The case dealt with parts of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations that sought to require legal counsel and law firms to collect confidential information about their clients that could be subject to search and seizure by the state.
In 2003, the legal profession mounted a constitutional challenge, resulting in an order exempting lawyers from the Act’s reporting scheme. The government undertook to redesign the rules to respect solicitor client privilege, in consultation with the legal profession.
Excluding lawyers from requirements under the money laundering legislation to divulge confidential communications with their clients is huge win for the rights of Canadians. No legislation should compromise lawyers’ confidential relationship with their clients.
The Court held:
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,  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 interfere with the privilege no more than absolutely necessary. These provisions wrongly transfer the burden of protecting solicitor client privilege to lawyers. Nothing requires notice to clients and a client may not be aware that his or her privilege is threatened. There is no protocol for independent legal intervention when it is not feasible to notify a client. A judge has no discretion to assess a claim of privilege on his or her own motion. Unless the search is of a lawyer’s home office, nothing requires prior judicial authorization. Searches are not contingent upon proof that there are no reasonable alternatives. The provisions allow warrantless searches, which are presumptively unreasonable. Examining and copying documents proceeds until privilege is asserted — an approach that greatly elevates the risk of a breach of privilege. Claiming privilege requires revealing a client’s name and address even though this information may be subject 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.