In the 2022 case, Minister of National Revenue v. BMO Nesbitt Burns Inc., the Minister of National Revenue (the “Minister”) made an application pursuant to section 231.7 of the Income Tax Act (Canada) (the “Act”) for an order requiring BMO Nesbitt Burns Inc. (the “Respondent”) to comply with a request for information made by the Minster. Among other things, at issue was a document referred to as the “master summary pricing model” (the “MSPM”), prepared by the Respondent with input from its solicitors pursuant to two legal memorandums. In response to the request, the Respondent provided a copy of the MSPM that contained parts which were redacted, claiming solicitor-client privilege over the redacted parts. The core of the privilege claim was that the computations in the MSPM were translated from legal advice, the disclosure of which would reveal the legal advice. If supported by the facts, this is a compelling argument. The Minister argued that the MSPM was an “operational document” and that it was the end product or operational impact of legal advice but did not disclose the “very legal advice” provided to the Respondent. In the abstract, it is difficult to see how the end product of legal advice does not disclose the advice itself or at the very least, tip the client’s hand. Citing (Canada (Public Safety and Emergency Preparedness) v. Canada (Information Commissioner), the Court offered the following example to explain how the end of product of legal advice does not necessarily disclose the advice itself:
…an organization might receive plenty of legal advice about how to draft a policy against sexual harassment in the workplace. But the operational implementation of that advice – the policy and its circulation to personnel within the organization for the purpose of ensuring the organization functions in an acceptable, professional and business-like manner – is not privileged, except to the extent that the policy communicates the very legal advice given by counsel.
In response to the privilege claim, the Minister asked for, among other things, the author and recipients of the MSPM, and whether any copies had been made. It is possible that such questions were an effort to determine if privilege had been waived or compromised. An important aspect of solicitor-client privilege is that the communication, except in limited circumstances, be limited to the solicitor and the client.
In its analysis, the Court stated that, in its most simple formulation, in order for a document to be protected by solicitor-client privilege “the document must be a communication between a solicitor and client that entails the seeking or giving of legal advice and which was intended by the parties to be confidential.” This quote highlights the three foundational elements required for a communication to be protected by solicitor-client privilege, specifically, the communication is: 1) between a solicitor and a client; 2) the seeking or giving of legal advice; and 3) intended by the parties to be confidential.
The Court referred to (Canada (National Revenue) v. Revcon Oilfield Constructors Incorporated, at paragraph 12, which case referenced Descôteaux et al v Mierzwinski, at 892-893, wherein the Supreme Court of Canada said the following:
…a lawyer’s client is entitled to have all communications made with a view to obtaining legal advice kept confidential. Whether communications are made to the lawyer himself or to employees, and whether they deal with matters of an administrative nature such as financial means or with the actual nature of the legal problem, all information which a person must provide in order to obtain legal advice and which is given in confidence for that purpose enjoys the privileges attached to confidentiality.
The party making a claim that a document is protected by solicitor-client privilege bears the onus of proving it.
The Court also referenced Samson Indian Nation and Band v. Canada, 1995 CarswellNat 675 at paragraph 8, [1995] 2 FC 762 (FCA) [Samson] and said “the Federal Court of Appeal explained that solicitor-client privilege is to be given a broad scope and that there is a continuum of communications to which solicitor-client privilege applies” and reproduced the following excerpt from the judgment in Samson:
The legal advice privilege protects all communications, written or oral, between a solicitor and a client that are directly related to the seeking, formulating or giving of legal advice; it is not necessary that the communication specifically request or offer advice, as long as it can be placed within the continuum of communication in which the solicitor tenders advice; it is not confined to telling the client the law and it includes advice as to what should be done in the relevant legal context.
The Court articulated the test to determine where the limit of the continuum is by quoting paragraph 28 from Information Commissioner:
“…does the disclosure of the communication have the potential to undercut the purpose behind the privilege – namely, the need for solicitors and their clients to freely and candidly exchange information and advice so that clients can know their true rights and obligations and act upon them?”
Turning to the evidence, the Court referred to the affidavit evidence being relied upon by the Respondent as being vague, but carefully worded assertions. The Court noted the evidence of the Respondent was that the redacted parts were added while discussions were underway with counsel, not after receiving legal advice. Furthermore, when representatives of the Respondent were asked to provide further details on cross-examination, their responses focused on the impact “of the disclosure of confidential information to potential business competitors.” The Respondent’s evidence proved insufficient to support a privilege claim over the MSPM.
The Court concluded that the redactions contained in the MSPM were not protected by solicitor-client privilege because to the Court it was not at all “…apparent how the redacted part of the MSPM, which sets out calculations, would convey the legal advice.” The Respondent has appealed the decision to the Federal Court of Appeal.
This case is a good example of the approach the Canada Revenue Agency takes to challenging the assertion that a document is protected from disclosure by solicitor-client privilege and a good overview of the Canadian law of privilege, as it pertains to documents prepared pursuant to legal advice. Maintaining privilege over a document is not always simple or guaranteed. Proper protocols must be implemented from the outset and adhered to throughout the period during which maintaining privilege is desired by the client.
If you would like more information regarding solicitor-client privilege or would like more information on establishing privilege protocols, please contact a member of the Miller Thomson LLP Corporate Tax group.
