Date: 20161129
Docket: T-283-13
Citation:
2016 FC 1322
Ottawa, Ontario, November 29, 2016
PRESENT:
CHIEF JUSTICE CRAMPTON
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BETWEEN:
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MINISTER OF
NATIONAL REVENUE
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Applicant
(Respondent on Motion)
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and
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KPMG LLP
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Respondent
(Applicant on Motion)
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ORDER AND REASONS
[1]
In this Motion, which is being dealt with in
writing, KPMG LLP seeks to quash or cancel an Order of Justice Noël dated
February 18, 2013. That Order authorized the Minister of National Revenue to
impose on KMPG a requirement pursuant to s. 231.2(3) of the Income Tax Act,
RSC 1985, c 1 (5th Supp.) [the Act] to disclose
confidential information relating to certain of its unnamed clients, including
their identities and documentation relating to their participation in a tax
structure known as the Offshore Company Structure [the Unnamed Persons
Requirement].
[2]
KPMG submits that the Unnamed Persons
Requirement should be quashed or cancelled because Rule 208 of the
Chartered Professional Accountants of Ontario’s Code of Professional Conduct
[the Code] provides that, subject to listed exceptions, “[a] member or firm shall not disclose any confidential
information concerning the affairs of any client, former client, employer or former
employer.” I understand that KMPG is subject to a similar rule in
several other provinces.
[3]
The Minister responds that KPMG’s duty of
confidentiality, including pursuant to Rule 208 of the Code, does not prevent
the Minister from requiring and obtaining information that is described in an
Order issued by this Court pursuant to subsection 231.2(3). I agree.
[4]
KPMG does not appear to take issue with the Minister’s
position on this matter. However, it invites the Court to exercise its
discretion to grant the relief that it has requested, due to the existence of
its obligation under Rule 208 (and similar rules that exist elsewhere in
Canada), and because subsection 231.2(3) was amended effective June 26,
2013, to eliminate the Court’s ability to issue orders under that provision on
an ex-parte basis. According to KPMG, the Unnamed Persons Requirement
appears to be one of the last, if not the last, such requirement issued under
subsection 231.2(3), prior to its amendment in 2013.
[5]
In support of its request, KMPG notes that
Commentary 2 to Rule 208 recognizes that “[t]he
duty of confidentiality does not excuse a member or firm from complying with a
legal requirement to disclose information.” KPMG further notes that
Commentary 2 proceeds to state that “courts have
held that a member or firm faced with a subpoena or other request to disclose
information should be aware of the member’s obligation to bring to the
attention of the court or other authority the member’s duty of confidentiality
to the client,” and that, ultimately, it is for the court to determine “whether the confidentiality of the information should be
maintained.”
[6]
I am not persuaded that this is an appropriate
case in which to grant the relief requested by KPMG.
[7]
One of the listed exceptions to the general
confidentiality principle set out in Rule 208 of the Code permits
disclosure of confidential information in the absence of client consent when “such information is required to be disclosed by order of
lawful authority” (Rule 208.1(c)).
[8]
Justice Noël’s Order dated February 18, 2013, was
such an order of lawful authority. KPMG has not suggested anything to the
contrary and has not identified any legal principle or jurisprudence that might
support the proposition that Rule 208 provides a sound basis for this
Court to exercise its discretion to quash or cancel an order issued pursuant to
a statute validly enacted by Parliament.
[9]
In my view, the language of s. 231.2(3) of the
Act is clear and overrides the general confidentiality rule imposed by Rule 208
of the Code. The mere fact that Rule 208, and similar rules in other
provinces, exist would not ordinarily provide a sufficient basis to warrant the
exercise of the Court’s discretion to cancel or set aside an order validly
issued pursuant to s. 231.2(3). There is nothing in the particular facts
of this case that would warrant the exercise of such discretion. Indeed, cancelling
or varying Justice Noël’s Order based on KMPG’s concerns regarding
confidentiality would appear to be inconsistent with Parliament’s intent in
enacting s. 231.2 (R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627,
at paras 36-38; MNR v Sand Exploration Ltd, [1995] FCJ No 780 (QL), at
paras 17-18 (TD).
[10]
As KPMG has advised its unnamed clients, and as
recognized by the Minister, any claim of solicitor-client privilege that they
may wish to make can be raised at the time of KPMG’s compliance with the
Unnamed Person’s Requirement.
[11]
The fact that s. 231.2(3) has been amended to
remove the Minister’s ability to seek the information described therein on ex-parte
basis does not change the foregoing analysis.
[12]
For the foregoing reasons, this motion is
dismissed with costs.
ORDER
THIS COURT ORDERS THAT:
1.
KMPG’s Motion to cancel or vary Justice Noel’s Order
dated February 18, 2013, is dismissed with costs.
"Paul S. Crampton"
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