Attorney General of Canada v. Suthanthiran 2018 SCJ mini 2

Court File and Parties

COURT FILE NO.: 13167

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

THE ATTORNEY GENERAL OF CANADA - KINGDOM OF BELGIUM Respondent – and – KRISHNAN SUTHANTHIRAN, BEST THERATRONICS LTD. AND BEST MEDICAL BELGIUM INC. Applicants

Counsel: Jeffrey G. Johnston, for the Respondent Scott Hutchison, for the Applicants

HEARD: May 10, 2018

IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 15(1) OF THE MUTUAL LEGAL ASSISTANCE IN CRIMINAL MATTERS ACT, R.S.C. 1985, c. 30 (4th Supp.) to send seized evidence to the kingdom of belgium

REASONS FOR JUDGMENT

MARANGER J.

Overview:

1This was an unusual application.

2On March 30, 2016, I issued a Sending Order under section 15(1) of the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c.30 (4th Supp.) (“the Act”). The decision followed two hearings: (1) to obtain disclosure of the Request to Send and cross-examine the officer on the search warrant; and (2) the sending hearing itself.

3The search warrant in this jurisdiction was granted on the basis of an affidavit sworn by Corporal Goodgie of the RCMP (“Goodgie affidavit”). It was largely founded on information contained in the Request to Send (information provided by Belgium translated from French to English setting out the facts upon which they rely). The Request to Send was never disclosed or provided to the court during any of the proceedings in Ontario. In fact, an application for its disclosure was denied on the basis of confidentiality claimed by Belgium, the requesting state. See: Attorney General of Canada-Belgium v. Suthanthiran, 2015 ONSC 3573, [2015] O.J. No. 3352.

4An appeal of the Sending Order decision was dismissed by the Ontario Court of Appeal on May 1, 2017. See: Belgium v. Suthanthiran, 2017 ONCA 343, 347 C.C.C. (3d) 120. Leave to appeal to the Supreme Court of Canada was denied on January 18, 2018. See: Suthanthiran v. Belgium (2018), S.C.C. No 256.

5The Applicants now seek to re-open the issue of the validity of the original search warrant, have it set aside, and have the Sending Order rescinded.

6The application to re-open the issue of the validity of the original search warrant arises from the following turn of events:

• The Applicant has offices/headquarters in Ontario and in British Columbia.

• In related proceedings before the Supreme Court of British Columbia involving the same parties, requesting the same relief, the Request to Send was made available without an application or court order.

• Constable James Laton of British Columbia prepared and swore an affidavit (“Laton affidavit”) in support of the search warrant largely based upon the contents of the Request to Send.

• At paragraph 117 of her judgment, the presiding Justice in British Columbia, Griffin J., found that the affidavit “fell significantly short of the care and candour expected in such matters and it cannot be considered reliable”. On December 12, 2017, she rendered her decision to set aside the search warrant and the Request to Send was abandoned by the Crown.

• Furthermore, she concluded at paragraphs 105-106 of her decision:

  [105] I am of the view that the misstatements and omissions in the Affidavit created a seriously misleading picture for the judge who authorized the warrant. The Affidavit created a strong impression that a Public Prosecutor in the Requesting State was firmly of the belief that three transactions were fraudulent, based on interviews of witnesses and reviews of documents. In fact, the officer who swore the Affidavit did not know what the Public Prosecutor knew or believed in terms of the strength of the case, and he merely assumed it. Cst. Laton’s assumptions cannot be considered reliable.

  [106] Further, Cst. Laton in his Affidavit overstated the evidence that was summarized in the Request and omitted significant information, all of which had one result: the Affidavit created the impression that Belgian authorities believed that there was a strong case for fraud and had evidence supporting that belief. On the contrary, the Request on its own does not support that conclusion.

  Canada (Attorney General) v. Suthanthiran, 2017 BCSC 2297, 2017 CarswellBC 3499.

7The thrust of the argument by counsel for the Applicant is that this “fresh” evidence in the form of the disclosure of the Request to Send allows for a re-opening of the hearing. Counsel argued that since both of the police officer’s affidavits were based upon the same Request to Send it follows that the warrant should fall here, as it did there. As counsel put it, “same book different covers”.

8It was also submitted that the principle of res judicata applies. That since a court of equal strength in another province reviewing essentially the same material set aside a warrant, so should this court.

9Counsel for the Respondent argued that the two affidavits were markedly different; the principal deficiencies found in the Laton affidavit by the presiding Justice in BC did not exist in the Goodgie affidavit. Furthermore, it was submitted that there was good reason to doubt the analysis of the standard of reasonable and probable grounds in the decision from British Columbia, and that this court was not bound by that finding or analysis.

10While forcefully and meticulously argued by counsel for the Applicant, I would dismiss the application for the reasons that follow.

Background:

11On July 23, 2014, the Minister of Justice for Canada approved a request from the Kingdom of Belgium dated May 7, 2014, seeking a search and seizure of business records from the registered offices of Best Theratronics Ltd.(a.k.a. Best Canada) located at 413 March Rd., Ottawa, Ontario. The request was pursuant to a treaty between Canada and the Kingdom of Belgium under the Act.

12The material sought is to further an investigation by Belgian authorities for the Belgian offences of misuse of company assets, concealing assets and insolvency, making false statements, using false documents, and money-laundering contrary to the Belgian Criminal Code. The allegations are made against Krishnan Suthanthiran or companies in his control.

13On September 30, 2014, Beaudoin J. authorised a search warrant which was executed on October 2, 2014. The Attorney General of Canada applied for a Sending Order pursuant to s. 15 of the Act on February 26, 2015.

14On May 29, 2015, the court heard an application for (1) an order requiring disclosure of the contents of the Request to Send dated May 17, 2014, presented to the Minister of Justice by Belgian authorities; and (2) for an order requiring Corporal Goodgie of the RCMP to attend for cross-examination on the affidavit he filed to obtain a search warrant pursuant to section 12(1) of the Act which provides:

12 (1) A judge of a province to whom an application is made under subsection 11(2) may issue a search warrant authorizing a peace officer named therein to execute it anywhere in the province, where the judge is satisfied by statements under oath that there are reasonable grounds to believe that

(a) an offence has been committed;

(b) evidence of the commission of the offence or information that may reveal the whereabouts of a person who is suspected of having committed the offence will be found in a building, receptacle or place in the province; and

(c) it would not, in the circumstances, be appropriate to make an order under subsection 18(1).

15The preliminary applications were brought under a broader application to set aside the search warrant granted by Beaudoin J., dated September 30, 2014, in the context of resisting the Sending Order.

16In reasons released on June 17, 2015, the application was dismissed. At paragraph 11 of that decision the following was indicated, “even if the contentions raised by the Applicants had merit and the relevant portions of the officer’s affidavit were excised, the remaining information in the affidavit would support the issuance of a search warrant by the authorizing Justice”. As a consequence, the application to quash the search warrant was abandoned. See: Canada (Attorney General) v. Suthanthiran, 2015 ONSC 3573, [2015] O.J. No. 3352.

17The factual background to the decision to grant the Sending Order can be summarized as follows:

• The Kingdom of Belgium is investigating Mr. Suthanthiran, Best Theratronics Limited (“Best Canada”), and Best Medical Belgium Inc. (“BMB”) for the Belgian offences of misuse of company assets, concealing assets in insolvency, making false statements, using false documents and money laundering, contrary to the Belgian Criminal Code.
• The allegations involve a claim that Mr. Suthanthiran fraudulently misappropriated approximately €9,656,000 from Best Medical Belgium SA (“BMB SA”) and its creditors by transferring funds to his benefit through Best Canada in a series of transactions between April 1, 2011 and August 19, 2011. The thrust of the allegations are threefold: a) That Mr. Suthanthiran acquired ownership of BMB SA and then improperly transferred €5,500,000 from BMB SA in the form of a loan to Best USA which funds were instead received by Best Canada and not repaid; b) That Mr. Suthanthiran caused BMB SA to buy two cyclotrons (a miniature particular accelerator used to make radioactive isotopes in medicine) from Best Canada. The equipment in question was never delivered to BMB SA. It is alleged that BMB SA, at Mr. Suthanthiran’s direction, made payments to Best Canada totaling €4,156,000 towards the purchase of the equipment and the funds were not fully repaid; and c) That Best Canada liquidated BMB SA’s assets and thereby contributed to the company becoming fraudulently insolvent.
• An ex parte application by the Attorney General of Canada for a search warrant was bought before Beaudoin J. on September 30, 2014 pursuant to s. 12(1) the Act.
• Pursuant to the search warrant, material was seized by the RCMP. Some of the material contained information relating to the construction of cyclotrons, while a great deal of the material was in regard to financial matters.
• On March 30, 2016, I granted a Sending Order of all material seized without imposing terms and conditions. The decision was upheld by the Ontario Court of Appeal on May 1, 2017. See: Belgium v. Suthanthiran, 2017 ONCA 343, 347 C.C.C. (3d) 120.

This Application/Governing Principles:

18At this hearing, the Applicant seeks an order to re-open the issue of the validity of the search warrant, have it set aside, and to rescind the March 30, 2016, Sending Order based upon what took place in the related proceedings in British Columbia.

The Test to Re-open:

19The jurisdiction and test to re-open proceedings under the Act flows from the decision of R v. Wilson, [1983] 2 S.C.R. 594 (SCC). In Viscomi v. Ontario (Attorney General), 2014 ONSC 5262, 326 C.C.C. (3d) 160 at paras 18-20, Code J. set out the governing principles when considering whether to re-open proceedings in the context of a Mutual Legal Assistance Treaty (MLAT) matter.

20The principles can be summarized as follows:

1. The question on re-opening is whether the judicial authorization at issue ought to have been granted;
2. The application to re-open is not a de novo hearing;
3. The judge hearing an application to re-open is not to substitute his or her discretion for that of the authorizing judge;
4. The question is whether there was any basis upon which the original order could have been made based upon the enlarged record that is before the reviewing judge; and
5. While the existence of fraud, misleading evidence, inaccurate information or material nondisclosure may be relevant to the application to re-open, the only question to be determined taking these factors into account is whether on the enlarged record the authorizing judge could have granted the warrant once the impugned portions are excised from the supporting affidavit.

21Whether this application to re-open the hearing, quash the warrant, and rescind the Sending Order succeeds depends upon two premises: (1) That the affidavit’s to obtain the search warrants were fundamentally the same because they were both based upon the same Request to Send; and (2) That I am bound by the judicial determination in another province in related proceedings, including that Judicial officer’s interpretation of the contents of the Request to Send as it relates to the question of reasonable and probable grounds.

The British Columbia Decision and the Laton Affidavit:

22In a very detailed and comprehensive 34-page decision delivered on December 12, 2017, Griffin J. of the Supreme Court of British Columbia set aside a s. 12 MLAT search warrant in proceedings involving the same parties.

23The decision is very critical of the tone, candour, and language used by the officer who swore the affidavit to obtain the s. 12 MLAT search warrant in British Columbia. The affidavit was based upon the contents of Request to Send provided by Belgium. As Griffin J. put it, “the proceedings before me focused on a close comparison of the Affidavit and the Request and alleged material omissions and misstatements in the affidavit”. See: Canada (Attorney General) v. Suthanthiran, 2017 BCSC 2297, 2017 CarswellBC 3499 at para 25.

24The following passages from the decision are illustrative of Griffin J.’s view of the officer’s affidavit in support of the warrant:

[82] What is apparent from the Request is that it is worded less forcefully than Cst. Laton’s Affidavit. In particular, there is no evidence in the Request that the Public Prosecutor held the strong beliefs of fraud that were attributed to him by Cst. Laton. Rather, the Request reads more as though the Public Prosecutor is investigating a number of possible theories and wants to know more about the transactions in question. Further, the Request contains important information that is omitted from Cst. Laton’s affidavit.

[90] In contrast to the tone of the Request which identified suspicions but also evidence that did not necessarily fit with the suspicions, Cst. Laton’s Affidavit took on more of an advocacy role in identifying evidence that would support the conclusion that a crime had taken place. The Affidavit was less forthright in identifying contradictory evidence that would suggest that what went on could have been legitimate business activity. I will touch on some examples.

[91] Cst. Laton stated twice in his Affidavit that the administrative trustees for BMB SA cancelled the cyclotron orders and demanded repayment of all amounts for the cyclotron purchases; and that no such amounts were repaid (at paras. 31, 33(b)). This was contradicted by summaries of evidence in the Request to the effect that only the 35 p cyclotron order was cancelled, and the advance payments for it were in fact repaid to BMB SA. This important evidence was left out of the Affidavit.

[92] There is an oblique reference later in the Affidavit, under a heading in relation to the “Fraudulent Loan” to three payments totalling €2.7 million being made (at para. 38), but this reference not only understates the amount of money repaid to BMB SA, it also does not correct the misleading impression created by Cst. Laton’s direct statements that both the cyclotron purchases were cancelled and advances were not repaid despite demand being made.

[93] Cst. Laton’s Affidavit in relation to the 35 p cyclotron order suggested at para. 36 (vi) there was evidence as follows: “According to key employees, the purpose of this transaction was to intimate [sic] staff as retribution for the strike notice and to drain BMB SA’s remaining equity.” Cst. Laton appears to have cribbed this from p. 40 of the Request which is not worded nearly as strongly. The Request simply identifies that two former employees of BMB SA held these opinions, without identifying any information to suggest that they had actual knowledge of the purpose of the transaction (at p. 40). The reliability of this speculation is questionable, given evidence in the Request that there was labour conflict between existing employees and the new management of BMB SA.

[95] I pause to note that the failure to repay a loan is often the subject of civil disputes and usually something more is required to make it a criminal offence. While it may be that in Belgium the mere failure to repay a loan is a criminal offence, that is not what the Request or Cst. Laton’s Affidavit suggests. Here the impression created by Cst. Laton’s Affidavit evidence was that the Public Prosecutor believed the loan to Best US to be a sham, designed to take money out of BMB SA to fund the expansion of Best Canada. Cst. Laton’s Affidavit evidence failed to clearly point out the fact that the Request contained evidence that the proceeds of the loan did not remain in Best Canada, but instead, the money was distributed to US bank accounts as was intended (Request p. 34).

[108] Here the flaw in the officer’s Affidavit goes one step further than failing to set out why he relies on the foreign Public Prosecutor: he states that the Public Prosecutor has certain strong beliefs about offences yet he has not spoken to the Public Prosecutor nor does the wording of the Request substantiate what the officer says the Public Prosecutor believes; and in addition, the officer’s Affidavit materially overstates evidence and omits material evidence.

25The affidavit prepared by Corporal Goodgie and sworn on September 29, 2015, is in my estimation not nearly as susceptible to the same criticism. For the most part it fairly summarizes the general thrust of the Request to Send provided to him by Belgium. Some of Griffin J.’s references to the Laton affidavit juxtaposed to the Goodgie affidavit demonstrate some of the significant differences between the two. In Griffin J.’s decision the following was highlighted:

• At paragraphs 91 and 92: The Laton affidavit failed to mention the cancellation of one of the cyclotron purchases and the repayment of the €2.7 million. The Goodgie affidavit does not suffer from this deficiency. At paragraph 57 of his affidavit, Corporal Goodgie clearly mentions the repayment and dates of repayment, and nowhere does he indicate that both orders were cancelled.
• At paragraph 95: The Laton affidavit did not disclose that although the €5,500,000 loan proceeds were transferred to Best Canada, the funds were subsequently distributed to US bank accounts. The Goodgie affidavit at paragraphs 43-45 described both that the loan proceeds were distributed to US bank accounts, and the fact that Best USA did make several interest payments on the loan. The Goodgie affidavit also indicates that the gist of the Belgian offences in so far as a loan was concerned was not the failure to repay, but rather that the stated borrower of the funds, Best USA, was not the beneficiary as the funds were sent to Best Canada.
• At paragraphs 96 to 99: The Laton affidavit indicated that the Belgian authorities believed that the loan proceeds were being fraudulently used to finance Best Canada’s expansion by referencing a Canadian newspaper article to this effect without disclosing that the same article reported that this expansion was partially funded by a government grant and was for legitimate business activities. The Goodgie affidavit does not contain this omission as it appends the complete newspaper article in question as an exhibit.
• At paragraph 108: The Laton affidavit attributed strong beliefs to the Public Prosecutor when in truth the officer never spoke to the Public Prosecutor. The Goodgie affidavit did not contain this error.
• Finally, the Goodgie affidavit does not indicate that any particular individual in Belgium had reasonable grounds to believe that an offence had been committed, in particular the Public Prosecutor. The Laton affidavit seems to repeatedly make this statement. The difference is the affidavit in this jurisdiction, importantly: sets out the affiant’s reasons why he has reasonable and probable grounds to believe that an offence has been committed in Belgium: he sets out the factual underpinnings for his belief that are based on speaking to the investigating magistrate, and reading the Request to Send.

26In submitting that the court was bound by Griffin J.’s decision on the basis of the application of the principle of res judicata, it was suggested that because the affidavits were based on the same source material, the issue of the validity of a search warrant was a matter already decided. As counsel for the Applicant stated,“same book different covers”. I disagree with this proposition. This case is more akin to different authors, writing a different book using the same source material.

27The bottom line is the two affidavits are very different. The affidavit sworn in Ontario summarizes the general contents of the Request to Send together with other investigative action taken by the affiant without inflating or misstating the tone, language, or meaning in the request, and without omitting material evidence; while the affidavit sworn in British Columbia has been interpreted to suffer from all of these deficiencies. The two cases are different.

28Whether the Justice in British Columbia set aside the warrant on the basis of the material deficiencies in the affidavit of the officer, or because the Request to Send did not in her estimation provide sufficient information to warrant a s. 12 search warrant is difficult to say. It seems to me at least plausible that her very dim view of the affidavit of the officer involved in the investigation in British Columbia coloured her overall perception of the Request to Send and impacted on the application of the standard of reasonable and probable grounds.

The British Columbia Decision, the Request to Send and Reasonable and Probable Grounds:

29The granting of a search warrant under s. 12(1) of the Act requires that the issuing judge must be satisfied by statements under oath that there be reasonable and probable grounds to believe that an offence has been committed.

30The standard of "reasonable ground to believe" or "probable cause" is not to be equated with proof beyond a reasonable doubt or a prima facie case. The standard to be met is one of reasonable probability. See: R. v. Debot (1986), 30 C.C.C. (3d) 207 (Ont. C.A.).

31The standard or test respecting the existence of reasonable and probable grounds was elaborated upon by Hill J. at paragraphs 28-30 in R v. Sanchez (1994), 20 O.R. (3d) 468, 93 C.C.C. (3d) 357 (Ont. C.J. (Gen. Div.)), where he stated the following governing principles:

• Section 487(1) of the Code requires reasonable grounds as the standard of persuasion to support issuance of a search warrant. Judicially interpreted, the standard is one of credibility based probability.
• Mere suspicion, conjecture, hypothesis or "fishing expeditions" fall short of the minimally acceptable standard from both a common law and constitutional perspective. On the other hand, in addressing the requisite degree of certitude, it must be recognized that reasonable grounds is not to be equated with proof beyond a reasonable doubt or a prima facie case.
• The appropriate standard of reasonable or credibly-based probability envisions a practical, non-technical and common-sense probability as to the existence of the facts and inferences asserted.
• Not only must the affiant subjectively or personally believe in the accuracy and credibility of the grounds of belief, but lawful issuance of a warrant also requires that the peace officer establish that, objectively, reasonable grounds in fact exist. In other words, would a reasonable person, standing in the shoes of the police officer, have believed that the facts probably existed as asserted and have drawn the inferences therefrom submitted by the affiant.

32In the context of an MLAT search warrant, the grounds relate to an offence under the law of the requesting state. In this case, Belgian criminal law. Unlike cases of extradition, there is no dual criminality requirement. See: Canada (Commissioner of Competition) v. Falconbridge Ltd. (2003), 173 C.C.C. (3d) 466 (Ont. C.A.).

33In the case before me, Corporal Goodgie’s affidavit swears to the following: “the information in this affidavit is based on my reading of the request (to send), which summarizes the Belgian investigation into the commission of the offences, including witness interviews conducted by Belgian authorities and documents provided during the course of those interviews, as well as investigations conducted in Canada by the RCMP and my speaking directly with the investigating judge overseeing the Belgian investigation Mr. Paul Dhaeyer examining magistrate”.

34The basis for his reasonable and probable grounds are the contents of the Request to Send in conjunction with speaking to the examining magistrate. The Request to Send and the factual allegations contained therein are nonetheless the backbone of the officers swearing to the belief that there are reasonable and probable grounds to believe that an offence has or is being committed in Belgium under Belgian law. If the Request to Send supports such a finding then a warrant could issue.

35With all due respect to Griffin J., I do not agree with her ultimate finding that the Request to Send did not contain sufficient evidence to find that there were reasonable and probable grounds to believe that an offence had been committed under the criminal law of the treaty partner. This is especially so in the context of an MLAT proceeding. As the jurisprudence indicates, the ‘spirit of the legislation is to promote international cooperation in criminal investigations’.

36While the Request to Send utilises language such as suspects and suspicions this does not mean that the factual underpinnings it contains are incapable of satisfying the s. 12 reasonable and probable grounds standard.

37When read as a whole the Request to Send offers some evidence which the authorizing Justice could have found amounted to a “credibly based probability” that certain offences have been committed under Belgian criminal law.

38The existence of evidence of the following facts can be taken from the Goodgie affidavit, and from the Request to Send standing alone:

• The Best group of companies is an international group of companies providing medical equipment and supplies, including medical isotopes for treating cancer. It includes US and Canadian based companies, namely, Best Theratronics (a.k.a. Best Canada), and the Belgium based company BMB SA. Mr. Suthanthiran is the chairman of this group of companies.
• The targets of the Belgian investigation are Mr. Suthanthiran, Best Canada, and BMB SA.
• MDS Nordian SA (“Nordian”) was a Belgian company which specialized in nuclear applications in medicine and industry. It had been operating at a loss for some years due to major liabilities regarding the disposal of nuclear waste. On April 1, 2011, Nordian became BMB SA for a nominal sum. Mr. Suthanthiran assumed control of the company. A capital increase of €13 million from Nordian Canada Inc. occurred just prior to the sale.
• From April 2011 to May 14, 2012, the following occurred:
  1. A €5,500,000 loan agreement from BMB SA to Best USA was transacted on April 8, 2011. The money was first transferred to Best Canada and not Best USA, which is an offence under Belgian law.
  2. The purchases of a 14p cyclotron and a 35p cyclotron were arranged between BMB SA and Best Canada in early April 2011. €1,420,000 was transferred to Best Canada from BMB SA for the purchase of the 14p cyclotron, and an advance of €2,736,000 was made towards the purchase of the 35p cyclotron.
  3. The 14p cyclotron’s invoice predated the order thereof.
  4. The site where the cyclotrons would have been installed was not ready delivery could not have occurred at that time.
  5. The cyclotrons were never delivered.
  6. On October 7, 2011, BMB SA applied for administrative proceedings (a precursor to declaring insolvency).
  7. Of the €9,656,000 transferred from BMB SA to Best Canada, only €2,700,000 was repaid in the period October 7, 2011, up to the date of insolvency.
  8. On May 14, 2012, a Commercial Court in Belgium declared BMB SA insolvent.
  9. There was some evidence to support the position that Best Canada was undergoing a multi-million dollar expansion in and around this time.
• The alleged offences include misuse of company assets, concealing assets in insolvency, and making false statements. Articles 489, 490, and 492 of the Belgian Criminal Code sets out “Offences in connection with insolvency”: Article 489 states in part: That it is an offence for: Anyone trading in a state of insolvency … who enters into obligations which are excessive given the financial situation of the business in favour of third parties without sufficient consideration … or with the intention of delaying the declaration of insolvency, makes purchases to resell at below their price or who engages in loans, circulating or other ruinous means of procuring funds; or Pays or favours any one creditor to the detriment of other creditors … or with intent to defraud or injure Embezzles or conceals assets.

39The transactions and the events that took place in Belgium and Canada concerning BMB SA, Best Canada and Mr. Suthanthiran, viewed objectively, allow for a finding that there were reasonable and probable grounds to believe that an offence under the ‘offences in insolvency’ contained in the Belgian Criminal Code took place.

40Therefore, the Sending Order stands and the application is dismissed.

Maranger J.

Released: August 8, 2018