Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 22, Evidence - November 27, 2014
OTTAWA, Thursday, November 27, 2014
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-13, An Act to amend the Criminal Code, the Canada Evidence Act, the Competition Act and the Mutual Legal Assistance in Criminal Matters Act, met this day at 10:31 a.m. to give clause-by-clause consideration to the bill; and to examine the subject matter of those elements contained in Division 4 of Part 4 of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014, and other measures.
Senator Bob Runciman (Chair) in the chair.
[English]
The Chair: Good day, and welcome colleagues, invited guests, and members of the general public who are following today's proceedings of the Standing Senate Committee on Legal and Constitutional Affairs.
Our first item of business today is the committee's clause-by-clause consideration of Bill C-13, An Act to amend the Criminal Code, the Canada Evidence Act, the Competition Act and the Mutual Legal Assistance in Criminal Matters Act. This is our sixth meeting on this bill.
As per usual, with legislation like this, we do have officials from the Criminal Law Policy Section of Justice Canada with us to answer any questions members might have. We have: Carole Morency, Director General and Senior General Counsel, and Normand Wong, Counsel, whom I had difficulty recognizing initially with a bit of a growth for Movember. Welcome, both.
Do members feel that they should come forward? Are we going to have any questions for officials?
Senator Jaffer: I have one.
The Chair: Would you mind taking seats at the table?
Senator Jaffer: My question to you is: As this bill gets adopted, I still am not very clear as to what the process will be after this bill is implemented and how quick it will be to get the image off.
One of the main things we hear in the Human Rights Committee and have heard here is that, after the images are put on, it takes too long and the bullying continues for days and days, or months and months. How quickly can we make sure that the image is removed? What will the process be? I know every province is different. I respect that very much. How do you see it unfolding?
Carole Morency, Director and General Counsel, Criminal Law Policy Section, Justice Canada: Perhaps we could answer that in two stages: first, in terms of the coming into force process and what the department will do to support the effective implementation of the bill; and then, my colleague could speak to the police practice and how we envision it happening.
As the committee will know, the bill will come into force three months after Royal Assent. Typically, there's a news release, backgrounder and information. We share information with our provincial-territorial counterparts, as well, so that they're aware of progress as we move forward.
We may have occasion, depending on the timing, to work with some organizations if they want to do some public legal education information material. That's all work that we try to do in the normal course of events in terms of trying to support the effective and timely implementation of this.
The committee heard from Lianna McDonald recently and we work closely through the national strategy that funds cybertip.ca in the centre. We'll continue to work with them in supporting and getting the word out on what the new reforms are in terms of the non-consensual intimate images.
In terms of the specifics and how the takedown provisions would work:
Normand Wong, Counsel, Criminal Law Policy Section, Justice Canada: As Ms. Morency said, the administration of justice largely falls to the provinces in this. I think I spoke to this in my earlier remarks. This will largely be a complaint-driven process. The person who has the intimate image on the Internet would have to go to police and inform police that there are intimate images up without their consent. Police would then, along with Crowns, have to make the application to the court, probably with an affidavit from the complainant.
It really depends on the court in that jurisdiction, what their docket is like and how much time. It's up to the complainant to start the process. Once that ball gets rolling, it's dependent on how busy the court is to hear the application.
Senator Baker: I think the bill will move very quickly in a moment, when we go clause by clause. There's just one question I have for Mr. Wong. It's this: In the Criminal Code now, under 487.012, a production order, as we've gone over many times before, is issued when a justice or judge has reasonable grounds to believe that a police officer or a peace officer has a suspicion. Those are the words in 487.012(3), I think it is, in other words, a belief that there is a suspicion on the part — am I quoting this correctly?
Mr. Wong: You're quoting the correct current production order.
Senator Baker: The current law.
Now, under this bill, you're raising the standard for a general production order. On page 16, at the bottom of the page, in form 5.004, which is now form 5, it states ''there are reasonable grounds to believe that.'' There's no suspicion.
Why are you raising the bar, in this particular case, for a general production order? Is this too high a bar for a general production order, when, today, it's not that high?
Mr. Wong: It's not that we're trying to raise the bar. The way the jurisprudence has developed —
Senator Baker: The interpretation.
Mr. Wong: Yes. Over the last 10 years since the production orders were introduced in the Criminal Code. As you recall, we had this conversation 10 years ago, as well.
Senator Baker: Ten years ago.
Mr. Wong: The original production order was based on the section 487 warrant, where that language still exists.
In the interim case law, this issue came up about having the dual standard — the reasonable suspicion for the police and the reasonable belief for the judge — and it was clarified in case law that it would be reasonable belief only, because the judge is issuing it. So, the judiciary interpreted that secondary sort of threshold as being inconsequential to the issuing of the production order. All we're doing is trying to codify what the courts have already said.
Senator Baker: Thank you for that because there has been no reference to that explicitly, during all of these hearings, in the House of Commons and here, that the interpretation of the courts has been to interpret a belief that a police officer has a suspicion on the higher ground of belief, as a normal warrant is.
There's just one other thing I'd like to say before going to clause by clause. It's my last comment. We were cross-examining a lot of lawyers during these hearings, experts in their field, and we got to the point where we were quoting from Spencer, the Supreme Court of Canada decision. I said paragraph 47; I've never checked it. It just remains in my mind what the Supreme Court of Canada said, in talking about a belief, and they used the example of Brown, which was a dog sniff case and in which a dog sniff is a search. I pointed out to each of the lawyers — three, in fact — that this was judged to be a search and that the entire case of Spencer had nothing to do with reasonable suspicion, but had to do with a letter that was sent under PIPEDA requesting the information from the police.
The response from the lawyers was, in each case, ''Well, you can't compare a dog sniff.'' My response to that was, ''Yes, but it puts you in jail.'' A dog sniff is the reason why the majority of people under the Controlled Drugs and Substances Act, as Senator Dagenais would testify, are in jail today.
Then the lawyers, each one of them said, ''Yes, but then you need a warrant based on a belief to search the vehicle or clothing.''
I didn't say it. I should have said no, that's not right; that once you arrest somebody, you search incidental to the arrest. It's a common thing that happens. Every day our police officers do that.
So, on a reasonable suspicion, somebody is pulled over; on a reasonable suspicion, a dog sniff; on a reasonable suspicion, an arrest; on a reasonable suspicion, it's a search incidental to arrest that does not require a warrant with reasonable grounds to believe.
I don't know if you want to comment on that. I didn't feel like correcting. The last person who said that was here yesterday and I didn't complete, because they were of the understanding that you still needed reasonable grounds to believe a warrant in order to do a search of a vehicle or your baggage, whereas it's incidental to arrest. I don't know if you want to comment on that. You don't have to.
Mr. Wong: I'm not sure that I should comment on it, but I will anyway.
The Spencer case, as many have read it, they interpret it to their own benefit. In our opinion, the Spencer case, the Supreme Court, it's a fairly narrow decision. Unfortunately, it has very broad implications because PIPEDA, which you mentioned, is a permissive act. Its goal in PIPEDA is to protect the personal information of Canadians, and it expresses some exceptions to that requirement to protect.
So this law enforcement request that you referred to, where it was just done on the basis of a request, that's because historically that type of information — the very basic subscriber information, such as your customer name and address — was always obtained without a warrant. We've never attributed a high degree of expectation of privacy to that.
The Supreme Court of Canada has moved that because they said in that case your identity, when linked to online activity that may be anonymous, has a higher expectation of privacy, but that's the linking of your identity to this other information. The Supreme Court didn't say that your identity has a high degree of expectation of privacy in all circumstances, just when it's linked to something that might reveal the intimate details of your life.
That said, in relation to the dog sniffer cases and things like that, there are different thresholds in the Criminal Code that might lead to your arrest, depending on the invasiveness of the state's ability to search you. So, it's under reasonable suspicion for dog sniffing because police dogs or those sniffer dogs are in places where you are in a public place where security is an issue. So your expectation of privacy should be lower in those circumstances.
When the state uses tools that have a higher degree of invasive quality to them, they have to meet that higher threshold. When they're doing searches in public where you should be expected to be searched for security reasons, then the threshold is lower.
Senator Baker: And it is lower, as Senator Dagenais would attest and has mentioned in this committee many times, under the Customs Act. It's just a simple suspicion. That's why Senator Dagenais pointed out that you would need your customs officer with you in order to stop the vehicle and to do a search, because the threshold was lower. Just simple suspicion.
The Chair: Are there any additional questions for officials?
Seeing none, is it agreed that the committee proceed to clause-by-clause consideration of Bill C-13, An Act to amend the Criminal Code, the Canada Evidence Act, the Competition Act and the Mutual Legal Assistance in Criminal Matters Act?
Hon. Senators: Agreed.
The Chair: Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed.
From this point forward, is it agreed that we consider the remaining clauses in groups of 10?
Hon. Senators: Agreed.
The Chair: Shall clauses 2 through 9 carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall clauses 10 through 19 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 19 through 20 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 21 through 30 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 31 through 40?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 41 through 47?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Carried.
Does the committee wish to consider appending observations to the report? No?
Is it agreed that I report this bill to the Senate?
Hon. Senators: Agreed.
The Chair: Agreed.
As members know, we have another matter to deal with this morning. For our next item of business, we're beginning our study into the subject matter of Division 4 of Part 4 of Bill C-13, a part of the second budget implementation bill of 2014.
The specific part this committee has been asked to study pertains to the use of computers to sell tickets, select winners or to distribute prizes in a provincially licensed raffle or a 50/50 draw. Currently, it's an offence to use computers for these types of lotteries.
We have with us today Hal Pruden, counsel in the Criminal Law Policy Section of Justice Canada. We're looking to Mr. Pruden to explain this provision to members of the committee. The floors is yours, sir.
Hal Pruden, Legal Counsel, Criminal Law Policy Section, Justice Canada: I hadn't prepared a written opening statement, but very briefly, I could let you know that the clause in Bill C-43 responds to a measure that was in the budget of 2014. It will expand the ambit of what a provincial or territorial government can license to a religious or charitable organization in terms of raffles.
With this amendment, a province, if it chooses, could license a religious or charitable organization to have a raffle that is operated on or through a computer, which means that the organization, if the province has licensed it, could do its sales; it also could do its selection of a winner; and it could do its distribution of prizes on or through a computer. It could do any or all of those three parts, and it's a provincial choice. That's why I said at the beginning that this would expand the ambit of what a province could license.
At the current time, the provinces cannot license a religious or charitable organization to conduct a lottery scheme or, in this case, a raffle, that is operated on or through a computer.
The Minister of Justice consulted in the summer with provincial and territorial counterparts. Nine provinces and two territories responded to that consultation. The results, as I understand it, were positive, and the matter is now a clause in the bill.
The Chair: We will begin the questions with the deputy chair of the committee, Senator Baker.
Senator Baker: First, this will permit a charitable or religious organization to use a computer for the sale of a ticket and the selection of a winner or the distribution of a prize in a raffle, including a 50/50 draw. What is a raffle and what is a 50/50 draw?
Mr. Pruden: The 50/50 draw happens often at hockey games. Tickets are sold. Half of the winnings go to the charitable organization and half of the winnings go to the winner of the draw at the hockey game. This happens at football games, I understand, and at hockey games.
In terms of the raffle, it could be a large hospital that is selling a raffle and selling a dream home or something of that nature. The advantage to the religious or charitable organization would be, if they did not have to put all the tickets into a drum, they might have financial savings when it comes to the cost of putting all those printed tickets into a drum. If they could do it through a computer, they have said that they would have cost savings.
Senator Baker: So every person — we'll say ''person'' — who operates a raffle or a 50/50 draw, right now, if it's not involving a charitable or religious organization, can use a computer to do the 50/50 draw, and do they use a computer?
Mr. Pruden: No. My understanding from the Criminal Code is that only a province itself can operate a lottery scheme, including a raffle or a 50/50 draw, on or through a computer. A province or territory cannot license others, including charities and religious organizations, to do that.
Senator Baker: What sequence of events arose to forbid the use of a computer? I don't understand that. We must have arrived at some point where we allowed the use of computers to some people but not to others.
Mr. Pruden: In 1985, it was clarified that a province or territory itself could use a computer. At that time, some provinces and some territories had been using computers to operate their lottery schemes. However, they had not been giving licences to any of the charity or religious organizations. In 1985, the clarification did not extend to a provincial licence for a religious or charitable organization to use a computer.
Senator Baker: So this is just a housekeeping thing; it's just a cleanup thing that you can now use a computer. Everybody now uses computers.
Mr. Pruden: It's extending the ability of the province or territory to grant a licence, as you say, in the modern age, so that the religious or charitable organization could use a computer if the province chooses to grant that type of a licence. It can decide that it's not going to licence any computer use, or the province could decide that it will licence sales but not other parts — whatever the province chooses, in accordance with the conditions that prevail within the province and what the province feels that it is comfortable licensing.
Senator Batters: My home province is Saskatchewan. We have a lot of experience in Saskatchewan, especially in the last few years, with 50/50 draws, but also with this computerized technology dramatically increasing both the winning amount of money for the 50/50 draws and the fundraising capabilities for these different charities and that sort of thing that run them.
I'm a regular attendee at Saskatchewan Roughrider games and they have recently switched over — I think it's the University of Regina Rams that run the 50/50 program there. They have for years, but they've recently switched over to computer-generated. It has gone from where a good 50/50 winning a few years ago would be $20,000 or $30,000, to now when it can easily be $50,000 or $60,000.
At the world junior final that I attended a few years ago in Saskatoon, there were 14,000 people there and my recollection is that that particular winning prize — the other 50 per cent going to the charity — was $150,000, or something like that. It's an extreme amount of money that's generated with these.
I've seen a lot of these done over the last few years, certainly, and it's becoming more popular. Why is this particular law needed when it seems that places are already using this?
Mr. Pruden: My understanding is that some provinces have chosen to conduct the computer side of the operation on behalf of the charity, because the province itself has the Criminal Code authority to do that. This will make it clear in the law that the licensee itself, if the province chooses to give them a licence, can either continue to cooperate with the province or the licensee could find a provider that the province is satisfied with that could provide the computer service.
Senator Batters: My understanding from the Moose Jaw Warriors hockey games, when they switched over, I think that the company that provides the computerized service receives a certain percentage of the proceeds. That was my understanding, without knowing a lot about it. That's often a consideration as to whether a particular place should switch over to that. However, the fundraising amounts are so dramatically escalated that a lot of places do switch over. Was there any prohibition about an arrangement like that, a percentage being given to corporations?
Mr. Pruden: That would be strictly up to provincial government, if it chooses to licence, as to what terms and conditions it might place on the licence.
The Chair: As Senator Batters mentioned Saskatchewan, how many other provinces and/or territories are already engaged in this, through the province or perhaps a different interpretation of the law?
Mr. Pruden: I believe there might be three, but Mr. Bourgeois, who will be on a panel after me, may have a better understanding of what provinces are currently doing.
Senator Joyal: Welcome, Mr. Pruden. It is an amendment to the Criminal Code and it refers to charitable or religious object. I checked, of course, the definition that we find in the Criminal Code, and nowhere is a charity or a religious object defined. Who is going to be interpreting? On which basis will you be interpreting, and what is the definition in the context of the Criminal Code in relation to charitable or religious object?
Mr. Pruden: The proposed amendment does not change the current law. The current law in section 207(1)(b) speaks already of a provincial government or a territorial government choosing to give a licence to a religious or charitable organization to conduct a lottery scheme where the proceeds are used for charitable or religious purposes.
This amendment does nothing to change the current law on charitable or religious purposes.
Senator Joyal: In the context of provincial law, essentially, but it is not in relation to the federal Income Tax Act. It is essentially in relation to each province according to its own regulations or its own legislation that might define what is a charitable or religious organization.
Mr. Pruden: My understanding is that this is the basis on which provinces proceed, but again, Mr. Bourgeois, who will be on the panel following, may be in a position to speak directly to how, at least, Ontario proceeds with the licences to the charities and religious organizations, which ones qualify and which purposes qualify.
Senator Joyal: It is the Criminal Code, and it is rather important, in my opinion, to have definitions of what would constitute a crime in the context of a charity or a religious object. It seems to me that the Criminal Code as much as possible has to have the same definition all through Canada because citizens should be entitled to know what the law is, and the law is what is in the Criminal Code.
In relation to that, it seems to me that it is a very important issue to understand the parameters of what could be a charitable or a religious object. Under ''charity,'' you could have political. Charity is not only to give something to the poor. A charity could be an organization that is recognized under some law whereby the activities are not to alleviate the economic or social condition of somebody. It could be an organization that is involved with political objectives.
That's why I'm trying to understand the parameters of what we cover with that kind of statement.
Mr. Pruden: As I indicated, this clause in Bill C-43 is not changing in any way the current law on charities and religious organizations or on the kinds of spending that a charitable religious organization can do with its lottery proceeds for religious and charitable purposes.
In relation to political spending, we may be aware around this table of a political scandal that erupted in British Columbia when proceeds were used for political purposes, and my understanding is that the courts have already indicated that that was inappropriate.
Senator Joyal: That's why I raise it because I know the definition, as I said, can vary from one province to the other.
Did you mention that the territories also had that opportunity to establish such a scheme?
Mr. Pruden: Yes. In the Criminal Code, when it refers to a province by the Interpretation Act, it also includes the territories.
Senator Joyal: So they will also have the capacity to do that?
Mr. Pruden: Yes.
Senator Baker: When these provisions were brought in to the Criminal Code, I remember it well. The Prime Minister of the day was Mr. Mulroney, and the minister initiating it was John Crosbie. There was an agreement with the provinces, when these provisions were brought in to the Criminal Code, allowing the provinces to make these decisions.
As I recall, Mr. Pruden, there was also an understanding in the written agreement that these provisions could not be changed without the unanimous approval of the provinces. Am I wrong on that?
Mr. Pruden: I would never say that you are wrong.
Senator Baker: Okay.
Mr. Pruden: However, I would indicate that in 1985 the provinces already had the authority, under the Criminal Code, and I believe it was since 1969, to conduct a very broad range of lottery schemes and to license some others.
The federal government also had authority to conduct lottery schemes.
Senator Baker: The department of agriculture, yes.
Mr. Pruden: In 1983, Parliament chose to give the federal government authority to conduct pool betting operations. Some provinces took umbrage with that and said it looked very much like a lottery scheme. Under the 1979 gaming agreement, only the provinces were to continue conducting lottery schemes. The federal government said it would step back. The federal government said what Quebec was doing looked very much like a pool betting operation that since 1983 only the federal government could operate.
To resolve those issues, the 1985 legislation and I believe it was Mr. Piragoff of Justice Canada then who was on the file.
Senator Baker: That's right.
Mr. Pruden: Mr. Crosbie was the minister. The code was amended so that it was clear that there was no longer any federal authority to conduct a lottery scheme or a pool betting operation. This meant that only provinces now could conduct the lottery scheme, or they could license religious or charitable organizations, and some others that are found in section 207, to conduct a lottery scheme.
I hope that helps. I hope I haven't said you are wrong.
Senator Baker: No, but you haven't commented on what my question was, which was in order to change a section of the Criminal Code covered by this particular section we're dealing with, you would need unanimity of the provinces.
Mr. Pruden: The agreement itself, as I understand it, from the two agreements, 1979 and 1985, indicate that Canada would not diminish the provinces in the rights that they acquired under the agreements. The position of the federal government is that here we are expanding the ambit of what a province can license, and we don't imagine that this can be taken as diminishing the provinces in any way in the rights that they have under those agreements.
Senator Joyal: Did you mention in your opening statement that you had consulted with the provinces at the beginning, and were all the provinces or which ones?
Mr. Pruden: All provinces and territories were consulted with. The minister wrote to his counterparts and received responses from nine of the 10 provinces and from two of the three territories.
Senator Joyal: Was the Province of Quebec one of those that answered?
Mr. Pruden: I think I can say without upsetting federal-provincial-territorial relations that Quebec did provide an answer.
Senator Plett: Which provinces did not?
Mr. Pruden: Perhaps the speaker who will follow in the next panel will indicate the answer to that.
The Chair: That's it for questions for Mr. Pruden. Hopefully, sir, you can remain for the duration of the hearing in case something else arises.
Mr. Pruden: Yes, I will.
The Chair: For our next panel of witnesses, please welcome, from the Ottawa Senators Foundation, Jonathan Bodden, Vice President, Corporate and Community Relations; and from the Alcohol and Gaming Commission of Ontario, Donald Bourgeois, General Counsel and Director of Legal Services. Welcome, gentlemen.
Mr. Bourgeois, I believe you will lead off with an opening statement, followed by Mr. Bodden. The floor is yours.
Donald Bourgeois, General Counsel and Director of Legal Services, Alcohol and Gaming Commission of Ontario: Thank you very much, senator. Thank you for the invitation today to speak on behalf of the Alcohol and Gaming Commission of Ontario with respect to the bill, as well as the particular issue of the pilot projects that the Ontario Lottery and Gaming Corporation has entered into with the Ottawa Senators Foundation and its colleagues at Maple Leaf Sports and Entertainment in Toronto.
The pilot projects and their continuation are not dependent upon any change to the legislation to the Criminal Code, as the pilot projects currently are being undertaken under paragraph 207(1)(a) of the Criminal Code, which allows the Ontario Lottery and Gaming Corporation to conduct and manage the lottery scheme and retain the services of the Ottawa Senators or others, as the case may be.
I would like to talk about four items in the minutes that I have. One is a background to the AGCO, as we're not necessarily a well-known agency; the Criminal Code and the existing restrictions; the measures that are in place to ensure the integrity of the lottery scheme, which is a major role of the AGCO; and some issues related to the proposed amendment as drafted.
The AGCO is an agency of the Government of Ontario that reports to the ministry of the Attorney General and has a very broad mandate, powers and duties with respect to gaming established under the Alcohol and Gaming Regulation and Public Protection Act and the Gaming Control Act. We carry out those activities in a bundle of functions, one of which is the registration, sometimes called licensing, of those who provide services to lottery licensees, the charities and religious organizations, and especially the Ontario Lottery and Gaming Corporation.
The eligibility assessment is a very intensive process and includes a comprehensive risk analysis of the operator or the gaming supplier and the individuals behind it. We focus on the past conduct, the financial responsibility and competence of the entity. We do so by a team approach that includes police officers of the Ontario Provincial Police, lawyers, accountants, gaming experts, technologists, et cetera, in order to ensure that the entity that's providing the services meets the statutory standards and does so in the public interest.
We also establish standards for electronic gaming devices and, more generally, around the control environment that operators and suppliers are to follow, which are quite intensive.
We have a regulatory assurance program to ensure people comply with the rules. As well, we have a compliance program to deal with what happens when they don't.
The AGCO also works with our colleagues in the other provinces. As well, we have developed a network of relationships with European, U.K., U.S. and Asian gaming regulators in order to ensure we bring that experience and that intelligence information to bear on the regulatory structure.
The Criminal Code, as pointed out, generally makes gaming activities in Canada illegal unless they fall within the exceptions set out in the Criminal Code. The exceptions that the Registrar of the Alcohol and Gaming Commission of Ontario deals with are under section 207, the major ones being the Ontario Lottery and Gaming Corporation under 207(1)(a) and the lottery licensees under 207(1)(b).
Subsection 207(4) creates restrictions on their activities, especially for lottery licensees. You can think of it as an exemption from the exemption, what they can't do. The exemption from the exemption today that we have been dealing with is the conduct and management of the operation on or through a computer, video device or slot machine by a lottery licensee. The prohibition is not limited to the use of computerized random number generators, but includes anything that falls under 206(1)(a) to (g), which are proposal, scheme, plan, device, et cetera, quite an extensive listing.
The 50/50 device that has been used as a pilot project could not be used by a lottery licensee under the existing Criminal Code, which is why the OLG has partnered with the foundations to run these pilot projects. Parliament has granted, since 1969, to the Crown corporations to do so, and the pilot projects have, in fact, been quite successful.
The pilots, as I say, fall within the parameter of 207(1)(a), and the increases are parallel to Senator Batters' comments in Saskatchewan of a 30, 40, 50 or 70 per cent increase. It is still the early days, but it is hopeful that the pilot projects will continue in that fashion.
The measures in place are an important part. Gaming is obviously illegal but for the exemption of the Criminal Code. The AGCO is very focused upon the integrity of the game, as well as the integrity of the people who provide that service.
The OLG had a supplier, a gaming company, which was registered under the Gaming Control Act and which procured the particular device from another supplier. That supplier had to go through an examination.
The devices have also undergone a comprehensive testing process that resulted in material changes to the device in order to meet the standards. The testing included integration testing and a variety of other things. As a simple example, random number generators are not a simple thing. If you think of just setting up your own smart TV and the frustrations that I personally have had in trying to do that, or a computer, magnify that many times, and you get into how complex this technology can be and is, especially the random number generators.
The AGCO carried out pre-launch inspections and post-launch inspections in order to ensure that things were appropriate. The control activities are very intensive and extensive.
With respect to the proposed amendment, we certainly recognize the value of technology and lottery schemes and as a result have interpreted the existing Criminal Code to allow for certain things that charities can do. The AGCO has authorized in bulletin number 61 certain uses for raffles. The bulletin is attached.
But there are some real limits to the use of technology, and we spend a great deal of time and resources on technology because it is complicated. The pilot project has been successful, in large measure, because of the competency, experience and resources available to the OLG in order to deal with these things.
The issue is particularly relevant when you get into some of the core matters of integrity, such as who the winner is, and whether or not the tickets actually get into the draw, much less get selected in the draw. These are all very complex sorts of situations. There have been incidents where in the 50/50 devices, the tickets actually didn't get into the draw. So, if you are the purchaser of that ticket, it's an integrity issue. We try to ensure that that does not happen through the testing.
There are also some issues with the wording of the proposed amendment, because if Parliament clarifies what the law is, then that's what we will take into account in applying the law.
Some of the elements of how we interpreted the existing Criminal Code for administrative purposes may or may not be available to us for the operation of the lottery scheme because Parliament will have clarified it's those three elements that computers can be used for, not some of the things that we have already interpreted the Criminal Code to allow.
Parliament speaks; it establishes what the law is; and we apply the law as we understand the law.
Thank you very much for the opportunity to speak on behalf of the agency.
Jonathan Bodden, Vice President, Corporate and Community Relations, Ottawa Senators Foundation: Thank you for the invitation and opportunity to present and discuss the issue of the use of electronic devices and equipment to conduct charitable lotteries.
As mentioned, the Ottawa Senators Foundation has been selected to participate in this pilot project in partnership with the Ontario Lottery and Gaming Corporation. We are using electronic equipment to conduct our charitable 50/50 raffle at all of our Ottawa Senators home games through this 2014-15 season.
The introduction of electronic 50/50 as part of this pilot project thus far has had positive results, and will continue to have a significantly positive impact on our foundation and our ability to conduct charitable work in this community.
I would like to speak today about the results, the increased raffle ticket sales and revenues, the enhanced fan engagement and entertainment value at our games, improved player confidence, which is the result of the enhanced security and integrity of the raffle process, and, most importantly, the increased available funding for our charitable work which we support in this community.
In the materials that were submitted earlier, I have identified the comparison of 2013-14 gross raffle ticket sales per game, on average, with this current pilot project. We have recognized a 37 per cent increase in the gross average ticket sales per game. The other measurement we use is called ''per cap,'' which is a function of the gross ticket sales divided by the number of bodies and the fans in the stadium.
There are some photographs being passed around of the displays in our building and an example of the actual raffle tickets. Based on the results of the first 10 games of this season, we conclude that fans have more confidence in our program, are more engaged and are buying more raffle tickets.
There was a study in 2013 that I referenced of all NHL hockey clubs that use electronic platforms for their 50/50 raffles. As mentioned earlier, this is a common practice both in the NHL and NFL. I have listed the Vancouver Canucks, Edmonton Oilers, Calgary Flames and Winnipeg Jets, and in that 2013 season they have reported an average gross sales per game of between $65,000 and $86,000.
Understanding that these are different marketplaces and the Ottawa Senators has a different fan base, I thought it important to demonstrate that the fans in attendance at our games and participating in our raffle are largely university and college-educated — 71 per cent of the fans are — with annual household incomes over $100,000. So that's an example of a season seat owner at an Ottawa Senators game. There are casual ticket buyers that have very similar demographics.
I mentioned the increased participant confidence, which is a result of the security and integrity measures that are in place with this raffle. The technology strengthens the overall integrity of the raffle through its ability to provide detailed real-time data on every purchase, every transaction; the reduced risk of human error associated with the manual distribution, collection and reconciliation of the paper tickets; real-time monitoring and the display of progressive prize amounts. In our building, our venue, we demonstrate or post the winner's share as the estimated prize.
There is also extension of in-game selling period, extensive data collection and detailed reporting after every game, which is available and supports the AGCO requirements; the extended prize-claim period, which is now 30 days, for a winner to claim a prize; and extensive training of our volunteer sellers before every single game with the focus being on responsible gaming, where we reinforce no selling of tickets to minors under age 18. There is no selling of raffle tickets to intoxicated patrons at our game. Sales are limited to very specific and certain areas within the venue that are outside areas where there are designated youth or family-friendly zones, and sales start with the prescribed start time and a definite finish time.
These increased security and integrity measures lend to greater participant confidence, overall fan engagement and entertainment, and the excitement value at Senators home games. To date, we have had no complaints from any of our participants.
Most important, as I suggested at the outset, is that the increased jackpots will allow the Ottawa Senators Foundation to have a greater positive impact with the work we do in our community. The Ottawa Senators Foundation empowers children and youth to reach their full potential. We do this by investing in social recreation and education programs that promote both physical and mental wellness.
In our submission, I have identified some of our achievements and programs. I would like to just touch on a few, namely the Sens Sports and Leadership League. This is a partnership with the Boys & Girls Club of Ottawa where we committed half a million dollars and created the only no registration fee year-round athletic program for young people that are high-risk or underprivileged in our community. That will result in 12,500 games being played this year.
Many of you are familiar with Roger's House, the pediatric palliative care home built on the campus of CHEO named in honour of our late coach Roger Neilson. It opened its doors in 2006 and to date has provided more than 13,500 days of care for more than 300 families in our communities. Our foundation has invested more than $9 million to date, including the construction of the home and the ongoing operations of that facility. We have a further commitment for another five years there.
Project S.T.E.P. is another one I would like to identify. It is similarly a partnership with the United Way of Ottawa. We have a $1 million investment with Project S.T.E.P., which is an acronym for substance treatment, education and prevention. This is a program delivered to address addiction and youth addiction-related problems. This has enabled parents to receive counselling for their young adults, students to be able to participate in school-based counselling, and students that can now attend education sessions.
There are a number of social recreation and physical education initiatives, including Sens@School, which is a school-based curriculum, but I would like to skip right to the last one in consideration of the time, and that's camperships.
We have embarked, and you will hear a news release later today, with an ambitious goal of raising $200,000 to send kids to day camps and overnight camps. They are kids from our community that are high risk or underprivileged, and we believe the increased funding as a result of this pilot project will help us achieve these goals.
The Ottawa Senators Foundation supports the use of a computer for the sale of a ticket and the selection of a winner as related to its charitable 50/50 raffle at all of our Sens home games.
The Chair: May I emphasize the foundation does good works well beyond the borders of Ottawa as well, throughout eastern Ontario.
Mr. Bodden: Yes.
Senator Baker: Thank you to both of our witnesses here today. My question is to you, Mr. Bourgeois. It is with regard to your observation that this amendment we're dealing with today may, in fact, restrict you in your operations, more so than you presently interpret the law to be and your application of the law. That's what you have said. That's what I gather from what you have said.
Mr. Bourgeois: Correct.
Senator Baker: I think it revolves around the first portion of this amendment, which says, ''The use of a computer for the sale of a ticket, selection of a winner or the distribution of a prize'' and so on.
You're interpreting the sale of the ticket in a very narrow sense. I'm not saying you're wrong on this. I hate using the words ''established case law,'' but the sale of a ticket could include the administrative process. Wouldn't you agree with that?
Mr. Bourgeois: It could, but it also might not. That's why, under the drafting, the Criminal Code is interpreted with as much precision as we can bring to bear, based upon the case law that is out there. So we interpreted the Criminal Code up till now to allow for certain administrative activities to occur where the use of a computer was allowed. If Parliament speaks and says, ''You guys in the provinces, we are now telling you what the law is on some of these activities,'' we then have to look to that and say that what Parliament has now said is that there are three elements that can be used. Are all of the activities that we otherwise now permit a computer to be used for in a lottery licensee situation captured or not captured in those three elements? Parliament speaks, and the law is what the law is. If this is Parliament's clarification of what the law is, then we have to take that into account.
Senator Baker: Absolutely. What you're saying, though, is that the sale of a ticket may not include the administration and the purchase process; am I correct?
Mr. Bourgeois: That's correct.
Senator Baker: But, normally, when judges look at this, they will go back to these proceedings we're having here and they will read your words as being that you would like an expanded definition of ''sale'' to include administrative and purchasing process and so on.
Do you think it's advisable, when we're considering this in a few moments, that we call back the representative from the Department of Justice to give us his opinion as to the interpretation of the word ''sell''?
Mr. Bourgeois: That I leave to your hands. But if you look at documents like an agreement of purchase and sale, from a transactional point of view in a contract, the purchase and sale of a lottery ticket is a contract. Being done in a lawful manner means it's an enforceable contract. What the lottery licensee is selling is the chance to win a prize; and what the purchaser is purchasing is the chance to win the prize and giving up money in consideration in order to do that.
When you look at commercial law and contract law, you have an offer to purchase and a purchase, or an offer to sell, a purchase, et cetera. When we look at these things, we try to look at them as to how the law of contract also applies, because essentially it's a contractual agreement.
Senator Baker: I don't want to belabour the point, but I seem to remember case law somewhere back in the 1960s that interpreted ''the sale of'' to mean the very things you want it to mean.
Mr. Bourgeois: There is some case law and that's why, if this is the bill that goes through, then, as any regulator will do, we will examine the language, see what we are doing now, what we're permitting now, and examine whether or not they remain lawful under this amendment.
Senator McInnis: I think it's wonderful what the foundation does. Of course, the fact of integrity is important in this business, and computer versus manual always seems to be better.
Seventy-two per cent of the revenue goes to prizes, marketing and operational expenses. Operational expenses would be cost of staff and technical equipment, I suppose. What is the take? Is it 50 per cent of the net or the gross?
Mr. Bourgeois: It depends upon what the lottery scheme is. In a raffle situation, such as the 50/50 draw, let's say $1,000 is the amount of tickets sold at a dollar a piece or whatever. $500 of that in a 50/50 will go back to the players as prizes. The other 500 then is what is available for the charitable activities, or the government activities, if it's a government-run lottery scheme, less the expenses. So the expenses may vary, depending upon how big of a lottery scheme it is, and they may vary from one night to another night. So the contract that the OLG has entered into will set out different levels, and they include the amount of funds that are going to the charities that are involved in the pilot projects.
So, it really will vary from whether it's a lottery licensee or whether it's a Crown corporation lottery scheme. It will then vary depending upon whether it's the pilot project, in which certain assumptions have been built in, and the purpose of a pilot, obviously, is to see if those assumptions continue to be valid during operations.
Senator McInnis: The chair has said that the area that you cover is eastern Ontario.
Mr. Bourgeois: That would be Mr. Bodden's group, the Senators Foundation.
Senator McInnis: We don't have an NHL team in Atlantic Canada. There's an outdoor rink in behind where I live, and we're looking for a roof. I'm wondering if there's a possibility. I'm an Ottawa Senators fan, and they all can be Ottawa Senators fans.
The Chair: That could be interpreted as an inappropriate question, even though we haven't voted yet.
Senator McInnis: He hasn't answered yet.
Senator Joyal: Mr. Bourgeois, thank you for your presentation. It helps us to better understand the legal system surrounding the new proposal.
I don't want to argue with you on the niceties of the definition of ''sale'' of a ticket. If there is a sale, it's because there has been an offer, a proposal made, and that proposal is accepted; then there's a sale. Let's take it. I make an offer to sell you this cup of tea. You say, ''Yes, I accept it for $2.'' There's a sale. When there is a sale, there are two elements that join together on an agreement.
When you mentioned that purchase process would not be covered, or could not be covered by the text, I would argue that in fact the purchase is part of the sale. The sale is not just an offering and the publicity surrounding it. Again, if I advertise the sale of this cup, I could say it's a fantastic tea; the cup is formidable, it's porcelain, whatever.
When I make the sale, all those operations of the offer are covered, and your counterproposal to say, ''Yes, I won't pay $2; I will pay $1.75,'' there's a negotiation process. This is covered by the sale. A sale means that the transaction is completed; there is a sale. There is a final agreement.
I'm sympathetic to your proposal, because it helps us to reflect upon the substance of what it means and what we will be called to vote on, but it seems to me it is covered by the sale.
Mr. Bourgeois: Senator Joyal, it very well may be. My comment was that, as we read the legislation, there are some issues. If Parliament passes the legislation, then we take the legislation as Parliament has passed it, look at how we understand the law based upon the case law, and then apply that to the situations that arise. It may be that, in the final analysis, we come to the same conclusion. We were asked to comment on the bill, and so this is a comment saying that the wording may not be as clear as it ought to be to deal with some of these types of issues. It may ultimately be considered to be sufficiently clear.
Senator Joyal: My other preoccupation is that this is a subparagraph to section 207, so this subparagraph has to be interpreted in the context of the whole of section 207. Your argument seems to be, if I understand your presentation, that you have enough authority presently, under section 207, as it stands, before the amendments, to lead the pilot project that is proposed to be confirmed by the subparagraph 4(1) that we are requested to add.
It seems to me that your argument would be that the authority you already have in section 207 will be restricted by the addition of subparagraph 4(1).
Mr. Bourgeois: The OLG, the Ontario Lottery and Gaming Corporation, or its equivalents in the other provinces, has the authority to do that now, and what it has been doing is working with foundations, such as the Senators Foundation, in order to implement that so that this foundation can carry out its very worthwhile activities.
What the amendment would do is allow lottery licensees directly to do that, whereas this is a pilot project that is for OLG to carry out. Then, the funds do go to the foundation. The amendment provides for a broadening so that it would be directly to the lottery licensees.
If I could just speak to your issue about the subparagraph within the paragraphs, the other critical part is the definition of ''lottery scheme.'' The definition of ''lottery scheme'' includes the activities that are set out in paragraphs 206(1)(a) to (g). In those, there are a lot of activities. When we start to interpret the new exemption from the prohibition within the existing exemption for charities and the lottery licensees, we have to then align the words ''sale,'' ''selection'' and ''distribution'' to the wording of all of the activities that are set out in 206(1)(a) to (g). That's where there might be some rub.
Senator Joyal: So what you would request is an amendment to the text as it stands now in front of us. Do you have wording to propose?
Mr. Bourgeois: We're not proposing. I was asked to come to comment on the bill, as well as on the pilot projects. The pilot projects are very successful to date, but it's early days. So we take no position on the bill, other than sort of more as an amicus curiae, appearing at the request of the committee, in order to provide comments.
Senator Joyal: May I continue? I have another question.
The Chair: We'd all like to get in here. I've given you seven minutes, so we'll come back to you on second round.
Senator Joyal: I know I have been treated fairly.
The Chair: I have a question for Mr. Bourgeois.
Mr. Pruden, when appearing here earlier was asked a question. I'm not sure who posed it, but he was asked about the consultation that the federal government undertook and that nine provinces responded and that one did not. He suggested we ask you who that might be.
So it leaves you with the suspicion that it might be Ontario. I'm curious if that is indeed the case. You're here expressing some concerns today. Apparently, nine other provinces and territories have agreed to what we're doing. I'm curious, if that's the case, why didn't Ontario participate in the consultation, if that is indeed a fact?
Mr. Bourgeois: The Alcohol and Gaming Commission is an agency, and so I can't speak to what a minister or ministry may have done or may not have done. I was asked to appear on behalf of the agency, presumably bringing some expertise. I can even answer the question about the charitable definition, if asked.
Senator Joyal: That was my next question.
The Chair: We'll get back to that.
Mr. Bourgeois: I can't speak to what and who did and did not.
The Chair: So you're not aware of whether the Ontario government responded or not?
Mr. Bourgeois: I'm now retired from the agency, but I was asked to speak on behalf of the agency's analysis of the legislation and the pilot project.
Senator Plett: I was, in fact, the one who asked Mr. Pruden. If Mr. Bourgeois doesn't want to answer this question, then I would like to see Mr. Pruden come back, because he seemed to be willing to tell us what provinces did participate. I will, in the process of elimination, ask him whether each province participated, because he did say Quebec did. I am now more curious than I was before which province it is. Somebody better answer that question.
The Chair: I share that view. We will ask Mr. Pruden, once the witnesses are finished their testimony, to return to the table.
Senator Joyal: Do you know the criteria that Ontario is using to define what a charitable or religious organization is in relation to the lottery scheme?
Mr. Bourgeois: Hearken your mind back to 1601 in England and the Statute of Uses and, ultimately, to 1856 or 1886 and the Pemsel case. It is all purely common law definition as to what is charitable or religious. My understanding is that the reason a religious object was included by Parliament was because not all religious activity is viewed as being charitable by the courts in Canada, England and the other Commonwealth jurisdictions.
So it is a common law definition. To the extent that a province might have different common law, there might be a difference of opinion, but, for all intents and purposes, across Canada, we use a number of the cases, many of them decided at the Supreme Court of Canada level or the Privy Council level in England. So it really is a common law definition of what a charitable or religious object is.
Senator Joyal: In other words, in Quebec, because it has a civil law tradition, the definition might be different than what the common law, for instance, in Ontario or in New Brunswick could be?
Mr. Bourgeois: It's not substantially different because, although, from a common law point of view the common law is not as prominent, there is, in a sense, a common law within the civil code. Also, on top of that, we still have the Supreme Court of Canada and the Federal Court dealing with the definition of charity for purposes of the Income Tax Act. There are some slight differences as to how Parliament has required the Canada Revenue Agency to insist upon exclusive activities as being charitable, whereas the common law is not as restrictive as the Income Tax Act is.
Senator Joyal: I read recently that the revenue drawn from the operation of the lottery scheme in Quebec has been going down in the last years. Could you give us an idea of the trend in Ontario or in other parts of Canada? In other words, my question is: Does this come to rescue revenues that are dwindling, or is it another way to make the revenue greater than what you have already because you're at a stable level now?
Mr. Bourgeois: Each market is going to be a little bit different, so the issues in Quebec relate to the changing demographics in Quebec, the same thing as in Ontario, and the type of lottery schemes people want to participate in. So younger people do not necessarily want to participate in the same sort of lottery schemes as people of my generation did. The lottery corporations are adjusting the types of products that they provide to meet those particular demographics.
That trend is pretty much worldwide. There are certain jurisdictions where there will be an uptick and certain jurisdictions where there will be a drop. As with any business activity, you start to examine the causes of that and provide a different product in order to deal with those.
Senator Joyal: In other words, you have to be inventive in trying to find other products to maintain the stability or the increase of your income?
Mr. Bourgeois: That's correct. From an AGCO perspective, our job is to ensure that those products have integrity. There's responsible gambling built into them and those types of things that meet other public policy objectives. Revenue-raising is a public policy objective, but there are a number of other responsibility and integrity issues that are also public policy objectives.
The Chair: I will have to jump in here. We're scheduled to adjourn at noon, but I think we'll go beyond that. I'd like to allow enough time for Mr. Pruden to return to the table. I know there are another at least two or three questions for him.
Gentlemen, thank you very much for your appearance, testimony and assistance here today.
Mr. Pruden, could you come to the table again? Thank you for hanging in.
Mr. Pruden: Gladly done.
The Chair: I appreciate it.
Senator Baker: Mr. Pruden, you've been listening attentively to the questions to the previous witnesses. What would you like to add as far as those questions and answers are concerned?
Mr. Pruden: The only thing that I could indicate is that had the words ''contract of sale'' been selected for the proposed amendment, I might share the concerns of Mr. Bourgeois. Having selected the word ''sale,'' I'm a little bit less concerned.
I would say that when it comes to the criminal law, the courts, if there is something that is open to interpretation, will interpret it in favour of the accused person — in other words, more broadly and not narrowly and restrictively. That would be the only thing that I would have to add.
Senator Baker: You're absolutely correct, everything else being equal.
Do you think that the word ''sale'' in this particular amendment would cover the administration and the purchase process as we discussed with the previous witness?
Mr. Pruden: Yes, I think it would, because the courts would be obliged to interpret the criminal law broadly and because we did not focus on the words ''contract of sale.''
Senator Baker: Final question: As far as the intent of the amendment is concerned, as far as the words ''for the sale of a ticket'' are concerned, the intent is not to restrict that to a simple sale but to include the process of administration and the purchasing process, as explained by the previous witness. Is that right?
Mr. Pruden: Yes.
Senator Plett: Mr. Pruden, I think you know what my question is going to be. I would like to know which province did not respond to the minister.
Mr. Pruden: Of the nine provinces, Ontario was the province from which a response has not been received. I can't say why they did not send a response. Whether they might yet send a response or comment, I don't know.
Senator Batters: I have a supplementary on that. These consultations, though, were done last summer, right? It wasn't like it was three weeks ago or something like that.
Mr. Pruden: No. The minister sent his letter at the beginning of July and asked for responses. Some provinces responded after the deadline he had asked for, but, as mentioned, nine out of ten provinces did respond.
Senator Joyal: Mr. Pruden, I want to offer you additional elements in support of your interpretation. You have to read the section as a whole. The section talks about the sale of a ticket and the selection of a winner, so if there is a winner, it's because there has been a purchase; otherwise, there is no winner. Then there is the distribution of a prize. There has to be an administrative aspect for the distribution of a prize.
If you look at those three operations — the sale, the winner and the prize — in my opinion, the whole scheme is described in each and every operation and makes a whole. In my opinion, if I would have to interpret that section, I would propose that the purchase process and the administrative process are covered in order to reach the result, which is from the offering to the conclusion of the whole scheme.
I will not ask whether you concur, as a judge would, but don't you think that, in fact, with the way the text is written, the fact that it refers to the various steps of the operation, the concern that Mr. Bourgeois has expressed to us has addressed the way the system is described in the section?
Mr. Pruden: I think the description in the proposed amendment is broad and that the province that chooses to grant a licence will be able to do so in a fairly broad manner.
On the other hand, if a province chooses not to go to section 207(1)(b), which is a religious charitable, it could still choose to go to section 207(1)(a) and do what Ontario is now piloting, which is to use the authority for provincially conducted lottery schemes to do the computer aspect and to share the proceeds with the charitable organization.
Senator Joyal: In other words, there are two headings under which they could lead the scheme?
Mr. Pruden: Yes, under which there could be a 50/50 draw or a raffle that uses a computer.
Senator Joyal: Through computers, because that's what we're talking about here.
Mr. Pruden: Yes.
Senator Baker: I can see a smile on Mr. Bourgeois' face now, because he has accomplished a great deal here today; he has defined it as I think he wished it to be defined.
The Chair: Thank you again, Mr. Pruden, for your appearance and your time here today. It was very helpful.
Members, our next order of business is consideration of a draft report, so I will ask for a motion to move in camera for consideration of the report.
Senator Joyal: So moved.
The Chair: Agreed?
Hon. Senators: Agreed.
The Chair: We'll have to ask the witnesses to depart, but I will also require another motion to permit senators' staff to remain in the room.
Senator Baker: So moved.
The Chair: Agreed?
Hon. Senators: Agreed.
(The committee continued in camera.)