Tele-Mobile Co. v. Ontario

Abella J. — A new investigative tool was introduced to the Criminal Code in 2004: the production order. Production orders compel third parties in possession of information relevant to a criminal investigation to produce and generate documents and data for law enforcement agencies. The Tele-Mobile Company (“Telus”) argued that requiring it to comply with production orders without compensation was unreasonable.

The issue in this case is whether a judge has the power to make it a term or condition of a production order that the police compensate a third party for expenses incurred in complying with the order. In my view, there is no power to order compensation under the production order scheme. Where the financial costs of compliance are unreasonable, the remedy lies in a full or partial exemption from the production order.

The parties in this case agree that while there may be a number of factors making a production order unreasonable, this appeal is limited to a consideration of the reasonableness of the financial burden of compliance. The burden on Telus was found not to be unreasonable by Vaillancourt J. I agree with his conclusion.

Background

The scheme governing the use of production orders is found in ss. 487.012 to 487.017 of the Criminal Code , R.S.C. 1985, c. C-46 . The relevant provisions (added by S.C. 2004, c. 3, s. 7) state:

487.012 (1) [Production order] A justice or judge may order a person, other than a person under investigation for an offence referred to in paragraph (3)(a),

(a) to produce documents, or copies of them certified by affidavit to be true copies, or to produce data; or

(b) to prepare a document based on documents or data already in existence and produce it.

(2) [Production to peace officer] The order shall require the documents or data to be produced within the time, at the place and in the form specified and given

(a) to a peace officer named in the order; or

(b) to a public officer named in the order, who has been appointed or designated to administer or enforce a federal or provincial law and whose duties include the enforcement of this or any other Act of Parliament.

(3) [Conditions for issuance of order] Before making an order, the justice or judge must be satisfied, on the basis of an ex parte application containing information on oath in writing, that there are reasonable grounds to believe that

(a) an offence against this Act or any other Act of Parliament has been or is suspected to have been committed;

(b) the documents or data will afford evidence respecting the commission of the offence; and

(c) the person who is subject to the order has possession or control of the documents or data.

(4) [Terms and conditions] The order may contain any terms and conditions that the justice or judge considers advisable in the circumstances, including terms and conditions to protect a privileged communication between a lawyer and their client or, in the province of Quebec, between a lawyer or a notary and their client.

(5) [Power to revoke, renew or vary order] The justice or judge who made the order, or a judge of the same territorial division, may revoke, renew or vary the order on an ex parte application made by the peace officer or public officer named in the order.

. . .

487.014 (1) [Power of peace officer] For greater certainty, no production order is necessary for a peace officer or public officer enforcing or administering this or any other Act of Parliament to ask a person to voluntarily provide to the officer documents, data or information that the person is not prohibited by law from disclosing.

(2) [Application of section 25] A person who provides documents, data or information in the circumstances referred to in subsection (1) is deemed to be authorized to do so for the purposes of section 25.

487.015 (1) [Application for exemption] A person named in an order made under section 487.012 and a financial institution, person or entity named in an order made under section 487.013 may, before the order expires, apply in writing to the judge who issued the order, or a judge of the same territorial division as the judge or justice who issued the order, for an exemption from the requirement to produce any document, data or information referred to in the order.

(2) [Notice] A person, financial institution or entity may only make an application under subsection (1) if they give notice of their intention to do so to the peace officer or public officer named in the order, within 30 days after it is made.

(3) [Order suspended] The execution of a production order is suspended in respect of any document, data or information referred to in the application for exemption until a final decision is made in respect of the application.

(4) [Exemption] The judge may grant the exemption if satisfied that

(a) the document, data or information would disclose information that is privileged or otherwise protected from disclosure by law;

(b) it is unreasonable to require the applicant to produce the document, data or information; or

(c) the document, data or information is not in the possession or control of the applicant.

487.017 [Offence] A financial institution, person or entity who does not comply with a production order made under section 487.012 or 487.013 is guilty of an offence and liable on summary conviction to a fine not exceeding $250,000 or imprisonment for a term not exceeding six months, or to both.

This case arises out of two production orders issued pursuant to s. 487.012 of the Criminal Code , requiring Telus to produce call records related to separate criminal investigations. The first was granted to the Toronto Police Service on September 30, 2004, compelling Telus to produce a report outlining the call data records relating to one of its subscribers who was the subject of a murder investigation. The order provided:

WHEREAS IT APPEARS UPON the Information of . . . a Peace Officer;

That there are reasonable grounds to believe that an offence against the Criminal Code has been committed, namely

First Degree Murder . . .

AND UPON being satisfied that the requested documents will afford evidence in respect of the commission of the offence.

AND UPON being satisfied that the persons who are the subject of this Order have possession or control of the requested data.

IT IS ORDERED that . . . the Director of Regulatory Affairs and Government Relations or any other person occupying that position in a permanent or acting capacity, of the TELE MOBILE COMPANY, otherwise known as Telus Mobility, produce, based on data already in existence, the documents listed below:

(a) A report setting out all network activity records including dialed numbers for outgoing calls, caller line identification for incoming calls, automatic network registrations if available, and the time, date and duration for each of these network events pertaining to the Telus Mobility wireless telephone service [telephone number] from and including the dates of March 10th, 2004 to March 24th, 2004, and

(b) A report setting out the cell site location and, if available, cell sector information for all network events pertaining to the Telus Mobility wireless telephone service [telephone number] from and including the dates of March 10th, 2004 to March 24th, 2004.

This Production Order is subject to the following terms and conditions:

(a) Within two business days of receiving a copy of this Order, the person named will provide a report to the Officer indicating how long it will take for the documents/data pursuant to this Order to be produced, and

(b) Copies of documents produced pursuant to this Order need not be returned to the person named in this Order.

The second production order was obtained by the Ontario Provincial Police on October 5, 2004, compelling Telus to produce call data records relevant to a drug investigation. Specifically, it required Telus to produce:

A report setting out:

(a) Records of all incoming and outgoing telephone numbers, automatic network registrations (ie. Subscriber information for each outgoing and incoming telephone number), and the time, date, and duration for each event for the period of August 1, 2003 up to and including January 12, 2004 contained in the form of data storage media otherwise known as magnetic tape or tapes containing raw data showing activity records on the Tele-mobile Company wireless network for the following cellular telephone numbers:

. . .

The manner of production of the documents/data will be:

. . .

prepare a document described herein based on documents or data already in existence and produce it. Provide an affidavit attesting that the prepared document was prepared from original documents.

On July 14, 2005, Telus filed two applications under s. 487.015 of the Criminal Code , seeking exemptions from each of the two production orders on the basis that the financial burden of compliance would be unreasonable without compensation.

Telus had already “archived” the information sought in both production orders, that is, the raw data had been transferred to a magnetic tape and kept offsite. In order to recover the information, the tapes had to be retrieved from the archives, a process described in an affidavit by Telus’ Manager of Production Operations:

The process for the recovery of archived data includes identifying and locating the relevant magnetic tapes, arranging for their transport from an off site location back to our computer processing facilities, mounting the tapes onto a dedicated storage facility, searching the tapes and processing the search results. There are substantial labour and equipment costs engaged by this process.

By the time of the hearing, Telus had complied with both production orders. It had also entered into an agreement with the Toronto Police Service whereby the police would pay Telus “reasonable compensation” for the production of archived data if its exemption application were successful.

The two applications were heard together by Vaillancourt J. in the Ontario Court of Justice ((2006), 81 O.R. (3d) 745, 2006 ONCJ 229). He identified several bases for concluding that the statutory scheme does not allow a court to order that the police compensate a third party for the costs of compliance with production orders. He firstly defined the function of the judge issuing the order as being to “consider the statutory test for the issuance of the order, having regard to the Constitutional rights impacted by the order and the interest of society in the enforcement of its laws, and ultimately to determine if it is reasonable to make the order” (para. 19). In his view, Telus’ claim for compensation had nothing to do with these functions.

Secondly, Vaillancourt J. emphasized that production orders are obtained in ex parte proceedings, proceedings which are not therefore conducive to consideration of the issue of compensation. The police making the application would not have the requisite information to enable a judge to determine whether compensation is appropriate. This led Vaillancourt J. to conclude that the design of the procedure did not make adjudicating claims for compensation feasible. In other contexts, he noted, the Criminal Code has provided a framework for third parties to assert their interests. This framework is notably absent in connection with production orders.

Finally, Vaillancourt J. found that the exemption provision in s. 487.015 is unambiguous and limits the court’s jurisdiction either to granting or not granting an exemption from a production order. The provision gives no jurisdiction to vary or amend the original production order by adding compensation. It is the availability of an exemption that ensures that no unfairness flows from the fact that an issuing judge does not have the power to make an order respecting compensation.

On an exemption application, Vaillancourt J. noted that an applicant has the onus of satisfying the court, on a balance of probabilities, that one or more of the statutory criteria for exemption applies. The only relevant criterion in this case is found in s. 487.015(4)(b), which states that “it is unreasonable to require the applicant to produce the document, data or information”. The question then is whether production is “unreasonable” when it is ordered without compensation.

Vaillancourt J. concluded that compliance without compensation, without more, is not itself unreasonable. In his view, citizens and corporations have a duty to assist in the enforcement of the laws of the state. This necessarily requires that reasonable costs be borne. As he stated, “It is only where the costs of providing assistance become overly burdensome that society’s interest in the effective enforcement of its laws must yield to the individual interest in conducting one’s affairs without interference from the state” (para. 43).

The duties placed on other participants in the criminal justice system, like jurors and witnesses reflect this reality, and require that those participants bear their own — often significant — costs. Vaillancourt J. found that it was reasonable to assume that Parliament, by not providing for compensation in production orders, intended the same principles to apply unless compliance became unreasonable.

He rejected the Crown’s proposed standard of “undue hardship” as the point at which compliance becomes unreasonable, instead finding that “an applicant must demonstrate that the expenditure is significant to its financial health” (para. 96).

All the parties argued the application using projected annual costs of compliance rather than the financial burden imposed by the two specific production orders in this case. Based on an annual estimated cost to Telus of $662,000 for the retrieval of archived data, Vaillancourt J. concluded that this projection amounted to

— 0.0087 per cent of Telus Consolidated’s Operating Revenue for 2004

— 0.011 per cent of Telus Consolidated’s Operating Expenses for 2004

— 0.12 per cent of Telus Consolidated’s Net Income for 2004

— 0.023 per cent of Telus Mobility’s Operating Revenue for 2004

— 0.039 per cent of Telus Mobility’s Operating Expenses for 2004

— 0.058 per cent of Telus Mobility’s Earnings Before Interest, Taxes, Depreciation and Amortization for 2004 [para. 49]

His overall conclusion on reasonableness was that, based on these figures, the cost of compliance was not unreasonable in the circumstances.

Telus appealed directly to this Court pursuant to s. 40(1) of the Supreme Court Act , R.S.C. 1985, c. S-26 .

It is Telus’ position that the broad wording in s. 487.012(4), permitting a judge to add terms and conditions, allows for the inclusion in the production order of a condition that the law enforcement agency pay the reasonable costs of compliance where:

1. The expense is greater than de minimus;

2. The party is one frequently called upon to assist in the investigation of crime; and,

3. There is expertise involved in retrieving data and providing it to the police.

In Telus’ submission, the question of when the expense will be greater than de minimus will be determined in an exemption application brought by the object of the order. Once the judge hearing the exemption application determines the cost to be unreasonable, the police can then go back before a judge, pursuant to s. 487.012(5), and request that the order be varied to include a requirement of reasonable compensation. Telus submitted that the amount of reasonable compensation would be worked out between industry and law enforcement agencies, as it was in the agreement it reached with the Toronto police in this case. Over time, Telus argued, an industry standard would develop so that the police know at the outset when a provision for reasonable compensation is required in the order. This would make the intermediate step of an exemption application unnecessary.

Telus sought to distinguish itself from other unpaid or under-compensated actors in the criminal justice system, such as jurors and witnesses, on the basis that it is called upon repeatedly to assist in law enforcement. It has a “Fraud and Wireless Security Management” department to facilitate timely responses to requests from law enforcement agencies for customer information. In 2004, it responded to 2,823 warrants seeking customer records. That, it argued, makes it more like those who have regular contact with the justice system, such as judges and expert witnesses, who are compensated for their contribution.

The Canadian Bankers Association intervened. Its members are frequently the object of production orders. The Association argued that while it would rarely be appropriate for a judge to impose a term requiring payment of reasonable costs of compliance with a production order on the original ex parte application, a production order will be “unreasonable” — and therefore subject to an exemption under s. 487.015 — when compliance with the order would have a considerable adverse operational or financial impact on the party subject to it. Upon finding such an impact, the judge’s powers are not limited to granting the exemption; they extend to variation of the production order, including the addition of terms for payment of costs or extended time for compliance. This interpretation, it argued, is consistent with the desire to facilitate compliance while avoiding unreasonable burdens.

The position of the Crowns (Federal, Ontario, Quebec and British Columbia) is that it is clear from a plain reading of the legislation that a judge has no authority under ss. 487.012(4), (5) or 487.015 to make an order for compensation. The permissible terms and conditions of a production order relate solely to factors pertaining to the execution of the order. These terms do not include terms designed to minimize the financial impact of compliance.

The Crowns submitted that only in exceptional circumstances, where the costs of compliance amount to “undue hardship”, does the object of the production order have a remedy in the form of an exemption pursuant to s. 487.015. This threshold denotes an oppressive burden that amounts to more than just a significant or considerable impact. The need for citizens to be involved in the efficient administration of the criminal justice system is well established. Like jury duty, the Criminal Code provides the option of being excused from compliance with a production order if the burden is too onerous to be reasonably borne. In both cases, the Crowns argued, the exempting conditions must be strict.

The Canadian Association of Chiefs of Police agreed with the Crowns’ submission that an exemption from compliance under s. 487.015 should only be available when the financial burden amounts to undue hardship.

Analysis

Three questions are to be answered in this case:

1. Do ss. 487.012(4), (5), and/or 487.015 of the Criminal Code give a judge the power to make it a term or condition of a production order that the police reimburse an innocent third party for reasonable expenses incurred in complying with the order?

2. When should an exemption order be made on the basis that the financial burden associated with compliance is “unreasonable”?

3. Should an exemption have been granted to Telus in this case?

As previously noted, Telus relied on the language of s. 487.012(4) to argue that even though the power to do so is not specifically mentioned, a judge issuing a production order has the authority to make reasonable compensation a term of the production order. That provision states:

(4) [Terms and conditions] The order may contain any terms and conditions that the justice or judge considers advisable in the circumstances, including terms and conditions to protect a privileged communication between a lawyer and their client or, in the province of Quebec, between a lawyer or a notary and their client.

Telus argued that s. 487.012(5) implicitly confers the same power:

(5) [Power to revoke, renew or vary order] The justice or judge who made the order, or a judge of the same territorial division, may revoke, renew or vary the order on an ex parte application made by the peace officer or public officer named in the order.

The outcome of this case depends on statutory interpretation. The legislation makes no reference to compensation. This ambiguity requires us to examine the scheme, object and context of the production order provisions.

A review of the history preceding the creation of the production order scheme is significant in discerning what the legislature’s intention was in connection with compensation for compliance. That history shows that the question of whether compensation should be paid to telecommunications service providers for the costs of compliance with court orders has been part of an ongoing conversation between these providers and the government for some time.

The position of telecommunications service providers, including Telus, has consistently been that they are entitled to be reimbursed for expenses incurred in complying with court orders. Parliament’s decision not to include an express right of compensation in the scheme is given added significance when understood in light of this history. In view of its critical role in this interpretive analysis, and of Telus’ active part in it, the history is set out in some detail.

In 1999, telecommunications service providers asserted their claim to compensation before the Canadian Radio‑television and Telecommunications Commission (“CRTC”). Telus had initiated the proceeding, proposing a tariff that would apply to court-ordered wiretaps and production of confidential subscriber information to law enforcement agencies. Telus’ application was opposed by several police and government departments.

The CRTC issued Order No. 2000-676 on July 21, 2000, concluding that it did not have jurisdiction to approve the tariff under the Telecommunications Act , S.C. 1993, c. 38 :

In the circumstances, the Commission considers that compensation for compliance with court orders, notwithstanding the ancillary involvement of telecommunications, is best dealt with by the courts.

If there is a concern that the current regime (where compensation for compliance with court orders is left to the discretion of the courts) is not appropriate given the potentially mounting costs, it is open to Parliament to address the issue explicitly through legislative amendments. [paras. 12-13]

Industry and law enforcement representatives debated, inconclusively, the meaning of this Order, as noted by the Department of Justice in a discussion paper:

Some law enforcement agencies interpreted the decision as a partial victory because the Commission refrained from exerting its jurisdiction with respect to court-ordered “services”. These law enforcement agencies took the position that if the CRTC would not tariff such “services”, Telus could not charge fees for such “services”. On the other hand, Telus believed, it would appear, that the decision does not mean that telecommunications service providers were prohibited from charging a fee for “services” rendered pursuant to a court order.

(Department of Justice, Discussion Paper, Lawful Access: Operational Fees, December 12, 2003, at p. 15)

The issue gained renewed visibility when the Department of Justice, jointly with Industry Canada and the Solicitor General Canada, released a consultation document inviting submissions on how to improve and modernize law enforcement’s ability to intercept communications and obtain information of assistance in the investigation of crime. The document identified the following as the bases for the exercise:

(1) the need to bring the provisions of the law into concordance with new telecommunications technology; (2) the need for all telecommunications service providers to ensure that the technical capability in their facilities permits lawful access by law enforcement and national security agencies; and (3) the need for Canada to adopt statutory measures that will permit ratification of the Council of Europe Convention on Cyber-Crime [CETS No. 185, Article 18(1), requiring participating countries to legislate the availability of production orders]

(Government of Canada, Lawful Access — Consultation Document, August 25, 2002, at p. 6)

This document generated more than 300 submissions (Canada, Department of Justice, News Release: “Lawful Access Consultation Submission Summary Report Available on Department of Justice Website”, August 6, 2003).

Among the groups making submissions on behalf of industry were Telus, the Canadian Cable Television Association, and the Canadian Wireless Telecommunications Association. Their position with respect to the costs of compliance with lawful access requests was summarized in a government report entitled Summary of Submissions to the Lawful Access Consultation, April 28, 2003:

The legislation should ensure that law enforcement agencies remain responsible for reasonable costs incurred by service providers making operational assistance available to law enforcement agencies in carrying out lawful interception, seizure and preservation orders. These costs should be worked out between each service provider and the agency concerned rather than being based on universal tariffs laid out in the regulations for various types of support. Industry Canada and the Solicitor General, or an independent arbitrator, should mediate any disputes about fees for service between a [communication service provider] and a law enforcement agency. [p. 7]

The Canadian Wireless Telecommunications Association submitted “that the new legislation should enshrine the principle that law enforcement should pay service providers for assistance provided” (Lawful Access Consultation: Response of the Canadian Wireless Telecommunications Association, December 16, 2002, at para. 62).

In response to contrary submissions by law enforcement agencies who argued that no compensation be payable, Telus’ EVP - Corporate Affairs and General counsel wrote a letter in April 2003 to the then Minister of Justice seeking express language in the proposed legislation which would require that compensation be paid for providing lawful information to law enforcement agencies:

Currently, a couple of law enforcement agencies refuse to pay TELUS for court-ordered services, relying on the fact that the court order usually does not require that compensation be paid. It should be noted, however, that these orders are obtained by [law enforcement agencies] on an ex parte basis, and the court is not asked to consider whether compensation should be required. If the court were asked to turn its mind to this issue and to consider the cost to the service provider of complying with the order, it is likely that some compensation would be ordered.

. . .

I agree . . . that we need a legislated resolution to this issue. Consistent with the views expressed by other telecom carriers, TELUS recommends that the proposed legislation expressly require that [law enforcement agencies] compensate service providers for their reasonable costs of providing lawful access services. To the extent that [law enforcement agencies] may require additional funds to do so, this support should be provided by government and ultimately by the general taxpayer. . . . [C]lear legislation will put an end to the current confusion and will benefit both law enforcement and the telecommunications industry. [Emphasis added.]

On December 12, 2003, the Department of Justice published its discussion paper entitled Lawful Access: Operational Fees, setting out the “circumstances that gave rise to the complexity of lawful access operational fees in the telecommunications sphere” (p. 1) and suggesting options to address those fees. The authors of the paper noted:

Based on some of the wording of the Criminal Code in relation to the issuance of the various court orders and the interpretation of that wording, some argue that the courts might have an implied discretion to make terms and conditions, including compensatory terms, in relation to warrants and other legal demands. However, it would be surprising if courts would be in a position to exert such jurisdiction absent express and clear wording in the Criminal Code . Section 840 of the Criminal Code is the only section that contains a schedule of fees. This schedule relates to a number of criminal procedural matters, but only in relation to proceedings taken before summary conviction courts or justices. There is no schedule of payments for proceedings commenced by way of indictment in the Criminal Code . In some provinces, witness fees are established in relevant administration of justice legislation. [Emphasis added; p. 8.]

Notably, the question of compensation for compliance with production orders was squarely in view:

An additional factor that needs to be recognized in determining whether or not third parties should be compensated for helping to execute court orders is the impact of the new procedural tools being proposed within the context of the lawful access initiative. The Lawful Access consultation document proposes the creation of a number of new procedural tools to help law enforcement agencies in performing their tasks whether or not in the context of the fight against cyber-crime. Such proposals have raised significant concerns from third parties other than service providers, such as banks or securities organizations, that have raised concerns about the additional tasks that could be imposed on them as a result of these new court orders. Their

main concern, especially in relation to the proposed production orders, relates to law enforcement agencies relying more and more on private sector entities to do the work law enforcement agencies would be tasked with through the issuance of such search warrants.

One way of alleviating the previously noted concern would be to specifically provide in the legislation creating these orders for the possibility for courts to provide for third parties to be compensated for the payment of any unduly burdensome or unreasonable costs. However, any specific provision to that effect would open once again the issue of why third parties should be compensated for work they undertake pursuant to their duties as good corporate citizens. Although the increased workload resulting from the multiplication of court orders in relation to specific types of third parties (e.g., service providers) is certainly an argument that cannot be discounted,

a general obligation on governments (either per se or through its law enforcement agencies) to pay for assistance with the execution of court orders would create a financial strain on already limited resources in the field of the administration of justice. [Emphasis added; footnote deleted; pp. 33-34.]

On June 12, 2003, Bill C-46, An Act to amend the Criminal Code (capital markets fraud and evidence-gathering), was introduced. The Bill proposed various amendments to the Criminal Code , including the creation of the new production order scheme found in ss. 487.012 to 487.017. At second reading, Paul Harold Macklin, the Parliamentary Secretary to the then Minister of Justice, explained the impetus behind the new investigative tool:

Production orders are similar to search warrants. Whereas a search warrant allows police to search a certain place for evidence, a production order compels a person to produce the relevant information to the police.

Although this investigative tool is new to the Criminal Code , it already exists in Canadian law, notably under the Competition Act and in limited circumstances under other statutes. Further, it could also be characterized as a codification of current practices. For example, today when a police officer enters a bank with a warrant to seize record[s], he does not usually shut down the bank to get those records. Nor will he seize the bank’s computer system.

What generally happens is that the holder of the information sought in the warrant will generally produce that information to the police himself. The reason for this is twofold: first, it is more convenient for the bank, since its business operations are not being interrupted; and second, it is more cost effective and less time consuming for the police.

. . .

Law enforcement agencies and crown prosecutors have been asking for a new investigative tool for some time and with the proliferation of the Internet and the widespread adoption of new communications technologies, the timing is right for this form of investigative tool.

The production orders will solve a number of nagging issues for investigators including extraterritorial searches and timing issues. Under these new orders, persons who have possession or control of documents, data or information will have to produce that information whether it resides in Canada or abroad. Thus, as long as they have possession or control over the relevant information, they will be required to produce it no matter where it is located. This solves the problem that has in part been created by inexpensive overseas data warehousing.

Second, the new production orders will be time sensitive so that the third party served with the order will either have to produce the information within the time specified in the order or report back to the court within the specified time as to why he or she cannot comply. This solves the problem of the inherent nature of informal arrangements which is they are informal and they often lack specific mechanisms such as timing mechanisms.

. . .

. . . Before issuing the order, the judge or justice must be satisfied that there are reasonable grounds to believe an offence has been committed, that the specific documents or data will afford evidence relating to the commission of the offence and that the recipient of the order has possession or control of these documents or data. These are the same basic judicial safeguards as required by the existing Criminal Code search warrant provisions. [Emphasis added.]

(House of Commons Debates, vol. 138, 2nd sess., 37th Parl., September 29, 2003, at pp. 7933-34)

There is no mention of compensation for the cost of compliance with the orders. Instead, the only conditions of which the issuing judge must be satisfied are those set out in s. 487.012(3), namely that

(a) an offence against this Act or any other Act of Parliament has been or is suspected to have been committed;

(b) the documents or data will afford evidence respecting the commission of the offence; and

(c) the person who is subject to the order has possession or control of the documents or data.

Notably, no mention is made of any factors relating either to hardship or costs incurred by the object of the order.

While it cannot be said that legislative silence is necessarily determinative of legislative intention, in this case the silence is Parliament’s answer to the consistent urging of Telus and other affected businesses and organizations that there be express language in the legislation to ensure that businesses can be reimbursed for the reasonable costs of complying with evidence-gathering orders. I see the legislative history as reflecting Parliament’s intention that compensation not be paid for compliance with production orders.

The procedural scheme chosen by Parliament also reflects an intention that compensation not be ordered for complying with production orders.

The process outlined in s. 487.012 and s. 487.015 is triggered when a peace officer makes an ex parte application before a judge (s. 487.012(3)). The judge may issue the order requiring the production or preparation of documents or data where there are reasonable grounds to believe that an offence has been or is suspected to have been committed, that the information sought is relevant to an ongoing investigation and that it is in the possession of the object of the order (s. 487.012(1) and (3)). The order may include “any terms and conditions that the justice or judge considers advisable in the circumstances” (s. 487.012(4)). The peace officer named in the order can apply at any time to the issuing justice or a judge in the jurisdiction, in an ex parte application, to revoke, renew or vary the original order (s. 487.012(5)).

The object of the order can apply at any time before it expires for an exemption from compliance on the basis that the information sought is privileged, that it is not in the object’s possession or control, or that it would be unreasonable to require the object to produce the information (s. 487.015(1) and (4)). Initiation of the exemption application suspends the execution of the order (s. 487.015(3)). A production order is unnecessary if parties make their own arrangements for the voluntary provision of the documents or information, so long as they are not prohibited by law from disclosing the information (s. 487.014).

The process set out in ss. 487.012 and 487.015 for obtaining a production order confirms that Parliament did not intend the issuing judge to consider the potentially complex and contentious question of cost at the stage of issuing the production order, since to do so would contradict Parliament’s intention to create a cost‑effective and timely mechanism for obtaining information related to an investigation.

The ex parte procedure delineated in the legislation is not a procedure amenable to determining whether compensation should be a term of the order, which would require the issuing judge to have information about the cost of compliance with the order and its impact on the person required to comply. That information could only be obtained by giving notice to that person and allowing him or her to call some evidence to support a claim for compensation. Neither contingency is provided for in the legislation. Moreover, as Vaillancourt J. observed, “[t]he adjudication of costs at this stage of the proceedings would have the potential of hindering the confidentiality of the investigation and frustrate the investigative goals of the authorities” (para. 30).

Similarly, a judge considering whether to “revoke, renew or vary the order” under s. 487.012(5), does so in an ex parte application “made by the peace officer or public officer named in the order”. Again, had Parliament intended this procedure be used to adjudicate the issue of compensation, it could reasonably be expected to have provided for a process whereby any party could bring an application to vary the order so that the application could be heard inter partes.

In other contexts, the Criminal Code does include provisions for giving notice and standing to third parties whose interests are engaged. In his reasons, Vaillancourt J. points to the following examples:

— Section 278 of the Code deals with the notice (s. 278.3(5)) and standing (s. 278.4(2)) provided to a complainant or witness regarding the production of their confidential records.

— Part XII.2 of the Code involving the proceeds of Crime provides notice (ss. 462.32(5); 462.33(5); 462.41) and a detailed application process for innocent third parties (ss. 462.41(3); 462.42) as well as an appeal process (s. 462.44).

— Sections 490.1-490.9 [deal] with offence-related property and claims to that property by persons with a valid interest in the property. Provisions for notice (s. 490.4), the application process (s. 490.5) and appeal (s. 490.6) are included. [para. 31]

The conclusion that a judge cannot order compensation for compliance with a production order also accords with what this Court affirmed as a general “moral” and “social” duty imposed on citizens. Dickson C.J. explained the duty in his dissenting reasons in Dedman v. The Queen, [1985] 2 S.C.R. 2, as follows:

Society as a whole bears responsibility for the maintenance of law and order; co‑operation between the public and the police is essential to the effective fulfilment of the already difficult tasks performed by the police. [p. 19]

(See also Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425, at p. 576, and Canadian Broadcasting Corp. v. Lessard, [1991] 3 S.C.R. 421, at p. 447.)

Wigmore’s reflections on the burdens imposed on witnesses in criminal trials also resonate:

[I]t may be a sacrifice of time and labor, and thus of ease, of profits, of livelihood. This contribution is not to be regarded as a gratuity, or a courtesy, or an ill-required favor. It is a duty not to be grudged or evaded. Whoever is impelled to evade or to resent it should retire from the society of organized and civilized communities, and become a hermit. He who will live by society must let society live by him, when it requires to.

(Wigmore on Evidence (McNaughton rev. 1961), vol. 8, at §2192, p. 72)

This duty does not, however, give the state a licence to abusively exploit the public’s civic responsibilities. That is why the scheme for production orders includes relief in the form of an exemption where compliance would be “unreasonable”.

The duty to assist in the administration of justice was recently canvassed by the Courts of Appeal of British Columbia and Ontario in cases dealing with whether the evidence-gathering provisions found in the Mutual Legal Assistance in Criminal Matters Act , R.S.C. 1985, c. 30 (4th Supp .), permit a court to order that the object of the order be compensated for the production of evidence.

In Canada (Attorney General) v. Pacific International Securities Inc. (2005), 209 C.C.C. (3d) 390, 2006 BCCA 303, the British Columbia Court of Appeal concluded that there was no power to order compensation. The Ontario Court of Appeal, on the other hand, concluded in Canada (Attorney General) v. Foster (2006), 215 C.C.C. (3d) 59, that there was discretion in the provisions to order compensation where failure to do so would amount to undue hardship.

The statutory scheme under consideration in those cases was significantly different from the production order scheme, but in their reasons, both courts expressed general legal principles relevant to the interpretive exercise before us. In Foster, Rosenberg J.A. noted:

In considering a costs order, the paramount principle to bear in mind is that in criminal matters costs are ordinarily not recoverable from, nor paid to, the Crown, the accused or third parties, even where there is a statutory basis for awarding costs. . . .

. . .

. . . Absent an express statutory basis, as for example can be found in the victim compensation and restitution provisions of the Criminal Code , a court dealing with criminal matters is not ordinarily concerned with compensation for losses incurred in the course of criminal proceedings. Compensation of innocent third parties is generally left to civil proceedings. Common laws courts have consistently recognized that the investigation of crime is a responsibility of society as a whole that includes an obligation to provide evidence, even though the cost of doing so may be burdensome financially and psychologically.

. . .

The general rule that witnesses and other innocent third parties (like the innocent accused) are not compensated for losses and expenses occasioned by the criminal process exists despite the fact that these costs can be onerous. [Emphasis added; paras. 56, 59 and 65.]

In Pacific, Ryan J.A., writing for the majority of the British Columbia Court of Appeal, observed:

. . . the [Mutual Legal Assistance in Criminal Matters Act ] should be examined in the context of the longstanding practice in criminal law that neither costs nor expenses are recoverable by persons involved in the proceedings except in exceptional circumstances. Witnesses and jurors are not paid their lost wages as a result of their compelled participation in the criminal process. Witnesses who produce documents for use at the trial are not entitled to be compensated for the expense of their production. . . . [T]his policy stems from the accepted principle that the criminal justice system functions for the good of all members of society. Consequently, society requires members of the public to contribute to its effective operation. [para. 54]

This basic public duty finds expression in several laws. There is, for example, no legislated right to compensation for compliance with general warrants and assistance orders (ss. 487.01 and 487.02 of the Criminal Code). In addition, s. 83.28 of the Criminal Code , though no longer in force, required a person named in an “order for the gathering of information” to attend before a judge as a witness and produce material to assist in the evidence-gathering process, with no legislated right of compensation. There are also provisions in federal and provincial regulatory statutes compelling the production of documents and testimony with no legislated right to compensation for the costs of compliance (aside from ordinary witness fees), such as the Competition Act , R.S.C. 1985, c. C-34, ss. 11 , 12 and 30.11 ; Excise Tax Act , R.S.C. 1985, c. E-15, s. 107 ; Income Tax Act , R.S.C. 1985, c. 1 (5th Supp .), ss. 231 to 239; and the Securities Act, R.S.B.C. 1996, c. 418, s. 144.

On the other hand, there are provisions in the Criminal Code where courts are explicitly given jurisdiction to award costs:

· Sections 462.32(6) and 462.33(7), authorizing the seizure and restraint of proceeds of crime, which state that the issuing judge shall require an undertaking from the Attorney General of Canada for the payment of damages or cost, or both, in relation to the execution of the order;

· Section 708, which provides that a court may order the payment of costs incidental to the service of process in relation to a conviction for contempt;

· Section 809, which gives a summary conviction court the power to order such costs as it considers reasonable; and

· Section 839, which provides that orders of costs may be made in relation to summary conviction appeals.

In the absence of a specific provision permitting the recovery of costs in the production order scheme, therefore, and in light of the legislative history, the ex parte procedural mechanisms set out in the legislation, and the principle that compensation is not ordinarily recoverable in criminal matters (Foster, at para. 56), I agree with Vaillancourt J. that s. 487.012(4) and (5) cannot be interpreted so broadly as to permit a judge to order compensation for compliance with production orders.

I accept Telus’ concern that because of the nature of its business, it will necessarily be the object of repeated production orders but, as an American court observed in connection with banks, another entity from whom requests for information are routinely sought, such requests are neither unanticipated nor aberrational:

Any further expenses incurred in connection with this investigation and examination of these records, such as the salary of employees that may be necessarily assigned to this project, are expenses to be borne by the bank. . . . They are reasonably incident to the bank’s normal operations, and they are reasonable expenses that the bank can be and should be prepared to sustain when it opens and operates as a bank, knowing full well that some of its depositors will from time to time get investigated by the Internal Revenue Service.

(U.S. v. Jones, 351 F. Supp. 132 (M.D. Ala. 1972), per Johnson C.J., at p. 134)

The object of an unreasonable production order is not without remedy. It lies in an application for an exemption pursuant to s. 487.015, the applicable portions of which are repeated here:

487.015 (1) [Application for exemption] A person named in an order made under section 487.012 and a financial institution, person or entity named in an order made under section 487.013 may, before the order expires, apply in writing to the judge who issued the order, or a judge of the same territorial division as the judge or justice who issued the order, for an exemption from the requirement to produce any document, data or information referred to in the order.

While there are three possible grounds for an exemption under s. 487.015(4), only para. (b) is engaged in this case, namely that a judge may grant an exemption if satisfied that

it is unreasonable to require the applicant to produce the document, data or information;

The authority given to a judge is limited to granting “an exemption from the requirement to produce any document, data or information referred to in the order”. Exemption from compliance is the remedy Parliament has provided when a judge is satisfied that the burden of compliance is unreasonable. I agree with Vaillancourt J. when he says “there is no statutory power whereby a judge on an exemption hearing can make an order for compensation” (para. 40). To the extent that a judge hearing an exemption application considers the financial consequences of the order, it is in the context of determining whether to grant an exemption from full or partial compliance.

Parliament has thereby acknowledged that production orders potentially represent an unreasonable burden, but expressed its intention that there be an exemption from such orders rather than an order for compensation for compliance with them. This is not to say, however, that although a judge cannot make compensation a term of the order, the parties cannot make their own arrangements in the face of a likely finding of unreasonableness. The Ontario Crown accepted that possibility in its factum when it observed:

If an exemption is ordered because the costs of complying with a production order cause undue financial hardship, the decision as to how to proceed at that point belongs to the police. They may decide to forego the evidence, or they may agree to compensate the target and obtain the evidence, despite the budgetary impact that may have. Thus, the police retain control over the evidence gathering process. No evidence is lost. [Emphasis in original; para. 49.]

As earlier noted, it is the reasonableness of the financial burden of compliance about which the parties argued in this case. The Crowns and the Chiefs of Police argued that “unreasonable” in this context requires application of a standard of “undue hardship”. Each interprets that phrase slightly differently. Quebec, for example, argued that it would only be met in circumstances nearing an abuse of process. According to British Columbia, an applicant should be required to show near irreparable harm. The Canadian Bankers Association, on the other hand, proposed a standard of “considerable adversity”. Telus proposed a significantly lower threshold, one triggered almost automatically for those who are the frequent objects of production orders.

Vaillancourt J. rejected the proposed standard of “undue hardship” and adopted instead a threshold which was met when “the expenditure is significant to [the applicant’s] financial health” (para. 96).

I agree with Vaillancourt J. that there is no need to adopt an “undue hardship” standard. I see no reason to embellish the statutory language. The standard chosen by the legislature — unreasonableness — is a familiar one in law. La Forest J. observed: “‘Reasonable’ is a flexible criterion that permits adjustments to different situations” (B. (R.) v. Children’s Aid Society of Metropolitan Toronto, [1995] 1 S.C.R. 315, at para. 92). And in Canadian Foundation for Children, Youth and the Law v. Canada (Attorney General), [2004] 1 S.C.R. 76, 2004 SCC 4, McLachlin C.J., writing for the majority, explained:

. . . the law has long used reasonableness to delineate areas of risk, without incurring the dangers of vagueness. . . . The criminal law also relies on it. The Criminal Code expects that police officers will know what constitutes “reasonable grounds” for believing that an offence has been committed, such that an arrest can be made (s. 495); that an individual will know what constitutes “reasonable steps” to obtain consent to sexual contact (s. 273.2(b)); and that surgeons, in order to be exempted from criminal liability, will judge whether performing an operation is “reasonable” in “all the circumstances of the case” (s. 45). These are merely a few examples; the criminal law is thick with the notion of “reasonableness”.

The reality is that the term “reasonable” gives varying degrees of guidance, depending upon the statutory and factual context. [paras. 27-28]

In essence, the financial consequences must be so burdensome that it would be unreasonable in the circumstances to expect compliance. This, I readily acknowledge, is a somewhat tautological explanation, but I see no purpose in offering alternative definitions for a term so well known and understood as having a fact-specific compass. What is reasonable will be informed by a variety of factors, including the breadth of the order being sought, the size and economic viability of the object of the order, and the extent of the order’s financial impact on the party from whom production is sought. Where the party is a repeated target of production orders, the cumulative impact of multiple orders may also be relevant.

In this case, the parties argued the application of the test of “unreasonableness” using the annual costs of compliance to Telus, not just the cost of the two specific production orders. Vaillancourt J. found that the annual estimated cost of Telus’ compliance with production orders fell within a range of $400,000 to $800,000. Based on the figures before him at the hearing, he projected an annual cost to Telus of $662,000 and found that this represented 0.058 percent of Telus’ earnings before interest, taxes, depreciation and amortization, and 0.023 percent of Telus’ operating revenue for 2004. This, as the Ontario Crown pointed out, is the equivalent of a person earning $100,000 a year having to spend up to $58 to comply with jury duty.

Vaillancourt J.’s conclusion, based on the financial information before him, was, essentially, that Telus had not met its onus of satisfying him that the cost of compliance was unreasonable:

I agree that a number in and of itself is not the determining fact when dealing with the issue of unreasonableness. Granted, $662,000 is not a mere bagatelle. However, the cost of compliance must be viewed in the context of the overall impact that figure has on a corporation’s total financial picture. In the circumstances of this application, I find that the expenditure is of no particular great moment.

. . .

. . . A court must consider the actual expense to the third party. This amount must be considered in light of the overall fiscal health of the third party. . . . [A]n applicant must show that there is a significant impact on the third party in all of the circumstances. The nature of [the] third party’s business is also an underlying consideration. In the case at bar, the applicant certainly would have or should have been aware that the nature of it’s business leaves it open for production orders or like procedures. I have found that at this particular time, the applicant has not been so inconvenienced by the current production orders as to require the court to grant an exemption from the production orders. [paras. 97 and 118]

I see no basis in this record for interfering with his conclusion. I agree with Vaillancourt J. that in these circumstances, Telus has not demonstrated that it would be unreasonable to require it to comply with the production orders.

I would dismiss the appeal.