Tech-savvy criminals make law update necessary, government says, but privacy advocates are opposed

Janice Tibbetts
Sun

Police will be given new powers to eavesdrop on Internet-based communications as part of a contentious government bill, to be announced Thursday, which Public Safety Minister Peter Van Loan has said is needed to modernize surveillance laws crafted during “the era of the rotary phone.”

The proposed legislation would force Internet service providers to allow law enforcement to tap into their systems to obtain information about users and their digital conversations.

Police have lobbied for a new law for almost 10 years, saying that they need to access “Internet safe havens” for gangsters, sexual predators and terrorists.

“This is really not about the warrantless tracking of Canadians’ Internet use,” said Clayton Pecknold, of the Canadian Association of Chiefs of Police.

Privacy advocates and civil libertarians, however, have vocally opposed the prospect of giving police “lawful access” to the digital conversations of Canadians by being able to access such things as their text messages, e-mails, web surfing habits and Internet phone lines.

“It is an issue that has proven to be very, very controversial,” said Michael Geist, a law professor at University of Ottawa and public commentator on Internet legal issues.

“The consistent criticism and concern that has been expressed is that there has to be some evidence that there is a real problem here and in the past we haven’t seen that,” he said.

“Why is the status quo not good enough? What investigations have been impeded?”

Federal Privacy Commissioner Jennifer Stoddard recently warned that forcing ISPs to surrender information “is a serious step forward toward mass surveillance” that violates the rights of Canadians.

Van Loan’s bill has been posted on a notice paper of pending government legislation and it is expected to be tabled in the House of Commons before MPs break for their summer recess on Friday. He has scheduled a news conference for Thursday with Justice Minister Rob Nicholson.

Earlier this year, Van Loan publicly stated his intentions to pursue legislation, which had been promised for years but relegated to a back burner by his predecessor, Stockwell Day.

When he was public safety minister, Day also promised that any federal initiative would require police to obtain a warrant to access personal information of users, such as names and addresses.

Pecknold said it is “an ongoing frequent occurrence” that police want to act to stop a crime, but they are blocked at the technological door at a time when criminals have shifted increasingly to online communications.

“Terrorist groups, pornographers and pedophile networks, illegal traffickers in weapons, drugs and human beings, money launderers and cyber criminals, Internet and telemarketing fraudsters all use technology to develop activities, perpetrate crimes and avoid detection,” the police chiefs said in a November 2008 position paper supporting a new law.

Police and the Canadian Security Intelligence Service already have the power to wiretap private communications, provided they have judicial authorization, but the law does not require ISPs to grant them access.

© Copyright (c) The Vancouver Sun

No public hearing necessary despite competing bid, staff says

Jeff Lee
Sun

The private liquor outlet planned for the Olympic village would be the city’s third-largest. Photograph by: Ward Perrin, Vancouver Sun files

There are no residents yet in the new Olympic village on False Creek, but already a dispute has erupted over who should supply the emerging neighbourhood with liquor.

City planners want to permit a massive new private liquor store in the heart of the brand-new village, adjacent to many of the highrise towers. At 8,600 square feet, the site would become the third-largest booze outlet in the city, behind two government-run stores.

But they’re being challenged by a Burnaby company that already holds a preliminary liquor licence from the B.C. Liquor Control Board and wants to open a more modest store 400 metres away at the corner of Quebec Street and Second Avenue.

The Burnaby company, West Coast Liquor, needs the property to be rezoned.

But in a report going to a city council committee today, city staff want the politicians to refuse West Coast Liquor’s rezoning application outright without letting it go to a public hearing. They argue that the store wouldn’t fit with the city’s planning policies for the new Olympic village, which contemplates a central commercial core that would include a grocery store, pharmacy and liquor outlet.

The planning department’s stance has angered West Coast Liquor’s co-owner, John Teti, who accuses the city of acting as a de facto agent for Millennium Development, the company building the village. He also says the city might be in a conflict because it owns the land and has also become Millennium’s major financial backer with the $100-million-plus construction loan guarantee it gave late last year.

“They can deny me going to a public hearing, but they are in a conflict of interest on this,” Teti said. “They’re acting as agents for their own developer.”

Teti said he followed the city’s rules for private liquor stores and applied for and received a provincial liquor licence. He said the city tried to push him into leasing the Millennium property, but he balked because of the high cost. He said he’s paying $32 a square foot for the Second Avenue location, as opposed to the $75 a square foot he was quoted for the Millennium property. The difference, he said, was in the order of half a million dollars a year in leasing costs, and to him that makes a liquor store inside the village a financial bust. He also wonders why the city would want such a large liquor store in a neighbourhood that already has five public or private liquor stores in a 15-block radius.

However, the city says it has been told by another company, Granville Entertainment Group, that it is willing to locate a liquor store in the village.

Ron Orr, Granville Entertainment’s chief financial officer, said it signed a lease recently with Millennium and has applied to transfer an existing but dormant liquor licence to the proposed site, but can’t get provincial approval because Teti’s application took precedence and is within 500 metres of the village. He said Teti’s proposed store is too far from the core, is not near any commercial businesses and doesn’t have enough parking.

Teti, on the other hand, says his proposed store is within the city’s planned redevelopment of the Southeast False Creek area and would adequately serve the new neighbourhood.

© Copyright (c) The Vancouver Sun

Civil investigations can turn into criminal

Vern Krishna
Sun

The line between a civil audit and a criminal investigation is not always clear and the Canada Revenue Agency likes it that way. Photograph by: Jean Levac, Canwest News Service, Financial Post

Some individuals who filed their tax returns by the April 30th deadline await the results of their assessments by Canada Revenue Agency with some trepidation.

Although the income tax system relies primarily upon self-assessment by taxpayers and “voluntary” reporting of tax liabilities, the CRA is always looking over its shoulder to ensure compliance.

The taxpayer initially determines his or her liability and submits the tax return. The CRA checks the mathematical accuracy of the return, reviews supporting documents, performs perfunctory cross checks, and issues a “quick assessment” within approximately eight weeks of filing.

Mercifully for most taxpayers — particularly employees who have income and payroll taxes withheld at source — that is the end of the tax ritual for another year. But it is only the beginning of the process for the tax collector.

The CRA has substantial audit and investigative powers. These powers are of two types: civil audits and criminal investigations.

However, the line between the two is not always clear and the taxman likes it that way. The blurred line allows the CRA to cross over from the civil to the criminal without alerting the taxpayer.

A civil audit is an examination to determine the accuracy of the taxpayer’s self-assessed income.

Such an audit under the CRA’s regulatory powers is a routine process for verifying the taxpayer’s financial information and examining relevant supporting documents.

The purpose of the audit is to ensure regulatory compliance and mathematical accuracy. If the CRA disagrees with the taxpayer’s self-assessed income, it will reassess him and charge interest on any deficiency in taxes paid. The CRA also has the power to impose civil penalties in circumstances where it can show egregious conduct by the taxpayer in preparing his or her return. Civil penalties can add up to an additional 50% (plus interest) of the tax deficiency to the final bill. The courts grant the tax authorities considerable latitude under the civil audit provisions and taxpayers have minimal constitutional rights.

In contrast, a tax investigation is essentially a criminal examination.

The courts vigilantly protect Charter rights in criminal matters.

In an investigation the state is pitted against the individual in an attempt to establish culpability. The adversarial relationship escalates because the liberty of the subject is at stake.

The CRA must look to s. 231.3 (the part of the tax code that deals with obtaining a warrant for search and seizure), which deals with serious offences under the act.

For example, for the purpose of investigating penal liability, s. 231.3 sets out an application process for an ex parte (without notice) search warrant similar to that found in s. 487 of the Criminal Code. The courts are always on high alert in criminal law.

The difficulty is an examination that starts out as a routine civil audit can turn into a criminal investigation. If this happens, the nature of the relationship between the CRA and the taxpayer changes from regulatory supervision to potential criminal prosecution and becomes subject to restrictions under the Canadian Charter of Rights and Freedoms. Nevertheless, the CRA may use any information that it procures during the proper exercise of its audit function in a subsequent penal investigation.

The use of such information for criminal purposes does not offend either s. 7 (the principles against self-incrimination) or section 8 (reasonable expectation of privacy) of the Charter.

Individuals have few privacy interests under section 8 of the Charter in materials and records that they are obliged to keep and produce for the purposes of the Income Tax Act. Once an auditor has inspected or compelled the production of a document or information, the taxpayer cannot be said to have a reasonable expectation that the auditor will guard its confidentiality.

Given the taxpayer’s diminished expectation of privacy, the government’s interest to intrude on the individual’s privacy in order to advance its goals of law enforcement outweighs the individual’s privacy interest in his materials and records.

The CRA may also conduct an audit and an investigation concurrently.

However, once the CRA begins its investigation, it can use further information that it obtains under its concurrent audit powers only for the purposes of the audit and not for the purposes of the investigation.

It is not easy in practice, however, to distinguish the divergence in powers and obligations related to civil audits and investigations.

An inquiry becomes an investigation when its predominant purpose is to determine penal liability.

There is no “bright-line” test for determining the predominant purpose of an inquiry or when it changes.

Apart from a clear decision to pursue a criminal investigation, no single factor governs in every circumstance. Hence, a court has considerable latitude in its decision to admit evidence resulting from an investigation. In arriving at its decision, however, the court will consider the totality of the circumstances to determine whether the inquiry sufficiently engages the adversarial relationship between the State and the taxpayer to warrant Charter protection.

– Prof. Vern Krishna, CM, QC, FCGA, is tax counsel and a mediator and arbitrator at Borden Ladner Gervais and is executive director of the CGA Tax Research Centre at the University of Ottawa.

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