Canada: The Supreme Court Protects Accounting Records Of Lawyers From The CRA

Solicitor-client privilege is nearly sacrosanct in Canada. The circumstances in which it can be breached are limited and specific. Courts will not abide attempts by the Government to do away with privilege for expediency's sake or overreach when limiting the application of the privilege. This was recently reinforced by the Supreme Court of Canada in two decisions that considered the CRA's powers to compel information from lawyers and notaries: Canada (Attorney General) v. Chambre des notaires du Quebec and Canada (National Revenue) v. Thompson.


Both decisions consider the power of the Canadian Revenue Agency ("CRA") to compel the production of documents or information from lawyers or notaries pursuant to provisions of the Income Tax Act.

Chambre des notaries du Quebec arose out of requests for information sent by the Minister of Natural Revenue to notaries pursuant to section 231.2 of the Income Tax Act ("ITA"), which permitted the Minister to "require that any person provide... any information ... or any document". If a person failed to comply with a section 231.2 request, the Minister could apply to a judge for enforcement pursuant to section 231.7 of the ITA, with the possibility of a penalty of a fine or jail time for non-compliance (together these sections created a so-called "requirement scheme"). Further, section 232(1) of the ITA contained a definition of solicitor-client privilege, which specifically excluded accounting records of notaries and lawyers.

The Chambre des notaries du Quebec, the self-regulating body for notaries in Quebec, brought a declaratory action seeking declarations that the following were all unconstitutional with respect to notaries: section 231.2 of the ITA; section 231.7 of the ITA; and the exception for accounting records of notaries and lawyers in the definition of "solicitor-client privilege" in section 232(1) of the ITA.

The Barreau du Quebec joined as an intervener for the purpose of having any declaration(s) apply equally to lawyers. The Chambre des noraries du Quebec was successful at both the Superior Court and the Quebec Court of Appeal.

Thompson arose out of an investigation of an Alberta lawyer by the CRA. The CRA made a request for a list of the lawyer's accounts receivable. The lawyer provided certain information but asserted that certain details of his accounts receivable, including the names of his clients, were subject to solicitor-client privilege.

In Thompson, the Court considered the more narrow issue of whether the statutory definition of "solicitor-client privilege" in section 232(1) of the ITA, which explicitly excluded accounting records, was clear enough to exclude all accounting records of lawyers and notaries from the protection of solicitor-client privilege.

The Minister of Revenue was successful at the Federal Court. Success was mixed at the Federal Court of Appeal and the Minister appealed.

The Decisions

The Court found against the Minister of Revenue in both decisions. In Chambre des notaries du Quebec, the Court found that the "requirement scheme" in sections 231.2(1) and 231.7 violated the prohibition against unreasonable search and seizure in section 8 of the Charter.

The Court considered two questions in their section 8 analysis. First, whether the action intruded upon an individual's reasonable expectation of privacy. Second, whether the seizure was an unreasonable intrusion on that expectation of privacy.

The first question was "not problematic" as the Supreme Court had already decided in R. v. McKinlay Transport Ltd., [1990] 1 SCR 627 that a requirement under section 231(3) of the ITA (now 231.2(1)) intrudes upon an individual's reasonable expectation of privacy and therefore constitutes a seizure within the meaning of section 8.

Concerning the second question, the reasonableness of the intrusion, as a starting point, the Court noted that the professional secrecy of legal advisers is a "principle of fundamental justice and a legal principle of supreme importance". The Court went on to find a three constitutional defects in the requirement scheme:

  1. the absence of notice to the client;
  2. the burden imposed on legal advisors, e.g. the possibility of prosecution for non-compliance; and
  3. the disclosure was not absolutely necessary.

The Court also noted that each of the above defects was "all the more unacceptable" because they could be easily mitigated and remedied.

The exception for accounting records to the definition of solicitor client privilege in section 232(1) of the ITA was also found to infringe section 8. The exception was found to be "broad and undefined" and it was not "absolutely necessary" to achieve the ends sought by the ITA.

Finally, neither provision could be saved by section 1 as neither provision was minimally impairing.

For procedural reasons, no constitutional question was stated in Thompson, however, as a result of the decision in Chambre des notaries du Quebec, the Court held that Mr. Thompson was not compelled to disclose further information.


These decisions are important for two reasons. First, they help to protect the accounting records of lawyers and notaries from compelled production by the CRA. Clients should be reassured that their legal advisors' accounting records will not be disclosed without their knowledge.

Second, they further reinforce the general importance of solicitor-client privilege in Canadian law. The Supreme Court again endorsed the professional secrecy of legal advisors as "a civil right of supreme importance in the Canadian justice system" and confirmed that "professional secrecy must thus remain as close to absolute as possible, and the courts must adopt stringent standards to protect it."

The Court did leave the door open to a new – constitutionally valid – requirement scheme that will allow the Government to request documents protected by solicitor-client privilege. Depending on the particulars of the requirement scheme that is chosen by the Government, it would not be surprising to see further challenges.


Case Information

Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20

Docket: 35892

Date of Decision: June 3, 2016

Canada (National Revenue) v. Thompson, 2016 SCC 21

Docket: 35590

Date of Decision: June 3, 2016

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