Re: QW v. YC, 2017 SKPC 85

IN THE PROVINCIAL COURT OF SASKATCHEWAN Citation: 2017 SKPC 085 Date: October 5, 2017 Location: Saskatoon ____________________________________________________________________________ Between: Re: QW and YC Appearing: A.A. Furlonger For the Crown _____________________________________________________________________________ EX PARTE APPLICATION PURSUANT TO S. 490(15) OF THE CRIMINAL CODE Q. D.

AGNEW, J ______________________________________________________________________________ [ 1 ] This is an application pursuant to s. 490(15) of the Criminal Code by the federal Attorney General on behalf of the Minister of National Revenue, for an order that Canada Revenue Agency [CRA] officials be allowed to view and copy documents seized by the Canada Border Security Agency [CBSA]. [ 2 ] The order will not issue on the information currently before the Court. Preconditions to examination [ 3 ] Subsection 490(15) empowers a court to permit examination of something detained. That subsection reads as follows: 490

(15) Where anything is detained pursuant to subsections (1) to (3.1), a judge of a superior court of criminal jurisdiction, a judge as

(15) Where anything is detained pursuant to subsections (1) to (3.1), a judge of a superior court of criminal jurisdiction, a judge as defined in

section 552 or a provincial court judge may, on

summary application on behalf of a person who has an interest in what is detained, after three clear days notice to the Attorney General, order that the person by or on whose behalf the application is made be permitted to examine anything so detained. [ 4 ] It is clear that there are several preconditions to the issuance of the order: (

a) the subject-matter must have been detained under ss. 490(1) to (3.1); (

b) the applicant must have given three clear days’ notice to the Attorney General (unless waived pursuant to s. 490(18)); and (

c) the applicant must be “a person who has an interest in what is detained”. [ 5 ] If the Court is satisfied that all three conditions have been met, it may choose to grant such an order.

If so, the Court has the power to impose conditions on the order, to safeguard and preserve that which is to be examined: 490(16) An order that is made under subsection (15) shall be made on such terms as appear to the judge to be necessary or desirable to ensure that anything in respect of which the order is made is safeguarded and preserved for any purpose for which it may subsequently be required. [ 6 ] According to the affidavit filed in support of the application (sub-para. 6(c)), the subject matter of this application is documents being held by CBSA pursuant to s. 490(2) of the Code .

There is therefore evidence that the first precondition of s. 490(15) is met. [ 7 ] The next precondition is that three clear days’ notice of the application be given to “the Attorney General”.

Section 2 of the Code defines “Attorney General” to mean, subject to certain exceptions which do not apply here, “the Attorney General or Solicitor General of the province in which those proceedings are taken . . .” Thus, notwithstanding that this application is brought by an Attorney General, notice must be given to the Saskatchewan Attorney General. As there is no evidence that this has been done, or that notice has been waived by the provincial Attorney General, the application cannot proceed. [ 8 ] The third precondition is that the applicant have “an interest in what is detained”.

Although the subsection does not specify what type of interest this is, it does not restrict it either. That is, there is nothing in the subsection that says that the interest must be a claim of beneficial ownership, for example. At the same time, presumably Parliament did not mean “interest” in the sense of “curiosity”. [ 9 ] In the present case, the material filed establishes that: (

a) CBSA has obtained certain specified information which, combined with information already in the hands of CRA, gives reasonable grounds to believe that certain offences under the Income Tax Act and the Excise Tax Act have been committed by QW and YC, specifically the filing of false T1 tax returns, and the failure to collect and remit GST as required; (

b) CBSA obtained and executed a search warrant at the residence of QW and YC, pursuant to s. 487 of the Criminal Code ; (

c) in the course of so doing, CBSA obtained “hard-copy and electronic documents pertaining to” QW and YC, which it continues to detain pursuant to s. 490(2) of the Code ; (

d) among the documents seized are certain specified financial, business and tax records which may reasonably be expected to provide evidence regarding the offences referred to in (a).

[ 10 ] In essence, CRA wishes to search the documents seized by CBSA for evidence of the specified offences. That would certainly seem to indicate that they have an interest in the documents. However, the state is not entitled simply to examine private documents to see if it can find evidence of wrongdoing. It therefore seems reasonable to me that whether or not CRA has an “interest” within the meaning of s. 490(15) it should be measured by the same standard as would be required for the state to obtain a search warrant, if the documents were still in the hands of their owners.

This would ensure that the privacy interests of QW and YC are not being circumvented by use of the s. 490(15) procedure, while still allowing the state to search for evidence if the usual standard for a search as set out in s. 487(1) is met: 487

(1) A justice who is satisfied by information on oath in Form 1 that there are reasonable grounds to believe that there is in a building, receptacle or place (

a) anything on or in respect of which any offence against this Act or any other Act of Parliament has been or is suspected to have been committed, (

b) anything that there are reasonable grounds to believe will afford evidence with respect to the commission of an offence, or will reveal the whereabouts of a person who is believed to have committed an offence, against this Act or any other Act of Parliament, (

c) anything that there are reasonable grounds to believe is intended to be used for the purpose of committing any offence against the person for which a person may be arrested without warrant, or (c.1) any offence-related property, may at any time issue a warrant authorizing a peace officer or a public officer who has been appointed or designated to administer or enforce a federal or provincial law and whose duties include the enforcement of this Act or any other Act of Parliament and who is named in the warrant (

d) to search the building, receptacle or place for any such thing and to seize it, and (

e) subject to any other Act of Parliament, to, as soon as practicable, bring the thing seized before, or make a report in respect thereof to, the justice or some other justice for the same territorial division in accordance with

section 489.1. [ 11 ] The affidavit filed gives reasonable grounds to believe that the offences have been committed, namely the filing of false T1 tax returns and the failure to collect and remit GST as required, and that the documents specified will provide evidence of that offence. On that basis, I am satisfied that the affidavit discloses an “interest” within the meaning of the subsection, thus satisfying the third criterion of s. 490(15) . [ 12 ] Thus, although preconditions (

a) and (

c) have been satisfied, precondition (

b) has not been, and I am therefore powerless to grant the requested order, even were it so inclined. As it turns out, I would not be so inclined: there are difficulties with the proposed scope of search, and with the requested direction for copying. Scope of search [ 13 ] According to the affidavit (sub-para. 6(c)), various of the documents in question are in hard copy, and others are electronic documents. Nothing further is stated about the format of the electronic documents.

The draft order would authorize examination of “all data, records and other information on the electronic device within the scope of the relevant search warrant”, to be found on any and all “cellular phones, smart phones, tablets, hard drives and flash drives”. [ 14 ] There are difficulties with the scope of search requested.

[ 15 ] The authorization requested flies directly in the face of the Supreme Court of Canada’s decision in R v Vu , 2013 SCC 60 , [2013] 3 SCR 657 [ Vu ]. That decision went into considerable detail about privacy concerns regarding computers and smart phones: although most of the decision refers to computers, the Court makes it clear that it is including smart phones in its reasoning (para. 38).

Those concerns now, in my view, extend to tablets: given the computing and storage abilities of such devices and the uses to which they are put, being between those of personal computers and those of smart phones, the Court’s reasoning seems to apply equally to them as to the other devices.

Indeed, the Saskatchewan Court of Appeal has referred to Vu and Fearon (see below) applying to “computers and mobile devices like cellphones”: R v Adeshina , 2015 SKCA 29 , 457 Sask R 35 at para 30 (emphasis added). [ 16 ] Although Vu was specifically about search warrants, for the reasons noted above the process which CRA wishes to use here is sufficiently like that of a search warrant that I consider the processes and protections of an application for a search warrant, with the necessary changes, applicable. [ 17 ] Vu conceptualizes a two-stage search process, although it does not necessarily require that the two stages be separated in time, nor does it prohibit the possibility of both stages being addressed in one warrant or order.

First, the state must show “that [it has] reasonable grounds to believe that any computers [it] discover[s] will contain the things [it] is looking for” (para. 48). In other words, specific to the present case, simply the fact that there are apparently “electronic documents” in the hands of CBSA is not sufficient to authorize CRA to look in every cell phone, smart phone, tablet, hard drive and flash drive. [ 18 ] In essence, there must be some reason to believe that the specific computers, etc. to be looked at will have the data sought.

This may be as a result of the context in which the devices were found, other information obtained through the investigation, or otherwise, but simply the fact that the state has computers, etc. in its possession belonging to someone under investigation is not sufficient to justify a search of the data on all of those devices. [ 19 ] In the context of this particular matter, all the affidavit discloses is that CBSA has in its possession “electronic documents” pertaining to the subject persons which are “relevant to the CBSA investigation” (para. 6(c)).

On that basis, CRA wants authorization to search “any electronic device, including computers, computer software and other electronic information storage devices, namely cellular phones, smart phones, tablets, hard drives and flash drives.” [ 20 ] The affidavit accordingly does not meet the first test in Vu . There may be, for example, tablets on which there is no suggestion that any of the “electronic documents” exist. Those tablets should not, based on Vu , be examined. The applicant must be more specific about what devices are to be searched, and why those in particular.

To the extent possible, those devices should be identified by make, model, serial or other number, or similar descriptors so that there is no doubt what is, and perhaps more importantly what is not, subject to search. [ 21 ] Second, Vu requires at least a consideration of whether or not search protocols should be imposed on the search. The Court declined to find a constitutional requirement that the manner of search be spelled out in advance (paras. 54 - 59).

The Court was content, in the context of Vu specifically and at that time, to leave the base requirement for the search to be that it be conducted in a reasonable manner; however, it declined to rule out such requirements in specific cases (para. 62). [ 22 ] That idea was modified in R v Fearon , 2014 SCC 77 , [2014] SCR 621 [ Fearon ], a case which dealt with the powers of police to examine the data on a cell phone incident to arrest. The majority of the Court rejected (para. 58) the bare constraints of (

i) lawful arrest, (ii) search truly incidental to arrest, and (iii) reasonably conducted. Instead, the Court constructed a significant protocol for such searches (para. 83), the most significant of which for present purposes is that “[t]he nature and extent of the search are tailored to the purpose of the search”. [ 23 ] In holding that “reasonableness” was an insufficient safeguard for a search incident to arrest, the Court said the following (para. 58): . . . the search of a cell phone has the potential to be a much more significant invasion of privacy than the typical search incident to arrest.

As a result, my view is that the general common law framework for searches incident to arrest needs to be modified in the case of cell phone searches incident to arrest. In particular, the law needs to provide the suspect with further protection against the risk of wholesale invasion of privacy which may occur if the search of a cell phone is constrained only by the requirements that the arrest be lawful and that the search be truly incidental to arrest and reasonably conducted.

[ 24 ] It is important to note that the concerns expressed by the Court in Fearon are those present in Vu , specifically the privacy rights of the owner of the device. Despite Vu declining to make any general rule or protocol, the Court in Fearon chose to do so. [ 25 ] The Supreme Court has thus, in Fearon , clarified its position on search protocols for computers, etc.

Rather than simply relying on police reasonableness, there now is a standard protocol for such searches, at least in the context of searches of phones, etc., incident to arrest. [ 26 ] Although Fearon was specifically in the context of police powers on a search incident to arrest, and Vu dealt with a search warrant, the concepts are clearly transferable, and indeed the Court in Fearon specifically cites Vu : “[a] warrant to search a computer does not give the police ‘a licence to scour the devices indiscriminately’" (para. 77). [ 27 ] The Supreme Court has accordingly determined not only that search protocols are appropriate in some specific situations ( Vu ), but also that they are appropriate in some general types of situations ( Fearon ). [ 28 ] In my view, the situation before me is one in which a search protocol would be appropriate, for the same reasons as set out in Fearon .

I leave for another day the question of whether or not the Supreme Court of Canada’s position now supports a general application of search protocols to searches of electronic devices. [ 29 ] There is an additional reason for a search protocol, beyond those laid out by the Supreme Court. Relying on the state’s “reasonableness” in carrying out the search is problematic for a very practical reason: it is almost impossible to enforce. How will a person in the position of QW and YC, upon return of their phone or computer, have any idea what the agents of the state have looked at?

At least with a physical search of a home, for example, the homeowner is likely to see visible clues as to what the police have done and where they have been, and thus to have a basis for challenging the reasonableness of the search. If the warrant is to search for a stolen car and it appears that the underwear drawer has been disturbed, the homeowner will have a basis for questioning what was searched and why. How could the owner of an electronic device, however, even begin to consider whether or not the police search of the computer was reasonable?

At least if the warrant or order sets out limits or guidance for the search, the individual would have some basis for asking questions as to what the police had done and whether or not it fell within the authorization. [ 30 ] Accordingly, for an order to issue in the present matter there must be both some reason to believe that relevant data will be found on specific devices, and some limitation on CRA’s power to examine all data on those devices. [ 31 ] I will leave it to the applicant to determine how to describe what it wants to do.

If it knows of specific documents, what devices they are on, in what format and with what file name, for example, it might simply refer to that information (provided it can show that those documents meet the search warrant test referred to above). If it seeks to search all documents of a particular type, format or file extension, then it can attempt to persuade the Court as to why such a search is reasonable and how it appropriately balances the state’s interest in detecting and prosecuting crime with the privacy rights of QW and YC.

The applicant is in a better position than is the Court to specify what it is looking for, and how best to find it without going further than necessary.

Obviously, any such details would have to be verified by affidavit, where appropriate. [ 32 ] Aside from any other guidance, I think it would be appropriate for the order to specify, in some manner, that if CRA comes across any documents which would be subject to solicitor-client privilege but which would otherwise be open to examination under the order, it is to immediately cease examining such document. [ 33 ] As an additional issue, I note that the proposed order would authorize examination of “all data, records and other information on the electronic device within the scope of the relevant search warrant ”. (para. 3, emphasis added).

Given that there is no search warrant, this wording is problematic. Copying

Copying [34] Finally, the last paragraph of the proposed order would have this Court order CBSA to provide to CRA copies of thedocuments “relevant to their investigation”. There are two problems with this. First is the wording, and second is whether or notcopying is permitted under s. 490(15); and, as an associated issue, whether I can or should order CBSA to make copies for CRA. [35] Dealing with the first problem, it would be improper for the order to authorize CRA to obtain copies of anything they consider(or even which reasonably is) “relevant to their investigation”.

As noted above, there need to be restrictions on the examination; thosesame restrictions logically must apply to copying. The wording regarding copying must therefore be consistent with the wordingregarding examination: CRA cannot get copies of documents it is not authorized to examine. [36] With respect to the second issue, I am not aware of what jurisdiction I might have to compel someone to make copies for theperson examining something detained pursuant to s. 490(15). [37] I am satisfied that I do in fact have the power to order an applicant be allowed to make copies.

In R v Sutherland, (ON SC), [1977] OJ No 2614, 38 CCC (2d) 252 (Ont Co Ct) [Sutherland], the applicant was allowed to make copies of thedocuments seized. In that case, the applicant alleged that the documents belonged to it, and were necessary for the operation of itsbusiness. The Court concluded (para. 20): I have, therefore, reached the conclusion that "examine" is to be interpreted as including the right to make copies of documents by bothmechanical means, such as photocopying, and the taking of notes or memoranda of the contents of the documents.

To reach a contraryconclusion would do violence to the right of access by those having an interest in what is seized by the execution of a search warrant byunduly restricting the right to examine to a visual examination which, though helpful, fails to recognize that the contents and complexityof documents seized would, in most cases, be beyond the natural retentive powers of the average person.

While modern technology,through various electronic devices has, perhaps, taken a step toward making the human memory obsolete, it has also provided aconvenient mode to aid in the proper examination of documents. [38] I adopt that reasoning.

Further, as that decision goes on to say, the Court has the power to make rules as to how the applicantcan exercise the power to make copies, so as to preserve the evidence. [39] R v Labrador Tool Supply Ltd, (NL SC), 3 CCC (3d) 269, 41 Nfld & PEI R 126 (1982, Nfld SCTD)[Labrador Tool] dealt with the question of jurisdiction of the Court to order the holder of the documents to make copies for theapplicant. The Court there concluded that there is no such power in what is now s. 490.

I note that in the annotations in Martin’sCriminal Code, 2017, it is suggested that Labrador Tool stands for the proposition that copies cannot be made. I do not read the case asgoing that far.

Indeed, the Court quite explicitly defines the issue before it (at para. 12): The issue is whether s. 446(5) in authorizing the court to permit a person having an interest in anything seized by warrant to examine theproperty detained, includes the authority or jurisdiction to also order the Crown to provide the party from whom the property was takenwith photocopies. [40] The Court then answers that question (in para. 14): “the Crown cannot be compelled by order of the court to provide copies ofrecords and documents seized”. [41] I do not read Sutherland and Labrador Tool as being contrary to each other; rather, I see them as complementary.

Sutherlandacknowledges the power of the Court to allow copying; Labrador Tools simply says that the Crown cannot be compelled to do thecopying for the applicant.

Admittedly, Labrador Tools states that allowing a party to have copies made at their own expense wouldrequire an amendment to the subsection (para. 16), but this remark is clearly in the context of whether or not the Court has the power tocompel the Crown to make such copies (even if the applicant pays the Crown for the copying); the question of whether or not the Courtcould make an order to allow the applicant themselves to make copies, or could make an order allowing third-party copying forexample, was simply not addressed.

[42] R v Barsoum, (NWT SC), [1989] NWTR 85, 6 WCB (2d) 107 (SCNWT) dealt with examination ofdocuments in the possession of the Court. An order was made pursuant to what is now s. 490(15) allowing both examination andcopying, the cost of copying to be paid by the applicant.

Of course, the documents were in the custody of the Court, not the Crown orpolice, so the order for copying was not directed to a third party, as is here being requested by CRA. [43] In Haynes v Ontario, 78 OTC 129. 40 WCB (2d) 168 (1998, OCJ), again dealing with an application under what is now s.490(15), the Court concluded that, “ it seems clear, and is a matter of common sense, that the right to ‘examine’ includes the right tomake copies of documents relevant to the ‘interest’ claimed by the applicant” (para. 6). [44] Accordingly, I conclude that: (

i) this Court has the power to order not just examination of the documents, but copying of the same; (ii) this Court has the power to impose appropriate terms on the exercise of such power, and; (iii) this Court does not have the power to compel the third party holder of the documents to make copies for the applicant. [45] The application is therefore dismissed. ____________________________ Q. D. Agnew, J