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Evidence - Canada Evidence Act - Open Court [s.38]. Sakab Saudi Holding Company v. Canada (Attorney General)
In Sakab Saudi Holding Company v. Canada (Attorney General) (Fed CA, 2024) the Federal Court of Appeal dismissed appeals from two open-court-related interlocutory orders to "protect sensitive or potentially injurious information from disclosure in a proceeding commenced in the Ontario Superior Court of Justice (OSCJ)" under s.38.04 of the Canada Evidence Act [International Relations and National Defence and National Security - Application to Federal Court: Attorney General of Canada].
Here the court usefully canvasses CEA s.38:[20] Section 38 of the CEA sets out a mandatory statutory process governing the use and protection of sensitive or potentially injurious information in connection with, or in the course of a proceeding before a court, person, or body with jurisdiction to compel the production of information. It defines "“sensitive information”" as "“information relating to international relations or national defence or national security that is in the possession of the Government of Canada, whether originating from inside or outside Canada, and is of a type that the Government of Canada is taking measures to safeguard”". It also defines "“potentially injurious information”" as "“information of a type that, if it were disclosed to the public, could injure international relations or national defence or national security.”"
[21] When, in connection with a proceeding, a participant is required to disclose, or expects to disclose or cause the disclosure of sensitive or potentially injurious information, they must give notice to the AGC in writing as soon as possible of the possibility of the disclosure, and of the nature, date and place of the proceeding (subsection 38.01(1)). The broad notice requirements extend to all participants to a proceeding (subsection 38.01(2)) and to non-participating officials (subsections 38.01(3)-(4)). The immediate effect of the notice is to prohibit disclosure of the sensitive or potentially injurious information, including the fact that notice was provided (section 38.02).
[22] Upon review of the information, the AGC may authorize the disclosure of all or part of the information (section 38.03). Where the AGC does not authorize the disclosure of the information or enter into an agreement to permit disclosure of some of the facts or information subject to conditions (section 38.031), the AGC may bring an application to the Federal Court for an order confirming the prohibition on disclosure (subsection 38.04(1)).
[23] The Court must then determine, pursuant to section 38.06, whether to confirm the prohibition on disclosure or to authorize disclosure of all or part of the information and under what conditions (subsections 38.06(1)-(3)). In doing so, the Court applies a three-part test established by this Court in Canada (Attorney General) v. Ribic, 2003 FCA 246 and restated in Canada (Attorney General) v. Khawaja, 2007 FCA 388 at paragraph 8, leave to appeal dismissed, 32397 (3 April 2008).
[24] On the first part of the test, the party seeking disclosure of the information (usually the respondent) must establish that the redacted information is relevant (Ribic at para. 17). On the second part of the test, the onus shifts to the AGC to demonstrate that the disclosure of the information would be injurious to international relations, national defence or national security (Ribic at para. 18). If both relevance and injury are established, the party seeking disclosure of the information then bears the burden of demonstrating that the public interest in disclosure outweighs the public interest in the non-disclosure (Ribic at para. 21).
[25] Where the Court concludes that the public interest favours disclosure, the Court may authorize, by order, disclosure in the form and under the conditions that are most likely to limit any injury resulting from disclosure (subsection 38.06(2)).
[26] As noted above, the obligation to give notice arises when there is a possibility that sensitive or potentially injurious information will or may be disclosed in connection with a proceeding. While section 38 defines when notice must be provided, it does not prescribe the form in which the information must exist. Although the sensitive or potentially injurious information will usually be contained in a document, the obligation to give notice can also apply to oral testimony as well as audio and video recordings (Ribic at paras. 4-7; Lopes v. Canada (Attorney General), 2006 FC 347 at paras. 17, 23, upheld on appeal in Lopez v. Canada (Attorney General), 2007 FCA 109). There is also no requirement that the information pre-exist in the format sought to be used in the section 38 process. As the Designated Judge properly noted, the AGC is required to review the information regardless of the format in which it is provided (Sakab #1 at para. 177). The scope of section 38 extends to all information that is anticipated to be disclosed over the course of the underlying proceeding.
[27] The Designated Judge accepted that Al Jabri had prepared the proffer to provide the AGC all the information that was likely to be otherwise disclosed in the underlying civil action, in order to prevent a series of section 38 notices and applications as the litigation unfolded and to avoid the uncertainty about what information could be disclosed. She found that multiple section 38 applications as the litigation progressed could be more detrimental than resolving the section 38 claims at the outset. She added that, while the Court did not encourage the creation of new documents for a section 38 application, the circumstances in this case warranted such an approach (Sakab #1 at paras. 178-180; Sakab #2 at paras. 89, 92).
[28] The Designated Judge’s finding that it would be more efficient to deal with as much information as possible in one application to avoid further delays in the underlying action was an appropriate exercise of discretion regarding the section 38 process, in the circumstances.
[29] In fact, in 2021, Al Jabri had provided to the AGC a first notice under section 38.01 which referred to sensitive information in a confidential appendix to an affidavit filed by Al Jabri on a stay motion in the OSCJ. Believing that Al Jabri might disclose sensitive or potentially injurious information in a supplementary affidavit and motion materials to be filed on a renewed stay motion in the OSCJ, an official from the Canadian Security Intelligence Service gave notice under subsection 38.01(3) of the CEA to the AGC in 2022 (the second notice). Instead of providing the AGC with a copy of his affidavit and stay materials, Al Jabri and his counsel prepared the proffer with the supporting documents and submitted them to the AGC for review. The justification for this approach was to ensure that all the information relevant to Al Jabri’s defence, and potentially engaging section 38 of the CEA, would be provided for review by the AGC. Al Jabri then delivered a third notice to the AGC, which referred to the proffer and 17 supporting documents. As Al Jabri’s counsel explained during a case management conference, the purpose behind the proffer was to know, once it was redacted, what information could be adduced in the underlying litigation (Appeal Book at 2330, transcript of case conference held on September 27, 2022, at 2335-2340). The first and second notices are not at issue in this appeal.
[30] Given the number of notices already provided to the AGC and the nature of the operations in which the Sakab Parties and Al Jabri are alleged to have engaged in (counterterrorism), it was reasonably foreseeable that further section 38 notices would be required as the proceedings in the OSCJ evolved. I am satisfied that the Designated Judge properly exercised her discretion in finding that the circumstances warranted this approach.
[31] The Designated Judge’s finding is also consistent with the jurisprudence of the Supreme Court of Canada, this Court and the Federal Court.
[32] In Canada (Attorney General) v. Nuttall, 2016 FC 850, the Federal Court cautioned against a "“continuing cycle of disclosure orders”", especially in light of the delay inherent in the bifurcated section 38 process (Nuttall at paras. 78-79).
[33] In Ribic, this Court expressed concern over an approach that would lead to disclosure in multiple stages:[51] The two witnesses asserted that they are incapable of separating sensitive from non-sensitive information ... If they were to testify in the criminal trial, the trial would have to be suspended every time a question would be put to the witnesses in order to determine whether the question would lead to the disclosure of sensitive information and, if so, whether that sensitive information should be revealed. For this last determination, it involves coming back to the Federal Court. ... [34] In R v. Ahmad, 2011 SCC 6, the Supreme Court of Canada noted that "“[s]ection 38 of the CEA places an obligation on all participants to a legal proceeding, as well as non-participating officials, to notify the Attorney General of the possibility that sensitive or potentially injurious information will be disclosed”" (Ahmad at para. 17, my emphasis). It further held that the scheme under section 38 of the CEA was "“designed to operate flexibly”" (Ahmad at para. 44). In discussing the issue of potential delays caused by the bifurcation of proceedings, the Supreme Court stated as follows:An important step the parties can take is attempting to identify potential national security issues during pre-trial proceedings. This would allow the disclosure arguments to take place at an early date. Section 38 encourages early-stage disclosure proceedings … Due diligence in this respect will work to minimize the risk of mistrials. Disclosure by the Crown in a series of stages over a period of time, each new stage of disclosure triggering additional s. 38 proceedings, will heighten the risk of resort by the trial judge to s. 38 remedies.
(Ahmad at para. 77) [35] While Ahmad involved the disclosure of information in the context of a criminal prosecution, I see no reason why the same reasoning would not apply in the context of civil proceedings, as the Federal Court held in Canada (Attorney General) v. Telbani, 2014 FC 1050 at paragraph 110.
[36] The Sakab Parties submit "“this Court has declined to review information under s. 38 that is not yet at an imminent risk of disclosure.”" To support their preferred approach, they rely on Ottawa Citizen Group Inc. v. Canada (Attorney General), 2004 FC 1052 (Appellant’s Memorandum of Fact and Law at para. 79, footnote 81).
[37] In my view, their reliance on this decision is misguided.
[38] Ottawa Citizen is a decision of the Federal Court. In that case, the applicants had filed an application before a judge of the Ontario Court of Justice to terminate or vary a sealing order she had previously made in respect of seven search warrants. Counsel for the AGC was notified that the documents in issue contained sensitive or potentially injurious information as defined in section 38 of the CEA. The applicants initiated a section 38 application in the Federal Court and sought an order authorizing the disclosure of the information in issue. The Designated Judge adjourned the section 38 proceeding as a matter of judicial economy, pending the determination of the motion to vary the sealing order in the Ontario Court of Justice. The Designated Judge found that, if the judge of the Ontario Court of Justice refused to vary her sealing order, it was likely that there would be no reason to continue the section 38 application. He also noted that, if she agreed to further vary her sealing order and the AGC no longer objected to making the information public, then again, the proceeding would likely not be necessary (at paras. 20-21, 25).
[39] In my view, Ottawa Citizen does not stand for the proposition that section 38 proceedings are limited to information at imminent risk of disclosure. On the contrary, it confirms the flexibility designated judges enjoy in determining section 38 applications.
[40] Like the Designated Judge, I agree that the creation of new documents for a section 38 application should not be encouraged. However, the situation is not unprecedented. In Canada (Attorney General) v. Ortis, 2022 FC 142, Mr. Ortis was a civilian employee of the Royal Canadian Mounted Police who, in connection with his employment, had access to classified information from a variety of sources, including international partners (Ortis at paras. 2-3). He was charged with a number of offences under the Security of Information Act, R.S.C. 1985, c. O-5 and the Criminal Code, R.S.C. 1985, c. C-46. Crown disclosure provided to Mr. Ortis was redacted and the AGC applied under section 38.04 for an order confirming the claims for the prohibition of disclosure.
[41] Since Mr. Ortis had been privy to the classified documents, he was able to recall some of their redacted content. It was recognized that Mr. Ortis needed to be able to discuss the classified information with his defence counsel in order to prepare for trial. Arrangements were made for Mr. Ortis to consult with and instruct his counsel in a secure fashion. To assist the Court, Mr. Ortis’ counsel, who was security cleared, provided a summary of the evidence that Mr. Ortis wished to provide at his trial in his own defence. This information was not sworn or affirmed. The AGC reviewed the information and redacted portions of the defence summary on section 38 grounds. The summary of Mr. Ortis’ anticipated evidence was made available to the AGC and the amici curiae, but was withheld from counsel with the Public Prosecution Service of Canada (PPSC), who had carriage of the prosecution on behalf of the Crown. Mr. Ortis eventually agreed to share with the PPSC parts of the defence summary that related to specific counts, but did so in part to facilitate the Crown’s consideration of whether those charges should be stayed on the grounds that he could not have a fair trial (Ortis at paras. 17-24).
[42] The Designated Judge in Ortis noted that the defence summary "“was in effect an advance vetting of Mr. Ortis’s anticipated trial evidence for objections to disclosure under the section 38 scheme”" (Ortis at para. 7). He further observed at paragraph 39:While this complicated the work of the AGC and the Court somewhat, proceeding in this fashion ultimately enhanced the efficiency and consistency of the Court’s determinations under subsection 38.06(2) of the CEA. Dealing at this stage with objections to the disclosure of certain information Mr. Ortis wishes to provide at trial should also go a long way in minimizing any disruption to the trial because of section 38 concerns. [43] As in Ortis, the Designated Judge here accepted that Al Jabri was seeking to vet in advance his potential defence to the fraud action. Furthermore, similarly to Mr. Ortis, who relied on his right to silence vis-à-vis the Crown, Al Jabri is placing restrictions on who may access his anticipated defence by invoking litigation privilege.
[44] The Sakab Parties’ reliance on paragraph 38.01(6)(a) of the CEA is equally misplaced. While section 38.01 of the CEA imposes notice requirements regarding the disclosure of sensitive or potentially injurious information, subsection 38.01(6) sets out certain exceptions. One such exception is when a person discloses the information to their solicitor in connection with a proceeding if the information is relevant to that proceeding (para. 38.01(6)(a)). In such a situation, the person is not required to give notice to the AGC.
[45] However, this exception does not preclude the requirement to give notice under section 38.01 of the CEA where there is a possibility that the sensitive or potentially injurious information will or may be disclosed in a proceeding. In this case, as previously noted, the Designated Judge accepted that Al Jabri had prepared the proffer to provide all the information that was likely to be disclosed in the course of the underlying civil proceeding to the AGC for review. He was thus required to give notice to the AGC and the section 38 process was triggered.
[46] As I stated above, the Designated Judge’s conclusion that the proffer was appropriate in the circumstances of this section 38 application is a proper exercise of discretion, which warrants this Court’s deference on appeal.
[47] The Sakab Parties have failed to convince me that the Designated Judge either erred in law or committed a palpable and overriding error in concluding that the proffer could be the subject of proceedings under section 38 of the CEA.
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[62] Not only does the Designated Judge have a general power to control the Court’s process, subsection 38.04(5) of the CEA provides them with discretion over various aspects of the section 38 process. For example, the Designated Judge decides whether it is necessary to hold a hearing (para. 38.04(5)(b)) and, if the judge "“considers it appropriate in the circumstances, may give any person the opportunity to make representations”" (para. 38.04(5)(d)).
[63] In the circumstances of this application, I find that the section 38 process is sufficiently flexible to allow the Designated Judge to make a fair determination of the nature of the information at issue. The Sakab Parties have had the opportunity to make representations on the relevancy prong of the Ribic test. To do so, they have had access to a comprehensive record in the underlying proceeding from which they could discern Al Jabri’s defence. Furthermore, the Sakab Parties would have received written submissions from Al Jabri on the redacted information’s relevance to the underlying proceeding.
[64] Moreover, by the time the second prong of the Ribic test will be completed, they will likely have examined Al Jabri for discovery and have elicited some of the facts they allege are contained in the proffer. If they acquire information they feel should be shared with the Designated Judge, they can request a further public hearing or request an ex parte hearing to advance their position in the absence of the other parties. The amicus curiae will also have access to the proffer and can assist the Designated Judge in reaching a fair decision.
[65] In addition, I accept the Designated Judge’s conclusion that, given the extensive record filed and submissions received from the Sakab Parties and Al Jabri, she should have a sufficient grasp of the key issues in the underlying litigation to determine the relevance and public interest prongs of the Ribic test. One must keep in mind that designated judges regularly determine section 38 applications where one of the parties does not have all the information. If the Designated Judge finds that she requires more context to assist in her determination, she may order the production of additional information (Nuttall at paras. 77-78). In the event the Sakab Parties are unsatisfied with the Designated Judge’s findings on relevance in the context of the section 38 application, they are not precluded from making arguments about the relevance of the evidence to the trier of fact in the civil proceedings.
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