When Is An Accountant's Work Privileged? – Lessons From A Recent British Columbia Supreme Court Decision

In the recent decision of Lewis v. WestJet Airlines Ltd. (Lewis v. WestJet),¹ the British Columbia Supreme Court addressed a critical issue for tax professionals and litigators alike: whether the work product of accountants can be protected under legal privilege. The plaintiff sought the production of numerous EY documents created between 2016 and 2021, including reports, working papers, correspondence and invoices. WestJet claimed privilege over certain materials.

While the case deals with non-tax matters, the findings may be applicable when taxpayers are faced with document production requests in tax-related proceedings.

Solicitor–client privilege – Narrow scope for accountants

Justice Hughes reaffirmed that solicitor–client privilege applies only to communications:

1. Between a solicitor and their client;
2. For the purpose of seeking or receiving legal advice; and
3. Intended to be confidential.

Although privilege may sometimes extend to third-party communications, it does so only where the third party performs a function integral to the solicitor–client relationship—for example, acting as a direct channel between a lawyer and their client. Here, EY's role was to carry out investigations and provide information at counsel's direction, but not to "stand in the place" of WestJet in seeking legal advice. As such, the accountant's work was not covered by solicitor–client privilege.

Litigation privilege – Broader protection

The Court reached a different conclusion on litigation privilege. This doctrine protects documents created for the dominant purpose of preparing for ongoing or reasonably contemplated litigation, regardless of whether they are communications with counsel.

Here, the evidence demonstrated that:

• EY was retained shortly after the plaintiff filed her individual claim and the class action began;
• The Draft Investigation Report concerned allegations directly at issue in the litigation; and
• The work was undertaken at counsel's instruction to assist in WestJet's defence.

On that basis, the Court found that the Draft Investigation Report and related invoices were created for the dominant purpose of litigation and were therefore protected by litigation privilege.

Invoices and commingled work

The plaintiff argued for production of EY's invoices. However, EY's billing records commingled privileged and non-privileged work, and could not be separated. Because the invoices related, at least in part, to privileged work and disclosure would indirectly reveal litigation costs, the Court held that they too were protected by litigation privilege.

Application in the tax context

While the above case deals with privilege in another context, it is helpful when considering accountants' work product with respect to tax matters. This issue has been one considered by courts in various jurisdictions on many occasions, including notably Textron (a US case),² Prudential Plc (a UK case)³ and PwC (a Canadian case),⁴ and more recently the Tax Court of Canada's decision in Coopers Park Real Estate Development Corporation v. The King (Coopers Park).⁵

Lewis v. WestJet serves as an important reminder of the scope and limitations of solicitor-client privilege. The findings were similar to those in Coopers Park, where the Tax Court considered whether certain documents prepared by accountants were privileged. In both cases, the Courts found that solicitor–client privilege did not apply, as the communications and documents prepared by the accountants failed to contain legal advice. The difference in Lewis v. WestJet is that certain documents were protected by litigation privilege.

Key takeaways for privilege and accountants

1. Solicitor–client privilege is rarely available for accountant's work, unless the accountant's function is integral to the solicitor–client relationship, such as acting as agents for the lawyer and/or assisting them in providing legal advice.
2. Litigation privilege can protect accountants' reports, notes and other materials, if they were created for the dominant purpose of litigation. These materials should be prepared separately from other work streams and under separate engagement agreements.
3. Invoices may also be privileged, if they cannot be disentangled from privileged work.
4. To preserve privilege over accountant's work, it is best to:
   • Clearly document that the retainer is for litigation purposes, or, where the accountant is acting as agent for the lawyer, clearly document the nature of that relationship;
   • Ensure the engagement is routed through legal counsel; and
   • Maintain separate invoicing for privileged and non-privileged tasks.

Where a taxpayer requires the expertise of both a lawyer and an accountant for litigation, a transaction (or series of transactions) or to advise on tax position(s) or filing(s), and solicitor–client privilege is a priority, it is best practice to task the lawyer with preparing memos or letters describing the steps necessary to implement the transactions(s) or support the relevant position(s) or filing(s), in order to preserve privilege.

Thank you to Ali Ebenhardt for her contributions to the insight.

Footnotes

1. 2025 BCSC 1565.

2. United States v. Textron Inc., docket no. 06-198T (Dist. RI 2007).

3. Prudential Plc & Anor, R (on the Application of ) v. Special Commissioner of Income Tax & Anor, [2009] EWHC 2494 (Admin)

4. PricewaterhouseCoopers LLP v. Minister of National Revenue, Federal Court file no. T-1817-07.

5. 2024 TCC 122.