International Securities Group Inc. v. Alberta (Securities Commission), 2011 ABQB 737

Court of Queen ’ s Bench of Alberta Citation: International Securities Group Inc. v. Alberta (Securities Commission), 2011 ABQB 737 Date: 20111201 Docket: 1101 06648 Registry: Calgary Between: International Securities Group Inc. Applicant - and - Alberta Securities Commission Respondent _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice P.R.

Jeffrey _______________________________________________________ Overview [ 1 ] This ruling addresses the scope of permissible questioning of Alberta Securities Commission (“ ASC ”) investigators in an application for return of items seized by them before the conclusion of the investigation for which they were seized, that is, for purposes of an application pursuant to sub-section 42(10) of the Alberta Securities Act (“ ASA ”). Statutory Context [ 2 ]

Section 42 of the ASA states, in part:

(6) If authorized to do so by an order of the Court of Queen’s Bench, a person conducting an investigation under

section 41 may (

a) enter into and search premises, and (

b) seize and take possession of any documents, records, securities, exchange contracts, contracts or things, of the person or company whose affairs are being investigated.

(7) An application for an order under subsection (6) may be made ex parte unless the Court of Queen’s Bench otherwise directs.

(8) Documents, records, securities, exchange contracts, contracts or things seized under subsection (6) shall, at a time and place mutually convenient to the person or company from whom they were seized and the person making the investigation, be made available for inspection and copying by that person or company if a request for an opportunity to inspect or copy is made by that person or company to the person making the investigation.

(9) Where (

a) documents, records, securities, exchange contracts, contracts or things are seized under subsection (6)(b), and (

b) the matter for which the documents, records, securities, exchange contracts, contracts or things were seized is concluded, the Executive Director shall return those documents, records, securities, exchange contracts, contracts or things to the person from whom they were seized within 60 days from the day that the matter is concluded.

(10) If (

a) documents, records, securities, exchange contracts, contracts or things are seized under subsection (6)(b), and (

b) the person from whom the documents, records, securities, exchange contracts, contracts or things are seized, alleges that the documents, records, securities, exchange contracts, contracts or things are not relevant in respect of the matter for which they were seized, that person may apply to the Court of Queen’s Bench for the return of the documents, records, securities, exchange contracts, contracts or things.

(11) On hearing an application under subsection (10), the Court of Queen’s Bench shall order the return of any documents, records, securities, exchange contracts, contracts or things that it determines are not relevant to the matter for which they were seized. Background [ 3 ] On April 6, 2011, the “Director, Enforcement” of the ASC issued an Amended Investigation Order pursuant to s-s. 41(1) of the ASA appointing various individuals:

... to make the following investigation: ... into any and all matters relating to Coastal Pacific Mining Corp., Joseph Gaetano Bucci, Ox Financial Corp., International Securities Group Inc., Caroline Meyers (aka Caroline Winsor aka Caroline Danforth), Jacqueline Rae Danforth and Caribbean Overseas Investments Ltd., subsequent to March 1, 2007 and related to potential contraventions of sections 93(a), 93(b), 147(2) and 147(3) of the Act in respect of creating a false or misleading appearance of trading activity in a security or an exchange contract, fraud, insider trading and disclosure of material information to a person or company prior to general disclosure. [ 4 ] On May 11 and May 12, 2011, Wilson J. of this Court granted ex parte Orders for Search and Seizure pursuant to s-s.42(6) of the ASA (the “ Orders ”), authorizing identified investigators to attend and seize a wide range of items from the offices of International Securities Group Inc. (“ ISG ”).

Relevant excerpts of the May 11 Order for Search and Seizure are appended to this decision as Appendix A. In support of the applications for these Orders the ASC filed affidavits of Mr. Myles MacPherson, an ASC investigator (the “ May Affidavits ”). I am not aware of the specific contents of the May Affidavits. [ 5 ] On May 12 and 13, 2011, the Orders were executed upon the offices of ISG.

Approximately 30 bankers boxes of documents plus computers, a safe, documents destined for shredding and other items were seized. [ 6 ] By the date of my hearing this application ISG had not challenged the validity of the Orders. On June 14, however, ISG filed an application pursuant to s-s.42(10) of the ASA for the return of everything “unrelated to” the ASC’s investigation (the “ Document Return Application ”). More recently, and after many requests, ISG received a ‘draft inventory’ of the items seized. ISG expresses dismay that the ASC has refused to provide a final inventory.

It appears that the ASC does not want to be taken as guaranteeing the accuracy of its listing by representing, for example, that its listing of the items seized is comprehensive. [ 7 ] ISG does not want just copies of specific items; it could ask to make copies pursuant to s-s. 42(8) of the ASA. It seeks return of originals. Such originals, its counsel says, have value and in some cases are necessary for ongoing business activities of various ISG clients. ISG’s affiant says that “trust accounts and files (paper and computer) held by ISG have been seized and/or frozen.

Multiple clients have since contacted ISG in order to have their funds and files released.” [ 8 ] ISG believes that ASC investigators took documents not just related to identified companies, individuals and entities, but items unrelated to them – items related to other ISG clients that had not been implicated earlier in what ISG believes to be the scope of the investigation. ISG says that some of its clients “with no relation to the suspected manipulation” are being adversely affected by ASC’s refusal to return items seized, such as share certificates, trust funds and files.

ISG wishes not to interfere with the ASC investigation but considers the breadth of items seized to far exceed what is relevant to that investigation. It wants the unrelated items returned. [ 9 ] The ASC resists the request saying, among other things, it cannot be certain (at least, not at this time anyway) that any of the items seized are not related to the investigation.

In any event it says that ISG bears the onus to prove what is “not related to” the investigation. [ 10 ] By consent the Document Return Application was adjourned to allow the parties to conduct questioning on opposing affidavit evidence. [ 11 ] During ISG’s questioning of the ASC’s affiant, Mr. MacPherson, ASC objected to certain of ISG’s questions. The questioning was adjourned so ISG could bring this application for a ruling on the objections and for related directions. [ 12 ] The ASC objected to any question asking MacPherson to: (

i) explain what he considered to be “related to” the ASC investigation;

(ii) provide the names of the “entities associated to ISG” that the investigation targeted, beyond those companies and entitiesexpressly identified in the Orders; (iii) state when it was that the investigators learned that, or formed the conclusion that, entities were associated to ISG; and (iv) respond to inquiries based on the May Affidavits. [13] ISG asks that MacPherson be ordered to re-attend and to answer such questions. [14] Neither party could point the Court to any previous decision on the scope of permissible questioning in respect of anapplication pursuant to s-s. 42(10) of the ASA. [15] ISG first referred me to Rule 3.13 of the Rules of Court and the comments by Fradsham in his Annotated Rules of Court,2011.

In its reply ISG further referred me to: Edmonton Northlands v. Edmonton Oilers Hockey Corp., (AB KB),[1993] A.J. No. 1001 (Q.B.); Nova Scotia (Attorney General) v. Royal & SunAlliance Insurance Co. of Canada, 2005 NSSC 126;Corbett v. Samsports.Com Inc., 2007 ABCA 151; Deloitte & Touche LLP v. Ontario (Securities Commission) (2002), (ON CA), 159 O.A.C. 257; Deloitte & Touche LLP v. Ontario (Securities Commission), 2003 SCC 61; Lake Ontario Cement Ltd.v. Canada, 37 F.T.R. 197; Will-Kare Paving & Contracting Ltd. v. R., 2000 SCC 36; Taplin v.

Alberta (Securities Commission), 2008ABQB 173; and extracts from the Competition Act, RSC 1985 c. C-34. [16] The ASC relies on the Alberta Court of Appeal decision in Alberta (Securities Commission) v. Institute for Financial LearningGroup of Companies, 2005 ABCA 268, 371 A.R. 144 (“IFL”); College Brand Clothes Co. v. Brown, et al., (AB CA),[1928] 2 D.L.R. 502 (Alta. C.A.); Canada (Commissioner of Competition) v. Toshiba of Canada Ltd., 2010 ONSC 659 , 2010O.N.S.C. 659; Corr v. Canada, (ON CA), [1987] O.J. No. 654, 60 O.R. (2d) 289 (C.A.); R. v.

Wilson, (SCC), [1983] 2 S.C.R. 594; Toronto Board of Education Staff Credit Union Ltd. v. Skinner, et al. (1984), (ON SC),47 O.R. (2d) 70 (H.C.J.); and Bank of Nova Scotia v. Diamond-T Cattle Co., et al. (1992), (SK KB), 106 Sask. R.142, [1993] 2 W.W.R. 722 (Sask. Q.B.).

Positions of the Parties [17] ISG argues that “the ASC’s continued refusal to identify what electronic documents were seized and are retained ... iswrongful when considering the clear language of the ASA.” [18] ISG argues that it has a right to question a party adverse in interest, relying on Rule 3.13, which states: 3.13(1) The following persons may be questioned by a party adverse in interest: (

a) a person who makes an affidavit in support of an originating application; (

b) a person who makes an affidavit in response; (

c) a person who makes an affidavit in reply to a response. [19] ISG also refers me to the established law on the scope of examinations not being limited by the scope of the affidavit but bythe scope of the issues in the motion for which the affidavit has been tendered, and relies on Fradsham, supra. This is correct, although

questioning may also be directed at an affiant’s credibility and is subject to the overriding discretion of the Court to determine whether aquestion should be answered. See, for example, the following cases cited by Fradsham: Paszkowski v. Canada (Minister of Employment& Immigration), 1993 CarswellAlta 897, [Doc. Edmonton Appeal 9203-0844-A], (Alta. C.A.); Alberta Treasury Branches v.

Leahy(1999), 1999 ABQB 829 , 254 A.R. 263 (Q.B.). [20] ASC does not appear to disagree, referring at para. 23 of its written submissions to the Alberta Court of Appeal decision inIFL, which states at para. 28: ... the Commission has the onus of establishing that the proposed cross-examination should not be permitted.

Accepting the somewhatunusual procedure agreed to by the parties in this case for bringing the issue before the court and counsel for the appellants havingoutlined the areas of their interested cross-examination, I am of the opinion that the Commission has discharged this onus and hasestablished that there is no issue for relevant cross-examination and that the proposed cross-examination is not relevant to the issuesbefore the Court on the application before it. [underlining added] [21] But the ASC relies on IFL further as prohibiting any “investigation of the investigator” and believes that the avenue of inquiryproposed by ISG will necessarily amount to that.

Further, ASC argues the proposed questions will be of no assistance to ISG “indischarging its burden” in the Document Return Application. ASC theorizes that “the planned line of questioning will, in all likelihood,be aimed at determining which companies among the past and current clients of ISG are currently under suspicion of havingcontravened” the ASA. [22] The ASC further argues that the scope of permissible ISG questioning does not extend to encompass the contents of the MayAffidavits.

It says that those are “spent” in so far as the Document Return Application is concerned and that “any attemptedimpeachment on the evidence contained in these documents would amount to an impermissible collateral attack on previous orders ofthis Court.” ASC says that document return applications under s-s. 42(10) cannot be used as a substitute for Rule 9.15 applications (tovary, set aside or discharge an order of this Court).

ASC believes that ISG misapprehends the purpose of s-s. 42(10) applications, using ithere inappropriately to fix what ASC alleges is ISG’s real concern, “over seizure.” Analysis [23] The ASC may be correct about using s-s.42(10) to remedy perceived “over seizure.” If the ASC thinks ISG is complainingthat items outside the scope of the authorizing Orders were seized, then it is correct. This application cannot remedy such a concern. Ifhowever the ASC thinks ISG is complaining that the investigators seized items outside the scope of the investigation, then the ASC isnot correct.

This application can remedy that. [24] Therefore this Document Return Application could be an appropriate process here. As to which of the two forms of overseizure the ISG is seeking to remedy, if in fact either, is not an issue that is before me, nor was it argued by the parties other than theASC suggesting the Document Return Application is misguided. Whether or not ISG has brought the wrong application for the relief theASC believes ISG really wants will be for the Court that later hears the Document Return Application.

At such time it must order thereturn of any items that it determines are not relevant to the matter for which they were seized, regardless of whether or not they werewithin the scope of the Orders. [25] Rather than object to questions based on what the ASC thinks might be motivating the question or object because it theorizesfuture questions will serve an ulterior purpose, it would be more helpful for the ASC to assess each question actually posed on the basisof whether or not it is within the permissible scope of questioning.

If the ASC is correct and an answer to a permissible question is laterused for an ulterior or other improper purpose, the ASC may object and pursue appropriate relief at that time. [26] The scope of permissible questions is determined by the issues on the application for which the affidavit was tendered. In thiscase, on the Document Return Application, the Court will be asked to determine whether any items seized by ASC from ISG, that ISGalleges to be not relevant to a matter for which they were seized, are in fact not relevant to a matter for which they were seized.

If so theCourt must order that they be returned. Whether or not something was seized for which the investigators had no authority to seize isirrelevant. No questioning of the ASC affiant is permissible on that topic.

[ 27 ] However, all questioning is permissible that seeks to reveal whether or not the existence or content of a seized item intersects with the nature of the matter (or matters) under investigation, all other things being equal.

That wording tracks and adapts to this context the definition of relevance articulated by the Supreme Court of Canada in Deloitte at para.16: “[r]elevance occurs where the nature of the allegations and the content of the disclosed materials intersect.” [ 28 ] The Document Return Application shall be decided based upon whether or not seized items that are alleged to be not relevant to the matter for which they were seized [s-s. 42(10) ASA ] are determined by this Court to be not relevant to the matter for which they were seized [s-s. 42(11) ASA ].

Therefore the Court will need to gain an understanding of both the scope of the matter for which the items were seized and the nature of the items alleged to be not relevant thereto. (

i) Questions seeking an explanation of what MacPherson considered was “related to ” the ASC investigation [ 29 ] This category of proposed questioning is ambiguous. I will endeavour to address each of the seemingly possible meanings after making two threshold comments. [ 30 ] The maximum scope of the investigation is delineated by the Amended Investigation Order (excerpted at para. 3 above). Were there not any such document in existence, ISG would be without any basis to assess whether any item seized was not relevant to the matter under investigation and thereafter “allege” as much as required by the ASA .

That is, to allege certain seized items are irrelevant ISG must have a means of ascertaining what it is that they are not relevant to. In such a case it would be grossly unfair to deny ISG any ability to discover just what was under investigation but require it to allege that something fell outside the scope of that unknown investigation as a pre-condition to relief. But that is not this case.

Here there is a description of the maximum scope of the investigation in the Amended Investigation Order, so ISG is not without any basis to assess relevance. [ 31 ] At some stage, if a prosecution ensues, ISG should have some means of discovering reasonable particulars of the matter (or matters) for which it is being prosecuted.

This case is not at that stage; such questions are not permissible in the context of this Document Review Application. [ 32 ] Since it is possible that the matter (or matters) for which these particular items were seized is narrower in scope than the scope of the matters identified in the Amended Investigation Order, it is open to ISG to ask MacPherson about whether that is the case here.

For example asking whether the matter for which the items were seized was a subset of the matters identified in the Amended Investigation Order and, if so, asking further questions to gain an understanding of the scope of that subset of matters. That scope becomes the basis for the Court determining whether to order the return of any seized items. [ 33 ] Asking MacPherson what he considered “related to” the investigation, as those words are used in the Orders, is irrelevant.

The concern is whether the items seized are not relevant to the matters under investigation, not whether they fall outside the scope of what the ASC was authorized by the Orders to actually seize. While something about the nature of the investigation might be inferred from the face of the Orders, they address only the scope of what may be seized, not the scope of the matter for which they were seized. [ 34 ] Asking MacPherson to explain which seized items he considers are “related to” the investigation is not permitted.

His opinion is not relevant and the question entails the ultimate question for the Court to determine. (ii) Questions to provide the names of the “related entities ”, the “companies or entities associated to ISG ” [ 35 ] If certain seized items are not related to the matter for which they were seized, then they are to be returned (following an application to the Court if necessary).

The process contemplated by ISG in its questioning of MacPherson (of listing ISG’s 30 plus clients and asking in respect of each whether it is currently under suspicion of having contravened the ASA ) would not necessarily be dispositive of this issue in respect of each such entity. That is, if the answer for each was “no”, it would not necessarily follow that items seized in respect of any or all of those ISG clients were not related to the matter for which the items were seized. They still may be relevant, depending on the nature and scope of the matters under investigation.

It is also conceivable that the answer might genuinely be “I don’t know yet.” One of the purposes of an investigation is to seek answers to such questions. Through the study and careful review of items seized that ostensibly pertain to uninvolved clients of ISG, patterns or actions may emerge that evince culpability of the targets of

the investigation. [ 36 ] Questions as to which companies or entities are the “related entities” to ISG or are “associated to” ISG refers to the wording in the Orders.

As earlier stated, the Court in the Document Return Application will not concern itself with whether more was seized than was authorized by the Orders – such as if some of the documents were or were not about “related entities” or entities “associated to” ISG. [ 37 ] However, questions about the affected entities that are not named in the Amended Investigation Order are nevertheless permissible questions provided that they probe how the specific items seized, alleged by ISG to be not relevant to the investigation, are connected to the conduct under investigation of one or more of the entities named in the Amended Investigation Order. (iii) Questions about when the investigators learned that, or formed the conclusion that, ‘entities ’ were associated to ISG [ 38 ] Such questions are not permitted.

The question as to when the investigators learned about any association between ISG and any other entity is irrelevant to the issue before the Court in the Document Return Application. [ 39 ] The framing of this category of questions uses the wording of the Orders, which deal with what may be seized, rather than wording delineating the matter being investigated.

The issue on the Document Return Application is the scope of the investigative matters for which they were seized. [ 40 ] The open-ended nature of the Orders contemplate that information may exist in the possession of ISG related to the matters under investigation, the existence of which was not yet known to the ASC investigators when applying for the Orders. But the object and scope of the matters under investigation would be known at that time.

They are embodied in the Amended Investigation Order. (iv) Questions based upon the May Affidavits [ 41 ] In the written notice of its application ISG says it will rely upon, among other things, one of the May Affidavits and the transcript of ISG’s questioning thereon that it was then demanding. ISG asserts an entitlement to question MacPherson on them, but without any specificity as to the actual questions it intends to pose. [ 42 ] The ASC opposes any questioning of MacPherson on the May Affidavits.

The ASC alleges that ISG is pursuing a collateral attack on the validity of the Orders by questioning on the May Affidavits. The testing of evidence relevant to the pending Document Return Application does not automatically constitute a collateral attack on the Orders simply because that evidence is mentioned in the May Affidavits. In this case, on the evidence presented, it has not been demonstrated that ISG’s proposed questioning on the May Affidavits is for the purposes of any collateral attack to the validity of the Orders.

That appears to be ASC conjecture only. [ 43 ] The ASC also argues that ISG’s questioning on the May Affidavits will constitute an investigation of the investigator. Nothing has been stated about the questions that are proposed to be put to MacPherson in respect of the May Affidavits, only that ISG wishes to question on them. I have no basis to conclude that ISG is pursuing that agenda. A mere possibility is not sufficient to deny ISG its right to question ASC’s affiant on matters relevant to the issues in the Document Return Application. In the IFL case there was a basis.

The specific questions counsel proposed satisfied both the Chambers and appellate judges in that regard. [ 44 ] In my view, the May Affidavits are not “spent” as the ASC asserts, relying on the decision in Toshiba . Unlike in Toshiba , here the Document Return Application is not procedurally distinct from the applications to obtain the Orders. The regime established in s. 42 of the ASA ties this s-s. 42(10) application to the precursor ex parte s-s. 42(6) application (for the Orders).

Like sub-sections (7), (8) and (9), sub-section (10) specifically refers to orders rendered pursuant to sub-section (6) or to things seized pursuant to an order rendered pursuant to sub-section (6). [ 45 ] Furthermore, the Orders themselves expressly refer to all of s. 42 of the ASA when contemplating possible further dealings

affecting them: 5. This order shall remain in effect until it terminates or is otherwise dealt with in accordance with

section 42 of the Act ; [ 46 ] Therefore I do not regard all questioning of matters that may be within the May Affidavits to be impermissible a priori . However, and again admittedly without having knowledge of the specific contents of the May Affidavits, I harbour some doubt that any questions thereon will be helpful, let alone probative. Those affidavits presumably establish the reasonable and probable grounds for believing that ISG’s premises contained evidence of an offence.

Here the pertinent issue is whether any particular item now seized is relevant to the matters under investigation for which they were seized. But I cannot rule out the potential or find reason to preemptively override the procedural right of ISG to question the ASC affiant to the limits of the scope of the issues in the pending application for which he has been engaged. [ 47 ] I believe, but am not certain, that the May Affidavits are under a sealing order and therefore ISG may not have yet had access to them.

If ISG has not had access to them, my disagreement with the position and arguments espoused by the ASC is not to be construed as ISG having succeeded in now gaining access to them, redacted or otherwise. That application was not before me. (

v) Residual matters [ 48 ] There is no obligation upon the ASC to provide an inventory or listing of items seized, in draft or final form. There is an obligation upon the ASC to make available the seized items, at a mutually convenient time and place, for inspection and copying by ISG. If, as it appears, the ASC offered to, or relented and agreed to, provide to ISG a copy of its catalogue of items seized, it does not thereafter reflect poorly on the ASC that it was not prepared to generate a final version or ever to represent that it was exhaustive.

To the extent that ISG required greater or earlier certainty as to just what had been removed from its premises, its recourse was under s-s. 42(8). [ 49 ] ISG says s-s. 42(6) of the ASA creates a process for seizing only items “of the person or company whose affairs are being investigated.” It says the ASC here seized items of other ISG clients not under investigation and those cannot be seized under powers available by s. 42. [ 50 ] Sub-section 42(6) speaks of investigators searching premises, among other things.

In the typical process some degree of searching is involved and on-site determinations are made of what fits within the scope of things able to be seized. Here while the Orders are entitled “Order for Search and Seizure” they in fact do not authorize or contemplate any searching, only seizing. The operative words thereof state, at para. 1: 1. ASC Investigators ... are authorized to: (

a) attend at the Premises; and (

b) Seize and take possession of for the purpose of later examination: The Orders then list the broad range of items that may be seized. The Orders expressly contemplate seizing without searching, and subsequent examination. [ 51 ] If ISG believes the Orders to have authorized the seizure of more items than the statute permits, then its recourse is not under s-s. 42(10). If ISG believes the investigators seized more items than the statute could have authorized be seized, then again its recourse is not under s-s. 42(10). [ 52 ] In any event, that wording of s-s. 42(6) (“of the person or company whose affairs are being investigated”) does not

necessarily mean that the ASC may not retain items seized from the offices of ISG that are documents of some other entity not named in the Amended Investigation Order. Items seized from the possession of ISG are items “of the person or company whose affairs are being investigated” (namely ISG) even though they may be, for example, the share certificate of, or the trust ledger of, or documents on the letterhead of, an entity not being targeted by the investigation. [ 53 ] As to which party bears the burden on the Document Return Application, I shall limit what I say because that issue is not before me.

The issue is necessarily entailed by the Document Return Application, which is expected to come before this Court sometime in the future. But the parties clashed on that point and ISG addressed at length in its reply, so I will offer two select comments that I had cause to consider given the issues that were before me and that may assist the parties in their next steps. [ 54 ] First, the threshold step to any s-s. 42(10) application requires that “the person from whom the [items] are seized, alleges that the [items] are not relevant ...”. The burden for this step, then, is upon ISG.

I regard it unlikely that the legislators intended by this wording, in the context of securities related investigations and the relief the legislators are availing, that the person from whom items were seized can satisfy that initial burden by simply alleging that everything seized was unrelated, without any basis for that assertion, and thereby put the ASC to the obligation to answer on every single item seized.

It is theoretically possible that absolutely everything seized will be unrelated to the matter for which they were seized, in which case the comprehensive allegation would be warranted, but realistically that is extremely unlikely. Such an

interpretation of the ASA would lead to an automatic allegation in all seizures, within seconds of each seizure, diverting the ASC from investigation and onto defending its actions in respect of each item seized. In any event, in this case ISG acknowledges that there will be, within the breadth of items seized, some (perhaps many) items that relate to the subject matters under investigation. [ 55 ] Second, the logic followed by the Supreme Court of Canada in its decision in Deloitte would seem to me equally compelling here, at least in respect of this threshold ‘alleging’ step in the process.

The Supreme Court, quoting from the Ontario Court of Appeal with approval, stated at para. 27: Deloitte knew the contents of the compelled material better than anyone. If some of the material was obviously beyond the pale of the s. 127 proceeding, Deloitte could have directed the Commission’s attention to that part of the compelled material. and then at paragraph 28 the SCC said: ... I agree with Doherty J.A. that Deloitte could have identified its concerns with some of the compelled material being disclosed.

If Deloitte established that there was not a reasonable possibility that a particular document was relevant to the allegations, it would have been improper for the OSC to order disclosure. The Supreme Court made this comment even though, in that case, it was the OSC that bore the statutory obligation to disclose anything that was in the public interest to disclose, and therefore in that context bore the burden of demonstrating relevance. [ 56 ] Therefore I Order that MacPherson re-attend to answer ISG’s further questions as permitted by this ruling. ISG is entitled to its costs.

Heard on the 3 rd day of October, 2011. Dated at the City of Calgary, Alberta this 30 th day of November, 2011.

P.R. Jeffrey J.C.Q.B.A. Appearances: Norman D. Anderson for the Applicant Richard J. Finn for the Respondent Appendix A UPON THE EX PARTE APPLICATION of the ASC pursuant to subsections 42(6) and 42(7) of the Act and Rules 1.3, 6.2 and 6.4 of the Alberta Rules of Court; AND UPON HAVING READ the Affidavit of Myles MacPherson, sworn May 10, 2011; AND UPON NOTING THAT Marc Arsenault, Myles MacPherson, Tyler Hynnes, Barb Bauer, Brent Hornberger, Roy Dias and Gus Gallucci were appointed pursuant to

section 41 of the Act to investigate a matter; AND UPON the ASC satisfying the Court there are reasonable grounds to believe that the premises located at International Securities Group Inc. located at 5614(

E) Burbank Road SE, Calgary, AB, T2H 1Z4 (the “Premises”) are the location of certain things connected with the matter under investigation; IT IS HEREBY ORDERED THAT: 1. ASC Investigators Marc Arsenault, Myles MacPherson, Tyler Hynes, Barb Bauer, Brent Hornberger, Roy Dias and Gus Gallucci are authorized to: (

a) attend at the Premises; and (

b) Seize and take possession of for the purpose of later examination: - Electronic and hard copy documents, records and materials related to International Securities Group Inc. (“ISG”) or fraudulent securities transactions by ISC companies or entities associated to ISG including but not limited to Coastal Pacific Mining Corp., Ox Financial Corp., Caribbean Overseas Investment Ltd., Caroline Meyers (aka Caroline Winsor, Caroline Danforth), Jacqueline Rae Danforth, including the following: - All originals and copies of documents, records and materials, whether recorded on paper or as data stored on, or available to a computer system;

- Financial Records, including: Business books of account, Ledgers (including securities ledgers), General Ledger Accounts, Income Statements, Balance Sheets, Cash Flow Reports, Bank Reconciliations, Sales Reports, materials prepared for external accountants, pay cheques, blank cheques, cheque stubs, cancelled cheques and cheque books, bank statements, wire receipts or authorizations, deposit slips, sales contracts, sales orders, spreadsheets with account analysis, account statements, account opening documentation, powers of attorney, corporate resolutions and incorporation documents, memoranda, minute books or securities being traded by ISG or persons related to ISG including their employees, agents or representatives; - Corporate records, documents or drafts pertaining to ISG including employee lists, employment contracts, employment application forms, both blank and completed and documents related to employee compensation; - Envelopes and waybills from courier companies; - Letterhead associated to ATB Financial, Scotiabank, Canaccord Genuity Corp. and other investment dealers; - Copies of all Treasury Orders pertaining to ISG and related entities; - Prospectus and/or Offering Documents pertaining to ISG and related entitles; - Promotional material pertaining to ISG and related entities; - Cellular phones; - Lists of shareholders, investors and potential investors; - Share certificates both blank and completed; - Correspondence to and from investors, employees, consultants, agents, contractors, media, sales staff, transfer agents, internet marketing firms and persons related to ISG including letters, e-mails, texts, faxes and blank and completed share subscription agreements; - Qualification scripts and sales scripts related to the sale of securities or solicitation of advance fees; - Document files related to investors and any information compiled by, or received by, employees related to investors; - Cheques, wire transfers and money orders received from and to shareholders and clients of ISG; - Any contracts and/or written agreements related to the sale of securities, securities purchase agreements or acceptance of advance fees of which ISG or any of its agents or representatives are a party; - All computers, computer systems, personal digital assistants, electronic organizers, and data or electronic records contained in or

available to a computer system at the building or place to be searched, and computer and other electronic data storage equipment including magnetic, optical, electronic or other machine readable or writeable data storage media, programs or software associated with the said computer or electronic data storage equipment, manuals or documentation including any written or stored passwords required to read data and analyze contents of files, and any other device or mechanism which may be used or capable of being used to create, store, or manipulate electronic documents, records graphic files or programs, containing information relating to the things to be searched for listed herein; -All communication devices including but not limited to pagers, scanners, monitoring equipment and cellular telephones; - All computer systems peripherals and related devices, any input or output devices and associated communication equipment, cables and connectors; - Computerized accounting and computerized business records relating to ISG and its agents and representatives, including personal data organizers or electronic mail systems; and - Open Source Data including websites, internet postings, chat rooms and open forums. ... 5.

This order shall remain in effect until it terminates or is otherwise dealt with in accordance with

section 42 of the Act ; and ...