Minister of National Revenue v. Duncan Thompson

(Federal) (Civil) (By Leave)




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Taxation - Income tax - Enforcement - Solicitor-client privilege - Income Tax Act containing provision creating exception to privilege for accounting records of lawyers - Whether courts are required to apply that exception without further inquiry - Whether Court of Appeal erred in imposing a procedure to determine whether solicitor-client privilege applies to information or documents once Parliament has legislated, with clear and explicit language, a narrowing of the definition of solicitor-client privilege? - Whether Court of Appeal erred in returning the matter to Federal Court to allow respondent, or his clients, to file new evidence? - Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 237.7(1).

The respondent is a lawyer who is the subject of enforcement proceedings pursuant to the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). The Canada Revenue Agency (CRA) issued a Requirement seeking information and documents pertaining the respondent’s income and expenses, and assets and liabilities, including a current accounts receivable listing. The respondent provided some, but not all, of the information set out in the Requirement. The CRA subsequently found that he had provided no details regarding his accounts receivable other than a total balance owing.

The respondent challenged the Requirement, making solicitor-client privilege the focus of his objection. He sought a determination of whether s. 231.2(1) of the Income Tax Act can be interpreted, applied or enforced so as to require a lawyer who is the subject of enforcement proceedings by the CRA to divulge information about his clients, information which he argued is protected by solicitor-client privilege. He also alleged that the Requirement was akin to an unreasonable search or seizure and thus was contrary to s. 8 of the Canadian Charter of Rights and Freedoms.

Lower Court Rulings

October 31, 2012
Federal Court

Compliance order issued pursuant to s. 231.7 of the Income Tax Act requiring respondent Thompson to comply with Requirement issued by Minister of National Revenue; Respondent ordered to provide unredacted financial records to Minister
August 29, 2013
Federal Court of Appeal

A-515-12, 2013 FCA 197
Appeal allowed, in part; Matter sent back to Federal Court for new hearing with respect to respondent’s accounts receivable listing, notably determination of whether solicitor-client privilege protects the names of any of respondent's clients individually; Respondent ordered to produce unredacted versions of all other information and documents listed in application judge’s order