Working Group Meeting in Trinidad, March 5-7, 2008

OAS/REMJA WORKING GROUP OF EXPERTS ON MUTUAL LEGAL ASSISTANCE AND EXTRADITION

Port-of-Spain, Trinidad, March 5-7, 2008.

The Canadian Standard of “Reasonable Grounds to Believe” in the Context of Mutual Legal Assistance

Introduction

The purpose of this brief paper is to attempt to explain the meaning and significance, in context, of a legal standard that is required to be met by Canadian officials in order to obtain judicial orders to authorize the execution of requests made to Canada for mutual legal assistance. The words “reasonable grounds to believe” express the relevant standard of proof under Canadian law. It is hoped that this paper will assist foreign officials to prepare in the most efficient manner possible requests for mutual legal assistance destined for Canada by deepening these officials’ understanding or Canadian requirements.

Overview of the relationship between Canada’s treaties for mutual legal assistance and domestic Canadian legislation

Canada has a legal tradition based on the Common Law, which Canada inherited in its colonial period from England. Canada’s international treaties are not “self- implementing”, that is to say that the terms of a given treaty must be given effect by incorporation into the law of Canada, generally by legislation.

Consequently, the legal mechanism for the execution of a treaty request for mutual legal assistance is found in the Canadian legislation which implements the relevant treaty. Canada ensures that it has the legal means to implement a given treaty before it ratifies the treaty. However, the manner in which treaty commitment made by Canada can be given effect and the extent to which this can be done in a given situation must always be viewed in light of the terms of the applicable Canadian domestic legislation and also the interpretation given to such terms by the Canadian courts. The existence of a treaty containing provisions regarding mutual legal assistance triggers the operation of the central legislative instrument in Canada for the execution of foreign treaty requests, the Mutual Legal Assistance in Criminal Matters Act.

Provisions of the Mutual Legal Assistance in Criminal Matters Act (MLACMA) 2

Typically, requests made to Canada for mutual legal assistance are made to obtain one or more of the following measures:  to have documents produced;  to have a statement taken from a witness;  to have a search warrant executed.

Section 18 of Canada’s Mutual Legal Assistance in Criminal Matters Act (“MLACMA”) provides the means to obtain Canadian court orders which authorize the production of documents or the taking of statements on behalf of a foreign State under one of Canada’s treaties. Section 18 reads, in relevant part, as follows:

Evidence-gathering order

18. (1) A judge to whom an application is made under subsection 17(2) may make an order for the gathering of evidence, where he is satisfied that there are reasonable grounds to believe that

(a) an offence has been committed; and

(b) evidence of the commission of the offence or information that may reveal the whereabouts of a person who is suspected of having committed the offence will be found in Canada. (emphasis added)

Similarly, section 12 of the MLACMA is the means by which a search warrant may be executed in Canada on behalf of a foreign State based on a treaty request. It provides, in relevant part, as follows:

Issuance of search warrant

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

(a) an offence has been committed;

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

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

Some relevant decisions by Canadian Courts 3

In a case called R. v. Debot, one of Canada’s leading cases on the meaning of the words “reasonable grounds”, the Supreme Court of Canada sought to define the expression by distinguishing it from other legal standards found in Canadian law:

“… the appropriate standard is one of ‘reasonable probability’ rather than “proof beyond a reasonable doubt’ or ‘prima facie case’. The phrase ‘reasonable belief’ also approximates the requisite the requisite standard.”1

The following are summaries of three decisions made by Canadian courts which have interpreted the MLCMA words “reasonable grounds to believe” in various factual contexts. A more comprehensive review of the Canadian courts’ examination of these words is beyond the scope of this paper. While these cases may not necessarily represent the “average” case (if indeed it can be said that there is an average case), they are examined briefly below to illustrate the variation in the interpretations of the applicable standard under the MLCMA.

It should be noted that Canada is a federation made up of 10 provinces and 3 territories. Courts in one province are not necessarily bound to follow decisions made by the courts of another province. However, all courts are bound by the decisions of the Supreme Court of Canada.

In Canada, the application to obtain an order under the MLACMA must contain an affidavit (a statement provided under oath), usually by a Canadian police officer, in which he states that he has reasonable grounds to believe and does believe that the requirements of sections 18 or section 12, as the case may be, have been met in the circumstances of the given case. He also sets forth under oath the basis for his belief. The application is then presented by a lawyer employed by the Canadian government to a Canadian judge ex parte, that is outside of the presence of the person to whom the order is directed or the suspect to whom the order refers. If an order is granted, a person with appropriate standing and knowledge to challenge the initial issuance of the order may do so after the order has been executed, but before the material gathered on the basis of the order has been sent to the Requesting State.

The Future Électronique matter

In a case called R. v. Future Électronique Inc.,2 the Court of Appeal for the province of Québec was considering a challenge to the validity of search warrant under section 12 of the MLCMA which had been issued by a lower court. The warrant had been obtained in response to a request by the United States for a search to be conducted on the offices of an electronics retailer in relation to an alleged scheme to defraud the suppliers of electronics which were sold by Future Électronique.

1 R. v. Debot, [1989] 2 S.C.R. 1140, at p. 1166. 2 R. v. Future Électronique 2000 CanLII 11375 (QC C.A.), also known as United States of America v. Future Électronique Inc. (2000), 151 C.C.C. (3d) 403. 4

The information contained in the request was stated to have been provided to the U.S. investigator identified in the request by three former employees of Future who were not identified by name in the request. The affidavit stated that, after a first former employee had provided information to U.S. investigators about the fraud, the investigators decided to speak to other former employees to see whether the initial information would be corroborated. Two other former employees were interviewed, described in the affidavit as actually having taken part in the fraud scheme at the direction of named Future Électronique managers. The employees were described by the U.S. investigator as reliable informers and specific information was attributed to them by the U.S. investigator in relation to the manner in which the scheme was conducted, the fact that an alternate set of records were kept for the purposes of carrying out the fraud. In accordance with the usual practice in Québec, a Canadian police officer swore an affidavit stating that he had reasonable grounds to believe that the conditions set forth in section 12 had been met and attached the U.S. request as an exhibit to his affidavit.

The Québec Court of Appeal found that the warrant was invalid since, in its view, the affidavit in support did not disclose “reasonable grounds to believe” that section 12 had been complied with. While the Court recognized that the Canadian police officer who had signed the affidavit had stated that his belief that the unnamed confidential informants were “reliable”, he was in no position to make that determination since the U.S. investigator who had prepared the U.S. request had not stated in the request the basis for his own conclusion that the unnamed informers were reliable. The Court reasoned that the issuing court should not have granted the warrant since it had no means of assessing the reliability of the source of an essential part of the information provided in support of the application for a warrant.

The Court came to this conclusion even though there were several employees who appeared to corroborate one another, including two who admitted having been involved in the fraud, and the information provided was fairly detailed. The Court also commented that the Canadian officer who signed the affidavit was not personally familiar with the U.S. investigation since he had had little communication with the foreign investigators and based his affidavit on the written request. Finally the Court stated that, while the Canadian police officer provided a statement under oath, that statement was based on information from the U.S. investigator and that the foreign investigator’s affidavit “could have been produced”, seeming to suggest that foreign investigators should be providing Canadian officials with information under oath in order to establish the requisite “reasonable grounds”. In sum, the Court was of the view that there were insufficient facts upon which the issuing judge could come to his own independent conclusion on the issue of credibility.

The Falconbridge matter

In a subsequent judgement rendered by the Court of Appeal for the province of Ontario in a case called Commissioner of Competition v. Falconbridge Ltd.,3 the court

3 Commissioner of Competition v. Falconbridge Ltd., 2003 CanLII 52144, (2003), 173 C.C.C. (3d) 466. 5 was considering a challenge to a warrant issued under section 12 of the MLCMA and other orders issued under section 18 in response to a request alleging an illegal price- fixing scheme for sulphuric acid in violation of the U.S. Sherman Act. As in the Future Électronique case, a Canadian investigator had sworn an affidavit based on information contained in the U.S. request provided by a named U.S. investigator. In the request, the U.S. investigator identified the source of his information as a single unnamed employee of an unnamed company that had allegedly been involved in a meeting that had occurred on a specific date in Toronto, during which the details of the illegal scheme had been discussed and agreed to by representatives of several companies including Falconbridge Ltd, a company involved in the production of sulphuric acid. The U.S. investigator referred to letters that described the meeting. The U.S. investigator stated in the request that the unnamed employee had provided these letters to the U.S. investigators, although the letters themselves were not included in the request.

The appellant, Falconbridge Ltd, argued that, since the information had been provided by an unnamed source whose reliability could not be assessed by the Canadian investigator, the Canadian investigator was merely blindly repeating information which was not sufficiently reliable, much as the Québec Court of Appeal had found in Future Électronique. The Ontario Court of Appeal rejected this submission, noting that the Canadian investigator had dealt with the U.S. investigator who prepared the request in the past and found him to be honest. The Court reasoned that when the U.S. investigator referred to documents in support of his allegation that Falconbridge had been involved in the illegal scheme, the Canadian investigator could rely on that statement in spite of the fact that the request did not actually attach the documents. The Court noted as well that the unnamed employee was said to have responsibility within the unnamed company for sulphuric acid sales and was therefore in a position to know about the alleged conspiracy. The Court commented that the information about the scheme was sufficiently detailed that it could be inferred that the confidential informant had firsthand knowledge of the facts. The Court found that, while it was possible that confidential informant had fabricated the letters provided to the U.S. investigator, the judge who had issued the warrant was entitled to draw a common sense inference that that was highly unlikely.

Although there are factual distinctions, the approach of the Court in Falconbridge matter arguably reveals a greater inclination to accept the credibility of the ultimate source of the information based on the totality of the circumstances surrounding the request and to reject negative conclusions on credibility that are deemed unlikely. The position of the employee to provide the information contained in the request seems to have been given more weight than it was in the Future Électronique case, as was the amount of detail provided by the confidential informant. Corroboration of the informant’s statement by documents which were referred to in the request but not produced was apparently an important factor in Falconbridge, whereas corroboration by several witnesses (including some who admitted involvement in the offence) was not found, in combination with the surrounding information, to be sufficient to justify the issuance of the search warrant. Perhaps it can be said, based on these two cases at 6

least, that the Québec Court of Appeal has set the bar higher than the Ontario Court of Appeal as to what will constitute “reasonable grounds”.

The Ontario Court of Appeal in Falconbridge also found, based on a number of differences between the warrant under section 12 and the order under section 18, that the requirements for a search warrant to apply fully to applications for an order under section 18, referred to as an “evidence-gathering order”, the latter requirements being less stringent in terms of the details of the offence alleged. This seemed to suggest that the information required to meet the reasonable grounds standard in the case of an order under section 18 (which includes authority to have records produced or to have a statement taken by a witness) was less than that required for a warrant.

The Sherk matter

In another Canadian province, British Columbia, the Court seemed not to take into account the dicta of the Ontario Court of Appeal when considering the requirements for an order under section 18, which had been issued, but subsequently challenged by the target of the order. In a matter known as Sherk et al. v. the Attorney General of Canada,4 the British Columbia Supreme Court (which is not a court of appeal) was considering whether there had in fact been “reasonable grounds” for the issuance of two “evidence-gathering” orders under s. 18, one concerning Mr. Sherk, whose records relating to certain named suspects in the foreign (U.S.) fraud investigation and against a suspect corporation and another ordering a bank to produce Mr. Sherk’s bank records for a given period.

The British Columbia Supreme Court cited a number of search warrant cases in reference to the requirements to obtain a s. 18 order (which is not a search warrant). In this case, in accordance with practice in British Columbia, the request itself was not attached to the affidavit sworn by the Canadian police officer in support of the application. However, the Canadian officer referred to the U.S. request in some detail, noting that US investigators had “bank records” to show that $ 6.2 million dollars had been transferred to the alleged victim corporation to the account of “563163BC Ltd and Ken Sherk, Notary Public”. The affidavit attached a document as an exhibit, described as “a printout showing this wire transfer transaction”. Much of the information concerning the transactions that preceded the alleged fraud was attributed to a certain Mr. Herald Janssen, who represented Regency, the corporation which was the victim of the fraud.

The Court found that the fact that the U.S. investigators were not named was significant, as this detracted from the Court’s ability to assess the general credibility of the U.S. request. The Court also noted that the bank record referred to in the affidavit and attached to it did not identify the financial institution that had generated the record, but rather only mentioned “Rosa” as the person who had printed it out, without stating what her functions were. The Court also commented that although some of the information contained in the affidavit seemed to have as its source Mr.

4 Sherk et al. v. The Attorney General of Canada, 2003, BCSC 1216 (CanLII), 2003, 178 C.C.C. (3d) 297. 7

Janssen of Regency, the request did not specifically state that this was the case, which impacted negatively on the Court’s assessment of the information. The Court relied on the Québec Court of Appeal’s judgement in Future Électronique in its assessment of the general sufficiency of the information and in reaching its conclusion that it was not sufficient.

Conclusion

It is not suggested that the cases summarized above are a truly representative cross- section of the Canadian law in this area. However, it can be gleaned from this brief sampling of some notable cases, there is no single interpretation of the words “reasonable grounds to believe” that can be meaningfully expressed, even against the background of a factual context. Indeed, even where the facts of one case bear similarity to those in another, it cannot be predicted with any reliability that the result in both cases will be the same, particularly from one region of the country to another. Furthermore as in other common law countries, the case law in Canada is ever changing.

Canadian lawyers and other officials employed in the Central Authority, known in Canada as the International Assistance Group (IAG) of the Department of Justice Canada, do their best to stay abreast of the changing landscape of the relevant Canadian jurisprudence. Therefore, they are able to advise their counterparts in other Central Authorities in order to help them meet the requirements of Canadian law, bearing in mind that these can be determined with only limited certainty. The IAG’s colleagues in the field who actually apply for these orders may also bring to bear their own expertise, acquired from appearing repeatedly before local judges, in contributing useful suggestions for improvements to a request that is received from abroad in an attempt to ensure the best possible result before the courts on behalf of the Requesting State. Therefore, it should perhaps come as no surprise if Canadian officials seek further details from a foreign authority after receiving the initial request.

With all the foregoing information in mind, it is recommended, particularly for officials who have little familiarity with Canadian requirements, that the Working Group’s “Best Practices in the Area of Mutual Legal Assistance” be consulted as early on as possible in the drafting of a request to Canada for assistance. Finally, it is hoped that this brief paper has shed some light on the Canadian system and requirements that may be found helpful to foreign officials in the future.

Claude LeFrançois Senior Counsel International Assistance Group Department of Justice, Canada