Communications between lawyers and their clients'
accountants or other non-legal professionals are not in themselves
privileged but can be where the communication is in
"furtherance of a function essential to the solicitor-client
relationship or the continuum of legal advice provided by the
solicitor", the Saskatchewan Court of Appeal recently held in
Redhead Equipment v Canada (Attorney
General), 2016 SKCA 115 [Redhead].
Documents that are privileged do not have to be disclosed, for
example, in a lawsuit or to tax authorities. Legal advice
privilege, a type of privilege in which legal advice is sought from
a lawyer, is the form of privilege most often relied on in
transactional settings, and protects communications between a
client and a lawyer. Often, however, accountants and other
non-legal professionals are involved in such transactions. Are
communications between these other professionals and a lawyer
privileged? If "it depends", are there ways of
strengthening the potential for such communications to be
privileged? In Redhead, the Saskatchewan Court of Appeal
had an opportunity to address these questions.
In Redhead, a group of companies (Redhead) effected a
restructuring which involved Redhead seeking legal advice on
tax-related matters. The Canada Revenue Agency (CRA) later
requested that certain information and documents related to the
restructuring be provided to it pursuant to the Income Tax
Act. In response, Redhead applied for an order that the
documents in question were privileged.
In considering the decision of a chambers judge, the
Saskatchewan Court of Appeal reviewed relevant principles of law
concerning legal advice or solicitor-client privilege (litigation
privilege was not at issue, since litigation was not existing or
contemplated at the time). The Court noted that the "nature or
content of the communication must involve legal advice" and
the "lawyer must be acting as a lawyer giving legal advice
rather than in some other non-legal capacity". Accounting
documents, or documents of a "factual nature" are not
privileged. Likewise, documents that the lawyer possesses unrelated
to the giving of legal advice are not privileged. However, to
attract the privilege, it is not necessary for the communication to
"specifically request or offer advice as long as it can be
placed within the 'continuum' of communication in which the
solicitor tenders advice."
In applying these principles to situations in which a third
party, such as an accountant, is interjected between the lawyer and
the client, the Court reviewed previous case law and held that:
... the privilege extends to all situations in which the third
party functions as an interpreter of information provided by the
client for the solicitor or serves as a conduit of advice from the
solicitor to the client or a conduit of instructions from the
client to the solicitor, or employs expertise in assembling
information provided by the client and in explaining it to the
... solicitor-client privilege extends only to third party
communications that are in furtherance of a function essential to
the existence or operation of the solicitor-client relationship.
Therefore, determining whether the communication is privileged
requires an analysis of the function of the third party
vis-ŕ-vis the client and the solicitor in respect of the
Turning specifically to accountants, the Court noted that
"[t]here is no such thing as accountant-client privilege"
and "tax accountants do not give legal advice." Rather,
information from accountants will be protected by privilege only
where the accountant "was used as a representative of a client
to obtain legal advice". Thus, the privilege does not attach
to a communication to an accountant where his or her accounting
opinion is sought and provided. In particular, communications are
not privileged simply because a lawyer is "'driving the
bus' and everyone is on board and travelling toward the same
Redhead thus confirms the unique and advantaged status
afforded to lawyers, who alone are given the protection of legal
advice privilege. Communications with other professionals, while
transactionally important, must be treated carefully. The path to
protecting such communications may be bolstered by positioning the
adviser as "a channel of communication", "a
messenger, translator or transcriber" or someone who
"employ[s] expertise to assemble information provided by the
client and explain[s] the information to the solicitor". In
this way, with thoughtful preparation and implementation, the case
for non-disclosure of sensitive or confidential material may in
some cases be strengthened.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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