Federation of Law Societies of Canada v. Canada (Attorney General), (2015) 365 B.C.A.C. 3 (SCC)

• Judge: McLachlin, C.J.C., LeBel, Abella, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.
• Court: Supreme Court (Canada)
• Case Date: February 13, 2015
• Jurisdiction: Canada (Federal)
• Citations: (2015), 365 B.C.A.C. 3 (SCC);2015 SCC 7;[2015] 1 SCR 401;[2015] SCJ No 7 (QL)

Law Soc. Federation v. Can. (A.G.) (2015), 365 B.C.A.C. 3 (SCC);

    627 W.A.C. 3

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2015] B.C.A.C. TBEd. FE.047

Attorney General of Canada (appellant) v. Federation of Law Societies of Canada (respondent) and Criminal Lawyers' Association (Ontario), Canadian Civil Liberties Association, Law Society of British Columbia, Canadian Bar Association, Advocates' Society, Barreau du Québec and Chambre des notaires du Québec (intervenors)

(35399; 2015 SCC 7; 2015 CSC 7)

Indexed As: Federation of Law Societies of Canada v. Canada (Attorney General)

Supreme Court of Canada

McLachlin, C.J.C., LeBel, Abella, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.

February 13, 2015.

Summary:

In 2008, Parliament amended the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, making them apply to all lawyers, law firms and Quebec notaries. The effect of the amendments "was to subject lawyers to the client identification and verification, record keeping, internal compliance program and external monitor requirements as set out in the Act ... s. 33.1 of the Regulations requires that those lawyers who receive or pay funds on behalf of their clients, other than funds received or paid in respect of professional fees, disbursements, expenses or bail, to: (a) perform client identification and verification; (b) keep records of financial transactions; and (c) establish internal programs to promote compliance with the federal anti-money laundering regime". The Federation of Law Societies of Canada challenged the constitutional validity of the application of the Act and Regulations to lawyers. The Federation argued that "the recording and related obligations imposed on lawyers pursuant to Part 1 of the Act violated s. 7 of the Charter by jeopardizing the liberty of lawyers and clients in a manner that failed to conform with the principles of fundamental justice, namely: (a) solicitor-client confidentiality and privilege; (b) lawyers' duty of loyalty to their clients; and (c) the independence of the Bar". The Federation also argued that the Act and Regulations required lawyers to collect information from their clients and retain it so that the information could be available for law enforcement officials if they wished to review it. The Act and Regulations allegedly turned lawyers into state agents to collect information from their clients for potential use by the state, which would constitute an unreasonable search and seizure contrary to s. 8 of the Charter where authorities were authorized to conduct warrantless searches of lawyers' offices at any time. The Federation argued that the Charter violations were not saved as reasonable limits prescribed by law under s. 1 of the Charter.

The British Columbia Supreme Court, in a judgment reported [2011] B.C.T.C. Uned. 1270, held that the Act and Regulations engaged the liberty interests of both lawyers and their clients in a manner that failed to conform with the principles of fundamental justice, thereby violating s. 7 of the Charter. The Act and Regulations were not saved by s. 1, as there was no rational connection between the objective of the Act and Regulations and the infringement of s. 7, the Act and Regulations did not minimally impair s. 7, and the proportionality test was not met where the salutary effects of the Act and Regulations were outweighed by their deleterious effects. The court read down ss. 5(i), 5(j), 62, 63 and 63.1 of the Act to exclude lawyers and law firms, struck the words "or legal counsel or legal firm" from s. 11.1 of the Regulations and struck down s. 64 of the Act and ss. 33.3, 33.4, 33.5 and 59.4 of the Regulations. The federal Attorney General appealed, arguing that the trial judge erred (1) in interpreting the Act and Regulations; (2) in finding that a client's liberty interests were engaged; (3) in determining that the liberty interests of lawyers and clients were engaged in a manner inconsistent with the principles of fundamental justice; and (4) in finding that the challenged sections of the Act and Regulations were not saved by s. 1 of the Charter. The court did not address whether the challenged provisions also violated s. 8 of the Charter (unreasonable search and seizure).

The British Columbia Court of Appeal, in a judgment reported (2013), 335 B.C.A.C. 243; 573 W.A.C. 243, dismissed the appeal. The liberty interests of lawyers and clients were deprived by the challenged sections in a manner inconsistent with the principles of fundamental justice. The principle of fundamental justice involved was the independence of the Bar, not solicitor-client privilege as found by the trial judge. The court agreed that the challenged sections were not saved as a reasonable limit prescribed by law under s. 1 of the Charter. Although the trial judge erred in finding that there was no rational connection between the legislative objectives and the infringement of s. 7 of the Charter, the court agreed that the challenged sections did not minimally impair the s. 7 rights of lawyers and clients and that the proportionality test was not met. The federal Attorney General appealed.

The Supreme Court of Canada, McLachlin, C.J.C., and Moldaver, J., dissenting in part, allowed the appeal in part. The court held that ss. 5(i) and 5(j) of the Act, which merely authorized the making of Regulations, did not violate ss. 7 or 8 of the Charter and should not have been struck down. Sections 62, 63, 63.1 and 64 of the Act, to the extent that they applied to lawyers, infringed s. 8 of the Charter and were not saved as reasonable limits prescribed by law under s. 1 of the Charter. It was unnecessary to determine whether those sections also violated s. 7 liberty interests. Section 11.1 of the Regulations, to the extent that it applied to lawyers, and ss. 33.3, 33.4 and 59.4 of the Regulations, violated a lawyer's s. 7 liberty interests and were not saved as reasonable limits prescribed by law under s. 1. Sections 11.1, 33.3, 33.4 and 59.4 of the Regulations did not violate s. 8 of the Charter.

Barristers and Solicitors - Topic 1545

Relationship with client - Duty to client - General - Obligation of loyalty - [See first Civil Rights - Topic 8547 ].

Barristers and Solicitors - Topic 1626

Relationship with client - Duty of confidentiality (or professional secrecy) - Disclosure to governments - [See first Civil Rights - Topic 8547 ].

Barristers and Solicitors - Topic 7610

Regulation - General - Independence of the bar - Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations made them apply to all lawyers, law firms and Quebec notaries - All lawyers were subject to the client identification and verification, record keeping, internal compliance program and external monitor requirements of the Act - The Regulations required that those lawyers who received or paid funds on behalf of their clients, other than funds received or paid in respect of professional fees, disbursements, expenses or bail, to: (a) perform client identification and verification; (b) keep records of financial transactions; and (c) establish internal programs to promote compliance with the federal anti-money laundering regime - The Federation of Law Societies of Canada challenged the provisions as infringing a lawyer's s. 7 Charter liberty rights in a manner not in accordance with the principles of fundamental justice (independence of the bar) - The Supreme Court of Canada held that it need not decide whether the broad notion of "independence of the bar" was a principle of fundamental justice - The court stated that "The narrower understanding of the independence of the bar which relates it to the lawyer's duty of commitment to the client's cause is the aspect of the lawyer's special duty to his or her client that is most relevant to this appeal" - See paragraph 80.

Civil Rights - Topic 646.6

Liberty - Limitations on - Anti-money laundering and terrorist financing legislation - Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations made them apply to all lawyers, law firms and Quebec notaries - All lawyers were subject to the client identification and verification, record keeping, internal compliance program and external monitor requirements of the Act - The Regulations required that those lawyers who received or paid funds on behalf of their clients, other than funds received or paid in respect of professional fees, disbursements, expenses or bail, to: (a) perform client identification and verification; (b) keep records of financial transactions; and (c) establish internal programs to promote compliance with the federal anti-money laundering regime - The Federation of Law Societies of Canada challenged the constitutional validity of the application of the Act and Regulations to lawyers, arguing that "the recording and related obligations imposed on lawyers pursuant to Part 1 of the Act violated s. 7 of the Charter by jeopardizing the liberty of lawyers and clients in a manner that failed to conform with the principles of fundamental justice, namely: (a) solicitor-client confidentiality and privilege; (b) lawyers' duty of loyalty to their clients; and (c) the independence of the Bar" - The Supreme Court of Canada held that s. 11.1 of the Regulations, to the extent that it applied to lawyers, and ss. 33.3, 33.4 and 59.4 of the Regulations, violated a lawyer's s. 7 liberty interests and were not saved as reasonable limits prescribed by law under s. 1 - The court stated that "These provisions limit the liberty of lawyers in a way that is not in accordance with the principle of fundamental justice in relation to the lawyer's duty of commitment to the client's cause. ...; these provisions engage the liberty interests of lawyer. If lawyers do not comply with the Act's requirements, they are liable to prosecution and imprisonment" - It was unnecessary to decide whether the provisions also affected the liberty of clients - It was unnecessary to undertake an independent s. 7 analysis based on a principle of fundamental justice in relation to solicitor-client privilege - The court agreed that the provisions failed the proportionality test under s. 1 based on "the combination of the inadequate protection of solicitor-client privilege and the information gathering and retention aspects of the scheme that result in the s. 7 violation." - See paragraphs 69 to 115.

Civil Rights - Topic 686

Liberty - Principles of fundamental justice - Deprivation of - What constitutes - [See Civil Rights - Topic 646.6 ].

Civil Rights - Topic 724

Liberty - Charter of Rights and Freedoms - Persons protected - [See Civil Rights - Topic 646.6 ].

Civil Rights - Topic 1646

Property - Search and seizure - Unreasonable search and seizure defined - Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations made them apply to all lawyers, law firms and Quebec notaries - It was argued that the Act and Regulations required lawyers to collect information from their clients and retain it so that the information could be available for law enforcement officials if they wished to review it, allegedly turning lawyers into state agents to collect information from their clients for potential use by the state, which would constitute an unreasonable search and seizure contrary to s. 8 of the Charter where authorities were authorized to conduct warrantless searches of lawyers' offices at any time - The Supreme Court of Canada stated that ss. 62, 63, 63.1 and 64 of the Act authorized "sweeping law office searches which inherently risk breaching solicitor-client privilege. It does so in a criminal law setting and for criminal law purposes. In my view, the constitutional principles governing these searches are set out in the Court's decision in Lavallee, and this scheme does not comply with them. ... A law office search power is unreasonable unless it provides a high level of protection for material subject to solicitor-client privilege ... when a search provision is part of a regulatory scheme, the target's reasonable expectation of privacy may be reduced ... I do not accept the Attorney General's contention that this scheme may be properly characterized as 'an administrative law regulatory compliance regime' ... The regime imposes penal sanctions on lawyers for non-compliance. It therefore has a predominantly criminal law character and its regulatory aspects serve criminal law purposes. ... any legislative provisions that interfere with the privilege more than 'absolutely necessary' will be found to be unreasonable ... Warrantless searches, such as those permitted under this scheme, are presumptively unreasonable ... the search powers in ss. 62, 63 and 63.1 as applied to lawyers, along with the inadequate protection of solicitor-client privilege provided by s. 64, constitute a very significant limitation of the right to be free of unreasonable searches and seizures guaranteed by s. 8 of the Charter." - Although the objectives of the search provisions were pressing and substantial, and rationally connected to the limit, the challenged provisions failed the proportionality test where they did not minimally impair s. 8 rights - Sections 62, 63 and 63.1 were read down to exclude lawyers and law offices from the scope of their operation - Section 64 was declared to be of no force and effect - See paragraphs 31 to 67.

Civil Rights - Topic 8316

Canadian Charter of Rights and Freedoms - General - Application - Proportionality test - [See Civil Rights - Topic 1646 ].

Civil Rights - Topic 8348

Canadian Charter of Rights and Freedoms - Application - Exceptions - Reasonable limits prescribed by law (Charter, s. 1) - [See Civil Rights - Topic 646.6 ].

Civil Rights - Topic 8547

Canadian Charter of Rights and Freedoms - Interpretation - Particular words and phrases - Principles of fundamental justice - At issue was whether provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, as they applied to lawyers, violated a lawyer's s. 7 Charter liberty rights contrary to the principles of fundamental justice - The issue was what was the "principle of fundamental justice" involved - The Supreme Court of Canada held that the lawyer's duty of commitment to the client's cause was a "principle of fundamental justice" in need of constitutional protection from government intrusion - The client had to be able to place "unrestricted and unbounded confidence" in his or her lawyer - The court stated that "We should, in my view, recognize as a principle of fundamental justice that the state cannot impose duties on lawyers that undermine their duty of commitment to their clients' causes. Subject to justification being established, it follows that the state cannot deprive someone of life, liberty or security of the person otherwise than in accordance with this principle. ... I do not find it necessary or desirable in this appeal to address the extent, if at all, to which self-regulation of the legal profession is a principle of fundamental justice. ... The duty of commitment to the client's cause has been recognized by the Court as a distinct element of the broader common law duty of loyalty and thus unquestionably is a legal principle ... this principle of commitment to the client's cause is sufficiently precise to provide a workable standard in that it can be applied in a manner that provides guidance as to the appropriate result. ... there is overwhelming evidence of a strong and widespread consensus concerning the fundamental importance in democratic states of protection against state interference with the lawyer's commitment to his or her client's cause." - See paragraphs 83 to 86, 91, 92, 102.

Civil Rights - Topic 8547

Canadian Charter of Rights and Freedoms - Interpretation - Particular words and phrases - Principles of fundamental justice - The Supreme Court of Canada stated that "Principles of fundamental justice have three characteristics. They must be legal principles, there must be 'significant societal consensus' that they are 'fundamental to the way in which the legal system ought fairly to operate' and they must be sufficiently precise so as 'to yield a manageable standard against which to measure deprivations of life, liberty or security of the person'" - See paragraph 87.

Cases Noticed:

Lavallee, Rackel & Heintz et al. v. Canada (Attorney General), [2002] 3 S.C.R. 209; 292 N.R. 296; 312 A.R. 201; 281 W.A.C. 201; 164 O.A.C. 280; 217 Nfld. & P.E.I.R. 183; 651 A.P.R. 183; 2002 SCC 61, refd to. [para. 33].

Thomson Newspapers Ltd. v. Director of Investigation and Research, Combines Investigation Act et al., [1990] 1 S.C.R. 425; 106 N.R. 161; 39 O.A.C. 161, refd to. [para. 37].

R. v. Fitzpatrick (B.), [1995] 4 S.C.R. 154; 188 N.R. 248; 65 B.C.A.C. 1; 106 W.A.C. 1, refd to. [para. 37].

R. v. Oakes, [1986] 1 S.C.R. 103; 65 N.R. 87; 14 O.A.C. 335, refd to. [para. 58].

R. v. Kokesch, [1990] 3 S.C.R. 3; 121 N.R. 161, refd to. [para. 58].

Little Sisters Book and Art Emporium et al. v. Canada (Minister of Justice) et al., [2000] 2 S.C.R. 1120; 263 N.R. 203; 145 B.C.A.C. 1; 237 W.A.C. 1; 2000 SCC 69, refd to. [para. 60].

Schachter v. Canada et al., [1992] 2 S.C.R. 679; 139 N.R. 1, refd to. [para. 65].

Bedford et al. v. Canada (Attorney General), [2013] 3 S.C.R. 1101; 452 N.R. 1; 312 O.A.C. 53; 2013 SCC 72, refd to. [para. 69].

Blencoe v. Human Rights Commission (B.C.) et al., [2000] 2 S.C.R. 307; 260 N.R. 1; 141 B.C.A.C. 161; 231 W.A.C. 161; 2000 SCC 44, refd to. [para. 69].

R. v. Rodgers - see R. v. Jackpine (R.).

R. v. Jackpine (R.), [2006] 1 S.C.R. 554; 347 N.R. 201; 210 O.A.C. 200; 2006 SCC 15, refd to. [para. 73].

R. v. Mills (B.J.), [1999] 3 S.C.R. 668; 248 N.R. 101; 244 A.R. 201; 209 W.A.C. 201, refd to. [para. 73].

Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 2013 SCC 39, refd to. [para. 81].

Canadian National Railway Co. v. McKercher LLP - see Wallace v. Canadian Pacific Railway et al.

R. v. Fosty and Gruenke, [1991] 3 S.C.R. 263; 130 N.R. 161; 75 Man.R.(2d) 112; 6 W.A.C. 112, refd to. [para. 82].

R. v. McClure (D.E.), [2001] 1 S.C.R. 445; 266 N.R. 275; 142 O.A.C. 201; 2001 SCC 14, refd to. [para. 82].

Jones v. Smith, [1999] 1 S.C.R. 455; 236 N.R. 201; 120 B.C.A.C. 161; 196 W.A.C. 161, refd to. [para. 83].

Anderson v. Bank of British Columbia (1876), 2 Ch. D. 644 (C.A.), refd to. [para. 83].

Finney v. Barreau du Québec - see McCullock-Finney v. Barreau du Québec.

McCullock-Finney v. Barreau du Québec, [2004] 2 S.C.R. 17; 321 N.R. 361; 2004 SCC 36, refd to. [para. 86].

R. v. Malmo-Levine (D.) et al., [2003] 3 S.C.R. 571; 314 N.R. 1; 191 B.C.A.C. 1; 314 W.A.C. 1; 2003 SCC 74, refd to. [para. 87].

R. v. D.B., [2008] 2 S.C.R. 3; 374 N.R. 221; 237 O.A.C. 110; 2008 SCC 25, refd to. [para. 87].

R. v. Anderson (F.), [2014] 2 S.C.R. 167; 458 N.R. 1; 350 Nfld. & P.E.I.R. 289; 1088 A.P.R. 289; 2014 SCC 41, refd to. [para. 87].

Reference Re Section 94(2) of the Motor Vehicle Act (B.C.), [1985] 2 S.C.R. 486; 63 N.R. 266, refd to. [para. 89].

Canadian Foundation for Children, Youth and the Law v. Canada (Attorney General), [2004] 1 S.C.R. 76; 315 N.R. 201; 183 O.A.C. 1; 2004 SCC 4, refd to. [para. 90].

R. v. Neil (D.L.), [2002] 3 S.C.R. 631; 294 N.R. 201; 317 A.R. 73; 284 W.A.C. 73; 2002 SCC 70, refd to. [para. 91].

Rodriguez v. British Columbia (Attorney General) et al., [1993] 3 S.C.R. 519; 158 N.R. 1; 34 B.C.A.C. 1; 56 W.A.C. 1, refd to. [para. 92].

Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143; 91 N.R. 255, refd to. [para. 97].

Jabour v. Law Society of British Columbia et al., [1982] 2 S.C.R. 307; 43 N.R. 451, refd to. [para. 98].

Pearlman v. Manitoba Law Society Judicial Committee, [1991] 2 S.C.R. 869; 130 N.R. 121; 75 Man.R.(2d) 81; 6 W.A.C. 81, refd to. [para. 99].

Statutes Noticed:

Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17, sect. 2, sect. 3, sect. 5(i), sect. 5(j), sect. 6, sect. 6.1, sect. 7, sect. 9, sect. 9.1, sect. 9.6, sect. 10.1, sect. 62, sect. 63, sect. 63.1, sect. 64, sect. 65, sect. 65.1 [Appendix].

Proceeds of Crime (Money Laundering) and Terrorist Financing Act Regulations, Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-184, sect. 1(2), sect. 11.1, sect. 33.4, sect. 33.5, sect. 59.4, sect. 64, sect. 64.1, sect. 65, sect. 66, sect. 66.1, sect. 67, sect. 68, sect. 69 [Appendix].

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations - See Proceeds of Crime (Money Laundering) and Terrorist Financing Act Regulations.

Authors and Works Noticed:

International Bar Association, International Principles on Conduct for the Legal Profession (2011), p. 5 [para. 101].

Mill, John Stuart, On Liberty and Considerations on Representative Government (1946), p. 8 [para. 90].

Stewart, Hamish, Fundamental Justice: Section 7 of the Canadian Charter of Rights and Freedoms (2012), p. 108 [para. 92].

United Nations, Basic Principles of the Role of Lawyers, Eighth United Nations Congress on the Prevention of Crime and the Treatment of Offenders: Havana 27 August - 7 September 1990, U.N. Doc. A/CONF. 144/28/Rev. 1 (1991), p. 119 [para. 101].

Counsel:

Christopher Rupar and Jan Brongers, for the appellant;

John J. L. Hunter, Q.C., and Roy W. Millen, for the respondent;

Michal Fairburn and Justin Safayeni, for the intervener, the Criminal Lawyers' Association (Ontario);

Mahmud Jamal, David Rankin and Pierre-Alexandre Henri, for the intervener, the Canadian Civil Liberties Association;

Leonard T. Doust, Q.C., and Michael A. Feder, for the intervener, the Law Society of British Columbia;

Craig A. B. Ferris and Laura Bevan, for the intervener, the Canadian Bar Association;

Paul D. Stern and Robert A. Centa, for the intervener, the Advocates' Society;

Raymond Doray and Loïc Berdnikoff, for the interveners, Barreau du Québec and Chambre des notaires du Québec.

Solicitors of Record:

Attorney General of Canada, Ottawa, Ontario, for the appellant;

Hunter Litigation Chambers, Vancouver, B.C.; Blake, Cassels & Graydon, Vancouver, B.C., for the respondent;

Stockwoods, Toronto, Ontario, for the intervener, the Criminal Lawyers' Association (Ontario);

Osler, Hoskin & Harcourt, Toronto, Ontario, for the intervener, the Canadian Civil Liberties Association;

McCarthy Tétrault, Vancouver, B.C., for the intervener, the Law Society of British Columbia;

Lawson Lundell, Vancouver, B.C., for the intervener, the Canadian Bar Association;

Stern Landesman Clark, Toronto, Ontario; Paliare Roland Rosenberg Rothstein, Toronto, Ontario, for the intervener, the Advocates' Society;

Lavery, de Billy, Montreal, Quebec, for the interveners, Barreau du Québec and Chambre des notaires du Québec.

This appeal was heard on May 13, 2014, before McLachlin, C.J.C., LeBel, Abella, Cromwell, Moldaver, Karakatsanis and Wagner, JJ., of the Supreme Court of Canada.

On February 13, 2015, the judgment of the Court was delivered in both official languages and the following opinions were filed:

Cromwell, J. (LeBel, Abella, Karakatsanis and Wagner, JJ., concurring) - see paragraphs 1 to 117;

McLachlin, C.J.C., and Moldaver, J., partially concurring - see paragraphs 118 to 121.