Green v. Diack, 2012 ABQB 45

Court of Queen ’ s Bench of Alberta Citation: Green v. Diack, 2012 ABQB 45 Date: 20120118 Docket: 9703 20667 Registry: Edmonton Between: William Thomas Green, Judith Margaret Mellott and All-Canadian Training Institute Inc. Plaintiffs - and - Michael Stuart Diack and Her Majesty the Queen Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.J. Greckol _______________________________________________________ I.

Introduction [ 1 ] The Plaintiffs William Thomas Green and Judith Margaret Green, nee: Mellott [the Greens] owned and operated a crane maintenance business, All Crane Parts and Services Ltd. [All Crane Parts]. All Crane Parts had been in operation since June 1, 1987. Brian Stephen Heslin worked for the Crown at the Canadian General Standards Board [CGSB], located in Edmonton. He came to the attention of the Royal Canadian mounted Police [RCMP] while they were doing electronic surveillance of some of his associates then under investigation for drug related offences. Intercepted conversations revealed that Mr.

Heslin was bragging that he controlled and disposed of surplus assets for the Crown and could manipulate the bidding processes. An RCMP investigation revealed he had no such authority, but there were grounds to believe he would abuse his position as an official with the Government of Canada.

[ 2 ] Mr. Heslin attempted to take advantage of his government position with the CGSB and of the Greens. They became pawns in a scheme he conceived to provide training to the private sector in International Standards Organization [ISO] Quality Systems, the internationally recognized protocol for quality control within small businesses, through a company the Greens set up, All Crane Career Institute Inc. [All Crane Career]. Mr.

Heslin assisted with development of this business and stood to benefit financially from his role, undertaken without the knowledge or permission of his employer, the Government of Canada. [ 3 ] The RCMP obtained a number of wiretap authorizations in their investigation, and a number of warrants to seize evidence from the Greens ’ companies. On July 18, 1994, they seized all the paper and computer assets of both the repair business and the teaching business, which the Greens allege effectively shut down the businesses. These assets were not fully returned to the Greens until 28 months after the seizure.

Some six to eight months after the seizure, the Greens sold All Crane Parts, for what they contend was a fraction of its former worth. They allege the loss in value of the company was the result of the negligent investigation of the RCMP. [ 4 ] No charges were ever laid against the Greens, and the RCMP acknowledge in this trial that the Greens were pawns of Mr. Heslin, a fraud artist.

Heslin was convicted only of uttering a forged document, a resume with false credentials that he used to obtain a position with the Government of Canada. [ 5 ] By statement of claim filed October 31, 1994, the Greens sued Corporal Diack (now Superintendent Diack) of the RCMP, as well as the Crown, for negligent investigation. II. Issues [ 6 ] The issues to be resolved in this matter are: A. Was the RCMP negligent in pursuing or obtaining the search warrants? 1. Did the RCMP have reasonable and probable grounds to obtain the search warrants with respect to the Greens ’ companies? 2.

Was it negligent to include in the Information to Obtain [ITO] for the s 487 warrant a paragraph that reasonably might lead the reviewing justice to wrongly conclude that a s 462.33 warrant also was being obtained? 3. Was it negligent for the RCMP to proceed to obtain warrants under s 487 of the Code rather than s 462.33? B. Was the investigation after the warrants were executed negligent, in particular the failure to return the entirety of the seized assets until 28 months after the seizure? III. Facts A. Agreed Facts and Documents [ 7 ] This is a case of alleged negligent investigation by the RCMP.

The Greens are residents of Edmonton, Alberta, and were shareholders in the corporate entity All Crane Parts.

[ 8 ] The Plaintiff All-Canadian Training Institute Inc. [All-Canadian Training], the successor corporation to All Crane Career, was incorporated and carries on business in Alberta. The Plaintiff Ms. Green is the majority shareholder of All-Canadian Training.

She was the majority shareholder of the predecessor corporation All Crane Career, and was the quality assurance manager of and wife of the owner of All Crane Parts . [ 9 ] At the time of these events, the Defendant Michael Stuart Diack was a Corporal in the RCMP and an employee of the Defendant Crown. [ 10 ] The impugned RCMP investigation had its genesis in an unrelated drug investigation in southern Alberta. Pursuant to lawful wiretap authorizations, the RCMP intercepted calls between one of the named targets and Mr. Heslin, then an employee of a Crown agency, the CGSB.

From time to time the authorizations were expanded to include the Plaintiffs and others. The authorizations were issued by Ritter J on January 6, 1994, Lee J on April 14, 1994 and Kent J on May 25, 1994. [ 11 ] At the time of this investigation, Mr. Heslin, as an employee of CGSB, was an official of the Government of Canada as defined by s 118 of the Criminal Code . Ashok Kumar Anand was a private management consultant who was hired by the CGSB in April and May 1994 and also was an official of the Government of Canada as defined by s 118 of the Code . Donna Lerke is the wife of Mr. Heslin. [ 12 ] Mr. Heslin, Mr.

Anand and the CGSB had experience in teaching an industry standard known as the ISO 9000 Quality Systems. Ms. Green and others were interested in providing a course teaching this industry standard to the private sector. [ 13 ] Mr. Heslin, Ms. Green and Mr. Anand formed a company called All Crane Career Inc. that was to replace a company owned by Connie Warner called National Quality Training Group Inc. Ms. Warner originally had arranged with Mr.

Heslin and the CGSB to train the private sector in the ISO 9000 Quality Systems, an arrangement that would provide a profit for the owners and direct or indirect benefit for the Government of Canada. [ 14 ] On or about July 15, 1994, Cpl. Diack swore several ITOs for search warrants under s 487 of the Criminal Code to obtain evidence of the commission of offences contrary to s121(1)(a)(

i) and (ii) of the Code , defrauding the Government of Canada; and s 465(1)(c), conspiracy. In terms of the Alberta Treasury Branch [ATB], the search warrant also was intended to obtain evidence of the commission by Ms. Green of the offence of unlawfully being in possession of property or the proceeds of property as a result of the commission in Canada of an enterprise crime offence contrary to ss 462.31 of the Criminal Code .

Section 462.31 deals with laundering proceeds of crime. [ 15 ] Based on these ITOs, search warrants were issued to Cpl. Diack, allowing searches in Edmonton at: 1. The law offices of Weeks, Weeks and Doherty, solicitors for All Crane Parts; 2. the ATB, bankers for All Crane Parts and All Crane Career; 3. All Crane Parts; 4. Mr. Heslin ’ s residence; and 5. the offices of the CGSB.

[ 16 ] The warrants allowed for the seizure, at the law of offices of Weeks, Weeks and Doherty, of articles of incorporation, including draft copies; articles of reorganization, including draft copies; corporate registration documents, including draft copies; notes, bylaws, agreements and resolutions, including draft copies; articles of amendment, including draft copies; certificates of status; name change documents, including draft copies; letters of direction, notes and correspondence; trust ledger; and all documents, draft or otherwise; relating to, among others, Ms.

Green and All Crane Career. [ 17 ] At the ATB, the warrants which were issued allowed for the seizure of account statements; deposit slips; withdrawal slips; cancelled cheques; signature cards; contracts and agreements; loan applications; letters of direction, corporate resolutions; debit and credit memos; bank drafts, returned items, credit files; statements of affairs and collateral documentation; internal banking documentation and reports; and microfilm documents, including deposited items, books, records, and documents; all of which related to All Crane Career, including all transactions between All Crane Career and, among others, All Crane Parts and Ms.

Green. [ 18 ] The ITO for the ATB search warrant contained a reference in paragraph 25 to an application for a restraint order and an undertaking to a justice. The affidavit in support of the application for a restraint order never was sworn, no application ever was made and no order ever was granted.

No assets were restrained. [ 19 ] The warrants issued allowed for the seizure at All Crane Parts of account statements; deposit slips; withdrawal slips; cancelled cheques; deposit books; cash disbursements journals; general ledgers; general journal summaries; client course application forms; client files; course brochures; contracts and agreements; course syllabus; course material; computer programs, including the Bedford Accounting Program; computer systems; computer hardware, software, modems; computer manuals; computer data; phone lists; appointment calendars; and notes and correspondence; all of which related to All Crane Career, including all transactions between All Crane Career and, among others, All Crane Parts and Ms.

Green. [ 20 ] The warrants issued allowed for the seizure at the residence of Mr. Heslin of course application forms; client files; course syllabus and material; computer systems, programs, data, hardware; computer modems; faxes; notes, correspondence, letters and memorandums; telephone lists; cancelled cheques, invoices and receipts; plans, contracts, agreements, and bylaws; and corporate registration documents; all of which related to All Crane Career, including all transactions between All Crane Career and, among others, All Crane Parts and Ms.

Green. [ 21 ] At the offices of the CGSB, the warrants which were issued allowed for the seizure of client course application forms; client files and client lists; course brochures; contracts and agreements, including draft copies; course syllabus; course materials; computer programs; faxes; computer systems, hardware, software, modems; computer manuals; computer data; telephone lists; appointment calendars; and notes, correspondence, letters and memos; all of which related to All Crane Career, including all transactions between All Crane Career, and, among others, All Crane Parts and Ms. Green. [ 22 ] Mr.

Heslin, Mr. Anand and Ms. Lerke, none of whom are parties in this action, were named in all five search warrants. It was the belief of Cpl. Diack and other members of the RCMP that Ms. Green was involved in a conspiracy with Mr. Heslin and Mr. Anand to defraud the Government of Canada. [ 23 ] On July 18, 1994, the s 487 search warrants were executed at the named locations and numerous items were seized as potential evidence. [ 24 ] On July 27, 1994, Ms.

Green requested and obtained copies of the accounts receivable and payable for All Crane Career. [ 25 ] On October 7, 1994, a Report to Justice was filed with the Provincial Court of Alberta pursuant to s 490 of the Criminal Code for all exhibits seized. [ 26 ] At some point in October 1994, Cpl. Diack swore an affidavit in support of an application for an order authorizing further detention of the exhibits to July 18, 1995.

He attested that considerable action had been undertaken on the investigation, but more was required; that the majority of seized items were computer software, hard drives, and disks; that Edmonton RCMP Commercial Crimes

Section had only one investigator trained to recover stored and hidden information; and that he had been committed to another

investigation and, therefore, was “ unable to examine the exhibits seized for this file. ” He deposed that to do so would take that officer up to three months. He indicated that other witnesses were to be interviewed. The officer in charge of Commercial Crimes was transferred, and Insp. Reteff assumed command of Commercial Crimes, leaving Cpl. Diack as the only full time investigator on the file. [ 27 ] On October 18, 1994, Chisholm Prov Ct J granted the application allowing for further detention of items seized from All Crane until July 18, 1995. [ 28 ] In an affidavit sworn July 6, 1995, Cpl.

Diack asserted that he had conducted a “ lengthy and complex ” investigation into the affairs of Mr. Heslin, Ms. Green and Mr. Anand; on July 5, 1995, the Crown agent in Special Prosecutions had advised him that “ ... his review of the court briefs, and opinion on appropriate charges, will not be complete until the end of August of 1995; ” and he requested that the period of detention be extended a further three months to October 18, 1995. [ 29 ] On July 17, 1995, Cawsey J determined that a further detention until October 18, 1995 was warranted. [ 30 ] On or about November 1, 1996, Ms.

Green was advised by the Special Prosecutions Branch of Alberta Justice that no charges had been laid against her, nor were any charges being contemplated. [ 31 ] From time to time, various of the seized items were returned, but the financial records on the computer hard drive were not returned to the Plaintiffs until the completion of the RCMP investigation on November 18, 1996, some 28 months after the seizure. [ 32 ] In an Information sworn on October 12, 1995, Mr. Heslin was charged with two counts of fraud and one count of uttering a forged document.

On August 19, 1996, he entered a plea of guilty to the charge of uttering a forged document, the document referred to being his resume. He was sentenced on September 14, 1996. The fraud charges were withdrawn. [ 33 ] The parties have agreed that: “ ...[from] time to time renewal orders continuing the detention of items and information, including computer data, were issued by the Provincial Court of Alberta. ” [ 34 ] For purposes of this portion of the trial, the Defendants acknowledge that as a result of the seizure and detention of the Plaintiffs ’ property, the Plaintiffs may have sustained some loss.

However, the Defendants did not concede causation for the purposes of the negligence analysis. B. Viva Voce Evidence [ 35 ] The chronology of crucial events in this matter dates back to 1994. Under a wiretap authorization granted on January 1, 1994 by Ritter J, which permitted interception of private communications relating to an unrelated drug investigation, a conversation between Mr. Heslin and a named target was intercepted. Mr. Heslin was then employed by Public Works and Government Services, as Regional Director of the CGSB, a division of Public Works.

He was bragging to the other party to the call that he was Regional Director for western Canada in charge of the liquidation of various Crown assets, overseeing 600 staff, and that he recently had disposed of eight D-6 caterpillars for $6000 each. He suggested that he could rig the bids in favour of his friends. Inspector Reteff, then in the Commercial Crime Unit, was alerted to this potential fraud by his supervisor, Insp. Duncan. Inspector Reteff was put in charge of the investigation, working with Cpl. Diack. [ 36 ] Inspector Reteff swore an affidavit on April 14, 1994, which included the information about Mr.

Heslin ’ s plans to use his position to defraud the Government of Canada. Based on this affidavit, he obtained a

Part VI wiretap authorization from Lee J, expanding the order of Ritter J to include Mr. Heslin as a target. [ 37 ] By July 1994, the RCMP realized that Mr. Heslin could not do the things he had bragged about. Ms. Green had appeared on the scene by that time. Ms. Green was taking a course for internal business auditing offered through Lloyds of London. Mr. Heslin was the registrar for the course, which is how he and Ms. Green first met. She was looking at offering quality management systems through

her company. In November or December 1993, Mr. Heslin called Ms. Green and said he had taken a position with the CGSB and had a business opportunity for her. They met to discuss it. [ 38 ] Ms. Green also met with Mr. Anand, who was trained as an engineer and who became a contract employee of CGSB, responsible for writing a manual for the ISO 9000 Quality Systems. Ms. Green and Mr. Anand incorporated All Crane Career for their teaching project, although Mr. Anand said he could not hold shares in the company because he was a federal government employee. It was planned that Mr.

Anand would rewrite the materials and be an instructor for the ISO 9000 Quality Systems course to be offered by All Crane Career, as would Mr. Heslin. [ 39 ] Inspector Reteff became aware that Ms. Green and Mr. Heslin were meeting and planning to create a school for training business owners in the ISO 9000 Quality Systems. Canada is a signatory to an international agreement to use this system. The CGSB was responsible for effecting Canada ’ s commitments under that agreement in terms of offering training to the employees of interested companies. The RCMP determined that Mr.

Heslin did not have the university training claimed on his resume, nor was he an engineer as claimed. [ 40 ] Inspector Reteff swore another affidavit to obtain a third

Part VI wiretap authorization, which was granted by Kent J on May 25, 1994. The objects of the authorization were greatly expanded over the previous orders, including friends of Mr. Heslin, employees of CGSB, Mr. and Ms. Green, and Mr. Anand. [ 41 ] According to Insp. Reteff, the RCMP were of the view that Mr. Heslin was setting up a plan whereby All Crane Career would offer the ISO 9000 Quality Systems course for a tuition of $6000 per student, 25 students per course, yielding a profit of $100,000, from which Mr.

Heslin would benefit, although he went to great lengths to conceal his involvement. [ 42 ] Inspector Reteff prepared the affidavit to obtain the third wiretap authorization in consultation with the prosecutors at Special Prosecutions. The interception was implemented and the RCMP concluded that they had evidence to prove the elements of the offence of fraud. Corporal Diack prepared the draft ITOs for approval by the Crown agent before the warrants for search and seizure were sought. [ 43 ] Inspector Reteff testified as to his perspective on the warrant options.

He described the s 487 warrant as the general workhorse, to be used to make a search and seizure where the subject items are seized as they are needed for evidence. This warrant is used for all manner of investigations from murder weapons to documents. The s 462.37 special search warrant is for items that provide evidence of a crime and which the police ultimately want to have forfeited. He noted that this provision of the Code requires the Crown to sign an undertaking in case of malfeasance. [ 44 ] Inspector Reteff ’ s evidence was that Cpl. Diack executed the search warrants.

He said that a copy of the warrant is provided to the person on site, and the police do what is reasonable to secure the evidence. A detailed examination on site is not possible. A Form 5.2 must be prepared setting out a brief description of what has been seized. The Court has possession of the documents, and the police are custodians. After the seizures, the RCMP officers met with the Greens. [ 45 ] Inspector Reteff said that at both of his meetings with Ms. Green, she denied knowing that Mr. Heslin would be receiving a benefit from the ISO training business.

At the second meeting, she asked for the accounts payable and receivable for All Crane Career, which were provided to her. Corporal Diack, with Insp. Reteff, gave her the caution and advised her she likely would be charged.

Inspector Reteff did not recall hearing from her again or having further dealings with her. [ 46 ] Inspector Reteff explained that the RCMP ’ s Proceeds of Crime Policy describes the organization ’ s approach to the seizure of assets: the police have the option to use either warrant process if they want to seize items for the purpose of forfeiture. [ 47 ] Inspector Reteff could not recall discussions about the impact of seizure of assets on the Greens ’ business.

He acknowledged that the warrant was sweeping, but said that it was standard practice in white collar crime investigations to seize the whole scope of evidence on the theory that casting a wide net would obtain evidence to establish reasonable grounds for belief. Only after the seizure could the police determine if there was evidence that would support charges. He said that his last involvement in this investigation was a note that he wrote in November 1994 indicating that Cpl. Diack should continue with the investigation.

[ 48 ] Inspector Reteff testified that he did not have input into resolution of the charges against Mr. Heslin; that is, Mr. Heslin was convicted of uttering a forged document (his resume) and the fraud charges were withdrawn after thousands of hours were expended by the RCMP to complete a complex and expensive investigation. He agreed that he was disappointed with the result, but remarked, “ ... that ’ s the system. ” [ 49 ] Superintendent Diack has been with the RCMP for 32 years. In 1994, while a Corporal, he was attached to K Division in Edmonton. He was asked by Insp.

Reteff, to whom he reported, to be the primary investigator in this matter. Inspector Reteff reported in turn to Superintendent Duncan. Inspector Reteff looked after the wiretap authorization, while Cpl. Diack looked after the investigation on the ground. Corporal Diack prepared the ITOs for the s 487 warrants, as he had done on about 40 or 50 occasions before that. He had not had experience with the proceeds of crime legislation (s. 462.32 of the Code and s 463 restraint warrants). [ 50 ] On July 15, 1994, Cpl.

Diack swore ITOs to support the application for search warrants for the law office used to incorporate All Crane Career, for the ATB, for All Crane Parts, for Mr. Heslin ’ s residence, and for the offices of the CGSB. Included in the ITOs was information from telephone conversations between Mr. Heslin and Ms. Green. [ 51 ] Corporal Diack prepared a draft ITO and a draft restraint order to freeze bank accounts at the ATB, pursuant to s 462.33 of the Criminal Code .

However, the ITO was not signed or filed and no restraint order was obtained. [ 52 ] He testified that the warrant approval process ordinarily involved the ITOs being reviewed and approved by a supervisor, in this case Insp. Reteff, but when dealing with commercial crime, the RCMP dealt directly with Special Prosecutions for approval of the documents. [ 53 ] Corporal Diack testified that on July 7, 1994, Insp. Reteff returned all corrected search warrants to him.

He had discussions with officers from the Enterprise Crime Unit, and as a result prepared a restraint order under the enterprise crime sections of the Code to restrain the All Crane Career bank account at the ATB. The search warrants and restraint order were completed on July 11, 1994. On July 12 th , Insp. Duncan reviewed the documents and suggested changes. Among those was the inclusion of paragraph 25 in the ITO for the search warrant to obtain evidence from the ATB. Paragraph 25 provided that Mr. Heslin, Ms. Green and Mr.

Anand: ... are in possession of the proceeds of an Enterprise Crime, namely, Defrauding the Government of Canada, contrary to

Section 462.31 of the Criminal Code . The Affiant has made application for a Restraint Order for the ALL CRANE CAREER INSTITUTE INC. bank account at the Alberta Treasury Branch, pursuant to

Section 462.33 of the Criminal Code . ” [Emphasis added] [ 54 ] Later that day, Cpl. Diack and Insp. Reteff attended at Special Prosecutions. The prosecutor dealing with the application later called to advise that the search warrants had been approved and requested that the restraint order and undertaking be prepared, as well as a paragraph requesting a sealing order. [ 55 ] On July 14, the prosecutor called back to say that the senior Crown agent had not approved the restraint order and was leery of doing so unless it was clear the money came directly from an offence.

Corporal Diack said this caution was due to potential cost to the Crown. [ 56 ] On July 15, at 8:50 a.m., Cpl. Diack attended at Caffaro Prov Ct J ’ s office with the prosecutor and left the ITOs and search warrants for his review. They returned at 11:50 a.m.

The ITO for the ATB warrant contained the impugned paragraph 25, although no application had been made for any restraint order, nor was the judge advised that no such application had been made. [ 57 ] Corporal Diack testified that, in hindsight, he regrets that he and the prosecutors did not have paragraph 25 removed from the ITO, apparently included as a result of an oversight. [ 58 ] The ITOs were sworn before the judge and the five search warrants were signed by the judge. The prosecutor and Cpl. Diack

attended at the Clerk ’ s office for the purpose of sealing the five ITOs. Later that day, several officers met to plan the search. [ 59 ] Corporal Diack testified that he had appeared before Caffaro Prov Ct J many times for search warrants and this was the first time he had required several hours to review them. He was referred to his discovery evidence in which he said that it was not the practice of Caffaro Prov Ct J to read through the documents and that instead he generally scanned them.

Corporal Diack resiled from this view on reviewing his notes, observing that this was the first time there were multiple search warrants which would account for the extra time taken to review the material. [ 60 ] The search warrants were executed at the various locations on July 18, 1994. Ms. Green arrived at her office on July 18 th to find, according to her, six officers dressed in black suits with guns. They boxed up the property relating to the school, All Crane Career, as well as to the repair business, All Crane Parts.

They advised her to go to the RCMP Commercial Crimes Division to find out what was happening. The Greens did so, and met with Cpl. Diack for a couple of hours. However, they had no idea when their assets would be returned. [ 61 ] Corporal Diack acknowledged that Ms. Green expressed concern about her records. He told her that he would try and get her computer back to her by the end of the week. However, he did not do so. He did not recall any other calls from her regarding the return of assets.

The Greens did not apply for their return. [ 62 ] The day after the seizure, the officers returned to the Greens ’ business premises. The police said they had listening devices in the offices. Ms. Green explained to Cpl. Christenson that they needed the seized assets to operate their businesses. According to her, he replied that this was an expensive investigation of the highest calibre; that they only used this type of search with a drug laundering operation; and that it was his job to make sure she spent the next ten years in jail.

The Greens asked that everything to be returned, but received only one box back, containing the accounts receivable and payable for the teaching business. [ 63 ] The All Crane Parts business operated out of Edmonton and Grande Prairie. Ms. Green testified that the financial records and inventory records were gone; they had no accounting of what was in their inventory (what was sold and what was in stock); and they could not locate their receivables. Some accounts were paid, some were not.

Although they had received the accounts payable and receivable relative to the teaching business in July 1994, the financial records of the business contained on the hard drive were not returned until November 18, 1996. [ 64 ] Ms. Green said that the accounts at the ATB at the time of the seizure were for the All Crane Parts business as well as for All Crane Career. There was $190,000 in the latter account, representing the money that students had paid. She was able to access that account, and the funds were able to flow in and out of the All Crane Parts account. [ 65 ] According to Ms.

Green, the All Crane Parts business stayed in operation for six to nine months. It was able to generate some fresh receivables and fresh work-in-progress, but the business was struggling. By early spring, the Greens had hired a consultant to try to put the business back together. The bank manager extended their line of credit. She testified that eventually they had to concluded that there was not much left of the business. A large international crane company was coming into the area and they sold the business at an undervalued price.

She said that All Crane Parts went from a two million dollar business to one worth $79,000, although when the seizure occurred, they had a minimal line of credit. Her evidence was that they were forced to sell All Crane Parts. She said they have struggled for 15 years to pay back the debt incurred during this period. Their line of credit now stands at $170,000. [ 66 ] Ms. Green testified that she realized they had been used by Mr. Heslin in terms of the teaching business. She said they were able to keep the overhead crane training business.

They had to replace the computer and hard drive as well as the curriculum for training. Once Mr. Heslin was charged, they wanted nothing further to do with that business, so they restructured a new company to see what they could salvage. [ 67 ] Ms. Green was asked in cross-examination about her conversations with Mr. Heslin that were intercepted and recorded.

In one such conversation, she said she was “ so god damn broke I couldn ’ t fart in a church and I ’ m sitting there what, give me a break, this is not all coming my direction, this easy. ” In response to a question from counsel for the RCMP about whether she thought she should stop at that point, she responded that Mr. Heslin seemed straight forward. She also was referred to a conversation in which she told Mr. Heslin that an employee of Alberta Labour was offering to send inspections her way in return for “ a position on her staff. ” Ms.

Green explained that she does work for Occupational Health and Safety then, and still does.

[ 68 ] Corporal Diack testified that he reviewed the seized documents for any evidentiary value and considered them in association with the evidence from the intercepted phone calls. He said his skills with computers were lacking and it took a long time to figure out how to “ pull off ” the documents. He testified that this was one of the first investigations where computers were seized.

He said that he had obtained many warrants over the years, but he had never had a seizure of this magnitude. [ 69 ] The parties agreed that from time to time renewal orders continuing the detention of the seized items and information, including computer data, were issued by the Provincial Court of Alberta. [ 70 ] Corporal Diack indicated that he put together a massive court brief in April or May of 1995 concerning this case. Charges were considered against Mr. Heslin, Ms. Green and Mr. Anand. The prosecutors suggested to him that Ms. Green and Mr. Anand were pawns in Mr. Heslin ’ s scheme.

Special Prosecutions took a month to review the file. By then, it was October 1995. [ 71 ] On October 12, 1995, charges were laid against Mr. Heslin. Corporal Diack was transferred to Sherwood Park in January 1996 and Cpl. Christianson took over the file. [ 72 ] Corporal Diack confirmed that the last of the items which had been seized from the Greens were not returned to them until November 18, 1996. He acknowledged that he did not turn his mind to the impact of the seizure of the assets on their businesses. IV. The Law and RCMP Policy A.

Criminal Code Provisions [ 73 ] The relevant provisions of the Criminal Code relating to search and seizure, ss 462 and 487, that were in effect on July 18, 1994, and other relevant provisions of the Code , are attached as Appendix A. B. RCMP Policy [ 74 ] The RCMP Proceeds of Crime Policy states, in part: I. PRE-SEIZURE PLANNING 1. Movable assets may be seized using a special search warrant under Sec. 462.32, CC or a traditional search warrant under Sec. 487 or 487.1, CC. 2. Immovable assets, e.g. bank accounts, real estate, can be restrained using a restraint order under Sec. 462.33, CC. 3.

Before a special search warrant or a restraint order is issued, the Attorney General must provide an undertaking to pay for any costs or consequential damages associated with the issuance and execution of the order. See Sec. 462.32(6) or 462.33(7), CC. 4. Any questions or issues should be discussed with the appropriate prosecutor and Seized Property Management Directorate

(SPMD), PWGSC. 5. Before seizing or restraining assets, a member should consult his/her prosecutor and, in federal POC prosecutions involving narcotics or customs and excise, consult the SPMD, PWGSC. See App. IV-12-1 . C. Case Law 1. Tort of negligent investigation [ 75 ] In a decision issued in 2007, the Supreme Court of Canada clarified that the tort of negligent investigation exists in Canada under the law of negligence: Hill v Hamilton Wentworth Regional Police Services Board , 2007 SCC 41 , [2007] 3 SCR 129 . The appellant in Hill , an aboriginal male, was a suspect in a series of ten robberies.

He was investigated by the police, arrested, tried, wrongfully convicted, spent more than 20 months in jail, and ultimately was acquitted. He brought a civil action against the police on the basis of negligence, malicious prosecution, and breach of his Charter rights. [ 76 ] The majority in the Supreme Court of Canada concluded that the police owe a duty of care to suspects being investigated, and their conduct during the course of an investigation should be measured against the standard of how a reasonable officer would have acted in like circumstances.

Although the police had made certain mistakes in Hill , the court found they had not acted unreasonably in all of the circumstances. [ 77 ] McLachlin CJ, for the majority, commented at para 3 that: “ [t]he law of negligence does not demand a perfect investigation. It requires only that police conducting an investigation act reasonably. When police fail to meet the standard of reasonableness, they may be accountable through negligence law for harm resulting to a suspect. ” 2.

Duty of care [ 78 ] The court in Hill at para 20 applied the Anns test for duty of care, which focuses on two questions: (1) does the relationship between the plaintiff and the defendant disclose sufficient foreseeability and proximity to establish a prima facie duty of care; and (2) are there any residual policy considerations which ought to negate or limit the duty of care: Anns v Merton London Borough Council , [1978] AC 728 (HL) , as confirmed by the SCC in Cooper v Hobart , 2001 SCC 79 at paras 25 and 29-39 , [2001] 3 SCR 537 ; Edwards v Law Society of Upper Canada , 2001 SCC 80 at para 9 , [2001] 3 SCR 562 ; Odhavji Estate v Woodhouse , 2003 SCC 69 at paras 47-50 , [2003] 3 SCR 263 ;and Childs v Desormeaux , 2006 SCC 18 at para 47 , [2006] 1 SCR 643 ). [ 79 ] The majority had no difficulty in finding sufficient foreseeability; a negligent police investigation of a suspect clearly may cause harm to the suspect.

In assessing proximity, the majority emphasized the judgment was concerned with the very narrow relationship between a police officer and a particularized suspect he or she is investigating. That the police had identified the appellant as a particularized suspect and had begun to investigate him created a close and direct relationship between the police and the appellant.

In addition, both the appellant ’ s critical personal interest in the conduct of the investigation and the public interest in responding to failures of the justice system supported a finding of a proximate relationship giving rise to a duty of care. The majority also found that no other tort provided adequate remedy for negligent police investigations. Finally, the finding of a duty of care was consistent with the Charter values of liberty and fair process. [ 80 ] The majority of the court did not find sufficient policy considerations to negate the finding of a duty of care.

On the contrary, it held that policy considerations supported such a finding. Neither the quasi-judicial nature of police duties nor the discretion inherent in police work provided convincing reasons to negate the duty of care. The majority held these factors are to be taken into account in formulating the standard of care, not in determining whether a duty of care arises. They also found no evidence that recognizing a duty of care would have a chilling effect on police work, noting that police officers often are indemnified from personal civil liability.

A flood of litigation would not be a potential problem, as the class of potential plaintiffs is limited to particularized suspects who bear the burden to establish compensable injury. Finally, this burden of proof also effectively negated any concerns that guilty persons who are acquitted might unjustly recover in tort.

3. Standard of care [ 81 ] The majority in Hill held that the appropriate standard of care was the standard of a reasonable police officer in all the circumstances. This standard is flexible, covers all aspects of investigatory police work, and takes into account any special skills and experience the police may have.

The particular conduct the standard demands is informed by the stage of the investigation and applicable legal considerations, such as the requirement of reasonable and probable grounds to lay charges. [ 82 ] The reasonable officer standard incorporates criminal standards, denies liability for minor errors and rejects liability by hindsight. The standard is not breached because the police officer exercises his/her discretion in a manner other than that deemed optimal by the reviewing court. So long as discretion is exercised within the range of reasonable choices, the standard is not breached.

The police officer ’ s conduct must be judged in light of all the circumstances prevailing at the time the decision was made - including urgency and deficiencies of information. V. Analysis A. Was the RCMP Negligent in Pursuing or Obtaining the Search Warrants? [ 83 ] In the present case, the relationship between the RCMP and the Greens, as suspects in a criminal investigation, was one of sufficient proximity to give rise to a duty of care on the part of the RCMP. 1.

Did the RCMP have reasonable and probable grounds to obtain the search warrants with respect to the Greens ’ companies? [ 84 ] The Plaintiffs dispute that the RCMP had reasonable and probable grounds to obtain the search warrants in respect of their companies.

The Defendants note that this issue was not raised in the Greens ’ pleadings, but as the pleadings assert that the warrants were negligently obtained, it is open to the court to review the sufficiency of the material relied on to obtain the warrants. [ 85 ] In R v Campbell , 2011 SCC 32 at para 14 , the Supreme Court of Canada held that to comply with s 8 of the Charter , prior to conducting a search the police must provide "reasonable and probable grounds, established upon oath, to believe that an offence has been committed and that there is evidence to be found at the place of the search." The question to be addressed by the reviewing court is not whether the court itself would have issued the warrant, but whether there was sufficient credible and reliable evidence to permit an issuing justice to authorize the warrant.

In conducting this analysis, the reviewing court must exclude erroneous information from the ITO and may have reference to material properly received as "amplification" evidence. The accused has the burden to demonstrate that the ITO is insufficient. [ 86 ] The Greens argue with respect to the ITO in support of the search warrant for All Crane Parts that the only paragraphs that linked Ms. Green to All Crane Parts alleged that she had a position with the company as “ Quality Assurance Manager ” and “ wife of the owner; ” and a portion of a conversation in which it was said that Ms.

Green should issue a cheque to Mr. Heslin ’ s wife (through the company) rather than to him. They contend there were no grounds set out in the ITO for suspicion concerning that cheque transaction. [ 87 ] The ITOs sworn by Cpl. Diack provided his grounds for belief that the items sought would afford evidence of the commission of the crime of conspiracy to defraud the Government of Canada. The ITOs asserted that the following information was gleaned from the investigation: (

a) Mr. Heslin is Regional Director of the Edmonton Office of CGSB, which falls under Public Works and Government Services, a Department of the Government of Canada. It is part of his responsibility to instruct private companies and/or the public concerning Quality Assurances and the ISO 9000 Quality Systems.

(

b) Mr. Anand is a private management consultant who was hired temporarily by Mr. Heslin and the CGSB to do ISO 9000 document reviews during the months of April and May, 1994. (

c) Mr. Heslin and Mr. Anand were officials of the Government of Canada. (

d) Ms. Green was the Quality Assurance Manager and the wife of the owner of All Crane Parts. (

e) Until about April 6, 1994, the CGSB had agreed to assist another person, Ms. Warner and her company to set up work shops and train for ISO 9000 Quality Systems, but Mr. Heslin terminated that arrangement in April. (

f) Mr. Heslin entered into a secret agreement with Ms. Green and Mr. Anand to form All Crane Career, initially with Mr. Heslin ’ s wife as a shareholder, using her name, Donna Lerke. (

g) On May 16, 1994, Heslin, Green and Anand commenced a course “ ISO - 9000 Quality Systems

Interpretations and Documents ” through All Crane Career; they were actively involved in preparation and running of the course, they had discussed four more courses with 20 participants, charging $4000 to $6000 each, and the three anticipated sharing a profit of $250,000 from these courses. (

h) Mr. Heslin was the directing mind, it was his intention to derive personal and financial benefit from the relationship with the company, without the consent of the CGSB or Government of Canada. (

i) Mr. Heslin actively solicited potential clients to participate in the course during business hours while working at CGSB. (

j) Mr. Heslin took steps to hide his involvement, including by ensuring no funds were received in his name. [ 88 ] Corporal Diack included excerpts from wiretapped conversations in the ITOs, showing that: (

i) Mr. Heslin and Ms. Green discussed a potential leak of information concerning their agreement and the need to ensure that it remain secret. (ii) In conversations with various individuals, including Ms. Green, Mr. Heslin repeatedly emphasized that he must not be identified as the owner of All Crane Career so as to avoid a potential conflict of interest. (iii) Mr. Heslin said he “ owned ” Ms. Green and All Crane Career. (iv) A newspaper advertisement promoting ISO courses at All Crane Career listed phone numbers registered to All Crane Parts. (

v) Ms. Green agreed to pay Mr. Heslin by directing money through All Crane Parts to his wife (Ms. Lerke). (vi) Ms. Green indicated that she did not do anything unless Mr. Heslin told her to, and that she only took directions from him.

(vii) In a conversation with her mother, Ms. Green acknowledged that Mr. Heslin “ cannot do this now ” because of his position with the Federal Government. (viii) Ms. Green explicitly acknowledged that she knew that Mr. Heslin ’ s involvement with All Crane Career, while being employed by the Federal Government, was illegal. (ix) A fax prepared by Mr. Heslin for the Director of CGSB Ottawa was intercepted, and it contained proposed terms of the involvement of CGSB in the upcoming All Crane Career course. (

x) Ms. Green indicated that all accounting information pertaining to All Crane Career was stored on the Bedford Accounting System on a “ Bedford disk, ” and was managed by “ Sandy, ” a secretary with All Crane Parts. (xi) On two separate occasions, Cpl. Diack observed Mr. Heslin, Mr. Anand, and Ms. Green exiting the premises of All Crane Parts within minutes of each other. (xii) While entering the premises of All Crane Parts to install a listening device, Cpl.

Diack observed documents in the name of All Crane Career sitting in plain sight on a table in the rear service bay area. (xiii) Corporal Diack attended at the appointed time and place and observed the ISO 9000 course in progress. [ 89 ] The facts asserted in the ITOs tended to show that Ms. Green was working at All Crane Parts, that she made an agreement with Mr. Heslin and Mr. Anand to form All Crane Career, that the company would offer ISO 9000 Quality Systems training courses, that Mr. Heslin was an employee of the federal government at the CGSB (responsible for ISO 9000 Quality Systems training), that Mr.

Heslin would contract with All Crane Career, that he would secretly benefit from the delivery of these courses, that Ms. Green viewed Mr. Heslin ’ s involvement with All Crane Career while employed with the federal government to be “ illegal, ” and that Ms. Green agreed to pay Mr. Heslin by directing money to his wife through All Crane Parts. Under this business plan, she and her company would benefit from the receipt of the profits realized. [ 90 ] On these facts, the RCMP had reasonable and probable grounds to believe that Ms. Green had agreed to give a government official, Mr.

Heslin, financial benefit for his assistance in offering and promoting the ISO 9000 Quality Systems training course; and that he, being a government official, had agreed to accept such benefit. [ 91 ] I conclude that the police had reasonable and probable grounds, established on oath, to believe that an offence had been committed and that there was evidence to be found at the place of the search. There was sufficient credible and reliable evidence in the ITOs to permit the issuing justice to authorize the warrants. 2.

Was it negligent to include in the ITO for the s 487 warrant a paragraph that reasonably might lead the reviewing justice to wrongly conclude that a s 462.33 warrant also was being obtained? (

a) Facts [ 92 ] Paragraph 25 in the ITO for the search warrant to obtain records from the ATB stated the following:

(25) That the information supplied in this Information to Obtain a Search Warrant shows that Brian Stephan HESLIN, Judith Margaret GREEN (nee: MELLOTT), and Ashok Kumar ANAND are in possession of the proceeds of an Enterprise Crime, namely, Defrauding the Government of Canada, contrary to

Section 462.31 of the Criminal Code . The Affiant has made application for a Restraint Order for the ALL CRANE CAREER INSTITUTE INC. bank account at the Alberta Treasury Branch, pursuant to

Section 462.33 of the Criminal Code . [Emphasis added.]

[ 93 ] As noted above, Cpl. Diack prepared an affidavit to support an application for a restraint order, or order for forfeiture, under s 462.37(1) or s 462.38(2) of the Criminal Code in respect of money in possession of the ATB on deposit to All Crane Career, on the basis that this money was the proceeds of an enterprise crime offence; namely, defrauding the Government of Canada contrary to s 462.31 of the Code. He also prepared a draft restraint order bearing the date July 15, 1994.

The affidavit in support of the application for a restraint order never was sworn, no application ever was made and no order ever was granted. Nothing was restrained. Instead, a warrant under s 487 was sought and obtained to seize the records at the ATB. Nevertheless, paragraph 25 remained in the ITO used to obtain the warrants under s 487 to seize documents at the ATB. (

b) Arguments of the parties [ 94 ] The Plaintiffs contend that paragraph 25 would have suggested to the judge that a restraint order had been obtained pursuant to s 462.33 of the Code , with the attendant protections described by Salhany J in R v Stanley , [1996] OJ No 2774 at para 5 (Ct Just (Gen Div) (QL), including the requirement of an undertaking as to damages and costs. The Plaintiffs contend that inclusion of this paragraph in the ITO was negligent as the authorizing judge would have assumed there were protections for the Greens ’ property when there were not.

In addition, they say that inclusion of paragraph 25 in the ITO resulted in the associated search warrants being fatally flawed. [ 95 ] The Plaintiffs refer to Cpl. Diack ’ s evidence that he took steps to revise the ITO, met with the Crown, was advised that the Attorney General would not provide an undertaking as to damages, but he acknowledged that when he appeared before the judge on two occasions for the warrant, he failed to advise him of this sequence of events.

They maintain that inclusion of paragraph 25, without additional explanation, would have misled the judge into believing that the restraint order and the required undertaking as to damages and costs had been obtained. They contend the failure to correct or explain this assertion is conduct that falls below the standard of care required. [ 96 ] The Plaintiffs also refer to the evidence of Cpl. Christianson to the effect that he never allowed a mistake to enter a sworn affidavit; rather, he always reviewed affidavits prior to swearing them and made the necessary changes. They argue that Cpl. Christianson and Insp.

Reteff exemplify the standard of care: that if in error they act promptly and efficiently; that a careful and fair approach is called for; and that a standard of care commensurate with highly trained professionals is required. [ 97 ] Further, the Plaintiffs note Cpl. Diack told the prosecutor and Insp. Reteff that the Crown was not prepared to approve a restraint order, but the authorizing judge was not advised of that. [ 98 ] The Defendants argue that police officers may make minor errors, even errors in judgment, but such errors do not amount to negligence.

They submit that the RCMP did not breach the standard of care in this case by including paragraph 25 in the ITO and that there is no causal nexus between the mistakenly included paragraph 25 and what happened to the Greens ’ business. The question here is whether Cafarro Prov Ct J would have taken comfort in the knowledge derived from paragraph 25 because he would assume that a restraint order had been granted.

The Defendants argue that even assuming the judge was under the impression that a restraint order had been obtained with respect to the money at the ATB, that does not affect the legitimacy of the s 487 warrant vis a vis the documentary evidence. It points out that the undertaking that was not obtained would only pertain to the one account at the ATB and the restraint order. (

c) Analysis [ 99 ] As previously stated, it is clear the RCMP owed the Greens, in particular Ms. Green, a duty of care as the subjects of a criminal investigation. [ 100 ] Paragraph 25 stated that Cpl. Diack had made application for a s 462.33 restraint order. It did not state that one had been granted, but it is fair to conclude that the judge might have assumed it had been. The evidence does not establish that inclusion of paragraph 25 was anything more than an oversight. Nevertheless, it was in breach of the standard of care expected of a police affiant in such circumstances.

[ 101 ] In order to determine whether there is a causal link to the damages claimed by the Plaintiffs, it is necessary to assess whether the warrant otherwise would have issued. Paragraph 25 must be excised from the ITO for purposes of this analysis. It is not the role of this Court to determine if it would have issued the warrant. What must be assessed is whether there was sufficient credible and reliable evidence set out in the ITO as excised to have permitted the issuing judge to authorize the search warrant.

In my view, had paragraph 25 not been included in the ITO, the warrant still would have issued since there were reasonable and probable grounds to believe an offence had been committed by the Greens and Mr. Heslin, and that money would be paid through the All Crane Parts account at the ATB to the benefit of Mr. Heslin. [ 102 ] I conclude that inclusion of paragraph 25 in the ITO did not cause any damage to the Plaintiffs as the search warrants would have been issued in any event. 3. Was it negligent for the RCMP to proceed to obtain warrants under s 487 of the Code rather than s 462.33? (

a) Arguments of the parties [ 103 ] The Plaintiffs submit that the RCMP ’ s decision to obtain warrants under s 487 of the Code rather than s 462.33 was negligent. Their position, as explained by their counsel, is that: Although the allegation of defrauding the government contrary to s. 121 of the Criminal Code falls under the definition of an “ Enterprise Crime offence ” under s. 462.3 of the Code , the Crown ’ s position appears to be that s. 462.33 of the Code only applies to money or something akin to a bank account, both of which can be restrained and forfeited.

The section, however, is not so limited as it refers to “ any property in respect of which an order for forfeiture can be made under s. 462.37(1) [forfeiture on conviction] or 462.38(2) [procedure on application for forfeiture].... ” Within the

section and those following there are significant safeguards including the requirement for a report within seven days of the seizure, s. 462.32(4), a requirement in some cases for pre-seizure notice, s. 462.32(5) and the previously mentioned undertaking in damages, s. 462.32(6), a significant protection not available under s. 490 of the Code . The seizure can be reviewed at any time, s. 462.34(1), and relief for the payment of legal expenses may be granted, s. 462.34(5). Additionally the order automatically expires after six months unless the Crown takes steps, s. 462.35.

Section 462.44 allows an appeal from a forfeiture in the same manner as from a conviction, judgement or verdict of acquittal.

Section 462.46 refers to documents returned or forfeited allowing them to be copied and retained by the Attorney General and to be used in evidence. It is noteworthy that a similar power is available under s. 490(13) and (14). In relation to the documents seized from the ACPS there would have been no prejudice to the Crown to have copied the documents and returned the originals to the Plaintiffs in a timely fashion. Judge Allen touched on the issue of the appropriate form of warrant in R. v.

Newport Financial Pacific Group S.A. 2003 ABPC 80 but determined that he did not have the jurisdiction to consider the regularity of the order in issue. [ 104 ] The Defendants contend the RCMP sought and obtained search warrants under s 487 of the Code because the RCMP wanted to gather evidence of the commission of a crime rather than to seize the actual proceeds of crime. It submits that s 462.32 warrants are used for seizure of the actual proceeds of crime. The items seized were for evidentiary purposes and not for the ultimate purpose of forfeiture.

The Defendants argue that the items seized were intended to afford evidence of the commission of offences contrary to ss 121(1)(a)(

i) and (ii) and s 465(1)(

c) of the Code . The ITO for the search warrant at the ATB alleged the seized items would afford evidence of the commission of an enterprise crime offence contrary to s 562.31, namely laundering proceeds of crime. The Defendants say that is clear from the ITOs that the RCMP obtained search warrants to search for and seize evidence. No proceeds of crime; that is cash, jewellery or vehicles, were searched for or seized. The computers were seized for the data contained within them, although they may have been purchased with the proceeds of crime. [ 105 ] The Defendants rely on Cpl.

Diack ’ s testimony that the evidence before him at the time justified the ITOs he swore in support of a s 487 warrant rather than a s 462.32 warrant. They say that Cpl. Diack ’ s evidence supports the view that the standard practice of police officers in like circumstances would have been to execute search warrants pursuant to s 487 rather than s 462.32. [ 106 ] The Defendants assert that s 487 is a comprehensive provision, applying to the investigation of all offences under the Code, including those in

Part XII.2. It argues that s 462.32 came into force in 1985 and, until then, the Crown could only seize proceeds of crime if the proceeds had some evidentiary value. The

section was intended to enlarge the Crown ’ s powers to search for and seize property which constituted proceeds of crime to be forfeited to the Crown. It asserts that, in this case, the seized property was of an evidentiary nature rather than having been seized for forfeiture because it was proceeds of crime.

[107] The Defendants rely on the reasons of LeBel J in Quebec (Attorney General) v Laroche, 2002 SCC 72 , [2002] 3SCR 708 to argue that ss 462.32 and 462.33 are two mechanisms under

Part XII.2 that prevent wasting of illegally obtained property andallow for forfeiture when a finding of guilt is made. Special search warrants deal with moveable, tangible property such as cash, vehiclesand jewellery.

Restraint orders target real estate and intangible property such as bank accounts. [108] The Defendants contend that LeBel J clarified that the two interim measures apply only to “proceeds of crime,” whichincludes any property, benefit or advantage that may relate to the commission of an enterprise crime offence or a designated drug offence.LeBel J further explained that s 562.37 requires that the property be established as proceeds of the actual offence for which the accusedwas convicted.

Therefore, while the property may be seized prior to trial, forfeiture does not actually occur until an accused has beenconvicted. [109] The Defendants also rely on R v Li (1997), (BC SC), 115 CCC (3d) 336 at para 14 (BCSC), in whichRomilly J summarized the difference between the two warrant provisions as follows: Under s. 487(1) of the Criminal Code, a justice could issue a search warrant where there are reasonable grounds to believe that evidencewith respect to the commission of an offence will be located.

Section 462.32 allows for the issuing of a search warrant where there arereasonable grounds to believe that there is property subject to forfeiture because it is proceeds of crime... [110] The Defendants maintain there was no misuse of the s 487 warrant, and the search warrants were lawfully issued and executedpursuant to s 487 for a proper purpose. There was no legal basis to issue search warrants pursuant to s 462.32 to obtain property thatwould afford evidence of crimes but that was not thought to be proceeds of crime.

The Plaintiffs were not improperly deprived of theAttorney General’s undertaking in respect of damages or costs as there is no undertaking required for s 487 warrants. [111] Further, the Defendants submit that if the Plaintiffs sustained compensable damage, it is not causally related to any breach ofthe standard of care. (

b) Analysis [112] In Stanley, the police obtained a search warrant pursuant to s 487(1) of the Code to search the premises of Davis Motor Car, adealership owned by Stanley. The warrant was issued based on allegations that he had conspired with unknown persons to launder drugmoney through purchase and re-sale of motor vehicles. The Crown searched the premises and seized 20 motor vehicles. [113] Stanley sought a declaration that issuance of the search warrant was without lawful authority and asked that the warrant bequashed and the motor vehicles returned.

Stanley argued that the police had misused the search and seizure provisions of the CriminalCode by obtaining a s 487(1) warrant, as they should have proceeded under s 462.33 instead. [114] The court held that it would have been an abuse to use s 487(1) only if the property seized was nothing more than proceeds ofcrime and had no evidentiary value.

The onus was on the Crown to demonstrate the evidentiary link between the vehicles seized and thecharges against the accused. [115] The court observed that a warrant issued under s 487(1) could only be used to search for and seize evidence of thecommission of an offence, while proceeds of crime cannot be seized under that provision unless those proceeds also have someevidentiary value. [116] The court in Stanley at para 5 discussed the difference in purpose and effect of ss 487(1) and 462.3, along with the numeroussafeguards the latter

section provides to the individuals whose property has been seized:

Clearly, a warrant issued under section 487(1) could and still can only be used to search for and seize evidence of the commission of an offence. The proceeds of a crime can not be seized under a section 487(1) search warrant unless those proceeds also have some evidentiary value.

Section 462.32 was enacted by Parliament in 1985 to remedy this defect in the law. At the same time,

section 462.32 has certain safeguard provisions for... which section 487(1) does not. [ 117 ] Having found that the material filed by the parties did not provide the court with any information to determine whether the seized vehicles had any evidentiary value, the court adjourned the proceedings to enable the Crown to provide evidence in support of an evidentiary link. [ 118 ] In the present case, the property seized included computers for the purpose of retrieving data pertaining to corporate transactions, as well as accounting records, all intended to provide evidence of the alleged fraudulent conduct.

The property seized was not alleged to be proceeds of crime and/or was not of a tangible nature intended for forfeiture.

The Plaintiffs have not demonstrated that the RCMP exercised its discretion unreasonably or improperly in obtaining a warrant under s 487 of the Code . [ 119 ] While the decision to proceed under s 487 deprived the Plaintiffs of protections afforded property owners under s 462.32, such as the undertaking with respect to payment of damages or costs, or an order for return of part of the property to enable the applicant to meet reasonable living expenses or business or legal expenses, the procedure chosen was the appropriate one, consistent with the legitimate goal of proving that the Plaintiffs were involved in a scheme with a government employee to obtain an unlawful benefit.

It was also consistent with the RCMP Proceeds of Crime Policy, which has not been demonstrated to have been unreasonable. [ 120 ] The Plaintiffs have not proven that the Defendants were negligent in pursuing or obtaining the s 487 search warrants. B. Was the Investigation After the Warrants Were Executed Negligent, in Particular the Failure to Return the Entirety of the Seized Assets until 28 Months After They Were Seized? 1. Facts [ 121 ] The following facts are relevant to this issue: (

a) On July 18, 1994, Cpl. Diack and other members of the RCMP executed the search warrant against All Crane Parts and seized numerous items relating to the All Crane Parts business and the All Crane Career training business. (

b) On July 27, 1994, Ms. Green requested and obtained the return of copies of accounts receivable and payable for All Crane Career. (

c) On October 7, 1994, a Report to Justice was filed with the Provincial Court of Alberta pursuant to s 490 of the Criminal Code for all exhibits seized. (

d) In October 1994, Cpl. Diack swore an affidavit in support of an application for an order authorizing further detention of the exhibits to July 18, 1995. He attested that considerable action had been undertaken on the investigation, but considerably more was required; that the majority of seized items were computer software, hard drives, and disks; and that Edmonton RCMP Commercial Crimes

Section had only one investigator trained to recover stored and hidden information, but he had been committed to another investigation and was “ unable to examine the exhibits seized for this file. ” He deposed that to do so would take that officer up to three months. Further witnesses were to be interviewed. The officer in charge of Commercial Crimes was transferred and Insp. Reteff assumed command of Commercial Crimes, leaving Cpl. Diack as the only full-time investigator on the file. (

e) On October 18, 1994, Chisholm Prov Ct J ordered a further detention of items seized from all sources (CGSB; Heslin residence; All Crane Parts; the ATB; the law firm; and the Anand residence) until July 18, 1995.

(

f) In an affidavit sworn July 6, 1995, Cpl. Diack deposed that he had conducted a “ lengthy and complex ” investigation into the affairs of Mr. Heslin, Ms. Green and Mr. Anand; that on July 5, 1995, the Crown agent in Special Prosecutions had advised him that “ ... his review of the court briefs, and opinion on appropriate charges, will not be complete until the end of August of 1995; ” and requested that the period of detention be extended a further three months to October 18, 1995. (

g) On July 17, 1995, Cawsey J concluded that a further detention was warranted until October 18, 1995. (

h) On an Information sworn October 12, 1995, Mr. Heslin was charged with two counts of fraud and one count of uttering a forged document. On August 19, 1996, he entered a plea of guilty to the charge of uttering a forged document, his resume. (

i) From time to time, various seized items were returned to the Greens, but the financial records on the computer hard drive were not returned to them until the completion of the RCMP investigation on November 18, 1996, some 28 months after the seizure. (

j) The parties have agreed that: “ ... [from] time to time renewal orders continuing the detention of items and information, including computer data, were issued by the Provincial Court of Alberta. ” 2. Arguments of the parties [ 122 ] The Plaintiffs argue that the failure by the RCMP to return the seized assets in their entirety for 28 months amounts to negligence. They argue that the RCMP could have reproduced the floppy disks and photocopied the other records, but this was not done. [ 123 ] The Defendants argue that the chronology of events does not show negligence. They note that on July 27, 1994, Ms.

Green requested and obtained copies of accounts receivable and payable for All Crane Career and that other items were returned from time to time. They also point out that the Greens received notice of each motion for an extension of the seizure. They emphasize that there is no evidence of any other requests for return of information having been made. They argue that if the Greens required the balance of the seized items, they should have responded to the notices or brought an application for return of the documents.

The Defendants contend that the property was seized and held pursuant to lawful warrants and the seizures continued pursuant to lawful extension orders on notice to the Greens. [ 124 ] The Plaintiffs note that the return of documents was only for the accounts receivable and payable for All Crane Career, not for All Crane Parts. They emphasize that Ms. Green requested the return of all items at that time, but did not receive the financial records for the business until late 1996. 3. Analysis [ 125 ] The RCMP owed the Greens, in particular Ms. Green, a duty of care as the subjects of a criminal investigation.

According to Hill , the appropriate standard of care is the standard of a reasonable police officer in all the circumstances. The court in Hill emphasized that the conduct of investigating officers must be considered in light of the state of knowledge and practices prevailing at the time of the impugned conduct. Although the publication of the appellant ’ s photograph and the police approach to conducting witness interviews in that case were held not to be not good practices, there was no evidence that a reasonable officer at the time would not have followed similar practices in similar circumstances.

Moreover, awareness of the danger of wrongful convictions was less acute at that time. As a result, in Hill , the officers ’ exercise of discretion did not breach the standard of care of a reasonable police officer in 1995. [ 126 ] Since the standard of care of a reasonable police officer in all the circumstances has been found to cover all aspects of investigatory police work, it applies to the entire course of the investigation. The factual context here is quite straightforward. The RCMP believed that Ms. Green and Mr.

Heslin were involved in a fraudulent scheme whereby she would obtain government contracts to provide training that Mr. Heslin was responsible to facilitate by virtue of his position with the Government of Canada. Ms. Green ’ s

company would benefit and profit from the arrangement. Mr. Heslin would receive a secret pay off by means of his wife receiving money from Ms. Green ’ s company. The corporate and business records of the companies owned and operated by the Greens were seized by the RCMP in one fell swoop. A small business for crane repair and a small business to offer ISO 9000 Quality Systems training: these were not particularly sophisticated or complex operations. (

a) Were the applications for extension of the detention orders brought in time? [ 127 ] Section 490(3) of the Criminal Code , as it was in 1994, stated that more than one order for further detention of seized property could be made but the cumulative period of detention was not to exceed one year from the day of the seizure unless , before the expiration of that year, a judge of a superior court of criminal jurisdiction was satisfied that the further detention of the thing seized was warranted for a specified period, or proceedings were instituted in which the thing detained might be required. [ 128 ] R v Newport Financial Pacific Group S.A. , 2003 ABPC 80 , 335 AR 283 does not assist the Defendants since that case was decided in 2003, after amendments to the Code broadened the court ’ s discretion to extend the detention period: s 490 of the Criminal Law Amendment Act , SC 1994, c 44.

The amendments came into force on February 15, 1995, several months after the RCMP executed the search warrants against the Greens on July 18, 1994. [ 129 ] On October 18, 1994, Chisholm Prov Ct J ordered the further detention of items seized until July 18, 1995. However, it was not until July 17, 1995 that Cawsey J., a superior court judge, ordered further detention of the property.

I raised the issue with the parties of whether this extension order complied with the timelines in s 490(3), as it was then. [ 130 ] Section 490 (3) provided: 490(3) More than one order for further detention may be made under paragraph (2)(

a) but the cumulative period of detention shall not exceed one year from the day of the seizure unless, before the expiration of that year , (

a) a judge of a superior court of criminal jurisdiction or a judge as defined in

section 552, on the making of a

summary application to him after three clear days notice thereof to the person from whom the thing detained was seized, is satisfied, having regard to the complex nature of the investigation, that the further detention of the thing seized is warranted for a specified period and subject to such other conditions as the judge considers just, and he so orders; or (

b) proceedings are instituted in which the thing detained may be required. [Emphasis added.] [ 131 ]

Interpretation of the Criminal Code is governed by the Federal

Interpretation Act , RSC 1985, c I-21. The

Interpretation Act provides special rules for interpreting the meaning of “ year. ” Section 37(1) defines a year as “ any period of twelve consecutive months . ” A year in the Criminal Code , therefore, is not 365 days, but rather is 12 months. This difference is critical because the

Interpretation Act provides special rules for calculating a period of months after a specified day.

Section 28 provides that: 28. Where there is a reference to a period of time consisting of a number of months after or before a specified day , the period is calculated by (

a) counting forward or backward from the specified day the number of months, without including the month in which that day falls; (

b) excluding the specified day; and (

c) including in the last month counted under paragraph (

a) the day that has the same calendar number as the specified day or, if that month has no day with that number, the last day of that month. [Emphasis added.]

[ 132 ]

Section 28 applies to the

interpretation of s 490(3), since s 490(3) limits the detention period to “ one year from the day of the seizure ” (emphasis added). Although paragraphs (

b) and (

c) may appear to create ambiguity at first blush, the meaning of this language has been resolved beyond doubt by the courts.

The “ period of time ” in s 28 begins on the day that follows the “ specified day ” and includes the whole of the day referred to in paragraph (c): Society for the Prevention of Cruelty to Animals (Newfoundland and Labrador) v Harding , 2002 NFCA 14 at paras 9-11 , 210 Nfld & PEIR 64 ; Conway v Nova Scotia (Human Rights Commission) , 2008 NSSC 5 at paras 11-15 , 283 NSR (2d) 1 ; Melford Concerned Citizens Society v Nova Scotia (Minister of the Environment) (1999), 181 NSR (2d) 52 at paras 25-26, 560 APR 52 (SC) . [ 133 ] In this case, the specified date was July 18, 1994, the date of the seizure.

The one-year period began the following day, on July 19, 1994. Counting 12 months forward without including July 1994 means July 1995. The one-year period, therefore, ended at the end of the day on July 18, 1995, which has the same calendar number as the specified date. The Crown obtained the Cawsey J order on July 17, 1995. [ 134 ] Accordingly, the Crown obtained an order authorizing further detention of the Greens ’ property within the deadline provided by s 490(3). The extension granted was until October 18, 1995. Within the period of extension, on October 12, 1995, proceedings were commenced against Mr.

Heslin, and the seized items were further detained. The parties have agreed that: “ ... [from] time to time renewal orders continuing the detention of items and information, including computer data, were issued by the Provincial Court of Alberta. ” No other issue has been raised with respect to the renewal orders under which the assets were detained until November 18, 1996. (

b) Where the detention has been validly extended , can delay in returning the seized items nevertheless amount to negligent investigation? [ 135 ] The investigation in this case languished. The end results of the investigation were largely disproportionate to the measures undertaken by the RCMP in seizing all the assets of the Greens ’ crane repair business and fledgling ISO 9000 Quality Systems training business. This is shown by the fact that Mr. Heslin was only convicted of having issued a fraudulent resume to obtain his government job, a matter unrelated to the Greens ’ businesses, and by the fact that Ms.

Green was not charged at all. The position taken by the Crown at this trial was that Ms. Green was the innocent pawn of a fraud artist, Mr. Heslin. In my view, based on the material before the Court, it should not have taken the RCMP, acting reasonably, 28 months to have arrived at that conclusion. [ 136 ] The bulk of the Greens ’ property was seized and detained from July 18, 1994 to November 18, 1996, pursuant to valid court orders.

However, the fact the search and detention were authorized by law does not answer the question of whether or not the RCMP was negligent in continuing the detention for the duration of time that it did. The test for obtaining the search warrant and extension of the detention orders was contained in s 487, as it then was. Under s 487(1), a justice had to be satisfied that there were reasonable grounds to believe there was anything (

a) in respect of which any offence had or was suspected to have been committed; (

b) that would afford evidence with respect to the commission of an offence; and (

c) that was intended to be used for the purpose of committing an offence. I have found the search warrant for this seizure was based on reasonable and probable grounds. [ 137 ] Under s 490(1), the things seized had to be returned, (a) “ ...unless the prosecutor satisfies the justice that the detention of the thing seized is required for the purposes of any investigation or a preliminary inquiry or trial or other proceedings; ” or (

b) it was detained under an order that it be detained until the conclusion of the investigation, preliminary inquiry, trial or other proceedings. [ 138 ] Pursuant to s 490(2), nothing was to be detained for more than three months unless (

a) on three clear days notice, the justice was satisfied that “ ...having regard to the nature of the investigation, this further detention for a specified period is warranted and the justice so orders; ” or (

b) proceedings were instituted in which the thing detained was required. [ 139 ] Under s 490(3), more than one order could be made, but the cumulative period of detention was not to exceed one year from the date of seizure unless, before the expiry of the year, (

a) a judge, on notice, was satisfied that “ ...having regard to the complex nature of the investigation..., ” or (b) “ proceedings are instituted in which the things detained may be required. ” [ 140 ] Under s 490(7), a person from whom things were seized could apply to have the items returned.

[ 141 ] Under s 490(13) and (14) of the Code , the Crown had the option of copying the written material and returning it: 490(13) Where any document is returned or ordered to be returned, forfeited or otherwise dealt with under subsection (1) , (9) or (11), the Attorney General may, before returning the document or complying with the order, make or cause to be made, and may retain, a copy of the document. (emphasis added)

(14) Every copy made under subsection (13) shall, if certified as a true copy by the Attorney General, be admissible in evidence and, in the absence of evidence to the contrary, shall have the same probative force as the original document would have if it had been proved in the ordinary way. [Emphasis added] [ 142 ] The evidence shows that on July 18, 1994, the assets relating to All Crane Parts and All Crane Career were seized. On July 27, 1994, Ms. Green requested and obtained the return of copies of accounts receivable and payable for All Crane Career.

On October 7, 1994, a Report to Justice was filed with the Provincial Court of Alberta pursuant to s 490 of the Criminal Code for all property seized. In October 1994, Cpl. Diack swore an affidavit in suppor

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