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Proceedings of the Standing Senate Committee on
National Finance

Issue 9 - Evidence

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OTTAWA, Tuesday, May 15, 2001

The Standing Senate Committee on National Finance, to which was referred Bill S-23, to amend the Customs Act and to make related amendments to other acts, met this day at 9:31 a.m. to give consideration to the bill.

Senator Lowell Murray (Chairman) in the Chair.

[English]

The Chairman: Senators, we have before us, again, government Bill S-23, to amend the Customs Act and to make related amendments to other acts. As you know, this government bill was introduced in the Senate. We have had two meetings recently. We have heard from the minister and officials from the Canadian Customs and Revenue Agency.

Our first witnesses this morning are from the Canadian Bar Association. Later we will hear from the Canada Association of Importers and Exporters and from the Canadian Society of Customs Brokers.

I am happy to welcome, from the Canadian Bar Association, Ms Daphne E. Dumont, Mr. Benjamin J. Trister, and Ms Tamra L. Thompson.

I invite you to proceed.

[Translation]

Ms. Daphne E. Dumont, President, Canadian Bar Association: The CBA is a national organization that represents over 37,000 lawyers, judges, notaries, law teachers and law students from across Canada. We are the voice of and for all members of the profession and one of our primary objectives is to improve the law and the administration of justice

[English]

We are here today because we have serious concerns with those provisions of Bill S-23 that greatly expand the government's power to open and examine mail. Specifically, we are concerned about the erosion of Canadians' right to privacy and with the loss of lawyer-client privilege.

As you know, under the current provisions of the Customs Act, officers can open any imported goods, including mail weighing more than 30 grams, and take samples if they suspect on reasonable grounds that the package contains prohibited, controlled or regulated goods. Mail weighing less than 30 grams cannot be opened for any reason unless the recipient consents or unless the officers obtain a warrant.

This envelope contains a few pieces of paper and it weighs more than 30 grams. This is what the customs officers can now open when it comes into Canada.

The power of customs officers over exported goods are currently much more limited. They can open and examine exported goods in the same manner as imported goods, but currently they cannot open mail of any weight without a search warrant.

The Canadian Bar Association believes that the powers of customs officers in this regard are already too broad. We also believe that the officers go beyond their broad powers in opening mail. This bill will broaden those powers even more by extending to exported goods and outgoing mail the same powers that customs officers currently hold over imported goods and incoming mail.

We oppose these changes on two grounds. First, they would greatly increase the power of customs officers to open and examine international mail, invading the privacy rights of Canadians. Second, the new provisions seriously threaten Canada's longstanding and necessary principle of solicitor-client privilege.

The first objection is based on the practical reality of how customs officers currently use the powers that they already possess. In fact, they routinely conduct random checks of incoming mail weighing over 30 grams - which would be anything bigger than this letter - and they report the contents to other government departments, including the Department of Citizenship and Immigration. This is only lawful if reasonable grounds for suspicion about the mail exists. Opening packages and mail at random is, in itself, a process in which there cannot be any element of reliance on reasonable grounds to suspect anything because it is random. In this context, we urge the committee to be extremely cautious about extending customs officers' powers even more broadly to include opening mail leaving Canada.

Our second objection focuses on solicitor-client privilege, which is the highest privilege recognized by our courts. I wish to make it very clear that solicitor-client privilege does not belong to or benefit the lawyer. We are not before you today to argue for the interests of lawyers. The privilege that exists between solicitors and clients belongs to and is for the protection of the client. It is the client's rights that are being violated and whose outgoing mail will be randomly opened and searched under these new provisions. The guarantee of security from unreasonable search and seizure, which is set out clearly in section 8 of the Canadian Charter of Rights and Freedoms, protects a Canadian citizen's reasonable expectation of privacy.

We do recognize that the state has a pressing interest in protecting its borders, but we believe equally firmly that the existence of the solicitor-client relationship triggers the application of the Charter and that searches and seizures of privileged communications are a violation of our rights.

There are a few exceptions to this rule of privilege, but each has an extraordinarily high threshold that must be met before the privilege can be overcome. The CBA believes that the current random searches by customs officials do not come close to falling within these few exceptions. The provisions of Bill S-23, which extend the powers of search to search the mail, do not pass these tests either. That is why we are here and why we urge you to amend the bill.

[Translation]

I will ask my colleague, Mr. Benjamin Trister, to explain what the consequences of broadening this power will be.

[English]

Mr. Benjamin J. Trister, Vice-Chair, National Citizenship and Immigration Law Section, Canadian Bar Association: Honourable senators, Ms Dumont mentioned the issue of the test of reasonable grounds and how it is applied. We think it obvious that random searches do not meet the test of reasonable grounds. One of the things that drew the Citizenship and Immigration Law Section into this issue is that there is a provision of Bill C-11, which you will eventually see, that allows for the compelled examination for immigrants. The wording of that section is basically the same as the wording that allows the government to search the mail. Our concern is that the Department of Citizenship and Immigration wants to open immigrants to random searches like customs opens the mail.

It is a difficult problem. If the government does not insist on reasonable grounds being a meaningful standard, then there is considerable danger to our rights, as we expect them to be upheld and respected by our government.

We suggest that random searches do not meet the test and that the department, as it currently operates, is not worthy of being granted additional powers in this regard.

I was intrigued, at a recent sitting of our committee, by a statement made by a witness who I believe was from the department. He said they do not read the mail, period. I can tell you that is not the case. It is obviously not the case.

In the first place, the department acknowledges that it forwards the mail on to relevant departments. Obviously, you cannot forward it unless you know where it must go. You can only know where it must go by reading it.

More important, we have had shocking examples of the interference of this search process in the legal system. In one case, a colleague of mine, Dennis McCrae, from Vancouver, was sent an affidavit by his client that would eventually be introduced in a court proceeding. As it turned out, the package was intercepted by the department. The affidavit was copied and it existed on the file of the government's lawyer at the hearing prior to its introduction by counsel. That is, I would respectfully submit, a glowing and startling violation of solicitor-client privilege caused by the current government practice of searching incoming mail.

Another case involved a refugee claimant, one of the people who came off the boats in Vancouver. He was sent evidence from China. The package was opened and held without notice to counsel. The claimant had to go through his entire refugee hearing without the benefit of this evidence, although he was found to be a refugee.

These are glaring, although small, examples of the kinds of problems that happen when mail is interfered with.

In general terms, Canadians have an expectation of privacy. We think the case law is clear that Canadians have that right. I suggest to you that the current practices, in relatively short order, will be the subject of a declaratory action as we will be seeking the court's view on how the current act is administered.

In that context, it was startling to us that this bill was introduced very shortly after the outcry following the discovery that incoming mail was being opened. This is an area that concerns us greatly. I would expect that if this provision is allowed to proceed as drafted, that it, too, will become the subject of litigation based on the arguments for general privacy rights and Charter rights, as well as solicitor-client privilege.

The Chairman: Do I understand correctly, Mr. Trister, that you are of the view that the present practices - never mind the bill that is before us - infringe on the Charter?

Mr. Trister: Yes, absolutely.

Senator Banks: That is precisely my question. I have not brought the bill with me, for which I apologize, but I think I am correct in saying that it does not contain an authorization for anyone to randomly open mail. Neither the current act nor the proposed legislation in the bill authorizes anyone to randomly open mail.

Now I have a copy of the document. If I remember correctly, the bill does not authorize that.

The Chairman: The clause which the CBA wants deleted is clause 59(4), on page 64.

Senator Banks: Clause 59(4) reads:

Subsection 99(1) of the Act is amended by adding the following after paragraph (c):

(c.1) at any time up to the time of exportation...

I presume that the word "may" would precede this.

The Chairman: Subsection 99(1) starts "an officer may," and then goes to (c).

Senator Banks:

(c.1) at any time up to the time of exportation, examine any mail that is to be exported and, subject to this section, open or caused to be opened any such mail that the officer suspects on reasonable grounds contains any goods the exportation of which is prohibited, controlled or regulated under any Act of Parliament, and take samples of anything contained in such mail in reasonable amounts;

The presumption in that paragraph is one of reasonable grounds. It seems that you - and we, perhaps - have a complaint that the officers at present - and might in the future - contravene that provision in the Act.

The question before us is the act, not whether someone is contravening it. I do not believe that clause 59(4) authorizes anyone to randomly search mail.

Would you please comment on my view that the bill is right, the practice is wrong, and that we must in some way address the question of the practice? The bill is right in that it requires reasonable grounds for the opening of that mail.

Ms Dumont: I will yield to Mr. Trister in a moment, but it seems to me that while the practice is wrong, it is certainly dangerous to extend the areas into which that practice can reach. The Canadian Bar Association would prefer that the practice be corrected before any extension be undertaken of the areas over which the practice can reach.

Senator Banks: That is an administrative question, not one of legislation.

Mr. Trister: We would argue it is one of legislation. The department has readily admitted on the public record that it engages in searches for fact-finding purposes that are random in nature: for example, the country of origin. It is important that legislators send a clear message to the department to the effect that they are not happy with what the department is doing. Legislators set the law and the department is not following it. The department should be told that until it gets it right, legislators are not going to give the additional powers it wants.

That is just one aspect. For us, there are two issues. There is the general problem of opening people's mail. You may say the practice is acceptable if there are reasonable grounds. That is a policy choice the government gets to make.

However, given the Supreme Court's recent decision in McClure, which dealt with solicitor-client privilege, we say there must be an extremely high threshold that goes far beyond reasonable grounds to interfere with mail destined for a lawyer, or between lawyer and client. We have suggested in the letter that we wrote to the chairman of this committee that, as a minimum, an amendment should be included in the legislation that specifically exempts mail that can be identified as being sent or received by a solicitor.

Senator Banks: For our edification, what is the difference between a piece of mail that I either import or export from the country, on the one hand, and a piece of personal property that I carry in my pocket, on the other hand?

When I come to a border crossing of a new country, there is a certain mitigation of my expectation of privacy. I expect that someone may - perhaps randomly, depending on what country we are talking about - want to look at whatever I have on my person. I can always turn around and return to where I came from. I do not have to submit to that search. Tell me the difference between the two situations.

Mr. Trister: If you are talking about what the government is looking for when someone enters the country in terms of personal property, you are talking about dutiable items or items that are on a restricted list. People, generally speaking, if they are carrying that kind of thing, they have guilty minds. They know that they will be going through the examination process because it is established.

I submit to you that Canadians have a greater expectation insofar as their mail is concerned. The original idea behind giving this power was that if something could be felt in a package it might be a piece of property that is why you would want to search it. We are now getting into this area where it is 1984 all over again. Despite what we are told, the state wants to read the mail that is being opened. These are either ideas or personal aspects over which the state has no legitimate interest. It will expose itself to a broad range of personal information just to get at the small range of what it might successfully capture that would be useful to the government.

That is an overreaching power. It disadvantages too many people for small advantage to the government. People have a right to expect that what they write and what they send, if it is not dutiable, will be kept between them and the person to whom they send mail.

Senator Banks: If I were a criminal, I could assume that whereas I cannot walk across the border with a nefarious package, I should be able to mail the same thing with impunity. Is that right?

Mr. Trister: It depends on what it is. There are various ways of determining what is in a package, if there are reasonable grounds.

It is not like the CBA is taking a position exclusive of mail to which solicitor-client privilege applies. We are not taking the position that reasonable grounds do not warrant the opening of mail. In the current way in which the act is being administered by the department, as set out in admissions by the minister and department spokespeople in the House and to the press, they admit that random searches are being conducted for information-gathering purposes.

Senator Banks: I agree that is horrible. However, I do not think that is the question.

Senator Stratton: I expect that its lawyers told the department that this clause would be challenged. If that is the case, then why would it go forward with the clause? Surely to goodness, the department must have been aware that it would be challenged.

When you first heard of this bill coming before Parliament, you must have thought that, perhaps, this was similar to moves that are taking place in Europe. When you now land in the European Union, you go through customs and can then travel around Europe with very little in the way of checking. You can fly from London to Paris, to Brussels and to Rome without having to go through customs again. When you consider this bill, you must say that this is exactly the opposite of where the European Union has gone, or appears to have gone.

We hear about industry wanting freer and more open borders for the transportation of goods right to Mexico. When we address this restriction, I am flummoxed as to why the government is pushing it in this way, in particular when it knows there will be a court challenge. I am puzzled. Perhaps you are not the right group to ask, but I would surely like to have some light shed on that matter, if I could.

Mr. Trister: First, it has been our experience that departments are more than willing to head into legislation knowing that they will be challenged in certain areas. They bide their time until and if that happens. We know of clear instances in which the immigration legislation, as set out in Bill C-11, will violate the Charter. We tell the government not to do it because that will create work for us. The government does it anyway. That is fine - we will meet the government in court. Bill S-23 is another of those instances.

Our government is very concerned about security and about problems with organized crime, et cetera. There are many legitimate and modern challenges facing our country. The challenge for legislators is to strike the right balance and to ensure that when departments run afoul of the balance set by the legislators that they are held accountable. They must be made aware that statements they make before committees which differ from statements made in the House will be challenged. They must know that they will not be given additional tools until they are responsible with the tools that they have been given.

Senator Finnerty: How do you determine what are reasonable grounds for opening mail? I regard a customs official as being professional when he opens mail that is considered confidential. I do not know how we would ever determine what the guidelines are for reasonable grounds.

Ms Dumont: Our basic concern about reasonable grounds is that a package, or envelope, which clearly has something in it will give rise to reasonable grounds more readily. For example, a little square box sent through the mail might be a present for your mother, but it could be something that, when imported into the country, may be sold illegally, or something like that.

As long as the government admits to searching simple things that have three sheets of paper in them, that can never give rise to reasonable grounds. In general, just a few sheets of paper which can be identified by passing a package through an x-ray machine would never - or very, very rarely - give rise to reasonable grounds for thinking that the package contained a substance or an object, the importation of which is illegal.

As for export, we are really puzzled as to why exported pieces of paper are of concern to customs at all.

Senator Finnerty: With the thousands of pieces of mail that go through customs every day, it is hard to believe that officials are opening letters of that size and reading them. I do not think they would have the manpower or the time to do that.

Mr. Trister: The Privacy Commissioner suggested to the Minister of Citizenship and Immigration that she obtain a warrant before opening these packages. The minister replied, "We open so many of them that if we had to obtain warrants we would grind to a halt." Clearly, by her own admission, a significant amount of mail is opened.

I have had my mail opened. I had the largest immigration practice in the country, but it is a corporate immigration practice representing multinational clients. The mail is opened because it is international traffic. The last piece of mail that was opened was a courier pouch. The only piece of paper in the pouch was a cheque to pay my fees.

I did a Privacy Act search of all of the government databases to see if my name was in them. I did that because I thought there must be a feeling that there were reasonable grounds to assume that mail coming to me would be an issue. My name is not in any of the databases. If that is so, why was that package opened? My only suspicion is that the client was from Lebanon. I know that mail from Holland is opened, for example. It is done more on a country-wide basis. Again, the government admits it does so for fact-finding purposes.

Reasonable grounds are something more than that. The test for reasonable grounds does not necessarily have to be a high test, although the Minister of Citizenship and Immigration said it was a very high test. She said, "We do not open packages unless we suspect fraud," which clearly is not the case. From what I have read of your transcripts, you have heard more realistic evidence of what the test is. It is not such a high test. However, it is more than random.

Senator Banks: Let us not be naive. You both know perfectly well what kinds of things could be contained in the envelope which you held up, Ms Dumont. Some of those things could be illicit. There could be microchips or microfilm. There could be little dots with God knows what in them.

Sometimes the reason given, which sometimes seems to be reasonable, is, precisely, the source of the mail.

Mr. Trister: Let us talk about outgoing mail. If we are worried about contraband, should we not be happy that this stuff is leaving the country?

Senator Banks: Not necessarily.

Senator Stratton: I was busy at other meetings last week and missed the presentation by the government. If this is being done, we should be told what the success rate is. Were we told how many pieces were opened from Lebanon, Iran, Iraq or wherever? There must be justification for that. The government must be able to state that there is a problem with mail from Lebanon, for example, what the problem is and what its success rate is. Did we hear that?

Senator Banks: I do not think we heard any numbers.

Ms Dumont: To follow up on Senator Banks' comment, we must remember that to find a blotter charged with an illegal substance might require opening hundreds of thousands of privileged letters, of absolute purity, between lawyers and clients or mothers and sons. It seems to me that the infringement on what Canadians expect, which is that the government will not open personal mail, is massive in that case. Most people who try to import something illicit will probably not receive it in tiny envelopes. Most mail in such envelopes is innocent, private communication, which we have a very powerful right and need to think is privileged, particularly between lawyers and their clients.

You risk something else when you say that correspondence to lawyers can be opened. Lawyers have very powerful ethical standards. If someone foolishly mailed me something like that, I assure you that it would not be trafficked on the street. It makes no sense that mail between clients and lawyers would contain that sort of material.

Mr. Trister: To follow up on the comment that I made half jokingly, the fact is that there are different policy reasons for searching incoming packages. It may be to ensure that required duty is being paid or to protect the public from biological agents that could hurt people. That is fine. However, there are different public policy considerations that come into play in searching outgoing mail. Frankly, we are at a loss to figure out what the state objective is here. We have heard different things. We have heard it suggested that it may be because the countries to which the mail goes do not have the ability to search incoming mail so we will do it on the outgoing side.

I suggest that if we used the security argument for outgoing mail, it would not be too much of a stretch to say that we will search incoming or internal mail too. What would be the difference in policy objectives? This is putting a public security measure in the Customs Act that is really not related to customs at all. This is the thin edge of the wedge.

Senator Banks: That is true. One difference would be that it is unlikely that someone would mail stolen passports from Shawinigan to Winnipeg. It is more likely that passports would be mailed outside the country.

Mr. Trister: It is even more likely that stolen passports are not even manufactured domestically. It is more likely that they are manufactured by smugglers abroad. I am not so sure that any policy objective, if the government could bother to articulate one, would justify the kind of intrusion on privacy rights that the government has been engaged in and proposes to further engage in.

The Chairman: Clause 59(4) is the one you want removed. You do not seem to have the same objection to clause 59(2), which deals with imported mail.

Mr. Trister: That is because Clause 59(2) is not an addition. It is simply a wording amendment to the current section, which we will attack in court. Feel free to delete that clause too.

Ms Dumont: It is really concerning exported mail that we are here.

The Chairman: As a layman, I see that the distinction made in the law is that the mail contain goods that are prohibited or whatever. Is that distinction important in terms of the enforcement of the law?

Mr. Trister: A 30-gram limit does not necessarily entail goods at all. Thirty grams is pretty much what a FedEx cardboard envelope weighs containing a single cheque to pay my fees. How that is considered goods, I do not know.

The Chairman: I would have thought there were various scanning devices and other technological things that could be used to detect whether there was anything in the envelope beside your cheque.

Mr. Trister: I suggest that the inspectors know there is nothing in the envelope other than a piece of paper and that they want to see what is on the paper. Statements to the committee and in the House by the minister that they do not read the mail are farcical.

Senator Cools: The witness has repeatedly referred to a statement that the minister made. Perhaps he could put it on the record where the statement was made and in what circumstances.

Mr. Trister: The Minister of Citizenship and Immigration made that statement in the House in response to a question. I believe it was during question period.

Senator Cools: Do you know when?

Mr. Trister: That was in a letter to the Privacy Commissioner as well.

Senator Cools: If you have the letter, perhaps we could see it.

Mr. Trister: We can provide it to the committee.

Senator Cools: Do you know when the minister made the statement to the chamber?

Mr. Trister: It was in March.

The Chairman: Was there not a statement made at the committee last day, to the effect that mail is not read? I do not know whether it was by the minister or an official.

Mr. Trister: Yes. I believe that Mr. Lefebvre said that.

Senator Cools: Mr. Lefebvre did say something to that effect.

Mr. Trister: I would like to know how affidavits show up on government files and I would like to know how inspectors know what department to send the documents to.

Senator Tunney: Mr. Trister, suppose for a few moments that are you not a solicitor. You are a lawyer and you do not have any clients. You have been given the responsibility to develop a bill that will improve our security and will deal more effectively with criminality. You are totally and individually responsible for rewriting the law. I would like to know how you would write it, given your mandate to effectively curb or diminish the criminality that exists through mail.

Mr. Trister: One would hope that the drafter of the legislation would be a lawyer and that, in the context of drafting, he or she would be sensitive to Charter obligations, for example.

Perhaps I am misinterpreting your question, but I almost feel that you are asking me what I would do if security were my only objective. I suggest that security could not be my only objective.

Senator Tunney: I agree with you.

Mr. Trister: I would write the bill in the way that we have suggested. If reasonable grounds were really reasonable grounds, I could live with that. Our problem is that we do not want you to extend this because they are not engaging in legal searches at the moment. That is that issue.

We would also amend the section to ensure that solicitor-client privilege be protected. If the act does not do it, the Supreme Court cannot do it. If not immediately, we could eventually reach our common objectives by making those changes and by making sure we hold the department to what the standards are. It is unfortunate that we, as lawyers, have to do it, but that is part of our lot in life.

Senator Cools: It is a heavy, onerous burden.

The Chairman: With regard to being more careful, or perhaps more explicit about what constitutes reasonable grounds, how are you suggesting that might be accomplished? Are you stating that the officers should be required to get search warrants, or are you suggesting that we could somehow codify reasonable grounds in the regulations?

Mr. Trister: As lawyers, we know that the courts understand and have sensibilities to reasonable grounds and will define it fairly flexibly, given the context and the interests that are involved. It is not that the wording is deficient. It is just that, clearly, the government's practice of random searches is pretty much the one thing reasonable grounds is not. If it has to be defined, one could say that searches cannot be done for information-gathering purposes without a warrant, for example. It depends on what you are trying to protect.

I suspect that what will happen with the current legislation is that the courts will give us their view. They will articulate the test when we ask for the declaration, and then we will argue various aspects of the Charter to get them to elevate the test. The government will then be expected to adhere to it.

The Chairman: On that note I will call on Senator Cools, who has very well articulated views on the subject of judicial activism.

Senator Cools: Thank you, Chairman. What an introduction!

From what I can grasp, you are essentially asking the committee to delete a particular clause or, in the absence, inability, or lack of desire or will to delete it, to substitute the clauses you recommend.

Let me caution you that many witnesses come before us with written clauses that they recommend, but any such recommendation would have to be drafted by our drafting people and then would have to become an entire process in which everyone here and the entire Senate would be engaged. It is not as simple as it looks. That is my first point. It seems simple, but it is not.

Your recommendation raises real concerns for me. I have many serious questions. I must tell you, on the face of it, I am not inclined to support your recommendation. However, I am prepared to be open. My colleagues can tell you how open-minded I am and how extremely cooperative I am.

The Chairman: That is not necessarily the same thing.

Senator Cools: On the issue of solicitor-client privilege, you have made some very interesting statements. The material contained in your written submission, to my mind, equates privacy, confidentiality and solicitor-client privilege. It seems to me that you or some people here have been questioning what constitutes reasonable grounds. The real question is: What really does constitute solicitor-client privilege?

Solicitor-client privilege is the most narrow privilege of all the privileges. Your document describes it as the highest privilege recognized by the courts. I would challenge that, but it is an extremely narrow privilege. Privilege is an entirely different matter from privacy or confidentiality. You can have a conversation with any individual and be pledged to confidentiality, but it will not necessarily be accorded solicitor-client privilege. It will not be accorded privilege. Privilege is an entirely different issue from just the issue of privacy or just the issue of confidentiality.

I understand many lawyers have an interest in having a pretty wide scope and as wide a definition as possible of solicitor-client privilege. However, of all the privileges we have, Her Majesty's privileges - they are Her Majesty's prerogatives, really, in the hands of other people - solicitor-client privilege is the most narrow. It is much narrower than judges' privileges and judges' immunities. To begin with, it is a qualified privilege. It is not even an absolute privilege. You are talking to someone who has studied the matter extensively.

The record cannot show the facial expressions of Ms Dumont.

There are many questions. I thought you were trying to persuade me to support your proposition. The real question is: Why are you equating the notions of privacy and confidentiality to privilege? There are many privacy relations that go on, such as those between doctors and patients. None of those are privileged.

Solicitor-client privilege exists for the securing of justice. It is a very important public policy issue and a public interest issue when solicitor-client privilege may be used to defeat the purpose for which it was created, which is to secure justice. I wonder if you could clarify those points.

Ms Dumont: Your first question is: Why are we equating solicitor-client privilege and privacy?

Senator Cools: All privacy is not privileged. All confidentiality is not privileged. If I were to approach you and you, as a lawyer, were to give me financial advice, it would hardly be privileged. It would be confidential, but it would not be privileged.

This is the second time in the last few weeks that the question of solicitor-client privilege has been raised. Perhaps at some point in time we could do a more fulsome and a more able-bodied and full-bodied study of what constitutes solicitor-client privilege because I think there is some confusion around the table.

All privacy between lawyers and clients is not privileged; neither is all confidentiality.

Ms Dumont: Our concern today is that a client who writes to a lawyer has a reasonable expectation that others will not be opening the mail and reading it. People write to their lawyers, as you say, in order to secure justice in the process of a case or in proposing purchase of land or something like that. If they are proposing that from their summer residence in Florida or from their daughter's house in Buffalo, New York in writing to their lawyer in Canada, we feel that the current legislation could permit customs officers in their random searches to open and read that mail to the lawyer, which people, first, expect not to have opened and, second, expect the lawyer to keep secret when it arrives. That is our concern.

We think that the citizen's expectation, the expectation of the person who sends mail is that his or her mail will not be read and that is strong enough to justify our argument that this clause should be removed.

The random searches that occur will be hitting lawyers' communications. The person who sends communications has an even greater expectation that their communications will be secret between the person and his or her lawyer. As you rightly say, one cannot administer justice without people having confidence that their lawyers can discuss things with them without having everyone else know about it.

Senator Cools: What you have just described is the right of privacy, not privilege. Every exchange between a lawyer and a client is not privileged. The members of the committee should try to grapple with the fact that what the witness has just described is privacy and not privilege.

Mr. Trister: With respect, senator, I think you would find that the Supreme Court has elevated solicitor-client privilege, or at least recognized the significant position of solicitor-client privilege in the case of McClure. Privilege attaches to any communication between a lawyer and a client about a matter. It is broader than you might think. If we discuss a baseball game, that is not privileged. However, if we discuss the subject of a matter, it is privileged.

I would also like to read a short portion of the decision of the Supreme Court in which it said about solicitor-client privilege:

This privilege, by itself, commands a unique status within the legal system. The important relationship between a client and his or her lawyer stretches beyond the parties and is integral to the workings of the legal system itself. The solicitor-client relationship is a part of that system, not ancillary to it.

The prima facie protection for solicitor-client communica tions is based on the fact that the relationship and the communications between solicitor and client are essential to the effective operation of the legal system.

I do not know if you were here, senator, when I was talking about the affidavit that was mailed to the lawyer, copied by customs and given to the department and the department's lawyer and which then appeared on the lawyer's file before it was introduced into evidence. That is what is going on. Surely, that is privileged, even by your own definition. Surely, that is something that would bring the administration of justice into disrepute.

Senator Cools: The privilege that protects the affidavit, which is a sworn document, is not solicitor-client privilege. That is another privilege that protects a sworn affidavit. It is not solicitor-client.

Ms Dumont: That is not correct.

Senator Cools: There are two sorts of privilege in operation there. The courts themselves are protecting affidavits. The fact that it was sent to you is another privilege. There are two. There are a couple of privileges operating right there.

Do not misunderstand. I am not a supporter of a department being irresponsible or of customs officers being irresponsible. It seems to me you have solid ground on the questions of privacy. There is no doubt about that, but I think on the questions of privilege it begins to get somewhat weaker.

Mr. Trister: We suggest to you, as a matter of law, that we feel we are on extremely solid ground on that issue.

Senator Cools: You must be clear as well. Solicitor-client privilege is already protected. The mere fact you could cite those judgments already states and testifies to the fact that it is protected.

Ms Dumont: The protection is the government saying to government functionaries, "Do not interfere with this communication." Protection is only of value if the protection is carried through. As letters to lawyers come through, they are passed, they are not read. Protection is of no value as an idea. It must be imposed upon those people who might read my mail or your mail to me.

It is no comfort to the Canadian Bar Association to say it is already protected. We have come here to say that it will not be protected if this clause stays in.

The Chairman: Thank you both for coming.

We have two more witnesses, honourable senators. I remind members of the committee that I intend to convene the committee in camera immediately after we have heard from our next witnesses so that we may discuss our next steps.

I would ask the representatives of the Canadian Association of Importers and Exporters and of the Canadian Society of Customs Brokers to come to the table, please.

These two organizations have agreed to appear together. They will be making separate, brief opening statements. I call on Mr. Armstrong first.

Mr. Bob Armstrong, President, Canadian Association of Importers and Exporters: Honourable senators, I appreciate very much this opportunity for the Canadian Association of Importers and Exporters to appear before you this morning to comment on an important piece of legislation, Bill S-23.

I am accompanied by Mr. Worley, who is a very active member of our association. He is the customs manager at Merisel, which is a major importer of computer hardware and software.

Our association supports in principle the initiatives undertaken by the Canada Customs and Revenue Agency to modernize the Customs Act and to bring procedures more in line with today's business realities. Over the last several years, our association has been heavily involved with the agency and its predecessor, Revenue Canada, and even more since the launch of the original customs blueprint by Minister Dhaliwal. A year ago at our spring conference, Minister Cauchon launched the agency's customs action plan.

We have participated in rather lengthy discussions and a long consultation process. We have made numerous submissions to the agency, providing the input of our members across Canada. We represent some 650 companies. While some are the very largest importers, such as our large electronics and automotive retailers, more than 50 per cent are small and medium-sized enterprises.

We support the efforts of the agency where it seeks to streamline the movement of goods and of what we call legitimate trade and travel and where it assists Canadian companies so that we can become more competitive. In Canada, we are introducing world-class customs programs that also protect Canada and Canadians from illegal and illegitimate trade practices.

Although we are very supportive of the concepts of the action plan, the association is not without its concerns and reservations when it comes to the implementation of the programs, such as the Administrative Monetary Penalty System, AMPS, and the Customs Self Assessment initiative, CSA. We certainly strongly support the efforts to improve compliance in order to level the playing field for importers and exporters. It is important to have a system that treats everyone across Canada the same.

We also support the fact that AMPS is a step in the right direction. Today, we have a very archaic seizure approach as a result of administrative errors and infractions. A company can have its trucks and goods seized when merely an administrative error was committed. Its plant could be shut down. In that respect, this is a better system.

The greater concern, though, rests with the actual implementation of the program, since the comprehensive regulations are outside Bill S-23 and are still in a draft format.

As well, one of our big concerns centres around the fact that when the agency sought funding from Treasury Board in the amount of $122 million to embark upon its programs to service us, it fell short and received $35 million less than was required.

Our concern there, honourable senators, is that the agency needs to be properly funded to ensure that it can afford the proper systems and the training and promotion of its people so that the agency can truly meet the objectives that both businesses and travellers require.

I will briefly outline a couple of our concerns for you. The feeling is that the Administrative Monetary Penalty System is punitive in nature and not corrective. Many unknowns still remain, such as the interpretation of "reason to believe." It is set up so that importers are penalized first and then must seek redress afterwards and it is not necessarily streamlined with other government acts.

There are inequities in the proposals that we have seen so far and there is not yet an operating plan available to ascertain what the actual impact of AMPS will be. There is much verbal discussion. Everything is still in a draft format so we do not know entirely.

Mr. Worley has been involved on the AMPS working group. We do not have all the answers to the questions and concerns, but we are working toward that with senior officials at customs so we are hoping to get those answers.

Customs Self Assessment and carrier re-engineering are the future of the customs programs. As an importer, you will either be in CSA or carrier re-engineering. There is no middle ground. There are some companies that would not qualify for either program now, so they have concerns with which we are working.

Sometimes we think the agency needs a reality check on how to address the numerous exceptions and how to handle those that do not qualify for these new programs. A stop-gap measure may be required, as that is missing in the government assumptions.

Companies have a long way to go with the issue of electronic data interchange. To be honest, that comes from our entire international supply chain. It would be nice if we lived in a world where, when something is shipped from the Southern United States, the paperwork would be totally electronic from the exporter, the carrier, the customs broker and the importer. Unfortunately, we are a long way from that.

As I said, we support AMPS in principle. It is better than the seizure approach but we have some work to do with the agency on that.

With respect to the CSA, seven of my member companies are currently in the process of Phase 1. They have found it somewhat bureaucratic. They have concerns. We are working with the agency on that. We believe that it will have to be a little more flexible in the application process for the CSA. What started out as a simple process is becoming very frustrating to those few large importers who are in the first phase.

We intend to continue to be very vocal with our concerns and we expect that the customs authorities will listen, react and adapt accordingly.

Above all, with respect to a customs action plan, business in Canada wants speed, accuracy and simplicity in a cost-effective manner. We believe that, as time goes on, we will achieve those objectives but, unfortunately, with the lack of funding it may take longer than even the agency itself assumes it will take.

That is our other message. We hope that in the future the Government of Canada will properly fund its customs department so that it can perform to the highest level possible.

The Chairman: Thank you, Mr. Armstrong. I take it that you are not recommending any amendments to this bill.

Mr. Armstrong: No, we are not, Mr. Chairman.

Mr. Tom Mountain, Chairman, Canadian Society of Customs Brokers: Honourable senators, I am chairman of the Canadian Society of Customs Brokers. With me today is Carol West, our national President. I am the Executive Vice-President of PBB Global Logistics, a company which was founded in Fort Erie, Ontario some 54 years ago and which today has more than 70 locations throughout Canada and the United States.

I am fortunate to have spent my entire career with PBB. We have come a long way from the days of typewriters and paper processes. If I ever feel I am losing touch with the needs of my customers or the many challenges of Canada Customs, I need only look out my office window at the traffic on the Peace Bridge between Buffalo and Fort Erie.

The Canadian Society of Customs Brokers, founded in 1921, has about 200 members in large and small communities across Canada. Collectively, we employ over 6,000 people and, although the majority of our employment is in large urban areas, we are frequently a significant employer in communities with populations under 10,000. Customs brokers are licensed in accordance with the Customs Act and are legally authorized by importers to act on their behalf.

We appreciate the opportunity to appear before you today. Your work is vitally important to us and we hope that our comments will also be helpful to you as you review this important legislation.

The first thing you should know about us is that everything we do is affected by the Customs Act and its regulations. In turn, our activity, within the framework of legislation such as this, affects the commercial viability of our clients, Canadian importers and exporters. As global trade has increased, the importance of customs brokers to Canadian business has also been assuming greater importance. We play a key role in facilitating the flow of goods through the rapidly-changing and complex requirements of international trade regulation. We do this on behalf of the vast majority of Canadian companies.

Since the implementation of the customs commercial system more than a decade ago, we have been tireless advocates of advances in the customs process, particularly in the area of electronic commerce. We have invested millions of dollars in technology and automation that has benefited not only our clients but CCRA.

Just as customs brokers provide a specialized and cost-effective service to Canadian companies to enhance their ability to compete in world markets, we believe that, by implementing the Customs Self Assessment process and the Administrative Monetary Penalty System, Bill S-23 will also enhance the ability of Canadian companies to compete in world markets. For that reason, we support this legislation. We appreciate the opportunity to comment more specifically on these initiatives.

The implementation of CSA is key to customs strategy for the future. We understand why it is the priority for CCRA and for some of Canada's largest importers. In fact, we are currently working with our importers to manage and meet their needs under CSA, redefining our relationship with them as we go. However, if the target for CSA is 1,000 importers, that still leaves well over 140,000 importers, most of whom are as low risk as CSA clients even though their business systems are not as sophisticated as those needed to qualify for CSA. We must do something for them.

Unfortunately, the priority given to CSA and this legislation has meant that many things, apart from these initiatives, have stood still for four or five years. That was, at first, because of the customs blueprint consultation process itself, then because of Y2K priorities, and now because of CSA and AMPS.

One of our priorities during the blueprint consultation was enhancement in the area of electronic commerce, including such things as broader availability of electronic release processes, implementation of a one-step process and electronic adjustment, all of which would have broad benefit. None of these has received the priority it deserves. Along with the evaluation of CSA during the next two years to determine the feasibility of expanding it more broadly, it is our hope that we will have the opportunity to review the CSA processes to evaluate the feasibility of offering some of them as stand-alone options for small and medium-sized business. It is also our hope that the agency will get adequate funding to support important priorities beyond CSA, the most critical of which relate to electronic commerce.

We have consistently supported the development of an effective compliance regime by CCRA as the only way to ensure equitable and fair processes in the customs arena. Compliance with trade-reporting requirements has become a complex business and the decision of an importer or exporter to invest in the knowledge, skills and technology to ensure compliance is a fundamental business decision. The investment can be costly, both in time and resources. It is unfair if competitors can ignore the rules or if non-compliance is simply considered a more cost-effective way to do business. We see the development and implementation of AMPS as the cornerstone of an effective compliance framework.

There is still work to be done. We must see the proposed regulations. We must better understand the systems changes that will be used to monitor infractions and performance. We must explore administrative options that will avoid potential hardships, especially for small business, such as the posting of security bonds rather than payment up front when a penalty will be appealed.

We must participate in a communications strategy that fully informs the business community of its rights and obligations under AMPS. We must have more confidence that the discretion, afforded under this legislation to local and regional officers, will not result in inconsistent application of penalties or decisions to waive rights and obligations. Although Mr. Lefebvre commented to you last week that customs brokers act as a control on the consistency of customs decisions, this is one responsibility we would prefer not to have to assume. We want to examine the training plan for officers, which, in our view, must be extensive and ongoing.

Thank you again, Mr. Chairman and honourable senators, for the opportunity to comment on these initiatives.

The Chairman: I appreciate the point you make. It is one we hear all too frequently about legislation, that the bill is fine but we must see the regulations to know exactly how the system will work.

The minister was here last week and the officials were here another day. They were closely questioned about the coming regulations. Did you have an opportunity to review the transcript of those meetings?

Mr. Mountain: We did.

The Chairman: You think there are still many questions to be answered. Do you think those questions can be answered before the regulations are actually promulgated?

Mr. Mountain: Some of the questions can be addressed, but, for most of our questions, we must examine the draft regulations.

The Chairman: You are aware there will be a prepublication before promulgation and a consultative process in which you, I assume, will be participating.

Mr. Mountain: We will be participating, yes.

The Chairman: Will that process meet your needs and expectations?

Mr. Mountain: Yes, it will.

The Chairman: Will you have a fair opportunity to speak to the draft regulations in this process?

Mr. Mountain: Yes, we will.

The Chairman: It appears that you have made things abundantly clear, witnesses.

Senator Banks: Do any of you have any questions about the propriety of the search examination process that attends on the goods with which you deal?

Mr. Armstrong: I am not a lawyer, but in terms of the present system as opposed to what is proposed, the terms of search would be slightly different from what they are now.

Senator Banks: I do mean those terms in the proposed bill.

Mr. Armstrong: Our members have not been concerned with that issue.

Senator Stratton: Further, on the issue of moving toward a freer and more open border for access, particularly for goods travelling by truck, train or whatever, does this bill help you in any way?

Mr. Armstrong: Yes.

Senator Stratton: Has it cleaned up the bureaucracy considerably for you?

Mr. Armstrong: It has, somewhat. Many of the relief systems in the present system work quite well the way they are. With the carrier re-engineering that will start in 2003, it will be necessary to change the process. We had originally designed an initiative in conjunction with Canadian manufacturers and exporters. The initiative was for release on the importers' profile and then payment, on the following month, from business records. Down the road, we would like to have the first step in the evolution of imports being treated from a business system in one's company, which is no different from right now. Our members would withhold payroll taxes for the federal government - for example, domestic GST - and remit them on the month end. What this system is alluding to is that eventually we will get to the point, for example, where the Canada Customs and Revenue Agency would function as one unit. It will continue to do its inspections from the border, but from a commercial process for a company, we hope we will eventually have one audit team from the agency encompassing customs, Corporate Income Tax and the Goods and Services Tax. That would be a more efficient system for government and for us.

Currently, we can have an auditor, for example, from the Goods and Services Tax, an auditor from transfer pricing, an auditor from income tax and various customs auditors for the NAFTA agreement or something else. We believe that, as the system unfolds, it will take time but it will lead to a much better system down the road. It will have some hiccups and some huge challenges.

The Chairman: If there are no further questions, I will thank the witnesses for coming today and for your cooperation with the committee.

The committee continued in camera.

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