HALIFAX - The Crown is appealing a Nova Scotia ruling that threw out a decade-long, $1.5-million-dollar fraud case because of what the judge said were "indefensible" RCMP investigation methods.

Justice Denise Boudreau stayed multiple fraud allegations against businessmen Douglas Rudolph and Peter Mill in a decision published on Dec. 20, saying the investigators' actions in 2011 were "grossly careless."

Boudreau had earlier ruled in October that two police officers violated the constitution by talking to lawyer Mark David, who handled some of the money for an accused, about his dealings with clients.

She said the courts should jealously guard the long-standing principle of professional secrecy known as client-solicitor privilege.

"In an act which I can only describe as indefensible, the police offered Mr. David immunity from prosecution for giving information against the applicants," she wrote.

"While I agree that this was not a typical situation for the police, I have no difficulty in finding that their actions were grossly careless."

In a 2002 ruling, the Supreme Court of Canada set down 10 principles that guided police on how to search and make seizures from lawyers or their offices. That process usually requires all documents be sealed and vetted by the courts to ensure the material doesn't contain privileged material before police investigators view it.

The judge said in her original October decision that the officers could have gone to a third party to conduct the interview of David and then have sent a sealed transcript to the court for vetting.

She said not doing so amounted to negligence by the Mounties.

"The ... rules exist to protect solicitor-client privilege, which must surely extend to information in a lawyer's head," she wrote in the Dec. 20 decision.

The Crown argued during the trial that client-solicitor privilege doesn't apply when the communication furthers a crime, and also argued that the judge should have looked at the transcript to see what was actually said.

In its notice of intention to appeal, the Crown says Boudreau made errors of law in her ruling about the police actions, arguing that the constitutional rights of the accused weren't breached.

Furthermore, the prosecutors say the judge could have found a solution other than throwing out the case altogether.

The notice to the Nova Scotia Court of Appeal says that if the Crown is successful, a new trial will be requested.

David was disbarred in 2009 after the province's barristers' society investigated him for his involvement with the CanGlobe Group of Companies and Mill during the period of the alleged frauds, 2004 through 2008.

That July 15 ruling said the former in-house solicitor for an airline had entered private corporate practice and was devoting much of his time to the CanGlobe companies.

In an agreed statement of facts, it said many of the business proposals he supported involved loans or investments that would be repaid with high rates of interest in very short periods of time.

"None of the international financing promised (to repay loans) ... came to fruition and investors and lenders remained unpaid," it says.

In addition, the barristers' society found that David had improperly handled funds given to him in trust.

In addition to being disbarred, he was fined over $300,000.

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News from © The Canadian Press, 2018