Section 232

Subsection 232(1) - Definitions



Bank of Nova Scotia v. Deputy Attorney General of Canada, 92 DTC 6313 (Ont. Ct. (G.D.))

The province "where the matter arises" is the province where the document in question is situate, rather than the province where the judicial proceeding to determine the privilege takes place.

Solicitor-Client Privilege


Canada (National Revenue) v. BMO Nesbitt Burns Inc., 2022 FC 157

spreadsheet did not communicate the very legal advice given

The Minister brought an application pursuant to s. 231.7 seeking an order requiring the respondent (“BMONB”) to provide an unredacted version of a spreadsheet (the “MSPM”). The redacted column in the spreadsheet, which had been provided by BMONB pursuant to a request made by CRA in July 2019 in relation to its audit of suspected dividend rental arrangement transactions engaged in by BMONB in its 2016 taxation year, was claimed by BMONB to reflect legal advice in a small portion of legal written advice received by it in 2012 and 2013 from two law firms (McCarthy’s and Torys).

In rejecting BMONB’s claim of privilege, Kane J stated (at paras. 108 and 116):

As … found in Information Commissioner [2013 FCA 104], not all end products of legal advice fall on the continuum of solicitor-client communications; an end product is not privileged “except to the extent that [it] communicates the very legal advice given by counsel” (at para 31). …

The Court’s review of the legal opinions does not serve to establish that the MSPM falls on the continuum of solicitor-client communications. The Court remains of the view that BMONB has not established that the MSPM, which is a set of computations with some associated text, is other than the operational outcome or end product of legal advice, to some extent. BMONB has not established that the MSPM would disclose the legal advice provided.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.7 - Subsection 231.7(1) providing a full spreadsheet would not breach a requirement not to disclose uncertain tax positions, and could be enforced after a TCC appeal 562

Canada (National Revenue) v. Atlas Tube Canada ULC, 2018 FC 1086

predominant purpose of due diligence report was to aid a business decision

The Minister sought an order pursuant to s. 231.7 requiring the respondent (“Atlas”) to provide a draft due diligence report (the “Report”) prepared by an accounting firm (“EYC”), that reviewed the tax attributes of a Canadian corporation (“LSI”) that subsequently was acquired by Atlas’s U.S. parent (“JMC”) and of a Canadian subsidiary (“LSC”) of LSI, as well as LSC’s material tax exposures resulting from its Canadian tax filings including risk of challenge by CRA. Shortly thereafter, JMC transferred a subsidiary of amalgamated LSI (“New LSI”) to Atlas. The overall due diligence process was led by JMC’s Executive Vice President and General Counsel (“McNamara”), and EYC was engaged by McNamara to conduct the Canadian tax diligence upon the recommendation of JMC’s Canadian legal counsel (“Stikeman”).

In finding that the Report was not protected by solicitor-client privilege, Southcott J stated (at paras 54-55):

… I find that its dominant purpose when commissioned and generated was to inform the decision whether to proceed with the transaction and at what price. As in L’Abbé [2011 ONSC 7575], this was a business purpose and, to the extent the Report or the information in it also informed the giving of legal advice by Stikeman, I find this to have been ancillary to the business decision.

These findings as to the principal or dominant purpose for the report are determinative of my conclusion that the Report is not subject to solicitor-client privilege.

He further found (also at para. 55) that the portion of the Report providing “an assessment of the probability that the filing positions leading to the tax exposures would be sustained if challenged by CRA, and an evaluation of whether appropriate reserves had been taken in respect of such exposures” were not “capable of being characterized as prepared for the purpose of obtaining legal advice on the structuring of the transaction.”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) required disclosure of an EY tax due diligence report discussing uncertain tax filing positions of a target 373
Tax Topics - Income Tax Act - Section 231.7 - Subsection 231.7(1) low threshold of relevance was met 298

Iggillis Holdings Inc. v. Canada (National Revenue), 2018 FCA 51

privilege is not lost when a tax opinion is shared with a party with a “sufficient common interest in the same transactions”

Prior to the acquisition of two companies from the appellants by a third party, tax counsel for the respondents (“Kirby”) was provided by tax counsel for Abacus (“Nitikman”) with a draft tax planning memo of Nitikman, which Kirby commented on, so that the memo as finalized reflected his input as well. CRA served a Requirement on the appellants to produce the memo pursuant to s. 231.2(1), which they refused to do, on the basis that the memo was subject to common-interest privilege and, thus, was protected by solicitor-client privilege.

In confirming the appellants’ position, Webb JA stated (at paras. 43-44):

[S]olicitor-client privilege is not waived when an opinion provided by a lawyer to one party is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions. This principle applies whether the opinion is first disclosed to the client of the particular lawyer and then to the other parties or simultaneously to the client and the other parties. In each case, the solicitor-client privilege that applies to the communication by the lawyer to his or her client of a legal opinion is not waived when that opinion is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.

[W]hen dealing with complex statutes such as the Income Tax Act, sharing of opinions may well lead to efficiencies in completing the transactions and the clients may well be better served as the application of the Income Tax Act will be of interest to all of the parties to the series of transactions. In my view, in the circumstances of this case, [the appellants] had sufficient common interest in the transactions to warrant a finding that, in Alberta or British Columbia, the … memo is protected from disclosure by solicitor-client privilege.

Iggillis Holdings Inc. v. Canada (National Revenue), 2016 FC 1352, rev'd 2018 FCA 51

no common-interest privilege exception to the loss of solicitor-client privilege in providing a legal opinion to another firm

Prior to the acquisition of two companies from the respondents by an Abacus company, tax counsel for the respondents (“Kirby”) was provided by tax counsel for Abacus (“Nitikman”) with a draft tax planning memo of Nitikman, which Kirby commented on, so that the memo as finalized reflected his input as well (the “Abacus Memo”). There was no letter of intent, and the transactions instead were described in the Abacus Memo. CRA served a Requirement on the Respondents to produce the Abacus Memo pursuant to s. 231.2(1), which they refused to do, on the basis that the memo was subject to common-interest privilege (“CIP”) and, thus, was protected by solicitor-client privilege.

After finding (at para. 72) that “the Memo is legal advice provided by the lawyers to their clients in the strictest confidence and protected from disclosure under SCP subject to whether the privilege has been waived or is protected by CIP,” and before concluding (at para. 300) “that advisory CIP is not a legitimate or acceptable application of solicitor-client privilege,” Annis J went on to find that solicitor-client privilege had been waived through provision of the Abacus Memo to Kirby, stating (at para 289):

Litigation CIP is compatible with litigation privilege based on a shared adversarial purpose. …

Advisory CIP significantly expands the quantity of relevant evidence that is denied to the courts. …Furthermore, it provides an increased potential for abuse, while undermining the administration of justice by predominantly enabling transactions that anticipate creating litigation.

The claimed policy benefit of advisory CIP of enabling commercial transactions is entirely speculative, and more likely represents a cost to society by the fact that advisory CIP mostly enables transactions that anticipate litigation which undermine the administration of justice, or are otherwise of no, or harmful value to society.

Pitney Bowes is distinguishable as it was a matter involving joint client representation, not allied lawyer CIP.

Canada (National Revenue) v. Thompson, 2016 SCC 21, [2016] 1 S.C.R. 381

exclusion for accounting records was invalid even where CRA demands related to enforcement action against the lawyer

In the course of an enforcement action against him, CRA sent the respondent (“Thompson”), a lawyer practicing in a small Alberta town, a requirement pursuant to s. 231.2(1) of the Act, requesting his current accounts receivable listing. He provided a general indication of the balance owing, but claimed that the provision by him of further details, such as the names of his clients, was precluded by solicitor‑client privilege. When the Minister applied to the Federal Court for a compliance order under s. 232.7, Thompson filed a notice of constitutional question, asking the Federal Court whether s. 231.2(1) could be interpreted to require a lawyer to divulge privileged information. He also claimed that the requirement constituted an unreasonable search or seizure contrary to s. 8 of the Charter.

The Minister appealed a decision of the Federal Court of Appeal to send the matter back to the Federal Court so that Thompson could be given the opportunity to assert the privilege on his clients’ behalf. The sole question before the Supreme Court was the proper interpretation of s. 232(1), and a motion of Thompson to state a constitutional question before that Court was dismissed.

Wagner and Gason JJ. stated (at paras 17, 19 & 20):

Solicitor-client privilege has evolved from being treated as a mere evidentiary rule to being considered a rule of substance and, now, a principle of fundamental justice…

…[F]acts connected with that relationship (such as the bills of account at issue in Maranda [2003 SCC 67, [2003] 3 S.C.R. 193 at paras. 33-34]) must be presumed to be privileged absent evidence to the contrary… .

…[W]e cannot conclude at the outset that Mr. Thompson’s communications with his clients are distinct from financial records that disclose various facts about their relationships in order to determine whether solicitor-client privilege covers those facts. Absent proof to the contrary, all of this information is prima facie privileged, and therefore confidential.

However, “once a court has determined that a document over which solicitor-client privilege is being asserted is an accounting record of a lawyer, s. 232(1) is clearly intended to bypass the traditional protection associated with solicitor-client privilege, which means that the document can then be seized and inspected by the Minister” (para. 27).

However, they concluded (at para. 41):

Because we conclude in Chambre des notaires that the ITA ’s requirement scheme is unconstitutional insofar as it applies to lawyers like Mr. Thompson, it is unnecessary to return the matter to the Federal Court.

The Minister’s demand was to be rejected.

Before so concluding, they stated (at paras. 39-40):

[S]olicitor-client privilege is a right that belongs to, and can only be waived by, a client of a legal professional… . In order to properly afford clients the opportunity to raise their right to solicitor-client privilege, they must… be afforded the opportunity to decide whether they wish to contest the disclosure of the information requested by the state, and if they do wish to do so, they must be permitted to make submissions in that regard on their own behalf.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. Hansard indicated an intent for an amendment to trench on privilege 107
Tax Topics - Statutory Interpretation - Redundancy/reading in words presumption against tautology 120
Tax Topics - Statutory Interpretation - Speaking in vain presumption against the legislature using redundant words so as to speak in vain 49

Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336

exception for accounting records is unconstituional

Notaries practising law in Quebec received requirements under s. 231.2 to provide documents or information relating to clients for tax collection or audit purposes. Wagner and Gason JJ found (at para. 94):

…[T]he exception for a lawyer’s accounting records set out in the definition of “solicitor‑client privilege” in s. 232(1) of the ITA is unconstitutional and invalid. The manner in which it limits the scope of professional secrecy is not absolutely necessary to achieve the purposes of the ITA, which means that the exception is contrary to s. 8 of the Charter.

In this regard, they noted (at para. 72) that “even where accounting information includes no description of work, it may in itself, if disclosed, reveal confidential and privileged information,” so that, for example, client names and even the amount of fees may be protected.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 s.231.2 demands for information do not apply to lawyers 398
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) s. 231.2 does not apply to lawyers 137

Inwest Investments Ltd. v. The Queen, 2015 BCSC 1375

not necessary to provide legal opinion to rely on having consulted legal counsel

Fitzpatrick J. found that CRA had failed to establish neglect or carelessness in the filing position of the taxpayer ("Wesbild") given that such position had been carefully considered by its in-house tax lawyer – and, furthermore, he had consulted outside counsel (Robert Kopstein). Fitzpatrick J. found that it was unnecessary to put Kopstein’s opinion in evidence. He noted that Kopstein had refused to disclose the substance of his advice, and CRA had refused its proposal to have a Justice lawyer review his opinion and advise CRA that it met the due diligence defence. Fitzpatrick J. then stated (at paras. 174, 176-177):

I [disagree]… that Wesbild cannot exonerate itself by merely showing there is a potential legal argument that would support the filing position and that it must show what legal arguments were actually considered before the return was filed. …

The CRA invites the court to infer that there was no consideration of the legal issues by reason of the fact that Mr. Kopstein’s opinion was not put into evidence. …

…What that advice entailed is not before the Court. However, I was not referred to any authority… that, in considering this issue, Wesbild is compelled to waive its right to assert privilege … . To do so would render the protection afforded by such privilege to be illusory… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) reasonable filing position cannot be a “misrepresentation” 551
Tax Topics - Income Tax Regulations - Regulation 400 - Subsection 400(2) no fixed place of “business” if no source of business income 183
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business Marconi test of "business" applied outside source-of-income context 154
Tax Topics - Statutory Interpretation - French and English Version "misrepresentation" informed by narrower French version 109

Canada v. Superior Plus Corp., 2015 DTC 5118 [at 6319], 2015 FCA 241, aff'g 2015 TCC 132

non-tax legal opinion produced on discovery which potentially supported a GAAR argument did not entail implied waiver of tax memos until used in evidence

The Crown sought to have tax memos provided to the taxpayer by its law firm (Macleod Dixon) produced, on the basis that the the taxpayer had produced on discovery a memo from Macleod Dixon that advised that the publicly traded debt of an income fund could be assumed by the corporation into which it effectively was converted under a "SIFT conversion" transaction without triggering its early redemption. The Crown argued that "Superior Plus waived the privilege on the opinion which supports its contention that the transactions in issue were not tax motivated while maintaining it on those pointing the other way" (para. 12). In finding that the production of the Macleod Dixon did not entail implied waiver of privilege for the tax memos, Noël CJ stated (at paras. 17, 19):

[U]ntil Superior Plus introduces the disclosed document in evidence, access to the other privileged opinions is neither "vital or necessary" to the Crown's ability to respond… .

[A]n implied waiver [is] not [to] be pronounced unless and until it becomes necessary to do so in order to prevent the unfairness and inconsistency which the doctrine of implied waiver is intended to guard against.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) Minister compelled to disclose GAAR memoranda and minutes, and Finance correspondence, as relevant to alleged policy 445

Canada (National Revenue) v. Revcon Oilfield Constructors Incorporated, 2015 FC 524, aff'd 2017 FCA 22

name of tax counsel, shorthand tax language used, not privileged

In the course of finding that some of the documents in issue were not protected by solicitor-client privilege, Mosley J stated (at paras. 24-5):

[I]t is clear that the Respondent shared some of the Retained Documents with accountants and commodity traders. There is nothing in the record before the Court to suggest that these individuals are anything other than third parties. Privilege does not attach to communications shared with such persons. …

A communication revealing the name of a law firm or lawyer – without anything else, such as actual legal advice – is not a confidential communication made for the purpose of receiving legal advice from a lawyer acting in a legal capacity. The name of a law firm, without more, is not protected by solicitor-client privilege. Nor is the revelation of shorthand tax language used by tax planning advisors.

Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401

Charter protection against statutory erosion of privilege extends beyond a criminal context and includes client identity

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act required law firms to verify the identity and record the identity of clients for whom they acted as "financial intermediaries," collect and retain financial records when receiving or paying funds for purposes other than professional fees, disbursements, expenses or bail, and allowed the anti-money laundering a federal agency (FINTRAC) to make warrantless reviews of such records subject to the firm following a specified procedure for claiming solicitor-client privilege.

The Court largely confirmed the findings below that the provisions should be variously struck (in the case of the search and seizure provisions), or read down to exclude lawyers (for record keeping etc.). The impugned provisions breached the clients' rights against unreasonable search and seizure. The statutory accommodations for privilege in the Act were less robust than conventional solicitor-client privilege. For example, privilege could be lost if not asserted on a timely basis, which was found in Lavallee to be unacceptable. The Minister argued that Lavallee applied where law enforcement officials were seeking evidence of criminal wrongdoing, and not in connection with a regulatory compliance regime. The immediate problem with this position was that the Act was expressly aimed at finding criminal wrongdoing, and threatened imprisonment of lawyers for non-compliance.

Moreover, the bar in Lavallee against erosions of privilege was not confined to a criminal context. Cromwell J stated (at para. 38) "the reasonable expectation of privacy in relation to communications subject to solicitor-client privilege is invariably high, regardless of the context," and quoted with approval the statement of Arbour J in Lavalee that "all information protected by the solicitor-client privilege is out of reach for the state."

He further noted (at para. 55) that one of the objectionable features of the procedure for claiming privilege under the Act was that it had to be asserted on behalf of a named client (stating that "the name of the client may itself be (although is not always) subject to solicitor-client privilege") and further stated that "the same ... may be said about the obligation of the lawyer under s. 64(10) to provide the authorities with the latest known address for the client."

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 7 state cannot impose duties that undermine lawyer's duty of commitment to client's cause 266
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 Charter protection against statutory erosion of privilege extends beyond a criminal context and includes client identity 381

Equipment Ltd. v. The Queen, 2014 DTC 5102 [at 7176], 2014 SKQB 172

communications with accountants as conduits v. tax accounting advice

In determining whether communications involving the taxpayer's accountants ("MNP') and relating to a reorganization were subject to solicitor-client privilege on the basis that MNP were the taxpayer's agents, Allbright J stated (at para. 46):

[Q]uestions such as what was the role of the accountant and what is the focus of the advice being sought and given are appropriate. For example, if the accountant is acting as a "designer" of the document and the information contained in it, that would tend to negate the role of the accountant acting as "an agent" or a "conduit". Again, what is the nature of the advice being formulated? If at the heart of the document and its contents is found the overriding purpose of tax accounting advice, such would tend to negate the existence of solicitor-client privilege, as would disclosure to third parties.

Dr. Mike Orth Inc. v. Canada, 2014 DTC 6685, 2014 FCA 34

privilege does not change requirement to demonstrate legal fee deductibility

In affirming the Minister's disallowance of the deduction by the taxpayers of legal fees, Sharlow JA noted (at para. 12) their argument that "they could not disclose more particulars of their legal expenses without waiving...privilege," and stated (at para. 13):

[N]either the Minister nor the Court is obliged to determine a factual dispute in the taxpayer's favour merely because the taxpayer asserts and refuses to waive a claim of solicitor and client privilege with respect to evidence that could resolve the dispute.

Thompson v. Canada (National Revenue), 2013 DTC 5146 [at 6296], 2013 FCA 197, rev'd 2016 SCC 21

clients' names not generally privileged

The Minister served a Requirement on the appellant, a lawyer, to disclose information including a detailed accounts receivable listing. The appellant argued that solicitor-client privilege protected that information, chiefly because it disclosed client names and other personal information. In affirming the trial judge's position that privilege did not apply, the Trudel JA noted that:

  • privilege belongs to the client, and can only be asserted or waived by the client through his or her informed consent (para. 39);
  • client names and addresses are not privileged per se - personally identifying information is only privileged if the client's identity constitutes the foundation of the retainer or the essence of the consultation (para. 41);
  • the burden lies with the party claiming privilege (para. 49); and
  • the Minister was not seeking the information contained in statements of account, which may be privileged (paras. 57-58).

Canada (National Revenue) v. Thornton, 2013 DTC 5008 [5541], 2012 FC 1313

non-legal documents privileged if made in preparation of a case

Crampton CJ found that three documents prepared for the intervenor, an income fund, by its general counsel and secretary were subject to solicitor-client privilege, even though they were lean on legal content. He noted that "no one should be able to 'look into the mind' of the lawyer as he or she is preparing a case" (para. 23).

  • One document was a letter to the trustees describing the structure, objectives and broad steps of the reorganization of the intervenor into an income fund. The document referred to counsel having been sought, and contained two statements of belief that appeared to convey a legal conclusion (para. 34).
  • One document was clearly marked as being privileged and confidential, and purported to memorialize the lawyer's legal analysis. Although it was often difficult to tell whether statements were based on legal or accounting considerations, Crampton CJ stated that he would "err on the side of caution" (para. 35).
  • The final document was a memo that contained no legal advice. However, the memo had been created with the lawyer "while working with him to analyze the legal tax implications of various steps in the reorganization." In other words, the document was prepared "for the purpose of providing ... legal advice" (para. 42).

Canada (National Revenue) v. Clark, 2012 DTC 5143 [at 7324], 2012 FC 950

The respondent, a solicitor,was the sole shareholder of two corporations, and asserted solicitor-client privilege over various corporate records, which were predominantly accounting records. Snider J. found that the respondent had not met the burden of showing that any of the records were confidential communications between a client and a legal advisor. Although the respondent was a solicitor, the documents in question did not appear to contain any form of legal advice. They were merely evidence of a transaction, not a "communication" that attracts solicitor-client privilege.

R. v. Defehr, 2012 DTC 5005 [at 6514], 2011 BCSC 1548

Groves J. found (at paras. 15-16) that solicitor-client privilege did not attach to the documents described below:

In terms of solicitor-client privilege, there is a large number of pieces of correspondence from the lawyers which are in the nature of reporting letters, often enclosing numerous documents, many of which are of a public record... .

In regards to these documents, I have concluded that it cannot be said that solicitor-client privilege attaches to them. There is no suggestion in any of the documents that the communication is designed to be of a confidential nature nor is there within any of the documents communication which seeks the formation of or giving of legal advice.

Taxpro Professionnal Corporation v. Canada (National Revenue), 2012 DTC 5002 [at 6506], 2011 FCA 306

no explained connection of accounts to legal advice

The taxpayer was unable to assert solicitor-client privilege in respect of documents that the applications judge had found to involve "financial matters without any indication or suggestion that legal advice is being sought or given." Noël J.A. stated that "to the extent that the appellants are of the view that there is a link between the legal advice given and the financial matters revealed by the documents, it was incumbent on them to point out what it was" (para. 6).

Barrick Gold Corporation v. Goldcorp Inc., 2011 ONSC 1325

Campbell J. found that it was appropriate to extend solicitor-client privilege to documents prepared by the team responsible for the three defendant corporations' indirect acquisition of a copper-gold project in Chile. The team comprised seven financial advisors, a former senior employee of one of the defendants, and two tax advisors. Campbell J. stated (at para. 4):

The documents make clear the particular input of a relatively small number of non-lawyer individuals outside the companies, whose input was necessary and appropriate to the consideration, structuring, planning and implementation of very complex transactions in a very short timeframe.

His decision was partly based on his acceptance of the reasoning in para. 64 of Camp Development. However, he also stated (at para. 19):

I do not accept that there is to be expected a "deal team" extension of solicitor/client privilege in every complex commercial transaction where there is not a specific protocol that has been executed. In each instance the context, the parties and the framework for the establishment and maintenance of privilege must be established to the satisfaction of the Court. In this case from the review of documents, it does.

Camp Development Corporation v. South Coast Greater Vancouver Transportation Authority, 2011 BCSC 88

Voith J. found that privilege attached to communications between the defendant's lawyers and an acquisition consultant ("Mr. Pavlakovic"), who sought advice from the defendant's lawyer on the defendant's behalf. The plaintiff was seeking additional compensation in respect of an expropriation of land.

Voith J. distinguished the facts from Chrusz, where the third party involved was found to have merely collected information to assist the client in apprising counsel of the facts. He stated (at paras. 63-64):

Instead, this is a case where Mr. Hanman [the defendant's general counsel] and Mr. Pavlakovic worked hand-in-hand, within their respective areas of expertise, on an ongoing basis to advance the interests of the Authority. They simply did so under an economic model that caused the Authority to outsource part of the project to Mr. Pavlakovic. All of their activity was undertaken with the knowledge of and at the instance of the Authority. ...

The nature of the interrelationship and of the dealings between the Authority, Mr. Pavlakovic and Mr. Hanman are a practical reality in major commercial projects where teams of individuals with focused expertise are assembled. All functions are not performed under a single roof, and the solicitor, though retained by a single client, may be required to give advice to different members of the team who work for the client.

Bank of Montreal v. Tortora, 2010 BCSC 1430

The plaintiff sought damages against two former employees, for alleged breaches of the plaintiff's code of business conduct and ethics, and for gross negligence in approving certain mortgages. The plaintiff had arrived at these allegations through an investigation carried out by a certified fraud examiner ("Filliter"), and employed a consulting firm to oversee the employee terminations ("Hewitt Associates"). The plaintiff claimed privilege in respect of the communications between these parties.

Boyd J. agreed that solicitor-client privilege applied. She stated (at para. 18):

Adopting the functional analysis set out in General Accident Assurance Co., the court must determine whether the third party communications are in furtherance of a function which is essential to the existence or operation of a relationship between the solicitor and the client. In my view, in this case, Filliter was not simply gathering and passing information to Smith [the plaintiff's general counsel]. Rather he was empowered by both the client (Gowlings who retained him) and by the Bank, which worked with him, to perform a function which was integral to the solicitor-client functioning.

Communication with Hewitt Associates also gave rise to privilege. Because it "intimately involved in the potential termination, Smith's legal advice was provided to Hewitt Associates" (para. 19). Therefore, the communication was "essential to the existence of the solicitor-client relationship" between the plaintiff and its lawyers (para. 19).

Canada (Minister of National Revenue) v. Vlug, 2006 DTC 6285, 2006 FC 86

Solicitor-client privilege did not attach to a Statement of Adjustments provided in a real estate purchase transaction.

Canada (Minister of National Revenue) v. Reddy, 2006 DTC 6178, 2006 FC 277

The Minister issued a demand under s. 231.2 to the respondent requiring the provision of a statement of dispersements in regards to a real estate sale transaction and a copy of the cheque for the proceeds. In finding that this information was not protected by solicitor-client privilege, Shaw J. stated (at p. 6180) that the documents were "evidence of an 'act or transactions', not of a 'communication' that attracts solicitor-client privilege ...".

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

The files of the appellant, an actuary engaged to provide valuations to lawyers acting for employers who are considering setting up health and welfare trusts, including its reports, notes, drafts and communications with the lawyers, did not fall within the class of solicitor-client privilege simply because the lawyers used the actuary's views to provide legal advice to their clients.

However, Gauthier J. went on to note (at p. 6102) that "the names and coordinates of a client would 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" and that here, given that CCRA already had a copy of one of the legal opinions that had been given, "an assiduous and intelligent investigator at CCRA [would] be able to determine the nature of the legal advice given to each of these employers", the names of the employers in this case were protected by a solicitor-client privilege. Although such names have been passed on by the lawyers to the actuary, this disclosure was not intended to waive their clients' privilege.

Canada (Minister of National Revenue) v. Singh Lyn Ragonetti Bindal LLP, 2005 DTC 5703, 2005 FC 1538

CCRA was audited the respondents' accounting records in connection with its review of an alleged scheme involving the extraction of funds from RRSPs without payment of income tax, and served a requirement under s. 231.2(1) requiring the respondents trust account records pertaining to transfers from nine trust companies. In finding the privilege did not attach to these records, Mosley J. affirmed the proposition "that solicitor-client privilege does not extend to records of financial transactions directed through solicitor's trust accounts as such records are evidence of an act or transaction rather than communications" (p. 5705).

Canada (National Revenue) v. Kitsch, 2003 DTC 5540, 2003 FCA 307

There was no privilege protecting communications of tax advice between an accounting firm and its clients given that none of the four Wigmore principles (which had been adopted in R. v. Gruenke [1991] 3 S.C.R. 263) had been satisfied.

Pitney Bowes of Canada Ltd. v. The Queen, 2003 DTC 5179 (FCTD)

joint client privilege

Two legal opinions of a U.K. firm, that were prepared for three of the parties involved in some sale-lease-leaseback transactions, were expected to be distributed among other parties to the transactions so that there would be a common understanding of certain legal aspects of the transactions for the collective benefit of the parties. In these circumstances, such distribution of the opinions did not result in a loss of the privilege.

Fraser Milner Casgrain LLP v. MNR, 2003 DTC 5048 (BCSC)

Privilege was not lost when legal opinions of Fraser Milner and documentation prepared by an accounting firm in order to assist Fraser Milner in providing legal advice were provided to the other parties to a commercial transaction, given that Fraser Milner was instructed to communicate these documents in order to facilitate the completion of the transactions in which both parties had a common interest. Lowry J. stated (at p. 5049) that:

"The economic and social values inherent in fostering commercial transactions merit the recognition of a privilege that is not waived when documents prepared by professional advisers, for the purpose of giving legal advice, are exchanged in the course of negotiations."

College of Physicians of British Columbia v. British Columbia (Information and Privacy Commissioner), [2002] BCJ No. 2779 (CA)

In finding that experts' opinions obtained by the college's lawyer were not covered by legal advice privilege, the Court noted that 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 stated:

"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."

Belgravia Investments Ltd. v. The Queen, 2002 DTC 7133 (FCTD)

Some of the documents reviewed were found not to be privileged based on an assessment that the documents were business advice or mere statements of fact. Heneghan J. also stated (at p. 7141) that "if there is doubt on whether the disclosure of documents by the lawyers to the accountants was for the purpose of rendering or facilitating the provision of legal advice, the benefit of the doubt should enure to the benefit of acknowledging and maintaining the privilege ... ."

AFS & Co. Limited Partnership No. 5 v. The Queen, 2001 DTC 5330 (FCTD)

General discussion of the privilege before finding that specific documents were privileged.

Nathawad v. The MNR, 2001 DTC 5069 (BCSC)

After accepting authorities that statements of account received from a lawyer containing descriptions of services rendered are related to the giving or obtaining of legal advice, and that the amount of legal fees paid is also privileged, Macaulay J. found that statements of account or drafts each of which contain some description of services provided were privileged, including the amounts billed; and that what he described as "another category of documents which contains entries as to legal services" were to be redacted before release to the Revenue Canada investigators, including the removal of any amounts for legal fees and disbursements.

General Accident Assurance Co. v. Chrusz, [1999] O.J. No. 3291 (CA)

A claims adjuster originally had been retained directly by the client, an insurance company, and some time after the appointment of this expert, the insurance company retained a lawyer and directed the claims adjuster to report to the lawyer. The Court found that as 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 this client-solicitor relationship. Instead, his function was to educate the lawyer as to the circumstances surrounding a fire so that the client (the insurance company) could receive the benefit of better informed advice from its lawyer. The claims adjuster's correspondence and communications with the lawyer were not privileged.

Doherty J.A. stated (at p. 26):

"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. ... 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."

Archean Energy Ltd. v. MNR, 98 DTC 6456, [1998] 1 CTC 398 (Alta. Q.B.)

On the basis that a group of companies shared a law firm for tax advice purposes and so had a common interest in privilege claims raised by one company within the group, McMahon J. found that a claim for privilege could not be defeated on the basis that the claim for privilege was being raised by the wrong company.

Bentley v. Stone (1998), 42 OR (3d) 149 (Gen Div)

This summary is based on case description in "A Privilege Primer," article by Paul M. Perell, Judge, Superior Court of Justice, May 2006.

The defendant contested a motion to enforce a settlement by alleging that her lawyer did not have the authority to settle on her behalf. By this denial of his authority, she had, by implication, waived the privilege that otherwise would have attached to her communications with him.

Verney v. Great-West Life Assurance Co. (1998), 38 OR (3d) 475 (Gen Div), aff'd (1998), 40 OR (3d) 249 (Div Ct).

aff'd on other grounds (1998), 40 OR (3d) 249 (Div Ct).

This summary is based on case description in "A Privilege Primer," article by Paul M. Perell, Judge, Superior Court of Justice, May 2006.

The plaintiff sued her insurer for disability benefits. The issue arose as to whether she had improvidently settled the personal injury claim to which the defendant insurer was subrogated. The Court found that the lawyer-and-client communications about the settlement were legitimately put into issue with the consequence of a waiver of the privilege by implication.

Deloitte & Touche Inc., Trustee of Vancouver Trademark Inc. v. Attorney General of Canada, 97 DTC 5520, [1998] 1 CTC 79 (FCTD)

Various working papers prepared by a trustee in bankruptcy were not subject to solicitor-client privilege because the dominant purpose for their preparation was not their submission to legal advisors.

Toronto-Dominion Bank v. Leigh Instruments (1997), 32 O.R. (3d) 575 (Gen. Div.)

The TD Bank sued a corporation for negligent misrepresentation with respect to a comfort letter received in connection with a $40.5 million loan to the corporation's subsidiary. Reliance and the Bank's state of mind being important ingredients of its misrepresentation claim, the presence or absence of legal advice about comfort letters was relevant and, therefore, the Court concluded that the Bank had waived any privilege it had with respect to documents about comfort letters prepared or collected by the Bank's law department.

The Court quoted (at p. 590) McLachlin J. (as she then was) in S & K Processors Ltd. v. Campbell Avenue Herring Producers Ltd. (1983), 35 C.P.C. 146 (S.C.) in saying that "waiver of privilege as to part of a communication, will be held to be waiver as to the entire communication". Respecting the Court's determination that the state of mind of the plaintiff had been put in issue by the allegations that it had relied on comfort letters produced by the defendants, the Court stated (at p. 589):

The plaintiff, they assert, has pleaded reliance on the conduct of the defendants, when they knew, or ought reasonably to have known, through the advice of their legal department, that comfort letters were not binding. The consequence, they assert, is that the plaintiff has waived by implication any solicitor-client privilege it may have held over the legal advice or knowledge which gave rise to that state of mind. I agree with those submissions.

Interprovincial Pipe Lines Inc. v. MNR, 95 DTC 5642 (FCTD)

The applicant provided privileged legal advice to its auditors to assist them in the conduct of their statutorily-required audit. Because the applicant's waiver of solicitor-client privilege was for this limited purpose only, the privilege was not removed for other purposes, including for purposes of tax investigations.

Solicitor-client privilege also attached to advice provided by the Toronto office of the auditors to their Edmonton office which, in turn, was used by outside counsel in the course of preparation of legal advice to the applicant, given that there was no evidence that the applicant was aware of these exchanges and given that the Toronto office had no authority to waive privilege on behalf of the applicant.

Eastwood & Co. v. MNR, 94 DTC 6411 (BCSC)

Documents in the nature of simple reports by a conveyance agent relating to certain noted conveyancing matters were not privileged.

Cineplex Odeon Corp. v. A.G. of Canada, 94 DTC 6407, [1994] 2 CTC 293 (Ont. Ct. (G.D.))

In finding that a legal memoranda received by a tax accountant at a firm of public accountants ("Peats") that otherwise would have been protected by solicitor-client privilege because they were communicated to her as agent for the client in the obtaining of legal advice by the client, did not cease to be privileged because she provided them for review by the audit team, Haley J. stated (p. 6409)

"On the evidence, I accept the position that Peats had no power or right to waive the legal privilege in the five documents. I am also satisfied that when Shelley Levine gave the documents to the audit team or placed them in the audit file, she did so without regard to the client's privilege and without knowledge of it. It was inadvertent in that sense.

Haley J. indicated that if the audit team had received the memoranda following a request to the client for such disclosure, the privilege would have been lost.

1013808 Ontario Inc. v. The Queen, 94 DTC 6352, [1994] 2 CTC 2, [1994] 1 CTC 401 (Ont. Ct. (G.D.))

In finding that a corporate minute book maintained in a law office was not subject to solicitor-client privilege, Platana J. stated (p. 6354)

"To be privileged, documents therefore must relate to matters in which a solicitor's professional advice is sought in his capacity as solicitor, and not merely documents required to be kept by law in the solicitor's possession in his/her capacity as a repository or holder of the documents. The mere keeping of such records cannot be considered part of a solicitor's work.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 115

Gregory v. MNR, 92 DTC 6518, [1992] 2 CTC 250 (FCTD)

An environmental audit report on an Arizona property that was prepared in order to enable a solicitor to give a legal opinion to his clients regarding the acquisition of interests in a U.S. partnership, and an appraisal report on the Arizona property that was provided to the solicitor for the same purpose, were not privileged. However, financial statements prepared for the purposes of allowing the solicitor to give a legal opinion to his clients were privileged. Teitelbaum J. stated (p. 6524)

"Documents, not accounting documents, prepared by third parties, for and on behalf of a solicitor would be subject to the privilege only if the documents were prepared for the purpose of litigation or in contemplation of litigation ... Accounting documents would be subject to solicitor-client privilege if the accountant is used as a representative of a client to obtain legal advice.

Bank of Nova Scotia v. Deputy Attorney General of Canada, 92 DTC 6313 (Ont. Ct. (G.D.))

With respect to the preparation of a list of the documents for purposes of determining whether they were privileged, the appellant had no general right to require that the name of the sender of the document, and its date, be excluded.

Organic Research Inc. v. M.N.R ., [1991] 1 CTC 417 (Alta. Q.B.)

Egbert J. note (p. 424) that "communications are not acts and the privilege does not extend to positive acts that result from solicitor-client communications and instructions".

Southern Railway of British Columbia Ltd. v. Deputy Minister of National Revenue, Taxation, [1991] 1 CTC 432 (BCSC)

Privilege was granted with respect to documents which arose from the interaction of accountants and lawyers with the former acting as agents in the course of obtaining legal advice from the client.

Non-privilege documents with lawyers' notes on them were privileged except for those which were capable of redaction.

Dixon v. Deputy Attorney General of Canada, 91 DTC 5584 (Ont HCJ.)

Documents which related to an alleged scheme involving the sale of land at a substantial undervalue by a corporation to another corporation in which its president had a beneficial interest, or which were exchanged in the course of furthering that scheme, were divested of solicitor/client privilege by reason of their relevance to the alleged fraud. Most documents which lost their privilege on this basis related to the closing of the transaction of purchase and sale. Documents which emerged once the Department's challenge was disclosed and which were created or exchanged for the purpose of advising the clients as to their rights, obligations, liabilities and defences, did not lose their privilege. In finding that a statement of account was privileged, Henry J. stated (p. 5594) that "if one looks at the document as a form of report to the client of what the solicitor has done, which it is, it becomes self-evident that it must be a privileged communication".

Southern Railway of British Columbia Ltd. v. Deputy Minister of National Revenue, Taxation, 91 DTC 5081 (BCSC)

Communications between lawyers and accountants were privileged on the basis that the accountants were acting as representatives of the client for whose benefit the legal advice was being provided. In addition, lawyers' bills containing a description of the services rendered were protected.

Zein v. The Queen, 91 DTC 5052 (BCSC)

Arkell J. quoted with approval the statement in In re Modern Film Distributors Ltd. that

"'If the client's files contain copies of documentary activities performed by the solicitor, they will not be subject to the privilege.'"

Roseland Farms Ltd. v. The Queen, 90 DTC 6512, [1990] 2 CTC 348 (FCTD)

The president of a company, whose shareholders were non-resident individuals, was not entitled to claim solicitor-client privilege in respect of his knowledge of transactions that he had entered into on behalf of the corporation, notwithstanding that he also was the company's solicitor. "To be privileged, 'the communication must be made in order to elicit professional advice from the laywer based on his expertise in the law'" (p. 6515).

Baron v. The Queen, 91 DTC 5055 (FCA)

Reed J. indicated that even if she accepted the submission of counsel that the law of Quebec provided for an accountant-client privilege in the context of litigation, such a privilege was not available with respect to federal income tax litigation. Unlike solicitor-client privilege, any accountant-client privilege "is not founded upon a need to ensure an effective system of the administration of justice.

Heath v. The Queen, 90 DTC 6069 (BCSC)

Photocopies of relevant trust ledgers and cancelled trust account cheques relating to a sale by one of the clients of a law firm, were accounting records of a lawyer, and therefore were not privileged. Coultas J. disagreed with the finding of the trial judge that the exception applies only to the accounting records of a lawyer relating to his own business, and also disagreed with the trial judge's finding that the exception applies only to the accounting records of a single lawyer and not of firm or partnership of lawyers.

MNR v. Canadian Bio-Mass Research Inc., 89 DTC 5123, [1989] 1 CTC 289 (FCTD)

A prima facie case, based on reasonable inferences from documentary evidence, as to fraud, which fell short of proof beyond a reasonable doubt was sufficient to vitiate a claim for privilege.

Visser v. MNR, 89 DTC 5172, [1989] 1 CTC 192 (P.E.I.S.C.)

A voluntary disclosure by the taxpayer constituted a waiver of privilege with respect to his communications with his solicitor.

Mutual Life Assurance Co. of Canada v. Dep. A.G. of Canada, 88 DTC 6511 (S.C.O.)

Privileged documents included communications with respect to legal advice between employees of the American subsidiary of the taxpayer, and in-house lawyers of the taxpayer, communications by such lawyers with respect to legal problems in jurisdictions outside Ontario, and working papers found in those lawyers' files, including copies of non-privileged documents with lawyers' notes on them.

Re Cox, 88 DTC 6494, [1988] 2 CTC 365 (BCSC)

Trust account records of a law partnership were privileged because they were records of the client rather than of the solicitor, and because the records of a partnership of lawyers are not those of "a" lawyer. "A lawyer's trust accounts, like the accounts of any trustee, record the incomings and outgoings of his clients' money" it is the client's account which he records.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis 29

In re Playfair Developments Ltd., 85 DTC 5155, [1985] 1 CTC 302 (S.C.O.)

Since the Deputy Minister already had available all the accounting information as to transactions in the solicitors' accounts, instructions given by solicitors to their firm's accounting department which resulted in the various financial activities which were recorded in the firm's accounts were not "accounting records" and were privileged. Similarly, letters covering the transmission of cheques from client to solicitor were privileged, as was the solicitors' reconciliation of their disposition of certain funds in the trust account.

A note made by a solicitor of information received by him was part of his work product, and privileged.

The privilege respecting a letter containing legal advice was not lost when it was sent to a European financial adviser of the clients in addition to being sent to the clients.

Documents containing information necessary to the preparation of closing documents were privileged.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 232 - Subsection 232(5) 41

Dep. Min. of Rev. of Quebec v. Fava., [1984] CTC 584 (Que. C.A.)

The primary purpose of an audit report was to enable the Minister to determine whether to reassess tax on the taxpayer's income rather than to assist counsel in the event of litigation, and it accordingly was not privileged.

Mutual Life Insurance Co. of Canada v. Dep. A.G. of Canada, 84 DTC 6177, [1984] CTC 155 (Ont HC)

A statement of account sent by a lawyer to his client is not "an accounting record of a lawyer".

A memorandum that advised as to the impact of income tax laws that was prepared jointly by an accounting firm and a law firm was protected by solicitor-client privilege since the law firm had accepted responsibility for this advice. Also protected was a legal memorandum which originally had been prepared by a law firm for a third party, but which later was sent to in-house counsel of the taxpayer (probably without the knowledge of the preparing law firm) for his comments.

Crown Zellerback Canada Ltd. v. Dep. A.-G. (Canada), 82 DTC 6116, [1982] CTC 121 (BCSC)

"There is no distinction, for the purpose of a claim to legal professional privilege, between lawyers in private practice and salaried legal advisors such as ", in this case, a lawyer who was vice-president, secretary and general counsel of the petitioner.

As to the privilege accorded to communications made for the purpose of pending or contemplated litigation between the taxpayer and Revenue Canada "it [is] clear that litigation may be definitely in prospect prior to any formal legal step such as a reassessment being taken". In this case, the date at which litigation was taken to be in contemplation, was the date of a memorandum showing that active consideration was being given to the income tax implications of the inter-company dealings which later became the subject of a Revenue Canada field audit.

In re Cotrono, 82 DTC 6068, [1982] CTC 67 (FCTD)

A prima facie case of fraud by the applicant was made out where the evidence established inter alia that a company owned by the applicant, which had filed a "nil" return stating that it had been inactive, had had extensive activity in its bank account. The applicant's claim to privilege thus could not be sustained.

In re Romeo's Place Victoria Ltd., 81 DTC 5295, [1981] CTC 380 (FCTD)

Trust account records are accounting records of a lawyer, and thus are excluded by S.232(1)(e) from the privilege where it is the client, not the lawyer, whose affairs are being investigated by the Department.

In re Hoyle Industries Ltd., 80 DTC 6363, [1980] CTC 501 (FCTD)

Although copies of non-privileged documents generally are themselves not privileged, where disclosure of a collection of copies might afford a clue to the views of the solicitors as to their client's case, such collection is privileged.

Edmonds v. Dept. A.G. (Canada), 80 DTC 6201, [1980] CTC 192 (QSC)

In order for the privilege to be displaced on the ground of fraud, some definite charge or allegation of fraud must be made.

Herman v. Dep. A.G. of Canada, 79 DTC 5372 (Ont CA)

Lacourciere, J.A. stated "that the loss of privilege attendant upon the involuntary, in the sense of inadvertent, disclosure of a document, which would allow proof in court of the original document or secondary evidence of its contents, does not apply to the involuntary disclosure of a document pursuant to a court order [under s. 232]."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 232 - Subsection 232(5) 56

Medicine Hat Greenhouse Ltd. and German v. R., 79 DTC 5091, [1980] CTC 114 (Alta. C.A.)

A report prepared by a Special Investigations officer was intended, in part, to assist Justice lawyers in prosecuting the appellant, and therefore was privileged.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Abuse of Process delay in initiating a prosecution 65
Tax Topics - Income Tax Act - Section 244 - Subsection 244(4) 65

Susan Hosiery Ltd. v. The Queen, [1969] 2 Ex CR 27, 69 DTC 5278

After recognizing that, in practice, smaller corporations do engage accountants to act for them in such matters, President Jackett concluded that Mr. Pall, the taxpayer's auditor, was acting as representative of the taxpayer for the purpose of obtaining legal advice from the taxpayer's lawyer when he communicated with the lawyer. Thus, these communications were privileged.

President Jackett stated:

"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 ... Where an accountant is used as a representative ... or 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 ... does not make the communications that he makes ... 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 nonetheless communications from the lawyer to the client."

Rolka v. MNR, 62 DTC 1394, [1962] CTC 637 (Ex Ct)

Privilege was lost with respect to documents which came into the hands of the Minister's representative by the voluntary act of the taxpayer's solicitor.

See Also

Commissioner of Taxation v PricewaterhouseCoopers , [2022] FCA 278

privilege available for communications which were predominantly legal advice made by lawyer members of multi-disciplinary firm

The Commissioner of Taxation issued notices to produce documents under s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) to (a) Glenn Russell, a partner of PricewaterhouseCoopers Australia (PwC Australia), which was a multi-disciplinary partnership that provided services to the JBS Australia Group; and (b) Flora Green, a company in that group. In response to the notices, legal professional privilege was claimed by PwC Australia and by Flora Green or other group members over approximately 44,000 documents, with the Commissioner disputing such claims over approximately 15,500 documents.

Moshinsky J stated (at paras. 17, 20-21):

I am not satisfied that, as a general proposition, no relationship of lawyer and client (sufficient to ground a claim for legal professional privilege) came into existence. I am satisfied that, at least in some relevant circumstances, a lawyer-client relationship existed between Mr Russell (an Australian legal practitioner) (and other Australian legal practitioners at PwC Australia) and one or more of the JBS Parties. …

It is therefore necessary to consider, on a document-by-document basis, whether each Sample Document is subject to legal professional privilege. This requires consideration of whether the Sample Documents are, or record, communications made for the dominant purpose of giving or receiving legal advice. This question is to be determined by reference to the content of the document, its context, and the relevant evidence relating to the document. A critical part of the context in the present case is that the services were provided by a multi-disciplinary partnership and that the team carrying out the work comprised both lawyers and non-lawyers. Another contextual matter is the involvement of overseas PricewaterhouseCoopers (PwC) firms in many of the same projects (under separate engagements). At least in the case of PwC Brazil and PwC USA, the overseas firms were not able to provide legal advice and made clear that they were not doing so.

The Civil Aviation Authority v Jet2.Com Ltd, R. (on the Application of), [2020] EWCA Civ 35

dominant purpose test applied to determining whether privilege applies to emails sent to both lawyers and executives/disclosure of one email was not a waiver of privilege on other emails

The respondent (Jet2) issued judicial review proceedings challenging the Civil Aviation Authority’s decision to publish a press release that was critical of it (and reflected pointed comments of its CEO, Mr. Haines), as well as disclosing correspondence between it and the CAA to the press. In this regard, it applied for specific disclosure of all drafts underlying a CAA response (a letter dated February 1, 2018) to a written complaint about the press release that it had made to the CAA. Various internal emails had been sent to multiple recipients, most of whom were executives, but some of whom were in-house lawyers. At issue was whether such emails were protected from disclosure to Jet2 by legal advice privilege (“LAP”). Hickinbottom LJ stated (at para 100(ii):

In respect of a single, multi-addressee email sent simultaneously to various individuals for their advice/comments, including a lawyer for his input, the purpose(s) of the communication need to be identified. [T]he wide scope of "legal advice" … and the concept of "continuum of communications" must be taken fully into account. If the dominant purpose of the communication is … to settle the instructions to the lawyer then … that communication will be covered by LAP. That will be so even if that communication is sent to the lawyer himself or herself, by way of information; or if it is part of a rolling series of communications with the dominant purpose of instructing the lawyer. However, if the dominant purpose is to obtain the commercial views of the non-lawyer addressees, then it will not be privileged, even if a subsidiary purpose is simultaneously to obtain legal advice from the lawyer addressee(s).

As this test was not satisfied, the emails were not privileged.

However, in obiter, Hickinbottom LJ found that Morris J below had incorrectly found that the CAA had waived privilege through a witness statement that had disclosed an internal email that did not use the "colourful" language of Mr Haines and implied a more measured response to Jet2, stating (at para 119):

… In my view, the purpose and nature of the voluntary disclosure are crucial… . The purpose of the email was modest: it was intended to show that … not all of the executives at CAA shared the approach suggested by Mr Haines' earlier email. It cannot be right that such a modest voluntary disclosure could result in the collateral waiver (and thus the forced disclosure by the CAA) in respect of all the internal communications relating to the drafting of the 1 February 2018 letter, including those that expressly reveal legal advice from the CAA's lawyers; nor is that what the law (or fairness) requires.

R. v. Morris, 2019 QCCQ 7635

no waiver of privilege when ARQ auditor disclosed part of a legal opinion in her audit report

The defendant, who faced tax evasion charges, sought disclosure of a legal opinion that had been prepared by a notary working within the ARQ and which had been disclosed in part in the audit report of the auditor and transmitted to the accused without being redacted and without any reservation of legal professional privilege. The defendant claimed that this represented waiver of such privilege.

In finding that there had been no such waiver, so that the opinion continued to be protected by the privilege, Asselin J stated (at paras. 27-28, TaxInterpretations translation):

It should be remembered that client-notary professional secrecy, like client-lawyer professional secrecy, is a categorical privilege, which does not belong to the notary or the lawyer. Only the client can waive it. In addition, the Supreme Court has recognized that solicitor-client privilege applies when a government lawyer provides legal advice to a client - a government department or agency.

Thus, the Court is of the view that the disclosure of part of the legal opinion does not constitute an implied waiver of the right to legal professional privilege. … [T] here is no evidence that the auditor … was authorized, in the course of her duties, to disclose it in whole or in part.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 7 prosecution required to provide search engine for electronic file disclosure 331

Glencore International AG v Commissioner of Taxation, [2019] HCA 26

Australian Taxation Office was entitled to use privileged documents included in the Paradise Papers leak

The plaintiff Glencore companies sought an injunction restraining the Australian Taxation Office from making any use of the “Glencore documents" including information derived therefrom. These had been created for the provision by a Bermuda law firm ("Appleby") of legal advice respecting the Glencore Australian corporate structure, and were part of the "Paradise Papers," which had been stolen from Appleby's systems and provided to journalists before dissemination. It was agreed that the Glencore documents were the subject of legal professional privilege.

Before denying any relief (and before noting, at para. 23, that “it is now settled that legal professional privilege is a rule of substantive law and not merely a rule of evidence”), the unanimous Court stated (at paras. 12, 27):

The plaintiffs' argument … rests upon an incorrect premise, namely that legal professional privilege is a legal right which is capable of being enforced, which is to say that it may found a cause of action. The privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications … .

[T]he rule promotes the public interest because it "assists and enhances the administration of justice by facilitating the representation of clients by legal advisers". By keeping secret their communications, the client is encouraged to retain a lawyer and to make full and frank disclosure of all relevant circumstances to the lawyer.

After referencing (at para. 29) the “more general, public interest … in the fair conduct of litigation, which requires that all relevant documentary evidence be available,” the Court further stated (at paras. 31-32)

In striking the balance between the two competing public interests, the law was not concerned to further a client's personal interest in preventing the use which might be made by others of the client's communications if they obtained them. In providing an immunity, the law's purpose was to enhance the administration of justice. …

It is the policy of the law that the public interest in the administration of justice is sufficiently secured by the grant of an immunity from disclosure.

Kyard Capital 2007 Inc. v. Agence du revenu du Québec, 2019 QCCQ 1617

unnecessary to waive privilege in order to substantiate the nature of legal services provided

The individual taxpayer (“Fontaine”), who was the president and majority shareholder of a corporation (“Kyard”), was assessed under the Quebec equivalent of s. 15(1) when Kyard paid his fees for defending against an action brought against him by his ex-spouse. He did not disclose to the ARQ the text of the legal accounts on the grounds of privilege. In this regard, Chalilfour JCQ noted that this decision to not waive the privilege made Fontaine’s task more difficult but should not be “fatal,” stating that “Otherwise taxpayers would be required to waive professional privilege” (at para. 135, TaxInterpretations translation). [Cf. Orth.]

She then accepted Fontaine’s testimony (without any real documentary corroboration) that the action had been defended as a threat to Kyard’s business - so that he had not received a taxable benefit.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) payment of professional dues was benefit 152
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) no shareholder benefit in paying legal fees of individual shareholder defending against suit (that threatened corporation's business) brought by ex-spouse 267

Hart v Commissioner of Taxation (No 3), [2017] FCA 571 (Federal Court of Australia)

privilege lost when précis of legal opinion provided to Commissioner

An argument of the taxpayer, in another proceeding, that he was not subject to the application of the Australian general anti-avoidance rule, was based on him having relied on two legal opinions. The taxpayer’s counsel had voluntarily provided a précis to the Commissioner of one of two legal opinions in some considerable detail. The question was whether a claim of legal professional privilege should be upheld in respect of the two opinions. The two opinions were produced in response to a subpoena to the taxpayer issued at the request of the Commissioner, but were maintained in sealed envelopes pending the resolution of the privilege claim.

Bromwich J stated (at para 6):

… [S]enior counsel for the Commissioner …placed particular reliance on the Full Court decision in Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237; (2004) 140 FCR 101 as follows:

[A]fter referring to Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at 13 [29] and 15 [34] … [Tamberlin J ] applied those authorities …to find that legal professional privilege had been waived over an advice because the substance of the advice was conveyed in a letter sent to the solicitors for the successful appellant in order to emphasise and promote the strength and substance of the case to be made against him. His Honour found …that it would be inconsistent and unfair…, having disclosed and used the substance of the advice in that way, now to seek to maintain privilege in respect of the parts of the advice which pertained to the conclusion that had been expressed. …[O]nce the conclusion of the advice was stated together with its effect, there was an imputed waiver.

Bromwich J found (at para 14):

…I was satisfied that a compelling case for waiver had been made out in accordance with the principles identified in Mann v Carnell and Bennett. I … do not need to resolve the question as to whether reliance stated in a part of an affidavit that is ultimately rejected as inadmissible constitutes sufficient reliance for wavier of privilege. Had that required resolution I would have been inclined to the view that once reliance in evidence or by other means has taken place, waiver takes place regardless of whether the evidence is ultimately admitted. The genie is out of the bottle, so to speak. However, without reliance on the disallowed evidence, but by virtue of the other instances of reliance, the privilege has been lost by waiver and the Commissioner was entitled to have access to the two opinions as no other basis for resisting production and access was advanced.

Canadian Imperial Bank of Commerce v. The Queen, 2015 DTC 1235 [at 1551], 2015 TCC 280

internal investigations severable and also not legally supervised/no implied waiver by stating that position informed by legal advice/no partial waiver where no prejudice/no litigation privilege re previously completed civil suit/no privilege for commissioned 3rd party report re damages/common interest privilege re other bank defendants

Issues in the appeal of the taxpayer (“CIBC”) respecting whether it could deduct a payment of Cdn.$2.9 billion made to settle actions against it in connection with the Enron bankruptcy included whether the settlement amount should have been reimbursed to it by subsidiaries whose conduct may have been the primary basis for the actions. In finding that the taxpayer could not claim solicitor –client privilege over documents respecting its internal investigations of its involvement with Enron, Rossiter CJ stated (at para.33) that “CIBC has not produced any material that shows the investigations were done under counsel’s supervision for the purpose of providing legal advice,” and (at para. 41) that “there is no reason why the facts gathered as part of the internal investigations cannot be separated from any legal advice given based on the factual findings.”

In rejecting arguments that CIBC has waived solicitor-client privilege by putting its legal knowledge in issue including its position that “its most significant Enron-related liability exposure for the entire CIBC group of entities was created by the parent bank’s (CIBC’s) own conduct, and…not that of its subsidiaries or affiliates” (para. 77), Rossiter CJ stated (at para. 86):

[T]his is largely a factual issue. … CIBC’s answer to question 5591 merely states that…legal advice informed its position. But that answer does not amount to putting its reliance on legal advice in issue in these appeals… .

Moreover, the voluntary disclosure by CIBC of some privileged documents did not amount to waiver of the remainder of the privileged communications as the Crown had not shown that such disclosures were misleading in any way (paras. 102, 110).

Litigation privilege was not available for various documents prepared in connection with the Enron litigation given that (para. 178):

the parties are not the same as the Enron litigation, and the cause of action is completely different. The Enron litigation was about CIBC’s actions related to certain transactions it concluded with Enron; this tax litigation is essentially about whether the Settlement Amounts are deductible.

The report of a consultant hired in the Enron litigation by U.S. counsel to advise on damages and related strategy was not privileged given that (para. 196):

The consultant was not providing legal advice to the client, nor was the consultant standing in the client’s place to obtain legal advice. He was providing assessments that, while useful, were not essential to the solicitor’s provision of legal advice and were not central to the solicitor-client relationship.

However, results of a mock jury trial conducted by U.S. counsel were privileged.

Communications with other bank defendants in the Enron litigation were covered by common interest privilege given that "the discussions involved the banks and their counsel and included discussions of joint defences, options for settlement, etc." (para. 212).

See summary under Tax Court Rule 82.

Superior Plus Corp. v. The Queen, 2015 DTC 1124 [at 765], 2015 TCC 132, aff'd 2015 FCA 241

disclosure of commercial legal opinion did not entail waiver of privilege for tax legal opinions

The Crown sought to have tax memos provided to the taxpayer by its law firm (Macleod Dixon) produced, on the basis that there had been production of a memo from Macleod Dixon that advised that the publicly traded debt of an income fund could be assumed by the corporation into which it effectively was converted under a "SIFT conversion" transaction without triggering its early redemption. In finding that there thereby was no implied waiver of privilege for the tax memos, Hogan J stated (at paras. 44, 46)

[P]rivilege can be waived by a party for a limited purpose. If the waiver results in unfairness or inconsistency, the Court can order production of related privileged information.

… I am satisfied that the disclosure of the Macleod Dixon Memorandum does not bring the tax advice received by the Appellant into issue.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) Minister compelled to disclose GAAR Committee and ATP memoranda and minutes, and correspondence with Finance, as they were relevant to the alleged policy abuse 477

Zeldap Corporation v. The Queen, 2015 DTC 1108 [at 636], 2015 TCC 78

litigation privilege not established regarding meetings, taking place three years before reassessments, merely because lawyer was present

The appellant's book of documents referred to prior meetings relating to the reassessments in issue. The Minister applied under s. 116(2) of the Rules to compel the appellant to disclose who was at the meetings, where they were held, what was said, and what, if anything, was recorded. The taxpayer claimed litigation privilege on the basis that the meetings, which were directed by the appellant's counsel, were in anticipation of future tax litigation.

Favreau J found that the taxpayer had failed to make a prima facie case for privilege. After noting that the meetings were three years before the related reassessments, he stated (at para. 11):

A lawyer's presence at a meeting is not indicative that his legal advice was being sought. The appellant has not provided any information concerning the nature of the legal advice sought from Mr. Sullivan.

Cameco Corporation v. The Queen, 2014 TCC 45

basis for claim not disclosed

A the taxpayer's List of Documents in discovery contained a list of documents that were redacted on the basis of solicitor-client privilege. Rip CJ found that, given that the schedule made no indication why solicitor-client privilege was being claimed, and that many of the documents were not composed by or for a lawyer, the taxpayer had not discharged the necessary onus to claim privilege. He ordered the taxpayer to review its redactions and to disclose the basis upon which privilege was claimed.

Rip CJ also noted with approval the principle in Imperial Tobacco that "communications between employees of a company that include legal advice provided by the corporation's lawyer will be considered privileged."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence proportionality principle 202
Tax Topics - Income Tax Act - Section 169 - Subsection 169(1) appeals from superceded reassessments were nullities 56

Imperial Tobacco Canada Limited v. The Queen, 2013 TCC 144

privilege was lost when emails of tax lawyer were sent to PWC Australia

The taxpayer claimed privilege in respect of communications between the appellant, two affiliates in Australia and Italy, their UK parent, and their respective legal counsel (totaling five firms).

D'Arcy J found that neither the taxpayer nor its affiliates had breached the confidentiality of advice from counsel (and thus waived privilege) when the companies' employees shared the advice with each other. Under the principle of common interest privilege, solicitor-client privilege was not waived given that the shared legal advice "was obtained by all the parties to facilitate the completion of the transactions and was for the benefit of all parties" (para. 66).

However, D'Arcy J found that the taxpayer had waived privilege in respect of emails of a Canadian tax lawyer, which were addressed primarily to an individual at its U.K. parent but also were sent to the Australian affiliate's external accountants ("PWC"). Although Susan Hosiery established that privilege was not lost with respect to communications received or given by counsel to accountants acting in that regard on behalf of the client, the taxpayer failed to establish "that PWC Australia's role, whatever it was, extended to any function which could be said to be integral to the solicitor-client relationship" (para. 77).

R. (Prudential plc & Anor) v. Special Commissioner of Income Tax & Anor, [2013] 2 All ER 309, [2013] UKSC 1

In dealing with a claim of privilege asserted with respect to tax advice provided by an accounting firm on a tax shelter transaction, Lord Neuberger stated for the 5-2 majority that, although the rationale for legal advice privilege applies as readily to accountants who provide tax advice as to solicitors or barristers doing the same, such privilege should nevertheless be restricted to lawyers. Legal privilege in the UK has always been understood as pertaining exclusively to communication between lawyers and clients, and people facilitating such communication. To extend privilege to accountants would entail policy considerations more appropriate for Parliament.

506913 N.B. Ltd v. The Queen, 2012 TCC 210

The Minister requested an order prohibiting the taxpayer from using documents containing legal advice from the Department of Justice to CRA which CRA had inadvertently disclosed to the taxpayer in 2005 as part of the production to him of 70,000 documents. D'Arcy J. found that the documents were privileged, but that the Minister had waived privilege when it failed to object in a timely manner to their inclusion in court records. The Minister was aware of the inadvertent disclosure in 2006, but failed to object in 2007 when the taxpayer attached some of the documents to an affidavit in the course of criminal proceedings against the taxpayer, and failed to object in 2009 when some of the documents were put to a CRA official in 2009 in discovery for the present proceedings.

Before so concluding, D'Arcy J. noted that, in contrast with early common law, an inadvertent disclosure of a document will not necessarily strip the document of privilege. He quoted Robertson J. in Chapelstone Developments Inc. v. R., 2004 NBCA 96, [2004] G.S.T.C. 162, who stated (at para. 55):

[I]nadvertent disclosure of privileged information does not automatically result in a loss of privilege. More is required before the privileged communication will be admissible on the ground of an implied waiver. For example, knowledge and silence on the part of the person claiming the privilege and reliance on the part of the person in receipt of the privileged information that was inadvertently disclosed may lead to the legal conclusion that there was an implied waiver.

SoftSim Technologies Inc. v. The Queen, 2012 DTC 1187 [at 3473], 2012 TCC 181

The taxpayers' former counsel had reached a settlement agreement with the Minister, which the taxpayers argued had not been authorized by them. D'Auray J. found that the taxpayers could not assert privilege to prevent testimony from former counsel on questions regarding the existence and scope of the mandate the taxpayers had given. Privilege does not apply to questions about whether counsel has a mandates to settle.

D'Auray J. also found that the taxpayers had already waived privilege by allowing related testimony. He stated that "a party cannot waive solicitor-client privilege and subsequently reclaim it after a large part of the testimony has been given and a number of documents adduced into evidence" (para. 21).

R (Ford) v. Financial Services Authority, [2012] 1 All ER 1238, [2011] EWHC 2583 (QBD)

The U.K.'s Financial Services Authority ("FSA") commenced an investigation into the claimant corporation ("Keydata") in respect of a possible financial regulatory breach. It also investigated Keydata's compliance officer and its two directors ("the executives") for possible breaches. On application from FSA, Keydata was put into administration and administrators were appointed. The administrators waived Keydata's solicitor-client privilege in respect of two emails, and FSA relied on the emails in preparing its recommendation that penalties be assessed against Keydata and the executives. It was common ground that Keydata, at least, had privilege in the emails.

The executives asserted that they also held privilege in the emails, jointly with Keydata, and therefore it was improper that FSA used them. While the executives had not formally retained Keydata's lawyers, they referred to a line of Australian cases that suggested, strongly but inconclusively, that joint privilege may arise in the absence of a joint retainer. The line of cases reasoned that, where a corporation is closely held, the interests of the corporation and the interests of the directors and officers are inextricable. Substantial weight was attached to the finding that the individuals involved "reasonably believed" that they were clients of the lawyers in question. FSA relied on American jurisprudence, which essentially forbade joint privilege between a corporation and its directors and officers.

Burnett J. rejected either approach. The suggestion in Australia, that individuals' "reasonable belief" that they are clients is a relevant consideration, "begs too many questions" about the nature of the resulting legal test (para. 38). Conversely, the American jurisprudence was founded on a balancing of individual and public interests, and commonwealth jurisdictions reject any such balancing of interests with respect to privilege (with the exception of Canada, albeit in limited circumstance such as a threat to public safety - see Jones v. Smith, [1999] 1 S.C.R. 455) (para. 39). Burnett J. found that an individual seeking to establish joint privilege (where there is no joint retainer) will need to establish (para. 40):

  1. That he communicated with the lawyer for the purpose of seeking advice in an individual capacity.
  2. That he made clear to the lawyer that he was seeking legal advice in an individual capacity, rather than only as a representative of a corporate body.
  3. That those with whom the joint privilege was claimed knew or ought to have appreciated the legal position.
  4. That the lawyer knew or ought to have appreciated that he was communicating with the individual in that individual capacity.
  5. That the communication with the lawyer was confidential.

Burnett J. then reviewed the evidence in detail and concluded that those five conditions had been met in the instant case, and the executives had privilege, which had never been waived, in respect of the emails.

Richard A. Kanan Corporation v. The Queen, 2011 DTC 1168 [at 928], 2011 TCC 211 (Informal Procedure)

The Minister disallowed the taxpayer's deduction of certain legal expenses. The only documentary evidence provided by the taxpayer as to the nature of the legal services were the accounts of the firm stating only "For Legal Services Rendered." In response to a Crown submission that, in order for the taxpayer to discharge the onus on it to establish deductibility of the fees, it was required to provide its complete legal file, Campbell J stated (at para. 21):

The Court will require descriptions of the tasks undertaken by the lawyers, and the amounts charged for those tasks. In most cases, the Court will not, and should not, require the Appellant to reveal items such as complete legal advice memoranda, unexecuted drafts of contracts, or details of its discussions with counsel....

In response to a submission of the Crown in the alternative that some limited testimony of a lawyer from the firm on behalf of the taxpayer engaged the doctrine of implied waiver of privilege, Campbell J. found (at para. 24) that, in general, "the concerns of fairness and consistency operate to prevent litigants from relying on parts of privileged communication while using the privilege to shield others." However, in the case of an appeal from a reassessment, the taxpayer is effectively forced by the Minister to reveal privileged information. On that basis, Campbell J. stated (at para. 27):

I accept that, in general, it is problematic to allow a litigant to pick and choose the privileged information to be disclosed. However, in this context it is both fair and reasonable to expect a taxpayer to reveal enough information to satisfy the Court and CRA as to the nature of the legal expense, while keeping the specifics of the lawyer's advice confidential.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus 299

M.N.R. v. Newport Pacific Financial Group SA, 2010 DTC 5160 [at 7276], 2010 ABQB 568

The taxpayers failed to establish privilege for records that disclosed the beneficiaries of a trust, which the Minister seized from a trustee corporation's offices. Solicitor-client privilege only applies to communications in respect of legal advice. Graesser J. wrote that "I am not aware of any authority for the proposition that an executed document or agreement such as a trust deed or declaration can be subject to solicitor-client privilege."

Copthorne Holdings Ltd. v. The Queen, 2005 DTC 1133, 2005 TCC 491

Although communications among various law firms were privileged, documents exchanged between the taxpayer's Canadian solicitors and third party companies that were submitted to be under the same de facto control as the taxpayer were found not to be privileged as the taxpayer had failed to satisfy the Court that the companies were sufficiently intertwined as to warrant overriding the fact that they were separate corporate entities.

Tower v. MNR, 2002 DTC 7315 (FCTD)

No privilege was available with respect to a request by the CCRA pursuant to s. 231.2(1) with respect to documents in the possession of an accounting firm relating to specified clients.

Sumitomo Corp. v. Credit Lyonnais Rouse Ltd., [2002] 4 All ER 68 (CA)

Translations from Japanese unprivileged documents that were commissioned by the company's lawyer were not themselves privileged.

Bowne v. Person (2000), 185 DLR (4th) 335 (Man. CA)

The plaintiff waived solicitor-client privilege so that her solicitor could testify in her defence respecting criminal charges for defrauding insurers in relation to her disability claim. Given that the waiver was not limited, the plaintiff was required to disclose that portion of the file of the solicitor in the civil actions that was relevant to her claim.

Verney v. Great-West Life Insurance Co. (1998), 40 OR (3d) 249 (DC)

The defendant insurance company sought disclosure of anything in the files of the plaintiff's solicitor respecting why the plaintiff had settled her action against a tort-feasor for only $300,000 (thereby potentially increasing the liability of the defendant for disability payments). The plaintiff had filed an affidavit of her solicitor stating that he had "advised the plaintiff that the settlement was fair and reasonable taking into account all the risks and benefits of proceeding".

In requiring the plaintiff to provide such information, the Court quoted Wigmore on Evidence that:

"The client's offer of his own or the attorney's testimony as to a specific communication to the attorney is a waiver as to all other communications to the attorney in the same matter. This is so because the privilege of secret consultation is intended only as an incidental means of defense, and not as an independent means of attack, and to use it in the latter character is to abandon in the former."

Balabel v. Air India, [1988] 2 WLR 1036 (C.A.)

Whether "documents are privileged or not must depend on whether they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate."

Rogers v. Bank of Montreal, [1985] 4 WWR 508 (BCCA)

A party voluntarily waives the protection of solicitor-client privilege when it voluntarily injects into a suit an affirmative defence that makes its knowledge of the law relevant.

Descôteaux et al. v. Mierzwinski, [1982] 1 S.C.R. 860, 141 DLR (3d) 590.

Although the right to confidentiality accorded by solicitor-client privilege first took the form of a rule of evidence, it is now recognized as having a much broader scope, and constitutes a substantive rule.

O'Reilly v. Commissioners of the State Bank of Victoria, 82 A.TC 4671 (HC)

Legal professional privilege may be claimed only in a judicial or quasi-judicial proceeding and is not available in an administrative inquiry such as a tax investigation.

Administrative Policy

27 November 2018 CTF Roundtable Q. 11, 2018-0779971C6 - Record Retention Policy Guideline

solicitor-client privilege does not extend to list of uncertain tax positions

In the context of responding to a question on what is CRA’s approach to requesting taxpayer records, particularly a taxpayer’s analysis of its tax risks, CRA stated:

A taxpayer may claim that the tax accrual working papers include information that is subject to solicitor-client privilege. The CRA cannot compel production of privileged communications, but a taxpayer has the right to waive privilege. The taxpayer’s list of uncertain tax positions that relates to the tax reserves in the taxpayer’s financial statements is considered to be part of the taxpayer’s books and records and is not a privileged document unless otherwise demonstrated.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) in some circumstances CRA considers that it can require a taxpayer to disclose its uncertain tax positions 205

87 C.R. - Q.40

Only correspondence pertaining to communication in professional confidence between a lawyer (both in-house and external) and a taxpayer client is accorded solicitor-client privilege.

84 C.R. - Q.90

Solicitor-client privilege extends to copies of correspondence in the hands of the taxpayer or his accounting representative.

84 C.R. - Q.91

The privilege (as recognized in Descoteaux) is not just a rule of evidence, and also applies for investigative purposes.


Steve Suarez, "FCA To Hear Atlas Tube Appeal", Canadian Tax Highlights, Vol. 27, No. 12, December 2019, p. 2

Atlas Steel (on no privilege for tax due diligence reports) could be overturned

No requirement that legal advice be the document’s dominant purpose (p. 3)

[ Atlas Tube, FC] stated that privilege applies to a document that is not itself legal advice only where the “principal purpose” of the document’s creation was obtaining such legal advice…

Gower v. Tolko Manitoba Inc. (2001 MBCA 11, at paragraph 36) …[stated]

Nowhere in the definition of legal advice privilege is there any requirement that the communications between the lawyer and his/her client be for the dominant purpose of litigation. Rather, what must be present is the provision of legal advice as one of the purposes of the document….

Purpose of tax due diligence report is as an input to the commercial legal drafting (p. 3)

Second, the court’s conclusion that the primary purpose of the report was to inform the buyer’s business decision as to whether to buy the target (and at what price) seems questionable. …

To the contrary, in virtually every M & A transaction, the results of tax diligence are used primarily to inform the lawyers drafting the share purchase agreement as to what representations and warranties to demand, what covenants to seek, and the scope and structure of the indemnities required to adequately protect the buyer…This is the very core of the legal advice the buyer’s lawyers provide… .

Commercial use of legal advice does not detract from it being legal advice (p. 3)

[T]o some extent the court seems to conflate the separate questions of what constitutes the giving of legal advice and what the client does with that advice….Where a work product has been used by the buyer’s lawyers as an input to the legal advice they render, the client’s use of that legal advice to make a commercial decision should be irrelevant as to whether that legal advice (and the work product generated wholly or partially for that purpose) is protected from disclosure under solicitor-client privilege. …

Mark Tonkovich, "A Primer on Solicitor-client Privilege and Third-party Disclosure", Tax Litigation, Volume XIX, No. 1, 2013, p. 1141.

Integral 3rd-party assistance

Jurisprudence also recognizes a more curious exception to the waiver rule: communications with a third party where that party's involvement is essential, or functionally necessary, to the operation of the solicitor-client relationship. Determining whether this exception applies calls for a fact-intensive analysis and, unfortunately, there are no hard and fast rules. Generally, if the third party is providing services or analysis considered to be external to the legal retainer, the fact that the third party's work may help the lawyer formulate legal advice will not be enough to retain privilege. Instead, this exception effectively requires that the third party act as a vital conduit between the lawyer and client. This may occur where the third party takes on the role of a translator hired to decipher and explain information between the lawyer and client, or as an agent entrusted with authority to direct the solicitor-client relationship. As a result, there is generally no protection where the third party is hired to investigate, gather, or assemble information, which may subsequently assist the lawyer (but which service is not essential to the operation of the solicitor-client relationship), or to act on instructions received from the client through the lawyer.

Maria Italia, "Taxpayer Privilege in Australia, New Zealand, the United Kingdom, and the United States", Journal of International Taxation, August 2013, p. 47

Reasons for Crime/fraud exception to privilege (p.54)

There are two main reasons for denying privilege to communications where the client's intention is to further a crime or fraud. The first focuses on the client; since the client is aware of the criminal intent, no argument can be made for a legitimate expectation that such communications would be protected. The second focuses on the legal advisor; it would be most unreasonable if a lawyer could not give evidence against a client if it subsequently transpired that the client had sought advice for a fraudulent or criminal purpose. [fn no 58: Newbold, "The Crime/Fraud Exception to Legal Professional Privilege," 53 Modern L. Rev. 472 (1990)]

In Australian Federal Police v. Propend Finance Pty Ltd., [fn no 59: [1996-1997] 188 CLR 501, 35 ATR 130.] the High Court considered the appropriate test to apply in determining whether there was an illegal purpose. The court stated that what would be required would be material that would "lead a reasonable person to see a strong probability that there was a disqualifying crime or fraud [which]…falls short of the requirement to make out with strong evidence a prima facie case of crime or fraud…

Crime/fraud exception in U.S. (pp. 54-55)

In the United States, the Justice Department has been quite aggressive in seeking to overcome the attorney-client privilege based on the crime-fraud exception. [fn no 61: Perez and Palestine "The Crime-Fraud Exception to the Attorney-Client Privilege," 2 Tax Practice & Procedure 33 (2000).] The Party seeing to apply the exception must make a prima facie case that the client sought the advice of a lawyer with the intent to commit a crime or fraud, and that the advice was to be used in furtherance of that crime or fraud, Zolin [fn no 62:491 U.S. 554 (2989), page 562] broadened the exception rule by requiring a lower threshold of evidence for a court to conduct an in camera review of the materials that may establish the claim that the crime-fraud exception applies.

Chilling effect (p. 55)

…Uncertainty as to the application of the crime-fraud exception may cause a chilling of communications between client and attorney, based on the client's fear that privileged communications may later be exposed pursuant to the claim that the exception should apply. [fn no 65: Daily and Thornquist, "Has the Exception Outgrown the Privilege?: Exploring the Application of the Crime-Fraud Exception to the Attorney-Client Privilege," 16 Geo. J. Legal Ethics 583 (2003), page 595.]

Robert Kopstein, Rebecca Levi, "When Should the Courts Allow Reassessments Beyond the Limitation Period", Canadian Tax Journal, (2010) Vol. 58, No. 3, 475-527

In the course of an extensive criticism and review of s. 152(4)(a)(i), the authors stated (at pp. 521-22):

A related issue arises where the CRA proposes to reassess a taxpayer under subparagraph 152(4)(a)(i) on the basis of a disputed filing position, and in so doing seeks information as to the specific advice received and considered by the taxpayer in a legal opinion. ...

...[W]e believe that the taxation system should recognize as sufficient the fact that an opinion has been received from a competent legal adviser addressing the issue under dispute, without the acknowledgment of that fact being treated as a waiver of privilege either during the audit stage or later if an assessment follows and an appeal is ultimately taken to court.

Andrew W. Kingissepp, Sanjana Bikatta, "Solicitor-Client and Litigation Privilege-Current Canadian Issues", Journal of International Taxation, Vol. 19, No. 9, September 2008, p. 42.

Matthew Williams, "Three Rivers District Council (U.K.): Restricting the Scope of Legal Advice Privilege", Tax Litigation, Vol. XII, No. 1, 2004, p. 735.

Kent Roach, Edward Iacobucci, "Multidisciplinary Practices and Partnerships: Prospects, Problems and Policy Options", Canadian Bar Review, Vol. 79, No. 1, February 2000, p. 1.

Gloria Geddes, "The Fragile Privilege: Establish and Safeguarding Solicitor-Client Privilege", 1999 Canadian Tax Journal, Vol., 47, No. 4, p. 799: Includes discussion of the risks of the loss of the privilege in a multi disciplinary partnership.

G.D. Watson, F. Lau, "Solicitor-Client Privilege and Litigation Privilege in a Civil Litigation", Canadian Bar Review, Vol. 77, September - December 1998, p. 315.

Joel A. Nitikman, "Accountant's Privilege - Getting Closer to the Holy Grail?", Tax Litigation , Vol. VI, No. 3, 1998, p. 382.

J. Douglas Wilson, "Privilege in Experts' Working Papers", Canadian Bar Review , Vol. 76, September-December 1997, p. 346.

Laidlaw, "Solicitor-Client Privilege: To Disclose or not to Disclose Remains the Question, Even after Death", Estates and Trusts Journal , Vol. 15, No. 1, September 1995, p. 56.

McMechan, "Privileged Information", CA Magazine , March 1995, p. 46.

Watson, "Next Case, Please: Case-by-Case Privilege Offers Some Hope for Non-Lawyer Advisers", Canadian Current Tax , November 1993, p. P23.

Nathanson, "The Fairness Package, the Long Reach of Section 160, and Solicitor-Client Privilege", 1991 Conference Report , c. 49.

Kroft, "Disclosure to and by Revenue Canada", 1991 British Columbia Tax Conference, Volume 1

MacKnight, "Privileges of the Taxpayer", Practice Notes, Canadian Current Tax , February 1991, p. P27.

Subsection 232(3) - Seizure of certain documents where privilege claimed


Lavallee, Rackel & Heintz v. Canada (Attorney General); White, Ottenheimer & Baker v. Canada (Attorney General); R. v. Fink, 2002 DTC 7267, 2002 SCC 61, [2002] 3 S.C.R. 209

unconstitutional lack of privilege safeguards

In addition to other defects that potentially could be cured by a modest judicial redrafting of the provision, section 488.1 of the Criminal Code was fundamentally flawed in that it failed to ensure that clients were given a reasonable opportunity to exercise their constitutional prerogative to assert or waive their privilege but, instead, established a procedure whereby the privilege could be lost if the lawyers whose law offices were being searched did not advance claims of solicitor-client privilege on a timely basis. Arbour J stated (at para. 24):

It is critical to emphasize here that all information protected by the solicitor-client privilege is out of reach for the state. It cannot be forcibly discovered or disclosed and it is inadmissible in court. It is the privilege of the client and the lawyer acts as a gatekeeper, ethically bound to protect the privileged information that belongs to his or her client. Therefore, any privileged information acquired by the state without the consent of the privilege holder is information that the state is not entitled to as a rule of fundamental justice.

Accordingly, the proper course of action was to declare section 488.1 unconstitutional and strike it down pursuant to section 52 of the Constitution Act, 1982.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 unconstitutional lack of privilege safeguards 212

Subsection 232(3.1) - Examination of certain documents where privilege claimed


R. v. Cappell, 92 DTC 6591 (Ont CA)

It was not improper for the accused solicitor, when he received a requirement under s. 232(3.1) to produce client documents within 30 days of the letter, to return documents for which he claimed solicitor-client privilege to the client. The phrase "about to" in s. 232(3.1) requires that a Revenue officer be physically present when documents for which solicitor-client privilege is claimed are segregated and packaged, which was not the case here.

Words and Phrases
about to
Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Ordinary Meaning 40

Subsection 232(4) - Application to judge

Paragraph 232(4)(a)


Gray v. Attorney General of Canada, 93 DTC 5518, [1994] 2 CTC 409 (Ont. Ct. (G.D.))

Following the seizure of documents of the taxpayers at one law firm and a timely application made under s. 232(4) for a hearing to determine which of the seized documents were protected by solicitor-client privilege, there was a further seizure of documents by the Minister at a second law firm. In light of evidence that counsel for the Crown had effectively waived the 14-day period under s. 232(4) for an application with respect to the second set of documents by agreeing that they would be included in the hearing to be held with respect to the first set of documents - before that counsel changed his mind - Farley J. found that he had the discretion under s. 232(10) and in light of the protections accorded by s. 8 of the Charter to permit the taxpayers to amend their application to combine into a single hearing the determination of the question of privilege affecting both sets of documents.

Solvent Petroleum Extraction Inc. v. MNR, 90 DTC 6261 (FCTD)

Pinard J. indicated that the Court had no discretion to extend the 14-day period.

Vespoli v. The Queen, 82 DTC 6314, [1982] CTC 365 (FCTD), aff'd (FCA)

The 14-day deadline for making application relates to the date when the notice of motion is filed at the Registry office rather than the date when the application is heard. (It was noted that on the filing date, which was within the 14-day period, the applicants made their motion returnable on the earliest possible return date, which was beyond the 14-day period.)

Herman et al. v. Deputy Attorney General (Canada), 78 DTC 6456, [1978] CTC 728, [1979] 1 S.C.R. 729

A judge entertaining an application under and exercising authority given by s. 232 does so in his judicial capacity rather than as persona designata. His decision or order accordingly is not subject to review by the Federal Court of Appeal under s. 28 of the Federal Court Act.

Subsection 232(5) - Disposition of application


Taxpro Professional Corporation v. Canada (National Revenue), 2011 DTC 5036 [at 5635], 2011 FC 224

legal invoice privileged

The taxpayer submitted an envelope of sealed documents to the court so that Mandamin J. could determine whether solicitor-client privilege attached. He stated at para. 45:

The invoice by the Applicant for legal services is privileged as it identifies the subject matter for which legal services were provided to [the taxpayer].

594872 Ontario Inc., Salamon and Salbro Investments Inc. v. The Queen, 92 DTC 6234 (FCTD)

The Crown brought a motion to dismiss a motion of the taxpayers for determination of solicitor-client privilege on the ground that the Crown, at least for the time being, was not disputing the availability of solicitor-client privilege in respect of the documents. In denying the Crown's motion, Muldoon J. stated (p. 6236)

"For these reasons, primarily that the respondent failed to comply with Rule 319(2) and filed no supporting affidavit, and secondarily that the respondent is not entitled to withdraw its requirement so as arbitrarily to discontinue this validly constituted enquiry without undertaking terms and conditions to safeguard the applicants from oppressive behaviour on the part of the MNR and his or her minions [e.g., re-seizing the documents], the respondent's motion is dismissed.

In re Playfair Developments Ltd., 85 DTC 5155, [1985] 1 CTC 302 (S.C.O.)

Galligan, J. indicated that it appeared from a plain reading of s. 232(5)(b)(i) that he only had jurisdiction to determine the question of solicitor/client privilege, and that he had no jurisdiction to determine the relevance of documents.

Vespoli v. The Queen, 83 DTC 5001, [1982] CTC 418 (FCTD), rev'd 84 DTC 6489, [1984] CTC 519 (FCA)

"[T]he special procedures provided for in section 232 ... as well as the powers granted to the judge are all enacted solely and exclusively for the purpose of dealing with the issue of possible solicitor-client privilege and for no other purposes." Consequently the judge on such an application has no jurisdiction to consider such matters as the relevancy of evidence, and whether the seizure of documents was contrary to the Charter.

In re Cotroneo, 82 DTC 6115, [1982] CTC 131 (FCTD)

The closed nature of a S.232(4) application (as indicated by the Parliamentary direction that it "shall be heard in camera") must be protected by sealing the court file containing the affidavit evidence given on the application.

In re Romeo's Place Victoria Ltd., 81 DTC 5295, [1981] CTC 380 (FCTD)

If the judge determines that the documents he had inspected have no relevance to any possible violation of the Act, they should be returned to the taxpayer without examination by any departmental employees even if they are not privileged.

"[W]here fraud is asserted in order to try and circumscribe solicitor-client privilege, a prima facie case must be made [by way of affidavit] from first hand knowledge, and not on information and belief."

Herman v. Dep. A.G. of Canada, 79 DTC 5372 (Ont CA)

S.232 does not by implication provide for a right of appeal from the judge's decision, although in the event that a prosecution does ensue, it is open to the taxpayer to re-assert, at trial, a right of solicitor-client privilege in respect of documents that he has been compelled to disclose for purposes of investigation.

Subsection 232(10) - Directions


Sheridan Warehousing Ltd. v. MNR, 80 D.CTC 6389 (SCO)

The Minister's motion to have the question of whether documents were protected by solicitor-client determined, was not allowed. The Court found that it had no jurisdiction in the matter since to deal with it would constitute sitting in appeal from an order of another High Court judge that the matter not be decided before trial.