Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 10 - Evidence - June 3, 2009


OTTAWA, Wednesday, June 3, 2009

The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill S-4, An Act to amend the Criminal Code (identity theft and related misconduct), met this day at 4:11 p.m. to give consideration to the bill.

Senator Joan Fraser (Chair) in the chair.

[English]

The Chair: Welcome to the this meeting of the Standing Senate Committee on Legal and Constitutional Affairs, which is continuing its study of Bill S-4, An Act to amend the Criminal Code (identity theft and related misconduct).

We are pleased to have us with this afternoon as our first panel of witnesses, from the Criminal Lawyers' Association, Mr. Michael Spratt, Defence Lawyer; from the Canadian Bar Association, Ms. Gaylene Schellenberg, Lawyer, Legislation and Law Reform; and Mr. Daniel A. MacRury, Treasurer, National Criminal Justice Section. These are fine expert witnesses.

Have you decided among you who would like to go first? Everyone is looking at you, Ms. Schellenberg. The floor is yours.

Gaylene Schellenberg, Lawyer, Legislation and Law Reform, Canadian Bar Association: Thank you for the invitation to present the views of the CBA on Bill S-4 to you today. The CBA is a national association of over 37,000 lawyers, law students, notaries and academics from across the country. An important aspect of the CBA's mandate is seeking improvement in the law and the administration of justice. It is from that perspective that we appear before you today.

With me is Mr. Daniel MacRury, Treasurer, National Criminal Justice Section. The section represents a balance of Crown and defence lawyers from across the country. Mr. MacRury is a Crown Attorney from Sydney, Nova Scotia. I will now turn it over to him to present the substance of our presentation.

Daniel A. MacRury, Treasurer, National Criminal Justice Section, Canadian Bar Association: I would like to thank senators for the opportunity to make submissions on behalf of the Canadian Bar Association, National Criminal Justice Section. The section commends the efforts of Bill S-4 to address identity theft and related criminal activity as these are serious problems giving rise to significant individual and societal losses.

We appreciate that Bill S-4 would restrict the scope of some of the new proposed offences so as not to inadvertently capture unrelated or innocent conduct, in particular in relation to new offences concerning identity documents and information. The section also supports Bill S-4's proposed removal of certain reverse onus provisions of the Criminal Code.

The Canadian Bar Association, Criminal Justice Section, recommends several amendments that we believe would add clarity and certainty to the proposals contained in Bill S-4. Our comments today are guided by three principles. First is the principle of legislative restraint: Revisions to the Criminal Code should only be made where existing provisions are inadequate. Second, any provisions must comply with the Canadian Charter of Rights and Freedoms. Third, changes to the Criminal Code alone are generally insufficient to address serious and complex problems. To be effective, such changes must be accompanied by refinements in law enforcement practices and procedures, increased public education and legislative amendments. The latter observations may be applicable to the problem of identity theft.

The federal Privacy Commissioner and other organizations have noted that an effective response to identity theft requires a comprehensive approach, including a broad range of initiatives in addition to changes to the Criminal Code. In other words, this legislation is only one tool in the tool box to fight this very serious problem.

The Canadian Bar Association, Criminal Justice Section, makes the following recommendations: First, the CBA section recommends that Bill S-4 be amended to expressly exclude general provisions of attempt and counselling and certain de minimis behaviour. Second, the section recommends that the relationship between the new offences proposed in Bill S-4 and the existing general provisions be clarified. Third, the CBA recommends that the proposal to prohibit possession of identity information be amended to offer greater clarity by replacing the term "is reckless" with more explicit language. Fourth, the CBA recommends that the exemption for certain police activities in clauses 7 and 9 of Bill S-4 be removed.

In relation to recommendations one and two, the bill defines new categories of documents described as identity documents. Proposed is a wide range of offences, including procuring to be made, possessing and transferring, selling or offering for sale identity documents such as social insurance number, driver's licence, et cetera. Given the combined scope of the definition in the proposed offences, we believe the bill's proposal to add new defences to the existing concept of "lawful excuse" are appropriate and support the bill's clear attempt to restrict the reach of these provisions as consistent with concerns we have articulated in earlier submissions.

The Chair: Mr. MacRury, could I ask you to slow down a little bit? It is true that we have time limits. At the same time, we are also trying to think about what you say.

Mr. MacRury: My apologies. In spite of Bill S-4's proposals and restrictions, other jurisdictions go further to restrict the reach of similar provisions in two ways: First, they expressly exclude general revisions of attempt in counselling; and, second, they expressly conclude certain de minimis behaviour such as a young person possessing identity documents to gain admission to licensed premises. The Criminal Justice Section recommends that Bill S-4 be amended to expressly exclude general provisions of attempt in counselling and certain de minimis behaviour.

Bill S-4 would prohibit certain activities usually undertaken either by a precursor or preparation of other fraudulent activities. Such preparatory acts may already be prosecuted using the general attempt or counselling provisions of the Criminal Code. Given this potential overlap, the relationship between the new proposed offences and the existing general provisions should be clarified to avoid an unintentional broadening of the reach of the law. The section recommends that the relationship between the new offences proposed in Bill S-4 and the existing general provisions be clarified.

In relation to our third recommendation, the section believes that the term "reckless" should be clarified. In the legislation, proposed sub-section 402.2 would prohibit possession for the purpose of transmission, making available, distribution and sale, offer for sale, that information where an individual knows, believes or is reckless as to whether this information will be used to commit indictable offences containing an essential element of fraud, deceit or falsehood.

Including "reckless" as a form of mental intent for this offence could be seen as responding to the comments of the Supreme Court of Canada in R. v. Hamilton. We also note concerns about this formulation, particularly as it might apply to businesses or industries that handle large volumes of such information.

While the term "recklessness" is used in the Criminal Code, it is not free from controversy or, occasionally, interpretive difficulty. To provide greater clarity and to address some business and industry concerns, we suggest more explicit language be used. For example, in R. v. Hamilton, the Supreme Court of Canada equated "recklessness" with "conscious disregard of a substantial or unjustified risk."

In Hamilton, at paragraph 28 of the Supreme Court of Canada's decision, the court stated that:

28 The "substantial and unjustified risk" standard of recklessness has venerable roots in Canada and in other common law jurisdictions. . .

It then goes on to cite the cases. The court also went on to say, at paragraph 32 of their decision:

32 Finally, a brief word on R. v. Sansregret. . .The Court in that case defined recklessness as the conduct of "one who, aware that there is danger that his conduct could bring about the result prohibited by the criminal law, nevertheless persists, despite the risk. . . in other words, the conduct of one who sees the risk and who takes the chance." In this case, the court did not set out the degree of risk required to attract criminal sanction.

As Don Stuart points out, courts have arbitrarily endorsed varying standards on certainty, probability, likelihood and possibility. In that decision, the Supreme Court of Canada went on to say in paragraph 33: "We have not been invited in this case to revisit Sansregret or to consider afresh the governing principles of recklessness. . ."

It is our submission to you today that, without clarity in the definition, the courts will have to consider afresh the governing principles of recklessness. That deals with our concern in relation to recklessness in the definition.

Our fourth recommendation to you today deals with the exceptions for police and other official acts. Clauses 7 and 9 propose another exemption for certain activities of public officers as defined by section 25.1 of the Criminal Code. Given the existing legislative scheme, it is unclear why another exemption might be necessary.

The CBA Criminal Justice Section has strongly opposed an exemption for criminal liability for police and their agents, arguing that the law should apply to everyone, but acknowledges the existing sections contain detailed procedural safeguards and reporting requirements. The section sees no reason why the acts specified by Bill S-4 would be inadequately addressed by the existing scheme and are opposed to creating further exemptions of this sort. The Criminal Justice Section recommends that police activities in clauses 7 and 9 of Bill S-4 be removed.

In conclusion, the CBA Criminal Justice Section recognizes the prevalence and seriousness of identity theft. We appreciate the efforts of Bill S-4 to provide narrowly circumscribed new offences to address this issue without inadvertently capturing what should be properly considered non-criminal activity. To further advance the objective, we suggest some clarity in the language of the bill, for example surrounding the mental element of recklessness, as well as clarification between the interaction of some of the proposed offences with the attempt and counselling provisions of the Criminal Code.

We also appreciate the proposal to increase the use of hybrid structures of offences to give greater flexibility and scope to the exercise of prosecutorial discretion in dealing with these matters.

I thank honourable senators for the opportunity to address you this afternoon on this important piece of legislation.

Michael Spratt, Defense Lawyer, CLA Designate, Criminal Lawyers' Association: Good afternoon. I am a criminal defence lawyer who exclusively practices criminal defence work here in Ottawa. I am here as a representative of the Criminal Lawyers' Association. The CLA's position is that we support legislation that is fair, modest and constitutional.

Bill S-4, the proposed legislation that we have been discussing today, I view as problematic — or potentially problematic — on two levels: First, portions of the bill may be unconstitutional and, second, this bill has a potential of being unnecessary, given the current legislative scheme.

I will first address my constitutionality concerns and next move on to a brief discussion of whether the bill is necessary.

Dealing with constitutionality, it is always useful to look at some fundamental principles. There are fundamental principles that run through our justice system. These principles have often been described as pillars of our justice system. They ensure the fairness of our justice process and are reflected in the Canadian Charter of Rights and Freedoms.

Two of these fundamental pillars are the presumption of innocence and the criminal standard of proof, that is, the onus on the Crown to prove all elements of an offence beyond a reasonable doubt. Any legislation that is inconsistent with these principles runs a risk of being unconstitutional.

The legislation proposed in Bill S-4 has the potential of being overbroad in its scope and potentially diluting the principles of the presumption of innocence, and may lower the burden of proof required to prove an offence to potentially unconstitutional levels.

A striking example of this can be seen in proposed sub-section 402.2(1) of the bill. This section discusses possession of identity information in circumstances that give rise to a reasonable inference that an offence may be committed. The words that I am focusing on are ". . .in circumstances giving rise to a reasonable inference. . . ."

Constitutional legislation imposes a burden on the Crown to prove an accused person, who is presumed innocent, guilty beyond a reasonable doubt. In the case of fraud-related charges, the Crown must prove there was a fraudulent purpose or intent, and they must do so again beyond a reasonable doubt.

By including the words "giving rise to a reasonable inference," proposed section 402.2(1) dramatically lowers this burden of proof. As drafted in this proposed section, the Crown need only show there is a reasonable inference in terms of a fraudulent intent. In other words, the Crown would not need to prove that an accused person had an illegal purpose, only that an accused person may have had an illegal purpose in possessing such documentation. Again, this represents a dramatic and, in my view, unconstitutional reduction in the requisite burden of proof.

Under this section, even if an accused were able to present information and present a competing inference, a conviction would result because, nonetheless, the original reasonable inference would still be on the table. Courts have held that it is impermissible to engage in speculation in the criminal process. Specifically, courts typically address the issue of speculation when there are two competing inferences. It would be speculative to choose amongst those inferences. Of course, that is a reasonable doubt.

This section would provide legislative authority for the courts to do exactly what appellate courts have said we cannot do, and that is choose between inferences. In this case, if there is a reasonable inference giving rise to an inference of fraudulent intent but there is another competing inference, this section suggests that a conviction should be entered.

I have serious doubts about the constitutionality of this proposed section in the bill, as it could potentially undercut one of the fundamental principles on which our justice system is based. Specifically, in my submission, the proposed legislation could offend paragraph 11 (d) of the Charter, which is the presumption of innocence.

My concerns about the constitutionality of the legislation are made somewhat more acute by the broad nature of the definition of "identity information." Of course, the definition encompasses things like retina images and fingerprints but also information that may be ubiquitous and innocuous, such as names and dates of birth.

The broad definition combined with that reduction in standard of proof could lead to some constitutional issues. I would submit it would definitely lead to some constitutional litigation, should the bill be passed in its current form.

Bill S-4 seems to be designed to criminalize the preparatory stages of identity offences. This is somewhat problematic, as well, in my view, because criminal law does not typically deal with what someone may do but with what someone intends to do or has done. Quite often, the courts have said that mere preparation does not give rise to a criminal offence.

Having said that, I would like to move on to a discussion about existing provisions and whether there may be some duplication here. I believe that is another important issue. Of course, given that all members of the public are presumed to know our law, it is advantageous to avoid potential complexity in that law.

In my view, the current bill would serve to exacerbate the problems of potentially lengthy and complex litigation. There has been much discussion lately about the length and complexity of criminal trials. This bill may serve to worsen that in the form of overcharging by police forces, if there is, indeed, duplication, as well as the inevitable constitutional litigation arising from the problems that I have just addressed.

Current legislation that has been found to be constitutional and has been on the books for quite some time may be quite adequate to address what, admittedly, is an important issue of identity theft. It has always been illegal to attempt to commit a crime. The collection of information in circumstances where a fraudulent purpose could be shown would, of course, be captured under the current legislation.

It may be somewhat of a separate topic and a tangent but, as I said, complexity in the Criminal Code should be minimized. Duplication in the Criminal Code is not a social good, I would suggest. There are already examples of such duplication. When you look at the theft provisions in the Criminal Code, you see a section prohibiting theft but then a separate section prohibiting theft of cattle and a separate section prohibiting theft of oysters.

Senator Baker: They have bigger penalties.

Mr. Spratt: Yes, but it could be perhaps captured with some statements of purpose or with some refinement under the current section of theft. It may be advantageous to examine the current legislation to see if it can capture the spirit of this intended legislation.

I do not want to come just talking about problems but perhaps offering some potential solutions. It has long been thought, at least in academic circles, that criminal solutions should be solutions of last resort. This is due to the cost of implementing those criminal solutions, the potential stigmatization of criminal sanctions and the repercussions with regard to liberty if one is punished under that regime. It may be useful to examine, and I do not know if it has been done, other ways of solving this problem of identity theft and fraud, such as through regulatory offences. Regulatory offences attract much less constitutional scrutiny and can be subject to lower standards of proof. As such, regulations can be a very good way to aggressively target conduct that is not deemed socially useful.

The other potential solution is prevention. The saying is that an ounce of prevention is worth a pound of cure. The bill deals largely with government identification. In my experience, and anecdotally, a lot of government personal identification is delivered via the mail to your mailbox, including income tax receipts and driver's licence renewals. Much of this comes through the regular mail. I do not think there are any existing provisions that would address making sure that that information is delivered specifically to the intended person. Perhaps prevention can be achieved with less costly and intrusive measures such as requiring that any government identification information be delivered by registered mail so that we know who it is being delivered to and there is a way to track that. That would surely limit the amount of this personal identification information that may make its way into the hands of unsavoury individuals.

When one examines the options and looks at what the Law Reform Commission has said about utilizing criminal law options as a last resort, it is quite possible that prevention and deterrence through regulatory offences may be adequate to combat the problem while, at the same time, respecting the constitutional nature of the legislation.

The Chair: Thank you very much. Just before I turn to Senator Nolin, I will ask for some clarification on your comments about circumstances giving rise to a reasonable inference in proposed section 402.2(1). I do not know if you have had a chance to look at the French version.

Mr. Spratt: I have the French version in front of me.

The Chair: It is not, to a lay eye, quite the same. The French version talks about "circonstances qui permettent de conclure raisonnablement," and "conclure" or "conclude" is not quite the same as "infer." Would "conclusion" be a more appropriate word, in your view, than "inference"?

Mr. Spratt: I think it is still a problematic word. Of course, it is the court's final determination to "conclude," and the difference in the two versions could itself raise some issues. I do not know if that need be included at all.

Senator Nolin: That is important.

The Chair: It is an important point, but I did not want to usurp senators' ability to put questions, so I will now go to the list.

[Translation]

Senator Nolin: I will give my privilege to Senator Wallace but I ask you to put me now on the list for the second round of questioning, so I can deal with the analysis of Mr. Spratt.

[English]

Senator Wallace: Thank you, chair, and thank you for your presentations. It is always interesting when you look at the public purpose behind Bill S-4 and any piece of legislation when there is what many would believe to be an overriding public purpose for parliamentarians to take action to curb problems that exist in our society. All of us would probably agree that identity theft is certainly a serious problem and one that does require the attention of parliamentarians.

In many ways, the idea or concept is the easy part. People generally can agree on the need to take action and on what these problems are, but then of course we get down to the actual wording of bills and the legislation. For many people, the unfortunate thing is that lawyers have to get involved. Then we get into the wordsmithing and what does it mean and how do we measure those words against the case law and the statute law that is in place. Doing that properly would require an in-depth knowledge of the Criminal Code as well. It is necessary to put this bill in the context of the Criminal Code as it exists today. Having said that, the wordsmithing is unavoidable, and we have to address that.

Mr. MacRury, I might start with your reference to inclusion of the concept of "reckless." You obviously have some reservations concerning that and would like to see another term or another explanatory provision used. Is it not the case that the concern you are expressing is one that is not limited to this particular bill? This is a concern you have in the broader sense, since that term is used throughout the code or in many places in the code and has been the subject of many court cases and interpretations of exactly what that means. As I understand it, a high level of mens rea has to be associated with recklessness. It is not just simply a generic term that each of us might use in the ordinary course of our lives; the courts have defined it specifically.

Would it not be appropriate for the purpose of moving this social agenda forward and addressing this serious issue of identity theft to include the reference to "reckless" as it appears in the bill, and then if there is a need to look beyond that in the broader sense of the code and the broader application of the code, that that be done at a later date, rather than curbing a very positive and solid social purpose in advancing this bill at this time?

Mr. MacRury: Senator, it is an important piece of legislation and, as you can see, the CBA is supporting the overall intent of the legislation.

In terms of leaving it as is and passing it into law, I will put on my real life hat and say that I am the person who has to deal with it in the courts tomorrow. I would like to deal in the courts with an effective piece of legislation. We are saying that you can use the term "reckless" but maybe you should go further and use the Supreme Court of Canada's words, which mean "a substantial and unjustified risk." It does not delay the bill, but it means you add an amendment now and go forward with this important bill. The difficulty is: If you put it in now and raise everyone's expectations that we have an effective bill, then we would go to the courts and spend all of our time fighting the meaning of it and the courts would have to revisit it. We are suggesting that Parliament give clear intention to that word.

Senator Wallace: If that were the case, your proposed amendment would apply at every instance where "reckless" is used in the Code and not just simply for the purpose of this bill?

Mr. MacRury: I will leave it up to the legislators and how they wish to deal with it.

The Chair: We are limited to the purposes of this bill. We cannot use this bill as a tool to revise the whole Criminal Code.

Mr. MacRury: That is fair. I would amend this bill now to clarify it.

Senator Wallace: Not to repeat what I said earlier, the question that comes to my mind by addressing the issue of recklessness in the way that you have suggested — for the purpose of this bill only — is: What about the rest of the Code? Clearly, we would have carved out a different definition from what exists elsewhere. Again, although I think I have heard your response, I would suggest to you that that idea probably should be incorporated in a more comprehensive review of the Code and not simply for one bill.

Mr. MacRury: Senator, we recommend today that senators look at amending this bill. Certainly, down the road, if there were a comprehensive bill going forward, the CBA would support a comprehensive review to look at all the provisions of the Code, so that we are on record in that respect at this time. I think you can do both.

Senator Joyal: Mr. MacRury, you have recommended on page 3 of your brief that the relationship between the new offences proposed in Bill S-4 and the existing general provisions be clarified. I am receptive to such a proposal, but would you be in position to give us the text of your proposal?

Mr. MacRury: I would not be in a position to do that today. I can leave that up to the drafters, but it is clear that there is certainly some overlap with the legislation that should be looked at. That is what we recommend.

Senator Joyal: Do you undertake to give us in the near future some proposed text that you would like to see in the bill or is it too much for the CBA to provide drafting?

Mr. MacRury: Certainly, senator, we would undertake to try to do that. We are here to try to move this bill forward.

Senator Joyal: That would be helpful to us because then we would have something clear in front of us to pronounce on. Do you propose that we remove in clauses 7 and 9 the exemption for certain police activities?

Mr. MacRury: Yes.

Senator Joyal: We have concerns about exemptions given in other circumstances for bills that are now part of the Criminal Code. Can you explain why you think that other sections of the Code, as it exists, would cover the undercover activities of the police forces? That is, if they need to have an identity for the sake of an investigation or any initiative to crack down on drugs or security and other purposes for which different identity would help detect criminal activities?

Mr. MacRury: Senator, our position is quite clear such that we believe that the existing provisions protect law enforcement sufficiently at this time. Certainly, we are on record that we should not expand that exemption. We all value the rule of law, so we have to be very careful when we are looking at exemptions to the rule of law.

Looking at earlier testimony in this committee on that question, there was some suggestion that you can have an identity earlier before the investigation is started. However, that is a matter of interpretation. In my view, as soon as a police force provides an identity for someone, they have started the investigation. They might not have a specific target. I would submit that the existing provisions are strong enough to protect police and that expanding that exemption under the Criminal Code would be unnecessary.

Senator Joyal: A police force may decide before launching an investigation to try to introduce itself into an organized crime group and need to protect the identity of their undercover agent by using various pieces of identity papers. Do you feel that the provision as it stands in the Criminal Code is sufficient to exonerate the police forces from being found guilty of the crime that we are trying to create here today?

Mr. MacRury: That is my belief. Yes.

Senator Joyal: Let us move to proposed section 402.2(1) that Mr. Spratt described. Let us read the text together:

Everyone commits an offence who knowingly obtains or possesses another person's identity information. . .

The person has to know that he or she possesses those papers. If a person has those papers inadvertently, the person would not have them knowingly. It excludes a certain number of allegations.

The text continues:

In circumstances giving rise to a reasonable inference. . .

There have to be circumstances, facts or situations in which that person finds himself or herself. It is not the mere fact of possessing the identity papers of another person, as I read it. Other elements are around the possession and those elements have to lead to the reasonable inference that the information is intended to be used — another intention. One has to have a second element of mens rea. The first mens rea is that the person has to know that he has the papers of someone else and the second mens rea is having the intent to use the papers to commit a criminal offence.

There are different levels of conclusion about possession illegally in the person's hands. Do you not find that there are enough elements there to test the mens rea, especially with the French text, which, as the chair has properly stated, is much stricter than in the English one? In French, it must be "conclure raisonablement." In other words, the conclusion must reasonably be that. It is not just a general inference, it is a conclusion. In other words, you are in a funnel and, at the end of it, this is the conclusion you must draw. I feel that the French text is stricter than the English one. I am happy that I am not the only one who thinks that.

Do you not think there are enough elements there to circumscribe the mens rea?

Mr. Spratt: If one examines the text of the legislation, it states, "in circumstance giving rise to a reasonable inference that the information is intended to be used." The reasonable inference would appear to be attached to the intent, based on the reading of the English version of the legislation. We are reasonably inferring what the person's intent is.

Senator Joyal: No, no, no. I do not think so.

Senator Nolin: Let us look at the words. The key phrase is "circumstances leading to." We have to agree step-by- step. Do we agree that "knowingly" is the criminal intent? Do we agree on "criminally intend to obtain or possess?"

Mr. Spratt: Yes, we agree on that. The word "knowingly" refers to "knowingly did that."

Senator Nolin: We agree on the actus reus and the equivalent intent of the infraction. We are now wrestling with the circumstances. That is, why does he or she have that criminal intent? That is what we are trying to explore with you.

Mr. Spratt: Precisely.

Senator Joyal: I think Senator Nolin has restated my point. There are elements or steps there. I am very much impressed by your argument. However, when I read the text and I try to apply, at each level, what it contains in terms of requests of knowledge, I am not sure the conclusion as you stated it is correct. Maybe it is correct in the English version more than in the French one. In the French one, in my opinion, the second step is much stricter than in the English one.

Mr. Spratt: It very well may be with the word "conclusion" as opposed to "inference." I agree with you that "knowingly obtains" or "possesses" means that you have to knowingly be in possession of it. It would not be an offence if I slipped a bunch of documentation into someone else's bag.

Senator Joyal: For example, I have the passport of my father on me. Someone cannot say, "You are charged because you possess the identity of someone else," because it is not enough to have the paper of someone else with you.

Mr. Spratt: Of course; I agree with senators completely on that point. The point on which, perhaps, there is a bit of contention is the second phrase; that is, "in circumstances giving rise to a reasonable inference that the information is intended to be used."

The way that it is drafted, at least the way I am reading it, is the reasonable inference is connected to the phrase "intended to be used." What you are forming the reasonable inference of is what the person's intent is.

Senator Joyal: It is the conclusion that you draw from a set of circumstances that leads you to conclude that the intention would be to commit an indictable offence that includes fraud. The circumstances, in my opinion, must include an element of the criminal activity that will ensue from the fact that you hold the identity information.

Mr. Spratt: The concern that I have expressed — and I will deal with the English version right now— is that when we speak about reasonable inferences, normally that is a conclusion that a reasonable person could or may draw. It is not an inevitable conclusion. One can think of many examples where competing inferences could be drawn. For example, a person could have many passports on them, a person with a criminal record, and other circumstances that may give rise to a reasonable inference that the person has possession of those documents for a prohibited purpose. However, that same person could present an alternate explanation — that is, an explanation from which an inference could be drawn. In that circumstance, typically the courts do not choose between inferences if they are both supportable. In that circumstance, if the person testified — and there are issues about shifting onuses there — and provided an alternate inference, it would not matter what the person said.

The Chair: Mr. Spratt, you are more expert in criminal law than I am but similar wording already exists in the code in both English and French. I am the one who asked you about this. For example, in section 351.1.1, possession of break-in instruments, there is a reference to "circumstances that give rise to a reasonable inference" that the instrument has been used. Following that, section 352, possession of instruments for breaking into coin-operated or currency exchange devices, we have, again, "circumstances that give rise to a reasonable inference that the instrument has been used or is intended to be used." Apparently, there is jurisprudence on these sections which upholds them as written, R. vs Holmes, in particular, I think.

Are we having an argument here that, while fascinating in its own right, has already been held by the courts not to matter?

Mr. Spratt: In those circumstances, the courts have made findings after some constitutional litigation. The difficulty here is that the very permissive wording in proposed sub-section 402.2(1), combined with the broad definition of "identity information," could lead to further litigation in this regard.

The Chair: Forgive me again, senators.

Senator Joyal: No, this is part of what we are trying to understand about what we will be doing if we vote for this legislation.

In Holmes — and I am quoting the explanation text under section 351.1, which has the same "circumstances that give rise to a reasonable inference" — the explanation for those words states: "Its external circumstances require proof that this face was, at the material time, masked, coloured or otherwise disguised." No definitions are provided but each is a word of common, everyday usage. For example, he must prove an ulterior mental element; his intent to commit a specified, indictable offence to establish liability.

There is a third element which is the offence of fraud, falsehood and other elements of deceit. You infer, from the moment that you knowingly have the identity paper that there are circumstances around your possession of those papers that might reasonably lead one to conclude that you have those documents improperly. You still must show that you have mens rea for fraud. There are various steps in the process.

Senator Nolin: I think it is more that it may. The infraction is not fraud; it is not "supercherie". It is reasonable to conclude that they possessed or obtained the documents with a reasonable intent to commit those infractions. The real infraction is the first two lines of the infraction. The rest describe the circumstances — that is, the reasonable inference of why that person is doing that.

The Chair: I will ask Mr. Spratt to respond.

Senator Nolin: He raised the concern. We are asking him why.

The Chair: He did indeed, but we have other senators who I think may have equally fascinating concerns to raise.

Mr. Spratt: I think it is safe to say that, in the provision, there would be no question about the specific constitutionality of the specific provision if stronger language was used; language that removed the reasonable inference and simply put "possessed for a fraudulent intent." That might make the Crown's life more difficult but, ultimately, that would be more in keeping with the presumption of innocence and with the state's onus to prove offenses. I think it would eliminate any potential constitutional legislation.

As my friends have said, when a bill like this is passed, there is always litigation about the "legalese" contained therein. If the goal is to have a piece of legislation that can be effective, not delay the process, not increase the amount of litigation surrounding it, and be put into practice immediately when it hits the ground, having the proven constitutional language in the section would facilitate that and make it more readily achievable.

Mr. MacRury: I would like to offer the CBA's view on that. In the first paragraph of page 4 of our submission: The first of these offenses would prohibit possession of another person's identity in circumstances giving rise to a reasonable inference. That information is intended to be used to commit an offence. The type of offence in question is further restricted by the requirement to include fraud, deceit or falsehood as an element of the offence. An inclusive list of the offenses is also provided for greater certainty.

With respect, we would suggest that, when you read the totality of the proposed section, there does not appear to be difficulty. Further, as demanded by the Senate — it is not in our submission — but I have a personal view: In the annotations of my Criminal Code for section 351(1), in R. v. Holmes, 1988 — the Supreme Court of Canada ruled "reasonable inference" was not unconstitutional.

I leave that with you in terms of your deliberations.

The Chair: Thank you.

Senator Baker: I am with Mr. Spratt on these and all the other matters he referenced.

Senator Bryden: Me, too.

Senator Baker: I was thinking about what Mr. Spratt would be thinking about: A case where there is a report of a burglar. The police arrive on the scene and see a car driving fast on an adjacent road. They pull over the car and find a screwdriver in the car. The person driving the car has a criminal record for break and enter. He was convicted on these very words. A "reasonable inference" could be drawn about this person with this particular criminal record.

You or I would not be convicted, or even charged, but certainly this person was found guilty. The exact words here are found in two sections of the code: One deals with break and enter and the possession of tools, and the other one deals with the telecommunications industry, where you have equipment for the downloading of signals from satellites. Some 12 or 13 years ago, we put that into that section of the code, as well.

My question, though, is to Mr. MacRury, who is the person who must take these laws and prosecute them after the police lay the charges? Is it that you find it unusual that, in one piece of legislation here, we have phrases like "a reasonable inference," "recklessness" in another section, and then an exemption for public officers who are conducting a covert activity? That is all in one simple piece of legislation. Add that onto what you have already prosecuted: Offences of identity theft, because those offenses presently in the code that deal with that are now being added onto by other offenses identified in this bill.

Would it be reasonable to conclude that, when you prosecute your first case under this, the accused, in committing one action contrary to the law — we used to call it "delict" — would have quite a number of offenses or counts under the one "delict?" When you look at it, you have someone who is being prosecuted for maybe 10 offenses, whereas, without this bill, the same person would be charged with maybe two or three.

Mr. MacRury: That, certainly, was not in our submission, but I guess I would respectfully disagree with your assertion, on this basis: Even if there were a number of charges, we have protections under the law in terms of Kienapple res judicata that you can only be convicted of one offence for one act. Therefore, I respectfully disagree with that assertion.

Senator Baker: Under Kienapple, you can only "Kienapple" charges if they have the same elements in the offence. There are distinct elements in each one of these offenses that we are talking about here which would lead me to conclude that, after the passage of this bill, you would have several offenses with the same "delict"? I do not know if you would agree.

Mr. MacRury: With respect, that is where you deal with overlap. I will try to make my point with an example. Say you were charged with break and enter and possession of stolen goods, you would only be convicted of the break and enter and not the possession of the stolen goods. They are not exactly the same elements, but that is generally what would happen in our world. Therefore, I would have to respectfully disagree with your assertion.

Senator Baker: Let me ask you about your objection to proposed section 368.2. It says: "No public officer. . .is guilty of an offence under any of sections 366 to 368.1. . . ." Section 368.1 is the proposed section. Is there any reason why in our legislation we use "public officer" as defined under subsection 25.1(1) because subsection 25.1(1) is a section that defines people who not only enforce the law but people who administer the law. You would have a public officer as defined as a peace officer, and a peace officer is defined under section 2 — if my recollection of the Criminal Code is correct — as being a mayor, a reeve, a member of the Armed Forces, and so on. Should the government have been more definitive here and said "police officer" instead or have you ever thought about that?

Mr. MacRury: As you are aware, the CBA strongly recommends that the exemption be removed from the bill.

Senator Baker: Totally removed?

Mr. MacRury: Totally. This legislation can go forward without that. In terms of why that is in there, in terms of the wording, obviously section 25 has some procedural safeguards. If you are adding another exemption, I guess the drafters of this probably wanted to ensure those procedural safeguards were in place.

There is a procedure for reporting provisions that you have to comply with, so obviously that procedure would have to be in place, whatever exemptions there are in the law.

I guess the CBA's view is strong on this that there should not be any exemption for this offence. The exemption under 25.1 is sufficient.

The Chair: We are on the second round.

Senator Bryden: Mr. Spratt, because we cannot rewind the tape, would you say again why you said the criminal law is the last option that we should be dealing with? You said further that other methods can be used, such as regulation. A portion of your presentation gave me the impression that we are perhaps using the criminal law to the point that we may be misusing it, in that the first thing we do is jump and create a new crime. Am I misreading you?

Mr. Spratt: No. My interpretation of the purpose of Bill S-4 is to criminalize some of the preparatory stages of identity theft and related misconduct. I would like to take credit for saying that the criminal law should be used as a last resort, but the Law Reform Commission beat me to that in 1976. I say that, and the Law Reform Commission said that as well, due to the cost of prosecuting criminal offenses, the stigmatization that results upon a successful conviction and the potential penalties that can result in deprivation of liberty and the like. It is for those reasons that criminal law is thought to be the measure of last resort.

You are right when you remember me saying there could be other ways. I would submit that one of those other ways could be through regulations, which can be prosecuted much more aggressively. There are strict liability offenses and absolute liability offenses where the presumptions can be much more adverse to an accused person, and the constitutional safeguards are not as elevated. Regulations would allow for a vigorous prosecution of this type of conduct. Then, of course, there is prevention, which I believe has a great role to play.

Senator Bryden: Thank you. That is the context I was thinking of. Earlier, we heard other witnesses, and a discussion occurred about the maximum penalty under this bill, which is five years. When asked, the person who was giving the evidence, who I think was from the Department of Justice, indicated that the penalties were low because in many instances the Crown will proceed by summary conviction. The new penalties that are included in here are at the very lowest end of what would constitute a reason to arrest and charge a person.

You can understand why I say that. Look at identity theft and the identity fraud and what constitutes it. When you look at the definition in proposed section 402.1, it says:

of a type that is commonly used alone or in combination with other information to identify or purport to identify an individual, including a fingerprint, voice print, retina image, iris image, DNA profile, name, address, date of birth, written signature, electronic signature, digital signature, user name, credit card number, debit card number, financial institution account number, passport number, social insurance number, health insurance number, driver's licence number or password.

Anyone who takes a person's social insurance number without good reason has committed an offence here, and it was explained that that is that is why we do not have big penalties in relation to this.

Is this not the type of thing that would be better regulated or better dealt with in our society the way you indicated a few minutes ago; that is, by regulation. You can actually do it by attempting to prevent these types of crime as against waiting until it happens and then charging with a criminal offence.

Mr. Spratt: I am in agreement with that position, especially since there is such a broad definition, as you pointed out, of personal identification information, and also reflecting on some of the submissions that my friends have made. Consider a young person using someone else's ID to gain entrance to a bar or impersonating someone for what could be described as a socially good purpose, tracking down a deadbeat spouse who has not come through on spousal support. One can think of a number of minor infractions that may not warrant the stigmatization that this broad sweeping legislation may impart upon a conviction.

Senator Bryden: The concern I have had for a number of years, not only under this regime but under earlier ones, is that of going to the criminalization of an activity as a first thing instead of as a last resort — after you have tried something and nothing else works. In recent years, and certainly with the government that we have now, the immediate reaction is to change the Criminal Code. They have a reputation that they are tough on crime. You cannot be tough on crime unless you have a lot of crimes to be tough on. It is of concern, because some of the criminalized activity is very marginal, and yet it carries, in some instances, mandatory sentences.

I want to mention something else, and then I would like to hear your comment. I have a problem with proposed sections 402.2 (1) and 402.2 (2). I find that in both of those paragraphs, in either one alone but particularly if you read both of them together, the criminalization is loosey goosy. My friend to my right said you start with someone who commits an offence who knowingly obtains or possesses another person's identity information. So far, that is my mother and my mother's information. I knowingly obtained it. I knowingly possess it. To this stage, I have not committed any crime. Then it says, in circumstances giving rise to a reasonable inference that I was going to commit something. What gives you the inference? I am wearing a mask. The fact is that it is Halloween. This gets to be pretty ridiculous.

The next one says "in possession for any of those purposes knowing that or being reckless as to whether the information will be used to commit. . . ." We have "reasonable inference," which is not precise, in my view. The next set of problems is "knowing that or being reckless as to whether the information will be used to commit an indictable offence that includes fraud, deceit. . . ." There are so many other possibilities that come out of either of those two paragraphs that neither one of them should be in a Criminal Code, in my opinion.

The Chair: Was that a question?

Senator Bryden: Yes. I asked him to comment when I finished.

Mr. Spratt: Specificity and certainty are to be strived for in the Criminal Code. I am of the opinion that marginal activities that can be dealt with otherwise, should be dealt with thus. That is particularly apt in these times of increasing workloads in our courts and concerns about access to justice and the amount of time that the court process takes. In Ontario at this time, from the criminal lawyer's perspective, there is much concern over access to justice and appropriate funding. We should strive to achieve specificity, certainty and tight, narrow legislation that is not overbroad, which can be unconstitutional at times. In response to your question, senator, that is my answer.

The Chair: Ms. Schellenberg or Mr. MacRury, do either of you want to comment on that?

Mr. MacRury: We support the bill and do not believe it is overbroad. We have commented in relation to our concern with "reckless" but we believe that can be cured with more sufficient language. The CBA is on record as saying that this is a serious problem and this is an important bill.

To answer your question in terms of whether it is necessary, I refer senators back to the decision in Hamilton. In the United States, they accuse courts of being legislators but our courts have made it clear that they cannot expand the law unless Parliament does so. In other words, in terms of counselling provisions in that case, three counts did not go ahead despite facts that are disturbing. They were not the examples that you gave. I respectfully suggest that in the circumstances after the Supreme Court decision in Hamilton, this bill addresses important issues and deserves due consideration.

Senator Bryden: If that is the case, why did you have to say that the CBA recommends that Bill S-4 be amended to expressly exclude general provisions of attempt and counselling and certain types of de minimis behaviour. It is not perfect there. It seems that the CBA section recommends that the relationship between new offenses proposed in Bill S- 4 and the existing general provision be clarified. A third of your recommendations is that we remove the exemption of police and other officials. Three of your recommendations go right to the heart of the justice system as ordinary people have to live with it.

Mr. MacRury: Senator, it is clear from our presentation that we certainly did not say that it was perfect. However, we thought it was a necessary bill, and we are here to offer suggestions on how to improve it with the amendments that we proposed.

Senator Bryden: Are you a prosecutor?

Mr. MacRury: Yes, and a former defence counsel. I went to UNB.

Senator Bryden: Why did you not say so at the beginning?

Senator Banks: This might be the shortest question on the record, but I guess you would have obviated many questions, Mr. MacRury, if you had said that up front.

Did you say in your opening remarks that you found strict liability content in this legislation?

Mr. MacRury: No, I did not say that.

Senator Banks: Did you say specific liability?

Mr. MacRury: No, I do not believe I said that. It certainly was not my intent.

Senator Banks: Thank you.

Senator Nolin: Mr. Spratt, I will go back to section 402.2(1). You have heard the reference in the Supreme Court decision that it is perfectly constitutional to have a reasonable inference of circumstances. Do you maintain your concerns?

Mr. Spratt: I maintain my concerns. This is a broader piece of proposed legislation with broader sections that capture a different set of offenses. I maintain that it is problematic, that it will attract constitutional litigation and that perhaps tighter language could be used.

Senator Nolin: You heard Senator Baker lining up facts that were quite normal — a car, a screwdriver and the person was found guilty. I am sure they use Holmes as an argument.

Mr. Spratt: Yes.

Senator Nolin: The intent of Parliament is to create that infraction, and now we have to make it viable.

Mr. Spratt: My concerns would be eliminated if the phrase "inference" were removed and "fraudulent purpose" were added. It would be very clear. It would pass any level of constitutional muster, and it would not obviate the need, given the breadth of the specific proof that is required.

Senator Nolin: I will argue with you a little. If that were the case, likely I would work to accuse that person of fraud and forget about possession.

Mr. Spratt: Yes.

Senator Nolin: The infraction we want to create is the first step leading to fraud. We already have fraud. The intent in this bill is to create new infractions that will lead to the major infraction of fraud. The infraction takes years to process or to obtain. That is the infraction with intention.

Mr. Spratt: I understand that that is the intention of Bill S-4. In my experience, it would be a novel piece of legislation to criminalize mere preparation, which typically has not been criminalized or viewed as criminal, and it would attract constitutional scrutiny.

Senator Nolin: Of course.

The Chair: This is absolutely fascinating. We could keep all of you here for another four hours, but you will be delighted to know that we cannot because we have other witnesses. You have given us a great deal to think about and we are grateful to you for appearing.

We are now fortunate to have with us witnesses from the Canadian Bankers Association, Mr. William P. Randle, Assistant General Counsel and Foreign Bank Secretary, and Mr. William Crate, Director of Security.

William P. Randle, Assistant General Counsel and Foreign Bank Secretary, Canadian Bankers Association: Madam Chair and members of the committee, thank you for inviting us to be here today with to contribute to your study of Bill S-4, An Act to amend the Criminal Code (identity theft and related misconduct). My name is Bill Randle, and I am the Assistant General Counsel and Foreign Bank Secretary of the Canadian Bankers Association. I will try to say "Canadian Bankers Association" so we do not get confused with the previous CBA. With me today is Bill Crate, our Director of Security. He was a Detective Superintendent with the Ontario Provincial Police and was Director of their Anti-Rackets Branch.

The Canadian Bankers Association welcomes the decision by the government to address the problem of identity theft and the criminal activities associated with it through amendments to the Criminal Code. The Canadian Bankers Association has long advocated for the need to protect Canadians, and we are pleased to express our strong support for Bill S-4 and hope that it will be enacted as soon as possible. We commend the government for moving forward and taking the action that is needed to combat the problem of identity theft.

Over the last few years, identity theft has become a substantial and growing problem. As businesses that handle personal information and the financial accounts of millions of Canadians, the banks take the role they play in protecting the personal information of their clients extremely seriously. They work continuously to strengthen their extensive security systems and preventive measures. We recognize the emotional toll sustained by individuals whose privacy has been invaded and the considerable effort that is required by them to restore their reputations and their credit ratings.

Existing provisions in the Criminal Code and in other statutes have been used against identity theft activities or, more accurately, the fraud that arises from identity theft. For the most part, however, these provisions preceded the emergence of 21st century technologies. For example, section 371 of the Criminal Code states that individuals are guilty of an indictable offence if they fraudulently send "a telegram, cablegram or radio message" with the intent to defraud. The last telegram in Canada was sent in 2006, and even then it was considered something of a relic.

More broadly, there is currently no comprehensive set of modern and forward-looking legislative provisions that provide adequate tools to address the specific problem of identity deception and related offences which lie at the heart of identity theft. There are a number of factors behind the increase of identify theft, including the development of skimming technologies and criminal involvement in computer hacking. A key reason is the limited scope and effectiveness of the current laws aimed at deterring and punishing the kinds of criminal activity connected to identity theft.

Even where the Crown tries to use existing Criminal Code provisions against these activities, it invariably means that an attempt is being made to force the proverbial square peg into a round hole. These serious gaps in the law are a consumer protection matter that require attention. In particular, we note that none of the existing statutory provisions effectively deal with: the possession by one person of identification documents of another individual, the possession of personal information of another person, or the manufacturing or possession of novelty identification. Therefore, we believe that the Criminal Code must be modernized, kept current and evergreen to address these gaps and also reflect the society in which we live, especially the impact of the rapid change of technology.

In our view, the new measures proposed in Bill S-4 will fill many of these gaps and will provide significant and vital tools against identity theft and the problems it creates. As a result, we endorse the approach proposed in the bill, in other words, measures directed to those offences in which identifying information is intended to be used to pretend to be another person or to pretend to have certain attributes of that person. At the same time, in our submission to the committee, we have noted a small number of technical amendments that we believe will clarify the bill and further improve its effectiveness. We trust the committee will consider accepting our recommendations for minor changes to the bill that will deal with these issues.

In closing, we again wish to stress our strong support for Bill S-4. Enactment of this bill, in our view, will be beneficial for consumers and business and will greatly improve the tools available to law enforcement to combat identity theft. Thank you for providing the opportunity to offer our views. We would be pleased to answer any questions you might have.

The Chair: Mr. Crate, did you want to add anything?

William Crate, Director, Security, Canadian Bankers Association: I will be here to respond to any questions.

The Chair: We will begin with Senator Nolin.

Senator Nolin: I will give my time to Senator Wallace.

Senator Wallace: With the rapid change in technologies, it seems with each day criminals seem to have other means at their disposal to commit fraud and wreak havoc on our society. As you look at Bill S-4, are you satisfied that it does satisfactorily address new technologies as they evolve and, in particular, how they might relate to this issue of identify theft?

Mr. Randle: At the moment, we have nothing, so anything is better than nothing, and that is why we support the bill. We have had an absence of anything to deal with this matter. It is an increasing problem because of technology, and therefore we are strongly endorsing the bill. You are right in that you always have a concern that you will be losing track as others move on, which is one of the reasons we suggested looking at the definition of "credit card." We discussed that concern with the Department of Justice, and in our view it is more important that the bill be passed and passed quickly so that we can deal with the issue of identity theft than that it be delayed by any matters such as that. We would, however, believe it is of strong importance that it be monitored as it goes on and Department of Justice quickly make any changes along the lines we and others suggested to deal with what might be technological movements going ahead.

Senator Wallace: Have you found increasingly over time that bank customers are more concerned about identity theft and that there have been serious repercussions because it has gone on unpunished and unchecked?

Mr. Randle: Customers have reacted with increasing concern in the last few years as they became aware of an issue of identity theft, when they or people they knew became subject to it.

I do not think many of them realized that there was no way of dealing with the identity theft itself. Not surprisingly, their concern was that fraud was committed, not the identity theft that initially led to the fraud. We support this bill because it would allow law enforcement to legally take actions to try to stop the fraud occurring before it actually happens.

Senator Joyal: Mr. Randle, in the middle of page 5 of your brief, there is a paragraph with a title in bold letters, "Soliciting Personal Information for the Purpose of Committing Identity Fraud." You state that the bill does not appear to address the act of soliciting personal information for the purpose of committing identity fraud, for example, when individuals are approached by a fraudster asking them to obtain personal information and offering money for its sale. We have raised that concern around the table with previous witnesses. Is it an initiative, because the bill does not recognize that as a crime, that is very common in your activities?

Mr. Randle: Our concern is that it is occurring more frequently. There are several ways of doing it. To some extent, the proposed anti-spam bill before Parliament will address some of these issues because one of the ways of soliciting personal information is to use that type of technology.

In this case, we were raising the issue in this context without expecting that this bill would be the appropriate forum at this time to take the measures needed. It should be considered by the Department of Justice and the federal government going forward.

Senator Joyal: Your second point is about the complexity of defining the word "reckless." Your testimony this evening follows witnesses who, as you know, raised that issue. I believe that you were in the room when it was raised. You make the recommendation either to remove the concept of reckless behaviour as one of the measures of the commission of an offence under proposed section 402.2 or to restrict it to the action of individuals. You say: "If the concept of recklessness is to be included as a measure of the offence, the standard needs to be defined so organizations understand what precautions need to be taken to ensure that they meet the required standard."

Do you think there is a real risk that the bill, as written, could open doors to allegations of responsibility that are beyond what an individual should in fact incur in the way that the bill proposes to legislate?

Mr. Randle: I do not know if I would use the words "real risk." Our issue was that potentially a merchant could be subject to this when the clear intention of the legislation is not to do so. In that context, why have any possibility whatsoever? As you may know, some of our members have quite extensive security measures to protect their personal information. We thought, as other witnesses have said, that the term "reckless" is being used frequently in the Criminal Code. It has, therefore, been subject to definition and interpretation by courts in cases. However, there is no consistent position on the word "reckless," as far as I am aware. In that context, is it necessary to use that phrase in this bill? Would another be more suitable or could some clarification be made. We do not think it is needed in this context.

Senator Nolin: On that, what if the intent of Parliament were to do exactly what you are saying? When you look at the definition of that type of information, we do not want your members to be reckless in maintaining the data. Perhaps the intent of Parliament is to provoke you to prevent that? What is your answer to that?

Mr. Randle: With respect, senator, certainly our members and legitimate businesses who deal with this are not reckless as commonly defined. The concern is that because it is a term that is not clearly defined in the Criminal Code or in judicial interpretation, it is not clear what it truly means? While none of these businesses, including our members, would be reckless with the information, they might be subject to the idea that they were, so we are trying to avoid the ambiguity.

Senator Nolin: Of course, but the definitions that a court adopts, goes around the same thing. I am sure your members are not reckless. If they are afraid of being reckless, you had better teach them how to secure the data of other people so that they are not found reckless.

Mr. Randle: I am pleased, senator, to have the unambiguous endorsement of a senator of Canada that our member banks are not reckless. I appreciate it.

The Chair: The difficulty is that one does not write the Criminal Code for the good guys only.

Mr. Randle: That is true.

The Chair: We will take it as gospel that every single one of your members is wonderful, but this bill does not apply only to your members.

Mr. Randle: We have one senator saying that we are definitely not reckless and the chair saying that we are wonderful.

Senator Nolin: In proposed section 402.2 (2), it is the latter portion that is troubling. "Knowing that or being reckless as to whether the information will be used to commit an indictable offence that includes fraud, deceit or falsehood as an element of the offence." That is the kind of being reckless intended. The test is there, so that is why I say I do not think your members are reckless.

If you think they could be reckless, do you think they should be taught how not to be reckless? I hope the answer is, yes. That is why you have the option. If you do not want to amend the bill, tell us, and we will make sure that they protect themselves.

Mr. Randle: I am willing to accept your endorsement that we are not reckless.

Senator Joyal: It seems that the word "reckless" in the English version at 402.2 (2), as read by Senator Nolin, defines the scope of the recklessness allegation. There are two options: Knowing that the information will be used to commit an indictable offence or being reckless with the information, in other words, not wanting to know.

Senator Nolin: They do not care.

Senator Joyal: Yes, they do not care.

In my opinion, there is an element of negligence in the concept of recklessness; the way that section is phrased — unless I am totally mistaken — is that you have a responsibility, when you hold personal identity information, to manage that information out of reach for people who want to commit fraud.

There are a minimum number of precautions to take, and you cannot say, "Well, it is identity information. It is an open bar; anyone can pick up whatever they want from the sets of information you have." That is because you make all kinds of agreements with other companies to sell information about your own customers. Sometimes I receive solicitations. When I try to find out where they come from, I find out that bank so-and-so has an agreement with company so-and-so, and I happen to be on a list of prospective customers.

I do not mean that what you offer me is illegal. They are pretty commercial kinds of products. However, when you deal with my information — what you know about me — I think you have to be prudent to ensure that it does not fall into the hands of people who would like to use it for other purposes than good commercial purposes that are within your scope of activities.

Mr. Crate: I do not disagree but even banks like TD Canada Trust and TD Waterhouse do not share information with each other without your permission. Any information that is shared is always done with the customer's permission.

Senator Nolin: Do not be afraid.

Senator Joyal: Do not be too defensive.

In my opinion, with regards to the word "recklessness," I understand there is no definition in the code; it has to do with the context. As you stated quite clearly, if there is a system — a computer system or something in your computer system — that you could have used to make sure that none of your employees have access to that information too easily and that it will not be sold or offered for other purposes than the good management of the account, then I can understand that you would have been reckless.

In that case, it will be up to the prosecution to prove that. However, you have a responsibility at the very moment you obtain someone's personal information not to make it too easily available for the purpose of deceit, fraud or other illegal activities of that same nature.

Mr. Randle: We have always agreed on that, senator. The financial institutions in this country have always taken seriously the need to maintain and protect personal information of their customers. There were numerous pieces of legislation in the country that set out requirements. There was a code of conduct between financial institutions, and the duty of confidentiality through the common law, that applied to banks — as I am sure you are aware — long before there was any legislation.

In some ways, the protection of customer information by banks is the strictest it has been. In fact, it has been subject to some concerns by law enforcement in that we too closely control personal information. However, there is no doubt that financial institutions in this country have done a very good job of protecting the personal information they have and only sharing it when the customer expressly allows that.

Senator Joyal: I would not be that concerned about that part of the section; if you feel you manage well the personal data of your customers, generally, I do not think that anything in that section should concern you, unless you can show us that there is a real element there that would put you at risk of being the object of criminal charges.

Mr. Randle: I thank you again for the sterling endorsement and the feeling you have. I am sure all our members will be glad to hear it. Also, yes, we protect personal information and hopefully this issue will never come up.

The Chair: Senator Bryden has a supplementary.

Senator Bryden: I believe it is not that long ago that a large amount of information about the customers of one of the major banks in Canada ended up with a junk dealer somewhere in the southern U.S. If that can happen, why did that bank not know until the junk dealer called them and said, "I have got tens of thousands of pieces of information here on your customers. Would you like to have them?"

Mr. Randle: I am aware of the situation, as is the institution. I do not think that does away with the fact that, as much as possible, our financial institutions make every effort to protect the information of their customers. There may be some isolated incidents such as that. I think that the common thread and the normal procedure is that the information is protected by them better than by anyone else.

Senator Bryden: So you are not totally wonderful.

Mr. Randle: I never said we were wonderful. Fortunately, the chair of the committee did and I endorsed her view.

The Chair: I did so for the purposes of this discussion.

Senator Angus: This is a question to our colleague, Senator Joyal. I am reading and re-reading the French of this section, and I cannot find the concept of recklessness in it.

The Chair: ". . .ne se souciant pas. . ."

Senator Angus: That is the part? Thank you.

Senator Nolin: What Senator Bryden is raising is probably exactly the reason why it is in the bill. We do not want the people who have the responsibility of the garbage to work recklessly. That is exactly the reason.

The Chair: That was a supplementary comment.

Senator Nolin: Do you not think?

The Chair: We now return to the main questioner in this block, who is Senator Joyal.

Senator Joyal: If I may comment on Senator Angus' question, I think Senator Angus raised a very good point. "Recklessness" to me is different from "insouciance." There is a different degree of "consciousness" of what you are doing. I do not know if the Department of Justice will be back to answer on that translation as we did with "reasonable inference" and "conclure raisonnablement." That is in the same section, by the way, Senator Angus: It is proposed subsection 1.

Senator Angus: That is a similar problem. I was reading it. They were not direct translations.

Senator Joyal: They are not exactly direct translation. We are here in the Criminal Code. We are not trying to write nice prose.

Senator Angus: They are putting such a fine point on "recklessness."

Senator Joyal: Of course, it will be for other witnesses than the ones before us now.

May I move on to the issue of restitution that you have raised in your brief? We have raised the impact of this new section of finding in the Criminal Code a provision to allow the court to allow the granting of damages, which is not the proper business of the Criminal Code to do.

However, you suggest to us to add the word "corporation" or "organization" to proposed section 738(1)(d) under clause 11. It would then read:

(d) in the case of an offence under section 402.2 or 403, by paying to a person, corporation or organization who, as a result of the offence, incurs expenses. . . .

In your opinion, the word "person" should be read literally as a human person versus a corporate person.

Mr. Randle: Our point is to make it clear, if possible, that restitution could be extended to both the individual and the corporations. It is not just financial institutions in the case of our members, but merchants and small business people are subject to identity theft leading to fraud and lose money. It is to ensure that in those cases, if restitution is available, they should be able to obtain it. It is a clarification to ensure that they will, if possible, be able to get restitution.

Senator Joyal: I will have to check in the Code to determine if, when the word "person" is used, it includes the corporate entity or only the human entity. One would understand the difference.

The Chair: Now can I put you down for a second round?

Senator Joyal: Thank you.

Senator Baker: You represent the banks, so that is about 50 institutions; is that correct?

Mr. Randle: Yes.

Senator Baker: At times, you take an active part in trying to catch people who steal people's money or identity. I say that because I recall distinctly the last time I saw Mr. Crate on television, he was offering a $10,000 reward for someone who had stolen something from the banks, but I never saw the conclusion. Did you catch the fellow?

Mr. Crate: Yes, within about 12 hours.

Senator Baker: Money talks. Mr. Crate, along that line, if people are stealing information from the banks, would that be one of the methods that you would think about instituting, the offering of rewards for information? That was the only time I have ever seen it done.

Mr. Crate: Those rewards are oftentimes for robbery. Internal fraud in banks is referred to as defalcation. There is no threshold with regard to the bank security people investigating that. They investigate all of those cases. Each and every bank has dedicated security, so they are focused on prevention and what we would probably refer to as education. In some cases, they try to anticipate where the criminal will be, like Wayne Gretzky going to where the puck is going to be, not where it was. They also are focused on detection, and they do that through analytics. The third pillar is the investigation, and much of that is underpinned by intelligence. They take internal investigations seriously because it is their reputation.

We at the CBA maintain an investigative body that we manage, and the authority comes to us through PIPEDA and is overseen by Industry Canada. It is called the Bank Crime Prevention Investigation Office. We maintain a number of databases with regard to employees that have been let go for cause just to prevent those employees from coming back and being hired by the banks. We have a number of activities in place from a prevention point of view. One of the other things we have done recently, and it is a proof of concept and seems to be working quite well, is trying to break down the silos with bank security. We have established a Centralized Financial Crimes Intelligence Unit in the CBA which is collecting all kinds of information with regard to occurrences and photos, identifying trends and patterns and trying to do predictive analysis. We are actually trying to get ahead or be proactive rather than be reactive.

I can tell you that the products we are producing are well received by law enforcement, because much of it is focused on organized crime. In some cases, it does involve someone that either has worked or is working at the bank. We take that very seriously. I do not think we are immune. All kinds of industries have those problems.

Senator Baker: It certainly worked with the reward.

You mentioned PIPEDA. We read the decisions of PIPEDA in the electronic versions of Quicklaw and Westlaw Carswell. Many times, the Privacy Commissioner has to make a judgment that the banks have in fact given out personal information that they should not have given out. Does this bill change, as we say, the water on the beans as far as PIPEDA is concerned and put some greater onus on the banks as far as the release of private information is concerned where it should not be released accidentally?

Mr. Randle: I do not think this bill is directed at that. PIPEDA itself has sufficient protections. In those isolated cases that the Privacy Commissioner has identified, she has taken action and the institution concerned has reacted as it should. It needs to be noted that literally millions of Canadians deal with financial institutions with multi-millions of accounts and personal information. We are certainly not saying we are perfect, and isolated incidences are bound to occur. That is why we have our own policies and procedures, why PIPEDA is there, why the regulations are there and why the Privacy Commissioner has her power. From our perspective, the fact that there are so relatively few of these cases is a compliment to the industry rather than a criticism.

Senator Baker: I congratulate you on the resolutions that I noticed are spelled out by the Privacy Commissioner, in that the person who alleges a loss of private information sometimes does negotiate with the bank and the bank makes a proper judgment accommodating the loss — monetary compensation. I congratulate you for that.

Senator Banks: I am sorry to pound the nail again, Mr. Randle, but the fact that banks do not often act recklessly with respect to the release of information does not mean there should not be a law against it, any more than the fact that most people do not commit burglary does not mean we should not have laws against burglary. Would you agree that in the instance Senator Bryden has referred to and in other cases where institutions, health institutions, for example, have inadvertently left information which would otherwise be private in places where people who ought not to have them get them? I am seeking your concurrence as to whether the word "reckless" would be appropriate in those circumstances?

Mr. Randle: You would not be surprised to hear me say that I do not necessarily agree with you, with respect. I do not want to talk about specific incidents. I do not know whether or not a certain circumstance would meet the requirements in this legislation. I would not know until action was taken and it went before the courts. I would hope that there would be no incidents in which anything done by one of the financial institutions in Canada would lead to any possibility that law enforcement would think such a charge was necessary under the Criminal Code. Apart from that, I cannot really have any other comment.

Senator Banks: Thank you.

Senator Dickson: Following up on the questions from Senator Joyal and Senator Banks, you must be concerned that your codes of practice are not adequate?

Mr. Randle: I would not put it that way, senator, with respect. I suggest that we do have all these codes. Dealing with personal information in the case of federal financial institutions is clearly dealt with under PIPEDA and the regulations, so there is a great deal of control and regulation of this type of personal information. Our concern is not that we would, in an objective sense, be in breach of this provision, but that the provision is so written and so lacking in clarity in some cases that a claim could be made. Our concern is not just the actual action that would take place but the reputational risk.

Even if you clearly won a case, the fact that the case was taken would be a concern. When you have a provision that uses a phrase that is unclear and has potential harmful repercussions, why keep that phrase? It is not just us. The focus has been on us for obvious reasons, but plenty of other people deal with personal information who do not have the degree of sophistication that we have. They do not have the resources or the expert staff. In that case, would they be subject to a claim?

My concern for a small company with only a handful of employees, is that the cost would be great for them. Is that necessary in the context of this proposed legislation and what you are trying to do? Frankly, in most cases, real identity theft and the problems it causes are with organized crime and serious criminal elements, rather than innocent companies dealing with information.

Senator Dickson: I have a follow-up question. What is the process for due diligence and compliance with the codes of conduct? Do you do audits of the individual members? How does that work?

Mr. Randle: Obviously, we would not do it as an association, but each of the institutions has its own procedures in place.

Senator Dickson: Is there no third party overview? It is self-regulatory.

Mr. Crate: The Bank Crime Prevention Investigation Office that we manage contains personal information and we have a third party to do audits. In terms of BCPIO bank member security responsiblities, it is a self-audit.

Senator Dickson: Do you find that to be satisfactory?

Mr. Crate: Yes. We were doing it annually but now we are doing it every couple of years. As a director and overseer of the Bank Crime Prevention Investigation Office, I can order an audit at any time.

Senator Angus: I have a question about the role of the Canadian Bankers Association. In this particular matter, are you taking all of these measures on behalf of all members or do they do it individually, following the standards that you set? I always thought that the CBA was the lowest common denominator, where you can reach a consensus amongst the members. However, the practices that you outline might not necessarily be the ones followed at each of the banks.

It suddenly occurred to me that perhaps you are performing these duties on behalf of the members in respect of identity theft and other matters in this bill.

Mr. Randle: I am not sure what the question is directed to.

Senator Angus: It is security.

The Chair: Are you liable?

Mr. Crate: We have a policy and procedures book with regard to the BCPIO that deals directly with the members. There are some consequences for non-compliance with those policy and procedures.

We do not set security policy for individual banks. You have to appreciate that the last thing they would want is any kind of attention paid to them and their particular business model in respect of managing personal information. Then again, each bank does its own risk assessment in terms of what they are prepared to do. We do not have any such standards. Perhaps Mr. Randle might want to add to that.

Senator Angus: You do not have any standards? You referred to the acronym PIPEDA, which is a set of recommended practices.

Mr. Crate: No. It is two different things.

Mr. Randle: You have various pieces of legislation that control personal information. There is PIPEDA, but there is other legislation as well. In addition, each of the banks has its own internal corporate security department responsible for protecting information and investigating and dealing with potential frauds. They spend many millions, if not hundreds of millions, within the industry per year to update and keep their computer systems at the forefront. Each takes its own responsibility.

There are discussions through the CBA about initiatives that would help in terms of the information but, essentially, they do it internally and spend their own money. They know their own business and they know what they need to do.

Senator Angus: That is fine. I am comfortable, thank you.

The Chair: I have one point of information and one question. The point of information has to do with the discussion earlier raised by Senator Angus and Senator Joyal about "reckless" and "insouciance." There are numerous cases in the Criminal Code where those are the two formulations, depending on the language, on sexual exploitation, criminal negligence, hit and run, criminal harassment and so on. The phrase used in the French version "sans se soucier de" corresponds with "reckless" or "recklessness" in the English version.

On page 5 of your brief, under Soliciting Personal Information, you say that the bill does not appear to address the act of soliciting personal information for the purposes of committing identity fraud. Would that not be covered under the famous proposed section 402.2 (1), although the marginal note calls it identity theft, not identity fraud. Nonetheless, it says that you commit an offence if you knowingly obtain or possess another person's identity information, et cetera, in circumstances giving rise to a reasonable inference. We will not talk about the reasonable inference. However, would that not cover soliciting?

Mr. Randle: Our position on this was that although that provision might cover it, it is not clear that it does so. In the absence of such clarity, we wish to raise the issue. It might well be that previous witnesses, including the Department of Justice, have clarified and answered that issue. We raised it because it was not obvious and clear to us that the provision you mentioned would address the concern we have.

Senator Nolin: Exactly on that, the previous witnesses gave us a quote from a decision of the Supreme Court that says recklessness equates to the conscious disregard of a substantial and non-justified risk.

Mr. Randle: This is true of all the issues that we raised. As we have said, we wish this bill to pass quickly because it is important to deal with a great problem that is getting bigger. We have not raised any issue that would be a show stopper, so we do wish Parliament to proceed with the bill. However, we have expressed these issues and hope that when the bill eventually finds its way to the court system and law enforcers, judges would interpret it quite widely. We have raised these issues at this stage so they could be addressed going forward in potential amendments.

Senator Nolin: I am sure you know enough that you can teach your membership not to behave recklessly. They have all the key words.

Senator Wallace: Mr. Randle, going back to your comments about the definition of "credit cards," you refer to its definition in section 321 of the Code. I see how you are proposing to expand that definition. I can see from what you have on page 4 of your presentation, you would do so by adding subsections (a) i, ii and iii. I believe you are trying to add further clarity to it.

My question is, do you not believe, when you look at section 321 (b), it effectively covers the items that you have included in your re-definition in proposed subsection (a) i, ii and iii? I realize my wording is broad, but my understanding is that the present definition does cover what you are enunciating more pointedly.

Mr. Randle: On this issue, there are several points to it. First, as you say, at the moment, section 321 uses the term "credit card" and has a definition, which, frankly, anyone outside the criminal profession would not think was the definition of "credit card." They have used a phrase, "credit card," and then used a definition of that term which does not really describe that term as you or I —

Senator Wallace: — as we commonly know it on the street.

Mr. Randle: Right. Why not take the opportunity to clarify that? That is our first issue. Second, why not take the opportunity in this legislation to try to deal with prospective technological changes? You touched on that earlier. Third, if possible, clarify it and therefore ensure you are dealing with all the potential possibilities you can think of.

We had discussions with the Department of Justice, which is why in our submission we have said that we feel these are technical issues. As you note, senator, it may well be that the existing definition is broad enough and is interpreted broadly enough by law enforcement and the judicial system to capture the issues we want. In that case, the issues go away, obviously.

However, we wish to record that so that it would be monitored as it went forward, after the bill has passed. It would be seen if there was a gap in these issues and it would be filled. We were not really saying we feel as though there needs to be a holding up of the bill and a thorough review while it is being looked at. We just wished to note our concerns on those particular points.

Senator Wallace: On that point: You are not necessarily saying that section 321 as it is now worded has a gap that would be filled by your suggested amendment. Rather, you believe it would add more clarity, but you are not necessarily saying there is a gap in the current legislation?

Mr. Randle: We think there may potentially be a gap because this section has not been used in the context of identity theft because that was not an offence. It is now. Whether this current provision is sufficient for identity theft will be tested by the courts.

I recognize it is very wide and that the views of others are that it would be sufficient. We are simply saying: Why use the word "credit card"; why take a chance when you can clean it up? We have accepted that the current provision is very wide, it may be sufficient, and we should proceed on that basis.

Senator Wallace: May I just have one more question? I will be very brief. On your comments about restitution and the suggestion that identity theft does result in damage to individuals and, as you suggest, to corporations, as well. I think we get your point.

More for the purpose of clarification — I suspect you are aware of this — when I look at clause 11 of the bill, it is not designed to provide a remedy for all damages that may result from identity theft. Specifically, it deals with expenses incurred to re-establish the identity of the individual who has been the victim of the theft.

If you want to comment on it, fine. As it is now written, it does not get to the issue you are raising of covering all damages. I think many of us believe that is an issue for the courts. Civil proceedings would deal with the issue of damages rather than criminal law. I think you are raising more of a civil issue than what would be dealt with under the code.

Mr. Randle: I am more than willing to accept that, senator. I think that is a correct analysis.

Senator Wallace: Good. I will leave it at that.

The Chair: Thank you both, Mr. Randle and Mr. Crate. We are very grateful to you. It is extremely interesting stuff. Again, this bill has turned out to be absolutely fascinating.

Honourable senators, we will suspend briefly and resume for a brief in camera session.

Senator Banks: Before you adjourn for the purposes of going in camera, I would like to bring something up, since I may not be here. Look at proposed section 402.1 of the bill. I would not bring this up if this was a C bill but it is an S bill. I am coming at this from the angle of show business, so please forgive me. It is a trick I learned in show business. Technology moves so fast that definitions in law go out of date very quickly.

You would obviate any such question if, in the last line on that page, you said ". . .including biological or physiological information of a type, whether or not known, that is. . . ." It is impossible, in this bill or any other, to contemplate where technology having to do with that innovation might be 10 years hence, never mind 20 years hence. In jurisprudence which already exists, that phrase happens to work.

The Chair: Colleagues will know that you have hit upon a subject close to my heart in connection with a different clause of this bill. However, we will not have a long discussion about it now. We thank you for your contribution and we again thank the witnesses.

(The committee continued in camera.)


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