Protecting solicitor-client privilege

Bill C-32, Fall Economic Statement Implementation Act, received Royal Assent on December 15. It includes new reporting obligations for trust accounts. Lawyers’ general trust accounts are exempt, but “client-specific trust accounts” are not and would be required to file annual tax returns.

The CBA is also keeping a close eye on draft legislation released in 2022, which expands reporting obligations for reportable transactions and imposes new reporting obligations for notifiable transactions.

Not only are those measures imposing unreasonable and costly burdens on lawyers who are already governed by rules of professional conduct, but these reporting requirements may infringe on solicitor-client privilege and place lawyers and their clients in a conflict of interest and impact the duty of confidentiality owed to clients.

The CBA has expressed its concerns on these matters as early as 2018. Concerns that we reiterated earlier this year. In an April letter to Minister Chrystia Freeland, we explained that purporting to compel the disclosure, under threat of penalty, of solicitor client privileged information by persons who are validly in possession of such information is unconstitutional as it undermines one of the most fundamental aspects of our legal system and ultimately, the public’s confidence in its ability to obtain comprehensive legal advice in relation to their tax affairs.

In November 2022, the CBA President wrote to Minister Freeland to express our concerns and we tabled submissions to the House of Commons Finance Committee and the Senate Committee on National Finance.

On November 23, 2022, Steeves Bujold, CBA President and Stephen Bowman, CBA member, tax expert and Vice Chair at Bennett Jones LLP, appeared before the Senate Finance Committee. Supplemental comments to the Senate Finance Committee were also tabled to respond to the Charter Statement for Bill C-32. Government meetings continued in December, both with Minister Freeland’s office and Finance officials.

While the CBA’s advocacy has resulted in appropriate changes to the legislation, including the confirmation that solicitor-client privilege information is not to be disclosed as part of the new trust reporting requirements, much work remains to be done.

In particular the impact of draft legislation imposing new reporting obligations for “reportable” and “notifiable” transactions which could force advisers who are not lawyers but who are legitimately in possession of privileged information – accountants, for instance – to disclose that privileged information as part of their new reporting requirements.

The CBA is asking that the exception for solicitor-client privilege be amended to cover any information believed to be privileged. We continue proactively to engage with the Department of Finance to address the infringement of solicitor-client privilege.