COURT FILE NO.: CR-23-90000072-0000

DATE: 20230922

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TRI-CAN CONTRACT INCORPORATED, HARALAMBOS VLAHOPOULOS, 912547 ONTARIO INC., JOSE DE OLIVEIRA, LIDIO ROMANIN CONSTRUCTION COMPANY LIMITED, LIDIO ANTHONY ROMANIN

Applicants

– and –

HIS MAJESTY THE KING

Respondent

Alan D. Gold and Ellen C. Williams, for the Applicants Lidia Anthony (Tony) Romanin and Lidio Romanin Construction

Jonathan Shime and Megan Schwartzentruber, for the Applicants Jose De Oliveira and 912547 Ontario Inc.

Jay Naster and Maureen Salama, for the Applicants Tri-Can Contract Incorporated and Haralambos (Bob) Vlahopoulos

Moray Welch and Craig Power, for the Respondent

HEARD: June 19, 20, 21, 2023

reasons for decision

bawden J.

[1] The applicants are charged with serious criminal offences – fraud over $5,000 and conspiracy to commit fraud. Some of the witnesses who will testify against them were once engaged in the same conduct which is alleged against the applicants, but they have received immunity or leniency for their acts in return for cooperating with the authorities in the prosecution of the accused. They are, in short, Vetrovec witnesses: R. v. Vetrovec, 1982 20 (SCC), [1982] 1 SCR 811.

[2] In most criminal investigations, Vetrovec witnesses are viewed with a jaundiced eye. Experience has shown that witnesses will sometimes lie about the conduct of others to escape the consequences of their own actions.

[3] When a witness of this nature comes forward in a criminal investigation, police will almost always conduct the first interview on video, under oath. After obtaining a comprehensive statement, police and prosecutors will weigh the reliability of the witness and decide what benefit – if any – will be offered in return for cooperating with authorities. Outright immunity for criminal conduct is rare.

[4] The importance of obtaining a comprehensive initial statement from a Vetrovec witness can hardly be overstated. The first statement establishes a standard against which any subsequent deviation can be measured. It is the foundation for any analysis of whether the witness’s evidence subsequently changed to conform to the terms of an immunity agreement, or to explain contradictory evidence which was not known when the first statement was taken. Virtually every cross-examination of a Vetrovec witness entails some comparison between the witness’s first statement and the final version presented to the trier of fact.

[5] The oath is an important element of the first interview. If the witness subsequently retracts the statement or it is proven that material elements were intentionally false, the witness will not only lose the benefit of his agreement with the Crown but may also face prosecution for obstruction of justice.

[6] It is obviously essential that police have a video recording of the statement so that there can be no dispute about what the witness said or how he said it. The trier of fact may draw important inferences from the tone and inflection of the statement.

[7] None of these precautions occurred in this case. This investigation was not conducted by police, but by investigators from the Competition Bureau of Canada (the “Bureau”). The witnesses approached the Bureau through counsel and their potential evidence was proffered in hypothetical terms. The witnesses were interviewed by investigators, but always with ironclad assurances that their statements would never be used against them. The interviews were not electronically recorded, and the witnesses were free to suspend the questioning at any time to obtain the advice of counsel. Even after the witnesses were granted immunity or leniency, the investigators continued to question the witnesses through their lawyers.

[8] As time passed, the witnesses began to change their statements and failed to recall important matters. The investigators still did not insist on sworn videotaped statements. They instead collaborated with counsel to prepare affidavits which the witnesses signed in their lawyers’ offices. The first time that the Vetrovec witnesses were called upon to give a complete and unscripted account of their evidence was when they testified at the applicants’ preliminary inquiry, nine years after they had first come to the attention of the Bureau.

[9] The applicants submit that this just can’t be right. Mr. Naster argues that when the lawyers questioned the witnesses at the direction of the Bureau, they were not acting as lawyers but as agents of the State. Both the lawyers and the clients knew that whatever they said concerning the facts of the case could be disclosed to the Bureau. No one considered the interviews to be privileged.

[10] Mr. Naster submits that the witnesses are obliged by the terms of their immunity and leniency agreements to turn over all relevant, non-privileged evidence to the Crown. In these circumstances, that includes their own lawyers’ notes of their first statements concerning the facts of the case. If the Crown is not willing to compel the witnesses to produce the notes, the court must order it.

[11] Counsel for the Crown and the witnesses take a very different view. They observe that this was a Competition Bureau investigation, not a murder. Different considerations apply. Competition Bureau investigations are designed to allow cooperating witnesses to communicate with investigators through counsel. The witnesses are obliged to provide disclosure to the Bureau of all information known to them apart from information which is protected by privilege. The witnesses have fulfilled that obligation.

[12] The witnesses submit that they faced criminal, civil and regulatory consequences when they came forward to admit their involvement in anti-competitive practices. They required legal advice at every juncture of the proceedings. Far from acting as agents of the State, counsel for the witnesses provided essential legal services by first negotiating agreements with a prosecuting authority and then by ensuring that the witnesses abided by the terms of their agreements. The witnesses never waived solicitor-client privilege regarding any aspect of their consultations with counsel and no waiver can be inferred from the circumstances. The defendants may be disappointed by the absence of evidence which might have been available in a different type of investigation, but that is no basis to abrogate solicitor-client privilege. No one is suggesting that innocence is at stake.

[13] The backdrop to this application is the decision of Justice Nordheimer (as he then was) in the case of R. v. Nestlé Canada Inc., 2015 ONSC 810, 124 O.R. (3d) 498. The Nestlé case involved an investigation into price fixing conducted by the Competition Bureau. The investigation began when Cadbury Canada Inc. (“Cadbury”) came forward to the Competition Bureau to disclose that it had been involved in illegal price-fixing. Cadbury sought immunity from prosecution in return for cooperating with investigators. Prior to approaching the Bureau, Cadbury had hired counsel to conduct an internal investigation to determine what had occurred. The lawyers amassed an investigative file which they turned over in its entirety to the Bureau. The file included statements made by officers and employees of Cadbury to the investigating counsel.

[14] Based on the information received from Cadbury, the Bureau obtained search warrants which lead to the seizure of evidence implicating Hershey Canada Inc. (“Hershey”) in the price-fixing conspiracy. Hershey applied for a leniency agreement and, like Cadbury, provided the Bureau with its own investigative file which also included interviews of officers and employees conducted by counsel. The Crown disclosed the investigative files which it had received from Cadbury and Hershey to the accused, Nestlé et al, (hereinafter “Nestlé”).

[15] Shortly after providing disclosure to Nestlé, the Crown realized that some of the disclosed documents were potentially subject to privilege. Both Cadbury and Hershey claimed that they were and demanded that Nestlé return the documents. Nestlé refused, taking the position that the documents were not privileged and even if they were, privilege had been lost when Cadbury and Hershey provided them to the Bureau. The Crown applied to the court for directions as to whether the evidence was privileged and if so, whether the privilege had been lost.

[16] Hershey claimed that the notes of counsel concerning interviews with its officers and employees were protected by solicitor-client privilege. Justice Nordheimer dismissed that argument, finding that any claim to solicitor-client privilege over the contents of the files was waived when the documents were provided to the investigating authority:

[33] … Even assuming that solicitor/client privilege could have attached to the information as it was gathered by Hershey's counsel, for the purpose of advising Hershey on this matter, once Hershey chose to instruct its counsel to approach the Competition Bureau, and reveal that information to the bureau for the purpose of entering into a plea agreement pursuant to the Leniency Program, Hershey must be seen as having waived any solicitor/client privilege that attached to the information.

[17] The applicants particularly rely on Justice Nordheimer’s further comment at paragraph 37 of Nestlé:

[37] I would also note that, while I have assumed that solicitor/client privilege applied to this information originally, that does not mean that the privilege would continue for all purposes. It has long been held that solicitor/client privilege cannot be relied upon to refuse to disclose factual information, once the party who claims the privilege comes under a duty to disclose at, for example, an examination for discovery. Consequently, information obtained by counsel for a party, in preparation for litigation, cannot be withheld in the discovery process on the basis of solicitor/ client privilege, insofar as factual information has been conveyed to the party by a witness.

[18] Justice Nordheimer then turned to the question of whether the material disclosed was covered by settlement privilege. He concluded that it was not:

[69] I conclude, therefore, that settlement privilege does not apply to prohibit the disclosure of factual information provided to the Crown in respect of a proposed criminal prosecution in circumstances where the person providing that information does so with the knowledge that the Crown intends to rely on some or all of that information for the purposes of that criminal prosecution. I would say that that is especially so where the person who is providing the information has committed to providing evidence, in the future, against the accused in that prosecution.

[19] The responding witnesses submit that the interview notes taken by counsel are covered by solicitor-client privilege and their agreements with the Competition Bureau specifically exempted them from disclosing privileged materials. The Crown joins in this position and accordingly submits that the interview notes are not within its control to disclose.

[20] The application before this court is a predictable sequel to Nestlé. In Nestlé, the court presumed that solicitor-client privilege applied to the lawyers’ interview notes but was lost when the notes were intentionally disclosed to the Bureau. The applicants challenge that presumption. They submit that the lawyers were acting as State agents when they agreed to question the witnesses at the behest and direction of the Bureau. The applicants seek a declaration that the investigative files are within the control of the Crown by virtue of the terms of the Immunity and Leniency Agreements and must therefore be disclosed based on the principles enunciated in R. v. Stinchcombe, 1991 45 (SCC), [1991] 3 SCR 326. In the alternative, the applicants ask that the court order production of the documents as a third-party record.

I. THE BACKGROUND TO THE APPLICATIONS

A. Immunity and Leniency Agreements in Competition Act Investigations

[21] The fundamentals of the Immunity Program were described in Nestlé:

(a) A "marker" is granted if a party, typically through their counsel, identifies, on the basis of a limited hypothetical disclosure, the nature of the criminal offence it had committed in respect of a specified product.

(b) If the bureau provides a marker to the party, the party would then "proffer" to the bureau a detailed description of the illegal activity and disclosure of information it had. The proffer would typically be made in hypothetical terms by the applicant's legal representative. The bureau would generally require, with sufficient detail and certainty, the nature of any records the party could provide, what evidence potential witnesses could give and how probative the evidence is likely to be. In addition, the bureau could request an interview with one or more witnesses, or an opportunity to view certain documents, prior to recommending that the Director of Public Prosecutions of Canada grant immunity.

(c) Subject to certain conditions, including full co-operation and disclosure, if the bureau was unaware of the offence, and the party was the first to disclose it, the commissioner would provide all of the relevant information and recommend to the Director of Public Prosecutions of Canada that immunity from prosecution be granted.

R. v. Nestlé Canada Inc., 2015 ONSC 810, 124 O.R. (3d) 498 at para. 6

[22] The same procedures applied at the time of this investigation, with necessary modifications for parties seeking leniency rather than immunity.

[23] The elements of the Immunity and Leniency Programs are published by the Bureau in bulletins which are available to the public. The following aspects of the Immunity Bulletin are significant to this application:[^1]

a. The Bureau cannot provide legal advice to applicants and recommends obtaining private counsel “if a particular situation causes concern”: paragraph 7.

b. An applicant is required to provide complete and truthful disclosure of all non-privileged information in its possession: paragraph 17(c).

c. If a company qualifies for immunity, all employees and officers who admit their involvement in the illegal activity and who provide complete and on-going cooperation qualify for the same recommendation of immunity: Paragraph 22.

B. Project Condor

[24] The Bureau received information from a confidential source in 2012 which caused investigators to commence an investigation into bid-rigging in the condominium refurbishment industry in the Greater Toronto Area. The investigation was named “Project Condor”.

[25] On July 17, 2013, an officer from the Bureau left a voicemail message for Jane Shackleton, an employee of Mohawk Industries Inc. (“Mohawk”), requesting an interview. Ms. Shackleton did not answer the message and instead reported it to her employer.

[26] Counsel for Mohawk, Mr. Adam Fanaki of Davies Ward Phillips & Vineberg (“Davies”), returned the call. Discussions ensued between Mr. Fanaki and the Competition Bureau which ultimately led Mr. Fanaki to make a series of proffers on behalf of Mohawk with the objective of obtaining immunity from prosecution for the company, its directors, executives and employees.

[27] The Bureau identified four employees of Mohawk who could provide relevant evidence to the investigation, two of whom are relevant to this application: Jane Shackleton and Maria Michaud. Ms. Shackleton retained Mr. Nikiforos Iatrou of WeirFoulds LLP as her counsel. Ms. Michaud was initially represented by Davies, Ward, Phillips & Vineberg LLP (“Davies”) but later changed counsel and retained Mr. Iatrou. Mr. Iatrou now practices with McCarthy Tetrault (“McCarthys”) and continues to represent both witnesses.

[28] Based on information provided by Ms. Michaud, the Bureau obtained a warrant in October 2014 to search various premises including the offices of Connoisseur Painting Ltd. (“CPL”). The President and directing mind of CPL was Richard Lyons. As the warrant was being executed, Mr. Lyons retained Mr. Glen Jennings of Gowling WLG (Canada) LLP (“Gowling WLG”) to act as his counsel. Mr. Jennings immediately contacted the Bureau to request a leniency marker on behalf of CPL. Mr. Jennings made a series of proffers in the following months which ultimately led to CPL entering into a leniency agreement. On January 17, 2022, CPL pleaded guilty to one count of conspiring to fix prices and allocate customers, contrary to section 45 of the Competition Act.

[29] The Crown intends to call Jane Shackleton, Maria Michaud and Richard Lyons as witnesses at the trial of the defendants.

C. Defence Requests for Disclosure of the Investigative Files

[30] The applicants were charged on March 25, 2021, with offences which are alleged to have occurred between January 1, 2009, and December 31, 2014.

[31] In June 2021, Crown counsel made the following inquiry of counsel for Mohawk, CPL and the Cooperating Witnesses:

Are there any materials created or obtained as the result of internal investigations into anti-competitive actions that have not been provided to the competition bureau? If so, can you please provide Officer Kiran Khan with these materials?

If there are previously undisclosed materials relating to internal investigations over which you claim privilege, can you please identify these materials, as well as the nature of the privilege?

We make this request with an eye towards Justice Nordheimer’s guidance in R. v. Nestlé Canada Inc., 2015 ONSC 810, 124 O.R. (3d) 498.

[32] All counsel responded that they had reviewed their files and had no additional non-privileged evidence to provide.

[33] Three months later, Mr. Naster requested the following disclosure from the Crown:

The entire internal investigative files of the Immunity Applicant Mohawk including, but not limited to, the files maintained by counsel for the Immunity Applicant (i.e., Davies) as well as independent counsel for the cooperating witnesses, Maria Michaud and Jane Shackleton (i.e., WeirFoulds LLP/McCarthy Tetrault). As it would appear from the disclosure that the Bureau informed the Immunity Applicant as of March 2016 of the need to obtain the “entire investigative file” from the Immunity Applicant, we trust there has been ample time for the bureau to obtain this information.

[34] Mr. Naster made a similar request for the investigative file of the Leniency Applicant, CPL.

[35] Crown counsel relayed Mr. Naster’s disclosure request to counsel for the Immunity and Leniency Applicants. Counsel for Mohawk, Ms. Forbes, responded in March 2022.

[36] Ms. Forbes began by observing that Mohawk’s Immunity Application did not result from an internal investigation but rather because of inquiries made by the Bureau. Mohawk made proffers, provided documents as requested and facilitated Bureau interviews of Mohawk employees. Mohawk did not conduct an independent internal investigation and no investigative file was ever created.

[37] Ms. Forbes confirmed that Davies had conducted a complete review of their files and had forwarded all non-privileged and potentially relevant documents to the Crown. Ms. Forbes asserted solicitor-client, common interest, and settlement privilege over the balance of the file including notes taken by Davies lawyers, correspondence between Davies and Mohawk and notes taken by Davies lawyers to prepare oral proffers.

[38] Mr. Iatrou responded in very similar terms on behalf of Ms. Shackleton and Ms. Michaud.

[39] Mr. Jennings responded that Mr. Lyons and CPL had nothing further to disclose.

D. The Subpoenas Served on Counsel for the Cooperating Witnesses

[40] In May 2023, counsel for the applicants served subpoenas on counsel acting for the Immunity and Leniency Applicants. The subpoena served on Davies required the law firm to produce the following materials to the court:

The records of all communications and interviews, in whatever form, with the Cooperating Witnesses (Maria Michaud, Jane Shackleton, Michel Vermette, Lee Blair), and any other representative of Mohawk, which contain facts.

[41] Comparable subpoenas were served on Mr. Iatrou and Mr. Jennings.

[42] Davies responded to the subpoena by filing a USB key with the court. The key holds three digital folders divided into the following categories:

First Category: Notes taken by Davies lawyers of their communications with representatives of Mohawk (including cooperating witnesses) which contain “facts”. The accompanying affidavit asserts that these communications were undertaken solely for the purpose of seeking or providing legal advice in connection with one or more of the proceedings and solicitor client privilege is claimed.

Second Category: E-mail communications between counsel and Mohawk Representatives which were also undertaken solely for the purpose of seeking or providing legal advice and hence, subject to solicitor-client privilege.

Third Category: Records of communications between Davies and McCarthys which contain “facts”. The accompanying affidavit asserts that there is a common interest between Mohawk and the immunity witnesses and that the communications with McCarthys were solely to allow counsel to provide legal advice and to determine legal strategy in pursuit of the common interest of their clients. It is asserted that the communications are subject to solicitor-client privilege, litigation privilege and common interest privilege.

[43] Mr. Iatrou responded to the subpoena in a similar fashion.

[44] Mr. Jennings responded to the subpoena by reiterating his position that Mr. Lyons and CPL had provided all material, non-privileged evidence to the Bureau as they were required to do under the terms of the Leniency Agreement. All other aspects of the Gowling WLG file were subject to solicitor-client privilege. Mr. Lyons also filed an affidavit stating that he had met with Mr. Jennings on many occasions to receive legal advice concerning disclosure to be made to the Bureau, and that he understood all those conversations were confidential. He has never been asked to waive solicitor-client privilege and has not done so.

II. THE EVIDENCE

[45] The evidence relied upon by the applicants includes the records of 172 communications between Bureau investigators, Crown counsel, and counsel acting for the Immunity and Leniency Applicants. The communications begin at the outset of the investigation in 2013 and continue until the filing of this application in 2023. The applicants rely on this extensive evidential record to prove two facts:

i. That the lawyers who interviewed the cooperating witnesses did so at the direction of the Bureau for the purpose of gathering evidence and hence, were acting as agents of the Bureau; and

ii. The cooperating witnesses knew that when they were interviewed by their lawyers about the facts of the case, the lawyers were acting as agents of the Bureau, and they had no expectation that those conversations would remain confidential.

A. The Evidence Relating to Jane Shackleton

2013

[46] The Bureau left a voicemail message for Jane Shackleton on July 17. Mr. Fanaki returned the call on August 14.

[47] On September 4, Mr. Iatrou called the Bureau on behalf of Mohawk and requested an immunity marker. The marker was granted.

[48] Mr. Iatrou had a follow-up call with Officer Stephen Luciw of the Bureau on September 9. Officer Kiran Khan was present during the call and took handwritten notes of the conversation. Her notes include the following:[^2]

• Mr. Iatrou acknowledged that he had no experience in “the immunity process”.
• Mr. Luciw explained that making a proffer is a 30-day process but the deadline can be extended if the process is being followed.
• Mr. Iatrou asked what the consequences would be if there was an “honest oversight” in the proffer. Mr. Luciw replied “we have been investigating this – can direct you, give you direction. Work together. Extension not (an) issue if working together”.
• Mr. Iatrou asked if the proffer was conducted orally and Mr. Luciw confirmed that it was. He described a proffer as “a paperless process – we get together in a meeting”.
• Mr. Luciw added that the Bureau “may ask for witness interviews if need to flesh out info.”

[49] On October 7, Mr. Fanaki made the first proffer. He specified that the proffer was based on “information presently known from the client and investigation conducted by counsel.” Mr. Fanaki confirmed that he had interviewed both Jane Shackleton and Maria Michaud in preparing the proffer. He told the Bureau that Maria Michaud was at a “higher level” and although she was aware of calls which had been made to Jane Shackleton, there was “not much information there.”[^3]

[50] On October 28, Mr. Fanaki proffered further information concerning Jane Shackleton. He advised investigators of three recent occasions when Ms. Shackleton had communicated with the targets of the investigation and provided details of their conversations.[^4]

[51] Ms. Shackleton was scheduled to be interviewed by the Bureau on November 12. On November 4, the investigators advised her counsel, Mr. Iatrou, of the matters which they would raise in the interview. Mr. Iatrou confirmed that he would review those topics with Ms. Shackleton before the interview.[^5]

[52] On November 11, Ms. Shackleton received a letter from the Public Prosecution Service of Canada (hereinafter “PPSC”) counsel undertaking that any statements made by her during her interview would not be used against her or Mohawk in any proceeding brought by the DPP or the Competition Bureau. This letter is routinely provided to witnesses who are interviewed by Bureau investigators at the proffer stage of an Immunity or Leniency Application and is colloquially referred to by investigators as a “Queen for the Day” letter.

[53] At the outset of the November 12 interview, Officer Khan cautioned Ms. Shackleton against making false statements and alerted her to section 29 of the Competition Act. Ms. Shackleton was not sworn to tell the truth and the interview was not electronically recorded.

[54] On November 28, Officer Khan advised Mr. Fanaki that the Bureau would recommend to the PPSC that Ms. Shackleton receive full immunity from prosecution.[^6]

[55] On December 4, Bureau investigators conducted a conference call with Mr. Fanaki and Mr. Iatrou. Officer Khan’s handwritten notes of that meeting include the following:[^7]

• Mr. Luciw stated that the “conversation with Jane Shackleton was weak. Things shifted from initial proffer to weaker ‘may have’ etc.”
• Mr. Luciw stated that another witness (referred to here as “M”) is “(a) little bit short of what we fully need from a key witness”.

[56] Mr. Luciw spoke to Mr. Fanaki and Mr. Iatrou again on December 16. The notes of that conversation include the following:[^8]

• Mr. Luciw stated that the Bureau was “starting to question JS what exactly she remembers.”
• The investigators “want JS to tell exactly as answers - no conditional answers or qualifying answers.”
• Mr. Fanaki questioned what this would cover and the response was “over all information proffered”.

[57] Ms. Shackleton agreed to report any ongoing contact between herself and the targets of the investigation to the Bureau. On December 9, investigators called Mr. Iatrou to express concern that Ms. Shackleton had not disclosed a recent contact. Mr. Iatrou apologized, saying that he had not instructed Ms. Shackleton to advise him immediately of such contacts. Mr. Iatrou and Mr. Fanaki subsequently reported the following:

a. On December 13, Mr. Fanaki called to provide information regarding calls that Ms. Shackleton and Maria Michaud had with targets.

b. On December 23, Mr. Iatrou called to advise that Ms. Shackleton had spoken to a target at a Christmas party. On December 27, he called to report that he had made notes of their conversation as it had been recounted to him by Ms. Shackleton.

2014

[58] Jane Shackleton was interviewed again on January 8 and 9. At the close of the interview, Mr. Luciw attempted to confirm with Ms. Shackleton that she understood her ongoing obligation to provide information to the Bureau. Mr. Iatrou responded on her behalf, saying that she did understand and would contact him (not the Bureau) to report any contact with targets.[^9]

[59] Jane Shackleton was interviewed again on March 31, April 1, and May 5 and6.

[60] On July 31, the Bureau recommended to the PPSC that Mohawk Industries and Ms. Shackleton be granted immunity for their actions. The Immunity Agreement was signed by Ms. Shackleton on October 21, 2014. The Agreement included the following terms:[^10]

• Mohawk and Ms. Shackleton would provide full, complete, frank and truthful disclosure to the DPP and the Commissioner of all non-privileged information, records and things in their control: paragraphs 3(a), 5(a) and 18.
• Immunity can be revoked for breach of the agreement or being charged with giving contradictory evidence: paragraph 16.
• If immunity is revoked as a result of a breach of the agreement, the DPP may take any appropriate action against the party including prosecution under the Competition Act. In any such action, the DPP may use any information, statement or testimony provided by the person at any time after the Immunity Application was initiated. Privilege would be deemed to be waived over any record, statement or testimony in those proceedings: paragraph 15.

2016

[61] On May 12, Officer Khan asked Mr. Iatrou if he knew where Ms. Shackleton was and if she understood her obligation to continue to cooperate with the investigation. Mr. Iatrou responded that she was aware of the obligation but told Officer Khan that the Bureau still “need(ed) to go through him” to contact her.

2018

[62] In June, the Bureau requested a sworn statement from Ms. Shackleton. Mr. Iatrou replied that he was having difficulty locating her and she was not returning his messages.

2019

[63] On June 11, Mr. Iatrou and Officer Khan spoke about preparing a sworn statement for Ms. Shackleton. The notes of that conversation include the following:[^11]

• NI (Nikki Iatrou) asked how to finalize statement – if I had questions and to make sure statement covers everything.
• I said we could use the same process as Michaud statement, i.e., if he wants to send us a draft, we can take a look to identify any questions or info missing. Or NI can send us a sworn statement and we can ask follow up questions on that, which can be responded by way of another sworn statement.
• NI said he prefers to cover all info in one statement if possible so he will send us draft so we can ask follow up questions.

[64] On August 7, Officer Khan spoke to Mr. Iatrou about details which she wished to correct in Ms. Shackleton’s affidavit. She urged him to stay in touch with both Ms. Shackleton and Ms. Michaud because they might be required to testify. Mr. Iatrou said that he hadn’t spoken to Ms. Michaud in some time, but he would try to contact her.

[65] On October 22, 2019, Mr. Iatrou provided the Bureau with an affidavit from Ms. Shackleton which had been sworn in his office.

B. The Evidence Relating to Maria Michaud

2014

[66] On February 4, Mr. Fanaki advised the Bureau that he had held lengthy discussions with Maria Michaud about Mohawk’s role in the bid-rigging conspiracy, and that she recalled a conversation which could be of significance to the investigation.

[67] Maria Michaud was given a “Queen for the Day” letter and interviewed by Bureau investigators on March 5 and 6. The interviews were not electronically recorded, and Ms. Michaud was not sworn or affirmed.

[68] Ms. Michaud was interviewed again on May 9 and confirmed what she had said in March.

[69] On October 4, Officer Khan swore an ITO in support of a warrant application to search the defendants’ premises. In the ITO, Officer Khan relied on information received from Ms. Michaud as evidence of an agreement amongst the defendants to arrange bids in the condominium refurbishment industry. Officer Khan acknowledged in her testimony at the applicants’ preliminary inquiry that Ms. Michaud was the only source for that evidence.

[70] Ms. Michaud signed an immunity agreement with the DPP on October 27.

2015

[71] In November, Bureau investigators sent Mr. Fanaki a draft statement for Ms. Michaud to sign. The draft was based on her May 2014 interviews. Mr. Fanaki did not respond.

[72] On December 15, an investigator called Mr. Fanaki to remind him that Ms. Michaud was required to provide a statement. The notes of the conversation include the following:[^12]

• Mr. Fanaki reported that he had spoken to Ms. Michaud and she “does not have a strong recollections – wants to look at the statement previously drafted”.
• Officer Allen responded “right now it is to complete the record. Don’t see prosecution in the near future. Need statement because memory gets faded with time.”
• Mr. Fanaki said that Ms. Michaud is “a former employee – don’t have any control over her – will take this to her and see what she says”.
• Officer Allen reminded Mr. Fanaki that Ms. Michaud had signed an immunity letter and was obliged to cooperate with investigators.

2016

[73] On January 6, Mr. Fanaki confirmed that Ms. Michaud had received her statement and was reviewing it.

[74] Officer Khan left a voicemail message for Mr. Fanaki on January 15, inquiring when they would receive the signed statement. Mr. Fanaki did not respond. Officer Khan emailed Mr. Fanaki on January 20.

[75] On February 9, investigators again called Mr. Fanaki. He answered the phone and reported that he had been unable to reach Ms. Michaud. He noted that she was no longer an employee of Mohawk and he did not have “as much degree of control”. The investigators suggested to Mr. Fanaki that he remind Ms. Michaud of her obligation to cooperate. He responded “don’t want to get her upset because she’s pretty good. If not by Friday, will read her the Riot Act.”[^13]

[76] On February 10, Mr. Fanaki called the Bureau to advise that Ms. Michaud had received the draft statement and was making changes to it because some aspects were not accurate. He promised to provide a black lined version of the statement by Wednesday.

[77] On February 23, Mr. Fanaki sent the investigators Ms. Michaud’s handwritten comments regarding the draft statement.

[78] On March 11, the investigators held a meeting to discuss Maria Michaud’s statement. The notes of that meeting indicate that they were “surprised” by the inconsistencies between her 2014 interviews and her “new revised comments”. They decided that they were no longer satisfied with an affidavit from Ms. Michaud and would instead require her to provide a videotaped statement under oath. The meeting notes also state “internal investigative file (Crown) for us to prepare for interview.” At the conclusion of this meeting, the investigators left a voice message for Mr. Fanaki requesting a meeting.[^14]

[79] On March 21, Mr. Fanaki spoke to the investigators. Officer Khan’s notes of that meeting include the following:[^15]

• After that, talk about internal investigative file – give that some thought and get back to us.
• Nothing privileged – what she told to you in her interviews with you.
• At some point will need entire investigative file but at this time need only what relates to Maria Michaud so we can prepare for interview. Compare what was said in previous interview with what she said to him and what she said in her revised statement.
• Fanaki: Will see when he gets hold of Maria Michaud and get back to us.
• Request Fanaki’s investigative file. Questioned why. Explained Nestlé decision.

[80] On April 8, Officer Khan left a voicemail for Mr. Fanaki asking when the Bureau would receive his investigative file.

[81] On April 26, Office Khan spoke to Mr. Fanaki and they discussed the fact that Ms. Michaud would have to provide a sworn videotaped statement. Officer Khan again asked Mr. Fanaki when the Bureau would receive his investigative file. He responded that he was “sorting through investigative file – understood his obligation with respect to that – will be able to provide info RE MM before interview”. Officer Khan sent a follow-up email to Mr. Fanaki confirming his agreement to send the Bureau his investigative file.[^16]

[82] On May 6, Mr. Fanaki emailed Officer Khan to report that he was “working with Maria with respect to her attendance” for the May 12 interview. He indicated that she wished to review the Mohawk Immunity Agreement.

[83] On May 9, Mr. Fanaki wrote to report that Ms. Michaud had decided to retain new counsel and was canceling the May 12 interview.

[84] On May 12, Mr. Iatrou called the Bureau to report that he had been retained by Ms. Michaud. Officer Khan’s notes of her conversation with Mr. Iatrou include the following:[^17]

I gave him a brief overview that we interviewed MM (Maria Michaud) in 2014 and then reviewed statement of summarized info over the phone. Need the info under oath to satisfy DPP’s requirements for immunity and leniency applicants. No new info needed from her. Immunity assurances have been given to her. NI (Nicki Iatrou) asked if sworn written statement would be enough? GA (Bureau investigator Gwinn Allen) and I said yes. I said she can review the summarized info and change as needed to provide under oath. NI said he will go through everything and then get back to us.

[85] On June 13, Mr. Iatrou called the investigators to advise them that he had reviewed the “revised version” of Ms. Michaud’s statement with her and that they had “taken some quotes out” and replaced them with “to the effect that”. He commented that Mr. Fanaki was also reviewing Ms. Michaud’s anticipated affidavit.[^18]

[86] On August 4, Mr. Iatrou provided the Bureau with Ms. Michaud’s witness statement. The Bureau’s notes of a follow-up telephone call on August 9 include the following:[^19]

• Called NI (Nicki Iatrou). Went over questions and statement. Asked him to send us sworn statement. Noted that PPSC may still require a videotaped sworn statement from Maria Michaud.
• Officer Khan: We have used the term CRSP (new para 25) – Maria said she wouldn’t use CRSP as a term – just a “dealer” or “GC” (or both). Since it’s her affidavit, I don’t want her to be stuck with a term she doesn’t use. CRSP is how we (the Bureau) refer to them in a more generic way. Once those comments are addressed, if you could have it sworn and sent.
• Niki – we don't want to delay it – want to have it fixed in time. We’ll go through these changes – clean up the things you’ve identified – pretty minor changes – I won’t run it by you.
• Kiran – That’s okay, just make sure she is comfortable and understands the statement. Down the road we can deal with the requirements of PPSC (videotaped statement) - this statement may be sufficient.
• Niki – If a year or two from now, you decide to interview her under oath, her words wouldn’t be identical to her statement.
• Kiran – We’ll cross that bridge when we come to it. If this comes up again, we’ll try to address it directly with PPSC.

[87] On August 26, Mr. Iatrou sent the Bureau an affidavit from Maria Michaud. Ms. Michaud was never required to provide a sworn, videotaped statement.

[88] Mr. Fanaki passed away in 2020. Mr. Mark Katz of Davies took over the Mohawk file. He called the Bureau on February 18, 2020, to introduce himself. Officer Khan’s notes of the conversation indicate that she asked him if he would be raising any claim of solicitor-client privilege over the internal investigative file prepared by Davies.

C. The Evidence Relating to Richard Lyons

2014

[89] Bureau officers executed a warrant at the premises of CPL on October 8, 2014. During the execution of the warrant, Mr. Glen Jennings, counsel for the company, requested a leniency marker. A first-in leniency marker was granted on October 15.

[90] The Bureau scheduled a proffer meeting for October 22. The Bureau advised Mr. Jennings of the areas that they wished him to address in the proffer and Mr. Jennings confirmed that he would review those areas with his client.

[91] The initial proffer proceeded on October 22. Investigators had several follow up calls with Mr. Jennings and it was agreed that Richard Lyons would attend to be interviewed on November 24.

[92] Richard Lyons was provided with a “Queen for the Day” letter for interviews which occurred on November 24 and 25. The interviews were not under oath and were not electronically recorded.

[93] On December 1, the Bureau advised Mr. Jennings that they required a more detailed proffer. Mr. Jennings provided the requested information and asked that the leniency marker be retrospective to 2005. On December 12, a marker for conduct beginning in 2005 was perfected. The Bureau advised Mr. Jennings that “we will be seeking additional information in order to formulate our leniency recommendation…”[^20]

[94] Richard Lyons was interviewed again on December 15.

2015

[95] On January 26, the Bureau called Mr. Jennings to provide him with a list of ten additional refurbishment projects which were of interest to the investigation. Mr. Jennings agreed to speak to Mr. Lyons about those projects. The investigators sent Mr. Jennings details regarding the additional projects and requested that he proffer regarding them on February 3. The parties agreed that Mr. Lyons would be interviewed for a third time on February 25.[^21]

[96] During Mr. Lyons’ February 25 interview, it became apparent that he had engaged in fraudulent conduct which was not related to the Project Condor bid-rigging investigation.

[97] On May 20, the Project Team met to discuss how to deal with Mr. Lyons’ extraneous criminal frauds. The notes of the meeting include the following:[^22]

• Luciw – Will have to deal with the issue. Effect on leniency recommendation. No question has to be disclosed and discussed. Not bid rigging - fraud - offences not competition law. Go to Jennings?
• Counsel for case – grant leniency only after KGB - with all this and Jennings investigative file.
• Have from the searches – deal with it with us and PPSC.
• Behaviour mitigates leniency for competition offences??
• Still credible on bid-rigging.
• Can’t ignore fraud to take successful bid-rigging plea alone.
• 380 fraud – no jurisdiction if stand alone, only if linked to bid-rigging.
• April 21, 2015 Jennings call – one offs?

[98] An unidentified officer made the following note:[^23]

• If bid-rigging – with leniency recommendation.
• If fraud – can’t offer leniency or negotiate on this.
• Don’t have duty – but OPP expect if we have this evidence to refer to the partners OPP or Toronto.
• Give Jennings this project – have him conduct own internal investigation.
• Still can re-interview Lyons on credibility pre-referral to PPSC leniency program.
• KGB? Can try.

[99] On October 15, Mr. Lyons was interviewed again on various matters including the extraneous frauds. The interview was not electronically recorded and although Mr. Lyons was cautioned regarding the need to tell the truth, he was not sworn or affirmed.

2016

[100] An investigator made a note on June 23, 2016, regarding a conversation with senior Bureau officials Matthew Boswell and Stephen Hould. The note confirmed that Mr. Boswell and Mr. Hould had assured Mr. Jennings that evidence of Mr. Lyons’ extraneous frauds would not be referred to any other agency and would only be used as a mitigating (sic) factor in the leniency recommendation.[^24]

[101] On August 4, Officer Khan advised Mr. Jennings by email that the Bureau wished to conduct a sworn, videotaped interview of Mr. Lyons “to complete the record”. Mr. Jennings replied that he wanted an agenda for the interview. The agenda was to include the projects to be reviewed and the underlying documents to be considered. The Bureau complied with these requests and a sworn, videotaped statement (referred to as a “KGB” statement based on the ruling in R. v. B. (K.G.) 1993 116 (SCC), [1993] 1 SCR 740) was scheduled to take place on November 9.[^25] The record is unclear whether that interview occurred.

[102] In 2017 and 2018, the Bureau requested sworn affidavits from Mr. Lyons concerning additional matters. Mr. Jennings provided the requested affidavits.

2017

[103] On July 14, the Bureau recommended to the PPSC that Mr. Lyons and CPL be granted a leniency agreement.

2020

[104] Crown counsel Barbara Mercier spoke with Mr. Jennings on March 25. The notes of the conversation indicate that the Crown had not yet decided the terms of the leniency which would be extended to CPL and Mr. Lyons. Mr. Jennings asked if Mr. Lyons was expected to be a witness for the Crown and Ms. Mercier replied that he would be the Crown’s “key” witness. Mr. Jennings asked what fine the Crown would request. Ms. Mercier gave a ballpark figure of $1 million or slightly less. Mr. Jennings asked if that included a 50% reduction for the leniency application and subsequent cooperation. Ms. Mercier confirmed that she had considered those factors in arriving at her position.

2021

[105] The parties agreed on January 28 that the facts in support of a guilty plea would be presented to the court as an agreed statement. The Crown offered Mr. Jennings a choice between pleading guilty to a Criminal Code or Competition Act offence.

2022

[106] On January 17, 2022, CPL entered a plea of guilty to one count of conspiring to fix prices and allocate customers, contrary to section 45 of the Competition Act. The parties presented a joint submission for a fine of $761,961. The Crown acknowledged that CPL was no longer an operating business, and no funds were available to pay the fine.

D. The Evidence of Officer Kiran Khan

[107] The applicants called Officer Khan to testify on the application. Officer Khan was a junior officer at the outset of the investigation but by the time of trial, she had become the officer in charge of the case.

[108] Mr. Naster asked Officer Khan why the investigators asked Mr. Fanaki to produce Mohawk’s investigative file on March 21, 2016. Officer Khan’s response was a circuitous one. She testified that the Bureau first requested a sworn statement from Ms. Michaud in April 2014. She was still working for Mohawk at that time but intended to leave the company. The investigators had notes from her March 2014 interview but wanted to make sure that their notes were accurate. They prepared a summary of the March interview and provided it to Mr. Fanaki. He reported that he had reviewed it with Ms. Michaud. The investigators spoke to Ms. Michaud in a conference call in May 2014 and, apart from a few changes, her evidence was “about the same” as it had been in March.

[109] In November 2015, investigators prepared a draft statement for Ms. Michaud to sign. They emailed the draft to Mr. Fanaki. He reviewed the draft with Ms. Michaud and returned it to investigators in February 2016 with her handwritten comments. When the investigators read the comments, they immediately realized that Ms. Michaud had made “significant changes” to her May 2014 statement. The investigators concluded that things which had been clear in Ms. Michaud’s memory in March 2014 had changed by 2016. Officer Khan testified that the Bureau “wanted to make sure… that her statement reflected what she said to us in March 2014.”[^26]

[110] Officer Khan acknowledged that her notes of the March 21, 2016, meeting with Mr. Fanaki indicate that the investigators requested that he provide his investigative file. The request was characterized as “nothing privileged – what she told to you in her interviews with you… so we can prepare for interview – compare what was said in previous interview… with what she said to him and what she said in her revised statement”. Investigators reiterated the demand for Mohawk’s investigative file on at least four subsequent occasions. Officer Khan’s notes indicate that Mr. Fanaki was willing to provide the file and never asserted privilege over any of its contents.

[111] Ms. Michaud changed counsel and canceled her appointment to give a KGB statement. Her new counsel, Mr. Iatrou, offered to provide an affidavit and Officers Khan and Allen were content with that suggestion. Mr. Fanaki never produced Mohawk’s investigative file and the Bureau’s demands for production ceased as soon as Ms. Michaud provided an affidavit which was satisfactory to the investigators. Mr. Naster asked Officer Khan why she abandoned the demand after receiving Ms. Michaud’s affidavit. Officer Khan testified that she did not pursue the demand because she assumed that if there was anything more to be disclosed, Mr. Fanaki would have provided it. Considering the matter in retrospect, she now views her demand for the investigative file as “not well grounded”.

[112] Officer Khan’s notes from the team meeting held on March 11, 2016 read as follows:[^27]

To discuss:

• Surprised with Maria Michaud’s inconsistencies between interview - the initial statement and her comments and her now revised comments.
• No longer satisfied with sworn statement.
• Wish to schedule an interview with her – videotape interview under oath.
• Internal investigative file (Crown) for us to prepare for interview.

[113] Mr. Naster suggested to Officer Khan that this note demonstrates that the investigative team recognized that Ms. Michaud was providing inconsistent statements and concluded that it was necessary to obtain a KGB statement for that reason. Officer Khan denied any such connection. She maintained that the only reason for obtaining a sworn, videotaped statement from Ms. Michaud was a requirement from PPSC counsel.

[114] The investigators never did obtain a sworn videotaped statement from Ms. Michaud. Mr. Naster asked why not. Officer Khan testified that the investigators elected not to obtain a KGB statement from Ms. Michaud “because of the logistics and the timing, we just decided at that point it was enough to do the sworn statement”. In her view, the affidavit which had been prepared with the assistance of Mr. Iatrou was satisfactory. Mr. Naster asked why an affidavit was satisfactory to the Bureau given their earlier decision to conduct an interview under oath. Officer Khan testified that the sworn statement was the best that Ms. Michaud could recall “according to what Mr. Iatrou told us… so that would have to suffice.” [^28]

[115] The applicants also questioned Officer Khan concerning her reliance on Ms. Michaud’s evidence in the ITO to obtain a search warrant. Officer Khan agreed that her own notes of Mr. Fanaki’s October 7, 2013, proffer indicate that Ms. Michaud was “at a higher level” and “not much information there”.[^29] In her evidence at the applicants’ preliminary inquiry, however, Officer Khan testified that Maria Michaud was the only source of evidence concerning an illegal agreement between the applicants which was central to the grounds for issuing a warrant. Officer Khan agreed that she had relied heavily on Ms. Michaud’s anticipated evidence in the ITO, even though Ms. Michaud had not provided a sworn statement and her counsel had indicated in his proffer that she had little evidence to offer.

III. Analysis

A. Overview

[116] The applicants submit that Mr. Fanaki, Mr. Iatrou and Mr. Jennings were acting as agents of the State when they interviewed their clients regarding the facts of the case. They argue that the agency relationship began the moment that the markers for immunity and leniency were requested and continued until the witnesses provided affidavits regarding their anticipated evidence. The applicants conclude that solicitor-client privilege does not apply to the portions of the interviews which concerned the facts.

[117] Counsel for the respondents dispute the suggestion that the lawyers were acting as agents of the Bureau. They submit that the lawyers received information from their clients within a privileged relationship and then hypothetically proffered the required elements of that information to the Bureau. The Bureau was an investigative body which stood in an adversarial relationship toward their clients and the lawyers acted as intermediaries, exactly as is intended by the Immunity and Leniency Programs. Acting as an intermediary between a client and an adversary does not make a lawyer an agent of the adversary and it certainly does not vitiate solicitor-client privilege.

[118] The lawyers continued to provide legal services to their clients after the Immunity or Leniency Agreements had been signed. They assisted the clients in preparing affidavits which would fully comply with their obligations to the Bureau while minimizing their exposure to the collateral consequences of admitting anti-competitive practices. Providing such legal services required a privileged relationship, despite the fact that the discussions concerned the facts of the case.

[119] In my view, deciding whether the actions of counsel amounted to “agency” does not assist in deciding this application. There is no dispute that during the proffer phase of the applications, Bureau investigators gave counsel a list of the items which were of interest to them and expected counsel to discuss those matters with their clients. Counsel would then include the information which they received from their clients in further hypothetical proffers. Investigators also advised counsel of the topics which they would raise during interviews of the clients and counsel were invited to prepare the witnesses to respond on those points. While the actions of counsel undoubtedly assisted the Bureau to collect information, the lawyers were unmistakably acting to advance the interests of their clients. Whether their actions provided some agency for the Bureau is not determinative of privilege. The only fact that matters is whether the clients understood that when they spoke to their lawyers, the conversations were privileged. The privilege belongs to the client and only the client can waive it.

[120] There is no evidence of an explicit waiver of privilege and the respondents have filed affidavit evidence swearing that it was never waived. The applicants argue that waiver should be inferred from the circumstances. Mr. Naster submits that the Bureau investigators delegated their responsibility to interview prospective Crown witnesses to the witnesses’ own lawyers. I agree. Mr. Naster next argues that the court should draw the inference that the witnesses knew that conversations with their lawyers regarding the evidence would not be protected by privilege. Respectfully, I disagree. The evidence leads me to the opposite inference.

[121] I am certain that the witnesses did believe that their communications with their counsel would remain confidential because that is the only conclusion which would explain the conduct of the investigators. Once the cooperating witnesses were granted immunity from prosecution, they became Crown witnesses. The terms of their agreements required them to cooperate with the investigation. That requirement included providing complete, unscripted interviews under oath and on video. The investigators never asked them to provide such statements. Instead, they encouraged the witnesses to provide their evidence through affidavits which the investigators and counsel jointly drafted. The only reasonable conclusion that the witnesses could have drawn - indeed, the inference that I draw – was that the investigators wanted their evidence to be conveyed through counsel. The investigators intentionally used counsel as an intermediary so that any contradictory or uncertain statements made by the Crown’s Vetrovec witnesses would not form part of the disclosable record and would instead remain shielded from scrutiny by solicitor-client privilege.

B. The Nature of Competition Bureau Investigations

[122] No one disputes the difficulty of investigating anti-competitive business practices. The victims of bid-rigging and price-fixing are not aware that they have been victimized and unless a participant in the conspiracy comes forward to the authorities, it is virtually impossible to prove an offence. Justice Nordheimer explained in Nestlé why the immunity and leniency programs are necessary to facilitate such investigations: see Nestlé at paragraphs 22 and 23.

[123] Competition Act investigations are distinguished from other criminal and quasi-criminal investigations by an officially sanctioned proffer stage. The Bureau may interview witnesses at the proffer stage, but such interviews are conducted on a without prejudice basis which insulates the applicant from prosecution if the bid for immunity or leniency fails. The proffer process is designed to provide potential witnesses with an absolute assurance that any information which they provide to the Bureau while seeking immunity or leniency cannot be used to incriminate them if the bid fails.

[124] In my view, the solicitor-client privilege applies to information obtained by counsel from an immunity or leniency applicant at the proffer stage of the application. This includes information obtained from officers and employees of an applicant company. A company that suspects that it has become involved in anti-competitive activity will typically retain counsel to investigate the suspected activity and provide an opinion as to whether an offence has been committed. The lawyer will interview employees and officers of the company to determine the facts. Those witnesses cannot be expected to have a sophisticated understanding of the possible legal consequences of their statements. They may know of criminal or quasi-criminal activity which is not related to the company’s concerns, or which would not be eligible for the Immunity or Leniency programs. They may also be aware of (or engaged in) activity which is not criminal but could incur civil or regulatory consequences for the company. The lawyer who is conducting the investigation might prefer to target only the anti-competitive activity suspected by the company but can’t take the risk of conducting a limited interview which would risk missing critical information. The lawyer needs to have a complete account of all the witnesses’ potential evidence to determine what offences have been committed, whether the offences are amenable to the immunity or leniency programs, and what collateral consequences might flow from an admission of wrongdoing. The only way that the lawyer can hope to obtain complete disclosure from the prospective witnesses of their own potentially criminal conduct is through the absolute and permanent assurance of solicitor-client privilege: see Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 SCR 319 at pages 331 and 334.

[125] Once the lawyer is armed with a privileged knowledge of the facts, she can advise the company whether to apply for immunity or leniency and, if so, what to disclose to the Bureau. Deciding what to disclose is crucial. A failure to disclose relevant information could eventually result in a loss of immunity and expose the company, its officers, and employees to prosecution. Excessive disclosure (as occurred in Nestlé) may imperil the company’s legal or economic interests. Providing legal advice in such nuanced circumstances demands complete information which can only be acquired through solicitor-client conversations with witnesses.

[126] The company will also require the advice of counsel in deciding whether to approach the Bureau. There is no legal obligation to do so. If the company admits its anti-competitive practices, it may obtain the benefit of immunity from prosecution but expose itself to catastrophic civil consequences. If the company decides not to report the activity, the officers and employees may be concerned that the failure to report illegal activity would be viewed as an obstruction of justice. The lawyer cannot answer such questions without a privileged knowledge of the facts.

[127] Once the lawyer has received instructions to seek Immunity or Leniency, she will prepare a proffer to the Bureau based on information obtained through the privileged interviews. The proffer is provided through counsel on a hypothetical basis to assure the company, its officers and its employees that they are in no jeopardy of prosecution if the bid fails. That concern only exists at the proffer stage. Once an Immunity or Leniency Agreement is signed, the witnesses are no longer in any jeopardy. The employees and officers become cooperating witnesses and the need for counsel to act as an intermediary disappears. As long as the witnesses remain honest, fulsome, and cooperative, they have nothing to fear. They are eligible to be interviewed under oath and (unlike witnesses in most criminal prosecutions) are obliged to cooperate or risk losing the benefit of their Immunity Agreements. There is absolutely no need for investigators to use a witness’s lawyer as a conduit for the evidence.

[128] In Nestlé, the only issue was whether the defendants would be ordered to return communications between counsel and witnesses which had occurred at the proffer stage. It was conceded by all parties that anything provided after the proffer must be disclosed to the defendants: see Nestlé at paragraph 29.

[129] A Competition Bureau investigator is hamstrung at the proffer stage. The investigator can only rely on the good faith of counsel to provide reliable and complete disclosure of the potential evidence of the witnesses. Once immunity or leniency have been granted, the shackles are off. At that point, the investigator has a duty to conduct an unbiased investigation of the credibility and reliability of the cooperating witnesses. History teaches that witnesses who have escaped liability for their own wrongdoing by implicating others must be treated with caution see R. v. Smith, 2009 SCC 5, [2009] 1 SCR 146 at paragraph 15. The need for caution is not limited to witnesses of an unsavory background; it is a facet of human nature which exists at every stratum of the socioeconomic spectrum. In any circumstance where an offender can evade liability for his or her criminal wrongdoing by providing information which inculpates another, that witness’ evidence must be scrutinized. The duty of the officer who conducts that examination is to ensure the integrity of the investigation, not to the successful prosecution of those who are implicated by the accusations of cooperating witnesses.

C. Factual Findings

[130] Concerns regarding the anticipated evidence of Jane Shackleton were recognized early in the proffer stage. On December 4, 2013, Mr Luciw observed that her recent statement was “weaker” than what had initially been proffered by her counsel. Mr. Luciw told Mr. Fanaki that the Bureau did not want conditional or qualifying answers from Ms. Shackleton.

[131] It is difficult to understand how a professional investigator could have made such a statement. Rather than attempting to determine Ms. Shackleton’s actual evidence, Mr. Luciw effectively dictated what her evidence was going to have to be. Such a direction is antithetical to the principles of criminal investigation.

[132] Jane Shackleton signed her Immunity Agreement on October 21, 2014. Two years later, the Bureau sought for the first time to obtain a sworn statement from her. When the investigators broached this topic with Mr. Iatrou, he told them “they still need to go through him to contact her.” The investigators accepted this statement without challenge. They made no effort to ascertain the whereabouts of Ms. Shackleton and acquiesced to Mr. Iatrou’s assertion that any contact with the witness had to go through him.

[133] In June 2018, almost four years after Ms. Shackleton’s first statements to the Bureau, Officer Khan finally took steps to obtain a sworn statement from her. Although she could have compelled Ms. Shackleton to attend for a sworn videotaped statement, Officer Khan recommended to Mr. Iatrou that he prepare a draft affidavit which the investigators would then review to identify “any questions or information missing”. In her evidence on this application, Officer Khan was unable to provide any cogent reason for proceeding in this fashion.

[134] Maria Michaud provided unsworn statements to the Bureau during the proffer stage. Those statements were relied upon to obtain search warrants which were executed on October 8, 2014.

[135] Ms. Michaud signed her Immunity Letter on October 27, 2014. The first time that the Bureau investigators requested a sworn statement from her was in December 2015. Mr. Fanaki responded that Ms. Michaud did not have a strong recollection of events and he had little control over her. Those comments should have set off alarm bells for any investigator who was concerned about the reliability of a key Crown witness. It ought to have spurred immediate efforts to find Ms. Michaud and conduct a fulsome interview under oath. No such steps were taken.

[136] In March 2016, Mr. Fanaki provided the Bureau with Ms. Michaud’s handwritten comments regarding the statement which she had made in 2014. The investigators were immediately “surprised” by the inconsistencies. They decided that Ms. Michaud must provide a sworn videotaped statement and that Mr. Fanaki would have to provide them with his investigative file. Officer Khan acknowledged that the investigators anticipated that the file would include Mr. Fanaki’s notes of his earliest interviews of Ms. Michaud.

[137] Ms. Michaud's interview was scheduled for May 12. On May 9, she changed counsel and canceled the interview. The Bureau did not raise any concerns about this obvious evasion of the responsibility to cooperate.

[138] Despite the investigators’ resolution in March 2016 to conduct a KGB interview of Ms. Michaud and obtain Mr. Fanaki’s investigative file, neither event ever occurred. Ms. Michaud’s new counsel, Mr. Iatrou, asked Officers Khan and Clancey if an affidavit prepared in consultation with the investigators would be sufficient. They assured him that it would.

[139] Mr. Iatrou prepared a draft affidavit. Officer Khan recommended changes so that the affidavit would better reflect Ms. Michaud’s own vocabulary. The draft affidavit used a term that was familiar to Bureau investigators but not to Ms. Michaud.

[140] After the affidavit had been sworn, Mr. Iatrou questioned whether Ms. Michaud would have to provide a KGB statement later. Officer Khan assured him that they could deal with the PPSC’s requirement “down the road”. When Mr. Iatrou pointed out that a statement taken one or two years later would not be “identical” to the affidavit, Officer Khan told him “we’ll cross that bridge when we come to it”.

[141] The record offers no explanation why Officer Khan would view a sworn KGB statement from a Vetrovec witness as a bureaucratic requirement of the PPSC rather than an integral aspect of her own investigation. Officer Khan clearly approved of Mr. Iatrou’s efforts to suppress any uncertainty in Ms. Michaud’s evidence by removing quotes, softening the language, and avoiding – at all costs – an unscripted interview.

[142] In her evidence on this application, Officer Khan denied that the March 11, 2016, resolution to obtain a KGB statement from Ms. Michaud was spurred by the inconsistencies between her 2014 and 2016 statements. The officer maintained that the investigators only contemplated obtaining a KGB statement to fulfill the requirement of PPSC counsel and the reason that such a statement was not taken was “logistics and timing.” I do not accept that testimony. There is no evidence that either logistics or timing factored into the decision. Delay was of no concern to anyone in the Project Condor investigation: the investigation began in 2012, Immunity Agreements were signed in 2014 and search warrants were executed in 2014. The defendants were not charged until 2021. Neither logistics nor timing were any impediment to obtaining a KGB statement from Ms. Michaud.

[143] Mr. Naster pressed Officer Khan to explain why investigators failed to follow through on their demand for Mr. Fanaki’s investigative file once they had received an affidavit from Ms. Michaud. Officer Khan did not attempt to answer that question. She instead offered an explanation for accepting an affidavit rather than conducting an interview: “that was the best Ms. Michaud’s recollection was at that time according to what Mr. Iatrou told us based on conversations with his client… so that would have to suffice.”

[144] This response revealed an alarming failure to understand the responsibilities of a professional investigator. Officer Khan’s notes suggest that Bureau investigators had a good rapport with Mr. Iatrou and I am sure that she personally trusted him. It is simply absurd, however, that an investigating officer would delegate the responsibility of discovering the evidence of a Vetrovec witness to the witness’s own lawyer and then unquestioningly accept the lawyer’s assessment that the witness had nothing more to say. This was a complete derogation of the duty to conduct a rigorous, unbiased investigation.

[145] Some of the same patterns appear in the investigators’ dealings with Mr Lyon. In Mr. Lyons’ case, however, the leniency agreement was not finalized until shortly before the final resolution of the charges. As long as the proffer stage remains open and the applying party is in jeopardy of incriminating himself by providing evidence to an investigative body, the Leniency protocol anticipates that information from the applicant will be received in hypothetical terms through counsel. There are oddities in the Bureau’s dealings with Mr. Lyon but, with one important exception, they do not touch on the issue of privilege.

[146] The one aspect of Mr. Lyons’ case which does touch on the privilege issue is a note made by an investigator on April 21, 2015. Members of the Project Condor investigative team had a meeting that morning to discuss how they would deal with the evidence that Mr. Lyons had been engaged in extraneous criminal frauds. One officer who was present at the meeting wrote “give Jennings this project – have him conduct own internal investigation.”

[147] As previously stated, counsel assisting an Immunity or Leniency Applicant can conduct an internal investigation to discover the conduct of her client and that is likely a prudent step to ensure that disclosure at the proffer stage is complete. It is very unusual, however, for an investigator to ask counsel to conduct an investigation which the investigator can conduct himself. Even at the proffer stage, the investigators can compel an applicant to produce witnesses and provide documents. One possible explanation for an investigator asking counsel to conduct the investigation is that if any evidence of additional criminal activity was uncovered, it would remain hidden by privilege.

D. The Demand for the Mohawk Investigative File

[148] Much of the evidence adduced on this application concerned the Bureau’s efforts to obtain Mohawk’s investigative file from Mr. Fanaki. The investigators repeatedly demanded the file, expecting that it would contain Mr. Fanaki’s earliest interviews of Maria Michaud. Mr. Fanaki reportedly agreed that he was obliged to produce the file and never asserted privilege over any part of it. Mr. Naster submits that the Bureau’s demands and Mr. Fanaki’s responses reflect the fact that neither party perceived the notes of Mr. Fanaki’s interviews of Ms. Michaud to be privileged. Mr. Naster submits that the defendants are entitled to disclosure of evidence which the investigators themselves once demanded as a matter of right.

[149] For the reasons previously stated, I find that solicitor-client privilege is essential at the proffer stage of an Immunity Application. Mr. Fanaki’s interviews with Ms. Michaud which were conducted at the proffer stage are privileged.

[150] Concerns about privilege should not arise after immunity or leniency is granted because the investigators will interview witnesses directly rather than through counsel. That did not happen in this case, but the failure of investigators to interview Ms. Michaud had no effect on her solicitor-client relationship with Mr. Fanaki. From Ms. Michaud’s perspective, the Bureau was content to receive her anticipated evidence through her lawyer and that never changed. Nothing would have alerted her to the possibility that solicitor-client privilege would be lost after she signed the Immunity Agreement.

[151] Officer Khan acknowledged that her demand for Mr. Fanaki’s investigative file was “not well grounded”. I agree with that assessment. It appears that the demand was based on a misinterpretation of the ruling in Nestlé. The notes of the investigative meeting on March 21, 2016, suggest that the investigators believed that the Nestlé decision stood for the proposition that an Immunity or Leniency Applicant must provide its investigative files to the Bureau. Nestlé does not stand for that proposition. In Nestlé, the applicant companies volunteered their investigative files and Justice Nordheimer concluded that they lost any privilege when they did so. The court did not impose an obligation on an applicant to produce the entire contents of its investigative file and the provisions of the Immunity and Leniency Bulletins clearly state that parties are not required to produce privileged materials. In my view, that includes a lawyer’s notes of interviews with witnesses at the proffer stage of the application.

[152] I do not find any evidence that Mr. Fanaki intended to waive privilege over the investigative file. Firstly, it is not clear that Mr. Fanaki had an investigative file. Ms. Forbes stated in correspondence to the Crown and advised the court that Mohawk never did have an investigative file. Bureau investigators came to Mohawk because of a confidential tip. Mohawk only responded to inquiries made by the Bureau and did not conduct an internal investigation. Mr. Fanaki may not have had anything to disclose apart from his own notes of interviews with his clients which he may well have considered to be self-evidently privileged.

[153] Secondly, Officer Khan’s notes of the March 21 meeting indicate that Mr. Fanaki was assured that he need not produce anything which he considered to be privileged. The term “investigative file” is not defined in law and there is unfortunately no way of knowing today what Mr. Fanaki understood by the investigators’ use of the term in 2016. Bearing in mind that Mr. Fanaki was explicitly told that he need not produce anything which was privileged, it is reasonable to infer that he did not think that it was necessary to formally object to producing notes of his own conversations with a client.

[154] Finally, even if the Bureau and Mr. Fanaki believed that counsel’s interview notes had to be provided as part of the application for immunity, that does not lead to the conclusion that the clients were aware of such an obligation and knowingly waived their privilege. Mohawk has filed an affidavit through its counsel indicating that it has expected complete confidentiality in its discussions with Davies from the outset of the proceedings and has never waived that privilege. McCarthys filed a comparable affidavit on behalf of Ms. Shackleton and Ms. Michaud. Mr. Lyons has filed a personal affidavit asserting that he has never waived privilege and has expected confidentiality in his conversations with Gowlings WLG. Those assertions are consistent with other evidence before me and I accept them to be true. No one ever asked the witnesses to waive solicitor-client privilege and no waiver can be inferred in these circumstances.

E. Disclosure is Necessary in the Interests of Justice

[155] Mr. Shime raised an additional argument which was not addressed in the applicants’ factum. He relied on the case of R. v A.M., 2021 ONSC 2725, [2021] O.J. No. 2062, for the proposition that if the investigative files of the Immunity Applicants are privileged, that privilege should give way to “the interests of justice”.

[156] I have found that the witness statements are protected by solicitor-client privilege. The standard for piercing that privilege is innocence at stake, not the interests of justice. In my view, the finding in A.M. turned on facts which are readily distinguishable from the case at bar.

[157] I also do not accept that it would be in the interests of justice to abrogate privilege in these circumstances. To do so would defeat the purpose of the proffer stage of the Immunity and Leniency Programs. Officers and employees of applicant companies would be most unlikely to admit their involvement in anti-competitive and possibly criminal practices if they knew that their admissions to counsel would be subject to disclosure on a standard as low as “the interests of justice”.

IV. Conclusion

[158] My factual findings are dispositive of the applications. I am convinced that both the lawyers and the cooperating witnesses were convinced that their communications both before and after proffer were privileged, and rightly so. The witnesses made incriminating statements to an investigative authority. They obtained immunity or leniency from prosecution, but their agreements were not absolute. The witnesses understandably wished to have the assistance of counsel to ensure that any statements which they made to the Bureau were complete, accurate and in accord with other evidence. They were entitled to a privileged relationship with counsel to obtain advice on these and related matters.

[159] The Bureau investigators had a duty to conduct a rigorous, unbiased investigation of the evidence of the witnesses. They had a responsibility to compel the witnesses to provide fulsome statements outside of privilege which would be disclosable and subject to review. The investigators failed in those obligations and instead delegated the task of determining the evidence of the witness to the witnesses’ own lawyers. In doing so, the investigators tacitly invited counsel to refine the evidence of the witnesses within privilege such that the final product - an affidavit negotiated between the lawyers and the investigators - would bear no trace of inconsistency, uncertainty, or evolution. While this creates an obvious unfairness to the defendants, it cannot lead to the abrogation of an essential legal privilege. There are other remedies available to address an incompetent investigation.

[160] The application for disclosure pursuant to Stinchcombe is dismissed. The requested materials are privileged and not within the control of the Crown.

[161] The application for production is dismissed for the same reason: see R. v. McNeil, 2009 SCC 3, [2009] 1 SCR 66 at para. 27.

Justice Peter Bawden

Released: September 22, 2023

COURT FILE NO.: CR-23-90000072-0000

DATE: 20230922

ONTARIO

SUPERIOR COURT OF JUSTICE

TRI-CAN CONTRACT INCORPORATED, HARALAMBOS VLAHOPOULOS, 912547 ONTARIO INC., JOSE DE OLIVEIRA, LIDIO ROMANIN CONSTRUCTION COMPANY LIMITED, LIDIO ANTHONY ROMANIN

Applicants

– and –

HIS MAJESTY THE KING

Respondent

REASONS FOR DECISION

BAWDEN J.

Released: September 22, 2023

[^1]: Immunity Program under the Competition Act dated July 7, 2010 at www.competitionbureau.gc.ca/elc/site/cb-bc-nsf/eng/03248.html.

[^2]: Tab 11 of the Application Record.

[^3]: Tab 15 of the Application Record.

[^4]: Tab 19 of the Application Record.

[^5]: Tabs 21 and 22 of the Application Record.

[^6]: Tab 28 of the Application Record.

[^7]: Tab 30 of the Application Record.

[^8]: Tab 38 of the Application Record.

[^9]: Tab 42 of the Application Record.

[^10]: Tab 63 of Applicant’s Record – Immunity Agreement between the DPP and Mohawk Industries Inc..

[^11]: Tab 92 of the Application Record.

[^12]: Tab 67 of the Application Record

[^13]: Tab 70 of the Application Record.

[^14]: Tab 74 of the Application Record.

[^15]: Tab 76 of the Application Record.

[^16]: Tabs 79 and 80 of the Application Record.

[^17]: Tab 84 of the Application Record.

[^18]: Tab 85 of the Application Record.

[^19]: Tab 88 of the Application Record

[^20]: Tab 116 of the Application Record.

[^21]: Tab 126 of the Application Record.

[^22]: Tab 129 of the Application Record

[^23]: Tab 130 of the Application Record

[^24]: Tab 138 of the Application Record

[^25]: Tab 139 of the Application Record

[^26]: Evidence of Officer Khan, June 19, 2023 – DRD Time 11:10:10 AM.

[^27]: Tab 74 of the Application Record.

[^28]: Evidence of Officer Kiran Khan – June 19, 2023 at DRD 12:06:00 to 12:11:01.

[^29]: Tab 17 of the Application Record.