Why does it cost so much just to look on the Internet?”

I get this question a lot, and too often from “professionals” who should know better. I will list a few of the reasons here.

To begin with, I never know how the research results will be used in the future. That means that the results must be properly documented so that it would be reproducible if someone else with similar skill did the searches at the same time as I did.

If at some future date what I find becomes important evidence, then how it was found, where it was found, when it was found, and what it actually looked like becomes very important. My report and the supporting material may be the only proof of the existence of the material being entered into evidence.

The computers must be free of malicious code (S. 31 Canada Evidence Act). We often set aside a computer for this purpose after doing some Spring-Cleaning.

The logic of the research process must be clear and easy to explain to anyone. This logic must be explained in the report. Search statements must be recorded. The project directory and file naming and structures must be logical and properly documented. The evidence must have a clear and documented chain of custody.

Providing this evidence requires skill, training, experience, software, computers, office space, support staff, and time.  Finally, did you know it takes at least twice as long to do the report as it does to do the research?

Sales of large quantities of stock or the sale of assets and equipment of the business itself outside the regular course of business are considered a sale “in bulk”. The Bulk Sales Act is designed to protect the creditors of a business owner by requiring the owner to follow the procedures of the Act for sales outside the regular course of business.

If a buyer wishes to purchase the assets and equipment of a business, the seller “in bulk” must provide an affidavit stating that all creditors have been paid, or they will be paid from the proceeds of the sale.  In some cases the buyer pays an assigned trustee and creditors of the business may wish to waive their rights in which case the proceeds are paid.

A ‘Bulk Sales search‘ determines if a bulk sales affidavit has been filed with the relevant Ontario Superior Court of Justice office.

The Private Investigator (PI)

If you are interested in an Ontario business’s assets, debts, cash flow, and general financial condition, then a a Bulk Sale Act search is an important search.  It may tell you if the business is failing or if it has suffered a set-back.  You may learn of an abandoned line or the sale of a production facility.  You may learn of a legal action in another jurisdiction by contacting or researching the other parties to the bulk sale. Any sale that indicates that creditors will be paid from the proceeds of the sale may indicate a judgment that is being satisfied or it may be part of the settlement of a claim.

Some companies claim to be able to perform real-time “ping” geo-location tracking of almost any cell phone. After paying, the Investigator is told that the cell phone is being pinged but has not answered and the Investigator is out hundreds of dollars. This is not how Location Based Services work in a mobile phone network.

Canadian Criminal Records

Some companies, usually in the U.S.A., claim that they can do CPIC searches. The normal answer is that nothing was found. Of course no search of any kind was performed. They also charge for searches by province when CPIC covers all of Canada. Sometimes, the single-province searches are advertised as CPIC but actually search the provincial court case management system.

These injunctions are widely recognised in common law jurisdictions and such orders can have world-wide effect.  Similar provisions are now available in the rest of Europe, under Article 9(2) of the European Union Directive on the enforcement of intellectual property rights, which was approved in April 2004.

The injunction is often granted ex parte and pre-trial based on affidavit evidence alone.  A Norwich order sometimes precedes the Mareva Injunction.  A Mareva Injunction is often combined with an Anton Piller order. The combination of a Mareva Injunction and an Anton Pillar order can be devastating to a business or professional person by freezing assets and revealing proprietary processes and data to competitors. However, this does prevent a foreign company from removing its assets from the country before a trial can take place. Today’s telecommunications makes moving assets almost instantaneous. The Anton Pillar order prevents the destruction of evidence before trial.

A Norwich order is a pre-action discovery mechanism.

In Norwich Pharmacal Co. v Customs and Excise Commissioners [1974] AC 133, the owner of a patent knew that infringing goods were entering the UK, but could not ascertain the identity of the goods. The Commissioners, in the course of performing their duties, had information that would identify the imports.  Also, they had unknowingly played a part in facilitating importation of infringing goods. The House of Lords found that where a third party had become involved in unlawful conduct, they were under a duty to assist the person suffering damage by giving them full information and disclosing the identity of wrongdoers. If the third party bears expense in assisting compliance with an order, the person seeking assistance is bound to reimburse those expenses. That expense however would be reflected in an award of damages against the ultimate tort-feasors, and this be recovered after the final hearing.

Canada and the Norwich Order

The Court in Isofoton S.A. v. Toronto Dominion Bank, outlined five elements that a court should consider before granting a Norwich order.

(i) Whether the applicant has provided evidence sufficient to raise a valid, bona fide or reasonable claim; (The standard required is that the claim
is not frivolous or vexatious.)
(ii) Whether the applicant has established a relationship with the third party from whom the information is sought such that it establishes that the third party is somehow involved in the acts complained of; (The Court confirmed that a bank in receipt of allegedly fraudulent funds will be considered an innocently-involved third party.)
(iii) Whether the third party is the only practicable source of the information available; (The victim is not required to approach the alleged wrongdoer for the information. Often, financial institutions are the only real source of the information required to prove a claim and locate fraudulently transferred assets.)
(iv) Whether the third party can be indemnified for costs to which the third party may be exposed because of the disclosure, some [authorities] refer to the associated expenses of complying with the orders, while others speak of damages; (The Court in Isofoton rejected the argument that an undertaking as to damages was required, stating that it was difficult to envision a situation in which a financial institution that is subject to a Norwich order would be subject to liability and a damages award for disclosing financial information. The Court further advised that should a concern materialize on the facts of a specific case, the financial institution has the added protection of being able to seek legal advice and return to court for further direction, if necessary.) and
(v) Whether the interests of justice favour the obtaining of disclosure. [emphasis added] (The courts are reluctant to protect the rights of wrongdoers if maintaining confidentiality in essence protects fraudulent acts.)

In Isofoton, the Court found that the alleged wrongdoer’s right to privacy did not outweigh the victim’s right to access the information required to pursue its legal remedies. The Court based its decision on the following three reasons:

• Confidentiality in bank records is not absolute, as the records are subject to disclosure by court order in a variety of circumstances.

• The use that could be made of the information ordered disclosed was restricted by the terms of the order.

• The wrongdoer, to the extent that it acted fraudulently, did not have a right to the protection of confidentiality normally afforded to bank records.

Liability & Indemnity

In the past, financial institutions have been held liable for breaching confidentiality obligations owed to their clients in assisting other financial institutions or wronged parties in instances of alleged fraud. The Norwich orders removes liability from financial institutions for responding to allegations of fraud made against a client. The financial institution may reasonably take the position that it will not disclose confidential information without a Norwich order compelling it to do so. The fraud victim must establish that a Norwich order is required and for the court to determine whether such an order ought to be granted.

Norwich orders allow financial institutions to assist fraud victims while also protecting their clients’ legitimate expectations regarding confidential information.

Usage in Canada

While a Norwich Order is normally associated with finding monies obtained through fraud, however, it may also be used to find an IP address. The Internet Service Provided may be presented with a list of IP addresses and required to deliver up the names and addresses of the individuals using those IP address at the designated times pursuant to the Norwich Pharmacal Order. This is becoming more common in cases of Internet defamation.

The Ontario Superior Court of Justice allowed the issuance of a Norwich order in York University v. Bell Canada Enterprises.  The case is based on an allegedly defamatory e-mail about the President of York University, Mamdouh Shoukri, saying he had “perpetrated an outrageous fraud.” Bell Canada Enterprises and Rogers Communications Inc. were ordered to disclose the identity of the account owners.  A previous Norwich order had been approved against Google back in May 2009, which identified the two ISPs as the holders of the information.

Both Bell and Rogers had privacy policies protecting customer data, but these could be overridden by the Norwich order pursuant to s. 7(3)(c) of PIPEDA.

A search of Cole’s computer by the high school’s IT staff found sexually explicit photos of a Grade 10 student that he acquired from the student’s email account. The laptop was then turned over to the police and searched without a warrant. The proceeds of the police search were excluded while the IT technician’s search was proper as it was for the purposes of maintaining the school board’s network and the laptop.

Justice Karakatsanis wrote for the Ontario Court of Appeal which found the employee had a reasonable expectation of privacy in the contents of his laptop based on the following factors:

• he had exclusive possession of the laptop;
• he had permission to use it for personal use;
• he had permission to take it home on evenings, weekends and summer vacation;
• there was no evidence the board actively monitored teachers’ use of laptops;
• the school board had no clear and unambiguous policy to monitor, search, or police the teacher’s use of his laptop.

This seems consistent with the prevailing case law regarding the recognition of an employer’s right to govern the use of their systems through policy, but it also recognises the rising privacy expectations of employees in the personal use of an employer’s system.

There is some confusion going around about Bill C-23. It was split into two parts, and because the second part, C-23B, has been the most debated, people associate C-23A, which received Royal Assent on 29 Jun 2010, with the changes proposed by C-23B, which has not yet been made law.

Bill C-23A only covers certain aspects of the full bill, while C-23B covers the bulk of the changes. Part A, which has been made law, covers the following:

1.    Lengthens pardon waiting periods from 3 years to 5 years and from 5 years to 10 years for certain crimes.

2.    Puts the onus on the applicant for proving that a pardon would bring them measurable benefit.

3.    Gives the Parole Board of Canada more discretion for granting pardon applications.

Bill C-23B will bring a few more changes, but for now, these are the basic changes that have already taken place. C-23B is scheduled for its third reading on March 24^th and will undergo clause by clause consideration in April. For more information on these changes, please visit: http://www.canadianpardons.ca/. The Pardon & Waiver Wiki and Blog pages should be very  useful if you need to understand the Pardon and Waiver process in Canada.

An Anton Piller order is obtained ex parte, and allows the moving party to access the premises of the other party to gather evidence that the court fears may be destroyed if the search is not conducted immediately. To many people this resembles a private search warrant but it is not.  The contempt power is used to enforce them rather than the normal criminal process where physical force may be used to execute the Order.  Nor does the Order authorize entry.  Rather, it commands the defendant to permit entry.  The defendant may deny entry, and thereafter face contempt proceedings.  The plaintiff’s agents may not use force to effect entry in the face of the defendant’s denial of permission.  The defendant may move to have the access limited after the search. Therefore, the order doesn’t necessarily give the moving party immediate access to the evidence, rather it preserves it, so that access can be determined at a later time.

With a search warrant, those strangers are police officers, who may use reasonable force to execute their search.  With an Anton Piller order, the strangers are not police officers (although they will usually include one peace officer from the Sheriff’s office or a Bailiff in Quebec).  They may not use force to gain entry, but rather the threat of jail or other punishment.

The premise of these orders is that (a) the defendant is likely to act to frustrate the order if given notice of it in advance; and (b) there is a strong prima facie case that the defendant has already acted very badly.  As Anton Piller orders play an increasingly important role in protecting businesses from disgruntled or departing employees (as in Ridgewood cited below), it is important for Investigators to fully understand their obligation to properly execute these orders.

A number of judgments have condemned the improper execution of these orders. An Ontario case,  Ridgewood Electric (1990) v. Robbie, contains an  excellent background of the Anton Pillar Order in Para [23] and demonstrates how not to execute the order. In Harris Scientific Products v. Araujo (2005), 54 Alta. L.R. (4th) 195, the Alberta Court of Queen’s Bench ordered damages of $35,000 for trespass and punitive damages of $10,000. Furthermore, the Alberta Court of Appeal in Catalyst Partners Inc. v. Meridian Packaging Ltd. established that there had to be strong evidence showing a real possibility that the defendant would destroy documents, not merely an inference or suspicion in order to issue an Anton Pillar Order.  In Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36 the SCC ruled that Celanese had the onus of demonstrating that no prejudice would result from their solicitors carrying on in the file. As a result of the execution of an Order, the Celanese solicitors had come into the possession of confidential information attributable to a solicitor-client relationship, and the court said that the solicitors “bear the onus of showing there is no real risk such confidences will be used to the prejudice of the defendant.” This contentious case led the SCC to better define the  requirements for successful preparation and execution of an Anton Pillar Order. The following guidance is distilled from Celanese Canada Inc. v. Murray Demolition Corp.

• An independent solicitor should act as a neutral officer of the Court to supervise the execution of the Order. This person should explain the Order to the Defendant and provide a objective report to the Court.
• Limit the scope to only necessary material and no material should be removed from the site unless pursuant to the terms of the Order.  This is not a fishing expedition. However, allocate enough time and be methodical in your execution of the Order while documenting every step in the process.
• The moving party should provide an undertaking and/or security for damages if the Order is unwarranted or improperly executed. The court does not want to deal with imposing fines etc. as in Harris Scientific mentioned above.
• Include a procedure for dealing with solicitor-client privilege or other confidential materials. The court does not want a repeat of this problem as seen in Celanese above.
• Return seized material as soon as practicable.
• Commence the search during normal business hours when the counsel for the Defendant is available for consultation. Again, this was a problem faced by the Defendant in Celanese.
• The premises should not be searched, or items removed, without the presence of the defendant or his responsible employee.
• Persons conducting the search should be listed by name rather than just the number of people permitted.
• A detailed list of all evidence seized should be made and verified by the Defendant before leaving the site.

The judge issued an order compelling Ms. Sparks’ lawyer, James Crocco, to secretly arrange to have a colleague call the woman to a surprise meeting without telling her why and then order to her download the entire contents of her Facebook site, including any photos and videos, so it could be examined in court.”