Bureau can share information with foreign authorities, judge rules

R. v. Stucky

Pre-trial rulings in the Competition Bureau’s prosecution of David Stucky for an alleged lottery participations and prize promotions scam have held that:

• The Bureau can share information obtained from search warrants with foreign competition authorities and does not have to advise the judge granting the warrant of its intention to do so;[1]
• Public interest privilege cannot be established on a class basis, but must be established document by document;[2] and
• The Crown’s decision to prefer a direct indictment was not unfair.

Background

In 2002, Mr. Stucky was charged with criminal misleading advertising for promoting and selling participation units in certain lotteries and one prize incentive promotion between 1995 and 2002. The Bureau and the US Postal Service had been investigating Mr. Stucky since 1997.

The case has been marked by numerous demands for disclosure and resulting delays. When the preliminary inquiry had still not started by May 2004, the Crown, concerned that Mr. Stucky might apply for a stay based on the right to trial within a reasonable amount of time (s. 11(b)), preferred a direct indictment.

Stucky brought two motions: in one, he challenged the search warrants; in the other, he sought further disclosure and attacked the decision to prefer a direct indictment.

Search warrants

Stucky attacked search warrants issued in 1997 and 1998 that had resulted in the Bureau seizing large amounts of information that ultimately formed the basis for prosecuting him. Stucky claimed that the Bureau had misled the judge issuing the 1998 warrants because it did not tell the judge that it was going to act as a mere conduit of information to US authorities, and had no intention of prosecuting Stucky.

Stucky claimed that the 1997 search amounted to a warrantless seizure, because at the time the Bureau had not been investigating exactly the same promotions as he was later charged with.

Bureau can share information

Gans J. found that the Bureau was investigating Stucky in parallel with US authorities, and had every intention of prosecuting him at the time the Info rmation to Obtain was sworn.

Gans J. accepted that the Bureau can share information with foreign competition authorities, despite s. 29 of the Competition Act, which provides that information obtained from (among other things) a search warrant, must be kept confidential. Gans J. commented:

If [the Bureau] was sharing information with foreign law enforcement agencies, which apparently it was, it was doing so because of its interpretation of s. 29 of the Act in the fond hope that the sharing of information would inure to its benefit in respect of its own domestic investigations and prosecutions.

Gans J. went on to suggest that the Bureau did not have to follow the formal two-step process under the Mutual Legal Assistance Treaty (“MLAT”).

Thus, he concluded, the Bureau does not have to tell the justice issuing a search warrant that it may share the information obtained from the search with foreign authorities. He added:

in this era of global transactions, legitimate or otherwise, it would be naïve to conclude or even suggest that there is not some measure of cross border intelligence sharing and hence that truism need not be brought to the attention of the issuing justice.

Gans J.’s reasoning likely goes too far. Section 29 prohibits the Bureau from communicating information obtained in the course of investigations “to any other person except to a Canadian law enforcement agency or for the purposes of the administration or enforcement of this Act”. Section 29 likely allows the Bureau to collaborate and pool information with a foreign competition authority in order to advance a particular inquiry in Canada . But it would likely be a breach of s. 29 for the Bureau to share information on one inquiry with a foreign agency in hopes of being given information relevant to some other inquiry in the future.

Indeed, this appears to be the position that Bureau has taken. In its August 2005 draft Info rmation Bulletin on the Communication and Treatment of Info rmation under the Competition Act , the Bureau says that “the Bureau may communicate information to foreign counterparts where the intent is to advance a specific examination or inquiry for the effective administration or enforcement of the Act.” [Emphasis added.]

The facts of the Stucky case suggest that the Bureau was collaborating with US authorities in a joint investigation of Stucky. Assuming the US authorities were sharing the fruits of their investigation with the Bureau, the Bureau likely would have been entitled to share information with US authorities under s. 29.

No warrentless seizure

In 1997, the Bureau searched Stucky’s premises in connection with an inquiry into certain direct mail promotions. This inquiry was unrelated to the lottery promotion prosecution. However, among the 15,000 documents seized by the Bureau were many that relate to the lottery promotions Stucky was charged with.

Gans J. held that the seizure of these documents was not a warrantless search. Investigators do not have to read every document before seizing it, nor do they have to pull files apart.[3] As well, investigators can seize anything that sheds light on the circumstances connected with the offence.[4] Gans J. noted that:

Again, what was and was not relevant to the 1997 investigation was not at the time completely apparent on the face of the documents seized and reproduced in Mr. Steen’s affidavit filed on this application. Nor could it be said that the Bureau investigators would even in the time they were at the Premises come to a well-reasoned decision on where the relationship of one promotion stopped and another started.

Public interest privilege

Mr. Stucky’s lawyers sought disclosure of over twelve volumes of documents over which the Bureau claimed public interest privilege.

Public interest privilege, also sometimes called “public interest immunity”, shields information whose disclosure would be injurious to the public interest. Info rmation protected by public interest privilege includes the identity of police informants, certain state secrets, and cabinet documents.

Counsel retained a lawyer to review these documents. Gans J. adopted his conclusions, including:

• Public interest privilege cannot be maintained on a “class” basis. A “functional and principled approach should be employed on a document-by-document basis”.
• The onus is on the Crown to establish that the document is needed for a current investigation or prosecution.
• The documents should be disclosed to defence counsel on a counsel-only basis for review to determine whether a motion should be brought. If the judge concludes that the documents are relevant and not privileged, defence counsel can then use the document.

Gans J.’s conclusion that public interest privilege must be assessed on a document by document contradicts the practice in the Competition Tribunal. The Tribunal recognizes a class of public interest privilege covering Bureau officers’ interview notes and complaints received by the Bureau, because these individuals may be customers or employees of respondents in Tribunal proceedings, and may thus be subject to reprisals.[5] In these cases, however, the Federal Court of Appeal and the Tribunal approved of the Bureau’s practice of providing summaries of information it had obtained through its investigations as a substitute for disclosure of this material. More recently however, the Bureau has taken the position that it is not obliged even to provide such summaries of information.

The general rule in criminal cases is disclosure. Since R. v. Stinchcombe, police interview notes and witness statements must be disclosed, subject to relevance and privilege.[6] Info rmation that could reveal the identity of a police informer is subject to “police informer privilege” and protected from disclosure (subject to the “innocence at stake” exception).[7] This privilege exists to protect informers from harm and encourage others to divulge information about the commission of crimes. As well, information about investigative techniques is subject to a qualified privilege.[8]

The rationale offered by the Tribunal and the Federal Court for shielding Bureau notes from disclosure is similar to that underlying police informer privilege. However, police informer privilege does not extend to the entire information provided by the informant, but only to the information that could identify the informant. As well, police informer privilege would not generally apply to information obtained by way of search warrants. By contrast, the Bureau tends to claim public interest privilege over information it receives as a result of its investigations, including offices’ notes, complaints, and even information received through compulsory investigative tools.

Federal direct indictment process not unfair

Mr. Stucky’s lawyers claimed that the process by which a direct indictment was preferred against him by the Attorney General was unfair. Normally an accused charged with an indictable offence is entitled to a preliminary hearing where a judge determines whether there is enough evidence to commit the accused for trial. However, the provincial or federal Attorney General, as the case may be, has the power to send an accused directly to trial, without a preliminary hearing, on a direct indictment.

Gans J. held that the decision to prefer a direct indictment does engage a duty of fairness. That is, the Attorney General must act fairly in deciding whether to prefer an indictment. The federal Attorney General has a formal process for deciding whether to prefer a direct indictment, which is set out in the Federal Prosecution Service Deskbook. Gans J. held that this process is fair, and that the accused does not have a right to notice that the Attorney General is considering a direct indictment, nor to make submissions to the Attorney General.

Published March 21, 2006