1 2 3 4 TORONTO COMPUTER LEASING INQUIRY 5 6 7 8 ******************** 9 10 11 BEFORE: THE HONOURABLE MADAM JUSTICE DENISE BELLAMY, 12 COMMISSIONER 13 14 15 16 17 Held at: East York Civic Centre 18 850 Coxwell Avenue 19 Toronto, Ontario 20 M4C 5R1 21 22 ******************** 23 24 25 October 10th, 2003

2
  1                        APPEARANCES
  2  Ronald Manes   (np)     )Commission Counsel 
  3  David Butt              )
  4  Chris Thiesenhausen     )
  5  Patrick Moore  (np)     )
  6  Daina Groskaufmanis (np)) 
  7  
  8  Linda Rothstein (np)    )City of Toronto 
  9  Ian Roland              )
 10  Andrew Lewis            )
 11  Lily Harmer    (np)     )
 12  Robert Centa   (np)     )
 13  Gordon Capern  (np)     )
 14  
 15  David Moore    (np)     )MFP 
 16  Fraser Berrill  (np)    ) 
 17  Ken Jones      (np)     ) 
 18  
 19  Raj Anand      (np)     )Lana Viinamae
 20  Bay Ryley      (np)     )
 21  
 22  William Anderson  (np)  )Wanda Liczyk
 23  
 24  Valerie Dyer            )Dell Computers
 25  Jennifer Lynch  (np)    )

3
  1                          APPEARANCES
  2  Edward Greenspan (np)   )Jeff Lyons
  3  Richard Auger           )
  4  Todd White      (np)    )
  5  
  6  Hugh MacKenzie   (np)   )Jim Andrew
  7  Jennifer Searle  (np)   )
  8  
  9  Bryan McPhadden (np)    )Brendan Power
 10  
 11  Dorothy Button          )Registrar
 12  
 13  
 14  
 15  
 16  
 17  
 18  
 19  
 20  
 21  
 22  
 23  
 24  
 25

1 TABLE OF CONTENTS 2 Page 3 4 Exhibits 5 5 6 Commission Counsel's Application 8 7 8 Certificate of Transcript 194 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 LIST OF EXHIBITS 2 No. Description Page No. 3 4 1 VOLUME I Bound document titled 9 5 "Commission Motion 6 Documents" Tabs 1-47 7 8 2 VOLUME I Bound document titled 9 "Compendium of Correspondence 10 regarding Commission Counsel 11 request to review privileged 12 and irrelevant documents" 13 Tabs 1-9 193 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 9:00 a.m. 2 3 THE REGISTRAR: The Hearing is now open, 4 please be seated. 5 MADAM COMMISSIONER: Good morning. Good 6 morning, Mr. Butt. 7 MR. DAVID BUTT: Good morning, Commissioner. 8 Commissioner, as you're aware, this morning we are dealing 9 with a motion brought by Commission Counsel for access to 10 nineteen (19) sealed boxes that are currently just down the 11 hall in Commission Counsel's office space. 12 And -- 13 MADAM COMMISSIONER: Is Mr. Auger here, for 14 Mr. Lyons? He just stepped out? 15 MR. DAVID BUTT: I'm sorry, I didn't -- didn't 16 notice he had stepped out. Yes, he is here, and we -- we 17 chatted before the Hearing began. 18 MADAM COMMISSIONER: All right, well let's 19 wait until he gets here. 20 MR. DAVID BUTT: Sure. 21 22 (BRIEF PAUSE) 23 24 MR. IAN ROLAND: While we're waiting, 25 Commissioner, let me introduce myself, my name's Ian Roland,

1 and I appear on behalf of the City. 2 MADAM COMMISSIONER: Good morning, Mr. Roland. 3 MR. IAN ROLAND: And with me is my partner, 4 Andrew Lewis, who also appears. 5 MADAM COMMISSIONER: Thank you. And just so 6 you know, Mr. Roland, since this is your first time here, 7 we're -- we're operating with microphones, and so if you 8 stand we -- I appreciate the deference, but we won't be able 9 to hear you on the -- on the transcript. 10 MR. IAN ROLAND: Thank you, I will remain 11 seated. 12 MADAM COMMISSIONER: And here's Mr. Auger. 13 MR. RICHARD AUGER: Good morning. 14 MADAM COMMISSIONER: Good morning, you're -- 15 you're Richard Auger? 16 MR. RICHARD AUGER: Richard Auger here for Mr. 17 Lyons. 18 MADAM COMMISSIONER: Good morning, Mr. Auger. 19 Good morning. 20 We actually would not have started without 21 you, it was -- my -- I guess my deputy didn't know that you 22 weren't here, and I was already in the room before we 23 realized that you weren't here. 24 MR. RICHARD AUGER: Thanks very much. 25 MADAM COMMISSIONER: All right, no problem.

1 Okay, so we have Mr. Butt for Commission Counsel? 2 MR. DAVID BUTT: Yes, thank you, Madam 3 Commissioner, and I should say at the outset that I'm here on 4 behalf of the two (2) Commissions of Inquiry, that you, Madam 5 Commissioner, are charged with and for ease of reference, if 6 it's necessary to refer to both of them, I'll -- I'll 7 distinguish the -- the two (2) as TCLI, which is the Toronto 8 Computer Leasing Inquiry, dealing with the MFP matters, and 9 then TECI, the Toronto External Contracts Inquiry, dealing 10 with the matters that are coming up later, after the MFP 11 Inquiry is finished. 12 The first thing I'd like to do to assist you, 13 Madam Commissioner, is to provide to the Registrar, and enter 14 as Exhibits, the book of documents that has been prepared by 15 Commission Counsel in -- in preparation for this motion, it's 16 a black binder labelled Commission Motion Documents, and it 17 consists of correspondence and transcript references. 18 And I understand that everybody has now 19 received a copy of it and so, I would propose that that be 20 marked for purposes of this motion. 21 MADAM COMMISSIONER: All right. 22 23 (BRIEF PAUSE) 24 25 MR. DAVID BUTT: My suggestion would be, I'm

1 in everyone's hands, but if we called it Exhibit number 1 on 2 this motion. 3 MADAM COMMISSIONER: On the motion. 4 MR. DAVID BUTT: Then we're in a position to 5 identify the document readily without confusion, in the event 6 that there are other proceedings related to this motion 7 elsewhere. 8 MADAM COMMISSIONER: Okay. 9 10 --- EXHIBIT NO. 1 VOLUME I: Bound document titled 11 "Commission Motion Documents" 12 Tabs 1-47 13 14 MR. DAVID BUTT: As is often the case, there 15 are a couple of items to add to the document binder, and I'm 16 content that they simply be added to the binder, or they can 17 be marked separately, I don't have any strong preference, but 18 just as a matter of -- of housekeeping, there should be added 19 to the motion materials, the two (2) summons' that were 20 served on Mr. Lyons himself. 21 Obviously the summons' were served, which led 22 to the request to produce. 23 The first summons served on Mr. Lyons was 24 provided in the usual manner by Commission Counsel during an 25 interview with Mr. Lyons in the summer of 2002 and it is

1 dated August 14th. 2 A second summons was provided to Mr. Lyons in 3 December of 2002 and it's dated the 22nd of November. I have 4 provided copies to all counsel present here today, and I 5 would ask that those few documents become part of the 6 document binder. 7 MADAM COMMISSIONER: All right, there are 8 forty-five (45) documents right now, so why don't we have 9 those be forty (40) -- forty-six (46), do you want them both 10 as one (1), or as two (2)? 11 MR. DAVID BUTT: Both as one (1) is fine, 12 just -- 13 MADAM COMMISSIONER: All right. 14 MR. DAVID BUTT: -- so we all know where to 15 find the summons'. 16 MADAM COMMISSIONER: Okay, so they'll be Tab 17 46? 18 MR. DAVID BUTT: Yes. And in addition, I have 19 prepared a list, the boxes, as I mentioned earlier are 20 sealed, and of course will remain sealed until an appropriate 21 order is carried out, but in the interim, and to assist 22 everyone in dealing with the boxes, I have provided a list of 23 what is written on the outside of each box. And I've 24 provided that as well to counsel, and to Madam Registrar, and 25 an extra copy for you, Madam Commissioner.

1 MADAM COMMISSIONER: Okay. 2 MR. DAVID BUTT: And so, I would propose if 3 we're going consecutively, that be forty-seven (47) in the 4 document book. 5 MADAM COMMISSIONER: All right. 6 MR. DAVID BUTT: And for the benefit of 7 everyone, we can get the tabs at an appropriate time so you 8 can take away at least a tab set. 9 MADAM COMMISSIONER: Okay. 10 MR. DAVID BUTT: Lastly, in terms of 11 additional material, there is a -- a letter written February 12 14th, 2003, which contains much material, it's a three (3) 13 page single spaced letter that's not relevant to these 14 proceedings, but, it does have one (1) paragraph that I 15 propose be added to the record of these proceedings. 16 And I do not propose to put the whole letter 17 before the Court, but, perhaps if I might, just to assist 18 everybody in understanding how it fits in. 19 If I could deal with that passage and read it 20 into the record, at the appropriate time in my submissions 21 when I deal with the chronology of events that has us here. 22 MADAM COMMISSIONER: And this is a letter from 23 whom to whom? 24 MR. DAVID BUTT: It's a letter from Commission 25 Counsel, Mr. Manes, to Mr. Greenspan, Counsel for Mr. Lyons.

1 MADAM COMMISSIONER: All right. 2 MR. DAVID BUTT: What I would like to do now, 3 if I could briefly please, Madam Commissioner, is -- this is 4 Commission Counsel's Motion, so I'd like to address the issue 5 on the Motion. 6 And just to let everybody know in advance, 7 what I propose to do with probably the twenty (20) or twenty 8 five (25) minutes, that I'll ask you to listen to me. The 9 first thing I'd like to do is to set out a little bit of the 10 chronology. 11 Obviously, there are a number of letters 12 tabbed in the materials that do provide a comprehensive 13 written account of the chronology that brings us here. I 14 would like to just highlight certain of those events in the 15 chronology to help everybody understand where we are in this 16 Motion. 17 The second thing I would like to do -- during 18 the course of that chronology, I should add that I'll be 19 dealing with both letters and transcripts of Mr. Lyons 20 testimony and in a certain sense, juxtaposing the letters and 21 the transcripts so that we all have a sense of how the two 22 (2) inter-related. 23 Second thing that I'd like to do is refer to 24 the law that I have provided in the black binder, that I 25 believe everybody has, as a way of speaking about what I

1 submit is the appropriateness of the Order that we're 2 submitting, should be given or a ruling permitting access to 3 the boxes. 4 And then thirdly, I'll just talk about the 5 terms of the Order that we are requesting and again the terms 6 of the Order are essentially, with just minor modifications, 7 already found in the correspondence. So, it's nothing that 8 anybody hasn't had prior access to. 9 Dealing then with the correspondence and the 10 history of this matter. Obviously initially the summons were 11 served on Mr. Lyons, at his interview in August and again in 12 December. 13 So, the point in my submission to be taken 14 away from the initial service of the summons, is that it has 15 been months now that everybody has known that the Commission, 16 would like to have from Mr. Lyons, relevant documentation. 17 It's fair to say that following those summons, 18 there was voluminous correspondence and ongoing dealings on a 19 number of issues, but, in February that is February 14th, 20 2003, again in the context of discussion of many, many 21 matters, some of which were the subject matter of agreement, 22 some of which were not, Commission Counsel, did communicate 23 with Mr. Greenspan for Mr. Lyons, about documents at Morrison 24 Brown Sosnovitch. 25 And I'll just read the relevant passage from

1 the February 14th, 2003 letter from Mr. Manes to Mr. 2 Greenspan, that expresses Commission Counsel's views on the 3 need to go to Morrison Brown Sosnovitch and determine whether 4 or not, there's relevant documentation there. 5 The passage is as follows, it's at the top of 6 a third page of a letter that deals otherwise with matters, 7 as I said, not relevant. 8 And I'm quoting: 9 "I know [this is Mr. Manes speaking], 10 speaking to your office and I address this 11 below, that your office has been monitoring 12 the Hearings ongoing to date. Since my 13 December 6th letter several witnesses have 14 given evidence, some of which involves your 15 client, e.g. the evidence of Irene Payne 16 which I also address below. 17 In light of that evidence, we would expect 18 that you have inquired of Mr. Lyons' 19 business entity under which he practised as 20 a lobbyist and or his former law firm, 21 Morrison Brown Sosnovitch, seeking relevant 22 documents. 23 We would expect that you will produce all 24 of the relevant documentation related to 25 Ms. Payne's evidence including, for

1 example, the retainer agreements with MFP, 2 Dell Financial Services and Dell Computer." 3 The letter does then go on to discuss other 4 evidence and other matters but I ask that that portion be 5 part of the record simply to demonstrate that there has been 6 communication around the issue of going to Morrison Brown 7 Sosnovitch. 8 MADAM COMMISSIONER: Just speaking of Dell 9 Computer, I've been remiss in not acknowledging Ms. Dyer here 10 today. Welcome back, Ms. Dyer. 11 MS. VALERIE DYER: Thank you, good morning. 12 MADAM COMMISSIONER: On behalf of Dell 13 Computer Corporation. 14 MS. VALERIE DYER: Yes. 15 MR. DAVID BUTT: That February 14th letter is 16 also helpful in that at Tab 1, if we turn to the motion 17 materials, we have the beginnings of a series of 18 correspondence back and forth between Commission Counsel 19 directly and Morrison Brown Sosnovitch. 20 And I can advise you, Madam Commissioner, that 21 March 7th, some three (3) weeks after the February 14th 22 letter, we had not received any indication, one way or 23 another, as to whether Mr. Lyons had or had not made any 24 inquiries of Morrison Brown Sosnovitch. The February 14th 25 letter, therefore, helps to put this March 7th approach to

1 Morrison Brown Sosnovitch in context. 2 Commissioner Counsel is, in my submission, 3 taking it upon themselves to explore with Morrison Brown 4 Sosnovitch what, if anything, might be located there and Tab 5 1 is simply, I don't mean to go into any detail in it, a 6 fairly standard letter that Commission Counsel sent out many 7 times, adapted for this particular request, but it's 8 essentially the usual letter explaining the Inquiry, 9 including the Terms of Reference and a summons, and 10 requesting documents. 11 Tab 2, March 26th. Morrison Brown Sosnovitch 12 gets back to Mr. Manes and it's apparent from the text of 13 that letter that there has been some conversation and an 14 agreement as to how the return of documents can occur and 15 that's found at the bottom of page 1 of Tab 2 which is 16 consecutively numbered page 12. 17 And I -- I draw attention to this last 18 paragraph at the bottom of page 12 simply to highlight that 19 Commission Counsel's position has been consistent throughout 20 from our earliest contact with Morrison Brown Sosnovitch. We 21 have always been agreeable to having the documents, if there 22 are any that may be relevant, produced sealed. Commission 23 Counsel would then review those documents confidentially. 24 If there is anything relevant in there the 25 question of privilege would be addressed. In terms of an

1 order of operations, it's always been Commission Counsel's 2 position that one should first assess relevance because if 3 nothing is relevant that's the end of it; everything gets 4 returned. 5 Only if there is something that could 6 potentially be of assistance to you, Madam Commissioner, 7 would we spend time and taxpayers' money addressing privilege 8 issues. 9 MADAM COMMISSIONER: Just with respect to 10 that, our rules don't actually refer to relevance 11 specifically, it goes with helpfulness. 12 MR. DAVID BUTT: Yes. 13 MADAM COMMISSIONER: So I'm assuming you're 14 using the two interchangeably then; are you? 15 MR. DAVID BUTT: Yes. And thank you for that 16 correction. I should be using the term "helpfulness". And I 17 may have been led astray in that by looking down at the 18 documents. I spoke -- which mistakenly uses the word 19 "relevant". 20 Also of interest, because I'll be returning to 21 this, is on the second page of that letter Morrison Brown 22 Sosnovitch advising two (2) things. First of all, their 23 awareness that there were matters in which, Mr. Lyons, worked 24 outside the scope of his employment as Counsel to the firm. 25 And the initial position of Morrison Brown

1 Sosnovitch, is that they have no knowledge or records of 2 these matters and that's at the top of page 13. 3 4 (BRIEF PAUSE) 5 6 MR. DAVID BUTT: So, that does, as the 7 correspondence will unfold, show that the picture is a little 8 bit more complicated than simply searching for all the files 9 that Mr. Lyons -- through all the files that Mr. Lyons may or 10 may not have opened as a lawyer. 11 We -- the second thing of note on page 13 at 12 Tab 2, is Morrison Brown Sosnovitch indicates initially that 13 they do not have any physical files pertaining to any of the 14 parties named in the letter and the summons Commission 15 Counsel sent. 16 Now, as we will find out as we go forward, 17 that initial impression, turned out not to be the case, but, 18 certainly the initial request came back to us with that 19 answer. 20 In the background to all this, is the approach 21 to Mr. Lyons evidence and again, Madam Commissioner, it would 22 be helpful for everyone to keep in mind that, Mr. Lyons, 23 testified May 8th, 12th, 13th and 14th. 24 So, in March and into April, we're into what 25 could be called, I suppose, the lead up period to Mr. Lyons

1 testimony and again, that helps to contextualize Commission 2 Counsel's search for relevant documentation. 3 So, on April 8th, which is Tab -- a letter 4 found at Tab 3 of the materials, we have Mr. Manes, again 5 asking for Morrison Brown Sosnovitch and I'll quote: 6 "To please advise me formally as to whether 7 your firm has any hard copies or electronic 8 documents or communication which may be 9 relevant to the Inquiry. And by that I 10 mean helpful to the Inquiry." 11 And goes on to say, what I have just 12 explained: 13 "The group of witnesses involving Mr. Lyons 14 will be heard shortly. So the Commission 15 would appreciate a response." 16 And at Tab 4, a response comes back, it is 17 dated April 9th. And it says: 18 "We enclose herewith -- 19 This is again from Morrison Brown Sosnovitch, 20 April 9th: 21 "-- an index of materials in our possession 22 with respect to the summons being provided, 23 again while preserving our claim for 24 privilege." 25 Now, I mention the date because it becomes

1 important. If we turn the page and look at the letter of May 2 15th, we see Mr. Manes saying on May 15th, which importantly 3 is after Mr. Lyons has finished testifying. 4 He testified the 8th, 12th, 13th and 14th of 5 May. So on May 15th, Mr. Manes is writing back to Mr. 6 Sosnovitch and saying: 7 "Thank you for your letter of April 9th. 8 As I explained this letter was not in our 9 files." 10 Commission Counsel's fault. I'm sure Morrison 11 Brown Sosnovitch sent the letter, but, for reasons that we 12 can't attribute to anyone else, but, our internal processes, 13 we were not aware of that letter, until after Mr. Lyons had 14 testified. 15 And I mention that because when I get to the 16 transcript of the testimony, certain questions are or are not 17 asked that appear to possibly have this as an explanation. 18 But, in any event, turning to the -- 19 MADAM COMMISSIONER: Just, if I might, Mr. 20 Butt, on page 17, is the list of Jeffrey Lyons material re: 21 Toronto Computer Leasing Inquiry, and there's actually 22 nothing on my sheet. Is -- 23 MR. DAVID BUTT: Yes, thank you for bringing 24 that to my attention. I'll deal with it now. I've discussed 25 it with the other parties.

1 Obviously, this motion has a limited purpose 2 in that the sole order being sought is to unseal and 3 confidentially review boxes of documents. 4 We all anticipate and indeed, Morrison Brown 5 Sosnovitch has anticipated since day one in our 6 correspondence with them that privilege issues might arise. 7 We don't know because we haven't looked at the documents. 8 However, anticipating that privilege issues 9 might arise, we've taken the step in these motion materials 10 of removing from the public copies anything in the 11 correspondence that identifies particular documents and I 12 hope we've been thorough in that respect. 13 Again, that is obviously intended to preserve 14 everybody's right to assert whatever privilege might attach 15 to any of those documents. And if it assists, for the 16 benefit of counsel here alone, I do have the letters that 17 have been redacted here in the courtroom with me with the 18 redactions underneath little post-its so that everybody, if 19 they wish, can confidentially inspect what I have redacted 20 and what's behind the redactions. 21 So that's the purpose in removing that 22 information. It's to preserve the ability to make any 23 privilege claims that might arise. 24 MADAM COMMISSIONER: Okay. So, I'll hear from 25 Mr. Auger on that component later on once he has an

1 opportunity. 2 MR. RICHARD AUGER: I'm happy to make one 3 comment on that. 4 MADAM COMMISSIONER: I'm sorry. You weren't 5 here when I mentioned to Mr. Roland because these are taped, 6 we have to -- I appreciate the deference in your standing, 7 but I actually have to ask you to sit -- 8 MR. RICHARD AUGER: Very well. 9 MADAM COMMISSIONER: -- because otherwise we 10 can't hear you through the -- 11 MR. RICHARD AUGER: Thank you very much. 12 MADAM COMMISSIONER: -- microphone and the 13 court reporters can't pick up anything. 14 MR. RICHARD AUGER: Thank you very much. I'm 15 happy to make one comment. I think that's an important point 16 that you point out, Commissioner. I have one point on that, 17 I'm happy to make it now or later. I don't want to interrupt 18 Mr. Butt. 19 I had one impression that our agreement was a 20 little different from that in that we had a discussion about 21 the purpose of the materials being redacted and I'm happy to 22 make that comment now. 23 MADAM COMMISSIONER: If you think it would be 24 helpful for me now, I'm happy to hear it now. If you want to 25 save it for your submissions, I'm happy to hear it then;

1 whatever you think is best, but if you think it would be 2 helpful now I -- 3 MR. RICHARD AUGER: I think it's an important 4 point -- 5 MADAM COMMISSIONER: Okay. 6 MR. RICHARD AUGER: -- and you'll see that 7 Mr. Butt has, in the index, noted that some -- well, Tab 4, 8 Tab 5, Tab 6, Tab 10 have portions that were redacted and I 9 discussed this with Mr. Butt this morning and I thought that 10 we'd agreed that, without getting into reviewing the content 11 of what was redacted and coming up with submissions on that 12 issue, because this isn't a privilege motion today in my 13 respectful submission, that we had agreed that we would tell 14 you that the materials were redacted because they are 15 privileged and that Commission Counsel had agreed that they 16 would be removed from this exercise and would concede that 17 the material's redacted because it's privileged material. 18 That's what I understood and if I'm wrong we 19 can discuss that at the break but that's what I understood 20 was the purpose in it being redacted and that we would go 21 forward on the basis that any of the material that is 22 redacted was privileged. 23 MR. DAVID BUTT: Yeah, I have to say I've a 24 different understanding because I haven't looked at those 25 materials with a view to ascertaining whether privilege may

1 or may not attach. As I mentioned earlier in the 2 submissions, conceptually the first order of business is to 3 ascertain relevance and that's why this is not a privilege 4 motion. 5 So we would -- I would expect if we ever look 6 at this material, assess relevance first and if it's 7 irrelevant we don't even need to go to the privilege issue 8 and then only go to the privilege issue if relevance 9 determines that they might be helpful to you, Madam 10 Commissioner. 11 So, but having said that, we obviously have to 12 think a couple of steps down the road at this motion and for 13 that reason I'm quite content that no reference be made to 14 anything in case it does turn out to be privileged. I'm 15 simply not in a position to prejudge the legal quality of 16 those documents when I haven't seen them. 17 MADAM COMMISSIONER: Right. Okay. I -- are 18 you content with that Mr. Auger. What I hear Mr. Butt saying 19 is that for the purposes of today, he will deal with them as 20 though they are privileged but we have no -- am I getting 21 that wrong, Mr. Butt? 22 MR. DAVID BUTT: That's fair. 23 MADAM COMMISSIONER: That he'll deal with them 24 as though they are privileged though he has no idea of 25 whether they are or not because we're only dealing today with

1 what is helpful for me. 2 MR. RICHARD AUGER: Thank you. 3 MADAM COMMISSIONER: I think I got that right. 4 Okay. 5 MR. DAVID BUTT: Thank you. Now, if I could 6 just continue in the chronology and let everybody know that 7 I'm not going through every Tab, I'm only going to deal with 8 the Morrison Brown Sosnovitch correspondence in any detail. 9 The bulk of the correspondence, is between Mr. 10 Lyons' Counsel and Commission Counsel, around the events that 11 lead up to this Motion. 12 So, I'm close to finishing the relevant 13 chronology in the correspondence, but, before I leave the 14 April 9th letter, which as I explained didn't come to 15 Commission Counsel's attention until much later, we have 16 what's important to note, a second response from Morrison 17 Brown Sosnovitch saying, contrary to what we earlier thought, 18 hey yeah, we have found some stuff. 19 20 (BRIEF PAUSE) 21 22 MADAM COMMISSIONER: And where is that? 23 MR. DAVID BUTT: That is Tab 4, page 16. And 24 the items are listed. 25

1 (BRIEF PAUSE) 2 3 4 MR. DAVID BUTT: Now, just to follow through 5 briefly for a moment with correspondence after the testimony 6 is over on May 15th, we have Mr. Manes then able to write 7 about the testimony, not only of Mr. Lyons, but, the 8 testimony of Ms. Sue Cross, who was at some relevant times an 9 employee of Mr. Lyons and did have some insights into the 10 existence of material at Morrison Brown Sosnovitch. 11 So, at Tab 5, Mr. Manes is able to write to 12 Mr. Sosnovitch and say, I know something now that I didn't 13 know then, when I wrote to you before Mr. Lyons testified. 14 And he says at the bottom of page 18, at Tab 15 5, the beginning of the middle paragraph: 16 "Both Mr. Lyons and a former Morrison Brown 17 Sosnovitch employee, Sue Cross, have 18 testified that Dell Computer and Dell 19 Financial Services were separate files and 20 that therefore there might be separate 21 storage." 22 Over onto page 19: 23 "Mr. Lyons has testified that his files 24 included correspondence and memoranda 25 produced using computers owned by the law

1 firm and these computers were left behind 2 when he left the firm and Ms. Cross 3 testified that she recalls some of Mr. 4 Lyons files were sent to storage, to the 5 same facility used by Morrison Brown 6 Sosnovitch." 7 So, as a result of the testimony, it's fair to 8 say that we have more information to assist Morrison Brown 9 Sosnovitch in conducting their search. 10 And on May 23rd, Morrison Brown Sosnovitch, is 11 in a position through Mr. Lyons testimony -- 12 MADAM COMMISSIONER: This is at Tab 6? 13 MR. DAVID BUTT: Yes. And our more detailed 14 requests that also flowed from Mr. Lyons testimony, to 15 conduct a more comprehensive search and indeed much more 16 material is found. 17 And I'll deal with this letter before jumping 18 to the testimony. First of all they've conducted a further 19 search, that's item number one (1) on page 20 of the Morrison 20 Brown Sosnovitch letter. 21 "A further search of our firms closed files 22 which are stored offsite." 23 And the offsite storage issues is going to 24 become important when we turn to the testimony and indeed 25 they found one (1) physical file, under Dell Financial

1 Services, general matters. 2 As you know, Madam Commissioner, items from 3 that file have already been entered in TCLI. 4 MADAM COMMISSIONER: I'm not sure that they 5 would -- 6 MR. DAVID BUTT: Or referred to, at least. 7 MADAM COMMISSIONER: I think some were 8 referred to and some were entered into it as Exhibits. 9 MR. DAVID BUTT: Right. Secondly, Morrison 10 Brown Sosnovitch, first identifies twenty one (21) boxes of 11 files marked, quote: 12 "Jeffrey Lyons personal." 13 14 (BRIEF PAUSE) 15 16 MR. DAVID BUTT: And the third point of 17 interest in that letter over on page 21 18 "As was ..." 19 It's the second full paragraph, Morrison Brown 20 Sosnovitch writing 21 "As was presented into evidence by Mr. 22 Lyons and Ms. Cross to the Inquiry and as 23 we determined subsequent to Mr. Lyons' 24 departure, there were apparently matters 25 which Mr. Lyons billed outside of our

1 firm." 2 So that provides some assistance and insight 3 in why, initially, Morrison Brown Sosnovitch did not have a 4 sense that these materials might have existed. Now, I'm not 5 saying that's conclusive but it's an insight that's expressed 6 in this letter that may be of some assistance as to why it 7 did take a little while to find this material. 8 So keeping in mind that this material was 9 apparently outside the scope of counsel work or may have 10 been, but was, nonetheless conducted, and was physically 11 stored off-site, those are the three (3) important points 12 that, in my submission, it is important to keep in mind at 13 this point, we need to turn to the -- to the testimony of Mr. 14 Lyons on the issue of documents. 15 And for that I'm going to be referring to Tab 16 39 and Tab 45 of the evidence and those are the only 17 transcript extracts that I'm going to be referring to. So, 18 at Tab 39, I'll pause to mention that Tabs 41 to 44 address 19 the issue of whether Mr. Lyons was acting as a lawyer or a 20 lobbyist which, again because this is not a privilege motion, 21 is not something that needs to be dealt with in any detail 22 now. 23 So, thirty-nine (39) and forty-five (45) are 24 the two (2) relevant tabs on the issue of material at 25 Morrison Brown Sosnovitch and, as everyone sees from looking

1 at those tabs, they're four (4) pages per photocopied page 2 and I apologise to everyone, including myself, for the size 3 of the font. 4 But, on page 6, which is the top left page 5 three (3) pages in at Tab 39, we have Mr. Manes asking at 6 line 18 7 "Q: Do you have any files, faxes, 8 memorandums, letters, retainer agreements, 9 anything in relation to the representation 10 of Dell Computer and Dell Financial? 11 A: No." 12 And, of course, as we know because this 13 material has been referred to -- subsequently located and 14 referred to, and first identified in that May 23rd letter 15 from Morrison Brown Sosnovitch, that answer is factually 16 incorrect. That material was there. 17 Next question, page 7 18 "Q: When you left Morrison Brown 19 Sosnovitch you took the MFP file, what 20 happened to the Dell Financial file? 21 A: Well, normally we don't keep files once 22 we cease acting for clients." 23 And up at the top of page 8, line 9. 24 "Well, we try to weed them out if we're not 25 using them and we try to do that within a

1 few weeks or months of acting for them." 2 And then the question is 3 "Q: Do you recall whether you specifically 4 gave the instruction to destroy those files 5 to the best of your recollection? 6 A: Probably." 7 And, again, that turns out to be factually 8 incorrect, vis-a-vis the Dell Financial Services file or DFS. 9 In any event, the question continues 10 "Q: Those files are not available, you've 11 looked for them? 12 A: Yes. I did." 13 And Mr. Manes goes on to say 14 "Q: Now, we've inquired of Morrison Brown 15 Sosnovitch, they've gotten back to us and 16 said they didn't have them?" 17 And that's where I ask, Madam Commissioner, 18 that we keep in mind the flow of correspondence with Morrison 19 Brown Sosnovitch, initially they did find nothing. And it 20 was only after the testimony was over, that it came to our 21 attention, specifically the May 23rd letter and the April 9th 22 letter, that we didn't see May 15th, that there was material. 23 And then just below on page 9, 24 "Do you remember taking the Dell Financial 25 or Dell Computer files.

1 A: Not Dell Financial, again or DFS." 2 Now, in my submission, it's important to pause 3 there and turn to Tabs 12 and 14, keeping that evidence in 4 mind, let's turn to Tabs 12 and 14. What do we find? 5 At Tab 12, July 4th, we have Mr. Manes asking: 6 "Please advise me whether Mr. Lyons has, at 7 any time, requested from your Firm, any 8 materials relevant to these inquiries. 9 Also please advise us of the Firm's 10 policies on retention and storage of 11 documents, as they apply to Mr. Lyons 12 during the time when Mr. Lyons was 13 associated with your Firm as counsel." 14 That's Tab 12, page 31. If we skip to Tab 14, 15 page 33, second last paragraph, the response to Mr. Manes 16 questions: 17 "I advise that Mr. Lyons has not at any 18 time, to our knowledge, requested from this 19 Firm, any materials relevant to the 20 Inquiry." 21 Just below that, answer to the second 22 question: 23 "The Firm's policy on retention and storage 24 of documents is the same today as was the 25 policy during the time that Mr. Lyons was

1 associated with our Firm as Counsel." 2 Over the page: 3 "The policy is that upon completion of a 4 matter as determined by the lawyer in 5 charge, the file is closed out, documents 6 are returned to the client as appropriate 7 and the file is then assigned a file number 8 and ultimately deposited in the Firm's 9 storage facility." 10 So, we have a very clear response back, that 11 no, there was no request and that the policy, which was in 12 place, at the relevant time, was to keep files at the Firm's 13 storage facility. 14 And if we think back now, to the May 23rd 15 letter, they opened that May 23rd letter, by saying we've 16 checked the Firms storage letter and we found the stuff, so, 17 indeed, it was right where Morrison Brown Sosnovitch said, as 18 a matter of course, it should be. 19 MADAM COMMISSIONER: It goes on to say that 20 they have no record of any instruction from Mr. Lyons to 21 destroy any of the files. 22 MR. DAVID BUTT: That's correct. And if we go 23 back then to page 72(b) and Tab 39, we are able to return the 24 question: 25 "Do you recall whether you specifically

1 gave instruction to destroy those files." 2 The answer being: 3 "Probably." 4 Again, a perspective of Morrison Brown 5 Sosnovitch as stated in the letter, is precisely the contrary 6 and again Tab 39, page 8 of the four (4) pages at the top 7 right, line 20: 8 "In any event, those files aren't available 9 you've looked for them? 10 A: Yes, I did." 11 Again, a very different perspective from 12 Morrison Brown Sosnovitch. 13 Despite the fact, that just below on page 9, 14 it is acknowledged that it was left there. If the file was 15 left at Morrison Brown Sosnovitch, there's only one (1) place 16 to look for it; Morrison Brown Sosnovitch. 17 Mr. Lyons said he looked for it. Morrison 18 Brown Sosnovitch said he did not. 19 20 (BRIEF PAUSE) 21 22 MR. DAVID BUTT: And over the top of the next 23 page in Tab 39, essentially through incomplete sentences, one 24 (1) can derive meaning that that exchange was repeated. 25 "Q: In any event, you've done a search and

1 those files are not -- 2 A: Right. No." 3 Verbally it's not as clear as it might be, but 4 a fair reading would be that, again, there's a repeated 5 assertion that he looked for them and they're not there and 6 in relation to the Dell Financial Services file, at least, 7 that is incorrect. 8 If I can turn now to Tab 45, again, keeping 9 the Morrison Brown Sosnovitch letters after this testimony in 10 mind. At the first page behind Tab 45 which is consecutively 11 numbered 89 in handwriting at the top and then if we look at 12 the bottom left transcript page of the four (4) on 89, we're 13 looking at page 107. 14 And this is cross-examination by Ms. Rothstein 15 for the City of Toronto. 16 "Q: Are you saying, Mr. Lyons, that the 17 lobbying files like Dell and the DFS file 18 were all opened in the name of MBS, the law 19 firm? 20 A: That's my recollection." 21 So, again, we have an acknowledgment here by 22 Mr. Lyons that he is aware that those files, in terms of 23 their labelling, were associated with MBS. And, again, we 24 juxtapose that with Morrison Brown Sosnovitch's assertion 25 that he never inquired of MBS.

1 Again, he repeats down at line 13 on the same 2 page 3 "If it was lobbying, it would generally be 4 in the firm of Morrison Brown Sosnovitch. 5 I've answered that." 6 Then on page 109 another relevant passage. 7 Line 11 8 "Q: You testified on Thursday that you 9 destroyed your DFS file shortly after your 10 retainer ended? 11 Again, 12 "A: Yes." 13 Again, we know that to be factually incorrect 14 and down below 15 "Q: You did not personally destroy that 16 file? 17 A: No. 18 Q: You would have directed someone to do 19 that? 20 A: One of my staff." 21 And, again, as Madam Commissioner has pointed 22 out, Morrison Brown Sosnovitch has no record of any direction 23 to destroy and, of course, I just pause at this stage to take 24 a step back. Inside a law firm environment one might well 25 expect, given retention obligations, that destruction orders

1 would be recorded in some way. 2 One can't say with certainty that that would 3 necessarily be the case 100 percent of the time but it's 4 certainly something that one might well expect. Then, if we 5 turn the page to page 91 of the consecutively hand-numbered 6 pages, again at Tab 45, and we get into some more detail. 7 Again, the bottom left page, page 115 we have 8 Ms. Rothstein asking 9 "Q: Were you using MBS computers, 10 Mr. Lyon? 11 A: Not me. 12 Q: Your staff? 13 A: They were using a computer. Yes. 14 Q: Owned by MBS? 15 A: Yes. 16 Q: Left at MBS when you departed MBS? 17 A: Could have been, I think, at the time. 18 Further down, page 19 -- I'm sorry, line 19 19 same page, 115, bottom left. 20 Q: The computers that were used to 21 generate documents in 1999 remained the 22 property of MBS when you departed? 23 A: I would assume so. 24 Q: Did you take that electronic data with 25 you when you left, sir?

1 A: No. No." 2 Again, knowledge that that is a likely source 3 of material juxtaposed with Morrison Brown Sosnovitch's 4 assertion in Tab 14 that he never inquired. Top of the same 5 page, top right, which is transcript page 116: 6 "Have you made any inquiries of MBS to 7 determine the whereabouts of that 8 electronic data? 9 A: Yes." 10 Answer is inconsistent with what Morrison 11 Brown Sosnovitch tells us. 12 "And what have you learned? It's been 13 wiped clean because they had too much data 14 storage." 15 Wrong, according to Morrison Brown Sosnovitch. 16 They don't destroy data in that way. 17 Secondly, again drawing on the collective 18 experience in the room, to think about a law firm 19 environment, is that why you destroy data, because you run 20 out of space? 21 22 (BRIEF PAUSE) 23 24 MR. DAVID BUTT: Mr. Lyons does go on to say: 25 "There was somebody in my office who looked

1 after all of that, Mr. Mangat." 2 3 (BRIEF PAUSE) 4 5 MR. DAVID BUTT: And the timing which covers 6 much of page 116 and 117 is discussed in some detail in a 7 question of whether its before the Inquiry had started or 8 during and at that point, it's helpful to once again, turn 9 back to Tab 14. 10 11 (BRIEF PAUSE) 12 13 MR. DAVID BUTT: And look at the letter from 14 Morrison Brown Sosnovitch, the third paragraph, in which the 15 following is said: 16 "Our office administrator advises that we 17 did send two (2) boxes of Mr. Lyons 18 personal files to Mr. Lyons at his request, 19 sometime in the calendar year of 2002." 20 So, what we have here, if this letter can be 21 relied on, is evidence that in 2002, keep in mind that the 22 Inquiry was called in February of 2002, in 2002, and in 23 fairness we don't know when, it could have been before 24 February, we have Mr. Lyons, if this letter is accurate 25 demonstrating that he knows, there is material in storage at

1 Morrison Brown Sosnovitch, because he through an agent, went 2 and got it. 3 And again if we juxtapose that level of 4 knowledge, he knows his files were opened under the MBS name, 5 he knows that they were generated on MBS computers that he 6 left behind. 7 He didn't take the Dell Financial Services 8 file with him, he knows that there is material in storage and 9 Morrison Brown Sosnovitch says, he never asked. 10 In my submission, a picture is starting to 11 emerge. The cross examination continues and the next 12 relevant point that I would like to bring to your attention, 13 Madam Commissioner, is at page 93, the handwritten pages in 14 Tab 45. 15 16 (BRIEF PAUSE) 17 18 MR. DAVID BUTT: And what precedes this 19 passage, just to contextualize it for you, Madam 20 Commissioner, is discuss about lawyers retention obligations 21 and the point that these are lobbying files, so there may be 22 some fair difference of approach to those two (2). 23 But, then the cross examination turns to a 24 different subject. At the bottom right of the four (4) pages 25 on the hand numbered 93, we have at line 15, Ms. Rothstein's

1 still asserting: 2 "You also have a duty as a taxpayer if 3 nothing else to maintain financial records. 4 A: Well, we do keep the financial records. 5 Q: Oh, so there are records now, they're 6 not all destroyed? Who would have those, 7 your accountant? 8 A: No. Morrison, Brown, Sosnovitch." 9 So, again, in the witness box, during his 10 testimony May 8th through the 14th, he knows, but again, it 11 appears from Morrison, Brown, Sosnovitch, he did not inquire. 12 Over the page: 13 "So, Morrison, Brown would have the 14 financial records with respect to Dell and 15 DFS? 16 A: I would imagine so. I would assume so, 17 so, I don't know if they have them still." 18 Lines 8 and 9. Again, not only do we have the 19 same juxtaposition between Morrison, Brown, Sosnovitch's 20 assertion that he never inquired, but we have an internal 21 inconsistency in Mr. Lyons' own evidence. A few pages back 22 he said: 23 "No, no, I had Mr. Mangat inquire, it's all 24 been destroyed." 25 And now, well, maybe it hasn't been destroyed,

1 I don't know. 2 Then we get to the issue of offsite storage. 3 And page 126 of the transcript, which is at page 94, lines 17 4 and 18: 5 "I'm saying, Mr. Lyons --" 6 Again Mr. (sic) Rothstein: 7 "-- that surely developed a practice as a 8 lawyer over all the years that you 9 practised, of sending closed files to 10 offsite storage? 11 A: Yes, when I was a lawyer, but I don't 12 practice law." 13 And there's a little bit of an exchange and 14 some objections, and when -- when ultimately we return to the 15 question, like at the bottom of transcript page 128 onto 129: 16 "Q: I'm simply saying, Mr. Lyons, that it 17 can't be that it was too expensive to send 18 the files to offsite storage? 19 A: I'm going to suggest to you without 20 sarcasm, that it is too expensive, and 21 that's my answer." 22 What does that answer mean? One (1) fair 23 implication of that answer is that I don't use offsite 24 storage, because it's too expensive. 25 But what do we know from the Morrison, Brown,

1 Sosnovitch letters? We know that in 2002 he went through an 2 agent to the offsite storage, and retrieved two (2) boxes of 3 files. 4 MADAM COMMISSIONER: When you say he went 5 through an agent, did you mean somebody at -- at Morrison, 6 Brown, Sosnovitch? 7 MR. DAVID BUTT: Well, I -- I don't know, I'm 8 -- I'm leaving open that possibility because the -- the 9 wording of the letter at Tab 14 is that as follows: 10 "Our office administrator advises that we 11 did send two (2) boxes of Mr. Lyons' 12 personal files to Mr. Lyons at his 13 request." 14 So, I do not assume that Mr. Lyons went 15 himself to the storage facility and removed the boxes, I'm -- 16 I'm saying that a fair reading of that is that it was done 17 for him at his request. 18 MADAM COMMISSIONER: Okay. 19 MR. DAVID BUTT: And frankly, I -- I don't 20 know. 21 So, and that concludes my march through both 22 the -- the transcript and the correspondence. And I'd like 23 to pause at -- at this stage to just say that in my 24 submission, a picture fairly emerges if the correspondence 25 for Morrison, Brown, Sosnovitch is -- is an accurate

1 assertion of -- of what went on. 2 And there are some very serious issues, not 3 issues that I would ask you, Madam Commissioner, to make any 4 final determination on at this stage, because it's simply 5 correspondence. 6 But at this stage it would be fair, in my 7 submission, for a dispassionate third party looking at this 8 material, to have some very serious concerns about the level 9 of Mr. Lyons' cooperation with this Inquiry. 10 And it's in that context, that we have the 11 boxes before us, and it's to the opening of those boxes that 12 I will now turn. 13 Let me begin by saying there are nineteen (19) 14 boxes in our possession, right now. 15 Let me also say, that the first letter 16 identifying the boxes that I've already taken the Court 17 through, speaks of twenty one (21). I have to confess I 18 scratched my head a little bit, and worried a bit about the 19 twenty one (21) to nineteen (19). 20 It appears that the answer lies in the 21 correspondence I've just referred to, that in 2002, two (2) 22 boxes were taken by Mr. Lyons. That would bring us from 23 twenty one (21) down to nineteen (19). 24 So what we are seeking is an Order that those 25 boxes be unsealed confidentially, away from the public eye by

1 Commission Counsel, in the presence, if they wish of Counsel 2 for Mr. Lyons or Mr. Lyons himself and that they be reviewed 3 first for relevance and only if there is relevant material -- 4 MADAM COMMISSIONER: I take it you're meaning 5 for helpfulness. 6 MR. DAVID BUTT: Helpfulness, I'm sorry. 7 Only if they contain potentially helpful material, that that 8 potentially helpful material alone, be examined for potential 9 privilege issues. 10 Is that the right thing to do? Is that the 11 fair thing to do at this stage? We're hearing a Motion 12 because we cannot agree that it is and if I might, Madam 13 Commissioner, I'd like to spend a couple of minutes, talking 14 about why, in my submission, that is the right thing to do 15 and the fair thing to do. 16 I just want to start with a -- before I -- and 17 in making the submissions I'll be looking at the case law, 18 but, before I do that, I just want to make a couple of common 19 sense observations. 20 One (1) the clock is ticking and it's been 21 ticking for months. A summons has been outstanding since 22 August of 2002, fourteen (14) months ago. The boxes have 23 been in our possession and there's a date stamped letter in 24 the materials since July 22nd. 25 We began corresponding with Mr. Lyons Counsel

1 on August 6th. The boxes are still sealed. So, on any 2 objective view of things, it's my submission, Madam 3 Commissioner, that it's time to do something. 4 It's time to do something fair, but, it's time 5 to do something decisive, it's time to act. Why then do I 6 say, that this is a fair way of proceeding? 7 Understanding why it's fundamentally fair 8 requires understanding the role of Commission Counsel. 9 Everybody is abundantly aware that privilege issue lurk in 10 the very near background to this Motion. 11 Nobody wants a privilege thoughtlessly tossed 12 open, least of all, Commission Counsel. The Public Inquiries 13 Act is perfectly clear that we have no power to admit into 14 evidence privileged material, Section 11. 15 Therefore, for many reasons, not the least of 16 which, is the prohibition in Section 11, it's incumbent on us 17 to assess privilege issues, if there are any, in advance. 18 Conceptually, it only makes sense to turn our 19 minds to privilege issues only with respect to the sub-set of 20 relevant or potentially helpful materials and that's what 21 we're proposing to do. 22 So what we're proposing to do, before I turn 23 to the authorities, get things moving because of the time 24 issue, we've been dealing with, gets things moving in a 25 conceptually sensible way, relevance first, then privilege

1 and gets things moving in a confidential way, so that the 2 process of determining what's relevant, does not in any way 3 compromise privilege issues. 4 But why should we lawyers get to look at this 5 stuff? And that's why, in my submission, one has to 6 understand the role of Commission Counsel, and -- and perhaps 7 the best discussion that's helpful, comes from Tab 3 of my 8 materials, which is Justice O'Connor's paper to the Advocate 9 Society on the role of Commission Counsel. 10 And I accept, without question, that third 11 parties looking at potentially privileged material causes 12 very serious privilege problems; are we a third party in that 13 sense? The simple answer is, no and that's why we can and we 14 should. 15 Why are we not a third party? In my 16 submission, Justice O'Connor appropriately captures the 17 conceptual -- critical conceptual distinction between 18 Commission Counsel and counsel for a third party. 19 And looking at his paper, which is at Tab 3, 20 he states under the title: 21 "Role of Commission Counsel is quite 22 different from that of a lawyer in most 23 other legal proceedings." 24 What's different about it we're going to see, 25 is that Commission Counsel functions, in some respects like a

1 lawyer, in the presentation of evidence, in the interviewing 2 of witnesses, in the making of legal submissions like is 3 happening right now, but in other respects, like a Judge. 4 First of all, Commission Counsel is as Justice 5 O'Connor says, the alter ego, or the agent of the Judge. We 6 have the same confidentiality obligations that you, Madam 7 Commissioner, have. 8 Secondly, and Justice O'Connor notes this in 9 his paper, we have a duty to provide advice to the 10 Commissioner. It's unheard of that independent counsel for 11 third parties would give a Judge legal advice. A Judge would 12 hear their submissions of course. 13 But the fact that it is part of our role to 14 give legal advice, demonstrates the closeness of the 15 connection between you, Madam Commissioner, and Commission 16 Counsel. 17 Secondly, Justice O'Connor notes a number of 18 roles of Commission Counsel, but in the last page of his 19 paper, the second one (1) that I wish to draw attention to is 20 that one (1) of our roles is to help write the report. 21 Again, we are plunged up to the eyebrows and beyond, in the 22 judicial role. 23 And thirdly, again identified by Justice 24 O'Connor in the last page of his article, we speak for the 25 Commission, principally to the media, because as Justice

1 O'Connor notes, it is a very bad idea for the Commissioner, 2 who's generally Judge, to do so. 3 So, in a very real sense, Commission Counsel 4 wears the public face of a judicial inquiry, and if it's 5 going to be what its name suggests it has to be, that public 6 face is a judicial one (1). 7 So, we can see that privately, publicly, 8 conceptually and functionally, we are the Commissioner. 9 Understanding that, puts the order then in the proper 10 context. Is it appropriate for you, Commissioner Bellamy, to 11 review this material for relevance? Absolutely. 12 Therefore, is it appropriate for Commission 13 Counsel to review it confidentially, for helpfulness? 14 Absolutely. 15 Lastly, this of course is not a procedure that 16 we thought up on the spot, it's a procedure that has been 17 resorted to quite successfully before in the situation where 18 it's hard to imagine more sensitive documents. That is the 19 Walkerton Inquiry and the search warrant executed, to seize 20 Cabinet documents. 21 Again, difficult to imagine a more sensitive 22 area of privilege in the law than Cabinet privilege. And the 23 excerpts that I have from the Walkerton report demonstrated 24 that the parties reached an agreement in Walkerton to deal 25 with the privilege issues, precisely as we are proposing.

1 Confidential review and inspection by 2 Commission Counsel with the affected parties and again, 3 conceptually, logically, helpfulness comes first. After 4 helpfulness, privilege issues were addressed. 5 And as the report at page 487, Tab 2 in my 6 Authorities mentions, both parties would have the opportunity 7 to resolve the privilege issue on a document by document 8 basis. 9 It makes perfect sense. We can sit down 10 together confidentially and talk about the document with the 11 document in front of us and if we cannot reach an agreement, 12 as was the case in Walkerton, a Hearing would be held before 13 a Judge, precisely what we propose. 14 As it happened in Walkerton, no one had to go 15 to the independent Judge, which was the Regional Senior 16 Justice, because they were able to agree. 17 You, Madam Commissioner, are aware that we 18 have followed this procedure in a number of instances in 19 these proceedings. And the absence of any application 20 demonstrates that so far we have been able to agree among 21 Counsel on the treatment of helpful material that may have 22 privilege issues around it. 23 So, the nub of my submission on why this is an 24 appropriate thing to do rests on the role of Commission 25 Counsel and the demonstrated appropriateness of the procedure

1 we propose, in the context of the Walkerton Inquiry. 2 There's just one (1) last case that I wish to 3 address in -- it's in My Friend, Mr. Auger's material and 4 that's the Supreme Court of Canada's case, about law office 5 searches. 6 And it's a criminal case, it's a criminal code 7 search warrant and the Supreme Court of Canada found the 8 legislation constitutionally defective and I'd just like to 9 talk about that for one (1) minute. 10 11 (BRIEF PAUSE) 12 13 MR. DAVID BUTT: First of all, we have to all 14 keep at the forefront of our minds, the repeated admonitions 15 of the Supreme Court of Canada that a Public Inquiry is not a 16 criminal prosecution, Commission Counsel are not prosecutors. 17 And that has been so frequently repeated, it's 18 in the Consortium case that's before us all now, that if we 19 were so minded, without much more we could say, well thanks 20 the Heintz case in the Supreme Court of Canada, criminal 21 context, really isn't very helpful and we could say that 22 respectably, but, I don't want to simply because it arises in 23 an inapplicable context through out the good ideas that there 24 might be in the case. 25 So it's worth looking for a brief minute at

1 what the Supreme Court of Canada said, to see if there's some 2 helpful ideas that we can transplant into this very different 3 legal context. 4 And to deal with this case, I don't need to go 5 to more than the head note, Mr. Auger's principal edited the 6 particular version that's before you, so I'm sure it's 7 completely accurate and reliable. 8 And there are two (2) things -- 9 MADAM COMMISSIONER: I see, you mean in the 10 Canadian Criminal cases, okay. 11 MR. DAVID BUTT: That's right. 12 MADAM COMMISSIONER: I couldn't figure out 13 what you were talking about. Yes. All right. 14 MR. DAVID BUTT: I've never found it necessary 15 to double check the text with the head note in the CCD's. 16 MADAM COMMISSIONER: I thought you had meant 17 he had edited what was before me here right now. All right. 18 MR. DAVID BUTT: No. 19 MADAM COMMISSIONER: Yes. 20 MR. DAVID BUTT: His very able editorial team. 21 They -- they said two (2) things, there are two (2) problems 22 with the Criminal Code legislation as it stood at the time. 23 One (1), is that there was a very short time turnaround, 24 thirty-five (35) days after which the Crown could get access 25 to sealed material. The Supreme Court of Canada said, that's

1 too short, you can't have that kind of arbitrary deadline 2 imposed. 3 So, let's look at our context, we're nothing 4 like that. This Summons has been outstanding since August 5 2002, we've been corresponding with Morrison, Brown, 6 Sosnovitch since March, to try to obtain this material, 7 always from the very first letter, which -- which I took the 8 Court to this morning, always insisting that we would be 9 happy to receive it sealed. 10 And we have been corresponding directly with 11 Mr. Lyons' counsel since August 6th, again, always 12 maintaining that it would remain sealed until appropriately 13 dealt with. 14 So, in -- in -- if we take this case as a 15 benchmark of fairness, globally construed, we're well above 16 that benchmark on the timing issue. In fact, the timing 17 issue is starting to go the other way. We have to get on, we 18 have to make decisions. We can't delay these Proceedings any 19 longer, at the expense to everyone that is entailed in delay. 20 Secondly, the case says that 488.1, which is 21 the Criminal Code section on law office searches, permitted 22 the Crown under certain circumstances, to inspect the 23 documents before a judicial determination of privilege was 24 made. 25 And again, that's simply not the case here.

1 The Crown is in an adversarial relationship vis-a-vis an 2 accused person. We have absolutely no intention of 3 permitting any independent third party, to look at these 4 documents before the privilege issues are resolved, if 5 necessary, by hearing before the Regional Senior Justice and 6 on up the Judicial Review ladder, if that's where the 7 Proceedings go. 8 To suggest that Commission Counsel looking at 9 it is no different than Crown Counsel looking at it, I think 10 everybody can see quite clearly where I'm going with this, is 11 to completely overlook the fundamental conceptual distinction 12 that is so succinctly put between Commission Counsel and an 13 adversarial third party, in Justice O'Connor's article. 14 So, if we look -- even looking in the criminal 15 context, for lessons to be learned in fairness, it's my 16 submission that we're there. 17 The order that we're requesting is found in -- 18 in substance, in a letter from Commission Counsel, to Mr. 19 Lyons' counsel, at Tab 34 of the materials. 20 And I've highlighted the salient features of 21 the order, but just to allow other parties to address what 22 we're requesting, I refer everybody to the seven (7) points 23 in that letter, which would constitute, in my submission, an 24 appropriate and fair wording of the order, but I would like 25 to note just a couple of minor modifications.

1 Point number two (2), suggests that the review 2 to be conducted confidentially on Inquiry premises for 3 relevance first and then to address privilege issues would 4 begin within one (1) business day of the date of the Order. 5 I would submit, Madam Commissioner, that it 6 would be appropriate in the event that parties wish to seek 7 further review that that be expanded. It doesn't take long 8 to serve a notice and file a notice of application to review 9 any decision you, Madam Commissioner, might make but one (1) 10 day is a little short; perhaps two (2) or three (3) and the 11 other parties before you may have submissions on that issue. 12 Secondly, item number 7, 13 "Materials affected by unresolved privilege 14 or relevance claims will be placed before 15 the Commissioner for her review and 16 decision on the claim." 17 Again, consistent with the Walkerton model 18 you, Madam Commissioner, are best placed to determine 19 relevance. So I would propose that you, Madam Commissioner, 20 deal with relevance issues first because if it's irrelevant 21 privilege issues need not be addressed and that privilege 22 issues be addressed by the Regional Senior Justice. 23 And I understand, from conversations this 24 morning, that the Regional Senior Justice has, once again, 25 agreed to make himself available for that confidential review

1 if necessary. 2 Lastly, I would point out that in the 3 Walkerton procedure, which is essentially what I am 4 proposing, Madam Commissioner, be followed in this case, the 5 parties agreed that an application to the Regional Senior 6 Justice be deemed an application pursuant to Rule, I believe 7 it's, 14.01 in the Rules of Civil Procedure. 8 The effect of that is to accord, to my 9 understanding, a settled avenue of further review. If that 10 process were employed it would have the salutary effect of 11 not distracting anybody and not obliging anybody to waste 12 time or money, and in our case taxpayers' money, on bickering 13 over jurisdiction. So it would be my strong submission that 14 that be the appropriate procedure. 15 Lastly, on the nature of the order, I need to 16 address the titles on the boxes. It appears by the titles 17 that some, if the titles are accurate, boxes may contain 18 material that predates the period of concern with this 19 Inquiry. Either inquiry, that is TCLI or TECI and, of 20 course, the review must, in my submission, encompass issues 21 in both so that we only have to do this once for both 22 Inquiries. 23 If those titles are accurate then it may be 24 that some of the boxes contain irrelevant material. Two (2) 25 difficulties, one is that we have no idea what those titles

1 are, who put them -- I mean, what they are, but who put them 2 on and what knowledge the person titling the boxes had about 3 the contents of the files. 4 We know, because it's in the correspondence, 5 that Morrison Brown Sosnovitch did conduct what they called a 6 cursory review of the material and reached a preliminary 7 determination that some of those materials were irrelevant, 8 but, in the same letter said, we have neither the time, the 9 inclination or the resources to look at every page. 10 So, again, we do not have anything conclusive, 11 but, we do have some indication that there may be irrelevant 12 material in the boxes. 13 In that situation, in my submission, we have 14 to look at all of these boxes to see with some degree of 15 finality, what's in them, whether they are labelled 16 appropriately or inappropriately, how they're organized and 17 put the matter to rest, once and for all. 18 In making that submission, I also ask you 19 Madam Commissioner to keep in mind, that and I've already 20 taken everybody through this transcript reference, Mr. Lyons, 21 and I'll give you just the reference again, so that everyone 22 can turn back to it, did imply, at least, but one could 23 fairly say he implied that lobbying files were not stored off 24 site. 25 Looking at all of those files, may give us

1 some insight in the extent to which, Mr. Lyons was making an 2 accurate statement, when he said that because to take but one 3 (1) example, there's one (1) box going back to 1993, if Mr. 4 Lyons, was engaged in lobbying activities, with respect to 5 that box in 1993, then the fact that it was stored offsite, 6 has potentially great significant to his assertion under 7 oath, that he does not store lobbying files, off site. 8 So while, facially, the dates might seem to 9 make this material irrelevant, in light of what Mr. Lyons 10 himself has said, it is appropriate in my submission, for 11 Commission Counsel to inspect those files as well, because it 12 may be that as a result of that inspection, Mr. Lyons has a 13 statement under oath to answer for. 14 Those are my submissions. Thank you, Madam 15 Commissioner. 16 MADAM COMMISSIONER: Okay. How do you propose 17 that we proceed with this? I -- there is someone here from 18 the City and someone here from Dell Computer. 19 So, I don't know Mr. Auger, if you'd like me 20 to hear you first, or if you'd rather hear them first, to see 21 what it is that they have to say, so that you can reply to 22 all of that. 23 MR. RICHARD AUGER: Thank you very much. I 24 was thinking about that and I know, My Friend Mr. Roland, and 25 I don't want to speak for him, he can speak for himself, but,

1 my impression is that he may support Mr. Butt's position and 2 that -- 3 MADAM COMMISSIONER: Ms. Dyer? 4 MR. RICHARD AUGER: -- Counsel here, Ms. Dyer, 5 may in whole or in part, support the position I'm advancing. 6 So I don't -- I'm really in your hands. One (1) thought I 7 had, was whether or not, Mr. Roland wanted to now proceed 8 with his submissions, and then I would go next and 9 characterize that as responding to Mr. Butt's Motion. 10 MADAM COMMISSIONER: Okay. I guess from my 11 perspective, I see this as an application by Commission 12 Counsel that applies directly to your client, Mr. Lyons. 13 And insofar as the City is concerned and Dell 14 Computer is concerned, I see their submissions as potentially 15 being helpful to assist me, but, not necessarily 16 determinative of what I'm going to do. 17 Whatever ruling I make will be -- will affect 18 Mr. Lyons only and not Dell Computer or the City, at least 19 that's how I'm seeing it at this point. 20 MS. VALERIE DYER: I would have to disagree -- 21 MADAM COMMISSIONER: I'm sorry, your 22 microphone doesn't seem to be -- okay, go on. 23 MS. VALERIE DYER: The -- the privilege, if it 24 exists. 25 MADAM COMMISSIONER: We're not talking

1 privilege. 2 MS. VALERIE DYER: No, no, they -- well, we 3 are -- well, the difference here is we're talking about 4 whether somebody can look at somebody else's privileged 5 documents. 6 Privilege in here is in the communication and 7 is a privilege -- 8 MADAM COMMISSIONER: Okay, you know what, I 9 don't actually want to hear a whole argument on this right 10 now, because we've been here for an hour and a half, and 11 personally, I need a break. I -- I just want to -- to get a 12 sense of who's going next, and why, I guess. 13 But -- but I -- my -- my preliminary view was 14 that what I'm doing here today is making a decision based on 15 what Commission Counsel is asking me to do, vis-a-vis Mr. 16 Lyons, and that is simply looking at whether or not I will 17 allow them to unseal those boxes, to take a look at whether 18 there's anything in there that is helpful to me in my 19 capacity as Commissioner of a Public and Judicial Inquiry; 20 that's how I see this application today. 21 And so I -- I'm just not sure what -- what it 22 is that I'm to do with submissions from the City or -- or 23 Dell Computer. Although I'm happy to hear your parties, and 24 I'm happy to hear what you have to say, it's just I'm -- I 25 see at this point, and maybe I'm wrong, as being primarily an

1 issue between Commission Counsel and Mr. Lyons on this 2 particular case. 3 But why don't we take a break and -- and then 4 Mr. Roland, would you be prepared to go after the break then? 5 MR. IAN ROLAND: I will, Madam Commissioner. 6 MADAM COMMISSIONER: All right, we'll break 7 until ten (10) to. 8 THE REGISTRAR: The hearing is in recess until 9 10:50 a.m. 10 11 --- Upon recessing at 10:30 a.m. 12 --- Upon resuming at 10:50 a.m. 13 14 THE REGISTRAR: The Hearing is now resumed, 15 please be seated. 16 17 (BRIEF PAUSE) 18 19 MADAM COMMISSIONER: Yes, Mr. Roland...? 20 MR. IAN ROLAND: Yes, Madam Commissioner, on 21 behalf of the City of Toronto, we support Mr. Butt's 22 application to you, and we recommend the process that he puts 23 before you, to essentially vet the documents that are 24 contained in the eighteen (18) or nineteen (19) boxes. 25 Let me say that this is not a novel issue,

1 that the City of Toronto as I understand, has gone through 2 the same process with respect to many documents that for 3 which there was a concern both of relevancy and in 4 particular, privilege. 5 And finds -- found this -- the process 6 entirely to its satisfaction, and had -- and retains full 7 confidence in Commission Counsel to act as your alter ego in 8 the vetting of the material that is contained in those boxes, 9 as Commission Counsel has vetted material that has raised 10 issues for the City of Toronto. 11 What he puts before you is a process that he 12 recommends as fair, and we support the process as being a 13 fair one (1). 14 I want to also say that on the submissions put 15 before you by Mr. Butt this morning, and on the material 16 that's in place before you by him, it is clear that Mr. Lyons 17 has forfeited his opportunity to initially vet the documents. 18 As I understand it, his counsel will be 19 proposing to you that the boxes be returned to the Greenspan 20 White, and that Mr. Lyons, presumably with this counsel, will 21 go through the documents and identify those that are 22 relevant, and identify those that if relevant, there is an 23 assertion of privilege. 24 We say he's forfeited that opportunity. And 25 the reason he's forfeited that opportunity is clear from the

1 material that's put before you. That is he has not been 2 candid with you in his evidence. He has not presented 3 himself as someone who's prepared to fairly and openly and 4 appropriately cooperate with this Inquiry, by his denial of 5 the existence of the -- of any relevant and non-privileged 6 document and file, that is the DFS file. 7 What I -- what we also say to you, Madam 8 Commissioner, is that it would be difficult in any event, in 9 the circumstances, for Mr. Lyons, given his cast of mind and 10 his approach to date, to determine possible relevance. 11 This is a detailed and complex Inquiry, and it 12 is more difficult in this than in most cases, to assess what 13 is or is not relevant. There are, no doubt, going to be 14 documents in those boxes that are not relevant from any 15 perspective and there are -- there may be documents that are 16 relevant from any perspective. 17 Between those two (2) extremes there may very 18 well, or likely be a number of documents in which there is 19 going to be debate about relevance. That debate can't be 20 left solely now to Mr. Lyons, in the circumstance, to 21 determine. 22 23 (BRIEF PAUSE) 24 25 MR. IAN ROLAND: And I say that, not only

1 because of the complexity of this case, but also Mr. Lyons 2 and his counsel have not been in attendance and participated 3 at all in this Inquiry and hence, aren't sufficiently 4 informed of the nuances of relevance. 5 However, most significantly, the boxes came 6 from a third party, not from Mr. Lyons. They're in the 7 possession of Commission Counsel, who in my submissions, has 8 a duty, an overriding duty, to assure that a proper review of 9 the contents of the file boxes is undertaken, to determine 10 whether or not there are relevant documents. 11 You've averted, Madam Commissioner, this 12 morning, to the -- to a descriptor of helpful, as opposed to 13 relevant. I'm not sure whether you -- you make a distinction 14 between the two (2). I don't make a distinction between the 15 two (2). Certainly I don't say that, and I don't come before 16 you saying that helpful is broader than relevance. 17 It may be that one might say that helpful is 18 narrower than relevance, it may be relevant, but not 19 particularly helpful to the Inquiry, and if -- if that's the 20 intent of the use of the term helpful, I leave it to 21 Commission Counsel to determine whether a document, although 22 relevant, may not be helpful to the work of this Inquiry. 23 We're not interested in having documents put 24 before the Inquiry, if they're -- even if relevant, if 25 they're not helpful at all to the work of the Inquiry.

1 Madam Commissioner, you're assisted by analogy 2 in this case, with the rules of civil procedure. They don't 3 govern your process, but the rules of civil procedure have 4 been developed over -- over many decades, to regulate the 5 civil process, including the disclosure and production of 6 relevant documents and you're helped by the rules of civil 7 procedure, and in particular by Rule 30.10. Sorry, yes, Rule 8 30.10. 9 Rule 30.10 deals with the production from non- 10 parties of documents, with leave, and what you have here is 11 documents from a non-party, from the Morrison Brown firm. 12 And what the rule says is that under sub 3: 13 "Where privilege is claimed for a document, 14 or where the Court is uncertain of the 15 relevance of or necessity for discovery of 16 the document, the Court may inspect the 17 document to determine the issue." 18 That it is for the Court to look at the 19 document if there's an issue of relevance, or an issue of 20 privilege to inspect the document and to determine whether 21 it's relevant or whether it's privileged. 22 You have that same concern here at this 23 Inquiry with this motion and I support the submissions made 24 by Mr. Butt that Commission Counsel is the Court in this 25 process, is your alter-ego and that has been recognized by

1 numerous Commissions in the past, by the writers and in 2 particular, by Mr. Justice O'Connor in the article put before 3 you this morning. 4 I point you to a couple of additional passages 5 that Mr. Butt didn't refer to in that article, in particular, 6 at page 10 on the right hand column in which he makes it 7 clear, about two-thirds (2/3) of the way down the right-hand 8 column on page 10, that the proceeding is entirely invesgator 9 -- investigatory and not adversarial. 10 And that, of course, is the critical 11 distinction in this process that it is investigatory and that 12 Mr. Butt and Commission Counsel, generally, are your alter 13 ego in conducting the investigation. This is not a cause, as 14 the motion is struck -- put before you that any adversary, 15 any third party, even if one could call interested parties in 16 this process adversaries and certainly from -- it could be 17 said that's so from a number of perspectives. 18 None of them are in -- are proposed to be 19 engaged in the process of reviewing these documents, vetting 20 the documents and so the analogy is to rule 30.10 is perfect. 21 That is there's an issue of relevance, there's an issue of 22 privilege and the court, in the context of this Inquiry and 23 the person of Commission Counsel is and should be fixed with 24 the responsibility of inspecting the document. 25 From the City's perspective, we say this is im

1 -- it's important that this Inquiry be seen as a fair Inquiry 2 and a fair process and given the conduct of Mr. Lyons to 3 date, even if he had, as he did, the opportunity himself 4 initially to vet the documents, he's both, in a practical 5 sense, lost the opportunity because the documents are now 6 with the Inquiry and in a very real fairness sense, has 7 forfeited the opportunity by his evidence and by his approach 8 to this very issue to date. 9 In denying the existence of the documents and 10 in failing to look for the documents even though it's 11 apparent he knew they existed and indeed, coming before you 12 and say he had, when he hadn't. That is there can be no fair 13 confidence in Mr. Lyons himself unilaterally vetting these 14 documents in the circumstances. 15 So we ask you then and we support and we ask 16 you to allow the motion brought on behalf of Commission 17 Counsel. Thank you. 18 MADAM COMMISSIONER: Thank you, Mr. Roland. 19 MR. DAVID BUTT: Madam Commissioner? 20 MADAM COMMISSIONER: Yes? 21 MR. DAVID BUTT: I wonder if I might just 22 before anyone else speaks bring to your attention one small 23 factual issue that I thank Ms. Dyer for alerting me to. 24 There are only eighteen (18) boxes on that list. 25 MADAM COMMISSIONER: Okay.

1 MR. DAVID BUTT: I spoke of nineteen (19) -- 2 MADAM COMMISSIONER: Yes. 3 MR. DAVID BUTT: -- and twenty-one (21) as 4 mentioned in the correspondence. I misspoke. We counted 5 during the break, we have only eighteen (18). I'm confident 6 that we have retained in one location since we received them 7 on July 22nd, all of the boxes we received but beyond that, I 8 do not have an explanation by the number twenty-one (21) 9 appears in the correspondence from Morrison Brown Sosnovitch 10 and if we assume that the two (2) boxes taken away account 11 for two (2) of them why there is a third one unaccounted for. 12 I do not have anything more to offer on that 13 at this stage, but I can say that I will make sure we 14 communicate with Morrison Brown Sosnovitch to try to resolve 15 that issue and we'll keep everybody apprised of our 16 communication about that and I bring that to everyone's 17 attention now so that anyone can deal with it in the 18 submissions that they make. Thank you. 19 MADAM COMMISSIONER: All right. Thank you. 20 Mr. Auger...? 21 MR. RICHARD AUGER: Thank you, very much and I 22 thank Mr. Butt for clarifying that one (1) point and I've 23 prepared -- 24 MADAM COMMISSIONER: Oh, okay. 25 MR. RICHARD AUGER: -- my own compendium of

1 correspondence and I received Mr. Butt's compendium this 2 morning and to try to be as efficient as possible, what I 3 propose to do is deliver to you my own compendium because I 4 have my own notes and references within my own volume. 5 MADAM COMMISSIONER: Sure. That's fine. 6 thank you. 7 MR. RICHARD AUGER: And I have a copy for My 8 Friends and the one, sort of, housekeeping item I'll point 9 out, mostly for Mr. Butt's benefit, is that Tab 6, I've taken 10 out of my copy because that's one of the letters that Mr. 11 Butt and I agreed would be edited. 12 MADAM COMMISSIONER: Okay. 13 MR. RICHARD AUGER: And I'm only doing this to 14 try to avoid matching up my own notes on my own compendium 15 and -- 16 MADAM COMMISSIONER: Welcome to the modern 17 age, Mr. Auger. With the system that we have here, one has 18 to stay close to the microphone otherwise the court reporter 19 doesn't pick up your voice. So, would you like to go to the 20 podium then and that might make things a little easier. 21 So I have here your compendium of 22 correspondence and your brief of authorities. 23 MR. RICHARD AUGER: Thank you, very much. 24 25 (BRIEF PAUSE)

1 2 MR. RICHARD AUGER: And another reason that 3 I'm opting to proceed in this manner, Madam Commissioner, is 4 that my approach is really entirely different from 5 Mr. Butt's. Mr. Butt spent a lot of time on reviewing the 6 various letters to Morrison Brown and, indeed, reviewing Mr. 7 Lyons' evidence and I think that got to Mr. Butt's submission 8 that, and indeed Mr. Roland's submission, was that Mr. Lyons 9 had forfeited his entitlement to review these documents 10 privately with his own counsel. 11 In my submission, the attempted 12 characterizations by My Friends are both unfair and entirely 13 unhelpful to the issue that you're being asked to assist on 14 today and I think one thing we can all agree on is that when 15 you go through the correspondence as Mr. Butt accurately has 16 and you go through the evidence, I think we can all agree on 17 the fact that it's not really clear what happened. 18 And, indeed, Mr. Butt conceded that there was 19 a letter of April 9th. And, again, as Mr. Butt pointed out, 20 the timing is important as we know Mr. Lyons testified in 21 early to mid-May. But the problem, as we now know, is that 22 according to the Morrison Brown correspondence, which is at 23 Tab 4 of Mr. Butt's compendium page 16, there's a letter of 24 April 9th, 2003 sent by fax and the fax number that I can 25 read on my copy is 416-338-3944 and it's addressed to Mr.

1 Manes, Commission Counsel. 2 MADAM COMMISSIONER: I -- I can't actually see 3 that on mine, I can't see the numbers. Is it on yours? 4 MR. RICHARD AUGER: On my document, Madam 5 Commissioner, on page 16 I'm reading on the top left, April 6 9, 2003, file 200 -- 7 MADAM COMMISSIONER: Oh, yes, okay sorry, yes. 8 But that's not the fax -- I see, I thought you meant the 9 transmission -- 10 MR. RICHARD AUGER: Oh, no, I -- 11 MADAM COMMISSIONER: Okay. 12 MR. RICHARD AUGER: -- I don't see a 13 transmission on my document. 14 MADAM COMMISSIONER: Right, okay, thank you. 15 MR. RICHARD AUGER: So -- so, what I'm 16 pointing out is that the letter of April 9th, 2003 was faxed 17 to fax number 416-338-3944, so on the face of the documents 18 that we have, it would appear that a letter was sent from 19 Morrison Brown to Mr. Manes on April 9th. 20 MADAM COMMISSIONER: There isn't one (1) that 21 has a fax transmission on it though, what -- Morrison Brown 22 Sosnovitch sent to Mr. Manes was a -- a copy of it, but not 23 one (1) where the fax transmission has gone through? 24 MR. RICHARD AUGER: Well, the document -- I'm 25 sorry.

1 MADAM COMMISSIONER: Is that right? 2 MR. RICHARD AUGER: The document that I'm 3 referring you to -- 4 MADAM COMMISSIONER: Yeah, I -- I see what 5 you're saying -- I know what you're saying is that on the 6 face of the letter from Mr. Sosnovitch, that he then -- he 7 sends to Mr. Manes, this says: 8 "Further to your letter of April 8th, we 9 enclose herewith an index of materials." 10 And it -- this letter is dated April the 9th, 11 2003. 12 MR. RICHARD AUGER: Correct. 13 MADAM COMMISSIONER: It appears then in -- on 14 the next tab on May the 15th, that there -- there appears to 15 have been some kind of -- of discussion between Mr. Manes 16 then and Mr. Sosnovitch, because he says: 17 "As I explained, this letter was not in our 18 file." 19 So, I'm taking from that, that there must have 20 been some conversation. 21 MR. RICHARD AUGER: Right. 22 MADAM COMMISSIONER: Right, okay. 23 MR. RICHARD AUGER: And so document 15, in the 24 tab that I was looking at, Madam Commissioner, in Tab 4, 25 indicates that on Monday, May 12th, 2003, Morrison Brent --

1 Morrison Brown, sorry, sent another fax and the comments are: 2 "Re fax of letter initially faxed April 3 9th." 4 MADAM COMMISSIONER: Right. 5 MR. RICHARD AUGER: So, that's what we have 6 and that's what we know today. 7 8 (BRIEF PAUSE) 9 10 MR. RICHARD AUGER: And without trying to 11 assert on behalf of Mr. Manes, what his position is and 12 trying to suggest whether or not he received it, et cetera, I 13 think we can all agree that -- well, I think Mr. Butt 14 indicated that through clerical error or whatever happened, 15 Mr. Manes didn't get the letter on April 9th. 16 And I think we can agree by extension that if 17 Mr. Manes had an opportunity to show this letter to Mr. Manes 18 -- sorry, to Mr. Lyons during the course of his testimony, I 19 expect that there wouldn't have been a need for Mr. Butt to 20 go through all of the evidence again today, and spend some 21 twenty (20) or thirty (30) minutes on the chronology and I 22 don't -- and I don't say that in a critical way. My point is 23 that -- 24 MADAM COMMISSIONER: If -- if the letter had 25 come in, or if the -- we don't know what happened to the

1 letter, I gather and there is no record of it having come to 2 the Commission offices. So, what you're saying is that if 3 the letter had in fact been received by Mr. Manes, when it 4 was sent, then he could have done whatever needed to be done 5 in order to have the documents by the time Mr. Lyons 6 testified. Is that -- 7 MR. RICHARD AUGER: Precisely. 8 MADAM COMMISSIONER: Okay. 9 MR. RICHARD AUGER: And that in leaving aside 10 whether or not Mr. Manes had it or it was misplaced, whatever 11 happened I think we can all agree that, you know, the -- the, 12 now, attempted characterization that Mr. Lyons has not been 13 up front, did not conduct diligent searches, et cetera, that 14 these suggestions could have been put to him under oath and 15 he's not -- this is not a trial of his credibility or his 16 reliability and this letter of April 9th of 2003 that on May 17 12th, Morrison Brown says in its cover letter that it was 18 initially faxed on April 9th. 19 If that had have found its way into the 20 hearing room, in my submission, it would have been dealt with 21 appropriately and the appropriate answers would have been 22 given and this is only one example of -- for whatever reason, 23 there may have been a problem and it's simply unfair to go 24 through these letters and to go through the transcript and 25 try to come to some conclusion or to assert that Mr. Lyons

1 was being less than forthright; that's one example. 2 The April letter -- the April 9th letter is 3 one example of a problem that obviously when Mr. Lyons was 4 testifying, he wasn't aware of the exchange of the documents 5 and indeed -- 6 7 (BRIEF PAUSE) 8 9 MR. RICHARD AUGER: -- as I understand the 10 chronology, none of the documents that were -- that are the 11 subject of the requested order today -- my office wasn't 12 advised of their existence or advised of these discussions 13 that were occurring with Morrison Brown and Mr. Manes and I 14 think the date that Mr. Butt had given us was August 6th. 15 August 6 -- yes, it is in Mr. Butt's compendium at Tab 16, 16 Madam Commissioner. 17 MADAM COMMISSIONER: Thank you. 18 MR. RICHARD AUGER: As I understand your 19 chronology, August 6th, 2003 is the first day that my firm 20 was advised of the existence of the summons to Morrison Brown 21 and this entire issue of other documents that may or may not 22 be out there and again, so the only point I'm making is that, 23 you know, again, if there were documents that the Commission 24 -- the Commission Counsel were aware of or suspected were out 25 there it should have either A) been -- advised my firm

1 earlier or B) could have put some of this to Mr. Lyons. 2 So that's just one example of how it's a real 3 problem for My -- My Friends to suggest that Mr. Lyons has 4 not been entirely forthright in conducting his search. 5 MADAM COMMISSIONER: Did Mr. Manes not put to 6 Mr. Lyons when Mr. Lyons was in the witness box that he, 7 being Mr. Manes, had asked Morrison Brown Sosnovitch for the 8 -- for documents and they didn't have any? Is that -- 9 MR. RICHARD AUGER: Precisely and that was my 10 next -- I was just going to move to that point. 11 MADAM COMMISSIONER: I'm sorry, because I 12 thought you said he could have put this to Mr. Lyons and I 13 understood that he had, in fact, put it to Mr. Lyons in the 14 witness box. That he'd asked the firm for any documents and 15 that the firm didn't have any. 16 MR. RICHARD AUGER: That's right and that's -- 17 that was actually the point that I was just moving to as 18 another example or an illustration of the problem. I think 19 the general point I'm making is that it was unclear to all 20 parties and it was unclear to Mr. Manes, it was unclear to 21 Morrison Brown, what searches were conducted, was it off 22 site, was it on site, was it electronic, was it paper? And 23 you're quite right and I have -- and I was going to take you 24 to the quote -- I was looking for it in Mr. Butt's tab and I 25 couldn't find it. So what I have is the extract,

1 unfortunately it's not in my own compendium but I'll read to 2 you the -- 3 MADAM COMMISSIONER: Just give me the date and 4 I can find it from here as well. 5 MR. RICHARD AUGER: Okay. May 8, Madam 6 Commissioner. 7 MADAM COMMISSIONER: Okay. And the page 8 number? 9 MR. RICHARD AUGER: Well, the page number that 10 I have on my materials that were printed out from the 11 website, the page number is page 8 and 9. 12 MADAM COMMISSIONER: Thank you. 13 MR. RICHARD AUGER: And I'll back up a little 14 bit so that we have the context of the exchange. 15 MADAM COMMISSIONER: Is that not on -- at Tab 16 39, page 72(b), that seems to be page 8 and 9 or are you 17 looking at something different? 18 MR. RICHARD AUGER: Sorry, Tab 39? 19 MADAM COMMISSIONER: Tab 39, page 72(b)? 20 MR. RICHARD AUGER: Yes. You're quite right. 21 Thank you very much. 22 MADAM COMMISSIONER: Okay. 23 MR. RICHARD AUGER: That makes it much easier. 24 MADAM COMMISSIONER: All right. Thank you. 25 MR. RICHARD AUGER: So that's exactly what I

1 was referring to, Page 72(b). And this is the exchange and 2 this is, I think, the same evidence that -- that you and I 3 are now discussing. 4 At the top of page 8, Madam Commissioner. 5 MADAM COMMISSIONER: Yes. I'm there. 6 MR. RICHARD AUGER: "Would you have 7 personal knowledge of that or would that 8 have been done by somebody else in your 9 firm at the time? 10 A: It could have been done by someone 11 else. 12 Q: Was there a regular process of 13 destroying files after they -- after you 14 were done working on them or was that 15 something that you would have had to give 16 instruction on? 17 A: Well, we tried to weed them out if 18 we're not using them and we try to do that 19 within a few weeks or months of the -- of 20 acting for them. 21 Q: In this -- in the specific case, Dell 22 Computer, DFS, do you recall whether you 23 specifically gave the instruction to 24 destroy those files to the best of your 25 recollection?

1 A: Probably." 2 And this just, as we're passing through the 3 point, Mr. Butt submits to you that, you know, it's clear -- 4 this is one of the criticisms of the evidence is that it's 5 clear that Mr. Lyons' answer is just not correct or 6 forthright. 7 Well, his answer was "probably". He didn't 8 say yes and he didn't say no and I think on a fair reading of 9 the entire transcript he's doing his best to recall the 10 process and he's -- he's not committing with any certainty 11 which is probably the most honest approach. 12 And as any council in the room would know, you 13 can't be certain without -- you can't be certain without 14 checking with your assistant, without checking your own 15 notes, without checking with your filing clerk exactly what 16 happened with any file whether it's a small firm or a large 17 firm. In any busy practice you just can't say with certainty 18 yes or no. 19 And in my respectful submission, the honest 20 answer was to say "probably" meaning maybe. In any event, I 21 want to continue with the exchange to respond to your 22 comment, Madam Commissioner. It continues 23 "Q: In any event, those files aren't 24 available, you've looked for them? 25 A: Yes, I did."

1 Question -- and this is the part -- the 2 important part; 3 "Q: Now, we've inquired of Morrison Brown 4 Sosnovitch, they've gotten back to us and 5 said they didn't have them. So I take it 6 that when you left them either the files 7 were destroyed or they were destroyed after 8 you left them? 9 A: What was the question again, sorry? 10 Q: Let me ask the question this way, when 11 you left Morrison Brown Sosnovitch do you 12 remember taking the Dell Financial or Dell 13 Computer files? 14 A: Not Dell Financial. Dell Computer 15 might still have been a client." 16 So the important lines I'm trying to take your 17 attention to are line 23, on page 8, where Mr. Manes himself 18 acknowledges to the Inquiry, that he made it -- he made an 19 inquiry of Morrison Brown as to what material they had, and 20 they got back to Mr. Manes and said that they didn't have 21 them either. 22 So, I think to be fair, on a -- on a -- on a 23 whole reading of the evidence and a whole reading of the 24 correspondence and to look at the entire context, it's -- 25 it's just unfair to suggest, for the purpose of this motion,

1 that Mr. Lyons has somehow given up his rights of 2 confidentiality, his obligations of asserting privilege, et 3 cetera. 4 So, just with that introduction, I want to 5 take you to my main submissions on the motion and as I said 6 at the outset, my approach is a little different. My 7 approach is not who's at fault, who's to blame, who received 8 a fax or didn't receive a fax, or who had a perfect memory of 9 conducting searches, et cetera. 10 My focus is -- and in my respectful 11 submission, this point, with the greatest respect, has been 12 missed and the -- and the point is simple, Commission Counsel 13 cannot look at private confidential and privileged documents, 14 it's that simple. 15 And that I know My Friends are suggesting 16 that, well -- and I've read Justice O'Connor's article, I 17 know that the submission is that, well, Commission Counsel is 18 really the same -- Commission Counsel is really in the same 19 shoes as the Commissioner, and that therefore Commission 20 Counsel are entitled to review documents for relevance, and 21 perhaps privilege. 22 And I think My Friend has suggested that, 23 well, what we really want to do is open the boxes, we'll do a 24 preliminary review for rel -- for relevance, and if there's 25 any dispute, or if there's any issues or any concern about

1 privilege, we'll proceed in another forum. 2 In my respectful submission, that's just not 3 practical, and the reason they're not pract -- the reason 4 it's not practical is that relevance and privilege are 5 married, you can't separate them, you can't conduct a review 6 of documents, and say, oh, I'm only going to look at 7 documents and see if they're relevant, but in the back of my 8 mind, I'll keep in mind that you have privilege concerns, and 9 if there's any privilege concern, even though I've looked at 10 it, we'll deal with that on another day. 11 In my respectful submission, a) there's no 12 legal authority to do that, and b) it's unfair and not an 13 appropriate procedure. 14 I've asked -- well Mr. Butt and I have been 15 exchanging correspondence for some time on -- on this issue, 16 and I've asked for authority for the order that My Friend 17 seeks. My Friend, in fairness, referred me to the Consortium 18 case, which I have and I'll take you to eventually, but in my 19 respectful submission, it's of no assistance for the 20 particular order that My Friend is seeking. 21 And so what I want to -- what I now want to do 22 is talk to some of the basic statutory authority, and then 23 some of the principles in case law, that in my submissions, 24 support our position. 25 In my brief of authorities at Tab 1, is the

1 Public Inquiries Act. And so the simple starting point is 2 that a summons was issued, and it was delivered to a number 3 of parties, but for the purpose of this motion, there was a 4 summons delivered to Morrison Brown and Section 7 of the 5 Public Inquiries Act does give the Commission power to do 6 that and that was done with jurisdiction and done properly. 7 "Section 7: The Commission may require any 8 person by summons --" 9 Subsection B says: 10 "To produce in evidence at an Inquiry such 11 documents and things as the Commission may 12 specify relevant to the subject matter of 13 the Inquiry and not inadmissible in 14 evidence at the Inquiry under Section 11." 15 And Section 11, as we well know, is the 16 express provision relating to privilege. 17 "Section 11: Nothing is admissible in 18 evidence at an Inquiry that would be 19 inadmissible in a court by reason of any 20 privilege under the law of evidence." 21 So, again, basic principle that if Commission 22 Counsel was interested in documents and, indeed, if the 23 Commissioner is interested in documents or interested in 24 persons that may have relevant evidence, the summons may be 25 issued and that's what occurred.

1 But in my respectful submission, the problem 2 that we're now faced with is that Morrison Brown and 3 Commission Counsel entered into what I'll call a private 4 arrangement whereby -- and I think Mr. Butt has already 5 accurately described this as Morrison Brown would seal the 6 documents and I think it was a description to the effect of, 7 you know, they did cursory review, didn't have the time or 8 resources to review the material in a complete fashion. 9 And so I think we all agree that the complete 10 review didn't occur by Morrison Brown and that's the problem. 11 Morrison Brown's the law firm -- Morrison Brown's the law 12 firm that Mr. Lyons was at. 13 We've heard the evidence about Mr. Lyons 14 background practising law for I think it was thirty-six (36) 15 or thirty-eight (38) years, a member of the Ontario Bar Bench 16 of the Law Society and Queen's Counsel and he was a member of 17 Morrison Brown. 18 And so the point that I'm making is there's 19 nothing -- there's no power under the Act, there's no cases 20 for the proposition that a recipient of a summons under 21 Section 7, a) does not have to review material and -- and 22 bring forward what they deem relevant and priv -- in fact, 23 the provision is clear. That person that receives the 24 summons must produce in evidence at an Inquiry documents that 25 are revel -- relevant and not privileged.

85
  1                 So in my submission, Commission Counsel has
  2  made a huge leap that has created this problem and the huge
  3  leap is that there was a private agreement without
  4  consultation with Mr. Lyons' Counsel --
  5  
  6                       (BRIEF PAUSE)
  7  
  8                 MR. RICHARD AUGER:  And I'm pausing because I
  9  know there's a reference in one of the letters where Morrison
 10  Brown specifically suggested that there's documents that may
 11  be a real concern that may be privileged and Mr. Lyons'
 12  Counsel should participate in any process.
 13  
 14                       (BRIEF PAUSE)
 15  
 16                 MR. RICHARD AUGER:  But that doesn't occur and
 17  then on July 21st the documents are delivered under this
 18  private agreement to seal the documents.  And, in fairness,
 19  the agreement was that they not be opened in the absence of
 20  the appropriate order -- well, I think the wording was "An
 21  order of Madam Commissioner", or consent of Mr. Lyons'
 22  counsel.
 23                 So the point I'm making is that had Commission
 24  Counsel complied with the appropriate route which is set out
 25  in Section 7, that is issue the summons that contemplates

1 only relevant, inadmissible and admissible documents, and 2 have the party that have any concern bring them to the 3 Inquiry so that the appropriate questions can occur, the 4 appropriate background can be set out and the appropriate 5 record can be created -- 6 MADAM COMMISSIONER: I'm just thinking of some 7 of the things that have happened in the Inquiry so far and I 8 think we've heard from Mr. Roland where there have been 9 instances where the Commission Counsel have found documents 10 that were privileged and my understanding is that there have 11 been some documents that the City had that they took the 12 position were privileged because as you may or may now know, 13 there are outstanding lawsuits going on right now between the 14 City and MFP and between the City and between Lana Viinamae 15 and the City and so there are some documents that are 16 privileged. 17 And some of the documents that Commission 18 Counsel has seen they have seen them, decided they were 19 relevant but did not, in fact, proceed to use them in the 20 Inquiry because one of the parties claimed privilege and from 21 Commission Counsel's point of view, it was felt that it 22 wasn't -- it wasn't necessary or helpful for me to have that 23 information given the privilege claim and all that was 24 attached to it. 25 So it's simply because Mr. Butt asked that the

1 boxes be opened and if he -- if I grant this and find that -- 2 or give him the opportunity to do that through whatever 3 mechanism and if he finds something that he feels is relevant 4 or helpful to me but that privilege is claimed, it doesn't 5 necessarily mean that Commission Counsel will seek to 6 introduce the document that is privileged. 7 MR. RICHARD AUGER: I agree entirely, Madam 8 Commissioner. I agree entirely and you're quite right, it's 9 a two-step process. One is what documents are going to seek 10 your permission to be admissible? And are they admissible? 11 So, I agree, that, you know, if there are ten (10) documents 12 that My Friend is permitted to look at, there may be, you 13 know, only one (1) document that he seeks to be admitted. 14 MADAM COMMISSIONER: Right. 15 MR. RICHARD AUGER: The problem is that he's 16 looked at the other nine (9) that may be privileged and in my 17 respectful submission, he's just not entitled to do that as a 18 matter of law and, again, it's My Friend's motion and it's 19 not a criticism but I think we've all searched for the 20 appropriate authorities that could assist you and there's no 21 -- there's no case on point that says that Commission Counsel 22 is entitled to, in an Inquiry setting, is entitled to look at 23 privileged documents. 24 And I'll get to, sort of, more of an 25 elaboration on that at -- as we move forward. So the only

1 point I'm making, Madam Commissioner, in terms of Tab 1 is 2 that the appropriate section, Section 7, as the simple 3 starting point wasn't followed and there was this private 4 arrangement, seal up the documents and we'll deal with it on 5 a later day and that is another example that -- 6 MADAM COMMISSIONER: I just want to make sure 7 that we all agree that in your characterization of it as a 8 private arrangement, Morrison Brown Sosnovitch was in fact 9 responding to a summons? 10 MR. RICHARD AUGER: Absolutely, and they had a 11 legal obligation -- 12 MADAM COMMISSIONER: Right. 13 MR. RICHARD AUGER: -- to do that, and -- 14 MADAM COMMISSIONER: So, the arrangement was 15 simply that they would respond to the summons, and that 16 Commission Counsel would look -- and in fact, Commission 17 Counsel, as I understood it, are the ones who -- or either 18 they agreed or Commission Counsel suggested that they be 19 sealed, so that there be no allegation or suggestion that 20 Commission Counsel has looked at any of -- of those 21 documents? 22 MR. RICHARD AUGER: Precisely. 23 MADAM COMMISSIONER: Okay. 24 MR. RICHARD AUGER: Precisely. 25 MADAM COMMISSIONER: Okay.

1 (BRIEF PAUSE) 2 3 4 MR. RICHARD AUGER: I want to take you to 5 what, in my -- and I think most of the argument is being done 6 by way of analogy to other principles and cases, and I want 7 to take you to the last case in my book, which is the 8 Lavallee case, at Tab 9. 9 In my submission, it's the most helpful 10 authority that we have to assist you in deciding the issue, 11 and it's the Lavallee, Rackel and Heintz vs The Attorney 12 General of Canada, The Supreme Court of Canada, the judgment 13 rendered September 12th, 2002, 167 ccc 3rd, page 1. 14 And this is a case that Mr. Butt has already 15 alluded to, and without getting into all of the details of 16 the facts, it's an examination of -- and this is on page 13, 17 Madam Commissioner. 18 It's the Supreme Court's review of the 19 Criminal Code provision at the time, Section 488.1, sub- 20 section 4. 21 In my submission, this is most helpful to you, 22 because this contemplates the very same type of order that 23 Commission Counsel is requesting today. In Section 4, and 24 I'm not going to read it to you, but what it contemplates is 25 that -- well sub B, on the top of page 14, where the Judge is

1 of the opinion that: 2 "It would materially assist him in deciding 3 whether or not the document is privileged, 4 may allow the Attorney General to inspect 5 the document." 6 And that, in my submission, is -- is the 7 narrow and simple issue that's before you, whether or not 8 that's permissible, and the case -- the Lavallee case goes 9 through an analysis of -- I think it was three (3) search 10 warrants that were executed at three (3) different law firms 11 and again, that's another factual point that makes it 12 applicable to this case. 13 It's not as though we're talking about a 14 summons that was served, you know, on a third party that may 15 have an interest in these Proceedings, but it was served on a 16 law firm, and that's what occurred in the Lavallee case. 17 And the Court struck down Section 488.1, on 18 the basis that it was inappropriate, as a matter of law, for 19 a third party, and in this case, the Crown Attorney to 20 inspect -- to inspect documents. Not to seek to admit them 21 in evidence, but to at the very initial threshold stage, to 22 inspect the privileged document. And that's what -- that's 23 what this litigation was about in the Lavallee case and in my 24 submission, the very same issue that's before you now. 25 And there are very good reasons that I want to

1 develop, that apply to the application that's before you. On 2 page 24; 3 "The court examines the constitutional 4 failings of Section 48.1 identified in the 5 proceedings below." 6 And at paragraph 28, the court says this: 7 "Courts have also identified another 8 offensive aspect of Section 48.12 and the 9 requirement that the lawyer may name the 10 client whose privilege is being threatened 11 in order to engage the sealing procedure 12 with respect to that client's documents. 13 The name of the client may very well be 14 protected by solicitor client privilege 15 although this is not always the case." 16 And there -- authorities cited including Mr. 17 Manes, solicitor client privilege in Canadian law in 1993. 18 "Where the name of the client is indeed 19 privileged information, Section 48.12 20 compels the lawyer to choose between two 21 (2) different privileged items. The name 22 of the client or the pri -- or the 23 confidential documents targeted by the 24 search." 25 So just as a very simple starting point, the

92
  1  court has identified a real problem in allowing a third party
  2  in the Lavallee case, Crown Counsel -- Crown Counsel that, in
  3  my submission, had the role not unlike Commission Counsel and
  4  I appreciate that there's a distinction.  
  5                 I appreciate that Commission Counsel is
  6  permitted as a matter of law to assist you in many aspects of
  7  the proceedings but Commission Counsel is doing that, as My
  8  Friend has pointed out, in some way on behalf of the public
  9  the public has an interest in the proceedings and as My
 10  Friend pointed out, it's taxpayer's funds.
 11                 And so the court's concern in Lavallee about a
 12  Crown attorney that has the same type of role that the Crown
 13  attorney's acting on behalf of the public, the Crown attorney
 14  has no vested interest in the outcome, that the Crown
 15  attorney's role was to not seek a conviction, the Crown
 16  attorney's role is to assist the trier with all relevant
 17  evidence and put the evidence before the court and let the
 18  court decide.
 19                 In my submission, it's not an entirely
 20  different role and so that -- on page 24, I point that out
 21  just as a starting point of one of the problems that the
 22  court had real concerns about in Lavallee in allowing a third
 23  party, a Crown attorney, review privileged documents.  
 24                 MADAM COMMISSIONER:  Help me with this, Mr.
 25  Auger.  There are some inquiries -- public inquiries where

1 instead of having Counsel the -- the Commissioner does all 2 the questioning himself or herself and the view is that the 3 Commissioner can either do all of that work or the 4 Commissioner can hire somebody else to assist him or her to 5 do the work. 6 And in most of them now, because there's so 7 much work involved, the Commissioners tend to hire lawyers to 8 assist them in the investigation and in the preparation and 9 the presentation of the cases but in principle, the 10 Commissioner doesn't have to do that. They can ask all the 11 questions themselves if they want; they can be the 12 investigator, they can be the Commission Counsel. 13 So if that -- so that being the case, how is 14 Commission Counsel, then, who is hired by me to assist me in 15 conducting this Inquiry, the same as a Crown attorney who 16 does not report to the Judge; who does not work with the 17 Judge in the preparation of the case? If you could help me 18 with that distinction -- 19 MR. RICHARD AUGER: Certainly. 20 MADAM COMMISSIONER: -- I'd appreciate it. 21 MR. RICHARD AUGER: I agree with you that 22 you're entitled to, in fact, have Commission Counsel to 23 assist you, as I've already indicated, with much of the 24 proceedings and obviously there's a lot of work and you're 25 entitled to assistance in that.

1 My submission is that that assistance stops -- 2 is halted at any procedure that involves the review of 3 privileged documents. And my authority for saying that is 4 the Lavallee case and -- and it's not just that where 5 Lavallee involved a Crown Attorney and, yes, there are 6 differences. It's more -- 7 MADAM COMMISSIONER: So -- 8 MR. RICHARD AUGER: I'm sorry, go ahead. 9 MADAM COMMISSIONER: So, if -- let's say if 10 there were no Crown Attorney -- if there were no Commission 11 Counsel then, would it be your position that the Commissioner 12 also should not be entitled to see this material? 13 MR. RICHARD AUGER: I don't have a section, 14 statutory authority or a case that would specifically assist 15 you on that. My -- 16 MADAM COMMISSIONER: I appreciate that -- 17 MR. RICHARD AUGER: My -- 18 MADAM COMMISSIONER: I doesn't happen all that 19 often. It's -- there aren't as many Public Inquiries as 20 there are trials so we don't have that same kind of case law, 21 so I appreciate whatever assistance you can give me. 22 MR. RICHARD AUGER: Precisely. And I -- and 23 that's exactly right. In civil or criminal litigation the 24 Justice presiding may very well be entitled to review the 25 documents on a privilege motion.

1 As we know, and I think it was alluded to by 2 Mr. Roland, that there's a civil procedure under the Rules of 3 Civil Procedure where a party to a civil litigation is 4 required to set out or list documents in an affidavit of 5 documents and there's a specific schedule that you're 6 familiar with that a party can list, in general terms, 7 privileged documents. 8 So that everyone knows they exist and that 9 ultimately a Judge may review them for determining whether or 10 not they're privileged. So let's just one example and the 11 same type of -- same procedure can occur in criminal 12 litigation where the Judge can review documents and that's 13 true in terms of third party documents, et cetera. 14 So, I don't know if that assists you but the 15 point that I'm making in Lavallee is not that, well, Lavallee 16 was, you know, involved a Crown Attorney and Mr. Butt is the 17 same as a Crown Attorney in this case and therefore you can't 18 do it. That's not -- my submission, the Supreme Court of 19 Canada in Lavallee goes through a more in depth examination 20 of why you can't do that and it's tied to -- it requires a 21 breakdown of what we're really talking about. 22 And what we're really talking about is not 23 whether it's Mr. Lyons' privilege or whether it's any other 24 party with standing's privilege, the important issue is that 25 it's potentially the client's privilege. So if you were to

1 say for the purpose of dialogue that there were these ten 2 (10) documents, in our example nine (9) of them were 3 privileged, if those documents were -- if they were -- and 4 there are many categories of privilege and it's a continuing 5 growing category, if -- if nine (9) of those documents were 6 solicitor client privilege, it's the client that decides. 7 It's not Mr. Lyons or any other lawyer. It's 8 the client's privilege and only the client can waive that and 9 that -- it's a principle that's flushed out in Lavallee and 10 I'm going to take you to it and it's in paragraph 39. So 11 again, in trying to flush out what I say are the key 12 principles that have always existed but the Supreme Court is 13 very helpful in Lavallee in flushing out what we're really 14 talking about. 15 We're not really -- it's the discussion isn't 16 limited to Mr. Lyons own documents or any other personal 17 documents. Paragraph 39 -- 18 MR. DAVID BUTT: If it assists, without 19 interrupting, there's no issue, at least from Commission 20 Counsel's perspective, that the privilege is the client's as 21 a matter of law. 22 MR. RICHARD AUGER: And paragraph 39 says the 23 following 24 "While I think it unnecessary to revisit 25 the numerous statements of this court on

1 the nature and primacy of the solicitor 2 client privilege in Canadian law it bears 3 repeating that the privilege belongs to the 4 client can only be asserted or waived by 5 the client or through his or her informed 6 consent." 7 That's the other problem. If -- if Commission 8 Counsel reviews documents that are privileged, a third party 9 has reviewed and has infringed upon a privilege that belongs 10 to the client, without that client's -- that without that 11 client even knowing about it. 12 And in my submission, that's prohibited and 13 it's a serious problem, and the Court continues in paragraph 14 39: 15 "In my view, the failings of Section 488.1 16 identified numerous judicial decisions 17 described above, all shared one (1) 18 principle fatal feature, namely the 19 potential breach of solicitor/client 20 privilege without the client's knowledge, 21 let alone consent." 22 And that, in my respectful submission, is -- 23 there's the potential of that occurring in this case, there 24 are a number of boxes containing documents that belong to Mr. 25 Lyons, that were delivered by a law firm that Mr. Lyons was a

1 member of. 2 And again, appreciating that this is not a 3 privilege motion, but -- but again they're married, we can't 4 separate this motion and say, oh you know, forget about 5 privilege, we just want to look at them. You can't do that 6 in the absence of considering whether or not there's a 7 serious breach of -- 8 MADAM COMMISSIONER: How do -- how do I look 9 at the issue of the marriage of -- of relevance and 10 privilege, as you call it, without knowing whether or not the 11 documents are documents that belong to Mr. Lyons in his 12 capacity as a lawyer, as opposed to doc -- where there -- 13 where a privilege could attach, as opposed to documents that 14 are his in his capacity as a lobbyist, in which case 15 privilege may or may not attach, probably not. 16 So, how do -- how do -- how do we resolve that 17 issue, because just because they came from a law firm, does 18 not necessarily mean, under Mr. Lyons' evidence, anyway, that 19 he was doing legal work? 20 MR. RICHARD AUGER: I agree entirely, and 21 that's an excellent question, and that's why -- and I'm going 22 to go a little bit off track to respond directly to the 23 question you've just presented and that I want to take you to 24 Tab 8, and that's why I've given you the Law of Confidential 25 Communications in Canada, by Ronald Manes and Michael Silver,

1 because you're quite right, some other forum may -- may or 2 may not decide that there's solicitor/client privilege. 3 But in my respectful submission, that doesn't 4 decide today, if you were to conclude, for example, on I 5 think what is your hypothetical, if you were to conclude that 6 none of the documents that are at issue are solicitor/client 7 privilege, and therefore we can just allow Commission Counsel 8 to look at them. In my respectful submission, that would not 9 be correct either, because -- and I'll take you to -- just 10 very briefly, to try to respond to your inquiry. 11 12 (BRIEF PAUSE) 13 14 MR. RICHARD AUGER: And it's on page 12, and I 15 know that you're most familiar with it, and it's Wigmore's 16 Criteria, and I'm not going to go through it, but the -- but 17 the point is that, you know, not whether or not a party, in 18 this case Mr. Lyons, fits strictly within, was he a lawyer at 19 the time, or was he not a lawyer. 20 I know that there's evidence about him being a 21 lobbyist and that there's evidence about him being on the 22 letterhead of Morrison Brown and the description was, I 23 think, Counsel for Morrison Brown. 24 In my respectful submission, you can't 25 conclude today that Mr. Lyons was not -- in terms of the

100

1 documents that are sealed and at issue, Mr. Lyons was not 2 acting as a lawyer and he may have -- he may have alluded to 3 something to that effect. 4 I don't have the reference but if that's what 5 you're referring to, in my respectful submission, that 6 doesn't assist because for example if a client, in whatever 7 capacity, or a colleague or any other person that a) had the 8 understanding that Mr. Lyons was their lawyer, for example, 9 as represented on the letterhead of Morrison Brown that he 10 was Counsel. 11 If the client had that appreciation, whether 12 it was correct or not correct is a matter of law. In my 13 submission the -- the correspondence or the documents would 14 be captured under the evolving categories of communication in 15 confidence and that's what Wigmore sets out and I know that 16 you're more familiar with that and the other cases that 17 follow but the point is that -- 18 MADAM COMMISSIONER: So if -- if somebody goes 19 to a lawyer thinking -- if somebody goes to a mortgage broker 20 who happens to be a lawyer but they go to get mortgage 21 brokering advice from someone who is a lawyer, I think the 22 Law Society is pretty clear now that it's certainly not going 23 to cover that person from a insurance perspective, I think if 24 I recall correctly, but what you're saying then is that if 25 they went to speak with the mortgage broker who is the lawyer

101

1 that there would be a privilege attaching to their documents 2 because they went to see that person who is a lawyer, even 3 though they were going to get mortgage brokering advice. 4 Would that -- is that -- am I capturing what 5 you're saying? 6 MR. RICHARD AUGER: With the greatest respect, 7 I'm not certain that that example is really the same 8 example -- 9 MADAM COMMISSIONER: Okay. 10 MR. RICHARD AUGER: -- that I'm trying to 11 flush out. The point -- in my resp -- 12 MADAM COMMISSIONER: So if the person goes to 13 Mr. Lyons knowing that he's a lawyer but goes to him for 14 lobbying advice, is it your view then that a privilege 15 attaches because Mr. -- even though they are going for 16 lobbying advice and not lawyering advice because Mr. Lyons is 17 a lawyer? 18 MR. RICHARD AUGER: I'm sorry. The last 19 part -- 20 MADAM COMMISSIONER: If they're going to see 21 Mr. Lyons because he's a lobbyist but he happens to be a 22 lawyer and he's working in a law firm. Okay? Are you saying 23 that the client then has a privilege in the documentation 24 that, say, Mr. -- that is in their file because they're going 25 to see Mr. Lyons who is a lawyer but who is acting in a

102
  1  capacity as a lobbyist?
  2                 MR. RICHARD AUGER:  Possibly yes.
  3                 MADAM COMMISSIONER:  Okay.
  4                 MR. RICHARD AUGER:  Possibly yes because, I
  5  mean, obviously you'd have to have evidence about what that
  6  hypothetical client understood but that's the issue.  That
  7  client's counsel would make representations to a Judge
  8  asserting privilege and setting out the reasons why and the
  9  evidence could be, well, when I got my bill from Mr. Lyons,
 10  in this case on our hypothetical, I knew he was a lawyer, his
 11  name was on the letterhead and I got a bill from Morrison
 12  Brown and so I hadn't -- I thought that when I was talking to
 13  him about lobbying advice -- again, this is our hypothetical
 14  for the purpose of the dialogue, I had an understanding that
 15  anything I said to him was confidential.
 16                 Again, Wigmore's criteria on page 12 of Mr.
 17  Manes' article of confidential communications.  Communication
 18  must originate in confidence.  The element of confidentiality
 19  must be essential to the relationship between the parties so
 20  that our hypothetical client believed that everything was
 21  private and confidential.  The rel -- the relationship must
 22  be one which, in the opinion of the community, ought to be
 23  fostered.  So there could very well be a public policy
 24  interest in preserving the communication in our hypothetical. 
 25                   "In the injury that would enure to the

103

1 relationship by the disclosure of the 2 communication must be greater than the 3 benefit to society in disclosure." 4 So my response to your question is, you know, 5 because of the evolving categories of privilege, and there 6 are many of them, of course, it could be that a client could 7 have the understanding, correct or not correct as a matter of 8 law, that A, the communication was in confidence and 9 therefore would never be disclosed to anybody or, B, is -- is 10 pure solicitor client privilege or any other category of 11 privilege. 12 And maybe the best example on Tab 47 of 13 Mr. Butt's material -- in my respectful decision there's no 14 dispute and I'll take you through some of the references and 15 correspondence but just for now Tab 47. There's no dispute 16 that documents in the sealed boxes, some or all of them or a 17 portion of them, are privileged. 18 Tab 47 is the identification of Jeffrey Lyons 19 boxes received from Morrison Brown. Item 3 20 "Lyons, Mr. Jeffrey 1996, 1997, 1998 firm 21 accounts" 22 I would submit that just looking at that title 23 that that would suggest that there should be real concerns 24 about solicitor client privilege and that's just one (1) 25 example.

104

1 Again, coming back to -- coming back to 2 basics, March 7th, 2003, and this is in my compendium, I 3 don't think there's any debate or argument about whether or 4 not there are real privilege concerns. 5 I think we can proceed, in my respectful 6 submission with the issue today assuming that there are real 7 privilege concerns and I say that because even Mr. Manes 8 pointed that out in his March 7th, 2003 letter when he was 9 delivering to Morrison Brown knowing full well that it was a 10 law firm. 11 He says in his letter, page 2 12 "We are very much aware that our request 13 may raise privilege concerns. We want to 14 address those concerns." 15 And it makes the invitation 16 "Please call me and we can discuss how 17 Commission Counsel has dealt with privilege 18 issues in the past." 19 Again, just while I'm on this point, Madam 20 Commissioner. Tab 2, then I say on the face of Morrison 21 Brown's own correspondence and as I understand it they're the 22 only party that has actually looked at some of the documents 23 and they too are asserting privilege. 24 Tab 2, March 26th, 2003, the letter from 25 Morrison Brown, third paragraph

105

1 "With respect to matters of privilege, we 2 understand the arrangement you have agreed 3 to with Mr. Morrison is that we will 4 produce such documents that we may have in 5 a sealed envelope to the attention of Mr. 6 Ron Manes asserting solicitor client 7 privilege and that Mr. Manes would examine 8 the same and determine if there is any 9 relevant material. If Mr. Manes felt the 10 material should be produced to the Inquiry 11 the question of privilege would then be 12 determined." 13 Obviously, this is before the final agreement 14 that was entered. 15 MADAM COMMISSIONER: So, in this case, they 16 assert the privilege but then say that Mr. Manes can examine 17 the documents to which they're asserting privilege. 18 MR. RICHARD AUGER: That's what they -- I 19 think -- I think that's a fair -- the author of this letter 20 is Mr. Sosnovitch writing to Mr. Manes, and he's talking 21 about an arrangement with Mr. Morrison. 22 So, I think your characterization is a fair 23 one (1), from what we read on the letter. 24 MADAM COMMISSIONER: And I think that this is 25 -- this is the way we have been doing it, that -- that

106

1 counsel -- that if someone asserts privilege, Commission 2 Counsel examines the documents, makes a determination as to 3 whether or not the document will be helpful or relevant to 4 the Inquiry. 5 And -- and if there is a privilege asserted, 6 then they still make the determination, Commission Counsel 7 still decides whether given the privilege assertion, is it 8 something that -- that Commission Counsel thinks is important 9 enough to -- to get a ruling on or not. 10 And it may be that while it's relevant and may 11 be helpful, that it's not worth it, from the -- from 12 anybody's point of view, for Commission Counsel to -- to try 13 to have the privilege issue resolved, because it may not be 14 as helpful for the Inquiry as lots of other documents for 15 which we might be able to find the same information and other 16 ways, without -- without a privilege being asserted. See, 17 what I'm saying? 18 MR. RICHARD AUGER: I do. In my respectful 19 submission, it's too late to proceed on that basis. If -- if 20 -- if the privilege has already been revealed, it's been 21 pierced, and -- and it's -- it could potentially create more 22 problems further down the road, and so, just picking -- 23 coming back to the context of the March 26th, which I think 24 was the introduction of your comment, was that in that letter 25 it was suggested that Mr. Manes -- you're quite right,

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1 examine the same and determine if there is any relevant 2 material; that was the dialogue that was occurring. 3 What's important is, that wasn't the 4 arrangement. And I think it's -- the fair characterization 5 is that Morrison Brown backed off of that position, realized 6 that there could be some real concerns about privilege, and 7 didn't agree to that process. 8 MADAM COMMISSIONER: I -- I'm missing your 9 point, sorry, what -- when you say they backed off, they 10 backed off in -- 11 MR. RICHARD AUGER: Right, I think you're -- 12 MADAM COMMISSIONER: -- what sense? 13 MR. RICHARD AUGER: -- I think you're -- you 14 were pointing out to me that in this March 26th letter, 15 Morrison Brown suggested that Mr. Manes examine the documents 16 to determine relevance, and then if there was any question of 17 privilege it would then be determined. 18 The only thing I'm -- I think clar -- try and 19 clarify is that that wasn't the ultimate arrangement, that 20 was the dialogue that occurred, but that is not -- that is 21 not what ultimately was the exchange between Morrison Brown 22 and Mr. Manes, and I'll take you to it. 23 Again, and at Tab 3 -- 24 MADAM COMMISSIONER: Well, they're -- they're 25 two (2) separate -- there may be two (2) separate things

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1 we're talking about. I think there was one (1) with Morrison 2 Brown Sosnovitch, that involved two (2) pieces of paper 3 involving Dell Financial Services, and then there are the 4 boxes. 5 MR. RICHARD AUGER: Right. 6 MADAM COMMISSIONER: So, I'm not sure if 7 anyone -- if they backed off or changed their mind or 8 anything like that. I think we might -- I'm just not sure, 9 but we might be talking about two (2) separate -- two (2) 10 separate incidences. 11 12 (BRIEF PAUSE) 13 14 MADAM COMMISSIONER: Because we're talking 15 about that sealed envelope, and then the sealed envelope 16 there were those other documents that have since been either 17 introduced in evidence or to -- or parts of them have been 18 referred to in evidence. 19 MR. RICHARD AUGER: Right, there are two 20 (2) -- 21 MADAM COMMISSIONER: I think that -- I think 22 they're two (2) separate things. 23 MR. RICHARD AUGER: And I -- and I think 24 everyone agrees that what we're talking about today is the 25 unsealing of the --

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1 MADAM COMMISSIONER: Exactly, boxes. 2 MR. RICHARD AUGER: -- nineteen (19), eighteen 3 (18) or twenty-one (21) boxes, I think it's -- that's also 4 unclear is how many boxes are there, but you're quite right, 5 the point I'm making is set out in the June 27th letter. And 6 that is that the -- and that's at Tab 7, Madam Commissioner. 7 "With respect to the boxes referred to in 8 Mr. Sosnovitch's letter, identified as Jeff 9 Lyons personal in following upon our 10 conversation of yesterday's date. We shall 11 be pleased to deliver up these boxes sealed 12 to your office as upon receiving your 13 confirmation undertaking that you will then 14 alert Mr. Lyons' legal counsel, Mr. Todd 15 White, to the fact that you're now in 16 receipt of these boxes of documents that 17 you and Mr. White will then decide how the 18 boxes and their contents are to be dealt 19 with; that the boxes will not be unsealed 20 without Mr. White's agreement and failing 21 that in order and or directions from the 22 Commissioner and that upon receipt of the 23 boxes by you, the duties of this firm in 24 relation to subpoena will have been 25 discharged."

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1 MADAM COMMISSIONER: And that's been done, 2 right? 3 MR. RICHARD AUGER: Sorry, what's been done, 4 Madam Commissioner? 5 MADAM COMMISSIONER: What they've said here 6 has happened. They delivered the boxes, after they delivered 7 the boxes, Mr. Manes informed Mr. Lyons' counsel -- 8 MR. RICHARD AUGER: Oh, yes. No, that was 9 done in my -- I think I referred to the August 6th letter on 10 Tab -- that's at Tab 9 of my materials, Madam Commissioner. 11 MADAM COMMISSIONER: All right. 12 MR. RICHARD AUGER: August 6th to Mr. White, a 13 letter from Mr. Manes at the bottom of the first page: 14 "We have also obtained by summons from 15 Morrison Brown Sosnovitch, twenty (20) 16 sealed boxes marked 'Jeff Lyons - 17 personal'." 18 So the answer to your question is yes, that 19 was done and so we now have an indication that Mr. Manes 20 received twenty (20) sealed boxes from Morrison Brown and 21 that's the letter -- well, I've already given you the 22 reference. 23 So the answer to your question is yes, it was 24 done, that boxes were sent to Mr. Manes, as I understand, and 25 he advised my firm on August 6 that twenty (20) boxes were

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1 received. 2 3 (BRIEF PAUSE) 4 5 MR. RICHARD AUGER: And then just to try to 6 finish the chronology, the next tab, Madam Commissioner, Tab 7 8 is July 21st where Mr. Morrison says: 8 "I'm delivering to you with this letter the 9 boxes identified as Jeff Lyons personal, 10 sealed and in reliance upon the 11 representations made in your letter to me." 12 And so in my submission, because Morrison 13 Brown is a law firm, they're taking the appropriate cautious 14 steps to ensure that documents will not be inspected -- 15 documents that may be privileged will not be inspected. 16 17 (BRIEF PAUSE) 18 19 MR. RICHARD AUGER: I was pausing because I've 20 -- was loca -- I located the reference that I wanted to take 21 you to and that's in Tab 3 of my materials and again, it's 22 consistent with my submission that Morrison Brown is 23 asserting privilege. Solicitor client privilege or any other 24 form of confidential communications that could be privileged. 25 Paragraph 2 and this is what I referred to earlier but

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1 couldn't find the reference. This was early on, May 23rd, 2 2003, Morrison Brown says to Commission Counsel: 3 "We would suggest that Mr. Lyons' counsel 4 be informed if you wish to examine the same 5 as they are sure to contain material 6 unrelated to the subject matter of the 7 Inquiry. We await your directions." 8 And so again, Morrison Brown is being 9 cautious, taking the steps that Mr. Lyons' counsel should 10 participate in the process and they're protecting the 11 privilege and I think we also agree that Morrison Brown 12 acknowledged that it had only conducted a cursory review and 13 it didn't have, I think the term was "the resources" to 14 complete the review. 15 And my -- I'm not criticising Morrison Brown 16 but, again, it comes back to one of my earlier points that 17 this is not the right process; what I'd called the private 18 arrangement to seal up boxes is not the process contemplated 19 by Section 7 of the Public Inquiries Act. It's not the 20 proper mechanism and had Morrison Brown, like any other 21 recipient of a summons, reviewed the documents -- their 22 obligation is to deliver relevant documents in accordance 23 with Section 7. We know that on the face of their own 24 correspondence that there's irrelevant documents. 25 So, again, this is another example of the

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1 practical problems that we're faced with and in my respectful 2 submission, when you line up all of the practical problems 3 that we have, the answer isn't to just put privilege aside 4 and we'll deal with it on a later occasion and let Commission 5 Counsel inspect the documents notwithstanding the fact that 6 there are privileged documents. 7 MADAM COMMISSIONER: How would they know 8 whether something is relevant? They've had nothing 9 whatsoever to do with the Inquiry and nothing whatsoever to 10 do with the second Inquiry that's coming up. How could they 11 possibly know? I mean, no offence to them when I say this 12 but unless someone has been following the details of the 13 Inquiry, and more importantly for the second Inquiry which 14 hasn't even started yet, how could they possibly know -- 15 MR. RICHARD AUGER: I think that's an 16 excellent -- 17 MADAM COMMISSIONER: -- what would be helpful? 18 MR. RICHARD AUGER: I think the procedure that 19 was employed in this case to deal with that is -- if I can 20 take you to Tab 1 of my compendium, the process that 21 Commission Counsel employed to address that very problem back 22 in March because -- because the wording of the summons is 23 quite broad and includes, basically, anything in your 24 possession that may, in any way, relate and you're point is a 25 good one; how would they know?

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1 And the only answer I have is that as I 2 understand it, the recipient of the summons was given the 3 terms of reference which is some eight (8) or nine (9) pages 4 of detail setting out what the issues would be and setting 5 out the authority and setting out the course of the 6 investigation and setting out some of the issues that your 7 assistance is being asked for. 8 So that's, in my submission, would give them 9 enough information to respond appropriately to the summons 10 and with that information they advised that, you know, we'll 11 send over the twenty (20) or -- we'll send over the boxes. 12 There's some irrelevant material and there's concerns about 13 privilege and assure us that Mr. Lyons' counsel will have an 14 opportunity to address that. 15 16 (BRIEF PAUSE) 17 18 MR. RICHARD AUGER: If I can just, if you 19 will, spend a little more time coming back to the principle 20 in Lavallee in Tab 9 that, and I'll try to be as focussed as 21 I can on the issue before you, and that is whether or not 22 Commission Counsel can review privileged documents. 23 On Page 32, Madam Commissioner, just at the 24 bottom of paragraph 43, again: 25 "Measured against the constitutional

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1 standard of reasonableness in Section 8 of 2 the Charter, this mandatory disclosure 3 potentially privileged information." 4 So the court isn't even concluding that it is 5 privileged, it's potentially privileged. 6 "In a case where the court has been alerted 7 to the possibility of privilege by the fact 8 that the documents were sealed at the point 9 of search cannot be said to minimally 10 impair the privilege. It amounts to an 11 unjustifiable indication of form over 12 substance and it creates a real possibility 13 that the state may obtain privileged 14 information, the court could very well have 15 recognized as such. 16 In my view, reasonableness dictates that 17 courts must retain a discretion to decide 18 whether materials seized in lawyers' office 19 should remain inaccessible to the state as 20 privileged information if and when in the 21 circumstances it in the best -- it is in 22 the interest of justice to do so." 23 And the most important paragraph is the next 24 one, in my submission, that could assist you because the 25 direct analogy applies.

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1 "I also find an unjustifiable impairment of 2 the privilege and the provision section 3 48.14(b) --" 4 And you recall that's the part of the section 5 that mirrors what Commission Counsel is asking permission to 6 do in this Inquiry, that is inspect. Nothing to do with 7 admissibility, nothing to do with what would be tendered in 8 evidence with your leave but to inspect. 9 "-- which permits the Attorney General to 10 inspect seized documents where the 11 application's Judge is of the opinion that 12 it would materially assist him or her in 13 deciding whether the document privileged." 14 So, again, it's the same concept that My -- My 15 Friend is advancing that you are entitled to assistance 16 throughout this Inquiry and I say yes you are, but in my 17 submission, it stops at Commission Counsel being entitled to 18 inspect documents that are or may be privileged in that that 19 privilege belongs to a client that doesn't even know about 20 this proceeding or doesn't even know that Commission Counsel 21 may inspect them. 22 "This partic --" 23 Just continuing on: 24 "This particular aspect of such in 48.1 was 25 disapproved of by the Law Reform Commission

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1 of Canada who felt that, quote: 2 'Granting the Crown access to confidential 3 communications passing between the 4 solicitor and his client would diminish the 5 public's faith in the administration of 6 justice and create a potential for abuse.'" 7 Just continuing on as there's a quote from the 8 same case: 9 "The effective of this provision is the 10 complete loss of the protection afforded by 11 the very privilege that may subsequently be 12 determined to apply." 13 In my submission, that sort of amounts to -- I 14 don't know if I would call it the waiver, but if My Friend is 15 entitled to inspect privileged documents, minimally, it's a 16 loss of the privilege. It's a loss of that anonymous 17 client's confidential communication to a) Mr. Lyons or b) to 18 what they believe they were making represe -- confidential 19 communications to Morrison Brown. 20 MADAM COMMISSIONER: Now, do I understand that 21 you're -- that Mr. Lyons is claiming privilege on all these 22 boxes? 23 MR. RICHARD AUGER: I think -- I think I have 24 to assert that all of the documents, as the court says, may 25 possibly be privileged because of the context, because of, as

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1 I've pointed out, they -- they were in the possession of 2 Morrison Brown, they presumably were documents that Mr. Lyons 3 participated in their generation. Again, that's the context 4 of him being on the letterhead as Counsel. 5 So the answer to your question, and of course 6 I can't commit to you that every single page is privileged 7 but I think I have an obligation -- 8 MADAM COMMISSIONER: You haven't seen them? 9 MR. RICHARD AUGER: Precisely. 10 MADAM COMMISSIONER: Right. 11 MR. RICHARD AUGER: And that that is -- is an 12 issue to be decided in another -- on another day but the 13 principles from Lavallee apply directly to the case and the 14 motion before you, and it's not you know, well, Lavallee was 15 the Crown and this is different here, it's the principles. 16 An anonymous client that doesn't even have 17 notice about this motion, that anonymous client's doc -- My 18 Friend is asking to review those private, confidential and 19 privileged materials. 20 So, I can just finish off the quote, because 21 in my submissions, it's important, and it's the closest 22 jurisprudence that comes to the issue that you've been asked 23 to assist on. 24 25 (BRIEF PAUSE)

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1 MR. RICHARD AUGER: However, in my opinion as 2 Southey J. recognized in that case, quote: 3 "It would be small comfort indeed, for the 4 privileged holder, that the law prevents 5 the introduction of his or her confidential 6 documents into evidence, when their 7 contents have already been disclosed to the 8 prosecuting authority." 9 So, that comes back to one (1) of the early -- 10 earlier exchanges that you and I had, and I agreed with you, 11 that this isn't about what's going to be admissible, but 12 that's -- it's too late, there's -- as the Court said, it 13 would be small comfort to tell this anonymous client that 14 asserts privilege, or that the document that may very well be 15 privileged, but don't worry about it, because if it's 16 privileged, we'll never admit it into evidence, but I want to 17 look at it anyway. 18 And that's why I come back to my other -- the 19 starting point is that the exer -- the exercise in reviewing 20 relevance is married to privilege, and you can't separate 21 them. 22 MADAM COMMISSIONER: So, help me then, how do 23 I -- how would you propose then that a Commissioner, in my 24 situation, go about finding out whether there's anything in 25 there that could be helpful to me in conducting -- in

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1 fulfilling my Terms of Reference on this Inquiry? 2 MR. RICHARD AUGER: Well, that's exact -- 3 MADAM COMMISSIONER: I can tell you, Mr. 4 Auger, that if you were to look at my Terms of Reference, and 5 if that was all you had, it probably wouldn't be of great 6 assistance to you to determine whether or not they were 7 helpful to me. 8 MR. RICHARD AUGER: Well, that's an excellent 9 point, and we want to participate and assist you, because you 10 are entitled -- you are entitled to all of the relevant 11 material that will assist you in making the determinations at 12 the end of the day in this Inquiry that you have -- that you 13 -- that you will make. 14 And so we want to assist you, and you're quite 15 right, I mean how -- how do we now overcome this problem. 16 And I wrote -- this is in my -- I think there are three (3) 17 or four (4) responses to your question in my compendium at 18 Tab 13. 19 We proposed at least two (2) possibilities to 20 resolve -- and Mr. Butt pointed out, you know, the delays, 21 the concern, and this has been going on for some time, and he 22 linked it to one (1) of the comments by the Supreme Court of 23 Canada in Lavallee on the timing. In my submission, we've 24 tried to resolve this as early as September 9th, in -- in our 25 letter to Mr. Manes we --

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1 MADAM COMMISSIONER: I read -- I read this, 2 the first one (1) is that the sealed boxes go back to 3 Morrison Brown Sosnovitch, and they wrote to Commission 4 Counsel and said -- or there was some discussion with them, 5 and -- and they said, well we -- no one asked us, and we 6 don't want to do it anyway. Okay, so that one's done. 7 MR. RICHARD AUGER: Okay, well that -- in my 8 submission, that's for you to decide, respectfully, if the 9 process is going to work, if the Section 7 is gong to work, 10 if the Inquiry is going to work, and -- and witnesses are 11 going to properly respond to summons', as opposed to entering 12 into other ways of avoiding, a) reviewing documents, or b) 13 avoiding coming to the Commission as they're required to 14 pursuant to the Summons, maybe that's a -- maybe that's a 15 consideration, but that was one (1) proposal, and I'm 16 responding to your question, how can we deal with this? 17 Well, as I've said -- as we said in our 18 September 9th letter, Section 7 requires a recipient of a 19 summons to deliver relevant documents, they're required as a 20 matter of law to review the documents, and to say well, we 21 don't want to, or we don't have time, I'll leave it at that, 22 as to whether or not that can occur, because if for example, 23 think just by extension, if you were to grant the order 24 sought, given the facts that you're faced with, could there 25 then not be more practical problems whereby parties that

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1 receive a summons that are all people are busy and have other 2 things to do besides reviewing documents could see -- take a 3 broad sweep, seal them up, send them to -- and the 4 hypothetical inquiry without reviewing them and then we're 5 back in the same position. So -- 6 MADAM COMMISSIONER: Let's deal with your 7 second proposal. 8 MR. RICHARD AUGER: So the next proposal that 9 I offered in my letter of September 9th was that, and in my 10 submission this is the preferred proposal, is that as counsel 11 that -- that as counsel for Mr. Lyons, we ought to take the 12 documents or come to the appropriate facility and review them 13 in private. 14 Review them without Commission Counsel 15 reviewing them with us. As counsel and officers of the 16 court, we understand the obligations to review the documents 17 and provide what's relevant pursuant to Section 7 and to not 18 disclose privileged documents. 19 That, in my submission, is the appropriate way 20 to deal with it and one -- rely on Mr. Roland's assistance in 21 terms of the civil process, hypothetically what could occur 22 is my firm could review the documents in private and if we do 23 conclude that there are privileged documents perhaps create a 24 schedule; that's what's done in civil litigation. 25 MADAM COMMISSIONER: Help me with how you're

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1 going to be able to determine whether something is relevant 2 or helpful to the Inquiry? 3 MR. RICHARD AUGER: Well, as Mr. Lyons' 4 counsel -- our firm is Mr. Lyons' counsel, my submission, we 5 would have a -- a collective knowledge of the issues that are 6 before you and the evidence that we've heard and would -- 7 would be well-placed to assess relevance. 8 And I think it would be a -- a liberal 9 interpretation of relevance. As you've -- as you've said, 10 more than once today, you want or will need evidence that's 11 helpful to you. And so, you know, if were, for example, to 12 look at one of the boxes and concluded that all of the 13 documents in that box somehow related to, I don't know, we 14 can speculate on any personal aspect of any person's life, 15 related to, you know, the purchase of a home back in, you 16 know, the '80s or early '90s, it would be irrelevant. 17 And my submission, I think it would be clear 18 as to whether or not there are documents and we would be 19 well-positioned, in fact, Commission Counsel -- Commission 20 Counsel's proposal is not really any different. They're 21 suggesting they review them with us for relevance. So it has 22 to follow that, as counsel for Mr Lyons', we would be in a 23 position to know the issues and determine relevance, but what 24 I'd be asking is that we do that privately because of the 25 concerns that I've advanced.

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1 MADAM COMMISSIONER: Okay. I'm just thinking 2 very practically. Your firm has been here for about fourteen 3 (14) of the, going off the top of my head, hundred and thirty 4 (130) days or so that we've been hearing evidence. I don't 5 know if it's a hundred (100) -- it's certainly over a hundred 6 (100). I don't know if it's over a hundred and thirty (130) 7 or not but it's over a hundred (100). 8 And I mean no disrespect to you at all when I 9 say this, but the issues that Mr. White was dealing with when 10 he was here had to do with an allegation involving certain 11 individuals and Mr. Lyons with respect to something that was 12 referred to at various times as a success fee or was referred 13 to in other ways, as well. 14 If you were to look at the Terms of Reference 15 of the Inquiry, that was not even in the Terms of Reference 16 in the Inquiry. We didn't even know that that existed at the 17 time of the Terms of the Reference -- Terms of Reference. 18 This was information that you may recall came shortly before 19 the Inquiry was to start and so what Mr. White was here for 20 was something that looking at the Terms of Reference, we 21 wouldn't even know was even remotely relevant to the Inquiry. 22 So that -- that's the difficulty I have with 23 respect to the Toronto Computer Leasing Inquiry. With 24 respect to the Toronto External Contracts Inquiry, that 25 Inquiry is not starting until December 1st. There has been

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1 no evidence called on that at all yet. 2 So help me with how you would be able to 3 determine the relevance on that? 4 MR. RICHARD AUGER: Well, again, we would be 5 in no worse position than Commission Counsel because as I un 6 -- and I don't know the answer, I don't know if there's a 7 Term -- Term of -- Terms of Reference that are now drafted 8 for -- 9 MADAM COMMISSIONER: Well, the second Inquiry 10 there's Terms of Reference drafted. Commission Counsel have 11 already interviewed, I don't know how many people. 12 MR. DAVID BUTT: Over a hundred witnesses for 13 the second one. 14 MADAM COMMISSIONER: Over a hundred witnesses 15 for the second. There are so far how many documents? Do we 16 know, Mr. -- 17 18 (BRIEF PAUSE) 19 20 MADAM COMMISSIONER: Thousands. 21 MR. DAVID BUTT: Thousands is right. We're 22 having a debate on how many thousands but -- 23 MADAM COMMISSIONER: Thousands. 24 25 (BRIEF PAUSE)

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1 MADAM COMMISSIONER: I'm very concerned about 2 the issues that you're raising. I just -- I need to find a 3 practical answer. 4 MR. RICHARD AUGER: And my answer is that -- I 5 mean, I guess your Inquiry at me started with, you know, our 6 firm hasn't been here for every single day and I appreciate 7 that's not a criticism, as you said. 8 MADAM COMMISSIONER: No, no. That -- 9 MR. RICHARD AUGER: But -- but -- 10 MADAM COMMISSIONER: I'm not -- 11 MR. RICHARD AUGER: But you're quite right 12 that, you know, we haven't been present for all of the oral 13 evidence but the transcripts are online and we keep up to 14 date on what's occurring and so in terms of the evidence 15 that's been heard, we're in a position to assess relevance. 16 So, you know, again, our hypothetical ten (10) 17 documents, we are in a position or in no worse position than 18 anyone else to look at those ten (10) documents and determine 19 whether they're relevant a) to the Terms of Reference or b) 20 to the evidence we've heard to date. 21 Your second question, and it's valid, is the 22 second phase of the Inquiry hasn't even started but that's 23 true for everybody that -- that, you know, My Friend's asking 24 to review the documents for relevance. Well, he's in no 25 better position either and --

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1 MADAM COMMISSIONER: Are you talking about 2 Commission Counsel here as your Friend or -- 3 MR. RICHARD AUGER: We're -- 4 MADAM COMMISSIONER: -- Mr. Butt? 5 MR. RICHARD AUGER: Yes. 6 MADAM COMMISSIONER: Well, Commission Counsel 7 has already reviewed all the thousands of documents on the 8 second Inquiry. I mean, we're starting that in a month. So 9 Commission Counsel has already reviewed all those documents. 10 MR. RICHARD AUGER: Well, again, I -- you 11 know, I confess I'm not up to speed on the -- you know, the 12 second Inquiry but the answer -- you know, the concerns and 13 the reason that we're opposing the motion, and I've tried to 14 point out the real concern we have with respect to the 15 inspection of privileged material and the insp -- that's the 16 real concern and private and confidential -- 17 MADAM COMMISSIONER: I understand. 18 MR. RICHARD AUGER: -- communications. 19 MADAM COMMISSIONER: I have that concern too. 20 MR. RICHARD AUGER: And so respectfully, the 21 answer can't be, well, they're entitled to the order because 22 they're in a better position to assess relevance than anyone 23 else. My submission -- it just doesn't follow and I -- I -- 24 and I don't agree that they're necessarily in a better 25 position to assess relevance and so we started this exchange

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1 with, well, how do we deal with the problem? 2 And my submission, it's a real -- it's a 3 problem and that the law doesn't permit what My Friend's 4 proposing, and there's no basis to allow him to inspect the 5 documents, you know, and as I was doing my research in 6 preparing for the issue, you know, I was considering whether 7 or not, you know, and as you well know, other inquiries and 8 other Courts have quashed summons'. 9 And in my submission, you know, I -- I was 10 trying to think about whether or not that's the appropriate 11 remedy, and then -- and you know, there are various reasons 12 why that could be done, I don't know that that assists you or 13 -- or it advances anything, because it gets us back to the 14 starting point. 15 The starting point is, Mr. Manes back in March 16 had a concern about privilege, Morrison Brown had a concern 17 about privilege, we have a concern about privilege, and 18 Morrison Brown didn't review the documents, each document for 19 that purpose, and so the answer can't be, oh, well, we'll 20 just let Commission Counsel do it. 21 MADAM COMMISSIONER: Okay. 22 MR. RICHARD AUGER: And I -- if I -- I see 23 that it's quarter to 1:00 and, go ahead. Did you want me -- 24 MADAM COMMISSIONER: I see that too. 25 MR. RICHARD AUGER: Yeah. Do you --

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1 MADAM COMMISSIONER: Well, I'm -- I'm 2 interested in any new points that you have to raise, but I've 3 got all your other points. 4 MR. RICHARD AUGER: Just very quickly, it is a 5 new point. 6 MADAM COMMISSIONER: Okay. 7 MR. RICHARD AUGER: And it sort of touches on 8 one (1) of my last comments, and it's the Consortium case, 9 which I've provided in Tab 2, 3, and 4, and it's really an 10 example where the Ontario Divisional Court did quash a 11 summons that was issued to Council members, where you know, 12 the summons was served and required certain Council members 13 to attend and give evidence about the intention of certain -- 14 MADAM COMMISSIONER: Right. 15 MR. RICHARD AUGER: So, the only point is 16 that, you know, that's a good example where the Court did 17 quash the summons. Again, it comes back to basic principles 18 of relevance, and in this case, privilege. 19 MADAM COMMISSIONER: Are you suggesting that I 20 quash my own summons? 21 MR. RICHARD AUGER: I'm not, it's a -- it's an 22 illustration of -- you know, and I commented on in response 23 to your questions, an illustration of the problem that we 24 have and to avoid quashing a summons or getting into that, 25 the -- I offered as an example, it's not the quashing of the

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1 summons, it's the reason it was quashed. 2 MADAM COMMISSIONER: Okay. 3 MR. RICHARD AUGER: And the reason applies 4 here. We know that Morrison Brown has delivered irrelevant 5 documents and we now have a problem, there are irrelevant and 6 privileged documents that we're left to deal with. 7 MADAM COMMISSIONER: And potentially 8 privileged documents, is that -- 9 MR. RICHARD AUGER: Well, I think -- I think 10 the most fair answer is potentially, because as you've 11 pointed out, I haven't -- I haven't seen them. 12 MADAM COMMISSIONER: Right. 13 MR. RICHARD AUGER: But I think given all the 14 facts we know, we can confidently assert that there may very 15 well be clients that had a -- had an interest. 16 And just in terms of the Consortium case, at 17 Tab 4, the Supreme Court of Canada, again pointed out the 18 importance of staying on track, and staying on track with 19 summons' and ensuring the parties provide relevant material 20 and that's at page 19, Madam Commissioner, of -- 21 MADAM COMMISSIONER: Of which one (1)? 22 MR. RICHARD AUGER: It's at Tab 4, the Supreme 23 Court of Canada -- 24 MADAM COMMISSIONER: Okay, the Supreme Court 25 of Canada?

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1 MR. RICHARD AUGER: Yes. 2 3 (BRIEF PAUSE) 4 5 MADAM COMMISSIONER: Okay, I'm there. 6 MR. RICHARD AUGER: It's actually, sorry, it's 7 paragraph 45, the next page. 8 MADAM COMMISSIONER: Okay. 9 MR. RICHARD AUGER: Where the Court concludes 10 the discussion by saying, in paragraph 45: 11 "Accordingly, the Courts below were correct 12 to quash the summons' and strike 13 from the record, certain other evidence. 14 While Courts should be slow to 15 interfere with the party's effort to build 16 its case, they should set aside summons' 17 where, as here, the evidence sought to be 18 elicited has no relevance to a live issue 19 in a judicial review applications." 20 And so, I've made the point and it's my 21 submission, that's what the Court said in the Consortium. 22 Just as quickly as possible, again, in my submission, doing 23 most of this by analogy, and the case at Tab 6 is helpful. 24 And it, aside from Lavallee, gets as close -- 25 gets at close as we can get to the situation before you and

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1 it's a -- it's a judicial review of the Human Rights 2 Commission Order relating to the production of certain 3 private documents and I think they were medical records, 4 Madam Commissioner, relating to a certain complainant. 5 In any event, on page 713 the Court of Appeal 6 articulates the same issue. At the top of paragraph 52 7 "Did the Board err in ordering production 8 of documents that are privileged or are, 9 arguably, not relevant? 10 And in my submission that's the same type of 11 order that My Friend is asking for today and that -- it 12 amounts to the same thing and it triggers the same privilege 13 and confidentiality concerns. 14 "I mentioned at the outset that Mr. Heintz 15 conceded that the Board has no power to 16 order the production of privileged 17 documents. 18 This is correct and in the same vein I 19 think that the power has -- sorry, the 20 Board has no power to order the production 21 of documents that are not arguably 22 relevant. 23 The exercise of such a power would invade a 24 party's privacy rights without any counter 25 veiling advantage to the administration of

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1 justice." 2 This does not mean that a court should not 3 show deference to a decision by the Board that a particular 4 document is arguably relevant but this, of course, is a 5 different issue. 6 And that's the same point that I've advanced 7 today is that there's just no legal basis whatsoever for the 8 order that Commission Counsel seeks today and the court on 9 page 714, and I'll try to focus this as much as possible. It 10 concludes -- well, it touches upon, again, this concept of an 11 affidavit of documents. 12 Paragraph 57. 13 "If paragraph 5 were interpreted to require 14 the Complainant to provide to Mr. Heintz 15 all of the documents referred to in it 16 without any screening of them by the Board 17 to exclude those which are privileged or 18 not arguably relevant, there would, to put 19 it mildly, be a serious problem with 20 respect to the validity of the order. 21 However, as I've determined, the Board's 22 order should not be interpreted as 23 providing for such unrestricted production. 24 The requirement of an affidavit of 25 documents which contains a paragraph in

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1 which privilege may be claimed for 2 specified documents and by virtue of the 3 Board's order, further section in which 4 protection may be claimed for documents 5 which are not arguably relevant is, in my 6 view, within the powers of the Board." 7 Just jumping down. 8 "The requirement merely to disclose the 9 existence of a document in an affidavit of 10 document does not involve a breach of 11 privilege." 12 And here's the point -- the final point that 13 applies to the motion before you. 14 "In short, paragraph 5 in the order, and 15 those paragraphs related to it, do not 16 involve an infringement of the 17 Complainant's right to privilege or keep 18 from Dofasco documents which are not 19 arguably relevant. On the contrary, they 20 afford protections for these rights. I do 21 not think that the same can be said for 22 paragraph 2 in the order. It requires the 23 Complainant to furnish to counsel for 24 Dofasco a document setting forth all 25 medical practitioners ..."

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1 MADAM COMMISSIONER: Sorry, where are you on 2 this one? 3 MR. RICHARD AUGER: Sorry. Paragraph 60, 4 Madam Commissioner. 5 MADAM COMMISSIONER: Sixty (60), okay. 6 MR. RICHARD AUGER: "... setting forth all 7 medical practitioners not mentioned in 8 paragraph 1 who treated the Complainant 9 between March 22nd 1990 and the present, 10 their area of expertise et cetera. It is 11 not known what particular information would 12 be set forth in this document, but the 13 requirement to produce it inevitably 14 carries with it the grave risk that in 15 complying with the order the complainant 16 would be providing to Dofasco information 17 of a most intimate nature relating to her 18 physical and emotional condition that is 19 completely unrelated to her claims in this 20 proceeding. 21 Paragraph 61. 22 "I appreciate the Board has and should have 23 wide latitude in making procedural orders 24 but it appears to me, in paragraph 2, the 25 Board has made no attempt at all to balance

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1 the complainants right to protect privilege 2 or irrelevant information with Dofasco's 3 right to obtain production of relevant 4 material." 5 And that, in my submission, is really the same 6 type of exercise is -- for Commission Counsel to obtain the 7 order sought does not take into account and, in fact, it sort 8 of brushes away the concern that any of these anonymous 9 clients or other participants in the confidential privilege 10 documents may want to advance. 11 And on balance, keeping in mind that Mr. Lyons 12 intends and will cooperate with the Inquiry and our firm 13 wishes to participate and provide documents that are relevant 14 and not privileged, the balance has to be struck in favour of 15 not piercing the concerns that I've raised and privileges 16 that I've raised. 17 I've given you in Tab 7 an excerpt from the 18 practice and procedural before administrative tribunals. 19 Page 12-87, I mean, it's common ground but: 20 "The purpose of a subpoena is to secure 21 information which is useful or necessary 22 for the performance of an agency's mandate, 23 thus any information sought thereby must be 24 relevant. If it is not relevant, the 25 subpoena should not be issued. Equally, a

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1 subpoena cannot be used to secure 2 information which enjoys a privilege 3 recognized by law." 4 And that's how I started the submissions I 5 have with respect to the concerns that we're advancing and 6 that, you know, My Friends may have other suggestions about 7 how to deal with the problem but in my submission, the best 8 way to deal with the problem is to permit Mr. Lyons' Counsel 9 to review and comply with the rules in the section set out in 10 the Public Inquiries Act. 11 12 (BRIEF PAUSE) 13 14 MR. RICHARD AUGER: And Mr. Butt's referred to 15 correspondence even predating the issuance of the summons 16 relating to -- it was a letter to Mr. Greenspan asking for 17 compliance with the procedure and asking for documents and in 18 no way have we ever rec -- refused to do that and we have 19 done that and wish to do that. 20 I just don't want you to be left with an 21 impression -- there was various correspondence going back and 22 forth and Mr. Greenspan did make it clear that documents 23 would be produced but he was simply trying to ascertain 24 whether or not there would be any disclosure and information 25 provided from Commission Counsel.

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1 I don't want to -- I don't think that's the 2 real issue before you today; Mr. Butt's started with the 3 submission; I think it was a February letter. I want to try 4 to focus on the dates from the issuance of the summons up to 5 the present. 6 7 (BRIEF PAUSE) 8 9 MR. RICHARD AUGER: So subject to your 10 questions, those are the submissions I have. 11 MADAM COMMISSIONER: Okay. Thank you very 12 much, Mr. Auger. 13 Ms. Dyer, I bet you're hungry. 14 MS. VALERIE DYER: I'm not but Mr. Roland told 15 me he was. 16 MR. IAN ROLAND: Don't govern your process by 17 my stomach. 18 MADAM COMMISSIONER: Well, it is one o'clock 19 and I do have to think about the staff, as well. How long do 20 you think you might be? 21 MS. VALERIE DYER: I would hope no more than a 22 half an hour. 23 MADAM COMMISSIONER: Half an hour? All right. 24 Why don't we take just a one (1) hour lunch. All right? So 25 that way people can eat and the staff can have a break and

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1 we'll come back here in -- at two o'clock. All right? And 2 then I'll hear from you, Ms. Dyer, and then from, I guess, 3 Mr. Butt and Mr. Auger in reply if there's anything in reply. 4 Thank you. 5 6 --- Upon recessing at 1:00 p.m. 7 --- Upon resuming at 2:00 p.m. 8 9 THE REGISTRAR: The hearing is now resumed. 10 Please be seated. 11 MADAM COMMISSIONER: Good afternoon. Did 12 everybody have a good quick lunch. Ms. Dyer on behalf of 13 Dell Computers? 14 MS. VALERIE DYER: Yes. I am here today, 15 only to speak on behalf of Dell Computer who is one (1) 16 client of Morrison Brown Sosnovitch and not as My Friend 17 thought I was commenting to you, I'm here to support 18 Mr. Lyons. I'm not. 19 I'm only here to deal with the substantive, 20 fundamental and constitutionally protected right of Dell 21 Computer Corporation to communicate in confidence with its 22 lawyers and not to have that communication reviewed by any 23 third party including Commissioner Butt or Mr. Manes or 24 anyone else on Commission staff. Not to be reviewed by any 25 third party without it's informed consent.

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1 And in that regard, I had intended to look at 2 the law in Lavallee and I may still but I will keep in mind 3 this is trying to be within a half hour. But the reason I 4 would go to the substantive law is so that you would 5 understand clearly why Dell is taking a position now on this 6 point of fundamental principle as opposed to just doing just 7 what Commission Counsel was asking for in this order. 8 And so the second point I want to deal with 9 then is one of process and whether a means can be found to 10 preserve Dell's fundamental right to confidence in the 11 documents in the eighteen (18) sealed boxes. 12 While at the same time that process would 13 satisfy your staff and certainly you, Madam Commissioner, 14 that there either is nothing of relevance in those boxes 15 dealing with Dell or if there was something of possible 16 relevance finding a way as between us, as being myself 17 representing Dell and your counsel, to work it out and to 18 deal with it. 19 And that's a position that I have taken, both 20 positions, very clearly from the first time I was retained, 21 spoke to your counsel and your counsel took the position that 22 they could review documents for which I asserted privilege. 23 And I very clearly disagreed, ultimately in writing on 24 January 15th, 2003, expressing the reluctance to enter into 25 an adversarial position so early in the proceeding but, at

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1 the same time, registering my strongest objection possible to 2 the proposed procedure for dealing with my client's 3 privileged documents which, at the time was, we'll simply 4 look at them. 5 And I cited Lavallee and I cited the portions 6 that were -- some of the portions that were read to you this 7 morning and, in particular, the basic principle from Lavallee 8 that the majority have endorsed which is that it is critical 9 to emphasize that all information protected by solicitor 10 client privilege is out of the reach of the state. 11 It cannot be forcibly discovered and that's 12 the key. It cannot be forcibly discovered or disclosed and, 13 in addition to that, it is inadmissible in court and that's 14 the distinction between the substantive right that Mr. Auger 15 was referring to this morning or in the portions he took you 16 to and the Rules of Evidence; that it is the substantive 17 right that is absolutely inviolable. 18 And is now protected by the Charter, by 19 Section 8, freedom from reasonable -- freedom from 20 unreasonable search and seizure, paragraph 1 and subject to 21 balancing of interest which I don't need to get into here. 22 But you start from the position that it is -- 23 that privilege is not ever to be unjustifiably impaired. 24 Now, so, if I say I want to deal with that process which 25 really boils down to a single issue and that is, Commission

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1 Counsel says they are not third parties and they can look at 2 the documents first. 3 And Dell says, you are not Dell Computer, you 4 are not Dell's lawyers, you may not look at them without 5 Dell's informed consent. Simple as that. An additional 6 issue that I want to address and, in fact, as I have it as 7 point 3 in my new notes, I'm going to address it as soon as I 8 finish this outline. 9 And that is the problem that I became alerted 10 to today at the morning break that Dell's substantive and 11 constitutional right to privilege has already been infringed 12 with respect to some of the documents that were sent to the 13 Commission in a sealed envelope which I must assume was under 14 the first procedure adopted in March 26th and have already 15 been reviewed. 16 MADAM COMMISSIONER: I think that was Dell 17 Financial Services; was it not? 18 MS. VALERIE DYER: No. They are in this 19 file. Now, just because -- the reason I address that first 20 is so nobody thinks, oh well, there's some smoking gun here. 21 It's not quite the situation of no injury, no foul but it's 22 pretty close. 23 But it does show the fundamental problem with 24 the process that would be adopted that has allowed Commission 25 Counsel to unseal that envelope without any notice whatsoever

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1 to Dell or to me, as their counsel here at the Hearing, 2 contrary to the principles established in Lavallee where one 3 of the fundamental problems, in addition to the two (2) that 4 Mr. Butt cited, was that there was no provision for notice to 5 the clients under that section of the code. 6 The next thing I would deal with in my outline 7 would be the order that was requested, including adding some 8 protection for some language perhaps that would protect the 9 interests of Dell and any other clients of Morrison Brown and 10 also dealing now with this issue of eighteen (18) or twenty 11 (20) boxes. 12 And then finally, as I go through, I want to 13 try to answer some questions that you had posed this morning 14 to My Friend, and perhaps I will, in some cases, be giving 15 you a different answer. 16 What I also want to make clear, Madam 17 Commissioner, as I have throughout to your Counsel, that the 18 position of Dell Computer Corporation and hence my 19 instructions are to cooperate fully with this Commission and 20 we both have done so to date. 21 My instructions, however, as their lawyer is 22 to preserve their fundamental right to privilege to review 23 the documents and give them advice. Okay. So the documents 24 with respect to the separate envelopes and we just step back 25 because I actually thought I was coming here today to deal

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1 with one (1) envelope of documents and twenty (20) boxes. 2 There would appear from the documents that are 3 in the file there have been at least two (2) sealed envelopes 4 sent over, one (1) of which has the Dell Financial Services 5 documents and, as you know, I don't represent Dell Financial. 6 One (1) has been, what was described as, the 7 -- an electronic file. Some documents that had been obtained 8 from the Morrison Brown computers before they went to the 9 warehouse and the third is the twenty (20), twenty-one (21), 10 eighteen (18) boxes that, later, came over. 11 So let's just look at the documents so you can 12 see the document brief as been put forward so can see how 13 that -- but I can confidently tell you that that's happened. 14 There is, at Tab 6 of this brief, as you 15 pointed out, at page 22, whoops, I must have the wrong -- 16 page 17 -- 17 MADAM COMMISSIONER: Tab 4 then? 18 MS. VALERIE DYER: Yes. Tab 4. 19 MADAM COMMISSIONER: Okay. 20 MS. VALERIE DYER: So the fax to 21 Ms. Groskaufmanis, May 12, 2003, page 17 there was a list 22 which has been redacted for which I thank Commission Counsel 23 to properly protect what is a claim for privilege and without 24 getting into anything that's privileged, I can tell you it 25 refers to documents of Dell Computer Corporation as the

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1 unredacted list is here. We -- you dealt this morning with 2 this previous agreement that Morrison Brown -- the private 3 agreement, the characterization I agree, that Morrison Brown 4 entered into with Commission Counsel but Morrison Brown is 5 nothing but a gatekeeper in the claim for privilege and I'm 6 going to take you that portion of Lavallee. 7 My recollection and I'm hoping other Counsel 8 will know better, I thought Mr. Roland would know. I think 9 the decision is Smith, it's a Supreme Court of Canada 10 decision of around 1966 and it basically says, we've had a 11 lawyer on the stand, it was the lawyer's duty to claim the 12 privilege and the lawyer has no ability to waive it. 13 So Morrison Brown cannot agree on behalf of 14 Dell or any other client that the documents can be reviewed 15 and as a result, I think Morrison Brown thought it was doing 16 the right thing in delivering them over a certain privilege 17 but then we have the next letter at Tab 18, the second 18 paragraph. So that's Tab 5, page 18. 19 20 (BRIEF PAUSE) 21 22 MADAM COMMISSIONER: Yes, I'm there. 23 MS. VALERIE DYER: Okay. There is a redacted 24 portion. It says: 25 "I appreciate you have located electronic

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1 files related to Dell Computer." 2 MADAM COMMISSIONER: Yes. 3 MS. VALERIE DYER: Now, it's my information 4 that on May 28th in a sealed envelope that file of documents 5 was delivered to your Counsel asserting the privilege on 6 behalf of Dell. So the -- the kind of documents that have 7 been produced would include things like the account between 8 Morrison and Brown and Dell. Those counts, Madam 9 Commissioner, have been produced to Commission Counsel for 10 the relevant period as agreed with Mr. Manes in February, I 11 believe, of this year and they are in the database. 12 MADAM COMMISSIONER: They were what, sorry? 13 MS. VALERIE DYER: They're in the database. 14 MADAM COMMISSIONER: Okay. 15 MS. VALERIE DYER: And because of the nature 16 of the account that is rendered, no privilege is claimed for 17 it. It includes correspondence well beyond the period of 18 time of your Inquiry and it does not -- it would be of the 19 nature that your Counsel, having reviewed it, would probably 20 say is not helpful but I haven't spoken to them about that. 21 It includes a letter which would not be 22 privileged and for which privilege would not be claimed but 23 it's also totally irrelevant, at the same time and it 24 includes two (2) or three (3) documents for which Dell would 25 claim privilege and then look at a means -- would have looked

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1 at a means to satisfy your Counsel that they're not relevant. 2 So there's -- there's actually no smoking gun 3 here but just an example of the problem with the process 4 that's being requested here today. 5 So I think what I'd like to do is just look at 6 just a few of the -- the quotes and the basis of the 7 fundamental principle so that it will explain why -- support 8 what I just said and explain why I -- why I opposed the order 9 as requested. 10 We could look at the Lavallee decision, which 11 is found at Tab 9 of My Friend's book which is a decision 12 clearly dealing with criminal law by which the manner of the 13 court they have given a very helpful history starting with 14 the development of the evidentiary rule, the key decision and 15 Descoteaux which is prior to the charter and then the various 16 charter decisions and now this case which once again refers 17 the basic principle. 18 The -- and I'm going to -- 19 MADAM COMMISSIONER: Have you -- 20 MS. VALERIE DYER: -- try to -- 21 MADAM COMMISSIONER: -- lost some -- 22 MS. VALERIE DYER: I'm going to try to -- 23 MADAM COMMISSIONER: Excuse me. 24 Have you lost something, Mr. Butt? 25 MR. DAVID BUTT: Yeah. I'm sorry, Madam

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1 Commissioner. Might I just have five (5) minutes to speak to 2 Ms. Dyer just to retrieve a file? 3 MADAM COMMISSIONER: Okay. 4 MS. VALERIE DYER: Actually, this is an 5 interesting point. Madam Commissioner, I would ask Mr. Butt 6 -- Mr. Butt? 7 This is the file that Mr. Butt made available 8 for us to review. He clearly wants to have a look at it 9 again and I would ask that he not look at it given the, once 10 again, asserted privilege on behalf of my client. 11 MADAM COMMISSIONER: Well, why don't we just 12 put that aside for now and let me hear your argument. 13 MS. VALERIE DYER: Right. Thank you. 14 MADAM COMMISSIONER: We can deal with that 15 later on. All right? 16 MS. VALERIE DYER: Thank you. 17 MADAM COMMISSIONER: Otherwise if I have the 18 intervening events overtake us here, we won't ever get out 19 before the long weekend. 20 MS. VALERIE DYER: Well, that's right. And 21 today we were not supposed to deal with the issue of the 22 privilege but -- okay. So, in the Lavallee case and what I'm 23 going to try to do is not deal with points that My Friend 24 will have dealt with. 25 Starting at paragraph 39 at page 30 is the

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1 point that My Friend has already read to you which sets out 2 the fundamental principle 3 "And the problem with anything that was 4 fatal which allows the privilege to be 5 breached without the client's knowledge, 6 let alone without the client's consent." 7 At paragraph 35, at page 27. Paragraph 35 -- 8 I'm going to go to the middle of it but what it addresses, 9 Madam Commissioner, is the question you asked with respect to 10 whether a mortgage broker who happens to be a lawyer, et 11 cetera, et cetera. You had that discussion. 12 And what the majority of the Supreme Court of 13 Canada has said about halfway down is, in setting out the 14 issue 15 "A client has a reasonable expectation of 16 privacy in all documents in the possession 17 of his or her lawyer which constitute 18 information that the lawyer is ethically 19 required to keep confidential and an 20 expectation of privacy of the highest order 21 when such documents are protected by the 22 solicitor/client privilege." 23 So that is the starting point and I support 24 what was said this morning that when you retain a law firm as 25 Dell has retained and the letter -- the retainer letter is in

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1 the evidence of this Inquiry, then the client has a 2 reasonable expectation of privacy in all communications with 3 the lawyers. 4 Just to step outside that for a moment, it's 5 also clear law, and it isn't here, that you can't put a 6 document with your lawyer that is not privileged and then 7 claim that document happens to be privileged. So if we look 8 at -- if we took at face value, for example, what is in these 9 boxes, and here I fully support Commission Counsel, that from 10 the look of some of these documents such as, you know, 11 "Molson Indy Festival Foundation 1993", it's not going to be 12 relevant if that's what the box really contains. 13 And the fact that it happens to be in a 14 storage room of Morrison Brown isn't going to make -- turn it 15 into a confidential document and, of course, the issue that 16 we're here for is someone wants to open those boxes and see 17 if that's what it really does contain. 18 The -- the next point is the issue -- to deal 19 with the issue of the role of Morrison Brown and that is 20 found at paragraph 24 at page 3. 21 MADAM COMMISSIONER: I'm sorry. What are you 22 referring to? 23 MS. VALERIE DYER: I've now gone -- I've gone 24 back to, in the same decision, to page 23 -- 25 MADAM COMMISSIONER: Yes.

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1 MS. VALERIE DYER: -- paragraph 24. 2 MADAM COMMISSIONER: Okay. I'm right there. 3 MS. VALERIE DYER: It starts with a quotation 4 that I already raised in correspondence with Commission 5 Counsel about these documents being out of the reach of the 6 state and cannot be forcibly discovered. 7 It goes on to say 8 "It is the privilege of the client and the 9 lawyer acts as a gatekeeper ethically bound 10 to protect the privileged information that 11 belongs to his or her client. Therefore, 12 any privileged information acquired by the 13 state without the consent of the privilege 14 holder is information that the state is not 15 entitled to as a rule of fundamental 16 justice." 17 Now, Madam Commissioner, in this Hearing, 18 having been appointed as the Commissioner to conduct this 19 Inquiry. Even though you are also a Judge of the Supreme 20 Court, you are operating in this Hearing in your role and 21 under the authority granted by the state, being the Province 22 of Ontario, in the Public Inquiries Act. 23 The Public Inquires Act gives you the ability 24 to compel production of documents by summons to witnesses or 25 subpoenas. The law I've cited to you this morning accurately

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1 states that the power of a summons cannot override the 2 solicitor/client privilege. 3 So when you utilize the power -- the forcible 4 powers of the state to require anybody here to produce 5 documents to you, in my submission, you cannot compel them to 6 give you the privileged documents because it's a rule of 7 fundamental justice and now a constitutionally protected 8 right that the state is not entitled to that. 9 Then one looks at the provisions that are set 10 up in order to balance the concerns of the administration of 11 justice, various things that various statutes look at going 12 from criminal, at one end to I don't know what would be at 13 the other end. 14 Perhaps the better analogy for your position is one similar 15 to the director of investigation and research under the 16 Combined Investigation Act, now the Competition Act. These 17 cases are summarized in this Lavallee case, I don't -- won't 18 turn them but essentially, the -- the initial problem with 19 the statute that allowed for the director under Section 17 20 which is just the fact finding investigative stage to get a 21 summons was that the Commissioner proved that there was no 22 independent judicial officer who considered the evidence and 23 granted the summons. 24 And the same problem has arisen in Lavallee in 25 a different way where a section of the Criminal Code said the

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1 Judge shall disclose the information, thereby taking away the 2 Judge's discretion. 3 So the -- what is fundamental to a proper 4 balance is that there be an independent third party, not the 5 investigator who makes the decision with respect to any 6 summons and I would suggest that once you're before that 7 independent officer, as they were in the Human Rights case 8 when they were acting on Statutory Powers Procedure Act, 9 you're then dealing with the independent officer, not the 10 investigators themselves making the decision. 11 And that's why the process that was developed 12 in -- of which I was advised that any privileged issues, 13 privilege having been claimed, would be dealt with the 14 Regional Senior Justice makes eminent good sense and that is 15 why, unfortunately, when you asked why I would disagree and 16 you asked, well, can I as the Commissioner look at these 17 documents? With respect, you cannot look at the privileged 18 documents but I think we probably have a way around that. 19 MADAM COMMISSIONER: So just help me on this, 20 Ms. Dyer. In this case then we have a process that we've 21 established informally here that if anyone is claiming 22 privilege that the matter would go before the Regional Senior 23 Justice and he has agreed to do that. 24 MS. VALERIE DYER: Right. 25 MADAM COMMISSIONER: And I had understood that

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1 all parties were prepared to proceed on that basis. We were 2 operating under the assumption that if the matter is 3 relevance that the issue of relevance or helpfulness would be 4 something that could more properly be decided by us simply 5 because we're the ones who are dealing with it on a daily 6 basis and whereas the Regional Senior Justice would not be. 7 Is it your view then with respect to these -- 8 these eighteen (18) boxes that because there is a blanket 9 privilege assertion on them that we shouldn't look at them at 10 all or -- 11 MS. VALERIE DYER: No, but let me just -- let 12 me address -- if I could address an assumption in your 13 question, first, and then I could address how I think perhaps 14 this could be dealt with. 15 MADAM COMMISSIONER: Thank you. 16 MS. VALERIE DYER: I did not understand the 17 provisions whereby I -- we agreed to put the question of 18 privilege to the Regional Senior Justice, that they would 19 include that your Counsel and your staff would look at the 20 documents first. 21 So that's -- there was a claim that they would 22 be reviewed, I said no you cannot review them but if an issue 23 arises, speak to me about it and we'll see what we can do 24 about it because I don't want to run off to court and waste 25 money over something that was so insignificant as some of

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1 those documents. 2 But you still have to protect the fundamental 3 privilege because they can't be viewed by the third party who 4 then has the information in their head and as the judges said 5 this morning, you know, small comfort indeed if the privilege 6 holder can then prevent them from -- prevent that particular 7 document from going into evidence. 8 But the process and the decision between 9 relevance and privilege raises a -- as raised this morning 10 and, again, now when he raises a couple of issues. The -- 11 the relevance and the question was, how can anybody other 12 than your staff determine relevance? Well, it is actually an 13 issue that many of the parties have raised with your Counsel 14 beforehand. 15 You send a subpoena -- or a summons to my 16 client and say everything relevant. What is it that you're 17 looking for? And typically you're given some indication but, 18 at the same time, don't limit your inquiries here but these 19 are the issues that are important and this is what we're 20 asking you for and, in fact, you'll see that in Mr. Manes' 21 letters to Morrison Brown. He's telling them specifically 22 what he wants. 23 The other obvious source is the Terms of 24 Reference which, broadly speaking, I would say, deal with the 25 computer leasing at Stage I and, broadly speaking, deal with

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1 the three (3) or four (4) discrete issues at Level II. 2 Anything that touches on those is arguably relevant. 3 But the Molson Indy Festival Foundation can't 4 possibly be within -- if that's what it is, can't possibly be 5 within either Terms of Reference. So, again, the summons 6 power wouldn't properly attach to that. 7 So, practically, how do you deal with it which 8 is what I had intended to do when I come to the order but 9 let's just deal with it now. See if I pick up all my points. 10 My submission would be to protect Dell's interest, what I 11 would be happy with is this. 12 Someone from -- from the offices of Mr. Lyons' 13 Counsel or some group of students are to come out here and be 14 given a room where these boxes are located, to be given a 15 reasonable time and it obviously doesn't have to be Mr. White 16 who does it, to look at the documents. 17 Now, there's clearly an issue of trust that 18 has arisen here and I don't want to say anything other than I 19 heard the submissions this morning and I understand some 20 concerns. I can tell you that in the old days before 21 photocopying became so prevalent, you would just issue all 22 your -- send everybody copies of your documents. 23 MADAM COMMISSIONER: You're not that old. 24 MS. VALERIE DYER: No. I'm not that old but 25 maybe it was more expensive in those days, but what used to

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1 happen was, people would say, I want to come to your office 2 and look at your productions and if you didn't -- without 3 calling into question any particular lawyer, but if you had 4 some concern about what would happen, you'd give them a big 5 enough boardroom and a student would sit in the boardroom far 6 enough away so they couldn't see any notes that were being 7 made. 8 But you would -- it would be an inability for 9 any document to disappear. And I'm not suggesting in any way 10 that that would happen if Mr. Auger was here or anyone from 11 his office, but that's the -- if there needed to be some kind 12 of extra concern, I think that would be a fair thing. 13 In going through this box in the Molson Indy 14 Festival Foundation, we already know that Morrison Brown has 15 determined that some of these boxes actually had other client 16 files in them, somebody sees -- Mr. Lyons' counsel sees a 17 letter that has my client's name in it. That letter is 18 tabbed so that I can review it and determine if it's 19 privileged or someone from my office but before your counsel 20 looks at it. 21 Now, what would happen in the ordinary course 22 in going through documents like this, the parties would very 23 quickly agree that this file that has nothing but '93 24 brochures in it is totally irrelevant. CV's they're nothing. 25 Agreed. We don't have to do that.

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1 And the reason I can say that is because 2 that's exactly what Daina did with the Susan Cross notes. 3 Sitting down with somebody, and I know there was an issue 4 because they sent a student, but it worked remarkably well. 5 I was put under very tight time lines when 6 things were sent to me on a Friday afternoon but I worked on 7 them Saturday morning, spoke to your counsel on Saturday, 8 worked something out. She spoke to Mr. Manes. I spoke to 9 him on Sunday. Monday morning we came in here. He had what 10 he wanted. I had my protection. 11 So, it will work and then if there was 12 something that didn't work we have the process of Regional 13 Senior Justice. So -- 14 MADAM COMMISSIONER: In that one with 15 Ms. Groskaufmanis, are you saying that she didn't look at the 16 documents? 17 MS. VALERIE DYER: Well, what I understood 18 had happened -- 19 MADAM COMMISSIONER: I can't recall. 20 MS. VALERIE DYER: -- yeah, what I understood 21 happened, she asked, and it would be consistent with what 22 seems to be in here for Dell Financial Services, she asked 23 Susan Cross to put in a sealed envelope anything that might 24 be Dell or DFS or MFP or whatever. 25 MADAM COMMISSIONER: Right.

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1 MS. VALERIE DYER: I was then given the 2 sealed envelope. Now, at the next stage, it would seem 3 evident, now it's becoming clear, because there was an issue 4 raised by Mr. Lyons that there hadn't been complete enough 5 disclosure. I think that might have been when she and Mr. 6 Lyons' lawyer sat down together, but I can't be sure. 7 So obviously at some other stage they were 8 reviewed. The horse was out of the barn. I simply dealt 9 with it as, the horse is out of the barn, let's just motor 10 ahead and get what you need for your hearing, but I would not 11 want that to happen again; that's why I would ask that the 12 order, as I say, when my client's name appears, it's tabbed 13 for purpose of sealing and it's sealed. 14 And then I come out here, they can be sent to 15 me, whatever. Probably better if we come out here because 16 they there would be an issue of photocopying and all of that. 17 Whatever suits your staff, suits me. 18 And this issue, you see, of the -- of the 19 access of your staff is -- was one of several fatal flaws in 20 this section of the Criminal Code that was under 21 investigation. It wasn't just the timeliness of the issues. 22 There was, as Mr. Auger took you too this morning, the 23 unjustifiable impairment which permitted the Attorney General 24 to inspect the seized documents in order to assist the Judge. 25 The -- that's all in paragraph 44. My Friend

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1 was going through it and you were asking questions. He 2 didn't quite finish it so at the end of page 33, the end of 3 the paragraph. I'm sorry, it's not the end. It's a very 4 long paragraph; isn't it? 5 After the Borden and Elliot case maybe two (2) 6 inches up. 7 "Ultimately any benefit that might accrue 8 to the administration of justice from the 9 Crown's being in a better position to 10 assist the court in determining the 11 existence of the privilege is, in my view, 12 greatly outweighed by the risk of 13 disclosing privileged information to the 14 state in the conduct of a criminal 15 investigation. I also cannot understand 16 the logic of the argument that the Crown 17 should be trusted not to use information 18 obtained under that provision if it's 19 subsequently proved to have been the proper 20 subject of privilege. If as would be the 21 case under this provision the conduct of 22 the Crown in examining the documents would 23 have been entirely lawful, it's difficult 24 to understand why the Crown should then 25 refrain from using the information and the

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1 knowledge lawfully acquired." 2 And that was, again, balancing the interests 3 of the parties what appear to be logical commonsense and 4 let's just motor on was found to be part of the problem with 5 this -- with this particular provision. 6 But I would submit to you that the process 7 that I suggested for Dell ought to work equally well for 8 obvious client issues such as these -- this box of the firm 9 accounts and the fact that they are privileged and one of the 10 flaws with Section 488.1 was the naming -- the requirement to 11 name the clients which, again, My Friend took you through 12 this morning. 13 But the next -- the next fatal flaw of this 14 section was the fact that there was no notice given to the 15 client and that's at page 25, paragraph 29 where it's held, 16 among other things 17 "The absence of notice is the first step in 18 a series of consequences which can be fatal 19 to maintaining the confidentiality of 20 privileged documents." 21 Now, all I want to say on that is, just to 22 step outside my Dell role for a moment, anybody who has an 23 account from Morrison Brown, prima facie, is a client of the 24 law firm and their name should not be revealed publicly. 25 In Dell's case, it's quite different. It's

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1 public knowledge that Dell was a client of that firm and we 2 are the ones who have given you the retainers and the cheques 3 and things like that. 4 MADAM COMMISSIONER: Why have you given me 5 the Molson Indy name? 6 MS. VALERIE DYER: I'm sorry. I -- I hadn't 7 thought of that. To me it was just obviously something that 8 -- from a time period. I do apologize. That just struck me 9 as something that wouldn't be client related and I could be 10 quite wrong, so I apologize, again, showing the problem of 11 dealing with these issues. 12 13 (BRIEF PAUSE) 14 15 MS. VALERIE DYER: So I would say that with 16 the pro -- with the order requested in Dell's position, that 17 the fundamental difference of position between your Counsel 18 and myself is whether or not they are a third party -- 19 whether they are Dell or Dell solicitors and clearly, they're 20 not Dell or Dell solicitors, that makes them a third party 21 and even though operating under your auspices and keeping in 22 mind the importance of maintaining the integrity of your 23 office, my submission it doesn't save the problem of the 24 disclosure and the undermining and infringing of the 25 substantive right of confidential communications.

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1 There is also in the Lavallee decision and I 2 -- I won't take you to it but I just offer it to you for 3 consideration. There was a -- there's reference to a 4 procedure in Quebec as you had asked this morning what could 5 be done. There was a procedure in Quebec when the lawyer 6 couldn't be found and there was an issue of privilege, the 7 Bar Society -- local Bar Society stepped in and there was an 8 independent lawyer who came in and looked at it and tried to 9 deal with it. So if you wanted to consider something like 10 that short of going to Justice Blair, that may work. 11 12 (BRIEF PAUSE) 13 14 MS. VALERIE DYER: In your questions this 15 morning you were saying -- you said to My Friend, well, help 16 me how -- how can we determine this relevance issue and if 17 the two (2) are married so closely, the relevance and the 18 privilege, how can we deal with step 1 before we go into step 19 2? 20 And I think I've told you how I would be 21 satisfied would work for my client, but I think that the -- 22 the more fundamental issue is what are the -- what are the 23 issues of relevance that any -- that any person receiving a 24 summons would deal with and that can be assisted by having 25 your Counsel list with some greater particularity what the

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1 issues are and what the issues are of interest to them in 2 these documents. 3 For example, just to pick an obvious example, 4 the leasing RFQ but one can go through a whole list like 5 that. Then there'd be issues like the Paula Leggieri side 6 play that occurred. I don't know whether that -- first of 7 all, there probably isn't anything like that in there but if 8 there was, there may be issues like that that are completely 9 closed and don't need to be examined at all. So by providing 10 a list in bulleted form, this type of document bing, bing, 11 bing, then certainly Counsel looking through these boxes 12 would be -- would be assisted. 13 I'm struck, as well, by the reference this 14 morning that despite the searches over some period of time of 15 both Counsel, there is no precedent for a Commission of 16 Inquiry ever ordering the production of privileged documents 17 and being able to review them. 18 As one would think the issue has come up 19 before and one would think that if it's truly privileged the 20 process such as the Regional Senior Justice dealing with it 21 would maintain the privilege. Subject to the exceptions we 22 all know of when things that might have been privileged are 23 not, we don't have to get into that at this stage because 24 that's what the Judge would do. The Walkerton Inquiry was 25 raised.

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1 In Walkerton, as I read the excerpt that My 2 Friend has put before you, Justice O'Connor as the 3 Commissioner took the position early on that by reason of the 4 Terms of Reference of the Walkerton Inquiry, the Province of 5 Ontario had waived the privilege and he took that position 6 quite strongly. 7 I would think that the -- if it didn't come 8 up, it could fairly come up early in the discussions between 9 you Counsel and the City: City of Toronto, you have ordered 10 a wide-ranging inquiry and you have thereby agreed implicitly 11 to waive your privilege. Faced with the Commissioner saying 12 a waiver of privilege had occurred, not that they weren't 13 privileged at all, the parties worked out a means of dealing 14 with it and that process worked satisfactorily and everything 15 got worked out, but I do think that is a fundamental 16 difference because City Council can, in no way through these 17 Terms of Reference, waive the privilege of Dell Computer 18 Corporation. It can only waive its own privilege. 19 Now, if I could deal with the other parts of 20 the order. I think I've dealt with the process concerning 21 Dell. The timing, I think this is at Tab 9, let me just see 22 where we have this. Tab 9 of Commission Counsel's brief, 23 page 63. 24 MADAM COMMISSIONER: It seems to be the June 25 4th letter, is that what you're referring to?

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1 MS. VALERIE DYER: No. It's September 19, 2 Tab 34, page 63. 3 MADAM COMMISSIONER: Oh, Tab 34. I thought 4 you said Tab 9. 5 MS. VALERIE DYER: Oh, I'm sorry. I probably 6 did because that's what's in my notes. So I don't know why I 7 said that. 8 MADAM COMMISSIONER: All right. Thirty-four 9 (34). I'm there. 10 MS. VALERIE DYER: I quite helpfully put a 11 little yellow sticker that said "order". I'll have to go 12 back and see what I wanted to look at the other one. 13 The -- I've made my submissions on paragraph 1 14 and how I'd like Dell to be dealt with. Paragraph 2 15 "It will begin within one (1) business day 16 of the date of the order ..." 17 And the suggestion was well, maybe two (2) or 18 three (3) days would be fine. I would -- I would request 19 that the order provide counsel with a reasonable period of 20 time within which to launch the judicial review or whatever 21 the step is to review the order and I would think three (3) 22 working days is -- would be the minimum. 23 MADAM COMMISSIONER: Thank you. 24 MS. VALERIE DYER: And that it be part of the 25 order that the -- that upon receipt of any notice of appeal

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1 or judicial review that your order is stayed pending the 2 determination by the court. 3 MADAM COMMISSIONER: Is that not in there 4 somewhere? I thought that -- 5 MS. VALERIE DYER: I didn't see that. 6 MADAM COMMISSIONER: It might not be. I 7 thought that that was -- 8 MR. DAVID BUTT: If I can assist on that. I 9 absolutely agree. I had that conversation by telephone and 10 it didn't get committed to writing but I -- I completely 11 support it. 12 MADAM COMMISSIONER: Okay. Thank you. 13 MS. VALERIE DYER: Paragraph 3 quite properly 14 deals with Mr. Lyons or his counsel attending. I think your 15 order should deal with the rights of clients generally. I 16 don't have anything to offer you on that because I haven't 17 addressed my mind to it, but with respect to Dell, and I'd be 18 pleased to try to work out suitable language with your 19 counsel, that Dell or Dell's counsel may attend to 20 participate in the review or receive photocopies. Whatever 21 the appropriate language is. 22 At paragraph 4 it talks about the 23 "return of privileged material" 24 Any privileged material should be immediately 25 sealed. It isn't something that feeds into paragraph 1.

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1 Otherwise I don't have any comments. 2 I support the concept of counsel trying to 3 resolve any privilege issues between them and I will continue 4 to make myself available in the most unlikely event that any 5 of these files as labelled have anything to do with Dell. 6 And then there was a request this morning 7 about agreeing that Rule 14 would apply. The process in Rule 8 14 for originating applications, the -- as I understand under 9 the -- somehow under the authority of the Public Inquiries 10 Act that the Regional Senior Justice has agreed to assume 11 jurisdiction, that he has the jurisdiction. 12 Therefore, Rule 14 is an appropriate process. 13 The originating application process subject only to this and 14 that is, typically where material facts are in dispute one 15 doesn't use the originating process -- the application 16 process. 17 Typically, when privilege issues are in 18 dispute you use an interlocutory motion. You don't go to 19 trial on it. So as long as it's understood that by agreeing 20 to rule 14, I'm not agreeing that there will not be material 21 facts in dispute then I think it's the most efficient process 22 to be used. 23 MADAM COMMISSIONER: Okay. 24 MS. VALERIE DYER: Now, I think I've covered 25 all of my points unless there were other -- and I tried to

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1 make note of the significant questions you asked this 2 morning. Unless there were other questions you had, I would 3 be finished. 4 MADAM COMMISSIONER: I have no more questions. 5 Thank you very much. 6 MS. VALERIE DYER: Thank you. 7 MADAM COMMISSIONER: Thank you for your help. 8 9 (BRIEF PAUSE) 10 11 MADAM COMMISSIONER: Mr. Auger, I guess -- 12 would it make sense for you to go now and then ha -- given 13 that it's Commission Counsel's application, to have them go 14 last. I guess that would probably make sense but, you know, 15 I'm not bound by any formal mechanism here. I want to be as 16 fair as possible, so. 17 MR. RICHARD AUGER: Well, I guess my -- thank 18 you. I guess my hope was that, you know, Mr. Butt's brought 19 his motion, he's made his submissions, I've responded to 20 that. I guess I would ask, he's entitled -- I think we've -- 21 he and I discussed that he would have a right of reply and if 22 he wants to reply he can and if I have any final comments 23 that may arise out of his comments, I would ask for your 24 permission to make them but -- 25 MADAM COMMISSIONER: At the moment you don't

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1 have any? 2 MR. RICHARD AUGER: At this moment I do not. 3 MADAM COMMISSIONER: Okay. 4 Mr. Butt, why don't you -- I just want to be 5 as fair as possible and there is no real process here, 6 anyway. We're just making it up as we go along as far as 7 this Motion application is concerned. 8 9 (BRIEF PAUSE) 10 11 MR. DAVID BUTT: Madam Commissioner, it would 12 perhaps be helpful -- I'm indebted to Ms. Dyer for framing 13 the issues conceptually and so it would perhaps be most 14 helpful to everybody if I address Dell's position first and 15 then I'll deal with issues raised by Mr. Auger to the extent 16 that I need to on top of Ms. Dyer's submissions for Dell. 17 When I say I'm indebted, it appears to me, 18 with respect, that there has been a very neat, well thought 19 out conceptual framing of the issues if one compares the two 20 (2) positions taken -- the two (2) major positions. I 21 appreciate there are three (3) -- four (4) people speaking 22 and -- and some differences but speaking broadly, two (2) 23 major perspectives have arisen, if I can put it that way. 24 One of them is that you as Commissioner and 25 Commission Counsel as your alter ego are essentially engaged

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  1  in judicial functions.  The other position is that both you,
  2  Madam Commissioner, and your Counsel are agents of the state
  3  who are not engaged in judicial functions and in my
  4  submission, the reason that that apparent conceptual framing
  5  of the issues is so neat and well thought out is that the
  6  implications for this very practical issue of looking at some
  7  documents in sealed boxes all flow from which concept applies
  8  in these circumstances.  
  9                 If we are the state, and I say we in the sense
 10  of you, Madam Commissioner, and your Counsel, Lavallee is
 11  perfectly clear; we can't look at that material absent the
 12  requisite waivers.  On the other hand, and using Lavallee as
 13  the example, if it is more appropriate to conceive of -- of
 14  this function as a judicial function then the complaints
 15  about third party access to privileged documents vanish into
 16  thin air.  Why do I say that?
 17                 I say that in reference to a particular
 18  paragraph in Lavallee, the majority judgment of
 19  Justice Arbour.  It's paragraph 49 and it's a very long
 20  paragraph, but it's under page 37, Tab 9 of My Friend, Mr.
 21  Auger's materials.  After finding the criminal code section
 22  constitutionally deficient and striking it down the Supreme
 23  Court goes on to construct a common law remedy for the
 24  interim between the section being struck down and parliament
 25  legislating.

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1 And so we have in general terms, general 2 common law terms, the Supreme Court's authoritative views on 3 how privilege issues can be addressed and point number 8 is 4 that, and I'm reading now, 5 "The prosecuting authority can only inspect 6 the documents if and when it is determined 7 by a Judge that the documents are not 8 privileged." 9 Obviously what's behind the Supreme Court of 10 Canada endorsing a recommendation like that to go into effect 11 immediately to operate in a criminal context is that a Judge 12 can look at privileged documents without violating the 13 solicitor/client privilege rule, without resulting in a 14 waiver of privilege and without prejudicing unknown anonymous 15 clients whose intimate affairs may be reviewed by that judge. 16 Because if all those bad things were going to 17 happen, the Supreme Court of Canada simply wouldn't have said 18 a Judge can look at it. They would have said nobody can look 19 at it. So, Ms. Dyer was right on the mark when she said you, 20 Madam Commissioner, and I are not Dell and we're not Dell's 21 lawyers. 22 But in my submission, the position goes too 23 far when she says, therefore you are a third party for the 24 purpose of privilege and you cannot look at the documents 25 because that is true for a Superior Court Judge in a criminal

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1 case. 2 A Superior Court Judge in a criminal case, 3 heaven forbid that Dell and Ms. Dyer were before a Superior 4 Court Judge in a criminal case, that Judge is neither Dell 5 nor Dell's lawyers either so if we carry that logic to its 6 extreme, that person is a third party and that Superior Court 7 Judge cannot look at the privileged material and, obviously, 8 that cannot be the law. 9 There has to be a mechanism where somebody who 10 is neither the party nor their lawyer in a privilege 11 situation can look at the material. So we come back, in a 12 sense, to the position that I advanced in my principal 13 submissions. Section 274 of the Municipal Act stipulates 14 that the Commissioner in a municipal inquiry of this type 15 must be a Judge of the Ontario Superior Court. 16 A Commissioner in a 274 Inquiry does not, by 17 virtue of agreeing to conduct the inquiry, lose her status as 18 a Superior Court Judge. The relationship between the 19 Commissioner and her counsel, remains in my submission the 20 one as defined by Justice O'Connor and in recognition of that 21 obvious closeness and that obvious relationship, Ms. Dyer 22 again had the conceptually sound position that if I can't 23 look at it, you can't either, it only makes sense. 24 So in reply on this nicely framed conceptual 25 issue, I'm submitting that you do and are -- you are

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1 conducting a judicial inquiry, you do exercise judicial 2 functions and you are, therefore, entitled in the same way 3 that a Sup -- that a judge in a Lavallee context is entitled 4 to fairly deal with privilege issues on the basis of 5 knowledge; that is to say knowing what you're dealing with 6 because as a practical matter, and the practicalities are 7 everything here. 8 Issues are simply not going to arise with 9 anything like the frequency that they would arise in the 10 abstract if we actually know what documents we're dealing 11 with, if we can actually go through and call for relevance 12 first. 13 So I am submitting to you that we do have to 14 ground the approach to privilege in the judicial conception 15 of a Commissioner -- Commissioner's role and the role of her 16 Counsel because the converse goes simply too far and by 17 following the procedure roughly as we have proposed, and I do 18 have some comments on the variations of the order proposed by 19 My Friend and some of them make good sense, but proceeding 20 roughly in that way allows the practical work of determining 21 what documents are realistically in play and what are not and 22 what documents should be the subject of subsequent privilege 23 litigation and should not to be done quickly, efficient, 24 confidentially and my hunch is, based on past experience in 25 this Inquiry, for the most part finally resolved.

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1 Now, again, this type of Inquiry is a unique 2 entity. It's not a criminal proceeding, it's not a civil 3 proceeding and what makes it unique, in part, is because 4 while, yes, you do exercise judicial functions, you also 5 exercise an investigative role. 6 By the terms of the enabling legislation and 7 the -- and the Terms of Reference themself, the Council 8 resolution, there is a mandate to investigate and report. So 9 in that sense, yes, it's not a purely judicial function 10 traditionally conceived but let's keep in mind that that 11 exploratory function, that investigative function, is 12 extremely tightly constrained. 13 While you have wide latitude to look into the 14 matters within your mandate, a Commissioner has no ability to 15 find liability of any kind. So it is not the kind of 16 investigative function that we traditionally see associated 17 with civil investigations that precede law suits or criminal 18 investigations that precede prosecutions; it is not an 19 investigation aimed at ultimately determining any kind of 20 liability or infringement of liberty. 21 So that -- in my submission, while that 22 investigative element is, of course, there, because of the 23 tight constraints that are placed on it, it cannot override 24 the judicial component of the Commissioner's role and make a 25 Commissioner and her counsel third parties for relevance

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1 purposes. 2 I'd like to turn away now from the 3 conceptional and just get a little more practical here. 4 Unfortunately, we don't have authorities so we have to think 5 in conceptual terms but just to get right back to the 6 practicalities, who's going to look at this stuff? Who's 7 better placed to assess relevance? No one. 8 We could, I suppose try to bring outside 9 parties up to speed by telling them everything we know so 10 that they can do a job and, I guess, if we already accept 11 that this is, in very large measure, a judicial office with 12 the kind of impartial judicial obligations of impartiality 13 that go with it, the question is, why go to all that trouble? 14 It serves no useful purpose and would only 15 dilute the quality of the review that we have to brief 16 somebody so they can look at the documents and make 17 decisions. It dilutes the quality of the review, it's 18 impractical and it's costly. 19 Let's take these boxes for an example. I have 20 no idea how many clients there might be whose interests are 21 potentially affected by those eighteen (18) boxes. Do we 22 have to ensure that everybody who might conceivably has an 23 interest is somehow involved in that process? 24 If we are third parties, that's the 25 implication. Impractical in the extreme. What about the

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1 issue of this being an investigative inquiry? Our rules 2 require that we keep confidential our contact with many 3 people whom we summons and many people from whom we receive 4 documents. 5 We are required to keep that confidential 6 unless and until a decision is made to present that material 7 in the Hearing. So, at any given stage in the investigation, 8 we will know a lot about where we think the investigation 9 should go but be prohibited from briefing somebody else so 10 they can determine relevance. 11 The other choice is, we do away with our 12 confidentiality requirement and say, look, come and talk to 13 us but, hey, we're making no promises about keeping your 14 stuff confidential no matter how tangential it is and how 15 private it is; that doesn't work either. 16 So, practically speaking, we simply can't 17 brief someone else to come anywhere near as up to speed as we 18 are to determine relevance. The other thing that -- the 19 other practical consideration is this and it's nicely stated 20 in the Consortium case, paragraph 41. 21 We can't forget because this concept of a very 22 practical actually description of a typical judicial inquiry 23 because, in many respects, our experience here has borne out 24 the wisdom of the comments and I'm speaking of the Consortium 25 case in the Supreme Court of Canada.

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1 It's Tab 1 of my book of authorities and it's 2 paragraph 41. 3 "Unlike an ordinary law suit ..." 4 And I'm reading 5 "... where there's been preliminary 6 disclosure and the trial proceeds at a 7 measured pace in accordance with well- 8 established procedures, a judicial inquiry 9 often resembles a giant multi-party 10 examination for discovery where there are 11 no pleadings, minimal pre-hearing 12 disclosure and relaxed rules of evidence." 13 I'm skipping a sentence about publicity. 14 "Often, of course, at least some of the 15 participants will know far in advance of 16 Commission Counsel what the documents will 17 show, what the key witnesses will say ..." 18 So, relevance, what is helpful, is simply not 19 static. As Commission Counsel, if we are reviewing the 20 confidential documents that come in, we're in a position to 21 know what body of material has been dealt with and as issues 22 unfold or new issues arise, we are the ones acquiring, 23 cultivating and maintaining the corporate memory that allows 24 us to say yeah, you know what, there's a document we saw two 25 (2) months ago that is bang on this key issue. We can't do

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1 that if we're farming out relevance decisions. It's just 2 unrealistic in the context of what Judicial Inquiries 3 actually are. 4 So it's my submission, for those very 5 practical reasons, the appropriate conceptual view of your 6 function, Madam Commissioner, and your Counsel's is that of 7 judicial officers, so that there is no difficulty associated 8 with stepping inside the privilege provided, which we are -- 9 have taken the position from the outset that we are fully 10 ready to provide confidentiality and other protections that 11 are in place. 12 Now, I'd like to deal, if I could, with some 13 particular points raised by My Friend, Mr. Auger. In terms 14 of the -- the background to this proceeding, Madam 15 Commissioner, you've heard from Mr. Auger Mr. Lyons' 16 perspective that -- and I'm paraphrasing what I've heard. 17 For example, when he testified he was not aware of the 18 exchange of correspondence and -- and the attempts to get 19 documents between Commission Counsel and Morrison Brown 20 Sosnovitch, he was not advised of our discovery of the 21 existence of the documents in the spring, although that did 22 come out in the examination in-chief and was not involved in 23 that process and that, as I heard the submission, was 24 directed at indicating that this, quote: 25 "Private side agreement."

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1 Unquote, was somehow to be looked at 2 disparagingly. 3 It was called, if I got the quote right from 4 the submissions, a huge leap that created a problem without 5 consultation with Lyons' Counsel. Madam Commissioner, Mr. 6 Lyons was given a summons in August of 2002. He was given 7 another summons in December of 2002. 8 MADAM COMMISSIONER: December or November? 9 MR. DAVID BUTT: It was dated November. 10 MADAM COMMISSIONER: All right. 11 MR. DAVID BUTT: Given to him in December. He 12 was told in writing through his Counsel on February 14th, 13 2003 to inquire at Morrison Brown Sosnovitch. We started our 14 efforts in March 2003, seven (7) months after his obligation 15 pursuant to the summons to provide us with all those 16 documents arose. 17 Seven (7) months during which that obligation 18 went unfulfilled despite Mr. Lyons knowing that files were 19 opened under Morrison Brown Sosnovitch's names, despite Mr. 20 Lyons knowing that there were materials of his in off-site 21 storage and despite his knowing that his staff used Morrison 22 Brown Sosnovitch computers that remained behind. 23 This was not a private side agreement that 24 somehow interfered with his presentation of evidence. It was 25 steps taken by Commission Counsel faced with inappropriate

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1 responses to the obligations placed on him in the summons. 2 Now, I'd like to -- 3 MADAM COMMISSIONER: It's just -- it's not 4 just on the summons, is it? It's also as a party with 5 standing. 6 MR. DAVID BUTT: A party with standing, yes. 7 I'd like to address the Dofasco case, Tab 6 in My Friend's 8 materials. The Ontario Human Rights Commission and Dofasco. 9 And I'm going to ask you, Madam Commissioner, to look at 10 paragraph 61 at page 715. 11 And My Friend took you to this passage but it 12 bears a brief return because it embodies precisely what we 13 are endeavouring to do. In that passage the Board is 14 criticized in that case because, and I'm reading 15 "The Board has made no attempt at all to 16 balance the complainants right to protect 17 privileged or irrelevant information with 18 Dofasco's right to obtain production of 19 relevant material." 20 I'd ask you, Madam Commissioner, to keep that 21 balancing process in mind when you consider the proposed 22 order around review, in a preliminary way for relevance, only 23 by Commission Counsel, your alter ego, and affected parties 24 confidentially. The process for taking a Rule 14 route 25 towards privilege decisions once relevance has been

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1 determined and the fact that nothing goes into the public 2 domain or into these Inquiry's proceedings until all of the 3 privilege issues have been finally resolved. 4 That, in my submission is the principle that 5 comes out of Dofasco that is put into practical effect by the 6 order that we construct. And perhaps, just as an example of 7 the practice of this Commission in that regard, it's no 8 secret that, as a result of the materials received from 9 Morrison Brown Sosnovitch the DFS file made its way into the 10 Hearing Room. Whether as an exhibit or not or referred to, 11 it did make its way into the public hearing room. 12 But I would commend for your consideration, 13 Madam Commissioner, Tabs 9 and 14 - 14 MADAM COMMISSIONER: Of? 15 MR. DAVID BUTT: -- of my book of authorities 16 that demonstrate how this process, I'm not saying that any 17 process with documents, briefs of this magnitude and this 18 many parties and this much complex of issue will unfold 19 perfectly, what does, but this is how the process can and 20 ought to unfold and did, in this case. 21 Our information, based on Mr. Lyons' 22 testimony, that is found at Tabs 41 to 44 is that throughout 23 his testimony he maintained adamantly that he was acting as a 24 lobbyist. Now, I don't pretend to be an expert on the law of 25 solicitor/client privilege but what little I know leads me to

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1 guess that there's no such thing yet as lobbyist/client 2 privilege and I stand to be corrected on that if I'm wrong. 3 But assuming for the moment that that's the 4 case, there's no reason given the consistency with which 5 Mr. Lyons maintained that throughout that there's any 6 privilege attaching to anything he did in relation to these 7 matters and, again, I'm happy to be corrected if anyone can 8 find in Mr. Lyons' testimony someplace where he asserted, 9 yes, I was acting as a lawyer in relation to these matters. 10 In any event, despite that, after hearing that 11 testimony and before the DFS material distributed -- was 12 distributed any further, Commission Counsel at Tab 9 on June 13 4th, contacted the successor company to DFS to address the 14 privilege issue. 15 And at Tab 14 -- I'm sorry, Tab 13 received a 16 reply back confirming a waiver. So, practically speaking, 17 rights can be protected. Rights can be accommodated. 18 MR. IAN ROLAND: My Friend misspoke. I think 19 we said waiver -- the document didn't assert any claim of 20 privilege. It's not a waiver of privilege. There's no claim 21 of privilege. 22 MR. DAVID BUTT: Thank you. I appreciate the 23 correction. 24 MADAM COMMISSIONER: Thank you, Mr. Roland. 25 MR. DAVID BUTT: Again, so as a practical

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1 matter, can it work? Yes, it can. And so -- but I 2 acknowledge that we're first having to resolve this 3 conceptually issue about who we are and my position is, as 4 you've heard, if we are, as I submit, performing the judicial 5 function, the practicalities can be worked out. 6 So let me turn then to the proposal, in 7 particular Ms. Dyer's comments on the -- on the order. I'm 8 certainly content with three (3) working days. I'm 9 certainly, given what we know about Dell's obvious interest 10 in these proceedings and their obvious place in these 11 proceedings, I have no issue with involving them in any kind 12 of review we conduct confidentially. 13 I do say though that it's because of the facts 14 of this situation and, again, remind you Commissioner of my 15 earlier submission that if this were a situation where 16 everybody who might have a solicitor/client interest in every 17 piece of paper had to somehow be involved, we'd collapse 18 under the weight of the lawyers in the room or the 19 impracticalities of it all. 20 One or the other and, finally, I'm certainly 21 content with the caveat that My Friend, Ms. Dyer, has placed 22 on the Rule 14 review. I'm confident that we can resolve 23 matters to the degree that we can, if necessary, review 24 privilege issues in an orderly -- in an orderly way. 25 And, finally, just with respect to the folder

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1 that I did not look at. I still haven't looked at it so I'm 2 talking in the dark a little bit, my sense is that some 3 materials were sent unsealed and, as a result, they were 4 obviously seen. Some materials were sent, this was by 5 Morrison Brown Sosnovitch, sealed and anything that was sent 6 sealed has not been unsealed. 7 Those are my submissions in reply, Madam 8 Commissioner. 9 MADAM COMMISSIONER: Mr. Auger...? 10 MR. RICHARD AUGER: Thank you. As briefly as 11 possible, I'm going to ask if we can go back to the Lavallee 12 case at Tab 9 of my book of authorities. There's one area 13 that I didn't take you to and I think it demonstrates or 14 emphasizes the seriousness of the problem and, sort of, 15 confirms the principles that are at play and you flesh them 16 out at the beginning of the Lavallee case. 17 But what's very interesting, as I find it, is 18 on the last page of the case and this -- Lavallee was a six 19 (6), three (3) split. And the dissent on page 50 -- the 20 dissent agrees that the very section, Subsection 4 -- 21 MADAM COMMISSIONER: Which paragraph are you 22 on? 23 MR. RICHARD AUGER: Sorry, it's paragraph 83 24 and 84. 25 MADAM COMMISSIONER: Thank you.

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1 MR. RICHARD AUGER: The defence, as I read it, 2 took the view that the general provisions of Section 48.1 3 could be saved but that Subsection 4 could not be saved and 4 that it was unconstitutional and I referred you to Subsection 5 4 and that's the very subsection and it's in -- on page 13 -- 6 that's the very subsection that the Criminal Code 7 contemplated that if the judge wanted assistance, the 8 attorney general may inspect the document. 9 So what we have is a scenario where all 10 members of the Supreme Court of Canada agreed on one thing 11 and that is it was unconstitutional, it was no -- it was 12 improper as a matter of principle to have a process in a 13 statute that allowed a third party to inspect a privileged 14 document and at paragraph 84, the court says: 15 "Nevertheless, I agree with Arbour J. that 16 SS 4 is unconstitutional with perhaps the 17 best of intents and despite the stated 18 desire to assist the court, it may lead to 19 improper and premature disclosure of 20 confidential information." 21 What se -- and I'll just stop there. The 22 court doesn't even say disclosure of solicitor/client 23 privilege information; the court is more broad about its 24 concern in the dissent. 25 Disclosure of confidential information; it

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1 should be struck down and excised from the section without 2 disrupting the general procedural scheme which remains valid 3 in my opinion. 4 I've already made lengthy submissions on 5 principles that are of concern, but in my submission, that 6 just simply demonstrates it's the same concept that -- that 7 Commission Counsel is asking for in this motion before you. 8 It's the very same thing and it's not -- it's not that -- 9 well, let's put all of these sacred principles aside that the 10 courts have made abundantly clear for a number of years and 11 all of the criminal and civil and administrative cases. 12 Let's put all of that aside and let's agree 13 that this Inquiry is somehow different and that there's some 14 special carve out to permit Commission Counsel to inspect. 15 In my submission, there's just no legal basis for that to 16 occur and so -- so that's sort of the conceptual background 17 that I wanted to reply to. 18 And so given that, if I've persuaded you that 19 it is a real problem and that we want to preserve the 20 privilege and the confidential information and all the rights 21 that unknown clients are entitled to, how do we -- how do we 22 all work together and compromise and come up with the 23 appropriate mechanism or remedy to move forward with this 24 Inquiry? 25 In my respectful submission, the simple answer

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  1  is Mr. Lyons has Counsel; Mr. Greenspan's office has been
  2  retained.  Why can't we conduct a review on behalf of Mr.
  3  Lyons?  I've heard no reason today that's been offered as to
  4  why my firm can't conduct the review and if the documents are
  5  on these premises, members of my firm could attend in a
  6  private room.  
  7                 Commission Counsel -- for example, you know,
  8  if there was any concern about documents becoming
  9  disorganized, et cetera, Commission Counsel or its designate
 10  could be present but not to review or inspect the content of
 11  each individual document and so that, in my submission, might
 12  be a compromise if the documents are on site to make sure --
 13  we know that when, you know, problems can occur if documents
 14  are transported and, you know, however they're transported
 15  and then moved back.  
 16                 It may be a simple practical compromise to
 17  have them inspected in a private room and have a person from
 18  My Friend's office present to ensure that it appears to be
 19  orderly and -- but not to permit My Friend to read the
 20  content of privileged confidential communications and I say
 21  that because, well, we've spent a full day on this issue and
 22  I query whether if this was -- if we were talking about a
 23  one-page document would we -- what would occur in that
 24  circumstance?
 25                 What would happen is my firm would be entitled

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1 to look at it and without Commission Counsel looking at it 2 and there would be a privilege motion and a judicial 3 determination made. So, but it's different here because 4 we're talking about twenty (20) banker's boxes. Morrison 5 Brown didn't want to do it. As a practical matter, Madam 6 Commissioner probably doesn't have time or inclination to 7 review twenty (20) boxes of documents. 8 And that's why I'm suggesting that the 9 compromise -- 10 MADAM COMMISSIONER: I've got your point. 11 MR. RICHARD AUGER: And so, of course, as Mr. 12 Butt pointed out, a new third party can't be delegated to do 13 this and briefed on relevance; of course that cannot occur. 14 And so when we look at all of the values and 15 principles that are at play and on balance, in my respectful 16 submission, there's no reason why Mr. Lyons' counsel cannot 17 complete the procedure in an effective manner so that this 18 Inquiry can proceed. 19 And just in terms of Mr. Butt's point, which I 20 think is a good point, sort of, fleshing out one (1) of the 21 paragraphs of Lavallee where I think the submission was that 22 a Judge would be entitled to look at the documents. 23 And, in fact, you posed that question to me 24 and I certainly didn't have the perfect answer and I think I 25 made the analogy to criminal and civil litigation and

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1 suggested that it may be that a Justice sitting in those 2 proceedings could review the documents. 3 And I just want to finish on this point is 4 that, in my respectful submission, I'm not certain that the 5 Supreme Court of Canada in Lavallee when it said that a Judge 6 may look at documents to determine privilege, I'm not certain 7 that the definition of "Judge" in that context of that case 8 necessarily is the same as your function here. 9 And when Mr. Butt was advancing that concept, 10 I was again reviewing the terms of reference and I'm not 11 going to spend a lot of time on it but I -- I just note that 12 there is a certain investigative role, if I understand it, 13 that you play in this Inquiry and it's -- it's expressed in 14 the Terms of Reference, so there is a component of 15 investigation and inquiry for the purpose of, and I'll -- you 16 know, I'll just characterize it as trying to determine what, 17 if anything, went wrong. 18 And in my respectful submission, that is 19 different than a Superior Court Judge sitting in the criminal 20 trial or, indeed, a Judge sitting in civil litigation. So 21 I'm not -- I don't agree with the submission that the 22 analysis is step 1, are you a Judge or not as intended -- the 23 meaning intended in Lavallee and, if so, then you can, step 2 24 look at the documents and by extension Commission Counsel can 25 do the same.

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1 Just in terms of the practical proposed order, 2 again, I'm looking at Tab 34 of My Friend's brief of 3 documents for the proposed order. So, obviously, I disagree 4 with the suggestion that Commission Counsel unseal the boxes 5 and review. 6 I would submit -- I would invite you to 7 consider an order that would allow my firm to do that in the 8 appropriate circumstances. And just in terms of the timing 9 of any order that you may make -- I think three (3) days is 10 the minimum period that I would ask that it not come into 11 effect in the absence of us serving any notices and I'd ask 12 you to consider something closer to seven (7) days. 13 And the obvious, I think Mr. Butt and I in 14 fact discussed this that, you know, obviously any orders that 15 you make at any -- you know, if Mr. Butt's on notice of any 16 review, everything would be done in an orderly fashion and so 17 those are the only submissions I have in terms of September 18 19th letter. 19 Subsequent to any questions, that's the extent 20 of my reply. 21 MADAM COMMISSIONER: Okay, thank you. 22 Mr. Roland, you're not wanting to say 23 anything? 24 MR. IAN ROLAND: I -- I would love to say one 25 thing just so that it's, I think, clear in the kind of

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1 language we're using today because I don't think it's been -- 2 it's been sufficiently clearly stated that the meaning and 3 the use of the term party and third party. 4 And I -- I just want you to have on record 5 that from my perspective in looking at these proceedings, 6 neither you nor Commission Counsel are party at all whether 7 you're in the first degree, second degree or third degree. 8 You're not a party. 9 If you're not a party, Madam Commissioner, 10 your Counsel's not a party and My -- My Friends who made 11 submissions to you extensively this morning and afternoon did 12 so entirely on that basis; that you and by extension, 13 Commission Counsel, are parties to the -- to this proceeding; 14 that, I think, is fundamentally incorrect and what is an 15 understanding that will assist you greatly in coming to the 16 appropriate conclusion. Thank you. 17 MADAM COMMISSIONER: All right. Thank you -- 18 oh, Mr. Auger? 19 MR. RICHARD AUGER: No, it's just a 20 housekeeping matter with your permission. 21 MADAM COMMISSIONER: Okay. 22 MR. RICHARD AUGER: I referred extensively to 23 my compendium, I told you the reasons why I was referring to 24 it -- 25 MADAM COMMISSIONER: Yes.

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1 MR. RICHARD AUGER: -- as opposed to the one 2 document book. I wonder if I can have your permission to 3 have my compendium marked as an exhibit? 4 MADAM COMMISSIONER: Oh, sure. No problem. 5 They -- well, I have four (4) separate documents or books. 6 So, two (2) from Commission Counsel and two (2) from you and 7 I'm quite happy to have all of those put in as the record for 8 this motion. 9 MR. RICHARD AUGER: Thank you very much. 10 11 --- EXHIBIT NO. 2 VOLUME I: Bound document titled 12 "Compendium of Correspondence 13 regarding Commission Counsel 14 request to review privileged 15 and irrelevant documents" Tabs 16 1-9 17 18 MADAM COMMISSIONER: Well, I would love to be 19 able to give you a decision right this second but you've 20 actually given me some serious food for thought and I will 21 try to have a decision as -- as soon as I can, hopefully 22 early next week. I shudder to say that because I know that 23 that means that the Thanksgiving weekend is devoted to work 24 but I -- that is what I'm going to try to do so that we can 25 have this issue resolved once and for all and that we can

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1 then move on. 2 All right? So thank you all very much. It's 3 been a very full, full day and some of you I will see on 4 Tuesday morning. 5 Now, just as well, I had offered my time to 6 those who were here yesterday in case they wanted to finish 7 with Mr. Andrew today instead of having Mr. Andrew have to 8 come back on Tuesday. Just as well that everybody else was 9 too busy to do that because we wouldn't have been able to 10 deal with him, in any event. So thank you all very much and 11 see you on Tuesday. 12 THE REGISTRAR: The Inquiry will resume at 13 10:00 am on Tuesday, October 14th. 14 15 --- Upon Adjourning at 3:32 p.m. 16 17 Certified Correct 18 19 20 21 ______________________ 22 Carol Geehan 23 Court Reporter 24 25