Ontario brings in child pornography reporting requirement (updated)

It’s all too common for employers to find child pornography on their computer systems.  In Ontario, until now, deciding whether or not to report it to the authorities was difficult.  It was important to pay heed to the potential for obstruction of justice charges in some circumstances, but for the most part the decision to report was an employer’s to make based on practical and ethical considerations.  This has changed with the December 4th passage of Bill 37, the Child Pornography Reporting Act, 2008.

Bill 37 will amend the Child and Family Services Act on a date to be named.  The CFSA has long-featured a duty to report a child in need of protection to a children’s aid society.  The amendment will mean that any child who is exploited by child pornography will, in most circumstances, be deemed to be in need of protection.  The amendment also creates a new duty to report what a person reasonably believes “is” or “might be” child pornography to an entity that will be designated later by regulation.  The duty applies to all persons, not just those owning or operating computer systems (such as employers) and those providing risk-related services (such as ISPs and photograph developers).  A failure to report will be punishable by fine of not more than $50,000 and/or imprisonment of up to two years.

Thank you to Slaw and John Gregory for first noting this significant amendment.

Addendum.  There are a couple twists to this legislation that are worth considering. First, the duty appears to hinge on a subjective belief that the material is (or might be) child pornography, which has a narrowing effect. Second, it appears that an employee of a corporation who discovers child pornography on his or her employer’s system will have an independent duty to report that will not be discharged by his or her employer’s report.  As, discussed above, the duty applies broadly, to all “persons.”  The legislation also specifies that a person must report “directly,” which means a person cannot rely on another to report.  This seems to require multiple reports by all those who handle the offending material.

Case Report – ABCA finds appeal of PIPA time limits issue moot

On November 14th, the Alberta Court of Appeal held that an appeal by the Alberta Information and Privacy Commissioner was moot because the complainant had passed away.  This leaves intact the Alberta Queen’s Bench’s decision that the 90-day time limit for completing an inquiry in section 50(5) of PIPA is mandatory.  It also may do away with the first drug testing complaint brought under PIPA.

Kellogg Brown and Root Canada v. Alberta (Information and Privacy Commissioner), 2008 ABCA 384 (CanLII).

Case Report – Appeal in eBay PowerSellers case dismissed

On November 11th, the Federal Court dismissed an appeal in the eBay “PowerSellers case.”  

This was an appeal of eBay’s unsuccessful application to vacate a production order made under section 231.2 of the Income Tax Act. The order required two Canadian eBay subsidiaries to produce data about specific Canadian eBay users that resided on servers operated by eBay’s American subsidiary in the United States.

The Court of Appeal held:

  • that the data sought was not “located” in the United States (and therefore subject to different production power) given eBay Canada’s right of access to the information and ready means of gaining access to the information;
  • that it should not depart from its recent decision in Greater Montreal Real Estate Board, where it held that an production order seeking access to information unnamed persons under section 231.2 may be granted if the information is “required to verify compliance with the Act by one or more unnamed persons in the group” or that “the information is required for a tax audit conducted in good faith”; and
  • that the motions judge did not err by failing to give notice to eBay US and eBay International, who were said by eBay Canada to “own” the records and information in question.

Hat tip to Michael Geist, who provides his views on the case here.

eBay Canada Limited v. Minister of National Revenue, 2008 FCA 348.

Case Report – Sask. CA affirms law society’s right to demand access to privileged communications

On October 9th, the Saskatchewan Court of Appeal held that the Saskatchewan Legal Profession Act authorizes the Law Society of Saskatchewan to demand production of records required for an investigation despite a claim to solicitor-client privilege.

The Court distinguished the Supreme Court of Canada’s recent Blood Tribe decision and held that section 63 of the Saskatchewan Act clearly contemplates that privilege will be abrogated by a proper demand.  Since the respondent law firm conceded the Law Society’s production demand was sufficiently tailored, the Court held that it could lawfully seize the disputed records.

Notably, the Court also rejected a broader argument by the Law Society that the common law “extends the envelope of solicitor-client privilege” to include law societies.  The Law Society relied heavily on United Kingdom jurisprudence and, in particular, on a 2002 House of Lords decision called Morgan Grenfell & Go. Ltd.  The Court explained that the cases raised by the Law Society did not support its broad proposition, and stressed that the basis for the solicitor-client privilege must be assessed through the eyes of the client:  “Disclosure of privileged communication to the Law Society would surely, to most clients, represent an infringement of confidentiality.”

Law Society of Saskatchewan v. E.F.A. Merchant Q.C., [2008] S.J. No. 623 (C.A.) (QL).

Case Report – Div. Ct. interprets doctors’ college investigatory powers broadly

On September 26th, the Divisional Court held that investigators appointed under the Ontario Health Professions Procedural Code have the power to compel observation of surgery conducted by an investigated physician and the power to compel an individual physician under investigation to submit to an interview.

Registrars of the self-regulating colleges may appoint investigators to look into whether a member has committed an act of misconduct or is incompetent. The Registrar must report the results of an investigation to a committee which, in turn, decides whether to proceed with discipline or incompetence charges in accordance with the procedures outlined in the Code. Investigators enjoy the following grant of power:

An investigator may inquire into and examine the practice of the member to be investigated and has, for the purposes of the investigation, all the powers of a commission under Part II of the Public Inquiries Act.

The Court held that the power to “inquire into and examine,” interpreted purposively, allowed for compelled observation of surgeries. It stressed that the College’s evidence showed observation is an effective, customary and even necessary process for assessing a health care practitioner’s competence. It held that the grant of power in the Code was unambiguous, so there was no scope for interpreting it narrowly to conform with Charter values that weigh against self-incrimination and unreasonable search. (The applicants did not challenge the constitutionality of the legislation itself.)

The Court also dealt with the privilege against self-incrimination in finding that an investigator can compel a physician to submit to an interview. The Court held that neither the privilege against self-incrimination nor (implicitly) the right to silence were engaged given the purpose of an investigation. It said that the aim of an investigation is not to gather evidence for use in a subsequent prosecution but rather was, “to ensure appropriate regulation of the medical profession in the public interest.” In this regard, it suggested that the use immunity provision in section 9 of the Public Inquiries Act was also incorporated into the Code, through it declined to issue a declaration that the applicants would be immune because such an order was premature.

Gore v. College of Physicians and Surgeons of Ontario, 2008 CanLII 48643 (ON S.C.).

Case Report – SCC says CRA may audit one taxpayer through another

On July 31st, a 4-3 majority of the Supreme Court of Canada held that the Canada Revenue Agency need not seek judicial authorization to examine information about one taxpayer’s compliance by auditing another.

The case involved an audit of a university’s charitable foundation. The CRA sought to examine the Foundation’s records to determine whether it was receiving valid charitable donations. There was no dispute that, at the same time, it intended to pursue individual donors who may have made donations it expected to be invalid.

The question, given the CRA’s dual purpose, was whether it could seek Foundation records that would identify individual donors under its section 231.1 audit power (which allows it to look at a taxpayer’s records without judicial authorization) or whether it needed to rely on its section 231.2 production power (which allows it to look at a person’s records which relate to one or more “unnamed persons,” but only with judicial authorization).

The majority, in a judgement written jointly by McLachlin C.J. and Lebel J., held that the CRA does not need judicial authorization in conducting audits that are aimed at both parties to a tax-related transaction: “The s. 231.2(2) [judicial authorization] requirement should not apply to situations in which the requested information is required in order to verify the compliance of the taxpayer being audited.” It held that section 321.2 still has a meaningful role in the enforcement scheme because the CRA may need to seek information outside of a formal audit.

Rothstein J. wrote the dissenting judgement, and argued that the majority’s interpretation leaves no meaningful role for section 231.2. He argued that Parliament intended the requirement for judicial authorization that is embedded section 231.2(2) to be engaged whenever the CRA seeks information about “unnamed persons” through an audit of a taxpayer, even if the taxpayer’s own compliance is at issue.

This was a very close one to call, which makes me question whether it reveals something about the extent to which each of our top court’s justices value privacy. Justice Rothstein, however, adamantly declares that he differs with the majority only on a point of statutory interpretation and because the production power in section 231.2 ought to be given a meaningful role in the enforcement scheme. It seems to me that the eBay case (see here and here), where the CRA utilized section 231.2 to demand production of the account and transaction records of eBay “PowerSellers,” leaves a role for this provision despite the majority’s finding; in that instance, eBay was simply a record holder rather than a party to the tax-related transaction.

Redeemer Foundation v. Canada (National Revenue), 2008 SCC 46.

Case Report – OCA grants leave in case about whistle-blower who leaked privileged report to Crown

On July 7th, the Ontario Court of Appeal granted leave to appeal in noteworthy case about breach of privilege by the Crown.

The case involves an investigation report prepared at the request of external legal counsel after a critical injury for which Occupational Health and Safety Act charges were ultimately laid. An employee who was given a draft of the report on the undertaking he destroy it gave a copy to the Crown. This was after the company had asserted privilege to the Ministry inspector, who had agreed not to order the report’s production.

When the Crown disclosed the report to the company it immediately objected, and at trial moved for a declaration (that the report was privileged) and a stay. It succeeded in obtaining a declaration, a stay and an order for $38,000 in legal costs. On appeal, the stay and the costs order were overturned. In its judgement on leave, the Ontario Court of Appeal explained the difference between the J.P. and the appeal judge’s views as follows:

Essentially and in a nutshell, the justice of the peace and the appeal judge approached the issue of prejudice differently. The justice of the peace assumed prejudice when the Crown gained access to the accused’s privleged document and held that in the circumstances no remedy short of a stay would ovecome that prejudice. The appeal judge, on the other hand, was of the view that the stay should be set aside. In her view, the trial should proceed but without prejudce to the applicant’s right to move for a stay during or at the conclusion of that trial if predjduce is demonstrated.

In granting leave, the Court of Appeal commented that the civil law cases on inadvertent disclosure of privileged records are not “particularly on point” and that this was likely an issue that would arise in the context of corporate accused who face “disgruntled” employees.

Thanks to my colleague Meghan Ferguson for the hat tip on this case.

The Queen (Ontario Ministry of Labour) v. Bruce Power Inc. (7 July 2008, Ontario Court of Appeal).

Case Report – SCC says Privacy Commissioner can’t decide privilege claims

The Supreme Court of Canada issued its decision in Blood Tribe earlier today. In a judgement written by Mr. Justice Binnie, it unanimously held that the Privacy Commissioner of Canada does not have the power to compel production of records over which an organization claims solicitor-client privilege. In doing so, the Court affirmed the well-established principle that solicitor-client privilege cannot be abrogated by inference and made its first comments yet on the mandate granted to the PCC by the Personal Information and Protection of Documents Act.

The dispute arose when the respondent to an access to personal information complaint refused to produce records of communications that it claimed to be subject to solicitor-client privilege. In demanding the records be produced, the Commissioner relied on the investigatory powers granted by section 12. Section 12 reads as follows:

12. (1) The Commissioner shall conduct an investigation in respect of a complaint and, for that purpose, may

(a) summon and enforce the appearance of persons before the Commissioner and compel them to give oral or written evidence on oath and to produce any records and things that the Commissioner considers necessary to investigate the complaint, in the same manner and to the same extent as a superior court of record

The Supreme Court held that this provision does not give the PCC the power to compel production of records over which solicitor-client is claimed by mere inference or by necessary implication in light of the PCC’s mandate.

While the principle that solicitor-client privilege can only be abrogated by express statutory language is not new, the Court’s application of the principle in this case demonstrates its strength because (as pointed out by the Information Commissioner in support of the PCC’s appeal), “verification of the privilege is the very object of the Privacy Commissioner’s statutory ombudsperson function and not merely a preliminary step to determine the record’s use for another purpose.”

The Court was not convinced by this argument, especially given the PCC’s mandate, which it characterized as adversarial rather than independent. Though the Court acknowledged that the validity of a solicitor-client privilege claim which is raised in response to a PIPEDA right of access request is of concern to the PCC given her mandate, it said her only valid means of seeking a determination of such a claim is to engage the Federal Court as she is empowered to do under the Act.

Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44.

Case report – eBay’s request for stay of PowerSeller production order rejected by FCA

On April 17th, the Federal Court of Appeal rejected an application for a stay of an order that requires eBay to provide the Minister of National Revenue with the names, basic account information and gross annual sales of eBay’s Canadian resident “PowerSellers” for 2004 and 2005.

The information was ordered to be produced under the authority of section 231.2 of the Income Tax Act, which authorizes third-party production orders that allow the MNR to seek information about persons or ascertainable groups of persons where the order is made to verify compliance with the ITA.  After last November when the Federal Court of Appeal held in Greater Montreal Real Estate Board that this provision did not require the MNR to establish that each and every one of the individuals targeted to be the subject of a “genuine and serious inquiry,” Hughes J. of the Federal Court affirmed the eBay production order.

The Federal Court of Appeal rejected eBay’s motion for a stay of Hughes J.’s order pending its appeal based on an application of the R.J.R.-MacDonald three-part test.  Sharlow J.’s key finding was that eBay did not prove irreparable harm. Although she acknowledged that information cannot be undisclosed, she held that harm to individual eBay account holders rather than eBay itself could not justify a stay.  This somewhat remarkable finding was despite “some material” on the record about eBay’s contractual relationship to account holders.

The record contains some material from which it could be inferred that eBay Canada has contractual obligations to eBay Inc. not to disclose certain confidential information without the consent of eBay Inc. It is not clear that the information sought by the Minister about PowerSellers is confidential information as contemplated in those contracts. Even if the information about PowerSellers is confidential information under those contracts, it is not clear that eBay Canada’s obligation not to disclose confidential information would or could be breached by the disclosure of information pursuant to a court order (even a court order that is under appeal). And, even if such a breach would or could result from such a disclosure, there is no evidence that any harm would come to eBay Canada as a result.

Coincidentally, the application for leave to appeal to the Supreme Court of Canada in Greater Montreal Real Estate Board was just dismissed on April 24th.

eBay Canada Limited v. Canada (National Revenue), 2008 FCA 141 (CanLII).


Case Report – SCC says no power to order costs of production order

Yesterday, the Supreme Court of Canada unanimously held that the Criminal Code‘s production order scheme does not allow a court to order that the police compensate a third party for the costs of compliance with a production order.

In 2004, the federal government passed Bill C-45, An Act to Amend the Criminal Code (capital markets fraud and evidence gathering). The Act created a new investigative tool called a “production order” by which third-parties may be required to produce documents, produce data or even prepare documents (based on existing data) for production. A production order is meant to be an easier-to-administer alterative to search warrants. The Department of Justice backgrounder on the Bill also says production orders are privacy-protective because they do not involve the fishing that’s associated with the execution of a search warrant.

The Court held that costs could not be ordered based on a reading of the statutory text in light of the relevant legislative history and the recognized social duty of citizens to assist in the administration of justice. It noted that the Department of Justice and the telecommunications industry had a dialogue before Bill C-45 was promulgated in which industry members requested an express jurisdiction to order costs.

The Court also held that standard for am exemption based on “unreasonable” burden should not be altered by establishing alternative criteria such as “undue hardship.” It held that reasonableness in the entire circumstances was a justiciable standard, noting that parties who are subject to frequent production orders may raise this fact as a relevant circumstance.

Tele-Mobile Company v. Ontario, 2008 SCC 12.