Attorney General of Canada v. Canada Revenue Agency, 2016 SCC 20

SUPREME COURT OF CANADA Citation: Canada (Attorney General) v . Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336 Appeal heard: November 3, 2015 Judgment rendered: June 3, 2016 Docket: 35892 Between: Attorney General of Canada and Canada Revenue Agency Appellants and Chambre des notaires du Québec and Barreau du Québec Respondents - and - Advocates’ Society, Canadian Bar Association, Federation of Law Societies of Canada and Criminal Lawyers’ Association Interveners Official English Translation Coram: McLachlin C.J. and Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.

Joint Reasons for Judgment: (paras. 1 to 96) Wagner and Gascon JJ. (McLachlin C.J. and Abella, Cromwell, Moldaver and Karakatsanis JJ. concurring) Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336 Attorney General of Canada and

Canada Revenue Agency Appellants v. Chambre des notaires du Québec and Barreau du Québec Respondents and Advocates’ Society, Canadian Bar Association, Federation of Law Societies of Canada and Criminal Lawyers’ Association Interveners Indexed as: Canada ( Attorney General) v. Chambre des notaires du Québec 2016 SCC 20 File No.: 35892. 2015: November 3; 2016: June 3.

Present: McLachlin C.J. and Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ. on appeal from the court of appeal for quebec Constitutional law — Charter of rights — Search and seizure — Professional secrecy of notaries and lawyers — Income tax — Tax audit and collection — Whether ss. 231.2(1) and 231.7 and definition of “solicitor-client privilege” set out in s. 232(1) of Income Tax Act infringe right guaranteed by s. 8 of Canadian Charter of Rights and Freedoms insofar as they apply to lawyer or notary — If so, whether that impairment can be justified under s. 1 of Charter — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), ss. 231.2(1), 231.7, 232(1) “solicitor-client privilege”.

Taxation — Income tax — Enforcement — Professional secrecy of notaries and lawyers — Statutory provision requiring provision of documents or information for audit or enforcement purposes — Constitutional validity of requirement scheme with respect to notaries and lawyers and of exception for accounting records of lawyer provided for in definition of “solicitor-client privilege” set out in Act — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), ss. 231.2(1), 231.7, 232(1) “solicitor-client privilege”.

Some notaries practising law in Quebec received requirements to provide documents or information from the Minister of National Revenue under s. 231.2 of the ITA . The purpose of these requirements was to obtain information or documents relating to clients of the notaries for tax collection or audit purposes. Some of the notaries who received such requirements contacted the Chambre des notaires du Québec (« Chambre ») to raise concerns about their clients’ right to professional secrecy.

The Chambre instituted a declaratory action against the Attorney General of Canada and the Canada Revenue Agency (“CRA”) for the purpose of having ss. 231.2 and 231.7 of the ITA and the exception for the accounting records of notaries and lawyers set out in the definition of “solicitor-client privilege” in s. 232(1) declared to be unconstitutional and of no force or effect with respect to notaries.

The Barreau du Québec (« Barreau ») joined in the proceedings as an intervener for the purpose of having any declaration made by the courts concerning the legislative provisions in question apply equally to its members. The Superior Court and the Court of Appeal ruled in favour of the Chambre and the Barreau.

The Court of Appeal found that, pursuant to s. 52 of the Constitution Act, 1982 , ss. 231.2(1) and 231.7 and the accounting records exception set out in s. 232(1) are unconstitutional and of no force or effect with respect to Quebec notaries and lawyers for all information and documents protected by professional secrecy. Held : The appeal should be dismissed.

Section 8 of the Charter protects against unreasonable searches and seizures. There are two questions that must be answered to determine whether a government action was contrary to s. 8: whether the government action intruded upon an individual’s reasonable expectation of privacy, in which case it constituted a seizure within the meaning of s. 8, and whether the seizure was an unreasonable intrusion on that right to privacy. The first of these questions is not problematic, as the Court has already established that a requirement constitutes a seizure within the meaning of s. 8 .

The seizure in this case involves information or documents that may be protected by the professional secrecy of notaries or lawyers. Professional secrecy must remain as close to absolute as possible, and it is generally seen as a fundamental and substantive rule of law. In this respect, professional secrecy has a deep significance regardless of the nature of the legal advice being sought or the context in which it is sought.

For the purposes of the analysis under s. 8 of the Charter , the civil and administrative context of the requirement scheme does not diminish the taxpayer’s expectation of privacy for information that is protected by professional secrecy. A client of a notary or a lawyer has a reasonable expectation of privacy for information and documents that are in the possession of the notary or lawyer and in respect of which a requirement is issued.

In answering the second question, the courts must balance the interests at stake, namely an individual’s privacy interest on the one hand and the state’s interest in carrying out a search or seizure on the other. Where the interest at stake is the professional secrecy of legal advisers, which is a principle of fundamental justice and a legal principle of supreme importance, the usual balancing

exercise under s. 8 will not be particularly helpful. Stringent standards must be adopted to protect professional secrecy. This means thatany legislative provision that interferes with professional secrecy more than is absolutely necessary will be labelled unreasonable.

In this case there are several defects that cause a requirement sent to a notary or lawyer concerning information that isprotected by professional secrecy to be unreasonable and contrary to s. 8, namely that the client is given no notice of the requirement,that an inappropriate burden is placed solely on the notary or lawyer concerned, that compelling disclosure of the information beingsought is not absolutely necessary and that no measures have been taken to help mitigate the impairment of professional secrecy.

Therequirement scheme serves legitimate purposes, namely the collection of amounts owed to the CRA and tax audits, but the existence ofan important purpose cannot justify sidestepping the protection afforded by s. 8 of the Charter. The constitutional defects in therequirement scheme are all the more unacceptable given that they could easily be mitigated and remedied by way of measures that arecompatible with the state’s obligations relating to the protection of professional secrecy.

Currently, therefore, the impairment permittedby the requirement scheme set out in ss. 231.2(1) and 231.7 of the ITA is not consistent with the principle of minimization. The exception whose effect is to exclude the accounting records of notaries and lawyers from the protection of professionalsecrecy and which is set out in s. 232(1) of the ITA also infringes the rights guaranteed by s. 8 of the Charter. To determine whether anabrogation of professional secrecy in the context of a seizure is constitutional, a court must consider what characterizes professionalsecrecy as a substantive right.

Thus, a legislative provision cannot, by abrogating professional secrecy, authorize the state to gain accessto information that is normally protected, where the abrogation is not absolutely necessary to achieve the purposes of the legislation.Limits on professional secrecy must take into account the duty recognized by the Court to minimize impairments, and the exceptionsmust be precisely defined. In this case, the exception is broad and undefined, as it permits the seizure of any accounting record of anotary or a lawyer, and is therefore problematic from the standpoint of the absolute necessity test.

Moreover, for all practical purposes,the exception removes from the court’s jurisdiction the determination of whether accounting records in respect of which a requirementhas been issued are privileged. In sum, in the absence of absolute necessity and given that there is no possibility of judicial review toensure that professional secrecy is protected, the accounting records exception allows the unreasonable seizure of information found inthe accounting records of notaries or lawyers.

Because the statutory provisions in question — ss. 231.2(1) and 231.7 and the accounting records exception set out ins. 232(1) of the ITA — do not minimally impair the right to professional secrecy, they cannot be saved under s. 1 of the Charter. As forthe appropriate remedy in this case, since the Court has already found that the requirement scheme is generally constitutional insofar asrequirements are sent to taxpayers, it is neither necessary nor appropriate to find that the entire scheme is invalid.

The requirementscheme in the ITA infringes s. 8 of the Charter and must be declared to be unconstitutional insofar as it applies to notaries and lawyers inQuebec.

Section 231.2(1) of the ITA, which authorizes the Minister to send requirements, and s. 231.7 of the ITA, which authorizes theMinister to apply to a court to follow up on a requirement, are unconstitutional, and inapplicable to notaries and lawyers in their capacityas legal advisers. The exception for a lawyer’s accounting records set out in the definition of “solicitor-client privilege” in s. 232(1) of theITA is unconstitutional and invalid. Cases Cited Distinguished: Thomson Newspapers Ltd. v.

Canada (Director of Investigation and Research, Restrictive Trade PracticesCommission), (SCC), [1990] 1 S.C.R. 425; applied: Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002SCC 61, [2002] 3 S.C.R. 209; Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401;referred to: Maranda v. Richer, 2003 SCC 67, [2003] 3 S.C.R. 193; R. v. Edwards, (SCC), [1996] 1 S.C.R. 128; R. v.McKinlay Transport Ltd., (SCC), [1990] 1 S.C.R. 627; Solosky v. The Queen, (SCC), [1980] 1 S.C.R.821; Descôteaux v. Mierzwinski, (SCC), [1982] 1 S.C.R. 860; Smith v.

Jones, (SCC), [1999] 1 S.C.R.455; Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, [2008] 2 S.C.R. 574; R. v. McClure, 2001SCC 14, [2001] 1 S.C.R. 445; R. v. National Post, 2010 SCC 16, [2010] 1 S.C.R. 477; R. v. Brown, 2002 SCC 32, [2002] 2 S.C.R. 185;Goodis v. Ontario (Ministry of Correctional Services), 2006 SCC 31, [2006] 2 S.C.R. 32; Foster Wheeler Power Co. v. Sociétéintermunicipale de gestion et d’élimination des déchets (SIGED) inc., 2004 SCC 18, [2004] 1 S.C.R. 456; Hunter v. Southam Inc., (SCC), [1984] 2 S.C.R. 145; R. v.

Cunningham, 2010 SCC 10, [2010] 1 S.C.R. 331; Canada (National Revenue) v. Thompson,2016 SCC 21, [2016] 1 S.C.R. 381; Organic Research Inc. v. Minister of National Revenue (1990), (AB KB), 111A.R. 336; Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, [2004] 1 S.C.R. 809; R. v. Dunbar (1982), (ON CA), 68 C.C.C. (2d) 13; A. (L.L.) v. B. (A.), (SCC), [1995] 4 S.C.R. 536; R. v. Seaboyer, (SCC), [1991] 2 S.C.R. 577; Carter v. Canada (Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331. Statutes and Regulations Cited Act respecting the ministère du Revenu, R.S.Q., c.

M-31 [now Tax Administration Act, CQLR, c. A-6.002], s. 39. Act to amend the Income Tax Act, S.C. 1956, c. 39, s. 28. Act to amend the Income Tax Act and the Federal-Provincial Fiscal Arrangements Act, S.C. 1965, c. 18, s. 26. Act to facilitate the payment of support, CQLR, c. P-2.2, s. 57. Canadian Charter of Rights and Freedoms, ss. 1, 7, 8. Charter of human rights and freedoms, CQLR, c. C-12, s. 9. Constitution Act, 1982, s. 52. Criminal Code, R.S.C. 1985, c. C-46, s. 488.1. Income Tax Act, R.S.C. 1952, c. 148.

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), ss. 230 to 232, 231.1, 231.2, 231.7, 232(1) “solicitor-client privilege”, (2)(a), 238. Authors Cited Geddes, Gloria. “The Fragile Privilege: Establishing and Safeguarding Solicitor-Client Privilege” (1999), 47 Can. Tax J. 799. Lederman, Sidney N., Alan W. Bryant and Michelle K. Fuerst. The Law of Evidence in Canada, 4th ed. Markham, Ont.: LexisNexis,2014. Wigmore, John Henry. Evidence in Trials at Common Law, vol. 8., revised by John T. McNaughton. Boston: Little, Brown, 1961.

APPEAL from a judgment of the Quebec Court of Appeal (Bich, Léger and Fournier JJ.A.), 2014 QCCA 552, [2014] AZ-51056416, [2014] J.Q. no 2296 (QL), 2014 CarswellQue 8337 (WL Can.), setting aside in part a decision of Blanchard J., 2010 QCCS 4215, [2010] R.J.Q. 2069, [2010] 2010 QCCS 4215 , AZ-50670160, [2010] J.Q. no 8868 (QL), 2010 CarswellQue 9351(WL Can.). Appeal dismissed. Marc Ribeiro, Christopher Rupar and Chantal Comtois, for the appellants. Raymond Doray and Loïc Berdnikoff, for the respondent Chambre des notaires du Québec. Giuseppe Battista, for the respondent Barreau du Québec.

Pierre Bienvenu and Andres Garin, for the intervener the Advocates’ Society. Mahmud Jamal, Alexandre Fallon and W. David Rankin, for the intervener the Canadian Bar Association. John B. Laskin and Yael Bienenstock, for the intervener the Federation of Law Societies of Canada. Brian Gover, Justin Safayeni and Carlo Di Carlo, for the intervener the Criminal Lawyers’ Association. English version of the judgment of the Court delivered by Wagner and Gascon JJ. — I.

Overview [1] In this appeal, the Attorney General of Canada (“AGC”) and the Canada Revenue Agency (“CRA”), on the onehand, and the Chambre des notaires du Québec (“Chambre”) and the Barreau du Québec (“Barreau”), on the other, disagree about therequirement procedure set out in the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (“ITA”).

This procedure enables the tax authorities torequire any person to provide information or documents for any purpose related to the administration of the ITA. [2] The Chambre and the Barreau submit that, when a “requirement to provide documents or information” is sent to anotary or a lawyer, there is a risk that the information or documents being sought will, unbeknownst to the legal adviser’s client, revealparticulars that are protected by the professional secrecy of notaries and lawyers, otherwise known as solicitor-client privilege.

To thisextent, it is argued, the relevant provisions of the ITA infringe the rights guaranteed by ss. 7 and 8 of the Canadian Charter of Rights andFreedoms (“Charter”), and the infringement cannot be justified under s. 1. [3] The AGC and the CRA counter that the Canadian tax system is based on the principle of self-reporting andself-assessment, which means that the tax authorities must rely on broad powers of audit to ensure the system’s integrity. In this regard,they argue, the requirement procedure does not infringe any

section of the Charter. Because the requirements in question are issued in anadministrative context, not a criminal one, taxpayers have a lower expectation of privacy. In addition, according to the exception set outin the definition of “solicitor-client privilege” in s. 232(1) of the ITA, the accounting records of a notary or a lawyer, which containinformation that is prima facie not privileged, are not protected by professional secrecy (“the accounting records exception”).

The AGCand the CRA submit that this exception is valid and that the CRA should have access to information of this nature by means ofrequirements issued to such legal advisers. [4] The Superior Court and the Court of Appeal ruled in favour of the Chambre and the Barreau. The Court of Appealfound that, pursuant to s. 52 of the Constitution Act, 1982, ss. 231.2(1) and 231.7 and the accounting records exception areunconstitutional and of no force or effect with respect to Quebec notaries and lawyers for all information and documents protected byprofessional secrecy.

We are in substantial agreement and would dismiss the appeal. [5] The Court has held in the past that professional secrecy is a principle of fundamental justice within the meaning ofs. 7 (Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61, [2002] 3 S.C.R. 209, at para. 49). It is also a civil right ofsupreme importance in the Canadian justice system. Professional secrecy must thus remain as close to absolute as possible, and the courtsmust adopt stringent standards to protect it. [6] A requirement under the ITA constitutes a seizure within the meaning of s. 8 of the Charter.

The seizures made inthis case are unreasonable and are contrary to that section, because the requirement scheme and the exception for accounting records donot provide adequate protection for the professional secrecy of notaries and lawyers. The procedure set out in the ITA does not requirethat the client, who is the holder of the privilege, be informed of the requirement or of any proceeding brought by the CRA to obtain anorder to provide information or documents. The procedure also places the entire burden of protecting the privilege on the notary orlawyer.

Finally, the AGC and the CRA have not established that it is absolutely necessary here to impair professional secrecy. Becausethe impugned provisions do not minimally impair the right to professional secrecy, they also cannot be saved under s. 1. In light of thisconclusion, a separate analysis under s. 7 of the Charter will not be necessary.

II. Background A. Requirement Scheme of the ITA [ 7 ] Three provisions of the ITA relating to the requirement scheme are central to this appeal. They are set out in full in the appendix. [ 8 ] The first of these provisions, s. 231.2(1), authorizes the Minister of National Revenue (“Minister”), by notice served personally or by registered or certified mail, to require a person to provide information or documents concerning a taxpayer within a reasonable time stipulated in the notice. This

section therefore allows the CRA, for and on behalf of the Minister, to send a notary or lawyer a requirement concerning a client. But in most cases, the client in question has no knowledge of the requirement. The CRA generally sends the notice to the notary or lawyer without sending a copy to the client, that is, to the taxpayer about whom information is being sought. Moreover, the requirement is issued without judicial intervention. [ 9 ] The second provision, s. 231.7, comes into play where a person to whom a requirement is issued refuses to provide the information or documents being sought. In such a case, this

section provides that the Minister may have recourse to the courts by means of a proceeding of a

summary nature.

Section 231.7 authorizes a judge, on application by the Minister, to order a person to provide any access, assistance, information or document sought by the Minister if the judge is satisfied that the person in question did not do so when required under s. 231.1 or 231.2 of the ITA . However, this

section provides that the judge may make an order in respect of the information or document being sought only if the information or document is not protected from disclosure by solicitor-client privilege within the meaning of s. 232(1) of the ITA . [ 10 ] The third provision is the definition of “solicitor-client privilege” set out in s. 232(1): solicitor-client privilege means the right, if any, that a person has in a superior court in the province where the matter arises to refuse to disclose an oral or documentary communication on the ground that the communication is one passing between the person and the person’s lawyer in professional confidence, except that for the purposes of this

section an accounting record of a lawyer, including any supporting voucher or cheque, shall be deemed not to be such a communication . [ 11 ] This definition was added to the Income Tax Act , R.S.C. 1952, c. 148, in 1956 (c. 39, s. 28). At the time, professional secrecy had not yet attained the status it is given today. As for the “accounting record of a lawyer” exception, it was added to the definition in 1965 (c. 18, s. 26), although the term “accounting record” is not defined in the ITA . The definition and the exception have remained unchanged since they were first enacted.

The third paragraph of s. 232(1) provides that, for the purposes of s. 232 , the term “lawyer” includes both notaries and advocates in Quebec. [ 12 ] It should be added that the ITA ’s requirement scheme provides for sanctions up to and including imprisonment for persons who have failed to comply with any of ss. 230 to 232 ( s. 238(1) of the ITA , also reproduced in the appendix).

However, a notary or lawyer who is prosecuted for failure to comply with a requirement can raise professional secrecy as a defence and must be acquitted if the judge is satisfied that the notary or lawyer had reasonable grounds to believe that solicitor-client privilege applied to the information or document being sought ( s. 232(2) (

a) of the ITA ). B. Source of the Dispute [ 13 ] The factual background to the parties’ dispute is essentially quite simple. In recent years, notaries practising law in Quebec have received requirements issued by the CRA under s. 231.2 of the ITA . The purpose of all these requirements has been to obtain information or documents relating to clients of the notaries for tax collection or audit purposes. According to the CRA, the information in question falls within the accounting records exception set out in the definition of “solicitor-client privilege” in s. 232(1) of the ITA .

In almost every one of the requirements filed in evidence, the CRA official who sent the requirement advised the notary of the possible sanctions — namely a fine or imprisonment — for failing to comply with it. [ 14 ] Some of the notaries who received such requirements contacted the Chambre to raise concerns about their clients’ right to professional secrecy. The Chambre tried unsuccessfully to negotiate a compromise with the CRA on what should be done when requirements are issued to notaries.

The failure of the negotiation led the Chambre to institute a declaratory action against the AGC and the CRA in the Superior Court for the purpose of having ss. 231.2 and 231.7 of the ITA and the accounting records exception declared to be unconstitutional and of no force or effect with respect to notaries. The Chambre argued, inter alia , that those provisions authorized unreasonable seizures contrary to the Charter because they did not include adequate protection for professional secrecy.

In its action, the Chambre also requested that a series of documents regularly held or prepared by its members in their practice be declared to be prima facie privileged. [ 15 ] The Barreau, whose members are lawyers practising in Quebec to whom similar requirements could be issued for information and documents relating to their clients, joined in the proceedings as an intervener for the purpose of having any declaration made by the courts concerning the legislative provisions in question apply equally to its members. III. Judicial History A.

Quebec Superior Court, 2010 QCCS 4215 , [2010] R.J.Q. 2069 [ 16 ] Blanchard J. allowed the Chambre’s action. He made an order declaring that ss. 231.2 and 231.7 of the ITA and the definition of “solicitor-client privilege” in s. 232(1) of the ITA are unconstitutional and of no force or effect with respect to notaries and lawyers in Quebec for documents protected by professional secrecy.

He also granted the request to recognize a list of legal documents prepared by notaries or lawyers in the practice of their profession as being prima facie protected by professional secrecy regardless of the medium on which the documents in question are found. [ 17 ] In his reasons, Blanchard J. noted at the outset that there was no need for a lengthy discussion of the distinction

between notaries and lawyers. Both are legal advisers. As such, they have the same duty and obligation to respect their clients’ right to professional secrecy. After reviewing this Court’s decisions on the professional secrecy of notaries and lawyers, Blanchard J. concluded that, in this case, there was no reason to draw a distinction based on whether the seizure in question occurred in a civil or a criminal context. He added that the distinction advanced by the CRA between “facts” and “communications” was not justified.

In his view, the relationship between a legal professional and a client presupposes that all actions, documents and information resulting from that relationship are prima facie privileged.

He also expressed the view that exceptions to professional secrecy should be made very rarely and only as a last resort. [ 18 ] Concerning the impugned provisions of the ITA , Blanchard J. observed that the procedure established by Parliament does not provide a way for clients who hold the right to professional secrecy to know that their right is in jeopardy or to ensure that it is protected: only the person against whom an order is sought has to be given notice of a

summary application made by the Minister to a judge. In the context of this case, that person is the notary. The fact that a judge can order a person to provide documents does not ensure that the holder of the right to professional secrecy is given a reasonable opportunity to raise an objection in order to maintain the confidentiality of privileged information.

Blanchard J. concluded that ss. 231.2 and 231.7 result in an unreasonable search and seizure contrary to s. 8 of the Charter . [ 19 ] As to the accounting records exception, Blanchard J. found that it also had to be declared to be of no force or effect under the Constitution. In his view, the CRA should always have to apply directly to a superior court judge when seeking to obtain privileged information. B.

Quebec Court of Appeal, 2014 QCCA 552 [ 20 ] The Court of Appeal unanimously allowed the appeal, but solely to make a minor change to para. 125 of the trial judge’s judgment and to strike out paras. 126-27 thereof. The primary purpose of the changes was to make it clear that where s. 231.2 of the ITA was concerned, only subs. (1) was to be declared to be of no force or effect with respect to a requirement sent to a taxpayer’s notary or lawyer. In addition, the changes limited the scope of the declaration of unconstitutionality to the accounting records exception set out in s. 232(1) of the ITA .

The paragraphs of the judgment that were struck out concerned the list of documents that Blanchard J. had recognized as being prima facie protected by professional secrecy. Bich J.A., who wrote the Court of Appeal’s reasons, found that it was risky to establish in advance a presumption as to what documents or classes of documents were privileged. [ 21 ] This being said, Bich J.A. accepted Blanchard J.’s conclusions about the scope of professional secrecy and noted that exceptions to professional secrecy must be rare and must be narrowly construed.

In her opinion, the distinction between “facts” and “communications” is not relevant, and the expectation of privacy associated with professional secrecy is high regardless of whether the circumstances in which it might be jeopardized arise in a civil or criminal context.

She agreed with Blanchard J. that there are strong similarities between the professional secrecy of legal advisers in Quebec and solicitor-client privilege in the law of the other provinces; the definition in s. 232(1) thus incorporates the law relating to professional secrecy in Quebec and all the rules on solicitor-client privilege developed by this Court. [ 22 ] As to the requirement scheme provided for in ss. 231.2(1) and 231.7 of the ITA , Bich J.A. found that, insofar as it concerns notaries and lawyers, it infringes s. 8 of the Charter because of one principal, fatal feature: the potential breach of the professional secrecy of legal advisers without the knowledge or consent of the client in respect of whom a requirement is issued.

For this reason, Bich J.A. was of the opinion that the provisions lead to an unreasonable seizure and that the impairment is not minimal, given that it does not meet the constitutional requirements for the seizure of documents that could be protected by professional secrecy. Nor, in her view, was the requirement scheme consistent with the principle of minimization enunciated in Maranda v. Richer , 2003 SCC 67 , [2003] 3 S.C.R. 193, according to which a seizure may be carried out at the office of a legal adviser only where there are no reasonable alternative measures for obtaining the information being sought.

She added that a seizure cannot be justified by mere convenience. [ 23 ] Bich J.A. found that the accounting records exception is equally invalid. The exception does not meet the requirements of s. 8 of the Charter ; Parliament cannot opt out of s. 8 by enacting a legislative exception to professional secrecy. In her view, judges may not be stripped of the possibility of deciding on a case-by-case basis whether documents are protected by professional secrecy.

Finally, Bich J.A. noted that the scheme does not include measures that would satisfy the minimal impairment requirement that applies in respect of professional secrecy, and that as a result it cannot be saved under s. 1 . IV. Issues [ 24 ] The Chief Justice stated the following constitutional questions for the purposes of the appeal: 1.

Do ss. 231.2(1) and 231.7 and the definition of “solicitor-client privilege” set out in s. 232(1) of the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp.), infringe a right guaranteed by s. 7 of the Canadian Charter of Rights and Freedoms insofar as they apply to a lawyer or a notary? 2. If so, is the infringement a reasonable limit prescribed by law that can be demonstrably justified in a free and democratic society under s. 1 of the Canadian Charter of Rights and Freedoms ? 3.

Do ss. 231.2(1) and 231.7 and the definition of “solicitor-client privilege” set out in s. 232(1) of the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp.), infringe the right guaranteed by s. 8 of the Canadian Charter of Rights and Freedoms insofar as they apply to a lawyer or a notary? 4.

If so, is the infringement a reasonable limit prescribed by law that can be demonstrably justified in a free and democratic society under s. 1 of the Canadian Charter of Rights and Freedoms ? [ 25 ] As can be seen from these questions, the constitutional validity of the relevant provisions of the ITA is at issue under both s. 7 and s. 8 of the Charter . In Lavallee , at para. 34, and in Canada (Attorney General) v. Federation of Law Societies of Canada , 2015 SCC 7 , [2015] 1 S.C.R. 401 (“ FLS ”), at para. 33 , the Court stated that there is no need to undertake a s. 7 analysis where a s. 8

analysis leads to the conclusion that the impugned provisions are unconstitutional. [26] Since that is in fact the conclusion we reach in the instant case, it will suffice for us to begin by outlining theframework for the s. 8 analysis and then to discuss the constitutional defects identified by the courts below in the requirement scheme asa whole and more particularly in the accounting records exception. Because the scope of the professional secrecy of legal advisers iscentral to this case, it will be necessary for us to discuss it in our analysis, as the Superior Court and the Court of Appeal did in theirrespective reasons. V. Analysis A.

Section 8 and Professional Secrecy [27]

Section 8 of the Charter does not explicitly protect professional secrecy. Rather, it protects against unreasonablesearches and seizures. There are two questions that must be answered to determine whether a government action was contrary to s. 8. Thefirst is whether the government action intruded upon an individual’s reasonable expectation of privacy. If it did, it constitutes a seizurewithin the meaning of s. 8. The second is whether the seizure was an unreasonable intrusion on that right to privacy (R. v. Edwards, (SCC), [1996] 1 S.C.R. 128, at para. 33; Lavallee, at para. 35).

In the case at bar, the first step is not really problematic, asthe Court held in R. v. McKinlay Transport Ltd., (SCC), [1990] 1 S.C.R. 627, that a requirement under s. 231(3) of theITA (now s. 231.2(1)) constitutes a seizure within the meaning of s. 8 (pp. 641-42).

(1) Reasonable Expectation of Privacy [28] On the first question, it should be remembered that professional secrecy, which started out as a mere rule ofevidence, became a substantive rule over time (Solosky v. The Queen, (SCC), [1980] 1 S.C.R. 821, at p. 837; Descôteauxv. Mierzwinski, (SCC), [1982] 1 S.C.R. 860, at pp. 875-76; Smith v. Jones, (SCC), [1999] 1 S.C.R.455, at paras. 48-49; Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, [2008] 2 S.C.R. 574, atpara. 10). The Court now recognizes that this rule has deep significance and a unique status in our legal system (R. v.

McClure, 2001SCC 14, [2001] 1 S.C.R. 445, at paras. 28 and 31-33; Smith, at paras. 46-47). In Lavallee, the Court reaffirmed that the right toprofessional secrecy has become an important civil and legal right and that the professional secrecy of lawyers or notaries is a principleof fundamental justice within the meaning of s. 7 of the Charter (para. 49). Moreover, professional secrecy is generally seen as a“fundamental and substantive” rule of law (R. v. National Post, 2010 SCC 16, [2010] 1 S.C.R. 477, at para. 39).

Because of itsimportance, the Court has often stated that professional secrecy should not be interfered with unless absolutely necessary given that itmust remain as close to absolute as possible (Lavallee, at paras. 36-37; McClure, at para. 35; R. v. Brown, 2002 SCC 32, [2002] 2 S.C.R.185, at para. 27; Goodis v.

Ontario (Ministry of Correctional Services), 2006 SCC 31, [2006] 2 S.C.R. 32, at para. 15). [29] From this perspective, Blanchard J. was right to note that [translation] “[t]he fundamental importance of the right toprofessional secrecy of lawyers is a cornerstone not only of our judicial system but, more broadly, of our legal system” (para. 86). [30] In this respect, professional secrecy has a deep significance regardless of the nature of the legal advice being soughtor the context in which it is sought (Smith, at para. 46).

We therefore conclude, contrary to the argument of the AGC and the CRA, thatfor the purposes of the analysis under s. 8 of the Charter, the civil and administrative context of the requirement scheme does notdiminish the taxpayer’s expectation of privacy for information that is protected by professional secrecy. [31] It is true that this Court stated in Thomson Newspapers Ltd. v.

Canada (Director of Investigation and Research,Restrictive Trade Practices Commission), (SCC), [1990] 1 S.C.R. 425, that it might be appropriate to find that there is alower expectation of privacy in an administrative context and therefore to apply a “less strenuous and more flexible” standard ofreasonableness in determining whether a seizure is constitutional (pp. 506-7).

To justify its reasoning in that case, the Court stated that“there can only be a relatively low expectation of privacy in respect of premises or documents that are used or produced in the course ofactivities which, though lawful, are subject to state regulation as a matter of course” (p. 507). In such cases, the routine performance ofthe activities in question often involves the inspection by agents of the state of premises or documents that would otherwise beconsidered private.

Since the state is therefore expected to have access to information for regulatory purposes, it would make no sense tofind that, on the one hand, the disclosure of such information is normal but that, on the other, the expectation of privacy associated withthe information is extremely high. [32] The situation is very different when information protected by professional secrecy is involved. The nature of suchinformation means that it cannot be disclosed by a notary or a lawyer in any regulatory context.

Even if the information may be obtainedfrom a third party or may be a type of information that taxpayers must regularly provide to the tax authorities, it is presumed to beprotected by professional secrecy while in the hands of a notary or a lawyer and is therefore exempt from seizure (Maranda, atparas. 33-34). The key difference between the situation in the case at bar and the one in Thomson Newspapers lies in the fact that here,the party in possession of the information is the notary or the lawyer, not the person who is subject to the regulatory framework.

We aretherefore of the opinion that, with certain rare exceptions, the general rule is that information protected by professional secrecy that is inthe possession of a legal adviser is immune from disclosure (Foster Wheeler Power Co. v.

Société intermunicipale de gestion etd’élimination des déchets (SIGED) inc., 2004 SCC 18, [2004] 1 S.C.R. 456, at para. 37; Smith, at para. 51; McClure, at paras. 34-35. [33] Moreover, the Court confirmed in FLS that the reasonable expectation of privacy in relation to communicationssubject to solicitor-client privilege is always high, regardless of whether the question arises in a civil, administrative or criminal context.Cromwell J. wrote the following on this point: I also accept that, as Arbour J. noted in Lavallee, “the need for the full protection of the privilege is activated” in the context of acriminal investigation: para. 23.

However, the reasonable expectation of privacy in relation to communications subject to solicitor-clientprivilege is invariably high, regardless of the context. The main driver of that elevated expectation of privacy is the specially protectednature of the solicitor-client relationship, not the context in which the state seeks to intrude into that specially protected zone.

I do notaccept the proposition that there is a reduced expectation of privacy in relation to solicitor-client privileged communication when a[Financial Transactions and Reports Analysis Centre of Canada] official searches a law office rather than when a police officer does so in

the course of investigating a possible criminal offence. While Arbour J. placed her analysis in the context of criminal investigations (see,e.g., paras. 25 and 49), her reasons, as have many others before and since, strongly affirmed the fundamental importance ofsolicitor-client privilege. [para. 38] [34] We recognize that, in that case, Cromwell J. rejected the AGC’s contention that the impugned scheme had to becharacterized as merely an administrative law regulatory compliance scheme.

Cromwell J. stated that the purposes of the scheme wereinstead to deter criminal offences and to facilitate the investigation and prosecution of serious offences. He noted that the scheme had“a predominantly criminal law character and [that] its regulatory aspects serve[d] criminal law purposes” (FLS, at para. 37). However,this takes nothing away from the clear and unequivocal remarks quoted above, which, in our view, apply to this appeal.

The protectionafforded to professional secrecy in the context of a s. 8 analysis is invariably high regardless of whether the seizure has occurred in acriminal or an administrative context. [35] In our view, therefore, it is well established that a client of a notary or a lawyer has a reasonable expectation ofprivacy for information and documents that are in the possession of the notary or lawyer and in respect of which a requirement is issued.Indeed, the Court wrote in Lavallee that “[a] client has a reasonable expectation of privacy in all documents in the possession of his orher lawyer, which constitute information that the lawyer is ethically required to keep confidential” (para. 35).

(2) Unreasonable Intrusion on the Right to Privacy [36] In answering the second question from Edwards in respect of an unreasonable seizure that is contrary to s. 8, thecourts must balance the interests at stake, namely an individual’s privacy interest on the one hand and the state’s interest in carrying out asearch or seizure on the other. In Hunter v.

Southam Inc., (SCC), [1984] 2 S.C.R. 145, the Court stated in this regard“that an assessment must be made as to whether in a particular situation the public’s interest in being left alone by government must giveway to the government’s interest in intruding on the individual’s privacy in order to advance its goals, notably those of law enforcement”(pp. 159-60). [37] Here again, however, where the interest at stake is the professional secrecy of legal advisers, which is a principle offundamental justice and a legal principle of supreme importance, the usual balancing exercise under s. 8 will not be particularly helpful(Lavallee, at para. 36).

As the Court observed in Goodis, “[w]hile a fact-specific balancing may have been appropriate in Fuda [v.Ontario (Information and Privacy Commissioner) (2003), (ON SCDC), 65 O.R. (3d) 701 (Div. Ct.)], it cannot,having regard to this Court’s categorical jurisprudence, apply where the records involve communications between solicitor and client”(para. 18). [38] In Lavallee, the Court stated that “solicitor-client privilege must remain as close to absolute as possible if it is toretain relevance” (para. 36).

In Smith, the Court noted that “[t]he disclosure of the privileged communication should generally be limitedas much as possible” (para. 86). This means that any legislative provision that interferes with professional secrecy more than isabsolutely necessary will be labelled unreasonable (Lavallee, at para. 36). Absolute necessity is as restrictive a test as may be formulatedshort of an absolute prohibition in every case (Goodis, at para. 20). In short, “[t]he appropriate test for any document claimed to besubject to solicitor-client privilege is ‘absolute necessity’” (Goodis, at para. 24).

Stringent standards must therefore be adopted to protectit. A procedure will withstand Charter scrutiny only if its impact on the professional secrecy of legal advisers is minimal, as minimalimpairment “has long been the standard by which this Court has measured the reasonableness of state encroachments on solicitor-clientprivilege” (Lavallee, at para. 37). [39] Thus, where professional secrecy is in issue, what matters is not the context in which a privileged document orprivileged information could be disclosed to the state, but rather the fact that the document or information in question is privileged.

It isimportant that a client consulting a legal adviser feel confident that there is little danger that information or documents shared by theclient will be disclosed in the future regardless of whether the consultation takes place in the context of an administrative, penal orcriminal investigation: “The lawyer’s obligation of confidentiality is necessary to preserve the fundamental relationship of trust betweenlawyers and clients” (Foster Wheeler, at para. 34). [40] From this perspective, it is not appropriate to establish a strict demarcation between communications that areprotected by professional secrecy and facts that are not so protected (Maranda, at paras. 30-33; Foster Wheeler, at para. 38).

The linebetween facts and communications may be difficult to draw (S. N. Lederman, A. W. Bryant and M. K. Fuerst, The Law of Evidence inCanada (4th ed. 2014), at p. 941). For example, there are circumstances in which non-payment of a lawyer’s fees may be protected byprofessional secrecy (R. v. Cunningham, 2010 SCC 10, [2010] 1 S.C.R. 331, at para. 30). The Court has found that “[c]ertain facts, ifdisclosed, can sometimes speak volumes about a communication” (Maranda, at para. 48).

This is why there must be a rebuttablepresumption to the effect that “all communications between client and lawyer and the information they shared would be consideredprima facie confidential in nature” (Foster Wheeler, at para. 42). [41] It follows that we must reject the argument of the AGC and the CRA that some information, particularly informationfound in accounting records, constitutes facts rather than communications and is therefore always excluded from the protection ofsolicitor-client privilege as defined in s. 232(1) of the ITA. [42] This being said on the applicable principles, the Chambre argued in particular, at every stage of the litigation, thatQuebec notaries have a distinct role and face an even greater risk that information or documents they disclose in response to arequirement will be protected by professional secrecy.

With respect, we are of the view that there are strong similarities between thecommon law’s solicitor-client privilege and professional secrecy in the civil law. Nationwide, the Court’s decisions with respect to theprofessional secrecy of legal advisers have been consistent. It would not be appropriate to change that approach in the case at bar. [43] Of course, we are not denying the special status of notaries in Quebec. Notaries play a role distinct from that oflawyers in that province.

However, it must be recognized that their role as legal advisers is very similar to the role played by solicitors inthe common law provinces. It is therefore unnecessary to undertake a specific analysis respecting s. 9 of the Charter of human rights andfreedoms, CQLR, c. C-12, or other legislation relating solely to the notarial profession. Clients who retain notaries in Quebec and those

who retain solicitors in the common law provinces have the same expectation that their right to professional secrecy or solicitor-client privilege will be respected and that any information or documents they provide to their notaries or solicitors will be kept confidential. In any event, when it comes to solicitor-client privilege, the definition of “lawyer” in s. 232(1) of the ITA puts notaries and lawyers on the same footing. B.

Constitutional Defects in the Requirement Scheme [ 44 ] The Superior Court and the Court of Appeal identified several defects that cause a requirement sent to a notary or lawyer concerning information that is protected by professional secrecy to be unreasonable and contrary to s. 8. We agree with that conclusion.

The defects in question are that the client is given no notice of the requirement, that an inappropriate burden is placed solely on the notary or lawyer concerned, that compelling disclosure of the information being sought is not absolutely necessary and that no measures have been taken to help mitigate the impairment of professional secrecy. In the end, the AGC and the CRA have not made any persuasive arguments that can overcome these defects identified by the courts below.

(1) Absence of Notice to the Client [ 45 ] Professional secrecy belongs to the client, not to the notary or lawyer; only the client may waive it ( Blood Tribe , at para. 9; McClure , at para. 37 ; FLS , at para. 48). Where it is in jeopardy, the client must therefore have an opportunity to ensure that it is protected. In Lavallee , Arbour J. identified the possibility of solicitor-client privilege being breached “without the client’s knowledge, let alone consent” as a “principal, fatal feature” of s. 488.1 of the Criminal Code , R.S.C. 1985, c. C-46 (para. 39).

In our view, the same risk exists in the instant case. [ 46 ] Nothing in the ITA obliges CRA officials to send a requirement to anyone other than the person from whom they are seeking information or documents. There is therefore no obligation to give notice to the client of a notary or lawyer to whom a requirement is issued, not even where the information or documents being sought will help facilitate collection from or an audit of that client.

In fact, according to the evidence in the record of the Superior Court, the vast majority of the requirements sent to Quebec notaries were not served on their clients, thus indiscriminately putting the clients at risk of losing the protection of professional secrecy to which they are entitled in respect of privileged information that might be found in “accounting records” prepared by their legal advisers. [ 47 ] At the hearing, the AGC and the CRA argued that it is the government’s usual practice to always contact a notary or lawyer rather than his or her client.

The government’s expectation is that the notary or lawyer will act in a manner consistent with his or her ethical obligations and will therefore notify the client and ensure that the client’s right to professional secrecy is protected. We find this argument unpersuasive for two reasons. [ 48 ] First, as Arbour J. noted in Lavallee , a notary or a lawyer is not the alter ego of his or her client. Legal advisers and their clients may sometimes have conflicting interests. The professional relationship between the notary or lawyer and the client may even have been terminated before the requirement is sent.

In any event, the right to claim professional secrecy does not belong to the legal adviser. The constitutionality of a seizure cannot rest on the unverifiable expectation that a legal adviser will always act diligently and solely in the client’s interests when faced with a seizure by the state ( Lavallee , at para. 40; FLS , at para. 49). [ 49 ] Second, although it is true that for practical reasons it can sometimes be necessary for third parties to contact an individual’s legal adviser rather than contacting the individual directly, that is not the case here.

Notaries to whom requirements are sent must instead be considered third parties who are in possession of information and documents relevant to collection from or an audit of the taxpayer, that is, the client. The notaries in question are placed in a situation similar to that of banks holding financial information or companies doing business with the taxpayer that have kept information relevant to a particular transaction. A requirement sent to a taxpayer’s legal adviser cannot be regarded as a communication similar to the communication that takes place in the course of litigation, for example.

The argument of the AGC and the CRA that it is normal not to contact the clients of notaries or lawyers where requirements are issued is unfounded. [ 50 ] Apart from this argument, which we reject, the AGC and the CRA have made no submission to explain why it would not be possible to notify a client that a requirement has been sent to his or her legal adviser. In cases in which a requirement is sent by email, it is certainly possible and, more importantly, easy for the letter sent to the notary or lawyer to be copied to the client.

Indeed, the evidence in this case shows that there were some rare occasions on which CRA officials did notify the clients of notaries to whom they had sent requirements. If it was possible to do this in some cases, we find it difficult to understand why the CRA was not required to do so in all cases. [ 51 ] In any event, as Bich J.A. correctly pointed out, the occasional service of requirements on clients in addition to notaries and lawyers does not amount to a true notification system.

Because the ITA does not make it mandatory to notify the clients of legal advisers that a requirement has been sent, such service remains optional even where it is effected voluntarily. The constitutionality of the requirement scheme cannot be based on a presumption that the state will always behave honourably.

The absence of any formal obligation to notify the clients in respect of whom requirements are sent to notaries and lawyers is therefore a critical constitutional defect, as the Court indicated in both Lavallee and FLS . [ 52 ] We wish to be clear, however, that in our opinion, the fact that the CRA need not seek judicial authorization before sending a requirement does not constitute a constitutional defect in the current scheme.

Although the Court asserted in FLS that “the judicial pre-authorization requirement is, in itself, an important protection against improper search and seizure of privileged material”, it did not rule out “the possibility that Parliament could devise a constitutionally compliant inspection regime without a judicial pre- authorization requirement” (para. 56). In the instant case, if the client is given notice of the requirement, the risk of privileged information being disclosed without his or her consent when the requirement is sent would be greatly reduced.

(2) Burden Imposed on Legal Advisers [ 53 ] The absence of notice to clients whose information and documents are sought by means of a requirement brings to light another significant defect in the scheme having regard to information protected by professional secrecy that is in the possession of a

notary or a lawyer. This defect has to do with the role that notaries and lawyers are expected to play in safeguarding their clients’ right to professional secrecy and the fact that they ultimately bear alone the burden of safeguarding that right when a requirement is issued. [ 54 ] Judicial consideration of a requirement under s. 231.7 of the ITA is not automatic. It can occur only if the notary or lawyer concerned refuses to comply with the requirement, in which case the Minister must apply to a Federal Court judge for a compliance order.

The notary or lawyer therefore bears the burden of raising an objection to the requirement on the basis of professional secrecy. Unless the notary or lawyer does so, there is a possibility that the state will obtain information or documents to which it is not entitled ( Lavallee , at paras. 39-40).

In other words, basing the protection solely on the duty of legal advisers to claim their clients’ right to professional secrecy increases the risk that the state will gain access to protected information. [ 55 ] However, as we mentioned above, there may be many reasons why lawyers or, in the case at bar, notaries might fail to claim protection for their clients’ right to professional secrecy in court. Since the legal adviser is not the alter ego of the client, he or she will not necessarily always make the same choices the client would ( Lavallee , at paras. 39-40).

There may be situations in which a notary or a lawyer is simply negligent and forgets to verify whether any of the information requested by the Minister is protected by professional secrecy. There may be other situations in which a notary or a lawyer forgets to notify a client that a requirement has been received before complying with it.

Aside from a case of simple negligence that takes the form of a failure to notify a client, it is also possible for a notary or a lawyer to honestly but wrongly believe that the information sought by the Minister is not protected by professional secrecy and can therefore be disclosed.

In addition, a requirement could be issued to a notary or a lawyer who, although no longer the client’s legal adviser, still has documents concerning the client. [ 56 ] Finally, the possibility of being prosecuted (under s. 238 of the ITA ) for failing to provide the CRA with the information it seeks could influence the choice made by a notary or a lawyer to comply or not to comply with a requirement.

The threat of prosecution in fact creates a conflict of interests between legal advisers and their clients, pitting the duty of confidentiality owed by legal advisers to their clients against their statutory duty of disclosure to the tax authorities ( Lavallee , at para. 40). In this regard, it is, contrary to the AGC’s argument, irrelevant that none of the notaries who received requirements have so far been prosecuted for refusing to provide the information or documents being sought. The mere possibility of being so prosecuted under the ITA places those legal advisers in an intolerable situation.

For the purposes of determining whether the seizure is unreasonable within the meaning of s. 8 and analyzing the scheme’s constitutional defects in relation to notaries and lawyers and the protected information they have in their possession, this is sufficient. [ 57 ] Because the client is not given notice of the requirement, the notary or lawyer can take any of the possible courses of action discussed above without the client’s knowledge and without a court being asked to determine whether professional secrecy applies to the particular situation.

This is all the more problematic given that, regardless of the reason why a notary or a lawyer fails to notify his or her client that a requirement has been received, there is no way for a court to remedy that failure after the fact. If a legal adviser provides the CRA with the information or documents it seeks, the ITA gives the client no opportunity to remedy the improper disclosure. The client cannot go to court following the disclosure in order to withdraw certain privileged information or documents from the CRA. Once professional secrecy is lost, there is no way to recover it.

This confirms that the requirement scheme is unreasonable, since it increases the risk of improper disclosure of confidential information protected by professional secrecy.

(3) Disclosure Is Not Absolutely Necessary [ 58 ] There is more. In addition to the problems posed by the facts that notice is not given to the client and that an inappropriate burden is placed on the legal adviser alone, the courts have held that it is not appropriate to interfere with professional secrecy unless it is absolutely necessary to do so ( Goodis , at para. 24 ; Lavallee , at para. 36). In Lavallee and FLS , the Court faulted the authorities for the fact that the impugned searches had not been carried out as a last resort ( Lavallee , at para. 49; FLS , at para. 54).

In addition to the fact that, as we will explain below, the exception set out in the definition of “ solicitor-client privilege” in s. 232(1) is in itself problematic, we find that the entire requirement scheme is flawed in that it authorizes a seizure that cannot be characterized as a measure of last resort. In the context of a seizure involving information or documents that may be protected by the professional secrecy of notaries or lawyers, this presents a problem. [ 59 ] We agree that the problem in this case is not as acute as in Lavallee or FLS , which involved physical searches of law offices.

The mere service of a requirement to disclose certain information or documents is not on the same scale. Nevertheless, we find that it is not absolutely necessary here to rely on notaries or lawyers rather than on alternative sources in order to obtain the information or documents being sought. For example, where the Minister seeks information about specific transactions in which the client took part, the information would be available from alternative sources, such as financial institutions, that do not have as onerous an obligation to safeguard its confidentiality.

In this regard, there is no evidence that the Minister even tried, albeit unsuccessfully, to obtain the information in question by alternative means before issuing a requirement to a legal adviser. [ 60 ] No one disputes the fact that the requirement scheme serves legitimate purposes, namely the collection of amounts owed to the CRA and tax audits. Nor does anyone dispute the fact that it is important to prevent firms of notaries or lawyers from becoming tax havens. However, such firms must not be turned into archives for the tax authorities either ( FLS , at para. 75).

The fact that the requirement scheme has an important purpose does not mean that it can be used to sidestep the protection afforded by s. 8 of the Charter .

The authorities’ failure to even attempt to obtain the information or documents they seek from alternative sources indicates that the manner in which the seizure is conducted is unreasonable, as it does not minimally impair the right to professional secrecy. [ 61 ] If the client were given notice of the requirement and afforded an opportunity to independently safeguard his or her right to professional secrecy before the information was disclosed, the fact that the requirement is not sent as a last resort would not be fatal to the scheme.

The risk of information protected by professional secrecy being revealed would then be minimized by the fact that the client would have an opportunity to challenge its disclosure. That is not the case here, however, and this further problem adds to the ones already identified.

(4) Possibility of Mitigating the Scheme’s Defects

[ 62 ] Finally, these constitutional defects in the ITA ’s requirement scheme are all the more unacceptable given that they could easily be mitigated and remedied by way of measures that are compatible with the state’s obligations relating to the protection of professional secrecy. [ 63 ] For example, as the Chambre noted at the hearing in this Court and as Blanchard J. mentioned in his judgment, the declaratory action in this case had also been brought against the Attorney General of Quebec and the Deputy Minister of Revenue of Quebec in relation to the corresponding provisions of the Act respecting the ministère du Revenu , R.S.Q., c.

M-31 (“ AMR ”) (now the Tax Administration Act , CQLR, c. A-6.002), and the Act to facilitate the payment of support , CQLR, c. P-2.2 (“ AFPS ”). However, a settlement agreement was reached for that part of the action and was approved by the judge; a declaration of an out-of-court settlement, which included the transaction, was filed in the record. The transaction establishes the limits to be observed by Revenu Québec in issuing “formal demands” for information or documents to notaries.

It sets out criteria to ensure that the client’s professional secrecy is protected and to prevent the disclosure of documents that may contain information to which notary-client privilege applies. [ 64 ] Revenu Québec thus agreed, inter alia , as regards formal demands for information sent to notaries under s. 39 of the AMR or s. 57.1 of the AFPS , to comply with a directive issued on May 3, 2005 by the Direction générale de la législation et des enquêtes (now the Direction générale de la législation, des enquêtes et du registraire des entreprises) (“directive”).

Revenu Québec also agreed to take into account the other limits imposed by the transaction, recognizing for example that, prima facie , certain documents are protected by professional secrecy and cannot be the subject of a formal demand. [ 65 ] The directive concerns the minimization of state impairments of the professional secrecy of lawyers and notaries.

It states that, before issuing a formal demand, Revenu Québec must try to obtain the documents or information from various public records or by requesting them from the taxpayer, another party to a contract, a financial institution, an accountant or other third parties that have prepared the documents.

If Revenu Québec determines that only a lawyer or a notary has the documents or information it is seeking, the Minister of Revenue may then ask the taxpayer for permission to obtain the documents or information from the taxpayer’s legal adviser by way of a consent in writing to release the adviser from professional secrecy.

The directive further provides that Revenu Québec can consider sending a formal demand to a lawyer or a notary only if the other steps are unsuccessful and there is no other way to obtain the information or documents. [ 66 ] The directive also states that, where Revenu Québec is of the opinion that professional secrecy does not apply to the information or documents being sought, a judgment may be obtained from the Court of Québec or the Superior Court, as provided for in the particular statute.

Where the Minister of Revenue indicates that it is absolutely necessary to obtain the information for the purposes of administering the AMR or the AFPS , the judge must determine whether the Minister is entitled to have access to the information or documents in question. [ 67 ] The transaction further provides that any formal demand issued to a notary by Revenu Québec must specify the information or documents covered by the demand.

It must explain why Revenu Québec is of the opinion that the information or documents in question are not protected by professional secrecy, and it must ask the notary to find out whether the client agrees to waive professional secrecy. Finally, Revenu Québec agrees not to include any statement to the effect that a notary who fails to comply with a formal demand could face prosecution that could result in a fine or a term of imprisonment.

Revenu Québec also agrees not to prosecute a notary who invokes professional secrecy in good faith. [ 68 ] The agreement between the Chambre and the Quebec authorities is helpful to our analysis, since it shows that there are ways to minimize the risk that a requirement scheme will impair professional secrecy. In its current form, the ITA ’s requirement scheme is problematic insofar as it is applied to a notary or a lawyer.

It will be for Parliament, if it so chooses, to adopt measures specifying how the CRA can obtain information or documents from a taxpayer’s legal adviser without jeopardizing professional secrecy. Currently, in our view, the impairment permitted by the requirement scheme set out in ss. 231.2(1) and 231.7 of the ITA is not consistent with the principle of minimization ( Maranda , at paras. 14-20 ). C. Constitutional Defects in the Exception in Section 232(1) of the ITA [ 69 ] The Court of Appeal held that the accounting records exception also infringes the rights guaranteed by s. 8 of the Charter .

We agree with this conclusion, too. [ 70 ] Even though we have concluded that the requirement scheme is contrary to s. 8 for the reasons and to the extent mentioned above, whether this exception is constitutional remains an important issue. In the companion case, Canada (National Revenue) v. Thompson , 2016 SCC 21 , [2016] 1 S.C.R. 381, we find that the definition in s. 232(1) creates a valid exception to solicitor-client privilege on the basis of the rules of

interpretation enunciated in Blood Tribe . Therefore, even if Parliament remedies the defects we have identified in the general requirement scheme, the application of that exception in the context of a requirement could nonetheless result in the disclosure of information that is normally “privileged” as defined by the courts. A separate analysis regarding the exception is therefore necessary in this case. [ 71 ] No matter how it is viewed, the exception set out in the definition of “solicitor-client privilege” does not withstand constitutional scrutiny.

The abrogation of professional secrecy in respect of the accounting records of lawyers in a scheme that allows such documents to be seized gives the state access to a whole range of information that would otherwise be exempt from the duty to disclose and therefore exempt from seizure. The Minister has not satisfied us that giving the state access to a range of information that is normally protected by professional secrecy is absolutely necessary to meet the ITA ’s objectives.

In the absence of absolute necessity and given that there is no possibility of judicial review to ensure that professional secrecy is protected, the accounting records exception infringes s. 8 of the Charter by allowing the unreasonable seizure of information found in the accounting records of notaries or lawyers.

(1) Accounting Records and Protected Information [ 72 ] It is well established that the accounting records of notaries and lawyers are inherently capable of containing information that is protected by professional secrecy. In Descôteaux , the Court quoted the following passage from John Henry Wigmore ( Evidence in Trials at Common Law (McNaughton rev. 1961), vol. 8, § 2292): “Where legal advice of any kind is sought from a

professional legal adviser in his capacity as such, the communications relating to that purpose, made in confidence by the client, are athis instance permanently protected from disclosure . . .” (pp. 872-73). In Foster Wheeler, the Court observed that “[i]t would beinaccurate to reduce the content of the obligation of confidentiality to opinions, advice or counsel given by lawyers to their clients”(para. 38).

In Maranda, noting the importance of the information that can be extracted from particulars as seemingly neutral as theamount of the fees paid by a client, the Court concluded that “the fact consisting of the amount of the fees must be regarded, in itself, asinformation that is . . . protected” (para. 33).

The Court thus acknowledged that, even where accounting information includes nodescription of work, it may in itself, if disclosed, reveal confidential and privileged information. [73] Whether a document or the information it contains is privileged depends not on the type of document it is but, rather,on its content and on what it might reveal about the relationship and communications between a client and his or her notary or lawyer. Iflawyers’ fees can reveal privileged information, it is difficult to see why this could not also be the case for accounting records.

Suchrecords will not always contain privileged information, of course, but the fact remains that they may contain some, so their disclosurecould involve a breach of professional secrecy. This is sufficient for the purposes of our analysis. [74] From this perspective, it is important to note that clients’ names may appear in accounting records that containinformation about amounts received by and owed to a notary or a lawyer.

In some cases, those names may be privileged, since the factthat a person has consulted a notary or a lawyer may reveal other confidential information about the person’s personal life or legalproblems (Lavallee, at para. 28; G. Geddes, “The Fragile Privilege: Establishing and Safeguarding Solicitor-Client Privilege” (1999), 47Can. Tax J. 799, at pp. 805-6; Lederman, Bryant and Fuerst, at p. 939). Accounting records may also include a description of themandate the notary or lawyer was given and for which a statement of account was submitted to the client.

In other cases, the notary orlawyer may include numerous particulars about the work he or she performed, including the topic of the consultation with the client.Finally, a legal adviser might keep his or her books of account and other accounting records related to the statements of account sent toclients and the amounts owed by clients in such a way as to reveal certain aspects of the litigation strategy that was adopted in a givencase. [75] This being the case, the outright exclusion of the accounting records of notaries and lawyers from the protection ofprofessional secrecy as set out in the definition of “solicitor-client privilege” in s. 232(1) of the ITA causes a problem.

Although thedefinition expressly provides that an accounting record includes “any supporting voucher or cheque”, the expression “accounting recordof a lawyer” is not defined in the ITA. Section 230(2.1) of the ITA does require lawyers to keep records and books of account, but it doesnot specify what information those records must contain. This lack of precision creates a real risk that a wide variety of documents, someof which may contain information protected by professional secrecy, will be disclosed in response to a requirement. The expression“accounting record of a lawyer” is open to multiple

interpretations. Some of these

interpretations could lead a court to conclude that suchrecords cannot be considered to contain any privileged information, while others could lead to the opposite conclusion (OrganicResearch Inc. v. Minister of National Revenue (1990), (AB KB), 111 A.R. 336 (Q.B.)). [76] Moreover, this lack of precision of the expression “accounting record of a lawyer” in terms of the documentspractitioners must keep, the format they must be kept in and the level of detail they must contain creates a risk that different legaladvisers will include different information in their accounting records.

The risk that a client’s privileged information might be exposed asa result of the exception may therefore vary greatly.

(2) Constitutional Analysis [77] In Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, [2004] 1 S.C.R. 809, the Court noted that“whether solicitor-client privilege can be violated by the express intention of the legislature is a controversial matter” (para. 34). In thisappeal, we are not being asked to answer this question for all cases in which a legislature expresses a clear and unequivocal intention toabrogate professional secrecy in respect of a class of documents or information.

The question in the case at bar is limited to whether anabrogation of that privilege that has the effect of permitting the seizure of documents that would otherwise be protected by professionalsecrecy constitutes an infringement of the right to be secure against unreasonable seizure guaranteed by s. 8. [78] In our view, for the exception at issue in this case, the answer must be yes. The exception is broad and undefined, asit permits the seizure of any accounting record of a notary or a lawyer. As a result of s. 231.7 of the ITA, the effect of the exception isstark.

Once a court finds that a document is an accounting record, it must order that the document be disclosed regardless of whether itwould be considered privileged in the absence of the exception. In other words, for all practical purposes, the exception removes fromthe court’s jurisdiction the determination of whether accounting records in respect of which a requirement has been issued are privileged. [79] At the hearing in this Court, the AGC and the CRA, no doubt aware of this problem, argued for the first time thatjudges nonetheless have some “residual discretion” in such cases.

They argued that a judge considering a ministerial application fordisclosure can exercise this “discretion” to exclude privileged documents from the seizure of accounting records of a notary or a lawyer.We reject this argument. It conflicts with the actual wording of the accounting records exception and with the meaning of s. 231.7.Neither of those provisions mentions such a “residual discretion”.

The definition of “solicitor-client privilege” in s. 232(1) results, rather,in a complete abrogation of professional secrecy in respect of one class of documents, namely the accounting records of notaries andlawyers. [80] To determine whether an abrogation of professional secrecy in the context of a seizure is constitutional, a court mustconsider what characterizes professional secrecy as a substantive right. More specifically, the third factor of the substantive rule fromDescôteaux is of decisive importance in such a case.

According to Lamer J., when a law authorizes someone to do something that mightinterfere with the right to confidentiality that results from professional secrecy, “the decision to do so and the choice of means ofexercising that authority should be determined with a view to not interfering with it except to the extent absolutely necessary in order toachieve the ends sought by the enabling legislation” (p. 875 (emphasis added)). [81] Thus, a legislative provision cannot, by abrogating professional secrecy, authorize the state to gain access toinformation that is normally protected, where the abrogation is not absolutely necessary to achieve the purposes of the legislation.

If theprovision does so, the seizure will be unreasonable and contrary to s. 8 of the Charter. This rule prevents the state from giving itself, with

a clear intention to create a statutory exception to professional secrecy, the authority to gain untrammelled access to documents that arenormally privileged even though the state’s operations are facilitated only minimally by access to the information. [82] This is consistent with the emphasis frequently placed by the Court on ensuring that professional secrecy alwaysremains as close to absolute as possible (McClure, at para. 35). Limits on professional secrecy must take into account the dutyrecognized by the Court to minimize impairments (Maranda, at para. 14; Goodis, at para. 24).

This Court’s decisions have narrowlycircumscribed the situations in which and the reasons for which professional secrecy may be set aside without the client’s consent. Inevery case, professional secrecy will be set aside only if the court is of the view that it is absolutely necessary to do so, and only for avery specific purpose. Even then, the exceptions must be precisely defined. [83] For example, in legal proceedings, where professional secrecy prevents an accused from making full answer anddefence, it can be set aside only if the innocence of the accused is at stake (R. v.

Dunbar (1982), (ON CA), 68 C.C.C.(2d) 13 (Ont. C.A.), at pp. 43-45; A. (L.L.) v. B. (A.), (SCC), [1995] 4 S.C.R. 536, at para. 69; R. v. Seaboyer, (SCC), [1991] 2 S.C.R. 577, at p. 607; Brown). Likewise, where concerns about the health and well-being of individuals makeit necessary to infringe professional secrecy, “the interference must be no greater than is essential to the maintenance of security”(Solosky, at p. 840). In Smith, the Court upheld the requirement that privileged documents be disclosed only on the basis of a clear,serious and imminent danger (para. 84).

Major J., dissenting on another point, agreed that a more permissive standard that authorizes“completely lifting the privilege and allowing [the client’s] confidential communications to his legal advisor to be used against him in themost detrimental ways will not promote public safety, only silence” (para. 23).

Any other conclusion would undermine the main rationalefor professional secrecy: the need to maintain a legal system that ensures that individuals have access to specialists who will representtheir interests and with whom they can be completely honest about their legal problems and needs. [84] The potential scope of the expression “accounting record of a lawyer” is therefore problematic from the standpointof the absolute necessity test.

The exception set out in the definition of “solicitor-client privilege” in s. 232(1) of the ITA does notdistinguish the many forms that information in an accounting record can take. For now, all information in an accounting record is to bedisclosed in response to a requirement regardless of the form or the content of the record. The information may therefore have nothing todo with the Minister’s power of audit and collection, and the Minister may not need it in order to achieve his or her objective under theITA.

In fact, nothing in the arguments of the AGC and the CRA suggests why, to achieve the purposes of the ITA, it would be absolutelynecessary to set aside professional secrecy for such a wide range of documents rather than, for example, doing so only in respect of theamounts paid and owed by clients. [85] It is true that in the companion case, Thompson, the Minister argues that, when a requirement is sent to a lawyerwhose own tax liability is the subject of an assessment, access to clients’ names may be necessary in order for the amounts owed by thelawyer to be collected and for the Minist

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