Federal Court Decisions

Date: 20050216

Docket: T-1591-04

Citation: 2005 FC 254

BETWEEN:

DOMINION INVESTMENTS (NASSAU) LTD.

-and-

MARTIN TREMBLAY

                                    (President of Dominion Investments (Nassau) Ltd.)

                                                                                                                                             Plaintiffs

                                                                          AND

                              HER MAJESTY THE QUEEN IN RIGHT OF CANADA

                                                                                                                                           Defendant

                                                        REASONS FOR ORDER

RICHARD MORNEAU, PROTHONOTARY:

Introduction

[1]                As a result of the defendant's motion to stay proceedings, this Court has been called to determine whether the defence she should raise against the action in civil liability brought by the plaintiffs would inevitably result in her disclosing information that she considers she must protect for a variety of public interest reasons, and for which she has filed, in support of her motion, a duly prepared certificate under section 37 of the Canada Evidence Act, R.S. 1985, c. C-5, as amended (the Act); without disclosing the information, the certificate refers to the information to be protected, which is set out in detail in an affidavit by an RCMP inspector (the affidavit of Serge Therriault).

[2]                For the reasons that follow, the Court is of the opinion that this would be the case in this instance and that the interest of justice referred to in paragraph 50(1)(b) of the Federal Courts Act, R.S. 1985, c. F-7, as amended, corresponds with the public interest reasons set out in the certificate and detailed in Serge Therriault's affidavit.

[3]                Accordingly, the defendant's motion for a stay of proceedings in this case will be allowed and, as requested, the stay will apply for one year from the date of the order accompanying these reasons. However, the stay will come with an obligation for the defendant to report to the Court within six months of the date of the order regarding any significant change that might enable the defendant to resume the proceedings in this case and thereby lift the stay otherwise imposed.

Factual Context

[4]                On August 30, 2004, the plaintiffs brought an action in damages against the defendant in the amount of $6,350,000 US because, as the plaintiffs understand it, the RCMP had intentionally disclosed information to financial institutions and to police in the United States that was false, misleading and extremely harmful to the plaintiffs' reputation and business.

[5]                The plaintiffs state that this information was disclosed by police in Canada and the United States in the course of an investigation they were conducting in relation to the illegal activities engaged in by one Daniel Pelchat.

[6]                The plaintiffs drew this conclusion based essentially on the fact that the following passage appears in a document prepared by the American authorities and filed in September 2002 in a public record of the Quebec Superior Court relating to the provisional arrest of one Daniel Pelchat:

As part of our financial investigation, we have, together with the RCMP, learned that PELCHAT's moneys are deposited into an investment account named DOMINION INVESTMENTS at the Royal Bank of Canada. While that investigation remains ongoing, the RCMP reports that DOMINION INVESTMENTS is a Bahamian money laundering operation affiliated with the Hell's Angels.

[7]                In their statement of claim, the plaintiffs are also seeking a permanent injunction to prevent the RCMP from disclosing information about the plaintiffs. We will return to the injunction claim in paragraphs 23 et seq.

Analysis

[8]                According to the plaintiffs, the defendant ultimately made criminal accusations against them public when she disclosed her information against them. As a result, they say, the law now requires that the basis of those accusations, and any relevant information about them, be disclosed to the plaintiffs, so that they can refute them. In their submission, no investigation concerning a third party, such as Daniel Pelchat, can relieve the defendant of such an obligation.

[9]                The plaintiffs also submit that only the identity of any police informer and information that might identify such person may be excluded from the information that they are now requiring of the defendant..

[10]            The plaintiffs would very possibly be correct, in principle, if they were now being formally charged with criminal acts by the federal Crown. However, the plaintiffs have not been charged under the Criminal Code and in my opinion they are wrong to rely on strong statements that have been made in the case law in contexts relating directly to criminal law (see, inter alia, R. v. Stinchcombe, [1991] 3 S.C.R. 326, to which the plaintiffs referred at length at the hearing).

[11]            Very recently, in Charkaoui (Re), [2005] F.C.J. No. 139, an immigration law case, the Court stated:

[17]    ... Nor, for the same reasons, is it necessary to discuss the role of CSIS in the investigation, other than to say that CSIS is not a police agency and that it is not its role to lay charges. As such, it cannot be subject to the same obligations as those attributed to a police force. Moreover, we are dealing here with immigration law, not the criminal law. The standpoint is different: see Blencoe v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307, at para. 88, in which Mr. Justice Bastarache, on behalf of the majority, states: "This Court has often cautioned against the direct application of criminal justice standards in the administrative law area. We should not blur concepts which under our Charter are clearly distinct." See also Canada (Minister of Employment and Immigration) v. Chiarelli, [1992] 1 S.C.R. 711; R. v. Lyons, [1987] 2 S.C.R. 309.

[Emphasis added]

[12]            In my view, therefore, it is wrong to say that the defendant is cornered in this situation and that the only choice offered to her is:

[TRANSLATION] [E]ither the Defendant files her defence disclosing to the Plaintiffs all relevant information, both exculpatory and inculpatory, that led her to conclude that they were engaged in illegal activities, or she chooses not to base her defence on that information. (See R. v. Stinchcombe).

(Paragraph 66 of the plaintiffs' written submissions.)

[13]            Rather, the option that the defendant presents to this Court is to stay the proceedings in this case for a period of time, for the following reasons.

[14]            The defendant submits that in order to exercise her right to make full answer and defence to the plaintiffs' allegations, she would ordinarily have to disclose to them, either when she files her defence or in examination for discovery of her representative, the information that Serge Therriault's affidavit discusses in one way or another. (For the purposes of this motion, the plaintiffs have been given a redacted version of that affidavit by the defendant, that is, a version of the affidavit from which the defendant had deleted the allegations that refer to information that the defendant is seeking to protect.)

[15]            However, the Court has had an opportunity to examine Serge Therriault's affidavit in detail, and I am entirely satisfied that in order to exercise her right to make full answer and defence, in view of the plaintiffs' allegations and expectations, the defendant would have to disclose to them, and disclose to the Court, the information that has not yet been disclosed and that is set out in Serge Therriault's affidavit.

[16]            I am also satisfied, after examining the certificate signed by Superintendent Stephen Covey of the RCMP and filed by the defendant under section 37 of the Act (the Certificate) to prevent disclosure of information of this nature, that Mr. Covey is justified in stating what he said at paragraphs 16 and 18 of the Certificate:

16.            I have personally examined and carefully considered each of the sworn statements made by Inspector Therriault in his affidavit. I certify to this Honourable Court pursuant to section 37 of the Canada Evidence Act, R.S.C. 1985, c. C-5, as amended, that the disclosure of the information contained in Inspector Therriault's affidavit would be injurious to the public interest, namely the sound and effective functioning of the R.C.M.P. and other police forces in Canada and elsewhere in conducting criminal investigations and implementing the criminal law. I object to the disclosure of the information contained in paragraphs 6 to 13, 31 to 71, 75 to 89 and 91 to 93 and 95 to 121 on those grounds.

18.            My opinion in this matter is based on my 23 years of experience in police work with the R.C.M.P. and particularly my experience in the areas of drug enforcement and criminal intelligence gathering.

More particularly, disclosure of the information contained in paragraphs 6 to 13, 31 to 71, 75 to 89 and 91 to 93 and 95 to 121 would:

C               identify or tend to identify human sources of information of the R.C.M.P., that is, informers who are provided with code numbers and registered on R.C.M.P. files (known as "coded informers" or "informers") [category B];

C               identify or tend to identify individuals or subject matters under investigation by the R.C.M.P. or other agencies, thereby compromising ongoing investigations [category C];

C               identify or tend to identify methods of operation utilized by the R.C.M.P. or other agencies in the investigation of criminal activity ("investigative techniques") [category D];

C               identify or tend to identify innocent individuals; this includes members of the public who are not coded informers but who have provided information to the R.C.M.P. in connection with other matters in the expectation of confidentiality, as well as individuals whose names happen to appear in R.C.M.P. documents which are unconnected with the current prosecution [category E];

C               jeopardize communications links with agencies of other nations [category F];

C               identify or tend to identify knowledge possessed by the R.C.M.P. and other police agencies of connections between active criminals, unbeknownst to those criminals [category G].

[17]            As well, the relevant subsections of section 37 of the Act read as follows:

37.(1) Subject to sections 38 to 38.16, a Minister of the Crown in right of Canada or other official may object to the disclosure of information before a court, person or body with jurisdiction to compel the production of information by certifying orally or in writing to the court, person or body that the information should not be disclosed on the grounds of a specified public interest.

37. (1) Sous réserve des articles 38 à 38.16, tout ministre fédéral ou tout fonctionnaire peut s'opposer à la divulgation de renseignements auprès d'un tribunal, d'un organisme ou d'une personne ayant le pouvoir de contraindre à la production de renseignements, en attestant verbalement ou par écrit devant eux que, pour des raisons d'intérêt public déterminées, ces renseignements ne devraient pas être divulgués.

37. (4.1) Unless the court having jurisdiction to hear the application concludes that the disclosure of the information to which the objection was made under subsection (1) would encroach upon a specified public interest, the court may authorize by order the disclosure of the information.

37. (4.1) Le tribunal saisi peut rendre une ordonnance autorisant la divulgation des renseignements qui ont fait l'objet d'une opposition au titre du paragraphe (1), sauf s'il conclut que leur divulgation est préjudiciable au regard des raisons d'intérêt public déterminées.

[18]            In the circumstances of this case, and if we review the relevant aspects of section 37 of the Act, I am entirely satisfied as to the following points. First, that the Certificate meets the requirements of section 37 of the Act, and more specifically the requirements of subsection 37(1).

[19]            Second, for the purposes of subsections 37(4.1) and (5) of the Act, I conclude from an examination of the Certificate and of Serge Therriault's affidavit that disclosure of the information that has not yet been disclosed, as set out in that affidavit, would be harmful having regard to the specified public interest reasons set out in the Certificate.

[20]            As well, for the reasons that follow, I find, under subsection 37(5) of the Act, that I see no public interest reasons in the record to justify disclosure that outweigh the public interest reasons specified and identified in the Certificate.

[21]            Having regard to that conclusion, the Court need not undertake the exercise to which the remainder of subsection 37(5) relates, where a contrary conclusion is reached: authorizing disclosure of all or part of the information not yet disclosed subject to conditions.

[22]            The main reason why disclosure might be in the public interest would be the reason identified by the Quebec Superior Court in Brian Mulroney v. Procureur général du Canada et al. (André Rochon J., May 22, 1996, No. 500-05-012098-958), in which the Court stated at page 15, regarding a case which is similar to this case in some limited aspects:

[TRANSLATION] ... it is incorrect to say that a civil action is a matter of purely private interest. The public interest is involved, first, when the issue is whether civil actions should be stayed when the State, the defendant in the case, requests that this be done to protect a police investigation.

In Mario Allard [citation omitted], the Honourable Mr. Justice Dalphond stated:

It is in the interests of justice that parties rights be recognized as soon as possible when they apply to the courts for a remedy.

[23]            The right to a speedy disposition is indeed in play here as well, but it cannot outweigh a valid public interest identified in the Certificate. The fact that the plaintiffs are seeking an injunction cannot, in my opinion, make this case more important, because it is uncertain whether that remedy may be granted in this instance.

[24]            The plaintiffs' action, according to the style of cause, has been brought against Her Majesty the Queen. Subsection 22(1) of the Crown Liability and Proceedings Act, R.S. 1985, c. C-50, as amended (the Crown Liability Act) clearly provides:

22.(1)    Where in proceedings against the Crown any relief is sought that might, in proceedings between persons, be granted by way of injunction or specific performance, a court shall not, as against the Crown, grant an injunction or make an order for specific performance, but in lieu thereof may make an order declaratory of the rights of the parties.

22.(1)    Le tribunal ne peut, lorsqu'il connaît d'une demande visant l'État, assujettir celui-ci à une injonction ou à une ordonnance d'exécution en nature mais, dans les cas où ces recours pourraient être exercés entre personnes, il peut, pour en tenir lieu, déclarer les droits des parties.

[25]            While we need not list them, we know that there has been a long line of decisions in which a conclusion similar to the one set out in subsection 22(1) has been stated: that an injunction may not issue against the defendant (see, inter alia, Grand Council of the Crees (of Quebec) v. The Queen, [1982] 1 F.C. 599 (FCA)).

[26]            Even if we had to consider the injunction as being actually sought against the RCMP, the possibility of an injunction being obtained against it is not obvious.

[27]            On this point, subsection 35(1) of the Crown Liability Act, supra, does exempt agencies of the Crown from the bar to injunctions set out in subsection 22(1) of the Act. Subsection 35(1) reads as follows:

35.(1)    This Act, except section 22, applies in respect of any proceedings against an agency of the Crown taken in accordance with any Act of Parliament that authorizes the proceedings to be taken.

35.(1)    La présente loi, à l'exception de l'article 22, s'applique aux poursuites intentées aux termes d'une loi fédérale contre un organisme mandataire de l'État.

[28]            However, neither of the parties has presented any persuasive evidence to me to show that the RCMP should be regarded as an agency of the Crown and not as the Crown itself. Further reason for the Court to doubt that the RCMP is such an agency is the fact that the parties were unable to submit any decisions in which an injunction had clearly been issued against the RCMP. In Délisle v. Royal Canadian Mounted Police Commission et al. (1990), 39 F.T.R. 217, the defendants in the case, against whom an injunction was issued, were comprised of a list of individuals, and not the RCMP as such or the Crown.

[29]            In Mulroney, the Superior Court had to consider a dilemma similar to the one the defendant in this case is facing: whether to put the civil proceedings on hold while waiting for a police investigation to be completed, in order to avoid disclosing confidential information by filing a full answer and defence and thus jeopardizing the outcome of a police investigation.

[30]            As the Court observed several times in Mulroney, a stay motion is indeed unprecedented and there appear to be no precedents in the case law.

[31]            In Mulroney, the Court denied the stay sought by the federal Crown, essentially, as I read it, because the Crown had limited itself, as support for its motion, to filing two very general affidavits, and had further shown, in the eyes of the Court, that it could very well have filed a defence without disclosing confidential information. In that decision, the Crown had not relied on section 37 of the Act.

[32]            To my mind, the main flaws present in Mulroney have been remedied in this case.

[33]            The defendant in this case has validly relied on section 37 of the Act, by filing the Certificate and the affidavit of Serge Therriault, which is moreover sufficiently detailed. As well, I do not believe that the defendant could have or could, without disclosing the information set out in Serge Therriault's affidavit, prepare a valid defence that would protect her rights to make full answer and defence and the other public interests referred to in Serge Therriault's affidavit.

[34]            In Mulroney, the Court ultimately declined to apply the three-part test set out in Attorney General of Manitoba v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110 and R.J.R.-Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311.

[35]            For greater certainty, and as is the practice of this Court, I nonetheless intend to apply that three-part test. On that point, I think that the foregoing reasons indicate that the defendant's motion raises a serious issue and that she would suffer irreparable harm if the stay of proceedings were not ordered. It is also clear from the foregoing study that, on the question of the balance of convenience, the defendant is most seriously affected if the stay is denied.

[36]            In short, the defendant is entitled to require that the privileged information that appears in Serge Therriault's affidavit not be jeopardized.

[37]            Similarly, the defendant is entitled to be able to make full answer and defence.

[38]            Having regard to the specific facts of this case, a stay of these proceedings is the only remedy that reconciles those two rights.

[39]            At the hearing and during my deliberations I have attempted to think of alternatives to staying the proceedings, but I have been unable to think of any that would result in a practical, effective and serious alternative.

[40]            For all these reasons, the defendant's motion to stay the proceedings in this case, under paragraph 50(1)(b) of the Federal Courts Act, supra, will be allowed and, as requested, the stay will apply for one year from the date of the order that accompanies these reasons. However, the stay will come with an obligation for the defendant to report to the Court within six months of the date of the order regarding any significant change that might enable the defendant to resume the proceedings in this case and thus to lift the stay otherwise imposed.

[41]            Costs in the cause.

	"Richard Morneau"
	Prothonotary

Montréal, Quebec

February 16, 2005

Certified true translation

K.A. Harvey

                         FEDERAL COURT

                  SOLICITORS OF RECORD

DOCKET:

STYLE OF CAUSE:

T-1591-04

DOMINION INVESTMENTS (NASSAU) LTD.

and

MARTIN TREMBLAY

                                                                        Plaintiffs

and

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

                                                                     Defendant

PLACE OF HEARING:                                 Montréal, Quebec

DATE OF HEARING:                                   February 8, 2005

REASONS FOR ORDER:                            Richard Morneau, Prothonotary

DATE OF REASONS:                                   February 16, 2005

APPEARANCES

Michel Décary Louise Touchette		FOR THE PLAINTIFFS
Jacques Savary		FOR THE DEFENDANT

SOLICITORS OF RECORD

Stikeman, Elliott Montréal, Quebec		FOR THE PLAINTIFFS
John H. Sims, Q.C. Deputy Attorney General of Canada		FOR THE DEFENDANT

Date: 20050216

Docket: T-1591-04

Montréal, Quebec, February 16, 2005

Present:           RICHARD MORNEAU, PROTHONOTARY

BETWEEN:

DOMINION INVESTMENTS (NASSAU) LTD.

-and-

MARTIN TREMBLAY

(President of Dominion Investments (Nassau) Ltd.)

                                                                     Plaintiffs

                                      AND

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

                                                                   Defendant

                                   ORDER

The defendant's motion to stay the proceedings in this case under paragraph 50(1)(b) of the Federal Courts Act, R.S. 1985, c. F-7, as amended, is allowed, with costs in the cause, and as requested, the stay will apply for one year from the date of this order. However, the stay will come with an obligation for the defendant to report to the Court within six months of the date of the order regarding any significant change that might enable the defendant to resume the proceedings in this case and thus to lift the stay otherwise imposed.

In addition, in accordance with the order of this Court dated January 19, 2005, when this order becomes final, the affidavit of Serge Therriault will be delivered to the defendant by hand. The defendant will have to contact the Registry for that purpose. The Court will retain a copy of the affidavit annotated by the Court for a certain period of time in its locked vault, along with other relevant notes of the Court. Those documents will be securely destroyed after a reasonable period of time.

	"Richard Morneau"
	Prothonotary

Certified true translation

K.A. Harvey