In a decision released today, the Supreme Court of Canada has upheld a decision that excluded evidence obtained in a sweep of an Ontario school by sniffer dogs. In this case, the police were invited by a school principal to walk a sniffer dog through the building to enforce the "zero tolerance" policy for drugs. When the dog reacted to an unattended backpack, the police opened it and found drugs. At trial, the accused argued that the search was unconstitutional and the evidence should be excluded. The trial judge agreed and the Supreme Court of Canada has upheld that decision.
In the result, police can only use sniffer dogs and open backpacks if they have a reasonable suspicion is demonstrated. Any holding otherwise would enable the police to effectively see through backpacks, into their contents. The Court concluded that teenagers have a reasonable expectation of privacy in closed backpacks.
A positive reaction from a sniffer dog, the Court concluded, is not sufficiently reliable to indicate the actual presence of drugs. Sniffers detect smells that indicate that drugs may be present, may have been present or that the backpack has been exposed to drugs, or "the dog is simply wrong". As the Court noted, "in the sniffer dog business, there are many variables."
Here's the headnote:
Supreme Court of Canada - Decisions - R. v. A.M.
Per McLachlin C.J. and Binnie J.: The police possess common law authority to use sniffer dogs in appropriate circumstances. If the police in this case had been called to investigate the potential presence of guns or explosives at the school using dogs trained for that purpose, the public interest in dealing quickly and efficiently with such a threat to public safety would have been greater and more urgent than routine crime prevention.  
The dog sniff amounts to a search within s. 8 of the Charter. The information provided when the dog is trained to alert to the presence of controlled drugs permits inferences about the precise contents of the source that are of interest to the police. The subject matter of the sniff is not public air space. It is the concealed contents of the backpack. As with briefcases, purses and suitcases, backpacks are the repository of much that is personal, particularly for people who lead itinerant lifestyles during the day as in the case of students and travellers. Teenagers may have little expectation of privacy from the searching eyes and fingers of their parents, but they expect the contents of their backpacks not to be open to the random and speculative scrutiny of the police. This expectation is a reasonable one that society should support. The guilty secret of the contents of the accused’s backpack was specific and meaningful information, intended to be private, and concealed in an enclosed space in which the accused had a continuing expectation of privacy. By use of the dog, the policeman could “see” through the concealing fabric of the backpack.  [62‑63] [66‑67]
Although a warrantless sniffer‑dog search is available where reasonable suspicion is demonstrated, the sniffer‑dog search of the students’ belongings in this case violated their Charter rights under s. 8. The dog‑sniff search was unreasonably undertaken because there was no proper justification. The youth court judge found that the police lacked any grounds for reasonable suspicion and the Crown has shown no error in the youth court judge’s finding of fact. 
While the sniffer‑dog search may have been seen by the police as an efficient use of their resources, and by the principal of the school as an efficient way to advance a zero‑tolerance policy, these objectives were achieved at the expense of the privacy interest (and constitutional rights) of every student in the school. The Charter weighs other values, including privacy, against an appetite for police efficiency. Because of their role in the lives of students, backpacks objectively command a measure of privacy, and since the accused did not testify, the question of whether he had a subjective expectation of privacy in his backpack must be inferred from the circumstances.  [62‑63]
In the context of a routine criminal investigation, the police are entitled to use sniffer dogs based on a “reasonable suspicion”. If there are no grounds of reasonable suspicion, the use of the sniffer dogs will violate the s. 8 reasonableness standard. Where there are grounds of reasonable suspicion, the police should not have to take their suspicions to a judicial official for prior authorization to use the dogs in an area where the police are already lawfully present. All “searches” do not have the same invasive and disruptive quality and prior judicial authorization is not a universal condition precedent to any and all police actions characterized as “searches” given that the touchstone of s. 8 is reasonableness. Account must be taken in s. 8 matters of all the relevant circumstances including the minimal intrusion, contraband‑specific nature and high accuracy rate of a fly‑by sniff. The warrantless search is, of course, presumptively unreasonable. If the sniff is conducted on the basis of reasonable suspicion and discloses the presence of illegal drugs on the person or in a backpack or other place of concealment, the police may confirm the accuracy of that information with a physical search, again without prior judicial authorization. But all such searches by the dogs or the police are subject to after‑the‑fact judicial review if it is alleged (as here) that no grounds of reasonable suspicion existed, or that the search was otherwise unreasonably undertaken. [12‑14]
Permitting the police to act on a standard of reasonable suspicion within the framework of s. 8 will allow inappropriate conduct by the dog or the police to be dealt with on the basis that although the lawful authority to use the sniffer dog does exist, the search in the particular case was executed unreasonably, and thereby constituted a Charter breach, on the basis of which the evidence obtained may be excluded. The importance of proper tests and records of particular dogs will be an important element in establishing the reasonableness of a particular sniffer‑dog search. From the police perspective, a dog that fails to detect half of the narcotics present is still better than no detection at all. However from the perspective of the general population, a dog that falsely alerts half of the time raises serious concerns about the invasion of the privacy of innocent people. An important concern for the court is therefore the number of any such false positives. It is important not to treat the capacity and accuracy of sniffer dogs as interchangeable. Dogs are not mechanical or chemical devices. Moreover, the sniff does not disclose the presence of drugs. It discloses the presence of an odour that indicates either the drugs are present or may have been present but are no longer present, or that the dog is simply wrong. In the sniffer‑dog business, there are many variables.  [84‑85] [87‑88]
In sniffer‑dog situations, the police are generally required to take quick action guided by on‑the‑spot observations. In circumstances where this generally occurs, it is not feasible to subject the “sniffer dog’s” sniff to prior judicial authorization. Both the subject and his suspicious belongings would be long gone before the paperwork could be done. In the particular context of sniffer dogs, there is sufficient protection for the public in the prior requirement of reasonable suspicion and after‑the‑fact judicial review to satisfy the “reasonableness” requirement of s. 8. 
The trade‑off for permitting the police to deploy their dogs on a “reasonable suspicion” standard without a warrant is that if this procedure is abused and sniffer‑dog searches proceed without reasonable suspicion based on objective facts, the consequence could well tip the balance against the admission of the evidence if it is established under s. 24(2) of the Charter that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute. Youth court judges have a greater awareness than appellate judges do of the effect that admission or exclusion of the evidence would have on the reputation of the administration of justice in the community with which they deal on a daily basis. Here, the youth court judge excluded the evidence. His exclusion of the evidence should not be interfered with.