Section 232

In addition to other defects that potentially could be cured by a modest judicial redrafting of the provision, section 488.1 of the Criminal Code was fundamentally flawed in that it failed to ensure that clients were given a reasonable opportunity to exercise their constitutional prerogative to assert or waive their privilege but, instead, established a procedure whereby the privilege could be lost if the lawyers whose law offices were being searched did not advance claims of solicitor-client privilege on a timely basis. Arbour J stated (at para. 24):

It is critical to emphasize here that all information protected by the solicitor-client privilege is out of reach for the state. It cannot be forcibly discovered or disclosed and it is inadmissible in court. It is the privilege of the client and the lawyer acts as a gatekeeper, ethically bound to protect the privileged information that belongs to his or her client. Therefore, any privileged information acquired by the state without the consent of the privilege holder is information that the state is not entitled to as a rule of fundamental justice.

Accordingly, the proper course of action was to declare section 488.1 unconstitutional and strike it down pursuant to section 52 of the Constitution Act, 1982.

It was not improper for the accused solicitor, when he received a requirement under s. 232(3.1) to produce client documents within 30 days of the letter, to return documents for which he claimed solicitor-client privilege to the client. The phrase "about to" in s. 232(3.1) requires that a Revenue officer be physically present when documents for which solicitor-client privilege is claimed are segregated and packaged, which was not the case here.

The taxpayer submitted an envelope of sealed documents to the court so that Mandamin J. could determine whether solicitor-client privilege attached. He stated at para. 45:

The invoice by the Applicant for legal services is privileged as it identifies the subject matter for which legal services were provided to [the taxpayer].

The Crown brought a motion to dismiss a motion of the taxpayers for determination of solicitor-client privilege on the ground that the Crown, at least for the time being, was not disputing the availability of solicitor-client privilege in respect of the documents. In denying the Crown's motion, Muldoon J. stated (p. 6236)

"For these reasons, primarily that the respondent failed to comply with Rule 319(2) and filed no supporting affidavit, and secondarily that the respondent is not entitled to withdraw its requirement so as arbitrarily to discontinue this validly constituted enquiry without undertaking terms and conditions to safeguard the applicants from oppressive behaviour on the part of the MNR and his or her minions [e.g., re-seizing the documents], the respondent's motion is dismissed.

Galligan, J. indicated that it appeared from a plain reading of s. 232(5)(b)(i) that he only had jurisdiction to determine the question of solicitor/client privilege, and that he had no jurisdiction to determine the relevance of documents.

"[T]he special procedures provided for in section 232 ... as well as the powers granted to the judge are all enacted solely and exclusively for the purpose of dealing with the issue of possible solicitor-client privilege and for no other purposes." Consequently the judge on such an application has no jurisdiction to consider such matters as the relevancy of evidence, and whether the seizure of documents was contrary to the Charter.

The closed nature of a S.232(4) application (as indicated by the Parliamentary direction that it "shall be heard in camera") must be protected by sealing the court file containing the affidavit evidence given on the application.

If the judge determines that the documents he had inspected have no relevance to any possible violation of the Act, they should be returned to the taxpayer without examination by any departmental employees even if they are not privileged.

"[W]here fraud is asserted in order to try and circumscribe solicitor-client privilege, a prima facie case must be made [by way of affidavit] from first hand knowledge, and not on information and belief."

S.232 does not by implication provide for a right of appeal from the judge's decision, although in the event that a prosecution does ensue, it is open to the taxpayer to re-assert, at trial, a right of solicitor-client privilege in respect of documents that he has been compelled to disclose for purposes of investigation.

The Minister's motion to have the question of whether documents were protected by solicitor-client determined, was not allowed. The Court found that it had no jurisdiction in the matter since to deal with it would constitute sitting in appeal from an order of another High Court judge that the matter not be decided before trial.