MERCHANT LAW GROUP LLP, ANTHONY MERCHANT, v. PANA MERCHANT, 2023 SKKB 22

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 22 Date: 2023 01 30 Docket: QBG-SA-00520-2013 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: MERCHANT LAW GROUP LLP, ANTHONY MERCHANT, and PANA MERCHANT PLAINTIFFS - and - CANADIAN BROADCASTING CORPORATION, HARVEY CASHORE, FRÉDÉRIC ZALAC and GERARD RYLE DEFENDANTS Counsel: E.F. Anthony Merchant, K.C. on his own behalf Sean M. Sinclair for the defendants ___________________________________________________________________________ FIAT BARDAI J.

January 30, 2023 ___________________________________________________________________________ Introduction [ 1 ] In April of 2013, the Merchant Law Group LLP, Anthony Merchant [Mr. Merchant] and Pana Merchant commenced an action against the Canadian Broadcasting Corporation [CBC], Harvey Cashore [Mr. Cashore], Frédéric Zalac [Mr. Zalac] and Gerard Ryle. The claim alleges that the defendants published, aired and broadcast stories about the plaintiffs that were/are defamatory, libelous and slanderous resulting in irreparable harm to the plaintiffs.

The allegation is that the publications presented a false and misleading storyline suggesting that the plaintiffs had failed to claim income or make the necessary remittances with the Canada Revenue Agency. The allegation is that the plaintiffs were framed in the news story as “wealthy tax evaders”. The claim contends that the defendants engaged in a determined effort to malign and defame the plaintiffs for the purposes of promoting a CBC story that the plaintiffs had committed or were involved in unlawful conduct.

[ 2 ] The defence filed in September 2016 contends that the publications discussed an offshore trust established in the Cook Islands where the settlor is described as the plaintiff, Mr. Merchant, and the beneficiaries include Pana Merchant and others with the last name “Merchant”. The defendants allege that their reporting is mischaracterized in the statement of claim.

The defendants rely on the defences of responsible communication on a matter of public interest, fair comment, innocent dissemination, passive instrument, truth and qualified privilege. [ 3 ] Since the claim was commenced, there have been a number of procedural issues that have required the Court’s intervention. These include motions to deal with a demand for particulars, the setting aside of a default notice, and issues of production. In February of 2022, the defendants filed an application seeking

summary judgment against the plaintiffs on the basis that: (

a) the publications are true; (

b) the publications are protected based on the defence of responsible communication on a matter of public interest; (

c) any opinions in the publications amount to fair comment; (

d) the defendants are not responsible for any comments made by third parties; and (

e) the publications were in the public interest and according to law. Specifically, the defendants did not breach any legislation relating to privacy. [ 4 ] In support of their

summary judgment application, the defendants have filed an affidavit from Mr. Cashore, sworn November 17, 2021 [Cashore Affidavit] and an affidavit from Mr. Zalac, sworn October 20, 2021 [Zalac Affidavit]. Mr. Merchant seeks to strike substantial portions of the Zalac Affidavit, pursuant to Rules 13-30 and 7-3 of The Queen’s Bench Rules . Mr.

Merchant contends that the Zalac Affidavit contains irrelevant information, opinion, argument, speculation and that the business records accompanying the Zalac Affidavit have not been proven in accordance with the requirements of The Evidence Act , SS 2006, c E-11.2 and, therefore, cannot be considered at all by the Court. [ 5 ] The Zalac Affidavit indicates that he was contacted by Marina Walker, an employee of the International Consortium of Investigative Journalists [ICIJ], indicating that the ICIJ was in possession of a hard drive from an unknown source containing information about accounts held by Canadians in offshore jurisdictions.

According to Mr. Zalac, the information on the hard drive appeared to originate, in part, from an entity called TrustNet (Cook Islands) Limited [TrustNet]. The Zalac Affidavit appends a number of documents purporting to be from TrustNet’s internal database. These documents purportedly detail the setting up of trusts and corporate structures by the plaintiffs. [ 6 ] The application to strike portions of the Zalac Affidavit initially came before Currie J. In a July 6, 2022 decision, he found that the judge who presides over the

summary judgment hearing should determine the application to strike as the decision to strike will affect the evidence that the presiding judge can consider on the

summary judgment application. I agree. I am, therefore, seizing myself with the application for

summary judgment and will decide the matter of the objection application. [ 7 ] The objections advanced by Mr. Merchant to the Zalac Affidavit can be grouped into three broad categories: (

a) relevance in relation to paragraphs 12, 30, 36, 37 and 62 of the Zalac Affidavit. (

b) business records which, according to Mr. Merchant, are inadmissible pursuant to s. 52 of The Evidence Act . This objection relates to paragraphs 13, 17, 31 and Exhibits “B”-“FFF” of the Zalac Affidavit; (

c) inadmissible opinion, evidence, commentary, argument and speculation which are contained at paragraphs 13, 15, 16, 18, 20, 21, 30 and 32 of the Zalac Affidavit; The Queen’s Bench Rules [ 8 ] Rule 13-30 provides in part: Affidavit to be on knowledge or belief 13-30

(1) Subject to subrule (2), an affidavit must be confined to facts that are within the personal knowledge of the person swearing or affirming the affidavit.

(2) In an interlocutory application, the Court may admit an affidavit that is sworn or affirmed on the basis of information known to the person swearing or affirming the affidavit and that person’s belief.

(3) If an affidavit is sworn or affirmed on the basis of information and belief in accordance with subrule (2), the source of the information must be disclosed in the affidavit. [ 9 ] Although Rule 13-30 generally prohibits hearsay on final applications, the Rules governing

summary judgment and, in particular, Rule 7-3, allows the Court to consider hearsay where: the source of the information is set out; the deponent says they believe the information; and circumstances justifying the use of the hearsay are provided. It is of note that the language of Rule 7-3 is permissive and says the Court “may” consider such evidence but does not require it to do so. Rule 7-3(3) states: Evidence on application 7-3

(3) An affidavit for use on an application for

summary judgment may be made on information and belief as provided in rule 13-30, but, on the hearing of the application, the Court may draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts.

Relevance in relation to paragraphs 12, 30 , 36, 37 and 62 [ 10 ] The application contends that the affidavit of Mr. Zalac contains irrelevant evidence. Relevance is an issue determined by looking at the pleadings.

In R v J.-L.J., 2000 SCC 51 at para 47 , [2000] 2 SCR 600, the Court provides the following definition of relevance: 47 Evidence is relevant "where it has some tendency as a matter of logic and human experience to make the proposition for which it is advanced more likely than that proposition would appear to be in the absence of that evidence" … [ 11 ] In Canadian National Railway Co. v Clarke Transport , 2013 SKQB 394 at para 22 , 432 Sask R 63, the Court looked at relevance in the context of a disclosure application and held: [22] What determines whether a fact or matter is material are the elements of the cause(

s) of action and what the parties have pled as being the facts or their positions. Only if the matter is in issue in the action is the matter material, in a jurisprudential sense. If the matter qualifies as being material to the action, the next question is whether the evidence being proffered tends to prove or disprove the matter in issue. If the question does not relate to a matter in issue as particularized by the pleadings, then the matter is not relevant to any matter in issue.

The question of relevance is, therefore, determined by looking at the facts, allegations, causes of action and defences in issue based on the language of the pleadings. [ 12 ] In this case, it is not in dispute that certain publications were made and disseminated. The content of those publications is not in dispute either, though the characterization of such publications is a matter in dispute. A review of the pleadings suggests that what is in issue between the parties, in addition to the question of damages, is: (

a) whether the defendants were focused on the plaintiffs in their reporting; (

b) the appropriate characterization of the publications and the motivation behind such publications given the allegation that the defendants actively sought to malign the plaintiffs and leave a misleading impression in the footage aired by the CBC; (

c) whether the publications are true; (

d) whether the publications are protected based on the defence of responsible communication on a matter of public interest; (

e) whether any opinions in the publications amount to fair comment, including whether there was any malice in respect of the making of the publication as malice would defeat a fair comment defence; (

f) whether the defendants are responsible for any comments made by or attributed to third parties; and (

g) whether the publications were in the public interest and made according to law. For example, did the defendants breach any legislation relating to privacy. [ 13 ] In any challenge to evidence based on relevance, regard must be given to the matters in issue as set out in the pleadings, including the elements which would have to be proven in order to establish the claim or any of the various defences asserted. If the evidence is irrelevant to the issues raised in the pleadings, including any of the defences, the evidence ought to be struck. In this case, at paragraph 12, Mr. Zalac states: 12.

Indeed, while in Washington, I also reviewed material in relation to Commonwealth Trust Ltd. and its connections to a Canadian, Mr. Tom Ward. I eventually learned that this firm enabled the creation of numerous companies that were used to mask the laundering the proceeds from a questionable $230M Russian tax refund. This material was eventually relied upon to publish a story contemporaneously to the story about Mr. and Mrs.

Merchant. [ 14 ] At paragraph 13 of the statement of claim the plaintiffs allege that “The Defendants exhibited a single-minded focus on pursuing defamatory stories against the Plaintiffs designed to malign and libel them…”. At paragraph 14, the claim goes on to allege that the defendants “decided that they would focus all of their attention on developing a defamatory and malicious series of stories about the Plaintiffs alone…” [ 15 ] Paragraph 12 of the Zalac Affidavit speaks to the disputed focus of the investigation. It can therefore stay. [ 16 ] Paragraph 30 of the Zalac affidavit states: 30.

Eventually, further data leaks, including one which became known as the “Panama Papers”, were reported upon by the CBC and others working with the ICIJ. According to the ICIJ, worldwide, countries from New Zealand to Argentina have recouped more than $1.2 billion in fines and unpaid taxes as a result of the disclosures. The data leaks also played a significant role in holding public officials accountable; it is my understanding that, prime ministers in Iceland and Pakistan resigned or were forced out of office. [ 17 ] Paragraph 30 does not speak to a specific matter in dispute between these parties.

Rather, what this paragraph does is provide information about a different data leak and the results of the investigation into that separate data leak. I find that the fact that there has been an instance of another leak of financial information (the Panama Papers) to be irrelevant to the issues raised in this case. Paragraph 30 is accordingly struck. [ 18 ] Paragraph 36 of the Zalac Affidavit states: 36. As noted above, the CBC determined that this was a matter of significant public importance, as it related to wider public issues.

The tax gap and taxes avoided through offshore holdings by the wealthy are of concern to Canadians as a whole. In order to tell the story of

the offshore holdings, we (along with the worldwide network of journalists working with the ICIJ) believed that telling stories about the individuals with the offshore accounts was important to the public. [ 19 ] This paragraph is about what the CBC determined and why the CBC viewed the matter as being one of public importance. The paragraph is relevant to the question of malice, which is a consideration in the fair comment defence. It is also relevant to some of the other defences raised, for example, responsible communication on a matter of public interest.

It can stay. [ 20 ] Paragraph 37 of the Zalac Affidavit states: 37. The story was not urgent in the sense that it was prepared in great haste. We worked on this story for several months. It went through multiple edits. We coordinated the release of the story with the release of other stories by the journalists working with the ICIJ on April 3, 2013. However, the deadline was never short. We ultimately aired the Initial Story because we felt that it was ready for broadcast. [ 21 ] One of the defences advanced by the defendants is the defence of responsible communication on a matter of public interest.

This defence requires that the publication be on a matter of public interest and that the publisher act diligently in trying to verify the information in the story. See Grant v Torstar Corp., 2009 SCC 61 at para 126 , [2009] 3 SCR 640. Without determining whether the publication is on a matter of public interest at this stage, this evidence speaks to the diligence of the defendants. It is, therefore, relevant to a matter in issue as set out in the pleadings. It can stay. [ 22 ] Paragraph 62 of the Zalac Affidavit provides: 62.

The CBC has been at all material times a broadcaster licensed by the Canadian Radio-Television Commission to carry on a broadcasting transmitting undertaking. Attached hereto and marked Exhibits “JJJJ” and “KKKK” are copies of the renewals of the CBC’s broadcasting licences for 2013 and 2018.

A broadcasting licence has existed for the CBC for each year for a period far before and subsequent to the airing of the Initial Story, covering each of the other stories raised in the Statement of Claim. [ 23 ] Among the issues in the lawsuit as set out in the pleadings is whether or not the defendants breached statutory obligations. Paragraph 26 of the claim alleges breach of a number of statutes, including The Privacy Act , RSS 1978, c P-24 .

Section 4 of that legislation provides: Defences 4

(1) An act, conduct or publication is not a violation of privacy where: … (

e) it was that of a person engaged in a news gathering: (

i) for any newspaper or other paper containing public news; or (ii) for a broadcaster licensed by the Canadian Radio-Television Commission to carry on a broadcasting transmitting undertaking; and such act, conduct or publication was reasonable in the circumstances and was necessary for or incidental to ordinary news gathering activities.

(2) A publication of any matter is not a violation of privacy where: (

a) there were reasonable grounds for belief that the matter published was of public interest or was fair comment on a matter of public interest; or (

b) the publication was, in accordance with the rules of law relating to defamation, privileged; but this subsection does not extend to any other act or conduct whereby the matter published was obtained if such other act or conduct was itself a violation of privacy. … [ 24 ] Paragraph 62 of the Zalac Affidavit provides evidence relating to whether or not the defendants were broadcasters within the meaning of s. 4 of The Privacy Act . This paragraph can stay. [ 25 ] In the end result, in respect of the challenge to paragraphs 12, 30, 36, 37 and 62 on the basis of relevance, I strike paragraph 30.

The remaining paragraphs I do not strike. Business records which, according to Mr. Merchant are inadmissible pursuant to s. 52 of The Evidence Act . This objection relates to paragraphs 13, 17, 31 and Exhibits “B”-“FFF” of the Zalac Affidavit [ 26 ] There is no question that the documents appended to the Zalac Affidavit amount to hearsay. In R v Bradshaw, 2017 SCC 35 at para 1 , [2017] 1 SCR 865 [ Bradshaw ], the Court provides a

summary of what hearsay is, the challenges that arise with hearsay evidence and when such evidence may be admitted: 1 Hearsay is an out-of-court statement tendered for the truth of its contents. It is presumptively inadmissible because - in the absence of the opportunity to cross-examine the declarant at the time the statement is made - it is often difficult for the trier of fact to assess its truth. Thus hearsay can threaten the integrity of the trial's truth-seeking process and trial fairness. However, hearsay may exceptionally

be admitted into evidence under the principled exception when it meets the criteria of necessity and threshold reliability. [ 27 ] The general rule as set out in Rule 13-30 is that where a final determination is being made, hearsay evidence is inadmissible. Where instead an interlocutory decision is being sought, hearsay may be permitted where special circumstances are provided. See for example, Coppola v Lang, 2008 SKCA 83 , 311 Sask R 54 [ Coppola ]. [ 28 ] Rule 7-3, enacted subsequent to the Coppola decision, creates an exception to this general rule allowing but not requiring the Court to consider hearsay evidence in the context of

summary judgment applications. [ 29 ] Mr. Merchant takes the position that the purported TrustNet records appended to the Zalac Affidavit are business records and may only be admitted into evidence and considered for any purpose if the business records exception set out in ss. 49 and 52 of The Evidence Act is first satisfied. Those sections provide in part:

Interpretation of Division 49 In this Division: “ business ” includes every kind of business, profession, occupation, calling, operation or undertaking, whether carried on for profit or otherwise or whether carried on by a person or entity in the private sector or in the public sector; (« entreprise ») “ documen t” means a record in any tangible form that is capable of being photographed; (« document ») … “ record ” includes any information that is recorded or stored by means of any device or electronic means. (« enregistrement ») … Copies of business records 52

(1) Subject to this section, a copy of an entry in a record kept by a business is admissible in any proceeding as proof, in the absence of evidence to the contrary, of the entry, and of the acts, transactions, occurrences and events recorded in the entry.

(2) A copy of an entry in a record kept by a business shall not be received in evidence pursuant to this

section unless it is first proved that: (

a) the record was, at the time of the making of the entry, one of the ordinary records of the business; (

b) the entry was made in the usual and ordinary course of business; (

c) the record is in the custody or control of the business or its successor; and (

d) the copy is a true copy.

(3) The proof described in subsection (2) may be given by the manager or accountant of the business or by any person employed by the business who has knowledge of the record, and may be given orally or by affidavit. [ 30 ] The position of Mr. Merchant is that unless the requirements of s. 52 are met, the documents cannot be admitted, either for the truth of their contents or for the fact that such records were in the possession of the defendants prior to the airing of the news stories in issue. [ 31 ] Alternatively, Mr.

Merchant argues that internet records, which he says these are, should not be admitted, or alternatively, that extreme caution should be used when considering whether to admit information from the internet. Mr. Merchant relies on Thorpe v Honda Canada, Inc., 2010 SKQB 39 , 352 Sask R 78 [ Thorpe ], Kish v Facebook Canada Ltd., 2021 SKQB 198 , Wells v General Motors of Canada Company , 2018 SKQB 253 , and Adams v Canadian Tobacco Manufacturers’ Council , 2010 SKQB 308 , 360 Sask R 236 in support of his argument.

These cases, in my view, do not stand for the proposition that news articles and internet material can never be admitted. Rather, these cases require that information from the internet be critically examined before being admitted into evidence. It is fair to say that not every piece of information found on the internet is reliable or, frankly, true. However, a blanket prohibition on internet materials is not appropriate either. As noted by Popescul J. (as he then was) in Thorpe at paras 21-24 , of his decision: [21] The internet is an abundant source of information.

Some of the information available is impeccably accurate, while other information is pure garbage. It does not make sense, on the one hand, to conclude that any and all information pulled from the world-wide web is inherently unreliable and ought to be given zero weight; on the other hand, it makes equally little sense to open the door to admitting into court absolutely anything placed on the internet by anybody. [22] The approach taken by the Federal Court Trial Division has logical appeal.

Even though the appellate court declined to endorse the analysis and conclusion, I agree with the essence of the ruling: internet information may be admissible in court proceedings depending upon a variety of circumstances relating to reliability which include, but are not limited to: · whether the information comes from an official website from a well known organization; · whether the information is capable of being verified; · whether the source is disclosed so that the objectivity of the person or organization posting the material can be

assessed. [23] Where the threshold of “admissibility” is met, it is still up to the triers of fact to weigh and assess the information todetermine what significance, if any, such information would have on the issues to be decided. [24] If the internet-based evidence tendered does not contain sufficient badges of reliability, it ought be rejected asworthless and, hence, inadmissible. [32] The defendants’ position is that the business records exception is not the basis upon which they are asking thatthese purported TrustNet records be admitted into evidence.

They say the business records exception in The Evidence Act is, therefore,not relevant. The defendants want the documents to be admitted for the truth of their contents. They rely on Rule 7-3 which says thathearsay “may” be admitted subject to the requirements of Rule 13-30 being met. [33] When hearsay does not fall within a recognized exception, such as the business records exception, the questionbecomes whether the hearsay evidence can be admitted for the truth of its contents under the principled approach to hearsay.

As outlinedby the Supreme Court of Canada in Bradshaw at para 23, under the principled approach, hearsay evidence can be admitted when it meetsthe twin criteria of necessity and threshold reliability. [34] When the source of the hearsay is unknown, necessity can be established on the basis that there is no othermeans of getting evidence of similar value before the Court, because the declarant is unable to testify.

See R v Middleton, 2012 ONCA523 at para 44, 289 CCC (3d) 55; and R v Hawkins, (SCC), [1996] 3 SCR 1043 at paras 71 to 73. [35] With respect to the reliability inquiry under the principled approach, threshold reliability of hearsay evidencecan be established on two separate bases. First, where there are adequate substitutes for testing the truth and accuracy of the hearsay,which is called procedural reliability; and, second, where there are sufficient circumstantial or evidentiary guarantees that the statementis inherently trustworthy, which is called substantive reliability (Bradshaw at para 27).

Also see R v Anaquod, 2021 SKCA 111 at para 7,75 CR (7th) 111. [36] The need to ensure that a hearsay statement is reliable has resulted in a cautious approach to allowing unsourcedhearsay into evidence: (

a) In Nicholson Estate v Johnston, 2017 BCSC 1151, hearsay documents adduced by the parties that had unknown authors were heldto be inadmissible because there was no way that the reliability of the documents could be tested and, therefore, there was no principledbasis to admit them (see para. 8); (

b) In 118143 Ontario Inc. v City of Mississauga, 2015 ONSC 3691, 39 MPLR (5th) 231, a document was held to be inadmissible ashearsay because its origin was unknown and its source and content did not provide the reliability required by the principled approach tothe hearsay rule (at para. 162); and (

c) In Jayde Scott v Regional Health Authority B and Nicole Ruest, 2022 NBQB 22, an email containing hearsay that quoted unknownsources was held to be inadmissible due to a lack of evidence that corroborated the contents of the email.

Such email was found to beneither necessary or reliable in the context of that case (at paras. 73 to 84). [37] When determining whether hearsay evidence is substantively reliable, it is open to the Court to consider whethercorroborative evidence independently supports the reliability of the hearsay evidence (Bradshaw at paras 56 & 57). [38] As a starting point, it is important to note that to the extent that there is conflict between The Evidence Act andThe Queen’s Bench Rules, The Evidence Act must prevail over The Queen’s Bench Rules.

In Arslan v Şekerbank T.A.Ş., 2020 SKCA104at para 31, the Court notes: 31 It is uncontroversial that specific statutory provisions prevail over general provisions in the Rules, if there is a conflict orinconsistency between the two on substantive issues. With regard to procedural issues, section 27(2) of The Queen's Bench Act, 1998, SSc Q-1.01, empowers the Court of Queen's Bench to make rules for the procedure to be followed that supersede procedural rules set out inan Act, unless that power is expressly excluded by the Act.

However, on substantive issues, general rules in the Rules are subordinate tospecific legislative enactments and the legislative "enactment prevails to the extent of any conflict or inconsistency" (Rule 1-8): also seePlantana v Saskatoon (City), 2006 SKCA 10 at 62-65 and 101-102, 263 DLR (4th) 603, and Menke Holdings Ltd. v Bayardo Aguirre,2017 SKQB 72 at paras 13-15, 263 DLR (4th) 603. [39] I accept Mr. Merchant’s argument that to the extent there is a conflict between The Evidence Act and TheQueen’s Bench Rules, The Evidence Act prevails.

That said, The Evidence Act is clear in that business records being admitted “pursuantto” s. 52 must first satisfy the requirements of s. 52(2). The

section does not provide that this is the only way these records can be putbefore the Court. [40] I do not accept Mr. Merchant’s suggestion that absent compliance with s. 52 of The Evidence Act, the recordsappended to the Zalac Affidavit are completely inadmissible and may not be considered by the Court at all.

At this stage, therequirements of s. 52 are not met and we do not know whether the records appended to the Zalac Affidavit are all even business records.That said, even if we begin from the assumption that these are all business records, they may still, in my view, be admitted pursuant tohearsay exceptions, notwithstanding that the defendants have not satisfied the requirements of the specific exception found in TheEvidence Act. [41] What The Evidence Act does is create an exception to the hearsay rule allowing for business records to beadmitted as proof of their contents, if certain pre-conditions are met.

It is, however, not the only exception to the hearsay rule or the onlyway in which records of this nature may be admitted. This point was succinctly made at para. 34 of the Court of Appeal’s decision inB.L. v Saskatchewan (Ministry of Social Services), 2012 SKCA 38, 393 Sask R 57, where the Court notes:

[34] None of the foregoing prevents a court from admitting business records under another exception to the hearsay rule or editing a record to delete parts which do not meet the requirements of ss. 50 - 52 of The Evidence Act . [ 42 ] The question, therefore, is whether the material from the unknown source is sufficiently authentic, credible and reliable for it to be entered into evidence for the truth of its content pursuant to Rule 7-3. [ 43 ] Where a party seeks to tender hearsay evidence in the context of an application they must: (

a) set out the source of the information; (

b) say that the deponent believes the information to be true; and (

c) provide the circumstances justifying the use of the hearsay. See: Rivard v Rivard, 2002 SKQB 25 at para 4 . [ 44 ] The requirements of the Rule are aimed at ensuring that before hearsay information is admitted into evidence for the truth of its contents, the record sought to be introduced is found to meet the twin criteria of necessity and threshold reliability required under the principled approach to hearsay. [ 45 ] In this case, the Court has no evidence about the source of the underlying records. The Court cannot determine the authenticity of the documents.

The Court does not know how the records came into the possession of the unknown source, whether the unknown source created the record, who the unknown source is, whether the unknown source is reliable, whether the documents were edited by the unknown source or why the unknown source leaked the documents. [ 46 ] The position of the defendants is that they have identified the source as being “unknown”. The defendants further say that the Zalac Affidavit includes language saying that he believes the information to be true.

Finally, the defendants argue that the circumstances of the case warrant the admission of these records for the truth of their contents. Specifically, the defendants argue that the documents are, on their face, inherently reliable in that they include the correct names and addresses of the plaintiffs and contain other verifiable information, like the name of Mr. Merchant’s legal colleague, the “emergency trustee” identified in the documents as Tim “Purple” which Mr.

Zalac infers is intended to refer to Tim Turple. [ 47 ] Much of the information that CBC was able to verify from the documents is not secretive in nature. The names of family members, the fact that Tim Turple is a member of the Merchant Law Group, basic address and phone information can easily be obtained. This corroborative information, in my view, does not make the documents sufficiently reliable to overcome the concerns the Court has over the authenticity of these records. The concerns described by the Court in Thorpe , Bradshaw and subsequent cases are not, in my view, overcome.

Therefore, the requirement of threshold reliability, on either a procedural or substantive basis, is not satisfied in this case and the hearsay cannot be admitted under the principled approach. To be clear, this does not mean that hearsay from an unknown source can never be admitted, but in this case, on this evidence, I am not prepared to admit this evidence for the truth of its contents. I have concerns over its authenticity and reliability given the issues and unanswered questions respecting the unknown source.

I am also troubled by the fact that the name of the “emergency trustee” is not spelled correctly on what the defendants characterize as an official and reliable document. [ 48 ] The fact that I am not admitting these records at this time for the truth of their contents does not mean that the information in the records is untrue.

What it means is that the truth of the record from the unknown source will not be proven solely by the record itself. [ 49 ] Having determined that the records identified in the objection cannot be introduced for the truth of their contents, I am nevertheless allowing them into evidence, not to prove what they say, but rather to prove what the defendants looked at and relied upon in making the various publications and news stories in issue.

This material relates directly to a number of the defences advanced by the defendants which defences do not require that the defendants prove the truth of their publications in order to avoid liability. [ 50 ] The defendants may still rely on the defence of truth but they will need to do more than simply put forward the documents from the unknown source to prove the truth of their publications. [ 51 ] In the end result, I decline to strike this evidence but limit its use on the

summary judgment application for now. It can be used for the purposes of establishing what the defendants looked at and considered in the preparation of their publication but will not be admitted as proof of the various trust arrangements, transactions and organizational structure set out in the various documents, absent further evidence which may help verify and corroborate what the records say.

Inadmissible opinion, evidence, commentary, argument and speculation with respect to portions of paragraphs 13 , 15 , 16 , 18 , 20 , 21 , 30 and 32 of the Zalac Affidavit [ 52 ] The plaintiffs object to the following language in paragraph 13 on the basis of opinion: 13. In reviewing the ICIJ database in Washington, I also looked at information pertaining to the individuals on the list provided by the ICIJ. I immediately recognized that there was extensive information related to Mr. and Mrs. Merchant.

In my initial review in Washington, I came across an alert in Merchant’s file (discussed further below) indicating that faxes should not be sent to Mr. Merchant because “he will have a stroke about it.” This immediately piqued my interest in Mr. Merchant’s affairs and the information in the database about him, given the clear indication that he sought secrecy. [ 53 ] In my view, Mr. Zalac can testify as to what he reviewed in Washington, including the alert he saw in Mr. Merchant’s file. This does not mean the alert is true, only that this is what Mr. Zalac says he saw. Mr. Zalac cannot, however, testify as to

whether or not Mr. Merchant sought secrecy. He cannot testify as to Mr. Merchant’s state of mind or intentions, only what the documents say. The last eight words of paragraph 13 are, therefore, struck. [ 54 ] In respect of paragraphs 15, 16, 18, 21, 30, and 32, the objection is made to descriptive words like “significant”, “important” and “numerous”. Descriptive words are not on their own objectionable. I agree with the comments of the Court in Gusikoski v Gusikoski, 2001 SKQB 139 at para 15 , 205 Sask R 145, where the Court held: 15 … The Rule was not enacted in order that every sentence should be "parsed".

Adjectives or adverbs often convey in one word what it would otherwise take many words of detail to describe. The opinion Rule and the argumentative Rule were not directed at the use of adjectives or adverbs unless they are being used for pejorative purposes. [ 55 ] The use of adjectives and descriptors in affidavits are not on their own objectionable. That said, where the term “significant” is used without providing context or particulars as to how long a “significant” amount of time is to the affiant, the word becomes meaningless.

In the context of this case, in some instances, the term “significant” is given context by describing the tasks undertaken while in other cases not. To the extent there is no context provided, these sorts of descriptors can be given little meaning. The language objected to can stay but in some instances, the language is frankly, not helpful. [ 56 ] Portions of paragraphs 15 and 16 are also objected to on the basis of opinion. Paragraph 15 indicates “…In other words, as far as I know, my access to the database was akin to that of a Trustnet employee”. This sentence is struck. Mr.

Zalac cannot testify as to what exactly a TrustNet employee has access to. Do all TrustNet employees from the custodial staff to the chief executive have access to the same TrustNet records and, if they do, how does Mr. Zalac know? At best, he can say he had access to records on the hard drive leaked by the unknown source and provided to him by the ICIJ. [ 57 ] Paragraph 16 is also objected to on the basis that it is opinion and on the basis that there is no evidence to support the suggestion that “Trustnet had opened on behalf of the Trust and at the suggestion of Mr.

Merchant an investment account in Bermuda…” In the absence of setting out the source for the statement “at the suggestion of Mr. Merchant”, this language must be struck. [ 58 ] Mr. Merchant objects to paragraph 20 which states: 20. The review of the court file documents was important. It permitted me and my colleagues to better understand the ways in which various entities mentioned in the ICIJ documents were used by Mr. and Mrs. Merchant. [ 59 ] This paragraph details the steps taken by the defendants and why they took such steps. It sets out why Mr.

Zalac saw the review of court file documents as being important. It goes to the question of diligence which is relevant to the defences raised. It can stay. [ 60 ] Paragraphs 31 and 32 of the Zalac Affidavit state: 31. The CBC believed that reporting on the Merchants’ documents was in the public interest because of the high public profile of Pana Merchant, a sitting senator at the time, and Anthony Merchant, a prominent class actions lawyer.

Further, the documents indicated a desire for secrecy, with an alert set such that every employee opening the file would see the direction “such as the direction not to send faxes to Mr. Merchant as “DO NOT FAX TO CLIENT. HE WILL HAVE A STROKE. KEEP CORRESPONDENCE TO A MINIMUM. AIRMAIL ALL CORRESPO.” The internal Trustnet notes and instructions related to the Trust also indicated that “Mr. Merchant requesting that we do not disclose now or in the future any information to the authorities in Luxembourg, or anywhere…” A copy of these documents is attached hereto as EXHIBIT “QQQ” . 32.

These issues of secrecy are a major concern with tax havens. We also believed that the juxtaposition of the ICIJ documents with the public income tax rulings (in part referenced above) were an important factual issue in considering public interest. Pana Merchant’s role as a government official is a further important consideration when looking at public interest, because she (along with elected officials and other Senators) has a role in setting tax policy in Canada. [ 61 ] I agree that these paragraphs include opinion. The Court needs to know what the documents say.

The Court can determine what the documents mean. For example, Mr. Zalac can testify as to the notation on the document but he cannot testify as to Mr. Merchant’s intentions or desires. That is for the Court to decide. Those portions of these two paragraphs which seek to interpret documents rather than report on their contents will not be considered and are struck. Conclusion [ 62 ] In the end result, I have struck paragraph 30 and portions of paragraphs 13, 15, 16, 31 and 32. In addition, I have limited the use that can be made of the documents appended to the Zalac Affidavit.

These documents are not to be used for the truth of their contents but only for the fact that this is information that the defendants received, looked at and considered in preparing their publications. [ 63 ] The results of the application have been decidedly mixed. I indicated to the parties that I would hear submissions on costs if one party or the other’s position was largely accepted. In this case, given the results and the divided outcome, costs shall be in the cause. [ 64 ] I instruct the Local Registrar to convene a call with counsel to discuss management of the

summary judgement application. I seize myself with such application and the management contemplated under General Application Practice Directive #9. [ 65 ] Finally, I should add that this decision concerned the admissibility of certain evidence. What weight should be given to the admissible evidence and whether such evidence should be believed remains very much an open question to be considered

only after all the admissible evidence has been tendered. At this stage, the Court has only one side of the story, but now the plaintiffs know exactly the evidence to which they must respond. J. N. BARDAI