Case Headnote:
R. v. Stewart
copyright 1997 Donald M. Cameron , Aird & Berlis
Contents
Summary
In R. v. Stewart, the Supreme Court of Canada held that confidential information is not property which may be the subject matter of theft under s. 322 of the Canadian Criminal Code.
Facts
In the fall of 1981 a union was attempting to form a bargaining unit at the Constellation Hotel near the Toronto International Airport. The hotel management kept a confidential list of its 600 employees for payroll purposes. The list was in the form of a computer print-out. Wayne John Stewart, a consultant, was approached by someone who, he inferred, was associated with the union, to help in obtaining a list of the hotel employees to assist the union to solicit employees to obtain a bargaining unit at the hotel. Mr. Stewart asked Jan William Hart, an employee of the hotel employed as a security person, to procure the information and suggest various methods of obtaining the information. The information was to be copied from the confidential records of the hotel without removing or otherwise affecting the records themselves.
Mr. Stewart was charged with counselling Mr. Hart to commit three criminal offences:
(1) fraud under s.338;
(2) theft under s.283(1); and
(3) mischief under s.387.
Trial Decision
With respect to the count of theft, the issue at the trial of Mr. Stewart was whether confidential information was "anything" under s. 322(1). The trial judge, Mr. Justice Horace Krever, held that to be "anything" within the meaning of s. 322(1), the thing must be capable of being property and, after reviewing the authorities, concluded that confidential information is not property.
Only "property" can be the subject matter of fraud or mischief whereas "anything, whether animate or inanimate" can be the subject matter of theft.
mischief
The count of mischief alleged that the taking of the confidential information from the hotel would interfere with the overall operation and the physical premises of the hotel.
At trial, the Court held that Mr. Stewart was not guilty of mischief since it had not been shown that the loss of confidentiality of the list would have interfered with the hotel's physical premises. It should be noted that the count of mischief was not directed at the property, if any, in the confidential information contained in the list.
theft
With respect to the count of theft, the issue was whether confidential information was "anything" under s.283(1). The Court held that to be "anything" within the meaning of s.283(1), the thing must be capable of being property and, after reviewing the authorities, concluded that confidential information is not property. In so holding, the following appears at p.14 of the C.P.R. report of the reasons:
"If this interpretation should be thought to be inadequate to meet the needs of modern Canadian society, particularly because of its implication for the computer age, the remedy must be a change in the law by Parliament."
fraud
Mr. Stewart was also found not guilty of fraud at trial. Although the requisite element of dishonesty was present, there was not proven to be any deprivation of "any property, money or valuable property" as required by the statute.
Court of Appeal Decision
The Crown appealed to the Ontario Court of Appeal on the counts of fraud and theft. Two of the three judges of the Ontario Court of Appeal (Houlden & Cory JJ.) held that there is a right of property in confidential information that has been gathered through the expenditure of time, effort and money by a commercial enterprise for the purpose of its business. The third judge, Mr. Justice Lacourciere, dissented, holding that confidential information was not of itself protected under the Canadian Criminal Code, but suggested that counselling its disclosure might constitute counselling a criminal breach of trust.
The two judges who formed the majority and who allowed the appeal convicting Mr. Stewart of counselling the commission of theft each gave reasons for their decision. Cory J., held that not all information is property but found support for considering confidential information as property in civil cases. He found that Mr. Hart would have had the intent required by s. 322(1)(a) to (d) because 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. It would have lost its confidential character.
Houlden J. agreed with the reasons of Cory J. and added further conclusions on the case. He highlighted the increasing importance of this area (at pp. 29 and 30):
"Information and its collection, collation and interpretation are vital to most modern commercial enterprises. Compilations of information are often of such importance to the business community that they are securely kept to ensure their confidentiality. The collated, confidential information may be found in many forms covering a wide variety of topics. It may include painstakingly prepared computer programmes pertaining to all aspects of the firm's business; meticulously indexed lists of suppliers with comments as to their efficiency, reliability and time required for delivery; laboriously compiled lists of customers and their needs; instructions as to manufacturing processes learned from months of experimentation and trial; lists of employees, including reference to their physical well-being and disciplinary history that may be required to be kept confidential in compliance with the terms of a collective bargaining agreement. For many businessmen their confidential lists may well be the most valuable asset of their company. Their security will be of utmost importance to the firm."
He then went on to recite the cases holding that copyright is a form of property including lists compiled for business purposes. The list of hotel employees was an unpublished literary work to which copyright attached. He concluded that copyright constituted property of a nature that constituted "anything whether animate or inanimate" under s. 322(1) of the Criminal Code but then limited property which might be the subject matter of theft by stating at p.33:
"It should be noted that compilations such as this will only be capable of being stolen if they are confidential."
Houlden J. did not discuss s. 38 of the Copyright Act, which deems unauthorised copies of copyright material to be the property of the owner of the copyright. Quare, if he had been directed to that section, he might have concluded that the hotel would have been the owner of the property in the unauthorised copy of the employee list, and may not have restricted his limitation of theft to only confidential compilations.
Supreme Court of Canada Decision
At the Supreme Court of Canada, the appeal was allowed. Mr. Stewart's conviction was set aside.
The two essential elements of fraud (as set out by the Supreme Court of Canada in R v Olan Hudson and Hartnett [1978] 2 S.C.R. 1175) are "dishonesty" and "deprivation", the latter element being satisfied by proof of detriment, prejudice or risk of prejudice to the economic interest of the victim.
Although the Court found that Stewart had acted dishonestly, the Court found that it was not proven that there had been any deprivation of any "property, money or valuable property" as required by Criminal Code. There was no intention of the hotel to deal in a commercial way with the confidential information. All that the hotel lost was the confidentiality of the information.
The Supreme Court of Canada held that in order for something to be "anything" capable of being stolen it must be:
1. of a nature that it can be subject to a proprietary right, and;
2. capable of being taken or converted in a manner that results in the deprivation of the victim.
Mr. Justice Lamer held that as a matter of policy, confidential information should not be property for the purposes of s. 322. Additionally, Mr. Justice Lamer held that confidential information did not satisfy the second requirement to be "anything": pure intangibles can only be converted, not taken. He held that except in very rare circumstances, confidential information is not of a nature that it can be taken or converted. There is no deprivation and hence no conversion.
The decision of the Supreme Court of Canada echoed the comments made by the trial judge:
"If this interpretation should be thought to be inadequate to meet the needs of modern Canadian society, particularly because of its implication for the computer age, the remedy must be a change in the law by Parliament."
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