Court File No. 35399
IN THE SUPREME COURT OF CANADA
(ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA) BETWEEN:
ATTORNEY GENERAL OF CANADA
Appellant
- and -
THE
FEDERATION OF LAW SOCIETIES OF CANADA
Respondent
- and -
LAW SOCIETY OF BRITISH COLUMBIA, CANADIAN BAR ASSOCIATION, BARREAU
DU QUÉBEC ET CHAMBRE DES NOTAIRES DU QUÉBEC, CRIMINAL LAWYERS’ ASSOCIATION,
CANADIAN CIVIL LIBERTIES ASSOCIATION AND THE ADVOCATES’ SOCIETY
Interveners
FACTUM OF THE INTERVENER, THE ADVOCATES’ SOCIETY
(Pursuant To Rule 42 Of The Rules Of The Supreme Court Of Canada)
Lawyers for the Intervener
The Advocates’ Society
STERN LANDESMAN CLARK LLP
Suite 1724,
390 Bay Street Toronto, ON M5H 2Y2
Paul D. Stern
Tel: 416-869-3422
Fax: 416-869-3449
Email: pstern@sternlaw.ca
Agent for the Intervener
GOWLINGS LLP
160 Elgin
Street, Suite 2600 Ottawa, ON K1P 1C3
Ed Van Bemmel
Tel: 613-786-0212
Fax: 613-788-3500
Email: ed.vanbemmel@gowlings.com
PALIARE ROLAND ROSENBERG ROTHSTEIN LLP
155 Wellington Street West, 35th Floor
Toronto,
ON M5V
3H1
Robert A. Centa Tel: 416-646-4314
Fax: 416-646-4301
Lawyers for the Respondent
HUNTER LITIGATION CHAMBERS
2100 – 1040 West Georgia Street
Vancouver, BC V6E 4H1
John J.L.
Hunter, Q.C. Tel: 604-891-2400
Fax: 604-647-4554
Agent for the
Respondent
BLAKE, CASSELS & GRAYDON
LLP
340 Albert Street, Suite 1750
Constitution Square, Tower 3 Ottawa,
ON K1R
7Y6
Nancy K. Brooks
Tel: 613-788-2200
Fax: 613-788-2247
BLAKE, CASSELS & GRAYDON LLP
2600 – 595
Burrard Street Vancouver, BC V7X 1L3
Roy W. Millen Tel: 604-631-4220
Fax: 604-631-3309
Email: roy.millen@blakes.com
Lawyers for the Appellant
DEPARTMENT OF JUSTICE
2323 – 234
Wellington Street, East Tower Ottawa, ON
K1A 0H8
Christopher
Rupar / Jan Brongers / BJ Wray Tel: 613-941-2351
Fax: 613-954-1920
Lawyers for the Intervener
Law Society Of British Columbia MCCARTHY TÉTRAULT LLP
Suite 1300, 777 Dunsmuir Street
Vancouver, BC V7Y 1K2
Leonard T. Doust, Q.C. / Michael A. Feder
Tel: 604-643-5983
Fax: 604-622-5614
Email:
mfeder@mccarthy.ca
Agent for the Intervener
Law Society of British Columbia
BORDEN LADNER GERVAIS LLP
World Exchange Plaza
100 Queen
Street, Suite 1100 Ottawa, ON K1P 1J9
Nadia Effendi
Tel: 613-787-3562
Fax: 613-230-8842
Email: neffendi@blg.com
Lawyers for the Intervener Canadian Bar Association
LAWSON LUNDELL LLP
1600 – 925 West Georgia Street
Vancouver, BC V6C 3L2
Craig A.B. Ferris / Laura L. Bevan Tel: 604-685-3456
Fax: 604-669-1620
Email:
cferris@lawsonlundell.com
Agent for the Intervener Canadian
Bar Association NOËL ET ASSOCIES
111 Champlain Street Gatineau, PQ J8X 3R1
Pierre Landry
Tel: 819-771-7393
Fax: 819-771-5397
Email: p.landry@noelassocies.com
Lawyers for the Inervener
Barreau du Québec et Chambre des Notaires du Québec
LAVERY, DE BILLY, s.e.n.c.r.l.
1, Place
Ville Marie, bureau 4000 Montréal,
QB H3B
4M4
Raymone
Doray, Ad.E / Loïc Berdnikoff Tel:
514-877-2913 / 2981
Fax: 514-871-8977
Agent for the Inervener
Barreau
du Québec et Chambre des Notaires du Québec
LAVERY, DE BILLY, s.e.n.c.r.l.
360, rue
Albert, bureau 1810 Ottawa, ON K1R 7X7
Paul Lepsoe
Tel: 613-594-4936
Fax: 613-594-8783
Lawyers for the Intervener
Canadian Civil Liberties Association
OSLER, HOSKIN & HARCOURT
LLP
PO Box 50
1 First
Canadian Place Toronto, ON M5X 1B8
Mahmud Jamal
/ W. David Rankin Pierre-Alexandre Henri
Tel: 416- 862-6764
Fax: 416-862-6666
Email: mjamal@osler.com
Agent for the Intervener
Canadian Civil Liberties Association OSLER, HOSKIN & HARCOURT LLP
1900 – 340
Albert Street Ottawa, ON K1R 7Y6
Patricia J.
Wilson Tel: 613-235-7234
Fax: 613-235-2867
Email: pwilson@osler.com
Lawyers for the Intervener,
Criminal Lawyers’ Association STOCKWOODS LLP
TD Centre, TD North Tower
77 King Street West, Suite 4130 Toronto, ON M5K 1H1
Michal Fairburn / Justin Safayeni
Tel: 416-593-7200
Fax: 416-593-9345
Agent for the Intervener The
Advocates’ Society
GOWLING LAFLEUR HENDERSON LLP
160 Elgin
Street, Suite 2600 Ottawa, ON K1P 1C3
Henry S.
Brown, Q.C. / D. Lynne Watt Tel:
613-786-0139 / 8695
Fax:
613-788-3433 / 3509
Lawyers for the Intervener
Canadian Bar Association LAWSON
LUNDELL LLP
1600 – 925 West Georgia Street
Vancouver, BC V6C 3L2
Craig A.B. Ferris / Laura L. Bevan Tel: 604-685-3456
Fax: 604-669-1620
Email:
cferris@lawsonlundell.com
Agent for the Intervener Canadian
Bar Association NOËL ET ASSOCIES
111 Champlain Street Gatineau, PQ J8X 3R1
Pierre Landry
Tel: 819-771-7393
Fax: 819-771-5397
Email: p.landry@noelassocies.com
Lawyers for the Intervener
Barreau du Québec et Chambre des Notaires du Québec
LAVERY, DE BILLY, s.e.n.c.r.l.
1, Place
Ville Marie, bureau 4000 Montréal,
QB H3B
4M4
Raymone
Doray, Ad.E / Loïc Berdnikoff Tel:
514-877-2913 / 2981
Fax: 514-871-8977
Agent for the Intervener
Barreau
du Québec et Chambre des Notaires du Québec
LAVERY, DE BILLY, s.e.n.c.r.l.
360, rue
Albert, bureau 1810 Ottawa, ON K1R 7X7
Paul Lepsoe
Tel: 613-594-4936
Fax: 613-594-8783
I N D E X
PART I - OVERVIEW 1
PART II - POSITION ON THE QUESTIONS IN ISSUE 2
PART III - ARGUMENT 2
PART IV – SECTION 1 10
PART V - NATURE OF ORDER SOUGHT CONCERNING COSTS 10
PART VI - NATURE OF ORDER SOUGHT 10
PART VII - TABLE OF AUTHORITIES 11
PART VIII - TABLE OF STATUTORY AUTHORITIES 12
PART I. OVERVIEW
1.
This appeal addresses the constitutionality of the Proceeds
of Crime (Money Laundering) and
Terrorist Financing Act, S.C. 2000, c. 17, as amended (the “Act”) and the
Proceeds of Crime (Money Laundering)
and Terrorist Financing Regulations, SOR/2002-184, as amended (the “Regulations”,
and collectively, the “Regime”).
2.
The Advocates’ Society
(“Society”) adopts the submissions of the Criminal
Lawyers’ Association that the Regime violates Section 8 of the Charter, and additionally submits that the Regime
violates s. 7 of the Charter because the Regime constitutes a deprivation of life, liberty or security of the person, and the
deprivation does not accord with the principles of fundamental justice. The Regime infringes the liberty interest
of lawyers and their clients by making lawyers agents of the state for the purposes of
creating, collecting, and retaining potentially incriminating evidence against their clients, on pain of
criminal sanction including imprisonment. This infringement is contrary to the
principles of fundamental justice because
(i)
the duty of loyalty that a
lawyer owes a client is a principle of fundamental
justice that is violated by the Regime; and
(ii)
the independence of the bar from the state
is a principle of fundamental justice and this independence
depends on the duty of loyalty that lawyers owe to their clients.
3.
The Society submits that the Charter breaches identified above cannot be saved under Section 1 of the Charter. Even assuming that the Regime’s
objectives are pressing and
substantial in our society and that there is a rational connection between the objective of the Regime and the rights violations,
(a)
the Regime is not a minimal
impairment of the rights at issue, especially given the parallel law society anti-money laundering regulations that
are in place; and
(b)
the effect of the Regime on the liberty interests of lawyers
and clients is disproportionate to the Regime’s
legislative objective.
PART II.
POSITION ON THE QUESTIONS IN ISSUE
4.
The Society submits that the
constitutional questions stated by the Chief Justice should be answered as follows: Yes to questions
1, 3, 5, and 7; and No to questions 2, 4, 6, and 8.
PART III. – ARGUMENT
A.
The Regime Interferes with the liberty
interests of lawyers
and their clients
by making lawyers agents of the state
5.
The Regime directly imposes obligations on “legal counsel”
and “legal firms” (hereinafter “lawyers”). It requires lawyers
providing legal advice
to obtain and record client information for state use. Section 10.1 of the Act exempts lawyers,
“when they are providing
legal services” (an undefined term) only from portions of Part 1, in particular
from the provisions of s. 7
(reporting suspicious transactions) and s. 9 (reporting all financial transactions).
6.
The Regime subjects
all lawyers to inspection by the “Centre”, hereafter FINTRAC,
regardless of whether or not the lawyer has provided
legal services. It also compels all lawyers
providing legal services to keep a “receipt of funds record” in respect
of every amount of $3,000 or more that they receive in the course of
a single transaction if the lawyer is receiving or paying funds, other than those received or paid in respect of
professional fees, disbursements, expenses
or bail, unless the amount is received from a financial entity or a public
body, or another lawyer’s trust account.
7.
The Regime, however, defines neither “disbursements” nor
“expenses”, which makes it very
difficult to predict whether or not a lawyer and client would be covered by the
Regime and its mandatory data collection provisions. For example, consider
the following routine
lawyer- client interactions where a lawyer:
(a)
receives settlement funds in trust by a foreign
cheque or in cash;
(b)
in settling litigation,
effects the purchase of shares in a corporation using closing funds held in trust that were provided by foreign cheque
or money order, and then receives and
forwards share certificates to his or her client;
(c)
receives contested share
certificates from the client to effect settlement and thereby holds
negotiable instruments in specie;
(d)
arranges for the release of a caution, or injunctive relief, on terms which require
the lawyer to hold funds in escrow,
which are received
from a client by foreign cheque or money order, or cash; or
(e)
holds in trust security for
costs received from the client, pursuant to
an undertaking, in order to avoid a motion and order for security for costs, and the client makes payment by cheque, or
foreign money order, or cash.
8.
In each of these routine cases a lawyer is handling “funds”
in connection with the provision of
legal services and may or may not be compelled to collect the required information.
9.
The Regime also requires the lawyer to “establish and implement” a program to ensure
compliance and to assess the risk, in the course of the lawyer’s activities, of
the commission of a money laundering offence or a terrorist financing
offence. The Regime
requires the lawyer to monitor his or her relationship with the client, and keep a record of that monitoring. Moreover, if the lawyer “considers that the
risk of a money laundering offence or terrorist activity financing
10.
More troubling still, the Regime empowers state agents to
conduct inspections to determine compliance with Part 1 of the Act, whether or not the lawyer has provided legal services or engaged in activities for which the Regime compels
record keeping. The inspection
would entail review of whether the lawyer had failed to record or report,
requiring broad review of the
lawyer’s records respecting clients. Further, the inspector has the power “to
use or cause to be used” any computer
in the premises, and to require the lawyer to assist with the inspection and copying of
information. Failure to cooperate constitutes an offence, punishable by up to five years
imprisonment and/or a $500,000 fine.
11.
The only limitation to the inspection power is
solicitor-client privilege, through in effect
a reversed onus, i.e. only if claimed, only if for a named client and with the client’s last known address provided. The Regime constitutes
an unreasonable interference with the fundamental and ancient principles of solicitor client-privilege. The Society agrees
with the submissions of the intervener the Criminal Lawyers’
Association on this point.
12.
The Regime, however, does nothing to protect confidential
material that is not privileged. The right
to keep information confidential, which is a fundamental human
right, cannot be vindicated once it has been violated.
Not only does the Regime permit the invasion of a client’s right to privacy in their own lawyer’s records, it
conscripts the lawyer in this effort by compelling the lawyer to record the
client’s information.
13.
Any information that FINTRAC
obtains through an inspection can be disseminated to other state agencies,
both within Canada and internationally, whether or not the lawyer was
force, the Canada Revenue Agency, the Canada Border
Services Agency and the
Communications Security Establishment, CSIS and may disclose to an institution
or agency of a foreign state. Neither the records kept about the client by the lawyer, nor the information about the lawyer and his or her clients obtained
through the inspection, are exempt from disclosure.
14.
Second, FINTRAC may be
required to produce information obtained through inspections under power of a subpoena or summons issued in the
course of court proceedings in respect of a
money laundering offence, a terrorist activity financing offence or an offence
under the Act.
15.
Third, pursuant to s. 65 of the Act, FINTRAC may voluntarily choose
to disclose any information
obtained through the compliance inquiry and examination “that it suspects on reasonable grounds
is evidence of a contravention of Part 1”, to “appropriate law enforcement
agencies” or to a regulator.
16.
There are completely insufficient restrictions in place to a
limit recipient’s use of information
obtained from FINTRAC:
(a)
proposed further amendments to the Act
eliminate any restriction on use;
(b)
while there is some
restriction on the use of information disclosed under subsection 65(1), there is no clearly
expressed restriction on the use of information obtained through the
inspection of the legal counsel or legal firm,
and the same information could be obtained
directly pursuant to Act sections 59 to 61;
(c)
there is no restriction on
the use of derivative evidence obtained as a consequence
of the law enforcement agency receiving the information under s. 65;
(d)
there is no restriction of secondary use of the information, so that information used “for purposes relating
to compliance with Part 1”, once filed in court, may be used in other domestic
or international proceedings, for example pursuant
to the Mutual Legal Assistance in Criminal Matters Act.
17.
In conclusion, the Regime infringes the liberty interest
of lawyers and their clients
by making lawyers agents of the
state for the purposes of creating, collecting, and retaining potentially incriminating evidence
against their clients,
on pain of criminal sanction
including imprisonment.
B.
Regime violates principles of fundamental justice
18.
The Regime’s infringement of the right to liberty is
contrary to the principles of
fundamental justice because
(a)
the duty of loyalty that a
lawyer owes a client is a principle of fundamental justice that is violated by the Regime; and
(b)
the independence of the bar from the state is a principle of fundamental justice that depends on the duty of
loyalty that lawyers owe to their clients.
19.
A lawyer’s duty of loyalty to her or his client is a principle
of fundamental justice.
That duty is the sine qua non of a functioning judicial
system. That duty of loyalty
informs the principle of independence of the bar and gives it sufficient precision to stand
as a principle of
fundamental justice, violated
by the Regime. One important
aspect of the duty of loyalty is the
duty to keep client confidences. As Justice Cory noted:
Lawyers are an integral and
vitally important part of our system of justice. It is they who prepare and
put their clients' cases before courts and tribunals. In preparing for the
hearing of a contentious matter, a client will often be required to
reveal to the lawyer retained highly confidential information. The client's most secret devices and desires,
the client's most frightening fears will often, of necessity, be revealed. The client must be secure in the knowledge that the lawyer will neither disclose nor
take advantage of these revelations.
Our judicial system could not
operate if this were not the case. It cannon function properly if doubt or suspicion exists in the mind of the
public that the confidential information disclosed by a client to a lawyer
might be revealed.
20.
The duty of loyalty is essential to the integrity of the
administration of justice and it is of high public importance that public
confidence in that integrity be maintained. A litigant (and the public) can have faith in our adversary system of justice because of the litigant’s
faith in her or his lawyer's undivided loyalty. The duty of loyalty,
which is the same as the absence
of a conflicting interest, is
essential for the independence of the bar. As Binnie J. wrote:
The value of an independent
bar is diminished unless the lawyer is free from conflicting interests. Loyalty, in that sense, promotes effective representation, on
which the problem-solving capability of an adversarial system rests.
21.
The independence of the bar is fundamental to Canada’s system
of justice. An independent
bar is a fundamental feature of a free and democratic society. In Canada (Attorney General) v. Law Society (British
Columbia), Estey J. wrote:
The independence of the bar from the state in all its pervasive manifestations is one of the hallmarks of a free society.
Consequently, regulation of these members of the law profession by the
state must, so far as by human ingenuity it can be so designed, be free from
state interference, in the political sense, with the delivery of
services to the individual citizens in the state, particularly in fields of public and
criminal law. The public interest in a free society knows no area more sensitive than the independence, impartiality and availability to the general
public of the members
of the bar and through those members, legal advice and services generally. The uniqueness of position of the barrister and solicitor in the community
may well have led the province to select self-administration as the mode
for administrative control over the supply of legal
services throughout the community.
22.
The independence of the bar
is a great strength of Canadian society and an element of the rule
of law. An independent bar must be free to represent citizens
without fear or favour in the protection of individual rights
and civil liberties
against incursions from any source,
including the state. To stand fearlessly between the state
and its citizens, lawyers must be free of state control and influence. As LeBel J. commented “an
independent bar composed of lawyers who
are free of influence by public authorities is an important
component of the fundamental legal framework of Canadian society.”
23.
The Regime, as described above, diminishes the value of an
independent bar by imposing
conflicting interests upon lawyers. The Regime turns lawyers into a resource
to be used in the investigation
and prosecution of their clients. This jeopardizes the constitutional
protections for clients
against self-incrimination and turns lawyers’
offices into “archives for the use of the prosecution.”
Lawyers must be free to represent their clients’ interests without the fear of being conscripted to act against their clients or facing state sanctions. The Regime is fatally deficient and violates the liberty interests of lawyers and their clients
and does so in a manner that does not accord with the principles of
fundamental justice.
PART IV.
SECTION 1
24.
The Charter breaches identified
above cannot be saved under Section 1 of the Charter. Even assuming that the Regime’s
objectives are pressing and substantial in our society and that there is a rational connection
between the objective of the Regime and the rights violations, the Regime
is not a minimal impairment of the rights at issue,
especially given the parallel law society anti-money
laundering regulations that are in place. Moreover,
the effect of the Regime on
the liberty interests of lawyers and clients is disproportionate to the Regime’s
legislative objective. The Society adopts the submissions of the
Respondent on section 1.
PART V.
NATURE OF ORDER SOUGHT CONCERNING COSTS
25.
The Society does not seek costs, and asks that
no costs be awarded against it.
PART
VI. NATURE OF ORDER SOUGHT
26.
The Society respectfully asks that the appeal dismissed, and seeks leave to present
oral argument to supplement the
above submissions.
All of which is
respectfully submitted on April 30, 2014.
Paul D. Stern
Stern Landesman
Clark LLP
Tel:
416-869-3422; Fax: 416-869-3449
Robert A. Centa
(LSUC# 44298M) Paliare Roland Rosenberg Rothstein LLP Tel: 416-646-4314; Fax: 416-646-4301
Lawyers for the
Intervener, The Advocates’ Society
PART VII. – TABLE OF AUTHORITIES
PART VIII. – LEGISLATION
CANADIAN CHARTER OF RIGHTS AND FREEDOMS – PART I
OF THE
CONSTITUTION ACT, 1982
1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject
only to such reasonable limits prescribed by law as can be demonstrably justified
in a free and democratic society.
7. Everyone has the right to life,
liberty and security of the person and
the right not to be deprived thereof except in accordance with the principles of fundamental justice.
1. La Charte
canadienne des droits et libertés garantit
les droits et libertés qui y sont
énoncés. Ils ne peuvent être
restreints que par une règle de droit, dans des limites qui soient raisonnables et
dont la justification puisse se démontrer dans le cadre d’une société libre et démocratique.
7. Chacun a droit à la vie, à la
liberté et à la sécurité de sa
personne; il ne peut être porté atteinte à ce droit qu’en conformité
avec les principes de justice fondamentale.
8. Everyone has the right to be secure against unreasonable search or seizure.
8. Chacun a droit à la protection contre les fouilles, les perquisitions ou les saisies abusives.
Universal Declaration of Human
Rights, G.A. Res. 271(III), UNGAOR, 3d Sess., Supp. No. 13, UN. Doc. A/810
(1948) 71
Article 12.
No one shall be subjected to arbitrary interference with his
privacy, family, home or correspondence, nor to attacks
upon his honour and reputation. Everyone has the right to the protection of the law against such
interference or attacks.
International Covenant on Civil
and Political Rights, 19 December 1966, 999 U.N.T.S. 171
Article 17
1. No one shall be subjected to
arbitrary or unlawful interference with his privacy, family, home or
correspondence, nor to unlawful attacks on his honour and reputation.
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