Solicitor-Client Privilege and Income Tax Act Seizures: A Comment on Canada (Attorney General) v. Chambre Des Notaires Du Québec

In Canada (Attorney General) v. Chambre des notaires du Quebec, the Supreme Court of Canada held that seizure provisions of the Income Tax Act were unconstitutional as they applied to the collection of taxpayer information from lawyers and notaries. The Court found that the ITA provisions more than minimally impaired solicitor-client privilege (“the privilege”), contrary to s. 8 of the Canadian Charter of Rights and Freedoms. The impugned regulatory enforcement provisions under ss. 231.2(1), 231.7 and 232(1) of the ITA authorized the Canada Revenue Agency (“CRA”) to require a lawyer or notary to provide information or documents about his or her client for the purpose of a tax compliance inquiry. The ITA classifies these materials as accounting records, and purports to exclude them from the ambit of the privilege, enabling the CRA to compel their production. The privilege insulates confidential solicitor-client communications from compelled disclosure. The privilege is a principle of fundamental justice under s. 7 of the Charter and, as part of the reasonable expectation of privacy under s. 8, privileged materials are protected from unreasonable search or seizure. In Canada (National Revenue) v.Thompson, a companion decision to Chambre des notaires, the Supreme Court held that statutory provisions, such as the regulatory enforcement provisions of the ITA, can validly set aside the privilege and compel the production of client information or documents in the possession of a lawyer or notary. In Chambre des notaires, however, the Court found that the impugned provisions of the ITA targeted an undefined class of accounting records that may contain protected information, potentially breaching the privilege without the knowledge or consent of the privilege-holder. The Court held that the seizure scheme was contrary to s. 8. In rendering its decision in Chambre des notaires, the Supreme Court found that an individual retains a high expectation of privacy in privileged materials targeted by regulatory enforcement seizures. Historically, such a privacy expectation existed only where the privilege was threatened by criminal law search and seizure powers. The Court also held that accounting records of lawyers and notaries are presumptively protected by the privilege, blurring the conventional dividing line between protected communications and unprotected facts. I argue that the Court’s conclusions are appropriate. The near absolute protection of the privilege is established by the mere existence of the solicitor-client relationship. The scope of its protection is not determined by the criminal or regulatory context of an encroaching search or seizure. Furthermore, to protect the client’s privacy interest, the privilege must extend to protect all information produced in the solicitor-client relationship. This includes accounting records, which may reveal information about the lawyer-client relationship.

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