| Q.B.C. No. 2100 |
A.D. 1996 J.C.S. |
JUDICIAL CENTER OF SASKATOON
About AN APPLICATION FOR AN ORDER RESTORING TO THE POSSESSION OF THE APPLICATIONS RONALD EREISER AND KERROBERT SATELLITE & CELLULAR CERTAIN ARTICLES SEIZED PURSUANT TO TWO SEARCH WARRANTS ON JUNE 24, 1996
AND IN THE MATTER OF SECTIONS 8 AND 24 OF THE CANADIAN CHARTER OF RIGHTS AND FREEDOMS
AND IN THE MATTER OF SECTIONS 487, 489.1, AND 490 OF THE CRIMINAL CODE OF CANADA
AND IN THE MATTER OF SECTION 31(1) OF THE INTERPRETATION ACT
| BETWEEN: | ||
| HER MAJESTY THE QUEEN | ||
| RESPONDENT | ||
| - and - | ||
| RONALD EREISER AND KERROBERT SATELLITE & CELLULAR | ||
| APPLICANTS | ||
| Mr. Barry Miller | for the respondent | |
| Mr. Ian Angus | for the applications |
| JUDGEMENT | KLEBUC J. |
| May 16, 1997 |
Ronald Ereiser and Kerrobert Satellite & Cellular have applied by motion for an order for the return of articles seized from their premises at Kerrobert, Saskatchewan, pursuant to two search warrants issued by a justice of the peace in and for the Province of British Columbia on June 24, 1996 and endorsed by a judge of the Provincial Court of Saskatchewan on June 25, 1996. The warrants were obtained on the basis that a search of the applicatns' premises would provide evidence concerning the following offences:
COUNT 1Although the notice of motion does not specify the rule or statutory provision relied on, the parties argued the motion as if it were an application to quash the warrants based on a breach of s.8 of the Charter of Rights and Freedoms, and in the alternative, for relief under ss. 489 and 490 of the Criminal Code.... Wayn HOLLOHAN ... Ronald EREISER ... Dennis DEFLORVILLE and David William DAWSON, between the 1st day of September 1995 A.D. and the 24th day June 1996 A.D., in the Province of British Columbia, and elsewhere in Canada, did conspire to manufacture, possess, and distribute a device designed to obtain the use of a telecommunication service without payment of a lawful charge therefore, together and with others to commit the indictable offence of theft of telecommunications CONTRARY TO SECTION 465(1)(c) of the CRIMINAL CODE OF CANADA.
. . .
COUNT 3
Ronald EREISER and KERROBERT SATELLITE & CELLULAR on or about the 22nd day of March, 1996 A.D., at or near the Town of Kerrobert, in the Province of Saskatchewan, did without lawful excuse possess equipment or a device intended to be used to decode an encrypted subscription programming signal without authorization from the lawful distributor of the signal CONTRARY TO SECTION 10(1)(b) of the Radiocommunication Act of Canada.
The following issues arose out of the submissions presented:
- (1)
- Whether counts 1 or 3 disclose an offence known in law;
- (2)
- Did the justice of the peace act reasonably and judiciously when issuing the warrants based on the information to obtain?
- (3)
- Whether the information to obtain sets out the essential elements for the issuance of a search warrant;
- (4)
- Whether the search was excessive, unreasonable, and beyond the scope of the warrants.
DirecTV Inc. is not licensed to broadcast in Canada and will not activate a Smart Card for anyone resident in Canada even though such person is ready, willing, and able to pay the customary fee charged by DirecTV. However, DirecTV Inc. does participate in a thinly veiled scheme to circumvent the laws of Canada by accepting subscription fees directly from Canadians provided they maintain a United States address. In the instant case, DirecTV accepted numerous monthly fees paid by way of a Royal Bank of Canada Visa card. Presumably, it takes the position the activated Smart Card is located in the United States. From all of the facts, it is easy to infer that it clearly knows otherwise.
Ereiser and Kerrobert Satellite & Cellular (which I presume to be an nincorporated business, but will describe as a separate entity for the ease of reference) sell and service audio and video devices, cellular telephones, car stereos and alarms, satellite receivers, computers, and computer software. The Crown alleges that the applicants, along with others, have developed a software system and card, referred tto as the "Green Card", which is capable of emulating the characteristics of a Smart Card, and in turn, descrambling or decoding any encrpyted signal for which a Smart Card is activated. The applications sold Green Cards to persons in Canada who have access to a DSS system.
An undercover officer attended at Kerrobert Satellite and inquired about purchasing a "satellite system". He was told by Ereiser that he could either subscribe to the "system or pirate it". The other undercover agent elected to purchase a complete satellite system and a Green Card. Subsequent testing confirmed the Green Card adopted a billing access number assigned to a Smart Card registered with a person resident in Stillwater, Oklahoma, U.S.A. Further investigation indicated that the activation or subscription fee payable for the activated Smart Card was being paid directly to DirecTV by way of Ereiser's Royal Bank of Canada Visa card.
It is evident from the file that Green Cards impacted on DirecTV's substantial grey market income and were an embarassment to News Datacom Incorporated who encrypted DirecTV's signal. With some apparent assistance from U.S. Customs, they encouraged the Royal Canadian Mounted Police to conduct an investigation. The investigation led to Corporal Paul Mark McGowan swearing a 67-page information to otain warrants.
The applications submit DirecTV Inc. is not licensed to carry on business in Canada or to provide telecommunications services in Canada. Therefore, no offence known in law arose in the instant case capable of supporting the warrants. Their position necessitates a review of what constitutes a "telecommunication" under s.327(1) of the Criminal Code, and an "encrypted subscription programming signal" and a "lawful distributor of that signal" under ss. 9(1) and 10(1)(b) of the Radiocommunication Act of Canada, R.S.C. 1985, c.R-2 (the "RCA").
Section 327(1) reads:
Every one who, without lawful excuse, ... manafactures, possesses, sells or offers for sale, or distributes any instrument or device ... the design of which renders it primarily useful for obtaining the use of any telecommunication facility or service, under circumstances that give rise to a reaosnable inference that the device has been used or is or was intended to be used to obtain the use of any telecommunication facility or service without payment of a lawful charge therefor, is guilty of an indictable offence ...Section 326(2) of the Criminal Code defines the physical properties of a "telecommunication" as any transmission, emission, or reception of signs, signals, writing, images, or sounds, or intelligence of any nature by wires, radio, visual, or other electromagnetic system, but does not address the relationship at law between those physical properties and the right to transmit the same and to collect a lawful fee therefor. Madam Justice Dorgan in Hollohan v. Justice of the Peace M. Jan et al, S.C.B.C., September 17, 1996, considered whether s.327(1) required such linkage.
In Hollohan, the petitioner submitted that an offence does not arise under s.327(1) unless the provider of the telecommunication facility or service is licensed to provide the same for a fee. Therefore, his reception of the unlicensed signal broadcasted by DirecTV did not constitute the offence under s.327(1). Madam Justice Dorgan rejected the argument and at para. 12 of her decision set out the basis for her conclusion:
[12] In my view, s.327 of the Code should be interpreted more broadly than the argument of the petitioner suggests. The Code, unlike the RCA, does not require the existence of a lawful distributor and does not require the signals intercepted to have originated from a lawful distributor. The provisions of s.327 of the Criminal Code define the offence as essentially one person, or entity, using another's telecommunications signals without paying for them. A theft includes circumstances where a person who has a special property or interest in the property alleged to have been taken is deprived of that special property or interest.In my view, Dorgan J.'s interpretation is too broad and inconsistent with the underlying purpose of s.327(1), which is to protect the proprietary rights of persons legally entitled to provide a telecommunication service. Absent the requirement of a nexus betwen the telecommunication service and the right of the provider to broadcast and charge a lawful fee, s.327 takes on the character of legislation designed to control what Canadians view or hear. It would extend beyond criminal law into subjects covered by the RCA and related legislation. If the legislators intended s.327 to pervasively interfere with the findamental liberties and rights of Canadians, that intention had to be expressed in the clearest of terms. Section 327 in my opinion does not do so.
Madam Justice Dorgan relied on R. v. Ross (1988), 32 O.A.C. 47. There, the requisite nexus existed for the cable service provider was licensed and entitled to the payment of a lawful charge. A similar linkage existed in R. v. Miller et al (1984), 12 C.C.C. (3d) 466 and in R. v. Fulop (1988), 46 C.C.C. (3d) 427 where the accused was successfully prosecuted under s.327. Here, as in Hollohan, the creator of the programming signal was not entitled to assess a lawful charge for what they may describe as an "illegal communication" to the public in Canada.
In summary, I conclude that no offence arises under s.327 unless the telecommunication facility or service in question is authorized by law and the provider is lawfully entitled to a fee for the use thereof.
The applicants further submitted that absent a lawful distributor in Canada of the DirecTV signal, no breach of s.9(1)(c) of the RCA arises, its objectives being to protect lawful distributors. This argument was fully canvassed in R. v. Open Sky Inc. et al, Provincial Court of Manitoba, November 1, 1994, and in R. v. Love et al, unreported, Manitoba Queen's Bench, March 12, 1997.
In Open Sky, the accused submitted that since DirecTV Inc. was not authorized to broadcast its programming in Canada, no lawful distributor of Home Box Office ("HBO") existed. In the result, no party was injured, and no breach of s.9(1) of the RCA would arise consequent on the device he manufactures on his proposed reception of its unauthorized signal. Chartier P.C.J. held on the evidence before him that a lawful distributor of "HBO" in Canada existed and then in obiter stated that absent a lawful distributor, s.9(1)(c) created an absolute prohibition against decoding encrypted subscription programming signals. The Court of Queen's Bench for Manitoba upheld the conviction by Chartier P.C.J. Leave to appeal was refused by the Court of Appeal of Manitoba.
In R. v. Love et al, Kennedy J. applied a narrower interpretation of ss. 9(1) and 10(1)(b) than Open Sky. At pp. 20-22 he stated:
Section 9(1) contemplates that decoding is prohibited unless under and in accordance with an authorization from the lawful distributor of the signal or feed. The section, in my mind, clearly intends that when a lawful distributor has been approved by the CRTC, to distribute a signal, decoding or [decrypting] these subscription programming signals is unlawful. Plainly put, to allow others to decode signals that a lawful distributor has the commercial rights to is tantamount to stealing these signals from that lawful distributor.Then at p. 22:The legislation might have said that decoding all "encrypted subscription programming signals" is unlawful unless authorized, which would have made all acts of decoding prohibited unless authorized. By relating the authorization to the authorization of a lawful distributor leaves the issue of decoding signals, for which there is no lawful distributor questionable.
Section 10(1)(b) of the Act, in my opinion, is aimed at protecting lawful distributors who are entitled, based on their commercial and contractual rights, to the signal and have the right to transmit the signals as regulated by the CRTC. The Act is there in part, to protect commercial enterprises involved in delivering television signals to the public as regulated by the CRTC.
The Act does not refer to distinctions based upon the type of programming although the Commission approves a distributor depending upon the nature and content of its programming. It protects in Canada the rights of a lawful distributor and prevents the tehft of signals purchased by the lawful distributor. If there were no lawful distributor of the signal in Canada, can the prohibition extend to non-resident enterprises whose signals happen to overlap into Canada? I think not.In my opinion, the central issue is whether a "subscription programming signal" within the meaning of the RCA was held out to exist in the instant case. The RCA defined "encrypted", "lawful distributor", and "subscription programming signal" as follows:
I agree with Kennedy J. In addition, I am of the view that for a programming signal to qualify as a "subscription programming signal" under ss. 9(1) and 10(1)(b) of the RCA, it must be lawfully intended for reception by the public in Canada and the public must also be entitled to lawfully subscribe for it in Canada. Mere production of "pirate" or "grey market" programming signal is insufficient to constitute an offence under s.10(1)(b).
- "encrypted"
- means treated electronically or otherwise for the purpose of preventing intelligible reception;
- "lawful distributor"
- in relation to an encrypted subscription programming signal ... means a person who has the lawful right in Canada to transmit it and authorize its decoding;
- "subscription programming signal"
- means radiocommunication that is intended for reception either directly or indirectly by the public in Canada or elsewhere on payment of a subscription fee or other charge;
The parties made no submission concerning whether s.465(3) of the Criminal Code creates a statutory function in circumstances where a conspiracy is alleged, such that alleged breaches of Title 18, U.S. Code 2512(1)(a) and 2512(1)(b) are deemed to be offences prescribed under the laws of Canada. I therefore have assumed in these reasons that the aforementioned deeming provision does not apply to the applications.
My conclusions respecting the first issue is dispositive of the second and third issues and therefore I will not address the same. The fourth issue remains relevant only in the event that I have erred in my disposition of the first issue.
Issue No. 4 -- Whether the search conducted pursuant to the warrants was excessive and unreasonable.
The applicants further submitted that the seizure conducted pursuant to the warrants went far beyond what the Crown required and thereby violated their rights under s.8 of the Charter. In support of their submission they cited Ronald W. King et al v. The Attorney General of Canada and Constable Louis Plourde, Q.B.N.B., September 17, 1996 wherein the reviewing court on facts very similar to those before me found the search warrants and the search and seizure pursuant thereto were not proportional to the situation, and consequently violated Mr. King's rights under s.8 of the Charter. It then quashed the search warrant and granted the relief requested.
I am satisfied that the reasoning in King applies to the instant case and following those reasons find that the search and seizures in question were unreasonable and excessive.
In conclusion, the applicants' rights under s.8 of the Charter have been breached. the justice of the peace did not act reasonably or judiciously in issuing the warrants in respect to the applicants for the reasons noted. Further, the searches conducted under the warrants were excessive and unreasonable. Accordingly, an order will issue quashing the search warrants to the extent that they pertain to Ereiser and Kerrobert Satellite. The applicants will also have the remaining relief they seek. The parties may speak to the matter of costs.
Klebuc J.