In the last 5 years, investigators with the Quebec securities regulator, the Autorité des marchés financiers (AMF), have more and more often turned to authorizing judges to secure search warrants allowing them to enter people’s homes and collect evidence. The hearings before the authorizing judges are held ex parte and authorization is granted on the basis of the affidavit filed by the AMF investigator.
Despite the Zalat v. R. (2019 QCCA 1829) being a criminal case, the teachings of the Quebec Court of Appeal, described below, are easily transposable to a securities litigation setting.
The Quebec Court of Appeal in Zalat ordered a stay of the proceedings against Zalat for possession and careless storing of a restricted weapon, on account of the misconduct of the main investigator, Sergeant-Detective McCann, which was found to have undermined the integrity of the judicial process. The firearm had been seized by the police during the execution of a search warrant which was authorized by a judge on an ex parte basis, relying on a sworn affidavit of McCann setting out information provided by a police informant as verified by the police.
Five failings of McCann were analyzed by the Court of Appeal:
- His systematic and intentional destruction of notes of discussions with any of the thirty-odd police informants under his control (including the one on whom he relied in his affidavit to obtain the search warrant targeting Zalat’s home) after he had completed a “source report”.
- His patently unreasonable interpretation of the Montreal Police Service Policy which required McCann to place all documents regarding a police informant in a sealed, confidential envelope to be sent to a specific team within the Police Service, which not only did not justify his destruction of his notes, but also breached his duty to preserve evidence. In so acting, McCann’s conduct denoted unacceptable negligence, indifference or carelessness towards the criminal process and the rights of an accused.
- His knowledge that the destruction of the notes of his discussion with the police informant in this case would prevent Zalat from being able to use them in Court. The Court highlights McCann’s testimony under oath that he took as few notes as possible, “knowing what could come of them in court”.
- The affidavit signed by McCann and presented to the authorizing judge was found lacking in many respects.
He purposefully failed to inform the authorizing judge that he was the officer in control of the police informant on whom he relied in his affidavit.
He drafted his affidavit to lead the authorizing judge to believe that he gained knowledge of the facts alleged in his affidavit through a document provided by the police informant where no such document existed.
He attributed to the police informant information that was a lot more precise than what had in fact been provided by the police informant.
He destroyed the notes of the discussion with the police informant, prohibiting any verification of the accuracy of the statements in the “source report” and his affidavit.
- McCann’s favouring of the end result of his search and seizure, regardless of the impact of his conduct on the process leading to the seizure. The Court highlights McCann’s comment to the trial judge that whatever decision she reached on the possible exclusion of the seized evidence, he knew that he had taken a firearm off the streets and “that’s what mattered”.
The Court held that the authorization process leading to the issuance of a search warrant could not perverted in this way and that courts should not tolerate such a lack of transparency in an ex parte proceeding seeking permission to search a person’s home. This was a clear case warranting a stay of proceedings.