Canada (Minister of National Revenue) v. Welton Parent Inc., 2006 DTC 6093, 2006 FC 67

Date: 20060124

Docket: T-506-04

Citation: 2006 FC 67

Ottawa, Ontario, January 24, 2006

PRESENT:      THE HONOURABLE JOHANNE GAUTHIER

BETWEEN:

MINISTER OF NATIONAL REVENUE

Applicant

and

WELTON PARENT INC.

Respondent

REASONS FOR ORDER AND ORDER

[1]                Welton Parent seeks an order cancelling or varying my order dated March 31, 2004 authorizing the Minister of National Revenue to impose on it a requirement which seeks to produce information and documents relating to one or more unnamed persons under subsection 231.2(3) of the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.) (ITA).

[2]                This order of March 31, 2004 was granted on an ex parte application. Pursuant to subsection 231.2(6) of the ITA, it may be cancelled if I am not satisfied that the conditions set out in paragraphs 231.2(3)a) and b) have been met, and it can be confirmed or varied even if I am satisfied that those conditions have been meet.

[3]                In addition to challenging the validity of this order and the resulting requirement on the basis that the statutory conditions for issuing it were not met, Welton Parent challenges its validity on three additional grounds which it says are each independently sufficient to justify quashing it.

[4]                It submits that:

i)           the requirement imposed on it seeks information and documents that are protected by solicitor-client privilege;

ii)          subsections 231.2(3), (5), (6) and section 232 of the ITA unjustifiably infringe sections 7 and 8 of the Canadian Charter of Rights and Freedom, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c.11 (Charter),by failing to provide for adequate protection of solicitor-client privilege and are, therefore, of no force and effect. In that respect, the Court should apply the reasoning of the Supreme Court of Canada in Lavallee, Rackel & Heintz v. Canada (A.G.), [2002] 3 S.C.R. 209 in which section 488.1 of the Criminal Code, R.S.C. 1985, c. C-46, which mirrored section 232 of the ITA, was quashed. Alternatively, for the same reason, the order of March 31, 2004 unjustifiably infringes sections 7 and 8 of the Charter and should be quashed pursuant to subsection 24(1) of the Charter and subsection 231.2(6) of the ITA.

iii)          the Minister failed to make a full and frank disclosure of all the facts and information within the knowledge of the Canada Custom Revenue Agency (CCRA) that would indicate that the information and documents sought by the requirement are privileged or potentially privileged.

BACKGROUND

[5]                CCRA is conducting audits, for the taxation years of 1997 to 2003 inclusive, of various Canadian employers who have claimed expenses for salaries and wages incurred in respect of contributions to what those unnamed employers claim to be offshore "health and welfare trusts" for the benefit of their employees.

[6]                The interpretation bulletin IT-85R2 defines "health and welfare trust" as a vehicle which allows special treatment for employers acting for the benefit of their employees. A health and welfare trust contribution that meets the criteria set out in the bulletin and the costs related to it may be deducted by an employer as a business expense.

[7]                During the course of the audits referred to above, approximately twenty-five health and welfare trusts were identified and CCRA is of the view that these trusts did not in fact meet the criteria established in the interpretation bulletin because, among other things:

a)                   the employers have been contributing amounts to offshore trusts which could revert back to them in the future;

b)                   the contributions have been unreasonably high in light of the wages earned by the employees and in light of comparable insurance plans;

c)                   the funds available are used for other things than to provide health and welfare benefits;

d)                   the payments are not made enforceable by the trust; and

e)                   the employer and the trustee are not dealing at arm's length.

[8]                On that basis, CCRA's position has been that contributions to such trusts will not be deductible in the year they are made.

[9]                In the twenty-five cases referred to above, CCRA found an actuarial valuation prepared by the actuarial firm of the respondent, Welton Parent. In each case, it appears that CCRA was well aware that Welton Parent was providing those valuations to Ottawa lawyers. It also knew that the respondent did not deal directly with the unnamed employers.[1]

[10]            Although at the time the authorization was sought, CCRA was only aware of the involvement of two lawyers, Gregory Sanders and William Johnston, it is clear that Welton Parent also provided similar services to a third Ottawa lawyer, Hari S. Nesathurai.[2] Each of these lawyers uses a slightly different legal structure to establish their respective group sickness and accident insurance plans, but these plans are essentially the same. A "group sickness and accident insurance plan" is one type of benefit plan that qualifies under the interpretation bulletin IT-85R2 as a "health and welfare trust". Hereinafter, I will refer to the arrangements set up by the three Ottawa lawyers as "the Plans".

[11]            It is not contested that the three lawyers were retained to provide legal advice to their clients, the unnamed taxpayers. CCRA takes the position, however, that prior to the reply to its motion record, it was not fully aware of their role and their exact relationship with Welton Parent.

[12]            The evidence shows to my satisfaction that the legal mandate of these lawyers included the setting up of the Plans and the giving of an opinion to the unnamed employers on the taxability of expenses associated with the Plans.

[13]            There is no evidence that those lawyers actually promoted the use of the Plans[3] or that they were involved in the financing or setting up of the Plans in any capacity other than as legal advisers. In fact, the evidence indicates that employers wishing to set up such Plans were actually referred to the three counsel by accountants and financial advisers. For example, Mr. Sanders received referrals from various Canadian chartered banks, including the Royal Bank of Canadaand the Canadian Imperial Bank of Commerce.

[14]            Those lawyers retained Welton Parent directly to perform actuarial valuations of the liabilities and funding requirements of their Plans and to make recommendations based on each unnamed employer's ability to pay. The extent to which the actuarial valuations were used to render the legal opinion and fulfill the legal mandate of each lawyer will be discussed later. It is sufficient to say at this stage that, in addition to being used by the three lawyers for their own purposes, these valuations were also remitted to the custodian or the trustee of the various Plans because, in each case, they had a contractual obligation to obtain such valuations once a given Plan was established.

[15]            In the course of some of its audits, CCRA obtained copies of legal opinions rendered by Mr. Sanders and Mr. Johnston to some of the taxpayers it was investigating. In those instances, the Court can only assume that the taxpayers waived their legal advice privilege.

[16]            As it appears clearly from the affidavit of Daniel Rivet, dated March 5, 2004 and submitted in support of the Minister's ex parte application to the Court for the order authorizing the imposition of a requirement on Welton Parent, one of the main purposes of the requested requirement was to obtain the names of the employers who had established such Plans and were still unknown to CCRA.

[17]            In his affidavit, Mr. Rivet also mentions that, if necessary, CCRA would also issue a requirement to the employers or the "promoters" at a later date to obtain additional documentation such as letters of wishes and trust agreements.

[18]            The involvement of the Ottawa lawyers is mentioned only once in this affidavit and it is in a paragraph which explains why the arrangements failed to meet the criteria set out in the interpretation bulletin.

[19]            At subsection 9(h) of his affidavit, Mr. Rivet states:

9) Review of trust agreements to date reveal that these arrangements are failing to meet the above criteria for a number or reasons. These include cases where:

(...)

(h) the documents in the files that have been reviewed by the CCRA are similar and originate from two Ottawa based lawyers (the "promoters");

[20]            Thereafter, in his affidavit and in his testimony before the Court at the hearing to obtain the authorization, Mr. Rivet referred to these lawyers only as promoters. He did not indicate that CCRA had obtained copies of the legal opinions provided by these lawyers which clearly indicate that their role was mainly to act as legal advisers to their clients, the unnamed employers. In the course of these audits, it also appears that CCRA had several discussions with Welton Parent and at least one of the Ottawa lawyers.

[21]            In addition to the flaws identified in paragraph 9 of his affidavit, Mr. Rivet also indicates that Welton Parent did not calculate the contributions to the Plans in accordance with accepted actuarial standards (paragraph 12 of his affidavit).

[22]            The order of March 31, 2003 was issued without special conditions or reference to solicitor-client privilege. When the requirement was delivered to Welton Parent, it immediately contacted the three lawyers who had appointed it. The lawyers in turn sought to obtain instructions from the unnamed employers as to whether or not they were authorized to waive solicitor-client privilege, with respect to their names and the other information in the files of Welton Parent. They were instructed to file the present motion to preserve privilege and have done so through the respondent, Welton Parent.[4]

[23]            No attempt was made by CCRA to contact the Ottawalawyers to discuss the issue of privilege when the requirement was served. However, CCRA agreed to suspend the time granted to reply to the requirement until a decision is made with respect to this motion.

[24]            Extensive evidence was filed by both parties on this motion. In particular, the respondent filed affidavits by Gregory Sanders, William Johnston, Hari S. Nesathurai and Joann Williams (Welton Parent) and the Minister filed an additional affidavit of Daniel Rivet. All affiants were cross-examined.

LEGISLATION

[25]            The most relevant provisions of the ITA are the following:

Income Tax Act, R.S.C. 1985, c.1 (5th Supp.): 231.2(3) On ex parte application by the Minister, a judge may, subject to such conditions as the judge considers appropriate, authorize the Minister to impose on a third party a requirement under subsection 231.2(1) relating to an unnamed person or more than one unnamed person (in this section referred to as the "group") where the judge is satisfied by information on oath that (a) the person or group is ascertainable; and (b) the requirement is made to verify compliance by the person or persons in the group with any duty or obligation under this Act. (c) (Repealed by S.C. 1996, c. 21, s. 58(1).) (d) (Repealed by S.C. 1996, c. 21, s. 58(1).) (5) Where an authorization is granted under subsection 231.2(3), a third party on whom a notice is served under subsection 231.2(1) may, within 15 days after the service of the notice, apply to the judge who granted the authorization or, where the judge is unable to act, to another judge of the same court for a review of the authorization. (6) On hearing an application under subsection 231.2(5), a judge may cancel the authorization previously granted if the judge is not then satisfied that the conditions in paragraphs 231.2(3)(a) and 231.2(3)(b) have been met and the judge may confirm or vary the authorization if the judge is satisfied that those conditions have been met.

Loi de l'impôt sur le revenu, L.R.C. (1985), ch. 1 (5e suppl.) : 231.2 (3) Sur requête ex parte du ministre, un juge peut, aux conditions qu'il estime indiquées, autoriser le ministre à exiger d'un tiers la fourniture de renseignements ou production de documents prévue au paragraphe (1) concernant une personne non désignée nommément ou plus d'une personne non désignée nommément -- appelée "groupe" au présent article --, s'il est convaincu, sur dénonciation sous serment, de ce qui suit: a) cette personne ou ce groupe est identifiable; b) la fourniture ou la production est exigée pour vérifier si cette personne ou les personnes de ce groupe ont respecté quelque devoir ou obligation prévu par la présente loi; c) (Abrogé par L.C. 1996, ch. 21, art. 58(1).) d) (Abrogé par L.C. 1996, ch. 21, art. 58(1).) (5) Le tiers à qui un avis est signifié ou envoyé conformément au paragraphe (1) peut, dans les 15 jours suivant la date de signification ou d'envoi, demander au juge qui a accordé l'autorisation prévue au paragraphe (3) ou, en cas d'incapacité de ce juge, à un autre juge du même tribunal de réviser l'autorisation. (6) À l'audition de la requête prévue au paragraphe (5), le juge peut annuler l'autorisation accordée antérieurement s'il n'est pas convaincu de l'existence des conditions prévues aux alinéas (3)a) et b). Il peut la confirmer ou la modifier s'il est convaincu de leur existence.

[26]            The other relevant sections such as 231.7, 232 and 238 of the ITA, sections 7, 8 and 24 of the Charter and sections 487 and 488.1 of the Criminal Code are included in Annex 1.

ANALYSIS

A- Should the requirement be cancelled because it was not sought for the purpose of verifying compliance with any "duty or obligation" under paragraph 232.1(3)b) of the ITA?

[27]            As mentioned, the respondent argues that the applicant has failed to provide the Court with proper evidence showing that the requirement was necessary to verify compliance with any specific "duty or obligation" under the ITA. In their view, the Minister only referred to an alleged breach of an untested interpretation bulletin which is not binding on the courts or CCRA.

[28]            Welton Parent submits that subsection 231.2(3) sets a very high threshold for the issuance of an unnamed person requirement that must be contrasted with the threshold set out at subsection 231.2(1), which permits the issuance of a requirement "for any purpose related to the administration or enforcement of this act".

[29]            On the other hand, the Minister says that the requirement is valid because the requested information may be relevant to the determination of the tax liability of the unnamed taxpayers and that, indeed, section 231.2 sets a low threshold even for unnamed persons.

[30]            It is not disputed that, in this particular instance, the group of unnamed taxpayers is ascertainable (paragraph 231.2(3)a)). I am satisfied that the affidavit of Mr. Rivet (in particular paragraphs 3, 17, 21 and 25) and his testimony (particularly at page 464, line 10 through page 465 of volume 4 of Welton Parent's motion record) at the ex parte hearing established that the Minister was seeking the required information to verify compliance by the unnamed employers with their duty to pay taxes on all revenues except for deductions permitted under the ITA.

[31]            The unnamed employers are clearly the persons who are being investigated by the applicant and I am satisfied on the evidence presented that there may be a problem with the deductions made by these unnamed employers, with respect to their contributions to the Plans.

[32]            This situation is very similar to the one recently reviewed by the Federal Court of Appeal in Canada (M.N.R.) v. National Foundation for Christian Leadership, [2005] F.C.J. No. 1115 (F.C.A.)(QL), where Justice Sharlow confirmed that the conditions in paragraph 231.2(3)b) had been properly met. I conclude that the order authorizing the issuance of the requirement should not be cancelled on that basis.

B- Are the information and documents targeted by the requirement protected from disclosure by solicitor-client privilege?

1)         Information and documents other than the names of the employers:

[33]            After reviewing the evidence, particularly the affidavits of Gregory Sanders, William Johnston and Hari S. Nesathurai, the transcripts of their cross-examinations and the samples of their opinions, I conclude that the valuation reports of Welton Parent and the advice it provided were important elements on which all counsel relied to give their opinions on the tax consequences of the Plans they were mandated to establish on behalf of their clients. There is no doubt that, for Mr. Sanders, an actuarial opinion was necessary to support the reasonableness of the clients' deductions under the ITA (motion record, volume 4, page 558). Similarly, Mr. Johnston's uncontradicted evidence was that such an opinion was an essential pre-condition for him to opine on compliance with Canadian income tax law (motion record, volume 3, page 217). For Mr. Nesathurai, it is equally clear that the actuary report was essential to determine whether the funding of the plan was reasonable. Only after receiving a confirmation of the reasonableness of the actuarial assumptions was he able to provide his legal opinion to his client. Even the applicant recognizes that pursuant to the interpretation bulletin, an actuarial report is essential to determine whether the contributions can be deducted.

[34]                There is uncontradicted evidence that the lawyers' clients expected that the information given to their lawyers for the purpose of obtaining legal advice would remain privileged and confidential and would be disclosed to no one without their express consent.

[35]            For example, the evidence of Gregory Sanders is that he discussed privilege virtually every time he first met with a potential client. He advised his clients that all information that they conveyed to him would be privileged, "including their names and contact information", since he was a tax lawyer and disclosing their name would violate their rights with respect to privilege (cross-examination of Mr. Sanders, motion record, volume 4, pages 484 to 486, questions 49, 50 and 52).

[36]            It appears that Mr. Johnston even advised his clients not to tell others that he was their lawyer, because Ottawa is not a very big town and people know that he is a tax law practitioner with a specialized tax practice (motion record, volume 4, page 646).

[37]            The lawyers also provided evidence that they had always expected that all the information that they provided to Welton Parent about their clients would be privileged and would be kept in the strictest confidence and not disclosed to anyone except themselves or their clients.

[38]            On that basis, Welton Parent, on behalf of the unnamed employers, urges the Court to conclude that all the information in its files are protected by the legal advice privilege.

[39]            I will deal with the status of the names of the various employers as a separate issue because, in respect of this question, the parties do not appear to disagree on the law. Rather, they disagree on how it should apply in the particular circumstances of this case. In contrast, their disagreement with respect to the other information and documentation referred to in the requirement directly concerns the extent of the concept of legal advice privilege in Canada.

[40]            In effect, the respondent says that the law in Canadaactually recognises that its report and correspondence with the Ottawa lawyers are privileged. For Welton Parent, a correct interpretation of the decision of President Jackett in Susan Hosiery Ltd. v. Canada (M.N.R.), [1969] 2 Ex. C.R. 27 indicates that communications between a client's accountant and a solicitor are privileged where the accountant was hired in the context of providing legal advice.

[41]            This decision was in their view properly interpreted and applied by Justice Gibson in Interprovincial Pipe Line Inc. v. M.N.R., [1996] 1 F.C. 367 at page 383, and by Justice Heneghan in AFS and Co. v. Canada, 2001 D.T.C. 5330.

[42]            According to the respondent, Susan Hosiery has been interpreted too restrictively in several decisions including the decision of the Court of Appeal of Ontario in General Accident Assurance Company et al. v. Chrusz et al., [1999] O.J. No. 3291.The respondent also says that Chrusz should be distinguished because, contrary to what happened in that case, there is no evidence here that the unnamed taxpayers are trying to use the legal advice privilege to artificially shield evidence that would otherwise not have been privileged.

[43]            The respondent also refers to other decisions, such as Long Tractor Inc. v. Canada (Deputy Attorney General) (1997), 155 D.L.R. (4th) 747, Methanex Corp. v. Canada(Department of National Revenue), [1997] 1 W.W.R. 573, Cineplex Odeon Corp. v. M.N.R. (1994), 114 D.L.R. (4th) 141, Telus Communications Inc. v. Canada (Attorney General), [2004] F.C.J. No. 1918 (C.A.)(QL), which allegedly support its position.

[44]            There is no doubt, and it is not contested, that solicitor-client privilege is a fundamental right and a substantive rule of law in Canada ([1980] 1 S.C.R. 821">Canada v. Solosky, [1980] 1 S.C.R. 821, [1982] 1 S.C.R. 860">Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860, R. v. McClure, [2001] 1 S.C.R. 445 and Lavallee, above). Courts have also often recognized the need to adopt a very liberal approach to the scope of such privilege (Stevens v. Canada (Prime Minister), [1998] 4 F.C. 89 (C.A.) at paragraph 21).

[45]            Because of the importance of the concept and recognizing the significance of the issue raised by the respondent in the context of multi-disciplinary practices and in areas of the law which have become extremely complex, such as tax law, the Court has very carefully examined all the authorities cited even though I will not deal in detail with each and every one of them here.

[46]            Before reviewing these authorities, it is important to mention that the parties agree that Welton Parent was not serving as a channel of communication between the three lawyers involved

in this case and their clients. In fact, Welton Parent never communicated with anybody other than the solicitors themselves.[5]

[47]            Also, as indicated, Welton Parent has taken the position that the Court does not need to change the law to conclude that their files are privileged. It simply has to properly construe the existing case law.

[48]            The Minister takes the opposite view. He says that Canadian law on the subject has been properly summarized by Justice Doherty in Chrusz and that to conclude that the documentation and information in the possession of Welton Parent in this case is privileged would require an extension of the law with respect to legal advice privilege.

[49]            In Susan Hosiery, the Exchequer Court of Canada used the decision in Wheeler v. Le Marchant (1881), 17 Ch. D. 675 as the starting point for its analysis of the law with respect to solicitor-client privilege.

[50]            In Wheeler, a land surveyor had been retained by a solicitor for the purpose of obtaining information required to enable him to give the legal advice sought by his client.

[51]            As in the present case, it was clear that the land surveyor had not been engaged to serve as a conduit between the solicitor and his client for the purpose of obtaining legal advice. He was not a representative or agent of the client. The English Court of Appeal decided that the communications between the solicitor and his expert were not communications to which legal advice privilege extended.

[52]            After quoting from Justice Cotton's decision in Wheeler, President Jackett said that none of the decisions to which he had been referred since then seemed to have changed or added to the law so far as it was relevant to what he had to decide on the motion before him.

[53]            I therefore understand that in Susan Hosiery, the Court applied to the particular facts before it the law as it then stood. The Court simply reformulated the principles set out in Wheeler, by saying at paragraph 8:

(a)         all communications, verbal or written, of a confidential character, between a client and a legal adviser directly related to the seeking, formulating or giving of legal advice or legal assistance (including the legal adviser's working papers, directly related thereto) are privileged; and

(b)         all papers and materials created or obtained specially for the lawyer's "brief" for litigation, whether existing or contemplated, are privileged.

[54]            It then added at paragraph 12:

Applying these principles, as I understand them, to materials prepared by accountants, in a general way, it seems to me

(a)         that no communication, statement or other material made or prepared by an accountant as such for a business man falls within the privilege unless it was prepared by the accountant as a result of a request by the business man's lawyer to be used in connection with litigation, existing or apprehended; and

(b)         that where an accountant is used as a representative, or one of a group of representatives, for the purpose of placing a factual situation or a problem before a lawyer to obtain legal advice or legal assistance, the fact that he is an accountant, or that he uses his knowledge and skill as an accountant in carrying out such task, does not make the communications that he makes, or participates in making, as such a representative, any the less communications from the principal, who is the client, to the lawyer; and similarly, communications received by such a representative from a lawyer whose advice has been so sought are none the less communications from the lawyer to the client.

[55]            Based on the evidence then before the Court and after recognizing that, in practice, smaller corporations do engage accountants to act for them in such matters, President Jackett concluded that Mr. Pall, Susan Hosiery's auditor, was indeed acting as representative of Susan Hosiery for the purpose of obtaining legal advice from Susan Hosiery's lawyer when it communicated with the lawyer. Thus, their communications were privileged.

[56]            This interpretation of Wheeler has been adopted in England and in Australia (see Pratt Holdings Pty Ltd. v. Commissioner of Taxation, [2004] F.C.A.F.C. 122 (F.C.A.) at paragraphs 23 to 33 and 91 to 97, Price Waterhouse (a firm) v. BCCI Holdings (Luxembourg) SA and other, [1992] BCLC 583 (Ch. Div.), page 5, Three Rivers District Counsel and others v. Governor and Company of the Bank of England (No. 5), [2004] UKHL 48, [2005] 4 All ER 948 (H. L.) at paragraph 99).

[57]            This is also exactly how the Court of Appeal of Ontario in Chrusz understood Wheeler and Susan Hosiery (see pages 22 and 23 to 27).

[58]            For example, at page 23, the Court says: "Wheeler v. Le Marchant, supra, illustrates the first principle that communications to or by a third party are not protected by client-solicitor privilege merely because they assist the solicitor in formulating legal advice for a client". In that respect, Justice Doherty notes that one must be careful when reviewing authorities on this subject given the inconsistent terminology used. He also points out that one must ascertain that comments made in a case about solicitor-client privilege were indeed intended to apply to communications with third parties where litigation was not ongoing or not contemplated.

[59]            In Chrusz, the Court of Appeal had to determine whether the report of a claims adjuster who had originally been retained directly by the client, an insurance company, was privileged because, sometime after the appointment of this expert, the insurance company retained a lawyer and directed the claims adjuster to report to the lawyer. The Court of Appeal had to review and analyze the extent of the solicitor-client privilege not only in the context of legal advice but also in the context of litigation because in that case, ultimately, the insurance company commenced an action for fraud against its insured.

[60]            The Court considered the rationale for the legal advice privilege (referred to as the solicitor-client privilege in the decision as opposed to the litigation privilege) and reviewed the authorities on the subject, particularly in respect of its application to communications by or to a third party. It concluded[6] that the privilege extended to all situations in which the third party's expertise was required to interpret, for the solicitor, information provided by the client or when the third party serves as a conduit of advice from the lawyer to the client or of instructions from the client to the lawyer.

[61]            For Justice Doherty, the existence of a solicitor-client privilege should not depend on the concept of agency; rather, one should adopt a functional approach to determine if it should apply. In that respect, he said at page 26:

I agree with the Divisional Courtthat the applicability of client-solicitor privilege to communications involving a third party should not be determined by deciding whether Mr. Bourret is properly described as an agent under the general law of agency. I think that the applicability of client-solicitor privilege to third party communications in circumstances where the third party cannot be described as a channel of communication between the solicitor and client should depend on the true nature of the function that the third party was retained to perform for the client. If the third party's retainer extends to a function which is essential to the existence or operation of the client-solicitor relationship, then the privilege should cover any communications which are in furtherance of that function and which meet the criteria for client-solicitor privilege.

    Client-solicitor privilege is designed to facilitate the seeking and giving of legal advice. If a client authorizes a third party to direct a solicitor to act on behalf of the client, or if the client authorizes the third party to seek legal advice from the solicitor on behalf of the client, the third party is performing a function which is central to the client-solicitor relationship. In such circumstances, the third party should be seen as standing in the shoes of the client for the purpose of communications referable to those parts of the third party's retainer.

[62]            It is interesting to note that in drawing this distinction between essential and non-essential functions, Doherty J.A. returned to the seminal case of Wheeler.

[63]            Applying this approach, the Court in Chrusz found that the claims adjuster did not have the authority to seek legal advice or to give instructions on legal matters on behalf of the insurance company; his authority did not reach inside the client-solicitor relationship. Rather, his function was to educate the solicitor as to circumstances surrounding the fire so that the client could receive the benefit of better informed advice from his lawyer and could then instruct the latter as to the legal steps to be taken on its behalf. Thus, the claims adjuster's correspondence and communications with the lawyer were not privileged.[7]

[64]            In College of Physiciansof British Columbia v. British Columbia (Information and Privacy Commissioner), [2002] B.C.J. No. 2779, the Court of Appeal of British Columbia found the analysis of Justice Doherty in Chrusz compelling and adopted it to determine whether the experts' opinions obtained by the College's lawyer were covered by a legal advice privilege.

[65]            In that particular case, the experts were retained to help the lawyer interpret and assess whether the evidence supported an allegation that a certain doctor had hypnotized his patient. The Court, after adopting the functional approach, said:

The experts were not authorized by the College to direct the lawyer to act or to seek legal advice from her. The experts were retained to act on the instructions of the lawyer to provide information and opinions concerning the medical basis for the Applicant's complaint. While the experts' opinions were relevant, and even essential, to the legal problem confronting the College, the experts never stood in the place of the College for the purpose of obtaining legal advice. Their services were incidental to the seeking and obtaining of legal advice.

[66]            It concluded that the opinions were not covered by legal advice privilege.

[67]            In my review, I have obviously considered the decision of the New Brunswick Court of Appeal in Lamey (Litigation Guardian of) v. Rice (2000), 190 D.L.R. (4th) 486 (N.B.C.A.). In that case, the Court does not refer to or mention Chrusz and, after a brief analysis, it concludes that an adjuster's report prepared at the request of the lawyer, as well as the correspondence between the lawyer and the adjuster, were protected by solicitor-client privilege.

[68]            Having carefully considered the reasoning of the Court in that case, I agree with the comments found in the Second Edition Supplement prepared by S. Lederman and A. Bryant, The Law of Evidence in Canada, LexisNexis Buttherworths, 2004, at paragraph 14.71.3, that the better view is that of Justice Doherty in Chrusz.

[69]            Before concluding my comments on the authorities, I will briefly refer to the decisions of this Court and of the Federal Court of Appeal[8] cited by the respondent.

[70]            In Telus, Justice Linden had to determine whether excised portions of a memorandum were subject to solicitor-client privilege. The Court reviewed certain cases dealing with legal advice communicated to a client through an agent and referred to Susan Hosiery as a case where "the communications between two accountants and a lawyer were deemed to be privileged because the accountants were obtaining legal advice on behalf of the client" (paragraph 15).

[71]            The respondent put some emphasis on the fact that Justice Linden approved the decision of Master Peppiat in Sunwell Engineering Co. et al. v. Mogilevski et al. (1986),9 C.P.C. (3d) 479. I do not see how this case supports the respondent's position for it is clear that, in Sunwell, the communications between the patent agent and the client for which privilege was sought were nothing more than a mere passing on and restating of the solicitor's opinion obtained by the patent agent on behalf of his client. This was again a simple conduit case as was the case before the Court of Appeal in Telus, above.

[72]            The respondent then says that Justice Gibson, in Interprovincial Pipe-Line Inc., above, accepted that solicitor-client privilege extends "to advice provided by professionals retained by outside counsel in the course of preparation of legal advice to the counsel's clients" (at page 383).

[73]            The learned judge did use such a description of the solicitor-client privilege in his decision but, in doing so, he was simply restating the principle as it was put before him by the parties. He clearly says that such a statement of the law was not in dispute. Therefore, he does not analyze the authorities in that respect. There are insufficient details in the decision to enable me to conclude without a doubt that, in Interprovincial Pipe-Line Inc., the accountant Price Waterhouse was not a third party whose functions fell within the parameters set out in Chrusz and Susan Hosiery.

[74]            My own review of the authorities leads me to conclude that the statement put before the Court by the parties in Interprovincial Pipe-Line Inc. was inaccurate if it was meant to apply to situations where litigation was not ongoing or contemplated.

[75]            The respondent then referred to the decision of Justice Heneghan in AFS and Co., above, particularly to paragraph 21 of her decision where she says:

The jurisprudence has established that there are two distinct branches of solicitor-client privilege: litigation privilege and legal advice privilege. The former protects all communications between the solicitor, client or third parties made in the course of existing or contemplated litigation. The latter protects all communications between a solicitor and client and third parties, that directly relate to the seeking, formulating or giving of legal advice.

                                                                        (My emphasis)

[76]            Again, the decision contains few details as to the exact function performed by and role of the third party whose communications were the subject of the motion. Having carefully considered this decision, I am not prepared to accept that Justice Heneghan intended to add to or extend the law as it existed prior to her decision and as it was expressed in Susan Hosiery and Chrusz, to which she refers.

[77]            In any event, Justice Heneghan revisited this issue in Belgravia Investments Ltd. v. Canada, [2002] F.C.J. No. 870. In that case, CCRA requested documents relating to certain investments by Belgravia and the taxpayer claimed that some of them were protected by solicitor-client privilege. This documentation consisted mostly of communications moving from Belgravia to its advisers, both legal and non legal, and the exchange of documents between the legal advisor and the other professional advisers, primarily the accountants.

[78]            Justice Heneghan reviews the general principles applicable as well as various authorities, including Susan Hosiery and Chrusz, to determine if there were limits to the application of solicitor-client privilege to communications with non legal professionals or third parties. The learned judge concludes at paragraphs 49 and 50:

The limits on solicitor-client privilege, in relation to non-legal professionals, has been considered.    The general rule is that communications, statements or other materials prepared by third parties for and on behalf of a solicitor are subject to the privilege only where those documents are prepared in contemplation of litigation; (...)

Accounting documents will be subject to the privilege if the accountant is used as a representative of a client to obtain legal advice; (...) Where a communication is made to an agent, such as an accountant who must consider it and provide an individual opinion, no privilege attaches. Where a document is created by a lawyer who has been consulted by the client's own lawyer in relation to the client's business, the general rule is that such documents will be privileged; (...).

(My emphasis)

[79]            If Justice Heneghan's position in AFS & co. was ambiguous, she certainly clarified her views in Belgravia. I see nothing in her summary of the law that differs from my understanding of the authorities.[9]

[80]            In view of the foregoing, the Court concludes that, in the present context, Welton Parent's file, including its reports, notes, drafts and communications with the unnamed taxpayers' lawyers, does not fall within the class of solicitor-client privilege simply because these lawyers used the respondent's views to provide legal advice to their client.

[81]            Thus, this leaves only the question of whether, in the present case, the names of the employers are protected by solicitor-client privilege.

2)          The names of the employers:

[82]            The issue with respect to the disclosure of the names of the employers, as I understand it here, is that, in the very particular circumstances of this case, disclosure of this information would effectively reveal not only the fact that these employers sought legal advice from those specific lawyers but also the nature and the very substance of the legal advice given by the lawyers to these employers with respect to the Plans.

[83]            Before reviewing the particular circumstances on which the respondent relies to support its position, I will briefly review the applicable principles.

[84]            First, it is agreed that, as mentioned by Justice Arbour in Lavallee, at paragraph 28, "the names of the client may very well be protected by solicitor-client privilege, although this is not always the case".

[85]            In saying this, Justice Arbour was echoing the concerns expressed by Justice Coté of the Alberta Court of Appeal in that same case ((2000), 184 D.L.R. (4th) 25) who had said at paragraph 56 that :

The very fact that a certain client consulted a certain type of lawyer may be very sensitive, and may indirectly reveal important secrets. It may well reveal the topic on which legal advice was sought: Dorchak v. Krupka (1997), 196 A.R. 81, 90 (C.A.).

[86]            Justice Veit of the Alberta Queen's Bench in that case ((1998), 160 D.L.R. (4th) 508, at page 525) had also said:

(...) in some situations, it may be critically important for a client to be confident that no one will know that she has consulted a divorce lawyer, or a lawyer who specializes in sterilization claims, or in claims for individuals who contracted AIDS through the blood supply, or in defending drunk driving charges.

[87]            The reasoning here is exactly the same as the one adopted to protect other types of information which would reveal the nature of the confidential legal advice provided (see Maranda v. Richer, [2003] 3 S.C.R. 193, at paragraph 22, with respect to administrative information). It is not new and it was applied in an income tax context (verification of a lawyer's tax returns) more than forty years ago in Re Solicitor, (1962), 36 D.L.R. (2d) 594 (BCSC), affirmed, (1964), 45 D.L.R. (2d) 134, leave to appealed dismissed, [1965] S.C.R. 84">[1965] S.C.R. 84. There, the Court held that the Minister of National Revenue is not entitled to use his coercive powers to require a lawyer to disclose the names of his clients as these clients had the right to keep secret and privileged the fact that they had sought legal advices.

[88]            In Legal Services Society v. British Columbia (Information and Privacy Commissioner) (2003), 226 D.L.R. (4th) 20 (B.C.C.A.), the British Columbia Court of Appeal had to consider whether a reporter should be permitted to obtain the names of the five lawyers with the highest billing for legal aid clients. The Court found that the names of the lawyers could not be disclosed because an assiduous reporter could use this information to deduce that particular clients were funded by legal aid (paragraphs 37-38). It held that because privilege must be retained as a right that is as close to absolute as possible, the line must be drawn on the side of the protection of the privilege (paragraph 40).

[89]            This means that like any other information conveyed by a client to his lawyer on a confidential basis for the purpose of obtaining legal advice, the names and coordinates of a client will be protected by solicitor-client privilege if, on the particular circumstances of the case, disclosing them would reveal the topic and substance of the legal advice sought.

[90]            In his memorandum and at the hearing, the Minister did not dispute the respondent's position as to the law on this issue.

[91]            In fact, the applicant did not make any comments specific to the disclosure of the names of the employers in his memorandum. At the hearing, when asked to clarify his position, the applicant specifically referred the Court to paragraph 38 of his written representations, which simply says that, in any event, not everything in a solicitor-client relationship is privileged, and to paragraphs 44 to 47 of those submissions where the Minister takes the position that even if the information sought was privileged, the privilege was waived when the information was voluntarily sent to third parties such as, in this case, the trustees or custodians of the various Plans and Welton Parent.[10]

[92]            It is interesting that the applicant did not argue at the hearing that the names sought were simply the names of the clients of Welton Parent rather than those of the Ottawa lawyers. This is probably because Mr. Rivet himself in his cross-examination acknowledged that although the request was sent to Welton Parent, it was indeed indirectly seeking the names of the clients of those lawyers (motion record, volume 5, pages 713-714, questions 237-240).

[93]            Given that Welton Parent only worked on the Plans set out by the three Ottawa lawyers and was at all times communicating only with them, the Court is satisfied that the requirement is indeed seeking the names of these lawyers' clients.

[94]            What is of particular concern here, as it was for the British Columbia Court of Appeal in Legal Services Society (paragraph 22) and for Justice LeBel speaking for the majority in Maranda (paragraph 24), is that there is little doubt in my mind that if Welton Parent is required to disclose apparently neutral information (names of the employers) either as a separate list or as part of the documents exchanged with the lawyers, an assiduous and intelligent investigator at CCRA will be able to determine the nature of the legal advice given to each of these employers.

[95]            Even though Mr. Rivet indicated in his testimony that the copies of the legal opinions in his possession did not mention any dollar amounts, the Court is satisfied that the copies of the legal opinions in the possession of CCRA disclose the nature and to a great extent, the substance of the legal advice given by those lawyers.[11]

[96]            This is an exceptional case that goes well beyond the concerns expressed by Justice Coté and Justice Veit in Lavallee.

[97]            With respect to Hari S. Nesathurai, even if CCRA did not have a sample of his opinion before the filing of this motion (the time at which the Court should focus its analysis), it appears to the Court that CCRA will obtain enough information from Welton Parent's file to again clearly know the nature of the services he rendered and of his legal advice.

[98]            As noted in Re Solicitor, as far back as 1675, the common law has been that "the benefit of doubt should always go to sustain solicitor-client privilege" (page 599).

[99]            One must, therefore, determine whether the unnamed employers waived the privilege protecting the nature and substance of the legal advice they sought from the three Ottawa lawyers when their names were voluntarily given by their lawyers to Welton Parent and to the trustees or custodians of the Plans.

[100]        In their submissions and in their evidence, Welton Parent states that the solicitor-client privilege belongs to the client and may only be waived by the client through his or her informed consent (Justice Arbour at paragraph 39 in Lavallee and Justice Major at paragraph 37 of R. v. McClure, [2001] 1 S.C.R. 445).

[101]        Since the nature of the legal advice privilege is so fundamental that the Supreme Court of Canada in Lavallee, at paragraph 36, held that it must be retained as a right as close to absolute as possible, the Court agrees that it should not lightly be abrogated.

[102]        The Court recognizes that a client's intention to waive is not always determinative because, as mentioned in J. Sopinka, S. Lederman and A. Bryant, The Law of Evidence in Canada, Second Edition, Butterworths, Toronto and Vancouver, 1999, at paragraph 14.96, page 756, other considerations unique to the adversarial system, such as fairness to the opposite party and consistency of positions, may come into play. But the Court cannot find any such considerations here.

[103]        Normally, the essentials of a waiver of a legal right (such as a time limitation or contractual rights) include a conscious intention to relinquish that right (see Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490, at paragraphs 19-20).

[104]        The Court should depart from the general principles applicable to the waiver of other types of legal rights only when absolutely necessary.

[105]        In my view, it is because of the fundamental nature of the privilege that Courts are becoming more reluctant to find waivers of solicitor-client privilege, particularly legal advice privilege, than in the past. This can also explain why concepts such as common interest privilege and limited waivers have been developed. The most recent example is the decision of the Ontario Divisional Court in Philip Services Corp. (Receiver of) v. Ontario Securities Commission, [2005] O.J. No. 4418).

[106]        The Ottawa lawyers say that the disclosure to the trustees and custodians of the Plans and to Welton Parent was made for a limited purpose - that is, solely to establish and/or implement the Plans. In their affidavits, they say that their clients gave them no authority to waive their privilege beyond that limited purpose, and that neither they nor their clients gave that authority to Welton Parent.

[107]        The respondent also relies on the "common interest privilege". This concept applies to information that is shared among parties to a commercial transaction and ensures that such sharing does not result in a waiver or loss of the privilege vis-à-vis parties outside of the group.

[108]        It appears from the testimony of Hari S. Nesathurai that a trustee or a custodian of a purpose-based trust, such as those created for the Plans, must know from whom he received the money because anti-money laundering regulations require disclosure of that information. This makes eminent sense and the applicant produced no evidence that the Plans could be established without disclosing at all the names of the employers who funded them.

[109]        At the hearing, the applicant also submitted that the Court should consider that this information was or could also be shared with everyone connected with the Plan, such as the employees, the enforcers of the Plans, etc. However, the applicant did not refer in its memorandum or at the hearing to any specific evidence that would indicate that the sharing of the names with these persons gave them sufficient information to know that these employers had retained the Ottawa lawyers to obtain their legal advice on the taxability of their contribution or to know the substance of such legal advice.

[110]        There is little evidence as to how the trustee or the custodian treated this information[12] and no evidence on whether any other person to whom the name was or could be disclosed would be in

a position to know and ascertain the name of the lawyer representing that party, or the nature and substance of the legal advice he gave.

[111]        Although it may well be that Welton Parent could issue a valuation report without having the names of the employers on file, it is clear that when this information was passed on by Mr. Sanders and Mr. Johnston, these lawyers were acting on the belief that such disclosure did not waive their clients' privilege with respect to the nature and substance of the legal advice that had been sought from them. They were wrong in that respect but at least this means that they did not act on the belief that their clients had expressly or implicitly authorized them to waive their legal privilege.

[112]        The Court also finds that it was understood by Welton Parent that they had to protect the confidentiality and privilege of the information they received (discussions with the lawyers, notice of privilege on e-mails, etc.).

[113]        In the present circumstances, the Court is not willing to infer that the clients implicitly authorized their lawyers to waive the privilege on the nature and substance of their legal advice when they authorized them to obtain an actuarial report from Welton Parent.

[114]        The Court concludes that it is not satisfied that the privilege protecting the fact that they sought legal advice with respect to these Plans, and with respect to the nature and substance of such advice, has been waived by the unnamed taxpayers.

[115]        In view of the foregoing, the Court concludes that the names of the employers in this very unique case are indeed protected by solicitor-client privilege.

[116]        This means that, unless the subsections of the ITA that are challenged are found to be invalid, the order will have to be varied to exclude from the information sought the names of the employers, as well as any reference to such names or these employers' coordinates in the documentation contained in the file of Welton Parent.[13]

C- Do subsections 231.2(3)(5) and (6) and section 232 of ITA unjustifiably infringe section 8 of the Charter?

[117]        Although the notice of motion includes a reference to section 7 of the Charter, the respondent confirmed at the hearing that the Court should only review the validity of the impugned sections in light of section 8 of the Charter. The parties have limited their arguments to that section.

[118]        Relying on the reasoning of the Supreme Court of Canada in Lavallee, Welton Parent submits that subsections 231.2(3), (5) and (6) of the ITA are unconstitutional because they do not allow a requirement to be cancelled by the Court on grounds of solicitor-client privilege.

[119]        It also claims that section 232 is unconstitutional because it allows for the loss of privilege without the client's knowledge or consent and, as such, does not minimally impair their privilege, again, contrary to Lavallee.

[120]        It is evident that, in this case, section 232 of the ITA does not directly apply. No requirement was sent to a lawyer, no document is about to be seized in the hand of a lawyer, and no lawyer is being prosecuted for failure to comply with a requirement.

[121]        Despite this, Welton Parent argues that the Court should review the constitutionality of this section because it is indirectly involved. According to the respondent, the Minister was trying to circumvent the solicitor-client privilege by sending the requirement to Welton Parent instead of sending it to the Ottawa lawyers. Welton Parent also says that the Minister could assert that the scheme provided for in section 232 applies because, by serving the requirement on Welton Parent, the Minister was in fact serving it on their principals, the Ottawa lawyers (see paragraphs 190 and 191 of the respondent's written representations at page 1439 of their motion record).

[122]        But, the Minister did not say that 231.2(3) was constitutional because it was supplemented by the procedure provided for at section 232. He argues that subsections 231.2(3), (5) and (6) stand on their own, and that they give sufficient flexibility to the authorizing judge and the reviewing judge to ensure their validity.

[123]        The Court finds that section 232 is not engaged in this case and, therefore, that it would be inappropriate to review or comment on the constitutionality of this section.

[124]        Obviously, this makes the task of the respondent more difficult because, in Lavallee, the Supreme Court of Canada quashed section 488.1 of the Criminal Code which dealt only with searches and seizures of documents in the possession of a lawyer and mirrored the procedure set out in section 232 of the ITA to a great extent. The respondent had thus focused its submissions on this section.

[125]        Like section 487 of the Criminal Code, which deals with the issuance of search warrants in general, subsection 231.2(3) applies to the issuance of requirements with respect to unnamed taxpayers in general.

[126]        The validity of section 487 has been confirmed by the Ontario Court of Appeal in R. v. Piersanti & Co., [2003] O.J. No. 23 and has been discussed by the British Columbia Court of Appeal in its decision in Festing v. Canada (A.G.) (2003), 172 C.C.C. (3d) 321. It has not been reviewed by the Supreme Court of Canada except when leave to appeal from Piersanti was denied (R. v. Piersanti & Co., [2003] S.C.C.A. No. 105). But I will say more about these decisions later.

[127]        The majority of the Supreme Court of Canada in Lavallee, followed the approach set out in R. v. Edwards, [1996] 1 S.C.R. 128, where Justice Cory said:

There are two distinct questions which must be answered in any s. 8 challenge.    The first is whether the accused had a reasonable expectation of privacy.    The second is whether the search was an unreasonable intrusion on that right to privacy.

[128]        This is the approach I will adopt.

[129]        The Minister submits that in R. v. McKinlay Transport Ltd., [1990] S.C.J. No. 25, the Supreme Court of Canada considered the constitutionality of the predecessor to subsection 231.2(3) and distinguished the investigation of criminal conduct from the enforcement of compliance with the ITA. At paragraph 35, the Court said:

In my opinion, s. 231(3) provides the least intrusive means by which effective monitoring of compliance with the Income Tax Act can be effected.    It involves no invasion of a taxpayer's home or business premises.    It simply calls for the production of records which may be relevant to the filing of an income tax return.    A taxpayer's privacy interest with regard to these documents vis-à-vis the Minister is relatively low.    The Minister has no way of knowing whether certain records are relevant until he has had an opportunity to examine them.    At the same time, the taxpayer's privacy interest is protected as much as possible since s. 241 of the Act protects the taxpayer from disclosure of his records or the information contained therein to other persons or agencies.

[130]        It then concluded that the sending of a requirement did not offend section 8 of the Charter where the information was sought for the purpose of ensuring compliance with the ITA.

[131]        More recently, in Bisaillon v. Canada, [1999] F.C.J. No. 1477 (F.C.A.)(QL), the Federal Court of Appeal dismissed the argument that a requirement to provide documents or information infringes sections 7 and 8 of the Charter. Justice Létourneau summarized the principles set out in McKinlay and found that they were still applicable. He said at paragraph 3:

In fact, McKinlay Transport Ltd., [...] a judgment by the Supreme Court of Canada, applies in the case at bar and disposes of the constitutional arguments made by the appellants. In that case the Supreme Court concluded that:

(a)		the Act is essentially a regulatory measure;
(b)		s. 231(3) (the predecessor of s. 231.2(1)) is not criminal or quasi-criminal law;
(c)		application of that subsection constitutes a seizure since it infringes the individual's expectations of privacy;
(d)		only unreasonable seizures contravene s. 8 of the Charter of Rights and Freedoms;
(e)		seizure in an administrative and regulatory context must be distinguished from seizure in a criminal or quasi-criminal situation;
(f)		in a taxation system based on the principle of self-reporting and self-assessment, the Minister of National Revenue has to have broad powers to audit taxpayers' returns and inspect records which may have been used to prepare those returns;
(g)		the Minister of National Revenue must be able to exercise these powers whether or not he has reasonable grounds to believe that a particular taxpayer has breached the Act;
(h)		s. 231(3) provides the least intrusive means by which effective monitoring of compliance with the Act can be carried out; and
(i)		the taxpayer's privacy interest with regard to documents which may be relevant in income tax returns is relatively low in relation to the Minister.

In our opinion, it is not a serious argument for the appellants to say that a requirement to provide documents or information, like the one at bar, infringes the constitutional provisions of ss. 7 and 8 of the Charter when that requirement is made as part of a genuine administrative investigation for the purpose of recovering money owed and with a real objective of collecting information in that connection. Of course, it cannot be used as a stratagem for the covert purpose of obtaining information to be used in criminal proceedings.

[132]        This does not mean, however, that even in the context of enforcing compliance of the ITA, a taxpayer has a low expectation of privacy with respect to documents or information protected by solicitor-client privilege. This question was never addressed in Bisaillon or in McKinlay.

[133]        In Lavallee, the Supreme Court of Canada found that when solicitor-client privilege is at stake, the expectation of privacy is of the highest order. Even if the Court must adopt a contextual approach to such an issue, I see no reason why a taxpayer would have a lower expectation of privacy in respect of the legal advice sought by him simply because we are in the context of enforcing the ITA.

[134]        Since the decision in Re Solicitor, no authorities have been cited that would indicate that solicitor-client privilege does not apply to the same extent in the income tax context as in any other context. Anyone looking at the language of section 231.7(1)(b), for example, would conclude that the legislator did not intend to lower the taxpayer's expectation in that respect.

[135]        I find that the statement of Justice Arbour in Lavallee as to the expectation of privacy with respect to information protected by solicitor-client privilege applies here.

[136]        In respect of the second part of the test, the only argument raised by the respondent to say that 231.2(3) constitutes an unreasonable intrusion on the right to privacy of the information protected by solicitor-client privilege is the fact that section 231.2(6) does not allow the Court to cancel the order authorizing the issuance of the requirement if the criteria set out in section 231.2(3) have been met.

[137]        The respondent submits that it is important to also consider that any person who fails to comply with a requirement issued under section 231.2(3) is guilty of an offence and may be subject to imprisonment for a term not exceeding twelve months or to a fine not exceeding $25,000 or both (section 238(1)). In this case, the requirement warned Welton Parent specifically of the possibility of imprisonment and of a fine if it failed to comply within 30 days.

[138]        The applicant says that pursuant to section 231.2(3), the authorizing judge has the discretion to impose any terms of execution or conditions he or she considers appropriate. This includes anything that would be relevant to the protection of solicitor-client privilege. He says that in fact, in this case, the Court did put its mind to the issue before issuing the authorization and could have set conditions.

[139]        Furthermore, where solicitor-client privilege is raised or becomes an issue, a reviewing judge may vary the order and exclude information or documents on the basis of such privilege. According to the applicant, subsection 231.2(5) ensures that no documents are provided to the applicant before a reviewing judge has put his or her mind to the issue. He submits that the present motion shows that one can get the issue decided without disclosing the names of the clients seeking to rely on the privilege and without any infringement of such a right. Section 231.7 further ensures that no compliance order may be granted by a Court until it is satisfied, among other things, that the information and documentation sought by the Minister is not privileged.

[140]        When the Supreme Court of Canada heard Lavallee, it was also seized with two other cases involving the validity of section 488.1 of the Criminal Code. One of them was Festing v. Canada (2001), 159 C.C.C. (3d) 97. In that case, the British Columbia Court of Appeal had struck down section 488.1 and this portion of its decision was affirmed by the Supreme Court of Canada.

[141]        But the Court of Appeal in Festing had also found that section 487 of the Criminal Code would be unconstitutional in so far as it applied to searches in law firms and had declared that the words "other than the law office" be read into the introductory words of that section. That portion of the decision was not before the Supreme Court of Canada and the Court of Appeal had suspended its effect until the Supreme Court of Canada ruled on the validity of section 488.1. In its remanded decision found at Festing v. Canada (A.G.) (2003), 172 C.C.C. (3d) 321, the Court of Appeal sets aside its previous order finding section 487 unconstitutional and it simply extends the definition of "law office" for the purpose of applying the Lavallee guidelines to any places where privileged documents may reasonably be expected to be located.

[142]        At about the same time, the Ontario Court of Appeal (Justice Weiler, Justice Abella and Justice Charron) had to review a similar issue in Piersanti & Co.[14] In this case, Piersanti & Co. was appealing from the dismissal of its application for an order quashing a search warrant and declaring section 487 unconstitutional to the extent that it authorized the search of law offices and the seizure of documents therein. At paragraph 3 of its decision, the unanimous Court of Appeal agreed with the applications judge that the reasoning of the British Columbia Court of Appeal in its 2001 decision in Festing should not be followed in light of the recent decision of the Supreme Court of Canada in Lavallee. Instead, the Court of Appeal found that the constitutional imperatives for the protection of solicitor-client privilege can be adequately met through the application of common law principles relating to the issuance of search warrants.

[143]        If the existence of the common law guidelines set out in Lavallee was found to constitute a sufficient safeguard against unreasonable searches in the context of criminal proceedings and the issuance of search warrants under section 487, it is difficult to envisage why they could not properly support the validity of a much less intrusive process in an administrative or regulatory context. A copy of the guidelines is attached as Annex 2 to these reasons.

[144]        There is no reason why the Lavallee guidelines could not be applied to a search warrant issued under the ITA (section 232). Similarly, there is no reason why those guidelines, adapted to the circumstances, could not be applied in the context of a requirement authorised under subsection 231.2(3). As I said, and the parties did not dispute it, they would have to be adapted. For example, as this provision deals with unnamed taxpayers, it would simply not be possible for the Minister to contact or give notice to those taxpayers.

[145]        If one applies the Lavallee guidelines, no authorization will be issued with regard to documents that are known to be protected by solicitor-client privilege.

[146]        Further, no authorization will be granted without referring to the guidelines where it is reasonable to expect that privileged or potentially privileged information or documentation may be included in the material requested (Festing (2003)).

[147]        As I will explain it later in these reasons, had I known all of the facts that were known to the applicant when it sought the ex parte authorization, I would not have authorized the issuance of the requirement unless it had included a specific reference to the fact that Welton Parent was not required to disclose any information or documentation protected by solicitor-client privilege, and that this issue had to be properly considered with its clients or its lawyers before any information or documentation was sent to CCRA.

[148]        When one looks at subsection 231.2(3) in the context of the scheme provided for in sections 231.1 to 231.7 and 232, it is clear that Parliament intended the Court to take the steps necessary to protect solicitor-client privilege.

[149]        The Court is also convinced that one cannot incur the penalties provided for in section 238 of the ITA if one can establish that one could not fulfill the requirement because solicitor-client privilege prevented it. As section 232 does not apply, there was no need for Welton Parent to identify or name the person on whose behalf it was claiming solicitor-client privilege (R. v. McNeney (1984), 11 C.C.C. (3d) 557). Also, the Court agrees with the applicant that this case is proof enough that Welton Parent and their unnamed clients can assert their privilege within the existing scheme without having to disclose their identities.

[150]        In view of the above, the Court is satisfied that subsections 231.2(3)(5) and (6) do not constitute an unjustified infringement of section 8 of the Charter.

[151]        That does not mean that the requirement, as issued and sent to Welton Parent without any special warning or precaution with respect to solicitor-client privilege, does not constitute an unreasonable search.

[152]        I will deal with this issue if it is necessary at the same time as I review the last argument raised with respect to the validity of the requirement and the ex parte order and when I exercise my discretion under subsection 231.2(6) of the ITA.

C- Breach of duty of full and frank disclosure

[153]        It is not disputed that the applicant had the duty to make full and frank disclosure in the utmost good faith when it sought the authorization of the Court under paragraph 231.2(3).

[154]        In R. v. Araujo, [2000] 2 S.C.R. 992, at paragraph 47, the Supreme Court of Canada said that "a corollary to the requirement of an affidavit being full and frank is that it should never attempt to trick its readers". The parties giving evidence in an ex parte application "should not allow themselves to be led into the temptation of misleading the authorizing judge, either by the language used or strategic omissions".

[155]          Justice Gibson in The Minister of National Revenue v. 159890 Canada Inc., 97 DTC 5495, at page 5497, also specified that the obligation of full and frank disclosure requires the Minister to disclose "what might reasonably be regarded as weaknesses in the case" for his ex parte order. His view was confirmed in another context by the Supreme Court of Canada in Ruby v. Canada (Solicitor General), [2002] 4 S.C.R. 3 at paragraph 47 where Justice Arbour said that the disclosure must include the facts adverse to one's interest.

[156]        What the respondent says is that the Minister's evidence was incomplete, inaccurate and misleading, and more particularly that:

            i)           it was incomplete because the Minister did not disclose that he knew that the information and documentation requested were potentially privileged because of their knowledge that the Ottawa lawyers were giving legal opinions to these employers and also because Mr. Johnston had already raised the issue of privilege during a meeting with CCRA concerning one of the twenty-five tax audits referred to earlier (memorandum of May 21, 2003 at page 1189 of the respondent motion record);

            ii)          it was incomplete because the Minister failed to disclose that his position on the validity of the Plans was untested and was solely based on an interpretation bulletin;

            iii)          it was inaccurate and misleading with respect to the manner in which Welton Parent's valuations were performed, and;

            iv)         it was misleading in how it presented the fact that Ottawalawyers were somewhat involved in the file as promoters.

[157]        Although the affidavit filed in support of the ex parte application did not discuss the relative strength of the Minister's position with respect to the Plans, this issue was canvassed during the testimony of Mr. Rivet at the ex parte hearing. It was acknowledged that there had been no decision yet confirming the Minister's position and that a first appeal on this question was in progress. The Court is satisfied that there was full and frank disclosure in that respect.

[158]        With respect of the allegation that the Minister failed to give accurate evidence when Mr. Rivet said at paragraph 12 of his affidavit that the valuations were not made in accordance with accepted actuarial standards, the Court finds that there was no material misrepresentation that would justify quashing the order.

[159]        Mr. Rivet acknowledged that although Ms. Laird, the expert in his department, challenges the reasonableness of some of the assumptions made by Welton Parent, she never said that its opinion was not made in accordance with accepted actuarial principles. Mr. Rivet agreed that the wording he used in his affidavit was "not quite what it should be".

[160]        This overstatement did color the file but the Court is satisfied that it was not material because the Court clearly understood from Mr. Rivet's testimony that it was the reasonableness of the assumptions that was challenged. This is normally a matter of opinion. In any event, this was only one of the many issues raised by CCRA (paragraph 9 of Mr. Rivet's affidavit).

[161]        The last deficiency raised by the respondent is more serious as it relates to the potentially privileged nature of the information sought by the Minister. After a careful review of the transcript of Mr. Rivet's cross-examination and the documentary evidence produced by the respondent, the Court is not convinced that CCRA or Mr. Rivet knew that Welton Parent or its principals considered all the documentation and information in their files privileged. There is insufficient evidence to support the respondent's assertion that the applicant intentionally deceived the Court as to the role played by the lawyers in this file. There is no doubt that the Court misunderstood the role of the lawyer because of the use of the term "promoters" throughout the affidavit and particularly during the testimony of Mr. Rivet. But I will come back to this issue later.

[162]        It is clear that the Minister had to be alert and alive to the issue of solicitor-client privilege. He had the duty to ensure that all available information that could impact on the Court's exercise of its discretion, particularly in respect of the need to impose special conditions to protect solicitor-client privilege, was disclosed.

[163]        Mr. Rivet testified that CCRA did not turn its mind to the fact that the Ottawa lawyers were acting at all times as legal advisers, and this despite the fact that he had personally reviewed one of Mr. Johnston's opinions with respect to the tax consequences of one of the Plans. He never turned his mind to the issue of solicitor-client privilege either because he presumed that "whether or not it (Welton Parent's valuation) went through the lawyer this was for the trustee and not for the legal opinion" (transcript of cross-examination at page 738 of the respondent motion record).

[164]        On its face, this is contrary to what was argued in the applicant's memorandum for the ex parte hearing. At paragraph 13, the applicant says that "the group of unnamed persons is ascertainable as the respondent has provided opinions to each of the taxpayer employers known to have participated in these health and welfare trusts, (...)".

[165]        Recognizing the complexity of the case, and the fact that in one of the sample opinions it is said that the valuation is obtained for the trustee, the Court will give the benefit of the doubt to the applicant.

[166]        The Court finds that considering the information at paragraph 15 of Mr. Rivet's affidavit, it was not unreasonable to expect that the report of Welton Parent and its file would not be protected by any privilege. Welton Parent was clearly not a conduit between the Ottawa lawyers and their clients, the employers, and there was no indication that they were essential to the solicitor-client relationship.

[167]        But this reasoning cannot be applied in respect of the request to disclose the names of the employers. Mr. Rivet knew that the "promoters" were acting as legal advisers to the employers. He knew the substance of their advice because CCRA had obtained samples of such legal opinions. He had even met with Mr. Johnston in the context of the audit of one of the Plans.

[168]        As mentioned earlier, Mr. Rivet also acknowledged that although the Minister was asking for the names of the employers through Welton Parent, he was indirectly seeking the names of the clients of the two Ottawa lawyers.

[169]        All this information was relevant and material. It should have been disclosed to the Court as clearly as possible. It should certainly not have been buried in the affidavit among technical details as the existence of the Ottawalawyers was in paragraph 9 of Mr. Rivet's affidavit.[15]

[170]        The matter was evidently complex and the circumstances quite particular. But there was no urgency in this matter and the applicant had ample time to consider all the issues.

[171]        The Court cannot adequately fulfill its role when it is not presented with all the evidence that could indicate that it was reasonable to expect that the names requested were protected by solicitor-client privilege.

[172]        It was certainly open to the applicant to believe that any privilege which might have existed with respect to the names of the employers was waived when this information was given to the respondent and to the trustees. He simply had to say so to the Court. This did not relieve him of his obligation. As I said, the applicant has an onerous duty on an ex parte application. He must be conscious that all facts adverse to his position must be included in the evidence provided to the Court.

[173]        The fact that the Court itself was alive to the issue of privilege and raised the point during the hearing, does not relieve the applicant of his duty either. Especially when it is evident that the Court misunderstood the role of the lawyers/promoters. It raised the matter because "(...) the promoter may have been given a legal opinion" At that time, it would have been simple to rectify the situation and explain to the Court that, in fact, the promoters were the ones giving the legal opinions to the employers. In his response, the applicant clearly focused on the nature of the actuarial opinion. The problem associated with the disclosure of the names of the employers was never discussed.

[174]        I am satisfied that the Court was never in a position to assess the potentially privileged nature of this particular information and there is no doubt that, had it known all the facts that were within the knowledge of the applicant before its sought the ex parte authorization, the Court would not have granted the authorization with respect to the names of the employers unless the requirement clearly stipulated that it covered only documents or information that were not subject to a solicitor-client privilege and that Welton Parent had to discuss this issue with its clients and its lawyers, if necessary, before responding to the requirement.

[175]        The respondent argued that any breach of the duty of full and frank disclosure would be sufficient to quash the order in its entirety. In the present circumstances, where there was no intention to deceive, the Court finds that the breach only affects the authorization with respect to the request to disclose the names of the employers.

[176]        Pursuant to subsection 231(6), the Court has the authority to vary the order and I will do so.

[177]        Because the names of the employers are covered by solicitor-client privilege or, alternatively, as a result of a breach of the duty of full and frank disclosure, the Court finds that the applicant should not be authorized to issue a requirement requesting the names of the employers and that reference to such names should also be deleted from any documentation and information to be provided to CCRA pursuant to the requirement. Now that the issue of solicitor-client privilege has been fully canvassed, there is no further need to refer to it in the requirement.

[178]        The only issue left is whether the order should be quashed in its entirety because it also unjustifiably infringes the unnamed taxpayers' right to solicitor-client privilege contrary to section 8 of the Charter.

[179]        I do not need to discuss this issue with respect to the names of the employers for this portion of the order has already been struck.

[180]        With respect to other information listed in the requirement, the Court is not satisfied that the order of March 30, 2004 unjustifiably infringes section 8. As I said, the files and correspondence between Welton Parent and the Ottawalawyers are not covered by solicitor-client privilege and the applicant had no reason to believe that they would be.

[181]        The motion is therefore granted in part. Both parties sought their costs but made no representations on that point at the end of the two days of hearing. The matter is somewhat unusual in that there were three different lawyers representing the Ottawa lawyers involved in the motion and, as I said, they were only partially successful.

[182]        Should the parties not be able to agree on this matter, the respondent shall file its written representations on costs on or before February 14, 2006 and the applicant shall file his reply on or before February 24, 2006.

ORDER

THIS COURT ORDERS that:

            1.          The motion is granted in part;

            2.          The order dated March 30, 2004 is amended as follows:

paragraph a) shall read:

The Minister of National Revenue is authorized to impose on the respondent a Requirement in the form attached hereto except that paragraph 1(a) of the said Requirement shall be deleted and the names of the employers and their coordinates if any, shall be deleted from the documentation to be provided in accordance with paragraph 1(b) to 1(f) of the Requirement;

3.          If necessary, an order with respect to costs will be issued after receiving the parties written representations.

"Johanne Gauthier"

ANNEX 1

Income Tax Act, R.S.C. 1985, c.1 (5th Supp.): 231.7 (1) On summary application by the Minister, a judge may, notwithstanding subsection 238(2), order a person to provide any access, assistance, information or document sought by the Minister under section 231.1 or 231.2 if the judge is satisfied that (a) the person was required under section 231.1 or 231.2 to provide the access, assistance, information or document and did not do so; and (b) in the case of information or a document, the information or document is not protected from disclosure by solicitor-client privilege (within the meaning of subsection 232(1)). (2) An application under subsection (1) must not be heard before the end of five clear days from the day the notice of application is served on the person against whom the order is sought. (3) A judge making an order under subsection (1) may impose any conditions in respect of the order that the judge considers appropriate. (4) If a person fails or refuses to comply with an order, a judge may find the person in contempt of court and the person is subject to the processes and the punishments of the court to which the judge is appointed. (5) An order by a judge under subsection (1) may be appealed to a court having appellate jurisdiction over decisions of the court to which the judge is appointed. An appeal does not suspend the execution of the order unless it is so ordered by a judge of the court to which the appeal is made. 232. (1) In this section, "custodian" « gardien » "custodian" means a person in whose custody a package is placed pursuant to subsection 232(3); "judge" « juge » "judge" means a judge of a superior court having jurisdiction in the province where the matter arises or a judge of the Federal Court; "lawyer" « avocat » "lawyer" means, in the province of Quebec, an advocate or notary and, in any other province, a barrister or solicitor; "officer" « fonctionnaire » "officer" means a person acting under the authority conferred by or under sections 231.1 to 231.5; "solicitor-client privilege" « privilège des communications entre client et avocat » "solicitor-client privilege" means the right, if any, that a person has in a superior court in the province where the matter arises to refuse to disclose an oral or documentary communication on the ground that the communication is one passing between the person and the person's lawyer in professional confidence, except that for the purposes of this section an accounting record of a lawyer, including any supporting voucher or cheque, shall be deemed not to be such a communication. (2) Where a lawyer is prosecuted for failure to comply with a requirement under section 231.2 with respect to information or a document, the lawyer shall be acquitted if the lawyer establishes to the satisfaction of the court (a) that the lawyer, on reasonable grounds, believed that a client of the lawyer had a solicitor-client privilege in respect of the information or document; and (b) that the lawyer communicated to the Minister, or some person duly authorized to act for the Minister, the lawyer's refusal to comply with the requirement together with a claim that a named client of the lawyer had a solicitor-client privilege in respect of the information or document. (3) Where, pursuant to section 231.3, an officer is about to seize a document in the possession of a lawyer and the lawyer claims that a named client of the lawyer has a solicitor-client privilege in respect of that document, the officer shall, without inspecting, examining or making copies of the document, (a) seize the document and place it, together with any other document in respect of which the lawyer at the same time makes the same claim on behalf of the same client, in a package and suitably seal and identify the package; and (b) place the package in the custody of the sheriff of the district or county in which the seizure was made or, if the officer and the lawyer agree in writing on a person to act as custodian, in the custody of that person. (3.1) Where, pursuant to section 231.1, an officer is about to inspect or examine a document in the possession of a lawyer or where, pursuant to section 231.2, the Minister has required provision of a document by a lawyer, and the lawyer claims that a named client or former client of the lawyer has a solicitor-client privilege in respect of the document, no officer shall inspect or examine the document and the lawyer shall (a) place the document, together with any other document in respect of which the lawyer at the same time makes the same claim on behalf of the same client, in a package and suitably seal and identify the package or, if the officer and the lawyer agree, allow the pages of the document to be initialed and numbered or otherwise suitably identified; and (b) retain it and ensure that it is preserved until it is produced to a judge as required under this section and an order is issued under this section in respect of the document. (4) Where a document has been seized and placed in custody under subsection 232(3) or is being retained under subsection 232(3.1), the client, or the lawyer on behalf of the client, may (a) within 14 days after the day the document was so placed in custody or commenced to be so retained apply, on three clear days notice of motion to the Deputy Attorney General of Canada, to a judge for an order (i) fixing a day, not later than 21 days after the date of the order, and place for the determination of the question whether the client has a solicitor-client privilege in respect of the document, and (ii) requiring the production of the document to the judge at that time and place; (b) serve a copy of the order on the Deputy Attorney General of Canada and, where applicable, on the custodian within 6 days of the day on which it was made and, within the same time, pay to the custodian the estimated expenses of transporting the document to and from the place of hearing and of safeguarding it; and (c) if the client or lawyer has proceeded as authorized by paragraph 232(4)(b), apply at the appointed time and place for an order determining the question. (5) An application under paragraph 232(4)(c) shall be heard in camera, and on the application (a) the judge may, if the judge considers it necessary to determine the question, inspect the document and, if the judge does so, the judge shall ensure that it is repackaged and resealed; and (b) the judge shall decide the matter summarily and, (i) if the judge is of the opinion that the client has a solicitor-client privilege in respect of the document, shall order the release of the document to the lawyer, and (ii) if the judge is of the opinion that the client does not have a solicitor-client privilege in respect of the document, shall order (A) that the custodian deliver the document to the officer or some other person designated by the Commissioner of Customs and Revenue, in the case of a document that was seized and placed in custody under subsection 232(3), or (B) that the lawyer make the document available for inspection or examination by the officer or other person designated by the Commissioner of Customs and Revenue, in the case of a document that was retained under subsection 232(3.1), and the judge shall, at the same time, deliver concise reasons in which the judge shall identify the document without divulging the details thereof. (6) Where a document has been seized and placed in custody under subsection 232(3) or where a document is being retained under subsection 232(3.1) and a judge, on the application of the Attorney General of Canada, is satisfied that neither the client nor the lawyer has made an application under paragraph 232(4)(a) or, having made that application, neither the client nor the lawyer has made an application under paragraph 232(4)(c), the judge shall order (a) that the custodian deliver the document to the officer or some other person designated by the Commissioner of Customs and Revenue, in the case of a document that was seized and placed in custody under subsection 232(3); or (b) that the lawyer make the document available for inspection or examination by the officer or other person designated by the Commissioner of Customs and Revenue, in the case of a document that was retained under subsection 232(3.1). (7) The custodian shall (a) deliver the document to the lawyer (i) in accordance with a consent executed by the officer or by or on behalf of the Deputy Attorney General of Canada or the Commissioner of Customs and Revenue, or (ii) in accordance with an order of a judge under this section; or (b) deliver the document to the officer or some other person designated by the Commissioner of Customs and Revenue (i) in accordance with a consent executed by the lawyer or the client, or (ii) in accordance with an order of a judge under this section. (8) Where the judge to whom an application has been made under paragraph 232(4)(a) cannot for any reason act or continue to act in the application under paragraph 232(4)(c), the application under paragraph 232(4)(c) may be made to another judge. (9) No costs may be awarded on the disposition of any application under this section. (10) Where any question arises as to the course to be followed in connection with anything done or being done under this section, other than subsection 232(2), 232(3) or 232(3.1), and there is no direction in this section with respect thereto, a judge may give such direction with regard thereto as, in the judge's opinion, is most likely to carry out the object of this section of allowing solicitor-client privilege for proper purposes. (11) The custodian shall not deliver a document to any person except in accordance with an order of a judge or a consent under this section or except to any officer or servant of the custodian for the purposes of safeguarding the document. (12) No officer shall inspect, examine or seize a document in the possession of a lawyer without giving the lawyer a reasonable opportunity of making a claim under this section. (13) At any time while a document is in the custody of a custodian under this section, a judge may, on an ex parte application of the lawyer, authorize the lawyer to examine or make a copy of the document in the presence of the custodian or the judge by an order that shall contain such provisions as may be necessary to ensure that the document is repackaged and that the package is resealed without alteration or damage. (14) Where a lawyer has, for the purpose of subsection 232(2), 232(3) or 232(3.1), made a claim that a named client of the lawyer has a solicitor-client privilege in respect of information or a document, the lawyer shall at the same time communicate to the Minister or some person duly authorized to act for the Minister the address of the client last known to the lawyer so that the Minister may endeavour to advise the client of the claim of privilege that has been made on the client's behalf and may thereby afford the client an opportunity, if it is practicable within the time limited by this section, of waiving the claim of privilege before the matter is to be decided by a judge or other tribunal. (15) No person shall hinder, molest or interfere with any person doing anything that that person is authorized to do by or pursuant to this section or prevent or attempt to prevent any person doing any such thing and, notwithstanding any other Act or law, every person shall, unless the person is unable to do so, do everything the person is required to do by or pursuant to this section. 238. (1) Every person who has failed to file or make a return as and when required by or under this Act or a regulation or who has failed to comply with subsection 116(3), 127(3.1) or 127(3.2), 147.1(7) or 153(1), any of sections 230 to 232 or a regulation made under subsection 147.1(18) or with an order made under subsection 238(2) is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to (a) a fine of not less than $1,000 and not more than $25,000; or (b) both the fine described in paragraph 238(1)(a) and imprisonment for a term not exceeding 12 months. (2) Where a person has been convicted by a court of an offence under subsection 238(1) for a failure to comply with a provision of this Act or a regulation, the court may make such order as it deems proper in order to enforce compliance with the provision. (3) Where a person has been convicted under this section of failing to comply with a provision of this Act or a regulation, the person is not liable to pay a penalty imposed under section 162 or 227 for the same failure unless the person was assessed for that penalty or that penalty was demanded from the person before the information or complaint giving rise to the conviction was laid or made. Canadian Charter of Rights and Freedom, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c.11: 7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.    8. Everyone has the right to be secure against unreasonable search or seizure. 24. (1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances. (2) Where, in proceedings under subsection (1), a court concludes that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter, the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute. Criminal Code, R.S.C. 1985, c. C-46 : 487. (1) A justice who is satisfied by information on oath in Form 1 that there are reasonable grounds to believe that there is in a building, receptacle or place (a) anything on or in respect of which any offence against this Act or any other Act of Parliament has been or is suspected to have been committed, (b) anything that there are reasonable grounds to believe will afford evidence with respect to the commission of an offence, or will reveal the whereabouts of a person who is believed to have committed an offence, against this Act or any other Act of Parliament, (c) anything that there are reasonable grounds to believe is intended to be used for the purpose of committing any offence against the person for which a person may be arrested without warrant, or (c.1) any offence-related property, may at any time issue a warrant authorizing a peace officer or a public officer who has been appointed or designated to administer or enforce a federal or provincial law and whose duties include the enforcement of this Act or any other Act of Parliament and who is named in the warrant (d) to search the building, receptacle or place for any such thing and to seize it, and (e) subject to any other Act of Parliament, to, as soon as practicable, bring the thing seized before, or make a report in respect thereof to, the justice or some other justice for the same territorial division in accordance with section 489.1. (2) Where the building, receptacle or place in which anything mentioned in subsection (1) is believed to be is in any other territorial division, the justice may issue his warrant in like form modified according to the circumstances, and the warrant may be executed in the other territorial division after it has been endorsed, in Form 28, by a justice having jurisdiction in that territorial division. (2.1) A person authorized under this section to search a computer system in a building or place for data may (a) use or cause to be used any computer system at the building or place to search any data contained in or available to the computer system; (b) reproduce or cause to be reproduced any data in the form of a print-out or other intelligible output; (c) seize the print-out or other output for examination or copying; and (d) use or cause to be used any copying equipment at the place to make copies of the data. (2.2) Every person who is in possession or control of any building or place in respect of which a search is carried out under this section shall, on presentation of the warrant, permit the person carrying out the search (a) to use or cause to be used any computer system at the building or place in order to search any data contained in or available to the computer system for data that the person is authorized by this section to search for; (b) to obtain a hard copy of the data and to seize it; and (c) to use or cause to be used any copying equipment at the place to make copies of the data. (3) A search warrant issued under this section may be in the form set out as Form 5 in Part XXVIII, varied to suit the case. (4) An endorsement that is made on a warrant as provided for in subsection (2) is sufficient authority to the peace officers or public officers to whom it was originally directed, and to all peace officers within the jurisdiction of the justice by whom it is endorsed, to execute the warrant and to deal with the things seized in accordance with section 489.1 or as otherwise provided by law. 488.1 (1) In this section, "custodian" « gardien » "custodian" means a person in whose custody a package is placed pursuant to subsection (2); "document" « document » "document", for the purposes of this section, has the same meaning as in section 321; "judge" « juge » "judge" means a judge of a superior court of criminal jurisdiction of the province where the seizure was made; "lawyer" « avocat » "lawyer" means, in the Province of Quebec, an advocate, lawyer or notary and, in any other province, a barrister or solicitor; "officer" « fonctionnaire » "officer" means a peace officer or public officer. (2) Where an officer acting under the authority of this or any other Act of Parliament is about to examine, copy or seize a document in the possession of a lawyer who claims that a named client of his has a solicitor-client privilege in respect of that document, the officer shall, without examining or making copies of the document, (a) seize the document and place it in a package and suitably seal and identify the package; and (b) place the package in the custody of the sheriff of the district or county in which the seizure was made or, if there is agreement in writing that a specified person act as custodian, in the custody of that person. (3) Where a document has been seized and placed in custody under subsection (2), the Attorney General or the client or the lawyer on behalf of the client, may (a) within fourteen days from the day the document was so placed in custody, apply, on two days notice of motion to all other persons entitled to make application, to a judge for an order (i) appointing a place and a day, not later than twenty-one days after the date of the order, for the determination of the question whether the document should be disclosed, and (ii) requiring the custodian to produce the document to the judge at that time and place; (b) serve a copy of the order on all other persons entitled to make application and on the custodian within six days of the date on which it was made; and (c) if he has proceeded as authorized by paragraph (b), apply, at the appointed time and place, for an order determining the question. (4) On an application under paragraph (3)(c), the judge (a) may, if the judge considers it necessary to determine the question whether the document should be disclosed, inspect the document; (b) where the judge is of the opinion that it would materially assist him in deciding whether or not the document is privileged, may allow the Attorney General to inspect the document; (c) shall allow the Attorney General and the person who objects to the disclosure of the document to make representations; and (d) shall determine the question summarily and, (i) if the judge is of the opinion that the document should not be disclosed, ensure that it is repackaged and resealed and order the custodian to deliver the document to the lawyer who claimed the solicitor-client privilege or to the client, or (ii) if the judge is of the opinion that the document should be disclosed, order the custodian to deliver the document to the officer who seized the document or some other person designated by the Attorney General, subject to such restrictions or conditions as the judge deems appropriate, and shall, at the same time, deliver concise reasons for the determination in which the nature of the document is described without divulging the details thereof. (5) Where the judge determines pursuant to paragraph (4)(d) that a solicitor-client privilege exists in respect of a document, whether or not the judge has, pursuant to paragraph (4)(b), allowed the Attorney General to inspect the document, the document remains privileged and inadmissible as evidence unless the client consents to its admission in evidence or the privilege is otherwise lost. (6) Where a document has been seized and placed in custody under subsection (2) and a judge, on the application of the Attorney General, is satisfied that no application has been made under paragraph (3)(a) or that following such an application no further application has been made under paragraph (3)(c), the judge shall order the custodian to deliver the document to the officer who seized the document or to some other person designated by the Attorney General. (7) Where the judge to whom an application has been made under paragraph (3)(c) cannot act or continue to act under this section for any reason, subsequent applications under that paragraph may be made to another judge. (8) No officer shall examine, make copies of or seize any document without affording a reasonable opportunity for a claim of solicitor-client privilege to be made under subsection (2). (9) At any time while a document is in the custody of a custodian under this section, a judge may, on an ex parte application of a person claiming a solicitor-client privilege under this section, authorize that person to examine the document or make a copy of it in the presence of the custodian or the judge, but any such authorization shall contain provisions to ensure that the document is repackaged and that the package is resealed without alteration or damage. (10) An application under paragraph (3)(c) shall be heard in private. (11) This section does not apply in circumstances where a claim of solicitor-client privilege may be made under the Income Tax Act or under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Loi de l'impôt sur le revenu, L.R.C. (1985), ch. 1 (5e suppl.) : 231.7 (1) Sur demande sommaire du ministre, un juge peut, malgré le paragraphe 238(2), ordonner à une personne de fournir l'accès, l'aide, les renseignements ou les documents que le ministre cherche à obtenir en vertu des articles 231.1 ou 231.2 s'il est convaincu de ce qui suit: a) la personne n'a pas fourni l'accès, l'aide, les renseignements ou les documents bien qu'elle en soit tenue par les articles 231.1 ou 231.2; b) s'agissant de renseignements ou de documents, le privilège des communications entre client et avocat, au sens du paragraphe 232(1), ne peut être invoqué à leur égard. (2) La demande n'est entendue qu'une fois écoulés cinq jours francs après signification d'un avis de la demande à la personne à l'égard de laquelle l'ordonnance est demandée. (3) Le juge peut imposer, à l'égard de l'ordonnance, les conditions qu'il estime indiquées. (4) Quiconque refuse ou fait défaut de se conformer à une ordonnance peut être reconnu coupable d'outrage au tribunal; il est alors sujet aux procédures et sanctions du tribunal l'ayant ainsi reconnu coupable. (5) L'ordonnance visée au paragraphe (1) est susceptible d'appel devant le tribunal ayant compétence pour entendre les appels des décisions du tribunal ayant rendu l'ordonnance. Toutefois, l'appel n'a pas pour effet de suspendre l'exécution de l'ordonnance, sauf ordonnance contraire d'un juge du tribunal saisi de l'appel. 232. (1) Les définitions qui suivent s'appliquent au présent article. « avocat » "lawyer" « avocat » Dans la province de Québec, un avocat ou notaire et, dans toute autre province, un barrister ou un solicitor. « fonctionnaire » "officer" « fonctionnaire » Personne qui exerce les pouvoirs conférés par les articles 231.1 à 231.5. « gardien » "custodian" « gardien » Personne à la garde de qui un colis est confié conformément au paragraphe (3). « juge » "judge" « juge » Juge d'une cour supérieure compétente de la province où l'affaire prend naissance ou juge de la Cour fédérale. « privilège des communications entre client et avocat » "solicitor-client privilege" « privilège des communications entre client et avocat » Droit qu'une personne peut posséder, devant une cour supérieure de la province où la question a pris naissance, de refuser de divulguer une communication orale ou documentaire pour le motif que celle-ci est une communication entre elle et son avocat en confidence professionnelle sauf que, pour l'application du présent article, un relevé comptable d'un avocat, y compris toute pièces justificative out tout chèque, ne peut être considéré comme une communication de cette nature. (2) L'avocat poursuivi pour n'avoir pas obtempéré à une exigence de fourniture d'un renseignement ou de production d'un document prévue par l'article 231.2 doit être acquitté s'il démontre, à la satisfaction du tribunal, ce qui suit: a) pour des motifs raisonnables, il croyait qu'un de ses clients bénéficiait du privilège des communications entre client et avocat en ce qui concerne le renseignement ou le document; b) il a indiqué au ministre ou à une personne régulièrement autorisée à agir pour celui-ci son refus d'obtempérer à cette exigence et a invoqué devant l'un ou l'autre le privilège des communications entre client et avocat dont bénéficiait un des ses client nommément désigné en ce qui concerne le renseignement ou le document. (3) Le fonctionnaire qui, conformément à l'article 231.3, est sur le point de saisir un document en la possession d'un avocat qui invoque le privilège des communications entre client et avocat au nom d'un de ses clients nommément désigné en ce qui concerne ce document doit, sans inspecter ou examiner celui-ci ni en faire de copies: a) d'une part, le saisir, ainsi que tout autre document pour lequel l'avocat invoque, en même temps, le même privilège au nom du même client, en faire un colis qu'il doit bien sceller et bien marquer; b) d'autre part, confier le colis à la garde soit du shérif du district ou du comté où la saisie a été opérée, soit de la personne que le fonctionnaire et l'avocat conviennent par écrit de désigner comme gardien. (3.1) Lorsque, conformément à l'article 231.1, un fonctionnaire est sur le point d'inspecter ou d'examiner un document en la possession d'un avocat ou que, conformément à l'article 231.2, le ministre exige la fourniture ou la production d'un document, et que l'avocat invoque le privilège des communications entre client et avocat en ce qui concerne le document au nom d'un de ses client ou anciens clients nommément désigné, aucun fonctionnaire ne peut inspecter ou examiner le document et l'avocat doit: a) d'une part, faire un colis du document ainsi que de tout autre document pour lequel il invoque, en même temps, le même privilège au nom du même client, bien sceller ce colis et bien le marquer, ou, si le fonctionnaire et l'avocat en conviennent, faire en sorte que les pages du document soient paraphées et numérotées ou autrement bien marquées; b) d'autre part, retenir le document et s'assurer de sa conservation jusqu'à ce que, conformément au présent article, le document soit produit devant un juge et une ordonnance rendue concernant le document. (4) En cas de saisie et mise sous garde d'un document en vertu du paragraphe (3) ou de rétention d'un document en vertu du paragraphe (3.1), le client ou l'avocat au nom de celui-ci peut: a) dans les 14 jours suivant la date où le document a ainsi été mis sous garde ou a ainsi commencé à être retenu, après avis au sous-procureur général du Canada au moins trois jours francs avant qu'il soit procédé à cette requête, demander à un juge de rendre une ordonnance qui: (i) d'une part, fixe la date -- tombant au plus 21 jours après la date de l'ordonnance -- et le lieu où il sera statué sur la question de savoir si le client bénéficie du privilège des communications entre client et avocat en ce qui concerne le document, (ii) d'autre part, enjoint de produire le document devant le juge à la date et au lieu fixés; b) signifier une copie de l'ordonnance au sous-procureur général du Canada et, le cas échéant, au gardien dans les 6 jours suivant la date où elle a été rendue et, dans ce même délai, payer au gardien le montant estimé des frais de transport aller-retour du document entre le lieu où il est gardé ou retenu et le lieu de l'audition et des frais de protection du document; c) après signification et paiement, demander, à la date et au lieu fixés, une ordonnance où il soit statué sur la question. (5) Une requête présentée en vertu de l'alinéa (4)c) doit être entendue à huis clos. Le juge qui en est saisi: a) peut, s'il l'estime nécessaire pour statuer sur la question, examiner le document et, dans ce cas, s'assure ensuite qu'un colis du document soit refait et que ce colis soit rescellé; b) statue sur la question de façon sommaire: (i) s'il est d'avis que le client bénéficie du privilège des communications entre client et avocat en ce qui concerne le document, il ordonne la restitution du document à l'avocat ou libère l'avocat de son obligation de le retenir, selon le cas, (ii) s'il est de l'avis contraire, il ordonne: (A) au gardien de remettre le document au fonctionnaire ou à quelque autre personne désignée par le commissaire des douanes et du revenu, en cas de saisie et mise sous garde du document en vertu du paragraphe (3), (B) à l'avocat de permettre au fonctionnaire ou à l'autre personne désignée par le commissaire des douanes et du revenu d'inspecter ou examiner le document, en cas de rétention de celui-ci en vertu du paragraphe (3.1). Le juge motive brièvement sa décision en indiquant de quel document il s'agit sans en révéler les détails. (6) En cas de saisie et mise sous garde d'un document en vertu du paragraphe (3) ou de rétention d'un document en vertu du paragraphe (3.1), et s'il est convaincu, sur requête du procureur général du Canada, que ni le client ni l'avocat n'a présenté de requête en vertu de l'alinéa (4)a) ou que, en ayant présenté une, ni l'un ni l'autre n'a présenté de requête en vertu de l'alinéa (4)c), le juge saisi ordonne: a) au gardien de remettre le document au fonctionnaire ou à quelque autre personne désignée par le commissaire des douanes et du revenu, en cas de saisie et mise sous garde du document en vertu du paragraphe (3); b) à l'avocat de permettre au fonctionnaire ou à l'autre personne désignée par le commissaire des douanes et du revenu d'inspecter ou examiner le document, en cas de rétention de celui-ci en vertu du paragraphe (3.1). (7) Le gardien doit: a) soit remettre le document à l'avocat en conformité, selon le cas, avec: (i) un consentement souscrit par le fonctionnaire, ou par le sous-procureur général du Canada ou au nom de celui-ci, ou par le commissaire des douanes et du revenu ou au nom de ce dernier, (ii) une ordonnance d'un juge sous le régime du présent article; b) soit remettre le document au fonctionnaire ou à quelque autre personne désignée par le commissaire des douanes et du revenu en conformité, selon le cas, avec: (i) un consentement souscrit par l'avocat ou le client, (ii) une ordonnance d'un juge sous le régime du présent article. (8) Lorsque, pour quelque motif, le juge saisi d'une demande visée à l'alinéa (4)a) ne peut instruire ou continuer d'instruire la requête visée à l'alinéa (4)c), un autre juge peut être saisi de cette dernière. (9) Il ne peut être adjugé de frais sur la décision rendue au sujet d'une requête prévue par le présent article. (10) Si aucune mesure n'est prévue au présent article sur une question à résoudre en rapport avec une chose accomplie ou en voie d'accomplissement selon le présent article -- à l'exception des paragraphes (2), (3) et (3.1) --, un juge peut décider des mesures qu'il estime les plus aptes à atteindre le but du présent article, à savoir, accorder le privilège des communications entre client et avocat à des fins pertinentes. (11) Le gardien ne peut remettre aucun document à qui que ce soit, sauf en conformité avec une ordonnance d'un juge ou d'un consentement donné, en vertu du présent article, ou sauf à l'un de ses fonctionnaires ou préposés, pour protéger le document. (12) Aucun fonctionnaire ne peut inspecter, examiner ou saisir un document en la possession d'un avocat sans donner à celui-ci une occasion raisonnable d'invoquer le privilège des communications entre client et avocat en vertu de présent article. (13) À tout moment, lorsqu'un document est entre les mains d'un gardien selon le présent article, un juge peut, sur la demande ex parte de l'avocat, autoriser celui-ci à examiner le document ou à en faire une copie en présence du gardien ou du juge, au moyen d'une ordonnance qui doit contenir les dispositions nécessaires pour qu'un colis du document soit refait et que ce colis soit rescellé sans modification ni dommage. (14) L'avocat qui, pour l'application du paragraphe (2), (3) ou (3.1), invoque, au nom d'un de ses clients nommément désigné, le privilège des communications entre client et avocat en ce qui concerne un renseignement ou un document, doit en même temps indiquer la dernière adresse connue de ce client au ministre ou à quelque personne régulièrement autorisée à agir au nome de celui-ci, afin que le ministre puisse, d'une part, chercher à informer le client du privilège que est invoqué en son nome et, d'autre part, donner au client l'occasion, si la chose est matériellement possible dans le délai mentionné au présent article, de renoncer à invoquer le privilège avant que la question ne soit soumise à la décision d'un juge ou d'un autre tribunal. (15) Nul ne peut entraver, rudoyer ou contrecarrer une personne qui fait une chose qu'elle est autorisée à faire en vertu du présent article, ni empêcher ou tenter d'empêcher une personne de faire une telle chose. Malgré toute autre loi ou règle de droit, quiconque est tenu par le présent article de faire quelque chose doit le faire, sauf impossibilité. 238. (1) La personne qui ne produit ou ne présente pas ou ne remplit pas une déclaration de la manière et dans le délai prévus à la présente loi ou à son règlement ou qui contrevient au paragraphe 116(3), 127(3.1) ou (3.2), 147.1(7) ou 153(1) ou à l'un des articles 230 à 232 ou à une disposition réglementaire prise en vertu du paragraphe 147.1(18) ou encore qui contrevient à une ordonnance rendue en application du paragraphe (2) commet une infraction et encourt, sur déclaration de culpabilité par procédure sommaire et outre toute pénalité prévue par ailleurs: a) soit une amende de 1 000 $ à 25 000 $; b) soit une telle amende et un emprisonnement maximal de 12 mois. (2) Le tribunal qui déclare une personne coupable d'une infraction prévue au paragraphe (1) peut rendre toute ordonnance qu'il estime indiquée pour qu'il soit remédié au défaut visé par l'infraction. (3) La personne déclarée coupable, par application du présent article, d'avoir contrevenu à une disposition de la présente loi ou de son règlement n'est passible d'une pénalité prévue à l'article 162 ou 227 pour la même contravention que si une cotisation pour cette pénalité a été établie à son égard ou que si le paiement en a été exigé d'elle avant que la dénonciation ou la plainte qui a donné lieu à la déclaration de culpabilité ait été déposée ou faite. Charte canadienne des droits et libertés, Édictée comme l'annexe B de la Loi de 1982 sur le Canada, 1982, ch. 11 (R.-U.) : 7. Chacun a droit à la vie, à la liberté et à la sécurité de sa personne; il ne peut être porté atteinte à ce droit qu'en conformité avec les principes de justice fondamentale. 8. Chacun a droit à la protection contre les fouilles, les perquisitions ou les saisies abusives. 24. (1) Toute personne, victime de violation ou de négation des droits ou libertés qui lui sont garantis par la présente charte, peut s'adresser à un tribunal compétent pour obtenir la réparation que le tribunal estime convenable et juste eu égard aux circonstances. (2) Lorsque, dans une instance visée au paragraphe (1), le tribunal a conclu que des éléments de preuve ont été obtenus dans des conditions qui portent atteinte aux droits ou libertés garantis par la présente charte, ces éléments de preuve sont écartés s'il est établi, eu égard aux circonstances, que leur utilisation est susceptible de déconsidérer l'administration de la justice. Code criminel, L.R. 1985, ch. C-46 : 487. (1) Un juge de paix qui est convaincu, à la suite d'une dénonciation faite sous serment selon la formule 1, qu'il existe des motifs raisonnables de croire que, dans un bâtiment, contenant ou lieu, se trouve, selon le cas : a) une chose à l'égard de laquelle une infraction à la présente loi, ou à toute autre loi fédérale, a été commise ou est présumée avoir été commise; b) une chose dont on a des motifs raisonnables de croire qu'elle fournira une preuve touchant la commission d'une infraction ou révélera l'endroit où se trouve la personne qui est présumée avoir commis une infraction à la présente loi, ou à toute autre loi fédérale; c) une chose dont on a des motifs raisonnables de croire qu'elle est destinée à servir aux fins de la perpétration d'une infraction contre la personne, pour laquelle un individu peut être arrêté sans mandat; c.1) un bien infractionnel, peut à tout moment décerner un mandat autorisant un agent de la paix ou, dans le cas d'un fonctionnaire public nommé ou désigné pour l'application ou l'exécution d'une loi fédérale ou provinciale et chargé notamment de faire observer la présente loi ou toute autre loi fédérale, celui qui y est nommé : d) d'une part, à faire une perquisition dans ce bâtiment, contenant ou lieu, pour rechercher cette chose et la saisir; e) d'autre part, sous réserve de toute autre loi fédérale, dans les plus brefs délais possible, à transporter la chose devant le juge de paix ou un autre juge de paix de la même circonscription territoriale ou en faire rapport, en conformité avec l'article 489.1. (2) Lorsque le bâtiment, contenant ou lieu, dans lequel est présumée se trouver une chose mentionnée au paragraphe (1), est situé dans une autre circonscription territoriale, le juge de paix peut décerner son mandat dans la même forme, modifiée selon les circonstances, et le mandat peut être exécuté dans l'autre circonscription territoriale après avoir été visé, selon la formule 28, par un juge de paix ayant juridiction dans cette circonscription. (2.1) La personne autorisée à perquisitionner des données contenues dans un ordinateur se trouvant dans un lieu ou un bâtiment peut : a) utiliser ou faire utiliser tout ordinateur s'y trouvant pour vérifier les données que celui-ci contient ou auxquelles il donne accès; b) reproduire ou faire reproduire des données sous forme d'imprimé ou toute autre forme intelligible; c) saisir tout imprimé ou sortie de données pour examen ou reproduction; d) utiliser ou faire utiliser le matériel s'y trouvant pour reproduire des données. (2.2) Sur présentation du mandat, le responsable du lieu qui fait l'objet de la perquisition doit faire en sorte que la personne qui procède à celle-ci puisse procéder aux opérations mentionnées au paragraphe (2.1). (3) Un mandat de perquisition décerné en vertu du présent article peut être rédigé selon la formule 5 de la partie XXVIII, ajustée selon les circonstances. (4) Un visa apposé à un mandat conformément au paragraphe (2) constitue une autorisation suffisante pour les agents de la paix ou fonctionnaires publics à qui il a été d'abord adressé et à tous les agents de la paix qui ressortissent au juge de paix qui l'a visé d'exécuter le mandat et de s'occuper des choses saisies en conformité avec l'article 489.1 ou d'une autre façon prévue par la loi. 488.1 (1) Les définitions qui suivent s'appliquent au présent article. « avocat » "lawyer" « avocat » Dans la province de Québec, un avocat ou un notaire, et dans les autres provinces, un barrister ou un solicitor. « document » "document" « document » Pour l'application du présent article, s'entend au sens de l'article 321. « fonctionnaire » "officer" « fonctionnaire » Agent de la paix ou fonctionnaire public. « gardien » "custodian" « gardien » Personne à qui la garde d'un paquet est confiée conformément au paragraphe (2). « juge » "judge" « juge » Juge d'une cour supérieure de juridiction criminelle de la province où la saisie a été faite. (2) Lorsqu'un fonctionnaire agissant sous le régime de la présente loi ou de toute autre loi fédérale est sur le point d'examiner, de copier ou de saisir un document en la possession d'un avocat qui prétend qu'un de ses clients, nommément désigné, jouit du privilège des communications entre client et avocat en ce qui concerne ce document, le fonctionnaire doit, sans examiner le document ni le copier : a) le saisir et en faire un paquet qu'il doit convenablement sceller et identifier; b) confier le paquet à la garde du shérif du district ou du comté où la saisie a été effectuée ou, s'il existe une entente écrite désignant une personne qui agira en qualité de gardien, à la garde de cette dernière. (3) Lorsqu'un document a été saisi et placé sous garde en vertu du paragraphe (2), le procureur général, le client ou l'avocat au nom de son client, peut : a) dans un délai de quatorze jours à compter de la date où le document a été placé sous garde, demander à un juge, moyennant un avis de présentation de deux jours adressé à toute autre personne qui pourrait faire une demande, de rendre une ordonnance : (i) fixant une date, au plus tard vingt et un jours après la date de l'ordonnance, et un endroit, où sera décidée la question de savoir si le document doit être communiqué, (ii) en outre, exigeant du gardien qu'il présente le document au juge au moment et au lieu fixés; b) faire signifier une copie de l'ordonnance à toute personne qui pourrait faire une demande et au gardien dans les six jours de la date où elle est rendue; c) s'il a procédé ainsi que l'alinéa b) l'autorise, demander, au moment et au lieu fixés, une ordonnance qui tranche la question. (4) Suite à une demande prévue à l'alinéa (3)c), le juge : a) peut examiner le document, s'il l'estime nécessaire, pour établir si le document doit être communiqué; b) peut, s'il est d'avis que cela l'aidera à rendre sa décision sur le caractère privilégié du document, permettre au procureur général d'examiner le document; c) doit permettre au procureur général et à toute personne qui s'oppose à la communication du document de lui présenter leurs observations; d) doit trancher la question de façon sommaire et : (i) s'il est d'avis que le document ne doit pas être communiqué, s'assurer que celui-ci est remballé et scellé à nouveau et ordonner au gardien de le remettre à l'avocat qui a allégué le privilège des communications entre client et avocat ou à son client, (ii) s'il est d'avis que le document doit être communiqué, ordonner au gardien de remettre celui-ci au fonctionnaire qui a fait la saisie ou à quelque autre personne désignée par le procureur général, sous réserve des restrictions et conditions qu'il estime appropriées. Le juge motive brièvement sa décision en décrivant la nature du document sans toutefois en révéler les détails. (5) Lorsque le juge décide, conformément à l'alinéa (4)d), qu'un privilège des communications entre client et avocat existe en ce qui concerne un document, ce document demeure privilégié et inadmissible en preuve, que le juge ait permis ou non au procureur général de l'examiner, conformément à l'alinéa (4)b), à moins que le client n'y consente ou que le privilège ne soit autrement perdu. (6) Lorsqu'un document a été saisi et placé sous garde, en vertu du paragraphe (2) et qu'un juge, sur la demande du procureur général, est convaincu qu'aucune demande prévue à l'alinéa (3)a) n'a été faite, ou, si elle l'a été, qu'elle n'a pas été suivie d'une autre demande prévue à l'alinéa (3)c), il doit ordonner au gardien de remettre le document au fonctionnaire qui a fait la saisie ou à quelque autre personne désignée par le procureur général. (7) Lorsque, pour quelque motif, le juge à qui une demande a été faite selon l'alinéa (3)c) ne peut agir ni continuer d'agir en vertu du présent article, des demandes subséquentes faites en vertu de cet alinéa peuvent être faites à un autre juge. (8) Aucun fonctionnaire ne doit examiner ni saisir un document ou en faire des copies sans donner aux intéressés une occasion raisonnable de formuler une objection fondée sur le privilège des communications entre client et avocat en vertu du paragraphe (2). (9) En tout temps, lorsqu'un document est entre les mains d'un gardien selon le présent article, un juge peut, sur une demande ex parte de la personne qui s'oppose à la divulgation du document alléguant le privilège des communications entre client et avocat, autoriser cette dernière à examiner le document ou à en faire une copie en présence du gardien ou du juge; cependant une telle autorisation doit contenir les dispositions nécessaires pour que le document soit remballé et le paquet scellé à nouveau sans modification ni dommage. (10) La demande visée à l'alinéa (3)c) est entendue à huis clos. (11) Le présent article ne s'applique pas lorsque peut être invoqué le privilège des communications entre client et avocat en vertu de la Loi de l'impôt sur le revenu ou le secret professionnel du conseiller juridique en vertu de la Loi sur le recyclage des produits de la criminalité et le financement des activités terroristes.

ANNEX 2

Guidelines that are found at paragraph 49 of Lavallee, Rackel & Heintz v. Canada(A.G.), [2002] 3 S.C.R. 209, governing the searches of law offices:

1. No search warrant can be issued with regards to documents that are known to be protected by solicitor-client privilege. 2. Before searching a law office, the investigative authorities must satisfy the issuing justice that there exists no other reasonable alternative to the search. 3. When allowing a law office to be searched, the issuing justice must be rigorously demanding so to afford maximum protection of solicitor-client confidentiality. 4. Except when the warrant specifically authorizes the immediate examination, copying and seizure of an identified document, all documents in possession of a lawyer must be sealed before being examined or removed from the lawyer's possession. 5. Every effort must be made to contact the lawyer and the client at the time of the execution of the search warrant. Where the lawyer or the client cannot be contacted, a representative of the Bar should be allowed to oversee the sealing and seizure of documents. 6. The investigative officer executing the warrant should report to the justice of the peace the [page251] efforts made to contact all potential privilege holders, who should then be given a reasonable opportunity to assert a claim of privilege and, if that claim is contested, to have the issue judicially decided. 7. If notification of potential privilege holders is not possible, the lawyer who had custody of the documents seized, or another lawyer appointed either by the Law Society or by the court, should examine the documents to determine whether a claim of privilege should be asserted, and should be given a reasonable opportunity to do so. 8. The Attorney General may make submissions on the issue of privilege, but should not be permitted to inspect the documents beforehand. The prosecuting authority can only inspect the documents if and when it is determined by a judge that the documents are not privileged. 9. Where sealed documents are found not to be privileged, they may be used in the normal course of the investigation. 10. Where documents are found to be privileged, they are to be returned immediately to the holder of the privilege, or to a person designated by the court.

1. Aucun mandat de perquisition ne peut être décerné relativement à des documents reconnus comme étant protégés par le secret professionnel de l'avocat. 2. Avant de perquisitionner dans un bureau d'avocats, les autorités chargées de l'enquête doivent convaincre le juge saisi de la demande de mandat qu'il n'existe aucune solution de rechange raisonnable. 3. Lorsqu'il permet la perquisition dans un bureau d'avocats, le juge saisi de la demande de mandat doit être rigoureusement exigeant, de manière à conférer la plus grande protection possible à la confidentialité des communications entre client et avocat. 4. Sauf lorsque le mandat autorise expressément l'analyse, la copie et la saisie immédiates d'un document précis, tous les documents en la possession d'un avocat doivent être scellés avant d'être examinés ou de lui être enlevés. 5. Il faut faire tous les efforts possibles pour communiquer avec l'avocat et le client au moment de l'exécution du mandat de perquisition. Lorsque l'avocat ou le client ne peut être joint, on devrait permettre à un représentant du Barreau de superviser la mise sous scellés et la saisie des documents. 6. L'enquêteur qui exécute le mandat doit rendre compte au juge de paix des efforts faits pour [page251] joindre tous les détenteurs potentiels du privilège, lesquels devraient ensuite avoir une occasion raisonnable de formuler une objection fondée sur le privilège et, si cette objection est contestée, de faire trancher la question par les tribunaux. 7. S'il est impossible d'aviser les détenteurs potentiels du privilège, l'avocat qui a la garde des documents saisis, ou un autre avocat nommé par le Barreau ou par la cour, doit examiner les documents pour déterminer si le privilège devrait être invoqué et doit avoir une occasion raisonnable de faire valoir ce privilège. 8. Le procureur général peut présenter des arguments sur la question du privilège, mais on ne devrait pas lui permettre d'examiner les documents à l'avance. L'autorité poursuivante peut examiner les documents uniquement lorsqu'un juge conclut qu'ils ne sont pas privilégiés. 9. Si les documents scellés sont jugés non privilégiés, ils peuvent être utilisés dans le cours normal de l'enquête. 10. Si les documents sont jugés privilégiés, ils doivent être retournés immédiatement au détenteur du privilège ou à une personne désignée par la cour.

FEDERAL COURT

                      NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                    T-506-04

STYLE OF CAUSE:                   

MINISTER OF NATIONAL REVENUE

Applicant

and

WELTON PARENT INC.

Respondent

PLACE OF HEARING:              Ottawa, Ontario

DATE OF HEARING:                August 29 and 30, 2005

REASONS FOR ORDER

AND ORDER:                           Justice Johanne Gauthier

DATED:                                       January 24, 2006

APPEARANCES:

Mr. Roger Leclaire                                                              FOR APPLICANT

Ms. Carole Benoit

Mr. Al Meghji                                                                     FOR RESPONDENT

Mr. Mahmud Jamal

Mr. Derek Leschinsky

SOLICITORS OF RECORD:

John H. Sims, Q.C.                                                             FOR APPLICANT

Deputy Attorney General of Canada

Ottawa, Ontario

Osler, Hoskin & Harcourt LLP                                            FOR RESPONDENT

Toronto, Ontario