reasons into the record, I realized that I had overlooked the decision of R. v. Dunn 2011 ONSC 4263, wherein the accused challenged the Crown’s use of a subpoena (rather than a search warrant) to bring lawyer’s notes to court. Nordheimer J. concluded, as I have, that a subpoena was a legitimate means of bringing such documents to court, and that any concerns about solicitor-client privilege could be dealt with later by the court: see paras. 14-18. As he put it, “the distinction between bringing any notes to court and any requirement to produce them to the prosecution is an important one”.