In Redhead Equipment v Canada (Attorney General), 2016 SKCA 115, a company provided 662 documents in response to a s. 231.1 requirement issued by the CRA during an audit of the company’s tax-driven reorganization transaction. The company applied to Saskatchewan’s provincial court to determine which of these documents were subject to solicitor-client privilege (2014 SKQB 172). The company subsequently appealed to Saskatchewan’s Court of Appeal with respect to 31 of these documents. Of particular interest is the Court of Appeal’s finding that communications between a lawyer and an accountant in the course of a transaction are not privileged simply because a lawyer is “driving the bus” on the transaction and “everyone is on board and travelling toward the same transactional destination” (see paragraphs 46 to 49). Rather, the proper test is whether the communication involving the accountant is in furtherance of a function essential to the solicitor-client relationship or the continuum of legal advice provided by the lawyer; for example: (1) where the accountant is a channel of communication between the lawyer and the client; or (2) where the accountant employs an expertise to assemble information provided by the client and explains that information to the lawyer (see paragraph 45).
