Supreme Court Of Canada Denies Compensation To Third Party For Costs Of Complying With Production Order

Copyright 2008, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Litigation, April, 2008

In 2004, amendments to the Criminal Code were enacted to permit law enforcement agencies to issue production orders compelling innocent third parties to produce documents and data for use in criminal investigations. The financial burden imposed on the third party to comply with these orders can be tremendous, particularly for companies in the financial services and communications sectors who may be called upon to respond to several orders in a particular fiscal year.

On March 28, 2008, in Tele-Mobile Co. v. Ontario, 2008 SCC 12, the Supreme Court of Canada ruled that a judge cannot award compensation to a third party for the reasonable costs of complying with such an order. The Court, however, confirmed that in particularly onerous circumstances, the third party may be relieved of its production obligations.

The Statutory Scheme

Sections 487.012 to 487.017 of the Criminal Code permit law enforcement agencies to obtain orders requiring third parties to produce or generate documents and data. These orders are granted on an ex parte basis, upon the judge being satisfied that there are reasonable grounds to believe that the third party has possession or control of documents or data that will afford evidence respecting the commission of an offence. The judge has power to impose terms or conditions as he or she considers advisable in the circumstances.

After an order is issued, the third party may apply for an exemption from the order's requirement to produce any document, data or information. The judge may grant the exemption if he or she is 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.

A third party who does not comply with a production order is guilty of a criminal offence punishable by a fine not exceeding C$250,000 and/or imprisonment for a term not exceeding six months.

The Issue

On September 30, 2004 and October 5, 2004, two production orders were issued compelling the Appellant, the Tele-Mobile Company, to produce reports setting out all information regarding every incoming and outgoing call on its cellular network from August 1, 2003 to...