Table of Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Preface to the Fourth Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface to the Third Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Table of Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxix

1

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 2 3 4 5

2

UNDERSTANDING WHAT A ‘‘FORENSIC INVESTIGATOR” DOES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 UNDERSTANDING FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 UNDERSTANDING THE DOMESTIC RULES . . . . . . . . . . . . . . 5 THE FORENSIC INVESTIGATOR AS PART OF A FORENSIC TEAM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 RED FLAGS AND AMBER LIGHTS . . . . . . . . . . . . . . . . . . . . . 13

The Law of Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

MENS REA AND ACTUS REUS . . . . . . . . . . . . . . . . . . . . . . . . WHAT IS FRAUD? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD UNDER THE CRIMINAL CODE . . . . . . . . . . . . . . . . FRAUD UNDER THE COMPETITION ACT . . . . . . . . . . . . . . FRAUD AND THE CONSUMER PROTECTION ACT . . . . . . . FRAUD: A WORKING DEFINITION . . . . . . . . . . . . . . . . . . . . SIGNIFICANCE OF A FINDING OF FRAUD: FRAUS OMNIA CORRUMPIT. . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD AND THE CORPORATE VEIL . . . . . . . . . . . . . . . . . . ACTUAL AND CONSTRUCTIVE FRAUD . . . . . . . . . . . . . . . . CAVEAT EMPTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD, DECEIT AND NEGLIGENT MISREPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD AND NEGLIGENT MISREPRESENTATION . . . . . . . THE NUANCES OF FRAUDULENT MISREPRESENTATION/DECEIT . . . . . . . . . . . . . . . . . . . . . . . THE OPPRESSION REMEDY . . . . . . . . . . . . . . . . . . . . . . . . . . WHY FRAUD? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSTRUCTIVE FRAUD AND THE EMPLOYEE/ EXECUTIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSTRUCTIVE FRAUD AND INSURANCE. . . . . . . . . . . . . CONSTRUCTIVE FRAUD AND SECURITIES LEGISLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INSIDER TRADING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PARTICIPATING IN FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . PLEADING FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . WITH ALL OF THESE PROBLEMS, WHY ALLEGE FRAUD?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29 30 31 34 35 37 39 42 43 45 48 51 58 59 63 63 73 77 85 87 89 92

xii

Table of Contents 23 FRAUD AND PROPOSALS UNDER THE CCAA AND THE BIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 24 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

3

The Adjudication Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 1 2 3 4 5

6

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

WHY DO WE CARE ABOUT LEGAL PROCEDURE? . . . . . . . 97 CRIMINAL PROSECUTION FOR FRAUD. . . . . . . . . . . . . . . . 97 PRIVATE PROSECUTIONS AND PRE-ENQUETE HEARINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 CANADIAN CRIMINAL PROCEDURE . . . . . . . . . . . . . . . . . 101 CANADIAN CIVIL PROCEDURE . . . . . . . . . . . . . . . . . . . . . . 105 (a) Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 (b) A Civil Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 (c) Adjournments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 (d) Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 THE TRIAL PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 (a) Motions in Limine (Pre-trial Motions Affecting the Trial). . . 112 (b) The Exclusion of Witnesses. . . . . . . . . . . . . . . . . . . . . . . . . . 113 THE VOIR DIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 TESTIFYING AS AN EXPERT. . . . . . . . . . . . . . . . . . . . . . . . . 114 OPENING STATEMENTS AT TRIAL . . . . . . . . . . . . . . . . . . . 116 THE PLAINTIFF’S CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 THE DEFENDANT’S CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 THE CASE IN REPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 CLOSING ARGUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 THE EXAMINATION IN CHIEF . . . . . . . . . . . . . . . . . . . . . . . 118 CROSS-EXAMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 RE-DIRECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 GENERAL RULES FOR EXAMINATION, CROSS-EXAMINATION AND RE-DIRECT . . . . . . . . . . . . . . 118 THE TRIAL JUDGE’S DECISION . . . . . . . . . . . . . . . . . . . . . . 119 BURDEN OF PERSUASION AND BURDEN OF PRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 CIRCUMSTANTIAL EVIDENCE OF A GUILTY MIND/ INTENTIONAL DECEPTION. . . . . . . . . . . . . . . . . . . . . . . . . . 122 MODUS OPERANDI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 CONDUCT OF THE TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 SETTLEMENT PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 LAWYER/CLIENT PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . 124 THE CRIME FRAUD EXCEPTION TO PRIVILEGE . . . . . . . 124 INSURANCE POLICIES AS ADMISSIBLE EVIDENCE . . . . . 125 THE TRIAL RECORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 TIPS ON TESTIFYING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 AMERICAN CIVIL PROCEDURE . . . . . . . . . . . . . . . . . . . . . . 127 ENGLISH CIVIL PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . 128 WHAT DOES IT ALL MEAN? . . . . . . . . . . . . . . . . . . . . . . . . . 129

Table of Contents Appendix 3.1 The Forensic Investigator’s Testimony at Trial . . . Appendix 3.2 Impeachment Checklist . . . . . . . . . . . . . . . . . . . . . Appendix 3.3 Canadian Criminal Procedure vs. Civil Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 3.1 Launching a Private Prosecution . . . . . . . . . . . . . . Precedent 3.2 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

xiii 131 134 135 136 139

Pre-Judgment Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 1 2 3 4 5

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

24

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CRIMINAL PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . CIVIL PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTRODUCTION TO PRE-JUDGMENT REMEDIES IN CIVIL LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBTAINING FUNDING FOR THE FRAUD INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Family Law and Fraud Investigations. . . . . . . . . . . . . . . . . . (b) The Costs of Investigating Oppression . . . . . . . . . . . . . . . . . EX PARTE PROCEEDINGS AND FULL AND FAIR DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ANTON PILLER ORDER (‘‘SEARCH ORDER”) . . . . . . . . . . BANKERS’ TRUST ORDER (‘‘TRACING ORDER”) . . . . . . . MAREVA INJUNCTION (‘‘FREEZING ORDER”) . . . . . . . . . CANADA REVENUE AGENCY’S ‘‘NUCLEAR WEAPON” — THE JEOPARDY ORDER. . . . . . . . . . . . . . . . . FRAUD AND THE MAREVA/INTERIM INJUNCTION . . . . DISCOVERY COLLATERAL TO MAREVA AND OTHER FORMS OF INJUNCTIVE RELIEF . . . . . . . . . . . . . . . . . . . . . ABSCONDING DEBTORS ACT AND WRITS OF ATTACHMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BANK ACT FREEZE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONFIDENTIALITY ORDERS . . . . . . . . . . . . . . . . . . . . . . . . COURT-ORDERED RECEIVER. . . . . . . . . . . . . . . . . . . . . . . . INSPECTION ORDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTERLOCUTORY INJUNCTION V. INTERLOCUTORY MANDATORY ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A SPECIAL KIND OF FRAUD — ‘‘STEALING A MARCH” ON THE COURT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . REPLEVIN ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTERIM PRESERVATION OF PERSONAL PROPERTY . . . CAUTIONS AND CERTIFICATES OF PENDING LITIGATION (LIS PENDENS) . . . . . . . . . . . . . . . . . . . . . . . . . DISCOVERY OF NON-PARTIES BEFORE COMMENCING THE PROCEEDING . . . . . . . . . . . . . . . . . . . (a) Norwich Pharmacal Order . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Equitable Bill of Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . COMPARING THE PRE-JUDGMENT REMEDIES . . . . . . . .

141 141 142 145 146 146 150 150 154 160 161 170 176 180 181 184 185 187 189 190 193 194 196 197 199 199 202 205

xiv

Table of Contents

25 26 27 28

5

(a) Comparing the Details of the Motion or Application Itself . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Does the Remedy Require Proof of a ‘‘Serious Issue to Be Tried,” a ‘‘Prima Facie Case”or a ‘‘Strong Prima Facie Case”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) What Is Irreparable Harm and Do You Have to Prove Irreparable Harm? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) What Is the Balance of Convenience? . . . . . . . . . . . . . . . . . . EVIDENCE GATHERING ON MOTIONS OR APPLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CROSS-BORDER CONSIDERATIONS . . . . . . . . . . . . . . . . . . CROSS-BORDER COMPLICATIONS. . . . . . . . . . . . . . . . . . . . CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 4.1 Anton Piller Notice of Motion. . . . . . . . . . . . . . . . Precedent 4.2 Anton Piller Affidavit . . . . . . . . . . . . . . . . . . . . . . Precedent 4.3 Anton Piller Order. . . . . . . . . . . . . . . . . . . . . . . . . Precedent 4.4 John Doe Rolling Anton Piller Order . . . . . . . . . . Precedent 4.5 Mareva — Notice of Motion . . . . . . . . . . . . . . . . . Precedent 4.6 Mareva — Affidavit . . . . . . . . . . . . . . . . . . . . . . . Precedent 4.7 Affidavit in Support of Mareva Motion. . . . . . . . . Precedent 4.8 Mareva Injunction . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 4.9 Alternative Form from Bank of Montreal v. Misir. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 4.10 Canada Revenue Agency Jeopardy Order . . . . . . Precedent 4.11 Norwich Notice of Motion . . . . . . . . . . . . . . . . . Precedent 4.12 Norwich Order. . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 4.13 BIA and Courts of Justice Act — Court-Ordered Receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . .

206

207 208 209 209 214 216 219 222 225 231 236 243 246 253 260 263 266 268 271 273

Using the Litigation Process as Part of an Investigation . . . . . . . . 283 1 2

3

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE LEGAL STANDARD FOR INVESTIGATION . . . . . . . . (a) Peer Review Using Judicially Accepted Techniques . . . . . . . . (b) The Perils of Investigators Acting as Experts of Deceit . . . . . (c) Is ‘‘Tunnel Vision” Inevitable? . . . . . . . . . . . . . . . . . . . . . . . (d) Strategies for Avoiding Investigative Failures . . . . . . . . . . . . THE ROLE OF THE EXPERT WITNESS IN THE LITIGATION PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Investigators and Criminal Proceedings. . . . . . . . . . . . . . . . . (b) Combining Civil and Criminal Proceedings . . . . . . . . . . . . . . (c) The Effect of a Criminal Charge, Conviction or Acquittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Litigation as the Final Stage of Pre-Trial Investigation . . . . . (e) Who Should Be the Parties to the Litigation? . . . . . . . . . . . . (f) Using the Courts to Get Evidence from Non-Parties to the Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (g) Applications and Motions. . . . . . . . . . . . . . . . . . . . . . . . . . .

283 284 289 297 298 299 306 310 312 314 317 319 320 321

Table of Contents

4

5 6 7 8 9

10 11

12 13

14 15 16

6

(h) Experts and Motions for Summary Judgment . . . . . . . . . . . . (i) Taking Advantage of Affidavits on Motions and Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAKE ADVANTAGE OF THE DISCOVERY PROCESS. . . . . (a) Examine Affidavits of Documents with a Critical Eye. . . . . . (b) What Are the ‘‘Documents” an Investigator Is Entitled to Review? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Pre-Trial Inspections of Computers and Other Forms of Real and Personal Property . . . . . . . . . . . . . . . . . . . . . . . PRODUCTION OF HARD DRIVES . . . . . . . . . . . . . . . . . . . . . E-DISCOVERY COMPARED WITH COMPUTER FORENSICS IN A FRAUD CASE . . . . . . . . . . . . . . . . . . . . . . E-DISCOVERY COMPARED WITH COMPUTER FORENSICS AND DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE IT AUDIT PROCESS DURING E-DISCOVERY AND A FRAUD INVESTIGATION . . . . . . . . . . . . . . . . . . . . . EXAMINATIONS FOR DISCOVERY . . . . . . . . . . . . . . . . . . . (a) Bifurcation to Avoid Discovery. . . . . . . . . . . . . . . . . . . . . . . (b) Discovery of Relevant Facts in Privileged Documents. . . . . . (c) Using the Discovery Process to Find Witnesses. . . . . . . . . . . (d) Using the Discovery Process to Critically Evaluate Expert Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) What Is an Investigator’s Role in Challenging Opposing Experts? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHOULD INVESTIGATORS DESTROY THEIR OWN DRAFT REPORTS BEFORE DISCOVERY OR TRIAL? . . . . . SHOULD INVESTIGATORS ATTEND ON EXAMINATIONS FOR DISCOVERY AND TRIAL TO ASSIST LEGAL COUNSEL?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREVENTING AMBUSH AT TRIAL . . . . . . . . . . . . . . . . . . . . THE TRIAL AND THE ADMISSIBILITY OF EVIDENCE . . . (a) What Kind of Evidence Is an Investigator Looking For? . . . (b) Using the Suspect’s Discovery Evidence Against Him at Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Trial and Weighing the Evidence . . . . . . . . . . . . . . . . . . . . . (d) Is the Trial the Final Stage of the Investigation? . . . . . . . . . . INVESTIGATIONS AFTER TRIAL . . . . . . . . . . . . . . . . . . . . . CHANGES IN THE RULES OF COURT AS CATALYST FOR CHANGING THE INVESTIGATOR’S ROLE . . . . . . . . . CONCLUSION: LESSONS LEARNED . . . . . . . . . . . . . . . . . . . Appendix 5.1 E-Trial Checklist . . . . . . . . . . . . . . . . . . . . . . . . . .

xv 322 327 328 329 333 334 337 342 345 348 350 352 355 355 356 357 358

363 363 364 364 368 369 374 375 375 377 378

Remedies for Fraud Obtained at Trial . . . . . . . . . . . . . . . . . . . . . . 381 1 2 3

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A PRIMER ON DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD AND CONTRACT LAW. . . . . . . . . . . . . . . . . . . . . . . (a) Loss of Bargain Damages . . . . . . . . . . . . . . . . . . . . . . . . . . .

381 381 385 387

xvi

Table of Contents (b) (c) (d) (e)

4 5 6 7

8 9 10 11 12 13

14 15 16 17 18 19 20 21 22

Cost of Bargain Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . Gaps in the Evidence/Costs of Investigation . . . . . . . . . . . . . General and Aggravated Damages . . . . . . . . . . . . . . . . . . . . Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) The Mitigation Principle . . . . . . . . . . . . . . . . . . . . . . . . (ii) The Foreseeability Principle . . . . . . . . . . . . . . . . . . . . . . (iii) Betterment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (f) Special Rules for Damages for Fraud . . . . . . . . . . . . . . . . . . (g) Fraud and Affirming the Contract . . . . . . . . . . . . . . . . . . . . (h) Constructive Fraud and Damages . . . . . . . . . . . . . . . . . . . . . TAXATION AND DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . EQUITABLE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . RESCISSION AND FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD AND ‘‘EQUITABLE” REMEDIES . . . . . . . . . . . . . . . (a) Restitutionary Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Rescission of Contracts, Waivers of Tort and Restitutionary Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Accounting for Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Differential Profit or Comparative Profit Approach . . . . . . . (e) Differential/Direct Cost Approach . . . . . . . . . . . . . . . . . . . . (f) The Full/Absorption Cost Approach. . . . . . . . . . . . . . . . . . . REASONABLE ROYALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . BIFURCATION AND ‘‘ELECTING” BETWEEN DAMAGES AND DISGORGEMENT OF PROFITS . . . . . . . . DISGORGING PROFITS AND COMPENSATION ‘‘CLAWBACKS” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . IMPUTING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Family Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Income Tax Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) The Net Worth Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) Imputing Income for Shareholders . . . . . . . . . . . . . . . . . . . . WINDING UP ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A PROPOSED APPROACH TO QUANTIFYING PUNITIVE DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTEREST RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LEGAL COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ONTARIO’S RICO STATUTE. . . . . . . . . . . . . . . . . . . . . . . . . . INJUNCTIONS, MANDATORY ORDERS, SPECIFIC PERFORMANCE AND EQUITABLE DAMAGES . . . . . . . . . CONSTRUCTIVE AND RESULTING TRUSTS. . . . . . . . . . . . THE CROWN’S ‘‘POST-JUDGMENT” REMEDIES. . . . . . . . . OTHER DEFENDANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Fidelity Bonds and Other Insurance Policies . . . . . . . . . . . . . (b) Spouses, Banks, Bailees and Other Potential Defendants. . . .

389 392 394 396 396 396 397 397 406 407 409 411 414 416 418 420 423 429 430 431 432 435 438 440 441 442 442 442 443 444 447 450 452 460 467 468 472 473 484 488 488 490

Table of Contents

23 24 25 26 27 28 29

7

(i) Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (ii) Knowing Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . (iii) Knowing Receipt and Spouses . . . . . . . . . . . . . . . . . . . . FRAUD AND AUDITOR’S NEGLIGENCE. . . . . . . . . . . . . . . FRAUD AND LAWYER’S NEGLIGENCE, KNOWING ASSISTANCE OR KNOWING RECEIPT . . . . . . . . . . . . . . . . . JOINT LIABILITY AND CONSPIRACY . . . . . . . . . . . . . . . . . VICARIOUS LIABILITY FOR FRAUDS BY EMPLOYEES AND PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUD AND THE CHOICE OF REMEDIES . . . . . . . . . . . . . SOLIDARY LIABILITY, CLAIMS BETWEEN FRAUDSTERS AND THE ROLE OF THE TRUSTEE IN BANKRUPTCY . . . CROSS-BORDER CONSIDERATIONS . . . . . . . . . . . . . . . . . . Appendix 6.1 ‘‘Fraud Overcomes All”: Claiming Loss of Profits in a Fraud Case . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 6.2 Piercing the Corporate Veil . . . . . . . . . . . . . . . . . . Precedent 6.1 Statement of Claim . . . . . . . . . . . . . . . . . . . . . . . .

xvii 490 507 509 511 513 514 517 518 519 523 526 531 535

Insolvency Fraud, Fraudulent Conveyances and Tracing . . . . . . . . 551 1 2 3

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INSOLVENCY FRAUD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FRAUDULENT CONVEYANCES AND PREFERENCES . . . (a) Fraudulent Conveyances . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Fraudulent Conveyances and Matrimonial Litigation . . . . . . (c) Assignments and Preferences. . . . . . . . . . . . . . . . . . . . . . . . . 4 PREFERENCES UNDER CANADA’S BANKRUPTCY AND INSOLVENCY ACT (‘‘BIA”) . . . . . . . . . . . . . . . . . . . . . . (a) Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) What Are the Differences Between the Two Parts of Section 95? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) What Does Arm’s Length Mean? . . . . . . . . . . . . . . . . . . . . . (d) When Does the Three Months/12 Months Start? . . . . . . . . . (e) Does Fraud Have to Be Proven?. . . . . . . . . . . . . . . . . . . . . . (f) Evidence of Pressure Versus a Diligent Creditor Forcing a Sound Business Decision. . . . . . . . . . . . . . . . . . . . (g) The Role of the Trustee in Bankruptcy . . . . . . . . . . . . . . . . . (h) The Preference Rules Summarized . . . . . . . . . . . . . . . . . . . . 5 TRANSFERS AT UNDERVALUE UNDER THE BIA . . . . . . 6 FRAUD AND BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . 7 THE PROBLEM OF THE PHOENIX COMPANY . . . . . . . . . . 8 INTRODUCTION TO TRACING . . . . . . . . . . . . . . . . . . . . . . . 9 WHY TRACING?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 TRACING IN A NUTSHELL . . . . . . . . . . . . . . . . . . . . . . . . . . 11 FOLLOWING AN ASSET AND THE FORENSIC INVESTIGATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 FRAUD AND THE LAW OF TRACING . . . . . . . . . . . . . . . . .

551 551 553 553 557 558 564 564 565 565 566 566 568 568 569 571 575 578 582 582 583 586 586

xviii

Table of Contents 13 SPECIAL TRACING RULES TO ASSIST AGAINST FRAUDSTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Problems with Following an Asset — Claimant Does Not Have, and Cannot Acquire, Good Title . . . . . . . . . . . . . (b) Problems with Following an Asset — The Nemo Dat Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Claiming Against Substitute Assets . . . . . . . . . . . . . . . . . . . . (d) The Mortgagee as Bona Fide Purchaser for Value Without Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) Tracing Money Used to Discharge the Fraudster’s Debt (and Subrogation and Backtracing). . . . . . . . . . . . . . . . . . . . (f) The Replacement Exception to Tracing. . . . . . . . . . . . . . . . . (g) Interim Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (h) Applying the Principles — The First Island Financial Services Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) Competing Victims’ Claims. . . . . . . . . . . . . . . . . . . . . . . . . . (i) A Hypothetical Example of Equitable Tracing — Claiming by Substitution . . . . . . . . . . . . . . . . . . . . . . . . (ii) The Change of Position Defence . . . . . . . . . . . . . . . . . . (j) Summary of Claiming Rules — Following and Tracing into Substitute Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (k) Practical Considerations for Claiming . . . . . . . . . . . . . . . . . . 14 TRACING AND INSOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . 15 ‘‘CLAWBACK” TRACING CLAIMS . . . . . . . . . . . . . . . . . . . . (a) Pyramid and Ponzi Schemes . . . . . . . . . . . . . . . . . . . . . . . . . (b) The American Approach to Ponzi Schemes Compared to the Canadian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Conclusion: The Tracing Checklist . . . . . . . . . . . . . . . . . . . . 16 RETRIEVING GOOD TITLE: NEMO DAT, TITLE FRAUD AND MORTGAGE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Nemo Dat and Land Titles Legislation . . . . . . . . . . . . . . . . . 17 THE BULK SALES ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 7.1 Methods of Tracing Using an Example . . . . . . . . . Appendix 7.2 A Typical Case Involving Pro Rata Sharing of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 7.3 Tracing and the Banking System . . . . . . . . . . . . . . Appendix 7.4 Bankruptcy Duties and Offences . . . . . . . . . . . . . .

8

589 589 591 593 596 597 599 600 606 614 618 620 620 622 623 623 625 630 637 646 650 663 664 670 675 690

Post-Judgment Remedies for Fraud. . . . . . . . . . . . . . . . . . . . . . . . . 693 1

OTHER EXECUTION PROCEEDINGS . . . . . . . . . . . . . . . . . . (a) Seizure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Garnishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Examination in Aid of Execution . . . . . . . . . . . . . . . . . . . . . (d) Contempt of Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) Equitable Receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (f) Post-Judgment Mareva . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (g) Seizing or Garnishing a Professional’s Trust Account . . . . . .

693 693 693 695 696 698 699 700

Table of Contents (h) Bankruptcy Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) The Fraudster, Exempt Assets and ‘‘Unfair” Discharge . . . . (j) Examinations by the Trustee in Bankruptcy . . . . . . . . . . . . . (k) Contempt on an Examination in Aid of Execution . . . . . . . . (l) Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 8.1 Notice of Motion. . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 8.2 Affidavit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 8.3 Order for an Equitable Receiver from Daniels v. Daniels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

xix 702 705 705 706 706 708 710 712

Fraud and the Examination in Aid of Execution . . . . . . . . . . . . . . 715 1 2 3 4 5 6 7 8

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . QUESTIONS ASKED ON EXAMINATIONS IN AID OF EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE FORENSIC USE OF NET WORTH ANALYSIS . . . . . . . EXAMINATION OF THIRD PARTIES . . . . . . . . . . . . . . . . . . CONTEMPT AS A REMEDY FOR FRAUDULENT CONVEYANCES AND BREACHES OF COURT ORDERS . . FRAUD AND RELEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPORTIONMENT OF LIABILITY AND RELEASES . . . . . . RES JUDICATA AND SUBSEQUENT LAWSUITS. . . . . . . . . Appendix 9.1 Questions for Examination of Personal Debtor . . . Appendix 9.2 Witness Statements . . . . . . . . . . . . . . . . . . . . . . . . Precedent 9.1 Minutes of Settlement . . . . . . . . . . . . . . . . . . . . . . Precedent 9.2 Full and Final Release . . . . . . . . . . . . . . . . . . . . . . Precedent 9.3 Notice of Examination in Aid of Execution . . . . . .

715 718 719 721 723 724 728 730 734 744 747 765 767

10 Expert Evidence in the Litigation Process. . . . . . . . . . . . . . . . . . . . 769 1

2

3 4 5

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Qualifying an Expert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Relevance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Necessity in Assisting the Trier of Fact . . . . . . . . . . . . . . . . . (e) Scope of Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . (f) Who Can Be an Expert? . . . . . . . . . . . . . . . . . . . . . . . . . . . . (g) Objectivity and the Expert Witness . . . . . . . . . . . . . . . . . . . . (i) Contingency Fees and Objectivity . . . . . . . . . . . . . . . . . (h) How Experts Get into Trouble . . . . . . . . . . . . . . . . . . . . . . . THE FORENSIC ACCOUNTANT AND PRIOR NEGATIVE JUDICIAL OPINION . . . . . . . . . . . . . . . . . . . . . . (a) A Primer on the Law Regarding Cross-Examination. . . . . . . (b) The Admissibility of Negative Judicial Comments. . . . . . . . . GOOD TACTICS MAKE GOOD EXPERTS — MOTIONS IN LIMINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PRIVILEGE AND THE EXPERT’S REPORT . . . . . . . . . . . . . ACCOUNTANTS AS PROFESSIONALS AND PROPERTY: THE NEED FOR FORENSIC STANDARDS . . . . . . . . . . . . . .

769 770 771 771 772 772 774 777 781 786 790 790 792 793 797 800

xx

Table of Contents 6

7

THE PROCEDURE FOR INTRODUCING EXPERT EVIDENCE AT TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Expert’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Expert Witness’s Curriculum Vitae . . . . . . . . . . . . . . . . . . . . (c) Expert Evidence and the Fraud Engagement. . . . . . . . . . . . . WHAT’S NEW? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Experts Meet and Confer under the New Rules . . . . . . . . . .

806 806 806 807 810 812

11 Fraud, the Criminal Code and Planning the Fraud Engagement . . 815 1 2 3 4 5 6 7 8 9 10 11

12 13 14

15 16

INTRODUCTION: CRIMINAL AND CIVIL FRAUD. . . . . . . CRIMINAL FRAUD IN THE UNITED STATES AND THE UNITED KINGDOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . CRIMINAL CODE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . ATTEMPTED FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AIDING AND ABETTING A FRAUD. . . . . . . . . . . . . . . . . . . FRAUD AND CRIMINAL ORGANIZATIONS IN CANADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SENTENCING FOR FRAUD IN CANADA . . . . . . . . . . . . . . COMPARING AMERICAN AND CANADIAN APPROACHES TO CRIMINAL FRAUD . . . . . . . . . . . . . . . . . CONFLICTS OF INTEREST AND BRIBERY OF DOMESTIC AND FOREIGN OFFICIALS . . . . . . . . . . . . . . . . FORGERY AND FRAUD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSTRUCTIVE FRAUD UNDER CIVIL AND PENAL STATUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Full Disclosure and Securities Legislation . . . . . . . . . . . . . . . (b) Full Disclosure and the Franchisee . . . . . . . . . . . . . . . . . . . . A COMPARISON OF CRIMINAL AND CIVIL FRAUD GENERALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RECOVERY OF ASSETS USING THE CRIMINAL LAW . . . THE CRIMINAL LAW AS A THREAT . . . . . . . . . . . . . . . . . . (a) Using the Criminal Code to Attack Investigators (‘‘Pretexting”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Extortion and Compounding . . . . . . . . . . . . . . . . . . . . . . . . (c) Breach of Legislation and Civil Remedies (Credit Card Checks and Invasion of Privacy) . . . . . . . . . . . THE CRIMINAL LAW AS AN OPPORTUNITY . . . . . . . . . . . EVIDENCE GATHERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) The Criminal Code and Regulatory Offences . . . . . . . . . . . . (b) Using Testimony in Regulatory Proceedings in Criminal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Money Laundering Legislation . . . . . . . . . . . . . . . . . . . . . . . (d) The American Approach to Witness Cooperation . . . . . . . . . (i) Blow It Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (ii) Rain Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) The Identification Doctrine. . . . . . . . . . . . . . . . . . . . . . . . . .

815 816 819 820 822 825 827 831 837 858 861 861 868 874 875 876 876 878 879 880 882 882 882 884 887 888 888 889

Table of Contents

17

18

19

20 21 22

23 24

(f) How Corporate Regulatory and Criminal Liability Works in Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (g) Aiding and Abetting Outside the Criminal Code . . . . . . . . . . (h) How Does Alleging a Conspiracy Help? . . . . . . . . . . . . . . . . CIVIL LITIGATION AS AN INVESTIGATORY TOOL . . . . . (a) No Stay of Civil Case Pending Completion of Criminal Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) The Ambit of the ‘‘Implied Undertaking” Rule. . . . . . . . . . . COMPENSATING THE VICTIM OF FRAUD . . . . . . . . . . . . . (a) Restitution, Forfeitures and Recovering Property for the Victims of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) How Does One Get Disclosure of the Crown Brief? . . . . . . . (c) Res Judicata and the Effect of a Prior Criminal Conviction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LEVELLING THE PLAYING FIELD. . . . . . . . . . . . . . . . . . . . (a) Indemnification of the Fraudster by His Employer of the Costs of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . MISUSE OF THE CRIMINAL LAW . . . . . . . . . . . . . . . . . . . . PLANNING THE FRAUD INVESTIGATION . . . . . . . . . . . . . THE FORENSIC METHOD OF INVESTIGATION . . . . . . . . . (a) Why Sufficient?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Why Appropriate? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Why Relevant? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Why Reliable?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) Why Professional?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (f) Why Unbiased?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A PROFESSIONAL INVESTIGATION. . . . . . . . . . . . . . . . . . . CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 11.1 Interviewing the Suspect and Other Witnesses . . . Appendix 11.2 Criminal Fraud and Similar Offences . . . . . . . . . . Appendix 11.3 Case of Fraud and Similar Offences. . . . . . . . . . . Appendix 11.4 Police Checklist — Information the Police Need for Filing a Complaint of Fraud . . . . . . . . . . . . . . . . . Appendix 11.5 Victim Impact Statements . . . . . . . . . . . . . . . . . . Precedent 11.1 Application for a Management Order . . . . . . . . . Precedent 11.2 Management Order . . . . . . . . . . . . . . . . . . . . . . . Precedent 11.3 Application for a Restraint Order — Bank Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 11.4 General Warrant to Search under Section 487.01 of the Criminal Code . . . . . . . . . . . . . . . . . . . Precedent 11.5 Information to Obtain a Production Order . . . . . Precedent 11.6 Production Order. . . . . . . . . . . . . . . . . . . . . . . . . Precedent 11.7 Production Order for Financial or Commercial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . Precedent 11.8 Telewarrant to Search . . . . . . . . . . . . . . . . . . . . . Precedent 11.9 Endorsement of the Warrant . . . . . . . . . . . . . . . . Precedent 11.10 Relinquishment of Interest . . . . . . . . . . . . . . . . .

xxi

893 896 897 898 898 899 900 900 907 909 912 912 914 916 917 918 918 918 918 918 918 919 922 923 926 931 947 948 949 951 952 954 956 958 961 963 964 965

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Table of Contents Precedent Precedent Precedent Precedent Precedent

11.11 11.12 11.13 11.14 11.15

Feeney Warrant to Enter Dwelling House . . . . . Information to Obtain Feeney Warrant . . . . . . . DAGG Notice of Motion . . . . . . . . . . . . . . . . . Affidavit in Support of DAGG Motion . . . . . . . Order on DAGG Motion . . . . . . . . . . . . . . . . . .

966 970 974 977 980

12 Going on the Offensive When a Fraudster Claims Privilege . . . . . 983 1

2 3

4

5

6

INTRODUCTION — HOW PRIVILEGE AFFECTS YOUR PRACTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 983 (a) Discovery of Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 987 (b) Types of Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989 SETTLEMENT PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 989 UNDERSTANDING LEGAL PROFESSIONAL PRIVILEGE (LPP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991 (a) The Reasons for the Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . 991 (b) The Limits of LPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993 (c) A Legal Advisor for the Purpose of LPP . . . . . . . . . . . . . . . 993 (d) The Ambit of LPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 994 (e) Legal Advice and the Crime-Fraud Exception to LPP. . . . . . 996 (f) Intentional Wrongdoing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 998 CONFIDENTIAL COMMUNICATIONS . . . . . . . . . . . . . . . . . 1001 (a) Confidentiality and LPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001 (b) What Does Confidential Mean? . . . . . . . . . . . . . . . . . . . . . . 1002 (c) Who Is the Client? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002 (i) Common Interest Privilege, Corporate Groups and Joint Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002 (ii) Receivers and Trustees in Bankruptcy . . . . . . . . . . . . . . 1007 (d) Confidentiality and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 1008 (e) Waiver and Forfeiture of LPP . . . . . . . . . . . . . . . . . . . . . . . 1009 THE LPP RULES IN BRIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . 1013 (a) Litigation Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1015 (b) The Implied Undertaking Rule and Privilege . . . . . . . . . . . . 1024 (c) The Legal Professional Privilege Checklist . . . . . . . . . . . . . . 1027 (d) The Importance of Suing Personally . . . . . . . . . . . . . . . . . . . 1028 (e) Forensic Investigation and Privilege . . . . . . . . . . . . . . . . . . . 1031 (f) Putting LPP to Work — A Typical Example . . . . . . . . . . . . 1033 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1038

13 Public Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041 1 2 3 4 5 6 7

PUBLIC INQUIRIES AND FRAUD INVESTIGATIONS . . . . 1041 WHAT HAT ARE YOU WEARING? . . . . . . . . . . . . . . . . . . . . 1043 TAX EVASION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1043 IS THIS AN AUDIT OR A FRAUD INVESTIGATION? . . . . . 1047 CHARTER RIGHTS AND INTERROGATING A SUSPECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1052 THE CHOICE OF REGULATORY OR CRIMINAL . . . . . . . . 1053 PROSECUTION FOR TAX EVASION . . . . . . . . . . . . . . . . . . . 1058

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(a) The Interaction of Tax Evasion and No-Fault Automobile Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1059 8 CROSS-BORDER INVESTIGATIONS . . . . . . . . . . . . . . . . . . . 1061 9 A CASE STUDY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1064 (a) Step 1: Look at the Statutory Context . . . . . . . . . . . . . . . . . 1066 (b) Step 2: From Compliance to Prosecution (the Jarvis Factors) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1068 (c) Step 3: Proceeding in Accordance with Charter Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1069 10 ACTING AS A CROWN AGENT . . . . . . . . . . . . . . . . . . . . . . . 1070 11 PERSONS IN AUTHORITY AND THE CONFESSIONS RULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1071 12 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1074 Precedent 13.1 Charter Warnings by Regulatory Investigators . . . 1075

14 Fraud Investigations and the Rules of Evidence . . . . . . . . . . . . . . 1077 1 2

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1077 A PRIMER ON THE RULES OF EVIDENCE . . . . . . . . . . . . . 1078 (a) The Hearsay Rule Examined. . . . . . . . . . . . . . . . . . . . . . . . . 1081 (b) Evidence and Credibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1083 THE REVERSE ONUS AND ADVERSE INFERENCES . . . . . 1085 CIRCUMSTANTIAL EVIDENCE . . . . . . . . . . . . . . . . . . . . . . . 1086 PROVING FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1089 THE ONUS AND STANDARD OF PROOF FOR FRAUD. . . 1090 USE OF EVIDENCE FROM CIVIL PROCEDURE IN CRIMINAL TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1094 THE REMORSEFUL FRAUDSTER . . . . . . . . . . . . . . . . . . . . . 1095 IMPROPERLY PROCURED EVIDENCE . . . . . . . . . . . . . . . . 1097 PIPEDA AND THE ADMISSIBILITY OF EVIDENCE . . . . . . 1100 HEARSAY AND AFFIDAVIT EVIDENCE . . . . . . . . . . . . . . . 1102 THE CO-CONSPIRATOR’S EXCEPTION TO THE HEARSAY RULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103 HEARSAY AND THE BUSINESS RECORDS RULE . . . . . . . 1104 REAL AND DEMONSTRATIVE EVIDENCE . . . . . . . . . . . . . 1105 THE FORMS OF AFFIDAVITS AND EXHIBITS . . . . . . . . . . 1106 YOU CAN HANDLE THE TRUTH . . . . . . . . . . . . . . . . . . . . . 1106 THE VOLUMINOUS RECORDS RULE (SPREADSHEETS AND OTHER SUMMARIES) . . . . . . . . . . . . . . . . . . . . . . . . . . 1107 SIMILAR FACT EVIDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . 1109 IS A WITNESS’S FAILURE TO SPEAK ‘‘EVIDENCE”? . . . . . 1110 THE ‘‘DOCUMENTS IN POSSESSION” DOCTRINE . . . . . . . 1111 ADMITTING PRIOR CONSISTENT STATEMENTS . . . . . . . 1113 DOCUMENT PRESERVATION . . . . . . . . . . . . . . . . . . . . . . . . 1113 THE MYTH OF THE CHAIN OF CUSTODY . . . . . . . . . . . . . 1119 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1120

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15 The Day-to-Day Practice of the Forensic Investigator . . . . . . . . . 1121 1 2 3 4 5

6

THE INITIAL CLIENT INTERVIEW . . . . . . . . . . . . . . . . . . . . 1121 NOTES OF THE INITIAL MEETING . . . . . . . . . . . . . . . . . . . 1123 USING THE CLIENT TO OBTAIN INFORMATION . . . . . . . 1124 THE ENGAGEMENT LETTER . . . . . . . . . . . . . . . . . . . . . . . . 1125 ENGAGEMENT ACCEPTANCE CONSIDERATIONS . . . . . . 1126 (a) Quality and Competence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1126 (b) Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1127 (c) Assistance Throughout the Litigation Process . . . . . . . . . . . . 1127 (d) Independence and Objectivity . . . . . . . . . . . . . . . . . . . . . . . . 1127 (e) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1127 (f) Timing and Staffing Considerations . . . . . . . . . . . . . . . . . . . 1128 PERFORMANCE OF THE ENGAGEMENT . . . . . . . . . . . . . . 1128 Appendix 15.1 Conflict of Interest Checklist . . . . . . . . . . . . . . . . 1131 Precedent 15.1 Engagement Letter. . . . . . . . . . . . . . . . . . . . . . . . 1133

16 Construction Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1139 1

2 3 4

5

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1139 (a) The Construction Pyramid . . . . . . . . . . . . . . . . . . . . . . . . . . 1139 (b) The Procurement Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 1140 MANAGEMENT FRAUD IN THE PROCUREMENT PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1141 MANAGEMENT AND EMPLOYEE FRAUD . . . . . . . . . . . . . 1143 THE VARIOUS STAGES OF FRAUD DURING A PROJECT LIFE CYCLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1144 (a) Red Flags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1145 A FRAUD AUDIT OF THE BIDDING PROCESS. . . . . . . . . . 1146 (a) The Bid Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1146 (b) The Contract B Administration Stage . . . . . . . . . . . . . . . . . . 1149 (c) Closing Out the Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1151 Appendix 16.1 Construction Fraud Data Analytics . . . . . . . . . . . 1155 Precedent 16.1 Employee Conflict of Interest Policy . . . . . . . . . . 1157 Precedent 16.2 Supplier Code of Conduct for Hospital . . . . . . . . 1163

17 The Dark Arts: Defending Fraud Claims . . . . . . . . . . . . . . . . . . . 1167 1 2

3

THE ‘‘SYSTEM” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1167 BLAME THE VICTIM — AFFIRMATION OF THE CONTRACT AFTER THE FRAUD IS REVEALED . . . . . . . . 1168 (a) Laches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1169 (b) Limitation Periods and Fraud. . . . . . . . . . . . . . . . . . . . . . . . 1169 (c) Blame Others for Not Catching Him . . . . . . . . . . . . . . . . . . 1171 (d) The Wrong Forum for Hearing the Dispute . . . . . . . . . . . . . 1173 (e) Foreign Judgment Was Procured by Fraud. . . . . . . . . . . . . . 1178 (f) Sue the Expert Witness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1179 (g) The Claim Is Being Asserted for an Improper Purpose . . . . . 1185 STRIKING THE PLEADING/MAKING A MOTION FOR PARTICULARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1186

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(a) Motions for Security for Costs . . . . . . . . . . . . . . . . . . . . . . . 1189 (b) The Discovery Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1189 (c) Production Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1190 4 DISCOVERIES AND UNDERTAKINGS/REFUSAL MOTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1193 5 PRE-TRIAL AS A DEVICE FOR DELAY . . . . . . . . . . . . . . . . 1193 6 ENLARGING THE INVESTIGATION BEYOND THE SCOPE OF EXPERTISE OF THE VICTIM’S EXPERT . . . . . . 1195 7 USING THE SUSPECT AS AN EXPERT WITNESS . . . . . . . . 1196 8 CHALLENGING THE PLAINTIFF’S CLAIM TO PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1196 9 RELY ON THE PRESUMPTION OF REGULARITY . . . . . . . 1198 10 AN INVESTIGATOR’S OWN ‘‘BLACK OPS” . . . . . . . . . . . . . 1199 11 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1200 Appendix 17.1 The Black Ops Top 20 Checklist . . . . . . . . . . . . . 1201

18 The Forensic Investigation as Science . . . . . . . . . . . . . . . . . . . . . . 1219 1 2

3 4

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1219 A SYSTEMATIC APPROACH TO ENGAGEMENT . . . . . . . . 1222 (a) Pre-Engagement and Planning Procedure Phase . . . . . . . . . . 1222 (b) Freeze and Formulate Phase . . . . . . . . . . . . . . . . . . . . . . . . . 1222 (c) Investigation Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1223 (d) Reporting and Wrap-Up Phase . . . . . . . . . . . . . . . . . . . . . . . 1223 A SYSTEMATIC APPROACH TO PROOF . . . . . . . . . . . . . . . 1223 DEBENHAM’S DOZEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1235

19 A Canadian Investigator’s Professional Obligations (and Liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1239 1 2

3 4 5 6 7

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1239 WHAT DOES BEING A PROFESSIONAL MEAN? . . . . . . . . . 1239 (a) A Systematic Approach to Advising a Client in a Fraud Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1240 (b) The Common Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1240 (c) The Use and Misuse of Expected Value . . . . . . . . . . . . . . . . 1241 (d) A New Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1241 (e) Decision Making under Uncertainty . . . . . . . . . . . . . . . . . . . 1245 (f) Witness Credibility Analysis — How You Get the Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1250 (g) Are Findings of Credibility Made Independently for Each Issue? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1253 HOW DOES THE LAW DEFINE A PROFESSION? . . . . . . . . 1256 WHAT ARE THE IMPLICATIONS OF BEING A PROFESSIONAL? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1257 A FIDUCIARY DUTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1257 A PROFESSIONAL’S DUTY OF CARE . . . . . . . . . . . . . . . . . . 1259 THE ROLE OF STANDARDS AND CODES OF ETHICAL CONDUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1262

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Table of Contents 8 9 10 11 12 13 14 15 16

17 18 19 20 21 22

ARE INVESTIGATORS PROFESSIONALS? . . . . . . . . . . . . . . 1263 THE NEW PROFESSIONAL LIABILITY OF INVESTIGATORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1265 THE BIRTH OF THE TORT OF NEGLIGENT INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1266 THE DEATH OF MALICIOUS PROSECUTION . . . . . . . . . . . 1273 APPLYING THE PUBLIC INVESTIGATOR’S STANDARD OF CARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1278 THE STANDARD OF CARE AND THE STAGES OF THE INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1280 CAUSATION AND THE POLICE–PROSECUTION CONTINUUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1281 UNDER WHAT CIRCUMSTANCES WILL CLAIMS BE SUCCESSFUL?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1281 HOW ‘‘SCIENTISTIC” APPROACHES TO LIE DETECTION CAN GET AN INVESTIGATOR INTO TROUBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1283 (a) Statement Validity Analysis, Criteria-Based Content Analysis and Forensic Linguistics . . . . . . . . . . . . . . . . . . . . . 1288 (b) Polygraph Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1295 (c) Neuro-Linguistic Programming (‘‘NLP”) and Kinesic Interviewing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1298 (d) Other Behaviour: Red Flags — ‘‘Experience” and ‘‘Profiling” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1301 (i) My Experience Tells Me Who Is Lying . . . . . . . . . . . . . 1301 (ii) Certain ‘‘Kinds” of People Have a Propensity to Lie or Commit Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . 1302 (e) The Use of Inadmissible or Fabricated Evidence. . . . . . . . . . 1302 (f) The Dangers of Using Inadmissible Evidence in Your Forensic Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1303 (g) Obtaining Confessions: Interviewing and Interrogation Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1308 (i) The Reid Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1309 (ii) The Cognitive Interview. . . . . . . . . . . . . . . . . . . . . . . . . 1313 (iii) The PEACE Method . . . . . . . . . . . . . . . . . . . . . . . . . . . 1314 (iv) Motivational Interviewing . . . . . . . . . . . . . . . . . . . . . . . 1315 (h) Bias in the Lie Detection Process . . . . . . . . . . . . . . . . . . . . . 1315 WHO CAN SUE FOR PROFESSIONAL MALPRACTICE? . . . 1323 NEGLIGENT INVESTIGATION AND THE PRIVATE INVESTIGATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1325 SUING INSURANCE INVESTIGATORS PERSONALLY FOR BAD FAITH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1329 NEGLIGENT INVESTIGATION AND CHARTER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1331 DAMAGE AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1334 SHOULD INVESTIGATORS SUPPORT ‘‘THE CANADIAN TORT”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1335

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23 WHAT THEN IS TO BE DONE?. . . . . . . . . . . . . . . . . . . . . . . . 1336 24 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1341

20 Insurance Fraud and Arson Investigations. . . . . . . . . . . . . . . . . . . 1345 1 2 3

4

INTRODUCTION: WHAT IS INSURANCE? . . . . . . . . . . . . . . 1345 WHAT IS INSURANCE FRAUD? . . . . . . . . . . . . . . . . . . . . . . 1350 ARSON FOR PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1351 (a) Investigating Arson. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1351 (b) The ‘‘Usual Suspects” for Arson for Profit . . . . . . . . . . . . . . 1355 (c) The Types of Arson Experts . . . . . . . . . . . . . . . . . . . . . . . . . 1356 (d) Experts and Arson for Profit . . . . . . . . . . . . . . . . . . . . . . . . 1357 (i) The Fire Was of Incendiary Origin . . . . . . . . . . . . . . . . 1360 (ii) The Plaintiff Had Sufficient Motive for Setting the Fire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1365 (iii) The Plaintiff Had the Opportunity to Set the Fire . . . . . 1368 (iv) Bad Faith and Arson for Profit Claims . . . . . . . . . . . . . 1369 (e) An Arson Investigation Gone Awry . . . . . . . . . . . . . . . . . . . 1372 (f) The Need for Transparency . . . . . . . . . . . . . . . . . . . . . . . . . 1376 (i) What Is ‘‘Civil” Fraud? . . . . . . . . . . . . . . . . . . . . . . . . . 1377 (ii) Arson as Our Exemplar of Civil Fraud . . . . . . . . . . . . . 1379 (iii) Using a Model Involving Situational Red Flags to Determine Whether Arson Took Place . . . . . . . . . . . 1382 (iv) Identifying the Arsonist: Behavioural Red Flags . . . . . . 1385 (v) Ranking the Suspects: Behavioural Red Flags . . . . . . . . 1386 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1388 Appendix 20.1 Group Ranking and Inconsistent Rankings . . . . . 1390 Appendix 20.2 Find Arson Before You Look for an Arsonist . . . 1393 Appendix 20.3 Applying and Ranking Inculpatory and Exculpatory Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1394 Appendix 20.4 A Verification Method . . . . . . . . . . . . . . . . . . . . . 1396

21 Big Data Analytics, Big Financial Institutions and Big Money Fraud Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1399 1 2 3 4

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1399 WHAT IS ‘‘BIG DATA ANALYTICS”? . . . . . . . . . . . . . . . . . . 1400 BIG DATA ANALYTICS — HOW DOES IT WORK? . . . . . . . 1404 BIG DATA ANALYTICS AND FRAUD DETECTION — WHAT IS THE ATTRACTION? . . . . . . . . . . . . . . . . . . . . . . . . 1405 5 BIG DATA ANALYTICS AND FINANCIAL INSTITUTIONS — OUR EXEMPLAR . . . . . . . . . . . . . . . . . . . 1406 6 LOOKING AT CREDIT CARDS . . . . . . . . . . . . . . . . . . . . . . . 1407 7 BANKS PROTECT YOU — AND OTHERS. . . . . . . . . . . . . . . 1411 8 WHAT ABOUT THE CUSTOMER’S RIGHT TO PRIVACY? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1419 9 WHAT DOES IT MEAN FOR FINANCIAL INSTITUTIONS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1419 10 WHAT IS THE C-SUITE TO DO? . . . . . . . . . . . . . . . . . . . . . . . 1420

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(a) Identify Your Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . 1420 (b) Understand the Information and Liability Flows within Your Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1421 (c) Identify the Risks of Loss and Moral Hazards in Your Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1423 (d) Understand the Limitations of BDA . . . . . . . . . . . . . . . . . . . 1424 (i) Complexity Results in Alchemy . . . . . . . . . . . . . . . . . . . 1424 (ii) BDA Is Entirely Left Brained . . . . . . . . . . . . . . . . . . . . 1425 (iii) The C-Suite Must Control the Golem . . . . . . . . . . . . . . 1426 (iv) Silo Failure and the C-Suite. . . . . . . . . . . . . . . . . . . . . . 1427 11 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1427 Appendix 21.1 FINTRAC’s Red Flags of Suspicious Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1428

22 Social Media Investigations and the Law of Privacy . . . . . . . . . . 1435 1 2 3

SOCIAL MEDIA INVESTIGATIONS . . . . . . . . . . . . . . . . . . . . 1435 WHERE IS ‘‘SOCIAL MEDIA” EVIDENCE? . . . . . . . . . . . . . . 1435 WHICH WEBSITES DO I LOOK AT TO GET WHAT I NEED?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1438 4 SOCIAL MEDIA MONITORING TOOLS . . . . . . . . . . . . . . . . 1439 5 PRIVACY LEGISLATION IN CANADA . . . . . . . . . . . . . . . . . 1440 6 THE CRIMINAL LAW, THE REASONABLE EXPECTATION OF PRIVACY, AND THE NEW TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1444 7 PRIVACY, THE WORKPLACE COMPUTER AND INTERNET USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1448 8 PRIVACY, SOCIAL MEDIA AND CIVIL LITIGATION. . . . . 1450 9 PRIVACY, LAWYERS AND SOCIAL MEDIA INVESTIGATORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1453 (a) Confidentiality of Information . . . . . . . . . . . . . . . . . . . . . . . 1453 (b) Deceptive or Misleading Conduct/Truthfulness in Statements to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1454 (c) Prohibition on Contacting Party Represented by Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1455 (d) Pretexting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1456 10 CONCLUSION — SO WHERE DO WE STAND? . . . . . . . . . . 1456 Appendix 22.1 Metadata and E-mails . . . . . . . . . . . . . . . . . . . . . 1457 Appendix 22.2 The New Tort of Invasion of Privacy. . . . . . . . . . 1463 Precedent 22.1 Social Media Preservation Letter — Opposing Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1482 Precedent 22.2 Social Media Preservation Letter — Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1484 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1487