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Failed Claim Of Solicitor-Client Privilege: Commentary On Minister Of National Revenue v. BMO Nesbitt Burns Inc., 2022 FC 157 – Trials & Appeals & Compensation

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
, 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

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

…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.
, 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

“…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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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