Federal Appeal


Income tax

Administration and enforcement

Advisory common interest privilege was not valid component of solicitor-client privilege

Lawyer N, counsel for intervenor A, prepared memo detailing tax consequences for each step in share purchase transaction, with contribution from lawyer K, counsel for taxpayers I Inc. and IG. Taxpayers refused to produce memo to Minister of National Revenue on ground of common interest privilege. Federal Court judge granted Minister’s summary application to enforce requirements under s. 231.2(1) of Income Tax Act. Judge held that advisory common interest privilege was not valid component of solicitor-client privilege. Judge was concerned about potential loss of evidence if memo were not disclosed. Judge focused on American decision that referred to article that stated that solicitor-client privilege should not protect communications in allied lawyer setting. Taxpayers appealed. Appeal allowed. Memo was protected by solicitor-client privilege, subject to whether it had been waived or was protected by common interest privilege. There would be no loss of admissible evidence if memo was not disclosed because legal implications of transactions were matters for court to determine. It was not appropriate for judge to rely on American case to effectively overturn Canadian decisions that recognized common interest privilege. Based on Alberta and BC decisions, solicitor-client privilege was not waived when opinion provided by lawyer to one party was disclosed, on confidential basis, to other parties with common interest in same transactions. Intervenor and taxpayers had sufficient common interest in transactions to warrant finding that memo was protected by solicitor-client privilege.

Iggillis Holdings Inc. v. Canada (Minister of National Revenue) (2018), 2018 CarswellNat 702, 2018 FCA 51, Wyman W. Webb J.A., Richard Boivin J.A., and Donald J. Rennie J.A. (F.C.A.); reversed (2016), 2016 CarswellNat 10974, 2016 CarswellNat 6533, 2016 FC 1352, 2016 CF 1352, Peter Annis J. (F.C.).

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