Date:
20080424
Docket:
A-257-07
Citation:
2008 FCA 156
CORAM: NOËL
J.A.
NADON
J.A.
RYER
J.A.
BETWEEN:
LAW SOCIETY
OF BRITISH
COLUMBIA
Appellant
(Intervener)
and
S. BRUCE
CORNFIELD
Appellant
(Respondent)
and
THE MINISTER
OF NATIONAL REVENUE
Respondent
(Applicant)
REASONS FOR JUDGMENT OF THE
COURT
(Delivered
from the Bench at Vancouver, British Columbia, on April
24, 2008)
NOËL J.A.
[1]
This is an appeal by the Law Society of British Columbia (the “Law
Society”) from a decision of Snider J. (the “applications judge”) of the
Federal Court, whereby a Compliance Order was issued under section 289.1 of the
Excise Tax Act, R.S.C., 1985, c. E-15 (the “ETA”), requiring that Mr.
Cornfield, a lawyer, produce certain documents relating to a client, to the
Minister of National Revenue (the “MNR”). The decision to order compliance is
based on the applications judge’s finding that none of the documents sought to
be produced are protected by the solicitor-client privilege. The applications
judge also indicated in the course of her reasons that the procedure in place
for requiring the
production of documents when privilege is validly claimed adequately safeguards
the sanctity of solicitor-client privilege.
[2]
The Law Society does not challenge the conclusion that the documents in
issue are not covered by the privilege or that the Compliance Order should
issue but submits that the applications judge erred in finding that the
procedure in place for obtaining a Compliance Order (see Minister of
National Revenue v. Norris, [2002] 3 C.T.C.
346), when lawyers are the holders of the documents sought to be produced,
provides adequate safeguards for the protection of the solicitor-client
privilege.
[3]
The Law
Society’s standing to bring this appeal is based on its intervener status
granted by Gauthier J. on December 20, 2006, in the application for a
Compliance Order before the Federal Court. Gauthier J’s order provided that that
the Law Society had the right to make representations in respect of all issues
concerning solicitor-client privilege raised in the application, including the
procedures which a court should follow in considering an order for production
of documents in possession of a lawyer and the protection of solicitor-client
privilege in the face of a demand for production of documents. She further
granted the Law Society the right to appeal in respect of any of these issues.
[4]
Counsel
for the respondent raises a preliminary objection to the hearing and
disposition of the question raised by the Law Society in this appeal. Counsel
submits that the only matter that can be appealed is the order given by the
applications judge. As the Law Society does not take issue with the issuance of
that order, or the reasoning of the applications judge for issuing it, there is
nothing to appeal.
[5]
The only
issue in the proceedings below was whether a Compliance Order should be issued.
This turned on whether the documents sought – documents relating to a
conveyance of property such as cheques from a solicitor’s account and
statements of adjustments – were covered by a solicitor-client privilege. Relying on a
consistent body of case law (In the Matter of the Legal Profession Act and
Martin K. Wirick, 2005 BCSC 1821, 51 B.C.L.R. (4TH) 193, [2005]
B.C.J. No. 2878 (B.C. Sup. Ct.) (QL); Minister of National Revenue v. Vlug,
2006 FC 86, 2006 D.T.C. 6285, [2006] F.C.J. No. 142 (F.C.) (QL); Canada
(Minister of National Revenue) v. Reddy, 2006 FC 277, 146 A.C.W.S. (3d)
568, [2006] F.C.J. No. 348 (F.C.) (QL); Canada (Minister of National
Revenue) v. Singh Lyn Ragonetti Bindal LLP, 2005 FC 1538, [2006] 1
C.T.C. 113, [2005] F.C.J. No. 1907 (F.C.) (QL)), the applications judge held that they
were not.
Given this conclusion, the applications judge went on to issue the Compliance
Order.
[6]
Despite
this finding, the applications judge addressed the concern raised by the Law
Society (Reasons, para. 28):
The Law
Society raises the problem that sometimes these types of documents may contain
notations or other information that may be privileged. This is not the case
with the Information and Documents that are the subject of this application;
the Law Society does not assert that the documents at issue in this application
are annotated. . . . However, I acknowledge that this situation could arise in
a future case. The simple response to this concern is that a financial or
accounting record that contains privileged information in the form of a
notation is not a document that satisfies the definition of non-privileged
information or documents. A Compliance Order may only be issued if the
information or document is not protected from disclosure by solicitor-client
privilege, either pursuant to s. 289.1 of the Excise Tax
Act or under principles of common law. If such circumstances were to
arise, the statute and the Federal Court procedures for obtaining a Compliance
Order would, in my view, suffice to provide the important protection for
privileged documents and information.
[My
emphasis]
[7]
As can be
seen, the opinion expressed in this last passage, with which the Law Society
takes issue, was not necessary for the disposition of the application and, as
noted earlier, the Law Society does not take issue with the order itself or the
reasons given for issuing it.
[8]
The Law
Society nonetheless argues that the order of Gauthier J. authorized the
applications judge to rule on the adequacy of the procedure, and that the right
of appeal which she granted must be read as extending to this question.
[9]
With
respect, we do not read the order of Gauthier J. as having this effect.
Gauthier J. did not have the authority to refer the procedural question raised
by the Law Society for determination, and did not purport to do so. She
authorized the Law Society’s intervention on the basis that it could be of
assistance to the applications judge in disposing of the issue whether the
documents in issue were privileged and whether a Compliance Order should be
issued (See Rule 109 of the Federal Courts Rules).
[10]
We
therefore conclude that the appeal by the Law Society should not have been
brought. The appeal will be accordingly dismissed. Costs will be awarded to the
respondent.
"Marc Noël"
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