Court File and Parties

COURT FILE NO.: CR-19-01-00MO DATE: 20190514

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN Respondent – and – 1758691 Ontario Inc. (“ATV Farms”) Applicant

Counsel: Robert Morin and Tanit Gilliam, for the Respondent Brian H. Greenspan and Peter S. Hamm, for the Applicant

HEARD: April 25, 2019

DAWE J.

[1] The Applicant 1758691 Ontario Inc., which operates under the business name “ATV Farms”, is one of Ontario’s largest growers, importers, exporters and wholesalers of root vegetables. In March 2019, officials from the Canadian Food Inspection Agency (“the CFIA”) obtained and executed s. 487 Criminal Code search warrants on the Applicant’s business premises, seizing over 50 boxes of documents and making copies of electronic files. The CFIA obtained these search warrants on the basis that it had reasonable grounds to believe that the Applicant had packaged and marketed vegetables with incorrect country of origin information, which is an offence under the Canada Agricultural Products Act (“the CAPA”) and its associated regulations. No charges have yet been laid against the Applicant.

[2] The Applicant seeks an order in the nature of certiorari quashing the search warrants and a declaration that its s. 8 Charter rights have been infringed, arguing that that the CFIA did not have reasonable grounds to believe any mislabeling offences had been committed, and that the Information to Obtain the warrants (“the ITO”) was materially incomplete and misleading. The Applicant also requests leave to cross-examine the CFIA’s affiant and sub-affiant before its challenge to the sufficiency of the ITO is argued.

[3] The Respondent Crown opposes these applications on various grounds. As a preliminary point, the Respondent argues that it would be preferable for the lawfulness and constitutionality of the searches to be determined by the trial judge, in the event that charges are eventually laid against the Applicant. Accordingly, the Respondent urges me to exercise my discretion to decline to hear the application at this time.

[4] When the matter came before me on April 25, 2019 both parties agreed that this threshold issue should be argued and decided first. For the reasons set out below, I have concluded that the application should be permitted to proceed to the next stages.

Factual Background

[5] The distribution and sale of agricultural produce in Canada is governed by the Canada Agricultural Products Act and its associated regulations, [1] which make it an offence, when packaging or marketing fruits and vegetables, to incorrectly label their country of origin, which is defined to be the country where the produce was actually grown.

[6] On March 13, 2019 CFIA inspectors obtained s. 487 Criminal Code search warrants authorizing them to conduct searches of the Applicant’s business premises in Holland Landing and in Keswick, Ontario. They also obtained production orders under s. 487.014 of the Code requiring four of the Applicant’s customers to turn over documents relating to their purchases from the Applicant.

[7] The Information to Obtain the search warrants (“the ITO”) was sworn by CFIA Investigation Specialist Michael Cole. He asserted that he had reasonable grounds to believe that the proposed searches would reveal evidence that the Applicant had committed offences under the CAPA, as set out in five counts. Four of these counts allege that on three specific dates in January 2018 the Applicant unlawfully packaged or marketed imported American turnips as produce of Canada. The fifth count contains a broad and unparticularized charge alleging that the Applicant marketed imported vegetables with incorrect country of origin information over an 18-month period between April 2017 and September 2018.

[8] The search warrants were executed on March 20, 2019. During the search of the Holland Landing business premises CFIA inspectors seized over 50 boxes of paper documents and also copied a number of computer files. No seizures were made from the Applicant’s Keswick business premises. The production orders directed at four of the Applicant’s customers were executed the following day.

[9] The Applicant’s president and owner has filed an affidavit in which he asserts that:

The reputational damage caused by the search of our properties and subsequent production orders executed on our key customers has had real costs to our business. ATV Farms has lost a major retailer customer as a result, and stands to lose millions of dollars in revenue. ATV Farms fears losing more.

Analysis

General principles

[10] In Re Zevallos and the Queen, 37 C.C.C. (3d) 79 (Ont. C.A.), the Ontario Court of Appeal held that criminal defendants who seek to bring a Charter challenge at trial to the admissibility of evidence seized pursuant to a search warrant do not have to first bring a separate certiorari application in the superior court to quash the warrant, but may simply litigate their Charter claim in front of the trial judge. The Court of Appeal held further that it will generally be inadvisable for courts to entertain a certiorari application to quash a search warrant when the applicant’s “only purpose” is to have seized evidence excluded at his or her eventual trial. Writing for the Court, Morden J.A. explained (at p. 84 C.C.C.):

If the only issue sought to be resolved is one of admissibility at trial of the evidence of seizure, I think that it is preferable that the trial judge decide all aspects of the question of admissibility rather than to have them decided by different judges, one before the trial and the other during it.

In this situation there are strong policy reasons for not bifurcating the proceedings and opening the door to interlocutory appeals. However, Morden J.A. added further (at pp 86-87 C.C.C.) that:

This reasoning is confined to a situation where the only real issue is that of the admissibility at trial of the evidence relating to the search and seizure. It does not relate to situations where the application to quash is brought for other, or possibly additional, purposes, such as to prevent a search and seizure or to obtain the return of the property seized.

He suggested that cases could arise where “the overall interests of justice clearly indicate the advantage of seeking a prerogative remedy” (at p. 87 C.C.C.).

[11] The approach outlined by Morden J.A. in Zevallos has been repeatedly followed both in Ontario and in other provinces. As emphasized in Zevallos, courts will ordinarily exercise their discretion to decline to conduct a free-standing certiorari review of a search warrant where the applicant’s only stated objective is to have seized evidence excluded under s. 24(2) at a subsequent criminal trial. [2] Courts will also generally decline to hear an application to quash a warrant when they conclude the applicant, despite claiming to have some other motivation, is in reality trying to have the court rule indirectly on the inadmissibility of the seized evidence at any future trial. Other considerations that have been found to weigh against permitting certiorari review prior to trial include:

• When the applicant’s request for an order returning seized items appears to be intended to frustrate an ongoing investigation by depriving the investigators of the fruits of the search;
• When the items seized during the search are contraband that cannot lawfully be returned to the applicant;

See, e.g., R. v. Hayman Motors Ltd., [1998] O.J. No. 747 (Ont. Gen. Div.); Pèse Pêche Inc. v. The Queen, 2013 NBCA 37 [sub nom. Pêcheries Belle-Île Fisheries Ltée. v. Guignard]; Haida Salmon Restoration Corp. v. Environment Canada, 2014 BCSC 151.

[12] However, in other situations the balance can tip in favour of permitting certiorari review of a search warrant. Relevant circumstances include:

• Where the applicant can establish a legitimate reason for seeking to have the search warrant quashed at an early stage, going beyond merely wanting to set up a Charter application to exclude evidence at a subsequent trial;
• When no criminal trial is imminent, and the applicant can identify some specific prejudice he or she will suffer if he or she cannot obtain a timely determination of the legality and constitutionality of the search;
• When the application to quash the warrant raises a narrow and discrete jurisdictional ground that can be resolved in a preliminary motion without the court having to delve into or rule on the issues that are likely to also arise at a subsequent trial.

See, e.g., R. v. Branton; R. v. Sanchez, 93 C.C.C. (3d) 357 (Ont. S.C.J.); Vijaya v. The Queen, 2014 ONSC 1653; Ontario College of Trades v. Mayfair Electric Ltd. (Ont. S.C.J., unreported).

[13] Ultimately, the critical question is whether “the overall interests of justice favour the granting of relief prior to trial”: R. v. Branton, supra at para. 14; see also Zevallos, supra at p. 87 C.C.C.

The principles applied

Factors not present in this case

[14] In the case at bar, both parties have taken ameliorative steps or made concessions that effectively neutralize or defuse some significant arguments that would otherwise have been available to the opposing party.

[15] For its part, the CFIA has gone to some lengths to minimize the impact of its document seizures on the Applicant’s ongoing business. Among other things, the CFIA framed its search warrant application to exclude documents that were created within the last six months in order to establish a “buffer” for documents pertaining to the Applicant’s current business transactions. In the weeks since the warrants were executed on March 20, 2019, CFIA investigators have apparently been working diligently to copy and catalogue the seized documents as quickly as possible so that either the originals or copies can be returned to the Applicant without undue delay. [3] In the interim, the CFIA has apparently cooperated with the Applicant’s requests to return certain specific documents it needs for business purposes.

[16] As a result, the Applicant does not suggest that it has suffered any material prejudice as a consequence of being temporarily deprived of its business records. The Applicant acknowledges that this distinguishes the case at bar from the situation in R. v. Branton, supra, where “the seizure and the detention of business records caused significant financial hardship and would have ultimately put the respondents out of business if their property were not returned”. [4]

[17] Moreover, although the Applicant argued in its factum that it had been prejudiced by the CFIA’s seizure of documents containing “private or confidential information”, Mr. Greenspan clarified in his oral submissions that this complaint was directed mainly at the CFIA’s seizure of some personal papers unrelated to the Applicant’s business, which were apparently taken inadvertently and either have been or will soon be returned. He advised that he would not be pursuing this issue further, and fairly acknowledged that this makes the case at bar readily distinguishable from the situation in Vijaya, supra, where the police had seized a lawyer’s computer that contained potentially privileged files.

[18] At the same time, the Applicant has significantly modified its position in a way that substantially reduces any risk of prejudice to the CFIA’s ongoing investigation. In its written material the Applicant had indicated that it would be seeking an order under s. 24(1) of the Charter directing the CFIA to return all copies it has made of the seized documents and electronic files. However, in his oral submissions Mr. Greenspan advised that his client was no longer seeking this remedy and would only be seeking declaratory relief. In my view, this effectively neutralizes the Respondent’s attempt to rely on the New Brunswick Court of Appeal’s decision in Pèse Pêche Inc. v. The Queen, supra, where it was the applicants’ insistence on seeking the return of copies of seized documents that led the motions judge to conclude that their real purpose was to disrupt the investigation and indirectly litigate the admissibility of the seized evidence at any subsequent trial. As the New Brunswick Court of Appeal explained its decision upholding the motions judge’s ruling (at paras. 12-13):

Even though no charges had been laid when the applications were filed, the investigation of the underlying matter was ongoing. Most of the items seized had been returned to the appellants. As mentioned, the investigators retained copies of the documents. The appellants seek an order compelling them to return the copies. The prosecution argued before the judge that this was an attempt to jeopardize a long and difficult ongoing investigation, which would be compromised without the copies. In addition, the investigators have an unequivocal right to keep copies of the seized documents, which they were ordered to return to the appellants (s. 490(13) of the Criminal Code). In my view, the judge was correct in finding that this was an attempt to jeopardize an investigation, which remains open.

Furthermore, it is difficult to imagine that the application judge could have ordered the return of the copies lawfully retained by the investigators without considering the validity of the warrant, and without examining whether s. 8 of the Charter had been contravened and whether the return of the copies to the appellants would constitute a remedy under s. 24(1) of the Charter, that would be appropriate in the circumstances. Notwithstanding the fact that the appellants did not seek an order with respect to the admissibility of the documentary evidence, one can reasonably ask whether the judge could order the return of the copies without determining their admissibility. The judge rightfully concluded that, behind a simple certiorari application seeking a declaration that the warrants were invalid, there was a hidden intent to obtain a declaration concerning the admissibility of documentary evidence in a potential trial, a declaration which might put the trial judge in an embarrassing position (on this topic, see R. v. Saunders, [1995] O.J. No. 3621 (QL), Salhany J., at paras. 21-23).

[19] In contrast, in the case at bar the Applicant is no longer seeking any s. 24(1) remedy that would require the CFIA to return either the originals or copies of the seized documents. As a result, I will not be called on to make any order that would impede the CFIA’s ongoing investigation by depriving it of the fruits of its search. While the Applicant will be asking me to rule on the lawfulness and constitutionality of the CFIA’s searches, even if I were to find a breach of the Applicant’s s. 8 Charter rights I will not have to comment directly or inferentially on the analytically distinct question of whether any of the seized files should be excluded from evidence at a subsequent trial pursuant to s. 24(2) of the Charter. In my view, this makes the situation in the case at bar readily distinguishable from that in Pèse Pêche Inc.

[20] The Respondent argues that even if the CFIA investigators do not face the prospect of losing access to the seized documents, their investigation would still be compromised by a ruling that their search violated the Applicant’s s. 8 rights, because they would then have to start worrying about the possibility that the seized documents might be found inadmissible at any subsequent trial. However, the CFIA cannot avoid having the lawfulness and constitutionality of its search determined at some point, and I am not persuaded that its investigation will be materially impeded if this ruling is made sooner rather than later. Indeed, it seems to me at least arguable that the CFIA investigators will be better off having the lawfulness of their investigative conduct resolved as quickly as possible so they can make contingency plans.

Factors favouring permitting certiorari review of the search warrant in this case

[21] In my view, the balancing exercise in the case at bar ultimately hinges on an assessment of two competing sets of factors. On one side of the scales is the Applicant’s stated interest in obtaining declaratory relief as a means of restoring its reputation as a law-abiding business, which it claims has been undermined by the issuance and execution of the search warrants and production orders. As the Respondent points out, the Applicant’s assertion that it has lost business as a direct result of the CFIA investigation was not fully developed in its supporting affidavit. However, Mr. Greenspan indicated in his submissions that the Applicant will be able to substantiate its claims by adducing evidence of communications it has received from at least one major customer. While Mr. Greenspan’s submissions are not themselves evidence, it would not in my view be appropriate for me to dismiss the application now, based on the shortcomings of the existing evidential record, in the face of Mr. Greenspan’s proffer of further and better evidence on this key point. For present purposes, I will assume that this evidence can and will be provided in due course, while reserving the right to reassess the weight this evidence should be given once it has been properly adduced and tested through cross-examination.

[22] The Respondent questions the sincerity of the Applicant’s claim that its reputation and business have been harmed by the issuance of the search warrants and production orders, pointing out that the Applicant has taken no steps to date to have the ITO sealed. However, it seems to me that a sealing order would have little or no utility as a means of addressing the Applicant’s specific concerns in this case, which are more about its reputation in the small community of wholesale root vegetable purchasers than with how it is perceived by the general public. From the Applicant’s perspective, the problem it faces is that four of its largest customers have already received production orders identifying the Applicant as being under CFIA investigation for alleged mislabeling of produce, and that at least one of these customers has apparently indicated that it will no longer purchase root vegetables from the Applicant while the investigation is ongoing. The Applicant fears that other customers will learn about the investigation through word of mouth and will also choose to take their business elsewhere, and apparently believes that the best option it has for avoiding this loss of future business will be to obtain a public judicial declaration that the CFIA had no reasonable grounds to believe the Applicant had committed any offences.

[23] The fact that the targets of investigative searches often “endure … stigmatization to name and reputation” is undisputed: see Attorney General of Nova Scotia v. MacIntyre, [1982] 1 S.C.R. 175 at p. 187. It is also well-settled that “[t]here is an important declaratory entitlement where certiorari operates to quash a search warrant”: Sanchez, supra at p. 363 C.C.C. In my view, the use of certiorari to vindicate a reputational interest will be potentially justified in at least some situations, for instance, where: (i) no criminal trial is imminent; (ii) where the application cannot properly be characterized as an an attempt to interfere with an ongoing investigation or to prematurely litigate the admissibility of the seized evidence; and (iii) when the applicant can reasonably claim that the harm to its reputation has caused, or is likely to cause, some tangible material harm.

[24] I agree with the Applicant that in situations where this third condition is satisfied, the possibility that the applicant might be able to sue for damages at a later date does not automatically make certiorari review inappropriate. An applicant who claims to have suffered reputational harm from being targeted by an unreasonable search may have considerable difficulty proving compensable losses after the fact. In at least some situations the interests of justice will favour allowing the applicant to seek anticipatory relief rather than having to absorb the losses and try to obtain compensation later.

[25] The Respondent argues that permitting certiorari review of search warrants to vindicate an applicant’s reputational concerns alone will open the door to many such applications being brought in the future. While I agree that this a factor that should be considered, I am not persuaded that allowing the Applicant’s certiorari application to proceed will necessarily lead to a flood of similar applications. I reach this conclusion for three main reasons.

[26] First, many persons who believe their rights have been infringed and their reputations damaged by an unreasonable search will nevertheless conclude that it is not worth the expense of bringing a free-standing application to challenge the issuance of the warrant. Free-standing applications to quash warrants by search targets who are ultimately never charged are relatively rare, even though such claims are not currently barred by Zevallos.

[27] Second, would-be litigants who do not follow the Applicant’s course and limit their claims to requests for declaratory relief will continue to run the risk that the court will characterize their application as an improper attempt to compromise an ongoing investigation or to obtain a premature admissibility ruling, and will decline to hear the application for either or both reasons, as happened in Pèse Pêche Inc., supra.

[28] Third, applicants who seek certiorari review of a search warrant with the goal of establishing their innocence and vindicating their reputational interests are pursuing a high-risk litigation strategy that can easily backfire on them. The standard of review in search warrant cases is onerous and difficult for applicants to meet. As the Supreme Court of Canada explained in R. v. Araujo, 2000 SCC 65 at para. 54:

[T]he test is whether there was reliable evidence that might reasonably be believed on the basis of which the authorization could have issued, not whether in the opinion of the reviewing judge, the application should have been granted at all by the authorizing judge. [Underlining in original].

Accordingly, applicants who seek a declaration that their rights have been infringed by the issuance of a warrant not only run the risk that they will not obtain the remedy they seek, but that the reviewing court will instead publicly uphold the validity of the warrant, and in so doing compound the harm to the applicant’s reputational interests.

[29] For these three reasons, I am not persuaded that there are likely to be vast numbers of future applicants who will have both the financial resources and the courage of their convictions necessary for them to follow the Applicant’s litigation approach. However, even if I am underestimating the number of similar claims that could be brought in the future, it does not necessarily follow that it would be in the public interest to bar these claims from proceeding. The courts serve the public by providing a forum for resolving disputes and remedying legitimate grievances, and it is not apparent to me that properly-founded claims by the targets of allegedly unlawful searches who assert that they have suffered reputational harm are matters that ought never be heard.

Factors weighing against certiorari review

[30] As I see it, the main countervailing factors that weigh in favour of declining to conduct the proposed search warrant review are: (i) the need to preserve scarce court resources and avoid duplicative proceedings, in the event that charges are eventually laid against the Applicant; and (ii) the danger that I will reach an incorrect conclusion about the issuance of the warrant because I will be forced to rely on an incomplete factual record, as compared to the record that will be available to any future trial judge.

[31] In my view, these are both substantial concerns. However, the first factor is offset to some extent by: (i) the possibility that no charges will ultimately be laid; and (ii) the fact that even if charges are eventually laid, at least some of the steps taken in the litigation before me will not necessarily have to be entirely re-done at trial. Even if my rulings and conclusions do not bind a subsequent trial judge, they may have persuasive force and may help the parties narrow the issues that must be relitigated at trial. Likewise, when assessing the second danger I take considerable comfort from the very high quality of the materials I have received from both parties so far.

Conclusions

[32] While I see this as a somewhat close case, I have concluded that on balance the overall interests of justice are better served by permitting the Applicant’s claim for Charter relief to proceed to the next litigation stages. If the Applicant can substantiate with proper evidence its claim that the stain on its reputation arising from the CFIA’s investigation has caused it to lose sales and to reasonably anticipate losing future sales, and if this evidence holds up when tested by cross-examination, the Applicant’s goal of obtaining declarative relief as a means of possibly vindicating its reputation and preventing further financial loss would, in my view, outweigh the potential downside risks of conducting the search warrant review now rather than postponing it until a possible future trial.

[33] This determination is necessarily provisional and may need to be reassessed if circumstances materially change, e.g., if charges are laid against the Applicant, which would potentially undermine the utility of a declaratory remedy as a means of restoring the Applicant’s loss of reputation among its customers, or if cross-examination substantially undercuts the Applicant’s claim that its loss of reputation has or is likely to translate to substantial financial losses. For the time being, however, I am satisfied that the application should be permitted to proceed to the next scheduled steps, namely: (i) argument on the Applicant’s motion to cross-examine that search warrant affiant and sub-affiant, currently scheduled for May 23, 2019; and (ii) cross-examination of the Applicant’s affiant by the Respondent and, if leave is granted, cross-examination of the search warrant affiant and/or sub-affiant by the Applicant, all of which are currently scheduled for June 5, 2019.

Dawe J. Released: May 14, 2019

Footnotes

[1] Specifically, the Fresh Fruit and Vegetable Regulations, CRC, c 285.

[2] See, e.g., R. v. Charania.

[3] When the threshold prematurity issue was argued before me on April 25, 2019, I was advised that the CFIA anticipated that the original documents or copies thereof would be returned to ATV Farms within the next two weeks.

[4] R. v. Branton, supra at para. 11.