Attorney General of Canada Appellant v. Federation of Law Societies of Canada, 2015 SCC 7

SUPREME COURT OF CANADA Citation: Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401 Date: 20150213 Docket: 35399 Between: Attorney General of Canada Appellant and 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 Interveners Coram: McLachlin C.J. and LeBel, Abella, Cromwell, Moldaver, Karakatsanis and Wagner JJ.

Reasons for Judgment: (paras. 1 to 117) Partially Concurring Joint Reasons: (paras. 118 to 121) Cromwell J. (LeBel, Abella, Karakatsanis and Wagner JJ. concurring) McLachlin C.J. and Moldaver J. canada (a.g.) v. federation of law societies, 2015 SCC 7, [2015] 1 S.C.R. 401 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 Interveners Indexed as: Canada (Attorney General) v. Federation of Law Societies of Canada 2015 SCC 7 File No.: 35399. 2014: May 13; 2015: February 13.

Present: McLachlin C.J. and LeBel, Abella, Cromwell, Moldaver, Karakatsanis and Wagner JJ. on appeal from the court of appeal for british columbia Constitutional law — Charter of Rights — Right to liberty — Fundamental justice — Search and seizure — Solicitor-client privilege — Lawyer’s duty of commitment to client’s cause — Whether Canada’s anti-money laundering and anti-terrorist financing legislation, as it applies to legal profession, infringes right to be free of unreasonable searches and seizures — Whether legislation infringes right not to be deprived of liberty otherwise than in accordance with principles of fundamental justice — If so, whether infringements justifiable — Canadian Charter of Rights and Freedoms, ss. 1 , 7 , 8 — Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17, ss. 5 (i), 5(j), 62 , 63 , 63.1 , 64 — Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-184 , ss. 11.1, 33.3, 33.4, 33.5, 59.4.

To reduce the risk that financial intermediaries may facilitate money laundering or terrorist financing, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act , S.C. 2000, c. 17, and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations , SOR/2002-184, impose duties on financial intermediaries, including advocates and notaries in Quebec and barristers and solicitors in all other provinces. The legislation requires financial intermediaries to collect, record and retain material, including information verifying the identity of those on whose behalf they pay or receive money.

It puts in place an agency to oversee compliance, the Financial Transactions and Reports Analysis Centre of Canada, and allows that agency to search for and seize that material. It imposes fines and penal consequences for non-compliance. Sections 5(

i) and 5(

j) of the Act make professions specified in the Regulations subject to the record keeping and verification requirements.

Section 33.3 of the Regulations makes legal counsel subject to the Act when receiving or paying funds or giving instructions to pay funds other than in respect of professional fees, disbursements, expenses or bail or when doing so on behalf of their employer. Sections 33.4 and 33.5 of the Regulations impose record keeping requirements.

Section 59.4 of the Regulations imposes identification requirements.

Section 11.1 of the Regulations sets out the information that must be collected and retained in the course of verifying identity. Sections 62, 63 and 63.1 of the Act provide for search and seizure powers.

Section 64 provides limitations on the search and seizure powers in relation to material for which solicitor-client privilege is claimed. The Federation of Law Societies commenced a constitutional challenge to the legislation as it applies to the legal profession. The application judge of the Supreme Court of British Columbia held that the challenged provisions violate s. 7 of the Charter and the infringement is not saved under s. 1 of the Charter . She did not address whether the provisions infringe s. 8 of the Charter .

She read down ss. 5( i ), 5( j ), 62, 63 and 63.1 of the Act and s. 11.1 of the Regulations to exclude legal counsel and legal firms. She struck down s. 64 of the Act, and ss. 33.3, 33.4, 33.5 and 59.4 of the Regulations. The British Columbia Court of Appeal dismissed an appeal. Held : The appeal should be allowed in part. That part of the application judge’s order declaring that ss. 5(

i) and 5(

j) of the Act are inconsistent with the Constitution of Canada and are of no force and effect to the extent that the reference in those subsections to “persons and entities” includes legal counsel and law firms should be set aside. Sections 5(

i) and 5(

j) should be struck from that part of the application judge’s order declaring that ss. 5( i ), 5( j ), 62, 63 and 63.1 of the Act are read down to exclude legal counsel and law firms from the operation of those sections. The appeal should otherwise be dismissed. Per LeBel, Abella, Cromwell, Karakatsanis and Wagner JJ.: Sections 5(

i) and 5(

j) of the Act simply authorize the making of regulations and do not on their own infringe the Charter . Sections 62, 63 and 63.1 of the Act, to the extent that they apply to documents in the possession of legal counsel and legal firms, and s. 64 of the Act infringe s. 8 of the Charter . These provisions have a predominantly criminal law character rather than an administrative law character. They facilitate detecting and deterring criminal offences, and investigating and prosecuting criminal offences. There are penal sanctions for non-compliance.

These provisions authorize sweeping searches of law offices which inherently risks breaching solicitor-client privilege. The expectation of privacy in solicitor-client privileged communications is invariably high regardless of the context and nothing about the regulatory context of the Act or the fact that a regulatory agency undertakes the searches diminishes that expectation. The principles governing searches of law offices set out in Lavallee, Rackel & Heintz v. Canada (Attorney General) , 2002 SCC 61 , [2002] 3 S.C.R. 209, apply and these provisions do not comply with those standards.

Solicitor-client privilege

must remain as close to absolute as possible. There must be a stringent norm to ensure protection and legislative provisions must interferewith the privilege no more than absolutely necessary. These provisions wrongly transfer the burden of protecting solicitor-clientprivilege to lawyers. Nothing requires notice to clients and a client may not be aware that his or her privilege is threatened. There is noprotocol for independent legal intervention when it is not feasible to notify a client. A judge has no discretion to assess a claim ofprivilege on his or her own motion.

Unless the search is of a lawyer’s home office, nothing requires prior judicial authorization. Searchesare not contingent upon proof that there are no reasonable alternatives. The provisions allow warrantless searches, which arepresumptively unreasonable. Examining and copying documents proceeds until privilege is asserted — an approach that greatly elevatesthe risk of a breach of privilege. Claiming privilege requires revealing a client’s name and address even though this information may besubject to privilege.

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.

Section 11.1 of the Regulations, to the extent that it applies to legal counsel and legal firms, and the other provisions of theRegulations in issue in this appeal infringe s. 7 of the Charter. The liberty interests of lawyers are infringed because lawyers are liable toimprisonment if they do not comply with the requirements of the Act and Regulations. It is not necessary to determine whether theliberty interests of clients are infringed. It should be recognized as a principle of fundamental justice that the state cannot impose duties on lawyers that underminetheir duty of commitment to their clients’ causes.

Principles of fundamental justice have three characteristics. They must be a legalprinciple; there must be significant societal consensus that they are fundamental to the way in which the legal system ought fairly tooperate; and, they must be sufficiently precise so as to yield a manageable standard against which to measure deprivations of life, libertyor security of the person. The lawyer’s duty of commitment to the client’s cause meets this test. First, it is a normative legal principle anda basic tenet of our legal system.

It has been recognized as a distinct element of a lawyer’s broader common law duty of loyalty. Second,jurisprudence demonstrates that the principle is sufficiently precise to provide a workable standard. It does not countenance a lawyer’sinvolvement in, or facilitation of, illegal activities and it is consistent with a lawyer taking appropriate steps to ensure that his or herservices are not used for improper ends.

Third, there is overwhelming evidence of a strong and wide-spread consensus concerning thefundamental importance in democratic states of protection against state interference with the lawyer’s commitment to his or her client’scause. The duty is fundamental to the solicitor-client relationship and how the state and the citizen interact in legal matters. The lawyer’sduty of commitment to the client’s cause is essential to maintaining confidence in the integrity of the administration of justice.

Subject to justification, the state cannot impose obligations on lawyers that undermine their compliance with the duty, eitherin fact or in the perception of a reasonable person. The legal profession has developed practice standards relating to the subjectsaddressed by the Act and Regulations that are narrower in scope.

Although these standards cannot set the constitutional parameters forlegislation, they are evidence of a strong consensus in the profession as to what ethical practice in relation to these issues requires.Viewed in this light, the legislation requires lawyers to gather and retain considerably more information than the profession thinks isneeded for ethical and effective client representation. This, coupled with the inadequate protection of solicitor-client privilege,undermines a lawyer’s ability to comply with the duty of commitment to the client’s cause.

The lawyer is required to create and preserverecords not required for ethical and effective representation, in the knowledge that solicitor-client confidences contained in these recordsare not adequately protected against searches and seizures authorized by the legislation. A reasonable and informed person, thinking thematter through, would perceive that these provisions are inconsistent with the lawyer’s duty of commitment to the client’s cause.

Thescheme taken as a whole limits the liberty of lawyers in a manner that is not in accordance with the principle of fundamental justicerelating to the lawyer’s duty of committed representation. The infringements of ss. 7 and 8 of the Charter are not justified under s. 1 of the Charter. Sections 62, 63, 63.1 and 64 ofthe Act fail the minimal impairment test. There are other less drastic means to pursue the objectives of combating money laundering andterrorist financing. The provisions of the Regulations in issue in this appeal fail the proportionality test.

Per McLachlin C.J. and Moldaver J.: There is agreement with Cromwell J.’s reasons insofar as they relate to s. 8 of theCharter. However, to the extent that the s. 7 interests of the lawyer are engaged, the lawyer’s duty of commitment to the client’s causelacks sufficient certainty to constitute a principle of fundamental justice. The lawyer’s commitment does not provide a workableconstitutional standard because it will vary with the nature of the retainer and other circumstances.

Solicitor-client privilege has alreadybeen recognized as a constitutional norm and breach of this principle of fundamental justice is sufficient to establish the potentialdeprivation of liberty that violates s. 7 of the Charter. Cases Cited By Cromwell J. Applied: Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61, [2002] 3 S.C.R. 209; referred to: R. v.Malmo-Levine, 2003 SCC 74, [2003] 3 S.C.R. 571; Schachter v. Canada, (SCC), [1992] 2 S.C.R. 679; ThomsonNewspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), (SCC),[1990] 1 S.C.R. 425; R. v.

Fitzpatrick, (SCC), [1995] 4 S.C.R. 154; R. v. Oakes, (SCC), [1986] 1 S.C.R.103; R. v. Kokesch, (SCC), [1990] 3 S.C.R. 3; Little Sisters Book and Art Emporium v. Canada (Minister of Justice),2000 SCC 69, [2000] 2 S.C.R. 1120; Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101; Blencoe v. BritishColumbia (Human Rights Commission), 2000 SCC 44, [2000] 2 S.C.R. 307; R. v. Rodgers, 2006 SCC 15, [2006] 1 S.C.R. 554; R. v.Mills, (SCC), [1999] 3 S.C.R. 668; Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R.649; R. v. Gruenke, (SCC), [1991] 3 S.C.R. 263; R. v.

McClure, 2001 SCC 14, [2001] 1 S.C.R. 445; Smith v. Jones, (SCC), [1999] 1 S.C.R. 455; Anderson v. Bank of British Columbia (1876), 2 Ch. D. 644; Finney v. Barreau du Québec,2004 SCC 36, [2004] 2 S.C.R. 17; R. v. D.B., 2008 SCC 25, [2008] 2 S.C.R. 3; R. v. Anderson, 2014 SCC 41, [2014] 2 S.C.R. 167; ReB.C. Motor Vehicle Act, (SCC), [1985] 2 S.C.R. 486; Canadian Foundation for Children, Youth and the Law v. Canada(Attorney General), 2004 SCC 4, [2004] 1 S.C.R. 76; R. v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631; Rodriguez v. British Columbia(Attorney General), (SCC), [1993] 3 S.C.R. 519; Andrews v.

Law Society of British Columbia, (SCC),[1989] 1 S.C.R. 143; Attorney General of Canada v. Law Society of British Columbia, (SCC), [1982] 2 S.C.R. 307;Pearlman v. Manitoba Law Society Judicial Committee, (SCC), [1991] 2 S.C.R. 869.

By McLachlin C.J. and Moldaver J. Referred to: R. v. Malmo-Levine , 2003 SCC 74 , [2003] 3 S.C.R. 571. Statutes and Regulations Cited Canadian Charter of Rights and Freedoms , ss. 1, 7 , 8 . Criminal Code , R.S.C. 1985, c. C-46, ss. 83.02, 83.03 , 462.31 , 488.1 . Proceeds of Crime (Money Laundering) and Terrorist Financing Act , S.C. 2000, c. 17, ss. 2 “legal counsel”, 3,

Part 1, 5( i ), ( j ), 6, 6.1, 7, 9, 9.1, 9.6, 10.1, 11, 62, 63, 63.1, 64, 65, 65.1, 74. Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations , SOR/2002-184, ss. 1(2) “funds”, “receipt of funds record”, 11.1, 33.3, 33.4, 33.5, 59.4, 64 to 67, 68, 69, 70. Authors Cited Council of Bars and Law Societies of Europe. Charter of Core Principles of the European Legal Profession , in Charter of Core Principles of the European Legal Profession and Code of Conduct for European Lawyers , edition 2013, 5 (online: http://www.ccbe.eu/index.php?id=32&L=0). Federation of Law Societies of Canada.

Model Rule on Client Identification and Verification Requirements , adopted March 20, 2008, and modified December 12, 2008 (online). International Bar Association. International Principles on Conduct for the Legal Profession , adopted May 28, 2011 (online: http://www.ibanet.org/Publications /publications_IBA_guides_and_free_materials.aspx). Mill, J. S. On Liberty and Considerations on Representative Government , by R. B. McCallum, ed. Oxford: Basil Blackwell, 1946. Stewart, Hamish. Fundamental Justice:

Section 7 of the Canadian Charter of Rights and Freedoms . Toronto: Irwin Law, 2012. United Nations. Basic Principles on the Role of Lawyers , in 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. New York: United Nations, 1991, 118. APPEAL from a judgment of the British Columbia Court of Appeal (Finch C.J.B.C. and Frankel, Neilson, Garson and Hinkson JJ.A.), 2013 BCCA 147 , 41 B.C.L.R. (5th) 283, 335 B.C.A.C. 243, 573 W.A.C. 243, 359 D.L.R. (4th) 1, 48 Admin.

L.R. (5th) 181, 297 C.C.C. (3d) 429, 2 C.R. (7th) 324, 278 C.R.R. (2d) 273, [2013] 5 W.W.R. 1, [2013] B.C.J. No. 632 (QL), 2013 CarswellBC 812 (WL Can.), affirming a decision of Gerow J., 2011 BCSC 1270 , 25 B.C.L.R. (5th) 265, 339 D.L.R. (4th) 48, 48 Admin. L.R. (5th) 285, 89 C.R. (6th) 80, 244 C.R.R. (2d) 129, [2012] 2 W.W.R. 758, [2011] B.C.J. No. 1779 (QL), 2011 CarswellBC 2436 (WL Can.). Appeal allowed in part. 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.

The judgment of LeBel, Abella, Cromwell, Karakatsanis and Wagner JJ. was delivered by Cromwell J. — I. Introduction [ 1 ] Lawyers must keep their clients’ confidences and act with commitment to serving and protecting their clients’ legitimate interests. Both of these duties are essential to the due administration of justice. However, some provisions of Canada’s anti- money laundering and anti-terrorist financing legislation are repugnant to these duties.

They require lawyers, on pain of imprisonment, to obtain and retain information that is not necessary for ethical legal representation and provide inadequate protection for the client’s confidences subject to solicitor-client privilege. I agree with the British Columbia courts that these provisions are therefore unconstitutional. They unjustifiably limit the right to be free of unreasonable searches and seizures under s. 8 of the Canadian Charter of Rights and Freedoms and the right under s. 7 of the Charter not to be deprived of liberty otherwise than in accordance with the principles of fundamental justice.

II. Overview and Background A. Overview [ 2 ] There is a risk that financial intermediaries — those who handle funds on behalf of others — may facilitate money laundering or terrorist financing. To reduce that risk, Canada’s anti-money laundering and anti-terrorist financing legislation imposes duties on financial intermediaries, including lawyers, accountants, life insurance brokers, securities dealers and others. They must collect information in order to verify the identity of those on whose behalf they pay or receive money, keep records of the transactions, and establish internal programs to ensure compliance.

The legislation also subjects financial intermediaries, including lawyers, to searches and seizures of the material that they are required to collect, record and retain. [ 3 ] Lawyers object to these provisions and the Federation of Law Societies of Canada (“Federation”), supported by several interveners, challenges them on constitutional grounds. The Federation says that the scheme makes lawyers unwilling state agents. They are required to obtain and retain information about their clients.

They must do this within a scheme that authorizes unreasonable searches and seizures and provides inadequate protections for solicitor-client privilege. This, the Federation argues, turns law offices into archives for use by the police and prosecution.

The provisions therefore violate both s. 7 and s. 8 of the Charter . [ 4 ] The British Columbia courts agreed with the Federation that the provisions violate s. 7 of the Charter but they did not address the s. 8 challenge. [ 5 ] The Attorney General of Canada appeals and the Chief Justice has stated constitutional questions which I have reproduced at the conclusion of my reasons. The issues raised by the appeal and my resolution of them are as follows: 1.

Do the provisions infringe the s. 8 Charter right to be free of unreasonable searches and seizures? [ 6 ] In my opinion, the search provisions in the legislation do not provide the constitutionally required protection for solicitor-client privilege and, as a result, infringe the s. 8 Charter right to be free of unreasonable searches and seizures. 2(a). With respect to s. 7 of the Charter , do the provisions limit lawyers’ and/or clients’ right to liberty? [ 7 ] The provisions limit the liberty interests of lawyers. It is not necessary to decide whether clients’ liberty interests are also engaged. 2(b).

Is that limitation in accordance with the principles of fundamental justice in relation to (

i) solicitor-client privilege or (ii) the independence of the bar? [ 8 ] The provisions, taken as a whole, interfere with the lawyer’s duty of commitment to the client’s cause, which, I conclude, is a principle of fundamental justice. Given my conclusion concerning s. 8 , there is no need to conduct a separate analysis relating to the proposed principle of fundamental justice relating to solicitor-client privilege. 3.

Are any limitations of rights under ss. 7 or 8 demonstrably justified as required by s. 1 of the Charter ? [ 9 ] The Attorney General failed to demonstrate that these limitations of Charter rights are demonstrably justified in a free and democratic society and they are therefore not saved by s. 1 of the Charter . B.

The Legislation [ 10 ] The legislative scheme out of which this appeal arises is complex and a good grasp of how its provisions affect lawyers and clients is necessary in order to understand the issues on appeal. [ 11 ] Laundering the proceeds of crime and financing terrorist activity are serious crimes: Criminal Code , R.S.C. 1985, c. C-46, ss. 462.31, 83.02 and 83.03 . The Proceeds of Crime (Money Laundering) and Terrorist Financing Act , S.C. 2000, c. 17, seeks to detect and deter these crimes and to facilitate their investigation and prosecution: s. 3 .

The Act pursues these objectives in three main ways: by establishing record keeping and client identification standards, by requiring reporting from financial intermediaries, and by putting in place an agency to oversee compliance — the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”). [ 12 ] Regulations made under the Act particularize how the legislative scheme applies to legal counsel: the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations , SOR/2002-184.

The Act defines “legal counsel” to mean an advocate or a notary in the province of Quebec and in every other province a barrister or solicitor: s. 2 . I will use the term “lawyer” to refer to all legal professionals who are subject to the regime. The relevant provisions of the Act and the Regulations are set out in the Appendix.

The rationale for requiring lawyers to comply with client identification and record keeping requirements, according to the Attorney General’s submissions, is to deter illicit transactions and, if such transactions occur, to help establish a paper trail that, with the proper judicial authorization, could be accessed by law enforcement: A.F., at para. 17. The record keeping requirements deter illicit transactions in at least two ways.

They help ensure that lawyers do not become unwitting dupes of clients who wish to use them to facilitate illicit transactions and make it harder for clients to engage in such activities through their lawyers. [ 13 ] Here is an overview of the most relevant provisions of the Act and Regulations affecting lawyers.

(1) Gathering Information to Verify Identity [ 14 ] Turning first to verification, the Act requires lawyers to identify persons and entities on whose behalf they act as financial intermediaries: s. 6.1; Regulations, s. 33.3. In

summary, a lawyer must verify the identity of persons or entities on whose behalf the lawyer receives or pays funds other than in respect of professional fees, disbursements, expenses or bail. There are detailed rules about how to do this verification upon receipt of $3,000 or more. Briefly, verification requires presentation of government-issued

documents. Individuals must present proof of identity such as passports or drivers’ licences. In the case of corporations, the lawyer must obtain the corporation’s name and address, as well as the names of its directors, by means of a record that confirms the corporation’s existence: Regulations, s. 65.

Other entities, such as partnerships, are identified by records confirming their existence: Regulations, ss. 33.3, 33.4, 59.4 and 64 to 67. [ 15 ] This verification scheme also requires lawyers to collect information which varies according to whether the transaction is being conducted on behalf of a person, a corporation or some other entity: Regulations, s. 11.1. For a corporation, this includes the names of all directors and the names and addresses of certain shareholders: Regulations, s. 11.1(1)( a ).

With respect to trusts, the names and addresses of all trustees, beneficiaries and settlors are required: Regulations, s. 11.1(1)( b ). The lawyer must obtain “information establishing the ownership, control and structure of the entity”: Regulations, s. 11.1(1)( d ). The lawyer is required to ensure accuracy of the information obtained (Regulations, s. 11.1(3)), and if he or she is unable to either obtain or confirm the information sought, he or she will be subject to other requirements: Regulations, s. 11.1(4).

(2) Record Keeping [ 16 ]

Section 33.4 of the Regulations provides that a “receipt of funds record” must be created by a lawyer when $3,000 or more in funds are received in a transaction, unless the amount is received from a financial entity or public body. (“Funds” include cash, currency or securities, or negotiable instruments or other financial instruments, in any form: Regulations, s. 1(2).) The information required in the “receipt of funds record” includes the name, address, date of birth, and nature of the principal business or occupation of the person or entity from whom the amount is received; the date of the transaction; the number of any account that is affected by the transaction; the type of that account; the name of the account holder and the currency in which the transaction is conducted; the purpose and details of the transaction; the manner in which the funds were delivered if they were delivered in cash (armoured car, in person, by mail, etc.); and the amount and currency of funds received: Regulations, s. 1(2).

Some information does not have to be included where the funds are received from another lawyer’s trust account: Regulations, s. 33.5.

Section 33.4 also requires, where the person or entity is a corporation, the lawyer to keep a copy of corporate records relating to the power to bind a corporation in respect of transactions with the lawyer. [ 17 ] The records must be kept for at least five years after the completion of the transaction (Regulations, ss. 68 and 69) and the Regulations mandate that they can be produced to FINTRAC within 30 days of a request: s. 70.

(3) Search and Seizure [ 18 ] FINTRAC has broad access to the information which lawyers (and others) are required to collect, record and retain. Section 62(1) of the Act authorizes FINTRAC to “examine the records and inquire into the business and affairs” of any lawyer. This includes the power to search through computers (s. 62(1)( b )) and to print or copy records (s. 62(1)( c )).

Section 63.1 empowers FINTRAC to make requests for information to lawyers and obliges lawyers to comply. [ 19 ] There are some protections for solicitor-client privilege. Lawyers, when they are providing legal services, are not subject to the reporting requirements that apply to other professions: Act, s. 10.1. Nothing in the Act requires legal counsel to disclose any communication subject to solicitor-client privilege: s. 11. Most significantly, s. 64 of the Act sets up a procedure to protect against disclosure of privileged material in the course of a search.

It provides that where a lawyer claims a document in his or her possession is subject to solicitor-client privilege it cannot be examined or copied. However, this provision requires the lawyer to seal, identify and retain the document and to claim privilege in court within 14 days. FINTRAC has the authority under the regime to disclose to law enforcement information of which it becomes aware under the search provisions if it suspects that it would be relevant to investigating or prosecuting an offence arising out of a contravention of the verification or record keeping obligations: Act, s. 65.

Under very recently amended provisions, law enforcement may only use this information as evidence of a contravention of the verification, retention and reporting obligations in

Part 1 of the Act or for purposes related to compliance with those provisions: s. 65(3). Finally, s. 65.1 of the Act allows FINTRAC to disclose information to foreign state agencies analogous to FINTRAC for the purposes of ensuring compliance with verification and record keeping obligations.

(4) The Challenged Provisions [ 20 ] It will be helpful to list and describe the provisions that are challenged. The provisions fall into two groups, those relating to verifying identity and record keeping and those relating to search and seizure. [ 21 ] Sections 5(

i) and 5(

j) of the Act make the professions specified in the Regulations subject to the verification and record keeping requirements in

Part 1 of the Act.

Section 33.3 of the Regulations makes legal counsel subject to

Part 1 of the Act when receiving or paying funds or giving instructions to pay funds (other than those received or paid in respect of professional fees, disbursements, expenses or bail or when doing so on behalf of their employer).

Section 33.4 of the Regulations sets out the record keeping requirements.

Section 33.5 of the Regulations relaxes these requirements where funds are received from the trust account of a legal firm or legal counsel.

Section 59.4 of the Regulations imposes the identification requirements.

Section 11.1 of the Regulations sets out the information that must be collected and retained in the course of verifying identity. [ 22 ] Sections 62, 63 and 63.1 of the Act provide for search and seizure powers.

Section 64 provides limitations on the search and seizure powers in relation to material for which solicitor-client privilege is claimed. C. Judicial History

(1) The Proceedings (

a) Background [ 23 ] Lawyers first became subject to the Act in 2001 when they were required to report to FINTRAC “suspicious transactions” involving their clients: s. 7 . The Federation, as well as several law societies, launched constitutional challenges to the Act as

a result. In 2002, the Attorney General reached an agreement with the Federation to facilitate the constitutional challenges by way of a national “binding test case” before the courts in British Columbia. Interlocutory injunctions currently preclude the Act from applying to lawyers. As a result, none of the regime’s anti-money laundering requirements have been enforced against lawyers pending the outcome of the case.

In the interim, the Federation has encouraged Canadian provincial and territorial law societies to adopt rules prohibiting lawyers from conducting large cash transactions and requiring client identification, verification, and record keeping measures when lawyers effect certain financial transactions on behalf of clients. [ 24 ] The Attorney General contends that these measures are insufficient to combat money laundering and terrorist financing.

He argues that criminal sanctions are needed to back up these requirements in the case of non-compliance and that leaving enforcement to the law societies risks a lack of uniformity. (

b) British Columbia Supreme Court, 2011 BCSC 1270 , 25 B.C.L.R. (5th) 265 (Gerow J.) [ 25 ] The application judge held that the challenged provisions are contrary to s. 7 of the Charter . She concluded that both lawyers’ and clients’ liberty interests are engaged by the Act because it places both lawyers and their clients in jeopardy of potential incarceration.

She was of the view that solicitor-client privilege is a principle of fundamental justice and that the recording and retention requirements are contrary to this principle because they “result in having lawyers’ offices turned into archives for the use of the prosecution” (para. 144). [ 26 ] Turning to whether this Charter infringement could be justified under s. 1 , the judge concluded that the means chosen were not proportionate to the objectives because regulation of lawyers by law societies already provides effective and constitutional anti-money laundering and anti-terrorist financing regimes.

She found no proof that there is a rational connection between the legislative objective and the infringement of s. 7 , that the statutory regime interferes as little as possible with s. 7 rights, or that the salutary effects of the measures outweigh their deleterious effects. [ 27 ] As a remedy, the application judge read down ss. 5( i ), 5( j ), 62, 63 and 63.1 of the Act and s. 11.1 of the Regulations to exclude legal counsel and legal firms, and struck down s. 64 of the Act and ss. 33.3, 33.4, 33.5 and 59.4(1) of the Regulations. (

c) British Columbia Court of Appeal, 2013 BCCA 147 , 41 B.C.L.R. (5th) 283 (Hinkson J.A., Finch C.J.B.C. and Neilson J.A. Concurring; Concurring in the Result, Frankel J.A., Garson J.A. Concurring) [ 28 ] The Court of Appeal unanimously held that the obligations imposed on lawyers by the provisions breach s. 7 of the Charter and that they are not saved by s. 1 . Although the court found that the provisions sufficiently protect solicitor-client privilege, it concluded that “independence of the Bar” is a principle of fundamental justice and that the provisions are not consistent with it.

The Court of Appeal held that legal advisors are placed in an unacceptable conflict of interest between clients’ interests, the state’s interests, and their own liberty interests, and that the provisions turn some lawyers into agents of the state. [ 29 ] On the question of whether clients’ liberty interests are engaged by the provisions, the Court of Appeal divided.

Hinkson J.A. (as he then was) (writing for a majority of the court on this point) held that the clients’ liberty interests are engaged because the provisions facilitate access to confidential information that may be disclosed to law enforcement for any purpose including pursuing criminal charges.

Frankel J.A. (Garson J.A. concurring) held that clients’ liberty interests are not engaged by these provisions because the causal connection between the provisions and any potential loss of clients’ liberty is too remote. [ 30 ] The Court of Appeal unanimously held that the limitation of s. 7 rights was not justified under s. 1 of the Charter because the Attorney General failed to prove that the provisions are minimally impairing.

The rules of the professional governing bodies already provide effective and constitutional anti-money laundering and anti-terrorist financing regime s in relation to lawyers, law firms and notaries across Canada. III. Analysis A. Do the Provisions Infringe

Section 8 of the Charter ?

(1) Introduction [ 31 ] The issue here is whether the search and production provisions of the scheme infringe the right to be free from unreasonable searches and seizures guaranteed by s. 8 of the Charter . The relevant provisions are these.

Section 62 provides that a person authorized by the Director of FINTRAC may enter premises other than a dwelling-house, examine the records required under the Act and, for that purpose, use any computer system and reproduce any record. There is no warrant requirement.

Section 63 gives the same powers with respect to rooms in a dwelling-house which the authorized person reasonably believes are being used to carry on a business, profession or activity which is subject to the Act, but a warrant is required. This provision implicates lawyers who have home offices.

Section 63.1 permits the authorized person to serve a notice that requires the person or entity which is the subject of the inspection to provide information relevant to the administration of the Act in the form of electronic data, a printout or other intelligible output. Finally, s. 64 provides some protection of solicitor-client privilege in the course of exercising these powers. [ 32 ] The Attorney General concedes that s. 62 and s. 63.1 authorize searches and seizures within the meaning of s. 8 . It is self-evident that the same must be said about s. 63.

These provisions do not simply require production of a particular type of document but permit an authorized person to “examine the records and inquire into the business and affairs of any person or entity [subject to the Act] for the purpose of ensuring compliance with

Part 1” (s. 62(1)), as well as to make and take away copies (s. 62(1)( c )). [ 33 ] Neither of the British Columbia courts addressed the s. 8 issue, but I have found it helpful to address it first. This is the better approach to considering the constitutionality of the law office inspection provisions, in my view.

If these procedures constitute unjustified and unreasonable searches and seizures, they are unconstitutional by virtue of s. 8 and there is no need to undertake an independent s. 7 analysis depending on a proposed principle of fundamental justice in relation to solicitor-client privilege: Lavallee, Rackel & Heintz v. Canada (Attorney General) , 2002 SCC 61 , [2002] 3 S.C.R. 209, at paras. 34-35 .

[34] The Federation says that these provisions violate s. 8 of the Charter, mainly because they permit the search of lawoffices in ways that are not consistent with the principles set out by the Court in Lavallee. The Attorney General, on the other hand,argues that the searches and seizures authorized by the scheme are reasonable: they relate to a limited class of documents for a narrow,regulatory purpose and there are appropriate safeguards to protect solicitor-client privilege. [35] I respectfully do not accept the Attorney General’s position.

The regime authorizes sweeping law office searcheswhich 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 complywith them.

(2) Protection of Solicitor-Client Privilege [36] A law office search power is unreasonable unless it provides a high level of protection for material subject tosolicitor-client privilege: Lavallee.

The Attorney General submits, however, that Lavallee does not dictate the outcome here: the Court inthat case was only considering the question of what safeguards are constitutionally required in situations where law enforcement officialsare seeking evidence of criminal wrongdoing, not as here, in connection with an administrative law regulatory compliance regime. [37] I accept, of course, that when a search provision is part of a regulatory scheme, the target’s reasonable expectation ofprivacy may be reduced: Thomson Newspapers Ltd. v.

Canada (Director of Investigation and Research, Restrictive Trade PracticesCommission), (SCC), [1990] 1 S.C.R. 425, at p. 507; R. v. Fitzpatrick, (SCC), [1995] 4 S.C.R. 154, atpara. 49. However, I do not accept the Attorney General’s contention that this scheme may be properly characterized as “anadministrative law regulatory compliance regime”: A.F., at para. 111.

Its purposes, as stated in the Act and indeed as described by theAttorney General in his submissions, are to detect and deter the criminal offences of money laundering and terrorist financing and tofacilitate the investigation and prosecution of these serious offences: s. 3(a). 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. [38] I also accept that, as Arbour J. noted in Lavallee, “the need for the full protection of the privilege is activated” in thecontext of a criminal investigation: para. 23. However, the reasonable expectation of privacy in relation to communications subject tosolicitor-client privilege is invariably high, regardless of the context.

The main driver of that elevated expectation of privacy is thespecially protected nature of the solicitor-client relationship, not the context in which the state seeks to intrude into that speciallyprotected zone. I do not accept the proposition that there is a reduced expectation of privacy in relation to solicitor-client privilegedcommunication when a FINTRAC official searches a law office rather than when a police officer does so in the course of investigating apossible criminal offence.

While Arbour J. placed her analysis in the context of criminal investigations (see, e.g., paras. 25 and 49), herreasons, as have many others before and since, strongly affirmed the fundamental importance of solicitor-client privilege.

As Arbour J.put it: It is critical to emphasize here that all information protected by the solicitor-client privilege is out of reach for the state. . . . [A]nyprivileged information acquired by the state without the consent of the privilege holder is information that the state is not entitled to as arule of fundamental justice. [Emphasis added; para. 24.] [39] I see no basis for thinking that solicitor-client communications should be more vulnerable to non-consensualdisclosure in the course of a search and seizure by FINTRAC officials than they would be in the course of any other search by other lawenforcement authorities. [40] The Attorney General submits that the information here is sought in aid of monitoring the lawyer’s activities, not theclient’s, and that there is protection against derivative use.

But these factors are entitled to little weight here. As discussed earlier, theoverriding purposes of this scheme are the prevention and detection of serious, criminal offences. It has little in common with, forexample, the competition legislation at issue in Thomson Newspapers or the fisheries legislation in Fitzpatrick. Moreover, I do not acceptthe Attorney General’s submission that the broad scope of this search power is somehow limited by what the “regulator” is “interested inreviewing”: A.F., at para. 107.

The Act on its face purports to give the authorized person licence to troll through vast amounts ofinformation in the possession of lawyers. As the intervener Criminal Lawyers’ Association fairly put it, the Act gives authorized personsthe power “to roam at large within law offices, and . . . to examine and seize any record or data found therein”: factum, at para. 23.

Theexercise of these powers in relation to records in possession of lawyers creates a very high risk that solicitor-client privilege will be lost. [41] In short, there is nothing about the regulatory context here or the interests of the regulator which in any way takesthis regime out of the field of criminal law or diminishes in any way the very high reasonable expectation of privacy in relation tomaterial subject to solicitor-client privilege.

In my view, the Lavallee standard applies to this regime. [42] The Lavallee analysis does not assume, of course, that all records found in the possession of a lawyer are subject toprivilege and I do not approach this case on the basis that all the materials that lawyers are required to obtain and retain by the Act areprivileged. The Lavallee standard aims to prevent the significant risk that some privileged material will be among the records in alawyer’s office examined and seized pursuant to a search warrant.

Similarly, in this case, there is a significant risk that at least someprivileged material will be found among the documents that are the subject of the search powers in the Act.

(3) The Lavallee Principles [43] Lavallee and its two companion appeals concerned the constitutionality of s. 488.1 of the Criminal Code. Thatsection sets out a procedure to be followed when an officer acting under the authority of any Act of Parliament is “about to examine,copy or seize a document in the possession of a lawyer who claims that a named client of his has a solicitor-client privilege” in respect ofit. The Court concluded that the

section was unconstitutional because it suffered from a number of deficiencies in relation to theconstitutional level of protection required by s. 8 in relation to solicitor-client privilege. [44] The core principle of the decision is that solicitor-client privilege “must remain as close to absolute as possible if it isto retain relevance”: Lavallee, at para. 36. This means that there must be a “stringent” norm to ensure its protection, such that any

legislative provisions that interfere with the privilege more than “absolutely necessary” will be found to be unreasonable: para. 36. [ 45 ] Lavallee is an important authority because of the similarity of the schemes set up to protect solicitor-client privilege under s. 488.1 of the Code , which was in issue in that case, and s. 64 of the Act, which is in issue here.

Section 64 of the Act, like s. 488.1, is engaged at the point at which the official is “about to examine” material “in the possession” of a lawyer. Under both provisions, the protective scheme applies at the point that the lawyer asserts that a “named client” (or in the case of s. 64, a “named client or former client”) “has a solicitor-client privilege” in respect of the material sought.

Once that claim is made, the material is sealed and preserved. (The mechanics of this part of the two schemes differ; under the Code , the official seals the documents and places the sealed package in possession of the sheriff for safekeeping, while under the Act, the lawyer does the sealing and safekeeping.) [ 46 ] Both schemes require the official to give a reasonable opportunity for a claim of solicitor-client privilege to be made before examining or copying the material.

Section 64(9.1) of the Act enhances this protection somewhat by providing that the official is not to examine or make copies of a document in the possession of a non-lawyer who contends that a claim of solicitor-client privilege may be made by a lawyer without giving the person a reasonable opportunity to contact that lawyer. [ 47 ] The processes under the two schemes for judicial determination of the privilege issue are also similar. Under both schemes, the lawyer may apply within 14 days to have a judge decide whether the material is privileged.

If no application is made, the Attorney General may apply to a judge for an order directing the custodian of the material to deliver it to the official. Under both schemes, any material that the judge finds to be subject to solicitor-client privilege remains so.

In the absence of an application, however, the judge is obliged to direct the material to be turned over to the official. [ 48 ] To return to Lavallee , the Court identified specific constitutional infirmities in s. 488.1, all flowing from the fact that it failed to address directly the entitlement that the privilege holder, the client, should have to protect the privilege. The absence of provisions requiring notice to the holder of the privilege meant the client may not even be aware that his or her privilege is threatened: para. 40.

This fundamental difficulty identified in s. 488.1 in Lavallee is not meaningfully addressed by s. 64. [ 49 ] The Court in Lavallee found that two further constitutional infirmities resulted from this. The first was that the scheme wrongly transferred the burden of protecting the privilege from the state to the lawyer. This was so because under the scheme only the lawyer could assert the privilege and the client did not have to be given notice: para. 40.

Where notification was not feasible, there ought at least to be some independent legal intervention, for instance in the form of notification and involvement of the relevant Law Society: para. 41. As Arbour J. explained: . . . since the right of the state to access this information is, in law, conditional on the consent of the privilege holder, all efforts to notify that person, or an appropriate surrogate such as the Law Society, must be put in place in order for the

section to conform to s. 8 of the Charter . [para. 42] [ 50 ]

Section 64 suffers from similar defects. The initial claim of privilege may only be made by legal counsel, as was the case under s. 488.1. While under s. 64, legal counsel is required to provide the client’s last known address to enable the official to “endeavour to advise the client of the claim of privilege”, there is no requirement for notice to the client, who is the holder of the privilege, and no protocol for independent legal intervention where it is not feasible to notify the client.

Moreover, as we shall see, the lawyer’s obligation to identify the client in order to claim the privilege is also problematic. [ 51 ] A second constitutional failing identified in Lavallee relates to what happens when a claim of privilege has been made to the official, but no application to court has been made by the client or the lawyer. In those circumstances, the judge is required on the application of the Attorney General to order the lawyer to make the material available to the official.

As Arbour J. explained: . . . this mandatory disclosure of potentially privileged information, in a case where the court has been alerted to the possibility of privilege by the fact that the documents were sealed at the point of search, cannot be said to minimally impair the privilege.

It amounts to an unjustifiable vindication of form over substance, and it creates a real possibility that the state may obtain privileged information that a court could very well have recognized as such. [para. 43] [ 52 ] Section 64(6) similarly denies discretion to the judge to assess the claim of privilege on his or her own motion and therefore has the same constitutional failing. [ 53 ] The Court in Lavallee also set out a number of general principles that govern the legality of law office searches designed in part to guide the legislative options that Parliament may wish to address.

These general principles, while not a checklist, were intended “to reflect the present-day constitutional imperatives for the protection of solicitor-client privilege”: para. 49. Two of these general principles are particularly relevant here. [ 54 ] One of these principles is that, before searching a law office, the authorities must satisfy a judicial officer that there exists no other reasonable alternative to the search. Sections 62 and 63.1 do not require prior judicial authorization, let alone impose a statutory requirement that there be no other reasonable alternative.

However, s. 63 is less problematic in this respect. It requires judicial pre-authorization to search a lawyer’s home office, including demonstration that entry into the dwelling-house is necessary for any purpose that relates to ensuring compliance with

Part 1 of the Act. [ 55 ] A second general principle in Lavallee is that “all documents in possession of a lawyer must be sealed before being examined or removed from the lawyer’s possession” unless otherwise specifically authorized by a warrant: para. 49. In contrast, under s. 64, examining and copying in a law office by the official stops only at the point at which a claim of solicitor-client privilege is asserted by a lawyer on behalf of a named client.

Thus, examining and copying proceeds until there is a specific assertion of privilege — an approach that greatly elevates the risk that privileged material will be examined. Moreover, the name of the client may itself be (although is not always) subject to solicitor-client privilege: para. 28. In a situation in which it is, the Act requires the lawyer to breach that privilege in order to claim the privilege attaching to the material sought by the official. The same, in my view, may be said about the obligation of the lawyer under s. 64(10) to provide the authorities with the latest known address for the client.

[56] Lavallee concerned law office searches that were judicially pre-authorized and therefore addressed a scheme thatwas, in that respect, different from the scheme that is in issue here. Warrantless searches, such as those permitted under this scheme, arepresumptively unreasonable. Moreover, the judicial pre-authorization requirement is, in itself, an important protection against impropersearch and seizure of privileged material. However, I do not foreclose the possibility that Parliament could devise a constitutionallycompliant inspection regime without a judicial pre-authorization requirement.

(4) Summary [57] In my view, the search powers in ss. 62, 63 and 63.1 as applied to lawyers, along with the inadequate protection ofsolicitor-client privilege provided by s. 64, constitute a very significant limitation of the right to be free of unreasonable searches andseizures guaranteed by s. 8 of the Charter.

(5) Is the Limitation Justified Under

Section 1? [58]

Section 1 of the Charter “guarantees the rights and freedoms set out in it subject only to such reasonable limitsprescribed by law as can be demonstrably justified in a free and democratic society”. In order for a limitation to be justified, it must serveand be a proportionate response to a pressing and substantial objective: R. v. Oakes, (SCC), [1986] 1 S.C.R. 103, at pp.138-39. The government has a difficult task in seeking to uphold as reasonable provisions, such as those in issue here, which have beenfound to authorize unreasonable searches: Lavallee, at para. 46; R. v.

Kokesch, (SCC), [1990] 3 S.C.R. 3, at pp. 18-19. [59] I accept, of course, that the objectives of combating money laundering and terrorist financing are pressing andsubstantial as both the application judge and the Court of Appeal held. [60] With respect to the proportionality analysis, the appellant has the burden of proving that (

i) the objective is rationallyconnected to the limit; (ii) the limit impairs the right as little as possible; and (iii) there is proportionality between the effects of thelimitation of the Charter right and the objective. The rational connection does not impose a particularly onerous threshold: Little SistersBook and Art Emporium v. Canada (Minister of Justice), 2000 SCC 69, [2000] 2 S.C.R. 1120, at para. 228.

There is a logical and directlink between, on one hand, the combating of money laundering and terrorist financing (in which lawyers may unbeknownst to them beparticipating) and, on the other, governmental supervision through searches conducted at law offices. [61] In my view, however, the justification fails the minimal impairment test. There are other less drastic means ofpursuing the same identified objectives.

The Court has previously outlined the sorts of protections that are required in order to meet theconstitutional standard of protection for solicitor-client privilege: Lavallee. [62] I am therefore of the view that s. 64, and to the extent that they operate in relation to lawyers’ offices, ss. 62, 63 and63.1 of the Act, cannot be justified.

(6) Remedy [63] With respect to ss. 62, 63 and 63.1, I would follow the example of the application judge and read those provisionsdown to exclude legal counsel and legal firms from the scope of their operation. [64] The correct approach to s. 64 is more controversial. The Attorney General submits that the appropriate remedy is toread into s. 64 the requirements that would render these provisions constitutionally sound. I cannot accept this approach, however. [65] The Attorney General’s argument rests on the premise that s. 64 (as it now stands) can only violate s. 8 to a “verylimited extent”: A.F., at para. 116.

This is not the case in my respectful view, for the reasons I have developed at length earlier.Moreover, “reading in” as a constitutional remedy is generally not appropriate when there is a variety of options that would render theprovision constitutional: see Schachter v. Canada, (SCC), [1992] 2 S.C.R. 679, at pp. 705-7. In this case, there is such avariety of legislative approaches available.

As Arbour J. said in Lavallee, at para. 48: The need to ensure that privilege holders are given a genuine opportunity to enforce the protection of their confidential communicationsto their lawyers, at the time when they need the protection of the law the most, cannot easily be met by a judicial redrafting of theprovision. Neither can the need to ensure that the courts are given enough flexibility and discretion to remain the protectors ofconstitutional rights and the guardians of the law.

In my view, the process for seizing documents in the possession of a lawyer is indeed adelicate matter, which presents some procedural options that are best left to Parliament. [66] Applying this reasoning, reading in is not appropriate to remedy the constitutional defects of s. 64.

(7) Conclusion [67] I would declare that s. 64 is of no force or effect and that ss. 62, 63 and 63.1 should be read down so that they do notapply to documents in the possession of legal counsel or in law office premises. [68] I add this. The issues that would arise in the event of a challenge to professional regulatory schemes are not before usin this case. Different considerations would come into play in relation to regulatory audits of lawyers conducted on behalf of lawyers’professional governing bodies.

The regulatory schemes in which the professional governing bodies operate in Canada serve a differentpurpose from the Act and Regulations and generally contain much stricter measures to protect solicitor-client privilege. B. Do the Provisions Violate

Section 7 of the Charter? [69] There are two steps to the analysis under s. 7 of the Charter. The first is to determine whether the challenged

provisions limit the right to life, liberty or security of the person. If they do, the analysis moves to the second step of determiningwhether that limitation is in accordance with the principles of fundamental justice: Canada (Attorney General) v. Bedford, 2013 SCC 72,[2013] 3 S.C.R. 1101, at para. 57; Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44, [2000] 2 S.C.R. 307, at para.47. [70] The Attorney General maintains that there is no s. 7 violation here, but I respectfully disagree. These provisions limitthe liberty of lawyers in a way that is not in accordance with the principle of fundamental justice in relation to the lawyer’s duty ofcommitment to the client’s cause.

(1) Do the Provisions Limit Lawyers’ and/or Clients’ Right to Life, Liberty or Security of the Person? [71] There is no dispute that these provisions engage the liberty interests of lawyers. If lawyers do not comply with theAct’s requirements, they are liable to prosecution and imprisonment.

Section 74 provides that the failure to comply with certainprovisions of the Act (including the search provisions) can lead to the imposition of a fine of up to $500,000 or imprisonment of up tofive years, or both. This includes failure to comply with ss. 6 and 6.1 of the Act, which set out the general verification and record keepingobligations.

It also includes the failure of persons in charge of law offices subject to searches to give FINTRAC “all reasonableassistance” during a search conducted under the authority of s. 62, as well as the failure to comply with a request for documents made byFINTRAC under s. 63.1. [72] Both the application judge and a majority of the Court of Appeal found that this regime also limited the liberty ofclients. However, I do not find it necessary to decide this point.

I have already concluded that lawyers’ liberty interests are engaged bythe challenged provisions and it has not been suggested that the s. 7 analysis would be different in relation to clients’ as compared tolawyers’ liberty interests.

(2) Is the Limitation Contrary to the Principle of Fundamental Justice in Relation to Solicitor-Client Privilege? [73] I have already concluded that the search provisions of the Act offend the s. 8 right to be free from unreasonablesearches and seizures and that they are unconstitutional and of no force and effect as they apply to records in the possession of lawyers.This conclusion makes it unnecessary to undertake an independent s. 7 analysis based on a principle of fundamental justice in relation tosolicitor-client privilege in this case: see, e.g., Lavallee, at para. 34; R. v. Rodgers, 2006 SCC 15, [2006] 1 S.C.R. 554, at para. 23; and R.v. Mills, (SCC), [1999] 3 S.C.R. 668, at para. 88.

(3) Is the Limitation Contrary to the Principle of Fundamental Justice Relating to the Independence of the Bar? (

a) The Court of Appeal’s Decision [74] The Court of Appeal found that the limitation of lawyers’ liberty interests was not in accordance with what itconcluded was a principle of fundamental justice in relation to the independence of the bar. While the Court of Appeal at times expressedthe principle of the independence of the bar in very broad terms, the crux of its reasoning rested on much narrower grounds.

Thelegislation, the court found, constituted state interference with the lawyer’s duty of loyalty to the client: it places the lawyer in a conflictof interest because the legal advisor must choose to conform to the Act and to the Regulations and thus, at the very least, be in breach of his or her duty ofloyalty acting both for the client and for the State or, in order to respect his or her obligations to the client, expose himself or herself toprosecution . . . they are forced not only to keep but also to create archives for the State. . . . the Regime imposes conflicting interests and corresponding obligations on the lawyer, regarding clients’ interests, state interests, andLawyers’ liberty interests. [paras. 122-23] (

b) Positions of the Parties and Overview [75] The Federation, supported by several interveners, maintains that the independence of the bar is a principle offundamental justice and that the scheme is contrary to that principle in two respects. First, the scheme directly interferes with howlawyers deliver legal services to clients because it requires lawyers, by threat of imprisonment, to prepare records of the clients’activities, relationships and details of their transactions as part of a regime whose overall purpose is predominantly criminal.

This, it isargued, is direct government intervention in the way in which the lawyer delivers legal services. Second, the lawyer is required to retainthat information so the lawyer’s office, as the Federation puts it, becomes an archive for the use of the prosecution. This undermines thetrust between lawyer and client that is and must be at the foundation of the solicitor-client relationship.

The argument goes that thelawyer is being conscripted against his or her clients by being required to obtain information from a client that is not required in order toprovide legal services and to act as a government repository for that information. [76] As I understand these submissions, there are really two versions of the principle that are being advanced, a broad oneand a narrow one. [77] According to the broad version, the independence of the bar means that lawyers “are free from incursions from anysource, including from public authorities”: Court of Appeal reasons, at para. 113.

The narrower, more focused version, is anchored inconcern about state interference with the lawyer’s commitment to the client’s cause. This narrower version, as I see it, boils down to theproposition that the state cannot impose duties on lawyers that interfere with their duty of commitment to advancing their clients’legitimate interests. In my view, the narrower principle is the one that is most relevant to this case: the central contention is that thisscheme substantially interferes with the lawyers’ duty of commitment to their clients’ cause because it imposes duties on lawyers to the

state to act in ways that are contrary to their clients’ legitimate interests and may, in effect, turn lawyers into state agents for that purpose. [78] The Attorney General submits that there is no principle of fundamental justice in relation to the independence of thebar. He argues that the Court of Appeal’s broad definition of the independence of the bar essentially places lawyers above the law. Theprinciple of the independence of the bar does not meet any of the three requirements that must be met by a principle of fundamentaljustice.

While an important state interest, the independence of the bar is not a legal principle. There is no broad societal consensusconcerning the existence of this principle and it cannot be identified with sufficient precision. The independence of the bar, says theAttorney General, does not describe a justiciable standard. [79] The Attorney General submits that even if the independence of the bar is a principle of fundamental justice, thescheme is consistent with it. The Court of Appeal was wrong to conclude that the scheme has the effect of turning at least some lawyersinto state agents.

This conclusion, argues the Attorney General, is based on the Court of Appeal’s misinterpretation of the nature of theobligations imposed on lawyers to maintain financial records, the extent to which FINTRAC can access these records through acompliance audit, and the prohibition on derivative use of these records provided by s. 65 of the Act.

The Attorney General notes thatlawyers are exempted from the Act’s reporting requirements that apply to accountants and other professionals who act as financialintermediaries. [80] In my view, there is considerable merit in the Attorney General’s submissions considered in relation to the broadnotion of the independence of the bar asserted by the Federation. However, I do not for the purposes of this appeal have to finallydetermine that point.

The narrower understanding of the independence of the bar which relates it to the lawyer’s duty of commitment tothe client’s cause is the aspect of the lawyer’s special duty to his or her client that is most relevant to this appeal. [81] The duty of lawyers to avoid conflicting interests is at the heart of both the general legal framework defining thefiduciary duties of lawyers to their clients and of the ethical principles governing lawyers’ professional conduct.

This duty aims to avoidtwo types of risks of harm to clients: the risk of misuse of confidential information and the risk of impairment of the lawyer’srepresentation of the client (see, e.g., Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R. 649, at para.23). [82] The Court has recognized that aspects of these fiduciary and ethical duties have a constitutional dimension. I havealready discussed at length one important example.

The centrality to the administration of justice of preventing misuse of the client’sconfidential information, reflected in solicitor-client privilege, led the Court to conclude that the privilege required constitutionalprotection in the context of law office searches and seizures: see Lavallee. Solicitor-client privilege is “essential to the effectiveoperation of the legal system”: R. v. Gruenke, (SCC), [1991] 3 S.C.R. 263, at p. 289.

As Major J. put it in R. v.McClure, 2001 SCC 14, [2001] 1 S.C.R. 445, at para. 31: “The important relationship between a client and his or her lawyer stretchesbeyond the parties and is integral to the workings of the legal system itself” (emphasis added). [83] The question now is whether another central dimension of the solicitor-client relationship — the lawyer’s duty ofcommitment to the client’s cause — also requires some measure of constitutional protection against government intrusion.

In my view itdoes, for many of the same reasons that support constitutional protection for solicitor-client privilege. “The law is a complex web ofinterests, relationships and rules. The integrity of the administration of justice depends upon the unique role of the solicitor who provideslegal advice to clients within this complex system”: McClure, at para. 2. These words, written in the context of solicitor-client privilege,are equally apt to describe the centrality to the administration of justice of the lawyer’s duty of commitment to the client’s cause.

A clientmust be able to place “unrestricted and unbounded confidence” in his or her lawyer; that confidence which is at the core of the solicitor-client relationship is a part of the legal system itself, not merely ancillary to it: Smith v. Jones, (SCC), [1999] 1 S.C.R.455, at para. 45, citing with approval, Anderson v. Bank of British Columbia (1876), 2 Ch. D. 644 (C.A.); McClure.

The lawyer’s duty ofcommitment to the client’s cause, along with the protection of the client’s confidences, is central to the lawyer’s role in theadministration of justice. [84] We should, in my view, recognize as a principle of fundamental justice that the state cannot impose duties onlawyers that undermine their duty of commitment to their clients’ causes.

Subject to justification being established, it follows that thestate cannot deprive someone of life, liberty or security of the person otherwise than in accordance with this principle. [85] The analysis leading me to this conclusion addresses three questions:

(1) How do we recognize a principle offundamental justice?

(2) Is the principle of commitment to the client’s cause such a principle?

(3) If so, is the limitation on lawyers’liberty in this legislative scheme in accordance with that principle? [86] Before addressing those questions, I should make clear what is not in issue. While the Court of Appeal and theFederation place great stress on independence of the bar as it relates to self-regulation of the legal profession, I do not find it necessary ordesirable in this appeal to address the extent, if at all, to which self-regulation of the legal profession is a principle of fundamentaljustice. As LeBel J. pointed out in Finney v.

Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17, self-regulation is certainly the meansby which legislatures have chosen in this country to protect the independence of the bar: para. 1. But we do not have to decide herewhether that legislative choice is in any respect constitutionally required. Nor does the appeal require us to consider whether otherconstitutional protections may exist in relation to the place of lawyers in the administration of justice. (

c) Recognizing Principles of Fundamental Justice [87] Principles of fundamental justice have three characteristics. They must be legal principles, there must be “significantsocietal consensus” that they are “fundamental to the way in which the legal system ought fairly to operate” and they must be sufficientlyprecise so as “to yield a manageable standard against which to measure deprivations of life, liberty or security of the person”: R. v.Malmo-Levine, 2003 SCC 74, [2003] 3 S.C.R. 571, at para. 113, per Gonthier and Binnie JJ.; R. v. D.B., 2008 SCC 25, [2008] 2 S.C.R.3, at para. 46, per Abella J.; R. v. Anderson, 2014 SCC 41, [2014] 2 S.C.R. 167, at para. 29, per Moldaver J. (

d) Is the Duty of Commitment to the Client’s Cause Such a Principle?

(

i) Legal Principle and Sufficient Precision [88] These two elements of the test are conveniently treated together. [89] Turning first to the definition of a legal principle, the distinction is between, on one hand, a description of “animportant state interest” and “the realm of general public policy” and, on the other, a “normative ‘legal’ principle” and “the basic tenetsof our legal system”: see Malmo-Levine, at paras. 112 and 114; Re B.C. Motor Vehicle Act, (SCC), [1985] 2 S.C.R. 486,at p. 503.

Some examples help flesh out this distinction. [90] The “harm principle”, unsuccessfully advanced as a principle of fundamental justice in Malmo-Levine, was Mill’stheory to the effect that “the only purpose for which power can be rightfully exercised over any member of a civilised community,against his will, is to prevent harm to others”: J. S. Mill, On Liberty and Considerations on Representative Government (1946), at p. 8.

However, the “best interests of the child” principle and the presumption of reduced moral culpability of young persons were found to belegal principles because they were not legal generalizations, but rather recognized legal principles in both domestic and internationallaw: see Canadian Foundation for Children, Youth and the Law v. Canada (Attorney General), 2004 SCC 4, [2004] 1 S.C.R. 76, atpara. 9.

Their manifestation in various legal instruments, coupled with their longstanding use by various legal institutions, qualified themas legal principles: ibid.; see also D.B., at paras. 47-60. [91] An important indicator that a proposed rule or principle is a legal principle is that it is used as a rule or test incommon law, statutory law or international law. The duty of commitment to the client’s cause has been recognized by the Court as adistinct element of the broader common law duty of loyalty and thus unquestionably is a legal principle: McKercher, at paras. 19 and 43-44; R. v.

Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, at para. 19. [92] While this standard is far from self-applying, it has proven to be sufficiently precise to enable the courts to apply it inwidely divergent fact situations: see, e.g., McKercher, at paras. 43-44 and 55-56; Neil, at para. 19. This body of jurisprudencedemonstrates that this principle of commitment to the client’s cause is sufficiently precise to provide a workable standard in that it can beapplied in a manner that provides guidance as to the appropriate result: Rodriguez v.

British Columbia (Attorney General), (SCC), [1993] 3 S.C.R. 519, at pp. 590-91, per Sopinka J.; Canadian Foundation for Children, Youth and the Law, at para. 11, perMcLachlin C.J.; H. Stewart, Fundamental Justice:

Section 7 of the Canadian Charter of Rights and Freedoms (2012), at p. 108. [93] Of course the duty of commitment to the client’s cause must not be confused with being the client’s dupe oraccomplice. It does not countenance a lawyer’s involvement in, or facilitation of, a client’s illegal activities. Committed representationdoes not, for example, permit let alone require a lawyer to assert claims that he or she knows are unfounded or to present evidence that heor she knows to be false or to help the client to commit a crime.

The duty is perfectly consistent with the lawyer taking appropriate stepswith a view to ensuring that his or her services are not being used for improper ends. [94] I conclude that the lawyer’s duty of commitment to the client’s cause is well entrenched as a sufficiently preciselegal principle and therefore satisfies the first and the third requirements of a principle of fundamental justice. (ii) Sufficient Consensus That the Duty Is Fundamental [95] Principles of fundamental justice find their “meaning in the cases and traditions that have long detailed the basicnorms for how the state deals with its citizens”: Canadian Foundation for Children, Youth and the Law, at para. 8, per McLachlin C.J.The duty of commitment to the client’s cause is fundamental to how the state and the citizen interact in legal matters. [96] Clients — and the broader public — must justifiably feel confident that lawyers are committed to serving theirclients’ legitimate interests free of other obligations that might interfere with that duty.

Otherwise, the lawyer’s ability to do so may becompromised and the trust and confidence necessary for the solicitor-client relationship may be undermined. This duty of commitment tothe client’s cause is an enduring principle that is essential to the integrity of the administration of justice. In Neil, the Court underlinedthe fundamental importance of the duty of loyalty to the administration of justice. The duty of commitment to the client’s cause is anessential component of that broader fiduciary obligation.

On behalf of the Court, Binnie J. emphasized the ancient pedigree of the dutyand wrote that it endures “because it is essential to the integrity of the administration of justice and it is of high public importance thatpublic confidence in that integrity be maintained”: para. 12 (emphasis added).

This unequivocal and recent affirmation seems to me todemonstrate that the duty of commitment to the client’s cause is both generally accepted and fundamental to the administration of justiceas we understand it. [97] The duty of commitment to the client’s cause is thus not only concerned with justice for individual clients but is alsodeemed essential to maintaining public confidence in the administration of justice. Public confidence depends not only on fact but also onreasonable perception.

It follows that we must be concerned not only with whether the duty is in fact interfered with but also with theperception of a reasonable person, fully apprised of the relevant circumstances and having thought the matter through. Thefundamentality of this duty of commitment is supported by many more general and broadly expressed pronouncements about the centralimportance to the legal system of lawyers being free from government interference in discharging their duties to their clients. In Andrewsv.

Law Society of British Columbia, (SCC), [1989] 1 S.C.R. 143, McIntyre J. put it this way: . . . in the absence of an independent legal profession, skilled and qualified to play its

part in the administration of justice and the judicialprocess, the whole legal system would be in a parlous state. [p. 187] [98] In Attorney General of Canada v. Law Society of British Columbia, (SCC), [1982] 2 S.C.R. 307,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 fromstate interference, in the political sense, with the delivery of services to the individual citizens in the state, particularly in fields of publicand 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. [Emphasis added; pp.335-36.] [99] Similarly, in Pearlman v. Manitoba Law Society Judicial Committee, (SCC), [1991] 2 S.C.R. 869,the Court took up the theme in these words: Stress was rightly laid on the high value that free societies have placed historically on . . . an independent bar, free to represent cit

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