R. v. Maitland Capital Limited, 2010 ONCJ 644

COURT FILE No.: 031001844301 Citation: R. v. Maitland Capital Limited , 2010 ONCJ 644 ONTARIO COURT OF JUSTICE OLD CITY HALL, TORONTO BETWEEN: HER MAJESTY THE QUEEN — AND — MAITLAND CAPITAL LIMITED — AND — ABRAHAM HERBERT GROSSMAN — AND — HANOCH ULFAN Before Justice G. N. Sparrow Reasons for Decision on Charter Motion Mr. Derek Ferris ..................................................................................................... for the Crown Ms. Marcy Segal .......................................................... for the accused Maitland Capital Limited Ms.

Marcy Segal .................................................... for the accused Abraham Herbert Grossman ..................................................................................................... Hanoch Ulfan Sparrow J.: The accused seek to have documentary evidence in this matter excluded because of alleged breaches of sections 7, 8, 9 and 10 of the Charter by enforcement staff of the Ontario Securities Commission. They are charged with the following five offences under the s.122 of the Ontario Securities Act , between October 15, 2004 and November 30, 2005: 1 .

Trading in securities of Maitland Capital without being registered to do so, as required by

section 25 of the Act; 2 . Trading in securities without filing a preliminary prospectus and obtaining a receipt, as required by section 55(1) of the Act; 3 . Giving undertakings as to the future price or value of Maitland shares with the intention of effecting trades, contrary to section

38(2) of the Act; and 4 . Making misleading or untrue statements in a report of exempt distribution required by the Act, or failing to state a fact required in the report, contrary to section 122(1)(

b) of the Act. 5 . Making prohibited representations regarding future listing of Maitland shares on a stock exchange. The accused Grossman and Ulfan are also charged, in companion counts, with authorizing, permitting or acquiescing in the above noted offences. Mr. Ulfan has never appeared in this proceeding, and his whereabouts are unknown. All defence submissions are therefore made only on behalf of Grossman and Maitland Capital Limited (hereinafter referred to as “Maitland”). The Facts For the purpose of the Charter motion, the facts are largely undisputed.

In the fall of 2005, the Ontario Securities Commission received an anonymous complaint about the accused, and their attempts to sell shares in an oil and gas venture in western Canada. The file was assigned to Sabine Dobell, an assistant investigator in the case assessment unit of the enforcement branch for preliminary investigation. Various documents were sent to the Commission as part of the complaint, including press releases issued by the company concerning the energy venture and a temporary cease trade order issued by the Saskatchewan Financial Securities Commission against the company in July, 2005.

Dobell discovered that none of the accused were registered to sell securities in any province as is required by all provincial securities acts. On November 8, 2005, she wrote a letter to Grossman outlining her concern that Maitland was not registered in Ontario, as required by

section 25 of the Ontario Securities Act , and asking if any of the exemptions from the requirement outlined in the Rules passed pursuant to the Act were being relied upon. She also asked for: 1) lists of all current and former employees, officers and directors, 2) copies of solicitation and marketing materials used in seeking investors, and 3) an explanation of the relationship between Maitland Capital and Maitland Energy, the entity that was represented as being the developer of the energy project. Dobell asked for a response within 10 days. She did not state that Grossman could choose not to respond.

In his response dated November 21, 2005, Grossman stated that the company had voluntarily ceased all trading and marketing activities nationally effective November 18, 2005, given that cease trade orders had been issued in Saskatchewan and Alberta. He stated that “we” were raising capital from “accredited investors” - a term contained in Ontario Securities Commission Rule 45-106 referring to individuals who have a specific high net income or financial assets of a specific high value. Sales to such investors are exempt from the Rule requiring the seller to be registered with the Commission.

He stated that forms required to be filed for sales to accredited investors had not been filed due to “administrative oversight”. Grossman also explained that Maitland Capital was providing start up capital to Maitland Energy. He provided a list of employees, but not of shareholders, marketing materials, and a few other responses. Dobell testified that all responses were voluntary, rather than compelled. Upon receipt of the response Dobell wrote a follow up letter, dated November 22 nd , asking for an audited financial statement and

evidence that each investor was accredited, how the employees were hired and paid, and how money had been used. She explained that employees cannot be paid commission if the employer is not registered. Grossman responded on November 29 th with an incomplete list of 31 Ontario shareholders, a statement that marketing representatives are paid 17 percent commission, copies of several purchase agreements, and various explanations about the operation of the business.

Dobell testified that accredited investors usually fill out a form for the seller on which they tick off an “accredited investor” box, but that no such forms were provided by Grossman. Dobell then interviewed investors, and exchanged information with investigator Ed LeBlanc in New Brunswick who was also inquiring into Maitland’s activities. On December 15, 2004, she recommended that the file be transferred to the litigation department for the obtaining of a temporary cease trade order.

She testified that it appeared that Maitland was engaging in illegal distribution, as sales were not being made to accredited investors and did not qualify for any other exemption from the registration and prospectus requirements of the Act contained in the Rules. In cross-examination, Dobell agreed that before writing her letter she had been informed by the New Brunswick investigator that the accused had breached the Ontario Securities Act through non-exempt sales made in at least one other province, and that she therefore thought it was “likely happening” within Ontario as well.

She also agreed that she knew before she wrote the letter that Grossman’s answers could be used against him, but said that she did not know at any time whether the investigation would result in a Commission hearing or a quasi-criminal proceeding. Dobell’s supervisor, Joanne Fallone agreed with the recommendation that the file be transferred, and sent it to the litigation department on December 22 nd for commencement of cease trade proceedings. Jody Sikora, an accountant and investigator with the Commission received the file on January 23, 2006 for further investigation.

He received direction from Derek Ferris, senior litigator with the Commission and prosecutor before this Court, throughout the investigation. A temporary cease trade order was obtained ex parte from the Commission in its quasi-judicial capacity on January 24, 2006, on the basis of an affidavit about the investigation sworn by Dobell. A hearing for extension of the order was set for February 8, 2006, and the order was served by Sikora the following day. Sikora testified that upon receipt of the file, he began to attempt to locate all investors.

Through a corporate search, he identified Heritage Transfer Agency Ltd. as Maitland’s transfer agency – in short, a company which performs certain duties of share issuers pursuant to the Securities Act , including maintaining a shareholder register and records of share transfers. He then obtained a summons from the Commission pursuant to

section 12 of the Statutory Powers Procedure Act , requiring Heritage president Moe Wortzman to appear at the February 8 hearing and bring all related documents. Ultimately, Wortzman faxed an investor list, which included contact information, and couriered copies of all share certificates to the Commission on the morning of the hearing. Upon agreement he did not appear in person. The list revealed 1213 shareholders and approximately 1600 share transactions completed by Maitland. The names of four investors who were subpoenaed by the Commission and testified at this trial were obtained from the Wortzman list.

Sikora also arranged for the issuing and service of a summons to Maitland’s bank, TD Canada Trust, requiring a representative to appear with the company’s banking documents at the February 8 hearing. Again, some of the records were sent by the bank to the Commission in advance for review. The hearing was adjourned until February 28 th , and then April 19 th , so that the Commission staff could have the cease trade order served on all parties and obtain more banking documents pursuant to the summons.

On February 28 th , Sikora sent a questionnaire to several investors on the Wortzman list, asking them how they became involved, who they had dealt with at Maitland, how much they invested and whether they were accredited investors. He then began interviewing them. On March 31 st , he received the remaining bank documents from TD Canada Trust, traced the investor’s money and discover that approximately 2.8 million investor dollars had been transferred to two companies unrelated to Maitland. One of the companies was owned by Ulfan.

On April 5 th he met with his manager and the director of enforcement of the Commission, and recommended the laying of the charges before this court, because: “after reviewing the bank documents, it appeared to us the money was not being invested in a manner that the investors were told it would be… the investors were told that the money was being used for oil and gas exploration and my analysis of the account showed money being transferred to AEI Construction and Landrite Limited.” The recommendation was accepted and the information before this court was sworn by Sikora on May 3, 2006.

In November of 2007, Sikora served a summons obtained under the Provincial Offences Act on Bell Canada, requiring that all Maitland telephone records for the relevant time period be brought to court on January 7, 2008, the first day of this trial. He picked up the records, contained on a disk, from a Bell Canada supervisor in December for review. Additional records were sent by email. The records, which were obtained to determine the extent of telephone solicitation, revealed huge volumes of calls throughout Canada in the relevant time period.

Sikora testified that it is normal procedure for Commission investigators to summons corporate representatives such as Wortzman and the witnesses from the bank and telephone companies to appear at Commission or court proceedings with documents, but to have the documents released to the Commission in advance. Such witnesses may then not be required to attend. In cross-examination, Sikora agreed that a temporary cease trade order is obtained when an illegal distribution of securities is suspected and may be extended while further evidence is collected.

He acknowledged that he had not previously appeared before a hearing for continuation of a cease trade order; nevertheless he stated that he thought that it was important that the Commissioners know the exact number of shareholders in Maitland.

At one point during Sikora’s cross-examination the following exchange took place: Q: “of course, you’re always under suspicion and always of the belief that they’re doing it until you keep collecting more evidence, right?” A: “yeah.” A: “Our mandate is to protect Ontario investors and if we suspect that there is an illegal distribution of securities, we will obtain a cease trade order to protect Ontario investors.” In other relevant evidence, an affidavit sworn by assistant investigator Jasmine Handonovic contains statistics which demonstrate that only a very small percentage of investigations lead to criminal prosecution.

It should be noted that all accused had engaged counsel for the purpose of the cease trade proceedings on February 8, 2006, and appear on the record – Darryl Mann for Ulfan and Ari Kulidjian for Maitland and Grossman.

Disclosure of documents is discussed in various communications between counsel, including; 1) Ferris’s e-mail to counsel on February 21 st promising prompt disclosure of the bank and Wortzman documents, 2) Kulidjian’s request on February 28 by email for records of share certificates and sales, 3) consent by all during the April 19 th extension hearing to a disclosure order regarding the TD bank documents, 4) Ferris’s e-mail to Kulidjian on May 19 th referring to advance release of the bank documents on “your client’s consent”, and 5) letters written by the Commission to Kulidjian providing advance disclosure of the telephone records and a

summary of them. No objection to the Commission having received any documents in advance of hearing was made by any counsel in any e-mails or letters, or on the record in any proceedings. Issues Defence counsel seeks to have excluded: 1. Grossman’s written response to Dobell’s letters of inquiry in November 2005, and attached documents; 2. the documents provided by Wortzman to the Commission including the list of shareholders with their addresses; 3. the banking records provided by TD Canada Trust; 4. the telephone records provided by Bell Canada, and

5. any evidence derived from the above documents. Ultimately, defence counsel relies mainly on

section 8 of the Charter, submitting that all four groups of documents were obtained by warrantless searches; therefore, according to R. v. Collins, [1987] 1 S.C.R. (S.C.C) 265, paragraphs 21-23, the Crown must prove that the searches were reasonable. She submits that they were not reasonable given that: 1. They were steps in an investigation which was criminal in nature rather than administrative and therefore required full compliance with all Charter rights including

section 8: see R. v. Jarvis, [2002] 3 S.C.R. (S.C.C.) 757 at paragraphs 2, 88 and 96; and 2. As established in Hunter v. Southam Inc., [1984] 2 S.C.R. (S.C.C.) 145

section 8 requires that warrants must be obtained when it is feasible. In this case it was feasible to obtain warrants for each category of documents. The Commission submits that all four categories of documents were obtained in the course of administrative proceedings rather than penal ones, such that neither Maitland’s or Grossman’s Charter rights were engaged. Although defence counsel did not ultimately make a specific submission regarding an alleged violation of

section 7, it will be addressed as it was referred to in the notice of motion and argument. The Commission submits again that there was no violation as Charter rights were not engaged by a purely administrative as investigation.

Section 10, although referred to in the Notice of Motion, were ultimately not addressed. Analysis Dobell Documents It is important to note that it appears that the majority of documents provided by Grossman in his responses to the Dobell letters are replicated elsewhere in the evidence or are public in nature such that their exclusion pursuant to the Charter application strictly need not be considered.

In his first response of November 21 st , Grossman clarified the company address and provided names and addresses of officers and directors – all information required to be kept for public inspection under regulations passed pursuant to the Ontario Corporations Information Act . He also provided two documents identified as “marketing materials”, which had been sent by Maitland to various witnesses and filed in evidence through them. In short, these items were available to investigators from sources other than Grossman’s responses.

As stated earlier, with respect to Maitland’s sales activities, Grossman explained that 1) capital was being raised from accredited investors, and 2) that failure to file all required Ontario Securities Commission Forms 45-501F1, which reveal the name and address of each accredited investor, the number and price of shares purchased and commission paid was “an oversight”. At that point, Grossman had filed one such report dated December 30, 2004 – Exhibit 2-156 - listing 73 purchases on the required attached schedule. This document was clearly already in the possession of the Commission.

The fact that this report did not cover all sales – i.e. that he had “overlooked” filing all records of sales - was clearly already known to Dobell, as she mentioned the problem in her first letter. LeBlanc had told her that no such records had been filed in New Brunswick, and no New Brunswick sales were listed on the one form that was filed. With respect to the purchase agreements, included with the November 21 st response,

Section 3.1 of Rule 45-501 states that the Commission will normally accept “written certification” from purchasers that they fall within an exemption. In my view, in providing purchase agreements containing certification by Maitland purchasers, Grossman was merely demonstrating compliance with the Rule as required. With respect to the incomplete list of shareholders, the names of the three who eventually testified would have ultimately been found in the Wortzman documents.

Therefore, in my view, the only materials provided in the November 21 st response which require Charter consideration are: 1) the explanation and materials provided by Mr. Grossman concerning the relationship between Maitland Capital and Maitland Energy -

namely the former’s role as capital provider to the latter; 2) the employee list. With respect to item one, I note that Dobell produced images of the company’s website as it existed in January describing the companies as one enterprise. However, it is not clear from the record that the information was on the website when she wrote her letters. LeBlanc had also provided information that according to its website Maitland Capital was selling Maitland Energy shares. Grossman’s response, however differs slightly from this information, describing Maitland Capital as the source of capital.

It therefore cannot be said that his explanation in its entirety was known to the Commission. With respect to the November 29 th response, Grossman again provided materials to which the Commission was clearly entitled – sales figures and purchase agreements which refer to “certification of accredited investors status”. Grossman’s brief explanation as to how the marketing representatives were managed and how they located customers is largely replicated in the testimony of employees, although might be considered derivative of the employee list.

Commission payments to sales agents must be included in the report of exempt distribution. The date of year end need not be considered as it is in no way relevant. In short, the vast majority of the information contained in the responses to the Dobell inquiries includes material that Maitland had a duty to report to the Commission previously, or that is contained in testimony, government records and other exhibits. However, admissibility of none of the responses was conceded, and a few items are not replicated elsewhere. Analysis of the application to exclude them is therefore required.

Section 7 As stated earlier, defence counsel makes no reference to

section 7 in her written submissions. However, given her repeated oral reference to Grossman being “compelled to incriminate himself”, it will be addressed as it applies to him. It is clear that Maitland cannot claim a violation of

Section 7 as it applies only to individuals, and not corporations: see Irwin Toy Limited v Quebec (Attorney General) [1989] 1S.C.R. (S.C.C.) 927. In the seminal case of R. v. Jarvis , [2002] 3 S.C.R. (S.C.C.) 757, the Supreme Court of Canada analyzed an investigation under the Income Tax Act which had commenced as an audit but was transferred to the special investigations unit for criminal investigation. The lower courts had held that an auditor, on meeting with a taxpayer and reviewing certain records before the full transfer, had effectively commenced a criminal investigation for tax evasion.

The taxpayer should therefore have been advised of his Charter rights, including his right to remain silent. Although the Supreme Court of Canada did not agree with the finding that the purpose had changed, the court stated at paragraph 96: On the other hand, with respect to s. 7 of the Charter , when the predominant purpose of a question or inquiry is the determination of penal liability, the “full panoply” of Charter rights are engaged for the taxpayer’s protection. There are a number of consequences that flow from this. First, no further statements may be compelled from the taxpayer by way of s. 231.1(1)(

d) for the purpose of advancing the criminal investigation. Likewise, no written documents may be inspected or examined, except by way of judicial warrant under s. 231.3 of the ITA or s. 487 of the Criminal Code , and no documents may be required, from the taxpayer or any third party for the purpose of advancing the criminal investigation. CCRA officials conducting inquiries, the predominant purpose of which is the determination of penal liability, do not have the benefit of the ss. 231.1(1) and 231.2(1) requirement powers.

After the investigation’s focus becomes predominantly criminal, documents or other evidence produced cannot be used for the purpose of obtaining a warrant or for prosecution unless Charter rights are complied with. The prosecutor argues that the responses and documents in this case were provided to Dobell voluntarily, such that Grossman’s Charter rights were “not engaged”. In my view, it is not necessary to determine whether his responses were voluntary, according to any test.

Dobell consistently stated that her purpose in writing the letters was to determine if there had been any breaches of the Act, but not to find evidence for prosecution. She was clearly suspicious, and well aware that other cease trade orders had been issued. Her goal however, was that of the impugned investigator in Jarvis, supra , namely “... to determine whether to refer the file. There is no suggestion that she was seeking information to be used in an eventual prosecution” (see Jarvis , para 103).

It is also clear from Jarvis that even if an investigator is mindful of the possibility of prosecution, he or she need not provide the “panoply” of Charter rights until the predominant purpose changes. In my view, it is very clear that Dobell’s letters do not constitute a breach of

section 7. I need not consider whether the small amount of information in the responses which was not already in the public domain, or part of Maitland’s reporting requirements, or replicated elsewhere should be excluded from the case against Grossman under Section 24(2) of the Charter. Nor need I consider the exclusion of any evidence arguably derived from these documents.

Section 8 With respect to the argument that Dobell’s requests violated

section 8 of the Charter , the answer lies largely in the clear dictates of the Supreme Court of Canada in Branch v. British Columbia Securities Commission 1995 CanLII 142 (SCC) , [1995] 2 S.C.R. 3 (S.C.C.) . In Branch , the Appellant argued that s.128 of the British Columbia Securities Act , which authorizes investigators to compel production of documents, violates s.8, as well as s.7 of the Charter.

In rejecting the arguments, the Court emphasized the need for inspection of documents in highly regulated industries in order to “discourage detrimental forms of commercial behaviour” by individuals who choose to participate. At paragraph 62, the court adopted its earlier ruling in R. v. Thomson Newspapers vs. Canada [1990] 1 S.C.R. (S.C.C.) at pp 517-518: They do not, in short, deal with those aspects of individual identity which the right of privacy is intended to protect from the overbearing influence of the state.

On the contrary, as already mentioned, it is imperative that the state have power to regulate business and the market both for economic reasons and for the protection of the individual against private power. Given this, state demands concerning the activities and internal operations of business have become a regular and predictable part of doing business. Under these circumstances, I cannot see how there would be a very high expectation of privacy in respect of records and documents in which this information is contained.

The court continues in Branch at paragraph 64 : “…All those who enter into this market know or are deemed to know the rules of the game. As such, an individual engaging in such activity has a low expectation of privacy in business records. In fact, “there will be instances in which an individual will have no privacy interest or expectation in a particular document or

article required by the state to be disclosed”: McKinlay Transport , supra, at pp. 641-42. Under such circumstances, the state authorized inspection of documents under s. 128(1) of the Securities Act does not violate s. 8 of the Charter.” In Jarvis , the court specifically addressed financial records, including banking and sales information which the appellant taxpayer had been obliged to produce during an audit under s.s.231.1(1) and 231.2(1) of the Income Tax Act .

The court cited McKinlay Transport, [1990] 1 S.C.C. 627(S.C.C.) at pp. 641-642 for the proposition that taxpayers have “very little” privacy interest in such records; however, the court ruled at paragraph 88 that if the predominant purpose of a particular inquiry becomes determination of penal liability, officials “cross the Rubicon" and “engage the adversarial relationship between the taxpayer and the state”. At that point, a search warrant is required to meet the tests for a reasonable search established under

section 8. In determining when this point has been reached, the Court said that a judge must look at all factors, including whether the file has been transferred to the unit specifically charged with investigating the full mens rea offence of tax evasion, and whether other authorities had been functioning like, or on behalf of criminal investigators. As noted by Shamai, J. in R. v.

Landen 2007 ONJC 531 (O.C.J.) , an analysis of the issue of when “the Rubicon is crossed” in cases involving Securities Act violations is even less clear than it is in income tax prosecutions, given that there is no special investigations unit which addresses suspected criminal conduct. Presumably this is at least partly so because charges under s.122 of The Securities Act are strict liability offences, requiring investigators to consider whether due diligence has been exercised, rather than to seek evidence of full mens rea, which is required for proof of tax evasion.

Despite these difficulties, the prosecution has demonstrated that Dobell did not have the predominant purpose of criminal investigation when she wrote her letter. Although she clearly pursued the matter aggressively, in cooperation with investigators from other provinces, she firmly and credibly denied this suggestion, and made inquiries that were reasonable and necessary to investigations of administrative breaches.

As stated in Jarvis at paragraph 89, even if grounds to suspect a criminal offence exist, the investigator’s predominant purpose would not necessarily be found to be determination of criminal liability. In fact, labelling the investigations as criminal too early in the inquiry process would create “procedural shackles on regulatory officials” which might lead to more, rather than fewer criminal charges. To summarize, as I found under the

section 7 analysis, defence counsel has proved very little, if any reasonable expectation of privacy in Grossman’s responses to the Dobell letters on behalf of himself or Maitland Capital. Much of the information consisted of documents already made public, required to be filed with Commission or other branch of government, or in the possession of other witnesses. Nevertheless I have considered the alleged breach of

section 8, and I find that neither of the Dobell letters constituted a violation. They

were not sent with the predominant purpose of a penal investigation. The fact that there is a minimal expectation of privacy in them weighs against a finding that the search is unreasonable: see R.v. Nolet 2010 SCC 24 (CanLII) , 2010 S.C.C. 24 (S.C.C.) at paragraph 44 . The letters, although thorough and assertive, in no way violated

section 8. Section 24(2) If I am wrong, and a

section 8 breach occurred, Grossman’s responses should clearly not be excluded under the test established in R. v. Grant , [2009] 2 S.C.R. (S.C.C.) 353. The fact that the expectation of privacy is minimal is also relevant at the stage of s 24(2) analysis: see R.v. Harrison 2009 2 S.C.R. (S.C.C.) 353 at paragraph 57. Given the at most minimal expectation of privacy that Grossman or Maitland had in the responses, any breach was not serious. The impact on the

section 8 rights of Grossman or Maitland could not have been significant, given that the information provided was about a business which is subject to strict and complex regulations. Grossman subjected himself to this regulatory scheme voluntarily. Excluding the reliable evidence would have a negative impact on the truth seeking purpose of the trial and would clearly be unwarranted. Wortzman Documents With respect to the documents produced by Wortzman in response to the summons, defence counsel’s arguments appear to be focused on

section 8 rather than

section 7. However, as stated earlier, the Supreme Court of Canada states in Jarvis at paragraph 9 that

section 7 requires that documents only be obtained under judicial warrant once an investigation has become predominantly criminal.

Section 7 must be therefore considered. As in the facts

section above, investigator Sikora maintained that he did not consider his investigation to be criminal in nature until he received the bank documents on March 31 st . Although he acknowledged “being always under suspicion”, he was unshaken in his position that he was predominantly investigating the need for a permanent cease trade order, and only formally recommended the laying of charges on April 5 th . None of the emails between Ferris and counsel, or transcripts of proceedings before the Commission made mention of any type of proceedings other than administrative ones before the bank document were received.

In my view, there is no evidence that “the Rubicon was crossed” by Sikora. Defence counsel has argued repeatedly that the delivery of documents to the Commission before the commencement of the hearing constitutes a Charter violation. She has provided no authority supporting this submission. As stated earlier, it is clear from emails that by February 27 th , counsel were aware that the shareholder list and certificates had been delivered to the Commission, and that counsel wanted disclosure of them. In an email dated February 27 th , Kulidjian refers to using them to possibly settle the matter.

Sikora stated that advance delivery of such documents for review before a hearing was standard procedure. In my view, no breach of

section 7 has been demonstrated by this practice.

Section 8 With respect to

Section 8, in my view, there is clearly no reasonable expectation of privacy in the shareholder list or certificates. All information on their shareholders’ names and addresses, numbers and value of share purchased, and commission paid are all details which must be reported to the Commission with 10 days of sale on Form 45-501F1, prescribed by s.7.1, Rule 45-501. Given that the records are those of the company, Grossman’s personal expectation of privacy in them is particularly questionable.

Even if this were not so, as stated above, the predominant purpose of Sikora’s investigation when the Wortzman documents were received was not the potential laying of criminal charges. As with the Dobell documents, no warrant was required. With respect to the argument about the advance delivery of the documents, no authority has been provided to demonstrate that this practice would constitute a search that was unreasonable according to the test in Collins, supra .

The prosecution cites the following authority on this point: A witness may often respond to a subpoena in an informal way by supplying the originals, or more often copies, of the relevant documents to counsel who was responsible for the issuance of the subpoena, but this does not alter the essential legal process that has been invoked. The subpoena is a document emanating from the court requiring the described documents to be brought to the

court. Ontario Securities Commission v. Crownbridge Industries Inc. (1989), 1989 CanLII 4389 (ON CA) , 70 O.R. (2d) 506 (C.A.) No complaint was made by counsel about this practice, in email or before the Commission. In fact, it appears to have facilitated disclosure. In my view, the summonsing and dropping off of the Wortzman documents does not violate

Section 8. Bank Documents

Section 7 With respect to Grossman’s

Section 7 rights, once again I accept Sikora’s testimony that he did not have a predominant purpose of a criminal investigation until he had actually reviewed the bank documents. As stated above, it is clear that Kulidjian wanted to obtain these documents from the Commission for disclosure purposes and did not object at the hearings to the advance delivery. Sikora testified that this practice was standard, and no authority had been provided supporting the submission that a Charter breach occurred because of it. A violation of

Section 7 has not been demonstrated.

Section 8 With respect to

Section 8, it was not suggested that the information in the bank documents was required to be kept by a specific provision of the Commission Rules. It was not public in nature, nor held by other witnesses. Nevertheless, as financial information of a business in a heavily regulated industry in which the accused chose to participate, any expectation of privacy in these records was minimal. In my view, the analysis of a possible violation of

Section 8 with respect to these records is the same as the

Section 8 analysis regarding the Wortzman documents. At the point at which they were delivered, Sikora’s predominant purpose was not criminal investigation. If the summonsing and delivery constitutes a search, it was shown to be reasonable; the expectation of privacy was minimal, and the advance delivery was stated to be standard practice. The evidence shows that Kulidjian wanted disclosure of those documents on behalf of his clients before the Commission proceeding continued. In my view, the Commission has demonstrated that

Section 8 was not breached by the advance delivery of the documents, or the use of the summons rather than a warrant. If I am wrong in this analysis, any breach was clearly minimal given Sikora’s good faith and the commercial nature of the documents. Charter interests were not strongly impacted and exclusion would not be merited. Telephone Records With respect to the Bell Canada records, there is no argument made pursuant to

Section 7 of the Charter . Sikora clearly was conducting a quasi-criminal investigation at the point that he sought the summons for them. It was issued by a justice of the peace pursuant to the Provincial Offences Act for the purpose of quasi-criminal proceedings. The practice was standard, and properly conducted. With respect to

Section 8 of the Charter , again, in my view, there was at most a minimal expectation of privacy in these documents. They are records of telephone calls to and from investors - in other words, again records of how a highly regulated business was conducted, sought for the purpose of revealing the extent of the operation. If there was a reasonable expectation of privacy, it was not in my view breached by the use of a summons issued under the Provincial Offences Act rather than a search warrant. With respect to the argument made again that the delivery of the documents before the commencement of the trial constitutes a breach of

Section 8, I again note that no authority has been provided for this submission. The prosecutor reiterates his reliance on Ontario Securities Commission v. Crownbridge Industries Inc. , supra, for the proposition that the practice is accepted. Again, it appears from letters to Kulidjian that he was aware that the records and summaries of them were being delivered in advance of trial for review. Again, no complaint was made. In any event, if any breach of

Section 8 occurred, in my view the evidence should not be excluded pursuant to Section 24(2). Any such breach was minimal, given the commercial nature of the records, and the fact that they were obtained after delivery of a proper summons. Society’s interest in having securities infractions prosecuted far outweighs any danger caused by a technical breach.

In

summary, defence counsel has not proved any breaches of

section 7 by Commission staff and the prosecutor has demonstrated that

section 8 was not breached with respect to the Dobell, Wortzman, bank and telephone documents. If I am wrong in the conclusion as stated above, any breach was very minimal, and exclusion is not warranted. Although

section 10 was reflected in the notice of motion, and sections 9 and 10 mentioned at the beginning of defence counsel’s written submissions, no specific related arguments were made, and no Charter breach has been demonstrated. All documents referred to in the Charter application and all evidence derived from them will therefore be admitted. Released: December 31, 2010 Signed: “Justice G. N. Sparrow”