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Battleground to be privilege in SCC cases

Thursday, September 10, 2015 @ 8:00 PM | By Cristin Schmitz


The Supreme Court’s fall menu starting early next month includes two civil test cases affecting lawyers and notaries and a pair of novel criminal appeals related to sexual offences.

The busy session, running from Oct. 5 to Dec. 11, comprises 25 appeals addressing a wide range of issues, including whether Metis are “Indians” under s. 91(24) of the Constitution (Daniels v. R., Oct. 8), if a recent Criminal Code amendment limiting the availability of extra credit for pre-trial custody violates the Charter (R. v. Safarzadeh-Markhali, Nov. 4), and whether administrative agencies must be free from interference by the executive branch when exercising their legislative, as opposed to judicial functions (Canadian Pacific Railway v. Attorney General of Canada, Dec. 9).

Of special note to lawyers and notaries nationwide are separate appeals emanating from Ontario and Quebec.

A.G. of Canada v. Chambre des notaires du Quebec, to be argued Nov. 3, is Ottawa’s appeal from a successful Charter challenge in the Quebec courts below by the Chamber of Notaries to the Canada Revenue Agency’s ostensibly sweeping authority, under s. 231.2(1) of the Income Tax Act, to make compulsory demands to anyone for information and documents that could assist in enforcing the act. At issue in the appeal are related ITA provisions which recognize a “solicitor-client privilege” exception but narrowly define it to exclude lawyers’ and notaries’ “accounting records” (s. 232(1)) and which authorize the Federal Court to order production of the requested information or documents (s. 231.7). The exclusion of lawyers’ accounting records (which the bar notes can encompass privileged material) from the definition of solicitor-client privilege was enacted by Parliament in 1965, decades before the Supreme Court elevated solicitor-client privilege to a broad and robust constitutional principle. Lawyers’ groups argue the ITA exclusion is not legally effective to abrogate solicitor-client privilege, or if it is, it is unconstitutional.

The Chambre won a declaration below that ss. 231.2(1) and 231.7, together with the exception set out in the definition of “solicitor-client privilege” in s. 232(1), are unconstitutional in relation to Quebec lawyers and notaries.

The Chambre’s challenge, based on the Charter’s s. 8 protection against unreasonable search or seizure, is supported by interveners the Barreau du Quebec, the Federation of Law Societies of Canada, the Canadian Bar Association, the Advocates’ Society and the Criminal Lawyers’ Association. As the umbrella group for Canada’s 14 legal regulators, the FLSC argues that the statutory scheme, in its application across the country, violates lawyers’ and notaries’ rights to liberty inconsistent with the lawyer’s duty of commitment to the client’s cause — a s. 7 Charter principle of fundamental justice — and more than minimally impairs a client’s right to solicitor-client privilege. As such, the scheme is unconstitutional.

The top court also has, under reserve, an appeal argued last Dec. 4 in Canada (Revenue) v. Thompson on whether “accounting record” under the ITA should be construed restrictively to exclude privileged information such as clients’ names in the context of tax enforcement proceedings against a lawyer (as opposed to the context of collecting tax from a lawyer’s clients, as in the Chambre des Notaires case).

“Overall what’s at stake in these two appeals is really whether the ITA is going to trump solicitor-client privilege,” says the FLSC’s lead counsel, John B. Laskin of Toronto’s Torys LLP. “What we’re hoping to see is a continued recognition of the fundamental importance of solicitor-client privilege to the administration of justice, and the sweeping away of provisions that provide for privilege to be breached in circumstances where the client doesn’t even get an opportunity to address the protection of that privileged information.”

Mahmud Jamal of Toronto’s Osler, lead counsel for the intervener CBA, says the case presents the court with its first opportunity to pronounce on the constitutionality of legislation that expressly targets solicitor-client privilege. Based on statutory interpretation, the CBA argues the undefined term “accounting record” is so vague it does not have the requisite “extraordinary clarity” to override solicitor-client privilege. Beyond that, the ITA’s scheme is also “constitutionally defective” because it doesn’t provide sufficient safeguards for the privilege, Jamal contends. Under Supreme Court case law, “a legislative scheme that puts a privilege substantially at risk is constitutionally problematic,” he said.

Another appeal of special note to lawyers, Lapointe Rosenstein Marchand Melancon LLP, et al v. Cassels Brock and Blackwell LLP, is scheduled to be argued Dec. 3. It involves an ongoing multimillion-dollar class action (a $45-million damages award is currently under appeal) launched by more than 200 former General Motors dealers across Canada against GM and Toronto business law firm Cassels Brock in the aftermath of the federal government’s bailout of the automaker. In its 2009 restructuring GM sent wind-down agreements to dealerships, accompanied by a letter requiring them to obtain legal advice and, if the dealership wished to accept the closure agreement, it also had to provide GM with a certificate signed by legal counsel certifying that counsel had explained the terms of the wind-down agreement.

During the restructuring, Cassels Brock advised the Canadian Automobile Dealers’ Association, the national association of franchised automobile and truck dealerships that sell new vehicles. In the class action, the plaintiffs allege that Cassels Brock was negligent in the legal advice it provided to the dealerships affected by the restructuring. In its defence, Cassels Brock denied having had the mandate to represent individual dealerships, claiming that the association was its sole client.

In the alternative, Cassels Brock would commence third-party actions against lawyers and law firms who provided legal advice to the independent dealerships before they accepted to close and signed the wind-down agreement. Cassels Brock added over 150 lawyers and law firms from across Canada as third-party defendants. At the Supreme Court, the lawyers and law firms from Quebec who provided legal advice to Quebec dealerships on the wind-down agreement are appealing the Court of Appeal for Ontario’s refusal to dismiss or stay the third-party claim against them based on their argument that Ontario’s courts do not have jurisdiction.

The Ontario motions judge held that the fact that the appellants were not parties to the wind-down agreement (which named Ontario as the forum) did not rebut the presumption that the province’s courts have jurisdiction over tort claims connected to contracts made there.

Peter Griffin of Toronto’s Lenczner Slaght, lead counsel for Cassels Brock, told The Lawyers Weekly the appeal dealing with private international law raises issues of the interplay between national class actions and the Supreme Court of Canada’s jurisprudence on jurisdiction, including “whether or not our courts are going to treat a national class proceeding as one in which issues should be centralized, and dealt with, in one jurisdiction.”

On the criminal front, the court is scheduled to hear arguments Dec. 1 in Saeed v. R. on whether police may, without a warrant, demand or compel a penile DNA swab from a sexual assault suspect, as a search incident to arrest. The appellant was convicted of sexual assault with a weapon, and sexual interference in respect of the 15-year-old complainant, at a trial where the identity of her assailant was in issue. Over defence objections, Alberta courts below allowed Crown evidence that the complainant’s DNA was found on the accused’s penis, based on a penile swab obtained by police from the accused, who had been chained in his cell after his arrest and was not permitted to go to the washroom until he did the swab.

The Alberta Court of Appeal upheld the conviction 3-0 after ruling the evidence should not be excluded. But only one judge accepted the Crown’s argument that the penile swab was analogous to gunshot residue swabbing, and that there was no Charter violation as it was a search incident to arrest. The majority held that, in light of the violation of bodily integrity that a penile swab entails, the Charter’s s. 8 prohibition of unreasonable searches or seizures presumptively requires a telewarrant. The Crown argues that penile swabbing, properly done, falls under the police power to search incident to arrest.

In R. v. D.L.W., scheduled for Nov. 9, the B.C. Crown appeals from the accused’s acquittal on charges of bestiality involving a dog. The B.C. Court of Appeal held 2-1 that the s. 160(1) Criminal Code offence requires vaginal or anal penetration (prior to 1955, the offence was called “buggery”). However, the dissenting judge agreed with the Crown that bestiality is a general intent offence encompassing sexual activity of any kind between humans and animals.