Judgments

Decision Information

Dominion Investments (Nassau) Ltd. v. Canada (F.C.)

Collection	Judgments
Date	2005-10-13
Neutral citation	2005 FC 1397
Report citation	[2006] 2 F.C.R. 409
File numbers	T-1591-04
Subjects	Construction of Statutes Evidence Practice - Stay of Proceedings
Notes	Full-Text Decision

Decision Content

T-1591-04

2005 FC 1397

Dominion Investments (Nassau) Ltd. and Martin Tremblay (President of Dominion Investments (Nassau) Ltd.) (Plaintiffs)

Her Majesty the Queen in right of Canada (Defendant)

Indexed as: Dominion Investments (Nassau) Ltd. v. Canada (F.C.)

Federal Court, Gauthier J.--Montréal, May 19; Ottawa, October 13, 2005.

Practice -- Stay of Proceedings -- Appeal from Prothonotary's decision staying plaintiffs' action against defendant pending completion of police investigation -- Defendant invoking Canada Evidence Act, s. 37 (objection to disclosure on ground of public interest) to prevent disclosure of affidavit filed in support of motion to stay -- Prothonotary wrong to examine serious issue advanced by defendant (whether defendant able to make full answer, defence without disclosing information referred to in affidavit) as that issue calling for analysis of possible application of Canada Evidence Act, s. 37 to action, not stay motion -- Defendant not establishing irreparable harm if action not stayed -- Insufficient evidence for Court to balance diverse interests at play -- Appeal allowed.

Evidence -- Defendant's motion record for stay of plaintiffs' action including Canada Evidence Act, s. 37 certificate stating disclosure of information in affidavit filed in support of motion would encroach on public interest -- Such use of Canada Evidence Act, s. 37 proactive rather than reactive -- Not Parliament's intention s. 37 be used in proactive way to prevent disclosure of evidence voluntarily produced -- S. 37 allowing objection in reactive context only -- Non-disclosure order re: affidavit not available in case at bar -- In any event, Prothonotary not having regard to correct public interest principles supporting disclosure, confusing factors relevant to stay with principles relevant to s. 37 order.

Construction of Statutes -- Canada Evidence Act, s. 37 -- If Parliament intended s. 37 be used to prevent disclosure of evidence voluntarily produced, would have referred to power to compel disclosure rather than production -- Purposive interpretation of s. 37 most consistent with fundamental principles of our law allowing objections to be made in reactive context only, i.e. in course of objection to production before court, person or body with jurisdiction to compel production.

This was an appeal from a Prothonotary's decision granting the defendant's motion to stay the plaintiffs' action for an injunction against the RCMP and damages against the Crown pending the completion of a police investigation. In its motion record, the defendant included a certificate under section 37 of the Canada Evidence Act stating, inter alia, that disclosure of the information in all of the redacted paragraphs of the affidavit filed in support of the motion, would seriously encroach on a public interest, i.e. the functioning of the RCMP and of Canadian police services, as well as on the conduct of ongoing criminal investigations. Section 37 specifies that a Minister of the Crown or other official may object to the disclosure of information before a court or body with jurisdiction to compel the production of information by certifying that the information should not be disclosed on the grounds of a specified public interest.

At issue in this appeal was whether the defendant could use the procedure in section 37 of the Evidence Act to prevent the disclosure of the affidavit, if so, whether a stay of proceedings was the appropriate remedy, and if so, whether the three-part test set out in RJR -- MacDonald Inc. v. Canada (Attorney General) was applicable.

Held, the appeal should be allowed.

The defendant sought to use section 37 of the Evidence Act in a proactive context (i.e. to prevent disclosure of information prepared and filed by it of its own accord to obtain a procedural advantage) rather than in a reactive context (i.e. in the course of an objection to production of that information before a court, person or body with jurisdiction to compel the production of information). If Parliament had intended to allow an authorized person to use section 37 to prevent disclosure of evidence that he or she voluntarily produced before such a court or person, it would have referred to the power to compel disclosure rather than production in that section. The Court adopted the interpretation of section 37 that is most consistent with the fundamental principles of our law, which require that proceedings be public, that the administration of justice be transparent, that the Court have the benefit of adversarial proceedings before making a decision and that each party have access to all of the relevant evidence. If section 37 is interpreted as allowing objections to be made in a reactive context only, it is remedial and ensures the attainment of its objectives perfectly. Based on this purposive interpretation of section 37, neither the Prothonotary nor the Court had the power under that section to make a non-disclosure order in respect of the affidavit.

Even if section 37 of the Evidence Act did apply in a proactive context, the Prothonotary failed to have regard to the correct public interest principles that support disclosure in his analysis, and confused the factors that are relevant to the analysis of the motion under paragraph 50(1)(b) (stay of proceedings) of the Federal Courts Act with the principles relevant to an order under section 37 of the Evidence Act when he said that the central public interest reason in support of disclosure was the right to a speedy hearing. That question is relevant regarding whether a stay should be granted, but is not the central reason in support of disclosure. A party's right to have access to all of the evidence relevant to the proceedings before the Court is a public interest that operates in support of disclosure. Here, the relevant proceeding was not the action in damages but the stay motion. And the fact that the action included a claim for an injunction was irrelevant to the exercise directed by section 37 of the Evidence Act, but was relevant to the merits of the stay motion. In applying RJR -- MacDonald, the Prothonotary was wrong to examine the serious issue advanced by the defendant (i.e. whether the defendant is able to make full answer and defence without disclosing the information referred to in the affidavit) as that issue called for an analysis of the possible application of section 37 to the action rather than to the stay motion.

Exercising its discretion de novo (and assuming that section 37 applied in a proactive context), the Court held that the defendant did not establish irreparable harm if the action was not stayed, and found that there was not sufficient evidence to balance the diverse interests at play.

Finally, although section 37 of the Evidence Act may only be used in a reactive context, this does not mean that a motion under paragraph 50(1)(b) of the Federal Courts Act may never be granted to enable police services to complete an investigation when a civil action has been instituted. Such a motion may succeed where it is justified by the circumstances and public interests at play.

statutes and regulations judicially

considered

Anti-terrorism Act, S.C. 2001, c. 41, s. 43.

Canada Evidence Act, R.S.C., 1985, c. C-5, ss. 37 (as am. by S.C. 2001, c. 41, s. 43; 2002, c. 8, s. 183), 37.21 (as enacted by S.C. 2001, c. 41, s. 43; rep. by S.C. 2004, c. 12, s. 18), 37.3 (as enacted by S.C. 2001, c. 41, s. 43), 38 (as am. idem, ss. 43, 141), 38.01 (as enacted idem, s. 43), 38.02 (as enacted idem, ss. 43, 141), 38.04 (as enacted idem, ss. 43, 141), 38.06 (as enacted idem, s. 43), 38.08 (as enacted idem), 38.11 (as enacted idem), 38.14 (as enacted idem), 39 (as am. by S.C. 1992, c. 1, s. 144(F)).

Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 41 (as am. by S.C. 1980-81-82-83, c. 111, s. 3).

Federal Courts Act, R.S.C., 1985, c. F-7, ss. 1 (as am. by S.C. 2002, c. 8, s. 14), 50 (as am. idem, s. 46).

Interpretation Act, R.S.C., 1985, c. I-21, s. 12.

cases judicially considered

applied:

Merck & Co., Inc. v. Apotex Inc., [2004] 2 F.C.R. 459; (2003), 30 C.P.R. (4th) 40; 315 N.R. 175; 2003 FCA 488; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559; (2002), 212 D.L.R. (4th) 1; [2002] 5 W.W.R. 1; 166 B.C.A.C. 1; 100 B.C.L.R. (3d) 1; 18 C.R.R. (4th) 289; 93 C.R.R. (2d) 189; 2002 SCC 42.

considered:

RJR -- MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; (1994), 111 D.L.R. (4th) 385; 54 C.P.R. (3d) 114; 164 N.R. 1; 60 Q.A.C. 241; Mulroney c. Canada (Procureur général), [1996] A.Q. No. 3868 (Sup. Ct.) (QL); Gold v. R., [1986] 2 F.C. 129; (1986), 25 D.L.R. (4th) 285; 18 Admin. L.R. 212; 64 N.R. 260 (C.A.).

referred to:

Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425; [1993] 1 C.T.C. 186; (1993), 93 DTC 5080; 149 N.R. 273 (C.A.); Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450; (2003), 224 D.L.R. (4th) 577; 30 C.P.C. (5th) 1; 2003 SCC 27; Athey v. Leonati, [1996] 3 S.C.R. 458; (1996), 140 D.L.R. (4th) 235; [1997] 1 W.W.R. 97; 81 B.C.A.C. 243; 31 C.C.L.T. (2d) 113; 203 N.R. 36; 671905 Alberta Inc. v. Q'Max Solutions Inc., [2003] 4 F.C. 713; (2003), 27 C.P.R. (4th) 385; 241 F.T.R. 160; 305 N.R. 137; 2003 FCA 241; Ruby v. Canada (Solicitor General), [2002] 4 S.C.R. 3; (2002), 219 D.L.R. (4th) 385; 49 Admin. L.R. (3d) 1; 22 C.P.R. (4th) 289; 7 C.R. (6th) 88; 99 C.R.R. (2d) 324; 295 N.R. 353; 2002 SCC 75; Vancouver Sun (Re), [2004] 2 S.C.R. 332; (2004), 240 D.L.R. (4th) 147; [2005] 2 W.W.R. 671; 33 B.C.L.R. (4th) 261; 199 B.C.A.C. 1; 184 C.C.C. (3d) 515; 21 C.R. (6th) 142; 120 C.R.R. (2d) 203; 2004 SCC 43; Jose Pereira E Hijos, S.A. v. Canada (Attorney General) (2002), 299 N.R. 154; 2002 FCA 470; Canada (Attorney General) v. Ribic, [2005] 1 F.C.R. 33; (2003), 185 C.C.C. (3d) 129; 320 N.R. 275; 2003 FCA 246.

authors cited

Cooper, T. G. Crown Privilege, Aurora, Ont.: Canada Law Book, 1990.

Sopinka, J. et al. The Law of Evidence in Canada, 2nd ed. Toronto: Butterworths, 1999.

APPEAL from the Prothonotary's decision (2005 FC 254) granting the defendant's motion to stay the plaintiffs' action against it and allowing the defendant to invoke section 37 of the Canada Evidence Act to prevent disclosure of information in an affidavit filed in support of the motion. Appeal allowed.

appearances:

R. Michel Décary, Louise Touchette and Charles C. Gagnon for plaintiffs.

Jacques Savary and Nathalie Drouin for defendant.

solicitors of record:

Stikeman Elliott LLP, Montréal, for plaintiffs.

Deputy Attorney General of Canada for defendant.

The following is the English version of the reasons for order and order rendered by

[1]Gauthier J.: Dominion Investments Nassau Ltd. (Dominion) has appealed from the decision of the Prothonotary [2005 FC 254] to stay their action for a permanent injunction against the Royal Canadian Mounted Police (RCMP), and for damages including punitive and exemplary damages (US$6,350,000) against Her Majesty, for a period of 12 months to allow the defendant to pursue and complete a police investigation that is currently ongoing. The stay is accompanied by a requirement that the defendant report to the Court within six months regarding any significant change that might make it possible to resume the proceedings and lift the stay.

[2]In that order, the Prothonotary also ordered that the affidavit of Serge Therriault, filed in support of the defendant's motion for the stay, be delivered to it by hand and that all copies held by the Court be destroyed within a reasonable time.

[3]This appeal raises two novel issues:

(i) Can the defendant use the procedure set out in section 37 [as am. by S.C. 2001, c. 41, s. 43; 2002, c. 8, s. 183] of the Canada Evidence Act, R.S.C., 1985, c. C-5 (Evidence Act) to prevent the disclosure of information (in this case, the affidavit of Mr. Therriault prepared specifically to support its motion to stay the action under paragraph 50(1)(b) [as am. by S.C. 2002, c. 8, s. 46] of the Federal Courts Act, R.S.C., 1985, c. F-7 [s. 1 (as am. idem, s. 14)]) (the Act) that it itself chose to file to obtain an order other than the order relating to the disclosure of that information?

(ii) If so, is a stay of proceedings the appropriate remedy to allow the RCMP to complete an ongoing investigation when the conduct of the investigation is itself the central issue in the action in damages, and if so, must the three-part test set out in RJR -- MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, which is generally applicable in analyzing motions for a stay of proceedings under section 50, be applied in analyzing the merits of the motion?

BACKGROUND

[4]It is not appropriate to review in detail the facts alleged in the action. For the purposes of this appeal, it is sufficient to note that in their action, the plaintiffs allege that in 2002 and 2003, in the course of an investigation, the RCMP disclosed information that was false, misleading and highly prejudicial to their reputations and their business to certain financial institutions with which they did business and to the police in the United States.

[5]That information was allegedly disclosed in relation to a request made by the American authorities for the extradition of Daniel Pelchat, in a document filed in September 2002 in the public record of the Quebec Superior Court, stating:

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. [Emphasis added.]

[6]As I said, the plaintiffs are seeking, in addition to the damages they are claiming, an order enjoining the RCMP to cease disclosing any information to anyone regarding them, including any information relating to the facts out of which this action arose. With regard to the allegations in the amended statement of claim, I also understand that they are thereby attempting to put an end to, or prevent, any future investigation in which they might be directly or indirectly implicated.

[7]In its motion record, the defendant included a certificate under section 37 of the Evidence Act referring to, without disclosing, the information found in the redacted affidavit filed in support of the stay motion. Mr. Covey, the Superintendent of the RCMP, stated in that certificate that disclosure of the information in all of the redacted paragraphs of the affidavit would seriously encroach upon a public interest, and more specifically the functioning of the RCMP and of Canadian police services, as well as on the conduct of ongoing criminal investigations. He also certified that it would endanger the lives of individuals who have cooperated with the police services in those investigations, that it would identify or tend to identify informers and individuals who are the subject of investigations and investigative techniques used by the RCMP and, more generally, police intelligence.

[8]The plaintiffs are therefore generally aware of the principles relied on by the defendant to protect the substance of Mr. Therriault's affidavit under section 37, in accordance with the procedure set out in that section. However, they are not aware of the evidence filed by the defendant to establish that it has met the test set out in RJR -- MacDonald Inc., and that it is entitled to a stay of proceedings.

[9]At the hearing before the Prothonotary, the defendant also had an opportunity to make additional submissions ex parte (that is, in the absence of the plaintiffs and their counsel) and to provide an explanation of the evidence filed in support of its stay motion.

[10]In his decision, the Prothonotary first considered the application of section 37 of the Evidence Act, and stated, based on the information in the certificate and the redacted affidavit, that the defendant was justified in objecting to disclosure of the information in the affidavit because there were reasons of public interest not to disclose it. He found that Mr. Covey's certificate complied with the requirements in section 37 and that there was no public interest in disclosure that outweighed the interest identified in the certificate. On that point, he noted, in paragraph 22 of his decision, that "the main reason why disclosure might be in the public interest" is that 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.

[11]On that point, he then said, at paragraph 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.

[12]In the second step, the Prothonotary considered the primary remedy sought by the defendant: a stay of proceedings. After identifying how, in his opinion, the case must be distinguished from Mulroney c. Canada (Procureur général), [1996] A.Q. No. 3868 (Sup. Ct.) (QL), he concluded that, having regard to the allegations in the statement of claim, the defendant could not present a defence that would protect her right to make full answer and defence, and protect the other public interests referred to in the affidavit, without disclosing the information in the affidavit of Serge Therriault.

[13]In his opinion, this clearly indicated that a stay would be in the public interest within the meaning of paragraph 50(1)(b), but [at paragraph 35] "[f]or greater certainty, and as is the practice of this Court", he then applied the test set out in RJR -- MacDonald Inc., and concluded that having regard to the particular facts of the case, a stay of proceedings was the only remedy that could guarantee both the defendant's right to protect the public interest information in the affidavit of Serge Therriault and its right to make full answer and defence.

ISSUES

[14]The plaintiffs submit that the Prothonotary made a number of errors of law in his analysis and his application of section 37 of the Evidence Act, as follows:

(i) He refused to apply the principles of law set out in ample criminal jurisprudence, stating simply that those principles relate solely to criminal law, and he did not consider all of the material evidence in the assessment mandated by section 37;

(ii) He did not consider the fact that the defendant was unable to rely on section 37 because the information it wished to protect had already been made public;

(iii) He erred in fact and in law when he refused, notwithstanding subsection 37(5) of the Evidence Act, to establish conditions for disclosure of the information in the affidavit filed by the defendant, such as disclosure to the plaintiffs' counsel only.

[15]The Prothonotary allegedly erred when he agreed to apply the process described in section 37 for protecting information prepared and filed by the defendant of its own accord in order to obtain a procedural advantage, a stay of proceedings (proactive context) rather than in the course of an objection to production of that information (reactive context) when it was or could have been required to do so by a court or other body with the authority to compel it to do so in response to an application for such an order. In the plaintiffs' submission, the Prothonotary also erred, in this context, by hearing submissions ex parte.

[16]The plaintiffs further argue that the Prothonotary erred when he found that a stay of proceedings was an appropriate remedy in this instance and applied the test in RJR -- MacDonald Inc., which in their submission is not an applicable analytical framework, as has been decided by Rochon J., in Mulroney.

[17]Their final argument is that if the Prothonotary was right to use that test, he erred in the specific manner in which he applied it, by suggesting that the plaintiffs might not be entitled to obtain an injunction and by failing to consider, inter alia, that there would be irreparable harm to their reputation if the proceedings were stayed.

ANALYSIS

[18]The standard of review that applies to the Prothonotary's decision is settled law (Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.); Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, at paragraph 18). It was recently restated by the Federal Court of Appeal in Merck & Co., Inc. v. Apotex Inc., [2004] 2 F.C.R. 459 (F.C.A.), where Décary J.A. described it as follows [at paragraph 19]:

Discretionary orders of prothonotaries ought not be disturbed on appeal to a judge unless: (a) the questions raised in the motion are vital to the final issue of the case, or (b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts.

[19]The plaintiffs submit that the Prothonotary's decision is vital to the final outcome of the case. However, they have not explained how a stay of proceedings, a measure that is neutral and essentially temporary, would have such an influence that way.

[20]The Prothonotary's decision to apply the process set out in section 37 to the information in the redacted affidavit is indeed vital to the final outcome of the motion, but certainly not to the outcome of the action. As I will explain later, that decision does not relate to the future disclosure of information or documents during the proceeding once the stay is lifted.

[21]In any event, for the reasons that I will explain below, I am satisfied that the Prothonotary erred in law when he agreed to apply section 37 of the Evidence Act to the stay motion. In addition, if I am not mistaken on this point, in my opinion the Prothonotary was clearly wrong in his assessment of the interests at stake in relation to the application of section 37 and paragraph 50(1)(b) of the Act. That error justifies that I consider the motion de novo. I will return to this point.

A. Application of section 37 of the Evidence Act

[22]First, we should note that at the hearing before the Prothonotary the plaintiffs did not suggest that section 37 did not apply. In response to questions by the Court, the plaintiffs submitted that the defendant could not rely on section 37 to prevent the disclosure of the evidence it had itself filed in support of its request for a stay because the result would be grossly unfair and could not be sanctioned by the Court given the wording of this section.

[23]Because there is no indication that relevant evidence needed for this question of law to be disposed of is missing, the Court must consider it in the appeal (Athey v. Leonati, [1996] 3 S.C.R. 458, at paragraph 51 and 671905 Alberta Inc. v. Q'Max Solutions Inc., [2003] 4 F.C. 713 (C.A.), at paragraph 35).

[24]I will therefore examine that argument. For the purposes of this analysis, I will adopt the principles of interpretation summarized by Iacobucci J. in Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, at paragraphs 26-27:

In Elmer Driedger's definitive formulation, found at p. 87 of his Construction of Statutes (2nd ed. 1983):

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

Driedger's modern approach has been repeatedly cited by this Court as the preferred approach to statutory interpretation across a wide range of interpretive settings: see, for example, . . . . I note as well that, in the federal legislative context, this Court's preferred approach is buttressed by s. 12 of the Interpretation Act, R.S.C., 1985, c. I-21, which provides that every enactment "is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects".

The preferred approach recognizes the important role that context must inevitably play when a court construes the written words of a statute: as Professor John Willis incisively noted in his seminal article "Statute Interpretation in a Nutshell" (1938), 16 Can. Bar Rev. 1, at p. 6, "words, like people, take their colour from their surroundings". This being the case, where the provision under consideration is found in an Act that is itself a component of a larger statutory scheme, the surroundings that colour the words and the scheme of the Act are more expansive. In such an instance, the application of Driedger's principle gives rise to what was described in . . . as "the principle of interpretation that presumes a harmony, coherence, and consistency between statutes dealing with the same subject matter".

[25]It will be useful to reproduce here the most relevant provisions of section 37 and of sections 38 [as am. by S.C. 2001, c. 41, ss. 43, 141] and 39 of the Evidence Act, since those provisions comprise a code or set of rules designed to govern the exercise of public interest immunity, including sensitive information and Privy Council confidences.

Canada Evidence Act, R.S.C., 1985, c. C-5, as amended [ss. 37.3 (as enacted by S.C. 2001, c. 41, s. 43), 38.01 (as enacted idem), 38.02 (as enacted idem, ss. 43, 141), 38.04 (as enacted idem, ss. 43, 141), 38.06 (as enacted idem, s. 43), 38.08 (as enacted idem), 38.11 (as enacted idem), 38.14 (as enacted idem), 39 (as am. by S.C. 1992, ch. 1, s. 144 (F))]:

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.

(1.1) If an objection is made under subsection (1), the court, person or body shall ensure that the information is not disclosed other than in accordance with this Act.

(2) If an objection to the disclosure of information is made before a superior court, that court may determine the objection.

(3) If an objection to the disclosure of information is made before a court, person or body other than a superior court, the objection may be determined, on application, by

(a) the Federal Court, in the case of a person or body vested with power to compel production by or under an Act of Parliament if the person or body is not a court established under a law of a province; or

(b) the trial division or trial court of the superior court of the province within which the court, person or body exercises its jurisdiction, in any other case.

(4) An application under subsection (3) shall be made within 10 days after the objection is made or within any further or lesser time that the court having jurisdiction to hear the application considers appropriate in the circumstances.

(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.

(5) If 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, but that the public interest in disclosure outweighs in importance the specified public interest, the court may, by order, after considering both the public interest in disclosure and the form of and conditions to disclosure that are most likely to limit any encroachment upon the specified public interest resulting from disclosure, authorize the disclosure, subject to any conditions that the court considers appropriate, of all of the information, a part or summary of the information, or a written admission of facts relating to the information.

(6) If the court does not authorize disclosure under subsection (4.1) or (5), the court shall, by order, prohibit disclosure of the information.

(6.1) The court may receive into evidence anything that, in the opinion of the court, is reliable and appropriate, even if it would not otherwise be admissible under Canadian law, and may base its decision on that evidence.

. . .

37.3 (1) A judge presiding at a criminal trial or other criminal proceeding may make any order that he or she considers appropriate in the circumstances to protect the right of the accused to a fair trial, as long as that order complies with the terms of any order made under any of subsections 37(4.1) to (6) in relation to that trial or proceeding or any judgment made on appeal of an order made under any of those subsections.

(2) The orders that may be made under subsection (1) include, but are not limited to, the following orders:

(a) an order dismissing specified counts of the indictment or information, or permitting the indictment or information to proceed only in respect of a lesser or included offence;

(b) an order effecting a stay of the proceedings; and

. . .

38.01 (1) Every participant who, in connection with a proceeding, is required to disclose, or expects to disclose or cause the disclosure of, information that the participant believes is sensitive information or potentially injurious information shall, as soon as possible, notify the Attorney General of Canada in writing of the possibility of the disclosure, and of the nature, date and place of the proceeding.

(2) Every participant who believes that sensitive information or potentially injurious information is about to be disclosed, whether by the participant or another person, in the course of a proceeding shall raise the matter with the person presiding at the proceeding and notify the Attorney General of Canada in writing of the matter as soon as possible, whether or not notice has been given under subsection (1). In such circumstances, the person presiding at the proceeding shall ensure that the information is not disclosed other than in accordance with this Act.

. . .

38.02 . . .

(1.1) When an entity listed in the schedule, for any purpose listed there in relation to that entity, makes a decision or order that would result in the disclosure of sensitive information or potentially injurious information, the entity shall not disclose the information or cause it to be disclosed until notice of intention to disclose the information has been given to the Attorney General of Canada and a period of 10 days has elapsed after notice was given.

. . .

38.04 (1) The Attorney General of Canada may, at any time and in any circumstances, apply to the Federal Court for an order with respect to the disclosure of information about which notice was given under any of subsections 38.01(1) to (4).

. . .

38.06 (1) Unless the judge concludes that the disclosure of the information would be injurious to international relations or national defence or national security, the judge may, by order, authorize the disclosure of the information.

(2) If the judge concludes that the disclosure of the information would be injurious to international relations or national defence or national security but that the public interest in disclosure outweighs in importance the public interest in non-disclosure, the judge may by order, after considering both the public interest in disclosure and the form of and conditions to disclosure that are most likely to limit any injury to international relations or national defence or national security resulting from disclosure, authorize the disclosure, subject to any conditions that the judge considers appropriate, of all of the information, a part or summary of the information, or a written admission of facts relating to the information.

. . .

38.08 If the judge determines that a party to the proceeding whose interests are adversely affected by an order made under any of subsections 38.06(1) to (3) was not given the opportunity to make representations under paragraph 38.04(5)(d), the judge shall refer the order to the Federal Court of Appeal for review.

. . .

38.11 (1) A hearing under subsection 38.04(5) or an appeal or review of an order made under any of subsections 38.06(1) to (3) shall be heard in private and, at the request of either the Attorney General of Canada or, in the case of a proceeding under Part III of the National Defence Act, the Minister of National Defence, shall be heard in the National Capital Region, as described in the schedule to the National Capital Act.

(2) The judge conducting a hearing under subsection 38.04(5) or the court hearing an appeal or review of an order made under any of subsections 38.06(1) to (3) may give any person who makes representations under paragraph 38.04(5)(d), and shall give the Attorney General of Canada and, in the case of a proceeding under Part III of the National Defence Act, the Minister of National Defence, the opportunity to make representations ex parte.

. . .

38.14 (1) The person presiding at a criminal proceeding may make any order that he or she considers appropriate in the circumstances to protect the right of the accused to a fair trial, as long as that order complies with the terms of any order made under any of subsections 38.06(1) to (3) in relation to that proceeding, any judgment made on appeal from, or review of, the order, or any certificate issued under section 38.13.

(2) The orders that may be made under subsection (1) include, but are not limited to, the following orders:

(a) an order dismissing specified counts of the indictment or information, or permitting the indictment or information to proceed only in respect of a lesser or included offence;

(b) an order effecting a stay of the proceedings; and

. . .

39. (1) Where a minister of the Crown or the Clerk of the Privy Council objects to the disclosure of information before a court, person or body with jurisdiction to compel the production of information by certifying in writing that the information constitutes a confidence of the Queen's Privy Council for Canada, disclosure of the information shall be refused without examination or hearing of the information by the court, person or body.

(2) For the purpose of subsection (1), "a confidence of the Queen's Privy Council for Canada" includes, without restricting the generality thereof, information contained in

(a) a memorandum the purpose of which is to present proposals or recommendations to Council;

(b) a discussion paper the purpose of which is to present background explanations, analyses of problems or policy options to Council for consideration by Council in making decisions;

(d) a record used for or reflecting communications or discussions between ministers of the Crown on matters relating to the making of government decisions or the formulation of government policy;

(e) a record the purpose of which is to brief Ministers of the Crown in relation to matters that are brought before, or are proposed to be brought before, Council or that are the subject of communications or discussions referred to in paragraph (d); and

(f) draft legislation.

(3) For the purposes of subsection (2), "Council" means the Queen's Privy Council for Canada, committees of the Queen's Privy Council for Canada, Cabinet and committees of Cabinet.

(4) Subsection (1) does not apply in respect of

(a) a confidence of the Queen's Privy Council for Canada that has been in existence for more than twenty years; or

(b) a discussion paper described in paragraph (2)(b)

(i) if the decisions to which the discussion paper relates have been made public, or

(ii) where the decisions have not been made public, if four years have passed since the decisions were made. [Emphasis added.]

[26]Originally, Parliament had included the rules on this subject in the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, section 41 (see Appendix A), even though it was clear that its intention was that they would apply not only in this Court but also in all courts with the authority to compel the production of information protected by a public interest immunity.

[27]It was then clear that Parliament had simply codified the common-law principles, and not repealed them.¹ It confirmed that the Court may examine information that does not relate to international or federal-provincial relations or national defence or security, or to Privy Council confidences. After considering whether the proper administration of justice outweighs the specified public interest, the Court may order disclosure. It specifies, however, that the power to examine and order disclosure does not apply to information relating to the interests specified in subsection 41(2).

[28]On July 7, 1982, section 41 of the Federal Court Act was repealed (S.C. 1980-81-82-83, c. 111, section 3). New provisions were incorporated into the Evidence Act (see Appendix A).² The new section 37 now specifies that not only may a Minister of the Crown object to disclosure of information, and that the objection may be made not only to a court, but to any person with jurisdiction to compel the production of such information. In that sense, the amendments do not seem to depart from the common-law principles that applied at the time.

[29]Section 38 introduces the new concept of designated judge and now permits the documents to be examined by the Chief Justice of the Federal Court or another judge designated by the Chief Justice, even where the objection is based on reasons of international relations or national defence and security.

[30]In Gold v. R., [1986] 2 F.C. 129 (C.A.), the first decision of the Federal Court of Appeal in which these provisions arose in a civil case, the Court said [at page 138]:

The circumstances which led Parliament, at the instance of the government, to change radically the laws governing access to information in government files, Canada's security service and, specifically, to repeal subsection 41(2) of the Federal Court Act [R.S.C. 1970 (2nd Supp.), c. 10 (as am. by S.C. 1980-81-82-83, c. 111, s. 3)], ought to be fresh in judicial minds. As to the latter, Parliament has manifestly found it expedient to substitute a judicial discretion for what was heretofore an absolute right on the part of the executive to refuse disclosure. It is not to be assumed that any of this transpired because the government of the day was spontaneously taken by a selfless desire to share its secrets. The executive had been unable to sustain the credibility of the system of absolute privilege codified in subsection 41(2). The new system was a politically necessary response to serious public concerns. Effective judicial supervision is an essential element of the new system. Among other aspects of the new system, its credibility is dependent on a public appreciation that the competing public interests are, in fact, being judicially balanced. It will not be well served if it appears that the exercise of judicial discretion is automatically abdicated because national security is accepted as so vital that the fair administration of justice is assumed incapable of outweighing it. Each application under section 36.2 must be dealt with on its own merits.

[31]Following the events of September 11 and the enactment of the Anti-terrorism Act, S.C. 2001, c. 41, in December 2001, major changes were made to those rules, and in particular to section 38 (see Appendix A). A number of new points were added to section 37: for example, it now provides that the Court is entitled to hold hearings in camera and that it has the authority to hear a party in the absence of other parties (subsections 37.21(1) [as enacted by S.C. 2001, c. 41, s. 43] and (2) [as enacted idem]).

[32]Although Parliament extensively reorganized the text of section 38, which no longer makes any reference to the concept of objection ("opposition" in French), it did not change the wording of sections 37 and 39, which still deal with objection to the disclosure of information before a court or a person with jurisdiction to compel the production of information.

[33]In section 38, it is clear that the Attorney General may now ask a designated judge to make a non-disclosure order in the course of a proceeding in which a participant is required to disclose or expects to disclose or cause the disclosure of sensitive information as defined in that section.

[34]To complete this review of the legislative history of these provisions, it should be noted that in April 2004, Parliament repealed section 37.21 of the Evidence Act, the provision that expressly referred to the power to hold hearings in camera and to hear parties ex parte (S.C. 2004, c. 12, s. 18). It seems that after the decision of the Supreme Court of Canada in Ruby v. Canada (Solicitor General), [2002] 4 S.C.R. 3, Parliament wished to redress certain excesses. As we know, debate about the Anti-terrorism Act continues today.

[35]The parties confirmed that despite their exhaustive research, they were unable to find a single precedent in which either the common-law immunity or the immunity provided in section 37 of the current version or former versions of the Evidence Act was used by a minister or any other authorized person in a proactive context, that is, to protect information or documents that the party who objects to the disclosure had itself produced or placed in issue.³

[36]While section 37, as I noted, was originally intended to be a codification of the case law relating to public interest immunity, it is difficult to imagine that Parliament's intention was to go beyond the reactive context in which that immunity had traditionally been invoked and granted.

[37]The defendant admits that the wording of section 37, on its face, seems to be designed to protect information in a reactive context in connection with a request for production and disclosure.

[38]On that point, it should be noted that section 39, which accords virtually absolute immunity for Privy Council confidences, also provides for objection to disclosure before a court or a person with jurisdiction to compel the production of information. Obviously, because the Court cannot examine or even see the documents or information in question, Parliament could not have intended that language to refer to a proactive context where, for example, a minister would want to produce such information as evidence in support of a motion for a stay.

[39]As I said, it is entirely clear that these three sections (37 to 39 of the Evidence Act) must be interpreted as a single unit and that Parliament is presumed to have used the same word in the same sense in each of those sections, and particularly in sections 37 and 39.

[40]It is also difficult to imagine why Parliament limited the application of section 37 by referring to a court or person with jurisdiction to compel production if it intended to allow an authorized person to use it to prevent disclosure of evidence that he or she voluntarily produced before such a court or person. Logically, if that were what Parliament intended, it would have referred to the power to compel disclosure rather than production.

[41]The defendant submits that the Court must nonetheless apply a practical interpretation to section 37. In the defendant's submission, limiting its application to a purely reactive context, in the circumstances of this case, would create a flagrant injustice.

[42]The defendant cited section 12 of the Interpretation Act, R.S.C., 1985, c. I-21, which states that every enactment is deemed remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects. In the defendant's submission, because there are no precedents that prohibit it, the Court must include its right to object to disclosure of evidence produced by it in order to protect its rights, and particularly its right to defend its interests.

[43]The Court is aware of the dilemma faced by the defendant. However, it is important to recall that the defendant is in fact asking the Court to interpret section 37 as if it had the same scope as section 38 and read like that section, which allows for an application for a non-disclosure order to be made in any proceeding before a person with jurisdiction to compel disclosure, whether the party is required to disclose as a result of a request by a third party or simply wishes to disclose to support its own position in a proceeding.⁴

[44]Although the defendant did not address any proceeding other than a motion for a stay, it did not say how the Court could limit the proactive interpretation of section 37 to that proceeding alone. Today, the dilemma arises within that framework only, but there is nothing to suggest that it might not arise in the framework of, for example, a motion to strike or a motion for summary judgment.

[45]If we accept the principle that section 37 must be interpreted in such a way as to allow the defendant to use the information to preserve its right to present a defence, why would we deny the right to file a redacted statement of defence, for example, and obtain a non-disclosure order allowing it to present that evidence to the Court without the other party having access to it?

[46]The Court would of course then have the power to balance the public interests at play and order disclosure subject to conditions, but that mechanism is already an exception to a number of fundamental principles of our law, which requires that proceedings be public, that the administration of justice be transparent, that the Court have the benefit of adversarial proceedings before making a decision and that each party have access to all of the relevant evidence, and particularly to the evidence presented to the Court by the opposing party (see, inter alia, Ruby; and Vancouver Sun (Re), [2004] 2 S.C.R. 332).

[47]In these circumstances, the Court must adopt a rigorous approach.

[48]The Court must also have regard to the principle holding that if, as the defendant argues (and as is not accepted), section 37 is capable of two interpretations that are also consistent with the objects of the Act or the intention of Parliament, the Court must prefer the interpretation that is most consistent with the fundamental principles of our law that I set out above.

[49]I am also satisfied that if section 37 is interpreted as allowing objection to be made in a reactive context only, it is remedial and ensures the attainment of its objects perfectly.

[50]I conclude from my review of all of the factors that are relevant to a purposive interpretation of section 37 that neither the Prothonotary nor the Court has the power under that section to make a non-disclosure order in respect of Insp. Therriault's affidavit, which was filed by the defendant in support of its request for a stay and which includes its evidence regarding the irreparable harm it claims it would suffer. That provision does not allow the Court to hear an application other than a simple objection to disclosure, having regard to "secret" evidence, that is, information that cannot be disclosed to the other party.

B. The Stay Motion

[51]That being said, and as an alternative condition, if section 37, contrary to what I have said, applies in a proactive context as suggested by the defendant, I think that the Prothonotary failed to have regard to the correct public interest principles that support disclosure in his analysis, and confused the factors that are relevant to the analysis of the motion under paragraph 50(1)(b) of the Act with the principles relevant to an order under section 37 of the Evidence Act.

[52]For example, as I said in paragraph 10 above, when the Prothonotary considered whether to do an analysis under subsection 37(5), he said that the central public interest reason in support of disclosure was the reason identified in Mulroney: the right to a speedy hearing. Obviously, that question is relevant in determining whether a stay should be granted under paragraph 50(1)(b), but it is certainly not the central reason in support of disclosure.

[53]The public interest that operates in support of disclosure is, for example, a party's right to have access to all of the evidence relevant to the proceeding before the Court. In this case, that proceeding was not the action in damages, as the plaintiffs seem to have assumed; rather, it was the stay motion. In fact, as I said earlier, that is the novel factor in this case. The fact that the action includes a claim for an injunction (see paragraph 11 above) is also not relevant to the exercise directed by section 37 of the Evidence Act. However, it is relevant to the analysis of the merits of the stay motion.

[54]Because the Prothonotary makes no reference to the principles of the public nature of proceedings and the right of every party to have a fair chance to assert its position and to rebut all arguments and evidence introduced by the opposing party, we might wonder whether those concepts were indeed taken into account and given their proper weight. In Gold, the Federal Court of Appeal had already pointed out that Parliament has recognized that the public interest in the administration of justice, which supports disclosure, may outweigh even the public interest in national security, and that the scheme of the Act does not expose any obvious imbalance between those interests.

[55]In paragraphs 35-38, the Prothonotary analysed the three-part test set out in RJR -- MacDonald Inc., as follows:

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.

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

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

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

[56]The use of the words "for greater certainty" suggests that the Prothonotary thought that his analysis under section 37, in which he concluded that the public interests referred to in Serge Therriault's affidavit outweighed the public interests that supported disclosure, together with his conclusion that the defendant could not prepare a sound defence without disclosing it,⁵ was sufficient reason to stay the action.

[57]The serious issue advanced by the defendant was indeed as follows:

[translation] Is the defendant able to make full answer and defence without disclosing the information referred to in the affidavit of Insp. Serge Therriault?

[58]While that was the question that had to be asked according to RJR -- MacDonald, it called for an analy-sis of the possible application of section 37, but in this case to the action. At that stage, the Court was going to have to ask whether the information to be disclosed was essential and crucial to the success of the action or the defence. This is different from the application of section 37 to the stay motion. I conclude that the Prothonotary either erred in his analysis under section 37 in relation to the motion or confused the two levels of analysis when he examined the serious issue advanced.

[59]In addition, the Court cannot follow the defendant's reasoning, which was adopted by the Prothonotary. At what point will the judge who hears the matter on the merits have to decide this issue? It really seems that it arises only in relation to the stay motion or to an objection that might be made under section 37. At the hearing, however, the defendant argued that the purpose of the stay was to enable it to use its information to present a defence once the ongoing criminal investigations have been completed.

[60]In addition, the purpose of that test (serious issue) is to ensure that the position of the party seeking a stay is not frivolous, in terms of the merits of the action or defence. The question advanced by the defendant does not answer that concern, in my opinion.

[61]For these reasons, I conclude that I must exercise my discretion de novo and that there is no need to analyse the other arguments made by the plaintiffs on this point.

[62]As I said earlier, I assume at this stage that section 37 applies in this situation and in a proactive context.

[63]In this context, even if I agree that Mr. Therriault's affidavit must not be disclosed, after completing the exercise directed by section 37 of the Evidence Act, I am not satisfied that the defendant has established that it will suffer irreparable harm if the action is not stayed.

[64]In this respect, I believe that the motion is premature.

[65]There is nothing to indicate that the defendant could not file a redacted statement of defence and that, if necessary, the judge who is asked to make an order under section 37, at that point, could not, if he or she found it appropriate under subsection 37(5), set a reasonable time within which the defendant would have to disclose the redacted information, as a condition of disclosure.

[66]In addition, because the Court must ordinarily balance the diverse interests at play, an exercise that includes assessing the relevance of the information in the strict sense (Jose Pereira E Hijos, S.A. v. Canada (Attorney General), 2002 FCA 470, at paragraphs 17 and 18; Canada (Attorney General) v. Ribic, [2005] 1 F.C.R. 33 (F.C.A.), at paragraph 22), the Court must have before it as many details as possible regarding the defence that the defendant intends to assert. At this stage, I am not satisfied that I have sufficient evidence in that regard.

[67]I am also not satisfied that a stay would resolve the dilemma faced by the defendant today. As Mr. Covey said, its objection is based on a number of public interests, not only the interest in ongoing police investigations. How would a stay resolve the dilemma in respect of the information that Superintendent Covey included in categories B, D and E, to mention only that information?

[68]It is not useful or appropriate to go any further, because these reasons provide sufficient justification for dismissing the stay motion, if section 37 is to be interpreted as applying in a proactive context.

[69]Before concluding, however, I would like to point out that if section 37 of the Evidence Act can be applied only in a reactive context, as I believe, this does not mean that a motion under paragraph 50(1)(b) can never be granted to enable police services to complete an investigation when a civil action has been instituted. With respect, I do not think that the decision in Mulroney, definitively settled that question.

[70]Paragraph 50(1)(b) specifically provides that even when there is no action pending, a stay may be granted where it is in the interest of justice that the proceedings be stayed.

[71]Parliament has already provided that a stay of proceedings may be granted in the context of a criminal proceeding if the Crown objects to disclosure of information that is essential to the accused (section 37.3). This was in fact the rule before these provisions were enacted in 1985.

[72]Doing the same thing in civil proceedings, where it is justified by the circumstances and public interests at play, would allow the defendant's concerns to be taken into account.

[73]I am confident that in appropriate given circumstances, with careful presentation, such a motion can succeed.

ORDER

THE COURT ORDERS that:

1. The appeal be allowed.

2. The order of February 16, 2005, be set aside and the motion for a stay dismissed, costs in the cause.

3. The affidavit of Serge Therriault 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 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, it being understood that those documents must be retained at least until expiry of the time for appeal and, in the event of an appeal, until after final judgment only.

APPENDIX A

Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10:

41. (1) Subject to the provisions of any other Act and to subsection (2), when a Minister of the Crown certifies to any court by affidavit that a document belongs to a class or contains information which on grounds of a public interest specified in the affidavit should be withheld from production and discovery, the court may examine the document and order its production and discovery to the parties, subject to such restrictions or conditions as it deems appropriate, if it concludes in the circumstances of the case that the public interest in the proper administration of justice outweighs in importance the public interest specified in the affidavit.

(2) When a Minster of the Crown certifies to any court by affidavit that the production or discovery of a document or its contents would be injurious to international relations, national defence or security, or to federal-provincial relations, or that it would disclose a confidence of the Queen's Privy Council for Canada, discovery and production shall be refused without any examination of the document by the court. [Emphasis added.]

Canada Evidence Act, R.S.C., 1985, c. C-5 [as it read prior to the 2001 amendments]:

37. (1) A minister of the Crown in right of Canada or other person interested 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.

(2) Subject to sections 38 and 39, where an objection to the disclosure of information is made under subsection (1) before a superior court, that court may examine or hear the information and order its disclosure, subject to such restrictions or conditions as it deems appropriate, if it concludes that, in the circumstances of the case, the public interest in disclosure outweighs in importance the specified public interest.

(3) Subject to sections 38 and 39, where an objection to the disclosure of information is made under subsection (1) before a court, person or body other than a superior court, the objection may be determined, on application, in accordance with subsection (2) by

(a) the Federal Court--Trial Division, in the case of a person or body vested with power to compel production by or pursuant to an Act of Parliament if the person or body is not a court established under a law of a province; or

(b) the trial division or trial court of the superior court of the province within which the court, person or body exercises its jurisdiction, in any other case.

(4) An application pursuant to subsection (3) shall be made within ten days after the objection is made or within such further or lesser time as the court having jurisdiction to hear the application considers appropriate in the circumstances.

(5) An appeal lies from a determination under subsection (2) or (3)

(a) to the Federal Court of Appeal from a determination of the Federal Court-Trial Division; or

(b) to the court of appeal of a province from a determination of a trial division or trial court of a superior court of a province.

(6) An appeal under subsection (5) shall be brought within ten days from the date of the determination appealed from or within such further time as the court having jurisdiction to hear the appeal considers appropriate in the circumstances.

(7) Notwithstanding any other Act of Parliament,

(a) an application for leave to appeal to the Supreme Court of Canada from a judgment made pursuant to subsection (5) shall be made within ten days from the date of the judgment appealed from or within such further time as the court having jurisdiction to grant leave to appeal considers appropriate in the circumstances; and

(b) where leave to appeal is granted, the appeal shall be brought in the manner set out in subsection 60(1) of the Supreme Court Act but within such time as the court that grants leave specifies.

38. (1) Where an objection to the disclosure of information is made under subsection 37(1) on grounds that the disclosure would be injurious to international relations or national defence or security, the objection may be determined, on application, in accordance with subsection 37(2) only by the Chief Justice of the Federal Court, or such other judge of that Court as the Chief Justice may designate to hear such applications.

(2) An application under subsection (1) shall be made within ten days after the objection is made or within such further or lesser time as the Chief Justice of the Federal Court, or such other judge of that Court as the Chief Justice may designate to hear such applications, considers appropriate.

(3) An appeal lies from a determination under subsection (1) to the Federal Court of Appeal.

(4) Subsection 37(6) applies in respect of appeals under subsection (3), and subsection 37(7) applies in respect of appeals from judgment made pursuant to subsection (3), with such modifications as the circumstances require.

(5) An application under subsection (1) or an appeal brought in respect of the application shall

(a) be heard in camera; and

(b) on the request of the person objecting to the disclosure of information, be heard and determined in the National Capital Region described in the schedule to the National Capital Act.

(6) During the hearing of an application under subsection (1) or an appeal brought in respect to the application, the person who made the objection in respect of which the application was made or the appeal was brought shall, on the request of that person, be given the opportunity to make representations ex parte.

39. (1) Where a minister of the Crown or the Clerk of the Privy Council objects to the disclosure of information before a court, person or body with jurisdiction to compel the production of information by certifying in writing that the information constitutes a confidence of the Queen's Privy council for Canada, disclosure of the information shall be refused without examination or hearing of the information by the court, person or body.

(2) For the purpose of subsection (1), "a confidence of the Queen's Pricy Council for Canada" includes, without restricting the generality thereof, information contained in

(a) a memorandum the purpose of which is to present proposals or recommendations to Council;

(b) a discussion paper the purpose of which is to present background explanations, analyses of problems or policy options to Council for consideration by Council in making decisions;

(d) a record used for or reflecting communications or discussions between ministers of the Crown on matters relating to the making of government decisions or the formulation of government policy;

(f) draft legislation.

(3) For the purposes of subsection (2), "Council" means the Queen's Privy Council for Canada, committees of the Queen's Privy Council for Canada, Cabinet and committees of Cabinet.

(4) Subsection (1) does not apply in respect of

(a) a confidence of the Queen's Privy Council for Canada that has been in existence for more than twenty years; or

(b) a discussion paper described in paragraph (2)(b)

(i) if the decisions to which the discussion paper relates have been made public, or

(ii) where the decisions have not been made public, if four years have passed since the decisions were made.

Anti-terrorism Act, S.C. 2001, c. 41 [section 43]:

(1.1) If an objection is made under subsection (1), the court, person or body shall ensure that the information is not disclosed other than in accordance with this Act.

(2) If an objection to the disclosure of information is made before a superior court, that court may determine the objection.

(3) If an objection to the disclosure of information is made before a court, person or body other than a superior court, the objection may be determined, on application, by

(a) the Federal Court-Trial Division, in the case of a person or body vested with power to compel production by or under an Act of Parliament if the person or body is not a court established under a law of a province; or

(b) the trial division or trial court of the superior court of the province within which the court, person or body exercises its jurisdiction, in any other case.

(6) If the court does not authorize disclosure under subsection (4.1) or (5), the court shall, by order, prohibit disclosure of the information.

(7) An order of the court that authorizes disclosure does not take effect until the time provided or granted to appeal the order, or a judgment of an appeal court that confirms the order, has expired, or no further appeal from a judgment that confirms the order is available.

(8) A person who wishes to introduce into evidence material the disclosure of which is authorized under subsection (5), but who may not be able to do so by reason of the rules of admissibility that apply before the court, person or body with jurisdiction to compel the production of information, may request from the court having jurisdiction under subsection (2) or (3) an order permitting the introduc-tion into evidence of the material in a form or subject to any conditions fixed by that court, as long as that form and those conditions comply with the order made under subsection (5).

(9) For the purpose of subsection (8), the court having jurisdiction under subsection (2) or (3) shall consider all the factors that would be relevant for a determination of admissibility before the court, person or body.

37.1 (1) An appeal lies from a determination under any of subsections 37(4.1) to (6)

(a) to the Federal Court of Appeal from a determination of the Federal Court-Trial Division; or

(b) to the court of appeal of a province from a determination of a trial division or trial court of a superior court of the province.

(2) An appeal under subsection (1) shall be brought within 10 days after the date of the determination appealed from or within any further time that the court having jurisdiction to hear the appeal considers appropriate in the circumstances.

37.2 Notwithstanding any other Act of Parliament,

(a) an application for leave to appeal to the Supreme Court of Canada from a judgment made under subsection 37.1(1) shall be made within 10 days after the date of the judgment appealed from or within any further time that the court having jurisdiction to grant leave to appeal considers appropriate in the circumstances;

(b) if leave to appeal is granted, the appeal shall be brought in the manner set out in subsection 60(1) of the Supreme Court Act but within the time specified by the court that grants leave.

37.21 (1) A hearing under subsection 37(2) or (3) or an appeal of an order made under any of subsections 37(4.1) to (6) shall be heard in private.

(2) The court conducting a hearing under subsection 37(2) or (3) or the court hearing an appeal of an order made under any of subsections 37(4.1) to (6) may give

(a) any person an opportunity to make representations; and

(b) any person who makes representations under paragraph (a) the opportunity to make representations ex parte.

(2) The orders that may be made under subsection (1) include, but are not limited to, the following orders:

(a) an order dismissing specified counts of the indictment or information, or permitting the indictment or information to proceed only in respect of a lesser or included offence;

(b) an order effecting a stay of the proceedings; and

. . .

38. The following definitions apply in this section and in sections 38.01 to 38.15.

"judge" means the Chief Justice of the Federal Court or a judge of the Federal Court-Trial Division designated by the Chief Justice to conduct hearings under section 38.04.

"participant" means a person who, in connection with a proceeding, is required to disclose, or expects to disclose or cause the disclosure of, information.

"potentially injurious information" means information of a type that, if it were disclosed to the public, could injure international relations or national defence or national security.

"proceeding" means a proceeding before a court, person or body with jurisdiction to compel the production of information.

"prosecutor" means an agent of the Attorney General of Canada or of the Attorney General of a province, the Director of Military Prosecutions under the National Defence Act or an individual who acts as a prosecutor in a proceeding.

"sensitive information" means information relating to international relations or national defence or national security that is in the possession of the Government of Canada, whether originating from inside or outside Canada, and is of a type that the Government of Canada is taking measures to safeguard.

(3) An official, other than a participant, who believes that sensitive information or potentially injurious information may be disclosed in connection with a proceeding may notify the Attorney General of Canada in writing of the possibility of the disclosure, and of the nature, date and place of the proceeding.

(4) An official, other than a participant, who believes that sensitive information or potentially injurious information is about to be disclosed in the course of a proceeding may raise the matter with the person presiding at the proceeding. If the official raises the matter, he or she shall notify the Attorney General of Canada in writing of the matter as soon as possible, whether or not notice has been given under subsection (3), and the person presiding at the proceeding shall ensure that the information is not disclosed other than in accordance with this Act.

(5) In the case of a proceeding under Part III of the National Defence Act, notice under any of subsections (1) to (4) shall be given to both the Attorney General of Canada and the Minister of National Defence.

(6) This section does not apply when

(a) the information is disclosed by a person to their solicitor in connection with a proceeding, if the information is relevant to that proceeding;

(b) the information is disclosed to enable the Attorney General of Canada, the Minister of National Defence, a judge or a court hearing an appeal from, or a review of, an order of the judge to discharge their responsibilities under section 38, this section and sections 38.02 to 38.13, 38.15 and 38.16;

(c) disclosure of the information is authorized by the government institution in which or for which the information was produced or, if the information was not produced in or for a government institution, the government institution in which it was first received; or

(d) the information is disclosed to an entity and, where applicable, for a purpose listed in the schedule.

(7) Subsections (1) and (2) do not apply to a participant if a government institution referred to in paragraph (6)(c) advises the participant that it is not necessary, in order to prevent disclosure of the information referred to in that paragraph, to give notice to the Attorney General of Canada under subsection (1) or to raise the matter with the person presiding under subsection (2).

(8) The Governor in Council may, by order, add to or delete from the schedule a reference to any entity or purpose, or amend such a reference.

38.02 (1) Subject to subsection 38.01(6), no person shall disclose in connection with a proceeding

(a) information about which notice is given under any of subsections 38.01(1) to (4);

(b) the fact that notice is given to the Attorney General of Canada under any of subsections 38.01(1) to (4), or to the Attorney General of Canada and the Minister of National Defence under subsection 38.01(5);

(c) the fact that an application is made to the Federal Court --Trial Division under section 38.04 or that an appeal or review of an order made under any of subsections 38.06(1) to (3) in connection with the application is instituted; or

(d) the fact that an agreement is entered into under section 38.031 or subsection 38.04(6).

(2) Disclosure of the information or the facts referred to in subsection (1) is not prohibited if

(a) the Attorney General of Canada authorizes the disclosure in writing under section 38.03 or by agreement under section 38.031 or subsection 38.04(6); or

(b) a judge authorizes the disclosure under subsection 38.06(1) or (2) or a court hearing an appeal from, or a review of, the order of the judge authorizes the disclosure, and either the time provided to appeal the order or judgment has expired or no further appeal is available.

38.03 (1) The Attorney General of Canada may, at any time and subject to any conditions that he or she considers appropriate, authorize the disclosure of all or part of the information and facts the disclosure of which is prohibited under subsection 38.02(1).

(2) In the case of a proceeding under Part III of the National Defence Act, the Attorney General of Canada may authorize disclosure only with the agreement of the Minister of National Defence.

(3) The Attorney General of Canada shall, within 10 days after the day on which he or she first receives a notice about information under any of subsections 38.01(1) to (4), notify in writing every person who provided notice under section 38.01 about that information of his or her decision with respect to disclosure of the information.

38.031 (1) The Attorney General of Canada and a person who has given notice under subsection 38.01(1) or (2) and is not required to disclose information but wishes, in connection with a proceeding, to disclose any facts referred to in paragraphs 38.02(1)(b) to (d) or information about which he or she gave the notice, or to cause that disclosure, may, before the person applies to the Federal Court--Trial Division under paragraph 38.04(2)(c), enter into an agreement that permits the disclosure of part of the facts or information or disclosure of the facts or information subject to conditions.

(2) If an agreement is entered into under subsection (1), the person may not apply to the Federal Court--Trial Division under paragraph 38.04(2)(c) with respect to the information about which he or she gave notice to the Attorney General of Canada under subsection 38.01(1) or (2).

38.04 (1) The Attorney General of Canada may, at any time and in any circumstances, apply to the Federal Court--Trial Division for an order with respect to the disclosure of information about which notice was given under any of subsections 38.01(1) to (4).

(2) If, with respect to information about which notice was given under any of subsections 38.01(1) to (4), the Attorney General of Canada does not provide notice of a decision in accordance with subsection 38.03(3) or, other than by an agreement under section 38.031, authorizes the disclosure of only part of the information or disclosure subject to any conditions,

(a) the Attorney General of Canada shall apply to the Federal Court--Trial Division for an order with respect to disclosure of the information if a person who gave notice under subsection 38.01(1) or (2) is a witness;

(b) a person, other than a witness, who is required to disclose information in connection with a proceeding shall apply to the Federal Court--Trial Division for an order with respect to disclosure of the information; and

(c) a person who is not required to disclose information in connection with a proceeding but who wishes to disclose it or to cause its disclosure may apply to the Federal Court--Trial Division for an order with respect to disclosure of the information.

(3) A person who applies to the Federal Court-Trial Division under paragraph (2)(b) or (c) shall provide notice of the application to the Attorney General of Canada.

(4) An application under this section is confidential. Subject to section 38.12, the Administrator of the Federal Court may take any measure that he or she considers appropriate to protect the confidentiality of the application and the information to which it relates.

(5) As soon as the Federal Court--Trial Division is seized of an application under this section, the judge

(a) shall hear the representations of the Attorney General of Canada and, in the case of a proceeding under Part III of the National Defence Act, the Minister of National Defence, concerning the identity of all parties or witnesses whose interests may be affected by either the prohibition of disclosure or the conditions to which disclosure is subject, and concerning the persons who should be given notice of any hearing of the matter;

(b) shall decide whether it is necessary to hold any hearing of the matter;

(i) determine who should be given notice of the hearing,

(ii) order the Attorney General of Canada to notify those persons, and

(iii) determine the content and form of the notice; and

(d) if he or she considers it appropriate in the circumstances, may give any person the opportunity to make representations.

(6) After the Federal Court--Trial Division is seized of an application made under paragraph (2)(c) or, in the case of an appeal from, or a review of, an order of the judge made under any of subsections 38.06(1) to (3) in connection with that application, before the appeal or review is disposed of,

(a) the Attorney General of Canada and the person who made the application may enter into an agreement that permits the disclosure of part of the facts referred to in paragraphs 38.02(1)(b) to (d) or part of the information, or disclosure of the facts or information subject to conditions; and

(b) if an agreement is entered into, the Court's consideration of the application or any hearing, review or appeal shall be terminated.

(7) Subject to subsection (6), after the Federal Court-Trial Division is seized of an application made under this section or, in the case of an appeal from, or a review of, an order of the judge made under any of subsections 38.06(1) to (3) before the appeal or review is disposed of, if the Attorney General of Canada authorizes the disclosure of all or part of the information or withdraws conditions to which the disclosure is subject, the Court's consideration of the application or any hearing, appeal or review shall be terminated in relation to that information, to the extent of the authorization or the withdrawal.

38.05 If he or she receives notice of a hearing under paragraph 38.04(5)(c), a person presiding or designated to preside at the proceeding to which the information relates or, if no person is designated, the person who has the authority to designate a person to preside may, within 10 days after the day on which he or she receives the notice, provide the judge with a report concerning any matter relating to the proceeding that the person considers may be of assistance to the judge.

(3) If the judge does not authorize disclosure under subsection (1) or (2), the judge shall, by order, confirm the prohibition of disclosure.

(3.1) The judge may receive into evidence anything that, in the opinion of the judge, is reliable and appropriate, even if it would not otherwise be admissible under Canadian law, and may base his or her decision on that evidence.

(4) A person who wishes to introduce into evidence material the disclosure of which is authorized under subsection (2) but who may not be able to do so in a proceeding by reason of the rules of admissibility that apply in the proceeding may request from a judge an order permitting the introduction into evidence of the material in a form or subject to any conditions fixed by that judge, as long as that form and those conditions comply with the order made under subsection (2).

(5) For the purpose of subsection (4), the judge shall consider all the factors that would be relevant for a determination of admissibility in the proceeding.

38.07 The judge may order the Attorney General of Canada to give notice of an order made under any of subsections 38.06(1) to (3) to any person who, in the opinion of the judge, should be notified.

38.09 (1) An order made under any of subsections 38.06(1) to (3) may be appealed to the Federal Court of Appeal.

(2) An appeal shall be brought within 10 days after the day on which the order is made or within any further time that the Court considers appropriate in the circumstances.

38.1 Notwithstanding any other Act of Parliament,

(a) an application for leave to appeal to the Supreme Court of Canada from a judgment made on appeal shall be made within 10 days after the day on which the judgment appealed from is made or within any further time that the Supreme Court of Canada considers appropriate in the circumstances; and

(b) if leave to appeal is granted, the appeal shall be brought in the manner set out in subsection 60(1) of the Supreme Court Act but within the time specified by the Supreme Court of Canada.

38.12 (1) The judge conducting a hearing under subsection 38.04(5) or the court hearing an appeal or review of an order made under any of subsections 38.06(1) to (3) may make any order that the judge or the court considers appropriate in the circumstances to protect the confidentiality of the information to which the hearing, appeal or review relates.

(2) The court records relating to the hearing, appeal or review are confidential. The judge or the court may order that the records be sealed and kept in a location to which the public has no access.

38.13 (1) The Attorney General of Canada may personally issue a certificate that prohibits the disclosure of information in connection with a proceeding for the purpose of protecting information obtained in confidence from, or in relation to, a foreign entity as defined in subsection 2(1) of the Security of Information Act or for the purpose of protecting national defence or national security. The certificate may only be issued after an order or decision that would result in the disclosure of the information to be subject to the certificate has been made under this or any other Act of Parliament.

(2) In the case of a proceeding under Part III of the National Defence Act, the Attorney General of Canada may issue the certificate only with the agreement, given personally, of the Minister of National Defence.

(3) The Attorney General of Canada shall cause a copy of the certificate to be served on

(a) the person presiding or designated to preside at the proceeding to which the information relates or, if no person is designated, the person who has the authority to designate a person to preside;

(b) every party to the proceeding;

(d) every person who, in connection with the proceeding, may disclose, is required to disclose or may cause the disclosure of the information about which the Attorney General of Canada has received notice under section 38.01;

(e) every party to a hearing under subsection 38.04(5) or to an appeal of an order made under any of subsections 38.06(1) to (3) in relation to the information;

(f) the judge who conducts a hearing under subsection 38.04(5) and any court that hears an appeal from, or review of, an order made under any of subsections 38.06(1) to (3) in relation to the information; and

(g) any other person who, in the opinion of the Attorney General of Canada, should be served.

(4) The Attorney General of Canada shall cause a copy of the certificate to be filed

(a) with the person responsible for the records of the proceeding to which the information relates; and

(b) in the Registry of the Federal Court and the registry of any court that hears an appeal from, or review of, an order made under any of subsections 38.06(1) to (3).

(5) If the Attorney General of Canada issues a certificate, then, notwithstanding any other provision of this Act, disclosure of the information shall be prohibited in accordance with the terms of the certificate.

(6) The Statutory Instruments Act does not apply to a certificate issued under subsection (1).

(7) The Attorney General of Canada shall, without delay after a certificate is issued, cause the certificate to be published in the Canada Gazette.

(8) The certificate and any matters arising out of it are not subject to review or to be restrained, prohibited, removed, set aside or otherwise dealt with, except in accordance with section 38.131.

(9) The certificate expires 15 years after the day on which it is issued and may be reissued.

38.131 (1) A party to the proceeding referred to in section 38.13 may apply to the Federal Court of Appeal for an order varying or cancelling a certificate issued under that section on the grounds referred to in subsection (8) or (9), as the case may be.

(2) The applicant shall give notice of the application to the Attorney General of Canada.

(3) In the case of proceedings under Part III of the National Defence Act, notice under subsection (2) shall be given to both the Attorney General of Canada and the Minister of National Defence.

(4) Notwithstanding section 16 of the Federal Court Act, for the purposes of the application, the Federal Court of Appeal consists of a single judge of that Court.

(5) In considering the application, the judge may receive into evidence anything that, in the opinion of the judge, is reliable and appropriate, even if it would not otherwise be admissible under Canadian law, and may base a determination made under any of subsections (8) to (10) on that evidence.

(6) Sections 38.11 and 38.12 apply, with any necessary modifications, to an application made under subsection (1).

(7) The judge shall consider the application as soon as reasonably possible, but not later than 10 days after the application is made under subsection (1).

(8) If the judge determines that some of the information subject to the certificate does not relate either to information obtained in confidence from, or in relation to, a foreign entity as defined in subsection 2(1) of the Security of Information Act, or to national defence or security, the judge shall make an order varying the certificate accordingly.

(9) If the judge determines that none of the information subject to the certificate relates to information obtained in confidence from, or in relation to, a foreign entity as defined in subsection 2(1) of the Security of Information Act, or to national defence or security, the judge shall make an order cancelling the certificate.

(10) If the judge determines that all of the information subject to the certificate relates to information obtained in confidence from, or in relation to, a foreign entity as defined in subsection 2(1) of the Security of Information Act, or to national defence or security, the judge shall make an order confirming the certificate.

(11) Notwithstanding any other Act of Parliament, a determination of a judge under any of subsections (8) to (10) is final and is not subject to review or appeal by any court.

(12) If a certificate is varied or cancelled under this section, the Attorney General of Canada shall, as soon as possible after the decision of the judge and in a manner that mentions the original publication of the certificate, cause to be published in the Canada Gazette

(a) the certificate as varied under subsection (8); or

(b) a notice of the cancellation of the certificate under subsection (9).

(2) The orders that may be made under subsection (1) include, but are not limited to, the following orders:

(a) an order dismissing specified counts of the indictment or information, or permitting the indictment or information to proceed only in respect of a lesser or included offence;

(b) an order effecting a stay of the proceedings; and

38.15 (1) If sensitive information or potentially injurious information may be disclosed in connection with a prosecution that is not instituted by the Attorney General of Canada or on his or her behalf, the Attorney General of Canada may issue a fiat and serve the fiat on the prosecutor.

(2) When a fiat is served on a prosecutor, the fiat establishes the exclusive authority of the Attorney General of Canada with respect to the conduct of the prosecution described in the fiat or any related process.

(3) If a prosecution described in the fiat or any related process is conducted by or on behalf of the Attorney General of Canada, the fiat or a copy of the fiat shall be filed with the court in which the prosecution or process is conducted.

(4) The fiat or a copy of the fiat

(a) is conclusive proof that the prosecution described in the fiat or any related process may be conducted by or on behalf of the Attorney General of Canada; and

(b) is admissible in evidence without proof of the signature or official character of the Attorney General of Canada.

(5) This section does not apply to a proceeding under Part III of the National Defence Act.

38.16 The Governor in Council may make any regulations that the Governor in Council considers necessary to carry into effect the purposes and provisions of sections 38 to 38.15, including regulations respecting the notices, certificates and the fiat.

¹ T. G. Cooper, Crown Privilege, Aurora (Ont.): Canada Law Book, 1990, p. 17, footnote 2. John Sopinka, Sidney N. Lederman and Alan W. Bryant, The Law of Evidence in Canada, 2nd ed., Toronto: Butterworths, 1999, para. 15.5-15.8.

² The 1982 provisions, sections 36.1, 36.2 and 36.3, were renumbered in the 1985 revision and became sections 37, 38 and 39. I will use the new numbering in my reasons.

³ The parties confirmed that they also reviewed the British, Australian and New Zealand decisions on this question.

⁴ This language expands the circumstances in which a non-disclosure application under s. 38 may be made. However, even in this context, it is not clear that after obtaining a non-disclosure order a party may submit the "secret" evidence to the court hearing the proceeding (other than the designated judge, within the meaning of s. 38) to support its own position. I do not intend to address that question here.

⁵ The Prothonotary reached that conclusion simply because the defendant must reply to all allegations in the statement of claim. He does not seem to have considered that balancing the interests at play calls for a more rigorous test to be applied than mere relevance to the allegations in the statement of claim. In relation to both s. 37 and s. 38, in fact, the Court must consider whether the information is evidence that is crucial or very important to the success of the action or the defence (on this point, see the decisions cited in para. 66 below).

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