Protection of legal privilege and seizure of electronic data

Every day in Canada, police forces, the CRA, and other investigative agencies seize huge amounts of data in the course of their investigations. Rather than narrowly focusing on gathering documents relevant to their investigation, they routinely seize entire computer hard drives or entire servers. This systemic approach has a number of troubling aspects to it. The focus of this article, however, is on the ability of our judicial system to uphold the protections guaranteed by legal privilege that are in jeopardy due to systemic over-seizure.

Released in 2019, the British Columbia Supreme Court (the "BCSC") decision Solicitor-Client Privilege of Things Seized (Re), 2019 BCSC 91,[1] considered appropriate measures for handling seized electronic files that included privileged communications. The decision provides a practical review of solicitor-client privilege and the safe handling of potentially privileged materials seized by the state. At a high level, the decision reminds us that solicitor-client privilege is as close to an absolute right as exists in law and that any handling of seized data must be strictly managed to minimally impair the right. In this case the CRA's plan for identifying, isolating and storing privileged documents was rejected and counsel for the unnamed respondents (from whose residence and business premises the CRA seized materials) was charged with identifying privileged documents; an independent computer technician was to be appointed to isolate those documents from the producible documents; and the CRA was required to delete all materials from its servers, with the originals being returned to the respondents and a copy deposited with the Court.

The BCSC framed the issue as follows:

What persons and procedures should the Court order for the identification, isolation, and storage of solicitor-client privilege materials, so that privilege is "minimally impaired" and remains "as absolute as possible"?

Lavallee[2] is one of the leading decisions of the Supreme Court of Canada ("SCC") on protecting solicitor-client privileged materials. Lavallee principles are relevant in solicitor-client privilege cases, although whether they are constitutionally required depends on the case: strict application is not necessarily required and different processes may be engaged to protect privilege depending on context. The SCC stated in Lavallee that solicitor-client privilege must remain "as close to absolute as possible" and at paragraph 49 that:

… Solicitor-client privilege is a rule of evidence, an important civil and legal right and a principle of fundamental justice in Canadian law. While the public has an interest in effective criminal investigation, it has no less an interest in maintaining the integrity of the solicitor-client relationship. Confidential communications to a lawyer represent an important exercise of the right to privacy, and they are central to the administration of justice in an adversarial system. Unjustified, or even accidental infringements of the privilege erode the public's confidence in the fairness of the criminal justice system. This is why all efforts must be made to protect such confidences.

However, the guidelines apply based on the facts of a case, and Lavallee requires a principled rather than cookie-cutter approach. Also at paragraph 49 of Lavallee, the SCC wrote:

… guidelines are meant to reflect the present-day constitutional imperatives for the protection of solicitor-client privilege, and to govern both the search authorization process and the general manner in which the search must be carried out; in this connection, however, they are not intended to select any particular procedural method of meeting these standards.

Lavallee set out ten guidelines to protect privilege when law offices are the subject of a search warrant:

1. No search warrant can be issued with regard to documents that are known to be protected by solicitor-client privilege.
2. Before searching a law office, the investigative authorities must satisfy the issuing justice that there exists no other reasonable alternative to the search.
3. When allowing a law office to be searched, the issuing justice must be rigorously demanding so to afford maximum protection of solicitor-client confidentiality.
4. Except when the warrant specifically authorizes the immediate examination, copying and seizure of an identified document, all documents in possession of a lawyer must be sealed before being examined or removed from the lawyer's possession.
5. Every effort must be made to contact the lawyer and the client at the time of the execution of the search warrant. Where the lawyer or the client cannot be contacted, a representative of the Bar should be allowed to oversee the sealing and seizure of documents.
6. The investigative officer executing the warrant should report to the justice of the peace the efforts made to contact all potential privilege holders, who should then be given a reasonable opportunity to assert a claim of privilege and, if that claim is contested, to have the issue judicially decided.
7. If notification of potential privilege holders is not possible, the lawyer who had custody of the documents seized, or another lawyer appointed either by the Law Society or by the court, should examine the documents to determine whether a claim of privilege should be asserted, and should be given a reasonable opportunity to do so.
8. The Attorney General may make submissions on the issue of privilege, but should not be permitted to inspect the documents beforehand. The prosecuting authority can only inspect the documents if and when it is determined by a judge that the documents are not privileged.
9. Where sealed documents are found not to be privileged, they may be used in the normal course of the investigation.
10. Where documents are found to be privileged, they are to be returned immediately to the holder of the privilege, or to a person designated by the court.

While these principles were articulated in the context of a law office search, their application may be wider, in view of case law discussed below.

Background

In November 2016, search warrants were issued in connection with allegations that the (unnamed) respondents committed offences under the Income Tax Act (Canada). When the warrants were executed at the respondents' residences and business premises, the CRA's Certified Forensic Analysts (the "CFAs") seized electronic storage devices. The respondents' counsel claimed solicitor-client privilege over all of the stored data. Any review of the storage devices was suspended until privileged materials were identified by the respondents' counsel and isolated.[3] Because the parties could not agree on a process for so doing, the matter came before the BCSC.

Positions of the Parties

The Crown wanted the court to allow the CFAs to search the electronic storage devices, subject to the following protocol. The CFAs would be physically segregated from the CRA's investigators; use forensic examination software that could quarantine selected electronic documents and data; perform searches to isolate electronic documents and data that may be protected by solicitor-client privilege, using the names of counsel provided by the respondents, so as to identify the electronic documents and data to be quarantined ("quarantined data"). Further, pursuant to this plan, no CRA person other than a CFA would have access to quarantined data, no CFA would communicate with anyone from the CRA (other than another CFA) regarding the contents of the quarantined data, and it would be excluded from any reports or analysis conducted by anyone from the CRA.

The respondents contended the Crown's proposal did not adequately protect privilege and that the search should only continue if the process adhered to Lavallee principles. In particular, the respondents argued that the CRA must not review or process privileged materials and that the court should appoint: (1) an independent referee (a lawyer), to identify and segregate the documents and (2) an independent computer forensic technician (because the CFA team was neither independent nor neutral). Further, the respondents wanted the CRA to delete from its servers all information from the seized electronic devices and deliver originals and any copies to a neutral third party, with the originals then sealed and deposited with the Court. The independent technician would create copies for the respondents, the independent referee and the independent technician. The respondents proposed that they would, together with the independent referee, proceed to identify any privileged materials, and the court could review and confirm those determinations. The respondents proposed that the inventory of privileged materials would be provided to the independent computer technician who would isolate the materials, with the remainder provided to the CRA. Finally, the respondents asked that the CRA be prohibited from disclosing any information or using any knowledge it has concerning the privileged materials.

The Crown disputed that the search in this case concerned a "law office" that would trigger constitutional protections under Lavallee, and disputed that the search concerned a place "akin" to a law office (see Festing v. Canada (Attorney General), 2003 BCCA 112 aka Festing #2).[4] According to the BCSC, Festing #2 expanded "law office" to include "place where privileged documents may reasonably be expected to be located" and searches of law offices, or places akin to law offices, must follow Lavallee. Not surprisingly, the Crown and the respondents adopted a different view of what it means for a place to be "akin to a law office", which determination is contingent on whether privileged documents may reasonably be expected to be located in a particular place. Reasonable expectations are rooted in more than mere assertions: there must be some factual basis for a finding of reasonable expectations.

In the Crown's submission, the documents in question were found on storage devices at residences and/or business premises and Lavallee cannot be stretched so far as to make the whole world a lawyer's office just because privileged documents are stored there. According to the Crown, post-Lavallee cases dealing with non-law office searches allow the use of CFAs from the investigating organization, who work separately from investigators. The Crown argued that the CRA's CFA team had the training to do the work on a timely basis and reasonable cost, and that they have confidence-building ethical and legal obligations (they follow a code of integrity and personal conduct, and are prohibited from unauthorized access and disclosure of taxpayer information under the ITA). Essentially, the Crown argued that its proposed approach protected societal interests in "sedulously fostering and minimally impairing solicitor client privilege" while simultaneously respecting the CRA's objective of effectively investigating tax offenses.

The BCSC canvassed case law that considered whether an independent third party should review seized records containing privileged information. A third party can cause needless duplication of effort and add complexity, whereas a respondent may be best positioned to assert privilege because they understand their own communications. However, third party referees can be useful where a multitude of records concerning different clients are seized, where each client has a different privilege claim.

In Saramac,[5] the independent forensic technology unit of the Surete du Québec ("SQ") was found to be an appropriate handler of master copies of electronic documents that included privileged materials. The SQ forensic unit met constitutional requirements because: (1) it had operational independence from investigators, there was minimal risk of accidental revelation and no information regarding privileged documents would be available to the seizing authority; (2) the SQ forensic team had to take an oath of confidentiality; (3) the SQ forensic team had the technical expertise to ensure data would not be compromised; (4) the technical processes available meant that the SQ forensic team did not have to read or access the potentially privileged documents to be able to process and isolate them (third parties may be required when an authority seeks access to the content of privileged materials, or the technical people have to read the documents to do their work).

In the case before the BCSC, it was established that to create a keyword search to identify documents, the names of senders and recipients of privileged communications would need to be known. Here there was a tension. The names of senders and recipients are arguably privileged, and the fact a lawyer was consulted, and the lawyer's name and practice area, may indirectly reveal the nature of the advice. On the other hand, on the basis of Revcon[6] the Crown argued that such information is not a confidential communication made for the purpose of giving or receiving legal advice. Without reaching a legal conclusion on this point, the Court held that the respondents and their counsel were best positioned to identify the privileged materials. The BCSC stated that independent referees are useful in law office searches where there is information pertaining to multiple clients, and in situations where someone should "look over the shoulder" of a state forensics department. That was not the case here, however, as the respondents had demonstrated an ability to identify privileged documents without assistance.

Nevertheless, the court ruled that an independent technician was required to perform the isolation process that would separate the privileged and non-privileged materials to adequately protect the privilege materials and impair the privilege as little as possible. The BCSC noted that the parties argued about the fallibility of keyword searches and isolating technologies generally, and the risk that their use could reveal privileged materials. Since the risk of inadvertent viewing and leakage was present, there was a risk that privileged information could accidentally be divulged. Using independent technicians would address those concerns. With an independent technician in place, the respondents could be more open. The independent technician would essentially fulfill a narrow role, with no discretion as to relevance or scope.

With respect to storage, in Saramac, the master copies of electronic documents were sealed and stored with the Quebec Court. In AG v LSUC,[7] the Court ordered that the seized originals be stored at an independent secured system, which reduced the risk of inadvertent breach of the privilege. From this decision, the BCSC drew the conclusion that a Court should order the storage option that minimally impaired privilege and maintained confidence in the administration of justice. The parties agreed that the materials should be deleted from the CRA's computers, but there was a question as to who should do that. The BCSC concluded that CRA's CFA personnel were best positioned to ensure deletion, given their detailed knowledge of the CRA's systems. A forensic copy was to be placed with the BCSC and the original storage devices returned to the respondents.

Persons and Processes to Identify, Isolate and Store Privileged Materials

It is becoming routine for investigative agencies to have internal teams who are allegedly segregated and independent from the investigative team. These internal teams are routinely given the task of separating out the privileged materials from the mass of data that was seized. They are expected to keep the privileged material segregated so that the investigative team never has access to it. But the question that arises from this scenario is how much faith should be placed in these internal teams tasked with the critical role of protecting solicitor-client privilege. Should the courts require that a truly independent party be involved in the removal of the privileged materials before the investigative agency ever has access to the seized materials? In essence, the question is whether there is a better way to protect privileged documents seized by the state.

Conclusion

Applying the rigorous rules to protect privilege within the digital domain is clearly more challenging than in the physical world of paper files. The guidance from cases like Lavallee is open-ended. The key takeaway is that privilege is meant to be as close to an absolute right as possible and minimally impaired in any investigative action.

The impact of the decision on how seizure of electronic data may unfold in the future is an open question but, unless the technologies change, seizures may play out as follows: (1) if the disclosure of privileged information is required to identify privileged documents, then clearly the identification part of the document vetting process cannot be done by CFAs; (2) if keyword searching and isolating technologies are fallible, and could result in improper disclosure, then independent technicians will continue to be required to execute the document isolation exercise and (3) as long as (1) and/or (2) are true, then there would be no basis for investigative agencies to take copies of electronic documents during a search. Presumably, hard drives and servers would be sealed off and turned over to independent third parties for storage pending a plan to identify and isolate privileged documents.

In this particular case, the BCSC was rigorous, even though the documents were not found in a law office and, arguably, not in a space that was akin to a law office. The arguments and the outcome were determined by technological considerations. In light of the imperative pronounced by the SCC to protect solicitor client privilege to the fullest extent possible, it will be interesting to see if independent third parties will become the standard for removing privileged materials before they are turned over to the investigative agency. If technical schemes for identifying, isolating and storing potentially privileged materials were to improve or evolve, perhaps courts order will take a different approach in the future.