Labour & Employment Law Blog

Strengthening Solicitor-Client Privilege – Supreme Court of Canada declares probative sections of the Income Tax Act unconstitutional

Zeilikman Law

Zeilikman Law

Case Summary

In two companion decisions handed down on June 3, 2016, the Supreme Court of Canada (“SCC”) affirmed that sections of the Income Tax Act (“ITA”), which attempted to erode the protection of solicitor-client privilege, were unconstitutional. The decisions clarified that legal professionals cannot be compelled to disclose their clients’ identities, communications or any other privileged information with respect to tax audit and/or collection powers of the Canadian Revenue Agency (“CRA”). Meaning, the objectives of tax legislation and laws cannot justify abrogating the protections of solicitor-client privilege.

Canada v. Chambre des notaries du Québec 2016 SCC 20


Notaries in Quebec began to receive Requirements from the Minister of National Revenue to provide documents and/or information of their clients for tax collection and audit purposes. These Requirements were imposed under s.231.1 of the ITA.

In response to the Requirements, some notaries voiced their concerns with the Chambre des notaries du Québec (“Chambre”) with respect to their client’s right to secrecy that comes from the professional relationship. The Chambre brought an action against the CRA and the Attorney General of Canada (“AGC”), “for the purpose of having ss. 231.2 and 231.7 of the ITA and the exception for the accounting records of notaries and lawyers set out in the definition of “solicitor-client privilege” in s. 232(1) declared to be unconstitutional and of no force or effect with respect to notaries.” (Headnote) It was at this point that the Barreau du Québec, on behalf of Quebec lawyers, joined the proceedings as an intervener (i.e. any decision or declaration would also apply to its members).


In a unanimous decision, the SCC addressed two central questions before dismissing the appeal and finding the ITA provisions contrary to s. 8 of the Charter of Rights and Freedoms (“Charter”). First, whether the CRA intruded on a person’s reasonable expectation of privacy, which accompanies the notary or solicitor-client relationship, that would constitute a seizure within the meaning of s. 8 of the Charter. Second, in consideration of the rights to privacy, whether the seizure an unreasonable intrusion.

With respect to the first question the SCC affirmed that the Requirements were seizures because they may have involved information or documents, which are protected by the special professional secrecy relationship. The SCC emphasized need to protect the integrity of the professional secrecy relationship. A client of a notary or lawyer has a reasonable expectation of privacy, which was considered by the SCC to be a fundamental principal of justice within the meaning of s. 7 of the Charter. Therefore, the expectation of privacy requires the appropriate protection, which cannot be eroded by tax law objectives.

The second question lead to the SCC balance a person’s right to privacy against a CRA’s interest of search and seizure. The Court concluded that rights of an individual supersede the CRA’s interest. The SCC, referring the lengthy history of jurisprudence, concluded, “that any legislative provision that interferes with professional secrecy more than is absolutely necessary will be labelled unreasonable” (para 38).  Therefore, “where professional secrecy is in issue, what matters is not the context in which a privileged document or privileged information could be disclosed to the state, but rather the fact that the document or information in question is privileged” (para 39). As such, the Court rejected the CRA and AGC’s submission that certain information, including accounting records are facts and not communication and thus, should not be subject to the protection of professional secrecy.

In determining that the provisions of the ITA in question infringed s. 8 Charter protections, the SCC was tasked to assess whether the infringements could be justified under s. 1 of the Charter. The Court held that “these constitutional defects in the ITA’s requirement scheme are all the more unacceptable given that they could easily by mitigated and remedied by way of measures that are compatible with the state’s obligation relating to the protection of professional secrecy.” (para 62) Therefore, the ITA provisions did not pass the minimal impairment test of the s. 1 justification.

Canada (National Revenue) v. Thompson 2016 SCC 21


Mr. Duncan Thompson, an Alberta lawyer, was sent a requirement from the CRA pursuant to s. 231.2(1) of the ITA. The requirement requested that Mr. Thompson provide documents related to the current accounts receivable of his law practice. Mr. Thompson claimed solicitor-client privilege over specific details about the accounts receivable, including the names of his client. Under s. 231.7 of the ITA, the Minister of National Revenue (“Minister”) made an application to the Federal Court to compel Mr. Thompson to disclose the requested requirement documentation. Mr. Thompson objected to the proceedings and submitted that s. 231.7 of the ITA may erode the protection of solicitor-client privilege.

The Federation of the Law Societies of Canada, the Canadian Bar Association and the Criminal Lawyers’ Association joined the proceedings as interveners.


The sole matter before the SCC was whether accounting records, such as accounts receivable, fall within the definition of “solicitor-client privilege” in s. 232(1) of the ITA. The SCC held that “[s]olicitor-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.” (para 17).

Referring to the companion decision discussed above, the Court rejected the Minister’s argument that in the context of solicitor-client privilege there are two categories of information, facts and communication, which could bare different treatments under the ITA. Adding that, “[a]bsent proof to the contrary, all of this information is prima facie privileged, and therefore confidential.” (para 20) Therefore, the SCC again found an infringement of s. 8 of the Charter when a seizure of accounting records, unless the intrusion “is absolutely necessary to achieve the ends of the enabling legislation.” (para 18).

What’s more, the SCC made a point to note the underlying nature of the solicitor-client privilege. The client is the only one who can waive privilege unilaterally, whereas a lawyer may only waive privilege once they have received the consent of the client to disclose. Therefore, Mr. Thompson cannot, without breaching his professional duty, disclose his client’s privileged information contained within the accounts receivable without their consent.


While these decisions are a victory for the fundamental right of solicitor-client privilege it is not a blanket protection, which encompasses all information disclosed in the course of the relationship. Moving forward, the SCC has left it open for the Parliament to enact legislation that would provide procedural safeguard, which reflects this broad scope of solicitor-client privilege described in the above cases. Therefore, caution should still be taken when lawyers are disclosing account records.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.