In a recent decision1, the Quebec Superior Court declared unconstitutional CRA compulsory disclosure requests addressed to lawyers and notaries under Sections 231.2 and 231.7 and paragraph 5 of subsection 232(1) of the Income Tax Act2 (the “ITA”), as contrary to Section 52 of the Canadian Charter of Rights and Freedoms3 (the “Charter”) regarding documents and information protected by attorney-client privilege.

This decision covers such requests to lawyers and notaries in Quebec, but certainly is national in scope.

This decision is of particular interest on three specific points:

  1. Firstly, it lists almost exhaustively the legal documents protected by attorney-client privilege for both lawyers and notaries.
  2. Secondly, after analysis of all the legal literature on attorney-client privilege, it provides a simple summary for easy reference of all elements related to attorney-client privilege, a sort of code of practice covering the issue from all angles.
  3. Finally, it reminds the Attorney General of Canada and the CRA that one of the basic tenets of our law is that, except for illegal acts, legal documents are prima facie protected by attorney-client privilege regardless of the manner in which they are stored.

Please contact a member of our Practice Group for more information on which documents are protected. What can we learn from this decision? Below is an extract of the judgment:

« [80] [Our translation]…

  • That there is no call, in principle, to draw a distinction between criminal law and civil law.
  • That the distinction between what constitutes a “fact” and what constitutes a “communication” is unfounded.
  • That as soon as a legitimate professional contact is made between a legal professional and a client, all acts, all documents and all information are, prima facie, protected by attorney-client privilege.
  • That it is up to the person contesting the existence of either the attorney-client privilege or the obligation of confidentiality, to demonstrate why this is not the case.
  • That exceptions to lift attorney-client privilege must be extremely rare and used only as a last resort.
  • That the legislative mechanisms in place must make sure to comply rigorously with the existence of attorney-client privilege to avoid improper or hasty disclosures.
  • That any law that might undermine attorney-client privilege must be narrowly construed and cannot allow the production of protected documents.”

It is not every day a Court declares unconstitutional, inoperative and without effect provisions of ITA. We are pleased by this decision and its scope. This clearly demonstrates that the Attorney General of Canada and the CRA are not always right. Please take note that this judgment is currently under appeal.