An Ontario court has ruled that an appeal should be heard in a case that questions whether the RCMP was right in turning over information it received from the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) to a private lawyer for use in a civil fraud suit.

The Ontario Superior Court of Justice, Divisional Court, has granted leave to appeal in a case that, it says, tests the balance of privacy rights versus the right to information. The case underlying the appeal, Massa v. Sualim, involves allegations of fraud, in which a Canadian man, Leon Massa, claims he lost $840,000. Massa alleges that a U.S. resident, Alex Sualim, is behind the fraud, and he is suing Sualim, Sualim’s wife, and others. The allegations have not been proven.

According to the Divisional Court decision, Massa has never met or spoken to Sualim, but had circumstantial evidence suggesting that Sualim was part of a fraud he fell victim to — this evidence includes materials provided by U.S. law enforcement authorities, such as an arrest warrant, criminal complaint, and an indictment against Sualim alleging fraud in the U.S. This material was provided to FINTRAC by U.S. authorities, which turned it over to the RCMP, who then passed it along to Massa’s lawyer.

The decision says that the “defendants do not question the delivery of the material to the RCMP; it was an ‘appropriate police force’. The issue is whether the RCMP was authorized to send this material on to the law firm acting on behalf of Leon Massa or whether it breached Alex Sualim’s right to privacy when it did so.”

A lower court rejected a motion to throw out the FINTRAC evidence, saying, “In my opinion, there is nothing improper in the disclosure by the RCMP of personal information regarding an accused fraudster to assist the Crown with the criminal prosecution of a fraud or to assist a victim of that crime in seeking recovery. There is no evidence before the court to suggest that disclosure was not consistent with that purpose.”

The defendants in the case sought to appeal that decision. In granting leave to appeal, the Divisional Court noted that federal privacy legislation “prohibits government institutions like FINTRAC and the RCMP from disclosing personal information which would include the criminal history and financial transactions unless the individual involved consents or the disclosure was for the purpose for which the information was obtained or for a use consistent with that purpose.”

The Divisional Court found that, in this case, “there is serious reason to question whether the release of the information… can be justified” as being used to aid a criminal fraud prosecution, or to help the victim of a crime. It noted that, at this point, no crime has been proven. “Alex Sualim has not been found guilty of anything. He has only been charged,” the Divisional Court said, noting that Massa isn’t named in the U.S. complaint, or in a supporting affidavit from an FBI agent. And, it said, “Under the legislation relied on, in the absence of a crime, there can be no justification for the release of the material to a lawyer for the purpose of pursuing a civil fraud.”

The court also noted that there is a competing right involving access to information. However, in this case, it said that the police simply turned over the information without requiring a written request; and, in doing so, it said that the RCMP “sidestepped the responsibility” of determining whether the information should have been disclosed to Massa’s lawyer. “There is a process set out for a determination of whether the RCMP should have released the information. The process was ignored. To my mind, this confirms that there is serious reason to question the correctness of the decision for which leave to appeal is requested,” the Divisional Court decision says.

Ultimately, the Divisional Court judge concluded, “I have little difficulty in finding that establishing how the tension between privacy, on the one hand, and access to information, on the other, is to be resolved is important, even fundamental, to the relationship of Canadian citizens and residents to our government institutions. The proposed appeal involves matters of such importance that leave to appeal should be granted.”