R. v. Knight Date:, 2014 BCPC 407

Citation: R. v. Knight Date: 20141215 2014 BCPC 0407 File No: 226773-1 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA REGINA v. MICHAEL JEROME KNIGHT EXCERPTS FROM PROCEEDINGS: RULING ON DEFENCE APPLICATION FOR PRODUCTION OF THIRD PARTY DOCUMENTS OF THE HONOURABLE JUDGE M. GIARDINI Counsel for the Crown: J. Neal Counsel for the Defendant: D. Tarnow

Place of Hearing: Vancouver , B.C. Date of Hearing: October 7, 2014; December 10 & 15, 2014 Date of Judgment: December 15, 2014 [ 1 ] THE COURT: This is my ruling on the application of Mr. Michael Knight, the accused, to be granted an order regarding third party documents, namely, documents contained in the files of Mr. Mark Standerwick. I begin with an introduction. Introduction [ 2 ] Mr. Knight is charged with 19 counts. In the course of these proceedings, the Crown advised it was not proceeding with at least one of the counts. However, he was originally charged with 19 counts.

Those counts relate to offences under the Real Estate Services Act , the Real Estate Development Marketing Act , and the Securities Act . [ 3 ] The offences charged include the following: failing to comply with an order of the Superintendent of Real Estate by providing real estate services to various named individuals, providing real estate services without being licenced under the Real Estate Services Act , failing to provide disclosure statements, failing to comply with an order made under s. 161 of the Securities Act by engaging in investor relations, acting as an investment advisor without being registered under the Securities Act , marketing condominium developments without having filed a disclosure statement, and unlawfully trading a security and unlawfully distributing a security to various named persons. [ 4 ] At the beginning of the trial, I was advised of certain admissions of fact.

Those admissions of fact include that Mr. Knight was registered under the Securities Act as a salesperson restricted to mutual fund securities from July 24, 1992, to January 6, 1995. Since then, Mr. Knight has not been registered under the Securities Act in any capacity. [ 5 ] On April 5, 2004, the B.C. Securities Commission ordered Mr. Knight to cease trading in securities or engaging in investor relations activities for a period of three years. The order was part of a settlement agreement reached between the B.C. Securities Commission and Mr. Knight. Mr.

Knight signed the settlement agreement on March 24, 2004, and was aware of the terms of the consent order. [ 6 ] Mr. Knight acknowledged that he has never been licenced under the B.C. Real Estate Services Act or the previous legislation in British Columbia, that is, the B.C. Real Estate Act . Mr. Knight also acknowledged that on June 15, 2006, the Superintendent ordered him to cease providing real estate services. He signed a consent order on June 12, 2006, and was aware of the terms of that consent order. Background to this Application [ 7 ] I now turn to the background to the current application.

On August 13, 2014, by my count, the sixth day of the trial, the Crown advised the court it was going to call Mr. Mark Standerwick, a lawyer practicing in Richmond, British Columbia. Mr. Standerwick, according to the Crown, was being called to authenticate two emails that were filed by the co-accused, Mr. Wiegel, at his sentencing hearing. That matter was dealt with at an earlier date by another judge of this court. [ 8 ] Mr. Comer, the Crown counsel who handled that matter, apparently received two emails from Mr. Wiegel's lawyer. One email was dated November 21, 2006, and time-stamped 2:34 p.m. It was from Mr.

Standerwick and it was addressed to Michael Knight. The other was a reply from Mr. Knight also dated November 21, 2006, and time-stamped 11:00 p.m. [ 9 ] According to the Crown's explanatory statements, Mr. Wiegel's lawyer apparently told Mr. Comer that Mr. Wiegel had waived privilege over the two emails so that they could be presented at his sentencing hearing. I want to make it clear that these were submissions of counsel as to what was going to happen as opposed to findings of fact. [ 10 ] The two emails were filed at Mr. Wiegel's sentencing hearing, although they were not marked as exhibits.

However, the Crown says the two emails were the subject of submissions on the sentencing. The Crown, in making its explanatory statements, noted it was fully aware that Mr. Tarnow, defence counsel for Mr. Knight, was objecting to the production of the two emails in the proceedings before me. [ 11 ] At the August 13, 2014, trial proceedings, Mr. Tarnow, on behalf of Mr. Knight, said his position on the evidence the Crown planned to adduce was as follows: 1. The proposed evidence of Mr. Comer is hearsay and should not be admitted. 2. The court could hear from Mr. Standerwick; however, if Mr.

Standerwick maintained solicitor-client privilege, that privilege could not be released because the company Mr. Standerwick represented is dissolved and there is no one to waive the privilege. 3. Mr. Knight has not been able to look at Mr. Standerwick's files and, as his innocence is at stake, the court would need to enter into a voir dire as set out in R. v. McClure . [ 12 ] I am omitting case citations, to make things easier but see appendix for list of cases. [ 13 ] At that time defence counsel said that due diligence is at the core of the law on the issues now before the court.

At the end of the trial, he expected the Crown would argue Mr. Knight was not duly diligent. Accordingly, Mr. Tarnow said Mr. Knight needs to look at the entire file and not just the selective emails the Crown intends to adduce. The defence noted it would argue there may be documents in Mr. Standerwick's file which will show that Mr. Knight was seeking legal advice. There may also be materials in the file

that may show Mr. Knight sought advice and tried to comply with it. [ 14 ] After some discussion on the record and separate discussions just between counsel, it was agreed the Crown would call Mr. Standerwick. He would be asked a few questions which would not require a voir dire. Then the Crown would call Mr. Comer in a voir dire and have him give his evidence regarding the two emails. [ 15 ] On August 13, 2014, Mr. Standerwick was called. He testified he is a lawyer practicing in British Columbia and has done so since 1988. He practices at a well-known Richmond law firm and has been there for 26 years.

He said his client was the numbered company, 072835 B.C. Ltd. He was asked whether, during the course of acting for the numbered company, he had communicated with Mr. Knight. Mr. Standerwick's reply was that he was concerned whether answering that question would be a waiver of solicitor-client privilege. [ 16 ] Mr. Standerwick was shown the two emails dated November 21, 2006, time-stamped 2:34 p.m. and the other time-stamped 11:00 p.m. He said those were privileged communications with the client.

He was asked by the Crown whether, if he was asked questions about communications with his client or employees of the client, he would assert solicitor-client privilege. Mr. Standerwick replied he would. His further answer suggested that without a letter of authorization from the client, or a court order, he would not answer any questions he considered privileged. [ 17 ] Mr. Comer, Crown counsel, gave evidence in a voir dire. He testified he had prepared an affidavit, to which he appended two emails. He said his affidavit was true. He testified he checked the exhibits at the sentencing hearing of Mr.

Wiegel and the two emails attached to his affidavit were not entered as exhibits in the sentencing hearing of Mr. Wiegel. [ 18 ] In cross-examination, Mr. Comer said he did not speak to Mr. Standerwick. He did not see any other documents regarding any legal advice Mr. Standerwick may have provided. [ 19 ] At that point, the voir dire was adjourned to a future date to argue issues arising from the voir dire and to hear Mr. Tarnow's application on behalf of Mr. Knight for production of third party documents, namely, Mr.

Standerwick's files. [ 20 ] On September 30, 2014, the defence filed an application seeking an order granting the production of all files, including notes, correspondence, and emails relating to the Brook and Almaval projects, in the possession of Mark Standerwick pursuant to s. 278 of the Criminal Code . The grounds for the application were that the contents of the files, which are in the possession of Mr. Standerwick, are relevant to Mr. Knight's ability to defend himself against the charges in these proceedings. [ 21 ] The defence's application was supported by an affidavit sworn by Mr. Knight.

In his affidavit, Mr. Knight attested he had retained Mr. Standerwick when the Brook project commenced. He met Mr. Standerwick and Mr. Wiegel to discuss the project. He also sought Mr. Standerwick's advice with respect to the Almaval project. Mr. Standerwick was involved from the outset in providing legal advice with respect to the Brook project. Mr. Standerwick reviewed the Founders' Agreement which was signed by all investors and made revisions to that document. [ 22 ] Mr. Knight spoke to Mr.

Standerwick and exchanged emails with him on an almost daily basis for over three years as the Brook and the Almaval projects were proceeding. Mr. Knight further stated in his affidavit that he relied heavily on Mr. Standerwick's legal advice in respect to both projects. [ 23 ] An example he gave was that the Co-ownership Agreement and related materials were prepared and drafted by Mr. Standerwick. Mr. Knight said, based on Mr. Standerwick's advice, the structure of the projects included the issuance of multiple classes of shares to the group of investors. He said Mr.

Standerwick never mentioned that the issuance of those shares could be considered to be a distribution of securities under the Securities Act . [ 24 ] Mr. Knight specifically commented in his affidavit on the two November 21, 2006, emails. He said those emails have been taken out of context. He said those emails appear to have been pulled from the company's email server by Mr. Wiegel, a server to which Mr. Knight had no access. Mr. Knight said the emails were exchanged at the time when a particular investor was looking for a job as a project manager in one of the projects.

He further said that the Brook project was at its initial stage as the site had just been purchased. [ 25 ] Mr. Knight further said that as the projects commenced and many documents were prepared, referring again to the Founders' Agreement and the Co-ownership Agreement, there were never any warnings from Mr. Standerwick regarding the Securities Act or the Real Estate Marketing Act . Mr. Knight said the two emails are a tiny fraction of the communications that occurred between Mr. Standerwick and himself. A review of Mr.

Standerwick's file and correspondence concerning both projects would demonstrate that at no time did Mr. Standerwick provide any warnings about possible violations of the Securities Act or the Real Estate Marketing Act . [ 26 ] Mr. Knight stated his belief that he was diligent and constantly sought legal advice from a conscientious and experienced real estate lawyer at an established law firm. He also said he believes he is unable to make full answer and defence without access to Mr. Standerwick's files and correspondence concerning the Brook and Almaval real estate projects. [ 27 ] He said that without Mr.

Standerwick's evidence, including access to his file, his innocence is at stake as Mr. Standerwick's evidence would establish that: "I attempted to comply with the applicable legislation and was diligent about following the laws of B.C." [ 28 ] I now return to the chronology. The proceedings before me reconvened on December 7 and December 10, 2014. In addition to the Crown and Mr. Tarnow, Mr. Jack Webster attended as counsel representing Mr. Standerwick.

There was considerable discussion on both occasions about the issues the court ought to decide, the procedure to be followed, and the role of the various parties. Furthermore, it was brought to the court's attention that since Mr. Wiegel had not been properly served with notice of the hearing, there was a concern about proceeding without him on December 10, 2014. The court did not proceed on December 10, 2014. A new hearing date was set for today, December 15, 2014. Matters to be Addressed

[ 29 ] The two matters to be addressed today are the innocence-at-stake arguments and arguments regarding the admissibility of Mr. Comer's evidence in court and his affidavit and the attachments thereto. I acceded to the Crown's suggestion that it would expedite matters if the court decided whether Mr. Knight has established that his innocence is at stake if the documents he seeks are not produced. Position of Parties [ 30 ] I now turn to the position of the parties. The Crown argues that in considering whether Mr. Knight's innocence is at stake if the documents and Mr.

Standerwick's files are not produced, I should assume the best case scenario for Mr. Knight. The best case scenario is that there was a full discussion between Mr. Knight and Mr. Standerwick, that Mr. Knight provided all necessary background information, and that Mr. Standerwick provided incorrect legal advice or, as the Crown put it, "bad advice". [ 31 ] The Crown submits Mr. Knight's arguments amount to a claim that he was ignorant of the law. The Crown submits the type and quality of legal advice Mr.

Knight may have received is neither here nor there in determining his innocence or his ability to make full answer and defence. [ 32 ] The Crown relies on the case of R. v. Edwardson which is a 2004 decision of the British Columbia Provincial Court. In that case, Mr. Edwardson, who was charged with several offences under the Securities Act , argued that due diligence or mistake of fact should be taken into account.

He pointed to evidence before the court that his solicitor had been present when a solicitor for the company in question had provided advice that there was no need to issue a prospectus. [ 33 ] The court, for purposes of the Edwardson judgment, accepted the evidence of Mr. Edwardson and another witness as true. However, the court concluded this constituted a mistake of law and did not provide a defence for Mr. Edwardson. The court noted that the law makes it clear that mistaken legal advice does not shield the purposeful doing of

an act which may prove contrary to law unless there is officially induced error. The court found there was no officially induced error in that case. In Edwardson , Judge Sinclair relied on R. v. Koch (note correct name is "Kotch"), R. v. Giroux , and Molis v. The Queen . All of those cases are also relied on by the Crown. [ 34 ] Mr. Tarnow argues that the cases relied on by the Crown are older cases. Since those cases were issued the Supreme Court of Canada has tried to temper its position with respect to the issues decided in those cases.

He also points out that the case of Edwardson , which is relatively recent having been issued in 2004, should be considered with caution because it was a case where Mr. Edwardson was self-represented and the judge did not have the benefit of submissions by counsel for the accused. [ 35 ] Mr. Tarnow, on Mr. Knight's behalf, argues that if Mr. Knight is not successful in getting an order to see Mr. Standerwick's file, he will not be able to make full answer and defence.

He acknowledges it is trite law that ignorance of the law is not an excuse and that bad legal advice which contravenes the law is also not an excuse. However, he relies on the case of R. v. Jorgenson which is a 1995 decision of the Supreme Court of Canada. He says that case should be considered. In particular, it should be considered in light of the comments made by Judge Sinclair in the Edwardson case where he said that mistaken legal advice would not shield someone who broke the law, unless there was an officially induced error. [ 36 ] Mr.

Tarnow, quite fairly, points out that although this was a decision of the Supreme Court of Canada, Chief Justice Lamer who was Chief Justice at the time, issued concurring reasons. Mr. Justice Lamer did not agree with his brother and sister judges in all respects. In particular, he did not necessarily agree with them with respect to officially induced error. [ 37 ] Mr. Tarnow reviewed the case, in particular, paragraph 8 which reviews what academic commentators have said.

He pointed to the quote from Barton at paragraph 8 that: . . . perhaps it is time to abandon the distinction and . . . look at the position of the accused from the point of view of "should the accused be excused?" Further, Mr. Justice Lamer wrote: From this perspective of moral blameworthiness, it is difficult to justify convicting an individual who has considered that her behaviour may be illegal, consulted an appropriate authority regarding the legality of her actions, and relied on the advice she obtained in a way that appears objectively reasonable. [ 38 ] Mr.

Tarnow also reviewed paragraph 25, which is the beginning of the analysis on officially induced error, right through to paragraphs 33, 34. [ 39 ] Mr. Wiegel also made submissions. He attended without counsel. In his submissions, Mr. Wiegel acknowledges he was director of the Brook at the time, and that the numbered company has now been struck off by the registrar of companies. He submits that Mr. Standerwick was counsel for the Brook and for Almaval. By the Brook, I take it to mean he refers to the numbered company. He submits Mr. Standerwick was a real estate lawyer and not a securities lawyer.

It is his belief that the advice Mr. Standerwick would have given would have related to real estate. In his view, it would be unlikely that Mr. Standerwick would have provided securities advice. [ 40 ] Mr. Wiegel acknowledges he is currently a director of the two companies, that is, the Brook and the Almaval or their numerical equivalents. He does not waive solicitor-client privilege on behalf of the companies in this matter. Legal Principles [ 41 ] I now turn to legal principles regarding the production of documents where solicitor-client privilege is asserted. In R. v.

McClure , a 2001 decision of the Supreme Court of Canada, the court revisited the reach of solicitor-client privilege. Mr. Justice Major, writing for the court, noted that solicitor-client privilege:

. . . comes with a long history. Its value has been tested since early in the common law. [and] Its importance has not diminished. [ 42 ] At the beginning of the decision, the court notes that interests often compete within our legal system. In particular: The policy justifying the existence of solicitor-client privilege might clash with an accused's right under s. 7 of the . . .

Charter of Rights and Freedoms to make full answer and defence. [ 43 ] The McClure appeal raised the issue of whether: . . . the solicitor-client privilege of a third person should yield to permit an accused to make full answer and defence to . . . criminal charge[s]. [ 44 ] The court noted that solicitor-client privilege is part of and fundamental to the Canadian legal system. While its historical roots derived from rules of evidence, it has evolved into a fundamental and substantive rule of law. Certain types of relationships warrant a prima facie presumption of inadmissibility.

Over the years, certain protective classes have been established, for example, spousal privilege and informer privilege. The court noted that solicitor-client privilege, because of its unique position in our legal fabric, is the most notable example of a class privilege. [ 45 ] In McClure , the Supreme Court of Canada articulated the test which should be applied when determining whether disclosure of documents which are subject to solicitor-client privilege should be ordered.

In the course of doing so, the court noted: . . . the occasions when the solicitor-client privilege yields are rare and the test to be met is a stringent one. [ 46 ] At paragraph 47 of the McClure decision, after rejecting the appropriateness of the O'Connor test for addressing disclosure of documents protected by solicitor-client privilege, the court said the following: In recognition of the central place of solicitor-client privilege within the administration of justice, the innocence at stake test should be stringent.

The privilege should be infringed only where core issues going to the guilt of the accused are involved and there is a genuine risk of a wrongful conviction. [ 47 ] In R. v.

Brown , a 2002 case of the Supreme Court of Canada, the court summarized the McClure test at paragraph 4: The McClure test comprises a threshold question and a two-stage innocence at stake test, which proceed as follows: - To satisfy the threshold test, the accused must establish that: - the information he seeks from the solicitor-client communication is not available from any other source; and - he is otherwise unable to raise a reasonable doubt. - If the threshold has been satisfied, the judge should proceed to the innocence at stake test, which has two stages. - Stage #1: The accused seeking production of the solicitor-client communication has to demonstrate an evidentiary basis to conclude that a communication exists that could raise a reasonable doubt as to his guilt. - Stage #2: If such an evidentiary basis exists, the trial judge should examine the communication to determine whether, in fact, it is likely to raise a reasonable doubt as to the guilt of the accused. - It is important to distinguish that the burden in the second stage of the innocence at stake test ([i.e.] likely to raise a reasonable doubt) is stricter than that in the first stage (could raise a reasonable doubt). - If the innocence at stake test is satisfied, the judge should order disclosure of the communications that are likely to raise a reasonable doubt, in accordance with the guiding principles discussed [above]. [ 48 ] I note that in the case at bar we have, by consent, proceeded by addressing the innocence at stake question first in order to expedite matters.

The case law relied on by the Crown and provided to the court is crystal clear that bad or poor legal advice does not provide a defence unless, as Judge Sinclair said, there is officially induced error. In the Edwardson case, the court found there was no officially induced error. [ 49 ] In this case, Mr. Tarnow urges me, not in so many words but indirectly, to push the envelope and to find that in these circumstances there was an officially induced error in that Mr. Knight was not provided with adequate or correct legal advice. Mr. Tarnow relies on the concurring reasons of Mr.

Justice Lamer, a very respected jurist. It is clear from a reading of Mr. Justice Lamer's concurring reasons in the Jorgenson case that Mr. Justice Lamer was considering emerging trends in Canadian cases and in American cases on the issue of ignorance of the law being no excuse. In fact, he makes this quite clear in paragraph 3. [ 50 ] I should backtrack a moment. In paragraph 2, although Mr. Justice Lamer concurred with the majority's disposition of the appeal, he said that on the second issue (whether the accused had acted without lawful justification or excuse) he disagreed with the majority's conclusion.

In Mr. Justice Lamer's view, the circumstances of the case before the court permitted the accused to be excused from a conviction on the basis of an officially induced error of law by virtue of the Ontario Film Review Board's approval of the films in question. He went on to say: While I do not believe film board approval negatives mens rea or justifies the accused's criminal actions, I believe that reasonable reliance on this type of official advice is sufficient basis for a judicial stay of proceedings to be entered.

Requiring that a stay be entered only in the clearest of officially induced error of law cases does not offend the maxim that ignorance of the law does not excuse. Rather, it provides an exception from this provision, in line with the existing exceptions, which ensures that the morally blameless are not made

criminally responsible for their actions. (para. 2) [51] Throughout Mr. Justice Lamer's analysis, which he himself notes, is an analysis based on trends in Canadian cases and theemerging law, he refers to officially induced error. At one point in paragraph 9, he refers to a representative of the state. However, lestwe need any more clarity, he addresses the issue of private counsel directly at paragraph 32: Several other types of advice have been considered in the cases dealing with this excuse . . .

That is, the cases he reviewed. . . . for example advice from private lawyers and reliance on judicial pronouncements. As these examples are beyond the scope of thiscase, I make no comment at this time on whether these types of advice may provide the basis for officially induced error of law.(emphasis added) [52] That statement by Mr.

Justice Lamer and the statement of the majority at paragraph 123 wherein the majority wrote: Nothing in these reasons should be [seen] as agreeing or disagreeing with the reasons of the Chief Justice but I would prefer to addressthe issue of officially induced error in a case in which it is properly raised and argued. (emphasis added) leads me to conclude that I would be doing more than "pushing the envelope" if I were to accede to Mr. Tarnow's submissions.

As I readthe cases, ignorance of the law continues to apply, even in circumstances where an accused has sought legal advice from a privatelawyer. [53] On the basis of what I have heard and the submissions made today, I am not satisfied that Mr. Knight has made out theinnocence at stake test as set out in McClure. At this point, I will not issue an order that Mr. Standerwick provide his legal files to Mr.Knight or his counsel. [54] MR. TARNOW: Sorry, I am just missing what you are saying. [55] THE COURT: Sorry, to Mr. -- [56] MR. TARNOW: "I will not provide"? [57] THE COURT: His legal files to Mr.

Knight or his counsel. [58] MR. TARNOW: Yes. So thank you, Your Honour. [59] THE COURT: Yes, and what I am going to do -- [60] MR. TARNOW: There is the -- yes. [61] THE COURT: -- is I am going to order -- this was an extemporaneous decision, but I think it would be useful for the parties tohave a copy of it. You will have to obtain your own copy from J.C. Word, but I am ordering a court copy of my ruling for the court file. [62] MR. TARNOW: Yes. [63] THE COURT: I will, of course, be editing it for grammatical errors, ums and ahs.

I will insert the citations of the cases and,essentially, make sure the grammar is correct and so on. I do not at this point plan to publish it, but a copy will be on the file. If either ofyou want to look at it or if you want to have your own copy of it, you can piggyback on the fact that the court has already ordered it. (RULING ON DEFENCE APPLICATION FOR PRODUCTION OF THIRD PARTY DOCUMENTS CONCLUDED) (SEE LIST OF CASES ATTACHED) Appendix Molis v. The Queen, (SCC), [1980] S.C.J. No. 75 R. v. Brown 2002 SCC 32 R. v. Edwardson, 2004 BCPC 311 R. v. Giroux, (QC CA), [1981] J.Q. no 147 R. v.

Jorgenson, (SCC), [1995] S.C.J. No. 92 R. v. Kotch, 1990 ABCA 348 , [1990] A.J. No. 1029

R. v. McClure 2001 SCC 14