Court File and Parties
COURT FILE NO.: CR-18-00000142-00MO DATE: 20180905 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: HER MAJESTY THE QUEEN Applicant – and – CANADIAN BROADCASTING CORPORATION, BUILDING AND DEVELOPMENT MORTGAGES CANADA INC., FMP MORTGAGE INVESTMENTS INC., FORTRESS REAL CAPITAL INC., FORTRESS REAL DEVELOPMENTS INC., FDS BROKER SERVICES INC., and FFM CAPITAL INC. Respondent
Counsel: Robert W. Hubbard and Mabel Lai, for the Crown, Applicant Ryder Gilliland, for the CBC
Before: R.F. GOLDSTEIN J.
Reasons for Judgment – Application to Unseal Search Warrant
[1] On April 13, 2018 the RCMP executed several search warrants in relation to Fortress Real Capital Inc. and associated entities (which, for convenience, I will simply refer to collectively as “Fortress”). Briefly, the RCMP alleged in the information to obtain the search warrants (which, for convenience, I will refer to as the “ITO”) that Fortress and some of its principals engage in investor fraud. The alleged fraud garnered media attention. The CBC took an interest in the investigation and the results. The CBC wishes to have access to the ITO. The issuing justice ordered that the ITO be sealed in its entirety prior to the execution of the search. After execution of the warrant, the Crown moved to unseal the ITO, subject to editing. The parties and the CBC were provided with an edited copy of it.
[2] At this point, about 25% of the ITO remains redacted. The CBC now wishes to access the 25% portion that remains redacted. The Crown resists. The Crown argues that the remaining sealed portions would compromise the continuing investigation.
[3] In my view, all that can be revealed has been revealed. I have reviewed those portions that remain redacted. For the reasons that follow, I am satisfied that the remainder of the ITO that has not been released is properly subject to investigative privilege.
Background
[4] The RCMP commenced an investigation into Fortress and its principals based on complaints from investors. The RCMP alleged in the ITO that Fortress defrauded investors by knowingly misrepresenting the appraised value of various development properties. The RCMP further alleged in the ITO that the loan ratios were in excess of 100%, which meant that the investments were not RRSP eligible – something that was also misrepresented to investors. The RCMP also alleged in the ITO that the investment funds were not used for the purposes that were disclosed to the investors.
[5] After the warrant was executed Crown counsel and the various parties exchanged correspondence. Among the parties was the CBC. The CBC wished to have access to the ITO, which was sealed. The Crown initially provided to the Court a draft order and proposed redactions. The Crown claimed that the redactions were based on investigative privilege and the protection of innocent third parties. The Crown also provided a chart. The chart identified those redactions that were based on investigative privilege; and those which were based on protecting the interests of innocent persons. Crown counsel provided further elaboration on July 6, 2018.
[6] The application came before me in order to determine whether the redactions could be justified. On July 31, 2018 I provided a chart to Crown counsel. I did not share the chart with the other parties. The purpose of the chart was for me to flag those redactions that I believed Crown counsel was required to justify. There were also redactions that, to me, were self-evidently justified on the face of the ITO. Crown counsel then released almost of all the redactions that I set out in my chart. Crown counsel held back references to innocent persons and to a person referenced in paragraph 90 and following of the ITO. On August 9, 2018, Crown counsel, Ms. Lai, and Mr. Gilliland, for the CBC, made further submissions in relation to the rest of the redactions. The Crown took the position that no further parts of the ITO should be unsealed. The Crown relied on an affidavit of Constable Williamson. Constable Williamson also swore the ITO. In the affidavit he set out a justification for the remaining redactions. Mr. Gilliland argued that the evidence that he was aware of did not justify keeping the rest of the ITO sealed.
Issues and Analysis
[7] Mr. Gilliland argued that the remainder of the ITO should be unsealed. He argued that the justifications put forward by Crown counsel for the redactions are inadequate. Specifically, he focussed on two main areas: what he called Crown counsel’s general assertion of secrecy; and the protection of so-called innocent third parties.
[8] In my view, the CBC’s arguments can be boiled down to two issues of mixed fact and law:
(a) Is the Crown merely relying on a generalized assertion of secrecy? (b) Would revealing the names of third parties prejudice the interests of innocent third parties?
[9] Before dealing with the substance of Mr. Gilliland’s points, I have five general observations about modern criminal investigations, and in particular modern investigations of alleged financial crime (and these comments should not be taken to say anything one way or the other about this particular case):
- First, these investigations have grown ever more complicated. This case is an example. The police have seized over 4.2 terabytes of information. They searched several locations. The ITO is well over 100 pages. There are many different financial transactions involved. The RCMP requires outside expertise. These sorts of cases often have international aspects and may require mutual legal assistance treaty requests.
- Second, these investigations are invariably intertwined with civil proceedings. The parties and witnesses in those civil proceedings are usually witnesses or targets of the police investigation. The targets of the criminal investigation are discoverable and compellable in civil litigation. Individuals who are parties to the civil litigation but not targets of the criminal investigation may be reluctant to talk to the police.
- Third, there may be related litigation over the search itself. For example, in this case, a claim of solicitor-client privilege has been made and that laborious process must play itself out.
- Fourth, as Zuker J. observed in a different context in R. v. Lubbell (1973), 11 C.C.C. (2d) 188 (Ont.H.C.), a search warrant is an investigative tool. It is carried out at an early stage of the proceeding. The authorities often don’t know what they have until they carry out a review of the seized material. In this case, they cannot even do that review just yet as much of the seized material is still sealed.
- Finally, there are situations where delayed disclosure properly balances society’s often conflicting interests in proper law enforcement and the open court principle: Toronto Star v. Ontario, [2005] 2 S.C.R. 188, 2005 SCC 41 at para. 31. In this case the Crown has not asserted a class privilege, such as informant privilege. The Crown has only asserted litigation privilege. That means that the ITO is unlikely to be sealed forever. I realize that it is not satisfactory to be told “be patient, you’ll get the information eventually” but that is sometimes a realistic response to competing interests.
[10] Some of these factors militate in favour of greater openness, and some militate in favour of protecting the sources and methods used by law enforcement. Each case obviously turns on its own facts in that regard. But these are some of the factors at play in modern investigations that a court must balance.
[11] With those comments in mind, I turn to the two issues raised by the CBC.
(a) Is the Crown merely relying on a generalized assertion of secrecy?
[12] Mr. Gilliland argues that the Crown is relying on a generalized assertion of secrecy. The Crown must justify specific redactions and set out the basis for them. Here, the Crown has not specified the basis for its redactions. The CBC is left in the dark about the basis for sealing. More than a simple assertion is required: Toronto Star at para. 38.
[13] I agree with Mr. Gilliland that the Crown cannot rely on a generalized assertion of secrecy. With respect, however, I cannot say that the Crown is doing so in this case. In my view, there is evidence that further disclosure poses a risk to the integrity of the investigation. There are law enforcement techniques that have been used and are or may still be used that must not be revealed. The evidence in support is set out in the affidavit of Constable Williamson as well as in the body of the ITO itself.
[14] The statutory framework for determining access to the contents of an ITO is set out in s. 487.3 of the Criminal Code.
[15] A justice or a judge may make an order prohibiting access to the ITO on the ground that the ends of justice would be subverted by disclosure: s. 487.3(1)(a). The justice or judge must balance whether subversion of the ends of justice outweighs in importance access to the contents of the ITO: s. 487.3(1)(b). The statute itself sets out the factors that a judge must balance when he or she evaluates whether the ends of justice would be subverted by disclosure:
487.3 (2) For the purposes of paragraph (1)(a), an order may be made under subsection (1) on the ground that the ends of justice would be subverted by the disclosure
(a) if disclosure of the information would
(i) compromise the identity of a confidential informant,
(ii) compromise the nature and extent of an ongoing investigation,
(iii) endanger a person engaged in particular intelligence-gathering techniques and thereby prejudice future investigations in which similar techniques would be used, or
(iv) prejudice the interests of an innocent person; and
(b) for any other sufficient reason.
[16] The key provisions at issue in this case are whether the ends of justice would be subverted by compromising the nature and extent of an ongoing investigation; or by prejudicing the interests of an innocent person.
[17] The issuing judge or justice may order that all or part of the ITO, the warrants, and the application materials be placed in a sealed packet. The sealed packet is then to be deposited in a place to which the public has no access. The issuing justice or judge has a wide discretion as to the limits on access, partial disclosure, and duration of the order: s. 487.3(3) of the Criminal Code.
[18] An application to terminate or vary the sealing order may be made to the justice or judge who made the order, or a judge of any court where proceedings arising out of the investigation may be held. This is a common law power was codified in s. 487.3(4) of the Criminal Code.
[19] Once the warrant is executed the presumption of openness applies – for the obvious reason that the target will know about the warrant and there will be no opportunity to destroy or hide evidence. The burden shifts to the person seeking to justify the redaction or the secrecy: Toronto Star at para. 18; Attorney General of Nova Scotia v. MacIntyre, [1982] 1 S.C.R. 175.
[20] That said, the number and type of investigative tools available to the authorities has changed significantly since 1982. That has obviously required a change in the approach mandated by MacIntyre. In 1982 there were no general warrants, tracking warrants, or digital number warrants. The purpose of a general warrant that authorized a surreptitious “sneak and peak” would surely be frustrated if the presumption of secrecy shifted immediately upon execution.
[21] The test for balancing whether subversion of the ends of justice outweighs in importance access to the contents of the ITO is commonly known as the Dagenais/Mentuck test: Dagenais v. Canadian Broadcasting Corporation, [1993] 3 S.C.R. 835; R. v. Mentuck, [2001] 3 S.C.R. 442, 2001 SCC 76. Lamer C.J.C. first set out the test in Dagenais. Dagenais dealt with the question of whether a fictional television program about child sexual abuse in the Catholic Church would prejudice the fair trial rights of four priests. The priests were about to go on trial. Iacobucci J. reformulated the test in Mentuck. Mentuck involved publicising the details of some police techniques. The test now applies to all discretionary court orders involving publication bans and sealing orders: Toronto Star at para. 7. Iacobucci J. set out the test as follows at para. 32 of Mentuck:
The Dagenais test requires findings of (a) necessity of the publication ban, and (b) proportionality between the ban's salutary and deleterious effects. However, while Dagenais framed the test in the specific terms of the case, it is now necessary to frame it more broadly so as to allow explicitly for consideration of the interests involved in the instant case and other cases where such orders are sought in order to protect other crucial aspects of the administration of justice. In assessing whether to issue common law publication bans, therefore, in my opinion, a better way of stating the proper analytical approach for cases of the kind involved herein would be:
A publication ban should only be ordered when:
(a) such an order is necessary in order to prevent a serious risk to the proper administration of justice because reasonably alternative measures will not prevent the risk; and
(b) the salutary effects of the publication ban outweigh the deleterious effects on the rights and interests of the parties and the public, including the effects on the right to free expression, the right of the accused to a fair and public trial, and the efficacy of the administration of justice.
[22] The Court must apply the Dagenais/ Mentuck test to determine whether continuing redaction is justified: Toronto Star at para. 7. That said, as Fish J. also pointed out in Toronto Star, the Dagenais/ Mentuck test is a flexible one. The Court must have regard for the circumstances under which the Crown, or some other interested person, seeks to delay disclosure.
[23] Mr. Gilliland initially mentioned that there is no evidence that the investigation would crumble if I ordered disclosure. He rightly conceded, however, that the Crown is not required to show that the investigation would crumble in the event of public disclosure of some details. I agree. That bar is much too high. That would amount to the functional equivalent of beyond a reasonable doubt. That is the ultimate burden the Crown bears in a criminal proceeding, not the burden that the Crown bears at the investigative stage. Indeed, as Fish J. put it at para. 39 of Toronto Star, “the party seeking confidentiality must at the very least allege a serious and specific risk to the integrity of the investigation.”
[24] Public disclosure of an ongoing law enforcement technique that would compromise the investigation is clearly a serious and specific risk to the integrity of the investigation. As Mr. Gilliland quite properly conceded, the information about that technique could come from the ITO itself. Fish J. noted in Toronto Star that the test is contextual and flexible. He also stated at paras. 32-33:
In Vancouver Sun, the Court recognized that the evidentiary burden on an application to hold an investigative hearing in camera cannot be subject to the same stringent standard as applications for a publication ban at trial:
Even though the evidence may reveal little more than reasonable expectations, this is often all that can be expected at that stage of the process and the presiding judge, applying the Dagenais/ Mentuck test in a contextual manner, would be entitled to proceed on the basis of evidence that satisfies him or her that publicity would unduly impair the proper administration of justice.
Similar considerations apply to other applications to limit openness at the investigative stage of the judicial process.
[25] Quite simply, that is the case here. Without suggesting in any way what any of the techniques might be in this case, I illustrate the problem with an example that I discussed with counsel during submissions. There are often investigations where the police intercept private communications. The intercepts are used as grounds to obtain search warrants while the police still have authority to intercept. The targets of the intercepts could become aware of the investigation because of the execution of the warrants. The ITO’s are redacted to prevent the targets from learning of the existence of the interceptions. Indeed, sometimes the police execute warrants or conduct arrests in order to stimulate conversations among the targets. If the existence of the interceptions were revealed in the ITO’s then the targets would stop communicating. That would deprive the police of a legitimate and valuable source of evidence. There is no way that a judge, on an application to unseal, could explain the basis for the redaction of the intercepts without revealing the existence of the wiretap authorization.
[26] Ultimately, then, this is one of those situations where the public is denied access, and I cannot reveal the basis upon which access is denied. To do so would inevitably compromise the utility of the investigative technique. This answer, of course, is highly unsatisfactory: I am reduced to simply saying: “I’ve looked at the confidential parts and you’re just going to have to trust me when I say they can’t be released.” “Trust me” is rarely a satisfactory answer when it comes from the government. I sympathize with Mr. Gilliland’s dilemma, which is the dilemma of any counsel faced with evidence that cannot be accessed. And yet, when there is a clash of values, we often delegate authority to judges to evaluate evidence that some parties just cannot see. In fact, Parliament has created several different procedures where a judge determines whether information can be disclosed based on representations from the Attorney General or other entities. See, for example, the complex scheme for the prohibition of access to information that might cause injury to Canada’s international relations: s. 38 of the Canada Evidence Act. See also the Garofoli “Step Six” procedure. A judge may see information provided by a confidential informant and then make decisions about what may, or may not be disclosed to the defence: R. v. Crevier, 2015 ONCA 619.
[27] I have read the ITO here, as well as the affidavit of Constable Williamson. I am satisfied that public disclosure of the law enforcement technique or techniques that are still redacted could pose a serious and specific risk to the integrity of the investigation. Regrettably, I can say no more at this point.
(b) Would revealing the names of innocent persons prejudice their interests?
[28] Mr. Gilliland argues that the Crown had failed to justify the redactions of the names of individuals in the ITO. He argues that the Crown has tried to justify the redaction of only one person’s identity. That person is named at paragraph 90 and the following paragraphs of the ITO. The justification, set out in the affidavit of Constable Williamson, is inadequate. Mere embarrassment or prejudice to financial interests is not enough, he argues.
[29] I am satisfied that the Crown has shown a sufficient basis upon which to redact the names of innocent persons. The legislation itself contemplates that prejudicing the rights of an innocent person is a basis upon which to redact: Criminal Code s. 487.3(2)(a)(iv). Furthermore, I am also satisfied that there is a sufficient basis set out in the ITO and the affidavit to justify the redactions in respect of the person named in paragraph 90 and following.
[30] Mr. Gilliland relies on the decision of Nordheimer J. (as he then was) in R. v. Canadian Broadcasting Corporation, 2013 ONSC 6983. The investigation in that case involved the controversial late Mayor of Toronto, Rob Ford. Some of Mayor Ford’s associates, including one Alessandro Lisi, faced drug and extortion charges. Although Nordheimer J. canvassed several issues in that case, the one that we are most concerned with here relates to the identities of third parties. The Crown sought to keep most of them secret. The Crown wished to do so in order to prevent reputational harm. The Crown also pointed out that most of the material related to the Mayor, not to the people actually charged.
[31] Nordheimer J. rejected those arguments. He quoted Iacobucci J. in Mentuck, that the danger must be to the integrity of the investigation. A mere advantage to law enforcement is not sufficient to maintain the redactions. He observed that the Crown’s reliance on a generalized assertion of reputational harm was insufficient. There was no actual evidence about the nature of that harm. Further, Nordheimer J. also rejected the notion that mere embarrassment could trump the principle of open-ness.
[32] I certainly agree with all of Nordheimer J.’s observations. This case, however, can be distinguished. Here, the Crown has made a very specific argument and provided evidence about the person mentioned in paragraph 90 and following. The Crown’s evidence is that this person would suffer a specific financial harm. I accept that evidence. There is also justification for that position in the ITO itself.
[33] The Crown’s argument is more problematic when it comes to the other third parties. The balance is much less clear. Nonetheless, I am satisfied that the balance falls on the side of continuing to redact the identities of the third parties, at least while the investigation is continuing.
[34] There are two critical differences between this case and Nordheimer J.’s decision in CBC in respect of the third parties. The first difference is that there are no charges laid here. The investigation is still going on. The police had charged Mr. Lisi in CBC. It is true that the Crown and the police can continue to investigate after charges are laid (and usually do). The expectation of privacy of third parties is, however, substantially reduced at that point. A third party can reasonably anticipate that defence counsel will know who they are. A third party can also reasonably anticipate that he or she will be a witness. Their identities will no longer be secret. That is not yet the case here. It is not a major reason (at least in the circumstances here) for maintaining secrecy but it is a factor. Those innocent third parties can therefore expect some measure of privacy – for now.
[35] The second critical difference is that much of the seized material in this case remains under seal, and the volume of the evidence means that the police have not yet had a chance to fully analyze the material that they do have (which is voluminous). Much of the seized material is subject to an application in respect of solicitor-client privilege. Thus, the Crown and the police do not know fully know what they have. There was no equivalent in the earlier CBC case.
[36] Why does it matter much of the seized material remains under seal? Let me say first where I do not agree with Crown counsel. I do not agree that as a general rule ITO’s must remain sealed to preserve the evidence of the witnesses. The evidence is preserved when witnesses give their statements. They are free to speak out and defend themselves, as Justice Nordheimer observed in the first CBC case. I also do not accept that as a general rule mere publication of the fact of cooperation with the police will prejudice future cooperation. It might. People might be willing to cooperate with the police only where they do not believe that the fact of cooperation is unknown. Such an assertion would require specific evidence – such as in the case of a person fearing physical harm in a gang-related case. There is no such specific evidence here.
[37] I do, however, agree with Crown counsel that it is important that so much material remains either under seal or un-examined. I do not think that I need specific evidence to draw this obvious inference – and it is an inference available to anyone with experience in the investigation, prosecution, or defence of criminal offences: the police will very likely need to re-interview many third parties based on the seized material. Indeed, the position of some of these people may change from witness to target or from target to witness. The interests of those third parties may be at stake in other ways that are difficult to know until the material is unsealed and analyzed. Accordingly, I find that the balance favours keeping the identities of the third parties private – again, for now.
Disposition
[38] The redactions are justified. I will not order further unsealing.
R.F. Goldstein J. Released: September 5, 2018
COURT FILE NO.: CR-18-00000142-00MO DATE: 20180905 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: HER MAJESTY THE QUEEN Applicant – and – CANADIAN BROADCASTING CORP. ET AL Respondent