The Supreme Court of Canada recently granted leave to appeal in
Minister of National Revenue v Duncan Thompson, 2013 FCA
197, which touches on the issue of whether a lawyer subject to
enforcement proceedings can claim solicitor-client privilege over
his accounts receivable.
Thompson was a lawyer, and the subject of enforcement
proceedings pursuant to the Income Tax Act. The CRA
issued a Requirement seeking information and documents pertaining
Thompson's income and expenses, and assets and liabilities,
including a current accounts receivable listing. Thompson provided
some, but not all, of the information set out in the Requirement.
In particular, he had provided no details regarding his accounts
receivable other than a total balance owing.
Thompson challenged the Requirement, in part, based on
solicitor-client privilege, and sought a determination of whether
s. 231.2(1) of the Income Tax Act can be
interpreted, applied or enforced so as to require a lawyer who is
the subject of enforcement proceedings by the CRA to divulge
information about his clients, including their names and amounts
owing, information that he claims is protected by solicitor-client
privilege. Thompson also argued that the Requirement was akin to an
unreasonable search or seizure and thus was contrary to s. 8
of the Charter.
TheFederal Court ordered that Thompson must comply with the
Requirement, and ordered that he provide unredacted financial
records to the Minister. The Court of Appeal allowed Thompson's
appeal, but only because the Federal Court did not review the
accounts receivable listing to ensure solicitor-client privilege
did not apply to protect each of Thompson's clients
individually. The Court of Appeal upheld the Federal Court's
order that Thompson produce unredacted versions of all other
information and documents.
The Court of Appeal rejected Thompson's arguments with
respect to solicitor-client privilege and s. 8 of the
Charter. It found that solicitor-client privilege does not
apply to a lawyer's accounting records and supporting documents
because they do not constitute the provision of legal advice, and
noted that if privilege were to apply, the CRA could never seek and
obtain information from a lawyer about the revenue generate by his
practice that would enable CRA to ensure compliance with the
Income Tax Act.
With respect to s. 8 of the Charter, the Court rejected
the assertion that a class privilege attaches to a lawyer's
accounting records and client names, with the result that there was
no interference with any rights in relation to privilege.
It is interesting that the Supreme Court has granted leave in
this case, as there does not seem to be anything controversial
about the decisions of either the Federal Court or the Court of
Appeal. Perhaps the Supreme Court feels that some clarification on
the law of solicitor-client privilege, and the process to be used
to determine that privilege, especially in the context of demands
for production from the CRA, is needed.
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