R. v. Stewart, [1988] 1 SCR 963

 

r. v. stewart, [1988] 1 S.C.R. 963

 

Wayne John Stewart   Appellant

 

v.

 

Her Majesty The Queen                                                                   Respondent

 

indexed as: r. v. stewart

 

 

File No.: 17827.

 

1987: December 1; 1988: May 26.

 

Present: Dickson C.J. and Beetz, Estey*, McIntyre, Lamer, Wilson and Le Dain JJ.

 

 

on appeal from the court of appeal for ontario

 

                   Criminal law ‑‑ Theft and fraud of information ‑‑ Hotel employee contacted by accused to obtain the names, addresses and telephone numbers of hotel employees ‑‑ Information sought confidential to the hotel ‑‑ Whether accused's conduct constitutes counselling theft or fraud ‑‑ Whether "anything" in s. 283(1)  of the Criminal Code  includes confidential information ‑‑ Criminal Code, R.S.C. 1970, c. C‑34, ss. 283(1), 338(1).

 

                   The accused was hired to obtain the names, addresses and telephone numbers of the hotel's employees by someone he assumed was associated with a union seeking to organize the employees of that hotel. The accused contacted a security guard at the hotel and offered him money for that information. According to the agreed statement of facts, no physical object would have been taken had the scheme been carried out. The security guard was not authorized to access the personnel files, payroll print‑outs or any hotel record and knew that the hotel had refused to divulge that information, considered confidential, to the union. The security guard reported the incident and the accused was charged with counselling a hotel employee to commit fraud and theft of information. He was acquitted at trial, but on appeal, the Court of Appeal set aside the acquittal and entered a conviction on the charge of counselling the indictable offence of theft. This appeal is to determine (1) whether confidential information can be the object of theft under s. 283(1)  of the Criminal Code ; and (2) whether the appropriation of the information would have amounted to fraud contrary to s. 338(1) of the Code?

 

                   Held: The appeal should be allowed.

 

                   This case does not deal with the theft of a list or any other tangible object containing confidential information, but with the theft of confidential information per se, a pure intangible. Although the word "anything" is not in itself a bar to including any intangible, whatever its nature, its meaning must be determined within the context of s. 283(1) of the Code. The wording of that section restricts the meaning of "anything" in two ways: first, whether tangible or intangible, "anything" must be of a nature such that it can be the subject of a proprietary right; and second, the property must be capable of being taken or converted in a manner that results in the deprivation of the victim. Confidential information does not fall within that definition. Confidential information does not qualify as property for the purposes of s. 283 of the Code. If protection is warranted for such information, it should be granted through legislative enactment and not through the extension of the concept of property or of the scope of the theft provision under the Code. Further, except in very unusual circumstances, confidential information is not of a nature such that it can be taken or converted. Information per se cannot be the subject of a taking. As for conversion, if one appropriates confidential information without taking a physical object evidencing it, the alleged owner is not deprived of the use or possession of the information but only of the confidentiality thereof. Since there is no deprivation, there can be no conversion. Confidentiality cannot be the subject of theft because it does not fall within the meaning of "anything" in s. 283(1) .

 

                   The unauthorized reproduction of copyrighted information, like the employer's list, constitutes an infringement of copyright under s. 17  of the Copyright Act  but does not constitute theft under the criminal law. The rights provided in the Copyright Act  cannot be taken or converted as their owner would never suffer deprivation.

 

                   The accused's conduct did not amount to fraud. The element of "defraud" in s. 338(1) of the Code is established by proving a dishonest deprivation. The proof of a risk of prejudice to the economic interests of the victim is sufficient evidence of the deprivation; actual economic loss is not essential. In this case, the appropriation of information would not have resulted in a risk of economic loss amounting to deprivation. The hotel had no intention of dealing in a commercial way with the confidential information. The hotel would not have been defrauded of money or of any economic advantage; all that it stood to lose was the confidentiality of the information.

 

Cases Cited

 

                   Applied: R. v. Olan, [1978] 2 S.C.R. 1175; R. v. Scallen (1974), 15 C.C.C. (2d) 441; R. v. Hardy (1980), 57 C.C.C. (2d) 73; considered: R. v. Offley (1986), 28 C.C.C. (3d) 1; referred to: R. v. Bird, [1970] 3 C.C.C. 340; Aas v. Benham, [1891] 2 Ch. 244; Exchange Telegraph Co. v. Gregory & Co., [1896] 1 Q.B. 147; Exchange Telegraph Co. v. Central News Ltd., [1897] 2 Ch. 48; Exchange Telegraph Co. v. Howard (1906), 22 T.L.R. 375; Peter Pan Manufacturing Corp. v. Corsets Silhouette Ltd., [1963] 3 All E.R. 402; Saltman Engineering Co. v. Campbell Engineering Co., [1963] 3 All E.R. 413n; Argyll v. Argyll, [1965] 2 W.L.R. 790; Pre‑Cam Exploration & Development Ltd. v. McTavish, [1966] S.C.R. 551; Seager v. Copydex Ltd., [1967] 2 All E.R. 415; Boardman v. Phipps, [1967] 2 A.C. 47; Fraser v. Evans, [1968] 3 W.L.R. 1172; Oxford v. Moss (1978), 68 Cr. App. R. 183.

 

Statutes and Regulations Cited

 

Copyright Act, R.S.C. 1970, c. C‑30, ss. 2, 3, 17 [am. 1974‑75‑76, c. 50, s. 47].

 

Criminal Code, R.S.C. 1970, c. C‑34, ss. 27, 38, 39, 283(1), 302, 312 [am. 1972, c. 13, s. 27; rep. & subs. 1974‑75‑76, c. 93, s. 29], 338(1) [1974‑75‑76, c. 93, s. 32], 350, 616, 653, 654.

 

 

 

Authors Cited

Hammond, R. Grant. "Theft of Information" (1984), 100 L.Q.R. 252.

 

Institute of Law Research and Reform and a federal provincial working party. Report No. 46. Trade Secrets. Edmonton: The Institute, 1986.

 

Weinrib, Arnold S. "Information and Property" (1988), 38 U.T.L.J. 117.

 

 

                   APPEAL from a judgment of the Ontario Court of Appeal (1983), 42 O.R. (2d) 225, 149 D.L.R. (3d) 583, 5 C.C.C. (3d) 481, 74 C.P.R. (2d) 1, 35 C.R. (3d) 105, allowing the Crown's appeal from a judgment of the Ontario High Court of Justice (1982), 38 O.R. (2d) 84, 138 D.L.R. (3d) 73, 68 C.C.C. (2d) 305, 74 C.P.R. (2d) 4, acquitting the accused on charges of counselling to commit the offence of theft and fraud. Appeal allowed.

 

                   Clayton C. Ruby and Mary Bartley, for the appellant.

 

                   Jeff Casey, for the respondent.

 

                   The judgment of the Court was delivered by

 

1.                       Lamer J.‑‑While one can steal a document containing confidential information, does obtaining without authorization the confidential information, by copying the document or memorizing its content, constitute theft? Is it fraud? The appellant was charged in the Supreme Court of Ontario with the following three counts:

 

...that he, during the month of October, 1981, at the Municipality of Metropolitan Toronto in the Judicial District of York, did counsel Jan William Hart to commit the indictable offence of fraud, an offence as described in Section 338  of the Criminal Code  of Canada, contrary to Section 422  of the Criminal Code  of Canada.

 

...that he, during the month of October, 1981 at the Municipality of Metropolitan Toronto in the Judicial District of York, unlawfully did counsel Jan William Hart to commit the indictable offence of theft, an offence as described in Section 294  of the Criminal Code  of Canada, to wit: to steal information, the property of the Constellation Hotel and its employees, of a value exceeding $200.00 contrary to Section 422  of the Criminal Code  of Canada.

 

...that he, during the month of October, 1981 at the Municipality of Metropolitan Toronto in the Judicial District of York, unlawfully did counsel Jan William Hart to commit the indictable offence of mischief to the private property of the Constellation Hotel and its employees, which mischief exceeded $50.00, an offence as described in Section 387(4)  of the Criminal Code  of Canada, contrary to Section 422  of the Criminal Code  of Canada.

 

2.                       The events giving rise to these charges can be summarized succinctly. A union attempting to organize the approximately 600 employees of the Constellation Hotel, in Toronto, was unable to obtain the names, addresses and telephone numbers of the employees because of a hotel policy that such information be treated as confidential. The employer also barred union representatives from the premises. The appellant, Wayne John Stewart, a self‑employed consultant, was hired by somebody he assumed to be acting for the union to obtain the names and addresses of the employees. Stewart offered a security guard at the hotel a fee to obtain this information. The security guard, at all relevant times, had not been authorized by any of the appropriate people nor did he have any consent or right whatsoever to access the personnel files, payroll print‑outs or any hotel record whatsoever for names, addresses or telephone numbers of employees and knew that the hotel refused to divulge any such information to the union, its representatives and agents and the appellant surmised this to be the situation. I should like to make it very clear at the outset of this opinion that we are not here dealing with an attempt to obtain a physical object. This case was argued throughout on an agreed statement of facts, in which it was agreed that no tangible object, such as a list containing the information sought, would have been taken had the scheme been carried out. The security guard reported the offer to his security chief and the police; as a result, a subsequent telephone conversation between Hart and Stewart was recorded, and Stewart was indicted as listed above. He elected trial by judge alone and was acquitted on all three counts.

 

3.                       As the Crown did not appeal the acquittal on the count of counselling mischief, I will not refer to the legislation relevant to that count nor will I summarize the trial judge's reasons in that regard.

 

Judgments

 

4.                       The parties having submitted an agreed statement of facts, the trial turned on the legal issue of whether what Mr. Hart was asked to do amounted to fraud, theft or mischief. On the theft charge the Crown argued that the definition in s. 283(1)  of the Criminal Code ‑‑"anything whether animate or inanimate"‑‑does not require that the subject of theft be property; alternatively, if "anything" had to be property, then confidential information was property. Krever J. adopted the approach in R. v. Scallen (1974), 15 C.C.C. (2d) 441 (B.C.C.A.), which dealt with s. 283(1)  and which held that while "anything" need not be material and could be an intangible, it had to be property of some kind: (1982), 38 O.R. (2d) 84.

 

5.                       Krever J. also rejected the Crown's alternative submission that confidential information was property. Canadian, British and some American cases were cited as denying that proposition in a criminal context, and American decisions supporting it were distinguished because they interpreted legislation that aimed at the protection of much broader values than common law concepts of property. He added that if his interpretation was thought inadequate to meet the needs of modern society, the remedy must be a change in the law by Parliament.

 

6.                       On the charge of counselling to commit fraud Krever J. applied R. v. Olan, [1978] 2 S.C.R. 1175, which established that s. 338(1) of the Code requires proof of "dishonesty" and "deprivation". The element of dishonesty was clearly made out, but s. 338(1) specifies deprivation of "property, money or valuable security". The last was clearly inapplicable, and the first ruled out by the decision on the theft charge. The Crown argued that the hotel had been deprived of money because it could potentially make a profit should it choose to sell the list of employees' names and addresses. Krever J. rejected this submission as artificial, because the undertaking by the hotel to maintain the confidentiality of the employees' information entirely negated that suggestion. In the absence of the element of deprivation, there is no fraud. Krever J. found the accused not guilty on all counts.

 

7.                       On appeal, Houlden J.A. set aside the verdict of acquittal and entered a conviction on the charge of counselling the indictable offence of theft: (1983), 42 O.R. (2d) 225. He applied R. v. Scallen, supra, to the effect that the word "anything" in s. 283(1)  has a broad meaning, wider in scope than the expression "anything capable of being stolen". Accepting Krever J.'s interpretation of s. 283(1)  that "anything" must be capable of being property, Houlden J.A. was of the opinion that confidential information gathered through the expenditure of time, effort and money by a commercial enterprise for the purposes of its business should be regarded as property and entitled to the protection of the criminal law. He supported this position by reference to the definition of property in the Code and to a number of English and American civil cases recognizing confidential information to be property. In Houlden J.A.'s view, if a thing is property for the purposes of civil law, it follows that it is also property under the criminal law. Houlden J.A. added that, for a conviction under s. 283(1) , not only is it necessary to prove that the accused "took or converted anything whether animate or inanimate", but it is also necessary to establish that the accused possessed one of the intents set out in paras. (a) to (d) of s. 283. Houlden J.A. found that, had Hart appropriated the information as requested, the hotel would still have had the information, but its character of confidentiality would have been lost. Therefore, in Houlden J.A.'s opinion, Hart would have had the intent described in s. 283(1) (d): he would have intended to deal with the information in such a manner that it would not be returned in the condition it was in at the time it was taken or converted. Houlden J.A. thus held that when the appellant counselled Hart to obtain the information without authorization, he was guilty of counselling the commission of the offence of theft.

 

8.                       Houlden J.A. then dealt with the charge of counselling the commission of fraud. Unlike section 283(1), s. 338 specifically refers to "property". Houlden J.A. held that if information is property under the theft section, it is also property for the purposes of the fraud section. In his view, the appropriation of the information would have caused a risk of prejudice to the hotel's economic interests, since promotional groups had approached the hotel to obtain the list of names and addresses of the employees. The deprivation necessary to prove the element of "defraud" in s. 338(1) was therefore present and sufficient. Houlden J.A. thus found appellant guilty of counselling the commission of fraud. However, applying the Kienapple rule, he entered no conviction on this count.

 

9.                       Cory J.A. concurred with Houlden J.A. but expressed additional reasons for finding that confidential information is property for the purposes of criminal law. In his view, information and its collection, collation and interpretation are vital to most modern enterprises and may be their most valuable asset. Cory J.A. cited American cases that support the conclusion that information is property. These decisions held that copying paper and removing the copies was as much an act of theft as the surreptitious removal of the original papers would be.

 

10.                     Moreover, Cory J.A. stated that even if information per se is not property, there remains a right of property in confidential information. In Cory J.A.'s opinion, this right, now protected by the provisions of the Copyright Act, R.S.C. 1970, c. C‑30, falls within the definition of property contained in s. 283(1). He then held that, in the case at bar, the list of the hotel employees represents an unpublished literary work to which copyright attaches. The hotel thus has the exclusive right to reproduce copies of the list and has the corollary right to restrain others from so doing. Cory J.A. therefore concluded that copyright constitutes property of a nature that falls within the scope of s. 283(1), but he stressed that such compilations will only be capable of being stolen if they are confidential.

 

11.                     In a dissent, Lacourcière J.A. supported the findings of the trial judge. He stated that appellate decisions have restricted the application of the word "anything" to cases involving "property" whether corporeal or incorporeal. That assertion is supported by reference to the requisite intent set out in paras. (a) to (d) of s. 283(1). In his opinion, the proposition that confidential information can be the subject of proprietary rights is correct to the extent only that a court of equity will restrain the improper transmission or use of confidential information surreptitiously obtained. Cases containing dicta to the effect that confidential information may be described as property are not helpful when considering whether it can be obtained by the commission of a theft.

 

12.                     After much consideration, Lacourcière J.A. felt bound to agree that the word "anything" in s. 283 must be defined and qualified within the context of property and that confidential information does not properly fit within that context. Like Krever J., he was of the opinion that it is for Parliament to broaden the criminal definition of property if the needs of modern Canadian society require it.

 

13.                     As for the count of fraud, Lacourcière J.A. held that confidential information is clearly not money or valuable security, and that it is not property within the meaning of s. 338(1) of the Code. Furthermore, the hotel conceded that it had no intention to deal in a commercial way with the information; it would thus not have suffered the requisite deprivation or detriment which is an essential element of fraud. Lacourcière J.A. was of the view that the accused's conduct did not amount to the offence of counselling fraud.

 

 

 

The Issues

 

14.                     On the facts of this appeal the following questions are raised:

 

1.                Can confidential information be the subject of theft under s. 283(1)  of the Criminal Code ?

 

2.                Would the appropriation of the information have amounted to fraud contrary to s. 338(1)  of the Criminal Code ?

 

15.                     Before this Court, the Crown adopted the majority's reasoning in the Court of Appeal and would answer the questions in the affirmative.

 

                                                                     I

 

Theft

 

16.                     Section 283(1)  of the Criminal Code  reads as follows:

 

                   283. (1) Every one commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right converts to his use or to the use of another person, anything whether animate or inanimate, with intent,

 

(a) to deprive, temporarily or absolutely, the owner of it or a person who has a special property or interest in it, of the thing or of his property or interest in it,

 

(b) to pledge it or deposit it as security,

 

(c) to part with it under a condition with respect to its return that the person who parts with it may be unable to perform, or

 

(d) to deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted.

 

17.                     In order to be convicted of theft, one has to take or convert "anything whether animate or inanimate" with the requisite intent as described in paras. (a) to (d). To determine whether confidential information can be the object of theft, the meaning of "anything" must be ascertained. The word "anything" is very comprehensive and is not in itself restricted in any way. As such it could include both tangible things and intangibles. Appellant contends that the offence of theft contemplates only physical objects. Under Canadian law as it now stands, however, "anything" has been held to encompass certain choses in action, which are intangibles. In R. v. Scallen, supra, the accused was convicted on a charge of theft of credit in a financial institution. The British Columbia Court of Appeal held that bank credit was included in "anything" under s. 283(1)  (at p. 473):

 

                   I see no reason to construe "anything" in s. 283(1)  with stress on "thing", and I think the word should be construed in its broad sense and to mean exactly what it says, that theft can be committed of "anything" that was property. That would include a bank credit in a bank account‑‑which any normal person having one would describe by saying that "he had money in the bank". I think it would be difficult to convince him otherwise, even if in strict domestic law all he had was the right to draw money from the bank in cash, by banknotes, by cheque or by transfers elsewhere.

 

18.                     The reasoning in Scallen, with which I am in agreement, was followed in R. v. Hardy (1980), 57 C.C.C. (2d) 73 (B.C.C.A.) Since certain choses in action can be the subject of theft, what must be decided for the purpose of this appeal is whether intangibles other than choses in action are to be included in the word "anything".

 

19.                     In R. v. Offley (1986), 28 C.C.C. (3d) 1, the Alberta Court of Appeal was of the view that information, even when qualified as confidential, is not "anything" within the meaning of s. 283(1) , because it is intrinsically incapable of being an inanimate thing. In that case, the accused offered money to a police officer to run security checks for him on job applicants through the Canadian Police Information Center, knowing that this information was available only to law enforcement agencies. As in the case before us, he was charged with counselling theft of information. The Alberta Court of Appeal disagreed with the majority decision of the Ontario Court of Appeal in the case at bar and acquitted the accused.

 

20.                     We are here dealing not with the theft of a list or any other tangible object containing confidential information, but with the theft of confidential information per se, a pure intangible. As mentioned earlier, the assumption that no tangible object would have been taken was part of the agreed statement of facts, and the case was argued throughout on that basis. The word "anything" is not in itself a bar to including any intangible, whatever its nature. However, its meaning must be determined within the context of s. 283 of the Code. Indeed, while sexual intercourse was found to be included in "anything" within the meaning of the extortion provision (R. v. Bird, [1970] 3 C.C.C. 340 (B.C.C.A.)), it does not necessarily follow that the same must be found under our law of theft.

 

21.                     In my view, the wording of s. 283 restricts the meaning of "anything" in two ways. First, whether tangible or intangible, "anything" must be of a nature such that it can be the subject of a proprietary right. Second, the property must be capable of being taken or converted in a manner that results in the deprivation of the victim.

 

22.                     With respect to the first restriction, the courts below have decided the case on the assumption that "anything" has to be property. While appellant's counsel takes issue with the relevancy of this qualification, I am of the view that such qualification is proper. In my opinion, it is clear that to be the object of theft, "anything" must be property in the sense that to be stolen, it has to belong in some way to someone. For instance, no conviction for theft would arise out of a taking or converting of the air that we breathe, because air is not property.

 

23.                     It can be argued‑‑as Professor Weinrib does in "Information and Property" (1988), 38 U.T.L.J. 117‑‑that confidential information is property for the purposes of civil law. Indeed, it possesses many of the characteristics of other forms of property: for example, a trade secret, which is a particular kind of confidential information, can be sold, licensed or bequeathed, it can be the subject of a trust or passed to a trustee in bankruptcy. In the commercial field, there are reasons to grant some form of protection to the possessor of confidential information: it is the product of labour, skill and expenditure, and its unauthorized use would undermine productive efforts which ought to be encouraged. As the term "property" is simply a reference to the cluster of rights assigned to the owner, this protection could be given in the form of proprietary rights. The cases demonstrate that English and Canadian civil law protect confidential information. However, the legal basis for doing so has not been clearly established by the courts. Some cases have treated confidential information as property, and thus have entitled the owner to exclude others from the use thereof: Aas v. Benham, [1891] 2 Ch. 244 (C.A.); Exchange Telegraph Co. v. Gregory & Co., [1896] 1 Q.B. 147 (C.A.); Exchange Telegraph Co. v. Central News Ltd., [1897] 2 Ch. 48; Exchange Telegraph Co. v. Howard (1906), 22 T.L.R. 375 (Ch. Div.) On the other hand, the courts have recognized certain rights with respect to confidential information in the guise of an equitable obligation of good faith: Peter Pan Manufacturing Corp. v. Corsets Silhouette Ltd., [1963] 3 All E.R. 402 (Ch. Div.); Saltman Engineering Co. v. Campbell Engineering Co., [1963] 3 All E.R. 413n (C.A.); Argyll v. Argyll, [1965] 2 W.L.R. 790 (Ch. Div.); Pre‑Cam Exploration & Development Ltd. v. McTavish, [1966] S.C.R. 551; Seager v. Copydex Ltd., [1967] 2 All E.R. 415 (C.A.); Boardman v. Phipps, [1967] 2 A.C. 47 (H.L.); Fraser v. Evans, [1968] 3 W.L.R. 1172 (C.A.)

 

24.                     It appears that the protection afforded to confidential information in most civil cases arises more from an obligation of good faith or a fiduciary relationship than from a proprietary interest. No Canadian court has so far conclusively decided that confidential information is property, with all the civil consequences that such a finding would entail. The case law is therefore of little assistance to us in the present case.

 

25.                     It is possible that, with time, confidential information will come to be considered as property in the civil law or even be granted special legal protection by statutory enactment. Even if confidential information were to be considered as property under civil law, it does not however automatically follow that it qualifies as property for the purposes of criminal law. Conversely, the fact that something is not property under civil law is likewise not conclusive for the purpose of criminal law. Whether or not confidential information is property under the Criminal Code  should be decided in the perspective of the criminal law.

 

26.                     In Oxford v. Moss (1978), 68 Cr. App. R. 183, the Divisional Court had to decide whether confidential information was "intangible property" for the purposes of the Theft Act 1968. A student was accused of stealing an examination paper that he hoped to return without being detected. After considering a number of civil authorities dealing with the subject of confidential information, Smith J. wrote (at pp. 185‑86):

 

                   Those are cases concerned with what is described as the duty to be of good faith. They are clear illustrations of the proposition that, if a person obtains information which is given to him in confidence and then sets out to take an unfair advantage of it, the courts will restrain him by way of an order of injunction or will condemn him in damages if an injunction is found to be inappropriate. It seems to me, speaking for my part, that they are of little assistance in the present situation in which we have to consider whether there is property in the information which is capable of being the subject of a charge of theft. In my judgment, it is clear that the answer to that question must be no.

 

27.                     In civil law, the characterization of something as property triggers a series of legal consequences. That characterization has the same effect under the criminal law, although the consequences are somewhat different. If confidential information is considered as property for the purposes of the theft section, other sections of the Criminal Code  relating to offences against property may also apply: ss. 27  (use of force to prevent commission of offence), 38 (defence of movable property), 39 (defence with claim of right), 302 (robbery), 312 (possession of property obtained by crime), 350 (disposal of property to defraud creditors), 616 (restitution of property), 653 (compensation for loss of property) and 654 (compensation to bona fide purchasers). For example, let us assume a person obtains confidential information by the commission of a crime, such as theft if it were possible. If, after having memorized the information, that person is incapable of erasing it from his memory, he could, one might argue, be charged with an offence under s. 312  of the Criminal Code  for each day that he is unable to forget the information.

 

28.                     Furthermore, the qualification of confidential information as property must be done in each case by examining the purposes and context of the civil and criminal law. It is understandable that one who possesses valuable information would want to protect it from unauthorized use and reproduction. In civil litigation, this protection can be afforded by the courts because they simply have to balance the interests of the parties involved. However criminal law is designed to prevent wrongs against society as a whole. From a social point of view, whether confidential information should be protected requires a weighing of interests much broader than those of the parties involved. As opposed to the alleged owner of the information, society's best advantage may well be to favour the free flow of information and greater accessibility by all. Would society be willing to prosecute the person who discloses to the public a cure for cancer, although its discoverer wanted to keep it confidential?

 

29.                     The criminalization of certain types of conduct should not be done lightly. If the unauthorized appropriation of confidential information becomes a criminal offence, there would be far reaching consequences that the courts are not in a position to contemplate. For instance, the existence of such an offence would have serious implications with respect to the mobility of labour. In "Theft of Information" (1984), 100 L.Q.R. 252, Hammond points out (at p. 260) the problem that would follow:

 

[W]hat is significant for present purposes about the traditional civil law formulations with respect to such [employee] covenants is that, notwithstanding their difficulties of application, they do allow a balance to be struck in particular cases between the various interests at stake. The criminal law on the other hand allocates responsibility in black and white terms. There is either an offence or there is not. Every employee who leaves a position in Canada now faces criminal sanctions if he misjudges a line which judges have had enormous difficulty in drawing in civil law cases.

 

30.                     This indirect restriction on the mobility of labour is only one of the many undesirable consequences that could result from a hasty extension of criminal provisions by qualifying confidential information as property.

 

31.                     Moreover, because of the inherent nature of information, treating confidential information as property simpliciter for the purposes of the law of theft would create a host of practical problems. For instance, what is the precise definition of "confidential information"? Is confidentiality based on the alleged owner's intent or on some objective criteria? At what point does information cease to be confidential and would it therefore fall outside the scope of the criminal law? Should only confidential information be protected under the criminal law, or any type of information deemed to be of some commercial value? I am of the view that, given recent technological developments, confidential information, and in some instances, information of a commercial value, is in need of some protection through our criminal law. Be that as it may, in my opinion, the extent to which this should be done and the manner in which it should be done are best left to be determined by Parliament rather than by the courts.

 

32.                     Indeed, the realm of information must be approached in a comprehensive way, taking into account the competing interests in the free flow of information and in one's right to confidentiality or again, one's economic interests in certain kinds of information. The choices to be made rest upon political judgments that, in my view, are matters of legislative action and not of judicial decision. Illustrative of this is the complexity of the schemes suggested to legislatures and Parliaments by the various reform agencies in this country, the United Kingdom and the United States (v.g. Institute of Law Research and Reform, Report No. 46, Trade Secrets, July 1986).

 

33.                     For these reasons, I am of the opinion that, as a matter of policy, confidential information should not be property for the purposes of s. 283 of the Code. To the extent that protection is warranted for confidential information, it should be granted through legislative enactment and not through judicial extension of the concept of property or of the scope of the theft provision under the Criminal Code .

 

34.                     Although this conclusion is sufficient to dispose of the appeal on the charge of counselling theft, I will also consider the second restriction to the scope of the word "anything", that is, that property must be capable of being taken or converted in a manner that results in the deprivation of the victim. Tangible things present no difficulty in this regard, as it is easy to conceive how they can be both taken and converted. On the other hand, pure intangibles, as they have no physical existence, can obviously only be converted, not taken. The "taking" of an intangible could only occur where such intangible is embodied in a tangible object, for example a cheque, a share certificate or a list containing information. However, that would not result in the taking of the intangible per se, but rather of the physical object evidencing it.

 

35.                     The question is thus whether confidential information is of a nature such that it can be taken or converted. In my opinion, except in very rare and highly unusual circumstances, it is not. As we have seen, information per se cannot be the subject of a taking. As for conversion, it is defined as an act of interference with a chattel inconsistent with the right of another, whereby that other is deprived of the use and possession of it. Confidential information is not of a nature such that it can be converted because if one appropriates confidential information without taking a physical object, for example by memorizing or copying the information or by intercepting a private conversation, the alleged owner is not deprived of the use or possession thereof. Since there is no deprivation, there can be no conversion. The only thing that the victim would be deprived of is the confidentiality of the information. In my opinion, confidentiality cannot be the subject of theft because it does not fall within the meaning of "anything" as defined above.

 

36.                     It is no doubt possible to imagine far‑fetched situations where the victim would actually be deprived of confidential information. For instance, to give but one example, if an outsider elicits from an employee of the company, who is the only employee to hold a secret formula, not only that confidential information but also the undertaking to keep it secret from his employer. In these circumstances, assuming that confidential information is property, the element of deprivation would be met. However we must recognize that these factual situations are somewhat fanciful and will seldom occur. It would be odd indeed that these rare situations be covered by the law of theft, while the vast majority of cases concerning the appropriation of confidential information would remain beyond the reach of our theft section. I am thus of the view that as a matter of policy, it is best to exclude altogether confidential information from the realm of theft.

 

37.                     In the case at bar, the majority of the Court of Appeal held that if Hart had taken the information requested, the hotel would not have been deprived of the information, but of its character of confidentiality. As a result, the Court was of the opinion that Hart would have had the intent set out in s. 283(1) (d), that is, dealing with the information in such a manner that it could not be restored in its original confidential condition. With respect, the Court of Appeal did not properly consider the actus reus required for committing the offence, that is a taking or a conversion. As I said one cannot be deprived of confidentiality, because one cannot own confidentiality. One enjoys it. Therefore, appellant should not have been convicted on the sole basis that he might have had the intent set out in s. 283(1) (d) since the commission of the actus reus was not and could not be established.

 

38.                     Before this Court, respondent also argued that appellant intended to deprive the hotel of the special property or interest which it had in the list, contrary to s. 283(1) (a). Respondent contended that this special property or interest is what gave the list its value, namely its confidentiality, and thus that the absence of intent to deprive of the use of the information is irrelevant. I cannot agree with this suggestion. The "special property or interest" in s. 283(1) (a) refers to a proprietary possessory right in the thing stolen. This section contemplates for example the case of the owner of an object who, having pawned it, steals it back from the pawnbroker. Theft would then be committed because the pawnbroker has a special property or interest in the object, even against the owner. Although confidentiality might give some value to the information, it does not confer a special property or interest in it to anyone. Since confidential information is not property, it follows that one cannot have a proprietary possessory right in something that is not property. Furthermore, as I have said above, establishing that an offender has the intent required is not sufficient proof of guilt if the actus reus has not been committed.

 

39.                     As an additional ground for finding guilt, Cory J.A. held that even if information per se is not property, there still remains a right of property in confidential information which is now protected by the provisions of the Copyright Act . As copyright is, in his view, property, it falls within the scope of s. 283(1)  and can therefore be the object of theft. The employer's list in the case at bar is indeed a "literary work" as defined in s. 2 of the Act, and thus the subject of copyright under s. 3  thereof. Does that mean however that the unauthorized reproduction of copyrighted information amounts to theft?

 

40.                     Copyright is defined as the exclusive right to produce or reproduce a work in its material form (s. 3). A mere copier of documents, be they confidential or not, does not acquire the copyright nor deprive its owner of any part thereof. No matter how many copies are made of a work, the copyright owner still possesses the sole right to reproduce or authorize the reproduction of his work. Such copying constitutes an infringement of the copyright under s. 17 of the Act, but it cannot in any way be theft under the criminal law. While one can, in certain circumstances, steal a chose in action, the rights provided in the Copyright Act  cannot be taken or converted as their owner would never suffer deprivation. Therefore, whether or not copyright is property, it cannot, in my opinion, be the object of theft under s. 283(1) of the Code.

 

41.                     To summarize in a schematic way: "anything" is not restricted to tangibles, but includes intangibles. To be the subject of theft it must, however:

 

1.                be property of some sort;

 

2.                be property capable of being

 

(a)               taken‑‑therefore intangibles are excluded; or

 

(b)               converted‑‑and may be an intangible;

 

(c)               taken or converted in a way that deprives the owner of his proprietary interest in some way.

 

Confidential information should not be, for policy reasons, considered as property by the courts for the purposes of the law of theft. In any event, were it considered such, it is not capable of being taken as only tangibles can be taken. It cannot be converted, not because it is an intangible, but because, save very exceptional far‑fetched circumstances, the owner would never be deprived of it.

 

42.                     For all these reasons, I am of the opinion that confidential information does not come within the meaning of the word "anything" of s. 283(1)  of the Criminal Code .

 

                                                                    II

Fraud

 

43.                     Appellant has also been charged with counselling the commission of fraud contrary to s. 338(1)  of the Criminal Code :

 

                   338. (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security,

 

(a) is guilty of an indictable offence and is liable to imprisonment for ten years, where the subject‑matter of the fraud is a testamentary instrument or where the value thereof exceeds two hundred dollars;

 

44.                     Very little was argued in this Court in relation to the fraud charge. Be that as it may, it must be addressed given my conclusion as regards the theft charge.

 

45.                     In R. v. Olan, supra, this Court held that the element of "defraud" in s. 338(1)  is established by proving a dishonest deprivation. The proof of a risk of prejudice to the economic interests of the victim is sufficient evidence of the deprivation; actual economic loss is not essential.

 

46.                     On the basis of this decision, the majority of the Court of Appeal was of the opinion that, since promotional groups had previously offered money to the hotel to obtain the list of its employees, Hart's appropriation of that information would have caused a risk of prejudice to the hotel's economic interests. The Court therefore found appellant guilty of counselling the commission of fraud.

 

47.                     In his dissent Lacourcière J.A. was of the view that appellant was not guilty under that count. He held that the hotel was not defrauded of confidential information since he found that such information was neither "property, money [n]or valuable security". The only question remaining was whether the appropriation of the information would have resulted in a risk of economic loss amounting to deprivation. In this regard, Lacourcière J.A. stated (at p. 236):

 

                   It is conceded that there was no intention on the part of the hotel to deal in a commercial way with the confidential information. The hotel would not have been defrauded of money or of any economic advantage; all that the hotel stood to lose was the confidentiality of the information. Although the respondent would have received some money for the information I find it difficult to see how the hotel suffered the requisite deprivation or detriment within the meaning of R. v. Olan, supra. The deprivation would be clear if the confidential information had been in the nature of a trade secret or copyrighted material having a commercial value intended to be exploited by the victim.

 

48.                     In this I agree with Lacourcière J.A. for the reasons quoted above.

 

49.                     I would therefore allow the appeal and restore the acquittals entered by the trial judge.

 

                          Appeal allowed.

 

                          Solicitors for the appellant: Ruby & Edwardh, Toronto.

                  

                          Solicitor for the respondent: The Ministry of the Attorney General for Ontario, Toronto.