ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CR-12-90000011-00MO
DATE: 20151214

B E T W E E N:

THE ATTORNEY GENERAL OF CANADA ON BEHALF OF THE UNITED STATES OF AMERICA

Moiz Rahman, for the Attorney General

Applicant

and -

EQUINIX INC. and MEGAUPLOAD INC.

Scott Hutchison, for the Defendant/Respondent, Megaupload Inc.

Defendant/Applicant

HEARD: April 13, June 1, and July 5, 2015, at Toronto, Ontario

Michael G. Quigley J.

Reasons for Ruling

Overview

[1] This matter arises out of a search warrant that was issued on January 18, 2012 by Justice McMahon of the Superior Court under s. 12 of the Mutual Legal Assistance in Criminal Matters Act[^1] (“MLACMA” or the “Act”), to assist United States authorities in their investigation in United States v. Kim Dotcom et al.[^2] The RCMP executed that warrant the next day, and as a result, seized 32 computer servers from the premises of Equinix Inc. The servers are currently being kept securely at the RCMP office in London, Ontario and have not yet been forensically examined.

[2] On January 7, 2013, Pardu J. (as she then was) heard an application to send those servers to the United States. In her reasons dated January 13, 2013, Justice Pardu neither allowed nor dismissed the sending application. Rather, she adjourned the application in order that the content of the servers could effectively be brought before the Court (virtually, not physically) pursuant to s. 15(2) of the Act.

[3] It is important to note that at the hearing in January 2013, the respondent, Megaupload Inc. did not challenge the issuance or execution of the warrant, but it argued that sending mirror image copies of all of the data on the 32 servers would be overly broad. Megaupload Inc. is the only party actively participating in the proceedings.

[4] As part of her ruling, Justice Pardu adjourned the application for a sending order without a fixed return date, returnable on seven days notice, and she further stated that if counsel were unable to agree on how the scope of the relevant materials was to be defined, then the matter could come back before a judge of this court for determination of that particular issue and the issuance of directions.

[5] This application now arises from that endorsement, and involves the Attorney General of Canada on behalf of the United States applying for directions. The A.G. now requests that the court permit the servers to be examined in Canada by a "clean team" of American investigators and to allow that team to prepare a report for this Court outlining the data that is stored on the servers. That approach is considered to be the best way to give effect to Canada's international obligations while balancing any privacy interests relative to the data, and the requirements of MLACMA that evidence not be sent prematurely to the United States.

[6] So, in order to virtually "bring" the servers before this court in accordance with Justice Pardu's endorsement, the clean team would examine that evidence forensically, and provide a written summary of it to this court. The clean team will be comprised of American FBI trained personnel who have had no involvement in the case for which the evidence is being sought. In their report, they would also describe whether and to what extent evidence on those servers is relevant to the charges that are being prosecuted in the United States. A letter sent by Mary Ellen Wardlow of the United States Department of Justice to the A.G. indicates that U.S. authorities routinely use this clean team approach to review evidence that contains privileged information.

[7] Most importantly, the A.G. proposes that the work of the clean team would be subject to a number of safeguards that would be imposed by this court in its order, including that: (i) members of the clean team would not reveal any information to the U.S. investigating or prosecuting authorities who are actually involved in the Megaupload prosecution without a prior order of this court; (ii) the clean team would conduct its review in Canada in a secure facility under the supervision of the RCMP; (iii) the clean team would not keep any copies of any of the data gathered during the search, except for those materials that are provided to the court; (iv) a representative of the respondent, Megaupload, will be permitted to observe and be present at all times during the course of that review; and (v) the clean team would use methods to protect the data on the servers from being altered in any way whatsoever.

[8] The A.G. takes the position that the proposal that a so-called "clean team" of American investigators be permitted to forensically review the data on the servers and to prepare reports is a reasonable request. The involvement of foreign investigators is not inconsistent with the Act, the Treaty, or the Charter of Rights and Freedoms. In France (Republic) v. Foster[^3], the Court of Appeal observed that the involvement of an agent of the requesting State in examining evidence is reasonable, provided that safeguards are put in place to ensure that the evidence is not sent to the requesting State without appropriate Canadian judicial authorization. At para. 45, Rosenberg J.A. stated as follows:

I should not be taken as questioning the correctness of those authorities. The fact remains that s. 18 is worded differently than the search warrant provision and both it and the Treaty involved in this case (namely, Treaty between the Government of Canada and the Government of the Republic of France on Mutual Assistance in Penal Matters, 15 December, 1989, Can. T.S. 1991 No. 34) specifically contemplate the involvement of foreign authorities in the gathering of evidence. Article 5(3) of the Treaty provides that authorities of the requesting state can be present at any hearing of witnesses and can conduct examinations of the witnesses. This is consistent with other parts of s. 18, which contemplate that the examinations may be conducted before a judge of a foreign court. See for example s. 18(8) (a), which provides that if the person designated under s. (2)(c) is a judge of a foreign court, the judge may make immediate rulings. The examination conducted by M. Perrault was not an evidentiary hearing in that sense and therefore is not expressly within the terms of the Treaty. However, given these provisions of the Treaty and the Act, having an agent⁴ of the requesting state present at and conducting the kind of examination that was carried out by M. Perrault is not inconsistent with the Treaty or the Act, so long as suitable safeguards are put in place to ensure that the evidence is not sent to the requesting state without judicial authorization.

[9] Rosenberg J.A. specifically directed his observations to evidence gathering orders, but the A.G. takes the position that those comments apply equally to the circumstances that are present before me. This is hardly a request to have agents of the United States help execute a search warrant and seize items in Canada. The servers have been lawfully seized pursuant to the order of McMahon J., who by reason of issuing that warrant must have concluded that there were reasonable grounds to believe that evidence of the offences would be located on the servers, so the servers are in the same position as evidence produced under any other evidence gathering order. The servers are in the possession of the RCMP and are capable of being examined. Unlike in Foster, however, the Crown asserts that the foreign state agency that would be involved here would be even more removed from this particular case, insofar as they would be unconnected with the investigation and would be performing a very limited analysis of data merely for the purposes of presenting a summary for this court’s review.

[10] The A.G. also points to the recent 2014 decision of our Supreme Court relative to the sharing of foreign information in United States of America v. Wakeling.[^4] In that case, noting that the clean team's proposed exposure to data on the servers was extremely limited, a four member majority of the court approved of that process and concluded that the common law permitted the Canadian authorities to share that evidence, including wiretap information, with the foreign law enforcement officials.

[11] Against that background, the A.G. argues that if the sharing of wiretap information with foreign law enforcement agencies was regarded as constitutional by the Supreme Court, then surely the proposed examination of the servers by a clean team in these circumstances, subject to suitable safeguards, and given the limited extent of the proposed exposure, must be constitutional and reasonable. I note as well that the proposed very limited observation of evidence by the clean team should also be regarded as less intrusive than the provision of a list of items seized pursuant to the Canadian search warrant to American authorities as was discussed in Re McFarlane.[^5]

[12] Finally, and most importantly in the Attorney General’s submission, permitting this kind of very limited involvement by American officials furthers the objectives of the entire mutual legal assistance theme and purpose which is embraced within the MLACMA legislation, which is in turn to honor Canada's international obligations and to foster inter-jurisdictional investigative cooperation. The point is made plainly by the Court of Appeal in U.S.A. v. Price, at para. 17:[^6]

I also agree that it would be inappropriate, as a matter of policy, to adopt an interpretation of s. 15(1) that would require the judge to take a purely mechanical approach and refuse a sending order for every minor or trivial failure in the execution of the warrant. In the domestic context, we do not take that approach when deciding whether or not to exclude evidence under section 24(2) of the Charter. To apply a higher standard under the Act would hardly advance its purpose and object. That purpose was described by Doherty J.A. in Russian Federation v. Pockidyshev (1999), 1999 (ON CA), 138 C.C.C.(3d) 321 at para.15 (Ont. C.A.) as being to ensure Canada is able to assist in combating the problem of international crime and to fulfill our “international obligations under various treaties and conventions to assist other states in the investigation and detection of [international] crime". This assessment of the purpose of the Act was reiterated by Rosenberg J.A. in R. v. Budd (2000), 2000 (ON CA), 150 C.C.C.(3d) 108 at para.28 (Ont.C.A.), leave to appeal to S.C.C. refused, [2001] S.C.C.A. No.57, referring to "the need to ensure that Canada's international obligations are honoured and [the need] to foster cooperation between investigative authorities in different jurisdictions" when interpreting and applying section 15.

[13] While all of this might at first blush seem eminently reasonable and fair, and sufficiently detailed to protect privacy interests, counsel for Megaupload argues that the court should not accede to the A.G.'s request. Rather, Mr. Hutchison puts forward the proposition that either the A.G. or the United States should pay for the cost of a truly independent firm of forensic auditors in Canada to perform the role that is envisaged for the "clean team" in the A.G.’s proposal.

Analysis

Privacy interests

[14] Megaupload argues that privacy interests of innocent Canadians are at stake. They argue that an independent third party forensic examiner should carry out the investigation, as the scope of the request for examination by the clean team is too broad in order to protect those privacy interests and minimize unnecessary intrusions. The defence points to the requirement in our law that search and seizure must be reasonably specific and focused, and argues that we will not be able to achieve that objective and ensure that the required specificity and control can be assured if a United States agency undertakes the forensic examination.

[15] Our law protects against unreasonable search and seizure and the invasion of a person’s reasonable privacy interests, but it does not guarantee it. Section 8 of the Charter of Rights and Freedoms protects an individual’s “reasonable expectation of privacy”[^7] but this reasonable expectation depends on the totality of the circumstances.[^8]

[16] No doubt there is a heightened awareness in the context of this case relative to protecting the interests of computer data, and in particular, of computer data of people that have absolutely nothing to do with this case. Indeed, courts have noted that the capacity for technology to store an almost unlimited amount of personal information and correspondence raises unique privacy concerns.[^9]

[17] However, the privacy interests stemming from the search and seizure of the servers itself is not the issue here, as the parties agree that the warrant carried out to seize the servers is valid. Instead, the issue is a very narrow one with respect to who will forensically examine the information seized. To me, there is no more of an invasion of privacy if the forensic examination is carried out by the clean team than if it is carried out by a third party independent examiner.

[18] What then, is the privacy risk in this context? To trigger sufficient concern there must be a real and reasonable and appreciable risk to the privacy interests of these individuals. However, any potential risk to the privacy interests of the innocent persons with personal information on these servers has already been addressed by Justice Pardu’s order to have the court first assess the content of the data and narrow its scope before it becomes the subject of a sending order under MLACMA. Any potential risk to privacy is therefore two steps removed.

International comity and mutual cooperation

[19] Megaupload further submits that we cannot be sure that the clean team would abide by an order made by this court to safeguard the content of the servers. Megaupload emphasizes the care we need to take with sending orders under MLACMA because once the evidence is sent it is beyond the jurisdiction of this court. As the expression goes, once the evidence is sent ‘the horse is out of the barn.’

[20] With respect, to agree with this is to undermine international comity and cooperation between nations envisaged in MLCAMA. Comity of nations is founded on trust and mutual respect under international law. It is the cornerstone of our ability to have cooperative relations with other nations.

[21] The Supreme Court of Canada endorsed the importance of facilitating international cooperation through the sharing of information relating to criminal matters in Wakeling.[^10] It was unanimous in its acknowledgement that cooperation between Canadian and foreign law enforcement is essential noting specifically at para. 57 that “[M]ulti-jurisdictional cooperation between law enforcement authorities furthers the administration of justice in all of the jurisdictions involved. It must not be forgotten that Canada is often on the receiving end of valuable information from foreign law enforcement authorities” [emphasis removed].

[22] In R v. Hape,[^11] the Supreme Court again emphasized the importance of international cooperation and information sharing. At para. 47, the Court outlined a definition of international comity from its earlier decision in Morguard Investments Ltd. v. De Savoye,[^12] as “the deference and respect due by other states to the actions of a state legitimately taken within its territory.” As such, approaching this application with the presumption that the U.S. would violate any sending order made by this court once it is beyond the Canadian border does not accord the deference and respect required by these principles.

[23] The foundation of our ability to have other nations assist us in matters relating to the enforcement of our law must be our mutual willingness to assist them in enforcing theirs. If we are going to put functional roadblocks or impediments for other nations to overcome before we will cooperate with them, then we must and will necessarily be treated the same way.

Safeguards

[24] Furthermore, it must be kept in mind that this process is only the first of two steps – the clean team will be producing a report as a result of their examination, returnable to this court, to then determine what will be the subject of the sending order to the United States. The sending order will have the requisite safeguards contemplated under MLACMA.

[25] As such, there is an added layer of protection and any risk to the privacy concerns of individuals with information on the servers not implicated in this litigation, would still ultimately be protected.

[26] Unless one fears that the U.S. will intentionally violate their undertaking, which I do not believe is a reasonable premise for reasons of international comity and mutual cooperation that I have just discussed, there will be no information sent to the U.S. until it first returns to this court for approval. This is the type of safeguard contemplated by the legislature when MLACMA came into force. Indeed, Hon. Ray Hnatyshyn, then Minister of Justice and A.G. of Canada, noted during the House of Commons Debate when the legislation was being enacted, that under the Act, no object or thing will be sent abroad until the Minister of Justice is satisfied that the foreign state will respect the conditions imposed by the Canadian judge.[^13] I see no reason to mistrust this legislative intention.

Costs

[27] There is one further consideration relevant to this matter, and that is the cost of the clean team undertaking the examination, as compared to the cost that would result were it to be conducted by an independent third party examiner. I asked the parties to provide me with a cost comparison between hiring an independent examiner and having the clean team conduct the forensic investigation of the data and produce the report returnable to this court. Understanding the differences in cost is not a central consideration, but it is a part of the balancing exercise in my view.

[28] I now have cost estimates for the clean team and two possible independent third party examiners. The results indicate that the total cost of having the clean team do the examination is somewhat less than the quote from one independent examiner, and substantially less than the upper estimate of the other.

[29] Considering that it would cost more to have the third party forensic team do the investigation, then submitting that the U.S. should pay that extra level of costs must be because there is perceived to be a real and reasonable risk that they cannot be relied upon to maintain the requisite degree of privacy and adhere to their undertakings to Canada and more particularly, this court. Yet, for reasons already discussed, I do not believe this is a reasonable presumption. As such, the lower cost of the clean team is also a factor that weighs in favour of them carrying out the investigation.

Conclusion

[30] At the core of this application is the need to balance privacy interests of Canadians relative to the data, with Canada’s international obligations and the requirements of MLACMA.

[31] While there may and will be circumstances where it will be necessary to protect Canadian interests, whether government interests or the privacy interest of Canadian persons, it ought not to be done indiscriminately when there is no real or reliable evidence or basis to conclude that those interests would be put at risk in the particular circumstances by following a more cooperative approach. Even then, the rigour of the proposed limits on the operation and reporting line to this court of the clean team approach proposed here is not far removed from the kind of judicial scrutiny that is mandated under Hunter v. Southam for all search warrants. So it seems to me there are more than adequate protections provided in conformity with our own law, apart from international law and cooperation.

[32] Moreover, in this case, there is a cost disparity between the most conservative cost estimate of an independent examiner and the U.S. clean team. But this is not the driver. It is a factor and relevant, and ought to be taken into account, but it is not a core consideration and was not raised by me with the intention of it being the deciding feature.

[33] Rather, I find the deciding questions to be whether I am satisfied in all of the circumstances that: (i) the proposed forensic audit and review of the servers by the clean team will be solely for the purpose of preparing a report to this court as contemplated by Justice Pardu’s order; (ii) the examination will adequately protect the privacy interests of both the named targets and unnamed persons whose private information may be on the servers that will be examined; and (iii) having regard to the obligations of the United States and Canada to each other under international law and the comity of nations, and MLACMA itself, that the proposed forensic review plan put forward by the A.G. on behalf of the United States will be fully respected in spirit and letter if ordered by the court.

[34] I find the simple answer to those three questions to be (i) yes, (ii) yes, and (iii) yes. The order will go as requested. Once completed, the report of the clean team prepared further to this ruling and order is to be returnable to me for further consideration in accordance with Pardhu J.’s order.

Michael G. Quigley J.

Released: December 14, 2015

COURT FILE NO.: CR-12-90000011-00MO
DATE: 20151214

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

THE ATTORNEY GENERAL OF CANADA ON BEHALF OF THE UNITED STATES OF AMERICA

Applicant