Canadian Planning v. Libya, 2015 ONSC 3386
COURT FILE NO.: 13-44192
DATE: 2015-05-29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Canadian Planning And Design Consultants Inc.
Applicant
(Respondent on Cross-Motion)
- and -
State Of Libya aka Libya aka People’s Bureau Of The Great Socialist People’s Libyan Arab Jamahiriya-Canada aka The Great Socialist People’s Libyan Arab Jamahiriya-Canada aka Embassy Of Libya In Canada aka Embassy Of Libya aka Libyan Embassy Canada
Respondent
(Applicant on Cross-Motion)
- and -
Royal Bank of Canada
Garnishee
The Honourable Justice C.D. Braid
Jennifer King, Malcolm Ruby and John Adair for the Applicant, Canadian Planning
John Melia and Jennifer Radford for the Respondent, Libya
Catherine Francis, for the Garnishee, RBC
HEARD: April 2 and May 5, 2015
RULING NO. 3 ON MOTIONS
[1] This case concerns issues of diplomatic immunity, State immunity and the right of a private debtor to recover judgment against bank accounts held by another State within Canada’s borders.
[2] This is the third ruling on motions related to Notices of Garnishment that have been served on the Royal Bank of Canada (“RBC”) in relation to Libyan bank accounts held in Canada. The first ruling was released on March 11, 2015 (“the first ruling”) and is cited at 2015 ONSC 1638. The second ruling was released on April 30, 2015 (“the second ruling”) and is cited at 2015 ONSC 2188.
[3] This third ruling addresses motions brought by the Applicant, who seeks to compel the cross-examination of the Libyan Ambassador and a representative of RBC; and who seeks orders to compel production of documents from Libya, RBC and other third parties.
BACKGROUND
[4] Canadian Planning and Design Consultants (“Canadian Planning”) is a Canadian corporation who made a monetary claim against the State of Libya (“Libya”) for breach of contract arising out of a Hospital Management Agreement from 2007. In that agreement, both parties agreed that any disputes would be settled at the International Chamber of Commerce International Court of Arbitration in Paris (“ICC”). A dispute arose, and both parties submitted to the jurisdiction of the ICC for the purpose of arguing the dispute on its merits.
[5] On May 4, 2012, the ICC ordered Libya to pay damages to Canadian Planning for lost profit. The current value of this judgment is approximately $11 million Canadian dollars. Despite the fact that Libya submitted to the jurisdiction of the ICC, Libya has failed to pay the judgment.
[6] Canadian Planning brought an application seeking an order to permit them to enforce the ICC judgment in Canada. On June 20, 2014, Justice Parayeski of the Ontario Superior Court of Justice issued a recognition and enforcement order. Despite having been served with the application, Libya was not present for this hearing. The recognition and enforcement order stated that Libya “has, by implication, waived its immunity from attachment, execution, seizure, and forfeiture within the meaning of Section 12(1)(a) of the State Immunity Act, R.S.C. 1985, c. S-18”.
[7] Libya appealed the recognition and enforcement order. On December 19, 2014, the Ontario Court of Appeal found that there was no basis to interfere with the order on procedural fairness grounds and dismissed the appeal. The court stated that the appropriate procedure to raise this issue was by way of a motion to set aside the order pursuant to Rule 38.11. Libya subsequently brought a motion to set aside Justice Parayeski’s order, which will likely be heard later this year.
[8] On December 22, 2014 and January 12, 2015, the Department of Justice wrote to the Civil Enforcement Office. The letters enclosed a certificate that had been issued by the Department of Foreign Affairs, Trade and Development (“the DFATD certificate”) pursuant to s.11(a) and (c) of the Foreign Missions and International Organizations Act, S.C. 1991, c. 41 (“Foreign Missions Act”). The DFATD certificate stated that several named bank accounts were the “diplomatic property of Libya” and that the accounts “continue to enjoy privileges and immunities under the Foreign Missions and International Organizations Act”. In their letters to the court, the Department of Justice stated that the DFATD certificate was prima facie proof that the accounts were immune from enforcement and attachment. (For reasons set out in the first ruling, this court found that that the DFATD certificate, on its own, is not enough to confer immunity on the bank accounts).
[9] On December 29, 2014, the court issued Notices of Garnishment (“the original Notices of Garnishment”) naming the State of Libya as the debtor. On January 6, 2015, Canadian Planning served the original Notices of Garnishment on RBC bank accounts in Ottawa. Libya has paid the $20,000 costs order from the appeal on this matter out of one of the garnished bank accounts.
[10] On January 9, 2015, Canadian Planning obtained an order amending the style of cause in the recognition and enforcement order. The amendment added the Libyan Embassy as a defendant to the Application (as one of the aliases for the State of Libya).
[11] On January 26, 2015, Canadian Planning served Notices of Withdrawal of the Original Notices of Garnishment. Canadian Planning then attempted to withdraw the original Notices of Garnishment and replace them with the new Notices of Garnishment in order to reflect the amended title of proceedings. In light of the correspondence that it had received from the Department of Justice, the Civil Enforcement Office would not accept any further documents for filing, including the Notice of Withdrawal of Garnishment and the new Notices of Garnishment.
[12] On the original return date of February 6, 2015, the parties sought the following:
i) Libya sought an order quashing the original Notices of Garnishment; an order directing that no new Notices of Garnishment be issued; and an order restraining Canadian Planning from any further enforcement attempts in respect of the bank accounts.
ii) Canadian Planning sought a declaration that the original Notices of Garnishment are valid; and a direction from the court to permit the issuance of new, amended Notices of Garnishment that reflect the amended style of cause in the proceedings.
[13] In the first ruling in respect of those motions, this court concluded as follows:
- Procedurally, if a “competent authority” of the State of Libya provides a court with “due assurances” that a bank account’s funds are for the sovereign purposes of the functioning of the embassy, the court must be satisfied with those assurances unless Canadian Planning can prove that the funds are for another purpose (i.e. for a commercial purpose). If Libya asserts that these bank accounts exist for the proper functioning of its embassy, and Canadian Planning has no evidence to the contrary, the court must be satisfied with these assurances and provide the immunities due to such bank accounts at international law. The court is not entitled to inquire further into the use of the bank accounts, because doing so would be an undue interference into the affairs of the sending state, contrary to international law.
45... I will provide the parties with a further opportunity to provide a declaration or additional sworn evidence regarding the nature of the bank accounts. Once the court has received that evidence, the parties may provide additional submissions as to the nature of the bank accounts.
[14] Following the release of the first ruling, Libya filed a statutory declaration of the Libyan Ambassador in Canada, Fathi Mohammed Baja. This document is dated March 12, 2015 and affirms that the garnished bank accounts “exist and are utilized for the sovereign and diplomatic purposes of the proper functioning of the Libyan Embassy in Canada”. The Statutory Declaration states that it is being provided in response to this court’s ruling of March 11, 2015, and states “Neither the execution of this Statutory Declaration nor any statements herein represent or are intended to be construed as a waiver of the state immunity of the State of Libya or the diplomatic immunity afforded to me.”
[15] Canadian Planning then sought a further adjournment in order to provide evidence that the bank accounts are not purely for a diplomatic purpose, in an attempt to displace the immunity. Canadian Planning brought motions, returnable April 2, 2015, for the following relief:
a) An order requiring that the Libyan Ambassador submit to cross-examination with respect to his March 12, 2015 declaration, failing which his declaration shall be given no weight;
b) Production of the complete files with respect to the garnished bank accounts (from RBC and/or from Libya);
c) Directing that RBC’s affiant, Mary Burke-Cameron, submit to cross-examination with respect to her February 2, 2015 affidavit; and
d) Disclosure from other named third parties to permit Canadian Planning to determine whether any funds have been paid to those third parties from the garnished bank accounts. The third parties are University Health Network, Algonquin College and Can/Aus Security & Investigations International Inc.
[16] Libya brought a cross-motion, also returnable on April 2, 2015, seeking to strike the affidavit filed in support of Canadian Planning’s motions.
[17] In the meantime, this court received a certificate signed by the Honourable Rob Nicholson, Minister of Foreign Affairs of Canada dated March 30, 2015 (“the Minister’s certificate”). The Minister’s certificate stated, in part, that “Canada and Libya enjoy diplomatic relations” and certified that “The Department of Foreign Affairs, Trade and Development has determined that the (following) bank accounts are the bank accounts of the Embassy of Libya, used by the Embassy of Libya for diplomatic purposes which enjoy the privileges and immunities accorded to embassy bank accounts under customary international law.” This statement was followed by a list of bank accounts held at RBC and the Toronto Dominion Bank.
[18] The court received preliminary oral submissions on April 2, 2015 regarding the motions for production and cross-examination. Following that attendance in court, the parties provided further written submissions with regard to whether the Minister’s certificate removed the opportunity for Canadian Planning to allege that the accounts fall into a commercial purpose or other exception.
[19] In the second ruling, this court set out a framework for the motions to set aside Notices of Garnishment. Portions of the ruling bear repeating here, as the court must always return to this framework in each step of the process:
Customary international law dictates that funds of a foreign State held in an embassy bank account in the host State for diplomatic or sovereign purposes will be immune from attachment and execution…Some states, including most Western states, allow an exception for accounts that a judgment creditor proves are not used or intended for diplomatic or sovereign purposes. There is little dispute over this general rule. However, the limits, scope, and content of exceptions to the rule (and how courts should treat mixed-use accounts) is still unsettled.
Once it is clear that there is a diplomatic relationship between the two States, the court should, according to customary international law, review the nature of the accounts at issue, and should move on to the second step of the test: whether the sending State has provided due assurances that the funds are held in the embassy account for sovereign or diplomatic purposes.
The foreign State does not need to prove that the bank account is for a diplomatic purpose; all that is necessary at international law is an “assurance” from a competent authority that the accounts are for sovereign or diplomatic purposes…
International law requires that this statement must be respected without further proof, unless the creditor can prove the contrary, as doing otherwise would be an unacceptable interference with the internal affairs of a foreign State.
In the case at bar, the Ambassador for Libya has provided assurances that the bank account is for a sovereign purpose…This court takes this statutory declaration to be the due assurances from a competent authority necessary to create a presumption of diplomatic immunity over the bank accounts.
(This) is characterized as a strong but rebuttable presumption in favour of diplomatic immunity for embassy bank accounts…
If this court determines that it can proceed to the third question, this court will need to determine whether Canadian Planning has sufficient evidence to displace the mantle of immunity, and whether the court has the authority to compel production of information from third parties in order to assist Canadian Planning in their search for that evidence. In analyzing international cases, it appears that the creditor has rarely displaced the mantle of immunity.
[20] In the second ruling, this court concluded the Minister’s certificate is not dispositive of all issues on these motions. The Minister’s certificate is conclusive proof of the existence of a diplomatic relationship between Canada and Libya, but it does not end the enquiry regarding the immunity of the bank accounts. Canadian Planning must be given the opportunity to introduce evidence of a commercial (or other) purpose. This court will continue to assess the nature of the bank accounts, within the parameters established by customary international law.
[21] In support of the motions for production and cross-examination, Canadian Planning filed the affidavit of Mr. Gord McGuire. The affidavit included the following documents:
a) Internet searches, including newspaper articles, purporting to demonstrate that Libya engages in commercial transactions in other countries through the Libyan Investment Authority; and that the Libyan Investment Authority purchased a Canadian-based company in 2009 or 2010 for approximately $300 million.
b) An internet article regarding a Memorandum of Understanding (“MOU”) that Libya entered into with Toronto’s University Health Network (“UHN”) to train Libyan medical professionals. The article also mentions an MOU with the Royal College of Physicians and Surgeons to build a medical college in Libya.
c) An internet article regarding an agreement between Libya and UHN for Libyans to be treated in Canada for injuries that they sustained in the civil war.
d) An internet article regarding a letter of intent that Libya signed with Algonquin College for the education of the faculty at a school in Libya.
e) Internet searches regarding scholarship grants to Libyan students who are studying in Canada. The material appears to demonstrate that Libya funds scholarship programs in at least 41 different countries, through their embassies. The scholarship plan in Canada appears to include medical and dental insurance. The documentation appears to state that the Central Bank of Libya transferred millions of dollars to the Libyan Embassy in Canada in order to provide the funds necessary to support Libyan students in Canada.
f) Internet search and a title search demonstrating that a condominium was purchased in Toronto in 2008 by Saadi Gaddafi (son of the late Colonel Muammar Gaddafi) and that security services were provided, in Canada, by Can/Aus Security & Investigations International Inc. (“CSI”) for Saadi Gaddafi.
g) Correspondence and court proceedings related to the cases of Tracy v. Iran and Bennett Estate v. Iran. In those proceedings, the moving party sought to enforce, in Ontario, judgments against Iran. During those proceedings, RBC did not contest or take any position with respect to a motion for production of the Iranian embassy bank account; a motion to freeze the embassy bank account; and motions for orders permitting execution and garnishment against the embassy bank account.
[22] In support of their position on the motion, Canadian Planning also filed an affidavit of international law expert Mr. Stephen Toope. Mr. Toope is the Director Designate and a Professor of International Law at the Munk School of Global Affairs and Faculty of Law, University of Toronto. Mr. Toope was presented with the following question: “Whether there is any rule or principle of international law that would preclude third parties, such as banks or counter-parties to transactions, to provide information about their financial dealings in Ontario with a foreign State for the purposes of a motion to determine the status of foreign State-owned bank accounts situated in Ontario.”
[23] Mr. Toope stated that he reviewed the international law providing for the diplomatic immunity of foreign States in relation to archives, documents and communications. The expert opinion focused on documents and the fact that, once a document is out of the hands of the holder of the diplomatic immunity and is in the hands of another party, it is no longer protected by immunity. Mr. Toope concluded that there is no principle of international law that precludes the court from ordering disclosure of records related to the embassy accounts.
[24] On May 5, 2015, further submissions were made regarding the motions for production and cross-examinations. This ruling addresses the relief sought in those motions.
ISSUES
[25] The following issues must be determined by the court on these motions:
A. Onus
B. Request to strike Canadian Planning’s affidavit
C. Cross-examination of the Libyan Ambassador with respect to his declaration
D. Production of garnished bank account files
E. Cross-examination of RBC’s affiant
F. Disclosure from other third parties who had dealings with Libya
ANALYSIS
A. Onus
[26] Canadian Planning argues that the issues on this motion must be analyzed on the basis of the ordinary rules of evidence and procedure applicable in Ontario, unless RBC or Libya can demonstrate that there is some principle of international law that requires a departure from those rules. Canadian Planning argues that, if the court is satisfied that there is a prima facie entitlement based on the usual evidentiary and procedural rules, then Libya and/or RBC bear the legal onus of satisfying the court that the Applicant’s right to cross-examination and production is displaced by a rule of international law.
[27] In the first and second rulings, it was recognized that this court is bound to follow principles of international law with respect to the garnished bank accounts. At this stage, there is a strong but rebuttable presumption in favour of diplomatic immunity for the garnished bank accounts. The requests for production and cross-examination must be assessed in that unique context.
[28] Diplomatic immunity is a predominant consideration in this case. This court must be careful to avoid undue interference in the affairs of a diplomatic mission. It is inevitable that, given the unique circumstances of this case, the analysis of whether the Applicant is entitled to the orders sought will have extra considerations than in a traditional civil matter. However, this does not change the legal onus on the motion.
B. Request to Strike Canadian Planning’s Affidavit
[29] Libya seeks an order striking the affidavit of Gord McGuire filed in support of Canadian Planning’s motions for production and cross-examination. Libya and RBC generally suggest that the evidence provided by Mr. McGuire in the nature of internet searches is hearsay, without further proof of who wrote the articles and without making inquiries with the authors or subjects of the articles directly. Libya and RBC also argue that Mr. McGuire had no direct knowledge of this case and that Mr. Gary Graham, a counsel directly involved with the proceedings, should have sworn the affidavit.
[30] Regarding hearsay, Rule 39(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 permits an affidavit to be based on “information and belief”. The rules state that an affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit.
[31] While the quality of the hearsay evidence (taken from the internet) may affect the weight assigned to it by the court, there is nothing to prohibit the affidavit from being submitted in its current format. In addition, even if I were to accept that Mr. Graham is better suited to swear the affidavit, that is not a valid basis for the court to strike the affidavit that has been filed.
[32] The motion to strike the affidavit of Mr. McGuire is therefore dismissed.
C. Cross-examination of the Libyan Ambassador With Respect to his Declaration
[33] Canadian Planning seeks an order requiring the Libyan Ambassador to submit to cross-examination with respect to his March 12, 2015 declaration, failing which his declaration shall be given no weight.
[34] The request to compel the Ambassador for cross-examination must be considered in the context of this court’s previous rulings. In the first ruling, the court held that Libya should be given an opportunity to provide due assurances from a competent authority. If the court were to receive the statutory declaration from the Libyan Ambassador, international law requires that the statutory declaration must be respected without further proof. Once Libya provided its due assurances that the subject accounts are for sovereign purposes, “the court is not entitled to inquire further into the use of the bank accounts, because doing so would be an undue interference into the affairs of the sending state, contrary to international law” (Iraq v. Vinci Constructions, Court of Appeal of Brussels (9th Chamber) 2002, 127 ILR 101 at part 1, page 106. See also The Philippine Embassy Bank Account Case, (1977) 65 ILR 146 (Fed Const Ct) (Germany), at page 400).
[35] The declaration of the Ambassador must be accepted on its face. In the first ruling, several cases were cited in support of this proposition, including the following:
a) MK v. State Secretary for Justice (1986) 94 ILR 357: the Dutch Council of State accepted a declaration from the Turkish Embassy that the money in the bank account was for the performance of embassy functions. It held that to require a further and more detailed account of the use of the account would amount, under international law, to an unjustified interference in the internal affairs of the mission.
b) Banamar-Capizzi v. Embassy of the Popular Democratic Republic of Algeria (1989), 87 ILR 56: the Italian Court of Cassation commented that, where the funds in question appear to be devoted to financing the expenses necessary to fulfil sovereign purposes, “any attempt to check if such funds are effectively used in whole or in part for those purposes would inevitably result in undue interference in the affairs of the diplomatic mission.”
c) Netherlands v. Azeta BV (1998), 128 ILR 688 (Dist. Ct. of Rotterdam): Chile filed a letter from the foreign minister stating the bank accounts were intended for the running of the Chilean embassy. Upon receipt of this letter, the onus was on the creditor to prove the contrary, which it failed to do. The court held that Chile is entitled to claim immunity, and does not have to provide more detailed information about the bank accounts. To require more from Chile would constitute “an unacceptable interference under international law in the internal affairs of this mission.”
[36] The first ruling also made reference to the Philippine Bank Account Case, supra, in which the German Federal Constitutional Court stated that a receiving State must accept a claim by a foreign State that a certain bank account is in use for the exercise of diplomatic functions. To require the State to provide details “concerning the existence or the past, present or future purposes of funds in such an account would constitute interference, contrary to international law, in matters within the exclusive competence of the sending State.”
[37] The first ruling recognized the international jurisprudence stating that the declaration must be accepted without further proof. The Ambassador provided the declaration in response to that ruling. To order the Ambassador to submit to cross-examination would be an unacceptable interference with the internal affairs of a foreign State.
[38] It is notable that Article 31 of the Vienna Convention states: “A diplomatic agent is not obliged to give evidence as a witness”. Although Article 31 is not determinative on this motion, it further bolsters the determination that the Ambassador should not be compelled to be produced for cross-examination.
[39] The motion to require the Libyan Ambassador to submit to cross-examination with respect to the March 12, 2015 declaration is therefore dismissed.
D. Production of Garnished Bank Account Files
[40] Canadian Planning seeks an order for production of the RBC files with respect to the garnished bank accounts from RBC. In the alternative, Canadian Planning seeks production from Libya.
[41] Canadian Planning did not strenuously argue in support of the request for production of the bank records directly from Libya. The preceding paragraphs addressing the issue of the request to cross-examine the Ambassador are relevant to the request for production of bank documents from Libya. As noted above, the Ambassador’s declaration must be accepted on its face. For the reasons set out above, the court cannot order production of the bank records from Libya and declines to do so.
[42] Canadian Planning argues that the position taken by RBC in Tracy (Litigation guardian of) v. Iranian Ministry of Information and Security, 2014 ONSC 1696 (Tracy) and Bennett Estate v. Islamic Republic of Iran, 2013 ONSC 6832 (Bennett) is relevant to this proceeding. RBC disclosed bank records of the Iranian embassy in those prior proceedings, and therefore Canadian Planning argues that RBC should be required to produce the bank records of the Libyan embassy in this case.
[43] I do not accept that the position taken by RBC in the prior proceedings is relevant in this case. The prior proceedings were very different from the case before the court. The Justice for Victims of Terrorism Act, S.C. 2012, c. 1. (which came into force in September of 2012) specifically listed Iran as a foreign State that will be excepted from the State Immunity Act for the purposes of execution, i.e. the Act provides that Iran’s property is explicitly not immune from attachment and execution in certain circumstances (circumstances that were in play in the Tracy and Bennett cases. Parliament has here enacted language explicitly contradicting international law, unlike in the present case. Also, Foreign Affairs had identified two bank accounts as “Iran’s Non-Diplomatic Bank Accounts in Canada”. That is entirely different from the current case, in which both Libya and Canada’s Minister of Foreign Affairs have declared or certified that the RBC accounts are diplomatic bank accounts.
[44] Canadian Planning also argues that there is no principle of law, domestic or international, that precludes RBC from producing the information sought. Based on the expert opinion of Mr. Toope, Canadian Planning argues that there is no immunity or privilege over the documents contained in RBC’s files in relation to the bank accounts.
[45] Libya concedes that Mr. Toope is an international law expert. The Court also recognizes that Mr. Toope is extremely qualified in the study of international law. However, Libya says that Mr. Toope did not consider the case of Iraq v. Vinci Construction, Court of Appeal of Brussels (9th Chamber) 2002, 127 ILR 101, which is directly on point. Libya and RBC submit that the court should assign little or no weight to Mr. Toope’s evidence.
[46] The expert opinion of Mr. Toope focused on documents and the fact that, once a document is out of the hands of the holder of the diplomatic immunity, it is no longer protected by immunity. Mr. Toope concluded that there is no principle of international law that precludes the court from ordering disclosure of records related to the embassy accounts. Put another way, he said that there is a dearth of authority on this issue and it does not appear to have been the subject of considerable court interpretation.
[47] I agree with Mr. Toope’s assessment that this issue has not received considerable interpretation by the court. However, Mr. Toope neglected to mention the decision of Iraq v. Vinci Construction, supra. In that case, the Court of Appeal of Brussels (9th Chamber) refused to compel bank statements showing movement in and out of the accounts (at page 105-106):
The dominant opinio juris accepts that the funds deposited in the bank account of a diplomatic mission enjoy a presumption that they are allocated for sovereign purposes. To require the State in question to justify the use of its bank accounts for all its diplomatic activities… would constitute unacceptable interference with that State and an infringement of its sovereignty.
To require proof of the allocation of funds to be the responsibility of the State against which attachment is sought would be contrary to the very principle of immunity that, by definition, establishes a presumption in favour of the State that enjoys immunity. The imposition of (such) a duty…would in practice exclude reliance on its immunity.
[48] The court further held that bank statements constitute archives and documents of the missions that are protected by Article 24 of the Vienna Convention on Diplomatic Relations of 18 April 1961, according to which they “shall be inviolable at any time and wherever they may be” (Iraq v. Vinci, supra, at p.106-107):
…Article 24 has an extremely broad scope and is not limited to the protection of documents relating to national security. It also covers extracts from bank statements of a diplomatic mission...
Not to extend the protection of Article 24 to bank accounts would unquestionably interfere with the activity of a diplomatic mission to the extent that such a mission, which could have entirely legitimate political reasons for wishing to maintain the confidentiality of certain of its movements of funds, would be prevented from using funds in a bank account since confidentiality could not be guaranteed.
[49] Toope’s opinion also failed to take into account a fundamental tenet of Canadian banking law, which is the bank’s duty of confidentiality to its customer and that the confidentiality belongs to the customer (see Royal Bank of Canada v. Trang 2014 ONCA 883 (Ont.C.A.).
[50] To give effect to the presumption of immunity over embassy bank accounts, the court must not interfere with the documents in the hands of RBC. To find that the funds are immune but that the documents regarding the movement of funds are not immune would run contrary to the very information that the immunity seeks to protect. As the holders of the information, RBC does not have immunity, but they cannot be compelled to provide Libya’s bank account records. A court order compelling the documents to be produced by RBC would inevitably result in undue interference with the affairs of the mission and would strike at the very heart of the diplomatic relations that the Vienna Convention seeks to protect.
[51] In addition, Libya could never be compelled to produce the records. Canadian Planning should not be able to do indirectly what it cannot do directly.
[52] Therefore, the motion for production of the files with respect to the garnished bank accounts (from Libya and/or from RBC) is dismissed.
E. Cross-examination of RBC’s Affiant
[53] On February 2, 2015, Mary Burke-Cameron, from RBC, swore an affidavit in support of RBC’s position on the garnishment motions. Canadian Planning seeks an order compelling Ms. Burke-Cameron to submit to cross-examination on that affidavit. The request to compel Ms. Burke-Cameron to be cross-examined only arose at the point when the court embarked on the inquiry of whether the Libyan bank accounts are being used for diplomatic purposes.
[54] The content of Ms. Burke-Cameron’s affidavit can be divided into three categories:
a) A description of her employment at RBC.
b) The factual background leading up to the original garnishment motions. She described when RBC received the Notices of Garnishment; what the Notices said; how RBC responded to the Notices; consultations with in-house and external counsel; and correspondence between counsel and other parties.
c) Statements regarding the fact that the Embassy of Libya in Canada is a client of RBC and that she is the account manager for those accounts. Ms. Burke-Cameron provided a list of the specific accounts in question.
[55] Prior to the first ruling, RBC had offered to have Ms. Burke-Cameron answer written interrogatories. Canadian Planning did not take advantage of that opportunity.
[56] As a representative of RBC, Ms. Burke-Cameron is not insulated from cross-examination. As noted above, RBC does not have immunity, but they cannot be compelled to provide Libya’s bank account records. For the reasons set out above, the court cannot compel the production of the bank records. To do so would constitute an undue interference into the affairs of the sending State and is contrary to international law.
[57] Ms. Burke-Cameron could be cross-examined about residual matters that are not related to the inquiry regarding the garnished bank accounts. For example, she could be asked questions about her employment at RBC. However, that cross-examination would only be in relation to matters that are irrelevant to the inquiry of whether the bank accounts are for a diplomatic purpose.
[58] In my view, it would be dangerous to direct Ms. Burke-Cameron to be cross-examined on the limited areas of questioning, as she is not an international law expert and may not know what questions she can or cannot answer. Although limited cross-examination may be permitted, it would not produce any evidence relevant to the inquiry. To direct the cross-examination would also unnecessarily delay these proceedings for the purpose of cross-examination on irrelevant matters.
[59] In Central Halifax Community Association v. Halifax (Regional Municipality), 2007 NSCA 39 (leave to appeal to the SCC refused [2007] S.C.C.A. No. 279), the Nova Scotia Court of Appeal described the common law principle of residual inherent jurisdiction:
[34] Every superior court in this country has a residual discretion to control its process in order to prevent abuse. Procedural rules, however well intentioned, cannot be seen to stand in the way of basic fairness. This overriding judicial discretion is commonly referred to as the court's inherent jurisdiction. It is a jurisdiction sourced independently from any rule of court or statute.
[60] Residual discretion of the court to control its process should be invoked sparingly. Given the presumption of diplomatic immunity and the importance of protecting such immunity, I find that this is an appropriate case for the court to exercise residual discretion and deny the request to cross-examine Ms. Burke-Cameron.
[61] The motion to compel Ms. Burke-Cameron to submit to cross-examination on her February 2, 2015 affidavit is therefore dismissed.
F. Disclosure From Other Third Parties Who Had Dealings with Libya
[62] Canadian Planning seeks orders to compel production of records from other third parties that had dealings with Libya in Canada. Canadian Planning argues that the production is relevant to the inquiry of whether or not the garnished bank accounts are used for diplomatic purposes.
[63] Libya objects to the disclosure, and says that the articles from websites or newspapers do not establish a connection to the Libyan embassy or the garnished bank accounts of the Libyan embassy. It also states that the activities at issue, i.e. education and medical care, should be categorized as for a diplomatic or sovereign purpose.
[64] Rule 37.07(1) of the Rules of Civil Procedure requires that a notice of motion shall be served on any party or other person who will be affected by the order sought. The third parties will clearly be affected by the order sought and they may wish to assert a privacy interest over the records sought. Canadian Planning has not provided notice to the third parties, which is fatal to their application.
[65] Even if Canadian Planning had served the third parties, I would not order production from the third parties, for the reasons set out below.
[66] Rule 30.10 of the Rules of Civil Procedure deals with production of third party records during the discovery process prior to trial. Although this rule does not exactly govern the process for this motion, it is appropriate for the court to draw on the principles enunciated by that rule to require production from third parties. Rule 30.10 states that the court may order production of a document that is in the possession of a person who is not a party and is not privileged, where the court is satisfied that the document is relevant to a material issue in the action. Notice of this motion must be served on the person who is not a party.
[67] The Ontario Court of Appeal has held that “an order under Rule 30.10 should not be made as a matter of course; such an order should be made only in exceptional cases” (Ontario (Attorney General) v. Stavro [1995 3509 (ON CA)](https://www.canlii.org/en/on/onca/doc/1995/1995canlii3509/1995canlii3509.html>, [1995] O.J. No. 3136 (Ont.C.A.); cited with approval in Tetefsky v. General Motors Corp. [2011] O.J. No. 1390 (Ont.C.A.)).
[68] The motion for production from third parties was brought in the context of a fairly unique garnishment hearing. Because Libya had asserted that the garnished bank accounts were diplomatic bank accounts, the court embarked on a process recognized in international law. This court’s ruling of March 11, 2015 stated the following (at paragraph 39):
Procedurally, if a “competent authority” of the State of Libya provides a court with “due assurances” that a bank account’s funds are for the sovereign purposes of the functioning of the embassy, the court must be satisfied with those assurances unless Canadian Planning can prove that the funds are for another purpose (i.e. for a commercial purpose).
[69] On the motion for production from third parties, Canadian Planning must provide some evidence that the records sought are relevant. In that context, it is appropriate to determine what could be a commercial (or other) exception that would displace the presumption of immunity over the bank accounts. In order to establish that the documents sought are relevant to the inquiry, Canadian Planning must establish that the documents sought are relevant to a commercial/non-sovereign/non-diplomatic purpose of the garnished bank accounts.
[70] Canadian Planning says that, when this court analyzes the nature of transactions in the garnished bank accounts, the phrase “diplomatic purpose” should be defined narrowly as consistent with expenses limited to or necessary for the running of the embassy. Canadian Planning argues that payment for health care in Canada for injured Libyans and the Libya-North America Scholarship Fund are commercial enterprises. They have not provided any authority for this proposition.
[71] Canadian Planning argues that it is premature to determine this issue and it would be prejudicial to the Applicant to define “diplomatic purpose” at this stage, as it almost forces the Applicant to satisfy the court before it is allowed to obtain production. Canadian Planning states that is an extremely complex and novel issue in Canadian law and that the issue cannot be determined in the absence of an evidentiary record.
[72] I agree that this is a complex matter and there is no precedent in Canadian law. However, Canadian Planning must establish that the evidence that they seek to obtain from third parties is relevant to the inquiry of non-diplomatic use of the bank accounts.
[73] In the first and second ruling, this court has stated that the customary international law recognizes that embassy bank accounts are generally subject to diplomatic immunity. The reason for exempting them from the enforcement jurisdiction of the forum State lies primarily in protecting the ability of embassies to serve their diplomatic functions. The right to carry out diplomatic functions is a product of a State’s sovereignty.
[74] Article 3 of the Vienna Convention states that the functions of the diplomatic mission includes representing the sending State in the receiving State; protecting the interests of the sending State in the receiving State; promoting friendly relations between the States; and developing the economic, cultural and scientific relations of the sending State.
[75] I find that Canadian Planning has not established, on a balance of probabilities, that the records sought are relevant, for the following reasons:
a) Canadian Planning relies on an internet article regarding a letter of intent signed by Algonquin College and the Higher Institute for Comprehensive Careers in Libya. Such a document is not a contract, nor is it proof that Libya paid any funds to Algonquin College.
b) The internet article suggests that the agreement with Algonquin College focuses on “a faculty development training program and English as a Second Language training for staff and students” at the Higher Institute for Comprehensive Careers in Libya. Even if the court were to accept that Algonquin College might be paid by Libya, these services could be considered diplomatic. As noted above, the Vienna Convention states that the function of a diplomatic mission includes “promoting friendly relations and developing economic, cultural and scientific relations”.
c) Even if the court were to accept the article regarding the letter of intent with Algonquin College as evidence of an agreement to pay, there is no evidence that it was paid out of the garnished accounts. It is sheer speculation that payments were made or are being made to this organization out of these accounts.
d) Canadian Planning seeks records from CSI (a private security contractor) in relation to payments made to the security company for the benefit of Saadi Gaddafi. The documents do not establish any evidence that payments are being made from the garnished bank account for these expenses. In fact, the National Post article describes how Saadi Gaddafi fled Libya in 2011 as Tripoli was falling to anti-Gaddafi rebels. It would be unwise to presume that the Libyan Embassy, which represents the current State of Libya, would fund security services for the son of the late Colonel Muammar Gaddafi (whose dictatorship was overthrown in the civil war).
e) With respect to Libya’s contract with UHN to provide health care for Libyans who were treated in Canada, it is debatable whether this contract was for a diplomatic purpose. Even if UHN could provide verification that payments have been made from the garnished bank accounts (which has not been established in the materials), that evidence may not be relevant to the issue of displacing the mantle of immunity.
[76] This court recognizes that Canadian Planning is placed in a difficult position. They cannot confirm the nature of the records (or even whether records exist) until they get an order for production of the records from the third parties. However, it is not sufficient to compel production of documents from non-parties merely on a “hunch” that they might reveal something. To proceed on that basis would be contrary to the recognized law of third party disclosure. To do so in this case would be even more problematic due to the sensitive nature of the immunities that this court is bound to protect.
[77] During the course of submissions on the motions, it was suggested that that production could be granted and the court may examine the documents in an in camera hearing to determine whether the documents can be disclosed to Canadian Planning. This is the procedure taken for Cabinet documents that are alleged to enjoy public interest immunity. I have found that no disclosure should be ordered. If I am wrong about production, I am not convinced that it would be appropriate for the court to undertake an in camera process. Canadian Planning and Libya both agree that an in camera process would not be appropriate. Although courts are sometimes called upon to determine issues of privilege, the diplomatic immunity of a foreign State is a matter of international importance that cannot lightly be interfered with by the courts.
[78] Given the importance of immunity of bank accounts and the admonition from international State practice that any attempt to check if such funds are effectively used in whole or in part for those purposes would inevitably result in undue interference in the affairs of the diplomatic mission, the court may be prohibited from embarking on an in camera process. By making such an order, the court may be unacceptably drawn into the fray. I am not aware of any precedent in international jurisprudence where such a process has been undertaken by the court, and I would be reluctant to take such a step in this case.
[79] Therefore, the motions to compel production from third parties, namely, University Health Network, Algonquin College and Can/Aus Security and Investigations International Inc., are dismissed.
CONCLUSION
[80] In the result, the court declines to grant any of the orders for production and cross-examination. The court also declines to strike the affidavit filed in support of Canadian Planning’s motions.
[81] The next return date for this motion is June 2, 2015. On that date, counsel will make submissions regarding the evidence that has been adduced by Canadian Planning and whether it is sufficient to displace the inference of diplomatic immunity over the garnished bank accounts.
Braid J.
Released: May 29, 2015
CITATION: Canadian Planning v. Libya, 2015 ONSC 3386
COURT FILE NO.: 13-44192
DATE: 2015-05-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CANADIAN PLANNING AND DESIGN CONSULTANTS INC.
Applicant
- and –
STATE OF LIBYA aka LIBYA aka PEOPLE’S BUREAU OF THE GREAT SOCIALIST PEOPLE’S LIBYAN ARAB JAMAHIRIYA-CANADA aka THE GREAT SOCIALIST PEOPLE’S LIBYAN ARAB JAMAHIRIYA-CANADA aka EMBASSY OF LIBYA IN CANADA aka EMBASSY OF LIBYA aka LIBYAN EMBASSY CANADA
Respondents
- and –
ROYAL BANK OF CANADA
Garnishee
RULING ON MOTION
Braid J.
Released: May 29, 2015