[2013] 1 F.C.R. D-11
Income Tax
Practice
Solicitor-client privilege—Application to compel production of three short documents pursuant to Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 231.7(1)—Canada Revenue Agency (CRA) reviewing reorganization of Foremost Industries Income Fund (FIIF)—Foremost Industries Inc. (intervener) acting as administrator of FIIF—Respondent retained as auditor for FIIF—CRA notifying respondent of requirement to produce certain information, documents relating to reorganization pursuant to Act, s. 231.1(1)(a),(b)—FIIF asserting solicitor-client privilege over three documents (retained documents)—Whether retained documents protected by solicitor-client privilege; if so, whether limited waiver of solicitor-client privilege or inadvertent disclosure of retained documents existing—Solicitor-client privilege protecting all communications made within framework of solicitor-client relationship; extending to work product created in connection with giving of legal advice—All retained documents determined to be protected by solicitor-client privilege—Under doctrine of limited waiver, documents protected by solicitor-client privilege knowingly disclosed in confidence by privilege holder to auditor for limited purpose of enabling auditor to perform audit retaining solicitor-client privilege protection vis-à-vis other third parties—In present circumstances, not proven that intervener knowingly disclosing retained documents to respondent for limited purpose of performing audit, with intention of maintaining solicitor-client privilege over documents—Thus, limited waiver exception could not be relied upon to maintain solicitor-client privilege in retained documents—Numerous factors considered in determining whether discretion should be exercised to maintain solicitor-client privilege over retained documents inadvertently disclosed—One factor whether privilege holder taking swift steps to assert solicitor-client privilege upon learning of inadvertent disclosure of privileged documents—In present case, no evidence intervener aware that retained documents inadvertently disclosed to respondent or remaining silent or not taking immediate action to assert solicitor-client privilege once becoming aware of disclosure—Given intervener’s actions, opposite appearing to be true—Inference made that respondent coming into possession of retained documents in confidence, in course of conducting intervener’s audit—Therefore, discretion to maintain solicitor-client privilege in respect of retained documents exercised—Application dismissed.
Canada (National Revenue) v. Thornton (T-848-11, 2012 FC 1313, Crampton C.J., judgment dated November 13, 2012, 35 pp.)