Judgments

[1996] 3 F.C. 947

T-670-96

Karlheinz Schreiber (Plaintiff)

v.

The Attorney General of Canada (Defendant)

Indexed as: Schreiber v. Canada (Attorney General) (T.D.)

Trial Division, Gibson J.—Edmonton, July 25; Ottawa, August 15, 1996.

Practice — Judgments and orders — Stay of execution — Application to suspend effect of judgment holding Canadian standard for issuance of search warrant must be satisfied before requesting Swiss authorities to seize banking records — Test in Manitoba (Attorney General) v. Metropolitan Stores Ltd. satisfied — (1) Interaction of Charter, s. 8 with international arrangements for mutual legal assistance in criminal investigations serious issue to be tried — (2) All Canadians suffering irreparable harm through reduction in Canada’s capacity to investigate criminal activity with international aspects, in absence of mechanism allowing Canada to meet Charter, s. 8 obligations while taking advantage of existing, contemplated mutual legal assistance arrangements — (3) Short term public interest in effective law enforcement outweighing that of protection of privacy of those subject to criminal investigation.

Constitutional law — Charter of Rights — Criminal process — Application to suspend effect of judgment holding Canadian standard for issuance of search warrant must be satisfied before requesting Swiss authorities to seize banking records — Test in Manitoba (Attorney General) v. Metropolitan Stores Ltd. met.

This was an application for an order suspending, pending an appeal, the effect of the judgment of Wetston J., holding that the Canadian standard for the issuance of a search warrant had to be satisfied before Canadian authorities requested Swiss authorities to search for and seize the plaintiff’s banking records.

Held, the application should be allowed.

The tripartite test to justify the grant of a suspension enunciated in Manitoba (Attorney General) v. Metropolitan Stores Ltd. was met. (1) The interaction of Charter, section 8 with the extensive arrangements that exist between Canada and other nations, for mutual legal assistance in criminal investigations was a serious question to be tried. (2) All Canadians, as represented by the Attorney General of Canada, will suffer irreparable harm through a reduction in Canada’s capacity to investigate major criminal activity with international aspects, in the absence of a mechanism that will effectively allow Canada to meet its Charter, section 8 obligations while taking advantage of existing and contemplated mutual legal assistance arrangements. (3) In the short term, the public interest in effective law enforcement outweighs the public interest in protection of the privacy of those who are subject to criminal investigation.

A suspension pending determination of the appeal was granted on two conditions: the Attorney General must (1) apply forthwith to the Federal Court of Appeal to expedite the hearing of the appeal; and (2) write to the Swiss authorities requesting that they suspend further action under the request for mutual legal assistance pending the outcome of the appeal.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], ss. 7, 8, 9.

Criminal Code, R.S.C. 1970, c. C-34.

Federal Court Rules, C.R.C., c. 663, RR. 341A (as enacted by SOR/79-57, s. 8), 475.

Income Tax Act, S.C. 1970-71-72, c. 63.

Mutual Legal Assistance in Criminal Matters Act, R.S.C., 1985 (4th Supp.), c. 30.

CASES JUDICIALLY CONSIDERED

APPLIED:

Schachter v. Canada, [1992] 2 S.C.R. 679; (1992), 93 D.L.R. (4th) 1; 92 CLLC 14,036; 10 C.R.R. (2d) 1; 139 N.R. 1; Thibaudeau v. M.N.R., [1994] 2 F.C. 189 (1994), 114 D.L.R. (4th) 261; 21 C.R.R. (2d) 35; [1994] 2 C.T.C. 4; 94 DTC 6230; 167 N.R. 161; 3 R.F.L. (4th) 153 (C.A.); Thibaudeau v. Canada, [1995] 2 S.C.R. 627; (1995), 124 D.L.R. (4th) 449; 29 C.R.R. (2d) 1; [1995] 1 C.T.C. 382; 95 DTC 5273; 182 N.R. 1; 12 R.F.L. (4th) 1; Thibaudeau v. Canada (Minister of National Revenue — M.N.R.), [1994] S.C.J. No. 54 (QL); R. v. Swain, [1991] 1 S.C.R. 933; (1991), 75 O.R. (2d) 388; 71 D.L.R. (4th) 551; 63 C.C.C. (3d) 481; 5 C.R. (4th) 253; 3 C.R.R. (2d) 1; 125 N.R. 1; 47 O.A.C. 81; Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110; (1987), 38 D.L.R. (4th) 321; [1987] 3 W.W.R. 1; 46 Man. R. (2d) 241; 25 Admin. L.R. 20; 87 CLLC 14,015; 18 C.P.C. (2d) 273; 73 N.R. 341; RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; (1994), 54 C.P.R. (3d) 114; 164 N.R. 1; 60 Q.A.C. 241.

APPLICATION to suspend, pending appeal, the effect of a judgment holding that the Canadian standard for the issuance of a search warrant had to be satisfied before Canadian authorities could request Swiss authorities to search for and seize the plaintiff’s banking records. Application allowed.

COUNSEL:

Robert W. Hladun, Q.C. and Gary D. Braun for plaintiff.

S. David Frankel, Q.C. for defendant.

SOLICITORS:

Hladun & Company, Edmonton, for plaintiff.

Deputy Attorney General of Canada for defendant.

The following are the reasons for order rendered in English by

Gibson J.: There reasons arise out of two applications presented before me at Edmonton, Alberta, on July 25, 1996.

The defendant applied, pursuant to Rule 341A of the Federal Court Rules[1] and other authority, for an order suspending the effect of the judgment of Mr. Justice Wetston pronounced in this matter on July 4, 1996 [[1996] 3 F.C. 931. The plaintiff applied for an order granting a stay of any further action or reliance upon the letter of request sent to Switzerland by the defendant on September 29, 1995, as amended by a further letter dated July 16, 1996. The letter of request referred to in the plaintiff’s motion constituted a request for the assistance of Swiss authorities with respect to a Canadian criminal investigation. In response to the letter of request, Swiss authorities, acting in accordance with the law of Switzerland, issued an order for the seizure of documents and records relating to the plaintiff’s bank account in Switzerland. Bank documents and records were seized and are currently in the hands of Swiss authorities.

THE DEFENDANT’S MOTION

In the judgement sought to be suspended, Mr. Justice Wetston dealt with a special case that was before him for adjudication pursuant to Rule 475. The parties had agreed that the determination of the following question of law would be positive of the action [at page 936]:

Was the Canadian standard for the issuance of a search warrant required to be satisfied before the Minister of Justice and the Attorney General of Canada submitted the letter of request asking Swiss authorities to search for and seize the plaintiff’s banking documents and records?

Mr. Justice Wetston answered the question in the affirmative. The following are extracts from his reasons for judgement [at pages 939-944]:

Neither party could direct the Court to any specific Canadian authorities that have considered the question of law which is before me.

…

As I indicated above, I do not consider that, in this case, Charter protection is being sought in an extraterritorial context. Simply because the plaintiff chose to have bank accounts in Switzerland is not determinative of the matter. If the plaintiff can be prosecuted in Canada, I see no reason why he should not be entitled to the corollary benefits of the Charter. I do not consider this to be an unreasonable balance between the plaintiff’s rights and the government’s responsibilities to enforce the criminal laws of this country. Obviously, “everyone” has the right to be secure from unreasonable search and seizure, and this entitlement is not dependent upon an individual being formally prosecuted for any alleged wrongdoing. Indeed, as Dickson J. [as he then was] stated in Hunter et al. v. Southam Inc., supra, at page 160, the purpose of section 8 of the Charter is to prevent unjustified searches before they happen, and not simply to determine, after the fact, whether they ought to have occurred in the first place.

…

Prior authorization therefore ensures a high degree of impartiality in balancing the interests of the individual with those of the government in law enforcement. The notion that the balancing can take place between police investigators and government enforcement officials is not tenable. The same neutrality is required, in my opinion, whether the search or seizure takes place under a warrant issued in Canada, or whether it takes place by means of a letter of request procedure to be acted upon outside of Canada. The need to protect unreasonable search or seizure is no less significant when a search takes place abroad, rather than within Canada. The requirement of prior authorization does not, in my opinion, make search or seizure outside of Canada a less powerful enforcement tool for public authorities.

I recognize that there may not exist a procedure presently under Canadian law for the prior authorization of a letter of request. However, the unavailability of constitutionally-permissible investigative techniques is not a justification for a constitutionally-impermissible investigative technique …. Whether or not section 487.01 [as enacted by S.C. 1993, c. 40, s. 15] of the Criminal Code, which deals with general warrants, may be used for these purposes is not a matter that I need to decide. Nevertheless, I believe it unlikely that the provision would apply. [Citations deleted.]

The issue of a possible suspension of his judgment, pending an appeal, was not raised before Mr. Justice Wetston.

Suspension of the operation of a declaration regarding rights under the Canadian Charter of Rights and Freedoms,[2] should not lightly be granted. In Schachter v. Canada,[3] the Chief Justice of Canada stated:

A delayed declaration is a serious matter from the point of view of the enforcement of the Charter. A delayed declaration allows a state of affairs which has been found to violate standards embodies in the Charter to persist of a time despite the violation. There may be good pragmatic reasons to allow this in particular cases.

To the same effect, Mr. Justice Hugessen stated in Thibaudeau v. M.N.R.:[4]

Next, respondent’s counsel asked that, in the event that we should allow the application, we delay any declaration of invalidity of paragraph 56(1)(b) for a period of time to allow the Government to introduce the necessary amendments to the Act. There are several reasons why this cannot be done …. On a more fundamental level, we are dealing here with the rights of individuals which are guaranteed to them by the supreme law of the country. It would take very strong reasons indeed to justify any suspension of those rights. None has been suggested.

Despite the concerns expressed by Mr. Justice Hugessen, and his own caveat expressed in Schachter as quoted above, on the appeal of the Thibaudeau decision to the Supreme Court of Canada, the Chief Justice, speaking for the full Court, stayed or suspended the decision of the Federal Court of Appeal, declaring a provision of the Income Tax Act [S.C. 1970-71-72, c. 63] unconstitutional, until final disposition of the matter by the Supreme Court itself.[5] Further, in R. v. Swain,[6] the Supreme Court suspended, on terms, the effect of its judgment, notwithstanding the fact that sections 7 and 9 of the Charter, dealing with the right to life, liberty and security of the person and the right not to be arbitrarily detained or imprisoned, were found to be violated by a provision of the Criminal Code [R.S.C. 1970, c. C-34]. Once again, Chief justice Lamer wrote reasons justifying the suspension.

It was not in dispute before me that the tripartite test enunciated in Manitoba (Attorney General) v. Metropolitan Stores Ltd.[7] applied on an application such as this. The elements of the test were recently revisited by the Supreme Court of Canada in RJR — MacDonald Inc. v. Canada (Attorney General),[8] where Justices Sopinka and Cory wrote at page 334:

Metropolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer a greater harm from the granting or refusal of the remedy pending a decision on the merits.

It was not in dispute before me that this matter raises a serious question to be tried before the Federal Court of Appeal. As quoted earlier, Mr. Justice Wetston pointed out that neither party before him could direct the Court to any specific Canadian authorities that had considered the question of law that was before him. That question of law involved the interaction of section 8 of the Charter with the extensive arrangements that exist between Canada and other nations, for mutual legal assistance in criminal investigations. I had before me a publication of the Department of justice relating to its role in mutual legal assistance. The publication is entitled “Law Enforcement in the Global Village”, reflecting the importance that is attached to mutual cooperation in a technological age. I have no difficulty concluding that there is, in this matter, a serious issue to be tried.

The defendant placed before me an extensive affidavit of William H. Corbett, a senior general counsel at the headquarters of the federal Department of Justice in Ottawa. The affidavit establishes Mr. Corbett’s long involvement in mutual legal assistance matters, including development of the Mutual Legal Assistance in Criminal Matters Act.[9] Mr. Corbett attested regarding the extent of Canada’s involvement in mutual legal assistance and as to the impact of Mr. Justice Wetston’s judgment on Canada’s capacity to pursue international aspects of major criminal investigations. I am satisfied, on the basis of the Corbett affidavit, that all Canadians, as represented by the Attorney General of Canada, will suffer irreparable harm through a reduction in Canada’s capacity to effectively investigate major criminal activity with international aspects, in the absence of a mechanism that will effectively allow Canada to meet its section 8 Charter obligations while at the same time taking advantage of existing and contemplated mutual legal assistance arrangements.

I turn then to the issue of balance of convenience. Mr. Justice Wetston addressed at some length the balance between the right to privacy in the circumstances of this matter and the federal government’s responsibility to assist in the enforcement of the criminal laws of this country. His conclusions in this regard are reflected in quotations earlier in these reasons.

I fully concur with Mr. Justice Wetston’s conclusions in this regard. However, I am called upon to consider the balance between individual rights to privacy and the federal government’s responsibility to assist in the enforcement of the criminal laws of this country, not in the long term context which was before Mr. Justice Wetston, but rather in the short term context of a period, pending disposition of an appeal, during which I am satisfied that, in the absence of suspension of Mr. Justice Wetston’s judgment or of legislative amendment, there will be no effective mechanism in place to allow the federal Government to fulfil its responsibility.

In RJR — MacDonald, Justices Sopinka and Cory considered the “public interest” in evaluation of the balance of convenience. They wrote [at pages 343-344]:

While it is of utmost importance to consider the public interest in the balance of convenience, the public interest in Charter litigation is not unequivocal or asymmetrical in the way suggested in Metropolitan Stores. The Attorney General is not the exclusive representative of a monolithic “public” in Charter dispute, nor does the applicant always represent only an individual claim. Most often, the applicant can also claim to represent one vision of the “public interest”. Similarly, the public interest may not always gravitate in favour of enforcement of existing legislation.

It is, we think, appropriate that it be open to both parties in an interlocutory Charter proceeding to rely upon considerations of the public interest. Each party is entitled to make the court aware of the damage it might suffer prior to a decision on the merits. In addition, either the applicant or the respondent may tip the scales of convenience in its favour by demonstrating to the court a compelling public interest in the granting or refusal of the relief sought. “Public interest” includes both the concerns of society generally and the particular interests of identifiable groups.

Persons, and section 8 of the Charter speaks in terms of “everyone”, have a right to be secure against unreasonable search or seizure. Thus the Charter interest of the plaintiff, found by Mr. Justice Wetston to have been violated in the circumstances of this matter, constitutes a public interest protected by the fundamental law of the land. That interest is counter-balanced by the interest in ensuring effective investigation of criminal activities, an interest that affects the lives and well-being of all Canadians. In balance these two public interests, I find a conclusion, that in the short term, and I emphasize, in the short term, the public interest in effective law enforcement outweighs the public interest in protection of the privacy of those who are subject to criminal investigation, not to be at odds with the longer term conclusion to the contrary, reached by Mr. Justice Wetston.

In the result, I conclude, and I emphasize once again, in the short term, that the public interest represented by the defendant in this matter, outweighs the privacy interest of everyone, as in this case, represented by the plaintiff.

I conclude that the tripartite test to be met to justify the granting of a suspension of the judgment of Mr. Justice Wetston, has on the facts and argument before me, been met. In the result, a suspension pending determination of the appeal in this matter has been granted.

Two conditions have been imposed on the suspension. First, I have required the defendant to apply forthwith to the Federal Court of Appeal to expedite the hearing of the appeal to minimize the period for which breach of section 8 Charter rights will be permitted. Second, I impose on the defendant an obligation to write to Swiss authorities requesting that they suspend further action under the request for mutual legal assistance sent to them by the federal government regarding the plaintiff, once again, pending the outcome of the appeal in this matter.

THE PLAINTIFF’S MOTION

The latter condition imposed effectively addresses the relief sought on behalf of the plaintiff in the second motion that was before me, referred to in the opening lines of these reasons. That being the case, I have dismissed the plaintiff’s application.

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